| Loans and Leases | Loans and Leases Peoples' loan portfolio consists of various types of loans and leases originated primarily as a result of lending opportunities within Peoples' footprint. Peoples also originates insurance premium finance loans nationwide through its Peoples Premium Finance division, and originates leases nationwide through its North Star Leasing ("NSL") division and its Vantage Financial, LLC ("Vantage") subsidiary. The major classifications of loan balances (in each case, net of deferred fees and costs) excluding loans held for sale, were as follows: (Dollars in thousands) June 30, December 31, 2023 Construction $ 340,601 $ 364,019 Commercial real estate, other 2,195,979 2,196,957 Commercial and industrial 1,258,063 1,184,986 Premium finance 293,349 203,177 Leases 430,651 414,060 Residential real estate 789,344 791,095 Home equity lines of credit 227,608 208,675 Consumer, indirect 675,054 666,472 Consumer, direct 113,655 128,769 Deposit account overdrafts 1,067 986 Total loans, at amortized cost $ 6,325,371 $ 6,159,196 Accrued interest receivable is not included within the loan balances, but is presented in the “Other assets” line of the Unaudited Consolidated Balance Sheets, with no recorded allowance for credit losses. Total interest receivable on loans was $24.4 million at June 30, 2024 and $24.5 million at December 31, 2023. Nonaccrual and Past Due Loans A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on nonaccrual status regardless of whether or not such loan is considered past due. The amortized cost of loans on nonaccrual status and of loans delinquent for 90 days or more and accruing was as follows: June 30, 2024 December 31, 2023 (Dollars in thousands) Nonaccrual (a) Accruing Loans 90+ Days Past Due Nonaccrual (a) Accruing Loans 90+ Days Past Due Construction $ — $ — $ — $ — Commercial real estate, other 4,833 106 2,816 78 Commercial and industrial 6,030 208 2,758 316 Premium finance — 2,546 — 1,355 Leases 11,849 3,193 8,436 3,826 Residential real estate 7,078 1,209 7,921 877 Home equity lines of credit 1,454 230 1,022 171 Consumer, indirect 2,261 67 2,412 68 Consumer, direct 164 33 112 25 Total loans, at amortized cost $ 33,669 $ 7,592 $ 25,477 $ 6,716 (a) There were $1.4 million of nonaccrual loans for which there was no allowance for credit losses at June 30, 2024 and $1.2 million of nonaccrual loans for which there was no allowance for credit losses at December 31, 2023. During the first six months of 2024, nonaccrual loans increased compared to at December 31, 2023, which was primarily due to one large commercial and industrial loan of approximately $2.0 million that went on nonaccrual status during the first half of 2024. Further, eight leases and four commercial real estate loans went on nonaccrual status during the second quarter of 2024 which increased the amount reported by $3.4 million and $1.8 million, respectively. The increase in accruing loans 90+ days past due at June 30, 2024 when compared to at December 31, 2023, was primarily due to an increase in accruing premium finance loans 90+ days past due of approximately $1.2 million and an increase in accruing residential real estate loans 90+ days past due of approximately $0.3 million which was partially offset by a decrease in accruing leases and commercial and industrial loans 90+ days past due. The amount of interest income recognized on accruing loans 90+ days past due during the six months ended June 30, 2024 was $0.9 million. The following table presents the aging of the amortized cost of past due loans: Loans Past Due Current Loans Total Loans (Dollars in thousands) 30 - 59 days 60 - 89 days 90 + Days Total June 30, 2024 Construction $ — $ 70 $ — $ 70 $ 340,531 $ 340,601 Commercial real estate, other 2,509 2,551 2,799 7,859 2,188,120 2,195,979 Commercial and industrial 821 2,191 4,166 7,178 1,250,885 1,258,063 Premium finance 4,051 4,332 2,546 10,929 282,420 293,349 Leases 2,690 9,395 14,831 26,916 403,735 430,651 Residential real estate 3,543 3,065 4,259 10,867 778,477 789,344 Home equity lines of credit 1,071 474 979 2,524 225,084 227,608 Consumer, indirect 5,928 1,119 1,168 8,215 666,839 675,054 Consumer, direct 553 51 86 690 112,965 113,655 Deposit account overdrafts — — — — 1,067 1,067 Total loans, at amortized cost $ 21,166 $ 23,248 $ 30,834 $ 75,248 $ 6,250,123 $ 6,325,371 December 31, 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 Delinquency trends improved slightly, as 98.8% of Peoples' loan portfolio was considered “current” at June 30, 2024, compared