In its January 27, 2026 earnings release, First Commonwealth Financial Corporation reported steady financial performance alongside a notable shift in how it is managing portions of its commercial loan portfolio.

The most consequential change was the reclassification of approximately $225 million of commercial loans into the loans-held-for-sale (LHFS) category, driving a $209 million quarter-over-quarter increase in LHFS balances. This move indicates a deliberate strategy to reposition select credits rather than retain them on the balance sheet through maturity. Such actions are typically used to manage concentration risk, free up capital capacity, or respond to evolving credit or pricing dynamics in the secondary market.

At the same time, criticized loans rose to $267.2 million, an increase of $19 million from the prior quarter. While criticized loans remain performing, their growth suggests heightened scrutiny of certain commercial exposures, consistent with a more cautious credit posture rather than a deterioration in portfolio performance.

Operationally, First Commonwealth posted net income of $44.9 million, reflecting sequential and year-over-year improvement. Net interest income increased, and expense controls kept efficiency metrics relatively stable. Total loans grew modestly, led by Equipment Finance and Construction lending, while deposits also experienced a slight uptick, supporting funding stability.

➤ TAKEAWAY

Beyond headline earnings, First Commonwealth’s results point to a bank actively managing commercial credit risk—using loan sales and tighter internal classifications to shape its balance sheet—while maintaining profitability and controlled growth.