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 central and eastern Kentucky. Acquired loans consist of loans purchased in 2012 or thereafter. Loans that were acquired and subsequently re-underwritten are reported as originated upon execution of such credit actions (for example, renewals and increases in lines of credit). 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) June 30, December 31, 2018 Originated loans: Commercial real estate, construction $ 102,904 $ 124,013 Commercial real estate, other 641,061 632,200 Commercial real estate 743,965 756,213 Commercial and industrial 548,460 530,207 Residential real estate 299,173 296,860 Home equity lines of credit 90,374 93,326 Consumer, indirect 419,595 407,167 Consumer, direct 72,209 71,674 Consumer 491,804 478,841 Deposit account overdrafts 676 583 Total originated loans $ 2,174,452 $ 2,156,030 Acquired loans: Commercial real estate, construction $ 6,775 $ 12,404 Commercial real estate, other 201,909 184,711 Commercial real estate 208,684 197,115 Commercial and industrial 51,506 35,537 Residential real estate 348,439 296,937 Home equity lines of credit 41,262 40,653 Consumer, indirect 90 136 Consumer, direct 9,100 2,370 Consumer 9,190 2,506 Total acquired loans $ 659,081 $ 572,748 Total loans $ 2,833,533 $ 2,728,778 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 purchased credit impaired loans included in the loan balances above are summarized as follows: (Dollars in thousands) June 30, December 31, Commercial real estate $ 13,116 $ 11,955 Commercial and industrial 4,479 1,287 Residential real estate 23,509 20,062 Consumer 640 58 Total outstanding balance $ 41,744 $ 33,362 Net carrying amount $ 28,125 $ 22,475 Changes in the accretable yield for purchased credit impaired loans for the six months ended June 30 were as follows: (Dollars in thousands) June 30, June 30, Balance, beginning of period $ 8,955 $ 6,704 Additions: ASB Financial Corp. — 2,415 First Prestonsburg Bancshares Inc. 3,853 — Accretion (1,148 ) (897 ) Balance, June 30 $ 11,660 $ 8,222 The fair value of newly acquired loans is determined at the time of acquisition and Peoples completes annual re-estimations of cash flows on acquired purchased credit impaired loans in August of each year. At the end of each quarter, Peoples evaluates factors to determine if a material change has occurred in acquired purchased credit impaired loans, and if a re-estimation is needed. Factors evaluated to determine if a re-estimation is needed include changes in: risk ratings, maturity dates, charge-offs, payoffs, nonaccrual status, loans that have become past due and actual cash flows compared to the projected cash flows from the last re-estimation. Peoples evaluates these changes quarterly and compares the current status or activity to those at the previous cash flow re-estimation date, and the related materiality of the changes. As of June 30, 2019 , these changes, when compared to the total loan portfolio and the factors at the last re-estimation date, would not have a material impact on amounts recorded since the last re-estimation. Peoples completed a re-estimation of cash flows on purchased credit impaired loans in August 2018. Cash flows expected to be collected on 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 re-forecasting future estimated cash flows, credit loss expectations are adjusted as necessary. Pledged Loans Peoples pledges certain loans secured by 1-4 family and multifamily residential mortgages under a blanket collateral agreement to secure borrowings from the FHLB of Cincinnati. The amount of loans pledged under this blanket collateral agreement totaled $488.4 million and $505.7 million at June 30, 2019 and December 31, 2018 , respectively. Peoples also pledges commercial loans to secure borrowings with the FRB of Cleveland. The outstanding balances of these loans totaled $153.0 million and $180.9 million at June 30, 2019 and December 31, 2018 , 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) June 30, December 31, June 30, December 31, Originated loans: Commercial real