As filed with the Securities and Exchange Commission on October 30, 2003

                                                     REGISTRATION NO. 333-109292


================================================================================

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

                                 PRE-EFFECTIVE
                                AMENDMENT NO. 1
                                       TO
                                    FORM S-4
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933
                     ---------------------------------------
                    FIRST COMMONWEALTH FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)



          PENNSYLVANIA                               6021                           25-1428528
          ------------                               ----                           ----------
                                                                       
(State or other jurisdiction of          (Primary Standard Industrial            (I.R.S. Employer
 incorporation or organization)           Classification Code Number)           Identification No.)


                              OLD COURTHOUSE SQUARE
                              22 NORTH SIXTH STREET
                                INDIANA, PA 15701
                                 (724) 349-7220
       (Address, including zip code, and telephone number, including area
               code, of registrant's principal executive offices)

                            DAVID R. TOMB, JR., ESQ.
                             SECRETARY AND TREASURER
                    FIRST COMMONWEALTH FINANCIAL CORPORATION
                              22 NORTH SIXTH STREET
                           INDIANA, PENNSYLVANIA 15701
                                 (724) 349-7220
     (Name, address, including zip code and telephone number, including area
                           code, of agent for service)

                                   Copies to:
                           ANDREW L. BLAIR, JR., ESQ.
                              MATTHEW C. TOMB, ESQ.
                             SHERMAN & HOWARD L.L.C.
                       633 SEVENTEENTH STREET, SUITE 3000
                             DENVER, COLORADO 80202
                                 (303) 297-2900

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement and upon the
consummation of the transaction described in the Prospectus.


If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]


If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, as amended (the "Securities
Act"), check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]




         THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

===============================================================================


                        [PITTSBURGH FINANCIAL CORP. LOGO]
                              1001 Village Run Road
                           Wexford, Pennsylvania 15090

PROXY STATEMENT/PROSPECTUS

Dear Fellow Shareholders:


         The board of directors of Pittsburgh Financial Corp. has called a
special meeting of the shareholders to consider and to vote upon the approval of
a merger agreement providing for the merger of Pittsburgh Financial with First
Commonwealth Financial Corporation. If the merger agreement is approved and the
merger is subsequently completed, each outstanding share of Pittsburgh Financial
common stock will be converted into the right to receive $20.00 in cash or a
number of whole shares of common stock of First Commonwealth determined by
dividing $20.00 by the average closing price of First Commonwealth's common
stock during a specified period preceding the merger, plus cash in lieu of any
fractional share interest. You will have the opportunity to elect the form of
consideration that you will receive for your shares, subject to allocation
procedures set forth in the merger agreement. The merger agreement provides the
aggregate amount of cash consideration to be paid in the merger to ensure that
approximately 60% of the outstanding shares of Pittsburgh Financial common stock
will be converted into the right to receive First Commonwealth common stock and
approximately 40% of the outstanding shares of Pittsburgh Financial common stock
will be converted into the right to receive cash. First Commonwealth common
stock is listed on the New York Stock Exchange under the symbol FCF. The merger
is intended to be tax-free to the extent that you receive shares of First
Commonwealth common stock in exchange for your shares, and taxable to the extent
that you receive cash.


         We cannot complete the merger unless it is approved by the shareholders
of Pittsburgh Financial at the special meeting. Whether or not you plan to
attend the special meeting, please take the time to complete and mail the
enclosed proxy card. If you sign, date and mail your proxy card without
indicating how you want to vote, your proxy card will be voted in favor of the
merger.

         Based on our reasons for the merger described herein, our board of
directors believes that the merger is fair to you and in your best interests.
Accordingly, our board of directors unanimously recommends that you vote FOR
approval of the merger agreement.

         The accompanying proxy statement/prospectus describes the shareholders'
meeting, the merger, and other related matters. Please read the entire document
carefully, including the discussion of "Risk Factors" beginning on page 12.

         We look forward to seeing you at the special meeting.


                                                Very truly yours,

                                                /s/ J. Ardie Dillen

                                                J. Ardie Dillen
                                                Chairman, President and
                                                Chief Executive Officer


Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the First Commonwealth common stock to be
issued in the merger or passed upon the adequacy or accuracy of this proxy
statement/prospectus. The shares of First Commonwealth common stock are not
savings accounts, deposits or other obligations of any bank or savings
association and are not insured by any federal or state governmental agency. Any
representation to the contrary is a criminal offense.


This proxy statement/prospectus is dated October 30, 2003, and is first
being mailed to Pittsburgh Financial Corp. shareholders on or about
November 3, 2003.








                        [PITTSBURGH FINANCIAL CORP. LOGO]

                              1001 Village Run Road
                           Wexford, Pennsylvania 15090


                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                         TO BE HELD ON DECEMBER 5, 2003


To the Shareholders of Pittsburgh Financial Corp.:


         Notice is hereby given that a special meeting of shareholders of
Pittsburgh Financial Corp., a Pennsylvania corporation, will be held at Marriott
Pittsburgh North, 100 Cranberry Woods Drive, Cranberry Township, PA 16066, on
Friday, December 5, 2003, at 10:00, local time, for the following purposes:

         1. To consider and vote upon a proposal to adopt a merger agreement
dated as of August 8, 2003, among Pittsburgh Financial Corp., First Commonwealth
Financial Corporation, a Pennsylvania corporation, Pittsburgh Savings Bank, dba
BankPittsburgh, a Pennsylvania-chartered stock savings bank, and First
Commonwealth Bank, a Pennsylvania-chartered banking corporation, in the form of
ANNEX I to the proxy statement/prospectus, and to approve the merger of
Pittsburgh Financial with and into First Commonwealth;

         2. To consider and vote upon a proposal to adjourn the special meeting
to a later date or dates, if necessary, to permit further solicitation of
proxies in the event there are not sufficient votes at the time of the special
meeting to approve the merger agreement; and

         3. To transact such other business as may properly come before the
meeting.


         Only holders of record of Pittsburgh Financial Corp. common stock as of
the close of business on October 27, 2003 are entitled to notice of, and to
vote at, the special meeting. A list of Pittsburgh Financial Corp. shareholders
entitled to vote at the special meeting will be available for examination by any
Pittsburgh Financial Corp. shareholder at the special meeting and, for a period
of ten business days prior to the date of the special meeting, during ordinary
business hours, at Pittsburgh Financial's corporate offices at 1001 Village Run
Road, Wexford, Pennsylvania 15090.


         Whether or not you are personally able to attend the meeting, please
complete, sign and date the enclosed proxy card and return it in the enclosed
prepaid envelope as soon as possible. This action will not limit your right to
vote in person if you wish to attend the special meeting and vote personally.
You may revoke your proxy in the manner described in the proxy
statement/prospectus at any time before it is voted at the special meeting.


October 30, 2003                          By Order of the Board of Directors,

                                          /s/ Gregory G. Maxcy

                                          Gregory G. Maxcy
                                          Executive Vice President and Secretary


DO NOT SEND ANY STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD. THE PROCEDURE
FOR THE EXCHANGE OF YOUR SHARES AFTER THE MERGER IS CONSUMMATED IS SET FORTH IN
THE PROXY STATEMENT/PROSPECTUS.






                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

         This proxy statement/prospectus is a part of a registration statement
on Form S-4 filed by First Commonwealth with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended. This proxy
statement/prospectus does not contain all the information set forth in the
registration statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information with respect to
First Commonwealth and the securities offered by this proxy
statement/prospectus, reference is made to the registration statement, including
the documents filed as exhibits to the registration statement. Statements
contained in this proxy statement/prospectus concerning the provisions of such
documents are necessarily summaries, and each such statement is qualified in its
entirety by reference to the document filed with the Securities and Exchange
Commission.

         First Commonwealth and Pittsburgh Financial each file periodic reports,
proxy statements and other information with the SEC. Those filings are available
to the public over the Internet at the SEC's web site. The address of that site
is http://www.sec.gov. You may also inspect and copy these materials at the
public reference facilities of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information about the public reference facilities.

                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         This proxy statement/prospectus incorporates important business and
financial information about First Commonwealth and Pittsburgh Financial Corp.
that is not included in or delivered with this proxy statement/prospectus. The
following documents previously filed by First Commonwealth under the Securities
Exchange Act of 1934, as amended, are incorporated by reference into this proxy
statement/prospectus:

o        Annual report on Form 10-K for the fiscal year ended December 31, 2002.

o        Quarterly report on Form 10-Q for the period ended March 31, 2003.

o        Quarterly report on Form 10-Q for the period ended June 30, 2003.


o        Current reports on Form 8-K filed with the Securities and Exchange
         Commission on April 17, 2003, July 17, 2003, July 29, 2003, August
         12, 2003 and October 23, 2003.


o        The description of First Commonwealth common stock set forth in First
         Commonwealth's Registration Statement filed pursuant to Section 12 of
         the Exchange Act, and any amendment or report filed for the purpose of
         updating any such description.

         The following documents previously filed by Pittsburgh Financial under
the Securities Exchange Act of 1934, as amended, are incorporated by reference
into this proxy statement/ prospectus:

o        Annual Report on Form 10-K for the fiscal year ended September 30,
         2002.

o        Quarterly Report on Form 10-Q for the period ended December 31, 2002.

o        Quarterly Report on Form 10-Q for the period ended March 31, 2003.

o        Quarterly Report on Form 10-Q for the period ended June 30, 2003.

o        Current Reports on Form 8-K filed on April 28, 2003, July 31, 2003 and
         August 13, 2003.



                                       i


         All documents filed by First Commonwealth pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
subsequent to the date of this proxy statement/prospectus and prior to the date
of the special meeting of Pittsburgh Financial shareholders, shall be deemed to
be incorporated by reference into this proxy statement/prospectus.

         A copy of Pittsburgh Financial's Annual Report on Form 10-K for the
year ended September 30, 2002 and Quarterly Report on Form 10-Q for the quarter
ended June 30, 2003, each as filed with the Securities and Exchange Commission,
accompany this proxy statement/prospectus at ANNEX II.

         The documents incorporated by reference can be obtained from the SEC's
public reference facilities or on the SEC's web site as described above under
"Where You Can Find Additional Information." Documents incorporated by reference
are also available from First Commonwealth and Pittsburgh Financial without
charge, excluding the exhibits to such documents (unless specifically
incorporated by reference to this document). You may obtain documents
incorporated by reference in this proxy statement/prospectus or additional
copies of this proxy statement/prospectus by requesting them in writing or by
telephone from:


                                             
David R. Tomb, Jr.                               J. Ardie Dillen
Secretary and Treasurer                          Chairman, President and Chief Executive Officer
First Commonwealth Financial Corporation         Pittsburgh Financial Corp.
22 North Sixth Street                            1001 Village Run Road
Indiana, Pennsylvania 15701                      Wexford, Pennsylvania 15090
(724) 349-7220                                   (724) 933-4509


         If you are a shareholder of Pittsburgh Financial and would like to
obtain additional copies of this document, please address your request to
Pittsburgh Financial at the address listed above.

         IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM FIRST COMMONWEALTH OR
PITTSBURGH FINANCIAL, PLEASE DO SO AT LEAST FIVE BUSINESS DAYS BEFORE THE DATE
OF THE SHAREHOLDERS' MEETING IN ORDER TO RECEIVE TIMELY DELIVERY OF SUCH
DOCUMENTS PRIOR TO THE SHAREHOLDERS' MEETING.


         First Commonwealth has supplied all information contained or
incorporated by reference in this document relating to First Commonwealth, and
Pittsburgh Financial has supplied all information contained or incorporated by
reference in this document relating to Pittsburgh Financial. You should rely
only on the information contained or incorporated by reference in this document
to vote your shares at the special meetings. First Commonwealth and Pittsburgh
Financial have not authorized anyone to provide you with information that is
different from the information contained in this document. This document is
dated October 30, 2003. You should not assume that the information contained in
this document is accurate as of any other date and neither the mailing of this
document to shareholders nor the issuance of First Commonwealth common stock in
the merger creates any implication to the contrary.



                                       ii




                                TABLE OF CONTENTS




                                                                                                      Page
                                                                                                   
WHERE YOU CAN FIND ADDITIONAL INFORMATION...............................................................i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.........................................................i
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................................................1
SUMMARY OF THIS PROXY STATEMENT/PROSPECTUS..............................................................3
SELECTED FINANCIAL INFORMATION  OF FIRST COMMONWEALTH...................................................8
SELECTED FINANCIAL INFORMATION  OF PITTSBURGH FINANCIAL.................................................10
RISK FACTORS............................................................................................12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION..............................................15
MARKET PRICE AND DIVIDEND INFORMATION...................................................................16
Comparative Prices......................................................................................16
Historical Market Prices and Dividend Information.......................................................16
   First Commonwealth...................................................................................16
   Pittsburgh Financial.................................................................................16
Dividend Policy of First Commonwealth...................................................................17
Historical, Pro Forma and Equivalent Per Share Data.....................................................17
THE SPECIAL MEETING OF THE SHAREHOLDERS  OF PITTSBURGH FINANCIAL........................................20
THE COMPANIES INVOLVED IN THE MERGER....................................................................22
First Commonwealth......................................................................................22
Pittsburgh Financial....................................................................................23
THE MERGER..............................................................................................23
Structure of the Merger.................................................................................23
Cash or Stock Election..................................................................................24
Election Procedures; Surrender of Stock Certificates....................................................25
Background of the Merger................................................................................27
Reasons for the Merger..................................................................................30
   Pittsburgh Financial.................................................................................30
   First Commonwealth...................................................................................31
Opinion of Pittsburgh Financial's Financial Advisor.....................................................33
Interests of Certain Directors and Executive Officers of Pittsburgh Financial in the Merger.............43
Material Federal Income Tax Consequences................................................................46
Accounting Treatment of the Merger......................................................................48
New York Stock Exchange Listing.........................................................................48
THE MERGER AGREEMENT....................................................................................49
Conditions to Completing the Merger.....................................................................49
Conduct of Pittsburgh Financial's Business Before the Merger............................................50
Covenants in the Merger Agreement.......................................................................51
Representations and Warranties in the Merger Agreement..................................................52
Termination of the Merger Agreement; Termination Fee....................................................53
Regulatory Approvals for the Mergers....................................................................54
Resale of First Commonwealth Common Stock...............................................................55
Expenses ...............................................................................................55
Amendment and Waiver....................................................................................55
Dissenters' Rights......................................................................................55
COMPARISON OF RIGHTS OF SHAREHOLDERS....................................................................55
UNAUDITED PRO FORMA FINANCIAL INFORMATION...............................................................57
ADJOURNMENT OF THE SPECIAL MEETING......................................................................62
EXPERTS ................................................................................................62
LEGAL MATTERS...........................................................................................62


ANNEXES:
Annex I    -    Merger Agreement
Annex II   -    Pittsburgh Financial Annual and Quarterly Reports
Annex III  -    Sandler O'Neill Fairness Opinion



                                       v



                     QUESTIONS AND ANSWERS ABOUT THE MERGER

Q: WHO ARE THE PARTIES TO THE MERGER? (PAGE 22)

A: The parties to the merger are Pittsburgh Financial Corp. and First
Commonwealth Financial Corporation. After the merger, the separate existence of
Pittsburgh Financial will cease, and First Commonwealth will continue as the
surviving corporation.

Q: WHAT ARE THE REASONS FOR THE MERGER? (PAGE 30)

A: For Pittsburgh Financial, the merger will allow it to more effectively
compete with larger regional and national financial institutions and take
advantage of opportunities in the Pittsburgh market by offering First
Commonwealth's expanded range of products and services. Management believes that
operating efficiencies can be achieved by combining the operations of the two
institutions and that the resulting cost savings can be redeployed to
income-producing functions at BankPittsburgh. In addition, the shareholders of
Pittsburgh Financial should have greater liquidity as holders of First
Commonwealth common stock, which is traded on the New York Stock Exchange, has a
larger public float (i.e., there are more outstanding shares held by persons
other than directors and officers of the company) and is more actively traded
than Pittsburgh Financial common stock.

For First Commonwealth, the merger represents a significant step in implementing
its strategy for expansion into the Pittsburgh market. First Commonwealth Bank
and BankPittsburgh have different customer bases, which presents the opportunity
for First Commonwealth Bank to offer insurance, trust and financial planning
services to a larger base of customers.

The boards of directors of First Commonwealth and Pittsburgh Financial believe
that the merger is in the best interests of their respective companies and
shareholders.

Q: WHAT WILL I RECEIVE IN EXCHANGE FOR MY SHARES? (PAGE 24)

A: You will receive $20 per share in either cash or shares of First Commonwealth
common stock. You must elect to receive either all cash or all stock for your
shares, but the actual mix of cash and stock that you receive will depend upon
what other Pittsburgh Financial shareholders elect to receive for their shares.
First Commonwealth has agreed to pay approximately 40% of the merger
consideration in cash and the remainder in shares of First Commonwealth common
stock. If holders of more than 40% of the outstanding Pittsburgh Financial
common stock elect to receive cash or if more than 60% elect to receive stock,
the exchange agent will apply allocation and proration procedures to ensure that
the 40% / 60% ratio is achieved.

Q: WHAT IS THE CONVERSION RATIO IN THE MERGER? (PAGE 24)

A: The conversion ratio is based on the average closing price of First
Commonwealth common stock on the New York Stock Exchange for the 10 trading days
ending three trading days before the consummation of the merger. The final
conversion ratio cannot be determined until the closing date of the merger.

Q: WHEN IS THE MERGER EXPECTED TO BE COMPLETED? (PAGE 49)

A: We are working to complete the merger on or about December 31, 2003. We must
first obtain the necessary approvals from federal and state regulatory agencies
and the approvals of the Pittsburgh Financial shareholders at the special
meeting. We cannot predict with certainty when or if all the conditions to the
merger will be met, and it is possible we will not complete the merger.




Q: WHAT ARE THE FEDERAL TAX CONSEQUENCES OF THE MERGER TO SHAREHOLDERS OF
PITTSBURGH FINANCIAL? (PAGE 46)

A: It depends upon whether you receive cash or shares of First Commonwealth
common stock for your Pittsburgh Financial stock. To the extent that you receive
cash in exchange for your shares, you will be subject to federal capital gains
tax with respect to the difference between $20 per share and your tax basis in
your shares of Pittsburgh Financial common stock. To the extent that you receive
First Commonwealth common stock for your shares, the exchange of shares
generally will be tax-free for U.S. federal income tax purposes, and your basis
in the shares of First Commonwealth common stock will be the same as your basis
in your Pittsburgh Financial shares multiplied by the exchange ratio. You will,
however, have to pay taxes on any cash received for fractional shares. Your tax
consequences will also depend on your personal situation. We urge you to consult
your tax advisors for a full understanding of the tax consequences of the merger
to you.

Q: WILL THE MERGER OCCUR IF THE PITTSBURGH FINANCIAL SHAREHOLDERS DO NOT APPROVE
THE MERGER? (PAGE 49)

A: No. The merger must be approved by the shareholders of Pittsburgh Financial.

Q: IF MY SHARES ARE HELD IN "STREET NAME" (MEANING THAT MY SHARES ARE HELD BY A
BROKER AS NOMINEE), WILL MY BROKER VOTE MY SHARES FOR ME? (PAGE 21)

A: Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how to
instruct your broker to vote your shares. Without instructions to your broker,
your shares will not be voted.

Q: WHAT IS THE EFFECT OF NOT VOTING OR ABSTAINING? (PAGE 20)

A: If your shares are not voted or you abstain, your shares will not be counted
for or against the merger. In other words, if you do not vote or if you abstain,
your failure to vote will have no effect on the proposed merger, assuming a
quorum is present at the special meeting. If you sign and send in your proxy
card but do not indicate how you want to vote, your shares will be voted in
favor of the merger.

Q: WHAT SHOULD I DO NOW? (PAGE 21)

A: After you have carefully read this document, mail your signed proxy card in
the enclosed envelope following the instructions on or with the proxy card or,
if your shares are held by a broker as nominee, the instructions provided by
your broker regarding how to instruct your broker to vote, so that your shares
will be represented at the special meeting. You should not send your stock
certificates representing shares of common stock of Pittsburgh Financial yet.

Q: WHOM SHOULD I CALL WITH QUESTIONS? (PAGE iv)

A: You should call J. Ardie Dillen, Chairman, President and Chief Executive
Officer of Pittsburgh Financial, at (724) 933-4509 with any questions about the
merger or the other matters described in the accompanying proxy
statement/prospectus.




                                       2



                   SUMMARY OF THIS PROXY STATEMENT/PROSPECTUS


         This summary, together with the preceding Questions and Answers
section, highlights selected information from this proxy statement/prospectus,
but does not contain all of the information that is important to you. We have
provided cross-references to more complete discussions of the matters described
below. To understand the merger and the merger agreement, you should carefully
read this entire document and the documents referred to in "Incorporation of
Certain Documents by Reference" on page i. You should pay special attention to
the information presented in "Risk Factors" beginning on page 12 and "Cautionary
Statement Regarding Forward-Looking Information" beginning on page 15. A copy of
the Agreement and Plan of Merger dated August 8, 2003 (the "merger agreement")
is attached as ANNEX I to this proxy statement/prospectus. We encourage you to
read the merger agreement in full, since it is the legal document governing the
merger transaction.


INFORMATION ABOUT THE COMPANIES (PAGE 22)

         FIRST COMMONWEALTH

         First Commonwealth is a bank holding company headquartered in Indiana,
Pennsylvania. First Commonwealth's wholly owned subsidiary, First Commonwealth
Bank, is a full-service banking institution with 84 locations in 17 counties
throughout central and western Pennsylvania. As of June 30, 2003, First
Commonwealth had total assets of $4.8 billion, net loans of $2.6 billion and
deposits of $3.2 billion. First Commonwealth provides a broad range of financial
products and services, including credit, cash management, investment, deposit,
trust, employee benefits consulting and insurance brokerage products and
services. First Commonwealth's principal executive offices are located at 22
North Sixth Street, Indiana, Pennsylvania 15701, and its telephone number is
(724) 349-7220.

         PITTSBURGH FINANCIAL

         Pittsburgh Financial is a financial holding company headquartered in
Wexford, Pennsylvania. Pittsburgh Savings Bank, doing business as
BankPittsburgh, is a savings bank, with seven locations and one loan office
serving Pittsburgh and the surrounding area of Allegheny and Butler Counties,
Pennsylvania. As of June 30, 2003, Pittsburgh Financial had total assets of $376
million, net loans of $234 million and deposits of $182 million. BankPittsburgh,
founded in 1942, is a community oriented financial institution engaged primarily
in the business of attracting deposits from the general public and using such
funds, together with other borrowings, to invest primarily in loans in the
communities it serves. Such lending activity primarily consists of single-family
residential real estate loans and, to a lesser extent, multi-family residential
and commercial real estate loans and other loans such as home equity and small
business loans and lines of credit. Pittsburgh Financial's principal executive
offices are located at 1001 Village Run Road, Wexford, Pennsylvania 15090, and
its telephone number is (724) 933-4509.

THE MERGER (PAGE 23)

         Pittsburgh Financial will merge with First Commonwealth. After the
merger, the separate existence of Pittsburgh Financial will cease and First
Commonwealth will continue as the surviving corporation. In the merger, each
outstanding share of Pittsburgh Financial common stock will be converted into
$20 in cash or shares of First Commonwealth common stock based on a conversion
ratio calculated as described below under "What Pittsburgh Financial
Shareholders Will Receive in the Merger." Immediately after the merger of
Pittsburgh Financial into First Commonwealth, Pittsburgh Savings Bank will be
merged into First Commonwealth Bank.


                                       3


WHAT PITTSBURGH FINANCIAL SHAREHOLDERS WILL RECEIVE IN THE MERGER (PAGE 24)

         In the merger, Pittsburgh Financial shareholders will receive $20 in
cash or shares of First Commonwealth common stock in exchange for their shares
of Pittsburgh Financial common stock. After the merger, you will be provided a
form on which to elect whether you wish to receive cash or stock in the merger.
However, the actual consideration that you receive will also depend in part upon
the elections of other Pittsburgh Financial shareholders. The aggregate merger
consideration will consist of approximately 60% First Commonwealth common stock
and approximately 40% cash. If holders of more than 60% of the outstanding
Pittsburgh Financial common stock elect to receive stock or if more than 40%
elect to receive cash, the exchange agent will apply allocation and proration
procedures to ensure that the 60% / 40% ratio is achieved. See "The Merger--Cash
or Stock Election" on page 24.


         The exchange ratio for shares of Pittsburgh Financial common stock that
are converted into First Commonwealth common stock will be determined by
dividing $20 by the average closing price of the First Commonwealth common stock
on the New York Stock Exchange for the 10 trading days ending three trading days
prior to closing of the merger. On October 27, 2003, the closing price of First
Commonwealth common stock on the NYSE was $13.75. The final conversion ratio
cannot be determined until the closing date of the merger. You should obtain
current market prices for First Commonwealth common stock to see how this
formula may affect you. First Commonwealth will pay cash in lieu of fractional
shares based on the average closing price discussed above.


SPECIAL MEETING (PAGE 20)


         The special meeting of the Pittsburgh Financial shareholders will be
held at Marriott Pittsburgh North, 100 Cranberry Woods Drive, Cranberry
Township, PA 16066, at 10:00 a.m., local time, on December 5, 2003. At that
special meeting, the Pittsburgh Financial shareholders will be asked to vote on
the merger agreement.


RECORD DATE; VOTE REQUIRED (PAGE 20)


         You are entitled to vote at the special meeting of Pittsburgh Financial
shareholders if you owned Pittsburgh Financial common stock on October 27, 2003,
the record date for that special meeting. As of that date, there were 1,429,481
shares of Pittsburgh Financial common stock outstanding held by approximately
930 holders of record. Each holder of Pittsburgh Financial common stock is
entitled to one vote per share. The merger agreement must be approved by a
majority of the votes cast on the merger agreement at the special meeting of the
Pittsburgh Financial shareholders.


STOCK OWNERSHIP OF PITTSBURGH FINANCIAL DIRECTORS AND EXECUTIVE OFFICERS
(PAGE 21)


         On the record date for the Pittsburgh Financial special meeting,
directors and executive officers of Pittsburgh Financial, including their
affiliates, beneficially owned an aggregate of 332,594 shares of Pittsburgh
Financial common stock or approximately 23% of the outstanding shares of
Pittsburgh Financial common stock. All executive officers and directors of
Pittsburgh Financial have signed voting agreements pursuant to which they have
agreed to vote in favor of the merger agreement.


RECOMMENDATIONS OF PITTSBURGH FINANCIAL BOARD OF DIRECTORS (PAGE 21)

         The board of directors of Pittsburgh Financial has unanimously approved
and adopted the merger agreement and recommends that you vote FOR approval of
the merger agreement. Pittsburgh Financial shareholders should refer to the
discussion of the factors the Pittsburgh Financial board of directors considered
in determining whether to approve and adopt the merger agreement beginning on
page 30.


                                       4


PITTSBURGH FINANCIAL'S FINANCIAL ADVISOR BELIEVES THAT THE MERGER CONSIDERATION
IS FAIR TO PITTSBURGH FINANCIAL SHAREHOLDERS (PAGE 33)

         Among other factors considered in deciding to approve the merger, the
Pittsburgh Financial board of directors received the opinion of its financial
advisor, Sandler O'Neill & Partners, L.P., that, as of August 8, 2003 (the date
on which the Pittsburgh Financial board of directors approved the merger
agreement), the merger consideration was fair to the holders of Pittsburgh
Financial common stock from a financial point of view. This opinion was
subsequently confirmed in writing as of the date of this document. The opinion
dated as of the date of this document is included as ANNEX III. You should read
this opinion completely to understand the assumptions made, matters considered
and limitations of the review undertaken by Sandler O'Neill in providing its
opinion. The opinion of Sandler O'Neill is directed to the Pittsburgh Financial
board of directors and does not constitute a recommendation to any shareholder
as to any matters relating to the merger. Pittsburgh Financial has agreed to pay
Sandler O'Neill a fee of $75,000 for the fairness opinion rendered to Pittsburgh
Financial, which has been paid, and upon consummation of the merger, a
transaction fee equal to 1.8% of the aggregate merger consideration, net of the
amount paid for the fairness opinion, which is estimated to amount to
approximately $554,000, less the fairness opinion fee, based on the $20.00 per
share merger consideration.

THE MERGER IS GENERALLY TAX-FREE TO THE EXTENT YOU RECEIVE FIRST COMMONWEALTH
STOCK IN THE MERGER AND TAXABLE TO THE EXTENT YOU RECEIVE CASH (PAGE 48)

         Pittsburgh Financial expects that, for U.S. federal income tax
purposes, no gain or loss will be recognized by the Pittsburgh Financial
shareholders upon exchange of their shares of Pittsburgh Financial common stock
for shares of First Commonwealth common stock. Pittsburgh Financial has received
an opinion from First Commonwealth's legal counsel to that effect, based on
certain assumptions described in "The Merger - Federal Income Tax Consequences
of the Merger." However, Pittsburgh Financial shareholders who receive cash for
their shares or cash in lieu of fractional shares of First Commonwealth common
stock will have to pay taxes at the applicable capital gains rate.

INTERESTS OF CERTAIN DIRECTORS AND EXECUTIVE OFFICERS OF PITTSBURGH FINANCIAL IN
THE MERGER (PAGE 43)

         When you consider the Pittsburgh Financial board of directors'
recommendation to vote FOR the merger agreement, you should be aware that
certain executive officers and directors of Pittsburgh Financial have interests
in the merger as employees and/or directors that are different from, and may
conflict with, your interests as a shareholder. These interests include the
following, each of which will occur at the effective time of the merger:

         o The outstanding options to purchase Pittsburgh Financial common stock
held by directors, officers and employees of Pittsburgh Financial will be
converted, at the election of each option holder, into cash or options to
acquire shares of First Commonwealth common stock, adjusted to account for the
conversion ratio in the merger.

         o Certain members of senior management of Pittsburgh Financial are
parties to employment agreements and supplemental executive retirement plan
agreements with Pittsburgh Financial or BankPittsburgh which provide for
severance and retirement benefits upon termination of their employment after the
completion of the merger.


                                       5


         o The merger agreement requires First Commonwealth to indemnify
directors, officers and employees of Pittsburgh Financial against claims
relating to their service as such for periods prior to the completion of the
merger.

         The Pittsburgh Financial board of directors recognized these interests
and determined that they did not negatively affect the benefits of the merger to
the Pittsburgh Financial shareholders.

ACCOUNTING TREATMENT OF THE MERGER (PAGE 48)

         First Commonwealth expects to account for the merger as a purchase.
This means that the assets and liabilities of Pittsburgh Financial will be
recorded on First Commonwealth's consolidated balance sheet at their estimated
fair value at the effective date of the merger, and the excess of the purchase
price over the fair value of the assets acquired will be recorded as goodwill.
Results of operations of Pittsburgh Financial after the date of the merger will
be included in First Commonwealth's consolidated income statement.

REGULATORY APPROVALS (PAGE 54)

         The merger must be approved by the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and the
Pennsylvania Department of Banking. Applications for all of these approvals have
been filed. However, we cannot predict whether or when we will obtain those
approvals.

PITTSBURGH FINANCIAL SHAREHOLDERS DO NOT HAVE DISSENTERS' RIGHTS (PAGE 55)

         Pittsburgh Financial shareholders do not have dissenters' rights under
Pennsylvania law in connection with the merger.

CONDITIONS TO THE MERGER (PAGE 49)

         The completion of the merger depends upon the satisfaction of a number
of conditions, including:

         o Approval of the merger agreement by the shareholders of Pittsburgh
Financial.

         o Receipt of listing approval from the New York Stock Exchange for the
First Commonwealth common stock to be issued in the merger.

         o Receipt of all necessary federal and state regulatory approvals for
the merger.

COMPLETION OF THE MERGER (PAGE 49)

         The merger will be completed as soon as practicable following the
satisfaction or waiver of the conditions to the merger. If all of the conditions
have been met or waived at the time of the special meeting, and if the merger is
approved by the shareholders of Pittsburgh Financial, the merger will be
completed immediately following the special meeting. If any governmental
approval has not been received or other condition has not been fulfilled at the
time of the special meeting, the completion of the merger will be deferred
pending receipt of the approval or fulfillment of the condition. Either party
may terminate the merger agreement if the merger has not been completed by March
31, 2004, but that date may be extended by mutual agreement of the boards of
directors of First Commonwealth and Pittsburgh Financial.


                                       6


         After the merger is completed, First Commonwealth will send Pittsburgh
Financial shareholders an election form, a letter of transmittal and
instructions for sending in Pittsburgh Financial stock certificates to be
exchanged for cash and/or certificates representing their First Commonwealth
common stock. YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATE(S) UNTIL YOU RECEIVE
THOSE MATERIALS FROM FIRST COMMONWEALTH.

TERMINATION OF THE MERGER (PAGE 53)

         The merger agreement may be terminated at any time prior to the
consummation of the merger as follows:

         o First Commonwealth and Pittsburgh Financial may mutually agree to
terminate.

         o Either First Commonwealth or Pittsburgh Financial may terminate if
any of the conditions to its obligations under the merger agreement has not been
satisfied or waived and the merger is not completed by March 31, 2004, but that
date may be extended by mutual agreement of the boards of directors of First
Commonwealth and Pittsburgh Financial.

         o Either First Commonwealth or Pittsburgh Financial may terminate if
any required regulatory approval is denied or is conditioned upon a substantial
deviation from the contemplated transaction.

         o Either First Commonwealth or Pittsburgh Financial may terminate if
the Pittsburgh Financial shareholders do not approve the merger agreement at
their special meeting.

         o Either First Commonwealth or Pittsburgh Financial may terminate if
the other party materially breaches any of its representations, warranties or
covenants in the merger agreement and does not cure the breach after notice.

         o First Commonwealth may terminate if the Pittsburgh Financial board of
directors withdraws or adversely modifies its recommendation of the merger.

         o Pittsburgh Financial may terminate if it receives a superior
acquisition proposal and its board of directors determines that termination of
the merger agreement is necessary to comply with its fiduciary duties to the
Pittsburgh Financial shareholders.

         Pittsburgh Financial will be required to pay a termination fee to First
Commonwealth under certain circumstances. The termination fee is equal to the
product of 4% of the number of outstanding shares of Pittsburgh Financial common
stock on the date of the termination times $20, or approximately $1.14 million.

RESALES OF FIRST COMMONWEALTH COMMON STOCK FOLLOWING THE MERGER (PAGE 55)

         Shares of First Commonwealth common stock issued in the merger will be
freely transferable by Pittsburgh Financial shareholders, except shareholders
who may be "affiliates" of Pittsburgh Financial prior to the merger. Affiliates
generally include directors, executive officers and holders of 10% or more of
the common stock of Pittsburgh Financial before the merger. Pittsburgh Financial
has provided to First Commonwealth the written agreement of each person believed
to be an "affiliate" that such person will not dispose of his or her shares of
First Commonwealth common stock received in the merger, except in compliance
with Rule 145 of the Securities and Exchange Commission.


                                       7


                         SELECTED FINANCIAL INFORMATION
                              OF FIRST COMMONWEALTH


         The following table provides you with selected historical consolidated
financial data of First Commonwealth for the past five years. The following
selected financial data is not covered by the auditors report, and you should
read this information along with the consolidated financial statements and
accompanying notes of First Commonwealth included in its annual report on Form
10-K for the year ended December 31, 2002(1) and its quarterly report on Form
10-Q for the quarter ended June 30, 2003, which are incorporated by reference
into this proxy statement/prospectus. For a list of documents incorporated by
reference into this proxy statement/prospectus, see "Incorporation of Certain
Documents by Reference" on page i.




                                      At or for the
                                    six months ended
                                        June 30,                         At or for the year ended December 31,
                                  2003           2002          2002          2001         2000          1999          1998
                              ------------------------------------------------------------------------------------------------
                                                           (Dollar amounts in thousands, except per share data)
                                                                                             
Interest income               $   123,503    $   140,401   $   275,568   $   308,891   $   311,882   $   296,089   $   282,067
Interest expense                   51,216         64,426       122,673       167,170       174,539       152,653       148,282
                              ------------------------------------------------------------------------------------------------
Net interest income                72,287         75,975       152,895       141,721       137,343       143,436       133,785
Provision for credit losses         6,925          5,925        12,223        11,495        10,030         9,450        15,049
                              ------------------------------------------------------------------------------------------------
Net interest income after
  provision for credit losses      65,362         70,050       140,672       130,226       127,313       133,986       118,736

Securities gains                    5,455            615           642         3,329         1,745           565         1,457
Other operating income             18,814         17,711        36,564        36,895        31,938        33,660        27,929
Litigation settlement                (610)         8,000         8,000             0             0             0             0
Restructuring charges                   0          3,116         6,140             0             0             0             0
Merger and related charges              0              0             0             0             0             0         7,915
Other operating expenses           56,764         55,942       111,301       105,007        99,461        95,569        93,980
                              ------------------------------------------------------------------------------------------------
Income before taxes and
  extraordinary items              33,477         21,318        52,437        65,443        61,535        72,642        46,227
Applicable income taxes             6,746          2,723         8,911        15,254        14,289        19,612        12,229
                              ------------------------------------------------------------------------------------------------
Net income before                  26,731         18,595        43,526        50,189        47,246        53,030        33,998
extraordinary items
Extraordinary items (less
  applicable income taxes
  of $336)                              0              0             0             0             0             0          (624)
                              ------------------------------------------------------------------------------------------------
Net income                    $    26,731    $    18,595   $    43,526   $    50,189   $    47,246   $    53,030   $    33,374
                              ================================================================================================

PER SHARE DATA
Net income before
  extraordinary items         $      0.46    $      0.32   $      0.75   $      0.87   $      0.82   $      0.88   $      0.55
Extraordinary items                  0.00           0.00          0.00          0.00          0.00          0.00         (0.01)
                              ------------------------------------------------------------------------------------------------
Net income                    $      0.46    $      0.32   $      0.75   $      0.87   $      0.82   $      0.88   $      0.54
                              ================================================================================================

Dividends declared            $     0.310    $     0.300   $     0.605   $     0.585   $     0.565   $     0.515   $     0.445

Average shares outstanding     58,736,392     58,251,440    58,409,614    57,885,478    57,558,929    60,333,092    61,333,572




                                       8

                         SELECTED FINANCIAL INFORMATION
                       OF FIRST COMMONWEALTH (continued)



                                      At or for the
                                    six months ended
                                        June 30,                         At or for the year ended December 31,
                                  2003           2002          2002          2001         2000          1999          1998
                              ------------------------------------------------------------------------------------------------
                                                  (Dollar amounts in thousands, except per share data)
                                                                                             
PER SHARE DATA ASSUMING
DILUTION
Net income before
  extraordinary items              $0.45          $0.32         $0.74         $0.86         $0.82         $0.88         $0.55
Extraordinary items                 0.00           0.00          0.00          0.00          0.00          0.00        (0.01)
                              ----------------------------------------------------------------------------------------------

Net income                         $0.45          $0.32         $0.74         $0.86         $0.82         $0.88         $0.54
                              ===============================================================================================

Dividends declared                $0.310         $0.300        $0.605        $0.585        $0.565        $0.515        $0.445

Average shares outstanding    59,018,324     58,669,047    58,742,018    58,118,057    57,618,671    60,569,322    61,666,026

AT END OF PERIOD
Total assets                  $4,830,764     $4,584,972    $4,524,743    $4,583,530    $4,372,312    $4,340,846    $4,096,789
Investment securities          1,963,624      1,733,966     1,680,609     1,762,408     1,636,337     1,592,389     1,525,332
Loans and leases, net of
  unearned income              2,621,569      2,612,965     2,608,634     2,567,934     2,490,827     2,500,059     2,374,850
Allowance for credit losses       35,604         34,302        34,496        34,157        33,601        33,539        32,304
Deposits                       3,219,809      3,183,634     3,044,124     3,093,150     3,064,146     2,948,829     2,931,131
Company obligated
  mandatorily redeemable
  capital securities of
  subsidiary trust                35,000         35,000        35,000        35,000        35,000        35,000             0
Other long-term debt             543,408        646,215       544,934       629,220       621,855       603,355       630,850
Shareholders' equity             411,462        387,518       401,390       370,066       334,156       286,683       355,405

KEY RATIOS
Return on average assets            1.17%          0.82%         0.96%         1.11%         1.10%         1.25%         0.85%
Return on average equity           13.07%          9.77%        11.09%        13.85%        15.65%        15.44%         9.13%
Net loans to deposits ratio        80.31%         81.00%        84.56%        81.92%        80.19%        83.64%        79.92%
Dividend per share as a
  percent of net income per
  share                            67.39%         93.75%        80.67%        67.24%        68.90%        58.52%        82.41%
Average equity to average
  assets ratio                      8.95%          8.43%         8.64%         8.01%         7.00%         8.10%         9.28%



(1) As of June 2003, the company had automobile leases with a net balance of
$37.5 million outstanding, a majority of which did not have individually insured
residuals. On May 15, 2003, the SEC 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. Consequently, a
majority of the automobile leases outstanding at June 30, 2003 may not qualify
as financing leases, and previously issued financial statements would need to be
restated, if material. The guidance will be effective no later than for reports
issued after the first fiscal quarter beginning after December 15, 2003. While
the company is in the process of analyzing the impact of this Staff
Interpretation, it could cause a restatement of previously issued financial
statements.



                                       9



                         SELECTED FINANCIAL INFORMATION
                             OF PITTSBURGH FINANCIAL

         The following table provides you with selected historical consolidated
financial data of Pittsburgh Financial. The following selected financial data is
not covered by the auditors report, and you should read this information along
with the consolidated financial statements and accompanying notes of Pittsburgh
Financial included in its annual report on Form 10-K for the year ended
September 30, 2002 and its quarterly report on Form 10-Q for the quarter ended
June 30, 2003, which are attached to this proxy statement/prospectus as ANNEX
II.



                                              At or for the
                                            nine months ended
                                                 June 30,                    At or for the year ended September 30,
                                            2003         2002         2002         2001         2000         1999        1998
                                         ----------------------------------------------------------------------------------------
                                                             (Dollar amounts in thousands, except per share data)
                                                                                                 
Interest income                          $   16,792   $   20,569   $   27,032   $   30,533   $   30,975   $   27,659   $   24,414
Interest expense                             11,869       14,670       19,255       22,725       22,446       19,017       16,513
                                         ----------------------------------------------------------------------------------------
Net interest income                           4,923        5,899        7,777        7,808        8,529        8,642        7,901
Provision for credit losses                     180          360          420          600          600          600          610
                                         ----------------------------------------------------------------------------------------
Net interest income after provision
  for credit losses                           4,743        5,539        7,357        7,208        7,929        8,042        7,291

Securities gains (losses)                       542            8            9          (81)        (172)         (10)        (208)
Other operating income                        2,083        1,308        1,861        1,089        1,513        1,015          817
Other operating expenses                      6,719        6,014        8,050        7,922        7,620        5,727        5,114
                                         ----------------------------------------------------------------------------------------
Income before taxes                             649          841        1,177          294        1,650        3,320        2,786
Applicable income taxes                         232          275          379           85          483        1,031          884
                                         ----------------------------------------------------------------------------------------
Net income                               $      417   $      566   $      798   $      209   $    1,167   $    2,289   $    1,902
                                         ========================================================================================

PER SHARE DATA
Net income                               $     0.31   $     0.42   $     0.60   $     0.14   $     0.75   $     1.43   $     1.10

Dividends declared                       $    0.285   $    0.270   $    0.360   $    0.360   $    0.360   $    0.280   $    0.310

Average shares outstanding                1,338,707    1,329,637    1,326,197    1,490,407    1,552,541    1,602,554    1,725,921

PER SHARE DATA ASSUMING DILUTION
Net Income                               $     0.30   $     0.41   $     0.58   $     0.14   $     0.75   $     1.39   $     1.05
Dividends declared                       $    0.285   $    0.270   $    0.360   $    0.360   $    0.360   $    0.280   $    0.310
Average shares outstanding                1,377,950    1,363,582    1,361,236    1,499,937    1,555,207    1,644,699    1,813,475

AT END OF PERIOD
Total assets                             $  376,450   $  407,752   $  413,663   $  427,069   $  438,419   $  415,742   $  374,279
Investment securities                       102,754      119,131      124,296      101,287       99,176      109,745      141,624
Loans, net of unearned income               237,184      256,557      243,829      287,549      309,666      280,042      213,719
Allowance for credit losses                   3,124        3,000        3,023        2,644        2,238        1,957        1,738
Deposits                                    181,722      191,634      196,222      213,011      205,680      169,463      153,983
Company obligated mandatorily
  redeemable capital securities of
  subsidiary trust                            7,595        9,747        9,753       10,855       10,830       10,806       10,781
Other long-term debt                        158,947      155,617      157,388      164,566      160,816      160,067      167,567
Shareholders' equity                         22,842       22,677       23,022       23,310       21,419       22,026       24,799



                                       10

                         SELECTED FINANCIAL INFORMATION
                      OF PITTSBURGH FINANCIAL (continued)


                                              At or for the
                                            nine months ended
                                                 June 30,                    At or for the year ended September 30,
                                            2003         2002         2002         2001         2000         1999        1998
                                         ----------------------------------------------------------------------------------------
                                                                                                 
KEY RATIOS
Return on average assets                       0.14%        0.18%        0.18%        0.09%        0.27%        0.59%        0.56%
Return on average equity                       2.43%        3.43%        3.58%        0.91%        5.58%        9.74%        7.33%
Net loans to deposits ratio                  128.80%      132.31%      122.72%      133.75%      149.47%      164.10%      137.67%
Dividend per share as a percent of net
  income per share                            91.94%       62.79%       60.00%      257.14%       48.00%       19.58%       28.18%
Average equity to average assets
  ratio                                        5.87%        5.33%        5.38%        5.35%        4.86%        6.01%        7.66%




                                       11



                                  RISK FACTORS

         After the merger, the current shareholders of Pittsburgh Financial who
receive shares of First Commonwealth common stock will continue to face the
risks that they have faced as shareholders of a local financial institution. The
merger and the process of integrating the two companies after the merger may
pose additional risks to the shareholders of First Commonwealth following the
merger. In addition to the other information presented in this joint proxy
statement/prospectus, including the matters addressed in "Cautionary Statement
Regarding Forward-Looking Information" on page 15, shareholders of Pittsburgh
Financial should consider carefully the risks described below in determining
whether to approve the merger agreement.

BECAUSE THE AGGREGATE MERGER CONSIDERATION IS FIXED AT 40% CASH AND 60% STOCK,
YOU MAY RECEIVE A FORM OF CONSIDERATION DIFFERENT FROM WHAT YOU ELECT.

         The merger agreement allows you to elect whether to receive cash or
shares of First Commonwealth common stock in exchange for your Pittsburgh
Financial shares. However, your election is subject to the requirement that
approximately 40% of the outstanding shares of Pittsburgh Financial be exchanged
for cash and the remainder be exchanged for First Commonwealth common stock. The
purpose of this fixed ratio is to ensure that, with respect to the First
Commonwealth common stock issued in the merger, the transaction qualifies as a
tax-free reorganization under the United States Internal Revenue Code. To
achieve this outcome, the merger agreement contains proration and allocation
procedures. If you elect to receive cash and the available cash is
oversubscribed, then you will receive a portion of the merger consideration in
First Commonwealth common stock. Conversely, if you elect to receive First
Commonwealth common stock and the available stock is oversubscribed, then you
will receive a portion of the merger consideration in cash. Therefore, you may
not receive exactly the form of consideration that you elect. Because the tax
consequences of the merger depend upon the form of consideration you receive,
you may recognize gain or loss on your Pittsburgh Financial shares
notwithstanding your election to receive shares of First Commonwealth common
stock in the merger.

IF WE ARE UNABLE TO INTEGRATE THE BUSINESSES OF PITTSBURGH FINANCIAL AND FIRST
COMMONWEALTH SUCCESSFULLY, OUR BUSINESS AND EARNINGS MAY BE ADVERSELY AFFECTED.

         After the merger, we will undertake to integrate the business of
Pittsburgh Financial with that of First Commonwealth, which have previously
operated independently. Integration will involve the consolidation of the
operations, systems and procedures of the two institutions in order to eliminate
redundant functions and costs and to operate on a consistent basis. That process
will probably increase operating costs in the short run. We cannot assure you
that we will be able to integrate the two operations without encountering
difficulties, including the possible loss of employees or customers, disruptions
in the delivery of services or inconsistencies in standards, controls,
procedures and policies. Such difficulties could interfere with our ability to
realize the benefits expected from the merger.

WE MAY LOSE CURRENT CUSTOMERS AND EMPLOYEES OF PITTSBURGH FINANCIAL AND
BANKPITTSBURGH AFTER THE MERGER.

         Historically, financial institutions have experienced some loss of
customers and employees following an acquisition of this nature. Customers
perceive a change in the bank's name as a sign that the quality of service may
decline, and employees fear instability following a change in control. While
First Commonwealth is committed to retaining the current customers and employees
of Pittsburgh Financial and BankPittsburgh, we cannot assure you that we will be
successful in doing so or that we will be able to replace any customers or
employees that are lost.


                                       12


FIRST COMMONWEALTH MAY NOT REALIZE THE BENEFITS EXPECTED FROM THE MERGER.

         First Commonwealth intends to grow Pittsburgh Financial and
BankPittsburgh by offering First Commonwealth's expanded range of products and
services to BankPittsburgh's customers and by expanding BankPittsburgh's
marketing programs. We cannot assure you that BankPittsburgh's customers or the
Pittsburgh market in general will be receptive to our expanded range of products
and services. The addition of First Commonwealth's expanded product and service
offerings may involve costs not previously incurred by BankPittsburgh. If the
expanded product and service offerings are not successful, such costs could
adversely affect the results of our operations and the market price of our
stock.

FIRST COMMONWEALTH'S EXPOSURE TO INTEREST RATE RISK MAY INCREASE AS A RESULT OF
THE MERGER.

         Interest-bearing assets and liabilities that we acquire in the merger
may be sensitive to future changes in interest rates, which could result in
material changes to the fair values of acquired assets and liabilities, as well
as the interest income and interest expense generated from these acquired assets
and liabilities in future periods. Interest rate risk inherent in the acquired
assets and liabilities may negatively impact our future earnings. Some of this
risk is mitigated by the fact that the expected duration of acquired
interest-sensitive assets and liabilities may be shorter than the contractual
maturities of such assets and liabilities.

STATUTORY RESTRICTIONS ON DIVIDENDS AND OTHER DISTRIBUTIONS FROM OUR SUBSIDIARY
BANK MAY ADVERSELY IMPACT OUR FUTURE FINANCIAL RESULTS.

         First Commonwealth's earnings and financial condition have allowed it
to pay sizable quarterly dividend distributions to its shareholders. A
substantial portion of our cash flow comes from dividends paid to us by our
subsidiary bank. Various federal and state statutory provisions limit the amount
of dividends that our subsidiary bank can pay without regulatory approval. These
restrictions may adversely impact our future financial results, and there can be
no assurance that our dividend policy or size of dividend will continue after
the merger.

FIRST COMMONWEALTH'S GROWTH STRATEGY MAY BE MORE AGGRESSIVE AND THEREFORE MORE
RISKY THAN THE GROWTH STRATEGY OF PITTSBURGH FINANCIAL PRIOR TO THE MERGER.

         The merger is part of First Commonwealth's ongoing strategy to expand
into different communities and markets through, among other things, acquisitions
of existing financial institutions. First Commonwealth may acquire other
financial institutions and related businesses in the future. Such acquisitions
involve significant risks including:

         o Potential exposure to unknown or contingent liabilities of financial
institutions and other businesses we acquire.

         o Exposure to potential asset quality issues at the acquired banks or
businesses.

         o Difficulty and expense of integrating the operations and personnel of
banks and businesses we acquire.

         o Potential disruption of our business.

         o Potential diversion of management's time and attention.


                                       13


         o The possible loss of key employees and customers of the banks and
businesses we acquire.

FIRST COMMONWEALTH'S STRATEGY OF CONTINUING TO DIVERSIFY ITS PRODUCTS AND
SERVICES WILL EXPOSE FORMER PITTSBURGH FINANCIAL SHAREHOLDERS TO ADDITIONAL
RISKS.

         In recent months, First Commonwealth has begun offering various types
of services not historically offered by all banks. For example, in 2002, First
Commonwealth began offering financial planning, asset management and consulting
services. First Commonwealth also offers insurance products and employee benefit
services. We intend to continue to explore opportunities to expand our product
and service offerings and sources of revenue. These additional products and
services involve risks that are different than the risks associated with the
operation of a traditional savings bank. There can be no assurance that First
Commonwealth will be successful in offering these expanded products and services
or that its efforts to do so will not adversely affect earnings.

BECAUSE THE MARKET PRICE OF FIRST COMMONWEALTH'S COMMON STOCK MAY FLUCTUATE, YOU
CANNOT BE SURE OF THE MARKET PRICE OF THE FIRST COMMONWEALTH COMMON STOCK THAT
YOU WILL RECEIVE IN THE MERGER.

         The number of shares of First Commonwealth common stock into which each
share of Pittsburgh Financial stock is converted in the merger will be
determined by a conversion ratio calculated by dividing $20 by the average
closing price of the First Commonwealth common stock over the 10 trading days
ending three trading days before the merger is effective. Significant increases
or decreases in the market price of First Commonwealth common stock in the three
days after that period could cause the First Commonwealth common stock issued in
the merger to have a market value on the date of the merger that is more or less
than the average. In addition, there will be a time period between the
completion of the merger and the time when Pittsburgh Financial shareholders
receiving stock consideration actually receive certificates evidencing First
Commonwealth common stock. Until stock certificates are received, Pittsburgh
Financial shareholders will not be able to sell their First Commonwealth shares
in the open market and will not be able to avoid losses resulting from any
decline in the trading price of First Commonwealth common stock during this
period.

AFTER THE MERGER, FIRST COMMONWEALTH WILL CONTINUE TO FACE THE RISKS COMMON TO
LOCAL AND REGIONAL FINANCIAL INSTITUTIONS.

         Prior to the merger, First Commonwealth and Pittsburgh Financial have
faced, and after the merger First Commonwealth will continue to face, all of the
risks common to local and regional financial institutions, including:

         o General or local economic conditions may adversely affect the demand
for our products and services, the ability of our borrowers to repay loans and
the value of the collateral for our loans.

         o Our allowance for loan losses, which is established based on various
assumptions, may not be adequate to cover actual credit losses or may have to be
increased, either of which would have an adverse effect on earnings.

         o Changes in prevailing interest rates or market prices may adversely
affect our net interest margins and asset values and increase expenses.

         o The loss of senior management personnel at the parent company or any
operating subsidiary could adversely affect our business and prospects.


                                       14


         o Increased competition in one or more of our market areas may
adversely affect earnings, financial condition and growth.

         o Changes in the extensive regulatory structures to which we are
subject could require changes in our operations that would increase costs or
otherwise impact earnings.

         o Keeping pace with technological changes in the financial services
industry may be more difficult for us than for larger institutions and may
require significant capital expenditures.

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

         This proxy statement/prospectus, including documents incorporated by
reference herein, contains forward looking statements concerning future events
that are subject to risks, uncertainties and assumptions. These forward-looking
statements are based upon our current expectations and projections about future
events. When used in this proxy statement/prospectus and in our incorporated
documents, the words "believe," "anticipate," "intend," "estimate," "expect" and
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such words. These
forward-looking statements are subject to risks, uncertainties and assumptions
about us and our subsidiaries and business affiliates, including, among other
things, the factors described above under the "Risk Factors" section of this
proxy statement/prospectus and the following:

o        Competitive pressures among depository and other financial institutions
         nationally and in our market areas may increase significantly.

o        Adverse changes in the economy or business conditions, either
         nationally or in our market areas, could increase credit-related losses
         and expenses.

o        Increases in defaults by borrowers and other delinquencies could result
         in increases in our provision for losses on loans and leases and
         related expenses.

o        Our inability to manage growth effectively, including the successful
         expansion of our customer support, administrative infrastructure and
         internal management systems, could adversely affect our results of
         operations and prospects.

o        Fluctuations in interest rates and market prices could reduce our net
         interest margins and asset valuations and increase our expenses.

o        The consequences of continued bank acquisitions and mergers in our
         market areas, resulting in fewer but much larger and financially
         stronger competitors, could increase competition for financial services
         to our detriment.

o        Our continued growth will depend in part on our ability to enter new
         markets successfully and capitalize on other growth opportunities.

o        Changes in legislative or regulatory requirements applicable to us and
         our subsidiaries could increase costs, limit certain operations and
         adversely affect results of operations.

o        Changes in tax requirements, including tax rate changes, new tax laws
         and revised tax law interpretations may increase our tax expense or
         adversely affect our customers' businesses.

o        Other factors discussed in "Risk Factors" may adversely affect us.


YOU ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THIS PROXY STATEMENT/ PROSPECTUS.
IN LIGHT OF THESE RISKS, UNCERTAINTIES AND OTHER ASSUMPTIONS, THE
FORWARD-LOOKING EVENTS DISCUSSED IN THIS PROXY STATEMENT/PROSPECTUS MIGHT NOT
OCCUR.



                                       15



                      MARKET PRICE AND DIVIDEND INFORMATION

COMPARATIVE PRICES


         The following table presents information concerning closing prices for
First Commonwealth common stock on the New York Stock Exchange and Pittsburgh
Financial common stock on the Nasdaq National Market on the last day that a
trade was reported prior to our public announcement of the signing of the merger
agreement and on October 27, 2003, the record date for the special meeting. We
announced the agreement on August 8, 2003. The last day on which a trade was
reported prior to that date was August 8, 2003 for First Commonwealth and August
6, 2003 for Pittsburgh Financial Corp.





                                               First Commonwealth           Pittsburgh Financial
                                                  common stock                  common stock
                                                  ------------                  ------------
                                                                           
Last trade prior to announcement                     $12.64                       $16.00

October 27, 2003                                     $13.75                       $19.60




HISTORICAL MARKET PRICES AND DIVIDEND INFORMATION

         FIRST COMMONWEALTH


        First Commonwealth common stock is listed on the New York Stock
Exchange under the symbol "FCF." The following table sets forth the high and low
prices per share of First Commonwealth common stock as reported on the NYSE and
the dividends paid per share of First Commonwealth common stock for each quarter
during the last two fiscal years and the first three quarters of 2003.





                                                                    Dividends
                                   High             Low             Declared
                                   ----             ---             --------
                                                           
2001
     First Quarter                $11.45           $ 9.50            $0.145
     Second Quarter                15.00            10.30             0.145
     Third Quarter                 14.35            10.80             0.145
     Fourth Quarter                13.00            11.10             0.150
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
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



         PITTSBURGH FINANCIAL


         Pittsburgh Financial common stock is traded on the Nasdaq National
Market under the symbol "PHFC." The following table sets forth the high and low
prices per share of Pittsburgh Financial common stock as reported on the Nasdaq
National Market and the dividends paid per share of Pittsburgh Financial common
stock for each quarter during the last three fiscal years.

                                       16




                                                                    Dividends
                                   High             Low             Declared
                                   ----             ---             --------
                                                           
2001
     First Quarter                $  9.00          $  6.38           $  0.09
     Second Quarter                 12.00             9.00              0.09
     Third Quarter                  11.50            10.51              0.09
     Fourth Quarter                 13.15            11.00              0.09
2002
     First Quarter                $ 12.93          $ 11.00           $  0.09
     Second Quarter                 14.06            11.16              0.09
     Third Quarter                  15.00            13.50              0.09
     Fourth Quarter                 14.00            10.65              0.09
2003
     First Quarter                $ 12.74          $ 10.80           $ 0.095
     Second Quarter                 14.65            12.25             0.095
     Third Quarter                  16.00            12.92             0.095
     Fourth Quarter                 19.85            14.75             0.095



DIVIDEND POLICY OF FIRST COMMONWEALTH

         After the merger, holders of First Commonwealth common stock will be
entitled to receive dividends when, as and if declared by the board of directors
of First Commonwealth. The timing and amount of future dividends are at the
discretion of the board of directors of First Commonwealth and will depend upon
the consolidated earnings, financial condition, liquidity and capital
requirements of First Commonwealth and its subsidiaries, the amount of cash
dividends paid to First Commonwealth by its subsidiaries, applicable government
regulations and policies and other factors considered relevant by the board of
directors of First Commonwealth. The board of directors of First Commonwealth
anticipates that it will continue to pay quarterly dividends in amounts
determined based on the factors discussed above.

HISTORICAL, PRO FORMA AND EQUIVALENT PER SHARE DATA

         Summarized below is certain per share information for First
Commonwealth and Pittsburgh Financial on an historical, pro forma combined and
pro forma equivalent basis. In calculating the pro forma per share information,
we used a conversion ratio of 1.5 shares of First Commonwealth common stock for
each share of Pittsburgh Financial common stock, which is the conversion ratio
that would apply if the average closing price of the First Commonwealth common
stock for the ten trading days ending three days before the completion of the
merger is $13.33 per share.

         We have calculated the pro forma First Commonwealth and Pittsburgh
Financial combined per share data for net income using the weighted average
number of shares of First Commonwealth common stock outstanding for the periods
presented, increased by the weighted average number of shares of Pittsburgh
Financial common stock outstanding for the periods presented multiplied by an
assumed conversion ratio of 1.5 shares of First Commonwealth's common stock for
each share of Pittsburgh Financial common stock, and assuming that 60% of the
outstanding common stock of Pittsburgh Financial is converted into First
Commonwealth common stock, as if these shares were outstanding for each period
presented.

         The pro forma combined dividends assume no changes in First
Commonwealth's cash dividends per share. The ability of First Commonwealth to
pay dividends in the future is limited by certain


                                       17


regulatory restrictions. Please refer to Note 25 "Regulatory Restrictions and
Capital Adequacy" of First Commonwealth's annual report for a discussion of
those restrictions.

         The pro forma First Commonwealth and Pittsburgh Financial combined book
value per share has been calculated using the shares of outstanding First
Commonwealth common stock increased by the shares of outstanding Pittsburgh
Financial common stock multiplied by an assumed conversion ratio of 1.5 for each
share of Pittsburgh Financial common stock, and assuming that 60% of the
outstanding common stock of Pittsburgh Financial is converted into First
Commonwealth common stock as if these shares were outstanding as of the date
presented. Book value has also been adjusted for the impact of purchase
accounting adjustments on pro forma shareholders' equity.

         The equivalent pro forma Pittsburgh Financial per share information has
been calculated by multiplying the First Commonwealth pro forma combined per
share net income, dividends and book value by an assumed conversion ratio of
1.5.




                                                                                            Pro Forma               Pro Forma
                                     First Commonwealth     Pittsburgh Financial            Combined               Equivalent
                                    -----------------------------------------------------------------------------------------------
                                      Six        Twelve       Six         Twelve        Six         Twelve      Six         Twelve
                                     Months      Months      Months       Months        Months      Months      Months      Months
                                     Ended       Ended       Ended        Ended         Ended       Ended       Ended       Ended
                                    06/30/03    12/31/02    06/30/03     12/31/02      06/30/03    12/31/02    06/30/03    12/31/02
                                   ------------------------------------------------------------------------------------------------
                                                         (dollar amounts in thousands, except per share data)
                                                                                                   
Net income                          $ 26,731    $43,526      $  97        $  972       $27,881     $46,603           -           -

Basic earnings per share                0.46       0.75       0.07          0.74          0.47        0.78        0.71        1.17

Diluted earnings per share              0.45       0.74       0.07          0.72          0.46        0.78        0.69        1.17

Cash dividends declared per share      0.310      0.605      0.190         0.365         0.310       0.605       0.465       0.908

Book value per share                    6.97       6.81      16.03         16.45          7.10        6.95       10.65       10.43



         The following table sets forth an estimate of the expected effects of
the projected aggregate purchase accounting adjustments reflected in the pro
forma combined financial statements on the future net income of First
Commonwealth after the merger (in thousands):



                                                            Discount Accretion (Premium Amortization)
                                                                 for the Years Ended December 31,
                                              --------------------------------------------------------------------
                                                 2004           2005            2006           2007          2008
                                                 ----           ----            ----           ----          ----
                                                                                            
Investment securities                         $  (929)        $  (718)        $  (487)       $  (286)      $   (16)
Loans                                          (2,919)         (2,919)         (2,529)        (1,040)         (289)
Bank premises                                      21              21              21             21            21
Customer/deposit base                            (351)           (351)           (351)          (351)         (351)
Time deposits                                   2,359             807               -              -             -
Borrowings                                      5,207           5,207           5,113          4,630         3,975
                                              --------------------------------------------------------------------

Increase (decrease) in income before taxes    $ 3,388         $ 2,047         $ 1,767        $ 2,974       $ 3,340
                                              ====================================================================




                                       18


         On the effective date of the merger, the interest rates used in the
valuation of Pittsburgh Financial's assets and liabilities may be higher or
lower than those at June 30, 2003. This may change the purchase accounting
adjustments and their estimated effects on future net income. The following
table shows the estimated effects on the purchase accounting adjustments and the
pro forma annual net income of a 1% change in the interest rates used to
determine the estimated fair value of the indicated assets and liabilities. The
income effect has been determined by changing the relevant interest rate.



                                                  Purchase Accounting Adjustments
                                             ------------------------------------------
                                                            1% Increase     1% Decrease
                                             Pro Forma       in Rates         in Rates
                                             ---------      -----------     -----------
                                                           (in thousands)
                                                                   
  Investment securities                      $   2,437      $     (78)       $  (1,275)
  Loans                                          9,697          1,735           14,551
  Bank premises                                 (1,142)        (1,142)         ( 1,142)
  Customer/deposit base                          3,220          3,220            3,220
  Time deposits                                 (3,166)        (1,981)          (4,314)
  Borrowings                                   (24,894)       (18,565)         (32,083)
                                             -----------------------------------------

  Total adjustment                           $ (13,848)     $ (16,811)       $ (21,043)
                                             =========================================





                                                               Impact on Pro Forma Net Income
                                                               for the Years Ended December 31,
                                             ---------------------------------------------------------------------
                                               2004            2005            2006          2007           2008
                                               ----            ----            ----          ----           ----
                                                                         (in thousands)
                                                                                           
  1% increase in interest rates              $ 4,448          $ 3,548         $ 2,955       $ 3,013        $ 2,702
  1% decrease in interest rates                6,011            4,196           2,946         3,153          4,188




                                       19




                     THE SPECIAL MEETING OF THE SHAREHOLDERS
                             OF PITTSBURGH FINANCIAL

GENERAL


         Pittsburgh Financial is furnishing this proxy statement/prospectus to
its shareholders in connection with the solicitation of proxies by the
Pittsburgh Financial board of directors for use at the special meeting of
shareholders, including any meeting adjournments or postponements, to be held on
December 5, 2003 at 10:00 a.m., local time, at Marriott Pittsburgh North, 100
Cranberry Woods Drive, Cranberry Township, PA 16066. In addition, First
Commonwealth is furnishing this proxy statement/prospectus to the shareholders
of Pittsburgh Financial as its prospectus in connection with the offering and
issuance of shares of its common stock in the merger.


         At the special meeting, Pittsburgh Financial shareholders will consider
and vote upon the proposal to approve the merger agreement pursuant to which
Pittsburgh Financial will merge with and into First Commonwealth, with the
result that each share of Pittsburgh Financial common stock will be converted,
at the election of the holder, subject to the proration and allocation
procedures described below under "The Merger - Cash or Stock Election," into $20
in cash or shares of First Commonwealth common stock on the basis described in
this proxy statement/prospectus. First Commonwealth will pay cash in lieu of any
fractional shares.

         In addition, Pittsburgh Financial shareholders will consider and
approve a proposal to adjourn the special meeting if necessary to permit further
solicitation of proxies in the event there are not sufficient votes at the time
of the special meeting to approve the merger agreement and to consider any other
matters that may be properly submitted to a vote at the special meeting. At this
time, the Pittsburgh Financial board of directors is unaware of any matters,
other than set forth in the preceding sentence, that may be presented for action
at the special meeting.

         The merger agreement is attached to this document as ANNEX I. For a
description of the merger agreement, see "The Merger" on page 23 and "The Merger
Agreement" on page 49.

RECORD DATE


         If you were a Pittsburgh Financial shareholder at the close of business
on October 27, 2003, you may vote at the meeting. As of that date, there were
1,429,481 issued and outstanding shares of Pittsburgh Financial common stock
held by approximately 930 shareholders of record. Pittsburgh Financial
shareholders have one vote per share on any matter that may properly come before
the special meeting.


VOTE REQUIRED

         The presence in person or by proxy of the holders of a majority of the
shares of Pittsburgh Financial common stock outstanding on the record date will
constitute a quorum for the transaction of business at the special meeting.
Pittsburgh Financial will count abstentions and broker non-votes for purposes of
establishing the presence of a quorum at the meeting.

         If a quorum is present at the special meeting, the approval of the
merger agreement requires the affirmative vote of a majority of the shares of
Pittsburgh Financial common stock present or represented by proxy at the
meeting. The affirmative vote of a majority of the votes cast on the matter at
the special meeting is required to approve the proposal to adjourn the special
meeting if necessary to permit further


                                       20


solicitation of proxies on the proposal to approve the merger agreement and any
other matter properly submitted to shareholders for their consideration at the
special meeting.

         Any "broker non-votes" submitted by brokers or nominees in connection
with the special meeting will not be counted for purposes of determining the
number of votes cast on a proposal. "Broker non-votes" are shares held by
brokers or nominees as to which voting instructions have not been received from
the beneficial owners or the persons entitled to vote those shares and the
broker or nominee does not have discretionary voting power under the applicable
New York Stock Exchange rules. Under these rules, the proposals to approve the
merger agreement and to adjourn the special meeting are not items on which
brokerage firms may vote in their discretion on behalf of their clients if such
clients have not furnished voting instructions within ten days of the special
meeting. Because of the vote required for both the proposal to approve the
merger agreement and the proposal to adjourn the special meeting, abstentions
and broker "non-votes" will have no effect on these proposals.


         First Commonwealth has entered into voting agreements with each
director and executive officer of Pittsburgh Financial, pursuant to which such
persons have agreed to vote all shares of Pittsburgh Financial common stock
which they own in favor of the merger agreement. These voting agreements
increase the likelihood that the merger agreement will be approved by the
shareholders of Pittsburgh Financial. On the record date, the executive officers
and directors of Pittsburgh Financial had voting power with respect to an
aggregate of 332,594 shares of Pittsburgh Financial common stock or
approximately 23% of the shares of Pittsburgh Financial common stock then
outstanding.


RECOMMENDATIONS OF THE PITTSBURGH FINANCIAL BOARD OF DIRECTORS

         The Pittsburgh Financial board has unanimously approved and adopted the
merger agreement and the transactions contemplated thereby. The Pittsburgh
Financial board believes that the merger is fair to and in the best interests of
Pittsburgh Financial and its shareholders and unanimously recommends that you
vote FOR approval of the merger agreement and the transactions contemplated
thereby. The Pittsburgh Financial board also unanimously recommends that you
vote FOR approval of the proposal to adjourn the special meeting if necessary to
solicit additional proxies to vote in favor of the merger agreement.

SOLICITATION AND REVOCATION OF PROXIES

         Pittsburgh Financial has enclosed a form of proxy with this proxy
statement/prospectus. Shares represented by a proxy will be voted at the special
meeting as specified in the proxy. Proxies that are properly signed and dated
but that do not have voting instructions will be voted by the proxy holders FOR
the merger, FOR the adjournment, and in the discretion of the proxy holder as to
any other matter that may properly come before the meeting.

         Pittsburgh Financial asks you to vote by completing, dating and signing
the accompanying proxy card and returning it promptly to Pittsburgh Financial in
the enclosed, postage-paid envelope even if you plan to attend the meeting in
person. YOU SHOULD NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD.

         If you are a Pittsburgh Financial shareholder who delivers a properly
executed proxy, you may revoke the proxy at any time before its exercise. You
may revoke your proxy by:

o        Filing with the Secretary of Pittsburgh Financial prior to the special
         meeting, at Pittsburgh Financial's principal executive offices, either
         a written revocation of such proxy or a duly executed proxy bearing a
         later date.

                                       21


o        Attending the special meeting and voting in person. Presence at the
         meeting will not revoke your proxy unless and until you vote in person.

o        If your shares are held in the name of your broker, bank or other
         nominee and you wish to vote in person, you must bring an account
         statement and authorization from your nominee so that you can vote your
         shares.

         Pittsburgh Financial is soliciting proxies for use at the special
meeting. Pittsburgh Financial and First Commonwealth will share equally the cost
of printing and mailing this document. Pittsburgh Financial will bear the cost
of solicitation of proxies from its shareholders. In addition to solicitation by
mail, Pittsburgh Financial directors, officers and employees may solicit proxies
from shareholders by telephone, in person or through other means. These persons
will not receive additional compensation, but they will be reimbursed for the
reasonable out-of-pocket expenses they incur in connection with this
solicitation. Pittsburgh Financial also will make arrangements with brokerage
firms, fiduciaries and other custodians who hold shares of record to forward
solicitation materials to the beneficial owners of these shares. Pittsburgh
Financial will reimburse these brokerage firms, fiduciaries and other custodians
for their reasonable out-of-pocket expenses in connection with this
solicitation.

