Loans (Tables)

9 Months Ended

Sep. 30, 2018

The major classifications of loan balances (in each case, net of deferred fees and costs) excluding loans held for sale, were as follows:



(Dollars in thousands)	September 30, 2018		December 31, 2017
Originated loans:
Commercial real estate, construction	$	103,562	$	107,118
Commercial real estate, other	630,720		595,447
Commercial real estate	734,282		702,565
Commercial and industrial	510,591		438,051
Residential real estate	299,768		304,523
Home equity lines of credit	92,892		88,902
Consumer, indirect	396,701		340,390
Consumer, direct	72,601		67,010
Consumer	469,302		407,400
Deposit account overdrafts	649		849
Total originated loans	$	2,107,484	$	1,942,290
Acquired loans:
Commercial real estate, construction	$	13,050	$	8,319
Commercial real estate, other	191,993		165,120
Commercial real estate	205,043		173,439
Commercial and industrial	41,188		34,493
Residential real estate	308,178		184,864
Home equity lines of credit	42,961		20,575
Consumer, indirect	161		329
Consumer, direct	2,712		1,147
Consumer	2,873		1,476
Total acquired loans	$	600,243	$	414,847
Loans, net of deferred fees and costs	$	2,707,727	$	2,357,137

Schedule of Financing Receivables Acquired with Deteriorated Credit Quality

Peoples has acquired various loans through business combinations for which there was, at acquisition, evidence of deterioration of credit quality since origination, and for which it was probable that all contractually required payments would not be collected. The carrying amounts of these purchased credit impaired loans included in the loan balances above are summarized as follows:



(Dollars in thousands)	September 30, 2018		December 31, 2017
Commercial real estate, other	$	12,812	$	8,117
Commercial and industrial	1,343		767
Residential real estate	20,488		19,532
Consumer	61		33
Total outstanding balance	$	34,704	$	28,449
Net carrying amount	$	23,639	$	19,564

Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Accretable Yield

Changes in the accretable yield for purchased credit impaired loans for the nine months ended September 30 were as follows:



(Dollars in thousands)	September 30, 2018			September 30, 2017
Balance, beginning of period	$	6,704		$	7,132
Reclassification from nonaccretable to accretable	2,019			1,285
Additions:
ASB Financial Corp. (preliminary)	2,047			—
Accretion	(1,392		)	(1,279		)
Balance, September 30	$	9,378		$	7,138

Acquired loans are reported net of the unamortized fair value adjustment. The following table details the preliminary fair value adjustment for acquired loans as of the acquisition date:



(Dollars in thousands, except per share data)	ASB
Nonimpaired Loans
Contractual cash flows	$	342,087
Nonaccretable difference	59,967
Expected cash flows	282,120
Accretable yield	54,029
Fair value	$	228,091
Credit Impaired Loans
Contractual cash flows	$	19,031
Nonaccretable difference	5,908
Expected cash flows	13,123
Accretable yield	2,047
Fair value	$	11,076

Nonaccrual and Past Due Loans

The recorded investments in loans on nonaccrual status and loans delinquent for 90 days or more and accruing were as follows:



	Nonaccrual Loans				Loans 90+ Days Past Due and Accruing
(Dollars in thousands)	September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
Originated loans:
Commercial real estate, construction	$	725	$	754	$	—	$	—
Commercial real estate, other	6,712		6,877		—		—
Commercial real estate	7,437		7,631		—		—
Commercial and industrial	1,308		739		—		—
Residential real estate	3,842		3,546		373		548
Home equity lines of credit	582		550		84		50
Consumer, indirect	405		256		—		—
Consumer, direct	31		39		—		16
Consumer	436		295		—		16
Total originated loans	$	13,605	$	12,761	$	457	$	614
Acquired loans:
Commercial real estate, construction	$	—	$	—	$	401	$	—
Commercial real estate, other	225		192		60		215
Commercial real estate	225		192		461		215
Commercial and industrial	61		259		—		45
Residential real estate	1,970		2,168		965		730
Home equity lines of credit	374		312		—		22
Consumer, indirect	—		—		2		—
Total acquired loans	$	2,630	$	2,931	$	1,428	$	1,012
Total loans	$	16,235	$	15,692	$	1,885	$	1,626

