Equibles

10-Q

FIRST COMMONWEALTH FINANCIAL CORP /PA/ (FCF)

10-Q 2024-11-12 For: 2024-09-30
View Original
Added on April 11, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to

Commission File Number 001-11138

First Commonwealth Financial Corporation

(Exact name of registrant as specified in its charter)

Pennsylvania 25-1428528
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
601 Philadelphia Street
Indiana PA 15701
(Address of principal executive offices) (Zip Code)

724-349-7220

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $1.00 par value FCF New York Stock Exchange

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x    Accelerated filer  ¨    Smaller reporting company ☐ Emerging growth company  ☐

Non-accelerated filer  ¨ (Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No x

The number of shares outstanding of issuer’s common stock, $1.00 par value, as of November 11, 2024, was 101,782,705.

Table of Contents

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

FORM 10-Q

INDEX

PAGE
PART I. Financial Information
ITEM 1. Financial Statements and Supplementary Data
Included in Part I of this report:
First Commonwealth Financial Corporation and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited) 3
Consolidated Statements of Income (Unaudited) 4
Consolidated Statements of Comprehensive Income (Unaudited) 6
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) 7
Consolidated Statements of Cash Flows (Unaudited) 9
Notes to the Unaudited Consolidated Financial Statements 10
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 62
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 89
ITEM 4. Controls and Procedures 89
PART II. Other Information
ITEM 1. Legal Proceedings 90
ITEM 1A. Risk Factors 90
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 90
ITEM 3. Defaults Upon Senior Securities 90
ITEM 4. Mine Safety Disclosures 90
ITEM 5. Other Information 90
ITEM 6. Exhibits 91
Signatures 92

Table of Contents

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

September 30, 2024 December 31, 2023
(dollars in thousands, except share data)
Assets
Cash and due from banks $ 126,598 $ 125,436
Interest-bearing bank deposits 455,711 21,557
Securities available for sale, at fair value 1,140,800 1,020,986
Securities held to maturity, at amortized cost (Fair value of $373,160 and $350,595 at September 30, 2024 and December 31, 2023, respectively) 430,425 419,009
Other investments 24,592 50,871
Loans held for sale 46,785 29,820
Loans and leases:
Portfolio loans and leases 8,965,500 8,968,761
Allowance for credit losses (126,112) (117,718)
Net loans and leases 8,839,388 8,851,043
Premises and equipment, net 116,752 121,015
Other real estate owned 669 422
Goodwill 363,715 363,715
Amortizing intangibles, net 20,457 22,820
Bank owned life insurance 228,601 228,479
Other assets 188,706 204,315
Total assets $ 11,983,199 $ 11,459,488
Liabilities
Deposits (all domestic):
Noninterest-bearing $ 2,463,971 $ 2,388,533
Interest-bearing 7,281,581 6,803,776
Total deposits 9,745,552 9,192,309
Short-term borrowings 538,828 597,835
Subordinated debentures 128,266 177,741
Other long-term debt 3,548 4,122
Capital lease obligation 4,471 4,894
Total long-term debt 136,285 186,757
Other liabilities 152,918 168,313
Total liabilities 10,573,583 10,145,214
Shareholders’ Equity
Preferred stock, $1 par value per share, 3,000,000 shares authorized, none issued — —
Common stock, $1 par value per share, 200,000,000 shares authorized; 123,603,380 shares issued at both September 30, 2024 and December 31, 2023, respectively, and 102,237,941 and 102,114,664 shares outstanding at September 30, 2024 and December 31, 2023, respectively 123,603 123,603
Additional paid-in capital 631,408 630,154
Retained earnings 948,464 881,112
Accumulated other comprehensive loss, net (83,086) (111,756)
Treasury stock (21,365,439 and 21,488,716 shares at September 30, 2024 and December 31, 2023, respectively) (210,773) (208,839)
Total shareholders’ equity 1,409,616 1,314,274
Total liabilities and shareholders’ equity $ 11,983,199 $ 11,459,488

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

Table of Contents

ITEM 1. Financial Statements and Supplementary Data (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2024 2023 2024 2023
(dollars in thousands, except share data)
Interest Income
Interest and fees on loans and leases $ 137,555 $ 129,373 $ 405,989 $ 357,735
Interest and dividends on investments:
Taxable interest 12,381 6,229 34,356 17,652
Interest exempt from federal income taxes 105 114 320 345
Dividends 444 823 1,498 2,110
Interest on bank deposits 3,838 3,346 8,304 7,899
Total interest income 154,323 139,885 450,467 385,741
Interest Expense
Interest on deposits 49,663 32,685 140,387 74,104
Interest on short-term borrowings 6,279 6,643 19,383 14,237
Interest on subordinated debentures 1,786 2,707 6,637 7,175
Interest on other long-term debt 35 41 109 130
Interest on lease obligations 45 52 140 156
Total interest expense 57,808 42,128 166,656 95,802
Net Interest Income 96,515 97,757 283,811 289,939
Provision for credit losses 10,615 5,885 22,680 6,025
Provision for credit losses - acquisition day 1 non-PCD — — — 10,653
Net Interest Income after Provision for Credit Losses 85,900 91,872 261,131 273,261
Noninterest Income
Net securities gains (losses) 88 (103) (5,447) (103)
Gain on VISA exchange and sale 106 — 5,664 —
Trust income 3,242 2,949 8,790 7,967
Service charges on deposit accounts 5,840 5,600 16,769 15,842
Insurance and retail brokerage commissions 2,663 2,305 7,618 7,171
Income from bank owned life insurance 2,278 1,242 4,943 3,664
Gain on sale of mortgage loans 1,151 1,270 4,150 3,175
Gain on sale of other loans and assets 2,576 1,027 6,035 5,004
Card-related interchange income 4,137 7,221 17,964 21,422
Derivatives mark to market (153) 35 (141) 27
Swap fee income 88 452 88 1,029
Other income 2,682 2,828 7,463 7,114
Total noninterest income 24,698 24,826 73,896 72,312
Noninterest Expense
Salaries and employee benefits 38,618 35,640 111,262 106,639
Net occupancy 4,858 4,782 15,014 14,584
Furniture and equipment 4,335 4,414 13,093 12,936
Data processing 3,879 3,857 11,543 11,024
Advertising and promotion 1,960 1,662 4,177 4,652
Pennsylvania shares tax 1,126 1,588 3,454 4,013
Intangible amortization 1,223 1,344 3,656 3,773
Other professional fees and services 1,448 1,603 3,976 4,376
FDIC insurance 1,638 1,920 4,537 4,614
Loss on sale or write-down of assets 132 50 352 97
Litigation and operational losses 2,181 1,626 3,672 3,263
Loss on early redemption of subordinated debt — — 369 —
Merger and acquisition related — 379 114 8,860
Other operating 8,672 8,548 26,222 25,906
Total noninterest expense 70,070 67,413 201,441 204,737

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

Table of Contents

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2024 2023 2024 2023
(dollars in thousands, except share data)
Income Before Income Taxes 40,528 49,285 133,586 140,836
Income tax provision 8,442 10,054 26,863 28,600
Net Income $ 32,086 $ 39,231 $ 106,723 $ 112,236
Average Shares Outstanding 102,069,233 102,159,213 102,032,702 101,428,065
Average Shares Outstanding Assuming Dilution 102,418,964 102,442,878 102,293,213 101,674,970
Per Share Data: Basic Earnings per Share $ 0.31 $ 0.38 $ 1.05 $ 1.11
Diluted Earnings per Share $ 0.31 $ 0.38 $ 1.04 $ 1.10
Cash Dividends Declared per Common Share $ 0.130 $ 0.125 $ 0.385 $ 0.370

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

Table of Contents

ITEM 1. Financial Statements and Supplementary Data (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

For the Three Months Ended For the Nine Months Ended
September 30, September 30,
2024 2023 2024 2023
(dollars in thousands)
Net Income $ 32,086 $ 39,231 $ 106,723 $ 112,236
Other comprehensive income (loss), before tax (expense) benefit:
Unrealized holding gains (losses) on securities arising during the period 30,372 (21,389) 18,578 (25,150)
Reclassification adjustment for (gains) losses included in net income (88) 103 5,447 103
Unrealized holding gains on derivatives arising during the period 8,108 2,111 12,266 4,336
Total other comprehensive income (loss), before tax (expense) benefit 38,392 (19,175) 36,291 (20,711)
Income tax (expense) benefit related to items of other comprehensive income (loss) (8,062) 3,672 (7,621) 4,349
Total other comprehensive income (loss) 30,330 (15,503) 28,670 (16,362)
Comprehensive Income $ 62,416 $ 23,728 $ 135,393 $ 95,874

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

Table of Contents

ITEM 1. Financial Statements and Supplementary Data (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

Common<br>Stock Additional<br>Paid-in-<br>Capital Retained<br>Earnings Accumulated<br>Other<br>Comprehensive<br>Income (Loss),<br>net Treasury<br>Stock Total<br>Shareholders’<br>Equity
Balance at December 31, 2023 $ 123,603 $ 630,154 $ 881,112 $ (111,756) $ (208,839) $ 1,314,274
Net income 106,723 106,723
Other comprehensive income 28,670 28,670
Cash dividends declared (0.385 per share) (39,371) (39,371)
Treasury stock acquired (4,554) (4,554)
Treasury stock reissued 313 — 2,216 2,529
Restricted stock — 941 — 404 1,345
Balance at September 30, 2024 $ 123,603 $ 631,408 $ 948,464 $ (83,086) $ (210,773) $ 1,409,616

All values are in US Dollars.

Common<br>Stock Additional<br>Paid-in-<br>Capital Retained<br>Earnings Accumulated<br>Other<br>Comprehensive<br>Income (Loss),<br>net Treasury<br>Stock Total<br>Shareholders’<br>Equity
Balance at December 31, 2022 $ 113,915 $ 497,431 $ 774,863 $ (137,692) $ (196,443) $ 1,052,074
Net income 112,236 112,236
Other comprehensive loss (16,362) (16,362)
Cash dividends declared (0.370 per share) (38,050) (38,050)
Treasury stock acquired (14,105) (14,105)
Treasury stock reissued 660 — 1,551 2,211
Restricted stock — 488 — 684 1,172
Common stock issuance 9,688 131,667 141,355
Balance at September 30, 2023 $ 123,603 $ 630,246 $ 849,049 $ (154,054) $ (208,313) $ 1,240,531

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

Table of Contents

ITEM 1. Financial Statements and Supplementary Data (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

Common<br>Stock Additional<br>Paid-in-<br>Capital Retained<br>Earnings Accumulated<br>Other<br>Comprehensive<br>Income (Loss),<br>net Treasury<br>Stock Total<br>Shareholders’<br>Equity
Balance at June 30, 2024 $ 123,603 $ 630,910 $ 929,686 $ (113,416) $ (208,278) $ 1,362,505
Net income 32,086 32,086
Other comprehensive income 30,330 30,330
Cash dividends declared (0.130 per share) (13,308) (13,308)
Treasury stock acquired (2,482) (2,482)
Treasury stock reissued — — — —
Restricted stock — 498 — (13) 485
Balance at September 30, 2024 $ 123,603 $ 631,408 $ 948,464 $ (83,086) $ (210,773) $ 1,409,616

All values are in US Dollars.

Common<br>Stock Additional<br>Paid-in-<br>Capital Retained<br>Earnings Accumulated<br>Other<br>Comprehensive<br>Income (Loss),<br>net Treasury<br>Stock Total<br>Shareholders’<br>Equity
Balance at June 30, 2023 $ 123,603 $ 630,246 $ 822,619 $ (138,551) $ (205,498) $ 1,232,419
Net income 39,231 39,231
Other comprehensive loss (15,503) (15,503)
Cash dividends declared (0.125 per share) (12,801) (12,801)
Treasury stock acquired (3,216) (3,216)
Treasury stock reissued — — — —
Restricted stock — — — 401 401
Balance at September 30, 2023 $ 123,603 $ 630,246 $ 849,049 $ (154,054) $ (208,313) $ 1,240,531

All values are in US Dollars.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

8

Table of Contents

ITEM 1. Financial Statements and Supplementary Data (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

For the Nine Months Ended
September 30,
2024 2023
Operating Activities (dollars in thousands)
Net income $ 106,723 $ 112,236
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for credit losses 22,680 16,678
Deferred tax expense 1,888 3,179
Depreciation and amortization 3,629 2,831
Net gains on securities and other assets (9,714) (7,701)
Net amortization of premiums and discounts on securities 635 1,052
Loss on early redemption of subordinated debentures 369 —
Income from increase in cash surrender value of bank owned life insurance (3,935) (3,627)
Decrease (increase) in interest receivable 2,771 (5,156)
Mortgage loans originated for sale (185,514) (137,721)
Proceeds from sale of mortgage loans 162,210 128,270
Increase in interest payable 17,601 3,937
Increase (decrease) in income taxes payable 1,461 (1,905)
Other, net (4,858) (5,336)
Net cash provided by operating activities 115,946 106,737
Investing Activities
Transactions with securities held to maturity:
Proceeds from maturities and redemptions 43,400 31,394
Purchases (55,276) (200)
Transactions with securities available for sale:
Proceeds from sales 69,598 33,756
Proceeds from maturities and redemptions 140,079 75,593
Purchases (311,088) (155,782)
Proceeds from sale of equity securities 5,664 —
Purchases of FHLB stock (26,117) (83,218)
Proceeds from the redemption of FHLB stock 51,946 73,311
Proceeds from the redemption of other investments 450 —
Proceeds from bank owned life insurance 3,813 2,246
Proceeds from sale of loans 73,756 110,695
Proceeds from sale of other assets 4,986 2,836
Net cash received from business acquisition — 14,492
Net increase in loans and leases (69,614) (435,093)
Purchases of premises and equipment and other assets (11,771) (19,020)
Net cash used in investing activities (80,174) (348,990)
Financing Activities
Net decrease in other short-term borrowings (59,007) (1,368)
Net increase in deposits 553,269 479,307
Repayments of other long-term debt (574) (553)
Repayments of capital lease obligation (423) (397)
Repayments of subordinated debentures (50,000) —
Dividends paid (39,371) (38,050)
Proceeds from reissuance of treasury stock 204 245
Purchase of treasury stock (4,554) (14,105)
Net cash provided by financing activities 399,544 425,079
Net increase in cash and cash equivalents 435,316 182,826
Cash and cash equivalents at January 1 146,993 154,244
Cash and cash equivalents at September 30 $ 582,309 $ 337,070

The accompanying notes are an integral part of these unaudited consolidated financial statements.

9

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Basis of Presentation

The accounting and reporting policies of First Commonwealth Financial Corporation and subsidiaries (“First Commonwealth” or the “Company”) conform with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual realized amounts could differ from those estimates. In the opinion of management, the unaudited interim consolidated financial statements include all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of First Commonwealth’s financial position, results of operations, comprehensive income, cash flows and changes in shareholders’ equity as of and for the periods presented. Certain information and Note disclosures normally included in Consolidated Financial Statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC.

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks, federal funds sold and interest-bearing bank deposits. Generally, federal funds are sold for one-day periods.

The results of operations for the nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the full year of 2024. These interim financial statements should be read in conjunction with First Commonwealth’s 2023 Annual Report on Form 10-K.

Note 2 Acquisition

On January 31, 2023, the Company completed its acquisition of Centric Financial Corporation (“Centric”) and its banking subsidiary, Centric Bank, for consideration of 9,688,478 shares of the Company's common stock. Through the acquisition, the Company obtained seven full-service banking offices and one loan production office in the Harrisburg, Philadelphia and Lancaster Metropolitan Service Areas ("MSAs").

The table below summarizes the net assets acquired (at fair value) and consideration transferred in connection with the Centric acquisition (dollars in thousands):

Consideration paid
Cash paid to shareholders - fractional shares $ 1
Shares issued to shareholders (9,688,478 shares) 141,355
Total consideration paid $ 141,356
Fair value of assets acquired
Cash and due from banks 14,492
Investment securities 34,302
FHLB stock 7,658
Loans 923,555
Premises and equipment 17,186
Core deposit intangible 16,671
Bank owned life insurance 4,502
Other assets 17,391
Total assets acquired 1,035,757
Fair value of liabilities assumed
Deposits 757,003
Borrowings 179,301
Other liabilities 18,484
Total liabilities assumed 954,788
Total fair value of identifiable net assets 80,969
Goodwill $ 60,387

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company determined that this acquisition constitutes a business combination and therefore was accounted for using the acquisition method of accounting. Accordingly, as of the date of the acquisition, the Company recorded the assets acquired, liabilities assumed and consideration paid at fair value. The $60.4 million excess of the consideration paid over the fair value of assets acquired was recorded as goodwill and is not amortizable or deductible for tax purposes. The amount of goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company with Centric.

The fair value of the 9,688,478 common shares issued was determined based on the $14.59 closing market price of the Company's common shares on the acquisition date, January 31, 2023.

The valuation of the acquired assets and liabilities was completed in the second quarter of 2023. The following is a description of the valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed. The Company used an independent valuation specialist to assist with the determination of fair values for certain acquired assets and assumed liabilities.

Cash and due from banks - The estimated fair value was determined to approximate the carrying amount of these assets.

Investment securities - The estimated fair value of the investment portfolio was based on quoted market prices, dealer quotes, and pricing obtained from independent pricing services.

Loans - The estimated fair value of loans was based on a discounted cash flow methodology applied on a pooled basis for non- purchased credit-deteriorated ("non-PCD") loans and on an individual basis for purchased credit-deteriorated ("PCD") loans. The valuation considered underlying characteristics including loan type, term, rate, payment schedule and credit rating. Other factors included assumptions related to prepayments, the probability of default and loss given default. The discount rates applied were based on a build-up approach considering the funding mix, servicing costs, liquidity premium and factors related to performance risk.

Acquired loans are classified into two categories: PCD loans and non-PCD loans. PCD loans are defined as a loan or group of loans that have experienced more than insignificant credit deterioration since origination. Non-PCD loans will have an allowance established on acquisition date, which is recognized as an expense through provision for credit losses. For PCD loans, an allowance is recognized on day 1 by adding it to the fair value of the loan, which is the “Day 1 amortized cost”. There is no provision for credit loss expense recognized on PCD loans because the initial allowance is established by grossing-up the amortized cost of the PCD loan.

A day 1 allowance for credit losses on non-PCD loans of $10.7 million was recorded through the provision for credit losses within the Consolidated Statements of Income. At the date of acquisition, of the $979.5 million of loans acquired from Centric, $304.7 million, or 31.1%, of Centric's loan portfolio, was accounted for as PCD loans as of February 1, 2023.

Premise and equipment - The estimated fair value of land and buildings were determined by independent market-based appraisals.

Core deposit intangible - The core deposit intangible was valued utilizing the cost savings method approach, which recognizes the cost savings represented by the expense of maintaining the core deposit base versus the cost of an alternative funding source. The valuation incorporates assumptions related to account retention, discount rates, deposit interest rates, deposit maintenance costs and alternative funding rates.

Time deposits - The estimated fair value of time deposits was determined using a discounted cash flow approach incorporating a discount rate equal to current market interest rates offered on time deposits with similar terms and maturities.

Borrowings - The estimated fair value of short-term borrowings was determined to approximate stated value. Subordinated debentures were valued using a discounted cash flow approach incorporating a discount rate that incorporated similar terms, maturities and credit ratings.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides details related to the fair value of acquired PCD loans as of January 31, 2023.

Unpaid Principal Balance PCD Allowance for Credit Loss at Acquisition (Discount) Premium on Acquired Loans Fair Value of PCD Loans at Acquisition
(dollars in thousands)
Commercial, financial, agricultural and other $ 84,095 $ (19,417) $ 117 $ 64,795
Time and demand 84,095 (19,417) 117 64,795
Real estate construction 29,947 (287) (479) 29,181
Construction other 16,978 (227) (179) 16,572
Construction residential 12,969 (60) (300) 12,609
Residential real estate 16,564 (527) (496) 15,541
Residential first lien 13,740 (197) (264) 13,279
Residential junior lien/home equity 2,824 (330) (232) 2,262
Commercial real estate 174,002 (6,971) (6,073) 160,958
Multifamily 13,169 (234) (1,413) 11,522
Non-owner occupied 97,324 (2,739) (1,902) 92,683
Owner occupied 63,509 (3,998) (2,758) 56,753
Loans to individuals 62 (3) (3) 56
Automobile and recreational vehicles 62 (3) (3) 56
Total loans and leases $ 304,670 $ (27,205) $ (6,934) $ 270,531

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table provides details related to the fair value and Day 1 provision related to the acquired non-PCD loans as of January 31, 2023.

Unpaid Principal Balance (Discount) premium on acquired loans Fair Value of Non-PCD Loans at Acquisition Day 1 Provision for Credit Losses - Non-PCD Loans
(dollars in thousands)
Commercial, financial, agricultural and other $ 167,606 $ (5,451) $ 162,155 $ 3,482
Time and demand 165,878 (5,342) 160,536 3,436
Equipment finance 4 — 4 —
Time and demand other 1,724 (109) 1,615 46
Real estate construction 52,773 (1,126) 51,647 1,638
Construction other 34,801 (971) 33,830 1,146
Construction residential 17,972 (155) 17,817 492
Residential real estate 75,041 (2,593) 72,448 614
Residential first lien 53,612 (1,981) 51,631 437
Residential junior lien/home equity 21,429 (612) 20,817 177
Commercial real estate 378,777 (12,607) 366,170 4,911
Multifamily 45,475 (1,203) 44,272 514
Non-owner occupied 182,793 (5,660) 177,133 2,111
Owner occupied 150,509 (5,744) 144,765 2,286
Loans to individuals 640 (36) 604 8
Automobile and recreational vehicles 449 (25) 424 4
Consumer other 191 (11) 180 4
Total loans and leases $ 674,837 $ (21,813) $ 653,024 $ 10,653

Costs related to the acquisition totaled $9.1 million. These amounts were expensed as incurred and are recorded as a merger and acquisition related expense in the Consolidated Statements of Income.

As a result of the full integration of the operations of Centric, it is not practicable to determine revenue or net income included in the Company's operating results relating to Centric since the date of acquisition as Centric results cannot be separately identified.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 3 Supplemental Comprehensive Income Disclosures

The following table identifies the related tax effects allocated to each component of other comprehensive income (“OCI”) in the unaudited Consolidated Statements of Comprehensive Income. Reclassification adjustments related to securities available for sale are included in the "Net securities gains" line in the unaudited Consolidated Statements of Income.

For the Nine Months Ended September 30,
2024 2023
Pretax Amount Tax (Expense) Benefit Net of Tax Amount Pretax Amount Tax (Expense) Benefit Net of Tax Amount
(dollars in thousands)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period $ 18,578 $ (3,901) $ 14,677 $ (25,150) $ 5,282 $ (19,868)
Reclassification adjustment for losses on securities included in net income 5,447 (1,144) 4,303 103 (22) 81
Total unrealized gains (losses) on securities 24,025 (5,045) 18,980 (25,047) 5,260 (19,787)
Unrealized gains on derivatives:
Unrealized holding gains on derivatives arising during the period 12,266 (2,576) 9,690 4,336 (911) 3,425
Total unrealized gains on derivatives 12,266 (2,576) 9,690 4,336 (911) 3,425
Total other comprehensive income (loss) $ 36,291 $ (7,621) $ 28,670 $ (20,711) $ 4,349 $ (16,362)
For the Three Months Ended September 30,
--- --- --- --- --- --- --- --- --- --- --- --- ---
2024 2023
Pretax Amount Tax (Expense) Benefit Net of Tax Amount Pretax Amount Tax (Expense) Benefit Net of Tax Amount
(dollars in thousands)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) on securities arising during the period $ 30,372 $ (6,377) $ 23,995 $ (21,389) $ 4,138 $ (17,251)
Reclassification adjustment for (gains) losses on securities included in net income (88) 18 (70) 103 (22) 81
Total unrealized gains (losses) on securities 30,284 (6,359) 23,925 (21,286) 4,116 (17,170)
Unrealized gains on derivatives:
Unrealized holding gains on derivatives arising during the period 8,108 (1,703) 6,405 2,111 (444) 1,667
Total unrealized gains on derivatives 8,108 (1,703) 6,405 2,111 (444) 1,667
Total other comprehensive income (loss) $ 38,392 $ (8,062) $ 30,330 $ (19,175) $ 3,672 $ (15,503)

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table details the change in components of OCI for the nine months ended September 30:

2024 2023
Securities Available for Sale Post-Retirement Obligation Derivatives Accumulated Other Comprehensive Income (Loss) Securities Available for Sale Post-Retirement Obligation Derivatives Accumulated Other Comprehensive Income (Loss)
(dollars in thousands)
Balance at December 31 $ (92,340) $ 344 $ (19,760) $ (111,756) $ (107,471) $ 268 $ (30,489) $ (137,692)
Other comprehensive income (loss) before reclassification adjustment 14,677 — 9,690 24,367 (19,868) — 3,425 (16,443)
Amounts reclassified from accumulated other comprehensive (loss) income 4,303 — — 4,303 81 — — 81
Net other comprehensive income (loss) during the period 18,980 — 9,690 28,670 (19,787) — 3,425 (16,362)
Balance at September 30 $ (73,360) $ 344 $ (10,070) $ (83,086) $ (127,258) $ 268 $ (27,064) $ (154,054)

The following table details the change in components of OCI for the three months ended September 30:

2024 2023
Securities Available for Sale Post-Retirement Obligation Derivatives Accumulated Other Comprehensive Income (Loss) Securities Available for Sale Post-Retirement Obligation Derivatives Accumulated Other Comprehensive Income (Loss)
(dollars in thousands)
Balance at June 30 $ (97,285) $ 344 $ (16,475) $ (113,416) $ (110,088) $ 268 $ (28,731) $ (138,551)
Other comprehensive income (loss) before reclassification adjustment 23,995 — 6,405 30,400 (17,251) — 1,667 (15,584)
Amounts reclassified from accumulated other comprehensive (loss) income (70) — — (70) 81 — — 81
Net other comprehensive income (loss) during the period 23,925 — 6,405 30,330 (17,170) — 1,667 (15,503)
Balance at September 30 $ (73,360) $ 344 $ (10,070) $ (83,086) $ (127,258) $ 268 $ (27,064) $ (154,054)

Note 4 Supplemental Cash Flow Disclosures

The following table presents information related to cash paid during the period for interest and income taxes, as well as detail on non-cash investing and financing activities for the nine months ended September 30:

2024 2023
(dollars in thousands)
Cash paid during the period for:
Interest $ 148,897 $ 92,376
Income taxes 22,946 26,874
Non-cash investing and financing activities:
Loans transferred to other real estate owned and repossessed assets 4,472 2,933
Loans transferred from held to maturity to held for sale 65,427 117,143
Loans transferred from held for sale to held to maturity (3,127) (519)
Gross increase (decrease) in market value adjustment to securities available for sale 24,025 (25,047)
Gross increase in market value adjustment to derivatives 12,266 4,336
Increase in limited partnership investment unfunded commitment — 1,320
Noncash treasury stock reissuance 2,325 1,966
Net assets acquired through acquisition — 66,477

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5 Earnings per Share

The following table summarizes the composition of the weighted-average common shares (denominator) used in the basic and diluted earnings per share computations:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
Weighted average common shares issued 123,603,380 123,603,380 123,603,380 122,503,223
Average treasury stock shares (21,238,907) (21,222,298) (21,322,792) (20,849,426)
Average deferred compensation shares (57,617) (56,402) (57,298) (56,029)
Average unearned non-vested shares (237,623) (165,467) (190,588) (169,703)
Weighted average common shares and common stock equivalents used to calculate basic earnings per share 102,069,233 102,159,213 102,032,702 101,428,065
Additional common stock equivalents (non-vested stock) used to calculate diluted earnings per share 292,820 226,939 203,600 190,178
Additional common stock equivalents (deferred compensation) used to calculate diluted earnings per share 56,911 56,726 56,911 56,727
Weighted average common shares and common stock equivalents used to calculate diluted earnings per share 102,418,964 102,442,878 102,293,213 101,674,970
Per Share Data:
Basic Earnings per Share $ 0.31 $ 0.38 $ 1.05 $ 1.11
Diluted Earnings per Share $ 0.31 $ 0.38 $ 1.04 $ 1.10

The following table shows the number of shares and the price per share related to common stock equivalents that were not included in the computation of diluted earnings per share for the nine months ended September 30, because to do so would have been antidilutive.

2024 2023
Price Range Price Range
Shares From To Shares From To
Restricted Stock 140,439 $ 12.39 $ 18.08 137,169 $ 12.70 $ 16.43
Restricted Stock Units 34,700 $ 17.09 $ 17.09 32,470 $ 17.53 $ 17.53

Note 6 Commitments and Contingent Liabilities

Commitments and Letters of Credit

Standby letters of credit and commercial letters of credit are conditional commitments issued by First Commonwealth to guarantee the performance of a customer to a third party. The contract or notional amount of these instruments reflects the maximum amount of future payments that First Commonwealth could be required to pay under the guarantees if there were a total default by the guaranteed parties, without consideration of possible recoveries under recourse provisions or from collateral held or pledged. In addition, many of these commitments are expected to expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements.

The following table identifies the notional amount of those instruments at the date shown below:

September 30, 2024 December 31, 2023
(dollars in thousands)
Financial instruments whose contract amounts represent credit risk:
Commitments to extend credit $ 2,290,477 $ 2,517,905
Financial standby letters of credit 14,493 14,300
Performance standby letters of credit 17,926 17,194
Commercial letters of credit 152 555

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The notional amounts outstanding as of September 30, 2024 include amounts issued in 2024 of $1.9 million in performance standby letters of credit and $1.2 million in financial standby letters of credit. There were no commercial letters of credit issued in 2024. A liability of $0.2 million and $0.1 million has been recorded as of September 30, 2024 and December 31, 2023, respectively, which represents the estimated fair value of letters of credit issued. The fair value of letters of credit is estimated based on the unrecognized portion of fees received at the time the commitment was issued.

Unused commitments and letters of credit provide exposure to future credit loss in the event of nonperformance by the borrower or guaranteed parties. Management’s evaluation of the credit risk related to these commitments resulted in the recording of a liability of $4.1 million and $7.3 million as of September 30, 2024 and December 31, 2023, respectively. This liability is reflected in "Other liabilities" in the unaudited Consolidated Statements of Financial Condition. The credit risk evaluation incorporates the expected loss percentage calculated for comparable loan categories as part of the allowance for credit losses for loans as well as estimated utilization for each loan category.

Legal Proceedings

First Commonwealth and its subsidiaries are subject in the normal course of business to various pending and threatened legal proceedings in which claims for monetary damages are asserted. As of September 30, 2024, management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against First Commonwealth or its subsidiaries will be material to First Commonwealth’s consolidated financial position. On at least a quarterly basis, First Commonwealth assesses its liabilities and contingencies in connection with such legal proceedings. For those matters where it is probable that First Commonwealth will incur losses and the amounts of the losses can be reasonably estimated, First Commonwealth records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability (if any), is between $0 and $1 million. Although First Commonwealth does not believe that the outcome of pending litigation will be material to First Commonwealth’s consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations and cash flows for a particular reporting period in the future.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7 Investment Securities

Securities Available for Sale

Below is an analysis of the amortized cost and estimated fair values of securities available for sale at:

September 30, 2024 December 31, 2023
Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair Value
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential $ 3,209 $ 33 $ (126) $ 3,116 $ 3,565 $ 47 $ (147) $ 3,465
Mortgage-Backed Securities – Commercial 724,019 6,683 (45,868) 684,834 512,979 4,935 (52,521) 465,393
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential 434,676 2,236 (53,457) 383,455 559,769 3,052 (68,222) 494,599
Other Government-Sponsored Enterprises 1,000 — (53) 947 1,000 — (85) 915
Obligations of States and Political Subdivisions 8,962 2 (785) 8,179 9,226 3 (1,027) 8,202
Corporate Securities 62,347 1,324 (3,402) 60,269 51,886 145 (3,619) 48,412
Total Debt Securities Available for Sale $ 1,234,213 $ 10,278 $ (103,691) $ 1,140,800 $ 1,138,425 $ 8,182 $ (125,621) $ 1,020,986

Mortgage-backed securities include mortgage-backed obligations of U.S. Government agencies and obligations of U.S. Government-sponsored enterprises. These obligations have contractual maturities ranging from less than one year to approximately 42 years, with lower anticipated lives to maturity due to prepayments. All mortgage-backed securities contain a certain amount of risk related to the uncertainty of prepayments of the underlying mortgages. Interest rate changes have a direct impact upon prepayment speeds; therefore, First Commonwealth uses computer simulation models to test the average life and yield volatility of all mortgage-backed securities under various interest rate scenarios to monitor the potential impact on earnings and interest rate risk positions.

Expected maturities will differ from contractual maturities because issuers may have the right to call or repay obligations with or without call or prepayment penalties. Other fixed income securities within the portfolio also contain prepayment risk.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The amortized cost and estimated fair value of debt securities available for sale at September 30, 2024, by contractual maturity, are shown below.

Amortized<br>Cost Estimated<br>Fair Value
(dollars in thousands)
Due within 1 year $ 490 $ 489
Due after 1 but within 5 years 17,900 18,139
Due after 5 but within 10 years 53,919 50,767
Due after 10 years — —
72,309 69,395
Mortgage-Backed Securities (a) 1,161,904 1,071,405
Total Debt Securities $ 1,234,213 $ 1,140,800

(a)  Mortgage-backed and collateralized mortgage securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds. Mortgage-Backed Securities include an amortized cost of $727.2 million and a fair value of $688.0 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $434.7 million and a fair value of $383.5 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac.

