FIRST COMMONWEALTH FINANCIAL CORP /PA/

Previous wording

This discussion and the related financial data are presented to assist in the understanding and evaluation of the consolidated financial condition and the results of operations of First Commonwealth Financial Corporation including its subsidiaries (“First Commonwealth”) for the three and nine months ended September 30, 2025 and 2024, and should be read in conjunction with the unaudited Consolidated Financial Statements and notes thereto included in this Form 10-Q.

Current wording

This discussion and the related financial data are presented to assist in the understanding and evaluation of the consolidated financial condition and the results of operations of First Commonwealth Financial Corporation including its subsidiaries (“First Commonwealth”) for the three months ended March 31, 2026 and 2025, and should be read in conjunction with the unaudited Consolidated Financial Statements and notes thereto included in this Form 10-Q.

Previous wording

We believe the presentation of net interest income on a fully taxable equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Interest income per the unaudited Consolidated Statements of Income is reconciled to net interest income adjusted to a fully taxable equivalent basis on pages 65 and 73 for the nine and three months ended September 30, 2025 and 2024, respectively.

Current wording

We believe the presentation of net interest income on a fully taxable equivalent basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Interest income per the unaudited Consolidated Statements of Income is reconciled to net interest income adjusted to a fully taxable equivalent basis on pages 57 for the three months ended March 31, 2026 and 2025.

Previous wording

For the three months ended September 30, 2025, First Commonwealth recognized net income of $41.3 million, or $0.39 diluted earnings per share, compared to net income of $32.1 million, or $0.31 diluted earnings per share, in the three months ended September 30, 2024. The increase in net income between the two periods is largely attributable to an increase of $14.6 million in net interest income. Offsetting this increase is a $2.8 million increase in noninterest expense, a $0.7 million increase in the provision for credit losses and a $2.0 million increase in income tax expense.

Current wording

For the three months ended March 31, 2026, First Commonwealth had net income of $37.5 million, or $0.37 diluted earnings per share, compared to net income of $32.7 million, or $0.32 diluted earnings per share, in the three months ended March 31, 2025. The increase in net income was primarily the result of a $13.5 million increase in net interest income and $2.1 million increase in noninterest income, offset by a $5.0 million increase in the provision for credit losses and a $4.3 million increase in noninterest expense.

Previous wording

For the three months ended September 30, 2025, the Company’s return on average equity was 10.71% and its return on average assets was 1.34%, compared to 9.19% and 1.08%, respectively, for the three months ended September 30, 2024.

Current wording

For the three months ended March 31, 2026, the Company’s return on average equity was 9.75% and its return on average assets was 1.25%, compared to 9.28% and 1.14%, respectively, for the three months ended March 31, 2025.

Previous wording

Net interest income, on a fully taxable equivalent basis, was $313.9 million in the first nine months of 2025, compared to $284.8 million for the same period in 2024. The increase in net interest income can be attributedtoa 26 basis point decrease in the cost of interest-bearing liabilities and a 5 basis point increase in the yield on interest-earning assets. Net interest income comprises the majority of our operating revenue (net interest income before provision expense plus noninterest income), at 81.3% and 79.3% for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

Net interest income, on a fully taxable equivalent basis, was $109.3 million in the first three months of 2026, compared to $95.9 million for the same period in 2025. The increase in net interest income can be attributedtoa 29 basis point decrease in the cost of interest-bearing liabilities and an 8 basis point increase in the yield on interest-earning assets. Net interest income comprises the majority of our operating revenue (net interest income before provision expense plus noninterest income), at 81.6% and 80.9% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

The net interest margin on a fully taxable equivalent basis was 3.79% for the nine months ended September 30, 2025 and 3.55% for the nine months ended September 30, 2024. The net interest margin is affected by changes in the level of interest rates and the amount and composition of interest-earning assets and interest-bearing liabilities.

Current wording

The net interest margin on a fully taxable equivalent basis was 3.92% for the three months ended March 31, 2026 and 3.62% for the three months ended March 31, 2025. The net interest margin is affected by changes in the level of interest rates and the amount and composition of interest-earning assets and interest-bearing liabilities.

