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Loans and Leases
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
Loans and Leases 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 ("NSL") division and its Vantage Financial, LLC ("Vantage") subsidiary. Throughout this Form 10-Q, loans and leases 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,
2023		December 31, 2022
Construction$418,741 $246,941 
Commercial real estate, other2,071,514 1,423,518 
Commercial and industrial1,160,310 892,634 
Premium finance162,357 159,197 
Leases377,791 345,131 
Residential real estate791,442 723,360 
Home equity lines of credit199,221 177,858 
Consumer, indirect654,371 629,426 
Consumer, direct138,019 108,363 
Deposit account overdrafts830 722 
Total loans, at amortized cost$5,974,596 $4,707,150 
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 $20.0 million at June 30, 2023 and $15.4 million at December 31, 2022.
Nonaccrual and Past Due Loans
A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due.
The amortized cost of loans on nonaccrual status and of loans delinquent for 90 days or more and accruing was as follows:
June 30, 2023December 31, 2022
(Dollars in thousands)
Nonaccrual (a)
Accruing Loans 90+ Days Past Due
Nonaccrual (a)
Accruing Loans 90+ Days Past Due
Construction$— $— $12 $— 
Commercial real estate, other8,987 15 12,121 167 
Commercial and industrial3,438 — 3,462 130 
Premium finance— 987 — 504 
Leases4,800 3,847 3,178 3,041 
Residential real estate8,393 856 9,496 917 
Home equity lines of credit841 148 820 58 
Consumer, indirect1,982 40 2,176 — 
Consumer, direct355 31 208 25 
Total loans, at amortized cost$28,796 $5,924 $31,473 $4,842 
(a) There were $1.3 million of nonaccrual loans for which there was no allowance for credit losses at June 30, 2023 and $1.4 million of nonaccrual loans for which there was no allowance for credit losses at December 31, 2022.
During the first six months of 2023, nonaccrual loans declined compared to at December 31, 2022, which was primarily due to $3.1 million of commercial real estate loans being on nonaccrual status as of December 31, 2022 that were accruing as of March 31, 2023. The increase in accruing loans 90+ days past due at June 30, 2023 when compared to at December 31, 2022, was primarily due to increases of $0.5 million and $0.8 million in premium finance loans and leases, respectively.
The amount of interest income recognized on loans past due 90 days or more and accruing during the six months ended June 30, 2023 was $0.9 million.
The following table presents the aging of the amortized cost of past due loans:
Loans Past Due
Current
Loans
Total
Loans
(Dollars in thousands)30 - 59 days60 - 89 days90 + DaysTotal
June 30, 2023
Construction$— $— $— $— $418,741 $418,741 
Commercial real estate, other4,849 53 7,850 12,752 2,058,762 2,071,514 
Commercial and industrial1,710 686 3,370 5,766 1,154,544 1,160,310 
Premium finance4,257 1,438 987 6,682 155,675 162,357 
Leases4,387 3,697 8,647 16,731 361,060 377,791 
Residential real estate3,327 3,134 4,762 11,223 780,219 791,442 
Home equity lines of credit854 327 618 1,799 197,422 199,221 
Consumer, indirect4,137 695 764 5,596 648,775 654,371 
Consumer, direct446 69 259 774 137,245 138,019 
Deposit account overdrafts— — — — 830 830 
Total loans, at amortized cost$23,967 $10,099 $27,257 $61,323 $5,913,273 $5,974,596 
December 31, 2022
Construction$196 $161 $9 $366 $246,575 $246,941 
Commercial real estate, other2,279 1,051 10,370 13,700 1,409,818 1,423,518 
Commercial and industrial2,522 289 3,449 6,260 886,374 892,634 
Premium finance646 816 504 1,966 157,231 159,197 
Leases6,074 1,921 6,218 14,213 330,918 345,131 
Residential real estate10,113 2,128 5,519 17,760 705,600 723,360 
Home equity lines of credit987 149 552 1,688 176,170 177,858 
Consumer, indirect5,866 1,048 921 7,835 621,591 629,426 
Consumer, direct703 70 108 881 107,482 108,363 
Deposit account overdrafts— — — — 722 722 
Total loans, at amortized cost$29,386 $7,633 $27,650 $64,669 $4,642,481 $4,707,150 
Delinquency trends remained stable, as 99.0% of Peoples' loan portfolio was considered “current” at June 30, 2023, compared to 98.6% at December 31, 2022.
