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Off-Balance Sheet Commitments | 12 Months Ended
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Dec. 31, 2020
Risks And Uncertainties [Abstract] |
Off-Balance Sheet Commitments | Note 19 — Off-Balance Sheet Commitments The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk similar to the risk involved with on-balance sheet items recognized in the Consolidated Balance Sheets and may expire without ever being utilized. The Bank’s exposure to loan losses in the event of non-performance by the other party to commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for extending loan facilities to customers. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, was based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, premises and equipment, and income-producing or borrower-occupied properties. The following table shows the distribution of undisbursed loan commitments as of the dates indicated:
|  | December 31, |
|  | 2020 |  |  | 2019 |
|  | (in thousands) |
Commitments to extend credit |  | $ | 453,900 |  |  | $ | 371,287 |
Standby letters of credit |  |  | 47,169 |  |  |  | 31,372 |
Commercial letters of credit |  |  | 54,547 |  |  |  | 11,133 |
Total undisbursed loan commitments |  | $ | 555,616 |  |  | $ | 413,792 |
The allowance for credit losses related to off-balance sheet items is maintained at a level believed to be sufficient to absorb probable losses related to these unfunded credit facilities. The determination of the allowance adequacy is based on periodic evaluations of the unfunded credit facilities including an assessment of the probability of commitment usage, credit risk factors for loans outstanding to these same customers, and the terms and expiration dates of the unfunded credit facilities. Net adjustments to the allowance for credit losses related to off-balance sheet items are included in other operating expenses. Activity in the allowance for credit losses related to off-balance sheet items was as follows for the periods indicated:
|  | As of and for the Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands) |
Balance at beginning of period |  | $ | 2,397 |  |  | $ | 1,439 |  |  | $ | 1,296 |
Adjustment related to adoption of ASU 2016-13 |  |  | (335 | ) |  |  | — |  |  |  | — |
Adjusted balance |  | $ | 2,062 |  |  |  | 1,439 |  |  |  | 1,296 |
Provision expense for credit losses |  |  | 730 |  |  |  | 958 |  |  |  | 143 |
Balance at end of period |  | $ | 2,792 |  |  | $ | 2,397 |  |  | $ | 1,439 |

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- Definition The entire disclosure for any concentrations existing at the date of the financial statements that make an entity vulnerable to a reasonably possible, near-term, severe impact. This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI http://asc.fasb.org/topic&trid=2134479 + Details
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