Proceeds from sales, gross gains (losses) realized on sales and maturities related to securities held to maturity and securities available for sale were as follows for the nine months ended September 30:

2024 2023
(dollars in thousands)
Proceeds from sales $ 69,598 $ 33,756
Gross gains (losses) realized:
Sales transactions:
Gross gains $ — $ —
Gross losses (5,535) (103)
(5,535) (103)
Maturities
Gross gains 88 —
Gross losses — —
88 —
Net losses $ (5,447) $ (103)

For the nine months ended September 30, 2024, proceeds from sales included in above table are a result of management selling $75.1 million in available for sale investment securities yielding 2.17% and reinvesting the proceeds into securities yielding 5.49%.

For the nine months ended September 30, 2023, proceeds from sales included in the above table are a result of the sale of investments acquired as part of the Centric acquisition. All of the acquired investments were recorded at fair value at the time of acquisition and subsequently sold at the same value, with the exception of one corporate security. This security was sold in the third quarter of 2023 at a loss of $103 thousand.

Securities available for sale with an estimated fair value of $895.0 million and $386.5 million were pledged as of September 30, 2024 and December 31, 2023, respectively, to secure public deposits and for other purposes required or permitted by law.

Equity Securities

During the second quarter of 2024, Visa commenced an exchange offer for any and all outstanding shares of its Class B-1 common stock for a combination of Visa's Class B-2 common stock, Class C common stock and, where applicable cash in lieu of fractional shares. As part of this exchange, each share of Class B-1 common stock would be exchanged for one half share of the newly issued Class B-2 common stock and Class C common stock would be issued in an amount equivalent to one half of a share of Class B-1 common stock. The Company opted to participate in this exchange offer prior to its expiration and received

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13,340 Class B-2 shares and 5,294 Class C shares. As of September 30, 2024, the Class C shares were sold at fair value resulting in a gain of $5.7 million. The Class B-2 shares will continue to be carried by the company with a zero basis.

The unrealized gains and losses recognized related to equity securities still held at each reporting date is as follows:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
(dollars in thousands)
Net gains and losses recognized during the period on equity securities $ 106 $ — $ 5,664 $ —
Less: Net gains and losses recognized during the period on equity securities sold during the period (106) — (5,664) —
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date $ — $ — $ — $ —

Securities Held to Maturity

Below is an analysis of the amortized cost and fair values of debt securities held to maturity at:

September 30, 2024 December 31, 2023
Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Amortized<br>Cost Gross<br>Unrealized<br>Gains Gross<br>Unrealized<br>Losses Estimated<br>Fair Value
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential $ 1,604 $ — $ (151) $ 1,453 $ 1,781 $ — $ (175) $ 1,606
Mortgage-Backed Securities- Commercial 105,996 613 (13,012) 93,597 69,502 — (14,435) 55,067
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential 274,026 — (39,570) 234,456 296,432 — (47,148) 249,284
Mortgage-Backed Securities – Commercial — — — — 2,190 — (30) 2,160
Other Government-Sponsored Enterprises 22,786 — (3,426) 19,360 22,543 — (4,178) 18,365
Obligations of States and Political Subdivisions 25,013 — (1,704) 23,309 25,561 — (2,412) 23,149
Debt Securities Issued by Foreign Governments 1,000 — (15) 985 1,000 — (36) 964
Total Securities Held to Maturity $ 430,425 $ 613 $ (57,878) $ 373,160 $ 419,009 $ — $ (68,414) $ 350,595

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The amortized cost and estimated fair value of debt securities held to maturity at September 30, 2024, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

Amortized<br>Cost Estimated<br>Fair Value
(dollars in thousands)
Due within 1 year $ 1,090 $ 1,083
Due after 1 but within 5 years 13,786 13,311
Due after 5 but within 10 years 33,360 28,790
Due after 10 years 563 470
48,799 43,654
Mortgage-Backed Securities (a) 381,626 329,506
Total Debt Securities $ 430,425 $ 373,160

(a)Mortgage-backed and collateralized mortgage securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds. Mortgage-Backed Securities include an amortized cost of $107.6 million and a fair value of $95.1 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $274.0 million and a fair value of $234.5 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac.

Securities held to maturity with an amortized cost of $394.8 million and $98.1 million were pledged as of September 30, 2024 and December 31, 2023, respectively, to secure public deposits and for other purposes required or permitted by law.

Other Investments

As a member of the Federal Home Loan Bank ("FHLB"), First Commonwealth is required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements. The level of stock required to be held is dependent on the amount of First Commonwealth's mortgage-related assets and outstanding borrowings with the FHLB. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is unlike other investment securities insofar as there is no trading market for FHLB stock and the transfer price is determined by FHLB membership rules and not by market participants. As of September 30, 2024 and December 31, 2023, our FHLB stock totaled $18.9 million and $44.7 million, respectively, and is included in “Other investments” on the unaudited Consolidated Statements of Financial Condition.

FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. First Commonwealth evaluates impairment quarterly and has concluded that the par value of its investment in FHLB stock will be recovered. Accordingly, no impairment charge was recorded on these securities during the three and nine months ended September 30, 2024.

As of September 30, 2024 and December 31, 2023, "Other investments" also includes $5.7 million and $6.2 million, respectively, in equity securities. These securities do not have a readily determinable fair value and are carried at cost. During the nine-months ended September 30, 2024 and 2023, there were no gains or losses recognized through earnings on these equity securities. On a quarterly basis, management evaluates equity securities by reviewing the severity and duration of decline in estimated fair value, research reports, analysts’ recommendations, credit rating changes, news stories, annual reports, regulatory filings, impact of interest rate changes and other relevant information.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Impairment of Investment Securities

We review our investment portfolio on a quarterly basis for indications of impairment. For available for sale securities, the review includes analyzing the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and whether we are more likely than not to sell the security. We evaluate whether we are more likely than not to sell debt securities based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy, tax position and interest rate risk position. Held-to-maturity securities are evaluated for impairment on a quarterly basis using historical probability of default and loss given default information specific to the investment category. If this evaluation determines that credit losses exist an allowance for credit loss is recorded and included in earnings as a component of credit loss expense.

First Commonwealth utilizes the specific identification method to determine the net gain or loss on debt securities and the average cost method to determine the net gain or loss on equity securities.

The following table presents the gross unrealized losses and estimated fair values at September 30, 2024 for both available for sale and held to maturity securities by investment category and time frame for which securities have been in a continuous unrealized loss position:

Less Than 12 Months 12 Months or More Total
Estimated<br>Fair Value Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Gross<br>Unrealized<br>Losses
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential $ — $ — $ 3,198 $ (277) $ 3,198 $ (277)
Mortgage-Backed Securities – Commercial — — 289,554 (58,880) 289,554 (58,880)
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential 1,412 (2) 532,114 (93,025) 533,526 (93,027)
Mortgage-Backed Securities – Commercial — — — — — —
Other Government-Sponsored Enterprises — — 20,307 (3,479) 20,307 (3,479)
Obligations of States and Political Subdivisions 360 (1) 29,666 (2,488) 30,026 (2,489)
Debt Securities Issued by Foreign Governments — — 585 (15) 585 (15)
Corporate Securities 11,134 (965) 16,813 (2,437) 27,947 (3,402)
Total Securities $ 12,906 $ (968) $ 892,237 $ (160,601) $ 905,143 $ (161,569)

At September 30, 2024, fixed income securities issued by the U.S. Government and U.S. Government-sponsored enterprises comprised 96% of total unrealized losses. All unrealized losses are the result of changes in market interest rates. At September 30, 2024, there are 156 debt securities in an unrealized loss position.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the gross unrealized losses and estimated fair values at December 31, 2023 by investment category and the time frame for which securities have been in a continuous unrealized loss position:

Less Than 12 Months 12 Months or More Total
Estimated<br>Fair Value Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Gross<br>Unrealized<br>Losses Estimated<br>Fair Value Gross<br>Unrealized<br>Losses
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential $ — $ — $ 3,395 $ (322) $ 3,395 $ (322)
Mortgage-Backed Securities - Commercial — — 300,642 (66,956) 300,642 (66,956)
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential 1,124 (3) 643,735 (115,367) 644,859 (115,370)
Mortgage-Backed Securities – Commercial — — 2,160 (30) 2,160 (30)
Other Government-Sponsored Enterprises — — 19,280 (4,263) 19,280 (4,263)
Obligation of States and Political Subdivisions 2,641 (62) 26,887 (3,377) 29,528 (3,439)
Debt Securities Issued by Foreign Governments 199 (1) 765 (35) 964 (36)
Corporate Securities 11,416 (45) 21,426 (3,574) 32,842 (3,619)
Total Securities $ 15,380 $ (111) $ 1,018,290 $ (193,924) $ 1,033,670 $ (194,035)

As of September 30, 2024, our corporate securities had an amortized cost and an estimated fair value of $62.3 million and $60.3 million, respectively. As of December 31, 2023, our corporate securities had an amortized cost and estimated fair value of $51.9 million and $48.4 million, respectively. Corporate securities are comprised of debt issued by large regional banks. There were eight corporate securities, respectively, in an unrealized loss position at both September 30, 2024 and December 31, 2023. When unrealized losses exist, management reviews each of the issuer’s asset quality, earnings trends and capital position to determine whether the unrealized loss position is a result of credit losses. All interest payments on the corporate securities are being made as contractually required.

There was no expected credit related impairment recognized on investment securities during the nine months ended September 30, 2024 and 2023.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8 Loans and Leases and Allowance for Credit Losses

Loans and leases are presented in the Consolidated Statements of Financial Condition net of deferred fees and costs, and discounts related to purchased loans. Net deferred fees were $13.6 million and $8.2 million as of September 30, 2024 and December 31, 2023, respectively, and discounts on purchased loans from acquisitions were $20.1 million and $25.7 million as of September 30, 2024 and December 31, 2023, respectively. The following table provides outstanding balances related to each of our loan types:

September 30, 2024 December 31, 2023
(dollars in thousands)
Commercial, financial, agricultural and other $ 1,629,535 $ 1,543,349
Time and demand 1,141,477 1,187,300
Commercial credit cards 12,405 12,906
Equipment finance 366,527 232,944
Time and demand other 109,126 110,199
Real estate construction 540,775 597,735
Construction other 522,548 541,633
Construction residential 18,227 56,102
Residential real estate 2,374,376 2,416,876
Residential first lien 1,698,863 1,739,107
Residential junior lien/home equity 675,513 677,769
Commercial real estate 3,069,438 3,053,152
Multifamily 540,427 551,142
Non-owner occupied 1,803,084 1,772,785
Owner occupied 725,927 729,225
Loans to individuals 1,351,376 1,357,649
Automobile and recreational vehicles 1,275,765 1,277,969
Consumer credit cards 9,610 10,291
Consumer other 66,001 69,389
Total loans and leases $ 8,965,500 $ 8,968,761

First Commonwealth’s loan portfolio includes five primary loan categories. When calculating the allowance for credit losses these categories are classified into fourteen portfolio segments. The composition of loans by portfolio segment includes:

Commercial, financial, agricultural and other

Time & Demand - Consists primarily of commercial and industrial loans. This category consists of loans that are typically cash flow dependent and therefore have different risk and loss characteristics than other commercial loans. Loans in this category include revolving and term structures with fixed and variable interest rates. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Commercial Credit Cards - Consists of unsecured credit cards for commercial customers. These commercial credit cards have separate characteristics outside of normal commercial non-real estate loans, as they tend to have shorter overall duration. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Equipment Finance - Consists of loans and leases to finance the purchase of equipment for commercial customers. The risk and loss characteristics are unique for this group due to the type of collateral. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Time & Demand Other - Consists primarily of loans to state and political subdivisions and other commercial loans that have different characteristics than loans in the Time and Demand category. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of household debt to income and economic conditions measured by GDP.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Real estate construction

Construction Other - Consists of construction loans to commercial builders and developers and are secured by the properties under development or raw land.

Construction Residential - Consists of loans to finance the construction of residential properties during the construction period. Borrowers are typically individuals who will occupy the completed single family property.

The risk and loss characteristics of these two construction categories are different than other real estate secured categories due to the collateral being at various stages of completion. The nature of the project and type of borrower of the two construction categories provides for unique risk and loss characteristics for each category. The primary macroeconomic drivers for estimating credit losses for construction loans include forecasts of national unemployment and measures of completed construction projects.

Residential real estate

Residential first lien - Consists of loans with collateral of 1-4 family residencies with a senior lien position. The risk and loss characteristics are unique for this group because the collateral for these loans are the borrower’s primary residence. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Residential Junior Lien/Home Equity - Consists of loans with collateral of 1-4 family residencies with an open end line of credit or junior lien position. The junior lien position for the majority of these loans provides a higher risk of loss than other residential real estate loans. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.

Commercial real estate

Multifamily - Consists of loans secured by commercial multifamily properties. Real estate related to rentals to consumers provide unique risk and loss characteristics. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of commercial real estate values and national unemployment.

Non-owner Occupied - Consists of loans secured by non-owner occupied commercial real estate and provides different loss characteristics than other real estate categories. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Owner Occupied - Consists of loans secured by owner occupied commercial real estate properties. The risk and loss characteristics of this category were considered different than other real estate categories because it is owner occupied and would impact the ability to conduct business. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and economic conditions measured by GDP.

Loans to individuals

Automobile and Recreational Vehicles - Consists of both direct and indirect loans with automobiles and recreational vehicles held as collateral. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and automobile retention value.

Consumer Credit Cards – Consists of unsecured consumer credit cards. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and economic conditions measured by GDP.

Other Consumer - Consists of lines of credit, student loans and other consumer loans, not secured by real estate or autos. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of consumer sentiment and retail sales.

The allowance for credit losses is calculated by pooling loans of similar credit risk characteristics and applying a discounted cash flow methodology after incorporating probability of default and loss given default estimates. Probability of default represents an estimate of the likelihood of default, and loss given default measures the expected loss upon default. Inputs impacting the expected losses include a forecast of macroeconomic factors, using a weighted forecast from a nationally recognized firm. Our model incorporates a one-year forecast of macroeconomic factors, after which the factors revert back to the historical mean over a one-year period. The most significant macroeconomic factor used in estimating credit losses is the national unemployment rate. The forecasted value for national unemployment at the beginning of the forecast period was 4.26% and during the one-year forecast period it was projected to average 4.87%, with a peak of 5.07%.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Credit Quality Information

As part of the on-going monitoring of credit quality within the loan portfolio, the following credit worthiness categories are used in grading our loans:

Pass Acceptable levels of risk exist in the relationship. Includes all loans not classified as OAEM, substandard or doubtful.
Other Assets Especially Mentioned (OAEM) Potential weaknesses that deserve management’s close attention. The potential weaknesses may result in deterioration of the repayment prospects or weaken the Company’s credit position at some future date. The credit risk may be relatively minor, yet constitute an undesirable risk in light of the circumstances surrounding the specific credit. No loss of principal or interest is expected.
Substandard Well-defined weakness or a weakness that jeopardizes the repayment of the debt. A loan may be classified as substandard as a result of deterioration of the borrower’s financial condition and repayment capacity. Loans for which repayment plans have not been met or collateral equity margins do not protect the Company may also be classified as substandard.
Doubtful Loans with the characteristics of substandard loans with the added characteristic that collection or liquidation in full, on the basis of presently existing facts and conditions, is highly improbable.

The Company’s internal creditworthiness grading system provides a measurement of credit risk based primarily on an evaluation of the borrower’s cash flow and collateral. Category ratings are reviewed each quarter, at which time management analyzes the results, as well as other external statistics and factors related to loan performance.

The following tables represent our credit risk profile by creditworthiness:

September 30, 2024
Non-Pass
Pass OAEM Substandard Doubtful Loss Total Non-Pass Total
(dollars in thousands)
Commercial, financial, agricultural and other $ 1,527,815 $ 70,382 $ 31,338 $ — $ — $ 101,720 $ 1,629,535
Time and demand 1,042,940 69,135 29,402 — — 98,537 1,141,477
Commercial credit cards 12,405 — — — — — 12,405
Equipment finance 363,348 1,243 1,936 — — 3,179 366,527
Time and demand other 109,122 4 — — — 4 109,126
Real estate construction 527,529 51 13,195 — — 13,246 540,775
Construction other 509,302 51 13,195 — — 13,246 522,548
Construction residential 18,227 — — — — — 18,227
Residential real estate 2,362,443 1,454 10,479 — — 11,933 2,374,376
Residential first lien 1,691,847 1,116 5,900 — — 7,016 1,698,863
Residential junior lien/home equity 670,596 338 4,579 — — 4,917 675,513
Commercial real estate 2,954,477 55,324 59,637 — — 114,961 3,069,438
Multifamily 522,389 17,956 82 — — 18,038 540,427
Non-owner occupied 1,749,506 13,841 39,737 — — 53,578 1,803,084
Owner occupied 682,582 23,527 19,818 — — 43,345 725,927
Loans to individuals 1,351,274 — 102 — — 102 1,351,376
Automobile and recreational vehicles 1,275,665 — 100 — — 100 1,275,765
Consumer credit cards 9,610 — — — — — 9,610
Consumer other 65,999 — 2 — — 2 66,001
Total loans and leases $ 8,723,538 $ 127,211 $ 114,751 $ — $ — $ 241,962 $ 8,965,500

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2023
Non-Pass
Pass OAEM Substandard Doubtful Loss Total Non-Pass Total
(dollars in thousands)
Commercial, financial, agricultural and other $ 1,453,970 $ 58,325 $ 31,054 $ — $ — $ 89,379 $ 1,543,349
Time and demand 1,098,763 58,325 30,212 — — 88,537 1,187,300
Commercial credit cards 12,906 — — — — — 12,906
Equipment finance 232,102 — 842 — — 842 232,944
Time and demand other 110,199 — — — — — 110,199
Real estate construction 585,543 — 12,192 — — 12,192 597,735
Construction other 529,441 — 12,192 — — 12,192 541,633
Construction residential 56,102 — — — — — 56,102
Residential real estate 2,405,240 2,768 8,868 — — 11,636 2,416,876
Residential first lien 1,732,006 2,415 4,686 — — 7,101 1,739,107
Residential junior lien/home equity 673,234 353 4,182 — — 4,535 677,769
Commercial real estate 2,956,338 62,038 34,776 — — 96,814 3,053,152
Multifamily 538,939 12,117 86 — — 12,203 551,142
Non-owner occupied 1,722,315 31,652 18,818 — — 50,470 1,772,785
Owner occupied 695,084 18,269 15,872 — — 34,141 729,225
Loans to individuals 1,357,483 — 166 — — 166 1,357,649
Automobile and recreational vehicles 1,277,805 — 164 — — 164 1,277,969
Consumer credit cards 10,291 — — — — — 10,291
Consumer other 69,387 — 2 — — 2 69,389
Total loans and leases $ 8,758,574 $ 123,131 $ 87,056 $ — $ — $ 210,187 $ 8,968,761

The following table summarizes the loan risk rating category by loan type including term loans on an amortized cost basis by origination year:

September 30, 2024
Term Loans Revolving Loans
2024 2023 2022 2021 2020 Prior Total
(dollars in thousands)
Time and demand $ 106,373 $ 122,043 $ 127,757 $ 85,518 $ 55,193 $ 78,136 $ 566,457 $ 1,141,477
Pass 104,939 114,374 122,913 65,957 51,512 62,727 520,518 1,042,940
OAEM 1,434 5,792 3,687 12,182 2,777 6,310 36,953 69,135
Substandard — 1,877 1,157 7,379 904 9,099 8,986 29,402
Gross charge-offs — (11) (25) (247) (658) (1,550) (5,670) (8,161)
Gross recoveries — — 1 — 183 195 26 405
Commercial credit cards — — — — — — 12,405 12,405
Pass — — — — — — 12,405 12,405
Gross charge-offs — — — — — — (183) (183)
Gross recoveries — — — — — — 5 5

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

September 30, 2024
Term Loans Revolving Loans
2024 2023 2022 2021 2020 Prior Total
(dollars in thousands)
Equipment finance 178,083 141,087 47,357 — — — — 366,527
Pass 177,770 139,936 45,642 — — — — 363,348
OAEM 313 414 516 — — — — 1,243
Substandard — 737 1,199 — — — — 1,936
Gross charge-offs (60) (806) (369) — — — — (1,235)
Gross recoveries — 16 56 — — — — 72
Time and demand other 10,226 10,732 4,822 16,685 19,372 44,696 2,593 109,126
Pass 10,226 10,732 4,822 16,685 19,372 44,696 2,589 109,122
OAEM — — — — — — 4 4
Gross charge-offs — — — — — — (1,651) (1,651)
Gross recoveries — — — — — 5 146 151
Construction other 24,384 176,947 212,015 76,444 5,669 26,215 874 522,548
Pass 24,384 176,947 207,709 74,933 5,669 18,837 823 509,302
OAEM — — — — — — 51 51
Substandard — — 4,306 1,511 — 7,378 — 13,195
Gross charge-offs — — — (35) — — — (35)
Gross recoveries — — — — — 6 — 6
Construction residential 1,102 13,387 1,804 1,427 — 29 478 18,227
Pass 1,102 13,387 1,804 1,427 — 29 478 18,227
Gross charge-offs — — — — — — — —
Gross recoveries — — — — — — — —
Residential first lien 36,625 140,707 379,382 493,014 303,754 343,477 1,904 1,698,863
Pass 36,625 139,494 378,595 491,873 303,323 340,106 1,831 1,691,847
OAEM — — — 177 — 866 73 1,116
Substandard — 1,213 787 964 431 2,505 — 5,900
Gross charge-offs — (77) (1) (21) (1) (37) — (137)
Gross recoveries — — — — — 150 — 150
Residential junior lien/home equity 14,688 55,779 64,171 38,954 2,148 5,920 493,853 675,513
Pass 14,688 55,768 64,019 38,954 2,148 5,718 489,301 670,596
OAEM — — — — — 192 146 338
Substandard — 11 152 — — 10 4,406 4,579
Gross charge-offs — — (1) — — — (223) (224)
Gross recoveries — — — — — 32 39 71
Multifamily 11,914 7,053 163,202 160,295 84,929 112,253 781 540,427
Pass 11,914 7,053 150,791 155,172 84,929 111,749 781 522,389
OAEM — — 12,411 5,123 — 422 — 17,956
Substandard — — — — — 82 — 82
Gross charge-offs — — — — — — — —
Gross recoveries — — — — — — — —
Non-owner occupied 48,625 201,299 457,064 185,451 153,016 745,884 11,745 1,803,084
Pass 48,625 198,289 454,957 185,208 138,414 712,333 11,680 1,749,506
OAEM — — 2,107 243 1,660 9,831 — 13,841
Substandard — 3,010 — — 12,942 23,720 65 39,737
Gross charge-offs — — (50) — — (457) — (507)
Gross recoveries — — — — — 53 — 53

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

September 30, 2024
Term Loans Revolving Loans
2024 2023 2022 2021 2020 Prior Total
(dollars in thousands)
Owner occupied 55,366 104,679 152,829 150,658 62,568 186,763 13,064 725,927
Pass 54,316 103,705 140,557 144,791 60,920 167,112 11,181 682,582
OAEM 1,050 113 7,086 5,832 202 7,415 1,829 23,527
Substandard — 861 5,186 35 1,446 12,236 54 19,818
Gross charge-offs — — (141) (136) (1,050) (163) (50) (1,540)
Gross recoveries — — — 28 — 44 41 113
Automobile and recreational vehicles 308,474 343,733 353,335 170,238 81,085 18,900 — 1,275,765
Pass 308,474 343,733 353,335 170,184 81,079 18,860 — 1,275,665
Substandard — — — 54 6 40 — 100
Gross charge-offs (88) (1,242) (2,490) (898) (454) (380) — (5,552)
Gross recoveries 2 298 669 406 243 319 — 1,937
Consumer credit cards — — — — — — 9,610 9,610
Pass — — — — — — 9,610 9,610
Gross charge-offs — — — — — — (348) (348)
Gross recoveries — — — — — — 78 78
Consumer other 6,618 4,948 2,905 10,850 803 2,411 37,466 66,001
Pass 6,618 4,948 2,905 10,850 803 2,411 37,464 65,999
Substandard — — — — — — 2 2
Gross charge-offs — (91) (73) (57) (16) (34) (977) (1,248)
Gross recoveries — — 14 20 13 93 151 291
Total loans and leases $ 802,478 $ 1,322,394 $ 1,966,643 $ 1,389,534 $ 768,537 $ 1,564,684 $ 1,151,230 $ 8,965,500
Total charge-offs $ (148) $ (2,227) $ (3,150) $ (1,394) $ (2,179) $ (2,621) $ (9,102) $ (20,821)
Total recoveries $ 2 $ 314 $ 740 $ 454 $ 439 $ 897 $ 486 $ 3,332 December 31, 2023
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Term Loans Revolving Loans
2023 2022 2021 2020 2019 Prior Total
(dollars in thousands)
Time and demand $ 170,285 $ 178,568 $ 111,288 $ 73,487 $ 42,502 $ 65,419 $ 545,751 $ 1,187,300
Pass 166,716 174,699 100,779 71,125 29,812 57,660 497,972 1,098,763
OAEM 1,707 3,129 2,948 1,530 10,873 2,553 35,585 58,325
Substandard 1,862 740 7,561 832 1,817 5,206 12,194 30,212
Gross charge-offs (582) (4,572) (18) (2,195) (2,364) (1,283) (5,133) (16,147)
Gross recoveries — — — 119 4 128 9 260
Commercial credit cards — — — — — — 12,906 12,906
Pass — — — — — — 12,906 12,906
Gross charge-offs — — — — — — (105) (105)
Gross recoveries — — — — — — 13 13
Equipment finance 170,630 62,314 — — — — — 232,944
Pass 170,302 61,800 — — — — — 232,102
Substandard 328 514 — — — — — 842
Gross charge-offs (104) (433) — — — — — (537)
Gross recoveries — — — — — — — —
Time and demand other 9,965 6,022 17,860 19,352 3,025 46,466 7,509 110,199
Pass 9,965 6,022 17,860 19,352 3,025 46,466 7,509 110,199
Gross charge-offs — — — — — — (2,410) (2,410)
Gross recoveries — — — — — — 225 225

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2023
Term Loans Revolving Loans
2023 2022 2021 2020 2019 Prior Total
(dollars in thousands)
Construction other 94,150 217,565 154,873 44,428 5,379 24,541 697 541,633
Pass 94,150 214,277 153,195 44,428 5,379 17,315 697 529,441
Substandard — 3,288 1,678 — — 7,226 — 12,192
Gross charge-offs — — — — — — — —
Gross recoveries — — — — — — — —
Construction residential 27,487 19,322 2,284 3,194 3,337 — 478 56,102
Pass 27,487 19,322 2,284 3,194 3,337 — 478 56,102
Gross charge-offs — — — — — — — —
Gross recoveries — — — — — — — —
Residential first lien 120,053 385,917 527,057 320,107 97,529 286,503 1,941 1,739,107
Pass 119,903 385,269 524,841 319,762 96,702 283,665 1,864 1,732,006
OAEM — 80 1,527 — — 731 77 2,415
Substandard 150 568 689 345 827 2,107 — 4,686
Gross charge-offs — (98) — (31) (1) (116) — (246)
Gross recoveries — — — — — 177 — 177
Residential junior lien/home equity 62,098 70,171 44,359 2,487 2,305 4,949 491,400 677,769
Pass 62,098 70,171 44,359 2,487 2,305 4,672 487,142 673,234
OAEM — — — — — 208 145 353
Substandard — — — — — 69 4,113 4,182
Gross charge-offs — — — — — — (315) (315)
Gross recoveries — — — — — — 70 70
Multifamily 6,839 156,393 155,067 94,284 44,121 92,585 1,853 551,142
Pass 6,839 144,728 155,067 94,284 44,121 92,047 1,853 538,939
OAEM — 11,665 — — — 452 — 12,117
Substandard — — — — — 86 — 86
Gross charge-offs — — — — — — — —
Gross recoveries — — — — — — — —
Non-owner occupied 184,562 423,543 159,593 148,716 221,551 621,678 13,142 1,772,785
Pass 181,578 415,577 159,593 148,716 211,019 592,755 13,077 1,722,315
OAEM — 7,546 — — 7,313 16,793 — 31,652
Substandard 2,984 420 — — 3,219 12,130 65 18,818
Gross charge-offs — (232) — — — (4,473) — (4,705)
Gross recoveries — — — — — 127 — 127
Owner occupied 106,831 163,830 153,996 80,522 59,357 152,728 11,961 729,225
Pass 106,583 161,071 149,788 75,267 42,745 147,809 11,821 695,084
OAEM 112 785 3,950 4,000 5,363 4,026 33 18,269
Substandard 136 1,974 258 1,255 11,249 893 107 15,872
Gross charge-offs — — (32) — — (1,540) — (1,572)
Gross recoveries — — — — — 24 — 24
Automobile and recreational vehicles 427,112 459,836 234,144 115,364 35,402 6,111 — 1,277,969
Pass 427,112 459,835 234,085 115,354 35,345 6,074 — 1,277,805
Substandard — 1 59 10 57 37 — 164
Gross charge-offs (487) (2,232) (1,258) (972) (527) (111) — (5,587)
Gross recoveries 71 479 419 367 347 149 — 1,832
Consumer credit cards — — — — — — 10,291 10,291
Pass — — — — — — 10,291 10,291
Gross charge-offs — — — — — — (290) (290)
Gross recoveries — — — — — — 87 87

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2023
Term Loans Revolving Loans
2023 2022 2021 2020 2019 Prior Total
(dollars in thousands)
Consumer other 6,893 4,224 13,277 1,411 1,090 3,440 39,054 69,389
Pass 6,893 4,224 13,277 1,411 1,090 3,440 39,052 69,387
Substandard — — — — — — 2 2
Gross charge-offs (21) (50) (130) (31) (157) (23) (941) (1,353)
Gross recoveries — 1 4 9 35 66 185 300
Total loans and leases $ 1,386,905 $ 2,147,705 $ 1,573,798 $ 903,352 $ 515,598 $ 1,304,420 $ 1,136,983 $ 8,968,761
Total charge-offs $ (1,194) $ (7,617) $ (1,438) $ (3,229) $ (3,049) $ (7,546) $ (9,194) $ (33,267)
Total recoveries $ 71 $ 480 $ 423 $ 495 $ 386 $ 671 $ 589 $ 3,115

Portfolio Risks

The credit quality of our loan portfolio can potentially represent significant risk to our earnings, capital and liquidity. First Commonwealth devotes substantial resources to managing this risk primarily through our credit administration department that develops and administers policies and procedures for underwriting, maintaining, monitoring and collecting loans. Credit administration is independent of lending departments and oversight is provided by the Risk Committee of the First Commonwealth Board of Directors.

Total net charge-offs for the nine months ended September 30, 2024 and 2023 were $17.5 million and $13.8 million, respectively.

Age Analysis of Past Due Loans by Segment

The following tables delineate the aging analysis of the recorded investments in past due loans as of September 30, 2024 and December 31, 2023. Also included in these tables are loans that are 90 days or more past due and still accruing because they are well-secured and in the process of collection.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

September 30, 2024
30 - 59 days past due 60 - 89 days past due 90 days or greater and still accruing Nonaccrual Total past due and nonaccrual Current Total
(dollars in thousands)
Commercial, financial, agricultural and other $ 1,809 $ 3,315 $ — $ 15,409 $ 20,533 $ 1,609,002 $ 1,629,535
Time and demand 891 3,146 — 13,689 17,726 1,123,751 1,141,477
Commercial credit cards 41 53 — — 94 12,311 12,405
Equipment finance 875 116 — 1,720 2,711 363,816 366,527
Time and demand other 2 — — — 2 109,124 109,126
Real estate construction 6,016 — — 5,817 11,833 528,942 540,775
Construction other 6,016 — — 5,817 11,833 510,715 522,548
Construction residential — — — — — 18,227 18,227
Residential real estate 4,745 2,505 994 10,223 18,467 2,355,909 2,374,376
Residential first lien 3,428 1,753 436 5,644 11,261 1,687,602 1,698,863
Residential junior lien/home equity 1,317 752 558 4,579 7,206 668,307 675,513
Commercial real estate 10,599 479 — 43,172 54,250 3,015,188 3,069,438
Multifamily 69 — — 21 90 540,337 540,427
Non-owner occupied 6,520 180 — 35,314 42,014 1,761,070 1,803,084
Owner occupied 4,010 299 — 7,837 12,146 713,781 725,927
Loans to individuals 4,416 1,249 197 102 5,964 1,345,412 1,351,376
Automobile and recreational vehicles 4,083 896 79 100 5,158 1,270,607 1,275,765
Consumer credit cards 27 32 — — 59 9,551 9,610
Consumer other 306 321 118 2 747 65,254 66,001
Total loans and leases $ 27,585 $ 7,548 $ 1,191 $ 74,723 $ 111,047 $ 8,854,453 $ 8,965,500

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2023
30 - 59 days past due 60 - 89 days past due 90 days or greater and still accruing Nonaccrual Total past due and nonaccrual Current Total
(dollars in thousands)
Commercial, financial, agricultural and other $ 1,206 $ 745 $ 4,187 $ 10,060 $ 16,198 $ 1,527,151 $ 1,543,349
Time and demand 565 691 4,187 9,218 14,661 1,172,639 1,187,300
Commercial credit cards 7 54 — — 61 12,845 12,906
Equipment finance 600 — — 842 1,442 231,502 232,944
Time and demand other 34 — — — 34 110,165 110,199
Real estate construction — — — 3,288 3,288 594,447 597,735
Construction other — — — 3,288 3,288 538,345 541,633
Construction residential — — — — — 56,102 56,102
Residential real estate 6,982 1,535 1,062 8,573 18,152 2,398,724 2,416,876
Residential first lien 4,130 940 171 4,443 9,684 1,729,423 1,739,107
Residential junior lien/home equity 2,852 595 891 4,130 8,468 669,301 677,769
Commercial real estate 4,157 — 3,509 17,385 25,051 3,028,101 3,053,152
Multifamily — — — 55 55 551,087 551,142
Non-owner occupied 2,303 — 3,509 14,282 20,094 1,752,691 1,772,785
Owner occupied 1,854 — — 3,048 4,902 724,323 729,225
Loans to individuals 4,613 878 678 166 6,335 1,351,314 1,357,649
Automobile and recreational vehicles 4,115 612 151 164 5,042 1,272,927 1,277,969
Consumer credit cards 39 71 — — 110 10,181 10,291
Consumer other 459 195 527 2 1,183 68,206 69,389
Total loans and leases $ 16,958 $ 3,158 $ 9,436 $ 39,472 $ 69,024 $ 8,899,737 $ 8,968,761

Nonaccrual Loans

The previous tables summarize nonaccrual loans by loan segment. The Company generally places loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain, when part of the principal balance has been charged off and no restructuring has occurred, or the loans reach a certain number of days past due. Generally, loans 90 days or more past due are placed on nonaccrual status, except for most consumer loans, which are placed on nonaccrual status at 150 days past due. Consumer loans related to automobile and recreational vehicles are either charged off or repossessed at no later than 90 days past due.

