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Financial Instruments with Off-Balance Sheet Credit Exposures
 6 Months Ended
Jun. 30, 2025
Credit Loss [Abstract]  
Financial Instruments with Off-Balance Sheet Credit Exposures
7.
Financial Instruments with 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 Company 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.

In the ordinary course of business, the Company may be subject to various legal proceedings. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such proceedings will not be material to the consolidated balance sheet or consolidated statements of (loss) income.

Notional amounts of financial instruments with off-balance sheet credit risk are as follows as of June 30, 2025 and December 31, 2024:

 

June 30, 2025

 

 

December 31, 2024

 

Unadvanced portions of loans

 

$

41,736

 

 

$

42,883

 

Commitments to originate loans

 

 

6,495

 

 

 

9,333

 

Standby letters of credit

 

 

1,738

 

 

 

125

 

The Company records an ACL for off-balance sheet credit exposures that are not unconditionally cancelable through a charge to the provision (release) for credit losses on the Company’s consolidated statements of (loss) income. At June 30, 2025 and December 31, 2024 the ACL for off-balance sheet credit exposures totaled $216,000 and $199,000, respectively, and was included in other liabilities on the Company’s consolidated balance sheets. The provision for credit losses for off-balance sheet credit exposures for the three and six months ended June 30, 2025 was $47,000 and $17,000, respectively. The release of credit losses for off-balance sheet credit exposures for the three and six months ended June 30, 2024 was $(46,000) and $(96,000), respectively.