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Loans
 9 Months Ended
Sep. 30, 2023
Receivables [Abstract]  
Loans Loans
The table below identifies the Company’s loan portfolio segments and classes.
Portfolio SegmentClass of Financing Receivable
CommercialOwner occupied real estate
Non-owner occupied real estate
Residential spec homes
Development & spec land
Commercial and industrial
Real estateResidential mortgage
Residential construction
Mortgage warehouseMortgage warehouse
ConsumerDirect installment
Indirect installment
Home equity
Portfolio segment is defined as a level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Class of financing receivable is defined as a group of financing receivables determined on the basis of both of the following, 1) risk characteristics of the financing receivable, and 2) an entity’s method for monitoring and assessing credit risk. Generally, the Bank does not move loans from a revolving loan to a term loan other than construction loans. Residential construction loans are reviewed and rewritten prior to being originated as a term loan.
The following table presents total loans outstanding by portfolio class, as of September 30, 2023 and December 31, 2022:
September 30,
2023		December 31,
2022
Commercial
Owner occupied real estate$630,125 $594,562 
Non–owner occupied real estate1,244,371 1,187,077 
Residential spec homes12,414 10,838 
Development & spec land29,146 27,358 
Commercial and industrial673,188 647,587 
Total commercial2,589,244 2,467,422 
Real estate
Residential mortgage649,996 612,551 
Residential construction25,403 40,741 
Mortgage warehouse65,923 69,529 
Total real estate741,322 722,821 
Consumer
Direct installment54,399 56,614 
Indirect installment439,922 500,549 
Home equity534,115 410,592 
Total consumer1,028,436 967,755 
Total loans4,359,002 4,157,998 
Allowance for credit losses(49,699)(50,464)
Net loans$4,309,303 $4,107,534 
Total loans include net deferred loan costs of $23.1 million at September 30, 2023 and $22.7 million at December 31, 2022, respectively.

The risk characteristics of each loan portfolio segment are as follows:

Commercial

Commercial loans are primarily based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected, and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short–term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves larger loan principal amounts and the repayment of these loans is generally dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets, the general economy or fluctuations in interest rates. The properties securing the Company's commercial real estate portfolio are diverse in terms of property type, and are monitored for concentrations of credit. Management monitors and evaluates commercial real estate loans based on collateral, cash flow and risk grade criteria. As a general rule, the Company avoids financing single purpose projects unless other underwriting factors are present to help mitigate risk. In addition, management tracks the level of owner–occupied commercial real estate loans versus non–owner occupied loans.
Real Estate and Consumer

With respect to residential loans that are secured by 1–4 family residences and are generally owner occupied, the Company generally establishes a maximum loan–to–value ratio and requires private mortgage insurance if that ratio is exceeded. Home equity loans are typically secured by a subordinate interest in 1–4 family residences, and consumer loans are secured by consumer assets such as automobiles or recreational vehicles. Some consumer loans are unsecured such as small installment loans and certain lines of credit. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Repayment can also be impacted by changes in property values on residential properties. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.

Mortgage Warehousing

Horizon's mortgage warehouse lending has specific mortgage companies as customers of Horizon Bank. Individual mortgage loans originated by these mortgage companies are funded as a secured borrowing with a pledge of collateral under Horizon's agreement with the mortgage company. Each mortgage loan funded by Horizon undergoes an underwriting review by Horizon to the end investor guidelines and is assigned to Horizon until the loan is sold to the secondary market by the mortgage company. In addition, Horizon takes possession of each original note and forwards such note to the end investor once the mortgage company has sold the loan. At the time a loan is transferred to the secondary market, the mortgage company reacquires the loan under its option within the agreement. Due to the reacquire feature contained in the agreement, the transaction does not qualify as a sale and therefore is accounted for as a secured borrowing with a pledge of collateral pursuant to the agreement with the mortgage company. When the individual loan is sold to the end investor by the mortgage company, the proceeds from the sale of the loan are received by Horizon and used to pay off the loan balance with Horizon along with any accrued interest and any related fees. The remaining balance from the sale is forwarded to the mortgage company. These individual loans typically are sold by the mortgage company within 30 days and are seldom held more than 90 days. Interest income is accrued during this period and collected at the time each loan is sold. Fee income for each loan sold is collected when the loan is sold, and no costs are deferred due to the term between each loan funding and related payoff, which is typically less than 30 days.

