Note

. Commitments and Contingencies

In the ordinary course of business, the Bank has various commitments and contingent liabilities that are

not

reflected in the accompanying consolidated financial statements. In the opinion of management, the ultimate disposition of these matters is

not

expected to have a material adverse effect on the financial position of the Bank.

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 and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit. These instruments involve elements of credit and interest-rate risk in excess of the amount recognized in the balance sheets.

December 31, 2017

and

2016,

the following financial instruments were outstanding whose contract amounts represent credit risk:

							Range of rates
	Variable rate		Fixed rate		Total		on fixed rate commitments
As of December 31, 2017:
Commitments to originate loans	$	576,200	$	2,620,320	$	3,196,520	4.13%	-	5.00%
Unfunded commitments on construction loans		-		5,573,760		5,573,760	1.88%	-	6.00%
Unfunded commitments under lines of credit		16,667,928		-		16,667,928		-
		17,244,128		8,194,080		25,438,208
Standby letters of credit		-		-		-
	$	17,244,128	$	8,194,080	$	25,438,208
As of December 31, 2016:
Commitments to originate loans	$	1,582,150	$	2,135,460	$	3,717,610	3.50%	-	4.75%
Unfunded commitments on construction loans		-		3,011,307		3,011,307	1.88%	-	4.38%
Unfunded commitments under lines of credit		11,310,327		-		11,310,327		-
		12,892,477		5,146,767		18,039,244
Standby letters of credit		-		-		-
	$	12,892,477	$	5,146,767	$	18,039,244

Commitments to extend credit are agreements to lend to a customer as long as there is

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 commitments for equity lines of credit

may

expire without being drawn upon. Therefore, the total commitment amounts do

not

necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank is based on management’s credit evaluation of the customer.

Unfunded commitments under commercial lines-of-credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines-of-credit are uncollateralized and usually do

not

contain a specified maturity date and

may

not

be fully drawn upon to the total extent of the approximately

$16.7

million to which the Bank is committed. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are

not

anticipated. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet obligations.

The Company does

not

engage in the use of interest rate swaps or futures, forwards or option contracts.