FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Interest Sensitivity Maturity Distribution of Securities Held to Maturity (Dollar Amounts in Thousands) U.S. Government States and Total Weighted Agencies and Political Other Amortized Average Corporations  Subdivisions  Securities  Cost  Yield* Within 1 year  $ 10,003  $ 4,035  $ 8,990  $ 23,028  6.78% After 1 but within 5 years  2,686   13,329  405  16,420  7.04  After 5 but within 10 years  5,165   29,362  -0-  34,527  7.32  After 10 years  289   29,990  30,279  7.06  Total  $ 18,143  $ 76,716  $ 9,395  $ 104,254  7.08  Maturity Distribution of Securities Available for Sale At Amortized Cost (Dollar Amounts in Thousands) U.S. Treasury, and other  U.S. Government States and Total Weighted Agencies and Political Other Amortized Average Corporations  Subdivisions  Securities  Cost  Yield* Within 1 year  $  31,317  $  1,468  $  21,055  $  53,840  3.81% After 1 but within 5 years  280,450  7,010  41,052  328,512  2.84 After 5 but within 10 years  405,627  12,114  -0-  417,741  3.80 After 10 years  769,497  136,198  240,067  1,145,762  4.65 Total  $ 1,486,891  $ 156,790  $ 302,174  $ 1,945,855  4.14 * Yields are calculated on a tax-equivalent basis. Market risk is the risk of loss arising from adverse changes in  the fair value of financial instruments due to changes in  interest rates, currency exchange rates or equity prices. The  Corporation’s market risk is composed primarily of interest  rate risk. Interest rate risk results principally from timing  differences in the repricing of assets and liabilities, changes in  the relationship of rate indices and the potential exercise of  freestanding or embedded options. The objective of interest rate sensitivity management is to  maintain an appropriate balance between the stable growth of  income and the risks associated with maximizing income  through interest sensitivity imbalances. While no single number  can accurately describe the impact of changes in interest rates  on net interest income, interest rate sensitivity positions, or  “gaps,” when measured over a variety of time periods, can be informative. An asset or liability is considered to be interest-sensitive if the  rate it yields or bears is subject to change within a  predetermined time period. If interest-sensitive assets (“ISA”)  exceed interest-sensitive liabilities (“ISL”) during a prescribed  time period, a positive gap results. Conversely, when ISL  exceeds ISA during a time period, a negative gap results. The following table lists the amounts and ratios of assets and  liabilities with rates or yields subject to change within the  periods indicated as of December 31, 2003 and 2002:  The primary components of ISA include adjustable rate loans and investments, loan repayments, investment  maturities and money market investments. The primary  components of ISL include maturing certificates of deposit,  money market deposits, savings deposits, NOW accounts and short-term borrowings. The cumulative gap at the 365-day repricing period was  negative in the amount of $809 million or 15.59% of total  assets at December 31, 2003. A positive gap tends to indicate  that earnings will be impacted favorably if interest rates rise  during the period and negatively when interest rates fall during  the time period. A negative gap tends to indicate that earnings  will be affected inversely to interest rate changes. In other  words, as interest rates fall, a negative gap should tend to  produce a positive effect on earnings and when interest rates  rise, a negative gap should tend to affect earnings negatively. 53