Loans and Leases

12 Months Ended

Dec. 31, 2023

Peoples’ loan portfolio consists of various types of loans and leases originated primarily as a result of lending opportunities within Peoples’ footprint. Peoples also originates insurance premium finance loans nationwide through its Peoples Premium Finance division, and originates leases nationwide through its North Star Leasing (“NSL”) division and its Vantage subsidiary. Throughout this Form 10-K, 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 at December 31:


(Dollars in thousands)	2023		2022
Construction	$	364,019	$	246,941
Commercial real estate, other	2,196,957		1,423,518
Commercial and industrial	1,184,986		892,634
Premium finance	203,177		159,197
Leases	414,060		345,131
Residential real estate	791,095		723,360
Home equity lines of credit	208,675		177,858
Consumer, indirect	666,472		629,426
Consumer, direct	128,769		108,363
Deposit account overdrafts	986		722
Total loans, at amortized cost	$	6,159,196	$	4,707,150

Net deferred loan origination costs were $21.7 million and $20.5 million at December 31, 2023 and 2022, respectively.

Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Consolidated Balance Sheets, with no recorded allowance for credit losses. Total interest receivable on loans was $24.5 million at December 31, 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 loans delinquent for 90 days or more and accruing were as follows at December 31:


	2023				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, other	2,816		78		12,121		167
Commercial and industrial	2,758		316		3,462		130
Premium finance	—		1,355		—		504
Leases	8,436		3,826		3,178		3,041
Residential real estate	7,921		877		9,496		917
Home equity lines of credit	1,022		171		820		58
Consumer, indirect	2,412		68		2,176		—
Consumer, direct	112		25		208		25
Total loans, at amortized cost	$	25,477	$	6,716	$	31,473	$	4,842

(a)There were $1.2 million of nonaccrual loans for which there was no allowance for credit losses at December 31, 2023 and $1.4 million of such loans at December 31, 2022.

The amount of interest income recognized on loans past due 90 days or more during 2023 and 2022 was $0.8 million and $1.7 million, respectively.

The following tables present the aging of the recorded investment in past due loans at December 31:


	Loans Past Due								Current		Total
(Dollars in thousands)	30 – 59 days		60 – 89 days		90 + Days		Total
2023
Construction	$	13	$	52	$	—	$	65	$	363,954	$	364,019
Commercial real estate, other	2,728		4,556		1,572		8,856		2,188,101		2,196,957
Commercial and industrial	1,717		1,491		3,052		6,260		1,178,726		1,184,986
Premium finance	1,288		867		1,355		3,510		199,667		203,177
Leases	12,743		4,932		12,014		29,689		384,371		414,060
Residential real estate	14,021		2,733		4,481		21,235		769,860		791,095
Home equity lines of credit	1,561		691		683		2,935		205,740		208,675
Consumer, indirect	7,488		1,550		1,230		10,268		656,204		666,472
Consumer, direct	536		282		43		861		127,908		128,769
Deposit account overdrafts	—		—		—		—		986		986
Total loans, at amortized cost	$	42,095	$	17,154	$	24,430	$	83,679	$	6,075,517	$	6,159,196
2022
Construction	$	196	$	161	$	9	$	366	$	246,575	$	246,941
Commercial real estate, other	2,279		1,051		10,370		13,700		1,409,818		1,423,518
Commercial and industrial	2,522		289		3,449		6,260		886,374		892,634
Premium finance	646		816		504		1,966		157,231		159,197
Leases	6,074		1,921		6,218		14,213		330,918		345,131
Residential real estate	10,113		2,128		5,519		17,760		705,600		723,360
Home equity lines of credit	987		149		552		1,688		176,170		177,858
Consumer, indirect	5,866		1,048		921		7,835		621,591		629,426
Consumer, direct	703		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 98.6% of Peoples’ portfolio was considered “current” both at December 31, 2023, and at December 31, 2022.