When a loan is placed on nonaccrual, the accrued unpaid interest receivable is reversed against interest income and all future payments received are applied as a reduction to the loan principal. Generally, the loan is returned to accrual status when (a) all delinquent interest and principal becomes current under the terms of the loan agreement or (b) the loan is both well-secured and in the process of collection and collectability is no longer in doubt.

Nonperforming Loans

Management considers loans to be nonperforming when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When management identifies a loan as nonperforming, the credit loss is measured based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole source for repayment of the loan is the operation or liquidation of collateral. When the loan is collateral dependent, the appraised value less estimated cost to sell is utilized. If management determines that the value of the loan is less than the recorded investment in the loan, a credit loss is recognized through an allowance estimate or a charge-off to the allowance for credit losses.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

When the ultimate collectability of the total principal of a nonperforming loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal under the cost recovery method. When the ultimate collectability of the total principal of a nonperforming loan is not in doubt and the loan is on nonaccrual status, contractual interest is credited to interest income when received under the cash basis method.

At September 30, 2024 and December 31, 2023, there were no nonperforming loans held for sale. During both the nine months ended September 30, 2024 and 2023, there were no gains recognized on the sale of nonperforming loans.

The following tables include the recorded investment and unpaid principal balance for nonperforming loans with the associated allowance amount, if applicable, as of September 30, 2024 and December 31, 2023. Also presented are the average recorded investment in nonperforming loans and the related amount of interest recognized while the loan was considered nonperforming. Average balances are calculated using month-end balances of the loans for the period reported and are included in the table below based on their period-end allowance position.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

September 30, 2024 December 31, 2023
Recorded<br>investment Unpaid<br>principal<br>balance Related specific<br>allowance Recorded<br>investment Unpaid<br>principal<br>balance Related specific<br>allowance
(dollars in thousands)
With no related specific allowance recorded:
Commercial, financial, agricultural and other $ 3,631 $ 16,697 $ 4,369 $ 18,014
Time and demand 2,324 15,390 3,527 17,172
Equipment finance 1,307 1,307 842 842
Time and demand other — — — —
Real estate construction 5,817 5,869 3,288 3,288
Construction other 5,817 5,869 3,288 3,288
Construction residential — — — —
Residential real estate 8,669 10,357 7,042 8,763
Residential first lien 5,351 6,290 4,161 5,151
Residential junior lien/home equity 3,318 4,067 2,881 3,612
Commercial real estate 9,524 9,951 12,402 18,219
Multifamily 21 21 55 58
Non-owner occupied 7,236 7,419 10,971 17,092
Owner occupied 2,267 2,511 1,376 1,069
Loans to individuals 102 157 166 259
Automobile and recreational vehicles 100 141 164 257
Consumer other 2 16 2 2
Subtotal 27,743 43,031 27,267 48,543
With a specific allowance recorded:
Commercial, financial, agricultural and other 11,778 12,886 $ 6,534 5,691 6,787 $ 4,044
Time and demand 11,365 12,473 6,397 5,691 6,787 4,044
Equipment finance 413 413 137 — — —
Time and demand other — — — — — —
Real estate construction — — — — — —
Construction other — — — — — —
Construction residential — — — — — —
Residential real estate 1,554 1,723 249 1,531 1,697 118
Residential first lien 293 293 44 282 279 39
Residential junior lien/home equity 1,261 1,430 205 1,249 1,418 79
Commercial real estate 33,648 34,798 7,491 4,983 5,294 387
Multifamily — — — — — —
Non-owner occupied 28,078 29,050 6,686 3,311 3,550 174
Owner occupied 5,570 5,748 805 1,672 1,744 213
Loans to individuals — — — — — —
Automobile and recreational vehicles — — — — — —
Consumer other — — — — — —
Subtotal 46,980 49,407 14,274 12,205 13,778 4,549
Total $ 74,723 $ 92,438 $ 14,274 $ 39,472 $ 62,321 $ 4,549

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Nine Months Ended September 30,
2024 2023
Average<br>recorded<br>investment Interest<br>income<br>recognized Average<br>recorded<br>investment Interest<br>income<br>recognized
(dollars in thousands)
With no related specific allowance recorded:
Commercial, financial, agricultural and other $ 5,720 $ 10 $ 3,974 $ 141
Time and demand 4,673 10 3,786 141
Equipment finance 1,047 — 188 —
Time and demand other — — — —
Real estate construction 4,424 — 365 —
Construction other 4,424 — 365 —
Construction residential — — — —
Residential real estate 8,223 117 6,224 75
Residential first lien 4,946 114 3,602 74
Residential junior lien/home equity 3,277 3 2,622 1
Commercial real estate 8,951 62 9,253 170
Multifamily 38 — 30 —
Non-owner occupied 6,177 20 7,313 57
Owner occupied 2,736 42 1,910 113
Loans to individuals 136 5 428 7
Automobile and recreational vehicles 134 5 341 7
Consumer other 2 — 87 —
Subtotal 27,454 194 20,244 393
With a specific allowance recorded:
Commercial, financial, agricultural and other 5,128 37 10,190 (16)
Time and demand 5,083 37 10,190 (16)
Equipment finance 45 — — —
Time and demand other — — — —
Real estate construction — — — —
Construction other — — — —
Construction residential — — — —
Residential real estate 1,283 — 1,099 —
Residential first lien 33 — — —
Residential junior lien/home equity 1,250 — 1,099 —
Commercial real estate 15,034 233 13,134 —
Multifamily — — — —
Non-owner occupied 12,979 — 12,763 —
Owner occupied 2,055 233 371 —
Loans to individuals — — — —
Automobile and recreational vehicles — — — —
Consumer other — — — —
Subtotal 21,445 270 24,423 (16)
Total $ 48,899 $ 464 $ 44,667 $ 377

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30,
2024 2023
Average<br>recorded<br>investment Interest<br>income<br>recognized Average<br>recorded<br>investment Interest<br>Income<br>Recognized
(dollars in thousands)
With no related specific allowance recorded:
Commercial, financial, agricultural and other $ 5,252 $ 10 $ 2,509 $ 135
Time and demand 3,770 10 2,269 135
Equipment finance 1,482 — 240 —
Time and demand other — — — —
Real estate construction 5,834 — 1,096 —
Construction other 5,834 — 1,096 —
Construction residential — — — —
Residential real estate 8,781 4 6,290 35
Residential first lien 5,420 4 3,784 34
Residential junior lien/home equity 3,361 — 2,506 1
Commercial real estate 10,089 17 7,908 213
Multifamily 14 — 68 —
Non-owner occupied 7,593 17 6,498 53
Owner occupied 2,482 — 1,342 160
Loans to individuals 121 2 401 6
Automobile and recreational vehicles 119 2 315 6
Consumer other 2 — 86 —
Subtotal 30,077 33 18,204 389
With a specific allowance recorded:
Commercial, financial, agricultural and other 7,816 28 14,980 —
Time and demand 7,679 28 14,980 —
Equipment finance 137 — — —
Time and demand other — — — —
Real estate construction — — — —
Construction other — — — —
Construction residential — — — —
Residential real estate 1,351 — 1,236 —
Residential first lien 98 — — —
Residential junior lien/home equity 1,253 — 1,236 —
Commercial real estate 24,633 233 13,514 —
Multifamily — — — —
Non-owner occupied 20,406 — 12,601 —
Owner occupied 4,227 233 913 —
Loans to individuals — — — —
Automobile and recreational vehicles — — — —
Consumer other — — — —
Subtotal 33,800 261 29,730 —
Total $ 63,877 $ 294 $ 47,934 $ 389

Unfunded commitments related to nonperforming loans were $0.2 million and $0.1 million at September 30, 2024 and December 31, 2023, respectively. After consideration of the requirements to draw and available collateral related to these

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

commitments, it was determined that no reserve was required for these commitments at September 30, 2024 and December 31, 2023.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

In accordance with ASU 2022-02, Financial Instruments Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02"), modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal forgiveness, other-than-insignificant payment delay, term extensions or any combination thereof. When calculating the allowance for credit losses, these modifications are included in their respective loan segment and an allowance is determined by a loss given default and probability of default methodology.

The following tables present the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty:

For the Nine Months Ended September 30, 2024
Rate Reduction Term Extension Payment Deferral Term Extension and Payment Deferral Rate Reduction, Term Extension and Payment Deferral Rate Reduction and Payment Deferral Total Percentage of Total Loans and Leases
(dollars in thousands)
Commercial, financial, agricultural and other $ 254 $ 5,995 $ — $ 898 $ — $ 100 $ 7,247 0.44 %
Time and demand 254 5,995 — 834 — — 7,083 0.62
Equipment finance — — — 64 — 100 164 0.04
Residential real estate — 160 — 509 — — 669 0.03
Residential first lien — 160 — 482 — — 642 0.04
Residential junior lien/home equity — — — 27 — — 27 —
Commercial real estate — — 9,674 — — — 9,674 0.32
Owner occupied — — 9,674 — — — 9,674 1.33
Loans to individuals — 11 — 9 12 — 32 —
Automobile and recreational vehicles — 11 — 9 12 — 32 —
Total $ 254 $ 6,166 $ 9,674 $ 1,416 $ 12 $ 100 $ 17,622 0.20 % For the Nine Months Ended September 30, 2023
--- --- --- --- --- --- --- --- --- --- --- --- ---
Rate Reduction Term Extension Principal Forgiveness Term Extension and Payment Deferral Total Percentage of Total Loans and Leases
(dollars in thousands)
Residential real estate $ 22 $ 305 $ — $ 305 $ 632 0.03 %
Residential first lien 22 305 — 305 632 0.04
Total $ 22 $ 305 $ — $ 305 $ 632 0.01 %

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30, 2024
Rate Reduction Term Extension Payment Deferral Term Extension and Payment Deferral Total Percentage of Total Loans and Leases
(dollars in thousands)
Commercial, financial, agricultural and other $ 75 $ 4,885 $ — $ 834 $ 5,794 0.36 %
Time and demand 75 4,885 — 834 5,794 0.51
Residential real estate — 72 — 124 196 0.01
Residential first lien — 72 — 124 196 0.01
Total $ 75 $ 4,957 $ — $ 958 $ 5,990 0.07 % For the Three Months Ended September 30, 2023
--- --- --- --- --- --- --- --- --- --- --- --- ---
Rate Reduction Term Extension Principal Forgiveness Term Extension and Payment Deferral Total Percentage of Total Loans and Leases
(dollars in thousands)
Residential real estate $ — $ 144 $ — $ 63 $ 207 0.01 %
Residential first lien — 144 — 63 207 0.01
Total loans and leases $ — $ 144 $ — $ 63 $ 207 — %

The following tables describe the financial effect of the modifications made to borrowers experiencing financial difficulty:

For the Nine Months Ended September 30, 2024
Rate Reduction Term Extension (Years) Principal Forgiveness Payment Deferral (Years)
(dollars in thousands)
Commercial, financial, agricultural and other 1.99 % 1.5 $ — 0.9
Time and demand 1.87 1.5 — 1.0
Equipment finance 2.30 0.5 — 0.4
Residential real estate — 3.8 — 0.7
Residential first lien — 3.5 — 0.7
Residential junior lien/home equity — 10.3 — 0.3
Commercial real estate — 0.0 — 0.9
Owner occupied — 0.5 — 0.9
Loans to individuals 2.39 2.6 — 0.4
Automobile and recreational vehicles 2.39 2.6 — 0.4
Total 2.01 % 1.7 $ — 0.9 For the Nine Months Ended September 30, 2023
--- --- --- --- --- --- ---
Rate Reduction Term Extension (Years) Principal Forgiveness Payment Deferral (Years)
(dollars in thousands)
Residential real estate 2.25 % 2.8 $ — 0.5
Residential first lien 2.25 2.8 — 0.5
Total 2.25 % 2.8 $ — 0.5

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30, 2024
Rate Reduction Term Extension (Years) Principal Forgiveness Payment Deferral (Years)
(dollars in thousands)
Commercial, financial, agricultural and other 2.75 % 1.4 $ — 1.0
Time and demand 2.75 1.4 — 1.0
Residential real estate — 2.9 — 0.7
Residential first lien — 2.9 — 0.7
Total 2.75 % 1.5 $ — 1.0 For the Three Months Ended September 30, 2023
--- --- --- --- --- --- ---
Rate Reduction Term Extension (Years) Principal Forgiveness Payment Deferral (Years)
(dollars in thousands)
Residential real estate — % 2.2 — 0.5
Residential first lien — 2.2 — 0.5
Total — % 2.2 $ — 0.5

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A modification is considered to be in default when the loan is 90 days or more past due. The following table shows modifications considered to be in default.

September 30, 2024 December 31, 2023
Number of Contracts Balance Number of Contracts Balance
(dollars in thousands)
Commercial, financial, agricultural and other 2 $ 164 — $ —
Equipment finance 2 164 — —
Residential real estate 1 95 — —
Residential first lien 1 95 — —
Total loans and leases 3 $ 259 — $ —

The following table shows the payment status of loans that have been modified in the last twelve months prior to the date presented:

September 30, 2024
Current 30 - 59 days past due 60 - 89 days past due 90 days or greater Total
(dollars in thousands)
Commercial, financial, agricultural and other $ 7,129 $ — $ — $ 164 $ 7,293
Time and demand 7,129 — — — 7,129
Equipment finance — — — 164 164
Residential real estate 616 — 84 95 795
Residential first lien 589 — 84 95 768
Residential junior lien/home equity 27 — — — 27
Commercial real estate 9,674 — — — 9,674
Owner occupied 9,674 — — — 9,674
Loans to individuals 32 — — — 32
Automobile and recreational vehicles 32 — — — 32
Total loans and leases $ 17,451 $ — $ 84 $ 259 $ 17,794 December 31, 2023
--- --- --- --- --- --- --- --- --- --- ---
Current 30 - 59 days past due 60 - 89 days past due 90 days or greater Total
(dollars in thousands)
Commercial, financial, agricultural and other $ 50 $ — $ — $ — $ 50
Time and demand 50 — — — 50
Residential real estate 758 — — — 758
Residential first lien 758 — — — 758
Commercial real estate 9,663 — — — 9,663
Owner occupied 9,663 — — — 9,663
Total loans and leases $ 10,471 $ — $ — $ — $ 10,471

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following tables provide detail related to the allowance for credit losses:

For the Nine Months Ended September 30, 2024
Beginning balance Charge-offs Recoveries Provision (credit)a Ending balance
(dollars in thousands)
Commercial, financial, agricultural and other $ 27,996 $ (11,230) $ 633 $ 13,304 $ 30,703
Time and demand 22,819 (8,161) 405 7,483 22,546
Commercial credit cards 278 (183) 5 137 237
Equipment finance 3,399 (1,235) 72 4,294 6,530
Time and demand other 1,500 (1,651) 151 1,390 1,390
Real estate construction 7,418 (35) 6 (1,209) 6,180
Construction other 6,448 (35) 6 (527) 5,892
Construction residential 970 — — (682) 288
Residential real estate 23,901 (361) 221 (1,122) 22,639
Residential first lien 16,975 (137) 150 (985) 16,003
Residential junior lien/home equity 6,926 (224) 71 (137) 6,636
Commercial real estate 37,071 (2,047) 166 9,492 44,682
Multifamily 5,233 — — (178) 5,055
Non-owner occupied 19,995 (507) 53 8,405 27,946
Owner occupied 11,843 (1,540) 113 1,265 11,681
Loans to individuals 21,332 (7,148) 2,306 5,418 21,908
Automobile and recreational vehicles 19,142 (5,552) 1,937 4,065 19,592
Consumer credit cards 372 (348) 78 238 340
Consumer other 1,818 (1,248) 291 1,115 1,976
Total loans and leases $ 117,718 $ (20,821) $ 3,332 $ 25,883 $ 126,112

a) The provision expense (credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Nine Months Ended September 30, 2023
Beginning balance Allowance for credit loss on PCD acquired loans Charge-offs Recoveries Provision (credit)a Ending balance
(dollars in thousands)
Commercial, financial, agricultural and other $ 22,650 $ 19,417 $ (9,102) $ 352 $ 4,088 $ 37,405
Time and demand 20,040 19,417 (7,424) 214 804 33,051
Commercial credit cards 335 — (63) 13 22 307
Equipment finance 1,086 — (45) — 1,586 2,627
Time and demand other 1,189 — (1,570) 125 1,676 1,420
Real estate construction 8,822 287 — — (605) 8,504
Construction other 6,360 227 — — 765 7,352
Construction residential 2,462 60 — — (1,370) 1,152
Residential real estate 21,412 527 (384) 128 2,257 23,940
Residential first lien 14,822 197 (124) 65 2,071 17,031
Residential junior lien/home equity 6,590 330 (260) 63 186 6,909
Commercial real estate 28,804 6,971 (1,689) 142 8,871 43,099
Multifamily 4,726 234 — — 861 5,821
Non-owner occupied 16,426 2,739 (172) 126 6,373 25,492
Owner occupied 7,652 3,998 (1,517) 16 1,637 11,786
Loans to individuals 21,218 3 (4,649) 1,388 3,429 21,389
Automobile and recreational vehicles 18,819 3 (3,469) 1,114 2,823 19,290
Consumer credit cards 412 — (205) 63 100 370
Consumer other 1,987 — (975) 211 506 1,729
Total loans and leases $ 102,906 $ 27,205 $ (15,824) $ 2,010 $ 18,040 $ 134,337

a) The provision expense (credit) shown here includes the day 1 provision on non-PCD loans acquired from Centric and excludes the provision for off-balance sheet credit exposure included in the income statement.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30, 2024
Beginning balance Charge-offs Recoveries Provision (credit)a Ending balance
(dollars in thousands)
Commercial, financial, agricultural and other $ 30,608 $ (5,980) $ 110 $ 5,965 $ 30,703
Time and demand 23,589 (4,784) 11 3,730 22,546
Commercial credit cards 244 (81) 5 69 237
Equipment finance 5,292 (521) 36 1,723 6,530
Time and demand other 1,483 (594) 58 443 1,390
Real estate construction 6,389 — — (209) 6,180
Construction other 6,017 — — (125) 5,892
Construction residential 372 — — (84) 288
Residential real estate 22,173 (106) 51 521 22,639
Residential first lien 15,745 (28) 37 249 16,003
Residential junior lien/home equity 6,428 (78) 14 272 6,636
Commercial real estate 42,544 (1,423) 42 3,519 44,682
Multifamily 5,206 — — (151) 5,055
Non-owner occupied 25,036 (37) 5 2,942 27,946
Owner occupied 12,302 (1,386) 37 728 11,681
Loans to individuals 21,940 (2,280) 801 1,447 21,908
Automobile and recreational vehicles 19,676 (1,827) 676 1,067 19,592
Consumer credit cards 346 (120) 33 81 340
Consumer other 1,918 (333) 92 299 1,976
Total loans and leases $ 123,654 $ (9,789) $ 1,004 $ 11,243 $ 126,112

a) The provision expense (credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Three Months Ended September 30, 2023
Beginning balance Allowance for credit loss on PCD acquired loans Charge-offs Recoveries Provision (credit)a Ending balance
(dollars in thousands)
Commercial, financial, agricultural and other $ 41,714 $ — $ (1,762) $ 98 $ (2,645) $ 37,405
Time and demand 37,873 — (954) 46 (3,914) 33,051
Commercial credit cards 320 — (28) 6 9 307
Equipment finance 2,074 — — — 553 2,627
Time and demand other 1,447 — (780) 46 707 1,420
Real estate construction 7,728 — — — 776 8,504
Construction other 6,145 — — — 1,207 7,352
Construction residential 1,583 — — — (431) 1,152
Residential real estate 23,740 — (304) 57 447 23,940
Residential first lien 16,563 — (107) 22 553 17,031
Residential junior lien/home equity 7,177 — (197) 35 (106) 6,909
Commercial real estate 38,927 — (172) 6 4,338 43,099
Multifamily 5,775 — — — 46 5,821
Non-owner occupied 21,710 — (172) 2 3,952 25,492
Owner occupied 11,442 — — 4 340 11,786
Loans to individuals 21,437 — (2,360) 461 1,851 21,389
Automobile and recreational vehicles 19,258 — (1,883) 412 1,503 19,290
Consumer credit cards 375 — (59) 16 38 370
Consumer other 1,804 — (418) 33 310 1,729
Total loans and leases $ 133,546 $ — $ (4,598) $ 622 $ 4,767 $ 134,337

a) The provision expense (credit) shown here excludes the provision for off-balance sheet credit exposure included in the income statement.

Note 9 Leases

First Commonwealth has elected to apply certain practical expedients provided under ASU 2016-02 "Leases" (Topic 842) including (i) to not apply the requirements in the new standard to short-term leases; (ii) to not reassess the lease classification for any expired or existing lease; (iii) to account for lease and non-lease components separately; and (iv) to not reassess initial direct costs for any existing leases. The impact of this standard primarily relates to operating leases of certain real estate properties, including certain branch and ATM locations and office space. First Commonwealth has no material leasing arrangements for which it is the lessor of property or equipment.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table represents the unaudited Consolidated Statements of Condition classification of the Company’s right of use ("ROU") assets and lease liabilities, lease costs and other lease information.

September 30, 2024 December 31, 2023
Balance sheet:
Operating lease asset classified as premises and equipment $ 40,982 $ 45,005
Operating lease liability classified as other liabilities 45,472 49,327
For the Three Months Ended For the Nine Months Ended
September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023
Income statement:
Operating lease cost classified as occupancy and equipment expense $ 1,406 $ 1,521 $ 4,333 $ 4,565
Weighted average lease term, in years 13.12 13.37
Weighted average discount rate 3.72 % 3.51 %
Operating cash flows $ 1,404 $ 1,571

The ROU assets and lease liabilities are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. First Commonwealth's lease agreements often include one or more options to renew at the Company's discretion. If we consider the renewal option to be reasonably certain, we include the extended term in the calculation of the ROU asset and lease liability.

First Commonwealth uses incremental borrowing rates when calculating the lease liability because the rate implicit in the lease is not readily determinable. The incremental borrowing rate used by First Commonwealth is an amortizing loan rate obtained from the Federal Home Loan Bank ("FHLB") of Pittsburgh. This rate is consistent with a collateralized borrowing rate and is available for terms similar to the lease payment schedules.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2024 were as follows (dollars in thousands):

For the twelve months ended:
September 30, 2025 $ 5,577
September 30, 2026 5,063
September 30, 2027 4,749
September 30, 2028 4,415
September 30, 2029 4,456
Thereafter 34,237
Total future minimum lease payments 58,497
Less remaining imputed interest 13,025
Operating lease liability $ 45,472

Note 10 Income Taxes

In accordance with FASB ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes,” at September 30, 2024 and December 31, 2023, First Commonwealth had no material unrecognized tax benefits or accrued interest and penalties. If applicable, First Commonwealth will record interest and penalties as a component of noninterest expense.

First Commonwealth is subject to routine audits of our tax returns by the Internal Revenue Service (“IRS”) as well as all states in which we conduct business. Generally, tax years prior to the year ended December 31, 2020 are no longer open to examination by federal and state taxing authorities.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 11 Fair Values of Assets and Liabilities

FASB ASC Topic 820, “Fair Value Measurements and Disclosures” ("Topic 820"), requires disclosures for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). All non-financial assets are included either as a separate line item on the unaudited Consolidated Statements of Financial Condition or in the “Other assets” category of the unaudited Consolidated Statements of Financial Condition. Currently, First Commonwealth does not have any non-financial liabilities to disclose.

FASB ASC Topic 825, “Financial Instruments” ("Topic 825"), permits entities to irrevocably elect to measure select financial instruments and certain other items at fair value. The unrealized gains and losses are required to be included in earnings each reporting period for the items that fair value measurement is elected. First Commonwealth has elected not to measure any existing financial instruments at fair value under Topic 825; however, in the future we may elect to adopt this guidance for select financial instruments.

In accordance with Topic 820, First Commonwealth groups financial assets and financial liabilities measured at fair value in three levels based on the principal markets in which the assets and liabilities are transacted and the observability of the data points used to determine fair value. These levels are:

•Level 1 – Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange (“NYSE”). Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

•Level 2 – Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained for observable inputs for identical or comparable assets or liabilities from alternative pricing sources with reasonable levels of price transparency. Level 2 includes Obligations of U.S. Government securities issued by Agencies and Sponsored Enterprises, Obligations of States and Political Subdivisions, corporate securities, FHLB stock, loans held for sale, premise held for sale, interest rate derivatives (including interest rate caps, interest rate collars, interest rate swaps and risk participation agreements), certain other real estate owned and certain nonperforming loans.

Level 2 investment securities are valued by a recognized third party pricing service using observable inputs. The model used by the pricing service varies by asset class and incorporates available market, trade and bid information as well as cash flow information when applicable. Because many fixed-income investment securities do not trade on a daily basis, the model uses available information such as benchmark yield curves, benchmarking of like investment securities, sector groupings and matrix pricing. The model will also use processes such as an option-adjusted spread to assess the impact of interest rates and to develop prepayment estimates. Market inputs normally used in the pricing model include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications.

Management validates the market values provided by the third party service by having another source price 100% of the securities on a monthly basis, monthly monitoring of variances from prior period pricing and, on a monthly basis, evaluating pricing changes compared to expectations based on changes in the financial markets.

Other investments recorded in the unaudited Consolidated Statements of Financial Condition are primarily comprised of FHLB stock whose estimated fair value is based on its par value. Additional information on FHLB stock is provided in Note 7, “Investment Securities.”

Loans held for sale include residential mortgage loans originated for sale in the secondary mortgage market. The estimated fair value for these loans was determined on the basis of rates obtained in the respective secondary market. Loans held for sale could also include the Small Business Administration guaranteed portion of small business loans. The estimated fair value of these loans is based on the contract with the third party investor. When loans held for sale include other commercial loans, fair value is determined using an executed trade or market bid obtained from potential buyers.

Interest rate derivatives are reported at an estimated fair value utilizing Level 2 inputs and are included in other assets and other liabilities, and consist of interest rate swaps where there is no significant deterioration in the counterparties' and/or loan customers' credit risk since origination of the interest rate swap, as well as interest rate caps, interest rate collars and risk participation agreements. First Commonwealth values its interest rate swap and cap positions using a yield curve by taking market prices/rates for an appropriate set of instruments. The set of instruments used to determine the U.S. Dollar yield curve includes Secured Overnight Financing Rate ("SOFR") rates from overnight to one year, Eurodollar futures contracts and SOFR

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

swap rates from one year to thirty years. These yield curves determine the valuations of interest rate swaps. Interest rate derivatives are further described in Note 12, “Derivatives.”

For purposes of potential valuation adjustments to our derivative positions, First Commonwealth evaluates the credit risk of its counterparties as well as our own credit risk. Accordingly, we have considered factors such as the likelihood of default, expected loss given default, net exposures and remaining contractual life, among other things, in determining if any estimated fair value adjustments related to credit risk are required. We review our counterparty exposure quarterly, and when necessary, appropriate adjustments are made to reflect the exposure.

Interest rate derivatives also include interest rate forwards entered to hedge residential mortgage loans held for sale and the related interest-rate lock commitments. This includes forward commitments to sell mortgage loans. The fair value of these derivative financial instruments are based on derivative market data inputs as of the valuation date and the underlying value of mortgage loans for rate lock commitments.

The estimated fair value for other real estate owned included in Level 2 is determined by either an independent market-based appraisal less estimated costs to sell or an executed sales agreement.

•Level 3 – Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker traded transactions. If the inputs used to provide the valuation are unobservable and/or there is very little, if any, market activity for the security or similar securities, the securities would be considered Level 3 securities. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities. The assets included in Level 3 are non-marketable equity investments, certain interest rate derivatives and certain nonperforming loans.

The estimated fair value of other investments included in Level 3 is based on carrying value as these securities do not have a readily determinable fair value.

The estimated fair value of limited partnership investments included in Level 3 is based on par value.

For interest rate derivatives included in Level 3, the fair value incorporates credit risk by considering such factors as likelihood of default and expected loss given default based on the credit quality of the underlying counterparties (loan customers).

In accordance with ASU No. 2011-04, the following table provides information related to quantitative inputs and assumptions used in Level 3 fair value measurements.

Fair Value (dollars<br>in thousands) Valuation<br>Technique Unobservable Inputs Range /<br>(weighted average)
September 30, 2024
Other Investments $ 5,732 Carrying Value N/A N/A
Limited Partnership Investments 29,757 Par Value N/A N/A
December 31, 2023
Other Investments $ 6,182 Carrying Value N/A N/A
Limited Partnership Investments 27,137 Par Value N/A N/A

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below present the balances of assets and liabilities measured at fair value on a recurring basis:

September 30, 2024
Level 1 Level 2 Level 3 Total
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential $ — $ 3,116 $ — $ 3,116
Mortgage-Backed Securities - Commercial — 684,834 — 684,834
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential — 383,455 — 383,455
Other Government-Sponsored Enterprises — 947 — 947
Obligations of States and Political Subdivisions — 8,179 — 8,179
Corporate Securities — 60,269 — 60,269
Total Debt Securities — 1,140,800 — 1,140,800
Equity Securities — — — —
Total Securities Available for Sale — 1,140,800 — 1,140,800
Other Investments — 18,860 5,732 24,592
Loans Held for Sale — 46,785 — 46,785
Other Assets(a) — 17,815 29,757 47,572
Total Assets $ — $ 1,224,260 $ 35,489 $ 1,259,749
Other Liabilities(a) $ — $ 30,860 $ — $ 30,860
Total Liabilities $ — $ 30,860 $ — $ 30,860

(a)Hedging and non-hedging interest rate derivatives and limited partnership investments

December 31, 2023
Level 1 Level 2 Level 3 Total
(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities - Residential $ — $ 3,465 $ — $ 3,465
Mortgage-Backed Securities - Commercial — 465,393 — 465,393
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities - Residential — 494,599 — 494,599
Other Government-Sponsored Enterprises — 915 — 915
Obligations of States and Political Subdivisions — 8,202 — 8,202
Corporate Securities — 48,412 — 48,412
Total Securities Available for Sale — 1,020,986 — 1,020,986
Other Investments — 44,689 6,182 50,871
Loans Held for Sale — 29,820 — 29,820
Other Assets(a) — 32,668 27,137 59,805
Total Assets $ — $ 1,128,163 $ 33,319 $ 1,161,482
Other Liabilities(a) $ — $ 58,167 $ — $ 58,167
Total Liabilities $ — $ 58,167 $ — $ 58,167

(a)Hedging and non-hedging interest rate derivatives and limited partnership investments

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the nine months ended September 30, changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:

2024
Other Investments Other<br>Assets Total
(dollars in thousands)
Balance, beginning of period $ 6,182 $ 27,137 $ 33,319
Total gains or losses
Included in earnings — (7) (7)
Included in other comprehensive income — — —
Purchases, issuances, sales and settlements
Purchases — 3,383 3,383
Issuances — — —
Sales (450) — (450)
Settlements — (756) (756)
Transfers from Level 3 — — —
Transfers into Level 3 — — —
Balance, end of period $ 5,732 $ 29,757 $ 35,489
2023
--- --- --- --- ---
Other Investments Other<br>Assets Total
(dollars in thousands)
Balance, beginning of period $ 1,170 $ 17,691 $ 18,861
Total gains or losses
Included in earnings — — —
Included in other comprehensive income — — —
Purchases, issuances, sales and settlements
Purchases 5,000 9,161 14,161
Issuances — — —
Sales — — —
Settlements — (512) (512)
Transfers from Level 3 — — —
Transfers into Level 3 12 57 69
Balance, end of period $ 6,182 $ 26,397 $ 32,579

During the nine months ended September 30, 2024 and 2023, there were no transfers between fair value Levels 1, 2 or 3. There were no gains or losses included in earnings for the periods presented that are attributable to the change in realized gains (losses) relating to assets held at September 30, 2024 and 2023.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the three months ended September 30, changes in Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:

2024
Other Investments Other<br>Assets Total
(dollars in thousands)
Balance, beginning of period $ 6,182 $ 28,825 $ 35,007
Total gains or losses
Included in earnings — 4 4
Included in other comprehensive income — — —
Purchases, issuances, sales and settlements
Purchases — 1,147 1,147
Issuances — — —
Sales (450) — (450)
Settlements — (219) (219)
Transfers from Level 3 — — —
Transfers into Level 3 — — —
Balance, end of period $ 5,732 $ 29,757 $ 35,489
2023
--- --- --- --- ---
Other Investments Other<br>Assets Total
(dollars in thousands)
Balance, beginning of period $ 6,182 $ 25,011 $ 31,193
Total gains or losses
Included in earnings — — —
Included in other comprehensive income — — —
Purchases, issuances, sales and settlements
Purchases — 1,544 1,544
Issuances — — —
Sales — — —
Settlements — (158) (158)
Transfers from Level 3 — — —
Transfers into Level 3 — — —
Balance, end of period $ 6,182 $ 26,397 $ 32,579

During the three months ended September 30, 2024 and 2023, there were no transfers between fair value Levels 1, 2 or 3. There were no gains or losses included in earnings for the periods presented that are attributable to the change in realized gains (losses) relating to assets held at September 30, 2024 and 2023.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below present the balances of assets measured at fair value on a nonrecurring basis at the dates shown below:

September 30, 2024
Level 1 Level 2 Level 3 Total
(dollars in thousands)
Nonperforming loans $ — $ 49,501 $ 10,948 $ 60,449
Other real estate owned — 1,018 — 1,018
Total Assets $ — $ 50,519 $ 10,948 $ 61,467
December 31, 2023
--- --- --- --- --- --- --- --- ---
Level 1 Level 2 Level 3 Total
(dollars in thousands)
Nonperforming loans $ — $ 25,215 $ 9,708 $ 34,923
Other real estate owned — 609 — 609
Total Assets $ — $ 25,824 $ 9,708 $ 35,532

The following (losses) gains were realized on the assets measured on a nonrecurring basis:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
(dollars in thousands)
Nonperforming loans $ (6,914) $ (4,598) $ (12,413) $ (5,265)
Other real estate owned (34) — (68) —
Total losses $ (6,948) $ (4,598) $ (12,481) $ (5,265)

Nonperforming loans over $250 thousand are individually reviewed to determine the amount of each loan considered to be at risk of non-collection. The fair value for nonperforming loans that are collateral-based is determined by reviewing real property appraisals, equipment valuations, accounts receivable listings and other financial information. A discounted cash flow analysis is performed to determine fair value for nonperforming loans when an observable market price or a current appraisal is not available. For real estate secured loans, First Commonwealth’s loan policy requires updated appraisals be obtained at least every twelve months on all nonperforming loans with balances of $250 thousand and over. For real estate secured loans with balances under $250 thousand, we rely on broker price opinions. For non-real estate secured assets, the Company normally relies on third party valuations specific to the collateral type.

