Off-Balance Sheet Risk, Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies Disclosure [Abstract]

Off-Balance Sheet Risk, Commitments and Contingencies

OFF-BALANCE SHEET RISK, COMMITMENTS AND CONTINGENCIES

The Bank is a party to 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. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of conditions established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank, upon extension of credit is based on management’s credit evaluation of the borrower. Collateral obtained varies but may include real estate, stocks, bonds, and certificates of deposit.

The following table presents a summary by type of contract and amount the Bank’s exposure to off-balance sheet risk as of December 31, 2011 and 2010:

	2011		2010
Financial instruments whose contract amounts represent credit risk:
Loan commitments and undisbursed lines of credit	$	255,586,241	$	265,752,158
Undisbursed standby letters of credit	5,653,973		9,106,181
Undisbursed portion of construction loans	6,172,254		13,580,221
Commitments to close first mortgages	22,270,876		119,168,227
Commitments to sell first mortgages	41,804,790		169,587,602