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 primarily include commitments to extend credit. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The contractual amounts of these instruments reflect the extent of involvement the Bank has in those particular classes of financial instruments.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend 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 had outstanding firm commitments, all of which expire within two months, to originate, or purchase participation interests in, loans at December 31, 2022 and 2021 was as follows:

Note 15 – Commitments and Contingencies (Continued)


	2022		2021
Fixed Rate
Residential mortgage loans	$	650,000	$	2,986,250
Commercial real estate		—		—
Commercial & Industrial		500,000		—
Home equity line of credit		85,000		170,000
	$	1,235,000	$	3,156,250

Variable Rate
Residential mortgage loans	$	1,822,807	$	—
Construction loans		32,935,531		44,683,133
Home equity loans		510,000		1,060,000
Commercial real estate		-		1,400,000

	$	35,268,338	$	47,143,133

Commitments to make loans are generally made for periods of 90 days or less. The fixed rate loan commitments have interest rates ranging from 6.25% to 7.50% and maturities ranging from 10 years to 30 years.

At December 31, 2022 and 2021, undisbursed funds from approved lines of credit under a homeowners’ equity lending program amounted to approximately $48,776,452 and $48,028,579, respectively. At December 31, 2022 and 2021, undisbursed funds from approved lines of credit under a business line of credit program amounted to $8,183,350 and $7,938,797, respectively. Unless they are specifically cancelled by notice from the Bank, these funds represent firm commitments available to the respective borrowers on demand.

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 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 counterparty. Collateral held varies but primarily includes commercial and residential real estate. The Bank leases certain Bank properties and equipment under operating leases. Rent expense was $169,540 and $152,725 for 2022 and 2021, respectively.