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Loans and Leases

6 Months Ended

Jun. 30, 2022

Peoples' loan portfolio consists of various types of loans and leases originated primarily as a result of lending opportunities within Peoples' footprint. Peoples also originates insurance premium finance loans and leases nationwide through its Peoples Premium Finance and North Star Leasing divisions, and Vantage Financial, LLC ("Vantage") subsidiary, respectively. Loans and leases throughout this document are referred to as "total loans" and "loans held for investment".

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)	June 30, 2022		December 31, 2021
Construction	$	202,588	$	210,232
Commercial real estate, other	1,460,023		1,550,081
Commercial and industrial	858,452		891,392
Premium finance	152,237		136,136
Leases	314,522		122,508
Residential real estate	743,005		771,718
Home equity lines of credit	169,335		163,593
Consumer, indirect	563,088		530,532
Consumer, direct	111,804		104,652
Deposit account overdrafts	851		756
Total loans, at amortized cost	$	4,575,905	$	4,481,600

On March 7, 2022, Peoples completed the acquisition of Vantage, which included $157.5 million of leases. During the first six months of 2022, Peoples experienced elevated levels of payoffs and amortization of previously-acquired loans, which partially offset organic loan growth.

Peoples is a Small Business Administration ("SBA") Paycheck Protection Program ("PPP") lender. At June 30, 2022, the PPP loans had an amortized cost of $15.2 million, and were included in the commercial and industrial loan balances. As of June 30, 2022, deferred loan origination fees, net of deferred origination costs, totaled $0.4 million for PPP loans. During the second quarter of 2022, Peoples recorded amortization of net deferred loan origination fees of $0.6 million on PPP loans compared to $3.4 million for the second quarter of 2021. The remaining net deferred loan origination fees will be amortized over the life of the respective loans, or until forgiven by the SBA, and will be recognized in "Net interest income".

Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses. Total interest receivable on loans was $12.0 million at both June 30, 2022 and December 31, 2021.

Nonaccrual and Past Due Loans

A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due.

The amortized cost of loans on nonaccrual status and of loans delinquent for 90 days or more and accruing was as follows:


	June 30, 2022				December 31, 2021
(Dollars in thousands)	Nonaccrual (a)		Accruing Loans 90+ Days Past Due		Nonaccrual (a)		Accruing Loans 90+ Days Past Due
Construction	$	5	$	—	$	6	$	90
Commercial real estate, other	14,253		330		17,067		689
Commercial and industrial	1,849		89		3,572		1,139
Premium finance	—		304		—		865
Leases	1,573		5,722		1,581		—
Residential real estate	9,194		1,687		9,647		805
Home equity lines of credit	890		89		1,039		50
Consumer, indirect	1,558		15		1,574		—
Consumer, direct	166		—		279		85
Total loans, at amortized cost	$	29,488	$	8,236	$	34,765	$	3,723

(a) There were $2.3 million of nonaccrual loans for which there was no allowance for credit losses at June 30, 2022 and $2.6 million at December 31, 2021.

During the first six months of 2022, nonaccrual loans declined compared to December 31, 2021, which was primarily due to the payoff of one commercial relationship, coupled with other smaller reductions. The increase in accruing loans 90+ days past due, compared to December 31, 2021, was the result of the additional leases acquired in the Vantage acquisition, the majority of which related to in-process renewals. As of June 30, 2022, the short-term modifications, such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment for current borrowers Peoples had made were insignificant. Under the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), borrowers are considered current if they are less than 30 days past due on their contractual payments at the time a modification program is implemented. As such, these modifications made in accordance with the CARES Act were not included in Peoples' nonaccrual or accruing loans 90+ days past due at June 30, 2022.

The amount of interest income recognized on loans past due 90 days or more during the six months ended June 30, 2022 was $0.7 million.

