First Commonwealth Financial Corporation Q1 FY2026 earnings call

• Mike Price discussed first quarter financial results including net income, net interest income, net interest margin, deposits, non-interest expenses, provision for loan losses, non-performing loans, and various business segments' performances. - Jim Reske drilled down on spread income, margin, non-interest expense, fee income, stock repurchase, dividend, and capital ratios. - Emphasized focusing on basics like living mission, growing the bank, getting better, using FinTech and AI, and being efficient as scaling the bank.

Net income was $37.5 million with 37 cents earnings per share. Net interest income was down $4.2 million to $109.3 million due to selling $210 million of Eastern PA commercial loans and loan payoffs. Net interest margin fell to 3.92%. Deposits grew 6.3% annualized. Non-interest expenses were up $1.2 million to $75.5 million. Provision for loan losses increased $3.7 million. Non-performing loans to loans were 0.98%. Center bank acquisition exceeded financial expectations. Residential mortgage had strong first quarter. Small business and business banking volumes were brisk. Retail bank had highest net promoter and customer satisfaction scores. Revenue contributions: Net interest income $109.3 million, non-interest expenses $75.5 million, etc.

• NIM should benefit from fewer than expected rate cuts and $150 million swaps rolling off, revised NIM guidance upwards by about three to five basis points each quarter, drifting to low 4% range by fourth quarter. - NIE per quarter expected to hover in $74 to $76 million range. - Fee income expected to range from $24 to $25 million per quarter. - Intend to continue share repurchase activity in second quarter. - Expect mid-single loan growth.

• Risks and uncertainties causing actual results to differ from forward-looking statements, including those related to loan payoffs, deposit rates, interest rate changes, credit quality of loans, and economic environment impacts on business segments.

• Q: Clarification on charge-offs associated with sold/paid off credits and provision/net charge-offs for rest of year.

A: $2.8 million charge-offs in fourth quarter, $400,000 reversed in first quarter, charge-offs above long-term target but improving sequentially, with resolution of credits leading to slow ramp down. - Q: Pay down activity in first quarter, forecasted trend, and offset against origination activity.

A: Pay down activity up $150 million from first quarter 2025, production over $900 million, activity steady despite payoffs, expecting payoff activity to slow with rates cresting. - Q: Margin guidance, exit margin expectation.

A: NIM expected to end year a little over 4%, with deposit behavior being a big variable factor. - Q: Buyback pace impact on loan growth.

A: Buyback pace not leveraged by loan growth, driven by dollar amount of capital generation, primary use of capital is organic loan growth. - Q: Loan growth mix, equipment finance growth.

A: Mix becoming more commercial, equipment finance growth has room to run for another year or so. - Q: Credit growth in C&I, commercial real estate.

A: C&I and commercial real estate growth expected this year, added business bankers, small business and business banking grew in first quarter. - Q: Customer sentiment, credit non-performers concentration.

A: Monitoring consumer books, no significant geographic concentration in non-performers. - Q: Tax rate modeling.

A: Tax rate close to 20%, first quarter tax rate 22.26%