Pledged Loans

Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, commercial real estate and home equity lines of credit under a blanket collateral agreement to secure borrowings from the FHLB. Peoples also has pledged commercial loans to secure borrowings with the FRB. Loans pledged at December 31 are summarized in the following table:


(Dollars in thousands)	2023		2022
Loans pledged to FHLB	$	1,206,134	$	783,843
Loans pledged to FRB	419,245		339,005

Related Party Loans

In the normal course of its business, Peoples Bank has granted loans to certain directors and officers of Peoples, including their affiliates, families and entities in which they are principal owners. At December 31, 2023, no related party loan was past due 90 or more days or on nonaccrual status. Activity in related party loans is presented in the table below. Other changes primarily consist of changes in related party status, and the addition and exit of directors during the year, as applicable.


(Dollars in thousands)
Balance, December 31, 2022	$	27,372
Acquired loans	18,892
New loans and disbursements	466
Repayments	(215)
No longer related party (a)	(26,696)
Other changes	347
Balance, December 31, 2023	$	20,166
(a) Two directors exited the company and therefore were no longer considered related parties.

Quality Indicators

As discussed in “Note 1 Summary of Significant Accounting Policies,” 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 are to borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan obligations. Loans in this risk category would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the loans if required, for any weakness that may exist.

“Special Mention” (grade 5): Loans in this risk category are the equivalent of the regulatory “Other Assets Especially Mentioned” classification. 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 the secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the loans or in Peoples’ credit position.

“Substandard”(grade 6): Loans in this risk category are inadequately protected by the borrower’s current financial condition and payment capability, or by 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 deficiencies are not corrected.

“Doubtful” (grade 7): Loans in this risk category 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 these loans as an estimated loss is deferred until their more exact status may be determined.

“Loss” (grade 8): Loans in this risk category are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean each such 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 in the period in which the loan becomes uncollectable. Consequently, Peoples typically does not maintain a recorded investment in loans within this risk 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. 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 tables summarize the risk category of Peoples’ loan portfolio based upon the then most recent analysis performed at December 31, 2023:



	Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term		Total Loans
Construction
Pass	$	80,273	$	141,245	$	85,913	$	27,169	9,995		$	12,723	$	—	$	—	$	357,318
Special mention	—		3,757		—		—		—		123		—		—		3,880
Substandard	1,200		1,590		—		—		—		31		—		—		2,821


Total	81,473		146,592		85,913		27,169		9,995		12,877		—		—		364,019
Current period gross charge-offs	—		—		9		—		—		—						9
Commercial real estate, other
Pass	199,565		327,762		366,752		227,604		262,099		650,265		37,177		189		2,071,224
Special mention	999		12,975		4,850		10,324		7,074		22,186		408		41		58,816
Substandard	287		2,421		5,878		8,679		1,972		47,213		457		—		66,907
Doubtful	—		—		—		—		—		10		—		—		10

Total	200,851		343,158		377,480		246,607		271,145		719,674		38,042		230		2,196,957
Current period gross charge-offs	—		—		—		39		—		575						614
Commercial and industrial
Pass	225,894		180,068		212,938		86,934		55,434		132,675		213,714		38		1,107,657
Special mention	540		12,051		533		9,723		4,722		6,336		16,236		8,614		50,141
Substandard	78		6,441		5,104		5,617		1,602		6,278		1,889		779		27,009
Doubtful	—		—		—		—		—		179		—		—		179

Total	226,512		198,560		218,575		102,274		61,758		145,468		231,839		9,431		1,184,986
Current period gross charge-offs	—		36		202		25		173		415						851
Premium finance
Pass	201,659		1,517		1		—		—		—		—		—		203,177
Total	201,659		1,517		1		—		—		—		—		—		203,177
Current period gross charge-offs	25		97		—		—		—		—						122
Leases
Pass	216,559		114,327		51,307		14,061		4,883		1,501				—		402,638
Special mention	363		1,529		476		81		1		5						2,455
Substandard	1,937		3,006		2,944		448		321		311						8,967
Total	218,859		118,862		54,727		14,590		5,205		1,817		—		—		414,060
Current period gross charge-offs	963		1,328		1,173		233		165		135						3,997
Residential real estate
Pass	75,957		91,506		140,157		58,144		45,507		369,552		—		—		780,823

