FIRST COMMONWEALTH FINANCIAL CORP /PA/ (FCF): what the price requires
At today's price, FIRST COMMONWEALTH FINANCIAL CORP /PA/ (FCF) is priced for 11.2% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/FCF
Headline
| Field | Value |
|---|---|
| Ticker | FCF |
| Company | FIRST COMMONWEALTH FINANCIAL CORP /PA/ |
| Current price | $20.44/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 11.2% |
| Return on equity now | 9.8% |
| ROE gap | +1.4pp |
| Price-to-book | 1.34x |
Solve inputs: computed at a 9.4% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.3pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.11σ |
| cohort percentile (of 119 peers) | 45 |
| sustained it ~10 years at this level | 72% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.18x | 3 | expensive |
| Earnings | 0.84x | 2 | justifies |
| Relative | 0.96x | 3 | justifies |
| Growth | 1.24x | 2 | expensive |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $12.66 | 1.61x | yes | TBVPS $11.26 × 1.12x (ROE (TTM) 10.1% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.39% allowance/loans → ×0.95, NPL 0.98% → ×0.98) |
| Relative Valuation | Relative | $17.70 | 1.15x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 8.2x / 10.0x / 11.8x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $15.13 | 1.35x | yes | Stage 1: 14% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $16.59 | 1.23x | yes | BV/sh $15.16, ROE (TTM) 10.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $17.33 | 1.18x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $17.96 | 1.14x | yes | Rev $0.4B, growth 15% (input: historical growth; tapered), Terminal P/S: 3.9x / 4.8x / 5.6x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $21.29 | 0.96x | yes | EPS $1.52, growth 14% (input: historical EPS growth), PEG=0.95 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $22.77 | 0.90x | yes | √(22.5 × EPS $1.52 × BVPS $15.16) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $46.52 | 0.44x | yes | EPS $1.52 × (8.5 + 2×14.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $31.94 | 0.64x | yes | EPS $1.52 × (PEG 1.5 × growth 14.0% (input: historical EPS growth)) → PE 21.0x |
| Earnings Yield | Earnings | $16.43 | 1.24x | yes | EPS $1.52 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 2.1% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
First Commonwealth trades at about 1.3x book at $19.52, which prices a sustained return on equity near 11% against a recently-earned figure of about 9.8%; the inversion reads that as within range, and unusually all four valuation families support the price.
Q1 2026 net income was $37.5 million ($0.37 EPS) with a healthy 3.92% net interest margin, but net interest income was pressured by a shrinking loan base (about $630 million of commercial payoffs and a $210 million loan sale); capital return continued with buybacks and an eleventh straight year of dividend increases.
Bull Case
What the standard models tend to miss about First Commonwealth Financial is the steadiness of a well-run Pennsylvania community bank that has compounded book value and dividends through cycles rather than chasing growth. The static valuation frames see a bank earning about a 9.8% return on equity and trading at roughly 1.3x book, and they file it as ordinary. What that read undersells is the quality of the franchise: a deposit-funded balance sheet, disciplined credit, and a capital-return record that includes an eleventh consecutive year of dividend increases. That kind of consistency is precisely what a price-to-book snapshot cannot capture, and it is the heart of the bull case.
Unusually, all four valuation families support the price here. The asset-based, earnings-power, relative-multiple, and growth-DCF frames each land at or above the current level, which is why this reads as a value-and-asset-supported name rather than a stretched growth bet.
The recent results show a bank managing a tricky environment rather than struggling in it. First-quarter 2026 net income was $37.5 million, or $0.37 per share, with a net interest margin of 3.92% that held up well even as elevated commercial loan payoffs (about $630 million in the quarter) and a $210 million loan sale temporarily shrank the loan base. Management kept returning capital, with $22.7 million of buybacks and a dividend increase, and the May 2025 CenterGroup acquisition added a Cincinnati growth foothold that exceeded expectations. The bull wager is that the implied roughly 11% return on equity, modestly above the recently-earned 9.8%, is within reach for a franchise with this margin, this discipline, and this capital-return habit.
Bear Case
The valuation methods are close to agreement for First Commonwealth, but the more conservative ones still flag the cautious read, and they are worth heeding. The earnings-power family lands modestly below the price and the relative-multiple family sits roughly at it, which says the stock is not cheap on what it currently earns; it is fairly-to-slightly-fully priced and leaning on the assumption that the return on equity climbs from the recently-earned 9.8% toward the implied 11%. The bear's framing is that the honest anchor is the demonstrated return, not the hoped-for one, and on the demonstrated return the stock is already near fair value with limited cushion.
