10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003 commission file number 0-11242

FIRST COMMONWEALTH FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
PENNSYLVANIA	25-1428528
(State or other jurisdiction of incorporation or organization	(I.R.S. Employer Identification No.)

22 NORTH SIXTH STREET INDIANA, PA	15701
(Address of principal executive offices	(Zip Code)

Registrant's telephone number, including area code:  (724) 349-7220

Securities registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS	NAME OF EACH EXCHANGE ON WHICH REGISTERED
COMMON STOCK, $1 PAR VALUE	NEW YORK STOCK EXCHANGE

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes XX No   .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this form 10-K.  [   ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes XX No   .

Indicate the number of shares outstanding of each of the issuer's classes of common stock.

TITLE OF CLASS	OUTSTANDING AT March 2, 2004
Common Stock, $1 Par Value	61,029,838 Shares

The aggregate market value of the voting common stock, par value $1 per share, held by non-affiliates of the registrant (based upon the closing sale price on March 2, 2004), was approximately $823,705,576.

The aggregate market value of the voting common stock, par value $1 per share, held by non-affiliates of the registrant (based upon the closing sale price on June 30, 2003), was approximately $706,151,494.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement related to the annual meeting of security holders to be held April 19, 2004 are incorporated by reference into Part III.

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
FORM 10-K
INDEX

PART I		PAGE
ITEM 1.	Business.....................................................	2
	Description of Business......................................	2
	Competition..................................................	5
	Supervision and Regulation...................................	6
	Availability of Financial Information........................	10
ITEM 2.	Properties...................................................	10
ITEM 3.	Legal Proceedings............................................	11
Item 4.	Submission of Matters to a Vote of Security Holders..........	11
	Executive Officers of the Registrant.........................	11
PART II
ITEM 5.	Market for Registrant's Common Stock And Related Security Holder Matters...............................................	12
ITEM 6.	Selected Financial Data......................................	13
ITEM 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation.....................................	14
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk...	44
ITEM 8.	Financial Statements and Supplementary Data..................	45
ITEM 9.	Disagreements on Accounting and Financial Disclosures........	103
ITEM 9A.	Controls and Procedures......................................	103
PART III
ITEM 10.	Directors and Executive Officers of the Registrant...........	103
ITEM 11.	Executive Compensation.......................................	104
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management...................................................	104
ITEM 13.	Certain Relationships and Related Transactions...............	104
ITEM 14.	Principal Accountant Fees and Services.......................	104
PART IV
ITEM 15.	Exhibits, Financial Statements, Schedules and Reports on Form 8-K..........................................................	105
	Signatures...................................................	108

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

PART I

ITEM 1.  Business

Description of Business

First Commonwealth Financial Corporation (the "Corporation") was incorporated as a Pennsylvania business corporation on November 15, 1982 and is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.  The Corporation has one chartered bank affiliate which operates under the First Commonwealth Bank name.  Personal financial planning and other financial services and insurance and products are also provided through First Commonwealth Trust Company, First Commonwealth Financial Advisors and First Commonwealth Insurance Agency.  The Corporation also operates through First Commonwealth Systems Corporation, a data processing subsidiary and First Commonwealth Professional Resources Inc., a subsidiary providing professional services to affiliated organizations.

In October 2002, the Corporation brought all of the community bank offices and the other affiliates under a common brand, First Commonwealth.  The Corporation unveiled a new logo, colors, and signage through an aggressive marketing strategy to reintroduce First Commonwealth to the marketplace.  A unified brand yields important benefits for our clients.  All of First Commonwealth Bank's community offices have the same identity, products, and professional service that provide a consistent experience throughout the office network.  The insurance, trust, and financial planning affiliates are now clearly linked with First Commonwealth Bank to provide integrated solutions to meet any client need.

First Commonwealth Bank ("FCB"), a Pennsylvania-chartered banking corporation headquartered in Indiana, Pennsylvania operated through divisions doing business under the following names:  NBOC Bank, Deposit Bank, Cenwest Bank, First Bank of Leechburgh, Peoples Bank, Central Bank, Peoples Bank of Western Pennsylvania, Unitas Bank and Reliable Bank.  In October 2002, these banking divisions as well as the Corporation's other chartered bank (Southwest Bank) were merged under the First Commonwealth name.  This enhancement has provided our clients with greater flexibility, efficiency and seamless service throughout our market footprint.

During 2003, the Corporation took steps to increase its presence in the Pittsburgh, Pennsylvania market by acquiring Pittsburgh Financial Corp. ("PFC").  Effective December 5, 2003, the Corporation completed the transaction to acquire 100% of the outstanding shares of PFC. PFC was a financial holding company that was headquartered in Wexford, Pennsylvania, and was the parent company of Pittsburgh Savings Bank (d/b/a BankPittsburgh).  The branches that were acquired as part of the PFC acquisition are continuing to operate as BankPittsburgh, a division of First Commonwealth Bank, and will continue to do so until the deposit and loan systems are converted during 2004.

Also as a step to increase its presence in the Pittsburgh, Pennsylvania market, the Corporation announced plans to acquire GA Financial, Inc. ("GAF") pending approval from GAF shareholders and various regulatory agencies.  In December 2003, the Corporation signed a definitive agreement to acquire 100% of the outstanding shares of GAF, a savings and loan holding company that is headquartered in Whitehall, Pennsylvania.


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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)

Description of Business (Continued)

Through FCB, the Corporation traces its banking origins to 1866.  FCB conducts business through 91 community banking offices in the counties of Allegheny (10), Armstrong (2), Beaver (1), Bedford (4), Blair (8), Butler (2), Cambria (10), Centre (1), Clearfield (5), Elk (3), Huntingdon (5), Indiana (9), Jefferson (3), Lawrence (5), Somerset (5), Washington (1), and Westmoreland (17).  FCB engages in general banking business and offers a full range of financial services including such general retail banking services including savings and time deposits and mortgage, consumer installment and commercial loans.

FCB operates a network of 91 automated teller machines ("ATMs") which permit customers to conduct routine banking transactions 24 hours a day.  Of the ATMs, 70 are located on the premises of branch offices and 21 are in remote locations.  All the ATMs are part of the STAR network which consists of over 250,000 ATMs owned by numerous banks, savings and loan associations and credit unions from coast to coast.  STAR serves more than 132 million ATM/debit cardholders and more than 6,100 financial institution members.  The ATMs operated by FCB are also part of the global MasterCard/Cirrus network which is comprised of more than 900,000 ATMs located in the United States, Canada and 120 other countries and territories, which services over 632 million card holders.  Such networks allow FCB clients to withdraw cash and in certain cases conduct other banking transactions from ATMs of all participating financial institutions.

Along with the PFC acquisition, FCB became a member of the Freedom ATM Alliance.  The Freedom ATM Alliance will give cardholders of the First Commonwealth Check Card access to a network of more than 440 surcharge-free ATMs that are located in 41 counties, extending north into New York, and west into Ohio, with a majority of the ATMs located in southwestern Pennsylvania.

In addition to the access of funds through the use of ATMs, the STAR debit card offered to FCB's deposit clients may be used at over 1 million point-of-sale retail locations on the STAR system as well as being used on the global MasterCard system for the purchase of goods and services.  The STAR debit card provides clients with almost universal acceptability of a credit card combined with the convenience of direct debit to the clients' checking account.

First Commonwealth Systems Corporation ("FCSC") was incorporated as a Pennsylvania business corporation in 1984 by the Corporation to function as its data processing subsidiary and it has its principal place of business in Indiana, Pennsylvania.  Before August 1984, it had operated as the data processing department.  FCSC provides on-line general ledger accounting services and bookkeeping services for deposit and loan accounts to the Corporation, FCB and its other nonbank subsidiaries.  FCSC also acts as a centralized purchasing agent for the purchase of computer hardware and software products by the Corporation and subsidiaries as well as providing technical support for the installation and use of these products.  It competes, principally with data processing subsidiaries of other, mostly larger, banks, on the basis of the price and quality of its services and the speed with which such services are delivered. 



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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)

Description of Business (Continued)

First Commonwealth Trust Company ("FCTC") was incorporated on January 18, 1991 as a Pennsylvania chartered trust company to render general trust services.  The corporate headquarters are located in Indiana, Pennsylvania.  FCTC has five branch offices in the service areas of FCB and offers personal and corporate trust services, including administration of estates and trusts, individual and corporate investment management and custody services and employee benefit trust services.

First Commonwealth Insurance Agency ("FCIA") was incorporated as a Pennsylvania business corporation with its principal place of business in Indiana, Pennsylvania.  FCIA began operations in January 1998 as a wholly-owned subsidiary of FCB and provides a full range of insurance and annuity products to retail and commercial clients.

First Commonwealth Financial Advisors ("FCFA") was formed in 2002 as the result of an acquisition.  FCFA offers financial planning, asset management and consulting services to individuals, businesses, retirement plans, trusts and estates.  FCFA also offers insurance products through FCIA.  FCFA's office is located in Allegheny County in Pennsylvania.

FraMal Holdings Corporation ("FraMal") is a wholly-owned subsidiary of the Corporation that was incorporated under the laws of the state of Delaware for the purpose of providing investment services.  FraMal was acquired with the PFC acquisition.

On June 1, 1989, Commonwealth Trust Credit Life Insurance Company ("Commonwealth Trust") began operations.  The Corporation owns 50% of the voting common stock of Commonwealth Trust.  Commonwealth Trust provides reinsurance for credit life and credit accident and health insurance sold by the subsidiaries of the two unrelated holding company owners under a joint venture arrangement whereby the net income derived from such reinsurance inures proportionally to the benefit of the holding company selling the underlying insurance to its banks' customers.

First Commonwealth Capital Trust I and First Commonwealth Capital Trust II are business trusts created under the laws of the state of Delaware.  The trusts were formed in September 1999 and December 2003, respectively.  The trusts were formed for the exclusive purposes of issuing trust preferred securities, using the proceeds from the sale of the trust preferred securities to acquire subordinated debentures issued by the Corporation and engaging in only those activities necessary or incidental thereto.  Based on criteria established in FASB Interpretation No. 46 "Consolidation of Variable Interest Entities," the business trusts are unconsolidated subsidiaries of the Corporation.



 




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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)

Description of Business (Continued)

The Corporation operates and manages all client services in an integrated fashion through what is referred to as the "Growth Unit."  The Growth Unit is comprised of the four revenue-producing subsidiaries of the Corporation, which include FCB, FCTC, FCIA and FCFA.  The other subsidiaries serve as support affiliates of the Corporation.  Through the Growth Unit, the Corporation delivers our core competencies of banking, insurance, trust, financial management and investment services. 

The Corporation and its subsidiaries employed approximately 1,474 (full-time equivalents) at December 31, 2003.  The Corporation does not engage in any significant business activities other than holding the stock of its subsidiaries.  The Corporation does not currently have any plans to expand or modify its business or that of its subsidiaries, other than as described herein.  Nevertheless, it will be receptive to and may actively seek out mergers and acquisitions in the event that opportunities which management considers advantageous to the development of the Corporation's business arise, and may otherwise expand or modify its business as management deems necessary to respond to changing market conditions or the laws and regulations affecting the business of banking.

Competition

FCB, FCTC, FCFA and FCIA face intense competition, both from within and out of their service areas, in all aspects of business.  FCB competes for deposits, in such forms as checking, savings and NOW (negotiable order of withdrawal) accounts, MMDA (money market deposit accounts) and certificates of deposit, and in making consumer loans and loans to smaller businesses, with numerous other commercial banks and savings banks doing business within its service area.  FCB also competes, primarily in making consumer loans and for deposits, with state and federally chartered savings and loan associations and with credit unions.  In recent years, FCB has encountered significant competition for deposits from money market funds, mutual funds and institutions that offer annuities located throughout the United States.  Money market funds pay dividends to their shareholders (which are the equivalent of the interest paid by banks on deposits) and they are able to offer services and conveniences similar to those offered by FCB.  Annuities accumulate interest on the amounts deposited over a predetermined time period.  The depositor is then entitled to withdraw their funds for a fixed period of time or until death.  The effect of such competition has been to increase the costs of the rest of deposits, which provide the funds with which loans are made.  In addition to savings and loan associations and credit unions, FCB also competes for consumer loans with local offices of national finance companies and finance subsidiaries of automobile manufacturers and with national credit card companies such as MasterCard and VISA, whose cards, issued through financial institutions, are held by consumers throughout its service area.  FCB believes that the principal means by which it may compete for deposits and consumer and smaller commercial loans are the number and desirability of the locations of its offices and ATMs, the sophistication and quality of its services and the

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)

Competition (Continued)

prices (primarily interest rates) of its services.  Additionally, FCB intends to remain competitive by offering financial services that target specific client needs.  Development of an integrated advisory sales model to integrate products between our bank, insurance agency, trust company and financial advisory affiliates as well as utilization of an employee team to deliver products and services to our commercial clients through our "Total Solutions Financial Management" approach have been positively received by our customers.  Specific client needs are also met through an enhanced client delivery system that includes telephone banking, which provides convenient access to financial services and hours of operation that extend past those of the FCB branch offices.  The Corporation also remains competitive by providing clients with Internet-based banking solutions through "WebBank" and "BillPay."  WebBank provides clients with access to bank account information via the Internet 24 hours a day, 7 days a week.  Features of WebBank include the ability to monitor account balances and transaction history, transfer funds between accounts, issue stop payments and request online customer service such as copies of checks or statements.  BillPay is an Internet bill payment and presentment service that allows clients to pay bills online. 

Supervision and Regulation

The Corporation is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended ("the Bank Holding Company Act") and is registered as such with the Federal Reserve Board.  As a registered bank holding company ("BHC"), the Corporation is required to file an annual report and other information with the Federal Reserve Board.  The Federal Reserve Board is also empowered to make examinations and inspections of the Corporation and its subsidiaries.

The Bank Holding Company Act and Regulation Y of the Federal Reserve Board require every bank holding company to obtain prior approval of the Federal Reserve Board before it may acquire direct or indirect ownership or control of more than 5% of the outstanding voting shares or substantially all of the assets of a bank or merge or consolidate with another bank holding company.  The Federal Reserve Board may not approve acquisitions by the Corporation of such percentage of voting shares or substantially all the assets of any bank located in any state other than Pennsylvania unless the laws of such state specifically authorize such an acquisition.

The Bank Holding Company Act generally prohibits a bank holding company from engaging in a nonbank business or acquiring direct or indirect ownership or control of more than 5% of the outstanding voting shares of any nonbank corporation subject to certain exceptions.  The principal exception is where the business activity in question is determined by the Federal Reserve Board to be closely related to banking or to managing or controlling banks to be a proper incident thereto.  The Bank Holding Company Act does not place territorial restrictions on the activities of such banking related subsidiaries of bank holding companies.




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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)

Supervision and Regulation (Continued)

Under the Federal Reserve Act, subsidiary banks of a bank holding company are subject to certain restrictions on extensions of credit to the bank holding company or any of its subsidiaries, investments in the stock or other securities thereof, or acceptance of such stock or securities as collateral for loans to any one borrower.  Under the Pennsylvania Banking Code, there is no limit on the number of Pennsylvania banks that may be owned or controlled by a Pennsylvania bank holding company.

Sarbanes-Oxley Act of 2002

On July 30, 2002, President George W. Bush signed into law the Sarbanes-Oxley Act of 2002, which generally established a comprehensive framework to modernize and reform the oversight of public company auditing, improve the quality and transparency of financial reporting by those companies and strengthen the independence of auditors.  Certain of the legislation's more significant reforms are noted below:

*	The legislation created a public company accounting oversight board which is empowered to set auditing, quality control and ethics standards to inspect registered public accounting firms, to conduct investigations and to take disciplinary actions, subject to SEC oversight and review.  Mandatory fees paid by all public companies are funding the new board.  The legislation also improved the Financial Accounting Standards Board, giving it full financial independence from the accounting industry.
*	The legislation strengthened auditor independence from corporate management by, among other things, limiting the scope of consulting services that auditors can offer to their public company audit clients.
*	The legislation heightened the responsibility of public company directors and senior managers for the quality of the financial reporting and disclosure made by their companies.  Among other things, the legislation provided for a strong public company audit committee that will be directly responsible for the appointment, compensation and oversight of the work of the public company auditors.
*	The legislation has imposed a range of new corporate disclosure requirements.  Among other things, the legislation requires public companies to report all off-balance sheet transactions, as well as to present any pro forma disclosures in a way that is not misleading and in accordance with requirements to be established by the SEC.

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)

Supervision and Regulation (Continued)

*	The legislation also accelerated the required reporting of insider transactions, which now generally must be reported by the end of the second business day following a covered transaction.
*	The legislation has required the Corporation's Chief Executive Officer and Chief Financial Officer to each certify that the Corporation's Quarterly and Annual Reports do not contain any untrue statements of a material fact.  The rules contain several requirements, including having these officers certify that:  they are responsible for establishing, maintaining and regularly evaluating the effectiveness of the Corporation's internal controls; they have made certain disclosures to the Corporation's auditors and the Audit Committee of the Board of Directors about the Corporation's internal controls; and they have included information in the Corporation's Quarterly and Annual Reports about their evaluation and whether there have been significant changes in the Corporation's internal controls or in other factors that could significantly affect internal controls subsequent to the evaluation.
*	The legislation imposed a range of criminal penalties for fraud and other wrongful acts, as well as extends the period during which certain types of lawsuits can be brought against a company or its insiders.

The Corporation has a new Code of Conduct and Ethics and a Financial Disclosure Committee.  Members of the Financial Disclosure Committee include the Chief Executive Officer, Chief Financial Officer and other key members of the Corporation's management team.  The Corporation also requires validation of controls and signed certifications from managers who are responsible for internal controls throughout the Company as to the integrity of the information they prepare.

The Gramm-Leach-Bliley Act ("GBLA") of 1999 revolutionized the regulation of financial services companies.  GBLA amended the Bank Holding Company Act of 1956 to create a new type of bank holding company, a financial holding company ("FHC"), which is permitted to engage in all activities permitted by a bank holding company as well as securities, merchant banking and insurance activities that were prohibited to BHCs.  GLBA also repealed Section 20 and 32 of the Glass-Steagall Act, which prohibited affiliations between a member bank and a company principally engaged in securities activities.  The activities of a BHC that do not qualify as activities of a FHC will be limited to those that the Federal Reserve Board had, prior to enactment of GBLA, deemed closely related to banking.  In order to qualify as a FHC, each depository institution subsidiary of a BHC must be well capitalized, well managed and if insured, have a satisfactory or better rating under the Community Reinvestment Act of 1977 ("CRA") as of its most recent examination.  The BHC must file an election with the Federal Reserve Board certifying that it meets the requirements of a FHC.  GBLA expanded the range of business opportunities for commercial banking organizations and enabled banking companies and other types of financial companies such


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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)

Supervision and Regulation (Continued)

as securities, insurance and financial technology companies to combine more readily.  A FHC does not need to obtain prior Federal Reserve Board approval in order to engage in, or acquire a nonbank company that engages in financial activities.  The FHC only needs to provide notice to the Federal Reserve Board, describing the activity commenced or conducted by the acquired company, within 30 days after commencing the activity or consummating the acquisition.

Subsidiary Bank

FCB is a Pennsylvania-chartered bank and is subject to the supervision of and regularly examined by the Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation ("FDIC").  FCB is also subject to certain regulations of the Federal Reserve Board.  The areas of operation that are subject to regulation by Federal and Pennsylvania laws, regulations and regulatory agencies include reserves against deposits, maximum interest rates for specific classes of loans, truth-in-lending disclosures, permissible types of loans and investments, trust operations, mergers and acquisitions, issuance of securities, payment of dividends, Community Reinvestment Act evaluations, mandatory external audits, establishment of branches and other aspects of operations.  Under the Pennsylvania Banking Code, a state bank located in Pennsylvania may establish branches anywhere in the state.

Effects of Governmental Policies

The business and earnings of the Corporation are affected not only by general economic conditions, but also by the monetary and fiscal policies of the United States Government and its agencies, including the Federal Reserve Board.  An important function of the Federal Reserve Board is to regulate the national supply of bank credit.  Among the instruments of monetary policy used by the Federal Reserve Board to implement these objectives are open market operations in United States government securities, changes in the discount rate on borrowings by member banks and savings institutions from the Federal Reserve System and changes in reserve requirements against bank and savings institution deposits.  These instruments, together with fiscal and economic policies of various governmental entities, influence overall growth of bank loans, investments and deposits and may also affect interest rates charged on loans, received on investments or paid for deposits.

The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of bank holding companies and their subsidiary banks in the past and are expected to continue to do so in the future.  In view of changing conditions in the national and Pennsylvania economies and in the money markets, as well as the effect of actions by monetary and fiscal authorities, including the Federal Reserve Board, no prediction can be made as to possible future changes in interest rates, deposit levels and loan demand or the effect of such changes on the business and earnings of the Corporation or its subsidiaries.



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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 1.  Business (Continued)
 
Changes in Regulations

Proposals to change the laws and regulations governing the banking industry are frequently introduced in Congress, in the state legislatures and before the various bank regulatory agencies.  The likelihood and timing of any proposals or legislation and the impact they might have on the Corporation and its subsidiaries cannot be determined at this time.

Availability of Financial Information

The Corporation files reports with the SEC. Those reports include the annual report on Form 10-K, quarterly reports on Form 10-Q, current event reports on Form 8-K and proxy statements, as well as any amendments to those reports. The public may read and copy any materials that the Corporation files with the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains quarterly and annual reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. The Corporation's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are also accessible at no cost on the Corporation's web site at http://www.fcbanking.com.  Printed copies are also available upon request to the Corporation, to the attention of the Corporate Secretary.

Furthermore, the Corporation also makes available on its website, and in print to any shareholder who requests it, the Corporation's Corporate Governance Guidelines, the committee charters for its Audit, Executive Compensation, and Governance Committees, as well as the Code of Conduct and Ethics that applies to all directors, officers and employees of the Corporation.  Amendments to these documents or waivers related to the Code of Conduct and Ethics will be made available on the Corporation's website as soon as practicable after their execution.

ITEM 2.  Properties

The Corporation's principal office is located in the Old Indiana County Courthouse complex.  This certified Pennsylvania and national historic landmark was built in 1870 and restored by the Corporation in the early 1970's.  The Corporation occupies this building, which provides 32,000 square feet of floor space, under a 25-year restoration lease agreement with Indiana County.  The Corporation entered into the lease agreement in 1973 and renewed the agreement in 1998 for an additional 25 years.  In order to support future expansion needs and centralization of various functional areas, the Corporation owns two additional structures in Indiana, Pennsylvania, in close proximity to the Corporation's principal office.  The Corporation also leases additional office space in Indiana, Pennsylvania.  FCB has 91 banking facilities of which 25 are leased and 66 are owned.  Management presently expects that such facilities will be adequate to meet the anticipated needs of the Corporation and its subsidiaries for the immediate future.


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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 3.  Legal Proceedings

There are no material proceedings to which the Corporation or its subsidiaries are a party, or of which their property is the subject, except proceedings which arise in the normal course of business and, in the opinion of management, will not have a material adverse effect on the consolidated operations or financial position of the Corporation and its subsidiaries.

ITEM 4.  Submission of Matters to Vote of Security Holders

There were no matters submitted to vote by security holders in the fourth quarter of 2003.

Executive Officers of the Registrant

The table below lists the current executive officers of the Corporation:
Name	Age	Positions Held During the Past Five Years
E. James Trimarchi	81	Chairman of the Board of the Corporation since 1990; Chairman of the Board of FCB, FCTC, FCSC, FCIA and FCFA; Director of CTCLIC and FCPRI
Joseph E. O'Dell	58	President and Chief Executive Officer of the Corporation since 1995; Director of the Corporation, FCB, FCTC, FCFA and FCIA; Vice Chairman of the Board of FCSC and FCPRI
Johnston A. Glass	54	Vice Chairman of the Corporation since 2000; President and Chief Executive Officer of FCB; Director of FCB, FCTC, FCFA, FCSC, FCIA and FCPRI
Gerard M. Thomchick	48	Senior Executive Vice President and Chief Operating Officer of the Corporation since 1995; President, Chief Executive Officer, Director and Investment Committee Member of CTCLIC; President, Chief Executive Officer and Director of FCPRI; Director of FCB, FCTC, FCIA and FCFA; Director, Chairman and President of FraMal Holdings Corporation; Administrative Trustee of First Commonwealth Capital Trust I and First Commonwealth Capital Trust II
John J. Dolan	47	Executive Vice President and Chief Financial Officer of the Corporation since 1999; Chief Financial Officer of FCB, FCSC and FCPRI; Comptroller and Chief Financial Officer of CTCLIC; Treasurer and Assistant Secretary of FCTC; Treasurer of FCIA and FraMal Holdings Corporation; Vice President and Chief Financial Officer of FCFA; Administrative Trustee of First Commonwealth Capital Trust I and First Commonwealth Capital Trust II
David R. Tomb, Jr.	72	Senior Vice President, Secretary and Treasurer of the Corporation since1995; Secretary of FCB, FCIA, FCTC, FCPRI, FCFA and FCSC; Director of FCFC, FCB, FCSC, FCTC, FCPRI, FCIA, FCFA and CTCLIC
Thaddeus J. Clements	47	Senior Vice President of the Corporation since 2000; Senior Vice President, Human Resources of FCPRI

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Executive Officers of the Registrant (Continued)

Name		Age	Positions Held During the Past Five Years
William R. Jarrett		69	Senior Vice President, Risk Management of the Corporation since 1994
Sue A. McMurdy		47	Senior Vice President and Chief Information Officer of the Corporation since 2000; President, Chief Executive Officer and Director of FCSC; Director of FCPRI; former Executive Vice President, Technical Services of FCSC
R. John Previte		54	Senior Vice President, Investments of the Corporation since 1992; Investment Officer of FCB; Senior Vice President of FCPRI; Vice President and Investment Officer of FraMal Holdings Corporation; Administrative Trustee of First Commonwealth Capital Trust I and First Commonwealth Capital Trust II
	Each of the officers identified above has held the position indicated above or other executive positions with the same entity (or a subsidiary thereof) for at least the past five years except where noted.
	Executive officers of the Corporation serve at the pleasure of the Board of Directors of the Corporation and for a term of office extending through the election and qualification of their successors.

 
PART II

ITEM 5.  Market for Registrant's Common Stock and Related Security Holder
         Matters

First Commonwealth Financial Corporation (the "Corporation") is listed on the New York Stock Exchange under the symbol "FCF."  The approximate number of holders of record of the Corporation's common stock is 15,500.  The table below sets forth the high and low sales prices per share and cash dividends declared per share for common stock of the Corporation.

Period	High Sale	Low Sale	Cash Dividends Per Share
2003
First Quarter	$12.55	$11.50	$0.155
Second Quarter	$13.30	$11.57	$0.155
Third Quarter	$14.00	$12.60	$0.155
Fourth Quarter	$14.98	$13.15	$0.160
Period	High Sale	Low Sale	Cash Dividends Per Share
2002
First Quarter	$14.00	$11.51	$0.150
Second Quarter	$14.12	$12.53	$0.150
Third Quarter	$13.37	$11.62	$0.150
Fourth Quarter	$12.35	$10.84	$0.155

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 6.  Selected Financial Data (Dollar Amounts in Thousands,
         except per share data)

The following selected financial data is not covered by the auditor's report and should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations, which follows, and with the consolidated financial statements and related notes.  Financial statement amounts for prior periods have been reclassified to conform to the presentation format used in 2003.  The reclassifications had no effect on the Corporation's financial condition or results of operations.

	Years Ended December 31,
		2003		2002		2001		2000		1999
Interest income	$	243,773	$	275,568	$	308,891	$	311,882	$	296,089
Interest expense		100,241		122,673		167,170		174,539		152,653
Net interest income		143,532		152,895		141,721		137,343		143,436
Provision for credit losses		12,770		12,223		11,495		10,030		9,450
Net interest income after     provision for credit losses		130,762		140,672		130,226		127,313		133,986
Securities gains		5,851		642		3,329		1,745		565
Other operating income		42,593		37,453		37,776		31,938		33,660
Litigation settlement		(610)		8,000		-0-		-0-		-0-
Restructuring charges		-0-		6,140		-0-		-0-		-0-
Other operating expenses		113,265		112,190		105,888		99,461		95,569
Income before taxes		66,551		52,437		65,443		61,535		72,642
Applicable income taxes		13,251		8,911		15,254		14,289		19,612
Net income	$	53,300	$	43,526	$	50,189	$	47,246	$	53,030
Per Share Data
Net income	$	0.90	$	0.75	$	0.87	$	0.82	$	0.88
Dividends declared	$	0.625	$	0.605	$	0.585	$	0.565	$	0.515
Average shares outstanding	59,002,277		58,409,614		57,885,478		57,558,929		60,333,092
Per Share Data Assuming Dilution
Net income	$	0.90	$	0.74	$	0.86	$	0.82	$	0.88
Dividends declared	$	0.625	$	0.605	$	0.585	$	0.565	$	0.515
Average shares outstanding	59,387,055		58,742,018		58,118,057		57,618,671		60,569,322
At End of Period
Total assets	$	5,189,195	$	4,524,743	$	4,583,530	$	4,372,312	$	4,340,846
Investment securities		2,073,430		1,680,609		1,762,408		1,636,337		1,592,389
Loans and leases, net of     unearned income		2,824,882		2,608,634		2,567,934		2,490,827		2,500,059
Allowance for credit losses		37,385		34,496		34,157		33,601		33,539
Deposits		3,288,275		3,044,124		3,093,150		3,064,146		2,948,829
Company obligated mandatorily     redeemable capital securities     of subsidiary trust		-0-		35,000		35,000		35,000		35,000
Subordinated debentures		75,304		-0-		-0-		-0-		-0-
Other long-term debt		718,668		544,934		629,220		621,855		603,355
Shareholders' equity		430,946		401,390		370,066		334,156		286,683
Key Ratios
Return on average assets		1.12%		0.96%		1.11%		1.10%		1.25%
Return on average equity		12.95%		11.09%		13.85%		15.65%		15.44%
Net loans to deposits ratio		84.77%		84.56%		81.92%		80.19%		83.64%
Dividends per share as a percent     of net income per share		69.44%		80.67%		67.24%		68.90%		58.52%
Average equity to average assets     ratio		8.68%		8.64%		8.01%		7.00%		8.10%

13

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Introduction

This discussion and the related financial data are presented to assist in the understanding and evaluation of the consolidated financial condition and the results of operations of First Commonwealth Financial Corporation including its subsidiaries (the "Corporation") for the years ended December 31, 2003, 2002 and 2001 and are intended to supplement, and should be read in conjunction with, the consolidated financial statements and related footnotes.

Sections of this financial review, as well as the notes to the consolidated financial statements, contain forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995), which reflect management's beliefs and expectations based on information currently available and may contain the words "expect," "estimate," "project," "anticipate," "should," "intend," "probability," "risk," "target," "objective," and similar expressions or variations on such expressions.  These forward-looking statements are inherently subject to significant risks and uncertainties, including but not limited to:  changes in general economic and financial market conditions, the Corporation's ability to effectively carry out its business plans, changes in regulatory or legislative requirements, changes in competitive conditions and continuing consolidation of the financial services industry.  Although management believes the expectations reflected in such forward-looking statements are reasonable, actual results could differ materially.  Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof.  The Corporation undertakes no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances that arise after the date hereof.

Effective December 5, 2003, the Corporation acquired all of the outstanding shares of Pittsburgh Financial Corporation ("PFC").  In addition, the Corporation acquired all of the outstanding shares of Strategic Capital Concepts, Inc. ("SCC") and Strategic Financial Advisors, Inc. ("SFA"), effective March 1, 2002.  As required under the purchase method of accounting, the results of PFC, SCC and SFA have been included in the Corporation's financial statements since their respective acquisition dates.  In October 2002, SFA was merged into SCC and the name was changed to First Commonwealth Financial Advisors, Inc.

Financial statement amounts in prior periods have been reclassified to conform to the presentation format used in 2003.  The reclassifications had no effect on the Corporation's financial condition or results of operations.










14

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Critical Accounting Policies and Significant Estimates

The Corporation considers accounting policies and estimates to be critical to reported financial results if (1) the estimate requires management to make assumptions about matters that are highly uncertain and (2) the different estimates that management reasonably could have used for the accounting estimate in the current period or the changes in the accounting estimates from period to period could have a material impact on the Corporation's financial condition or results of operations.  Accounting policies related to the allowance for credit losses are considered to be critical because they are highly dependent on subjective or complex judgments, assumptions and estimates by management. 

The allowance for credit losses is a reserve established through a provision for credit losses charged to expense, which represents management's best estimate of probable losses that are inherent in the existing loan portfolio as of the balance sheet date.  The allowance includes amounts calculated in accordance with FASB Statement No. 114 "Accounting by Creditors for Impairment of a Loan" as amended by FASB Statement No. 118, and amounts determined in accordance with FASB Statement No. 5 "Accounting for Contingencies."

The Corporation's methodology for assessing the appropriateness of the allowance for credit losses consists of several key elements including a specific allowance for primary watch list classified loans, a formula allowance based on historical trends and an allowance for special circumstances.  These key elements are described in detail in the "Statement of Accounting Policies" in NOTE 1 to the "Consolidated Financial Statements."  The Corporation also maintains an unallocated allowance to cover any factors or conditions that may cause a credit loss but are not specifically identifiable and to account for imprecision.  These factors include (1) delays in obtaining information, including unfavorable information about a borrower's financial condition and (2) changes in the composition of the loan portfolio that may reduce the correlation between historical loss and delinquency statistics used to establish allocation estimates and credit losses inherent to the current portfolio.

Results of Operations

Net income was $53.3 million in 2003, an increase of $9.8 million from the 2002 results of $43.5 million.  This compared to $50.2 million that was registered in 2001.

The change in net income for the 2003 period reflected an increase in security gains compared to the corresponding period of 2002 and a gain on the sale of two branches in the 2003 period.  In addition, the effects of restructuring costs and a litigation settlement negatively impacted net income for 2002.  The restructuring charges consisted principally of severance amounts paid to employees as part of the plan to consolidate the





15

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)
multiple bank charters and develop the First Commonwealth brand and identity for all of the financial services subsidiaries.  Payments to retiring directors as part of the realignment for the Corporation's new vision on corporate governance were also included in restructuring charges.  The litigation settlement related to a lender liability action filed in 1994 against one of the Corporation's subsidiary banks and followed an adverse pre-trial judgment by the trial judge on procedural grounds.  A partial recovery from insurance for the claim related to the litigation settlement was received in 2003.   

In addition to the restructuring and litigation expenses that were incurred during 2002, the decrease in net income from the 2001 period to the 2002 period included a decrease in security gains. 

Diluted earnings per share was $0.90 for 2003 compared to $0.74 and $0.86 for 2002 and 2001, respectively.  Return on average assets was 1.12% and return on equity was 12.95% during 2003 compared to 0.96% and 11.09%, respectively for 2002 and 1.11% and 13.85%, respectively for 2001.

The following is an analysis of the impact of changes in net income on diluted earnings per share:

		2003 vs. 2002		2002 vs. 2001
Net income per share, prior year	$	0.74	$	0.86
Increase (decrease) from changes in:
Net interest income		(0.18)		0.16
Provision for credit losses		(0.01)		(0.01)
Security transactions		0.09		(0.05)
Insurance commissions		(0.01)		0.01
Income from bank owned life insurance		(0.01)		0.00
Service charges on deposits		0.02		0.00
Sale of branches		0.05		(0.01)
Other income		0.02		(0.01)
Salaries and employee benefits		(0.04)		(0.05)
Occupancy and equipment costs		(0.01)		(0.01)
Outside data processing expense		0.00		0.02
Goodwill amortization		0.00		0.02
Litigation settlement		0.15		(0.14)
Restructuring charges		0.10		(0.10)
Rebranding costs		0.03		(0.03)
Other operating expenses		0.03		(0.03)
Applicable income taxes		(0.07)		0.11
Net income per share	$	0.90	$	0.74

16

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Net Interest Income

Net interest income, the engine that powers revenue growth for the Corporation, is defined as the difference between income on earning assets and the cost of funds supporting those assets.  Net interest income declined to $143.5 million in 2003 compared to $152.9 million in 2002 and $141.7 million in 2001.  Both interest income and interest expense declined compared to 2002 levels primarily as a result of the dramatic decrease in interest rates that began in 2001 and continued through 2002 into 2003.  During this unparalleled period of low interest rates, the Corporation, as well as the financial services industry in general, has been challenged by margin compression, as the cost of funds has not declined in the same magnitude or at the same pace as asset yields.  The following is an analysis of the average balance sheets and net interest income for each of the three years in the period ended December 31, 2003:




































17

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations

          (Continued)

Results of Operations (Continued)

	Average Balance Sheets and Net Interest Analysis (Dollar Amounts in Thousands)
	2003						2002							2001
	Average Balance		Income/ Expense		Yield or Rate(a)		Average Balance		Income/ Expense		Yield or Rate(a)		Average Balance		Income/ Expense		Yield or Rate(a)
Assets
Interest-earning assets:
Time deposits with banks	$	1,289	$	13		1.03%	$	1,785	$	31		1.74%	$	1,842	$	70		3.81%
Tax free investment      securities		226,780		10,561		7.16		198,687		9,520		7.37		197,544		9,534		7.42
Taxable investment      securities		1,605,191		68,754		4.28		1,495,824		86,110		5.76		1,527,181		96,622		6.33
Federal funds sold		358		4		1.05		359		6		1.72		9,521		492		5.17
Loans, net of unearned      income (b)(c)		2,640,935		164,441		6.46		2,597,862		179,901		7.13		2,548,596		202,173		8.11
Total interest-earning       assets		4,474,553		243,773		5.71		4,294,517		275,568		6.66		4,284,684		308,891		7.43
Noninterest-earning assets:
Cash		66,614						69,735						72,806
Allowance for credit      losses		(36,172)						(34,813)						(34,078)
Other assets		233,040						211,302						198,051
Total noninterest-       earning assets		263,482						246,224						236,779
Total Assets	$	4,738,035					$	4,540,741					$	4,521,463

18

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations

          (Continued)

Results of Operations (Continued)

	Average Balance Sheets and Net Interest Analysis (Dollar Amounts in Thousands)
	2003						2002						2001
	Average Balance		Income/ Expense		Yield or Rate(a)		Average Balance		Income/ Expense		Yield or Rate(a)		Average Balance		Income/ Expense		Yield or Rate(a)
Liabilities and   Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand      deposits (d)	$	457,327	$	1,699		0.37%	$	416,184	$	3,410		0.82%	$	388,495	$	7,039		1.81%
Savings deposits (d)		792,755		7,028		0.89		727,996		9,375		1.29		684,298		16,061		2.35
Time deposits		1,524,974		51,373		3.37		1,592,585		65,787		4.13		1,728,056		95,065		5.50
Short-term borrowings		554,133		6,755		1.22		339,908		6,029		1.77		300,173		11,227		3.74
Long-term debt		594,383		33,386		5.62		670,258		38,072		5.68		663,063		37,778		5.70
Total interest-bearing       liabilities		3,923,572		100,241		2.55		3,746,931		122,673		3.27		3,764,085		167,170		4.44
Noninterest-bearing
liabilities and capital:
Noninterest-bearing      demand deposits (d)		380,772						380,878						368,983
Other liabilities		22,241						20,493						26,008
Shareholders' equity		411,450						392,439						362,387
Total noninterest-       bearing funding sources		814,463						793,810						757,378
Total Liabilities          and Shareholders'          Equity	$	4,738,035					$	4,540,741					$	4,521,463
Net Interest Income and   Net Yield on   Interest-Earning Assets			$	143,532		3.47%			$	152,895		3.80%			$	141,721		3.53%

(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.
(c)	Loan income includes net loan fees.
(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.

19

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)
Net Interest Income (Continued)

Earning assets yields, on a tax-equivalent basis, declined 95 basis points (0.95%) during 2003 to 5.71% from 6.66% registered in 2002, after decreasing from 7.43% in 2001.  The cost of funds for 2003 dropped 72 basis points (0.72%) below 2002 costs of 3.27%, after decreasing 117 basis points (1.17%) from 2001 costs of 4.44%.  Average earning assets were $4,474.6 million and average interest-bearing liabilities were $3,923.6 million for 2003, compared to $4,294.5 million and $3,746.9 million, respectively in 2002.  2002 averages were basically flat when compared to 2001 averages in both components.

Interest and fees on loans declined $15.5 million for 2003 compared to 2002 after declining $22.3 million for 2002 compared to 2001 levels.  The decreases are primarily the result of declining yields in a lower interest rate environment.  Tax-equivalent loan yields fell 67 basis points (0.67%) during 2003 to 6.46% from 7.13% after a decline of 98 basis points (0.98%) during 2002 from the 2001 levels.  Installment loan yields fell 92 basis points (0.92%) and the yields on home equity lines of credit declined 81 basis points (0.81%) compared to the prior year.

The increase in average loan volumes was not enough to offset the reduced interest income caused by declining yields.  During 2003, the Corporation took advantage of the lower interest rate cycle and continued to change the mix of the loan portfolio.  Average mortgage loans declined during 2003 as consumers refinanced their loans at near record levels.  The Corporation continued to offer competitive mortgage loans but generally sold them immediately after origination along with the related servicing rights.  The Corporation has recently started to retain fixed rate mortgages with maturities of 15 years or less as well as adjustable rate mortgages.  Average commercial and municipal loans offset the decline in 1-4 family mortgage loans and grew $142.9 million, primarily in shorter term and variable rate lending.  In addition, 2003 included increases in average installment loans of $41.4 million over 2002 levels.  The Corporation has continued to capitalize on lending opportunities with small to mid-sized commercial borrowers, including loans generated through its preferred Small Business Administration ("SBA") lender status.  The Corporation has consistently been one of the top small business lenders in Pennsylvania.

Interest income on investments declined $16.3 million for 2003 compared to 2002 primarily due to interest rate decreases.  Interest rate decreases were also the primary cause of the decline of $10.5 million in interest income on investments in 2002 compared to 2001 levels.  Yields on investments for 2003 continued to decline, falling to 4.64% compared to 5.95% for 2002 and 6.45% for 2001.  As with the loan category, the increase in average investment security volumes was not enough to offset the reduced interest income caused by declining yields.  All categories of interest income on investments were negatively impacted by interest rate changes with the largest decline being registered in the U.S. government agency category, declining $20.4 million due to interest rates declining 162 basis points (1.62%) for 2003 compared to 2002.  This decline was partially offset by an increase of $10.4 million in interest income on U.S.

20

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)Net Interest Income (Continued)

government agency securities as a result of average volume increases from 2003 to 2002.  Prepayment speeds of mortgage backed securities ("MBS") continued to accelerate in 2003 as interest rates continued to decline.  Interest rate changes have a direct impact on prepayment speeds.  As interest rates increase, prepayments tend to decline and average lives of MBS increase.  As interest rates decrease, prepayment speeds tend to increase and average lives of MBS decline, which accelerates the amount of premium amortization that is realized, further reducing the yields in current periods.  Using computer simulation modeling, the Corporation tests the average life and yield volatility of all MBS under various interest rate scenarios on a continuing basis to insure that volatility falls within acceptable limits.  The Corporation holds no "high risk" securities nor does the Corporation own any securities of a single issuer exceeding 10% of shareholders' equity other than U.S. government and agency securities.Interest on deposits dropped $18.5 million for 2003 compared to 2002 primarily as a result of decreases due to interest rates of $16.9 million.  The Corporation also registered decreases in interest expense of $1.6 million due to declines in average volumes of deposits in 2003 compared to 2002. The rate on savings deposits fell 40 basis points (0.40%) resulting in a decrease to interest expense of $3.2 million for 2003 compared to 2002, while the rate on time deposits for 2003 also declined, down 76 basis points (0.76%), compared to 2002 resulting in a decrease to interest expense of $11.6 million.  The deposit mix changed in 2003 as clients registered a preference for savings products, which jumped $64.8 million or 8.9%, while time deposits dropped $67.6 million or 4.2% due to continued economic uncertainties.  Average interest-bearing demand deposit balances for 2003 also advanced, up $41.1 million over 2002 balances.  During its management of deposit levels and mix, the Corporation continues to evaluate the cost of time deposits compared to alternative funding sources as it balances its goals of providing clients with the competitive rates they are looking for while also minimizing the Corporation's cost of funds.
Interest expense on short-term borrowings rose $726 thousand during 2003 primarily as a result of volume increases of $3.8 million which were partially offset by rate decreases of $3.1 million.  Average short-term borrowings rose by $214.2 million for 2003 compared to 2002 while the cost of short-term borrowings fell by 55 basis points (0.55%) compared to the prior year.  All categories of short-term borrowing costs declined from year-to-year.  The increase in short-term borrowings is due in part to $100 million of long-term debt that matured during the fourth quarter of 2002 and was replaced with short-term borrowings.  In addition, the increase in short-term borrowings can be attributed to an ALCO strategy implemented to mitigate the risk of further declines in net interest income resulting from a low or declining interest rate environment.  The increase in short-term borrowings funded the purchase of U.S. government agency securities maturing in approximately 3.5 years.



21

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Net Interest Income (Continued)

Interest expense on long-term debt declined $4.7 million for 2003 compared to the 2002 period as decreases due to volume of $4.3 million were further reduced by decreases due to rate of $376 thousand.  Average long-term debt for 2003 decreased by $75.9 million compared to 2002.  This was due in part to the $100 million of long-term debt that matured during the fourth quarter of 2002 that was replaced by short-term borrowings.  Long-term debt includes additional subordinated debentures in the amount of $30.9 million, which were issued during 2003, bearing an adjustable interest rate based upon the three-month LIBOR and maturing in 30 years.  The proceeds will be used by the Corporation to partially fund the pending acquisition of GA Financial, Inc. ("GAF").  Refer to NOTE 17 for further discussion of subordinated debentures that are included in long-term debt.

Net interest margin (net interest income, on a tax-equivalent basis as a percentage of average earning assets) declined to 3.47% for 2003, a decrease of 33 basis points (0.33%) compared to 2002.  The year-to-year decrease in the margin was due to asset yields declining more quickly than the cost of funds as interest rates fell to historic lows.  Continued pressure on net interest income is anticipated by the Corporation, despite active management of interest rate risk.  The Corporation's use of computer simulation to manage interest rate risk is described in the "Interest Sensitivity" section of this discussion.

The following table shows the effect of changes in volumes and rates on interest income and interest expense:

	Analysis of Year-to-Year Changes in Net Interest Income (Dollar Amounts in Thousands)
	2003 Change from 2002						2002 Change from 2001
	Total Change		Change Due to Volume		Change Due to Rate		Total Change		Change Due to Volume		Change Due to Rate
Interest-earning assets:
Time deposits with banks	$	(18)	$	(9)	$	(9)	$	(39)	$	(2)	$	(37)
Securities		(16,315)		8,367		(24,682)		(10,526)		(1,950)		(8,576)
Federal funds sold		(2)		-0-		(2)		(486)		(473)		(13)
Loans		(15,460)		3,070		(18,530)		(22,272)		3,995		(26,267)
Total interest income		(31,795)		11,428		(43,223)		(33,323)		1,570		(34,893)
Interest-bearing  liabilities:
Deposits		(18,472)		(1,622)		(16,850)		(39,593)		(5,925)		(33,668)
Short-term borrowings		726		3,799		(3,073)		(5,198)		1,486		(6,684)
Long-term debt		(4,686)		(4,310)		(376)		294		410		(116)
Total interest expense		(22,432)		(2,133)		(20,299)		(44,497)		(4,029)		(40,468)
Net interest income	$	(9,363)	$	13,561	$	(22,924)	$	11,174	$	5,599	$	5,575

Changes in interest income or expense not arising solely as a result of volume or rate variances are allocated to rate variances due to interest sensitivity of consolidated assets and liabilities.




