FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES Since all identified losses are immediately charged off, no portion of the allowance for credit losses is restricted to any individual credit or groups of credits, and the entire allowance is available to absorb any and all credit losses. However, for analytical purposes, the following table sets forth an allocation of the allowance for credit losses at December 31 according to the categories indicated: MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Allocation of the Allowance for Credit Losses (Dollar Amounts in Thousands) 2001  2000 1999 1998 1997 Commercial, industrial, financial, agricultural and other $ 6,315 $ 6,263 $ 6,321 $ 4,375 $ 3,726 Real estate-construction 432 643 831 414 415 Real estate-commercial 9,808 9,064 7,675 5,119 4,912 Real estate-residential 7,379 10,211 9,928 10,319 8,595 Loans to individuals 3,845 4,938 5,131 5,223 4,583 Lease financing receivables 401 638 586 512 393 Unallocated 5,977 1,844 3,067 6,342 3,308 Total $34,157 $33,601 $33,539 $32,304 $ 25,932 Allowance as percentage of average total loans 1.34% 1.34% 1.39% 1.32% 1.11% Nonperforming and Impaired Assets and Effect on Interest Income Due to Nonaccrual (Dollar Amounts in Thousands) loans which were contractually past due 90 days or more as to interest or principal payments but are well secured and in the process of collection. Renegotiated loans are those loans which terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of the deteriorating financial position of the borrower. Other than those described below, there are no material credits that management has serious doubts as to the borrower’ s ability to comply with the present loan repayment terms. The following table identifies nonperforming loans at December 31. A loan is placed in a nonaccrual status at the time when ultimate collectibility of principal or interest, wholly or partially, is in doubt. Past due loans are those The reduction of income due to renegotiated loans was less than $50 thousand in any year presented. The level of nonperforming loans at year-end 2001 increased by $6.5 million over 2000 levels as increases in nonaccrual loans were only partially offset by decreases in past due loans and renegotiated loans. The increase in nonaccrual loans since year-end 2000 is primarily related to two loans. One is a $6.7 million credit that is not past due and carries an 80% guaranty of a U.S. government agency but is experiencing cash flow difficulties and has therefore been placed in nonaccrual status. A resolution of this credit is expected by the end of the second quarter 2002. The second credit is in the amount of $5.9 million and the Corporation is in the process of liquidating the collateral. The Corporation anticipates a final resolution of this credit in the first quarter of 2002 without a significant loss. 2001  2000 1999 1998 1997 Loans on nonaccrual basis $22,899 $10,698 $12,765 $ 9,677 $ 11,387 Past due loans 17,781 22,086 15,815 15,780 13,955 Renegotiated loans 832 2,263 62 64 67 Total nonperforming loans $41,512 $35,047 $28,642 $25,521 $ 25,409 Nonperforming loans as a percentage of total loans 1.62% 1.41% 1.15% 1.07% 1.04% Allowance as percentage of nonperforming loans  82.28% 95.87% 117.10% 126.58% 102.06% Other real estate owned $ 1,619 $ 1,661 $ 1,707 $ 2,370 $ 1,950 Gross income that would have been recorded at original rates $ 1,422 $ 750 $  724 $ 961 $ 1,017 Interest that was reflected in income 750 333 458 286 146 Net reduction to interest income due to nonaccrual $ 672 $  417 $ 266 $ 675 $ 871 52