FIRST COMMONWEALTH FINANCIAL CORP /PA/
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 6, 2026
FCF$20.91-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0000712537-26-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-06.
0000712537-26-000042
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 183 previous paragraphs and 189 current paragraphs.
102 unchanged; 74 reworded; 11 added; 6 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 28 previous and 28 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Current report
Total provision expense for the nine months ended September 30, 2026, increased $4.1 million compared to the nine months ended September 30, 2025. Impacting the provision for credit losses for the nine months ended September 30, 2026 is an increase of $7.2 million in specific reserves for nonperforming loans. The specific reserves include $4.9 million for four time and demand relationships, $4.7 million for a multifamily relationship, $2.3 million for a owner occupied relationship and $2.8 million for a non-owner occupied relationship. Offsetting these increases in specific reserves is the decrease in specific reserves of $6.6 million; $2.3 million of which relates to two non-owner occupied relationships and $4.9 million relates to five time and demand relationships. Also impacting provision expense for the nine months ended September 30, 2026 was a decrease of $4.3 million in standard factor qualitative measures, primarily related to concentration risk associated with construction and construction permanent financing.
Current report
The following table presents the components of noninterest income for the nine months ended September 30:
Current report
The provision for income taxes decreased $0.4 million for the nine months ended September 30, 2026, compared to the corresponding period in 2025. Higher levels of pretax earnings increased the provision for income taxes by approximately $4.3 million. This increase was offset by a $4.7 million benefit from purchasing $54.7 million in prior year tax credits at a discount.
Current report
The level of provision expense in the third quarter of 2025 was impacted by $4.4 million specific reserve recognized on a dealer floor plan loan, a $1.8 million charge off for a commercial loan moved to held for sale and $1.3 million in provision expense as a result of mix and growth of the loan portfolio.
Current report
The provision for income taxes decreased $4.8 million for the three months ended September 30, 2026, compared to the corresponding period in 2025. This decrease is primarily a result of a $4.7 million tax benefit recognized in the three months ended September 30, 2026 from purchasing $54.7 million in prior year tax credits at a discount. The effective tax ratefor the three months ended September 30, 2026 was 11.3%, compared to 20.2% for thethree months ended September 30, 2025. The effective tax rate for the three months ended September 30, 2026, excluding discrete items such as the purchased tax credits, was 20.6%.
Current report
On October 27, 2026, the Company announced that its Board of Directors authorized an additional $25.0 million share
Current report
repurchase program of the Company's common stock. Under the program, management is authorized to repurchase shares
Current report
through Rule 10b5-1 plans, open market purchases, privately negotiated transactions, block purchases or otherwise in a
Current report
manner that is intended to comply with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange
Current report
Act of 1934. The Company may suspend or discontinue the program at any time.
Removed paragraphs (6)
Previous report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Previous report
Total provision expense for the six months ended June 30, 2026, increased $1.3 million compared to the six months ended June 30, 2025. Included in the provision for credit losses for the six months ended June 30, 2026 is $4.9 million in reserves related to two individually analyzed time and demand relationships and $2.1 million in reserves for one individually analyzed multifamily real estate loan, all of which were moved to nonaccrual during the first six months of 2026. Provision expense for the period was also impacted by growth in the equipment finance portfolio and a $3.4 million provision related to a time and demand loan which was moved to nonaccrual in 2026 and subsequently charged-off. In addition, provision expense was impacted by charge-offs totaling $0.8 million for three commercial loan relationships moved to held for sale.
Previous report
The following table presents the components of noninterest income for the six months ended June 30:
Previous report
The provision for income taxes increased $4.4 million for the six months ended June 30, 2026, compared to the corresponding period in 2025, primarily due to the higher level of income before tax.
Previous report
The level of provision expense in the second quarter of 2025 was impacted by $3.4 million recognized as the day-1 non-PCD provision expense related to the Center acquisition. Loan growth and the economic forecast also contributed to the provision expense in the second quarter of 2025.
Previous report
The provision for income taxes increased $3.0 million for the three months ended June 30, 2026, compared to the corresponding period in 2025. The effective tax rate increased 20 basis points from 20.6% for thethree months ended June 30, 2025 to 20.8% for thethree months ended June 30, 2026.
