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Investment Securities | 12 Months Ended
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Dec. 31, 2023
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | Investment Securities Securities Available for Sale Below is an analysis of the amortized cost and fair values of securities available for sale at December 31:
| 2023 |  | 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 | $ | 3,565 |  |  | $ | 47 |  |  | $ | (147) |  |  | $ | 3,465 |  |  | $ | 4,127 |  |  | $ | 37 |  |  | $ | (181) |  |  | $ | 3,983 |
Mortgage-Backed Securities – Commercial | 512,979 |  |  | 4,935 |  |  | (52,521) |  |  | 465,393 |  |  | 324,306 |  |  | — |  |  | (52,890) |  |  | 271,416 |
Obligations of U.S. Government-Sponsored Enterprises: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-Backed Securities – Residential | 559,769 |  |  | 3,052 |  |  | (68,222) |  |  | 494,599 |  |  | 527,777 |  |  | 59 |  |  | (78,847) |  |  | 448,989 |
Other Government-Sponsored Enterprises | 1,000 |  |  | — |  |  | (85) |  |  | 915 |  |  | 1,000 |  |  | — |  |  | (118) |  |  | 882 |
Obligations of States and Political Subdivisions | 9,226 |  |  | 3 |  |  | (1,027) |  |  | 8,202 |  |  | 9,482 |  |  | — |  |  | (1,295) |  |  | 8,187 |
Corporate Securities | 51,886 |  |  | 145 |  |  | (3,619) |  |  | 48,412 |  |  | 32,010 |  |  | 179 |  |  | (2,985) |  |  | 29,204 |
Total Securities Available for Sale | $ | 1,138,425 |  |  | $ | 8,182 |  |  | $ | (125,621) |  |  | $ | 1,020,986 |  |  | $ | 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 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 December 31, 2023, by contractual maturity, are shown below:
| Amortized Cost |  | Estimated Fair Value
| (dollars in thousands)
Due within 1 year | $ | 6,255 |  |  | $ | 6,246 |
Due after 1 but within 5 years | 9,796 |  |  | 9,654 |
Due after 5 but within 10 years | 46,061 |  |  | 41,629 |
Due after 10 years | — |  |  | — |
| 62,112 |  |  | 57,529 |
Mortgage-Backed Securities (a) | 1,076,313 |  |  | 963,457 |
Total Debt Securities | $ | 1,138,425 |  |  | $ | 1,020,986 |
(a)Mortgage Backed Securities include an amortized cost of $516.5 million and a fair value of $468.9 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $559.8 million and a fair value of $494.6 million for Obligations of U.S. Government-sponsored enterprises issued by Fannie Mae and Freddie Mac. Proceeds from sales of securities and gross gains (losses) realized on sales, calls and maturities of securities available for sale were as follows for the years ended December 31:
| 2023 |  | 2022 |  | 2021
| (dollars in thousands)
Proceeds from sales | $ | 33,756 |  |  | $ | — |  |  | $ | — |
Gross (losses) gains realized: |  |  |  |  |
Sales Transactions: |  |  |  |  |
Gross gains | $ | — |  |  | $ | — |  |  | $ | — |
Gross losses | (103) |  |  | — |  |  | — |
| (103) |  |  | — |  |  | — |
Maturities |  |  |  |  |
Gross gains | — |  |  | 2 |  |  | 16 |
Gross losses | — |  |  | — |  |  | — |
| — |  |  | 2 |  |  | 16 |
Net (losses) gains | $ | (103) |  |  | $ | 2 |  |  | $ | 16 |
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. Gross gains from maturities recognized in 2022 and 2021 were the result of calls on municipal securities. Securities available for sale with an approximate fair value of $386.5 million and $626.7 million were pledged as of December 31, 2023 and 2022, 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 December 31:
| 2023 |  | 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 | $ | 1,781 |  |  | $ | — |  |  | $ | (175) |  |  | $ | 1,606 |  |  | $ | 2,008 |  |  | $ | — |  |  | $ | (224) |  |  | $ | 1,784 |
Mortgage-Backed Securities – Commercial | 69,502 |  |  | — |  |  | (14,435) |  |  | 55,067 |  |  | 75,229 |  |  | — |  |  | (14,196) |  |  | 61,033 |
Obligations of U.S. Government-Sponsored Enterprises: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-Backed Securities – Residential | 296,432 |  |  | — |  |  | (47,148) |  |  | 249,284 |  |  | 329,267 |  |  | — |  |  | (53,002) |  |  | 276,265 |
Mortgage-Backed Securities – Commercial | 2,190 |  |  | — |  |  | (30) |  |  | 2,160 |  |  | 4,794 |  |  | — |  |  | (129) |  |  | 4,665 |
Other Government-Sponsored Enterprises | 22,543 |  |  | — |  |  | (4,178) |  |  | 18,365 |  |  | 22,221 |  |  | — |  |  | (4,501) |  |  | 17,720 |
Obligations of States and Political Subdivisions | 25,561 |  |  | — |  |  | (2,412) |  |  | 23,149 |  |  | 26,643 |  |  | — |  |  | (2,865) |  |  | 23,778 |
Debt Securities Issued by Foreign Governments | 1,000 |  |  | — |  |  | (36) |  |  | 964 |  |  | 1,000 |  |  | — |  |  | (40) |  |  | 960 |
Total Securities Held to Maturity | $ | 419,009 |  |  | $ | — |  |  | $ | (68,414) |  |  | $ | 350,595 |  |  | $ | 461,162 |  |  | $ | — |  |  | $ | (74,957) |  |  | $ | 386,205 |
