| 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 subsidiary. Throughout this Form 10-K, loans and leases are referred to as “total loans” and “loans held for investment.” The major classifications of loan balances (in each case, net of deferred fees and costs) excluding loans held for sale, were as follows at December 31: (Dollars in thousands) 2023 2022 Construction $ 364,019 $ 246,941 Commercial real estate, other 2,196,957 1,423,518 Commercial and industrial 1,184,986 892,634 Premium finance 203,177 159,197 Leases 414,060 345,131 Residential real estate 791,095 723,360 Home equity lines of credit 208,675 177,858 Consumer, indirect 666,472 629,426 Consumer, direct 128,769 108,363 Deposit account overdrafts 986 722 Total loans, at amortized cost $ 6,159,196 $ 4,707,150 Net deferred loan origination costs were $21.7 million and $20.5 million at December 31, 2023 and 2022, respectively. Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Consolidated Balance Sheets, with no recorded allowance for credit losses. Total interest receivable on loans was $24.5 million at December 31, 2023 and $15.4 million at December 31, 2022. Nonaccrual and Past Due Loans A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due. The amortized cost of loans on nonaccrual status and loans delinquent for 90 days or more and accruing were as follows at December 31: 2023 2022 (Dollars in thousands) Nonaccrual (a) Accruing Loans 90+ Days Past Due Nonaccrual (a) Accruing Loans 90+ Days Past Due Construction $ — $ — $ 12 $ — Commercial real estate, other 2,816 78 12,121 167 Commercial and industrial 2,758 316 3,462 130 Premium finance — 1,355 — 504 Leases 8,436 3,826 3,178 3,041 Residential real estate 7,921 877 9,496 917 Home equity lines of credit 1,022 171 820 58 Consumer, indirect 2,412 68 2,176 — Consumer, direct 112 25 208 25 Total loans, at amortized cost $ 25,477 $ 6,716 $ 31,473 $ 4,842 (a) There were $1.2 million of nonaccrual loans for which there was no allowance for credit losses at December 31, 2023 and $1.4 million of such loans at December 31, 2022. The amount of interest income recognized on loans past due 90 days or more during 2023 and 2022 was $0.8 million and $1.7 million, respectively. The following tables present the aging of the recorded investment in past due loans at December 31: Loans Past Due Current Total (Dollars in thousands) 30 – 59 days 60 – 89 days 90 + Days Total 2023 Construction $ 13 $ 52 $ — $ 65 $ 363,954 $ 364,019 Commercial real estate, other 2,728 4,556 1,572 8,856 2,188,101 2,196,957 Commercial and industrial 1,717 1,491 3,052 6,260 1,178,726 1,184,986 Premium finance 1,288 867 1,355 3,510 199,667 203,177 Leases 12,743 4,932 12,014 29,689 384,371 414,060 Residential real estate 14,021 2,733 4,481 21,235 769,860 791,095 Home equity lines of credit 1,561 691 683 2,935 205,740 208,675 Consumer, indirect 7,488 1,550 1,230 10,268 656,204 666,472 Consumer, direct 536 282 43 861 127,908 128,769 Deposit account overdrafts — — — — 986 986 Total loans, at amortized cost $ 42,095 $ 17,154 $ 24,430 $ 83,679 $ 6,075,517 $ 6,159,196 2022 Construction $ 196 $ 161 $ 9 $ 366 $ 246,575 $ 246,941 Commercial real estate, other 2,279 1,051 10,370 13,700 1,409,818 1,423,518 Commercial and industrial 2,522 289 3,449 6,260 886,374 892,634 Premium finance 646 816 504 1,966 157,231 159,197 Leases 6,074 1,921 6,218 14,213 330,918 345,131 Residential real estate 10,113 2,128 5,519 17,760 705,600 723,360 Home equity lines of credit 987 149 552 1,688 176,170 177,858 Consumer, indirect 5,866 1,048 921 7,835 621,591 629,426 Consumer, direct 703 70 108 881 107,482 108,363 Deposit account overdrafts — — — — 722 722 Total loans, at amortized cost $ 29,386 $ 7,633 $ 27,650 $ 64,669 $ 4,642,481 $ 4,707,150 Delinquency trends remained stable as 98.6% of Peoples’ portfolio was considered “current” both at December 31, 2023, and at December 31, 2022. Pledged Loans Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, commercial real estate and home equity lines of credit under a blanket collateral agreement to secure borrowings from the FHLB. Peoples also has pledged commercial loans to secure borrowings with the FRB. Loans pledged at December 31 are summarized in the following table: (Dollars in thousands) 2023 2022 Loans pledged to FHLB $ 1,206,134 $ 783,843 Loans pledged to FRB 419,245 339,005 Related Party