XML 35 R15.htm IDEA: XBRL DOCUMENT v3.24.0.1
Leases
 12 Months Ended
Dec. 31, 2023
Leases [Abstract]  
Leases Leases
Lessor Arrangements
Leases originated by Peoples, that Peoples has the positive intent and ability to hold for the foreseeable future or to maturity or payoff, are reported at the net investment of the lease, net of initial direct costs, charge-offs and an allowance for credit losses. Peoples considers leases past due if any required payments have not been received as of the date such payments were required to be made under the terms of the lease agreement. Upon detection of the reduced ability of a lessee to meet cash flow obligations, leases are
typically charged down to the net realizable value, with the residual balance placed on nonaccrual status. Leases deemed to be uncollectable are charged against the allowance for credit losses, while recoveries of previously charged-off amounts are credited to the allowance for credit losses.
Peoples began originating leases with the acquisition of leases from NSL and increased its portfolio with the acquisition of Vantage. The leases acquired from NSL were determined to be sales-type leases, as the premise for the leases is dollar buy-out, whereby the lessee pays one dollar at maturity of the lease to purchase the equipment. The leases acquired from Vantage were determined to be sales-type leases, as the payment structure and term triggered that accounting treatment, whereby either (i) the lease is structured as a fair market value buyout, whereby the lessee has the option to purchase the leased equipment at its fair market value at maturity of the lease, or (ii) the lessee purchases the leased equipment for one dollar at maturity of the lease. Originated leases are primarily classified as sales-type leases, and to a lesser extent, operating leases. These leases do not typically contain residual value guarantees; however, Peoples reduces its residual asset risk by obtaining a security deposit from the lessee. As a lessor, Peoples originates commercial equipment leases either directly to the customer or indirectly through vendor programs. Equipment leases relate to automotive, construction, health care, manufacturing, office, restaurant, information technology and other equipment. These leases include an estimated residual value, which is assessed for impairment as part of the allowance for credit losses. Operating leases are leases that do not meet the criteria of a sales-type lease or a finance lease. When Peoples originates an operating lease, it records an operating lease asset recognized in “Other assets” which is depreciated over its useful life.
Lease income noted in the table below includes (i) gains on the early termination of leases, net of any associated purchase accounting adjustments, (ii) month-to-month lease payments in excess of net investment in the lease, (iii) fees received for referrals, (iv) gains and losses recognized on the sales of residual assets, and (v) syndication income. Income on operating leases is recognized on a straight-line basis in “Other non-interest income” and depreciation expense is recognized on a straight-line basis in “Other non-interest expense.” Additional information regarding Peoples’ sales-type leases can be found in “Note 4 Loans and Leases.”
The table below details Peoples’ lease income for the years ended December 31, 2023 and 2022:
(Dollars in thousands)20232022
Interest and fees on leases (a)$42,931 $34,720 
Lease income5,552 4,267 
Other non-interest income2,308 — 
Total lease income$50,791 $38,987 
(a)Included in “Interest and fees on loans” on the Consolidated Statements of Income. For additional information, see “Note 4 Loans and Leases.”

The following table summarizes the net investments in sales-type leases, which are included in “Loans and leases, net of deferred costs” on the Consolidated Balance Sheets at December 31:
(Dollars in thousands)20232022
Lease payments receivable, at amortized cost$463,742 $367,681 
Estimated residual values33,448 35,045 
Initial direct costs7,114 4,233 
Deferred revenue(90,244)(61,828)
Total leases, at amortized cost414,060 345,131 
Allowance for credit losses - leases(10,850)(8,495)
Net investment in sales-type leases$403,210 $336,636 
The following table summarizes the contractual maturities of leases:
(Dollars in thousands)Balance
2024$110,893 
2025108,346 
202694,672 
202774,997 
202856,111 
Thereafter18,723 
Lease payments receivable, at amortized cost$463,742 
Lessee Arrangements
Peoples leases certain banking facilities and equipment under various agreements with original terms providing for fixed monthly payments over periods generally ranging from two to 25 years. Certain leases may include options to extend or terminate the lease. Only those renewal and termination options which Peoples is reasonably certain of exercising are included in the calculation of the lease liability. Certain leases contain rent escalation clauses calling for rent increases over the term of the lease, which are included in the calculation of the lease liability. At December 31, 2023, Peoples did not have any finance leases or any significant lessor agreements. Right of Use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement or remeasurement date of a lease based on the present value of lease payments over the remaining lease term. Operating lease ROU assets include lease payments made at or before the commencement date and initial indirect costs. Operating lease ROU assets exclude lease incentives and nonlease components. Short-term leases of certain facilities and equipment, with lease terms of 12 months or less, are recognized on a straight-line basis over the lease term. Peoples does not record ROU assets or lease liabilities for such leases.
