Loans (Tables) | 9 Months Ended |
Sep. 30, 2016 |
Receivables [Abstract] | |
Loans | Loans Peoples' loan portfolio consists of various types of loans originated primarily as a result of lending opportunities within Peoples' primary market areas of northeastern, central, southwestern and southeastern Ohio, west central West Virginia, and northeastern Kentucky. Acquired loans consist of loans purchased in 2012 or thereafter in a business combination. The major classifications of loan balances, excluding loans held for sale, were as follows: (Dollars in thousands) September 30, December 31, 2015 Originated loans: Commercial real estate, construction $ 70,838 $ 63,785 Commercial real estate, other 507,842 471,184 Commercial real estate 578,680 534,969 Commercial and industrial 351,340 288,130 Residential real estate 306,374 288,783 Home equity lines of credit 83,412 74,176 Consumer, indirect 229,334 165,320 Consumer, other 67,973 61,813 Consumer 297,307 227,133 Deposit account overdrafts 1,074 1,448 Total originated loans $ 1,618,187 $ 1,414,639 Acquired loans: Commercial real estate, construction $ 10,242 $ 12,114 Commercial real estate, other 221,036 265,092 Commercial real estate 231,278 277,206 Commercial and industrial 48,702 63,589 Residential real estate 238,787 276,772 Home equity lines of credit 27,784 32,253 Consumer, indirect 952 1,776 Consumer, other 3,518 6,205 Consumer 4,470 7,981 Total acquired loans $ 551,021 $ 657,801 Loans, net of deferred fees and costs $ 2,169,208 $ 2,072,440 Peoples has acquired various loans through business combinations for which there was, at acquisition, evidence of deterioration of credit quality since origination, and for which it was probable that all contractually required payments would not be collected. The carrying amounts of these loans included in the loan balances above are summarized as follows: (Dollars in thousands) September 30, December 31, Commercial real estate, other $ 11,391 $ 16,893 Commercial and industrial 2,567 3,040 Residential real estate 24,212 27,155 Consumer 94 193 Total outstanding balance $ 38,264 $ 47,281 Net carrying amount $ 28,292 $ 35,064 Changes in the accretable yield for purchased credit impaired loans for the nine months ended September 30, 2016 were as follows: (Dollars in thousands) Accretable Yield Balance, December 31, 2015 $ 7,042 Reclassification from nonaccretable to accretable 2,014 Accretion (1,430 ) Balance, September 30, 2016 $ 7,626 Peoples completed semi-annual re-estimations of cash flows on acquired purchased credit impaired loans in February and August of 2016. The above reclassification from nonaccretable to accretable was related to the re-estimation of cash flows on the acquired purchased credit impaired loan portfolios, coupled with the loans performing better than expected. The majority of the reclassification related to prepayment speeds decreasing in the residential portfolio, resulting in higher total expected cash flows. In 2017, Peoples will complete the re-estimation of cash flows on acquired purchased credit impaired loans on an as needed basis and, in any event, at least annually in August. Cash flows expected to be collected on acquired purchased credit impaired loans are estimated by incorporating several key assumptions similar to the initial estimate of fair value. These key assumptions include probability of default, and the amount of actual prepayments after the acquisition date. Prepayments affect the estimated life of the loans and could change the amount of interest income, and possibly the principal expected to be collected. In reforecasting future estimated cash flows, credit loss expectations are adjusted as necessary. Peoples pledges certain loans secured by 1-4 family and multifamily residential mortgages under a blanket collateral agreement to secure borrowings from the FHLB. The amount of such pledged loans totaled $538.7 million and $554.8 million at September 30, 2016 and December 31, 2015 , respectively. Peoples also pledges commercial loans to secure borrowings with the FRB. The outstanding balances of these loans totaled $159.9 million and $195.5 million at September 30, 2016 and December 31, 2015 , respectively. 