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Off-Balance Sheet Financial Instruments
 12 Months Ended
Dec. 31, 2024
Off-Balance Sheet Financial Instruments [Abstract]  
Off-Balance Sheet Financial Instruments NOTE 14 - OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

The Bank 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 and letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The Bank’s ACL for off-balance sheet commitments was $423,000 and $296,000 as of December 31, 2024 and 2023, respectively. The Bank recognized credit loss expense of $ 127,000 for the year ended December 31, 2024 and a credit (benefit) of (33,000) for the year ended December 31, 2023.

A summary of the Bank’s financial instrument commitments is as follows:

December 31,

2024

2023

(In Thousands)

Commitments to grant loans

$

78,026

$

72,625

Unfunded commitments under lines of credit

156,205

154,339

Standby letters of credit

7,016

8,336

$

241,247

$

235,300

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. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer and generally consists of real estate.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The majority of these standby letters of credit expire within the next twelve months. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Bank requires collateral supporting these letters

of credit when deemed necessary. Management believes that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees.