COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

NOTE 17 – COMMITMENTS AND CONTINGENCIES

Lending and Letter of Credit Commitments

In the normal course of business, the Company enters into various commitments to extend credit which are not reflected in the financial statements. These commitments consist of the undisbursed balance on personal and commercial lines of credit and of undisbursed funds on construction and development loans. At June 30, 2018 and December 31, 2017, undisbursed commitments total $87.9 million and $98.7 million, respectively. In addition, at June 30, 2018 and December 31, 2017, the Company has issued standby letter of credit commitments, primarily issued for the third party performance obligations of Company clients totaling $230,000 and $213,000, respectively, of which none was outstanding at both June 30, 2018 and December 31, 2017.

The actual liquidity needs or the credit risk that the Company will experience will be lower than the contractual amount of commitments to extend credit because a significant portion of these commitments are expected to expire without being drawn upon. The Company’s outstanding loan commitments are made using the same underwriting standards as comparable outstanding loans. As of June 30, 2018 and December 31, 2017, the reserve associated with these commitments was $310,000.

Local Agency Deposits

In the normal course of business, the Company accepts deposits from local agencies. The Company is required to provide collateral for certain local agency deposits in the states of California and Washington. As of June 30, 2018 and December 31, 2017 the FHLB issued a letter of credit on behalf of the Company totaling $7.5 million as collateral for local agency deposits.