OTHER MATTERS

         No matters other than those set forth in the notice of meeting that
accompanies this proxy statement/prospectus, and appropriate procedural matters,
may be considered at the special meeting. If other matters are properly
presented at the special meeting, the persons named in the proxy will have
authority to vote all proxies in accordance with their judgment on any such
matter.

                      THE COMPANIES INVOLVED IN THE MERGER

FIRST COMMONWEALTH


         Financial and other information relating to First Commonwealth,
including information relating to First Commonwealth's current directors and
executive officers, is set forth in First Commonwealth's 2002 Annual Report on
Form 10-K, First Commonwealth's Proxy Statement for the 2003 Annual Meeting of
Shareholders, and First Commonwealth's Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed during 2003, which are incorporated by
reference to this proxy statement/prospectus. Copies of those materials may be
obtained from First Commonwealth as indicated under "Incorporation of Certain
Documents by Reference" on page i.


         First Commonwealth is a Pennsylvania corporation and a registered bank
holding company engaged in the retail banking business through its wholly-owned
subsidiary, First Commonwealth Bank, and offers personal financial planning,
employee benefit services and investment and insurance products through its
wholly owned subsidiaries First Commonwealth Financial Advisors, First
Commonwealth Trust Company and First Commonwealth Insurance Agency. First
Commonwealth also owns 50% of Commonwealth Trust Credit Life Insurance Company,
which provides reinsurance for credit life and credit accident and health
insurance sold by First Commonwealth Insurance Agency and the insurance agency
subsidiary of the other 50% owner of Commonwealth Trust Credit Life Insurance
Company. As of June 30, 2003, First Commonwealth had consolidated total assets
of $4.8 billion, deposits of $3.2 billion and shareholders' equity of $411
million.

         First Commonwealth Bank, a Pennsylvania-chartered banking corporation
headquartered in Indiana, Pennsylvania conducts business through 84 community
banking offices in the counties of Allegheny, Armstrong, Beaver, Bedford, Blair,
Butler, Cambria, Centre, Clearfield, Elk, Huntingdon,


                                       22


Indiana, Jefferson, Lawrence, Somerset, Washington, and Westmoreland,
Pennsylvania. First Commonwealth Bank offers a full range of financial services
including such general retail banking services as demand, savings and time
deposits and mortgage, consumer installment and commercial loans.

PITTSBURGH FINANCIAL


         Financial and other information relating to Pittsburgh Financial,
including information relating to Pittsburgh Financial's current directors and
executive officers, is set forth in Pittsburgh Financial's 2002 Annual Report on
Form 10-K, Pittsburgh Financial's Proxy Statement for the 2003 Annual Meeting of
Shareholders, and Pittsburgh Financial's Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed during 2003, which are incorporated by
reference to this proxy statement/prospectus. A copy of Pittsburgh Financial's
2002 Annual Report and June 2003 Quarterly Report are included with this Proxy
Statement/Prospectus. Copies of the other documents may be obtained from
Pittsburgh Financial as indicated under "Where You Can Find Additional
Information" on page i.


         Pittsburgh Financial is a Pennsylvania corporation and registered
financial holding company. Pittsburgh Financial is the sole stockholder of
Pittsburgh Savings Bank, doing business as "BankPittsburgh", a
Pennsylvania-chartered stock savings bank. Pittsburgh Financial also provides
title and settlement services through its 80%-owned subsidiary, Pinnacle
Settlement Group, LLC. As of June 30, 2003, Pittsburgh Financial had total
consolidated assets of $376.4 million, total consolidated deposits of $181.7
million, and total consolidated shareholders' equity of $22.8 million.

         BankPittsburgh currently conducts business from its main office in
Pittsburgh, Pennsylvania and seven branch offices and one loan office located in
Allegheny and Butler Counties, Pennsylvania. BankPittsburgh is a community
oriented financial institution which offers a variety of savings products to its
retail customers. The bank has historically concentrated its lending activities
on real estate loans secured by single family residential properties,
construction loans on primarily residential properties, and commercial real
estate loans. As of June 30, 2003, BankPittsburgh's total loan portfolio was
$234.1 million, of which $133.5 million consisted of residential loans and $76.3
million consisted of commercial real estate loans.

                                   THE MERGER

         The detailed terms of the merger are contained in the merger agreement
attached as ANNEX I to this proxy statement/prospectus and are incorporated in
this proxy statement/ prospectus by this reference. The following discussion and
the discussion under "The merger agreement" describe the more important aspects
of the merger and the material terms of the merger agreement. These descriptions
are qualified by reference to the merger agreement. We encourage you to read the
merger agreement carefully.

STRUCTURE OF THE MERGER

         General. The merger agreement provides that, after approval of the
merger agreement by the shareholders of Pittsburgh Financial and the
satisfaction or waiver of the other conditions to the merger, Pittsburgh
Financial will merge with and into First Commonwealth, with First Commonwealth
as the surviving corporation.

         The articles of incorporation and bylaws of First Commonwealth as in
effect immediately prior to the merger will be the articles of incorporation and
bylaws of the surviving corporation. The officers and directors of First
Commonwealth immediately prior to the merger will be the officers and directors
of the surviving corporation after the merger until they resign or until their
respective successors are duly elected and qualified.


                                       23


         Timing of Closing. The closing of the merger will occur as soon as
reasonably practicable after the satisfaction or waiver of all of the conditions
to the merger, including the receipt of all regulatory approvals. The parties
currently anticipate that the closing will occur on or before December 31, 2003.

         Conversion of Pittsburgh Financial Common Stock. In the merger, each
share of Pittsburgh Financial common stock issued and outstanding immediately
prior to the completion of the merger will automatically be converted into the
right to receive, at the holder's election, either (a) $20.00 in cash without
interest or (b) a number of shares of First Commonwealth common stock calculated
by dividing $20 by the average closing price of the First Commonwealth common
stock on the New York Stock Exchange for the ten trading days ending with the
third trading day prior to the closing date. First Commonwealth will not issue
any fractional shares in the merger. In lieu of any fractional share that would
otherwise be issuable, First Commonwealth will pay an amount of cash determined
by multiplying that fraction by the average closing price of the First
Commonwealth common stock used in determining the exchange ratio. If there is a
change in the number or classification of shares of First Commonwealth common
stock outstanding as a result of a stock split, stock dividend,
reclassification, recapitalization, or other similar transaction, the exchange
ratio will be proportionately adjusted. Your receipt of either cash or stock,
however, is subject to the allocation and proration procedures as well as other
provisions in the merger agreement. See "--Cash or Stock Election."


         Assuming an average closing price of $13.33 and that exactly 60% of the
outstanding Pittsburgh Financial shares are exchanged for First Commonwealth
common stock, after the merger the Pittsburgh Financial shareholders will own
1,286,854 shares of First Commonwealth common stock, or approximately 2.12% of
the issued and outstanding First Commonwealth common stock, based on the
59,368,883 shares of First Commonwealth common stock and 1,429,481 shares of
Pittsburgh Financial common stock outstanding on October 27, 2003.


CASH OR STOCK ELECTION

         Under the terms of the merger agreement, Pittsburgh Financial
shareholders may elect to convert their shares into either cash or First
Commonwealth common stock. All elections of Pittsburgh Financial shareholders
are subject to the allocation and proration procedures described in the merger
agreement. These procedures are intended to ensure that at least 60% of the
outstanding shares of Pittsburgh Financial common stock will be converted into
First Commonwealth common stock in the merger. We make no recommendation as to
whether you should elect to receive cash or First Commonwealth common stock in
the merger. You must make your own decision with respect to the election after
carefully considering the information contained and referred to in this proxy
statement/prospectus.

         It is unlikely that shareholders owning exactly 60% of the outstanding
Pittsburgh Financial shares will elect to receive First Commonwealth common
stock and shareholders owning exactly 40% will elect to receive cash. As a
result, the merger agreement describes procedures to be followed if Pittsburgh
Financial shareholders in the aggregate elect to receive more or less of the
First Commonwealth common stock than First Commonwealth has agreed to issue.
These procedures are summarized below.

         If Cash Is Undersubscribed: If Pittsburgh Financial shareholders elect
to receive less cash than First Commonwealth has agreed to pay in the merger,
then all Pittsburgh Financial shareholders who have elected to receive cash will
receive cash for their shares, and the remaining cash will be allocated in the
following manner:

         o If the number of shares held by Pittsburgh Financial shareholders who
have made no election is sufficient to make up the shortfall in the amount of
cash that First Commonwealth has agreed to pay, then the exchange agent will
select by lot a sufficient number of shares from among those


                                       24


shareholders who made no election to make up the shortfall and pay cash to those
shareholders. All Pittsburgh Financial shareholders who elected to receive stock
will receive shares of First Commonwealth common stock, and the remaining shares
held by Pittsburgh Financial shareholders who made no election will be converted
into First Commonwealth common stock.

         o If the number of shares held by Pittsburgh Financial shareholders who
have made no election is insufficient to make up the shortfall in the amount of
cash that First Commonwealth has agreed to pay, then all Pittsburgh Financial
shareholders who made no election will receive cash, and the Pittsburgh
Financial shareholders who elected to receive First Commonwealth common stock
will receive a pro rata portion of the available First Commonwealth shares
(subject to rounding to avoid the conversion of fractional shares) plus cash for
those shares not converted into First Commonwealth common stock. However, in
this circumstance, First Commonwealth may choose to increase the percentage of
the aggregate merger consideration that is paid with shares of First
Commonwealth common stock to allow all Pittsburgh Financial shareholders who
elected to receive stock to receive all or a greater percentage of their merger
consideration in First Commonwealth common stock.

         If First Commonwealth Common Stock Is Undersubscribed: If Pittsburgh
Financial shareholders elect to receive fewer shares of First Commonwealth
common stock than First Commonwealth has agreed to issue in the merger, then all
Pittsburgh Financial shareholders who have elected to receive First Commonwealth
common stock will receive First Commonwealth common stock and the remaining
First Commonwealth common stock will be allocated in the following manner:

         o If the number of shares held by Pittsburgh Financial shareholders who
have made no election is sufficient to make up the shortfall in the number of
shares that First Commonwealth has agreed to issue, then the exchange agent will
select by lot a sufficient number of shares from among those shareholders who
made no election to make up the shortfall and issue shares of First Commonwealth
common stock to those shareholders. All Pittsburgh Financial shareholders who
elected to receive cash will receive cash, and the remaining shares held by
Pittsburgh Financial shareholders who made no election will be converted into
cash.

         o If the number of shares held by Pittsburgh Financial shareholders who
have made no election is insufficient to make up the shortfall in the number of
shares that First Commonwealth has agreed to issue, then all Pittsburgh
Financial shareholders who made no election will receive shares of First
Commonwealth common stock, and the Pittsburgh Financial shareholders who elected
to receive cash will receive a pro rata portion of the available cash plus
shares of First Commonwealth common stock (subject to rounding to avoid the
conversion of fractional shares) for those shares not converted into cash.

         There is no guarantee that you will receive all cash or all stock for
your shares if you so elect. As a result of the allocation procedures you may
receive a combination of First Commonwealth common stock and cash if cash or
stock is oversubscribed.

ELECTION PROCEDURES; SURRENDER OF STOCK CERTIFICATES

         An election form and letter of transmittal will be mailed to you after
the effective time of the merger. The election form will allow you to elect to
receive either cash or First Commonwealth common stock or make no election with
respect to the merger consideration you wish to receive. To make an effective
election, you must submit a properly completed election form, along with your
Pittsburgh Financial stock certificates representing all shares of Pittsburgh
Financial common stock covered by the election form (or an appropriate notice of
guaranteed delivery) to The Bank of New York on or before the date set forth in
the election form. The Bank of New York will act as the exchange agent in the
merger


                                       25


and in that role will process the exchange of Pittsburgh Financial stock
certificates for cash and/or shares of First Commonwealth common stock. Shortly
after the merger, the exchange agent will allocate cash and stock among
Pittsburgh Financial shareholders, consistent with their elections and the
allocation and proration procedures described above under "--Cash or Stock
Election." If you do not submit an election form, you will be treated as having
made no election for purposes of the allocation and proration procedures
described above. Whether or not you send in the election form, you must send
your certificates and a completed letter of transmittal to the exchange agent in
order to receive the cash or stock into which your Pittsburgh Financial stock is
converted in the merger. In any event, do not forward your Pittsburgh Financial
stock certificates with your proxy card.

         You may change your election at any time prior to the election deadline
by written notice accompanied by a properly completed and signed later-dated
election form received by the exchange agent prior to the election deadline. If
you prefer to receive either First Commonwealth common stock or cash for your
Pittsburgh Financial common stock, you should complete and return the election
form promptly. If you do not make an election, you will be allocated First
Commonwealth common stock, cash or a combination of stock and cash, depending on
the elections made by other Pittsburgh Financial shareholders.

         If certificates for Pittsburgh Financial common stock are not
immediately available or you are unable to send the election form and other
required documents to the exchange agent prior to the election deadline,
Pittsburgh Financial shares may be properly exchanged, and an election will be
effective, if:

         o the exchange is made by or through a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., or by a commercial bank or trust company having an office, branch
or agency in the United States;

         o the exchange agent receives, prior to the election deadline, a
properly completed and duly executed notice of guaranteed delivery in the form
provided with the election form (delivered by hand, mail, telex or facsimile
transmission); and

         o the exchange agent receives, within three business days after the
election deadline, the certificates for all exchanged Pittsburgh Financial
shares, or confirmation of the delivery of all such certificates into the
exchange agent's account with The Depository Trust Company in accordance with
the proper procedures for such transfer, together with a properly completed and
duly executed election form and any other documents required by the election
form.

         Pittsburgh Financial shareholders who do not submit a properly
completed election form or revoke their election form prior to the election
deadline will have their shares of Pittsburgh Financial common stock designated
as no-election shares.

         Until you surrender your Pittsburgh Financial stock certificates for
exchange after completion of the merger, you will not be paid dividends or other
distributions declared after the merger with respect to any First Commonwealth
common stock into which your Pittsburgh Financial shares have been converted.
When you surrender your Pittsburgh Financial stock certificates, First
Commonwealth will pay any unpaid dividends or other distributions, without
interest. After the completion of the merger, there will be no further transfers
of Pittsburgh Financial common stock. Pittsburgh Financial stock certificates
presented for transfer after the completion of the merger will be canceled and
exchanged for the merger consideration.


                                       26


BACKGROUND OF THE MERGER

         As the pace of change within the banking industry has accelerated over
the past decade, and as competition from national and regional banks and from
non-bank financial service providers has increased, First Commonwealth has
carefully reviewed its strategic alternatives and long-term goals and has taken
steps to maintain and enhance its competitive positions and meet the rising
demand for investments in technology and ancillary financial services. First
Commonwealth's Board of Directors has for some time recognized the foregoing
industry trends and anticipates that industry consolidation and intensifying
competition from within and outside the banking industry will continue. In
response to these trends, First Commonwealth has expanded its presence in the
central and western Pennsylvania region, internally through de novo branching,
as well as through strategic acquisitions. First Commonwealth has also
diversified its product offerings beyond those of a traditional bank. For
example, in 1997 First Commonwealth established First Commonwealth Insurance
Agency, and in 2002, First Commonwealth acquired Strategic Capital Concepts,
Inc., a registered investment advisor, and Strategic Financial Advisors, Inc.,
which offered investment and insurance products.

         As part of its strategic planning process, the senior management team
of First Commonwealth has frequently discussed potential expansion into various
markets, including the Pittsburgh area. The potential benefits of geographic
expansion were determined to include the ability to take First Commonwealth's
established growth strategy to new markets, to diversify credit concentrations
and to expand the First Commonwealth franchise into a regional franchise.
Management considered whether to expand into the Pittsburgh area by opening a de
novo bank or branch or by acquiring an existing institution to serve as a
platform for implementing First Commonwealth's growth strategy in that area.
Management concluded that an acquisition would be the preferable way to enter
the Pittsburgh market and began making inquiries to develop a list of
prospective acquisition candidates.

         During the past several years, the Board of Directors of Pittsburgh
Financial has periodically reviewed its strategic alternatives, including
remaining independent and continuing its strategy of internal growth or a
strategic combination with a larger banking organization. In prior years,
Pittsburgh Financial's Board has determined that Pittsburgh Financial should
continue its strategy of independence and to seek growth internally.

         On March 7, 2003, the Board of Directors of Pittsburgh Financial held a
special meeting to review current market conditions, discuss Pittsburgh
Financial's projected performance and, in light of those factors, consider its
strategic alternatives. The discussion was continued at a Board of Directors
meeting held on April 7, 2003, at which time the Board determined it was
appropriate to seek the advice of an investment banking firm to evaluate the
various strategic alternatives available to Pittsburgh Financial, including the
potential value of Pittsburgh Financial in a sale of control transaction. Mr. J.
Ardie Dillen, Chairman, President and Chief Executive Officer of Pittsburgh
Financial, was authorized by the Board of Directors to begin discussions with
Sandler O'Neill & Partners, L.P., a national recognized investment banking firm
that is experienced in advising community banks in the area of strategic
planning and merger and acquisition transactions.

         At a special meeting of the Board of Directors held on May 14, 2003,
David L. Martin and Daniel Burr of Sandler O'Neill made a detailed presentation
outlining the various strategic alternatives available to Pittsburgh Financial,
including a possible sale or merger of the company. After careful consideration
and extensive discussion, the Board concluded that it would be in Pittsburgh
Financial's best interests to consider a possible merger transaction. The Board
also approved the engagement of Sandler O'Neill to serve as Pittsburgh
Financial's financial advisor in connection with any possible merger.



                                       27


         At a special meeting held by telephone on June 12, 2003, Pittsburgh
Financial's Board of Directors received an update of the merger market for
financial institutions and an analysis from Sandler O'Neill regarding the
financial ability of a larger institution that had previously expressed an
interest in acquiring Pittsburgh Financial to pay an acceptable price for the
company. Sandler O'Neill was authorized to contact that institution, have them
enter into a confidentiality agreement, provide detailed information about
Pittsburgh Financial and request a written indication of interest letter that,
among other things, outlined the financial terms of a proposed merger. The Board
of Directors also determined that if the proposed terms were deemed not
sufficiently attractive, indications of interest would be solicited from certain
other institutions that may be interested in acquiring Pittsburgh Financial.

         On June 25, 2003, Pittsburgh Financial received a preliminary
indication of interest from the institution indicating an interest in acquiring
Pittsburgh Financial at a price per share of $20.00, with the merger
consideration to be paid 50% in cash and 50% in common stock of the acquiror.
The proposal provided that the stock portion of the merger consideration would
be based upon a fixed exchange ratio and included the use of a price collar that
was to be determined by the parties. The indication of interest also included
certain other conditions.

         At a regular Board meeting held on June 26, 2003, the Board of
Directors considered the indication of interest, including concerns expressed by
Sandler O'Neill about the current value of the acquiring institution's common
stock and the potential adverse effect that a merger might have on the trading
value of the acquiring institution's common stock. The Board determined that it
was in Pittsburgh Financial's best interests to seek potential indications of
interest from other institutions and authorized Sandler O'Neill to contact three
other institutions who were considered to be potential acquirors of Pittsburgh
Financial, including First Commonwealth.

         On June 27, 2003, Sandler O'Neill contacted Jerry Thomchick, Senior
Executive Vice President and Chief Operating Officer of First Commonwealth,
inquiring as to whether First Commonwealth might be interested in submitting an
indication of interest for the potential acquisition of Pittsburgh Financial.
First Commonwealth executed a confidentiality agreement and was provided
financial information and other data on Pittsburgh Financial, similar to that
provided to the first institution. On June 27, 2003, Sandler O'Neill also
contacted the other two institutions which the Board of Pittsburgh Financial had
authorized them to contact. Sandler O'Neill also distributed similar financial
information and other data on Pittsburgh Financial to the two institutions after
entering into confidentially agreements with each of them.

         On July 7, 2003, First Commonwealth advised Pittsburgh Financial that
it was interested in submitting a proposal to acquire Pittsburgh Financial. On
July 9, 2003, Mr. Thomchick met with Mr. Dillen to discuss the terms of a
possible transaction, including the form of consideration for Pittsburgh
Financial's shareholders, the role of Pittsburgh Financial's existing officers
and directors in the combined company and the treatment of current Pittsburgh
Financial employees. On July 14, 2003, Mr. Dillen met with Joseph O'Dell,
President and Chief Executive Officer of First Commonwealth, to discuss these
matters further.

         At a meeting held on July 15, 2003, First Commonwealth's Board approved
a proposal to acquire Pittsburgh Financial for $20.00 per share, with the merger
consideration to consist of a combination of cash and First Commonwealth common
stock. First Commonwealth provided a written indication of interest on July 15,
2003 to Pittsburgh Financial at a price of $20.00 per share with the merger
consideration to be paid in a combination of cash and common stock, with the
aggregate stock portion of the merger consideration not to exceed 50%. The
proposal also provided that the exchange ratio for the stock would be based upon
the average trading price of First Commonwealth common stock over the ten
trading days prior to the closing of the transaction and did not include price
collars or any other price


                                       28


condition. On July 15, 2003, Pittsburgh Financial also received indications of
interest from the two other institutions at price levels below the First
Commonwealth proposal.

         A meeting of Pittsburgh Financial's Executive Committee of the Board of
Directors was held by telephone on July 17, 2003 in order to review each of the
indications of interest received. Representatives of Sandler O'Neill and
Pittsburgh Financial's special counsel, Elias, Matz, Tiernan & Herrick L.L.P.
("Elias, Matz"), were present at the meeting. Sandler O'Neill made a
presentation describing each proposal, which included an analysis of the
financial terms of each proposal as well as a financial analysis of each
potential acquiror. Elias, Matz discussed the legal aspects of each proposal and
the Board of Directors' fiduciary duties with respect to the proposed
transaction. After extensive discussion of each proposal, the committee
determined to proceed with negotiations with First Commonwealth and to proceed
with a due diligence review of First Commonwealth.

         On July 18, 2003, Pittsburgh Financial executed a confidentiality
agreement and began its due diligence review of First Commonwealth, and First
Commonwealth concurrently began its due diligence review of Pittsburgh
Financial.

         On July 24, 2003, at a regular meeting of the Board of Directors of
Pittsburgh Financial, Sandler O'Neill updated the Board on the financial terms
of the proposal by First Commonwealth and compared the financial terms of the
offer with those of the other bidders and recent comparable transactions.
Sandler O'Neill advised the Board that the financial terms offered by First
Commonwealth were superior to those of the other indications of interest
Pittsburgh Financial had received and similar to those in recent comparable
transactions. Elias, Matz reviewed with the Board of Directors the legal terms
of the First Commonwealth indication of interest as well as those of the other
bidders. Management reported that its due diligence examination of First
Commonwealth had been satisfactorily completed. On the basis of this information
and after extensive discussion, Pittsburgh Financial's Board directed management
and its advisors to negotiate a definitive agreement to merge with First
Commonwealth and to present such agreement to the Board for approval.

         First Commonwealth provided a draft of the proposed merger agreement
and related documents to Pittsburgh Financial on July 24, 2003. Over the next
two weeks, legal counsel for both Pittsburgh Financial and First Commonwealth,
together with the parties and their representatives, negotiated the terms of the
merger agreement and related documents.

         On August 5, 2003, Mr. O'Dell and David R. Tomb, Jr., Secretary and
Treasurer of First Commonwealth, met with Mr. Dillen to discuss the several
remaining open business issues, including Pittsburgh Financial's request that
the percentage of the merger consideration which consisted of First Commonwealth
common stock be increased from 50% to 60%. First Commonwealth agreed to increase
the stock portion of the merger consideration and all other business points were
agreed to by the parties.

         On August 8, 2003, the Board of Directors held a special meeting to
consider the proposed merger with First Commonwealth. At this meeting, Sandler
O'Neill made a detailed presentation to the Board, including a financial
analysis of the proposed merger. In addition, Sandler O'Neill delivered its oral
opinion concerning the fairness, from a financial point of view, of the proposed
consideration to be received by Pittsburgh Financial's shareholders as set forth
in the merger agreement, which was later confirmed in writing. Elias, Matz
reviewed in detail with the Board the terms of the merger agreement and related
documents and matters. The Board considered the terms of the merger agreement,
the potential advantages and risks associated with the merger, and the financial
analyses of Sandler O'Neill. Following discussion, by the unanimous vote of all
directors, the Board of Directors approved the merger agreement and the
transactions contemplated by the merger agreement, authorized management to
enter into the merger agreement and other related agreements and recommended
that shareholders vote their


                                       29


shares in favor of approving the merger agreement. Following the close of the
financial markets on the afternoon of August 8, 2003, Pittsburgh Financial and
First Commonwealth executed the merger agreement and related agreements and
issued a joint press release publicly announcing the transaction.

REASONS FOR THE MERGER

         The management of First Commonwealth and Pittsburgh Financial believe
that they have very similar approaches to serving their customers and target
markets. Management of each company perceives opportunities to achieve operating
efficiencies through the combination of their operations and believes that by
offering First Commonwealth's expanded range of products and services, they will
be able to more effectively compete and successfully take advantage of banking
opportunities in the greater Pittsburgh market.

         PITTSBURGH FINANCIAL

         Pittsburgh Financial's board believes that the merger is in the best
interests of the company and its shareholders. Accordingly, Pittsburgh
Financial's board has unanimously approved and adopted the merger agreement and
recommends approval of the merger agreement by the Pittsburgh Financial
shareholders. In reaching its decision, the board consulted with management,
their financial advisor, Sandler O'Neill, and legal counsel. The board's
deliberations included an analysis of:

         o        The current and prospective economic, regulatory and
                  competitive environment facing financial institutions.

         o        The alternatives to the merger with First Commonwealth, the
                  range of possible values to Pittsburgh Financial shareholders
                  that might be obtained in the future if other alternatives
                  were chosen, and the timing and likelihood of actually
                  receiving such values. The alternatives considered included
                  remaining independent and engaging in a merger or similar
                  transaction with another financial institution.

         o        The business, operations, earnings and financial condition of
                  Pittsburgh Financial on an historical and a prospective basis
                  and the historical market price and potential future value of
                  Pittsburgh Financial's common stock.

         o        The business, operations, earnings and financial condition of
                  First Commonwealth on an historical and a prospective basis
                  and the historical market price and potential future value of
                  First Commonwealth's common stock.

         o        The current and prospective economic and competitive
                  environment of First Commonwealth relative to the financial
                  services industry generally.

         o        The tax consequences of the merger to Pittsburgh Financial
                  shareholders.

         o        The results of Pittsburgh Financial's due diligence review of
                  First Commonwealth.

         o        The financial and other terms of the merger agreement.

         o        The nature of, and likelihood of obtaining, the regulatory
                  approvals that would be required with respect to the merger.


                                       30


         o        The actual and potential conflicts of interest presented by
                  the existing and proposed arrangements and agreements between
                  First Commonwealth as the surviving corporation and certain
                  officers of Pittsburgh Financial following the merger.

         o        The effect of the merger on Pittsburgh Financial's other
                  constituencies, including its employees, customers and the
                  communities it serves.

         o        The advice and fairness opinion rendered by Pittsburgh
                  Financial's financial advisor, Sandler O'Neill

         Based on this analysis, the board identified the following advantages
of the merger to Pittsburgh Financial and its shareholders:

         o        The opportunity for Pittsburgh Financial shareholders to
                  receive in the merger a substantial premium (25%) over recent
                  trading prices of Pittsburgh Financial stock.

         o        The increased value for shareholders of Pittsburgh Financial
                  as a result of First Commonwealth's historically higher
                  dividend yield.

         o        The increased liquidity for shareholders of Pittsburgh
                  Financial as holders of First Commonwealth common stock, which
                  is traded on the New York Stock Exchange rather than the
                  Nasdaq National Market and has significantly greater float and
                  average trading volumes.

         o        The enhanced ability to compete for loans and deposits with
                  other commercial banks, including many that are much larger
                  than BankPittsburgh, as well as with savings institutions,
                  finance companies, credit unions, brokerage houses and other
                  financial services companies.

         o        The elimination and consolidation of duplicate functions
                  resulting in projected cost savings in the areas of item
                  processing, data processing, professional and audit fees and
                  marketing and operating expenses.

         The foregoing discussion of the information and factors considered by
the Pittsburgh Financial board is not intended to be exhaustive but includes all
material factors considered by the board of directors of Pittsburgh Financial.
In deciding to approve the merger, the Pittsburgh Financial board did not assign
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to different factors.

         FIRST COMMONWEALTH

         First Commonwealth's board of directors believes that the merger is in
the best interests of First Commonwealth and its shareholders. Accordingly,
First Commonwealth's board has unanimously approved and adopted the merger
agreement. In reaching this decision, the board consulted with senior
management. The board's deliberation included an analysis of:

         o        Pittsburgh Financial's attractive market area.

         o        The alternative acquisition possibilities that are currently
                  available.


                                       31


         o        The business, operations, earnings and financial condition of
                  Pittsburgh Financial on an historical and a prospective basis
                  and the historical market price and potential future value of
                  Pittsburgh Financial's common stock.

         o        The current and prospective economic and competitive
                  environment of Pittsburgh Financial relative to the financial
                  services industry generally.

         o        The results of First Commonwealth's due diligence review of
                  Pittsburgh Financial.

         o        The financial and other terms of the merger agreement.

         o        The nature of, and likelihood of obtaining, the regulatory
                  approvals that would be required with respect to the merger.

         o        The cost savings that may result from the merger

         Based on this analysis, the board identified the following advantages
of the merger to First Commonwealth and its shareholders:

         o        The merger creates the opportunity for First Commonwealth to
                  offer services to Pittsburgh Financial customers that
                  Pittsburgh Financial does not currently offer. These services
                  include competitively priced consumer and commercial insurance
                  and annuity products offered through First Commonwealth
                  Insurance Agency and financial planning and brokerage services
                  offered through First Commonwealth Financial Advisors.

         o        The combined company would have a larger lending limit than
                  that of First Commonwealth alone, which would enable First
                  Commonwealth to compete for loans that are currently dominated
                  by national and regional banks from other geographic areas.

         o        The combined company would enjoy greater resources to fund the
                  technological research and product development costs necessary
                  to deliver new and improved financial services in the future.

         o        The merger will substantially improve First Commonwealth's
                  capacity to offer the varied and specialized services and
                  expertise that are available from larger organizations, and
                  will substantially strengthen its ability to compete with the
                  largest banks.

         o        The merger will enable First Commonwealth to draw upon and
                  take advantage of the expertise and experience of Pittsburgh
                  Financial's employees.

         o        First Commonwealth expects to achieve significant cost savings
                  following the merger by: (i) consolidating external data
                  processing costs; (ii) combining accounting, retail and
                  lending support, compliance and other redundant functions;
                  (iii) combining employee benefits programs; (iv) reducing
                  certain professional and other third party fees, including
                  audit and loan review support; and (v) achieving economies of
                  scale in advertising, insurance and purchasing. Actual savings
                  in some or all of these areas may be higher or lower than
                  currently expected.

         o        The merger will enable First Commonwealth to attract qualified
                  personnel and to retain existing personnel by offering broader
                  career opportunities and advancement potential than are
                  offered in Pittsburgh Financial's current organization.


                                       32


         The foregoing discussion of the information and factors considered by
the First Commonwealth board is not intended to be exhaustive, but includes all
material factors considered by the board of directors of First Commonwealth. In
deciding to approve the merger, the First Commonwealth board did not assign
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to different factors.

OPINION OF PITTSBURGH FINANCIAL'S FINANCIAL ADVISOR

         By letter dated May 27, 2003, Pittsburgh Financial retained Sandler
O'Neill to act as its financial advisor in connection with a possible business
combination with another institution. Sandler O'Neill is a nationally recognized
investment banking firm whose principal business specialty is financial
institutions. In the ordinary course of its investment banking business, Sandler
O'Neill is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions.

         Sandler O'Neill acted as financial advisor to Pittsburgh Financial in
connection with the proposed merger with First Commonwealth and participated in
certain of the negotiations leading to the merger agreement. At the August 8,
2003 meeting at which Pittsburgh Financial's board of directors considered and
approved the merger agreement, Sandler O'Neill delivered to the board its oral
opinion, subsequently confirmed in writing, that, as of such date, the merger
consideration was fair to Pittsburgh Financial's shareholders from a financial
point of view. Sandler O'Neill has confirmed its August 8th opinion by
delivering to the board a written opinion dated the date of this proxy
statement/prospectus. In rendering its updated opinion, Sandler O'Neill
confirmed the appropriateness of its reliance on the analyses used to render its
earlier opinion by reviewing the assumptions upon which their analyses were
based, performing procedures to update certain of their analyses and reviewing
the other factors considered in rendering its opinion. THE FULL TEXT OF SANDLER
O'NEILL'S UPDATED OPINION IS ATTACHED AS ANNEX III TO THIS PROXY
STATEMENT/PROSPECTUS. THE OPINION OUTLINES THE PROCEDURES FOLLOWED, ASSUMPTIONS
MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW
UNDERTAKEN BY SANDLER O'NEILL IN RENDERING ITS OPINION. THE DESCRIPTION OF THE
OPINION SET FORTH BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
OPINION. WE URGE YOU TO READ THE ENTIRE OPINION CAREFULLY IN CONNECTION WITH
YOUR CONSIDERATION OF THE PROPOSED MERGER.

         SANDLER O'NEILL'S OPINION SPEAKS ONLY AS OF THE DATE OF THE OPINION.
THE OPINION WAS DIRECTED TO THE PITTSBURGH FINANCIAL BOARD AND IS DIRECTED ONLY
TO THE FAIRNESS OF THE MERGER CONSIDERATION TO PITTSBURGH FINANCIAL SHAREHOLDERS
FROM A FINANCIAL POINT OF VIEW. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS
DECISION OF PITTSBURGH FINANCIAL TO ENGAGE IN THE MERGER OR ANY OTHER ASPECT OF
THE MERGER AND IS NOT A RECOMMENDATION TO ANY PITTSBURGH FINANCIAL SHAREHOLDER
AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE SPECIAL MEETING WITH RESPECT TO
THE MERGER, THE FORM OF CONSIDERATION A SHAREHOLDER SHOULD ELECT IN THE MERGER
OR ANY OTHER MATTER.

         In connection with rendering its August 8, 2003 opinion, Sandler
O'Neill reviewed and considered, among other things:

         o        the merger agreement, together with certain of the exhibits
                  thereto;

         o        certain publicly available financial statements and other
                  historical financial information of Pittsburgh Financial that
                  they deemed relevant;

         o        certain publicly available financial statements and other
                  historical financial information of First Commonwealth that
                  they deemed relevant;


                                       33


         o        financial projections for Pittsburgh Financial for the year
                  ending September 30, 2003 and net income projections for the
                  year ending September 30, 2004 prepared by and reviewed with
                  management of Pittsburgh Financial Corporation;

         o        financial projections for First Commonwealth for the year
                  ending December 31, 2003 provided by management of First
                  Commonwealth and earnings per share estimates for First
                  Commonwealth for the year ending December 31, 2004 published
                  by I/B/E/S;

         o        the pro forma financial impact of the merger on First
                  Commonwealth, based on assumptions relating to earnings,
                  transaction expenses, purchase accounting adjustments and cost
                  savings determined by the senior managements of First
                  Commonwealth and Pittsburgh Financial;

         o        the publicly reported historical price and trading activity
                  for Pittsburgh Financial's and First Commonwealth's common
                  stock, including a comparison of certain financial and stock
                  market information for Pittsburgh Financial and First
                  Commonwealth with similar publicly available information for
                  certain other companies the securities of which are publicly
                  traded;

         o        the financial terms of certain recent business combinations in
                  the savings institutions industry, to the extent publicly
                  available;

         o        the current market environment generally and the banking
                  environment in particular; and

         o        such other information, financial studies, analyses and
                  investigations and financial, economic and market criteria as
                  they are considered relevant.

         Sandler O'Neill also discussed with members of senior management of
Pittsburgh Financial and First Commonwealth their views of the business,
financial condition, results of operations and prospects of their respective
companies.

         In performing its reviews and analyses and in rendering its opinion,
Sandler O'Neill assumed and relied upon the accuracy and completeness of all the
financial information, analyses and other information that was publicly
available or otherwise furnished to, reviewed by or discussed with it and
further relied on the assurances of management of Pittsburgh Financial and First
Commonwealth that they were not aware of any facts or circumstances that would
make such information inaccurate or misleading. Sandler O'Neill was not asked to
and did not independently verify the accuracy or completeness of any of such
information and they did not assume any responsibility or liability for the
accuracy or completeness of any of such information. Sandler O'Neill did not
make an independent evaluation or appraisal of the assets, the collateral
securing assets or the liabilities, contingent or otherwise, of Pittsburgh
Financial or First Commonwealth or any of their respective subsidiaries, or the
collectibility of any such assets, nor was it furnished with any such
evaluations or appraisals. Sandler O'Neill is not an expert in the evaluation of
allowances for loan losses and it did not make an independent evaluation of the
adequacy of the allowance for loan losses of Pittsburgh Financial or First
Commonwealth, nor did it review any individual credit files relating to
Pittsburgh Financial or First Commonwealth. With Pittsburgh Financial's consent,
Sandler O'Neill assumed that the respective allowances for loan losses for both
Pittsburgh Financial and First Commonwealth were adequate to cover such losses
and will be adequate on a pro forma basis for the combined entity. In addition,
Sandler O'Neill did not conduct any physical inspection of the properties or
facilities of Pittsburgh Financial or First Commonwealth.


                                       34


         Sandler O'Neill's opinion was necessarily based upon market, economic
and other conditions as they existed on, and could be evaluated as of, the date
of its opinion. Sandler O'Neill assumed, in all respects material to its
analysis, that all of the representations and warranties contained in the merger
agreement and all related agreements are true and correct, that each party to
such agreements will perform all of the covenants required to be performed by
such party under such agreements and that the conditions precedent in the merger
agreement are not waived. Sandler O'Neill also assumed that there has been no
material change in Pittsburgh Financial's or First Commonwealth's assets,
financial condition, results of operations, business or prospects since the date
of the most recent financial statements made available to them, that Pittsburgh
Financial and First Commonwealth will remain as going concerns for all periods
relevant to its analyses, and that the sale will qualify as a tax-free
reorganization for federal income tax purposes.

         In rendering its August 8, 2003 opinion, Sandler O'Neill performed a
variety of financial analyses. The following is a summary of the material
analyses performed by Sandler O'Neill, but is not a complete description of all
the analyses underlying Sandler O'Neill's opinion. The summary includes
information presented in tabular format. IN ORDER TO FULLY UNDERSTAND THE
FINANCIAL ANALYSES, THESE TABLES MUST BE READ TOGETHER WITH THE ACCOMPANYING
TEXT. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL
ANALYSES. The preparation of a fairness opinion is a complex process involving
subjective judgments as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances. The process, therefore, is not necessarily susceptible to a
partial analysis or summary description. Sandler O'Neill believes that its
analyses must be considered as a whole and that selecting portions of the
factors and analyses considered without considering all factors and analyses, or
attempting to ascribe relative weights to some or all such factors and analyses,
could create an incomplete view of the evaluation process underlying its
opinion. Also, no company included in Sandler O'Neill's comparative analyses
described below is identical to Pittsburgh Financial or First Commonwealth and
no transaction is identical to the merger. Accordingly, an analysis of
comparable companies or transactions involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading values or
merger transaction values, as the case may be, of Pittsburgh Financial or First
Commonwealth and the companies to which they are being compared.

         The earnings projections for Pittsburgh Financial and First
Commonwealth used and relied upon by Sandler O'Neill in its analyses were based
upon internal financial projections for 2003 and 2004 in the case of Pittsburgh
Financial and upon internal earnings projections for 2003 and published I/B/E/S
earnings estimates for 2004 in the case of First Commonwealth. With respect to
such financial projections and estimates and all projections of transaction
costs, purchase accounting adjustments and expected cost savings relating to the
merger, Pittsburgh Financial's and First Commonwealth's managements confirmed to
Sandler O'Neill that they reflected the best currently available estimates and
judgments of such managements of the future financial performance of Pittsburgh
Financial and First Commonwealth, respectively, and Sandler O'Neill assumed for
purposes of its analyses that such performances would be achieved. Sandler
O'Neill expressed no opinion as to such financial projections or the assumptions
on which they were based. The financial projections and estimates provided by
management of Pittsburgh Financial and First Commonwealth were prepared for
internal purposes only and not with a view towards public disclosure. These
projections, as well as the other estimates used by Sandler O'Neill in its
analyses, were based on numerous variables and assumptions that are inherently
uncertain, and, accordingly, actual results could vary materially from those set
forth in such projections.

         In performing its analyses, Sandler O'Neill also made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which cannot be predicted and are
beyond the control of Pittsburgh Financial, First Commonwealth and Sandler
O'Neill. The analyses performed by Sandler O'Neill are not necessarily
indicative of actual values or


                                       35


future results, which may be significantly more or less favorable than suggested
by such analyses. Sandler O'Neill prepared its analyses solely for purposes of
rendering its opinion and provided such analyses to the Pittsburgh Financial
board at the August 8th meeting. Estimates on the values of companies do not
purport to be appraisals or necessarily reflect the prices at which companies or
their securities may actually be sold. Such estimates are inherently subject to
uncertainty and actual values may be materially different. Accordingly, Sandler
O'Neill's analyses do not necessarily reflect the value of Pittsburgh
Financial's common stock or First Commonwealth's common stock or the prices at
which Pittsburgh Financial's or First Commonwealth's common stock may be sold at
any time.

         SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial terms of
the proposed transaction. Using the implied transaction value of $20.00 per
share, Sandler O'Neill calculated the following ratios based upon Pittsburgh
Financial's March 2003 financial information:

-------------------------------------------------------------------------------
PROPOSED TRANSACTION RATIOS
-------------------------------------------------------------------------------

         Transaction value/LTM EPS(1)                             71.33x
         Transaction value/Stated book value per share            124.77%
         Transaction value/Tangible book value per share          125.47%
         Tangible book premium/Core deposits                      3.76%

-------------------------------------------------------------------------------
(1)      Excludes gain from December 2002 branch sale transaction.

The aggregate transaction value was approximately $31.9 million, based upon 1.4
million shares of Pittsburgh Financial common stock outstanding and including
the intrinsic value of options outstanding to purchase shares of Pittsburgh
Financial common stock calculated at the implied per share transaction value of
$20.00. For purposes of Sandler O'Neill's analyses, earnings per share were
based on fully diluted earnings per share. Sandler O'Neill noted that the
transaction value represented a 25.00% premium over the August 7, 2003 closing
price of Pittsburgh Financial's common stock.

         STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the
reported trading prices and volume of Pittsburgh Financial's common stock and
First Commonwealth's common stock and the relationship between the movements in
the prices of Pittsburgh Financial's common stock and First Commonwealth's
common stock, respectively, to movements in certain stock indices, including the
Standard & Poor's 500 Index, S&P Bank Index, the NASDAQ Bank Index and the
median performance of composite peer groups of publicly traded regional savings
institutions (for comparison with Pittsburgh Financial) and publicly traded
regional commercial bank institutions (for comparison with First Commonwealth)
selected by Sandler O'Neill. During the one-year period ended August 7, 2003,
Pittsburgh Financial common stock underperformed its regional peer group and
outperformed each of the other indices to which it was compared, while First
Commonwealth underperformed each of the indices to which it was compared.

-------------------------------------------------------------------------------
PITTSBURGH FINANCIAL'S AND FIRST COMMONWEALTH'S ONE-YEAR STOCK PERFORMANCE
-------------------------------------------------------------------------------


                             Beginning Index Value          Ending Index Value
                                 August 6, 2002               August 7, 2003
                                                         
Pittsburgh Financial                  100%                        130.73%
Regional Peer Group                   100%                        134.87%
NASDAQ Bank Index                     100%                        110.49%
S&P Bank Index                        100%                        110.08%



                                       36




                             Beginning Index Value          Ending Index Value
                                 August 6, 2002               August 7, 2003

                                                         
S&P 500                               100%                        113.33%
First Commonwealth                    100%                        104.63%
Regional Peer Group                   100%                        118.83%
NASDAQ Bank Index                     100%                        110.49%
S&P Bank Index                        100%                        110.08%
S&P 500                               100%                        113.33%
-------------------------------------------------------------------------------


         COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to compare selected publicly available financial and market trading
information for Pittsburgh Financial, the regional peer group of savings
institutions selected by Sandler O'Neill and a high performing group of savings
institutions selected by Sandler O'Neill. The regional peer group consisted of
Pittsburgh Financial and the following publicly traded regional savings
institutions:

First Bell Bancorp, Inc.                   GA Financial, Inc.
Northeast Pennsylvania Financial Corp.     Thistle Group Holdings, Co.
Willow Grove Bancorp, Inc.                 TF Financial Corp.
Harleysville Savings Financial Corp.       Fidelity Bancorp, Inc.
First Keystone Financial, Inc.             WVS Financial Corp.
PHSB Financial Corp                        Laurel Capital Group, Inc.
Nittany Financial Corp.

The high performing group, which included savings institutions with a last
twelve months' return on average equity of greater than 10% and a price to
tangible book value ratio of greater than 142%, consisted of the following
publicly traded savings institutions:

FFLC Bancorp, Inc.                         Warwick Community Bancorp, Inc.
Horizon Financial Corp.                    First Mutual Bancshares, Inc.
NewMil Bancorp, Inc.                       Pamrapo Bancorp, Inc.
Heritage Financial Corp.                   New Hampshire Thrift Bancshares, Inc.
Severn Bancorp, Inc.                       Pulaski Financial Corp.
North Central Bancshares, Inc.             Alliance Bancorp of New England
WVS Financial Corp.

The analysis compared publicly available financial information for Pittsburgh
Financial and the median data for each of the peer groups as of and for each of
the years ended December 31, 1998 through December 31, 2002 and as of and for
the twelve months ended June 30, 2003 (or in the case of First Keystone
Financial, WVS Financial Corp., Laurel Capital Corp., Nittany Financial Corp.
and Severn Bancorp, as of and for the twelve months ended March 31, 2003). The
table below sets forth the comparative data as of and for the most recent twelve
months available, with pricing data as of August 7, 2003.


                                       37




---------------------------------------------------------------------------------------------
COMPARABLE GROUP ANALYSIS
---------------------------------------------------------------------------------------------
                                          Pittsburgh        Regional          High Performing
                                          Financial         Group             Group
                                          Corporation       Median            Median

                                                                    
Total assets (in thousands)                 $376              $658              $588

Tangible equity/Tangible assets             6.03%             8.18%             8.06%

Intangible assets/Total equity              0.67%             0.87%             0.51%

Net loans/Total assets                     62.18%            49.61%            73.79%

Gross loans/Total deposits                130.52%            75.19%            95.70%

Total borrowings/Total assets              42.65%            23.75%            16.28%

Non-performing assets/Total assets          1.41%             0.37%             0.24%

Loan loss reserves/Gross loans              1.32%             0.95%             1.18%

Net interest margin                         1.83%             2.62%             3.83%

Non-interest income/Average assets          0.86%             0.31%             0.85%

Non-interest expense/Average assets         2.29%             1.99%             2.38%

Efficiency ratio                           91.22%            64.98%            55.84%

Return on average assets (1)                0.10%             0.73%             1.07%

Return on average equity (1)                1.69%             8.99%            13.76%

Price/Tangible book value per share       100.48%           142.52%           200.16%

Price/LTM earnings per share (1)           57.14x            16.80x            14.49x

Dividend payout ratio                      79.17%            37.89%            27.42%

Dividend yield                              2.76%             2.26%             2.29%
---------------------------------------------------------------------------------------------


(1) Pittsburgh Financial's data excludes gain from 2002 branch sale transaction.

Sandler O'Neill also used publicly available information to perform a similar
comparison of selected financial and market trading information for First
Commonwealth. The First Commonwealth regional peer group consisted of First
Commonwealth and the following publicly traded regional commercial banks:

Susquehanna Bancshares Inc.                  Provident Bankshares Corp.
National Penn Bancshares Inc.                Community Bank System, Inc.
United National Bancorp                      S&T Bancorp, Inc.


                                       38



The high performing group, which included commercial banks with a last twelve
months' return on average equity of greater than 14% and a price to tangible
book value ratio of greater than 270%, consisted of the following publicly
traded commercial banks:

First Midwest Bancorp, Inc.                  Chittenden Corp.
United Bankshares, Inc.                      Park National Corp.
Westamerica Bancorp                          Pacific Capital Bancorp

The analysis compared publicly available financial information for First
Commonwealth and the median First Commonwealth peer group as of and for each of
the years ended December 31, 1998 through December 31, 2002 and as of and for
the twelve months ended June 30, 2003. The table below sets forth the
comparative data as of and for the twelve months ended June 30, 2003, with
pricing data as of August 7, 2003.



---------------------------------------------------------------------------------------------
COMPARABLE GROUP ANALYSIS
---------------------------------------------------------------------------------------------
                                          First             Regional          High Performing
                                          Commonwealth      Group Median      Group - Median
                                                                    
Total assets (in thousands)                 $4,831            $3,364            $5,378

Tangible equity/Tangible assets               8.36%             6.65%             7.69%

Intangible assets/Total equity                1.98%            22.04%             7.64%

Net loans/Total assets                       53.53%            61.78%            56.97%

Gross loans/Total deposits                   81.42%            86.18%            76.91%

Total borrowings/Total assets                23.55%            15.57%            17.30%

Non-performing assets/Total assets            0.47%             0.47%             0.30%

Loan loss reserves/Gross loans                1.36%             1.40%             1.61%

Net interest margin                           3.72%             4.03%             4.53%

Non-interest income/Average assets            0.82%             1.20%             1.24%

Non-interest expense/Average assets           2.45%             3.01%             2.69%

Efficiency ratio                             60.00%            60.62%            52.60%

Return on average assets                      1.13%             1.18%             1.74%

Return on average equity                     12.70%            14.31%            18.21%

Price/Tangible book value per share         185.28%           259.82%           299.26%

Price/LTM earnings per share                 14.21x            15.03x            14.48x

Dividend payout ratio                        69.10%            51.33%            38.68%

Dividend yield                                4.86%             3.35%             2.66%

---------------------------------------------------------------------------------------------


                                       39




         ANALYSIS OF SELECTED MERGER TRANSACTIONS. Sandler O'Neill reviewed
merger transactions announced during the period January 1, 2003 through August
7, 2003 involving publicly traded savings institutions as acquired institutions
with transaction values greater than $15 million. Sandler O'Neill reviewed 18
transactions announced nationwide. Sandler O'Neill reviewed the multiples of
transaction price at announcement to last twelve months' earnings per share,
transaction price to book value per share, transaction price to tangible book
value per share, tangible book premium to core deposits and premium to market
price and computed high, low, mean and median multiples and premiums for these
transactions. These multiples were applied to Pittsburgh Financial's financial
information as of and for the twelve months ended June 30, 2003. As illustrated
in the following table, Sandler O'Neill derived an imputed range of values per
share of Pittsburgh Financial's common stock of $5.25 to $31.76 based upon the
median multiples for nationwide transactions.

-------------------------------------------------------------------------------
2003 NATIONWIDE TRANSACTION MULTIPLES
-------------------------------------------------------------------------------


                                    Median Multiple     Implied Value
                                    ---------------     -------------
                                                
Price/LTM EPS                        18.76x             $ 5.25

Price/Book value                    162.07%             $25.98

Price/Tangible book value           165.13%             $26.30

Tangible book premium/
Core deposits (1)                    14.59%             $31.76

Premium to market (2)                21.52%             $19.44

-------------------------------------------------------------------------------


(1) Assumes 14.89% of Pittsburgh Financial's total deposits are non-core
    deposits.

(2) Based on Pittsburgh Financial's August 7, 2003 closing price of $16.00.

         DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill
performed an analysis that estimated the future stream of after-tax dividend
flows of Pittsburgh Financial through September 30, 2007, assuming Pittsburgh
Financial's projected dividend stream and that Pittsburgh Financial performed in
accordance with the earnings projections reviewed with management for the years
ending September 30, 2003 and 2004. For periods after September 30, 2004,
Sandler O'Neill assumed that total earning assets remained essentially flat. To
approximate the terminal value of Pittsburgh Financial common stock at September
30, 2007, Sandler O'Neill applied price/earnings multiples ranging from 10x to
20x and multiples of tangible book value ranging from 100% to 225%. The dividend
income streams and terminal values were then discounted to present values using
different discount rates ranging from 9% to 15% chosen to reflect different
assumptions regarding required rates of return of holders or prospective buyers
of Pittsburgh Financial common stock. As illustrated in the following tables,
this analysis indicated an imputed range of values per share of Pittsburgh
Financial common stock of $2.65 to $5.54 when applying the price/earnings
multiples and $9.35 to $24.78 when applying multiples of tangible book value.


                                       40




-------------------------------------------------------------------------------
EARNINGS PER SHARE MULTIPLES
-------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------
Discount Rate               10x            12x           14x             16x             18x          20x
----------------------------------------------------------------------------------------------------------
                                                                                 
 9.0%                    $ 3.22         $ 3.68         $ 4.15          $ 4.61          $ 5.08       $ 5.54

11.0                       3.01           3.44           3.87            4.30            4.73         5.16

13.0                       2.82           3.22           3.62            4.02            4.42         4.81

15.0                       2.65           3.02           3.39            3.76            4.13         4.50
----------------------------------------------------------------------------------------------------------


TANGIBLE BOOK VALUE PER SHARE MULTIPLES



----------------------------------------------------------------------------------------------------------
Discount Rate             100%           125%           150%            175%            200%         225%
----------------------------------------------------------------------------------------------------------
                                                                                 
 9.0%                    $11.62         $14.25         $16.88          $19.51          $22.14       $24.78

11.0                      10.79          13.23          15.66           18.10           20.53        22.97

13.0                      10.04          12.29          14.55           16.81           19.06        21.32

15.0                       9.35          11.44          13.54           15.63           17.72        19.82
----------------------------------------------------------------------------------------------------------


         Sandler O'Neill performed a similar analysis that estimated the future
stream of after-tax dividend flows of First Commonwealth through December 31,
2007, assuming First Commonwealth's projected dividend stream and that First
Commonwealth performed in accordance with mean I/B/E/S estimates for 2003 and
2004. For periods after 2004, Sandler O'Neill assumed an annual growth rate of
earning assets of approximately 5%. To approximate the terminal value of First
Commonwealth common stock at December 31, 2007, Sandler O'Neill applied
price/earnings multiples ranging from 11x to 21x and multiples of tangible book
value ranging from 125% to 250%. The dividend income streams and terminal values
were then discounted to present values using different discount rates ranging
from 9% to 15% chosen to reflect different assumptions regarding required rates
of return of holders or prospective buyers of First Commonwealth Financial
common stock. As illustrated in the following table, this analysis indicated an
imputed range of values per share of First Commonwealth common stock of $8.28 to
$17.74 when applying the price/earnings multiples and $7.74 to $16.50 when
applying multiples of tangible book value. The closing price of First
Commonwealth's common stock on August 7, 2003 was $12.65 per share.


                                       41


-------------------------------------------------------------------------------
EARNINGS PER SHARE MULTIPLES
-------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------
Discount Rate              11x            13x            15x             17x             19x          21x
----------------------------------------------------------------------------------------------------------
                                                                                 
9.0                      $10.52         $11.96         $13.41          $14.85          $16.29       $17.74

11.0                       9.70          11.01          12.33           13.65           14.97        16.28

13.0                       8.95          10.16          11.36           12.57           13.77        14.98

15.0                       8.28           9.38          10.49           11.59           12.70        13.80
----------------------------------------------------------------------------------------------------------


TANGIBLE BOOK VALUE PER SHARE MULTIPLES


----------------------------------------------------------------------------------------------------------
Discount Rate             125%           150%           175%            200%            225%         250%
----------------------------------------------------------------------------------------------------------
                                                                                 
9.0                      $ 9.81         $11.15         $12.49          $13.82          $15.16       $16.50

11.0                       9.05          10.27          11.49           12.71           13.93        15.15

13.0                       8.36           9.48          10.60           11.71           12.83        13.94

15.0                       7.74           8.76           9.79           10.81           11.83        12.86



In connection with its analyses, Sandler O'Neill considered and discussed with
the Pittsburgh Financial board how the present value analyses would be affected
by changes in the underlying assumptions, including variations with respect to
net income, the growth rate of earning assets and dividend payout ratio. Sandler
O'Neill noted that the discounted dividend stream and terminal value analysis is
a widely used valuation methodology, but the results of such methodology are
highly dependent upon the numerous assumptions that must be made, and the
results thereof are not necessarily indicative of actual values or future
results.

         PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential
pro forma effects of the sale, based upon the following assumptions: (1) 40% of
the outstanding Pittsburgh Financial shares are exchanged for a cash payment of
$20.00 per share and 60% of the outstanding Pittsburgh Financial shares are
exchanged for shares of First Commonwealth common stock at an exchange ratio of
1.544, (2) earnings per share estimates and projections of Pittsburgh Financial
and First Commonwealth consistent with those discussed above, and (3) charges
and transaction costs, purchase accounting adjustments and cost savings
determined by the senior managements of Pittsburgh Financial and First
Commonwealth, and share repurchase assumptions projected by First Commonwealth.
The analysis indicated that for the year ending December 31, 2004, the first
full year following the merger, the merger would be accretive to the combined
company's projected earnings per share and dilutive to tangible book value per
share. The actual results achieved by the combined company may vary from
projected results and the variations may be material.


                                       42

-------------------------------------------------------------------------------
PRO FORMA MERGER ANALYSIS
-------------------------------------------------------------------------------


                                                     Stand-alone      Pro Forma

                                                               
Projected 2004 EPS                                   $0.90            $0.92

Projected tangible book value per share (1)          $7.27            $7.06

-------------------------------------------------------------------------------


        (1)  At December 31, 2004.


         Pittsburgh Financial has agreed to pay Sandler O'Neill a transaction
fee in connection with the merger of approximately $554,000, of which
$138,521 was paid upon execution of the merger agreement and the balance of
which is contingent and payable upon closing of the merger. Pittsburgh Financial
has also paid Sandler O'Neill a fee of $75,000 for rendering its opinion, which
will be credited against that portion of the fee due upon consummation of the
merger. Pittsburgh Financial has also agreed to reimburse certain of Sandler
O'Neill's reasonable out-of-pocket expenses incurred in connection with its
engagement and to indemnify Sandler O'Neill and its affiliates and their
respective partners, directors, officers, employees, agents, and controlling
persons against certain expenses and liabilities, including liabilities under
securities laws.

         Sandler O'Neill has in the past provided certain other investment
banking services to Pittsburgh Financial and has received compensation for such
services. In addition, in the ordinary course of its business as a
broker-dealer, Sandler O'Neill may purchase securities from and sell securities
to Pittsburgh Financial and First Commonwealth and their respective affiliates
and may actively trade the debt and/or equity securities of Pittsburgh Financial
and First Commonwealth and their respective affiliates for its own account and
for the accounts of customers and, accordingly, may at any time hold a long or
short position in such securities.

INTERESTS OF CERTAIN DIRECTORS AND EXECUTIVE OFFICERS OF PITTSBURGH FINANCIAL
IN THE MERGER

         When considering the recommendations of the Pittsburgh Financial board
of directors, you should be aware that some of the directors, management and
employees of Pittsburgh Financial may have interests that differ from, or
conflict with, your interests. The board of directors was aware of these
interests when it approved the merger and the merger agreement. Except as
described below, to the knowledge of Pittsburgh Financial, the executive
officers and directors of Pittsburgh Financial do not have any material interest
in the merger apart from their interests as shareholders.


         Conversion of Stock Options. Prior to the merger, holders of stock
options outstanding under the Pittsburgh Financial stock option plans will elect
whether to receive payment in cancellation of their options or to receive
options to purchase First Commonwealth common stock in exchange for their
Pittsburgh Financial options. Holders who elect to receive payment for
cancellation of their options will receive an amount for each underlying share
equal to the difference between $20 and the exercise price for the option. First
Commonwealth has agreed to assume all stock options that remain outstanding
under the Pittsburgh Financial stock option plans at the effective time of the
merger. As of October 27, 2003, there were 238,660 options outstanding, of which
179,481 were held by executive officers, 23,132 were held by outside directors
and 36,047 were held by others. In connection with the merger, these options
will be exercisable for a number of shares of First Commonwealth common stock
determined by applying the conversion ratio to the number of shares of
Pittsburgh Financial common stock covered by



                                       43


the options at an exercise price determined by dividing the pre-merger exercise
price by the conversion ratio. The holders of these options will benefit from
any increase in value of First Commonwealth common stock after the merger in a
manner that is not available to the other shareholders of Pittsburgh Financial.


         Acceleration of Stock Options. Pursuant to the terms of Pittsburgh
Financial's stock option plans, all unvested options to purchase shares of
Pittsburgh Financial common stock will become vested and exercisable upon
consummation of the merger. At October 27, 2003, outside directors held unvested
options to purchase 6,000 shares of Pittsburgh Financial common stock and
executive officers held unvested options to purchase 42,040 shares of Pittsburgh
Financial common stock, all of which will accelerate and vest upon consummation
of the merger.


         Employment Contracts. J. Ardie Dillen, Chairman, President and Chief
Executive Officer of Pittsburgh Financial, Gregory G. Maxcy, Executive Vice
President of Pittsburgh Financial, Michael J. Kirk, Executive Vice President and
Chief Financial Officer of Pittsburgh Financial, and Albert L. Winters, Senior
Vice President of Operations of BankPittsburgh, are each parties to employment
contracts with their respective employers. In the event that the employment of
any of these officers is terminated upon completion of the merger or within one
year thereafter, the officer will be entitled to receive severance payments. In
the case of Messrs. Dillen, Maxcy and Kirk, the aggregate severance will be
equal to three times the officer's annual salary, payable in equal monthly
installments over three years, and in the case of Mr. Winters, the aggregate
severance will be equal to two times his annual salary, payable in equal monthly
installments over two years. Based on their current annual salaries, the
aggregate cash severance amounts for Messrs. Dillen, Maxcy, Kirk and Winters
will be $540,000, $405,000, $361,500 and $163,000, respectively, subject to
reduction as described below. Messrs. Dillen, Maxcy and Kirk are also entitled
to the continuation of fringe benefits for a period of up to three years, or
until they obtain other full-time employment that provides similar benefits.

         If the employment of the above officers is terminated subsequent to the
one-year anniversary of the merger, their cash severance and fringe benefits
will be reduced on a pro rata basis by the length of time they are employed by
First Commonwealth or its subsidiaries subsequent to the one-year anniversary of
the merger.

         The present value of the cash severance, fringe benefits and SERP
benefits (as provided below) received by an officer cannot exceed the officer's
threshold under Section 280G of the Code, which is three times his five-year
average compensation. If the merger closes in 2003, the Section 280G limit for
Messrs. Dillen, Maxcy, Kirk and Winters will be $677,763, $458,799, $410,148 and
$243,891, respectively. As a result, the cash severance, fringe benefits and
SERP benefits otherwise payable to each of Messrs. Dillen, Maxcy and Kirk will
be reduced.

         Supplemental Executive Retirement Plan Agreements. Messrs. Dillen,
Maxcy and Kirk are each party to a supplemental executive retirement plan
("SERP") agreement with Pittsburgh Financial and BankPittsburgh. Under the terms
of each agreement, the officer will be entitled to receive monthly payments for
the 20-year period following the officer's retirement or termination of
employment. The benefits accrue with each year of service and vest over a
five-year period, subject to meeting certain return on average assets targets,
which targets were not met for 2002 and will not be met for 2003. If the officer
is terminated following a change in control of Pittsburgh Financial, the officer
is credited with three additional years of service for purposes of vesting and
accrual of benefits. Upon termination of the officer's employment following the
merger, First Commonwealth will be obligated to pay each officer his benefits
under the supplemental executive retirement plan agreement in a lump sum, based
on the value of the future payments, discounted to present value using the IRS
discount rates in effect on the closing date of the merger. Based on the IRS
discount rate in effect for August 2003, the lump sum payments would


                                       44


be approximately $297,000 for Mr. Dillen, $279,000 for Mr. Maxcy and $137,000
for Mr. Kirk. However, the aggregate amount of the cash severance, fringe
benefits and SERP benefits that each officer is otherwise entitled to receive
will be reduced so that the present value of such amounts do not exceed the
officer's Section 280G limit.

         Pittsburgh Financial Employee Stock Ownership Plan. Pittsburgh
Financial will terminate its employee stock ownership plan upon completion of
the merger. Each participant in the plan will become 100% vested as to his or
her account balance upon termination of the plan. The plan will repay its
existing loan and will allocate the surplus cash and First Commonwealth common
stock to the accounts of the plan participants in proportion to their account
balances, to the extent allowed under applicable law and the governing documents
of the plan. Based on current estimates, the executive officers of Pittsburgh
Financial would be allocated approximately 30,415 shares of First Commonwealth
common stock after the repayment of the ESOP loan.

         Indemnification of Pittsburgh Financial Directors and Officers. First
Commonwealth has agreed to indemnify and hold harmless each present and former
director, officer and employee of Pittsburgh Financial and BankPittsburgh from
liability and expenses arising out of matters existing or occurring at or before
the consummation of the merger to the fullest extent allowed under Pennsylvania
law and the articles of incorporation and bylaws of Pittsburgh Financial and
BankPittsburgh in effect on the date of the merger agreement. First Commonwealth
has also agreed that it will maintain a policy of directors' and officers'
liability insurance coverage for the benefit of Pittsburgh Financial's directors
and officers for three years following consummation of the merger, subject to
certain limitations on the amount of premiums to be paid.

         Incentive Bonuses. First Commonwealth may authorize Pittsburgh
Financial to pay reasonable and customary incentive bonuses to the officers of
Pittsburgh Financial, including Messrs. Dillen, Maxcy and Kirk, at the effective
time of the merger if the merger is completed before the end of 2003. The
amount, if any, of such bonuses will not be determined until immediately prior
to the completion of the merger.

         Participation in First Commonwealth Employee Benefit Plans. After the
merger, employees of Pittsburgh Financial and its subsidiaries who remain
employed after the merger shall be entitled to participate in the same benefit
plans or programs as are generally available to employees of First Commonwealth
and its subsidiaries of similar rank and status. For purposes of eligibility,
vesting, benefit accrual (but not for accrual of pension benefits) and
determination of level of benefits under any such plan or program maintained by
First Commonwealth, employees will be credited with prior years of service with
Pittsburgh Financial.

         Other Employee Benefits and Severance. First Commonwealth also agreed
to honor the terms of other Pittsburgh Financial benefit plans, including the
BankPittsburgh Group Term Carve-Out Plan and the Director Split Dollar
Agreements. Under the Group Term Carve-Out Plan each of Messrs. Dillen, Maxcy
and Kirk will have a vested insurance benefit equal to two times his base annual
salary upon termination of employment, with such amount to be paid to his
beneficiaries upon his death. Under the Director Split Dollar Agreements, each
non-employee director other than Mr. Tott will have life insurance coverage in
the amount of $100,000.

         In addition, although First Commonwealth intends for employees of
Pittsburgh Financial to become employees of First Commonwealth after the merger,
any employee of Pittsburgh Financial whose employment is terminated within one
year after the merger for other than cause by First Commonwealth, other than
employees entitled to severance or other termination benefits pursuant to
existing agreements, or whose primary location of employment after the merger
would be more than 25 miles from their


                                       45


primary employment location prior to the merger, would be entitled to receive a
severance payment from First Commonwealth based upon First Commonwealth's
general severance policy.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

         The following summary discusses the material federal income tax
consequences of the merger to Pittsburgh Financial shareholders. The discussion
may not be applicable to certain classes of taxpayers, including securities
dealers and others that use the mark-to-market method of accounting for federal
income tax purposes, tax-exempt organizations or trusts, foreign persons,
persons who hold shares of Pittsburgh Financial common stock as part of a
straddle or conversion transaction and persons who acquire shares of Pittsburgh
Financial common stock pursuant to the exercise of employee stock options or
otherwise as compensation. The respective obligations of the parties to
consummate the merger are conditioned upon Pittsburgh Financial receiving a
written tax opinion, dated as of the closing date, to the same effect as the tax
opinion described below. Like other conditions to the merger, any of the parties
could choose to waive receipt of the updated tax opinion. However, if the
receipt of the updated tax opinion is waived and there is a material difference
in the tax consequences to you from what is described in this section, we will
recirculate revised proxy materials and resolicit the vote of shareholders
before closing the merger.

         Neither First Commonwealth nor Pittsburgh Financial plans to obtain a
ruling from the Internal Revenue Service concerning tax issues with respect to
the merger. However, a tax opinion of special tax counsel to First Commonwealth,
Sherman & Howard L.L.C., as described below has been rendered and will be
updated as of the effective time of the merger. The opinion of Sherman & Howard
L.L.C. is not binding on the Internal Revenue Service, and there can be no
assurance that the Internal Revenue Service will not contest the conclusions
expressed therein. The tax opinion is based upon, among other things, factual
representations of First Commonwealth and Pittsburgh Financial customarily given
in transactions of this type. The tax opinion is filed as an exhibit to the
registration statement of which this proxy statement/prospectus is a part. The
tax opinion of Sherman & Howard L.L.C., assuming the factual representations
described above are true and complete as of the effective time of the merger and
that the merger is completed as described in this proxy statement/prospectus,
provides:

         o that the merger will be treated for United States federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code and, accordingly, neither First Commonwealth or Pittsburgh
Financial will recognize any taxable gain or loss as a result of the merger;

         o that First Commonwealth and Pittsburgh Financial will each be a party
to the reorganization within the meaning of Section 368(b) of the Internal
Revenue Code.

         The federal income tax consequences of the merger to a Pittsburgh
Financial shareholder generally will depend on whether the shareholder receives
cash, First Commonwealth stock or a combination thereof in exchange for the
shareholder's shares of Pittsburgh Financial stock. Based on the opinion of
special tax counsel, the material U.S. federal income tax consequences of the
merger to the Pittsburgh Financial shareholders are as follows:

         Pittsburgh Financial Shareholders Receiving Only First Commonwealth
Common Stock. If you receive only First Commonwealth common stock in exchange
for all of your shares of Pittsburgh Financial shares pursuant to the merger:

         o You will not recognize gain or loss on the conversion of your shares
of Pittsburgh Financial common stock into shares of First Commonwealth common
stock, except to the extent that you


                                       46


receive cash in lieu of fractional shares. If you receive cash in lieu of a
fractional share interest in First Commonwealth common stock, you will recognize
gain or loss equal to the difference between the cash you receive and the part
of basis of the Pittsburgh Financial common stock allocated to the fractional
share interest. Any such gain or loss will generally be a capital gain or loss.

         o Your tax basis in the First Commonwealth common stock you receive
will be the same as the tax basis of the shares of Pittsburgh Financial common
stock you exchange in the merger, reduced by any proportionate part of your
basis allocable to any fractional share interest in First Commonwealth common
stock for which cash is received.

         o Your holding period for the First Commonwealth common stock you
receive will include the holding period of the Pittsburgh Financial common stock
you surrender in the merger.

         Pittsburgh Financial Shareholders Receiving Both First Commonwealth
Common Stock and Cash. If you receive both First Commonwealth common stock and
cash in exchange for your Pittsburgh Financial common stock:

         o You will recognize gain, if any, but not loss, in an amount equal to
the lesser of

                  o        the excess of the consideration you receive,
                           including both the fair market value of the First
                           Commonwealth common stock (including any fractional
                           share of First Commonwealth common stock deemed to be
                           received and exchanged for cash) and cash (excluding
                           any cash received in lieu of a fractional share of
                           First Commonwealth common stock), over your basis of
                           the Pittsburgh Financial common stock you exchange in
                           the merger, or

                  o        the amount of cash you receive.

         o You will not recognize any loss.

         o Your basis in the First Commonwealth common stock you receive will be
equal to the basis of the Pittsburgh Financial common stock you exchange in the
merger, decreased by the amount of cash you receive (including any amount
allocable to a fractional share interest of First Commonwealth common stock for
which cash is received), and increased by the amount of gain, if any, you
recognize, including any amount of gain treated as a dividend as described
below.

         o Your holding period for the First Commonwealth common stock you
receive will include the holding period of the Pittsburgh Financial common stock
you exchange in the merger.

         Any gain you recognize will be treated as capital gain unless the
receipt of cash has the effect of the distribution of a dividend to you under
Section 302 of the Internal Revenue Code, as described below. Your capital gain
will constitute long-term capital gain if you held the Pittsburgh Financial
common stock for more than one year. Long-term capital gains and dividends are
both taxed at preferential rates in the case of individuals. Dividends and
capital gains may be subject to different effective rates in the case of a
corporate shareholder, and such shareholders should consult their tax advisors
for the treatment of such dividends.

