Unearned ESOP Shares

12 Months Ended

Dec. 31, 2012

Note 24—Unearned ESOP Shares

During 2012, all employees with at least one year of service were 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 represented leveraged and unallocated shares, and accordingly were recorded as long-term debt with the offset as a reduction of common shareholders’ equity. The borrowing had a balance of $1.6 million at December 31, 2011 and matured in November of 2012. All the remaining shares held as collateral for the loan were released and allocated to participants when the borrowing was repaid. Compensation costs related to the plan were $733 thousand, $717 thousand and $783 thousand in 2012, 2011 and 2010, respectively.

As of December 31, 2012, First Commonwealth terminated the ESOP and appropriate forms have been filed with the IRS in order to receive a determination letter.

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


	2012			2011			2010
	(dollars in thousands)
Shares in suspense, beginning of the year		104,661			237,106			375,925
Shares allocated		(104,661	)		(132,445	)		(138,819	)
Shares acquired		0			0			0

Shares in suspense, end of the year		0			104,661			237,106

Fair market value of shares in suspense	$	0		$	550		$	1,679

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


	2012		2011		2010
	(dollars in thousands)
Interest paid on ESOP loan	$	13	$	38	$	66
Dividends on unallocated shares		19		32		22

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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