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Investment Securities | 9 Months Ended
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Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | Investment Securities Available-for-sale The following table summarizes Peoples' available-for-sale investment securities:
(Dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value
September 30, 2023 |  |  |  |
Obligations of: |  |  |  |
U.S. Treasury and government agencies | $ | 45,207 |  | $ | — |  | $ | (2,741) |  | $ | 42,466 |
U.S. government sponsored agencies | 118,148 |  | — |  | (14,216) |  | 103,932 |
States and political subdivisions | 263,001 |  | 6 |  | (42,547) |  | 220,460 |
Residential mortgage-backed securities | 714,501 |  | 725 |  | (122,122) |  | 593,104 |
Commercial mortgage-backed securities | 62,584 |  | — |  | (11,744) |  | 50,840 |
Bank-issued trust preferred securities | 8,353 |  | 1 |  | (575) |  | 7,779 |
Total available-for-sale securities | $ | 1,211,794 |  | $ | 732 |  | $ | (193,945) |  | $ | 1,018,581 |
December 31, 2022 |  |  |  |
Obligations of: |  |  |  |
U.S. Treasury and government agencies | $ | 158,473 |  | $ | — |  | $ | (6,051) |  | $ | 152,422 |
U.S. government sponsored agencies | 101,753 |  | 18 |  | (13,656) |  | 88,115 |
States and political subdivisions | 261,612 |  | 12 |  | (35,742) |  | 225,882 |
Residential mortgage-backed securities | 707,025 |  | 1,017 |  | (103,389) |  | 604,653 |
Commercial mortgage-backed securities | 61,091 |  | — |  | (11,042) |  | 50,049 |
Bank-issued trust preferred securities | 10,765 |  | 57 |  | (544) |  | 10,278 |
Total available-for-sale securities | $ | 1,300,719 |  | $ | 1,104 |  | $ | (170,424) |  | $ | 1,131,399 |
The gross gains and losses realized by Peoples from sales of available-for-sale securities for the periods ended September 30 were as follows:
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
(Dollars in thousands) | 2023 | 2022 |  | 2023 | 2022
Gross gains realized | $ | 1,101 |  | $ | 29 |  |  | $ | 1,191 |  | $ | 189 |
Gross losses realized | (1,108) |  | (8) |  |  | (3,299) |  | (82) |
Net (loss) gain realized | $ | (7) |  | $ | 21 |  |  | $ | (2,108) |  | $ | 107 |
The cost of investment securities sold, and any resulting gain or loss, were based on the specific identification method and recognized as of the trade date. The following table presents a summary of available-for-sale investment securities that have been in a continuous unrealized loss position for the periods identified:
| Less than 12 Months |  | 12 Months or More |  | Total
(Dollars in thousands) | Fair Value | Unrealized Loss | No. of Securities |  | Fair Value | Unrealized Loss | No. of Securities |  | Fair Value | Unrealized Loss
September 30, 2023 |  |  |  |  |  |  |  |  |  |
Obligations of: |  |  |  |  |  |  |  |  |  |
U.S. Treasury and government agencies | $ | 15,992 |  | $ | 374 |  | 19 |  |  | $ | 26,476 |  | $ | 2,367 |  | 12 |  |  | $ | 42,468 |  | $ | 2,741 |
U.S. government sponsored agencies | 29,514 |  | 450 |  | 17 |  |  | 74,418 |  | 13,766 |  | 17 |  |  | 103,932 |  | 14,216 |
States and political subdivisions | 47,093 |  | 3,358 |  | 106 |  |  | 170,282 |  | 39,189 |  | 156 |  |  | 217,375 |  | 42,547 |
Residential mortgage-backed securities | 68,958 |  | 4,928 |  | 85 |  |  | 519,488 |  | 117,194 |  | 238 |  |  | 588,446 |  | 122,122 |
Commercial mortgage-backed securities | 7,851 |  | 344 |  | 9 |  |  | 42,767 |  | 11,400 |  | 21 |  |  | 50,618 |  | 11,744 |
Bank-issued trust preferred securities | — |  | — |  | — |  |  | 3,925 |  | 575 |  | 2 |  |  | 3,925 |  | 575 |
Total | $ | 169,408 |  | $ | 9,454 |  | 236 |  |  | $ | 837,356 |  | $ | 184,491 |  | 446 |  |  | $ | 1,006,764 |  | $ | 193,945 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |
Obligations of: |  |  |  |  |  |  |  |  |  |
U.S. Treasury and government agencies | $ | 112,730 |  | $ | 2,772 |  | 13 |  |  | $ | 39,692 |  | $ | 3,279 |  | 11 |  |  | $ | 152,422 |  | $ | 6,051 |
U.S. government sponsored agencies | 15,166 |  | 249 |  | 17 |  |  | 66,706 |  | 13,407 |  | 18 |  |  | 81,872 |  | 13,656 |
States and political subdivisions | 60,324 |  | 714 |  | 114 |  |  | 156,900 |  | 35,028 |  | 117 |  |  | 217,224 |  | 35,742 |
Residential mortgage-backed securities | 104,959 |  | 8,087 |  | 105 |  |  | 488,452 |  | 95,302 |  | 139 |  |  | 593,411 |  | 103,389 |
Commercial mortgage-backed securities | 1,874 |  | 129 |  | 2 |  |  | 48,175 |  | 10,913 |  | 21 |  |  | 50,049 |  | 11,042 |
Bank-issued trust preferred securities | 4,400 |  | 100 |  | 3 |  |  | 3,556 |  | 444 |  | 2 |  |  | 7,956 |  | 544 |
Total | $ | 299,453 |  | $ | 12,051 |  | 254 |  |  | $ | 803,481 |  | $ | 158,373 |  | 308 |  |  | $ | 1,102,934 |  | $ | 170,424 |
Management evaluates available-for-sale investment securities for an allowance for credit losses on a quarterly basis. At September 30, 2023, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses. At September 30, 2023, Peoples did not have the intent to sell, nor was it more likely than not that Peoples would be required to sell, any of the securities with an unrealized loss prior to recovery. Further, the unrealized losses at both September 30, 2023 and December 31, 2022 were largely attributable to changes in market interest rates and spreads since the securities were purchased, and were not credit-related losses. Accrued interest receivable is not included in investment securities balances, and is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses. Interest receivable on investment securities was $9.4 million at September 30, 2023 and $7.8 million at December 31, 2022. At September 30, 2023, approximately 99% of the mortgage-backed securities with a market value that had been at an unrealized loss position for twelve months or more were issued by U.S. government sponsored agencies. The remaining 1%, or five positions, consisted of privately issued mortgage-backed securities with all of the underlying mortgages originated prior to 2004. Of the five positions, no positions had a fair value of less than 90% of their book values. Management analyzed the underlying credit quality of these mortgage-backed securities and concluded the unrealized losses were primarily attributable to the floating rate nature of these investments and the low remaining number of loans underlying these securities. Obligations of the U.S. treasury and government agencies, obligations of U.S. government sponsored agencies, and obligations of states and political subdivisions were issued by the U.S. Treasury Department or other U.S., state or local government agencies or government-sponsored entities. The decline in fair values was attributable to changes in interest rates and not credit quality. Therefore, management does not consider these to be impaired securities. The unrealized loss with respect to the two bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at September 30, 2023 was attributable to the subordinated nature of the trust preferred securities. The table below presents the amortized cost, fair value and total weighted-average yield of available-for-sale securities by contractual maturity at September 30, 2023. The weighted-average yields are based on the amortized cost. In some cases, the issuers may have the right to call or prepay obligations without call or prepayment penalties prior to the contractual maturity date.