Substandard	43		243		585		182		529		8,604		—		—		10,186

Loss	—		—		—		—		—		86		—		—		86
Total	76,000		91,749		140,742		58,326		46,036		378,242		—		—		791,095
Current period gross charge-offs	—		—		—		—		—		170						170
Home equity lines of credit
Pass	39,706		42,565		33,406		19,838		14,297		57,482		27		1,346		207,321

Substandard	19		—		61		34		123		1,109		—		—		1,346

Loss	—		—		—		—		—		8		—		—		8
Total	39,725		42,565		33,467		19,872		14,420		58,599		27		1,346		208,675
Current period gross charge-offs	—		—		—		—		—		110						110
Consumer, indirect
Pass	247,829		225,225		96,698		59,044		18,644		15,977		—		—		663,417

Substandard	333		934		789		558		190		206		—		—		3,010

Loss	7		34		2		—		2		—		—		—		45
Total	248,169		226,193		97,489		59,602		18,836		16,183		—		—		666,472
Current period gross charge-offs	609		2,091		865		255		63		147						4,030
Consumer, direct
Pass	58,445		37,050		17,434		8,282		3,185		4,081		—		—		128,477

Substandard	55		79		47		28		30		27		—		—		266

Loss	—		—		—		—		—		26		—		—		26
Total	58,500		37,129		17,481		8,310		3,215		4,134		—		—		128,769
Current period gross charge-offs	36		154		77		100		14		35						416
Deposit account overdrafts	986		—		—		—		—		—		—		—		986
Current period gross charge-offs	1,161																1,161
Total loans, at amortized cost	$	1,352,734	$	1,206,325	$	1,025,875	$	536,750	$	430,610	$	1,336,994	$	269,908	$	11,007	$	6,159,196

The following tables summarize the risk category of Peoples’ loan portfolio based upon the then most recent analysis performed at December 31, 2022:



	Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving 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


Total	82,143		110,721		27,893		20,223		656		5,261		44		81		246,941
Commercial real estate, other
Pass	165,282		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

Total	165,282		233,243		231,489		209,762		114,971		441,150		27,621		5,407		1,423,518
Commercial and industrial
Pass	167,937		142,615		72,573		71,497		40,229		91,853		215,116		3,722		801,820
Special mention	10,248		14,981		11,923		2,711		236		4,877		16,235		—		61,211
Substandard	84		9,801		3,417		2,410		1,459		3,620		8,603		611		29,394
Doubtful	—		—		—		—		—		209		—		—		209

Total	178,269		167,397		87,913		76,618		41,924		100,559		239,954		4,333		892,634
Premium finance
Pass	158,778		419		—		—		—		—		—		—		159,197
Total	158,778		419		—		—		—		—		—		—		159,197
Leases
Pass	191,148		90,738		34,627		15,951		3,269		1,119		—		—		336,852
Special mention	1,741		2,477		140		22		24		—		—		—		4,404
Substandard	546		1,840		571		464		454		—		—		—		3,875
Total	193,435		95,055		35,338		16,437		3,747		1,119		—		—		345,131
Residential real estate
Pass	78,313		138,860		58,869		42,840		28,174		364,635		—		—		711,691

Substandard	—		—		137		569		563		10,302		—		—		11,571

Loss	—		—		—		—		—		98		—		—		98
Total	78,313		138,860		59,006		43,409		28,737		375,035		—		—		723,360
Home equity lines of credit
Pass	41,781		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
Total	41,781		35,828		19,863		14,873		13,926		51,253		334		2,096		177,858
Consumer, indirect
Pass	305,814		149,445		100,027		35,988		22,789		12,741		—		—		626,804

Substandard	384		811		659		266		304		193		—		—		2,617

Loss	—		5		—		—		—		—		—		—		5
Total	306,198		150,261		100,686		36,254		23,093		12,934		—		—		629,426
Consumer, direct
Pass	50,889		28,351		14,558		6,333		3,725		3,975		—		—		107,831

