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Loans and Leases
 9 Months Ended
Sep. 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)September 30,
2023		December 31, 2022
Construction$374,016 $246,941 
Commercial real estate, other2,189,984 1,423,518 
Commercial and industrial1,128,809 892,634 
Premium finance189,251 159,197 
Leases402,635 345,131 
Residential real estate791,965 723,360 
Home equity lines of credit203,940 177,858 
Consumer, indirect668,371 629,426 
Consumer, direct134,562 108,363 
Deposit account overdrafts857 722 
Total loans, at amortized cost$6,084,390 $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 $22.2 million at September 30, 2023 and $15.4 million at December 31, 2022.
Nonaccrual and Past Due Loans
A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due.
The amortized cost of loans on nonaccrual status and of loans delinquent for 90 days or more and accruing was as follows:
September 30, 2023December 31, 2022
(Dollars in thousands)
Nonaccrual (a)
Accruing Loans 90+ Days Past Due
Nonaccrual (a)
Accruing Loans 90+ Days Past Due
Construction$— $— $12 $— 
Commercial real estate, other3,661 487 12,121 167 
Commercial and industrial3,116 67 3,462 130 
Premium finance— 1,581 — 504 
Leases7,929 6,007 3,178 3,041 
Residential real estate8,454 736 9,496 917 
Home equity lines of credit1,026 177 820 58 
Consumer, indirect1,904 47 2,176 — 
Consumer, direct97 15 208 25 
Total loans, at amortized cost$26,187 $9,117 $31,473 $4,842 
(a) There were $0.5 million of nonaccrual loans for which there was no allowance for credit losses at September 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 nine months of 2023, nonaccrual loans declined compared to at December 31, 2022, which was primarily due to three large relationships totaling $8.0 million of commercial real estate loans which were paid off in the third quarter. This was partially offset by an increase in nonaccrual leases during the first nine months of 2023. The increase in accruing loans 90+ days past due at September 30, 2023 when compared to at December 31, 2022, was primarily due to increases of approximately $3.0 million and $1.1 million in leases and premium finance loans, respectively.
The amount of interest income recognized on accruing loans 90+ days past due during the nine months ended September 30, 2023 was $0.9 million.
The following table presents the aging of the amortized cost of past due loans:
Loans Past Due
Current
Loans
Total
Loans
(Dollars in thousands)30 - 59 days60 - 89 days90 + DaysTotal
September 30, 2023
Construction$— $— $— $— $374,016 $374,016 
Commercial real estate, other1,059 322 2,970 4,351 2,185,633 2,189,984 
Commercial and industrial733 2,513 3,171 6,417 1,122,392 1,128,809 
Premium finance781 686 1,581 3,048 186,203 189,251 
Leases4,057 9,036 13,937 27,030 375,605 402,635 
Residential real estate3,286 2,924 4,091 10,301 781,664 791,965 
Home equity lines of credit1,637 239 795 2,671 201,269 203,940 
Consumer, indirect5,663 1,090 816 7,569 660,802 668,371 
Consumer, direct441 96 53 590 133,972 134,562 
Deposit account overdrafts— — — — 857 857 
Total loans, at amortized cost$17,657 $16,906 $27,414 $61,977 $6,022,413 $6,084,390 
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 improved slightly, as 99.0% of Peoples' loan portfolio was considered “current” at September 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)September 30, 2023December 31, 2022
Loans pledged to FHLB$1,245,235 $783,843 
Loans pledged to FRB366,754 339,005 
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 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 September 30, 2023:
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20232022202120202019PriorRevolving Loans
Total
Loans
Construction

  Pass$49,218 $166,000 $103,935 $28,902 $8,931 $14,073 $— $— $371,059 
  Special mention— — — — — 125 — — 125 