         If your receipt of cash has the effect of the distribution of a
dividend, any gain that you recognize will be treated as a dividend only to the
extent of your ratable share of undistributed earnings and profits of Pittsburgh
Financial. However, gain that you recognize should not be treated as a dividend
if:


                                       47


         o the percentage of the outstanding First Commonwealth common stock
owned by you, certain of your family members, and certain entities in which you
own an interest and First Commonwealth common stock which you have the right to
acquire by exercising an option, measured after giving effect to the merger, is
less than 80% of the percentage of the outstanding First Commonwealth common
stock that would have been owned actually and constructively by you after the
merger if First Commonwealth had issued solely common stock in the merger and
none of the merger consideration had been paid in cash, or

         o your relative stock interest in First Commonwealth is minimal, you
exercise no control over the affairs of First Commonwealth and the percentage of
the outstanding First Commonwealth common stock you owned both actually and
under the constructive ownership rules of Section 318 of the Internal Revenue
Code, measured after giving effect to the merger, is less (by even a small
margin) than the percentage of the outstanding First Commonwealth common stock
that would have been owned actually and constructively by you after the merger
if First Commonwealth had issued solely common stock in the merger and none of
the merger consideration had been paid in cash.

         Pittsburgh Financial Shareholders Receiving Only Cash. If you receive
solely cash in exchange for all of your Pittsburgh Financial common stock
pursuant to the merger, you will generally recognize capital gain or loss in an
amount equal to the difference between the amount of cash you receive and the
basis in the Pittsburgh Financial common stock you exchange. However, if you are
not treated as completely terminating your interest because of the application
of the constructive ownership rules of Section 318 of Internal Revenue Code,
under certain circumstances the full amount of cash you receive may be treated
as a dividend under Section 302 of the Internal Revenue Code. Pittsburgh
Financial shareholders should consult their tax advisors as to the possibility
that all or a portion of any cash received in exchange for their shares of
Pittsburgh Financial stock will be treated as a dividend.

         This summary is based on current federal income tax law. The tax
treatment of each Pittsburgh Financial shareholder will depend in part on such
shareholder's particular situation, and each shareholder is urged to consult
with his or her own tax advisor concerning the specific tax consequences of the
merger to the shareholder, including the applicability and effect of foreign,
state, local or other tax laws and of any future changes in the Internal Revenue
Code, the Treasury Regulations, tax rulings or court decisions or other laws
concerning taxes.

ACCOUNTING TREATMENT OF THE MERGER

         First Commonwealth will account for the merger as a purchase, as that
term is used under GAAP, for accounting and financial reporting purposes. Under
the purchase method of accounting, the assets and liabilities of Pittsburgh
Financial will be recorded on First Commonwealth's consolidated balance sheet at
their estimated fair value at the effective date of the merger. The amount by
which the purchase price paid by First Commonwealth exceeds the fair value of
the net tangible and identifiable intangible assets acquired by First
Commonwealth through the merger will be recorded as goodwill. In accordance with
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets", goodwill resulting from the merger will not be amortized to
expense but will be reviewed for impairment at least annually. To the extent
that goodwill is impaired, its current value will be written down to its implied
fair value and a charge will be made to earnings. Core deposit and other
intangibles with definite useful lives recorded in connection with the merger
will be amortized to expense in accordance with the new rules. Financial
statements of First Commonwealth issued after the effective date of the merger
will reflect these values and will not be restated retroactively to reflect the
historical position or results of operations of Pittsburgh Financial. Results of
operations of Pittsburgh Financial after the date of the merger will be included
in First Commonwealth's consolidated income statement.

NEW YORK STOCK EXCHANGE LISTING

         First Commonwealth intends to apply to list the shares of First
Commonwealth common stock to be issued in the merger on the New York Stock
Exchange. The stock must be authorized for listing on the NYSE for the merger to
be completed.


                                       48


                              THE MERGER AGREEMENT

CONDITIONS TO COMPLETING THE MERGER

         The respective obligations of First Commonwealth and Pittsburgh
Financial to complete the merger are subject to a number of conditions, each of
which must have been fulfilled or waived by the other party prior to the
completion of the merger. These conditions include the following:

         Conditions to the Obligations of Both Parties.

         o Pittsburgh Financial's shareholders must approve the merger;

         o The parties must receive all required governmental and regulatory
approvals and all applicable waiting periods must have expired;

         o Neither First Commonwealth nor Pittsburgh Financial may be subject to
any legal order that restrains or prohibits the consummation of any part of the
transaction;

         o The registration statement, of which this proxy statement/prospectus
is a part, must have been declared effective by the Securities and Exchange
Commission;

         o The parties must have received all consents and approvals from third
parties (other than those required from government agencies) required to
complete the merger;

         o The shares of First Commonwealth to be issued in the merger must have
been approved for listing on the NYSE;

         Conditions to the Obligations of Pittsburgh Financial.

         o First Commonwealth's legal counsel must deliver an opinion to
Pittsburgh Financial to the effect that the merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code;

         o First Commonwealth must have performed and complied in all material
respects its obligations under the merger agreement;

         o First Commonwealth's representations and warranties must be true and
correct as of the date of the merger agreement and as of the closing date, and
no material adverse change may have occurred in the business or financial
position of either party;

         Conditions to the Obligations of First Commonwealth.

         o Pittsburgh Financial must have performed and complied in all material
respects its obligations under the merger agreement; and

         o Pittsburgh Financial's representations and warranties must be true
and correct as of the date of the merger agreement and as of the closing date,
and no material adverse change may have occurred in the business or financial
position of either party.


                                       49


CONDUCT OF PITTSBURGH FINANCIAL'S BUSINESS BEFORE THE MERGER

         Pittsburgh Financial has agreed that it will not do or permit any of
its subsidiaries to do any of the following without the prior consent of First
Commonwealth until the merger is completed:

         o amend its articles of incorporation or bylaws;

         o redeem any of its equity securities, effect a stock split or declare
a stock dividend on its common stock, or pay or declare a cash dividend (except
for regular quarterly dividends in an amount consistent with past practice and
not exceeding $0.095 per share);

         o acquire direct or indirect control over any corporation or other
entity;

         o issue any additional shares of common stock or any other capital
stock of Pittsburgh Financial or its subsidiaries; other than pursuant to the
exercise of outstanding stock options;

         o incur any additional debt obligation or other obligation for borrowed
money;

         o pay any bonus, enter into any severance agreement or increase the
compensation or benefits to any of its employees except for routine annual
salary increases not to exceed 4% of the employee's annual salary;

         o hire a new employee with an annual compensation in excess of $50,000;

         o adopt any new employee benefit plan or terminate or make any material
change to any existing employee benefit plan;

         o enter into new service contracts or make capital expenditures
involving expenses in excess of $15,000;

         o sell, encumber or otherwise dispose of any of its assets;

         o settle any claim, action or proceeding involving any liability of
Pittsburgh Financial for money damages in excess of $25,000 or agree in
connection with any settlement to restrictions upon the operations of Pittsburgh
Financial or any subsidiary of Pittsburgh Financial;

         o change its method of accounting in effect at September 30, 2002;

         o enter into any new line of business or discontinue any existing line
of business;

         o make any loan or commitment in excess of specified amounts;

         o enter into any material transactions outside the ordinary course of
business;

         o open or close any office; or

         o settle or compromise any material tax liability.

Many of these restrictions are subject to exceptions which permit Pittsburgh
Financial and its subsidiaries to take actions that are in the ordinary course
of their respective businesses and consistent with past practice.


                                       50


COVENANTS IN THE MERGER AGREEMENT

         Agreement Not to Solicit Other Proposals. Pittsburgh Financial has
agreed not to solicit, initiate or encourage any acquisition proposal or engage
in negotiations or disclose nonpublic information to any person who has made or
may be considering an acquisition proposal. An acquisition proposal means any
tender offer, agreement, understanding or other proposal of any nature pursuant
to which any third party would directly or indirectly acquire substantially all
of the assets or a majority of the outstanding voting securities of Pittsburgh
Financial or BankPittsburgh. Despite the agreement of Pittsburgh Financial not
to solicit other acquisition proposals, the board of directors of Pittsburgh
Financial may furnish nonpublic information to or negotiate with any person in
connection with an unsolicited acquisition proposal if the board determines in
good faith that such action is required to comply with its fiduciary duties to
the Pittsburgh Financial shareholders, and the board concludes that the terms of
the acquisition proposal are superior to those of the merger with First
Commonwealth.

         Pittsburgh Financial must notify First Commonwealth of the receipt of
any acquisition proposal or any request for nonpublic information relating to
Pittsburgh Financial and keep First Commonwealth fully informed concerning the
status and details of any such acquisition proposal or request. Pittsburgh
Financial may not take any action with respect to the acquisition proposal for a
period of three business days after notifying First Commonwealth of the proposal
and must allow First Commonwealth to propose any changes to the terms and
conditions of the merger agreement that would enable Pittsburgh Financial's
board of directors to proceed with the merger.

         Employee Matters. Each person who is an employee of Pittsburgh
Financial or BankPittsburgh as of the closing of the merger will become an at
will employee of First Commonwealth or First Commonwealth Bank, as the case may
be. Each continuing employee will be entitled to participate in the same benefit
plans as are generally available to employees of First Commonwealth or First
Commonwealth Bank of similar rank and status, and will be credited with prior
years of service with Pittsburgh Financial and BankPittsburgh for purposes of
determining eligibility, vesting, benefit accrual (other than pension benefits)
and level of benefits.

         Indemnification of Pittsburgh Financial Officers and Directors. First
Commonwealth will indemnify each director, officer and employee of Pittsburgh
Financial and BankPittsburgh and maintain a policy of directors' and officers'
liability insurance coverage for their benefit for three years following
consummation of the merger. See "The Merger--Interests of Certain Directors and
Executive Officers of Pittsburgh Financial in the Merger" on page 43.

         Certain Other Covenants. The merger agreement requires the parties to
take certain actions before the consummation of the merger, including the
following:

         o Pittsburgh Financial and BankPittsburgh will modify and change their
accruals and reserves so as to be consistent with those of First Commonwealth
and First Commonwealth Bank.

         o Pittsburgh Financial will give First Commonwealth, and First
Commonwealth will give Pittsburgh Financial, access during normal business hours
to each other's property, books, records and personnel and furnish all
information either party may reasonably request. First Commonwealth and
Pittsburgh Financial agree that they will keep confidential all such information
and documents unless the information was already known, becomes publicly
available, is disclosed with prior written consent from the other party or
becomes readily ascertainable from published information.

         o Pittsburgh Financial will promptly provide First Commonwealth with a
copy of each report filed with its banking regulators.


                                       51


         o First Commonwealth and Pittsburgh Financial will use their reasonable
efforts to submit all necessary applications, notices, and other filings with
any governmental entity, the approval of which is required to complete the
merger and related transactions.

         o Pittsburgh Financial will use its reasonable efforts to obtain all
third party consents necessary to consummate the merger.

         o First Commonwealth and Pittsburgh Financial will use reasonable
efforts to take all actions necessary to consummate the merger and the
transactions contemplated by the merger agreement.

         o Pittsburgh Financial and First Commonwealth will consult with each
other regarding any public statements about the merger and any filings with any
governmental entity or with any national securities exchange or market.

         o First Commonwealth will file a registration statement, of which this
proxy statement/prospectus is a part, with the Securities and Exchange
Commission registering the shares of First Commonwealth common stock to be
issued in the merger to Pittsburgh Financial shareholders.

         o Pittsburgh Financial will take all actions necessary to convene a
meeting of its shareholders to vote on the merger agreement. The Pittsburgh
Financial board of directors will recommend at the shareholders' meeting that
the Pittsburgh Financial shareholders vote to approve the merger and will use
its reasonable efforts to solicit shareholder approval, unless it determines
that such actions would not comply with its fiduciary obligations to Pittsburgh
Financial shareholders.

         o Prior to completion of the merger, First Commonwealth will notify the
New York Stock Exchange of the additional shares of First Commonwealth common
stock that First Commonwealth will issue in exchange for shares of Pittsburgh
Financial common stock.

         o Pittsburgh Financial will use its reasonable efforts to cause each
person who is an affiliate of it under Rule 145 of the Securities Act to deliver
to First Commonwealth a letter to the effect that such person will comply with
the securities laws in disposing of shares of First Commonwealth common stock
received in the merger.

         o Pittsburgh Financial will notify First Commonwealth of any event
necessary to amend or supplement the representations and warranties so that the
representations and warranties and schedules remain true and correct through the
effective time of the merger.

REPRESENTATIONS AND WARRANTIES IN THE MERGER AGREEMENT

         First Commonwealth and Pittsburgh Financial have made customary
representations and warranties to each other in the merger agreement. These
representations and warranties relate to the corporate status of the parties,
the due authorization and execution of the merger agreement and the absence of
conflicting laws and agreements. In addition, Pittsburgh Financial makes a
variety of representations and warranties about its business, assets, financial
condition and compliance with applicable legal requirements.

         Because Pittsburgh Financial will cease to exist after the merger,
neither party will have any remedy for breach of a representation or warranty if
the merger is consummated. As a practical matter, the only functions of the
representations and warranties in the merger agreement are to provide
information about the parties and to allow either party to terminate the merger
agreement if, prior to the

                                       52


merger, there is a material breach of a representation or warranty of the
other party that is not cured after notice.

TERMINATION OF THE MERGER AGREEMENT; TERMINATION FEE

         Termination of the merger agreement. The merger agreement may be
terminated at any time prior to the completion of the merger, either before or
after approval of the merger agreement by Pittsburgh Financial shareholders, as
follows:

         o by either party upon mutual written consent

         o by either party upon denial of any required regulatory approval or
approval is conditioned upon a substantial deviation from the contemplated
transaction;

         o by either party if the merger is not consummated by March 31, 2004
(subject to extension in certain circumstances);

         o by either party if the Pittsburgh Financial shareholders do not
approve the merger agreement and the merger;

         o by First Commonwealth if the board of directors of Pittsburgh
Financial approves or recommends or enters into any agreement with respect to
any other acquisition proposal, or withdraws, modifies or qualifies its
recommendation of the merger agreement or the merger in a manner adverse to the
interests of First Commonwealth;

         o by First Commonwealth if Pittsburgh Financial breaches any
representation, warranty or covenant under the merger agreement and the breach
would result in the nonfulfillment of any of the conditions to First
Commonwealth's obligation to complete the merger;

         o by Pittsburgh Financial if First Commonwealth breaches any
representation, warranty or covenant under the merger agreement and the breach
would result in the nonfulfillment of any of the conditions to Pittsburgh
Financial's obligation to complete the merger; or

         o by Pittsburgh Financial if it has received a superior acquisition
proposal in compliance with the merger agreement and the board of directors of
Pittsburgh Financial determines in good faith that it must terminate the merger
agreement to fulfill its fiduciary duties to the Pittsburgh Financial
shareholders.

         Termination Fee. The merger agreement requires Pittsburgh Financial to
pay a termination fee to First Commonwealth under certain circumstances. The
termination fee is equal to the product of 4% of the number of outstanding
shares of Pittsburgh Financial common stock on the date of the termination times
$20. Assuming there is no change in the number of shares of Pittsburgh Financial
common stock outstanding, the termination fee would be approximately $1.14
million. The termination fee is payable as follows:

         o upon termination of the merger agreement by First Commonwealth
because the board of directors of Pittsburgh Financial has recommended an
alternative acquisition proposal or modified or withdrawn its recommendation for
the merger with First Commonwealth;

         o upon termination of the merger agreement by Pittsburgh Financial
because the board of directors of Pittsburgh Financial has determined that it
must terminate the merger agreement to comply with its fiduciary duties after
receiving a superior acquisition proposal; or


                                       53


         o if either party terminates the merger agreement because the
shareholders of Pittsburgh Financial did not approve the merger agreement and
the merger, an alternative acquisition proposal was pending at the time of the
shareholders' meeting, and a third party acquires Pittsburgh Financial within 12
months after the date of the shareholders' meeting.

         The termination fee is intended to increase the likelihood that the
merger will be consummated according to the terms set forth in the merger
agreement and may be expected to discourage competing offers to acquire
Pittsburgh Financial from other parties, because the termination fee could
increase the cost of acquiring Pittsburgh Financial. To Pittsburgh Financial's
knowledge, no event that would permit First Commonwealth to demand payment of
the termination fee has occurred as of the date of this proxy
statement/prospectus.

REGULATORY APPROVALS FOR THE MERGERS

         The merger of Pittsburgh Financial with First Commonwealth is subject
to the prior approval of the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956, as amended, and the Pennsylvania
Department of Banking under the Pennsylvania Banking Code of 1965, as amended.
The merger of BankPittsburgh with First Commonwealth Bank is subject to prior
approval of the Federal Deposit Insurance Corporation under the Bank Merger Act
and the Pennsylvania Department of Banking under the Pennsylvania Banking Code.

         The Federal Reserve Board generally may not approve any proposed
transaction that would result in a monopoly or that would further a combination
or conspiracy to monopolize banking in the United States, or that could
substantially lessen competition or that would tend to create a monopoly in any
section of the country or that would be in restraint of trade, unless the
Federal Reserve Board finds that the public interest in meeting the convenience
and needs of the community served clearly outweighs the anti-competitive effects
of the proposed transaction. The Federal Reserve Board is also required to
consider the financial and managerial resources and future prospects of the bank
holding companies and banks concerned, as well as the convenience and needs of
the community to be served. Consideration of financial resources generally
focuses on capital adequacy. Consideration of convenience and needs includes the
parties' performance under the Community Reinvestment Act of 1977. First
Commonwealth filed an application with the Federal Reserve Board on September
18, 2003.

         In determining whether to approve the application for the merger and
the bank merger, the Pennsylvania Department of Banking will consider, among
other factors, whether the mergers would be consistent with the public interest,
the needs and convenience of the geographic market, and adequate and sound
banking. The Department will also consider whether the merger would result in
concentration of assets beyond limits consistent with effective competition.
First Commonwealth filed an application with the Pennsylvania Department of
Banking on September 18, 2003.

         In reviewing applications under the Bank Merger Act, the FDIC must
consider, among other factors, the financial and managerial resources and future
prospects of the existing and resulting institutions, the convenience and needs
of the communities to be served, and the record of performance under the
Community Reinvestment Act of both First Commonwealth Bank and BankPittsburgh in
meeting the credit needs of the entire community, including low- and
moderate-income neighborhoods, served by each institution. In addition, the FDIC
may not approve a transaction if it will result in a monopoly or otherwise be
anti-competitive. First Commonwealth filed an application with the FDIC on
September 18, 2003.


                                       54


         The merger cannot proceed unless and until the parties have obtained
the requisite regulatory approvals. See "-Conditions to Completing the Merger"
and "-Termination of the merger agreement." There can be no assurance that the
requisite regulatory approvals will be obtained, and if obtained, there can be
no assurance as to the date of any approval.

RESALE OF FIRST COMMONWEALTH COMMON STOCK

         The shares of First Commonwealth common stock to be issued to
shareholders of Pittsburgh Financial in the merger have been registered under
the Securities Act of 1933. Shares of First Commonwealth common stock issued in
the merger may be traded freely and without restriction by those shareholders
not deemed to be "affiliates" of Pittsburgh Financial, as that term is defined
in the rules under the Securities Act. First Commonwealth common stock received
by those shareholders of Pittsburgh Financial who are deemed to be "affiliates"
of Pittsburgh Financial at the time the merger is submitted for vote of the
shareholders of Pittsburgh Financial may be resold without registration under
the Securities Act in compliance with Rule 145 under the Securities Act, which
permits limited sales under certain circumstances, or pursuant to another
exemption from registration. An affiliate of Pittsburgh Financial is an
individual or entity that controls, is controlled by or is under common control
with Pittsburgh Financial, and may include the executive officers and directors
of Pittsburgh Financial. The same restrictions apply to certain relatives or the
spouse of those persons and any trusts, estates, corporations or other entities
in which those persons have a 10% or greater beneficial interest.

         Pittsburgh Financial has agreed in the merger agreement to cause each
person who is an affiliate of Pittsburgh Financial for purposes of Rule 145
under the Securities Act to deliver to First Commonwealth a written agreement
intended to ensure compliance with the Securities Act.

EXPENSES

         Each of First Commonwealth and Pittsburgh Financial will pay its own
costs and expenses incurred in connection with the merger.

AMENDMENT AND WAIVER

         The merger agreement may be amended at any time prior to the completion
of the merger by a written instrument signed by all of the parties. In addition,
either First Commonwealth or Pittsburgh Financial may waive any default,
misrepresentation or breach of a warranty or covenant contained in the merger
agreement, so long as the waiver is set forth in a writing and signed by the
party against whom such waiver is asserted.

DISSENTERS' RIGHTS

         Under Pennsylvania law, Pittsburgh Financial shareholders will not have
the right to exercise appraisal rights in connection with this transaction. If
the merger is approved, Pittsburgh Financial shareholders who voted against the
merger agreement will be treated in the same manner as other Pittsburgh
Financial shareholders.

                      COMPARISON OF RIGHTS OF SHAREHOLDERS

         First Commonwealth and Pittsburgh Financial are both Pennsylvania
corporations, subject to the provisions of the Pennsylvania Business Corporation
Law of 1988. Upon completion of the merger, Pittsburgh Financial shareholders
who receive stock for their shares will become First Commonwealth shareholders.
Their shares will be governed by First Commonwealth's articles of incorporation
and bylaws. The following is a brief summary of the most significant differences
between the rights of shareholders under the articles of incorporation and


                                       55


bylaws of First Commonwealth and the rights of shareholders under the articles
of incorporation and bylaws of Pittsburgh Financial.

         Authorized and Issued Stock. Pittsburgh Financial is authorized to
issue up to 10,000,000 shares of common stock and 5,000,000 shares of preferred
stock. First Commonwealth is authorized to issue up to 100,000,000 shares of
common stock and 3,000,000 shares of preferred stock. As of June 30, 2003, there
were 1,424,881 shares of Pittsburgh Financial common stock outstanding and
289,045 shares of Pittsburgh Financial common stock reserved for issuance upon
exercise of outstanding options, and there were 59,071,871 shares of First
Commonwealth common stock outstanding and 3,381,610 shares of First Commonwealth
common stock reserved for issuance upon exercise of outstanding options. Neither
corporation has any shares of preferred stock outstanding.

         Anti-Takeover Provision. The articles of incorporation of First
Commonwealth authorize the board of directors to take defensive actions to
oppose a tender offer or other offer for First Commonwealth's securities if it
determines that the offer should be rejected. In determining whether to reject
an offer, the board is authorized to consider the offer price, the ability to
obtain a more favorable price in the future, the impact of an acquisition on
First Commonwealth's employees and customers and the communities in which they
serve, the reputation and business practices of the offeror and its management,
the value of the securities which are offered in exchange for First
Commonwealth's securities, and any antitrust or regulatory issues that are
raised by the offer. If First Commonwealth's board determines that the offer
should be rejected, it is authorized to take any lawful action against the
offer, including advising shareholders to reject the offer, commencing
litigation against the offeror, acquiring or selling First Commonwealth's
securities or granting options to purchase First Commonwealth securities,
acquiring another company and seeking a more favorable offer from another party.
This provision may discourage third parties from seeking to acquire First
Commonwealth without first negotiating with its board of directors. There is no
similar provision in the articles of incorporation of Pittsburgh Financial.

         Supermajority Shareholder Approval of a Merger. Except where
shareholder approval is not required under the Pennsylvania Business Corporation
Law, First Commonwealth's articles of incorporation require the approval of at
least 75% of the outstanding shares of First Commonwealth common stock to
approve any merger or other transaction that would result in the sale of
substantially all of the assets of First Commonwealth. Pittsburgh Financial's
articles of incorporation do not specify a percentage of shares that must
approve a merger or similar transaction. Under the Pennsylvania Business
Corporation Law, a merger is approved by the affirmative vote of a majority of
the votes cast at a meeting at which quorum is present. The supermajority
approval required under First Commonwealth's articles of incorporation may make
it more difficult for a third party to acquire First Commonwealth, regardless of
whether the board of directors recommends the transaction to the shareholders.



                                       56




                   UNAUDITED PRO FORMA FINANCIAL INFORMATION

         The following unaudited pro forma condensed combined consolidated
balance sheet as of June 30, 2003 and the unaudited pro forma condensed combined
consolidated statements of income for year ended December 31, 2002 and the six
months ended June 30, 2003 give effect to the pending merger, accounted for as a
purchase.

         The unaudited pro forma condensed combined consolidated financial
information is based on the historical consolidated financial statements of
First Commonwealth and Pittsburgh Financial under the assumptions and
adjustments set forth in the accompanying notes. The unaudited pro forma
condensed combined consolidated balance sheet gives effect to the merger as if
the merger had been consummated at June 30, 2003. The unaudited pro forma
condensed combined consolidated statements of income give effect to the merger
as if the merger had been consummated on January 1 of each period presented. The
unaudited pro forma condensed combined consolidated financial statements do not
give effect to the anticipated cost savings in connection with the merger.

         You should read the unaudited pro forma condensed combined consolidated
financial statements in conjunction with the consolidated historical financial
statements of First Commonwealth and Pittsburgh Financial, including the
respective notes to those statements. The pro forma information is not
necessarily indicative of the combined financial position or the results of
operations in the future or of the combined financial position or the results of
operations which would have been realized had the merger been consummated during
the periods or as of the dates for which the pro forma information is presented.
We anticipate that the merger will provide the combined company with financial
benefits that include reduced operating expenses and opportunity to earn more
revenue. In addition, First Commonwealth will incur costs in acquiring
Pittsburgh Financial. The pro forma information, while helpful in illustrating
the financial characteristics of the new company under one set of assumptions,
does not reflect these benefits and costs and, accordingly, does not attempt to
predict or suggest future results.

         Pro forma per share amounts for the combined company are based on a
1.5:1 exchange ratio.


                                       57




         FIRST COMMONWEALTH AND PITTSBURGH FINANCIAL UNAUDITED PRO FORMA
               CONDENSED COMBINED BALANCE SHEET AT JUNE 30, 2003

              (Dollar Amounts in Thousands, except per share data)



                                           As Reported
                                  ------------------------------
                                      First           Pittsburgh                         Pro Forma
                                  Commonwealth         Financial      Adjustments        Combined
                                  ------------        ----------      -----------        ---------
                                                                           
Cash and due from banks           $    92,455        $    15,655      $  (14,872)(A)    $    93,238
Investment securities               1,963,624            110,782           2,437 (C)      2,076,843

Gross loans                         2,621,569            237,184           9,697 (D)      2,868,450
Allowance for credit losses            35,604              3,124               0             38,728
                                  -----------        -----------      ----------        -----------

   Net loans                        2,585,965            234,060           9,697          2,829,722

Premises and equipment                 44,917              5,365          (1,142)(E)         49,140

Goodwill                                8,131                152            (152)(J)         26,515
                                                                          18,384(L)

Core deposit intangibles                   16                  0           3,220(F)           3,236
Other real estate owned                 1,714                670               0              2,384
Other assets                          133,942              9,766           4,745(K)         148,453
                                  -----------        -----------      ----------        -----------

     Total assets                 $ 4,830,764        $   376,450      $   22,317        $ 5,229,531
                                  ===========        ===========      ==========        ===========

Noninterest bearing demand
  deposits                        $   396,794        $    14,934      $         0       $   411,728
Other transaction and savings
  accounts                          1,256,014             47,917                0         1,303,931
Time deposits                       1,567,001            118,871            3,166 (G)     1,689,038
                                  -----------        -----------      ----------        -----------

   Total deposits                   3,219,809            181,722            3,166         3,404,697

Short-term borrowings                 594,210             20,000            4,378 (I)       618,588
Long-term debt                        543,408            140,547           20,516 (H)       704,471
Company obligated
  mandatorily redeemable
  capital securities of
  subsidiary trust                     35,000              7,595                0            42,595
                                  -----------        -----------      ----------        -----------

   Total borrowings                 1,172,618            168,142           24,894         1,365,654

Other liabilities                      26,875              3,715                0            30,590
                                  -----------        -----------      ----------        -----------

   Total liabilities                4,419,302            353,579           28,060         4,800,941

Minority interest                           0                 29                0                29

Shareholders' equity                  411,462             22,842         (22,842) (B)       428,561
                                                                           17,099 (A)
                                  -----------        -----------      ----------        -----------

     Total liabilities and
shareholders' equity              $ 4,830,764        $   376,450      $   22,317        $ 5,229,531
                                  ===========        ===========      ==========        ===========

Total shares outstanding           59,071,871          1,424,881        (142,167)        60,354,585

Book value per common share       $      6.97        $     16.03                         $     7.10
Tangible book value per common
  share                           $      6.83        $     15.92                         $     6.61



                                       58


--------------------------------


NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET:

         (dollar amounts in thousands, except per share data)

(A)      To record the estimated consideration to be issued to Pittsburgh
         Financial shareholders, plus transaction costs, assuming that 854,929
         shares of Pittsburgh Financial common stock (60%) will elect stock at a
         conversion rate of approximately 1.5 shares of First Commonwealth
         Common Stock for each Pittsburgh Financial share and that the remaining
         40% or 569,952 shares elect cash at $20 per Pittsburgh Financial share.
         The assumed cash purchase price includes payment of cash for all
         outstanding Pittsburgh Financial stock options. At the effective time
         of the merger, the holders of Pittsburgh Financial stock options will
         make an election between a cash payment equal to the difference between
         $20 and the exercise price per underlying share or an equivalent value
         of First Commonwealth stock options.

                 Assumed cash purchase price:                $    11,399
                 Assumed transaction costs                         1,950
                 Assumed value of Pittsburgh Financial
                   stock options                                   1,523
                                                             -----------

            Total estimated cash required                         14,872
            Stock issue for 60%                                   17,099
                                                             -----------

            Total purchase price                             $    31,971
                                                             ===========


         Assumed market value of First Commonwealth
           shares                                            $     13.33
         Number of First Commonwealth shares issued            1,282,714

(B)      To eliminate shareholders' equity of Pittsburgh Financial pursuant to
         the exchange described in (A) above.

(C)      To adjust Pittsburgh Financial's investment portfolio to estimated fair
         market value. The estimated remaining life is three years.

(D)      To adjust Pittsburgh Financial's loan portfolio to estimated fair
         value. The estimated remaining life is 3.5 years.

(E)      To adjust Pittsburgh Financial's land and buildings to their estimated
         fair value. The estimated remaining life on the buildings is 34 years.


(F)      To record the estimated value of Pittsburgh Financial's
         customer/deposit base. The estimated remaining life is 10 years.

(G)      To adjust Pittsburgh Financial's time deposits to estimated fair market
         value. The estimated remaining life is 17 months.

(H)      To adjust Pittsburgh Financial's FHLB advances and other borrowings in
         excess of one year to fair value. The estimated remaining life is 5
         years.

(I)      To adjust Pittsburgh Financial's short-term borrowings to fair value.
         The estimated remaining life is 53 months.

(J)      To eliminate pre-merger goodwill existing on Pittsburgh Financial's
         balance sheet.

(K)      To record the deferred tax benefit of net purchase accounting
         adjustments, excluding goodwill and land.

(L)      To record excess purchase price over the fair market value of net
         assets acquired.



                                       59


              FIRST COMMONWEALTH AND PITTSBURGH FINANCIAL UNAUDITED
                PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
                      FOR THE YEAR ENDED DECEMBER 31, 2002

              (Dollar Amounts in Thousands, except per share data)



                                           As Reported
                                 --------------------------------
                                      First           Pittsburgh                        Pro Forma
                                 Commonwealth(1)     Financial(2)    Adjustments         Combined
                                 ---------------     ------------    -----------        -----------
                                                                           
Interest income                   $   275,568        $    25,938      $   (2,919)(a)    $   297,658
                                                                            (929)(b)
Interest expense                      122,673             18,342          (2,359)(d)        133,598
                                                                          (5,207)(e)
                                                                             149 (f)
                                  -----------        -----------      ----------        -----------
  Net interest income                 152,895              7,596           3,569            164,060

Provision for credit losses            12,223                330                             12,553
                                  -----------        -----------      ----------        -----------

  Net interest income after
provision                             140,672              7,266           3,569            151,507

Net securities gains                      642                  1                                643
Gain on sale of loans/branch                0                454                                454
Other noninterest income               36,564              1,937                             38,501
                                  -----------        -----------      ----------        -----------

   Total other income                  37,206              2,392               0             39,598
Salaries & benefits                    58,149              4,013                             62,162
Occupancy & equipment expense          16,720              1,691             (21)(c)         18,390
Litigation settlement                   8,000                  0                              8,000
Restructuring charges                   6,140                  0                              6,140

Other noninterest expense              36,432              2,507             351 (h)         39,290
                                  -----------        -----------      ----------        -----------

   Total other expenses               125,441              8,211             330            133,982
                                  -----------        -----------      ----------        -----------

Income before taxes                    52,437              1,447           3,239             57,123

Income tax expense                      8,911                475           1,134 (g)         10,520
                                  -----------        -----------      ----------        -----------

     Net income                   $    43,526        $       972      $    2,105        $    46,603
                                  ===========        ===========      ==========        ===========

Average common shares
outstanding:
  Basic                            58,409,614          1,314,302        (131,430)        59,592,486
  Diluted                          58,742,018          1,349,982        (134,998)        59,957,002

Earnings per share:
  Basic                           $      0.75        $      0.74                        $      0.78
  Diluted                                0.74               0.72                               0.78


Average assets                    $ 4,540,741        $   409,950      $   22,317        $ 4,973,008
Average equity                        392,439             22,344          (5,743)           409,040

Return on average equity                11.09%              4.35%                             11.39%
Return on average assets                 0.96%              0.24%                              0.94%




(1)      As reported in the December 31, 2002 Form 10-K.

(2)      For the 12 month period ending December 31, 2002.  Calculated using
         the Form 10-K and Form 10-Qs.



                                       60


              FIRST COMMONWEALTH AND PITTSBURGH FINANCIAL UNAUDITED
                PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
                     FOR THE SIX MONTHS ENDED JUNE 30, 2003

              (Dollar Amounts in Thousands, except per share data)



                                           As Reported
                                 --------------------------------
                                      First           Pittsburgh                        Pro Forma
                                 Commonwealth(1)     Financial(2)    Adjustments         Combined
                                 ---------------     ------------    -----------        -----------
                                                                           
Interest income                   $   123,503        $    10,816      $   (1,460)(a)    $   132,394
                                                                            (465)(b)
Interest expense                       51,216              7,620          (1,180)(d)         55,126
                                                                          (2,604)(e)
                                                                              74 (f)
                                  -----------        -----------      ----------        -----------

  Net interest income                  72,287              3,196           1,785             77,268

Provision for credit losses             6,925                120                              7,045
                                  -----------        -----------      ----------        -----------

  Net interest income after
provision                              65,362              3,076           1,785             70,223

Net securities gains                    5,455                542                              5,997
Gain on sale of loans/branch                0                  0                                  0
Other noninterest income               18,814              1,110                             19,924
                                  -----------        -----------      ----------        -----------

   Total other income                  24,269              1,652               0             25,921
Salaries & benefits                    30,481              2,315                             32,796
Occupancy & equipment expense           8,841                869             (11)(c)          9,699
Litigation settlement                   (610)                  0                               (610)
Other noninterest expense              17,442              1,385             176 (h)         19,003
                                  -----------        -----------      ----------        -----------

   Total other expenses                56,154              4,569             165             60,888
                                  -----------        -----------      ----------        -----------

Income before taxes                    33,477                159           1,620             35,256
Income tax expense                      6,746                 62             567 (g)          7,375
                                  -----------        -----------      ----------        -----------

     Net income                   $    26,731        $        97      $    1,053        $    27,881
                                  ===========        ===========      ==========        ===========


Average common shares
outstanding:
  Basic                            58,736,392          1,343,749        (134,375)        59,945,766
  Diluted                          59,018,324          1,389,426        (138,943)        60,268,807

Earnings per share:
  Basic                           $      0.46        $      0.07                        $      0.47
  Diluted                                0.45               0.07                               0.46

Average assets                    $ 4,608,493        $   385,306      $   22,317        $ 5,016,116
Average equity                        412,344             22,907          (5,743)           429,508

Return on average equity                13.07%              0.85%                             13.09%
Return on average assets                 1.17%              0.05%                              1.12%


 (1)  As reported in the June 30, 2003 Form 10-Q.

 (2)  For the 6 month period ending June 30, 2003.  Calculated using
      the Form 10-Qs.

--------------------------------

NOTES TO PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME (UNAUDITED):

(a)      To reflect the amortization of the premium ascribed to Pittsburgh
         Financial's loans over an average life of 3.5 years.

(b)      To reflect the amortization of the premium ascribed to Pittsburgh
         Financial's investment portfolio over an average life of 3 years.

(c)      To reflect adjustment to depreciation expense over an average life of
         34 years related to the valuation of Pittsburgh Financial's buildings.

(d)      To reflect the amortization of the value ascribed to Pittsburgh
         Financial's time deposits over an average life of 17 months.

(e)      To reflect the amortization of the value ascribed to Pittsburgh
         Financial's total borrowings over an average life of 5 years.

(f)      To reflect assumed interest of cash to fund purchase (@ 1%).

(g)      To reflect tax impact of purchase accounting adjustments at 35% tax
         rate.

(h)      To reflect amortization of the value ascribed to core deposit
         intangible over average life of 10 years.





                                       61




                       ADJOURNMENT OF THE SPECIAL MEETING

         In the event that there are not sufficient votes to constitute a quorum
or approve the adoption of the merger agreement at the time of the special
meeting, the merger agreement could not be approved unless the meeting was
adjourned to a later date or dates in order to permit further solicitation of
proxies. In order to allow proxies that have been received by Pittsburgh
Financial at the time of the special meeting to be voted for an adjournment, if
necessary, Pittsburgh Financial has submitted the question of adjournment to its
shareholders as a separate matter for their consideration. The board of
directors of Pittsburgh Financial unanimously recommends that shareholders vote
"FOR" the adjournment proposal. If it is necessary to adjourn the special
meeting, no notice of the adjourned meeting is required to be given to
shareholders, other than an announcement at the special meeting of the hour,
date and place to which the special meeting is adjourned.

                                     EXPERTS

         The consolidated financial statements incorporated in this prospectus
by reference from First Commonwealth Financial Corporation's Annual Report on
Form 10-K for the year ended December 31, 2002 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

         The consolidated financial statements of Pittsburgh Financial Corp. and
subsidiaries appearing in Pittsburgh Financial Corp.'s Annual Report (Form 10-K)
for the year ended September 30, 2002, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.

                                  LEGAL MATTERS

         The validity of the shares of First Commonwealth common stock to be
issued pursuant to the terms of the merger agreement will be passed upon for
First Commonwealth by Tomb & Tomb, Indiana, Pennsylvania. The material federal
income tax consequences of the merger to Pittsburgh Financial shareholders will
be passed upon by Sherman & Howard L.L.C., Denver Colorado. David R. Tomb, Jr.,
partner of Tomb & Tomb, beneficially owns, or has rights to acquire under First
Commonwealth's employee benefit plans, an aggregate of approximately 1.23% of
First Commonwealth's common stock.



                                       62


                                     ANNEX I








                          AGREEMENT AND PLAN OF MERGER


                                      AMONG

                    FIRST COMMONWEALTH FINANCIAL CORPORATION


                             FIRST COMMONWEALTH BANK


                           PITTSBURGH FINANCIAL CORP.


                                       AND


                             PITTSBURGH SAVINGS BANK



                           DATED AS OF AUGUST 8, 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 Pittsburgh Financial Common Stock...............................2
        1.5      PFC Treasury Stock; Shares owned by First Commonwealth........................3
        1.6      First Commonwealth Common Stock...............................................3
        1.7      Fractional Shares.............................................................3
        1.8      Anti-Dilution.................................................................3
        1.9      Pittsburgh Financial Options..................................................3
        1.10     Election and Exchange Procedures..............................................5
        1.11     Withholding Rights............................................................8
        1.12     Closing.......................................................................8

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF FIRST COMMONWEALTH AND FCB.........................8
        2.1      Organization and Corporate Authority of First Commonwealth....................8
        2.2      Organization and Qualification of FCB.........................................9
        2.3      Authority.....................................................................9
        2.4      No Legal Bar..................................................................9
        2.5      Approvals, Consents and Filings...............................................9
        2.6      Financial Statements.........................................................10
        2.7      No Material Adverse Change...................................................10
        2.8      Capitalization of First Commonwealth.........................................10
        2.9      Capitalization of FCB........................................................10
        2.10     Disclosure...................................................................10

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PITTSBURGH FINANCIAL AND BANKPITTSBURGH...........11
        3.1      Organization and Qualification of Pittsburgh Financial and Subsidiaries......11
        3.2      Organization and Qualification of BankPittsburgh.............................11
        3.3      Authority....................................................................11
        3.4      No Legal Bar.................................................................12
        3.5      Approvals, Consents and Filings..............................................12
        3.6      Financial Statements.........................................................12
        3.7      Undisclosed Liabilities......................................................12
        3.8      Regulatory Reports...........................................................13
        3.9      Books and Records............................................................13
        3.10     Tax Matters..................................................................13
        3.11     Litigation and Proceedings...................................................14
        3.12     Business Operations..........................................................14
        3.13     Absence of Changes; Operation in the Ordinary Course.........................16
        3.14     Employees and Benefits.......................................................17
        3.15     Certain Agreements...........................................................18
        3.16     Capitalization of Pittsburgh Financial.......................................18
        3.17     Capitalization of BankPittsburgh.............................................19
        3.18     Pittsburgh Financial Subsidiaries............................................19
        3.19     Allowance for Loan Losses....................................................19
        3.20     Absence of Brokers...........................................................20
        3.21     Representations and Warranties...............................................20




                                      I-i



                                                                                         
ARTICLE 4 COVENANTS OF FIRST COMMONWEALTH.....................................................20
        4.1      Regulatory Approvals.........................................................20
        4.2      Preparation of Registration Statement........................................20
        4.3      Registration Statement Effectiveness.........................................20
        4.4      Employees and Employee Benefits..............................................21
        4.5      Reasonable Efforts to Close..................................................23
        4.6      Access.......................................................................24
        4.7      NYSE.........................................................................24
        4.8      Updating of Representations..................................................24
        4.9      Indemnification..............................................................24
        4.10     Insurance....................................................................25

ARTICLE 5 COVENANTS OF PITTSBURGH FINANCIAL...................................................25
        5.1      Shareholders' Meeting........................................................25
        5.2      Conduct of Business -- Affirmative Covenants.................................25
        5.3      Conduct of Business -- Negative Covenants....................................27
        5.4      Acquisition Proposals........................................................29
        5.5      Accruals and Reserves........................................................30
        5.6      Affiliate Agreements.........................................................31

ARTICLE 6 CONDITIONS TO CLOSING...............................................................31
        6.1      Conditions to the Obligations of Pittsburgh Financial........................31
        6.2      Conditions to the Obligations of First Commonwealth..........................32
        6.3      Conditions to Obligations of All Parties.....................................33

ARTICLE 7 TERMINATION.........................................................................33
        7.1      Termination..................................................................33
        7.2      Effect of Termination........................................................34
        7.3      Termination Fee..............................................................35

ARTICLE 8 MISCELLANEOUS.......................................................................35
        8.1      Survival.....................................................................35
        8.2      Notices......................................................................35
        8.3      Jurisdiction; Venue..........................................................36
        8.4      Amendments and Supplements...................................................36
        8.5      Governing Law................................................................36
        8.6      Entire Agreement, Assignability, Etc.........................................36
        8.7      Exclusivity of Representations...............................................37
        8.8      Counterparts.................................................................37
        8.9      Publicity....................................................................37
        8.10     Headings; Terms..............................................................37
        8.11     Severability.................................................................37
        8.12     Waivers......................................................................37
        8.13     Payment of Expenses..........................................................37
        8.14     Construction.................................................................37
        8.15     Remedies Cumulative..........................................................38
        8.16     Incorporation of Disclosure Schedule.........................................38


EXHIBITS:
Exhibit A         Holding Company Plan of Merger
Exhibit B         Bank Plan of Merger
Exhibit C         Definitions
Exhibit D         Pittsburgh Financial Disclosure Schedule




                                      I-ii


                          AGREEMENT AND PLAN OF MERGER

         This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into this 8th day of August 2003, by and among FIRST COMMONWEALTH
FINANCIAL CORPORATION, a Pennsylvania corporation ("First Commonwealth"), FIRST
COMMONWEALTH BANK, a Pennsylvania-chartered banking corporation and wholly-owned
subsidiary of First Commonwealth ("FCB"), PITTSBURGH FINANCIAL CORP., a
Pennsylvania corporation ("Pittsburgh Financial"), and PITTSBURGH SAVINGS BANK,
d/b/a "BankPittsburgh," a Pennsylvania-chartered stock savings bank and
wholly-owned subsidiary of Pittsburgh Financial ("BankPittsburgh").

                                    RECITALS

         A. The respective Boards of Directors of First Commonwealth and
Pittsburgh Financial have determined that the merger of Pittsburgh Financial
with and into First Commonwealth (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement and the plan of merger attached
hereto as EXHIBIT A (the "Holding Company Plan of Merger"), would be advisable
and in the best interests of their respective shareholders, and have approved
the Holding Company Plan of Merger and the Merger, pursuant to which each
outstanding share of the common stock, $0.01 par value, of Pittsburgh Financial
("Pittsburgh Financial Common Stock"), will be converted, at the election of
each Pittsburgh Financial shareholder, into cash or shares of the common stock,
$1.00 par value, of First Commonwealth ("First Commonwealth Common Stock") as
provided herein. First Commonwealth will be the surviving corporation (the
"Surviving Corporation").

         B. After the Effective Time, BankPittsburgh will be merged with and
into FCB (the "Bank Merger") pursuant to the Plan of Merger (the "Bank Plan of
Merger") attached hereto as EXHIBIT B. FCB will be the surviving financial
institution following the Bank Merger.

         C. Under Pennsylvania law, the Holding Company Plan of Merger must be
approved by the shareholders of Pittsburgh Financial. The Board of Directors of
Pittsburgh Financial has resolved to recommend that the shareholders of
Pittsburgh Financial 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 First Commonwealth's willingness to enter into this
Agreement, each director and executive officer of Pittsburgh Financial has
entered into an agreement with First Commonwealth pursuant to which, among other
things, they have agreed to vote in favor of approval of the transactions
contemplated by this Agreement at the Pittsburgh Financial Shareholders'
Meeting.

         E. In furtherance thereof, the Boards of Directors of First
Commonwealth and Pittsburgh Financial have approved this Agreement and the
Merger in accordance with Pennsylvania law and upon the terms and subject to the
conditions set forth herein.

         F. The Merger is intended to qualify as a tax-free reorganization
within the meaning of the provisions of Section 368 of the Code.

                                    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 as follows (capitalized
terms in this Agreement shall have the meanings set forth on EXHIBIT C):



                                      I-1


                                   ARTICLE 1

                                BASIC TRANSACTION

         1.1 MERGER. At the Effective Time, Pittsburgh Financial shall be merged
with and into First Commonwealth pursuant to the terms and conditions set forth
herein and in the Holding Company Plan of Merger and pursuant to the
Pennsylvania Business Corporation Law ("PBCL"). Upon consummation of the Merger,
the separate existence of Pittsburgh Financial shall cease and First
Commonwealth shall continue as the Surviving Corporation. The Articles of
Incorporation and Bylaws of First Commonwealth, 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.

         1.2 BANK MERGER. At the time selected by First Commonwealth after the
Effective Time, BankPittsburgh shall be merged into FCB pursuant to the terms
and conditions set forth herein and in the Bank Plan of Merger and pursuant to
the Pennsylvania Banking Code of 1965, as amended ("PBC"). Upon consummation of
the Bank Merger, the separate existence of BankPittsburgh 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 PBC. By signing this Agreement, First
Commonwealth and Pittsburgh Financial consent to and approve the Bank Merger in
their capacities as the sole shareholders of FCB and BankPittsburgh, subject to
the consummation of the Merger.

         1.3 EFFECTIVE TIME. As soon as practicable after each of the conditions
set forth in Article 6 hereof have been satisfied or waived, First Commonwealth
and Pittsburgh Financial will file, or cause to be filed, 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. The Merger shall become effective upon filing the Articles of Merger with
the Pennsylvania Secretary of State (the "Effective Time").

         1.4 CONVERSION OF PITTSBURGH FINANCIAL COMMON STOCK. At the Effective
Time:

                  (a) Subject to the allocation procedures set forth in Section
1.10(d), and except as provided in Section 1.5, each share of Pittsburgh
Financial 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 First Commonwealth,
at the election of the holder thereof, either:

                           (i) cash in an amount equal to $20.00 per share (the
"Per Share Cash Consideration"); or

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

                  (b) The holders of certificates representing shares of
Pittsburgh Financial Common Stock shall cease to have any rights as stockholders
of Pittsburgh Financial, except such rights, if any, as they may have pursuant
to the PBCL. Except as provided above, until certificates representing shares of
Pittsburgh Financial 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



                                      I-2



consideration into which the shares of Pittsburgh Financial Common Stock
represented thereby shall have been converted by the Merger as provided above.

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

         1.5 PFC TREASURY STOCK; SHARES OWNED BY FIRST COMMONWEALTH.
Notwithstanding any other provision of this Agreement, any shares of Pittsburgh
Financial Common Stock issued and outstanding immediately prior to the Effective
Time which are then owned beneficially or of record (a) by Pittsburgh Financial
or by any Pittsburgh Financial Subsidiary or (b) by First Commonwealth or any
First Commonwealth Subsidiary, in each case other than in a fiduciary capacity
or as a result of debts previously contracted, shall, by virtue of the Merger,
be canceled without payment of any consideration therefor and without any
conversion thereof.

         1.6 FIRST COMMONWEALTH COMMON STOCK. The shares of First Commonwealth
Common Stock issued and outstanding immediately prior to the Effective Time
shall, on and after the Effective Time, remain issued and outstanding as shares
of First Commonwealth Common Stock.

         1.7 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of First Commonwealth 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, First Commonwealth shall pay to each
Pittsburgh Financial Shareholder who would otherwise be entitled to a fractional
share an amount in cash determined by multiplying such fraction by the Average
Closing Price.

         1.8 ANTI-DILUTION. In the event First Commonwealth changes the number
of shares of First Commonwealth Common Stock issued and outstanding between the
date hereof and the Effective Time as a result of a stock split, stock dividend
or recapitalization with respect to the outstanding First Commonwealth Common
Stock and the record date therefor shall be prior to the Effective Date of the
Merger, the Exchange Ratio shall be proportionately adjusted.

         1.9 PITTSBURGH FINANCIAL OPTIONS.

                  (a) At the Effective Time, each option granted by Pittsburgh
Financial to purchase shares of Pittsburgh Financial Common Stock (each, a
"Pittsburgh Financial Option") pursuant to the Pittsburgh Financial Stock Option
Plans which is outstanding and unexercised immediately prior thereto, whether or
not then vested or exercisable, will, at the election of the individual holders
of the Pittsburgh Financial Options, be either:

                           (i) cancelled and all rights thereunder be
extinguished ("Cancelled Option Holder"), in consideration for which Pittsburgh
Financial shall make payment immediately prior to the Effective Time in an
amount determined by multiplying (A) the number of shares of Pittsburgh
Financial Common Stock underlying such Pittsburgh Financial Option by (B) an
amount equal to the excess (if any) of (1) the Per Share Cash Consideration,
over (2) the exercise price per share of such Pittsburgh Financial Option; or

                           (ii) converted automatically into a fully vested
option to purchase shares of First Commonwealth Common Stock ("Continuing Option
Holder") in an amount, for a term and at an exercise price determined as
provided below (and otherwise subject to the terms of the particular Pittsburgh
Financial Option Plan pursuant to which each such Pittsburgh Financial Option
was issued, the agreements evidencing grants thereunder and any other agreements
between Pittsburgh



                                      I-3


Financial and an optionee regarding Pittsburgh Financial Options which have
been delivered to First Commonwealth prior to or as of the date of this
Agreement):

                                    (A) the number of shares to be subject to
the new option shall be equal to the product of the number of shares of
Pittsburgh Financial Common Stock subject to the Pittsburgh Financial Option
immediately prior to the Effective Time and the Exchange Ratio, provided that
any fractional shares of First Commonwealth Common Stock resulting from such
multiplication shall be rounded down to the nearest whole share;

                                    (B) the exercise price per share of First
Commonwealth Common Stock under the new option shall be equal to the exercise
price per share of the Pittsburgh Financial Common Stock under the Pittsburgh
Financial Option divided by the Exchange Ratio, provided that such exercise
price shall be rounded to the nearest cent; and

                                    (C) the term or duration of the new option
shall be the same as that of the Pittsburgh Financial Option.

The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be and is intended
to be effected in a manner which is consistent with Section 424(a) of the Code
and, to the extent it is not so consistent, Section 424(a) shall override
anything to the contrary contained herein. The duration and other terms of the
new option shall be the same as the original option except as provided for above
and all references to Pittsburgh Financial shall be deemed to be references to
First Commonwealth.

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

                  (c) Prior to the Effective Time, First Commonwealth shall
reserve for issuance the number of shares of First Commonwealth Common Stock
necessary to satisfy First Commonwealth's obligations under Section 1.9(a)
hereof. Promptly after the Effective Time (but no event later than twenty
business days thereafter), First Commonwealth shall file a registration
statement on Form S-8 with respect to the shares of First Commonwealth Common
Stock issued pursuant to Section 1.9(a) hereof, and shall maintain the current
status of the prospectus contained therein, as well as comply with applicable
state securities or "blue sky" laws, for so long as such options remain
outstanding.

                  (d) Prior to the Effective Time, Pittsburgh Financial shall
take or cause to be taken all actions required under the Pittsburgh Financial
Option Plans to provide for the foregoing.




                                      I-4



         1.10 ELECTION AND EXCHANGE PROCEDURES.

                  (a) First Commonwealth shall designate The Bank of New York
(or another bank selected by First Commonwealth and reasonably acceptable to
Pittsburgh Financial) as agent (the "Exchange Agent") for purposes of conducting
the election procedure and the exchange procedure as described in this Section
1.10. First Commonwealth shall use reasonable commercial efforts to cause the
Exchange Agent, no later than three (3) business days following the Effective
Time, to mail or otherwise make available to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented issued and outstanding shares of Pittsburgh Financial Common Stock
(i) a notice and letter of transmittal (which shall specify that delivery shall
be effected and risk of loss of the certificates formerly representing shares of
Pittsburgh Financial Common Stock shall pass only upon proper delivery of such
certificates to the Exchange Agent) advising such holder of the effectiveness of
the Merger and the procedure for surrendering to the Exchange Agent such
certificate or certificates in exchange for the consideration set forth in
Section 1.4 and (ii) an election form ("Election Form") which shall permit each
holder (or in the case of nominee record holders, the beneficial owner through
proper instructions and documentation) (A) to elect to receive First
Commonwealth Common Stock with respect to all of such holder's Pittsburgh
Financial Common Stock as provided in Section 1.4(a)(ii) ("Stock Election
Shares"), (B) to elect to receive cash with respect to all of such holder's
Pittsburgh Financial Common Stock as provided in Section 1.4(a)(i) ("Cash
Election Shares"), or (C) to indicate that such holder makes no such election
with respect to such holder's shares of Pittsburgh Financial Common Stock
("No-Election Shares"). Nominee record holders who hold Pittsburgh Financial
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. Any shares of Pittsburgh Financial Common Stock with respect
to which the holder thereof shall not, as of the Election Deadline (as defined
below), have made such an election by submission to the Exchange Agent of an
effective, properly completed Election Form shall be deemed to be No-Election
Shares.

                  (b) The term "Election Deadline" shall mean 5:00 p.m., Eastern
Time, twenty (20) business days following but not including the date of mailing
of the Election Form.

                  (c) Any election to receive First Commonwealth Common Stock or
cash shall have been properly made only if the Exchange Agent shall have
actually received a properly completed Election Form by the Election Deadline.
An Election Form will be properly completed only if all information called for
by the Election Form is provided and only if accompanied by a certificate or
certificates representing all shares of Pittsburgh Financial Common Stock
covered thereby, subject to the provisions of subsection (h) 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. 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 Pittsburgh Financial
Shareholders of rights to receive First Commonwealth Common Stock or cash in the
Merger as follows:

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

                                    (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 times the Per Share Cash Consideration to equal the Aggregate
Cash Consideration. If less than all of the No-Election Shares need



                                      I-5



to be treated as Cash Election Shares in order to accomplish that result, then
the Exchange Agent shall select which No-Election Shares shall be treated as
Cash Election Shares in such manner as the Exchange Agent shall determine, 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 times 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 times the
Per Share Cash Consideration is less than the Aggregate Cash Consideration,
First Commonwealth 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 times 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 times 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 times the Per Share Cash
Consideration to equal the Aggregate Cash Consideration.

                  (e) Following 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 First Commonwealth Common Stock and
all Cash Election Shares shall be converted into the right to receive the Per
Share Cash Consideration.

                  (f) At the Effective Time, First Commonwealth shall deliver to
the Exchange Agent the number of shares of First Commonwealth Common Stock
issuable and the amount of cash payable in the Merger (which shall be held by
the Exchange Agent in trust for the holders of Pittsburgh Financial Common
Stock). Pending payment, the cash so delivered shall be invested only in deposit
accounts of an FDIC-insured institution, direct obligations of the U.S.
Government or obligations issued or guaranteed by an agency thereof which carry
the full faith and credit of the United States, and all interest earned on such
cash shall be paid to First Commonwealth. The Exchange Agent shall use its
reasonable commercial efforts to distribute First Commonwealth Common Stock and
cash as provided herein, not later than ten (10) business days after the
Election Deadline to the former shareholders of Pittsburgh Financial who
submitted a properly completed letter of transmittal and Election Form prior to
the Election Deadline. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to the shares of First
Commonwealth Common Stock held by it from time to time hereunder, except that it
shall receive and hold all dividends or other distributions paid or distributed
with respect to such shares for the account of the persons entitled thereto.

                  (g) After the completion of the foregoing allocation, each
holder of an outstanding certificate or certificates which prior thereto
represented shares of Pittsburgh Financial


                                      I-6



Common Stock who surrenders such certificate or certificates to the Exchange
Agent will, upon acceptance thereof by the Exchange Agent, be entitled to a
certificate or certificates representing the number of full shares of First
Commonwealth Common Stock and/or the amount of cash into which the aggregate
number of shares of Pittsburgh Financial Common Stock previously represented by
such certificate or certificates surrendered shall have been converted pursuant
to this Agreement and, if such holder's shares of Pittsburgh Financial Common
Stock have been converted into First Commonwealth Common Stock, cash in lieu of
fractional shares, and any distribution previously paid with respect to First
Commonwealth Common Stock issuable in the Merger for which the record date was
on or after the Effective Date, in each case without interest. The Exchange
Agent shall accept such certificates 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 Pittsburgh Financial
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 First Commonwealth Common Stock or the
right to receive the amount of cash into which such Pittsburgh Financial Common
Stock shall have been converted. No dividends which have been declared will be
remitted to any person entitled to receive shares of First Commonwealth Common
Stock under this Section 1.10 until such person surrenders the certificate or
certificates representing Pittsburgh Financial Common Stock, at which time such
dividends shall be remitted to such person without interest.

                  (h) First Commonwealth shall not be obligated to deliver cash
and/or a certificate or certificates representing shares of First Commonwealth
Common Stock to which a Pittsburgh Financial Shareholder would otherwise be
entitled as a result of the Merger until such holder surrenders the certificate
or certificates representing the shares of Pittsburgh Financial Common Stock for
exchange as provided in this Section 1.10, or, in default thereof, an
appropriate affidavit of loss and indemnity agreement and/or a bond as may be
required by the Exchange Agent. If any certificates evidencing shares of First
Commonwealth Common Stock are to be issued in a name other than that in which
the certificate evidencing Pittsburgh Financial 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 First
Commonwealth 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.

                  (i) Any portion of the shares of First Commonwealth Common
Stock and cash delivered to the Exchange Agent by First Commonwealth pursuant to
Section 1.10(f) that remains unclaimed by the Pittsburgh Financial Shareholders
for six months after the Effective Time (as well as any proceeds from any
investment thereof) shall be delivered by the Exchange Agent to First
Commonwealth. Any Pittsburgh Financial Shareholders who have not complied with
Section 1.10(g) before the expiration of such six month period shall thereafter
look only to First Commonwealth for the consideration deliverable to such
shareholder in the Merger as determined pursuant to this Agreement, without any
interest thereon. If outstanding certificates for shares of Pittsburgh Financial
Common Stock are not surrendered or the payment for them is not claimed prior to
the date on which such shares of First Commonwealth Common Stock or cash would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed items shall, to the extent permitted by abandoned property and any
other applicable law, become the property of First Commonwealth (and to the
extent not in its possession shall be delivered to it), free and clear of all
claims or interest of any person previously entitled to such property. Neither
the Exchange Agent nor any party to this Agreement shall be liable to


                                      I-7


any holder of stock represented by any certificate for any consideration paid to
a public official pursuant to applicable abandoned property, escheat or similar
laws. First Commonwealth and the Exchange Agent shall be entitled to rely upon
the stock transfer books of Pittsburgh Financial to establish the identity of
those persons entitled to receive consideration specified in this Agreement,
which books shall be conclusive with respect thereto. In the event of a dispute
with respect to ownership of stock represented by any certificate, First
Commonwealth 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. First Commonwealth (through the Exchange
Agent, if applicable) shall be entitled to deduct and withhold from any amounts
otherwise payable pursuant to this Agreement to any Pittsburgh Financial
Shareholder such amounts as First Commonwealth is required under the Code or any
provision of state, local or foreign tax law to deduct and withhold with respect
to the making of such payment. Any amounts so withheld shall be treated for all
purposes of this Agreement as having been paid to the Pittsburgh Financial
Shareholder in respect of which such deduction and withholding was made by First
Commonwealth.

         1.12 CLOSING. 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 First Commonwealth and Pittsburgh Financial 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 promptly thereafter
shall take all steps necessary or desirable to consummate the Merger in
accordance with all applicable laws, rules and regulations and the Holding
Company Plan of Merger. The date on which the Closing actually occurs is herein
referred to as the "Closing Date." The Bank Merger will be consummated after the
Merger at a time selected by First Commonwealth and pursuant to the terms of the
Bank Plan of Merger.

                                   ARTICLE 2

          REPRESENTATIONS AND WARRANTIES OF FIRST COMMONWEALTH AND FCB

         To induce Pittsburgh Financial to enter into this Agreement, First
Commonwealth and FCB represent and warrant as follows, which representations and
warranties are being made as of the date of this Agreement and shall be deemed
to be made again as of the Closing:

         2.1 ORGANIZATION AND CORPORATE AUTHORITY OF FIRST COMMONWEALTH. First
Commonwealth is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. First Commonwealth
is registered with the Board of Governors of the Federal Reserve System (the
"FRB") as a bank holding company under the Bank Holding Company Act of 1956, as
amended ("BHCA"), and engages only in activities permitted by the BHCA and the
rules and regulations promulgated by the Federal Reserve Board thereunder. First
Commonwealth (i) has the requisite corporate power and authority to own, operate
and lease its material properties and carry on its businesses as they are
currently being conducted and (ii) is in good standing and is duly qualified to
do business in each jurisdiction where such qualification is necessary and where
the failure to so qualify would individually or in the aggregate have a Material
Adverse Effect on First Commonwealth. Each First Commonwealth Subsidiary is duly
organized, validly existing and in good standing under the laws of the state or
jurisdiction of its organization and (a) has the requisite corporate power and
authority to own, operate and lease its material properties and to carry on its
business as it is currently being conducted and (b) is in good standing and is
duly qualified to do business in each jurisdiction where such


                                      I-8


qualification is necessary and where the failure to so qualify would
individually or in the aggregate have a Material Adverse Effect on First
Commonwealth.

         2.2 ORGANIZATION AND QUALIFICATION OF FCB. 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 and the rules and regulations promulgated
thereunder by the Pennsylvania Department of Banking (the "PDB") and the Federal
Deposit Insurance Corporation (the "FDIC") for insured depository institutions.
FCB's deposit accounts are insured by the FDIC to the fullest extent permitted
under applicable law.

         2.3 AUTHORITY.

                  (a) Subject to obtaining the consents and approvals set forth
in Section 2.5, First Commonwealth and FCB each have full power and authority to
make, execute and perform this Agreement and to consummate the transactions
contemplated hereby, and no further action is necessary on the part of First
Commonwealth or FCB to authorize the consummation of the transactions
contemplated hereby. This Agreement constitutes a valid and binding obligation
of First Commonwealth and FCB and is enforceable against each of First
Commonwealth and FCB in accordance with its terms, except as limited by laws
affecting creditors' rights generally and subject to general principles of
equity.

                  (b) Subject to obtaining the consents and approvals set forth
in Section 2.5, the execution, delivery and performance of this Agreement and
the transactions contemplated hereby will not, with or without the giving of
notice or the passage of time, or both, (a) violate any provision of any law or
regulation applicable to First Commonwealth or FCB; (b) violate any provision of
the respective articles of incorporation, charter, or bylaws of First
Commonwealth or FCB; (c) conflict with or result in a breach of any provision
of, or termination of, or constitute a default under any instrument, license,
agreement or commitment to which either First Commonwealth or FCB is a party; or
(d) constitute a violation of any order, judgment or decree to which either
First Commonwealth or any First Commonwealth Subsidiary is a party, or by which
either First Commonwealth, any First Commonwealth Subsidiary, or any of their
respective assets or properties are bound, except, with respect to (a), (c) and
(d) above, such as individually or in the aggregate will not have a Material
Adverse Effect on First Commonwealth and the First Commonwealth Subsidiaries
taken as a whole and which will not prevent or delay the consummation of the
transactions contemplated hereby.

         2.4 NO LEGAL BAR. Neither First Commonwealth nor any First Commonwealth
Subsidiary is a party to, subject to or bound by any agreement, judgment, order,
letter of understanding, writ, prohibition, injunction or decree of any court or
other governmental authority or body of competent jurisdiction or any law which
would prevent the execution of this Agreement by First Commonwealth or FCB, its
delivery thereof to Pittsburgh Financial and BankPittsburgh or (upon receipt of
the consents and approvals set forth in Section 2.5) the consummation of the
transactions contemplated hereby, and no action or proceeding is pending or, to
the Knowledge of First Commonwealth, threatened against First Commonwealth or
any First Commonwealth 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 in connection herewith or in connection with any of the
transactions contemplated hereby is at issue.

         2.5 APPROVALS, CONSENTS AND FILINGS. Except for the approval of the
Merger by the FRB, the approval of the Bank Merger by the FDIC and the PDB, the
declaration of effectiveness of the Registration Statement and approval of the
Proxy Statement by the SEC, the approval of First Commonwealth's additional
listing application for the listing of the First Commonwealth Common Stock to be
issued in the Merger on the NYSE and the filing of the Articles of Merger with
the Pennsylvania


                                      I-9


Secretary of State, neither the execution and delivery of this Agreement by
First Commonwealth or FCB nor the consummation of the transactions contemplated
hereby, requires any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority or other third
party.

         2.6 FINANCIAL STATEMENTS. First Commonwealth has filed all forms,
reports and documents with the SEC required to be filed by it pursuant to the
Securities Act or the Exchange Act since January 1, 2000 (the "First
Commonwealth Filings"), all of which have complied in all material respects with
all applicable requirements of the Securities Act and the Exchange Act. None of
the First Commonwealth Filings, including, without limitation, any financial
statements or schedules included therein, at the time filed, contained any
untrue statement of a material fact or omitted 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. The
audited and unaudited consolidated financial statements of First Commonwealth
included in the First Commonwealth Filings have been prepared in accordance with
GAAP applied on a consistent basis (except as stated in such financial
statements and except as permitted by applicable SEC regulations) and fairly
present the financial position of First Commonwealth as of the dates thereof and
the results of operations for the periods presented therein, subject, in the
case of unaudited financial statements, to normal year-end audit adjustments.

         2.7 NO MATERIAL ADVERSE CHANGE. Since December 31, 2002 there has not
been any Material Adverse Change in First Commonwealth or FCB.

         2.8 CAPITALIZATION OF FIRST COMMONWEALTH. The authorized capital stock
of First Commonwealth consists of 100,000,000 shares of First Commonwealth
Common Stock and 3,000,000 shares of preferred stock, $1.00 par value per share.
As of June 30, 2003, 59,071,871 shares of First Commonwealth Common Stock were
issued and outstanding, 3,453,537 shares of First Commonwealth Common Stock were
held by First Commonwealth as treasury stock and no shares of the preferred
stock were issued and outstanding. All of the outstanding First Commonwealth
Common Stock is duly authorized, validly issued, fully paid and nonassessable
and has not been issued in violation of any preemptive rights of any First
Commonwealth shareholder. The shares of First Commonwealth Common Stock to be
issued in the Merger, when delivered as specified in this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable and registered
pursuant to the effective Registration Statement under the Securities Act.

         2.9 CAPITALIZATION OF FCB. The authorized capital stock of FCB consists
of 100,000,000 shares of common stock having a par value of $1.00 per share. As
of the date of this Agreement, 44,098,000 shares of FCB's common stock were
issued and outstanding, and no shares of FCB's common stock were held by FCB as
treasury stock. All of the outstanding common stock of FCB is held beneficially
and of record by First Commonwealth, free and clear of any lien, claim, security
interest, encumbrance, charge, restriction or right of any third party of any
kind whatsoever. All of the outstanding shares of FCB common stock are validly
issued, fully-paid and nonassessable and have not been issued in violation of
any preemptive rights of any shareholder of FCB. There are no outstanding
securities or other obligations which are convertible into FCB common stock or
into any other equity or debt security of FCB, and there are no outstanding
options, warrants, rights, scrip, rights to subscribe to, calls or other
commitments of any nature which would entitle the holder, upon exercise thereof,
to be issued FCB common stock or any other equity or debt security of FCB.

         2.10 DISCLOSURE. The representations or warranties made by First
Commonwealth and FCB as set forth in this Agreement, or in any document,
statement, certificate or other writing furnished or to be furnished by First
Commonwealth and FCB to Pittsburgh Financial pursuant to the transactions
contemplated by this Agreement, do not and will not contain any untrue statement
of a material fact or


                                      I-10


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 PITTSBURGH FINANCIAL AND BANKPITTSBURGH

         To induce First Commonwealth and FCB to enter into this Agreement,
Pittsburgh Financial and BankPittsburgh represent and warrant as follows (which
representations and warranties are being made as of the date of this Agreement
and shall be deemed to be made again as of the Closing), except as set forth in
the disclosure schedule attached hereto as EXHIBIT D (the "Pittsburgh Financial
Disclosure Schedule"), the section numbers of which are numbered to correspond
to the sections of this Agreement to which they refer:

         3.1 ORGANIZATION AND QUALIFICATION OF PITTSBURGH FINANCIAL AND
SUBSIDIARIES. Pittsburgh Financial is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Pittsburgh Financial is registered with the FRB as a financial
holding company under the BHCA, and engages only in activities permitted by the
BHCA and the rules and regulations promulgated by the Federal Reserve Board
thereunder. Pittsburgh Financial (i) has the requisite corporate power and
authority to own, operate and lease its material properties and carry on its
businesses as they are currently being conducted and (ii) is in good standing
and is duly qualified to do business in each jurisdiction where such
qualification is necessary and where the failure to so qualify would
individually or in the aggregate have a Material Adverse Effect on Pittsburgh
Financial and the Pittsburgh Financial Subsidiaries taken as a whole. Each
Pittsburgh Financial Subsidiary is duly organized, validly existing and in good
standing under the laws of the state or jurisdiction of its organization and (a)
has the requisite corporate power and authority to own, operate and lease its
material properties and to carry on its business as it is currently being
conducted and (b) is in good standing and is duly qualified to do business in
each jurisdiction where such qualification is necessary and where the failure to
so qualify would individually or in the aggregate have a Material Adverse Effect
on Pittsburgh Financial and the Pittsburgh Financial Subsidiaries taken as a
whole.

         3.2 ORGANIZATION AND QUALIFICATION OF BANKPITTSBURGH. BankPittsburgh is
a Pennsylvania-chartered stock savings bank, 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 PDB or the FDIC for insured depository institutions. BankPittsburgh's
deposit accounts are insured by the FDIC to the fullest extent permitted under
applicable law.

         3.3 AUTHORITY.

                  (a) Subject to obtaining the consents and approvals set forth
in Section 3.5, Pittsburgh Financial and BankPittsburgh have full power and
authority to make, execute and perform this Agreement and to consummate the
transactions contemplated hereby, and no further action is necessary on the part
of Pittsburgh Financial or BankPittsburgh to authorize the consummation of the
transactions contemplated hereby. This Agreement constitutes a valid and binding
obligation of Pittsburgh Financial and of BankPittsburgh and is enforceable
against each of Pittsburgh Financial and BankPittsburgh in accordance with its
terms, except as limited by the laws affecting creditors' rights generally and
subject to general principles of equity.


