FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands, except per share data) During 2000, 78,380 shares of treasury stock were acquired at an average price of $11.14. Treasury shares consisting of 447,001 and 256,174 were reissued during 2002 and 2001 upon exercise of stock options. During 2002, 67,484 shares of treasury stock were reissued to fund the business combination described in Note 5. The Corporation incurred restructuring charges of $6,140 during 2002. These restructuring charges were comprised of the following: $4,652 of employee separation costs consisting of severance packages for 95 employees from various affiliates of the Corporation including all levels of staff from the executive management level to back office support staff, $1,068 related to realignment of the various Boards of Directors and Board committees and $420 primarily related to the write off of obsolete signage and supplies. These amounts are included as restructuring charges, as a component of Other Expenses on the Consolidated Statements of Income. These restructuring charges resulted from the merger of the charters of the Corporation’s two commercial banks (First Commonwealth Bank and Southwest Bank) and the adoption of a new common brand and identity for all financial services subsidiaries. The actual termination benefits paid and charged against the total restructuring liability for 2002 were $1,263. Temporary differences between financial statement carrying amounts and tax bases of assets and liabilities that represent significant portions of the deferred tax assets (liabilities) at December 31, 2002 and 2001 were as follows: All employees with at least one year of service are eligible to participate in the employee stock ownership plan (“ESOP”). Contributions to the plan are determined by the Board of Directors, and are based upon a prescribed percentage of the annual compensation of all participants. During a prior period, the ESOP acquired shares of the Corporation’s common stock in a transaction, whereby the Corporation borrowed the required funds and concurrently loaned this amount to the ESOP. The borrowed amount represents leveraged and unallocated shares, and accordingly has been recorded as long-term debt and the offset as a reduction of common shareholders’ equity. Compensation costs related to 30 The total tax provision for financial reporting purposes differs from the amount computed by applying the statutory income tax rate to income before income taxes. The differences are as follows: NOTE 17— Common Share Commitments (continued) NOTE 18— Restructuring Charges NOTE 19— Income Taxes 2002 2001 2000 Current tax provision for income exclusive of securities transactions: Federal $ 9,279 $ 14,865 $ 12,155 State  1 55 (10) Securities transactions 225  1,165 611 Total current tax provision  9,505  16,085 12,756 Deferred tax provision (benefit) (594) (831)  1,533 Total tax provision $ 8,911 $ 15,254 $ 14,289 The income tax provision consists of: NOTE 20— Retirement Plans 2002 2001 2000 % of % of % of Pretax Pretax Pretax Amount Income Amount Income Amount Income Tax at statutory rate $ 18,353  35.0 $ 22,905  35.0 $ 21,537  35.0 Increase (decrease) resulting from: Effect of nontaxable income (7,865) (15.0) (7,137) (10.9) (6,595) (10.7) State income taxes 1 0.0  55  0.1 (10)  (0.0) Other  (1,578)  (3.0) (569)  (0.9) (643)  (1.1) Total tax provision $ 8,911  17.0 $ 15,254  23.3 $ 14,289  23.2 2002 2001 Deferred tax assets: Allowance for credit losses $ 12,074 $ 11,965 Postretirement benefits other than pensions 1,036  1,005 Accumulated depreciation  -0- 237 Severence expense  1,186 -0- Other  948  1,060 Total deferred tax assets 15,244 14,267 Deferred tax liabilities: Accumulated accretion of bond discount  (327) (295) Unrealized gain on securities available for sale  (13,920)  (4,686) Lease financing deduction  (9,272) (10,535) Loan origination fees and costs  (1,774) (999) Basis difference in assets acquired (337) (453) Pension expense (399) (281) Accumulated depreciation  (578) -0- Other (574) (315) Total deferred tax liabilities  (27,181) (17,564) Net deferred tax liability $ (11,937) $ (3,297)