Unearned ESOP Shares

12 Months Ended

Dec. 31, 2011

Note 24—Unearned ESOP Shares

All employees with at least one year of service are eligible to participate in the ESOP. Contributions to the plan are determined by the Board of Directors and are based upon a prescribed percentage of the annual compensation of all participants. The ESOP acquired shares of First Commonwealth's common stock in a transaction whereby the ESOP Trust borrowed funds that were guaranteed by First Commonwealth. The borrowed amounts represent leveraged and unallocated shares, and accordingly have been recorded as long-term debt with the offset as a reduction of common shareholders' equity. Compensation costs related to the plan were $717 thousand, $783 thousand and $972 thousand in 2011, 2010 and 2009, respectively.

First Commonwealth's ESOP borrowed funds that are guaranteed by First Commonwealth, and had a balance of $1.6 million at December 31, 2011 and $3.6 million at December 31, 2010. The loan is scheduled to be repaid in 2012 and payments will be made from contributions to the ESOP by First Commonwealth and from dividends on unallocated ESOP shares. The loan has been recorded as long-term debt in the Consolidated Statements of Financial Condition, with a like amount of unearned ESOP shares recorded as a reduction of shareholders' equity. The unearned ESOP shares included as a component of shareholders' equity represent First Commonwealth's prepayment of future compensation expense. The shares acquired by the ESOP are held in a suspense account and will be released to the ESOP for allocation to the plan participants as the debt is reduced.

The following is an analysis of ESOP shares held in suspense and the fair value of those shares as of December 31:


	2011			2010			2009
	(dollars in thousands)
Shares in suspense, beginning of the year		237,106			375,925			512,117
Shares allocated		(132,445	)		(138,819	)		(136,192	)
Shares acquired		0			0			0

Shares in suspense, end of the year		104,661			237,106			375,925

Fair market value of shares in suspense	$	550		$	1,679		$	1,748

Interest paid on the ESOP loan and dividends received on unallocated shares for the year ended December 31 were:


	2011		2010		2009
	(dollars in thousands)
Interest paid on ESOP loan	$	38	$	66	$	95
Dividends on unallocated shares		32		22		154

Dividends on unallocated shares were used for debt service while all dividends on allocated shares were allocated or paid to the participants.

- Definition

Tabular disclosure of the description of the plan, the basis for determining contributions, including the employee groups covered, and the nature and effect of significant matters affecting comparability of information for all periods presented. For leveraged ESOPs and pension reversion ESOPs, the disclosure may include the basis for releasing shares and how dividends on allocated and unallocated shares are used. Disclosure may also include a description of the accounting policies followed for ESOP transactions, including the method of measuring compensation, the classification of dividends on ESOP shares, and the treatment of ESOP shares for EPS computations. If the employer has both old ESOP shares for which it does not adopt the latest guidance and new ESOP shares for which the new guidance is required, the accounting policies for both blocks of shares may be described. Disclosure may also include he amount of compensation cost recognized during the period, the number of allocated shares, committed-to-be-released shares, and suspense shares held by the ESOP at the balance-sheet date, the fair value of unearned ESOP shares at the balance-sheet date for shares accounted for under the latest guidance, the existence and nature of any repurchase obligation, including disclosure of the fair value of the shares allocated as of the balance sheet date, which are subject to a repurchase obligation.

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