estate, construction $ 688 $ 710 $ — $ — Commercial real estate, other 6,241 6,565 — 786 Commercial real estate 6,929 7,275 — 786 Commercial and industrial 2,044 1,673 — — Residential real estate 3,816 4,105 438 398 Home equity lines of credit 452 596 53 7 Consumer, indirect 535 480 — — Consumer, direct 12 56 — — Consumer 547 536 — — Total originated loans $ 13,788 $ 14,185 $ 491 $ 1,191 Acquired loans: Commercial real estate, construction $ — $ — $ 230 $ — Commercial real estate, other 308 319 557 15 Commercial real estate 308 319 787 15 Commercial and industrial 36 36 261 18 Residential real estate 1,716 1,921 1,853 1,032 Home equity lines of credit 742 637 — — Consumer, direct 1 — 57 — Total acquired loans $ 2,803 $ 2,913 $ 2,958 $ 1,065 Total loans $ 16,591 $ 17,098 $ 3,449 $ 2,256 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 June 30, 2019 Originated loans: Commercial real estate, construction $ — $ — $ 688 $ 688 $ 102,216 $ 102,904 Commercial real estate, other — — 6,050 6,050 635,011 641,061 Commercial real estate — — 6,738 6,738 737,227 743,965 Commercial and industrial 606 3 1,937 2,546 545,914 548,460 Residential real estate 1,391 1,177 2,478 5,046 294,127 299,173 Home equity lines of credit 387 18 461 866 89,508 90,374 Consumer, indirect 3,024 216 111 3,351 416,244 419,595 Consumer, direct 306 17 2 325 71,884 72,209 Consumer 3,330 233 113 3,676 488,128 491,804 Deposit account overdrafts — — — — 676 676 Total originated loans $ 5,714 $ 1,431 $ 11,727 $ 18,872 $ 2,155,580 $ 2,174,452 Acquired loans: Commercial real estate, construction $ — $ — $ 230 $ 230 $ 6,545 $ 6,775 Commercial real estate, other 661 728 773 2,162 199,747 201,909 Commercial real estate 661 728 1,003 2,392 206,292 208,684 Commercial and industrial 488 60 297 845 50,661 51,506 Residential real estate 1,685 2,075 2,700 6,460 341,979 348,439 Home equity lines of credit 228 109 563 900 40,362 41,262 Consumer, indirect — — — — 90 90 Consumer, direct 88 52 57 197 8,903 9,100 Consumer 88 52 57 197 8,993 9,190 Total acquired loans $ 3,150 $ 3,024 $ 4,620 $ 10,794 $ 648,287 $ 659,081 Total loans $ 8,864 $ 4,455 $ 16,347 $ 29,666 $ 2,803,867 $ 2,833,533 Loans Past Due Current Loans Total Loans (Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total December 31, 2018 Originated loans: Commercial real estate, construction $ — $ — $ 710 $ 710 $ 123,303 $ 124,013 Commercial real estate, other 12 736 7,151 7,899 624,301 632,200 Commercial real estate 12 736 7,861 8,609 747,604 756,213 Commercial and industrial 1,678 3,520 1,297 6,495 523,712 530,207 Residential real estate 4,457 1,319 2,595 8,371 288,489 296,860 Home equity lines of credit 531 30 431 992 92,334 93,326 Consumer, indirect 3,266 488 165 3,919 403,248 407,167 Consumer, direct 308 50 42 400 71,274 71,674 Consumer 3,574 538 207 4,319 474,522 478,841 Deposit account overdrafts — — — — 583 583 Total originated loans $ 10,252 $ 6,143 $ 12,391 $ 28,786 $ 2,127,244 $ 2,156,030 Acquired loans: Commercial real estate, construction $ 511 $ — $ — $ 511 $ 11,893 $ 12,404 Commercial real estate, other 523 457 233 1,213 183,498 184,711 Commercial real estate 1,034 457 233 1,724 195,391 197,115 Commercial and industrial 111 13 18 142 35,395 35,537 Residential real estate 6,124 1,823 1,885 9,832 287,105 296,937 Home equity lines of credit 238 233 534 1,005 39,648 40,653 Consumer, indirect — — — — 136 136 Consumer, direct 23 6 — 29 2,341 2,370 Consumer 23 6 — 29 2,477 2,506 Total acquired loans $ 7,530 $ 2,532 $ 2,670 $ 12,732 $ 560,016 $ 572,748 Total loans $ 17,782 $ 8,675 $ 15,061 $ 41,518 $ 2,687,260 $ 2,728,778 Delinquency trends remained stable, as 99.0% of Peoples' portfolio was considered “current” at June 30, 2019 , compared to 98.5% at December 31, 2018 . Credit Quality Indicators As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2018 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. “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 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, classification of the loan 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 loan 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. 