Loans In the normal course of its business, Peoples Bank has granted loans to certain directors and officers of Peoples, including their affiliates, families and entities in which they are principal owners. At December 31, 2023, no related party loan was past due 90 or more days or on nonaccrual status. Activity in related party loans is presented in the table below. Other changes primarily consist of changes in related party status, and the addition and exit of directors during the year, as applicable. (Dollars in thousands) Balance, December 31, 2022 $ 27,372 Acquired loans 18,892 New loans and disbursements 466 Repayments (215) No longer related party (a) (26,696) Other changes 347 Balance, December 31, 2023 $ 20,166 (a) Two directors exited the company and therefore were no longer considered related parties. Quality Indicators As discussed in “Note 1 Summary of Significant Accounting Policies,” Peoples categorizes the majority of its loans into risk categories based upon an established risk grading matrix using a scale of 1 to 8. Loan grades are assigned at the time a new loan or lending commitment is extended by Peoples and may be changed at any time when circumstances warrant. Commercial loans to borrowers with an aggregate unpaid principal balance in excess of $1.0 million are reviewed at least on an annual basis for possible credit deterioration. Commercial leases, as well as loan relationships whose aggregate credit exposure to Peoples is equal to or less than $1.0 million are reviewed on an event driven basis. Triggers for review include knowledge of adverse events affecting the borrower’s business, receipt of financial statements indicating deteriorating credit quality, or other similar events. Adversely classified loans are reviewed on a quarterly basis. A description of the general characteristics of the risk grades used by Peoples follows: “Pass” (grades 1 through 4): Loans in this risk category are to borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan obligations. Loans in this risk category would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the loans if required, for any weakness that may exist. “Special Mention” (grade 5): Loans in this risk category are the equivalent of the regulatory “Other Assets Especially Mentioned” classification. Loans in this risk category possess some credit deficiency or potential weakness, which requires a high level of management attention. Potential weaknesses include declining trends in operating earnings and cash flows and/or reliance on the secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the loans or in Peoples’ credit position. “Substandard”(grade 6): Loans in this risk category are inadequately protected by the borrower’s current financial condition and payment capability, or by the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the orderly repayment of the loans. They are characterized by the distinct possibility that Peoples will sustain some loss if the deficiencies are not corrected. “Doubtful” (grade 7): Loans in this risk category have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of current existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, classification of these loans as an estimated loss is deferred until their more exact status may be determined. “Loss” (grade 8): Loans in this risk category are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean each such loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Charge-offs against the allowance for credit losses are taken in the period in which the loan becomes uncollectable. Consequently, Peoples typically does not maintain a recorded investment in loans within this risk category. Consumer loans and other smaller-balance loans are evaluated and categorized as “substandard,” “doubtful” or “loss” based upon the regulatory definition of these classes and consistent with regulatory requirements. All other loans not evaluated individually, nor meeting the regulatory conditions to be categorized as described above, would be considered as being “not rated.” The following tables summarize the risk category of Peoples’ loan portfolio based upon the then most recent analysis performed at December 31, 2023: Term Loans at Amortized Cost by Origination Year (Dollars in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Construction Pass $ 