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 recorded investments in loans on nonaccrual status and loans delinquent for 90 days or more and accruing were as follows: Nonaccrual Loans Loans 90+ Days Past Due and Accruing (Dollars in thousands) September 30, December 31, September 30, December 31, Originated loans: Commercial real estate, construction $ 855 $ 921 $ — $ — Commercial real estate, other 9,982 7,041 — — Commercial real estate $ 10,837 $ 7,962 $ — $ — Commercial and industrial 1,468 480 — 680 Residential real estate 3,722 3,057 34 169 Home equity lines of credit 273 321 199 — Consumer, indirect 30 34 82 — Consumer, other 5 58 — 1 Consumer $ 35 $ 92 $ 82 $ 1 Total originated loans $ 16,335 $ 11,912 $ 315 $ 850 Acquired loans: Commercial real estate, other 780 469 1,636 2,425 Commercial and industrial 281 247 452 1,306 Residential real estate 1,713 798 1,758 1,353 Home equity lines of credit 232 98 — 35 Consumer, other 5 7 — — Total acquired loans $ 3,011 $ 1,619 $ 3,846 $ 5,119 Total loans $ 19,346 $ 13,531 $ 4,161 $ 5,969 The following table presents the aging of the recorded investment in past due loans: Loans Past Due Current Loans Total Loans (Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total September 30, 2016 Originated loans: Commercial real estate, construction $ — $ — $ 855 $ 855 $ 69,983 $ 70,838 Commercial real estate, other 726 1,032 9,381 11,139 496,703 507,842 Commercial real estate $ 726 $ 1,032 $ 10,236 $ 11,994 $ 566,686 $ 578,680 Commercial and industrial 1,083 412 1,415 2,910 348,430 351,340 Residential real estate 2,043 1,094 1,694 4,831 301,543 306,374 Home equity lines of credit 153 46 318 517 82,895 83,412 Consumer, indirect 945 184 82 1,211 228,123 229,334 Consumer, other 291 96 — 387 67,586 67,973 Consumer $ 1,236 $ 280 $ 82 $ 1,598 $ 295,709 $ 297,307 Deposit account overdrafts — — — — 1,074 1,074 Total originated loans $ 5,241 $ 2,864 $ 13,745 $ 21,850 $ 1,596,337 $ 1,618,187 Acquired loans: Commercial real estate, construction $ — $ — $ — $ — $ 10,242 $ 10,242 Commercial real estate, other 623 294 2,293 3,210 217,826 221,036 Commercial real estate $ 623 $ 294 $ 2,293 $ 3,210 $ 228,068 $ 231,278 Commercial and industrial 188 59 733 980 47,722 48,702 Residential real estate 1,269 1,804 2,511 5,584 233,203 238,787 Home equity lines of credit 54 156 178 388 27,396 27,784 Consumer, indirect 27 — — 27 925 952 Consumer, other 32 14 — 46 3,472 3,518 Consumer $ 59 $ 14 $ — $ 73 $ 4,397 $ 4,470 Total acquired loans $ 2,193 $ 2,327 $ 5,715 $ 10,235 $ 540,786 $ 551,021 Total loans $ 7,434 $ 5,191 $ 19,460 $ 32,085 $ 2,137,123 $ 2,169,208 Loans Past Due Current Loans Total Loans (Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total December 31, 2015 Originated loans: Commercial real estate, construction $ 913 $ — $ 8 $ 921 $ 62,864 $ 63,785 Commercial real estate, other 7,260 1,258 379 8,897 462,287 471,184 Commercial real estate $ 8,173 $ 1,258 $ 387 $ 9,818 $ 525,151 $ 534,969 Commercial and industrial 1,437 215 767 2,419 285,711 288,130 Residential real estate 3,124 1,105 1,263 5,492 283,291 288,783 Home equity lines of credit 161 7 104 272 73,904 74,176 Consumer, indirect 790 168 — 958 164,362 165,320 Consumer, other 597 82 32 711 61,102 61,813 Consumer $ 1,387 $ 250 $ 32 $ 1,669 $ 225,464 $ 227,133 Deposit account overdrafts — — — — 1,448 1,448 Total originated loans $ 14,282 $ 2,835 $ 2,553 $ 19,670 $ 1,394,969 $ 1,414,639 Acquired loans: Commercial real estate, construction $ — $ — $ 40 $ 40 $ 12,074 $ 12,114 Commercial real estate, other 1,592 352 2,730 4,674 260,418 265,092 Commercial real estate $ 1,592 $ 352 $ 2,770 $ 4,714 $ 272,492 $ 277,206 Commercial and industrial 177 232 1,553 1,962 61,627 63,589 Residential real estate 4,910 2,480 1,745 9,135 267,637 276,772 Home equity lines of credit 318 20 95 433 31,820 32,253 Consumer, indirect 23 — — 23 1,753 1,776 Consumer, other 67 31 — 98 6,107 6,205 Consumer $ 90 $ 31 $ — $ 121 $ 7,860 $ 7,981 Total acquired loans $ 7,087 $ 3,115 $ 6,163 $ 16,365 $ 641,436 $ 657,801 Total loans $ 21,369 $ 5,950 $ 8,716 $ 36,035 $ 2,036,405 $ 2,072,440 Credit Quality Indicators As discussed in Note 1 of the Notes to the Consolidated Financial Statements included in Peoples' 2015 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. A description of the general characteristics of the risk grades used by Peoples is as 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. “Watch” (grade 5): Loans in this risk grade are the equivalent of the regulatory definition of “Other Assets Especially Mentioned” classification. Loans in this 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 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 of the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the orderly repayment of the loan. 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 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, its classification 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 the 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 loan losses are taken in 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. 