Previous wording

The taxable equivalent yield on interest-earning assets was 5.68% for the nine months ended September 30, 2025, an increase of five basis points compared to the 5.63% yield for the same period in 2024. The yield on interest-earning assets benefited from higher reinvestment rates related to the investment portfolio, resulting in the investment portfolio yield increasing by 41 basis points when compared to the nine months ended September 30, 2024. For the nine months ended September 30, 2025, seven basis points of the yield on interest-earning assets can be attributed to the recognition of $5.7 million in accretion of purchase accounting marks. For thenine months ended September 30, 2024, accretion of purchase accounting marks contributed$6.1 million, oreight basis points, to the yield on interest-earning assets.

Current wording

The taxable equivalent yield on interest-earning assets was 5.65% for the three months ended March 31, 2026, an increase of eight basis points compared to the 5.57% yield for the same period in 2025. The yield on interest-earning assets benefited as the yield on adjustable and fixed rate commercial loans increased 18 basis points and 55 basis points, respectively. Additionally, the yield on fixed rate consumer loans increased by 33 basis points. For the three months ended March 31, 2026, four basis points of the yield on interest-earning assets can be attributed to the recognition of $1.3 million in accretion of purchase accounting marks. For thethree months ended March 31, 2025, accretion of purchase accounting marks contributed$1.2 million, orfive basis points, to the yield on interest-earning assets.

Previous wording

The investment portfolio yield increased 41 basis points in comparison to the prior year as new volume rates were higher than the portfolio yield. The average investment portfolio for the nine months ended September 30, 2025 increased $112.9 million as compared to the nine months ended September 30, 2024 as a result of excess liquidity from growth in interest-bearing liabilities. Lower interest rates in the nine months ended September 30, 2025 compared to the prior year resulted in a 76 basis point decrease in the yield on interest-bearing deposits with banks, while the average balance decreased from $199.9 million in 2024 to $58.7 million in 2025.

Current wording

The investment portfolio yield decreased 3 basis points in comparison to the prior year primarily due to a decline in market rates. Additionally, the average balance of investments decreased $70.3 million as compared to the three months ended March 31, 2025. Lower interest rates in the three months ended March 31, 2026 compared to the prior year resulted in a 88 basis point decrease in the yield on interest-bearing deposits with banks, while the average balance increased from $76.8 million in 2025 to $207.8 million in 2026.

Previous wording

The cost of interest-bearing liabilities decreased to 2.58% for the nine months ended September 30, 2025, from 2.84% for the same period in 2024. The cost of interest-bearing deposits decreased 16 basis points and short-term borrowings decreased 78 basis points in comparison to the same period last year. The cost of interest-bearing deposits was impacted by declines in market interest rates as well as changes in the mix of deposits due to growth in money market and time deposits. Comparing the nine months ended September 30, 2025 with the comparable period in 2024, average time deposits increased $259.1 million, or 17.4%, with a decrease in the cost of these deposits of 48 basis points. Contributing to the average growth in time deposits was an average of $50.6 million acquired as part of the Center acquisition. Other interest-bearing deposits increased on average $331.3 million, or 5.9%, compared to the nine months ended September 30, 2024 and the cost of these deposits decreased 11 basis points. Average growth in other-interest bearing deposits attributable to the Center acquisition totaled $81.9 million. Compared to the prior period, short-term borrowings decreased an average of$451.9 million primarily due to the payoff of $516.0 million in short-term borrowings related to the Federal Reserve Term Funding program in the fourth quarter of 2024. Long-term debt increased an average of $98.0 million compared to the prior period as a result of a $127.0 million FHLB borrowing entered into in the fourth quarter of 2024.

Current wording

The cost of interest-bearing liabilities decreased to 2.38% for the three months ended March 31, 2026, from 2.67% for the same period in 2025. The cost of interest-bearing deposits decreased 27 basis points and short-term borrowings decreased 72 basis points in comparison to the same period last year. The cost of interest-bearing deposits was impacted by declines in market interest rates as well as changes in the mix of deposits due to growth in money market and time deposits. Comparing the three months ended March 31, 2026 with the comparable period in 2025, average time deposits increased $56.9 million, or 3.2%, with a decrease in the cost of these deposits of 52 basis points. Contributing to the average growth in time deposits was an average of $90.3 million acquired as part of the Center acquisition in the second quarter of 2025. Other interest-bearing deposits increased on average $375.3 million, or 6.5%, compared to the three months ended March 31, 2025 and the cost of these deposits decreased 18 basis points. Average growth in other-interest bearing deposits attributable to the Center acquisition totaled $146.2 million. Compared to the prior period, short-term borrowings decreased an average of$19.0 million and long-term debt decreased an average of$54.4 million compared to the prior period as a result of the payoff of $129.4 million FHLB debt during the first quarter of 2026.

