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Loans and Leases
 3 Months Ended
Mar. 31, 2024
Receivables [Abstract]  
Loans and Leases Loans and Leases
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 Financial, LLC ("Vantage") subsidiary.
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)March 31,
2024		December 31, 2023
Construction$314,687 $364,019 
Commercial real estate, other2,243,780 2,196,957 
Commercial and industrial1,214,615 1,184,986 
Premium finance238,962 203,177 
Leases422,694 414,060 
Residential real estate781,888 791,095 
Home equity lines of credit221,079 208,675 
Consumer, indirect650,228 666,472 
Consumer, direct113,588 128,769 
Deposit account overdrafts1,306 986 
Total loans, at amortized cost$6,202,827 $6,159,196 
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 $24.3 million at March 31, 2024 and $24.5 million at December 31, 2023.
Nonaccrual and Past Due Loans
A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due.
The amortized cost of loans on nonaccrual status and of loans delinquent for 90 days or more and accruing was as follows:
March 31, 2024December 31, 2023
(Dollars in thousands)
Nonaccrual (a)
Accruing Loans 90+ Days Past Due
Nonaccrual (a)
Accruing Loans 90+ Days Past Due
Construction$— $— $— $— 
Commercial real estate, other3,773 231 2,816 78 
Commercial and industrial6,205 10 2,758 316 
Premium finance— 2,208 — 1,355 
Leases10,136 4,070 8,436 3,826 
Residential real estate7,450 780 7,921 877 
Home equity lines of credit1,134 181 1,022 171 
Consumer, indirect2,506 134 2,412 68 
Consumer, direct157 48 112 25 
Total loans, at amortized cost$31,361 $7,662 $25,477 $6,716 
(a) There were $3.8 million of nonaccrual loans for which there was no allowance for credit losses at March 31, 2024 and $1.2 million of nonaccrual loans for which there was no allowance for credit losses at December 31, 2023.
During the first three months of 2024, nonaccrual loans increased compared to at December 31, 2023, which was primarily due to one large commercial and industrial loan of approximately $1.9 million that went on nonaccrual status during the first quarter of 2024. Further, two leases went on nonaccrual status during the quarter which increased the amount reported by $1.4 million. The increase in accruing loans 90+ days past due at March 31, 2024 when compared to at December 31, 2023, was primarily due to an increase in premium finance loans of approximately $0.9 million which was partially offset by a decrease in commercial and industrial loans.
The amount of interest income recognized on accruing loans 90+ days past due during the three months ended March 31, 2024 was $0.5 million.
The following table presents the aging of the amortized cost of past due loans:
Loans Past Due
Current
Loans
Total
Loans
(Dollars in thousands)30 - 59 days60 - 89 days90 + DaysTotal
March 31, 2024
Construction$— $15 $— $15 $314,672 $314,687 
Commercial real estate, other2,369 1,332 2,315 6,016 2,237,764 2,243,780 
Commercial and industrial2,482 850 3,772 7,104 1,207,511 1,214,615 
Premium finance1,436 889 2,208 4,533 234,429 238,962 
Leases15,567 2,496 13,902 31,965 390,729 422,694 
Residential real estate11,726 1,179 4,177 17,082 764,806 781,888 
Home equity lines of credit1,386 731 870 2,987 218,092 221,079 
Consumer, indirect5,448 569 1,421 7,438 642,790 650,228 
Consumer, direct553 129 105 787 112,801 113,588 
Deposit account overdrafts— — — — 1,306 1,306 
Total loans, at amortized cost$40,967 $8,190 $28,770 $77,927 $6,124,900 $6,202,827 
December 31, 2023
Construction$13 $52 $— $65 $363,954 $364,019 
Commercial real estate, other2,728 4,556 1,572 8,856 2,188,101 2,196,957 
Commercial and industrial1,717 1,491 3,052 6,260 1,178,726 1,184,986 
Premium finance1,288 867 1,355 3,510 199,667 203,177 
Leases12,743 4,932 12,014 29,689 384,371 414,060 
Residential real estate14,021 2,733 4,481 21,235 769,860 791,095 
Home equity lines of credit1,561 691 683 2,935 205,740 208,675 
Consumer, indirect7,488 1,550 1,230 10,268 656,204 666,472 
Consumer, direct536 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 
Delinquency trends improved slightly, as 98.7% of Peoples' loan portfolio was considered “current” at March 31, 2024, compared to 98.6% at December 31, 2023.
