XML 21 R11.htm IDEA: XBRL DOCUMENT

Loans and Leases

9 Months Ended

Sep. 30, 2022

Loans and LeasesPeoples' 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 nationwide through its Peoples Premium Finance division, and originates leases nationwide through its North Star Leasing division and its Vantage Financial, LLC ("Vantage") subsidiary. 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)	September 30, 2022		December 31, 2021
Construction	$	215,621	$	210,232
Commercial real estate, other	1,423,479		1,550,081
Commercial and industrial	877,472		891,392
Premium finance	167,682		136,136
Leases	312,847		122,508
Residential real estate	733,361		771,718
Home equity lines of credit	174,525		163,593
Consumer, indirect	592,309		530,532
Consumer, direct	113,314		104,652
Deposit account overdrafts	597		756
Total loans, at amortized cost	$	4,611,207	$	4,481,600

On March 7, 2022, Peoples completed the acquisition of Vantage, which included $154.9 million of leases. During the first nine 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 September 30, 2022, the PPP loans had an amortized cost of $3.7 million, and were included in the commercial and industrial loan balances. As of September 30, 2022, deferred loan origination fees, net of deferred origination costs, totaled $61,000 for PPP loans. During the third quarter of 2022, Peoples recorded amortization of net deferred loan origination fees of $0.4 million on PPP loans compared to $3.8 million for the third 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 $13.1 million at September 30, 2022 and $12.0 million at 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:


	September 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	$	2	$	—	$	6	$	90
Commercial real estate, other	11,916		1,472		17,067		689
Commercial and industrial	2,385		266		3,572		1,139
Premium finance	—		308		—		865
Leases	2,094		4,654		1,581		—
Residential real estate	8,728		1,499		9,647		805
Home equity lines of credit	921		23		1,039		50
Consumer, indirect	1,627		195		1,574		—
Consumer, direct	158		7		279		85
Total loans, at amortized cost	$	27,831	$	8,424	$	34,765	$	3,723

(a) There were $2.0 million of nonaccrual loans for which there was no allowance for credit losses at September 30, 2022 and $2.6 million at December 31, 2021.

During the first nine 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 September 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 September 30, 2022.

The amount of interest income recognized on loans past due 90 days or more during the nine months ended September 30, 2022 was $1.1 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
September 30, 2022
Construction	$	334	$	25	$	—	$	359	$	215,262	$	215,621
Commercial real estate, other	2,710		878		11,668		15,256		1,408,223		1,423,479
Commercial and industrial	1,742		870		2,630		5,242		872,230		877,472
Premium finance	312		287		308		907		166,775		167,682
Leases	786		2,972		6,749		10,507		302,340		312,847
Residential real estate	3,413		1,814		5,723		10,950		722,411		733,361
Home equity lines of credit	1,640		102		513		2,255		172,270		174,525
Consumer, indirect	3,912		744		628		5,284		587,025		592,309
Consumer, direct	395		54		83		532		112,782		113,314
Deposit account overdrafts	—		—		—		—		597		597
Total loans, at amortized cost	$	15,244	$	7,746	$	28,302	$	51,292	$	4,559,915	$	4,611,207
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 98.9% of Peoples' loan portfolio was considered “current” at September 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)	September 30, 2022		December 31, 2021
Loans pledged to FHLB	$	793,115	$	769,863
Loans pledged to FRB	405,652		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 September 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	$	50,403	$	109,791	$	30,078	$	18,033	$	427	$	3,251	$	2,222	$	81	$	214,205
Special mention	—		—		—		—		—		825		—		—		825
Substandard	—		—		136		—		69		386		—		—		591


Total	50,403		109,791		30,214		18,033		496		4,462		2,222		81		215,621
Commercial real estate, other
Pass	124,239		227,395		230,082		206,722		114,512		395,451		21,768		6,337		1,320,169
Special mention	—		195		1,225		5,514		3,198		36,761		93		—		46,986
Substandard	120		9,059		2,342		1,908		1,025		41,356		341		—		56,151
Doubtful	—		—		—		—		—		173		—		—		173

Total	124,359		236,649		233,649		214,144		118,735		473,741		22,202		6,337		1,423,479
Commercial and industrial
Pass	116,058		173,932		86,010		77,871		44,821		99,146		224,418		2,529		822,256
Special mention	—		28		11,098		985		274		4,987		3,333		25		20,705
Substandard	59		9,453		2,627		2,975		2,920		4,563		11,702		142		34,299
Doubtful	—		—		—		—		—		212		—		—		212

