FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES NOTESTO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands) Postretirement Benefits other than Pensions for  Acquired Subsidiary NOTE 23— Unearned ESOP Shares 35 The fair market value of the new shares remaining in  suspense was approximately $1,890 and $2,359 at  December 31, 2003 and 2002, respectively. The Medicare Prescription Drug, Improvement and  Modernization Act of 2003 (the “Act”) introduces a  prescription drug benefit under Medicare Part D. The Act also  introduces a federal subsidy to sponsors of retiree health care  benefit plans that provide a benefit that is at least actuarially  The discount rate used in determining the actuarial present  value of the accumulated postretirement benefit obligation  was 6.25% for 2003 and 6.75% for 2002. The health care  cost trend rates used for 2003 were projected at an initial rate  of 8.00% for 2004 decreasing over time to an annual rate  of 4.25% in 2008 for both indemnity plan participants and  non-indemnity plan participants. For 2002, rates used were  projected at an initial rate of 9.00% for 2003 decreasing over  time to an annual rate of 4.25% in 2008 for both indemnity  plan participants and non-indemnity plan participants. The following is an analysis of ESOP shares held in suspense: See NOTE 1 for the definition of “old shares” and “new shares” The loans have been recorded as long-term debt on the  Corporation’s Consolidated Balance Sheets. A like amount  of unearned ESOP shares was recorded as a reduction of  common shareholders’ equity. Unearned ESOP shares,  included as a component of shareholders’ equity, represent  the Corporation’s prepayment of future compensation  expense. The shares acquired by ESOP are held in a suspense  account and will be released to the ESOP for allocation to  the plan participants as the loan is reduced. Repayment of the  loans is scheduled to occur over a remaining two-year period  from contributions to the ESOP by the Corporation and  dividends on unallocated ESOP shares. The Corporation had borrowed amounts which were  concurrently loaned to the First Commonwealth Financial  Corporation Employee Stock Ownership Plan Trust  (“ESOP”) on the same terms. The combined balances of the  ESOP related loans were $1,994 at December 31, 2003 and  $3,055 at December 31, 2002. The following table sets forth the plan’s funded status and  the amounts recognized on the Corporation’s Consolidated  Balance Sheet as of December 31: The following table sets forth the change in benefit obligation: Employees of Southwest Bank were also covered by a post  retirement benefit plan. The measurement date for this plan  was October 1. Net periodic benefit cost of this plan was as follows: equivalent to Medicare Part D. The preceding measures of the  accumulated postretirement benefit obligation or net periodic  postretirement benefit cost do not reflect the effects of the Act  on the Corporation’s plan. The Corporation has elected to defer  recognizing the effects of the Act in accounting and reporting  for its plan until authoritative accounting guidance, including  guidance on accounting for the federal subsidy is issued. That  guidance, when issued, could impact reported calculations. The health care cost trend rate assumption can have a  significant impact on the amounts reported for this plan. A  one-percentage-point change in assumed health care cost  trend rates would have the following effects: 1-Percentage- 1-Percentage- Point Increase Point Decrease Effect on total of service and  interest cost components $ 23 $ (20) Effect on postretirement benefit  obligation $ 372 $ (314) 2003 2002 2001 Service cost $ -0- $ -0- $ 6 Interest cost on projected benefit obligation 338  273 232 Amortization of transition obligation  2  2 2 Loss amortization  121  60 65 Net periodic benefit cost $ 461  $ 335 $ 305 2003 2002 Accumulated post retirement benefit obligation: Retirees $ 5,901  $ 5,142 Actives  -0- -0- Total accumulated postretirement benefit obligation 5,901  5,142 Plan assets at fair value  -0- -0- Accumulated postretirement benefit obligation  in excess of plan assets 5,901  5,142 Unrecognized transition obligation (14) (16) Unrecognized net loss (2,844) (2,165) Accrued benefit liability recognized on the balance sheet $ 3,043 $ 2,961 Total Old Shares New Shares Shares in suspense  December 31, 2001 372,560 91,214 281,346 Shares allocated during 2002 (100,894) (24,702) (76,192) Shares in suspense  December 31, 2002 271,666 66,512 205,154 Shares allocated during 2003  (96,118) (23,533) (72,585) Shares in suspense  December 31, 2003  175,548 42,979 132,569