Commitments and Contigent Liabilities

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

NOTE 13: 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, 2021 and 2020, the following financial instruments were outstanding whose contract amount represents

credit risk.

December 31

(Dollars in thousands)

2021

2020

Commitments to extend credit

$

70,993

$

74,970

Standby letters of credit

1,455

1,237

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. 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, including accounts receivable, inventory,

equipment, marketable securities, and property to support 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 $

23

thousand and $

25

 thousand at December 31, 2021 and 2020, respectively.

Other Commitments

At December 31, 2021, the Company has contracts with construction companies for an aggregate of $

30.5

 million to

construct a new headquarters in Auburn, Alabama. As of December 31, 2021, the Company has paid $

24.1

 million under

these contracts with a balance to finish, including retainage, of $

6.4

 million.

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 effect upon the consolidated financial condition or results of operations of the Company and the

Bank.