Key Takeaways AMZN, GOOGL, MSFT and META ramp AI capex, pressuring margins and free cash flow.AAPL stays disciplined, while TSLA raises AI spending amid slowing EV demand.NVDA stands out as the main beneficiary of the Mag 7 AI buildout.For the past few years, artificial intelligence (AI) has been one of the hottest themes in the stock market. Investors rewarded companies that talked boldly about AI ambition, data leadership, cloud scale and long-term disruption. But this earnings season, more than the headl ...

Core Viewpoint - Amazon is expected to spend approximately $200 billion on capital expenditures (capex) in 2026, which may impact its attractiveness as a long-term investment [1] Group 1: Investment Insights - The long-term return on a stock is closely tied to the underlying business's performance, with a business earning 6% on capital over 40 years yielding similar returns for investors [1] - A business that earns 18% on capital over 20 to 30 years can still provide good returns even if purchased at a high price [1] - The impact of taxes on investment returns is significant, with different tax payment structures leading to varying effective returns over long holding periods [1]

Core Insights - ams OSRAM reported Q4 results that exceeded the mid-point of guidance, indicating strong performance in the semiconductor sector [1] - The company achieved EUR 144 million in free cash flow (FCF) for FY25, showcasing effective cash management and operational efficiency [1] - A new EUR 200 million 'Simplify' transformation and savings program has been launched, aimed at enhancing operational effectiveness and profitability [1] Financial Performance - The 'Re-establish-the Base' program was completed one year ahead of schedule, contributing to improved profitability despite challenging market conditions [1] - The semiconductor core business grew in alignment with overall semiconductor market growth, reflecting the company's competitive positioning [1]

Core Viewpoint - The recommendation for United Airlines (UAL) is a buy rating, indicating a positive outlook for the company's future performance [1] Group 1: Business Cycle and Revenue Mix - United Airlines is believed to have entered a new phase of its business cycle, which is expected to result in a structurally improved revenue mix and enhanced earnings [1] Group 2: Investment Approach - The investment strategy focuses on long-term investments while also considering short-term opportunities to uncover alpha [1] - The analysis is based on a bottom-up approach, emphasizing the fundamental strengths and weaknesses of individual companies [1] - The investment horizon is medium to long-term, targeting companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Core Insights - First Commonwealth Financial reported a core EPS of $0.43 for Q4 2025, exceeding consensus estimates, with a net interest margin (NIM) of 3.98% and a core return on assets (ROA) of 1.45% [4][7] - The company anticipates a short-term dip in NIM of 5 to 10 basis points in Q1 2026, followed by gradual improvement to around 4% by the end of 2026 [1][7] Financial Performance - Spread income increased by $2.1 million from the prior quarter, primarily due to a 6 basis point rise in NIM, with earning-asset yields up 3 basis points and funding costs down 3 basis points [2] - Average deposits rose by 2.8% and total loans increased by 1.2% during the quarter, attributed to seasonal factors and larger commercial loan payoffs [3] Loan and Deposit Metrics - The bank designated approximately $225 million in commercial loans as held for sale, primarily from the Philadelphia market, with plans to reinvest proceeds into lower-yielding securities [9][10] - Deposit costs fell by 1 basis point to 1.83%, supporting the expansion of net interest income [3] Credit Quality - Non-performing loans (NPLs) rose to 94 basis points, totaling approximately $98 million, with reserves at 1.32% [6][13] - The provision for credit losses decreased to $7 million, down $4.3 million from the prior quarter, as the dealer floor plan credit issue neared resolution [12][14] Capital Management - The company repurchased $23.1 million of stock in Q4 2025, with an additional $25 million authorized for buybacks, funded by excess capital generation [17] - Core non-interest expenses increased by $1.7 million to $74.3 million, primarily due to salaries and benefits [16] Leadership Changes - Bank President and Chief Revenue Officer Jane Grebenc will retire at the end of March, marking a significant leadership transition [18]

Company Performance - Big Yellow Group Plc, a leader in the British self-storage market, is performing solidly [1] - The growth opportunities in the U.K. self-storage industry may be receding as the market becomes more developed [1]

