First Commonwealth Financial Corporation

Thank you for standing by. My name is Jordan and I'll be your conference operator today. At this time, I'd like to welcome everyone to the first Commonwealth Financial Corporation fourth quarter 2025 earnings release 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'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I'd now like to turn the call over to Ryan Thomas, Vice President of Finance and Investor Relations. Please go ahead.

Thank you, Jordan, and good afternoon, everyone. Thanks for joining us today to discuss First Commonwealth Financial Corporation's fourth quarter financial results. Participating on today's call will be Mike Price, President and CEO, Jim Reske, Chief Financial Officer, Janger Bentz, Bank President and Chief Revenue Officer, Brian Sohocke, 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 three 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 our reported results prepared in accordance with GAAP. A 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. And welcome, everyone. Headline performance numbers for the fourth quarter include core EPS of 43 cents per share, which beat consensus earnings estimates alongside a net interest margin that expanded to 3.98%, a core ROA of 1.45%, and a core efficiency ratio of 52.8%. During the fourth quarter, average deposits and total loans grew modestly at 2.8% and 1.2%, respectively, due to seasonal headwinds and several larger commercial loan payoffs. Net interest income grew as the margin expanded on the heels of healthy new commercial loan volume at good rates. Deposit costs fell one basis point to 1.83%. Fee income was flat as gains in SBA were offset by seasonal declines in wealth and mortgage. Our fee income at 18% of total revenue compares favorably to peers, and we have a concerted effort and long-term focus on growing fee income through our regional banking model. Wages and incentives remain pressured due to market conditions. The provision for credit losses decreased by $4.3 million compared to last quarter to $7 million. The elevated prior quarter provision was reflective of the continued resolution of a previously disclosed dealer floor plan credit. The credit required no further reserve in the fourth quarter. While NPL has increased four basis points to 94 basis points versus the prior quarter, we are appropriately reserved for these loans and do not experience a provision impact like the third quarter. Non-performing loans include both the unguaranteed portion of SBA loans and the government guaranteed portion of any SBA loan which is owned by the bank. As of December 31st, 2025, $98 million of nonperforming loans included $39.2 million of total SBA loans, of which $31.2 million was government guaranteed. As a result of our 94 basis points of NPLs, 32 basis points is guaranteed. In the fourth quarter, we repurchased $23.1 million of our stock, or 1.4 million shares, at $15.94 per share. We repurchased 2.1 million shares in total in 2025, which incidentally is roughly two-thirds of the 3 million shares we issued in the Center Bank acquisition. For the year, core EPS, of $1.53 compares favorably to the consensus earning estimates of $1.40 that was in place in December of 2024, as well as the highest revised mid-year consensus estimate of $1.54. Net interest income of $427.5 million in 2025 was up an impressive $47.2 million year-over-year While net interest income benefited in general from higher for longer interest rates, more specifically, net interest income was driven by better loan yields, good loan volumes, lower deposit costs, and a better commercial business mix. All this mixed together drove the NIMH markedly higher over last year. Loan growth was 8.2% annualized and 5% without the center bank acquisition as commercial banking, equipment finance, and indirect led the way. Average deposit growth of 6.1% for the year largely kept pace with loan growth and was approximately 4.2% without center bank. Here, money market and CDs accounted for over $534 million in growth, while non-interest-bearing DDA added another $116 million to a now $10.3 billion depository. For the year, non-interest income fell only $3 million year over year, despite another $6.3 million in Durban amendment debit card headwinds that resulted from crossing $10 billion in assets. In short, our fee businesses are filling the gap. In sum, 2025 was a year in which strong growth and spread in fee income more than offset the impact of higher expenses and lost Durban interchange income, resulting in year-over-year improvements in PPNR, core EPS, core ROA, and efficiency. During the year, and oh, by the way, the team completed the acquisition of Center Bank and grew deposits 3% annually for the year. Before I turn the call over to Jim, I wanted to take a moment to recognize Jane Grabenz, who will be retiring at the end of March. Jane has been a friend and a mentor to me and many other leaders throughout her distinguished career, and she has left an indelible mark on First Commonwealth. Jane's dedication, leadership, and wisdom have played a pivotal role in the strategic transformations that have helped position First Commonwealth as a top quartile performer. Thank you, Jane. And with that, I will turn it over to Jim Reske, our CFO. Thanks, Mike.