Note 15 - Commitments

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Lease Disclosure [Text Block]

15. COMMITMENTS

In the ordinary course of business, various outstanding commitments and certain contingent liabilities are not reflected in the accompanying consolidated financial statements. These commitments and contingent liabilities represent financial instruments with off-balance-sheet risk. The contract or notional amounts of those instruments reflect the extent of involvement in particular types of financial instruments, which were composed of the following on December 31:

(Dollar amounts in thousands)	2021		2020
Commitments to extend credit	$	280,379	$	255,429
Standby letters of credit		586		581
Total	$	280,965	$	256,010

These instruments involve, to varying degrees, elements of credit and interest rate risk over the amount recognized in the Consolidated Balance Sheet. The Company’s exposure to credit loss, in the event of nonperformance by the other parties to the financial instruments, is represented by the contractual amounts as disclosed. The Company minimizes its exposure to credit loss under these commitments by subjecting them to credit approval and review procedures and collateral requirements as deemed necessary. Commitments generally have fixed expiration dates within one year of their origination.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These instruments are issued primarily to support bid or performance-related contracts. The coverage period for these instruments is typically one year, with an annual renewal option subject to prior approval by management. Fees earned from the issuance of these letters are recognized over the coverage period. The collateral is typically bank deposit instruments or customer business assets for secured letters of credit.

Leasing Commitments

The Company leases six of its branch locations and one loan production office. As of December 31, 2021, net assets recorded under leases amounted to $5.4 million and have remaining lease terms of 1 year to 19 years. As of December 31, 2021, finance lease assets included in premises and equipment, net, totaled $4.5 million, and operating lease assets included in accrued interest receivable and other assets on the Consolidated Balance Sheet totaled $872,000. As of December 31, 2021, finance lease obligations included in other borrowings totaled $4.7 million, and operating lease obligations included in accrued interest payable and other liabilities on the Consolidated Balance Sheet totaled $878,000.

In December 2021, the Company entered into a new lease agreement for the loan production office located in Mentor, Ohio. The new lease agreement does not exceed 12 months and, as such, is not considered a capitalized lease as of December 31, 2021.

Lease costs incurred are as follows for the years ended December 31:

	2021		2020
Lease Costs:
Finance lease cost:
Amortization of right-of-use asset	$	313	$	286
Interest Expense		130		131
Other		63		27
Operating lease cost		225		213
Total lease cost	$	731	$	657

The following table displays the weighted-average term and discount rates for both operating and finance leases outstanding as of December 31, 2021:

	Operating			Finance
Weighted-average term (years)		5.9			14.6
Weighted-average discount rate		1.8	%		2.6	%

The following table displays the undiscounted cash flows due related to operating and finance leases as of December 31, 2021, along with a reconciliation to the discounted amount recorded on the December 31, 2021 balance sheet:

	Operating			Finance
Undiscounted cash flows due within:
2022	$	169		$	385
2023		169			385
2024		169			385
2025		169			385
2026		134			389
2027 and thereafter		122			3,726
Total undiscounted cash flows		932			5,655
Impact of present value discount		(54	)		(1,002	)
Amount reported on balance sheet	$	878		$	4,653