Commitments

12 Months Ended

Dec. 31, 2011

Commitments [Abstract]

COMMITMENTS

NOTE O – COMMITMENTS

There are various commitments which arise in the normal course of business, such as commitments under commercial letters of credit, standby letters of credit and commitments to extend credit. These arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Bank’s normal credit policies. Collateral generally consists of receivables, inventory and equipment and is obtained based on management’s credit assessment of the customer.

At December 31, 2011 and 2010, the Company had no commitments under commercial letters of credit used to facilitate customers’ trade transactions.

Under standby letter of credit agreements, the Company agrees to honor certain commitments in the event that its customers are unable to do so. At December 31, 2011 and 2010, commitments under outstanding standby letters of credit were $1,690,000 and $1,720,000, respectively.

Loan commitments outstanding to extend credit are detailed below (in thousands):

	2011		2010
Fixed rate	$	3,475	$	4,333
Variable rate		73,672		56,445
Totals	$	77,147	$	60,778

The fixed rate commitments have stated interest rates ranging from 4.50% to 14.00%. The terms of the above commitments range from 1 to 121 months.

Management does not anticipate any losses as a result of the above related transactions; however, the above amount represents the maximum exposure to credit loss for loan commitments and commercial and standby letters of credit.

Certain executives of the Bank have employment contracts which have change of control clauses. The employment contracts provide for the payment of 2.99 times the officer's base salary and bonus if the officer is terminated in the event of a change of control.