Previous wording

For the nine months ended September 30, 2025, changes in rates positively impacted net interest income by $17.9 million when compared to the same period in 2024. The yield on interest-earning assets positively impacted net interest income by $4.3 million and the decrease in the cost of interest-bearing liabilities positively impacted net interest income by $13.6 million.

Current wording

For the three months ended March 31, 2026, changes in rates positively impacted net interest income by $7.4 million when compared to the same period in 2025. The yield on interest-earning assets positively impacted net interest income by $1.9 million and the decrease in the cost of interest-bearing liabilities positively impacted net interest income by $5.5 million.

Previous wording

Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $11.2 million for the nine months ended September 30, 2025, as compared to the same period in 2024. Higher levels of interest-earning assets resulted in an increase of $14.0 million in interest income, while changes in the volume and mix of interest-bearing liabilities increased interest expense by $2.8 million. Average interest-earning assets for the nine months ended September 30, 2025 increased $351.0 million, or 3.3%, compared to the same period in 2024. Average loans for the comparable period increased $379.3 million, or 4.2%, and average investments increased $112.9 million, or 7.5%. Average loans attributable to the Center acquisition for the nine month period ended September 30, 2025 totaled $164.0 million.

Current wording

Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $6.0 million for the three months ended March 31, 2026, as compared to the same period in 2025. Higher levels of interest-earning assets resulted in an increase of $8.2 million in interest income, while changes in the volume and mix of interest-bearing liabilities increased interest expense by $2.1 million. Average interest-earning assets for the three months ended March 31, 2026 increased $558.1 million, or 5.2%, compared to the same period in 2025. Average loans for the comparable period increased $497.4 million, or 5.5%, and average investments decreased $70.3 million, or 4.4%. Average loans attributable to the Center acquisition for the three months ended March 31, 2026 totaled $292.6 million.

Previous wording

Net interest income was positively impacted by a $114.4 million increase in average net free funds for the nine months ended September 30, 2025 as compared to the corresponding period in 2024. Average net free funds are the excess of noninterest-bearing demand deposits, other noninterest-bearing liabilities and shareholders’ equity over noninterest-earning assets. The level of net free funds was impacted by growth in average noninterest-bearing demand deposits, as well as higher average shareholders' equity due to retained earnings and stock issued for the Center acquisition. Average noninterest-bearing demand deposits for thenine months ended September 30, 2025 increased$12.8 million, or 0.6%, compared to the same period in 2024.

Current wording

Net interest income was positively impacted by a $199.3 million increase in average net free funds for the three months ended March 31, 2026 as compared to the corresponding period in 2025. Average net free funds are the excess of noninterest-bearing demand deposits, other noninterest-bearing liabilities and shareholders’ equity over noninterest-earning assets. The level of net free funds was impacted by growth in average noninterest-bearing demand deposits, as well as higher average shareholders' equity due to retained earnings and stock issued for the Center acquisition. Average noninterest-bearing demand deposits for thethree months ended March 31, 2026 increased$86.4 million, or 3.8%, compared to the same period in 2025, while interest-bearing demand deposits increased $375.3 million, or 6.5%.

Previous wording

The following is an analysis of the average balance sheet and net interest income on a fully taxable equivalent basis for the nine months ended September 30:

Current wording

The following is an analysis of the average balance sheet and net interest income on a fully taxable equivalent basis for the three months ended March 31:

Previous wording

Also impacting provision expense in the nine months ended September 30, 2025 was $4.5 million related to the reserve for off-balance sheet credit exposures. The level of provision for off-balance sheet exposure in 2025 is primarily due to increased commercial and residential construction commitments as well as the impact of periodic updates, completed in the third quarter of 2025, related to the expected loss rates for these loan categories. The negative provision for off-balance sheet credit exposure in 2024 is primarily attributed to lower commitments for commercial and residential construction loans.

Current wording

Also impacting provision expense in the three months ended March 31, 2026 was $0.8 million in negative provision expense related to the reserve for off-balance sheet credit exposures. The level of provision for off-balance sheet exposure in 2026 is primarily due to decreased commercial and residential construction commitments.

