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FC

FIRST COMMONWEALTH FINANCIAL CORP /PA/ (FCF)·Q2 2025 Earnings Summary

Executive Summary

  • Core EPS of $0.38 beat S&P Global consensus by ~$0.03; GAAP diluted EPS was $0.32 as provisioning (including $3.8M day-1 CECL for CenterBank) weighed on GAAP results . S&P Global estimates used for consensus values.*
  • S&P-defined revenue of $118.3M missed consensus ($126.5M) on higher provision expense and the acquisition day-1 provision; net interest margin expanded 21 bps to 3.83% with strong loan growth (+8.1% annualized ex-acquisition) . S&P Global estimates used for consensus values.*
  • Management guided NIM to the low-to-mid 3.90s by YE25 (assuming two Fed cuts), with net interest income expected at $110–$115M per quarter for the rest of 2025; deposit pricing will be used to fund growth, partly offsetting NIM upside .
  • Potential stock catalysts: durable NIM expansion, incremental buyback authorization ($25M), and deposit/loan growth in Ohio/Cincinnati; watch asset quality after a large floorplan credit moved to nonaccrual, lifting nonperforming loans by ~$40M q/q .

What Went Well and What Went Wrong

What Went Well

  • Material NIM expansion to 3.83% (+21 bps q/q, +26 bps y/y) driven by higher loan yields, lower deposit costs, CenterBank purchase accounting accretion (+4 bps), and macro swap roll-off (+3 bps) .
  • Broad-based fee income improvement (+$2.3M q/q to $24.7M) across mortgage, SBA, wealth, BOLI, and service charges; management highlighted “strong contributions” from multiple businesses .
  • CEO on strategic progress: “strong second quarter, marked by significant net interest margin expansion, robust loan growth, and the successful completion of the CenterBank acquisition” .

What Went Wrong

  • S&P-defined revenue missed consensus due to elevated provision expense ($8.9M excluding acquisition) and $3.8M day-1 CECL tied to CenterBank, lowering revenue under S&P’s definition (NII after provision + noninterest income) .
  • Asset quality: nonperforming loans rose to $99.5M (+$40.1M q/q), primarily from a single commercial floorplan relationship moved to nonaccrual and $8.4M of acquired NPLs; criticized loans increased $64.4M q/q .
  • Core op-ex (ex-merger) increased $1.2M q/q to $72.3M, driven by loan-related expenses, furniture/equipment, and professional fees, partially offset by lower occupancy .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
GAAP Diluted EPS ($)0.36 0.32 0.32
Core Diluted EPS ($)0.36 0.32 0.38
S&P Revenue ($USD)112.30M*112.07M*118.26M*
Net Interest Income ($USD)94.99M 95.52M 106.24M
Noninterest Income ($USD)25.21M 22.50M 24.75M
Net Interest Margin (FTE) (%)3.57% 3.62% 3.83%
Core Efficiency Ratio (%)53.63% 59.08% 54.06%
ROA (%)1.28% 1.14% 1.11%
Provision for Credit Losses ($USD)7.83M 5.74M 8.90M
Net Charge-offs ($USD)4.40M 3.10M 2.76M

Note: S&P Global revenue reflects net interest income after provision plus total noninterest income; Values retrieved from S&P Global.*

Segment and Portfolio Detail

Loan Category ($USD)Q2 2024Q1 2025Q2 2025
Commercial (C&I & Other)1,312.82M 1,276.42M 1,381.52M
Commercial Real Estate3,077.01M 3,158.44M 3,366.27M
Equipment Finance316.70M 485.78M 573.81M
Real Estate Construction (Commercial)523.60M 478.83M 424.44M
Total Commercial5,230.12M 5,399.48M 5,746.04M
Total Consumer Portfolio3,764.77M 3,693.67M 3,824.78M
Total Loans & Leases8,994.89M 9,093.14M 9,570.82M

Key KPIs

KPIQ2 2024Q1 2025Q2 2025
Total Deposits ($USD)9,408.92M 9,861.66M 10,104.58M
Loan-to-Deposit Ratio (%)—92.6% 95.1%
ACL / Loans (%)1.37% 1.32% 1.39%
Nonperforming Loans ($USD)57.12M 59.41M 99.51M
NPA / Total Assets (%)0.51% 0.52% 0.83%
Core PPNR ($USD)54.38M 46.88M 58.68M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (FTE)YE 2025 exitModel previously contemplated three Fed cuts; high-3.90s implied by model (3.97–4.00% for Q3–Q4) Low-to-mid 3.90s by YE25; baseline now assumes two Fed cuts; deposit pricing to fund growth tempers upside Lowered vs model; more conservative
Net Interest IncomeH2 2025 quarterlyNot previously quantified$110–$115M per quarter for remainder of 2025 New
Operating ExpensesQ3/Q4 2025Street consensus ~$72.8M (Q3), ~$73.1M (Q4) Internal view: slight seasonal trail-off in both op-ex and noninterest income (offset each other) Seasonality noted
Macro Swaps2025$150M matured May 1 (+~3 bps Q2, +~2 bps Q3) Additional maturities: $25M (Aug 25), $25M (Oct 10), $50M (Nov 5) Added maturities
DividendQ2 2025$0.130 in Q1 2025 $0.135 declared (3.9% y/y increase) Raised
Share RepurchaseAs of Q2 2025$6.2M remaining authorization Additional $25M authorization; opportunistic repurchase approach based on price grid Expanded

