First Commonwealth Financial Corporation

Thank you for standing by. My name is Danielle, and I will be your conference operator today. At this time, I would like to welcome everyone to the first Commonwealth Financial Corporation conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Ryan Summers. Please go ahead.

Thank you, Danielle, and good afternoon, everyone. Thank you for joining us today to discuss First Commonwealth Financial Corporation's third quarter financial results. Participating on today's call will be Mike Price, President and CEO, Jim Reske, Chief Financial Officer, Jane Grabenz, Bank President and Chief Revenue Officer, Brian Sohaki, Chief Credit Officer, and Mike McEwen, Chief Lending Officer. As a reminder, a copy of yesterday's earnings release can be accessed by logging on to fcbanking.com and selecting the Investor Relations link at the top of the page. We have also included a slide presentation on our Investor Relations website with supplemental information that will be referenced during today's call. Before we begin, I need to caution listeners that this call will contain forward-looking statements. Please refer to our forward-looking statements disclaimer on page 3 of the slide presentation for a description of risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statement. Today's call will also include non-GAAP financial measures. Non-GAAP financial measures should be viewed in addition to and not as an alternative for or report results prepared in accordance with GAAP. Reconciliation of these measures can be found in the appendix of today's slide presentation. With that, I will turn the call over to Mike.

Hey, thank you, Ryan. Our performance in the third quarter reflects broad-based momentum across our regions and lines of business. Key highlights include a return on assets improved to 1.34% and our core pre-tax, pre-provision ROA through 10 basis points to 2.05%. Net interest margin expanded nine basis points to 3.92%, marking another quarter of improvement. Average deposits increased 4%, reflecting balanced growth across all of our geographies. The cost of deposits declined seven basis points to 1.84%, underscoring effective pricing discipline balanced with growth. loans were up 137 million dollars or 5.7 percent despite some payoff headwinds and commercial real estate loan growth saw meaningful contributions from equipment finance commercial banking indirect and home equity lending mortgage lending provided a headwind to balance sheet growth although some of that runoff was by design and the outlook for the business is improving geographically we had strong loan contributions from all markets in Ohio and Pennsylvania. Fee income remained resilient post Durbin, representing 18% of total revenue. A healthy quarter over quarter improvement in our wealth business was offset by slower gain on sale income. The third quarter efficiency ratio improved to 52.3% from 54.1% in the second quarter, reflecting good expense control. Tangible book value grew 11.6% annualized on a linked quarter basis and 9.1% year over year. On the credit side, core provision expense increased by $2.4 million quarter over quarter, reaching $11.3 million. As disclosed last quarter, we had a $31.9 million dealer floor plan customer who was out of trust. In the second quarter, we set aside $4.2 million in reserves for this relationship. In the third quarter, a receiver was appointed to liquidate the collateral. The out of trust amount and related liquidation costs rose as the process evolved. During the third quarter, $5.5 million was charged off. An additional $3.1 million was added to reserves resulting in a net provision impact for this relationship of $4.4 million in the third quarter. This recent dealer floor plan fraud is isolated, and we expect it to be largely resolved by year end. As of September 30th, our floor plan exposures totaled $122 million across 21 traditional auto and RV relationships with individual exposures ranging from $2 million to $18 million. Net charge-offs for the quarter were $12.2 million, primarily driven by the aforementioned $5.5 million dealer floor plan charge-off, and $2.8 million associated with the sale of five recently acquired Center Bank loans. This was an opportunistic sale utilizing the allocated loan mark from the acquisition with only $100,000 in provision expense. These two items accounted for 34 basis points of the quarter's 51 basis points of net charge-offs. With the dealer-for-plan relationship now at $16 million, non-performing loans declined to 0.91% compared to 1.04% in the prior quarter. Our loan portfolio maintains negligible exposure to private credit funds, equipment finance firms, NDFIs, or subprime lenders. Our recent center bank acquisition in Cincinnati is exceeding our customer retention expectations. We're grateful for the opportunity that acquisition has given us to accelerate the build out of that region. On the digital front, we see good growth in services and high digital satisfaction in survey results. We continue to add customer-facing features to our platform and to improve productivity through the use of RPA and AI. We are excited about the outlook for First Commonwealth and the confluence of profitable growth, a regional focus leading to better low-cost deposit gathering and higher fee income, coupled with lower credit costs in the future. With that, I'll turn it over to Jim Rusty, our CFO.