Investment Securities

12 Months Ended

Dec. 31, 2014

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:

	2014									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	$	23,344	$	2,595	$	(3	)	$	25,936	$	22,639	$	2,624	$	(59	)	$	25,204
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	947,635		13,076		(9,830		)	950,881		1,009,519		12,531		(27,163		)	994,887
Mortgage-Backed Securities – Commercial	72		2		—			74		104		1		—			105
Other Government-Sponsored Enterprises	269,181		4		(1,308		)	267,877		267,971		81		(1,927		)	266,125
Obligations of States and Political Subdivisions	27,058		362		(43		)	27,377		80		—		—			80
Corporate Securities	6,682		573		—			7,255		6,693		328		—			7,021
Pooled Trust Preferred Collateralized Debt Obligations	41,926		309		(13,236		)	28,999		42,040		—		(18,517		)	23,523
Total Debt Securities	1,315,898		16,921		(24,420		)	1,308,399		1,349,046		15,565		(47,666		)	1,316,945
Equities	1,420		—		—			1,420		1,420		—		—			1,420
Total Securities Available for Sale	$	1,317,318	$	16,921	$	(24,420	)	$	1,309,819	$	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.

During 2014, a gain of $0.5 million was recognized as the result of a recovery on a trust preferred security for which a $1.3 million loss was recognized in 2013 due to 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. The gain recognized in 2014 was a result of additional proceeds distributed as part of the final liquidation of the trust.

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, 2014, by contractual maturity, are shown below:

	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	3,000	$	2,998
Due after 1 but within 5 years	266,181		264,879
Due after 5 but within 10 years	21,849		22,104
Due after 10 years	53,817		41,527
	344,847		331,508
Mortgage-Backed Securities (a)	971,051		976,891
Total Debt Securities	$	1,315,898	$	1,308,399

(a) Mortgage Backed Securities include an amortized cost of $23.3 million and a fair value of $25.9 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 $947.7 million and a fair value of $951.0 million.

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 years ended December 31:

	2014			2013			2012
	(dollars in thousands)
Proceeds from sales	$	132,868		$	671		$	—
Gross (losses) gains realized:
Sales Transactions:
Gross gains	$	291		$	233		$	—
Gross losses	(243		)	—			—
	48			233			—
Maturities and impairment
Gross gains	502			4			192
Gross losses	—			(1,395		)	—
Other-than-temporary impairment	—			—			—
	502			(1,391		)	192
Net gains and impairment	$	550		$	(1,158	)	$	192

Securities available for sale with an approximate fair value of $563.2 million and $594.9 million were pledged as of December 31, 2014 and 2013, respectively, to secure public deposits and for other purposes required or permitted by law.