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 Peoples' loan portfolio based upon the most recent analysis performed: Pass Rated (Grades 1 - 4) Watch (Grade 5) Substandard (Grade 6) Doubtful (Grade 7) Not Rated Total Loans (Dollars in thousands) September 30, 2016 Originated loans: Commercial real estate, construction $ 69,517 $ — $ 855 $ — $ 466 $ 70,838 Commercial real estate, other 483,190 9,242 15,410 — — 507,842 Commercial real estate $ 552,707 $ 9,242 $ 16,265 $ — $ 466 $ 578,680 Commercial and industrial 319,634 24,178 7,512 — 16 351,340 Residential real estate 20,577 1,066 12,975 359 271,397 306,374 Home equity lines of credit 545 — 138 — 82,729 83,412 Consumer, indirect 141 — — — 229,193 229,334 Consumer, other 141 — — — 67,832 67,973 Consumer $ 282 $ — $ — $ — $ 297,025 $ 297,307 Deposit account overdrafts — — — — 1,074 1,074 Total originated loans $ 893,745 $ 34,486 $ 36,890 $ 359 $ 652,707 $ 1,618,187 Acquired loans: Commercial real estate, construction $ 10,242 $ — $ — $ — $ — $ 10,242 Commercial real estate, other 197,552 10,086 13,328 69 1 221,036 Commercial real estate $ 207,794 $ 10,086 $ 13,328 $ 69 $ 1 $ 231,278 Commercial and industrial 46,650 318 1,538 196 — 48,702 Residential real estate 17,023 649 1,375 — 219,740 238,787 Home equity lines of credit 245 — — — 27,539 27,784 Consumer, indirect 72 — — — 880 952 Consumer, other $ 59 $ — $ — $ — $ 3,459 $ 3,518 Consumer $ 131 $ — $ — $ — $ 4,339 $ 4,470 Total acquired loans $ 271,843 $ 11,053 $ 16,241 $ 265 $ 251,619 $ 551,021 Total loans $ 1,165,588 $ 45,539 $ 53,131 $ 624 $ 904,326 $ 2,169,208 Pass Rated (Grades 1 - 4) Watch (Grade 5) Substandard (Grade 6) Doubtful (Grade 7) Not Rated Total Loans (Dollars in thousands) December 31, 2015 Originated loans: Commercial real estate, construction $ 62,225 $ — $ 913 $ — $ 647 $ 63,785 Commercial real estate, other 434,868 18,710 17,595 — 11 471,184 Commercial real estate $ 497,093 $ 18,710 $ 18,508 $ — $ 658 $ 534,969 Commercial and industrial 259,183 23,601 5,344 — 2 288,130 Residential real estate 21,903 1,168 12,282 187 253,243 288,783 Home equity lines of credit 785 — 175 — 73,216 74,176 Consumer, indirect 94 — 3 — 165,223 165,320 Consumer, other 114 — — — 61,699 61,813 Consumer $ 208 $ — $ 3 $ — $ 226,922 $ 227,133 Deposit account overdrafts — — — — 1,448 1,448 Total originated loans $ 779,172 $ 43,479 $ 36,312 $ 187 $ 555,489 $ 1,414,639 Acquired loans: Commercial real estate, construction $ 12,114 $ — $ — $ — $ — $ 12,114 Commercial real estate, other 233,630 13,866 17,521 75 — 265,092 Commercial real estate $ 245,744 $ 13,866 $ 17,521 $ 75 $ — $ 277,206 Commercial and industrial 56,077 3,078 4,238 196 — 63,589 Residential real estate 18,027 1,409 1,786 — 255,550 276,772 Home equity lines of credit 316 — — — 31,937 32,253 Consumer, indirect 130 — — — 1,646 1,776 Consumer, other 126 — — — 6,079 6,205 Consumer $ 256 $ — $ — $ — $ 7,725 $ 7,981 Total acquired loans $ 320,420 $ 18,353 $ 23,545 $ 271 $ 295,212 $ 657,801 Total loans $ 1,099,592 $ 61,832 $ 59,857 $ 458 $ 850,701 $ 2,072,440 Impaired Loans The following table summarizes loans classified as impaired: Unpaid Principal Balance Recorded Investment Total Recorded Investment Average Recorded Investment Interest Income Recognized With Allowance Without Allowance Related Allowance (Dollars in thousands) September 30, 2016 Commercial real estate, construction $ 925 $ — $ 898 $ 898 $ — $ 927 $ 1 Commercial real estate, other 21,497 7,878 13,370 21,248 1,164 18,950 530 Commercial real estate $ 22,422 $ 7,878 $ 14,268 $ 22,146 $ 1,164 $ 19,877 $ 531 Commercial and industrial 4,064 2,832 1,075 3,907 506 3,722 164 Residential real estate 30,087 428 28,770 29,198 122 28,745 978 Home equity lines of credit 1,248 — 1,241 1,241 — 1,002 59 Consumer, indirect 209 — 199 199 — 126 17 Consumer, other 295 — 291 291 — 244 38 Consumer $ 504 $ — $ 490 $ 490 $ — $ 370 $ 55 Total $ 58,325 $ 11,138 $ 45,844 $ 56,982 $ 1,792 $ 53,716 $ 1,787 December 31, 2015 Commercial real estate, construction $ 957 $ — $ 957 $ 957 $ — $ 227 $ 3 Commercial real estate, other 23,430 6,396 12,772 19,168 1,363 13,070 815 Commercial real estate $ 24,387 $ 6,396 $ 13,729 $ 20,125 $ 1,363 $ 13,297 $ 818 Commercial and industrial 5,670 1,224 4,130 5,354 351 4,049 246 Residential real estate 31,304 370 28,834 29,204 106 26,785 1,354 Home equity lines of credit 425 — 419 419 — 325 18 Consumer, indirect 118 — 103 103 — 84 — Consumer, other 265 — 195 195 — 210 28 Consumer $ 383 $ — $ 298 $ 298 $ — $ 294 $ 28 Total $ 62,169 $ 7,990 $ 47,410 $ 55,400 $ 1,820 $ 44,750 $ 2,464 At September 30, 2016 , Peoples' impaired loans shown in the table above included loans that were classified as troubled debt restructurings ("TDRs"). In assessing whether or not a borrower is experiencing financial difficulties, Peoples considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (i) the borrower is currently in payment default on any of the borrower's debt; (ii) a payment default is probable in the foreseeable future without the modification; (iii) the borrower has declared or is in the process of declaring bankruptcy; and (iv) the borrower's projected cash flow is insufficient to satisfy contractual payments due under the original terms of the loan without a modification. Peoples considers all aspects of