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Derivative Financial Instruments (Notes)
 6 Months Ended
Jun. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging [Text Block] Derivative Financial Instruments
Peoples utilizes interest rate swap agreements as part of its asset/liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements. The fair value of derivative financial instruments is included in the "Other assets" and the "Accrued expenses and other liabilities" lines in the accompanying Unaudited Consolidated Balance Sheets and cash activity related to these derivatives is included in the activity in the net cash provided by operating activities in the Unaudited Condensed Consolidated Statements of Cash Flows.
Derivative Financial Instruments and Hedging Activities - Risk Management Objective of Using Derivative Financial Instruments
Peoples is exposed to certain risks arising from both its business operations and economic conditions. Peoples principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. Peoples manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of its assets and liabilities, and through the use of derivative financial instruments. Specifically, Peoples enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known or expected cash amounts, the values of which are determined by interest rates. Peoples’ derivative financial instruments are used to manage differences in the amount, timing and duration of Peoples' known or expected cash receipts and its known or expected cash payments principally related to certain variable rate borrowings. Peoples also has interest rate derivative financial instruments that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in Peoples' assets or liabilities. Peoples manages a matched book with respect to customer-related derivative financial instruments in order to minimize its net risk exposure resulting from such transactions.
Cash Flow Hedges of Interest Rate Risk
Peoples' objectives in using interest rate derivative financial instruments are to add stability to interest income and expense, and to manage its exposure to interest rate movements. To accomplish these objectives, Peoples has entered into interest rate swaps as part of its interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for Peoples making fixed payments. At June 30, 2021, Peoples had entered into seventeen interest rate swap contracts with an aggregate notional value of $160.0 million. Peoples will pay a fixed rate of interest for up to ten years while receiving a floating rate component of interest equal to the three-month LIBOR rate. The interest received on the floating rate component is intended to offset the interest paid on rolling three-month brokered CDs and brokered demand deposits, which will continue to be rolled through the life of the swaps. At June 30, 2021, the interest rate swaps were designated as cash flow hedges of $110.0 million in brokered demand deposits, which are expected to be extended every 90 days through the maturity dates of
the swaps. The remaining $50.0 million of interest rate swaps were designated as cash flow hedges of 90-day brokered CDs, which are also expected to be extended every 90 days through the maturity dates of the swaps.
Amounts reported in accumulated other comprehensive (loss) income ("AOCI") related to derivative financial instruments will be reclassified to interest income or interest expense as interest payments are made or received on Peoples' variable-rate liabilities. During the three and six months ended June 30, 2021, Peoples had reclassifications of losses to earnings of $796,000 and $1.6 million, respectively. During the three and six months ended June 30, 2020, Peoples had reclassifications of losses to earnings of $365,000 and $483,000, respectively. During the next twelve months, Peoples estimates that minimal interest expense will be reclassified.
For derivative financial instruments designated as cash flow hedges, the effective and ineffective portion of changes in the fair value of each derivative financial instrument is reported in AOCI (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings. Peoples assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the hedging derivative financial instrument with the changes in cash flows of the designated hedged transaction. The reset dates and the payment dates on the funding associated with 90-day brokered CDs used to fund the swaps are matched to the reset dates and payment dates on the receipt of the three-month LIBOR floating portion of the swaps to ensure effectiveness of the cash flow hedge.
The following table summarizes information about the interest rate swaps designated as cash flow hedges:
(Dollars in thousands)June 30,
2021		December 31,
2020
Notional amount$160,000 $160,000 
Weighted average pay rates2.18 %2.18 %
Weighted average receive rates0.69 %0.38 %
Weighted average maturity3.9 years4.4 years
Pre-tax unrealized losses included in AOCI$(7,937)$(11,879)
The following table presents net gains or losses recorded in AOCI and in the Unaudited Consolidated Statements of Operations related to the cash flow hedges:
Three Months EndedSix Months Ended
June 30,June 30,
(Dollars in thousands)2021202020212020
Amount of (gain) loss recognized in AOCI, pre-tax$294 $734 $(3,942)$10,464 
The following table reflects the cash flow hedges, which are included in the Unaudited Consolidated Balance Sheets at fair value:
June 30,
2021		December 31,
2020
(Dollars in thousands)Notional AmountFair ValueNotional AmountFair Value
Included in "Accrued expenses and other liabilities":
Interest rate swaps related to debt$160,000 $8,116 $160,000 $12,063 
Non-Designated Hedges
Peoples maintains an interest rate protection program for commercial loan customers, which was established in 2010. Under this program, Peoples originates variable rate loans with interest rate swaps, where the customer enters into an interest rate swap with Peoples on terms that match the terms of the loan. By entering into the interest rate swap with the customer, Peoples Bank effectively provides the customer with a fixed rate loan while creating a variable rate asset for Peoples Bank. Peoples Bank offsets its exposure in the swap by entering into an offsetting interest rate swap with an unaffiliated institution. These interest rate swaps do not qualify as designated hedges; therefore, each swap is accounted for as a standalone derivative financial instrument. These interest rate swaps did not have a material impact on Peoples' results of operations or financial condition at or for the six months ended June 30, 2021 and at or for the year ended December 31, 2020.
The following table reflects the non-designated hedges, which are included in the Unaudited Consolidated Balance Sheets at fair value:
:
June 30,
2021		December 31,
2020
(Dollars in thousands)Notional AmountFair ValueNotional AmountFair Value
Included in "Other assets":
Interest rate swaps related to commercial loans$410,062 $17,957 $415,044 $27,332 
Included in "Accrued expenses and other liabilities":
Interest rate swaps related to commercial loans$410,062 $17,957 $415,044 $27,332 

Pledged Collateral
Peoples pledges or receives collateral for all interest rate swaps. When the fair value of Peoples' interest rate swaps is in a net liability position, Peoples must pledge collateral, and, when the fair value of Peoples' interest rate swaps is in a net asset position, the counterparties must pledge collateral. At June 30, 2021 and December 31, 2020, Peoples had zero and $41.0 million, respectively, of cash pledged, while the counterparties had no amount of cash pledged at either date. Cash pledged was included in "Interest-bearing deposits in other banks" on the Audited Consolidated Balance Sheet as of December 31, 2020. Peoples had pledged $39.6 million and zero in investment securities at June 30, 2021 and December 31, 2020, respectively.