Based on these agreements with each mortgage company, at any time a mortgage company can reacquire from Horizon its outstanding loan balance on an individual mortgage and regain possession of the original note. Horizon also has the option to request that the mortgage company reacquire an individual mortgage. Should this occur, Horizon would return the original note and reassign the assignment of the mortgage to the mortgage company. Also, in the event that the end investor would not be able to honor the purchase commitment and the mortgage company would not be able to reacquire its loan on an individual mortgage, Horizon would be able to exercise its rights under the agreement.
Non–performing Loans

The following table presents non–accrual loans and loans past due over 90 days still on accrual by class of loans at September 30, 2023:

September 30, 2023
Non–accrualLoans Past
Due Over 90
Days Still
Accruing		Total
Non–performing
Loans		Non–performing
with no Allowance for Credit Losses
Commercial
Owner occupied real estate$2,213 $— $2,213 $2,213 
Non–owner occupied real estate3,573 — 3,573 1,275 
Residential spec homes— — — — 
Development & spec land641 — 641 641 
Commercial and industrial492 50 542 243 
Total commercial6,919 50 6,969 4,372 
Real estate
Residential mortgage7,644 133 7,777 7,777 
Residential construction— — — — 
Mortgage warehouse— — — — 
Total real estate7,644 133 7,777 7,777 
Consumer
Direct installment132 — 132 132 
Indirect installment972 209 1,181 1,181 
Home equity3,389 — 3,389 3,389 
Total consumer4,493 209 4,702 4,702 
Total$19,056 $392 $19,448 $16,851 
The following table presents non–accrual loans, loans past due over 90 days still on accrual, and troubled debt restructurings (“TDRs”) by class of loan at December 31, 2022:

December 31, 2022
Non–accrualLoans Past
Due Over 90
Days Still
Accruing		Non–performing
TDRs		Performing
TDRs		Total
Non–performing
Loans		Non–performing
with no Allowance for Credit Losses
Commercial
Owner occupied real estate$3,423 $— $— $568 $3,991 $3,805 
Non–owner occupied real estate3,866 — — 269 4,135 2,211 
Residential spec homes101 — — — 101 101 
Development & spec land815 — — — 815 65 
Commercial and industrial288 — — — 288 288 
Total commercial8,493 — — 837 9,330 6,470 
Real estate
Residential mortgage5,479 43 1,210 1,391 8,123 8,123 
Residential construction— — — — — — 
Mortgage warehouse— — — — — — 
Total real estate5,479 43 1,210 1,391 8,123 8,123 
Consumer
Direct installment138 26 — — 164 164 
Indirect installment745 23 — — 768 768 
Home equity2,775 — 338 342 3,455 3,455 
Total consumer3,658 49 338 342 4,387 4,387 
Total$17,630 $92 $1,548 $2,570 $21,840 $18,980 
There was no interest income recognized on non–accrual loans during the nine months ended September 30, 2023 and 2022, respectively, while the loans were in non–accrual status.