the modification to loan terms to determine whether or not a concession has been granted to the borrower. Key factors considered by Peoples include the borrower's ability to access funds at a market rate for debt with similar risk characteristics, the significance of the modification relative to the unpaid principal balance or collateral value of the debt, and the significance of a delay in the timing of payments relative to the original contractual terms of the loan. The most common concessions granted by Peoples generally include one or more modifications to the terms of the loan, such as (i) a reduction in the interest rate for the remaining life of the loan, (ii) an extension of the maturity date at an interest rate lower than the current market rate for new loans with similar risk, (iii) a temporary period of interest-only payments, and (iv) a reduction in the contractual payment amount for either a short period or the remaining term of the loan. The following table summarizes the loans that were modified as a TDR during the three and nine months ended September 30 : Three Months Ended Recorded Investment (1) (Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment September 30, 2016 Originated loans: Residential real estate 2 $ 75 $ 75 $ 75 Home equity lines of credit 3 23 23 23 Consumer, indirect 7 78 78 78 Consumer, other 3 34 34 34 Consumer 10 $ 112 $ 112 $ 112 Total originated loans 15 $ 210 $ 210 $ 210 Acquired loans: Commercial real estate, other 1 $ 224 $ 224 $ 224 Residential real estate 2 141 141 141 Total acquired loans 3 $ 365 $ 365 $ 365 September 30, 2015 Originated loans: Commercial real estate, other 2 $ 128 $ 128 $ 128 Commercial and industrial 4 13,670 13,670 13,658 Residential real estate 2 73 73 73 Home equity lines of credit 2 78 78 77 Consumer, indirect 2 31 31 31 Total originated loans 12 $ 13,980 $ 13,980 $ 13,967 Acquired loans: Commercial real estate, other 1 $ 24 $ 24 $ 24 Residential real estate 1 34 33 33 Home equity lines of credit 1 8 8 8 Total acquired loans 3 $ 66 $ 65 $ 65 (1) 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 (1) (Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment September 30, 2016 Originated loans: Commercial real estate, other 1 $ 57 $ 57 $ 56 Commercial and industrial 6 716 724 685 Residential real estate 5 173 173 173 Home equity lines of credit 3 23 23 23 Consumer, indirect 9 107 107 107 Consumer, other 5 46 46 46 Consumer 14 $ 153 $ 153 $ 153 Total originated loans 29 $ 1,122 $ 1,130 $ 1,090 Acquired loans: Commercial real estate, other 1 $ 223 $ 223 $ 223 Residential real estate 11 927 929 923 Home equity lines of credit 3 179 179 173 Consumer, indirect 2 8 8 8 Consumer, other 3 17 17 17 Consumer 5 $ 25 $ 25 $ 25 Total acquired loans 20 $ 1,354 $ 1,356 $ 1,344 September 30, 2015 Originated loans: Commercial real estate, other 2 $ 128 $ 128 $ 128 Commercial and industrial 4 13,670 13,670 13,658 Residential real estate 4 257 256 167 Home equity lines of credit 11 387 387 378 Consumer, indirect 4 45 42 41 Total originated loans 25 $ 14,487 $ 14,483 $ 14,372 Acquired loans: Commercial real estate, other 1 $ 24 $ 24 $ 24 Residential real estate 1 34 33 33 Home equity lines of credit 1 8 8 8 Total acquired loans 3 $ 66 $ 65 $ 65 (1) 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 for the nine months ended September 30 that were modified as a TDR during the last twelve months that subsequently defaulted (i.e., 90 days or more past due following a modification.) September 30, 2016 September 30, 2015 (Dollars in thousands) Number of Contracts Recorded Investment (1) Impact on the Allowance for Loan Losses Number of Contracts Recorded Investment (1) Impact on the Allowance for Loan Losses Originated loans: Commercial real estate, other 1 243 $ — — — — Commercial and industrial 1 173 $ — — — — Total 2 416 — — $ — $ — Acquired loans: Commercial and industrial — $ — $ — 2 196 — Total — $ — $ — 2 $ 196 $ — (1) 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 did not have any acquired loans that were modified as a TDR during the last twelve months that subsequently defaulted. Peoples had no additional commitments to lend additional funds to the related debtors whose terms have been modified in a TDR. Allowance for Originated Loan Losses Changes in the allowance for originated loan losses for the nine months ended September 30 were as follows: (Dollars in thousands) Commercial Real Estate Commercial and Industrial Residential Real Estate Home Equity Lines of Credit Consumer Deposit Account Overdrafts Total Balance, January 1, 2016 $ 7,076 $ 5,382 $ 1,257 $ 732 $ 1,971 $ 121 $ 16,539 Charge-offs (12 ) (1,017 ) (524 ) (58 ) (1,899 ) (544 ) (4,054 ) Recoveries 1,199 250 193 33 910 148 2,733 Net recoveries (charge-offs) 1,187 (767 ) (331 ) (25 ) (989 ) (396 ) (1,321 ) (Recovery of) provision for loan losses (773 ) 1,075 194 (21 ) 