(Dollars in thousands) | Within 1 Year | 1 to 5 Years | 5 to 10 Years | Over 10 Years | Total
Amortized cost |  |  |  |  |
Obligations of: |  |  |  |  |
U.S. Treasury and government agencies | $ | — |  | $ | 30,703 |  | $ | 8,439 |  | $ | 6,065 |  | $ | 45,207 |
U.S. government sponsored agencies | 7,929 |  | 60,184 |  | 32,335 |  | 17,700 |  | 118,148 |
States and political subdivisions | 18,785 |  | 52,478 |  | 66,632 |  | 125,106 |  | 263,001 |
Residential mortgage-backed securities | 1 |  | 4,052 |  | 61,904 |  | 648,544 |  | 714,501 |
Commercial mortgage-backed securities | 1,628 |  | 12,583 |  | 27,254 |  | 21,119 |  | 62,584 |
Bank-issued trust preferred securities | — |  | 3,000 |  | 3,500 |  | 1,853 |  | 8,353 |
Total available-for-sale securities | $ | 28,343 |  | $ | 163,000 |  | $ | 200,064 |  | $ | 820,387 |  | $ | 1,211,794 |
Fair value |  |  |  |  |
Obligations of: |  |  |  |  |
U.S. Treasury and government agencies | $ | — |  | $ | 28,284 |  | $ | 8,242 |  | $ | 5,940 |  | $ | 42,466 |
U.S. government sponsored agencies | 7,858 |  | 54,328 |  | 26,545 |  | 15,201 |  | 103,932 |
States and political subdivisions | 18,554 |  | 48,537 |  | 54,148 |  | 99,221 |  | 220,460 |
Residential mortgage-backed securities | 1 |  | 3,845 |  | 54,760 |  | 534,498 |  | 593,104 |
Commercial mortgage-backed securities | 1,621 |  | 11,195 |  | 21,986 |  | 16,038 |  | 50,840 |
Bank-issued trust preferred securities | — |  | 2,942 |  | 2,984 |  | 1,853 |  | 7,779 |
Total available-for-sale securities | $ | 28,034 |  | $ | 149,131 |  | $ | 168,665 |  | $ | 672,751 |  | $ | 1,018,581 |
Total weighted-average yield | 2.77 | % | 2.27 | % | 2.10 | % | 2.29 | % | 2.27 | %
Held-to-maturity The following table summarizes Peoples’ held-to-maturity investment securities:
(Dollars in thousands) | Amortized Cost | Allowance for Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value
September 30, 2023 |  |  |  |  |
Obligations of: |  |  |  |  |
U.S. government sponsored agencies | $ | 174,699 |  | $ | — |  | $ | — |  | $ | (13,714) |  | $ | 160,985 |
States and political subdivisions | 144,728 |  | (238) |  | 84 |  | (39,764) |  | 104,810 |
Residential mortgage-backed securities | 248,627 |  | — |  | 85 |  | (29,742) |  | 218,970 |
Commercial mortgage-backed securities | 107,593 |  | — |  | — |  | (22,470) |  | 85,123 |
Total held-to-maturity securities | $ | 675,647 |  | $ | (238) |  | $ | 169 |  | $ | (105,690) |  | $ | 569,888 |
December 31, 2022 |  |  |  |  |
Obligations of: |  |  |  |  |
U.S. government sponsored agencies | $ | 132,366 |  | $ | — |  | $ | 130 |  | $ | (9,476) |  | $ | 123,020 |
States and political subdivisions | 145,263 |  | (241) |  | 162 |  | (36,408) |  | 108,776 |
Residential mortgage-backed securities | 176,215 |  | — |  | 244 |  | (18,461) |  | 157,998 |
Commercial mortgage-backed securities | 106,609 |  | — |  | — |  | (17,894) |  | 88,715 |
Total held-to-maturity securities | $ | 560,453 |  | $ | (241) |  | $ | 536 |  | $ | (82,239) |  | $ | 478,509 |