  Substandard1,200 1,598 — — — 34 — — 2,832 
     Total50,418 167,598 103,935 28,902 8,931 14,232 — — 374,016 
Current period gross charge-offs— — 9 — — — 9 
Commercial real estate, other

  Pass159,774 296,172 377,054 238,765 273,896 705,640 32,428 194 2,083,729 
  Special mention1,000 7,374 1,950 4,303 5,178 17,863 947 45 38,615 
  Substandard315 1,430 7,268 10,669 2,404 44,954 590 — 67,630 
  Doubtful— — — — — 10 — — 10 
     Total161,089 304,976 386,272 253,737 281,478 768,467 33,965 239 2,189,984 
Current period gross charge-offs— — — 39 — 279 318 
Commercial and industrial
  Pass129,859 188,569 221,410 88,762 68,408 132,029 222,517 56 1,051,554 
  Special mention788 12,298 68 9,439 2,051 8,132 13,842 7,500 46,618 
  Substandard34 6,477 5,286 5,764 1,723 6,976 4,193 142 30,453 
  Doubtful— — — — — 184 — — 184 
     Total130,681 207,344 226,764 103,965 72,182 147,321 240,552 7,698 1,128,809 
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20232022202120202019PriorRevolving Loans
Total
Loans
Current period gross charge-offs— — — 13 — 198 211 
Premium finance
Pass181,786 7,462 3 — — — — — 189,251 
     Total181,786 7,462 3 — — — — — 189,251 
Current period gross charge-offs2 76 1 — — — 79 
Leases
  Pass176,044 126,255 59,878 19,171 7,122 1,786 — 390,256 
  Special mention420 1,251 1,384 76 25 11 3,167 
  Substandard1,410 3,461 3,116 483 322 420 9,212 
     Total177,874 130,967 64,378 19,730 7,469 2,217 — — 402,635 
Current period gross charge-offs90 625 850 218 165 30 1,978 
Residential real estate
  Pass54,423 93,514 143,794 59,432 48,436 381,826 — — 781,425 
  Special mention— — — — — 111 — — 111 
  Substandard— 244 336 141 612 9,044 — — 10,377 
   Loss— — — — — 52 — — 52 
     Total54,423 93,758 144,130 59,573 49,048 391,033 — — 791,965 
Current period gross charge-offs— — — — — 150 150 
Home equity lines of credit
  Pass29,743 43,501 33,323 20,296 14,878 60,657 80 1,292 202,478 
  Substandard81 40 87 21 91 1,130 — — 1,450 
   Loss— — — — — 12 — — 12 
     Total29,824 43,541 33,410 20,317 14,969 61,799 80 1,292 203,940 
Current period gross charge-offs— — — — — 106 106 
Consumer, indirect
  Pass202,590 246,044 108,067 67,475 22,157 19,331 — — 665,664 
  Substandard169 704 803 510 211 235 — — 2,632 
   Loss16 39 9 11 — — — — 75 
     Total202,775 246,787 108,879 67,996 22,368 19,566 — — 668,371 
Current period gross charge-offs251 1,488 665 207 59 126 2,796 
Consumer, direct
  Pass54,619 41,130 20,085 9,714 3,854 4,850 — — 134,252 
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20232022202120202019PriorRevolving Loans
Total
Loans
  Substandard— 30 84 45 24 114 — — 297 
   Loss— — — — — 13 — — 13 
     Total54,619 41,160 20,169 9,759 3,878 4,977 — — 134,562 
Current period gross charge-offs18 99 32 84 14 27 274 
Deposit account overdrafts857 — — — — — — — 857 
Current period gross charge-offs809 — — — — — 809 
Total loans, at amortized cost1,044,346 1,243,593 1,087,940 563,979 460,323 1,409,612 274,597 9,229 6,084,390 
Total current period gross charge-offs$1,170 $2,288 $1,557 $561 $238 $916 $6,730 
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 
  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 estate 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)September 30, 2023December 31, 2022
Commercial real estate, other— 8,362 
Commercial and industrial— 1,456 
Residential real estate508 536 
Total collateral dependent loans$508 $10,354 
The decrease in collateral dependent loans at September 30, 2023, compared to December 31, 2022, was primarily due to three large-relationships that were paid in full during the nine months ended September 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 tables display the amortized cost of loans that were restructured during the three months and the nine months ended September 30, 2023, presented by loan classification.
