FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollar Amounts in Thousands) identifies the notional amount of those instruments at December 31, 2002 and 2001: Description of changes: Relationship to impaired loans: 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, 2002 and 2001, 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 does for on-balance-sheet instruments. The following table Depreciation and amortization related to premises and equipment was $6,840 in 2002, $6,153 and $5,996 in 2001 and 2000, 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. NOTE 12— Premises and Equipment NOTE 10— Allowance for Credit Losses NOTE 11— Financial Instruments with Off-Balance-Sheet Risk 2002 2001 2000 Allowance at January 1 $ 34,157 $ 33,601 $ 33,539 Additions: Recoveries of previously charged off loans 2,048 1,281 1,299 Provision charged to operating expense 12,223 11,495 10,030 Deductions: Loans charged off 13,932 12,220 11,267 Allowance at December 31 $ 34,496 $ 34,157 $ 33,601 2002 2001 Recorded investment in impaired loans at end of period $ 23,657 $ 23,731 Average balance for impaired loans for the year $ 24,740 $ 16,133 Allowance for credit losses related to impaired loans $ 5,204 $ 3,835 Impaired loans with an allocation of the allowance for credit losses $ 15,065 $ 16,266 Impaired loans with no allocation of the allowance for credit losses $ 8,592 $ 7,465 Income recorded on impaired loans on a cash basis $ 286 $ 750 Estimated Useful Life 2002 2001 Land Indefinite $ 6,023 $ 5,338 Buildings and improvements 7-50 years 46,995 45,910 Leasehold improvements 7-39 years 9,112 9,960 Furniture and equipment 3-10 years 52,732 50,771 Software  3-7 years 15,777 14,231 Subtotal 130,639 126,210 Less accumulated depreciation and amortization 84,909 79,844 Total premises and equipment $ 45,730 $ 46,366 2002 2001 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $ 535,692 $ 517,587 Standby letters of credit $ 32,301 $ 48,739 Commercial letters of credit $ 385 $ 390 27