The following table presents the payment status by class of loan, excluding non–accrual loans of $19.1 million at September 30, 2023:
September 30, 2023
Current30–59 Days
Past Due		60–89 Days
Past Due		90 Days or
Greater
Past Due		Total 
Past Due
Loans		Total
Loans
Commercial
Owner occupied real estate$631,843 $— $— $— $— $631,843 
Non–owner occupied real estate1,235,352 1,515 — — 1,515 1,236,867 
Residential spec homes12,414 — — — — 12,414 
Development & spec land28,505 — — — — 28,505 
Commercial and industrial672,131 390 125 50 565 672,696 
Total commercial2,580,245 1,905 125 50 2,080 2,582,325 
Real estate
Residential mortgage639,987 1,796 436 133 2,365 642,352 
Residential construction25,403 — — — — 25,403 
Mortgage warehouse65,923 — — — — 65,923 
Total real estate731,313 1,796 436 133 2,365 733,678 
Consumer
Direct installment53,848 418 1 — 419 54,267 
Indirect installment432,498 5,543 700 209 6,452 438,950 
Home equity528,561 2,088 77 — 2,165 530,726 
Total consumer1,014,907 8,049 778 209 9,036 1,023,943 
Total$4,326,465 $11,750 $1,339 $392 $13,481 $4,339,946 
The following table presents the payment status by class of loan, excluding non–accrual loans of $17.6 million and non–performing TDRs of $1.5 million at December 31, 2022:
December 31, 2022
Current30–59 Days
Past Due		60–89 Days
Past Due		90 Days or
Greater
Past Due		Total 
Past Due
Loans		Total
Commercial
Owner occupied real estate$590,870 $269 $— $— $269 $591,139 
Non–owner occupied real estate1,183,195 16 — — 16 1,183,211 
Residential spec homes10,737 — — — — 10,737 
Development & spec land26,513 — 30 — 30 26,543 
Commercial and industrial646,792 507 — — 507 647,299 
Total commercial2,458,107 792 30 — 822 2,458,929 
Real estate
Residential mortgage603,630 1,980 209 43 2,232 605,862 
Residential construction40,741 — — — — 40,741 
Mortgage warehouse69,529 — — — — 69,529 
Total real estate713,900 1,980 209 43 2,232 716,132 
Consumer
Direct installment56,266 168 16 26 210 56,476 
Indirect installment494,341 4,536 904 23 5,463 499,804 
Home equity405,405 1,413 661 — 2,074 407,479 
Total consumer956,012 6,117 1,581 49 7,747 963,759 
Total$4,128,019 $8,889 $1,820 $92 $10,801 $4,138,820 
The entire balance of a loan is considered delinquent if the minimum payment contractually required to be made is not received by the specified due date.
Modified Loans
The Company adopted ASU 2022–02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, during the first quarter of 2023. These amendments eliminated the TDR recognition and measurement guidance and, instead, require that an entity evaluate (consistent with the accounting for other loan modifications) whether the modification represents a new loan or a continuation of an existing loan. The amendments also enhance existing disclosure requirements and introduce new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. During the first nine months of 2023, the Company did not modify any loans.
Prior to the adoption of ASU 2022–02, loans modified as TDRs generally consisted of allowing borrowers to defer scheduled principal payments and make interest only payments for a specified period of time at the stated interest rate of the original loan agreement or lower payments due to a modification of the loans' contractual terms. TDRs that continued to accrue interest were individually monitored on a monthly basis and evaluated for impairment annually and transferred to non–accrual status when it was probable that any remaining principal and interest payments due on the loan would not be collected in accordance with the contractual terms of the loan. TDRs that subsequently default were individually evaluated for impairment at the time of default.
The following table presents TDRs by class of loan at December 31, 2022:
December 31, 2022
Non–accrualAccruingTotal
Commercial
Owner occupied real estate$— $568 $568 
Non–owner occupied real estate— 269 269 
Residential spec homes— — — 
Development & spec land— — — 
Commercial and industrial— — — 
Total commercial— 837 837 
Real estate
Residential mortgage1,210 1,391 2,601 
Residential construction— — — 
Mortgage warehouse— — — 
Total real estate1,210 1,391 2,601 
Consumer
Direct installment— — — 
Indirect installment— — — 
Home equity338 342 680 
Total consumer338 342 680 
Total$1,548 $2,570 $4,118 
Collateral Dependent Financial Assets
A collateral dependent financial loan relies solely on the operation or sale of the collateral for repayment. In evaluating the overall risk associated with the loan, the Company considers character, overall financial condition and resources, and payment record of the borrower; the prospects for support from any financially responsible guarantors; and the nature and degree of protection provided by the cash flow and value of any underlying collateral. However, as other sources of repayment become inadequate over time, the significance of the collateral's value increases and the loan may become collateral dependent.
