FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Pension Plan of Acquired Subsidiary NOTE 20— Retirement Plans 31 (Dollar Amounts in Thousands) The Corporation also has a savings plan pursuant to the provisions of section 401(k) of the Internal Revenue Code. Under the terms of the plan, each participant will receive an automatic employer contribution to the plan in an amount equal to 3% of compensation. Each participating employee may contribute up to 10% of compensation to the plan of which up to 4% is matched 100% by the employer’ s contribution. The 401(k) plan expense was $2,583 in 2001, $2,444 in 2000 and $2,328 in 1999. Effective February 1, 2002, the Corporation’ s 401(k) plan was modified to permit each participating employee to contribute up to 80% of compensation to the plan of which up to 4% is matched 100% by the employer’ s contribution. Upon shareholder approval at the regular 1998 meeting the Corporation established a “ Supplemental Executive Retirement Plan”  (“ SERP” ) to provide deferred compensation for a select group of management. The purpose of this plan is to restore some of the benefits lost to the highly compensated employees compared to other employees due to limits and restrictions incorporated into the Corporation’ s 401(k) and ESOP plans. The Corporation’ s 401(k) and ESOP plans include restrictions on maximum compensation, actual deferral percentage, actual contribution, maximum contribution and maximum salary reduction which are required in order to meet specific legal requirements. Participants in the SERP may elect to contribute up to 10% of plan compensation (compensation in excess of limits of the Corporation’ s 401(k) and ESOP plans) into the SERP, through salary reduction. The Corporation will make an elective contribution to the SERP equal to the elective contribution of the participant. Each participant of the SERP will also receive a matching contribution equal to 100% of the employee’ s elective contribution up to 4%, and an additional non-elective contribution from the employer equal to 8% of plan compensation. The SERP will continue to supplement the Corporation’ s 401(k) and ESOP plans and will therefore be modified at the same time and in the same respect as the basic plans are modified in future periods. The SERP plan expense was $150 in 2001, $182 in 2000, and $153 in 1999. The noncontributory defined benefit pension plan of Southwest Bank covered all eligible employees and provided benefits based on each employee’ s years of service and compensation. On December 31, 1998, the participants’ accrued benefit was frozen and participation in the First Commonwealth Financial Corporation ESOP Plan with no lapse in credited service began. The Southwest Bank Pension Plan was terminated effective December 31, 2001. As the result of the plan termination an asset reversion of $1,271 and a gain, net of applicable excise tax, of $277 were recognized. All employees with at least one year of service are eligible to participate in the employee stock ownership plan (“ ESOP” ). Contributions to the plan are determined by the board of directors, and are based upon a prescribed percentage of the annual compensation of all participants. During a prior period the ESOP acquired shares of the Corporation’ s common stock in a transaction whereby the Corporation borrowed the required funds and concurrently loaned this amount to the ESOP. The borrowed amount represents leveraged and unallocated shares, and accordingly has been recorded as long-term debt and the offset as a reduction of common shareholders’  equity. Compensation costs related to the plan were $1,173 in 2001, $1,005 in 2000 and $1,555 in 1999. (See NOTE 21). The total tax provision for financial reporting purposes differs from the amount computed by applying the statutory income tax rate to income before income taxes. The differences are as follows: 2001 2000 Deferred tax assets: Allowance for credit losses $ 11,965 $ 11,765 Postretirement benefits other than pensions 1,005 996 Accumulated depreciation 237 439 Unrealized loss on securities available for sale 0 4,204 Other 1,060 894 Total deferred tax assets 14,267 18,298 Deferred tax liabilities: Accumulated accretion of bond discount (295) (389) Lease financing deduction (10,535) (10,643) Loan origination fees and costs (999) (1,319) Basis difference in assets acquired (453) (674) Pension expense (281) (231) Unrealized gain on securities available for sale (4,686) -0- Other (315) (280) Total deferred tax liabilities (17,564) (13,536) Net deferred tax asset (liability) $ (3,297) $ 4,762 2001 2000 1999 % of % of % of Pretax Pretax Pretax Amount Income Amount Income Amount Income Tax at statutory rate $ 22,905 35.0 $ 21,537 35.0 $ 25,425 35.0 Increase (decrease) resulting from: Effect of nontaxable income (7,137) (10.9) (6,595) (10.7) (5,247) (7.2) State income taxes 55 0.1 (10) (0.0) 16 0.0 Other (569) (0.9)  (643) (1.1) (582) (0.8) Total tax provision $ 15,254 23.3 $ 14,289 23.2 $ 19,612 27.0