The following table presents the aging of the amortized cost of past due loans:


	Loans Past Due								Current Loans		Total Loans
(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total
June 30, 2022
Construction	$	5	$	—	$	—	$	5	$	202,583	$	202,588
Commercial real estate, other	2,294		4,133		10,804		17,231		1,442,792		1,460,023
Commercial and industrial	2,385		200		1,938		4,523		853,929		858,452
Premium finance	444		190		304		938		151,299		152,237
Leases	789		7,665		3,936		12,390		302,132		314,522
Residential real estate	4,465		2,091		5,516		12,072		730,933		743,005
Home equity lines of credit	927		290		554		1,771		167,564		169,335
Consumer, indirect	3,859		776		495		5,130		557,958		563,088
Consumer, direct	357		48		34		439		111,365		111,804
Deposit account overdrafts	—		—		—		—		851		851
Total loans, at amortized cost	$	15,525	$	15,393	$	23,581	$	54,499	$	4,521,406	$	4,575,905


	Loans Past Due								Current Loans		Total Loans
(Dollars in thousands)	30 - 59 days		60 - 89 days		90 + Days		Total
December 31, 2021
Construction	$	658	$	—	$	90	$	748	$	209,484	$	210,232
Commercial real estate, other	2,891		1,600		12,561		17,052		1,533,029		1,550,081
Commercial and industrial	1,132		1,278		3,595		6,005		885,387		891,392
Premium finance	751		266		865		1,882		134,254		136,136
Leases	426		247		1,581		2,254		120,254		122,508
Residential real estate	8,276		2,241		5,188		15,705		756,013		771,718
Home equity lines of credit	1,137		619		625		2,381		161,212		163,593
Consumer, indirect	4,220		895		615		5,730		524,802		530,532
Consumer, direct	457		135		200		792		103,860		104,652
Deposit account overdrafts	—		—		—		—		756		756
Total loans, at amortized cost	$	19,948	$	7,281	$	25,320	$	52,549	$	4,429,051	$	4,481,600

Delinquency trends remained stable, as 98.8% of Peoples' loan portfolio was considered “current” at June 30, 2022, compared to 98.8% at December 31, 2021.

Pledged Loans

Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, home equity lines of credit and commercial real estate loans under a blanket collateral agreement to secure borrowings from the FHLB. Peoples also has pledged eligible commercial and industrial loans to secure borrowings with the FRB. Loans pledged are summarized as follows:


(Dollars in thousands)	June 30, 2022		December 31, 2021
Loans pledged to FHLB	$	797,689	$	769,863
Loans pledged to FRB	354,119		294,728

Credit Quality Indicators

As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2021 Form 10-K, Peoples categorizes the majority of its loans into risk categories based upon an established risk grading matrix using a scale of 1 to 8. Loan grades are assigned at the time a new loan or lending commitment is extended by Peoples and may be changed at any time when circumstances warrant. Loans to borrowers with an aggregate unpaid principal balance in excess of $1.0 million are reviewed at least on an annual basis for possible credit deterioration. Loan relationships whose aggregate credit exposure to Peoples is equal to or less than $1.0 million are reviewed on an event driven basis. Triggers for review include knowledge of adverse events affecting the borrower's business, receipt of financial statements indicating deteriorating credit quality or other similar events. Adversely classified loans are reviewed on a quarterly basis. A description of the general characteristics of the risk grades used by Peoples, including loans and leases acquired from Vantage and Premier, is as follows:

“Pass” (grades 1 through 4): Loans in this risk category involve borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan obligations. Loans in this risk grade would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the loan if required, for any weakness that may exist.

“Special Mention” (grade 5): Loans in this risk grade are the equivalent of the regulatory definition of “Other Assets Especially Mentioned.” Loans in this risk category possess some credit deficiency or potential weakness, which requires a high level of management attention. Potential weaknesses include declining trends in operating earnings and cash flows and/or reliance on a secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the loan or in Peoples' credit position.

“Substandard” (grade 6): Loans in this risk grade are inadequately protected by the borrower's current financial condition and payment capability or the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the orderly repayment of the loans. They are characterized by the distinct possibility that Peoples will sustain some loss if the weaknesses are not corrected.

“Doubtful” (grade 7): Loans in this risk grade have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain

important and reasonably specific factors that may work to the advantage and strengthening of the exposure, classification of each of these loans as an estimated loss is deferred until its more exact status may be determined.

“Loss” (grade 8): Loans in this risk grade are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean a loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Charge-offs against the allowance for credit losses are taken during the period in which the loan becomes uncollectible. Consequently, Peoples typically does not maintain a recorded investment in loans within this category.