Reworded paragraphs (74)
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 six months ended June 30, 2026 and 2025, 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 and nine months ended September 30, 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
•Acts of God or of war or terrorism.
Current wording
•Acts of God or of war or of terrorism.
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 64 and 72 for the six and three months ended June 30, 2026 and 2025, 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 63 and 72 for the nine and three months ended September 30, 2026 and 2025, respectively.
Previous wording
For the six months ended June 30, 2026, First Commonwealth had net income of $82.1 million, or $0.81 diluted earnings per share, compared to net income of $66.1 million, or $0.64 diluted earnings per share, in the six months ended June 30, 2025. The increase in net income was primarily the result of a $19.7 million increase in net interest income and $4.3 million increase in noninterest income, offset by a $1.3 million increase in the provision for credit losses and a $2.3 million increase in noninterest expense.
Current wording
For the nine months ended September 30, 2026, First Commonwealth had net income of $127.1 million, or $1.25 diluted earnings per share, compared to net income of $107.4 million, or $1.04 diluted earnings per share, in the nine months ended September 30, 2025. The increase in net income was primarily the result of a $24.9 million increase in net interest income and $6.2 million increase in noninterest income, offset by a $4.1 million increase in the provision for credit losses and a $7.7 million increase in noninterest expense.
Previous wording
For the six months ended June 30, 2026, the Company’s return on average equity was 10.60% and its return on average assets was 1.36%, compared to 9.12% and 1.12%, respectively, for the six months ended June 30, 2025.
Current wording
For the nine months ended September 30, 2026, the Company’s return on average equity was 10.88% and its return on average assets was 1.39%, compared to 9.67% and 1.20%, respectively, for the nine months ended September 30, 2025.
Previous wording
Net interest income, on a fully taxable equivalent basis, was $222.2 million in the first six months of 2026, compared to $202.4 million for the same period in 2025. The increase in net interest income can be attributedtoa 28 basis point decrease in the cost of interest-bearing liabilities and a 2 basis point increase in the yield on interest-earning assets with a $337.3 million increase in net interest earning assets. Net interest income comprises the majority of our operating revenue (net interest income before provision expense plus noninterest income), at 81.1% and 81.0% for the six months ended June 30, 2026 and 2025, respectively.
Current wording
Net interest income, on a fully taxable equivalent basis, was $338.9 million in the first nine months of 2026, compared to $313.9 million for the same period in 2025. The increase in net interest income can be attributedtoa 26 basis point decrease in the cost of interest-bearing liabilities and a $214.1 million increase in net interest earning assets. Net interest income comprises the majority of our operating revenue (net interest income before provision expense plus noninterest income), at 81.2% and 81.3% for the nine months ended September 30, 2026 and 2025, respectively.
Previous wording
The net interest margin on a fully taxable equivalent basis was 3.97% for the six months ended June 30, 2026 and 3.73% for the six months ended June 30, 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.
Current wording
The net interest margin on a fully taxable equivalent basis was 4.02% for the nine months ended September 30, 2026 and 3.79% for the nine months ended September 30, 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 5.67% for the six months ended June 30, 2026, an increase of two basis points compared to the 5.65% yield for the same period in 2025. The yield on interest-earning assets benefited as the yield on fixed rate commercial loans increased 33 basis points. Additionally, the yield on fixed rate consumer loans increased by 15 basis points. Offsetting these increases were a 73 basis point decrease in consumer lines of credit and a 4 basis point decline in the yield on equipment finance loans. For the six months ended June 30, 2026, five basis points of the yield on interest-earning assets can be attributed to the recognition of $2.7 million in accretion of purchase accounting marks. For thesix months ended June 30, 2025, accretion of purchase accounting marks contributed$3.9 million, orseven basis points, to the yield on interest-earning assets.