Total	116,117		183,413		99,735		81,831		48,015		108,908		239,453		2,696		877,472
Premium finance
Pass	162,713		4,969		—		—		—		—		—		—		167,682




Total	162,713		4,969		—		—		—		—		—		—		167,682
Leases
Pass	139,715		98,250		40,078		19,569		4,440		1,513				—		303,565
Special mention	1,639		3,776		73		24		78		—						5,590
Substandard	575		1,693		537		424		463		—						3,692
Total	141,929		103,719		40,688		20,017		4,981		1,513		—		—		312,847
Residential real estate
Pass	65,666		140,597		62,306		44,469		29,790		375,024		—		—		717,852

Substandard	—		—		—		—		—		15,355		—		—		15,355

Loss	—		—		—		—		—		154		—		—		154
Total	65,666		140,597		62,306		44,469		29,790		390,533		—		—		733,361
Home equity lines of credit
Pass	29,784		36,483		21,432		15,451		14,072		56,586		340		2,191		174,148

Substandard	—		—		—		—		—		377		—		—		377


Total	29,784		36,483		21,432		15,451		14,072		56,963		340		2,191		174,525
Consumer, indirect
Pass	229,831		165,711		112,435		41,315		27,327		15,690		—		—		592,309




Total	229,831		165,711		112,435		41,315		27,327		15,690		—		—		592,309
Consumer, direct
Pass	45,117		32,606		17,426		7,874		4,738		5,553		—		—		113,314




Total	45,117		32,606		17,426		7,874		4,738		5,553		—		—		113,314
Deposit account overdrafts	597		—		—		—		—		—		—		—		597
Total loans, at amortized cost	$	966,516	$	1,013,938	$	617,885	$	443,134	$	248,154	$	1,057,363	$	264,217	$	11,305	$	4,611,207

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
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)	September 30, 2022		December 31, 2021

Construction	$	340		$	1,291
Commercial real estate, other	9,380			37,220
Commercial and industrial	2,590			8,340
Residential real estate	2,196			2,877
Home equity lines of credit	379			391


Total collateral dependent loans	$	14,885		$	50,119

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

Troubled Debt Restructurings

The following tables summarize the loans that were modified as TDRs during the three and nine 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, 2022


Commercial and industrial	1	$	20	$	20	$	19

Residential real estate	7	323		361		354
Home equity lines of credit	2	119		119		119
Consumer, indirect	6	79		79		79
Consumer, direct	3	20		20		20
Consumer	9	99		99		99
Total	19	$	561	$	599	$	591

September 30, 2021
Construction	1	$	6	$	6	$	6
Commercial real estate, other	2	14		14		14
Commercial and industrial	3	327		327		327
Leases	2	182		184		178
Residential real estate	46	1,952		1,956		1,955
Home equity lines of credit	5	55		55		55
Consumer, indirect	9	95		95		95
Consumer, direct	3	9		9		9
Consumer	12	104		104		104
Total	71	$	2,640	$	2,646	$	2,639
(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.


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

Commercial real estate, other	3	$	282	$	282	$	276
Commercial and industrial	6	1,309		1,313		801

Residential real estate	30	1,478		1,562		1,536
Home equity lines of credit	5	251		251		247
Consumer, indirect	19	237		237		237
Consumer, direct	6	63		63		63
Consumer	25	300		300		300
Total	69	$	3,620	$	3,708	$	3,160

September 30, 2021
Construction	2	$	350	$	350	$	350
Commercial real estate, other	3	37		37		37
Commercial and industrial	3	327		327		327
Leases	5	340		348		334
Residential real estate	54	2,367		2,376		2,366
Home equity lines of credit	9	315		315		307
Consumer, indirect	16	200		200		192
Consumer, direct	8	48		48		45
Consumer	24	248		248		237
Total	100	$	3,984	$	4,001	$	3,958
(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 five loans totaling $202,000 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

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' estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In management's estimation of expected credit losses, Peoples' uses a one year reasonable and supportable period across all segments.

Following the reasonable and supportable period, Peoples' reverts the macroeconomic variables to their long run average over a four quarter reversion period.