The amortized cost and estimated fair value of debt securities held to maturity at December 31, 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 | $ | 660 |  |  | $ | 658 |
Due after 1 but within 5 years | 12,373 |  |  | 11,772 |
Due after 5 but within 10 years | 35,508 |  |  | 29,595 |
Due after 10 years | 563 |  |  | 453 |
| 49,104 |  |  | 42,478 |
Mortgage-Backed Securities (a) | 369,905 |  |  | 308,117 |
Total Debt Securities | $ | 419,009 |  |  | $ | 350,595 |
(a)Mortgage Backed Securities include an amortized cost of $71.3 million and a fair value of $56.7 million for Obligations of U.S. Government agencies issued by Ginnie Mae and an amortized cost of $298.6 million and a fair value of $251.4 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 $98.1 million and $368.8 million were pledged as of December 31, 2023 and 2022, respectively, to secure public deposits for other purposes required or permitted by law. Other Investments As a member of the 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 December 31, 2023 and 2022, our FHLB stock totaled $44.7 million and $25.2 million, respectively and is included in “Other investments” on the 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 for the year ended December 31, 2023. At December 31, 2023 and 2022, Other Investments consisted of $6.2 million and $1.2 million, respectively, of securities that include bankers bank membership stock and investments in community development organizations. These securities do not have a readily determinable fair value and are carried at cost. For the years ended December 31, 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 research reports, analysts’ recommendations, credit rating changes, news stories, annual reports, regulatory filings, impact of interest rate changes and other relevant information. Impairment of Investment Securities 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. First Commonwealth utilizes the specific identification method to determine the net gain or loss on debt securities and the average cost method to determine the net gain or loss on equity securities. The following table presents the gross unrealized losses and estimated fair values at December 31, 2023 for available for sale securities for which an allowance for credit losses has not been recorded and held to maturity securities by investment category and time frame for which the 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 | $ | — |  |  | $ | — |  |  | $ | 3,395 |  |  | $ | (322) |  |  | $ | 3,395 |  |  | $ | (322) |
Mortgage-Backed Securities – Commercial | — |  |  | — |  |  | 300,642 |  |  | (66,956) |  |  | 300,642 |  |  | (66,956) |
Obligations of U.S. Government-Sponsored Enterprises: |  |  |  |  |  |  |  |  |  |  |
Mortgage-Backed Securities – Residential | 1,124 |  |  | (3) |  |  | 643,735 |  |  | (115,367) |  |  | 644,859 |  |  | (115,370) |
Mortgage-Backed Securities – Commercial | — |  |  | — |  |  | 2,160 |  |  | (30) |  |  | 2,160 |  |  | (30) |
Other Government-Sponsored Enterprises | — |  |  | — |  |  | 19,280 |  |  | (4,263) |  |  | 19,280 |  |  | (4,263) |
Obligations of States and Political Subdivisions | 2,641 |  |  | (62) |  |  | 26,887 |  |  | (3,377) |  |  | 29,528 |  |  | (3,439) |
Debt Securities Issued by Foreign Governments | 199 |  |  | (1) |  |  | 765 |  |  | (35) |  |  | 964 |  |  | (36) |
Corporate Securities | 11,416 |  |  | (45) |  |  | 21,426 |  |  | (3,574) |  |  | 32,842 |  |  | (3,619) |
Total Securities | $ | 15,380 |  |  | $ | (111) |  |  | $ | 1,018,290 |  |  | $ | (193,924) |  |  | $ | 1,033,670 |  |  | $ | (194,035) |
At December 31, 2023, fixed income securities issued by U.S. Government Agencies and U.S. Government-sponsored enterprises comprised 96% of total unrealized losses. All unrealized losses are a result of changes in market interest rates. At December 31, 2023, there were 207 debt securities in an unrealized loss position. There were no equity securities in an unrealized loss position at December 31, 2023. The following table presents the gross unrealized losses and estimated fair value at December 31, 2022 for both available for sale and held to maturity securities by investment category and time frame for which the securities had 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) |
Obligations 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 December 31, 2023, our corporate securities had an amortized cost and estimated fair value of $51.9 million and $48.4 million, respectively. At December 31, 2022, these securities had an amortized cost of $32.0 million and estimated fair value of $29.2 million. When unrealized losses exist, management reviews each of the issuer’s asset quality, earnings trend 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. There was no expected credit related impairment recognized on investment securities during the twelve months ended December 31, 2023, 2022 and 2021.

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