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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax provision for the years ended December 31 is as follows:
202120202019
 (dollars in thousands)
Current tax provision:
Federal$32,586 $21,629 $22,942 
State397 329 282 
Total current tax provision32,983 21,958 23,224 
Deferred tax provision (benefit):
Federal1,501 (5,070)2,284 
State76 (132)8 
Total deferred tax provision1,577 (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:
 202120202019
 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 benefit326 — 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)— 
Other266 — 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:
20212020
 (dollars in thousands)
Deferred tax assets:
Lease liability$9,489 $9,928 
Allowance for credit losses19,597 21,483 
Postretirement benefits other than pensions235 242 
Unrealized loss on securities available for sale2,357 — 
Net operating loss carryforward75 385 
Deferred compensation1,969 1,723 
Accrued interest on nonaccrual loans779 644 
Accrued incentives2,591 2,182 
Unfunded loan commitments & other reserves1,363 1,576 
Other988 1,831 
Total deferred tax assets39,443 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.