The fair value for other real estate owned that is determined by either an independent market-based appraisal less estimated costs to sell or an executed sales agreement, is classified as Level 2. The fair value for other real estate owned that is determined using an internal valuation, is classified as Level 3. Other real estate owned has a current carrying value of $0.7 million as of September 30, 2024 and primarily consists of residential real estate properties in Pennsylvania and Ohio. We review whether events and circumstances subsequent to a transfer to other real estate owned have occurred that indicate the balance of those assets may not be recoverable. If events and circumstances indicate further impairment, we will record a charge to the extent that the carrying value of the assets exceed their fair values, less estimated cost to sell, as determined by valuation techniques appropriate in the circumstances.

Certain other assets and liabilities, including goodwill, core deposit intangibles and customer list intangibles are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances. Additional information related to goodwill is provided in Note 13, “Goodwill.” There were no other assets or liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2024.

FASB ASC Topic 825-10, “Transition Related to FSP FAS 107-1” and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or nonrecurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

recurring or nonrecurring basis are as discussed above. The methodologies for other financial assets and financial liabilities are discussed below.

Cash and due from banks and interest-bearing bank deposits: The carrying amounts for cash and due from banks and interest-bearing bank deposits approximate the estimated fair values of such assets.

Securities: Fair values for securities available for sale and held to maturity are based on quoted market prices, if available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. The carrying value of other investments, which includes FHLB stock and other equity investments, is considered a reasonable estimate of fair value.

Loans: The fair values of all loans are estimated by discounting the estimated future cash flows using interest rates currently offered for loans with similar terms to borrowers of similar credit quality adjusted for past due and nonperforming loans.

Loans held for sale: The estimated fair value of loans held for sale is based on market bids obtained from potential buyers.

Off-balance sheet instruments: Many of First Commonwealth’s off-balance sheet instruments, primarily loan commitments and standby letters of credit, are expected to expire without being drawn upon; therefore, the commitment amounts do not necessarily represent future cash requirements. FASB ASC Topic 460, “Guarantees” clarified that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The carrying amount and estimated fair value for standby letters of credit was $0.2 million and $0.1 million at September 30, 2024 and December 31, 2023. See Note 6, “Commitments and Contingent Liabilities,” for additional information.

Deposit liabilities: The estimated fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date because of the customers’ ability to withdraw funds immediately. The fair value of fixed rate time deposits is estimated by discounting the future cash flows using interest rates currently being offered and a schedule of aggregated expected maturities.

Short-term borrowings: The fair values of borrowings from the FHLB were estimated based on the estimated incremental borrowing rate for similar type borrowings. The carrying amounts of other short-term borrowings, such as federal funds purchased and securities sold under agreement to repurchase, were used to approximate fair value due to the short-term nature of the borrowings.

Subordinated debt and long-term debt: The fair value is estimated by discounting the future cash flows using First Commonwealth’s estimate of the current market rate for similar types of borrowing arrangements.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents carrying amounts and fair values of First Commonwealth’s financial instruments:

September 30, 2024
Fair Value Measurements Using:
Carrying<br>Amount Total Level 1 Level 2 Level 3
(dollars in thousands)
Financial assets
Cash and due from banks $ 126,598 $ 126,598 $ 126,598 $ — $ —
Interest-bearing deposits 455,711 455,711 455,711 — —
Securities available for sale 1,140,800 1,140,800 — 1,140,800 —
Equity securities — — — — —
Securities held to maturity 430,425 373,160 — 373,160 —
Other investments 24,592 24,592 — 18,860 5,732
Loans held for sale 46,785 46,785 — 46,785 —
Loans and leases 8,965,500 8,903,333 — 49,501 8,853,832
Financial liabilities
Deposits 9,745,552 9,745,094 — 9,745,094 —
Short-term borrowings 538,828 537,568 — 537,568 —
Subordinated debt 128,266 111,785 — — 111,785
Long-term debt 3,548 3,539 — 3,539 —
Capital lease obligation 4,471 4,471 — 4,471 —
December 31, 2023
--- --- --- --- --- --- --- --- --- --- ---
Fair Value Measurements Using:
Carrying<br>Amount Total Level 1 Level 2 Level 3
(dollars in thousands)
Financial assets
Cash and due from banks $ 125,436 $ 125,436 $ 125,436 $ — $ —
Interest-bearing deposits 21,557 21,557 21,557 — —
Securities available for sale 1,020,986 1,020,986 — 1,020,986 —
Securities held to maturity 419,009 350,595 — 350,595 —
Other investments 50,871 50,871 — 44,689 6,182
Loans held for sale 29,820 29,820 — 29,820 —
Loans and leases 8,968,761 8,860,736 — 25,215 8,835,521
Financial liabilities
Deposits 9,192,309 9,187,655 — 9,187,655 —
Short-term borrowings 597,835 594,670 — 594,670 —
Subordinated debt 177,741 151,525 — — 151,525
Long-term debt 4,122 4,041 — 4,041 —
Capital lease obligation 4,894 4,894 — 4,894 —

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 12 Derivatives

Derivatives Not Designated as Hedging Instruments

First Commonwealth is a party to interest rate derivatives that are not designated as hedging instruments. These derivatives relate to interest rate swaps that First Commonwealth enters into with customers to allow customers to convert variable rate loans to a fixed rate. First Commonwealth pays interest to the customer at a floating rate on the notional amount and receives interest from the customer at a fixed rate for the same notional amount. At the same time the interest rate swap is entered into with the customer, an offsetting interest rate swap is entered into with another financial institution. First Commonwealth pays the other financial institution interest at the same fixed rate on the same notional amount as the swap entered into with the customer, and receives interest from the financial institution for the same floating rate on the same notional amount.

The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties.

We have 27 risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. We have 21 risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are the lead bank. The risk participation agreement provides credit protection to us should the borrower fail to perform on its interest rate derivative contract with us.

First Commonwealth is also party to interest rate caps and collars that are not designated as hedging instruments. The interest rate caps relate to contracts that First Commonwealth enters into with loan customers that provide a maximum interest rate on their variable rate loan. At the same time the interest rate cap is entered into with the customer, First Commonwealth enters into an offsetting interest rate cap with another financial institution. The notional amount and maximum interest rate on both interest cap contracts are identical. The interest rate collars relate to contracts that First Commonwealth enters into with loan customers that provides both a maximum and minimum interest rate on their variable rate loan. At the same time the interest rate collar is entered into with the customer, First Commonwealth enters into an offsetting interest rate collar with another financial institution. The notional amount and the maximum and minimum interest rates on both interest collar contracts are identical.

The fee received for such derivatives, less the estimate of the loss for the credit exposure, is recognized in earnings at the time of the transaction.

The Company also enters into interest rate lock commitments in conjunction with its mortgage origination business. These are commitments to originate loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. The Company locks in the rate with an investor and commits to deliver the loan if settlement occurs (“best efforts”) or commits to deliver the locked loan in a binding (“mandatory”) delivery program with an investor. Loans under mandatory rate lock commitments are covered under forward sales contracts of mortgage-backed securities (“MBS”). Forward sales contracts of MBS are recorded at fair value with changes in fair value recorded in "Noninterest income" in the unaudited Consolidated Statements of Income. The impact to noninterest income for the three and nine months ended September 30, 2024 was an increase of $0.6 million and $0.9 million, respectively.

Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives. The market value of interest rate lock commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. We determine the fair value of rate lock commitments and delivery contracts by measuring the fair value of the underlying asset, which is impacted by current interest rates and takes into consideration the probability that the rate lock commitments will close or will be funded. At September 30, 2024, the underlying funded mortgage loan commitments had a carrying value of $9.5 million and a fair value of $11.4 million, while the underlying unfunded mortgage loan commitments had a notional amount of $64.0 million. At December 31, 2023, the underlying funded mortgage loan commitments had a carrying value of $7.1 million and a fair value of $8.1 million, while the underlying unfunded mortgage loan commitments had a notional amount of $38.2 million. The interest rate lock commitments decreased other noninterest income by $0.1 million for the three months ended September 30, 2024 and increased other noninterest income by $0.3 million for the nine months ended September 30, 2024, respectively.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivatives Designated as Hedging Instruments

In August 2019, the Company entered into two interest rate swap contracts that are designated as cash flow hedges. These contracts mature on August 15, 2024 and August 15, 2026 and have notional amounts of $30.0 million and $40.0 million, respectively. The Company's risk management objective for these hedges is to reduce its exposure to variability in expected future cash flows related to interest payments made on subordinated debentures. Initially these swaps were benchmarked to the 3-month LIBOR rate; however, as a result of the discontinuance of the LIBOR rate on June 30, 2023, both of the swap contracts were amended to hedge exposure to the variability of the 3-month Daily Simple SOFR, compounded in arrears. This change is in agreement with amendments made to the interest rate on the subordinated debentures as a result of the discontinuance of LIBOR. Therefore, the interest rate swaps convert the interest rate benchmark on the first $70.0 million of 3-month SOFR based subordinated debentures to a fixed rate.

During 2021, the Company entered into eight interest rate swap contracts that were designated as cash flow hedges, $25.0 million of which matured during the second quarter of 2024. The remaining interest rate swaps have a total notional amount of $475.0 million: $50.0 million with an original maturity of three years, $250.0 million with an original maturity of four years and $175.0 million with an original maturity of five years. The Company's risk management objective for these hedges is to reduce its exposure to variability in expected future cash flows related to interest payments on commercial loans. Initially these swaps were benchmarked to the 1-month LIBOR rate however, as a result of the discontinuance of the LIBOR rate on June 30, 2023, these swaps were amended to hedge exposure to the variability of the 1-month Daily Simple SOFR rate compounded in arrears. Therefore, the interest rate swaps convert the interest payments on the first $500.0 million of 1-month Daily Simple SOFR based commercial loans into fixed rate payments. The following table provides the notional amount of interest rate swap contracts and their maturity date.

Notional Amount
(dollars in thousands)
50,000
150,000
25,000
25,000
50,000
150,000
25,000
475,000

All values are in US Dollars.

The periodic net settlement of these interest rate swaps are recorded as an adjustment to "Interest on subordinated debentures" or "Interest and fees on loans" in the unaudited Consolidated Statements of Income. For the three and nine months ended September 30, 2024, there was a negative impact of $5.1 million and $15.8 million, respectively, on net interest income as a result of these interest rate swaps. Changes in the fair value of the cash flow hedges are reported on the balance sheet and in OCI. When the cash flows associated with the hedged item are realized, the gain or loss included in OCI is recognized in "Interest on subordinated debentures," or "Interest and fees on loans", the same line items in the unaudited Consolidated Statements of Income as the income on the hedged items. The cash flow hedges were highly effective at September 30, 2024, and changes in the fair value attributed to hedge ineffectiveness were not material.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table depicts the credit value and fair value adjustments recorded related to the notional amount of derivatives outstanding as well as the notional amount of risk participation agreements participated to other banks:

September 30, 2024 December 31, 2023
(dollars in thousands)
Derivatives not Designated as Hedging Instruments
Interest rate derivatives:
Credit value adjustment $ (154) $ (13)
Notional amount:
Interest rate derivatives 921,088 945,046
Interest rate caps 37,295 37,647
Interest rate collars 524 35,878
Risk participation agreements 182,869 206,325
Sold credit protection on risk participation agreements (151,714) (121,265)
Interest rate options 64,016 38,155
Interest rate forwards:
Fair value adjustment (24) (352)
Notional amount 48,000 39,000
Derivatives Designated as Hedging Instruments
Interest rate swaps:
Fair value adjustment (12,867) (25,133)
Notional amount 515,000 570,000

The table below presents the change in the fair value of derivative assets and derivative liabilities attributable to credit risk or fair value changes included in "Other income", "Other expense," "Interest on subordinated debentures" or "Interest and fees on loans" in the unaudited Consolidated Statements of Income:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
(dollars in thousands)
Non-hedging interest rate derivatives
Increase (decrease) in other income $ 425 $ (581) $ 721 $ (178)
Non-hedging interest rate forwards
(Decrease) increase in other income (79) (460) 329 (590)
Hedging interest rate derivatives
Decrease in interest and fees on loans (5,630) (5,508) (17,832) (15,678)
Decrease in interest from subordinated debentures (567) (715) (2,014) (1,925)

The fair value of our derivatives is included in a table in Note 11, “Fair Values of Assets and Liabilities,” in the line items “Other assets” and “Other liabilities.”

Note 13 Goodwill

FASB ASC Topic 350-20, “Intangibles – Goodwill and Other” requires an annual valuation of the fair value of a reporting unit that has goodwill and a comparison of the fair value to the book value of equity to determine whether the goodwill has been impaired. Goodwill is also required to be tested on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. When circumstances indicate that it is more likely than not that fair value is less than carrying value, a triggering event has occurred and a quantitative impairment test would be performed.

We consider First Commonwealth to be one reporting unit. The carrying amount of goodwill at both September 30, 2024 and December 31, 2023 was $363.7 million. No impairment charges on goodwill or other intangible assets were incurred in 2024 or 2023.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We test goodwill for impairment as of November 30th each year and again at any quarter-end if any material events occur during a quarter that may affect goodwill.

As of September 30, 2024, no indicators of impairment were identified; however, changing economic conditions that may adversely affect our performance, the fair value of our assets and liabilities, or our stock price could result in impairment, which could adversely affect earnings in future periods. Management will continue to monitor events that could impact this conclusion in the future.

Note 14 Subordinated Debentures

Subordinated debentures outstanding are as follows:

September 30, 2024 December 31, 2023
Due Rate Amount Amount
(dollars in thousands)
Owed to:
First Commonwealth Bank 2028 3-Month CME Term SOFR + 0.26161% + 1.845% $ — $ 49,592
First Commonwealth Bank 2033 5.50% until June 1, 2028, then 3-Month CME Term SOFR + 0.26161% + 2.37% 49,393 49,341
First Commonwealth Financial Corp 2031 4.50% until March 29, 2026, then Prime + 1.00% 6,706 6,641
First Commonwealth Capital Trust II 2034 3-Month CME Term SOFR + 0.26161% + 2.85% 30,929 30,929
First Commonwealth Capital Trust III 2034 3-Month CME Term SOFR + 0.26161% + 2.85% 41,238 41,238
Total $ 128,266 $ 177,741

With the acquisition of Centric in January 2023, First Commonwealth acquired a ten-year subordinated note with a principal balance of $6.0 million. The rate remains fixed at 4.50% until March 29, 2026, then adjusts quarterly to Prime + 1.00%. The Bank may redeem the notes, beginning with the interest payment due on March 29, 2026, in whole or in part at a redemption price equal to 100% of the principal amount of the subordinated notes, plus accrued and unpaid interest to the date of redemption. A fair value premium of $0.6 million was recognized in connection with the acquisition.

On May 21, 2018, First Commonwealth issued ten-year subordinated notes with an aggregate principal amount of $50.0 million. Interest was paid quarterly at a rate of three-month CME Term SOFR + 0.26161% + 1.845%. On June, 1, 2024, the Bank redeemed the notes, in whole, at a redemption price equal to 100% of the principal amount of the subordinated notes, plus accrued and unpaid interest to the date of redemption. As part of the redemption of these notes, the remaining deferred issuance costs of $0.4 million were recognized as a loss on redemption.

On May 21, 2018, First Commonwealth issued fifteen-year subordinated notes with an aggregate principal amount of $50.0 million and a fixed-to-floating rate of 5.50%. The rate remains fixed until June 1, 2028, then adjusts on a quarterly basis to three-month CME Term SOFR+ 0.26161% + 2.37%. The Bank may redeem the notes, subject to regulatory approval, beginning with the interest payment due on June 1, 2028, in whole or in part at a redemption price equal to 100% of the principal amount of the subordinated notes, plus accrued and unpaid interest to the date of redemption. Deferred issuance costs of $1.1 million are being amortized on a straight-line basis over the term of the notes.

First Commonwealth currently has two trusts, First Commonwealth Capital Trust II and First Commonwealth Capital Trust III, of which 100% of the common equity is owned by First Commonwealth. The trusts were formed for the purpose of issuing company obligated mandatorily redeemable capital securities to third-party investors and investing the proceeds from the sale of the capital securities solely in junior subordinated debt securities (“subordinated debentures”) of First Commonwealth. The subordinated debentures held by each trust are the sole assets of the trust.

Interest on the debentures issued to First Commonwealth Capital Trust II is paid quarterly at a floating rate of three-month CME Term SOFR + 0.26161% + 2.85%, which is reset quarterly. Subject to regulatory approval, First Commonwealth may redeem the debentures, in whole or in part, at its option at a redemption price equal to 100% of the principal amount of the debentures, plus accrued and unpaid interest to the date of the redemption. Deferred issuance costs of $0.5 million are being amortized on a straight-line basis over the term of the securities.

Interest on the debentures issued to First Commonwealth Capital Trust III is paid quarterly at a floating rate of three-month CME Term SOFR + 0.26161% + 2.85%, which is reset quarterly. Subject to regulatory approval, First Commonwealth may

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

redeem the debentures, in whole or in part, at its option on any interest payment date at a redemption price equal to 100% of the principal amount of the debentures, plus accrued and unpaid interest to the date of the redemption. Deferred issuance costs of $0.6 million are being amortized on a straight-line basis over the term of the securities.

In order to reduce its exposure to variability in expected future cash flows related to interest payments on First Commonwealth Capital Trust II and III, the Company entered into two interest rate swap contracts that are designated as cash flow hedges. These contracts fix the index rate based portion of the interest rate on Capital Trust III at 1.525% until August 15, 2026. A similar interest rate swap contract was entered for Capital Trust II which fixed the index rate based portion at 1.515%, however that swap expired on August 15, 2024. Additional information related to these cash flow hedges can be found in Note 12 - "Derivatives".

Note 15 Revenue Recognition

Substantially all of the Company’s revenue is generated from contracts with customers. Revenue associated with financial instruments, including revenue from loans and securities, certain noninterest income streams such as fees associated with derivatives are not in scope of FASB ASC Topic 606 - "Revenue from Contracts with Customers" ("Topic 606"). Topic 606 is applicable to noninterest revenue streams such as trust income, service charges on deposits, insurance and retail brokerage commissions, card-related interchange income and gain(loss) on sale of OREO. For contracts within the scope of Topic 606, the Company immediately expenses contract acquisition costs when the asset that would have resulted from capitalizing these costs would have been amortized in one year or less.

Noninterest revenue streams in-scope of Topic 606 are discussed below:

Trust Income

Trust income is primarily comprised of fees earned from the management and administration of trusts and other customer assets. The Company’s performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon a tiered scale of market value of the assets under management at month-end. Payment is generally received a few days after month end through a direct charge to customers’ accounts. The Company does not earn performance-based incentives. Optional services such as financial planning or tax return preparation services are also available to trust customers. The Company’s performance obligation for these transactional-based services is generally satisfied and related revenue recognized at a point in time. Payment is received shortly after services are rendered.

Service Charges on Deposit Accounts

Service charges on deposit accounts consist of fees earned from its deposit customers for transaction-based, account maintenance, overdraft services and account analysis fees. Transaction-based fees, which include services such as ATM use fees, stop payment fees, statement rendering and ACH fees are recognized at the time the transaction is executed which is the point in time the Company fulfills the customer’s request. Monthly account maintenance fees are earned over the course of the month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. The Company’s performance obligation for account analysis fees is generally satisfied, and the related revenue recognized, during the month the service is provided. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Insurance and Retail Brokerage Commissions

Insurance income primarily consists of commissions received from execution of personal, business and health insurance policies when acting as an agent on behalf of insurance carriers. The Company’s performance obligation is generally satisfied upon the issuance of the insurance policy. Because the Company’s contracts with the insurance carriers are generally cancellable by either party with minimal notice, insurance commissions are recognized during the policy period as received. Also, the majority of insurance commissions are received on a monthly basis during the policy period; however, some carriers pay the full annual commission to First Commonwealth at the time of policy issuance or renewal. In these cases, First Commonwealth would be required to refund any commissions it would not be entitled to as a result of cancelled or terminated policies. The Company has established a refund liability for the remaining term of the policies expected to be cancelled. The Company also receives incentive-based contingency fees from the insurance carriers. Contingency fee revenue, which totals approximately $0.3 million per year, is recognized as received due to the immaterial amount.

Retail brokerage income primarily consists of commissions received on annuity and investment product sales through a third-party service provider. The Company’s performance obligation is generally satisfied upon the issuance of the annuity policy or the execution of an investment transaction. The Company does not earn a significant amount of trailer fees on annuity sales. However, after considering the factors impacting these trailer fees, such as the uncertainty of investor behavior and changes in the market value of assets, First Commonwealth determined that it would recognize trailing fees as received because it could not reasonably estimate an amount of future trailing commissions for which collection is probable. Commissions from the third-party service provider are received on a monthly basis based upon customer activity for the month. The fees are recognized monthly with a receivable until commissions are received from the third-party service provider the following month. Because the Company acts as an agent in arranging the relationship between the customer and the third-party service provider and does not control the services rendered to the customers, retail brokerage fees are presented net of related costs, including $3.9 million and $3.1 million in commission expense as of September 30, 2024 and 2023, respectively.

Card-Related Interchange Income

Card-related interchange income is primarily comprised of debit and credit card income, ATM fees and merchant services income. Debit and credit card income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as MasterCard. ATM fees are primarily generated when a Company cardholder uses a non-Company ATM or a non-Company cardholder uses a Company ATM. Merchant services income mainly represents fees charged to merchants to process their debit and credit card transactions, in addition to account management fees. Card-related interchange income is recognized daily as the customer transactions are settled.

Other Income

Other income includes service revenue from processing wire transfers, bill pay service, cashier’s checks, and other services. The Company’s performance obligation for these services are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.

Gains(losses) on sales of OREO

First Commonwealth records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When First Commonwealth finances the sale of OREO to the buyer, an assessment of whether the buyer is committed to perform their obligations under the contract is completed along with an evaluation of whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer. In determining the gain or loss on the sale, First Commonwealth adjusts the transaction price and the related gain or loss on sale if a significant financing component is present.

ITEM 1. Financial Statements and Supplementary Data

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606:

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
(dollars in thousands)
Noninterest Income
In-scope of Topic 606:
Trust income $ 3,242 $ 2,949 $ 8,790 $ 7,967
Service charges on deposit accounts 5,840 5,600 16,769 15,842
Insurance and retail brokerage commissions 2,663 2,305 7,618 7,171
Card-related interchange income 4,137 7,221 17,964 21,422
Gain on sale of other loans and assets 290 102 567 268
Other income 1,121 1,097 3,433 3,233
Noninterest Income (in-scope of Topic 606) 17,293 19,274 55,141 55,903
Noninterest Income (out-of-scope of Topic 606) 7,405 5,552 18,755 16,409
Total Noninterest Income $ 24,698 $ 24,826 $ 73,896 $ 72,312

Table of Contents

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

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, 2024 and 2023, and should be read in conjunction with the unaudited Consolidated Financial Statements and notes thereto included in this Form 10-Q.

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified as such. In addition, certain statements may be contained in our future filings with the Securities and Exchange Commission, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of First Commonwealth or its management or Board of Directors, including those relating to products, services or operations; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “estimate,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may,” are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

•Local, regional, national and international economic conditions and the impact they may have on us and our customers and our assessment of that impact.

•Volatility and disruption in national and international financial markets.

•Government intervention in the U.S. financial system.

•Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs.

•Changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.

•The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.

•Inflation, interest rate, securities market and monetary fluctuations.

•The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which we and our subsidiaries must comply.

•The soundness of other financial institutions.

•Political instability.

•Impairment of our goodwill or other intangible assets.

•Acts of God or of war or terrorism.

•The timely development and acceptance of new products and services and perceived overall value of these products and services by users.

•Changes in consumer spending, borrowings and savings habits.

•Changes in the financial performance and/or condition of our borrowers.

•Technological changes.

•The cost and effects of cyber incidents or other failures, interruption or security breaches of our systems or those of third-party providers.

•Acquisitions and integration of acquired businesses.

•Our ability to increase market share and control expenses.

•Our ability to attract and retain qualified employees.

•Changes in the competitive environment in our markets and among banking organizations and other financial service providers.

•The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters.

•Changes in the reliability of our vendors, internal control systems or information systems.

•Changes in our liquidity position.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

•Changes in our organization, compensation and benefit plans.

•The costs and effects of legal and regulatory developments, the resolution of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals.

•Greater than expected costs or difficulties related to the integration of new products and lines of business.

•Our success at managing the risks involved in the foregoing items.

Forward-looking statements speak only as of the date on which such statements are made. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

Explanation of Use of Non-GAAP Financial Measures

In addition to the results of operations presented in accordance with generally accepted accounting principles (“GAAP”), First Commonwealth management uses, and this quarterly report contains or references, certain non-GAAP financial measures, such as net interest income on a fully taxable equivalent basis. We believe these non-GAAP financial measures provide information that is useful to investors in understanding our underlying operational performance and our business and performance trends as they facilitate comparison with the performance of others in the financial services industry. Although we believe that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP.

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 66 and 74 for nine and three months ended September 30, 2024 and 2023.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Selected Financial Data

The following selected financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations, which follows, and with the unaudited Consolidated Financial Statements and related notes.

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2024 2023 2024 2023
(dollars in thousands, except per share data)
Net Income $ 32,086 $ 39,231 $ 106,723 $ 112,236
Per Share Data:
Basic Earnings per Share $ 0.31 $ 0.38 $ 1.05 $ 1.11
Diluted Earnings per Share 0.31 0.38 1.04 1.10
Cash Dividends Declared per Common Share 0.130 0.125 0.385 0.370
Average Balance:
Total assets $ 11,776,532 $ 11,307,058 $ 11,664,788 $ 10,987,290
Total equity 1,389,290 1,249,441 1,353,125 1,215,433
End of Period Balance:
Net loans and leases (1) $ 8,886,173 $ 8,800,515
Total assets 11,983,199 11,421,988
Total deposits 9,745,552 9,241,065
Total equity 1,409,616 1,240,531
Key Ratios:
Return on average assets 1.08 % 1.38 % 1.22 % 1.37 %
Return on average equity 9.19 % 12.46 % 10.54 % 12.35 %
Dividends payout ratio 41.94 % 32.89 % 36.67 % 33.33 %
Average equity to average assets ratio 11.80 % 11.05 % 11.60 % 11.06 %
Net interest margin 3.56 % 3.76 % 3.55 % 3.87 %
Net loans to deposits ratio 91.18 % 95.23 %

(1) Includes loans held for sale.

Results of Operations

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net Income

For the nine months ended September 30, 2024, First Commonwealth had net income of $106.7 million, or $1.04 diluted earnings per share, compared to net income of $112.2 million, or $1.10 diluted earnings per share, in the nine months ended September 30, 2023. The decrease in net income was primarily the result of a $6.1 million decrease in net interest income and a $6.0 million increase in the provision for credit losses. Offsetting these items was a $1.6 million increase in noninterest income and a $3.3 million decrease in noninterest expense, the latter of which was primarily due to $8.9 million in expenses related to the Centric acquisition recognized in the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, the Company’s return on average equity was 10.54% and its return on average assets was 1.22%, compared to 12.35% and 1.37%, respectively, for the nine months ended September 30, 2023.

Net Interest Income

Net interest income, on a fully taxable equivalent basis, was $284.8 million in the first nine months of 2024, compared to $290.9 million for the same period in 2023. The decrease in net interest income can be attributed to a 100 basis point increase in the cost of interest-bearing liabilities offset by a 49 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 79.3% and 80.0% for the nine months ended September 30, 2024 and 2023, respectively.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The net interest margin on a fully taxable equivalent basis was 3.55% for the nine months ended September 30, 2024 and 3.87% for the nine months ended September 30, 2023. 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.

The taxable equivalent yield on interest-earning assets was 5.63% for the nine months ended September 30, 2024, an increase of 49 basis points compared to the 5.14% yield for the same period in 2023. This change is a result of the higher interest rate environment and resulted in the loan portfolio yield increasing by 47 basis points when compared to the nine months ended September 30, 2023. Contributing to this increase was the yield on our adjustable and variable rate commercial loan portfolios, which increased 30 basis points due to the impact on loan repricing and new volumes at higher interest rates. Additionally, for the nine months ended September 30, 2024, 8 basis points of the yield on interest-earning assets can be attributed to the recognition of $6.1 million in accretion of purchase accounting marks, primarily from the Centric acquisition. For the nine months ended September 30, 2023, accretion of purchase accounting marks contributed $6.9 million, or 9 basis points, to the yield on interest-earning assets.

The investment portfolio yield increased 101 basis points in comparison to the prior year as new volume rates were higher than the portfolio yield. The average investment portfolio balance for the period ended September 30, 2024 increased $278.9 million as compared to the nine months ended September 30, 2023 as a result of liquidity from growth in interest-bearing liabilities. The yield on interest-bearing deposits with banks increased 20 basis points for the nine months ended September 30, 2024 as compared to the prior year, while the average balance increased from $197.5 million in 2023 to $199.9 million in 2024.

The cost of interest-bearing liabilities increased to 2.84% for the nine months ended September 30, 2024, from 1.84% for the same period in 2023. The cost of interest-bearing deposits increased 109 basis points and short-term borrowings decreased 11 basis points in comparison to the same period last year. The increase in the cost of interest-bearing deposits can be attributed to higher market interest rates, as well as changes in the mix of deposits as customers moved funds to take advantage of the increased rates offered in money market and time deposit accounts. Comparing the nine months ended September 30, 2024 with the comparable period in 2023, average time deposits increased $599.2 million, or 67.3%, with an increase in the cost of these deposits of 130 basis points. Other interest-bearing deposits increased on average $116.7 million, or 2.1%, compared to the nine months ended September 30, 2023 and the cost of these deposits increased 88 basis points. Compared to the prior period, short-term borrowings increased an average of $158.0 million in order to provide liquidity and fund growth in loans and investments.

For the nine months ended September 30, 2024, changes in rates negatively impacted net interest income by $7.0 million when compared with the same period in 2023. The higher yield on interest-earning assets positively impacted net interest income by $44.3 million, while the increase in the cost of interest-bearing liabilities negatively impacted net interest income by $51.3 million.

Changes in the volume of interest-earning assets and interest-bearing liabilities positively impacted net interest income by $0.9 million for the nine months ended September 30, 2024, as compared to the same period in 2023. Higher levels of interest-earning assets resulted in an increase of $20.4 million in interest income, while changes in the volume and mix of interest-bearing liabilities increased interest expense by $19.5 million. Average interest-earning assets for the nine months ended September 30, 2024 increased $661.0 million, or 6.6%, compared to the same period in 2023. Average loans for the comparable period increased $379.7 million, or 4.4% and average investments increased $278.9 million, or 22.7%.