22

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Provision for Credit Losses

The provision for credit losses is an amount added to the allowance against which credit losses are charged.  The amount of the provision is determined by management based upon its assessment of the size and quality of the loan portfolio and the adequacy of the allowance in relation to the risks inherent within the loan portfolio.  The provision for credit losses was $12.8 million in 2003 compared to $12.2 million in 2002 and $11.5 million in 2001.  The allowance for credit losses was $37.4 million at December 31, 2003, which represents a ratio of 1.42% of average loans outstanding, slightly up from the 1.33% reported at December 31, 2002. 

Net charge-offs for 2003 rose $1.1 million over 2002 levels.  The most significant components of this year-to-year change were increases in net charge-offs in the following categories:  commercial loans not secured by real estate (up $579 thousand), loans secured by 1-4 family real estate (up $1.1 million) and construction loans (up $381 thousand).  These increases in net charge-offs were partially offset by decreases in commercial real estate loans of $204 thousand, loans to individuals of $683 thousand and lease financing receivables of $103 thousand.  Net charge-offs as a percent of average loans outstanding at December 31, 2003 were 0.49% compared to 0.46% and 0.43% at December 31, 2002 and 2001, respectively.  For an analysis of credit quality, see the "Credit Review" section of this discussion.




























23

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

The following table presents an analysis of the consolidated allowance for credit losses for the five years ended December 31, 2003 (Dollar Amounts in Thousands):

	Summary of Loan Loss Experience
	2003		2002		2001		2000		1999
Loans outstanding at end of year	$	2,824,882	$	2,608,634	$	2,567,934	$	2,490,827	$	2,500,059
Average loans outstanding	$	2,640,935	$	2,597,862	$	2,548,596	$	2,503,036	$	2,408,450
Allowance for credit losses:
Balance, beginning of year	$	34,496	$	34,157	$	33,601	$	33,539	$	32,304
Addition as a result of acquisition		3,109		-0-		-0-		-0-		-0-
Loans charged off:
Commercial, financial and     agricultural		6,424		6,085		3,297		4,335		1,821
Loans to individuals		3,288		4,040		4,199		5,521		6,126
Real estate-construction		384		3		-0-		-0-		-0-
Real estate-commercial		1,111		1,315		2,300		130		427
Real estate-residential		3,172		2,065		1,818		874		1,035
Lease financing receivables		316		424		606		407		187
Total loans charged off		14,695		13,932		12,220		11,267		9,596
Recoveries of loans previously   charged off:
Commercial, financial and     agricultural		1,047		1,287		456		406		290
Loans to individuals		641		710		757		826		1,057
Real estate-construction		-0-		-0-		-0-		-0-		-0-
Real estate-commercial		-0-		-0-		-0-		-0-		-0-
Real estate-residential		17		46		49		42		33
Lease financing receivables		-0-		5		19		25		1
Total recoveries		1,705		2,048		1,281		1,299		1,381
Net loans charged off		12,990		11,884		10,939		9,968		8,215
Provision charged to expense		12,770		12,223		11,495		10,030		9,450
Balance, end of year	$	37,385	$	34,496	$	34,157	$	33,601	$	33,539
Ratios:
Net charge-offs as a percentage    of average loans outstanding		0.49%		0.46%		0.43%		0.40%		0.34%
Allowance for credit losses as    a percentage of average    loans outstanding		1.42%		1.33%		1.34%		1.34%		1.39%

24

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Noninterest Income

Net securities gains increased $5.2 million during 2003 to $5.9 million from the $642 thousand reported in 2002 and compared to $3.3 million in 2001.  The securities gains during the 2003 period resulted primarily from the sales of Pennsylvania bank stocks with book values of $7.6 million and fixed rate corporate bonds classified as securities "available for sale" with book values of $35 million.  The corporate bonds sold during 2003 had an average remaining life of one year, and the proceeds were reinvested in adjustable rate trust preferred securities with maturities of 30 years and mortgage backed securities with an average life of 3.6 years.  This reinvestment strategy was initiated to partially mitigate the Corporation's exposure to low and declining interest rates.  The securities gains during 2002 resulted primarily from the sales of Pennsylvania bank stocks, U.S. Treasury securities and fixed rate corporate bonds classified as securities "available for sale" with book values of $1.1 million, $1.5 million and $3.0 million, respectively.  The securities gains during 2001 resulted primarily from the sales of fixed rate corporate bonds classified as "available for sale" and Pennsylvania bank stocks with book values of $37.4 million and $12.7 million, respectively.

Trust income of $5.1 million for 2003 was relatively flat compared to 2002 and 2001 where the reported amount was $5.0 million for both years.  Although fee revenue continues to be negatively impacted due to low market values, the market value of the assets managed has started to rebound during the fourth quarter of 2003.  The enhanced referral programs and integrated growth plans for financial affiliates continue to help this trend.  The Corporation's continued success in building relationships with commercial clients provides fee based affiliates with additional sales opportunities through the Total Solutions Financial Management ("TSFM") process.  This strategy combines products, services and professional staff from the Corporation's trust, insurance, financial advisory and banking affiliates and partners them in providing comprehensive financial services offerings.

Service charges on deposits are the most significant component of noninterest income and increased $1.5 million for 2003 compared to 2002.  Increases in nonsufficient funds fees ("NSF") of $2.1 million helped to pace the year-to-year rise.  NSF charges were partially offset by decreases in account maintenance fees on deposit accounts of $424 thousand compared to 2002 levels.  Standardization of service fee routines accomplished during conversion of the Corporation's deposit system during 2001 and added emphasis on collection of fees had positive effects on fee revenue for 2003 and 2002.  Management strives to implement reasonable fees for services and closely monitors collection of those fees.

The 2003 period included a $3.0 million gain which occurred when First Commonwealth Bank, a wholly-owned subsidiary of the registrant, sold two of its branch offices.  The sale included $29.2 million in deposit liabilities and $4.4 million in loans associated with the two offices.  The 2001 period included a $777 thousand gain on the sale of one branch.  The sale included $10.4 million in deposit liabilities.

25

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Noninterest Income (Continued)

Insurance commissions decreased $326 thousand for 2003 after increasing $439 thousand for 2002 from 2001 commissions of $3.2 million.  Decreases in 2003 were primarily due to decreases in annuity commissions.  Insurance commissions for 2002 included increases in personal lines, annuities and employee benefit plans compared to 2001.  As part of the previously discussed TSFM process, the Corporation's insurance subsidiary will continue to have expanded opportunities to meet the insurance needs of commercial clients.  In addition, the Corporation has developed "FOCUS", a financial planning tool designed to help clients prioritize and assess their financial needs.  The "FOCUS" concept results in a systematic approach covering a wide range of personal financial goals including appropriate insurance coverage.  This category should also be favorably impacted by the integration of First Commonwealth Financial Advisors into these advisory models.

Income from bank owned life insurance was $4.3 million for 2003 compared to $4.7 million for 2002 and compared to $4.6 million for 2001.  The 2002 period included an additional investment in bank owned life insurance of $5.0 million and the 2001 period included an additional investment of $15.0 million. 

Other income for 2003 was $10.2 million, representing a $1.2 million increase compared to 2002, which followed a $596 thousand decrease from the $9.6 million achieved in 2001.  The increase in other income for 2003 over 2002 levels includes increases in STAR interchange fees and income from the increase in cash surrender value of split dollar life insurance of $629 thousand and $248 thousand, respectively.  Other income for 2002 included an increase in interchange income of $164 thousand.  The 2001 period included a gain related to the sale of a block of 30 year mortgages as well as a gain from the termination of a subsidiary's defined benefit pension plan.   

Noninterest Expense

Total other expenses for 2003 decreased $13.6 million to $112.7 million compared to $126.3 million in 2002.  The 2002 amount represented an increase of $20.4 million compared to $105.9 million reported in 2001.  The decrease in other expenses for 2003 and the increase in other expenses for 2002 were primarily the result of nonrecurring charges that were incurred during 2002 for the previously described litigation settlement and corporate restructuring of $8.0 million and $6.1 million, respectively.  These restructuring charges resulted from the merger of the Corporation's banking subsidiaries, Southwest Bank and First Commonwealth Bank, which occurred in October 2002.  Because of this merger, there was a consolidation of support functions with some staff positions being eliminated.  The personnel within the branches and relationship managers in

26

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Noninterest Expense (Continued)

corporate services continued to serve in the same capacity in order to ensure a smooth transition.  Also, related to the merger, the structures of all of the Boards of Directors and Board committees for the Corporation were realigned.  As a result of these activities, restructuring charges of $6.1 million are reported on the income statement for the 2002 period.  Ongoing savings from the restructuring were reflected in the 2003 period.  Other charges incurred during 2002 as a part of the restructuring, related principally to writing off obsolete signs and supplies due to the name change under one charter and amounted to $420 thousand.  Also impacting other operating expense for the period were $1.8 million of costs incurred principally in the fourth quarter of 2002 associated with development of the First Commonwealth brand.  Total noninterest expense as a percent of average assets was 2.38% for 2003 compared to 2.76% for 2002 and 2.32% for 2001. 

Employee costs were $61.1 million in 2003, representing 1.29% of average assets compared to $58.1 million and 1.28% of average assets for 2002.  Employee costs for 2001 were $54.5 million and 1.21% of average assets.  Salary costs for the 2003 period increased $1.6 million compared to 2002, while salary costs for the 2002 period increased $2.2 million compared to 2001 levels.  Employee benefit costs rose $1.4 million for 2003 compared to 2002 and also rose $1.4 million for 2002 compared to 2001.  Hospitalization costs continue to reflect the largest increases in employee benefit costs with increases of $1.1 million or 23.1% in 2003 and $943 thousand or 24.7% in 2002.  The Corporation strives to provide quality employee benefits while effectively managing costs.

Net occupancy expense increased $706 thousand during 2003 compared to expenses of $6.8 million during 2002 and $6.5 million for 2001.  The 2003 period included increases in building repairs and maintenance, net rental expense and utilities compared to 2002 costs.  Much of these increases were due to increased utility costs and snow removal expenses resulting from the harsh winter.  The 2003 period also included an increase in the amortization of the purchase accounting adjustments related to premises of $328 thousand over the 2002 period.  An adjustment of $291 thousand was taken during the 2003 period for the write-off of the remaining purchase accounting adjustment for three branch offices that were closed during 2003.  These branch offices were closed and their clients are served at nearby existing branch offices.  The Corporation continues to actively evaluate its branch delivery network to optimize client service in existing branch offices and to continue expansion into growth markets.  The execution of these initiatives may continue to impact occupancy and other expenses in future periods.  Increases in building insurance, building rental costs and building repairs and maintenance in 2002 were only partially offset by declines in most other building expense categories. 

27

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Noninterest Expense (Continued)
Furniture and equipment expenses increased $126 thousand to $10.1 million in 2003.  Increases were largely due to continued increases in depreciation expense.  Furniture and equipment expenses of $10.0 million for 2002 reflected increases of $920 thousand over 2001 levels resulting primarily from increases in depreciation on computer software and software maintenance offset in part by reduced equipment lease expense.  The 2002 period was also impacted by a full year of depreciation as well as maintenance charges on systems that were placed in service during the later part of 2001.  The systems were replacements of software that is utilized by the Corporation's data processing subsidiary to process loan and deposit accounts.  The new application software has enabled the Corporation's banking subsidiary to provide enhanced products and services, including internet banking.  Technology advances continue to drive the ability of financial services companies to provide expanded services through traditional channels as well as nontraditional and emerging delivery systems to meet the changing needs of our clients.

Outside data processing expense increased $396 thousand for the 2003 period to $2.5 million compared to $2.1 million for the 2002 period and $3.3 million for 2001.  This category was positively impacted in 2002 by the conversion of Southwest Bank from outsourced processing to that provided by a subsidiary of the Corporation.  This category will be unfavorably impacted by the acquisition of PFC until the systems, which are processed through an outsourced processing vendor, are converted to the systems that are provided by a subsidiary of the Corporation.  These conversions are scheduled to be completed by the end of the second quarter of 2004.  Outside data processing costs are managed by the Corporation's data processing subsidiary.  Its needs are evaluated based on technology, efficiency and cost considerations.

Other operating expenses decreased $3.4 million to $27.7 million for 2003.  Other operating expenses for 2002 increased $2.9 million compared to $28.2 million for 2001.  The 2003 period included decreases in other professional fees and services, advertising, expenses related to training and seminars, telephone and loss on the sale of other assets (primarily vehicles previously leased) in the amounts of $1.4 million, $637 thousand, $428 thousand, $420 thousand and $402 thousand, respectively, compared to 2002 costs.  Directors' fees for the 2003 period reflected decreases of $349 thousand resulting from the restructuring of the Corporation's Boards of Directors and committees during 2002. 

The 2002 period includes increased losses on sale of assets of $472 thousand, due primarily to the loss on sale of vehicles previously leased, compared to 2001.  Other professional fees in 2002 rose by $822 thousand over 2001 and included consulting fees related to implementation of the Corporation's "Balanced Scorecard" performance measurement system, enhancements to product and customer profitability systems, corporate restructuring and common branding and identity.  Consultants were also


28

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Results of Operations (Continued)

Noninterest Expense (Continued)

utilized to assist in the ongoing efforts to develop a world class sales culture and to generate new deposit dollars and relationships.  Corporate restructuring and movement towards a sales culture also impacted the decision to have employee benefit plans reviewed by outside specialists during 2002.  Advertising and promotion expenses rose a combined $2.3 million for the 2002 period due partially to expenditures related to the $1.8 million launch of the new corporate brand and identity.  This exciting campaign was designed to educate and build enthusiasm among current as well as potential clients and the communities we serve.  Also impacting these categories were expenses incurred in the successful marketing campaign for free checking products introduced during 2002.  These products are expected to have a favorable impact on deposit growth, interest expense and service charge revenue in future periods as well as providing potential add-on sales of other financial products and services. 

Income tax expense was $13.3 million during 2003 representing an increase of $4.4 million above the 2002 amount of $8.9 and compared to $15.3 million in 2001.  The Corporation's effective tax rate was 19.9% for 2003 compared to 17.0% for 2002 and 23.3% for 2001.  Although the 2003 effective tax rate was an increase over the 2002 rate, it was still favorable to the statutory tax rate and the 2001 effective rate.  The Corporation's 2003 effective tax rate continues to be favorably impacted by tax-free municipal income.  Pretax income in the 2002 period was reduced by the $8.0 million litigation settlement as well as the $6.1 million restructuring charges.  The decline in pretax income from the 2001 period allowed the effect of nontaxable income to have a greater impact on the effective tax rate in 2002 than in 2001. 

Aggregate Contractual Obligations and Off-Balance Sheet Arrangements

The following table summarizes the Corporation's contractual obligations to make future payments as of December 31, 2003.  Payments for borrowings do not include interest.  Payments related to operating leases are based on actual payments specified in the underlying contracts.

(Dollar Amounts in Thousands)

	Footnote Reference	1 Year or Less		After 1 But Within 3 Years		After 3 But Within 5 Years		After 5 Years		Total
Federal Home Loan Bank    advances	18	$	22,152	$	21,392	$	458,886	$	175,658	$	678,088
Repurchase agreements	18		-0-		-0-		20,000		-0-		20,000
Subordinated debentures	17		8,292		-0-		-0-		67,012		75,304
ESOP loan	18		1,477		1,136		-0-		-0-		2,613
Operating leases	14		2,093		3,856		3,146		5,584		14,679
Total contractual       obligations		$	34,014	$	26,384	$	482,032	$	248,254	$	790,684

29

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Aggregate Contractual Obligations and Off-Balance Sheet Arrangements
(Continued)

The preceding table excludes unamortized premiums and discounts on Federal Home Loan Bank advances because these premiums and discounts do not represent future cash obligations.  The preceding table also excludes the Corporation's cash obligations upon maturity of certificates of deposit whose maturities are described in NOTE 15 to the "Consolidated Financial Statements."  Subordinated debentures in the amount of $8,292 thousand previously issued by PFC and due in 2028 were called and subsequently paid in full in January 2004 and are included as due within 1 year above. 

The following table summarizes the Corporation's off-balance sheet commitments as of December 31, 2003.  Commitments to extend credit and standby letters of credit are presented at contractual amounts; however, since many of these commitments are expected to expire unused or only partially used, the total amounts of these commitments do not necessarily reflect future cash requirements.

(Dollar Amounts in Thousands)

	Footnote Reference		Amount
Commitments to extend credit	13	$	620,403
Standby letters of credit	13		28,836
Total lending-related commitments		$	649,239

Commitments to extend credit include unfunded loan commitments as well as the undrawn portions of revolving and closed-end lines of credit as of December 31, 2003.  The contractual provisions of these commitments normally include fixed expiration dates or termination clauses, specific interest rates and clauses indicating that funding is contingent upon borrowers maintaining stated credit standards at the time of loan funding. 

Standby letters of credit are written conditional commitments issued by the Corporation to guarantee the performance of a client to a third party.  In the event the client does not perform in accordance with the terms of the agreement with the third party, the Corporation would be required to fund the commitment.  The maximum potential amount of future payments the Corporation could be required to make is represented by the contractual amount of the commitment.  If the commitment is funded, the Corporation would be entitled to seek repayment from the client.  The Corporation's policies generally require that standby letter of credit arrangements contain security and debt convenants similar to those contained in loan agreements. 









30

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Liquidity

Liquidity is a measure of the Corporation's ability to efficiently meet normal cash flow requirements of both borrowers and depositors.  In the ordinary course of business, funds are generated from deposits (primary source) and the maturity or repayment of earning assets, such as securities and loans.  As an additional secondary source, short-term liquidity needs may be provided through the use of overnight Federal funds purchased, borrowings through the use of lines available for repurchase agreements and borrowings from the Federal Reserve Bank.  Additionally, the Corporation's banking subsidiary is a member of the Federal Home Loan Bank and may borrow under overnight and term borrowing arrangements.  The sale of earning assets may also provide an additional source of liquidity.  In addition to the previously described funding sources, the Corporation also has the ability to access the capital markets.

Liquidity risk stems from the possibility that the Corporation may not be able to meet current or future financial obligations, or the Corporation may become overly reliant on alternative funding sources.  The Corporation maintains a liquidity risk management policy to manage this risk.  This policy identifies the primary sources of liquidity, establishes procedures for monitoring and measuring liquidity and quantifies minimum liquidity requirements based on board approved limits.  The policy also includes a liquidity contingency plan to address funding needs to maintain liquidity under a variety of business conditions.  The Corporation's liquidity position is monitored by the Asset/Liability Management Committee ("ALCO").

The Corporation's long-term liquidity source is a large core deposit base and a strong capital position.  Core deposits are the most stable source of liquidity a bank can have due to the long-term relationship with a deposit customer.  Deposits increased $244.2 million in 2003 and included increases in savings and noninterest-bearing demand deposits, which were partially offset by decreases in time deposits.  Deposits in the amount of $190.4 million were acquired with the BankPittsburgh acquisition.  Noncore deposits, which are time deposits in denominations of $100 thousand or more, represented 12.1% of total deposits at December 31, 2003.  Noncore deposits decreased by $91.0 million in 2003 and $7.6 million in 2002 due in part to changes in public funds balances. 
















31

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Liquidity (Continued)

Although the Corporation's primary source of funds remains traditional deposits from within the communities served by its banking subsidiary, future sources of deposits utilized could include the use of brokered time deposits offered outside the Corporation's traditional market area.  Time deposits of $100 thousand or more at December 31, 2003, 2002 and 2001 had remaining maturities as follows:

	Maturity Distribution of Large Certificates of Deposit (Dollar Amounts in Thousands)
	2003			2002			2001
	Amount		Percent	Amount		Percent	Amount		Percent
Remaining Maturity:
3 months or less	$	77,603	19%	$	97,862	20%	$	133,017	27%
Over 3 months through    6 months		50,132	13		54,758	11		57,222	11
Over 6 months through    12 months		69,239	17		114,596	24		89,436	18
Over 12 months		201,742	51		222,486	45		217,643	44
Total	$	398,716	100%	$	489,702	100%	$	497,318	100%

Loans, net of unearned income and the allowance for credit losses, increased $213.4 million during 2003 as increases were noted in all categories with the exception of leases.  Most notable were increases in commercial loans secured by real estate of $108.6 million and increases in residential loans secured by real estate of $82.1 million compared to year-end 2002.  Net loans in the amount of $245.8 million were acquired with the BankPittsburgh acquisition.
























32

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Liquidity (Continued)

Below is a schedule of loans by classification for the five years ended December 31, 2003:

	Loans by Classification (Dollar Amounts in Thousands)
	2003			2002			2001			2000			1999
	Amount		%	Amount		%	Amount		%	Amount		%	Amount		%
Commercial, financial,   agricultural and other	$	655,740	23%	$	633,955	24%	$	529,300	21%	$	443,618	18%	$	417,300	16%
Real estate-construction		27,063	1		20,998	1		14,727	1		37,146	2		41,734	2
Real estate-commercial		771,861	27		663,220	26		638,576	25		560,066	22		495,789	20
Real estate-residential		821,159	29		739,018	28		849,787	33		932,915	37		980,506	39
Loans to individuals		521,481	19		505,139	19		473,515	18		450,154	18		502,465	20
Net leases		28,033	1		47,110	2		63,326	2		68,975	3		65,893	3
Gross loans and leases		2,825,337	100%		2,609,440	100%		2,569,231	100%		2,492,874	100%		2,503,687	100%
Unearned income		(455)			(806)			(1,297)			(2,047)			(3,628)
Total loans and leases    net of unearned income	$	2,824,882		$	2,608,634		$	2,567,934		$	2,490,827		$	2,500,059

An additional source of liquidity is marketable securities that the Corporation holds in its investment portfolio.  These securities are classified as "securities available for sale."  While the Corporation does not have specific intentions to sell these securities, they have been designated as "available for sale" because they may be sold for the purpose of obtaining future liquidity, for management of interest rate risk or as part of the implementation of tax management strategies.  As of December 31, 2003, securities available for sale had an amortized cost of $1,946 million and an approximate fair value of $1,969 million.  Gross unrealized gains were $32.9 million and gross unrealized losses were $9.6 million.










33

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Liquidity (Continued)

Based upon the Corporation's historical ability to fund liquidity needs from other sources, the current available for sale portfolio is deemed more than adequate, as the Corporation does not anticipate a need to liquidate the investments until maturity.  Below is a schedule of the contractual maturity distribution of securities held to maturity and securities available for sale at December 31, 2003:

	Maturity Distribution of Securities Held to Maturity (Dollar Amounts in Thousands)
	U.S. Government Agencies and Corporations		States and Political Subdivisions		Other Securities		Total Amortized Cost		Weighted Average Yield*
Within 1 year	$	10,003	$	4,035	$	8,990	$	23,028	6.78%
After 1 but within 5 years		2,686		13,329		405		16,420	7.04
After 5 but within 10 years		5,165		29,362		-0-		34,527	7.32
After 10 years		289		29,990		-0-		30,279	7.06
Total	$	18,143	$	76,716	$	9,395	$	104,254	7.08

	Maturity Distribution of Securities Available for Sale At Amortized Cost (Dollar Amounts in Thousands)
	U.S. Treasury, and other U.S. Government Agencies and Corporations		States and Political Subdivisions		Other Securities		Total Amortized Cost		Weighted Average Yield*
Within 1 year	$	31,317	$	1,468	$	21,055	$	53,840	3.81%
After 1 but within 5 years		280,450		7,010		41,052		328,512	2.84
After 5 but within 10 years		405,627		12,114		-0-		417,741	3.80
After 10 years		769,497		136,198		240,067		1,145,762	4.65
Total	$	1,486,891	$	156,790	$	302,174	$	1,945,855	4.14

* Yields are calculated on a tax-equivalent basis.

Interest Sensitivity

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, currency exchange rates or equity prices.  The Corporation's market risk is composed primarily of interest rate risk.  Interest rate risk results principally from timing differences in the repricing of assets and liabilities, changes in the relationship of rate indices and the potential exercise of freestanding or embedded options.

The objective of interest rate sensitivity management is to maintain an appropriate balance between the stable growth of income and the risks associated with maximizing income through interest sensitivity imbalances.  While no single number can accurately describe the impact of changes in interest rates on net interest income, interest rate sensitivity positions, or "gaps," when measured over a variety of time periods, can be informative.

34

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Interest Sensitivity (Continued)

An asset or liability is considered to be interest-sensitive if the rate it yields or bears is subject to change within a predetermined time period.  If interest-sensitive assets ("ISA") exceed interest-sensitive liabilities ("ISL") during a prescribed time period, a positive gap results.  Conversely, when ISL exceeds ISA during a time period, a negative gap results.

The cumulative gap at the 365-day repricing period was negative in the amount of $809 million or 15.59% of total assets at December 31, 2003.  A positive gap tends to indicate that earnings will be impacted favorably if interest rates rise during the period and negatively when interest rates fall during the time period.  A negative gap tends to indicate that earnings will be affected inversely to interest rate changes.  In other words, as interest rates fall, a negative gap should tend to produce a positive effect on earnings and when interest rates rise, a negative gap should tend to affect earnings negatively.

The primary components of ISA include adjustable rate loans and investments, loan repayments, investment maturities and money market investments.  The primary components of ISL include maturing certificates of deposit, money market deposits, savings deposits, NOW accounts and short-term borrowings.

The following table lists the amounts and ratios of assets and liabilities with rates or yields subject to change within the periods indicated as of December 31, 2003 and 2002 (Dollar Amounts in Thousands):

	2003
	0-90 Days		91-180 Days		181-365 Days		Cumulative 0-365 Days
Loans...........................	$	1,057,021	$	178,006	$	291,352	$	1,526,379
Investments.....................		241,163		116,979		189,610		547,752
Other interest-earning assets...		5,362		-0-		-0-		5,362
Total interest-sensitive assets		1,303,546		294,985		480,962		2,079,493
Certificates of deposit.........		325,957		242,706		249,361		818,024
Other deposits..................		1,413,069		-0-		-0-		1,413,069
Borrowings......................		634,878		1,407		21,290		657,575
Total interest-sensitive liabilities		2,373,904		244,113		270,651		2,888,668
Gap.........................	$	(1,070,358)	$	50,872	$	210,311	$	(809,175)
ISA/ISL.........................		0.55		1.21		1.78		0.72
Gap/Total assets................		20.63%		0.98%		4.05%		15.59%

35

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Interest Sensitivity (Continued)

	2002
	0-90 Days		91-180 Days		181-365 Days		Cumulative 0-365 Days
Loans...........................	$	962,398	$	157,172	$	295,273	$	1,414,843
Investments.....................		292,206		162,578		262,287		717,071
Other interest-earning assets...		1,973		-0-		-0-		1,973
Total interest-sensitive assets		1,256,577		319,750		557,560		2,133,887
Certificates of deposit.........		354,625		170,687		263,882		789,194
Other deposits..................		1,172,538		-0-		-0-		1,172,538
Borrowings......................		469,735		905		1,483		472,123
Total interest-sensitive liabilities		1,996,898		171,592		265,365		2,433,855
Gap.........................	$	(740,321)	$	148,158	$	292,195	$	(299,968)
ISA/ISL.........................		0.63		1.86		2.10		0.88
Gap/Total assets................		16.36%		3.27%		6.46%		6.63%

Although the periodic gap analysis provides management with a method of measuring current interest rate risk, it only measures rate sensitivity at a specific point in time, and as a result may not accurately predict the impact of changes in general levels of interest rates or net interest income.  This is exemplified as the gap analysis shows the Corporation's earnings to be negatively impacted by rising rates, but computer modeling indicates that rising rates would have a favorable impact on earnings.  Therefore, to more precisely measure the impact of interest rate changes on the Corporation's net interest income, management simulates the potential effects of changing interest rates through computer modeling.  The income simulation model used by the Corporation captures all assets, liabilities, and off-balance sheet financial instruments, accounting for significant variables that are believed to be affected by interest rates.  These variables include prepayment speeds on mortgage loans and mortgage backed securities, cash flows from loans, deposits and investments and balance sheet growth assumptions.  The model also captures embedded options, such as interest rate caps/floors or call options, and accounts for changes in rate relationships as various rate indices lead or lag changes in market rates.  The Corporation is then better able to implement strategies which would include an acceleration of a deposit rate reduction or lag in a deposit rate increase.  The repricing strategies for loans would be inversely related.

The Corporation's asset/liability management policy guidelines limit interest rate risk exposure for the succeeding twelve-month period.  Simulations are prepared under the base case where interest rates remain flat, and most likely case where interest rates are defined using projections of economic factors.  Additional simulations are produced estimating the impact on net interest income of a 200 basis point (2.00%) movement upward or downward which cannot result in more than a 5.0% decline in net interest income when compared to the base case.  The analysis at December 31, 2003, indicated that a 200 basis point (2.00%) increase in
interest rates would increase net interest income by 56 basis points (0.56%) above the base case scenario and a 200 basis point (2.00%) decrease


36

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Interest Sensitivity (Continued)

in interest rates would decrease net interest income by 671 basis points (6.71%) below the base case scenario over the next twelve months.  While the 200 basis points (2.00%) declining rate scenario currently exceeds the -5.00% policy limit by 171 basis points (1.71%), it is recognized by the Corporation that this declining rate scenario is unrealistic in the current rate environment with the Federal funds rate at only 1.00%.

The Corporation's "Asset/Liability Management Committee" ("ALCO") is responsible for the identification, assessment and management of interest rate risk exposure, liquidity, capital adequacy and investment portfolio position.  The primary objective of the ALCO process is to ensure that the Corporation's balance sheet structure maintains prudent levels of risk within the context of currently known and forecasted economic conditions and to establish strategies which provide the Corporation with appropriate compensation for the assumption of those risks.  The ALCO attempts to mitigate interest rate risk through the use of strategies such as asset sales, asset and liability pricing and matched maturity funding.  The ALCO strategies are established by the Corporation's senior management. 

The Corporation entered into an interest rate swap transaction during the third quarter of 2003.  The swap has a three-year maturity and involves hedging adjustable LIBOR based commercial loans with a receive-fixed and pay-floating interest rate swap of $25 million notional amount.  The purpose of the swap was to reduce the Corporation's exposure to further declines in interest rates.  The ALCO continues to evaluate the use of additional derivative instruments to protect against the risk of adverse price or interest rate movements on the values of certain assets and liabilities. 

Another strategy aimed at reducing the Corporation's exposure to falling interest rates was implemented during 2003.  U.S. government agency securities maturing in approximately 3.5 years were purchased with short-term borrowings.  The amount of this transaction averaged approximately $138 million for the year.

Final loan maturities and rate sensitivities of the loan portfolio excluding consumer installment and mortgage loans and before unearned income at December 31, 2003, were as follows (Dollar Amounts in Thousands):

	Within One Year		One to 5 Years		After 5 Years		Total
Commercial and industrial	$	207,848	$	110,732	$	85,942	$	404,522
Financial institutions		-0-		115		300		415
Real estate-construction		8,486		739		17,838		27,063
Real estate-commercial		76,495		144,509		550,857		771,861
Other		31,105		15,264		204,434		250,803
Totals	$	323,934	$	271,359	$	859,371	$	1,454,664
Loans at fixed interest rate				98,360		245,636
Loans at variable interest rates				172,999		613,735
Totals			$	271,359	$	859,371

37

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Credit Review

Maintaining a high quality loan portfolio is of great importance to the Corporation.  The Corporation manages the risk characteristics of the loan portfolio through the use of prudent lending policies and procedures and monitors risk through a periodic review process provided by internal auditors, regulatory authorities and our loan review staff.  These reviews include the analysis of credit quality, diversification of industry, compliance to policies and procedures and an analysis of current economic conditions.

In the management of its credit portfolio, the Corporation emphasizes the importance of the collectibility of loans and leases as well as asset and earnings diversification.  The Corporation immediately recognizes as a loss all credits judged to be uncollectible and has established an allowance for credit losses that may exist in the portfolio at a point in time, but have not been specifically identified.

The Corporation's written lending policy requires certain underwriting standards to be met prior to funding any loan, including requirements for credit analysis, collateral value coverage and documentation.  The principal factor used to determine potential borrowers' credit worthiness is business cash flows or consumer income available to service debt payments.  Secondary sources of repayment, including collateral and guarantees, are frequently obtained.

The lending policy provides limits for individual and bank committee lending authorities.  In addition to the bank loan approval process, requests for borrowing relationships which will exceed one million dollars must also be approved by the Corporation's Credit Committee.  This Committee consists of a minimum of three members of the Corporation's Board of Directors.  The Corporation has an additional level of approval for credit relationships between $500 thousand and $1.0 million.  This procedure requires approval of those credits by a committee consisting of senior lenders of the Corporation.

Commercial and industrial loans are generally granted to small and middle market customers for working capital, operations, expansion or asset acquisition purposes.  Operating cash flows of the business enterprise are identified as the principal source of repayment, with business assets held as collateral.  Collateral margins and loan terms are based upon the purpose and structure of the transaction as set forth in loan policy.

Commercial real estate loans are granted for the acquisition or improvement of real property.  Generally, commercial real estate loans do not exceed 75% of the appraised value of property pledged to secure the transaction.  Repayment of such loans is expected from the operations of the subject real estate and is carefully analyzed prior to approval.

Real estate construction loans are granted for the purposes of constructing improvements to real property, both commercial and residential.  On-site inspections are conducted by qualified individuals prior to periodic permanent project financing, which is generally committed prior to the commencement of construction financing.

38

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Credit Review (Continued)

Real estate loans secured by 1-4 family residential housing properties are granted subject to statutory limits in effect for the bank regarding the maximum percentage of appraised value of the mortgaged property.  Residential loan terms are normally established in compliance with secondary market requirements.  Residential mortgage portfolio interest rate risk is controlled by secondary market sales, variable interest rate loans and balloon maturities.

Loans to individuals represent financing extended to consumers for personal or household purposes, including automobile financing, education, home improvement and personal expenditures.  These loans are granted in the form of installment, credit card or revolving credit transactions.  Consumer credit worthiness is evaluated on the basis of ability to repay, stability of income sources and past credit history.

The Corporation maintains an allowance for credit losses at a level deemed sufficient to absorb losses which are inherent in the loan and lease portfolios at each balance sheet date.  Management reviews the adequacy of the allowance on a quarterly basis to ensure that the provision for credit losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is appropriate based on management's assessment of probable estimated losses.  The Corporation's methodology for assessing the appropriateness of the allowance for credit losses consists of several key elements.  These elements include a specific allowance for primary watch list classified loans, a formula allowance based on historical trends, an additional allowance for special circumstances and an unallocated allowance.

While the Corporation consistently applies the following comprehensive methodology and procedure described in NOTE 1 "Accounting Policies," allowance for credit loss methodologies incorporate management's current judgments about the credit quality of the loan portfolio as well as collection probabilities for problem credits.  Although management considers the allowance for credit losses to be adequate based on information currently available, additional allowance for credit loss provisions may be necessary due to changes in management estimates and assumptions about asset impairment, information about borrowers that indicate changes in the expected future cash flows or changes in economic conditions.  The allowance for credit losses and the provision for credit losses are significant elements of the Corporation's financial statements, therefore management periodically reviews the processes and procedures utilized in determining the allowance for credit losses to identify potential enhancements to these processes including development of additional management information systems to ensure that all relevant factors are appropriately considered in the allowance analysis.  In addition, the Corporation maintains a system of internal controls which are independently monitored and tested by internal audit and loan review staff to ensure that the loss estimation model is maintained in accordance with internal policies and procedures as well as generally accepted accounting principals.


39

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Credit Review (Continued)

Since all identified losses are immediately charged off, no portion of the allowance for credit losses is restricted to any individual credit or groups of credits, and the entire allowance is available to absorb any and all credit losses.  For analytical purposes, the following table sets forth an allocation of the allowance for credit losses at December 31 according to the categories indicated.  Management feels the unallocated portion of the reserve is necessary due to the uncertain economic and geo-political environment and its impact on a variety of sectors such as health care and lodging. During 2003, the unallocated allowance was reduced due to an additional allocation to fourteen commercial loans.  The increase in allocations to the commercial, industrial, financial, agricultural and real estate-commercial portfolios resulted from an increase in loan volumes in these categories and the BankPittsburgh acquisition within the metropolitan Pittsburgh market.

	Allocation of the Allowance for Credit Losses (Dollar Amounts in Thousands)
	2003		2002		2001		2000		1999
Commercial, industrial, financial,    agricultural and other	$	10,739	$	7,856	$	6,315	$	6,263	$	6,321
Real estate-construction		330		600		432		643		831
Real estate-commercial		11,361		7,201		9,808		9,064		7,675
Real estate-residential		4,910		5,294		7,379		10,211		9,928
Loans to individuals		4,614		3,035		3,845		4,938		5,131
Lease financing receivables		202		259		401		638		586
Unallocated		5,229		10,251		5,977		1,844		3,067
Total	$	37,385	$	34,496	$	34,157	$	33,601	$	33,539
Allowance as percentage of average total loans		1.42%		1.33%		1.34%		1.34%		1.39%

While the allowance for credit losses as a percentage of average total loans outstanding increased from 1.33% in 2002 to 1.42% in 2003, the allowance for credit losses as a percentage of actual loans outstanding remained at 1.32% for both periods.  The allowance as a percentage of average total loans outstanding for 2003 was impacted by the inclusion of BankPittsburgh loans since the acquisition.

Other than those described below, there are no material credits that management has serious doubts as to the borrower's ability to comply with the present loan repayment terms.  The following table identifies nonperforming loans at December 31.  A loan is placed in a nonaccrual status at the time when ultimate collectibility of principal or interest, wholly or partially, is in doubt.  Past due loans are those loans which are contractually past due 90 days or more as to interest or principal payments but are well secured and in the process of collection.  Renegotiated loans are those loans which terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of the deteriorating financial position of the borrower.

40

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Credit Review (Continued)

	Nonperforming and Impaired Assets and Effect on Interest Income Due to Nonaccrual (Dollar Amounts in Thousands)
	2003		2002		2001		2000		1999
Loans on nonaccrual basis	$	12,459	$	23,450	$	22,899	$	10,698	$	12,765
Past due loans		10,586		14,774		17,781		22,086		15,815
Renegotiated loans		195		207		832		2,263		62
Total nonperforming loans	$	23,240	$	38,431	$	41,512	$	35,047	$	28,642
Nonperforming loans as a percentage   of total loans		0.82%		1.47%		1.62%		1.41%		1.15%
Allowance as percentage of   nonperforming loans		160.86%		89.76%		82.28%		95.87%		117.10%
Other real estate owned	$	1,866	$	1,651	$	1,619	$	1,661	$	1,707
Gross income that would have been   recorded at original rates	$	1,962	$	1,542	$	1,422	$	750	$	724
Interest that was reflected in income		1,185		286		750		333		458
Net reduction to interest income   due to nonaccrual	$	777	$	1,256	$	672	$	417	$	266

The reduction of income due to renegotiated loans was less than $50 thousand in any year presented.

Nonperforming loan levels at December 31, 2003 decreased $15.2 million compared to 2002 levels as nonaccrual loans and past due loans decreased by $11.0 million and $4.2 million, respectively.  The decrease in nonaccrual loans was due to eight commercial loans that paid in full or were charged down and/or charged off.  The largest improvement was related to a credit with a balance of $6.2 million at December 31, 2002 and bearing an 80% guaranty of a U.S. government agency.  The credit was resolved in the fourth quarter of 2003 without any additional charge-off being recorded.  A second credit, which was $3.2 million at year-end 2002, continues to be resolved through the liquidation of collateral and exercising other remedies.  The balance outstanding at December 31, 2003 for this credit was $1.8 million, a decrease of $1.4 million from the prior year.  While the final resolution of this credit is uncertain, management's estimate of the potential loss on this credit is reserved. 

The decrease in past due loans for the 2003 period included decreases in all major categories with the most significant decreases in loans secured by residential real estate (down $2.5 million), loans secured by commercial real estate (down $607 thousand) and other commercial loans (down $839 thousand).  The decrease in past due loans was due to successful collection strategies.  The renegotiated loan category at December 31, 2003, included the one credit that was outstanding at the end of December 31, 2002.  Interest income on nonaccrual loans increased for 2003 due to final resolution of several large credits that included collection of some interest income.



41

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Credit Review (Continued)

The Corporation's loan portfolio continues to be monitored by senior management to identify potential portfolio risks and detect potential credit deterioration in the early stages.  The Corporation has a "Watch List Committee" which includes credit workout officers of the bank and meets bi-weekly to review watch list credits for workout progress or deterioration.  Loan loss adequacy and the status of significant nonperforming credits are monitored on a quarterly basis by a committee made up of senior officers of the bank and parent company.  These committees were established to provide additional internal monitoring and analysis in addition to that provided by the Credit Committees of the bank and parent company.  Credit risk is mitigated during the loan origination process through the use of sound underwriting policies and collateral requirements and its previously described committee structure.  Management also attempts to minimize loan losses by analyzing and modifying collection techniques on a periodic basis.  Management believes that the allowance for credit losses and nonperforming loans remained safely within acceptable levels.

Capital Resources

Equity capital stood at $430.9 million at December 31, 2003, a $29.6 million rise compared to December 31, 2002.  Dividends declared reduced equity by $37.2 million during 2003 as dividends were increased over 2002 levels.  The retained net income of $16.1 million remained in permanent capital to fund future growth and expansion.  Long-term debt payments and fair value adjustment to unearned ESOP shares in 2003 increased equity by $1.2 million.  The market value adjustment to securities available for sale decreased equity by $10.7 million in 2003.  Amounts paid to fund the discount on reinvested dividends reduced equity by $706 thousand.  Proceeds from the issuance of treasury shares to provide for stock options exercised increased equity by $5.9 million during 2003, while the tax benefit related to the stock options increased equity by $535 thousand.  Equity capital in 2003 was also impacted by the issuance of stock related to acquisitions from 2003 and 2002, which resulted in increases in the amounts of $17.0 million and $203 thousand, respectively.

A capital base can be considered adequate when it enables the Corporation to intermediate funds responsibly and provide related services while protecting against future uncertainties.  The evaluation of capital adequacy depends on a variety of factors, including asset quality, liquidity, earnings history and prospects, internal controls and management caliber.  In consideration of these factors, management's primary emphasis with respect to the Corporation's capital position is to maintain an adequate and stable ratio of equity to assets.  See NOTE 27 to the "Consolidated Financial Statements" for an analysis of regulatory capital guidelines and the Corporation's capital ratios relative to these measurement standards.





42

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Risk Management

In the normal course of business the Corporation assumes various types of risk.  The Corporation has identified twenty-six standard risks which have been summarized into seven major risk categories.  The seven major risk categories include credit risk, market risk, liquidity risk, compliance/legal risk, operational risk, reputation risk and strategic risk.  Credit risk, market risk and liquidity risk are discussed in this Management's Discussion and Analysis of Financial Condition and Results of Operations section.  The remaining major risk categories are defined as follows:  compliance/legal risk - the risk arising from violations of, or noncompliance with laws, rules, regulations, prescribed practices, or ethical standards; operational risk - threat created by inadequate information systems, operational problems, weak internal control systems,

fraud, or any other unforeseen catastrophes; reputation risk - the risk to earnings or capital arising from negative public opinion; and strategic risk - the risk arising from adverse business decisions or improper implementation of those decisions.  These factors and others could impact the Corporation's business, financial condition and results of operation.

Corporate management has taken strong and wide-ranging actions to enhance the awareness of and proactively manage risk within the Corporation.  In addition to establishing a comprehensive policy and procedure manual that is updated and regularly communicated throughout the Corporation, the Senior Vice President, Risk Management, an executive officer level position, oversees all aspects of the risk process.  Our committee structure embraces a risk management culture, which begins with the Risk Committee that provides oversight and monitoring of key risk areas.  The
Risk Committee, which is chaired by the Senior Vice President, Risk Management, and has representation from all of the disciplines across the organization, meets to discuss and assess current and emerging risks as well as to identify solutions and mitigants.  Credit quality and loan loss adequacy issues are addressed by the Credit Quality, Watch List and Loan Loss Reserve committees.  Additional committees include Security, which is responsible for coordinating the security program; Privacy, which focuses on safeguarding client information; ALCO, which monitors interest rate and liquidity risks; and Disclosure, which evaluates internal controls regarding information utilized in certain regulatory reports, as well as reviewing those reports and the disclosure process to ensure that disclosures are timely, complete and accurate.

The Risk Department has specific procedures to analyze and quantify risks in the seven major risk categories.  Gaps between inherent risks and mitigants are quantified and presented to the Risk Committee for their review.  Management continually reviews the mitigants and controls to ensure their continuity.  The Internal Audit Department validates the existence and effectiveness of the controls.  Risk gaps are compiled to develop a risk rating, which is incorporated into the balanced scorecard measure and is reported to the Board of Directors.  An analytical review of

43

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations (Continued)

Risk Management (Continued)

key indicators, both monetary and nonmonetary, as well as other current information that may become available through discussions with management serves as an early warning system to detect potential deteriorating internal controls.  All significant new initiatives and products are subject to a risk assessment prior to being presented for implementation.  An annual assessment of risk is also performed to identify potential threat areas to our computer systems.  Our internal audit staff performs routine and consistent information technology reviews of identified risk areas, security measures and control processes. 

With these processes in place the Corporation believes that its objective of establishing a risk culture that identifies, measures, controls and monitors events or actions that may adversely affect our organization has been achieved.  Our goal is not to eliminate risk but to understand fully the risk the Corporation is assuming and appropriately manage those risks.

Inflation and Changing Prices

Management is aware of the impact inflation has on interest rates and therefore, the impact it can have on a bank's performance.  The ability of a financial institution to cope with inflation can only be determined by analyzing and monitoring its asset and liability structure.  The Corporation monitors its asset and liability position with particular emphasis on the mix of interest-sensitive assets and liabilities in order to reduce the effect of inflation upon its performance.  However, it must be remembered that the asset and liability structure of a financial institution is substantially different from an industrial corporation in that virtually all assets and liabilities are monetary in nature, meaning that they have been or will be converted into a fixed number of dollars regardless of changes in general price levels.  Examples of monetary items include cash, loans and deposits.  Nonmonetary items are those assets and liabilities which do not gain or lose purchasing power solely as a result of general price level changes.  Examples of nonmonetary items are premises and equipment.

Inflation can have a more direct impact on categories of noninterest expenses such as salaries and wages, supplies and employee benefit costs.  These expenses are very closely monitored by management for both the effects of inflation and increases relating to such items as staffing levels, usage of supplies and occupancy costs.

ITEM 7A.  Quantitative and Qualitative Disclosures About Market Risk

Information appearing in Item 7 of this report under the caption "Interest Sensitivity" is incorporated herein by reference in response to this item.







