FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES NOTESTO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands) 2002. The Corporation may be required to issue additional  shares to satisfy common share purchases related to the  employee stock ownership plan described in NOTE 22. The  dilutive effective of stock options outstanding on average  shares outstanding in the diluted earnings per share reported  on the income statement were 384,778, 332,404 and 232,579  shares at December 31, 2003, 2002 and 2001, respectively. The income tax provision consists of: Treasury shares consisting of 552,781 and 447,001 were  reissued during 2003 and 2002 upon exercise of stock  options. Treasury shares consisting of 17,663 and 67,484 were  reissued in 2003 and 2002, respectively, to fund the business  combination with SCC and SFA as described in NOTE 5. During 2003, 1,179,037 common shares were issued to fund  the business combination with PFC, which is also described  in NOTE 5. 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, 2003 and 2002, were as follows: The Corporation incurred restructuring charges of $6,140  during 2002 in accordance with EITF 94-3. 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. NOTE 20— Restructuring Charges 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. Actual termination benefits paid and charged against the total  severance liability were $2,823 and $1,263 during 2003 and  2002, respectively, leaving a remaining unpaid liability for  severance costs of $566 at December 31, 2003. No additional  severance accruals or adjustments were recorded during 2003  related to the 2002 restructuring. The total tax provision for financial reporting differs from the  amount computed by applying the statutory income tax rate  to income before taxes. The differences are as follows: 33 2003 2002  2001 Amount   % of Pretax Income Amount  Amount % of Pretax Income Amount  Amount % of Pretax Income Tax at statutory rate $ 23,293  35.0  $ 18,353  35.0  $ 22,905  35.0 Increase (decrease) resulting from: Income from bank owned life insurance  (1,520) (2.3) (1,649) (3.1)  (1,616) (2.5) Other nontaxable income (7,332) (11.0) (6,216) (11.9)  (5,521) (8.4) State income taxes  -0-  0.0  1  0.0 55  0.1 Other (1,190) (1.8) (1,578) (3.0)   (569) (0.9) Total tax provision $  13,251 19.9  $ 8,911  17.0  $ 15,254  23.3 2003 2002 Deferred tax assets: Allowance for credit losses $ 13,107  $ 12,074 Postretirement benefits other than pensions 1,040 1,036 Basis difference in assets acquired 4,710  -0- Severance expense 250  1,186 Other 1,140  948 Total deferred tax assets 20,247 15,244 Deferred tax liabilities: Accumulated accretion of bond discount (124) (327) Unrealized gain on securities available  for sale (8,166) (13,920) Lease financing deduction (6,439) (9,272) Loan origination fees and costs (1,562) (1,774) Basis difference in assets acquired -0- (337) Pension expense (399) Accumulated depreciation (1,343) (578) Other (574) (574) Total deferred tax (liabilities) (18,208) (27,181) Net deferred tax asset (liability) $ 2,039  $ (11,937) 2003 2002 2001 Current tax provision for income exclusive of  securities transactions: Federal $ 13,438 $ 9,279 $ 14,865 State -0- 1 55 Securities transactions   2,048  225 1,165 Total current tax provision 15,486  9,505 16,085 Deferred tax provision (benefit) (2,235) (594) (831) Total tax provision $  13,251  $ 8,911 $ 15,254 NOTE 21— Income Taxes