The table below presents the amortized cost basis and allowance for credit losses (“ACL”) allocated for collateral dependent loans in accordance with ASC 326, which are individually evaluated to determine expected credit losses.
September 30, 2023
Real EstateAccounts Receivable/EquipmentOtherTotalACL
Allocation
Commercial
Owner occupied real estate$2,743 $— $— $2,743 $— 
Non–owner occupied real estate3,828 — — 3,828 789 
Development & spec land641 — — 641 — 
Commercial and industrial— 467 25 492 299 
Total commercial7,212 467 25 7,704 1,088 
Total collateral dependent loans$7,212 $467 $25 $7,704 $1,088 
December 31, 2022
Real EstateAccounts Receivable/EquipmentOtherTotalACL
Allocation
Commercial
Owner occupied real estate$3,905 $95 $— $4,000 $215 
Non–owner occupied real estate4,135 — — 4,135 988 
Residential spec homes101 — — 101 — 
Development & spec land815 — — 815 36 
Commercial and industrial— 248 31 279 — 
Total commercial8,956 343 31 9,330 1,239 
Total collateral dependent loans$8,956 $343 $31 $9,330 $1,239 
Credit Quality Indicators
Horizon Bank's processes for determining credit quality differ slightly depending on whether a new loan or a renewed loan is being underwritten, or whether an existing loan is being re–evaluated for credit quality. The latter usually occurs upon receipt of current financial information or other pertinent data that would trigger a change in the loan grade.
•For new and renewed commercial loans, the Bank's Credit Department, which acts independently of the loan officer, assigns the credit quality grade of the loans. Loan grades for loans with an aggregate credit exposure that exceeds the authorities in the respective regions (ranging from $3,000,000 to $6,000,000) are validated by the Loan Committee, which is chaired by the Chief Commercial Banking Officer (“CCBO”).
•Commercial loan officers are responsible for reviewing their loan portfolios and reporting any adverse material change to the CCBO or Loan Committee. When circumstances warrant a change in the credit quality grade, loan officers are required to notify the CCBO and the Credit Department of the change in the loan grade. Downgrades are accepted immediately by the CCBO, however, lenders must present their factual information to either the Loan Committee or the CCBO when recommending an upgrade.
•The CCBO, or a designee, meets periodically with loan officers to discuss the status of past due loans and classified loans. These meetings are also designed to give the loan officers an opportunity to identify an existing loan that should be downgraded to a classified grade.
•Monthly, senior management meets as members of the Watch Committee, which reviews all of the past due, classified, and impaired loans and the relative trends of these assets. This committee also reviews the actions taken by management regarding foreclosure mitigation, loan extensions, troubled debt restructures, other real estate owned and personal property repossessions. The information reviewed in this meeting acts as a precursor for developing management's analysis of the adequacy of the Allowance for Credit Losses.
For residential real estate and consumer loans, Horizon uses a grading system based on delinquency. Loans that are 90 days or more past due, on non–accrual, or are classified as modified loans are graded “Substandard.” After being 90 to 120 days delinquent a loan is charged off unless it is well secured and in the process of collection. If the latter case exists, the loan is placed on non–accrual. Occasionally a mortgage loan may be graded as “Special Mention.” When this situation arises, it is because the characteristics of the loan and the borrower fit the definition of a Risk Grade 5 described below, which is normally used for grading commercial loans. Loans not graded Substandard are considered Pass.