44

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollar Amounts in Thousands)

	December 31,
		2003		2002
ASSETS
Cash and due from banks..............................................	$	82,510	$	81,114
Interest-bearing bank deposits.......................................		5,362		1,973
Securities available for sale, at market.............................		1,969,176		1,482,771
Securities held to maturity, at amortized cost,    (Market value $109,609 in 2003 and $204,887 in 2002)................		104,254		197,838
Loans................................................................		2,825,337		2,609,440
Unearned income....................................................		(455)		(806)
Allowance for credit losses........................................		(37,385)		(34,496)
Net loans.....................................................		2,787,497		2,574,138
Premises and equipment...............................................		46,538		45,730
Other real estate owned..............................................		1,866		1,651
Goodwill.............................................................		29,854		8,131
Amortizing intangibles, net..........................................		3,256		29
Other assets.........................................................		158,882		131,368
Total assets..............................................	$	5,189,195	$	4,524,743
LIABILITIES
Deposits (all domestic):
Noninterest-bearing................................................	$	408,647	$	377,466
Interest-bearing...................................................		2,879,628		2,666,658
Total deposits................................................		3,288,275		3,044,124
Short-term borrowings................................................		634,127		469,065
Other liabilities....................................................		41,875		30,230
Company obligated mandatorily redeemable      capital securities of subsidiary trust............................		-0-		35,000
Subordinated debentures..............................................		75,304		-0-
Other long-term debt.................................................		718,668		544,934
Total long-term debt..........................................		793,972		579,934
Total liabilities..........................................		4,758,249		4,123,353
SHAREHOLDERS' EQUITY
Preferred stock, $1 par value per share, 3,000,000 shares     authorized, none issued............................................		-0-		-0-
Common stock $1 par value per share, 100,000,000 shares authorized;     63,704,445 shares issued and 60,712,020 shares outstanding     in 2003; 62,525,408 shares issued and 58,962,539 shares     outstanding in 2002................................................		63,704		62,525
Additional paid-in capital...........................................		79,581		64,885
Retained earnings....................................................		312,261		296,165
Accumulated other comprehensive income...............................		15,173		25,851
Treasury stock (2,992,425 and 3,562,869 shares at December 31, 2003     and 2002, respectively at cost)....................................		(37,779)		(44,981)
Unearned ESOP shares.................................................		(1,994)		(3,055)
Total shareholders' equity......................................		430,946		401,390
Total liabilities and shareholders' equity.................	$	5,189,195	$	4,524,743

The accompanying notes are an integral part of these consolidated financial statements.




45

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollar Amounts in Thousands, except per share data)

	Years Ended December 31,
		2003		2002		2001
Interest Income
Interest and fees on loans..........................	$	164,441	$	179,901	$	202,173
Interest and dividends on investments:
Taxable interest..................................		66,716		84,137		93,961
Interest exempt from Federal income taxes.........		10,561		9,520		9,534
Dividends.........................................		2,038		1,973		2,661
Interest on Federal funds sold......................		4		6		492
Interest on bank deposits...........................		13		31		70
Total interest income.............................		243,773		275,568		308,891
Interest Expense
Interest on deposits................................		60,100		78,572		118,165
Interest on short-term borrowings...................		6,755		6,029		11,227
Interest on mandatorily redeemable capital securities of     subsidiary trust..................................		-0-		3,325		3,325
Interest on subordinated debentures.................		3,560		-0-		-0-
Interest on other long-term debt....................		29,826		34,747		34,453
Total interest on long-term debt..................		33,386		38,072		37,778
Total interest expense..........................		100,241		122,673		167,170
Net interest income...................................		143,532		152,895		141,721
Provision for credit losses.........................		12,770		12,223		11,495
Net interest income after provision for credit losses.		130,762		140,672		130,226
Other Income
Securities gains....................................		5,851		642		3,329
Trust income........................................		5,142		5,008		4,995
Service charges on deposits.........................		13,013		11,538		11,160
Gain on sale of branches............................		3,041		-0-		777
Insurance commissions...............................		3,305		3,631		3,192
Income from bank owned life insurance...............		4,342		4,711		4,618
Merchant discount income............................		3,557		3,573		3,446
Other income........................................		10,193		8,992		9,588
Total other income................................		48,444		38,095		41,105
Other Expenses
Salaries and employee benefits......................		61,144		58,149		54,521
Net occupancy expense...............................		7,456		6,750		6,520
Furniture and equipment expense.....................		10,096		9,970		9,050
Data processing expense.............................		2,520		2,124		3,296
Pennsylvania shares tax expense.....................		4,301		3,937		3,825
Intangible amortization.............................		43		203		490
Litigation settlement...............................		(610)		8,000		-0-
Restructuring charges...............................		-0-		6,140		-0-
Other operating expenses............................		27,705		31,057		28,186
Total other expenses..............................		112,655		126,330		105,888
Income before income taxes............................		66,551		52,437		65,443
Applicable income taxes.............................		13,251		8,911		15,254
Net Income............................................	$	53,300	$	43,526	$	50,189
Average Shares Outstanding............................		59,002,277		58,409,614		57,885,478
Average Shares Outstanding Assuming Dilution..........		59,387,055		58,742,018		58,118,057
Per Share Data:
Basic Earnings Per Share............................	$	0.90	$	0.75	$	0.87
Diluted Earnings Per Share..........................	$	0.90	$	0.74	$	0.86

The accompanying notes are an integral part of these consolidated financial statements.






46

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollar Amounts in Thousands)

	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Unearned ESOP Shares		Total Shareholders' Equity
Balance at December 31, 2000	$	62,525	$	67,223	$	272,169	$	(7,808)	$	(54,666)	$	(5,287)	$	334,156
Comprehensive income
Net income		-0-		-0-		50,189		-0-		-0-		-0-		50,189
Other comprehensive income,      net of tax:
Unrealized holding gains (losses)        on securities arising during        the period		-0-		-0-		-0-		18,639		-0-		-0-		18,639
Less: reclassification adjustment        for gains on securities        included in net income		-0-		-0-		-0-		(2,128)		-0-		-0-		(2,128)
Total other comprehensive income		-0-		-0-		-0-		16,511		-0-		-0-		16,511
Total comprehensive income		-0-		-0-		50,189		16,511		-0-		-0-		66,700
Cash dividends declared		-0-		-0-		(34,139)		-0-		-0-		-0-		(34,139)
Decrease in unearned ESOP shares		-0-		31		-0-		-0-		-0-		1,161		1,192
Discount on dividend reinvestment    plan purchases		-0-		(612)		-0-		-0-		-0-		-0-		(612)
Treasury stock reissued		-0-		(735)		-0-		-0-		3,235		-0-		2,500
Tax benefit of stock options		-0-		269		-0-		-0-		-0-		-0-		269
Balance at December 31, 2001		62,525		66,176		288,219		8,703		(51,431)		(4,126)		370,066
Comprehensive income
Net income		-0-		-0-		43,526		-0-		-0-		-0-		43,526
Other comprehensive income,      net of tax:
Unrealized holding gains (losses)        on securities arising during        the period		-0-		-0-		-0-		17,542		-0-		-0-		17,542
Less: reclassification adjustment        for gains on securities        included in net income		-0-		-0-		-0-		(394)		-0-		-0-		(394)
Total other comprehensive income		-0-		-0-		-0-		17,148		-0-		-0-		17,148
Total comprehensive income		-0-		-0-		43,526		17,148		-0-		-0-		60,674
Cash dividends declared		-0-		-0-		(35,580)		-0-		-0-		-0-		(35,580)
Decrease in unearned ESOP shares		-0-		86		-0-		-0-		-0-		1,071		1,157
Discount on dividend reinvestment    plan purchases		-0-		(637)		-0-		-0-		-0-		-0-		(637)
Treasury stock reissued		-0-		(964)		-0-		-0-		6,450		-0-		5,486
Tax benefit of stock options		-0-		224		-0-		-0-		-0-		-0-		224
Balance at December 31, 2002		62,525		64,885		296,165		25,851		(44,981)		(3,055)		401,390

47

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Continued)
(Dollar Amounts in Thousands)

	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Unearned ESOP Shares		Total Shareholders' Equity
Comprehensive income
Net income		-0-		-0-		53,300		-0-		-0-		-0-		53,300
Other comprehensive income,      net of tax:
Unrealized holding gains (losses)        on securities arising during        the period		-0-		-0-		-0-		(6,951)		-0-		-0-		(6,951)
Less: reclassification adjustment        for gains on securities        included in net income		-0-		-0-		-0-		(3,734)		-0-		-0-		(3,734)
Unrealized holding gains         on derivatives used in cash        flow hedging relationship        arising during the period		-0-		-0-		-0-		7		-0-		-0-		7
Total other comprehensive income		-0-		-0-		-0-		(10,678)		-0-		-0-		(10,678)
Total comprehensive income		-0-		-0-		53,300		(10,678)		-0-		-0-		42,622
Cash dividends declared		-0-		-0-		(37,204)		-0-		-0-		-0-		(37,204)
Decrease in unearned ESOP shares		-0-		120		-0-		-0-		-0-		1,061		1,181
Discount on dividend reinvestment    plan purchases		-0-		(706)		-0-		-0-		-0-		-0-		(706)
Treasury stock reissued		-0-		(1,076)		-0-		-0-		7,202		-0-		6,126
Tax benefit of stock options		-0-		535		-0-		-0-		-0-		-0-		535
Stock issued for acquisition		1,179		15,823		-0-		-0-		-0-		-0-		17,002
Balance at December 31, 2003	$	63,704	$	79,581	$	312,261	$	15,173	$	(37,779)	$	(1,994)	$	430,946

The accompanying notes are an integral part of these consolidated financial statements.

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar Amounts in Thousands)

	Years Ended December 31,
	2003		2002		2001
Operating Activities
Net income...........................................	$	53,300	$	43,526	$	50,189
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for credit losses........................		12,770		12,223		11,495
Depreciation and amortization......................		7,498		7,360		7,760
Net gains on sales of assets.......................		(6,483)		(498)		(3,392)
Net gains on sales of branches.....................		(3,034)		-0-		(777)
Income from increase in cash surrender value of bank owned       life insurance...................................		(4,342)		(4,711)		(4,618)
Stock option tax benefit..............................		535		224		269
Changes net of acquisition:
Decrease in interest receivable....................		3,754		2,860		3,559
Decrease in interest payable.......................		(1,120)		(2,280)		(19,387)
Increase (decrease) in income taxes payable........		(843)		(2,754)		3,491
Change in deferred taxes...........................		(2,235)		(594)		(831)
Other-net..........................................		(2,525)		2,408		(1,165)
Net cash provided by operating activities........		57,275		57,764		46,593
Investing Activities
Changes net of acquisition:
Transactions with securities held to maturity:
Sales..............................................		-0-		-0-		-0-
Maturities and redemptions.........................		93,700		110,769		133,666
Purchases of investment securities.................		-0-		(15,266)		(28,772)
Transactions with securities available for sale:
Sales..............................................		62,941		15,328		85,737
Maturities and redemptions.........................		954,406		545,791		497,640
Purchases of investment securities.................		(1,414,519)		(547,799)		(785,610)
Proceeds from sales of loans and other assets........		138,535		102,225		90,241
Investment in bank owned life insurance..............		-0-		(5,000)		(15,000)
Net decrease (increase) in interest-bearing bank deposits...............................................		4,135		2,278		(3,823)
Net increase in loans................................		(121,400)		(154,614)		(178,465)
Purchases of premises and equipment..................		(5,227)		(6,382)		(7,886)
Net cash provided (used) by investing activities...		(287,429)		47,330		(212,272)
Financing Activities
Changes net of acquisition:
Proceeds from issuance of other long-term debt.......		10,000		18,200		9,500
Repayments of other long-term debt...................		(12,500)		(101,425)		(974)
Proceeds from issuance of subordinated debentures....		30,929		-0-		-0-
Discount on dividend reinvestment plan purchases.....		(706)		(637)		(612)
Dividends paid.......................................		(36,630)		(35,208)		(33,809)
Net increase (decrease) in Federal funds purchased...		(37,500)		(56,650)		91,425
Net increase in other short-term borrowings..........		202,562		97,980		64,138
Sale of branch and deposits, net of cash received....		(21,288)		-0-		(9,591)
Reissuance of treasury stock.........................		5,923		4,656		2,500
Net increase (decrease) in deposits..................		82,901		(49,026)		39,384
Net cash provided (used) by financing activities...		223,691		(122,110)		161,961
Net increase (decrease) in cash and cash equivalents.......................................................		(6,463)		(17,016)		(3,718)
Cash and cash equivalents acquired with acquisition..		7,859		-0-		-0-
Cash and cash equivalents at January 1...............		81,114		98,130		101,848
Cash and cash equivalents at December 31.............	$	82,510	$	81,114	$	98,130

The accompanying notes are an integral part of these consolidated financial statements.









49

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies

GENERAL

The following summary of accounting and reporting policies is presented to aid the reader in obtaining a better understanding of the financial statements and related financial data of First Commonwealth Financial Corporation and its subsidiaries (the "Corporation") contained in this report.

The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America.  In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements.  In addition, these estimates and assumptions affect revenues and expenses in the financial statements and as such, actual results could differ from those estimates.

Through its subsidiaries which include one commercial bank, a nondepository trust company, insurance agency and financial advisor, the Corporation provides a full range of loan, deposit, trust, insurance and financial advisory services primarily to individuals and small to middle-market businesses in seventeen counties in central and western Pennsylvania.  Under current conditions, the Corporation is reporting one business segment.

The Corporation is subject to regulations of certain state and federal agencies.  These regulatory agencies periodically examine the Corporation for adherence to laws and regulations.  As a consequence, the cost of doing business may be affected.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries.  All material intercompany transactions have been eliminated in consolidation.

Investments of 20 to 50 percent of the outstanding common stock of investees are accounted for using the equity method of accounting.

Reclassifications

Financial statement amounts in prior periods have been reclassified to conform to the presentation format used in 2003.  The reclassifications had no effect on the Corporation's financial condition or results of operations.




50

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Securities

Debt securities that the Corporation has the positive intent and ability to hold to maturity are classified as securities held-to-maturity and are reported at amortized cost.  Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are to be classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.  Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as securities available-for-sale and are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of shareholders' equity, net of deferred taxes.

The Corporation has securities classified as either held-to-maturity or available-for-sale.  The Corporation does not engage in trading activities.  Effective January 1, 2003, the Corporation changed the method it utilizes to determine the net gain or loss on the sale of securities from the specific identification method to the average cost method.  This change did not result in a material change to the Corporation's financial condition or results of operations. 

Loans

Loans are carried at the principal amount outstanding.  Unearned income on installment loans and leases is taken into income on a declining basis which results in an approximately level rate of return over the life of the loan or lease.  Interest is accrued as earned on nondiscounted loans.

The Corporation considers a loan to be past due and still accruing interest when payment of interest or principal is contractually past due but the loan is well secured and in the process of collection.  For installment, mortgage, term and other loans with amortizing payments scheduled monthly, 90 days past due is reached when four monthly payments are due and unpaid.  For demand, time and other multi-payment obligations with payments scheduled other than monthly, delinquency status is calculated using number of days instead of number of payments.  Revolving credit loans, including personal credit lines and home equity lines, are considered to be 90 days past due when the borrower has not made the minimum payment for four billing cycles. 

A loan is placed in nonaccrual status when based on current information and events, it is probable that the Corporation will be unable to fully collect principal or interest due according to the contractual terms of the loan.  A loan is also placed in nonaccrual status when based on regulatory definitions, the loan is maintained on a "cash basis" due to the weakened

51

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Loans (Continued)

financial condition of the borrower.  When a determination is made to place a loan in nonaccrual status, all accrued and unpaid interest for the current year is reversed against interest income and uncollected interest for previous years is charged against the allowance for credit losses.  Generally, consumer and residential mortgage loans, which are well-secured and/or in the process of collection, are not normally placed in nonaccrual status.  Nonaccrual loans are restored to accrual status when, based on a sustained period of repayment by the borrower in accordance with the contractual terms of the loan, the Corporation expects repayment of the remaining contractual principal and interest, or when the loan otherwise becomes well secured and in the process of collection. 

The Corporation considers a loan to be renegotiated when the loan terms have been renegotiated to a below market condition to provide a reduction or deferral of principal or interest as a result of the deteriorating financial position of the borrower and the loan is in compliance with the restructured terms.

The Corporation considers a loan to be impaired when, based on current information and events, it is probable that the Corporation will be unable to collect principal or interest due according to the contractual terms of the loan.  Impaired loans include nonaccrual loans and renegotiated loans.  Loan impairment is measured based on the present value of expected cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent.

Payments received on impaired loans are applied against the recorded investment in the loan.  For loans other than those that the Corporation expects repayment through liquidation of the collateral, when the remaining recorded investment in the impaired loan is less than or equal to the present value of the expected cash flows, income is recorded on a cash basis.

Loans deemed uncollectible are charged off through the allowance for credit losses.  Factors considered in assessing ultimate collectibility include past due status, financial condition of the borrower, collateral values and debt covenants including secondary sources of repayment by guarantors.  Payments received on previously charged off loans are recorded as recoveries in the allowance for credit losses.








52

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Mortgage Servicing Rights

When the Corporation purchases or originates mortgage loans with a definitive plan to sell or securitize those loans and retain the mortgage servicing rights, the Corporation measures the mortgage servicing rights at cost by allocating the cost of the mortgage loans between the mortgage
servicing rights and the mortgage loans (without the mortgage servicing rights) based on their relative fair values at the date of purchase or origination.  When the Corporation does not have a definitive plan at the purchase or origination date and later sells or securitizes the mortgage loans and retains the mortgage servicing rights, the Corporation allocates the amortized cost of the mortgage loans between the mortgage servicing rights and the mortgage loans (without mortgage servicing rights) based on their relative fair values at the date of sale.  The amount capitalized as the right to service mortgage loans is recognized as a separate asset and amortized in proportion to, and over the period of, estimated net servicing income (servicing revenue in excess of servicing cost).  Mortgage servicing rights are periodically evaluated for impairment based on fair values. 

Loan Fees

Loan origination and commitment fees, net of associated direct costs, are deferred and the net amount is amortized as an adjustment to the related loan yield on the interest method, generally over the contractual life of the related loans or commitments.

Other Real Estate Owned

Real estate, other than bank premises, is recorded at the lower of cost or fair value less selling costs at the time of acquisition.  Expenses related to holding the property, net of rental income, are generally charged against earnings in the current period.

Allowance for Credit Losses

The Corporation maintains an allowance for credit losses at a level deemed sufficient to absorb losses that are inherent in the loan and lease portfolios at each balance sheet date.  Management and the Corporation's Board of Directors review the adequacy of the allowance on a quarterly basis to ensure that the provision for credit losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is appropriate based on management's assessment of probable estimated losses.  The Corporation's methodology for assessing the appropriateness of the allowance for credit losses consists of several key

53

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Allowance for Credit Losses (Continued)

elements.  These elements include a specific allowance for primary watch list classified loans, a formula allowance based on historical trends, an additional allowance for special circumstances and an unallocated allowance.  While allocations are made to specific loans and pools of loans, the total allowance is available for all loan losses.  The Corporation consistently applies the following comprehensive methodology and procedure at the subsidiary bank level.

The allowance for primary watch list classified loans addresses those loans maintained on the Corporation's primary watch list that are assigned a rating of substandard, doubtful or loss.  Substandard loans are those with a well-defined weakness or a weakness that jeopardizes the repayment of the debt.  A loan may be classified as substandard as a result of impairment of the borrower's financial condition and repayment capacity.  Loans for which repayment plans have not been met or collateral equity margins do not protect the Corporation may also be classified as substandard.  Doubtful loans have the characteristics of substandard loans with the added characteristic that collection or liquidation in full, on the basis of presently existing facts and conditions, is highly improbable.  Although the possibility of loss is extremely high for doubtful loans, the classification of loss is deferred until pending factors, which might improve the loan, have been determined.  Loans rated as doubtful in whole or in part are placed in nonaccrual status.  Loans which are classified as loss are considered uncollectible and are charged to the allowance for credit losses at the next meeting of the Corporation's Credit Committee after placement in this category.  There were no loans classified as loss on the primary watch list as of December 31, 2003.

Each of the classified loans on the primary watch list are individually analyzed to determine the level of the potential loss in the credit under the current circumstances.  The specific reserve established for these classified loans on the primary watch list is based on careful analysis of the loan's performance, the related collateral value, cash flow considerations and the financial capability of any guarantor.  The allowance for primary watch list classified loans is equal to the total amount of potential unconfirmed losses for the individual classified loans on the watch list.  Primary watch list loans are managed and monitored by assigned account officers within the Corporation in conjunction with senior management.

The allowance based on historical trends uses charge-off experience of the Corporation to estimate potential unconfirmed losses in the balances of the loan and lease portfolios.  The historical loss experience percentage is

54

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 1--Statement of Accounting Policies (Continued)

Allowance for Credit Losses (Continued)

based on the charge-off history for the greater of the eight most recent quarters or the twenty most recent quarters.  Historical loss experience percentages are applied to non-classified loans from the primary watch list, as well as all other loans and leases which are not on the watch list, to obtain the portion of the allowance for credit losses which is based on historical trends.  Before applying the historical loss experience percentages, loan balances are reduced by the portion of the loan balances which are subject to guarantee by a government agency.  Loan balances are also adjusted for unearned discount on installment loans.

The additional allowance for special circumstances provides management with the opportunity to estimate additional potential allowance amounts which may be needed to cover specific factors.  The special factors that management currently evaluates consist of portfolio risk or concentrations of credit and economic conditions.  Portfolio risks include unusual changes or recent trends in specific portfolios such as unexpected changes in the trends or levels of delinquency, unusual repossession activities or large levels of unsecured loans in a portfolio.

The Corporation also maintains an unallocated allowance.  The unallocated allowance is used to cover any factors or conditions that may cause a potential credit loss but are not specifically identifiable.  It is prudent to maintain an unallocated portion of the allowance because no matter how detailed an analysis of potential credit losses is performed these estimates by definition lack precision.  Management must make estimates using assumptions and information that is often subjective and changing rapidly.

Bank Owned Life Insurance

The Corporation purchased insurance on the lives of certain groups of employees.  The policies accumulate asset values to meet future liabilities including the payment of employee benefits such as health care.  Increases in the cash surrender value are recorded as other income in the Consolidated Statements of Income.  The cash surrender value of bank owned life insurance is reflected in "other assets" on the Consolidated Balance Sheets in the amount of $103,625 and $92,644 at December 31, 2003 and 2002, respectively.  The increase in cash surrender value of bank owned life insurance during 2003 includes $6,646 acquired as a result of a business combination completed during 2003. 








55

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands, except per share data)

NOTE 1--Statement of Accounting Policies (Continued)

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation and amortization.  Depreciation is computed on the straight-line and accelerated methods over the estimated useful life of the asset.  Accelerated depreciation methods are used for furniture and equipment
while straight-line depreciation is used for buildings and improvements. Charges for maintenance and repairs are expensed as incurred.  Where a lease is involved, amortization is charged over the term of the lease or the estimated useful life of the improvement, whichever is shorter.  The Corporation records computer software in accordance with the American Institute of Certified Public Accountants' Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1").  The statement identifies the following three stages of software development:  the preliminary project stage, the application development stage and the post-implementation stage.  In

compliance with SOP 98-1, the Corporation expenses costs incurred during the preliminary project state and capitalizes certain costs incurred during the application development stage.  Once software is in operation, maintenance costs are expensed over the maintenance period while upgrades that result in additional functionality or enhancement are capitalized.  Training and data conversion costs are expensed as incurred.  Capitalized costs are amortized on a straight-line basis over a period of 3-7 years, depending on the life of the software license.

Business Combinations

The Corporation accounts for business combinations in accordance with the Financial Accounting Standards Board ("FASB") Statement No. 141, "Business Combinations" ("FAS No. 141") which requires the purchase method of accounting for business combinations initiated after June 30, 2001.  Under the purchase method, net assets of the business acquired are recorded at their estimated fair value as of the date of acquisition with any excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired recorded as goodwill.  Results of the acquired business are included in the Corporation's income statement from the date of the acquisition.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets with indefinite useful lives are tested for impairment at least annually and written down and charged to results of operations in periods in which their recorded value is more than their estimated fair value.  No impairment of goodwill or other intangibles has been identified since the adoption of FASB Statement No. 142, "Goodwill and Other Intangible Assets" ("FAS No. 142") on January 1, 2002.  Prior to the adoption of FAS No. 142, goodwill was amortized on a straight-line basis over a period of 15-25 years.  Goodwill amortization expense was $920 for 2001 representing basic and diluted earnings per share of $0.016.

56

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Accounting for the Impairment of Long-Lived Assets

The Corporation reviews long-lived assets, such as premises and equipment and intangibles for impairment whenever events or changes in circumstances, such as a significant decrease in the market value of an asset or the extent or manner in which an asset is used, indicate that the carrying amount of an asset may not be recoverable.  If there is an indication that the carrying amount of an asset may not be recoverable, future undiscounted cash flows expected to result from the use of the asset are estimated.  If the sum of the expected cash flows is less than the carrying value of the asset, a loss is recognized for the difference between the carrying value and fair market value of the asset.  Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less cost to sell.  Depreciation or amortization is discontinued on long-lived assets classified as held for sale.

Income Taxes

The Corporation records taxes in accordance with the asset and liability method utilized by FASB Statement No. 109 ("FAS No. 109"), whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases given the provisions of the enacted tax laws.  Deferred tax assets are reduced, if necessary, by the amount of such benefits that are not expected to be realized based upon available evidence.

Comprehensive Income Disclosures

"Other Comprehensive Income" (comprehensive income, excluding net income) for the 2003 period includes two components, the change in unrealized holding gains and losses on available for sale securities and the change in unrealized gains and losses on derivatives used in cashflow hedging relationships.  Both components of other comprehensive income are reported net of related tax effects in the statement of changes in shareholders' equity.  Prior to 2003 other comprehensive income includes only one
component, which is the change in unrealized holding gains and losses on
available for sale securities, net of related tax effects.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and Federal funds sold.  Generally, Federal funds are sold for one-day periods.






57

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Employee Stock Ownership Plan

Accounting treatment for the Corporation's Employee Stock Ownership Plan ("ESOP") described in NOTE 21 follows Statement of Position 93-6 ("SOP 93-6") "Employers Accounting for Employee Stock Ownership Plans" for ESOP shares acquired after December 31, 1992 ("new shares").  The Corporation has elected, as permitted under SOP 93-6, not to adopt this statement for ESOP shares acquired on or before December 31, 1992 ("old shares").

ESOP shares purchased subject to debt guaranteed by the Corporation are recorded as a reduction of common shareholders' equity by charging unearned ESOP shares.  As shares are committed to be released to the ESOP trust for allocation to plan participants, unearned ESOP shares is credited for the average cost of the shares to the ESOP.  Compensation cost recognized for new shares in accordance with the provisions of SOP 93-6 is based upon the fair market value of the shares committed to be released.  Additional paid-in capital is charged or credited for the difference between the fair value of the shares committed to be released and the cost of those shares to the ESOP.  Compensation cost recognized for old shares committed to be released is recorded at the cost of those shares to the ESOP.

Dividends on both old and new unallocated ESOP shares are used for debt service and are reported as a reduction of debt and accrued interest payable.  Dividends on allocated ESOP shares are charged to retained earnings and allocated or paid to the plan participants.  The average number of common shares outstanding used in calculating earnings per share excludes all unallocated ESOP shares.

Employee Stock Option Plan

Current accounting guidelines permit two alternate methods of accounting for stock-based compensation, the intrinsic value method of APB Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25") and the fair value method of FASB Statement No. 123 "Accounting for Stock-Based Compensation" ("FAS No. 123").  In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure" ("FAS No. 148").  FAS No. 148 did not amend FAS No. 123 to require companies to account for employee stock options using the fair value method but required all companies with stock-based compensation to provide additional disclosures, regardless of whether they account for that compensation using the fair value method of FAS No. 123 or the intrinsic value method of APB No. 25.  As permitted under FAS No. 123, the Corporation has elected to use the intrinsic value method to measure stock based compensation under APB 25 and to disclose in a footnote to the financial statements, net income and earnings per share determined as if the fair value methodology of FAS No.

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Employee Stock Option Plan (Continued)

123 had been implemented.  No stock-based employee compensation expense is reflected in the Corporation's net income as reported in the Consolidated Statements of Income because all stock options granted under the Corporation's plan had an exercise price equal to the market value of the underlying common stock on the date of the grant.  

Management has considered various factors in its decision to account for stock-based compensation, including stock options granted, using the intrinsic value method of APB 25.  Generally, expenses are easily measured as of the date they are incurred.  At some point the Corporation must pay cash to cover these expenses.  This is not the case with the methodology for expensing stock options.  The amount expensed for the purposes of this disclosure is equivalent to a theoretic value calculated on the date the option was granted.  Calculating a value of the option at the grant date requires a variety of assumptions that may have little to do with the actual realization of value by the option holder.  In fact, many of the options are forfeited or expire for a variety of reasons without ever being exercised.

Additionally, valuation models operate under the assumption that the options are similar to those that are actively traded.  In reality they are not marketable.  Also there exists times where executives are unable to exercise their options due to trading restrictions.  This limits the ability of certain option holders to benefit from some periods of volatility.  Changes in the assumptions used could affect the estimated impact of the stock options and this disclosure.

The variety of methodologies and assumptions permitted to be used by each reporting company gives rise to a high degree of subjectivity in estimating the impact of the options.  Management is concerned that due to the lack of uniformity and variations in assumptions, there may not be reasonable comparability between institutions.  See NOTE 24 for additional information.

The following table illustrates the effect on net income and earnings per share if the Corporation had applied the fair value recognition provisions of FAS No. 123 to stock-based employee compensation:












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ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands, except per share data)

NOTE 1--Statement of Accounting Policies (Continued)

Employee Stock Option Plan (Continued)

	December 31,
	2003		2002		2001
Net income, as reported	$	53,300	$	43,526	$	50,189
Deduct:  Total stock-based     employee compensation expense     determined under fair value based     method for all awards, net of     related tax effect		(1,352)		(2,278)		(1,978)
Pro forma net income	$	51,948	$	41,248	$	48,211
Earnings per share:
Basic - as reported	$	0.90	$	0.75	$	0.87
Basic - pro forma	$	0.88	$	0.71	$	0.83
Diluted - as reported	$	0.90	$	0.74	$	0.86
Diluted - pro forma	$	0.87	$	0.70	$	0.83
Average shares outstanding		59,002,277		58,409,614		57,885,478
Average shares outstanding    assuming dilution		59,387,055		58,742,018		58,118,057

Derivative Instruments and Hedging Activities

The Corporation accounts for derivative instruments and hedging activities utilizing guidelines established in FASB Statement No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("FASB No. 133"), as amended.   The Corporation recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value.  Changes in fair value of derivatives designated and accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in "Other Comprehensive Income," net of deferred taxes.  Any hedge ineffectiveness would be recognized in the income statement line item pertaining to the hedged item. 

Management periodically reviews contracts from various functional areas of the Corporation to identify potential derivatives embedded within selected contracts.  Management has identified potential embedded derivatives in certain loan commitments for residential mortgages where the Corporation has intent to sell to an outside investor.  Due to the short-term nature of these loan commitments and the minimal historical dollar amount of   commitments outstanding, the corresponding impact on the Corporation's financial condition and results of operation has not been material. The Corporation had no freestanding derivative or hedging instruments prior to the third quarter of 2003 when it entered into an interest rate swap that is described in NOTE 7.  

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

Earnings Per Common Share

Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period less unallocated ESOP shares.

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.  For all periods presented the dilutive effect on average shares outstanding is the result of compensatory stock options outstanding.

New Accounting Pronouncements

Effective January 1, 2003, the Corporation adopted FASB Statement No. 146 "Accounting for Costs Associated with Exit or Disposal Activities" ("FAS No. 146").  FAS No. 146 replaced EITF Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred In a Restructuring)."  The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  Statement No. 146 is applicable to exit or disposal activities initiated after December 31, 2002.  Adoption of FAS No. 146 did not have a material impact on the Corporation's financial condition or results of operations.
 
In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees of Indebtedness of Others."  The disclosure requirements of FIN 45 are effective for financial statements of interim or annual periods ending after December 15, 2002, and require disclosure of the nature of the guarantee, the maximum potential of future payments the guarantor could be required to make under the guarantee and the current amount of the liability, if any, for the guarantor's obligation under the guarantee.  The recognition requirements of FIN 45 are to be applied prospectively to guarantees issued or modified after December 31, 2002.  This interpretation expands the disclosures to be made by a guarantor in its financial statements about its obligations under certain guarantees and requires the guarantor to recognize a liability for the fair value of an obligation assumed under a guarantee.  FIN 45 clarifies the requirements of FASB Statement No. 5 ("FAS No. 5") "Accounting for Contingencies," relating to guarantees.  In general, FIN 45 applies to contracts or indemnification agreements that contingently require the guarantor to make payments to the guaranteed party based on changes in an underlying that is related to an asset, liability, or equity security of the guaranteed party.  Certain

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

New Accounting Pronouncements (Continued)

guarantee contracts are excluded from both the disclosure and recognition requirements of this interpretation, including, but not limited to, guarantees related to employee compensation, residual value guarantees under capital lease arrangements, commercial letters of credit, loan commitments, subordinated interests in Special Purpose Entities and guarantees of a company's own future performance.  Other guarantees are subject to the disclosure requirements of FIN 45 but not the recognition provisions and include, among others, a guarantee accounted for as a derivative instrument under FAS No. 133, a parent's guarantee of debt owed to a third party by its subsidiary or vice versa and a guarantee which is based on performance not price.  Guarantees that have been entered into by the Corporation are disclosed in NOTE 13.  The adoption of FIN 45 did not have a material impact on the Corporation's financial condition or results of operations.

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities."  As defined by FIN 46 a variable interest entity ("VIE") is a corporation, partnership, trust or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities.  This interpretation also defines when the assets, liabilities, noncontrolling interest and results of operations of a VIE should be included in a company's consolidated financial statements.  Companies that hold variable interests in an entity will need to consolidate that entity if the company's interest in the VIE is such that the company will obtain a majority of the entity's expected residual returns, should such occur.  FIN 46 applied immediately to variable interest entities created after January 31, 2003.  The effective date of FIN 46 for pre-existing variable interest entities that are not special purpose entities has been deferred until the first quarter of 2004.

Based on the criteria established in FIN 46 as interpreted by the Securities and Exchange Commission, the Corporation deconsolidated its investment in First Commonwealth Capital Trust I, a Delaware business trust (the "Trust") during the fourth quarter of 2003. The Trust was established in 1999 to issue capital securities through a private offering to qualified investors and to issue common securities to the Corporation.  The Trust used the proceeds from the sale of the capital securities to buy junior subordinated debentures from the Corporation with the same economic terms as the capital securities.  The Trust distributes the cash payments it receives from the Corporation on the debentures to the holders of the capital securities and the common securities.  The Trust will redeem all of






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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 1--Statement of Accounting Policies (Continued)

New Accounting Pronouncements (Continued)

the outstanding capital securities when the debentures are paid at maturity on September 1, 2029. The deconsolidation of the Trust resulted in an increase in long-term debt during the fourth quarter of 2003 of approximately $1,083 as a result of the subordinated debentures no longer being eliminated in consolidation and the capital securities no longer being included in the Consolidated Balance Sheet at December 31, 2003. The Consolidated Balance Sheet also reflects an increase in "Other Assets" in the same amount, which represents the Corporation's investment in the Trust.  Although net income has not changed as a result of the deconsolidation of the Trust, "Other Revenue" has increased by the income generated by the Trust, which represents the difference between the Trust's interest income from the subordinated debentures and the Trust's interest expense from the capital securities.  The Consolidated Statement of Income also reflects an increase in "Interest Expense on Long-term Debt" of approximately $103 as a result of the interest expense on the subordinated debentures no longer being eliminated in consolidation and the interest expense on the capital securities no longer being included in the Consolidated Statement of Income.   

As part of its community reinvestment initiatives, the Corporation invests in qualified affordable housing projects as a limited partner.  The Corporation receives federal affordable housing tax credits for these limited partnership investments.  The Corporation's maximum potential exposure to these partnerships is $3,556, consisting of the limited partnership investments plus unfunded commitments as of December 31, 2003.  The Corporation's preliminary determination is that these investments will not be consolidated but continue to be accounted for under the equity method whereby the Corporation's portion of partnership losses are recognized as incurred.  The adoption of FIN 46 is not expected to have a material impact on the Corporation's financial condition or results of operations.

In April 2003, the FASB issued Statement No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" ("FAS No. 149").  FAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under FAS No. 133.  In particular, FAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative and when a derivative contains a financing component that warrants special reporting in the statement of cash flows.  This statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.  The adoption of FAS No. 149 did not have a material impact on the Corporation's financial condition or results of operations. 



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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

New Accounting Pronouncements (Continued)

In May 2003, the FASB issued Statement No. 150 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("FAS No. 150").  FAS No. 150 represents the first phase of the FASB's broader project on (1) distinguishing between liability and equity instruments and (2) accounting for instruments that have characteristics of both liabilities and equity.  This statement requires issuers to classify as liabilities the following three types of freestanding financial instruments: (1) mandatorily redeemable financial instruments, (2) obligations to repurchase the issuer's equity shares by transferring assets and (3) certain obligations to issue a variable number of shares.  A freestanding financial instrument is one that is entered into separately and apart from any of the entity's other financial instruments or equity transactions or is entered in conjunction with some other transaction but can be legally detached and exercised on a separate basis.  FAS No. 150 is relatively narrow in scope as it specifies only that certain instruments must be classified as liabilities but does not include additional guidance on the concept of what constitutes either a "liability" or "equity."  Entities will continue to apply existing guidance on determining the balance sheet classification of instruments that do not specifically fall within the scope of FAS No. 150.  FAS No. 150 applied immediately to financial instruments entered into or modified after May 31, 2003.  For all other instruments that exist, this statement went into effect at the beginning of the first interim period beginning after June 15, 2003.  Adoption of FAS No. 150 did not have a material impact on the Corporation's financial condition or results of operations.

On May 15, 2003, the Securities and Exchange Commission issued Staff Interpretation Topic D-107, which indicated that unless lease residuals were individually insured, no related amount should be considered in minimum lease payments.   This interpretation is more restrictive than criteria previously utilized by many financial services companies in determining whether leases qualified for financing lease treatment.  A majority of the Corporation's automobile leases have residual insurance coverage that includes a deductible and/or cap on maximum coverage for each year of lease originations.  Interpretations of Topic D-107 have concluded that residual insurance policies with deductibles and caps calculated on a group basis do not meet the definition of "individually insured" even though:  (1) individual lease losses are covered after consideration of the deductible in place and (2) the caps on loss coverage included in the policies are unlikely to be exceeded.  Consequently, a majority of the Corporation's automobile leases outstanding at December 31, 2003 would not qualify as financing leases.  Management has determined that the impact of changing from financing lease treatment to operating lease treatment is not material to the Corporation's financial condition or results of operations and is not anticipated to be material to future results of operations or financial condition; therefore, no restatement of previously issued financial statements is required. The Corporation had discontinued automobile leasing in April of 2003 and anticipates that lease payments will conclude by the end of 2006.

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 1--Statement of Accounting Policies (Continued)

New Accounting Pronouncements (Continued)

In December 2003, the FASB issued Statement No. 132(R) "Employers' Disclosures about Pensions and Other Postretirement Benefits" ("FAS No. 132(R)").  The FASB's revision of Statement No. 132 retains all of the disclosure items that were provided in FAS No. 132 and requires new annual disclosures about the types of plan assets, investment strategy, measurement date, plan obligations and cash flows as well as the expanded disclosures of assumptions used in various calculations.  The statement also requires interim reporting of the components of the net periodic benefit cost recognized.   FAS No. 132(R) does not change the measurement or recognition for pension or other postretirement benefit plans.  This statement is effective for financial statements with fiscal years ending after December 15, 2003.  Disclosure requirements for future benefit payments are effective for fiscal years ending after June 15, 2004.




































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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 2--Supplemental Comprehensive Income Disclosures

The following table identifies the related tax effects allocated to each component of other comprehensive income in the Statements of Changes in Shareholders' Equity:

	December 31, 2003						December 31, 2002						December 31, 2001
	Pretax Amount		Tax (Expense) Benefit		Net of Tax Amount		Pretax Amount		Tax (Expense) Benefit		Net of Tax Amount		Pretax Amount		Tax (Expense) Benefit		Net of Tax Amount
Unrealized gains (losses) on   securities:
Unrealized holding gains   (losses) arising during the    period	$	(10,693)	$	3,742	$	(6,951)	$	26,987	$	(9,445)	$	17,542	$	28,676	$	(10,037)	$	18,639
Less:  reclassification   adjustment for gains realized    in net income		(5,745)		2,011		(3,734)		(606)		212		(394)		(3,274)		1,146		(2,128)
Unrealized gains (losses) on   derivatives used in cash flow    hedging relationships:
Unrealized holding gains    arising during the period		11		(4)		7		-0-		-0-		-0-		-0-		-0-		-0-
Net unrealized gains (losses)		(16,427)		5,749		(10,678)		26,381		(9,233)		17,148		25,402		(8,891)		16,511
Other comprehensive income	$	(16,427)	$	5,749	$	(10,678)	$	26,381	$	(9,233)	$	17,148	$	25,402	$	(8,891)	$	16,511

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands, except per share data)

NOTE 3--Supplemental Cash Flow Disclosures

		2003		2002		2001
Cash paid during the year for:
Interest	$	101,361	$	124,953	$	186,558
Income taxes	$	16,080	$	12,010	$	11,890
Noncash investing and financing activities:
ESOP loan reductions	$	1,061	$	1,071	$	1,161
Loans transferred to other real estate   owned and repossessed assets	$	4,270	$	5,029	$	5,246
Gross increase (decrease)in market value    adjustment to securities available    for sale	$	(16,438)	$	26,381	$	25,402
Gross increase in market value adjustment of   derivative instruments	$	11	$	-0-	$	-0-
Treasury stock reissued for business   combination	$	203	$	830	$	-0-

NOTE 4--Pending Business Combination

In December 2003, the Corporation signed a definitive agreement to acquire GA Financial, Inc. ("GAF"), an $890,274 asset savings and loan holding company operating a twelve branch network in Allegheny County in Pennsylvania as of December 31, 2003.  Under terms of the agreement, the shareholders of GAF can elect to receive $35.00 in cash or an equivalent of First Commonwealth common stock for each GAF share owned, subject to proration as provided in the definitive agreement to ensure that 40% of the aggregate merger consideration will be paid in cash and 60% in First Commonwealth common stock.  Common stock received by GAF shareholders is expected to qualify as a tax-free exchange.  Completion of this transaction is subject to shareholder and regulatory approvals.

NOTE 5--Business Combination

Effective December 5, 2003, the Corporation acquired 100% of the outstanding shares of Pittsburgh Financial Corp. ("PFC"), a financial holding company, which was headquartered in Wexford, Pennsylvania.  PFC was the parent company of Pittsburgh Savings Bank (d/b/a BankPittsburgh).  As a result of the merger, PFC merged into First Commonwealth Financial Corporation and BankPittsburgh merged into First Commonwealth Bank. 





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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 5--Business Combination (Continued)

The acquisition of PFC is a significant step for the Corporation to implement its strategy for expansion into the Pittsburgh, Pennsylvania market.  The acquisition of BankPittsburgh adds a new customer base, which presents the opportunity for First Commonwealth Bank to offer insurance, trust and financial planning services to a larger base of customers.

Shareholders of PFC elected to receive $20.00 in cash or an equivalent of First Commonwealth common stock for each PFC share owned.  The aggregate purchase price of the transaction was $28,589, which included $11,587 in cash and common stock valued at $17,002.  The value of the 1,179,037 issued shares of First Commonwealth common stock was based on the average market price of First Commonwealth's common stock over the ten-day period ending three trading days prior to consummation of the acquisition.  As of December 31, 2003, the Corporation had recorded a liability for the cash settlement of the transaction in the amount of $11,587. 

The merger was accounted for as a purchase transaction whereby the identifiable tangible and intangible assets and liabilities of PFC have been recorded at their fair values as of the acquisition date.  Purchase accounting valuation adjustments, which represent the difference between the carrying value and the fair value of identifiable tangible and intangible assets and liabilities were recorded in the Consolidated Balance Sheet as of December 31, 2003.  Preliminary goodwill in the amount of $21,723 was recorded as a result of the transaction.  As prescribed under the purchase method of accounting, the results of PFC's operations have been included in the consolidated financial statements since the acquisition date. 

The customer deposit base of $3,270 was the only amortizing intangible that was recorded with the transaction.  An average annual amortization expense in the amount of $289.5 will be recorded in the Consolidated Income Statement over the average useful life.  The weighted-average useful life of the customer deposit base intangible is 12 years.  The goodwill that was recorded with the transaction is not deductible for tax purposes.

Effective March 1, 2002, the Corporation acquired all of the outstanding shares of Strategic Capital Concepts, Inc. ("SCC") and Strategic Financial Advisors, Inc. ("SFA"), each a Pennsylvania corporation headquartered in Allison Park, Pennsylvania.  As a registered investment advisor, SCC provided financial planning, asset management and consulting services to individuals, businesses, retirement plans, trusts and estates.  SFA offered investment and insurance products as well as employee benefit services.  Each of the outstanding shares of SCC and SFA were exchanged for shares of the Corporation's common stock.  In addition, the shareholders of SCC and SFA are entitled to receive additional shares of the Corporation's common stock for each of the years 2002 through 2005 based on a formula



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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 5--Business Combination (Continued)

defined in the merger agreement which takes into consideration the financial performance of SCC and SFA after the merger date.  The merger was accounted for as a purchase transaction whereby the identifiable tangible and intangible assets and liabilities of SCC and SFA have been recorded at their fair values at the acquisition date.  Goodwill in the amount of $1,656 was recorded as a result of the transaction.  As prescribed under the purchase method of accounting, the results of operations of SCC and SFA from the date of acquisition are included in the Corporation's financial statements for 2002.

In October 2002, SFA was merged into SCC and the name was changed to First Commonwealth Financial Advisors, Inc.  This acquisition should expand the Corporation's product offerings and positively impact fee based revenue, which is a continuing priority.

NOTE 6--Cash and Due From Banks on Demand

Regulations of the Board of Governors of the Federal Reserve System impose uniform reserve requirements on all depository institutions with transaction accounts (checking accounts, NOW accounts, etc.).  Reserves are maintained in the form of vault cash or a noninterest-bearing balance held with the Federal Reserve Bank.  The subsidiary bank maintained with the Federal Reserve Bank average balances of $844 during 2003 and $1,896 during 2002.

NOTE 7--Derivative Instruments

During the third quarter of 2003, the Corporation entered into an interest rate swap with a notional amount of $25,000 which was initiated to hedge exposure to the variability in the future cash flows derived from adjustable rate loans.  The interest rate swap will convert the interest receivables generated by the first $25,000 of principal outstandings of three month LIBOR based adjustable commercial loans from an adjustable
rate to a fixed rate.  The swap is a traditional pay-floating and receive-fixed interest rate swap with a three year term.  The transaction is classified as a cash flow hedge whereby the fair value of the swap is recorded as an asset or liability and changes in the fair value are recorded as "Other Comprehensive Income" a component of shareholders' equity.  During 2003, the hedge transaction had no ineffectiveness.









