PR Newswire
MARIETTA, Ohio, July 25, 2023
MARIETTA, Ohio, July 25, 2023 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples") (Nasdaq: PEBO) today announced results for the three and six months ended June 30, 2023. Peoples reported net income of $21.1 million for the second quarter of 2023, representing earnings per diluted common share of $0.64. In comparison, Peoples reported net income of $26.6 million, representing earnings per diluted common share of $0.94, for the first quarter of 2023, and net income of $24.9 million, representing earnings per diluted common share of $0.88, for the second quarter of 2022. For the six months ended June 30, 2023, Peoples recorded net income of $47.7 million, or $1.56 per diluted common share, compared to $48.5 million, or $1.72 per diluted common share, for the six months ended June 30, 2022.
The provision for (recovery of) credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management's quarterly estimates. The provision for credit losses negatively impacted earnings per diluted common share by $0.19 for the second quarter of 2023, compared to $0.05 for the first quarter of 2023, while the release of provision positively impacted earnings per diluted common share by $0.02 for the second quarter of 2022. For the first six months of 2023, the provision negatively impacted earnings per diluted common share by $0.25, compared to the release of provision positively impacting earnings per diluted common share by $0.21 for the first six months of 2022.
Non-core items, and the related tax effect of each, in net income primarily included acquisition-related expenses. Non-core items negatively impacted earnings per diluted common share by $0.28 for the second quarter of 2023, $0.07 for the first quarter of 2023, and $0.02 for the second quarter of 2022. Non-core items negatively impacted earnings per diluted share by $0.37 and $0.06 for the six months ended June 30, 2023 and 2022, respectively.
"We are delighted to have closed on our merger with Limestone," said Chuck Sulerzyski, President and Chief Executive Officer. "We have already begun to see the results of the merger throughout the second quarter, which have added to our already impressive first half of 2023. We are grateful for the dedication of all colleagues who made this acquisition possible and remain bullish on our future together."
Completion of the Limestone Merger:
As of close of business on April 30, 2023, Peoples completed its previously announced merger with Limestone Bancorp, Inc. ("Limestone"), a bank holding company headquartered in Louisville, Kentucky, and the parent company of Limestone Bank, pursuant to a definitive Agreement and Plan of Merger (the "Merger Agreement") dated October 24, 2022. Under the terms of the Merger Agreement, Limestone merged with and into Peoples, and immediately thereafter Limestone Bank merged with and into Peoples' wholly-owned subsidiary, Peoples Bank (collectively, the "Limestone Merger"), in a transaction valued at $177.9 million. Peoples recorded acquisition-related expenses related to the Limestone Merger which included $10.8 million and $11.2 million in other non-interest expense for the second quarter and the six months ended June 30, 2023, respectively. For the second quarter of 2023, the $10.8 million of non-interest expense consisted of $5.2 million in salaries and employee benefit costs, $4.8 million in professional fees, $0.5 million in insurance expense, $0.1 million in electronic banking expense, and $0.2 million in various other non-interest expense line items. For the six months ended June 30, 2023, the $11.2 million of non-interest expense consisted of $5.2 million in salaries and employee benefit costs, $5.1 million in professional fees, $0.5 million in insurance expense, $0.1 million of printing costs (which is a component of other non-interest expense), $0.1 million in electronic banking expense, and $0.2 million in various other non-interest expense line items.
Investment Portfolio Restructuring:
During the first quarter of 2023, Peoples executed the sales of $96.7 million of its lower yielding available-for-sale investment securities for an after-tax loss of $1.6 million. Proceeds from the sale were used to pay down overnight borrowings. The loss on the sale of these available-for-sale investment securities had a nominal impact on tangible book value as such loss was previously reflected in capital through accumulated other comprehensive loss. The realized losses recognized due to these transactions are projected to be earned back within the 2023 fiscal year. There were no sales of investment securities pursuant to this restructuring during the second quarter of 2023.
Statement of Operations Highlights:
- Net interest income for the second quarter of 2023 increased $12.0 million, or 16%, compared to the linked quarter and increased $23.4 million, or 38%, compared to the second quarter of 2022.
- Net interest margin increased 1 basis point to 4.54% for the second quarter of 2023, compared to 4.53% for the linked quarter and increased 70 basis points compared to 3.84% for the second quarter of 2022.
