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Off-Balance Sheet Credit Exposures
 6 Months Ended
Jun. 30, 2023
Credit Loss [Abstract]  
Off-Balance Sheet Credit Exposures
7.
Off-Balance Sheet Credit Exposures

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, unadvanced funds on loans and standby letters of credit. The instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for loan commitments and standby letters of credit is represented by the contractual amounts of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to originate loans 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. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness 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 borrower. Collateral held varies, but generally includes secured interests in mortgages.

Standby letters of credit are conditional commitments issued by the Bank to guarantee 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.

Notional amounts of financial instruments with off-balance sheet credit risk are as follows as of June 30, 2023 and December 31, 2022:

 

2023

 

 

2022

 

Unadvanced portions of loans

 

$

47,392

 

 

$

44,929

 

Commitments to originate loans

 

 

20,026

 

 

 

16,134

 

Standby letters of credit

 

 

—

 

 

 

302

 

The Company records an ACL for off-balance sheet credit exposures that are not unconditionally cancelable through a charge to the provision for credit losses on the Company’s consolidated statements of (loss) income. At June 30, 2023 and December 31, 2022 the ACL for off-balance sheet credit exposures totaled $323,000 and $18,000, respectively, and was included in other liabilities on the Company’s consolidated balance sheets. The (release) provision for credit losses for off-balance sheet credit exposures for the three months ended June 30, 2023 and 2022 was $(15,000) and $-0-, respectively. The provision for credit losses for off-balance sheet credit exposures for the six months ended June 30, 2023 and 2022 was $15,000 and $-0-, respectively.