1,850 418 2,743 Balance, September 30, 2016 $ 7,490 $ 5,690 $ 1,120 $ 686 $ 2,832 $ 143 $ 17,961 Period-end amount allocated to: Loans individually evaluated for impairment $ 1,164 $ 506 $ 122 $ — $ — $ — $ 1,792 Loans collectively evaluated for impairment 6,326 5,184 998 686 2,832 143 16,169 Ending balance $ 7,490 $ 5,690 $ 1,120 $ 686 $ 2,832 $ 143 $ 17,961 Balance, January 1, 2015 $ 9,825 $ 4,036 $ 1,627 $ 694 $ 1,587 $ 112 $ 17,881 Charge-offs (181 ) (426 ) (537 ) (116 ) (869 ) (566 ) (2,695 ) Recoveries 90 94 206 107 567 134 1,198 Net charge-offs (91 ) (332 ) (331 ) (9 ) (302 ) (432 ) (1,497 ) (Recovery of) provision for loan losses (2,297 ) 7,783 (117 ) 92 518 474 6,453 Balance, September 30, 2015 $ 7,437 $ 11,487 $ 1,179 $ 777 $ 1,803 $ 154 $ 22,837 Period-end amount allocated to: Loans individually evaluated for impairment $ 7 $ 7,193 $ 4 $ — $ — $ — $ 7,204 Loans collectively evaluated for impairment 7,430 4,294 1,175 777 1,803 154 15,633 Ending balance $ 7,437 $ 11,487 $ 1,179 $ 777 $ 1,803 $ 154 $ 22,837 The reduction in the allowance for loan losses allocated to commercial and industrial recorded during the first nine months of 2016 compared to the same period of 2015 was driven by a decrease in the allowance needed for loans individually evaluated for impairment which was offset partially by loan growth. The changes in the residential real estate, home equity lines of credit and consumer categories of the allowance for originated loan losses and the related provision for originated loan losses recorded during the nine months of 2016 compared to the same period in 2015 were driven by net charge-off activity and increases in the size of the respective loan portfolios. Allowance for Acquired Loan Losses Acquired loans are recorded at their fair value as of the acquisition date with no valuation allowance, and monitored for changes in credit quality and subsequent increases or decreases in expected cash flows. Decreases in expected cash flows of acquired credit impaired loans are recognized as an impairment, with the amount of the expected loss included in management's evaluation of the appropriateness of the allowance for loan losses. The methods utilized to estimate the required allowance for loan losses for nonimpaired acquired loans are similar to those utilized for originated loans; however, Peoples records a provision for loan losses only when the computed allowance exceeds the remaining fair value adjustment. As of September 30, 2016 , the expected cash flows for acquired credit impaired loans had decreased from those as of the respective acquisition dates, resulting in Peoples recording provision for loan losses with respect to those acquired loans. The following table presents activity in the allowance for loan losses for acquired loans for the nine months ended September 30 : Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 Purchased credit impaired loans: Balance, beginning of period $ 197 $ — $ 240 $ — Charge-offs (16 ) — (67 ) — Recoveries — — — — Net charge-offs (recoveries) (16 ) — (67 ) — Provision for loan losses 77 303 85 303 Balance, September 30 $ 258 $ 303 $ 258 $ 303 |
Schedule of Financing Receivables, Type | The major classifications of loan balances, excluding loans held for sale, were as follows: (Dollars in thousands) September 30, December 31, 2015 Originated loans: Commercial real estate, construction $ 70,838 $ 63,785 Commercial real estate, other 507,842 471,184 Commercial real estate 578,680 534,969 Commercial and industrial 351,340 288,130 Residential real estate 306,374 288,783 Home equity lines of credit 83,412 74,176 Consumer, indirect 229,334 165,320 Consumer, other 67,973 61,813 Consumer 297,307 227,133 Deposit account overdrafts 1,074 1,448 Total originated loans $ 1,618,187 $ 1,414,639 Acquired loans: Commercial real estate, construction $ 10,242 $ 12,114 Commercial real estate, other 221,036 265,092 Commercial real estate 231,278 277,206 Commercial and industrial 48,702 63,589 Residential real estate 238,787 276,772 Home equity lines of credit 27,784 32,253 Consumer, indirect 952 1,776 Consumer, other 3,518 6,205 Consumer 4,470 7,981 Total acquired loans $ 551,021 $ 657,801 Loans, net of deferred fees and costs $ 2,169,208 $ 2,072,440 |
Schedule of Financing Receivables Acquired with Deteriorated Credit Quality | Peoples has acquired various loans through business combinations for which there was, at acquisition, evidence of deterioration of credit quality since origination, and for which it was probable that all contractually required payments would not be collected. The carrying amounts of these loans included in the loan balances above are summarized as follows: (Dollars in thousands) September 30, December 31, Commercial real estate, other $ 11,391 $ 16,893 Commercial and industrial 2,567 3,040 Residential real estate 24,212 27,155 Consumer 94 193 Total outstanding balance $ 38,264 $ 47,281 Net carrying amount $ 28,292 $ 35,064 |