- The increase in net interest margin for the second quarter of 2023 compared to the linked quarter was primarily driven by the accretion on the acquired Limestone portfolio as well as increases in market interest rates.
- The increase in net interest income for the second quarter of 2023 compared to the second quarter of 2022 was driven by increases in market interest rates and the accretion on the acquired Limestone portfolio.
- Peoples recorded a provision for credit losses of $8.0 million for the second quarter of 2023, compared to a provision for credit losses of $1.9 million for the first quarter of 2023, and a recovery of credit losses of $0.8 million for the second quarter of 2022.
- The provision for credit losses in the second quarter of 2023 was due to a provision for credit losses of $9.4 million established for the non-purchased credit deteriorated loans acquired in the Limestone Merger, partially offset by the release of reserves on individually analyzed loans and improvements in macro-economic conditions. The provision for credit losses in the linked quarter was largely attributable to a deterioration of macro-economic conditions and an increase in charge-off activity, partially offset by a reduction in reserves for individually analyzed loans. The recovery of credit losses in the second quarter of 2022 was attributable to an improvement in economic factors and loss drivers within the current expected credit loss ("CECL") model.
- Net charge-offs were $1.2 million, or 0.09% of average total loans annualized, for the second quarter of 2023, compared to $1.5 million, or 0.13%, for the linked quarter and $1.5 million, or 0.14%, for the second quarter of 2022.
- Total non-interest income, excluding net gains and losses, for the second quarter of 2023 increased $1.6 million, or 8%, compared to the linked quarter, and increased $3.3 million, or 17%, compared to the second quarter of 2022.
- The increase in non-interest income, excluding gains and losses, for the second quarter of 2023 when compared to the first quarter of 2023 was primarily due to an increase in lease income, mostly from Vantage Financial, LLC ("Vantage"), and increased electronic banking income and deposit account service charge income from the additional customers brought in from the Limestone Merger. The increase in lease income for the second quarter of 2023 when compared to the linked quarter was due to increases in residual sales and month-to-month lease income.
- Total non-interest income, excluding net gains and losses, for the first six months of 2023 was 22% of total revenue (defined as net interest income plus total non-interest income excluding net gains and losses).
- Total non-interest expense increased $14.1 million, or 25%, compared to the linked quarter and increased $20.7 million, or 42%, compared to the second quarter of 2022.
- The increase in total non-interest expense for the second quarter of 2023 when compared to the linked quarter was primarily attributable to a $10.2 million increase in acquisition-related expenses.
- For the second quarter of 2023, the efficiency ratio was 62.7%. When adjusted for non-core items, the efficiency ratio was 53.3% for the second quarter of 2023.
Balance Sheet Highlights:
- Period-end total loan and lease balances at June 30, 2023 increased $1.2 billion, or 26%, compared to March 31, 2023.
- The increases in period-end and average total loan and lease balances were primarily the result of loans acquired in the Limestone Merger totaling $1.1 billion at the time of the Limestone Merger.
- Excluding the loans acquired through the Limestone Merger, period-end loan and lease balances increased $146.4 million, primarily due to increases of (i) $71.3 million in construction loans, (ii) $25.3 million in commercial and industrial loans and (iii) $23.1 million in leases.
- Asset quality metrics remained stable during the quarter.
- Delinquency trends improved slightly as loans considered current comprised 99.0% of the loan portfolio at June 30, 2023, compared to 98.8% at March 31, 2023.
- Nonperforming assets at June 30, 2023 decreased $0.9 million compared to March 31, 2023. The decrease was primarily attributable to reductions in nonaccrual commercial real estate loans and other real estate owned ("OREO"), which were largely offset by increases in nonperforming and nonaccrual leases.
- Criticized loans increased $22.4 million during the second quarter of 2023 when compared to the end of the linked quarter. The increase was primarily driven by criticized loans acquired in the Limestone Merger.
- Classified loans increased $18.9 million during the second quarter of 2023 when compared to the end of the linked quarter. The increase was primarily driven by the Limestone Merger.
- Period-end total deposit balances at June 30, 2023 increased $1.2 billion, or 20%, compared to at March 31, 2023.
- The increase was driven by the deposits acquired in the Limestone Merger, which included $821.3 million of interest-bearing deposits and $261.5 million of non-interest-bearing deposits.