Net interest income was negatively impacted by a $190.8 million decrease in average net free funds for the nine months ended September 30, 2024 as compared to September 30, 2023. 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 a lower level of noninterest-bearing demand deposits as customers became more rate sensitive and moved their funds into interest-bearing deposits. Average noninterest-bearing demand deposits for the nine months ended September 30, 2024 decreased $292.7 million, or 11.3%, compared to the same period in 2023.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

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:

2024 2023
(dollars in thousands)
Interest income per Consolidated Statements of Income $ 450,467 $ 385,741
Adjustment to fully taxable equivalent basis 994 923
Interest income adjusted to fully taxable equivalent basis (non-GAAP) 451,461 386,664
Interest expense 166,656 95,802
Net interest income adjusted to fully taxable equivalent basis (non-GAAP) $ 284,805 $ 290,862

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

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

2024 2023
Average<br>Balance Income /<br>Expense (a) Yield<br>or<br>Rate Average<br>Balance Income /<br>Expense (a) Yield<br>or<br>Rate
(dollars in thousands)
Assets
Interest-earning assets:
Interest-bearing deposits with banks $ 199,887 $ 8,304 5.55 % $ 197,522 $ 7,899 5.35 %
Tax-free investment securities 20,218 405 2.68 21,660 437 2.70
Taxable investment securities 1,488,386 35,854 3.22 1,208,061 19,762 2.19
Loans and leases, net of unearned income (b)(c) 9,006,908 406,898 6.03 8,627,203 358,566 5.56
Total interest-earning assets 10,715,399 451,461 5.63 10,054,446 386,664 5.14
Noninterest-earning assets:
Cash 113,798 111,732
Allowance for credit losses (121,331) (131,297)
Other assets 956,922 952,409
Total noninterest-earning assets 949,389 932,844
Total Assets $ 11,664,788 $ 10,987,290
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand deposits (d) $ 1,909,166 $ 25,902 1.81 % $ 1,970,178 $ 17,977 1.22 %
Savings deposits (d) 3,704,820 66,256 2.39 3,527,158 35,923 1.36
Time deposits 1,489,476 48,229 4.33 890,299 20,204 3.03
Short-term borrowings 560,743 19,383 4.62 402,782 14,237 4.73
Long-term debt 164,553 6,886 5.59 186,629 7,461 5.35
Total interest-bearing liabilities 7,828,758 166,656 2.84 6,977,046 95,802 1.84
Noninterest-bearing liabilities and shareholders’ equity:
Noninterest-bearing demand deposits (d) 2,299,650 2,592,373
Other liabilities 183,255 202,438
Shareholders’ equity 1,353,125 1,215,433
Total Noninterest-Bearing Funding Sources 3,836,030 4,010,244
Total Liabilities and Shareholders’ Equity $ 11,664,788 $ 10,987,290
Net Interest Income and Net Yield on Interest-Earning Assets $ 284,805 3.55 % $ 290,862 3.87 %

(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, 2024 and 2023.

(b)Loan balances include held for sale and nonaccrual loans. Income on nonaccrual loans is accounted for on the cash basis.

(c)Loan income includes loan fees earned.

(d)Average balances do not include reallocations from noninterest-bearing demand deposits and interest-bearing demand deposits into savings deposits, which were made for regulatory purposes.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

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, 2024 compared with September 30, 2023:

Analysis of Year-to-Year Changes in Net Interest Income
Total<br>Change Change Due To<br>Volume Change Due To<br>Rate (a)
(dollars in thousands)
Interest-earning assets:
Interest-bearing deposits with banks $ 405 $ 95 $ 310
Tax-free investment securities (32) (29) (3)
Taxable investment securities 16,092 4,592 11,500
Loans and leases 48,332 15,790 32,542
Total interest income (b) 64,797 20,448 44,349
Interest-bearing liabilities:
Interest-bearing demand deposits 7,925 (557) 8,482
Savings deposits 30,333 1,807 28,526
Time deposits 28,025 13,579 14,446
Short-term borrowings 5,146 5,588 (442)
Long-term debt (575) (883) 308
Total interest expense 70,854 19,534 51,320
Net interest income $ (6,057) $ 914 $ (6,971)

(a)Changes in interest income or expense not arising solely as a result of volume or rate variances are allocated to rate variances.

(b)Changes in interest income have been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate.

Provision for Credit Losses

The provision for credit losses is determined based on management’s estimates of the appropriate level of the allowance for credit losses needed for expected losses inherent in the loan portfolio and off-balance sheet commitments. The provision for credit losses is an amount added to the allowance, against which credit losses are charged.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The table below provides a breakout of the provision for credit losses by loan category for the nine months ended September 30:

2024 2023
Dollars Percentage Dollars Percentage
(dollars in thousands)
Commercial, financial, agricultural and other $ 13,304 51 % $ 606 8 %
Time and demand 7,483 29 (2,632) (36)
Commercial credit cards 137 1 22 —
Equipment finance 4,294 16 1,586 22
Time and demand other 1,390 5 1,630 22
Real estate construction (1,209) (5) (2,243) (30)
Construction other (527) (2) (381) (5)
Construction residential (682) (3) (1,862) (25)
Residential real estate (1,122) (4) 1,643 22
Residential first lien (985) (3) 1,634 22
Residential junior lien/home equity (137) (1) 9 —
Commercial real estate 9,492 37 3,960 54
Multifamily (178) (1) 347 5
Non-owner occupied 8,405 33 4,262 58
Owner occupied 1,265 5 (649) (9)
Loans to individuals 5,418 21 3,421 46
Automobile and recreational vehicles 4,065 16 2,819 38
Consumer credit cards 238 1 100 1
Consumer other 1,115 4 502 7
Provision for credit losses on loans and leases $ 25,883 100 % $ 7,387 100 %
Provision for credit losses - acquisition day 1 non-PCD — 10,653
Total provision for credit losses on loans and leases 25,883 18,040
Provision for off-balance sheet credit exposure (3,203) (1,362)
Total provision for credit losses $ 22,680 $ 16,678

Total provision expense for the nine months ended September 30, 2024, increased $6.0 million compared to the nine months ended September 30, 2023. The increase can be attributed to $17.5 million in net charge-offs as well as an increase of $9.2 million in specific reserves. The specific reserves can be attributed to $6.2 million for three non-owner occupied relationships and $2.8 million for a time and demand relationship, all of which were moved to nonaccrual during the nine months ended September 30, 2024. During the first nine months of 2023, provision expense of $10.7 million was recognized as the day 1 non-PCD provision expense resulting from the Centric acquisition. A $1.8 million decrease in the provision for off-balance sheet commitments was recognized for the nine months ended September 30, 2024 as a result of lower off-balance sheet commitments related to construction and time and demand loans.

The allowance for credit losses was $126.1 million, or 1.41%, of total loans and leases outstanding at September 30, 2024, compared to $117.7 million, or 1.31%, at December 31, 2023 and $134.3 million, or 1.51%, at September 30, 2023. Nonperforming loans as a percentage of total loans and leases increased to 0.83% at September 30, 2024 from 0.54% as of September 30, 2023 and 0.44% at December 31, 2023. The allowance to nonperforming loan ratio was 168.77%, 298.23% and 280.31% as of September 30, 2024, December 31, 2023 and September 30, 2023, respectively.

Management believes that the allowance for credit losses is at a level deemed appropriate to absorb expected losses inherent in the loan portfolio at September 30, 2024.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Below is an analysis of the consolidated allowance for credit losses for the nine months ended September 30, 2024 and 2023 and the year-ended December 31, 2023:

September 30, 2024 September 30, 2023 December 31, 2023
(dollars in thousands)
Balance, beginning of period $ 117,718 $ 102,906 $ 102,906
Day 1 allowance for credit loss on PCD acquired loans — 27,205 27,205
Provision for credit losses - acquisition day 1 non-PCD — 10,653 10,653
Loans charged off:
Commercial, financial, agricultural and other 11,230 9,102 19,199
Real estate construction 35 — —
Residential real estate 361 384 561
Commercial real estate 2,047 1,689 6,277
Loans to individuals 7,148 4,649 7,230
Total loans charged off 20,821 15,824 33,267
Recoveries of loans previously charged off:
Commercial, financial, agricultural and other 633 352 498
Real estate construction 6 — —
Residential real estate 221 128 247
Commercial real estate 166 142 151
Loans to individuals 2,306 1,388 2,219
Total recoveries 3,332 2,010 3,115
Net charge-offs 17,489 13,814 30,152
Provision for credit losses on loans and leases charged to expense 25,883 7,387 7,106
Balance, end of period $ 126,112 $ 134,337 $ 117,718
Net charge-offs as a percentage of average loans and leases outstanding (annualized) 0.26 % 0.21 % 0.35 %
Allowance for credit losses as a percentage of end-of-period loans and leases outstanding 1.41 % 1.51 % 1.31 %

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Noninterest Income

The following table presents the components of noninterest income for the nine months ended September 30:

2024 2023 Change % Change
(dollars in thousands)
Noninterest Income:
Trust income $ 8,790 $ 7,967 10 %
Service charges on deposit accounts 16,769 15,842 927 6
Insurance and retail brokerage commissions 7,618 7,171 447 6
Income from bank owned life insurance 4,943 3,664 1,279 35
Card-related interchange income 17,964 21,422 (3,458) (16)
Swap fee income 88 1,029 (941) (91)
Other income 7,463 7,114 349 5
Subtotal 63,635 64,209 (574) (1)
Net securities losses (5,447) (103) (5,344) 5,188
Gain on VISA exchange and sale 5,664 — 5,664 —
Gain on sale of mortgage loans 4,150 3,175 975 31
Gain on sale of other loans and assets 6,035 5,004 1,031 21
Derivatives mark to market (141) 27 (168) (622)
Total noninterest income $ 73,896 $ 72,312 2 %

All values are in US Dollars.

Total noninterest income, excluding net securities losses, gain on VISA exchange, gain on sale of mortgage loans, gain on sale of other loans and assets and the derivatives mark to market for the nine months ended September 30, 2024 decreased $0.6 million, or 1%, compared to the nine months ended September 30, 2023. This decrease is primarily due to a $3.5 million decline in card-related interchange income resulting from the Company being subject to the Durbin Amendment to the Dodd-Frank Act beginning July 1, 2024. The Durbin Amendment is now applicable to the Company because its total assets exceeded $10.0 billion as of December 31, 2023. We estimate that the application of the interchange fee cap, as compared to the twelve months prior to the July 1, 2024 effective date, will decrease our interchange income by approximately $6.3 million in 2024 and approximately $12.8 million in 2025.

Income from bank owned life insurance increased $1.3 million, of which $1.0 million was related to an increase in policy death benefits. Service charges on deposit accounts increased $0.9 million primarily due to higher business account analysis income and increased customer activity. Trust income increased $0.8 million due to gains in the value of assets under management. Swap fee income declined $0.9 million as a result of a decrease in new interest rate swaps entered into by our commercial loan customers compared to the prior period.

Total noninterest income increased $1.6 million, or 2%, compared to the same period in the prior year. The most significant changes, other than the changes noted above, include a $5.7 million gain related to the conversion and sale of Visa class B shares. Gain on sale of mortgages increased $1.0 million as a result of changes in volume and spread received on mortgage loans sold, and gain on sale of other loans and assets increased $1.0 million due to an increase in the volume and spread on the sale of SBA loans. Offsetting these gains are $5.3 million in losses recognized on the sale of $75.1 million in available for sale securities, which were sold in order to reinvest into higher yielding investments.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Noninterest Expense

The following table presents the components of noninterest expense for the nine months ended September 30:

2024 2023 Change % Change
(dollars in thousands)
Noninterest Expense:
Salaries and employee benefits $ 111,262 $ 106,639 4 %
Net occupancy 15,014 14,584 430 3
Furniture and equipment 13,093 12,936 157 1
Data processing 11,543 11,024 519 5
Advertising and promotion 4,177 4,652 (475) (10)
Pennsylvania shares tax 3,454 4,013 (559) (14)
Intangible amortization 3,656 3,773 (117) (3)
Other professional fees and services 3,976 4,376 (400) (9)
FDIC insurance 4,537 4,614 (77) (2)
Other operating 26,222 25,906 316 1
Subtotal 196,934 192,517 4,417 2
Loss on sale or write-down of assets 352 97 255 263
Litigation and operational losses 3,672 3,263 409 13
Loss on early redemption of subordinated debt 369 — 369 —
Merger and acquisition related 114 8,860 (8,746) (99)
Total noninterest expense $ 201,441 $ 204,737 (2) %

All values are in US Dollars.

Noninterest expense decreased $3.3 million, or 2%, for the nine months ended September 30, 2024 compared to the same period in 2023. This decrease is primarily the result of $8.9 million in merger-related expenses associated with the Centric acquisition recognized during the comparable period in 2023. For the nine months ended September, 30, 2024, advertising and promotion expense decreased $0.5 million due to the timing and types of advertising in 2024 compared to 2023. Offsetting these decreases is a $4.6 million increase in salaries and benefits expense primarily due to annual merit salary increases, higher severance expense and an increase in the number of full-time employees. The number of full time equivalent employees totaled 1,481 at September 30, 2023 and 1,500 at September 30, 2024. Increases in net occupancy expense can be attributed to insurance costs as well as higher depreciation expenses from new or improved locations. Data processing costs increased $0.5 million due to continued investment in our digital banking and other product offerings. During the nine months ended September 30, 2024, $0.4 million in remaining subordinated debt issuance costs that were being amortized over the life of the instrument were accelerated and recognized in conjunction with the redemption of $50.0 million in subordinated debentures.

Income Tax

The provision for income taxes decreased $1.7 million for the nine months ended September 30, 2024, compared to the corresponding period in 2023.

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, 2024 and 2023.

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 20.1% and 20.3% for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, our deferred tax assets totaled $53.2 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.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net Income

For the three months ended September 30, 2024, First Commonwealth recognized net income of $32.1 million, or $0.31 diluted earnings per share, compared to net income of $39.2 million, or $0.38 diluted earnings per share, in the three months ended September 30, 2023. The decrease in net income was primarily the result of a $1.2 million decrease in net interest income, a $4.7 million increase in the provision for credit losses and a $2.7 million increase in noninterest expense.

For the three months ended September 30, 2024, the Company’s return on average equity was 9.19% and its return on average assets was 1.08%, compared to 12.46% and 1.38%, respectively, for the three months ended September 30, 2023.

Net Interest Income

Net interest income, on a fully taxable equivalent basis, was $96.9 million in the third quarter of 2024, compared to $98.1 million for the same period in 2023. The decrease in net interest income can be attributed to a 63 basis point increase in the cost of interest-bearing liabilities offset by a 31 basis point increase 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 79.6% and 79.7% for the three months ended September 30, 2024 and 2023, respectively.

The net interest margin, on a fully taxable equivalent basis, was 3.56% and 3.76% for the three months ended September 30, 2024 and 2023, respectively.

The taxable equivalent yield on interest-earning assets was 5.68% for the three months ended September 30, 2024, an increase of 31 basis points compared to the 5.37% yield for the same period in 2023. This is largely due to a 30 basis point increase in the loan portfolio yield when compared to the three months ended September 30, 2023 as a result of a higher repricing rates in 2024. Also contributing to this increase is the growth in average loans of $120.1 million. Additionally, accretion of purchase accounting marks, primarily related to the Centric acquisition, contributed $2.0 million or 7 basis points to the yield on interest-earnings assets in the three months ended September 30, 2024. For the three months ended September 30, 2023, accretion of purchase accounting marks contributed $2.4 million, or 9 basis points, to the yield on interest-earning assets.

The investment portfolio yield increased 102 basis points in comparison to the prior year as new volume rates were higher than the portfolio yield. The average investment portfolio balance increased $313.5 million as a result of liquidity from growth in interest-bearing liabilities. The average balance of interest-bearing deposits with banks increased from $235.8 million in 2023 to $278.0 million in 2024, while the yield decreased 14 basis points.

The cost of interest-bearing liabilities increased to 2.91% for the three months ended September 30, 2024, from 2.28% for the same period in 2023, primarily due to an increase in the cost of time deposits and savings deposits. The cost of interest-bearing demand deposits increased 46 basis points and short-term borrowings decreased 61 basis points in comparison to the same period last year. The increase in the cost of interest-bearing demand deposits can be attributed to higher market interest rates and changes in the mix of deposits as customers moved funds to take advantage of the increased rates on money market and time deposits. Comparing the three months ended September 30, 2024 with the comparable period in 2023, average time deposits increased $521.8 million, or 49.5%, with an increase in the cost of these deposits of 92 basis points. Other interest-bearing deposits increased on average $76.2 million, or 1.4%, compared to the three months ended September 30, 2023 and the cost of those deposits increased 60 basis points.

For the three months ended September 30, 2024, changes in interest rates negatively impacted net interest income by $0.7 million when compared with the same period in 2023. The higher yield on loans contributed to interest-earning assets positively impacting net interest income by $10.3 million, while an increase in the cost of interest-bearing liabilities negatively impacted net interest income by $11.0 million.

Changes in the volume of interest-earning assets and interest-bearing liabilities negatively impacted net interest income by $0.5 million during the three months ended September 30, 2024, as compared to the same period in 2023. The mix of interest-earning assets resulted in an increase of $4.2 million in interest income, while changes in the volume and mix of interest-bearing liabilities increased interest expense by $4.7 million. Average interest-earning assets for the three months ended September 30, 2024 increased $475.8 million, or 4.6%, compared to the same period in 2023. Average loans for the comparable period increased $120.1 million, or 1.4%. Average time deposits for the three months ended September 30, 2024 increased by $521.8 million compared to the comparable period in 2023, increasing interest expense by $4.6 million.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Net interest income was negatively impacted by a $108.4 million decrease in average net free funds for the three months ended September 30, 2024 as compared to September 30, 2023. Average net free funds are the excess of noninterest-bearing demand deposits, other noninterest-bearing liabilities and shareholders’ equity over noninterest-earning assets. The decline in the level of net free funds was primarily the result of a decrease in noninterest-bearing demand deposits, which decreased $232.7 million, as a result of customers becoming more rate sensitive due to higher interest rates.

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 three months ended September 30:

2024 2023
(dollars in thousands)
Interest income per Consolidated Statements of Income $ 154,323 $ 139,885
Adjustment to fully taxable equivalent basis 342 313
Interest income adjusted to fully taxable equivalent basis (non-GAAP) 154,665 140,198
Interest expense 57,808 42,128
Net interest income adjusted to fully taxable equivalent basis (non-GAAP) $ 96,857 $ 98,070

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

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

2024 2023
Average<br>Balance Income /<br>Expense (a) Yield<br>or<br>Rate Average<br>Balance Income /<br>Expense (a) Yield<br>or<br>Rate
(dollars in thousands)
Assets
Interest-earning assets:
Interest-bearing deposits with banks $ 278,006 $ 3,838 5.49 % $ 235,761 $ 3,346 5.63 %
Tax-free investment securities 20,016 133 2.64 21,439 144 2.66
Taxable investment securities 1,522,776 12,825 3.35 1,207,869 7,052 2.32
Loans and leases, net of unearned income (b)(c) 9,004,808 137,869 6.09 8,884,731 129,656 5.79
Total interest-earning assets 10,825,606 154,665 5.68 10,349,800 140,198 5.37
Noninterest-earning assets:
Cash 113,301 114,419
Allowance for credit losses (124,070) (135,340)
Other assets 961,695 978,179
Total noninterest-earning assets 950,926 957,258
Total Assets $ 11,776,532 $ 11,307,058
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand deposits (d) $ 1,962,209 $ 9,663 1.96 % $ 2,014,623 $ 7,608 1.50 %
Savings deposits (d) 3,695,587 22,565 2.43 3,567,000 15,842 1.76
Time deposits 1,575,975 17,435 4.40 1,054,216 9,235 3.48
Short-term borrowings 541,010 6,279 4.62 504,025 6,643 5.23
Long-term debt 136,408 1,866 5.44 187,122 2,800 5.94
Total interest-bearing liabilities 7,911,189 57,808 2.91 7,326,986 42,128 2.28
Noninterest-bearing liabilities and shareholders’ equity:
Noninterest-bearing demand deposits (d) 2,286,482 2,519,184
Other liabilities 189,571 211,447
Shareholders’ equity 1,389,290 1,249,441
Total noninterest-bearing funding sources 3,865,343 3,980,072
Total Liabilities and Shareholders’ Equity $ 11,776,532 $ 11,307,058
Net Interest Income and Net Yield on Interest-Earning Assets $ 96,857 3.56 % $ 98,070 3.76 %

(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 three months ended September 30, 2024 and 2023.

(b)Loan balances include held for sale and nonaccrual loans. Income on nonaccrual loans is accounted for on the cash basis.

(c)Loan income includes loan fees earned.

(d)Average balances do not include reallocations from noninterest-bearing demand deposits and interest-bearing demand deposits into savings deposits, which were made for regulatory purposes.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The following table shows the effect of changes in volumes and rates on interest income and interest expense for the three months ended September 30, 2024 compared with September 30, 2023:

Analysis of Year-to-Year Changes in Net Interest Income
Total<br>Change Change Due To<br>Volume Change Due To<br>Rate (a)
(dollars in thousands)
Interest-earning assets:
Interest-bearing deposits with banks $ 492 $ 599 $ (107)
Tax-free investment securities (11) (10) (1)
Taxable investment securities 5,773 1,841 3,932
Loans and leases 8,213 1,752 6,461
Total interest income (b) 14,467 4,182 10,285
Interest-bearing liabilities:
Interest-bearing demand deposits 2,055 (198) 2,253
Savings deposits 6,723 570 6,153
Time deposits 8,200 4,577 3,623
Short-term borrowings (364) 488 (852)
Long-term debt (934) (759) (175)
Total interest expense 15,680 4,678 11,002
Net interest income $ (1,213) $ (496) $ (717)

(a)Changes in interest income or expense not arising solely as a result of volume or rate variances are allocated to rate variances.

(b)Changes in interest income have been computed on a fully taxable equivalent basis using the 21% federal income tax statutory rate.

Provision for Credit Losses

The provision for credit losses is determined based on management’s estimates of the appropriate level of the allowance for credit losses needed for probable losses inherent in the loan portfolio, after giving consideration to charge-offs and recoveries for the period. The provision for credit losses is an amount added to the allowance, against which credit losses are charged.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The table below provides a breakout of the provision for credit losses by loan category for the three months ended September 30:

2024 2023
Dollars Percentage Dollars Percentage
(dollars in thousands)
Commercial, financial, agricultural and other $ 5,965 53 % $ (2,645) (55) %
Time and demand 3,730 33 (3,914) (82)
Commercial credit cards 69 1 9 —
Equipment finance 1,723 15 553 12
Time and demand other 443 4 707 15
Real estate construction (209) (2) 776 16
Construction other (125) (1) 1,207 25
Construction residential (84) (1) (431) (9)
Residential real estate 521 5 447 9
Residential first lien 249 2 553 11
Residential junior lien/home equity 272 3 (106) (2)
Commercial real estate 3,519 31 4,338 91
Multifamily (151) (1) 46 1
Non-owner occupied 2,942 26 3,952 83
Owner occupied 728 6 340 7
Loans to individuals 1,447 13 1,851 39
Automobile and recreational vehicles 1,067 9 1,503 32
Consumer credit cards 81 1 38 1
Consumer other 299 3 310 6
Provision for credit losses on loans and leases $ 11,243 100 % $ 4,767 100 %
Provision for off-balance sheet credit exposure (628) 1,118
Total provision for credit losses $ 10,615 $ 5,885

The provision for credit losses on loans and leases for the three months ended September 30, 2024 increased in comparison to the three months ended September 30, 2023 by $6.5 million. The level of provision expense in the third quarter of 2024 was impacted by specific reserves for two commercial loans moved to nonaccrual status during the period, resulting in $5.5 million in specific reserves. Additionally, the provision expense reflected $8.8 million in net charges-offs, of which $5.1 million related to two commercial borrowers and resulted in $1.5 million of provision expense for the quarter. The provision for off-balance sheet credit exposure decreased $1.7 million primarily due to the level of unfunded commitments for construction and time and demand.

The level of provision expense in the third quarter of 2023 was primarily the result of an increase in loan balances and an additional $4.1 million in specific reserves for a commercial real estate loan as a result of an updated appraisal. Net charge-offs for the three months ended September 30, 2023 were $4.0 million.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Below is an analysis of the consolidated allowance for credit losses for the three months ended September 30, 2024 and 2023 and the year-ended December 31, 2023:

September 30, 2024 September 30, 2023 December 31, 2023
(dollars in thousands)
Balance, beginning of period $ 123,654 $ 133,546 $ 102,906
Day 1 allowance for credit loss on PCD acquired loans — — 27,205
Provision for credit losses - acquisition day 1 non-PCD — — 10,653
Loans charged off:
Commercial, financial, agricultural and other 5,980 1,762 19,199
Real estate construction — — —
Residential real estate 106 304 561
Commercial real estate 1,423 172 6,277
Loans to individuals 2,280 2,360 7,230
Total loans charged off 9,789 4,598 33,267
Recoveries of loans previously charged off:
Commercial, financial, agricultural and other 110 98 498
Real estate construction — — —
Residential real estate 51 57 247
Commercial real estate 42 6 151
Loans to individuals 801 461 2,219
Total recoveries 1,004 622 3,115
Net charge-offs 8,785 3,976 30,152
Provision for credit losses on loans charged to expense 11,243 4,767 7,106
Balance, end of period $ 126,112 $ 134,337 $ 117,718

Noninterest Income

The following table presents the components of noninterest income for the three months ended September 30:

2024 2023 Change % Change
(dollars in thousands)
Noninterest Income:
Trust income $ 3,242 $ 2,949 10 %
Service charges on deposit accounts 5,840 5,600 240 4
Insurance and retail brokerage commissions 2,663 2,305 358 16
Income from bank owned life insurance 2,278 1,242 1,036 83
Card-related interchange income 4,137 7,221 (3,084) (43)
Swap fee income 88 452 (364) (81)
Other income 2,682 2,828 (146) (5)
Subtotal 20,930 22,597 (1,667) (7)
Net securities gains (losses) 88 (103) 191 (185)
Gain on VISA exchange and sale 106 — 106 —
Gain on sale of mortgage loans 1,151 1,270 (119) (9)
Gain on sale of other loans and assets 2,576 1,027 1,549 151
Derivatives mark to market (153) 35 (188) (537)
Total noninterest income $ 24,698 $ 24,826 (1) %

All values are in US Dollars.

Total noninterest income for the three months ended September 30, 2024 decreased $0.1 million compared to the three months ended September 30, 2023. The most significant change includes a $3.1 million decrease in card-related interchange income primarily due to the Durbin Amendment, which impacted the Company beginning July 1, 2024. Swap fee income declined

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

$0.4 million as a result of a reduction in new swaps entered by our commercial customers. Offsetting these decreases is a $1.0 million increase in income from bank owned life insurance, primarily due to policy death benefits and a $0.4 million increase in insurance and retail brokerage income due to growth in annuity sales. Additionally, gain on sale of other loans and assets increased $1.5 million due to the volume and spread related to the sale of SBA loans.

Noninterest Expense

The following table presents the components of noninterest expense for the three months ended September 30:

2024 2023 Change % Change
(dollars in thousands)
Noninterest Expense:
Salaries and employee benefits $ 38,618 $ 35,640 8 %
Net occupancy 4,858 4,782 76 2
Furniture and equipment 4,335 4,414 (79) (2)
Data processing 3,879 3,857 22 1
Advertising and promotion 1,960 1,662 298 18
Pennsylvania shares tax 1,126 1,588 (462) (29)
Intangible amortization 1,223 1,344 (121) (9)
Other professional fees and services 1,448 1,603 (155) (10)
FDIC insurance 1,638 1,920 (282) (15)
Other operating 8,672 8,548 124 1
Subtotal 67,757 65,358 2,399 4
Loss on sale or write-down of assets 132 50 82 164
Litigation and operational losses 2,181 1,626 555 34
Merger and acquisition related — 379 (379) (100)
Total noninterest expense $ 70,070 $ 67,413 4 %

All values are in US Dollars.

Noninterest expense increased $2.7 million for the three months ended September 30, 2024 compared to the same period in 2023. The increase is primarily a result of a $3.0 million increase in salaries and employee benefits expense due to annual merit increases, increased severance expense and a higher number of full time equivalent employees.

Income Tax

The provision for income taxes decreased $1.6 million for the three months ended September 30, 2024, compared to the corresponding period in 2023.  The effective tax rate increased 40 basis points from 20.4% for the three months ended September 30, 2023 to 20.8% for the three months ended September 30, 2024.

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 September 30, 2024 and 2023.

Liquidity

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 2024, the sale, maturity and redemption of investment securities provided $253.1 million in liquidity. These funds contributed to the liquidity available to originate loans, purchase investment securities and fund depositor withdrawals.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The following represents our expanded sources of liquidity as of September 30, 2024:

Total Available Amount Used Outstanding Letters of Credit Net Available
(dollars in thousands)
Internal liquidity sources
Unencumbered securities $ 275,136 $ — $ — $ 275,136
Other (excess pledged) 49,167 — — 49,167
External liquidity sources
FHLB advances 2,418,474 3,548 197,100 2,217,826
FRB borrowings 1,626,705 516,000 — 1,110,705
Lines with other financial institutions 160,000 — — 160,000
CDARs (1) 1,195,398 17,600 — 1,177,798
Total liquidity $ 5,724,880 $ 537,148 $ 197,100 $ 4,990,632

(1) Reflects internal policy limit. Maximum capacity with CDARs is $1.8 billion.

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, 2024, the outstanding CDARS balance of $17.6 million carried an average weighted rate of 3.53% and an average original term of 364 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.

Liquidity available through the Federal Reserve is a result of the FRB Borrower-in-Custody of Collateral program, which enables us to take certain loans that are not being used as collateral at the FHLB and pledge them as collateral for borrowings at the FRB. During the first quarter of 2024, borrowings of $516.0 million at a rate of 4.76% were originated under the Federal Reserve's Bank Term Funding Program in order to fund growth in loans and investments. These borrowings have a maturity date of January 16, 2025, and can be repaid without penalty at any time. Subsequent to September 30, 2024, the Company paid off $436.0 million of the borrowings under the Bank Term Funding Program.

First Commonwealth’s long-term liquidity source is its core deposit base. Core deposits are the most stable source of liquidity a bank can have due to the long-term relationship with a deposit customer. The following table shows a breakdown of the components of First Commonwealth’s deposits:

September 30, 2024 December 31, 2023
(dollars in thousands)
Noninterest-bearing demand deposits(a) $ 2,463,971 $ 2,388,533
Interest-bearing demand deposits(a) 671,667 629,138
Savings deposits(a) 4,953,206 4,886,781
Time deposits 1,656,708 1,287,857
Total $ 9,745,552 $ 9,192,309

(a)Balances include reallocations from noninterest-bearing demand deposits and interest-bearing demand deposits into savings deposits, which were made for regulatory purposes.

The level of deposits during any period is influenced by factors outside of management’s control, such as the level of short-term and long-term market interest rates and yields offered on competing investments, such as money market mutual funds.

During the first nine months of 2024, total deposits increased $553.2 million. Interest-bearing demand and savings deposits increased $109.0 million, time deposits increased $368.9 million and noninterest-bearing demand deposits increased $75.4 million.

The estimated total of uninsured deposits was $2.8 billion and $2.5 billion at September 30, 2024 and December 31, 2023, respectively, of which $0.9 billion and $0.8 billion were secured by pledged investment securities or letters of credit at September 30, 2024 and December 31, 2023, respectively. Uninsured amounts are estimated based on known account relationships for each depositor and insurance guidelines provided by the FDIC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Market Risk

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 0.70 and 0.69 at September 30, 2024 and December 31, 2023, 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.

Gap analysis has limitations due to the static nature of the model that holds volumes and consumer behaviors constant in all economic and interest rate scenarios. A lower level of rate sensitive assets to rate sensitive liabilities repricing in one year could indicate reduced net interest income in a rising interest rate scenario, and conversely, increased net interest income in a declining interest rate scenario. However, the gap analysis incorporates only the level of interest-earning assets and interest-bearing liabilities and not the sensitivity each has to changes in interest rates. The impact of the sensitivity to changes in interest rates is provided in the table below the gap analysis.