Horizon Bank employs a nine–grade rating system to determine the credit quality of commercial loans. The first five grades represent acceptable quality, and the last four grades mirror the criticized and classified grades used by the bank regulatory agencies (special mention, substandard, doubtful, and loss). The loan grade definitions are detailed below.
Risk Grade 1: Excellent (Pass)
Loans secured by liquid collateral, such as certificates of deposit, reputable bank letters of credit, or other cash equivalents or loans to any publicly held company with a current long–term debt rating of A or better and meeting defined key financial metric ranges.
Risk Grade 2: Good (Pass)
Loans to businesses that have strong financial statements containing an unmodified opinion from a CPA firm and at least three years consecutive years of profits; loans supported by unaudited financial statements containing strong balance sheets, five years consecutive years of profits, a five years satisfactory relationship with the Bank, and key balance sheet and income statement trends that are either stable or positive; loans secured by publicly traded marketable securities with required margins where there is no impediment to liquidation; loans to individuals backed by liquid personal assets and unblemished credit histories; or loans to publicly held companies with current long–term debt ratings of Baa or better and meeting defined key financial metric ranges.
Risk Grade 3: Satisfactory (Pass)
Loans supported by financial statements (audited or unaudited) that indicate average or slightly below average risk and having some deficiency or vulnerability to changing economic conditions; loans with some weakness but offsetting features of other support are readily available; loans that are meeting the terms of repayment, but which may be susceptible to deterioration if adverse factors are encountered and meeting defined key financial metric ranges. Loans may be graded Satisfactory when there is no recent information on which to base a current risk evaluation and the following conditions apply:
•At inception, the loan was properly underwritten, did not possess an unwanted level of credit risk, and the loan met the above criteria for a risk grade of Excellent, Good, or Satisfactory.
•At inception, the loan was secured with collateral possessing a loan value adequate to protect the Bank from loss.
•The loan has exhibited two or more years of satisfactory repayment with a reasonable reduction of the principal balance.
•During the period that the loan has been outstanding, there has been no evidence of any credit weakness. Some examples of weakness include slow payment, lack of cooperation by the borrower, breach of loan covenants, or the borrower is in an industry known to be experiencing problems. If any of these credit weaknesses is observed, a lower risk grade may be warranted.
Risk Grade 4: Satisfactory/Monitored (Pass)
Loans in this category are considered to be of acceptable credit quality, but contain greater credit risk than Satisfactory rated loans and meet defined key financial metric ranges. Borrower displays acceptable liquidity, leverage, and earnings performance within the Bank's minimum underwriting guidelines. The level of risk is acceptable but conditioned on the proper level of loan officer supervision. Loans that normally fall into this grade include acquisition, construction and development loans and income producing properties that have not reached stabilization.
Risk Grade 4W: Management Watch (Pass)
Loans in this category are considered to be of acceptable quality and meet defined key financial metric ranges, but with above normal risk. Borrower displays potential indicators of weakness in the primary source of repayment resulting in a higher reliance on secondary sources of repayment. Balance sheet may exhibit weak liquidity and/or high leverage. There is inconsistent earnings performance without the ability to sustain adverse economic conditions. Borrower may be operating in a declining industry or the property type, as for a commercial real estate loan, may be high risk or in decline. These loans require an increased level of loan officer supervision and monitoring to assure that any deterioration is addressed in a timely fashion. Commercial construction loans are graded as 4W Management Watch until the projects are completed and stabilized.
Risk Grade 5: Special Mention
Loans which possess some temporary (normally less than one year) credit deficiency or potential weakness which deserves close attention. Such loans pose an unwarranted financial risk that, if not corrected, could weaken the loan by adversely impacting the future repayment ability of the borrower. The key distinctions of a Special Mention classification are that (1) it is indicative of an unwarranted level of risk and (2) weaknesses are considered “potential,” not “defined,“ impairments to the primary source of repayment. These loans may be to borrowers with adverse trends in financial performance, collateral value and/or marketability, or balance sheet strength and must meet defined key financial metric ranges.