- Excluding the acquired Limestone deposit balances, deposits at June 30, 2023 increased $88.6 million, primarily due to increases of $241.4 million in brokered certificates of deposits and $139.2 million in retail certificates of deposit, partially offset by decreases of $133.9 million, $59.9 million, $50.0 million and $41.1 million in non-interest bearing deposits, savings accounts, governmental deposit accounts, and interest-bearing demand deposit accounts, respectively.
- The percentages of retail deposit balances and commercial deposit balances of the total deposit balance at June 30, 2023 were 78% and 22%, respectively, compared to 75% and 25%, respectively, at March 31, 2023.
- Total demand deposit balances were 42% and 46% of total deposit balances at June 30, 2023 and at March 31, 2023, respectively.
- Total loan balances were 86% of total deposit balances at June 30, 2023 and 82% of total deposit balances at March 31, 2023.
- At both June 30, 2023 and March 31, 2023, 32% of our deposit balances exceeded the FDIC insurance limit of $250,000. Peoples pledges investment securities against certain governmental deposit accounts, which collateralized $749.9 million, or 38%, of the uninsured deposit balances at June 30, 2023.
Net Interest Income:
Net interest income was $84.9 million for the second quarter of 2023, an increase of $12.0 million, or 16%, compared to the linked quarter. The increase in net interest income was primarily due to net interest income provided by Limestone following the Limestone Merger and increases in market interest rates. Net interest margin was 4.54% for the second quarter of 2023, compared to 4.53% for the linked quarter. The increase in net interest margin was primarily driven by the accretion on the acquired Limestone portfolio as well as increases in market interest rates. Also impacting the increases in net interest income and net interest margin were 43 basis points of improvement in loan yields due to recent increases in market interest rates and a shift in the composition of the loan portfolio into higher-yielding leases, and 29 basis points of improvement in investment yields when compared to the linked quarter due to sales of lower-yielding investment securities and securities acquired in the Limestone Merger. Partially offsetting this benefit was a shift in the composition of funding sources combined with an increase in market interest rates for deposits and other funding sources.
Net interest income for the second quarter of 2023 increased $23.4 million, or 38%, compared to the second quarter of 2022. Net interest margin for the second quarter of 2023 increased 70 basis points compared to 3.84% for the second quarter of 2022. The increase in net interest income compared to the second quarter of 2022 was driven by increases in market interest rates, the Limestone Merger and organic growth.
Accretion income, net of amortization expense, from acquisitions was $4.5 million for the second quarter of 2023, $2.0 million for the first quarter of 2023 and $3.9 million for the second quarter of 2022, which added 24 basis points, 13 basis points and 25 basis points, respectively, to net interest margin. The increases in accretion income for the second quarter of 2023 when compared to the linked quarter and the second quarter of 2022 were driven by accretion from the Limestone Merger.
For the first six months of 2023, net interest income increased $42.0 million, or 36%, compared to the first six months of 2022, while net interest margin increased 90 basis points to 4.53%. The increase in net interest income was driven by increases in market interest rates and the additional net interest income from the Limestone Merger. Partially offsetting this benefit was a shift in the composition of funding sources combined with an increase in market interest rates for deposits and other funding sources.
Accretion income, net of amortization expense, from acquisitions was $6.5 million for the six months ended June 30, 2023, compared to $6.7 million for the six months ended June 30, 2022, which added 18 and 21 basis points, respectively, to net interest margin. The decrease in accretion income for the first six months of 2023 compared to the same period in 2022 was due to more accretion in 2022 from the acquisitions of Vantage and NS Leasing, LLC ("NSL") and the merger with Premier Financial Bancorp, Inc. ("Premier"), as compared to accretion from the Limestone Merger.
Provision for (Recovery of) Credit Losses:
The provision for credit losses was $8.0 million for the second quarter of 2023, compared to a provision for credit losses of $1.9 million for the linked quarter and a recovery of credit losses of $0.8 million for the second quarter of 2022. The provision for credit losses in the second quarter of 2023 was due to a provision of $9.4 million for the non-purchased credit deteriorated loans acquired in the Limestone Merger, partially offset by the release of reserves of $1.7 million on individually analyzed loans and a recovery of $1.0 million due to improvements in macro-economic conditions. The provision for credit losses in the linked quarter was largely attributable to a deterioration of macro-economic conditions and charge-offs, partially offset by a reduction in reserves for individually analyzed loans. The recovery of credit losses in the second quarter of 2022 was primarily due to an improvement in economic factors and loss drivers within the CECL model.