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, 2023December 31, 2022
Loans pledged to FHLB$1,268,215 $783,843 
Loans pledged to FRB331,168 339,005 
Credit Quality Indicators
As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2022 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. Commercial 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. Commercial leases, as well as loan relationships whose aggregate credit exposure to Peoples is equal to or less than $1.0 million, are reviewed at least 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, 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," "doubtful" or "loss" based upon the regulatory definition of these classes and consistent with regulatory requirements. 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 being "not rated."
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, 2023:
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20232022202120202019PriorRevolving Loans
Total
Loans
Construction

  Pass$31,510 $195,130 $138,966 $27,622 $9,839 $12,695 $— $— $415,762 
  Special mention1,200 1,600 — — — 127 — — 2,927 
  Substandard— — — — — 52 — — 52 
     Total32,710 196,730 138,966 27,622 9,839 12,874 — — 418,741 
Current period gross charge-offs— — 9 — — — 9 
Commercial real estate, other

  Pass131,351 245,661 351,358 245,225 269,331 689,007 32,447 — 1,964,380 
  Special mention— 3,996 1,977 5,550 5,274 30,879 690 48 48,366 
  Substandard343 579 8,402 6,565 2,602 39,800 447 — 58,738 
  Doubtful— — — — — 30 — — 30 
     Total131,694 250,236 361,737 257,340 277,207 759,716 33,584 48 2,071,514 
Current period gross charge-offs— — — — — 40 40 
Commercial and industrial
  Pass95,464 202,509 231,053 99,823 83,817 152,991 209,181 999 1,074,838 
  Special mention1,803 1,216 166 21,177 1,737 8,795 19,467 — 54,361 
  Substandard19 2,097 5,060 8,717 2,963 7,281 4,785 143 30,922 
  Doubtful— — — — — 189 — — 189 
     Total97,286 205,822 236,279 129,717 88,517 169,256 233,433 1,142 1,160,310 
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20232022202120202019PriorRevolving Loans
Total
Loans
Current period gross charge-offs— — — 3 — 9 12 
Premium finance
Pass131,117 31,240 — — — — — — 162,357 
     Total131,117 31,240 — — — — — — 162,357 
Current period gross charge-offs1 45 — — — — 46 
Leases
  Pass122,391 139,451 68,529 25,313 9,978 2,713 — 368,375 
  Special mention221 1,252 1,595 145 16 30 3,259 
  Substandard136 1,822 3,080 377 327 415 6,157 
     Total122,748 142,525 73,204 25,835 10,321 3,158 — — 377,791 
Current period gross charge-offs— 318 403 158 164 30 1,073 
Residential real estate
  Pass36,481 95,877 146,290 60,238 49,622 394,204 — — 782,712 
  Substandard— 83 308 268 564 7,475 — — 8,698 
   Loss— — — — — 32 — — 32 
     Total36,481 95,960 146,598 60,506 50,186 401,711 — — 791,442 
Current period gross charge-offs— — — — — 100 100 
Home equity lines of credit
  Pass15,142 44,878 34,176 21,177 16,057 66,414 107 1,063 197,951 
  Substandard— — 115 22 123 985 — — 1,245 
   Loss— 13 — — — 12 — — 25 
     Total15,142 44,891 34,291 21,199 16,180 67,411 107 1,063 199,221 
Current period gross charge-offs— — — — — 74 74 
Consumer, indirect
  Pass134,476 268,260 120,680 77,043 26,384 23,362 — — 650,205 
  Substandard385 1,189 1,033 696 267 526 — — 4,096 
   Loss8 50 3 9 — — — — 70 
     Total134,869 269,499 121,716 77,748 26,651 23,888 — — 654,371 
Current period gross charge-offs105 1,002 503 170 18 72 1,870 
Consumer, direct
  Pass32,644 45,594 37,407 11,369 4,580 5,707 — — 137,301 
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20232022202120202019PriorRevolving Loans
Total
Loans
  Substandard20 169 123 97 97 194 — — 700 
   Loss— — — — — 18 — — 18 
     Total32,664 45,763 37,530 11,466 4,677 5,919 — — 138,019 
Current period gross charge-offs5 73 17 69 10 8 182 
Deposit account overdrafts830 — — — — — — — 830 
Current period gross charge-offs490 — — — — — 490 
Total loans, at amortized cost735,541 1,282,666 1,150,321 611,433 483,578 1,443,933 267,124 2,253 5,974,596 
Total current period gross charge-offs$601 $1,438 $932 $400 $192 $333 $3,896 
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, 2022:
Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)20222021202020192018PriorRevolving LoansRevolving Loans Converted to Term
Total
Loans
