First Commonwealth Financial Corporation

Ladies and gentlemen, thank you for standing by. My name is Abby and I'll be your conference operator today. At this time, I would like to welcome everyone to the first Commonwealth Financial Corporation first quarter 2026 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 would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you, and I would now like to turn the conference over to Ryan Thomas, Vice President of Finance and Investor Relations. You may begin.

Thanks, Abby, and good afternoon, everyone. Thank you for joining us today to discuss First Commonwealth Financial Corporation's first quarter financial results. Participating on today's call will be Mike Price, President and CEO, Jim Reske, Chief Financial Officer, Brian Sohocki, 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've 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. Good afternoon, everyone. Several headlines for the first quarter of 2026 follow. Net income of $37.5 million resulted in 37 cents of earnings per share as compared to our consensus earning estimate of 40 cents. Net interest income was down some $4.2 million for the quarter to $109.3 million as we sold $210 million of Eastern PA commercial loans, and loan balances fell another $74.2 million due to heightened payoffs. Our commercial loan repayments swelled to $630 million in the first quarter, up some $150 million in over the first quarter of 2025. In the first quarter, we had 18 successful CRE projects. They were refinanced or sold, representing a payoff of approximately $240 million in loan outstandings. The net interest margin, or NIM, fell as expected to 3.92%. Among other items, positive replacement yields on new fixed rate loans in the first quarter were 54 basis points higher, and coupled with $150 million swaps rolling off in the second quarter, this should provide the impetus for further NIM expansion. Deposits grew 6.3% end-to-end annualized in the first quarter, and our money market promotions have resulted in new consumer checking accounts. Period of four, we have been reticent to aggressively drop rates, But given the elevated loan payoffs and a markedly lower loan-to-deposit ratio, we were well-positioned to test lower deposit rates in the next several quarters. Non-interest expenses were up $1.2 million to $75.5 million in the quarter as salaries and incentives increased alongside $500,000 of prepayment fees for the repurchase of long-term debt. Our efficiency ratio climbed to 55.4% and we intend to slow down our expense growth rate. The provision for loan losses increased $3.7 million to $10.7 million on a linked quarter basis as we had $9.6 million in specific reserves for three larger credits, one of which was from Eastern Pennsylvania. Our non-performing loans or NPLs to loans remain stubbornly high at 0.98% in the first quarter. Specifically, three previously discussed relationships totaling $20.5 million moved to non-performing status during the quarter with $9.6 million of associated specific reserves. These downgrades offset otherwise positive asset resolution during the quarter And please recall that of our 92.3 million in NPLs, 28.1 million, or 30.4%, is guaranteed by the SBA. The balance sheet and liquidity continued to strengthen in the first quarter as we paid off virtually all borrowings, lowered our loan-to-deposit ratio to 91%, and grew tangible book value per share by 4.3% while at the same time repurchasing our stocks. Other notable first quarter items include our center bank acquisition has exceeded financial expectations and helped lead Cincinnati, the company leading loan and deposit growth in the second quarter. Residential mortgage had a strong first quarter with both loan volumes and gain on sale income. The small business and business banking segment volumes were brisk as we have added new bankers and enhanced credit processes. Also, our retail bank had the highest net promoter and customer satisfaction scores since we began tracking. As we think about the ensuing quarters and future, it will be important that we focus on the basics, namely live our mission, grow the bank, get better. As we grow the bank, we must do so steadily and ensure our credit costs converge and surpass peers. Getting better will necessitate new approaches and technologies to both make it easier for customers to do business with First Commonwealth while simplifying internal processes. Given our adoption of FinTech over the years and our current AI usage, we have important tools to continue to evolve our company. Simultaneously, we must become more efficient as we scale the bank. Our first strategic initiative, live our mission to improve the financial lives of our neighbors and businesses, remains the cornerstone of our brand and is what sets us apart as a community bank. With that, I'll turn it over to Jim Reske, our CFO.