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COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS OF CREDIT RISK
 12 Months Ended
Dec. 31, 2024
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS OF CREDIT RISK COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS OF CREDIT RISK
In the normal course of business, there are outstanding various commitments and contingent liabilities, such as guaranties, commitments to extend credit, overdraft protection, etc., which are not reflected in the accompanying financial statements. Commitments to extend credit and letters of credit include some exposure to credit loss in the event of nonperformance of the customer. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit policies and procedures for such commitments are the same as those used for lending activities. Because these instruments have fixed maturity dates and because a number expire without being drawn upon, they generally do not present any significant liquidity risk. No significant losses on commitments were incurred during the years ended December 31, 2024 and 2023, nor are any significant losses as a result of these transactions anticipated.
The contractual amounts of financial instruments with off-balance-sheet risk at year-end were as follows:
20242023
($ in thousands)
Fixed Rate
Variable Rate
Fixed Rate
Variable Rate
Commitments to make loans$23,430 $39,796 $34,380 $50,226 
Unused lines of credit126,592 706,585 231,335 605,646 
Standby letters of credit13,405 16,331 15,573 13,114 
Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 0.0% to 19.0% and maturities ranging from 1 year to 30 years.
ALLOWANCE FOR CREDIT LOSSES (“ACL”) ON OFF BALANCE SHEET CREDIT (“OBSC”) Exposures
The Company adopted ASC 326, effective January 1, 2021, which requires the Company to estimate expected credit losses for OBSC exposures which are not unconditionally cancellable. The Company maintains a separate ACL on OBSC exposures, including unfunded commitments and letters of credit, which is included on the accompanying consolidated balance sheet for the years ended December 31, 2024 and 2023. The ACL on OBSC exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.
Changes in the ACL on OBSC exposures were as follows for the presented periods:
($ in thousands)202420232022
Balance at beginning of period$2,075$1,325$1,070
Credit loss expense related to OBSC exposures32750255
Balance at end of period$2,107$2,075$1,325
Adjustments to the ACL on OBSC exposures are recorded to provision for credit losses OBSC exposures. The Company recorded $32 thousand, $750 thousand, and $255 thousand to the provision for credit losses OBSC exposures for the years ended December 31, 2024, 2023, and 2022 respectively. The decrease in the ACL on OBSC exposures for the year ended December 31, 2024 compared to the same period in 2023 was due to the day one provision for unfunded commitments related to the HSBI acquisition and an increase in unfunded commitments. The increase in the ACL on OBSC exposures for the year ended December 31, 2023 compared to the same period in 2022 was due to the acquisition of HSBI mentioned above.
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.
The Company currently has 109 full-service banking and financial service offices, one motor bank facility and six loan production offices across Mississippi, Alabama, Florida, Georgia, and Louisiana. Management closely monitors its
credit concentrations and attempts to diversify the portfolio within its primary market area. As of December 31, 2024, management does not consider there to be any significant credit concentrations within the loan portfolio. Although the Bank’s loan portfolio, as well as existing commitments, reflects the diversity of its primary market area, a substantial portion of a borrower's ability to repay a loan is dependent upon the economic stability of the area.
In the normal course of business, the Company and its subsidiary are subject to pending and threatened legal actions. Although the Company is not able to predict the outcome of such actions, after reviewing pending and threatened actions with counsel, management believes that based on the information currently available the outcome of such actions, individually or in the aggregate, will not have a material adverse effect on the Company’s consolidated financial statements.