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Note 16 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 16 – Commitments and Contingencies

The Bancorp is a party to financial instruments in the normal course of business to meet the financing needs of its customers. These financial instruments, which include commitments to make loans and standby letters of credit, are not reflected in the accompanying consolidated financial statements. Such financial instruments are recorded when they are funded.

The Bancorp’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to originate loans and standby letters of credit is represented by the contractual amount of those instruments. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. The Bancorp uses the same credit policy to make such commitments as it uses for on-balance sheet items. Since commitments to make loans may expire without being used, the amount does not necessarily represent future cash commitments.

The Bancorp had outstanding commitments to originate loans as follows:

		(Dollars in thousands)
		Fixed				Variable
		Rate				Rate				Total
December 31, 2021:
Residential real estate		$	34			$	19,261			$	19,295
Home equity			41,944				7,066				49,010
Commercial real estate			2,033				8,745				10,778
Construction and land development			34,817				24,491				59,308
Multifamily			229				958				1,187
Consumer			23,422				-				23,422
Commercial business			545				61,440				61,985
Lot			-				9,399				9,399
Total		$	103,024			$	131,360			$	234,384

December 31, 2020:
Residential real estate		$	749			$	21,961			$	22,710
Home equity			44,972				7,951				52,923
Commercial real estate			2,955				13,138				16,093
Construction and land development			20,667				30,959				51,626
Multifamily			158				579				737
Consumer			23,020				-				23,020
Commercial business			946				56,744				57,690
Lot			-				87				87
Total		$	93,467			$	131,419			$	224,886

The approximately $103.0 million in fixed rate commitments outstanding at December 31, 2021, had interest rates ranging from 2.25% to 10.00%, for a period not to exceed forty-five days. At December 31, 2020, fixed rate commitments outstanding of approximately $93.5 million had interest rates ranging from 2.25% to 10.00%, for a period not to exceed forty-five days. Mortgage interest rate locks with borrowers which are included with real estate commitments, were treated as derivative transactions.

Standby letters of credit are conditional commitments issued by the Bancorp to guarantee the performance of a customer to a third party. At December 31, 2021, and 2020, the Bancorp had standby letters of credit totaling approximately $12.3 and $11.5 million which are not included in the tables above, respectively. The Bancorp evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bancorp upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral obtained may include accounts receivable, inventory, property, land or other assets.