Contingent Liabilities and Commitments

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Contingent Liabilities and Commitments

NOTE J   CONTINGENT LIABILITIES AND COMMITMENTS

The Bank's financial statements do not reflect various commitments and contingent liabilities which arise in the normal course of business and which involve elements of credit risk, interest rate risk and liquidity risk. These commitments and contingent liabilities are commitments to extend credit. A summary of the Bank's commitments and contingent liabilities are as follows:

	2011		2010
Credit Card Arrangements	$	12,373,012	$	14,625,844
Commitments to Extend Credit		2,079,480		1,762,870

Commitments to extend credit, credit card arrangements and standby letters of credit all include exposure to some credit loss in the event of nonperformance of the customer. The Bank's credit policies and procedures for credit commitments and financial guarantees are the same as those for extension of credit that are recorded on the consolidated balance sheets. Because these instruments have fixed maturity dates, and because many of them expire without being drawn upon, they do not generally present any significant liquidity risk to the Bank.

In August 2005, Hurricane Katrina impacted the New Orleans area. Several of the Bank’s branches sustained significant damage as a result of the hurricane. In addition, due to concessions made to customers to facilitate the timely processing of transactions, the Bank has estimated that it has sustained losses. As a result of these losses, the Bank received approximately $2,090,000 of insurance proceeds. Due to the uncertainty of the financial impact of Katrina, these proceeds were recorded as an escrow account on the balance sheet of the Bank. Impairment losses and expenditures associated with repairs to the Bank’s facilities were applied against this account. During 2009, the Bank recognized into income the remaining balance in the escrow account, which totaled approximately $817,000.