The following is the gap analysis as of September 30, 2024 and December 31, 2023:

September 30, 2024
0-90 Days 91-180<br>Days 181-365<br>Days Cumulative<br>0-365 Days Over 1 Year<br>Through 5<br>Years Over 5<br>Years
(dollars in thousands)
Loans and leases $ 3,637,934 $ 452,379 $ 707,259 $ 4,797,572 $ 3,200,940 $ 865,426
Investments 60,671 53,057 123,452 237,180 688,115 739,343
Other interest-earning assets 454,535 — — 454,535 — 1,176
Total interest-sensitive assets (ISA) 4,153,140 505,436 830,711 5,489,287 3,889,055 1,605,945
Certificates of deposit 625,573 515,465 402,499 1,543,537 112,135 1,437
Other deposits 5,624,873 — — 5,624,873 — —
Borrowings 617,910 210 421 618,541 52,707 —
Total interest-sensitive liabilities (ISL) 6,868,356 515,675 402,920 7,786,951 164,842 1,437
Gap $ (2,715,216) $ (10,239) $ 427,791 $ (2,297,664) $ 3,724,213 $ 1,604,508
ISA/ISL 0.60 0.98 2.06 0.70 23.59 1,117.57
Gap/Total assets 22.66 % 0.08 % 3.57 % 19.17 % 31.08 % 13.39 %
December 31, 2023
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
0-90 Days 91-180<br>Days 181-365<br>Days Cumulative<br>0-365 Days Over 1 Year<br>Through 5<br>Years Over 5<br>Years
(dollars in thousands)
Loans and leases $ 3,619,166 $ 446,373 $ 756,190 $ 4,821,729 $ 3,137,007 $ 945,896
Investments 72,358 44,567 97,544 214,469 606,670 733,418
Other interest-earning assets 20,440 — — 20,440 1,117 —
Total interest-sensitive assets (ISA) 3,711,964 490,940 853,734 5,056,638 3,744,794 1,679,314
Certificates of deposit 271,662 210,793 569,507 1,051,962 235,562 974
Other deposits 5,515,919 — — 5,515,919 — —
Borrowings 726,850 207 415 727,472 53,069 224
Total interest-sensitive liabilities (ISL) 6,514,431 211,000 569,922 7,295,353 288,631 1,198
Gap $ (2,802,467) $ 279,940 $ 283,812 $ (2,238,715) $ 3,456,163 $ 1,678,116
ISA/ISL 0.57 2.33 1.50 0.69 12.97 1,401.76
Gap/Total assets 24.46 % 2.44 % 2.48 % 19.54 % 30.16 % 14.64 %

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The following table presents an analysis of the potential sensitivity of our annual net interest income to gradual changes in interest rates over a 12-month time frame as compared with net interest income if rates remained unchanged and there are no changes in balance sheet categories.

Net interest income change (12 months) for basis point movements of:
-200 -100 +100 +200
(dollars in thousands)
September 30, 2024 ($) $ (21,635) $ (5,748) $ 6,883 $ 12,408
September 30, 2024 (%) (5.34) % (1.42) % 1.70 % 3.06 %
December 31, 2023 ($) $ (9,867) $ (4,504) $ 6,215 $ 11,091
December 31, 2023 (%) (2.53) % (1.16) % 1.59 % 2.84 %

The following table represents the potential sensitivity of our annual net interest income to immediate changes in interest rates versus if rates remained unchanged and there are no changes in balance sheet categories.

Net interest income change (12 months) for basis point movements of:
-200 -100 +100 +200
(dollars in thousands)
September 30, 2024 ($) $ (35,299) $ (16,827) $ 17,203 $ 31,981
September 30, 2024 (%) (8.71) % (4.15) % 4.25 % 7.89 %
December 31, 2023 ($) $ (38,890) $ (17,930) $ 18,545 $ 34,788
December 31, 2023 (%) (9.97) % (4.60) % 4.76 % 8.92 %

The Company evaluates its potential interest rate sensitivity by utilizing multiple 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. In the nine months ended September 30, 2024 and 2023, the cost of our interest-bearing liabilities averaged 2.84% and 1.84%, respectively, and the yield on our average interest-earning assets, on a fully taxable equivalent basis, averaged 5.63% and 5.14%, respectively.

Asset/liability models require that certain assumptions be made, such as prepayment rates on earning assets and the impact of pricing on non-maturity deposits, which may differ from actual experience. These business assumptions are based upon our experience, business plans and published industry experience. While management believes such assumptions to be reasonable, there can be no assurance that modeled results will approximate actual results.

Credit Risk

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.

On an annual basis, the Credit Department also reviews the commercial real estate portfolio as a whole, along with underwriting practices and loan level stress testing procedures, to enhance risk management practices and monitor commercial real estate concentrations. This review provides an overview of the portfolio to ensure that emerging risks have been identified, and documents and validates the standard interest rate and capitalization rate stress scenarios.

First Commonwealth maintains an allowance for credit losses at a level deemed sufficient for losses inherent in the loan and lease portfolio at the date of each statement of financial condition. Management reviews the appropriateness of the allowance on a quarterly basis to ensure that the provision for credit losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is appropriate based on management’s assessment of probable estimated losses.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

First Commonwealth’s methodology for assessing the appropriateness of the allowance for credit losses consists of several key elements. These elements include an assessment of individual nonperforming loans with a balance greater than $250 thousand, loss experience trends and other relevant factors.

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 $4.1 million at September 30, 2024 and is classified in "Other liabilities" on the unaudited Consolidated Statements of Financial Condition.

We discontinue interest accruals on a loan when, based on current information and events, it is probable that we will be unable to fully collect principal or interest due according to the contractual terms of the loan. A loan is also placed on nonaccrual status when, based on regulatory definitions, the loan is maintained on a “cash basis” due to the weakened financial condition of the borrower. Generally, loans 90 days or more past due are placed on nonaccrual status, except for consumer loans, which are placed on nonaccrual status at 150 days past due. Consumer loans related to automobile and recreational vehicles are either charged off or repossessed at no later than 90 days past due.

Nonperforming loans are closely monitored on an ongoing basis as part of our loan review and work-out process. The probable risk of loss on these loans is evaluated by comparing the loan balance to the fair value of any underlying collateral or the present value of projected future cash flows. Losses or a specifically assigned allowance for loan losses are recognized where appropriate.

Nonperforming loans and leases, including loans held for sale, increased $35.3 million to $74.7 million at September 30, 2024, compared to $39.5 million at December 31, 2023. The increase in nonperforming loans is primarily a result of $54.2 million in commercial loans that were moved to nonaccrual during the first nine months of 2024. Offsetting these additions is the payoff or sale of $12.8 million for five commercial real estate relationships and the payoff of two commercial, financial, agricultural and other relationships totaling $1.3 million.

The allowance for credit losses as a percentage of nonperforming loans was 168.77% as of September 30, 2024, compared to 298.23% at December 31, 2023, and 280.31% at September 30, 2023. 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 reserves of $14.3 million and general reserves of $111.8 million as of September 30, 2024. Specific reserves increased $9.2 million from December 31, 2023, and decreased $2.4 million from September 30, 2023. The increase from December 31, 2023 is primarily due to $9.0 million in specific reserves related to loans moved to nonaccrual during the period. The decrease from September 30, 2023 is due to the charge-off of $6.4 million related to three commercial, financial, agricultural and other relationships, all of which were fully reserved, and the payoff of loans releasing $4.4 million in specific reserves. Offsetting these are specific reserves on loans moved to nonaccrual of $6.2 million.

Criticized loans totaled $242.0 million at September 30, 2024 and represented 2.7% of the loan portfolio. The level of criticized loans increased as of September 30, 2024 when compared to December 31, 2023, by $31.8 million, or 15%. Classified loans totaled $114.8 million at September 30, 2024 compared to $87.1 million at December 31, 2023, an increase of $27.7 million, or 32%. The increase in classified loans can be attributed to the increase in nonperforming loans.

The allowance for credit losses was $126.1 million at September 30, 2024, or 1.41% of total loans and leases outstanding, compared to 1.31% reported at December 31, 2023, and 1.51% at September 30, 2023. General reserves, or the portion of the allowance related to loans that were not specifically evaluated, as a percentage of performing loans were 1.26% at September 30, 2024 compared to 1.26% at December 31, 2023 and 1.33% at September 30, 2023.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

The following table provides information related to nonperforming assets, the allowance for credit losses and other credit-related measurements:

September 30, December 31, 2023
2024 2023
(dollars in thousands)
Nonperforming Loans:
Total nonperforming loans $ 74,723 $ 47,924 $ 39,472
Loans past due 30 to 90 days and still accruing $ 35,133 $ 19,957 $ 20,116
Loans past due in excess of 90 days and still accruing $ 1,191 $ 2,484 $ 9,436
Other real estate owned $ 669 $ 765 $ 422
Loans held for sale at end of period $ 46,785 $ 33,127 $ 29,820
Portfolio loans and leases outstanding at end of period $ 8,965,500 $ 8,901,725 $ 8,968,761
Average loans and leases outstanding $ 9,006,908 (a) $ 8,627,203 (a) $ 8,714,770 (b)
Nonperforming loans as a percentage of total loans and leases 0.83 % 0.54 % 0.44 %
Provision for credit losses on loans and leases (e) $ 25,883 (a) $ 7,387 (a) $ 7,106 (b)
Provision for credit losses - acquisition day 1 non-PCD $ — $ 10,653 $ 10,653
Allowance for credit losses $ 126,112 $ 134,337 $ 117,718
Net charge-offs $ 17,489 (a) $ 13,814 (a) $ 30,152 (b)
Net charge-offs as a percentage of average loans and leases outstanding (annualized) 0.26 % 0.21 % 0.35 %
Provision for credit losses as a percentage of net charge-offs (e) 148.00 % (a) 53.47 % (a) 23.57 % (b)
Allowance for credit losses as a percentage of end-of-period loans and leases outstanding (c) 1.41 % 1.51 % 1.31 %
Allowance for credit losses as a percentage of nonperforming loans (d) 168.77 % 280.31 % 298.23 %

(a)For the nine-month period ended.

(b)For the twelve-month period ended.

(c)Does not include loans held for sale.

(d)Does not include nonperforming loans held for sale.

(e)Does not include provision for credit losses on loans and leases - acquisition day 1 non-PCD.

The following tables show the outstanding balances of our loan and lease portfolio and the breakdown of net charge-offs and nonperforming loans, excluding loans held for sale, by loan type as of and for the periods presented:

September 30, 2024 December 31, 2023
Amount % Amount %
(dollars in thousands)
Commercial, financial, agricultural and other $ 1,629,535 18 % $ 1,543,349 17 %
Real estate construction 540,775 6 597,735 7
Residential real estate 2,374,376 27 2,416,876 27
Commercial real estate 3,069,438 34 3,053,152 34
Loans to individuals 1,351,376 15 1,357,649 15
Total loans and leases, net of unearned income $ 8,965,500 100 % $ 8,968,761 100 %

During the nine months ended September 30, 2024, loans decreased $3.3 million compared to balances outstanding at December 31, 2023.

Real estate construction loans decreased $57.0 million, or 9.5%, due to the completion of commercial real estate projects that subsequently received permanent financing. Residential real estate decreased $42.5 million, or 1.8%, primarily due to sales of closed-end 1-4 family mortgage loans originated for sale. Commercial real estate loans increased $16.3 million, or 0.5%, as a result of growth in loans secured by nonresidential property, due in part to the completion of several construction projects. Loans to individuals decreased $6.3 million, or 0.5%, primarily due to declines in the automobile and recreational vehicles portfolio as well as the personal lines of credit portfolio. Commercial, financial, agricultural and other loans increased $86.2 million, or 5.6%, primarily due to growth in the equipment finance portfolio.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Commercial real estate comprises 34% 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.

September 30, 2024 December 31, 2023
Amount % Amount %
(dollars in thousands)
Land $ 4,679 0.2 % $ 3,180 0.1 %
Residential 1-4 11,273 0.4 39,776 1.3
Industrial and Storage 496,274 16.2 456,759 15.0
Multifamily 589,308 19.2 597,262 19.6
Office 515,511 16.8 550,889 18.0
Healthcare 174,077 5.6 149,909 4.9
Student Housing 96,329 3.1 88,557 2.9
Retail 767,760 25.0 750,899 24.6
Hospitality 216,057 7.0 210,485 6.9
Specialty Use 189,948 6.2 192,570 6.3
Other 8,222 0.3 12,866 0.4
Total $ 3,069,438 100.0 % $ 3,053,152 100.0 %

The following tables represent our commercial real estate portfolio by type of property securing the credit as of September 30, 2024. Total non-pass commercial real estate loans increased by $0.3 million to $115.0 million when compared to December 31, 2023.

Pass OAEM Substandard Accruing Substandard Nonaccruing Total Non-Pass Total % Non-Pass
(dollars in thousands)
Land $ 4,506 $ — $ 173 $ — $ 173 $ 4,679 3.7 %
Residential 1-4 10,914 — — 359 359 11,273 3.2
Industrial and Storage 483,808 8,421 783 3,262 12,466 496,274 2.5
Multifamily 555,590 27,824 61 5,833 33,718 589,308 5.7
Office 478,000 11,182 1,103 25,226 37,511 515,511 7.3
Healthcare 171,311 2,439 327 — 2,766 174,077 1.6
Student Housing 96,329 — — — — 96,329 —
Retail 748,178 4,886 13,399 1,297 19,582 767,760 2.6
Hospitality 209,111 — — 6,946 6,946 216,057 3.2
Specialty Use 188,621 459 619 249 1,327 189,948 0.7
Other 8,109 113 — — 113 8,222 1.4
Total $ 2,954,477 $ 55,324 $ 16,465 $ 43,172 $ 114,961 $ 3,069,438 3.7 %

The office portfolio comprises 17% of total commercial real estate loans and 33% of total commercial real estate non-pass loans. The average loan commitment size for the office portfolio is $1.0 million and the average outstanding balance as of September 30, 2024 is $0.9 million. Within the office portfolio, exposures over $1.0 million have an average debt service coverage ratio of 1.48x, which exceeds our internal guidelines of 1.35x to 1.40x, depending on property class. Additionally, for loans with exposure over $1.0 million, the office portfolio has an average loan to value of 62.1% 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.

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

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

limit for the office portfolio was decreased from 65% to 50%, with the actual segment concentration at 40% as of September 30, 2024.

The following table summarizes commercial real estate loans by the location of the properties by which they are collateralized as of September 30, 2024. Some loans are collateralized by multiple properties spread over various states. In those instances, the loan is included below based on the location of the primary property collateralizing the loan.

Balance % of Total
(dollars in thousands)
Pennsylvania $ 1,570,866 51 %
Ohio 1,107,632 36
New Jersey 61,934 2
Indiana 52,824 2
New York 45,597 2
Delaware 44,189 1
Other 186,396 6
$ 3,069,438 100 %

When calculating the allowance for credit losses the commercial real estate portfolio is segmented into three portfolio segments: multifamily, non-owner occupied and owner occupied. For additional information related to these segments, including credit quality, see Note 8 "Loans and Leases and Allowance for Credit Losses" of the unaudited consolidated financial statements.

As indicated in the table below, commercial real estate and commercial, financial and agricultural and other loans represent a significant portion of the nonperforming loans as of September 30, 2024.

For the Nine Months Ended September 30, 2024 As of September 30, 2024
Net<br>Charge-<br>offs % of<br>Total Net<br>Charge-offs Net Charge-<br>offs as a % of<br>Average<br>Loans (annualized) Nonperforming<br>Loans % of Total<br>Nonperforming<br>Loans Nonperforming<br>Loans as a % of<br>Total Loans
(dollars in thousands)
Commercial, financial, agricultural and other $ 10,597 60.59 % 0.16 % $ 15,409 20.62 % 0.17 %
Real estate construction 29 0.17 — 5,817 7.78 0.07
Residential real estate 140 0.80 — 10,223 13.68 0.11
Commercial real estate 1,881 10.75 0.03 43,172 57.78 0.48
Loans to individuals 4,842 27.69 0.07 102 0.14 —
Total loans and leases, net of unearned income $ 17,489 100.00 % 0.26 % $ 74,723 100.00 % 0.83 %

Net charge-offs for the nine months ended September 30, 2024 totaled $17.5 million, compared to $13.8 million for the nine months ended September 30, 2023. The most significant charge-off during the nine months ended September 30, 2024 included a $5.4 million charge-off for two commercial, financial, agricultural and other loan, $3.8 million of which was fully provided for as part of Centric purchase accounting marks and a $1.0 million charge-off of a commercial real estate loan, $0.9 million of which was provided for as part of Centric purchase accounting marks. Additionally, $4.8 million in charge-offs relate to loans to individuals, primarily indirect auto loans and personal credit lines. See discussions related to the provision for credit losses and loans for more information.

Capital Resources

At September 30, 2024, shareholders’ equity was $1.4 billion, an increase of $95.3 million from December 31, 2023. The increase was primarily the result of $106.7 million in net income and a $28.7 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 an increase due to $3.9 million in treasury stock sales and decreases due to $39.4 million of dividends paid to shareholders and $4.6 million of common stock repurchases. Cash dividends declared per common share were $0.385 for the nine months ended September 30, 2024.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

First Commonwealth and First Commonwealth Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on First Commonwealth’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, First Commonwealth and First Commonwealth Bank must meet specific capital guidelines that involve quantitative measures of First Commonwealth’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. First Commonwealth’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Effective January 1, 2015, the Company became subject to the new regulatory risk-based capital rules adopted by the federal banking agencies implementing Basel III. The most significant changes included higher minimum capital requirements, as the minimum Tier I capital ratio increased from 4.0% to 6.0% and a new common equity Tier I capital ratio was established with a minimum level of 4.5%. Additionally, the rules improved the quality of capital by providing stricter eligibility criteria for regulatory capital instruments and provide for a phase-in, beginning January 1, 2016, of a capital conservation buffer of 2.5% of risk-weighted assets. This buffer, which was fully phased-in as of January 1, 2019, provides a requirement to hold common equity Tier 1 capital above the minimum risk-based capital requirements, resulting in an effective common equity Tier I risk-weighted asset minimum ratio of 7.0% on a fully phased-in basis.

The Basel III Rules also permit banking organizations with less than $15.0 billion in assets to retain, through a one-time election, the existing treatment for accumulated other comprehensive income, which currently does not affect regulatory capital. The Company elected to retain this treatment, which reduces the volatility of regulatory capital levels.

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, 2024, which under the regulatory rules qualifies as Tier II capital. As of September 30, 2024, this subordinated debt issuance increased the total risk-based capital ratio by 53 basis points.

In March 2020, regulators issued interim financial rule (“IFR”) “Regulatory Capital Rule: Revised Transition of the Current Expected Losses Methodology for Allowances” in response to the disrupted economic activity from the pandemic. The IFR provides financial institutions that adopt CECL during 2020 with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided by the initial two-year delay (“five-year transition”). The Company adopted CECL effective January 1, 2020 and elected to implement the five-year transition. Regulatory capital levels without the capital benefit at September 30, 2024 for both First Commonwealth and First Commonwealth Bank would have continued to be greater than the amounts needed to be considered “well capitalized”, as the transition provided a capital benefit of approximately 5 to 6 basis points.

As of September 30, 2024, First Commonwealth and First Commonwealth Bank met all capital adequacy requirements to which they are subject and were considered well-capitalized under the regulatory rules. To be considered well capitalized, the Company must maintain minimum Total risk-based capital, Tier I risk-based capital, Tier I leverage ratio and Common equity tier I risk-based capital as set forth in the table below:

Actual Minimum Capital Required Required to be Considered Well Capitalized
Capital<br>Amount Ratio Capital<br>Amount Ratio Capital<br>Amount Ratio
(dollars in thousands)
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation $ 1,352,337 14.50 % $ 979,228 10.50 % $ 932,598 10.00 %
First Commonwealth Bank 1,249,560 13.43 977,220 10.50 930,685 10.00
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation $ 1,186,365 12.72 % $ 792,708 8.50 % $ 746,078 8.00 %
First Commonwealth Bank 1,083,824 11.65 791,082 8.50 744,548 8.00
Tier I Capital to Average Assets
First Commonwealth Financial Corporation $ 1,186,365 10.31 % $ 460,492 4.00 % $ 575,615 5.00 %
First Commonwealth Bank 1,083,824 9.44 459,432 4.00 574,290 5.00
Common Equity Tier I to Risk Weighted Assets
First Commonwealth Financial Corporation $ 1,116,365 11.97 % $ 652,820 7.00 % $ 606,189 6.50 %
First Commonwealth Bank 1,083,824 11.65 651,480 7.00 604,945 6.50

On October 29, 2024, First Commonwealth Financial Corporation declared a quarterly dividend of $0.13 per share payable on November 22, 2024 to shareholders of record as of November 8, 2024. The timing and amount of future dividends are at the

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

discretion of First Commonwealth's Board of Directors based upon, among other factors, capital levels, asset quality, liquidity and current and projected earnings.

In October 2021, a share repurchase program was authorized by the Board of Directors for up to an additional $25.0 million in shares of the Company's common stock. On April 24, 2023, the Board of Directors authorized a $25 million increase in the share repurchase program. As of September 30, 2024, 2,661,388 common shares had been repurchased under these program at an average price of $13.28 per share. During the nine months ended September 30, 2024, 169,811 common shares were repurchased under these programs at an average price of $16.24 per share.

New Accounting Pronouncements

In December 2023, FASB released Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires additional disclosure information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate (the rate reconciliation) for federal, state and foreign income taxes. ASU 2023-09 also requires greater detail about individual reconciling items in the rate reconciliation for those items that exceed a specified threshold. In addition to the new rate reconciliation disclosures, ASU 2023-09 requires information related to taxes paid (net of refunds received) to be disaggregated for federal, state and foreign taxes, along with further disaggregation for specific jurisdictions, to the extent the related amounts exceed a quantitative threshold. ASU 2023-09 is effective for the Company for annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied prospectively, with an option for retrospective application to each period in the financial statements. The Company is in the process of assessing the impact of adoption on its consolidated financial statements.

In November 2023, FASB released Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an interim and annual basis. ASU 2023-07 does not change how an entity identifies its operating segments, but does require that an entity that has a single reportable segment, such as First Commonwealth, to provide the required enhanced disclosures. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. ASU 2023-07 should be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company is in the process of assessing the impact of the adoption of ASU 2023-07 on its consolidated financial statements and related disclosures.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Information appearing in Item 2 of this report under the caption “Market Risk” is incorporated by reference in response to this item.

ITEM 4. Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15 under the Securities Exchange Act of 1-934 (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms of the Securities and Exchange Commission.

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PART II – OTHER INFORMATION

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.     LEGAL PROCEEDINGS

The information required by this item is set forth in Part I, Item 1, Note 6, "Commitments and Contingent Liabilities," which is incorporated herein by reference in response to this item.

ITEM 1A.    RISK FACTORS

There have been no material changes to the risk factors previously disclosed under Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On October 26, 2021, a share repurchase program was authorized for up to $25.0 million in shares of the Company's common stock with a $25 million increase in April of 2023. The following table details the amount of shares repurchased under this program in the second quarter of 2024:

Month Ending: Average Price<br>Paid per Share<br>(or Unit) Total Number of<br>Shares Purchased<br>as Part of Publicly<br>Announced Plans<br>or Programs Maximum Number<br>of Shares that<br>May Yet Be<br>Purchased Under<br>the Plans or<br>Programs*
July 31, 2024 $ — — 946,040
August 31, 2024 — — 993,287
September 30, 2024 16.83 146,850 853,252
Total $ 16.83 146,850
* Remaining number of shares approved under the Plan is based on the market value of the Company's common stock of 18.08 at July 31, 2024, 17.22 at August 31, 2024 and 17.15 at September 30, 2024.

All values are in US Dollars.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.    OTHER INFORMATION

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during quarter ended September 30, 2024, as such terms are defined under Item 408(a) of Regulation S-K. On September 17, 2024, the Corporation entered into a Rule 10b5-1 Issuer Repurchase Plan with a registered broker to effect repurchases of the Corporation’s common stock under the Corporation’s treasury stock repurchase program. The 10b5-1 issuer repurchase plan will terminate upon the earlier of $10,000,000 in shares of common stock authorized for repurchase having been repurchased or November 1, 2024.

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PART II – OTHER INFORMATION

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 6.     EXHIBITS

Exhibit<br>Number Description Incorporated by Reference to
10.1 Separation Agreement dated August 15, 2024 between First Commonwealth Financial Corporation and Brian G. Karrip Filed herewith
10.2 Change of Control Agreement dated August 16, 2024 between First Commonwealth Financial Corporation and Brian J. Sohocki Filed herewith
10.3 Employment Agreement dated August 16, 2024 between First Commonwealth Financial Corporation and Brian J. Sohocki Filed herewith
10.4 Restricted Stock Agreement dated August 16, 2024 between First Commonwealth Financial Corporation and Brian J. Sohocki Filed herewith
31.1 Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith
31.2 Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith
32.1 Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith
32.2 Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith
101 The following materials from First Commonwealth Financial Corporation’s Quarterly Report on Form 10-Q, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statements of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to Unaudited Consolidated Financial Statements. Note that XBRL tags are embedded within the document. Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST COMMONWEALTH FINANCIAL CORPORATION

(Registrant)

DATED: November 12, 2024 /s/ T. Michael Price
T. Michael Price<br><br>President and Chief Executive Officer
DATED: November 12, 2024 /s/ James R. Reske
James R. Reske<br>Executive Vice President, Chief Financial Officer and Treasurer

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EXHIBIT 10.1

SEPARATION AGREEMENT

This Separation Agreement (“Agreement”) is between the First Commonwealth Financial Corporation (“Company”) and Brian G. Karrip (“Employee”).

WHEREAS, Employee’s employment by the Company and First Commonwealth Bank is being terminated on August 15, 2024 (“Termination Date”);

WHEREAS, the Company is willing to pay Employee certain severance in exchange for a release of claims and other commitments.

NOW THEREFORE, intending to be legally bound and for good and valuable consideration, Company and Employee agree as follows:

1.Recitals. The foregoing recitals are true and correct and incorporated herein.

2.Termination of Employment.

(a) Employee hereby resigns employment with the Company and First Commonwealth Bank as of the Termination Date. The Company has or will timely pay Employee, in accordance with its normal payroll and other procedures (or as otherwise required by law), for (i) Employee’s work through the Termination Date, (ii) Employee’s accrued but unused paid time off, and (iii) Employee’s properly reported and reimbursable business expenses, less all required tax withholdings and other deductions. The term of Employee’s employment under the Employment Agreement dated September 19, 2016 between the Company and Employee (the “Employment Agreement”) will be deemed to end on the Termination Date, and the payments and other benefits contemplated by Section 2 and 3 of this Agreement shall be in lieu of and in full satisfaction of any severance payments and benefits to which employee may be entitled pursuant to the Employment Agreement.

(b) Employee’s eligibility to participate in the Company’s group insurance plans, benefit plans, and other fringe benefit programs ceased as of the Termination Date, except as otherwise extended under COBRA. Certain benefits remain effective through the end of the month in which the termination occurs.

(c) The foregoing payments and benefits have been or will be provided to Employee regardless of whether Employee signs or revokes this Agreement.

3.Severance Benefits.

(a) The Company will continue the payment of Employee’s regular base salary, less all required tax withholdings and other deductions, through the payroll period ending on August 15, 2025 (“Severance”). The Company will pay the Severance in equal installments commencing on the first regular payroll date after the date this Agreement becomes final, binding and irrevocable (as described below) (the “Release Effective Date”), but in no event later than the sixtieth (60th) day following Employee’s Termination Date. The first Severance payment shall include payment of all amounts of such severance that otherwise would have been due prior to such date (without interest), applied as though such payments commenced on the next normal pay date immediately following Employee’s Termination Date.

(b) If Employee timely elects to continue Employee’s group health benefits under COBRA, the Company will pay 100% of Employee’s COBRA premiums for ten (10) months of coverage for Employee and Employee’s spouse ending on June 30, 2025 or when COBRA eligibility ceases. The

COBRA continuation period for group health insurance provided under this Section 3(b) shall be deemed to run concurrent with the continuation period federally mandated by COBRA, or any other legally mandated and applicable federal, state, or local coverage period.

(c) The Company will pay Employee in respect of the Employee’s award under the Company’s 2024 annual incentive plan (“AIP”) $169,600 in cash or immediately available funds, net of required withholdings, on January 15, 2025. The payment contemplated by this Section 3(c) shall constitute full satisfaction of Employee’s award under the 2024 AIP.

(d) Employee is a participant in the following long-term incentive compensation plans (collectively, the “LTIPs”): (i) First Commonwealth Financial Corporation 2022-2024 Long-Term Incentive Plan; (ii) First Commonwealth Financial Corporation 2023-2025 Long-Term Incentive Plan; and (iii) First Commonwealth Financial Corporation 2024-2026 Long-Term Incentive Plan. The Company will pay Employee in respect of the Employee’s awards at target performance, pro-rated, based on the average ten (10) day share price (FCF), ending on August 14, 2024 in cash or immediately available funds, net of required withholdings, on the first regular payroll date after the Release Effective Date. The payment contemplated by this Section 3(d) shall constitute full satisfaction of Employee’s awards under the LTIPs.

4.Release of Claims.

On the Termination Date, Employee will execute and deliver the General Release of Claims attached as Exhibit A to this Agreement. The Parties agree that neither this Agreement nor the furnishing of the consideration for the release by Employee shall be deemed or construed at any time for any purpose as an admission by the Company, or evidence of any liability or unlawful conduct of any kind.

5.Time Limits, Revocation and Effective Date

(a) Employee acknowledges and agrees that Employee received this Agreement on July 24, 2024. Employee has up to twenty-one (21) days from the date Employee receives this Agreement to consider its terms. Any changes to this Agreement during that period, whether material or not, will not extend the 21-day period. If Employee signs this Agreement, Employee may still revoke Employee’s acceptance of the Agreement for up to seven (7) days after Employee signs it, by notifying the Company in writing before the expiration of that seven-day period. The written notice should be delivered in person or, if sent by mail, postmarked no later than the 7th day and mailed to:

First Commonwealth Bank

601 Philadelphia Street

Indiana, PA 15701

Attention: General Counsel

(b) If not revoked, this Agreement will become effective on the 8th day after Employee signs it. If Employee does not sign this Agreement within the 21-day period, or if Employee timely revokes this Agreement during the seven-day revocation period, this Agreement will not become effective and Employee will not be entitled to the Severance Benefits provided for in Section 3.

6.Consult with an Attorney. The Company hereby advises Employee to consult with an attorney of Employee’s choice (at Employee’s expense) before Employee signs this Agreement. The Company will rely on Employee’s signature on this Agreement as Employee’s representation that Employee read this Agreement carefully before signing it, and that Employee has a full and complete understanding of its terms.

7.Representations. By signing below, Employee represents and agrees that the following are true and correct:

(a) Except for the wages and benefits to be paid to Employee regardless of whether Employee signs this Agreement (as described in Section 2) and the Severance Benefits to be paid under this Agreement (as described in Section 3), the Company does not owe Employee any other wages, compensation, or benefits of any kind or nature;

(b) The Company has provided Employee with all leave to which Employee was entitled and, to the best of Employee’s knowledge, Employee is not suffering from any work-related injuries;

(c) Employee has notified the Company of any charge or complaint Employee filed with any agency or court that is still pending before such court or agency;

(d) The Severance Benefits described in Section 3 are things that Employee is not entitled to receive in the absence of this Agreement;

(e) Employee has returned to the Company all property and information that belongs to the Company, including, but not limited to the following (where applicable): computers (desktop and laptop); phone; tablet; iPad; devices (including usb, external hard drives, etc.); handheld devices; keys, access cards, passwords, and/or ID cards; all electronically stored and paper copies of all financial data, customer information, business plans and reports, and Company files; and all records, customer lists, written information, forms, plans, and other documents, including electronically stored information. Employee shall search Employee's electronic devices, device back-ups, residence, and automobile and agrees that by signing below, Employee has disclosed all Company property in Employee's possession or control and returned such property as directed by Company; and

(f) Employee remains bound by the restrictive covenants (which include, by way of illustration and not limitation, the obligation not to solicit prospective customers, customers and/or employees) for a period as defined and discussed more fully in the Employment Agreement and any other document containing restrictive covenants. Without limiting the generality of the foregoing, Employee will abide by the obligations under Sections 3.01 (Non-Disclosure of Confidential Information), 3.02 (Non-Solicitation of Employees) and 3.06 (Non-Compete) of the Employment Agreement.

8.No Re-employment. Employee acknowledges and agrees that he shall not knowingly re-apply for employment with the Released Parties, nor will Employee knowingly accept any employment or otherwise work for the Released Parties. Further, Employee agrees that his forbearance to seek future employment with the Released Parties is purely contractual and is in no way involuntary, discriminatory, retaliatory, or in violation of any contract or policy of the Released Parties. If Employee applies for employment with the Released Parties, the Released Parties are not under any obligation to process or otherwise act upon such application.

9.Confidentiality. Employee will keep this Agreement and its terms (other than the fact that Employee was terminated on the Termination Date) confidential and will not disclose such information to anyone other than Employee’s immediate family and professional advisors, each of whom must, as a condition to the disclosure, agree to keep the information confidential. Employee will be responsible for any breach of this Section by Employee’s immediate family members and professional advisors. Notwithstanding the foregoing, this Agreement does not prohibit Employee from (a) providing truthful testimony in response to compulsory legal process, (b) participating or assisting in any investigation or inquiry by a governmental agency acting within the scope of its statutory or regulatory

jurisdiction, or (c) making truthful statements in connection with any claim permitted to be brought by Employee under Sections 3 or 4 of the Release.

10.Confidential Information.

(a) Employee will not disclose to any third parties any of the trade secrets and other confidential proprietary information of the Company, including, but not limited to, information regarding the Company’s operations, products, services, suppliers, customers, research, development, new products, marketing, marketing plans, business plans, budgets, finances, licenses, prices, and costs (“Confidential Information”) without the express written consent of the Company, which consent may be withheld by the Company in its sole and absolute discretion. Notwithstanding the foregoing, this Agreement does not prohibit Employee from (i) providing truthful testimony in response to compulsory legal process, (ii) participating or assisting in any investigation or inquiry by a governmental agency acting within the scope of its statutory or regulatory jurisdiction, or (iii) making truthful statements in connection with any claim permitted to be brought by Employee under Sections 3 or 4 of the Release.

(b) Employee’s obligation under this Section include, but are not limited to, any and all Confidential Information the Company provided to Employee, Employee developed on behalf of the Company, or to which Employee had access, as well as information third parties provided to the Company that the Company is obligated to keep confidential.