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ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 8--Securities Available For Sale

Below is an analysis of the amortized cost and approximate fair values of securities available for sale at December 31, 2003 and 2002:

	2003								2002
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
U.S. Treasury Securities	$	24,301	$	18	$	-0-	$	24,319	$	3,509	$	87	$	-0-	$	3,596
Obligations of U.S. Government   Corporation and Agencies:
Mortgage Backed Securities		1,210,347		12,702		(8,298)		1,214,751		870,777		24,623		(39)		895,361
Other		252,243		803		(1,008)		252,038		101,464		1,324		-0-		102,788
Obligations of States and   Political Subdivisions		156,790		4,650		(99)		161,341		115,936		2,800		(107)		118,629
Debt Securities Issued   by Foreign Governments		50		-0-		-0-		50		75		-0-		-0-		75
Corporate Securities		204,843		8,607		(216)		213,234		235,460		9,000		(472)		243,988
Other Mortgage Backed Securities		4,178		36		-0-		4,214		51,388		958		-0-		52,346
Total Debt Securities		1,852,752		26,816		(9,621)		1,869,947		1,378,609		38,792		(618)		1,416,783
Equities		93,103		6,126		-0-		99,229		64,392		2,978		(1,382)		65,988
Total Securities Available for Sale	$	1,945,855	$	32,942	$	(9,621)	$	1,969,176	$	1,443,001	$	41,770	$	(2,000)	$	1,482,771

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 8--Securities Available For Sale (Continued)

Mortgage backed securities include mortgage backed obligations of U.S. Government agencies and corporations, mortgage backed securities issued by other organizations and other asset backed securities.  These obligations have contractual maturities ranging from less than one year to 30 years and have an anticipated average life to maturity ranging from less than one year to approximately 19 years.  All mortgage backed securities contain a certain amount of risk related to the uncertainty of prepayments of the underlying mortgages.  Interest rate changes have a direct impact upon prepayment speeds, therefore the Corporation uses computer simulation models to test the average life and yield volatility of all mortgage backed securities under various interest rate scenarios to insure that volatility falls within acceptable limits.  At December 31, 2003 and 2002, the Corporation owned no high risk mortgage backed securities as defined by the Federal Financial Institutions Examination Council's Supervisory Policy Statement on Securities Activities.

The amortized cost and estimated market value of debt securities at
December 31, 2003, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

	Amortized Cost		Approximate Fair Value
Due within 1 year	$	52,829	$	53,199
Due after 1 but within 5 years		286,636		286,529
Due after 5 but within 10 years		15,600		16,212
Due after 10 years		283,162		295,042
		638,227		650,982
Mortgage Backed Securities		1,214,525		1,218,965
Total Debt Securities	$	1,852,752	$	1,869,947

Proceeds from the sales of securities available for sale were $62,941, $15,328 and $85,737 during 2003, 2002 and 2001, respectively.  Gross gains of $5,709, $609 and $3,419 and gross losses of $-0-, $-0- and $224 were realized on those sales during 2003, 2002 and 2001, respectively.

Securities available for sale with an approximate fair value of $949,602 and $712,827 were pledged at December 31, 2003 and 2002, respectively, to secure public deposits and for other purposes required or permitted by law.

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 8--Securities Available For Sale (Continued)
The following table shows the book value or fair market value of securities available for sale as of December 31, 2001:

		Approximate Fair Value
U.S. Treasury Securities	$	13,221
Obligations of U.S. Government Corporation   and Agencies:
Mortgage Backed Securities		847,825
Other		115,640
Obligations of States and Political    Subdivisions		102,642
Debt Securities Issued by Foreign Governments		175
Corporate Securities		230,984
Other Mortgage Backed Securities		112,918
Total Debt Securities		1,423,405
Equities		45,713
Total Securities Available for Sale	$	1,469,118

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 9--Securities Held to Maturity

Below is an analysis of the amortized cost and approximate fair values of debt securities held to maturity at December 31, 2003 and 2002:

	2003								2002
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
Obligation of U.S. Government Corporation and   Agencies:
Mortgage Backed Securities	$	8,143	$	444	$	-0-	$	8,587	$	63,535	$	1,713	$	-0-	$	65,248
Other		10,000		366		-0-		10,366		15,000		934		-0-		15,934
Obligations of States and Political Subdivisions		76,716		4,322		-0-		81,038		96,869		3,685		-0-		100,554
Debt Securities Issued by Foreign Governments		408		-0-		-0-		408		408		-0-		-0-		408
Corporate Securities		8,987		223		-0-		9,210		22,026		725		(8)		22,743
Total Securities Held to Maturity	$	104,254	$	5,355	$	-0-	$	109,609	$	197,838	$	7,057	$	(8)	$	204,887

The amortized cost and estimated market value of debt securities at December 31, 2003, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

	Amortized Cost		Approximate Fair Value
Due within 1 year	$	23,025	$	23,646
Due after 1 but within 5 years		13,734		14,465
Due after 5 but within 10 years		29,362		31,683
Due after 10 years		29,990		31,228
		96,111		101,022
Mortgage Backed Securities		8,143		8,587
Total Debt Securities	$	104,254	$	109,609

73

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 9--Securities Held to Maturity (Continued)

There were no sales of securities held to maturity in 2003, 2002 or 2001.

Securities held to maturity with an amortized cost of $98,173 and $149,119 were pledged at December 31, 2003 and 2002, respectively, to secure public deposits and for other purposes required or permitted by law.

The following table shows the book value or amortized cost of securities held to maturity as of December 31, 2001:

		Amortized Cost
Obligations of U.S. Government Corporation   and Agencies:
Mortgage Backed Securities	$	133,687
Other		29,998
Obligations of States and Political    Subdivisions		107,130
Debt Securities Issued by Foreign Governments		383
Corporate Securities		22,092
Total Securities Held to Maturity	$	293,290

NOTE 10--Other-Than-Temporary Impairment of Investments

The following table presents the gross unrealized losses and fair values at December 31, 2003 by investment category and time frame for which the loss has been outstanding:

	Less Than 12 Months
Description of   Securities	Fair Value		Unrealized   Losses
U.S. Treasury Obligations	$	-0-	$	-0-
U.S. Government Agency Obligations		101,423		(1,008)
U.S. Government Agency CMO and MBS		687,974		(8,298)
Corporate Securities		21,448		(216)
Municipal Securities		10,286		(99)
Total Securities	$	821,131	$	(9,621)

74

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 10--Other Than Temporary Impairment of Investments (Continued)

There were no unrealized losses in the investment portfolio that were outstanding for twelve months or more.  In addition, there were no unrealized losses on equity securities.

Management does not believe any individual unrealized loss as of December 31, 2003 represents an other-than-temporary impairment.  The unrealized losses are primarily attributed to changes in interest rates.  Finally, the Corporation has both the intent and the ability to hold the securities contained in the previous table for a time necessary to recover the amortized cost.

NOTE 11--Loans (all domestic)

Loans at year end were divided among these general categories:

	December 31,
	2003		2002
Commercial, financial, agricultural and other	$	655,740	$	633,955
Real estate loans:
Construction and land development		27,063		20,998
1-4 family dwellings		821,159		739,018
Other real estate loans		771,861		663,220
Loans to individuals for household, family and  other personal expenditures		521,481		505,139
Leases, net of unearned income		28,033		47,110
Subtotal		2,825,337		2,609,440
Unearned income		(455)		(806)
Total loans and leases	$	2,824,882	$	2,608,634

Most of the Corporation's business activity was with customers located within Pennsylvania.  The portfolio is well diversified, and as of December 31, 2003 and 2002, there were no significant concentrations of credit.

The following table identifies the amount of nonperforming loans as of December 31:

		2003		2002
Loans on nonaccrual basis	$	12,459	$	23,450
Past due loans		10,586		14,774
Renegotiated loans		195		207
Total nonperforming loans	$	23,240	$	38,431

75

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 12--Allowance for Credit Losses

Description of changes:

	2003		2002		2001
Allowance at January 1	$	34,496	$	34,157	$	33,601
Additions:
Recoveries of previously charged off loans		1,705		2,048		1,281
Provisions charged to operating expense		12,770		12,223		11,495
From acquisition		3,109		-0-		-0-
Deductions:
Loans charged off		14,695		13,932		12,220
Allowance at December 31	$	37,385	$	34,496	$	34,157

Relationship to impaired loans:

	2003		2002		2001
Recorded investment in impaired loans at     end of period	$	12,654	$	23,657	$	23,731
Average balance of impaired loans for     the year	$	19,866	$	24,740	$	16,133
Allowance for credit losses related to     impaired loans	$	2,048	$	5,204	$	3,835
Impaired loans with an allocation of the     allowance for credit losses	$	6,327	$	15,065	$	16,266
Impaired loans with no allocation of the     allowance for credit losses	$	6,327	$	8,592	$	7,465
Income recorded on impaired loans on a     cash basis	$	1,185	$	286	$	750

NOTE 13--Financial Guarantees

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, 2003 and 2002, the Corporation did not own or trade other financial instruments with significant off-balance sheet risk including derivatives such as futures, forwards, option contracts and the like, although such instruments may be appropriate to use in the future to manage interest rate risk.  See NOTE 7 for a description of interest rate swaps.

76

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 13--Financial Guarantees (Continued)

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 identifies the notional amount of those instruments at December 31, 2003 and 2002:

	2003		2002
Financial instruments whose contract amounts represent
credit risk:
Commitments to extend credit	$	620,403	$	535,692
Standby letters of credit	$	28,836	$	32,301
Commercial letters of credit	$	328	$	385

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.

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.

Current notional amounts outstanding at December 31, 2003 for financial standby letters of credit and performance standby letters of credit include amounts of $9,510 and $927, respectively, issued during 2003 and subject to the provisions of FIN 45.  There is currently no liability recorded on the Corporation's balance sheet related to these letters of credit.   







77

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 14--Premises and Equipment

Premises and equipment are described as follows:

	Estimated Useful Life	2003		2002
Land	Indefinite	$	7,177	$	6,023
Buildings and improvements	5-50 Years		47,438		46,995
Leasehold improvements	5-40 Years		10,043		9,112
Furniture and equipment	2-10 Years		58,028		52,732
Software	3-7 Years		16,599		15,777
Subtotal			139,285		130,639
Less accumulated depreciation and amortization			92,747		84,909
Total premises and equipment		$	46,538	$	45,730

Depreciation and amortization related to premises and equipment was $7,261 in 2003, $6,840 in 2002 and $6,153 in 2001.

The Corporation leases various premises and assorted equipment under noncancellable agreements.  Total future minimal rental commitments at December 31, 2003 were as follows:

	Premises		Equipment
2004	$	1,779	$	314
2005		1,638		313
2006		1,592		313
2007		1,555		101
2008		1,389		101
Thereafter		5,584		-0-
Total	$	13,537	$	1,142

    
Under the terms of various lease agreements, increases in utilities and taxes may be passed on to the lessee.  Such adjustments are not reflected in the above table.  Additionally, various lease renewal options are available and are not included in the minimum lease commitments until such options are exercised.  Total lease expense amounted to $1,939 in 2003, $1,699 in 2002 and $2,105 in 2001.

NOTE 15--Interest-Bearing Deposits

Components of interest-bearing deposits at December 31 were as follows:

	2003		2002
NOW and Super NOW accounts	$	110,618	$	71,649
Savings and MMDA accounts		1,302,451		1,100,889
Time deposits		1,466,559		1,494,120
Total interest-bearing deposits	$	2,879,628	$	2,666,658

78

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 15--Interest-Bearing Deposits (Continued)

Interest-bearing deposits at December 31, 2003 and 2002, include allocations from NOW and Super NOW accounts of $405,521 and $374,695, respectively, into Savings and MMDA accounts.  These reallocations are based on a formula and have been made to reduce the Corporation's reserve requirement in compliance with regulatory guidelines.

Included in time deposits at December 31, 2003 and 2002, were certificates of deposit in denominations of $100 or more of $398,716 and $489,702, respectively.

Interest expense related to $100 or greater certificates of deposit amounted to $18,227 in 2003, $21,685 in 2002 and $27,922 in 2001.

Included in time deposits at December 31, 2003, were certificates of deposit with the following scheduled maturities:

2004	$	645,251
2005		389,610
2006		209,984
2007		136,991
2008 and thereafter		84,723
	$	1,466,559

NOTE 16--Short-term Borrowings

Short-term borrowings at December 31 were as follows:

	2003					2002
	Ending Balance		Average Balance		Average Rate	Ending Balance		Average Balance		Average Rate
Federal funds purchased	$	14,100	$	68,455	1.32%	$	51,600	$	63,169	1.86%
Borrowings from FHLB		120,000		151,860	1.33%		146,395		30,044	1.76%
Securities sold under agreements to   repurchase		450,140		326,226	1.16%		222,577		225,793	1.78%
Treasury, tax and loan note option		49,887		7,592	0.87%		48,493		20,902	1.47%
Total	$	634,127	$	554,133	1.22%	$	469,065	$	339,908	1.77%
Maximum total at any month-end	$	699,326				$	469,065

79

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 16--Short-term Borrowings (Continued)

Interest expense on short-term borrowings for the years ended December 31 is detailed below:

	2003		2002		2001
Federal funds purchased	$	902	$	1,176	$	1,527
Borrowings from FHLB		2,019		530		243
Securities sold under agreements to repurchase		3,768		4,015		8,483
Treasury, tax and loan note option		66		308		974
Total interest on short-term borrowings	$	6,755	$	6,029	$	11,227

NOTE 17--Capital Securities and Subordinated Debentures

Capital Securities and Subordinated Debentures outstanding at December 31 are as follows:

	2003			2002
	Amount		Rate	Amount		Rate
Company obligated mandatorily redeemable capital securities
of First Commonwealth Capital Trust I due 2029	$	-0-		$	35,000	9.50%
Subordinated Debentures:
Owed to Pittsburgh Home Capital Trust I and due 2028	$	8,292	8.56%	$	-0-
Owed to First Commonwealth Capital Trust I and due 2029		36,083	9.50%		-0-
Owed to First Commonwealth Capital Trust II and due 2033		30,929	LIBOR +2.85%		-0-
Total junior subordinated debentures owed to unconsolidated
subsidiary trusts	$	75,304		$	-0-
Total consolidated debt obligations related to subsidiary trusts	$	75,304		$	35,000

The Corporation has established two trusts, First Commonwealth Capital Trust I and First Commonwealth Capital Trust II, of which 100% of the common equity is owned by the Corporation.  The trusts were formed for the purpose of issuing company obligated mandatorily redeemable capital securities to third-party investors and investing the proceeds from the sale of the capital securities solely in junior subordinated debt securities ("subordinated debentures") of the Corporation.  The subordinated debentures held by each trust are the sole assets of the trust.

Proceeds from subordinated debentures issued to First Commonwealth Capital Trust II in December 2003 are anticipated to be used to partially finance the pending business combination of GAF (See NOTE 4).  Interest on the debentures is paid quarterly at a floating rate of LIBOR plus 2.85%









80

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 17--Capital Securities and Subordinated Debentures (Continued)

which is reset quarterly. The Corporation may redeem the debentures, in whole or in part, at its option on or after January 23, 2009, at a redemption price equal to 100% of the principal amount of the debentures, plus accrued and unpaid interest to the date of the redemption.  Deferred issuance costs of $471 are being amortized on a straight-line basis over the term of the securities.
 
Subordinated debentures outstanding at December 31, 2003 also include $8,292 previously issued by PFC to Pittsburgh Home Capital Trust I.  These debentures were assumed by the Corporation when it acquired PFC in December 2003, and have since been called and paid by the Corporation in January 2004.

The subordinated debentures issued to First Commonwealth Capital Trust I have the same economic terms as the capital securities issued by the trust.  The trust will redeem all of the outstanding capital securities when the debentures are paid at maturity.  Subject to regulatory approvals, the Corporation may redeem the debentures, in whole or in part, at any time on or after September 1, 2009 at a redemption price equal to 104.75% of the principal amount of the debentures on September 1, 2009, declining ratably on each September 1 thereafter to 100% on September 1, 2019, plus accrued and unpaid interest to the date of the redemption.  The Corporation may also redeem the debentures prior to September 1, 2009, upon the occurrence of certain tax or bank regulatory events, subject to regulatory approval.

























81

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 18--Other Long-term Debt

Other long-term debt at December 31 follows:

	2003					2002
		Amount		Weighted Average Contractual  Rate	Weighted Average Effective  Rate	Amount		Weighted Average Contractual  Rate	Weighted Average Effective  Rate
ESOP loan due December 2005		$	1,994	LIBOR +1%	LIBOR +1%	$	3,055	LIBOR +1%	LIBOR +1%
ESOP loan due March 2006			620	8.50%	8.50%		-0-
Repos due:
2008			22,522	5.51%	2.46%		-0-
Borrowings from FHLB due:
2004			19,271	5.81%	1.38%		-0-
2005			8,555	5.46%	2.05%		-0-
2006			6,104	6.01%	2.67%		-0-
2007			21,319	5.20%	4.08%		5,000	6.94%	6.94%
2008			438,413	5.39%	5.26%		415,000	5.38%	5.38%
2009			11,557	6.49%	3.52%		-0-
2010			140,025	5.70%	4.47%		80,000	5.14%	5.14%
2011			5,895	5.68%	5.68%		6,525	5.68%	5.68%
2014			17,964	5.40%	4.64%		10,000	5.40%	5.40%
2016			1,748	5.65%	5.65%		1,844	5.65%	5.65%
2017			6,271	6.17%	6.17%		6,542	6.17%	6.17%
2019			7,789	5.72%	5.72%		8,091	5.72%	5.72%
2020			817	7.37%	7.37%		842	7.37%	7.37%
2022			7,804	5.90%	5.90%		8,035	5.90%	5.90%
		$	718,668			$	544,934

The weighted-average effective rates of long-term debt in the schedule above include the effects of the purchase accounting valuation adjustments that were recorded for the acquisition that was discussed in NOTE 5.

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 above 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 this Note, but are described in NOTE 17.

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

	2004		2005		2006		2007		2008		Thereafter
Long-term debt payments	$	23,629	$	12,981	$	9,547	$	19,607	$	459,279	$	175,658
Purchase valuation amortization	$	3,920	$	3,243	$	3,096	$	2,835	$	2,201	$	2,672

The amounts on the purchase valuation amortization row in the table above include fair market adjustments from the business combination, which is described in NOTE 5.




82

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 19--Common Share Commitments

At December 31, 2003 and 2002, the Corporation had 100,000,000 common shares authorized.  63,704,445 shares were issued at December 31, 2003, and 62,525,408 shares were issued at December 31, 2002.  Issued shares were reduced by 2,992,425 shares of treasury stock at December 31, 2003 and 3,562,869 shares of treasury stock at December 31, 2002.  The Corporation may be required to issue additional shares to satisfy common share purchases related to the employee stock ownership plan described in NOTE 22.  The dilutive effective of stock options outstanding on average shares outstanding in the diluted earnings per share reported on the income statement were 384,778, 332,404 and 232,579 shares at December 31, 2003, 2002 and 2001, respectively. 

Treasury shares consisting of 552,781 and 447,001 were reissued during 2003 and 2002 upon exercise of stock options.  Treasury shares consisting of 17,663 and 67,484 were reissued in 2003 and 2002, respectively, to fund the business combination with SCC and SFA as described in NOTE 5.

During 2003, 1,179,037 common shares were issued to fund the business combination with PFC, which is also described in NOTE 5.

NOTE 20--Restructuring Charges

The Corporation incurred restructuring charges of $6,140 during 2002 in accordance with EITF 94-3.  These restructuring charges were comprised of the following:  $4,652 of employee separation costs consisting of severance packages for 95 employees from various affiliates of the Corporation including all levels of staff from the executive management level to back office support staff, $1,068 related to realignment of the various Boards of Directors and Board committees and $420 primarily related to the write- off of obsolete signage and supplies.  These amounts are included as restructuring charges, as a component of Other Expenses on the Consolidated Statements of Income.

These restructuring charges resulted from the merger of the charters of the Corporation's two commercial banks (First Commonwealth Bank and Southwest Bank) and the adoption of a new common brand and identity for all financial services subsidiaries.

Actual termination benefits paid and charged against the total severance liability were $2,823 and $1,263 during 2003 and 2002, respectively, leaving a remaining unpaid liability for severance costs of $566 at December 31, 2003.  No additional severance accruals or adjustments were recorded during 2003 related to the 2002 restructuring.

83

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 21--Income Taxes

The income tax provision consists of:

	2003		2002		2001
Current tax provision for income exclusive of securities transactions:
Federal	$	13,438	$	9,279	$	14,865
State		-0-		1		55
Securities transactions		2,048		225		1,165
Total current tax provision		15,486		9,505		16,085
Deferred tax provision (benefit)		(2,235)		(594)		(831)
Total tax provision	$	13,251	$	8,911	$	15,254

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, 2003 and 2002, were as follows:

	2003		2002
Deferred tax assets:
Allowance for credit losses	$	13,107	$	12,074
Postretirement benefits other than pensions		1,040		1,036
Basis difference in assets acquired		4,710		-0-
Severance expense		250		1,186
Other		1,140		948
Total deferred tax assets		20,247		15,244
Deferred tax liabilities:
Accumulated accretion of bond discount		(124)		(327)
Unrealized gain on securities available for sale		(8,166)		(13,920)
Lease financing deduction		(6,439)		(9,272)
Loan origination fees and costs		(1,562)		(1,774)
Basis difference in assets acquired		-0-		(337)
Pension expense		-0-		(399)
Accumulated depreciation		(1,343)		(578)
Other		(574)		(574)
Total deferred tax (liabilities)		(18,208)		(27,181)
Net deferred tax asset (liability)	$	2,039	$	(11,937)

84

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 21--Income Taxes (Continued)

The total tax provision for financial reporting differs from the amount computed by applying the statutory income tax rate to income before taxes.  The differences are as follows:

	2003			2002			2001
	Amount		% of Pretax Income	Amount		% of Pretax Income	Amount		% of Pretax Income
Tax at statutory rate	$	23,293	35.0	$	18,353	35.0	$	22,905	35.0
Increase (decrease) resulting from:
Income from bank owned life       insurance		(1,520)	(2.3)		(1,649)	(3.1)		(1,616)	(2.5)
Other nontaxable income		(7,332)	(11.0)		(6,216)	(11.9)		(5,521)	(8.4)
State income taxes		-0-	0.0		1	0.0		55	0.1
Other		(1,190)	(1.8)		(1,578)	(3.0)		(569)	(0.9)
Total tax provision	$	13,251	19.9	$	8,911	17.0	$	15,254	23.3

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

85

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 22--Retirement Plans (Continued)

$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

86

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 22--Retirement Plans (Continued)

Pension Plans of Acquired Subsidiaries (Continued)

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:

	2003		2002		2001
Service cost	$	-0-	$	-0-	$	-0-
Interest cost on projected benefit obligation		-0-		-0-		346
Expected return on plan assets		-0-		-0-		(438)
Net amortization and deferral		-0-		-0-		(33)
Net periodic pension cost (benefit)	$	-0-	$	-0-	$	(125)

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.

Postretirement Benefits other than Pensions for Acquired Subsidiary

Employees of Southwest Bank were also covered by a post retirement benefit plan.  The measurement date for this plan was October 1.

Net periodic benefit cost of this plan was as follows:

	2003		2002		2001
Service cost	$	-0-	$	-0-	$	6
Interest cost on projected benefit obligation		338		273		232
Amortization of transition obligation		2		2		2
Loss amortization		121		60		65
Net periodic benefit cost	$	461	$	335	$	305

87

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 22--Retirement Plans (Continued)

Postretirement Benefits other than Pensions for Acquired Subsidiary (Continued)

The following table sets forth the plan's funded status and the amounts recognized on the Corporation's Consolidated Balance Sheet as of December 31:

		2003		2002
Accumulated post retirement benefit obligation:
Retirees	$	5,901	$	5,142
Actives		-0-		-0-
Total accumulated postretirement benefit obligation		5,901		5,142
Plan assets at fair value		-0-		-0-
Accumulated postretirement benefit obligation in excess of    plan assets		5,901		5,142
Unrecognized transition obligation		(14)		(16)
Unrecognized net loss		(2,844)		(2,165)
Accrued benefit liability recognized on the balance sheet	$	3,043	$	2,961

The following table sets forth the change in benefit obligation:

		2003		2002
Benefit obligation at beginning of year	$	5,142	$	4,151
Service cost		-0-		-0-
Interest cost		338		273
Benefit payments		(379)		(245)
Actuarial loss		800		963
Benefit obligation at end of year	$	5,901	$	5,142

The discount rate used in determining the actuarial present value of the accumulated postretirement benefit obligation was 6.25% for 2003 and 6.75% for 2002.  The health care cost trend rates used for 2003 were projected at an initial rate of 8.00% for 2004 decreasing over time to an annual rate of 4.25% in 2008 for both indemnity plan participants and non-indemnity plan participants.  For 2002, rates used were projected at an initial rate of 9.00% for 2003 decreasing over time to an annual rate of 4.25% in 2008 for both indemnity plan participants and non-indemnity plan participants.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act") introduces a prescription drug benefit under Medicare Part D.  The Act also introduces a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D.   The preceding measures of the accumulated postretirement benefit obligation or net periodic postretirement benefit cost do not reflect the effects of the Act on the Corporation's plan.  The Corporation has elected to defer recognizing the effects of the Act in accounting and reporting for its plan until authoritative accounting guidance, including guidance on accounting for the federal subsidy is issued.  That guidance, when issued, could impact reported calculations.

88

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 22--Retirement Plans (Continued)

Postretirement Benefits other than Pensions for Acquired Subsidiary (Continued)

The health care cost trend rate assumption can have a significant impact on the amounts reported for this plan.  A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	1-Percentage- Point Increase		1-Percentage- Point Decrease
Effect on total of service and interest cost components	$	23	$	(20)
Effect on postretirement benefit obligation	$	372	$	(314)

NOTE 23--Unearned ESOP Shares

The Corporation had borrowed amounts which were concurrently loaned to the First Commonwealth Financial Corporation Employee Stock Ownership Plan Trust ("ESOP") on the same terms.  The combined balances of the ESOP related loans were $1,994 at December 31, 2003 and $3,055 at December 31, 2002.

The loans have been recorded as long-term debt on the Corporation's Consolidated Balance Sheets.  A like amount of unearned ESOP shares was recorded as a reduction of common shareholders' equity.  Unearned ESOP shares, included as a component of shareholders' equity, represent the Corporation's prepayment of future compensation expense.  The shares acquired by ESOP are held in a suspense account and will be released to the ESOP for allocation to the plan participants as the loan is reduced.  Repayment of the loans is scheduled to occur over a remaining two-year period from contributions to the ESOP by the Corporation and dividends on unallocated ESOP shares.

The following is an analysis of ESOP shares held in suspense:

See NOTE 1 for the definition of "old shares" and "new shares."

	Total	Old Shares	New Shares
Shares in suspense December 31, 2001	372,560	91,214	281,346
Shares allocated during 2002	(100,894)	(24,702)	(76,192)
Shares in suspense December 31, 2002	271,666	66,512	205,154
Shares allocated during 2003	(96,118)	(23,533)	(72,585)
Shares in suspense December 31, 2003	175,548	42,979	132,569

The fair market value of the new shares remaining in suspense was approximately $1,890 and $2,359 at December 31, 2003 and 2002, respectively.




89

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands, except per share data)

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 PFC plans.

Equity Compensation Plan Information as of December 31, 2003:

	Number of Options Outstanding	Weighted Average Exercise Price of Options Outstanding		Shares Available for Future Grant
Equity compensation plans   approved by security   holders	2,965,726	$	11.51	74,274

90

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands, except per share data)

NOTE 24--Stock Option Plan (Continued)

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:

	2003				2002				2001
	As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma
Net income	$	53,300	$	51,948	$	43,526	$	41,248	$	50,189	$	48,211
Basic earnings per share	$	0.90	$	0.88	$	0.75	$	0.71	$	0.87	$	0.83
Diluted earnings per share	$	0.90	$	0.87	$	0.74	$	0.70	$	0.86	$	0.83

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:

	2003	2002	2001
Dividend yield	5.14% per annum	5.13% per annum	5.59% per annum
Expected volatility	40.3%	54.0%	55.1%
Risk-free interest rate	4.1%	5.0%	5.1%
Expected option life	7.0 years	7.0 years	10.0 years

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:

	2003			2002			2001
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding at beginning of    year	2,841,772	$	11.33	2,687,887	$	11.13	2,210,651	$	11.12
PFC converted options    at merger	62,322	$	7.60	-0-	$	0.00	-0-	$	0.00
Granted	641,912	$	12.06	820,775	$	11.70	796,743	$	10.75
Exercised	(549,215)	$	10.71	(447,001)	$	10.51	(256,174)	$	9.76
Forfeited	(31,065)	$	12.91	(219,889)	$	11.90	(63,333)	$	11.89
Outstanding at end of year	2,965,726	$	11.51	2,841,772	$	11.33	2,687,887	$	11.13
Exercisable at end of year	2,965,726	$	11.51	2,841,772	$	11.33	2,687,887	$	11.13

91

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands, except per share data)

NOTE 24--Stock Option Plan (Continued)

The following table summarizes information about the stock options outstanding at December 31, 2003:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding    At 12/31/03	Weighted- Average Remaining Contract Life	Weighted- Average    Exercise Price		Number Exercisable At 12/31/03	Weighted- Average    Exercise Price
$5.41-$8.99	45,078	7.2	$	7.21	45,078	$	7.21
$9.00-$9.99	293,747	2.9	$	9.23	293,747	$	9.23
$10.00-$10.99	429,976	7.1	$	10.75	429,976	$	10.75
$11.00-$11.99	1,298,938	6.7	$	11.47	1,298,938	$	11.47
$12.00-$15.00	897,987	7.5	$	12.88	897,987	$	12.88
Total	2,965,726	6.6	$	11.51	2,965,726	$	11.51

NOTE 25--Commitments and Contingent Liabilities

There are no material proceedings to which the Corporation or its subsidiaries are a party, or of which their property is the subject, except proceedings which arise in the normal course of business and, in the opinion of management, will not have a material adverse effect on the consolidated operations or financial position of the Corporation and its subsidiaries.

NOTE 26--Related Party Transactions

Some of the Corporation's or its subsidiaries' directors, executive officers, principal shareholders and their related interests, had transactions with the subsidiary banks in the ordinary course of business.  All deposit and loan transactions were made on substantially the same terms, such as collateral and interest rates, as those prevailing at the time for comparable transactions.  In the opinion of management, these transactions do not involve more than the normal risk of collectibility nor do they present other unfavorable features.  It is anticipated that further such transactions will be made in the future.

The following is an analysis of loans to those parties whose aggregate loan balances exceeded $60 during 2003:

Balances December 31, 2002	$	4,603
Advances		5,956
Repayments		(6,911)
Other		1,129
Balances December 31, 2003	$	4,777

"Other" primarily reflects the change in those classified as a "related party" usually as a result of mergers, resignations or retirements.


92

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 27--Regulatory Restrictions and Capital Adequacy

The amount of funds available to the parent from its subsidiary banks is limited by restrictions imposed on all financial institutions by banking regulators.  At December 31, 2003, dividends from subsidiary banks were restricted not to exceed $84,489.  These restrictions have not had, and are not expected to have, a significant impact on the Corporation's ability to meet its cash obligations.

The Corporation is subject to various regulatory capital requirements administered by the Federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and its banking subsidiaries must meet specific capital guidelines that involve quantitative measures of the Corporation's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.

The Corporation's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Corporation to maintain minimum amounts and ratios of total and Tier I capital (common and certain other "core" equity capital) to risk weighted assets, and of Tier I capital to average assets.  As of December 31, 2003, the Corporation and its banking subsidiaries meet all capital adequacy requirements to which they are subject.

As of December 31, 2003, the most recent notifications from the Federal Reserve Board and Federal Deposit Insurance Corporation categorized First Commonwealth Bank as well capitalized under the regulatory framework for prompt corrective action.  To be considered as well capitalized, the bank must maintain minimum total risk-based capital, Tier I risk-based capital and Tier I leverage ratios as set forth in the table below.  There are no conditions or events since that notification that management believes have changed the institution's category.












93

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 27--Regulatory Restrictions and Capital Adequacy (Continued)

	Actual			Regulatory Minimum			To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio	Amount		Ratio	Amount		Ratio
As of December 31, 2003
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	494,541	14.5%	$	273,207	8.0%		N/A	N/A
First Commonwealth Bank	$	403,313	12.0%	$	269,734	8.0%	$	337,167	10.0%
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	457,156	13.4%	$	136,603	4.0%		N/A	N/A
First Commonwealth Bank	$	365,929	10.9%	$	134,867	4.0%	$	202,300	6.0%
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	457,156	9.4%	$	146,571	3.0%		N/A	N/A
First Commonwealth Bank	$	365,929	7.6%	$	145,263	3.0%	$	242,105	5.0%
As of December 31, 2002
Total Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	436,850	14.0%	$	249,240	8.0%		N/A	N/A
First Commonwealth Bank	$	402,319	13.0%	$	246,779	8.0%	$	308,474	10.0%
Tier I Capital to Risk Weighted Assets
First Commonwealth Financial Corporation	$	402,354	12.9%	$	124,620	4.0%		N/A	N/A
First Commonwealth Bank	$	367,823	11.9%	$	123,389	4.0%	$	185,084	6.0%
Tier I Capital to Average Assets
First Commonwealth Financial Corporation	$	402,354	8.9%	$	135,282	3.0%		N/A	N/A
First Commonwealth Bank	$	367,823	8.2%	$	133,944	3.0%	$	223,239	5.0%

94

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 28--Condensed Financial Information of First Commonwealth Financial Corporation (parent company only)

Balance Sheets

	December 31,
	2003		2002
Assets
Cash	$	1,376	$	13,844
Securities available for sale		33,052		1,407
Loans to affiliated parties		439		498
Investment in subsidiaries		462,894		413,542
Investment in unconsolidated subsidiary trusts		2,280		-0-
Investment in jointly-owned company		5,622		5,081
Premises and equipment		5,887		6,095
Dividends receivable from subsidiaries		11,517		3,394
Receivable from subsidiaries		6,085		7,625
Other assets		5,126		1,936
Total assets	$	534,278	$	453,422
Liabilities and Shareholders' Equity
Accrued expenses and other liabilities	$	14,199	$	3,755
Dividends payable		9,714		9,139
Loans payable		2,613		3,055
Subordinated debentures payable		76,806		36,083
Shareholders' equity		430,946		401,390
Total liabilities and shareholders' equity	$	534,278	$	453,422

Statements of Income

	Years Ended December 31,
	2003		2002		2001
Interest and dividends	$	48	$	48	$	42
Dividends from subsidiaries		64,907		43,609		40,442
Interest expense		(3,629)		(3,570)		(3,724)
Net securities gains (losses)		742		-0-		-0-
Other revenue		253		-0-		16
Operating expenses		(9,237)		(9,161)		(7,033)
Income before taxes and equity in undistributed earnings of     subsidiaries		53,084		30,926		29,743
Applicable income tax benefits		4,570		5,304		3,495
Income before equity in undistributed earnings of     subsidiaries		57,654		36,230		33,238
Equity in undistributed earnings of subsidiaries		(4,354)		7,296		16,951
Net income	$	53,300	$	43,526	$	50,189

95

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands, except per share data)

NOTE 28--Condensed Financial Information of First Commonwealth Financial Corporation (parent company only) (Continued)

Statements of Cash Flows

	Years Ended December 31,
	2003		2002		2001
Operating Activities
Net income	$	53,300	$	43,526	$	50,189
Adjustments to reconcile net income to net cash provided by operating   activities:
Depreciation and amortization		835		537		1,140
Net gains on sale of assets		(739)		-0-		-0-
Decrease (increase) in prepaid income taxes		256		(397)		431
Undistributed equity in subsidiaries		(4,482)		(7,296)		(16,951)
Other - net		(2,193)		1,270		(592)
Stock option tax benefit		535		225		269
Net cash provided by operating activities		47,512		37,865		34,486
Investing Activities
Transactions with securities available for sale:
Purchases of investment securities		(32,785)		(943)		(123)
Sales of investment securities		1,766		-0-		-0-
Net change in loans to affiliated parties		59		42		(61)
Purchases of premises and equipment		(125)		(33)		(90)
Changes in receivable from and net investment in subsidiary		(28,918)		436		(792)
Net cash used by investing activities		(60,003)		(498)		(1,066)
Financing Activities
Issuance of subordinated debentures		30,929		-0-		-0-
Discount on dividend reinvestment plan purchases		(706)		(637)		(612)
Treasury stock acquired		-0-		-0-		-0-
Treasury stock reissued		5,923		4,655		2,499
Cash dividends paid		(36,630)		(35,208)		(33,809)
Net cash used by financing activities		(484)		(31,190)		(31,922)
Net increase (decrease) in cash		(12,975)		6,177		1,498
Cash at beginning of year		13,844		7,667		6,169
Cash acquired with acquisition		507		-0-		-0-
Cash at end of year	$	1,376	$	13,844	$	7,667

Cash dividends declared per common share were $0.625, $0.605 and $0.585 for 2003, 2002 and 2001, respectively.











96

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 28--Condensed Financial Information of First Commonwealth Financial Corporation (parent company only) (Continued)

Dividends from subsidiaries for 2003 included a special dividend in the amount of $11,436 that was received from First Commonwealth Bank, a wholly owned subsidiary.  After distribution of the special dividend, which was within guidelines established by the banking regulators, First Commonwealth Bank remains classified as a well-capitalized institution.  During 2003, the parent company also received a dividend-in-kind from First Commonwealth Bank in the amount of $8,797, which was received in the form of an investment holding company subsidiary.  The subsidiary, known as FraMal Holdings Corporation, was acquired by First Commonwealth Bank in the acquisition, which is described in NOTE 5.

During 2003, the parent company obtained a one-year line of credit to be used for general operating cashflows.  The line of credit was with an unrelated financial institution for $15,000, and as of December 31, 2003, had no amounts outstanding.

NOTE 29--Fair Values of Financial Instruments

Below are various estimated fair values at December 31, 2003 and 2002, as required by Statement of Financial Accounting Standards No. 107 ("FAS No. 107").  Such information, which pertains to the Corporation's financial instruments, is based on the requirements set forth in FAS No. 107 and does not purport to represent the aggregate net fair value of the Corporation.  It is the Corporation's general practice and intent to hold its financial instruments to maturity, except for certain securities designated as securities available for sale, and not to engage in trading activities.  Many of the financial instruments lack an available trading market, as characterized by a willing buyer and seller engaging in an exchange transaction.  Therefore, the Corporation had to use significant estimations and present value calculations to prepare this disclosure.

Changes in the assumptions or methodologies used to estimate fair values may materially affect the estimated amounts.  Also, management is concerned that there may not be reasonable comparability between institutions due to the wide range of permitted assumptions and the methodologies in absence of active markets.  This lack of uniformity gives rise to a high degree of subjectivity in estimating financial instrument fair values.

The following methods and assumptions were used by the Corporation in estimating financial instrument fair values:

Cash and short-term instruments:  The balance sheet carrying amounts for cash and short-term instruments approximate the estimated fair values of such assets.



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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001

NOTE 29--Fair Values of Financial Instruments (Continued)

Securities:  Fair values for securities held to maturity and securities available for sale are based on quoted market prices, if available.  If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.  The carrying value of nonmarketable equity securities, such as Federal Home Loan Bank stock, is considered a reasonable estimate of fair value.

Loans receivable:  The estimated fair values of all loans are estimated by discounting the future cash flows using interest rates currently offered for loans with similar terms to borrowers of similar credit quality. 

Off-balance sheet instruments:  Many of the Corporation's off-balance sheet instruments, primarily loan commitments and standby letters of credit, are expected to expire without being drawn upon, therefore, the commitment amounts do not necessarily represent future cash requirements.  Management has determined that due to the uncertainties of cash flows and difficulty in predicting the timing of such cash flows, fair values were not estimated for these instruments for both periods.

Deposit liabilities:  Management estimates that the fair value of deposits is based on a market valuation of similar deposits.  The carrying value of variable rate time deposit accounts and certificates of deposit approximate their fair values at the report date.  Also, fair values of fixed rate time deposits for both periods are estimated by discounting the future cash flows using interest rates currently being offered and a schedule of aggregated expected maturities. 

Short-term borrowings:  The estimated fair values of borrowings from the Federal Home Loan Bank were estimated based on the estimated incremental borrowing rate for similar types of borrowings.  The carrying amounts of other short-term borrowings such as Federal funds purchased, securities sold under agreement to repurchase and treasury, tax and loan notes were used to approximate fair value.
















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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

Notes to Consolidated Financial Statements
Years Ended December 31, 2003, 2002 and 2001
(Dollar Amounts in Thousands)

NOTE 29--Fair Values of Financial Instruments (Continued)

Long-term debt:  The fair value of long-term debt is estimated by discounting the future cash flows using the Corporation's estimated incremental borrowing rate for similar types of borrowing arrangements.

The following table presents carrying amounts and estimated fair values of the Corporation's financial instruments at December 31, 2003 and 2002:

	2003				2002
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets
Cash and due from banks	$	82,510	$	82,510	$	81,114	$	81,114
Interest-bearing deposits with banks	$	5,362	$	5,362	$	1,973	$	1,973
Securities available for sale	$	1,969,176	$	1,969,176	$	1,482,771	$	1,482,771
Investments held to maturity	$	104,254	$	109,609	$	197,838	$	204,887
Loans, net	$	2,787,497	$	2,858,032	$	2,574,138	$	2,631,557
Financial liabilities
Deposits	$	3,288,275	$	3,193,216	$	3,044,124	$	3,011,354
Short-term borrowings	$	634,127	$	634,361	$	469,065	$	469,381
Long-term debt	$	793,972	$	863,444	$	579,934	$	642,127

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 8.  Financial Statements and Supplementary Data (Continued)

REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
First Commonwealth Financial Corporation

We have audited the accompanying consolidated balance sheet of First Commonwealth Financial Corporation and subsidiaries (the "Company") as of December 31, 2003, and the related consolidated statement of income, changes in shareholders' equity, and cash flows for the year then ended.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.  The financial statements of the Company for the years ended December 31, 2002 and 2001, were audited by other auditors whose report dated January 22, 2003, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2003 financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2003 and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.


/S/ Ernst & Young LLP


Pittsburgh, Pennsylvania
January 28, 2004

















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ITEM 8.  Financial Statements and Supplementary Data (Continued)

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
of First Commonwealth Financial Corporation:




We have audited the accompanying consolidated balance sheet of First Commonwealth Financial Corporation and subsidiaries (the "Corporation") as of December 31, 2002 , and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the two years in the period ended December 31, 2002.  These financial statements are the responsibility of the Corporation's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of First Commonwealth Financial Corporation and subsidiaries at December 31, 2002, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.


/S/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 22, 2003

















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ITEM 8.  Financial Statements and Supplementary Data (Continued)

Quarterly Summary of Financial Data - Unaudited
(Dollar Amounts in Thousands, except per share data)

The unaudited quarterly results of operations for the years ended December 31, 2003 and 2002 are as follows:

	2003
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Interest income	$	62,317	$	61,186	$	59,605	$	60,665
Interest expense		25,471		25,745		24,616		24,409
Net interest income		36,846		35,441		34,989		36,256
Provision for credit losses		3,460		3,465		3,495		2,350
Net interest income after provision for credit     losses		33,386		31,976		31,494		33,906
Securities gains		2,234		3,221		166		230
Other operating income		8,837		9,977		13,691		10,088
Litigation settlement		(610)		-0-		-0-		-0-
Other operating expenses		28,382		28,382		28,005		28,496
Income before income taxes		16,685		16,792		17,346		15,728
Applicable income taxes		3,381		3,365		3,511		2,994
Net income	$	13,304	$	13,427	$	13,835	$	12,734
Basic earnings per share	$	0.23	$	0.23	$	0.23	$	0.21
Diluted earnings per share	$	0.23	$	0.23	$	0.23	$	0.21
Average shares outstanding	58,703,260		58,769,160		58,950,258		59,577,396
Average shares outstanding assuming dilution	58,934,248		59,101,475		59,376,716		60,122,832

	2002
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Interest income	$	70,523	$	69,878	$	68,784	$	66,383
Interest expense		32,481		31,945		30,457		27,790
Net interest income		38,042		37,933		38,327		38,593
Provision for credit losses		2,917		3,008		3,103		3,195
Net interest income after provision for credit     losses		35,125		34,925		35,224		35,398
Securities gains		39		576		26		1
Other operating income		8,572		9,583		9,597		9,701
Litigation settlement		8,000		-0-		-0-		-0-
Restructuring charges		-0-		3,116		2,473		551
Other operating expenses		27,665		28,721		27,240		28,564
Income before income taxes		8,071		13,247		15,134		15,985
Applicable income taxes		433		2,290		2,947		3,241
Net income	$	7,638	$	10,957	$	12,187	$	12,744
Basic earnings per share	$	0.13	$	0.19	$	0.21	$	0.22
Diluted earnings per share	$	0.13	$	0.19	$	0.21	$	0.22
Average shares outstanding	58,142,359		58,359,322		58,521,562		58,608,857
Average shares outstanding assuming dilution	58,484,806		58,851,264		58,862,215		58,765,383

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
(a)	Previously reported on the Corporation's 2002 Form 10-K under ITEM 9-Changes in and Disagreements with Accountants on Accounting and Financial Disclosures as filed on March 24, 2003.
(b)	None.
ITEM 9A.	CONTROLS AND PROCEDURES
	The Corporation carried out an evaluation, under the supervision and with the participation of the Corporation's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures as of the end of the period covered by this report pursuant to Exchange Act Rule 13a-15.  Based upon that evaluation, the Corporation's Chief Executive Officer and Chief Financial Officer concluded that the Corporation's disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Corporation's periodic Securities and Exchange Commission filings.  In addition, no significant change in the Corporation's internal control over financial reporting was identified in connection with this evaluation that has materially affected or is reasonably likely to materially affect internal control over financial reporting.
	Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Corporation in the reports that the Corporation files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Corporation in the reports that the Corporation files under the Exchange Act is accumulated and communicated to the Corporation's management, including the Corporation's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
PART III
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	Information appearing in the definitive Proxy Statement related to the annual meeting of security holders to be held April 19, 2004, under the heading "Election of Directors," is incorporated herein by reference in response to the listing of directors.

