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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax provision for the years ended December 31 is as follows:
202320222021
 (dollars in thousands)
Current tax provision:
Federal$32,167 $33,545 $32,586 
State936 471 397 
Total current tax provision33,103 34,016 32,983 
Deferred tax provision (benefit):
Federal7,488 (1,967)1,501 
State(99)(45)76 
Total deferred tax provision7,389 (2,012)1,577 
Total tax provision$40,492 $32,004 $34,560 
The statutory to effective tax rate reconciliation for the years ended December 31 is as follows:
 202320222021
 Amount% of
Pretax
Income		Amount% of
Pretax
Income		Amount% of
Pretax
Income
 (dollars in thousands)
Tax at statutory rate$41,487 21 %$33,639 21 %$36,292 21 %
Increase (decrease) resulting from:
State income tax, net of federal benefit725 — 361 — 326 — 
Income from bank owned life insurance(1,024)(1)(1,146)(1)(1,351)(1)
Tax-exempt interest income, net(812)— (809)(1)(846)— 
Tax credits(804)— (341)— (127)— 
Other920 — 300 1 266 — 
Total tax provision$40,492 20 %$32,004 20 %$34,560 20 %
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 each of the years ended December 31, 2023, 2022 and 2021.
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:
20232022
 (dollars in thousands)
Deferred tax assets:
Lease liability$10,542 $9,581 
Allowance for credit losses25,158 21,837 
Postretirement benefits other than pensions214 223 
Unrealized loss on securities available for sale30,469 36,673 
Net operating loss carryforward51 37 
Deferred compensation2,647 1,960 
Accrued interest on nonaccrual loans882 935 
Accrued incentives3,299 3,185 
Unfunded loan commitments & other reserves1,561 2,126 
Purchase accounting adjustments5,490 566 
Other738 953 
Total deferred tax assets81,051 78,076 
Deferred tax liabilities:
Loan origination fees and costs(1,252)(1,320)
Right of use asset(9,618)(8,646)
Depreciation of assets(1,484)(2,139)
Section 197 intangibles(2,418)(1,717)
Purchase accounting adjustments(3,321)(314)
Other(228)(197)
Total deferred tax liabilities(18,321)(14,333)
Net deferred tax asset$62,730 $63,743 
The Company has approximately $1.3 million of Pennsylvania net operating losses, which begin to expire in 2034. 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, 2023, 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, 2023. 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, 2020 are no longer open to examination by federal and state taxing authorities.