Consumer loans and other smaller-balance loans are evaluated and categorized as “substandard,” or “loss” consistent with the regulatory definitions and requirements of these classes. Leases are categorized as "special mention", "substandard", or "loss" based upon delinquency status and the prospect of collecting the remaining net investment balance owed under the lease. All other loans not evaluated individually, nor meeting the regulatory conditions to be categorized as described above, would be considered as “pass" for disclosure purposes.

The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the most recent analysis performed at June 30, 2022:



	Term Loans at Amortized Cost by Origination Year														Revolving Loans Converted to Term
(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans				Total Loans
Construction
Pass	$	25,664	$	115,352	$	39,773	$	17,453	$	432	$	397	$	1,805	$	9,668	$	200,876
Special mention	—		289		—		—		—		133		—		—		422
Substandard	—		—		—		—		72		1,218		—		—		1,290


Total	25,664		115,641		39,773		17,453		504		1,748		1,805		9,668		202,588
Commercial real estate, other
Pass	96,447		224,101		251,620		215,276		116,977		424,176		21,434		10,296		1,350,031
Special mention	—		201		3,211		7,214		3,755		27,180		87		45		41,648
Substandard	—		680		1,683		1,834		758		62,844		359		33		68,158
Doubtful	—		—		—		—		—		170		—		—		170
Loss	—		—		—		—		—		16		—		—		16
Total	96,447		224,982		256,514		224,324		121,490		514,386		21,880		10,374		1,460,023
Commercial and industrial
Pass	62,032		199,826		92,972		82,546		47,802		113,990		208,432		14,528		807,600
Special mention	—		110		12,090		1,231		257		5,098		3,953		7		22,739
Substandard	46		413		1,765		3,123		2,996		8,802		10,751		143		27,896
Doubtful	—		—		—		—		—		217		—		100		217

Total	62,078		200,349		106,827		86,900		51,055		128,107		223,136		14,778		858,452
Premium finance
Pass	125,587		26,650		—		—		—		—		—		—		152,237




Total	125,587		26,650		—		—		—		—		—		—		152,237
Leases
Pass	110,206		109,865		50,679		26,496		5,945		2,034		—		—		305,225
Special mention	918		4,326		46		67		72		—		—		—		5,429
Substandard	127		1,529		460		471		1,281		—		—		—		3,868
Total	111,251		115,720		51,185		27,034		7,298		2,034		—		—		314,522



	Term Loans at Amortized Cost by Origination Year														Revolving Loans Converted to Term
(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans				Total Loans
Residential real estate
Pass	47,234		141,838		64,003		46,524		31,153		396,348		—		—		727,100

Substandard	—		—		—		—		—		15,698		—		—		15,698

Loss	—		—		—		—		—		207		—		—		207
Total	47,234		141,838		64,003		46,524		31,153		412,253		—		—		743,005
Home equity lines of credit
Pass	18,117		37,484		21,488		16,056		14,615		60,756		419		4,443		168,935

Substandard	—		—		—		—		—		400		—		—		400


Total	18,117		37,484		21,488		16,056		14,615		61,156		419		4,443		169,335
Consumer, indirect
Pass	149,613		185,660		128,044		47,675		32,493		19,603		—		—		563,088




Total	149,613		185,660		128,044		47,675		32,493		19,603		—		—		563,088
Consumer, direct
Pass	33,346		37,122		20,084		9,154		5,692		6,406		—		—		111,804




Total	33,346		37,122		20,084		9,154		5,692		6,406		—		—		111,804
Deposit account overdrafts	851		—		—		—		—		—		—		—		851
Total loans, at amortized cost	$	670,188	$	1,085,446	$	687,918	$	475,120	$	264,300	$	1,145,693	$	247,240	$	39,263	$	4,575,905

The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the then most recent analysis performed at December 31, 2021:



	Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Construction
Pass	$	85,276	$	78,026	$	29,514	$	3,498	$	1,233	$	2,982	$	2,411	$	6,948	$	202,940
Special mention	290		—		—		735		3,850		137		—		—		5,012
Substandard	—		—		947		77		153		1,103		—		—		2,280


