XML 31 R20.htm IDEA: XBRL DOCUMENT v3.25.2
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
 6 Months Ended
Jun. 30, 2025
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 clients. 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 at June 30, 2025 and December 31, 2024.
Contractual or Notional Amount
June 30, 2025December 31, 2024
Commitments to fund:
Home equity lines of credit$543,842 $538,204 
1-4 family residential construction loans106,952 107,475 
Commercial real estate, construction and land development loans204,832 236,445 
Commercial, industrial and other loans599,659 706,783 
Letters of credit38,326 42,691 
Commitments to extend credit are agreements to lend to a client 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 the 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 client’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 client. 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 client 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 clients. The Company holds collateral supporting those commitments when deemed necessary by management. The liability at June 30, 2025 and December 31, 2024 for guarantees under standby letters of credit issued was not considered to be material.
The Company maintains a reserve on its off-balance sheet credit exposures, which totaled $2.4 million at June 30, 2025 and $2.5 million at December 31, 2024, respectively, and is recorded in other liabilities on the unaudited condensed consolidated balance sheets. The reserve is based on management's estimate of expected losses in its off-balance sheet credit exposures. The reserve specific to unfunded loan commitments is determined by applying utilization assumptions based on historical experience and applying the expected loss rates by loan class. The change in the reserve for off-balance sheet credit exposures is recorded as a provision or reduction to expense through the provision for credit losses in the unaudited condensed consolidated statements of income. The Company recorded a recovery of credit losses for off-balance sheet exposure of $100 thousand for the three and six months ended June 30, 2025. The Company recorded no provision for credit losses for the three months ended June 30, 2024. For the six months ended June 30, 2024, the Company recorded a recovery of credit losses for off-balance sheet exposure of $123 thousand.