Aging Of The Recorded Investment In Past Due Loans And Leases

The following table presents the aging of the recorded investment in past due loans:



	Loans Past Due								Current Loans		Total Loans
(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total
September 30, 2018
Originated loans:
Commercial real estate, construction	$	—	$	—	$	725	$	725	$	102,837	$	103,562
Commercial real estate, other	521		601		6,418		7,540		623,180		630,720
Commercial real estate	521		601		7,143		8,265		726,017		734,282
Commercial and industrial	624		865		988		2,477		508,114		510,591
Residential real estate	826		2,544		2,126		5,496		294,272		299,768
Home equity lines of credit	320		62		410		792		92,100		92,892
Consumer, indirect	2,308		222		220		2,750		393,951		396,701
Consumer, direct	289		5		20		314		72,287		72,601
Consumer	2,597		227		240		3,064		466,238		469,302
Deposit account overdrafts	—		—		—		—		649		649
Total originated loans	$	4,888	$	4,299	$	10,907	$	20,094	$	2,087,390	$	2,107,484
Acquired loans:
Commercial real estate, construction	$	9	$	—	$	401	$	410	$	12,640	$	13,050
Commercial real estate, other	1,318		136		140		1,594		190,399		191,993
Commercial real estate	1,327		136		541		2,004		203,039		205,043
Commercial and industrial	1,263		15		20		1,298		39,890		41,188
Residential real estate	1,382		1,215		1,963		4,560		303,618		308,178
Home equity lines of credit	572		107		210		889		42,072		42,961
Consumer, indirect	5		—		2		7		154		161
Consumer, direct	19		12		—		31		2,681		2,712
Consumer	24		12		2		38		2,835		2,873
Total acquired loans	$	4,568	$	1,485	$	2,736	$	8,789	$	591,454	$	600,243
Total loans	$	9,456	$	5,784	$	13,643	$	28,883	$	2,678,844	$	2,707,727



	Loans Past Due								Current Loans		Total Loans
(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total
December 31, 2017
Originated loans:
Commercial real estate, construction	$	—	$	—	$	—	$	—	$	107,118	$	107,118
Commercial real estate, other	990		—		6,492		7,482		587,965		595,447
Commercial real estate	990		—		6,492		7,482		695,083		702,565
Commercial and industrial	1,423		92		706		2,221		435,830		438,051
Residential real estate	4,562		1,234		2,408		8,204		296,319		304,523
Home equity lines of credit	502		80		395		977		87,925		88,902
Consumer, indirect	2,153		648		105		2,906		337,484		340,390
Consumer, direct	417		46		48		511		66,499		67,010
Consumer	2,570		694		153		3,417		403,983		407,400
Deposit account overdrafts	—		—		—		—		849		849
Total originated loans	$	10,047	$	2,100	$	10,154	$	22,301	$	1,919,989	$	1,942,290
Acquired loans:
Commercial real estate, construction	$	—	$	—	$	—	$	—	$	8,319	$	8,319
Commercial real estate, other	775		948		312		2,035		163,085		165,120
Commercial real estate	775		948		312		2,035		171,404		173,439
Commercial and industrial	—		1		171		172		34,321		34,493
Residential real estate	4,656		1,391		1,910		7,957		176,907		184,864
Home equity lines of credit	126		—		301		427		20,148		20,575
Consumer, indirect	3		—		—		3		326		329
Consumer, direct	10		11		—		21		1,126		1,147
Consumer	13		11		—		24		1,452		1,476
Total acquired loans	$	5,570	$	2,351	$	2,694	$	10,615	$	404,232	$	414,847
Total loans	$	15,617	$	4,451	$	12,848	$	32,916	$	2,324,221	$	2,357,137