to 98.6% at December 31, 2023. Pledged Loans Peoples has pledged certain loans secured by one-to-four family and multifamily residential mortgages, home equity lines of credit and commercial real estate loans under a blanket collateral agreement to secure borrowings from the FHLB. Peoples also has pledged eligible commercial and industrial loans to secure borrowings with the FRB. Loans pledged are summarized as follows: (Dollars in thousands) June 30, 2024 December 31, 2023 Loans pledged to FHLB $ 1,206,145 $ 1,206,134 Loans pledged to FRB 470,048 419,245 Credit Quality Indicators As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2023 Form 10-K, Peoples categorizes the majority of its loans into risk categories based upon an established risk grading matrix using a scale of 1 to 8. Loan grades are assigned at the time a new loan or lending commitment is extended by Peoples and may be changed at any time when circumstances warrant. Commercial loans to borrowers with an aggregate unpaid principal balance in excess of $1.0 million are reviewed at least on an annual basis for possible credit deterioration. Commercial leases, as well as loan relationships whose aggregate credit exposure to Peoples is equal to or less than $1.0 million, are reviewed on an event driven basis. Triggers for review include knowledge of adverse events affecting the borrower's business, receipt of financial statements indicating deteriorating credit quality or other similar events. Adversely classified loans are reviewed on a quarterly basis. A description of the general characteristics of the risk grades used by Peoples, follows: “Pass” (grades 1 through 4): Loans in this risk category involve borrowers of acceptable-to-strong credit quality and risk who have the apparent ability to satisfy their loan obligations. Loans in this risk category would possess sufficient mitigating factors, such as adequate collateral or strong guarantors possessing the capacity to repay the loan if required, for any weakness that may exist. “Special Mention” (grade 5): Loans in this risk grade are the equivalent of the regulatory definition of “Other Assets Especially Mentioned.” Loans in this risk category possess some credit deficiency or potential weakness, which requires a high level of management attention. Potential weaknesses include declining trends in operating earnings and cash flows and/or reliance on a secondary source of repayment. If left uncorrected, these potential weaknesses may result in noticeable deterioration of the repayment prospects for the loan or in Peoples' credit position. “Substandard” (grade 6): Loans in this risk grade are inadequately protected by the borrower's current financial condition and payment capability or the collateral pledged, if any. Loans so classified have one or more well-defined weaknesses that jeopardize the orderly repayment of the loans. They are characterized by the distinct possibility that Peoples will sustain some loss if the weaknesses are not corrected. “Doubtful” (grade 7): Loans in this risk grade have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or orderly repayment in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Possibility of loss is extremely high, but because of certain important and reasonably specific factors that may work to the advantage and strengthening of the exposure, classification of each of these loans as an estimated loss is deferred until its more exact status may be determined. “Loss” (grade 8): Loans in this risk grade are considered to be non-collectible and of such little value that their continuance as bankable assets is not warranted. This does not mean a loan has absolutely no recovery value, but rather it is neither practical nor desirable to defer writing off the loan, even though partial recovery may be obtained in the future. Charge-offs against the allowance for credit losses are taken during the period in which the loan becomes uncollectible. Consequently, Peoples typically does not maintain a recorded investment in loans within this category. Consumer loans and other smaller-balance loans are evaluated and categorized as "substandard," "doubtful" or "loss" based upon the regulatory definition of these classes and consistent with regulatory requirements. Leases are categorized as "special mention", "substandard", or "loss" based upon delinquency status and the prospect of collecting the remaining net investment balance owed under the lease. All other loans not evaluated individually, nor meeting the regulatory