Substandard	97		63		138		46		21		150		—		—		515

Loss	—		—		—		—		—		17		—		—		17
Total	50,986		28,414		14,696		6,379		3,746		4,142		—		—		108,363
Deposit account overdrafts	722		—		—		—		—		—		—		—		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 as of December 31:


(Dollars in thousands)	2023		2022


Commercial real estate, other	$	—		$	8,362
Commercial and industrial	—			1,456
Residential real estate	501			536



Total collateral dependent loans	$	501		$	10,354

The decrease in collateral dependent loans at December 31, 2023 compared to at December 31, 2022, was primarily due to three large-relationships that were paid in full during the year.

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 twelve months ended December 31, 2023, presented by loan classification.


During the Twelve Months Ended December 31, 2023(a)
	Payment Delay (Only)
(Dollars in thousands)	Forbearance Plan		Payment Deferral		Trial Modification and Repayment Plans		Term Extension		Forbearance Plan and Term Extension		Total		Percentage of Total by Loan Category(b)
Construction	$	—	$	1,590	$	—	$	52	$	—	$	1,642	0.45	%
Commercial real estate	184		—		—		2,160		—		2,344		0.11	%
Commercial and industrial	—		—		—		4,110		981		5,091		0.43	%

Residential real estate	—		—		—		91		—		91		0.01	%
Home equity lines of credit	—		—		—		209		—		209		0.10	%



Total	$	184	$	1,590	$	—	$	6,622	$	981	$	9,377	0.15	%

(a) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio as of period end.

(b) 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 table summarizes the financial impacts of loan modifications and payment deferrals made to loans during the twelve months ended December 31, 2023, presented by loan classification.


During the Twelve Months Ended December 31, 2023
(Dollars in thousands)	Weighted-Average Term Extension (in months)	Average Amount Capitalized as a Result of a Payment Delay(a)
Construction	5	$	—
Commercial real estate	7	—
Commercial and industrial	5	—

Residential real estate	213	8,076
Home equity lines of credit	187	—
Consumer, indirect	2	$	—


(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 December 31, 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 December 31, 2023.


For the Twelve Months Ended December 31, 2023
(Dollars in thousands)	Term Extension		Total


Commercial and industrial	$	148	$	148



Consumer, indirect	11		11


Total loans that subsequently defaulted	$	159	$	159

(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 December 31, 2023, presented by classification and class of financing receivable.


As of December 31, 2023(a)
(Dollars in thousands)	30-59 Days Delinquent		60-89 Days Delinquent		90+ Days Delinquent		Total Delinquent		Current		Total
Construction	$	—	$	52	$	—	$	52	$	1,590	$	1,642
Commercial real estate	—		—		—		—		2,344		2,344
Commercial and industrial	—		750		148		898		4,193		5,091

Residential real estate	—		—		—		—		91		91
Home equity lines of credit	—		—		—		—		209		209



Total loans modified(b)	$	—	$	802	$	148	$	950	$	8,427	$	9,377

(a) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio as of period end. (b) 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’ Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for more information on our TDR policy, and “Note 1, Summary of Significant Accounting Policies” in this Form 10-K for more information on the adoption of ASU 2022-02.

The following table summarizes the loans that were modified as TDRs during the year ended December 31, 2022.


		Recorded Investment (a)
(Dollars in thousands)	Number of Contracts	Pre-Modification		Post-Modification		Remaining Recorded Investment











2022
Construction	—	$	—	$	—	$	—
Commercial real estate, other	8	1,191		1,191		1,179
Commercial and industrial	9	1,513		1,517		971
Residential real estate	34	1,741		1,825		1,789
Home equity lines of credit	8	321		321		313
Consumer, indirect	23	286		285		285
Consumer, direct	9	102		103		103
Consumer	32	388		388		388
Total	91	$	5,154	$	5,242	$	4,640

(a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported.