Previous wording

The allowance for credit losses was $129.6 million, or 1.34%, of total loans and leases outstanding at September 30, 2025, compared to $118.9 million, or 1.32%, at December 31, 2024 and $126.1 million, or 1.41%, at September 30, 2024. Nonperforming loans as a percentage of total loans and leases increased to 0.91% at September 30, 2025 from 0.83% as of

Current wording

The allowance for credit losses was $129.2 million, or 1.37%, of total loans and leases outstanding at March 31, 2026, compared to $125.8 million, or 1.32%, at December 31, 2025 and $119.9 million, or 1.32%, at March 31, 2025. Nonperforming loans as a percentage of total loans and leases increased to 0.98% at March 31, 2026 from 0.65% as of March 31, 2025 and 0.97% at December 31, 2025. The allowance to nonperforming loan ratio was 141.70%, 137.07% and 201.89% as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively.

Previous wording

Other items impacting noninterest income include gains on the sale of VISA shares of $5.1 million and $5.7 million, as of September 30, 2025 and 2024, respectively. Offsetting these gains were net security losses of $4.8 million and $5.4 million, as of September 30, 2025 and 2024, respectively, resulting from the sale of available for sale securities that were sold in order to reinvest into higher yielding investments.

Current wording

Other items impacting noninterest income in the three months ended March 31, 2025 include gains on the sale of VISA shares of $5.1 million, offset by net security losses of $5.1 million, resulting from the sale of available for sale securities that were sold in order to reinvest into higher yielding investments.

Previous wording

Noninterest expense increased $18.9 million, or 9%, for the nine months ended September 30, 2025 compared to the same period in 2024. This increase is primarily the result of an $10.5 million increase in salaries and benefits expense. Contributing to the higher salary expense in 2025 was a $5.7 million increase in incentive expense, of which $1.5 million can be attributed to finalizing payments related to prior year volumes and performance, with the remaining increase due to higher sales volumes in 2025. Also impacting the increase in salary and benefit expense is a $1.4 million increase in 401(k) expense, a $0.9 million increase in FICA taxes and a higher number of full time equivalent employees, partially due to the Center acquisition. The number of full time equivalent employees totaled 1,500 at September 30, 2024 and 1,548 at September 30, 2025.

Current wording

Noninterest expense increased $4.3 million, or 6%, for the three months ended March 31, 2026 compared to the same period in 2025. This increase is primarily the result of a $2.5 million increase in salaries and benefits expense. Contributing to the higher salary expense in 2026 wasa higher number of full time equivalent employees, partially due to the Center acquisition. The number of full time equivalent employees totaled 1,538 at March 31, 2025 and 1,592 at March 31, 2026.

Previous wording

Other operating expense increased $2.2 million compared to the prior period primarily due to loan related appraisal, credit reporting and OREO expenses. The increase in other professional fees and services is a result of services and advisors for several areas, none of which were individually material.

Current wording

Furniture and equipment expense increased $0.6 million, primarily due to higher software related expenses. The decrease in other professional fees and services is a result of services and advisors contracted for several areas in the prior period, none of which were individually material.

Previous wording

The provision for income taxes increased $0.6 million for the nine months ended September 30, 2025, compared to the corresponding period in 2024, primarily due to the higher level of income before tax.

Current wording

The provision for income taxes increased $1.3 million for the three months ended March 31, 2026, compared to the corresponding period in 2025, primarily due to the higher level of income before tax.

Previous wording

We generate an annual effective tax rate that is less than the statutory rate of 21% due to benefits resulting from tax-exempt interest, income from bank-owned life insurance and tax benefits associated with low income housing tax credits, all of which are relatively consistent regardless of the level of pretax income. These provided for an effective tax rate of 20.4% and 20.1% for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

We generate an annual effective tax rate that is less than the statutory rate of 21% due to benefits resulting from tax-exempt interest, income from bank-owned life insurance and tax benefits associated with low income housing tax credits, all of which are relatively consistent regardless of the level of pretax income. These provided for an effective tax rate of 20.5% and 20.3% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

As of September 30, 2025, our deferred tax assets totaled $49.5 million. Based on our evaluation, we determined that it is more likely than not that all of these assets will be realized. As a result, a valuation allowance against these assets was not recorded. In evaluating the need for a valuation allowance, we estimate future taxable income based on management approved forecasts, evaluation of historical earnings levels and consideration of potential tax strategies. If future events differ from our current forecasts, we may need to establish a valuation allowance, which could have a material impact on our financial condition and results of operations.