                                      I-11


                  (b) Subject to obtaining the consents and approvals set forth
in Section 3.5, the execution, delivery and performance of this Agreement and
the transactions contemplated hereby will not, with or without the giving of
notice or the passage of time, or both, (a) violate any provision of any law or
regulation applicable to Pittsburgh Financial or any Pittsburgh Financial
Subsidiary; (b) violate any provision of the articles of incorporation, charter
or bylaws of Pittsburgh Financial or of any Pittsburgh Financial Subsidiary; (c)
conflict with or result in a breach of any provision of, or termination of, or
constitute a default under any instrument, license, agreement or commitment to
which Pittsburgh Financial or any Pittsburgh Financial Subsidiary is a party; or
(d) constitute a violation of any order, judgment or decree to which Pittsburgh
Financial or any Pittsburgh Financial Subsidiary is a party or by which
Pittsburgh Financial, or any Pittsburgh Financial Subsidiary, or any of their
assets or properties are bound, except, with respect to (a), (c) and (d) above,
such as individually or in the aggregate will not have a Material Adverse Effect
on Pittsburgh Financial and the Pittsburgh Financial Subsidiaries taken as a
whole and which will not prevent or delay the consummation of the transactions
contemplated hereby.

         3.4 NO LEGAL BAR. Neither Pittsburgh Financial nor any Pittsburgh
Financial Subsidiary is a party to, subject to, or bound by, any agreement,
judgment, order, letter of understanding, writ, prohibition, injunction or
decree of any court or other governmental authority or body of competent
jurisdiction, or any law which would prevent the execution of this Agreement by
Pittsburgh Financial or BankPittsburgh, the delivery thereof to First
Commonwealth, or (upon receipt of the consents and approvals set forth in
Section 3.5) the consummation of the transactions contemplated hereby, and no
action or proceeding is pending or, to the Knowledge of Pittsburgh Financial,
threatened against Pittsburgh Financial or any Pittsburgh Financial Subsidiary
in which the validity of this Agreement, the transactions contemplated hereby or
any action which has been taken by any of the Parties in connection herewith or
in connection with the transactions contemplated hereby is at issue.

         3.5 APPROVALS, CONSENTS AND FILINGS. Except for the approval of the
Merger by the FRB, the approval of the Bank Merger by the FDIC and the PDB, the
approval of the Merger by the Pittsburgh Financial shareholders and the filing
of the Articles of Merger and articles of merger relating to the Bank Merger
with the Pennsylvania Secretary of State, neither the execution and delivery of
this Agreement by Pittsburgh Financial or BankPittsburgh nor the consummation of
the transactions contemplated hereby requires any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority or other third party.

         3.6 FINANCIAL STATEMENTS.(a) Pittsburgh Financial has delivered to
First Commonwealth true, correct and complete copies of (i) the audited
consolidated financial statements of Pittsburgh Financial for the years ended
September 30, 2000, 2001 and 2002, including balance sheets, statements of
income, statements of shareholders' equity and statement of cash flows and (ii)
unaudited consolidated financial statements of Pittsburgh Financial, including a
balance sheet, statement of income, statement of shareholders' equity and
statement of cash flows for the nine months ended June 30, 2003. All such
financial statements have been prepared in accordance with GAAP consistently
applied and fairly present the financial condition of Pittsburgh Financial and
the Pittsburgh Financial Subsidiaries as of the dates thereof and the results of
their operations for the periods presented therein, subject, in the case of
unaudited financial statements, to normal year-end audit adjustments.

         3.7 UNDISCLOSED LIABILITIES. Neither Pittsburgh Financial nor any
Pittsburgh Financial Subsidiary has any material 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
Pittsburgh Financial to First Commonwealth or (ii) those incurred in the
Ordinary Course of Business since September 30, 2002, none of which arises from
any breach of contract, tort or violation of law.



                                      I-12


         3.8 REGULATORY REPORTS. Pittsburgh Financial and each Pittsburgh
Financial Subsidiary has filed all reports, registrations and other documents,
together with any amendments required to be made with respect thereto since
January 1, 2000 (the "Pittsburgh Financial Filings"), that were required to be
filed with the FRB, the FDIC, the PDB or the SEC and any other governmental
entity having jurisdiction over any of them. No administrative actions have been
taken or orders issued in connection with such Pittsburgh Financial Filings. As
of their respective dates, each Pittsburgh Financial Filing (i) complied in all
material respects with all laws and regulations promulgated by the governmental
entity with which it was filed; and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Pittsburgh Financial has furnished
or made available to First Commonwealth true and correct copies of all
Pittsburgh Financial Filings.

         3.9 BOOKS AND RECORDS. The stock records and minute books of Pittsburgh
Financial and each Pittsburgh Financial Subsidiary (previously furnished to
First Commonwealth) fully and accurately reflect all issuances, transfers and
redemptions of the capital stock of Pittsburgh Financial or such Pittsburgh
Financial Subsidiary, correctly show the record addresses of the shareholders
and the number and class of shares of capital stock held by each shareholder,
correctly show all corporate action taken by the directors (or any committee)
and shareholders of Pittsburgh Financial or such Pittsburgh Financial Subsidiary
(including actions taken by consent without a meeting), and contain true and
correct copies or originals of the articles of incorporation and bylaws of
Pittsburgh Financial or such Pittsburgh Financial Subsidiary, in each case as
amended and currently in force, and the minutes of all meetings or consent
actions of its directors and shareholders. No resolutions have been adopted by
the directors or shareholders of Pittsburgh Financial or any Pittsburgh
Financial Subsidiary except those contained in the minute books. All corporate
records of Pittsburgh Financial and each Pittsburgh Financial Subsidiary have
been maintained in accordance with all applicable statutory and regulatory
requirements.

         3.10 TAX MATTERS. Pittsburgh Financial and each Pittsburgh Financial
Subsidiary has duly filed when due (including applicable extensions granted
without penalty) (i) all required federal and state tax returns and reports, and
(ii) all required returns and reports of other governmental agencies having
jurisdiction with respect to taxes imposed upon the income, properties,
revenues, operations or other assets of Pittsburgh Financial or such Pittsburgh
Financial Subsidiary or taxes imposed which might create a lien or encumbrance
on any such assets. Such returns or reports are true, complete and correct, and
Pittsburgh Financial and each Pittsburgh Financial Subsidiary has paid, to the
extent such taxes or other governmental charges have become due, all taxes and
other governmental charges including all applicable interest and penalties set
forth in such returns or reports. There are no liens on the assets of Pittsburgh
Financial or any Pittsburgh Financial Subsidiary relating to or attributable to
any taxes. Neither Pittsburgh Financial nor any Pittsburgh Financial Subsidiary
is currently the beneficiary of any extension of time within which to file any
such written return or report. All federal, state and local taxes and other
governmental charges payable by Pittsburgh Financial or any Pittsburgh Financial
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, Pittsburgh Financial and each
Pittsburgh Financial Subsidiary shall continue to reserve sufficient funds for
the payment of expected tax liabilities in accordance with GAAP and banking
regulations applied on a consistent basis. Neither Pittsburgh Financial nor any
Pittsburgh Financial Subsidiary has received any notice of a tax deficiency or
assessment of additional taxes of any kind and, to the Knowledge of Pittsburgh
Financial, there is no threatened claim against Pittsburgh Financial or any
Pittsburgh Financial 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 with respect to any such
claim shown in the most recent audited financial statements provided by
Pittsburgh Financial to First Commonwealth. Neither Pittsburgh Financial nor any
Pittsburgh Financial Subsidiary has constituted a "distributing corporation" or
a "controlled corporation" in a distribution of stock qualifying for tax-free



                                       I-13


treatment under Section 355 of the Code (x) in the two years prior to the date
of this Agreement or (y) 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. Proper and accurate amounts have
been withheld by Pittsburgh Financial and each Pittsburgh Financial Subsidiary
from its employees for all periods in full and complete compliance with the tax
withholding provisions of applicable federal, state and local tax laws, and
proper and accurate federal, state and local tax returns have been filed by
Pittsburgh Financial and each Pittsburgh Financial Subsidiary for all periods
for which returns were due with respect to withholding, social security and
unemployment taxes and the amounts shown thereon to be due and payable have been
paid in full.

         3.11 LITIGATION AND PROCEEDINGS. There are no actions, decrees, suits,
counterclaims, claims, proceedings or governmental actions or investigations
pending or, to the Knowledge of Pittsburgh Financial, threatened against
Pittsburgh Financial or any Pittsburgh Financial Subsidiary in any court or
before any arbitrator or governmental agency. Neither Pittsburgh Financial nor
any Pittsburgh Financial Subsidiary is a party to any judgment, award, order or
decree.

         3.12 BUSINESS OPERATIONS.

                  (a) Permits, Compliance with Law. Pittsburgh Financial and
each Pittsburgh Financial Subsidiary has all permits, licenses, approvals,
authorizations and registrations under all federal, state and local laws
required for it to carry on its business as presently conducted and the absence
of which could have a Material Adverse Effect on Pittsburgh Financial and the
Pittsburgh Financial Subsidiaries taken as a whole, all such permits, licenses,
approvals, authorizations and registrations are in full force and effect and no
suspension or cancellation of any of them is pending or, to the Knowledge of
Pittsburgh Financial, threatened. Pittsburgh Financial and each Pittsburgh
Financial Subsidiary has complied in all material respects with all laws,
regulations, and orders applicable to it or its business. No notice from any
governmental authority with respect to any failure or alleged failure of
Pittsburgh Financial to comply in any material respect with any law, regulation
or order has been received by Pittsburgh Financial or any Pittsburgh Financial
Subsidiary, nor to the Knowledge of Pittsburgh Financial, is any such notice
threatened.

                  (b) Insurance. Section 3.12(b) of the Pittsburgh Financial
Disclosure Schedule contains a complete list and description of all policies of
insurance and bonds presently maintained by Pittsburgh Financial or any
Pittsburgh Financial 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. Each material term, obligation and provision of each
such policy and bond has been complied with, all premiums due thereon have been
paid and no notice of cancellation with respect thereto has been received by
Pittsburgh Financial or BankPittsburgh, as the case may be. Such policies and
bonds provide adequate coverage to insure the properties and business of
Pittsburgh Financial and the activities of its officers, directors and employees
against such risks and in such amounts as are prudent and customary. Pittsburgh
Financial has no liability for premiums with respect to such policies.
Pittsburgh Financial has previously made available to First Commonwealth a true,
correct and complete copy of each such insurance policy and bond.

                  (c) Material Contracts. Section 3.12(c) of the Pittsburgh
Financial Disclosure Schedule contains a complete list of all Material
Contracts. Each Material Contract is in full force and effect, is valid and
enforceable in accordance with its terms (subject to any bankruptcy or other
laws applicable to creditors' rights generally), constitutes a legal and binding
obligation of Pittsburgh Financial or a Pittsburgh Financial Subsidiary, as the
case may be, and, to the Knowledge of Pittsburgh Financial, each other party
thereto, and is not the subject of any notice of default, termination or partial



                                      I-14


termination or of any ongoing, pending, completed or, to the Knowledge of
Pittsburgh Financial, threatened investigation, inquiry or other proceeding or
action that may give rise to any notice of default, termination or partial
termination by any party thereto. Pittsburgh Financial or such Pittsburgh
Financial Subsidiary has complied in all material respects with the provisions
of each Material Contract. A true and complete copy of each Material Contract
has been made available to First Commonwealth for examination.

                  (d) Intellectual Property. Section 3.12(d) of the Pittsburgh
Financial Disclosure Schedule sets forth all (i) trademarks, trade names,
service marks or other trade rights, whether or not registered, and all pending
applications for any such registrations, (ii) copyrights, copyrightable
materials or pending applications therefor, (iii) trade secrets, (iv)
inventions, discoveries, designs, and drawings, (v) computer software (including
all source and object codes and manuals), and (vi) patents and patent
applications owned, licensed or otherwise used by Pittsburgh Financial or any
Pittsburgh Financial Subsidiary (collectively, the "Intellectual Property
Rights"). The Intellectual Property Rights are all those necessary for the
conduct of the business of Pittsburgh Financial and each Pittsburgh Financial
Subsidiary as presently conducted. Neither Pittsburgh Financial nor any
Pittsburgh Financial Subsidiary has any obligation to compensate any person for
the use of any of the Intellectual Property Rights and Pittsburgh Financial 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 Pittsburgh Financial 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 Pittsburgh Financial that such person claims any
ownership of or right to use any Intellectual Property Rights or (ii) to the
Knowledge of Pittsburgh Financial, is infringing upon any Intellectual Property
Rights. To the Knowledge of Pittsburgh Financial, Pittsburgh Financial's use of
the Intellectual Property Rights does not conflict with, infringe upon or
otherwise violate the valid rights of any third party anywhere where the
business of Pittsburgh Financial is currently conducted or is currently proposed
to be conducted by Pittsburgh Financial. No written notice has been received and
not fully resolved and no action has been instituted or, to the Knowledge of
Pittsburgh Financial, threatened against Pittsburgh Financial alleging that
Pittsburgh Financial's use of the Intellectual Property Rights infringes upon or
otherwise violates any rights of a third party.

                  (e) Personal Property. Pittsburgh Financial and the Pittsburgh
Financial Subsidiaries have good and marketable title to all of their personal
property, free and clear of all encumbrances, liens or charges of any kind or
character except liens for taxes not due and payable. The personal property
owned and leased by Pittsburgh Financial or any Pittsburgh Financial Subsidiary
is in good operating order (ordinary wear and tear excepted), usable in the
Ordinary Course of Business, and is sufficient and adequate to carry on the
business of Pittsburgh Financial as currently conducted.

                  (f) Leases. Section 3.12(f) of the Pittsburgh Financial
Disclosure Schedule sets forth a list of all leases pursuant to which Pittsburgh
Financial or any Pittsburgh Financial Subsidiary is either lessor or lessee of
any real or personal property, other than leases that are required to be
capitalized under GAAP (the "Leases"). All Leases are valid and enforceable in
accordance with their terms, there is not under any Lease any default or any
event which with notice or lapse of time, or both, would constitute a default by
Pittsburgh Financial or such Pittsburgh Financial Subsidiary, or, to the
knowledge of Pittsburgh Financial, by any other party thereto. There are no
contractual obligations, agreements in principle or present plans for Pittsburgh
Financial or any Pittsburgh Financial Subsidiary to enter into new leases or to
renew or amend existing Leases prior to the Closing. The copies of the Leases
and any amendments thereto provided by Pittsburgh Financial to First
Commonwealth are true, correct and complete, and the Leases have not been
modified in any respect other than pursuant to such amendments.


                                      I-15


                  (g) Real Property. Section 3.12(g) of the Pittsburgh Financial
Disclosure Schedule lists all real property (other than security interests)
owned by Pittsburgh Financial or any Pittsburgh Financial Subsidiary (the "Real
Property"). Pittsburgh Financial or such Pittsburgh Financial Subsidiary has
good and marketable title to each parcel of Real Property and the title to each
parcel of Real Property is covered by a title insurance policy providing
coverage in the amount of the original purchase price. The interests of
Pittsburgh Financial or such Pittsburgh Financial Subsidiary in each parcel of
the Real Property are free and clear of any and all liens and encumbrances,
except for liens for current taxes not yet due, and are not subject to any
pending or, to the Knowledge of Pittsburgh Financial, threatened claim, contest,
dispute, action at law or in equity. The present and past use of, and
improvements upon, each parcel of Real Property and all real properties leased
by Pittsburgh Financial or such Pittsburgh Financial Subsidiary (the "Leased
Property") are in material compliance with all applicable building, fire, zoning
and other applicable laws, ordinances and regulations, including the Americans
with Disabilities Act, and deed restrictions of record and no notice of any
violation or alleged violation thereof has been received. To the Knowledge of
Pittsburgh Financial, there is no proposed or pending change in the zoning of,
or any proposed or pending condemnation proceeding with respect to, any parcel
of Real Property or Leased Property. The buildings and structures owned, leased
or used by Pittsburgh Financial are, taken as a whole, in good operating order
(ordinary wear and tear excepted), usable in the Ordinary Course of Business and
are sufficient and adequate to carry on the business of Pittsburgh Financial as
presently conducted.

                  (h) Offices and ATMs. Section 3.12(h) of the Pittsburgh
Financial Disclosure Schedule lists the headquarters of Pittsburgh Financial and
BankPittsburgh (identified as such) and each of the offices and ATMs maintained
and operated by BankPittsburgh and the location thereof. BankPittsburgh does not
maintain any other office or ATM or conduct business at any other location, and
BankPittsburgh has not applied for or received permission to open or close any
additional branch or operate at any other location.

                  (i) Environmental. Pittsburgh Financial and each Pittsburgh
Financial Subsidiary is in compliance in all material respects with all
Environmental Regulations. There are no Hazardous Materials on, below or above
the surface of, or migrating to or from any parcel of Real Property or Leased
Property which requires remediation under any federal, state, or local statute,
regulation, ordinance, order, action, policy, or common law. To the Knowledge of
Pittsburgh Financial, neither Pittsburgh Financial nor any Pittsburgh Financial
Subsidiary has any outstanding loans secured by real property that is not in
compliance with Environmental Regulations, upon which there are Hazardous
Materials or from or to which Hazardous Materials have migrated or are
migrating. There is no claim, action, suit, proceeding or notice thereof before
any governmental entity pending, or, to the Knowledge of Pittsburgh Financial,
threatened, against Pittsburgh Financial or any Pittsburgh Financial Subsidiary
or, to the Knowledge of Pittsburgh Financial, concerning any real property
securing BankPittsburgh loans and there is no outstanding judgment, order, writ,
injunction, decree, or award against Pittsburgh Financial or any Pittsburgh
Financial Subsidiary or any real property securing BankPittsburgh loans relating
to Environmental Regulations or Hazardous Materials. Pittsburgh Financial has
provided to First Commonwealth phase I environmental assessments with respect to
each piece of Real Property and Leased Property as to which such a phase I
environmental investigation has been prepared by or on behalf of Pittsburgh
Financial or any Pittsburgh Financial Subsidiary.

         3.13 ABSENCE OF CHANGES; OPERATION IN THE ORDINARY COURSE. Since
September 30, 2002 (the "Balance Sheet Date") (a) there has not been any
Material Adverse Change in Pittsburgh Financial or any Pittsburgh Financial
Subsidiary, and (b) neither Pittsburgh Financial nor any Pittsburgh Financial
Subsidiary has taken any action which, if it had been taken after the date of
this Agreement, would require the consent of First Commonwealth under Section
5.3 hereof.



                                      I-16


         3.14 EMPLOYEES AND BENEFITS.

                  (a) Compensation. Section 3.14(a) of the Pittsburgh Financial
Disclosure Schedule contains a list of (i) the names, titles, responsibilities
and compensation arrangements of each officer and director of Pittsburgh
Financial and each Pittsburgh Financial Subsidiary and of each employee of
Pittsburgh Financial or any Pittsburgh Financial Subsidiary whose compensation
(including, without limitation, all salary, wages, bonuses and fringe benefits,
other than those fringe benefits made available to all employees on a
non-discriminatory basis), from Pittsburgh Financial or such Pittsburgh
Financial Subsidiary for the current fiscal year will exceed $50,000; and (ii)
all written agreements currently in effect which have been provided to such
employees relating to such person's employment or compensation. There are no
controversies pending or, to the Knowledge of Pittsburgh Financial, threatened
between Pittsburgh Financial or any Pittsburgh Financial Subsidiary and any of
its directors, officers or employees.

                  (b) Directors or Officers of Other Corporations. No director,
officer, or employee of Pittsburgh Financial or any Pittsburgh Financial
Subsidiary serves, or in the past five years has served, as a director or
officer of any other corporation or entity (other than of a Pittsburgh Financial
Subsidiary) on behalf of or as a designee of Pittsburgh Financial or any
Pittsburgh Financial Subsidiary.

                  (c) Employee Benefits. Section 3.14(c) of the Pittsburgh
Financial Disclosure Schedule lists (a) each pension plan, profit sharing plan,
group or individual health, dental, medical or life insurance plan, employee
welfare benefit plan (as such term is defined in Section 3(l) of ERISA),
severance plan, bonus plan, stock option plan or other equity plan, deferred
compensation plan, incentive compensation plan, or other similar plan which is
or has been maintained by Pittsburgh Financial or any Pittsburgh Financial
Subsidiary or its ERISA Affiliates for any of its current or former employees;
and (b) each "employee benefit plan" as defined in Section 3(3) of ERISA,
maintained by or on behalf of Pittsburgh Financial or any Pittsburgh Financial
Subsidiary or its ERISA Affiliates (including any plans which are "multiemployer
plans" under Section 3(37)(A) of ERISA ("Multiemployer Plans") and any defined
benefit plan (as defined in Section 3(35) of ERISA) terminated within the five
plan-years ending immediately before the Closing) which covers or covered any
employees of Pittsburgh Financial or any Pittsburgh Financial Subsidiary or its
ERISA Affiliates (each a "Plan"). Copies of all Plans, summary Plan
descriptions, actuarial reports, valuations, annual reports (and attachments
thereto) on Form 5500, 5500-C or 5500-R, as the case may be (if required
pursuant to ERISA), with respect to the Plans, IRS determination letters and any
other related documents have been provided by Pittsburgh Financial to First
Commonwealth. With respect to each Plan, no litigation or administrative or
other proceeding is pending or, to the Knowledge of Pittsburgh Financial,
threatened, except for claims for benefits in the ordinary course of operations
of the Plan. All the Plans that are intended to be qualified under Section
401(a) of the Code have received determination letters from the IRS to the
effect that such Plans are qualified and the plans and the trusts related
thereto are exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, no such determination letter has been revoked and
revocation has not been threatened, and no such Plan has been amended or
operated since the date of its most recent determination letter or application
therefor in any respect, and no act or omission has occurred, that would
adversely affect its qualification. Each Plan that is required to satisfy
Section 401(k)(3) or Section 401(m)(2) of the Code has been tested for
compliance with, and satisfies the requirements of, Section 401(k)(3) and
Section 401(m)(2) of the Code for each plan year ending prior to the Closing
Date. Neither the Plan nor any trustee, administrator or fiduciary thereof has
at any time been involved in any transaction relating to the Plan which would
constitute a breach of fiduciary duty under ERISA or a "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of the Code, unless
such transaction is specifically permitted under Sections 407 or 408 of ERISA,
Section 4975 of the Code or a class or administrative exemption issued by the
Department of Labor. Each Plan has been administered in compliance in all
material respects with applicable law and the terms of such Plan.



                                      I-17


No Post-Termination Payment will be nondeductible under Section 280G of the
Internal Revenue Code or result in any excise tax payment liability under
Section 4999 of the Internal Revenue Code. At no time has Pittsburgh Financial
or any ERISA Affiliate been obligated to contribute to any Multiemployer Plan.
Each Plan that is subject to the provisions of Title IV of ERISA is referred to
herein as a "Pension Plan." As of the most recent valuation date for each
Pension Plan, the fair market value of the assets of each Pension Plan
(including for these purposes any accrued but unpaid contributions) exceeded the
present value of all benefit liabilities, as defined in ERISA Section
4001(a)(16), under each Pension Plan determined on a termination basis using the
assumptions that would be applied by the PBGC for a plan terminating as of the
date of this Agreement. No "accumulated funding deficiency" (as defined in Code
Section 412), has been incurred with respect to any Pension Plan whether or not
waived. Quarterly contributions under Code Section 412(m) have been made as
required for each Pension Plan and no notice to the PBGC has been required under
Code Section 412(n). No "reportable event" (as defined in ERISA Section 4043),
and no event described in ERISA Section 4062, 4063 or 4041 has occurred in
connection with any Pension Plan, other than a "reportable event" for which the
30-day advance notice requirement has been waived under regulations published by
the PBGC. No condition exists and no event has occurred that could constitute
grounds for the termination of any Pension Plan under ERISA Section 4042.
Neither Pittsburgh Financial nor any ERISA Affiliate has incurred any liability
under Title IV of ERISA arising in connection with the termination of any plan
covered or previously covered by Title IV of ERISA.

                  (d) Labor Relations. Neither Pittsburgh Financial nor any
Pittsburgh Financial Subsidiary has been a party to any collective bargaining
agreement or agreement of any kind with any union or labor organization with
respect to its employees and none of its employees is represented by a labor
union. Pittsburgh Financial and each Pittsburgh Financial Subsidiary has
complied in all material respects with all obligations under the National Labor
Relations Act, as amended, the Age Discrimination in Employment Act, as amended,
and all other federal, state and local labor laws and regulations applicable to
employees. There are no unfair labor practice charges pending or, to the
Knowledge of Pittsburgh Financial, threatened against Pittsburgh Financial or
any Pittsburgh Financial Subsidiary.

         3.15 CERTAIN AGREEMENTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment becoming due to any employee, officer or director of
Pittsburgh Financial or any Pittsburgh Financial Subsidiary under any Plan,
agreement or otherwise, including payments that would become due as a result of
such transactions upon termination of employment following such transactions,
other than payments of the merger consideration, (ii) increase any benefits
otherwise payable to any of their employees, officers or directors under any
Plan or agreement, or (iii) result in the acceleration of the time of payment or
vesting of any such benefits.

         3.16 CAPITALIZATION OF PITTSBURGH FINANCIAL. The authorized capital
stock of Pittsburgh Financial consists of 10,000,000 shares of Pittsburgh
Financial Common Stock and 5,000,000 shares of preferred stock, $0.01 par value
per share. As of the date of this Agreement, 1,424,881 shares of Pittsburgh
Financial Common Stock were issued and outstanding, 757,244 shares of Pittsburgh
Financial Common Stock were held by Pittsburgh Financial as treasury stock and
no shares of preferred stock were issued and outstanding. All of the outstanding
Pittsburgh Financial Common Stock is validly issued, fully paid and
nonassessable and has not been issued in violation of any preemptive rights of
any Pittsburgh Financial shareholder. Section 3.16 of the Pittsburgh Financial
Disclosure contains a complete list of all outstanding options, warrants,
rights, and outstanding securities or other obligations which are convertible
into, or which would entitled the holder, upon exercise thereof, to be issued
shares of Pittsburgh Financial Common Stock or any other equity or debt security
of Pittsburgh Financial, whether or not exercisable.


                                      I-18


         3.17 CAPITALIZATION OF BANKPITTSBURGH. The authorized capital stock of
BankPittsburgh consists of 100 shares of common stock having a par value of
$0.01 per share (the "Bank Common Stock") and 100 shares of preferred stock
having no par value. As of the date of this Agreement, 100 shares of Bank Common
Stock were issued and outstanding, no shares of Bank Common Stock were held by
BankPittsburgh as treasury stock and no shares of preferred stock were issued
and outstanding. All of the outstanding Bank Common Stock is held beneficially
and of record by Pittsburgh Financial, free and clear of any lien, claim,
security interest, encumbrance, charge, restriction or right of any third party
of any kind whatsoever. All of the outstanding Bank Common Stock is validly
issued, fully-paid and nonassessable and has not been issued in violation of any
preemptive rights of any shareholder of BankPittsburgh. There are no outstanding
securities or other obligations which are convertible into Bank Common Stock or
into any other equity or debt security of BankPittsburgh, and there are no
outstanding options, warrants, rights, scrip, rights to subscribe to, calls or
other commitments of any nature which would entitle the holder, upon exercise
thereof, to be issued Bank Common Stock or any other equity or debt security of
BankPittsburgh.

         3.18 PITTSBURGH FINANCIAL SUBSIDIARIES.

                  (a) Section 3.18 of the Pittsburgh Financial Disclosure
Schedule sets forth each Pittsburgh Financial Subsidiary and the jurisdiction in
which each is formed. Each Pittsburgh Financial Subsidiary is duly formed,
validly existing and in good standing under the laws of the jurisdiction in
which it is formed and is qualified or otherwise authorized to transact business
as a foreign corporation or other entity in all jurisdictions in which such
qualification or authorization is required by law and where the failure to so
qualify would individually or in the aggregate have a Material Adverse Effect on
Pittsburgh Financial and the Pittsburgh Financial Subsidiaries taken as a whole.
All issued and outstanding shares or other equity interests of each Pittsburgh
Financial Subsidiary are owned directly or indirectly by Pittsburgh Financial as
set forth on Section 3.18 of the Pittsburgh Financial Disclosure Schedule, free
and clear of any charges, liens, encumbrances, security interests or adverse
claims.

                  (b) There are no subscriptions, options, conversion or
exchange rights, warrants, repurchase or redemption agreements, or other
agreements obligating Pittsburgh Financial or any Pittsburgh Financial
Subsidiary to issue, transfer, sell, repurchase or redeem, or cause to be
issued, transferred, sold, repurchased or redeemed, shares of the capital stock
or other securities of any Pittsburgh Financial Subsidiary or obligating
Pittsburgh Financial or any Pittsburgh Financial Subsidiary to vote the capital
stock of any Pittsburgh Financial Subsidiary in a particular manner or entitling
any other party to vote the capital stock of any Pittsburgh Financial
Subsidiary.

                  (c) Except for the stock or other interests in the Pittsburgh
Financial Subsidiaries, neither Pittsburgh Financial nor any Pittsburgh
Financial Subsidiary owns any stock or other equity interest in any other
Person, except in a fiduciary capacity.

         3.19 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses shown on
the Pittsburgh Financial's consolidated financial statements is (with respect to
periods ended on or before June 30, 2003) or will be (with respect to periods
ending subsequent to June 30, 2003), in the reasonable opinion of management of
Pittsburgh Financial, adequate in all material respects as of the dates thereof
under the requirements of GAAP. Section 3.18 of the Pittsburgh Financial
Disclosure Schedule lists, as of the date thereof, each loan of BankPittsburgh
which has been criticized or classified by Pittsburgh Financial or bank
examiners representing any Regulatory Authority as "Substandard," "Doubtful" or
"Loss" or as a "Potential Problem Loan."



                                      I-19


         3.20 ABSENCE OF BROKERS. Other than Sandler O'Neill & Partners, L.P.,
no broker or finder has acted on behalf of Pittsburgh Financial in connection
with this Agreement or the transactions contemplated hereby.

         3.21 REPRESENTATIONS AND WARRANTIES. No representation or warranty
contained in this Article 3 or in any other written instrument, document or
agreement delivered by Pittsburgh Financial or any Pittsburgh Financial
Subsidiary to First Commonwealth or any First Commonwealth 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 not misleading.

                                   ARTICLE 4

                         COVENANTS OF FIRST COMMONWEALTH

         4.1 REGULATORY APPROVALS. Within sixty (60) days after execution of
this Agreement, First Commonwealth, in cooperation with Pittsburgh Financial,
shall file all necessary applications with the appropriate government Regulatory
Authorities in order to obtain the Government Approvals and shall take such
other actions as may be reasonably required to consummate the transactions
contemplated in this Agreement and the Plans of Merger with reasonable
promptness. First Commonwealth shall pay all fees and expenses arising in
connection with such applications for regulatory approval. Counsel to Pittsburgh
Financial shall be provided with a draft of all Regulatory Applications, other
than the confidential portions of the Regulatory Applications, prior to their
submission and shall have a reasonable opportunity to review and comment on such
applications and with respect to all correspondence with Regulatory Authorities.
First Commonwealth agrees to provide the appropriate Regulatory Authorities with
the information required by such authorities in connection with First
Commonwealth's applications for regulatory approval and First Commonwealth
agrees to use reasonable commercial efforts to obtain such regulatory approvals,
and any other approvals and consents as may be required for the Closing, as
promptly as practicable; provided, however, that nothing in this Section 4.1
shall be construed to obligate First Commonwealth 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 Regulatory
Authorities in orders approving acquisitions of the type contemplated by this
Agreement, constitutes a significant impediment upon First Commonwealth's
ability to carry on its business or acquisition programs (as may be determined
in the sole discretion of First Commonwealth) or requires First Commonwealth 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.

         4.2 PREPARATION OF REGISTRATION STATEMENT. First Commonwealth, in
cooperation with Pittsburgh Financial, shall prepare and file with the SEC a
Registration Statement on Form S-4 with respect to the shares of First
Commonwealth Common Stock to be issued in the Merger ("Registration Statement").
The Registration Statement shall contain a Proxy Statement/ Prospectus which
shall serve as the proxy statement of Pittsburgh Financial for the Pittsburgh
Financial Shareholders' Meeting and as the prospectus of First Commonwealth for
the shares of First Commonwealth Common Stock to be issued in the Merger. First
Commonwealth shall use reasonable commercial efforts to cause the Registration
Statement to become effective.

         4.3 REGISTRATION STATEMENT EFFECTIVENESS. First Commonwealth will
advise Pittsburgh Financial, promptly after First Commonwealth 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 First Commonwealth Common Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any

                                      I-20



request by the SEC for the amendment or supplement of the Registration Statement
or for additional information.

         4.4 EMPLOYEES AND EMPLOYEE BENEFITS.

                  (a) Upon consummation of the Merger and the Bank Merger, all
employees of Pittsburgh Financial and BankPittsburgh shall be deemed to be
at-will employees of First Commonwealth and FCB, respectively, and all employees
of Pinnacle shall continue to be at-will employees of Pinnacle, except for those
employees, if any, who are parties to a written employment agreement.

                  (b) At the discretion of First Commonwealth, as of the
Effective Time, and subject to Sections 4.4(d), (e) and (f) hereof, all employee
benefit plans (within the meaning of Section 3(3) of ERISA) sponsored or
maintained by Pittsburgh Financial and BankPittsburgh shall be terminated.
Employees of Pittsburgh Financial, BankPittsburgh and/or Pinnacle who continue
as employees of First Commonwealth, FCB and/or Pinnacle ("Continuing Employees")
shall be entitled to participate on an equitable basis in the same benefit
plans, programs or policies as are generally available to employees of First
Commonwealth or FCB, as the case may be, of similar rank and status. For
purposes of eligibility, vesting, benefit accrual (but not for accrual of
pension benefits) and determination of the level of benefits under any employee
benefit plans, arrangements or policies (including but not limited to severance,
vacation, sick and other leave policies) maintained by First Commonwealth or
FCB, employees of Pittsburgh Financial, BankPittsburgh and/or Pinnacle who
continue as employees of First Commonwealth, FCB and/or Pinnacle, as the case
may be, will be credited with prior years of service with Pittsburgh Financial,
BankPittsburgh and Pinnacle, and there shall be no exclusion from coverage under
First Commonwealth's and FCB's health insurance plan as a result of pre-existing
conditions to the extent such conditions were covered under any health insurance
plan maintained by Pittsburgh Financial, BankPittsburgh and/or Pinnacle prior to
the Effective Time.

                  (c) No Continuing Employee shall be subject to any waiting
period under any welfare benefit plan of First Commonwealth or FCB, as
applicable, 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 Pittsburgh Financial, BankPittsburgh and/or Pinnacle. Continuing
Employees shall not be subject to any waiting period under a welfare benefit
plan of First Commonwealth or FCB if the applicable waiting period under the
corresponding Pittsburgh Financial or BankPittsburgh 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 First Commonwealth or FCB, whichever is
applicable, 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 Pittsburgh Financial, BankPittsburgh and/or
Pinnacle during the balance of such twelve (12) month period of coverage.
Nothing contained herein shall obligate First Commonwealth or FCB to provide or
cause to be provided any duplicative benefits. Nothing herein shall alter the
power of First Commonwealth or FCB to amend or terminate any of its benefit or
welfare plans. Moreover, this Section 4.4(c) shall not constitute a contract of
employment or create any rights to be retained in employment at First
Commonwealth or FCB.

                  (d) The Pittsburgh Financial Employee Stock Ownership Plan
("ESOP") shall be terminated as of the Effective Time. The Board of Directors of
Pittsburgh Financial shall use reasonable commercial efforts to cause the
trustees of the ESOP, to the extent consistent with the fiduciary duties of the
trustees under ERISA, to make such elections under Article 1 of this Agreement
with respect to unallocated shares of Pittsburgh Financial Common Stock held by
the ESOP as are


                                      I-21


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 Pittsburgh Financial 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 First Commonwealth 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 and regulations as
soon as practicable after the Effective Time. In connection with the termination
of the ESOP, Pittsburgh Financial shall promptly apply to the IRS for a
favorable determination letter on the tax-qualified status of the ESOP on
termination 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 Pittsburgh Financial and
BankPittsburgh, and any amendments requested by the IRS after the Effective Time
shall be promptly adopted by First Commonwealth and FCB. 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, Pittsburgh Financial and BankPittsburgh shall make contributions to, and
payments on the loan of, the ESOP consistent with past practices on regularly
scheduled payment dates.

                  (e) Prior to the Effective Time, the Board of Directors of
Pittsburgh Financial shall take all necessary action to cause the Pittsburgh
Financial 401(k) Plan (the "401(k) Plan") to be terminated immediately prior to
the Effective Time. As soon as practicable after the date hereof, Pittsburgh
Financial shall file or cause to be filed all necessary documents with the IRS
for a determination that the termination of the 401(k) Plan will not affect its
qualified status. As soon as practicable after receipt of the favorable
determination letter for termination from the IRS, the account balances in the
401(k) Plan shall be distributed to participants and beneficiaries in accordance
with applicable law and the 401(k) Plan documents. From the date hereof through
the Closing Date, Pittsburgh Financial shall be permitted to make contributions
to the 401(k) Plan on a periodic monthly basis, consistent with past practices.
Participants in the 401(k) Plan who become employees of First Commonwealth will
be permitted, subject to the terms of the First Commonwealth 401(k) Plan, to
transfer their accounts in the 401(k) Plan to the First Commonwealth 401(k) Plan
in a direct rollover distribution.

                  (f) Prior to the Effective Time, in accordance with the
relevant plan documents and applicable law, the Board of Directors of Pittsburgh
Financial, in consultation with First Commonwealth and its legal counsel, shall
take all necessary action to cause the Pittsburgh Financial Pension Plan to be
terminated in accordance with its terms and the assets thereof will be disposed
of pursuant to the terms of such Plan and applicable law as soon as possible
thereafter.

                  (g) First Commonwealth agrees to honor the terms of the
Pittsburgh Financial severance, employment and deferred compensation agreements,
as well as the Group Term Carve-Out Plan and the Director Split Dollar Agreement
set forth in the Pittsburgh Financial Disclosure Schedule (collectively referred
to as the "Post-Termination Payments"). Without limiting the foregoing, First
Commonwealth agrees to use reasonable efforts for a period of one year after the
Effective Time to find a position for Messrs. Dillen, Maxcy, Kirk and Winters
within the First Commonwealth (or FCB) organization that is mutually agreeable
to First Commonwealth and such individual. First Commonwealth and FCB
acknowledge and agree that the consummation of the Merger shall constitute a
"Change in Control" of Pittsburgh Financial for purposes of each of the
severance, employment, deferred compensation and SERP agreements (as defined
below), as well as the Group Term Carve-Out Plan and the Director Split Dollar
Agreement, set forth in the Pittsburgh Financial Disclosure Schedule. First
Commonwealth and FCB further acknowledge and agree that each of the officers
covered by employment agreements with Pittsburgh Financial and BankPittsburgh
would be entitled to terminate their



                                      I-22


employment for "Good Reason" as defined in the employment agreements upon
consummation of the Merger, and that none of the payments to such officers shall
be subject to mitigation under the terms of those agreements. In the event that
the employment of Mr. Dillen, Mr. Maxcy, Mr. Kirk or Mr. Winters is terminated
by First Commonwealth, FCB or the officer as of the Effective Time or within one
year thereafter, such officer shall be entitled to receive from First
Commonwealth and FCB cash severance and fringe benefits under Section 5(c) of
the employment agreement as if the remaining term of employment was 36 months
(24 months for Mr. Winters), subject to the limit in Section 6 of the employment
agreement. If the employment of Mr. Dillen, Mr. Maxcy, Mr. Kirk or Mr. Winters
is terminated by First Commonwealth, FCB or the officer subsequent to the
one-year anniversary of the Effective Time, the amount of cash severance and
fringe benefits that the officer shall be entitled to receive from First
Commonwealth and FCB shall be reduced by one week for each full week that he was
employed by First Commonwealth and its Subsidiaries following the one-year
anniversary of the Effective Time. First Commonwealth and FCB agree not to amend
or terminate the Group Term Carve-Out Plan or the Director Split Dollar
Agreement at or after the Effective Time in any manner that would be adverse to
the participants in such plans unless required to comply with applicable laws.

                  (h) It is the intention of First Commonwealth and FCB that
each employee of Pittsburgh Financial and BankPittsburgh at the Effective Time
will continue as an employee of First Commonwealth or FCB, as the case may be,
following the Effective Time. Any employee of Pittsburgh Financial or any of its
Subsidiaries whose employment is actually terminated within one year after the
Effective Time for other than cause by First Commonwealth or its Subsidiaries at
or following the Effective Time, other than the employees entitled to severance
or other termination benefits pursuant to existing employment agreements, change
in control agreements or severance agreements, or whose primary location of
employment after the Effective Time would be more than 25 miles from their
primary employment location as of the Effective Time, shall receive, upon
termination of employment, a severance payment from First Commonwealth or its
Subsidiaries based on the terms of the general severance policy covering the
employees of First Commonwealth and the First Commonwealth Subsidiaries.

                  (i) Section 4.4(i) of the Pittsburgh Financial Disclosure
Schedule sets forth the accrued but unpaid vacation pay for employees of
Pittsburgh Financial and its Subsidiaries as of June 30, 2003. If the employment
of any employee of Pittsburgh Financial or any of its Subsidiaries identified on
Section 4.4(i) of the Pittsburgh Financial Disclosure Schedule is terminated
within twelve (12) months following the Effective Time, then any vacation pay
accrued and expensed based on such employee's employment prior to the Effective
Time shall be paid to the employee to the extent not used prior to the
termination of employment.

                  (j) Notwithstanding any other provision of this Section 4.4,
the parties agree that the vesting of benefits under the supplemental executive
retirement plan ("SERP") agreements shall be suspended as of the Effective Time.
First Commonwealth and FCB agree that each of the officers who has a SERP
agreement shall be entitled to receive SERP benefits upon termination of his
employment based upon the second amount shown under the heading "Change in
Control Annual Benefit" in Schedule A of his SERP agreement, subject to the
limit in Section 5.1 of the SERP agreements. First Commonwealth and FCB shall
pay the SERP benefits in a single lump sum, with the lump sum discounted to
present value using the IRS discount rates for the month in which the Effective
Time occurs. The amount of the SERP benefits for each officer is set forth in
Section 4.4(h) of the Pittsburgh Financial Disclosure Schedule.

         4.5 REASONABLE EFFORTS TO CLOSE. Subject to the terms and conditions of
this Agreement, First Commonwealth agrees to use reasonable commercial 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


                                      I-23


and regulations to satisfy the conditions to closing contained herein and to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, using reasonable commercial 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. First Commonwealth shall use, and shall cause each of its
Subsidiaries to use, reasonable commercial efforts to obtain consents of all
third parties and Regulatory Authorities necessary or desirable for the
consummation of each of the transactions contemplated by this Agreement.

         4.6 ACCESS. Upon notice of at least 48 hours, subject to the terms of
the Confidentiality and Non-Disclosure Agreement dated July 18, 2003 between
First Commonwealth and Pittsburgh Financial, First Commonwealth shall afford
Pittsburgh Financial 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 First Commonwealth and FCB.

         4.7 NYSE. First Commonwealth shall use reasonable commercial efforts to
have the shares of First Commonwealth Common Stock which are to be issued in
exchange for the Stock Election Shares approved for listing on the NYSE.

         4.8 UPDATING OF REPRESENTATIONS. At all times to and including, and as
of, the Closing, First Commonwealth shall inform Pittsburgh Financial in writing
of any and all facts necessary to amend or supplement the representations and
warranties made herein so that the representations and warranties remain true
and correct in all respects; provided, however, that before such amendment,
supplement or update may be deemed to be a part of this Agreement, Pittsburgh
Financial shall have agreed in writing to each amendment, supplement or update
made subsequent to the date of this Agreement as an amendment to this Agreement.

         4.9 INDEMNIFICATION. From and after the Effective Time, First
Commonwealth shall indemnify and hold harmless each present and former director,
officer and employee of Pittsburgh Financial and BankPittsburgh determined as of
the Effective Time (the "Indemnified Parties") against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time (collectively, "Claims"), to the fullest extent to
which such Indemnified Parties were entitled under Pennsylvania law, the
Articles of Incorporation, Charter and Bylaws of Pittsburgh Financial and
BankPittsburgh as in effect on the date hereof, provided, however, that all
rights to indemnification in respect to any claim asserted or made within such
period shall continue until the final disposition of such claim.

         Any Indemnified Party wishing to claim indemnification under this
Section 4.9, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify First Commonwealth, but the failure to so
notify shall not relieve First Commonwealth of any liability it may have to such
Indemnified Party if such failure does not materially prejudice First
Commonwealth. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) First
Commonwealth shall have the right to assume the defense thereof and First
Commonwealth shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if First
Commonwealth elects not to assume such defense or counsel for the Indemnified
Parties advises that there are issues which raise conflicts of interest between
First Commonwealth and the Indemnified Parties, the Indemnified Parties may
retain counsel which is reasonably satisfactory to First Commonwealth, and First
Commonwealth shall pay, promptly as statements therefor are received, the


                                      I-24


reasonable fees and expenses of such counsel for the Indemnified Parties (which
may not exceed one firm in any jurisdiction unless the use of one counsel for
such Indemnified Parties would present such counsel with a conflict of
interest), (ii) the Indemnified Parties will cooperate in the defense of any
such matter, and (iii) First Commonwealth shall not be liable for any settlement
effected without its prior written consent, which consent shall not be withheld
unreasonably.

         In the event that First Commonwealth or any of its respective
successors or assigns transfers all or substantially all of its properties and
assets to any person, then, and in each such case, the successors and assigns of
such entity shall assume the obligations set forth in this Section 4.9.

         4.10 INSURANCE. First Commonwealth shall maintain a directors' and
officers' liability insurance policy covering the Indemnified Parties' Costs in
connection with any Claims for a period of three (3) years after the Effective
Time at annual premiums no greater than 150% of the annual premium of the
directors' and officers' liability insurance maintained by Pittsburgh Financial
and BankPittsburgh as of the date hereof. With the prior written consent of
First Commonwealth, such insurance policy may be acquired by Pittsburgh
Financial prior to the Effective Time.

                                   ARTICLE 5

                        COVENANTS OF PITTSBURGH FINANCIAL

         5.1 SHAREHOLDERS' MEETING. Pittsburgh Financial shall call a special
meeting of the Pittsburgh Financial Shareholders to be held as soon as
practicable after the effectiveness of the Registration Statement for purposes
of voting upon the transactions contemplated hereby and Pittsburgh Financial
shall use reasonable commercial efforts to solicit and obtain the votes of the
Pittsburgh Financial Shareholders in favor of the transactions contemplated
hereby and, subject to the provisions of Section 5.4, the Board of Directors of
Pittsburgh Financial shall recommend approval of such transactions by such
holders. In connection with the Pittsburgh Financial Shareholders' Meeting,
First Commonwealth and Pittsburgh Financial shall cooperate in the preparation
of the Proxy Statement/Prospectus and, with the approval of each of First
Commonwealth and Pittsburgh Financial, which approvals will not be unreasonably
withheld, the Proxy Statement/Prospectus will be mailed to the Pittsburgh
Financial Shareholders.

         5.2 CONDUCT OF BUSINESS -- AFFIRMATIVE COVENANTS. Unless the prior
written consent of First Commonwealth shall have been obtained, and, except as
otherwise contemplated herein:

                  (a) Pittsburgh Financial and each Pittsburgh Financial
Subsidiary shall:

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

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

                           (iii) Take no action, unless otherwise required by
law, rule or regulation, that would (A) materially adversely affect the ability
of any of them or First Commonwealth to obtain any necessary approvals of
Regulatory Authorities 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
obligations under, all Material Contracts;


                                      I-25


                           (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 the Pittsburgh Financial, or any Pittsburgh
Financial 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 Pittsburgh Financial and each Pittsburgh Financial
Subsidiary and to facilitate the retention of such customers after the Effective
Time; and

                           (vii) Maintain, renew, keep in full force and effect,
and preserve its business organization and material rights and franchises,
permits and licenses, and to use reasonable commercial efforts to maintain
positive relations with its present employees so that such employees will
continue to perform effectively and will be available to Pittsburgh Financial
and the Pittsburgh Financial Subsidiaries or First Commonwealth and the First
Commonwealth Subsidiaries at and after the Effective Time, and to use reasonable
commercial efforts to maintain its existing, or substantially equivalent, credit
arrangements with banks and other financial institutions and to assure the
continuance of the customer relationships of Pittsburgh Financial and each
Pittsburgh Financial Subsidiary.

                  (b) Pittsburgh Financial agrees to use reasonable commercial
efforts to assist First Commonwealth in obtaining the Government Approvals
necessary to complete the transactions contemplated hereby, and Pittsburgh
Financial shall provide to First Commonwealth or to the appropriate governmental
authorities all information reasonably required to be submitted in connection
with obtaining such approvals;

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

                  (d) At all times to and including, and as of, the Closing,
Pittsburgh Financial shall inform First Commonwealth in writing of any and all
facts necessary to amend or supplement the representations and warranties made
herein and the Pittsburgh Financial Disclosure Schedules attached hereto as
necessary so that the representations and warranties and information provided in
the schedules remain true and correct in all respects; provided, however, that
any such updates to the Pittsburgh Financial Disclosure Schedules shall be
required prior to the Closing only with respect to matters which represent
material changes to the Pittsburgh Financial Disclosure Schedules and the
information contained therein; and provided further, that before such amendment,
supplement or update may be deemed to be a part of this Agreement, First
Commonwealth shall have agreed in writing to each amendment, supplement or
update to the Pittsburgh Financial Disclosure Schedules made subsequent to the
date of this Agreement as an amendment to this Agreement;

                  (e) Between the date of this Agreement and the Closing Date,
(i) Pittsburgh Financial shall afford First Commonwealth 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 Pittsburgh Financial and the Pittsburgh
Financial Subsidiaries. Pittsburgh Financial shall provide reasonable assistance
to First Commonwealth in its investigation of matters relating to Pittsburgh
Financial and the Pittsburgh Financial Subsidiaries; and (ii) subject to the
provisions of applicable law and regulation, Pittsburgh Financial shall furnish
promptly to First Commonwealth (A) a copy of each material report, schedule and
other document filed by Pittsburgh


                                      I-26


Financial and the Pittsburgh Financial Subsidiaries with any Regulatory
Authority and (B) all other information concerning the business, interest rate
risk, properties and personnel of Pittsburgh Financial and the Pittsburgh
Financial Subsidiaries as First Commonwealth may reasonably request (other than
documents or other materials relating to the transaction contemplated herein),
provided that no investigation pursuant to this Section 5.2 shall affect or be
deemed to modify or waive any representation or warranty made by Pittsburgh
Financial in this Agreement or the conditions to the obligations of Pittsburgh
Financial to consummate the transactions contemplated by this Agreement;

                  (f) Pittsburgh Financial has taken or will take all steps
necessary to exempt the transactions contemplated by this Agreement from any
applicable state takeover or similar law or takeover or similar provision in the
charter documents or bylaws of Pittsburgh Financial and the Pittsburgh Financial
Subsidiaries, including without limitation any provisions of the Articles of
Incorporation of Pittsburgh Financial restricting the ownership or acquisition
of Pittsburgh Financial's capital stock or imposing any "fair price" or
supermajority director or stockholder vote requirements; and

                  (g) Subject to the terms and conditions of this Agreement,
Pittsburgh Financial agrees to use reasonable commercial efforts and 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 and regulations to satisfy
the conditions to Closing contained herein and to consummate and make effective
the transactions contemplated by this Agreement, including, without limitation,
using 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.

         5.3 CONDUCT OF BUSINESS -- NEGATIVE COVENANTS. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, Pittsburgh Financial covenants and agrees it will neither do, nor
agree or commit to do, nor permit any Pittsburgh Financial 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 First Commonwealth:

                  (a) Except as expressly contemplated by this Agreement or the
Plans of Merger, amend its Articles of Incorporation or Bylaws; or

                  (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 Pittsburgh Financial Common Stock; or (v) pay or declare a cash
dividend or make or declare any other type of distribution on the Pittsburgh
Financial Common Stock (except that Pittsburgh Financial may pay the regular
quarterly cash dividend in an amount consistent with past practice and not
exceeding $0.095 per share); or

                  (c) Acquire 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 Pittsburgh
Financial Subsidiaries, (ii) foreclosures in the Ordinary Course of Business and
not knowingly exposing it to liability by reason of Hazardous Materials, or
(iii) acquisitions of control in its fiduciary capacity; or

                  (d) Except in connection with the exercise of the Pittsburgh
Financial Options listed on the Pittsburgh Financial Disclosure Schedule or as
expressly permitted by this Agreement or the Plans of Merger, (i) issue, sell,
agree to sell, or otherwise dispose of or otherwise permit to become outstanding
any additional shares of Pittsburgh Financial Common Stock or any other capital



                                      I-27


stock of Pittsburgh Financial or of any Pittsburgh Financial 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, or (ii) sell, agree to sell, or otherwise dispose of any substantial part
of the assets or earning power of Pittsburgh Financial or of any Pittsburgh
Financial Subsidiary; or (iii) sell, agree to sell, or otherwise dispose of any
asset of Pittsburgh Financial or any Pittsburgh Financial 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 or entity; or

                  (e) Incur, or permit any Pittsburgh Financial Subsidiary to
incur, any additional debt obligation or other obligation for borrowed money
except in the Ordinary Course of Business; or

                  (f) Grant any increase in compensation or benefits to any of
its employees or officers except for routine annual salary increases not to
exceed 4% of such employee's or officer's annual salary for the current fiscal
year; pay any bonus; enter into any severance agreements with any of its
officers or employees; grant any increase in fees or other increases in
compensation or other benefits to any director of Pittsburgh Financial or of any
Pittsburgh Financial Subsidiary; or effect any change in retirement benefits for
any class of its employees or officers, unless such change is required by
applicable law; or

                  (g) Hire a new employee with an annual compensation in excess
of Fifty Thousand Dollars ($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 Pittsburgh Financial or any Pittsburgh
Financial 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; or

                  (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; or

                  (i) Enter into any new service contracts with an annual
expense in excess of Fifteen Thousand Dollars ($15,000), other than contracts
contemplated by this Agreement, purchase or sale agreements or lease agreements
that are material to Pittsburgh Financial or any Pittsburgh Financial
Subsidiary; or

                  (j) Make any capital expenditure except for ordinary
purchases, repairs, renewals or replacements in an amount less than Fifteen
Thousand Dollars ($15,000) per individual expenditure; or

                  (k) Other than in the Ordinary Course of Business, sell,
transfer, mortgage, encumber or otherwise dispose of any of its properties,
leases or assets to any person, or cancel, release or assign any indebtedness of
any person, except pursuant to contracts or agreements in force at the date of
this Agreement; or

                  (l) Other than as contemplated by this Agreement, enter into,
renew, amend or terminate any Material Contract or material lease of real or
personal property; or


                                      I-28


                  (m) Settle any claim, action or proceeding involving any
liability of Pittsburgh Financial or any Pittsburgh Financial Subsidiaries for
money damages in excess of Twenty-Five Thousand Dollars ($25,000) or agree in
connection with any such settlement to material restrictions upon the operations
of Pittsburgh Financial or any Pittsburgh Financial Subsidiaries; or

                  (n) Change its method of accounting in effect at September 30,
2002, except as required by changes in GAAP as recommended or approved by
Pittsburgh Financial's independent auditors or as required by regulatory
accounting principles or regulatory requirements; or

                  (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 consistent
with past practice; or

                  (p) Make, renegotiate, renew, increase, extend or purchase any
loan, lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing, except in
the Ordinary Course of Business consistent with past practices, and in
individual loan amounts of less than Five Hundred Thousand Dollars ($500,000) or
aggregate amounts of less than One Million Dollars ($1,000,000), as determined
under applicable regulatory loan to one borrower requirements; or

                  (q) 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; or

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

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

                  (t) Grant or commit to grant any new extension of credit to
any officer, director or holder of two percent (2%) or more of the outstanding
Pittsburgh Financial 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 two percent (2%) of the
capital of BankPittsburgh 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; or

                  (u) Sell, purchase, enter into a material lease, relocate,
open or close any office, or file an application pertaining to such action with
any government entity; or

                  (v) 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, except in the Ordinary Course of Business; or

                  (w) Agree in writing or otherwise to take any of the foregoing
actions.

         5.4 ACQUISITION PROPOSALS. From the date hereof until the Closing or
the termination hereof, Pittsburgh Financial shall not, nor shall Pittsburgh
Financial authorize or permit any officers, directors, employees,
representatives or other agents of Pittsburgh Financial or any Pittsburgh
Financial Subsidiary to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal or


                                      I-29


(ii) engage in negotiations with, or disclose any nonpublic information relating
to Pittsburgh Financial or any Pittsburgh Financial Subsidiary or afford access
to the properties, books or records of Pittsburgh Financial or any Pittsburgh
Financial Subsidiary to, any Person that may be considering making, or has made,
an Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent Pittsburgh Financial or the Board of Directors of
Pittsburgh Financial 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 Pittsburgh Financial or any Pittsburgh
Financial Subsidiary to, or entering into negotiations with, any Person in
connection with an unsolicited Acquisition Proposal by such Person, if (a)
Pittsburgh Financial's Board of Directors determines in good faith that such
action is necessary to comply with their fiduciary duties to the shareholders of
Pittsburgh Financial under applicable law; (b) prior to furnishing any such
nonpublic information to, or entering into discussions or negotiations with,
such Person, Pittsburgh Financial's Board of Directors receives from such Person
an executed confidentiality agreement with customary terms and (c) Pittsburgh
Financial'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 Pittsburgh Financial's
shareholders 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 Pittsburgh
Financial's Board of Directors shall not recommend that the shareholders of
Pittsburgh Financial tender their shares of Pittsburgh Financial 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,
informing the shareholders of Pittsburgh Financial 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)
Pittsburgh Financial's Board of Directors determines in good faith that such
action is necessary to comply with its fiduciary duties under applicable law and
(ii) Pittsburgh Financial's Board of Directors concludes in good faith that the
Acquisition Proposal is a Superior Proposal.

Pittsburgh Financial will promptly notify First Commonwealth after receipt of
any Acquisition Proposal or any request for nonpublic information relating to
Pittsburgh Financial or any Pittsburgh Financial Subsidiary or for access to the
properties, books or records of Pittsburgh Financial or any Pittsburgh Financial
Subsidiary by any Person that has made an Acquisition Proposal and will keep
First Commonwealth fully 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 Superior Proposal, and state whether or not the Board of
Directors of Pittsburgh Financial intends to make a Subsequent Determination.
For a period of three business days following such notice, Pittsburgh Financial
shall not take any action with respect to the Acquisition Proposal and shall
provide an opportunity for First Commonwealth to propose such adjustments to the
terms and conditions of this Agreement as would enable the Board of Directors of
Pittsburgh Financial to proceed with the transactions contemplated herein on
such adjusted terms.

         5.5 ACCRUALS AND RESERVES. At the request of First Commonwealth,
Pittsburgh Financial shall establish such additional accruals and reserves as
may be necessary to conform Pittsburgh Financial's accounting and credit loss
reserve practices and methods to those of First Commonwealth; provided, however,
that Pittsburgh Financial shall not be required to take such action prior to the



                                      I-30


satisfaction or waiver of all conditions to Closing set forth in Article 6
(other than those conditions relating to the delivery of certificates, opinions
and other instruments and documents at the Closing); 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 Pittsburgh Financial pursuant to this Section 5.5
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 Pittsburgh Financial or its management with any such adjustments.

         5.6 AFFILIATE AGREEMENTS. Pittsburgh Financial will use reasonable
commercial efforts to cause each person who is an Affiliate of Pittsburgh
Financial for purposes of Rule 145 under the Securities Act to execute and
deliver to First Commonwealth on or before the mailing of the Proxy
Statement/Prospectus for the Pittsburgh Financial Shareholders' Meeting an
agreement in such form as First Commonwealth may reasonably request restricting
the disposition of the shares of First Commonwealth Common Stock to be received
by such person in exchange for such person's shares of Pittsburgh Financial
Common Stock.

                                   ARTICLE 6

                              CONDITIONS TO CLOSING

         6.1 CONDITIONS TO THE OBLIGATIONS OF PITTSBURGH FINANCIAL. Unless
waived in writing by Pittsburgh Financial, all of the obligations of Pittsburgh
Financial 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 First Commonwealth 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. First
Commonwealth 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 First
Commonwealth described elsewhere in this Agreement, Pittsburgh Financial shall
have received the following documents and instruments:

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

                                    (A) First Commonwealth's Board of Directors
has duly adopted resolutions (copies of which shall be attached to such
certificate) approving this Agreement (including the Holding Company Plan of
Merger) 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;


                                      I-31


                                    (B) each person executing this Agreement on
behalf of First Commonwealth is an officer of First Commonwealth 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 First
Commonwealth attached to such certificate remain in full force and effect.

                           (ii) a certificate signed by a duly authorized
officer of First Commonwealth 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. Pittsburgh Financial shall have been
furnished with an opinion of counsel to First Commonwealth, dated as of the
Closing Date, to the effect that the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code.

         6.2 CONDITIONS TO THE OBLIGATIONS OF FIRST COMMONWEALTH. Unless waived
in writing by First Commonwealth, all of the obligations of First Commonwealth
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 Pittsburgh Financial contained in Section 4, 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. Pittsburgh
Financial 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, First Commonwealth shall have received the
following documents and instruments:

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

                                    (A) Pittsburgh Financial's Board of
Directors and the Pittsburgh Financial Shareholders have duly adopted
resolutions (copies of which shall be attached to such certificate) approving
this Agreement (including the Holding Company Plan of Merger) 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 Pittsburgh Financial is an Officer of Pittsburgh Financial, 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


                                      I-32


                                    (C) the charter documents of Pittsburgh
Financial attached to such certificate remain in full force and effect; and

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

                  (d) Accruals and Reserves. Pittsburgh Financial shall have
established any accruals and reserves described in Section 5.5.

         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. That no claim, action,
suit, investigation or other proceeding shall be pending or threatened before
any court or governmental agency 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) Government Approvals. The Parties hereto shall have
received all applicable Government Approvals for the consummation of the
transactions contemplated herein and all waiting periods incidental to such
approvals or notices given shall have expired;

                  (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
Regulatory Authority;

                  (d) Shareholder Vote. The Pittsburgh Financial Shareholders
shall have approved of the transactions contemplated hereby by the applicable
requisite vote; and

                  (e) NYSE Listing. The shares of First Commonwealth Common
Stock that shall be issued to the stockholders of Pittsburgh Financial 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, as follows:

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

                  (b) By First Commonwealth or Pittsburgh Financial:

                           (i) In the event the Closing shall not have occurred
by March 31, 2004, unless the failure of the Closing to occur shall be due to
the failure of the party seeking to terminate this Agreement to perform its
obligations hereunder in a timely manner; provided, however, that, if First
Commonwealth and FCB shall have filed any and all applications to obtain the
requisite Government Approvals within sixty (60) days of the date hereof, and if
the Closing shall not have occurred solely


                                      I-33


because of a delay in the approval of any such application, then First
Commonwealth may, by written notice to Pittsburgh Financial, extend the date
referenced in the first sentence of this Section 7.1(b) to June 30, 2004;

                           (ii) Upon denial of any Government Approval necessary
for the consummation of the Merger or the Bank Merger (or should such approval
be conditioned upon a substantial deviation from the transactions contemplated);
provided, however, that either First Commonwealth or Pittsburgh Financial may,
upon written notice to the other, extend the term of this Agreement 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;
provided, further, that no party shall have the right to terminate this
Agreement pursuant to this Section 7.1(b)(ii) if such denial shall be due to the
failure of that party to perform or observe the covenants and agreements of such
party set forth herein; or

                           (iii) If the Pittsburgh Financial Shareholders do not
approve this Agreement and the Merger at the Pittsburgh Financial Shareholders'
Meeting or any adjournment thereof.

                  (c) By First Commonwealth:

                           (i) if Pittsburgh Financial's Board of Directors
shall have (a) failed to include in the Proxy Statement its recommendation
without modification or qualification that the shareholders of Pittsburgh
Financial approve this Agreement and the Merger, (b) approved or recommended or
entered into any agreement with respect to any other Acquisition Proposal, (c)
withdrawn, modified or qualified its recommendation of this Agreement or the
Merger in a manner adverse to the interests of First Commonwealth or (d)
resolved to do any of the foregoing; or

                           (ii) If Pittsburgh Financial 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 First Commonwealth set forth in Section 6.2, First Commonwealth
has notified Pittsburgh Financial of the breach, and either such breach is
incapable of being cured or, if capable of being cured, has not been cured
within 15 days after the notice of breach.

                  (d) By Pittsburgh Financial:

                           (i) If First Commonwealth 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 Pittsburgh Financial set forth in Section 6.1, Pittsburgh
Financial has notified First Commonwealth of the breach, and either such breach
is incapable of being cured or, if capable of being cured, has not been cured
within 15 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, Pittsburgh Financial'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 shareholders of Pittsburgh
Financial 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 breach of this Agreement or for any misstatement or
misrepresentation made hereunder prior to such termination, or be


                                      I-34


deemed to constitute a waiver of any available remedy for any such breach,
misstatement or misrepresentation.

         7.3 TERMINATION FEE.

                  (a) Upon Termination. If (i) First Commonwealth shall
terminate this Agreement pursuant to clause (i) of Section 7.1(c) or (ii)
Pittsburgh Financial shall terminate this Agreement pursuant to clause (ii) of
Section 7.1(d), then, in either case, Pittsburgh Financial shall pay to First
Commonwealth, 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
Pittsburgh Financial Common Stock as of the date of termination times the Per
Share Cash Consideration (the "Termination Fee").

                  (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 First Commonwealth) is pending at the time
of the Pittsburgh Financial Shareholders' Meeting and (iii) with 12 months after
the date of the Pittsburgh Financial Shareholders' Meeting, Pittsburgh Financial
shall consummate an Alternative Transaction, then Pittsburgh Financial shall pay
to First Commonwealth on demand an amount in cash equal to the Termination Fee;
provided that no such amount shall be payable if the Termination Fee was 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 and 1.11 shall survive the Closing, (ii) Section 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)
covenants that by their terms are to be performed after the Effective Time,
including, without limitation, the covenants set forth in Section 4.4, shall
surviving the Closing.

         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 Pittsburgh Financial:         Pittsburgh Financial Corp.
                                    1001 Village Run Road
                                    Wexford, PA  15090
                                    Fax:    (724) 933-4533
                                    Attn:   J. Ardie "Butch" Dillen

With a copy to:                     Elias, Matz, Tiernan & Herrick L.L.P.
                                    734 15th Street, N.W.
                                    12th Floor
                                    Washington, DC  20005
                                    Fax:    (202) 347-2172
                                    Attn:   Kevin M. Houlihan


                                      I-35


If to First Commonwealth:           First Commonwealth Financial Corporation
                                    22 North Sixth Street
                                    Indiana, PA 15701
                                    Fax:    (724) 349-6427
                                    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,
this Agreement may be amended or supplemented by a written instrument signed by
First Commonwealth and Pittsburgh Financial; provided that, after the adoption
of this Agreement by the shareholders of Pittsburgh Financial, without the
affirmative vote of the holders of shares of Pittsburgh Financial Common Stock
representing a majority of the votes that may be cast by the holders of all then
outstanding shares of Pittsburgh Financial Common Stock, Pittsburgh Financial
will not (i) enter into any amendment to this Agreement that would 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 Pittsburgh
Financial 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
Pittsburgh Financial 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.

         8.6 ENTIRE AGREEMENT, ASSIGNABILITY, ETC. This Agreement (including the
Pittsburgh Financial Disclosure Schedule) 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, (ii) is not intended to confer any right or remedies upon
any Person other than the parties hereto, the shareholders of Pittsburgh
Financial, and other than with respect to the covenants and agreements set forth
in Sections 4.4, 4.9, and 4.10, to be performed or satisfied following the
Effective Time, and (iii) shall not be assignable by either party without the
prior written consent of the other party.


                                      I-36


         8.7 EXCLUSIVITY OF REPRESENTATIONS. Pittsburgh Financial has not and
shall not be deemed to have made to First Commonwealth any representation or
warranty other than as expressly made by Pittsburgh Financial in Section 3.
First Commonwealth have not and shall not be deemed to have made to Pittsburgh
Financial any representation or warranty other than as expressly made by First
Commonwealth in Section 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. Promptly following the execution of this Agreement,
Pittsburgh Financial and First Commonwealth shall issue a joint press release
announcing the transactions contemplated hereby, which shall be reasonably
acceptable to Pittsburgh Financial and First Commonwealth. Following that
release and prior to the consummation of the Merger, except as required by law
or any listing agreement with a securities exchange or interdealer quotation
system, neither Pittsburgh Financial nor First Commonwealth nor any Subsidiary
of Pittsburgh Financial or First Commonwealth 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 approval 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 or interdealer quotation system, the party making such communication
agrees 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
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.

         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. Whether or not the transactions contemplated
by this Agreement are consummated, First Commonwealth and Pittsburgh Financial
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.


                                      I-37


         8.15 REMEDIES CUMULATIVE. All remedies provided in this Agreement, by
law, equity or otherwise, shall be cumulative and not alternative.

         8.16 INCORPORATION OF DISCLOSURE SCHEDULE. The Pittsburgh Financial
Disclosure Schedule is incorporated herein by reference and made a part hereof.
For purposes of this Agreement, any matter disclosed in any portion of the
Pittsburgh Financial Disclosure Schedule shall be deemed to have been disclosed
for purposes of and to be an exception to all representations and warranties of
Pittsburgh Financial in this Agreement.


                            [Signature page follows.]



                                      I-38



         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/ JOHNSTON A. GLASS
                                      ---------------------------------
                                  Name: Johnston A. Glass
                                  Title: President and Chief Executive Officer


                                  Pittsburgh Financial Corp.


                                  By: /s/ J. ARDIE DILLEN
                                      ---------------------------------
                                  Name: J. Ardie Dillen
                                  Title: Chairman, President and Chief
                                         Executive Officer



                                  Pittsburgh Savings Bank


                                  By: /s/ J. ARDIE DILLEN
                                      ---------------------------------
                                  Name: J. Ardie Dillen
                                  Title: Chairman, President and Chief
                                         Executive Officer




                                      I-39



                                    EXHIBIT A

                         HOLDING COMPANY PLAN OF MERGER

         Section 1. Parties. The parties to the merger are First Commonwealth
Financial Corporation, a Pennsylvania corporation ("First Commonwealth") and
Pittsburgh Financial Corporation, a Pennsylvania corporation ("Pittsburgh
Financial").

         Section 2. Surviving Corporation. In the merger, Pittsburgh Financial
will be merged with and into First Commonwealth, with First Commonwealth as the
surviving corporation in the merger, pursuant to the provisions of the
Pennsylvania Business Corporation Law (the "Merger"). The Merger shall be
effective upon filing Articles of Merger with the Pennsylvania Secretary of the
Commonwealth. The separate existence of Pittsburgh Financial shall cease at the
effective time of the Merger.

         Section 3. Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of First Commonwealth, in effect immediately prior to
the consummation of the Merger, shall be the Articles of Incorporation and
Bylaws of the Surviving Corporation.

         Section 4. Directors and Officers. The directors and any officers of
First Commonwealth at the effective time of the Merger shall, from and after
such effective time, be the directors and the officers of the surviving
corporation, and shall hold their positions until the election or appointment
and qualification of their respective successors or until their tenure is
otherwise terminated in accordance with the Articles of Incorporation and Bylaws
of the surviving corporation.

         Section 5. Effects of the Merger. At the effective time of the Merger,
all property, real, personal and mixed, and all debts due to either First
Commonwealth or Pittsburgh Financial, as well as all other things and causes of
action belonging to each of them, shall be vested in the surviving corporation,
and shall thereafter be the property of the surviving corporation as they were
of each of the corporations that have been merged, and all debts, liabilities
and duties of each of the corporations that have been merged shall thereafter
attach to the surviving corporation and may be enforced against it to the same
extent as if such debts, liabilities and duties had been incurred or contracted
by it.

         Section 6. Conversion of Shares. Except as otherwise provided in the
Merger Agreement (as defined below), each outstanding share of common stock,
$0.01 par value, of Pittsburgh Financial, shall be converted, at the election of
the holder thereof (subject to proration) into the right to receive (a) $20 in
cash, or (b) a number of shares of First Commonwealth common stock, par value
$1.00 per share, equal to (x) $20 divided by (y) the average closing price of
the First Commonwealth common stock on the New York Stock Exchange for the ten
trading days ending with the third trading day prior to the date on which the
Merger is consummated. Notwithstanding the foregoing, each share of Pittsburgh
Financial common stock that is owned by First Commonwealth, Pittsburgh
Financial, or any subsidiary of First Commonwealth or Pittsburgh Financial, or
that is held in treasury by Pittsburgh Financial, shall be cancelled upon
consummation of the Merger, and no consideration shall be paid for such shares
in the Merger.