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
	The Board of Directors has determined that all three members of the Audit Committee satisfy the independence and financial literacy requirements of the New York Stock Exchange and that Director James W. Newill qualifies as the "Audit Committee Financial Expert" as defined by the Securities and Exchange Commission rules.
	Information appearing in the definitive Proxy Statement related to the annual meeting of security holders to be held April 19, 2004, under the heading "Compliance with Section 16(a) Beneficial Ownership Reporting," is incorporated herein by reference in response to the compliance with section 16(a) of the Exchange Act.
	The Corporation has adopted a code of conduct and ethics policy that applies to all employees of the Corporation, including executive officers.  In addition, the Corporation has adopted a code of ethics policy for the Chief Executive Officer and all senior financial officers of the Corporation.  Both of the ethics policies are included as exhibits to this Form 10-K and are posted on the Corporation's website at http://www.fcbanking.com.
	Information regarding executive officers is set forth in Part I of this Report under the caption "Executive Officers of the Registrant."
ITEM 11.	EXECUTIVE COMPENSATION
	Information appearing in the definitive Proxy Statement related to the annual meeting of security holders to be held April 19, 2004, under the heading "Compensation of Executive Officers," is incorporated herein by reference in response to this item.
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	Information appearing in the definitive Proxy Statement related to the annual meeting of security holders to be held April 19, 2004, under the heading "Common Stock Ownership of Management and Other Beneficial Owners," is incorporated herein by reference in response to this item.
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	Information appearing in the definitive Proxy Statement related to the annual meeting of security holders to be held April 19, 2004, is incorporated herein by reference in response to this item.
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES
	Information appearing in the definitive Proxy Statement related to the annual meeting of security holders to be held April 19, 2004, under the heading "Accountants," is incorporated herein by reference in response to this item.

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(A)	Documents Filed as Part of this Report
	(1)	Financial Statements
		All financial statements of the registrant as set forth under Item 8 of the Report on Form 10-K.
	(2)	Financial Statement Schedules
		Schedule Number		Description		Page
		I		Indebtedness to Related Parties		N/A
		II		Guarantees of Securities of Other Issuers		N/A
	(3)	Exhibit Number	Description		Incorporated by Reference to
		2.1	Amended and Restated Agreement and Plan of Merger
		3.1	Articles of Incorporation		Exhibit 3(i) to the Corporation's quarterly report on Form 10-Q for the quarter ended March 31, 1994
		3.2	By-Laws of Registrant		Exhibit 3.0 to Form 10-Q filed May 15, 2001
		10.1	Change in Control Agreement dated October 27, 1985 Joseph E. O'Dell		Exhibit 10.4 to Form 10-K filed March 21, 1996
		10.2	Change in Control Agreement dated October 27, 1995 Gerard M. Thomchick		Exhibit 10.5 to Form 10-K filed March 21, 1996
		10.3	Change in Control Agreement dated October 30, 1995, entered into between First Commonwealth Financial Corporation and John J. Dolan, together with a schedule listing substantially identical Change in Control Agreements with the following individuals:  William R. Jarrett, and R. John Previte		Exhibit 10.6 to Form 10-K filed March 21, 1996

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K (Continued)

(Continued)	Exhibit Number	Description	Incorporated by Reference to
	10.4	Supplemental Executive Retirement Plan	Exhibit 10.1 to Form 10-Q filed November 12, 2003
	10.5	Deferred Compensation Plan	Exhibit 10.8 to Form 10-K filed March 31, 1999
	10.6	Cash Incentive Bonus Program	Exhibit 10.9 to Form 10-K filed March 31, 1999
	10.7	Change in Control Agreement dated November 22, 2000, entered into between First Commonwealth Financial Corporation and Sue A. McMurdy	Exhibit 10.8 to Form 10-K filed April 2, 2001
	10.8	Form of Separation Agreement and General Release of David S. Dahlmann	Exhibit 10.2 to Form 10-Q filed November 8, 2002
	10.9	Employment Contract of Johnston A. Glass dated December 21, 1998	Exhibit 10.1 to Form 10-Q filed May 14, 2003
	10.10	Change in Control Agreement dated February 7, 1998, entered into between First Commonwealth Financial Corporation and Johnston A. Glass	Exhibit 10.2 to Form 10-Q filed May 14, 2003
	10.11	Change in Control Agreement dated May 3, 2002, entered into between First Commonwealth Financial Corporation and Thaddeus J. Clements	Exhibit 10.3 to Form 10-Q filed May 14, 2003
	14.1	Code of Conduct and Ethics
	14.2	Code of Ethics for CEO and Senior Financial Officers
	21.1	Subsidiaries of the Registrant
	23.1	Consent of Ernst & Young LLP Independent Auditors

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FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

ITEM 15.	EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (Continued)
(Continued)			Exhibit Number		Description	Incorporated by Reference to
			23.2		Consent of Deloitte & Touche LLP Independent Auditors
			24.1		Power of Attorney
			31.1		Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
			31.2		Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
			32.1		Chief Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
			32.2		Chief Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(B)		Reports on Form 8-K
			The following reports on Form 8-K were filed during the quarter ending December 31, 2003:
			(1)	Form 8-K dated December 12, 2003, reporting the Corporation's press release announcing the completion of the acquisition of Pittsburgh Financial Corp.
			(2)	Form 8-K dated December 16, 2003, reporting that the Corporation entered into a definitive agreement to acquire GA Financial, Inc.
			The following reports on Form 8-K were furnished during the quarter ending December 31, 2003:
			(1)	Form 8-K dated October 23, 2003, reporting the Corporation's press release announcing earnings for the three and nine month periods ending September 30, 2003.

107

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in Indiana, Pennsylvania, on the 10th day of March 2004.



                                 FIRST COMMONWEALTH FINANCIAL CORPORATION
                                 (Registrant)



                                 /S/JOSEPH E. O'DELL                  
                                 Joseph E. O'Dell
                                 President and Chief Executive Officer










































108

EX-2

EXHIBIT 2  -  AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

            THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into effective as of the 11th day of December 2003, by and among First Commonwealth Financial Corporation, a Pennsylvania corporation ("Purchaser"), First Commonwealth Bank, a Pennsylvania-chartered banking corporation and wholly owned subsidiary of Purchaser ("FCB"), GA Financial, Inc., a Delaware corporation ("Company"), and Great American Federal Savings and Loan Association, a federal savings association and wholly owned subsidiary of Company ("Great American").

Recitals

            A.          The respective Boards of Directors of Purchaser and Company have determined that the merger of Company with and into Purchaser (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement, is advisable and in the best interests of their respective stockholders, and have approved and adopted the this Agreement and the Merger, pursuant to which each outstanding share of the common stock, $0.01 par value, of Company ("Company Common Stock"), will be converted, at the election of each Company stockholder, into cash and/or shares of the common stock, $1.00 par value, of Purchaser ("Purchaser Common Stock") as provided herein.  Purchaser will be the surviving corporation (the "Surviving Corporation") following the Merger.

            B.          After the Effective Time, Great American will be merged with and into FCB (the "Bank Merger"), upon the terms and subject to the conditions set forth in this Agreement.  FCB will be the surviving financial institution following the Bank Merger.

            C.          Under Delaware law, this Agreement and the Merger must be approved and adopted by the stockholders of Company.  The Board of Directors of Company has adopted a resolution recommending that the stockholders of Company approve this Agreement and the Merger and the consummation of the transactions contemplated hereby upon the terms and subject to the conditions set forth herein.

            D.          Concurrently with the execution and delivery of this Agreement, and as an inducement to Purchaser's willingness to enter into this Agreement, each director and executive officer of Company has entered into a Voting Agreement with Purchaser pursuant to which, among other things, he or she agrees to vote in favor of approval of the transactions contemplated by this Agreement at the Special Meeting.

            E.          In furtherance thereof, the Boards of Directors of Purchaser and Company have approved this Agreement and the Merger in accordance with Pennsylvania law and Delaware law, respectively.

            F.          The parties intend that that (i) the Merger will qualify as a reorganization under Section 368 of the Code, (ii) no gain or loss will be recognized by either Company or Purchaser as a result of the Merger and (iii) no gain or loss for federal income tax purposes will be recognized by a Company Stockholder upon the exchange of Company Common Stock solely for Purchaser Common Stock.

Agreement

            In consideration of the premises and the mutual covenants set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree, intending to be legally bound, as follows (each capitalized term used in this Agreement shall have the meaning assigned to such term in Exhibit A):

ARTICLE I

BASIC TRANSACTION

            1.1          Merger.  At the Effective Time, Company shall be merged with and into Purchaser, pursuant to the terms and conditions set forth herein and pursuant to the Pennsylvania Business Corporation Law ("PBCL") and the Delaware General Corporation Law ("DGCL"). Upon consummation of the Merger, the separate corporate existence of Company shall cease and Purchaser shall continue as the Surviving Corporation.  The Articles of Incorporation and Bylaws of Purchaser, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation and Bylaws of the Surviving Corporation. The effects of the Merger shall be as provided in Section 1929 of the PBCL and Section 259 of the DGCL.

            1.2          Bank Merger.  At the time selected by Purchaser following the Effective Time, Great American shall be merged with and into FCB, pursuant to the terms and conditions set forth herein, and in the plan of merger which shall be in form and substance mutually agreeable to FCB and Great American (the "Bank Plan of Merger"), and pursuant to the Pennsylvania Banking Code of 1965, as amended ("Banking Code"), and the Home Owners' Loan Act of 1933, as amended ("HOLA") and the regulations of the Office of Thrift Supervision ("OTS") promulgated thereunder.  Upon consummation of the Bank Merger, the separate corporate existence of Great American shall cease and FCB shall continue as the surviving financial institution.  The Articles of Incorporation and Bylaws of FCB, in effect immediately prior to the consummation of the Bank Merger, shall be the Articles of Incorporation and Bylaws of the surviving financial institution. The effects of the Merger shall be as provided in Section 1601 et. seq. of the Banking Code and 12 C.F.R. Section 552.13.  By signing this Agreement, Purchaser and Company consent to and approve the Bank Merger in their capacities as the sole shareholders of FCB and Great American, subject only to the consummation of the Merger.

            1.3          Effective Time.  As soon as practicable after each of the conditions set forth in Article 6hereof have been satisfied or waived, Purchaser and Company will file, or cause to be filed, (a) with the Secretary of State of the Commonwealth of Pennsylvania Articles of Merger in the form required by and executed in accordance with the applicable provisions of the PBCL and (b) with the Secretary of State of the State of Delaware a Certificate of Merger in the form required by and executed in accordance with the applicable provisions of the DGCL.  The Merger shall become effective upon filing the Articles of Merger with the Pennsylvania Secretary of State and the Certificate of Merger with the Delaware Secretary of State, or at such later time as Purchaser and Company may agree as specified in the Articles of Merger and Certificate of Merger (the "Effective Time").  The Bank Merger will be consummated after the Merger at the time selected by Purchaser.

2

            1.4          Conversion of Company Common Stock.  At the Effective Time:

                                    (a)       Subject to the allocation and proration procedures set forth in Section 1.10,and except as provided in Sections 1.5 and 1.12, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive from Purchaser, at the election of the holder thereof pursuant to Section 1.10, either:

                                              (i)       cash in an amount equal to $35.00 per share (the "Per Share Cash Consideration"); or

                                              (ii)      a number of shares of Purchaser Common Stock which is equal to the Exchange Ratio. 

                                    (b)       The holders of certificates representing shares of Company Common Stock shall cease to have any rights as stockholders of Company, except such rights, if any, as they may have pursuant to the DGCL.  Except as provided above, until certificates representing shares of Company Common Stock are surrendered for exchange, each certificate shall, after the Effective Time, represent for all purposes only the right to receive the amount and type of consideration into which the shares of Company Common Stock represented thereby shall have been converted by the Merger as provided above.

                                    (c)       The stock transfer books of Company shall be closed and no transfer of shares of Company Common Stock shall be made thereafter.

            1.5          Company Treasury Stock; Shares owned by Purchaser.  Notwithstanding any other provision of this Agreement, any shares of Company Common Stock issued immediately prior to the Effective Time which are then owned beneficially or of record (a) by Company or any Company Subsidiary or (b) by Purchaser or any Purchaser Subsidiary, in each case, other than shares held in an agency or fiduciary capacity or as a result of debts previously contracted, shall, by virtue of the Merger, be canceled at the Effective Time without payment of any consideration therefor and without any conversion thereof.

            1.6          Purchaser Common Stock.  The shares of Purchaser Common Stock issued and outstanding immediately prior to the Effective Time shall, on and after the Effective Time, remain issued and outstanding as the same number of shares of Purchaser Common Stock.

            1.7          Fractional Shares.  Notwithstanding any other provision hereof, no fractional shares of Purchaser Common Stock and no certificates, or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger.  In lieu of fractional shares, Purchaser shall pay to each Company Stockholder who would otherwise be entitled to a fractional share an amount of cash determined by multiplying such fraction by the Per Share Cash Consideration.

            1.8          Anti-Dilution.  In the event Purchaser changes the number of shares of Purchaser Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend or recapitalization with respect to the outstanding Purchaser Common Stock and the effective date therefor shall be prior to the Effective Time, then, for purposes of computing the Average Closing Price (and, thus, the Exchange Ratio), the closing prices of the Purchaser

3

Common Stock for all trading days prior to the effective date of such stock split, stock dividend or recapitalization shall be proportionately adjusted.

            1.9          Company Options.

                                    (a)       At the Effective Time, by virtue of the Merger, and without any action on the part of any holder of an option to purchase Company Common Stock granted under the Company Option Plan (a "Company Option"), each Company Option that is then outstanding and unexercised shall, at the election of the holder thereof pursuant to Section 1.9(b), be either:

                                              (i)       assumed by Purchaser and converted into an option to purchase Purchaser Common Stock (a "Substituted Option") on the same terms and conditions as are in effect with respect to the Company Option immediately prior to the Effective Time, except that (A) each Substituted Option may be exercised solely for shares of Purchaser Common Stock, (B) the number of shares of Purchaser Common Stock subject to each Substituted Option shall be equal to the number of shares of Company Common Stock subject to the assumed Company Option immediately prior to the Effective Time multiplied by the Exchange Ratio, the product being rounded, if necessary, up or down to the nearest whole share, and (C) the per share exercise price under each Substituted Option shall be equal to the per share exercise price of the assumed Company Option immediately prior to the Effective Time divided by the Exchange Ratio, the quotient being rounded, if necessary, up or down to the nearest cent;

                                              (ii)      cancelled and all rights thereunder be extinguished ("Cancelled Option"), in consideration for which Company shall make payment immediately after the Effective Time in an amount determined by multiplying (A) the number of shares of Company Common Stock underlying such Company Option immediately prior to the Effective Time by (B) an amount equal to the excess (if any) of (x) the Per Share Cash Consideration, over (y) the exercise price per share of such Company Option; or

                                              (iii)     assumed by Purchaser and converted into an option to purchase Purchaser Common Stock as provided in Section 1.9(a)(i) with respect to a number of shares of Company Common Stock subject to such Company Option designated by the holder thereof and cancelled in consideration for payment as provided in Section 1.9(a)(ii) with respect to the remaining shares of Company Common Stock subject thereto.

                                    (b)       In order for any holder of a Company Option to have his or her Company Options converted into a Substituted Option as set forth in Section 1.9(a)(i) or to receive cash in exchange for a Cancelled Option as set forth in Section 1.9(a)(ii) or to receive a Substituted Option and cash as set forth in Section 1.9(a)(iii), such holder shall have executed a written election with respect to such conversion or cancellation no later than three business days prior to the Effective Time, which written election shall be in such form as shall be prescribed by Company and reasonably satisfactory to Purchaser.  No payment shall be made to a holder of a Cancelled Option unless and until such holder has executed and delivered the foregoing written election.  In the event any holder of a Company Option fails to make an election within the time frame set forth herein, the Company Option held thereby shall automatically be converted at the Effective Time into an option to purchase Purchaser Common Stock in the amount and at the exercise price as calculated pursuant to Section 1.9(a)(i).

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                                    (c)       As to any Company Option that is an incentive stock option, it is intended that the adjustments provided in Section 1.9(a)(i) shall be effected in a manner which is consistent with the requirements of Section 424(a) of the Internal Revenue Code.  To the extent that it is not consistent with such requirements, Section 424(a) shall override anything to the contrary set forth in Section 1.9(a)(i).

                                    (d)       No later than two business days prior to the Effective Time, Company shall deliver to Purchaser a schedule which sets forth, as of that date, a complete and accurate list of outstanding Company Options, indicating (i) the holder thereof, (ii) the number of shares of Company Common Stock subject thereto, (iii) the exercise price therefor, and (iv) the number of shares of Company Common Stock subject to such Company Option with respect to which the holder has elected to receive a Substituted Option and/or cash as provided in Section 1.9(a).  Prior to the Effective Time, Purchaser shall reserve for issuance the number of shares of Purchaser Common Stock necessary to satisfy Purchaser's obligations under Section 1.9(a).  As soon as practicable after the Effective Time, but in no event later than 20 business days thereafter, Purchaser shall (i) file a registration statement on Form S-8 with the SEC registering the shares of Purchaser Common Stock subject to the Substituted Options and shall use commercially reasonable efforts to maintain the current status of the prospectus or prospectuses contained therein for so long as such options remain outstanding, and (ii) take such other actions as are required under applicable state securities laws for so long as such options remain outstanding.

            1.10         Election and Exchange Procedures.

                                    (a)       Purchaser shall designate The Bank of New York (or another bank selected by Purchaser and reasonably acceptable to Company) as agent (the "Exchange Agent") for purposes of conducting the election procedure and the exchange procedure as described in this Section 1.10.  Company shall promptly provide or cause to be provided to the Exchange Agent all information reasonably necessary for the Exchange Agent to perform its obligations as specified herein. 

                                    (b)       Company shall include with the Proxy Statement/Prospectus sent to the Company Stockholders an election form for use by the Company Stockholders in making the election described below as to the form of consideration to be received for their Company Common Stock (the "Election Form") and other appropriate and customary transmittal materials for use by the Company Stockholders in transmitting the certificates representing Company Common Stock to the Exchange Agent, which shall specify that delivery shall be effected and risk of loss of Company Common Stock certificates shall pass, only upon proper delivery of such certificates to the Exchange Agent (the "Letter of Transmittal).  The Election Form and the Letter of Transmittal shall be in such form and substance as designated by Purchaser and reasonably acceptable to Company.  Purchaser shall thereafter make available one or more copies of the Election Form and the Letter of Transmittal as may be reasonably requested by Persons who become Company Stockholders after the record date for the Special Meeting and prior to the Election Deadline.  The Election Form shall permit each Company Stockholder (or beneficial owner through appropriate and customary documentation and instructions) to elect to receive either (i) Purchaser Common Stock with respect to all of such holder's shares of Company Common Stock, (ii) cash with respect to all of such holder's shares of Company

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Common Stock, or (iii) Purchaser Common Stock in exchange for a specified number of shares of Company Common Stock and cash in exchange for a specified number of shares of Company Common Stock.  Shares of Company Common Stock with respect to which a Company Stockholder elects to receive Purchaser Common Stock are referred to as "Stock Election Shares."  Shares of Company Common Stock with respect to which a Company Stockholder elects to receive cash are referred to as "Cash Election Shares."  Any shares of Company Common Stock (other than Dissenting Shares, which are dealt with in Section 1.12 and shares which are cancelled without payment pursuant to Section 1.5) with respect to which the holder fails to make an effective election to receive Purchaser Common Stock or cash, together with shares of Company Common Stock with respect to which a Company Stockholder exercises his or her rights to appraisal under the DGCL and, as of the Election Deadline, has failed to perfect or effectively withdrawn or lost such rights, are referred to as "No-Election Shares."  Nominee record holders who hold Company Common Stock on behalf of multiple beneficial owners shall indicate how many of the shares held by them are Stock Election Shares, Cash Election Shares and No-Election Shares.

                                    (c)       Any election by a Company Stockholder to receive Purchaser Common Stock or cash shall be effective only if the Exchange Agent shall have actually received a signed and properly completed Election Form by 5:00 p.m., Eastern Time, on the last business day before the date of the Special Meeting (the "Election Deadline"); provided, that if all Regulatory Approvals have not been obtained prior to such date, Purchaser shall extend the Election deadline until the third business day following the receipt of the final Regulatory Approval.  If the Election Deadline is so extended, Purchaser shall promptly issue a press release advising the Company Stockholders of the extension and, upon receipt of the final Regulatory Approval, shall issue a press release advising the Company Stockholders of the revised Election Deadline.  An Election Form will be properly completed only if all information called for by the Election Form is provided and, (i) in the case of shares that represented by certificates, only if accompanied by a certificate or certificates representing all shares of Company Common Stock covered thereby, and (ii) in the case of shares that are held in book-entry form ("Book-Entry Shares"), only upon compliance with the book-entry delivery procedures reasonably established by Purchaser and the Exchange Agent, in each case, subject to the provisions of subsection (g) of this Section 1.10.  Any Election Form may be revoked or changed by the Person submitting such Election Form to the Exchange Agent by written notice to the Exchange Agent only if such notice is actually received by the Exchange Agent at or prior to the Election Deadline. All elections shall be revoked automatically if the Exchange Agent is notified in writing by Purchaser and Company that this Agreement has been terminated and, in that event, the Exchange Agent shall promptly return all Company Common Stock certificates and Book-Entry Shares received by it to the appropriate Company Stockholders.  The Exchange Agent shall have reasonable discretion to determine when any election, modification or revocation is received and whether any such election, modification or revocation has been properly made.

                                    (d)       Within five (5) business days after the Election Deadline, the Exchange Agent shall effect the allocation among Company Stockholders of rights to receive Purchaser Common Stock or cash in the Merger as follows:

                                              (i)       If the number of Cash Election Shares multiplied by the Per Share Cash Consideration is less than the Aggregate Cash Consideration, then:

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                                                        (A)       No-Election Shares shall be deemed to be Cash Election Shares to the extent necessary to cause the total number of Cash Election Shares multiplied by the Per Share Cash Consideration to equal the Aggregate Cash Consideration. If less than all of the No-Election Shares need to be treated as Cash Election Shares in order to accomplish that result, then the Exchange Agent shall convert on a pro rata basis (subject to rounding to avoid the conversion of fractional shares) a sufficient number of No-Election Shares into Cash Election Shares to cause the total number of Cash Election Shares after such conversion multiplied by the Per Share Cash Consideration to equal the Aggregate Cash Consideration, and all remaining No-Election Shares shall be treated as Stock Election Shares.

                                                        (B)       If all of the No-Election Shares are treated as Cash Election Shares under the preceding subsection and the total number of Cash Election Shares multiplied by the Per Share Cash Consideration is still less than the Aggregate Cash Consideration, then the Exchange Agent shall convert on a pro rata basis (subject to rounding to avoid the conversion of fractional shares) a sufficient number of Stock Election Shares into Cash Election Shares to cause the total number of Cash Election Shares after such conversion times the Per Share Cash Consideration to equal the Aggregate Cash Consideration.

Notwithstanding the foregoing, if the number of Cash Election Shares multiplied by the Per Share Cash Consideration is less than the Aggregate Cash Consideration, Purchaser may, in its sole discretion, elect to reduce the Aggregate Cash Consideration to an amount not less than the product of the Cash Election Shares multiplied by the Per Share Cash Consideration and apply the foregoing allocation procedure (if necessary) using the Aggregate Cash Consideration as so reduced.

                                              (ii)      If the number of Cash Election Shares multiplied by the Per Share Cash Consideration is greater than the Aggregate Cash Consideration, then:

                                                        (A)       All No-Election Shares shall be deemed to be Stock Election Shares.

                                                        (B)       The Exchange Agent shall convert on a pro rata basis (subject to rounding to avoid the conversion of fractional shares) a sufficient number of Cash Election Shares into Stock Election Shares to cause the number of remaining Cash Election Shares multiplied by the Per Share Cash Consideration to equal the Aggregate Cash Consideration.

                                    (e)       Following and giving effect to any reallocation (if necessary) under subsection (d) of this Section 1.10, all Stock Election Shares and all No-Election Shares will be converted into the right to receive Purchaser Common Stock as provided in Section 1.4(a)(ii) and all Cash Election Shares shall be converted, effective as of the Effective Time, into the right to receive cash as provided in Section 1.4(a)(i). 

                                    (f)       At or prior to the Effective Time, Purchaser shall authorize the Exchange Agent to issue the number of shares of Purchaser Common Stock issuable in the Merger and shall deliver to the Exchange Agent the amount of cash payable in the Merger.  All

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such shares shall be deemed to have been issued as of the Effective Time.  The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to such shares. 

                                    (g)       After the Effective Time, each holder of an outstanding certificate or certificates which prior thereto represented shares of Company Common Stock who has surrendered or surrenders such certificate or certificates to the Exchange Agent with a properly completed Letter of Transmittal, and each Company Stockholder holding Book-Entry Shares who has complied with the book-entry delivery procedures established by Purchaser and the Exchange Agent will, upon acceptance of such certificates and/or Book-Entry Shares by the Exchange Agent, be entitled to a certificate or certificates representing the number of full shares of Purchaser Common Stock and/or the amount of cash into which the aggregate number of shares of Company Common Stock surrendered or delivered shall have been converted pursuant to this Agreement and, if such holder's shares of Company Common Stock have been converted into Purchaser Common Stock, cash in lieu of fractional shares, and any distribution previously paid with respect to Purchaser Common Stock issuable in the Merger for which the record date was on or after the Effective Date, in each case without interest.  Each Company Stockholder who receives shares of Purchaser Common Stock in the Merger shall receive a prospectus and enrollment materials for Purchaser's dividend reinvestment plan together with such Stockholder's Purchaser Common Stock certificate or certificates.  The Exchange Agent shall accept such certificates and/or Book-Entry Shares upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices.  Each outstanding certificate which prior to the Effective Time represented Company Common Stock and which is not surrendered to the Exchange Agent in accordance with the procedures provided for herein shall, except as otherwise herein provided, until duly surrendered to the Exchange Agent be deemed to evidence ownership of the number of shares of Purchaser Common Stock and/or the right to receive the amount of cash into which such Company Common Stock shall have been converted.  No dividends which have been declared will be remitted to any Person entitled to receive shares of Purchaser Common Stock under this Section 1.10 until such Person surrenders the certificate or certificates representing Company Common Stock, at which time such dividends shall be remitted to such Person without interest. 

                                    (h)       The Exchange Agent shall use commercially reasonable efforts to distribute Purchaser Common Stock and cash as provided herein not later than ten (10) business days after the Effective Time to the former Company Stockholders who submitted a properly completed Letter of Transmittal and Company stock certificates prior to the Election Deadline.  The Exchange Agent shall distribute Purchaser Common Stock and cash as provided herein to other former Company Stockholders within a reasonable time after its receipt of a properly completed Letter of Transmittal and Company Common Stock certificates from such former Company Stockholder.

                                    (i)       If any certificate for Company Common Stock has been lost or destroyed, the Company Stockholder in whose name that certificate is registered may submit to the Exchange Agent, in lieu of such certificate, an appropriate affidavit of loss and indemnity agreement and/or a bond in such sum as may be required by the Exchange Agent as indemnity against any claim that may be made against Purchaser or the Exchange Agent with respect to the certificates alleged to have been lost, stolen or destroyed.  If any certificates evidencing shares of

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Purchaser Common Stock are to be issued in a name other than that in which the certificate evidencing Company Common Stock surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the certificate so surrendered shall be properly endorsed or accompanied by an executed form of assignment separate from the certificate, with all signatures guaranteed, and otherwise in proper form for transfer and that the Person requesting such exchange pay to the Exchange Agent any transfer or other tax required by reason of the issuance of a certificate for shares of Purchaser Common Stock in any name other than that of the registered holder of the certificate surrendered or otherwise establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable.

                                    (j)       Any portion of the shares of Purchaser Common Stock and cash delivered to the Exchange Agent by Purchaser pursuant to Section 1.10(f) that remains unclaimed by the Company Stockholders for one year (or such later period as Purchaser and the Exchange Agent may agree) after the Effective Time (as well as any proceeds from any distributions on such shares and any investment of any cash held by the Exchange Agent) shall be delivered by the Exchange Agent to Purchaser. Any Company Stockholder who has not complied with Section 1.10(g) before the expiration of such period shall thereafter look only to Purchaser for the consideration deliverable to such stockholder in the Merger as determined pursuant to this Agreement, without any interest thereon.  Neither the Exchange Agent nor any party to this Agreement shall be liable to any holder of shares of Purchaser Common Stock for any consideration paid to a public official pursuant to applicable abandoned property, escheat or similar laws.  Purchaser and the Exchange Agent shall be entitled to rely upon the stock transfer books of Company to establish the identity of those Persons entitled to receive consideration specified in this Agreement, which books shall be conclusive with respect to the identify of such Persons.  In the event of a dispute with respect to ownership of shares of Purchaser Common Stock, Purchaser and the Exchange Agent shall be entitled to deposit any consideration represented thereby in escrow with an independent third party and thereafter be relieved with respect to any claims thereto.

            1.11         Withholding Rights.  Purchaser (through the Exchange Agent, if applicable) shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any Company Stockholder such amounts as Purchaser is required under the Code or any provision of state, local or foreign tax law to deduct and withhold with respect to such payment.  Any amounts so withheld shall be treated for all purposes of this Agreement as having been paid to the Company Stockholder in respect of which such deduction and withholding was made.

            1.12         Dissenting Shares.  Notwithstanding anything in this Agreement to the contrary, shares of Purchaser Common Stock that are issued and outstanding immediately prior to the Effective Time and are held by Company Stockholders who did not vote in favor of the Merger and who have complied with all of the relevant provisions of Section 262 of the DGCL ("Dissenting Shares" and "Dissenting Stockholders," respectively), shall not be converted into the right to receive the consideration provided in Section 1.4, unless and until such holders shall have failed to perfect or shall have effectively withdrawn or lost their rights to appraisal under the DGCL.  Company shall give Purchaser (a) prompt notice of any demands for appraisal of any shares of Company Common Stock or attempted withdrawals of such demands and any other instruments served pursuant to the DGCL and received by Company relating to Company

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Stockholders' rights of appraisal, and (b) the opportunity to direct, in its reasonable business judgment, all negotiations and proceedings with respect to demands for appraisal under the DGCL.  Company shall not, except with the prior written consent of Purchaser, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment.  If any Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent at any time following the Election Deadline, the shares of Company Common Stock held by such Dissenting Stockholder shall thereupon be converted into the right to receive the merger consideration provided in Section 1.4 as if such Dissenting Shares were Stock Election Shares.

            1.13         Closing.  Subject to the provisions of Article 6 hereof, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place as soon as practicable after the satisfaction or waiver of all of the conditions to Closing, and shall be on such date, time and location as Purchaser and Company shall mutually agree. If all conditions to the obligations of each of the parties shall have been satisfied or waived by the party entitled to the benefits thereof, the parties shall, at the Closing, duly execute the Articles of Merger for filing with the Pennsylvania Secretary of State and the Certificate of Merger for filing with the Delaware Secretary of State and promptly thereafter shall take all steps necessary or desirable to consummate the Merger in accordance with all applicable Laws.  The date on which the Closing actually occurs is referred to as the "Closing Date."  The Bank Merger will be consummated after the Merger at a time selected by Purchaser and pursuant to the terms of this Agreement and the Bank Plan of Merger.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND FCB

            To induce Company and Great American to enter into this Agreement, Purchaser and FCB represent and warrant as follows:

            2.1          Organization.



                                    (a)       Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania.  Purchaser is duly registered as a bank holding company with the Board of Governors of the Federal Reserve System (the "FRB") under the Bank Holding Company Act of 1956, as amended ("BHCA"), and engages only in activities (and holds properties only of the types) permitted by the Commonwealth of Pennsylvania and the FRB and the rules and regulations promulgated thereby (including but not limited to the BHCA).  Purchaser (i) has the corporate power and authority to own, operate and lease all of its properties and assets and to carry on its business as now being conducted and (ii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which such licensing or qualification is necessary, except where the failure to so qualify would not be reasonably likely to have a Material Adverse Effect on Purchaser and the Purchaser Subsidiaries.

                                    (b)       Each Purchaser Subsidiary (other than FCB) is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.  Each Purchaser Subsidiary (i) has the corporate power and

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authority to own, operate and lease all of its properties and assets and to carry on its business as now being conducted and (ii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which such licensing or qualification is necessary, except where the failure to so qualify would not be reasonably likely to have a Material Adverse Effect on Purchaser and the Purchaser Subsidiaries.

                                    (c)       FCB is a Pennsylvania-chartered banking corporation, duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania, and engages only in activities (and holds properties only of the types) permitted by the Commonwealth of Pennsylvania, the Pennsylvania Department of Banking (the "PDB") and the Federal Deposit Insurance Corporation (the "FDIC") and the rules and regulations promulgated thereby.  FCB (i) has the corporate power and authority to own, operate and lease all of its properties and assets and to carry on its business as now being conducted and (ii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which such licensing or qualification is necessary, except where the failure to so qualify would not be reasonably likely to have a Material Adverse Effect on Purchaser and the Purchaser Subsidiaries.  Deposit accounts of FCB are insured by the Federal Deposit Insurance Corporation (the "FDIC") to the fullest extent permitted under applicable Law and all premiums and assessments required in connection therewith have been paid by FCB.

            2.2          Capitalization.



                                    (a)       The authorized capital stock of Purchaser consists of 100,000,000 shares of Purchaser Common Stock, and 3,000,000 shares of preferred stock, par value $1.00 per share (the "Purchaser Preferred Stock").  As of the date hereof, there are (i) 63,715,026  shares of Purchaser Common Stock issued, 60,699,962 shares of Purchaser Common Stock outstanding, and 3,015,064 shares of Purchaser Common Stock held in Purchaser's treasury, (ii) no shares of Purchaser Preferred Stock issued and outstanding or held in Purchaser's treasury, and (iii) 2,988,365 shares of Purchaser Common Stock reserved for issuance upon exercise of outstanding stock options.  All of the issued and outstanding shares of Purchaser Common Stock have been duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof.  None of the issued and outstanding shares of Purchaser Common Stock were issued in violation of the preemptive rights of any Person.  Upon issuance as provided in this Agreement, the shares of Purchaser Common Stock issuable in the Merger will be duly authorized, validly issued, fully paid and nonassessable and no personal liability will attach to the ownership thereof.  No Person has preemptive rights in respect of the Purchaser Common Stock to be issued in the Merger. The shares of Purchaser Common Stock issuable in the Merger will be registered pursuant to an effective Registration Statement under the Securities Act.

                                    (b)       The authorized capital stock of FCB consists of 100,000,000 shares of common stock, par value $1.00 per share ("FCB Common Stock").  As of the date hereof, there are (i) 38,969,900 shares of FCB Common Stock issued and outstanding and (ii) no shares of FCB Common Stock are held in FCB's treasury.  All of the issued and outstanding shares of FCB Common Stock have been duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof.  All of the issued and outstanding shares of FCB Common Stock are held beneficially and of record by

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Purchaser, free and clear of any Lien.  None of the issued and outstanding shares of FCB Common Stock were issued in violation of the preemptive rights of any Person.  There are no outstanding securities or other obligations which are convertible into FCB Common Stock or into any other debt or equity security of FCB, and there are no outstanding rights, subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of FCB Common Stock or any other equity security of FCB or any securities representing the right to purchase or otherwise receive any shares of FCB Common Stock, or any other equity security of FCB.

            2.3          Authority; No Violation.



                                    (a)       Purchaser and FCB have full corporate power and authority to execute and deliver this Agreement and, subject to receipt of the required regulatory approvals set forth in Section 2.5, to consummate the transactions contemplated hereby and to comply with the terms and provisions hereof.  The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Boards of Directors of Purchaser and FCB and no other corporate proceedings on the part of Purchaser or FCB are necessary to approve this Agreement or to consummate the Merger or the Bank Merger.  This Agreement has been duly and validly executed and delivered by Purchaser and FCB and (assuming due authorization, execution and delivery by Company and Great American of this Agreement) is a valid and binding obligation of Purchaser and FCB, enforceable against each of Purchaser and FCB in accordance with its terms, except as enforcement may be limited by (i) receivership, conservatorship or supervisory powers of bank regulatory agencies, (ii) general principles of equity and (iii) bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally.

                                    (b)       Neither the execution and delivery of this Agreement by Purchaser and FCB, nor the consummation by Purchaser and FCB of the transactions contemplated hereby, nor compliance by Purchaser or FCB with any of the terms or provisions hereof, will (either with or without the giving of notice or the passing of time or both) (i) violate any provision of the Articles of Incorporation or Bylaws of Purchaser or the organizational documents of any Purchaser Subsidiary or (ii) subject to the receipt of the required regulatory approvals set forth in Section 2.5, (A) violate in any material respect any Law applicable to Purchaser or any Purchaser Subsidiary, or any of their respective properties or assets, or (B) violate or conflict in any material respect with, result in a material breach of any provision of or the loss of any material benefit under, constitute a material default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Purchaser or any Purchaser Subsidiary is a party, or by which they or any of their respective properties or assets may be bound or affected, (C) violate or conflict with any of the terms, conditions or provisions of any order, judgment or decree to which Purchaser or any Purchaser Subsidiary is a party, or by which they or any of their respective properties or assets may be bound or affected, or (D) result in the creation of any Lien upon any of the respective properties or assets of Purchaser or any Purchaser Subsidiary.

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            2.4          No Legal Bar.  Neither Purchaser nor any Purchaser Subsidiary is a party to, subject to or bound by any agreement, judgment, order, writ, prohibition, injunction or decree of any court or other Governmental Entity or any law which would prevent the execution of this Agreement by Purchaser or FCB, their delivery thereof to Company and Great American or, subject to receipt of the required regulatory approvals set forth in Section 2.5, their consummation of the transactions contemplated hereby and their compliance with the terms and provisions hereof, and no action or proceeding is pending or, to the Knowledge of Purchaser, threatened against Purchaser or any Purchaser Subsidiary in which the validity of this Agreement, any of the transactions contemplated hereby, or any action which has been taken by any of the parties to this Agreement in connection herewith or in connection with any of the transactions contemplated hereby is at issue.

            2.5          Approvals, Consents and Filings.  Except for (i) the approval of the Merger by the FRB and the PDB, (ii) the approval of the Bank Merger by the FDIC and the PDB, (iii) the delivery of notice of the Merger and the Bank Merger to the OTS, (iv) the declaration of effectiveness of the Registration Statement and approval of the Proxy Statement/Prospectus by the SEC, (v) any notice or filing required under the HSR Act, (vi) the approval of Purchaser's additional listing application for the listing of the Purchaser Common Stock to be issued in the Merger on the NYSE and (vii) the filing of the Articles of Merger with the Pennsylvania Secretary of State and the Certificate of Merger with the Delaware Secretary of State, neither the execution and delivery of this Agreement by Purchaser nor the consummation of the transactions contemplated hereby, requires any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity or other third party.

            2.6          Financial Statements; Reports; Books and Records.



                                    (a)       Purchaser has previously delivered or made available to Company true, correct and complete copies of the consolidated balance sheets of Purchaser and the Purchaser Subsidiaries as of December 31 for the fiscal years 2000 through 2002 and the related consolidated statements of income, changes in shareholders' equity and cash flows for the fiscal years 2000 through 2002, inclusive, in each case accompanied by the audit report of Deloitte & Touche LLP, independent public accountants with respect to Purchaser for such periods, and the interim unaudited financial statements of Purchaser as of and for the nine-month periods ended September 30, 2003 and 2002 (all such financial statements are collectively referred to herein as the "Purchaser Financial Statements"). The Purchaser Financial Statements (including the related notes, where applicable) fairly present, in all material respects, the results of the consolidated operations and the consolidated financial condition of Purchaser and the Purchaser Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth.  The Purchaser Financial Statements (including the related notes, where applicable) comply with applicable accounting requirements with respect thereto and have been prepared in accordance with accounting principles generally accepted in the United States of America consistently applied during the periods involved ("GAAP"), except in each case as indicated in such statements or in the notes thereto.

                                    (b)       Since December 31, 2000, Purchaser and each Purchaser Subsidiary has timely filed, and subsequent to the date hereof will timely file, all reports, registrations and statements, together with any amendments required to be made with respect

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thereto, that were and are required to be filed with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, proxy statements and all other communications mailed by Purchaser to its shareholders (and copies of all such reports, registrations statements and communications have been furnished or made available by Purchaser to Company), (ii) the FRB, (iii) the FDIC, (iv) the PDB, and (v) the NYSE and any other self-regulatory organization, and (vi) any applicable state securities, insurance or banking authorities (collectively, as used in this Section 2.6(b), the "Regulatory Agencies") (all such reports, registrations and statements, together with any amendments thereto, are collectively referred to herein as the "Purchaser Reports"), and have paid all fees and assessments due and payable in connection with any of the foregoing.  As of their respective dates, the Purchaser Reports complied and, with respect to filings made after the date of this Agreement, will at the date of filing comply in all material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Agencies and did not or will not, as applicable, at the date of filing contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  No Purchaser Subsidiary is required to file any form, report or other document with the SEC.  Except for normal periodic examinations conducted by a Regulatory Agency in the regular course of the business of Purchaser and the Purchaser Subsidiaries, since December 31, 2000, no Regulatory Agency has initiated any proceeding or, to the Knowledge of Purchaser, investigation into the business or operations of Purchaser or any of the Purchaser Subsidiaries. Purchaser and each Purchaser Subsidiary has resolved all material violations, criticisms or exceptions by any Regulatory Agency with respect to any such normal periodic examination.  Neither Purchaser nor any Purchaser Subsidiary has received any written notice from, or is a party to any written agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or is a recipient of any extraordinary supervisory letter from, any Governmental Entity or any staff thereof (i) asserting that Purchaser or any Purchaser Subsidiary is not in substantial compliance with any statute, regulation or ordinance which such Governmental Entity enforces, or with the internal policies and procedures of such entity, or (ii) directing, restricting or limiting in any manner the operations of Purchaser or any Purchaser Subsidiary, including with respect to such entities' capital adequacy, its credit policies, its management, or the payment of dividends.

                                    (c)       The books and records of Purchaser and each Purchaser Subsidiary have been, and are being, maintained in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions and reasonable accruals.

            2.7          Absence of Changes.  Since December 31, 2002 there has not been any Material Adverse Change in Purchaser and the Purchaser Subsidiaries.

            2.8          Brokers, Finders and Financial Advisors.  Except for Purchaser's engagement of Sandler O'Neill & Partners L.P. in connection with the issuance of trust preferred and/or other debt securities to finance the Merger, neither Purchaser nor any Purchaser Subsidiary, nor any of their respective officers, directors, employees or agents, has employed any broker, finder or financial advisor in connection with the transactions contemplated by this Agreement or in connection with any transaction other than the Merger, or incurred any liability or commitment for any fees or commissions to any such Person in connection with the transactions contemplated by this Agreement or in connection with any transaction other than the Merger. 

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            2.9          Information to be Supplied.  The information to be supplied by Purchaser or any Purchaser Subsidiary for inclusion in the Registration Statement and/or any information filed by Purchaser with the SEC under the Exchange Act which is incorporated by reference into the Registration Statement will not, at the time the Registration Statement is declared effective pursuant to the Securities Act and as of the date the Proxy Statement/Prospectus is mailed to Company Stockholders and up to and including the date of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading.  The information supplied, or to be supplied, by Purchaser for inclusion in the Regulatory Applications will, at the time such documents are filed with any Governmental Entity and up to and including the date of the attainment of any required regulatory approvals, be accurate in all material respects.

            2.10         Compliance with Applicable Laws.

 

                                    (a)       Purchaser and each Purchaser Subsidiary has complied in all material respects with all Laws applicable to it or its assets or to the operation of its business. Neither Purchaser nor any Purchaser Subsidiary has received any written notice of any alleged or threatened claim, violation, or liability under any such Laws that has not heretofore been cured and for which there is any remaining material liability.

                                    (b)       FCB is an insured depository institution and is "well-capitalized" (as that term is defined by 12 C.F.R. Section 565.4(b)(1)), and such institution's examination rating under the Community Reinvestment Act of 1977 is satisfactory or outstanding.

            2.11         Representations and Warranties.  The representations or warranties made by Purchaser and FCB as set forth in this Agreement, or in any document, statement, certificate or other writing furnished or to be furnished by Purchaser and FCB to Company pursuant to the transactions contemplated by this Agreement, do not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein which is necessary to make the statements and facts contained herein or therein, in light of the circumstances under which they were or are made, not false or misleading.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF COMPANY AND GREAT AMERICAN

            To induce Purchaser and FCB to enter into this Agreement, Company and Great American represent and warrant, except as set forth in the disclosure schedule delivered by Company to Purchaser on the date hereof (the "Company Disclosure Schedule"), as follows:

            3.1          Organization.


                                    (a)       Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Company is duly registered as a unitary savings and loan holding company with the OTS under the HOLA, and engages only in activities (and holds properties only of the types) permitted by the State of Delaware and the OTS and the rules and regulations promulgated thereby (including but not limited to the HOLA).  Company (i) has the corporate power and authority to own or lease all of its properties and assets and to

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carry on its business as it is now being conducted, and (ii) is duly licensed or qualified to do business in each jurisdiction in which such licensing or qualification is necessary, except where the failure to so qualify would not be reasonably likely to have a Material Adverse Effect on Company and the Company Subsidiaries. 

                                    (b)       Each Company Subsidiary (other than Great American) is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation.  Each Company Subsidiary (i) has the corporate power and authority to own, operate and lease all of its properties and assets and to carry on its business as now being conducted and (ii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which such licensing or qualification is necessary, except where the failure to so qualify would not be reasonably likely to have a Material Adverse Effect on Company and the Company Subsidiaries.

                                    (c)       Great American is a federal savings association duly chartered under the laws of the United States, with its main office in the Commonwealth of Pennsylvania, and engages only in activities (and holds properties only of the types) permitted by the OTS, the PDB and the FDIC and the rules and regulations promulgated thereby.  Great American (i) has the power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted and (ii) is duly licensed or qualified to do business in each jurisdiction in which such licensing or qualification is necessary, except where the failure to so qualify would not be reasonably likely to have a Material Adverse Effect on Company and the Company Subsidiaries.  Deposit accounts of Great American are insured by the FDIC to the fullest extent permitted by law, and all premiums and assessments required in connection therewith have been paid by Great American.

                                    (d)       Company has delivered to Purchaser true, correct and complete copies of the Certificate of Incorporation and Bylaws, as amended to the date hereof, of Company and each Company Subsidiary.

            3.2          Capitalization, Subsidiaries and Affiliates.


                                    (a)       The authorized capital stock of Company consists 23,000,000 of shares of Company Common Stock, and 1,000,000 shares of preferred stock, par value $.01 per share (the "Company Preferred Stock"). As of the date hereof, there are (i) 8,900,000 shares of Company Common Stock issued and 3,867,408 shares of Company Common Stock held in Company's treasury, (ii) no shares of Company Preferred Stock issued and outstanding or held in Company's treasury, and (iii) 5,032,592 shares of Company Common Stock outstanding for voting purposes.  Section 3.2(a) of the Company Disclosure Schedule sets forth a complete and accurate list specifying all outstanding options to purchase Company Common Stock, indicating (i) the holder thereof, (ii) the number of shares of Company Common Stock subject thereto, (iii) the exercise price, date of grant, vesting schedule and expiration date therefor, and (iv) any terms regarding the acceleration of vesting thereof.  The only outstanding options to purchase shares of Company Common Stock are issued pursuant to the Company Option Plans and a copy of each Company Option Plan gas been provided to Purchaser.  All such outstanding options to purchase shares of Company Common Stock pursuant to the Company Option Plans shall be converted or cancelled as provided herein as of the Effective Time.  All of the issued and outstanding shares

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of Company Common Stock have been duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof.  None of the issued and outstanding shares of Company Common Stock were issued in violation of the preemptive rights of any Person.  Except for the outstanding options to purchase shares of Company Common Stock under the Company Option Plans, Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of Company Common Stock, Company Preferred Stock or any other equity security of Company or any securities representing the right to purchase or otherwise receive any shares of Company Common Stock, Company Preferred Stock, or any other equity security of Company.

