FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

6 Months Ended

Jun. 30, 2022

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. At June 30, 2022, and December 31, 2021 these financial instruments consisted of the following:


($ in thousands)	June 30, 2022				December 31, 2021
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans	$	102,763	$	5,582	$	80,760	$	23,946
Unused lines of credit	270,342		314,136		213,332		309,791
Standby letters of credit	4,045		9,256		2,586		9,737

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 1.0% to 18.0% and maturities ranging from approximately 1 year to 30 years.

ALLOWANCE FOR CREDIT LOSSES (“ACL”) ON OFF BALANCE SHEET CREDIT (“OBSC”) Exposures

The Company maintains a separate ACL on OBSC exposures, including unfunded commitments and letters of credit, which is included on the accompanying consolidated balance sheet as of June 30, 2022 and December 31, 2021. The ACL on OBSC exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

Changes in the ACL on OBSC exposures were as follows for the presented periods:


($ in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Balance at beginning of period	$	1,070	$	718	$	1,070	$	—
Adoption of ASU 326	—		—		—		718
Credit loss expense related to OBSC exposures	150		—		150		—
Balance at end of period	$	1,220	$	718	$	1,220	$	718

Adjustments to the ACL on OBSC exposures are recorded to provision for credit losses OBSC exposures. The increase in the ACL on OBSC exposures for the three and six months ended June 30, 2022 was primarily due to an increase in unfunded commitments.

No credit loss estimate is reported for OBSC exposures that are unconditionally cancellable by the Company or for undrawn amounts under such arrangements that may be drawn prior to the cancellation on the arrangement.