XML 87 R17.htm IDEA: XBRL DOCUMENT v2.4.0.6
Junior Subordinated Notes Held By Subsidiary Trust
12 Months Ended
Dec. 31, 2012
Junior Subordinated Notes Held By Subsidiary Trust [Abstract]  
Junior Subordinated Notes [Table Text Block]
Junior Subordinated Debentures Held By Subsidiary Trust

Peoples previously formed a statutory business trust (the “Trust”) for the purpose of issuing corporation-obligated mandatorily redeemable capital securities (the “Capital Securities” or “Trust Preferred Securities”), with 100% of the common equity in the Trust owned by Peoples. The proceeds from the Capital Securities and common equity were invested in junior subordinated debentures issued by Peoples (the “Debentures”).
The Debentures held by the Trust were the sole assets of the Trust. Distributions on the Capital Securities were payable semiannually at a rate per annum equal to the interest rate being earned by the Trust on the Debentures and was recorded as interest expense by Peoples. Since the Trust was a variable interest entity and Peoples was not deemed to be the primary beneficiary, the Trust was not included in Peoples' Consolidated Financial Statements. As a result, Peoples included the Debentures as a separate category of long-term debt on the Consolidated Balance Sheets entitled “Junior Subordinated Debentures Held by Subsidiary Trust” and the related expense as interest expense on the Consolidated Statements of Income.
Under the provisions of the Debentures, Peoples had the right to defer payment of interest on the Debentures at any time, or from time to time, for periods not exceeding five years. If interest payments on the Debentures were deferred, the dividends on the Capital Securities were also deferred and Peoples was prohibited from paying dividends on its common shares. Interest on the Debentures was cumulative. Peoples entered into agreements which, taken collectively, fully and unconditionally guaranteed the Capital Securities subject to the terms of each of the guarantees.
The Capital Securities were mandatorily redeemable upon repayment of the Debentures. On December 19, 2012 Peoples prepaid the entire $30,928,000 principal amount of the Debentures at a premium of 3.017%, plus all accrued and unpaid interest at a then current rate of 8.62%. As a result of this repayment, PEBO Capital Trust I redeemed all of the outstanding Capital Securities and common equity, and was dissolved in accordance with the terms of the Amended and Restated Declaration of Trust of PEBO Capital Trust I, dated as of April 20, 1999. Peoples recorded a $1.0 million pre-tax loss on the redemption of these securities.
Under the risk-based capital standards for bank holding companies adopted by the Board of Governors of the Federal Reserve System, the Trust Preferred Securities had qualified as Tier 1 capital for regulatory capital purposes, subject to certain quantitative limits and qualitative standards. Specifically, the aggregate amount of trust preferred securities and certain other capital elements that qualify as Tier 1 capital is limited to 25% of core capital elements, net of goodwill, with the excess amount not qualifying for Tier 1 capital being included in Tier 2 capital. At December 31, 2012, due to the full prepayment of the Capital Securities, Peoples had no Trust Preferred Securities that qualified as Tier 1 Capital. As a result, Peoples' Tier 1 Risk-Based Capital Ratio, Total Risk-Based Capital Ratio and Tier 1 Leverage Ratio were reduced. At December 31, 2011, the entire amount of the outstanding Trust Preferred Securities qualified as Tier 1 capital.