conditions to be categorized as described above, would be considered as being "not rated." The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the most recent analysis performed at June 30, 2024: Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Loans Construction Pass $ 16,666 $ 110,671 $ 132,711 $ 57,833 $ 3,265 $ 15,568 $ — $ — $ 336,714 Special mention — — 998 — — 119 — — 1,117 Substandard — 1,185 1,560 — — 25 — — 2,770 Total 16,666 111,856 135,269 57,833 3,265 15,712 — — 340,601 Current period gross charge-offs — — — — — — — Commercial real estate, other Pass 51,930 225,385 356,931 371,474 209,331 826,545 40,467 267 2,082,063 Special mention 106 750 16,444 8,513 4,871 19,118 594 35 50,396 Substandard — 2,056 2,310 12,737 8,553 37,474 380 — 63,510 Doubtful — — — — — 10 — — 10 Total 52,036 228,191 375,685 392,724 222,755 883,147 41,441 302 2,195,979 Current period gross charge-offs — — 212 — — — 212 Commercial and industrial Pass 123,848 221,740 148,939 158,314 75,049 190,182 247,238 4,993 1,165,310 Special mention 69 3,965 11,960 11,314 11,070 4,420 22,259 5,500 65,057 Substandard — 276 2,134 14,522 4,911 2,403 1,233 — 25,479 Doubtful — — 2,048 — — 169 — — 2,217 Total 123,917 225,981 165,081 184,150 91,030 197,174 270,730 10,493 1,258,063 Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Loans Current period gross charge-offs — — — 15 70 206 291 Premium Finance Pass 250,326 42,781 242 — — — — — 293,349 Total 250,326 42,781 242 — — — — — 293,349 Current period gross charge-offs 1 76 32 — — — 109 Leases Pass 114,756 164,561 88,396 36,381 8,486 3,247 — — 415,827 Special mention 294 1,842 679 128 23 9 — — 2,975 Substandard 403 2,921 5,394 2,305 439 387 — — 11,849 Total 115,453 169,324 94,469 38,814 8,948 3,643 — — 430,651 Current period gross charge-offs — 1,499 1,498 565 47 38 3,647 Residential real estate Pass 45,622 71,719 88,373 134,905 55,916 382,908 — — 779,443 Substandard — 375 45 738 175 8,484 — — 9,817 Loss — 6 — — — 78 — — 84 Total 45,622 72,100 88,418 135,643 56,091 391,470 — — 789,344 Current period gross charge-offs — — 46 5 — 93 144 Home equity lines of credit Pass 31,066 40,667 40,425 30,901 18,285 64,766 25 1,119 226,135 Substandard — 19 43 86 34 1,281 — — 1,463 Loss — — — — — 10 — — 10 Total 31,066 40,686 40,468 30,987 18,319 66,057 25 1,119 227,608 Current period gross charge-offs — — — — — 9 9 Consumer, indirect Pass 132,042 213,380 184,569 75,211 43,458 23,473 — — 672,133 Substandard 25 689 660 778 392 347 — — 2,891 Loss — 12 14 4 — — — — 30 Total 132,067 214,081 185,243 75,993 43,850 23,820 — — 675,054 Current period gross charge-offs 47 1,268 1,042 454 100 117 3,028 Consumer, direct Pass 28,303 32,440 28,430 12,999 5,992 5,188 — — 113,352 Substandard — 60 70 49 7 81 — — 267 Term Loans at Amortized Cost by Origination Year Revolving Loans Converted to Term (Dollars in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Total Loans Loss — 6 — — — 30 — — 36 Total 28,303 32,506 28,500 13,048 5,999 5,299 — — 113,655 Current period gross charge-offs — 79 169 30 10 79 367 Deposit account overdrafts 1,067 — — — — — — — 1,067 Current period gross charge-offs 674 — — — — — 674 Total loans, at amortized cost 796,523 1,137,506 1,113,375 929,192 450,257 1,586,322 312,196 11,914 6,325,371 Total current period gross charge-offs $ 722 $ 2,922 $ 2,999 $ 1,069 $ 227 $ 542 $ 8,481 The following table summarizes the risk category of loans within Peoples' loan portfolio, including acquired loans, based upon the then most recent analysis performed at December 31, 2023: Term Loans at Amortized Cost by Origination Year (Dollars in thousands) 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 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 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 Current period gross charge-offs $ 2,794 $ 3,706 $ 2,326 $ 652 $ 415 $ 1,587 $ 11,480 Collateral Dependent Loans Peoples has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following provides more detail about the types of collateral that secure collateral dependent loans: • Construction loans are typically secured by owner occupied commercial real estate or non-owner occupied investment real estate. Typically, owner occupied construction loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties that are in process of construction. Non-owner occupied commercial construction loans are generally secured by multi-family complexes, warehouse buildings, industrial buildings, land under development, and other commercial real estate in process of