Commitments and Contingent Liabilities

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Federal Home Loan Bank Secured Line of Credit

As of September 30, 2023 and December 31, 2022, the Bank’s available line of credit with the FHLB to borrow in overnight funds was $32.0 million and $2.6 million, respectively. All borrowings are short-term and the interest rate is equal to the correspondent bank’s daily federal funds purchase rate. As of September 30, 2023 and December 31, 2022, no amounts were outstanding under the line of credit. Loans totaling $49.2 million and $4.0 million were pledged to secure the FHLB line of credit as of September 30, 2023 and December 31, 2022, respectively.

Lines of Credit

At September 30, 2023 and December 31, 2022, the Bank had the ability to access $11.6 million and $10.6 million from the Federal Reserve Bank’s Discount Window on a collateralized basis. At September 30, 2023, the Bank had the ability to access $0.8 million from the Federal Reserve Bank’s Bank Term Funding Program on a collateralized basis. Through Zions Bank, the Bank had an available unsecured line available of $5.0 million and $1.0 million at September 30, 2023 and December 31, 2022. The Bank had an available line of credit with Bankers’ Bank of the West to borrow up to $1.1 million in overnight funds at September 30, 2023 and December 31, 2022. The Bank had no outstanding balances on such unsecured or secured lines of credit as of September 30, 2023 and December 31, 2022.

Paycheck Protection Program Liquidity Facility

On April 20, 2020, the Bank was approved by the Federal Reserve to access its SBA Paycheck Protection Program Liquidity Facility (“PPPLF”) through the discount window. The PPPLF enables the Company to fund Paycheck Protection Program ("PPP") loans without taking on additional liquidity or funding risks because the Company is able to pledge PPP loans as collateral to secure extensions of credit under the PPPLF on a non-recourse basis. Borrowings under the PPPLF have a fixed-rate of 0.35%, with a term that matches the underlying loans. The Bank pledged $0.2 million of PPP loans as eligible collateral under the PPPLF borrowing arrangement at September 30, 2023. The Bank pledged $0.3 million of PPP loans as eligible collateral under the PPPLF borrowing arrangement at December 31, 2022. The average outstanding borrowings were $0.3 million during the nine months ended September 30, 2023 and $0.6 million during the nine months ended September 30, 2022.

Commitments to Extend Credit

In the ordinary course of business, the Bank has entered into commitments to extend credit to customers which have not yet been exercised. These financial instruments include commitments to extend credit in the form of loans. Those instruments involve to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

At September 30, 2023 and December 31, 2022, financial instruments with off-balance-sheet risk were as follows:


	September 30,		December 31,
($ in thousands)	2023		2022
Revolving, open-end lines of credit	$	2,237	$	1,683
Commercial real estate	20,886		17,886
Other unused commitments	367		253
	$	23,490	$	19,822

Allowance for Credit Losses on Unfunded Commitments

The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancelable by the Company. The allowance for credit losses on unfunded commitments is included in other liabilities on the consolidated balance sheets and is adjusted through a charge to provision for credit loss expense on the consolidated statements of income. The allowance for credit losses on unfunded commitments estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance for credit losses on unfunded commitments was $0.2 million as of September 30, 2023.