Financial Data and Key Metrics Changes - Core EPS for Q4 2025 was $0.43 per share, exceeding consensus estimates, with a net interest margin (NIM) of 3.98% and a core return on assets (ROA) of 1.45% [4] - Average deposits grew by 2.8% and total loans increased by 1.2% in Q4, while net interest income rose by $47.2 million year-over-year to $427.5 million [4][8] - The provision for credit losses decreased by $4.3 million to $7 million, with non-performing loans (NPLs) increasing by four basis points to 94 basis points [6][8] Business Line Data and Key Metrics Changes - Fee income remained flat at 18% of total revenue, with gains in SBA offset by declines in wealth and mortgage services [6] - Core non-interest income for Q4 was $24.3 million, down $200,000 from the previous quarter, with an increase in SBA gain on sale income [15] - Core non-interest expense rose by $1.7 million to $74.3 million, primarily due to increased salaries and benefits [16] Market Data and Key Metrics Changes - Average deposit growth for the year was 6.1%, with significant contributions from money market accounts and CDs [9] - The company reported a total of $98 million in non-performing loans, including $39.2 million in total SBA loans [7] Company Strategy and Development Direction - The company aims to grow fee income through its regional banking model and maintain a focus on low-cost deposit growth [10][96] - A portfolio of approximately $225 million in commercial loans was designated as held for sale, with plans to reinvest proceeds into lower-yielding securities [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining loan growth in 2026, despite elevated payoffs in the previous year [28] - The company anticipates a near-term dip in NIM due to rate cuts, followed by gradual improvement, projecting an end-of-year NIM of around 4% for 2026 [12][61] Other Important Information - The company repurchased $23.1 million of its stock in Q4 2025, totaling 2.1 million shares for the year [7] - Management highlighted the retirement of Jane Grebenc, a key figure in the company's strategic transformations [10] Q&A Session Summary Question: Credit side impact and net charge-offs for 2026 - Management provided guidance of 25-30 basis points for charge-offs, with $1.5 million left to resolve on the dealer floor plan loan [20][21] Question: Loan growth expectations for 2026 - Management expects loan growth to continue at around 5-7%, with a strong pipeline in business banking and mortgage [28][29] Question: Buyback strategy and stock price sensitivity - The company will continue to repurchase shares using excess capital, with a sensitivity to stock price affecting the pace of buybacks [30][31] Question: NIM sustainability and deposit costs - Management indicated that NIM is projected to hover around 4% in 2026, with potential for further reductions in deposit costs [54][61]

Financial Data and Key Metrics Changes - Core EPS for Q4 2025 was $0.43 per share, exceeding consensus estimates, with a net interest margin (NIM) of 3.98% and a core return on assets (ROA) of 1.45% [4] - Average deposits grew by 2.8% and total loans increased by 1.2% in Q4, with net interest income rising due to an expanded margin [4][15] - For the year 2025, core EPS was $1.53, up from the consensus estimate of $1.40, and net interest income reached $427.5 million, an increase of $47.2 million year-over-year [8][10] Business Line Data and Key Metrics Changes - Fee income constituted 18% of total revenue, with a focus on growing this through a regional banking model, although it remained flat due to seasonal declines in wealth and mortgage services [6][9] - The provision for credit losses decreased by $4.3 million to $7 million, with non-performing loans (NPLs) increasing slightly to 94 basis points [6][7] - Core non-interest income for Q4 was $24.3 million, down $200,000 from the previous quarter, with SBA gain on sale income increasing but offset by declines in other areas [15] Market Data and Key Metrics Changes - Average deposit growth for the year was 6.1%, with significant contributions from money market accounts and CDs, while non-interest-bearing deposits also increased [9] - The company reported a loan growth of 8.2% annualized for the year, with commercial banking and equipment finance leading the growth [8][9] Company Strategy and Development Direction - The company aims to maintain a focus on low-cost deposit growth and diversify its lending businesses, with a strategic exit from certain markets to concentrate resources elsewhere [10][13] - The acquisition of CenterBank was completed, contributing to overall deposit growth and positioning the company for future expansion [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a strong NIM, projecting it to drift upward to around 4% by the end of 2026, despite anticipated short-term dips due to rate cuts [12][38] - The company is focused on managing credit costs and maintaining strong reserve levels, with expectations for stability in provisions and charge-offs [21][22] Other Important Information - The company repurchased $23.1 million of its stock in Q4, with a total of 2.1 million shares repurchased in 2025 [7][16] - Management indicated that operational expenses are expected to increase by approximately 3% year-over-year, with a focus on maintaining operating leverage [16][40] Q&A Session Summary Question: Credit side impact and loan issues - Management provided guidance on charge-offs at 25-30 basis points and noted that the dealer floor plan loan issue is nearing resolution with a remaining balance of $2.5 million [20][21] Question: Loan growth expectations - Management expects loan growth to continue at a rate of 5-7%, despite elevated payoffs in the previous year [28][29] Question: Buyback strategy - The company will be cautious with buybacks, sensitive to stock price movements, and intends to utilize its capital effectively [30][31] Question: NIM sustainability - Management discussed the potential for NIM to hover around 4% in 2027, with expectations for deposit costs to decrease further [55][56] Question: Securities yields outlook - The securities portfolio is expected to yield around 4.5% to 4.75%, with opportunities for reinvestment as the portfolio rolls over [76][79]