There were no sales of held-to-maturity securities during either of the nine months ended September 30, 2023 or 2022. Management evaluates held-to-maturity investment securities for an allowance for credit losses on a quarterly basis. Peoples has determined that the loss given default for U.S. government sponsored agencies investment securities is zero, due to the fact that it is unlikely the ultimate guarantor (the U.S. government) would not perform on its implicit guarantee in the event of default. The remaining securities are included in the calculation of the allowance for credit losses for held-to-maturity investment securities. Peoples reported $0.2 million of allowance for credit losses for held-to-maturity securities at both September 30, 2023, and December 31, 2022. The following table presents a summary of held-to-maturity investment securities that had been in a continuous unrealized loss position for the periods identified:
| Less than 12 Months |  | 12 Months or More |  | Total
(Dollars in thousands) | Fair Value | Unrealized Loss | No. of Securities |  | Fair Value | Unrealized Loss | No. of Securities |  | Fair Value | Unrealized Loss
September 30, 2023 |  |  |  |  |  |  |  |  |  |
Obligations of: |  |  |  |  |  |  |  |  |  |
U.S. government sponsored agencies | $ | 111,592 |  | $ | 3,708 |  | 22 |  |  | 49,393 |  | 10,006 |  | 16 |  |  | $ | 160,985 |  | $ | 13,714 |
States and political subdivisions | — |  | — |  | — |  |  | 101,560 |  | 39,764 |  | 67 |  |  | 101,560 |  | 39,764 |
Residential mortgage-backed securities | 130,966 |  | 9,176 |  | 38 |  |  | 80,612 |  | 20,566 |  | 26 |  |  | 211,578 |  | 29,742 |
Commercial mortgage-backed securities | 21,396 |  | 3,599 |  | 8 |  |  | 63,727 |  | 18,871 |  | 30 |  |  | 85,123 |  | 22,470 |
Total | $ | 263,954 |  | $ | 16,483 |  | 68 |  |  | $ | 295,292 |  | $ | 89,207 |  | 139 |  |  | $ | 559,246 |  | $ | 105,690 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |
Obligations of: |  |  |  |  |  |  |  |  |  |
U.S. government sponsored agencies | $ | 59,905 |  | $ | 651 |  | 17 |  |  | 29,306 |  | 8,825 |  | 9 |  |  | $ | 89,211 |  | $ | 9,476 |
States and political subdivisions | 3,590 |  | 1,072 |  | 3 |  |  | 101,863 |  | 35,336 |  | 64 |  |  | 105,453 |  | 36,408 |
Residential mortgage-backed securities | 71,582 |  | 2,904 |  | 21 |  |  | 72,862 |  | 15,557 |  | 18 |  |  | 144,444 |  | 18,461 |
Commercial mortgage-backed securities | 26,869 |  | 650 |  | 8 |  |  | 61,846 |  | 17,244 |  | 29 |  |  | 88,715 |  | 17,894 |
Total | $ | 161,946 |  | $ | 5,277 |  | 49 |  |  | $ | 265,877 |  | $ | 76,962 |  | 120 |  |  | $ | 427,823 |  | $ | 82,239 |
The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity securities by contractual maturity at September 30, 2023. The weighted-average yields are based on the amortized cost and are computed on a fully taxable-equivalent basis using a blended federal and state corporate income tax rate of 23.3% at September 30, 2023. In some cases, the issuers may have the right to call or prepay obligations without call or prepayment penalties prior to the contractual maturity date.
