
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2020
Obligations of:

U.S. government sponsored agencies	$	4,958	$	425	$	—	$	5,383
States and political subdivisions	99,518		4,608		—		104,126
Residential mortgage-backed securities	710,254		19,052		(2,314)		726,992
Commercial mortgage-backed securities	10,473		218		(123)		10,568
Bank-issued trust preferred securities	4,696		114		(177)		4,633

Total available-for-sale securities	$	829,899	$	24,417	$	(2,614)	$	851,702
December 31, 2019
Obligations of:

U.S. government sponsored agencies	$	7,917	$	292	$	—	$	8,209
States and political subdivisions	111,217		3,018		(131)		114,104
Residential mortgage-backed securities	787,430		7,763		(4,184)		791,009
Commercial mortgage-backed securities	18,135		88		(135)		18,088
Bank-issued trust preferred securities	4,696		137		(142)		4,691

Total available-for-sale securities	$	929,395	$	11,298	$	(4,592)	$	936,101

The gross unrealized losses related to residential mortgage-backed securities at September 30, 2020 and December 31, 2019, were attributed to changes in market interest rates and spreads since the securities were purchased.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands)	2020		2019		2020		2019
Gross gains realized	$	2	$	97	$	386	$	157
Gross losses realized	—		—		3		87
Net gain realized	$	2	$	97	$	383	$	70


	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, 2020
Obligations of:



Residential mortgage-backed securities	$	142,807	$	1,794	44	$	19,904	$	519	18	$	162,711	$	2,313
Commercial mortgage-backed securities	—		—		—	1,475		123		2	1,475		123
Bank-issued trust preferred securities	495		5		1	1,828		172		2	2,323		177

Total	$	143,302	$	1,799	45	$	23,207	$	814	22	$	166,509	$	2,613
December 31, 2019
Obligations of:


States and political subdivisions	$	6,226	$	74	2	$	2,441	$	57	1	$	8,667	$	131
Residential mortgage-backed securities	284,096		2,527		62	88,993		1,657		39	373,089		4,184
Commercial mortgage-backed securities	970		21		1	2,409		114		3	3,379		135
Bank-issued trust preferred securities	—		—		—	1,858		142		2	1,858		142

Total	$	291,292	$	2,622	65	$	95,701	$	1,970	45	$	386,993	$	4,592

Management evaluates available-for-sale investment securities for an allowance for credit losses on a quarterly basis. At September 30, 2020, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses. At September 30, 2020, 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, 2020 and December 31, 2019 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 $3.4 million at September 30, 2020 and $3.6 million at December 31, 2019.

At September 30, 2020, 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 two positions, consisted of privately issued mortgage-backed securities with all of the underlying mortgages originated prior to 2004. Neither of the two positions had a fair value of less than 90% of its book value. 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.

The unrealized losses 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, 2020 were primarily attributable to the subordinated nature of the debt.

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, 2020. 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. government sponsored agencies	$	—		$	4,958		$	—		$	—		$	4,958
States and political subdivisions	5,878			24,002			38,358			31,280			99,518
Residential mortgage-backed securities	2			5,898			73,518			630,836			710,254
Commercial mortgage-backed securities	3,213			3,535			960			2,765			10,473
Bank-issued trust preferred securities	—			—			4,696			—			4,696

Total available-for-sale securities	$	9,093		$	38,393		$	117,532		$	664,881		$	829,899
Fair value
Obligations of:

U.S. government sponsored agencies	$	—		$	5,383		$	—		$	—		$	5,383
States and political subdivisions	5,925			24,949			40,925			32,327			104,126
Residential mortgage-backed securities	2			5,995			74,425			646,570			726,992
Commercial mortgage-backed securities	3,225			3,622			1,004			2,717			10,568
Bank-issued trust preferred securities	—			—			4,633			—			4,633

Total available-for-sale securities	$	9,152		$	39,949		$	120,987		$	681,614		$	851,702
Total weighted-average yield	2.47		%	2.67		%	2.43		%	2.12		%	2.19		%