The provision for credit losses during the first six months of 2023 was $9.8 million, compared to a recovery of credit losses of $7.6 million for the first six months of 2022. The provision for credit losses during the first six months of 2023 was driven by (i) the addition of the provision for the non-purchased credit deteriorated loans acquired in the Limestone Merger, (ii) loan growth and (ii) economic forecast deterioration, partially offset by a reduction in the reserves for individually analyzed loans and the use of updated loss drivers. The recovery of credit losses during the first six months of 2022 was driven by improvements in economic forecasts, coupled with loan payoffs and sales during certain periods.
Net charge-offs for the second quarter of 2023 were $1.2 million, or 0.09% of average total loans annualized, compared to net charge-offs of $1.5 million, or 0.13% of average total loans annualized, for the linked quarter and net charge-offs of $1.5 million, or 0.14% of average total loans annualized, for the second quarter of 2022. Net charge-offs for the first six months of 2023 were $2.7 million, or 0.11% of average total loans annualized, compared to net charge-offs of $3.5 million, or 0.15% annualized, for the first six months of 2022. For additional information on credit trends and the allowance for credit losses, see the "Asset Quality" section below.
Net Gains and Losses:
Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the second quarter of 2023 was $1.8 million, compared to a net loss of $2.2 million for the linked quarter, and a net loss of $196,000 for the second quarter of 2022. The net loss in the second quarter of 2023 was primarily driven by a $1.6 million write-down of an OREO property due to a potential sale of the property. The net loss for the linked quarter was primarily due to the $2.0 million pre-tax net loss on the sale of the available-for-sale investment securities mentioned above.
The net loss realized during the first six months of 2023 was $4.0 million, compared to $193,000 for the first six months of 2022. The net loss for the first six months of 2023 was primarily driven by the $2.0 million pre-tax net loss on the sale of the available-for-sale investment securities mentioned above and the $1.6 million write-down of the OREO property mentioned above. The net loss recognized in the first six months of 2022 was primarily driven by an adjustment to the gain on sale of loans recognized in the fourth quarter of 2021 due to a measurement period adjustment to the acquisition-date fair value of Premier loans acquired that were subsequently sold.
Total Non-interest Income, Excluding Net Gains and Losses:
Total non-interest income, excluding net gains and losses, for the second quarter of 2023 increased $1.6 million compared to the linked quarter. The increase in non-interest income, excluding net gains and losses, was due to a $1.0 million increase in electronic banking income and a $0.6 million increase in deposit account service charge income, mostly due to the additional customers brought in from the Limestone Merger, and a $0.6 million increase lease income, primarily from residual sales and month-to-month lease income.
Compared to the second quarter of 2022, non-interest income, excluding net gains and losses, increased $3.3 million, primarily due to a $1.0 million increase in electronic banking income and a $0.6 million increase in deposit account service charge income, mostly due to the additional customers brought in from Limestone Merger, and a $1.3 million increase in lease income, primarily from residual sales and month-to-month lease income.
For the first six months of 2023, total non-interest income, excluding gains and losses, increased $4.5 million, or 11%, compared to the first six months of 2022. The increase was driven by growth of (i) $1.6 million in lease income, primarily due to lease fee income from Vantage, (ii) a $1.2 million increase in electronic banking income, primarily due to the Limestone Merger and (iii) a $1.1 million increase in insurance income due to growth in the commercial insurance line.
Total Non-interest Expense:
Total non-interest expense for the second quarter and six months ended June 30, 2023 were primarily impacted by the Limestone Merger, which added $10.7 million and $11.3 million of non-interest expenses, respectively, across various line-items within non-interest expense. The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense. This information is used by Peoples to provide information useful to investors in understanding Peoples' operating performance and trends.