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 based upon the most recent analysis performed: Pass Rated (Grades 1 - 4) Special Mention (Grade 5) Substandard (Grade 6) Doubtful (Grade 7) Not Rated Total Loans (Dollars in thousands) June 30, 2019 Originated loans: Commercial real estate, construction $ 100,231 $ — $ 1,431 $ — $ 1,242 $ 102,904 Commercial real estate, other 622,966 7,673 10,416 6 — 641,061 Commercial real estate 723,197 7,673 11,847 6 1,242 743,965 Commercial and industrial 525,738 5,807 16,915 — — 548,460 Residential real estate 13,752 201 14,682 249 270,289 299,173 Home equity lines of credit 17 — — — 90,357 90,374 Consumer, indirect — — — — 419,595 419,595 Consumer, direct 24 — — — 72,185 72,209 Consumer 24 — — — 491,780 491,804 Deposit account overdrafts — — — — 676 676 Total originated loans $ 1,262,728 $ 13,681 $ 43,444 $ 255 $ 854,344 $ 2,174,452 Acquired loans: Commercial real estate, construction $ 4,338 $ 1,636 $ 801 $ — $ — $ 6,775 Commercial real estate, other 178,425 12,700 10,693 91 — 201,909 Commercial real estate 182,763 14,336 11,494 91 — 208,684 Commercial and industrial 43,171 3,265 5,038 32 — 51,506 Residential real estate 17,634 2,686 2,564 130 325,425 348,439 Home equity lines of credit 81 — — — 41,181 41,262 Consumer, indirect 1 — — — 89 90 Consumer, direct 19 — — — 9,081 9,100 Consumer 20 — — — 9,170 9,190 Total acquired loans $ 243,669 $ 20,287 $ 19,096 $ 253 $ 375,776 $ 659,081 Total loans $ 1,506,397 $ 33,968 $ 62,540 $ 508 $ 1,230,120 $ 2,833,533 Pass Rated (Grades 1 - 4) Special Mention (Grade 5) Substandard (Grade 6) Doubtful (Grade 7) Not Rated Total Loans (Dollars in thousands) December 31, 2018 Originated loans: Commercial real estate, construction $ 121,457 $ — $ 1,472 $ — $ 1,084 $ 124,013 Commercial real estate, other 612,099 10,898 9,203 — — 632,200 Commercial real estate 733,556 10,898 10,675 — 1,084 756,213 Commercial and industrial 476,290 45,990 7,692 — 235 530,207 Residential real estate 14,229 500 11,971 409 269,751 296,860 Home equity lines of credit 453 — — — 92,873 93,326 Consumer, indirect 8 — — — 407,159 407,167 Consumer, direct 30 — — — 71,644 71,674 Consumer 38 — — — 478,803 478,841 Deposit account overdrafts — — — — 583 583 Total originated loans $ 1,224,566 $ 57,388 $ 30,338 $ 409 $ 843,329 $ 2,156,030 Acquired loans: Commercial real estate, construction $ 8,976 $ 1,795 $ 1,633 $ — $ — $ 12,404 Commercial real estate, other 169,260 7,241 8,114 96 — 184,711 Commercial real estate 178,236 9,036 9,747 96 — 197,115 Commercial and industrial 32,471 2,008 1,058 — — 35,537 Residential real estate 17,370 1,938 2,033 137 275,459 296,937 Home equity lines of credit 33 — — — 40,620 40,653 Consumer, indirect 4 — — — 132 136 Consumer, direct 31 — — — 2,339 2,370 Consumer 35 — — — 2,471 2,506 Total acquired loans $ 228,145 $ 12,982 $ 12,838 $ 233 $ 318,550 $ 572,748 Total loans $ 1,452,711 $ 70,370 $ 43,176 $ 642 $ 1,161,879 $ 2,728,778 In the first six months of 2019, Peoples' classified loans, which are loans categorized as substandard or doubtful, increased compared to the balances at December 31, 2018 mostly due to downgrades during the period combined with loans acquired in the First Prestonsburg merger, which were partially offset by paydowns on classified loans. At June 30, 2019, criticized loans, which are those categorized as special mention, substandard or doubtful, declined compared to the balance at December 31, 2018, largely due to the upgrade of two commercial relationships, partially offset by loans acquired in the First Prestonsburg merger. At June 30, 2019 , Peoples had a total of $ 2.2 million of loans secured by residential real estate mortgages that were in the process of foreclosure. 