(a) Yields on interest-earning assets have been computed on a tax equivalent basis using the 35% Federal income tax statutory rate. (b) Income on nonaccrual loans is accounted for on the cash basis, and the loan balances are included in interest-earning assets. (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. Both interest income and interest expense decreased over 2000 levels primarily as a result of rate decreases during 2001 which were partially offset by volume increases. Asset yields, on a tax-equivalent basis, decreased 44 basis points (0.44%) during 2001 to 7.43% from 7.87% reported in 2000 and compared to 7.56% reported in 1999. The cost of funds for 2001 decreased 37 basis points (0.37%) over 2000 costs of 4.81% and compared to costs of 4.33% for 1999. Average interest earning assets increased $204.3 million or 5.0% while average interest-bearing liabilities increased $135.5 million or 3.7% for 2001 compared to 2000 averages. Interest and fees on loans decreased $6.4 million for 2001 over 2000 levels, primarily as a result of rate decreases for commercial loans and revolving credit loans which were partially offset by increases due to volume for commercial loans. Average loans for 2001 increased $45.6 million 41 2001 2000 1999 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 $ 1,842 $ 70 3.81% $ 1,220  $ 82 6.71% $ 1,844 $ 121 6.56% Investment securities 1,724,725 106,156 6.45 1,572,290 103,018  6.88 1,608,467 100,853  6.59 Federal funds sold 9,521 492 5.17 3,821 234  6.12 2,097 105  5.01 Loans, net of unearned income (b) (c) 2,548,596 202,173 8.11 2,503,036 208,548  8.50 2,408,450 195,010  8.21 Total interest- earning assets 4,284,684 308,891 7.43 4,080,367 311,882  7.87 4,020,858 296,089  7.56 Noninterest-earning assets: Cash 72,806 74,178 80,716 Allowance for credit losses (34,078) (34,296) (33,757) Other assets 198,051 191,534 174,063 Total noninterest- earning assets 236,779 231,416 221,022 Total Assets $ 4,521,463 $ 4,311,783 $ 4,241,880 Liabilities and Shareholders’  Equity Interest-bearing liabilities: Interest-bearing demand deposits (d) $ 388,495 $ 7,039 1.81% $ 386,149 $ 9,593 2.48% $ 386,124 $ 8,375 2.17% Savings deposits (d) 684,298 16,061  2.35 652,647 17,027  2.61 712,637 17,769  2.49 Time deposits 1,728,056 95,065  5.50 1,585,694 88,887  5.61 1,499,857 77,187  5.15 Short-term borrowings 300,173 11,227  3.74 371,286 22,218  5.98 279,269 13,832  4.95 Long-term debt 663,063 37,778  5.70  632,837 36,814  5.82 643,746 35,490  5.51 Total interest- bearing liabilities 3,764,085 167,170  4.44 3,628,613 174,539  4.81 3,521,633 152,653  4.33 Noninterest-bearing liabilities and capital: Noninterest-bearing demand deposits (d) 368,983 349,259 345,311 Other liabilities 26,008 31,971 31,439 Shareholders’  equity 362,387 301,940 343,497 Total noninterest-bearing funding sources 757,378 683,170 720,247 Total Liabilities and Shareholders’  Equity $ 4,521,463 $ 4,311,783 $ 4,241,880 Net Interest Income and Net Yield on Interest- earning Assets $ 141,721 3.53% $137,343 3.59% $143,436 3.76% FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES (Dollar Amounts in Thousands) Average Balance Sheets and Net Interest Analysis MANAGEMENT’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS