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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | 9 Months Ended
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Sep. 30, 2021
Fair Value Disclosures [Abstract] |
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK | 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. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the unaudited condensed consolidated balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. 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 and financial guarantees written 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 following table presents these contractual, or notional, amounts:
| Contractual or Notional Amount
| September 30, 2021 |  | December 31, 2020
Commitments to fund: |  |  |
Home equity lines of credit | $ | 251,607 |  |  | $ | 223,216 |
1-4 family residential construction loans | 35,519 |  |  | 28,928 |
Commercial real estate, construction and land development loans | 122,850 |  |  | 60,606 |
Commercial, industrial and other loans | 339,569 |  |  | 268,931 |
Standby letters of credit | 21,423 |  |  | 14,491 |
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 drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral varies but may include accounts receivable, inventory, equipment, residential real estate, and income-producing commercial properties. Standby letters of credit and financial guarantees written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company holds collateral supporting those commitments when deemed necessary by management. The liability, at September 30, 2021 and December 31, 2020, for guarantees under standby letters of credit issued was not considered to be material. The Company maintains a reserve, based on historical loss experience of the related loan class and utilization assumptions, for off-balance sheet credit exposures that currently are not funded, in other liabilities on the unaudited condensed consolidated balance sheets. A review of historical loss and line utilization experience in the nine months ended September 30, 2021 resulted in a reduction of loss and utilization assumptions from prior periods. This reserve totaled $1.4 million at September 30, 2021 and $1.5 million at December 31, 2020.

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