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 include commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making and monitoring commitments and conditional obligations as it does for on-balance sheet instruments. At March 31, 2024 and December 31, 2023, the Company has an allowance for credit losses for off-balance sheet instruments of $2,089 and $2,189 respectively, included within the liabilities section of the balance sheet. The corresponding credit to provision for credit losses for the three months ended March 31, 2024 was $100. The provision for credit losses for the three months ended March 31, 2023 was $90.

At March 31, 2024 and December 31, 2023, the following financial instruments were outstanding whose contract amounts represent credit risk:


(In Thousands)	March 31, 2024		December 31, 2023
Unfunded commitments under lines of credit:
Home equity loans	$	117,121	$	116,964
Commercial real estate, construction, and land development		159,413		186,966
Commercial and industrial		322,708		306,024
Total	$	599,242	$	609,954

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory, and equipment.