FIRST COMMONWEALTH FINANCIAL CORP /PA/FCF
FIRST COMMONWEALTH FINANCIAL CORP /PA/ Income Taxes Disclosure
Income Taxes
Cash paid for taxes for the years ended December 31 is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Federal | $ | 33,500 | $ | 31,000 | $ | 36,250 | |||||||||||
| States | |||||||||||||||||
| Other* | 1,162 | 1,185 | 1,380 | ||||||||||||||
| Foreign | — | — | — | ||||||||||||||
| Total cash paid for taxes | 34,662 | 32,185 | 37,630 | ||||||||||||||
* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
The income tax provision for the years ended December 31 is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Current tax provision: | |||||||||||||||||
| Federal | $ | 34,600 | $ | 31,220 | $ | 32,167 | |||||||||||
| State | 1,443 | 1,002 | 936 | ||||||||||||||
| Total current tax provision | 36,043 | 32,222 | 33,103 | ||||||||||||||
| Deferred tax provision (benefit): | |||||||||||||||||
| Federal | 3,152 | 3,412 | 7,488 | ||||||||||||||
| State | (139) | 2 | (99) | ||||||||||||||
| Total deferred tax provision | 3,013 | 3,414 | 7,389 | ||||||||||||||
| Total tax provision | $ | 39,056 | $ | 35,636 | $ | 40,492 | |||||||||||
The Company did not have any income tax expense (benefit) in foreign jurisdictions for the years ended December 31, 2025, 2024 and 2023.
The statutory to effective tax rate reconciliation for the years ended December 31 is as follows:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | % of Pretax Income | Amount | % of Pretax Income | Amount | % of Pretax Income | ||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Federal Income tax at statutory rate | $ | 40,185 | 21 | % | $ | 37,424 | 21 | % | $ | 41,487 | 21 | % | |||||||||||||||||||||||
| State and local income tax, net of federal benefit* | 1,030 | 1 | 793 | — | 725 | — | |||||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| Low income housing tax credits** | (294) | — | (354) | — | (381) | — | |||||||||||||||||||||||||||||
| Other | (10) | — | (4) | — | (38) | — | |||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| Tax-exempt interest income, net | (900) | — | (835) | — | (812) | — | |||||||||||||||||||||||||||||
| Income from bank owned life insurance | (1,444) | (1) | (1,336) | (1) | (1,024) | (1) | |||||||||||||||||||||||||||||
| Other | 614 | — | 457 | — | 660 | — | |||||||||||||||||||||||||||||
| Other adjustments | (125) | — | (509) | — | (125) | — | |||||||||||||||||||||||||||||
| Effective income tax rate | $ | 39,056 | 21 | % | $ | 35,636 | 20 | % | $ | 40,492 | 20 | % | |||||||||||||||||||||||
* State taxes in Delaware, Indiana, Kentucky, New Jersey, New York made up the majority (greater than 50 percent) of the tax effect in this category for 2025. State taxes in Delaware, Kentucky, New Jersey, New York made up the majority (greater than 50 percent) of the tax effect in this category for 2024. State taxes in Delaware, Illinois, New Jersey, New York and New York City made up the majority (greater than 50 percent) of the tax effect in this category for 2023.
** The benefit is net of associated investment impacts such as proportional amortization and benefit of flow through losses.
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:
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Lease liability | $ | 9,175 | $ | 9,561 | |||||||
| Allowance for credit losses | 26,980 | 25,459 | |||||||||
| Postretirement benefits other than pensions | 89 | 201 | |||||||||
| Unrealized loss on securities available for sale | 17,822 | 28,023 | |||||||||
| Net operating loss carryforward | 60 | 61 | |||||||||
| Deferred compensation | 3,289 | 3,008 | |||||||||
| Accrued interest on nonaccrual loans | 763 | 1,088 | |||||||||
| Accrued incentives | 3,949 | 3,295 | |||||||||
| Unfunded loan commitments & other reserves | 1,757 | 879 | |||||||||
| Purchase accounting adjustments | 3,889 | 4,001 | |||||||||
| Other | 1,127 | 744 | |||||||||
| Total deferred tax assets | 68,900 | 76,320 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Loan origination fees and costs | (4,268) | (2,615) | |||||||||
| Right of use asset | (8,215) | (8,601) | |||||||||
| Depreciation of assets | (2,608) | (1,586) | |||||||||
| Section 197 intangibles | (4,019) | (3,175) | |||||||||
| Purchase accounting adjustments | (3,231) | (2,755) | |||||||||
| Other | (695) | (718) | |||||||||
| Total deferred tax liabilities | (23,036) | (19,450) | |||||||||
| Net deferred tax asset | $ | 45,864 | $ | 56,870 | |||||||
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 $246.7 million as of December 31, 2025 and $262.5 million as of December 31, 2024. The Company has recorded a valuation allowance against these carryforward attributes of the holding company as it is not expected to realize these losses given the profitability of the holding company for Pennsylvania tax purposes. The 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, 2025, management has determined that no valuation allowance is necessary with the exception of the holding company's net operating loss carryforward deferred tax asset noted above 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, 2025. 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, 2022 are no longer open to examination by federal and state taxing authorities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.