         The Merger is being effected pursuant to and is subject to the terms of
the Agreement and Plan of Merger (the "Merger Agreement") dated as of August 8,
2003 among First Commonwealth, First Commonwealth Bank, a Pennsylvania-chartered
banking corporation, Pittsburgh Financial, and Pittsburgh Savings Bank, a
Pennsylvania-chartered stock savings bank.


                                      I-40





                                    EXHIBIT B

                               BANK PLAN OF MERGER

         Section 1. Parties. The parties to the merger are First Commonwealth
Bank, a Pennsylvania-chartered banking corporation ("FCB") and Pittsburgh
Savings Bank, a Pennsylvania-chartered stock savings bank ("PSB").

         Section 2. Merger. Pursuant to title 7, chapter 16 of the Pennsylvania
Banking Code of 1965, as amended, PSB shall be merged with and into FCB under
the charter of FCB, and FCB shall be the surviving bank. The merger shall be
effective upon filing of the Articles of Merger with the Pennsylvania Department
of State (the "Effective Time").

         Section 3. Articles of Incorporation and Bylaws. The Articles of
Incorporation and Bylaws of FCB, in effect immediately prior to the consummation
of the merger, shall be the Articles of Incorporation and Bylaws of the
surviving bank.

         Section 4. Directors and Officers. The persons serving as the board of
directors and officers of FCB immediately prior to the merger shall be the
directors and officers of the surviving bank, and shall hold their positions
until the election or appointment and qualification of their respective
successors or until their tenure is otherwise terminated in accordance with the
Articles of Incorporation and Bylaws of the surviving bank.

         Section 5. Effects of the Merger. All of the assets of PSB shall pass
to and vest in FCB without any conveyance or other transfer in accordance with
the Pennsylvania Banking Code, and FCB will be responsible for all liabilities
of PSB existing as of the Effective Time.

         Section 6. Conversion of Shares. Each issued and outstanding share of
common stock of PSB immediately before the merger shall be converted into one
share of common stock of FCB.

         Section 7. Articles of Merger. PSB and FCB will execute Articles of
Merger in compliance with the Pennsylvania Banking Code and will deliver the
executed Articles of Merger to the Pennsylvania Department of Banking for its
approval and for filing with the Pennsylvania Department of State.

         The merger is being effected pursuant to and is subject to the terms of
the Agreement and Plan of Merger dated as of August 8, 2003 among First
Commonwealth Financial Corporation, a Pennsylvania corporation, FCB, Pittsburgh
Financial Corporation, a Pennsylvania corporation, and PSB.



                                      I-41





                                    EXHIBIT C

                                   DEFINITIONS

         "Acquisition Proposal" means any tender offer, agreement, understanding
or other proposal of any nature pursuant to which any Person, other than First
Commonwealth or a First Commonwealth Subsidiary, would directly or indirectly
engage in an Alternative Transaction.

         "Affiliate" of a party means any person, partnership, corporation,
association or other legal entity directly or indirectly controlling, controlled
by or under common control with that party.

         "Agreement" shall have the meaning given to such term in the first
paragraph.

         "Aggregate Cash Consideration" means $11,399,048.

         "Alternative Transaction" means a transaction or series of transactions
in which any Person, other than First Commonwealth or a First Commonwealth
Subsidiary, merges or consolidates with or into Pittsburgh Financial or
BankPittsburgh, acquires substantially all of the assets of Pittsburgh Financial
or BankPittsburgh, 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
Pittsburgh Financial or BankPittsburgh.

         "ATM" means an automated teller machine.

         "Average Closing Price" means the average closing price of the First
Commonwealth Common Stock on the NYSE for the ten trading days ending with the
third trading day prior to the Closing.

         "Balance Sheet Date" shall have the meaning given to such term in
Section 3.13.

         "Bank Common Stock" shall have the meaning given to such term in
Section 3.17.

         "Bank Merger" shall have the meaning given to such term in the
Recitals.

         "Bank Plan of Merger" shall have the meaning given to such term in the
Recitals.

         "BankPittsburgh" shall have the meaning given to such term in the
Recitals.

         "BHCA" shall have the meaning given to such term in Section 2.1.

         "Cancelled Option Holder" shall have the meaning given to such term in
Section 1.9(a)(i).

         "Cash Election Shares" shall have the meaning given to such term in
Section 1.10(a).

         "Claim" shall have the meaning given to such term in Section 4.9.

         "Closing" shall have the meaning given to such term in Section 1.12.

         "Closing Date" shall have the meaning given to such term in Section
1.12.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Continuing Employees" shall have the meaning given to such term in
Section 4.4(b).




                                      I-42


         "Continuing Option Holder" shall have the meaning given to such term in
Section 1.9(a)(ii).

         "Costs" shall have the meaning given to such term in Section 4.9.

         "Effective Time" shall have the meaning given to such term in Section
1.3.

         "Election Deadline" shall have the meaning given to such term in
Section 1.10(b).

         "Election Form" shall have the meaning given to such term in Section
1.10(a).

         "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, the
environment, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Materials.

         "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 (D) 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" shall have the meaning given to such term in Section 4.4(d).

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         "Exchange Agent" shall have the meaning given to such term in Section
1.10(a).

         "Exchange Ratio" shall be calculated by dividing (x) the Per Share Cash
Consideration by (y) the Average Closing Price.

         "FCB" shall have the meaning given to such term in the Recitals.

         "First Commonwealth" shall have the meaning given to such term in the
first paragraph.

         "First Commonwealth Common Stock" shall have the meaning given to such
term in the Recitals.

         "First Commonwealth Filings" shall have the meaning given to such term
in Section 2.6.

         "First Commonwealth Subsidiary" means any Person in which First
Commonwealth, directly or indirectly, owns at least a majority of the stock or
other equity interests of such Person or possess at least a majority of the
total voting power of such Person.

         "FDIC" shall have the meaning given to such term in Section 2.2.

         "FRB" shall have the meaning given to such term in Section 2.1.

         "GAAP" shall mean accounting principles generally accepted in the
United States, consistently applied.



                                      I-43


         "Government Approval" means the regulatory and government approvals
specified in Sections 2.5 and 3.5.

         "Hazardous Materials" means 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.

         "Holding Company Plan of Merger" shall have the meaning given to such
term in the Recitals.

         "Indemnified Parties" shall have the meaning given to such term in
Section 4.9.

         "Intellectual Property Rights" shall have the meaning given to such
term in Section 3.12(e).

         "IRS" shall mean the Internal Revenue Service.

         "Knowledge" means, with respect to any Person, the knowledge of such
Person's officers and management personnel, after a reasonable inquiry.

         "Leased Property" shall have the meaning given to such term in Section
3.12(g).

         "Leases" shall have the meaning given to such term in Section 3.12(f).

         "Material Adverse Change" or "Material Adverse Effect" shall mean, with
respect to any Person, any change, effect, event, occurrence or state of facts
that is, or would reasonably be expected to be, (i) materially adverse to the
business, financial condition or results of operations of such Person, other
than a change, effect, event, occurrence or state of facts resulting from (u)
any change in banking or similar laws, rules or regulations of general
applicability or interpretations thereof by courts or governmental authorities,
(v) any change in GAAP or regulatory accounting principles, in each case which
affects banks, savings banks or their holding companies generally, (x) changes
in general economic conditions or interest rates affecting savings banks and
banks generally, (y) expenses incurred in connection with the transactions
contemplated hereby and (z) the effects of any action or omission taken pursuant
to this Agreement or with the prior consent of the other party or (ii) which
materially impairs the ability of such Person to consummate the transactions
contemplated hereby.

         "Material Contract" means all of the following written contracts,
agreements, mortgages, security agreements, deeds of trust, guarantees or
commitments to which Pittsburgh Financial or any Pittsburgh Financial Subsidiary
is a party, or by which it may be bound: (a) any employment, bonus or consulting
contract; (b) any contract concerning a partnership or joint venture; (c) any
contract or agreement that restricts Pittsburgh Financial or any Pittsburgh
Financial Subsidiary (or would restrict such First Commonwealth as the surviving
corporation after the Effective Time) from competing in any line of business in
any location; (d) any loan, agreement, note, capital lease agreement or other
agreement evidencing or related to indebtedness of Pittsburgh Financial or any
Pittsburgh Financial Subsidiary for borrowed money; (e) any mortgage, pledge,
conditional sales contract, security agreement, option, or any other similar
agreement that creates any lien, claim, charge or encumbrance on or any right to
purchase any asset of Pittsburgh Financial or any Pittsburgh Financial
Subsidiary, or any interest therein (other than those in which BankPittsburgh is
mortgagee, secured party or deed of trust beneficiary, in each case arising in
the ordinary course of its business); (f) any agreement relating to business
acquisitions or dispositions not yet consummated; (g) any guarantee or
indemnification other than letters of credit or loan commitments issued by
BankPittsburgh in the Ordinary Course of Business; (h) any contract involving


                                      I-44


the payment or receipt of more than $25,000 or having a term or requiring
performance over a period of more than 90 days; or (i) any other contract that
is material to Pittsburgh Financial on a consolidated basis.

         "Merger" shall have the meaning given to such term in the Recitals.

         "Multiemployer Plans" shall have the meaning given to such term in
Section 3.14(c).

         "NYSE" means the New York Stock Exchange.

         "No-Election Shares" shall have the meaning given to such term in
Section 1.10(a).

         "Option Plans" means, collectively, the Pittsburgh Financial 1996 Stock
Option Plan and the Pittsburgh Financial 2000 Stock Option Plan.

         "Ordinary Course of Business" means, with respect to any Person, the
ordinary course of such person's business operations, consistent with past
practices.

         "PBC" shall have the meaning given to such term in Section 1.2.

         "PBCL" shall have the meaning given to such term in Section 1.1.

         "Pension Plan" shall have the meaning given to such term in Section
3.14(c).

         "Per Share Cash Consideration" shall have the meaning given to such
term in Section 1.4(a)(i).

         "Person" shall mean any natural person, corporation, partnership,
limited liability company, joint venture, association, business trust or any
other kind of entity.

         "PDB" shall have the meaning given to such term in Section 2.2.

         "Pinnacle" shall mean Pinnacle Settlement Group, LLC, a Pennsylvania
limited liability company.

         "Pittsburgh Financial" shall have the meaning given to such term in the
first paragraph.

         "Pittsburgh Financial Common Stock" shall have the meaning given to
such term in the Recitals.

         "Pittsburgh Financial Disclosure Schedule" shall have the meaning given
to such term in the introductory paragraph of Article 3.

         "Pittsburgh Financial Filings" shall have the meaning given to such
term in Section 3.8.

         "Pittsburgh Financial Option" shall have the meaning given to such term
in Section 1.9(a).

         "Pittsburgh Financial Shareholders" shall mean the holders of the
Pittsburgh Financial Common Stock.

         "Pittsburgh Financial Shareholders' Meeting" shall mean the special
meeting of Pittsburgh Financial Shareholders to be held pursuant to Section 5.1
of this Agreement, including any adjournment or adjournments thereof.


                                      I-45


         "Pittsburgh Financial Subsidiary" means any Person in which Pittsburgh
Financial, directly or indirectly, owns at least a majority of the stock or
other equity interests of such Person or possess at least a majority of the
total voting power of such Person, including, without limitation,
BankPittsburgh, FraMal Holdings Corporation, a Delaware corporation, Pinnacle,
and Pittsburgh Home Capital Trust I, a Delaware business trust.

         "Plan" shall have the meaning given to such term in Section 3.14(c).

         "Plans of Merger" shall mean the Holding Company Plan of Merger and the
Bank Plan of Merger.

         "Post-Termination Payments" shall have the meaning given to such term
in Section 4.4(g).

         "Proxy Statement/Prospectus" shall mean the proxy statement to be used
by Pittsburgh Financial to solicit proxies with a view to securing the approval
of the Pittsburgh Financial Shareholders of this Agreement and the Plan of
Merger, which shall also serve as the prospectus for the shares of First
Commonwealth Common Stock to be issued to the Pittsburgh Financial Shareholders.

         "Real Property" shall have the meaning given to such term in Section
3.12(g).

         "Registration Statement" shall have the meaning given to such term in
Section 4.2.

         "Regulatory Authorities" shall mean, collectively, the Department of
Justice, the FDIC, the SEC, the FRB, the PDB or any other state or federal
governmental or quasi-governmental entity which has, or may hereafter have,
jurisdiction over any of the transactions described in this Agreement.

         "SEC" shall mean the United States Securities and Exchange Commission.

         "Securities Act" shall mean the Securities Act of 1933, as amended.

         "SERP" shall have the meaning given to such term in Section 4.4(f).

         "Stock Election Shares" shall have the meaning given to such term in
Section 1.10(a).

         "Subsequent Determination" shall have the meaning given to such term in
Section 5.4(c).

         "Superior Proposal" means an unsolicited bona fide Acquisition Proposal
that the Board of Directors of Pittsburgh Financial determines in good faith,
after consultation with its financial advisors, to be reasonably likely to
result in a transaction that is more favorable to Pittsburgh Financial's
shareholders from a financial point of view than the transactions contemplated
by this Agreement.

         "Surviving Corporation" shall have the meaning given to such term in
the Recitals.

         "Termination Fee" shall have the meaning given to such term in Section
7.3(a).

         "401(k) Plan" shall have the meaning given to such term in Section
4.4(e).



                                      I-46


                                    ANNEX II

                PITTSBURGH FINANCIAL ANNUAL AND QUARTERLY REPORTS




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

                                    FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED: SEPTEMBER 30, 2002

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                          Commission File No.: 0-27522

                           PITTSBURGH FINANCIAL CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Pennsylvania                              25-1772349
-------------------------------------   ----------------------------------------
     (State or other jurisdiction                    (I.R.S. Employer
   of incorporation or organization)               Identification Number)

          1001 Village Run Road
          Wexford, Pennsylvania                           15090
-------------------------------------   ----------------------------------------
         (Address of Principal                          (Zip Code)
           Executive Offices)

       Registrant's telephone number, including area code: (724) 933-4509

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

                                 NOT APPLICABLE

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

                    COMMON STOCK (PAR VALUE $0.01 PER SHARE)
--------------------------------------------------------------------------------
                                (Title of Class)

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 reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] 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. [X]

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

The aggregate value of the 1,067,314 shares of Common Stock of the Registrant
issued and outstanding, which excludes 341,385 shares held by all directors and
executive officers of the Registrant as a group, was approximately $15.0 million
based on the last closing sales price of a share of Common Stock of $14.06 as of
March 31, 2002.

Number of shares of Common Stock outstanding as of December 13, 2002: 1,408,699

                       DOCUMENTS INCORPORATED BY REFERENCE

         List hereunder the following documents incorporated by reference and
the Part of the Form 10-K into which the document is incorporated:

(1)      Portions of the definitive proxy statement for the Annual Meeting of
         Stockholders are incorporated into Part III.

PART I.

ITEM 1. BUSINESS

GENERAL

         Pittsburgh Financial Corp. (the "Company") is a Pennsylvania
corporation and the sole stockholder of Pittsburgh Savings Bank (dba
BankPittsburgh) (the "Bank"), which converted to the stock form of organization
in April 1996. The business of the Company consists primarily of the business of
the Bank. Pinnacle Settlement Group, LLC ("PSG") is a majority owned subsidiary
of the Company. Its business relates primarily to providing title and settlement
services. FraMal Holdings Corporation ("FraMal") is a wholly owned subsidiary of
the Bank. At September 30, 2002, the Company had total consolidated assets of
$413.7 million, total consolidated deposits of $196.2 million, and total
consolidated stockholders' equity of $23.0 million.

         The Bank is a Pennsylvania-chartered stock savings bank which was
founded in 1942 and has expanded its operations over the years through the
acquisition of three savings institutions, one branch acquisition, and three de
novo branch offices. The Bank currently conducts business from its main office
in Pittsburgh, Pennsylvania and seven branch offices located in Allegheny and
Butler Counties, Pennsylvania. The Bank's deposits are insured by the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC") to the maximum extent permitted by law. References herein to the
Company refer to the consolidated operations of the Company and the Bank unless
otherwise noted.

         The Company is a community oriented financial institution which has
traditionally offered a variety of savings products to its retail customers. The
Company has historically concentrated its lending activities on real estate
loans secured by single family residential properties and construction loans on
primarily residential properties. At September 30, 2002, the total loan
portfolio amounted to $247.9 million or 59.9% of total consolidated assets as
compared to $293.9 million at September 30, 2001. The $46.0 million or 15.7%
decrease was primarily attributable to the historic level of loan principal
prepayments and repayments received on residential mortgage loans. In addition,
the Company is continuing its efforts to diversify its loans receivable
portfolio from its previous emphasis on one-to-four family residential lending
to a more broad based, full service commercial lending philosophy. It should be
noted that the largest individual dollar component of its loans receivable
portfolio will continue to be residential lending, as this has been a long term
Company focus. For the year ended September 30, 2002, multi-family residential
and commercial real estate loans increased $10.5 million or 23.6%. Commercial
term loans and lines of credit increased $4.1 million or 97.1%; one-to-four
family residential and residential construction loans decreased $52.6 million or
25.1%; home equity loans and lines decreased by $2.3 million or 11.0%; and
consumer loans decreased by $479,000 or 20.4%.

                                      II-2

         The Company also invests its funds in U.S. Government and agency
securities, as well as mortgage-backed, municipal, equity securities and short
term investments. At September 30, 2002, mortgage-backed securities were $84.1
million or 20.3% of total consolidated assets and other investment securities
were $40.2 million or 9.7% of total assets, as compared to $73.3 million or
17.2% and $28.0 million or 6.6%, respectively, at September 30, 2001.

         The Company derives its income principally from interest earned on
loans, securities and its other investments and, to a lesser extent, from fees
received in connection with the origination of loans and for other services. The
Company's primary expenses are interest expense on deposits, borrowings, and
other operating expenses.

         The Bank currently exceeds all applicable minimum regulatory capital
requirements. At September 30, 2002, the Bank had Tier 1 risk-based, total
risk-based and Tier 1 leverage capital levels of 13.05%, 14.29% and 7.57%,
respectively, as compared to the minimum requirements of 4.0%, 8.0% and 4.0%,
respectively.

         The Company, as a registered bank holding company, is subject to
examination and regulation by the Board of Governors of the Federal Reserve
System ("Federal Reserve Board") and the Pennsylvania Department of Banking (the
"Department"), and is subject to various reporting and other requirements of the
Securities and Exchange Commission ("Commission"). The Bank is also subject to
examination and comprehensive regulation by the Department, which is the Bank's
chartering authority, and by the FDIC, as the administrator of the SAIF. The
Bank is subject to certain reserve requirements established by the Federal
Reserve Board and is a member of the Federal Home Loan Bank ("FHLB") of
Pittsburgh, which is one of the 12 regional banks comprising the FHLB System.

LENDING ACTIVITIES

         GENERAL. At September 30, 2002, the Company's total loans receivable
portfolio ("total loan portfolio") amounted to $247.9 million, or 59.9% of total
assets at that date. The historic level of refinancing due to the level of
interest rates and, to a lesser extent, the Company's continued efforts to
diversify its loans receivable portfolio to a more broad based full service
commercial banking philosophy attributed to the decrease of $50.5 million or
24.7% in residential mortgages to $153.9 million or 62.1% of the Company's total
loan portfolio during the fiscal year ended September 30, 2002. During fiscal
2002, one-to-four family residential construction loans decreased by $2.0
million or 42.4% to $2.8 million; construction builder loans decreased $5.2
million or 41.0% to $7.5 million; multi-family residential and commercial real
estate loans increased by $10.5 million or 23.6% to $55.0 million; home equity
loans and lines, consumer loans and commercial loans increased $1.3 million or
4.9% to $28.8 million.

         Historically, the Company's lending activities have been concentrated
in its primary market area of Allegheny County and Butler County, Pennsylvania
and portions of the surrounding counties. The Company estimates that a
substantial majority of its mortgage loans are secured by properties located in
its primary market area, and that substantially all of its non-

                                      II-3

mortgage loan portfolio consists of loans made to residents and businesses
located in such primary market area.

         LOAN PORTFOLIO COMPOSITION. The following table sets forth the
composition of the Company's loan portfolio by type of loan at the dates
indicated.



                                                                         September 30,
                                   --------------------------------------------------------------------------------------------
                                        2002               2001               2000               1999               1998
                                   ---------------    ---------------     -------------      -------------     --------------
                                   Amount       %     Amount       %      Amount     %       Amount     %      Amount      %
                                   ------      ---    ------      ---     ------    ---      ------    ---     ------     ---
                                                                     (Dollars in Thousands)
                                                                                          
First mortgage loans:
  One-to-four family residential  $153,896    62.1%  $204,432    69.6%   $241,069   74.8%   $219,676   73.6%  $170,100   75.3%
  One-to-four family residential
    construction                     2,771     1.1      4,808     1.6       8,810    2.7      17,897    6.0      8,179    3.6
  Mortgage loans-construction
    Builder                          7,508     3.0     12,720     4.3      15,322    4.8      20,827    7.0     21,770    9.6
  Multi-family residential and
    commercial                      54,966    22.2     44,545    15.2      31,259    9.7      15,679    5.2      8,140    3.6
                                  --------   -----   --------   -----    --------  -----    --------  -----   --------  -----
                                   219,141    88.4    266,505    90.7     296,460   92.0     274,079   91.8    208,189   92.1
                                  --------   -----   --------   -----    --------  -----    --------  -----   --------  -----
Other loans:
  Commercial loans                   8,353     3.4      4,239     1.4       1,708    0.5       3,509    1.2      2,211    1.0
  Home equity loans and lines       18,549     7.5     20,839     7.1      21,508    6.7      18,556    6.2     13,372    5.9
  Consumer loans                     1,868     0.7      2,347     0.8       2,640    0.8       2,373    0.8      2,083    1.0
                                  --------   -----   --------   -----    --------  -----    --------  -----   --------  -----
                                    28,770             27,425              25,856             24,438            17,666
                                  --------           --------            --------           --------          --------
      Total loans receivable       247,911   100.0%   293,930   100.0%    322,316  100.0%    298,517  100.0%   225,855  100.0%
                                  --------   =====   --------   =====    --------  =====    --------  =====   --------  =====

  Allowance for loan losses         (3,023)            (2,644)             (2,238)            (1,957)           (1,738)
  Loans in process                  (4,496)            (6,892)            (13,222)           (18,997)          (12,227)
  Deferred loan fees                   329                451                 521                522                90
  Unamortized premium                   85                 60                  51                 --                --
                                  --------           --------            --------           --------          --------
     Loans receivable, net        $240,806           $284,905            $307,428           $278,085          $211,980
                                  ========           ========            ========           ========          ========


                                      II-4

         CONTRACTUAL PRINCIPAL REPAYMENTS AND INTEREST RATES. The following
table sets forth certain information at September 30, 2002 regarding the dollar
amount of loans maturing in the Company's total loan portfolio, based on the
contractual terms to maturity. Loans having no stated schedule of repayments and
no stated maturity are reported as due in one year or less.



                                                           Due 1-5 years       Due more than 5 years
                                          Due 1 year           after                 years after
                                           or less       September 30, 2002      September 30, 2002     Total
                                        -------------   --------------------   ---------------------   --------
                                                                 (In Thousands)
                                                                                           
First mortgage loans:
  One-to-four family residential           $   176            $ 3,323                $150,397          $153,896
  One-to-four family residential
    construction                             2,771                 --                      --             2,771
  Mortgage loans-construction
    builder                                  7,508                 --                      --             7,508
  Multi-family residential and
    commercial                               3,385             13,682                  37,899            54,966

Other loans:
  Commercial loans                           7,607                746                      --             8,353
  Home equity loans and lines                3,851              3,418                  11,280            18,549
  Consumer loans                               543              1,241                      84             1,868
                                           -------            -------                --------          --------
    Total                                  $25,841            $22,410                $199,660          $247,911
                                           =======            =======                ========          ========


         The following table sets forth the dollar amount of total loans due
after one year from September 30, 2002, as shown in the preceding table, which
have fixed interest rates or floating or adjustable interest rates.



                                                                                Floating or
                                                              Fixed rate      adjustable-rate      Total
                                                            --------------   ------------------   --------
                                                                               (In Thousands)
                                                                                         
First mortgage loans:
  One-to-four family residential                               $125,854            $27,866        $153,720
  One-to-four family residential construction                        --                 --              --
  Mortgage loans-construction builder                                --                 --              --
  Multi-family residential and commercial                        43,073              8,508          51,581
Other loans                                                      16,769                 --          16,769
                                                               --------            -------        --------
    Total                                                      $185,696            $36,374        $222,070
                                                               ========            =======        ========


         Scheduled contractual principal repayments do not reflect the actual
maturities of loans. The average maturity of loans is substantially less than
their average contractual terms because of prepayments and, in the case of
conventional mortgage loans, due-on-sale clauses, which generally give the
Company the right to declare a loan immediately due and payable in the event,
among other things, that the borrower sells the real property subject to the
mortgage and the loan is not repaid. The average life of mortgage loans tends to
increase when current mortgage loan rates are substantially higher than rates on
existing mortgage loans and, conversely, decrease

                                      II-5

when current mortgage loan rates are substantially lower than rates on existing
mortgage loans (due to refinancings of adjustable-rate and fixed-rate loans at
lower rates). During fiscal year 2002, the Company experienced historic levels
of prepayments and repayments due to the levels of interest rates. The Company
received $101.1 million, $66.7 million, and $51.1 million in loan principal
repayments for the fiscal years ended September 30, 2002, 2001, and 2000,
respectively.

         ORIGINATION, PURCHASE AND SALE OF LOANS. The lending activities of the
Company are subject to the written, non-discriminatory, underwriting standards
and loan origination procedures established by the Company's Board of Directors
and management. Loan originations are obtained from a variety of sources,
including existing customers, builders, realtors, brokers, walk-in customers,
loan officers and advertising.

         Residential and commercial loan applications originated by the Company
are generally processed at the Company's lending facility in Pittsburgh. The
loan applications are initially processed by loan officers and, once completed,
are submitted for approval. Certain residential mortgage and consumer
transactions may be approved by individual officers under limits established by
the Board of Directors. Loans above these limits and all commercial loans are
submitted to the Bank's Loan Committee, which is comprised of the senior
management of the Bank. The Loan Committee may approve loans up to $500,000.
Loans in excess of $500,000 are submitted for approval to the Bank's Executive
Committee. The Board of Directors receives a report of all loans approved at its
monthly meeting.

         Property appraisals on the real estate and improvements securing the
Company's single-family residential loans are made by independent appraisers.
Appraisals are performed in accordance with federal regulations and policies.
The Company obtains title insurance policies on the majority of first mortgage
real estate loans originated by it. Borrowers also must obtain hazard insurance
prior to closing and, when required, flood insurance. Borrowers may be required
to advance funds, with each monthly payment of principal and interest, to a loan
escrow account from which the Company makes disbursements for items such as real
estate taxes and mortgage insurance premiums as they become due.

         During fiscal 2002 and 2001, the Company purchased $1.6 million and
$778,000 of loans qualifying under the Community Reinvestment Act ("CRA").
During fiscal 2001, the Company changed the maturity composition of its
interest-bearing assets and improved liquidity levels by selling $6.2 million of
its loan portfolio to decrease short-term borrowings and improve interest rate
risk. During fiscal 2000 the Company sold $8.9 million of fixed rate and
adjustable rate residential mortgage loans. The loan sales for fiscal 2001 and
2000 consisted of out of market loans with the sale proceeds reinvested in
liquid agency securities with maturities ranging from one to five years.

                                      II-6

         The following table shows total loan activity during the periods
indicated.



                                                                                 Year Ended
                                                                                September 30,
                                                             -----------------------------------------------
                                                               2002                2001                2000
                                                             ---------           --------            --------
                                                                               (In Thousands)
                                                                                            
Loan originations:
  First mortgage loans:
    One-to-four-family residential                           $   9,160           $  3,211             $36,912
    Construction                                                 5,048             13,314              20,196
    Multi-family residential and commercial                     29,868             19,489              16,828
                                                             ---------           --------             -------
       Total mortgage originations                              44,076             36,014              73,936
                                                             ---------           --------             -------
  Other loans:
    Commercial loans                                             4,850                 --                  --
    Home equity loans and lines                                  3,552              6,174               7,807
    Consumer loans                                                 945              1,540               2,014
                                                             ---------           --------             -------
    Total loans originated                                      53,423             43,728              83,757
                                                             ---------           --------             -------
Loans purchased                                                  1,648                778                  --
Loans and loan participations sold                                  --             (6,206)             (8,892)
Loan principal reductions                                     (101,090)           (66,686)            (51,066)
                                                             ---------           --------             -------
Net change in loan portfolio                                 $ (46,019)          $(28,386)            $23,799
                                                             =========           ========             =======


         A savings institution generally may not make loans to one borrower and
related entities in an amount which exceeds 15% of its unimpaired capital and
surplus, although loans in an amount equal to an additional 10% of unimpaired
capital and surplus may be made to a borrower if the loans are fully secured by
readily marketable securities or other qualified collateral. At September 30,
2002, the Bank's limit on loans-to-one borrower was approximately $5.1 million
as compared to $5.3 million at September 30, 2001. At September 30, 2002, the
Company's five largest loans or groups of loans-to-one borrower, including
persons or entities related to the borrower, ranged from an aggregate of $3.4
million to $4.5 million and are secured primarily by real estate located in the
Company's primary market area. All of these loans were performing in accordance
with their original terms at September 30, 2002.

         ONE-TO-FOUR FAMILY RESIDENTIAL REAL ESTATE LOANS. The Company had an
aggregate of $153.9 million of one- to four-family residential loans in its loan
portfolio at September 30, 2002. The Company's fixed-rate loans generally have
maturities ranging from 15 to 30 years and are fully amortizing with monthly
payments sufficient to repay the total amount of the loan with interest by the
end of the loan term. Such loans are typically originated under terms,
conditions and documentation which permit them to be sold to U.S. Government
sponsored agencies, such as the Federal Home Loan Mortgage Corporation ("FHLMC")
and the Federal National Mortgage Association ("FNMA"), or other corporate
investors. The Company's fixed-rate loans customarily include "due on sale"
clauses, which give the Company the right to declare a loan

                                      II-7

immediately due and payable in the event the borrower sells or otherwise
disposes of the real property subject to the mortgage or the loan is not repaid.

         In addition to conventional fixed-rate loans, the Company offers
residential loans which reprice once during the loan term at the end of the
seventh or fifteenth year, respectively. At such time, the loan's interest rate
is generally adjusted based on the index value of the FHLMC net yield on 30-year
fixed-rate mortgage loans plus a margin. These loans are typically based on a
30-year amortization schedule. The amount of any interest rate increase during
the repricing period is limited to 5%. At September 30, 2002, the Company held
an aggregate of $43.0 million of balloon mortgages in its loan portfolio.

         The Company also originates one-to-four family residential real estate
loans which provide for an interest rate that adjusts every year or are fixed
for a three and five year period and adjust every three and five years,
respectively, after the initial period (such adjustable-rate loans are referred
to as "ARMs"). The Company's one-year ARM adjusts every year in accordance with
the one year U.S. Treasury securities with a constant maturity ("CMT") index.
The interest rate adjustment for the Company's three and five year ARMs after
the initial fixed period is based on the three and five year CMT index,
respectively. The Company's ARMs are typically based on a 30-year amortization
schedule. The amount of any increase or decrease after the initial term is
limited to 2% per year, with a limit on the increase of 6% and on the decrease
of 2% over the life of the loan. The Company qualifies the borrowers on its
loans which are fixed for three or five years based on the initial rate and
qualifies its borrowers for its one-year ARM based on the fully indexed rate.
The adjustable rate loans offered by the Company may generally be converted to a
fixed-rate loan within five years from the start of the initial adjustment
period. The Company had $27.9 million and $41.6 million of ARMs in its loan
portfolio as of September 30, 2002 and 2001, respectively, which represented
11.2% and 14.2% of the Company's total loan portfolio, respectively.

         Adjustable-rate loans decrease the risks associated with changes in
interest rates but involve other risks, primarily because as interest rates
rise, the payment by the borrower rises to the extent permitted by the terms of
the loan, thereby increasing the potential for default. At the same time, the
marketability of the underlying property may be adversely affected by higher
interest rates. The Company believes that these risks, which have not had a
material adverse effect on the Company to date, are generally less than the
risks associated with holding fixed-rate loans in an increasing interest rate
environment.

         The Company's residential mortgage loans typically do not exceed 80% of
the appraised value of the security property. Pursuant to underwriting
guidelines adopted by the Board of Directors, the Company can lend up to 95% of
the appraised value of the property securing a one-to-four family residential
loan; however, the Company generally requires private mortgage insurance on the
portion of the principal amount that exceeds 80% of the appraised value of the
security property. At September 30, 2002, the Company had an aggregate of $153.9
million of one-to four family residential loans in its portfolio.

                                      II-8

         CONSTRUCTION LOANS. The Company originates residential construction
loans to local contractors, generally with whom it has an established
relationship, and to individuals who have a contract with a contractor for the
construction of their residence. The Company's construction loans are secured by
property located primarily in the Company's primary market area. At September
30, 2002, the Company had an aggregate of $7.5 million in construction-builder
loans and $2.8 million in one-to-four family residential construction loans in
its portfolio.

         The Company's construction loans to individuals generally have fixed
interest rates during the construction period. Construction loans to individuals
are typically made in connection with the granting of the permanent loan on the
property. Such loans convert to a fully amortizing adjustable or fixed-rate loan
at the end of the construction term. The Company requires that permanent
financing with the Company be in place prior to closing any construction loan to
an individual.

         The Company's construction loans to local contractors are made on
either a pre-sold or speculative (unsold) basis. However, the Company generally
limits the number of unsold homes under construction by its contractors, with
the amount dependent on the reputation and financial condition of the
contractor, the present exposure of the contractor, the location of the property
and prior sales of homes in the development. Construction loans to contractors
are typically made with a maximum loan to value ratio of 80%. The Company
estimates that approximately 75% of its construction loans to contractors are on
a speculative basis.

         Prior to funding a construction loan, the Company requires an appraisal
of the property by an independent state-licensed and qualified appraiser. One of
the Bank's loan officers generally reviews and inspects each project. Loan
proceeds are disbursed after inspections of the project by the appraiser based
on a percentage of completion. The Company requires monthly interest payments
during the construction term. The amount of funds available for advance under
the Company's construction loans usually do not include any amount from which
the borrower can pay the stated interest due thereon until completion of the
loan term.

         Construction lending is generally considered to involve a higher level
of risk as compared to permanent one-to-four family residential lending, due to
the concentration of principal in a limited number of loans and borrowers and
the effects of general economic conditions on developers and contractors.
Moreover, a construction loan can involve additional risks because of the
inherent difficulty in estimating both a property's value at completion of the
project and the estimated cost (including interest) of the project. The nature
of these loans is such that they are generally more difficult to evaluate and
monitor. In addition, builder construction loans to a contractor are not
pre-sold and thus pose a greater potential risk to the Company than
construction loans to individuals on their personal residences. Non-accruing
construction loans to builders amounted to $100,000 or 2.1% of total
non-performing assets at September 30, 2002.

         The Company has attempted to minimize the foregoing risks by, among
other things, limiting the extent of its construction lending as a proportion of
the total loan portfolio and by limiting its construction lending to primarily
residential properties. In addition, the Company

                                      II-9

has adopted underwriting guidelines which impose stringent loan-to-value, debt
service and other requirements for loans which are believed to involve higher
elements of credit risk, by generally limiting the geographic area in which the
Company will do business to its existing market and by generally working with
contractors with whom it has established relationships. It is also the Company's
general policy to obtain personal guarantees from the principals of its
corporate borrowers on its construction loans.

         MULTI-FAMILY RESIDENTIAL AND COMMERCIAL REAL ESTATE LOANS. The Company
originates mortgage loans for the acquisition and refinancing of multi-family
residential properties and properties secured by commercial real estate. The
majority of the Company's commercial real estate loans are secured by office
buildings and retail rental facilities, most of which are secured by property
located in the Company's market area. The Company has become more active in the
origination of commercial real estate lending primarily to diversify its loan
receivable portfolio to a more broad based, full service commercial bank-like
portfolio. Multi-family residential and commercial real estate loans increased
$10.5 million or 23.6% to $55.0 million at September 30, 2002 compared to $44.5
million at September 30, 2001. There are currently 119 loans ranging from $3,000
to $3.9 million with an average balance of $462,000.

         The Company generally requires appraisals of all properties securing
multi-family residential and commercial real estate loans. Appraisals are
performed by an independent appraiser designated by the Company, all of which
are reviewed prior to funding. The Company considers, among other things, the
quality and location of the real estate, the credit of the borrower, the cash
flow of the project and the quality of management involved with the property.

         The Company originates multi-family residential and commercial real
estate loans with both fixed and adjustable interest rates which vary as to
maturity. Loan to value ratios on the Company's multi-family residential and
commercial real estate loans are generally limited to 80%. As part of the
criteria for underwriting these loans, the Company's general policy is to obtain
personal guarantees from the principals of its corporate borrowers.

         Multi-family residential and commercial real estate lending entails
significant additional risks as compared with single-family residential property
lending. The payment experience on such loans is typically dependent on the
successful operation of the real estate project. The success of such projects is
sensitive to changes in supply and demand conditions in the market as well as
regional and economic conditions generally.

         COMMERCIAL LOANS. The Company has continued to develop its commercial
lending expertise. The Company offers line of credit commitments to lend on a
short-term basis for working capital requirements of a borrower. Lines of credit
are designed to meet seasonal working capital needs and are repaid from the
liquidation of current assets. Generally, the term of a line of credit is up to
one year and the outstanding balance may fluctuate between zero and the maximum
amount of the line of credit at the borrower's request. The line of credit may
be established as secured or unsecured. Security can be in the form of real
estate (maximum loan to value of 80%) or by establishing a borrowing base for
accounts receivable and inventory

                                     II-10

(generally 75% of accounts receivable less than 90 days and 50% of raw and
finished inventory). Additional lines of credit can be secured using a general
security filing against all assets of the business. In this case, there is not a
collateral formula established. At September 30, 2002 the Company had an
aggregate of $8.4 million in commercial lines of credit.

         The Company also offers warehouse and guidance line of credits whereby
a predetermined amount of credit is committed to the customer to purchase fixed
assets. Each time the customer requests a draw to purchase a fixed asset that
amount is established in a term loan according to predetermined conditions. The
availability of the line of credit is thereby reduced by the amount of the
request and does not revolve.

         OTHER LOANS. The Company also offers home equity loans and lines of
credit, deposit account secured loans, auto loans and unsecured consumer loans.

         The Company's home equity loans and lines of credit are secured by the
underlying equity in the borrower's home. Home equity loans generally have fixed
interest rates and terms of five to 15 years. The Company's home equity loans
generally require loan-to-value ratios of 80% or less after taking into
consideration the first mortgage loan; however, the Company in 1995 began
extending fixed rate, fixed term home equity loans up to 100% of loan-to-value.
The Company prices these loans at a higher rate than those loans originated with
a lower loan-to-value ratio. Home equity lines of credit generally have variable
interest rates based on the prime and terms of 5 to 15 years. Home equity lines
of credit generally require loan-to-value ratios of 80% or less after taking
into consideration the first mortgage loan; however, the Company since 1995 has
also been extending home equity lines of credit up to 100% of loan-to-value. In
June 1997, the Company opened a loan center in Butler, Pennsylvania to generate
and process home equity loans, home equity lines of credit and consumer loans.
At September 30, 2002, the Company had $18.5 million of aggregate home equity
loans and lines in its portfolio compared to $20.8 million at September 30,
2001. At September 30, 2002, the Company's portfolio had 636 home equity loans
with an aggregate balance of $14.1 million ranging from $73 to $191,000 with an
average balance of $22,000. Home equity lines of credit consisted of 214 loans
with an aggregate balance of $4.4 million ranging from $29 to $623,000 with an
average balance of $21,000.

         Consumer loans generally have shorter terms and higher interest rates
than mortgage loans but generally involve more credit risk than mortgage loans
because of the type and nature of the collateral and, in certain cases, the
absence of collateral. These risks are not as prevalent in the case of the
Company's consumer and other loans portfolio, however, because a high percentage
of the portfolio is comprised of home equity loans and lines of credit, which
are secured by real estate and underwritten in a manner such that they result in
a lending risk which is substantially similar to single-family residential
loans, as well as deposit account secured loans which are secured by the
deposits of the borrower.

                                     II-11

         LOAN FEE INCOME. In addition to interest earned on loans, the Company
receives income from fees in connection with loan originations, loan
modifications, late payments and for miscellaneous services related to its
loans. Income from these activities varies from period to period depending upon
the volume and type of loans made and competitive conditions.

         The Company charges loan origination fees which are calculated as a
percentage of the amount borrowed. Loan origination and commitment fees in
excess of loan origination costs are deferred and recognized over the
contractual remaining lives of the related loans on a level yield basis.
Discounts and premiums on loans purchased are credited and amortized in the same
manner. The Bank recognized $4,000, $2,000 and $18,000 of net deferred loan fees
during fiscal 2002, 2001 and 2000, respectively, in connection with loan
refinancing, payoffs and ongoing amortization of outstanding loans.

ASSET QUALITY

         When a borrower fails to make a required payment on a loan, the Company
attempts to cure the deficiency by contacting the borrower and seeking the
payment. Contacts are generally made 15 days after a payment is due. In most
cases, deficiencies are cured promptly. If a delinquency continues, the loan and
payment history are reviewed and efforts are made to collect the loan. While the
Company generally prefers to work with borrowers to resolve such problems, the
Company will institute foreclosure or other proceedings, as necessary, to
minimize any potential loss. The Company generally initiates such proceedings
when a loan becomes 90 days delinquent.

         Loans are placed on non-accrual status when they become 90 days
delinquent. When a loan is placed on non-accrual status, previously accrued but
unpaid interest is deducted from interest income. The Company will continue to
accrue interest on delinquent conventional real estate loans if the loan has a
loan-to-value ratio of less than 90%, active collection efforts are underway
and, in the opinion of management, there is a reasonable expectation of
collection of the delinquent interest. Loans may be reinstated to accrual status
when, in the opinion of management, collection of the remaining balance can be
reasonably expected.

         Real estate acquired by the Company as a result of foreclosure or by
deed-in-lieu of foreclosure is classified as foreclosed real estate until sold.
Such assets are held for sale and are carried at the lower of fair value minus
estimated costs to sell the property or cost (generally the balance of the loan
on the property at the date of acquisition). After the date of acquisition, all
costs incurred in maintaining the property are expensed and costs incurred for
the improvement or development of such property are capitalized up to the extent
of their net realizable value.

                                     II-12

         NON-PERFORMING ASSETS. The following table sets forth the amounts and
categories of the Company's non-performing assets at the dates indicated.



                                                                         September 30,
                                            ---------------------------------------------------------------------
                                                2002          2001            2000          1999          1998
                                            ------------  -------------   ------------   -----------   ----------
                                                                   (Dollars in Thousands)
                                                                                        
Non-accruing loans:
  First mortgage loans:
    One-to-four family residential             $1,664        $1,743          $1,579         $2,002        $2,545
    Construction                                  100           100             122          1,004           400
  Other loans:
    Commercial leases                              --            --               8             66           254
    Multifamily, residential and
      commercial                                2,209           683             187             --            --
                                               ------        ------          ------         ------        ------
      Total non-accruing loans                  3,973         2,526           1,896          3,072         3,199
                                               ------        ------          ------         ------        ------

Accruing loans greater than
  90 days delinquent:
  First mortgage loans:
    One-to-four family residential                 --            --              --             --            --
  Other loans:
    Consumer and other loans                       22             5              12             --            15
                                               ------        ------          ------         ------        ------
    Total accruing loans greater
      than 90 days delinquent                      22             5              12             --            15
                                               ------        ------          ------         ------        ------
    Total non-performing loans                  3,995         2,531           1,908          3,072         3,214
                                               ------        ------          ------         ------        ------

Real estate owned                                 788           700             644          1,957         1,274
                                               ------        ------          ------         ------        ------
    Total non-performing assets                $4,783        $3,231          $2,552         $5,029        $4,488
                                               ======        ======          ======         ======        ======

    Total non-performing loans as
      a percentage of total loans                1.61%         0.86%           0.59%          1.03%         1.42%
                                               ======        ======          ======         ======        ======

    Total non-performing assets as
      a percentage of total assets               1.16%         0.76%           0.58%          1.21%         1.20%
                                               ======        ======          ======         ======        ======


         For the year ended September 30, 2002, approximately $163,000 interest
income would have been recorded on loans accounted for on a non-accrual basis if
such loans had been current in accordance with their original terms and had been
outstanding throughout the year or since origination if held for part of the
year. For the year ended September 30, 2002, no amount was included in net
income for these same loans.

         For the year ended September 30, 2002, the Company's non-performing
assets increased $1.6 million or 48.0% to $4.8 million from $3.2 million at
September 30, 2001. The increase in total non-performing assets was primarily
attributable to a $1.5 million or 223.4% increase in

                                     II-13

multi-family and commercial real estate loans, a $17,000 or 340.0% increase in
consumer and other loans, and an $88,000 or 12.6% increase in foreclosed real
estate, which were partially offset by a $79,000 or 4.5% decrease in one-to-four
family residential mortgage loans.

         The total of six commercial loans aggregating $2.2 million had an
average balance of $376,000 and ranged from $5,000 to $1.6 million. The
aggregate includes one loan totaling $1.6 million that is well secured by a
commercial office building in metropolitan Pittsburgh. Three of the six loans
are partially guaranteed by the Small Business Administration ("SBA").

         A total of 17 one-to-four family residential loans aggregating $1.7
million had an average balance of $98,000 and ranged from $8,500 to $265,000.
Non-accruing delinquent construction loans remained at $100,000 for the years
ended September 30, 2002 and 2001. The Company has significantly increased its
commercial originations over the past several years and does not attribute its
non-performing assets to any specific weakness within the Company or in the
marketplace generally.

         Real estate owned ("REO") properties increased $88,000 to $788,000. REO
consists of 12 properties which range from $4,300 to $255,000. Each of these
properties has been written down to its estimated net realizable value. Three of
the properties were sold subsequent to September 30, 2002 at their net
realizable value. Two of the properties have a sales agreement and the Company
is awaiting a closing date. The remaining properties are either listed with a
realtor or are in the process of being sold by the Company.

         ALLOWANCE FOR LOAN LOSSES. It is management's policy to maintain an
allowance for estimated losses based on the risk of loss in the loan portfolio.
Management's periodic evaluation of the adequacy of the allowance is based on
the Company's loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay, the
estimated value of the underlying collateral and current economic conditions.
Management classifies all delinquent assets as Special Mention, Substandard,
Doubtful or Loss. A reserve level is estimated by management for each category
of classified loans, with an estimated percentage applied to the delinquent loan
category balance. In addition, management notes that there is an inherent risk
of potential loan loss in the Company's overall, non-classified loan portfolio.
This inherent risk is addressed by applying an estimated potential loss to the
remaining unclassified loan portfolio. Activity for the period under analysis is
also taken into account (charge offs, recoveries). While management has
allocated the allowance to different loan categories, the allowance is general
in nature and is available for the loan portfolio in its entirety.

         The Company designates all loans that are 90 or more days past due as
non-performing. Generally, when loans are classified as non-performing, unpaid
accrued interest is a reduction of interest income on loans receivable and is
only recognized when cash payments are received.

                                     II-14

         For each of the fiscal years ended September 30, 2002, 2001, and 2000,
the Company recorded provisions for losses on loans of $420,000, $600,000, and
$600,000, respectively. Provision for loan losses decreased $180,000 from
$600,000 for fiscal year 2001 when compared to $420,000 for fiscal year 2002.
Although non-performing assets increased in the commercial real estate portfolio
by $1.5 million or 223.4%, these loans are secured by office buildings and
retail rental facilities, most of which are secured by property located in the
Company's market area.

         The following table sets forth an analysis of the Company's allowance
for loan losses during the periods indicated.



                                                                             Year Ended
                                                                            September 30,
                                                ----------------------------------------------------------------------
                                                   2002           2001          2000              1999          1998
                                                ----------     ----------    ----------        ----------    ---------
                                                                       (Dollars in Thousands)
                                                                                              
Balance at beginning of period                    $2,644         $2,238        $1,957            $1,738        $1,419
                                                  ------         ------        ------            ------        ------

Charge-offs:
  First mortgage loans:
    One-to-four family residential                   112            179           164               244           150
  Other loans:
    Commercial leases                                 --             --             7               131           126
    Consumer and other loans                          45             57           152                24            48
                                                  ------         ------        ------            ------        ------
                                                     157            236           323               399           324
                                                  ------         ------        ------            ------        ------
Recoveries:
  First mortgage loans:
    One-to-four family residential                   101             20            --                --            32
  Other loans:
    Consumer and other loans                          15             22             4                18             1
                                                  ------         ------        ------            ------        ------
Net charge-offs                                       41            194           319               381           291
                                                  ------         ------        ------            ------        ------

Provision for losses on loans                        420            600           600               600           610
                                                  ------         ------        ------            ------        ------

Balance at end of period                          $3,023         $2,644        $2,238            $1,957        $1,738
                                                  ======         ======        ======            ======        ======

Allowance for loan losses as a percent
 of total loans outstanding                         1.26%          0.93%         0.73%             0.70%         0.77%
                                                  ======         ======        ======            ======        ======

Allowance for loan losses to total non-
 performing loans                                  75.67%        104.46%       117.30%            63.70%        54.08%
                                                  ======         ======        ======            ======        ======

Ratio of net charge-offs to average
 loans outstanding                                  0.02%          0.06%         0.10%             0.16%         0.15%
                                                  ======         ======        ======            ======        ======


                                     II-15

         The following table sets forth information concerning the allocation of
the Company's allowance for loan losses by loan category at the dates indicated.



                                                                   September 30,
                         --------------------------------------------------------------------------------------------------
                                2002                2001                2000                1999                1998
                         ------------------  ------------------  ------------------  ------------------  ------------------
                                 Percent of          Percent of          Percent of          Percent of          Percent of
                                  Loans In            Loans In            Loans In            Loans In            Loans In
                                    Each                Each                Each                Each                Each
                                  Category            Category            Category            Category            Category
                                  To Total            To Total            To Total            To Total            To Total
                         Amount     Loans    Amount     Loans    Amount     Loans    Amount     Loans    Amount     Loans
                         ------  ----------  ------  ----------  ------  ----------  ------  ----------  ------  ----------
                                                                  (Dollars in Thousands)
                                                                                   
Residential real
  estate                 $  832    63.18%    $1,141    71.17%    $1,357    77.95%    $1,265    78.72%    $1,258     86.53%
Commercial real
  estate                  1,308    25.11      1,163    19.35        625    13.77        508    12.71        286     11.74
Commercial
  loans                     757     3.45        187     1.49        104     0.56        153     1.26        168      1.05
Consumer                    126     8.26        153     7.99        152     7.72         31     7.31         26      0.68
                         ======   ======     ======   ======     ======   ======     ======   ======     ======    ======
  Total                  $3,023   100.00%    $2,644   100.00%    $2,238   100.00%    $1,957   100.00%    $1,738    100.00%


INVESTMENT ACTIVITIES

         MORTGAGE-BACKED SECURITIES. The Company invests in a portfolio of
mortgage-backed securities which are insured or guaranteed by the FHLMC, the
FNMA and the Government National Mortgage Association ("GNMA"). Mortgage-backed
securities increase the quality of the Bank's assets by virtue of the guarantees
that back them, are more liquid than individual mortgage loans and may be used
to collateralize borrowings or other obligations of the Company. At September
30, 2002, the Company's mortgage-backed securities portfolio had a carrying
value and fair value of $82.0 million and $84.1 million, respectively.

         The Company continues to work toward changing its asset mix and
improving its interest rate risk position. During fiscal 2002, the Company
received $28.5 million in repayments on mortgage-backed securities as well as
$101.1 million in loan principal prepayments and repayments primarily as a
result of the decrease in interest rates. During fiscal 2002, the Company
purchased an aggregate of $41.6 million of mortgage-backed securities as
compared to $32.4 million purchased during fiscal 2001. During fiscal 2002, the
Company sold $3.2 million of mortgage-backed securities compared to $10.6
million sold during fiscal 2001, and $9.5 million sold during fiscal 2000.

                                     II-16

         The following table sets forth the composition of the Company's
mortgage-backed securities at the dates indicated.



                                                                 September 30,
                                                       ----------------------------------
                                                          2002        2001        2000
                                                       ----------  ----------  ----------
                                                            (Dollars in Thousands)
                                                                      
GNMA certificates                                       $15,434     $25,202     $40,758
FNMA certificates                                        30,040      20,850      11,261
FHLMC certificates                                       18,249      13,620       5,286
Collateralized mortgage obligations                      17,307      11,475       4,515
                                                        -------     -------     -------
                                                         81,030      71,147      61,820

Unamortized premiums                                        983         799         452
Unearned discounts                                           20          37         (95)
                                                        -------     -------     -------
                                                         81,993      71,909      62,177
FASB 115 adjustment                                       2,074       1,375      (1,896)
                                                        -------     -------     -------
                                                        $84,067     $73,284     $60,281
                                                        =======     =======     =======
Weighted average interest rate                             5.16%       5.62%       6.20%
                                                        =======     =======     =======


         The following table sets forth the activity in the Company's
mortgage-backed securities portfolio during the periods indicated.



                                                                     At or For the Year Ended
                                                                           September 30,
                                                                     ------------------------
                                                                        2002         2001
                                                                     ----------   -----------
                                                                          (In Thousands)
                                                                            
Mortgage-backed securities at beginning of period                     $ 73,284     $ 60,281
Purchases                                                               41,588       32,386
Sales                                                                   (3,219)     (10,598)
Repayments                                                             (28,486)     (11,855)
Accretion and amortization, net                                            201         (201)
Gain (loss) on mortgage-backed securities                                  699        3,271
                                                                      --------     --------
Mortgage-backed securities at end of period                           $ 84,067     $ 73,284
                                                                      ========     ========


         In recent years, the Company's investment decisions have been directed,
in part, at increasing the interest-rate sensitivity of its assets. Accordingly,
the Company has emphasized investing in adjustable-rate mortgage-backed
securities and short-term, fixed-rate investments. Previously, the Company had
invested significantly in fixed-rate mortgage-backed securities. At September
30, 2002, $17.6 million or 20.9% of the Company's portfolio of mortgage-backed
securities were secured by ARMs.

                                     II-17

         The following table sets forth the amount of the Company's
mortgage-backed securities which mature during each of the periods indicated and
the weighted average yields for each range of maturities at September 30, 2002.



                                                    Contractually Maturing
                            -------------------------------------------------------------------------
                                     Weighted          Weighted           Weighted           Weighted
                             Under   Average    1-5    Average   5-10     Average   Over 10   Average
                            1 Year    Yield    Years    Yield    Years     Yield     Years     Yield
                            ------   --------  -----   --------  -----    --------  -------  --------
                                                    (Dollars in Thousands)
                                                                     
GNMA certificates           $  --       --%    $   --     --%     $  361    6.50%   $15,073    6.49%
FNMA certificates             106     5.64         --     --       2,023    6.26     27,911    5.01
FHLMC certificates             --       --      2,940   3.41          --      --     15,309    5.18
Collateralized
 mortgage obligations          --       --      1,727   5.00       1,000    3.83     14,580    4.30
                            -----    -----     ------   ----      ------    ----    -------    ----
                            $ 106     5.64%    $4,667   4.00%     $3,384    5.56%   $72,873    5.21%
                            =====    =====     ======   ====      ======    ====    =======    ====


Due to prepayments and repayments of the underlying loans, the actual maturities
of the securities are expected to be substantially less than the scheduled
maturities.

         OTHER INVESTMENT SECURITIES. The investment policy of the Company, as
established by the Board of Directors, is designed primarily to provide and
maintain liquidity and to generate a favorable return on investments without
incurring undue interest rate risk, credit risk, and investment portfolio asset
concentrations. The Company's investment policy is currently implemented by the
Bank's Executive Vice President and Chief Financial Officer and is overseen by
the Asset/Liability Management Committee of the Board of Directors. The Bank's
Executive Vice President and Chief Financial Officer is authorized to invest in
various types of securities, and in recent years, the emphasis has been on U.S.
Treasury and agency obligations, municipal securities and corporate debt
securities. There are no aggregate limits on the investment portfolio, however,
there are certain limits on specific product types (e.g., no limit on U.S.
Government and agency obligations; municipal securities are limited to 10% of
the Bank's capital). The Company's investment portfolio increased $23.0 million
or 22.7% between September 30, 2001 and September 30, 2002. The Company
purchased an aggregate of $10.3 million of mutual funds, $3.1 million of
municipal bonds, and $3.0 million of U.S. Government and agencies. The Company's
investment portfolio increased $2.1 million or 2.1% between September 30, 2000
and September 30, 2001.

                                     II-18

         The following table sets forth certain information relating to the
Company's investment portfolio at the dates indicated.



                                                          September 30,
                                                  ---------------------------
                                                    2002     2001      2000
                                                  -------   -------   -------
                                                       (In Thousands)
                                                             
U.S. Government and agency obligations            $14,036   $13,499   $25,701
Adjustable rate mortgage funds                     10,273        --        --
Trust preferred securities                         10,881    10,271    13,194
                                                  -------   -------   -------
                                                  $35,190   $23,770   $38,895
                                                  =======   =======   =======


         The following table sets forth the amount of the Company's investment
securities which mature during each of the periods indicated and the weighted
average yields for each range of maturities at September 30, 2002.



                                                            Contractually Maturing
                         ---------------------------------------------------------------------------------------------------
                                       Weighted                 Weighted                 Weighted                   Weighted
                         Under 1        Average        1-5       Average       5-10       Average      Over 10       Average
                          Year          Yield         Years       Yield       Years        Yield        years         Yield
                         -------       --------      -------    --------     -------     --------      -------      --------
                                                               (Dollars in Thousands)
                                                                                            
U.S. Government
  and agency
  obligations            $4,000         6.26%        $6,050       6.05%        $955        4.99%       $ 2,615        5.20%
Trust preferred
  securities                 --           --             --         --           --          --        $16,002        7.99%


The actual maturity of the Company's investment securities may differ from
contractual maturity since certain of the Company's investment securities are
subject to call provisions which allow the issuer to accelerate the maturity
date of the security.

SOURCES OF FUNDS

         GENERAL. Deposits are the primary source of the Company's funds for
lending and other investment purposes. In addition to deposits, the Company
derives funds from loan and mortgage-backed security principal repayments and
prepayments and advances from the FHLB of Pittsburgh. Loan and mortgage-backed
security repayments are generally a relatively stable source of funds, while
deposit inflows and outflows are significantly influenced by general interest
rates and money market conditions. During fiscal year 2002, loan repayments and
prepayments increased significantly as a result of the level of refinancings and
decrease in interest rates. Borrowings may be used on a short-term basis to
compensate for reductions in the availability of funds from other sources. They
may also be used on a longer term basis for general business purposes.

         DEPOSITS. The Company's deposit products include a broad selection of
deposit instruments, including checking accounts, business checking accounts,
money market accounts, regular savings accounts and certificates of deposit.
Deposit account terms vary, with the

                                     II-19

principal differences being the minimum balance required, the time periods the
funds must remain on deposit and the interest rate.

         The Company's deposits are obtained primarily from residents of
Allegheny County and Butler County, Pennsylvania. The Company also utilizes
wholesale certificates and also participates in various competitive bidding
processes for government entity deposits. The Company attracts deposit accounts
by offering a wide variety of accounts, competitive interest rates, and
convenient office locations and service hours. The Company utilizes traditional
marketing methods to attract new customers and savings deposits, including print
media advertising and direct mailings. The Company believes that an
insignificant number of deposit accounts were held by non-residents of
Pennsylvania at September 30, 2002.

         Deposits decreased $16.8 million or 7.9% primarily as a result of a
$6.1 million decrease in retail deposits and a $10.7 million decrease in
wholesale certificates of deposit. The decrease in retail deposits is primarily
the result of short term certificates of deposit that matured during the period
that the Company chose not to reprice aggressively due to the current interest
rate environment. At September 30, 2002, the Company had $8.4 million in
wholesale deposits, and had procured certificates of deposit with the following
government entities: $1.0 million with the County of Allegheny, $1.0 million
with the School District of Pittsburgh, and $700,000 with the Commonwealth of
Pennsylvania. Although market demand generally dictates deposit maturities and
rates, the Company intends to continue to promote longer term deposits to the
extent possible and consistent with its asset and liability management goals.
See "Item 2. Properties" for amount of deposits for each of the Bank's branches.
Subsequent to September 30, 2002, the Company sold its Bethel Park and Mt.
Oliver offices in two separate transactions. Total deposits sold in these
transactions were approximately $16.4 million. The transactions resulted in a
net pre-tax gain of approximately $465,000.

                                     II-20

         The following table sets forth the dollar amount of deposits in the
various types of deposit programs offered by the Company at the dates indicated.



                                                            September 30,
                            -----------------------------------------------------------------------------
                                      2002                       2001                      2000
                            ------------------------   ------------------------   -----------------------
                              Amount      Percentage    Amount     Percentage      Amount     Percentage
                            --------      ----------   --------    ----------    ---------    ----------
                                                     (Dollars in Thousands)
                                                                            
Passbook accounts           $ 28,657        14.6%      $ 25,436       11.9%       $ 26,099        12.7%
Money market                  18,168         9.3         16,067        7.5           8,791         4.3
Interest checking             14,800         7.5         15,611        7.3          14,338         7.0
Noninterest checking          12,327         6.3          8,465        4.0           7,026         3.4
Certificates of deposit      122,270        62.3        147,432       69.2         149,426        72.6
                            --------       -----       --------      -----        --------       -----
Total deposits              $196,222       100.0%      $213,011      100.0%       $205,680       100.0%
                            ========       =====       ========      =====        ========       =====


         The following table presents the average balance of each deposit type
and the average rate paid on each deposit type for the periods indicated.



                                                               September 30,
                                -------------------------------------------------------------------------
                                         2002                      2001                      2000
                                -----------------------    ---------------------    ---------------------
                                                Average                 Average                  Average
                                 Average         Rate       Average       Rate       Average      Rate
                                 Balance         Paid       Balance       Paid       Balance      Paid
                                --------       --------    ---------    --------    --------    ---------
                                                             (Dollars in Thousands)
                                                                              
Passbook accounts               $ 27,232         1.87%     $ 25,568       2.29%     $ 27,214      2.44%
Money market                      18,116         1.91        11,507       4.13         7,949      3.88
Interest checking                 14,662         1.28        15,127       1.26        13,566      1.40
Noninterest checking               9,123           --         7,138         --         5,416        --
Certificates of deposit          128,285         5.05       145,315       6.21       125,197      5.71
                                --------         ----      --------       ----      --------      ----
  Total deposits                $197,418         3.81%     $204,655       5.02%     $179,342      4.64%
                                ========         ====      ========       ====      ========      ====


         The following table sets forth the savings activities of the Company
during the periods indicated.



                                                                       Year Ended September 30,
                                                        ------------------------------------------------------
                                                            2002                2001                  2000
                                                        -------------       -------------        -------------
                                                                            (In Thousands)
                                                                                        
(Decrease)/increase before interest
  credited                                                $(22,876)            $ (921)              $29,957
Interest credited                                            6,088              8,252                 6,260
                                                          --------             ------               -------
Net (decrease)/increase in deposits                       $(16,788)            $7,331               $36,217
                                                          ========             ======               =======


                                     II-21

         The following table shows the interest rate and maturity information
for the Company's certificates of deposit at September 30, 2002.



                                                      Maturity Date
                          ----------------------------------------------------------------------
                            One Year       Over           Over           Over
                            or Less      1-2 Years      2-3 Years       3 Years         Total
                          -----------   -----------     ----------     ----------     ----------
                                                      (In Thousands)
                                                                       
0.00  -  2.00%               $ 3,566      $    --         $   --        $    --        $  3,566
2.01  -  4.00%                29,719       18,072          2,881             68          50,740
4.01  -  6.00%                 6,369        5,145          4,433         26,958          42,905
6.01  -  8.00%                18,998        3,551          1,166          1,332          25,047
8.01  -  10.00%                   12           --             --             --              12
                             -------      -------          ------       -------        --------
  Total                      $58,664      $26,768          $8,480       $28,358        $122,270
                             =======      =======          ======       =======        ========


         The following table sets forth the maturities of the Company's
certificates of deposit having principal amounts of $100,000 or more at
September 30, 2002.



Certificates of deposit maturing
        in quarter ending:
--------------------------------                            --------------
                                                            (In Thousands)
                                                         
December 31, 2002                                               $ 4,409
March 31, 2003                                                    2,470
June 30, 2003                                                     2,813
September 30, 2003                                                1,436
After September 30, 2003                                         19,669
                                                                -------
Total certificates of deposit with
  balances of $100,000 or more                                  $30,797
                                                                =======


         BORROWINGS. The Company may obtain advances from the FHLB of Pittsburgh
upon the security of the common stock it owns in that bank and certain of its
residential mortgage loans, provided certain standards related to
creditworthiness have been met. Such advances are made pursuant to several
credit programs, each of which has its own interest rate and range of
maturities. Such advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending. At September
30, 2002, the Company had $161.9 million of advances from the FHLB of
Pittsburgh.

                                     II-22

         The following table sets forth information with respect to the
Company's FHLB advances during the periods indicated.



                                                      At or For the Year Ended September 30,
                                             ------------------------------------------------------
                                                  2002                 2001                2000
                                             -------------        -------------       -------------
                                                             (Dollars in Thousands)
                                                                             
Maximum balance                                 $161,888             $178,717            $203,767
Average balance                                  158,588              162,226             212,861
Year end balance                                 161,888              156,316             176,217
Weighted average interest rate:
  At end of year                                    5.97%                6.12%               6.36%
  During the year                                   6.12%                6.32%               6.14%


COMPETITION

         The Company faces significant competition for real estate loans,
principally from mortgage banking companies, other savings institutions,
commercial banks and credit unions. Factors which affect competition generally
include the general and local economic conditions, current interest rate levels
and volatility in the mortgage markets. The Company also faces significant
competition in attracting deposits. Its most direct competition for deposits has
historically come from commercial banks and other savings institutions located
in its market area. The Company faces additional significant competition for
investors' funds from other financial intermediaries. The Company competes for
deposits principally by offering depositors a variety of deposit programs,
convenient branch locations, hours and other services. The Company does not rely
upon any individual group or entity for a material portion of its deposits.

         Federal legislation in recent years has eliminated many of the
distinctions between commercial banks and savings institutions and holding
companies and allowed bank holding companies to acquire savings institutions.
Such legislation has generally resulted in an increase in the competition
encountered by savings institutions and has resulted in a decrease in both the
number of savings institutions and the aggregate size of the savings industry.

SUBSIDIARIES

         As of September 30, 2002, the Bank was the Company's only bank
subsidiary.  See "Item 1.  Business-General."

         The Company's other wholly owned subsidiary, Pittsburgh Home Capital
Trust I (the "Trust") is a Delaware business trust formed in December 1997 to
issue $11.5 million of 8.56% Cumulative Trust Preferred Securities. These
securities represent undivided beneficial interests in Pittsburgh Home Capital
Trust I. The Trust purchased junior subordinated deferrable interest debentures
which were issued by the Company. See Note 8 to Consolidated Financial
Statements in "Item 8. Financial Statements and Supplementary Data."

                                     II-23

         The Company's majority owned subsidiary, PSG, a Pennsylvania limited
liability company, was formed in April 2002 for the purpose of engaging in the
title insurance business, settlement and escrow business, and related or
ancillary activities. The Company has an 80% equity interest and an 84% voting
interest in PSG. An unrelated limited liability company and two individuals have
the remaining minority interest.

         FraMal is a wholly owned subsidiary of the Bank, incorporated in
Delaware, in November 2001 for the purpose of warehousing various assets.

EMPLOYEES

         The Company had 74 full-time employees and 6 part-time employees as of
September 30, 2002.

REGULATION

         The Bank is a Pennsylvania-chartered stock savings bank subject to
extensive regulation and supervision by the Department and by the FDIC, as the
administrator of the SAIF.

         The federal banking laws contain numerous provisions affecting various
aspects of the business and operations of savings institutions and bank holding
companies. The following description of statutory and regulatory provisions and
proposals, which is not intended to be a complete description of these
provisions or their effects on the Company or the Bank, is qualified in its
entirety by reference to the particular statutory or regulatory provisions or
proposals.

         RECENT LEGISLATION. On July 30, 2002, President George W. Bush signed
into law the Sarbanes-Oxley Act of 2002, which generally establishes 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 new
legislation's more significant reforms are noted below.

   -     The new legislation creates 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. The new board will be funded by mandatory fees
         paid by all public companies. The new legislation also improves the
         Financial Accounting Standards Board, giving it full financial
         independence from the accounting industry.

   -     The new legislation strengthens auditor independence from corporate
         management by, among other things, limiting the scope of consulting
         services that auditors can offer their public company audit clients.

                                     II-24

   -     The new legislation heightens 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 new legislation provides 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 new legislation imposes a range of new corporate disclosure
         requirements.  Among other things, the new legislation requires
         public companies to report all off-balance-sheet transactions and
         conflicts, 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. The new 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; requires that annual reports filed with the SEC include
         a statement by management asserting that it is responsible for
         creating and maintaining adequate internal controls and assessing the
         effectiveness of those controls; and requires companies to disclose
         whether or not they have adopted an ethics code for senior financial
         officers, and, if not, why not, and whether the audit committee
         includes at least one "financial expert," a term which is to be
         defined by the SEC in accordance with specified requirements.  The
         new legislation also requires the SEC, based on certain enumerated
         factors, to regularly and systematically review corporate filings.

   -     The new legislation contains a number of provisions to deter
         wrongdoing. CEOs and CFOs will have to certify that company
         financial statements fairly present the company's financial
         condition. If a misleading financial statement later resulted in a
         restatement, the CEO and CFO must forfeit and return to the company
         any bonus, stock or stock option compensation received in the twelve
         months following the misleading financial report. The new
         legislation also prohibits any company officer or director from
         attempting to mislead or coerce an auditor. Among other reforms, the
         new legislation empowers the SEC to bar certain persons from serving
         as officers or directors of a public company; prohibits insider
         trades during pension fund "blackout periods;" directs the SEC to
         adopt rules requiring attorneys to report securities law violations;
         and requires that civil penalties imposed by the SEC go into a
         disgorgement fund to benefit harmed investors.

   -     The new legislation contains provisions which generally seek to limit
         and expose to public view possible conflicts of interest affecting
         securities analysts.

   -     Finally, the new legislation imposes a range of new 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.

         On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act which, among other things, permits bank holding companies
to become financial holding companies and thereby affiliate with securities
firms and insurance companies and engage in other activities that are financial
in nature. A bank holding company may become a financial

                                     II-25

holding company if each of its subsidiary banks is well capitalized under the
Federal Deposit Insurance Corporation Improvement Act of 1991 prompt corrective
action provisions, is well managed and has at least a satisfactory rating under
the CRA by filing a declaration that the bank holding company wishes to become a
financial holding company. No regulatory approval is required for a financial
holding company to acquire a company, other than a bank or savings association,
engaged in activities that are financial in nature or incidental to activities
that are financial in nature, as determined by the Federal Reserve Board.

         The Gramm-Leach-Bliley Act defines "financial in nature" to include
securities underwriting, dealing and market making; sponsoring mutual funds and
investment companies; insurance underwriting and agency; merchant banking
activities; and activities that the Federal Reserve Board has determined to be
closely related to banking. A national bank also may engage, subject to
limitations on investment, in activities that are financial in nature, other
than insurance underwriting, insurance company portfolio investment, real estate
development and real estate investment, through a financial subsidiary of the
bank, if the bank is well capitalized, well managed and has at least a
satisfactory CRA rating. Subsidiary banks of a financial holding company or
national banks with financial subsidiaries must continue to be well capitalized
and well managed in order to continue to engage in activities that are financial
in nature without regulatory actions or restrictions, which could include
divestiture of the financial in nature subsidiary or subsidiaries. In addition,
a financial holding company or a bank may not acquire a company that is engaged
in activities that are financial in nature unless each of the subsidiary banks
of the financial holding company or the bank has a CRA rating of satisfactory or
better.

THE COMPANY

         GENERAL. The Company is a registered bank holding company pursuant to
the Bank Holding Company Act of 1956, as amended (the "BHCA") and is subject to
regulation and supervision by the Federal Reserve Board and the Department. The
Company is required to file annually a report of its operations with, and is
subject to examination by, the Federal Reserve Board and the Department. In
December 2001, the Company filed a declaration to become a financial holding
company which became effective December 20, 2001.