(Dollars in thousands) | Within 1 Year | 1 to 5 Years | 5 to 10 Years | Over 10 Years | Total
Amortized cost |  |  |  |  |
Obligations of: |  |  |  |  |
U.S. government sponsored agencies | 4,629 |  | $ | 18,660 |  | $ | 67,032 |  | $ | 84,378 |  | $ | 174,699 |
States and political subdivisions | — |  | 5,218 |  | 9,392 |  | 130,118 |  | 144,728 |
Residential mortgage-backed securities | — |  | 646 |  | 4,453 |  | 243,528 |  | 248,627 |
Commercial mortgage-backed securities | 6,562 |  | 9,466 |  | 37,564 |  | 54,001 |  | 107,593 |
Total held-to-maturity securities | $ | 11,191 |  | $ | 33,990 |  | $ | 118,441 |  | $ | 512,025 |  | $ | 675,647 |
Fair value |  |  |  |  |
Obligations of: |  |  |  |  |
U.S. government sponsored agencies | 4,584 |  | $ | 17,800 |  | $ | 65,196 |  | $ | 73,405 |  | $ | 160,985 |
States and political subdivisions | — |  | 5,157 |  | 7,706 |  | 91,947 |  | 104,810 |
Residential mortgage-backed securities | — |  | 626 |  | 3,736 |  | 214,608 |  | 218,970 |
Commercial mortgage-backed securities | 6,474 |  | 7,793 |  | 30,487 |  | 40,369 |  | 85,123 |
Total held-to-maturity securities | $ | 11,058 |  | $ | 31,376 |  | $ | 107,125 |  | $ | 420,329 |  | $ | 569,888 |
Total weighted-average yield | 2.32 | % | 1.64 | % | 4.04 | % | 3.43 | % | 3.43 | %
Other Investment Securities Peoples' other investment securities on the Unaudited Consolidated Balance Sheets consist largely of shares of FHLB stock and of FRB stock. The following table summarizes the carrying value of Peoples' other investment securities:
(Dollars in thousands) | September 30, 2023 | December 31, 2022
FHLB stock | $ | 33,808 |  | $ | 26,605 |
FRB stock | 26,897 |  | 21,231 |
Nonqualified deferred compensation | 2,744 |  | 2,048 |
Equity investment securities | 394 |  | 346 |
Other investment securities | 2,489 |  | 1,379 |
Total other investment securities | $ | 66,332 |  | $ | 51,609 |
During the nine months ended September 30, 2023, Peoples redeemed $15.6 million of FHLB stock in order to be in compliance with the requirements of the FHLB. Peoples purchased $17.2 million of additional FHLB stock during the nine months ended September 30, 2023, as a result of the FHLB's capital requirements on FHLB advances during the first nine months. For the three months ended September 30, 2023 and 2022, Peoples recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income", resulting in an unrealized loss of $58,000 and an unrealized gain of $6,000, respectively. For the nine months ended September 30, 2023 and 2022, Peoples recognized an unrealized loss of $175,000 and an unrealized loss of $12,000, respectively, for the change in fair value of equity investment securities in "Other non-interest income". At September 30, 2023, Peoples' investment in equity investment securities was comprised largely of common stocks issued by various unrelated bank holding companies. There were no equity investment securities of a single issuer that exceeded 10% of Peoples' stockholders' equity at September 30, 2023. Pledged Securities Peoples has pledged available-for-sale investment securities and held-to-maturity investment securities to secure public and trust department deposits, and repurchase agreements in accordance with federal and state requirements. Peoples has also pledged available-for-sale investment securities to secure additional borrowing capacity at the FHLB and the FRB. The following table summarizes the carrying amount of Peoples' pledged securities:
|  | Carrying Amount
(Dollars in thousands) |  | September 30, 2023 |  | December 31, 2022
Securing public and trust department deposits, and repurchase agreements: |  |  |  |
Available-for-sale |  | $ | 745,164 |  |  | $ | 779,244 |
Held-to-maturity |  | 523,317 |  |  | 312,921 |
Securing additional borrowing capacity at the FHLB and the FRB: |  |  |  |
Available-for-sale |  | 3,520 |  |  | 3,972 |
Held-to-maturity |  | 1,254 |  |  | 128,870 |

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