construction. • Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities, and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by multifamily complexes, retail facilities, office buildings and complexes, warehouses, industrial buildings, land under development, as well as other commercial real estate. • Commercial and industrial loans are generally secured by equipment, inventory, accounts receivable, and other commercial property. • Residential real estate loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage, on residential real estate property. • Home equity lines of credit are generally secured by second mortgages on residential real estate property. • Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral. • Leases are secured by commercial equipment and other essential business assets. • Premium finance loans are secured by the unearned portion of the insurance premium being financed. The following table details Peoples' amortized cost of collateral dependent loans: (Dollars in thousands) June 30, 2024 December 31, 2023 Amortized Cost Amortized Cost Commercial real estate, other $ 689 $ — Leases 2,479 — Residential real estate — 501 Total collateral dependent loans $ 3,168 $ 501 The increase in collateral dependent loans at June 30, 2024, compared to December 31, 2023, was primarily due to the addition of ten leases associated with three customer relationships during the three months ended June 30, 2024. Modifications for Borrowers Experiencing Financial Difficulty As part of Peoples' loss mitigation activities, Peoples may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty. The most common modifications to the contractual terms of a loan to a borrower experiencing financial difficulty include an extension of the maturity date, a reduction in the interest rate for the remaining life of the loan, a temporary period of interest-only payments, and a reduction in the contractual payment amount for either a short period or the remaining term of the loan. In addition to loan modifications, Peoples also provides other loss mitigation options, such as forbearance and repayment plans, to assist borrowers who experience financial difficulties. In assessing whether or not a borrower is experiencing financial difficulty, Peoples considers information currently available regarding the financial condition of the borrower. This information includes, but is not limited to, whether (1) the borrower is currently in payment default on any of the borrower's debt; (2) a payment default is probable in the foreseeable future without the modification; (3) the borrower has declared or is in the process of declaring bankruptcy; and (4) the borrower's projected cash flow is insufficient to satisfy contractual payments due under the original terms of the loan without a modification. The following tables display the amortized cost of loans that were restructured during the three and six months ended June 30, 2024 and June 30, 2023, presented by loan classification. Payment Delay (Only) (Dollars in thousands) Payment Deferral Term Extension Total Percentage of Total by Loan Category (a)(b)(c) During the Three Months Ended June 30, 2024 Commercial and industrial — 687 687 0.05 % Leasing 174 — 174 0.04 % Home equity lines of credit — 64 64 0.03 % Consumer, indirect — 8 8 — % Total $ 174 $ 759 $ 933 0.01 % During the Three Months Ended June 30, 2023 Commercial real estate — 48 48 — % Commercial and industrial — 3,319 3,319 0.29 % Total $ — $ 3,367 $ 3,367 0.06 % (a) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable. (b) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio of period end. (c) Each with --% not meaningful Payment Delay (Only) (Dollars in thousands) Forbearance Plan Payment Deferral Term Extension Forbearance Plan and Term Extension Total Percentage of Total by Loan Category (a)(b)(c) During the Six Months Ended June 30, 2024 Commercial real estate — — $ 561 $ — $ 561 0.03 % Commercial and industrial — — 11,171 — 11,171 0.89 % Leasing — 199 — — 199 0.05 % Residential real estate — — 76 — 76 0.01 % Home equity lines of credit — — 64 — 64 0.03 % Consumer, indirect — — 8 — 8 — % Total $ — $ 199 $ 11,880 $ — $ 12,079 0.19 % During the Six Months Ended June 30, 2023 Construction $ — $ 1,600 $ — $ — $ 1,600 0.38 % Commercial real estate 194 — 48 — 242 0.01 % Commercial and industrial — — 3,325 306 3,631 0.31 % Residential real estate — — 220 — 220 0.03 % Total $ 194 $ 1,600 $ 3,593 $ 306 $ 5,693 0.10 % (a) Based on the amortized cost basis as of period end, divided by the period end amortized