content_image/97835.jpg content_image/97827.jpg content_image/97833.jpg content_image/97834.jpg
## NOTE 23— Unearned ESOP Shares (continued) 

Interest on ESOP loans was $60 in 2003, $109 in 2002 and $263 in 2001. During 2003, 2002 and 2001, dividends on unallocated shares in the amount of $184, $242 and $301, respectively, were used for debt service while all dividends on allocated shares were allocated or paid to the participants. 

Unearned ESOP shares of PFC at December 31, 2003 are excluded from the preceding analysis. The PFC ESOP plan was terminated effective December 5, 2003. Unallocated shares remaining after liquidation of shares to fund the PFC ESOP loan payable will be allocated to PFC ESOP participants. 

## NOTE 24— Stock Option Plan 

At December 31, 2003, the Corporation had a stock-based compensation plan, which is described below. All of the exercise prices and related number of shares have been restated to reflect historical stock splits. The plan permits the Executive Compensation Committee to grant options for up to 4.5 million shares of the Corporation’s common stock through October 15, 2005. Although the vesting requirements and terms of future options granted are at the discretion of the Executive Compensation Committee, all options granted from 1997 through 2003 were exercisable by December 31 of the grant year respectively, and expire ten years from the grant date. All equity compensation plans are approved by security holders. 

At December 5, 2003, the Corporation completed its merger with PFC, at which time all outstanding PFC options were converted to First Commonwealth options at a conversion rate of 1.387. These options were not granted from the Corporation’s existing stock option plan. First Commonwealth assumed the option plans of PFC. Under these plans, a total of 62,322 First Commonwealth shares were reserved for issuance due to the exercise of previously granted PFC options assumed in the merger. No further grants will be made under these plans. 

Equity Compensation Plan Information as of December 31, 2003: 

<img src='content_image/97835.jpg'>

The Corporation has elected, as permitted by FAS No. 123, to apply APB Opinion 25 and related interpretations in accounting for its plan. Accordingly, no compensation cost has been recognized for its stock options outstanding. Had compensation cost for the Corporation’s stock option plan been determined based upon the fair value at the grant dates for awards under the plan consistent with the method of FAS No. 123, the Corporation’s net income and earnings per share would have been reduced to the pro forma amounts shown below: 

<img src='content_image/97827.jpg'>

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes options pricing model with the following weighted average assumptions used: 

<img src='content_image/97833.jpg'>

A summary of the status of the Corporation’s outstanding stock options as of December 31, 2003, 2002, and 2001 and changes for the years ending on those dates is presented below: 

<img src='content_image/97834.jpg'>

