XML 25 R15.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies

9 Months Ended

Sep. 30, 2025

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 7 – Commitments and Contingencies

The Company is 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 originate loans, to disburse funds to borrowers on unused construction and land development loans, and to disburse funds on committed but unused lines of credit.

These financial agreements involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

Commitments to originate loans and disburse additional funds to borrowers on lines of credit are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

The Company evaluates each customer’s creditworthiness 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 of the borrower.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments, is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The commitments to originate loans and lines of credit may expire without being funded or drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance by a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. As of September 30, 2025 and December 31, 2024, the maximum potential amount of the Company’s obligation was $5.6 million and $6.0 million, respectively, for standby letters of credit. The Company’s outstanding letters of credit generally have a term of less than one year. If a letter of credit is drawn upon, the Company may seek recourse through the customer’s underlying line of credit. If the customer’s line of credit is also in default, the Company may take possession of the collateral, if any, securing the line of credit.

Financial instruments whose contract amounts represent off-balance sheet credit risk and are not reflected on the Company’s consolidated balance sheets consist of the following at the dates stated:


		As of
		September 30, 2025			December 31, 2024

		(In thousands)

Commitments to originate loans		$	22,141		$	34,050
Unadvanced funds on lines of credit			636,648			495,796
Unadvanced funds on construction loans			425,944			416,450
Letters of credit			5,608			6,043
		$	1,090,341		$	952,339

The Bank accrues for credit losses related to off-balance sheet financial instruments. Potential losses on off-balance sheet loan commitments are estimated using the same risk factors used to determine the ACL on loans, adjusted for the likelihood that funding will occur. The allowance for off-balance sheet commitments is recorded within other liabilities on the consolidated balance sheets and amounted to $2.7 million and $3.2 million as of September 30, 2025 and December 31, 2024, respectively. For the three months ended September 30, 2025 the Company recorded a provision for credit losses in the allowance for unfunded commitments of $355,000, compared to a release of the allowance for unfunded commitments of $2.4 million for the three months ended September 30, 2024. For the nine months ended September 30, 2025 and 2024, the Company recorded a release of the allowance for unfunded commitments of $517,000 and $2.6 million, respectively.