Current wording
The taxable equivalent yield on interest-earning assets was 5.69% for the nine months ended September 30, 2026, an increase of one basis points compared to the 5.68% yield for the same period in 2025. The yield on interest-earning assets benefited as the yield on fixed rate commercial loans increased 31 basis points and the yield on fixed rate consumer loans increased by 14 basis points. Offsetting these increases were a 78 basis point decrease in the yield on consumer lines of credit and a 7 basis point decline in the yield on equipment finance loans. For the nine months ended September 30, 2026, four basis points of the yield on interest-earning assets can be attributed to the recognition of $3.6 million in accretion of purchase accounting marks. For thenine months ended September 30, 2025, accretion of purchase accounting marks contributed$5.7 million, orseven basis points, to the yield on interest-earning assets.
Previous wording
The investment portfolio yield decreased two basis points in comparison to the prior year primarily due to a decline in market rates. Additionally, the average balance of investments decreased $39.7 million as compared to the six months ended June 30, 2025. Lower interest rates in the six months ended June 30, 2026 compared to the prior year resulted in a 93 basis point decrease in the yield on interest-bearing deposits with banks, while the average balance increased from $68.2 million in 2025 to $182.9 million in 2026.
Current wording
The investment portfolio yield increased two basis points in comparison to the prior year, while the average balance of investments decreased $10.0 million as compared to the nine months ended September 30, 2025. Lower interest rates in the nine months ended September 30, 2026 compared to the prior year resulted in a 90 basis point decrease in the yield on interest-bearing deposits with banks, while the average balance increased from $58.7 million in 2025 to $138.7 million in 2026.
Previous wording
The cost of interest-bearing liabilities decreased to 2.35% for the six months ended June 30, 2026, from 2.63% for the same period in 2025. The cost of interest-bearing deposits decreased 25 basis points and short-term borrowings decreased 164 basis points in comparison to the same period last year. The cost of interest-bearing deposits was impacted by declines in market interest rates offset by changes in the mix of deposits with growth in money market and time deposits. Comparing the six months ended June 30, 2026 with the comparable period in 2025, average time deposits increased $39.0 million, or 2.2%, while the cost of these deposits decreased 45 basis points. Contributing to the average growth in time deposits was $90.3 million in balances acquired in the second quarter of 2025 as part of the Center acquisition. The impact of the Center acquisition on average time deposit balances was an increase of $60.0 million when comparing the six-months ended June 30, 2026 to the prior year. Other interest-bearing deposits increased on average $298.8 million, or 5.1%, compared to the six months ended June 30, 2025 and the cost of these deposits decreased 18 basis points. Contributing to the average growth in other interest-bearing deposits was $146.2 million in balances acquired from Center in the second quarter of 2025. The impact of the Center acquisition on average other interest-bearing deposits was an increase of $96.9 million when comparing the six-months ended June 30, 2026 to the prior year. Compared to the prior period, short-term borrowings decreased an average of$69.6 million and long-term debt decreased an average of$93.1 million primarily due to the payoff of $129.4 million FHLB debt during the first quarter of 2026.
Current wording
The cost of interest-bearing liabilities decreased to 2.32% for the nine months ended September 30, 2026, from 2.58% for the same period in 2025. The cost of interest-bearing deposits decreased 23 basis points and short-term borrowings decreased 75 basis points in comparison to the same period last year. The cost of interest-bearing deposits was impacted by declines in market interest rates, offset by changes in the mix of deposits, including growth in money market and savings accounts. Comparing the nine months ended September 30, 2026 with the comparable period in 2025, average time deposits decreased $17.8 million, or 1.0%, and the cost of these deposits decreased 42 basis points. Other interest-bearing deposits increased on average $252.4 million, or 4.2%, compared to the nine months ended September 30, 2025 and the cost of these deposits decreased 16 basis points. Compared to the prior period, short-term borrowings decreased an average of$51.8 million and long-term debt decreased an average of$107.9 million, primarily due to the payoff of $129.4 million in FHLB debt during the first quarter of 2026.
Previous wording
For the six months ended June 30, 2026, changes in rates positively impacted net interest income by $10.9 million when compared to the same period in 2025. The yield on interest-earning assets positively impacted net interest income by $0.7 million and the decrease in the cost of interest-bearing liabilities positively impacted net interest income by $10.2 million.