Construction

  Pass$82,143 $110,719 $27,893 $20,223 $656 $4,061 $44 $81 $245,739 
  Special mention— — — — — 818 — — 818 
  Substandard— 2 — — — 382 — — 384 
     Total82,143 110,721 27,893 20,223 656 5,261 44 81 246,941 
Commercial real estate, other

  Pass165,282 224,727 227,799 202,877 110,564 369,578 27,300 5,217 1,328,127 
  Special mention— 189 1,099 5,519 3,111 29,334 105 — 39,357 
  Substandard— 8,327 2,591 1,366 1,296 42,172 216 190 55,968 
  Doubtful— — — — — 66 — — 66 
     Total165,282 233,243 231,489 209,762 114,971 441,150 27,621 5,407 1,423,518 
Commercial and industrial
  Pass167,937 142,615 72,573 71,497 40,229 91,853 215,116 3,722 801,820 
  Special mention10,248 14,981 11,923 2,711 236 4,877 16,235 — 61,211 
  Substandard84 9,801 3,417 2,410 1,459 3,620 8,603 611 29,394 
  Doubtful— — — — — 209 — — 209 
     Total178,269 167,397 87,913 76,618 41,924 100,559 239,954 4,333 892,634 
Premium finance
  Pass158,778 419 — — — — — — 159,197 
Total158,778 419 — — — — — — 159,197 
Leases
Pass191,148 90,738 34,627 15,951 3,269 1,119 — — 336,852 
Special mention1,741 2,477 140 22 24 — — — 4,404 
Substandard546 1,840 571 464 454 — — — 3,875 
Total193,435 95,055 35,338 16,437 3,747 1,119 — — 345,131 
Residential real estate
Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)20222021202020192018PriorRevolving LoansRevolving Loans Converted to Term
Total
Loans
  Pass78,313 138,860 58,869 42,840 28,174 364,635 — — 711,691 
  Substandard— — 137 569 563 10,302 — — 11,571 
   Loss— — — — — 98 — — 98 
     Total78,313 138,860 59,006 43,409 28,737 375,035 — — 723,360 
Home equity lines of credit
  Pass41,781 35,768 19,863 14,820 13,800 50,291 334 2,096 176,657 
  Substandard— 60 — 53 126 958 — — 1,197 
   Loss— — — — — 4 — — 4 
     Total41,781 35,828 19,863 14,873 13,926 51,253 334 2,096 177,858 
Consumer, indirect
  Pass305,814 149,445 100,027 35,988 22,789 12,741 — — 626,804 
  Substandard384 811 659 266 304 193 — — 2,617 
   Loss— 5 — — — — — — 5 
     Total306,198 150,261 100,686 36,254 23,093 12,934 — — 629,426 
Consumer, direct
  Pass50,889 28,351 14,558 6,333 3,725 3,975 — — 107,831 
  Special mention— — — — — — — — — 
  Substandard97 63 138 46 21 150 — — 515 
   Loss— — — — — 17 — — 17 
     Total50,986 28,414 14,696 6,379 3,746 4,142 — — 108,363 
Deposit account overdrafts722 — — — — — — — 722 
Total loans, at amortized cost$1,255,907 $960,198 $576,884 $423,955 $230,800 $991,453 $267,953 $11,917 $4,707,150 
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, on residential real property.
•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, 2023December 31, 2022
Commercial real estate, other5,581 8,362 
Commercial and industrial460 1,456 
Residential real estate520 536 
Total collateral dependent loans$6,561 $10,354 
The decrease in collateral dependent loans at June 30, 2023, compared to December 31, 2022, was primarily due to three large relationships that were paid in full during the six months ended June 30, 2023.
Modifications for Borrowers Experiencing Financial Difficulty Subsequent to the Adoption of ASU 2022-02
As part of Peoples' loss mitigation activities, Peoples may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty. The most common modifications to the contractual terms of a loan to a borrower experiencing financial difficulty include an extension of the maturity date, a reduction in the interest rate for the remaining life of the loan, a temporary period of interest-only payments, and a reduction in the contractual payment amount for either a short period or the remaining term of the loan.
In addition to loan modifications, Peoples also provides other loss mitigation options, such as forbearance and repayment plans, to assist borrowers who experience financial difficulties. In assessing whether or not a borrower is experiencing financial difficulty, Peoples considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (1) the borrower is currently in payment default on any of the borrower's debt; (2) a payment default is probable in the foreseeable future without the modification; (3) the borrower has declared or is in the process of declaring bankruptcy; and (4) the borrower's projected cash flow is insufficient to satisfy contractual payments due under the original terms of the loan without a modification.

