COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Financial Instruments With Off-Balance Sheet Risk

The Company 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 represent commitments to originate fixed and variable rate loans and loans in process, and involve, to varying degrees, credit risk and interest rate risk in excess of the amount recognized in the Company’s consolidated statements of financial condition. The Company’s exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit and lines of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments to originate loans as it does for on-balance sheet instruments. As it relates to interest rate risk, the Company's exposure is generally limited to increases in interest rates that may result during the short period of time between the commitment and funding of fixed rate credit facilities and adjustable rate credit facilities with initial fixed rate periods. The limited timing risk associated with these credit facilities are considered within the Company's asset liability management process.

Commitments to fund loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have expiration dates or other termination clauses. In addition, external market forces may impact the probability of commitments being exercised; therefore, total commitments outstanding do not necessarily represent future cash requirements.

At September 30, 2020 and December 31, 2019, the Company had outstanding commitments of approximately $124.1 million and $103.2 million, respectively, for loans. Unfunded loan commitment reserves totaled $78 thousand and $89 thousand at September 30, 2020 and December 31, 2019, respectively.

Operating Leases

The Company leases various office premises under long-term operating lease agreements. These leases expire between 2021 and 2030, with certain leases containing either three, five or ten year renewal options. At September 30, 2020, minimum commitments under these non-cancellable leases before considering renewal options are (dollars in thousands):


October 1 - December 31, 2020	$	1,212
2021	4,598
2022	3,668
2023	2,428
2024	1,454
Thereafter	2,658
Total	$	16,018

Rent expense under operating leases was $1.1 million and $3.2 million for the three and nine months ended September 30, 2020, respectively, compared with $1.3 million and $4.0 million for the three and nine months ended September 30, 2019, respectively. Sublease income earned was $185 thousand and $558 thousand for the three and nine months ended September 30, 2020, respectively, compared with $167 thousand and $533 thousand for the three and nine months ended September 30, 2019, respectively.

Contingencies

At present, there are no pending or threatened proceedings against the Company which, if determined adversely, would have a material effect on the Company’s business, financial position, results of operations, cash flows or stock price. In the ordinary course of operations, the Company may be party to various legal proceedings.

Correspondent Banking Agreements

The Company maintains funds on deposit with other federally insured financial institutions under correspondent banking agreements. Insured portions of these balances are limited to $250 thousand per institution based on FDIC insurance limits. At September 30, 2020 and December 31, 2019, the Company had $26.6 million and $25.7 million, respectively, in uninsured available cash balances. Additionally, the Company had $11.9 million and $2.8 million in restricted cash as collateral for its interest rate swap agreements at a correspondent bank as of September 30, 2020 and December 31, 2019, respectively. The Company periodically monitors the financial condition and capital adequacy of these correspondent banks.