Investment Securities

Securities Available for Sale

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



	March 31, 2016									December 31, 2015
	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	$	19,380	$	2,320	$	—		$	21,700	$	20,034	$	2,071	$	(13	)	$	22,092
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	768,405		12,917		(1,697		)	779,625		778,476		7,983		(8,882		)	777,577
Mortgage-Backed Securities – Commercial	23		—		—			23		28		—		—			28
Other Government-Sponsored Enterprises	19,201		7		(5		)	19,203		19,201		2		(85		)	19,118
Obligations of States and Political Subdivisions	27,068		764		—			27,832		27,066		532		—			27,598
Corporate Securities	5,896		440		—			6,336		1,897		422		—			2,319
Pooled Trust Preferred Collateralized Debt Obligations	42,500		476		(9,703		)	33,273		42,239		916		(7,497		)	35,658
Total Debt Securities	882,473		16,924		(11,405		)	887,992		888,941		11,926		(16,477		)	884,390
Equities	2,206		—		—			2,206		2,170		—		—			2,170
Total Securities Available for Sale	$	884,679	$	16,924	$	(11,405	)	$	890,198	$	891,111	$	11,926	$	(16,477	)	$	886,560

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 March 31, 2016, by contractual maturity, are shown below.



	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	2,601	$	2,601
Due after 1 but within 5 years	20,596		20,640
Due after 5 but within 10 years	27,068		27,832
Due after 10 years	44,400		35,571
	94,665		86,644
Mortgage-Backed Securities (a)	787,808		801,348
Total Debt Securities	$	882,473	$	887,992


(a)	Mortgage Backed Securities include an amortized cost of $19.4 million and a fair value of $21.7 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $768.4 million and a fair value of $779.6 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 three months ended March 31:



	2016		2015
	(dollars in thousands)
Proceeds from sales	$	—	$	—
Gross gains (losses) realized:
Sales Transactions:
Gross gains	$	—	$	—
Gross losses	—		—
	—		—
Maturities and impairment
Gross gains	—		105
Gross losses	—		—
Other-than-temporary impairment	—		—
	—		105
Net gains and impairment	$	—	$	105

Securities available for sale with an estimated fair value of $478.2 million and $416.1 million were pledged as of March 31, 2016 and December 31, 2015, 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:



	March 31, 2016									December 31, 2015
	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	$	4,743	$	99	$	—		$	4,842	$	4,775	$	—	$	(7	)	$	4,768
Mortgage-Backed Securities- Commercial	16,767		—		(3		)	16,764		16,843		—		(247		)	16,596
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	325,974		3,526		—			329,500		315,609		30		(1,824		)	313,815
Mortgage-Backed Securities – Commercial	15,067		273		—			15,340		15,187		—		(178		)	15,009
Obligations of States and Political Subdivisions	33,893		627		(2		)	34,518		31,910		301		(58		)	32,153
Total Securities Held to Maturity	$	396,444	$	4,525	$	(5	)	$	400,964	$	384,324	$	331	$	(2,314	)	$	382,341

The amortized cost and estimated fair value of debt securities held to maturity at March 31, 2016, 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	107		108
Due after 5 but within 10 years	27,839		28,412
Due after 10 years	5,947		5,998
	33,893		34,518
Mortgage-Backed Securities (a)	362,551		366,446
Total Debt Securities	$	396,444	$	400,964


(a)	Mortgage Backed Securities include an amortized cost of $21.5 million and a fair value of $21.6 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $341.0 million and a fair value of $344.8 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 $58.3 million and $45.7 million were pledged as of March 31, 2016 and December 31, 2015, respectively, to secure public deposits and for other purposes required or permitted by law.