The following table presents those loans modified into a TDR during the year that subsequently defaulted (i.e., 90 days or more past due following a modification during the year).


	2022
(Dollars in thousands)		Number of Contracts	Recorded Investment (a)		Impact on the Allowance for Credit Losses
Commercial real estate, other		1	$	65	$	—
Commercial and Industrial		1	43		—
Residential real estate		2	64		—
Consumer, indirect		1	7		—
Consumer, direct		1	2		—
Home equity lines of credit		—	—		—
Total		6	$	181	$	—
(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.

Peoples had no commitments to lend additional funds to the related 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 this 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 2023 are summarized below:



(Dollars in thousands)	Beginning Balance, January 1, 2023		Initial Allowance for Acquired PCD Assets (a)		(Recovery of) Provision for Credit Losses (b)		Charge-offs		Recoveries		Ending Balance, December 31, 2023
Construction	$	1,250	$	—	$	(542)	$	(9)	$	—	$	699
Commercial real estate, other	17,710		1,340		1,514		(614)		965		20,915
Commercial and industrial	8,229		379		2,181		(851)		552		10,490
Premium finance	344		—		238		(122)		24		484
Leases	8,495		—		5,990		(3,997)		362		10,850
Residential real estate	6,357		228		(670)		(170)		192		5,937
Home equity lines of credit	1,693		18		(14)		(110)		1		1,588
Consumer, indirect	7,448		—		4,685		(4,030)		487		8,590
Consumer, direct	1,575		86		1,025		(416)		73		2,343
Deposit account overdrafts	61		—		938		(1,161)		277		115
Total	$	53,162	$	2,051	$	15,345	$	(11,480)	$	2,933	$	62,011

(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 unfunded commitment liability.

Changes in the allowance for credit losses for 2022 are summarized below:



(Dollars in thousands)	Beginning Balance, January 1, 2022		Initial Allowance for Acquired PCD Assets		(Recovery of) Provision for Credit Losses (a)		Charge-offs		Recoveries		Ending Balance, December 31, 2022
Construction	$	2,999	$	—	$	(1,733)	$	(16)	$	—	$	1,250
Commercial real estate, other	29,147		(451)		(10,794)		(489)		297		17,710
Commercial and industrial	11,063		(418)		(1,522)		(943)		49		8,229
Premium finance	379		—		76		(124)		13		344
Leases	4,797		801		5,062		(2,585)		420		8,495
Residential real estate	7,233		(509)		217		(668)		84		6,357
Home equity lines of credit	2,005		(11)		(258)		(88)		45		1,693
Consumer, indirect	5,326		(41)		4,068		(2,233)		328		7,448
Consumer, direct	961		—		930		(363)		47		1,575
Deposit account overdrafts	57		—		1,050		(1,246)		200		61
Total	$	63,967	$	(629)	$	(2,904)	$	(8,755)	$	1,483	$	53,162

(a)Amount does not include the provision for unfunded commitment liability.

During 2023, the increase in the allowance balance when compared to 2022 was driven by (i) the addition of the $8.1 million provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers. The Limestone Merger added $2.1 million in allowance for credit losses at the acquisition date for PCD loans as part of the acquisition accounting. During 2022, the allowance established for PCD loans from the Premier Merger was adjusted, decreasing the allowance by $1.4 million, and the Vantage acquisition added $0.8 million in allowance for credit loss at the acquisition date for PCD loans as part of the acquisition accounting. The allowance for credit losses as a percent of total loans declined from 1.13% to 1.01% from December 31, 2022 to December 31, 2023.

At December 31, 2023, Peoples had recorded an unfunded commitment liability of $1.8 million, a decrease compared to the $2.0 million that was recorded at 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 Consolidated Balance Sheets. For 2023, Peoples recorded a recovery of credit losses on unfunded commitments of $0.2 million, compared to a recovery for credit losses on unfunded commitments of $0.6 million for 2022. The change in the allowance for unfunded commitments is reflected in the “Provision for credit losses” line of the Consolidated Statements of Income.