Current wording

As of March 31, 2026, our deferred tax assets totaled $43.0 million. Based on our evaluation, we determined that it is more likely than not that all of these assets will be realized. As a result, a valuation allowance against these assets was not recorded. In evaluating the need for a valuation allowance, we estimate future taxable income based on management approved forecasts, evaluation of historical earnings levels and consideration of potential tax strategies. If future events differ from our current forecasts, we may need to establish a valuation allowance, which could have a material impact on our financial condition and results of operations.

Previous wording

Liquidity refers to our ability to meet the cash flow requirements of depositors and borrowers, as well as our operating cash needs, with cost-effective funding. We generate funds to meet these needs primarily through the core deposit base of First Commonwealth Bank and the maturity or repayment of loans and other interest-earning assets, including investments. During the first nine months of 2025, the sale, maturity and redemption of investment securities provided $303.8 million in liquidity. These funds contributed to the liquidity available to originate loans, purchase investment securities and fund depositor withdrawals.

Current wording

Commonwealth Bank and the maturity or repayment of loans and other interest-earning assets, including investments. During the first three months of 2026, the sale, maturity and redemption of investment securities provided $100.0 million in liquidity. These funds contributed to the liquidity available to originate loans, purchase investment securities and fund depositor withdrawals.

Previous wording

Our participation in the Certificate of Deposit Account Registry Services (“CDARS”) program is part of an Asset/Liability Committee (“ALCO”) strategy to increase and diversify funding sources. As of September 30, 2025, the outstanding CDARS balance of $77.0 million carried an average weighted rate of 3.49% and an average original term of 85 days. These deposits are part of two different programs, a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple certificates of deposit at other CDARS member banks, and brokered deposits. The reciprocal deposits represent $14.9 million and carry an average weighted rate of 2.92% and an average original term of 322 days while the brokered deposits total $62.1 million and carry an average weighted rate of 3.63% and an average original term of 28 days.

Current wording

Our participation in the Certificate of Deposit Account Registry Services (“CDARS”) program is part of an Asset/Liability Committee (“ALCO”) strategy to increase and diversify funding sources. As of March 31, 2026, the outstanding CDARS balance of $15.0 million carried an average weighted rate of 2.95% and an average original term of 322 days. These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple certificates of deposit at other CDARS member banks.

Previous wording

The estimated total of uninsured deposits was $3.0 billion and $2.6 billion at September 30, 2025 and December 31, 2024, respectively, of which $0.5 billion and $0.7 billion were secured by pledged investment securities or letters of credit as of September 30, 2025 and December 31, 2024, respectively. Uninsured amounts are estimated based on known account relationships for each depositor and insurance guidelines provided by the FDIC.

Current wording

The estimated total of uninsured deposits was $3.0 billion and $2.9 billion at March 31, 2026 and December 31, 2025, respectively, of which $0.8 billion were secured by pledged investment securities or letters of credit as of both March 31, 2026 and December 31, 2025. Uninsured amounts are estimated based on known account relationships for each depositor and insurance guidelines provided by the FDIC.

Previous wording

The following gap analysis compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing over a period of time. The ratio of rate-sensitive assets to rate-sensitive liabilities repricing within a one-year period was 0.88 and 0.68 at September 30, 2025 and December 31, 2024, respectively. A ratio of less than one indicates a higher level of repricing liabilities over repricing assets over the next twelve months. The level of First Commonwealth's ratio is largely driven by the modeling of interest-bearing non-maturity deposits, which are included in the analysis as repricing within one year.

Current wording

The following gap analysis compares the difference between the amount of interest-earning assets and interest-bearing liabilities subject to repricing over a period of time. The ratio of rate-sensitive assets to rate-sensitive liabilities repricing within a one-year period was 0.71 and 0.70 at March 31, 2026 and December 31, 2025, respectively. A ratio of less than one indicates a higher level of repricing liabilities over repricing assets over the next twelve months. The level of First Commonwealth's ratio is largely driven by the modeling of interest-bearing non-maturity deposits, which are included in the analysis as repricing within one year.

