FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands) NOTE 6— Cash and Due From Banks on Demand Regulations of the Board of Governors of the Federal Reserve System impose uniform reserve requirements on all depository institutions with transaction accounts (checking accounts, NOW accounts, etc.). Reserves are maintained in the form of vault cash or a noninterest-bearing balance held with the Federal Reserve Bank. The subsidiary bank maintained with the Federal Reserve Bank average balances of $1,896 during 2002 and $4,269 during 2001. NOTE 7— Securities Available For Sale 2002 2001 Gross Gross Approximate Gross Gross Approximate Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair Cost Gains Losses Value Cost Gains Losses Value U.S. Treasury Securities $  3,509 $ 87 $ -0- $ 3,596 $ 13,084 $ 137 $ -0- $ 13,221 Obligations of U.S. Government Corporation and Agencies: Mortgage Backed Securities  870,777 24,623 (39)  895,361 840,639 8,140 (954) 847,825 Other 101,464 1,324 -0- 102,788 113,464  2,181  (5) 115,640 Obligations of States and Political Subdivisions 115,936 2,800 (107) 118,629 103,492 749 (1,599) 102,642 Debt Securities Issued by Foreign Governments 75 -0- -0- 75 175 -0- -0- 175 Corporate Securities 235,460 9,000  (472) 243,988 229,259 5,382 (3,657) 230,984 Other Mortgage Backed Securities 51,388 958 -0-  52,346 110,512 2,438 (32) 112,918 Total Debt Securities 1,378,609 38,792 (618) 1,416,783 1,410,625 19,027  (6,247) 1,423,405 Equities 64,392 2,978 (1,382) 65,988 45,091 622  -0- 45,713 Total Securities Available for Sale $ 1,443,001 $ 41,770 $ (2,000) $ 1,482,771 $ 1,455,716 $19,649 $ (6,247) $ 1,469,118 Below is an analysis of the amortized cost and approximate fair values of securities available for sale at December 31, 2002 and 2001: Mortgage backed securities include mortgage backed obligations of U.S. Government agencies and corporations, mortgage backed securities issued by other organizations and other asset backed securities. These obligations have contractual maturities ranging from less than one year to 30 years and have an anticipated average life to maturity ranging from less than one year to 18 years. All mortgage backed securities contain a certain amount of risk related to the uncertainty of prepayments of the underlying mortgages. Interest rate changes have a direct impact upon prepayment speeds, therefore the Corporation uses computer simulation models to test the average life and yield volatility of all mortgage backed securities under various interest rate scenarios to insure that volatility falls within acceptable limits. At December 31, 2002 and 2001, the Corporation owned no high risk mortgage backed securities as defined by the Federal Financial Institutions Examination Council’s Supervisory Policy Statement on Securities Activities. The amortized cost and estimated market value of debt securities at December 31, 2002, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties. Amortized Approximate Cost Fair Value Due within 1 year $ 72,216 $ 74,165 Due after 1 but within 5 years 162,273 166,077 Due after 5 but within 10 years 8,977  9,329 Due after 10 years 212,978 219,505 456,444 469,076 Mortgage Backed Securities 922,165 947,707 Total Debt Securities $ 1,378,609 $ 1,416,783 Proceeds from the sales of securities available for sale were $15,328, $85,737, and $22,391 during 2002, 2001, and 2000, respectively. Gross gains of $609, $3,419, and $1,752 and gross losses of $-0-, $224, and $18 were realized on those sales during 2002, 2001, and 2000, respectively. Securities available for sale with an approximate fair value of $712,827 and $637,915 were pledged at December 31, 2002 and 2001, respectively, to secure public deposits and for other purposes required or permitted by law. 25