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) June 30, 2019 Commercial real estate, construction $ 1,793 $ — $ 1,706 $ 1,706 $ — $ 1,728 $ 29 Commercial real estate, other 15,546 4,753 10,296 15,049 520 14,722 250 Commercial real estate 17,339 4,753 12,002 16,755 520 16,450 279 Commercial and industrial 4,265 1,485 2,731 4,216 449 3,226 47 Residential real estate 22,195 387 23,170 23,557 53 22,086 629 Home equity lines of credit 1,469 419 1,051 1,470 68 1,343 40 Consumer, indirect 445 96 356 452 23 413 15 Consumer, direct 464 49 415 464 18 207 9 Consumer 909 145 771 916 41 620 24 Total $ 46,177 $ 7,189 $ 39,725 $ 46,914 $ 1,131 $ 43,725 $ 1,019 December 31, 2018 Commercial real estate, construction $ 2,376 $ — $ 2,376 $ 2,376 $ — $ 1,732 $ 74 Commercial real estate, other 15,464 274 14,946 15,220 119 14,043 455 Commercial real estate 17,840 274 17,322 17,596 119 15,775 529 Commercial and industrial 3,305 790 2,436 3,226 157 2,423 72 Residential real estate 25,990 644 24,034 24,678 154 22,769 1,134 Home equity lines of credit 2,291 424 1,869 2,293 73 1,832 109 Consumer, indirect 496 — 503 503 — 278 15 Consumer, direct 79 22 57 79 6 63 20 Consumer 575 22 560 582 6 341 35 Total $ 50,001 $ 2,154 $ 46,221 $ 48,375 $ 509 $ 43,140 $ 1,879 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 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 months ended June 30 : Three Months Ended Recorded Investment (a) (Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment June 30, 2019 Originated loans: Residential real estate 1 $ 37 $ 37 $ 37 Home equity lines of credit 2 60 60 60 Consumer, indirect 7 110 110 110 Consumer, direct 3 41 41 41 Consumer 10 151 151 151 Total originated loans 13 $ 248 $ 248 $ 248 Acquired loans: Commercial real estate, other 7 $ 725 $ 699 $ 700 Commercial and industrial 4 1,259 1,259 1,259 Residential real estate 35 1,823 1,823 1,823 Home equity lines of credit 7 113 113 113 Consumer, direct 16 340 340 340 Total acquired loans 69 $ 4,260 $ 4,234 $ 4,235 June 30, 2018 Originated loans: Residential real estate 5 $ 717 $ 717 $ 717 Home equity lines of credit 3 61 61 61 Consumer, indirect 14 230 230 230 Consumer, direct 5 27 27 27 Consumer 19 257 257 257 Total originated loans 27 $ 1,035 $ 1,035 $ 1,035 Acquired loans: Residential real estate 11 $ 720 $ 720 $ 720 Home equity lines of credit 4 86 86 86 Consumer, direct 3 57 57 57 Total acquired loans 18 $ 863 $ 863 $ 863 (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. Six Months Ended Recorded Investment (a) (Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment June 30, 2019 Originated loans: Commercial and industrial 2 $ 38 $ 38 $ 35 Residential real estate 3 436 440 437 Home equity lines of credit 4 139 139 139 Consumer, indirect 8 123 123 123 Consumer, direct 5 69 69 67 Consumer 13 192 192 190 Total originated loans 22 $ 805 $ 809 $ 801 Acquired loans: Commercial real estate, other 7 $ 724 $ 699 $ 700 Commercial and industrial 4 1,259 1,259 1,259 Residential real estate 36 1,847 1,847 1,842 Home equity lines of credit 9 179 179 178 Consumer, direct 16 340 340 340 Total acquired loans 72 $ 4,349 $ 4,324 $ 4,319 June 30, 2018 Originated loans: Residential real estate 7 $ 910 $ 910 $ 911 Home equity lines of credit 3 61 61 61 Consumer, indirect 21 316 316 302 Consumer, direct 7 31 31 31 Consumer 28 347 347 333 Total originated loans 38 $ 1,318 $ 1,318 $ 1,305 Acquired loans: Commercial real estate, other 1 $ 50 $ 50 $ 48 Residential real estate 13 989 989 989 Home equity lines of credit 4 86 86 86 Consumer, direct 3 57 57 57 Total acquired loans 21 $ 1,182 $ 1,182 $ 1,180 (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 acquired loans modified in a TDR during the year that subsequently defaulted (i.e., were 90 days or more past due following a modification) during the six-month periods ended June 30: June 30, 2019 June 30, 2018 (Dollars in thousands) Number of Contracts Recorded Investment (a) Impact on the Allowance for Loan Losses Number of Contracts Recorded Investment (a) Impact on the Allowance for Loan Losses Acquired loans: Consumer, direct 1 $ 34 $ — — $ — $ — Total 1 $ 34 $ — — $ — $ — (a) The amount shown is 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 originated loans that were modified as a TDR during the last twelve months that subsequently defaulted. Peoples had no 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 