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)March 31, 2024December 31, 2023
Loans pledged to FHLB$1,173,512 $1,206,134 
Loans pledged to FRB445,922 419,245 
Credit Quality Indicators
As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2023 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 category 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 March 31, 2024:
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20242023202220212020PriorRevolving Loans
Total
Loans
Construction

  Pass$13,704 $94,507 $124,789 $56,375 $3,724 $17,756 $— $— $310,855 
  Special mention— — 918 — — 121 — — 1,039 
  Substandard— 1,192 1,573 — — 28 — — 2,793 
     Total13,704 95,699 127,280 56,375 3,724 17,905 — — 314,687 
Current period gross charge-offs— — — — — — — 
Commercial real estate, other

  Pass36,998 206,459 356,061 380,773 224,446 873,082 44,060 186 2,121,879 
  Special mention— 751 16,484 3,660 7,038 21,538 394 38 49,865 
  Substandard— 441 2,197 14,316 8,509 46,271 292 — 72,026 
  Doubtful— — — — — 10 — — 10 
     Total36,998 207,651 374,742 398,749 239,993 940,901 44,746 224 2,243,780 
Current period gross charge-offs— — 212 — — — 212 
Commercial and industrial
  Pass60,989 224,493 168,480 164,175 78,926 186,985 228,165 1,137 1,112,213 
  Special mention— 3,474 11,329 1,562 9,340 5,517 23,638 5,500 54,860 
  Substandard— 93 2,868 30,387 4,595 5,685 1,829 778 45,457 
  Doubtful— — 1,911 — — 174 — — 2,085 
     Total60,989 228,060 184,588 196,124 92,861 198,361 253,632 7,415 1,214,615 
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20242023202220212020PriorRevolving Loans
Total
Loans
Current period gross charge-offs— — — 15 57 163 235 
Premium Finance
Pass134,052 104,528 382 — — — — — 238,962 
Total134,052 104,528 382 — — — — — 238,962 
Current period gross charge-offs— 31 23 — — — 54 
Leases
Pass74,212 177,358 100,634 44,614 10,630 2,054 — — 409,502 
Special mention— 1,575 1,179 295 105 — — — 3,154 
Substandard— 2,378 4,555 2,364 328 413 — — 10,038 
Total74,212 181,311 106,368 47,273 11,063 2,467 — — 422,694 
Current period gross charge-offs— 596 454 169 28 23 1,270 
Residential real estate
Pass13,458 73,850 89,518 137,348 57,315 400,297 — — 771,786 
Substandard— 119 188 453 178 9,082 — — 10,020 
Loss— — — — — 82 — — 82 
     Total13,458 73,969 89,706 137,801 57,493 409,461 — — 781,888 
Current period gross charge-offs— — — 5 — 75 80 
Home equity lines of credit
  Pass18,738 40,864 41,076 31,757 18,917 68,214 26 1,066 219,592 
  Substandard— 40 58 95 34 1,252 — — 1,479 
Loss— — — — — 8 — — 8 
     Total18,738 40,904 41,134 31,852 18,951 69,474 26 1,066 221,079 
Current period gross charge-offs— — — — — — — 
Consumer, indirect
  Pass42,573 232,913 204,737 85,796 50,864 29,835 — — 646,718 
  Substandard— 760 934 756 568 412 — — 3,430 
   Loss— 30 45 3 — 2 — — 80 
     Total42,573 233,703 205,716 86,555 51,432 30,249 — — 650,228 
Current period gross charge-offs— 564 550 219 75 53 1,461 
Consumer, direct
  Pass16,228 35,984 32,493 15,127 7,061 6,405 — — 113,298 
  Substandard— 52 93 48 16 75 — — 284 
Term Loans at Amortized Cost by Origination YearRevolving Loans Converted to Term
(Dollars in thousands)20242023202220212020PriorRevolving Loans
Total
Loans
   Loss— — — — — 6 — — 6 
     Total16,228 36,036 32,586 15,175 7,077 6,486 — — 113,588 
Current period gross charge-offs— 48 82 11 7 78 226 
