Investment Securities

12 Months Ended

Dec. 31, 2013

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

Below is an analysis of the amortized cost and fair values of securities available for sale at December 31:

	2013									2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential	$	22,639	$	2,624	$	(59	)	$	25,204	$	27,883	$	3,781	$	—		$	31,664
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	1,009,519		12,531		(27,163		)	994,887		839,102		25,691		(392		)	864,401
Mortgage-Backed Securities – Commercial	104		1		—			105		148		1		—			149
Other Government-Sponsored Enterprises	267,971		81		(1,927		)	266,125		241,970		766		(72		)	242,664
Obligations of States and Political Subdivisions	80		—		—			80		82		4		—			86
Corporate Securities	6,693		328		—			7,021		6,703		288		—			6,991
Pooled Trust Preferred Collateralized Debt Obligations	42,040		—		(18,517		)	23,523		51,866		3		(28,496		)	23,373
Total Debt Securities	1,349,046		15,565		(47,666		)	1,316,945		1,167,754		30,534		(28,960		)	1,169,328
Equities	1,420		—		—			1,420		1,859		116		—			1,975
Total Securities Available for Sale	$	1,350,466	$	15,565	$	(47,666	)	$	1,318,365	$	1,169,613	$	30,650	$	(28,960	)	$	1,171,303

Mortgage backed securities include mortgage backed obligations of U.S. Government agencies and obligations of U.S. Government-sponsored enterprises. These obligations have contractual maturities ranging from less than one year to approximately 30 years with lower anticipated lives to maturity due to prepayments. All mortgage backed securities contain a certain amount of risk related to the uncertainty of prepayments of the underlying mortgages. Interest rate changes have a direct impact upon prepayment speeds, therefore First Commonwealth uses computer simulation models to test the average life and yield volatility of all mortgage backed securities under various interest rate scenarios to monitor the potential impact on earnings and interest rate risk positions.

Expected maturities will differ from contractual maturities because issuers may have the right to call or repay obligations with or without call or prepayment penalties. Other fixed income securities within the portfolio also contain prepayment risk.

During 2013, a loss of $1.3 million was recognized on the early redemption of a pooled trust preferred security with a book value of $6.6 million. Senior note holders elected to liquidate all assets of the trust, resulting in losses for the mezzanine notes owned by First Commonwealth.

In 2012, $5.1 million in single issue trust preferred securities and $0.2 million in pooled trust preferred securities were called by their issuers, providing security gains of $0.2 million.

The amortized cost and fair value of debt securities at December 31, 2013, by contractual maturity, are shown below:

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	33,080	$	33,141
Due after 1 but within 5 years	234,971		233,065
Due after 5 but within 10 years	—		—
Due after 10 years	48,733		30,543
	316,784		296,749
Mortgage-Backed Securities (a)	1,032,262		1,020,196
Total Debt Securities	$	1,349,046	$	1,316,945

(a) Mortgage Backed Securities include an amortized cost of $22.6 million and a fair value of $25.2 million for Obligations of U.S. Government agencies issued by Ginnie Mae and Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac which had an amortized cost of $1,009.6 million and a fair value of $995.0 million.

Proceeds from sale, gross gains (losses) realized on sales, maturities and other-than-temporary impairment charges related to securities available for sale were as follows for the years ended December 31:

	2013			2012		2011
	(dollars in thousands)
Proceeds from sales	$	671		$	—	$	76,914
Gross (losses) gains realized:
Sales Transactions:
Gross gains	$	233		$	—	$	2,368
Gross losses	—			—		(258		)
	233			—		2,110
Maturities and impairment
Gross gains	4			192		75
Gross losses	(1,395		)	—		—
Other-than-temporary impairment	—			—		—
	(1,391		)	192		75
Net gains and impairment	$	(1,158	)	$	192	$	2,185

Securities available for sale with an approximate fair value of $594.9 million and $631.0 million were pledged as of December 31, 2013 and 2012, respectively, to secure public deposits and for other purposes required or permitted by law.