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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax provision for the years ended December 31 is as follows:
| 2024 |  | 2023 |  | 2022
| (dollars in thousands)
Current tax provision: |  |  |  |  |
Federal | $ | 31,220 |  |  | $ | 32,167 |  |  | $ | 33,545 |
State | 1,002 |  |  | 936 |  |  | 471 |
Total current tax provision | 32,222 |  |  | 33,103 |  |  | 34,016 |
Deferred tax provision (benefit): |  |  |  |  |
Federal | 3,412 |  |  | 7,488 |  |  | (1,967) |
State | 2 |  |  | (99) |  |  | (45) |
Total deferred tax provision | 3,414 |  |  | 7,389 |  |  | (2,012) |
Total tax provision | $ | 35,636 |  |  | $ | 40,492 |  |  | $ | 32,004 |
The statutory to effective tax rate reconciliation for the years ended December 31 is as follows:
| 2024 |  | 2023 |  | 2022
| Amount |  | % of Pretax Income |  | Amount |  | % of Pretax Income |  | Amount |  | % of Pretax Income
| (dollars in thousands)
Tax at statutory rate | $ | 37,424 |  |  | 21 | % |  | $ | 41,487 |  |  | 21 | % |  | $ | 33,639 |  |  | 21 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |
State income tax, net of federal benefit | 793 |  |  | — |  |  | 725 |  |  | — |  |  | 361 |  |  | — |
Income from bank owned life insurance | (1,336) |  |  | (1) |  |  | (1,024) |  |  | (1) |  |  | (1,146) |  |  | (1) |
Tax-exempt interest income, net | (835) |  |  | — |  |  | (812) |  |  | — |  |  | (809) |  |  | (1) |
Tax credits | (1,045) |  |  | (1) |  |  | (804) |  |  | — |  |  | (341) |  |  | — |
Other | 635 |  |  | 1 |  |  | 920 |  |  | — |  |  | 300 |  |  | 1 |
Total tax provision | $ | 35,636 |  |  | 20 | % |  | $ | 40,492 |  |  | 20 | % |  | $ | 32,004 |  |  | 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, 2024, 2023 and 2022. 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:
| 2024 |  | 2023
| (dollars in thousands)
Deferred tax assets: |  |  |
Lease liability | $ | 9,561 |  |  | $ | 10,542 |
Allowance for credit losses | 25,459 |  |  | 25,158 |
Postretirement benefits other than pensions | 201 |  |  | 214 |
Unrealized loss on securities available for sale | 28,023 |  |  | 30,469 |
Net operating loss carryforward | 61 |  |  | 51 |
Deferred compensation | 3,008 |  |  | 2,647 |
Accrued interest on nonaccrual loans | 1,088 |  |  | 882 |
Accrued incentives | 3,295 |  |  | 3,299 |
Unfunded loan commitments & other reserves | 879 |  |  | 1,561 |
Purchase accounting adjustments | 4,001 |  |  | 5,490 |
Other | 744 |  |  | 738 |
Total deferred tax assets | 76,320 |  |  | 81,051 |
Deferred tax liabilities: |  |  |
Loan origination fees and costs | (2,615) |  |  | (1,252) |
Right of use asset | (8,601) |  |  | (9,618) |
Depreciation of assets | (1,586) |  |  | (1,484) |
Section 197 intangibles | (3,175) |  |  | (2,418) |
Purchase accounting adjustments | (2,755) |  |  | (3,321) |
Other | (718) |  |  | (228) |
Total deferred tax liabilities | (19,450) |  |  | (18,321) |
Net deferred tax asset | $ | 56,870 |  |  | $ | 62,730 |
The Company's insurance subsidiary, FCIA, has approximately $1.5 million of Pennsylvania net operating losses, which begin to expire in 2034. The Company expects to fully utilize the losses prior to expiration. The holding company has net operating loss carryforwards with the state of Pennsylvania of $262.5 million as of December 31, 2024 and $279.9 million as of December 31, 2023. The net operating loss carryforwards as of December 31, 2024 begin to expire in 2025. The company has recorded a valuation allowance against these carryforward attributes of the holding company as, under current law, it is not expected to realize these losses given the profitability of the holding company for Pennsylvania tax purposes. This valuation allowance is netted against the net operating loss in the preceding table. 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, 2024, management has determined that no valuation allowance is necessary for the deferred tax assets, with the exception of the holding company's Pennsylvania net operating loss carryforward deferred tax asset noted above. No valuation allowance is considered necessary 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, 2024. 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, 2021 are no longer open to examination by federal and state taxing authorities.

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