         BHCA ACTIVITIES AND OTHER LIMITATIONS. The BHCA prohibits a bank
holding company from acquiring direct or indirect ownership or control of more
than 5% of the voting shares of any bank, or increasing such ownership or
control of any bank, without prior approval of the Federal Reserve Board. The
BHCA also generally prohibits a bank holding company from acquiring any bank
located outside of the state in which the existing bank subsidiaries of the bank
holding company are located unless specifically authorized by applicable state
law. No approval under the BHCA is required, however, for a bank holding company
already owning or controlling 50% of the voting shares of a bank to acquire
additional shares of such bank.

         The BHCA also prohibits a bank holding company, with certain
exceptions, from acquiring more than 5% of the voting shares of any company that
is not a bank and from engaging in any business other than banking or managing
or controlling banks. Under the

                                     II-26

BHCA, the Federal Reserve Board is authorized to approve the ownership of shares
by a bank holding company in any company, the activities of which the Federal
Reserve Board has determined to be so closely related to banking as to be a
proper incident thereto.

         The Federal Reserve Board has by regulation determined that certain
activities are closely related to banking within the meaning of the BHCA. These
activities include operating a mortgage company, finance company, credit card
company, factoring company, trust company or savings association; performing
certain data processing operations; providing limited securities brokerage
services; acting as an investment or financial advisor; acting as an insurance
agent for certain types of credit-related insurance; leasing personal property
on a full-payout, non-operating basis; providing tax planning and preparation
services; operating a collection agency; and providing certain courier services.
The Federal Reserve Board also has determined that certain other activities,
including real estate brokerage and syndication, land development, property
management and underwriting of life insurance not related to credit
transactions, are not closely related to banking and a proper incident thereto.

         LIMITATIONS ON TRANSACTIONS WITH AFFILIATES. Transactions between
savings institutions and any affiliate are governed by Sections 23A and 23B of
the Federal Reserve Act. An affiliate of a savings institution is any company or
entity which controls, is controlled by or is under common control with the
savings institution. In a holding company context, the parent holding company of
a savings institution (such as the Company) and any companies which are
controlled by such parent holding company are affiliates of the savings
institution. Generally, Section 23A limits the extent to which the savings
institution or its subsidiaries may engage in "covered transactions" with any
one affiliate to an amount equal to 10% of such institution's capital stock and
surplus, and contain an aggregate limit on all such transactions with all
affiliates to an amount equal to 20% of such capital stock and surplus. The term
"covered transaction" includes the making of loans, purchase of assets, issuance
of a guarantee and other similar transactions. Section 23B also applies to
"covered transactions" as well as certain other transactions between a savings
institution and an affiliate. Section 23B requires that all such transactions be
on terms substantially the same, or at least as favorable, to the institution or
subsidiary as those provided to a non-affiliate.

         In addition, Sections 22(h) and (g) of the Federal Reserve Act places
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, an executive officer and
to a greater than 10% stockholder of a savings institution, and certain
affiliated interests of either, may not exceed, together with all other
outstanding loans to such person and affiliated interests, the savings
institution's loans to one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus). Section 22(h) also requires that
loans to directors, executive officers and principal stockholders be made on
terms substantially the same as offered in comparable transactions to other
persons unless the loans are made pursuant to a benefit or compensation program
that (i) is widely available to employees of the institution and (ii) does not
give preference to any director, executive officer or principal stockholder, or
certain affiliated interests of either, over other employees of the savings
institution. Section 22(h) also requires prior board approval for certain loans.
In addition, the

                                     II-27

aggregate amount of extensions of credit by a savings institution to all
insiders cannot exceed the institution's unimpaired capital and surplus.
Furthermore, Section 22(g) places additional restrictions on loans to executive
officers.

         CAPITAL REQUIREMENTS. The Federal Reserve Board has adopted capital
adequacy guidelines pursuant to which it assesses the adequacy of capital in
examining and supervising a bank holding company and in analyzing applications
to it under the BHCA. The Federal Reserve Board capital adequacy guidelines
generally require bank holding companies to maintain total capital equal to 8%
of total risk-adjusted assets, with at least one-half of that amount consisting
of Tier I or core capital and up to one-half of that amount consisting of Tier
II or supplementary capital. Tier I capital for bank holding companies generally
consists of the sum of common stockholders' equity and perpetual preferred stock
(subject in the case of the latter to limitations on the kind and amount of such
stocks which may be included as Tier I capital), less goodwill and, with certain
exceptions, intangibles. Tier II capital generally consists of hybrid capital
instruments; perpetual preferred stock which is not eligible to be included as
Tier I capital; term subordinated debt and intermediate-term preferred stock;
and, subject to limitations, general allowances for loan losses. Assets are
adjusted under the risk-based guidelines to take into account different risk
characteristics, with the categories ranging from 0% (requiring no additional
capital) for assets such as cash to 100% for the bulk of assets which are
typically held by a bank holding company, including multi-family residential and
commercial real estate loans, commercial business loans and consumer loans.
Single-family residential first mortgage loans which are not past-due (90 days
or more) or non-performing and which have been made in accordance with prudent
underwriting standards are assigned a 50% level in the risk-weighing system, as
are certain privately-issued mortgage-backed securities representing indirect
ownership of such loans. Off-balance sheet items also are adjusted to take into
account certain risk characteristics.

         In March 1999, the federal banking agencies amended their risk-based
and leverage capital standards to make uniform their regulations. In particular,
the agencies made risk-based capital treatments for construction loans on
presold residential properties, real estate loans secured by junior liens on
1-to 4-family residential properties, and investments in mutual funds consistent
among the agencies, and simplified and made uniform the agencies' Tier I
leverage capital standards. The most highly-rated institutions must maintain a
minimum Tier I leverage ratio of 3.0 percent, with all other institutions
required to maintain a minimum leverage ratio of 4.0 percent. The Federal
Reserve Board regulations now state that higher-than-minimum capital levels may
be required if warranted, and that institutions should maintain capital levels
consistent with their risk exposures.

         At September 30, 2002, the Company was in compliance with the
above-described Federal Reserve Board regulatory capital requirements.

         FINANCIAL SUPPORT OF AFFILIATED INSTITUTIONS. Under Federal Reserve
Board policy, the Company will be expected to act as a source of financial
strength to the Bank and to commit

                                     II-28

resources to support the Bank in circumstances when it might not do so absent
such policy. The legality and precise scope of this policy is unclear, however,
in light of judicial precedent.

         PAYMENT OF DIVIDENDS. It is the current policy of the Board of
Directors of the Bank to pay regular dividends quarterly on its outstanding
common stock, solely owned by the Company. The dividend may be increased or
decreased from time to time at the discretion of the Board of Directors and is
dependent primarily upon the net earnings, financial condition, capital
requirements, and regulatory restrictions of the Bank. It is the intention of
the Bank to continue to pay dividends to the Company in amounts sufficient to
fund the regular quarterly dividend payment to the Company's stockholders. No
dividends shall be paid if the Bank's capital to assets ratio falls below 4%.

THE BANK

         GENERAL. The Bank is incorporated under the Banking Code, is subject to
extensive regulation and examination by the Department and by the FDIC, and, is
subject to certain requirements established by the Federal Reserve Board. The
federal and state laws and regulations which are applicable to banks regulate,
among other things, the scope of their business, their investments, their
reserves against deposits, the timing of the availability of deposited funds and
the nature and amount of and collateral for certain loans. There are periodic
examinations by the Department and the FDIC to test the Bank's compliance with
various regulatory requirements. This regulation and supervision establishes a
comprehensive framework of activities in which an institution can engage and is
intended primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulation, whether by the Department, the FDIC or the Congress
could have a material adverse impact on the Company, the Bank and their
operations.

         FDIC INSURANCE PREMIUMS. The deposits of the Bank are insured by the
SAIF, which is administered by the FDIC. Under current FDIC regulations,
SAIF-insured institutions are assigned to one of three capital groups which are
based solely on the level of an institution's capital. SAIF assessment rates are
then tied to the level of an institution's supervisory concern based on risk
classifications derived from the capital groups. Rates for the third quarter of
2002 ranged from zero for well capitalized, healthy institutions, such as the
Bank, to 27 basis points for undercapitalized institutions with substantial
supervisory concerns.

         In addition, all institutions with deposits insured by the FDIC are
required to pay assessments to fund interest payments on bonds issued by the
Financing Corporation, a mixed-ownership government corporation established to
recapitalize the predecessor to the SAIF. The assessment rate for the third
quarter of 2002 was .0172% of insured deposits and is adjusted quarterly. These
assessments will continue until the Financing Corporation bonds mature in 2017
through 2019.

                                     II-29

         Under the Federal Deposit Insurance Act ("FDIA"), insurance of deposits
may be terminated by the FDIC upon a finding that the institution has engaged or
is engaging in unsafe and unsound practices, is in an unsafe or unsound
condition to continue operations or has violated any applicable law, regulation,
rule, order or condition imposed by the FDIC or written agreement entered into
with the FDIC. The management of the Bank does not know of any practice,
condition or violation that might lead to termination of deposit insurance. At
September 30, 2002, the Bank's regulatory capital exceeded all of its capital
requirements.

         CAPITAL REQUIREMENTS. The FDIC has promulgated regulations and adopted
a statement of policy regarding the capital adequacy of state-chartered banks
which, like the Bank, will not be members of the Federal Reserve System. These
requirements are substantially similar to those adopted by the Federal Reserve
Board regarding bank holding companies, as described above.

         As discussed under "Regulation - The Company - BHCA Activities and
Other Limitations - Capital Requirements," in March 1999, the federal banking
agencies amended their risk-based and leverage capital standards to make uniform
their regulations. The FDIC's capital regulations establish a minimum 3.0% Tier
I leverage capital requirement for strong banking institutions rated composite 1
under the Uniform Financial Institutions Rating System, with a minimum 4.0% Tier
I leverage capital requirement for all other state-chartered, non-member banks.
Leverage or core capital is defined as the sum of common stockholders' equity
(including retained earnings), noncumulative perpetual preferred stock and
related surplus, and minority interests in consolidated subsidiaries, minus all
intangible assets other than certain qualifying supervisory goodwill and certain
purchased mortgage servicing rights.

         The FDIC also requires that savings banks meet a risk-based capital
standard. The risk-based capital standard for savings banks requires the
maintenance of total capital (which is defined as Tier I capital and
supplementary (Tier 2) capital) to risk weighted assets of 8%. In determining
the amount of risk-weighted assets, all assets, plus certain off balance sheet
assets, are multiplied by a risk-weight of 0% to 100%, based on the risks the
FDIC believes are inherent in the type of asset or item. The components of Tier
I capital are equivalent to those discussed above under the 4% leverage capital
standard. The components of supplementary capital include certain perpetual
preferred stock, certain mandatory convertible securities, certain subordinated
debt and intermediate preferred stock and general allowances for loan and lease
losses. Allowance for loan and lease losses includable in supplementary capital
is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of
capital counted toward supplementary capital cannot exceed 100% of core capital.
At September 30, 2002, the Bank met each of its capital requirements.

         In August 1995, the FDIC, along with the other federal banking
agencies, adopted a regulation providing that the agencies will take account of
the exposure of a bank's capital and economic value to changes in interest rate
risk in assessing a bank's capital adequacy. According to the agencies,
applicable considerations include the quality of the bank's interest rate risk

                                     II-30

management process, the overall financial condition of the bank and the level
of other risks at the bank for which capital is needed. Institutions with
significant interest rate risk may be required to hold additional capital. The
agencies also have issued a joint policy statement providing guidance on
interest rate risk management, including a discussion of the critical factors
affecting the agencies' evaluation of interest rate risk in connection with
capital adequacy. The agencies have determined not to proceed with a previously
issued proposal to develop a supervisory framework for measuring interest rate
risk and an explicit capital component for interest rate risk.

         The Bank is also subject to more stringent Department capital
guidelines. Although not adopted in regulation form, the Department utilizes
capital standards requiring a minimum of 6% leverage capital and 10% risk-based
capital. The components of leverage and risk-based capital are substantially the
same as those defined by the FDIC. At September 30, 2002, the Bank exceeded the
Department's capital guidelines.

         ACTIVITIES AND INVESTMENTS OF INSURED STATE-CHARTERED BANKS. The
activities and equity investments of FDIC-insured, state-chartered banks are
generally limited to those that are permissible for national banks. Under
regulations dealing with equity investments, an insured state bank generally may
not directly or indirectly acquire or retain any equity investment of a type, or
in an amount, that is not permissible for a national bank. An insured state bank
is not prohibited from, among other things, (i) acquiring or retaining a
majority interest in a subsidiary, (ii) investing as a limited partner in a
partnership the sole purpose of which is direct or indirect investment in the
acquisition, rehabilitation or new construction of a qualified housing project,
provided that such limited partnership investments may not exceed 2% of the
bank's total assets, (iii) acquiring up to 10% of the voting stock of a company
that solely provides or reinsures directors', trustees' and officers' liability
insurance coverage or bankers' blanket bond group insurance coverage for insured
depository institutions, and (iv) acquiring or retaining the voting shares of a
depository institution if certain requirements are met. In addition, an insured
state-chartered bank may not, directly, or indirectly through a subsidiary,
engage as "principal" in any activity that is not permissible for a national
bank unless the FDIC has determined that such activities would pose no risk to
the insurance fund of which it is a member and the bank is in compliance with
applicable regulatory capital requirements. Any insured state-chartered bank
directly or indirectly engaged in any activity that is not permitted for a
national bank or not otherwise authorized by the FDIC must cease the
impermissible activity.

         PENNSYLVANIA SAVINGS BANK LAW. The Banking Code contains detailed
provisions governing the organization, location of offices, rights and
responsibilities of directors, officers, employees and members, as well as
corporate powers, savings and investment operations and other aspects of the
Bank and its affairs. The Banking Code delegates extensive rulemaking power and
administrative discretion to the Department so that the supervision and
regulation of state-chartered savings banks may be flexible and readily
responsive to changes in economic conditions and in savings and lending
practices.

                                     II-31

         One of the purposes of the Banking Code is to provide savings banks
with the opportunity to be competitive with each other and with other financial
institutions existing under other Pennsylvania laws and other state, federal and
foreign laws. A Pennsylvania savings bank may locate or change the location of
its principal place of business and establish an office anywhere in the
Commonwealth, with the prior approval of the Department.

         The Department generally examines each savings bank not less frequently
than once every two years. Although the Department may accept the examinations
and reports of the FDIC in lieu of the Department's examination, the present
practice is for the Department to conduct individual examinations. The
Department may order any savings bank to discontinue any violation of law or
unsafe or unsound business practice and may direct any trustee, officer,
attorney or employee of a savings bank engaged in an objectionable activity,
after the Department has ordered the activity to be terminated, to show cause at
a hearing before the Department why such person should not be removed.

         REGULATORY ENFORCEMENT AUTHORITY. Applicable banking laws include
substantial enforcement powers available to federal banking regulators. This
enforcement authority includes, among other things, the ability to assess civil
money penalties, to issue cease-and-desist or removal orders and to initiate
injunctive actions against banking organizations and institution-affiliated
parties, as defined. In general, these enforcement actions may be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with regulatory authorities.

REGULATORY AGREEMENTS

         As previously reported, during fiscal 2000, the Bank entered into a
Memorandum of Understanding ("MOU") with the Department and the FDIC. The
Company also entered into a MOU with the Federal Reserve Bank of Cleveland
("FRB"). Based on a joint examination of the Bank, the Department and the FDIC
rescinded the MOU on June 23, 2001. On October 1, 2001, the FRB notified the
Company that based on its latest examination of the Company the MOU has been
terminated effective as of September 5, 2001.

FEDERAL AND STATE TAXATION

         GENERAL. The Company and the Bank are subject to the corporate tax
provisions of the Code, as well as certain additional provisions of the Code
which apply to thrift and other types of financial institutions. The following
discussion of tax matters is intended only as a summary and does not purport to
be a comprehensive description of the tax rules applicable to the Company and
the Bank.

         METHOD OF ACCOUNTING. The Bank maintains its books and records for
federal income tax purposes using the accrual method of accounting. The accrual
method of accounting generally requires that items of income be recognized when
all events have occurred that

                                     II-32

establish the right to receive the income and the amount of income can be
determined with reasonable accuracy, and that items of expense be deducted at
the later of (i) the time when all events have occurred that establish the
liability to pay the expense and the amount of such liability can be determined
with reasonable accuracy or (ii) the time when economic performance with
respect to the item of expense has occurred.

         BAD DEBT RESERVES. Prior to the enactment, on August 20, 1996, of the
Small Business Job Protection Act of 1996 (the "Small Business Act"), for
federal income tax purposes, thrift institutions such as the Bank, which met
certain definitional tests primarily relating to their assets and the nature of
their business, were permitted to establish tax reserves for bad debts and to
make annual additions thereto, which additions could, within specified
limitations, be deducted in arriving at their taxable income. The Bank's
deduction with respect to "qualifying loans," which are generally loans secured
by certain interests in real property, could be computed using an amount based
on a six-year moving average of the Bank's actual loss experience (the
"Experience Method"), or a percentage equal to 8.0% of the Bank's taxable income
(the "PTI Method"), computed without regard to this deduction and with
additional modifications and reduced by the amount of any permitted addition to
the non-qualifying reserve.

         Under the Small Business Act, the PTI Method was repealed and the Bank
is required to use the Experience Method of computing additions to its bad debt
reserve for taxable years beginning with the Bank's taxable year beginning
October 1, 1996. In addition, the Bank is required to recapture (i.e., take into
taxable income) over a six-year period, beginning with the Bank's taxable year
beginning October 1, 1996, the excess of the balance of its bad debt reserves
(other than the supplemental reserve) as of September 30, 1996 over (a) the
greater of the balance of such reserves as of September 30, 1987 or (b) an
amount that would have been the balance of such reserves as of September 30,
1996 had the Bank always computed the additions to its reserves using the
Experience Method.

         At September 30, 2002, the federal income tax reserves of the Bank
included $3.17 million of federal income tax bad debt reserves, of this amount,
$2.89 million and $135,750 are attributable to pre-1987 and post-1987 bad debt
reserves, respectively. The Bank will recapture into income approximately
$24,000 per year over the six year period which was set to begin October 1,
1996, however, the Bank was eligible to suspend until 1998 the recapture under
the residential loan exemption.

         DISTRIBUTIONS. If the Bank were to distribute cash or property to its
sole stockholder, and the distribution was treated as being from its pre-1987
bad debt reserves, the distribution would cause the Bank to have additional
taxable income. A distribution is deemed to have been made from pre-1987 bad
debt reserves to the extent that (a) the reserves exceed the amount that would
have been accumulated on the basis of actual loss experience, and (b) the
distribution is a "non-qualified distribution." A distribution with respect to
stock is a non-qualified distribution to the extent that, for federal income tax
purposes, (i) it is in redemption of shares, (ii) it is pursuant to a
liquidation of the institution, or (iii) in the case of a current distribution,
together with all other such distributions during the taxable year, it exceeds
the institution's current and post-1951

                                     II-33

accumulated earnings and profits. The amount of additional taxable income
created by a non-qualified distribution is an amount that when reduced by the
tax attributable to it is equal to the amount of the distribution.

         MINIMUM TAX. The Code imposes an alternative minimum tax at a rate of
20%. The alternative minimum tax generally applies to a base of regular taxable
income plus certain tax preferences ("alternative minimum taxable income" or
"AMTI") and is payable to the extent such AMTI is in excess of an exemption
amount. The Code provides that an item of tax preference is the excess of the
bad debt deduction allowable for a taxable year pursuant to the percentage of
taxable income method over the amount allowable under the experience method.
Other items of tax preference that constitute AMTI include (a) tax-exempt
interest on newly issued (generally, issued on or after August 8, 1986) private
activity bonds other than certain qualified bonds and (b) 75% of the excess (if
any) of (i) adjusted current earnings as defined in the Code, over (ii) AMTI
(determined without regard to this preference and prior to reduction by net
operating losses).

         NET OPERATING LOSS CARRYOVERS. A financial institution may carry back
net operating losses ("NOLs") to the preceding two taxable years and forward to
the succeeding 20 taxable years. This provision applies to losses incurred in
taxable years beginning after August 5, 1997. At September 30, 2002, the Bank
had no NOL carryforwards for federal income tax purposes.

         AUDIT BY IRS. The Bank's federal income tax returns for taxable years
through September 30, 1999 have been closed for the purpose of examination by
the Internal Revenue Service.

         STATE TAXATION. The Company is subject to the Pennsylvania Corporate
Net Income Tax and Capital Stock and Franchise Tax. The Corporation Net Income
Tax rate for 2002 is 9.99% and is imposed on the Company's unconsolidated
taxable income for federal purposes with certain adjustments. In general, the
Capital Stock Tax is a property tax imposed at the rate of approximately 1.3% of
a corporation's capital stock value, which is determined in accordance with a
fixed formula based upon average net income and net worth.

         The Bank is taxed under the Pennsylvania Mutual Thrift Institutions Tax
Act (the "MTIT"), as amended to include thrift institutions having capital gain
stock, pursuant to the MTIT, the Bank's tax rate is 11.5%. The MTIT exempts the
Bank from all other taxes imposed by the Commonwealth of Pennsylvania for state
income tax purposes and from all local taxation imposed by political
subdivisions, except taxes on real estate and real estate transfers. The MTIT is
a tax upon net earnings, determined in accordance with GAAP with certain
adjustments. The MTIT, in computing GAAP income, allows for the deduction of
interest earned on state and federal securities, while disallowing a percentage
of a thrift's interest expense deduction in the proportion of interest income on
those securities to the overall interest income of the Bank. Net operating
losses, if any, thereafter can be carried forward three years for MTIT purposes.

                                     II-34

ITEM 2.   PROPERTIES

         The following table sets forth certain information with respect to the
Bank's offices at September 30, 2002.



                                                                       Net Book              Amount of
                                                                       Value of             Deposits at
Description/Address                            Leased/Owned            Property          September 30, 2002
-------------------                           ---------------       --------------      --------------------
                                                                     (In Thousands)
                                                                                
Administrative Office:

1001 Village Run Road                             Leased(1)               $  594              $    5,359
Wexford, Pennsylvania 15090

Lending Office:

225 Ross Street, 6th Floor                        Leased(2)                  128                      --
Pittsburgh, Pennsylvania  15219

Branch Offices:

441 Smithfield Street                             Leased(3)                  359                  37,913(3)
Pittsburgh, Pennsylvania 15222

125 Brownsville Road                              Owned(4)                    20                  12,284
Pittsburgh, Pennsylvania  15210

4900 Liberty Avenue                               Owned(5)                 1,671                  31,972
Pittsburgh, Pennsylvania  15224

100 North Main Street                             Owned(6)                   439                  61,536
Butler, Pennsylvania  16001

799 Castle Shannon Boulevard                      Leased(7)                   --                  12,023
Pittsburgh, Pennsylvania  15234

2905 West Liberty Avenue                          Owned                      456                  15,550
Pittsburgh, Pennsylvania  15216

5001 Library Road                                 Leased(8)                    4                   7,626
Bethel Park, Pennsylvania 15102

550 Marketplace Drive                             Owned(9)                   668                  11,959
Oakdale, Pennsylvania 15071                                               ------                --------
                                                                          $4,339                $196,222
                                                                          ======                ========


                                                   (Footnotes on following page)

                                     II-35

------------------

(1)      The administrative offices relocated to this facility in August 2000.
         This property is subject to a lease which expires on August 31, 2015
         and has two five year renewal options. The Bank also opened a branch
         office in the same building on August 14, 2000.

(2)      This property is subject to a lease which expires on April 1, 2005 and
         has two five year renewal options.

(3)      This branch office relocated August 7, 2000. This property is subject
         to a lease which expires on August 31, 2010 and has two five year
         renewal options. Includes $11.1 million in wholesale certificates.

(4)      The Bank sold this branch office to the First National Bank of
         Pennsylvania on December 13, 2002.

(5)      This branch office relocated to this new facility on February 22, 2000.

(6)      On June 1, 1997, the Bank opened a loan center in the same building as
         the branch office to generate home equity loans, home equity lines of
         credit and consumer lending.

(7)      This  branch  office  opened on October 16,  1995.  This  property is
         subject to a lease which  expires on October 16, 2005.

(8)      This branch office opened on October 15, 1997. This property was
         subject to a lease which expired on October 19, 2002. The Bank sold
         this branch office to Brentwood Bank on November 1, 2002.

(9)      This branch office opened on March 15, 1999.

ITEM 3. LEGAL PROCEEDINGS.

         There are no material legal proceedings to which the Company is a party
or to which any of their property is subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Not applicable.

                                     II-36

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         STOCK INFORMATION

         Pittsburgh Financial Corp.'s common stock is traded on The Nasdaq Stock
Market under the symbol "PHFC." As of December 13, 2002, Pittsburgh Financial
Corp. had 1,408,699 shares of common stock outstanding and approximately 1,200
stockholders.

         STOCK PRICE

         The following table illustrates Pittsburgh Financial Corp.'s high and
low quarterly closing stock price on The Nasdaq Stock Market and the cash
dividends per share paid during the year.



QUARTER ENDED                 HIGH                 LOW             DIVIDENDS
                                                           
September 2002               $14.00              $10.65               $.09
June 2002                     15.00               13.50                .09
March 2002                    14.06               11.16                .09
December 2001                 12.93               11.00                .09

September 2001               $13.15              $11.00               $.09
June 2001                     11.50               10.51                .09
March 2001                    12.00                9.00                .09
December 2000                  9.00                6.38                .09


                                     II-37

ITEM 6. SELECTED FINANCIAL DATA.

         The selected consolidated financial and other data of the Company set
forth below does not purport to be complete and should be read in conjunction
with, and is qualified in its entirety by, the more detailed information,
including the Consolidated Financial Statements and related Notes, appearing
elsewhere herein.



                                                                           As of or For the
                                                                        Year Ended September 30,
                                             -----------------------------------------------------------------------------
                                               2002             2001              2000             1999             1998
                                             --------         --------          --------         --------         --------
                                                                       (Dollars in Thousands)
                                                                                                   
SELECTED FINANCIAL AND OTHER DATA:
Total assets                                 $413,663         $427,069          $438,419         $415,742         $374,279
Investment securities                          40,229           28,003            38,895           33,832           57,109
Mortgage-backed securities                     84,067           73,284            60,281           75,913           84,515
Loans receivable, net                         240,806          284,905           307,428          278,085          211,981
Cash and cash equivalents                      23,819           22,360             7,108            5,319            4,476
Deposits                                      196,222          213,011           205,680          169,463          153,983
FHLB advances                                 161,888          156,316           176,217          184,067          155,267
Reverse repurchase agreements                  20,000           20,000            20,000           25,000           25,000
Stockholders' equity                           23,022           23,310            21,419           22,026           24,799
Non-performing assets(1)                        4,783            3,231             2,552            5,029            4,488
Full-service offices at end of period               9                9                 9                9                8

SELECTED OPERATING DATA:
Interest income                              $ 27,032         $ 30,533          $ 30,975         $ 27,659         $ 24,414
Interest expense                               19,255           22,725            22,446           19,017           16,513
                                             --------         --------          --------         --------         --------
Net interest income                             7,777            7,808             8,529            8,642            7,901
Provision for losses on loans                     420              600               600              600              610
                                             --------         --------          --------         --------         --------
Net interest income after
  provision for losses on loans                 7,357            7,208             7,929            8,042            7,291
Extinguishment of facility lease                   --               --              (202)              --               --
Net gain on sale of fixed assets                   --               --               550               --               --
Net loss on sale of loans                          --               16               (18)              --               --
Gain (loss) on trading/sale of securities           9              (81)             (172)             (10)            (208)
Other noninterest income                        1,861            1,073               963            1,015              817
Other noninterest expenses                      8,050            7,922             7,400            5,727            5,114
Income before income taxes                      1,177              294             1,650            3,320            2,786
Income taxes                                      379               85               483            1,031              884
                                             --------         --------          --------         --------         --------
Net income                                   $    798         $    209          $  1,167         $  2,289         $  1,902
                                             ========         ========          ========         ========         ========

PER COMMON SHARE:
Basic earnings per share                     $    0.60        $   0.14          $   0.75         $   1.43         $   1.10
Basic earnings per share(2)                       0.57            0.14              0.77             1.44             1.11
Diluted earnings per  share                       0.58            0.14              0.75             1.39             1.05
Diluted earnings per share(2)                     0.55            0.26              0.77             1.40             1.06
Cash dividends                                    0.36            0.36              0.36             0.28             0.31
Return of Capital Distribution                      --              --                --               --             2.43


                                     II-38



                                                                     As of or For the
                                                                  Year Ended September 30,
                                               -----------------------------------------------------------------
                                                  2002          2001          2000         1999          1998
                                               ----------    ----------    ----------   ----------    ----------
                                                                     (Dollars in Thousands)
                                                                                       
SELECTED OPERATING RATIOS:
Average yield earned on
  interest-earning assets                          6.82%        7.39%         7.48%          7.31%        7.51%
Average rate paid on interest-
  bearing liabilities                              5.10         5.81          5.65           5.27         5.41
Average interest rate spread(3)                    1.72         1.58          1.83           2.04         2.10
Net interest margin(3)                             1.96         1.89          2.06           2.28         2.43
Ratio of interest-earning assets
  to interest-bearing liabilities                105.12       105.54        104.31         104.91       106.45
Net interest income to operating expenses          0.96         0.99          1.18           1.51         1.55
Operating expenses as a
  percent of average assets                        1.96         1.83          1.68           1.46         1.50
Dividend payout ratio                             63.55       275.61         52.93          21.96        31.79
Return on average assets                           0.18         0.09          0.27           0.59         0.56
Return on average equity                           3.58         0.91          5.58           9.74         7.33
Ratio of average equity to average assets          5.38         5.35          4.86           6.01         7.66

ASSET QUALITY RATIOS(4):
Non-performing loans as a percent
  of total loans                                   1.61%        0.86%         0.59%          1.03%        1.42%
Non-performing assets as a percent
  of total assets                                  1.16         0.76          0.58           1.21         1.20
Allowance for loan losses as a
  percent of net loans                             1.22         0.90          0.73           0.70         0.82
Allowance for loan losses as a
  percent of non-performing loans                 75.67       104.46        117.30          63.68        54.08

BANK CAPITAL RATIOS(4):
Tier 1 risk-based capital ratio                   13.05%       14.44%        14.47%         16.16%       18.37%
Total risk-based capital ratio                    14.29        15.62         15.46          17.11        19.40
Tier 1 leverage capital ratio                      7.57         7.77          7.33           7.87         8.29


-------------------

(1)  --  Non-performing assets consist of non-performing loans and real
         estate owned ("REO"). Non-performing loans consist of non-accrual loans
         and accruing loans 90 days or more past due, while REO consists of real
         estate acquired through foreclosure and real estate acquired by
         acceptance of a deed-in-lieu of foreclosure.

(2)  --  Excludes impact of trading activities and sales of available for sale
         securities.

(3)  --  Interest rate spread represents the difference between the weighted
         average yield on average interest-earning assets and the weighted
         average cost of average interest-bearing liabilities, and net interest
         margin represents net interest income as a percent of average
         interest-earning assets.

(4)  --  Asset Quality Ratios and Bank Capital Ratios are end of period
         ratios. With the exception of end of period ratios, all ratios are
         based on average daily balances during the indicated periods.

                                     II-39

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS.

GENERAL

        The Company is a Pennsylvania corporation organized in September 1995 by
the Bank for the purpose of acquiring all of the capital stock of the Bank
issued in the conversion (the "Conversion") of the Bank from a
Pennsylvania-chartered mutual savings bank to a Pennsylvania-chartered stock
savings bank. The Conversion was completed on April 1, 1996. The only
significant assets of the Company are the capital stock of the Bank and assets
purchased with the balance of the net Conversion proceeds retained by the
Company. The business of the Company consists primarily of the business of the
Bank.

        The operating results of the Company depend primarily upon its net
interest income, which is determined by the difference between interest income
on interest-earning assets, which consist principally of loans, investment
securities and other investments, and interest expense on interest-bearing
liabilities, which consist principally of deposits and borrowings. The Company's
net income also is affected by its provision for loan losses, as well as the
level of its other operating income, including loan fees and service charges and
its other operating expenses, including salaries and employee benefits,
occupancy expenses, federal deposit insurance premiums, miscellaneous other
expenses, and income taxes.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

        In addition to historical information, forward-looking statements are
contained herein that are subject to risks and uncertainties that could cause
actual results to differ materially from those reflected in the forward-looking
statements. Factors that could cause future results to vary from current
expectations, include, but are not limited to, the impact of economic conditions
(both generally and more specifically in the markets in which the Company
operates), the impact of competition for the Company's customers from other
providers of financial services, the impact of government legislation and
regulation (which changes from time to time and over which the Company has no
control), and other risks detailed in this report and in the Company's other
Commission filings. 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 Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date hereof. Readers should carefully review the risk factors described in
other documents the Company files from time to time with the Commission,
including the Quarterly Reports on Form 10-Q to be filed by the Company in 2003
and any Current Reports on Form 8-K filed by the Company.

                                     II-40

CHANGES IN FINANCIAL CONDITION

         The Company's assets decreased $13.4 million or 3.1% from $427.1
million at September 30, 2001 to $413.7 million at September 30, 2002. Cash and
interest-bearing deposits increased $1.4 million or 6.25% to $23.8 million at
September 30, 2002 compared to $22.4 million at September 30, 2001. Investment
securities increased $23.0 million or 22.7% from $101.3 million at September 30,
2001 to $124.3 million at September 30, 2002. Bank owned life insurance was
purchased during the year and totaled $6.3 million at September 30, 2002. The
Company's net loans receivable decreased $44.1 million or 15.5% from $284.9
million at September 30, 2001 to $240.8 million at September 30, 2002. The
decrease is primarily attributable to $101.1 million of prepayments and
repayments received on residential mortgage loans as a result of the historic
level of refinancing due to the levels of interest rates. In addition, the
Company is continuing its efforts to diversify its loans receivable portfolio to
a more broad based full service commercial lending philosophy. For the year
ended September 30, 2002, multi-family residential and commercial real estate
loans increased $10.4 million or 23.4%. Commercial term loans and lines of
credit increased $4.1 million or 97.1%; one-to-four family residential and
residential construction loans decreased $52.6 million or 25.1%; home equity
loans and lines decreased by $2.3 million or 11.09%; and consumer loans
decreased by $479,000 or 20.4%. The Company's investment in FHLB Stock increased
$276,000 from $7.8 million at September 30, 2001 to $8.1 million at September
30, 2002. The increase in FHLB stock is primarily due to an increase of $5.6
million in FHLB advances which increased the required amount of stock to be
purchased by the Bank.

         Total liabilities decreased $13.1 million or 3.3% to $390.6 million at
September 30, 2002 compared to $403.8 million at September 30, 2001. The
decrease was primarily due to a $16.8 million or 7.9% decrease in deposits
partially offset by an increase in FHLB advances. The Company's FHLB advances
increased from $156.3 million at September 30, 2001 to $161.8 million at
September 30, 2002, an increase of $5.6 million or 3.6%. Reverse repurchase
agreements totaled $20.0 million at September 30, 2001 and 2002. Guaranteed
preferred beneficial interest in subordinated debt decreased $1.1 million or
10.1% from $10.9 million at September 30, 2001 to $9.8 million at September 30,
2002 as the Company repurchased approximately $1.2 million of the outstanding
securities at an average cost of $9.47 per share.

         Deposits decreased $16.8 million or 7.9% primarily as a result of a
$6.1 million decrease in retail deposits and a $10.7 million decrease in
wholesale certificates of deposit. The decrease in retail deposits was the
result of short term certificates of deposit that matured during the period that
the Company chose not to reprice aggressively due to the current interest rate
environment. At September 30, 2002, the Company had $8.4 million in wholesale
deposits, and had procured certificates of deposit with the following government
entities: $1.0 million with the County of Allegheny, $1.0 million with the
School District of Pittsburgh, and $700,000 with the Commonwealth of
Pennsylvania. Although market demand generally dictates deposit maturities and
rates, the Company intends to continue to promote longer term deposits to the
extent possible and consistent with its asset and liability management goals.
See "Item 2. Properties" for amount of deposits for each of the Bank's branches.
Subsequent to September 30, 2002, the

                                     II-41

Company sold its Bethel Park and Mt. Oliver offices in two separate
transactions. Total deposits sold in these transactions were approximately $16.4
million. The transactions resulted in a net pre-tax gain of approximately
$465,000.

         Total stockholders' equity decreased $320,000 or 1.4% to $23.0 million
at September 30, 2002 compared to $23.3 million at September 30, 2001. The net
decrease was primarily attributable to the purchase of treasury shares totaling
$1.5 million and $507,000 in cash dividends paid, partially offset by an
increase in comprehensive income of $609,000.

                                     II-42

        AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS EARNED AND RATES PAID.
The following table sets forth, for the periods and at the date indicated,
information regarding the Company's average balance sheet. Information is based
on average daily balances during the periods presented.




                                                                    Year Ended September 30,
                                  At September 30,  --------------------------------------------------------------
                                        2002                     2002                             2001
                                  ----------------  -------------------------------  -----------------------------
                                       Average                             Average                         Average
                                       Yield/        Average               Yield/     Average              Yield/
                                       Rate(1)       Balance   Interest    Rate(1)    Balance   Interest   Rate(1)
                                  ----------------  ---------  --------  ----------  ---------  --------  --------
                                                                 (Dollars in Thousands)
                                                                                     
Interest-earning assets:
  Investment securities                 5.81%       $ 39,060   $  2,538     6.50%    $ 44,334    $ 3,314     7.48%
  Mortgage-backed securities            5.16          81,793      4,303     5.26       61,016      3,832     6.28
  Loans receivable(1):                  7.54
    First mortgage loans                7.55         182,766     13,732     7.51      234,726     17,888     7.62
    Other loans                         7.54          81,406      6,289     7.73       65,236      5,237     8.03
                                                    --------   --------              --------    -------
      Total loans receivable            1.38         264,172     20,021     7.58      299,962     23,125     7.71
  Other interest-earning assets                       11,492        170     1.48        7,608        262     3.44
                                                    --------   --------   ------     --------    -------
    Total interest-earning assets       6.58%        396,517   $ 27,032     6.82%     412,920    $30,533     7.39%
                                        ====                   ========   ======                 =======   ======

Noninterest-earning assets                            17,177                           14,759
                                                    --------                         --------
    Total assets                                    $413,694                         $427,679
                                                    ========                         ========
Interest-bearing liabilities:
  Deposits                              3.54%       $188,295   $  7,522     3.99%    $197,517    $10,336     5.23%
  FHLB advances and other               6.07         178,588     10,826     6.06      182,226     11,380     6.24
  Guaranteed preferred beneficial
     interests in subordinated debt     8.81          10,339        907     8.77       11,500      1,009     8.77
                                        ----        --------   --------   ------     --------    -------   ------
    Total interest-bearing
      liabilities                       4.91%        377,222   $ 19,255     5.10%     391,243    $22,725     5.81%
                                        ====                   ========   ======                 =======   ======
Noninterest-bearing liabilities                       14,196                           13,575
                                                    --------                         --------
    Total liabilities                                391,418                          404,818
Stockholders' equity                                  22,276                           22,861
                                                    --------                         --------
    Total liabilities and retained
      earnings                                      $413,694                         $427,679
                                                    ========                         ========
Net interest-earning assets                         $ 19,295                         $ 21,677
                                                    ========                         ========
Net interest income/interest
  rate spread                           1.67%                  $  7,777     1.72%                $ 7,808     1.58%
                                        ====                   ========   ======                 =======   ======
Net interest margin(2)                                                      1.96%                            1.89%
                                                                          ======                           ======
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                                            105.12%                          105.54%
                                                                          ======                           ======




                                          Year Ended September 30,
                                        ----------------------------
                                                    2000
                                        ----------------------------
                                                             Average
                                         Average              Yield/
                                         Balance   Interest  Rate(1)
                                        ---------  --------  -------
                                           (Dollars in Thousands)
                                                    
Interest-earning assets:
  Investment securities                 $ 40,755   $ 3,122     7.66%
  Mortgage-backed securities              65,048     4,349     6.69
  Loans receivable(1):
    First mortgage loans                 262,905    20,077     7.61
    Other loans                           41,743     3,266     7.82
                                        --------   -------
      Total loans receivable             304,648    23,343     7.66
  Other interest-earning assets            3,260       161     4.45
                                        --------   -------
    Total interest-earning assets        414,071   $30,975     7.48%
                                                   =======   ======
Noninterest-earning assets                16,014
                                        --------
    Total assets                        $430,085
                                        ========
Interest-bearing liabilities:
  Deposits                              $172,619   $ 8,320     4.82%
  FHLB advances and other                212,861    13,117     6.16
  Guaranteed preferred beneficial
     interests in subordinated debt       11,500     1,009     8.77
                                        --------   -------   ------
    Total interest-bearing
      liabilities                        396,980   $22,446     5.65%
                                                   =======   ======
Noninterest-bearing liabilities           12,204
                                        --------
    Total liabilities                    409,184
Stockholders' equity                      20,901
                                        --------
    Total liabilities and retained
      earnings                          $430,085
                                        ========
Net interest-earning assets             $ 17,091
                                        ========
Net interest income/interest
  rate spread                                      $ 8,529     1.83%
                                                   =======   ======
Net interest margin(2)                                         2.06%
                                                             ======
Ratio of average interest-
  earning assets to average
  interest-bearing liabilities                               104.31%
                                                             ======


---------------------------
(1) Includes non-accrual loans.

(2) Net interest income divided by interest-earning assets.

                                     II-43

        RATE/VOLUME ANALYSIS. The following table describes the extent to which
changes in interest rates and changes in volume of interest-related assets and
liabilities have affected the Company's interest income and expense during the
periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (change in volume multiplied by prior year rate), (ii)
changes in rate (change in rate multiplied by prior year volume), and (iii)
total change in rate and volume.



                                                         Year Ended September 30,
                                             -----------------------------------------------
                                                            2002 vs. 2001
                                             -----------------------------------------------
                                                         Increase
                                                    (Decrease) Due to
                                             -------------------------------
                                                                              Total Increase
                                               Rate     Volume   Rate/Volume    (Decrease)
                                             --------  --------  -----------  --------------
                                                                  
Interest-earnings assets:
  Investment securities                      $  (433)  $  (394)    $  51         $  (776)
  Mortgage-backed securities                    (622)    1,305      (212)            471
  Loans receivable, net                         (392)   (2,759)       47          (3,104)
  Other interest-earning assets                 (149)      133       (76)            (92)
                                             -------   -------     -----         -------
    Total interest-earning assets             (2,383)   (1,213)       95          (3,501)
                                             -------   -------     -----         -------
Interest-bearing liabilities
  Deposits                                    (2,446)     (482)      114          (2,814)
  FHLB advances                                 (333)     (227)        6            (554)
  Guaranteed preferred beneficial interests
    in subordinated debt                          --      (102)       --            (102)
                                             -------   -------     -----         -------
    Total interest-bearing liabilities        (2,754)     (814)       98          (3,470)
                                             -------   -------     -----         -------
Increase (decrease) in net interest income   $   371   $  (399)    $  (3)        $   (31)
                                             =======   =======     =====         =======




                                                         Year Ended September 30,
                                             ---------------------------------------------
                                                            2001 vs. 2000
                                             ---------------------------------------------
                                                       Increase
                                                  (Decrease) Due to
                                             -----------------------------
                                                                            Total Increase
                                              Rate    Volume   Rate/Volume    (Decrease)
                                             ------  --------  -----------  --------------
                                                                
Interest-earnings assets:
  Investment securities                      $ (75)  $   274     $ (7)         $   192
  Mortgage-backed securities                  (264)     (269)      16             (517)
  Loans receivable, net                        143      (359)      (2)            (218)
  Other interest-earning assets                (36)      177      (40)             101
                                             -----   -------     ----          -------
    Total interest-earning assets             (357)      (86)       1             (442)
                                             -----   -------     ----          -------
Interest-bearing liabilities
  Deposits                                     713     1,200      103            2,016
  FHLB advances                                176    (1,888)     (25)          (1,737)
  Guaranteed preferred beneficial interests
    in subordinated debt                        --        --       --               --
                                             -----   -------     ----          -------
    Total interest-bearing liabilities         612      (324)      (9)             279
                                             -----   -------     ----          -------
Increase (decrease) in net interest income   $(969)  $   238     $ 10          $  (721)
                                             =====   =======     ====          =======


                                     II-44

RESULTS OF OPERATIONS

         NET INCOME. The Company reported net income of $798,000, $209,000, and
$1.2 million for the fiscal years ended September 30, 2002, 2001, and 2000,
respectively. Fully diluted earnings per share was $.58 for the year ended
September 30, 2002, compared to $.14 and $.75, respectively, for the years ended
September 30, 2001 and 2000.

        For fiscal 2002, the $589,000 or 281.5% increase in net income was
primarily the result of an $862,000 increase in noninterest income and a
$180,000 decrease in provision for loan losses, which were partially offset by a
$31,000 decrease in net interest income before the provision for loan losses, a
$128,000 increase in noninterest expense and a $294,000 increase in income tax
expense. The Company recognized a pre-tax net gain of $65,000 on the sale of
foreclosed real estate and a $9,000 pre-tax net gain on investment sales for the
fiscal year ended September 30, 2002.

        For fiscal 2001, the $958,000 or 82.1% decrease in net income was
primarily attributable to a decrease in net interest income before the provision
for loan losses of $720,000 or 8.4%, a $113,000 decrease in noninterest income
and a $522,000 increase in noninterest expense, partially offset by a $398,000
decrease in income taxes. The Company recognized a pre-tax net loss on security
sales of $81,000, a write down of an interest rate cap of $108,000, and a
pre-tax net loss on the sale of foreclosed real estate of $79,000, offset by a
pre-tax net gain on the sale of residential mortgage loans of $16,000.

        For fiscal 2002, the Company's net interest margin increased by 7 basis
points to 1.96% from 1.89% in fiscal 2001 and the Company's interest rate spread
increased by 14 basis points to 1.72% from 1.58% for fiscal 2001. The average
yield earned on the Company's interest-earning assets decreased by 57 basis
points from 7.39% to 6.82%, while the Company's average cost of interest-bearing
liabilities decreased 71 basis points from 5.81% to 5.10% for the fiscal year
ended September 30, 2002. The increase in margin is primarily a result of a
smaller earning asset base and a decrease in funding costs related to the
Company's interest bearing liabilities.

        For fiscal 2001, the Company's net interest margin decreased by 17 basis
points to 1.89% from 2.06% in fiscal 2000 and the Company's interest rate spread
decreased by 25 basis points to 1.58% from 1.83% for fiscal 2000. The average
yield earned on the Company's interest-earning assets decreased by 9 basis
points from 7.48% to 7.39%, while the Company's average cost of interest-bearing
liabilities increased 16 basis points to 5.81% in 2001 from 5.65% in 2000. This
increase in the Company's average cost of interest-bearing liabilities was
primarily a result of the Company's extension of maturities on liabilities on
its funding side in an effort to reduce its exposure to short term liabilities
and the related effect on its interest rate risk profile.

         NET INTEREST INCOME. Net interest income before the provision for
losses on loans decreased $31,000 or .04% for the fiscal year ended September
30, 2002 compared to the prior fiscal year. The average balance of
interest-earning assets decreased $16.4 million or 4.0%. The decrease was
primarily attributable to a decrease in the average balance of loans receivable
of $35.8 million and the decrease in related yields of 13 basis points from
7.71% to 7.58% for fiscal 2002 when compared to the prior fiscal year. The
average balance of investment and mortgage-

                                     II-45

backed securities increased $15.5 million or 14.7% which was offset by a
decrease in related yields of 112 basis points from 6.78% for the fiscal year
ended September 30, 2001 to 5.66% for the fiscal year ended September 30, 2002.
The average balance of interest-bearing liabilities decreased $14.0 million or
3.58%. The average cost of funds decreased to 5.10% from 5.81% for the fiscal
year ended 2002 when compared to the prior fiscal year. Average deposits
decreased $9.2 million or 4.7% for fiscal 2002 when compared to fiscal 2001.
Average borrowed funds decreased $3.6 million or 2.0% for fiscal 2002 when
compared to fiscal 2001. Interest expense associated with the trust preferred
securities of Pittsburgh Home Capital Trust I totaled $907,000 and $1.0 million
for fiscal years 2002 and 2001, respectively.

         During fiscal 2002, total interest income decreased $3.5 million or
11.5% compared to fiscal 2001, primarily due to a $3.1 million or 13.42%
decrease in interest earned on loans and a $305,000 or 4.3% decrease in interest
earned on investment securities. The Company's total loan portfolio decreased to
$247.9 million at September 30, 2002 from $293.9 million at September 30, 2001,
a 15.7% decrease. One-to-four family residential and residential construction
loans decreased $52.6 million or 25.1%; home equity loans and lines decreased by
$2.3 million or 11.0%; and consumer loans decreased by $479,000 or 20.4%.
Offsetting these decreases were a $10.4 million or 23.4% increase in
multi-family residential and commercial real estate loans and a $4.1 million or
97.1% increase in commercial lines of credit. During fiscal 2002, the Company
experienced a historic level of refinancing and continued to diversify its loans
receivable portfolio.

         During fiscal 2002, total interest expense decreased $3.47 million or
15.3% over fiscal 2001, primarily due to a decrease in average deposits of $9.2
million or 4.7% with a decrease in the related cost of 124 basis points from
5.23% to 3.99%. Interest expense on FHLB advances and other borrowings decreased
$553,000 or 4.86%. The decrease in interest expense on FHLB advances and other
borrowings was primarily attributable to the decrease in the cost of funds of 18
basis points from 6.24% to 6.06%. Interest expense associated with the trust
preferred securities of Pittsburgh Home Capital Trust I totaled $907,000 and
$1.0 million for fiscal years 2002 and 2001, respectively.

         Net interest income before the provision for losses on loans decreased
$720,000 or 8.4% for the fiscal year ended September 30, 2001 compared to the
prior fiscal year. The average balance of interest-earning assets decreased $1.2
million or .3%. The decrease was primarily attributable to a decrease in the
average balance of loans receivable of $4.7 million offset by an increase in
related yields of 5 basis points from 7.66% to 7.71% for fiscal 2001 when
compared to the prior fiscal year. The average balance of investment and
mortgage-backed securities decreased $453,000 or .4% with a decrease in related
yields of 28 basis points from 7.06% for the fiscal year ended September 30,
2000 to 6.78% for the fiscal year ended September 30, 2001. Offsetting such
decreases was an increase in the average balance of other interest-earning
assets of $4.3 million or 133.4%. The average balance of interest-bearing
liabilities decreased $5.8 million or 1.46%. The average cost of funds increased
to 5.81% from 5.65% for the fiscal year ended 2001 when compared to the same
period in 2000. Average deposits increased $24.9 million or 14.4% for fiscal
2001 when compared to fiscal 2000. Average borrowed funds decreased $30.7
million or 14.4% for fiscal 2001 when compared to fiscal 2000. Interest

                                     II-46

expense associated with the trust preferred securities of Pittsburgh Home
Capital Trust I totaled $1.0 million for fiscal years 2001 and 2000,
respectively.

        During fiscal 2001, total interest income decreased $442,000 or 1.4%
compared to fiscal 2000, primarily due to a $218,000 or .9% decrease in interest
earned on loans and an $178,000 or 2.4% decrease in interest earned on
investment securities. The Company's total loan portfolio decreased to $293.9
million at September 30, 2001 from $322.3 million at September 30, 2000, an 8.8%
decrease. One-to-four family residential and residential construction loans
decreased $40.7 million or 16.3%; home equity loans and lines decreased by
$669,000 or 3.1%; and consumer loans decreased by $293,000 or 11.1%. Offsetting
these decreases was a $13.3 million or 42.4% increase in multi-family
residential and commercial real estate loans and a $2.5 million or 147.1%
increase in commercial lines of credit.

        During fiscal 2001, total interest expense increased $279,000 or 1.2%
over fiscal 2000, primarily due to an increase in average deposits of $24.9
million or 14.4% with an increase in the related cost of 41 basis points from
4.82% to 5.23%. Interest expense on FHLB advances and other borrowings decreased
$1.7 million or 13.2%. The decrease in interest expense on FHLB advances and
other borrowings was primarily attributable to a decrease in average borrowings
of $30.6 million or 14.4%, which was offset by an increase in the related
borrowing cost of 8 basis points from 6.16% to 6.24%. The Company also had
interest expense of $1.0 million in connection with outstanding trust preferred
securities for 2001 and 2000.

        PROVISION FOR LOAN LOSSES. The allowance for loan losses is deemed to be
a critical accounting estimate by the Company. It is management's policy to
maintain an allowance for estimated losses based on the risk of loss in the loan
portfolio. Management's periodic evaluation of the adequacy of the allowance is
based on the Company's loan loss experience, known and inherent risks in the
portfolio, adverse situations that may affect the borrower's ability to repay,
the estimated value of the underlying collateral and current economic
conditions. Management classifies all delinquent assets as Special Mention,
Substandard, Doubtful or Loss. A reserve level is estimated by management for
each category of classified loans, with an estimated percentage applied to the
delinquent loan category balance. In addition, management notes that there is an
inherent risk of potential loan loss in the Company's overall, non-classified
loan portfolio. This inherent risk is addressed by applying an estimated
potential loss to the remaining unclassified loan portfolio. Activity for the
period under analysis is also taken into account (charge offs, recoveries).
While management has allocated the allowance to different loan categories, the
allowance is general in nature and is available for the loan portfolio in its
entirety.

        The Company designates all loans that are 90 or more days past due as
non-performing. Generally, when loans are classified as non-performing, unpaid
accrued interest is a reduction of interest income on loans receivable and is
only recognized when cash payments are received. For the year ended September
30, 2002, the Company's non-performing assets increased $1.6 million to $4.8
million from $3.2 million at September 30, 2001. Although non-performing assets
increased in the commercial real estate portfolio by $1.5 million or 223.4%,
these loans are secured by office buildings and retail rental facilities, most
of which are secured by property located in the Company's market area.

                                     II-47

        The allowance is increased by the provision for loan losses, which is
charged against income. For each of the fiscal years ended September 30, 2002,
2001, and 2000, the Company recorded a provision for losses on loans of
$420,000, $600,000 and $600,000, respectively.

         Activity in the allowance for loan losses is summarized as follows for
the years ended September 30, 2002 and 2001:



                                             September 30, 2002           September 30, 2001
                                             ------------------           ------------------
                                                                    
Balance at beginning of year                     $2,644,172                  $2,237,555
Provision charged to income                         420,000                     600,000
Charge offs                                        (157,152)                   (235,732)
Recoveries                                          116,197                      42,349
                                                 ----------                  ----------
Balance at end of period                         $3,023,217                  $2,644,172
                                                 ==========                  ==========


         NONINTEREST INCOME. Total noninterest income increased $862,000 or
85.5% during fiscal 2002 over fiscal 2001. The Company recognized a pre-tax net
gain of $9,000 on investment sales. Noninterest income, excluding the investment
sales, increased for the year ended September 30, 2002 by $681,000 or 57.7%.
During fiscal 2002, the Company recognized income of $301,000 from an investment
in bank owned life insurance which was purchased during the first quarter of
fiscal 2002. Service fees and other fees increased $345,000 or 37.6% and other
income increased $35,000 or 13.2% as a result of fees generated from the
Company's majority owned title subsidiary that was formed during the year.

        Total noninterest income decreased $113,000 or 10.1% during fiscal 2001
over fiscal 2000. The Company recognized a pre-tax net loss on security sales of
$81,000 and a write down of an interest rate cap of $108,000, partially offset
by a pre-tax net gain on the sale of residential mortgage loans of $16,000.
Noninterest income (excluding fixed asset sales, security sales, loans sales,
and early lease extinguishment) increased for the year ended September 30, 2001
by $217,000 or 22.5%. Service fees and other fees increased $143,000 or 18.5%
and other income increased $74,000 or 39.1%.

         NONINTEREST EXPENSE. Total noninterest expense increased $128,000 or
1.6% during fiscal 2002 when compared to fiscal 2001. Also, the Company
recognized a pre-tax net gain of $65,000 on the sale of foreclosed real estate.
Noninterest expense, excluding the sale of foreclosed real estate, increased
$272,000 or 3.5%. Compensation and employee benefits increased $119,000 or 3.1%,
during fiscal 2002 over fiscal 2001. Premises and occupancy costs increased
$102,000 or 6.4%, and marketing costs increased $87,000 or 32.3%. The increases
in compensation and employee benefits, premises and occupancy costs, and
marketing costs were partially offset by a $33,000 or 6.7% decrease in data
processing costs. Non-interest expenses related to the Company's majority owned
title subsidiary amounted to $136,000 for fiscal 2002.

        Total noninterest expense increased $522,000 or 7.1% during fiscal 2001
when compared to fiscal 2000. The increase in noninterest expense was primarily
attributable to the premises and occupancy costs of the subsidiary Bank's new
branch and other offices, which increased $717,000 or 83.3%. Compensation and
employee benefits increased $165,000 or 4.5%, which

                                     II-48

was primarily the result of new branch staffing and the development of the cash
management department. The Company's strategic technology initiatives and
related data processing costs also increased $153,000 or 45.1% for the year
ended September 30, 2001. The increases in compensation and employee benefits,
and data processing were offset by a $207,000 or 43.5% decrease in marketing
costs from $476,000 at September 30, 2000 to $269,000 at September 30, 2001.
During fiscal 2000, a significant portion of the marketing costs were associated
with the Company and the Bank name changes that went into effect April 3, 2000.
The Company recognized pre-tax net losses on the sales of foreclosed real estate
during fiscal 2001 and 2000 of $79,000 and $194,000, respectively.

        PROVISION FOR INCOME TAXES. The Company incurred a provision for income
taxes of $379,000, $85,000 and $483,000 for the fiscal years ended September 30,
2002, 2001, and 2000, respectively. The effective tax rate during each of the
foregoing respective fiscal years was 32.2%, 28.9% and 29.3%. See Note 9 to
Consolidated Financial Statements for additional information relating to income
taxes.

ASSET AND LIABILITY MANAGEMENT

        The ability to maximize net interest income is largely dependent upon
the achievement of a positive interest rate spread that can be sustained during
fluctuations in prevailing interest rates. Interest rate sensitivity is a
measure of the difference between amounts of interest-earning assets and
interest-bearing liabilities which either reprice or mature within a given
period of time. The difference, or the interest rate repricing "gap," provides
an indication of the extent to which an institution's interest rate spread will
be affected by changes in interest rates. A gap is considered positive when the
amount of interest-rate sensitive assets exceeds the amount of interest-rate
sensitive liabilities, and is considered negative when the amount of
interest-rate sensitive liabilities exceeds the amount of interest-rate
sensitive assets during a given time period. Generally, during a period of
rising interest rates, a negative gap within shorter maturities would adversely
affect net interest income, while a positive gap within shorter maturities would
result in an increase in net interest income, and during a period of falling
interest rates, a negative gap within shorter maturities would result in an
increase in net interest income while a positive gap within shorter maturities
would have the opposite effect. As of September 30, 2002, the amount of the
Company's interest-bearing liabilities which were estimated to mature or reprice
within one year exceeded the Company's interest-earning assets with the same
characteristics by $108.0 million or 26.1% of the Company's total assets.

        The Company's actions with respect to interest rate risk and its
asset/liability gap management are taken under the guidance of the
Asset/Liability Management Committee of the Board of Directors. This Committee
meets at least quarterly to, among other things, set interest rate risk
parameters and review the Company's current composition of assets and
liabilities in light of the prevailing interest rate environment. The Committee
assesses its interest rate risk strategy at the Bank at least quarterly, which
is reviewed by the full Board of Directors.

        Previously, the Company has historically emphasized the origination of
long-term fixed-rate residential real estate loans for retention in its
portfolio. At September 30, 2002, $83.1 million or 33.5% of the Company's total
loan portfolio consisted of fixed-rate residential

                                     II-49

mortgage loans. However, as of such date, the Company also held in its loan
portfolio $27.9 million of one-, three- and five-year ARMs and $43.0 million of
long-term residential mortgage loans which have interest rate adjustment
features at seven years and fifteen years. The Company has attempted to mitigate
the interest rate risk of holding a significant portion of fixed-rate loans in
its portfolio through the origination of the ARMs and short-term construction
and consumer loans. At September 30, 2002, ARMs comprised $27.9 million or 11.2%
of the total loan portfolio and construction, commercial and consumer loans
aggregated $75.5 million or 30.4% of the total loan portfolio. At September 30,
2002, $40.2 million or 9.7% of the Company's total assets consisted of
investment securities, 52.8% of which have terms to maturity of less than five
years. In addition, the Company has invested in adjustable rate mortgage-backed
securities. At September 30, 2002, $17.6 million or 20.9% of the Company's
mortgage-backed securities portfolio was comprised of ARMs. At September 30,
2002, the Company classified $113.8 million or 91.6% of its investment and
mortgage-backed securities portfolios as Available For Sale, which permits the
Company to sell such securities if deemed appropriate in response to, among
other things, changes in interest rates.

        Management presently monitors and evaluates the potential impact of
interest rate changes upon the level of net interest income and the economic
value of the Company's equity ("EVE") on a monthly basis. EVE is the difference
between incoming and outgoing discounted cash flows from assets, liabilities,
and off-balance sheet contracts. The Company focuses on the impact of a plus and
minus 200 basis point immediate interest rate shock on its net interest income.
The Company utilizes the Sendero system for its in-house modeling efforts and
also works with an outside banking consultant in modeling its interest rate risk
position.

        The following table presents the Company's EVE as of September 30, 2002:



                Economic Value of Portfolio Equity
----------------------------------------------------------------------
   Change in                      Estimated EVE
Interest Rates                   as a Percentage   Amount of
(basis points)   Estimated EVE      of Assets       Change     Percent
--------------   -------------   ---------------   ---------   -------
                        (Dollars in Thousands)
                                                   
     +400           $10,940             2.6%         $1,721      18.7%
     +300            15,308             3.7           6,089      66.0
     +200            16,324             3.9           7,105      77.1
     +100            15,269             3.7           6,050      65.6
       --             9,219             2.2              --       0.0
     -100            (2,369)           (0.6)        (11,588)   (125.7)
     -200           (16,153)           (3.9)        (25,372)   (275.2)
     -300           (27,983)           (6.7)        (37,202)   (403.5)
     -400           (33,124)           (7.9)        (42,343)   (459.3)


                                     II-50

The following table presents the Company's EVE as of September 30, 2001:



                       Economic Value of Portfolio Equity
---------------------------------------------------------------------------------------
  Change in                             Estimated EVE
Interest Rates                         as a Percentage         Amount of
(basis points)     Estimated EVE          of Assets             Change         Percent
--------------------------------------------------------------------------------------
                                    (Dollars in Thousands)
                                                                   
    +400              $ 18,099               4.1%              $ (7,869)        (30.3)%
    +300                22,555               5.2                 (3,413)        (13.1)
    +200                26,895               6.1                    927           3.6
    +100                28,060               6.4                  2,092           8.1
      --                25,968               5.9                     --           0.0
    -100                15,368               3.5                (10,600)        (40.8)
    -200                 2,032               0.5                (23,936)        (92.2)
    -300               (11,109)             (2.5)               (37,077)       (142.8)
    -400               (16,502)             (3.8)               (42,470)       (163.5)


        As noted on the previous tables, significant increases or decreases in
interest rates may adversely affect the Company's net interest income and/or EVE
because of the excess of interest-bearing liabilities over interest-earning
assets repricing within shorter periods and because the Company's
adjustable-rate, interest-earning assets generally are not as responsive to
changes in interest rates as its interest-bearing liabilities due to terms which
generally permit only annual adjustments to the interest rate and which
generally limit the amount which interest rates can adjust at such time and over
the life of the related asset. In addition, the proportion of adjustable-rate
loans and assets in the Company's loan and investment portfolio could decrease
in future periods if market rates of interest remain at or decrease below
current levels.

LIQUIDITY AND CAPITAL RESOURCES

        The Company's primary sources of funds are deposits, advances from the
FHLB, repayments, prepayments and maturities of outstanding loans, maturities of
investment securities and other short-term investments, and funds provided from
operations. While scheduled loan and mortgage-backed security repayments and
maturing investment securities and short-term investments are generally
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by the movement of interest rates in general, economic
conditions and competition. During fiscal year 2002, loan repayments and
prepayments significantly increased as a result of the decrease in interest
rates. The Company manages the pricing of its deposits to maintain a deposit
balance deemed appropriate and desirable. In addition, the Company invests in
short-term investment securities and interest-earning assets which provide
liquidity to meet lending requirements. Although the Company's deposits have
historically represented the majority of its total liabilities, the Company also
utilizes other borrowing sources, primarily advances from the FHLB of
Pittsburgh. At September 30, 2002,

                                     II-51

the Company had $161.9 million of outstanding borrowings from the FHLB of
Pittsburgh. The maximum remaining borrowing capacity at the FHLB as of September
30, 2002 was $224.7 million.

        Liquidity management is both a daily and long-term function. Excess
liquidity is generally invested in short-term investments such as cash and cash
equivalents, and U.S. Government agency securities. On a longer-term basis, the
Company invests in various loans, mortgage-backed securities, and investment
securities. The Company uses its sources of funds primarily to meet its ongoing
commitments to pay maturing savings certificates and savings withdrawals, fund
loan commitments and maintain an investment securities portfolio. At September
30, 2002, the total approved loan commitments outstanding (excluding undisbursed
portions of loans in process) amounted to $26.4 million. At the same date, the
unadvanced portion of loans in process approximated $4.5 million. Certificates
of deposit scheduled to mature in one year or less at September 30, 2002 totaled
$58.7 million. Management of the Company believes that the Company has adequate
resources, including principal prepayments and repayments of loans and maturing
investments, to fund all of its commitments to the extent required. Based upon
its historical run-off experience, management believes that a significant
portion of maturing deposits will remain with the Company.

        As of September 30, 2002, the Company had regulatory capital which was
in excess of applicable limits.

IMPACT OF INFLATION AND CHANGING PRICES

        The Consolidated Financial Statements of the Company and related notes
presented herein have been prepared in accordance with accounting principles
generally accepted in the United States which require the measurement of
financial position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation.

        Unlike most industrial companies, substantially all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation. Interest rates do
not necessarily move in the same direction or in the same magnitude as the
prices of goods and services, since such prices are affected by inflation to a
larger extent than interest rates. In the current interest rate environment,
liquidity and the maturity structure of the Company's assets and liabilities are
critical to the maintenance of acceptable performance levels.

ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        See "Item 7. Management's  Discussion and Analysis of Financial
Condition and Results of Operations--Asset and Liability Management."

                                     II-52

ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF PITTSBURGH FINANCIAL CORP.



                                                                      Page
                                                                      ----
                                                                   
Report of Independent Auditors.......................................  II-54
Consolidated Statements of Financial Condition.......................  II-55
Consolidated Statements of Operations................................  II-56
Consolidated Statements of Changes in Stockholders' Equity...........  II-57
Consolidated Statements of Cash Flows................................  II-59
Notes to Consolidated Financial Statements...........................  II-60


                                     II-53



                           [ERNST & YOUNG LETTERHEAD]


Report of Independent Auditors

Stockholders and Board of Directors
Pittsburgh Financial Corp.

We have audited the accompanying consolidated statements of financial condition
of Pittsburgh Financial Corp. and subsidiaries as of September 30, 2002 and
2001, and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended September 30, 2002. These financial statements are the responsibility of
Pittsburgh Financial Corp.'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. 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, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Pittsburgh
Financial Corp. and subsidiaries at September 30, 2002 and 2001, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 30, 2002, in conformity with
accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

October 31, 2002

                                     II-54

Pittsburgh Financial Corp. Consolidated Statements of Financial Condition



                                                                                           SEPTEMBER 30
                                                                                      2002              2001
                                                                                 ------------------------------
                                                                                             
ASSETS
Cash                                                                             $  1,709,206       $ 2,281,863
Interest-bearing deposits                                                          22,109,510        20,078,367
                                                                                 ------------------------------
                                                                                   23,818,716        22,360,230

Investment securities available for sale (cost of $111,408,047 in 2002 and
  $89,416,499 in 2001)                                                            113,805,047        90,889,499
Investment securities held to maturity                                             10,490,985        10,397,506
Bank owned life insurance                                                           6,275,111                 -
Loans receivable, net of allowance of $3,023,217 in 2002 and
  $2,644,172 in 2001                                                              240,805,711       284,905,040
Accrued interest receivable                                                         2,408,605         2,725,445
Premises and equipment, net                                                         5,701,722         6,121,138
Goodwill                                                                              151,809           170,574
Federal Home Loan Bank stock--at cost                                               8,098,300         7,822,100
Deferred income taxes                                                                       -           156,286
Foreclosed real estate                                                                787,616           699,723
Prepaid income taxes                                                                  526,826            61,710
Other assets                                                                          792,538           759,661
                                                                                 ------------------------------
Total assets                                                                     $413,662,986      $427,068,912
                                                                                 ==============================

LIABILITIES
Deposits                                                                         $196,222,472      $213,010,950
Advances from Federal Home Loan Bank                                              161,888,253       156,315,730
Repurchase agreements                                                              20,000,000        20,000,000
Guaranteed preferred beneficial interests in subordinated debt                      9,753,135        10,854,684
Deferred income taxes                                                                 176,333                 -
Advances by borrowers for taxes and insurance                                         709,684         1,271,757
Other liabilities                                                                   1,879,683         2,306,216
                                                                                 ------------------------------
Total liabilities                                                                 390,629,560       403,759,337

Minority interest                                                                      11,922                 -

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued                   -                 -
Common stock $.01 par value, 10,000,000 shares authorized
  (2,182,125 shares issued in 2002 and 2001)                                           21,821            21,821
Additional paid-in capital                                                         16,317,309        16,283,617
Treasury stock--at cost, 773,426 in 2002 and 660,126 shares in 2001               (10,398,322)       (8,934,977)
Unearned shares of ESOP                                                              (720,622)         (944,698)
Unearned shares of Recognition and Retention Plan                                           -           (17,690)
Accumulated other comprehensive income                                              1,581,000           972,000
Retained earnings (substantially restricted)                                       16,220,318        15,929,502
                                                                                 ------------------------------
Total stockholders' equity                                                         23,021,504        23,309,575
                                                                                 ------------------------------
Total liabilities, minority interest and stockholders' equity                    $413,662,986      $427,068,912
                                                                                 ==============================


See notes to consolidated financial statements.

                                     II-55

Pittsburgh Financial Corp. Consolidated Statements of Operations


                                                                               YEAR ENDED SEPTEMBER 30
                                                                      2002              2001              2000
                                                                  ------------------------------------------------
                                                                                              
Interest income:
Loans                                                             $20,021,455       $23,124,958        $23,342,660
Investment securities:
  Taxable                                                           6,784,672         7,145,630          7,323,405
  Tax-exempt                                                           56,191                 -            147,938
Interest-bearing deposits                                             170,127           262,635            160,985
                                                                  ------------------------------------------------
Total interest income                                              27,032,445        30,533,223         30,974,988

Interest expense:
Deposits                                                            7,521,735        10,336,291          8,320,181
Advances from Federal Home Loan Bank and other borrowings          10,826,527        11,379,781         13,117,271
Guaranteed preferred beneficial interests
  in subordinated debt                                                906,785         1,008,906          1,008,906
                                                                  ------------------------------------------------
Total interest expense                                             19,255,047        22,724,978         22,446,358
                                                                  ------------------------------------------------
Net interest income                                                 7,777,398         7,808,245          8,528,630

Provision for loan losses                                             420,000           600,000            600,000
                                                                  ------------------------------------------------
Net interest income after provision for loan losses                 7,357,398         7,208,245          7,928,630
Noninterest income:
Service charges and other fees                                      1,261,577           916,895            773,619
Loss on extinguishment of facility lease                                    -                 -           (201,500)
Bank owned life insurance income                                      301,045                 -                  -
Net gain on sale of fixed assets                                            -                 -            549,609
Net gain (loss) on sale of loans                                            -            16,184            (18,375)
Loss on interest rate cap                                                   -          (107,534)                 -
Net gain (loss) on available for sale securities                        8,575           (81,302)          (171,539)
Other income                                                          298,149           263,287            189,179
                                                                  ------------------------------------------------
Total noninterest income                                            1,869,346         1,007,530          1,120,993

Noninterest expense:
Minority interest in (loss) of consolidated entity                        (78)                -                  -
Compensation and employee benefits                                  3,918,578         3,799,217          3,634,426
Premises and occupancy costs                                        1,679,218         1,577,654            860,262
Amortization of goodwill                                               38,005            33,015             33,015
(Gain)/loss on sale of foreclosed real estate                         (64,883)           78,621            193,620
Marketing                                                             355,802           268,826            476,279
Data processing costs                                                 458,880           491,671            338,908
Other expenses                                                      1,664,274         1,672,598          1,863,202
                                                                  ------------------------------------------------
Total noninterest expense                                           8,049,796         7,921,602          7,399,712
                                                                  ------------------------------------------------
Income before income taxes                                          1,176,948           294,173          1,649,911
Income taxes                                                          379,000            85,000            483,000
                                                                  ------------------------------------------------
Net income                                                        $   797,948       $   209,173        $ 1,166,911
                                                                  ================================================

Basic earnings per share                                          $       .60       $       .14        $       .75
Diluted earnings per share                                        $       .58       $       .14        $       .75
Dividends per share                                               $       .36       $       .36        $       .36
Dilutive average shares outstanding                                 1,361,236         1,499,937          1,555,207


See notes to consolidated financial statements.

