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Off-Balance Sheet Loan Commitments
 9 Months Ended
Sep. 30, 2014
Commitments And Contingencies Disclosure [Abstract]  
Off-Balance Sheet Loan Commitments

NOTE 10 - OFF-BALANCE SHEET LOAN COMMITMENTS

From time to time, 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. These financial instruments include commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the balance sheet. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments.

The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

The contractual amounts of financial instruments with off-balance-sheet risk were as follows:

  

 

 

September 30, 2014

 

 

December 31, 2013

 

 

 

Fixed

 

 

Variable

 

 

Fixed

 

 

Variable

 

 

 

Rate

 

 

Rate

 

 

Rate

 

 

Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments to make loans

 

$

6,170

 

 

$

10,800

 

 

$

7,437

 

 

$

4,823

 

Unused lines of credit

 

 

35,010

 

 

 

199,107

 

 

 

33,470

 

 

 

104,896

 

Standby letters of credit

 

 

2,098

 

 

 

1,362

 

 

 

2,147

 

 

 

1,897

 

 

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. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by the Company, upon extension of credit, is based on management’s credit evaluation of the customer.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event of nonperformance by the customer, the Company has rights to the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The credit risk to the Company in issuing letters of credit is essentially the same as that involved in extending loan facilities to its customers.