FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Maturity Distribution of Securities Held to Maturity (Dollar Amounts in Thousands)  (Dollar Amounts in Thousands) The Corporation’ s “ Asset/Liability Management Committee” (“ ALCO” ) is responsible for the identification, assessment and management of interest rate risk exposure, liquidity, capital adequacy and investment portfolio position. The primary objective of the ALCO process is to ensure that the Corporation’ s balance sheet structure maintains prudent levels of risk within the context of currently known and forecasted economic conditions and to establish strategies which provide the Corporation with appropriate compensation for the assumption of those risks. The ALCO attempts to mitigate interest rate risk through the use of strategies such as asset disposition, asset and liability pricing and matched maturity funding. The ALCO strategies are established by the Corporation’ s senior management and are approved by the Corporation’ s board of directors. 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 may be helpful. 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, N.O.W. accounts and short-term borrowings. 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. 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” ) exceeds 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. 48 Interest Sensitivity Maturity Distribution of Securities Available for Sale At Amortized Cost States and Total  Weighted U.S. Government Agencies Political Other  Amortized  Average and Corporations Subdivisions Securities Cost Yield* Within 1 year $ 10,032 $ 3,031 $ - 0- $ 13,063 6.22% After 1 but within 5 years  25,417 14,595 22,200 62,212  6.47 After 5 but within 10 years 29,098 23,923 275 53,296 6.66 After 10 years 99,138 65,581 - 0-  164,719 6.17 Total $ 163,685 $ 107,130 $ 22,475 $ 293,290 6.33%  U.S. Treasury, and other States and Total  Weighted U.S. Government Agencies Political Other  Amortized  Average and Corporations Subdivisions Securities Cost Yield* Within 1 year $ 11,111 $ 5,588 $ 100 $ 16,799 3.89% After 1 but within 5 years 143,738 8,166  134,431 286,335 5.73 After 5 but within 10 years 99,523 10,897 15,000 125,420 5.78 Over 10 years 712,815 78,841  235,506  1,027,162 6.36 Total $ 967,187 $ 103,492 $ 385,037 $ 1,455,716 6.16%