                                    (b)       The authorized capital stock of Great American consists of 1,000 shares of common stock, par value $1.00 per share ("Great American Common Stock").  As of the date hereof, there are (i) 1,000 shares of Great American Common Stock issued and outstanding and (ii) no shares of Great American Common Stock held in Great American's treasury.  All of the issued and outstanding shares of Great American Common Stock have been duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof.  None of the issued and outstanding shares of Great American Common Stock were issued in violation of the preemptive rights of any Person.  Great American does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of Great American Common Stock or any other equity security of Great American or any securities representing the right to purchase or otherwise receive any shares of Great American Common Stock, or any other equity security of Great American. 

                                    (c)       Section 3.2(c) of the Company Disclosure Schedule sets forth a true, correct and complete list of all direct or indirect subsidiaries of Company, whether consolidated or unconsolidated (each, a "Company Subsidiary," and collectively, the "Company Subsidiaries"), including a description of the capitalization of each Company Subsidiary, and all investments by Company or any Company Subsidiary in any corporation, partnership, company, joint venture or other entity, as of the date of this Agreement.  Company owns, directly or indirectly, all of the issued and outstanding shares of capital stock or other equity interests of each Company Subsidiary, free and clear of all Liens.  All of the issued and outstanding shares of capital stock or other interests of each Company Subsidiary (other than Great American) are duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof, and none of such shares or other interests were issued in violation of the preemptive rights of any Person.  No Company Subsidiary has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Company Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Company Subsidiary.

                                    (d)       Each director and executive officer of Company and each Person who, to the Knowledge of Company, holds more than 10% of the outstanding shares of Company Common Stock is listed at Section 3.2(d) of the Company Disclosure Schedule.

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            3.3          Authority; No Violation.

 

                                    (a)       Company and Great American have full corporate power and authority to execute and deliver this Agreement and, subject to receipt of the required regulatory and stockholder approvals set forth in Section 3.5, to consummate the transactions contemplated hereby and to comply with the terms and provisions hereof. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly approved by the Boards of Directors of Company and Great American.  The Board of Directors of Company has directed that this Agreement and the transactions contemplated hereby be submitted to the Company Stockholders for approval at the Special Meeting and, except for the adoption of this Agreement by the requisite vote of the Company Stockholders, no other corporate proceedings on the part of Company or Great American (except for matters related to setting the date, time, place and record date for the Special Meeting) are necessary to approve this Agreement or to consummate the Merger or the Bank Merger.  This Agreement has been duly and validly executed and delivered by Company and Great American and (assuming due authorization, execution and delivery by Purchaser and FCB of this Agreement) is a valid and binding obligation of Company and Great American, enforceable against each of Company and Great American in accordance with its terms, except as enforcement may be limited by (i) receivership, conservatorship or supervisory powers of bank regulatory agencies, (ii) general principles of equity and (iii) bankruptcy, insolvency and similar Laws affecting creditors' rights and remedies generally.

                                    (b)       Neither the execution and delivery of this Agreement by Company and Great American, nor the consummation by Company and Great American of the transactions contemplated hereby, nor compliance by Company or Great American with any of the terms or provisions hereof, will (either with or without the giving of notice of the passing of time or both) (i) violate any provision of the Certificate of Incorporation or Bylaws of Company or the organizational documents of any Company Subsidiary or (ii) subject to the receipt of the required regulatory and stockholder approvals set forth in Section 3.5 and the third-party consents set forth in Section 3.3(b) of the Company Disclosure Schedule, (A) violate in any material respect any Law applicable to Company or any Company Subsidiary, or any of their respective properties or assets, or (B) violate or conflict in any material respect with, result in a material breach of any provision of or the loss of any material benefit under, constitute a material default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Company or any Company Subsidiary is a party, or by which they or any of their respective properties or assets may be bound or affected, (C) violate or conflict with any of the terms, conditions or provisions of any order, judgment or decree to which Company or any Company Subsidiary is a party, or by which they or any of their respective properties or assets may be bound or affected, or (D) result in the creation of any Lien upon any of the respective properties or assets of Company or any Company Subsidiary.

            3.4          No Legal Bar.  Neither Company nor any Company Subsidiary is a party to, or subject to, or bound by, any agreement or judgment, order, letter of understanding, writ, prohibition, injunction or decree of any court or other Governmental Entity, or any Law which

18

would prevent the execution of this Agreement by Company or Great American, the delivery thereof to Purchaser, or (subject to the receipt of the required regulatory and stockholder approvals set forth in Section 3.5) their consummation of the transactions contemplated hereby and their compliance with the terms and provisions hereof, and no action or proceeding is pending or, to the Knowledge of Company, threatened against Company or any Company Subsidiary in which the validity of this Agreement, the transactions contemplated hereby or any action which has been taken by any of the parties to this Agreement in connection herewith or in connection with the transactions contemplated hereby is at issue.

            3.5          Approvals, Consents and Filings.  Except for (i) the approval of the Merger by the FRB and the PDB, (ii) the approval of the Bank Merger by the FDIC and the PDB, (iii) the delivery of notice of the Merger and the Bank Merger to the OTS, (iv) any notice or filing required under the HSR Act, (v) the approval of the Merger by the Company Stockholders and (vi) the filing of the Articles of Merger with the Pennsylvania Secretary of State and the Certificate of Merger with the Delaware Secretary of State, neither the execution and delivery of this Agreement by Company or Great American nor the consummation of the transactions contemplated hereby requires any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity.

            3.6          Financial Statements; Reports; Books and Records.



                                    (a)       Company has previously delivered or made available to Purchaser true, correct and complete copies of the consolidated statements of condition of Company and the Company Subsidiaries as of December 31 for the fiscal years 2000 through 2002 and the related consolidated statements of income and comprehensive income, shareholders' equity and cash flows for the fiscal years 2000 through 2002, inclusive, in each case accompanied by the audit report of KPMG LLP, independent public accountants with respect to Company, and the interim unaudited financial statements of Company as of and for the nine-month periods ended September 30, 2003 and 2002 (all such financial statements are collectively referred to herein as the "Company Financial Statements"). The Company Financial Statements (including the related notes, where applicable) fairly present, and the financial statements referred to in Section 5.7 will fairly present (subject, in the case of the unaudited statements, to recurring audit adjustments normal in nature and amount), in all material respects, the results of the consolidated operations and consolidated financial condition of Company and the Company Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth.  The Company Financial Statements (including the related notes, where applicable) comply, and the financial statements referred to in Section 5.7 will comply, with applicable accounting requirements with respect thereto and have been, and the financial statements referred to in Section 5.7 will be, prepared in accordance with GAAP, except in each case as indicated in such statements or in the notes thereto and except, in the case of unaudited quarterly financial statements, for the absence of notes thereto and normal year-end audit adjustments consistent with past practice. 

                                    (b)       Since December 31, 2000, Company and each Company Subsidiary has timely filed, and subsequent to the date hereof will timely file, all reports, registrations and statements, together with any amendments required to be made with respect thereto, that were and are required to be filed with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K, proxy statements and all other communications mailed by

19

Company to its stockholders (and copies of all such reports, registrations statements and communications have been furnished or made available by Company to Purchaser), (ii) the OTS, (iii) the FDIC, (iv) the PDB, (v) the AMEX and any other self-regulatory organization, and (vi) any applicable state securities, insurance or banking authorities (collectively, as used in this Section 3.6(b), the "Regulatory Agencies") (all such reports, registrations and statements, together with any amendments thereto, are collectively referred to herein as the "Company Reports"), and have paid and will pay, as applicable, all fees and assessments due and payable in connection with any of the foregoing.  As of their respective dates, the Company Reports complied and, with respect to filings made after the date of this Agreement, will at the date of filing comply, in all material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Agencies and did not or will not, as applicable, at the date of filing contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  No Company Subsidiary is required to file any form, report or other document with the SEC.  Except for normal periodic examinations conducted by a Regulatory Agency in the regular course of the business of Company and the Company Subsidiaries, since December 31, 2000, no Regulatory Agency has initiated any proceeding or, to the Knowledge of Company, investigation into the business or operations of Company or any of the Company Subsidiaries. Company and each Company Subsidiary has resolved all material violations, criticisms or exceptions by any Regulatory Agency with respect to any such normal periodic examination.  Neither Company nor any Company Subsidiary has received any written notice from, or is a party to any written agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or is a recipient of any extraordinary supervisory letter from, any Governmental Entity or any staff thereof (i) asserting that Company or any Company Subsidiary is not in substantial compliance with any statute, regulation or ordinance which such Governmental Entity enforces, or with the internal policies and procedures of such entity, or (ii) directing, restricting or limiting in any manner the operations of Company or any Company Subsidiary, including with respect to such entities' capital adequacy, its credit policies, its management, or the payment of dividends.

                                    (c)       The books and records of Company and each Company Subsidiary have been, and are being, maintained in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions and reasonable accruals.

                                    (d)       Since December 31, 2002, there have been no significant changes in the internal controls utilized by Company and Company Subsidiaries with respect to their financial records (the "Internal Controls") or in other factors that could significantly affect the Internal Controls, including any corrective actions with regard to significant deficiencies and material weaknesses.  There are no significant deficiencies in the design or operation of the Internal Controls which could adversely affect the ability of Company and Company Subsidiaries to record, process, summarize and report financial data, and there are no material weaknesses in the Internal Controls.  Company is not aware of any fraud or suspected fraud, whether or not material, that involves management or other employees who have a significant role in preparing Company's consolidated financial statements.

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            3.7          Undisclosed Liabilities.  Neither Company nor any Company Subsidiary has any debt, liability or obligation of any kind, whether accrued, absolute, known, unknown, contingent or otherwise except (i) those reflected in the most recent audited balance sheet provided by Company to Purchaser or (ii) those incurred in the Ordinary Course of Business since December 31, 2002, none of which arises from any breach of contract, tort or violation of law or has or is reasonably likely to have a Material Adverse Effect on Company and the Company Subsidiaries.

            3.8          Tax Matters.


                                    (a)       Company and each Company Subsidiary has duly filed when due (including applicable extensions granted without penalty) (i) all material federal and state tax returns and reports, and (ii) all material returns and reports of other Governmental Entities having jurisdiction with respect to taxes imposed upon the income, properties, revenues, operations or other assets of Company or such Company Subsidiary.  Such returns or reports are true, complete and correct in all material respects.  Company and each Company Subsidiary has paid all taxes and other governmental charges including all applicable interest and penalties set forth in such returns or reports. 

                                    (b)       There are no Liens on the assets of Company or any Company Subsidiary relating to or attributable to any taxes (other than taxes not yet due and payable).  All material federal, state and local taxes and other material governmental charges payable by Company or any Company Subsidiary have been paid or have been adequately accrued or reserved for on such entity's books in accordance with GAAP and banking regulations applied on a consistent basis.  Until the Effective Time, Company and each Company Subsidiary shall continue to reserve sufficient funds for the payment of expected tax liabilities in accordance with generally accepted accounting principles and banking regulations applied on a consistent basis.  Neither Company nor any Company Subsidiary has received any written, or, to the Knowledge of Company, unwritten notice of a tax deficiency or assessment of additional taxes of any kind and, to the Knowledge of Company, there is no threatened claim against Company or any Company Subsidiary or any basis for any such claim, for payment of any additional federal, state or local taxes for any period prior to the date of this Agreement in excess of the accruals or reserves provided therefor in the most recent audited financial statements provided by Company to Purchaser.

                                    (c)       Neither Company nor any Company Subsidiary has constituted a "distributing corporation" or a "controlled corporation" in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the Code) that includes the Merger.

                                    (d)       Proper and accurate amounts have been withheld by Company and each Company Subsidiary from its employees for all periods in compliance in all material respects with the tax withholding provisions of applicable federal, state and local tax laws.  All material federal, state and local tax returns have been filed by Company and each Company Subsidiary for all periods for which returns were due with respect to withholding, social security

21

and unemployment taxes and the amounts shown thereon to be due and payable have been paid in full.  Such returns or reports are true, complete and correct in all material respects. 

            3.9          Certain Contracts.

                                    (a)       Section 3.9(a) of the Company Disclosure Schedule sets forth a complete and accurate list of all contracts, arrangements and commitments to which either Company or any Company Subsidiary is a party or by which either Company or any Company Subsidiary may be bound as of the date of this Agreement (i) between or among Company, any Company Subsidiary and/or any Affiliate thereof, (ii) which materially restricts the conduct of any line of business by Company or any Company Subsidiary, (iii) that is, whether or not entered into in the Ordinary Course of Business, not terminable upon notice of 60 days or less and involves payments to or by Company or a Company Subsidiary of more than $50,000 in the aggregate per year, except contracts with customers entered into in the Ordinary Course of Business, (iv) providing for the indemnification by Company or any Company Subsidiary of any Person, (v) that is, in Company's good faith determination, material to the financial condition, results of operations or business of Company or any Company Subsidiary, except contracts with customers entered into in the Ordinary Course of Business.  Each contract, arrangement or commitment of the type described in this Section 3.9(a), whether or not set forth in Section 3.9(a) of the Company Disclosure Schedule, is referred to herein as a "Company Contract."  Section 3.9(a) of the Company Disclosure Schedule does not include the Leases, Employment Agreements or Company Benefit Plans, and the Leases, Employment Agreements and Company Benefit Plans are not included in the term "Company Contracts."

                                    (b)        (i) Each Company Contract is valid, binding and in full force and effect and is enforceable in accordance with its terms, except as enforcement may be limited by (A) receivership, conservatorship or supervisory powers of bank regulatory agencies, (B) general principles of equity and (C) bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally; (ii) Company, each Company Subsidiary and, to the Knowledge of Company, each other party thereto, has in all material respects performed all obligations required to be performed by it to date under each Company Contract; and (iii) no event or condition exists that constitutes or, after notice or lapse of time or both, would constitute, a material default or cause for termination on the part of Company or any Company Subsidiary or, to the Knowledge of Company, any other party under any such Company Contract.

            3.10         Litigation and Proceedings.  Except as set forth on Section 3.10 of the Company Disclosure Schedule, neither Company nor any Company Subsidiary is a party to any, and there are no pending or to the Knowledge of Company, threatened, legal, administrative, arbitration or other proceedings, claims, counterclaims, actions or governmental or regulatory investigations of any nature against Company or any Company Subsidiary.  There is no injunction, order, judgment, decree, or regulatory restriction (other than those of general applicability to savings and loan holding companies and their subsidiaries) imposed upon Company, any Company Subsidiary, the officers and directors of Company or any Company Subsidiary or the assets or business of Company or any Company Subsidiary.  Neither Company nor any Company Subsidiary has been advised of, or is aware of, the threat of any such action.

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            3.11         Tangible Properties.


                                    (a)       Section 3.11(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all real property owned by Company or any Company Subsidiary. 

                                    (b)       Section 3.11(b) of the Company Disclosure Schedule sets forth a true, correct and complete schedule of all leases, subleases, licenses and other agreements under which each of Company and the Company Subsidiaries uses or occupies or has the right to use or occupy, now or in the future, real property (the "Leases").  Each of the Leases is valid, binding and in full force and effect in all material respects according to its terms.  Company and each Company Subsidiary has performed all material obligations required to be performed by it to date under each of the Leases.  No event has occurred and no condition exists that constitutes or, after notice or lapse of time or both, would constitute, a material default or termination event on the part of Company or any Company Subsidiary under any of the Leases.  Company and the Company Subsidiaries have paid all rents and other charges to the extent due under the Leases.

                                    (c)       Each of Company and the Company Subsidiaries, has good title to, valid leasehold interests in or otherwise legally enforceable rights to use all of the real property, personal property and other assets (tangible or intangible), used, occupied and operated or held for use by it in connection with its business as presently conducted in each case, free and clear of any Lien, except for (i) statutory Liens for amounts not yet delinquent, and (ii) Liens incurred in the Ordinary Course of Business that, individually and in the aggregate, are not material in character, amount or extent, do not materially detract from the value and do not materially interfere with the present use, occupancy or operation of, any material asset.

            3.12         Intellectual Property.  Section 3.12 of the Company Disclosure Schedule sets forth all (i) registered trademarks, trade names, service marks or other trade rights, and all pending applications for any such registrations, (ii) registered copyrights, and all pending applications for any such registrations, (iii) trade secrets, (iv) inventions, discoveries, designs, and drawings, (v) computer software (including all source and object codes and manuals), and (vi) registered patents, and all pending applications for any such registrations, whether owned, licensed or otherwise used by Company or any Company Subsidiary (collectively, the "Intellectual Property Rights").  The Intellectual Property Rights are all those necessary for the conduct of the business of Company and each Company Subsidiary as presently conducted.  Neither Company nor any Company Subsidiary has any obligation to compensate any Person for the use of any of the Intellectual Property Rights and Company has not granted to any Person any license, option or other rights to use in any manner any of the Intellectual Property Rights, whether requiring the payment of royalties or not.  The Intellectual Property Rights will not cease to be rights of Company or be impaired by reason of the performance of this Agreement or the consummation of the transactions contemplated hereby.  No other Person (i) has notified Company that such Person claims any ownership of or right to use any Intellectual Property Rights or (ii) to the Knowledge of Company, is infringing upon any Intellectual Property Rights.  To the Knowledge of Company, Company's use of the Intellectual Property Rights does not conflict with, infringe upon or otherwise violate the valid rights of any Person anywhere where the business of Company is currently conducted or is currently proposed to be conducted by Company.  No written notice has been received and not fully resolved and no action has been

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instituted or, to the Knowledge of Company, threatened against Company alleging that Company's use of the Intellectual Property Rights infringes upon or otherwise violates any rights of a Person.

            3.13         Insurance.  Section 3.13 of the Company Disclosure Schedule contains a complete list and description of all policies of insurance and bonds presently maintained by Company or any Company Subsidiary providing coverage for either of them, their assets, or any of their officers, directors and employees, all of which are in full force and effect, together with a complete list of all pending claims under any such policies or bonds.  All material terms, obligations and provisions of each such policy and bond has been complied with, all premiums due thereon have been paid.  Neither Company nor any Company Subsidiary has received any written, or, to the Knowledge of Company, unwritten notice of cancellation with respect to any such policy or bond.  Such policies and bonds provide adequate coverage to insure the properties and business of Company and the Company Subsidiaries and the activities of their officers, directors and employees against such risks and in such amounts as are prudent and customary.  Neither Company nor any Company Subsidiary has any liability for retrospective premium adjustments with respect to such policies.  Company has previously made available to Purchaser a true, correct and complete copy of each such insurance policy and bond.

            3.14         Compliance with Applicable Laws.


                                    (a)       Company and each Company Subsidiary has complied in all material respects with all Laws applicable to it or its assets or to the operation of its business. Neither Company nor any Company Subsidiary has received any written, or, to the Knowledge of Company, unwritten notice of any material alleged or threatened claim, violation, or liability under any such Laws that has not heretofore been cured and for which there is any remaining material liability.

                                    (b)       Great American is an insured depository institution and is "well-capitalized" (as that term is defined by 12 C.F.R. Section 565.4(b)(1)), and such institution's examination rating under the Community Reinvestment Act of 1977 is satisfactory or outstanding.

                                    (c)       Neither Company nor any Company Subsidiary, nor to the Knowledge of Company any other Person acting on behalf of Company or any Company Subsidiary that qualifies as a financial institution under the anti-money laundering restrictions of the United States, including without limitation the federal Bank Secrecy Act and the USA PATRIOT Act of 2001, and the rules, regulations and orders promulgated thereunder (collectively, the "Anti-Money Laundering Laws"), has knowingly acted, by itself or in conjunction with another, in any act in connection with the concealment of any currency, securities, other proprietary interest that is the result of a felony as defined in the Anti-Money Laundering Laws ("Unlawful Gains"), or knowingly accepted, transported, stored, dealt in or brokered any sale, purchase or any transaction of any nature for Unlawful Gains. Company and each Company Subsidiary that qualifies as a financial institution under the Anti-Money Laundering Laws has, during the past three years, implemented in all material respects such anti-money laundering mechanisms and kept and filed all reports and other necessary documents as required by, and otherwise complied in all material respects with, the Anti-Money Laundering

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Laws. Each such financial institution has implemented an anti-money laundering program that meets the requirements of Section 326 and Section 352 of the USA PATRIOT Act and the regulations promulgated thereunder.

                                    (d)       Company and each Company Subsidiary are, and since January 1, 2000 have been, in material compliance with all applicable federal and state privacy Laws, including without limitation, Title V of the Gramm-Leach-Bliley Act of 1999 and the regulations promulgated thereunder, and with its information security program required by 12 C.F.R. Part 570.

            3.15         Absence of Changes; Operation in the Ordinary Course.  Since December 31, 2002 (a) there has not been any Material Adverse Change in Company and the Company Subsidiaries, taken as a whole, and (b) except as disclosed in the textual portion of the Company Reports (including, for that purpose, the notes to the Company Financial Statements contained therein) or Section 3.15 of the Company Disclosure Schedule, neither Company nor any Company Subsidiary has taken any action which, if it had been taken after the date of this Agreement, would require the consent of Purchaser under Section 4.2 hereof.

            3.16          Employee Benefit Plans.



                                    (a)       Section 3.16(a) of the Company Disclosure Schedule contains a true and complete list of all of the Company Benefit Plans.  Company has heretofore delivered to Purchaser true and complete copies of (i) each Company Benefit Plan and, if the Company Benefit Plan is funded through a trust or any third party funding vehicle, a copy of the trust or other funding document, (ii) the most recent determination letter issued by the Internal Revenue Service with respect to each Company Benefit Plan for which such a letter has been obtained, (iii) annual reports on Form 5500 required to be filed with any Governmental Entity for each Company Plan for the three most recent plan years and all required actuarial reports for the last three plan years of each Company Benefit Plan.

                                    (b)       No Company Benefit Plan is subject to Title IV of ERISA or section 412 of the Code and neither Company nor any ERISA Affiliate made, or was required to make, contributions to any employee benefit plan subject to Title IV of ERISA or section 412 of the Code during the six year period ending on the Effective Time.

                                    (c)       No Company Benefit Plan utilizes a funding vehicle described in Section 501(c)(9) of the Code or is subject to the provisions of Section 505 of the Code.

                                    (d)       Each Company Benefit Plan has been operated and administered in material compliance with its terms and applicable Law, including Section 406 of ERISA and Section 4975 of the Code. 

                                    (e)       Each Company Benefit Plan which is intended to be "qualified" within the meaning of Section 401(a) of the Code is so qualified and the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code.

                                    (f)       Except as set forth in Section 3.16 of the Company Disclosure Schedule, no Company Benefit Plan provides welfare benefits, including death or medical

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benefits, with respect to current or former employees or consultants of Company or any Company Subsidiary beyond their retirement or other termination of service (other than coverage mandated by applicable Law).

                                    (g)       There are no pending, threatened or anticipated claims by or on behalf of any Company Benefit Plan, by any employee or beneficiary covered under any such Company Benefit Plan with respect to such Company Benefit Plan, or otherwise involving any such Company Benefit Plan (other than routine claims for benefits).

                                    (h)        (i) Except as set forth in Section 3.16 of the Company Disclosure Schedule, no employee of Company or any Company Subsidiary will be entitled to any additional benefits or any acceleration of the time of payment or vesting of any benefits under any Company Benefit Plan as a result of the consummation of the transactions contemplated by this Agreement (whether alone or in conjunction with other actions), (ii) no amount payable, or economic benefit provided, by Company or any of Company Subsidiary (including any acceleration of the time of payment or vesting of any benefit) as a result of the consummation of the transactions contemplated by this Agreement (whether alone or in conjunction with other actions) could be considered an "excess parachute payment" under Section 280G of the Code, (iii) no Person is entitled to receive any additional payment from Company, any Company Subsidiary or any other Person (a "Parachute Gross-Up Payment") in the event that the excise tax of Section 4999 of the Code is imposed on such Person, and (iv) neither Company nor any Company Subsidiary has granted to any Person any right to receive any Parachute Gross-Up Payment.

            3.17         Employee Matters.



                                    (a)       Section 3.17(a) of the Company Disclosure Schedule contains a list of the names, titles, responsibilities and compensation arrangements of (i) each officer and director of Company and each Company Subsidiary and (ii) each employee of Company or any Company Subsidiary whose base salary from Company or such Company Subsidiary for the current fiscal year will exceed $50,000.  Neither Company or any Company Subsidiary has received any notice or has any Knowledge that any officer, director or employee listed on Section 3.17(a) of the Company Disclosure Schedule intends to terminate his or her employment or service to Company or such Company Subsidiary.

                                    (b)       Section 3.17(b) of the Company Disclosure Schedule sets forth a true and complete list as of the date hereof of each of the following agreements, arrangements and commitments to which Company or any Company Subsidiary is a party or by which any of them may be bound (true and complete copies of which have been made available to Purchaser and have been delivered or will be delivered to Purchaser as soon as reasonably practicable after the date hereof): (i) each employment, consulting, agency or commission agreement not terminable without liability to Company or any Company Subsidiary upon 60 days' or less prior notice to the employee, consultant or agent; (ii) each agreement with any employee of Company or any Company Subsidiary the benefits of which are contingent, or the terms of which are materially altered, upon the consummation of the transactions contemplated by this Agreement (whether alone or in conjunction with other actions); (iii) each agreement with respect to any employee of Company or any Company Subsidiary of providing any term of employment or

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compensation guarantee extending for a period longer than one year; and (iv) each other agreement or Company Benefit Plan any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement (whether alone or in conjunction with other actions) or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement ((i) through (iv) collectively, the "Employment Agreements").

                                    (c)       Neither Company nor any Company Subsidiary is a party to or bound by the terms of any collective bargaining agreement.  Company and each Company Subsidiary is in compliance in all material respects with all applicable Laws respecting the employment and employment practices, terms and conditions of employment and wage and hours of its employees and is not engaged in any unfair labor practice.  There is no labor strike or labor disturbance pending or, to the Knowledge of Company, threatened against Company or any Company Subsidiary, and during the past five years neither Company nor any Company Subsidiary has experienced a work stoppage.

            3.18         Brokers, Finders and Financial Advisors; Fairness Opinion.  Except for Company's engagement of Janney Montgomery Scott LLC ("JMS") in connection with transactions contemplated by this Agreement, neither Company nor any Company Subsidiary, nor any of their respective officers, directors, employees or agents, has employed any broker, finder or financial advisor in connection with the transactions contemplated by this Agreement or in connection with any transaction other than the Merger, or incurred any liability or commitment for any fees or commissions to any such Person in connection with the transactions contemplated by this Agreement or in connection with any transaction other than the Merger.  The engagement letter between Company and JMS is annexed to Section 3.18 of the Company Disclosure Schedule.  JMS has provided Company with its oral opinion to the effect that, as of the date of approval of this Agreement by the Board of Directors of Company, the Merger consideration is fair, from a financial point of view, to stockholders of Company.

            3.19         Environmental.  (a) Company and each Company Subsidiary is in compliance in all material respects with all Environmental Regulations; (b) there are no Hazardous Materials on, below or above the surface of, or migrating to or from any parcel of real property nor or formerly owned or leased by Company or any Company Subsidiary; (c) to the Knowledge of Company, Great American has no outstanding loans secured by real property that is not in material compliance with Environmental Regulations, upon which there are Hazardous Materials or from or to which Hazardous Materials have migrated or are migrating; and (d) there is no claim, action, suit, proceeding or notice thereof before any Governmental Entity pending, or to the Knowledge of Company, threatened, against Company or any Company Subsidiary or, to the Knowledge of Company, concerning any real property securing Great American loans, and there is no outstanding judgment, order, writ, injunction, decree, or award against Company or any Company Subsidiary or, to the Knowledge of Company, any real property securing Great American loans relating to Environmental Regulations or Hazardous Materials.  Company has provided to Purchaser all environmental assessments or reports with respect to each piece of real property now or formerly owned or leased by Company or any Company Subsidiary which are in Company's possession or control.

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            3.20         Loans; Allowance for Loan Losses.

                                    (a)       The allowance for loan losses shown on the Company Financial Statements is (with respect to periods ended on or before September 30, 2003), and the allowance for loan losses shown on the financial statements referred to in Section 5.7 will be (with respect to periods ending subsequent to September 30, 2003), adequate in the reasonable opinion of management of Company in all material respects as of the dates thereof and is in compliance with the requirements of GAAP.  Section 3.20(a) of the Company Disclosure Schedule lists, as of the date thereof, each loan of Great American which has been criticized or classified by Company, Great American or bank examiners representing any Governmental Entity as "Substandard," "Doubtful" or "Loss" or as a "Potential Problem Loan."

                                    (b)       Each loan reflected as an asset in the Company Financial Statements: (i) is evidenced by notes, agreements or other evidences of indebtedness which are true and genuine and correct in all material respects, (ii) to the extent required by applicable agreements to be secured, has been secured by valid liens and security interests on the required collateral which have been perfected, except as would not adversely affect the value of the loan or the ability of Great American to realize upon such collateral, and (iii) is the legal, valid and binding obligation of the obligor named therein, except as enforcement may be limited by (A) general principles of equity or (B) bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally.

            3.21         Information to be Supplied.  The information to be supplied by Company or any Company Subsidiary for inclusion in the Registration Statement and/or any information Company filed with the SEC under the Exchange Act which is incorporated by reference into the Registration Statement will not, at the time the Registration Statement is declared effective pursuant to the Securities Act and as of the date the Proxy Statement/Prospectus is mailed to stockholders of Company and up to and including the date of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading.  The information supplied, or to be supplied, by Company for inclusion in the Regulatory Applications will, at the time such documents are filed with any Governmental Entity and up to and including the date of the attainment of any required regulatory approvals or consents, be accurate in all material respects.

            3.22         Related Party Transactions.  Except as disclosed in the documents filed by Company with the SEC or in the footnotes to the Company Financial Statements, neither Company nor any Company Subsidiary is a party to any transaction (including any loan or other credit accommodation, but excluding deposits in the Ordinary Course of Business) with any Affiliate of Company (except a Company Subsidiary). Any such transactions (a) were made in the Ordinary Course of Business, (b) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other Persons, and (c) did not involve more than the normal risk of collectibility or present other risks or unfavorable features. No loan or credit accommodation to any Affiliate of Company is presently in default or, during the three-year period prior to the date of this Agreement, has been in default or has been restructured, modified or extended.  Neither Company nor Great American has received written or, to the Knowledge of Company, unwritten notice that principal and interest with respect to any such loan or other credit accommodation will not be paid when due

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or that the loan grade classification accorded such loan or credit accommodation by Great American is inappropriate.

            3.23         Representations and Warranties.  No representation or warranty contained in this Article 3 or in any other written instrument, document or agreement delivered by Company or any Company Subsidiary to Purchaser or any Purchaser Subsidiary pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of material fact or omits to state any material fact required to be stated herein or therein or necessary to make the statements made herein or therein, in light of the circumstances under which they were or are made, not false or misleading.

ARTICLE 4

COVENANTS RELATING TO CONDUCT OF COMPANY'S BUSINESS

            4.1          Affirmative Covenants.  Unless the prior written consent of Purchaser shall have been obtained, and, except as otherwise contemplated herein, from the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement:

                                    (a)       Company and each Company Subsidiary shall:

                                              (i)       Operate its business only in the Ordinary Course of Business;

                                              (ii)      Use commercially reasonable efforts to preserve intact its business organizations and assets and to maintain its material rights and franchises;

                                              (iii)     Take no action, unless otherwise required by Law, that would (A) materially adversely affect the ability of any of them or Purchaser to obtain any necessary approvals of Governmental Entities required to consummate the transactions contemplated by this Agreement, or (B) adversely affect the ability of such party to perform its covenants and agreements under this Agreement;

                                              (iv)      Except as they may terminate in accordance with their terms, keep in full force and effect, and not default in any of their material obligations under, the Company Contracts;

                                              (v)       Keep in full force and effect insurance coverage with responsible insurance carriers which is reasonably adequate in coverage and amount for companies the size of Company, or any Company Subsidiary and for the businesses and properties owned by each and in which each is engaged, to the extent that such insurance is reasonably available;

                                              (vi)      Use commercially reasonable efforts to retain the customer base of Company and each Company Subsidiary; and

                                              (vii)     Use commercially reasonable efforts to maintain, renew, keep in full force and effect, and preserve its business organization and material rights and

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franchises, permits and licenses, and use commercially reasonable efforts to maintain positive relations with its present employees, and to use commercially reasonable efforts to maintain its existing, or substantially equivalent, credit arrangements with banks and other financial institutions and to continue the customer relationships of Company and each Company Subsidiary.

                                    (b)       Company shall use commercially reasonable efforts to assist Purchaser in obtaining the Regulatory Approvals, and Company shall provide to Purchaser or to the appropriate Governmental Entities all information reasonably required to be submitted in connection with obtaining such approvals.

                                    (c)       Each of Company and the Company Subsidiaries, at its own cost and expense, shall use commercially reasonable efforts to secure all consents and releases, if any, of third parties necessary or desirable with respect to Company or such Company Subsidiary for the consummation of the transactions contemplated by this Agreement and shall comply with all applicable Laws in connection with this Agreement and the consummation of the transactions contemplated hereby.

                                    (d)       Company shall promptly inform Purchaser in writing of any and all facts necessary to amend or supplement the Company Disclosure Schedule so that the representations and warranties of Company remain true and correct; provided, however, that before any such amendment or supplement may be deemed to be a part of the Company Disclosure Schedule, Purchaser must have consented in writing to such amendment or supplement.

                                    (e)       Company shall afford Purchaser and its authorized agents and representatives reasonable access during normal business hours to the properties, operations, books, records, contracts, documents, loan files and other information of, or relating to, Company and the Company Subsidiaries.  Company shall provide reasonable assistance to Purchaser in its investigation of matters relating to Company and the Company Subsidiaries.  Subject to the provisions of applicable Law, Company shall furnish promptly to Purchaser (i) a copy of each material report, schedule and other document filed by Company and the Company Subsidiaries with any Governmental Entity and (ii) all other information concerning the business, interest rate risk, properties and personnel of Company and the Company Subsidiaries as Purchaser may reasonably request (other than documents, materials and information related to this Agreement and the transactions contemplated hereby), provided that no investigation pursuant to this Section 4.1 shall affect or be deemed to modify or waive any representation or warranty made by Company in this Agreement or the conditions to the obligations of Company to consummate the transactions contemplated by this Agreement.

                                    (f)       Subject to the fiduciary duties of the Board of Directors of Company, Company will use commercially reasonable efforts to exempt the transactions contemplated by this Agreement from any applicable state takeover or similar Law or takeover or similar provision in the Certificate of Incorporation or Bylaws of Company and the Company Subsidiaries, including without limitation any provisions of the Certificate of Incorporation of Company restricting the ownership or acquisition of Company's capital stock or imposing any "fair price" or supermajority director or stockholder vote requirements.

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                                    (g)       Subject to the provisions of applicable Law and the terms and conditions of this Agreement, Company shall use commercially reasonable efforts to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things necessary, proper, or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, using commercially reasonable efforts to lift or rescind any injunction or restraining or other order adversely affecting the ability of the parties to consummate the transaction contemplated by this Agreement.

                                    (h)       Company shall take, or cause to be taken, all actions necessary to terminate the Company 1996 Stock-Based Incentive Plan Trust as of the Effective Time, such that after payment of all benefits due to participants under the Company's 1996 Stock-Based Incentive Plan, including with respect to the accelerated vesting of thereto for unvested stock awards thereunder and the distribution of stock awards permitted by Section 4.2(d) of the Company Disclosure Schedule, all remaining assets in the Trust, including Company Common Stock, shall be returned to Company and any such Company Common Stock will become treasury shares of Company and shall be cancelled in the Merger in accordance with Section 1.5.

            4.1          Negative Covenants.  From the date of this Agreement until the earlier of the Effective Time or the termination of this Agreement, Company covenants and agrees it will neither do, nor agree or commit to do, nor permit any Company Subsidiary to do or commit or agree to do, any of the following without the prior written consent of the Chief Executive Officer or Chief Financial Officer of Purchaser:

                                    (a)       Amend its Certificate of Incorporation or Bylaws;

                                    (b)        (i) Repurchase, redeem, or otherwise acquire or exchange, directly or indirectly, any shares of its capital stock or other equity securities or any securities or instruments convertible into any shares of its capital stock, or any rights or options to acquire any shares of its capital stock or other equity securities; or (ii) split or otherwise subdivide its capital stock; or (iii) recapitalize in any way; or (iv) declare a stock dividend on the Company Common Stock; or (v) pay or declare a cash dividend or make or declare any other type of distribution on the Company Common Stock (except that Company may pay the regular quarterly cash dividend in an amount consistent with past practice and not exceeding $0.20 per share);

                                    (c)       Acquire or dispose of direct or indirect control over any corporation, association, firm, organization or other entity, other than in connection with (i) internal reorganizations or consolidations involving existing Company Subsidiaries, (ii) foreclosures in the Ordinary Course of Business and not knowingly exposing it to liability by reason of Hazardous Materials, or (iii) transactions in its fiduciary capacity;

                                    (d)        (i) Except upon exercise of Company Options outstanding on the date hereof and except as set forth on Section 4.2(d) of the Company Disclosure Schedule, issue, sell, agree to sell, or otherwise dispose of or otherwise permit to become outstanding any additional shares of Company Common Stock or any other capital stock of Company or of any Company Subsidiary, or any stock appreciation rights, or any option, warrant, conversion, call, scrip, or other right to acquire any such stock, or any security convertible into any such stock; (ii) sell, agree to sell, or otherwise dispose of any substantial part of the assets or earning power of

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Company or of any Company Subsidiary; (iii) sell, agree to sell, or otherwise dispose of any asset of Company or any Company Subsidiary other than in the Ordinary Course of Business for reasonable and adequate consideration; or (iv) buy, agree to buy or otherwise acquire a substantial part of the assets or earning power of any other Person;

                                    (e)       Incur, or permit any Company Subsidiary to incur, any additional debt obligation or other obligation for borrowed money except for obligations incurred in the Ordinary Course of Business pursuant to existing Company Contracts;

                                    (f)        (i) Grant any increase in compensation or benefits to any employee or officer of Company or any Company Subsidiaries except for routine annual salary increases which, in the aggregate, do not exceed 4% of the total payroll of Company and the Company Subsidiaries during fiscal year 2003; (ii) pay any bonus except for bonuses set forth in Section 4.2(f) of the Company Disclosure Schedule; (iii) enter into any severance agreements with any officer or employee of Company or any Company Subsidiary; (iv) grant any increase in fees or other increases in compensation or other benefits to any director of Company or any Company Subsidiary; or (v) effect any change in retirement benefits for any class of employees or officers of Company or any Company Subsidiary, unless such change is required by applicable Law;

                                    (g)       Hire a new employee with an annual compensation in excess of $50,000, amend any existing employment contract between it and any Person (unless such amendment is required by Law); enter into or amend any indemnification agreement with any Person; or enter into any new employment contract with any Person that Company or any Company Subsidiary (or its successors) does not have the unconditional right to terminate without liability (other than liability for services already rendered), at any time on or after the Effective Time;

                                    (h)       Adopt any new employee benefit plan or terminate or make any material change in or to any existing employee benefit plan other than any change that is required by Law or that, in the opinion of counsel, is necessary or advisable to maintain the tax-qualified status of any such plan (except for a termination resulting from Purchaser's decision not to continue any such plan);

                                    (i)       Enter into any new service contracts with an aggregate annual expense in excess of $50,000 or any lease agreements for any real or personal property;

                                    (j)       Make any capital expenditure except for purchases, repairs, renewals or replacements in the Ordinary Course of Business in an amount less than $25,000 per individual expenditure;

                                    (k)       Cancel, release or assign any indebtedness of any Person to Company or any Company Subsidiary, other than in the Ordinary Course of Business and other than pursuant to contracts or agreements in force at the date of this Agreement;

                                    (l)       Other than terminations and renewals in the Ordinary Course of Business, enter into, amend, renew or terminate any Company Contract or Employment Agreement or enter into any agreement that would have been a Company Contract if it had been in existence on the date of this Agreement;

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                                    (m)       Settle any claim, action or proceeding involving any liability of Company or any Company Subsidiary for money damages in excess of $25,000 or agree in connection with any such settlement to material restrictions upon the operations of Company or any Company Subsidiaries;

                                    (n)       Change its method of accounting in effect at December 31, 2002, except as required by changes in GAAP as recommended or approved by Company's independent auditors or as required by regulatory accounting principles or regulatory requirements;

                                    (o)       Enter into any new activities or lines of business, or cease to conduct any material activities or lines of business that it conducts on the date hereof, or conduct any material business activity not in the Ordinary Course of Business;

                                    (p)       Enter into, renew or purchase any investments in derivatives contracts; or engage in any forward commitment, futures transaction, financial option transaction, hedging or arbitrage transaction or covered asset trading activities;

                                    (q)       Purchase any investment securities or make any deposits other than in the Ordinary Course of Business;

                                    (r)       Grant or commit to grant any new extension of credit to any officer, director or holder of 2% or more of the outstanding Company Common Stock, or to any corporation, partnership, trust or other entity controlled by any such Person, if such extension of credit, together with all other credits then outstanding to the same borrower and all affiliated persons of such borrower, would exceed 2% of the capital of Great American or amend the terms of any such credit outstanding on the date hereof; or grant or commit to grant any new extension of credit to any employee at below market interest rates;

                                    (s)       Terminate, amend or renew any Lease, or enter into a lease of real property, relocate, open or close any office, or file an application pertaining to such action with any Government Entity, other than terminations and renewals of any Lease in the Ordinary Course of Business;

                                    (t)       Settle or compromise any material tax liability or agree to an extension of the statute of limitations with respect to the assessment or determination of any taxes;

                                    (u)       Enter into any other material transactions other than in the Ordinary Course of Business; or

                                    (v)       Authorize or agree in writing or otherwise to take any of the foregoing actions.

Purchaser shall cause its authorized representatives to consider and respond to requests for Purchaser's consent under this Section 4.2 as promptly as practicable.  Purchaser shall be deemed to have consented to any action described in clause (g), (i) or (j) of this Section 4.2 if no

33

authorized representative of Purchaser has responded to a written request for consent within three business days after his or her receipt thereof.

ARTICLE 5

ADDITIONAL AGREEMENTS AND COVENANTS

            5.1          Regulatory Approvals.



                                    (a)       As promptly as practicable after the date of this Agreement, Purchaser will prepare and file all necessary documentation, to effect all applications, notices, petitions and filings with the appropriate Governmental Entities (collectively, the "Regulatory Applications") and to obtain the Regulatory Approvals at the earliest practicable date and shall take such other action as may be necessary to obtain the Regulatory Approvals at the earliest practicable date; provided, however, that nothing in this Section 5.1 shall be construed to obligate Purchaser to take any action to meet any condition required to obtain prior Regulatory Approval if any such condition materially differs from conditions customarily imposed by such Governmental Entities in orders approving acquisitions of the type contemplated by this Agreement, constitutes a significant impediment upon Purchaser's ability to carry on its business or acquisition programs (as determined by Purchaser in its reasonable discretion) or requires Purchaser to increase FCB's capital ratios to amounts in excess of the FDIC's minimum capital ratio guidelines which may be in effect from time to time.  Purchaser shall pay all fees and expenses relating to the preparation and filing the Regulatory Applications and obtaining the Regulatory Approvals.

                                    (b)       Company shall cooperate with Purchaser to effect the foregoing and will promptly furnish Purchaser with all information about or pertaining to Company and the Company Subsidiaries as is reasonably determined by Purchaser to be necessary or appropriate for such filings.  Company and Purchaser shall have the right to review in advance, and will consult the other on, in each case subject to applicable Laws relating to the exchange of information, all the information relating to Company or Purchaser, as the case may be, which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement; provided, however, that nothing contained herein shall be deemed to provide either party with a right to review any information provided to any Governmental Entity on a confidential basis in connection with the transactions contemplated hereby.  Company shall be provided with a draft of the Regulatory Applications and all correspondence with Regulatory Authorities relating to the Regulatory Applications and Regulatory Approvals.  Company shall have a reasonable opportunity to review and comment on such applications and correspondence.  In exercising the foregoing rights and obligations, each of the parties shall act reasonably and as promptly as practicable.

                                    (c)       Purchaser and Company shall consult with each other with respect to the obtaining of all Regulatory Approvals and all other permits, consents, approvals and authorizations of Governmental Entities and third parties necessary or advisable to consummate the transactions contemplated by this Agreement.  Each of the parties will keep the other party

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apprised of the status of the Regulatory Approvals and such other permits, consents, approvals and authorizations. 

            5.2          Registration Statement.  As promptly as reasonably practicable following the date of this Agreement, Purchaser, in cooperation with Company, shall prepare and file with the SEC a Registration Statement on Form S-4 with respect to the shares of Purchaser Common Stock to be issued in the Merger (the "Registration Statement").  The Registration Statement shall contain a proxy statement/prospectus (the "Proxy Statement/Prospectus") which shall serve as the proxy statement of Company for the Special Meeting and as the prospectus of Purchaser for the shares of Purchaser Common Stock to be issued in the Merger.  Company shall furnish Purchaser with all information about or pertaining to Company and the Company Subsidiaries as is reasonably determined by Purchaser to be necessary or appropriate for the preparation of the Registration Statement and the Proxy Statement/Prospectus, including, without limitation, any information necessary to comply with provisions of the DGCL relating to dissenters' rights.  The parties shall cooperate in responding to and considering any questions or comments from the SEC staff regarding the information contained or incorporated by reference in the Registration Statement.  Purchaser will use commercially reasonable efforts to cause the Registration Statement to be declared effective at the earliest practicable date, and Purchaser will advise Company, promptly after Purchaser receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of the Purchaser Common Stock for offering or sale in any jurisdiction, of the initiation or threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or supplement of the Registration Statement or for additional information.

            5.3          Special Meeting.  Company shall call a special meeting of the Company Stockholders (the "Special Meeting") to be held as soon as practicable after the Registration Statement is declared effective by the SEC for purposes of voting upon the adoption of this Agreement and the approval of the transactions contemplated hereby.  Company shall use commercially reasonable efforts to solicit and obtain the votes of the Company Stockholders in favor of the adoption of this Agreement and the approval of the transactions contemplated hereby and, unless and until a Subsequent Determination shall have been made after complying with the provisions of Section 5.4, the Board of Directors of Company shall recommend approval of such transactions by such holders.  In connection with the Special Meeting, Purchaser and Company shall cooperate in the preparation of the Proxy Statement/Prospectus and, with the approval of each of Purchaser and Company (which approvals will not be unreasonably withheld), the Proxy Statement/Prospectus will be mailed to the Company Stockholders.

