FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Average Balance Sheets and Net Interest Analysis (Dollar Amounts in Thousands) 2002 2001 2000 Average Income/ Yield or Average  Income/ Yield or Average Income/ Yield or  Balance  Expense Rate(a)  Balance Expense Rate(a) Balance Expense Rate(a) Assets Interest-earning assets: Time deposits with banks $ 1,785 $ 31 1.74% $ 1,842 $ 70 3.81% $ 1,220 $ 82 6.71% Investment securities 1,694,511  95,630 5.95  1,724,725 106,156 6.45 1,572,290 103,018 6.88 Federal funds sold 359 6 1.72 9,521 492 5.17 3,821 234 6.12 Loans, net of unearned income (b) (c)  2,597,862 179,901 7.13  2,548,596 202,173 8.11 2,503,036 208,548 8.50 Total interest- earning assets  4,294,517 275,568 6.66  4,284,684 308,891 7.43  4,080,367 311,882 7.87 Noninterest-earning assets: Cash 69,735 72,806 74,178 Allowance for credit losses (34,813) (34,078) (34,296) Other assets 211,302 198,051 191,534 Total noninterest- earning assets 246,224 236,779 231,416 Total Assets $4 ,540,741 $ 4,521,463 $ 4,311,783 Liabilities and Shareholders’ Equity Interest-bearing liabilities: Interest-bearing demand deposits (d) $ 416,184 $  3,410 0.82% $ 388,495 $ 7,039 1.81% $ 386,149 $  9,593 2.48% Savings deposits (d) 727,996 9,375 1.29 684,298  16,061 2.35 652,647 17,027 2.61 Time deposits 1,592,585  65,787 4.13  1,728,056  95,065 5.50 1,585,694  88,887 5.61 Short-term borrowings 339,908  6,029 1.77 300,173  11,227 3.74 371,286 22,218 5.98 Long-term debt  670,258 38,072 5.68 663,063  37,778 5.70 632,837 36,814 5.82 Total interest- bearing liabilities  3,746,931  122,673 3.27  3,764,085  167,170 4.44  3,628,613  174,539 4.81 Noninterest-bearing liabilities and capital: Noninterest-bearing demand deposits (d)  380,878 368,983  349,259 Other liabilities 20,493 26,008 31,971 Shareholders’ equity 392,439 362,387 301,940 Total noninterest-bearing funding sources 793,810 757,378 683,170 Total Liabilities and Shareholders’ Equity $4 ,540,741 $ 4,521,463 $ 4,311,783 Net Interest Income and Net Yield on Interest-  Earning Assets $ 152,895 3.80% $141,721 3.53% $ 137,343 3.59% (d) Average balances do not include reallocations from noninterest-bearing demand deposits and interest-bearing demand deposits into savings deposits which were made for regulatory purposes. (c) Loan income includes net loan fees. (b) Income on nonaccrual loans is accounted for on the cash basis, and the loan balances are included in interest-earning assets. (a) Yields on interest-earning assets have been computed on a tax equivalent basis using the 35% Federal income tax statutory rate. 42