The following table displays the amortized cost of loans that were restructured during the three months and the six months ended June 30, 2023, presented by loan classification.
During the Three Months Ended June 30, 2023
(Dollars in thousands)Term ExtensionTotal
Percentage of Total by Loan Category(a)(b)
Commercial real estate$48 $48 — %
Commercial and industrial3,319 3,319 0.29 %
Total$3,367 $3,367 0.06 %
During the Six Months Ended June 30, 2023
Payment Delay (Only)
(Dollars in thousands)Forbearance PlanPayment DeferralTerm ExtensionForbearance Plan and Term ExtensionTotal
Percentage of Total by Loan Category(a)(b)
Construction$— $1,600 $— $— $1,600 0.38 %
Commercial real estate194 — 48 — 242 0.01 %
Commercial and industrial— — 3,325 306 3,631 0.31 %
Residential real estate— — 220 — 220 0.03 %
Total$194 $1,600 $3,593 $306 $5,693 0.10 %
(a) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable.
(b) Each with "--%" not meaningful.
The following table summarizes the financial impacts of loan modifications and payment deferrals made to loans during the three months and the six months ended June 30, 2023, presented by loan classification.
During the Three Months Ended June 30, 2023
Weighted-Average Term Extension
(in months)
Average Amount Capitalized as a Result of a Payment Delay(a)
Commercial real estate12$— 
Commercial and industrial5— 
During the Six Months Ended June 30, 2023
Weighted-Average Term Extension
(in months)
Average Amount Capitalized as a Result of a Payment Delay(a)
Commercial real estate12$— 
Commercial and industrial5— 
Residential real estate2108,969 
Consumer, indirect2— 
(a) Represents the average amount of delinquency-related amounts that were capitalized as part of the loan balance. Amounts are in whole dollars.
The following table displays the amortized cost of loans that received a completed modification or payment deferral on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through June 30, 2023 and that defaulted in the period presented. For purposes of this disclosure, Peoples defines loans that had a payment default as loans that are 90 days or more past due following a modification through June 30, 2023.

For the Six Months Ended June 30, 2023
Payment Delay as a Result of a Payment Deferral (Only)Total
Consumer, indirect$11 $11 
(1) Represents the sum of amortized cost and gross charge-off as of period end. Excludes loans that liquidated either through foreclosure, deed-in-lieu of foreclosure, or a short sale.

The following table displays an aging analysis of loans that were modified on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through June 30, 2023, presented by classification and class of financing receivable.
As of June 30, 2023
(Dollars in thousands)30-59 Days Delinquent60-89 Days Delinquent90+ Days DelinquentTotal DelinquentCurrentTotal
Construction$— $— $— $— $1,600 $1,600 
Commercial real estate— — — — 242 242 
Commercial and industrial— — — — 3,631 3,631 
Residential real estate— — — — 220 220 
Total loans modified(a)
$— $— $— $— $5,693 $5,693 
(a) Represents the amortized cost basis as of period end.
Troubled Debt Restructurings Disclosures Prior to the Adoption of ASU 2022-02
Prior to the adoption of ASU 2022-02, Peoples accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. See “Note 1 Summary of Significant Accounting
Policies” in Peoples' 2022 Form 10-K for more information on our TDR policy and the COVID-19 relief from TDR accounting and disclosure requirements, and “Note 1, Summary of Significant Accounting Policies” in this Form 10-Q for more information on the adoption of ASU 2022-02.
The following table summarizes the loans that were modified as TDRs during the three months and the six months ended June 30, 2022:
Three Months Ended
Recorded Investment (a)
(Dollars in thousands)Number of ContractsPre-ModificationPost-ModificationRemaining Recorded Investment
June 30, 2022
Commercial real estate, other2 184 184 184 
Commercial and industrial5 1,422 1,426 1,031 
Residential real estate11 438 463 457 
Home equity lines of credit2 110 110 110 
Consumer, indirect7 108 108 108 
Consumer, direct1 31 31 31 
   Consumer8 139 139 139 
Total28 $2,293 $2,322 $1,921 
(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 ContractsPre-ModificationPost-ModificationRemaining Recorded Investment
June 30, 2022
Commercial real estate, other3 287 287 284 
Commercial and industrial5 1,422 1,427 1,031 
Residential real estate26 1,333 1,378 1,367 
Home equity lines of credit4 178 178 177 
Consumer, indirect16 210 210 210 
Consumer, direct3 44 44 44 
   Consumer19 254 254 254 
Total57 $3,474 $3,524 $3,113 
(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.
