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Commitments and Contigent Liabilities
 12 Months Ended
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

NOTE 16: COMMITMENTS AND CONTINGENT LIABILITIES

 

Credit-Related Financial Instruments

       

The Company is party to credit related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

 

The Company's exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments.

 

At December 31, 2012 and 2011, the following financial instruments were outstanding whose contract amount represents credit risk:

  December 31
(Dollars in thousands)2012 2011
Commitments to extend credit$48,525 $45,882
Standby letters of credit 7,093  8,212
      

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the agreement. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for lines of credit may expire without being drawn upon. Therefore, total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management's credit evaluation of the customer.

 

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support public and private borrowing arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company holds various assets as collateral supporting those commitments for which collateral is deemed necessary. The Company has recorded a liability for the estimated fair value of these standby letters of credit in the amount of $74 thousand and $69 thousand at December 31, 2012 and 2011, respectively.

 

Other Commitments

       

Minimum lease payments under leases classified as operating leases due in each of the five years subsequent to December 31, 2012, are as follows: 2013, $298 thousand; 2014, $179 thousand; 2015, $137 thousand; 2016, $95 thousand; 2017, $45 thousand.       

 

Contingent Liabilities

 

The Company and the Bank are involved in various legal proceedings, arising in connection with their business. In the opinion of management, based upon consultation with legal counsel, the ultimate resolution of these proceeding will not have a material adverse affect upon the consolidated financial condition or results of operations of the Company and the Bank.