Note 8 - Commitments and Off-Balance Sheet Risk

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Commitments Contingencies and Guarantees [Text Block]

8.

    

COMMITMENTS AND OFF-BALANCE SHEET RISK

Our bank is a party to 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. Loan commitments to extend credit are agreements to lend to a customer as long as there is

no

violation of any condition established in the contract. Standby letters of credit are conditional commitments issued by our bank to guarantee the performance of a customer to a

third

party. Commitments generally have fixed expiration dates or other termination clauses and

may

require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do

not

necessarily represent future cash requirements.

These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized, if any, in the balance sheet. Our bank’s maximum exposure to loan loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. Our bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Collateral, such as accounts receivable, securities, inventory, and property and equipment, is generally obtained based on our credit assessment of the borrower. If required, estimated loss exposure resulting from these instruments is expensed and is generally recorded as a liability. There was

no

reserve or liability balance for these instruments as of

March 31, 2018

and

December 31, 2017.

A summary of the contractual amounts of our financial instruments with off-balance sheet risk at

March 31, 2018

and

December 31, 2017

follows:

	March 31,		December 31,
	2018		2017
Commercial unused lines of credit	$	678,832,000	$	682,202,000
Unused lines of credit secured by 1 – 4 family residential properties		60,930,000		61,606,000
Credit card unused lines of credit		42,693,000		39,807,000
Other consumer unused lines of credit		17,788,000		17,629,000
Commitments to make loans		238,437,000		184,923,000
Standby letters of credit		23,592,000		26,030,000
	$	1,062,272,000	$	1,012,197,000