[Management View]
First Commonwealth Financial (FCF) reported core earnings per share of $0.38 for Q2 2025, surpassing consensus estimates by $0.03. Key metrics included a net interest margin (NIM) of 3.83%, driven by improved loan yields and lower deposit costs. The integration of Center Bank added $295 million in loans and $278 million in deposits, enhancing the company's presence in Cincinnati.

[Outlook]
Management projects NIM to reach the low-to-mid 3.90% range by year-end 2025, assuming two Fed rate cuts. Without cuts, NIM could increase an additional five basis points. The company aims to continue disciplined organic and small-scale acquisition growth, with a focus on Ohio and Western Pennsylvania markets.

[Financial Performance]
- Core EPS: $0.38 (non-GAAP) for Q2 2025, up from $0.32 in Q1 2025.
- Net Interest Margin: Increased 21 basis points to 3.83%.
- Net Interest Income: Rose by $10.7 million to $106.2 million.
- Loan Growth: Total loans rose 8.1% annualized QoQ.
- Deposits: Total deposits increased to $10.1 billion, up 9% YTD.
- Noninterest Income: Increased $2.3 million to $24.7 million.
- Provision Expense: $12.6 million, with $3.8 million attributed to CECL provision for Center Bank.

[Q&A Highlights]
Question 1: Did you give a guidance range for expenses in the third quarter or the back half of the year?
Answer: No specific guidance was given, but consensus estimates for Q3 and Q4 are $72.8 million and $73.1 million, respectively. Expenses and noninterest income are expected to trail off in Q4 due to seasonality.

Question 2: What is your appetite for share repurchases given the current stock price?
Answer: The company will re-enter the market after the blackout period, setting a price cap around $17-$17.50 per share. They aim to keep dry powder for dips in the stock price.

Question 3: Can you give color on where you think charge-offs will trend from here?
Answer: Charge-offs have been at acceptable levels, with equipment finance and indirect outperforming industry peers. The company expects charge-offs to return to a mid-20 basis point range.

Question 4: Any guidepost on loan yield trends in July and how it frames up for the quarter?
Answer: Loan yields have been consistent, with commercial fixed loans contributing significantly. The company expects these dynamics to persist even with potential Fed rate cuts.

Question 5: What are your priorities for M&A?
Answer: The company is interested in smaller deals with low-risk execution. They focus on leveraging acquisitions to enhance their existing verticals and maintain a disciplined approach to pricing.

Question 6: Can you expand on the strong organic loan growth and pipeline momentum?
Answer: The pipeline is strong, with some expected payoffs in Q3. Equipment finance growth is expected to moderate as the portfolio seasons, but the company remains pleased with the credit quality and incremental value from this segment.

Question 7: Can you comment on the mix of loan growth and its sustainability?
Answer: The company aims to maintain mid-single-digit growth, with a focus on C&I and commercial real estate loans. They also emphasize the importance of credit access for good consumers and small businesses.

Question 8: Can you dive into the dynamics of NIM guidance and expected loan yield pressure?
Answer: The company expects some pressure on the margin due to increased deposit rates to fund loan growth. The model predicts NIM in the low to mid-3.90s, with potential upside if the Fed does not cut rates.

Question 9: What is your market share position and growth potential in your current markets?
Answer: The company believes there is significant room for growth in existing markets like Cincinnati, Cleveland, Columbus, and Pittsburgh. They aim to build a bank twice the current size by leveraging opportunities in these areas.

Question 10: What percentage of your total nonaccrual portfolio does the floor plan nonaccrual represent?
Answer: The floor plan nonaccrual represents just over 30% of total nonaccruals. The remainder of the increase in NPLs was from the Center Bank acquisition.

[Sentiment Analysis]
The tone of the management was optimistic, focusing on strong financial performance and strategic growth. Analysts' questions were centered on expense guidance, share repurchases, loan growth, and market opportunities, indicating a positive outlook on the company's future prospects.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 |
|-------------------------|---------------|---------------|
| Core EPS (non-GAAP) | $0.38 | $0.32 |
| Net Interest Margin | 3.83% | 3.62% |
| Net Interest Income | $106.2 million| $95.5 million |
| Loan Growth (annualized)| 8.1% | N/A |
| Total Deposits | $10.1 billion | N/A |
| Noninterest Income | $24.7 million | $22.4 million |
| Provision Expense | $12.6 million | N/A |

[Risks and Concerns]
- Nonperforming loans increased by $40.1 million, primarily due to a single commercial floor plan credit and the Center Bank acquisition.
- Higher deposit rates to secure growth may pressure margins.
- Potential competitive pressures on loan spreads and deposit costs.

[Final Takeaway]
First Commonwealth Financial delivered strong financial performance in Q2 2025, with significant growth in loans and deposits, and an expanding net interest margin. The integration of Center Bank has bolstered their presence in key markets, and management remains optimistic about future growth. However, the increase in nonperforming loans and potential margin pressures due to higher deposit rates are areas to watch. Overall, the company is well-positioned for continued success through disciplined execution and strategic acquisitions.