Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 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
	September 30, 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	$	172,055	$	—	$	—	$	35,604	$	—	$	—
U.S. government sponsored agencies	—		80,915		—		—		81,739		—
States and political subdivisions	—		230,022		—		—		259,319		—
Residential mortgage-backed securities	—		624,061		—		—		828,517		—
Commercial mortgage-backed securities	—		52,504		—		—		63,519		—
Bank-issued trust preferred securities	—		10,287		—		—		6,795		—

Total available-for-sale securities	$	172,055	$	997,789	$	—	$	35,604	$	1,239,889	$	—
Equity investment securities (a)	134		198		—		160		184		—
Derivative assets (b)	—		37,167		—		—		12,163		—
Liabilities:
Derivative liabilities (c)	$	—	$	31,234	$	—	$	—	$	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 September 30, 2022 and December 31, 2021.


	Non-Recurring Fair Value Measurements at Reporting Date
	September 30, 2022				December 31, 2021
(Dollars in thousands)	Level 2		Level 3		Level 2		Level 3

Assets:
Collateral dependent loans	$	—	$	2,706	$	—	$	430
Loans held for sale (a)	$	1,302	$	—	$	418	$	—
Other real estate owned ("OREO")	$	—	$	—	$	—	$	87
Servicing rights (b)(c)	$	—	$	25	$	—	$	22

(a) Loans held for sale are presented gross of a valuation allowance of $0 and $0 as of September 30, 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) Peoples established a valuation allowance on servicing rights of $6 at September 30, 2022 and $12 at December 31, 2021. The fair value of the servicing rights on 10-year fixed rate loans was less than the carrying value.

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	September 30, 2022				December 31, 2021
		Carrying Amount		Fair Value		Carrying Amount		Fair Value

Assets:
Cash and cash equivalents	1	$	145,184	$	145,184	$	415,727	$	415,727




Held-to-maturity investment securities:
Obligations of:
U.S. government sponsored agencies	2	59,871		50,908		36,431		35,513
States and political subdivisions (a)	2	145,490		107,453		151,688		150,138
Residential mortgage-backed securities	2	111,707		93,885		110,708		110,159
Commercial mortgage-backed securities	2	90,971		74,211		75,588		74,145
Total held-to-maturity securities		408,039		326,457		374,415		369,955


Other investment securities:
Other investment securities at cost:
Federal Home Loan Bank ("FHLB") stock	N/A	14,683		14,683		17,308		17,308
Federal Reserve Bank ("FRB") stock	N/A	21,237		21,237		13,311		13,311
Total other investment securities at cost		35,920		35,920		30,619		30,619
Other investment securities at fair value:
Nonqualified deferred compensation (b)	1	2,008		2,008		2,240		2,240
Other investment securities (c)	2	779		779		784		784
Total other investment securities		38,707		38,707		33,643		33,643

Loans and leases, net of deferred fees and costs (d)	3	4,611,207		4,359,959		4,481,600		4,510,605
Bank owned life insurance	2	104,591		104,591		73,358		73,358
Liabilities:
Deposits	2	$	5,865,620	$	4,797,388	$	5,862,552	$	5,546,552
Short-term borrowings	2	133,611		135,268		166,482		164,990
Long-term borrowings	2	104,196		105,490		99,475		101,664

(a) Held-to-maturity investment securities are presented gross of an allowance for credit losses of $238 and $286 as of September 30, 2022 and December 31, 2021, respectively.

(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 September 30, 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 costs, are presented gross of an allowance for credit losses of $52.9 million and $64.0 million as of September 30, 2022 and December 31, 2021, respectively.