Total	85,566		78,026		30,461		4,310		5,236		4,222		2,411		6,948		210,232
Commercial real estate, other
Pass	253,259		259,113		217,938		143,094		143,975		392,212		21,320		11,940		1,430,911
Special mention	157		2,716		7,875		3,839		6,292		31,626		—		49		52,505
Substandard	—		1,675		824		691		3,124		59,415		371		37		66,100
Doubtful	—		—		—		—		—		542		—		—		542
Loss	—		—		—		—		—		23		—		—		23
Total	253,416		263,504		226,637		147,624		153,391		483,818		21,691		12,026		1,550,081
Commercial and industrial
Pass	299,117		105,646		84,144		56,361		22,182		100,030		174,848		15,888		842,328
Special mention	82		11,745		2,559		2,179		132		5,445		7,563		9		29,705
Substandard	465		2,059		2,691		812		4,995		3,342		3,085		367		17,449
Doubtful	—		—		—		—		—		1,648		262		100		1,910

Total	299,664		119,450		89,394		59,352		27,309		110,465		185,758		16,364		891,392



	Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Premium finance
Pass	135,896		240		—		—		—		—		—		—		136,136
Total	135,896		240		—		—		—		—		—		—		136,136
Leases
Pass	78,048		25,954		13,368		2,972		337		—		—		—		120,679
Special mention	34		29		22		159		4		—		—		—		248
Substandard	196		438		462		479		6		—		—		—		1,581
Total	78,278		26,421		13,852		3,610		347		—		—		—		122,508
Residential real estate
Pass	141,845		74,169		53,434		33,690		44,377		407,541		—		—		755,056

Substandard	—		—		—		—		—		16,302		—		—		16,302

Loss	—		—		—		—		—		360		—		—		360
Total	141,845		74,169		53,434		33,690		44,377		424,203		—		—		771,718
Home equity lines of credit
Pass	35,898		23,276		18,035		16,124		14,991		53,302		1,967		3,287		163,593




Total	35,898		23,276		18,035		16,124		14,991		53,302		1,967		3,287		163,593
Consumer, indirect
Pass	226,287		163,830		63,353		45,672		21,754		9,636		—		—		530,532




Total	226,287		163,830		63,353		45,672		21,754		9,636		—		—		530,532
Consumer, direct
Pass	47,308		26,792		13,293		8,411		3,218		5,630		—		—		104,652




Total	47,308		26,792		13,293		8,411		3,218		5,630		—		—		104,652
Deposit account overdrafts	756		—		—		—		—		—		—		—		756
Total loans, at amortized cost	$	1,304,914	$	775,708	$	508,459	$	318,793	$	270,623	$	1,091,276	$	211,827	$	38,625	$	4,481,600

Collateral Dependent Loans

Peoples has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans:

• Construction loans are typically secured by owner occupied commercial real estate or non-owner occupied investment real estate. Typically, owner occupied construction loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties that are in process of construction. Non-owner occupied commercial construction loans are generally secured by office buildings and complexes, multi-family complexes, land under development, and other commercial and industrial real estate in process of construction.

•Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.

•Commercial and industrial loans are generally secured by equipment, inventory, accounts receivable, and other commercial property.

•Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage.

•Home equity lines of credit are generally secured by second mortgages on residential real estate property.

•Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral.

•Leases are secured by commercial equipment and other essential business assets.

•Premium finance loans are secured by the unearned portion of the insurance premium being financed.

The following table details Peoples' amortized cost of collateral dependent loans:


(Dollars in thousands)	June 30, 2022		December 31, 2021

Construction	$	342		$	1,291
Commercial real estate, other	11,196			37,220
Commercial and industrial	2,310			8,340
Residential real estate	1,946			2,877
Home equity lines of credit	385			391


Total collateral dependent loans	$	16,179		$	50,119

The decrease in collateral dependent loans at June 30, 2022, compared to December 31, 2021, was primarily due to three large commercial relationships that were no longer considered collateral dependent at June 30, 2022.

