Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

v2.4.1.9
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
Note 15 – Commitments and Contingencies
 
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 not 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 may 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 may expire without being used, the amount does not 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, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
Residential real estate, including home equity
 
$
19,010
 
 
$
6,052
 
 
$
25,062
 
Consumer loans
 
 
11,037
 
 
 
-
 
 
 
11,037
 
Commercial real estate, construction & land development and other dwellings
 
 
8,534
 
 
 
6,842
 
 
 
15,376
 
Commercial participations purchased
 
 
83
 
 
 
-
 
 
 
83
 
Commercial business
 
1,258
 
 
39,920
 
 
41,178
 
Total
 
$
39,922
 
 
$
52,814
 
 
$
92,736
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
Residential real estate, including home equity
 
$
14,716
 
 
$
8,768
 
 
$
23,484
 
Consumer loans
 
 
10,734
 
 
 
-
 
 
 
10,734
 
Commercial real estate, construction & land development and other dwellings
 
 
6,718
 
 
 
-
 
 
 
6,718
 
Commercial participations purchased
 
 
1,293
 
 
 
5,522
 
 
 
6,815
 
Commercial business
 
1,728
 
 
29,282
 
 
31,010
 
Total
 
$
35,189
 
 
$
43,572
 
 
$
78,761
 
 
The approximately $39.9 million in fixed rate commitments outstanding at December 31, 2014 had interest rates ranging from 1.49% to 10.00%, for a period not to exceed forty-five days. At December 31, 2013, fixed rate commitments outstanding of approximately $35.2 million had interest rates ranging from 2.30% to 10.00%, for a period not to exceed forty-five days. Mortgage interest rate locks with borrowers which are included with real estate commitments, were treated as derivative transactions, and valued accordingly at year-end.
 
Standby letters of credit are conditional commitments issued by the Bancorp to guarantee the performance of a customer to a third party. At December 31, 2014 and 2013, the Bancorp had standby letters of credit totaling approximately $7.9 million and $8.2 million, respectively which are not 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 may include accounts receivable, inventory, property, land or other assets.