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities Accretable Yield | Changes in the accretable yield for purchased credit impaired loans for the nine months ended September 30, 2016 were as follows: (Dollars in thousands) Accretable Yield Balance, December 31, 2015 $ 7,042 Reclassification from nonaccretable to accretable 2,014 Accretion (1,430 ) Balance, September 30, 2016 $ 7,626 |
Nonaccrual and Past Due Loans | The recorded investments in loans on nonaccrual status and loans delinquent for 90 days or more and accruing were as follows: Nonaccrual Loans Loans 90+ Days Past Due and Accruing (Dollars in thousands) September 30, December 31, September 30, December 31, Originated loans: Commercial real estate, construction $ 855 $ 921 $ — $ — Commercial real estate, other 9,982 7,041 — — Commercial real estate $ 10,837 $ 7,962 $ — $ — Commercial and industrial 1,468 480 — 680 Residential real estate 3,722 3,057 34 169 Home equity lines of credit 273 321 199 — Consumer, indirect 30 34 82 — Consumer, other 5 58 — 1 Consumer $ 35 $ 92 $ 82 $ 1 Total originated loans $ 16,335 $ 11,912 $ 315 $ 850 Acquired loans: Commercial real estate, other 780 469 1,636 2,425 Commercial and industrial 281 247 452 1,306 Residential real estate 1,713 798 1,758 1,353 Home equity lines of credit 232 98 — 35 Consumer, other 5 7 — — Total acquired loans $ 3,011 $ 1,619 $ 3,846 $ 5,119 Total loans $ 19,346 $ 13,531 $ 4,161 $ 5,969 |
Aging Of The Recorded Investment In Past Due Loans And Leases | The following table presents the aging of the recorded investment in past due loans: Loans Past Due Current Loans Total Loans (Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total September 30, 2016 Originated loans: Commercial real estate, construction $ — $ — $ 855 $ 855 $ 69,983 $ 70,838 Commercial real estate, other 726 1,032 9,381 11,139 496,703 507,842 Commercial real estate $ 726 $ 1,032 $ 10,236 $ 11,994 $ 566,686 $ 578,680 Commercial and industrial 1,083 412 1,415 2,910 348,430 351,340 Residential real estate 2,043 1,094 1,694 4,831 301,543 306,374 Home equity lines of credit 153 46 318 517 82,895 83,412 Consumer, indirect 945 184 82 1,211 228,123 229,334 Consumer, other 291 96 — 387 67,586 67,973 Consumer $ 1,236 $ 280 $ 82 $ 1,598 $ 295,709 $ 297,307 Deposit account overdrafts — — — — 1,074 1,074 Total originated loans $ 5,241 $ 2,864 $ 13,745 $ 21,850 $ 1,596,337 $ 1,618,187 Acquired loans: Commercial real estate, construction $ — $ — $ — $ — $ 10,242 $ 10,242 Commercial real estate, other 623 294 2,293 3,210 217,826 221,036 Commercial real estate $ 623 $ 294 $ 2,293 $ 3,210 $ 228,068 $ 231,278 Commercial and industrial 188 59 733 980 47,722 48,702 Residential real estate 1,269 1,804 2,511 5,584 233,203 238,787 Home equity lines of credit 54 156 178 388 27,396 27,784 Consumer, indirect 27 — — 27 925 952 Consumer, other 32 14 — 46 3,472 3,518 Consumer $ 59 $ 14 $ — $ 73 $ 4,397 $ 4,470 Total acquired loans $ 2,193 $ 2,327 $ 5,715 $ 10,235 $ 540,786 $ 551,021 Total loans $ 7,434 $ 5,191 $ 19,460 $ 32,085 $ 2,137,123 $ 2,169,208 Loans Past Due Current Loans Total Loans (Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total December 31, 2015 Originated loans: Commercial real estate, construction $ 913 $ — $ 8 $ 921 $ 62,864 $ 63,785 Commercial real estate, other 7,260 1,258 379 8,897 462,287 471,184 Commercial real estate $ 8,173 $ 1,258 $ 387 $ 9,818 $ 525,151 $ 534,969 Commercial and industrial 1,437 215 767 2,419 285,711 288,130 Residential real estate 3,124 1,105 1,263 5,492 283,291 288,783 Home equity lines of credit 161 7 104 272 73,904 74,176 Consumer, indirect 790 168 — 958 164,362 165,320 Consumer, other 597 82 32 711 61,102 61,813 Consumer $ 1,387 $ 250 $ 32 $ 1,669 $ 225,464 $ 227,133 Deposit account overdrafts — — — — 1,448 1,448 Total originated loans $ 14,282 $ 2,835 $ 2,553 $ 19,670 $ 1,394,969 $ 1,414,639 Acquired loans: Commercial real estate, construction $ — $ — $ 40 $ 40 $ 12,074 $ 12,114 Commercial real estate, other 1,592 352 2,730 4,674 260,418 265,092 Commercial real estate $ 1,592 $ 352 $ 2,770 $ 4,714 $ 272,492 $ 277,206 Commercial and industrial 177 232 1,553 1,962 61,627 63,589 Residential real estate 4,910 2,480 1,745 9,135 267,637 276,772 Home equity lines of credit 318 20 95 433 31,820 32,253 Consumer, indirect 23 — — 23 1,753 1,776 Consumer, other 67 31 — 98 6,107 6,205 Consumer $ 90 $ 31 $ — $ 121 $ 7,860 $ 7,981 Total acquired loans $ 7,087 $ 3,115 $ 6,163 $ 16,365 $ 641,436 $ 657,801 Total loans $ 21,369 $ 5,950 $ 8,716 $ 36,035 $ 2,036,405 $ 2,072,440 |
