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## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar Amounts in Thousands, except per share data) 

## NOTE 16— Company Obligated Mandatorily Redeemable Capital Securities of Subsidiary Trust (Continued) 

The net proceeds (after deduction of offering expenses and the initial purchaser’ s commission) from the sale of the debentures to the Trust were approximately $34,200. The Corporation used the net proceeds from the issuance of the debentures to partially finance the purchase of 3,819,420 shares of its outstanding common stock (approximately 6.5% of its outstanding shares of common stock) pursuant to a “ modified Dutch Auction”  tender offer. Unamortized deferred issuance costs associated with the capital securities amounted to $909 as of December 31, 1999 and are being amortized on a straight-line basis over the term of the capital securities. The outstanding balance of the capital securities are included as a separate component of long-term debt on the Consolidated Balance Sheets while interest on the capital securities is included as a separate component of interest expense on the Consolidated Statements of Income. The amortization of the deferred issuance costs is included in interest expense from the capital securities on the Consolidated Statements of Income. 

## NOTE 17— Other Long-term Debt 

Other Long-term debt at December 31, follows: 

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All Federal Home Loan Bank stock, along with an interest in unspecified mortgage loans and mortgage-backed securities, with an aggregate statutory value equal to the amount of the preceding advances, have been pledged as collateral with the Federal Home Loan Bank of Pittsburgh. 

Capital securities included in total long-term debt on the Consolidated Balance Sheets are excluded from NOTE 17, but are described in NOTE 16. 

Scheduled loan payments for other long-term debt are summarized below: 

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## NOTE 18— Common Share Commitments 

At December 31, 2001 and 2000, the Corporation had 100,000,000 common shares authorized and 62,525,412 shares outstanding. Outstanding shares were reduced by 4,073,788 shares of treasury stock at December 31, 2001 and 4,329,962 shares at December 31, 2000. The Corporation may be required to issue additional shares to satisfy common share purchases related to the employee stock ownership plan described in NOTE 21. The dilutive effect of stock options outstanding on average shares outstanding in the diluted earnings per share reported on the income statement were 232,579, 59,742 and 236,230 shares at December 31, 2001, 2000 and 1999, respectively. 

During 2000, 78,380 shares of treasury stock were acquired at an average price of $11.14. Treasury shares consisting of 256,174 and 41,240 were reissued during 2001 and 2000 upon exercise of stock options. 

During 2000, 89,742 shares of treasury stock were reissued to fund the buy-out of the insurance agency’ s joint-venture partner, as described in NOTE 4. 

## NOTE 19— Income Taxes 

The income tax provision consists of: 

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Temporary differences between financial statement carrying amounts and tax bases of assets and liabilities that represent significant portions of the deferred tax assets (liabilities) at December 31, 2001 and 2000, were as follows: 