Loans By Risk Category

The following table summarizes the risk category of loans within Peoples' loan portfolio based upon the most recent analysis performed:



	Pass Rated (Grades 1 - 4)		Special Mention (Grade 5)		Substandard (Grade 6)		Doubtful (Grade 7)		Not Rated		Total Loans
(Dollars in thousands)
September 30, 2018
Originated loans:
Commercial real estate, construction	$	101,274	$	—	$	1,496	$	—	$	792	$	103,562
Commercial real estate, other	603,723		13,992		13,005		—		—		630,720
Commercial real estate	704,997		13,992		14,501		—		792		734,282
Commercial and industrial	459,927		42,036		8,628		—		—		510,591
Residential real estate	14,483		537		12,506		294		271,948		299,768
Home equity lines of credit	453		—		—		—		92,439		92,892
Consumer, indirect	45		—		—		—		396,656		396,701
Consumer, direct	39		—		—		—		72,562		72,601
Consumer	84		—		—		—		469,218		469,302
Deposit account overdrafts	—		—		—		—		649		649
Total originated loans	$	1,179,944	$	56,565	$	35,635	$	294	$	835,046	$	2,107,484
Acquired loans:
Commercial real estate, construction	$	10,138	$	1,280	$	1,632	$	—	$	—	$	13,050
Commercial real estate, other	175,375		8,450		8,070		98		—		191,993
Commercial real estate	185,513		9,730		9,702		98		—		205,043
Commercial and industrial	38,424		1,400		1,364		—		—		41,188
Residential real estate	18,477		1,950		1,825		140		285,786		308,178
Home equity lines of credit	34		—		—		—		42,927		42,961
Consumer, indirect	4		—		—		—		157		161
Consumer, direct	39		—		—		—		2,673		2,712
Consumer	43		—		—		—		2,830		2,873
Total acquired loans	$	242,491	$	13,080	$	12,891	$	238	$	331,543	$	600,243
Total loans	$	1,422,435	$	69,645	$	48,526	$	532	$	1,166,589	$	2,707,727



	Pass Rated (Grades 1 - 4)		Special Mention (Grade 5)		Substandard (Grade 6)		Doubtful (Grade 7)		Not Rated		Total Loans
(Dollars in thousands)
December 31, 2017
Originated loans:
Commercial real estate, construction	$	100,409	$	5,502	$	754	$	—	$	453	$	107,118
Commercial real estate, other	561,320		17,189		16,938		—		—		595,447
Commercial real estate	661,729		22,691		17,692		—		453		702,565
Commercial and industrial	420,477		13,062		4,512		—		—		438,051
Residential real estate	17,896		1,000		11,371		216		274,040		304,523
Home equity lines of credit	454		—		—		—		88,448		88,902
Consumer, indirect	55		8		—		—		340,327		340,390
Consumer, direct	33		—		—		—		66,977		67,010
Consumer	88		8		—		—		407,304		407,400
Deposit account overdrafts	—		—		—		—		849		849
Total originated loans	$	1,100,644	$	36,761	$	33,575	$	216	$	771,094	$	1,942,290
Acquired loans:
Commercial real estate, construction	$	8,267	$	—	$	52	$	—	$	—	$	8,319
Commercial real estate, other	149,486		6,527		9,107		—		—		165,120
Commercial real estate	157,753		6,527		9,159		—		—		173,439
Commercial and industrial	32,011		157		2,325		—		—		34,493
Residential real estate	12,543		593		1,105		—		170,623		184,864
Home equity lines of credit	124		—		—		—		20,451		20,575
Consumer, indirect	12		—		—		—		317		329
Consumer, direct	35		—		—		—		1,112		1,147
Consumer	47		—		—		—		1,429		1,476
Total acquired loans	$	202,478	$	7,277	$	12,589	$	—	$	192,503	$	414,847
Total loans	$	1,303,122	$	44,038	$	46,164	$	216	$	963,597	$	2,357,137

