Investment Securities (Tables)

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Analysis of Amortized Cost and Estimated Fair Value of Securities Available for Sale

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

	September 30, 2014									December 31, 2013
	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	$	21,780	$	2,617	$	(10	)	$	24,387	$	22,639	$	2,624	$	(59	)	$	25,204
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	987,530		11,642		(16,414		)	982,758		1,009,519		12,531		(27,163		)	994,887
Mortgage-Backed Securities – Commercial	79		2		—			81		104		1		—			105
Other Government-Sponsored Enterprises	269,177		—		(1,460		)	267,717		267,971		81		(1,927		)	266,125
Obligations of States and Political Subdivisions	19,421		251		(3		)	19,669		80		—		—			80
Corporate Securities	6,685		601		—			7,286		6,693		328		—			7,021
Pooled Trust Preferred Collateralized Debt Obligations	41,971		248		(12,763		)	29,456		42,040		—		(18,517		)	23,523
Total Debt Securities	1,346,643		15,361		(30,650		)	1,331,354		1,349,046		15,565		(47,666		)	1,316,945
Equities	1,420		—		—			1,420		1,420		—		—			1,420
Total Securities Available for Sale	$	1,348,063	$	15,361	$	(30,650	)	$	1,332,774	$	1,350,466	$	15,565	$	(47,666	)	$	1,318,365

Amortized Cost and Estimated Fair Value of Debt Securities Available for Sale

The amortized cost and estimated fair value of debt securities available for sale at September 30, 2014, by contractual maturity, are shown below.

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	2,600	$	2,600
Due after 1 but within 5 years	266,577		265,117
Due after 5 but within 10 years	11,224		11,373
Due after 10 years	56,853		45,038
	337,254		324,128
Mortgage-Backed Securities (a)	1,009,389		1,007,226
Total Debt Securities	$	1,346,643	$	1,331,354

(a) Mortgage Backed Securities include an amortized cost of $21.8 million and a fair value of $24.4 million for Obligations of U.S.

Proceeds from Sale, Gross Gains (Losses) Realized on Sales, Maturities and Other-Than-Temporary Impairment Charges Related to Securities Available for Sale

Investment Securities

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

	September 30, 2014									December 31, 2013
	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	$	21,780	$	2,617	$	(10	)	$	24,387	$	22,639	$	2,624	$	(59	)	$	25,204
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	987,530		11,642		(16,414		)	982,758		1,009,519		12,531		(27,163		)	994,887
Mortgage-Backed Securities – Commercial	79		2		—			81		104		1		—			105
Other Government-Sponsored Enterprises	269,177		—		(1,460		)	267,717		267,971		81		(1,927		)	266,125
Obligations of States and Political Subdivisions	19,421		251		(3		)	19,669		80		—		—			80
Corporate Securities	6,685		601		—			7,286		6,693		328		—			7,021
Pooled Trust Preferred Collateralized Debt Obligations	41,971		248		(12,763		)	29,456		42,040		—		(18,517		)	23,523
Total Debt Securities	1,346,643		15,361		(30,650		)	1,331,354		1,349,046		15,565		(47,666		)	1,316,945
Equities	1,420		—		—			1,420		1,420		—		—			1,420
Total Securities Available for Sale	$	1,348,063	$	15,361	$	(30,650	)	$	1,332,774	$	1,350,466	$	15,565	$	(47,666	)	$	1,318,365

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.

The amortized cost and estimated fair value of debt securities available for sale at September 30, 2014, by contractual maturity, are shown below.

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	2,600	$	2,600
Due after 1 but within 5 years	266,577		265,117
Due after 5 but within 10 years	11,224		11,373
Due after 10 years	56,853		45,038
	337,254		324,128
Mortgage-Backed Securities (a)	1,009,389		1,007,226
Total Debt Securities	$	1,346,643	$	1,331,354

(a) Mortgage Backed Securities include an amortized cost of $21.8 million and a fair value of $24.4 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $987.6 million and a fair value of $982.8 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac.

Proceeds from sales, gross gains (losses) realized on sales, maturities and other-than-temporary impairment charges related to securities available for sale were as follows for the nine months endedSeptember 30:

	2014			2013
	(dollars in thousands)
Proceeds from sales	$	132,868		$	671
Gross gains (losses) realized:
Sales Transactions:
Gross gains	$	489		$	233
Gross losses	(441		)	—
	48			233
Maturities and impairment
Gross gains	2			4
Gross losses	—			—
Other-than-temporary impairment	—			—
	2			4
Net gains and impairment	$	50		$	237

During the third quarter of 2014, $132.9 million million in available for sale securities were sold as part of a strategy to protect the Company's net interest margin from the effects of a prolonged low interest rate enviroment. Proceeds from the investment sales were reinvested into like securities with a slightly longer duration and higher yield. The overall effect was to increase the yield on the investment portfolio by 7 basis points, while only extending the overall duration of the entire portfolio by 2.4 months.

Securities available for sale with an estimated fair value of $547.1 million and $594.9 million were pledged as of September 30, 2014 and December 31, 2013, respectively, to secure public deposits and for other purposes required or permitted by law.