                                     II-56

Pittsburgh Financial Corp.

Consolidated Statements of Changes in Stockholders' Equity

Years ended September 30, 2002, 2001, and 2000



                                                                                    ADDITIONAL                          UNEARNED
                                             COMPREHENSIVE         COMMON             PAID-IN          TREASURY           SHARES
                                                 INCOME             STOCK             CAPITAL           STOCK            OF ESOP
                                             -------------------------------------------------------------------------------------
                                                                                                       
September 30, 1999                                              $ 21,821             $16,311,188      $ (5,755,444)   $ (1,340,100)

Treasury stock purchased                                               -                       -        (1,119,347)              -
ESOP shares released                                                   -                 (26,902)                -         189,396
RRP amortization                                                       -                       -                 -               -
Cash dividends declared on
common stock of $.36 per share                                         -                       -                 -               -

Change in unrealized loss on
Investment securities available for
sale, net of taxes                           $  (240,461)              -                       -                 -               -
  Less reclassification
    Adjustment for gains
    Included in net income                      (171,539)              -                       -                 -               -
                                             -----------
Other comprehensive loss                        (412,000)              -                       -                 -               -
Net Income                                     1,166,911               -                       -                 -               -
                                             -----------
Comprehensive income                         $   754,911
                                             ===========--------------------------------------------------------------------------
September 30, 2000                                              $ 21,821           $ 16,284,286        $(6,874,791)    $(1,150,704)
Treasury stock purchased                                               -                      -         (2,060,186)              -
ESOP shares released                                                   -                   (669)                 -         206,006
RRP amortization                                                       -                      -                  -               -
Cash dividends declared on
common stock of $.36 per share                                         -                      -                  -               -

Change in unrealized loss on
Investment securities available for
sale, net of taxes                           $ 3,900,000               -                      -                  -               -
  Less reclassification
    Adjustment for gains
    Included in net income                       (81,302)              -                      -                  -               -
                                             -----------
Other comprehensive income                     3,818,698               -                      -                  -               -
Net Income                                   $   209,173               -                      -                  -               -
                                             -----------
Comprehensive income                         $4,027,871
                                             ===========-------------------------------------------------------------------------




                                                     ACCUMULATED
                                     UNEARNED           OTHER                                  TOTAL
                                      SHARES        COMPREHENSIVE         RETAINED         STOCKHOLDERS'
                                      OF RRP            INCOME            EARNINGS            EQUITY
                                   ---------------------------------------------------------------------
                                                                               

September 30, 1999                 $ (442,970)        $ (2,516,000)       $ 15,747,639      $22,026,134

Treasury stock purchased                    -                    -                   -       (1,119,347)
ESOP shares released                        -                    -                   -          162,494
RRP amortization                      212,640                    -                   -          212,640
Cash dividends declared on
common stock of $.36 per share              -                    -            (617,703)        (617,703)
Change in unrealized loss on
Investment securities available for
sale, net of taxes                          -                    -                   -                -
  Less reclassification
    Adjustment for gains
    Included in net income                  -                    -                   -                -
Other comprehensive loss                    -             (412,000)                  -         (412,000)
Net Income                                  -                    -           1,166,911        1,166,911
Comprehensive income
                                   ---------------------------------------------------------------------
September 30, 2000                 $ (230,330)        $ (2,928,000)       $ 16,296,847     $ 21,419,129
Treasury stock purchased                    -                    -                   -       (2,060,186)
ESOP shares released                        -                    -                   -          205,337
RRP amortization                      212,640                    -                   -          212,640
Cash dividends declared on
common stock of $.36 per share              -                    -            (576,518)        (576,518)
 Change in unrealized loss on
Investment securities available for
sale, net of taxes                          -            3,900,000                   -        3,900,000
  Less reclassification
    Adjustment for gains
    Included in net income                  -                    -                   -                -
Other comprehensive income                  -                    -                   -                -
Net Income                                  -                    -             209,173          209,173
Comprehensive income
                                   ---------------------------------------------------------------------


                                     II-57

Pittsburgh Financial Corp
Cosolidated Statements of Changes in Stockholders' Equity (continued)
Years ended September 30, 2002, 2001 and 2000



                                                                                   Additional                         Unearned
                                              Comprehensive       Common            Paid-in         Treasury           Shares
                                                  Income           Stock            Capital           Stock           of ESOP
                                             ---------------------------------------------------------------------------------
                                                                                                      
September 30, 2001                                             $    21,821        $16,283,617       $(8,934,977)     $(944,698)
Treasury stock purchased                                                 -                  -        (1,463,345)             -
ESOP shares released                                                     -             33,692                 -        224,076
RRP amortization                                                         -                  -                 -              -
Cash dividends declared on
common stock of $.36 per share                                           -                  -                 -              -
Change in unrealized gain on
investment securities available
for sale, net of taxes                         $  609,000                -                  -                 -              -
  Less reclassification
    Adjustment for gains
    Included in net income                         (8,575)               -                  -                 -              -
                                               ----------
Other comprehensive income                        600,425                -                  -                 -              -
Net income                                     $  797,948                -                  -                 -              -
                                               ----------
Comprehensive income                           $1,398,373                -                  -                 -              -
                                               ===============================================================================
September 30, 2002                                              $   21,821        $16,317,309      $(10,398,322)     $(720,622)
                                                               ===============================================================




                                                                     Accumulated
                                               Unearned                Other                                       Total
                                                Shares             Comprehensive             Retained           Stockholders'
                                                of RRP                 Income                Earnings              Equity
                                             --------------------------------------------------------------------------------
                                                                                                    
September 30, 2001                              $(17,690)              $  972,000            $15,929,502          $23,309,575
Treasury stock purchased                               -                        -                      -           (1,463,345)
ESOP shares released                                   -                        -                      -              257,768
RRP amortization                                  17,690                        -                      -               17,690
Cash dividends declared on
common stock of $.36 per share                         -                        -               (507,132)            (507,132)
Change in unrealized gain on
investment securities available
for sale, net of taxes                                 -               $  609,000                      -          $   609,000
  Less reclassification
    Adjustment for gains
    Included in net income                             -                        -                      -                    -
Other comprehensive income                             -                        -                      -                    -
Net income                                             -                        -                797,948              797,948
Comprehensive income                                   -                        -                      -                    -
                                               ==============================================================================

September 30, 2002                              $      -               $1,581,000            $ 16,220,318         $23,021,504
                                               ==============================================================================


See notes to consolidated financial statements.

                                     II-58

Pittsburgh Financial Corp. Consolidated Statements of Cash Flows



                                                                                  YEAR ENDED SEPTEMBER 30
                                                                      2002                 2001                 2000
                                                                  ----------------------------------------------------
                                                                                                   
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                        $    797,948         $    209,173         $ 1,166,911
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and goodwill amortization                                 708,014              619,002             477,661
Amortization and accretion of premiums and discounts on assets
   and  deferred loan fees                                             218,105              657,888             895,244
Amortization of RRP and release of ESOP shares                         275,458              417,977             375,134
Provision for loan losses                                              420,000              600,000             600,000
Gain on sale of fixed assets                                                 -                    -            (549,609)
(Gain) loss on sale of loans                                                 -              (16,184)             18,375
Current and deferred tax (benefit) provision                          (149,497)           3,510,674             (70,964)
Other, net                                                            (668,215)            (301,267)           (766,249)
                                                                  ------------------------------------------------------
Net cash provided by operating activities                            1,601,813            5,697,263           2,146,503

CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations                                                  (56,928,885)        $(43,728,095)        (83,755,828)
Loan principal repayments                                          100,279,519           59,729,131          43,289,625
Net REO activity                                                       (87,893)             (55,972)          1,312,989
Purchase of loans                                                            -             (777,929)                  -
Proceeds from loan sales                                                     -            6,205,816           8,891,906
Purchases of:
  Available-for-sale securities                                    (59,274,679)         (32,386,293)        (17,133,427)
Purchase of bank owned life insurance                               (6,275,111)                   -                   -
Proceeds from sales, maturities and principal repayments of:
  Available-for-sale securities                                     37,024,042           38,797,073          26,747,651
Purchases of land, premises and equipment                             (274,133)          (1,478,419)         (2,226,188)
Proceeds from disposition of building                                        -                    -           1,404,743
Proceeds from sale of land                                               4,300                    -                   -
Other, net                                                            (298,000)          (1,725,801)           (519,221)
                                                                  ------------------------------------------------------
Net cash provided/(used) by investing activities                    14,169,160           24,761,511         (21,987,750)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in checking, passbook, and money market deposit         8,373,730            9,324,660           4,480,813
  accounts
Net (decrease) increase in certificates of deposit                 (25,162,208)          (1,993,787)         31,736,672
Increase(decrease) in advances from the Federal Home Loan Bank       5,572,523          (19,901,000)         (7,850,000)
Decrease in Reverse Repurchase Agreements                                    -                    -          (5,000,000)
Cash dividends paid to stockholders                                   (507,132)            (576,518)           (617,703)
Purchase of treasury stock                                          (1,463,345)          (2,060,186)         (1,119,347)
Repurchase of subordinated debt                                     (1,126,055)                   -                   -
                                                                  -----------------------------------------------------
 Net cash provided/(used) in financing activities                  (14,312,487)         (15,206,831)         21,630,435
                                                                  -----------------------------------------------------

Net increase in cash and cash equivalents                            1,458,486           15,251,943           1,789,188
Cash and cash equivalents at beginning of year                      22,360,230            7,108,287           5,319,099
                                                                  -----------------------------------------------------
Cash and cash equivalents at end of year                          $ 23,818,716         $ 22,360,230        $  7,108,287
                                                                  =====================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest                            $ 19,735,387         $ 22,899,814        $ 22,314,730

Income (refund) taxes                                                  826,497           (1,254,082)          1,073,185

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES
Foreclosed mortgage loans transferred to real estate owned        $  1,470,606         $    431,276        $    983,013


See notes to consolidated financial statements

                                     II-59

Pittsburgh Financial Corp.

Notes to Consolidated Financial Statements

September 30, 2002

1. BASIS OF PRESENTATION AND ORGANIZATION

The consolidated financial statements include the accounts of Pittsburgh
Financial Corp. (the Company) and its wholly owned subsidiaries, Pittsburgh
Savings Bank (d/b/a BankPittsburgh) (the Bank) and Pittsburgh Home Capital Trust
I (the "Trust"). Pinnacle Settlement Group, LLC is a majority owned subsidiary
of the Company. Its business relates primarily to providing title and settlement
services. FraMal Holdings Corporation is a wholly owned subsidiary of the Bank.
All significant intercompany balances and transactions have been eliminated in
consolidation.

The Bank is a state-chartered stock savings bank headquartered in Pittsburgh,
Pennsylvania, and conducts business from nine offices in Allegheny and Butler
counties. The Bank is primarily engaged in attracting retail deposits from the
general public and using such deposits to originate loans. The Company and Bank
are subject to the regulations of certain federal and state agencies and
periodic examinations by certain regulatory authorities.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the reported
period. Actual results could differ from those estimates.

CASH AND NONINTEREST-EARNING DEPOSITS

The Bank is required by the Federal Reserve Bank to maintain cash and reserve
balances. The reserve calculation is 0% of the first $5.7 million of checking
deposits, 3% of the next $35.6 million of checking deposits and 10% of total
checking deposits over $41.3 million. These required reserves, net of allowable
credits, amounted to $925,000 at September 30, 2002.

                                     II-60

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENT SECURITIES

Investment securities available for sale are carried at fair value based upon
quoted market prices. Unrealized holding gains and losses, net of tax, on
available-for-sale securities are reported as a net amount in a separate
component of stockholders' equity until realized. Gains and losses on the sale
of available-for-sale securities are determined using the specific
identification method.

Securities for which the Company has the positive intent and ability to hold to
maturity are reported at cost, adjusted for premiums and discounts that are
recognized in interest income using the interest method over the period to
maturity.

Declines in the fair value of investment securities below cost are evaluated for
other-than-temporary impairment losses on a quarterly basis.

Impairment losses for declines in value of fixed maturity investments and equity
securities below cost attributable to issuer-specific events are based upon all
relevant facts and circumstances for each investment and are recognized when
appropriate in accordance with Staff Accounting Bulletin (SAB) 59, Financial
Accounting Standard (FAS) 115, "Accounting for Certain Investments in Debt and
Equity Securities," and related guidance. For fixed maturity investments with
unrealized losses due to market conditions or industry-related events where the
Company has the positive intent and ability to hold the investment for a period
of time sufficient to allow a market recovery, declines in value below cost are
not assumed to be other-than-temporary.

BANK OWNED LIFE INSURANCE

Bank Owned Life Insurance (BOLI) is carried by the Bank at the current cash
surrender values of the underlying policies. The policies are single premium
policies that do not carry loads or surrender charges. Income earned on the
policies is based on the crediting rate on the individual insurance contracts.

LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES

Loans are reported at their outstanding principal adjusted for any chargeoffs,
the allowance for loan losses, and any deferred fees or costs on originated
loans. Loan origination and commitment fees and certain direct origination costs
have been deferred over the estimated lives of related loans and recognized as
an adjustment of the yield of the related loan, for anticipated loan
prepayments.

                                     II-61

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LOANS RECEIVABLE AND THE ALLOWANCE FOR LOAN LOSSES (CONTINUED)

The accrual of interest on impaired loans is discontinued when, in management's
opinion, the borrower may be unable to meet payments as they become due or when
the loan becomes more than 90 days past due. A reserve for the loss of accrued
but uncollected interest is established at the time the interest accrual is
discontinued. Interest ultimately collected is credited to income in the period
of recovery.

Impaired loans consist of nonhomogeneous loans in which management has
determined, based on the evaluation of current information and events, that it
is probable that the Bank will not be able to collect all of the amounts due on
these loans in accordance with the contractual terms of the loan agreements. The
Company had no impaired loans as of September 30, 2002 and 2001. Nonaccrual,
substandard and doubtful commercial and other real estate loans are evaluated
for impairment and have been included in management's assessment of the adequacy
of the allowance.

The allowance for loan losses is increased by charges to income and decreased by
chargeoffs (net of recoveries). Management's periodic evaluation of the adequacy
of the allowance is based on the Bank's loan loss experience, known and inherent
risks in the portfolio, adverse situations that may affect the borrower's
ability to repay, the estimated value of any underlying collateral, and current
economic conditions.

FORECLOSED REAL ESTATE

Real estate properties acquired through, or in lieu of, loan foreclosure are to
be sold and are recorded at the lower of the carrying amount of the loan or fair
value of the property less cost to sell. After foreclosure, valuations are
periodically performed by management and a valuation allowance is established
for any declines in the fair value less cost to sell below the property's
carrying amount. Revenues and expenses and changes in the valuation allowance
are included in the statement of operations. Gains and losses upon disposition
are reflected in earnings as realized.

PREMISES AND EQUIPMENT

Premises and equipment are carried at cost less accumulated depreciation.
Depreciation is calculated on the straight-line method with asset lives ranging
from three to thirty years. Maintenance and repairs are charged to expense as
incurred.

                                     II-62

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STATEMENTS OF CASH FLOWS

For purposes of reporting cash flows, cash and cash equivalents include cash and
interest-bearing deposits with contractual maturities of 90 days or less.

EARNINGS PER SHARE

Basic earnings per share ("EPS") is calculated by dividing income available to
common shareholders by the weighted average number of common shares outstanding
during the period. Options, warrants, and other potentially dilutive securities
are excluded from the basic calculation, but are included in diluted EPS. As
discussed in Note 10, the Company accounts for shares acquired by its ESOP in
accordance with Statement of Position 93-6; shares controlled by the ESOP are
not considered in the weighted average shares outstanding until the shares are
committed for allocation to an employee's individual account.

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations.



                                                               2002          2001          2000
                                                            --------------------------------------
                                                                               
Numerator for basic and diluted earnings per share--net
  income                                                    $  797,948    $  209,173    $1,166,911
Denominator:
  Denominator for basic earnings per share--weighted
     average shares                                          1,326,197     1,490,407     1,552,541
  Effect of dilutive securities:
     Employee stock options                                     35,039         9,530         2,666
     Unvested Management Recognition Plan Stock                      -             -             -
                                                            --------------------------------------
  Dilutive potential common shares                              35,039         9,530         2,666
                                                            --------------------------------------
  Denominator for diluted earnings per share--adjusted
     weighted average shares and assumed conversions         1,361,236     1,499,937     1,555,207
                                                            ======================================
  Basic earnings per share                                  $      .60    $      .14    $      .75
                                                            ======================================
  Diluted earnings per share                                $      .58    $      .14    $      .75
                                                            ======================================


TREASURY STOCK

The acquisition of treasury stock is recorded under the cost method. At the date
of subsequent reissue, the treasury stock account is reduced by the cost of such
stock on the average cost basis, with any excess proceeds being credited to
additional paid-in capital.

                                     II-63

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK OPTIONS

FAS No. 123 defines a fair value-based method of accounting for stock-based
employee compensation plans. Under the fair value-based method, compensation
cost is measured at the grant date based upon the value of the award and is
recognized over the service period. The standard encourages all entities to
adopt this method of accounting for all employee stock compensation plans.
However, it also allows an entity to continue to measure compensation costs for
its plans as prescribed in Accounting Principles Board Opinion (Opinion) No. 25,
"Accounting for Stock Issued to Employees." Since the Company has elected to use
the accounting in Opinion No. 25, pro forma disclosures of net income and
earnings per share are made as if the fair value method of accounting, as
defined by FAS No. 123 had been applied (see Note 10).

GOODWILL AMORTIZATION

Amortization of goodwill is computed using the straight-line method over ten
years.

In June 2001, the Financial Accounting Standards Board (FASB) issued FAS No.
142, "Goodwill and Other Intangible Assets," effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests in accordance with the Statement. Other
intangible assets will continue to be amortized over their useful lives.

In October 2002, the FASB issued FAS No. 147, "Acquisitions of Certain Financial
Institutions." The Statement provides guidance on the accounting for acquisition
of a financial institution which had previously been addressed in FAS No. 72,
"Accounting for Certain Acquisitions of Banking or Thrift Institutions." FAS No.
147 states that the excess of the fair value of liabilities assumed over the
fair value of the tangible and identifiable intangible assets acquired, if
acquired in a business combination, represents goodwill that should be accounted
for in accordance with FAS No. 142. The provisions of this Statement are
effective October 1, 2002.

Application of these Statements is expected to reduce non-interest expense by
approximately $33,000 in 2003 as compared to 2002.

FAS No. 142, as part of its adoption provisions, requires a transitional
impairment test to be applied to all goodwill and other indefinite-lived
intangible assets within the first half of the year of fiscal year 2003 and any
resulting impairment loss be reported as a change in accounting principle.
Management does not expect an impairment loss to be recorded in 2003 as a result
of this test.

INTEREST RATE CAP AGREEMENT

On October 1, 2000, the Company adopted FAS No. 133, which requires that all
derivatives be recorded on the balance sheet at fair value. Changes in the fair
value of derivatives that do not qualify for hedge treatment, as well as the
ineffective portion of a particular hedge, must be recognized currently in
earnings. Upon adoption, the cumulative transition adjustment was approximately
$75,000.

The Company enters into interest rate caps as a means of hedging interest rate
risk on floating rate liabilities. The costs of cap transactions are deferred
and amortized over the contract period. The amortized costs of cap transactions
are included in interest expense on advances and other borrowings.

                                     II-64

COMPREHENSIVE INCOME

Comprehensive income, which includes unrealized gains and losses on the
Company's Available-for-Sale securities, was $1,398,373, $4,027,871 and $754,911
for the years ended September 30, 2002, 2001, and 2000, respectively.

BUSINESS SEGMENTS

The Company views itself as one segment of business which is community banking.
As such, financial information for this segment does not differ materially from
the information provided in the consolidated financial statements.

RECLASSIFICATIONS

Certain reclassifications have been made in prior year financial statements to
conform to current presentation.

3. INVESTMENT SECURITIES

Securities classified by type at September 30, 2002 and 2001 are summarized
below by scheduled maturity.



                                                                     AVAILABLE FOR SALE
                                                -----------------------------------------------------------
                                                                     SEPTEMBER 30, 2002
                                                -----------------------------------------------------------
                                                  AMORTIZED       UNREALIZED     UNREALIZED        FAIR
                                                    COST             GAINS         LOSSES         VALUE
                                                -----------------------------------------------------------
                                                                                   
U.S. Government and agency obligations due:
Within 12 months                                $  3,981,897      $   91,800             -     $  4,073,697
Beyond 12 months but within 5 years                6,008,984         294,000             -        6,302,984
Beyond 5 years but within 10 years                   960,778          23,400           200          983,978
Beyond 10 years                                    2,611,015          70,900         6,900        2,675,015
                                                -----------------------------------------------------------
                                                  13,562,674         480,100         7,100       14,035,674
Mortgage-backed securities:
Government National Mortgage Association:
Beyond 12 months but within 5 years                        -               -             -                -
Beyond 5 years but within 10 years                   360,604          21,000             -          381,604
Beyond 10 years                                   15,146,436       1,219,000       552,000       15,813,436
Federal National Mortgage Association:
Within 12 months                                     107,065           3,000             -          110,065
Beyond 12 months but within 5 years                        -               -             -                -
Beyond 5 years but within 10 years                 2,027,987         103,000             -        2,130,987
Beyond 10 years                                   28,321,555         772,000        17,000       29,076,555
Federal Home Loan Mortgage Corporation:
Within 12 months                                           -               -             -                -
Beyond 12 months but within 5 years                3,010,636          32,500             -        3,043,136
Beyond 5 years but within 10 years
Beyond 10 years                                   15,488,949         393,500         4,000       15,878,449
Collateralized Mortgage Obligations:                       -               -             -                -
Beyond 12 months but within 5 years                1,728,877          16,000             -        1,744,877
Beyond 5 years but within 10 years                 1,011,711           7,500             -        1,019,211
Beyond 10 years                                   14,789,263         107,500        28,000       14,868,763
                                                -----------------------------------------------------------
                                                  81,993,083       2,675,000       601,000       84,067,083
Adjustable Rate Mortgage Fund                     10,250,000          23,000             -       10,273,000
                                                -----------------------------------------------------------
     Trust Preferred Securities
Beyond 10 years                                 $  5,602,290      $  110,000      $283,000     $  5,429,290
                                                -----------------------------------------------------------
Total available-for-sale securities             $111,408,047      $3,288,100      $891,100     $113,805,047
                                                ===========================================================


                                     II-65

3. INVESTMENT SECURITIES (CONTINUED)



                                                                          HELD TO MATURITY
                                                  ---------------------------------------------------------------------
                                                                         SEPTEMBER 30, 2002
                                                  ---------------------------------------------------------------------
                                                   AMORTIZED           UNREALIZED          UNREALIZED           FAIR
                                                     COST                 GAINS              LOSSES            VALUE
                                                  ---------------------------------------------------------------------
                                                                                                
     Trust Preferred Securities
Beyond 10 years                                   $10,490,985           $446,900             $56,900        $10,880,985
                                                  =====================================================================




                                                                            Available for Sale
                                                  ---------------------------------------------------------------------
                                                                            September 30, 2001
                                                  ---------------------------------------------------------------------
                                                   Amortized           Unrealized           Unrealized          Fair
                                                     Cost                 Gains               Losses           Value
                                                  ---------------------------------------------------------------------
                                                                                                 
U.S. Government and agency obligations due:
Within 12 months                                    $4,503,605         $   94,215           $      -        $ 4,597,820
Beyond 12 months but within 5 years                  6,903,993            457,006                  -          7,360,999
Beyond 5 years but within 10 years                   1,488,221             51,779                  -          1,540,000
Beyond 10 years                                              -                  -                  -                  -
                                                  ---------------------------------------------------------------------
                                                    12,895,819            603,000                  -         13,498,819
Mortgage-backed securities:
Government National Mortgage Association:
Beyond 12 months but within 5 years                     67,758              4,000                  -             71,758
Beyond 5 years but within 10 years                     520,055             24,000                  -            544,055
Beyond 10 years                                     24,795,579            615,000                  -         25,410,579
Federal National Mortgage Association:
Beyond 12 months but within 5 years                          -                  -                  -               -
Beyond 10 years                                     21,123,822            368,000                  -         21,491,822
Federal Home Loan Mortgage Corporation:
Within 12 months                                             -                  -                  -                  -
Beyond 12 months but within 5 years                          -                  -                  -                  -
Beyond 5 years but within 10 years                           -                  -                  -                  -
Beyond 10 years                                     13,811,009            200,000                  -         14,011,009
Collateralized Mortgage Obligations:
Beyond 12 months but within 5 years                  2,009,318             32,000                  -          2,041,318
Beyond 5 years but within 10 years                     584,277              9,000                  -            593,277
Beyond 10 years                                      8,997,331            124,000              1,000          9,120,331
                                                  ---------------------------------------------------------------------
                                                    71,909,149          1,376,000              1,000         43,284,149
       Trust Preferred Securities
Beyond 10 years                                      4,611,531                  -            505,000          4,106,531
                                                  ---------------------------------------------------------------------
Total available-for-sale securities                $89,416,499         $1,979,000           $506,000        $90,889,499
                                                  ---------------------------------------------------------------------




                                                                            Held to Maturity
                                                 ----------------------------------------------------------------------
                                                                           September 30, 2001
                                                 ----------------------------------------------------------------------
                                                  AMORTIZED COST    Unrealized Gains    Unrealized Losses    Fair Value
                                                 ----------------------------------------------------------------------
                                                                                                
       Trust Preferred Securities
Beyond 10  years                                   $10,397,506         $       -            $126,318        $10 271,188


U.S. Government obligations carried at approximately $4.5 million at September
30, 2002 were pledged to secure public deposits and for other purposes required
or permitted by law.

Gross realized gains and gross realized losses on sales of available for sale
securities were $14,640 and $6,065, respectively in 2002; $69,377 and $150,679
respectively, in 2001 and $43,882 and $215,421 respectively, in 2001.

                                     II-66

3. INVESTMENT SECURITIES (CONTINUED)

Interest rate cap agreements are instruments used by the Company in hedging
certain short-term liabilities. An interest rate cap is an agreement whereby the
seller of the cap contractually agrees to pay the buyer the difference between
the actual interest rate and the strike rate per the cap contract (if the actual
rate is higher than the strike rate). At September 30, 2002, the Company had
notional balances of interest rate cap agreements totaling $25 million. The Bank
would receive variable interest payments based on the spread between the
variable three-month LIBOR rate and the strike rate of the caps if the variable
three-month LIBOR rate is higher than the strike rate. The strike rate of the
agreement held by the Bank at September 30, 2002 was 7%. The agreement has an
expiration date of March 6, 2003.

4. LOANS RECEIVABLE, NET

Loans receivable, net at September 30, 2002 and 2001 are summarized below:



                                                                    2002                  2001
                                                                ----------------------------------
                                                                                
First mortgage loans:
 1-4 family residential permanent                               $153,895,645          $204,432,513
 1-4 family residential construction                               2,771,400             4,808,184
 Mortgage loans - residential construction builder                 7,508,450            12,720,373
 Mortgage loans - commercial                                      45,231,963            30,261,890
 Mortgage loans - commercial construction                          9,733,889            14,282,253
Loans in process                                                  (4,496,300)           (6,891,593)
Deferred loan costs                                                  328,695               450,508
Unamortized premium                                                   85,269                60,120
                                                                ----------------------------------
Total first mortgage loans                                       215,059,011           260,124,248

Home equity loans and lines                                       18,549,126            20,838,678
Other loans                                                       10,220,791             6,586,286
Allowance for loan losses                                         (3,023,217)           (2,644,172)
                                                                ----------------------------------
                                                                $240,805,711          $284,905,040
                                                                ==================================


Activity in the allowance for loan losses is summarized as follows for the years
ended September 30:



                                                  2002             2001              2000
                                               ---------------------------------------------
                                                                         
Balance at beginning of year                   $2,644,172       $2,237,554        $1,956,744
Provision                                         420,000          600,000           600,000
Chargeoffs                                       (157,152)        (235,732)         (323,030)
Recoveries                                        116,197           42,350             3,840
                                               ---------------------------------------------
Net chargeoffs                                    (40,955)        (193,382)         (319,190)
                                               ---------------------------------------------
Balance at end of year                         $3,023,217       $2,644,172        $2,237,554
                                               =============================================


                                     II-67

4. LOANS RECEIVABLE, NET (CONTINUED)

Real estate loans in arrears three months or more or in process of foreclosure
at September 30, 2002 and 2001 were as follows:



                                           NUMBER                             % OF REAL
                                          OF LOANS           AMOUNT          ESTATE LOANS
                                          -----------------------------------------------
                                                                    
2002                                         21            $3,945,081            1.84%
2001                                         30            $1,946,798             .80%


The Bank had outstanding loan origination commitments of $26,427,111 and
$31,866,052 including $15,211,315 and $6,020,677 available on lines of credit,
at September 30, 2002 and 2001, respectively. There were no loans committed to
be sold at September 30, 2002 and 2001.

The Bank utilizes established loan underwriting procedures which generally
require the taking of collateral to secure loans and does not believe it has a
significant concentration of credit risk to any one borrower but does estimate
that essentially all of its loans are located within Allegheny and Butler
counties and surrounding counties in Pennsylvania.

5. PREMISES AND EQUIPMENT

Premises and equipment and the related accumulated depreciation at September 30,
2002 and 2001 consist of the following:



                                                    2002              2001
                                                -----------------------------
                                                            
Land                                            $   895,065       $   899,365
Buildings and improvements                        4,517,139         4,324,448
Furniture and equipment                           3,686,366         3,418,287
Construction in progress                                  -           186,636
                                                -----------------------------
                                                  9,098,570         8,828,736
Less accumulated depreciation                    (3,396,848)       (2,707,598)
                                                -----------------------------
                                                $ 5,701,722       $ 6,121,138
                                                =============================


Depreciation expense was $689,250, $585,987, and $444,647 for the years ended
September 30, 2002, 2001, and 2000, respectively.

                                     II-68

5. PREMISES AND EQUIPMENT (CONTINUED)

The Bank leases office space under noncancelable operating leases. Future
minimum lease commitments under these operating lease agreements are as follows:



YEAR ENDING SEPTEMBER 30
                                            
2003                                           $  742,600
2004                                              742,600
2005                                              742,600
2006                                              641,198
2007                                              641,198
2008 and thereafter                             4,680,593
                                               ----------
Total minimum payments                         $8,190,788
                                               ==========


Total rental expense for these leases charged to earnings was $766,868,
$736,952, and $143,292, for the years ended September 30, 2002, 2001, and 2000,
respectively.

6. DEPOSITS

Deposits at September 30, 2002 and 2001 are summarized as follows:



                                               2002                  2001
                                           ----------------------------------
                                                           
Non interest-bearing demand                $ 12,326,753          $  8,464,509
Interest-bearing demand                      14,800,015            15,611,229
Savings deposits                             28,657,149            25,435,988
Variable money market                        18,168,418            16,066,879
Certificates of deposit                     122,270,137           147,432,345
                                           ----------------------------------
Total deposits                             $196,222,472          $213,010,950
                                           ==================================


Individual retirement accounts totaled $18,088,705 and $16,496,749 at September
30, 2002 and 2001, respectively.

Accrued interest payable on deposits included in other liabilities was $130,124
and $436,661 at September 30, 2002 and 2001, respectively.

                                     II-69

6. DEPOSITS (CONTINUED)

The contractual maturity of certificate accounts are as follows:



                                                      SEPTEMBER 30
                                               2002                  2001
                                           ----------------------------------
                                                           
2003                                       $ 58,664,230          $101,279,177
2004                                         26,766,875            25,813,141
2005                                          8,479,620             7,874,982
2006                                         14,143,101             1,925,031
2007 and thereafter                          14,216,311            10,540,014
                                           ----------------------------------
                                           $122,270,137          $147,432,345
                                           ==================================


Certificate accounts of $100,000 or more at September 30, 2002 and 2001 were
$30,796,974 and $42,732,466 respectively.

In September, 2001, the Bank issued $8,397,000 in wholesale certificates of
deposit with original maturities of between three and seven years at a weighted
average cost of 4.77%. These certificates are included in the deposit totals
reflected in the table above.

The following schedule sets forth interest expense by fiscal year by type of
deposit:



                                              2002             2001              2000
                                           ---------------------------------------------
                                                                     
Demand and money market accounts           $  533,786      $   658,935        $  508,277
Savings deposits                              508,561          585,029           663,671
Certificates of deposit                     6,479,388        9,092,326         7,148,233
                                           ---------------------------------------------
                                           $7,521,735      $10,336,291        $8,320,181
                                           =============================================


                                     II-70

7. FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

FHLB ADVANCES

The Bank is a member of the Federal Home Loan Bank (FHLB) System. As a member,
the Bank has the ability to borrow "advances" which are collateralized by
certain mortgages and investment securities. The Bank is also required to
maintain an investment in the capital stock of the Federal Home Loan Bank of
Pittsburgh in an amount not less than 1% of its outstanding residential loans or
5% of its outstanding advances (whichever is greater), if any, payable to the
Federal Home Loan Bank of Pittsburgh as calculated at December 31 of each year.

Advances from the FHLB consist of the following:



                                          SEPTEMBER 30, 2002                        SEPTEMBER 30, 2001
                                  ---------------------------------------------------------------------------
                                    WEIGHTED                                  WEIGHTED
STATED MATURITY                   AVERAGE RATE            AMOUNT            AVERAGE RATE            AMOUNT
-------------------------------------------------------------------------------------------------------------
                                                                                     
Less than 12 months                  6.26%             $ 24,500,000            5.61%             $ 11,750,000
One to two years                     4.27%                3,000,000            6.26%               24,500,000
Two to three years                   6.01%               21,500,000            5.03%                2,000,000
Three to four years                  6.65%                1,000,000            6.14%               20,500,000
Thereafter                           5.93%              111,888,253            6.15%               97,565,730
                                  ---------------------------------------------------------------------------
                                     5.97%             $161,888,253            6.12%             $156,315,730
                                  ===========================================================================


Approximately $130,500,000 of the outstanding FHLB advances are adjustable rate
notes with a weighted average yield of 6.02% at September 30, 2002. Advances
from the Federal Home Loan Bank of Pittsburgh are secured by the Bank's stock in
the Federal Home Loan Bank of Pittsburgh, qualifying residential mortgage loans,
U.S. Government securities, U.S. agency securities, and mortgage-backed
securities issued or guaranteed by GNMA, FHLMC, and FNMA to the extent that the
defined statutory value must be at least equal to the advances outstanding. The
maximum remaining borrowing capacity at September 30, 2002 is $62,776,747. The
advances are subject to restrictions or penalties in the event of prepayment.

                                     II-71

7. FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS (CONTINUED)

REPURCHASE AGREEMENTS

The Bank enters into sales of securities under agreements to repurchase. These
transactions are reflected as a liability on the accompanying Consolidated
Statements of Financial Condition. The dollar amount of securities underlying
the agreements remains in the asset account, although the securities underlying
the agreements are delivered to primary dealers who manage the transactions. All
of the agreements were to repurchase identical securities.

At September 30, 2002, repurchase agreements outstanding amounted to $20 million
with a weighted average rate of 5.51% and a maturity date of May 8, 2008. Within
one year, $20 million of repurchase agreements may be called by the issuer.
Securities underlying these repurchase agreements consisted of mortgage-backed
securities and U. S. Agencies with carrying values of $21.6 million (market
value of $23.5 million) at September 30, 2002. The maximum amounts of
outstanding repurchase agreements during the year ended September 30, 2002 were
$20 million.

8. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN SUBORDINATED DEBT

On January 30, 1998, the Company issued, through a wholly owned subsidiary,
Pittsburgh Home Capital Trust I (the Trust) 8.56% Cumulative Trust Preferred
Securities (Preferred Securities) and received proceeds of $10,764,829 (net of
$735,171 of offering costs). The Preferred Securities have an aggregate
liquidation amount of $11,500,000, which are redeemable at the option of the
Company on or after January 30, 2003 or upon occurrence of certain regulatory
events. The securities have a stated final maturity of January 30, 2028. Holders
of Preferred Securities are entitled to receive cumulative cash distributions,
at the annual rate of 8.56% of the liquidation amount of $10 per Preferred
Security, accruing from the date of original issuance and payable quarterly in
arrears. The Company has guaranteed the payment of distributions and payments on
liquidation of redemption of the Preferred Securities, but only in each case to
the extent of funds held by the Trust.

                                     II-72

8. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN SUBORDINATED DEBT (CONTINUED)

The Preferred Securities represent preferred undivided beneficial interests in
the assets of the Trust, which consist solely of 8.56% Subordinated Debentures
(the Subordinated Debentures) issued by the Company to the Trust. The
Subordinated Debentures bear interest at 8.56%, payable quarterly. The
Subordinated Debentures are unsecured and are effectively subordinated to all
existing and future liabilities of the Company. The Company has the right, at
any time, so long as no event of default has occurred, to defer payments of
interest on the Subordinated Debentures for a period not to exceed 20
consecutive quarters. Exercise of this right by the Company will result in the
deferral of quarterly payments on the Preferred Securities; however, interest
will continue to accrue on the Subordinated Debentures and unpaid dividends
accumulate on the Preferred Securities. The proceeds from the Preferred
Securities qualify as Tier I capital with respect to the Company under
risk-based capital guidelines established by the Federal Reserve. Federal
Reserve guidelines for calculation of Tier I capital limit the amount of
cumulative preferred stock which can be included in Tier I capital to 25% of
total Tier I capital.

During the fiscal year ended September 30, 2002, the Company repurchased on the
open market 119,300 preferred beneficial interests in the Pittsburgh Home
Capital Trust I Cumulative Trust Preferred securities, at an average cost of
$9.47 per share. In October 2002, the Company repurchased an additional 62,500
preferred beneficial interests of the Pittsburgh Home Capital Trust I Cumulative
Trust Preferred securities at an average cost of $10.26 per share. As of October
2002, the Company has repurchased a total of 1.61% of the preferred beneficial
interests outstanding.

9. INCOME TAXES

Income tax expense in the consolidated statements of income for the years ended
September 30, 2002, 2001, and 2000, respectively, includes the following
components:



                                      2002           2001          2000
                                   --------------------------------------
                                                        
Federal:
Current                            $ 320,999      $ 264,507      $332,398
Deferred                             (17,346)      (199,507)      (70,694)
State:
Current                               75,347         20,000       221,296
                                   --------------------------------------
                                   $ 379,000      $  85,000      $483,000
                                   ======================================


A reconciliation from the expected federal statutory income tax provision to the
effective tax provision expressed as a percentage of pretax income is as
follows:



                                                                PERCENTAGE OF PRETAX INCOME
                                                             ----------------------------------
                                                                  YEAR ENDED SEPTEMBER 30
                                                             2002           2001           2000
                                                             ----------------------------------
                                                                                  
Expected federal tax rate                                    34.0%          34.0%          34.0%
State income taxes, net of federal income tax effect          4.2            4.5            8.9
Bank owned life insurance                                    (8.0)             -              -
Tax-exempt interest income                                   (1.6)             -           (3.1)
Other, net                                                    3.6           (9.6)         (10.5)
                                                             ----------------------------------
Actual effective tax rate                                    32.2%          28.9%          29.3%
                                                             ==================================


                                     II-73

9. INCOME TAXES (CONTINUED)

Deferred federal income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amount used for income tax purposes. Significant
components of deferred federal income tax assets and liabilities as of September
30, 2001 and 2000 are as follows:



                                                                   2002                2001
                                                                ------------------------------
                                                                              
Deferred federal income tax assets:
Allowance for loan losses                                       $  810,934          $  861,221
Other                                                              178,364             248,486
                                                                ------------------------------
Total deferred federal income tax assets                           989,298           1,109,707

Deferred federal income tax liabilities:
Tax-based bad debt reserve in excess of base year                   46,155              75,069
Net unrealized gain on securities available for sale               816,000             500,727
Deferred loan fees                                                 111,757             153,173
Points and odd days deferral                                        51,708              87,625
Other                                                              140,011             136,827
                                                                ------------------------------
Total deferred federal income tax liabilities                    1,165,631             953,421
                                                                ------------------------------
Net deferred federal income tax assets                          $ (176,333)         $  156,286
                                                                ==============================


Retained earnings at September 30, 2002 include financial statement tax bad debt
reserves of $3,030,000. The Small Business Job Protection Act of 1996 passed on
August 20, 1996 eliminated the special bad debt deduction previously granted
solely to thrifts. This results in the recapture of past taxes for permanent
deductions arising from the "applicable excess reserve," which is the total
amount of the Bank's reserve over its base year reserve as of September 30,
1987. The recapture tax is to be paid in six equal annual installments beginning
after September 30, 1996. However, deferral of these payments is permitted for
up to two years, as a result of the Bank satisfying a specified mortgage
origination test for 1997 and 1998. At September 30, 2002, the Bank had $135,750
in excess of the base year reserves, and subject to prevailing corporate tax
rates, the Bank will owe $46,155 in federal taxes, which is reflected as a
deferred tax liability. No provision is required to be made for the $2,894,000
of base year reserves.

The Bank is subject to the Pennsylvania Mutual Thrift Institutions Tax which is
calculated at 11.5% of earnings based on generally accepted accounting
principles with certain adjustments.

                                     II-74

10. EMPLOYEE BENEFIT PLANS

EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

The Company has an ESOP for the benefit of employees who meet eligibility
requirements which include having completed one year of service with the Bank
and having attained age 21. The ESOP Trust purchased 174,570 shares of common
stock in connection with the Company's initial public offering with the proceeds
from a loan from the Company. The Company makes cash contributions to the ESOP
on an annual basis sufficient to enable the ESOP to make required loan payments
to the Company.

The ESOP note bears a fixed rate of interest equal to 8.5%, with equal payments
of interest and principal payable quarterly over ten years. The loan is secured
by the shares of stock purchased.

The Company accounts for its ESOP in accordance with Statement of Position 93-6.
As the debt is repaid, shares are released from collateral and allocated to
qualified employees based on the proportion of debt service paid in the year.
Accordingly, the shares pledged as collateral are reported as deferred ESOP
shares in the statement of financial condition. As shares are released from
collateral, the Company reports compensation expense equal to the current market
price of the shares, and the shares become outstanding for earnings per share
computations. Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings; dividends on unallocated ESOP shares are recorded as a
reduction of debt.

The Company petitioned the Internal Revenue Service in a private letter ruling
request to treat the return of capital distribution to the ESOP's unallocated
shares as being attributable to the proceeds of the original loan from the
Company to the ESOP since it represents the diminution in value of those shares.
As such, the Company used the return of capital distribution on the unallocated
shares held by the ESOP to acquire 20,848 shares of the Company's stock on the
open market.

Compensation expense for the ESOP was $257,769, $205,337, and $162,494, for the
years ended September 30, 2002, 2001, and 2000 respectively. The total shares
allocated to participants in the ESOP were 114,477 and 90,688 at September 30,
2002 and 2001, respectively.

THE FOLLOWING SUMMARIZES THE STATUS OF THE ESOP SHARES AT SEPTEMBER 30:



                                                               2002             2001           2000
                                                            ------------------------------------------
                                                                                   
Beginning balance of unreleased ESOP shares                    124,730          125,026        142,174
Additional shares purchased                                          -           20,000              -
Shares released for allocation                                 (23,789)         (20,296)       (17,148)
                                                            ------------------------------------------
Ending balance of unreleased ESOP shares                       100,941          124,730        125,026
                                                            ==========================================

Fair value of unreleased shares at September 30             $1,169,906       $1,465,573     $1,125,234
                                                            ==========================================


                                     II-75

10. EMPLOYEE BENEFIT PLANS (CONTINUED)

STOCK OPTION PLAN

The Company has Stock Option Plans that are designed to provide directors,
officers, and key employees with a proprietary interest in the Company as an
incentive to contribute to its success. All options granted to participants
under the plans become vested and exercisable at the rate of 20% per year on
each annual anniversary date. The Company's 1996 Plan was adopted in October
1996 and had a total of 218,212 shares of common stock reserved for issuance
pursuant to the plan. The Company's 2000 Plan was adopted in January, 2000 and
had a total of 88,365 shares of common stock reserved for issuance. As of
September 30, 2002, there were 33,203 options remaining to be awarded under the
plans.

The grant price of all options is equal to the fair market value of the
Company's common stock at the grant date. The following table summarizes the
changes in stock options outstanding at, and during, the two year period ended
September 30, 2002:



                                                                                                                          WEIGHTED
                                                                                                                          AVERAGE
                                                                                                                          EXERCISE
Exercise price per share  $7.500   $9.000   $10.375   $11.00   $11.38  $11.75  $13.625  $13.75  $14.625  $18.50    TOTAL   PRICE
                          ========================================================================================================
                                                                                      
Outstanding at
   October 1, 1999              -        -   135,573        -       -   7,000   17,456   4,950  24,701   19,000   208,680  $12.016
     Granted                    -   23,000         -        -       -       -        -       -       -        -    23,000    9.000
     Exercised                  -        -         -        -       -       -        -       -       -        -         -        -
     Forfeited                  -        -         -        -       -       -        -       -       -        -         -        -
                          ----------------------------- --------------------------------------------------------------------------
Outstanding at
   October 1, 2000              -   23,000   135,573        -       -   7,000   17,456   4,950  24,701   19,000   231,680  $11.716
     Granted               25,000        -         -        -  13,000       -        -       -       -        -    38,000    8.827
     Exercised                  -        -         -        -       -       -        -       -       -        -         -        -
     Forfeited             (3,000)  (3,000)  (24,838)       -       -       -        -       -  (3,000)  (2,000)  (35,838)  10.828
                          ------------------------------ -------------------------------------------------------------------------
Outstanding at
   September 30, 2001      22,000   20,000   110,735        -  13,000   7,000   17,456   4,950  21,701   17,000   233,842   11.383
     Granted                    -        -         -   30,000       -       -        -       -       -        -    30,000   11.000
     Exercised                  -        -         -        -       -       -        -       -       -        -         -        -
     Forfeited                  -        -         -        -       -       -        -       -       -        -         -        -
                          --------------------------------------------------------------------------------------------------------
Outstanding at
   September 30, 2002      22,000   20,000   110,735   30,000  13,000   7,000   17,456   4,950  21,701   17,000   263,842   11.339
                          ========================================================================================================
Exercisable at
   September 30, 2002       4,400    8,000   110,735        -   2,600   7,000   17,456   4,950  13,021   13,600   181,762   11.629
                          ========================================================================================================


The Company accounts for stock options in accordance with Opinion No. 25. The
following pro forma information regarding net income and earnings per share
assumes the adoption of the expense recognition provision of Statement No. 123.
The estimated fair value of the options is amortized to expense over the option
and vesting period. The fair value was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions: risk-free interest rates approximate the 7 year US Treasury rate at
the time of issuance, with ranges between 4.25% and 6.00%, and dividend yields
of between 1.3% and 4.0%; volatility factors of the expected market price of the
Company's common stock of .203 and a weighted average expected life of seven
years.

                                       II-76

10. EMPLOYEE BENEFIT PLANS (CONTINUED)

STOCK OPTION PLAN (CONTINUED)



                                                             2002             2001            2000
                                                           ------------------------------------------
                                                                                  
Net income before stock options                            $797,948         $209,173       $1,166,911
Compensation expense (tax effected) from options             57,331           50,257          120,716
                                                           ------------------------------------------
Pro forma net income                                       $740,617         $158,916       $1,046,195
                                                           ==========================================
Pro forma dilutive earnings per share                      $    .54         $    .11       $      .67
                                                           ==========================================


The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

RECOGNITION AND RETENTION PLAN AND TRUST

At a special meeting of the stockholders held on October 15, 1996, the
stockholders of the Company approved and established a Recognition and Retention
Plan and Trust, the objective of which is to retain qualified personnel in key
positions of the Company. Directors, officers, and key employees will be
eligible to receive benefits under the plan. During the year ended September 30,
1997, the Company contributed $1,063,170 to the trust to purchase 87,285 shares
of common stock in connection with the Company's public offering necessary to
establish the plan. Shares awarded under the Recognition and Retention Plan
(RRP) shall become vested and exercisable at the rate of 20% per year over five
years on each annual anniversary date. The Company amortized the prepaid
compensation and recording additions to stockholders' equity as the shares
vested. Compensation expense attributable to the plan amounted to $17,690,
$212,640, and $212,640 for the years ended September 30, 2002, 2001 and 2000.


                                       II-77

10. EMPLOYEE BENEFIT PLANS (CONTINUED)

THRIFT PLAN

Effective October 1, 1995, the Bank provided eligible employees participation in
a 401(k) contributory defined contribution plan. The Bank matches 50% of an
employee's contribution up to 6% of an employee's compensation. The Bank
contributed $50,489, $50,563, and $46,156, to the 401(k) for the years ended
September 30, 2002, 2001, and 2000, respectively.

PENSION PLAN

The Bank participates in a retirement plan which covers all eligible employees
through the Financial Institution Retirement Fund, a member of the Pentegra
Group, which is a multiemployer defined benefit plan. The fund does not compute
and provide separate actuarial valuations or segregation of plan assets by
employer. The actuarial cost method used for funding the plan is the projected
benefit method. The fund was fully funded at June 30, 2002, which is the plan
year-end. Pension expense was approximately $0, $55,000, and $0, respectively
for the periods ended September 30, 2002, 2001, and 2000.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Bank has established a Supplemental Executive Retirement Plan ("SERP") to
provide certain additional retirement benefits to participating executive
officers. The SERP was adopted in order to provide benefits to such executives
whose benefits are reduced under the Company's tax-qualified benefit plans
pursuant to limitations under the Internal Revenue Code. The SERP is subject to
certain vesting provisions, and provides that the executives shall receive a
supplemental retirement benefit if the executive's employment is terminated
after reaching the normal retirement age of 62. For the year ended September 30,
2002, the Company recognized expense under the SERP of $56,023.

                                       II-78

11. STOCKHOLDERS' EQUITY

Under federal regulations, the Bank is required to maintain specific amounts of
capital. The following table sets forth certain information concerning the
Bank's regulatory capital:



                                                      SEPTEMBER 30, 2002                    SEPTEMBER 30, 2001
                                             -------------------------------------------------------------------------
                                              TIER I      TIER I     TOTAL RISK-    TIER I     TIER I      TOTAL RISK-
                                             LEVERAGE   RISK-BASED     BASED       LEVERAGE   RISK-BASED     BASED
                                             CAPITAL     CAPITAL      CAPITAL      CAPITAL     CAPITAL      CAPITAL
                                             -------------------------------------------------------------------------
                                             (Dollars in thousands)

                                                                                         
Equity capital (1)                           $ 31,144    $ 31,144      $ 31,144   $ 32,204     $ 32,204     $ 32,204
Plus general valuation allowances (2)               -           -         2,971          -            -        2,644
                                             -------------------------------------------------------------------------
Total regulatory capital                       31,144      31,144        34,115     32,204       32,204       34,848
Minimum required capital                       16,466       9,550        19,099     16,581        8,924       17,847
                                             -------------------------------------------------------------------------
Excess regulatory capital                      14,678      21,594        15,016     15,623       23,280       17,001
                                             =========================================================================
Adjusted total assets                        $411,638    $238,738      $238,738   $414,523     $223,088     $223,088
                                             =========================================================================

Regulatory capital as a percentage               7.57%      13.05%        14.29%      7.77%       14.44%       15.62%
Minimum capital required as a percentage         4.00        4.00          8.00       4.00         4.00         8.00
                                             -------------------------------------------------------------------------
Excess regulatory capital as a percentage        3.57%       9.05%         6.29%      3.77%       10.44%        7.62%
                                             =========================================================================
Well-capitalized requirement                     5.00%       6.00%        10.00%      5.00%        6.00%       10.00%
                                             =========================================================================


(1) Represents equity capital of the Bank as reported to the Pennsylvania
    Department of Banking and the Federal Deposit Insurance Corporation.

(2) Limited to 1.25% of risk-adjusted total assets.


                                       II-79

11. STOCKHOLDERS' EQUITY (CONTINUED)

The Bank is also subject to more stringent Pennsylvania Department of Banking
capital guidelines. Although not adopted in regulation form, the Department
utilizes capital standards requiring a minimum of 6% leverage capital and 10%
risk-based capital.

In connection with the Bank's stock conversion, the Bank segregated and
restricted $11,167,000 of retained earnings, the amount of its regulatory
capital at that date, in a liquidation account for the benefit of eligible
savings account holders who continue to maintain their accounts at the Bank
after conversion. In the event of a complete liquidation of the Bank subsequent
to conversion, each eligible account holder will be entitled to receive a
distribution from the liquidation account in the amount proportionate to the
current adjusted balances of all qualifying deposits then held before any
liquidation distribution may be made with respect to the stockholders. Except
for the repurchase of stock and payment of dividends, the existence of the
liquidation account will not restrict the use or application of such capital.

Subsequent to the conversion, neither the Bank nor the Company may declare or
pay cash dividends on any of their shares of common stock if the effect would be
to reduce stockholders' equity below applicable regulatory capital requirements
or if such declaration and payment would otherwise violate regulatory
requirements.

12. LOANS TO RELATED PARTIES

The Bank has granted loans to certain directors and officers of the Bank and to
their affiliates. Such loans are made in the ordinary course of business at the
Bank's normal credit terms and do not represent more than normal risk of
collection. These loans aggregated approximately $428,044, $454,302, and
$197,590 at September 30, 2002, 2001, and 2000, respectively. There were no new
loans granted and repayments approximated $26,258 in fiscal 2002.

13. FAIR VALUES OF FINANCIAL INSTRUMENTS

Statement of FAS No. 107, "Disclosures about Fair Value of Financial
Instruments," requires that the Company disclose estimated fair values for its
financial instruments. The market value of investments and mortgage-backed
securities, as presented in Note 3, are based primarily upon quoted market
prices. For substantially all other financial instruments, the fair values are
management's estimates of the values at which the instruments could be exchanged
in a transaction between willing parties. In accordance with FAS No. 107, fair
values are based on estimates using present value and other valuation techniques
in instances where quoted prices.


                                       II-80

13. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

are not available. These techniques are significantly affected by the
assumptions used, including discount rates and estimates of future cash flows.
As such, the derived fair value estimates cannot be substantiated by comparison
to independent markets, and further, may not be realizable in an immediate
settlement of the instruments. FAS No. 107 also exclude certain items from its
disclosure requirements. Accordingly, the aggregate fair value amounts presented
do not represent, and should not be construed to represent, the underlying value
of the Company.

Fair value estimates, methods, and assumptions are set forth below for the
Company's financial instruments: Cash and interest-bearing deposits in financial
institutions: The carrying amounts reported in the balance sheet for cash and
interest-bearing deposits approximate those assets' fair value.

Investment securities, including mortgage-backed securities and equity
securities: Fair values are based on quoted market prices, where available. If
quoted market prices are not available, fair values are based on quoted prices
of comparable instruments (see Note 3).

Loans receivable: For variable rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying values. The
fair values for all other loans are estimated using discounted cash flow
analysis, using comparable interest rates offered for loans with similar terms
to borrowers of similar credit quality.

Deposit liabilities: The fair values disclosed for interest checking, money
market, and savings deposits are, by definition, equal to the amount payable on
demand at the reporting date (i.e., their carrying amounts). Fair values for
certificates of deposit are estimated using a discounted cash flow analysis,
applying a comparable Federal Home Loan Bank advance rate to the aggregated
weighted average maturity on time deposits.

Borrowings: Fair values for the Company's variable rate FHLB advances and other
borrowings are deemed to equal carrying value. Fair values for fixed rate
borrowings are estimated using a discounted cash flow analysis similar to that
used in valuing fixed rate deposit liabilities.

Guaranteed preferred beneficial interests in subordinated debt: Fair value is
based on quoted market price.

Interest Rate Cap:  Fair value is based on quoted market price.


                                       II-81

13. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

Interest rate cap: The fair value of interest rate swaps, caps and floors which
represent the estimated amount the Company would receive or pay to terminate the
contracts or agreements, taking into account current interest rates and when
appropriate, the current creditworthiness of the counterparties are obtained
from dealer quotes.



                                                       SEPTEMBER 30, 2002                  SEPTEMBER 30, 2001
                                                   -------------------------------------------------------------------
                                                                        FAIR                               FAIR
                                                   CARRYING VALUE       VALUE         CARRYING VALUE       VALUE
                                                   -------------------------------------------------------------------
                                                                                            
ASSETS
Cash and interest-bearing deposits                  $ 23,818,716     $ 23,818,716      $ 22,360,230     $ 22,360,230
Investment securities available for sale             113,805,047      113,805,047        90,889,499       90,889,499
Investment securities held to maturity                10,490,985       10,880,985        10,397,506       10,271,187
Loans receivable, net                                240,805,711      249,428,000       284,905,040      321,188,000
Federal Home Loan Bank stock                           8,098,300        8,098,300         7,822,100        7,822,100
Interest rate  cap                                             -                -               799              799

LIABILITIES
Deposits                                             196,222,472      198,206,000       213,010,950      214,723,000
Advances from Federal Home Loan Bank                 161,888,253      181,811,000       156,315,730      169,369,000
Advance payments by borrowers                            709,684          709,684         1,271,757        1,271,757
Repurchase agreements                                 20,000,000       22,603,000        20,000,000       21,534,000
Guaranteed preferred beneficial interests in
  subordinated debt                                    9,753,135        9,753,135        10,854,684       10,854,684



                                       II-82

14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly consolidated statements of income are as follows (dollar amounts in
thousands, except per share data):



                                              THREE MONTHS ENDED              YEAR ENDED
                                -------------------------------------------
                                DECEMBER      MARCH     JUNE     SEPTEMBER     SEPTEMBER
                                  2001        2002      2002        2002          2002
                                --------------------------------------------------------
                                                               
Total interest income            $7,071      $6,786    $6,712      $6,463        $27,032
Total interest expense            5,162       4,824     4,684       4,585         19,255
                                 ------      ------    ------      ------        -------
Net interest income               1,909       1,962     2,028       1,878          7,777
Provision for loan losses           150         150        60          60            420
                                 ------      ------    ------      ------        -------
Net interest income after
  Provision for loan
  Losses                          1,759       1,812     1,968       1,818          7,357

Total noninterest income            450         428       439         553          1,870
Total noninterest expense         1,989       1,986     2,039       2,036          8,050
                                 ------      ------    ------      ------        -------
Income before income
  taxes                             220         254       368         335          1,177
Income taxes                         74          87       114         104            379
                                 ------      ------    ------      ------        -------
Net income                          146         167       254         231            798
                                 ======      ======    ======      ======        =======

Basic earnings per share(1)
                                 $  .10      $  .13    $  .19      $  .18        $   .60
                                 ======      ======    ======      ======        =======
Diluted earnings per share(1)
                                 $  .10      $  .12    $  .19      $  .17        $   .58
                                 ======      ======    ======      ======        =======


                                              THREE MONTHS ENDED              YEAR ENDED
                                 ------------------------------------------
                                 DECEMBER     MARCH     JUNE     SEPTEMBER     SEPTEMBER
                                   2000       2001      2001        2001         2001
                                 --------------------------------------------------------
                                                                
Total interest income            $7,967       $7,837    $7,401      $7,328       $30,533
Total interest expense            6,115        5,766     5,455       5,389        22,725
                                 ------       ------    ------      ------       -------
                                  1,852        2,071     1,946       1,939         7,808
Net interest income                 150          150       150         150           600
                                 ------       ------    ------      ------       -------
Provision for loan losses
Net interest income after
  Provision for loan
  Losses                          1,702        1,921     1,796       1,789         7,208

Total noninterest income             97          248       300         363         1,008
Total noninterest expense         1,956        1,985     1,962       2,019         7,922
                                 ------       ------    ------      ------       -------
Income before income
  Taxes                            (157)         184       134         133           294
Income taxes                        (54)          68        34          37            85
                                 ------       ------    ------      ------       -------
Net income                       $ (103)      $  116    $  100      $   96       $   209
                                 ======       ======    ======      ======       =======
Basic earnings per share(1)      $ (.07)      $  .07    $  .07      $  .07       $   .14
                                 ======       ======    ======      ======       =======
Diluted earnings per share(1)    $ (.07)      $  .07    $  .07      $  .07       $   .14
                                 ======       ======    ======      ======       =======


(1) Quarterly per share amounts do not add to total for the years ended
    September 2002 and 2001, due to rounding.


                                       II-83

15. CONSOLIDATED FINANCIAL INFORMATION OF PITTSBURGH FINANCIAL CORP. (PARENT
    ONLY)

Pittsburgh Financial Corp. was organized in September 1995 and began operations
on April 1, 1996. The Company's balance sheets as of September 30, 2002 and
2000 and related statements of income and cash flows are as follows:

BALANCE SHEETS



                                                                          2002               2001
                                                                      ------------        -----------
                                                                                    
ASSETS
Cash and cash equivalents                                             $    106,311        $   374,307
Investment in Pittsburgh Savings Bank                                   32,862,897         33,346,501
Prepaid income taxes                                                       785,682                 --
Premises and equipment, net                                                 39,285                 --
Other assets                                                               427,346            665,002
                                                                      ------------        -----------
Total assets                                                          $ 34,221,521        $34,385,810
                                                                      ============        ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Guaranteed preferred benefit interest in subsidiary debt              $ 10,879,190        $10,854,684
Other liabilities                                                          308,905            221,551
                                                                      ------------        -----------
Total liabilities                                                       11,188,095         11,076,235
Minority interest                                                           11,922                 --
Total stockholders' equity                                              23,021,504         23,309,575
                                                                      ------------        -----------
Total liabilities and stockholders' equity                            $ 34,221,521        $33,385,810
                                                                      ============        ===========


STATEMENTS OF INCOME



                                                                          2002               2001
                                                                      ------------       ------------
                                                                                   
Interest and dividend income                                          $       189        $        27
Interest expense                                                       (1,008,991)        (1,008,906)
Noninterest income                                                         59,267            (74,600)
Noninterest expense                                                      (567,445)          (561,824)
                                                                      -----------        -----------
(Loss) before income taxes and equity in earnings of subsidiary        (1,516,980)        (1,645,303)
Income tax credit (expense)                                               516,000            904,878
                                                                      -----------        -----------
(Loss) before equity in earnings of subsidiary                         (1,000,980)          (740,425)
Equity in earnings of Pittsburgh Savings Bank                           1,798,928            949,598
                                                                      -----------        -----------
Net income                                                            $   797,948        $   209,173
                                                                      ===========        ===========


                                       II-84

15. CONSOLIDATED FINANCIAL INFORMATION OF PITTSBURGH FINANCIAL CORP. (PARENT
    ONLY) (CONTINUED)



                                                                              YEAR ENDED
                                                                          2002            2001
                                                                      -----------      -----------
                                                                                  
OPERATING ACTIVITIES
Net income                                                            $   797,948      $   209,173
Adjustments to reconcile net income to net cash used in
  operating activities:

     Equity in earnings of Pittsburgh Savings Bank                     (1,798,928)        (949,598)
     Amortization of ESOP and RRP shares                                  275,458          417,977
     Change in other assets and liabilities                             2,481,537        2,799,293
                                                                      -----------      -----------
Net cash used in operating activities                                   1,756,015        2,476,845

INVESTING ACTIVITIES
Purchase of land, premises, and equipment                                 (53,534)               -
                                                                      -----------      -----------
Net cash provided by investing activities                                 (53,534)               -

FINANCING ACTIVITIES
Cash dividend on common stock                                            (507,132)        (576,518)
Purchase of stock for Treasury and RRP                                 (1,463,345)      (2,060,186)
                                                                      -----------      -----------
Net cash used in financing activities                                  (1,970,477)      (2,636,704)
                                                                      -----------      -----------

Decrease in cash                                                         (267,996)        (159,859)
Cash at beginning of year                                                 374,307          534,166
                                                                      -----------      -----------
Ending cash and cash equivalents                                      $   106,311      $   374,307
                                                                      ===========      ===========


16.  SUBSEQUENT EVENTS (UNAUDITED)

In the first quarter of fiscal 2003, the Bank sold the deposits of its Bethel
Park and Mt. Oliver offices in two separate transactions. Total deposits sold
in these transactions were approximately $16.4 million. The transactions
resulted in a net pre-tax gain of approximately $465,000.


                                       II-85

ITEM 9.    CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

        Not applicable.

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

        The information required by Items 401 and 405 of Regulation S-K is
incorporated by reference from the information contained in the section
captioned "Information with Respect to Nominees for Director, Continuing
Directors and Executive Officers" and "Management Compensation - Section 16(a)
Beneficial Ownership Reporting Compliance," respectively, in the Registrant's
Proxy Statement dated December 23, 2002 ("Proxy Statement").

ITEM 11.   EXECUTIVE COMPENSATION.

        The information required by Item 402 of Regulation S-K is incorporated
by reference from the information contained in the section captioned
"Management Compensation" in the Registrant's Proxy Statement.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
           RELATED STOCKHOLDER MATTERS.

        The information required by Item 403 of Regulation S-K is incorporated
by reference from the information contained in the section captioned
"Beneficial Ownership of Common Stock by Certain Beneficial Owners and
Management" in the Registrant's Proxy Statement.

        EQUITY COMPENSATION PLAN INFORMATION. The following table sets forth
certain information for all equity compensation plans and individual
compensation arrangements (whether with employees or non-employees, such as
directors), in effect as of September 30, 2002.

                      EQUITY COMPENSATION PLAN INFORMATION



                                   Number of securities to be       Weighted-average        Number of securities remaining
                                     issued upon exercise of       exercise price of        available for future issuance
                                       outstanding options,       outstanding options,     under equity compensation plans
                                            warrants                    warrants           (excluding securities reflected
       Plan Category                       and rights                  and rights                in the first column)
       -------------               --------------------------     -------------------     --------------------------------
                                                                                 
Equity compensation plans
  approved by security holders              263,842                      $11.34                         33,203

Equity compensation plans not
  approved by security holders                   --                          --                             --
                                            -------                      ------                         ------
Total                                       263,842                      $11.34                         33,203
                                            =======                      ======                         ======


                                       II-86

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

        The information required by Item 404 of Regulation S-K is incorporated
by reference from the information contained in the section captioned
"Management Compensation - Transactions with Certain Related Persons" in the
Registrant's Proxy Statement.

ITEM 14.   CONTROLS AND PROCEDURES.

         Within 90 days prior to the date of this annual report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of
the Company's disclosure controls and procedures. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures are effective. There were no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.

        Disclosure controls and procedures are the controls and other
procedures of the Company that are designed to ensure that the information
required to be disclosed by the Company in its reports filed or submitted under
the Securities Exchange Act of 1934, as amended ("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 Company in its reports
filed under the Exchange Act is accumulated and communicated to the Company's
management, including the principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required disclosure.

PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a)   Documents filed as part of this Report.

               (1) The following documents are filed as part of this report and
are incorporated herein by reference to Item 8 of this Annual Report on Form
10-K:

        Independent Auditors' Report.

        Consolidated Statements of Financial Condition as of September 30, 2002
        and 2001.

        Consolidated Statements of Operations for the Years Ended September 30,
        2002, 2001 and 2000.

        Consolidated Statements of Changes in Stockholders' Equity for the Years
        Ended September 30, 2002, 2001 and 2000.


                                       II-87



        Consolidated Statements of Cash Flows for the Years Ended September 30,
        2002, 2001 and 2000.

        Notes to Consolidated Financial Statements.

               (2) All schedules for which provision is made in the applicable
accounting regulation of the Commission are omitted because they are not
applicable or the required information is included in the Consolidated Financial
Statements or notes thereto.

               (3)(a) The following exhibits are filed as part of this Form
10-K, and this list includes the Exhibit Index.



No.                                                  Description
-----        ------------------------------------------------------------------------------------------
          
3.1          Amended and Restated Articles of Incorporation of Pittsburgh Financial Corp.(3/)
3.2          Amended and Restated Bylaws of Pittsburgh Financial Corp.(3/)
4            Stock Certificate of Pittsburgh Financial Corp.(1/)
10.1         Employment  Agreement among  Pittsburgh  Financial Corp., Pittsburgh Savings Bank and J.
             Ardie Dillen(*/2/)
10.2         Amendment Number 1 to the Agreement among Pittsburgh Financial Corp., Pittsburgh Savings
             Bank and J. Ardie Dillen(*/5/)
10.3         Employment  Agreement  among  Pittsburgh  Financial Corp., Pittsburgh Savings  Bank and
             Michael J. Kirk(*/2/)
10.4         Amendment Number 1 to the Agreement among Pittsburgh Financial Corp., Pittsburgh Savings
             Bank and Michael J. Kirk(*/5/)
10.5         Amendment Number 2 to the Agreement among Pittsburgh Financial Corp., Pittsburgh Savings
             Bank and Michael J. Kirk(*/5/)
10.6         Employment Agreement between Pittsburgh Savings Bank and Albert L. Winters(*/2/)
10.7         Amendment  Number 1 to the Agreement between Pittsburgh Savings Bank and Albert L.
             Winters(*/5/)
10.8         Employment Agreement among Pittsburgh Financial Corp., Pittsburgh Savings Bank and
             Gregory G. Maxcy(*/)
10.9         Amendment Number 1 to the Agreement among Pittsburgh Financial Corp., Pittsburgh Savings
             Bank and Gregory G. Maxcy(*/5/)
10.10        Amendment Number 2 to the Agreement among Pittsburgh Financial Corp., Pittsburgh Savings
             Bank and Gregory G. Maxcy(*/5/)
10.11        Stock Option Plan(*/2/)
10.12        Recognition and Retention Plan and Trust(*/2/)
10.13        2000 Stock Option Plan(*/4/)
10.14        Employment Agreement between Pittsburgh Savings Bank and Jeffrey A. Martin(*/)
10.15        Supplemental  Executive  Retirement  Plan  Agreement  among Pittsburgh Financial Corp.,
             Pittsburgh Savings Bank and J. Ardie Dillen(*/)



                                       II-88



No.                                                  Description
-----        ------------------------------------------------------------------------------------------
          
10.16        Supplemental  Executive  Retirement Plan  Agreement among  Pittsburgh Financial Corp.,
             Pittsburgh Savings Bank and Michael J. Kirk(*/)
10.17        Supplemental  Executive  Retirement Plan  Agreement among  Pittsburgh Financial Corp.,
             Pittsburgh Savings Bank and Gregory G. Maxcy(*/)
21           Subsidiaries of the Registrant
23           Consent of Ernst & Young LLP, Independent Auditors
99.1         Certification  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
             Act of 2002 (18 U.S.C. 1350)
99.2         Certification  of Chief Financial Officer Pursuant to Section 906 of the  Sarbanes-Oxley
             Act of 2002 (18 U.S.C. 1350)


-----------------

(1/)    Incorporated by reference from the Registration Statement on Form S-1
        (Registration No. 33-99658) filed by the Registrant with the Commission
        on November 21, 1995, as amended.

(2/)    Incorporated by reference from the Form 10-K for the fiscal year ended
        September 30, 1996 filed by the Registrant with the Commission on
        December 27, 1996.

(3/)    Incorporated by reference from the Form 10-Q for the quarterly period
        ended March 31, 2000 filed by the Registrant with the Commission on May
        15, 2000.

(4/)    Incorporated by reference from the definitive Proxy Statement filed by
        the Registrant with the Commission on December 27, 1999.

(5/)    Incorporated by reference from the Form 10-K for the fiscal year ended
        September 30, 2001 filed by the Registrant with the Commission on
        December 27, 2001.

(*/)    Management contract or compensatory plan or arrangement.

        (3)(b)  Reports filed on Form 8-K.

        None.


                                       II-89

                                   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.

                                    PITTSBURGH FINANCIAL CORP.

