FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES NOTESTO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands, except per share data) Interest on ESOP loans was $60 in 2003, $109 in 2002 and  $263 in 2001. During 2003, 2002 and 2001, dividends on  unallocated shares in the amount of $184, $242 and $301,  respectively, were used for debt service while all dividends  on allocated shares were allocated or paid to the participants. The Corporation has elected, as permitted by FAS No. 123,  to apply APB Opinion 25 and related interpretations in  accounting for its plan. Accordingly, no compensation cost  has been recognized for its stock options outstanding. Had  compensation cost for the Corporation’s stock option plan  been determined based upon the fair value at the grant dates  for awards under the plan consistent with the method of  FAS No. 123, the Corporation’s net income and earnings per  share would have been reduced to the pro forma amounts  shown below: Unearned ESOP shares of PFC at December 31, 2003 are  excluded from the preceding analysis. The PFC ESOP  plan was terminated effective December 5, 2003.  Unallocated shares remaining after liquidation of shares to  fund the PFC ESOP loan payable will be allocated to PFC  ESOP participants. NOTE 23— Unearned ESOP Shares (continued) NOTE 24— Stock Option Plan 2003 2002 2001 As  Pro As  Pro As  Pro Reported Forma Reported Forma Reported Forma Net income $ 53,300 $ 51,948 $ 43,526 $ 41,248 $ 50,189 $ 48,211 Basic earnings  per share $ 0.90 $ 0.88 $ 0.75 $ 0.71 $ 0.87 $ 0.83 Diluted earnings  per share $ 0.90 $ 0.87 $ 0.74 $ 0.70 $ 0.86 $ 0.83 The fair value of each option granted is estimated on the date  of the grant using the Black-Scholes options pricing model  with the following weighted average assumptions used: At December 31, 2003, the Corporation had a stock-based  compensation plan, which is described below. All of the exercise prices and related number of shares have been  restated to reflect historical stock splits. The plan permits  the Executive Compensation Committee to grant options for  up to 4.5 million shares of the Corporation’s common stock  through October 15, 2005. Although the vesting requirements  and terms of future options granted are at the discretion of  the Executive Compensation Committee, all options granted  from 1997 through 2003 were exercisable by December 31  of the grant year respectively, and expire ten years from the  grant date. All equity compensation plans are approved by  security holders. A summary of the status of the Corporation’s outstanding  stock options as of December 31, 2003, 2002, and  2001 and changes for the years ending on those dates is  presented below: At December 5, 2003, the Corporation completed its  merger with PFC, at which time all outstanding PFC  options were converted to First Commonwealth options at  a conversion rate of 1.387. These options were not granted  from the Corporation’s existing stock option plan. First  Commonwealth assumed the option plans of PFC. Under  these plans, a total of 62,322 First Commonwealth shares  were reserved for issuance due to the exercise of previously  granted PFC options assumed in the merger. No further  grants will be made under these plans. Equity Compensation Plan Information as of  December 31, 2003: 2003 2002 2001 Dividend yield 5.14% per annum 5.13% per annum 5.59% per annum Expected  volatility 40.3% 54.0% 55.1% Risk-free  interest rate 4.1% 5.0% 5.1% Expected  option life 7.0 years 7.0 years 10.0 years 2003 2002 2001 Weighted  Weighted Weighted  Average  Average  Average Exercise  Exercise Exercise Shares Price Shares Price Shares Price Outstanding at  beginning  of year  2,841,772  $11.33 2,687,887 $ 11.13 2,210,651 $ 11.12 PFC converted  options at  merger  62,322 $ 7.60 -0- $ 0.00 -0- $ 0.00 Granted 641,912  $12.06 820,775 $ 11.70 796,743 $ 10.75 Exercised (549,215) $10.71 (447,001) $ 10.51 (256,174) $ 9.76 Forfeited  (31,065) $12.91  (219,889) $ 11.90  (63,333) $ 11.89 Outstanding at  end of year 2,965,726  $11.51 2,841,772 $ 11.33 2,687,887 $ 11.13 Exercisable at  end of year 2,965,726  $11.51 2,841,772 $ 11.33 2,687,887 $ 11.13 Number of Weighted Average  Shares  Options Exercise Price of Available for  Outstanding Options Outstanding Future Grant Equity compensation  plans approved by  security holders 2,965,726 $ 11.51 74,274 36