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
NIM trajectoryQ4: 3.54% NIM, modest pressure; Q1: 3.62% NIM, +8 bps q/q NIM 3.83%, +21 bps q/q; guided to low–mid 3.90s YE25 with two Fed cuts Improving; more constructive guidance
Loan growthQ4: modest growth; Q1: +4.4% annualized EOP loans +8.1% annualized (ex-acq), broad-based; equipment finance strong Accelerating organically
Deposit fundingQ4: avg deposits +$207M annualized ; Q1: EOP deposits +7.7% annualized Focus on deposit pricing to fund growth; expect some margin offset Proactive funding strategy
Fee incomeQ4: swap/mortgage/SBA gains ; Q1: seasonal softness Broad-based improvement in mortgage/SBA/wealth/BOLI; OREO gains noted Positive breadth
Asset qualityQ4: NPLs down q/q; high NCOs incl. reserved loans NPLs +$40.1M q/q from a single floorplan and acquired NPLs; provision higher Mixed; idiosyncratic pressure
M&A/integrationCenterGroup close Apr 30; conversion June Integration progressing; +4 bps to NIM from marks Executed; accretive to NIM
Macro/AI & regional—CEO cited large regional data/power investment ($10B Indiana County) as supportive of local economy Constructive regional backdrop

Management Commentary

  • CEO: “strong second quarter, marked by significant net interest margin expansion, robust loan growth, and the successful completion of the CenterBank acquisition” .
  • CFO on NIM drivers: purchase-accounting marks (+4 bps), macro swap maturities (+3 bps Q2, +2 bps Q3), assets (+9 bps) and liabilities (+5 bps) contributions; loan replacement yields +42 bps vs runoff; deposit cost −8 bps .
  • Credit update: the floorplan nonaccrual drove a $2.6M increase in specific reserves; NPL increase largely from this relationship and $8.4M acquired NPLs .
  • Strategic focus: grow deposits and loans in core markets (Ohio, Western PA), leverage equipment finance and SBA, and maintain disciplined buyback pricing .

Q&A Highlights

  • Expenses: management sees slight seasonal trail-off in Q4 for both op-ex and noninterest income vs consensus path; likely rebound in Q1 seasonally .
  • Buybacks: opportunistic approach with price caps (indicative mid-$17s); expanded authorization by $25M to use on dips .
  • Charge-offs outlook: normalized mid-25–30 bps annualized possible; recent headwinds from “centric” loans diminished; portfolio performing well .
  • Loan yields: replacement yields ~+42 bps overall; fixed-rate originations ~+115 bps replacement spread; variable ~+9 bps; supportive even with limited Fed cuts .
  • Equipment finance: growth strong but likely to plateau in ~18 months as vintages season; positive credit quality, deepening client relationships .

Estimates Context

  • EPS: Core diluted EPS $0.38 vs S&P Global consensus $0.35*; GAAP diluted EPS $0.32 .
  • Revenue (S&P definition): Actual $118.26M* vs consensus $126.47M*; miss primarily due to higher provision expense and $3.76M day-1 CECL on acquisition .
  • Prior periods: Q1 2025 EPS $0.32 vs $0.32*; S&P revenue $112.07M*; Q2 2024 EPS $0.36 vs $0.35*; S&P revenue $112.30M* .
    Values retrieved from S&P Global.*
MetricQ2 2024Q1 2025Q2 2025
EPS Consensus ($)0.351*0.321*0.348*
EPS Actual (Core) ($)0.36 0.32 0.38
Revenue Consensus ($USD)118.01M*117.60M*126.47M*
Revenue Actual ($USD, S&P def.)112.30M*112.07M*118.26M*

Key Takeaways for Investors

  • Core EPS beat with strong NIM expansion; focus remains on maintaining deposit growth to fund loans, which will partially temper NIM upside but sustain NII in the $110–$115M range through year-end .
  • Watch asset quality: NPLs rose on a single floorplan exposure and acquired NPLs; reserve ratio improved to 1.39% and net charge-offs remain low; expect normalized mid-20s bps COs .
  • Integration of CenterBank is accretive and supports Ohio/Cincinnati expansion; marks contribute ~4 bps to NIM, with conversion complete in June .
  • Buyback authorization expanded ($25M) and management uses a disciplined price grid, potentially providing support on pullbacks; dividend raised to $0.135 .
  • Near-term trading: positive momentum on NIM/loan growth vs caution on credit headlines; revenue misses tied to provisions can create volatility.
  • Medium-term thesis: diversified fee engines (mortgage, SBA, wealth), equipment finance maturation, and pipeline in core markets underpin profitable growth; macro swap maturities add incremental NIM tailwind .
Citations:  
- Q2 2025 press release and 8-K exhibits: **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:0]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:1]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:2]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:3]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:4]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:7]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:8]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:9]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:10]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:11]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:12]** **[712537_0000712537-25-000096_fcf-ex991_20250729x8k.htm:15]**  
- Q2 2025 earnings call transcript: **[0000712537_2295459_1]** **[0000712537_2295459_3]** **[0000712537_2295459_5]** **[0000712537_2295459_6]** **[0000712537_2295459_7]** **[0000712537_2295459_8]** **[0000712537_2295459_9]** **[0000712537_2295459_10]** **[0000712537_2295459_11]**  
- Q1 2025 8-K: **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:0]** **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:1]** **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:7]** **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:8]** **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:9]** **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:10]** **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:11]** **[712537_0000712537-25-000072_fcf-ex991_20250429x8k.htm:13]**  
- Q4 2024 8-K: **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:0]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:1]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:8]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:9]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:10]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:11]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:12]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:13]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:14]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:15]** **[712537_0000712537-25-000018_fcf-ex991_20250128x8k.htm:16]**  
- CenterGroup acquisition/ conversion press releases: **[712537_df45478652004e20be449ceb06ce41c7_0]** **[712537_ae4076272468424b993399eff63fd314_0]**

S&P Global disclaimer: All consensus and S&P-defined revenue values marked with an asterisk (*) are retrieved from S&P Global.