Loans By Risk Category | The following table summarizes the risk category of Peoples' loan portfolio based upon the most recent analysis performed: Pass Rated (Grades 1 - 4) Watch (Grade 5) Substandard (Grade 6) Doubtful (Grade 7) Not Rated Total Loans (Dollars in thousands) September 30, 2016 Originated loans: Commercial real estate, construction $ 69,517 $ — $ 855 $ — $ 466 $ 70,838 Commercial real estate, other 483,190 9,242 15,410 — — 507,842 Commercial real estate $ 552,707 $ 9,242 $ 16,265 $ — $ 466 $ 578,680 Commercial and industrial 319,634 24,178 7,512 — 16 351,340 Residential real estate 20,577 1,066 12,975 359 271,397 306,374 Home equity lines of credit 545 — 138 — 82,729 83,412 Consumer, indirect 141 — — — 229,193 229,334 Consumer, other 141 — — — 67,832 67,973 Consumer $ 282 $ — $ — $ — $ 297,025 $ 297,307 Deposit account overdrafts — — — — 1,074 1,074 Total originated loans $ 893,745 $ 34,486 $ 36,890 $ 359 $ 652,707 $ 1,618,187 Acquired loans: Commercial real estate, construction $ 10,242 $ — $ — $ — $ — $ 10,242 Commercial real estate, other 197,552 10,086 13,328 69 1 221,036 Commercial real estate $ 207,794 $ 10,086 $ 13,328 $ 69 $ 1 $ 231,278 Commercial and industrial 46,650 318 1,538 196 — 48,702 Residential real estate 17,023 649 1,375 — 219,740 238,787 Home equity lines of credit 245 — — — 27,539 27,784 Consumer, indirect 72 — — — 880 952 Consumer, other $ 59 $ — $ — $ — $ 3,459 $ 3,518 Consumer $ 131 $ — $ — $ — $ 4,339 $ 4,470 Total acquired loans $ 271,843 $ 11,053 $ 16,241 $ 265 $ 251,619 $ 551,021 Total loans $ 1,165,588 $ 45,539 $ 53,131 $ 624 $ 904,326 $ 2,169,208 Pass Rated (Grades 1 - 4) Watch (Grade 5) Substandard (Grade 6) Doubtful (Grade 7) Not Rated Total Loans (Dollars in thousands) December 31, 2015 Originated loans: Commercial real estate, construction $ 62,225 $ — $ 913 $ — $ 647 $ 63,785 Commercial real estate, other 434,868 18,710 17,595 — 11 471,184 Commercial real estate $ 497,093 $ 18,710 $ 18,508 $ — $ 658 $ 534,969 Commercial and industrial 259,183 23,601 5,344 — 2 288,130 Residential real estate 21,903 1,168 12,282 187 253,243 288,783 Home equity lines of credit 785 — 175 — 73,216 74,176 Consumer, indirect 94 — 3 — 165,223 165,320 Consumer, other 114 — — — 61,699 61,813 Consumer $ 208 $ — $ 3 $ — $ 226,922 $ 227,133 Deposit account overdrafts — — — — 1,448 1,448 Total originated loans $ 779,172 $ 43,479 $ 36,312 $ 187 $ 555,489 $ 1,414,639 Acquired loans: Commercial real estate, construction $ 12,114 $ — $ — $ — $ — $ 12,114 Commercial real estate, other 233,630 13,866 17,521 75 — 265,092 Commercial real estate $ 245,744 $ 13,866 $ 17,521 $ 75 $ — $ 277,206 Commercial and industrial 56,077 3,078 4,238 196 — 63,589 Residential real estate 18,027 1,409 1,786 — 255,550 276,772 Home equity lines of credit 316 — — — 31,937 32,253 Consumer, indirect 130 — — — 1,646 1,776 Consumer, other 126 — — — 6,079 6,205 Consumer $ 256 $ — $ — $ — $ 7,725 $ 7,981 Total acquired loans $ 320,420 $ 18,353 $ 23,545 $ 271 $ 295,212 $ 657,801 Total loans $ 1,099,592 $ 61,832 $ 59,857 $ 458 $ 850,701 $ 2,072,440 |
Schedule Of Impaired Loans | The following table summarizes loans classified as impaired: Unpaid Principal Balance Recorded Investment Total Recorded Investment Average Recorded Investment Interest Income Recognized With Allowance Without Allowance Related Allowance (Dollars in thousands) September 30, 2016 Commercial real estate, construction $ 925 $ — $ 898 $ 898 $ — $ 927 $ 1 Commercial real estate, other 21,497 7,878 13,370 21,248 1,164 18,950 530 Commercial real estate $ 22,422 $ 7,878 $ 14,268 $ 22,146 $ 1,164 $ 19,877 $ 531 Commercial and industrial 4,064 2,832 1,075 3,907 506 3,722 164 Residential real estate 30,087 428 28,770 29,198 122 28,745 978 Home equity lines of credit 1,248 — 1,241 1,241 — 1,002 59 Consumer, indirect 209 — 199 199 — 126 17 Consumer, other 295 — 291 291 — 244 38 Consumer $ 504 $ — $ 490 $ 490 $ — $ 370 $ 55 Total $ 58,325 $ 11,138 $ 45,844 $ 56,982 $ 1,792 $ 53,716 $ 1,787 December 31, 2015 Commercial real estate, construction $ 957 $ — $ 957 $ 957 $ — $ 227 $ 3 Commercial real estate, other 23,430 6,396 12,772 19,168 1,363 13,070 815 Commercial real estate $ 24,387 $ 6,396 $ 13,729 $ 20,125 $ 1,363 $ 13,297 $ 818 Commercial and industrial 5,670 1,224 4,130 5,354 351 4,049 246 Residential real estate 31,304 370 28,834 29,204 106 26,785 1,354 Home equity lines of credit 425 — 419 419 — 325 18 Consumer, indirect 118 — 103 103 — 84 — Consumer, other 265 — 195 195 — 210 28 Consumer $ 383 $ — $ 298 $ 298 $ — $ 294 $ 28 Total $ 62,169 $ 7,990 $ 47,410 $ 55,400 $ 1,820 $ 44,750 $ 2,464 |