11.Applicable Law; Jurisdiction and Venue.

(a) This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the principles of conflicts of law.

(b) Employee consents to the exclusive jurisdiction of any state or federal court of competent jurisdiction located within the Western District of the United States District Court in the Commonwealth of Pennsylvania, and Employee irrevocably agrees that all actions or proceedings relating to this Agreement may be litigated in such courts. Employee irrevocably waives Employee’s right to object to or challenge the above selected forum on the basis of inconvenience or unfairness similar state or federal statutes.

12.Entire Agreement; Other Agreements. This Agreement contains the entire agreement of the parties with respect to the subject matter hereof, and no representation, promise, or agreement, oral or written, relating hereto that is not contained herein shall be of any force or effect. Moreover, if Employee entered in any other enforceable agreements with the Company that contain provisions that are not in direct conflict with the provisions of this Agreement, those provisions shall remain in effect and the terms of this Agreement shall be in addition to the non-conflicting terms of such other such agreements.

13.No Disparagement. Employee will not make any defamatory or intentionally disparaging statements to any third parties regarding the Company, its services, or any of its employees, officers, or owners. Notwithstanding the foregoing, this Agreement does not prohibit Employee from (a) providing truthful testimony in response to compulsory legal process, (b) participating or assisting in any investigation or inquiry by a governmental agency acting within the scope of its statutory or regulatory jurisdiction, or (c) making truthful statements in connection with any claim permitted to be brought by Employee under Sections 3 or 4 of the Release.

14.No Admissions. Neither the execution of this Agreement nor the performance of its terms and conditions shall be construed or considered by any party or by any other person as an admission of liability or wrongdoing by either Party.

15.Counterparts. This Agreement may be executed in one or more counterparts, each of which will be considered an original instrument and all of which together will be considered one and the same agreement and will become effective when all executed counterparts have been delivered to the respective parties. Delivery of executed pages by facsimile transmission or e-mail will constitute effective and binding execution and delivery of this Agreement.

16.Assignment. This Agreement shall be binding upon and shall inure to the benefit of the Company and its respective successors and assigns, and any such successors and assigns shall be considered third-party beneficiaries of this Agreement.

17.Acknowledgements. Employee hereby acknowledges that Employee (a) has read this Agreement and understands all of its provisions; and (b) voluntarily enters into this Agreement, which is contractual in nature and contains a general release of claims.

18.Severability. If any term, provision or paragraph of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable for any reason, such determination shall be limited to the narrowest possible scope in order to preserve the enforceability of the remaining portions of the term, provision or paragraph, and such determination shall not affect the remaining terms, provisions or paragraphs of this Agreement, which shall continue to be given full force and effect.

19.409A. The provisions of this Agreement will be administered, interpreted and construed in a manner intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, the regulations issued thereunder, or any exception thereto (or disregarded to the extent such provision cannot be so administered, interpreted, or construed). Each payment under this Agreement shall be considered a separate and distinct payment. Employee shall have no right to designate the date of any payment under this Agreement. Nothing contained in this Agreement shall constitute any representation or warranty by the Company regarding compliance with Section 409A. The Company has no obligation to take any action to prevent the assessment of any tax under Section 409A on any person and neither the Company, nor its subsidiaries or affiliates, nor any of their employees, officers, directors or other representatives shall have any liability to Employee with respect thereto. To the extent required by this Agreement or applicable law, the Company will annually report as taxable wages and/or impute income to the Employee the value of any taxable benefits and payments provided to the Employee.

20.Further Assurances. Employee and the Company each agree to execute and deliver, after the date hereof, without additional consideration, any additional documents, and to take any further actions, as may be necessary to fulfill the intent of this Agreement and the transactions contemplated hereby.

21.Cooperation.

(a) Employee will (i) cooperate with the Company in all reasonable respects concerning any transitional matters which require Employee’s assistance, cooperation or knowledge, including communicating with persons inside or outside the Company as directed by the Company, and (ii) in the event that the Company (or any of its affiliates or other related entities) becomes involved in any legal action relating to events which occurred during Employee’s employment with the Company, cooperate to the fullest extent possible in the preparation, prosecution or defense of their case, including, but not

limited to, the execution of affidavits or documents, testifying or providing information requested by the Company.

(b) To the extent that Employee incurs (i) travel-related expenses, (ii) out-of-pocket expenses, and/or (iii) loss of wages as a result of Employee’s cooperation with the Company as contemplated by this Section 21 (“Cooperation Expenses”), the Company will promptly reimburse Employee (or will cause Employee to be promptly reimbursed) for such Cooperation Expenses, provided they are reasonable and were approved by the Company in advance.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date(s) set forth below.

First Commonwealth Financial Corporation

By /s/ T. Michael Price

Name T. Michael Price

Title Chief Executive Officer

Date 8/2/2024

/s/ Brian G. Karrip

Brian G. Karrip

8/1/2024

Date

EXHIBIT A

General Release of Claims.

This General Release of Claims is executed and delivered by the undersigned (“Employee”) pursuant to, and in consideration of the promises made within, that certain Separation Agreement dated August 2, 2024 (the “Agreement”) by and between First Commonwealth Financial Corporation, a Pennsylvania corporation (the “Company” in the Agreement and “Employer” in this General Release of Claims), and the undersigned (“Employee”).

  1.     Employee knowingly and voluntarily releases and forever discharges Employer, its parent, affiliates, subsidiaries, divisions, predecessor companies, their successors and assigns, their affiliated and predecessor companies and the current and former employees, attorneys, shareholders, members, officers, directors and agents thereof and the current and former trustees or administrators of any pension or other benefit plan applicable to the employees or former employees of Employer \(collectively referred to throughout the remainder of this Agreement as "Releasees"\), of and from any and all claims, controversies, damages, rights, actions and causes of action, known and unknown, which the Employee has or may have against Releasees as of the date of execution of this General Release of Claims as the result of his separation of service from Employer, examples include, but are not limited to, any alleged violation of the following in connection with his separation of service from Employer:

•Title VII of the Civil Rights Act of 1964, as amended;

•The Civil Rights Act of 1991;

•Sections 1981 through 1988 of Title 42 of the United States Code, as amended;

•The Employee Retirement Income Security Act of 1974, as amended (with the exception of claims involving vested and/or accrued benefits);

•The Immigration Reform and Control Act, as amended;

•The Americans with Disabilities Act of 1990, as amended;

• The Age Discrimination in Employment Act of 1967, as amended;

•The Older Workers Benefit Protect Act;

•The Workers Adjustment and Retraining Notification Act, as amended;

•The Occupational Safety and Health Act, as amended;

•The Equal Pay Act of 1963;

•The Genetic Information Nondiscrimination Act;

•The Family and Medical Leave Act;

•Uniformed Services Employment and Reemployment Rights Act

•Any other federal, state or local civil or human rights law or any other local, state public policy, contract, tort, or common law; or

•Any allegation for costs, fees, or other expenses including attorneys' fees incurred in these matters (all of the above collectively referred to as "Claims").

  1.     This release is intended to be a general release of claims arising out of Employee’s separation of service from the Employer and excludes any rights or claims preserved in or based on the Agreement, and any claims based on transaction or occurrences arising after Employee’s execution of this General Release of Claims.  Employee is advised to seek independent legal counsel if Employee seeks clarification on the scope of this release.  Signing this Agreement does not waive Employee's right to seek a judicial determination of the validity of Employee's release of rights arising under the Age Discrimination in Employment Act.

  2.     Nothing herein is intended to or shall preclude Employee from filing a charge with any appropriate federal, state, or local government agency and/or cooperating with said agency in its investigation. Employee, however, explicitly waives any right to file a personal lawsuit or receive monetary damages that the agency may recover against Releasees, without regard as to who brought any said complaint or charge.

  3.     Nothing herein is intended to or shall release, waive or otherwise impair the rights of Employee under the Bylaws of the Company or any of its subsidiaries, any insurance policy maintained by the Company or applicable law of Company practice to be indemnified against liability for acts or omissions in Employee’s covered capacities for the Company and/or its subsidiaries.

Other than filing suit to determine the validity of Employee's release under the ADEA as set forth in paragraph “2” above or filing a charge consistent with paragraph “3” above, Employee covenants not to file any lawsuit, charge, complaint, allegation or cause of action in any forum regarding any claim involving his employment with or his termination of employment from Employer which he is waiving and releasing through this General Release of Claims. If Employee breaches this covenant, he agrees to forfeit any and all consideration offered to him in the Agreement.

Date: 8/15/2024 /s/ Brian G. Karrip

Brian G. Karrip

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EXHIBIT 10.2

CHANGE OF CONTROL AGREEMENT

THIS CHANGE OF CONTROL AGREEMENT (this "Change of Control Agreement"), is entered into as of August 16, 2024 (the “Effective Date”), by and between First Commonwealth Financial Corporation, a Pennsylvania corporation (the “Company”), and Brian J. Sohocki (“Executive”).

W I T N E S S E T H:

WHEREAS, the Compensation & Human Resources Committee ("Compensation Committee") of the Company’s Board of Directors (the “Board”) has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a “Change of Control” (as defined below) of the Company;

WHEREAS, the Compensation Committee believes that it is important to diminish the inevitable distraction of the Executive that would result from the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive to continue to devote Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefit arrangements upon the termination of Executive’s employment following a Change of Control;

WHEREAS, the Compensation Committee has authorized the Company to enter into this Change of Control Agreement with the Executive; and

WHEREAS, the Company and the Executive wish to enter into this Change of Control Agreement in order to accomplish these objectives.

NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and other good and valuable consideration, the Company and the Executive do hereby agree as follows:

ARTICLE 1

CERTAIN DEFINITIONS

1.1“Cause” for termination will be deemed to exist if:

(a)the Executive is convicted of, or pleads guilty or nolo contendere to, any crime which constitutes a felony under the laws of the United States of America or of any state or territory thereof, and the commission of that felony resulted in, or was intended to result in, a loss (monetary or otherwise) to the Employer Entities, or any of their respective clients, customers, directors, officers or employees;

(b)the Executive fails or refuses to perform the Executive’s duties to any of the Employer Entities (other than during such time as the Executive is incapacitated due to an accident or illness or during the Executive’s regularly scheduled vacation periods) with the degree of skill and care reasonably expected of a professional of his experience and stature for a period of thirty (30) consecutive days following the receipt by the Executive of a notice

from the Company sent by certified mail, return receipt requested, setting forth in detail the facts upon which the Company relies in concluding that the Executive has failed or refused to perform the Executive’s duties and indicating with specificity the duties that the Company demands that the Executive perform without delay;

(c)the Executive engages in an act or acts of dishonesty which result or are intended to result in material damage to the business or reputation of any of the Employer Entities; or

(d)the Executive fails or refuses to comply with any material provision of this Change of Control Agreement or any policy or procedure of any Employer Entity, which violations are demonstrably willful and deliberate on the Executive's part and which result or are intended to result in material damage to the business or reputation of any of the Employer Entities and as to which failure or refusal to comply the Company has notified the Executive in writing.

1.2 “Change of Control” will mean:

(a)The acquisition, other than from the Company, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the then outstanding shares of common stock of the Company;

(b)Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board will be considered as though such individual were a member of the Incumbent Board; or

(c)Consummation of a reorganization, merger, consolidation, sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners of shares outstanding shares of the Company’s common stock immediately prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, more than fifty-percent (50%) of the then outstanding shares of common stock of the corporation resulting from such a Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries).

Notwithstanding any other provision of this Change of Control Agreement to the contrary, (i) the placement of any of the Employer Entities into receivership or conservatorship by the Federal Deposit Insurance Corporation ("FDIC") or a state or federal banking regulatory agency with jurisdiction over any of the Employer Entities, (ii) the acquisition of fifty-percent (50%) or more of any of the Employer Entities' assets or assumption of fifty-percent (50%) or more of the Employer Entities' deposit liabilities in an FDIC-assisted transaction, and (iii) a change in any Employer Entity's board of directors at the direction of a state or federal banking

regulatory authority having jurisdiction over any of the Employer Entities, will not constitute a Change of Control.

1.3 “Client” means any client or prospective client of the Company to whom the Executive provided services, or for whom the Executive transacted business, or whose identity became known to the Executive in connection with the Executive’s relationship with or employment by the Company.

1.4“Code” means the Internal Revenue Code of 1986, as amended.

1.5 “Employer Entity” means the Company and each of its subsidiaries and affiliates, including without limitation, FCB.

1.6“Exchange Act” means the Securities Exchange Act of 1934, as amended.

1.7“Good Reason” means:

(a)the assignment to the Executive of any duties inconsistent in any respect with the Executive’s title, position, authority, duties or responsibilities immediately prior to the Change of Control or any other action by the Company which results in a diminution of such position, authority, duties or responsibilities, other than an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after the receipt of notice thereof given by the Executive;

(b)any requirement of the Company that the Executive (i) be based anywhere more than fifty (50) miles from the office where the Executive is located immediately prior to the Change of Control or (ii) travel on Company business to an extent substantially greater than the travel obligations of the Executive immediately prior to the Change of Control; or

(c)(i) a reduction by the Company in the Executive’s rate of annual base salary as in effect immediately prior to the Change of Control or (ii) the failure of the Company to continue in effect any employee benefit plan, compensation plan, welfare benefit plan or material fringe benefit plan in which the Executive is participating or entitled to participate immediately prior to the Change of Control, unless the Executive is permitted to participate in other plans providing the Executive with substantially equivalent benefits in the aggregate (at substantially equivalent cost with respect to welfare benefit plans).

1.8 “Protected Period” means the period of time beginning with the date of a Change of Control and ending two (2) years following such Change of Control.

1.9“Qualifying Termination” means a termination of the Executive’s employment (i) by the Company other than for Cause, disability or death, or (ii) by the Executive for Good Reason, provided that such termination of employment constitutes a Separation from Service.

1.10“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

1.11“Section 409A Change of Control” means a "Change of Control Event" as defined in Section 409A.

1.12“Section 409A Deferred Compensation” means an amount payable or benefit to be provided under a "nonqualified deferred compensation plan" as defined in Section 409A.

1.13“Separation from Service” has the meaning set forth in Section 409A.

ARTICLE 2

TERM

2.1The term of this Change of Control Agreement will begin on the Effective Date and will continue for thirty-six (36) full calendar months thereafter (the "Initial Term"). This term of this Change of Control Agreement will automatically renew for twenty-four (24) full calendar months thereafter on the third anniversary of the Effective Date and on each second anniversary thereafter (each, a "Renewal Term") unless either party hereto gives notice in writing to the other party at least twelve (12) months prior to the end of the Initial Term or any Renewal Term of the party's intent not to renew such term. Notwithstanding the foregoing, if a Change of Control occurs prior to the end of the Initial Term or Renewal Term, as the case may be, then the term of this Change of Control Agreement will continue until the later of (a) the end of the Protected Period, or (b) if a Qualifying Termination occurs during the Protected Period, the end of the Severance Period.

2.2Notwithstanding anything in this Section to the contrary, this Change of Control Agreement will terminate if the Executive or the Company terminates the Executive's employment for any reason prior to a Change in Control.

ARTICLE 3

PAYMENTS

3.1Qualifying Termination. If during the Protected Period the employment of the Executive is terminated pursuant to a Qualifying Termination, subject to Article 7 hereof, then the Employer Entities will pay to the Executive (or the Executive’s beneficiary as provided in Article 5 hereof) the accrued obligations, severance pay and severance benefits in accordance with Sections 3.2, 3.3 and 3.4 hereof. If the Executive's employment with the Employer Entities is terminated (i) for any reason prior to or after the Protected Period or (ii) other than pursuant to a Qualifying Termination during the Protected Period, then the Executive will not be entitled to the payment of any severance or provision of any benefits under this Change of Control Agreement.

3.2Accrued Benefits. In the event of a Qualifying Termination described in Section 3.1 hereof, the Employer Entities will pay to the Executive any accrued and unpaid base salary and paid time-off, within thirty (30) days following the date of Qualifying Termination or such earlier date as is required by law.

3.3Severance Pay. Subject to Article 7 hereof, in the event of a Qualifying Termination described in Section 3.1 hereof, the Employer Entities will pay to the Executive an amount equal to two (2) times: (i) the Executive’s annual base salary immediately prior to the Change of Control; (ii) the average of the aggregate annual amount of all bonuses paid to the Executive during the thirty-six (36) month period (or the Executive's period of employment with the Employer Entities, if less) preceding the Change of Control; (iii) the

aggregate amount of all contributions by the Company for the account of the Executive under the First Commonwealth Financial Corporation 401(k) Savings and Investment Plan during the twelve (12) month period preceding the Change of Control; and (iv) the aggregate of all contributions by the Company for the account of the Executive to the Company’s Non-Qualified Deferred Compensation Plan during the twelve (12) month period preceding the Change of Control. Subject to Article 7 hereof, such sum will be paid in equal periodic installments payable in accordance with the Employer Entity's normal payroll practices during the twenty-four (24) month period immediately following such Qualifying Termination (the "Severance Period").

3.4 Continued Health Insurance Benefits. In addition to the severance payable pursuant to Section 3.3 hereof, in the event of a Qualifying Termination described in Section 3.1 hereof, the Employer Entities will offer continuation coverage to the Executive, as required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), under the Company's group health plan on the terms and conditions mandated by COBRA and the Company will pay the full cost of the COBRA premiums on behalf of the Executive and his covered family members during the eighteen (18) month period immediately following such Qualifying Termination.

3.5Other Compensation and Benefits.

(a)Except as expressly provided for in Article 3 hereof, the Executive will not be entitled to severance pay or benefits under any plan, program, policy, practice or other arrangement of any Employer Entity in connection with any Qualifying Termination, including without limitation this Change of Control Agreement or any severance policy of any Employer Entity.

(b)During the Severance Period, the Executive will not be eligible to participate in any Employer Entity equity-based incentive, other incentive, 401(k) savings, employee stock ownership, deferred compensation, supplemental retirement, supplemental savings, life insurance, short or long term disability, employee welfare benefit, fringe benefit, perquisite, vacation, paid time-off or other employee benefit plan, program, policy, practice or other arrangement of any Employer Entity.

(c)Unless otherwise determined by the Board or applicable committee thereof, any outstanding options or other equity based awards held by the Executive to purchase or acquire Employer stock under any equity-based plan of any Employer Entity will be subject to the exercisability, vesting and forfeiture provisions of the respective plan. Any benefits the Executive has earned with respect to his employment for periods on or prior to the Qualifying Termination under any annual incentive, deferred compensation, supplement retirement or savings, 401(k), employer stock ownership or similar plan of any Employer Entity will be paid in accordance with the terms of such plan.

3.6Release. The Company’s obligation to make any payment to the Executive as described in this Article 3 is contingent upon the Executive’s execution and non-revocation of a release within sixty (60) days following the Executive's Separation from Service, in form and substance reasonably satisfactory to the Company, that, in the opinion of the Company’s counsel, is effective to release the Company from all claims relating to the Executive’s employment or the termination thereof (other than under the terms of this

Change of Control Agreement), and the Company will have no obligation to make any payment unless and until such a release has become effective.

3.7Business Expenses. The Employer Entities will reimburse the Executive for any unreimbursed, reasonable business expenses incurred by the Executive on or before the Qualifying Termination, pursuant to Employer's reimbursement policies, provided that Executive present all expense reports to Employer in accordance with such policies. All such expense reports must be submitted within thirty (30) days following the date of the Qualifying Termination.

3.8Withholding Taxes and Other Deductions. The Employer Entities may withhold from any payments made to the Executive any applicable federal, state, local and other taxes (such as employment taxes), and such other deductions as are prescribed by law. This includes withholding amounts from payments made pursuant to this Article 3 in order to satisfy any withholding obligations.

ARTICLE 4

LIMITATION ON PAYMENT OF BENEFITS

Notwithstanding anything to the contrary in this Change of Control Agreement, if the payments and benefits pursuant to Article 3 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Company or any of its subsidiaries, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits pursuant to Article 3 hereof will be reduced, in the manner determined by independent tax counsel selected as provided below, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under Article 3 hereof being non-deductible to the Company or such subsidiary pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code; provided, however, that if such procedure for determining the reduction of payments and benefits is determined by the Company to result in a violation of Section 409A, such reduction will be made on a pro rata basis. The determination of whether any reduction in the payments and benefits is to be made pursuant to Article 3 hereof will be based upon the written advice of independent tax counsel selected by the Company and reasonably acceptable to the Executive. The fees and expenses of the tax counsel will be paid by the Company. The Company will use its best efforts to cause such counsel to prepare the foregoing opinion as promptly as practicable, and in any event, within thirty (30) days after the Change of Control or date of Qualifying Termination, if earlier. The Company and the Executive agree to be bound by the determination of such tax counsel and to make appropriate payments to each other to give effect to the intent and purpose of this Article 4.

ARTICLE 5

BENEFICIARIES

If the Executive dies after the occurrence of a Qualifying Termination, but prior to the payment of all of the monthly severance payments required by Article 3 hereof, then all remaining severance payments will be paid to the beneficiary designated in writing by the Executive at the same time, and in the same amount, as would have been payable to the Executive. The designation of a beneficiary for purposes of this Article 5 will be revocable

during the lifetime of the Executive. If the Executive does not designate a beneficiary under this Change of Control Agreement, the beneficiary will be deemed to be the same person that the Executive designated with respect to the Executive’s group life insurance program maintained by the Company.

ARTICLE 6

EXECUTIVE COVENANTS

6.1Non-Disparagement. The Executive agrees that he will not, in writing or orally, or through conduct, disparage, deprecate, discredit, vilify or otherwise say anything negative about the Employer Entities. The Executive agrees never to disparage the services, products, customers, or employees of any Employer Entity. These prohibitions include, without limitation, any such statements made through use of social media sites, such as Facebook, LinkedIn or X (formerly Twitter).

6.2Non-Disclosure of Confidential Information. The Executive recognizes and acknowledges that: (a) in the course of the Executive’s employment by the Employer Entities, it will be necessary for the Executive to acquire information which could include, in whole or in part, information concerning the Employer Entities’ business, sales volume, sales methods, sales proposals, financial statements and reports, customers and prospective customers, identity of customers and prospective customers, identity of key purchasing personnel in the employ of customers and prospective customers, amount or kind of customers’ purchases from the Employer Entities, the Employer Entities' sources of supply, the Employer Entities' computer programs, system documentation, special hardware, product hardware, related software development, the Employer Entities' manuals, formulae, processes, methods, machines, compositions, ideas, improvements, inventions, or other confidential or proprietary information belonging to the Employer Entities or relating to the Employer Entities' affairs (collectively referred to herein as the “Confidential Information”); (b) the Confidential Information is the property of the Employer Entities; (c) the use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Employer Entities; and (d) it is essential to the protection of the Employer Entities' good will and to the maintenance of the Employer Entities' competitive position that the Confidential Information be kept secret and that the Executive not disclose the Confidential Information to others or use the Confidential Information to the Executive’s own advantage or the advantage of others. Confidential Information will not include information otherwise available in the public domain through no act or omission of the Executive. The Executive agrees to hold and safeguard the Confidential Information in trust for the Employer Entities, its successors and assigns and agrees that he will not, without the prior written consent of the Employer Entities, misappropriate or disclose or make available to anyone for use outside the Employer Entities' organizations at any time, either during his employment with any Employer Entity or subsequent to the termination of his employment with the Employer Entities for any reason, including without limitation, termination by any Employer Entity, any of the Confidential Information, whether or not developed by the Executive, except as required in the performance of the Executive’s duties to the Employer Entities.

6.3Non-Solicitation of Employees. The Executive agrees that, during the term of his employment with any Employer Entity and for twenty-four (24) months following

termination of the Executive’s employment with the Employer Entities for any reason, including without limitation termination by any Employer Entity for Cause or without Cause, the Executive will not, directly or indirectly, solicit or induce, or attempt to solicit or induce, any employee of any Employer Entity or of any of its subsidiaries or affiliates, to leave any Employer Entity or any of its subsidiaries, or affiliates, for any reason whatsoever, or to hire any such employee.

6.4Return of Materials. Upon the termination of the Executive’s employment with the Employer Entities for any reason, the Executive will promptly deliver to the Employer Entities all correspondence, drawings, blueprints, manuals, letters, notes, notebooks, reports, flow-charts, computer equipment, programs, software, databases, proposals, financial statements and reports, and any documents concerning the Employer Entities' customers or concerning products or processes used by the Employer Entities and, without limiting the foregoing, will promptly deliver to the Employer Entities any and all other documents or materials containing or constituting Confidential Information.

6.5Work Made for Hire. The Executive agrees that in the event of publication by the Executive of written or graphic materials constituting “work made for hire,” as defined and used in the Copyright Act of 1976, 17 USC § 1 et seq., the Employer Entities will retain and own all rights in said materials, including right of copyright.

6.6Jurisdiction and Service of Process. The Executive and the Company waive any right to a court (including jury) proceeding and instead agree to submit any dispute over the application, interpretation, validity, or any other aspect of this Change of Control Agreement to binding arbitration consistent with the application of the Federal Arbitration Act and the procedural rules of the American Arbitration Association (“AAA”) before an arbitrator who is a member of the National Academy of Arbitrators (“NAA”) out of a nationwide panel of eleven (11) arbitrators to be supplied by the AAA. The Company will absorb the fee charged and the expenses incurred by the neutral arbitrator selected.

6.7Validity. The terms and provisions of this Article 6 are intended to be separate and divisible provisions and if, for any reason, any one or more of them is held to be invalid or unenforceable, neither the validity nor the enforceability of any other provision of this Change of Control Agreement will thereby be affected. The parties hereto acknowledge that the potential restrictions on the Executive’s future employment imposed by this Article 6 are reasonable in both duration and geographic scope and in all other respects. If for any reason any court of competent jurisdiction will find any provisions of this Article 6 unreasonable in duration or geographic scope or otherwise, the Executive and the Company agree that the restrictions and prohibitions contained herein will be effective to the fullest extent allowed under applicable law in such jurisdiction.

6.8Consideration. The parties acknowledge that this Change of Control Agreement would not have been entered into and the benefits described herein would not have been promised in the absence of the Executive’s promises under this Article 6.

6.9Cease Payments. In the event that the Executive breaches any material provision of this Article 6, the Company’s obligation to make or provide payments or benefits under Article 3 will cease, to the extent not already paid or provided.

ARTICLE 7

SECTION 409A

7.1This Change of Control Agreement will be administered, interpreted and construed in compliance with Section 409A, including any exemption thereunder. Each payment hereunder, including each installment payment, will be treated as a separate payment for purposes of Section 409A. With respect to payments subject to Section 409A (and not exempt therefrom), each such payment will be paid as a result of a permissible distribution event, and at a specified time, consistent with Section 409A. The Executive has no right to, and there will not be, any acceleration or deferral with respect to payments hereunder. The Executive acknowledges and agrees that the Company will not be liable for, and nothing provided or contained in this Change of Control Agreement will obligate or cause the Company to be liable for, any tax, interest or penalties imposed on the Executive related to or arising with respect to any violation of Section 409A. For purposes of this Change of Control Agreement, any reference to "termination of employment", "termination" or similar reference will be construed to be a reference to Separation from Service.

7.2Notwithstanding any other provision of this Change of Control Agreement to the contrary, to the extent that any amount payable or benefit to be provided under this Change of Control Agreement constitutes Section 409A Deferred Compensation that is not exempt from Section 409A, and such amount or benefit is payable or to be provided as a result of Separation from Service, and the Executive is a "specified employee" (as defined and determined under Section 409A and any relevant procedures that the Company may establish) ("Specified Employee") at the time of his Separation from Service, then such payment or benefit will not be made or provided to the Executive until the day after the date that is six months following the Executive's Separation from Service, at which time all payments or benefits that otherwise would have been paid or provided to the Executive under this Change of Control Agreement during that six-month period, but were not paid or provided because of this Section 7.2, will be paid or provided, with any cash payment to be made in a single lump sum (without any interest with respect to that six-month period). This six-month delay will cease to be applicable if the Executive's Separation from Service due to death or if the Executive dies before the six-month period has elapsed, in which event any such payments or benefits will be paid or provided to the Executive's estate within thirty (30) days of the date of death.

7.3Notwithstanding any other provision of this Change of Control Agreement to the contrary, to the extent that any amount payable or benefit to be provided under this Change of Control Agreement constitutes Section 409A Deferred Compensation that is not exempt from Section 409A and the Executive is not a Specified Employee at the time of his Separation from Service, then such payment or benefit will not be provided to the Executive until the sixtieth (60th) day following the Executive's Separation from Service, at which time all payments or benefits that otherwise would have been paid or provided to the Executive under this Change of Control Agreement during the sixty (60) days period, but were not paid or provided because of this Section 7.3, will be paid or provided, with any

cash payment to be made in a single lump sum (without any interest with respect to that sixty-day period).

ARTICLE 8

SUCCESSORS; BINDING AGREEMENT

8.1This Change of Control Agreement will inure to the benefit of and be binding upon the Company and its successors and assigns.

8.2The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Change of Control Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Change of Control Agreement, “Company” will mean the Company as defined herein and any successor to its business and/or assets which assumes and agrees to perform this Change of Control Agreement by operation of law or otherwise.

8.3This Change of Control Agreement will be binding upon, and will inure to the benefit of and be enforceable by, the Executive, the Executive’s heirs, personal representatives, executors and administrators.

ARTICLE 9

ATTORNEY’S FEES

Each party will bear all attorney’s fees and related expenses in connection with or relating to the negotiation and enforcement of this Change of Control Agreement; provided, that if the Executive is wholly successful on the merits of any action or proceeding to enforce the Executive’s rights under this Change of Control Agreement, the Company will reimburse all reasonable attorney’s fees and related expenses incurred by the Executive in connection with such action or proceeding. Any amount payable by the Company in any year pursuant to the prior sentence will not be affected by the amount of any payment made by the Company pursuant to the prior sentence in any other year, and under no circumstances will the Executive by permitted to liquidate or exchange the benefit afforded him in the prior sentence for cash or any other benefit. To the extent any such payment is made via reimbursement to the Executive, no such reimbursement will be made by the Company later than the end of the year following the year in which the underlying expense is incurred. The reimbursement right set forth in this Article 9 will be limited to fees and expenses incurred during the Executive's employment with the Employer Entities and during the ten (10) year period immediately thereafter.

ARTICLE 10

EMPLOYMENT WITH EMPLOYEE ENTITIES

Employment with the Company for purposes of this Change of Control Agreement will include employment with any Employer Entity.

ARTICLE 11

NO SETOFF

No amounts otherwise due or payable under this Change of Control Agreement will be subject to setoff by the Company, except as otherwise required by law.

ARTICLE 12

NOT A CONTRACT FOR EMPLOYMENT

This Change of Control Agreement will not in any way constitute an employment agreement between the Company and the Executive and it will not oblige the Executive to continue in the employ of Company, nor will it oblige the Company to continue to employ the Executive.

ARTICLE 13

FDIC EVENTS

If any of the Employer Entities is in default (as defined in Section 3(x)(1) of the Federal Deposit Insurance Act or equivalent provisions relating to a regulator with supervisory authority over any of the Employer Entities), all obligations under this Change of Control Agreement will terminate as of the date of default, but this Article 13 will not affect any vested rights of the parties. Notwithstanding any other provision of this Change of Control Agreement, the Employer Entities will have no obligation to make any payments to Executive if such payments would be prohibited by applicable federal or state law, including without limitation Part 359 of the regulations of the Federal Deposit Insurance Corporation (12 CFR § 359 et seq.) or any successor provision.

ARTICLE 14

NOTICES

All notices and other communications required to be given hereunder will be in writing and will be deemed to have been delivered or made when mailed, by certified mail, return receipt requested, if to the Executive, to the last address which the Executive will provide to the Employer, in writing, for this purpose, but if the Executive has not then provided such an address, then to the last address of the Executive then on file with the Company; and if to the Company, then to the last address which the Company will provide to the Executive, in writing, for this purpose, but if the Company has not then provided the Executive with such an address, then to:

President and Chief Executive Officer

First Commonwealth Financial Corporation

601 Philadelphia Street

Indiana, Pennsylvania 15701

ARTICLE 15

GOVERNING LAW AND JURISDICTION

This Change of Control Agreement will be governed by, and construed in accordance with, the laws of the Commonwealth of Pennsylvania, except for the laws governing conflict of laws. In the event that either party will institute suit or other legal proceeding, whether in law or equity, the Courts of the Commonwealth of Pennsylvania will have exclusive jurisdiction with respect thereto.

ARTICLE 16

ENTIRE AGREEMENT

This Change of Control Agreement constitutes the entire understanding between the Company and the Executive concerning the subject matter hereof and supersedes all prior written or oral agreements or understandings between the parties hereto, including without limitation the Original Change of Control Agreement. No term or provision of this Change of Control Agreement may be changed, waived, amended or terminated except by a written instrument of equal formality to this Change of Control Agreement.

Signature page follows.

IN WITNESS WHEREOF, the parties have executed this Change of Control Agreement as of the date set forth above.

(Corporate Seal) FIRST COMMONWEALTH FINANCIAL CORPORATION
/s/ Elaine Lowrie<br><br>Witness By: /s/ T. Michael Price<br><br>Name: T. Michael Price<br><br>Title: President & CEO<br><br><br><br>EXECUTIVE
/s/ Carrie L. Riggle<br><br>Witness /s/ Brian J. Sohocki

13

Document

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”), by and among First Commonwealth Financial Corporation, a Pennsylvania corporation (“Employer”), and Brian J. Sohocki (“Executive”), is entered into effective as of August 16, 2024 (the “Effective Date”).

