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Allowance for Credit and Loan Losses
 9 Months Ended
Sep. 30, 2020
Receivables [Abstract]  
Allowance for Credit and Loan Losses Allowance for Credit and Loan Losses
The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the three months ended September 30, 2020 and 2019:
Three Months Ended September 30, 2020
CommercialReal EstateMortgage WarehouseConsumerTotal
Balance, beginning of period$39,147 $5,832 $1,190 $8,921 $55,090 
Provision for credit losses on loans1,136 (232)60 1,088 2,052 
Charge–offs(502)(144)— (510)(1,156)
Recoveries14 8 — 311 333 
Balance, end of period$39,795 $5,464 $1,250 $9,810 $56,319 

Three Months Ended September 30, 2019
CommercialReal EstateMortgage WarehouseConsumerTotal
Balance, beginning of period$11,881 $1,732 $1,040 $3,652 $18,305 
Provision for credit losses on loans393 (290)1 272 376 
Charge–offs(224)— — (758)(982)
Recoveries32 7 — 218 257 
Balance, end of period$12,082 $1,449 $1,041 $3,384 $17,956 

The following tables represent, by loan portfolio segment, a summary of changes in the ACL on loans for the nine months ended September 30, 2020 and 2019:
Nine Months Ended September 30, 2020
CommercialReal EstateMortgage WarehouseConsumerTotal
Balance, beginning of period$11,996 $923 $1,077 $3,671 $17,667 
Impact of adopting ASC 32610,832 4,048 — 4,911 19,791 
Initial PCD allowance2,786 — — — 2,786 
Provision for credit losses on loans14,655 670 173 2,211 17,709 
Charge–offs(586)(204)— (1,654)(2,444)
Recoveries112 27 — 671 810 
Balance, end of period$39,795 $5,464 $1,250 $9,810 $56,319 

Nine Months Ended September 30, 2019
CommercialReal EstateMortgage WarehouseConsumerTotal
Balance, beginning of period$10,495 $1,676 $1,006 $4,643 $17,820 
Provision for credit losses on loans2,105 (220)35 (284)1,636 
Charge–offs(640)(48)— (1,669)(2,357)
Recoveries122 41 — 694 857 
Balance, end of period$12,082 $1,449 $1,041 $3,384 $17,956 
The Company utilized the Cumulative Loss Rate method in determining expected future credit losses. The loss rate method measures the amount of loan charge–offs, net of recoveries, (“loan losses”) recognized over the life of a pool and compares those loan losses to the outstanding loan balance of that pool as of a specific point in time (“pool date”).
To estimate a CECL loss rate for the pool, management first identifies the loan losses recognized between the pool date and the reporting date for the pool and determines which loan losses were related to loans outstanding at the pool date. The loss rate method then divides the loan losses recognized on loans outstanding as of the pool date by the outstanding loan balance as of the pool date.
The Company’s expected loss estimate is anchored in historical credit loss experience, with an emphasis on all available portfolio data. The Company's historical look–back period includes January 2012 through the current period, on a monthly basis. When historical credit loss experience is not sufficient for a specific portfolio, the Company may supplement its own portfolio data with external models or data.
Qualitative reserves reflect management’s overall estimate of the extent to which current expected credit losses on collectively evaluated loans will differ from historical loss experience. The analysis takes into consideration other analytics performed within the organization, such as enterprise and concentration management, along with other credit–related analytics as deemed appropriate. Management attempts to quantify qualitative reserves whenever possible.
The Company’s CECL estimate applies to a forecast that incorporates macroeconomic trends and other environmental factors. Management utilized National, Regional and Local Leading Economic Indexes, as well as management judgment, as the basis for the forecast period. The historical loss rate was utilized as the base rate, and qualitative adjustments were utilized to reflect the forecast and other relevant factors.
The Company segments the loan portfolio into pools based on the following risk characteristics: financial asset type, loan purpose, collateral type, loan characteristics, credit characteristics, outstanding loan balances, contractual terms and prepayment assumptions, industry of the borrower and concentrations, and historical or expected credit loss patterns.
The $17.7 million ACL provision included special allocations related to the potential impact due to the nature and characteristics on certain loan types including, non–owner occupied retail, leisure and hospitality, and unstabilized commercial real estate while continuing allocations for hotels and restaurants, as a result of the COVID–19 business restrictions implemented by the Federal Government and the states in which Horizon operates (Indiana and Michigan). Extensive analysis and monitoring of these portfolios has been undertaken and, while no loss has been specifically identified, the risks to certain borrowers are elevated and, therefore, the special allocation was deemed prudent.
The following table presents the balance in the allowance for credit loss and the recorded investment in loans, by portfolio segment, and based on impairment analysis as of December 31, 2019:
December 31, 2019
CommercialReal EstateMortgage
Warehousing		ConsumerTotal
Allowance For Loan Losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment$541 $— $— $— $541 
Collectively evaluated for impairment11,455 923 1,077 3,671 17,126 
Loans acquired with deteriorated credit quality— — — — — 
Total ending allowance balance$11,996 $923 $1,077 $3,671 $17,667 
Loans:
Individually evaluated for impairment$7,347 $— $— $— $7,347 
Collectively evaluated for impairment2,040,299 770,705 150,293 665,952 3,627,249 
Loans acquired with deteriorated credit quality— — — — — 
Total ending loans balance$2,047,646 $770,705 $150,293 $665,952 $3,634,596