80,273 $ 141,245 $ 85,913 $ 27,169 9,995 $ 12,723 $ — $ — $ 357,318 Special mention — 3,757 — — — 123 — — 3,880 Substandard 1,200 1,590 — — — 31 — — 2,821 Total 81,473 146,592 85,913 27,169 9,995 12,877 — — 364,019 Current period gross charge-offs — — 9 — — — 9 Commercial real estate, other Pass 199,565 327,762 366,752 227,604 262,099 650,265 37,177 189 2,071,224 Special mention 999 12,975 4,850 10,324 7,074 22,186 408 41 58,816 Substandard 287 2,421 5,878 8,679 1,972 47,213 457 — 66,907 Doubtful — — — — — 10 — — 10 Total 200,851 343,158 377,480 246,607 271,145 719,674 38,042 230 2,196,957 Current period gross charge-offs — — — 39 — 575 614 Commercial and industrial Pass 225,894 180,068 212,938 86,934 55,434 132,675 213,714 38 1,107,657 Special mention 540 12,051 533 9,723 4,722 6,336 16,236 8,614 50,141 Substandard 78 6,441 5,104 5,617 1,602 6,278 1,889 779 27,009 Doubtful — — — — — 179 — — 179 Total 226,512 198,560 218,575 102,274 61,758 145,468 231,839 9,431 1,184,986 Current period gross charge-offs — 36 202 25 173 415 851 Premium finance Pass 201,659 1,517 1 — — — — — 203,177 Total 201,659 1,517 1 — — — — — 203,177 Current period gross charge-offs 25 97 — — — — 122 Leases Pass 216,559 114,327 51,307 14,061 4,883 1,501 — 402,638 Special mention 363 1,529 476 81 1 5 2,455 Substandard 1,937 3,006 2,944 448 321 311 8,967 Total 218,859 118,862 54,727 14,590 5,205 1,817 — — 414,060 Current period gross charge-offs 963 1,328 1,173 233 165 135 3,997 Residential real estate Pass 75,957 91,506 140,157 58,144 45,507 369,552 — — 780,823 Substandard 43 243 585 182 529 8,604 — — 10,186 Loss — — — — — 86 — — 86 Total 76,000 91,749 140,742 58,326 46,036 378,242 — — 791,095 Current period gross charge-offs — — — — — 170 170 Home equity lines of credit Pass 39,706 42,565 33,406 19,838 14,297 57,482 27 1,346 207,321 Substandard 19 — 61 34 123 1,109 — — 1,346 Loss — — — — — 8 — — 8 Total 39,725 42,565 33,467 19,872 14,420 58,599 27 1,346 208,675 Current period gross charge-offs — — — — — 110 110 Consumer, indirect Pass 247,829 225,225 96,698 59,044 18,644 15,977 — — 663,417 Substandard 333 934 789 558 190 206 — — 3,010 Loss 7 34 2 — 2 — — — 45 Total 248,169 226,193 97,489 59,602 18,836 16,183 — — 666,472 Current period gross charge-offs 609 2,091 865 255 63 147 4,030 Consumer, direct Pass 58,445 37,050 17,434 8,282 3,185 4,081 — — 128,477 Substandard 55 79 47 28 30 27 — — 266 Loss — — — — — 26 — — 26 Total 58,500 37,129 17,481 8,310 3,215 4,134 — — 128,769 Current period gross charge-offs 36 154 77 100 14 35 416 Deposit account overdrafts 986 — — — — — — — 986 Current period gross charge-offs 1,161 1,161 Total loans, at amortized cost $ 1,352,734 $ 1,206,325 $ 1,025,875 $ 536,750 $ 430,610 $ 1,336,994 $ 269,908 $ 11,007 $ 6,159,196 The following tables summarize the risk category of Peoples’ loan portfolio based upon the then most recent analysis performed at December 31, 2022: Term Loans at Amortized Cost by Origination Year (Dollars in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Revolving Loans Converted to Term Total Loans Construction Pass $ 82,143 $ 110,719 $ 27,893 $ 20,223 $ 656 $ 4,061 $ 44 $ 81 $ 245,739 Special mention — — — — — 818 — — 818 Substandard — 2 — — — 382 — — 384 Total 82,143 110,721 27,893 20,223 656 5,261 44 81 246,941 Commercial real estate, other Pass 165,282 224,727 227,799 202,877 110,564 369,578 27,300 5,217 1,328,127 Special mention — 189 1,099 5,519 3,111 29,334 105 — 39,357 Substandard — 8,327 2,591 1,366 1,296 42,172 216 190 55,968 Doubtful — — — — — 66 — — 66 Total 165,282 233,243 231,489 209,762 114,971 441,150 27,621 5,407 1,423,518 Commercial and industrial Pass 167,937 142,615 72,573 71,497 40,229 91,853 215,116 3,722 801,820 Special mention 10,248 14,981 11,923 2,711 236 4,877 16,235 — 61,211 Substandard 84 9,801 3,417 2,410 1,459 3,620 8,603 611 29,394 Doubtful — — — — — 209 — — 209 Total 178,269 167,397 87,913 76,618 41,924 100,559 239,954 4,333 892,634 Premium finance Pass 158,778 419 — — — — — — 159,197 Total 158,778 419 — — — — — — 159,197 Leases Pass 191,148 90,738 34,627 15,951 3,269 1,119 — — 336,852 Special mention 1,741 2,477 140 22 24 — — — 4,404 Substandard 546 1,840 571 464 454 — — — 3,875 Total 193,435 95,055 35,338 16,437 3,747 1,119 — — 345,131 Residential real estate Pass 78,313 138,860 58,869 42,840 28,174 364,635 — — 711,691 Substandard — — 137 