Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Summary of Assets Measured on a Recurring Basis

The following table provides the fair value for assets and liabilities required to be measured and reported at fair value on a recurring basis on the Unaudited Consolidated Balance Sheets by level in the fair value hierarchy.


	Recurring Fair Value Measurements at Reporting Date
	March 31, 2022						December 31, 2021
(Dollars in thousands)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3

Assets:
Available-for-sale investment securities:
Obligations of:
U.S. Treasury and government agencies	$	167,406	$	—	$	—	$	35,604	$	—	$	—
U.S. government sponsored agencies	—		80,654		—		—		81,739		—
States and political subdivisions	—		231,644		—		—		259,319		—
Residential mortgage-backed securities	—		753,353		—		—		828,517		—
Commercial mortgage-backed securities	—		58,112		—		—		63,519		—
Bank-issued trust preferred securities	—		10,670		—		—		6,795		—

Total available-for-sale securities	$	167,406	$	1,134,433	$	—	$	35,604	$	1,239,889	$	—
Equity investment securities (a)	145		192		—		160		184		—
Derivative assets (b)	—		11,588		—		—		12,163		—
Liabilities:
Derivative liabilities (c)	$	—	$	11,150	$	—	$	—	$	17,183	$	—

(a) Included in "Other investment securities" on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 3 Investment Securities" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

(b) Included in "Other assets" on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 10 Derivative Financial Instruments" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

(c) Included in "Accrued expenses and other liabilities" on the Unaudited Consolidated Balance Sheets. For additional information, see "Note 10 Derivative Financial Instruments" of the Notes to the Unaudited Condensed Consolidated Financial Statements.

Summary of Assets and Liabilities Measured on a Non-Recurring Basis

The following table provides the fair value for each class of assets and liabilities required to be measured and reported at fair value on a non-recurring basis on the Unaudited Consolidated Balance Sheets by level in the fair value hierarchy at March 31, 2022 and December 31, 2021.


	Non-Recurring Fair Value Measurements at Reporting Date
	March 31, 2022				December 31, 2021
(Dollars in thousands)	Level 2		Level 3		Level 2		Level 3

Assets:
Collateral Dependent Loans	$	—	$	9,395	$	—	$	430
Loans held for sale (a)	$	1,291	$	—	$	418	$	—
Other real estate owned ("OREO")	$	—	$	35	$	—	$	87
Servicing rights (b)(c)	$	—	$	20	$	—	$	22

(a) Loans held for sale are presented gross of allowance for credit losses of $24 and $0 as of March 31,2022 and December 31,2021, respectively.

(b) Included in "Other intangible assets" on the Unaudited Consolidated Balance Sheets. Servicing rights are carried at the lower of cost or market value.

(c) As of March 31, 2022, Peoples recorded a minimal addition to the valuation allowance related to changes in the fair value of servicing rights. Peoples established a valuation allowance on servicing rights of $12 at March 31, 2022 and December 31, 2021. The fair value of the servicing rights was less than the carrying value on 10 year fixed rate loans.

Summary of Financial Instruments Not Required to be Measured at Fair Value

The following table provides the carrying amount for each class of assets and liabilities and the fair value for certain financial instruments that are not required to be measured or reported at fair value on the Unaudited Consolidated Balance Sheets.


	Fair Value Measurements of Other Financial Instruments
(Dollars in thousands)	Fair Value Hierarchy Level	March 31, 2022				December 31, 2021
		Carrying Amount		Fair Value		Carrying Amount		Fair Value

Assets:
Cash and cash equivalents	1	$	405,679	$	405,679	$	415,727	$	415,727




Held-to-maturity investment securities:
Obligations of:
U.S. government sponsored agencies	2	38,486		34,281		36,431		35,513
States and political subdivisions (a)	2	151,503		133,694		151,688		150,138
Residential mortgage-backed securities	2	115,613		108,199		110,708		110,159
Commercial mortgage-backed securities	2	79,340		71,804		75,588		74,145
Total held-to-maturity securities		384,942		347,978		374,415		369,955


Other investment securities:
Other investment securities at cost:
Federal Home Loan Bank ("FHLB") stock	N/A	17,308		17,308		17,308		17,308
Federal Reserve Bank ("FRB") stock	N/A	21,189		21,189		13,311		13,311
Total other investment securities at cost		38,497		38,497		30,619		30,619
Other investment securities at fair value:
Nonqualified deferred compensation (b)	1	2,222		2,222		2,240		2,240
Other investment securities (c)	2	784		784		784		784
Total other investment securities		41,503		41,503		33,643		33,643

Loans and leases, net of deferred fees and costs (d)	3	4,547,153		4,361,994		4,481,600		4,510,605
Bank owned life insurance	2	73,789		73,789		73,358		73,358
Liabilities:
Deposits	2	$	6,002,926	$	5,297,652	$	5,862,552	$	5,546,552
Short-term borrowings	2	144,275		145,091		166,482		164,990
Long-term borrowings	2	201,610		206,652		99,475		101,664

(a) Held-to-maturity investment securities are presented gross of allowance for credit losses of $286 as of March 31, 2022 and December 31, 2021.

(b) Nonqualified deferred compensation includes mutual funds as part of the investment.

(c) "Other investment securities", as reported on the Unaudited Consolidated Balance Sheets, also included equity investment securities at March 31, 2022

and at December 31, 2021, which are reported in the Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

table above and not included in this table.

(d) Loans and leases, net of deferred fees and cost are presented gross of allowance for credit losses of $54.8 million and $64.0 million, as of March 31, 2022 and December 31, 2021, respectively.