Guarantees

3 Months Ended

Mar. 31, 2020

Guarantees [Abstract]

Guarantees

Guarantees

We issue standby letters of credit in the normal course of business.  Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party.  Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party.  We are required to perform under a standby letter of credit when drawn upon by the guaranteed third party in the case of nonperformance by our customer.  The credit risk associated with standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal loan underwriting procedures. Collateral may be obtained based on management’s credit assessment of the customer. At March 31, 2020, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $37.9 million, of which $33.7 million is fully collateralized. At March 31, 2020, we had a liability which represents deferred income of $449,000 related to the standby letters of credit.