Current wording
For the nine months ended September 30, 2026, changes in rates positively impacted net interest income by $14.8 million when compared to the same period in 2025. The yield on interest-earning assets positively impacted net interest income by $1.1 million and the decrease in the cost of interest-bearing liabilities positively impacted net interest income by $13.7 million.
Previous wording
Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $8.8 million for the six months ended June 30, 2026, as compared to the same period in 2025. Higher levels of interest-earning assets resulted in an increase of $9.8 million in interest income, while changes in the volume and mix of interest-bearing liabilities increased interest expense by $1.0 million. Average interest-earning assets for the six months ended June 30, 2026 increased $337.3 million, or 3.1%, compared to the same period in 2025. Average loans for the comparable period increased $262.3 million, or 2.8%, and average investments decreased $39.7 million, or 2.4%. The Center acquisition, in the second quarter of 2025, increased ending loan balances by $292.6 million. Assuming no change in balances, this resulted in an increase in average balances of $194.0 million when comparing the six months ended June 30, 2026 with the prior year.
Current wording
Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $10.2 million for the nine months ended September 30, 2026, as compared to the same period in 2025. Higher levels of interest-earning assets resulted in an increase of $9.1 million in interest income, while changes in the volume and mix of interest-bearing liabilities increased interest expense by $1.1 million. Average interest-earning assets for the nine months ended September 30, 2026 increased $214.1 million, or 1.9%, compared to the same period in 2025. Average loans for the comparable period increased $144.1 million, or 1.5%, and average investments decreased $10.0 million, or 0.6%.
Previous wording
Net interest income was positively impacted by a $162.2 million increase in average net free funds for the six months ended June 30, 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 thesix months ended June 30, 2026 increased$67.9 million, or 3.0%, compared to the same period in 2025.
Current wording
Net interest income was positively impacted by a $139.3 million increase in average net free funds for the nine months ended September 30, 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 thenine months ended September 30, 2026 increased$69.5 million, or 3.0%, compared to the same period in 2025.
Previous wording
The following table reconciles interest income in the Consolidated Statements of Income to net interest income adjusted to a fully taxable equivalent basis for the six months ended June 30:
Current wording
The following table reconciles interest income in the Consolidated Statements of Income to net interest income adjusted to a fully taxable equivalent basis for the nine months ended September 30:
Previous wording
The following is an analysis of the average balance sheet and net interest income on a fully taxable equivalent basis for the six months ended June 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 nine months ended September 30:
Previous wording
(a)Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate for the six months ended June 30, 2026 and 2025.
Current wording
(a)Income on interest-earning assets has been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate for the nine months ended September 30, 2026 and 2025.
Previous wording
The following table shows the effect of changes in volumes and rates on interest income and interest expense for the six months ended June 30, 2026 compared with June 30, 2025:
Current wording
The following table shows the effect of changes in volumes and rates on interest income and interest expense for the nine months ended September 30, 2026 compared with September 30, 2025:
Previous wording
The table below provides a breakout of the provision for credit losses by loan category for the six months ended June 30:
Current wording
The table below provides a breakout of the provision for credit losses by loan category for the nine months ended September 30:
Previous wording
Also impacting provision expense in the six months ended June 30, 2026 was $1.6 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.
Current wording
Additionally, the provision expense for off-balance sheet credit exposures in the nine months ended September 30, 2026 was $1.9 million. The decrease in the level of provision for off-balance sheet exposures in 2026 is primarily due to decreases in commercial and residential construction commitments.
Previous wording
The provision expense for the six months ended June 30, 2025 was impacted by $3.4 million recognized in the second quarter of 2025 as the day-1 non-PCD provision expense resulting from the Center acquisition. Additionally, provision expense in 2025 was impacted by growth in equipment finance and automobile and recreational vehicles loans as well as an increase in the provision for off-balance sheet commitments due to a higher level of commercial construction commitments.
Current wording
The provision expense for the nine months ended September 30, 2025 was impacted by $3.4 million recognized in 2025 as the day-1 non-PCD provision expense resulting from the Center acquisition. Additionally, provision expense in 2025 was impacted by an $8.6 million dealer floor plan relationship moved to nonaccrual as a result of being out of trust on sold vehicles. Also impacting provision expense was a $1.8 million chargeoff for a commercial loan moved to held for sale and $5.2 million related to an increase in the allowance for credit losses as a result of the mix and growth of the loan portfolio.