six months ended June 30 were as follows: (Dollars in thousands) Commercial Real Estate Commercial and Industrial Residential Real Estate Home Equity Lines of Credit Consumer Indirect Consumer Direct Deposit Account Overdrafts Total Balance, January 1, 2019 $ 8,003 $ 6,178 $ 1,214 $ 618 $ 3,214 $ 351 $ 81 $ 19,659 Charge-offs (153 ) (63 ) (176 ) (9 ) (819 ) (96 ) (349 ) (1,665 ) Recoveries 12 2,012 133 2 162 40 106 2,467 Net (charge-offs) recoveries (141 ) 1,949 (43 ) (7 ) (657 ) (56 ) (243 ) 802 Provision for (recoveries of) loan losses 383 (930 ) 13 (13 ) 615 47 248 363 Balance, June 30, 2019 $ 8,245 $ 7,197 $ 1,184 $ 598 $ 3,172 $ 342 $ 86 $ 20,824 Balance, January 1, 2018 $ 7,797 $ 5,813 $ 904 $ 693 $ 2,944 $ 464 $ 70 $ 18,685 Charge-offs (849 ) (38 ) (227 ) (57 ) (1,479 ) (219 ) (420 ) (3,289 ) Recoveries 43 — 67 9 272 84 116 591 Net charge-offs (806 ) (38 ) (160 ) (48 ) (1,207 ) (135 ) (304 ) (2,698 ) Provision for (recovery of) loan losses 1,280 (410 ) 261 (27 ) 1,602 136 329 3,171 Balance, June 30, 2018 $ 8,271 $ 5,365 $ 1,005 $ 618 $ 3,339 $ 465 $ 95 $ 19,158 The following table details the recorded investment and allowance for originated loan losses disaggregated based on impairment method: (Dollars in thousands) Commercial Real Estate Commercial and Industrial Residential Real Estate Home Equity Lines of Credit Consumer Indirect Consumer Direct Deposit Account Overdrafts Total June 30, 2019 Allowance for loan losses allocated to: Loans individually evaluated for impairment $ 520 $ 449 $ 53 $ 68 $ 23 $ 18 $ — $ 1,131 Loans collectively evaluated for impairment 7,725 6,748 1,131 530 3,149 324 86 19,693 Ending balance $ 8,245 $ 7,197 $ 1,184 $ 598 $ 3,172 $ 342 $ 86 $ 20,824 Recorded investment in: Loans individually evaluated for impairment $ 16,755 $ 4,216 $ 23,557 $ 1,470 $ 452 $ 464 $ — $ 46,914 Loans collectively evaluated for impairment 727,210 544,244 275,616 88,904 419,143 71,745 676 2,127,538 Ending balance $ 743,965 $ 548,460 $ 299,173 $ 90,374 $ 419,595 $ 72,209 $ 676 $ 2,174,452 December 31, 2018 Allowance for loan losses allocated to: Loans individually evaluated for impairment $ 119 $ 157 $ 154 $ 73 $ — $ 6 $ — $ 509 Loans collectively evaluated for impairment 7,884 6,021 1,060 545 3,214 345 81 19,150 Ending balance $ 8,003 $ 6,178 $ 1,214 $ 618 $ 3,214 $ 351 $ 81 $ 19,659 Recorded investment in: Loans individually evaluated for impairment $ 17,596 $ 3,226 $ 24,678 $ 2,293 $ 503 $ 79 $ — $ 48,375 Loans collectively evaluated for impairment 738,617 526,981 272,182 91,033 406,664 71,595 583 2,107,655 Ending balance $ 756,213 $ 530,207 $ 296,860 $ 93,326 $ 407,167 $ 71,674 $ 583 $ 2,156,030 June 30, 2018 Allowance for loan losses allocated to: Loans individually evaluated for impairment $ 1 $ 191 $ 47 $ 14 $ 31 $ 45 $ — $ 329 Loans collectively evaluated for impairment 8,270 5,174 958 604 3,308 420 95 18,829 Ending balance $ 8,271 $ 5,365 $ 1,005 $ 618 $ 3,339 $ 465 $ 95 $ 19,158 Recorded investment in: Loans individually evaluated for impairment $ 19,162 $ 3,173 $ 26,497 $ 1,736 $ 441 $ 150 $ — $ 51,159 Loans collectively evaluated for impairment 737,051 468,097 273,437 88,221 372,943 71,395 860 2,012,004 Ending balance $ 756,213 $ 471,270 $ 299,934 $ 89,957 $ 373,384 $ 71,545 $ 860 $ 2,063,163 Allowance for Loan Losses for Acquired Loans 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 purchased 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 non-impaired 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. The following table presents activity in the allowance for loan losses for acquired loans: Three Months Ended Six Months Ended (Dollars in thousands) June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Non-impaired loans: Balance, beginning of period $ 380 $ — $ 383 $ — Charge-offs — — (3 ) — Balance, end of period $ 380 $ — $ 380 $ — Purchased credit impaired loans: Balance, beginning of period $ 153 $ 108 $ 153 $ 108 Balance, end of period $ 153 $ 108 $ 153 $ 108 The allowance for loan losses for non-impaired acquired loans was established at December 31, 2018. |