Investment Securities

Securities Available for Sale

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



	September 30, 2015									December 31, 2014
	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	$	20,902	$	2,379	$	—		$	23,281	$	23,344	$	2,595	$	(3	)	$	25,936
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	816,179		12,819		(4,846		)	824,152		947,635		13,076		(9,830		)	950,881
Mortgage-Backed Securities – Commercial	37		1		—			38		72		2		—			74
Other Government-Sponsored Enterprises	135,853		19		(91		)	135,781		269,181		4		(1,308		)	267,877
Obligations of States and Political Subdivisions	27,064		397		(12		)	27,449		27,058		362		(43		)	27,377
Corporate Securities	1,895		438		—			2,333		6,682		573		—			7,255
Pooled Trust Preferred Collateralized Debt Obligations	42,000		1,016		(7,237		)	35,779		41,926		309		(13,236		)	28,999
Total Debt Securities	1,043,930		17,069		(12,186		)	1,048,813		1,315,898		16,921		(24,420		)	1,308,399
Equities	1,920		—		—			1,920		1,420		—		—			1,420
Total Securities Available for Sale	$	1,045,850	$	17,069	$	(12,186	)	$	1,050,733	$	1,317,318	$	16,921	$	(24,420	)	$	1,309,819

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, 2015, by contractual maturity, are shown below.



	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	3,000	$	3,000
Due after 1 but within 5 years	132,852		132,781
Due after 5 but within 10 years	25,657		26,031
Due after 10 years	45,303		39,530
	206,812		201,342
Mortgage-Backed Securities (a)	837,118		847,471
Total Debt Securities	$	1,043,930	$	1,048,813


(a)	Mortgage Backed Securities include an amortized cost of $20.9 million and a fair value of $23.3 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $816.2 million and a fair value of $824.2 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 ended September 30:



	2015		2014
	(dollars in thousands)
Proceeds from sales	$	—	$	132,868
Gross gains (losses) realized:
Sales Transactions:
Gross gains	$	—	$	489
Gross losses	—		(441		)
	—		48
Maturities and impairment
Gross gains	125		2
Gross losses	—		—
Other-than-temporary impairment	—		—
	125		2
Net gains and impairment	$	125	$	50

Securities available for sale with an estimated fair value of $480.1 million and $563.2 million were pledged as of September 30, 2015 and December 31, 2014, respectively, to secure public deposits and for other purposes required or permitted by law.

Securities Held to Maturity

Below is an analysis of the amortized cost and fair values of debt securities held to maturity at September 30, 2015. There were no held to maturity securities at December 31, 2014.



	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential	$	4,806	$	24	$	—		$	4,830
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	$	116,065	$	520	$	(6	)	$	116,579
Mortgage-Backed Securities – Commercial	15,299		176		—			15,475
Obligations of States and Political Subdivisions	17,865		131		(43		)	17,953
Total Securities Held to Maturity	$	154,035	$	851	$	(49	)	$	154,837

The amortized cost and estimated fair value of debt securities held to maturity at September 30, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.



	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	—	$	—
Due after 1 but within 5 years	—		—
Due after 5 but within 10 years	12,210		12,303
Due after 10 years	5,655		5,650
	17,865		17,953
Mortgage-Backed Securities (a)	136,170		136,884
Total Debt Securities	$	154,035	$	154,837


(a)	Mortgage Backed Securities include an amortized cost of $4.8 million and a fair value of $4.8 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $131.4 million and a fair value of $132.1 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac.

Securities held to maturity with an amortized cost of $16.5 million were pledged as of September 30, 2015 to secure public deposits and for other purposes required or permitted by law.