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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes | Note 22—Income Taxes The income tax (benefit) provision for the years ended December 31 is as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (dollars in thousands) |
Current tax provision for income exclusive of securities transactions: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 651 |  |  | $ | 3,794 |  |  | $ | 3,123 |
State |  |  | 161 |  |  |  | 59 |  |  |  | 164 |
Total current tax provision |  |  | 812 |  |  |  | 3,853 |  |  |  | 3,287 |
Deferred tax benefit |  |  | (1,192 | ) |  |  | (3,614 | ) |  |  | (29,108 | )
Total tax (benefit) provision |  | $ | (380 | ) |  | $ | 239 |  |  | $ | (25,821 | )
The statutory to effective tax rate reconciliation for the years ended December 31 is as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | Amount |  |  | % of Pretax Income |  |  | Amount |  |  | % of Pretax Income |  |  | Amount |  |  | % of Pretax Income |
|  | (dollars in thousands) |
Tax at statutory rate |  | $ | 5,213 |  |  |  | 35 | % |  | $ | 8,126 |  |  |  | 35 | % |  | $ | (16,060 | ) |  |  | 35 | %
Decrease resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from bank owned life insurance |  |  | (1,959 | ) |  |  | (13 | ) |  |  | (1,866 | ) |  |  | (8 | ) |  |  | (1,555 | ) |  |  | 3 |
Tax-exempt income, net |  |  | (3,453 | ) |  |  | (23 | ) |  |  | (5,688 | ) |  |  | (25 | ) |  |  | (7,537 | ) |  |  | 16 |
Tax credits |  |  | (270 | ) |  |  | (2 | ) |  |  | (304 | ) |  |  | (1 | ) |  |  | (447 | ) |  |  | 1 |
Other |  |  | 89 |  |  |  | 0 |  |  |  | (29 | ) |  |  | 0 |  |  |  | (222 | ) |  |  | 1 |
Total tax (benefit) provision |  | $ | (380 | ) |  |  | (3 | )% |  | $ | 239 |  |  |  | 1 | % |  | $ | (25,821 | ) |  |  | 56 | %
The total tax provision for financial reporting differs from the amount computed by applying the statutory federal income tax rate to income before taxes. First Commonwealth ordinarily generates an annual effective tax rate that is less than the statutory rate of 35% due to benefits resulting from tax-exempt interest, income from bank owned life insurance and tax benefits associated with low income housing tax credits. The consistent level of tax benefits that reduce First Commonwealth's tax rate below the 35% statutory rate, coupled with the relatively low level of annual pretax income produced a low tax benefit for the year ended December 31, 2011 and a low tax provision for the year ended December 31, 2010. The tax effects of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities that represent significant portions of the deferred tax assets and liabilities at December 31 are presented below:
|  | 2011 |  |  | 2010 |
|  | (dollars in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 21,432 |  |  | $ | 24,930 |
Postretirement benefits other than pensions |  |  | 841 |  |  |  | 933 |
Alternative minimum tax credit carryforward |  |  | 15,247 |  |  |  | 14,764 |
Net operating loss carryforward |  |  | 1,626 |  |  |  | 0 |
Writedown of other real estate owned |  |  | 2,876 |  |  |  | 780 |
Other tax credit carryforward |  |  | 1,383 |  |  |  | 1,034 |
Deferred compensation |  |  | 2,215 |  |  |  | 2,115 |
Swap credit risk |  |  | 1,037 |  |  |  | 254 |
Loan origination fees and costs |  |  | 0 |  |  |  | 110 |
Accrued interest on nonaccrual loans |  |  | 3,161 |  |  |  | 2,543 |
Low income housing partnership investments |  |  | 44 |  |  |  | 204 |
Other-than-temporary impairment of securities |  |  | 15,764 |  |  |  | 16,570 |
Unrealized loss on securities available for sale |  |  | 0 |  |  |  | 1,589 |
Capitalization of OREO expenses |  |  | 826 |  |  |  | 446 |
Depreciation of assets |  |  | 0 |  |  |  | 683 |
Unfunded loan commitment allowance |  |  | 536 |  |  |  | 507 |
Other |  |  | 2,778 |  |  |  | 2,309 |
Total deferred tax assets |  |  | 69,766 |  |  |  | 69,771 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Basis difference in assets acquired |  |  | (1,213 | ) |  |  | (1,429 | )
Loan origination fees and costs |  |  | (392 | ) |  |  | 0 |
Unfunded postretirement obligation |  |  | (179 | ) |  |  | (269 | )
Accumulated accretion of bond discount |  |  | (18 | ) |  |  | (49 | )
Income from unconsolidated subsidiary |  |  | (551 | ) |  |  | (542 | )
Unrealized gain on securities available for sale |  |  | (898 | ) |  |  | 0 |
Depreciation of assets |  |  | (242 | ) |  |  | 0 |
Other |  |  | (1 | ) |  |  | (1 | )
Total deferred tax liabilities |  |  | (3,494 | ) |  |  | (2,290 | )
Net deferred tax asset |  | $ | 66,272 |  |  | $ | 67,481 |
The net deferred tax asset of $66.3 million as of December 31, 2011 includes a $15.2 million alternative minimum tax credit carryforward with an indefinite life and a $1.4 million tax credit carryforward, of which $0.2 million expires in 2028, $0.5 million expires in 2029, $0.3 million expires in 2030 and $0.4 million expires in 2031. There is also a $15.8 million deferred tax asset for other-than-temporary impairment of securities, of which $0.2 million are potential capital losses that can only be utilized if capital gains are realized. Management assesses all available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. In evaluating deferred tax assets, future taxable income of $177.0, forecasted over the next three years was considered. The amount of future taxable income used in management's valuation is based upon management approved forecasts, evaluation of historical earnings levels, proven ability to raise capital to support growth or during times of economic stress and consideration of prudent and feasible potential tax strategies. If future events differ from our current forecasts, a valuation allowance may be required, which could have a material impact on our financial condition and results of operations. Based on our evaluation, including the consideration of the weighting of positive and negative evidence, as of December 31, 2011, management has determined that no valuation allowance is necessary for the deferred tax assets because it is more likely than not that these assets will be realized through future reversals of existing temporary differences and through future taxable income. First Commonwealth adopted new authoritative accounting guidance issued under FASB ASC Topic 740-10, "Accounting for Uncertainty in Income Taxes" as of January 1, 2007, and had no material unrecognized tax benefits or accrued interest and penalties as of December 31, 2011. We do not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months and will record interest and penalties as a component of noninterest expense. First Commonwealth is subject to routine audits of our tax returns by the Internal Revenue Service as well as all states in which we conduct business. Federal and state income tax years 2008 through 2010 are open for examination as of December 31, 2011.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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