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' 2022 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 and the six months ended June 30, 2023 and June 30, 2022 are summarized below:
Beginning Balance, March 31, 2023
Initial Allowance for Acquired PCD AssetsProvision for (Recovery of) Credit Losses (a)Charge-offsRecoveries
Ending Balance, June 30, 2023
Construction$1,273 $— $223 $— $— $1,496 
Commercial real estate, other16,474 280 2,968 (7)16 19,731 
Commercial and industrial8,307 376 1,905 (11)451 11,028 
Premium finance433 — 18 (23)3 431 
Leases9,109 — 1,783 (604)89 10,377 
Residential real estate6,504 254 (656)(59)69 6,112 
Home equity lines of credit1,717 13 1 (55)— 1,676 
Consumer, indirect7,781 — 641 (941)129 7,610 
Consumer, direct1,619 85 981 (78)35 2,642 
Deposit account overdrafts86 — 232 (263)53 108 
Total$53,303 $1,008 $8,096 $(2,041)$845 $61,211 
(a)Amount does not include the provision for the allowance for credit losses on unfunded commitments.
Beginning Balance,
March 31, 2022		Initial Allowance for Acquired PCD Assets (a)(Recovery of) Provision for Credit Losses (b)Charge-offsRecoveriesEnding Balance, June 30, 2022
Construction$2,731 $— $(1,200)$— $— $1,531 
Commercial real estate, other21,055 (234)(2,267)(22)176 18,708 
Commercial and industrial10,114 (253)(871)(420)2 8,572 
Premium finance345 — (12)(30)8 311 
Leases5,875 292 1,847 (493)64 7,585 
Residential real estate6,495 12 (142)(47)14 6,332 
Home equity lines of credit1,894 — (170)(25)— 1,699 
Consumer, indirect5,172 — 1,428 (449)83 6,234 
Consumer, direct1,036 — 334 (60)11 1,321 
Deposit account overdrafts51 — 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 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, 2022
Initial Allowance for Acquired PCD AssetsProvision for (Recovery of) Credit Losses (a)Charge-offsRecoveries
Ending Balance, June 30, 2023
Construction$1,250 $— $255 $(9)$— $1,496 
Commercial real estate, other17,710 280 1,738 (40)43 19,731 
Commercial and industrial8,229 376 1,984 (12)451 11,028 
Premium finance344 — 121 (46)12 431 
Leases8,495 — 2,786 (1,073)169 10,377 
Residential real estate6,357 254 (497)(100)98 6,112 
Home equity lines of credit1,693 13 44 (74)— 1,676 
Consumer, indirect7,448 — 1,824 (1,870)208 7,610 
Consumer, direct1,575 85 1,114 (182)50 2,642 
Deposit account overdrafts61 — 412 (490)125 108 
Total$53,162 $1,008 $9,781 $(3,896)$1,156 $61,211 
(a) Amount does not include the provision for the allowance for credit losses on unfunded commitments.

(Dollars in thousands)Beginning Balance,
December 31, 2021		Initial Allowance for Acquired PCD Assets (a)(Recovery of) Provision for Credit Losses (b)Charge-offsRecoveries
Ending Balance, June 30, 2022
Construction$2,999 $— $(1,468)$— $— $1,531 
Commercial real estate, other29,147 (451)(9,913)(300)225 18,708 
Commercial and industrial11,063 (418)(1,196)(883)6 8,572 
Premium finance379 — (32)(44)8 311 
Leases4,797 424 3,090 (966)240 7,585 
Residential real estate7,233 (509)(64)(356)28 6,332 
Home equity lines of credit2,005 (11)(283)(41)29 1,699 
Consumer, indirect5,326 (41)1,614 (834)169 6,234 
Consumer, direct961 — 534 (196)22 1,321 
Deposit account overdrafts57 — 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.s adopted ASU 2016-13 - Financial Instruments
(c)
(a)Amount does not include the provision for the allowance for credit losses on unfunded commitments
During the second quarter of 2023, Peoples recorded a total provision for credit losses for loans of $8.0 million, largely attributable 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. Net charge-offs for the second quarter of 2023 were $1.2 million, primarily due to net charge-offs of indirect consumer loans of $0.8 million.
During the second quarter of 2022, Peoples recorded a recovery of credit losses 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.
Peoples had recorded an allowance for unfunded commitments of $2.0 million as of both June 30, 2023 and December 31, 2022. 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.