Financial Data and Key Metrics Changes - Core EPS for Q4 2025 was $0.43 per share, exceeding consensus estimates, with a net interest margin (NIM) of 3.98%, core ROA of 1.45%, and core efficiency ratio of 52.8% [4] - Average deposits and total loans grew by 2.8% and 1.2% respectively, while net interest income increased by $47.2 million year-over-year to $427.5 million [4][7] - The provision for credit losses decreased by $4.3 million to $7 million, with non-performing loans (NPLs) rising four basis points to 94 basis points [5][6] Business Line Data and Key Metrics Changes - Fee income remained flat at 18% of total revenue, with gains in SBA offset by declines in wealth and mortgage [5] - Core non-interest income for Q4 was $24.3 million, down $200,000 from the previous quarter, with SBA gain on sale income increasing by $800,000 [14] - Core non-interest expense increased by $1.7 million to $74.3 million, primarily due to increased salaries and benefits [15] Market Data and Key Metrics Changes - Average deposit growth for the year was 6.1%, with significant contributions from money market accounts and CDs [9] - The company reported $98 million in non-performing loans, including $39.2 million in total SBA loans [6] Company Strategy and Development Direction - The company aims to grow fee income through its regional banking model and maintain a focus on low-cost deposit growth [5][10] - A portfolio of approximately $225 million in commercial loans was designated as held for sale to improve liquidity and capital ratios [12][13] - The company plans to limit operating cost increases to approximately 3% year-over-year [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining loan growth despite seasonal headwinds and elevated payoffs, projecting continued growth in business banking and mortgage segments [28] - The guidance for NIM is expected to remain around 4% by the end of 2026, with a near-term dip anticipated due to rate cuts [12][40] - Management highlighted the importance of maintaining a balance between loan growth and capital generation, emphasizing disciplined capital deployment [31][32] Other Important Information - The company repurchased $23.1 million of its stock in Q4 2025, totaling 2.1 million shares for the year [6] - Jane Grebenc, Bank President and Chief Revenue Officer, will retire at the end of March 2026, marking a significant leadership transition [10] Q&A Session Summary Question: What are the expectations for net charge-offs and provisions in 2026? - Management expects charge-off guidance to be 25-30 basis points, with $1.5 million left to resolve on the dealer floor plan loan [19][20] Question: Can we expect additional loans to be moved off the balance sheet in 2026? - Management indicated that the loan sale is more of a one-off situation, focusing resources on other markets [23][24] Question: What are the expectations for loan growth in 2026? - The company anticipates loan growth to continue at a similar pace as 2025, despite elevated payoffs [28][30] Question: How should we think about the stock buyback strategy? - The buyback strategy is sensitive to stock price, with intentions to utilize the authority aggressively while maintaining capital ratios [31][57] Question: What is the outlook for NIM and deposit costs? - Management expects a dip in NIM in Q1 2026, with a gradual recovery to around 4% by year-end [60][61]

NYSE: FCF Forward-looking statements speak only as of the date on which they are made. First Commonwealth undertakes no obligation to update any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. 3 4Q 2025 Earnings Release Webcast Presentation January 28, 2026 2 FORWARD-LOOKING STATEMENTS Certain statements contained in this release that are not historical facts may constitute "forward-looking statements" within the meaning of Sec ...