During the Three Months Ended September 30, 2023
(Dollars in thousands)Term ExtensionTotal
Percentage of Total by Loan Category(a)(b)
Commercial real estate$901 $901 0.04 %
Commercial and industrial2,352 2,352 0.21 %
Residential real estate25 25 — %
Home equity lines of credit52 52 0.03 %
Total$3,330 $3,330 0.05 %
During the Nine Months Ended September 30, 2023
Payment Delay (Only)Forbearance Plan and Term Extension
Percentage of Total by Loan Category(a)
(Dollars in thousands)Forbearance PlanPayment DeferralTerm ExtensionTotal
Construction$— $1,598 $— $— $1,598 0.43 %
Commercial real estate189 — 1,089 — 1,278 0.06 %
Commercial and industrial— — 5,130 293 5,423 0.48 %
Residential real estate— — 243 — 243 0.03 %
Home equity lines of credit— — 203 — 203 0.10 %
Total$189 $1,598 $6,665 $293 $8,745 0.14 %
(a) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable.
The following tables summarize the financial impacts of loan modifications and payment deferrals made to loans during the three months and the nine months ended September 30, 2023, presented by loan classification.
During the Three Months Ended September 30, 2023
Weighted-Average Term Extension
(in months)
Average Amount Capitalized as a Result of a Payment Delay(a)
Commercial real estate4$— 
Commercial and industrial4— 
Residential real estate240— 
Home equity lines of credit217— 
During the Nine Months Ended September 30, 2023
Weighted-Average Term Extension
(in months)
Average Amount Capitalized as a Result of a Payment Delay(a)
Commercial real estate6$— 
Commercial and industrial5— 
Residential real estate2138,072 
Home equity lines of credit189— 
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 September 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 were 90 days or more past due following a modification through September 30, 2023.

For the Nine Months Ended September 30, 2023
Payment Delay as a Result of a Payment Deferral (Only)Total
Commercial and industrial$245 $245 
Consumer, indirect$11 $11 
Total loans that subsequently defaulted$256 $256 
(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 September 30, 2023, presented by classification and class of financing receivable.
As of September 30, 2023
(Dollars in thousands)30-59 Days Delinquent60-89 Days Delinquent90+ Days DelinquentTotal DelinquentCurrentTotal
Construction$— $— $— $— $1,598 $1,598 
Commercial real estate— 76 — 76 1,203 1,279 
Commercial and industrial— 276 2,042 2,318 3,105 5,423 
Residential real estate— — — — 242 242 
Home equity lines of credit— — — — 203 203 
Total loans modified(a)
$— $352 $2,042 $2,394 $6,351 $8,745 
(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 “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 nine months ended September 30, 2022:
Three Months Ended
Recorded Investment (a)
(Dollars in thousands)Number of ContractsPre-ModificationPost-ModificationRemaining Recorded Investment
September 30, 2022
Commercial and industrial1 20 20 19 
Residential real estate7 323 361 354 
Home equity lines of credit2 119 119 119 
Consumer, indirect6 79 79 79 
Consumer, direct3 20 20 20 
   Consumer9 99 99 99 
Total19 $561 $599 $591 
(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 ContractsPre-ModificationPost-ModificationRemaining Recorded Investment
September 30, 2022
Commercial real estate, other3 282 282 276 
Commercial and industrial6 1,309 1,313 801 
Residential real estate30 1,478 1,562 1,536 
Home equity lines of credit5 251 251 247 
Consumer, indirect19 237 237 237 
Consumer, direct6 63 63 63 
   Consumer25 300 300 300 
Total69 $3,620 $3,708 $3,160 
(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 nine months ended September 30, 2023 and September 30, 2022 are summarized below:
(Dollars in thousands)
Beginning Balance, June 30, 2023
Initial Allowance for Acquired PCD Assets (a)(Recovery of) Provision for Credit Losses (b)Charge-offsRecoveries