Previous wording
The allowance for credit losses was $127.4 million, or 1.35%, of total loans and leases outstanding at June 30, 2026, compared to $125.8 million, or 1.32%, at December 31, 2025 and $133.0 million, or 1.39%, at June 30, 2025. Nonperforming loans as a percentage of total loans and leases decreased to 0.86% at June 30, 2026 from 1.04% as of June 30, 2025 and 0.97% at December 31, 2025. The allowance to nonperforming loan ratio was 156.08%, 137.07% and 133.62% as of June 30, 2026, December 31, 2025 and June 30, 2025, respectively.
Current wording
The allowance for credit losses was $133.5 million, or 1.40%, of total loans and leases outstanding at September 30, 2026, compared to $125.8 million, or 1.32%, at December 31, 2025 and $129.6 million, or 1.34%, at September 30, 2025. Nonperforming loans as a percentage of total loans and leases increased to 0.99% at September 30, 2026 from 0.91% as of
Previous wording
Below is an analysis of the consolidated allowance for credit losses for the six months ended June 30, 2026 and 2025 and the year-ended December 31, 2025:
Current wording
Below is an analysis of the consolidated allowance for credit losses for the nine months ended September 30, 2026 and 2025 and the year-ended December 31, 2025:
Previous wording
Total noninterest income for the six months ended June 30, 2026 increased $4.3 million, or 9%, compared to the six months ended June 30, 2025. This is primarily the result of an $1.3 million increase in the gain on sale of mortgage loans, a $0.6 million increase in the gain on sale of other loans and assets and an $0.8 million gain on the early redemption of subordinated debt. Included in gain on sale of other loans and assets for the six months ended June 30, 2026 was $0.4 million related to changes in the value of loans held for sale. Trust income increased $0.9 million due to revenue for assets under management and income from bank owned life insurance increased $0.5 million due to claims received as well as the impact of a stable value wrap restructure completed in the first quarter of 2025. Offsetting these increases, was a decrease of $0.8 million in swap fee income as a result of lower volume for new interest rate swaps entered into by our commercial loan customers.
Current wording
Total noninterest income for the nine months ended September 30, 2026 increased $6.2 million, or 9%, compared to the nine months ended September 30, 2025. Contributing to this increase is a $1.7 million increase in the gain on sale of mortgage loans, a $1.8 million increase in the gain on sale of other loans and assets and an $0.8 million gain on the early redemption of subordinated debt. Included in gain on sale of other loans and assets for the nine months ended September 30, 2026 was $0.4 million related to changes in the value of loans held for sale. Trust income increased $1.4 million due to increased assets under management and income from bank owned life insurance increased $0.8 million primarily due to claims received. Offsetting these increases was a decrease of $0.5 million in insurance and retail brokerage commissions due to lower annuity income and $0.3 million in swap fee income as a result of lower volume for new interest rate swaps entered into by our commercial loan customers.
Previous wording
Items impacting noninterest income in the six months ended June 30, 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.
Current wording
Items impacting noninterest income in the nine months ended September 30, 2025 include gains on the sale of VISA shares of $5.1 million, offset by net security losses of $4.8 million, resulting from the sale of available for sale securities that were sold in order to reinvest into higher yielding investments.
Previous wording
The following table presents the components of noninterest expense for the six months ended June 30:
Current wording
The following table presents the components of noninterest expense for the nine months ended September 30:
Previous wording
Noninterest expense increased $2.3 million, or 2%, for the six months ended June 30, 2026 compared to the same period in 2025. This increase is primarily the result of a $4.6 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 1,562 at June 30, 2025 and 1,589 at June 30, 2026.
