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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax provision for the years ended December 31 is as follows:
| 2021 |  | 2020 |  | 2019
| (dollars in thousands)
Current tax provision: |  |  |  |  |
Federal | $ | 32,586 |  |  | $ | 21,629 |  |  | $ | 22,942 |
State | 397 |  |  | 329 |  |  | 282 |
Total current tax provision | 32,983 |  |  | 21,958 |  |  | 23,224 |
Deferred tax provision (benefit): |  |  |  |  |
Federal | 1,501 |  |  | (5,070) |  |  | 2,284 |
State | 76 |  |  | (132) |  |  | 8 |
Total deferred tax provision | 1,577 |  |  | (5,202) |  |  | 2,292 |
Total tax provision | $ | 34,560 |  |  | $ | 16,756 |  |  | $ | 25,516 |
The statutory to effective tax rate reconciliation for the years ended December 31 is as follows:
| 2021 |  | 2020 |  | 2019
| Amount |  | % of Pretax Income |  | Amount |  | % of Pretax Income |  | Amount |  | % of Pretax Income
| (dollars in thousands)
Tax at statutory rate | $ | 36,292 |  |  | 21 | % |  | $ | 18,943 |  |  | 21 | % |  | $ | 27,478 |  |  | 21 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |
State income tax, net of federal benefit | 326 |  |  | — |  |  | 155 |  |  | — |  |  | 229 |  |  | — |
Income from bank owned life insurance | (1,351) |  |  | (1) |  |  | (1,376) |  |  | (1) |  |  | (1,260) |  |  | (1) |
Tax-exempt interest income, net | (846) |  |  | — |  |  | (1,117) |  |  | (1) |  |  | (1,298) |  |  | (1) |
Tax credits | (127) |  |  | — |  |  | (44) |  |  | — |  |  | (7) |  |  | — |
Other | 266 |  |  | — |  |  | 195 |  |  | — |  |  | 374 |  |  | — |
Total tax provision | $ | 34,560 |  |  | 20 | % |  | $ | 16,756 |  |  | 19 | % |  | $ | 25,516 |  |  | 19 | %
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 21% 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 statutory rate produced an annual effective tax rate of 20% for the year ended December 31, 2021 and 19% for each of the years ended December 31, 2020 and 2019. 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:
| 2021 |  | 2020
| (dollars in thousands)
Deferred tax assets: |  |  |
Lease liability | $ | 9,489 |  |  | $ | 9,928 |
Allowance for credit losses | 19,597 |  |  | 21,483 |
Postretirement benefits other than pensions | 235 |  |  | 242 |
Unrealized loss on securities available for sale | 2,357 |  |  | — |
Net operating loss carryforward | 75 |  |  | 385 |
Deferred compensation | 1,969 |  |  | 1,723 |
Accrued interest on nonaccrual loans | 779 |  |  | 644 |
Accrued incentives | 2,591 |  |  | 2,182 |
Unfunded loan commitments & other reserves | 1,363 |  |  | 1,576 |
Other | 988 |  |  | 1,831 |
Total deferred tax assets | 39,443 |  |  | 39,994 |
Deferred tax liabilities: |  |  |
Loan origination fees and costs | (253) |  |  | (1,280) |
Right of use asset | (8,589) |  |  | (9,037) |
Unrealized gain on securities available for sale | — |  |  | (4,629) |
Depreciation of assets | (1,725) |  |  | (2,103) |
Section 197 intangibles | (1,107) |  |  | (540) |
Other | (308) |  |  | (424) |
Total deferred tax liabilities | (11,982) |  |  | (18,013) |
Net deferred tax asset | $ | 27,461 |  |  | $ | 21,981 |
The Company has approximately $1.0 million of federal net operating losses which are subject to an annual limitation under IRC Section 382. The Company has approximately $1.0 million of Pennsylvania net operating losses which begin to expire in 2034 and the Company expects to fully utilize the losses prior to expiration. 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. Based on our evaluation, as of December 31, 2021, 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 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, 2021. 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. Generally, tax years prior to the year ended December 31, 2018 are no longer open to examination by federal and state taxing authorities.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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