Troubled Debt Restructurings on Financing Receivables | The following table summarizes the loans that were modified as a TDR during the three and nine months ended September 30 : Three Months Ended Recorded Investment (1) (Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment September 30, 2016 Originated loans: Residential real estate 2 $ 75 $ 75 $ 75 Home equity lines of credit 3 23 23 23 Consumer, indirect 7 78 78 78 Consumer, other 3 34 34 34 Consumer 10 $ 112 $ 112 $ 112 Total originated loans 15 $ 210 $ 210 $ 210 Acquired loans: Commercial real estate, other 1 $ 224 $ 224 $ 224 Residential real estate 2 141 141 141 Total acquired loans 3 $ 365 $ 365 $ 365 September 30, 2015 Originated loans: Commercial real estate, other 2 $ 128 $ 128 $ 128 Commercial and industrial 4 13,670 13,670 13,658 Residential real estate 2 73 73 73 Home equity lines of credit 2 78 78 77 Consumer, indirect 2 31 31 31 Total originated loans 12 $ 13,980 $ 13,980 $ 13,967 Acquired loans: Commercial real estate, other 1 $ 24 $ 24 $ 24 Residential real estate 1 34 33 33 Home equity lines of credit 1 8 8 8 Total acquired loans 3 $ 66 $ 65 $ 65 (1) 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 (1) (Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment September 30, 2016 Originated loans: Commercial real estate, other 1 $ 57 $ 57 $ 56 Commercial and industrial 6 716 724 685 Residential real estate 5 173 173 173 Home equity lines of credit 3 23 23 23 Consumer, indirect 9 107 107 107 Consumer, other 5 46 46 46 Consumer 14 $ 153 $ 153 $ 153 Total originated loans 29 $ 1,122 $ 1,130 $ 1,090 Acquired loans: Commercial real estate, other 1 $ 223 $ 223 $ 223 Residential real estate 11 927 929 923 Home equity lines of credit 3 179 179 173 Consumer, indirect 2 8 8 8 Consumer, other 3 17 17 17 Consumer 5 $ 25 $ 25 $ 25 Total acquired loans 20 $ 1,354 $ 1,356 $ 1,344 September 30, 2015 Originated loans: Commercial real estate, other 2 $ 128 $ 128 $ 128 Commercial and industrial 4 13,670 13,670 13,658 Residential real estate 4 257 256 167 Home equity lines of credit 11 387 387 378 Consumer, indirect 4 45 42 41 Total originated loans 25 $ 14,487 $ 14,483 $ 14,372 Acquired loans: Commercial real estate, other 1 $ 24 $ 24 $ 24 Residential real estate 1 34 33 33 Home equity lines of credit 1 8 8 8 Total acquired loans 3 $ 66 $ 65 $ 65 (1) 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. |
Troubled Debt Restructurings during prior 12 months that subsequently defaulted | The following table presents those loans for the nine months ended September 30 that were modified as a TDR during the last twelve months that subsequently defaulted (i.e., 90 days or more past due following a modification.) September 30, 2016 September 30, 2015 (Dollars in thousands) Number of Contracts Recorded Investment (1) Impact on the Allowance for Loan Losses Number of Contracts Recorded Investment (1) Impact on the Allowance for Loan Losses Originated loans: Commercial real estate, other 1 243 $ — — — — Commercial and industrial 1 173 $ — — — — Total 2 416 — — $ — $ — Acquired loans: Commercial and industrial — $ — $ — 2 196 — Total — $ — $ — 2 $ 196 $ — (1) 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. |
Summary Of Activity In Allowance For Loan And Lease Losses | Changes in the allowance for originated loan losses for the nine months ended September 30 were as follows: (Dollars in thousands) Commercial Real Estate Commercial and Industrial Residential Real Estate Home Equity Lines of Credit Consumer Deposit Account Overdrafts Total Balance, January 1, 2016 $ 7,076 $ 5,382 $ 1,257 $ 732 $ 1,971 $ 121 $ 16,539 Charge-offs (12 ) (1,017 ) (524 ) (58 ) (1,899 ) (544 ) (4,054 ) Recoveries 1,199 250 193 33 910 148 2,733 Net recoveries (charge-offs) 1,187 (767 ) (331 ) (25 ) (989 ) (396 ) (1,321 ) (Recovery of) provision for loan losses (773 ) 1,075 194 (21 ) 1,850 418 2,743 Balance, September 30, 2016 $ 7,490 $ 5,690 $ 1,120 $ 686 $ 2,832 $ 143 $ 17,961 Period-end amount allocated to: Loans individually evaluated for impairment $ 1,164 $ 506 $ 122 $ — $ — $ — $ 1,792 Loans collectively evaluated for impairment 6,326 5,184 998 686 2,832 143 16,169 Ending balance $ 7,490 $ 5,690 $ 1,120 $ 686 $ 2,832 $ 143 $ 17,961 Balance, January 1, 2015 $ 9,825 $ 4,036 $ 1,627 $ 694 $ 1,587 $ 112 $ 17,881 Charge-offs (181 ) (426 ) (537 ) (116 ) (869 ) (566 ) (2,695 ) Recoveries 90 94 206 107 567 134 1,198 Net charge-offs (91 ) (332 ) (331 ) (9 ) (302 ) (432 ) (1,497 ) (Recovery of) provision for loan losses (2,297 ) 7,783 (117 ) 92 518 474 6,453 Balance, September 30, 2015 $ 7,437 $ 11,487 $ 1,179 $ 777 $ 1,803 $ 154 $ 22,837 Period-end amount allocated to: Loans individually evaluated for impairment $ 7 $ 7,193 $ 4 $ — $ — $ — $ 7,204 Loans collectively evaluated for impairment 7,430 4,294 1,175 777 1,803 154 15,633 Ending balance $ 7,437 $ 11,487 $ 1,179 $ 777 $ 1,803 $ 154 $ 22,837 |
Allowance for Loan Losses Acquired Loans [Table Text Block] | Three Months Ended Nine Months Ended (Dollars in thousands) September 30, 2016 September 30, 2015 September 30, 2016 September 30, 2015 Purchased credit impaired loans: Balance, beginning of period $ 197 $ — $ 240 $ — Charge-offs (16 ) — (67 ) — Recoveries — — — — Net charge-offs (recoveries) (16 ) — (67 ) — Provision for loan losses 77 303 85 303 Balance, September 30 $ 258 $ 303 $ 258 $ 303 |