Risk Grade 6: Substandard
One or more of the following characteristics may be exhibited in loans classified Substandard:
•Loans which possess a defined credit weakness. The likelihood that a loan will be paid from the primary source of repayment is uncertain. Financial deterioration is under way and very close attention is warranted to ensure that the loan is collected without loss.
•Loans are inadequately protected by the current net worth and paying capacity of the obligor.
•The primary source of repayment is gone, and the Bank is forced to rely on a secondary source of repayment, such as collateral liquidation or guarantees.
•Loans have a distinct possibility that the Bank will sustain some loss if deficiencies are not corrected.
•Unusual courses of action are need to maintain a high probability of repayment.
•The borrower is not generating enough cash flow to repay loan principal; however, it continues to make interest payments.
•The lender is forced into a subordinated or unsecured position due to flaws in documentation.
•Loans have been restructured so that payment schedules, terms, and collateral represent concessions to the borrower when compared to the normal loan terms.
•The lender is seriously contemplating foreclosure or legal action due to the apparent deterioration in the loan.
•There is a significant deterioration in market conditions to which the borrower is highly vulnerable.
•The borrower meets defined key financial metric ranges.
Risk Grade 7: Doubtful
One or more of the following characteristics may be present in loans classified Doubtful:
•Loans have all of the weaknesses of those classified as Substandard; however, based on existing conditions, these weaknesses make full collection of principal highly improbable.
•The primary source of repayment is gone, and there is considerable doubt as to the quality of the secondary source of repayment.
•The possibility of loss is high but because of certain important pending factors which may strengthen the loan, loss classification is deferred until the exact status of repayment is known.
•The borrower meets defined key financial metric ranges.
Risk Grade 8: Loss
Loans are considered uncollectible and of such little value that continuing to carry them as assets is not feasible. Loans will be classified Loss when it is neither practical nor desirable to defer writing off or reserving all of a portion of a basically worthless asset, even though partial recovery may be possible at some time in the future.
The following tables present loans by credit grades and origination year at September 30, 2023.
September 30, 202320232022202120202019PriorRevolving Term LoansRevolving LoansTotal
Commercial
Owner occupied real estate
Pass$53,302 $100,237 $76,376 $45,263 $43,194 $185,182 $89,316 $10,534 $603,404 
Special Mention— 494 2,300 — 1,869 4,427 — — 9,090 
Substandard— 502 6,550 968 230 8,851 530 — 17,631 
Doubtful— — — — — — — — — 
Total owner occupied real estate$53,302 $101,233 $85,226 $46,231 $45,293 $198,460 $89,846 $10,534 $630,125 
Gross charge–offs during period$— $— $— $— $— $3 $229 $— $232 
Non–owner occupied real estate
Pass$100,630 $221,897 $165,258 $105,564 $84,773 $308,926 $195,691 $9,153 $1,191,892 
Special Mention— — 1,355 257 855 43,471 — — 45,938 