569 563 10,302 — — 11,571 Loss — — — — — 98 — — 98 Total 78,313 138,860 59,006 43,409 28,737 375,035 — — 723,360 Home equity lines of credit Pass 41,781 35,768 19,863 14,820 13,800 50,291 334 2,096 176,657 Substandard — 60 — 53 126 958 — — 1,197 Loss — — — — — 4 — — 4 Total 41,781 35,828 19,863 14,873 13,926 51,253 334 2,096 177,858 Consumer, indirect Pass 305,814 149,445 100,027 35,988 22,789 12,741 — — 626,804 Substandard 384 811 659 266 304 193 — — 2,617 Loss — 5 — — — — — — 5 Total 306,198 150,261 100,686 36,254 23,093 12,934 — — 629,426 Consumer, direct Pass 50,889 28,351 14,558 6,333 3,725 3,975 — — 107,831 Substandard 97 63 138 46 21 150 — — 515 Loss — — — — — 17 — — 17 Total 50,986 28,414 14,696 6,379 3,746 4,142 — — 108,363 Deposit account overdrafts 722 — — — — — — — 722 Total loans, at amortized cost $ 1,255,907 $ 960,198 $ 576,884 $ 423,955 $ 230,800 $ 991,453 $ 267,953 $ 11,917 $ 4,707,150 Collateral Dependent Loans Peoples has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans: • Construction loans are typically secured by owner occupied commercial real estate or non-owner occupied investment real estate. Typically, owner occupied construction loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties that are in process of construction. Non-owner occupied commercial construction loans are generally secured by office buildings and complexes, multi-family complexes, land under development, and other commercial and industrial real estate in process of construction. • Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate. • Commercial and industrial loans are generally secured by equipment, inventory, accounts receivable, and other commercial property. • Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage, on residential real estate property. • Home equity lines of credit are generally secured by second mortgages on residential real estate property. • Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral. • Leases are secured by commercial equipment and other essential business assets. • Premium finance loans are secured by the unearned portion of the insurance premium being financed. The following table details Peoples’ amortized cost of collateral dependent loans as of December 31: (Dollars in thousands) 2023 2022 Commercial real estate, other $ — $ 8,362 Commercial and industrial — 1,456 Residential real estate 501 536 Total collateral dependent loans $ 501 $ 10,354 The decrease in collateral dependent loans at December 31, 2023 compared to at December 31, 2022, was primarily due to three large-relationships that were paid in full during the year. Modifications for Borrowers Experiencing Financial Difficulty Subsequent to the Adoption of ASU 2022-02 As part of Peoples’ loss mitigation activities, Peoples may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty. The most common modifications to the contractual terms of a loan to a borrower experiencing financial difficulty include an extension of the maturity date, a reduction in the interest rate for the remaining life of the loan, a temporary period of interest-only payments, and a reduction in the contractual payment amount for either a short period or the remaining term of the loan. In addition to loan modifications, Peoples also provides other loss mitigation options, such as forbearance and repayment plans, to assist borrowers who experience financial difficulties. In assessing whether or not a borrower is experiencing financial difficulty, Peoples considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (1) the borrower is currently in payment default on any of the borrower’s debt; (2) a payment default is probable in the foreseeable future without the modification; (3) the borrower has declared or is in the process of declaring bankruptcy; and (4) the borrower’s projected cash flow is insufficient to satisfy contractual payments due under the original terms of the loan without a modification. The following table displays the amortized cost of loans that were restructured during the twelve months ended December 31, 2023, presented by loan classification. During the Twelve Months Ended December 31, 2023 (a) Payment Delay (Only) (Dollars in thousands) Forbearance Plan Payment Deferral Trial Modification and Repayment Plans Term Extension Forbearance Plan and Term Extension Total Percentage of Total by