Schedule Of Impaired Loans

The following table summarizes loans classified as impaired:



	Unpaid Principal Balance		Recorded Investment				Total Recorded Investment				Average Recorded Investment		Interest Income Recognized
			With Allowance		Without Allowance				Related Allowance
(Dollars in thousands)
September 30, 2018
Commercial real estate, construction	$	2,483	$	—	$	2,396	$	2,396	$	—	$	1,571	$	46
Commercial real estate, other	17,119		269		15,710		15,979		91		13,795		349
Commercial real estate	19,602		269		18,106		18,375		91		15,366		395
Commercial and industrial	2,395		899		1,286		2,185		191		2,068		53
Residential real estate	26,732		234		24,913		25,147		40		22,724		898
Home equity lines of credit	2,298		486		1,784		2,270		83		1,801		84
Consumer, indirect	518		242		285		527		140		242		16
Consumer, direct	77		32		45		77		32		66		11
Consumer	595		274		330		604		172		308		27
Total	$	51,622	$	2,162	$	46,419	$	48,581	$	577	$	42,267	$	1,457
December 31, 2017
Commercial real estate, construction	$	821	$	—	$	754	$	754	$	—	$	788	$	—
Commercial real estate, other	14,909		14		13,606		13,620		1		14,392		503
Commercial real estate	15,730		14		14,360		14,374		1		15,180		503
Commercial and industrial	1,690		951		572		1,523		199		1,668		65
Residential real estate	24,743		477		22,626		23,103		58		23,195		1,246
Home equity lines of credit	1,707		81		1,624		1,705		18		1,505		85
Consumer, indirect	273		70		206		276		26		184		20
Consumer, direct	87		56		28		84		37		79		7
Consumer	360		126		234		360		63		263		27
Total	$	44,230	$	1,649	$	39,416	$	41,065	$	339	$	41,811	$	1,926

Troubled Debt Restructurings on Financing Receivables

The following table summarizes the loans that were modified as a TDR during the three months ended September 30:



		Three Months Ended
		Recorded Investment (a)
(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment
September 30, 2018
Originated loans:
Residential real estate	3	$	87	$	87	$	87
Home equity lines of credit	4	533		533		531
Consumer, indirect	7	150		150		150
Total originated loans	14	$	770	$	770	$	768
Acquired loans:
Residential real estate	3	$	272	$	272	$	272
Home equity lines of credit	1	54		54		54
Total acquired loans	4	$	326	$	326	$	326
September 30, 2017
Originated loans:
Commercial and industrial	1	$	36	$	36	$	36
Residential real estate	1	90		90		90
Home equity lines of credit	2	22		22		19
Consumer, indirect	5	34		34		34
Consumer, direct	2	9		9		9
Consumer	7	43		43		43
Total originated loans	11	$	191	$	191	$	188
Acquired loans:
Residential real estate	2	$	61	$	61	$	61
Home equity lines of credit	1	34		34		34
Total acquired loans	3	$	95	$	95	$	95
(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

The following table summarizes the loans that were modified as a TDR during the nine months ended September 30:



		Nine Months Ended
		Recorded Investment (a)
(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment
September 30, 2018
Originated loans:
Residential real estate	9	$	871	$	871	$	871
Home equity lines of credit	6	565		565		562
Consumer, indirect	26	454		454		420
Consumer, direct	5	27		27		18
Consumer	31	481		481		438
Total originated loans	46	$	1,917	$	1,917	$	1,871
Acquired loans:
Commercial real estate, other	1	$	50	$	50	$	47
Residential real estate	15	1,258		1,258		1,244
Home equity lines of credit	5	140		140		139
Total acquired loans	21	$	1,448	$	1,448	$	1,430
September 30, 2017
Originated loans:
Commercial real estate, other	1	$	14	$	14	$	14
Commercial and industrial	3	174		174		123
Residential real estate	7	483		483		478
Home equity lines of credit	6	291		291		286
Consumer, indirect	11	127		127		86
Consumer, direct	3	10		10		10
Consumer	14	137		137		96
Total originated loans	31	$	1,099	$	1,099	$	997
Acquired loans:
Commercial real estate, other	2	$	271	$	271	$	265
Residential real estate	8	264		264		263
Home equity lines of credit	5	328		328		323
Consumer, direct	2	10		10		9
Total acquired loans	17	$	873	$	873	$	860
(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Troubled Debt Restructurings during prior 12 months that subsequently defaulted