(Dollars in thousands)	Amortized Cost		Allowance for Credit Losses (a)		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2020
Obligations of:
States and political subdivisions	$	3,545	$	(6)	$	534	$	—	$	4,073
Residential mortgage-backed securities	26,926		—		954		(1)		27,879
Commercial mortgage-backed securities	5,678		—		456		—		6,134
Total held-to-maturity securities	$	36,149	$	(6)	$	1,944	$	(1)	$	38,086
December 31, 2019
Obligations of:
States and political subdivisions	$	4,346	$	—	$	445	$	—	$	4,791
Residential mortgage-backed securities	21,494		—		169		(94)		21,569
Commercial mortgage-backed securities	5,907		—		275		(1)		6,181
Total held-to-maturity securities	$	31,747	$	—	$	889	$	(95)	$	32,541

Management evaluates held-to-maturity investment securities for an allowance for credit losses on a quarterly basis. The majority of Peoples' held-to-maturity investment securities are issued by U.S. government sponsored agencies. The remaining securities are obligations of state and political subdivisions. Peoples analyzed these securities using cumulative default rate averages for investment grade municipal securities and determined that the potential credit losses of the securities was $6,000. As a result, at September 30, 2020, Peoples recorded $6,000 of allowance for credit losses for held-to-maturity securities, compared to $7,000 at January 1, 2020.


	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, 2020

Residential mortgage-backed securities	$	637	$	1	1	$	—	$	—	—	$	637	$	1

Total	$	637	$	1	1	$	—	$	—	—	$	637	$	1
December 31, 2019

Residential mortgage-backed securities	$	7,731	$	67	1	$	890	$	27	1	$	8,621	$	94
Commercial mortgage-backed securities	1,666		1		1	—		—		—	1,666		1
Total	$	9,397	$	68	2	$	890	$	27	1	$	10,287	$	95

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, 2020. The weighted-average yields are based on the amortized cost and are computed on a fully taxable-equivalent basis using a statutory federal corporate income tax rate of 21%. 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:
States and political subdivisions	$	—		$	—		$	3,545		$	—		$	3,545
Residential mortgage-backed securities	—			—			3,023			23,903			26,926
Commercial mortgage-backed securities	—			380			3,764			1,534			5,678
Total held-to-maturity securities	$	—		$	380		$	10,332		$	25,437		$	36,149
Fair value
Obligations of:
States and political subdivisions	$	—		$	—		$	4,073		$	—		$	4,073
Residential mortgage-backed securities	—			—			3,142			24,737			27,879
Commercial mortgage-backed securities	—			389			4,175			1,570			6,134
Total held-to-maturity securities	$	—		$	389		$	11,390		$	26,307		$	38,086
Total weighted-average yield	—		%	2.29		%	2.81		%	2.41		%	2.53		%


(Dollars in thousands)	September 30, 2020		December 31, 2019
FHLB stock	$	25,022	$	27,235
FRB stock	13,311		13,310
Nonqualified deferred compensation	1,711		1,499
Equity investment securities	306		321
Other investment securities	365		365
Total other investment securities	$	40,715	$	42,730

During the nine months ended September 30, 2020, Peoples redeemed FHLB stock in order to be in compliance with the requirements of the FHLB of Cincinnati. These redemptions totaled $2.1 million during the third quarter of 2020, $4.5 million during the second quarter of 2020, and $700,000 during the first quarter of 2020. Peoples purchased no additional FHLB stock during the third and second quarters of 2020, and purchased $5.0 million of additional FHLB stock during the first quarter of 2020, as a result of the FHLB of Cincinnati's capital requirements on FHLB advances during the quarter.

During the three and nine months ended September 30, 2020, Peoples recorded the change in the fair value of equity investment securities held at September 30, 2020, in other non-interest income, resulting in unrealized gain of $1,000 and unrealized loss of $15,000, respectively. During the three and nine months ended September 30, 2019, Peoples recorded the change in the fair value of equity investment securities held at September 30, 2019, in other non-interest income, resulting in an unrealized gain of $19,000 and $828,000, respectively. Net realized gains on sales of equity investment securities, included in other non-interest income during the

first nine months of 2019, consisted of a realized gain of $787,000 related to the sale of restricted Class B Visa stock, which had been held at a carrying cost and fair value of zero due to the litigation liability associated with the stock.

At September 30, 2020, 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.

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 and held-to-maturity securities to secure additional borrowing capacity at the FHLB and the FRB.


	Carrying Amount
(Dollars in thousands)	September 30, 2020		December 31, 2019

Securing public and trust department deposits, and repurchase agreements:
Available-for-sale	$	588,634	$	527,655
Held-to-maturity	18,440		12,975
Securing additional borrowing capacity at the FHLB and the FRB:
Available-for-sale	98,003		44,618
Held-to-maturity	12,054		14,155