Loan Category (b) Construction $ — $ 1,590 $ — $ 52 $ — $ 1,642 0.45 % Commercial real estate 184 — — 2,160 — 2,344 0.11 % Commercial and industrial — — — 4,110 981 5,091 0.43 % Residential real estate — — — 91 — 91 0.01 % Home equity lines of credit — — — 209 — 209 0.10 % Total $ 184 $ 1,590 $ — $ 6,622 $ 981 $ 9,377 0.15 % (a) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio as of period end. (b) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable. The following table summarizes the financial impacts of loan modifications and payment deferrals made to loans during the twelve months ended December 31, 2023, presented by loan classification. During the Twelve Months Ended December 31, 2023 (Dollars in thousands) Weighted-Average Term Extension Average Amount Capitalized as a Result of a Payment Delay (a) Construction 5 $ — Commercial real estate 7 — Commercial and industrial 5 — Residential real estate 213 8,076 Home equity lines of credit 187 — Consumer, indirect 2 $ — (a) Represents the average amount of delinquency-related amounts that were capitalized as part of the loan balance. Amounts are in whole dollars. The following table displays the amortized cost of loans that received a completed modification or payment deferral on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through December 31, 2023, and that defaulted in the period presented. For purposes of this disclosure, Peoples defines loans that had a payment default as loans that were 90 days or more past due following a modification through December 31, 2023. For the Twelve Months Ended December 31, 2023 (Dollars in thousands) Term Extension Total Commercial and industrial $ 148 $ 148 Consumer, indirect 11 11 Total loans that subsequently defaulted $ 159 $ 159 (1) Represents the sum of amortized cost and gross charge-off as of period end. Excludes loans that liquidated either through foreclosure, deed-in-lieu of foreclosure, or a short sale. The following table displays an aging analysis of loans that were modified on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through December 31, 2023, presented by classification and class of financing receivable. As of December 31, 2023 (a) (Dollars in thousands) 30-59 Days Delinquent 60-89 Days Delinquent 90+ Days Delinquent Total Delinquent Current Total Construction $ — $ 52 $ — $ 52 $ 1,590 $ 1,642 Commercial real estate — — — — 2,344 2,344 Commercial and industrial — 750 148 898 4,193 5,091 Residential real estate — — — — 91 91 Home equity lines of credit — — — — 209 209 Total loans modified (b) $ — $ 802 $ 148 $ 950 $ 8,427 $ 9,377 (a) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio as of period end. (b) Represents the amortized cost basis as of period end. Troubled Debt Restructurings Disclosures Prior to the Adoption of ASU 2022-02 Prior to the adoption of ASU 2022-02, Peoples accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. See “Note 1 Summary of Significant Accounting Policies” in Peoples’ Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for more information on our TDR policy, and “Note 1, Summary of Significant Accounting Policies” in this Form 10-K for more information on the adoption of ASU 2022-02. The following table summarizes the loans that were modified as TDRs during the year ended December 31, 2022. Recorded Investment (a) (Dollars in thousands) Number of Contracts Pre-Modification Post-Modification Remaining Recorded Investment 2022 Construction — $ — $ — $ — Commercial real estate, other 8 1,191 1,191 1,179 Commercial and industrial 9 1,513 1,517 971 Residential real estate 34 1,741 1,825 1,789 Home equity lines of credit 8 321 321 313 Consumer, indirect 23 286 285 285 Consumer, direct 9 102 103 103 Consumer 32 388 388 388 Total 91 $ 5,154 $ 5,242 $ 4,640 (a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported. The following table presents those loans modified into a TDR during the year that subsequently defaulted (i.e., 90 days or more past due following a modification during the year). 