The following table presents those acquired loans modified in a TDR during the year that subsequently defaulted (i.e., are 90 days or more past due following a modification) during the nine-month periods ended September 30:



	September 30, 2018					September 30, 2017
(Dollars in thousands)	Number of Contracts	Recorded Investment (a)		Impact on the Allowance for Loan Losses		Number of Contracts	Recorded Investment (a)		Impact on the Allowance for Loan Losses
Acquired loans:
Residential real estate	—	$	—	$	—	1	$	44	$	—
Home equity lines of credit	1	10		—		—	—		—
Consumer, other	—	—		—		1	8		—
Total	1	$	10	$	—	2	$	52	$	—
(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

Summary Of Activity In Allowance For Loan And Lease Losses

Changes in the allowance for originated loan losses for the nine months ended September 30 were as follows:



(Dollars in thousands)	Commercial Real Estate			Commercial and Industrial			Residential Real Estate			Home Equity Lines of Credit			Consumer Indirect			Consumer Direct			Deposit Account Overdrafts			Total
Balance, January 1, 2018	$	7,797		$	5,813		$	904		$	693		$	2,944		$	464		$	70		$	18,685
Charge-offs	(849		)	(38		)	(293		)	(67		)	(1,967		)	(297		)	(731		)	(4,242		)
Recoveries	58			10			98			12			403			114			160			855
Net charge-offs	(791		)	(28		)	(195		)	(55		)	(1,564		)	(183		)	(571		)	(3,387		)
Provision for loan losses	960			353			290			70			2,043			114			596			4,426
Balance, September 30, 2018	$	7,966		$	6,138		$	999		$	708		$	3,423		$	395		$	95		$	19,724

Period-end amount allocated to:
Loans individually evaluated for impairment	$	91		$	191		$	40		$	83		$	140		$	32		$	—		$	577
Loans collectively evaluated for impairment	7,875			5,947			959			625			3,283			363			95			19,147
Ending balance	$	7,966		$	6,138		$	999		$	708		$	3,423		$	395		$	95		$	19,724

Balance, January 1, 2017	$	7,172		$	6,353		$	982		$	688		$	2,312		$	518		$	171		$	18,196
Charge-offs	(25		)	(165		)	(451		)	(100		)	(1,493		)	(275		)	(767		)	(3,276		)
Recoveries	135			1			128			9			598			152			159			1,182
Net recoveries (charge-offs)	110			(164		)	(323		)	(91		)	(895		)	(123		)	(608		)	(2,094		)
Provision for loan losses	252			226			265			82			1,397			46			507			2,775
Balance, September 30, 2017	$	7,534		$	6,415		$	924		$	679		$	2,814		$	441		$	70		$	18,877

Period-end amount allocated to:
Loans individually evaluated for impairment	$	136		$	424		$	151		$	13		$	2		$	21		$	—		$	747
Loans collectively evaluated for impairment	7,398			5,991			773			666			2,812			420			70			18,130
Ending balance	$	7,534		$	6,415		$	924		$	679		$	2,814		$	441		$	70		$	18,877

Allowance for Loan Losses Acquired Loans [Table Text Block]

The following table presents activity in the allowance for loan losses for acquired loans:



	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Purchased credit impaired loans:
Balance, beginning of period	$	108	$	90	$	108	$	233
Provision for (recovery of) loan losses	47		25		47		(118		)
Balance, September 30	$	155	$	115	$	155	$	115