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Note 13 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Commitments Disclosure [Text Block]

NOTE 13 - COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers. These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit. Those instruments involve to varying degrees, elements of credit and interest rate risk not recognized in the Company's financial statements.

The Company's exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for loans reflected in the financial statements.

As of December 31, 2023 and 2022, the Company had the following financial commitments whose contractual amount represents credit risk:

		*2023*								*2022*
		*Fixed*				*Variable*				*Fixed*				*Variable*
*(dollars in thousands)*		*Rate*				*Rate*				*Rate*				*Rate*
Commitments to make loans		$	614			$	77,230			$	1,141			$	128,680
Unused lines of credit			10,629				95,686				13,730				197,314
Commercial and similar letters of credit			90				3,814				1,154				867
Standby letters of credit			1,626				1,061				1,577				1,061
Total		$	12,959			$	177,791			$	17,602			$	327,922

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. Since many of the commitments are expected to expire without being drawn upon, the total 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 is based on management's credit evaluation of the customer.

The Company records a liability for lifetime expected losses on off-balance-sheet credit exposure that do not fit the definition of unconditionally cancelable in accordance with ASC 326. The Company uses the loss rate and exposure of default framework to estimate a reserve for unfunded commitments. Loss rates for the expected funded balances are determined based on the associated pooled loan analysis loss rate and the exposure at default is based on an estimated utilization given default. The off-balance sheet commitment allowance were $640,000 and $1.2 million as of December 31, 2023 and December 31, 2022, respectively. The (reversal of)/provision for off-balance sheet commitments totaled were ($516,000) and $1.1 million for the years ended December 31, 2023 and 2022.

Additionally, we have commitments to invest in certain affordable housing partnerships and SBIC funds that call for capital contributions up to an amount specific in the partnership agreements. Such unfunded commitments totaled $3.3 million and $3.5 million as of December 31, 2023 and 2022.

The Company is involved in various matters of litigation, which have arisen in the ordinary course of business, and accruals for estimates of potential losses have been provided when necessary and appropriate under generally accepted accounting principles. In the opinion of management, the disposition of such pending litigation will not have a material effect on the Company's financial statements.