Deposit account overdrafts1,306 — — — — — — — 1,306 
Current period gross charge-offs336 — — — — — 336 
Total loans, at amortized cost412,258 1,201,861 1,162,502 969,904 482,594 1,675,304 298,404 8,705 6,202,827 
Total current period gross charge-offs$336 $1,239 $1,321 $419 $167 $392 $3,874 
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, 2023:
Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)20232022202120202019PriorRevolving LoansRevolving 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 
  Substandard1,200 1,590 — — — 31 — — 2,821 
     Total81,473 146,592 85,913 27,169 9,995 12,877 — — 364,019 
Current period gross charge-offs— — 9 — — — 9 
Commercial real estate, other

  Pass199,565 327,762 366,752 227,604 262,099 650,265 37,177 189 2,071,224 
  Special mention999 12,975 4,850 10,324 7,074 22,186 408 41 58,816 
  Substandard287 2,421 5,878 8,679 1,972 47,213 457 — 66,907 
  Doubtful— — — — — 10 — — 10 
     Total200,851 343,158 377,480 246,607 271,145 719,674 38,042 230 2,196,957 
Current period gross charge-offs— — — 39 — 575 614 
Commercial and industrial
  Pass225,894 180,068 212,938 86,934 55,434 132,675 213,714 38 1,107,657 
  Special mention540 12,051 533 9,723 4,722 6,336 16,236 8,614 50,141 
  Substandard78 6,441 5,104 5,617 1,602 6,278 1,889 779 27,009 
  Doubtful— — — — — 179 — — 179 
     Total226,512 198,560 218,575 102,274 61,758 145,468 231,839 9,431 1,184,986 
Current period gross charge-offs— 36 202 25 173 415 851 
Premium finance
  Pass201,659 1,517 1 — — — — — 203,177 
Total201,659 1,517 1 — — — — — 203,177 
Current period gross charge-offs25 97 — — — — 122 
Leases
Term Loans at Amortized Cost by Origination Year
(Dollars in thousands)20232022202120202019PriorRevolving LoansRevolving Loans Converted to Term
Total
Loans
Pass216,559 114,327 51,307 14,061 4,883 1,501 — — 402,638 
Special mention363 1,529 476 81 1 5 — — 2,455 
Substandard1,937 3,006 2,944 448 321 311 — — 8,967 
Total218,859 118,862 54,727 14,590 5,205 1,817 — — 414,060 
Current period gross charge-offs963 1,328 1,173 233 165 135 3,997 
Residential real estate
  Pass75,957 91,506 140,157 58,144 45,507 369,552 — — 780,823 
  Substandard43 243 585 182 529 8,604 — — 10,186 
   Loss— — — — — 86 — — 86 
     Total76,000 91,749 140,742 58,326 46,036 378,242 — — 791,095 
Current period gross charge-offs— — — — — 170 170 
Home equity lines of credit
  Pass39,706 42,565 33,406 19,838 14,297 57,482 27 1,346 207,321 
  Substandard19 — 61 34 123 1,109 — — 1,346 
   Loss— — — — — 8 — — 8 
     Total39,725 42,565 33,467 19,872 14,420 58,599 27 1,346 208,675 
Current period gross charge-offs— — — — — 110 110 
Consumer, indirect
  Pass247,829 225,225 96,698 59,044 18,644 15,977 — — 663,417 
  Substandard333 934 789 558 190 206 — — 3,010 
   Loss7 34 2 — 2 — — — 45 
     Total248,169 226,193 97,489 59,602 18,836 16,183 — — 666,472 
Current period gross charge-offs609 2,091 865 255 63 147 4,030 
Consumer, direct
  Pass58,445 37,050 17,434 8,282 3,185 4,081 — — 128,477 
  Substandard55 79 47 28 30 27 — — 266 
   Loss— — — — — 26 — — 26 
     Total58,500 37,129 17,481 8,310 3,215 4,134 — — 128,769 
Current period gross charge-offs36 154 77 100 14 35 416 
Deposit account overdrafts986 — — — — — — — 986 
Current period gross charge-offs1,161 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 
Current period gross charge-offs$2,794 $3,706 $2,326 $652 $415 $1,587 $11,480 