The table below details Peoples’ lease expense, which is included in “Net occupancy and equipment expense” in the Consolidated Statements of Income for the years ended December 31:
(Dollars in thousands)20232022
Operating lease expense$3,030 $2,568 
Short-term lease expense268 745 
Total lease expense$3,298 $3,313 
Peoples utilizes an incremental borrowing rate to determine the present value of lease payments for each lease, as the lease agreements do not provide an implicit rate. The estimated incremental borrowing rate reflects a secured rate and is based on the term of the lease and the interest rate environment at the lease commencement or remeasurement date.
The following table details the ROU asset, the lease liability and other information related to Peoples’ operating leases on the Consolidated Balance Sheet at December 31:
(Dollars in thousands)20232022
ROU asset:
Other assets$11,689 $6,825 
Lease liability:
Accrued expenses and other liabilities$12,080 $7,551 
Other information:
Weighted-average remaining lease term9.5 years8.8 years
Weighted-average discount rate3.34 %2.70 %
Cash paid during the year for operating leases$2,990 $2,560 
Additions for ROU assets obtained during the year$4,428 $880 
The following table summarizes the future lease payments of operating leases:
(Dollars in thousands)Payments
2024
$2,588 
2025
2,020 
2026
1,750 
2027
1,599 
2028
1,218 
Thereafter5,413 
Total undiscounted lease payments$14,588 
Imputed interest(2,508)
Total lease liability$12,080 
Leases Leases
Lessor Arrangements
Leases originated by Peoples, that Peoples has the positive intent and ability to hold for the foreseeable future or to maturity or payoff, are reported at the net investment of the lease, net of initial direct costs, charge-offs and an allowance for credit losses. Peoples considers leases past due if any required payments have not been received as of the date such payments were required to be made under the terms of the lease agreement. Upon detection of the reduced ability of a lessee to meet cash flow obligations, leases are
typically charged down to the net realizable value, with the residual balance placed on nonaccrual status. Leases deemed to be uncollectable are charged against the allowance for credit losses, while recoveries of previously charged-off amounts are credited to the allowance for credit losses.
Peoples began originating leases with the acquisition of leases from NSL and increased its portfolio with the acquisition of Vantage. The leases acquired from NSL were determined to be sales-type leases, as the premise for the leases is dollar buy-out, whereby the lessee pays one dollar at maturity of the lease to purchase the equipment. The leases acquired from Vantage were determined to be sales-type leases, as the payment structure and term triggered that accounting treatment, whereby either (i) the lease is structured as a fair market value buyout, whereby the lessee has the option to purchase the leased equipment at its fair market value at maturity of the lease, or (ii) the lessee purchases the leased equipment for one dollar at maturity of the lease. Originated leases are primarily classified as sales-type leases, and to a lesser extent, operating leases. These leases do not typically contain residual value guarantees; however, Peoples reduces its residual asset risk by obtaining a security deposit from the lessee. As a lessor, Peoples originates commercial equipment leases either directly to the customer or indirectly through vendor programs. Equipment leases relate to automotive, construction, health care, manufacturing, office, restaurant, information technology and other equipment. These leases include an estimated residual value, which is assessed for impairment as part of the allowance for credit losses. Operating leases are leases that do not meet the criteria of a sales-type lease or a finance lease. When Peoples originates an operating lease, it records an operating lease asset recognized in “Other assets” which is depreciated over its useful life.