Troubled Debt Restructurings

The following tables summarize the loans that were modified as TDRs during the three and six months ended June 30:


		Three Months Ended
		Recorded Investment (a)
(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment
June 30, 2022

Commercial real estate, other	2	$	184	$	184	$	184
Commercial and industrial	5	1,422		1,426		1,031

Residential real estate	11	438		463		457
Home equity lines of credit	2	110		110		110
Consumer, indirect	7	108		108		108
Consumer, direct	1	31		31		31
Consumer	8	139		139		139
Total	28	$	2,293	$	2,322	$	1,921

June 30, 2021

Commercial real estate, other	1	$	23	$	23	$	23

Leases	4	225		233		233
Residential real estate	5	245		245		245
Home equity lines of credit	4	260		260		258
Consumer, indirect	6	62		62		62
Consumer, direct	5	38		38		38
Consumer	11	100		100		100
Total	25	$	853	$	861	$	859
(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.


		Six Months Ended
		Recorded Investment (a)
(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment
June 30, 2022

Commercial real estate, other	3	$	287	$	287	$	284
Commercial and industrial	5	1,422		1,427		1,031

Residential real estate	26	1,333		1,378		1,367
Home equity lines of credit	4	178		178		177
Consumer, indirect	16	210		210		210
Consumer, direct	3	44		44		44
Consumer	19	254		254		254
Total	57	$	3,474	$	3,524	$	3,113

June 30, 2021
Construction	1	$	344	$	344	344
Commercial real estate, other	1	23		23		$	23

Leases	4	225		233		233
Residential real estate	8	415		419		416
Home equity lines of credit	4	260		260		258
Consumer, indirect	10	140		140		135
Consumer, direct	7	50		50		50
Consumer	17	190		190		185
Total	35	$	1,457	$	1,469	$	1,459
(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.

On March 22, 2020, federal and state government banking regulators issued a joint statement, with which the FASB concurred as to the approach, regarding accounting for loan modifications for borrowers affected by COVID-19. In this guidance, short-term modifications, made on a good faith basis in response to COVID-19, to borrowers who were current prior to any relief, are not considered TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment which are insignificant. Under the guidance, the borrowers that are considered to be current are those that are less than 30 days past due on their contractual payments at the time a modification program is implemented. In addition, modification or deferral programs mandated by the U.S. federal government or any state government related to COVID-19 are not in the scope of accounting for TDRs, as defined in ASC 310-40.

Peoples had two loans totaling $16,000 that were modified as TDRs during the past twelve months that subsequently defaulted (i.e., 90 days or more past due following a modification during the year).

Peoples had no commitments to lend additional funds to borrowers whose loan terms have been modified in a TDR.

Allowance for Credit Losses

Changes in the allowance for credit losses for the three and six months ended June 30, 2022 and June 30, 2021 are summarized below:


(Dollars in thousands)	Beginning Balance, March 31, 2022		Initial Allowance for Acquired Purchased Credit Deteriorated Assets (a)		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (b)		Charge-offs		Recoveries		Ending Balance, June 30, 2022
Construction	$	2,731	$	—	$	—	$	(1,200)	$	—	$	—	$	1,531
Commercial real estate, other	21,055		(234)		—		(2,267)		(22)		176		18,708
Commercial and industrial	10,114		(253)		—		(871)		(420)		2		8,572
Premium finance	345		—		—		(12)		(30)		8		311
Leases	5,875		292		—		1,847		(493)		64		7,585
Residential real estate	6,495		12		—		(142)		(47)		14		6,332
Home equity lines of credit	1,894		—		—		(170)		(25)		—		1,699
Consumer, indirect	5,172		—		—		1,428		(449)		83		6,234
Consumer, direct	1,036		—		—		334		(60)		11		1,321
Deposit account overdrafts	51		—		—		355		(405)		52		53
Total	$	54,768	$	(183)	$	—	$	(698)	$	(1,951)	$	410	$	52,346

(a)Includes purchase price adjustments related to acquisitions previously completed but within the 12-month measurement period.

(b)Amount does not include the provision for the allowance for credit losses on unfunded commitments.


(Dollars in thousands)	Beginning Balance, March 31, 2021		Initial Allowance for Acquired Purchased Credit Deteriorated Assets		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		Provision for (Recovery of) Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, June 30, 2021
Construction	$	829	$	—	$	—	$	85	$	—	$	—	$	914
Commercial real estate, other	17,834		—		—		(601)		(4)		4		17,233
Commercial and industrial	10,108		—		—		(1,435)		(5)		18		8,686
Premium finance	1,160		—		—		(155)		(7)		—		998
Leases	—		493		3,288		349		(525)		110		3,715
Residential real estate	4,935		—		—		(2)		(136)		40		4,837
Home equity lines of credit	1,494		—		—		14		(4)		—		1,504
Consumer, indirect	7,522		—		—		1,525		(269)		63		8,841
Consumer, direct	970		—		—		211		(31)		11		1,161
Deposit account overdrafts	45		—		—		53		(89)		44		53
Total	$	44,897	$	493	$	3,288	$	44	$	(1,070)	$	290	$	47,942

(a)Amount does not include the provision for the allowance for credit losses on unfunded commitments.

