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Note 15 - Commitments | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Lease Disclosure [Text Block] |
15. | C OMMITMENTS
In the normal course of business, there are various outstanding commitments and certain contingent liabilities which are not reflected in the accompanying consolidated financial statements. These commitments and contingent liabilities represent financial instruments with off-balance sheet risk. The contract or notional amounts of those instruments reflect the extent of involvement in particular types of financial instruments which were composed of the following at December 31:
(Dollar amounts in thousands) |  | 2019 |  |  | 2018 |
Commitments to extend credit |  | $ | 260,579 |  |  | $ | 228,427 |
Standby letters of credit |  |  | 1,616 |  |  |  | 1,656 |
Total |  | $ | 262,195 |  |  | $ | 230,083 |
These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Balance Sheet. The Company’s exposure to credit loss, in the event of nonperformance by the other parties to the financial instruments, is represented by the contractual amounts as disclosed. The Company minimizes its exposure to credit loss under these commitments by subjecting them to credit approval and review procedures and collateral requirements as deemed necessary. Commitments generally have fixed expiration dates within one year of their origination. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments are issued primarily to support bid or performance-related contracts. The coverage period for these instruments is typically a one -year period with an annual renewal option subject to prior approval by management. Fees earned from the issuance of these letters are recognized over the coverage period. For secured letters of credit, the collateral is typically bank deposit instruments or customer business assets. Leasing Commitments The Company leases seven of its branch locations and one loan production office. As of December 31, 2019, net assets recorded under leases amounted to $4.9 million and have remaining lease terms of 1 year to 20 years. As of December 31, 2019, finance lease assets included in premises and equipment, net, totaled $4.0 million and operating lease assets included in accrued interest receivable and other assets on the Consolidated Balance Sheet totaled $903,000. As of December 31, 2019, finance lease obligations included in other borrowings totaled $4.1 million and operating lease obligations included in accrued interest payable and other liabilities on the Consolidated Balance Sheet totaled $906,000. On April 17, 2019, the Company purchased a building to relocate the Mantua branch which is and has been at a leased location as of December 31, 2019. The relocation is planned for 2020, and the Company entered into an amended lease agreement with the Mantua lessor which does not exceed 12 months. As such, the lease for the Mantua location is not considered a capitalized lease as of December 31, 2019. Lease costs incurred are as follows:
|  | For the Twelve |
|  | Months Ended |
|  | December 31, 2019 |
Lease Costs: |  |  |  |
Finance lease cost: |  |  |  |
Amortization of right-of-use asset |  | $ | 360 |
Interest Expense |  |  | 132 |
Other |  |  | 57 |
Operating lease cost |  |  | 245 |
Total lease cost |  | $ | 794 |
The following table displays the weighted-average term and discount rates for both operating and finance leases outstanding as of December 31, 2019:
|  | Operating |  |  | Finance |
Weighted-average term (years) |  |  | 6.5 |  |  |  | 13.7 |
Weighted-average discount rate |  |  | 2.9 | % |  |  | 3.3 | %
The following table displays the undiscounted cash flows due related to operating and finance leases as of December 31, 2019, along with a reconciliation to the discounted amount recorded on the December 31, 2019 balance sheet:
|  | Operating |  |  | Finance |
Undiscounted cash flows due within: |  |  |  |  |  |  |  |
2020 |  | $ | 185 |  |  | $ | 458 |
2021 |  |  | 169 |  |  |  | 476 |
2022 |  |  | 169 |  |  |  | 478 |
2023 |  |  | 169 |  |  |  | 478 |
2024 |  |  | 133 |  |  |  | 478 |
2025 and thereafter |  |  | 174 |  |  |  | 2,749 |
Total undiscounted cash flows |  |  | 999 |  |  |  | 5,117 |
Impact of present value discount |  |  | (93 | ) |  |  | (1,019 | )
Amount reported on balance sheet |  | $ | 906 |  |  | $ | 4,098 |

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