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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax provision for the years ended December 31 is as follows:
| 2015 |  | 2014 |  | 2013
| (dollars in thousands)
Current tax provision for income exclusive of securities transactions: |  |  |  |  |
Federal | $ | 8,610 |  |  | $ | 12,661 |  |  | $ | 2,509 |
State | 68 |  |  | 157 |  |  | 68 |
Total current tax provision | 8,678 |  |  | 12,818 |  |  | 2,577 |
Deferred tax provision | 12,158 |  |  | 4,862 |  |  | 12,704 |
Total tax provision | $ | 20,836 |  |  | $ | 17,680 |  |  | $ | 15,281 |
The statutory to effective tax rate reconciliation for the years ended December 31 is as follows:
| 2015 |  | 2014 |  | 2013
| Amount |  | % of Pretax Income |  | Amount |  | % of Pretax Income |  | Amount |  | % of Pretax Income
| (dollars in thousands)
Tax at statutory rate | $ | 24,843 |  |  | 35 | % |  | $ | 21,747 |  |  | 35 | % |  | $ | 19,867 |  |  | 35 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |
Income from bank owned life insurance | (1,894 | ) |  | (3 | ) |  | (1,926 | ) |  | (3 | ) |  | (1,939 | ) |  | (3 | )
Tax-exempt interest income, net | (2,232 | ) |  | (3 | ) |  | (2,133 | ) |  | (4 | ) |  | (2,600 | ) |  | (5 | )
Tax credits | (61 | ) |  | — |  |  | (134 | ) |  | — |  |  | (144 | ) |  | — |
Other | 180 |  |  | — |  |  | 126 |  |  | — |  |  | 97 |  |  | — |
Total tax provision | $ | 20,836 |  |  | 29 | % |  | $ | 17,680 |  |  | 28 | % |  | $ | 15,281 |  |  | 27 | %
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 produced an annual effective tax rate of 29%, 28% and 27% for the years ended December 31, 2015, 2014 and 2013, respectively. 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:
| 2015 |  | 2014
| (dollars in thousands)
Deferred tax assets: |  |  |
Allowance for credit losses | $ | 17,784 |  |  | $ | 18,218 |
Postretirement benefits other than pensions | 641 |  |  | 679 |
Alternative minimum tax credit carryforward | 5,065 |  |  | 8,627 |
Litigation reserve | 0 |  |  | 3,000 |
Unrealized loss on securities available for sale | 1,291 |  |  | 2,463 |
Writedown of other real estate owned | 1,087 |  |  | 603 |
Deferred compensation | 2,113 |  |  | 2,246 |
Accrued interest on nonaccrual loans | 1,452 |  |  | 1,059 |
Other-than-temporary impairment of securities | 89 |  |  | 9,239 |
Depreciation of assets | 879 |  |  | 1,127 |
Accrued incentives | 1,629 |  |  | 1,594 |
Unfunded loan commitment allowance | 1,557 |  |  | 1,078 |
Accrued severance | 808 |  |  | 160 |
Basis difference in assets acquired | 417 |  |  | — |
Loan origination fees and costs | 141 |  |  | — |
Deferred rent | 1,258 |  |  | 969 |
Other | 1,105 |  |  | 1,194 |
Total deferred tax assets | 37,316 |  |  | 52,256 |
Deferred tax liabilities: |  |  |
Basis difference in assets acquired | — |  |  | (344 | )
Loan origination fees and costs | — |  |  | (1,337 | )
Income from unconsolidated subsidiary | (619 | ) |  | (603 | )
Other | (337 | ) |  | (318 | )
Total deferred tax liabilities | (956 | ) |  | (2,602 | )
Net deferred tax asset | $ | 36,360 |  |  | $ | 49,654 |
The net deferred tax asset of $36.4 million as of December 31, 2015 includes a $5.1 million alternative minimum tax credit carryforward with an indefinite life. The significant decrease in the deferred tax asset for other-than-temporary impairment of securities is due to previously recorded impairment charges on trust preferred debt securities being deducted on the 2014 federal tax return based on newly issued IRS guidance. 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 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, 2015, 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. In accordance with FASB ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes,” the Company has no material unrecognized tax benefits or accrued interest and penalties as of December 31, 2015. We do not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months. The Company records interest and penalties on unrecognized tax benefits as a component of noninterest expense. First Commonwealth is subject to routine audits of our tax returns by the Internal Revenue Service (“IRS”) as well as all states in which we conduct business. During 2015, the IRS completed an examination of our 2013 federal tax return. The examination was closed with no adjustments. Federal and state income tax years 2012 through 2014 are open for examination as of December 31, 2015.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: 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 3: 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 4: 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 5: 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 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 + Details
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