WITNESSETH:

WHEREAS, Employer wishes to promote Executive as Executive Vice President and Chief Credit Officer and to cause First Commonwealth Bank, a Pennsylvania bank and trust company (“FCB”), to appoint Executive as Executive Vice President and Chief Credit Officer, and Executive is willing to accept such employment upon the terms and conditions set forth herein.

NOW, THEREFORE, intending to be legally bound, Employer agrees to employ Executive, and Executive agrees to be employed by the Employer, upon the following terms and conditions:

ARTICLE I

EMPLOYMENT

1.01. Office. Executive is employed hereunder as Executive Vice President and Chief Credit Officer of Employer reporting to Employer’s President and Chief Executive Officer (“CEO”), and as Executive Vice President and Chief Credit Officer of FCB, reporting to FCB’s CEO, and in such capacity shall use his best energies and abilities in the performance of his duties and in the performance of such other duties as may be assigned to him from time to time by the CEO. Executive will serve in such additional capacities as the CEO may from time to time direct without additional compensation therefor.

1.02. Term. Subject to the terms and conditions of Article II, pursuant to the terms of this Agreement, Executive’s employment will continue until August 16, 2026, unless such term is extended pursuant to the following sentence. Executive’s employment will automatically be extended on August 16, 2026 and on each subsequent August 16 for successive one (1) year periods unless Employer or Executive provides notice in writing to the other party at least sixty (60) days prior to the end of any such term that such party does not intend to extend Executive’s employment hereunder for another year.

1.03. Base Salary. Subject to Article II hereof, during the term of his employment under this Agreement, Employer will pay Executive compensation at the rate of Three Hundred Sixty-Five Thousand Dollars ($365,000) per annum (the “Base Salary”), payable in accordance with Employer’s normal payroll practices in equal monthly installments, less legally required taxes and withholdings and elected deductions. Executive’s Base Salary may be increased but not decreased by Employer at any time based upon Executive’s contributions to the success of Employer and on such

other factors as the Board shall deem appropriate. Executive will be eligible to participate in any Short-Term and Long-Term Incentive Plans that may be offered to executive employees of Employer. Executive will also be eligible to participate in the Employer’s Non-Qualified Deferred Compensation Plan as provided in the documents that govern that plan.

1.04. Employee Benefits. Subject to Article II hereof, during the term of his employment under this Agreement, Executive will be eligible to participate in such major medical or health benefit plans, pensions, and other benefits as are available generally to employees of Employer, to the extent available to employees.

1.05. Special Equity Award. Contemporaneously with the execution of this Agreement, Executive and Employer are entering into a Restricted Stock Agreement pursuant to which Employer will award a total of Fifteen Thousand (15,000) shares of restricted stock to Executive as a special equity award, subject to vesting or forfeiture in accordance with the terms of the Restricted Stock Agreement.

ARTICLE II

TERMINATION

2.01. Termination For Cause. Employer may terminate Executive’s employment and the term of employment under this Agreement at any time for “Cause,” as defined herein, by providing written notice to Executive that his employment is terminated, whereupon Executive’s employment with the Employer will be terminated. Upon delivery of said notice together with payment of any salary accrued under Section 1.03 prior to the date of termination but not yet paid, as well as payment for any accrued vacation time not taken and expenses which were properly incurred by Executive on Employer’s behalf prior to the termination date that are not yet paid (“Accrued Obligations”), all obligations of the Employer to Executive shall terminate. In the event Employer terminates Executive’s employment for Cause, Employer will pay all Accrued Obligations to Executive within thirty (30) days following such termination of employment. Termination shall be deemed to be for Cause if: (i) Executive fails to comply with any material provision of this Agreement; (ii) Executive refuses to comply with any lawful, written directive from the Board; (iii) Executive fails to perform his duties under this Agreement with the degree of skill and care reasonably to be expected of a professional of his experience and stature after notice and a reasonable opportunity to cure (unless the failure to perform is incapable of being cured); or (iv) Executive engages in an act of dishonesty, fraud or moral turpitude or Executive is convicted of a crime which, in the judgment of the Board, renders his continued employment by Employer materially damaging or detrimental to Employer. The obligations of Executive under Article III shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.01. If Executive’s employment terminates under Section 2.01, he is entitled to no severance under Section 2.05.

2.02. Termination Without Cause. Executive’s employment with Employer and FCB and the term of employment under this Agreement may be terminated at any

time by Employer without Cause immediately upon written notice by Employer to Executive, whereupon Executive’s employment with Employer will be terminated. In the event Employer terminates Executive’s employment without Cause, Employer will pay all Accrued Obligations to Executive within thirty (30) days following such termination of employment and will provide Executive with the Severance Benefits set forth in Section 2.05, provided that as a condition precedent to Executive’s receipt of Severance Benefits under this Section 2.02 and Section 2.05, Executive must execute and deliver to Employer a Separation Agreement and General Release (as defined in Section 2.05). All other obligations of Employer to Executive shall cease as of the date of termination. The obligations of Executive under Article III shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.02.

2.03. Resignation for Good Reason. Executive may resign from employment with Employer and FCB and terminate the term of employment under this Agreement for Good Reason. Good Reason means: (i) a material change in Executive’s title, position or responsibilities with Employer or FCB which represents a substantial reduction of the title, position or responsibilities in effect immediately prior to the change; (ii) any reduction in the Base Salary or a material reduction of benefits provided under this Agreement (unless such reduction of benefits applies equally to all similarly situated employees of Employer); or (iii) the assignment to Executive of any duties or responsibilities (other than due to a promotion) which are materially inconsistent with the position of Executive Vice President and Chief Credit Officer of Employer and FCB. Before Executive resigns employment with Employer for Good Reason, Executive must give Employer twenty (20) days’ notice of said resignation and an opportunity to correct. In the event Executive resigns from employment with Employer for Good Reason, Employer will pay all Accrued Obligations to Executive within thirty (30) days following such termination of employment and will provide Executive with the Severance Benefits set forth in Section 2.05, provided that as a condition precedent to Executive’s receipt of Severance Benefits under this Section 2.03 and Section 2.05, Executive must execute and deliver to Employer a Separation Agreement and General Release (as defined in Section 2.05). All other obligations of Employer to Executive shall cease as of the date of termination. The obligations of Executive under Article III shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.03. Notwithstanding the foregoing, if Employer corrects within twenty (20) days of its receipt of notice of the Good Reason, Employer shall owe Executive no severance under Section 2.05 and Executive shall be eligible to continue in his capacity as Executive Vice President and Chief Credit Officer of Employer and FCB.

2.04. Termination by Executive. Executive agrees to give Employer sixty (60) days’ prior written notice of the termination of his employment with Employer. Simultaneously with such notice, Executive shall inform Employer in writing as to his employment plans following the termination of his employment with Employer. In the event Executive terminates his employment with Employer pursuant to this Section 2.04, Employer will pay all Accrued Obligations to Executive within thirty (30) days following such termination of employment. All other obligations of Employer to Executive shall

cease as of the termination date. The obligations of Executive under Article III shall continue notwithstanding termination of Executive’s employment pursuant to this Section 2.04. If Executive’s employment terminates under Section 2.04 he is entitled to no severance under Section 2.05.

2.05. Severance Benefits. In the event that Employer terminates Executive’s employment during the term of this Agreement without Cause pursuant to Section 2.02, or if Executive terminates his employment with Employer during the term of this Agreement pursuant to Section 2.03, and subject to the conditions set forth in this Section and subject to Sections 2.02 and/or 2.03 as applicable, Employer will pay to Executive an amount equal to the product of (x) one-twelfth (1/12) of the Base Salary times (y) the greater of (i) twelve or (ii) the number of months remaining in the term, less legally required taxes and withholdings and elected deductions. Said sum is to be paid in equal periodic installments payable in accordance with Employer’s normal payroll practices commencing with the first payroll following Executive’s termination of employment, provided, however, that any installments that would otherwise be payable in the six month period following separation from service shall be paid on the day following the six month anniversary of such separation from service in accordance with the requirements of Section 5.02(b) of this Agreement. Upon termination, Employer will offer continuation coverage to Executive, as required by Section 4980B of the Internal Revenue Code of 1986, (“Code”) as amended (“COBRA”), under the First Commonwealth’s group health plan (the “Health Plan”) on the terms and conditions mandated by COBRA including Executive’s payment of the applicable COBRA premiums and shall pay the full cost of Executive's COBRA premiums for the twelve (12) month period following such separation from service.

Employer’s obligations to make any payment to Executive as described in this Agreement is contingent upon Executive's execution and non-revocation of a separation agreement and general release of any and all claims and causes of action that Executive may have against Employer, as permitted by law, in a form and substance reasonably satisfactory to the Employer, that, in the opinion of the Employer’s counsel, is effective to release the Employer Entities (as defined in Section 3.01) from all claims relating to Executive’s employment or the termination thereof (other than under the terms of this Employment Agreement) (a “Separation Agreement and General Release”), and the Employer will have no obligation to make any payment unless and until such Separation Agreement and General Release has become effective.

2.06. Resignation of Board Membership. Executive expressly promises and agrees that he will resign from all boards of directors, officer positions, committee memberships and other positions with Employer and each of its subsidiaries immediately upon and concurrent with the termination of his employment with Employer for any reason, including, without limit, by Employer for Cause or without Cause or by Executive for any reason.

ARTICLE III

EXECUTIVE’S COVENANTS AND AGREEMENTS

3.01. Non-Disclosure of Confidential Information. Executive recognizes and acknowledges that: (a) in the course of Executive’s employment by Employer, it will be necessary for Executive to acquire information concerning Employer and its subsidiaries and affiliates (individually, an “Employer Entity,” and collectively, the “Employer Entities”), which could include, in whole or in part, the Employer Entities’ business, sales volume, sales methods, sales proposals, financial statements and reports, customers and prospective customers, identity of customers and prospective customers, identity of key purchasing personnel in the employ of customers and prospective customers, amount or kind of customers’ purchases from the Employer Entities, the Employer Entities’ sources of supply, the Employer Entities’ computer programs, system documentation, special hardware, product hardware, related software development, Employer Entities’ manuals, formulae, processes, methods, machines, compositions, ideas, improvements, inventions, or other confidential or proprietary information belonging to the Employer Entities or relating to the Employer Entities' affairs (collectively referred to herein as the “Confidential Information”); (b) the Confidential Information is the property of the Employer Entities; (c) the use, misappropriation or disclosure of the Confidential Information would constitute a breach of trust and could cause irreparable injury to the Employer Entities; and (d) it is essential to the protection of the Employer Entities' good will and to the maintenance of the Employer Entities' competitive position that the Confidential Information be kept secret and that Executive not disclose the Confidential Information to others or use the Confidential Information to Executive’s own advantage or the advantage of others. Confidential Information shall not include information otherwise available in the public domain through no act or omission of Executive. Executive agrees to hold and safeguard the Confidential Information in trust for the Employer Entities, its successors and assigns and agrees that he shall not, without the prior written consent of the Employer Entities, misappropriate or disclose or make available to anyone for use outside the Employer Entities' organizations at any time, either during his employment with any Employer Entity or subsequent to the termination of his employment with Employer for any reason, including without limitation, termination by Employer, any of the Confidential Information, whether or not developed by Executive, except as required in the performance of Executive’s duties to Employer.

3.02. Non-Solicitation of Employees. Executive agrees that, during the term of his employment with Employer and for one (1) year following termination of Executive’s employment with Employer for any reason, including without limitation termination by Employer for Cause or without Cause, Executive will not, directly or indirectly, solicit or induce, or attempt to solicit or induce, any employee of any Employer Entity, to leave any Employer Entity for any reason whatsoever, or hire any such employee.

3.03. Duties. Executive agrees to be a loyal employee of Employer. Executive agrees to devote his best efforts to the performance of his duties for Employer, to give proper time and attention to furthering the Employer’s business, and to comply with all

rules, regulations and instruments established or issued by, or applicable to, the Employer Entities. Executive further agrees that during the term of this Agreement, Executive shall not, directly or indirectly, engage in any business which would detract from Executive’s ability to apply his best efforts to the performance of his duties. Executive also agrees that he shall not usurp any corporate opportunities of the Employer Entities.

3.04. Return of Materials. Upon the termination of Executive’s employment with Employer for any reason, Executive shall promptly deliver to the Employer Entities all correspondence, drawings, blueprints, manuals, letters, notes, notebooks, reports, flow-charts, computer equipment, programs, software, databases, proposals, financial statements and reports, and any documents concerning the Employer Entities' customers or concerning products or processes used by the Employer Entities and, without limiting the foregoing, will promptly deliver to the Employer Entities any and all other documents or materials containing or constituting Confidential Information, in whatever form or medium (including cloud storage).

3.05. Work Made for Hire. Executive agrees that in the event of publication by Executive of written or graphic materials constituting “work made for hire,” as defined and used in the Copyright Act of 1976, 17 USC § 1 et seq., the Employer Entities will retain and own all rights in said materials, including right of copyright.

3.06. Non-Compete. Executive agrees that, during the term of his employment with Employer and for one (1) year following termination of Executive's employment with Employer for any reason, including without limitation termination by Employer for Cause or without Cause or termination by Executive for Good Reason or otherwise, Executive will not, for himself, as an agent, employee, contractor or owner, or on behalf of another person or entity, directly or indirectly, engage in any “Prohibited Position” with any “Competing Business.” For purposes of this Agreement, “Prohibited Position” shall mean any position, whether as principal, agent, officer, director, employee, consultant, shareholder, partner, member, or otherwise: (i) where Executive will be engaged in the management, sale, development, or marketing of products or services of the type provided by any Employer Entity; and (ii) during employment with Employer, Executive was privy to or given access to proprietary and/or confidential business information of Employer concerning any Employer Entity’s management, strategy, performance, sale, development or marketing of that type of product or service and/or was involved in maintaining the Employer Entities' customer relationships or goodwill; “Competing Business” shall mean any person, corporation or other entity which engages in the marketing and/or sale of: (i) retail banking products in the Restricted Territory, including, for example, personal and business accounts, private banking, business banking, loans, lines of credit, mortgages, and other investment or financial products; or (ii) any other product or service of the Employer Entities, currently and in the future, in the Restricted Territory, in which Executive had involvement, and/or about which Executive learned of, and/or may have acquired any knowledge about, while employed by Employer; and “Restricted Territory” shall mean any county in which any Employer Entity maintains an office or branch and any county which is contiguous to such a county. During the term of his employment with Employer and for one (1) year following

termination of Executive's employment with Employer for any reason, including without limitation termination by Employer for Cause or without Cause, or termination by Executive for Good Reason or otherwise, Executive also agrees not to enter into, consult about, or become involved with any transactions that he learned and/or became aware of through his employment with Employer. Executive acknowledges that the foregoing restrictions are properly limited so that they will not interfere with his ability to earn a livelihood and that such restrictions are reasonable and necessary to protect the Employer Entities' legitimate business interest, including the protection of its confidential and trade secret information. In exchange for the consideration set forth in this Agreement, Executive agrees to be bound by the terms of this Section 3.06. The foregoing covenants shall not be deemed to prohibit Executive from acquiring as an investment not more than five percent (5%) of the capital stock of a Competing Business, whose stock is traded on a national securities exchange or through an automated quotation system of a registered securities association.

3.07. Effect of Change of Control. The covenants in Section 3.06 above shall terminate and be of no further force or effect upon the occurrence of a Change of Control (as defined in the Change of Control Agreement between Employer and Executive, effective as of August 16, 2024 (the “Change of Control Agreement”)) if the Change of Control Agreement remains in full force and effect at the time of such Change of Control.

ARTICLE IV

EXECUTIVE’S REPRESENTATIONS AND WARRANTIES

4.01. Executive’s Abilities. Executive represents that his experience and capabilities are such that the provisions of Article III will not prevent him from earning his livelihood, and acknowledges that it would cause the Employer Entities serious and irreparable injury and cost if Executive were to use his ability and knowledge in breach of the obligations contained in Article III.

4.02. Remedies. In the event of a breach by Executive of the terms of this Agreement, Employer shall be entitled, if it shall so elect, to institute legal proceedings to obtain damages for any such breach, or to enforce the specific performance of this Agreement by Executive and to enjoin Executive from any further violation of this Agreement and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law. Executive acknowledges, however, that the remedies at law for any breach by him of the provisions of this Agreement may be inadequate and that Employer shall be entitled to injunctive relief against him in the event of any breach. In addition, in the event that Executive breaches any obligation under this Agreement or any obligation that Executive has to any Employer Entity under common law, or otherwise engages in tortious behavior that damages any Employer Entity in any way, any Employer Entity will have the right to not provide Executive with, or to cease providing Executive with, any amounts or benefits that would otherwise be provided pursuant to Section 2.05 above.

ARTICLE V

MISCELLANEOUS

5.01. Authorization to Modify Restrictions. It is the intention of the parties that the provisions of Article III shall be enforceable to the fullest extent permissible under applicable law, but that the unenforceability (or modification to conform to such law) of any provision or provisions of this Agreement shall not render unenforceable, or impair, the remainder hereof. If any provision or provisions hereof shall be deemed invalid or unenforceable, either in whole or in part, this Agreement shall be deemed amended to delete or modify, as necessary, the offending provision or provisions and to alter the bounds thereof in order to render it valid and enforceable.

5.02. Section 409A.

(a) This Agreement will be administered, interpreted and construed in compliance with Section 409A of the Internal Revenue Code and the regulations and other guidance promulgated thereunder (“Section 409A”), including any exemption thereunder. With respect to payments, if any, subject to Section 409A (and not excepted therefrom), each such payment is paid as a result of a permissible distribution event, and at a specified time, consistent with Section 409A. Executive has no right to, and there shall not be, any acceleration or deferral with respect to payments hereunder. Executive acknowledges and agrees that Employer shall not be liable for, and nothing provided or contained in this Agreement will obligate or cause Employer to be liable for, any tax, interest or penalties imposed on Executive related to or arising with respect to any violation of Section 409A. For purposes of this Agreement, any reference to “termination of employment”, “termination” or similar reference shall be construed to be a reference to “separation from service” within the meaning of Section 409A.

(b) Notwithstanding any other provision of this Agreement to the contrary, to the extent that any amount payable or benefit to be provided under this Agreement constitutes an amount payable or benefit to be provided under a “nonqualified deferred compensation plan” (as defined in Section 409A) that is not exempt from Section 409A, and such amount or benefit is payable or to be provided as a result of a “separation from service” (as defined in Section 409A), and Executive is a “specified employee” (as defined and determined under Section 409A and any relevant procedures that either Employer Entity may establish) at the time of his “separation from service,” then such payment or benefit will not be made or provided to Executive until the day after the date that is six months following Executive's “separation from service,” at which time all payments or benefits that otherwise would have been paid or provided to Executive under this Agreement during that six-month period, but were not paid or provided because of this clause, will be paid or provided, with any cash payment to be made in a single lump sum (without any interest with respect to that six-month period). This six-month delay will cease to be applicable if Executive “separates from service” due to death or if Executive dies before the six-month period has elapsed, in which event any such payments or benefits will be paid or provided to Executive's estate within thirty (30) days of the date of death.

5.03. Entire Agreement. This Agreement represents the entire agreement of the parties and may be amended only by a writing signed by each of them. This Agreement supersedes all other prior arrangements and agreements between the parties, except the Change of Control Agreement and Restricted Stock Agreement referred to herein. In the event that there is a Change of Control as defined by the Change of Control Agreement during the term of this Agreement and there is a Qualifying Termination within the Protected Period, in each case, as defined in the Change of Control Agreement, the provisions of the Change of Control Agreement will apply and this Agreement will cease to apply, and Executive will be entitled to no benefits under this Agreement, including the severance benefits in Section 2.05. Notwithstanding the foregoing sentence, except as provided in Section 3.07, Executive’s obligations under Article III will continue even if there is a Change of Control.

5.04. Governing Law. This Agreement shall be interpreted, construed, and governed according to the laws of the Commonwealth of Pennsylvania without giving effect to the principles of conflicts of law.

5.05. Jurisdiction and Service of Process. Executive and Employer waives any right to a court (including jury) proceeding and instead agree to submit any dispute over the application, interpretation, validity, or any other aspect of this Agreement to binding arbitration consistent with the application of the Federal Arbitration Act and the procedural rules of the American Arbitration Association (“AAA”) before an arbitrator who is a member of the National Academy of Arbitrators (“NAA”) out of a nationwide panel of eleven (11) arbitrators to be supplied by the AAA. Employer will absorb the fee charged and the expenses incurred by the neutral arbitrator selected.

5.06. Agreement Binding. The obligations of Executive under Article III of this Agreement shall continue after the termination of his employment with the Employer Entities for any reason and shall be binding on his heirs, executors, legal representatives and assigns and shall inure to the benefit of any successors and assigns of the Employer Entities. Likewise, the obligations of Employer shall be binding upon any successors.

5.07. Signatures. This Agreement may be executed in counterparts, any such copy of which to be deemed an original, but all of which together shall constitute the same instrument.

5.08. Assignment. Employer has the right to assign this Agreement, but Executive does not.

EXECUTIVE ACKNOWLEDGES THAT HE HAS READ AND UNDERSTANDS THE FOREGOING PROVISIONS AND THAT SUCH PROVISIONS ARE REASONABLE AND ENFORCEABLE.

[Signature page follows.]

IN WITNESS WHEREOF, the parties hereto have knowingly and voluntarily executed this Agreement or caused this Agreement to be executed the day and year first above written.

ATTEST:
/s/ Elaine Lowrie FIRST COMMONWEALTH FINANCIAL CORPORATION
By: /s/ T. Michael Price<br><br>Name: T. Michael Price<br><br>Title: President and Chief Executive Office WITNESS:
--- ---
/s/ Carrie L. Riggle
/s/ Brian J. Sohocki
Brian J. Sohocki

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Document

EXHIBIT 10.4

RESTRICTED STOCK AGREEMENT

This Restricted Stock Agreement (this “Agreement”) is made as of the 16th day of August, 2024 (the “Effective Date”) between First Commonwealth Financial Corporation (the “Company”) and Brian J. Sohocki (the “Grantee”).

RECITALS

Grantee will serve as Chief Credit Officer. The Company wishes to award Grantee 15,000 restricted shares of the Company’s common stock, par value $1.00 per share (“Common Shares”), upon the terms and subject to the conditions of this Agreement.

AGREEMENT

Accordingly, in consideration of the foregoing and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Grantee agree as follows:

1.Award of Stock. The Company hereby grants to the Grantee 15,000 shares of Restricted Stock (the “Shares”), subject to the terms set forth herein and to the terms and provisions of the First Commonwealth Financial Corporation 2024 Stock Plan (the “Plan”) applicable to Restricted Stock, which terms and provisions are incorporated herein by this reference. Unless the context requires otherwise, the terms defined in the Plan shall have the same meanings herein. Notwithstanding the foregoing, this Agreement and the award shall be null and void if Participant does not accept the award by countersigning this Agreement within 30 days following the Effective Date.

2.Restriction on Transfer. Except for the transfer of the Shares to the Company as contemplated by this Agreement, none of the Shares or any beneficial interest therein shall be transferred, encumbered, pledged or otherwise alienated or disposed of in any way until the Shares become nonforfeitable in accordance with Section 3 of this Agreement.

3.Vesting and Forfeiture. The Shares are subject to forfeiture to the Company until such time as they become nonforfeitable as set forth in this Section 3.

(a)Unless earlier forfeited in accordance with this Section 3, the Shares will become nonrestricted and nonforfeitable in accordance with the Vesting Schedule set forth below, provided that the Participant remains an employee through such dates:

(a)5,000 Shares will become nonrestricted and nonforfeitable on August 16, 2025

(b)5,000 Shares will become nonrestricted and nonforfeitable on August 16, 2026

(c)5,000 Shares will become nonrestricted and nonforfeitable on August 16, 2027

(b)If the Grantee’s employment is terminated by the Company other than for “Cause” (as defined in Section 3(c)), any Shares which have not as of the termination of Grantee’s employment become nonforfeitable will immediately and automatically, without any action on the part of the Company, become nonforfeitable.

(c)If the Grantee’s employment is terminated (i) by the Company for Cause or (ii) by Grantee for any reason, any Shares which have not as of the termination of Grantee’s employment become nonforfeitable will immediately and automatically be forfeited. For purposes of this Agreement, termination of employment shall be deemed to be for “Cause” if: (i) Grantee fails to comply with any material provision of this Agreement (including, without limitation, the restrictive covenants contained in Section 5 hereof); (ii) Grantee refuses to comply with any lawful, written directive from the Chief Executive Officer of the Company; (iii) Grantee fails to perform her duties as an officer of the Company with the degree of skill and care reasonably to be expected of a professional of her experience and stature after notice and a reasonable opportunity to cure (unless the failure to perform is incapable of being cured); or (iv) Grantee engages in an act of dishonesty, fraud or moral turpitude or Grantee is convicted of a crime which, in the judgment of the Chief Executive Officer of the Company, renders her continued employment by the Company materially damaging or detrimental to the Company.

(d)Notwithstanding the foregoing schedule, if a Change in Control (as defined in the Plan) occurs while the Grantee is an Employee, then any Shares which have not become nonforfeitable will immediately and automatically, without any action on the part of the Company, become nonforfeitable as of the date of the Change in Control.

4.Book Entry Shares. Grantee acknowledges that the Shares will be issued in book-entry form and no certificate will be issued to evidence the Shares. A notation of the transfer restrictions and forfeiture conditions pursuant to this Agreement and the Plan will be made on the book-entry system with respect to the account or accounts to which the Shares are credited.

5.Grantee Covenants.

(a)General. Grantee and the Company acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of this Section 5 by virtue of receiving the Shares (regardless of whether the Shares are subsequently forfeited); that such provisions are reasonable and properly required for the adequate protection of the business of the Company and its subsidiaries (each, a “Company Party,” and collectively, the “Company Parties”); and that enforcement of such provisions will not prevent Grantee from earning a living.

(b)Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (i) and (ii) of this Section 5(b) while employed by any Company Party and for a period of one year after the last day of Grantee’s employment with such Company Party (such last day being the “Termination Date”) regardless of the reason for such termination of employment.

(a)Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or purpose of any Person (as defined in the Plan) other than a Company Party, solicit, call on, do business with (in each of the foregoing cases, other than consumer retail transactions in the ordinary course of such customer’s business or legal representation in the event that the Company’s legal department grants a conflict waiver), or actively interfere with such Company Party’s relationship with, or attempt to divert or entice away, any Person that Grantee should reasonably know (A) is a customer of any Company Party for which the Company Party provides any services as of the Termination Date, or (B) was a customer of a Company Party for which the a Company Party provided any services at any time during the twelve (12) months preceding the Termination Date, or (C) was, as of the Termination Date, considering retention of a Company Party to provide any services.

(b)Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or purpose of any Person other than the Company Parties, employ or offer to employ, call on, or actively interfere with a Company Party’s relationship with, or attempt to divert or entice away, any employee of any Company Party, nor shall Grantee assist any other Person in such activities.

(c)Confidentiality. During Grantee’s employment with the Company Parties, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Company Parties whether or not conceived of or prepared by Grantee, other than (1) information generally known in the industry of the Company Parties or acquired from public sources, (2) as required in the course of employment by the Company Parties, (3) as required by any court, supervisory authority, administrative agency or applicable law, or (4) with the prior written consent of the Company.

(d)Ownership of Inventions. Grantee shall promptly and fully disclose to the Company any and all inventions, discoveries, improvements, ideas or other works, whether or not patentable, that have been or will be conceived and/or reduced to practice by Grantee during the term of Grantee’s employment with any Company Party, whether alone or with others, and that are (1) related directly or indirectly to the business or activities of any Company Party or (2) developed with the use of any time, material, facilities or other resources of any Company Party (“Developments”). Grantee agrees to assign and hereby does assign to the Company or its designee all of Grantee’s right, title and interest, including copyrights and patent rights, in and to all Developments. Grantee shall perform all actions and execute all instruments that the Company or any subsidiary

shall deem necessary to protect or record the Company’s or its designee’s interests in the Developments. The obligations of this Section 5(d) shall be performed by Grantee without further compensation and will continue beyond the Termination Date.

6.Rights of Grantee. The Grantee shall have the right to vote the Shares and to receive dividends with respect to the Shares.

7.Stock Splits, etc. If, while any of the Shares remain subject to forfeiture, there occurs any merger, consolidation, reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, or other similar change in the Company’s common stock, then any and all new, substituted or additional securities or other consideration to which the Grantee is entitled by reason of the Grantee’s ownership of the Shares will be immediately subject to the transfer restrictions and forfeiture provisions of Agreement.

8.Tax Withholding. Grantee shall be required to deposit with the Company an amount of cash equal to the amount determined by the Company to be required with respect to any withholding taxes, FICA contributions, or the like under any federal, state, or local statute, ordinance, rule, or regulation in connection with the vesting or award of the Shares. Alternatively, the Company may, at Grantee’s election, (i) withhold the required amounts from Grantee’s pay during the pay periods next following the date on which any such applicable tax liability otherwise arises, or (ii) withhold a number of Shares otherwise deliverable having a Fair Market Value (as defined in the Plan) sufficient to satisfy the statutory minimum of all or part of Grantee’s estimated total federal, state, and local tax obligations associated with the vesting or award of the Shares.

9.83(b) Election. Grantee hereby acknowledges that she may file an election pursuant to Section 83(b) of the Code to be taxed currently on the fair market value of the Shares (less any purchase price paid for the Shares), provided that such election must be filed with the Internal Revenue Service no later than thirty (30) days after the grant of such Shares. Grantee will seek the advice of her own tax advisors as to the advisability of making such a Section 83(b) election, the potential consequences of making such an election, the requirements for making such an election, and the other tax consequences of this Award under federal, state, and any other laws that may be applicable. The Grantee is required to notify the Company within 30 days of any such election. The Company and its Subsidiaries and agents have not and are not providing any tax advice to Grantee.

10.Limitation on Rights; No Right to Future Grants; Extraordinary Item. By entering into this Agreement and accepting the Award, Grantee acknowledges that: (a) Grantee's participation in the Plan is voluntary; and (b) the Award is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments, and Grantee will not be entitled to compensation or damages as a consequence of Grantee's forfeiture of any unvested portion of the Award as a result of Grantee's separation from service with the Company or any Subsidiary for any reason.

11.General Provisions:

(a)This Agreement, together with the Plan, constitutes the entire agreement between the Company and the Grantee regarding the grant of the Shares.

(b)The Committee may modify this Agreement to bring it into compliance with any valid and mandatory government regulation or exchange listing requirement. This Agreement may also be amended by the Committee with the written consent of the Grantee.

(c)Nothing contained in this Agreement shall be deemed to require the Company and its Subsidiaries to continue the Grantee’s relationship as an Employee or to modify any agreement between the Grantee and the Company or its Subsidiaries relating thereto.

(d)The Committee may from time to time impose any conditions on the Shares as it deems reasonably necessary to ensure that the Plan and this Award satisfy the conditions of Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and that Shares are issued and resold in compliance with the Securities Act of 1933, as amended.

(e)The Grantee agrees upon request execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement.

(f)Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. The terms of the Plan as it presently exists, and as it may hereafter be amended, are deemed incorporated herein by reference, and in the event of any conflict between the terms of this Agreement and the provisions of the Plan, the provisions of the Plan shall be deemed to supersede the provisions of this Agreement.

(g)This Agreement shall be governed by, and enforced in accordance with, the laws of the Commonwealth of Pennsylvania without regard to the application of the principals of conflicts or choice of laws.

(h)This Agreement may be executed, including execution by facsimile signature, in one or more counterparts, each of which shall be deemed an original, and all of which together shall be deemed to be one and the same instrument.

Signature page follows.

IN WITNESS WHEREOF, the parties have duly executed this Restricted Stock Agreement as of the day and year first set forth above.

GRANTEE:<br><br><br><br><br><br>/s/ Brian J Sohocki<br><br>Signature<br><br><br><br>Brian J. Sohocki<br><br>Printed Name COMPANY:<br><br><br><br><br><br>First Commonwealth Financial Corporation<br><br><br><br><br><br>By: /s/ T. Michael Price<br><br>Name: T. Michael Price<br><br>Title: President and CEO

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Document

EXHIBIT 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, T. Michael Price, certify that:

1.I have reviewed this quarterly report on Form 10-Q of First Commonwealth Financial Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATED: November 12, 2024 /s/ T. Michael Price
T. Michael Price<br><br>President and Chief Executive Officer

Document

EXHIBIT 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James R. Reske, certify that:

1.I have reviewed this quarterly report on Form 10-Q of First Commonwealth Financial Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATED: November 12, 2024 /s/ James R. Reske
James R. Reske
Executive Vice President, Chief Financial Officer and Treasurer

Document

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, T. Michael Price, of First Commonwealth Financial Corporation (“First Commonwealth”), certify that the Quarterly Report of First Commonwealth on Form 10-Q for the period ended September 30, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of First Commonwealth at the end of such period and the results of operations of First Commonwealth for such period.

DATED: November 12, 2024 /s/ T. Michael Price
T. Michael Price
President and Chief Executive Officer

Document

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

I, James R. Reske, of First Commonwealth Financial Corporation (“First Commonwealth”), certify that the Quarterly Report of First Commonwealth on Form 10-Q for the period ended September 30, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of First Commonwealth at the end of such period and the results of operations of First Commonwealth for such period.

DATED: November 12, 2024 /s/ James R. Reske
James R. Reske
Executive Vice President, Chief Financial Officer and Treasurer

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