Three Months Ended | Six Months Ended | ||||||||
June 30, | March 31, | June 30, | June 30, | ||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Non-interest expense: | |||||||||
Salaries and employee benefit costs | $ 38,025 | $ 32,028 | $ 27,585 | $ 70,053 | $ 55,314 | ||||
Net occupancy and equipment expense | 5,380 | 4,955 | 4,768 | 10,335 | 9,856 | ||||
Professional fees | 7,438 | 2,881 | 2,280 | 10,319 | 5,952 | ||||
Data processing and software expense | 4,728 | 4,562 | 3,033 | 9,290 | 5,949 | ||||
Amortization of other intangible assets | 2,800 | 1,871 | 2,034 | 4,671 | 3,742 | ||||
Electronic banking expense | 1,832 | 1,491 | 2,727 | 3,323 | 5,486 | ||||
Marketing expense | 1,357 | 930 | 860 | 2,287 | 1,855 | ||||
FDIC insurance premiums | 1,464 | 801 | 1,018 | 2,265 | 2,212 | ||||
Franchise tax expense | 872 | 1,034 | 1,102 | 1,906 | 1,866 | ||||
Communication expense | 724 | 613 | 649 | 1,337 | 1,274 | ||||
Other loan expenses | 538 | 739 | 445 | 1,277 | 1,277 | ||||
Other non-interest expense | 5,465 | 4,574 | 3,398 | 10,039 | 6,745 | ||||
Total non-interest expense | 70,623 | 56,479 | 49,899 | 127,102 | 101,528 | ||||
Acquisition-related non-interest expense: | |||||||||
Salaries and employee benefit costs | 5,125 | 21 | 19 | 5,146 | 29 | ||||
Net occupancy and equipment expense | 20 | 9 | 1 | 29 | 29 | ||||
Professional fees | 4,812 | 291 | 540 | 5,103 | 1,570 | ||||
Data processing and software expense | 1 | — | 164 | 1 | 281 | ||||
Electronic banking expense | 115 | — | (94) | 115 | (92) | ||||
Marketing expense | 14 | 10 | 24 | 23 | 40 | ||||
Communication expense | — | — | — | — | 1 | ||||
Other loan expenses | 1 | — | — | 1 | — | ||||
Other non-interest expense | 621 | 220 | (52) | 842 | 117 | ||||
Total acquisition-related non-interest expense | 10,709 | 551 | 602 | 11,260 | 1,975 | ||||
Non-interest expense excluding acquisition- | |||||||||
Salaries and employee benefit costs | 32,900 | 32,007 | 27,566 | 64,907 | 55,285 | ||||
Net occupancy and equipment expense | 5,360 | 4,946 | 4,767 | 10,306 | 9,827 | ||||
Professional fees | 2,626 | 2,590 | 1,740 | 5,216 | 4,382 | ||||
Data processing and software expense | 4,727 | 4,562 | 2,869 | 9,289 | 5,668 | ||||
Amortization of other intangible assets | 2,800 | 1,871 | 2,034 | 4,671 | 3,742 | ||||
Electronic banking expense | 1,717 | 1,491 | 2,821 | 3,208 | 5,578 | ||||
Marketing expense | 1,343 | 920 | 836 | 2,264 | 1,815 | ||||
FDIC insurance premiums | 1,464 | 801 | 1,018 | 2,265 | 2,212 | ||||
Franchise tax expense | 872 | 1,034 | 1,102 | 1,906 | 1,866 | ||||
Communication expense | 724 | 613 | 649 | 1,337 | 1,273 | ||||
Other loan expenses | 537 | 739 | 445 | 1,276 | 1,277 | ||||
Other non-interest expense | 4,844 | 4,354 | 3,450 | 9,197 | 6,628 | ||||
Total non-interest expense excluding acquisition- | $ 59,914 | $ 55,928 | $ 49,297 | $ 115,842 | $ 99,553 | ||||
Total non-interest expense increased $14.1 million, or 25%, for the three months ended June 30, 2023, compared to the linked quarter. The increase in total non-interest expense for the second quarter of 2023 was attributable to increases of $5.1 million and $4.5 million in acquisition-related salaries and employee benefit costs and professional fees, respectively, due to the Limestone Merger. Excluding acquisition-related expenses, total non-interest expense increased $4.0 million, primarily due to increases of (i) $0.9 million in the amortization of other intangible assets, (ii) $0.9 million in salaries and employee benefit costs, both driven by the Limestone Merger, and (iii) $0.7 million in FDIC insurance expense.
Compared to the second quarter of 2022, total non-interest expense for the second quarter of 2023 increased $20.7 million, or 42%, primarily due to an increase of $10.1 million in acquisition-related expenses. Excluding acquisition-related expenses, non-interest expenses increased $10.6 million, primarily due to a $5.1 million increase in salaries and employee benefit costs due to additional employees added in the Limestone Merger, and a $1.9 million increase in data processing and software expense due to recent growth, including through acquisitions.