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 multi-family complexes, warehouse buildings, industrial buildings, land under development, and other commercial 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 multifamily complexes, retail facilities, office buildings and complexes, warehouses, industrial buildings, land under development, as well as other commercial 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)March 31, 2024December 31, 2023
Commercial real estate, other$689 $— 
Leases738 — 
Residential real estate501 501 
Total collateral dependent loans$1,928 $501 
The increase in collateral dependent loans at March 31, 2024, compared to December 31, 2023, was primarily due to the addition of a commercial real estate loan and a lease as collateral dependent loans during the three months ended March 31, 2024.
Modifications for Borrowers Experiencing Financial Difficulty
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 ended March 31, 2024 and March 31, 2023, presented by loan classification.
Payment Delay (Only)
(Dollars in thousands)Forbearance PlanPayment DeferralTerm ExtensionForbearance Plan and Term ExtensionTotal
Percentage of Total by Loan Category(a)(b)
During the Three Months Ended March 31, 2024
Commercial real estate— — $565 $— $565 0.03 %
Commercial and industrial— — 10,203 — 10,203 0.84 %
Leasing— 25 — — 25 0.01 %
Residential real estate— — 76 — 76 0.01 %
Total$— $25 $10,844 $— $10,869 0.18 %
During the Three Months Ended March 31, 2023
Construction$— $1,600 $— $— $1,600 0.69 %
Commercial real estate200 — — — 200 0.01 %
Commercial and industrial— — 9 335 344 0.04 %
Residential real estate— — 221 — 221 0.03 %
Consumer, indirect— — 28 — 28 — %
Total$200 $1,600 $258 $335 $2,393 0.05 %
(a) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable.
(b) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio of period end.
The following table summarizes the financial impacts of loan modifications and payment deferrals made to loans during both the three months ended March 31, 2024 and March 31, 2023, presented by loan classification.
Weighted-Average Term Extension
(in months)
Average Amount Capitalized as a Result of a Payment Delay(a)
During the Three Months Ended March 31, 2024
Commercial real estate6$— 
Commercial and industrial6— 
Leasing9— 
Residential real estate2— 
During the Three Months Ended March 31, 2023
Commercial and industrial12— 
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 within the previous 12 months and that had a payment default 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.
For the Three Months Ended March 31, 2024
Payment Delay as a Result of a Payment Deferral (Only)(a)
Total
Commercial and industrial$648 $648 
(a) Represents the sum of amortized cost and gross charge-off as of period end. Excludes loans that liquidated either through foreclosure, deed-in-lieu of foreclosure, or a short sale.
As of March 31, 2023, there were no loans that were modified for borrowers experiencing financial difficulty since the adoption of ASU 2022-02 on January 1, 2023, and subsequently defaulted during the three months ended March 31, 2023.
The following table displays an aging analysis of loans that were modified during the twelve months prior to March 31, 2024, presented by classification and class of financing receivable.
