Note 20 - Commitments, Guarantees, and Contingent Liabilities

12 Months Ended

Dec. 31, 2011

Commitments Contingencies and Guarantees [Text Block]

20.   COMMITMENTS, GUARANTEES, AND CONTINGENT LIABILITIES

Credit Commitments and Guarantees

In the normal course of business, the Company enters into a variety of financial instruments with off-balance sheet risk to meet the financing needs of its customers and to conduct lending activities. These instruments include commitments to extend credit and standby and commercial letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the Consolidated Statements of Financial Condition.

Contractual or Notional Amounts of Financial Instruments

(Dollar amounts in thousands)

	December 31,
	2011		2010
Commitments to extend credit:
Home equity lines	$	257,315	$	275,826
Credit card lines		21,257		26,376
1-4 family real estate construction		13,300		26,682
Commercial real estate		139,574		175,608
Commercial and industrial		609,601		553,168
Overdraft protection program (1)		178,699		169,824
All other commitments		129,015		97,299
Total commitments	$	1,348,761	$	1,324,783
Letters of credit:
1-4 family real estate construction	$	8,661	$	10,551
Commercial real estate		49,373		54,896
All other		58,532		74,594
Total letters of credit	$	116,566	$	140,041
Unamortized fees associated with letters of credit (2) (3)	$	668	$	696
Remaining weighted-average term, in months		9.62		12.2
Remaining lives, in years	0.1 to 12.6		0.1 to 9.5
Recourse on assets securitized:
Unpaid principal balance of assets securitized	$	-	$	7,424
Cap on recourse obligation	$	-	$	2,208
Carrying value of recourse obligation (2)	$	-	$	148

(1)	Federal regulation regarding electronic fund transfers require customers to affirmatively consent to the institution’s overdraft service for automated teller machine and one-time debit card transactions before overdraft fees may be assessed on the account. Customers are provided a specific line for the amount they may overdraw.
(2)	Included in other liabilities in the Consolidated Statements of Financial Condition.
(3)	The Company is amortizing these amounts into income over the commitment period.

Commitments to extend credit are agreements to lend funds to a customer as long as there is no violation of any condition in the contract. Commitments generally have fixed expiration dates or other termination clauses and variable interest rates 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-flow requirements.

In the event of a customer’s non-performance, the Company’s credit loss exposure is equal to the contractual amount of those commitments. The credit risk is essentially the same as that involved in extending loans to customers and is subject to standard credit policies. The Company uses the same credit policies in making credit commitments as it does for on-balance sheet loans and minimizes exposure to credit loss through various collateral requirements.

Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party and are most often issued in favor of a municipality where construction is taking place to ensure the borrower adequately completes the construction.

The maximum potential future payments guaranteed by the Company under standby letters of credit arrangements are equal to the contractual amount of the commitment. If a commitment is funded, the Company may seek recourse through the liquidation of the underlying collateral including real estate, production plants and property, marketable securities, or receipt of cash.

Pursuant to the securitization of certain 1-4 family mortgage loans in 2004, the Company was contractually obligated to repurchase at recorded value any non-performing loans, defined as loans past due greater than 90 days. In accordance with the securitization agreement, the Company’s recourse obligation ended on November 30, 2011.

Repurchases and Charge-Offs of Recourse Loans

(Dollar amounts in thousands)

	Years ended December 31,
	2011			2010			2009
Recourse loans repurchased during the year		$	-		$	241		$	767
Recourse loans charged-off during the year			-			174			73

In August 2011, the Bank was named in a purported class action lawsuit filed in the Circuit Court of Cook County, Illinois on behalf of certain of the Bank’s customers who incurred overdraft fees. The lawsuit is based on the Bank’s practices pursuant to debit card transactions, and alleges, among other things, that these practices have resulted in customers being unfairly assessed overdraft fees. The lawsuit seeks an unspecified amount of damages and other relief, including restitution.

The Company believes that the complaint contains significant inaccuracies and factual misstatements and that the Bank has meritorious defenses. As a result, the Bank intends to vigorously defend itself against the allegations in the lawsuit.  The Bank filed a motion to dismiss this claim in November 2011, and the plaintiff filed an amended complaint in February 2012.

As of December 31, 2011, there were certain other legal proceedings pending against the Company and its subsidiaries in the ordinary course of business. The Company does not believe that liabilities, individually or in the aggregate, potentially arising from any of these proceedings would have a material adverse effect on the consolidated financial condition of the Company as of December 31, 2011.