Previous wording

The Company evaluates its potential interest rate sensitivity by utilizing several interest rate scenarios that incorporate both rising and declining rates. Results of these scenarios are impacted by variables that include the current level of interest rates, product characteristics such as floors and ceilings, the frequency with which variable rate products reset their rates, and projected pricing changes for non-maturity deposits. For example, the results in a declining rate scenario could be affected by the model's use of an assumed interest rate floor of zero. For the nine months ended September 30, 2025 and 2024, the cost of our interest-bearing liabilities averaged 2.58% and 2.84%, respectively, and the yield on our average interest-earning assets, on a fully taxable equivalent basis, averaged 5.68% and 5.63%, respectively.

Current wording

The Company evaluates its potential interest rate sensitivity by utilizing several interest rate scenarios that incorporate both rising and declining rates. Results of these scenarios are impacted by variables that include the current level of interest rates, product characteristics such as floors and ceilings, the frequency with which variable rate products reset their rates, and projected pricing changes for non-maturity deposits. For example, the results in a declining rate scenario could be affected by the model's use of an assumed interest rate floor of zero. For the three months ended March 31, 2026 and 2025, the cost of our interest-bearing liabilities averaged 2.38% and 2.67%, respectively, and the yield on our average interest-earning assets, on a fully taxable equivalent basis, averaged 5.65% and 5.57%, respectively.

Previous wording

Management of credit risk within our loan and lease portfolio is a focus of the Company and is a continuous process in order to address changing economic and lending environments. In order to identify and manage credit risk, segment and concentration limits are established and approved by our Board of Directors’ Risk Committee in order to maintain alignment with our credit risk appetite, loan strategic plan, loan policy and underwriting guidelines. In addition, our Credit Department completes industry studies to identify potential risk in the portfolio. For example, within the commercial real estate portfolio, industry studies are completed for the following sectors: hospitality, industrial, multifamily, office, retail, senior living, healthcare and student housing. All industry studies are completed on an annual basis with the exception of senior living and healthcare which are completed every other year.

Current wording

Management of credit risk within our loan and lease portfolio is a focus of the Company and is a continuous process in order to address changing economic and lending environments. Segment and concentration limits are established and approved by our Board of Directors’ Risk Committee in order to maintain alignment with our credit risk appetite, loan strategic plan, loan policy and underwriting guidelines. In addition, our Credit Department completes industry studies to identify potential risk in the portfolio. For example, within the commercial real estate portfolio, industry studies are completed for the following sectors: hospitality, industrial, multifamily, office, retail, senior living, healthcare and student housing. All industry studies are completed on an annual basis with the exception of senior living and healthcare which are completed every other year.

Previous wording

First Commonwealth also maintains a reserve for unfunded loan commitments and letters of credit based upon credit risk and probability of funding. The reserve totaled $8.6 million at September 30, 2025 and is classified in "Other liabilities" on the unaudited Consolidated Statements of Financial Condition.

Current wording

First Commonwealth also maintains a reserve for unfunded loan commitments and letters of credit based upon credit risk and probability of funding. The reserve totaled $7.3 million at March 31, 2026 and is classified in "Other liabilities" on the unaudited Consolidated Statements of Financial Condition.

Previous wording

The allowance for credit losses as a percentage of nonperforming loans was 148.04% as of September 30, 2025, compared to 193.48% at December 31, 2024, and 168.77% at September 30, 2024. The amount of individually assessed reserves included in the allowance for nonperforming loans and leases was determined by using fair values obtained from current appraisals and updated discounted cash flow analyses. The allowance for credit losses includes specific allocations of $9.1 million and general reserves of $120.5 million as of September 30, 2025. Specific reserves increased $3.4 million in comparison to December 31, 2024 and $5.2 million from September 30, 2024. The increase in specific reserves compared to December 31, 2024 is primarily due to a $3.1 million specific reserve established for the $16.0 million dealer floor plan relationship placed on nonaccrual status in the second quarter of 2025 and $3.6 million in a day-1 allowance for credit losses recognized related to PCD loans acquired from Center.

Current wording

The allowance for credit losses as a percentage of nonperforming loans was 141.70% as of March 31, 2026, compared to 137.07% at December 31, 2025, and 201.89% at March 31, 2025. The amount of individually analyzed reserves included in the allowance for nonperforming loans and leases was determined by using fair values obtained from current appraisals. The allowance for credit losses includes specific allocations of $14.0 million and general reserves of $115.2 million as of March 31, 2026. Specific reserves increased $4.1 million in comparison to December 31, 2025 and $6.1 million from March 31, 2025. The increase in specific reserves compared to December 31, 2025 is primarily due to specific reserves applied to individually analyzed loans moved to nonperforming during the quarter.