As of March 31, 2024
(Dollars in thousands)30-59 Days Delinquent60-89 Days Delinquent90+ Days DelinquentTotal DelinquentCurrentTotal
Construction$— $— $— $— $70 $70 
Commercial real estate193 — — 193 2,443 2,636 
Commercial and industrial— 667 648 1,315 12,752 14,067 
Leasing— — — — 25 25 
Residential real estate76 — — 76 24 100 
Home equity lines of credit— — — — 207 207 
Total loans modified(a)
$269 $667 $648 $1,584 $15,521 $17,105 
(a) Represents the amortized cost basis as of period end.
The following table displays an aging analysis of loans that were modified on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through March 31, 2023, presented by classification and class of financing receivable.
As of March 31, 2023
(Dollars in thousands)30-59 Days Delinquent60-89 Days Delinquent90+ Days DelinquentTotal DelinquentCurrentTotal
Construction$— $— $— $— $1,600 $1,600 
Commercial real estate0000200200
Commercial and industrial0000344344
Residential real estate0000221221
Consumer, indirect280028028
Total loans modified(a)
$28 $— $— $28 $2,365 $2,393 
(a) Represents the amortized cost basis as of period end.

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' 2023 Form 10-K, Peoples estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In management's estimation of expected credit losses, Peoples uses a one-year reasonable and supportable period across all segments. Following the reasonable and supportable period, Peoples reverts the macroeconomic variables to their long run average over a four-quarter reversion period.
Changes in the allowance for credit losses for the three months ended March 31, 2024 and March 31, 2023 are summarized below:
(Dollars in thousands)
Beginning Balance, December 31, 2023
Initial Allowance for Acquired PCD AssetsProvision for (Recovery of) Credit Losses (a)Charge-offsRecoveries
Ending Balance, March 31, 2024
Construction$699 $— $2 $— $— $701 
Commercial real estate, other20,915 — 1,002 (212)83 21,788 
Commercial and industrial10,490 — 319 (235)7 10,581 
Premium finance484 — 169 (54)8 607 
Leases10,850 — 3,097 (1,270)212 12,889 
Residential real estate5,937 — (74)(80)83 5,866 
Home equity lines of credit1,588 — 94 — 7 1,689 
Consumer, indirect8,590 — 1,101 (1,461)71 8,301 
Consumer, direct2,343 — 153 (226)9 2,279 
Deposit account overdrafts115 — 268 (336)74 121 
Total$62,011 $— $6,131 $(3,874)$554 $64,822 
(a) 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, March 31, 2023
Construction$1,250 $— $32 $(9)$— $1,273 
Commercial real estate, other17,710 — (1,230)(33)27 16,474 
Commercial and industrial8,229 — 79 (1)— 8,307 
Premium finance344 — 103 (23)9 433 
Leases8,495 — 1,003 (469)80 9,109 
Residential real estate6,357 — 159 (41)29 6,504 
Home equity lines of credit1,693 — 43 (19)— 1,717 
Consumer, indirect7,448 — 1,183 (929)79 7,781 
Consumer, direct1,575 — 133 (104)15 1,619 
Deposit account overdrafts61 — 180 (227)72 86 
Total$53,162 $— $1,685 $(1,855)$311 $53,303 
(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 first quarter of 2024, Peoples recorded a total provision for credit losses of $6.1 million, which was driven by (i) a deterioration in macro-economic conditions used within the current expected credit loss ("CECL") model, (ii) an increase of reserves on individually analyzed loans, (iii) and loan growth. The increase in the allowance for credit losses at March 31, 2024 when compared to prior periods was driven by the establishment of an allowance for credit losses for loans acquired in the Limestone Merger.
During the first quarter of 2023, Peoples recorded a provision for credit losses of $1.7 million, largely attributable to a deterioration of macro-economic conditions, partially offset by a reduction in reserves for individually analyzed loans. Net charge-offs for the first quarter of 2023 were $1.5 million, primarily due to net charge-offs of indirect consumer loans of $0.9 million.
Peoples had recorded an allowance for unfunded commitments of $1.7 million and $1.8 million as of March 31, 2024 and December 31, 2023, 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.