Current wording
Noninterest expense increased $7.7 million, or 3%, for the nine months ended September 30, 2026 compared to the same period in 2025. The increase is primarily the result of an $8.2 million increase in salaries and benefits expense. Contributing to the increased salary expense in 2026 wasa higher number of full time equivalent employees, as the number totaled 1,575 at September 30, 2026 compared to 1,548 at September 30, 2025. Also impacting this increase were annual merit increases as well as higher levels of incentive and hospitalization expense. Loss on sale or write-down of other assets increased $1.2 million primarily due to a $0.6 million write-down related to the termination of a capital lease. Other operating expense increased $1.0 million primarily due to a $0.7 million increase in collection and repossession expense as a result of increased foreclosure and repossession activity in 2026.
Previous wording
The decrease of $0.8 million 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. In addition, merger and acquisition related expenses were $4.1 million in the first six months of 2025 due to the Center acquisition with only $0.2 million recognized in the current period.
Current wording
The decrease of $1.0 million in other professional fees and services is a result of services and advisors contracted for in several areas in the prior period, none of which were individually material. In addition, merger and acquisition related expenses were $4.2 million in the first nine months of 2025 due to the Center acquisition with only $0.3 million recognized during the same period in 2026.
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 20.6% and 20.5% for the six months ended June 30, 2026 and 2025, 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 factors and the additional $4.7 million tax benefit from purchased tax credits provided for an effective tax rate of 17.6% and 20.4% for the nine months ended September 30, 2026 and 2025, respectively. The effective tax rate for the nine months ended September 30, 2026, excluding discrete items such as the purchased tax credits, was 20.6%.
Previous wording
We applied the “annual effective tax rate approach” to determine the provision for income taxes, which applies an annual forecast of tax expense as a percentage of expected full year income, for the six months ended June 30, 2026 and 2025.
Current wording
We applied the “annual effective tax rate approach” to determine the provision for income taxes, which applies an annual forecast of tax expense as a percentage of expected full year income, for the nine months ended September 30, 2026 and 2025. The Company estimates the annual effective income tax rate for 2026 to be 20.2%.
Previous wording
As of June 30, 2026, our deferred tax assets totaled $43.2 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 September 30, 2026, our deferred tax assets totaled $53.5 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.
Previous wording
For the three months ended June 30, 2026, First Commonwealth recognized net income of $44.6 million, or $0.44 diluted earnings per share, compared to net income of $33.4 million, or $0.32 diluted earnings per share, in the three months ended June 30, 2025. The increase in net income between the two periods is attributable to a $6.2 million increase in net interest income, a $2.2 million increase in noninterest income, a $3.7 million decrease in the provision for credit losses and a $2.0 million decrease in noninterest expense. Offsetting these positive changes is a $3.0 million increase in income tax expense.
Current wording
For the three months ended September 30, 2026, First Commonwealth recognized net income of $44.9 million, or $0.45 diluted earnings per share, compared to net income of $41.3 million, or $0.39 diluted earnings per share, in the three months ended September 30, 2025. The increase in net income between the two periods is attributable to a $5.2 million increase in net interest income, a $1.9 million increase in noninterest income and a $4.8 million decrease in income tax expense. Offsetting these changes is a $2.9 million increase in the provision for credit losses and a $5.4 million increase in noninterest expense.
Previous wording
For the three months ended June 30, 2026, the Company’s return on average equity was 11.44% and its return on average assets was 1.47%, compared to 8.97% and 1.11%, respectively, for the three months ended June 30, 2025.
Current wording
For the three months ended September 30, 2026, the Company’s return on average equity was 11.44% and its return on average assets was 1.46%, compared to 10.71% and 1.34%, respectively, for the three months ended September 30, 2025.
Previous wording
Net interest income, on a fully taxable equivalent basis, was $112.8 million in the second quarter of 2026, compared to $106.6 million for the same period in 2025. The increase in net interest income can be attributedtoa 28 basis point decrease in the cost of interest-bearing liabilities offset by a 5 basis point decrease in the yield on interest-earning assets. Net interest income comprises the majority of our operating revenue (i.e., net interest income before provision expense plus noninterest income), at 80.6% and 81.1% for the three months ended June 30, 2026 and 2025, respectively.