Lease income noted in the table below includes (i) gains on the early termination of leases, net of any associated purchase accounting adjustments, (ii) month-to-month lease payments in excess of net investment in the lease, (iii) fees received for referrals, (iv) gains and losses recognized on the sales of residual assets, and (v) syndication income. Income on operating leases is recognized on a straight-line basis in “Other non-interest income” and depreciation expense is recognized on a straight-line basis in “Other non-interest expense.” Additional information regarding Peoples’ sales-type leases can be found in “Note 4 Loans and Leases.”
The table below details Peoples’ lease income for the years ended December 31, 2023 and 2022:
(Dollars in thousands)20232022
Interest and fees on leases (a)$42,931 $34,720 
Lease income5,552 4,267 
Other non-interest income2,308 — 
Total lease income$50,791 $38,987 
(a)Included in “Interest and fees on loans” on the Consolidated Statements of Income. For additional information, see “Note 4 Loans and Leases.”

The following table summarizes the net investments in sales-type leases, which are included in “Loans and leases, net of deferred costs” on the Consolidated Balance Sheets at December 31:
(Dollars in thousands)20232022
Lease payments receivable, at amortized cost$463,742 $367,681 
Estimated residual values33,448 35,045 
Initial direct costs7,114 4,233 
Deferred revenue(90,244)(61,828)
Total leases, at amortized cost414,060 345,131 
Allowance for credit losses - leases(10,850)(8,495)
Net investment in sales-type leases$403,210 $336,636 
The following table summarizes the contractual maturities of leases:
(Dollars in thousands)Balance
2024$110,893 
2025108,346 
202694,672 
202774,997 
202856,111 
Thereafter18,723 
Lease payments receivable, at amortized cost$463,742 
Lessee Arrangements
Peoples leases certain banking facilities and equipment under various agreements with original terms providing for fixed monthly payments over periods generally ranging from two to 25 years. Certain leases may include options to extend or terminate the lease. Only those renewal and termination options which Peoples is reasonably certain of exercising are included in the calculation of the lease liability. Certain leases contain rent escalation clauses calling for rent increases over the term of the lease, which are included in the calculation of the lease liability. At December 31, 2023, Peoples did not have any finance leases or any significant lessor agreements. Right of Use (“ROU”) assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement or remeasurement date of a lease based on the present value of lease payments over the remaining lease term. Operating lease ROU assets include lease payments made at or before the commencement date and initial indirect costs. Operating lease ROU assets exclude lease incentives and nonlease components. Short-term leases of certain facilities and equipment, with lease terms of 12 months or less, are recognized on a straight-line basis over the lease term. Peoples does not record ROU assets or lease liabilities for such leases.
The table below details Peoples’ lease expense, which is included in “Net occupancy and equipment expense” in the Consolidated Statements of Income for the years ended December 31:
(Dollars in thousands)20232022
Operating lease expense$3,030 $2,568 
Short-term lease expense268 745 
Total lease expense$3,298 $3,313 
Peoples utilizes an incremental borrowing rate to determine the present value of lease payments for each lease, as the lease agreements do not provide an implicit rate. The estimated incremental borrowing rate reflects a secured rate and is based on the term of the lease and the interest rate environment at the lease commencement or remeasurement date.
The following table details the ROU asset, the lease liability and other information related to Peoples’ operating leases on the Consolidated Balance Sheet at December 31:
(Dollars in thousands)20232022
ROU asset:
Other assets$11,689 $6,825 
Lease liability:
Accrued expenses and other liabilities$12,080 $7,551 
Other information:
Weighted-average remaining lease term9.5 years8.8 years
Weighted-average discount rate3.34 %2.70 %
Cash paid during the year for operating leases$2,990 $2,560 
Additions for ROU assets obtained during the year$4,428 $880 
The following table summarizes the future lease payments of operating leases:
(Dollars in thousands)Payments
2024
$2,588 
2025
2,020 
2026
1,750 
2027
1,599 
2028
1,218 
Thereafter5,413 
Total undiscounted lease payments$14,588 
Imputed interest(2,508)
Total lease liability$12,080