                                    By: /s/ J. Ardie Dillen
                                        ------------------------------------
                                        J. Ardie Dillen
                                        Chairman of the Board, President and
                                        Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

/s/ J. Ardie Dillen                                         December 19, 2002
---------------------------------------
J. Ardie Dillen
Chairman of the Board,
  President and Chief Executive Officer
  (Principal Executive Officer)

/s/ Michael J. Kirk                                         December 19, 2002
---------------------------------------
Michael J. Kirk
Executive Vice President and Chief
  Financial Officer (Principal Financial
  and Accounting Officer)

/s/ Gregory G. Maxcy                                        December 19, 2002
---------------------------------------
Gregory G. Maxcy
Director and Corporate Secretary

/s/ Richard F. Lerach
---------------------------------------
Richard F. Lerach                                           December 19, 2002
Director

                                       II-90

/s/ Stephen Spolar                                          December 19, 2002
---------------------------------------
Stephen Spolar
Director

/s/ Charles A. Topnick                                      December 19, 2002
---------------------------------------
Charles A. Topnick
Director

/s/ Kenneth R. Rieger                                       December 19, 2002
---------------------------------------
Kenneth R. Rieger
Director

/s/ James M. Droney, Jr.                                    December 19, 2002
---------------------------------------
James M. Droney, Jr.
Director

/s/ Jeffrey W. Tott                                         December 19, 2002
---------------------------------------
Jeffrey W. Tott
Director

/s/ R. Yvonne Campos                                        December 19, 2002
---------------------------------------
R. Yvonne Campos
Director


                                       II-91

                                 CERTIFICATIONS

I, J. Ardie Dillen, certify that:

1.       I have reviewed this annual report on Form 10-K of Pittsburgh Financial
         Corp. (the "Registrant");

2.       Based on my knowledge, this annual 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 annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual 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 annual 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-14 and 15d-14) for the Registrant
         and we have:

         a)       designed such disclosure controls and procedures 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 annual report is being prepared;

         b)       evaluated the effectiveness of the Registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation
                  Date"); and

         c)       presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.       The Registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, 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 in the design or operation of
                  internal controls which could adversely affect the
                  Registrant's ability to record, process, summarize and report
                  financial data and have identified for the Registrant's
                  auditors any material weaknesses in internal controls; and


                                       II-92

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  Registrant's internal controls; and

6.       The Registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:    December 19, 2002                 /s/ J. Ardie Dillen
                                           -------------------------------------
                                           J. Ardie Dillen
                                           President and Chief Executive Officer


                                       II-93

I, Michael J. Kirk, certify that:

1.       I have reviewed this annual report on Form 10-K of Pittsburgh Financial
         Corp. (the "Registrant");

2.       Based on my knowledge, this annual 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 annual report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this annual 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 annual 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-14 and 15d-14) for the Registrant and
         we have:

         a)       designed such disclosure controls and procedures 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 annual report is being prepared;

         b)       evaluated the effectiveness of the Registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

         c)       presented  in this  annual  report our  conclusions  about the
                  effectiveness  of the  disclosure controls and procedures
                  based on our evaluation as of the Evaluation Date;

5.       The Registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, 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 in the design or operation of
                  internal controls which could adversely affect the
                  Registrant's ability to record, process, summarize and report
                  financial data and have identified for the Registrant's
                  auditors any material weaknesses in internal controls; and

         b)       any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  Registrant's internal controls; and


                                       II-94

6.       The Registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could significantly affect internal
         controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.

Date:    December 19, 2002                 /s/ Michael J. Kirk
                                           -------------------------------------
                                           Michael J. Kirk
                                           Executive Vice President and Chief
                                            Financial Officer



                                       II-95





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

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2003

                                       OR

           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          For the transition period from               to
                                         -------------    ------------

                         Commission File Number 0-27522

                           PITTSBURGH FINANCIAL CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              Pennsylvania                                  25-1772349
     -------------------------------                  ----------------------
     (State or other jurisdiction of                      (IRS Employer
      incorporation or organization)                  Identification Number)


         1001 Village Run Road
         Wexford, Pennsylvania                                 15090
---------------------------------------               ----------------------
(Address of principal executive office)                     (Zip Code)



                                 (724) 933-4509
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


     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 reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No
                                             ---    ---

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

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: As of August 13, 2003, there
were issued and outstanding 1,424,881 shares of the Registrant's Common Stock,
par value $.01 per share.





                           PITTSBURGH FINANCIAL CORP.

                                TABLE OF CONTENTS



                                                                                PAGE
                                                                                ----
                                                                             
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Statements of Financial Condition as of June 30, 2003
         (unaudited) and September 30, 2002                                    II-98

         Consolidated Statements of Income (unaudited) for the three and nine
         months ended June 30, 2003 and 2002                                   II-99

         Consolidated Statement of Changes in Stockholders' Equity
         (unaudited) for the nine months ended June 30, 2003                   II-100

         Consolidated Statements of Cash Flows (unaudited) for the
         nine months ended June 30, 2003 and 2002                              II-101

         Notes to Unaudited Consolidated Financial Statements                  II-102

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                 II-108

Item 3.  Quantitative and Qualitative Disclosures About Market Risk            II-119

Item 4.  Controls and Procedures                                               II-119

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                     II-120
Item 2.  Changes in Securities                                                 II-120
Item 3.  Defaults Upon Senior Securities                                       II-120
Item 4.  Submission of Matters to a Vote of Security-Holders                   II-120
Item 5.  Other Information                                                     II-120
Item 6.  Exhibits and Reports on Form 8-K                                      II-121

SIGNATURES





                                 PART I - ITEM 1
                              FINANCIAL STATEMENTS
                           PITTSBURGH FINANCIAL CORP.
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION



                                                                                     June 30,      September 30,
                                                                                      2003             2002
                                                                                   (Unaudited)
                                                                                  -------------    -------------
                                                                                             
ASSETS

Cash                                                                              $   1,204,453    $   1,709,206
Interest-bearing deposits                                                            14,450,084       22,109,510
                                                                                  -------------    -------------
                                                                                     15,654,537       23,818,716

Investment securities available for sale (cost of $93,038,463 and $111,408,047)      94,548,463      113,805,047
Investment securities held to maturity                                                8,206,296       10,490,985
Bank owned life insurance                                                             6,531,746        6,275,111
Loans receivable, net of allowance of $3,123,742 and $3,023,218                     234,060,067      240,805,711
Accrued interest receivable                                                           2,066,389        2,408,605
Premises and equipment, net                                                           5,364,720        5,701,722
Goodwill                                                                                151,809          151,809
Federal Home Loan Bank stock                                                          8,027,700        8,098,300
Foreclosed real estate                                                                  670,342          787,616
Deferred income taxes                                                                   126,667               --
Prepaid income taxes                                                                    525,532          526,826
Other assets                                                                            515,657          792,538
                                                                                  -------------    -------------
Total assets                                                                      $ 376,449,925    $ 413,662,986
                                                                                  =============    =============
LIABILITIES

Deposits                                                                          $ 181,722,234    $ 196,222,472
Federal Home Loan Bank borrowings                                                   140,546,564      161,888,253
Repurchase agreements                                                                20,000,000       20,000,000
Guaranteed preferred beneficial interests in subordinated debt                        7,594,999        9,753,135
Deferred income taxes                                                                        --          176,333
Advances by borrowers for taxes and insurance                                         2,238,941          709,684
Other liabilities                                                                     1,476,303        1,879,683
                                                                                  -------------    -------------

Total liabilities                                                                   353,579,041      390,629,560
                                                                                  -------------    -------------
Minority interest                                                                        29,265           11,922

STOCKHOLDERS' EQUITY

Preferred stock, $.01 par value, 5,000,000 shares authorized,
   none issued                                                                               --               --
Common stock, $.01 par value, 10,000,000 shares authorized,
   2,182,125 shares issued                                                               21,821           21,821
Additional paid-in capital                                                           16,311,572       16,317,309
Treasury stock - at cost, 757,244 and 773,426 shares                                (10,180,512)     (10,398,322)
Unearned shares of  ESOP                                                               (539,753)        (720,622)
Accumulated other comprehensive income                                                  997,000        1,581,000
Retained earnings (substantially restricted)                                         16,231,491       16,220,318
                                                                                  -------------    -------------
Total stockholders' equity                                                           22,841,619       23,021,504
                                                                                  -------------    -------------
Total liabilities, minority interest and stockholders' equity                     $ 376,449,925    $ 413,662,986
                                                                                  =============    =============


See accompanying notes to unaudited consolidated financial statements.




                                     II-98


                           PITTSBURGH FINANCIAL CORP.
                        CONSOLIDATED STATEMENTS OF INCOME



                                                                  THREE MONTHS ENDED              NINE MONTHS ENDED
                                                                        JUNE 30,                       JUNE 30,
                                                                      (UNAUDITED)                    (UNAUDITED)
                                                              ----------------------------    ----------------------------
                                                                  2003            2002           2003             2002
                                                              ------------    ------------    ------------    ------------
                                                                                                  
Interest income:
   Loans receivable                                           $  4,005,111    $  4,919,230    $ 12,389,788    $ 15,348,183
   Mortgage-backed securities                                      651,459       1,131,963       2,463,878       3,225,820
    Investment securities:
        Taxable                                                    541,197         611,408       1,727,674       1,862,706
        Tax exempt                                                  51,864          19,650         140,413          19,650
   Interest-bearing deposits                                        19,188          30,424          70,413         112,882
                                                              ------------    ------------    ------------    ------------
          Total interest income                                  5,268,819       6,712,675      16,792,166      20,569,241

Interest expense:
   Deposits                                                      1,175,622       1,761,988       3,889,328       5,908,292
   Federal Home Loan Bank and other borrowings                   2,365,926       2,710,875       7,365,360       8,082,021
   Guaranteed preferred beneficial interest
        in subordinated debt                                       172,703         211,475         614,568         680,089
                                                              ------------    ------------    ------------    ------------
          Total interest expense                                 3,714,251       4,684,338      11,869,256      14,670,402
                                                              ------------    ------------    ------------    ------------
NET INTEREST INCOME                                              1,554,568       2,028,337       4,922,910       5,898,839

Provision for loan losses                                           60,000          60,000         180,000         360,000
                                                              ------------    ------------    ------------    ------------
Net interest income after provision for loan losses              1,494,568       1,968,337       4,742,910       5,538,839

Noninterest income:
   Service charges and other fees                                  470,411         283,475       1,194,164         885,029
   Bank owned life insurance income                                 93,000          99,015         279,000         202,030
   Net gain on sale of deposits and branch offices                      --              --         453,518              --
   Net loss on early extinguishment of trust preferred debt       (100,502)             --        (151,824)             --
   Net gain on available for sale securities                       297,893              --         542,209           8,391
   Other income                                                     52,635          56,551         155,950         221,187
                                                              ------------    ------------    ------------    ------------
          Total noninterest income                                 813,437         439,041       2,473,017       1,316,637

Noninterest expenses:
   Minority interest in income of consolidated entity                9,373             (44)         17,343             (44)
   Compensation and employee benefits                            1,133,478       1,011,000       3,335,708       2,890,989
   Premises and occupancy costs                                    424,674         436,796       1,292,275       1,258,240
   Amortization of goodwill                                             --           8,546              --          25,053
   (Gain) loss on sale of foreclosed real estate                        --          (9,141)            432         (22,556)
   Marketing                                                        65,959          81,554         243,155         263,575
   Data processing costs                                            98,655         109,517         318,844         352,876
   Other expenses                                                  428,197         400,956       1,359,166       1,246,032
                                                              ------------    ------------    ------------    ------------
          Total noninterest expense                              2,160,336       2,039,184       6,566,923       6,014,165
                                                              ------------    ------------    ------------    ------------
Income before income taxes                                         147,669         368,194         649,004         841,311
Income taxes                                                        54,000         113,885         232,500         274,685
                                                              ------------    ------------    ------------    ------------
NET INCOME                                                    $     93,669    $    254,309    $    416,504    $    566,626
                                                              ============    ============    ============    ============

BASIC EARNINGS PER SHARE                                      $       0.07    $       0.19    $       0.31    $       0.42
                                                              ============    ============    ============    ============
DILUTED EARNINGS PER SHARE                                    $       0.07    $       0.19    $       0.30    $       0.41
                                                              ============    ============    ============    ============

DIVIDENDS PER SHARE                                           $      0.095    $       0.09    $      0.285    $       0.27
                                                              ============    ============    ============    ============


See accompanying notes to unaudited consolidated financial statements.



                                     II-99



                           PITTSBURGH FINANCIAL CORP.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     FOR THE NINE MONTHS ENDED JUNE 30, 2003
                                   (UNAUDITED)




                                                            Additional                               Unearned shares of
                              Comprehensive     Common       Paid In       Retained      Treasury      Employee Stock
                                 Income          Stock       Capital       Earnings       Stock        Ownership Plan
                              -------------  ------------  ------------  ------------  ------------  ------------------
                                                                                   
Balance as of
  September 30, 2002                         $     21,821  $ 16,317,309  $ 16,220,318  $(10,398,322)    $   (720,622)

Exercise of stock options                              --       (48,671)           --       217,810               --

ESOP shares released                                   --        42,934            --            --          180,869

Cash dividends declared                                --            --      (405,331)           --               --

Change in unrealized gain
  on investment securities
  available for sale, net
  of taxes                    $ (1,126,209)            --            --            --            --               --

Less reclassification
  adjustment for gains
  included in net income           542,209             --            --            --            --               --
                              ------------
Other comprehensive loss          (584,000)            --            --            --            --               --

Net income for period         $    416,504             --            --       416,504            --               --
                              ------------
Comprehensive loss            $   (167,496)            --            --            --            --               --
                              ============   ------------  ------------  ------------  ------------     ------------
Balance as of June 30, 2003                  $     21,821  $ 16,311,572  $ 16,231,491  $(10,180,512)    $   (539,753)
                                             ============  ============  ============  ============     ============



                                  Accumulated         Total
                                     Other         Stockholders'
                               Comprehensive Gain     Equity
                               ------------------  -------------
                                             
Balance as of
  September 30, 2002              $  1,581,000     $  23,021,504

Exercise of stock options                   --           169,139

ESOP shares released                        --           223,803

Cash dividends declared                     --          (405,331)

Change in unrealized gain
  on investment securities
  available for sale, net
  of taxes                            (584,000)         (584,000)

Less reclassification
  adjustment for gains
  included in net income                    --                --

Other comprehensive loss                    --                --

Net income for period                       --           416,504

Comprehensive loss                          --                --
                                  ------------     -------------
Balance as of June 30, 2003       $    997,000     $  22,841,619
                                  ============     =============



See accompanying notes to unaudited consolidated financial statements.



                                     II-100



                            PITTSBURGH FINANCIAL CORP
                      CONSOLIDATED STATEMENT OF CASH FLOWS



                                                                          For the nine months ended June 30,
                                                                          ----------------------------------
                                                                                2003              2002
                                                                          ---------------    ---------------
                                                                                     (Unaudited)
                                                                                       
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                 $    416,504       $    566,626
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and goodwill amortization                                     497,773            500,861
     Amortization and accretion of premiums and discounts on
       assets and deferred loan fees                                           (343,855)           387,428
     Amortization of RRP and release of ESOP shares                             282,812            214,808
     Provision for loan losses                                                  180,000            360,000
     Loss on the extinguishment of trust preferred debt                         151,824                 --
     Gain on sale of branches                                                  (453,518)                --
     Gain on sale of investments                                               (542,209)                --
     Deferred tax (benefit) provision                                          (301,706)             9,086
     Other, net                                                               1,886,177            914,027
                                                                           ------------       ------------
Net cash provided by operating activities                                     1,773,802          2,952,836

CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations                                                           (62,888,867)       (39,237,667)
Loan principal repayments                                                    72,253,808         90,651,996
Purchase of loans                                                            (2,919,376)                --
Net foreclosed real estate activity                                             117,274             22,420
Purchases of:
     Available for sale securities                                          (59,241,163)       (44,367,142)
Increase in bank owned life insurance                                          (256,635)        (6,182,840)
Proceeds from sales, maturities and principal repayments of:
     Available for sale securities                                           78,927,092          6,170,303
     Held to maturity securities                                              2,045,088                 --
Purchase of land, premises and equipment                                       (200,772)          (240,753)
Proceeds from disposition of land, premises and equipment                        24,186              4,300
Other, net                                                                      303,000           (220,000)
                                                                           ------------       ------------
Net cash provided by investing activities                                    28,163,635          6,600,617

CASH FLOWS FROM FINANCING ACTIVITIES

Sale of branches                                                            (16,807,002)                --
Net increase in checking, passbook, and money market
     deposit accounts                                                        23,968,453          5,705,143
Net decrease in certificates of deposit                                     (21,192,357)       (27,081,779)
(Decrease)/increase in advances from the Federal Home Loan Bank             (21,341,689)         2,800,997
Cash dividends paid to shareholders                                            (405,331)          (380,349)
Treasury stock issued (purchased)                                               110,130         (1,463,345)
Purchase of guaranteed preferred beneficial interests in subordinated debt   (2,433,820)        (1,126,055)
                                                                           ------------       ------------
Net cash (used in) financing activities                                     (38,101,616)       (21,545,388)

Net (decrease) in cash and cash equivalents                                  (8,164,179)       (11,991,935)
Cash and cash equivalents at beginning of period                             23,818,716         22,360,230
                                                                           ------------       ------------
Cash and cash equivalents at end of period                                 $ 15,654,537       $ 10,368,295
                                                                           ============       ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for interest                                   $ 12,094,865       $ 15,143,866
                                                                           ============       ============
Income taxes paid                                                          $    188,000       $    539,000
                                                                           ============       ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES

Foreclosed mortgage loans transferred to real estate owned                 $    266,168       $    796,549



See accompanying notes to unaudited consolidated financial statements



                                     II-101



                           PITTSBURGH FINANCIAL CORP.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

               The accompanying unaudited interim consolidated financial
        statements of Pittsburgh Financial Corp. (the "Company") have been
        prepared in accordance with accounting principles generally accepted in
        the United States for interim financial information and with the
        instructions to Form 10-Q. Accordingly, they do not include all of the
        information and footnotes required by accounting principles generally
        accepted in the United States. However, such information reflects all
        adjustments (consisting solely of normal recurring adjustments) which
        are, in the opinion of management, necessary for a fair statement of
        results for the interim periods.

               The consolidated financial statements include the accounts of the
        Company and its wholly owned subsidiaries, Pittsburgh Savings Bank
        (d/b/a BankPittsburgh) (the "Bank") and Pittsburgh Home Capital Trust I.
        Pinnacle Settlement Group, LLC is a majority owned subsidiary of the
        Company. FraMal Holdings Corporation is a wholly owned subsidiary of the
        Bank. All significant intercompany balances and transactions have been
        eliminated in consolidation.

               The Company reports comprehensive income in accordance with SFAS
        No. 130, which establishes standards for reporting and display of
        comprehensive income and its components (revenues, expenses, gains, and
        losses) in a full set of general purpose financial statements. SFAS
        No.130 requires that all items that are required to be recognized under
        accounting standards as components of comprehensive income be reported
        in a financial statement that is displayed with the same prominence as
        other financial statements. SFAS No. 130 requires that an enterprise (a)
        classify items of other comprehensive income by their nature in a
        financial statement and (b) display the accumulated balance of other
        comprehensive income separately from retained earnings and additional
        paid-in-capital in the equity section of a statement of financial
        position. For the three months ended June 30, 2003 and 2002, the
        Company's total comprehensive income amounted to $119,000 and
        $1,583,000, respectively. Total comprehensive gain is comprised of net
        income of $94,000 and $254,000, respectively, and other comprehensive
        gain of $25,000 and $1,329,000, net of tax, respectively. For the nine
        months ended June 30, 2003 and 2002, the Company's total comprehensive
        loss amounted to $167,000 and a comprehensive gain of $988,000,
        respectively. Total comprehensive loss is comprised of net income of
        $417,000 and $567,000, respectively, and other comprehensive loss of
        $584,000 and comprehensive gain of $422,000, net of tax, respectively.
        Other comprehensive income consists of unrealized gains and losses on
        investment securities and mortgage-backed securities available for sale,
        net of tax.

               The results of operations for the nine months ended June 30, 2003
        are not necessarily indicative of the results to be expected for the
        year ending September 30, 2003. The unaudited


                                     II-102


        consolidated financial statements and notes thereto should be read in
        conjunction with the audited financial statements and notes thereto for
        the year ended September 30, 2002.


Note 2 - Business

               The Company is a unitary bank holding company headquartered near
        Pittsburgh, in Wexford, PA. The Bank, a wholly owned subsidiary of the
        Company, is a state chartered stock savings bank headquartered in
        Pittsburgh, Pennsylvania, which conducts business from seven offices in
        Allegheny and Butler counties. The Bank is primarily engaged in
        attracting retail deposits from the general public and using such
        deposits together with borrowings to originate loans.

               The Company's other wholly owned subsidiary, Pittsburgh Home
        Capital Trust I (the "Trust") is a Delaware business trust formed in
        December 1997 to issue $11.5 million of 8.56% Cumulative Trust Preferred
        Securities ("Preferred Securities"). These securities represent
        undivided beneficial interests in Pittsburgh Home Capital Trust I. The
        Trust purchased junior subordinated deferrable interest debentures
        ("Subordinated Debt") which were issued by the Company. The Company owns
        all of the common securities issued by the Trust. "See Notes 4 and 6."

               The Company's majority owned subsidiary, Pinnacle Settlement
        Group, LLC ("PSG"), a Pennsylvania limited liability company, was formed
        in April 2002 for the purpose of engaging in the title insurance
        business, settlement and escrow business, and related or ancillary
        activities. The Company has an 80% equity interest and an 84% voting
        interest in PSG. An unrelated limited liability company and two
        individuals have the remaining minority interest.

               FraMal Holdings Corporation is a wholly owned subsidiary of the
        Bank, headquartered in Delaware. The Company and Bank are subject to the
        regulations of certain federal and state agencies and periodic
        examinations by certain regulatory authorities.

               All of the Company's activities are community banking related.

Note 3 - Earnings per share

               Earnings per share are based on the weighted average number of
        shares of common stock. Basic earnings per share are calculated by
        dividing income available to holders of common shares by the weighted
        average number of common shares outstanding during the period. Options,
        warrants, and other potentially diluted securities are excluded from the
        basic calculation, but are included in diluted earnings per share.



                                     II-103


The following table sets forth the computation of basic and diluted earnings per
share:




                                                        Three months ended               Nine months ended
                                                               June 30,                      June 30,
                                                    ------------------------------ ----------------------------
                                                          2003          2002             2003          2002
                                                    -------------- --------------- --------------- ------------
                                                                                    
Numerator for basic and diluted earnings
per share - net income                                   $ 93,669       $ 254,309        $416,504     $566,626

Denominator:
  Denominator for basic earnings per
     share - weighted-average shares                    1,349,595       1,309,507       1,338,707    1,329,637
   Effect of dilutive securities:
   Employee stock options                                  51,497          49,276          39,243       33,945
                                                    -------------- --------------- --------------- ------------
  Dilutive potential common shares                         51,497          49,276          39,243       33,945
                                                    -------------- --------------- --------------- ------------
  Denominator for diluted earnings per
     share - adjusted weighted-average
     shares and assumed conversions                     1,401,092       1,358,783       1,377,950    1,363,582
                                                    ============== =============== =============== ============
  Basic earnings per share                                  $0.07          $ 0.19           $0.31        $0.42
                                                    ============== =============== =============== ============
  Diluted earnings per share                                $0.07           $0.19           $0.30        $0.41
                                                    ============== =============== =============== ============



        The Company accounts for its Employee Stock Ownership Plan (ESOP) in
        accordance with SOP 93-6, "Employers Accounting for Employee Stock
        Ownership Plans,"; shares controlled by the ESOP are not considered in
        the weighted average shares outstanding until the shares are committed
        for allocation to an employee's individual account. In accordance with
        SOP 93-6, uncommitted shares held by the ESOP (75,286 and 96,445 shares
        at June 30, 2003 and 2002, respectively) are excluded from basic average
        shares outstanding.


Note 4 - Recent Accounting and Regulatory Developments

        In June 2001, the Financial Accounting Standards Board (FASB) issued FAS
No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives are no longer amortized but are subject
to annual impairment tests in accordance with the Statement. Other intangible
assets will continue to be amortized over their useful lives. FAS No. 142, as
part of its adoption provisions, required a transitional impairment test to be
applied to all goodwill and other indefinite-lived intangible assets within the
first half of the year of adoption and any resulting impairment loss be
reported as a change in accounting principle. The Company has completed this
impairment test as of October 1, 2002 and determined that goodwill was not
impaired.

        On October 1, 2002, the Company adopted FAS No. 147, "Acquisitions of
Certain Financial Institutions." The Statement provides guidance on the
accounting for acquisition of a financial institution which had previously been
addressed in FAS No. 72, "Accounting for Certain Acquisitions of Banking or
Thrift Institutions." FAS No. 147 states that the excess of the fair value of
liabilities assumed over the fair value of the tangible and identifiable
intangible assets acquired, if acquired in a business combination, represents
goodwill that should be accounted for in accordance


                                     II-104


with FAS No. 142, "Goodwill and Other Intangible Assets. Under FAS No. 142,
goodwill and intangible assets deemed to have indefinite lives are no longer
amortized but are subject to annual impairment tests."

        As a result, the Company ceased amortization of goodwill in the quarter
ended December 31, 2002. Application of these Statements reduced non-interest
expense by $25,000 during the nine months ended June 30, 2003 and increased net
income by $16,500. Had goodwill not been amortized in 2002, non-interest expense
would have been reduced by $8,500 and $25,000 for the three and nine months
ended June 30, 2002 and net income would have increased by $5,610 and $16,500,
respectively.

         In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" ("VIEs"), an interpretation of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to
improve financial reporting of special purpose and other entities. In accordance
with FIN 46, business enterprises that represent the primary beneficiary of
another entity by retaining a controlling financial interest in that entity's
assets, liabilities and results of operating activities must consolidate the
entity in its financial statements. Prior to the issuance of FIN 46,
consolidation generally occurred when an enterprise controlled another entity
through voting interests. Certain VIEs that are qualifying special purpose
entities subject to the reporting requirements of FASB 140 "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
will not be required to be consolidated under the provisions of FIN 46. The
consolidation provisions of FIN 46 apply to VIEs entered into after January 31,
2003, and for preexisting VIEs in the first interim reporting period after June
15, 2003.

         The Company has determined that the provisions of FIN 46 may require
de-consolidation of the subsidiary grantor trust, which issues mandatorily
redeemable preferred securities of the grantor trust. In the event of a
de-consolidation, the grantor trust may be de-consolidated and the junior
subordinated debentures of the Company owned by the grantor trusts would be
disclosed. The Trust Preferred Securities currently qualify as Tier 1 capital of
the Company for regulatory capital purposes. The banking regulatory agencies
have not issued any guidance which would change the capital treatment for Trust
Preferred Securities based on the impact of the adoption of FIN 46. No other
impact of significance on the Company's results of operations, financial
condition or cash flows is expected from the adoption of FIN No. 46.

        In May 2003, the FASB issued Statement of Financial Accounting Standard
("SFAS") No. 150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity." This statement is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003, the Company's fourth quarter of fiscal 2003. This statement
establishes standards for how an issuer classifieds and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within the
statement's scope as a liability. The adoption of this Statement is not expected
to have a significant impact on the Company's financial condition, results of
operations or cash flows.


                                     II-105


Note 5- Stock-Based Compensation

        In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". SFAS No. 148 amends SFAS
No. 123, "Accounting for Stock-Based Compensation" to provide alternative
methods of transition when companies elect to change from the intrinsic method
under Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees", to the fair value method of accounting for stock-based
employee compensation, including stock options. In addition, the Statement
amends the disclosure requirement of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the fair value
based method of accounting for stock-based employee compensation and the effect
of the method used on reported results.

        The Company has a stock-based option plan that is accounted for under
the intrinsic method of accounting.

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





                                                                 Three Months Ended            Nine Months Ended
                                                                       June 30,                     June 30,
                                                            ------------------------------ ---------------------------
                                                                 2003           2002           2003          2002
                                                            ------------- ---------------- ------------ --------------
                                                                                          
Net income, as reported                                          $93,669         $254,309     $416,504       $566,626
Deduct:  Total stock-based employee
Compensation expense under
  Fair value based method                                       (12,396)         (20,361)     (41,464)       (67,791)
   Less tax effect                                                 3,894            6,618       13,184         22,211
                                                            ------------- ---------------- ------------ --------------
Net of related tax effect                                        (8,502)         (13,743)     (28,280)       (45,580)
                                                            ------------- ---------------- ------------ --------------
Pro forma net income                                             $85,167         $240,566     $388,224       $521,046
                                                            ============= ================ ============ ==============
Earnings per share
  Basic - As reported                                              $0.07            $0.19        $0.31          $0.42
  Basic - Pro forma                                                $0.06            $0.18        $0.29          $0.39
  Diluted - As reported                                            $0.07            $0.19        $0.30          $0.41
  Diluted - Pro forma                                              $0.06            $0.18        $0.28          $0.38





                                     II-106


Note 6 - Guaranteed Preferred Beneficial Interests in Subordinated Debt

         On January 30, 1998, the Company issued, through a wholly owned
subsidiary, Pittsburgh Home Capital Trust I (the Trust) 8.56% Cumulative Trust
Preferred Securities (Preferred Securities) with an aggregate liquidation amount
of $11,500,000 which are redeemable at the option of the Company on or after
January 30, 2003. The Company has guaranteed the payment of distributions and
payments on liquidation of redemption of the Preferred Securities, but only in
each case to the extent of funds held by the Trust.

         During the fiscal year ended September 30, 2002, the Company
repurchased on the open market 119,300 shares or $1.2 million liquidation amount
of Preferred Securities, at an average cost of $9.47 per share. In October 2002,
the Company repurchased an additional 62,500 shares or $625,000 liquidation
amount of Preferred Securities at an average cost of $10.26 per share. As of
June 30, 2003, the Company had repurchased a total of 181,800 shares ($1.8
million liquidation amount) or 19.1% of the Preferred Securities outstanding.

         On May 2, 2003, the Company redeemed $2.0 million (200,000 shares) of
the Preferred Securities at a redemption price equal to the liquidation amount
of $10.00, plus accrued and unpaid distributions thereon through May 2, 2003. As
a result of the redemption, the Company recognized a loss of approximately
$101,000 which was primarily related to the write off of unamortized issuance
costs.

Note 7 - Subsequent Events

        On August 8, 2003, First Commonwealth Financial Corporation, the holding
company for First Commonwealth Bank, and the Company announced the execution of
a definitive agreement under which the Company and Bank would merge into First
Commonwealth Financial Corporation and First Commonwealth Bank, respectively.
Under the terms of the agreement, the shareholders of the Company can elect to
receive $20.00 in cash or an equivalent value of First Commonwealth common stock
for each Company 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 the First Commonwealth common stock.

        The definitive agreement was unanimously approved by the Board of
Directors of both organizations. The transaction is subject to all required
regulatory approvals and the approval by the Company's shareholders. The
transaction is expected to be completed by December 31, 2003.





                                     II-107


                                 PART I - ITEM 2

                       MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

         At June 30, 2003, the Company's total assets amounted to $376.4 million
compared to $413.7 million at September 30, 2002, a decrease of $37.3 million,
or 9.0%. Cash and interest-bearing deposits decreased $8.1 million, or 34.0%, to
$15.7 million at June 30, 2003, compared to $23.8 million at September 30, 2002.
The Company's loans receivable, net of allowance, decreased $6.7 million, or
2.8%, to $234.1 million at June 30, 2003 compared to $240.8 million at September
30, 2002. The decrease is primarily attributable to the extraordinarily high
level of repayments of residential 1-4 family mortgage loans that the Company
has experienced as a result of the overall decline in market interest rates.
Investments and mortgage-backed securities decreased $21.5 million, or 17.3%,
from $124.3 million at September 30, 2002 to $102.8 million at June 30, 2003.
The decrease is primarily due to the sale of $32.9 million in mortgage-backed
securities. The Company's investment in FHLB Stock decreased $100,000 from $8.1
million at September 30, 2002 to $8.0 million at June 30, 2003. Bank owned life
insurance totaled $6.5 million at June 30, 2003 compared to $6.3 million at
September 30, 2002.

         Total liabilities decreased by $37.0 million, or 9.5%, to $353.6
million at June 30, 2003 compared to $390.6 million at September 30, 2002.
Deposits decreased by $14.5 million, or 7.4%, to $181.7 million at June 30, 2003
compared to $196.2 million at September 30, 2002. During the quarter ended
December 31, 2002, the Company sold its Bethel Park and Mt. Oliver offices and
deposits in two separate transactions. Total deposits sold in these transactions
were approximately $16.4 million. Excluding the sale of the two branch offices,
retail deposits increased $2.9 million and wholesale certificates of deposit
decreased $1.0 million for the nine months ended June 30, 2003. Borrowings
decreased $21.4 million, or 11.8%, to $160.5 million at June 30, 2003 compared
to $181.9 million at September 30, 2002. Guaranteed preferred beneficial
interest in subordinated debt decreased $2.2 million, or 22.4%, from $9.8
million at September 30, 2002 to $7.6 million at June


                                     II-108


30, 2003 as the Company redeemed $2.0 million of the Preferred Securities at a
redemption price equal to the liquidation amount of $10.00.

        Total stockholders' equity decreased $200,000, or 0.9%, to $22.8 million
at June 30, 2003 compared to $23.0 million at September 30, 2002.

RESULTS OF OPERATIONS

        GENERAL. The Company reported net income for the quarter ended June 30,
2003 of $94,000 as compared to net income of $254,000 for the same quarter in
2002. For the nine months ended June 30, 2003, net income was $417,000 as
compared to $567,000 for the nine months ended June 30, 2002. The decrease of
$160,000 in net income for the three months ended June 30, 2003 compared to the
three months ended June 30, 2002 was primarily the result of a $474,000 decrease
in net interest income and a $121,000 increase in noninterest expense, which
were partially offset by a $374,000 increase in noninterest income, and a
$60,000 decrease in income tax expense. The decrease of $150,000 in net income
for the nine months ended June 30, 2003 compared to the nine months ended June
30, 2002 was primarily the result of a $976,000 decrease in net interest income,
a $553,000 increase in noninterest expense and an $42,000 decrease in income
taxes, partially offset by a $1.2 million increase in noninterest income and a
$180,000 decrease in provision for loan losses.

        For the quarter ended June 30, 2003, the Company recognized a pre-tax
net gain of $298,000 on the sale of investment securities and a pre-tax net loss
of $101,000 on the extinguishment of trust preferred debt compared to a pre-tax
net gain of $9,000 for the sale of foreclosed real estate for the quarter ended
June 30, 2002. For the nine months ended June 30, 2003, the Company recognized a
pre-tax net gain of $454,000 on the sale of branch deposits and branch offices,
a pre-tax net gain of $542,000 on the sale of investment securities, and a
$152,000 pre-tax net loss on the early extinguishment of trust preferred debt,
compared to a pre-tax gain on investment sales of $8,000, and a pre-tax gain of
$22,000 on the sale of foreclosed real estate for the nine months ended June 30,
2002.

         The Company's average interest rate spread decreased 38 basis points
from 1.83% for the three months ended June 30, 2002 to 1.45% for the three
months ended June 30, 2003. The decrease was primarily attributable to a
decrease in the yield on the Company's earning assets of 98 basis points from
6.82% for the three months ended June 30, 2002 to 5.84% for the three months
ended June 30, 2003 partially offset by a decrease in the Company's cost of
funds of 60 basis points from 4.99% for the three months ended June 30, 2002 to
4.39% for the three months ended June 30, 2003. As a result of the above,
combined with a smaller earning asset base, the Company's net interest income
decreased for the quarter by $474,000 or 23.4%. The Company's interest rate
spread decreased from 1.73% for the nine months ended June 30, 2002 to 1.50% for
the nine months ended June 30, 2003. The decrease was primarily due to a
decrease in the Company's yield on earning assets of 89 basis points from 6.90%
to 6.01%, offset by a decrease in the Company's cost of funds of 66 basis points
from 5.17% for the nine months ended June 30, 2002 to 4.51% for the nine months
ended June 30, 2003. In addition, the Company's average total earning assets
decreased


                                     II-109


$24.6 million from $397.0 million to $372.4 million. As a result of the above,
the Company's net interest income decreased for the nine months ended June 30,
2003 by $976,000 or 16.5%.

         Noninterest income increased $374,000 or 85.2% and $1.2 million or
87.8% for the quarter and nine months ended June 30, 2003 when compared to the
same periods in 2002. The increases were primarily due to an increase in fee
income, income recognized from bank owned life insurance, and fees generated
from the Company's majority owned loan settlement subsidiary. Noninterest
expense increased $121,000 or 5.9% and 553,000 or 9.2% for the quarter and nine
months ended June 30, 2003 when compared to the same periods in 2002. The
increases were primarily related to costs associated with the aforementioned
loan settlement subsidiary.

         The Company reported diluted earnings per share of $.07 and $.30 for
the quarter and nine months ended June 30, 2003, compared to $.19 and $.41 for
the same periods ended June 30, 2002.

         INTEREST INCOME. Interest income decreased $1.44 million or 21.5% for
the quarter ended June 30, 2003, compared to the same period in 2002. Interest
income decreased $3.78 million or 18.4% for the nine months ended June 30, 2003,
compared to the same period in 2002. The decrease of $1.44 million for the
quarter is primarily the result of a 98 basis point decrease in the average
yield on earning assets from 6.82% for the quarter ended June 30, 2002 to 5.84%
for the quarter ended June 30, 2003. In addition, the Company's average total
earning assets decreased $22.0 million from $393.8 million to $360.8 million for
the quarter and $24.6 million from $397.0 million to $372.4 million for the nine
months ended June 30, 2003.

         Interest income on loans receivable decreased $914,000 or 18.6% and
$2.9 million or 19.3% for the quarter and nine months ended June 30, 2003 when
compared to the same periods in 2002. The decreases in interest income for the
quarter and nine months ended June 30, 2003 were primarily the result of the
$18.2 million and $72.3 million in repayments on residential mortgage loans and
mortgage backed securities due to the low interest rate environment. The average
balance of loans receivable decreased by $26.7 million from $258.8 million for
the quarter ended June 30, 2002 to $232.1 million for the quarter ended June 30,
2003 and $36.9 million from $269.6 million for the nine months ended June 30,
2002 to $232.7 million for the nine months ended June 30, 2003, and the related
yields decreased .70% from 7.60% to 6.90% for the quarter and .49% from 7.59% to
7.10% for the nine months ended June 30, 2003, when compared to the same periods
in 2002.




                                     II-110


Loans receivable, net at June 30, 2003 and September 30, 2002 are summarized
below:



                                             June 30, 2003       September 30, 2002
                                             -------------       ------------------
                                                         
First mortgage loans:
Secured by 1-4 family residence              $ 134,084,753         $ 153,895,645
1-4 family residential construction              1,815,800             2,771,400
1-4 family residential construction -
  builder                                        5,463,665             7,508,450
Commercial real estate -construction             9,460,969             9,733,889
Commercial real estate                          61,305,507            45,231,963
Less loans in process                           (3,879,567)           (4,496,300)
Deferred loan costs (net of fees)                  120,079               328,695
Unamortized premium on mortgage loans              176,358                85,269
                                             -------------         -------------
Total first mortgage loans                     208,547,564           215,059,011
Home equity loans and lines of credit           16,388,571            18,549,126
Other loans                                     12,247,674            10,220,792
Less allowance for loan losses                  (3,123,742)           (3,023,218)
                                             -------------         -------------
                                             $ 234,060,067         $ 240,805,711
                                             =============         =============




        Investment and mortgage-backed security interest income decreased by
$519,000 or 29.4% and $776,000 or 15.2% for the three and nine months ended June
30, 2003 compared to the same periods in 2002. The average balance of investment
and mortgage-backed securities totaled $115.8 million with a weighted average
yield of 4.30% and $128.5 million with a weighted average yield of 4.49% for the
three and nine months ended June 30, 2003 compared to $125.5 million with a
weighted average yield of 5.62% and $118.2 million with a weighted average yield
of 5.76% for the same periods in 2002. The decreases in the average balances are
primarily due to the extraordinary high level of prepayments as well as
investment sales. During the quarter and nine months ended June 30, 2003, the
Company sold $12.1 million and $32.9 million in mortgage backed securities for a
gain of $298,000 and $542,000, respectively.




                                     II-111


     Average Balances, Net Interest Income and Yields Earned and Rates Paid
                       For the three months ended June 30,



                                                               2003                                            2002
                                              -----------------------------------------        ------------------------------------

                                              Average                         Average          Average                     Average
                                              Balance         Interest       Yield/Rate        Balance       Interest     Yield/Rate
                                              -------         --------       ----------        --------      --------     ----------
                                                                                                       
(Dollars in Thousands)
Interest-earning assets:
 Investment securities                       $ 45,082           $542           4.81%           $ 38,065          $612        6.43%
 Tax exempt securities                          4,683             52           4.44               1,898            20        4.21
 Mortgage-backed securities                    66,017            651           3.94              85,547         1,132        5.29
Loans receivable:
 First mortgage loans                         132,288          2,150           6.50             175,185         3,301        7.54
 Commercial loans                              81,518          1,429           7.01              62,204         1,186        7.63
 Other loans                                   18,289            426           9.32              21,373           432        8.08
                                              -------          -----                            -------         -----
Total loans receivable                        232,095          4,005           6.90             258,762         4,919        7.60
Other interest-earning assets                  12,915             19           0.59               9,576            30        1.25
                                              -------         ------                            -------        ------
Total interest-earning assets                 360,792         $5,269           5.84%            393,848        $6,713        6.82%
                                                                               ====                                          ====
Non-interest earning assets                    19,185                                            18,901
                                             --------                                           -------
Total assets                                 $379,977                                          $412,749
                                             ========                                          ========

Interest-bearing liabilities:
 Deposits                                    $169,253         $1,175           2.78%           $185,622         $1,762       3.80%
 FHLB advances and other                      160,903          2,366           5.88             179,642          2,711       6.04
 Guaranteed preferred beneficial
   interest in subordinated debt                8,349            173           8.29              10,307            211       8.19
                                             --------         ------                           --------         ------
Total interest-bearing liabilities           $338,505         $3,714           4.39%           $375,571         $4,684       4.99%
                                                                               ====                                          ====
Non-interest bearing liabilities               18,666                                            14,966
                                             --------                                          --------
Total liabilities                             357,171                                           390,537
Stockholders' equity                           22,806                                            22,212
                                              -------                                          --------
Total liabilities and stockholders' equity   $379,977                                          $412,749
                                             ========                                          ========

Net interest-earning assets                   $22,287                                           $18,277
                                              =======                                          ========
Net interest income/interest rate spread                      $1,555           1.45%                            $2,029       1.83%
                                                               =====           ====                             ======       ====
Net interest margin                                                            1.72%                                         2.06%
                                                                               ====                                          ====






                                     II-112


     Average Balances, Net Interest Income and Yields Earned and Rates Paid
                       For the nine months ended March 31,




                                                               2003                                            2002
                                              -----------------------------------------         ------------------------------------

                                              Average                         Average          Average                    Average
                                              Balance        Interest       Yield/Rate         Balance      Interest     Yield/Rate
                                              -------        --------       ----------         -------      --------     ----------
                                                                                                       
(Dollars in Thousands)
Interest-earning assets:
 Investment securities                       $ 45,727        $  1,728             5.04%         $ 36,403      $ 1,862         6.82%
 Tax exempt securities                          3,958             140             4.72               633           20         4.21
 Mortgage-backed securities                    78,841           2,464             4.17            81,207        3,226         5.30
Loans receivable:
 First mortgage loans                         138,033           7,348             7.10           189,370       10,663         7.51
 Commercial loans                              75,673           3,992             7.03            57,715        3,295         7.61
 Other loans                                   19,041           1,050             7.35            22,506        1,390         8.23
                                             --------         -------                           --------      -------
Total loans receivable                        232,747          12,390             7.10           269,591       15,348         7.59
Other interest-earning assets                  11,086              70              .84             9,834          113         1.53
                                             --------        --------                           --------      -------
Total interest-earning assets                 372,359         $16,792             6.01%          397,035      $20,549         6.90%
                                                                                  ====                                        ====
Non-interest earning assets                    18,324                                            16,748
                                             --------                                          --------
Total assets                                 $390,683                                          $413,783
                                             ========                                          ========
Interest-bearing liabilities:
 Deposits                                    $172,206         $ 3,889             3.01%        $190,230      $ 5,908         4.14%
 FHLB advances and other                      169,785           7,365             5.78          177,819        8,082         6.06
 Guaranteed preferred beneficial
   interest in subordinated debt                9,269             615             8.85           10,350          680         8.76
                                             --------         -------                          --------      -------
Total interest-bearing liabilities           $351,260         $11,869             4.51%        $378,399      $14,670         5.17%
                                                                                  ====                                       ====
Non-interest bearing liabilities               16,507                                            13,950
                                             --------                                          --------
Total liabilities                             367,767                                           392,349
Stockholders' equity                           22,916                                            22,067
                                             --------                                          --------
Total liabilities and stockholders' equity   $390,683                                          $414,416
                                             ========                                          ========

Net interest-earning assets                  $ 21,099                                          $ 18,636
                                             ========                                          ========
Net interest income/interest rate spread                      $ 4,923             1.50%                      $ 5,879         1.73%
                                                              =======             ====                       =======         ====
Net interest margin                                                               1.76%                                      1.97%
                                                                                  ====                                       ====




                                     II-113



        INTEREST EXPENSE. Interest expense decreased $970,000 or 20.7% and $2.8
million or 19.1% for the three and nine months ended June 30, 2003, compared to
the same periods in 2002. The average cost of funds decreased to 4.39% from
4.99% and to 4.51% from 5.17%, respectively, for the three and nine months ended
June 30, 2003 when compared to the same periods in 2002. The average balance of
interest-bearing liabilities decreased $37.1 million and $27.1 million for the
three and nine months ended June 30, 2003 when compared to the same periods in
2002. The decrease in interest-bearing liabilities was primarily the result of
the sale of the Company's Bethel Park and Mt. Oliver offices and deposits.
Average deposits decreased $16.4 million or 8.8% and $18.0 million or 9.47%,
respectively, for the three and nine months ended June 30, 2003 when compared to
the same periods in 2002. Average borrowed funds decreased $18.7 million or
10.4% and $8.0 million or 4.5%, respectively, for the three and nine months
ended June 30, 2003 when compared to the same periods in 2002. Interest expense
associated with the trust preferred securities of Pittsburgh Home Capital Trust
I totaled $173,000 and $615,000 for the three and nine months ended June 30,
2003, compared to $211,000 and $680,000 for the three and nine months ended June
30, 2002.


         PROVISION FOR LOAN LOSSES. It is management's policy to maintain an
allowance for estimated losses based on the risk of loss in the loan portfolio.
Management's periodic evaluation of the adequacy of the allowance is based on
the Company's loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay, the
estimated value of the underlying collateral and current economic conditions.
Management classifies all delinquent assets according to risk. A reserve level
is estimated by management for each category of classified loans, with an
estimated percentage applied to the delinquent loan category balance. Activity
for the period under analysis (charge offs, recoveries) is also taken into
account as a basis for adjusting estimated losses to actual experience. While
management has allocated the allowance to different loan categories, the
allowance is general in nature and is available for the loan portfolio in its
entirety.

         Activity in the allowance for loan losses is summarized as follows for
the nine months ended June 30, 2003 and 2002:




                                         Nine months ended
                                 --------------------------------
                                 June 30, 2003      June 30, 2002
                                 -------------      -------------
                                                
Balance at beginning of year      $ 3,023,218         $ 2,644,172
Provision charged to income           180,000             360,000
Chargeoffs                            (87,853)           (116,208)
Recoveries                              8,377             111,666
                                  -----------         -----------
Balance at end of period          $ 3,123,742         $ 2,999,630
                                  ===========         ===========




                                     II-114


        The Company designates all loans that are 90 or more days past due as
non-performing. Generally, when loans are classified as non-performing, unpaid
accrued interest is a reduction of interest income on loans receivable and is
only recognized when cash payments are received.

        The Company's non-performing assets decreased from $4.8 million at
September 30, 2002 to $4.6 million at June 30, 2003. This $200,000 decrease was
primarily attributable to a $438,000 decrease in non-accruing commercial real
estate loans, a $118,000 decrease in real estate owned, a $100,000 decrease in
non-accruing construction loans, a $21,000 decrease in non-accruing consumer
loans which were partially offset by a $503,000 increase in nonaccruing
one-to-four family mortgage loans. Although non-performing assets increased in
the one-to-four family portfolios, most of these loans are secured by property
located in the Company's market area. During the nine months ended June 30,
2003, the majority of the properties held in real estate owned were sold at or
near their net realizable value.

        NONINTEREST INCOME. Noninterest income increased by $374,000 or 85.3%
and $1.2 million or 87.8% for the three and nine months ended June 30, 2003
compared to the same periods in 2002. As noted above, the Company recognized a
pre-tax net gain of $298,000 on investment sales and a $101,000 pretax net loss
on the early extinguishment of trust preferred debt for the three months ended
June 30, 2003, as compared to a pre-tax gain of $9,000 on the sale of foreclosed
real estate for the three months ended June 30, 2002. For the nine months ended
June 30, 2003, the Company recognized a pre-tax net gain of $454,000 on the sale
of branch deposits and branch offices, a $542,000 pre-tax net gain on investment
sales and a $152,000 pre-tax net loss on the early extinguishment of trust
preferred debt. This compares to a pre-tax net gain on investment sales of
$8,000 and a pre-tax gain of $22,000 on the sale of foreclosed real estate for
the nine months ended June 30, 2002.

        Service charges and other fees increased $187,000 to $470,000 and
$309,000 to $1.2 million for the three and nine months ended June 30, 2003,
compared to $283,000 and $885,000 for the same periods in 2002. The increases in
service charges and other fees are primarily the result of fees generated from
the Company's majority owned loan settlement subsidiary and, to a lesser extent,
increases to the Company's fee structure to remain competitive in the
marketplace. Income from bank owned life insurance, which was purchased during
the three months ended December 31, 2001, totaled $93,000 and $279,000 for the
three and nine months ended June 30, 2003, compared to $99,000 and $202,000 for
the same periods in 2002. Other income decreased $4,000 to $53,000 and decreased
$65,000 to $156,000 for the three and nine months ended June 30, 2003, compared
to for the same periods in 2002.

         NONINTEREST EXPENSE. Noninterest expense increased by $121,000 or 5.9%,
and $553,000 or 9.2%, respectively, for the three and nine months ended June 30,
2003, compared to the same periods in 2002. Compensation and other benefits
increased $122,000 to $1.1 million and $445,000 to $3.3 million for the three
and nine months ended June 30, 2003 compared to $1.0 million and $2.9 million
for the three and nine months ended June 30, 2002. The primary reasons for the
increases in compensation and other benefits include salaries and benefits for
the loan settlement subsidiary, severance costs associated with a former
officer, the continued expansion of the Bank's commercial


                                     II-115


lending and cash management departments, and normal salary adjustments. Premises
and occupancy costs decreased $12,000 to $425,000, and increased $34,000 to
$1.29 million for the three and nine months ended June 30, 2003 compared to
$437,000 and $1.26 million for the three and nine months ended June 30, 2002.
Marketing costs decreased $16,000 to $66,000, and $20,000 to $243,000 for the
three and nine months ended June 30, 2003 from $82,000 and $264,000 for the
three and nine months ended June 30, 2002.


         PROVISION FOR INCOME TAXES. The Bank recognized a provision for income
taxes of $54,000 and $232,500 for the three and nine months ended June 30, 2003,
compared to $114,000 and $275,000 for the same periods in 2002. The effective
tax rates during the three and nine months ended June 30, 2003 and 2002 were
36.6% and 35.8%, and 30.9% and 32.6%, respectively.

ASSET AND LIABILITY MANAGEMENT

         Management presently monitors and evaluates the potential impact of
interest rate changes upon the level of net interest income and the economic
value of the Company's equity on a quarterly basis. The economic value of equity
("EVE") analysis approximates a total return for the Company's financial
condition under the different interest rate scenarios. The Company focuses on
the impact of a plus and minus 200 basis point immediate interest rate shock on
its net interest income. The Company believes that simulation modeling enables
the Company to more accurately evaluate and manage the possible effects on net
interest income due to the exposure to changing market interest rates, the slope
of the yield curve and different prepayment and deposit decay assumptions under
various interest rate scenarios. At June 30, 2003, the Company's simulation
model indicated that the Company's statement of financial condition is asset
sensitive.

         The following table presents the Company's EVE as of June 30, 2003:



                                       Economic Value of Portfolio Equity
     ----------------------------------------------------------------------------------------------------------
       Change in                                     Estimated EVE
     Interest Rates                                 as a Percentage            Amount of
     (basis points)           Estimated EVE            of Assets                Change               Percentage
     --------------           -------------            ---------                ------               ----------
      >                                                                                 
        +200                      8,643                   2.3%                 (2,720)                (23.9%)
        +100                     11,128                   2.9                    (235)                  (2.1)
          --                     11,363                   3.0                      --
        -100                      6,698                   1.8                  (4,665)                 (41.1)
        -200                      5,895                   1.6                  (5,468)                 (48.1)





                                     II-116



LIQUIDITY AND CAPITAL RESOURCES

        The Company's primary sources of funds are deposits, FHLB borrowings,
repayments, prepayments and maturities of outstanding loans, maturities of
investment securities and other short-term investments, and funds provided from
operations. While scheduled loan repayments and maturing investment securities
and short-term investments are relatively predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by the movement of interest
rates in general, economic conditions and competition. The Company manages the
pricing of its deposits to maintain a deposit balance deemed appropriate and
desirable. In addition, the Company invests in short-term investment securities
and interest-earning assets which provide liquidity to meet lending
requirements. Although the Company's deposits have historically represented the
majority of its total liabilities, the Company also utilizes other borrowing
sources, primarily borrowings from the FHLB of Pittsburgh. At June 30, 2003, the
Company had $140.5 million of outstanding borrowings from the FHLB of
Pittsburgh. The maximum remaining borrowing capacity at June 30, 2003 was
approximately $50.4 million.

        Liquidity management is both a daily and long-term function of business
management. The Bank uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing savings certificates and savings withdrawals, to
fund loan commitments and to maintain a portfolio of mortgage-backed and
investment securities. At June 30, 2003, the total approved loan commitments
outstanding amounted to $34.3 million including $3.9 million in loans in
process, and unused lines of credit amounted to $14.7 million. Certificates of
deposit scheduled to mature in one year or less at June 30, 2003, totaled $44.9
million. Management believes that a significant portion of maturing deposits
will remain with the Bank, based upon historical precedence.

        Under federal regulations, the Bank is required to maintain specific
amounts of capital. The following table sets forth certain information
concerning the Bank's regulatory capital.



                                                     Tier I        Tier I           Total
                                                    Leverage     Risk-Based       Risk-Based
                                                    Capital       Capital          Capital
                                                    -------       -------          -------
                                                                        
Regulatory capital as a percentage                   7.56%          12.27%          13.53%
Minimum capital required as a percentage             4.00%           4.00%           8.00%
Well-capitalized requirement                         5.00%           6.00%          10.00%




        Recently, the Federal Reserve has become aware that FIN No. 46 may have
implications on how trust preferred securities are reported on bank holding
companies' financial statements. In response, the Board of Governors of the
Federal Reserve System issued a supervisory letter on July 2, 2003, instructing
bank holding companies to continue to include the trust preferred securities in
their Tier 1 capital for regulatory capital purposes until notice is given to
the contrary. The Federal Reserve will review the regulatory implications of any
accounting treatment changes and, if necessary or warranted, provide further
guidance. The Federal Reserve may or may not allow institutions to continue to
include trust preferred securities in Tier 1 capital for regulatory capital
purposes.


                                     II-117



"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

        In addition to historical information, forward-looking statements are
contained herein that are subject to risks and uncertainties that could cause
actual results to differ materially from those reflected in the forward-looking
statements. Factors that could cause future results to vary from current
expectations, include, but are not limited to, the impact of economic conditions
(both generally and more specifically in the markets in which the Company
operates), the impact of competition for the Company's customers from other
providers of financial services, the impact of government legislation and
regulation (which changes from time to time and over which the Company has no
control), and other risks detailed in this Form 10-Q and in the Company's other
Securities and Exchange Commission ("SEC") filings. 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 Company undertakes no
obligation to publicly revise these forward-looking statements, to reflect
events or circumstances that arise after the date hereof. Readers should
carefully review the risk factors described in other documents the Company files
from time to time with the SEC.




                                     II-118

                                 PART I - ITEM 3

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Management presently monitors and evaluates the potential impact of
interest rate changes upon the level of net interest income and the economic
value of the Company's equity ("EVE") on a monthly basis. EVE is the difference
between incoming and outgoing discounted cash flows from assets, liabilities,
and off-balance sheet contracts. The Company focuses on the impact of a plus and
minus 200 basis point immediate interest rate shock on its net interest income.
The Company utilizes the Sendero system for its in-house modeling efforts and
also works with an outside banking consultant in modeling its interest rate risk
position.


        Quantitative and qualitative disclosures about market risk are presented
in Item 7A of the Company's Annual Report on Form 10-K for the year ended
September 30, 2002, filed with the SEC on December 23, 2002. See also "Part I,
Item 2, Management's Disccussion and Analysis of Financial Condition and Results
of Operations - Results of Operations - Asset and Liability Management," for a
discussion of the Company's EVE at June 30, 2003. Management believes there have
been no material changes in the Company's market risk since September 30, 2002.


                                 PART I - ITEM 4

                             CONTROLS AND PROCEDURES

        Our management evaluated, with the participation of our Chief Executive
Officer and Chief Financial Officer, the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934) as of the end of the period covered by this
report. Based on such evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and regulations and are operating in an effective manner.



                                    III-119


        No change in our internal control over financial reporting (as defined
in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934)
occurred during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.



                           PITTSBURGH FINANCIAL CORP.

                                     PART II

Item 1. Legal Proceedings

               Neither the Company nor the Bank is involved in any pending legal
               proceedings other than non-material legal proceedings occurring
               in the ordinary course of business.

Item 2. Changes in Securities

               Not applicable.

Item 3. Defaults Upon Senior Securities

               Not applicable.

Item 4. Submission of Matters to a Vote of Security-Holders

               Not applicable.

Item 5. Other Information

               Not applicable.

Item 6. Exhibits and Reports on Form 8-K

               (a)     Exhibits:


                                     II-120


                       31.1 Certification of Chief Executive Officer Pursuant to
               Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934
               and Section 302 of the Sarbanes-Oxley Act of 2002

                       31.2 Certification of the Chief Financial Officer
               Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange
               Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 (b)
               No Form 8-K reports were filed during the quarter.

                       32.1 Certification of Chief Executive Officer Pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002
               (18 U.S.C. 1350).

                       32.2 Certification of Chief Financial Officer Pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002
               (18 U.S.C. 1350).

              (b) On April 28, 2003, the Registrant filed a Form 8-K under Item
                  9 to file their earnings release for the quarter ended
                  March 31, 2003.

                                   SIGNATURES


        Pursuant to the requirements 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.



                             PITTSBURGH FINANCIAL CORP.



Date: August 14, 2003        By: /s/J.Ardie Dillen
                                 ------------------
                                 J. Ardie Dillen
                                 Chairman, President and Chief Executive Officer



Date: August 14, 2003        By: /s/ Michael J. Kirk
                                 --------------------
                                 Michael J. Kirk
                                 Executive Vice President and Chief
                                 Financial Officer




                                     II-121


                                    ANNEX III

                        SANDLER O'NEILL FAIRNESS OPINION


October 30, 2003


Board of Directors
Pittsburgh Financial Corp.
1001 Village Run Road
Wexford, Pennsylvania  15090


Ladies and Gentlemen:

         Pittsburgh Financial Corp. ("Pittsburgh Financial") and its
wholly-owned subsidiary, Pittsburgh Savings Bank, have entered into an Agreement
and Plan of Merger, dated as of August 8, 2003 (the "Agreement"), with First
Commonwealth Financial Corporation ("First Commonwealth") and its wholly-owned
subsidiary, First Commonwealth Bank, pursuant to which Pittsburgh Financial will
be merged with and into First Commonwealth (the "Merger"). Under the terms of
the Agreement, upon consummation of the Merger, each share of Pittsburgh
Financial common stock, par value $.01 per share, issued and outstanding
immediately prior to the Merger (the "Pittsburgh Financial Shares"), other than
certain shares specified in the Agreement, will be converted into the right to
receive, at the election of the holder thereof, either (a) $20.00 in cash
without interest, or (b) a number of shares of First Commonwealth common stock,
par value $1.00 per share, equal to the Exchange Ratio, subject to the election
and proration procedures set forth in the Agreement which provide generally,
among other things, that an aggregate of 569,952 Pittsburgh Financial Shares
shall be converted into cash and the remaining shares shall be converted into
First Commonwealth common stock (the "Merger Consideration"). If holders of less
than 569,952 shares elect cash, First Commonwealth may elect to reduce (but not
below the total number of shares electing cash) the total number of shares to be
converted into cash. The Exchange Ratio shall be determined by dividing $20.00
by the average closing price of First Commonwealth common stock for the ten
trading days ending three trading days prior to the closing of the Merger. The
terms and conditions of the Merger are more fully set forth in the Agreement.
You have requested our opinion as to the fairness, from a financial point of
view, of the Merger Consideration to the holders of Pittsburgh Financial Shares.

         Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement, together with certain of the exhibits thereto; (ii)
certain publicly available financial statements and other historical financial
information of Pittsburgh Financial that we deemed relevant; (iii) certain
publicly available financial statements


                                     III-1




Board of Directors
Pittsburgh Financial Corp.
October 30, 2003
Page 2


and other historical financial information of First Commonwealth that we deemed
relevant; (iv) financial projections for Pittsburgh Financial for the year
ending September 30, 2003 and net income projections for the year ending
September 30, 2004 provided by and reviewed with management of Pittsburgh
Financial; (v) financial projections for First Commonwealth for the year ending
December 31, 2003 provided by management of First Commonwealth and earnings per
share estimates for First Commonwealth for the year ending December 31, 2004
published by I/B/E/S; (vi) the pro forma financial impact of the Merger on First
Commonwealth, based on assumptions relating to earnings, transaction expenses,
purchase accounting adjustments and cost savings determined by the senior
managements of Pittsburgh Financial and First Commonwealth; (vii) the publicly
reported historical price and trading activity for Pittsburgh Financial's and
First Commonwealth's common stock, including a comparison of certain financial
and stock market information for Pittsburgh Financial and First Commonwealth
with similar publicly available information for certain other companies the
securities of which are publicly traded; (viii) the financial terms of certain
recent business combinations in the savings institutions industry, to the extent
publicly available; (ix) the current market environment generally and the
banking environment in particular; and (x) such other information, financial
studies, analyses and investigations and financial, economic and market criteria
as we considered relevant. We also discussed with certain members of senior
management of Pittsburgh Financial the business, financial condition, results of
operations and prospects of Pittsburgh Financial and held similar discussions
with certain members of senior management of First Commonwealth regarding the
business, financial condition, results of operations and prospects of First
Commonwealth.

         In performing our review, we have relied upon the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by Pittsburgh Financial or First
Commonwealth or their respective representatives or that was otherwise reviewed
by us and have assumed such accuracy and completeness for purposes of rendering
this opinion. We have further relied on the assurances of management of
Pittsburgh Financial and First Commonwealth that they are not aware of any facts
or circumstances that would make any of such information inaccurate or
misleading. We have not been asked to and have not undertaken an independent
verification of any of such information and we do not assume any responsibility
or liability for the accuracy or completeness thereof. We did not make an
independent evaluation or appraisal of the specific assets, the collateral
securing assets or the liabilities (contingent or otherwise) of Pittsburgh
Financial or First Commonwealth or any of their subsidiaries, or the
collectibility of any such assets, nor have we been furnished with any such
evaluations or appraisals. We did not make an independent evaluation of the
adequacy of the allowance for loan losses of Pittsburgh Financial or First
Commonwealth nor have we reviewed any individual credit files relating to
Pittsburgh Financial or First Commonwealth. We have assumed, with your consent,
that the respective allowances for loan losses for both Pittsburgh Financial and
First Commonwealth are adequate to cover such


                                     III-2




Board of Directors
Pittsburgh Financial Corp.
October 30, 2003
Page 3


losses and will be adequate on a pro forma basis for the combined entity. With
respect to the financial projections and estimates for Pittsburgh Financial and
First Commonwealth and all projections of transaction costs, purchase accounting
adjustments and expected cost savings prepared by and/or reviewed with the
managements of Pittsburgh Financial and First Commonwealth and used by Sandler
O'Neill in its analyses, Sandler O'Neill assumed that they reflected the best
currently available estimates and judgments of the respective managements of the
respective future financial performances of Pittsburgh Financial and First
Commonwealth and that such performances will be achieved. We express no opinion
as to such financial projections or the assumptions on which they are based. We
have also assumed that there has been no material change in Pittsburgh
Financial's or First Commonwealth's assets, financial condition, results of
operations, business or prospects since the date of the most recent financial
statements made available to us. We have assumed in all respects material to our
analysis that Pittsburgh Financial and First Commonwealth will remain as going
concerns for all periods relevant to our analyses, that all of the
representations and warranties contained in the Agreement and all related
agreements are true and correct, that each party to the agreements will perform
all of the covenants required to be performed by such party under the
agreements, that the conditions precedent in the agreements are not waived and
that the Merger will not be taxable for federal income tax purposes at the
corporate level.

         Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise, reaffirm or
withdraw this opinion or otherwise comment upon events occurring after the date
hereof. We are expressing no opinion herein as to what the value of First
Commonwealth's common stock will be when issued to Pittsburgh Financial's
shareholders pursuant to the Agreement or the prices at which Pittsburgh
Financial's or First Commonwealth's common stock may trade at any time.

         We have acted as Pittsburgh Financial's financial advisor in connection
with the Merger and will receive a fee for our services, a substantial portion
of which is contingent upon consummation of the Merger, and Pittsburgh Financial
has agreed to indemnify us against certain liabilities arising out of our
engagement. We have also received a fee for rendering this opinion. In the past,
we have also provided certain other investment banking services to Pittsburgh
Financial.

          In the ordinary course of our business as a broker-dealer, we may
purchase securities from and sell securities to Pittsburgh Financial and First
Commonwealth and their affiliates. We may also actively trade the debt and/or
equity securities of Pittsburgh Financial and First Commonwealth or their
affiliates for our own account and for the accounts of our customers and,
accordingly, may at any time hold a long or short position in such securities.


                                     III-3




Board of Directors
Pittsburgh Financial Corp.
October 30, 2003
Page 4


         Our opinion is directed to the Board of Directors of Pittsburgh
Financial in connection with its consideration of the Merger and does not
constitute a recommendation to any shareholder of Pittsburgh Financial as to how
such shareholder should vote at any meeting of shareholders called to consider
and vote upon the Merger or the form of consideration such shareholder should
elect in the Merger. Our opinion is directed only to the fairness, from a
financial point of view, of the Merger Consideration to holders of Pittsburgh
Financial Shares and does not address the underlying business decision of
Pittsburgh Financial to engage in the Merger, the relative merits of the Merger
as compared to any other alternative business strategies that might exist for
Pittsburgh Financial or the effect of any other transaction in which Pittsburgh
Financial might engage. Our opinion is not to be quoted or referred to, in whole
or in part, in a registration statement, prospectus, proxy statement or in any
other document, nor shall this opinion be used for any other purposes, without
Sandler O'Neill's prior written consent; provided, however, that we hereby
consent to the inclusion of this opinion as an annex to the Proxy
Statement/Prospectus of Pittsburgh Financial and First Commonwealth relating to
the Merger and to the references to this opinion therein.

         Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Merger Consideration to be received by the holders of
Pittsburgh Financial Shares is fair to such shareholders from a financial point
of view.


                                           Very truly yours,


                                           /s/ Sandler O'Neill & Partners, L.P.


                                     III-4


                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Indemnification under the Registrant's Bylaws. The Registrant's Bylaws
require the Registrant to indemnify its directors and officers against expenses
and liabilities to the fullest extent permitted by law. Any director or officer
who is made, or threatened to be made, a party to any claim, action, suit or
proceeding by reason of such person being or having been a director or officer
of the Registrant or a subsidiary of the Registrant, or by reason of the fact
that such person is or was serving at the request of the Registrant as a
director, officer, employee, fiduciary or other representative of another
corporation or entity, will be entitled to indemnification. The Bylaws further
provide that such indemnification is not exclusive of any other rights to which
such individual may be entitled under the Bylaws, any agreement, charter
provision, vote of shareholders or directors, or otherwise.

         Indemnification under the PBCL. The Pennsylvania Business Corporation
Law ("PBCL") authorizes indemnification of a director or officer against
expenses and liabilities if such person acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. Indemnification may be made only upon
a determination that indemnification of the director or officer is proper under
the circumstances because the director or officer has met this standard of care.
The determination may be made:

         (1) by the board of directors of the Registrant by a majority vote of a
quorum consisting of directors who were not parties to the action or proceeding;
or

         (2) if such a quorum is not obtainable, or, if obtainable and a
majority vote of a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or

         (3) by the Registrant's shareholders.

Notwithstanding the above, to the extent that a director or officer has been
successful on the merits or otherwise in defense of any action or proceeding, or
in defense of any claim, issue or matter in any such action or proceeding, such
person is entitled to indemnification against expenses (including attorneys'
fees) actually and reasonably incurred by in connection with the action or
proceeding.

         Limitation of Liability under the Registrant's Bylaws. The Registrant's
Bylaws provide that no director or officer of the Registrant will be liable by
reason of having been a director or officer of the Registrant if the person
performs his or her duties in good faith and in a manner reasonably believed to
be in the best interests of the Registrant. This standard will be satisfied if
the person acted without self-dealing, willful misconduct or recklessness.

         Directors' and Officers' Liability Insurance. The Registrant maintains
directors' and officers' liability insurance with a $25 million limit per year.
The Registrant pays annual premiums and expenses relating to the policy of
approximately $192,000 per year.



                                      II-1


ITEM 21.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

EXHIBIT                         DESCRIPTION
  NO.


 2.1     Agreement and Plan of Merger dated August 8, 2003 among First
         Commonwealth Financial Corporation, First Commonwealth Bank, Pittsburgh
         Financial Corp. and Pittsburgh Savings Bank (included as Annex I to the
         Prospectus contained in this Registration Statement) (the Registrant
         agrees to furnish supplementally a copy of the schedules omitted from
         this Exhibit 2.1 to the Securities and Exchange Commission upon
         request)

 5.1     Opinion of Tomb & Tomb*

 8.1     Tax Opinion of Sherman & Howard L.L.C.*


23.1     Consent of Deloitte & Touche LLP

23.2     Consent of Ernst & Young LLP


23.3     Consent of Tomb & Tomb (included as part of Exhibit 5.1)*

23.4     Consent of Sherman & Howard L.L.C. (included as part of Exhibit 8.1)*

24.1     Power of Attorney

99.1     Fairness Opinion of Sandler O'Neill (included as Annex III to the
         Prospectus)


99.2     Form of Proxy for Pittsburgh Financial Corp.


99.3     Form of Election Form and Letter of Transmittal*

99.4     Consent of Sandler O'Neill

* Previously filed


ITEM 22.   UNDERTAKINGS.

The undersigned registrant hereby undertakes:

         (1) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters in addition to
the information called for by the other Items of the applicable form.

         (2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415 (17 C.F.R. Section 230.415), will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.



                                      II-2


         (3) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of Form S-4,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.

         (4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.



                                      II-3





                                   SIGNATURES


         Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the Borough of Indiana, Commonwealth
of Pennsylvania, on October 29, 2003.


                                        First Commonwealth Financial Corporation


                                        By: /s/ Joseph E. O'Dell
                                            ---------------------------
                                        Name: Joseph E. O'Dell
                                        Title:  President and Chief
                                                Executive Officer





         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.




SIGNATURE                            TITLE                                    DATE

                                                                       
         *                           President and Chief Executive            October 29, 2003
------------------------------       Officer / Director
Joseph E. O'Dell

/s/ John J. Dolan                    Executive Vice President and Chief       October 29, 2003
------------------------------       Financial Officer
John J. Dolan

         *                           Chairman of the Board                    October 29, 2003
------------------------------
E. James Trimarchi

         *                           Director                                 October 29, 2003
------------------------------
David S. Dahlmann

         *                           Director                                 October 29, 2003
------------------------------
James W. Newill





                                      II-4





SIGNATURE                            TITLE                                    DATE

                                                                       
           *                         Director                                 October 29, 2003
------------------------------
John A. Robertshaw, Jr.


           *                         Director                                 October 29, 2003
------------------------------
Laurie Stern Singer


            *                        Director                                 October 29, 2003
------------------------------
Alan R. Fairman


            *                        Director                                 October 29, 2003
------------------------------
Ray T. Charley


            *                        Director                                 October 29, 2003
------------------------------
Edward T.  Cote


            *                        Director                                 October 29, 2003
----------------------------
Johnston A. Glass


            *                        Director                                 October 29, 2003
----------------------------
Dale P. Latimer


            *                        Director                                 October 29, 2003
----------------------------
David R. Tomb, Jr.


/s/ John J. Dolan
----------------------------
Attorney in Fact




                                      II-5