Current wording
Net interest income, on a fully taxable equivalent basis, was $116.7 million in the third quarter of 2026, compared to $111.5 million for the same period in 2025. The increase in net interest income can be largely attributedtoa 24 basis point decrease in the cost of interest-bearing liabilities. Net interest income comprises the majority of our operating revenue (i.e., net interest income before provision expense plus noninterest income), at 81.3% and 81.7% for the three months ended September 30, 2026 and 2025, respectively.
Previous wording
The net interest margin, on a fully taxable equivalent basis, was 4.01% and 3.83% for the three months ended June 30, 2026 and 2025, respectively.
Current wording
The net interest margin, on a fully taxable equivalent basis, was 4.11% and 3.92% for the three months ended September 30, 2026 and 2025, respectively.
Previous wording
The taxable equivalent yield on interest-earning assets was 5.68% for the three months ended June 30, 2026, a decrease of five basis points compared to the 5.73% yield for the same period in 2025. Contributing to this change is a one basis point decrease in the investment portfolio yield in comparison to the prior year and a decrease of 99 basis points in the yield on interest-bearing balances with banks due to lower market rates. The average investment portfolio balance decreased $9.5 million while the average balance of interest-bearing deposits with banks increased from $59.6 million in 2025 to $158.3 million in 2026.
Current wording
The taxable equivalent yield on interest-earning assets was 5.73% for the three months ended September 30, 2026, which remained unchanged in comparison to the same period in 2025. The yield on investments increased by nine basis points in comparison to the prior year, as replacement rates exceeded the portfolio yield. The yield on interest-bearing balances with banks, which reprices with changes in market rates, decreased 67 basis points as a result of lower market rates. The average investment portfolio balance increased $48.5 million, while the average balance of interest-bearing deposits with banks increased from $40.2 million in 2025 to $51.7 million in 2026.
Previous wording
The loan portfolio yield when compared to the three months ended June 30, 2025, decreased by two basis points. Accretion of purchase accounting marks contributed $1.3 million or five basis points to the yield on interest-earnings assets in the three months ended June 30, 2026. For the three months ended June 30, 2025, accretion of purchase accounting marks contributed$2.6 million, orten basis points, to the yield on interest-earning assets.
Current wording
The loan portfolio yield increased by one basis point compared to the three months ended September 30, 2025. During the three months ended September 30, 2026, one commercial relationship was placed in nonperforming status resulting in the reversal of $0.8 million in interest income. This reversal negatively impacted the yield on interest-earning assets by three basis points for the period. Accretion of purchase accounting marks contributed $1.0 million, or three basis points, to the yield on interest-earnings assets in the three months ended September 30, 2026. For the three months ended September 30, 2025, accretion of purchase accounting marks contributed$1.8 million, orsix basis points, to the yield on interest-earning assets.
Previous wording
The cost of interest-bearing liabilities decreased to 2.31% for the three months ended June 30, 2026, from 2.59% for the same period in 2025, primarily due to decreases in the cost of time and interest-bearing deposits. Comparing the three months ended June 30, 2026 with the comparable period in 2025, average time deposits increased $21.2 million, or 1.2%, while the cost of these deposits decreased 39 basis points. Over this same period, interest-bearing demand and savings deposits increased on average $223.1 million, or 3.7%, compared to the three months ended June 30, 2025 and the cost of those deposits decreased 17 basis points. The cost of short-term borrowings decreased 194 basis points in comparison to the same period last year as a result of changes in market rates.
Current wording
The cost of interest-bearing liabilities decreased to 2.26% for the three months ended September 30, 2026, from 2.50% for the same period in 2025, primarily due to decreases in the cost of interest-bearing deposits as a result of lower market interest rates. Comparing the three months ended September 30, 2026 with the comparable period in 2025, average time deposits decreased $129.5 million, or 7.5%, with the cost of these deposits decreasing 37 basis points. The decline in average time deposits can be attributed to changes in customer preference, as well as the funding mix preferences of the Company. Over this same period, interest-bearing demand and savings deposits increased on average $161.2 million, or 2.7%, compared to the three months ended September 30, 2025, and the cost of those deposits decreased 13 basis points. The cost of short-term borrowings decreased 33 basis points in comparison to the same period last year as a result of changes in market rates.