cost basis of the corresponding class of financing receivable. (b) The table presented above excludes loans that were paid off or otherwise no longer included in the loan portfolio as of period end. (c) Each with --% not meaningful The following tables summarizes the financial impacts of loan modifications and payment deferrals made to loans during both the three and six months ended June 30, 2024 and June 30, 2023, presented by loan classification. Weighted-Average Term Extension Average Amount Capitalized as a Result of a Payment Delay (a) During the Three Months Ended June 30, 2024 Commercial and industrial 28 — Home equity lines of credit 120 — Consumer, indirect 2 — During the Three Months Ended June 30, 2023 Commercial real estate 12 — Commercial and industrial 5 — (a) Represents the average amount of delinquency-related amounts that were capitalized as part of the loan balance. Amounts are in whole dollars. Weighted-Average Term Extension Average Amount Capitalized as a Result of a Payment Delay (a) During the Six Months Ended June 30, 2024 Commercial real estate 6 $ — Commercial and industrial 7 — Leasing 9 — Residential real estate 2 — Home equity lines of credit 120 — Consumer, indirect 2 — During the Six Months Ended June 30, 2023 Commercial real estate 12 — Commercial and industrial 5 — Residential real estate 210 8,969 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 tables display the amortized cost of loans that received a completed modification or payment deferral within the previous 12 months and that had a payment default in the periods 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. Payment Delay as a Result of a Payment Deferral (Only) (a) For the Three Months Ended June 30, 2024 Commercial real estate $ 193 Commercial and industrial $ 28 Residential real estate $ 76 Total loans that subsequently defaulted $ 297 For the Six Months Ended June 30, 2024 Commercial real estate $ 193 Commercial and industrial $ 31 Residential real estate $ 76 Total loans that subsequently defaulted $ 300 For the Three and Six Month Ended June 30, 2023 (b) Consumer, indirect $ 11 Total loans that subsequently defaulted $ 11 (a) Represents the sum of amortized cost and gross charge-off as of period end. Excludes loans that liquidated either through foreclosure, deed-in-lieu of foreclosure, or a short sale. (b) Accounting standard was implemented as of January 1, 2023, thus information above reflects loan modifications made on or after that date. The following table displays an aging analysis of loans that were modified during the 12 months prior to June 30, 2024, presented by classification and class of financing receivable. As of June 30, 2024 (Dollars in thousands) 30-59 Days Delinquent 60-89 Days Delinquent 90+ Days Delinquent Total Delinquent Current Total Construction $ — $ 70 $ — $ 70 $ — $ 70 Commercial real estate — — 193 193 2,321 2,514 Commercial and industrial — — 31 31 12,583 12,614 Leasing — — — — 199 199 Residential real estate — — 76 76 25 101 Home equity lines of credit — — — — 122 122 Consumer, indirect — — — — 8 8 Total loans modified (a) $ — $ 70 $ 300 $ 370 $ 15,258 $ 15,628 (a) Represents the amortized cost basis as of period end. The following table displays an aging analysis of loans that were modified on or after January 1, 2023, the date Peoples adopted ASU 2022-02, through June 30, 2023, presented by classification and class of financing receivable. As of June 30, 2023 (Dollars in thousands) 30-59 Days Delinquent 60-89 Days Delinquent 90+ Days Delinquent Total Delinquent Current Total Construction $ — $ — $ — $ — $ 1,600 $ 1,600 Commercial real estate — — — — 242 242 Commercial and industrial — — — — 3,631 3,631 Residential real estate — — — — 220 220 Total loans modified (a) $ — $ — $ — $ — $ 5,693 $ 5,693 (a) Represents the amortized cost basis as of period end. Allowance for Credit Losses As discussed in "Note 1 Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Peoples' 2023 Form 10-K, Peoples estimates the allowance for credit losses using relevant available information, from both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. In management's estimation of expected credit losses, Peoples uses a one-year reasonable and supportable period across all segments. Following the reasonable and supportable period, Peoples reverts the macroeconomic variables to their long run average over a four-quarter reversion period. Changes in the allowance for credit losses for the three and six months ended June 30, 2024 and June 30, 2023 are