Substandard— — — 200 — 6,341 — — 6,541 
Doubtful— — — — — — — — — 
Total non–owner occupied real estate$100,630 $221,897 $166,613 $106,021 $85,628 $358,738 $195,691 $9,153 $1,244,371 
Gross charge–offs during period$— $— $— $— $— $9 $— $— $9 
Residential spec homes
Pass$— $— $499 $— $— $— $5,282 $6,633 $12,414 
Special Mention— — — — — — — — — 
Substandard— — — — — — — — — 
Doubtful— — — — — — — — — 
Total residential spec homes$— $— $499 $— $— $— $5,282 $6,633 $12,414 
Gross charge–offs during period$— $— $— $— $— $— $— $— $— 
Development & spec land
Pass$2,483 $1,483 $1,029 $405 $253 $3,077 $18,001 $192 $26,923 
Special Mention— — — — — — 1,376 — 1,376 
Substandard— — — — — 107 740 — 847 
Doubtful— — — — — — — — — 
Total development & spec land$2,483 $1,483 $1,029 $405 $253 $3,184 $20,117 $192 $29,146 
Gross charge–offs during period$— $— $— $— $— $— $— $— $— 
Commercial & industrial
Pass$84,871 $160,710 $99,659 $14,961 $22,595 $63,195 $52,741 $151,850 $650,582 
Special Mention898 736 303 1,637 141 1,027 2,239 5,560 12,541 
Substandard1,585 733 249 302 35 1,517 3,811 1,833 10,065 
Doubtful— — — — — — — — — 
Total commercial & industrial$87,354 $162,179 $100,211 $16,900 $22,771 $65,739 $58,791 $159,243 $673,188 
Gross charge–offs during period$— $32 $— $47 $25 $57 $119 $— $280 
September 30, 202320232022202120202019PriorRevolving Term LoansRevolving LoansTotal
Real estate
Residential mortgage
Performing$28,673 $146,772 $162,167 $87,164 $31,513 $185,930 $— $— $642,219 
Non–performing— 1,386 766 263 751 4,611 — — 7,777 
Total residential mortgage$28,673 $148,158 $162,933 $87,427 $32,264 $190,541 $— $— $649,996 
Gross charge–offs during period$— $— $— $— $— $19 $— $— $19 
Residential construction
Performing$— $— $— $— $— $— $25,403 $— $25,403 
Non–performing— — — — — — — — — 
Total residential construction$— $— $— $— $— $— $25,403 $— $25,403 
Gross charge–offs during period$— $— $— $— $— $— $— $— $— 
Mortgage warehouse
Performing$— $— $— $— $— $— $— $65,923 $65,923 
Non–performing— — — — — — — — — 
Total mortgage warehouse$— $— $— $— $— $— $— $65,923 $65,923 
Gross charge–offs during period$— $— $— $— $— $— $— $— $— 
September 30, 202320232022202120202019PriorRevolving Term LoansRevolving LoansTotal
Consumer
Direct installment
Performing$12,518 $14,672 $9,177 $4,853 $5,172 $5,622 $11 $2,242 $54,267 
Non–performing— 47 41 — 9 35 — — 132 
Total direct installment$12,518 $14,719 $9,218 $4,853 $5,181 $5,657 $11 $2,242 $54,399 
Gross charge–offs during period$10 $27 $4 $10 $2 $14 $6 $— $73 
Indirect installment
Performing$68,343 $208,336 $89,229 $41,267 $20,287 $11,279 $— $— $438,741 
Non–performing39 480 260 170 115 117 — — 1,181 
Total indirect installment$68,382 $208,816 $89,489 $41,437 $20,402 $11,396 $— $— $439,922 
Gross charge–offs during period$54 $942 $518 $115 $51 $48 $— $— $1,728 
Home equity
Performing$21,750 $22,633 $3,611 $2,617 $4,127 $10,841 $11,687 $453,460 $530,726 
Non–performing— 140 — 55 134 689 2,371 — 3,389 
Total home equity$21,750 $22,773 $3,611 $2,672 $4,261 $11,530 $14,058 $453,460 $534,115 
Gross charge–offs during period$— $10 $— $103 $— $15 $12 $— $140 
The following tables present loans by credit grades and origination year at December 31, 2022.