Previous wording
For the three months ended June 30, 2026, changes in interest rates positively impacted net interest income by $3.5 million when compared with the same period in 2025. The lower yield on loans in 2026 contributed to a lower yield on interest-earning assets, negatively impacting net interest income by $1.1 million, while a decrease in the cost of interest-bearing liabilities positively impacted net interest income by $4.6 million.
Current wording
For the three months ended September 30, 2026, changes in interest rates positively impacted net interest income by $4.1 million as compared with the same period in 2025. The yield on interest-earning assets in 2026 positively impacted net interest income by $0.4 million, while a decrease in the cost of interest-bearing liabilities positively impacted net interest income by $3.6 million.
Previous wording
Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $2.7 million during the three months ended June 30, 2026, as compared to the same period in 2025. The growth and mix of interest-earning assets resulted in an increase of $1.6 million in interest income, while changes in the volume and mix of interest-bearing liabilities decreased interest expense by $1.2 million.
Current wording
Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $1.2 million during the three months ended September 30, 2026, as compared to the same period in 2025. The growth and mix of interest-earning assets resulted in a decrease of $0.8 million in interest income, while changes in the volume and mix of interest-bearing liabilities decreased interest expense by $2.0 million.
Previous wording
Average interest-earning assets for the three months ended June 30, 2026 increased $118.9 million, or 1.1%, compared to the same period in 2025. Average loans for the comparable period increased $29.7 million, or 0.3%, positively impacting interest income by $0.5 million, while average interest-bearing deposits with banks increased $98.7 million, benefiting interest income by $1.2 million. Average interest-bearing liabilities decreased by $6.7 million, favorably impacting net interest income by $1.2 million. Short-term borrowings and long-term debt average balances decreased by $250.9 million, resulting $2.9 million in lower interest expense. Offsetting this benefit were increases in average savings and time deposit balances. Average savings deposits for the three months ended June 30, 2026 increased by $291.1 million compared to the prior period, resulting in additional interest expense of $1.7 million, while average time deposits balances increased by $21.2 million compared to the comparable period in 2025, increasing interest expense by $0.2 million.
Current wording
Average interest-earning assets for the three months ended September 30, 2026 decreased $28.3 million, or 0.3%, compared to the same period in 2025. Average loans for the comparable period decreased $88.3 million, or 0.9%, negatively impacting interest income by $1.4 million, while average interest-bearing deposits with banks increased $11.5 million, benefiting interest income by $0.1 million. Average interest-bearing liabilities decreased by $122.3 million, favorably impacting net interest income by $2.0 million. Short-term borrowings and long-term debt average balances decreased by $154.1 million, resulting in lower interest expense of $1.7 million. Offsetting this benefit were increases in average savings balances. Average savings deposits for the three months ended September 30, 2026 increased by $277.3 million compared to the prior period, resulting in additional interest expense of $1.6 million, while average time deposits balances decreased by $129.5 million compared to the same period in 2025, decreasing interest expense by $1.2 million.
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Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
September 30, 2025 and 0.97% at December 31, 2025. The allowance to nonperforming loan ratio was 140.20%, 137.07% and 148.04% as of September 30, 2026, December 31, 2025 and September 30, 2025, respectively.
Current report — wording carried from elsewhere
The multifamily portfolio comprises 22% of total commercial real estate loans and 24% of total commercial real estate non-pass loans. The average loan commitment size for the multifamily portfolio is $3.2 million and the average outstanding balance as of September 30, 2026 is $2.4 million. Within the multifamily portfolio, exposures over $1.0 million have an average debt service coverage ratio of 1.35x, which exceeds our internal guidelines of 1.25x to 1.30x, depending on property class. Additionally, for loans with exposure over $1.0 million, the multifamily portfolio has a weighted average loan to value of 59.14% compared to internal guidelines of 75-80%, depending on property class. Our current measure is based off of the most recent appraisals on file, the majority of which are from origination.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
We applied the “annual effective tax rate approach” to determine the provision for income taxes, which applies an annual forecast of tax expense as a percentage of expected full year income, for the three months ended June 30, 2026 and 2025.