Previous wording

Criticized loans totaled $248.2 million at September 30, 2025 and represented 2.6% of the loan portfolio. The level of criticized loans increased as of September 30, 2025 when compared to December 31, 2024, by $24.0 million, or 11%. Classified loans totaled $124.9 million at September 30, 2025 compared to $96.3 million at December 31, 2024, an increase of $28.6 million, or 30%. The higher level of classified loans can be attributed to the increase in nonperforming loans as previously discussed.

Current wording

Criticized loans totaled $284.6 million at March 31, 2026 and represented 3.0% of the loan portfolio. The level of criticized loans increased as of March 31, 2026 when compared to December 31, 2025, by $17.5 million, or 7%. Classified loans totaled $136.9 million at March 31, 2026 compared to $139.4 million at December 31, 2025, a decrease of $2.5 million, or 2%. The higher level of classified loans can be attributed to changes in nonperforming loans as previously discussed.

Previous wording

The allowance for credit losses was $129.6 million at September 30, 2025, or 1.34% of total loans and leases outstanding, compared to 1.32% reported at December 31, 2024, and 1.41% at September 30, 2024. General reserves, or the portion of the allowance related to loans that were not specifically evaluated, as a percentage of performing loans were 1.25% at September 30, 2025 compared to 1.24% at December 31, 2024 and 1.26% at September 30, 2024.

Current wording

The allowance for credit losses was $129.2 million at March 31, 2026, or 1.37% of total loans and leases outstanding, compared to 1.32% reported at December 31, 2025, and 1.32% at March 31, 2025. General reserves, or the portion of the allowance related to loans that were not individually analyzed, as a percentage of performing loans were 1.75% at March 31, 2026 compared to 1.22% at December 31, 2025 and 1.24% at March 31, 2025.

Previous wording

During the nine months ended September 30, 2025, loans increased $704.5 million compared to balances outstanding at December 31, 2024, $292.6 million of which can be attributed to the Center acquisition.

Current wording

During the three months ended March 31, 2026, loans decreased $74.2 million compared to balances outstanding at December 31, 2025.

Previous wording

14.8%, due to commercial real estate projects that were completed and moved to permanent funding. Originated residential real estate decreased $41.9 million, or 1.8%, primarily due to a decline in residential first lien loans. Originated commercial real estate loans increased $169.5 million, or 5.4%, as a result of growth in loans secured by non-owner occupied commercial real estate. Originated loans to individuals increased $85.9 million, or 6.3%, primarily due to growth in the automobile and recreational vehicles portfolio, offset by a decline in the personal line of credit portfolio.

Current wording

Commercial, financial, agricultural and other loans increased $16.9 million, or 0.8%; $53.5 million of growth occurred in the equipment finance portfolio offset by a $29.6 million decrease in the time and demand portfolio. Real estate construction loans decreased $26.5 million, or 5.7%, due to commercial real estate projects that were completed and moved to permanent funding. Residential real estate decreased $8.7 million, or 0.4%, primarily due to a decline in residential first lien loans. Commercial real estate loans decreased $33.3 million, or 1.0%, as a result of decline in loans secured by non-owner occupied commercial real estate. Loans to individuals decreased $22.5 million, or 1.5%, primarily due to a decrease in the automobile and recreational vehicles portfolio.

Previous wording

Commercial real estate comprises 35% of our total loan portfolio. Commercial real estate loans are collateralized by real estate properties including, but not limited to, multifamily properties, office, retail, hotels and student housing. The following table summarizes the commercial real estate portfolio by type of property securing the credit.

Current wording

Commercial real estate comprises 33% of our total loan portfolio. Commercial real estate loans are collateralized by real estate properties including, but not limited to, multifamily properties, office, retail, hotels and student housing. The following table summarizes the commercial real estate portfolio by type of property securing the credit.

Previous wording

The following tables represent our commercial real estate portfolio by type of property securing the credit as of September 30, 2025. Total non-pass commercial real estate loans decreased by $1.2 million to $111.0 million when compared to December 31, 2024.

Current wording

The following tables represent our commercial real estate portfolio by type of property securing the credit as of March 31, 2026. Total non-pass commercial real estate loans increased by $19.8 million to $147.3 million when compared to December 31, 2025.