Ending Balance, September 30, 2023
Construction$1,496 — (255)— — 1,241 
Commercial real estate, other19,731 138 1,569 (278)97 21,257 
Commercial and industrial11,028 3 (630)(199)3 10,205 
Premium finance431 — 66 (33)12 476 
Leases10,377 — 2,052 (905)168 11,692 
Residential real estate6,112 6 156 (50)27 6,251 
Home equity lines of credit1,676 5 (9)(32)— 1,640 
Consumer, indirect7,610 — 683 (926)149 7,516 
Consumer, direct2,642 1 (43)(92)11 2,519 
Deposit account overdrafts108 — 289 (319)49 127 
Total$61,211 $153 $3,878 $(2,834)$516 $62,924 
(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,
June 30, 2022		Initial Allowance for Acquired PCD Assets (a)(Recovery of) Provision for Credit Losses (b)Charge-offsRecoveriesEnding Balance, September 30, 2022
Construction$1,531 $— $(67)$— $— $1,464 
Commercial real estate, other18,708 — (995)(57)39 17,695 
Commercial and industrial8,572 — 72 (36)3 8,611 
Premium finance311 — 279 (38)1 553 
Leases7,585 377 560 (731)99 7,890 
Residential real estate6,332 — 264 (168)36 6,464 
Home equity lines of credit1,699 — (50)(5)— 1,644 
Consumer, indirect6,234 — 1,207 (600)71 6,912 
Consumer, direct1,321 — 343 (81)9 1,592 
Deposit account overdrafts53 — 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 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 Assets (a)Provision for (Recovery of) Credit Losses (b)Charge-offsRecoveries
Ending Balance, September 30, 2023
Construction$1,250 $— $— $(9)$— $1,241 
Commercial real estate, other17,710 418 3,307 (318)140 21,257 
Commercial and industrial8,229 379 1,354 (211)454 10,205 
Premium finance344 — 187 (79)24 476 
Leases8,495 — 4,838 (1,978)337 11,692 
Residential real estate6,357 260 (341)(150)125 6,251 
Home equity lines of credit1,693 18 35 (106)— 1,640 
Consumer, indirect7,448 — 2,507 (2,796)357 7,516 
Consumer, direct1,575 86 1,071 (274)61 2,519 
Deposit account overdrafts61 — 701 (809)174 127 
Total$53,162 $1,161 $13,659 $(6,730)$1,672 $62,924 
(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, 2021		Initial Allowance for Acquired PCD Assets (a)(Recovery of) Provision for Credit Losses (b)Charge-offsRecoveries
Ending Balance, September 30, 2022
Construction$2,999 $— $(1,535)$— $— $1,464 
Commercial real estate, other29,147 (451)(10,908)(357)264 17,695 
Commercial and industrial11,063 (418)(1,124)(919)9 8,611 
Premium finance379 — 247 (82)9 553 
Leases4,797 801 3,650 (1,697)339 7,890 
Residential real estate7,233 (509)200 (524)64 6,464 
Home equity lines of credit2,005 (11)(333)(46)29 1,644 
Consumer, indirect5,326 (41)2,821 (1,434)240 6,912 
Consumer, direct961 — 877 (277)31 1,592 
Deposit account overdrafts57 — 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.
During the third quarter of 2023, Peoples recorded a total provision for credit losses of $4.1 million, which was driven by (i) loan growth, (ii) an increase in net charge-offs, (iii) updates to our prepayment, curtailment and funding rates, and (iv) a deterioration in macro-economic conditions used within the CECL model, partially offset by the release of reserves on individually analyzed loans. The increase in the allowance for credit losses at September 30, 2023 when compared to prior periods was driven by the establishment of an allowance for credit losses for loans acquired in the Limestone Merger that were not considered purchased credit deteriorated ("PCD").
During the third quarter of 2022, Peoples recorded a provision for credit losses of $1.8 million driven by a deterioration of macro-economic conditions, partially offset by a release of reserves on individually analyzed loans. Leases designated as 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 $2.2 million and $2.0 million as of September 30, 2023 and December 31, 2022, respectively. 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.