            5.4          Acquisition Proposals.  From the date hereof until the earlier of the termination of this Agreement and the Closing, Company shall not, nor shall Company authorize or permit any officers, directors, employees, representatives or other agents of Company or any Company Subsidiary to, directly or indirectly, (i) take any action to solicit, initiate or encourage any Acquisition Proposal or (ii) engage in negotiations with, or disclose any nonpublic information relating to Company or any Company Subsidiary or afford access to the properties, books or records of Company or any Company Subsidiary to, any Person that may be considering making, or has made, an Acquisition Proposal; provided, however, that nothing contained in this

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Agreement shall prevent Company or the Board of Directors of Company at any time prior to the consummation of the Merger from:

                                    (a)       furnishing nonpublic information to, or affording access to the properties, books or records of Company or any Company Subsidiary to, or entering into negotiations with, any Person in connection with an unsolicited Acquisition Proposal by such Person, if (a) Company's Board of Directors determines in good faith that such action is necessary to comply with their fiduciary duties to the Company Stockholders under applicable Law; (b) prior to furnishing any such nonpublic information to, or entering into discussions or negotiations with, such Person, Company's Board of Directors receives from such Person an executed confidentiality agreement with customary terms, and (c) Company's Board of Directors concludes in the exercise of its fiduciary duties that the Acquisition Proposal is a Superior Proposal;

                                    (b)       taking and disclosing to the Company Stockholders any position, and making any related filings with the SEC, as required by Rules 14e-2 and 14d-9 under the Exchange Act, with respect to any Alternative Transaction that is a tender offer; provided, that Company's Board of Directors shall not recommend that the Company Stockholders tender their shares of Company Common Stock in connection with any such tender offer unless the Board shall have determined in good faith that such action is necessary to comply with its fiduciary duties under applicable Law; or

                                    (c)       if an unsolicited Acquisition Proposal is received as described in clause (i) above, informing the Company Stockholders that it no longer believes that the Merger is advisable and no longer recommends approval of the Merger (a "Subsequent Determination"), approving or recommending an Alternative Transaction based on that unsolicited Acquisition Proposal or entering into an Acquisition Agreement with respect to such an Alternative Transaction if (i) Company's Board of Directors determines in good faith that such action is necessary to comply with its fiduciary duties under applicable Law and (b) Company's Board of Directors concludes in good faith that the Acquisition Proposal is a Superior Proposal.

Company will promptly notify Purchaser after receipt of any Acquisition Proposal or any request for nonpublic information relating to Company or any Company Subsidiary or for access to the properties, books or records of Company or any Company Subsidiary by any Person that has made an Acquisition Proposal and will keep Purchaser reasonably informed of the status and details of any such Acquisition Proposal, indication or request.  Such written notice shall specify the material terms and conditions of the Acquisition Proposal, identify the Person making the Acquisition Proposal and state that the Board of Directors of Company intends to make, or is considering making, a Subsequent Determination.  For a period of three business days following such notice, Company shall not take any action with respect to the Acquisition Proposal and shall provide an opportunity for Purchaser to propose such adjustments to the terms and conditions of this Agreement as would enable the Board of Directors of Company to proceed with the transactions contemplated herein on such adjusted terms.

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            5.5          Employees and Employee Benefits.

                                    (a)       Upon consummation of the Merger and the Bank Merger, all employees of Company and Great American shall be deemed to be at-will employees of Purchaser and FCB, respectively, subject only to, and to the extent provided in, those written employment agreements which have been disclosed on the Company Disclosure Schedule.  At the discretion of Purchaser, subject to the requirements of the Code and except as expressly set forth in this Section 5.5, from and after the Effective Time, all Company Benefit Plans shall continue to be maintained separately, or be consolidated, frozen or terminated.  Employees of Company and Great American who continue as employees of Purchaser and FCB ("Continuing Employees") shall be entitled to participate, commencing at the Effective Time, on an equitable basis in the same benefit plans, programs or policies as are generally available to employees of Purchaser or FCB, as the case may be, of similar rank and status.  For purposes of eligibility, vesting, accrual of benefits (but not for benefit accrual purposes under any qualified defined benefit plan maintained by Purchaser) and determination of the level of benefits under any employee benefit plans, arrangements or policies (including, without limitation, severance, vacation, sick and other leave policies) maintained by Purchaser, Continuing Employees will be credited with prior years of service with Company or Great American.  Purchaser and FCB shall give service credit to Continuing Employees (and their dependents) with respect to the satisfaction of the limitations as to pre-existing condition exclusions, evidence of insurability requirements and waiting periods for participation and coverage that are applicable under the employee welfare benefit plans (within the meaning of Section 3(1) of ERISA) of Purchaser or FCB, equal to the credit that any such employee had received as of the Effective Time towards the satisfaction of any such limitations and waiting periods under the comparable employee welfare benefit plans of Company or Company Subsidiaries and shall waive preexisting condition limitations to the same extent waived under the corresponding plans of Company or Company Subsidiaries.  Nothing contained herein shall obligate Purchaser to provide severance or other benefits that are based on years of service with duplicative benefits for the same years of service.

                                    (b)       No Continuing Employee shall be subject to any waiting period under any welfare benefit plan of Purchaser to the extent that such period is longer than the period, if any, to which such Continuing Employee was subject under the applicable welfare benefit plan of Company.  Continuing Employees shall not be subject to any waiting period under a welfare benefit plan of Purchaser if the applicable waiting period under the corresponding Company plan had been satisfied as of the Effective Time.  To the extent that the initial period of coverage for Continuing Employees under any plan of Purchaser that is an "employee welfare benefit plan" as defined in Section 3(1) of ERISA is not a full twelve (12) month period of coverage, Continuing Employees shall be given full credit under the applicable welfare plan for any deductibles and co-insurance payments made by such Continuing Employees under the corresponding welfare plan of Company during the balance of such twelve (12) month period of coverage.  Nothing contained herein shall obligate Purchaser to provide or cause to be provided any duplicative benefits.

                                    (c)       The Company Employee Stock Ownership Plan ("ESOP") shall be terminated as of the Effective Time.  The Board of Directors of Company shall use reasonable commercial efforts to cause the trustees of the ESOP, to the extent consistent with the fiduciary

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duties of the trustees under ERISA, to make such elections under Article 1 of this Agreement with respect to unallocated shares of Company Common Stock held by the ESOP as are necessary to obtain a sufficient amount of cash to repay in full the then outstanding ESOP indebtedness.  The Merger consideration received by the ESOP trustees with respect to the unallocated shares of Company Common Stock held by the ESOP shall be first applied by the ESOP trustees to the full repayment of the ESOP loan.  The remaining shares of Purchaser Common Stock and cash received by the ESOP shall be allocated to the ESOP participants in accordance with the terms of the ESOP and applicable Laws as soon as practicable after the Effective Time.  In connection with the termination of the ESOP, Company shall promptly apply to the IRS for a favorable determination letter on the tax-qualified status of the ESOP on terminations and any amendments made to the  ESOP in connection with its termination or otherwise, if such amendments have not previously received a favorable determination letter from the IRS with respect to their qualification under Code Section 401(a).  Any amendments to the ESOP requested by the IRS prior to the Effective Time shall be adopted by Company and any amendments requested by the IRS after the Effective Time shall be promptly adopted by Purchaser.  Any and all distributions from the ESOP after its termination shall be made consistent with the aforementioned determination letter from the IRS.  Prior to the Effective Time, Company shall make contributions to, and payments on the loan of the ESOP consistent with past practices on regularly scheduled payment dates.

                                    (d)       The Great American Federal 401(k) Plan (the "Company 401(k) Plan") will be merged with and into the Purchaser's 401(k) Plan within an administratively reasonable time after the Effective Date.  Continuing Employees shall be entitled to participate the Purchaser's 401(k) plan pursuant to the terms of that plan within an administratively reasonable period of time after the Effective Date, as provided in Section 5.5(a) above.  No contributions will be made to the Company 401(k) Plan after the Effective Date. 

                                    (e)       From the Effective Time, Purchaser agrees to honor the terms of the severance, employment, change of control and deferred compensation agreements set forth in Sections 3.16(a) and 3.17(b) of the Company Disclosure Schedule (collectively, the "Post-Termination Payments").  Purchaser acknowledges and agrees that the consummation of the Merger shall constitute a "Change in Control" for purposes of such agreements.

                                    (f)       From and after the Effective Time, Purchaser agrees to maintain in full force and effect the bank-owned life insurance program for Company directors (the "Company Director BOLI") and the bank-owned life insurance program for Company officers (the "Company Officer BOLI").  Purchaser agrees that the Merger will constitute a "Change in Control" for purposes of the Company Director BOLI.  Purchaser agrees to continue the Company Officer BOLI in accordance with its terms for the remainder of the life of each executive officer that is participating in the Company Officer BOLI at the Effective Time; provided, that if it is determined that the Company Officer BOLI is not permitted by Law with respect to any participant then Purchaser may terminate the Company Officer BOLI with respect to such participant and Purchaser shall provide such participant with a substantially equivalent life insurance benefit. 

                                    (g)       As of the Effective Time, Company's Board of Directors shall take action to immediately vest all Awards under the 1996 Stock-Based Incentive Plan ("Option

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Plan"), terminate the Option Plan and its related trust, and make all final distributions in accordance with the terms of the Option Plan.  Any remaining Company Common Stock in the Option Plan shall be returned to Company.

                                    (h)       Prior to the Effective Time, the Board of Directors of Great American shall take such actions as are reasonably necessary to cause the Great American Employee Severance Compensation Plan to terminate effective as of a date that is one year and one day after the Effective Time.  Subject to the preceding sentence, Purchaser agrees to assume the obligations of Great American under the and to honor the terms of such plan.

                                    (i)       Except as expressly provided in this Section 5.5, Purchaser may amend or terminate any Company Benefit Plan at any time in accordance with its terms.

            5.6          Indemnification of Company Directors, Officers and Other Persons.

                                    (a)       From and after the Effective Time, Purchaser shall jointly and severally indemnify and hold harmless each person who is now, or has been at any time prior to the date hereof, or who becomes prior to the Effective Time, a director, officer, employee or agent of Company or any Company Subsidiary (the "Covered Parties"), against all claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses, including attorneys' fees and disbursements (collectively, "Costs"), incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to (i) the fact that the Covered Party is or was an officer, director, employee or agent of Company or any Company Subsidiary or was serving as an officer, director or trustee of another Person at the request of Company or any Company Subsidiary or (ii) matters existing or occurring at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby), whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent permitted under applicable Law.  Each Covered Party will be entitled to advancement of expenses incurred in the defense of any claim, action, suit, proceeding or investigation from Purchaser within ten business days of receipt by Purchaser from the Covered Party of a request therefore, provided, that any person to whom expenses are advanced provides an undertaking, to the extent required by the DGCL, to repay such advances if it is ultimately determined that such person is not entitled to indemnification. 

                                    (b)       Subject to the next sentence, the Surviving Corporation shall maintain, and Purchaser shall cause the Surviving Corporation to maintain, at no expense to the beneficiaries, in effect for three years from the Effective Time, the current policies of the directors' and officers' liability insurance maintained by Company with respect to matters existing or occurring at or prior to the Effective Time (including the transactions contemplated by this Agreement), so long as the aggregate premium therefore would not be in excess of 300% of the higher of (i) the last annual premium paid prior to the date of this Agreement or (ii) the last annual premium paid prior to the Closing Date (the "Maximum Premium").  If the Company's existing insurance expires, is terminated or canceled during such three year period or exceeds the Maximum Premium, the Surviving Corporation shall obtain as much directors' and officers' liability insurance as can be obtained for the remainder of such period for an annualized premium not in excess of the Maximum Premium, on terms and conditions no less advantageous to the Covered Parties than the Company's existing directors' and officers' liability insurance.

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                                    (c)       Notwithstanding anything herein to the contrary, if any claim, action, suit, proceeding or investigation (whether arising before, at or after the Effective Time) is made against any Covered Party, on or prior to the third anniversary of the Effective Time, the provisions of this Section 5.6 shall continue in effect until the final disposition of such claim, action, suit, proceeding or investigation.

                                    (d)       The covenants contained in this Section 5.6 are intended to be for the benefit of, and shall be enforceable by, each of the Covered Parties and their respective heirs and legal representatives and shall not be deemed exclusive of any other rights to which a Covered Party is entitled, whether pursuant to Law, contract or otherwise.

                                    (e)       In the event that Purchaser or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any person, then, and in each such case, proper provision shall be made so that the successors or assigns of Purchaser Parent shall succeed to the obligations set forth in this Section 5.6.

            5.7          Consents.  Company and the Company Subsidiaries will use commercially reasonable efforts to, and Purchaser and the Purchaser Subsidiaries will cooperate in good faith with Company and the Company Subsidiaries to, obtain the consents, authorizations, approvals or notices listed in Section 3.3(b) of the Company Disclosure Schedule.  Without limiting the generality of the foregoing, Purchaser agrees upon the reasonable request of Company to provide financial and other information to any Person from whom a consent is required.

            5.8          Access.  Upon notice of at least 48 hours, Purchaser shall afford Company and its representatives reasonable access, during normal business hours throughout the period up to the Effective Time, to all of the properties, books and records of Purchaser and FCB; provided, that such representatives shall execute a confidentiality agreement in such form as Purchaser may require to prohibit the use or disclosure of any information concerning Purchaser or FCB without the prior consent of Purchaser.

            5.9          Subsequent Interim and Annual Financial Statements.  As soon as reasonably available, but in no event more than 45 days after the end of each fiscal quarter (other than the fourth fiscal quarter, as to which the time period shall be 75 days), Company will deliver to Purchaser its unaudited financial statements as of the end of each such period.  As soon as they are available, Company will deliver to Purchaser its audited financial statements following the end of its fourth quarter.

            5.10         NYSE.  Purchaser shall use commercially reasonable efforts to have the shares of Purchaser Common Stock which are to be issued in exchange for the Stock Election Shares approved for listing on the NYSE.

            5.11         Accruals and Reserves.  At the request of Purchaser, subject to any limitations imposed by Law and the fiduciary duties of the Board of Directors of Company, Company shall establish such additional accruals and reserves as may be reasonably necessary to conform Company's accounting and credit loss reserve practices and methods to those of Purchaser;

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provided, however, that Company shall not be required to take such action prior to the receipt of all Regulatory Approvals and stockholder approval; provided further, however, that no such additional accruals and reserves will be required to be made more than two (2) business days prior to the Closing Date.  No such additional accruals or reserves made by Company pursuant to this Section 5.11 shall constitute or be deemed to be a breach, violation of or failure to satisfy any representation, warranty, covenant, agreement, condition or other provision of this Agreement or otherwise be considered in determining whether any such breach, violation or failure to satisfy shall have occurred.  The recording of any such adjustments shall not be deemed to imply any misstatement of previously furnished financial statements or information and shall not be construed as concurrence of Company or its management with any such adjustments.

            5.12         Affiliate Agreements.  Company will cause each person listed on Section 3.2(d) of the Company Disclosure Schedule to execute and deliver to Purchaser on or before the mailing of the Proxy Statement/Prospectus an agreement in the form attached as Exhibit B.

            5.13         Section 16 Matters.  Prior to the Effective Time, Purchaser and Company shall use commercially reasonable efforts to cause any dispositions of Company equity securities (including derivative securities with respect to Company equity securities) or acquisitions of Purchaser equity securities (including derivative securities with respect to Purchaser equity securities) resulting from the transactions contemplated by this Agreement by each officer or director of Purchaser or Company who is subject to Section 16 of the Exchange Act (or who will become subject to Section 16 of the Exchange Act as a result of the transactions contemplated hereby) with respect to equity securities of Purchaser or Company to be exempt from Section 16(b) of the Exchange Act under Rule 16b-3 promulgated thereunder.  Company agrees to furnish Purchaser promptly with all requisite information necessary for Purchaser to take the action contemplated by this Section 5.12.

            5.14         Appointment to Purchaser Board.  Purchaser will cause a member of Company's Board of Directors selected by Company and reasonably acceptable to Purchaser to be appointed to Purchaser's Board of Directors as of the Effective Time and, subject to fiduciary obligations under applicable Law, shall cause such appointee to be nominated for election as a director of Purchaser at the first annual meeting of shareholders of Purchaser with a proxy mailing date after the Effective Time.

            5.15         Regional Advisory Board.  FCB has formed a Pittsburgh Regional Advisory Board (the "Advisory Board") in furtherance of Purchaser's efforts to expand its presence in the Pittsburgh metropolitan area.  At the Effective Time, all members of Company's Board of Directors will be appointed to the Advisory Board to assist in and advise with respect to integration of the operations of Great American with and into those of FCB and to advise with respect to the operations of FCB in the Pittsburgh region.  The Advisory Board will be maintained for a term of at least 12 months from the Effective date.  The Advisory board will meet at least quarterly during its term and may meet more frequently at the reasonable request of Purchaser.  Each member of the Advisory Board will be paid a quarterly retainer of $4,200 and a fee of $400 for each meeting of the Advisory Board that he or she attends.  FCB will have no obligation to continue the services of any advisory director who, in the reasonable judgment of FCB, acts in a manner detrimental to FCB.  In the event that FCB terminates, suspends or

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disbands the Advisory Board, fails to require or request the attendance of a member with respect to at least four meetings of the Advisory Board and/or committee thereof during the term specified above, or removes a member of the Advisory Board other than because such member acted in a manner detrimental to FCB, in each case prior to the end of the 12-month period contemplated by this Section 5.13, any member affected by any such action or failure shall nonetheless be paid the full amount of unpaid fees that would have been due such member during the remainder of the 12-month term specified above. 

            5.16         Reasonable Efforts to Close.  Subject to the terms and conditions of this Agreement, Purchaser and Company agree to use commercially reasonable efforts to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things necessary, proper, or advisable under applicable Laws to satisfy the conditions to closing contained herein and to consummate and make effective the transactions contemplated hereby at the earliest practicable date following the execution of this Agreement, including, without limitation, using commercially reasonable efforts to lift or rescind any injunction or restraining or other order adversely affecting the ability of the parties to consummate the transaction contemplated by this Agreement. 

            5.17         Tax Treatment.  Each party shall use its commercially reasonable efforts to cause the Merger to qualify, and will not take any action or fail to take any action that would result in the Merger not qualifying, as a "reorganization" within the meaning of Section 368 of the Code. 

            5.18         Confidentiality. Notwithstanding anything to the contrary in this Agreement or in the Confidentiality Agreement, any party to this Agreement (as well as their representatives) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement, and all materials of any kind (including opinions or other tax analyses) related to such tax treatment and tax structure; provided, that this sentence shall not permit any person making such disclosure to disclose the name of, or other information that would identify, any party to such transaction or to disclose confidential commercial or strategic information, or other proprietary information regarding such transaction not related to such tax treatment and tax structure; provided further, that the disclosure authorization granted under this sentence shall not be effective with respect to any person until the earliest of (i) the date of a public announcement (if any) of discussions relating to such transaction involving such person, (ii) the date of a public announcement (if any) of any such transaction involving such person or (iii) the date of the execution of a definitive agreement (if any) to enter into any such transaction involving such person, it being understood that there are no limits at any time on the ability of any party to consult its own independent tax advisor regarding the tax treatment or tax structure of the transaction.

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ARTICLE 6

CONDITIONS TO CLOSING

            6.1          Conditions to the Obligations of Company. Unless waived in writing by Company, all of the obligations of Company under this Agreement are subject to the fulfillment prior to or at the Closing of each of the following conditions:

                                    (a)       Representations and Warranties. The representations and warranties of Purchaser contained in Section 2, if qualified by a reference to materiality, shall be true, and if not so qualified, shall be true in all material respects, as of the date of this Agreement and as of the Effective Time with the same effect as though made at the Effective Time;

                                    (b)       Performance of Agreements and Covenants. Purchaser shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it prior to or at the Effective Time;

                                    (c)       Documents. In addition to the other deliveries of Purchaser described elsewhere in this Agreement, Company shall have received the following documents and instruments:

                                              (i)       a certificate signed by the Secretary or an assistant secretary of Purchaser dated as of the Closing Date certifying that:

                                                        (A)       Purchaser's Board of Directors has duly adopted resolutions (copies of which shall be attached to such certificate) approving this Agreement and authorizing the consummation of the transactions contemplated by this Agreement and certifying that such resolutions have not been amended or modified and remain in full force and effect;

                                                        (B)       each person executing this Agreement on behalf of Purchaser is an officer of Purchaser holding the office or offices specified therein, with full power and authority to execute this Agreement and any and all other documents in connection with the Merger, and that the signature of each person set forth on such certificate is his or her genuine signature; and

                                                        (C)       the charter documents of Purchaser attached to such certificate remain in full force and effect.

                                              (ii)      a certificate signed by a duly authorized officer of Purchaser stating that the conditions set forth in Section 6.1(a) and Section 6.1(b) of this Agreement have been fulfilled; and

                                    (d)       Tax Opinion.  Company shall have received an opinion of counsel to Company, dated as of the Closing Date, to the effect that (i) the Merger will qualify as a reorganization under Section 368 of the Code, (ii) no gain or loss will be recognized by either Company or Purchaser as a result of the Merger, (iii) no gain or loss for federal income tax purposes will be recognized by a Company Stockholder upon the exchange of Company Common Stock solely for Purchaser Common Stock, (iv) the basis of Purchaser Common Stock

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received by a Company Stockholder as a result of the Merger will be the same as the basis of the Company Common Stock surrendered in exchange therefor, (v) the holding period of the Purchaser Common Stock received by a Company Stockholder as a result of the Merger will include the holding period of the Company Common Stock surrendered in exchange therefor (provided that such Company Common Stock is held as a capital asset by the Company Stockholder at the Effective Time), and (vi) the payment of cash to a Company Stockholder in lieu of fractional shares of Purchaser Common Stock by Purchaser will be treated as if the fractional shares were distributed as part of the exchange and then redeemed by Purchaser, and the cash payment will be treated as having been received as distributions in full payment in exchange for the fractional shares redeemed and will be taxed as provided in Section 302(a) of the Code.  In rendering such opinion, Company's counsel may require and rely upon representations and covenants, including those contained in certificates of officers of Purchaser, Company and others, reasonably satisfactory in form and substance to such counsel.  If Company's counsel is not willing to provide such opinion, Purchaser may request that Purchaser's counsel provide such opinion to Company in order to satisfy this condition of closing.

            6.2          Conditions to the Obligations of Purchaser.  Unless waived in writing by Purchaser, all of the obligations of Purchaser under this Agreement are subject to the fulfillment prior to or at the Closing of each of the following conditions:

                                    (a)       Representations and Warranties. The representations and warranties of Company contained in Section 3, if qualified by a reference to materiality, shall be true, and if not so qualified, shall be true in all material respects, as of the date of this Agreement and as of the Effective Time with the same effect as though made at the Effective Time (except that representations and warranties that by their terms speak specifically as of the date of this Agreement or some other date shall be true and correct as of such date);

                                    (b)       Performance of Agreements and Covenants. Company shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it prior to or at the Effective Time;

                                    (c)       Documents.  In addition to the documents described elsewhere in this Agreement, Purchaser shall have received the following documents and instruments:

                                              (i)       a certificate signed by the Secretary or an assistant secretary of Company dated as of the Closing Date certifying that:

                                                        (A)       Company's Board of Directors has duly adopted resolutions (copies of which shall be attached to such certificate) approving the substantive terms of this Agreement and authorizing the consummation of the transactions contemplated by this Agreement and certifying that such resolutions have not been amended or modified and remain in full force and effect;

                                                        (B)       the Company Stockholders have duly adopted resolutions (copies of which shall be attached to such certificate) approving and adopting this

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Agreement and the Merger and certifying that such resolutions have not been amended or modified and remain in full force and effect;

                                                        (C)       each person executing this Agreement on behalf of Company is an Officer of Company, as the case may be, holding the office or offices specified therein, with full power and authority to execute this Agreement and any and all other documents in connection with the Merger, and that the signature of each person set forth on such certificate is his or her genuine signature; and

                                                        (D)       the charter documents of Company attached to such certificate remain in full force and effect; and

                                              (ii)      a certificate signed by a duly authorized officer of Company stating that the conditions set forth in Sections 6.2(a), (b), (d), (e) and (f) of this Agreement have been satisfied;

                                    (d)       Required Consents.  All material notices and consents described in Section 3.3(b) of the Company Disclosure Schedule shall have been given or obtained.

                                    (e)       Dissenters Rights.  The aggregate number of shares of Company Common Stock that are entitled to vote at the Special Meeting and are Dissenting Shares shall not exceed ten percent (10%) of the total number of issued and outstanding shares of Company Common Stock held of record as of the record date for the Special Meeting and entitled to vote on the Merger at such meeting.

                                    (f)       Accruals and Reserves. Company shall have established any accruals and reserves described in Section 5.11; and

                                    (g)       Director and Officer Resignations.  Company shall have procured and delivered to Purchaser the written resignations of each of the directors and executive officers of Company and the Company Subsidiaries in form and substance reasonably acceptable to Purchaser (none of which resignations shall prejudice or limit any rights such persons would otherwise have under any contract or benefit plan of Company).

            6.3          Conditions to Obligations of All Parties.  The obligation of each party to effect the transactions contemplated hereby shall be subject to the fulfillment, at or prior to the Closing, of the following conditions:

                                    (a)       No Pending or Threatened Claims. No claim, action, suit, investigation or other proceeding shall be pending or threatened before any court or Governmental Entity which presents a substantial risk of the restraint or prohibition of the transactions contemplated by this Agreement or the obtaining of material damages or other relief in connection therewith;

                                    (b)       Regulatory Approvals. The parties hereto shall have received all applicable regulatory approvals for the consummation of the transactions contemplated herein and all waiting periods incidental to such approvals or notices given shall have expired;

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                                    (c)       Effective Registration Statement. The Registration Statement shall have become effective and no stop order or other order suspending the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC or any other Governmental Entity;

                                    (d)       Stockholder Vote. The Company Stockholders shall have approved and adopted this Agreement and the Merger by the applicable requisite vote; and

                                    (e)       NYSE Listing.  The shares of Purchaser Common Stock that shall be issued to the stockholders of Company upon consummation of the Merger shall have been authorized for listing on the NYSE, subject to official notice of issuance.

ARTICLE 7

TERMINATION

            7.1          Termination.  This Agreement and the Plans of Merger may be terminated at any time prior to the Closing (whether before or after approval and adoption of the Agreement and the Merger by the Company Stockholders), as follows:

                                    (a)       By mutual consent in writing of the parties;

                                    (b)       By Purchaser or Company:

                                              (i)       In the event the Closing shall not have occurred by September 30, 2004, unless the failure of the Closing to occur shall be due to the breach of this Agreement by the party seeking to terminate this Agreement; provided, however, that, if Purchaser and FCB shall have filed all Regulatory Applications within  sixty (60) days of the date hereof, and if the Closing shall not have occurred solely because of a delay in the approval of any such application, then Purchaser may, by written notice to Company, extend the date referenced in the first sentence of this Section 7.1(b)(i) to December 31, 2004;

                                              (ii)      Upon denial of any Regulatory Approval necessary for the consummation of the Merger or the Bank Merger (or should such Regulatory Approval be conditioned upon a substantial deviation from the transactions contemplated), unless the denial of such Regulatory Approval (or the conditioning of such Regulatory Approval) shall be due to the breach of this Agreement by the party seeking to terminate this Agreement; provided, however, that either Purchaser or Company may, upon written notice to the other, extend the date set forth in Section 7.1(b)(i) for only one sixty (60) day period to appeal such denial or condition(s), provided that such appeal has been made within ten (10) business days of the receipt thereof; or

                                              (iii)     If the Company Stockholders do not approve and adopt this Agreement and the Merger at the Special Meeting or any adjournment thereof.

                                    (c)       By Purchaser:

46

                                              (i)       if Company's Board of Directors shall have (a) failed to include in the Proxy Statement/Prospectus its recommendation without modification or qualification that the Company Stockholders approve this Agreement and the Merger, (b) approved or recommended or entered into any agreement providing for an Alternative Transaction, (c) withdrawn, modified or qualified its recommendation of this Agreement or the Merger in a manner adverse to the interests of Purchaser, (d) failed to call and convene the Special Meeting in accordance with Section 5.3, or (e) resolved to do any of the foregoing; or

                                              (ii)      if Company has breached any representation, warranty or covenant contained in this Agreement, which breach would result in the nonfulfillment of one or more of the conditions to the obligations of Purchaser set forth in Section 6.2, Purchaser has notified Company of the breach, and either such breach is incapable of being cured or, if capable of being cured, has not been cured within 30 days after the notice of breach.

                                    (d)       By Company:

                                              (i)       if Purchaser has breached any representation, warranty or covenant contained in this Agreement, which breach would result in the nonfulfillment of one or more of the conditions to the obligations of Company set forth in Section 6.1, Company has notified Purchaser of the breach, and either such breach is incapable of being cured or, if capable of being cured, has not been cured within 30 days after the notice of breach; or

                                              (ii)      if, after it has received a Superior Proposal in compliance with Section 5.4 and otherwise complied with all of its obligations under Section 5.4, Company's Board of Directors determines in good faith to terminate this Agreement, after concluding that such action is necessary to comply with its fiduciary duties to the Company Stockholders under applicable Law.

            7.2          Effect of Termination.  In the event that this Agreement should be terminated pursuant to Section 7.1 hereof, all further obligations of the parties under this Agreement, other than the provisions of Section 7.3, shall terminate without further liability of any party to another; provided, however, that a termination under Section 7.1 hereof shall not relieve any party of any liability for a willful or intentional breach of this Agreement, or be deemed to constitute a waiver of any available remedy for any such willful or intentional breach.

            7.3          Termination Fee.

                                    (a)       Upon Termination.  If (i) Purchaser shall terminate this Agreement pursuant to clause (i) of Section 7.1(c) or (ii) Company shall terminate this Agreement pursuant to clause (ii) of Section 7.1(d), then, in either case, Company shall pay to Purchaser, within five business days of such termination, a fee, in cash, in an amount equal to 4% of the product of the number of shares of outstanding Company Common Stock as of the date of termination times the Per Share Cash Consideration (the "Termination Fee"), plus the out-of-pocket expenses reasonably incurred by Purchaser in connection with the negotiation, preparation and performance of this Agreement and the transactions contemplated hereby and related hereto (the "Transaction Expenses").

47

                                    (b)       Upon Subsequent Transaction.  If (i) this Agreement is terminated by either party pursuant to clause (iii) of Section 7.1(b), (ii) an Acquisition Proposal (other than by Purchaser) is pending at the time of the Special Meeting and (iii) with 12 months after the date of the Special Meeting, Company shall consummate an Alternative Transaction, then Company shall pay to Purchaser on demand an amount in cash equal to the Termination Fee plus the Transaction Expenses; provided that no such amount shall be payable to the extent that the Termination Fee and Transaction Expenses were paid under Section 7.3(a).

ARTICLE 8

MISCELLANEOUS

            8.1          Survival.  The representations, warranties, covenants and agreements made in this Agreement or in any instrument, agreement, certificate or other document delivered pursuant to this Agreement shall not survive the Closing or any termination of this Agreement except that (i) the provisions of Sections 1.10, 1.11 and 1.12 shall survive the Closing, (ii) the provisions of Sections 7.2 and Section 7.3 shall survive any termination of this Agreement, (iii) the provisions of this Article 8 shall survive the Closing and any termination of this Agreement, and (iv) the covenants that by their terms are to be performed by either party after the Effective Time or any termination of this Agreement shall survive the Closing or such termination.

            8.2          Notices.  All notices and other communications required or permitted hereunder shall be in writing and shall be sent by facsimile, hand delivery or reputable overnight courier.  The facsimile numbers and addresses of the parties set forth below shall be used for the delivery of notices unless and until a party changes its facsimile number or address for such purposes by notice to the other parties.  Each such notice or other communication shall be effective (i) if given by facsimile, when transmission of the facsimile is confirmed by the sender's facsimile machine, (ii) if given by reputable overnight courier, one business day after being delivered to the courier or (iii) if given by any other means, when actually received.

If to Company:	GA Financial, Inc.
	4750 Clairton Boulevard
	Pittsburgh, Pennsylvania 15236
	Fax:   412-882-8580
	Attn:   John Kish

With a copy to:	Reed Smith LLP
	435 Sixth Avenue
	Pittsburgh, PA  15219
	Fax:   412-288-3063
	Attn:   Stephen W. Johnson

If to Purchaser:	First Commonwealth Financial Corporation
	Old Courthouse Square
	22 North Sixth Street
	Indiana, Pennsylvania 15701
	Fax:   724-349-6427

48

Attn:   John J. Dolan

With a copy to:	Sherman & Howard L.L.C.
	633 Seventeenth Street, Suite 3000
	Denver, Colorado 80202
	Fax:     303-298-0940
	Attn:     Andrew L. Blair, Jr.

or to such other address as any party hereto may hereafter designate to the other parties in writing.

            8.3          Jurisdiction; Venue.  Each of the parties hereto (i) agrees that any legal action or proceeding with respect to any dispute that arises out of this Agreement or any of the transactions contemplated hereby shall be brought in the state or federal courts of appropriate subject matter jurisdiction in Pittsburgh, Pennsylvania and (ii) hereby submits itself to the exclusive personal jurisdiction of such courts.  Each party waives any objection to venue in any such court.

            8.4          Amendments and Supplements.  At any time prior to the Closing Date (whether before or after approval and adoption of the Agreement and the Merger by the Company Stockholders), this Agreement may be amended or supplemented by a written instrument signed by Purchaser and FCB and Company and Great American; provided that, after approval and adoption of this Agreement and the Merger by the Company Stockholders, without the affirmative vote of the holders of shares of Company Common Stock representing a majority of the votes that may be cast by the holders of all then outstanding shares of Company Common Stock, Company will not enter into any amendment to this Agreement that would (i) (a) alter or change the amount or kind of shares, securities, cash, property and/or rights to be received in exchange for or on conversion of all or any of the Company Common Stock, (b) alter or change any term of the Articles of Incorporation of the Surviving Corporation to be effected by the Merger, or (c) alter or change any of the terms and conditions of this Agreement if such alteration or change would materially adversely affect the holders of shares of Company Common Stock, or (ii) waive any condition set forth in Section 6.1 or 6.3 if such waiver would materially adversely affect the holders of shares of Company Common Stock.

            8.5          Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to any choice of law or conflict of laws rule or provision that would cause the application of the domestic substantive laws of any other jurisdiction.

49

            8.6          Entire Agreement, Assignability, Etc.  This Agreement (i) constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the transactions and matters contemplated hereby (other than the Confidentiality Agreement), (ii) is not intended to confer any right or remedies upon any Person other than the parties hereto and the Company Stockholders (except for the rights and remedies available to (A) current and former employees of Company and the Company Subsidiaries under Section 5.5, and (B) the Covered Parties under Section 5.15), and (iii) shall not be assignable by either party without the prior written consent of the other party.

            8.7          Exclusivity of Representations.  Company has not and shall not be deemed to have made to Purchaser any representation or warranty other than as expressly made by Company in Article 3.  Purchaser have not and shall not be deemed to have made to Company any representation or warranty other than as expressly made by Purchaser in Article 2.

            8.8          Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute but one and the same instrument.  The signatures of the parties on this Agreement may be delivered by facsimile and any such facsimile signature shall be deemed an original.

            8.9          Publicity.  As promptly as practicable following the execution of this Agreement, Company and Purchaser shall issue a joint press release announcing the transactions contemplated hereby, which shall be reasonably acceptable to Company and Purchaser.  Following that release and prior to the consummation of the Merger, except as required by Law or any listing agreement with a securities exchange, neither Company nor Purchaser nor any Company Subsidiary or Purchaser Subsidiary will, with respect to the transactions contemplated hereby, issue any press release or make any public statements or mail any communications or letters to their respective shareholders generally, except with the prior written consent of the other party or as otherwise permitted by this Agreement.  With respect to any communication believed to be required by Law or any listing agreement with a securities exchange, the party making such communication agrees to use its best efforts to provide a copy of the text of such communication to the other party prior to its release and to afford the other party a reasonable opportunity to review and comment thereon.

            8.10         Headings; Terms.  The section headings contained in this Agreement are for convenience only and will not affect in any way the meaning or interpretation of this Agreement.  Defined terms will have the meanings specified, applicable to both singular and plural forms, for all purposes of this Agreement.  All pronouns (and any variation) will be deemed to refer to the masculine, feminine or neuter, as the identity of the Person may require.  The singular or plural includes the other, as the context requires or permits.  The word include (and any variation) is used in an illustrative sense rather than a limiting sense.  The word "day" means a calendar day, unless a business day is specified.  All references to "Sections" are to sections of this Agreement unless indicated otherwise.

            8.11         Severability.  The invalidity or unenforceability of any term or provision of this Agreement shall not affect the validity or enforceability of the remaining terms and provisions hereof.

50

            8.12         Waivers.  No waiver by either party of any default, misrepresentation or breach of warranty or covenant hereunder will be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence, and no waiver will be effective unless set forth in writing and signed by the party against whom such waiver is asserted.

            8.13         Payment of Expenses.  Except as otherwise set forth in this Agreement, whether or not the transactions contemplated by this Agreement are consummated, Purchaser and Company shall each pay its own fees and expenses (including, without limitation, legal fees and expenses) incurred by it in connection with the transactions contemplated hereunder.

            8.14         Construction.  The parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring a party by virtue of the authorship of any of the provisions of this Agreement.

            8.15         Remedies Cumulative.  All remedies provided in this Agreement, by Law, equity or otherwise, shall be cumulative and not alternative.

[Signature page follows.]

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IN WITNESS WHEREOF, each of the parties hereto has duly executed and delivered this Agreement as of the date first written above.

                                                                       FIRST COMMONWEALTH FINANCIAL
                                                                       CORPORATION


                                                                       By:_/S/ JOSEPH E. O'DELL______________
                                                                       Name:   Joseph E. O'Dell
                                                                       Title:     President and Chief Executive Officer


                                                                       FIRST COMMONWEALTH BANK


                                                                       By:_/S/ GERARD M. THOMCHICK    _____
                                                                       Name:   Gerard M. Thomchick
                                                                       Title:     Director


                                                                       GA FINANCIAL, INC.


                                                                       By:_/S/ JOHN M. KISH__________________
                                                                       Name:  John M. Kish
                                                                       Title:   Chairman of the Board and Chief
                                                                                   Executive Officer


                                                                       GREAT AMERICAN FEDERAL SAVINGS
                                                                       AND LOAN ASSOCIATION


                                                                       By:_/S/ JOHN M. KISH__________________
                                                                       Name:  John M. Kish
                                                                       Title:   Chairman of the Board and Chief
                                                                                 Executive Officer

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER


among

FIRST COMMONWEALTH FINANCIAL CORPORATION


FIRST COMMONWEALTH BANK


GA FINANCIAL, INC.


and


GREAT AMERICAN FEDERAL SAVINGS AND LOAN ASSOCIATION



Dated as of December 11, 2003

TABLE OF CONTENTS

ARTICLE 1	BASIC TRANSACTION	2
1.1	Merger	2
1.2	Bank Merger	2
1.3	Effective Time	2
1.4	Conversion of Company Common Stock	3
1.5	Company Treasury Stock; Shares owned by Purchaser	3
1.6	Purchaser Common Stock	3
1.7	Fractional Shares	3
1.8	Anti-Dilution	3
1.9	Company Options	4
1.10	Election and Exchange Procedures	5
1.11	Withholding Rights	9
1.12	Dissenting Shares	9
1.13	Closing	10
ARTICLE 2	REPRESENTATIONS AND WARRANTIES OF PURCHASER AND FCB	10
2.1	Organization	10
2.2	Capitalization	11
2.3	Authority; No Violation	12
2.4	No Legal Bar	13
2.5	Approvals, Consents and Filings	13
2.6	Financial Statements; Reports; Books and Records	13
2.7	Absence of Changes	14
2.8	Brokers, Finders and Financial Advisors	14
2.9	Information to be Supplied	15
2.10	Compliance with Applicable Laws	15
2.11	Representations and Warranties	15
ARTICLE 3	REPRESENTATIONS AND WARRANTIES OF COMPANY AND GREAT AMERICAN	15
3.1	Organization	15
3.2	Capitalization, Subsidiaries and Affiliates	16
3.3	Authority; No Violation	18
3.4	No Legal Bar	18
3.5	Approvals, Consents and Filings	19
3.6	Financial Statements; Reports; Books and Records	19
3.7	Undisclosed Liabilities	21
3.8	Tax Matters	21
3.9	Certain Contracts	22
3.10	Litigation and Proceedings	22
3.11	Tangible Properties	23
3.12	Intellectual Property	23
3.13	Insurance	24
3.14	Compliance with Applicable Laws	24

i

3.15	Absence of Changes; Operation in the Ordinary Course	25
3.16	Employee Benefit Plans	25
3.17	Employee Matters	26
3.18	Brokers, Finders and Financial Advisors; Fairness Opinion	27
3.19	Environmental	27
3.20	Loans; Allowance for Loan Losses	28
3.21	Information to be Supplied	28
3.22	Related Party Transactions	28
3.23	Representations and Warranties	29
ARTICLE 4	COVENANTS RELATING TO CONDUCT OF COMPANY'S BUSINESS	29
4.1	Affirmative Covenants	29
4.2	Negative Covenants	31
ARTICLE 5	ADDITIONAL AGREEMENTS AND COVENANTS	34
5.1	Regulatory Approvals	34
5.2	Registration Statement	35
5.3	Special Meeting	35
5.4	Acquisition Proposals	35
5.5	Employees and Employee Benefits	37
5.6	Indemnification of Company Directors, Officers and Other Persons	39
5.7	Consents	40
5.8	Access	40
5.9	Subsequent Interim and Annual Financial Statements	40
5.10	NYSE	40
5.11	Accruals and Reserves	40
5.12	Affiliate Agreements	41
5.13	Section 16 Matters	41
5.14	Appointment to Purchaser Board	41
5.15	Regional Advisory Board	41
5.16	Reasonable Efforts to Close	42
5.17	Tax Treatment	42
5.18	Confidentiality	42
ARTICLE 6	CONDITIONS TO CLOSING	43
6.1	Conditions to the Obligations of Company	43
6.2	Conditions to the Obligations of Purchaser	44
6.3	Conditions to Obligations of All Parties	45
ARTICLE 7	TERMINATION	46
7.1	Termination	46
7.2	Effect of Termination	47
7.3	Termination Fee	47
ARTICLE 8	MISCELLANEOUS	48
8.1	Survival	48
8.2	Notices	48
8.3	Jurisdiction; Venue	49

ii

8.4	Amendments and Supplements	49
8.5	Governing Law	49
8.6	Entire Agreement, Assignability, Etc.	50
8.7	Exclusivity of Representations	50
8.8	Counterparts	50
8.9	Publicity	50
8.10	Headings; Terms	50
8.11	Severability	50
8.12	Waivers	51
8.13	Payment of Expenses	51
8.14	Construction	51
8.15	Remedies Cumulative	51

Exhibits:

Exhibit A	Definitions
Exhibit B	Form of Affiliate Agreement
Exhibit C	Form of Voting Agreement

iii

Exhibit A

Definitions

            "Acquisition Proposal" means any written tender offer, agreement, understanding or other proposal of any nature received by Company pursuant to which any Person, other than Purchaser or a Purchaser Subsidiary, proposes to engage, directly or indirectly, in an Alternative Transaction.

             "Advisory Board" is defined in Section 5.13.

             "Affiliate" means, as to a designated Person, another Person that controls, is controlled by or is under common control with the designated Person, and control means the power, directly or indirectly, by stock ownership, contract, family relationship, employment, position or otherwise, to significantly influence the business decisions of another Person.

             "Aggregate Cash Consideration" means the product of (x) $35 times (y) 40% of the number of shares of Company Common Stock outstandingas of the Effective Time.

             "Agreement" is defined in the first paragraph.

             "Alternative Transaction" means a transaction or series of transactions in which any Person, other than Purchaser or a Purchaser Subsidiary, merges or consolidates with or into Company or Great American, acquires substantially all of the assets of Company or Great American, or acquires beneficial ownership (determined pursuant to Rule 13d-3 of the Exchange Act) of at least a majority of the total voting power of Company or Great American.

             "AMEX" means the American Stock Exchange.

             "Anti-Money Laundering Laws" is defined in Section 3.14(c).

             "Average Closing Price" means the average closing price of the Purchaser Common Stock on the NYSE for the ten trading days ending with the third trading day prior to the Closing Date, provided, that if Purchaser enters into a definitive agreement with a third party providing for the acquisition by such third party of (i) substantially all of the assets of Purchaser or (ii) at least a majority of the outstanding shares Purchaser Common Stock, then the Average Closing Price will be calculated using the average closing price of the Purchaser Common Stock on the NYSE for the ten trading dates ending with the last trading day preceding the date on which such acquisition is first publicly announced.

             "Bank Merger" is defined in the Recitals.

             "Bank Plan of Merger" is defined in Section 1.2.

             "Banking Code" is defined in Section 1.2.

             "BHCA" is defined in Section 2.1.

A-1

             "Book-Entry Shares" is defined in Section 1.10(c).

             "Cancelled Option" is defined in Section 1.9(a)(ii).

             "Cash Election Shares" is defined in Section 1.10(b).

             "Closing Date" is defined in Section 1.13.

             "Closing" is defined in Section 1.13.

             "Code" means the Internal Revenue Code of 1986, as amended.

             "Company" is defined in the first paragraph.

             "Company Benefit Plan" means each bonus, deferred compensation, incentive compensation, stock purchase, stock option, severance or termination pay, hospitalization, medical, life or other insurance, supplemental unemployment benefits, profit-sharing, pension or retirement plan, program, agreement or arrangement, and each other employee benefit plan, program, agreement or arrangement, sponsored, maintained or contributed to or required to be contributed to at any time since December 31, 1999 by Company or ERISA Affiliate, that together with Company would be deemed a "controlled group" within the meaning of Section 4001(a)(14) of ERISA, for the benefit of any employee, director or former employee or director of Company or any ERISA Affiliate including any such type of plan established, maintained or contributed to under the Laws of any foreign country.

             "Company Common Stock" is defined in the Recitals.

             "Company Contract" is defined in Section 3.9(a).

             "Company Director BOLI" is defined in Section 5.5(f).

             "Company Disclosure Schedule" is defined in the introductory paragraph of Article 3.

             "Company Financial Statements" is defined in Section 3.6(a).

             "Company 401(k) Plan" is defined in Section 5.5(d).

             "Company Officer BOLI" is defined in Section 5.5(f).

             "Company Option" is defined in Section 1.9(a).

             "Company Option Plan" means Company's 1996 Stock Based Incentive Plan.

             "Company Preferred Stock" is defined in Section 3.2(a).

             "Company Reports" is defined in Section 3.6(b).

             "Company Stockholders" shall mean the holders of the Company Common Stock.

A-2

             "Company Subsidiary" is defined in Section 3.2(c).

             "Confidentiality Agreement" shall mean that certain Confidentiality Agreement, dated as of October 17, 2003, by and between Purchaser and Company.

             "Continuing Employees" is defined in Section 5.5(a).

             "Costs" is defined in Section 5.6(a).

             "Covered Parties" is defined in Section 5.6(a).

             "DGCL" is defined in Section 1.1.

             "Dissenting Shares" is defined in Section 1.12.

             "Dissenting Stockholder" is defined in Section 1.12.

             "Effective Time" is defined in Section 1.3.

             "Election Deadline" is defined in Section 1.10(c).

             "Election Form" is defined in Section 1.10(b).

             "Employment Agreement" is defined in Section 3.17(b).

             "Environmental Regulations" means all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items of all governmental entities and all applicable judicial, administrative, and regulatory decrees, judgments, and orders relating to the protection of human health or the environment. 