Previous wording

The office portfolio comprises 15% of total commercial real estate loans and 18% of total commercial real estate non-pass loans. The average loan commitment size for the office portfolio is $1.1 million and the average outstanding balance as of September 30, 2025 is $1.0 million. Within the office portfolio, exposures over $1.0 million have an average debt service coverage ratio of 1.48x, which is in line with our internal guidelines of 1.35x to 1.50x, depending on property class. These internal guidelines were updated in July 2025 to 1.35x to 1.50x. Additionally, for loans with exposure over $1.0 million, the office portfolio has an average loan to value of 55.0% compared to internal guidelines of 60-75%, depending on property class. Our current measure is based off of the most recent appraisal on file, the majority of which are from origination.

Current wording

March 31, 2026 is $0.9 million. Within the office portfolio, exposures over $1.0 million have an average debt service coverage ratio of 1.46x, which exceeds our internal guidelines of 1.25x to 1.50x, depending on property class. Additionally, for loans with exposure over $1.0 million, the office portfolio has a weighted average loan to value of 45.0% compared to internal guidelines of 60-75%, depending on property class. Our current measure is based off of the most recent appraisal on file, the majority of which are from origination.

Previous wording

As previously noted, portfolio segment limits are approved by our Board of Directors' Risk Committee. These segment limits incorporate loan commitments and are based off of total Tier 1 capital plus the allowable allowance for credit losses. In the second quarter of 2024, after considering the current environment and potential risks related to the office portfolio, the segment limit for the office portfolio was decreased from 65% to 50%, with the actual segment concentration at 37.0% as of September 30, 2025.

Current wording

As previously noted, portfolio segment limits are approved by our Board of Directors' Risk Committee. These segment limits incorporate loan commitments and are based off of total Tier 1 capital plus the allowable allowance for credit losses. In the second quarter of 2024, after considering the current environment and potential risks related to the office portfolio, the segment limit for the office portfolio was decreased from 65% to 50%, with the actual segment concentration at 31.2% as of March 31, 2026.

Previous wording

Net charge-offs for the nine months ended September 30, 2025 totaled $18.1 million, compared to $17.5 million for the nine months ended September 30, 2024. Charge-offs during the nine months ended September 30, 2025 were primarily in the commercial real estate and loans to individual categories. See discussions related to the provision for credit losses and loans for more information.

Current wording

Net charge-offs for the three months ended March 31, 2026 totaled $8.2 million, compared to $3.1 million for the three months ended March 31, 2025. Charge-offs during the three months ended March 31, 2026 were primarily in the commercial, financial, agricultural and other, commercial real estate and loans to individual categories. See discussions related to the provision for credit losses and loans for more information.

Previous wording

At September 30, 2025, shareholders’ equity was $1.5 billion, an increase of $136.7 million from December 31, 2024. The increase was primarily the result of $107.4 million in net income, $45.9 million in common shares issued in conjunction with the Center acquisition and a $33.3 million increase in the fair value of available for sale investments and interest rate swaps, which is reflected in the Other Comprehensive Income component of capital. Other items impacting capital include a $4.5 million increase related to the reissuance of treasury stock and decreases resulting from $41.5 million of dividends paid to shareholders and $12.9 million of common stock repurchases. Cash dividends declared per common share were $0.40 for the nine months ended September 30, 2025.

Current wording

At March 31, 2026, shareholders’ equity was $1.6 billion, a decrease of $1.7 million from December 31, 2025. The decrease was primarily the result of $24.8 million of common stock repurchases and a $3.4 million decrease in the fair value of available for sale investments and interest rate swaps, which is reflected in the Other Comprehensive Income component of capital. Other items impacting capital include $37.5 million in net income offset by $13.8 million of dividends paid to shareholders and a $2.8 million increase related to the reissuance of treasury stock. Cash dividends declared per common share were $0.135 for the three months ended March 31, 2026.

Previous wording

In 2018, First Commonwealth Bank, the Company's banking subsidiary, issued $100 million in subordinated debt, of which $50 million remained outstanding at September 30, 2025, which under the regulatory rules qualifies as Tier II capital. As of September 30, 2025, this subordinated debt issuance increased the total risk-based capital ratio by 49 basis points.

Current wording

In 2018, First Commonwealth Bank, the Company's banking subsidiary, issued $100 million in subordinated debt, of which $50 million remained outstanding at March 31, 2026, which under the regulatory rules qualifies as Tier II capital. As of March 31, 2026, this subordinated debt issuance increased the total risk-based capital ratio by 50 basis points.