NOTE 11— Allowance for Credit Losses Description of changes: Relationship to impaired loans: NOTE 13— Premises and Equipment NOTE 12— Financial Instruments with Off-Balance-Sheet Risk The Corporation is a party to financial instruments with off- balance-sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and commercial letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The contract or notional amount of those instruments reflects the extent of involvement the Corporation has in particular classes of financial instruments. As of December 31, 2001 and 2000, the Corporation did not own or trade any other financial instruments with significant off-balance-sheet risk including derivatives such as futures, forwards, interest rate swaps, option contracts and the like, although such instruments may be appropriate to use in the future to manage interest rate risk. The Corporation’ s exposure to credit loss in the event of nonperformance by the other party of the financial instrument for commitments to extend credit, standby letters of credit and commercial letters of credit written is represented by the contract or notional amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it Depreciation and amortization related to premises and equipment was $6,153 in 2001, $5,996 and $5,790 in 2000 and 1999, respectively. Premises and equipment are described as follows: Standby letters of credit and commercial letters of credit written are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’ s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’ s credit evaluation of the counter-party. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, residential and income-producing commercial properties. does for on-balance-sheet instruments. The following table identifies the notional amount of those instruments at December 31, 2001 and 2000: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands) FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES 2001 2000 1999 Allowance at January 1 $ 33,601 $ 33,539 $ 32,304 Additions: Recoveries of previously charged off loans 1,281 1,299 1,381 Provision charged to operating expense 11,495 10,030 9,450 Deductions: Loans charged off  12,220 11,267 9,596 Allowance at December 31 $ 34,157 $ 33,601 $ 33,539 2001 2000 Recorded investment in impaired loans at end of period $ 23,731 $ 12,961 Average balance for impaired loans for the year $ 16,133 $ 13,154 Allowance for credit losses related to impaired loans $ 3,835 $ 2,187 Impaired loans with an allocation of the allowance for credit losses $ 16,266 $ 4,679 Impaired loans with no allocation of the allowance for credit losses $ 7,465 $ 8,282 Income recorded on impaired loans on a cash basis $ 750 $ 333 28 Estimated Useful Life 2001 2000 Land Indefinite $ 5,338 $ 5,336 Buildings and improvements 7-50 years 45,910 45,296 Leasehold improvements 7-39 years 9,960 9,839 Furniture and equipment 3-25 years 50,771 48,643 Software  3-7 years 14,231 9,926 Subtotal 126,210 119,040 Less accumulated depreciation and amortization 79,844 74,369 Total premises and equipment $ 46,366 $ 44,671 2001 2000 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 517,587 $ 445,200 Standby letters of credit $ 48,739 $  37,787 Commercial letters of credit $ 390 $ 471