For the six months ended June 30, 2023, total non-interest expense increased $25.6 million, or 25.2%, compared to the first six months of 2022, primarily due to an increase of $9.3 million in acquisition-related expenses. Excluding acquisition-related expenses, non-interest expenses increased $16.3 million. This variance was driven by increases of $9.6 million and $3.6 million in salaries and employee benefit costs and data processing and software expense, respectively, due to recent growth, partially offset by a $2.4 million decrease in electronic banking expense.
The efficiency ratio for the second quarter of 2023 was 62.7%, compared to 57.8% for the linked quarter, and 58.8% for the second quarter of 2022. The increases in the efficiency ratio compared to the linked quarter and prior year quarter were primarily due to the increases in non-interest expenses, primarily from the Limestone Merger, which were partially offset by higher net interest income due to increases in the market interest rates and additional customers from Limestone. The efficiency ratio, adjusted for non-core items, was 53.3% for the second quarter of 2023, compared to 57.2% for the linked quarter and 58.0% for the second quarter of 2022. Peoples continues to focus on controlling expenses, while recognizing necessary costs in order to continue growing the business.
Income Tax Expense:
Peoples recorded income tax expense of $6.2 million with an effective tax rate of 22.6% for the second quarter of 2023, compared to income tax expense of $7.0 million with an effective tax rate of 21.0% for the linked quarter, and income tax expense of $6.8 million with an effective tax rate of 21.6% for the second quarter of 2022. Income tax expense for the second quarter of 2023 compared to the linked quarter and second quarter of 2022, decreased due to less net income before income taxes. The effective rate increase for the second quarter of 2022 was primarily due to the Limestone Merger. Peoples recorded income tax expense of $13.2 million with an effective tax rate of 21.7% in the first six months of 2023 and $12.8 million with an effective tax rate of 20.9% in the first six months of 2022. The increase was driven by higher pre-tax income.
Investment Securities and Liquidity:
Peoples' investment portfolio primarily consists of available-for-sale investment securities reported at fair value and held-to-maturity investment securities reported at amortized cost. The available-for-sale investment securities balance at June 30, 2023 increased $83.9 million and $2.0 million, when compared to at March 31, 2023, at December 31, 2022, respectively, and decreased $134.2 million when compared to at June 30, 2022. The changes in the balance from March 31, 2023 and December 31, 2022 were due to available-for-sale investment securities acquired in the Limestone Merger. The change in the balance from June 30, 2022 was due to a reduction in market value of available-for-sale securities driven by the recent increases in market interest rates and the sales of the lower-yielding available-for-sale securities mentioned above. The balances of unrealized losses on available-for-sale investment securities recognized within accumulated other comprehensive loss were $121.5 million, $112.7 million, $129.9 million and $93.6 million at June 30, 2023, at March 31, 2023, at December 31, 2022 and at June 30, 2022, respectively.
The held-to-maturity investment securities balance at June 30, 2023 decreased $20.1 million when compared to at March 31, 2023, and increased $113.7 million, and $273.2 million when compared to at December 31, 2022 and at June 30, 2022, respectively. The decrease when compared to at March 31, 2023 was due to calls on five securities during the second quarter of 2023. The increases when compared to at December 31, 2022 and at June 30, 2022 were driven by purchases of agency mortgage-backed securities, agency collateralized mortgage obligations, and agency debentures. Most of the securities purchased during the first quarter of 2023 were classified as held-to-maturity, which has contributed to the reduction of available-for-sale securities as a percentage of the bond portfolio. Management purchased these securities to increase portfolio yield and reduce Peoples' sensitivity to falling intermediate and long-term interest rates. The balances of unrealized losses on held-to-maturity investment securities were $81.1 million, $68.6 million, $80.6 million and $59.9 million at June 30, 2023, at March 31, 2023, at December 31, 2022 and at June 30, 2022, respectively.
The duration of the investment portfolio as of June 30, 2023 was estimated to be 6.02 years. The duration of Peoples' investments is managed as part of its Asset Liability Management program, and has the potential to impact both liquidity and capital, as mismatches in duration may require a liquidation of investment securities at market prices to meet
