(

) Commitments and Contingencies

Credit-Related Financial Instruments

The Company is a 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, standby letters of credit and commercial 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. We evaluate each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral held varies, but

may

include cash or cash equivalents, negotiable instruments, real estate, accounts receivable, inventory, oil, gas and mineral interests, property, plant, and equipment.

June 30, 2019

and

December 31, 2018

the following financial instruments were outstanding whose contract amounts represent credit risk:

	Contract Amount
	June 3 0 , 201 9		December 31, 2018

Loan Commitments	$	146,481	$	98,736
Letters of Credit		1,627		1,525

Commitments to extend credit are agreements to lend to a customer as long as there is

violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and

may

require payment of a fee. The

commitments for equity lines of credit

may

expire without being drawn upon. Therefore, the 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.

Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit are uncollateralized and usually do

not

contain a specified maturity date and

may

not

be drawn upon to the total extent to which the Company is committed.

Standby and performance letters of credit are conditional lending 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.

Other Commitments

. As of

June 30, 2019,

$18,000

letter of credit issued by FHLB was used to guarantee the Bank’s performance related to public fund deposit balances.

gal

Conting

enc

ies

. In the ordinary course of business, there are various legal proceedings pending against the Company and the Bank. The aggregate liabilities, if any, arising from such proceedings would

not,

in the opinion of management, have a material adverse effect on the Company’s consolidated financial position.