             "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

             "ERISA Affiliate" means, with respect to any entity, any entity that is, or at any applicable time was, a member of (A) a controlled group of corporations (as defined in Section 414(b) of the Code), (B) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (C) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes the first entity.

             "ESOP" is defined in Section 5.5(c).

             "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

             "Exchange Agent" is defined in Section 1.10(a).

             "Exchange Ratio" shall be calculated by dividing (x) the Per Share Cash Consideration by (y) the Average Closing Price, and rounding the resulting number to three decimal places.

A-3

             "FCB" is defined in the Recitals.

             "FCB Common Stock" is defined in Section 2.2(b).

             "FDIC" is defined in Section 2.1(b).

             "FRB" is defined in Section 2.1(a).

             "GAAP" is defined in Section 2.6(a).

             "Governmental Entity" means  (i) any federal, state, local, municipal or foreign government, (ii) governmental, quasi-governmental authority or body exercising or entitled to exercise, any governmentally-derived administrative, executive, judicial, legislative, police, regulatory or taxing authority, or (iii) any self-regulatory organization, administrative or regulatory agency, commission or authority, including, without limitation, the Regulatory Agencies listed in Sections 2.6(b) and 3.6(b).

             "Great American" is defined in the Recitals.

             "Great American Common Stock" is defined in Section 3.2(b).

             "Hazardous Materials" shall mean any substance the presence of which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law or which is or becomes defined as a hazardous waste, hazardous substance, hazardous material, used oil, pollutant or contaminant under any federal, state or local statute, regulation, rule or ordinance or amendments thereto. 

             "HOLA" is defined in Section 1.2.

             "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

             "Intellectual Property Rights" is defined in Section 3.12.

             "Internal Controls" is defined in Section 3.6(d).

             "JMS" is defined in Section 3.17.

             "Knowledge" means, with respect to any Person, the actual knowledge of such Person (or in the case of an entity, such Person's executive officers and senior management personnel) after reasonable inquiry.

             "Law" means any and all statutes, laws, ordinances, rules, regulations, orders, permits, judgments, injunctions, decrees, case law and other rules of law enacted, promulgated or issued by any Governmental Entity.

             "Leases" is defined in Section 3.12(b).

             "Letter of Transmittal" is defined in Section 1.10(b).

A-4

             "Lien" means any security interest, mortgage, pledge, hypothecation, charge, claim, option, right to acquire, adverse interest, assignment, deposit arrangement, encumbrance, restriction, lien (statutory or other), or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease involving substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable law of any jurisdiction).

             "Material Adverse Change" or "Material Adverse Effect" shall mean, with respect to any Person, any change, effect, event, occurrence or state of facts that (a) is, or would reasonably be expected to be, materially adverse to the business, financial condition or results of operations of such Person and its consolidated subsidiaries, taken as a whole, or (b) have, or would reasonably be expected to have a material adverse affect on the ability of such Person to consummate the Merger, in either case, other than a change, effect, event, occurrence or state of facts (i) resulting from any change in general economic or market conditions, (ii) which negatively affects the banking industry generally, (iii) the announcement of the transactions contemplated hereby and the taking of any action required by or the implementation of this Agreement, (iv) changes in Law, (v) the failure, in and of itself, by Company to meet any internal or published projections, forecasts or predictions for any period ending on or after the date of this Agreement, unless in the case of (i), (ii) or (iv), such change, effect, event, occurrence or state of facts has a materially disproportionate impact on the business, financial condition or results of operations of such Person.

             "Maximum Premium" is defined in Section 5.6(b).

             "Merger" is defined in the Recitals.

             "No-Election Shares" is defined in Section 1.10(b).

             "NYSE" means the New York Stock Exchange.

             "Optionee" means an eligible individual holding outstanding Company Options under the Option Plan.

             "Ordinary Course of Business" means, with respect to any Person, the ordinary course of such Person's business operations, consistent in nature and amount with past practices.

             "OTS" is defined in Section 1.2.

             "PBCL" is defined in Section 1.1.

             "PDB" shall mean the Pennsylvania Department of Banking.

             "Pension Plan" shall mean any employee pension benefit plan as such term is defined in Section 3(2) of ERISA which is maintained by the referenced party.

             "Per Share Cash Consideration" is defined in Section 1.4(a)(i).

A-5

             "Person" means an individual and any corporation, partnership, trust, limited liability company, association or Governmental Entity.

             "Post-Termination Payments" is defined in Section 5.5(e).

             "Proxy Statement/Prospectus" is defined in Section 5.2.

             "Purchaser" is defined in the first paragraph.

             "Purchaser Common Stock" is defined in the Recitals.

             "Purchaser Financial Statements" is defined in Section 2.6(a).

             "Purchaser Preferred Stock" is defined in Section 2.2(a).

             "Purchaser Reports" is defined in Section 2.6(a).

             "Purchaser Subsidiary" means any direct or indirect subsidiary of Purchaser, whether consolidated or unconsolidated.

             "Registration Statement" is defined in Section 5.2.

             "Regulatory Agencies" is defined in Sections 2.6(b) and 3.6(b).

             "Regulatory Applications" is defined in Section 5.1.

             "Regulatory Approval" means the approvals of the FRB, FDIC, PDB and OTS described in Sections 2.5 and 3.5.

             "SEC" shall mean the United States Securities and Exchange Commission.

             "Securities Act" shall mean the Securities Act of 1933, as amended.

             "Special Meeting" is defined in Section 5.3.

             "Stock Election Shares" shall have meaning given to such term in Section 1.10(b).

             "Subsequent Determination" is defined in Section 5.4(c).

             "Superior Proposal" means an unsolicited bona fide Acquisition Proposal that the Board of Directors of Company determines in good faith, after consultation with its financial advisors, to be reasonably likely to result in a transaction that is more favorable to the Company Stockholders from a financial point of view than the transactions contemplated by this Agreement taking into account, among other factors, the payments that would be due under Section 7.3(a) and any delay and uncertainty in receipt of the consideration in the transaction.

             "Surviving Corporation" is defined in the Recitals.

             "Termination Fee" is defined in Section 7.3(a).

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             "Transaction Expenses" is defined in Section 7.3(a).

             "Unlawful Gains" is defined in Section 3.14(c)

             "Voting Agreement" means the Voting Agreement in the form attached as Exhibit C.

A-7

Exhibit B

Form of Affiliate Agreement

____________, 2004

First Commonwealth Financial Corporation
Old Courthouse Square
22 North Sixth Street
Indiana, PA 15701

Re: Agreement and Plan of Merger (the "Merger Agreement") dated as of December 11, 2003 among First Commonwealth Financial Corporation ("FCFC"), First Commonwealth Bank, GA Financial, Inc. ("GA Financial"), and Great American Financial Savings and Loan Association

Ladies and Gentlemen:

            I have been advised that I may be considered an "affiliate" of GA Financial, as that term is defined for purposes of Rule 145 ("Rule 145") under the Securities Act of 1933 (the "Securities Act").  Pursuant to the Agreement, GA Financial will be merged with and into FCFC, and I may receive shares of FCFC common stock (the "Shares") in exchange for my shares of GA Financial common stock.

            I represent and warrant to, and agree with FCFC that:

                        1.          I have carefully read this letter agreement and the Merger Agreement and have discussed their requirements and other applicable limitations upon my ability to sell, transfer or otherwise dispose of the Shares, to the extent I felt necessary, with my counsel or counsel for GA Financial.

                        2.          I will not make any sale, transfer or other disposition of the Shares in violation of the Securities Act or the rules and regulations promulgated thereunder.

                        3.          I have been advised that the issuance of the Shares to me has been registered with the Securities and Exchange Commission (the "SEC") under the Securities Act on a Registration Statement on Form S-4.  I have also been advised, however, that because I may be considered an "affiliate" of GA Financial at the time the Merger was submitted for a vote of the shareholders of GA Financial, any public offer or sale by me of any of the Shares will require either (i) the further registration of the Shares under the Securities Act, (ii) compliance by me with Rule 145 or (iii) the availability of another exemption from registration of such Shares under the Securities Act.
                        4.          I understand that the Shares have not been registered under the Securities Act for distribution by me, and that the Shares must be held by me unless (i) such Shares have

been registered for distribution under the Securities Act, (ii) a sale of the Shares is made in conformity with the volume and other limitations of Rule 145 under the Securities Act or (iii) I deliver to FCFC an opinion of counsel in form and substance reasonably satisfactory to FCFC that some other exemption from registration under the Securities Act is available with respect to any proposed sale, transfer or other disposition of the Shares.

                        5.          I understand that FCFC is under no obligation to register the sale, transfer or other disposition of the Shares by me or to take any other action necessary in order to make compliance with an exemption from registration available to me.

                        6.          I understand that stop transfer instructions will be given to transfer agents of FCFC with respect to the Shares, and the following legend will be placed on the certificates representing such Shares:

The shares represented by this certificate were issued in a transaction to which Rule 145 under the Securities Act of 1933 applies. The shares represented by this certificate may be transferred only in accordance with the terms of a Letter Agreement dated __________, 2004, between the registered holder hereof and First Commonwealth Financial Corporation, a copy of which agreement is on file at the principal offices of First Commonwealth Financial Corporation.

                        7.          I understand and agree that the legend set forth in paragraph 6 above will be removed by the delivery of substitute certificates without such legend if I deliver to First Commonwealth (i) a copy of a letter from the staff of the SEC, or an opinion of counsel in form and substance reasonably satisfactory to First Commonwealth, to the effect that such legend is not required for purposes of the Securities Act or (ii) evidence or representations satisfactory to First Commonwealth that the Shares represented by such certificates are being or have been sold in conformity with the provisions of Rule 145(d).

                        8.          This letter agreement will apply to all shares of GA Financial common stock and all of the Shares that I am deemed to beneficially own pursuant to applicable federal securities laws.

            By its acceptance of this Letter Agreement, First Commonwealth agrees that for a period of two years after the effective time of the Merger, it will file on a timely basis all reports required to be filed by it pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, so that the public information provisions of SEC Rule 144(c) under the Securities Act are satisfied and the resale provisions of SEC Rules 145(d)(1) and (2) are therefore available to me in the event I desire to transfer any Shares issued to me in the Merger.

                                                                             Very truly yours,


                                                                             __________________________________

2

                                                                             Name:_____________________________

                                                                             Title:______________________________

ACCEPTED:

First Commonwealth Financial Corporation


By:_____________________________
Name:
Title:

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Exhibit C

Form of Voting Agreement

VOTING AGREEMENT

                    This VOTING AGREEMENT is made as of December ___, 2003 by the undersigned shareholder (the "Shareholder") of GA Financial, Inc., a Delaware corporation ("GA Financial"), for the benefit of First Commonwealth Financial Corporation, a Pennsylvania corporation (the "Purchaser").

Recitals

                    Pursuant to the terms of an Agreement and Plan of Merger of even date herewith (the "Merger Agreement") among Purchaser, First Commonwealth Bank, a Pennsylvania-chartered banking corporation, GA Financial, and Great American Federal, a federally-chartered savings and loan association, the Purchaser has agreed to acquire GA Financial in a merger in which the outstanding shares of Common Stock of GA Financial will be converted, at the election of the holder (subject to proration as provided in the Merger Agreement), into the right to receive $35.00 per share in cash or shares of Purchaser's Common Stock (the "Merger").  As a condition to its willingness to enter into the Merger Agreement, the Purchaser has required that the Shareholder agree, and the Shareholder is willing to agree, to the matters set forth herein.

Agreement

                    Accordingly, in consideration of the agreements of the Purchaser in the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Shareholder, intending to be legally bound hereby, agrees as follows for the benefit of the Purchaser:

                    1.          Representations and Warranties of Shareholder.  The Shareholder represents and warrants to the Purchaser that he is the beneficial owner of and has the power to vote or direct the voting of the number of shares of GA Financial Common Stock set forth opposite his signature below (together with any other shares of GA Financial Common Stock acquired by the Shareholder prior to the termination of this Agreement, the "Shares").

                    2.          Transfer and Other Restrictions.  The Shareholder agrees that, prior to the Merger, he shall not:

                                (a)          sell, exchange, transfer, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding with respect to the sale, exchange, transfer, pledge, encumbrance, assignment or other disposition of, any of the Shares (other than Shares sold in connection with the cashless exercise of an option, provided that the Shareholder agrees to notify the Purchaser promptly after any such exercise), unless any subsequent holder agrees in writing to be bound by the provisions hereof;

                                (b)          grant any proxies or enter into any voting agreement or similar arrangement with respect to any of the Shares, except proxies instructing that the Shares be voted in accordance with Section 3; or

                                (c)          deposit any of the Shares into a voting trust or other similar arrangement, unless the trustee is required by the terms thereof to vote the Shares in accordance with Section 3.

                    3.          Voting.  The Shareholder agrees to attend, in person or by proxy, all meetings of the shareholders of GA Financial and, at any meeting of the shareholders of GA Financial, agrees to vote all of the Shares:

                                (a)          in favor of the transactions contemplated by the Merger Agreement;

                                (b)          against any action or agreement that could result in a breach in any material respect of any covenant, representation or warranty of GA Financial in the Merger Agreement; and

                                (c)          except as otherwise agreed by the Purchaser or permitted under the Merger Agreement, against (i) any extraordinary corporate transaction, such as a merger, rights offering, reorganization, recapitalization or liquidation involving GA Financial, other than the Merger, or (ii) a sale or transfer of a material portion of the assets of GA Financial or the issuance of any securities of GA Financial, other than upon exercise of outstanding options.

                    4.          Specific Enforcement.  The Shareholder acknowledges that damages would be an inadequate remedy for a breach of this Agreement and that the obligations of the Shareholder shall be specifically enforceable, in addition to any other remedy which may be available to the Purchaser at law or in equity.

                    5.          Termination.  This Agreement shall terminate without any action by any of the parties hereto upon the earlier to occur of (i) the termination of the Merger Agreement pursuant to its terms or (ii) the effective date of the Merger.

                    6.          Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

                    IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the Shareholder as of the date first written above.

                                                                               Shareholder:

                    No. of shares:
                                            
                                                                                                                                                  
                                                                               (Signature)

                                                                                                                                                  
                                                                               (Name)

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EX-14

Exhibit 14.1 Code of Conduct and Ethics

FIRST COMMONWEALTH FINANCIAL CORPORATION
CODE OF CONDUCT AND ETHICS

I.        INTRODUCTION

          A.      SUMMARY

                     It is the policy of First Commonwealth Financial Corporation ("FCFC")
                     and each of its affiliates (collectively, the "Corporation") that, at all times,
                     directors and employees shall adhere to and obey laws, rules, and
                     regulations of local, state, and Federal authorities applicable to the
                     business of the Corporation and its affiliates and to maintain the highest
                     standards of professional and ethical conduct which is essential in
                     preserving the Corporation's integrity to the shareholders and the
                     community we serve.¹
          B.      RESPONSIBILITY

                     It is the responsibility of the Governance Committee to set the standards of
                     ethical business practices, and for all directors and employees to see that
                     they perform up to that standard. The Governance Committee has
                     designated the responsibility for the day-to-day coordination and
                     compliance monitoring to the Senior Vice President, Risk Management.
                     Each current director and employee will be required to read or review this
                     Code of Conduct and Ethics (the "Code") upon its adoption by the
                     Corporation and certify, in writing, that he or she understands his or her
                     responsibility to comply with the guidelines and provisions set forth
                     herein. Thereafter, each new employee will also be given a copy of the
                     code and will be required to certify in writing, that he or she also
                     understands his or her responsibility to comply with the guidelines and
                     provisions set forth within this Code.

1An employee means an officer or employee of the Corporation and it includes executive officers,
           unless otherwise stated. Certain parts of this Code of Conduct and Ethics may apply specifically to
          "Executive Officers", and are so indicated. "Executive Officer" means a member of the Corporation's
          management so designated by resolution of the Board of the Corporation.

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          C.      LEGAL AND ETHICAL STANDARDS

                     The maintenance of extremely high standards of honesty, integrity,
                     impartiality and conduct is essential to assure the proper performance of
                     the Corporation's business and the maintenance of the public's trust. The
                     preservation of that trust and of the Corporation's reputation requires close
                     observance of these standards on the part of the Corporation's directors
                     and employees.

                     Also, employees and directors of the Corporation should be alerted about
                     the Federal Bank Bribery Law, 18 U.S.C. Section 215, which provides that
                     whoever;
                                 (i)            "corruptly gives, offers or promises anything of value to                             any person, with intent to influence or reward a director,                             employee, agent, or attorney of a financial institution in                             connection with any business or transaction of such                             institution; or            (ii)             as a director, employee, agent, or attorney of a financial                             institution, corruptly solicits or demands for the benefit of                             any person, or corruptly accepts or agrees to accept                             anything of value from any person, intending to be                             influenced or rewarded in connection with any business or                             transaction of such institution, shall be [guilty of an                             offense]"
                     There are certain exceptions to the above rule concerning the receipt of
                     gifts. Please refer to Section III of this Code.

                     The Corporation requires that its directors, employees, and other
                     representatives avoid possible misconduct and conflicts of interest through
                     informed judgment and careful regard for the standards of conduct and
                     responsibilities set forth. In all situations including those where there are
                     no applicable legal principles or the law is unclear or in conflict, the

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                     Corporation's directors and employees are expected to conduct themselves
                     in such a manner that can be supported by the Corporation and to exercise
                     good judgment in the discharge of their responsibilities.

                     Compliance with the Code will be the responsibility of every
                     representative of the Corporation.

                     The needs of the community are to be given consideration in making
                     business decisions.


II.       CONFLICTS OF INTEREST

          A.      CORPORATE POLICY

                     It is the policy of the Corporation that all directors, employees, and other
                     representatives must avoid potential conflicts of interest. A potential
                     conflict exists whenever a director, employee or other representative has
                     an outside interest - direct or indirect - which conflicts with the
                     individual's duty to the Corporation or adversely affects the individual's
                     judgment in the discharge of his or her responsibilities at the Corporation.
                     The appearance of a conflict of interest may be just as damaging to the
                     Corporation's reputation as a real conflict.

                     Employees and directors are prohibited from self-dealing or otherwise
                     trading on their positions with the Corporation or participating in a
                     business opportunity not available to other persons or that is made
                     available because of such official's position with the Corporation.

                     The Corporation's name is not to be used as leverage by directors or
                     employees to enhance their own opportunities when dealing with others in
                     their political, investment, or retail purchasing activities.

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          B.      LENDING RELATIONSHIPS

                     It is the position of the bank that lending services be available to serve the
                     legitimate and deserving credit needs of all clients on an equal basis. Loan
                     terms and conditions shall be based upon a client's credit-worthiness.

          C.      PROHIBITED LENDING PRACTICE

                     Lending officers are not permitted to process loan applications or to
                     extend credit to members of their immediate family. Immediate family is
                     defined as spouses, parents, children, and/or siblings. Any such loan
                     application must be referred to another lending officer.

                     Extending credit to companies in which the lending officer has an interest
                     as a director, officer, controlling person, or partner, or in which a member
                     of the lending officer's immediate family has such an interest is not
                     permitted.
It shall be unlawful for FCFC, directly or indirectly, including through any subsidiary to extend or maintain credit, to arrange for the extension of credit, or to renew an extension of credit in the form of a personal loan to or for any director or executive officer of FCFC unless permitted by law. An extension of credit maintained by FCFC on July 31, 2002 shall not be subject to this provision provided that there is no material modification to any term of any such extension of credit, or any renewal of any such extension of credit on or after that date. Provided, however, that this restriction does not apply to any loan made or maintained by First Commonwealth Bank and First Commonwealth Trust Company (each a "Subsidiary Bank" and collectively, the "Subsidiary Banks"), if the loan is subject to the insider lending restrictions of Section 22(h) of the Federal Reserve Act. Loans from a Subsidiary Bank are further subject to the provisions of the FDIC's regulations set forth in 12 C.F.R. 337.3,

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Regulation O, 12 C.F.R. 563.43, the Subsidiary Bank's Lending Policy,
                     and other applicable provisions of law, and incorporated herein by
                     reference.

          D.      OUTSIDE EMPLOYMENT

                     Outside employment may not be undertaken without prior written
                     permission from the Human Resources Department or Chief Executive
                     Officer ("CEO") of the employee's employer. Full-time employees should
                     carefully scrutinize outside employment, including the performance of any
                     services for compensation, to avoid potential conflicts of interest and
                     excessive demands on one's time. Outside employment may not be
                     undertaken or continued if objected to by the CEO of the employee's
                     employer, Human Resources Department or the Governance Committee
                     on the grounds that such outside employment interferes with the job
                     performance or has the appearance of a conflict of interest with the
                     Corporation.

          E.      PARTICIPATION IN PUBLIC AFFAIRS

                     It is the philosophy of the Corporation to encourage on the part of its
                     employees a full awareness and interest in civic and political
                     responsibility. Each employee shall have the opportunity to support
                     community activities or the political process, as he or she desires.

                     Voluntary efforts for civic activities normally take place outside of regular
                     business hours. If voluntary work requires Corporation time, prior
                     approval must be obtained from the CEO of the employee's employer or
                     Human Resources Department.

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          F.      CORPORATE DIRECTORSHIP, PUBLIC OFFICERS,
COMMISSIONS

                     Directors and employees must be constantly aware when considering
                     election or appointment to corporate boards, public offices, or
                     commissions, that serving in such capacity will not place them in a
                     position where a potential conflict of interest may exist. No director may
                     serve on any other public company boards unless such service is approved
                     by the Board.

          G.      POLITICAL ACTIVITIES

                     It is illegal to use Corporation funds for the purpose of making
                     contributions or expenditures in connection with elections to any local,
                     state and federal office. However, the Federal Elections Commission does
                     permit the use of Corporation funds and assets for limited political
                     purposes, such as: establishing political action committees and
                     implementing non-partisan voter registration or "get-out-the-vote"
                      campaigns.

          H.      ACCURACY OF RECORDS

                     Employees shall always adhere to established accounting rules and audit
                     controls. All records shall accurately reflect transactions in a timely
                     manner. Incorrect or misleading entries shall be corrected immediately.

Falsification of records or transactions shall be grounds
for termination.
                     In accordance with the rules promulgated by the SEC under the Sarbanes-
                     Oxley Act of 2002, it shall be unlawful for any director or officer of the
                     Corporation or any other person acting under the direction thereof, to take
                     any action to fraudulently influence, coerce, manipulate, or mislead any
                     independent public or certified accountant engaged in the performance of

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                     an audit of the Corporation's financial statements for the purpose of
                     rendering such financial statements materially misleading.


III.      CORPORATE OPPORTUNITIES

          A.      RECEIPT OF GIFTS

                     The Corporation expects all directors and employees to render efficient
                     and courteous service to its clients at all times without expectation of
                     reward from its clients.

                     There is nothing wrong with having personal friendships with
                     representatives of those companies with whom we do business. However,
                     this cannot be permitted to extend to the giving or receiving of gifts that
                     could possibly influence the decisions made on behalf of the Corporation.

                     It is therefore against Corporate policy for any employee or director to
                     accept from any company or representative of those doing or seeking to do
                     business with us any gifts of value (For example: cash, merchandise, gift
                     certificates, weekend or vacation trips) that would influence them from
                     making the best decision for the benefit of the Corporation. This means
                     returning any such gifts which may be delivered to their home or office.

                     It is the responsibility of the employee or director to evaluate the intent of
                     the gift. No matter what the value of the gift, if the employee or director
                     feels the client is trying to influence his or her decisions, the gift should
                     not be accepted.

                     Specifically, no director, employee, agent, or attorney should:
                     i.             Solicit for themselves or a third party other than for the
                                    Corporation anything of value from anyone in return for any
                                    business, service, or information; and

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                     ii.            Accept anything of value other than regular authorized
                                    compensation from anyone in connection with the business of the
                                    Corporation, either before or after any business dealings occur.

                     Gifts are considered harmless if:
                                    (a) They are based on a family relationship;
                                    (b) They are benefits or awards that might be bestowed on any
                                         member of the public;
                                    (c) The benefit was a type that the Corporation would have paid for
                                         had the giver not done so, such as business meals or traditional
                                         holiday gifts; or
                                    (d) They are valued at $300 or less.

                     However, there may be from time to time, situations that arise where an
                     employee or director of the Corporation is offered a gift of value in excess
                     of $300 in the normal course of doing business that is in the best interest
                     of the Corporation (e.g. golf outings, business meals or overnight seminars
                     to further the employees knowledge of the product and/or industry in
                     which the Corporation may want to do business), but may give the
                     appearance of influencing the employees decision. It is the policy of the
                     Corporation that any gift over $300 offered to an employee or director
                     must be reported by the employee to the CEO of the employee's
                     employer, or, in the case of a director, to the Chairman of the Board.
                     Individual gifts aggregating $300 or more from one source in any calendar
                     year are also subject to this reporting requirement. The CEO will review
                     the proposed gift and if he or she determines that the acceptance of the gift
                     is in the best interest of the Corporation, written approval will be given.
                      (See Exhibit A for a copy of the "Written Approval" form.) However, if
                     the CEO feels that it is not in the best interest of the Corporation, the gift
                     will not be accepted.

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                     There may be situations where an employee may have to accept a gift
                     prior to obtaining the CEO's approval. Upon returning to the Corporation,
                     it is the responsibility of the employee to obtain the CEO's after-the-fact
                     written approval of the gift. However, if the CEO feels that it is not in the
                     best interest of the Corporation, the gift will be returned or appropriate
                     reimbursement will be made.

                     Copies of these written approvals will be forwarded to the Senior Vice
                     President, Risk Management of the Corporation for review.

          B.      PREFERENTIAL TREATMENT

                     No director or employee shall acquire or appropriate to his own personal
                     use any Corporate property, service, or profit opportunity on the basis of
                     or under situations not available to members of the public.


IV.       CONFIDENTIALITY
          A.      The confidential relationship between the Corporation and its clients is a
                     fundamental principle of the financial services business, which has long
                     been recognized by the statutes and court decisions. It is essential that
                     every director and employee maintain this relationship at all times.

          B.      The Corporation is entrusted with important information about individuals
and businesses. A violation of this trust is a serious matter. Furthermore,
the Corporation is legally obliged under regulations promulgated pursuant
to the Gramm-Leach-Bliley Act of 1999 to protect the privacy of a client's
personal financial information. Therefore, employees are authorized to
access client information only when they have a reasonable business need
for the information. The privacy practices of the Corporation are set out
more fully in the Privacy Policy, which is circulated, to our employees,
clients and members of the public, and is incorporated herein by reference.

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V.        FAIR DEALING

INTRODUCTION

                     Each employee must endeavor to deal fairly with the Corporation's clients,
                     suppliers, competitors and other employees. No employee shall take unfair
                     advantage of anyone through manipulation, concealment, abuse of
                     privileged or confidential information, misrepresentation of material fact,
                     or any other unfair-dealing practice.2 More specific discussion follows:

          A.      RELATIONSHIP WITH COMPETITORS

                     The antitrust laws are intended to preserve and foster the American
                     economic system of free enterprise by assuring energetic but fair
                     competition among business firms and to prevent business activity that
                     results in undue or unfair restraint or competition, the formation of
                     monopolies, and various undesirable business practices.

                     In providing its full range of financial services, the Corporation engages in
                     vigorous, yet fair and open competition. All of the directors and
                     employees are expected to observe the highest standards of ethical conduct
                     in relationships with competitors. It is the Corporation's policy to
                     emphasize the quality and competence of services and staff rather than
                     criticize those of competitors.

                     Directors and employees of the Corporation are prohibited from entering
                     into arrangements with competitors for the purpose of setting or
                     controlling prices, rates, trade practices, marketing policies, or disclosing
                     to competitors future plans of the Corporation which have not have been
                     disclosed generally to the public.

2       Adapted from the Report of the NYSE Corporate Accountability and Listing Standards Committee as
         submitted to the NYSE Board of Directors on June 6, 2002 (page 21), and from the Commentary to
         the Corporate Governance Rules Proposals submitted to the SEC by the NYSE on August 16, 2002.

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                     No director or employee shall engage in any activity which competes with
                     the Corporation.

          B.      RELATIONSHIP WITH CLIENTS

                     Employees shall act in a professional manner at all times when
                     representing the Corporation. In dealing with the Corporation's clients,
                     employees shall use prudent judgment and exercise good faith. Employees
                     shall avoid situations that would generate a conflict of interest.
                     Transactions with clients shall always be conducted at "arms length".

          C.      TIE-INS AND EXECUTIVE DEALINGS

                     Antitrust laws require that the Corporation may not extend credit, lease or
                     sell property or furnish any of its services to any entity not available to all
                     other qualifying applicants.

                     The Corporation's personnel must be alert to recognize situations,
                     transactions, and activities actually or potentially affected by antitrust
                     laws.

                     Each employee will be expected to monitor his personal conduct so as not
                     to bring discredit to the Corporation. As such, overdrafts of employee
                     checking accounts and past due loan payments will not be tolerated. In
                     addition, each employee shall conduct him or her self while at or away
                     from the Corporation in such a manner so as not to bring discredit to them
                     or to the Corporation.

                     Individuals should refer promptly any questionable matters for guidance
                     and resolution to the Corporation's Senior Vice President, Risk
                     Management.

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VI.       PROTECTION AND PROPER USE OF CORPORATION'S ASSETS

             Employees have a duty to protect and conserve Corporation property and to
             ensure its use for proper purposes. Employees of the Corporation are to take care
             of and have a responsibility to safeguard the property of the Corporation within
             reason. However, at no time is an employee to put his/her person at risk to
             safeguard Corporation property.

VII.      COMPLIANCE WITH LAWS, RULES AND REGULATIONS

             It is the policy of the Corporation that it and its directors and employees comply
             with both the letter and the spirit of the federal and state laws and regulations that
             govern their respective activities. All operating policies, procedures and forms
             used to conduct the Corporation's business shall be in conformity with applicable
             federal and state laws and regulations.

VIII.     ENCOURAGING THE REPORTING OF ANY ILLEGAL OR
              UNETHICAL BEHAVIOR

          A.      Good Faith Reporting of Wrongdoing

                     Employees of the Corporation are protected, to the extent provided by law,
                     against retaliation by the Corporation when they provide information or
                     assist in an investigation by federal regulators, law enforcement, Congress,
                     or the Corporation itself, regarding conduct which the employee
                     reasonably believes relates to fraud against the Corporation's shareholders.
                     Furthermore, the Subsidiary Banks are subject to and the employees are
                     protected by Section 33(a) Depository Institution Employee Protection
                     Remedy, of the Federal Deposit Insurance Act (12 U.S.C. 1831j, as
                     amended), (the "Act"), which is commonly known as "Whistleblower
                     Protections". Pursuant to the Act, employees shall not be discharged,
                     threatened, or otherwise discriminated or retaliated against regarding their
                     compensation, terms, conditions, location or privileges of employment
                     because they, or a person acting on their behalf, make a good faith report

12

                     or are about to report verbally or in writing to the Corporation or an
                     appropriate authority an instance of wrongdoing.

                                    (i) "Good faith report" shall mean a report of conduct defined as
                                          wrongdoing, which the person making the report has
                                          reasonable cause to believe is true and which is made without
                                          malice or consideration of personal benefit.

                                   (ii) "Wrongdoing" shall mean a violation, which is not of a merely
                                          technical or minimal nature of a federal or state statute or
                                          regulation or of this Code of Conduct and Ethics designed to
                                          protect the interests of the public or the Corporation.

3Confidential "refers to taking all reasonable measures to protect the name of the complainant who has
        filed a report concerning questionable accounting or auditing matters. The identity of the person
        providing the information, which initiated the investigative audit, will not be disclosed unless the
        disclosure is to a law enforcement agency which is conducting a criminal investigation, to Corporate
        personnel with a legitimate need to know in order to carry out the investigation or as necessary to
        conduct a complete and fair investigation. In addition, release of the identity of the complainant may
        be required pursuant to a subpoena or in other circumstances where the Corporation is required by law
        to release such information.

13

                     All reports of alleged wrongdoings should be submitted by employees, in
                     writing, to Global Compliance Services, a Third Party Service Provider
                     contracted by FCFC to independently receive the allegations, at AlertLine
                     Anonymous, PMB 3767, 13950 Ballantyne Corporate Place, Suite 300,
                     Charlotte, North Carolina 28277 or by phone at (866) 824-7836.  Global
                     Compliance Services will forward all of the reports of alleged
                     wrongdoings to the Chairman of the Audit Committee.   The Chairman of
                     the Audit Committee or his designees will review the alleged wrongdoings
                     and will make a determination as to the best course of action.  The
                     Chairman of the Audit Committee or his designees will make a
                     determination to either contract with an outside Investigation Agency or
                     have a review performed internally by the Governance Committee or any
                     other individuals or Group that the Chairman of the Audit Committee
                     deems appropriate.  The Chairman of the Audit Committee or his
                     designees may discuss the allegations with the Corporation's Human
                     Resources Department, General Counsel, Chief Internal Auditor or other
                     individuals to properly conduct an investigation.   They may also arrange a
                     meeting with the individual alleging the wrongdoing. In addition, the
                     individual for which the wrongdoing was alleged may also be interviewed.

                     Upon considering all the necessary facts, the Chairman of the Audit
                     Committee or his designees shall render a written decision, response or
                     explanation as expeditiously as possible.

          B.      Directors Submission of Good Faith Reports of Wrongdoing

                     Directors may submit any good faith reports of wrongdoing in writing to
                     the Chairman of the Governance Committee. A thorough investigation
                     will be undertaken by the Governance Committee or its designee and
                     appropriate action taken.

14

          C.      Request for Waivers

                     All requests for waiver of a provision of this Code should be submitted, in
                     writing, to the Senior Vice President, Risk Management.

                     The Senior Vice President, Risk Management will forward all requests
                     made by directors or executive officers to the Governance Committee for
                     determination if the waiver should be made. The Governance Committee,
                     in consultation with General Counsel or such external legal counsel as
                     they deem appropriate, shall render a written decision, response or
                     explanation and submit it to the Board for ratification.

                     If the request under consideration relates to an employee that is not an
                     executive officer, the determination shall be made by the Senior Vice
                     President, Risk Management in consultation with General Counsel or such
                     external legal counsel as the Senior Vice President, Risk Management
                     deems appropriate.

          D.      Document Retention

                     All documentation supporting the decisions concerning alleged
                     wrongdoings and waivers will be forwarded to the Human Resources
                     Department for filing and retention. These files shall be available to
                     Internal Audit Services.

          E.      Reporting

                     On a quarterly basis the Senior Vice President, Risk Management will
                     present to the Governance Committee a summary report of all alleged
                     wrongdoings, the status of any investigation or decisions rendered, waiver
                     requests made and their status.

15

          F.      Accounting or Auditing Matters

                     All reports of questionable accounting, internal accounting controls, or
                     auditing matters should be submitted by employees, in writing, to Global
                     Compliance Services, a Third Party Service Provider contracted by FCFC
                     to independently receive the allegations, at AlertLine Anonymous, PMB
                     3767, 13950 Ballantyne Corporate Place, Suite 300, Charlotte, North
                     Carolina 28277 or by phone at (866) 824-7836.  Regarding accounting
                     and auditing matters, they may be submitted anonymously and will be
                     kept confidential (See footnote 3 regarding the definition of
                     confidential.)  Global Compliance Services will forward all of the reports
                     of questionable accounting, internal accounting controls, or auditing
                     matters to the Chairman of the Audit Committee.  The Chairman of the
                     Audit Committee or his designees will review the reports of questionable
                     accounting, internal accounting controls, or auditing matters and will
                     make a determination as to the best course of action.  The Chairman of the
                     Audit Committee or his designees will make a determination to either
                     contract with an outside Investigation Agency or have a review performed
                     internally. 

                     Upon considering all the necessary facts, the Chairman of the Audit
                     Committee shall render a written decision, response or explanation as
                     expeditiously as possible.

          G.      Any Employee who violates a provision of this Code is subject to
                     applicable disciplinary action up to and including termination.

Directors who violate a provision of this Code are subject to such sanction
                     as the Board of Directors shall impose. Notwithstanding the foregoing, the
                     Corporation also preserves and reserves its other rights and remedies

16

against any individual who violates any provision of this Code, both at law
                     and in equity.

17

FCFC - Policies & Procedures
Exhibit A

First Commonwealth Financial Corporation
Gift Written Approval Form

Name                                                              
Department:                                                    
Date Submitted:


Customer/Vendor/Individual who gave you the gift:

Customer/Vendor/Individual's affiliation with FCFC and Affiliates (Please define current or proposed relationships with Customer/Vendor/Individual):



Description of gift:


Value of gift:
Reason for acceptance of gift:

18

FCFC - Policies and Procedures

I hereby certify that the above information is correct to the best of my knowledge:

Signature of the Employee Receiving the Gift:

Date:

Approved                        Denied                      

Comments, if applicable:








Signature of the Subsidiary (legal entity) CEO







Date:

19

EX-14

Exhibit 14.2 Code of Ethics for CEO and Senior Financial Officers

Code of Ethics
For Chief Executive Officer and Senior Financial Officers of
FIRST COMMONWEALTH FINANCIAL CORPORATION,
FIRST COMMONWEALTH BANK, and
FIRST COMMONWEALTH TRUST COMPANY

It is the policy of FIRST COMMONWEALTH FINANCIAL CORPORATION that the Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Chief Accounting Officer ("CAO") and Controller of each of FIRST COMMONWEALTH FINANCIAL CORPORATION ("FCFC"), FIRST COMMONWEALTH BANK and FIRST COMMONWEALTH TRUST COMPANY (the "Subsidiary Banks"), including any other direct or indirect material subsidiary of FCFC or the Subsidiary Banks (hereinafter sometimes collectively referred to as the "Corporation") adhere to and advocate the following principles governing their professional and ethical conduct in the fulfillment of their responsibilities:

1.       2.       3.       4.       5.       6.       7.       8.	Act with honesty and integrity, avoiding actual or apparent conflicts between his or her personal, private interests and the interests of the Corporation, including receiving improper personal benefits as a result of his or her position. Perform responsibilities with a view to causing periodic reports filed with the SEC to contain information which is accurate, complete, fair and understandable. Comply with laws of federal, state, and local governments applicable to the Corporation, and the rules and regulations of private and public regulatory agencies having jurisdiction over the Corporation. Act in good faith, responsibly, with due care, and diligence, without misrepresenting or omitting material facts or allowing independent judgment to be compromised. Respect the confidentiality of information acquired in the course of the performance of his or her responsibilities except when authorized or otherwise legally obligated to disclose. Do not use confidential information acquired in the course of the performance of his or her responsibilities for personal advantage. Proactively promote ethical behavior among subordinates and peers. Use corporate assets and resources employed or entrusted in a responsible manner. Do not use corporate information, corporate assets, corporate opportunities or one's position with the Corporation for personal gain as further described in the Corporation's Code of Conduct and Ethics. Do not compete directly or indirectly with the Corporation.
9.	Comply in all respects with FCFC's Code of Conduct and Ethics and FCFC's Policy on "Securities Trades by Company Personnel".
10.	Advance the Corporation's legitimate interests when the opportunity arises.

It is also the Policy of FCFC that each CEO, CFO, CAO and Controller of the Corporation acknowledge and certify to the foregoing annually and file a copy of such certification with each of the Audit Committee and Governance Committee of the Board.

The Governance Committee shall have the power to monitor, make determinations, and recommend action to the Board with respect to violations of this Policy, except for paragraph 2, with respect to which the Audit Committee shall have such power.

This Policy shall be subject to Part VIII. "Guidance and Reporting Procedures" of the Code of Conduct and Ethics of FCFC and such Part VIII. is hereby incorporated by reference into this Policy.

Attachment A
Code of Ethics for Chief Executive Officer and Senior Financial Officers
of First Commonwealth Financial Corporation*


ANNUAL CERTIFICATE

In my role as a chief or senior financial executive of [First Commonwealth Financial Corporation ("FCFC")] [                                  Bank (the "Bank")], I certify that I have adhered to and that I advocate the following principles and responsibilities governing my professional and ethical conduct. To the best of my knowledge and ability:

* 


* 


* 



* 


* 



* 

* 


* 


* 

*  I act with honesty and integrity, avoiding actual or apparent conflicts of interest between personal and professional relationships.

I perform my responsibilities with a view to causing periodic reports filed with the SEC to contain information which is accurate, complete, fair and understandable.

I comply with laws of federal, state, and local governments applicable to                         , and the rules and regulations of private and public regulatory agencies which have jurisdiction over [FCFC] [the Bank].

I act in good faith, responsibly, with due care, without misrepresenting or omitting material facts or allowing my independent judgment to be compromised.

I respect the confidentiality of information acquired in the course of my work except when authorized or otherwise legally obligated to do otherwise. I do not use confidential information acquired in the course of my work for personal advantage.

I proactively promote ethical behavior among my subordinates and peers.

I use corporate assets and resources employed by or entrusted to me in a responsible manner.

I do not use corporate information, corporate assets, corporate opportunities or my position for personal gain. I do not compete with [FCFC] [the Bank].

I advance [FCFC's] [the Bank's] legitimate interests when the opportunity to do so arises.

I comply in all respects with FCFC's Code of Conduct and Ethics and FCFC's Policy on "Securities Trades by Company Personnel".  

                                                                              
[Signature]

* "Senior Financial Officers" means the CFO, CAO and the Controller of First Commonwealth Bank, First Commonwealth Trust Company and/or any other material direct or indirect subsidiary of any of them or persons performing similar functions.

EX-21

Exhibit 21.1    SUBSIDIARIES OF FIRST COMMONWEALTH FINANCIAL
                CORPORATION

	Percent Ownership By Registrant
First Commonwealth Bank 22 North Sixth Street Indiana, PA 15701 Incorporated under the laws of Pennsylvania	100%
First Commonwealth Systems Corporation 22 North Sixth Street Indiana, PA 15701 Incorporated under the laws of Pennsylvania	100%
First Commonwealth Trust Company 614 Philadelphia Street Indiana, PA 15701 Incorporated under the laws of Pennsylvania	100%
First Commonwealth Professional Resources Incorporated 22 North Sixth Street Indiana, PA 15701 Incorporated under the laws of Pennsylvania	100%
First Commonwealth Financial Advisors Incorporated 22 North Sixth Street Indiana, PA 15701 Incorporated under the laws of Pennsylvania	100%
FraMal Holdings Corporation 1105 North Market Street, Suite 1300 Wilmington, DE  19899 Incorporated under the laws of Delaware	100%
First Commonwealth Capital Trust I 22 North Sixth Street Indiana, PA 15701 Incorporated under the laws of Delaware	100%
First Commonwealth Capital Trust II 22 North Sixth Street Indiana, PA 15701 Incorporated under the laws of Delaware	100%
Pittsburgh Home Financial Corporation 1001 Village Run Road Wexford, PA  15090 Incorporated under the laws of Delaware	100%
Commonwealth Trust Credit Life Insurance Company 2700 North Third Street, Suite 2000 Phoenix, AZ 85004 Incorporated under the laws of Arizona	50%

EX-23

Exhibit 23.1  CONSENT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements listed below, of our report dated January 28, 2004, with respect to the consolidated financial statements of First Commonwealth Financial Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 2003.

Form S-3 relating to the Corporation's Stock Purchase and Dividend Reinvestment Plan (No. 333-111732)

Form S-8 relating to the Pittsburgh Financial Corp. Stock Option Plan (No. 333-111735)

Form S-8 relating to the Corporation's Stock Option Plan (No. 033-55687)



/S/Ernst & Young LLP


March 10, 2004
Pittsburgh, Pennsylvania

EX-23

Exhibit 23.2  CONSENT OF DELOITTE & TOUCHE LLP INDEPENDENT AUDITORS

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements No. 33-55687 and No. 33-111735 of First Commonwealth Financial Corporation on Form S-8 and Registration Statement No. 333-111732 of First Commonwealth Financial Corporation on Form S-3 of our report, dated January 22, 2003 on the consolidated balance sheet of First Commonwealth Financial Corporation as of December 31, 2002 and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the two years then ended, appearing in this Annual Report on Form 10-K of First Commonwealth Financial Corporation for the year ended December 31, 2003.

/S/Deloitte & Touche LLP



DELOITTE & TOUCHE, LLP
Pittsburgh, Pennsylvania
March 10, 2004

EX-24

FIRST COMMONWEALTH FINANCIAL CORPORATION AND SUBSIDIARIES

Exhibit 24.1--POWER OF ATTORNEY

     KNOWN ALL PERSONS BY THESE PRESENT - that each person whose signature appears below constitutes and appoints Joseph E. O'Dell and David R. Tomb, Jr., and each of them, their true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for them and in their name, place and power of substitution and resubstitution, for them and in their name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them, or their or his substitutes, may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.

SIGNATURE AND CAPACITY	DATE
/S/JOHN A. ROBERTSHAW, JR.	FEBRUARY 17, 2004
Director
/S/DAVID S. DAHLMAN	FEBRUARY 17, 2004
Director
/S/RAY T. CHARLEY	FEBRUARY 17, 2004
Director
/S/ALAN R. FAIRMAN	FEBRUARY 17, 2004
Director
/S/JOHNSTON A. GLASS	FEBRUARY 17, 2004
Director
/S/DAVID R. TOMB, JR.	FEBRUARY 17, 2004
Secretary and Director
/S/JOSEPH E. O'DELL	FEBRUARY 17, 2004
President and CEO and Director
/S/EDWARD T. COTE	FEBRUARY 17, 2004
Director
/S/ JOHN J. DOLAN                          Executive Vice President and Chief Financial Officer	FEBRUARY 17, 2004
/S/JANICE PATTI                            (1)Chief Accounting Officer	FEBRUARY 17, 2004

EX-31

EXHIBIT 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph E. O'Dell, President and Chief Executive Officer, certify that:
1.	I have reviewed this annual report on Form 10-K of First Commonwealth Financial Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 10, 2004	/S/Joseph E. O'Dell
Date	Signature
	President and Chief Executive Officer
	Title

EX-31

EXHIBIT 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John J. Dolan, Executive Vice President and Chief Financial Officer, certify that:
1.		I have reviewed this annual report on Form 10-K of First Commonwealth Financial Corporation;
2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.		The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)		Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	c)		Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

March 10, 2004	/S/John J. Dolan
Date	Signature
	Executive Vice President and Chief Financial Officer
	Title

EX-32

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, Joseph E. O'Dell, President and Chief Executive Officer of First Commonwealth Financial Corporation ("the Corporation"), certify that the Annual Report of the Corporation on Form 10-K for the period ended December 31, 2003, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Corporation at the end of such period and the results of operations of the Corporation for such period.

DATED: March 10, 2004	/S/Joseph E. O'Dell
	Joseph E. O'Dell
	President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to First Commonwealth Financial Corporation and will be retained by First Commonwealth Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

I, John J. Dolan, Executive Vice President and Chief Financial Officer of First Commonwealth Financial Corporation ("the Corporation"), certify that the Annual Report of the Corporation on Form 10-K for the period ended December 31, 2003, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Corporation at the end of such period and the results of operations of the Corporation for such period.

DATED: March 10, 2004	/S/John J. Dolan
	John J. Dolan
	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to First Commonwealth Financial Corporation and will be retained by First Commonwealth Financial Corporation and furnished to the Securities and Exchange Commission or its staff upon request.