Changes in the allowance for credit losses for the six months ended June 30, 2022 and June 30, 2021 are summarized below:


(Dollars in thousands)	Beginning Balance, December 31, 2021		Initial Allowance for Acquired Purchased Credit Deteriorated Assets (a)		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (b)		Charge-offs		Recoveries		Ending Balance, June 30, 2022
Construction	$	2,999	$	—	$	—	$	(1,468)	$	—	$	—	$	1,531
Commercial real estate, other	29,147		(451)		—		(9,913)		(300)		225		18,708
Commercial and industrial	11,063		(418)		—		(1,196)		(883)		6		8,572
Premium finance	379		—		—		(32)		(44)		8		311
Leases	4,797		424		—		3,090		(966)		240		7,585
Residential real estate	7,233		(509)		—		(64)		(356)		28		6,332
Home equity lines of credit	2,005		(11)		—		(283)		(41)		29		1,699
Consumer, indirect	5,326		(41)		—		1,614		(834)		169		6,234
Consumer, direct	961		—		—		534		(196)		22		1,321
Deposit account overdrafts	57		—		—		554		(664)		106		53
Total	$	63,967	$	(1,006)	$	—	$	(7,164)	$	(4,284)	$	833	$	52,346

(a)Includes purchase price adjustments related to acquisitions previously completed but were within the 12-month measurement period.

(b)Amount does not include the provision for the allowance for credit losses on unfunded commitments.



(Dollars in thousands)	Beginning Balance, December 31, 2020		Initial Allowance for Acquired Purchased Credit Deteriorated Assets		Provision for Credit Losses for Acquired Non-Purchased Credit Deteriorated Assets		(Recovery of) Provision for Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, June 30, 2021
Construction	$	1,887	$	—	$	—	$	(973)	$	—	$	—	$	914
Commercial real estate, other	17,536		—		—		(146)		(161)		4		17,233
Commercial and industrial	12,763		—		—		(3,797)		(298)		18		8,686
Premium finance	1,095		—		—		(74)		(23)		—		998
Leases	—		493		3,288		349		(525)		110		3,715
Residential real estate	6,044		—		—		(993)		(269)		55		4,837
Home equity lines of credit	1,860		—		—		(344)		(16)		4		1,504
Consumer, indirect	8,030		—		—		1,417		(774)		168		8,841
Consumer, direct	1,081		—		—		110		(67)		37		1,161
Deposit account overdrafts	63		—		—		84		(192)		98		53
Total	$	50,359	$	493	$	3,288	$	(4,367)	$	(2,325)	$	494	$	47,942

(a)Amount does not include the provision for the allowance for credit losses on unfunded commitments.s adopted ASU 2016-13 - Financial Instruments

(a)Amount does not include the provision for the allowance for credit losses on unfunded commitments

During the second quarter of 2022, Peoples recorded a recovery of credit losses for loans of $0.7 million driven by a reduction in allowance for individually analyzed loans, as well as changes in loss drivers used in the CECL model. Leases designated as purchased

credit deteriorated ("PCD") acquired from Vantage increased the allowance for credit losses by $292,000. Net charge-offs for the second quarter of 2022 were $1.5 million, and included charge-offs of three leases aggregating $0.5 million.

At June 30, 2022, Peoples had recorded an allowance for unfunded commitments of $2.1 million, a decrease compared to $2.2 million at March 31, 2022 and $2.5 million at December 31, 2021. The allowance for unfunded commitments (also referred to as "unfunded commitment liability") is presented in the “Accrued expenses and other liabilities” line of the Unaudited Consolidated Balance Sheets. The change in the allowance for unfunded commitments is also reflected in the "(Recovery of) provision for credit losses" line of the Unaudited Consolidated Statements of Operations.