summarized below: (Dollars in thousands) Beginning Balance, March 31, 2024 Initial Allowance for Acquired PCD Assets (Recovery of) Provision for Credit Losses (a) Charge-offs Recoveries Ending Balance, June 30, 2024 Construction $ 701 $ — $ (28) $ — $ — $ 673 Commercial real estate, other 21,788 — (1,856) — (80) 19,852 Commercial and industrial 10,581 — 408 (56) 10 10,943 Premium finance 607 — 207 (55) 4 763 Leases 12,889 — 4,533 (2,377) 173 15,218 Residential real estate 5,866 — 69 (64) 68 5,939 Home equity lines of credit 1,689 — 57 (9) — 1,737 Consumer, indirect 8,301 — 1,803 (1,567) 117 8,654 Consumer, direct 2,279 — 179 (141) 15 2,332 Deposit account overdrafts 121 — 286 (338) 67 136 Total $ 64,822 $ — $ 5,658 $ (4,607) $ 374 $ 66,247 (a) Amount does not include the provision for the allowance for credit losses on unfunded commitments. (Dollars in thousands) Beginning Balance, March 31, 2023 Initial Allowance for Acquired PCD Assets Provision for (Recovery of) Credit Losses (a) Charge-offs Recoveries Ending Balance, June 30, 2023 Construction $ 1,273 $ — $ 223 $ — $ — $ 1,496 Commercial real estate, other 16,474 280 2,968 (7) 16 19,731 Commercial and industrial 8,307 376 1,905 (11) 451 11,028 Premium finance 433 — 18 (23) 3 431 Leases 9,109 — 1,783 (604) 89 10,377 Residential real estate 6,504 254 (656) (59) 69 6,112 Home equity lines of credit 1,717 13 1 (55) — 1,676 Consumer, indirect 7,781 — 641 (941) 129 7,610 Consumer, direct 1,619 85 981 (78) 35 2,642 Deposit account overdrafts 86 — 232 (263) 53 108 Total $ 53,303 $ 1,008 $ 8,096 $ (2,041) $ 845 $ 61,211 (a) Amount does not include the provision for the allowance for credit losses on unfunded commitments. (Dollars in thousands) Beginning Balance, December 31, 2023 Initial Allowance for Acquired PCD Assets Provision for (Recovery of) Credit Losses (a) Charge-offs Recoveries Ending Balance, June 30, 2024 Construction $ 699 $ — $ (26) $ — $ — $ 673 Commercial real estate, other 20,915 — (854) (212) 3 19,852 Commercial and industrial 10,490 — 727 (291) 17 10,943 Premium finance 484 — 376 (109) 12 763 Leases 10,850 — 7,630 (3,647) 385 15,218 Residential real estate 5,937 — (5) (144) 151 5,939 Home equity lines of credit 1,588 — 151 (9) 7 1,737 Consumer, indirect 8,590 — 2,904 (3,028) 188 8,654 Consumer, direct 2,343 — 332 (367) 24 2,332 Deposit account overdrafts 115 — 554 (674) 141 136 Total $ 62,011 $ — $ 11,789 $ (8,481) $ 928 $ 66,247 (a) Amount does not include the provision for the allowance for credit losses on unfunded commitments. (Dollars in thousands) Beginning Balance, Initial Allowance for Acquired PCD Assets Provision for (Recovery of) Credit Losses (a) Charge-offs Recoveries Ending Balance, June 30, 2023 Construction $ 1,250 $ — $ 255 $ (9) $ — $ 1,496 Commercial real estate, other 17,710 280 1,738 (40) 43 19,731 Commercial and industrial 8,229 376 1,984 (12) 451 11,028 Premium finance 344 — 121 (46) 12 431 Leases 8,495 — 2,786 (1,073) 169 10,377 Residential real estate 6,357 254 (497) (100) 98 6,112 Home equity lines of credit 1,693 13 44 (74) — 1,676 Consumer, indirect 7,448 — 1,824 (1,870) 208 7,610 Consumer, direct 1,575 85 1,114 (182) 50 2,642 Deposit account overdrafts 61 — 412 (490) 125 108 Total $ 53,162 $ 1,008 $ 9,781 $ (3,896) $ 1,156 $ 61,211 (a) Amount does not include the provision for the allowance for credit losses on unfunded commitments. During the second quarter of 2024, Peoples recorded a total provision for credit losses of $5.7 million, which was a result of (i) higher net-charge offs, (ii) an increase of reserves on individually analyzed loans and leases, and (iii) loan growth. Net charge-offs for the second quarter of 2024 were $4.2 million, primarily driven by an increase in charge-offs on leases originated by our North Star Leasing business, partially offset by decreases in net charge-offs on commercial and industrial loans and other commercial real estate loans.The increase in the allowance for credit losses at June 30, 2024 when compared to at March 31, 2024 and at December 31, 2023 was primarily due to an increase on reserves for individually analyzed loans and leases. During the second quarter of 2023, Peoples recorded a provision for credit losses of $8.1 million, largely attributable to a provision of $9.4 million for the non-purchased credit deteriorated loans acquired in the Limestone Merger, partially offset by the release of reserves of $1.7 million on individually analyzed loans and leases and a recovery of $1.0 million due to improvements in macro-economic conditi |
