Investment Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment Securities

Available-for-sale

The following table summarizes Peoples' available-for-sale investment securities:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2024
Obligations of:
U.S. Treasury and government agencies	$	29,807	$	113	$	(1,147)	$	28,773
U.S. government sponsored agencies	210,871		597		(11,008)		200,460
States and political subdivisions	237,207		92		(28,549)		208,750
Residential mortgage-backed securities	717,657		1,366		(97,332)		621,691
Commercial mortgage-backed securities	60,277		1		(9,487)		50,791
Bank-issued trust preferred securities	6,500		—		(499)		6,001
Total available-for-sale securities	$	1,262,319	$	2,169	$	(148,022)	$	1,116,466
December 31, 2023
Obligations of:
U.S. Treasury and government agencies	$	30,999	$	292	$	(995)	$	30,296
U.S. government sponsored agencies	128,500		639		(10,532)		118,607
States and political subdivisions	239,906		485		(27,095)		213,296
Residential mortgage-backed securities	717,772		1,819		(90,667)		628,924
Commercial mortgage-backed securities	60,611		5		(9,382)		51,234
Bank-issued trust preferred securities	6,500		—		(535)		5,965
Total available-for-sale securities	$	1,184,288	$	3,240	$	(139,206)	$	1,048,322

The gross gains and losses realized by Peoples from sales of available-for-sale securities for the periods ended March 31 were as follows:

	Three Months Ended
	March 31,
(Dollars in thousands)	2024		2023
Gross gains realized	$	—	$	78
Gross losses realized	1		2,013
Net (loss) gain realized	$	(1)	$	(1,935)

The cost of investment securities sold, and any resulting gain or loss, were based on the specific identification method and recognized as of the trade date.

The following table presents a summary of available-for-sale investment securities that have been in a continuous unrealized loss position for the periods identified:

	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
March 31, 2024
Obligations of:
U.S. Treasury and government agencies	$	12,003	$	173	23	$	11,565	$	974	5	$	23,568	$	1,147
U.S. government sponsored agencies	63,921		114		10	77,014		10,894		15	140,935		11,008
States and political subdivisions	26,352		439		66	171,591		28,110		144	197,943		28,549
Residential mortgage-backed securities	70,006		1,833		75	517,070		95,499		239	587,076		97,332
Commercial mortgage-backed securities	6,380		152		8	44,290		9,335		21	50,670		9,487
Bank-issued trust preferred securities	1,988		12		1	4,013		487		3	6,001		499
Total	$	180,650	$	2,723	183	$	825,543	$	145,299	427	$	1,006,193	$	148,022
December 31, 2023
Obligations of:
U.S. Treasury and government agencies	$	8,568	$	83	22	$	11,631	$	912	5	$	20,199	$	995
U.S. government sponsored agencies	14,439		35		4	74,211		10,497		15	88,650		10,532
States and political subdivisions	18,268		136		32	167,346		26,959		138	185,614		27,095
Residential mortgage-backed securities	58,671		1,150		66	529,895		89,517		238	588,566		90,667
Commercial mortgage-backed securities	6,000		112		7	44,656		9,270		21	50,656		9,382
Bank-issued trust preferred securities	1,984		16		1	3,981		519		3	5,965		535
Total	$	107,930	$	1,532	132	$	831,720	$	137,674	420	$	939,650	$	139,206

Management evaluates available-for-sale investment securities for an allowance for credit losses on a quarterly basis. At March 31, 2024, management concluded that no individual securities at an unrealized loss position required an allowance for credit losses. At March 31, 2024, 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 March 31, 2024 and December 31, 2023 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 $9.8 million at March 31, 2024 and $8.8 million at December 31, 2023.

The unrealized loss with respect to the three bank-issued trust preferred securities that had been in an unrealized loss position for twelve months or more at March 31, 2024 was attributable to the subordinated nature of the trust preferred securities.

The table below presents the amortized cost, fair value and total weighted-average yield of available-for-sale securities by contractual maturity at March 31, 2024. 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. Treasury and government agencies	$	985		$	15,661		$	7,272		$	5,889		$	29,807
U.S. government sponsored agencies	—			62,046			64,074			84,751			210,871
States and political subdivisions	10,319			45,388			59,362			122,138			237,207
Residential mortgage-backed securities	1			3,330			59,060			655,266			717,657
Commercial mortgage-backed securities	—			12,392			27,108			20,777			60,277
Bank-issued trust preferred securities	2,000			1,000			3,500			—			6,500
Total available-for-sale securities	$	13,305		$	139,817		$	220,376		$	888,821		$	1,262,319
Fair value
Obligations of:
U.S. Treasury and government agencies	$	978		$	14,619		$	7,303		$	5,873		$	28,773
U.S. government sponsored agencies	—			57,082			60,078			83,300			200,460
States and political subdivisions	10,264			42,516			50,785			105,185			208,750
Residential mortgage-backed securities	1			3,208			53,811			564,671			621,691
Commercial mortgage-backed securities	—			11,223			22,783			16,785			50,791
Bank-issued trust preferred securities	1,988			942			3,071			—			6,001
Total available-for-sale securities	$	13,231		$	129,590		$	197,831		$	775,814		$	1,116,466
Total weighted-average yield	3.59		%	2.31		%	2.77		%	2.73		%	2.70		%

Held-to-maturity

The following table summarizes Peoples’ held-to-maturity investment securities:

(Dollars in thousands)	Amortized Cost		Allowance for Credit Losses		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2024
Obligations of:
U.S. government sponsored agencies	$	188,423	$	—	$	309	$	(9,087)	$	179,645
States and political subdivisions	144,315		(238)		73		(31,075)		113,075
Residential mortgage-backed securities	246,579		—		672		(21,630)		225,621
Commercial mortgage-backed securities	100,427		—		—		(16,656)		83,771
Total held-to-maturity investment securities	$	679,744	$	(238)	$	1,054	$	(78,448)	$	602,112
December 31, 2023
Obligations of:
U.S. government sponsored agencies	$	188,475	$	—	$	489	$	(8,139)	$	180,825
States and political subdivisions	144,496		(238)		134		(30,104)		114,288
Residential mortgage-backed securities	248,559		—		1,643		(18,582)		231,620
Commercial mortgage-backed securities	102,365		—		—		(17,076)		85,289
Total held-to-maturity investment securities	$	683,895	$	(238)	$	2,266	$	(73,901)	$	612,022

There were no sales of held-to-maturity investment securities during either of the three months ended March 31, 2024 or 2023.

Management evaluates held-to-maturity investment securities for an allowance for credit losses on a quarterly basis. Peoples has determined that the loss given default for U.S. government sponsored agencies investment securities is zero, due to the fact that it is unlikely the ultimate guarantor (the U.S. government) would not perform on its implicit guarantee in the event of default. The remaining securities are included in the calculation of the allowance for credit losses for held-to-maturity investment securities. Peoples reported $0.2 million of allowance for credit losses for held-to-maturity securities at both March 31, 2024, and December 31, 2023.

The following table presents a summary of held-to-maturity investment securities that had been in a continuous unrealized loss position for the periods identified:

	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
March 31, 2024
Obligations of:
U.S. government sponsored agencies	$	35,986	$	537	12	118,531		8,550		21	$	154,517	$	9,087
States and political subdivisions	—		—		—	109,887		31,075		67	109,887		31,075
Residential mortgage-backed securities	51,550		1,274		17	133,314		20,356		39	184,864		21,630
Commercial mortgage-backed securities	8,575		1,297		5	73,196		15,359		30	81,771		16,656
Total	$	96,111	$	3,108	34	$	434,928	$	75,340	157	$	531,039	$	78,448
December 31, 2023
Obligations of:
U.S. government sponsored agencies	$	64,487	$	356	14	$	86,071	$	7,783	18	$	150,558	$	8,139
States and political subdivisions	—		—		—	111,040		30,104		67	111,040		30,104
Residential mortgage-backed securities	44,379		1,105		14	117,654		17,477		34	162,033		18,582
Commercial mortgage-backed securities	13,919		1,845		6	71,370		15,231		31	85,289		17,076
Total	$	122,785	$	3,306	34	$	386,135	$	70,595	150	$	508,920	$	73,901

The table below presents the amortized cost, fair value and total weighted-average yield of held-to-maturity investment securities by contractual maturity at March 31, 2024. The weighted-average yields are based on the amortized cost and are computed on a fully taxable-equivalent basis using a blended federal and state corporate income tax rate of 23.2% at March 31, 2024. 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	10,500			$	10,643		$	67,056		$	100,224		$	188,423
States and political subdivisions	—			6,422			11,419			126,474			144,315
Residential mortgage-backed securities	—			451			4,241			241,887			246,579
Commercial mortgage-backed securities	1,490			9,371			38,821			50,745			100,427
Total held-to-maturity investment securities	$	11,990		$	26,887		$	121,537		$	519,330		$	679,744
Fair value
Obligations of:
U.S. government sponsored agencies	10,419			$	10,144		$	66,436		$	92,646		$	179,645
States and political subdivisions	—			6,249			9,813			97,013			113,075
Residential mortgage-backed securities	—			441			3,696			221,484			225,621
Commercial mortgage-backed securities	1,478			8,719			32,914			40,660			83,771
Total held-to-maturity investment securities	$	11,897		$	25,553		$	112,859		$	451,803		$	602,112
Total weighted-average yield	3.85		%	2.51		%	4.00		%	3.51		%	3.57		%

Other Investment Securities

Peoples' other investment securities on the Unaudited Consolidated Balance Sheets consist largely of shares of FHLB stock and of FRB stock.

The following table summarizes the carrying value of Peoples' other investment securities:

(Dollars in thousands)	March 31, 2024		December 31, 2023
FHLB stock	$	28,426	$	29,949
FRB stock	27,114		26,896
Nonqualified deferred compensation	3,890		3,162
Equity investment securities	2,640		2,545
Other investment securities	869		869
Total other investment securities	$	62,939	$	63,421

During the three months ended March 31, 2024, Peoples redeemed $8.0 million of FHLB stock in order to be in compliance with the requirements of the FHLB. Peoples purchased $6.5 million of additional FHLB stock during the three months ended March 31, 2024, as a result of the FHLB's capital requirements on FHLB advances.

For the three months ended March 31, 2024 and 2023, Peoples recorded the change in the fair value of equity investment securities held during the period, in "Other non-interest income", resulting in an unrealized gains of $47,000 and $21,000, respectively.

At March 31, 2024, 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 at March 31, 2024.

Pledged Securities

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 to secure additional borrowing capacity at the FHLB and the FRB.

The following table summarizes the carrying amount of Peoples' pledged securities:

	Carrying Amount
(Dollars in thousands)	March 31, 2024		December 31, 2023
Securing public and trust department deposits, and repurchase agreements:
Available-for-sale	$	809,988	$	713,033
Held-to-maturity	568,473		559,142
Securing additional borrowing capacity at the FHLB and the FRB:
Available-for-sale	98,146		85,899
Held-to-maturity	50,046		39,607