December 31, 202220222021202020192018PriorRevolving Term LoansRevolving LoansTotal
Commercial
Owner occupied real estate
Pass$101,713 $78,352 $50,363 $49,584 $38,068 $166,813 $76,493 $5,163 $566,549 
Special Mention— 6,677 — 7 — 2,729 83 — 9,496 
Substandard1,016 253 983 834 3,116 9,439 2,876 — 18,517 
Doubtful— — — — — — — — — 
Total owner occupied real estate$102,729 $85,282 $51,346 $50,425 $41,184 $178,981 $79,452 $5,163 $594,562 
Non–owner occupied real estate
Pass$183,862 $173,971 $134,394 $91,359 $57,345 $303,174 $182,681 $11,851 $1,138,637 
Special Mention— 1,415 265 883 39,239 617 — — 42,419 
Substandard— — 246 — 3,532 2,243 — — 6,021 
Doubtful— — — — — — — — — 
Total non–owner occupied real estate$183,862 $175,386 $134,905 $92,242 $100,116 $306,034 $182,681 $11,851 $1,187,077 
Residential spec homes
Pass$— $779 $— $— $— $— $4,333 $5,626 $10,738 
Special Mention— — — — — — — — — 
Substandard— — — — — — 100 — 100 
Doubtful— — — — — — — — — 
Total residential spec homes$— $779 $— $— $— $— $4,433 $5,626 $10,838 
Development & spec land
Pass$1,586 $1,230 $449 $270 $5 $9,717 $13,008 $22 $26,287 
Special Mention— — — — — 145 — — 145 
Substandard— — — — — 178 748 — 926 
Doubtful— — — — — — — — — 
Total development & spec land$1,586 $1,230 $449 $270 $5 $10,040 $13,756 $22 $27,358 
Commercial & industrial
Pass$174,482 $118,498 $20,939 $28,383 $28,061 $49,339 $49,276 $159,017 $627,995 
Special Mention718 368 31 53 706 1,551 — 1,208 4,635 
Substandard— 228 2,216 83 1,293 1,648 2,322 7,167 14,957 
Doubtful— — — — — — — — — 
Total commercial & industrial$175,200 $119,094 $23,186 $28,519 $30,060 $52,538 $51,598 $167,392 $647,587 
Total commercial$463,377 $381,771 $209,886 $171,456 $171,365 $547,593 $331,920 $190,054 $2,467,422 
December 31, 202220222021202020192018PriorRevolving Term LoansRevolving LoansTotal
Real estate
Residential mortgage
Performing$107,224 $157,387 $91,314 $33,768 $36,147 $178,588 $— $— $604,428 
Non–performing— 493 285 623 631 6,091 — — 8,123 
Total residential mortgage$107,224 $157,880 $91,599 $34,391 $36,778 $184,679 $— $— $612,551 
Residential construction
Performing$— $— $— $— $— $— $40,741 $— $40,741 
Non–performing— — — — — — — — — 
Total residential construction$— $— $— $— $— $— $40,741 $— $40,741 
Mortgage warehouse
Performing$— $— $— $— $— $— $— $69,529 $69,529 
Non–performing— — — — — — — — — 
Total mortgage warehouse$— $— $— $— $— $— $— $69,529 $69,529 
Total real estate$107,224 $157,880 $91,599 $34,391 $36,778 $184,679 $40,741 $69,529 $722,821 
December 31, 202220222021202020192018PriorRevolving Term LoansRevolving LoansTotal
Consumer
Direct installment
Performing$18,935 $12,233 $7,182 $7,582 $3,939 $4,419 $9 $2,151 $56,450 
Non–performing— 50 13 65 25 11 — — 164 
Total direct installment$18,935 $12,283 $7,195 $7,647 $3,964 $4,430 $9 $2,151 $56,614 
Indirect installment
Performing$259,446 $118,961 $60,062 $34,576 $19,062 $7,674 $— $— $499,781 
Non–performing27 169 210 181 101 80 — — 768 
Total indirect installment$259,473 $119,130 $60,272 $34,757 $19,163 $7,754 $— $— $500,549 
Home equity
Performing$26,232 $3,820 $3,355 $4,964 $5,392 $9,463 $7,089 $346,822 $407,137 
Non–performing108 16 19 140 152 1,077 1,943 — 3,455 
Total home equity$26,340 $3,836 $3,374 $5,104 $5,544 $10,540 $9,032 $346,822 $410,592 
Total consumer$304,748 $135,249 $70,841 $47,508 $28,671 $22,724 $9,041 $348,973 $967,755