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## NOTESTO CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar Amounts in Thousands) 

## NOTE 22— Retirement Plans 

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 $938 in 2003, $940 in 2002 and $1,173 in 2001 (See NOTE 24). 

The employees of PFC were covered by a leveraged ESOP plan. The PFC ESOP had unallocated ESOP shares of 43,174 at the merger date. The plan has been terminated effective December 5, 2003, pending liquidation of unallocated ESOP shares with a fair value of $620 to be utilized to pay off the outstanding PFC ESOP loan payable. Remaining shares will be allocated to the participants of the PFC ESOP plan. No compensation cost for the PFC ESOP plan is required to be recognized in the Consolidated Statements of Income. 

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 80% of compensation to the plan of which up to 4% is matched 100% by the employer’s contribution. The 401(k) plan expense was $2,606 in 2003, $2,616 in 2002 and $2,583 in 2001. Prior to the plan amendment effective February 1, 2002, the Corporation’s 401(k) plan permitted each participating employee to contribute 10% of compensation to the plan of which up to 4% was matched 100% by the employer’s contribution. 

The 401(k) plan of PFC was merged into the Corporation’s 401(k) plan effective January 1, 2004, whereby all eligible PFC employees began to participate in the Corporation’s plan with no lapse in credited service. During the period from the merger date of December 5, 2003, until December 31, 2003, the PFC employees continued to participate in the PFC plan and to receive employer contributions under the terms of the plan. 

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 25% of 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 deferred compensation of the participant for the plan year. 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. In addition, the Corporation may make an extra non-elective contribution for plan participants. 

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 $235 in 2003, $133 in 2002 and $150 in 2001. 

## Pension Plans of Acquired Subsidiaries 

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 participant’s 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. 

Net periodic pension cost of this plan for each of the last three years was as follows: 

<img src='content_image/93920.jpg'>

Due to the termination of the plan, there were no benefit obligations and no assets held as of December 31, 2003 and 2002. 

PFC participated in a multi-employer defined benefit pension plan that covered all eligible employees and provided benefits based on each employee’s years of service and compensation. No contributions were made to the plan and no compensation cost was recognized in the Consolidated Statements of Income. The estimated withdrawal liability at December 31, 2003 is $374. 