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


(Dollars in thousands)	Beginning Balance, June 30, 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, September 30, 2022
Construction	$	1,531	$	—	$	—	$	(67)	$	—	$	—	$	1,464
Commercial real estate, other	18,708		—		—		(995)		(57)		39		17,695
Commercial and industrial	8,572		—		—		72		(36)		3		8,611
Premium finance	311		—		—		279		(38)		1		553
Leases	7,585		377		—		560		(731)		99		7,890
Residential real estate	6,332		—		—		264		(168)		36		6,464
Home equity lines of credit	1,699		—		—		(50)		(5)		—		1,644
Consumer, indirect	6,234		—		—		1,207		(600)		71		6,912
Consumer, direct	1,321		—		—		343		(81)		9		1,592
Deposit account overdrafts	53		—		—		218		(274)		44		41
Total	$	52,346	$	377	$	—	$	1,831	$	(1,990)	$	302	$	52,866

(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, June 30, 2021		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, September 30, 2021
Construction	$	914	$	2,127	$	638	$	(243)	$	—	$	—	$	3,436
Commercial real estate, other	17,233		13,374		5,384		(179)		—		4		35,816
Commercial and industrial	8,686		4,286		1,059		(3)		(654)		4		13,378
Premium finance	998		—		—		146		(7)		—		1,137
Leases	3,715		—		—		1,101		(431)		120		4,505
Residential real estate	4,837		2,394		2,645		(312)		(44)		48		9,568
Home equity lines of credit	1,504		41		674		148		(180)		37		2,224
Consumer, indirect	8,841		—		—		(2,308)		(416)		43		6,160
Consumer, direct	1,161		112		180		(362)		(29)		17		1,079
Deposit account overdrafts	53		—		—		124		(135)		37		79
Total	$	47,942	$	22,334	$	10,580	$	(1,888)	$	(1,896)	$	310	$	77,382

(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 nine months ended September 30, 2022 and September 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, September 30, 2022
Construction	$	2,999	$	—	$	—	$	(1,535)	$	—	$	—	$	1,464
Commercial real estate, other	29,147		(451)		—		(10,908)		(357)		264		17,695
Commercial and industrial	11,063		(418)		—		(1,124)		(919)		9		8,611
Premium finance	379		—		—		247		(82)		9		553
Leases	4,797		801		—		3,650		(1,697)		339		7,890
Residential real estate	7,233		(509)		—		200		(524)		64		6,464
Home equity lines of credit	2,005		(11)		—		(333)		(46)		29		1,644
Consumer, indirect	5,326		(41)		—		2,821		(1,434)		240		6,912
Consumer, direct	961		—		—		877		(277)		31		1,592
Deposit account overdrafts	57		—		—		772		(938)		150		41
Total	$	63,967	$	(629)	$	—	$	(5,333)	$	(6,274)	$	1,135	$	52,866

(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, September 30, 2021
Construction	$	1,887	$	2,127	$	638	$	(1,216)	$	—	$	—	$	3,436
Commercial real estate, other	17,536		13,374		5,384		(325)		(161)		8		35,816
Commercial and industrial	12,763		4,286		1,059		(3,800)		(952)		22		13,378
Premium finance	1,095		—		—		72		(30)		—		1,137
Leases	—		493		3,288		1,450		(956)		230		4,505
Residential real estate	6,044		2,394		2,645		(1,305)		(313)		103		9,568
Home equity lines of credit	1,860		41		674		(196)		(196)		41		2,224
Consumer, indirect	8,030		—		—		(891)		(1,190)		211		6,160
Consumer, direct	1,081		112		180		(252)		(96)		54		1,079
Deposit account overdrafts	63		—		—		208		(327)		135		79
Total	$	50,359	$	22,827	$	13,868	$	(6,255)	$	(4,221)	$	804	$	77,382

(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 third quarter of 2022, Peoples recorded a provision for credit losses for loans of $1.8 million, driven by a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans. Leases designated as

purchased credit deteriorated ("PCD") acquired from Vantage increased the allowance for credit losses by $377,000. Net charge-offs for the third quarter of 2022 were $1.7 million, and included charge-offs of three leases aggregating $0.6 million.

Peoples had recorded an allowance for unfunded commitments of $2.1 million as of September 30, 2022, a decrease compared to $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 "Provision for (recovery of) credit losses" line of the Unaudited Consolidated Statements of Operations.