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


	September 30, 2023								December 31, 2022
	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	$	3,678	$	10	$	(262)	$	3,426	$	4,127	$	37	$	(181)	$	3,983
Mortgage-Backed Securities – Commercial	429,282		—		(64,471)		364,811		324,306		—		(52,890)		271,416
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	501,750		1		(90,493)		411,258		527,777		59		(78,847)		448,989

Other Government-Sponsored Enterprises	1,000		—		(113)		887		1,000		—		(118)		882
Obligations of States and Political Subdivisions	9,228		—		(1,475)		7,753		9,482		—		(1,295)		8,187
Corporate Securities	33,752		—		(4,284)		29,468		32,010		179		(2,985)		29,204



Total Securities Available for Sale	$	978,690	$	11	$	(161,098)	$	817,603	$	898,702	$	275	$	(136,316)	$	762,661

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 40 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, 2023, by contractual maturity, are shown below.


	Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due within 1 year	$	6,253	$	6,206
Due after 1 but within 5 years	8,890		8,649
Due after 5 but within 10 years	28,837		23,253
Due after 10 years	—		—
	43,980		38,108
Mortgage-Backed Securities (a)	934,710		779,495
Total Debt Securities	$	978,690	$	817,603

(a)Mortgage-backed and collateralized mortgage securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds. Mortgage-Backed Securities include an amortized cost of $433.0 million and a fair value of $368.2 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $501.7 million and a fair value of $411.3 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 and maturities related to securities held to maturity and securities available for sale were as follows for the nine months ended September 30:


	2023		2022
	(dollars in thousands)
Proceeds from sales	$	33,756	$	—
Gross gains (losses) realized:
Sales transactions:
Gross gains	$	—	$	—
Gross losses	(103)		—
	(103)		—
Maturities
Gross gains	—		2
Gross losses	—		—

	—		2
Net gains	$	(103)	$	2

Proceeds from sales included in above table are a result of the sale of investments acquired as part of the Centric acquisition. All of the acquired investments were recorded at fair value at the time of acquisition and subsequently sold at the same value, with the exception of one corporate security. This security was sold in the third quarter of 2023 at a loss of $103 thousand.

Below is an analysis of the amortized cost and fair values of debt securities held to maturity at:


	September 30, 2023								December 31, 2022
	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	$	1,800	$	—	$	(279)	$	1,521	$	2,008	$	—	$	(224)	$	1,784
Mortgage-Backed Securities- Commercial	70,793		—		(17,191)		53,602		75,229		—		(14,196)		61,033
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	304,036		—		(61,572)		242,464		329,267		—		(53,002)		276,265
Mortgage-Backed Securities – Commercial	2,853		—		(55)		2,798		4,794		—		(129)		4,665
Other Government-Sponsored Enterprises	22,461		—		(5,205)		17,256		22,221		—		(4,501)		17,720
Obligations of States and Political Subdivisions	26,615		—		(3,558)		23,057		26,643		—		(2,865)		23,778
Debt Securities Issued by Foreign Governments	1,000		—		(52)		948		1,000		—		(40)		960




Total Securities Held to Maturity	$	429,558	$	—	$	(87,912)	$	341,646	$	461,162	$	—	$	(74,957)	$	386,205

The amortized cost and estimated fair value of debt securities held to maturity at September 30, 2023, 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	$	1,145	$	1,140
Due after 1 but within 5 years	11,811		10,928
Due after 5 but within 10 years	36,557		28,802
Due after 10 years	563		391
	50,076		41,261
Mortgage-Backed Securities (a)	379,482		300,385
Total Debt Securities	$	429,558	$	341,646

(a)Mortgage-backed and collateralized mortgage securities, which have prepayment provisions, are not assigned to maturity categories due to fluctuations in their prepayment speeds. Mortgage-Backed Securities include an amortized cost of $72.6 million and a fair value of $55.1 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $306.9 million and a fair value of $245.3 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac.

As a member of the Federal Home Loan Bank ("FHLB"), First Commonwealth is required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements. The level of stock required to be held is dependent on the amount of First Commonwealth's mortgage-related assets and outstanding borrowings with the FHLB. This stock is restricted in that it can

only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is unlike other investment securities insofar as there is no trading market for FHLB stock and the transfer price is determined by FHLB membership rules and not by market participants. As of September 30, 2023 and December 31, 2022, our FHLB stock totaled $42.8 million and $25.2 million, respectively, and is included in “Other investments” on the unaudited Consolidated Statements of Financial Condition.

FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. First Commonwealth evaluates impairment quarterly and has concluded that the par value of its investment in FHLB stock will be recovered. Accordingly, no impairment charge was recorded on these securities during the three and nine months ended September 30, 2023.

As of both September 30, 2023 and December 31, 2022, "Other investments" also includes $6.2 million and $1.2 million, respectively, in equity securities. These securities do not have a readily determinable fair value and are carried at cost. During the nine-months ended September 30, 2023 and 2022, there were no gains or losses recognized through earnings on equity securities. On a quarterly basis, management evaluates equity securities by reviewing the severity and duration of decline in estimated fair value, research reports, analysts’ recommendations, credit rating changes, news stories, annual reports, regulatory filings, impact of interest rate changes and other relevant information.

We review our investment portfolio on a quarterly basis for indications of impairment. For available for sale securities, the review includes analyzing the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and whether we are more likely than not to sell the security. We evaluate whether we are more likely than not to sell debt securities based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy, tax position and interest rate risk position. Held-to-maturity securities are evaluated for impairment on a quarterly basis using historical probability of default and loss given default information specific to the investment category. If this evaluation determines that credit losses exist an allowance for credit loss is recorded and included in earnings as a component of credit loss expense.

The following table presents the gross unrealized losses and estimated fair values at September 30, 2023 for both available for sale and held to maturity securities by investment category and time frame for which securities have been in a continuous unrealized loss position:


	Less Than 12 Months				12 Months or More				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential	$	633	$	(15)	$	3,233	$	(526)	$	3,866	$	(541)
Mortgage-Backed Securities – Commercial	95,858		(1,190)		293,015		(80,472)		388,873		(81,662)
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	3,042		(79)		628,596		(151,986)		631,638		(152,065)
Mortgage-Backed Securities – Commercial	—		—		2,798		(55)		2,798		(55)
Other Government-Sponsored Enterprises	—		—		18,143		(5,318)		18,143		(5,318)
Obligations of States and Political Subdivisions	4,526		(177)		26,284		(4,856)		30,810		(5,033)
Debt Securities Issued by Foreign Governments	195		(5)		753		(47)		948		(52)
Corporate Securities	8,552		(202)		20,917		(4,082)		29,469		(4,284)



Total Securities	$	112,806	$	(1,668)	$	993,739	$	(247,342)	$	1,106,545	$	(249,010)

At September 30, 2023, fixed income securities issued by the U.S. Government and U.S. Government-sponsored enterprises comprised 96% of total unrealized losses. All unrealized losses are the result of changes in market interest rates. At September 30, 2023, there are 231 debt securities in an unrealized loss position.

The following table presents the gross unrealized losses and estimated fair values at December 31, 2022 by investment category and the time frame for which securities have been in a continuous unrealized loss position:


	Less Than 12 Months				12 Months or More				Total
	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
	(dollars in thousands)
Obligations of U.S. Government Agencies:
Mortgage-Backed Securities – Residential	$	3,734	$	(405)	$	—	$	—	$	3,734	$	(405)
Mortgage-Backed Securities - Commercial	92,208		(12,364)		240,241		(54,722)		332,449		(67,086)
Obligations of U.S. Government-Sponsored Enterprises:
Mortgage-Backed Securities – Residential	239,760		(21,543)		482,195		(110,306)		721,955		(131,849)
Mortgage-Backed Securities – Commercial	4,666		(129)		—		—		4,666		(129)
Other Government-Sponsored Enterprises	—		—		18,603		(4,619)		18,603		(4,619)
Obligation of States and Political Subdivisions	21,234		(1,979)		9,230		(2,181)		30,464		(4,160)
Debt Securities Issued by Foreign Governments	587		(13)		373		(27)		960		(40)
Corporate Securities	14,406		(590)		12,632		(2,395)		27,038		(2,985)

Total Securities	$	376,595	$	(37,023)	$	763,274	$	(174,250)	$	1,139,869	$	(211,273)

As of September 30, 2023, our corporate securities had an amortized cost and an estimated fair value of $33.8 million and $29.5 million, respectively. As of December 31, 2022, our corporate securities had an amortized cost and estimated fair value of $32.0 million and $29.2 million, respectively. Corporate securities are comprised of debt issued by large regional banks. There were eight and six corporate securities, respectively, in an unrealized loss position as of September 30, 2023 and December 31, 2022. When unrealized losses exist, management reviews each of the issuer’s asset quality, earnings trends and capital position to determine whether the unrealized loss position is a result of credit losses. All interest payments on the corporate securities are being made as contractually required.