FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES (Dollar Amounts in Thousands) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS value of such deposits is a reasonable estimate of fair value. For both years the carrying value of variable rate time deposit accounts and certificates of deposit approximate their fair values at the report date. Also, fair values of fixed rate time deposits for both periods are estimated by discounting the future cash flows using interest rates currently being offered and a schedule of aggregated expected maturities. The carrying amount of accrued interest for both years approximates fair value. approximate fair values. For both the 2002 and 2001 periods the carrying amounts of other short-term borrowings such as Federal funds purchased, securities sold under agreements to repurchase and treasury, tax and loan notes were used to approximate fair value. Long-term debt: For 2002 and 2001 the carrying amounts of variable rate debt approximate their fair values at the report date. Fair values of fixed rate debt are estimated by discounting the future cash flows using the Corporation’s estimated incremental borrowing rate for similar types of borrowing arrangements. Short-term borrowings: For 2002 the estimated fair values of borrowings from the Federal Home Loan Bank were estimated based on the estimated incremental borrowing rate for similar types of borrowings. For 2001 the carrying value of Federal Home Loan Bank borrowings was used to The following table presents carrying amounts and estimated fair values of the Corporation’s financial instruments at December 31, 2002 and 2001: 37 2002 2001 Estimated Estimated Carrying Fair Carrying Fair Amount Value Amount Value Financial assets Cash and due from banks $ 81,114 $ 81,114 $ 98,130 $ 98,130 Interest-bearing deposits with banks $ 1,973 $ 1,973 $ 4,250 $ 4,250 Federal funds sold $ -0- $ -0- $ -0- $ -0- Securities available for sale $ 1,482,771 $ 1,482,771 $ 1,469,118 $ 1,469,118 Investments held to maturity $ 197,838 $ 204,887 $ 293,290 $ 298,643 Loans, net of allowance $ 2,574,138 $ 2,631,557 $ 2,533,777 $ 2,633,443 Financial liabilities Deposits $ 3,044,124 $ 3,011,354 $ 3,093,150 $ 3,123,845 Short-term borrowings $ 469,065 $ 469,381 $ 427,736 $ 427,736 Long-term debt $ 579,934 $ 642,127 $ 664,220 $ 650,106