The Bancorp is a party to financial instruments in the normal course of business to meet the financing needs of its customers. These financial instruments, which include commitments to make loans and standby letters of credit, are reflected in the accompanying consolidated financial statements. Such financial instruments are recorded when they are funded.

 

The Bancorp’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to originate loans and standby letters of credit is represented by the contractual amount of those instruments. Commitments generally have fixed expiration dates or other termination clauses and require the payment of a fee. The Bancorp uses the same credit policy to make such commitments as it uses for on-balance sheet items. Since commitments to make loans expire without being used, the amount does necessarily represent future cash commitments.

 

The Bancorp had outstanding commitments to originate loans as follows:

 

		(Dollars in thousands)
		Fixed				Variable
		Rate				Rate				Total
December 31, 2019:
Residential real estate		$	165			$	10,377			$	10,542
Home equity			40,429				8,841				49,270
Commercial real estate			5,890				11,537				17,427
Construction and land development			15,797				25,165				40,962
Multifamily			4,093				306				4,399
Consumer			21,677				-				21,677
Commercial business			1,161				52,879				54,040
Government			-				-				-
Total		$	89,212			$	109,105			$	198,317
December 31, 2018:
Residential real estate		$	106			$	10,812			$	10,918
Home equity			35,571				5,960				41,531
Commercial real estate			6,397				9,258				15,655
Construction and land development			18,355				35,222				53,577
Multifamily			4,151				389				4,540
Consumer			18,862				-				18,862
Commercial business			1,655				44,935				46,590
Government			-				-				-
Total		$	85,097			$	106,576			$	191,673

 

The approximately million in fixed rate commitments outstanding at had interest rates ranging from to for a period to exceed days. At fixed rate commitments outstanding of approximately million had interest rates ranging from to for a period to exceed days. Mortgage interest rate locks with borrowers which are included with real estate commitments, were treated as derivative transactions.

 

Standby letters of credit are conditional commitments issued by the Bancorp to guarantee the performance of a customer to a party. At and the Bancorp had standby letters of credit totaling approximately million and million, respectively which are included in the tables above. The Bancorp evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bancorp upon extension of credit, is based on management’s credit evaluation of the borrower. Collateral obtained include accounts receivable, inventory, property, land or other assets.