2022 (Dollars in thousands) Number of Contracts Recorded Investment (a) Impact on the Allowance for Credit Losses Commercial real estate, other 1 $ 65 $ — Commercial and Industrial 1 43 — Residential real estate 2 64 — Consumer, indirect 1 7 — Consumer, direct 1 2 — Home equity lines of credit — — — Total 6 $ 181 $ — (a) The amounts shown are inclusive of all partial paydowns and charge-offs. Loans modified in a TDR that were fully paid down, charged-off or foreclosed upon by period end are not reported. Peoples had no commitments to lend additional funds to the related borrowers whose loan terms have been modified in a TDR. Allowance for Credit Losses As discussed in “Note 1 Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements included in this Form 10-K, Peoples estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In management’s estimation of expected credit losses, Peoples uses a one-year reasonable and supportable period across all segments. Following the reasonable and supportable period, Peoples reverts the macroeconomic variables to their long run average over a four-quarter reversion period. Changes in the allowance for credit losses for 2023 are summarized below: (Dollars in thousands) Beginning Balance, Initial Allowance for Acquired PCD Assets (a) (Recovery of) Provision for Credit Losses (b) Charge-offs Recoveries Ending Balance, December 31, 2023 Construction $ 1,250 $ — $ (542) $ (9) $ — $ 699 Commercial real estate, other 17,710 1,340 1,514 (614) 965 20,915 Commercial and industrial 8,229 379 2,181 (851) 552 10,490 Premium finance 344 — 238 (122) 24 484 Leases 8,495 — 5,990 (3,997) 362 10,850 Residential real estate 6,357 228 (670) (170) 192 5,937 Home equity lines of credit 1,693 18 (14) (110) 1 1,588 Consumer, indirect 7,448 — 4,685 (4,030) 487 8,590 Consumer, direct 1,575 86 1,025 (416) 73 2,343 Deposit account overdrafts 61 — 938 (1,161) 277 115 Total $ 53,162 $ 2,051 $ 15,345 $ (11,480) $ 2,933 $ 62,011 (a) Includes purchase price adjustments related to acquisitions previously completed but were within the 12-month measurement period. (b) Amount does not include the provision for unfunded commitment liability. Changes in the allowance for credit losses for 2022 are summarized below: (Dollars in thousands) Beginning Balance, Initial Allowance for Acquired PCD Assets (Recovery of) Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, December 31, 2022 Construction $ 2,999 $ — $ (1,733) $ (16) $ — $ 1,250 Commercial real estate, other 29,147 (451) (10,794) (489) 297 17,710 Commercial and industrial 11,063 (418) (1,522) (943) 49 8,229 Premium finance 379 — 76 (124) 13 344 Leases 4,797 801 5,062 (2,585) 420 8,495 Residential real estate 7,233 (509) 217 (668) 84 6,357 Home equity lines of credit 2,005 (11) (258) (88) 45 1,693 Consumer, indirect 5,326 (41) 4,068 (2,233) 328 7,448 Consumer, direct 961 — 930 (363) 47 1,575 Deposit account overdrafts 57 — 1,050 (1,246) 200 61 Total $ 63,967 $ (629) $ (2,904) $ (8,755) $ 1,483 $ 53,162 (a) Amount does not include the provision for unfunded commitment liability. During 2023, the increase in the allowance balance when compared to 2022 was driven by (i) the addition of the $8.1 million provision for the non-PCD loans acquired in the Limestone Merger, (ii) loan growth and (iii) an increase in charge-offs, partially offset by a release of reserves on individually analyzed loans and the use of updated loss drivers. The Limestone Merger added $2.1 million in allowance for credit losses at the acquisition date for PCD loans as part of the acquisition accounting. During 2022, the allowance established for PCD loans from the Premier Merger was adjusted, decreasing the allowance by $1.4 million, and the Vantage acquisition added $0.8 million in allowance for credit loss at the acquisition date for PCD loans as part of the acquisition accounting. The allowance for credit losses as a percent of total loans declined from 1.13% to 1.01% from December 31, 2022 to December 31, 2023. At December 31, 2023, Peoples had recorded an unfunded commitment liability of $1.8 million, a decrease compared to the $2.0 million that was recorded at December 31, 2022. The allowance for unfunded commitments (also referred to as “unfunded commitment liability”) is presented in the “Accrued expenses and other liabilities” line of the Consolidated Balance Sheets. For 2023, Peoples recorded a recovery of credit losses on unfunded commitments of $0.2 million, compared to a recovery for credit losses on unfunded commitments of $0.6 million for 2022. The change in the allowance for unfunded commitments is reflected in the “Provision for credit losses” line of the Consolidated Statements of Income. |