The recent quarter exposes the operating pressure that makes that climb uncertain. Net interest income was squeezed as the loan base shrank: the bank sold $210 million of Eastern Pennsylvania commercial loans and absorbed about $630 million of elevated commercial loan payoffs in a single quarter. A shrinking earning-asset base is the opposite of what lifts return on equity, and while a 3.92% margin is healthy, margins are rate-sensitive and the payoff wave signals borrowers refinancing away or deleveraging. If loan growth does not resume, the return on equity stays nearer the 9.8% it has been earning, which is below the level the price assumes.
The structural cautions are the ordinary ones for a community bank, and they bite hardest when the cushion is thin. Earnings are leveraged to credit, so a normalization in loan losses would pull the return down just as the price is paying for it to rise. The bank operates in a mature, slow-growth regional market where organic growth is hard to come by, which is part of why it has leaned on acquisitions like CenterGroup; acquisitions carry integration and overpayment risk of their own.
Valuation
First Commonwealth is valued off price-to-book, the right frame for a bank, and at $19.52 it trades at about 1.3x book. Inverting that, the price assumes the bank sustains a return on equity of roughly 11%, against a recently-earned figure near 9.8%, at a 9.5% cost of equity. The inversion reads that as within range: the assumed return is within reach of what the bank has earned, though the price-to-book sits in the lower half of the peer group, which is consistent with a steady rather than a premium franchise.
The method families are unusually unanimous on the supportive side. The asset-based, earnings-power, relative-multiple, and growth-DCF families all support the price, which is why this reads as a value-and-asset-supported name rather than a one-frame growth bet. That breadth of agreement is the strongest argument that the price is fair: book value, earnings power, peer multiples, and forward growth all land at or above the current level.
The honest read: this is a fairly-priced, steady community bank where the modest gap between the recently-earned roughly 9.8% return and the implied 11% is the swing factor. The case is supported by a healthy 3.92% net interest margin, disciplined capital return (an eleventh straight year of dividend increases plus buybacks), and the accretive CenterGroup acquisition. The near-term pressure is a shrinking loan base, with about $630 million of commercial payoffs and a $210 million loan sale weighing on net interest income. The cleaner way to weigh the price is against demonstrated return on equity and the pace at which loan growth resumes, recognizing that the valuation already sits near fair value rather than at a discount.
Catalysts
The most recent catalyst was the first-quarter 2026 report, released April 28, 2026. First Commonwealth posted net income of $37.5 million, or $0.37 per share, modestly below consensus. The net interest margin was 3.92%, but net interest income was pressured as the loan base shrank, with about $630 million of elevated commercial loan payoffs in the quarter and a $210 million sale of Eastern Pennsylvania commercial loans (First Commonwealth 8-K, stockinvest).
Capital return remained a theme. The bank repurchased $22.7 million of stock (with $25 million of authorization remaining) and raised the dividend by $0.02, marking its eleventh consecutive year of dividend increases. On the growth side, the May 2025 acquisition of CenterGroup Financial (parent of Milford, Ohio-based CenterBank) added a Cincinnati presence that management said exceeded expectations (StockTitan, financhill).
The forward catalysts are loan growth and the rate path. The thesis turns on whether the loan base stabilizes and resumes growing after the payoff wave, and whether the net interest margin holds as rates move. The next quarterly earnings date is scheduled for July 28, 2026. A return to loan growth with a stable margin would support the climb in return on equity the valuation assumes; continued payoffs, margin compression, or any rise in credit costs would be the clearest near-term risks (financhill, First Commonwealth 8-K).
Peer Cohorts (Per Segment, With Filing Citations)
Community Banking (single operating segment) (reported)
- FBNC (FIRST BANCORP)
- (no filing in the citation store)
- GABC (German American Bancorp, Inc.)
- (no filing in the citation store)
- UBSI (UNITED BANKSHARES INC/WV)
- (no filing in the citation store)
- FBK (FB FINANCIAL CORPORATION)
- (no filing in the citation store)
- DCOM (DIME COMMUNITY BANCSHARES, INC.)
- (no filing in the citation store)
- SRCE (1st Source Corp)
- (no filing in the citation store)
- NBTB (NBT BANCORP INC)
- (no filing in the citation store)
- LOB (Live Oak Bancshares, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.