The Bank is a party to credit related 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 advance funds on lines-of-credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss is represented by the contractual amount of these commitments. The Bank uses the same credit policies in making commitments as it does for on-balance sheet instruments.

At June 30, 2022 and 2021, the following financial instruments were outstanding whose contract amounts represent credit risk:


(Dollars in thousands)	June 30, 2022		June 30, 2021
Commitments to grant loans	$	5,551	$	1,460
Unadvanced funds on construction loans		460		-
Unadvanced funds on equity lines of credit		4,305		4,237
Unadvanced funds on commercial and other lines of credit		1,188		1,422

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. The commitments for construction loans and lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis and the commitments are collateralized by real estate.

Pursuant to the terms of noncancelable lease agreements in effect at June 30, 2022 pertaining to premises, future minimum rent commitments for 2023 through 2027 and thereafter are as follows:


	Years ending
	June 30,
2023	$	117,400
2024		117,400
2025		117,400
2026		117,400
2027		113,400
Thereafter		633,267

The cost of such rentals is not included above. Total rent expense for the years ended June 30, 2022 and 2021 amounted to $93,000 and $89,000, respectively.

During the year ended June 30, 2022, the Bank entered into employment agreements with two executives (each for a term of three years) which provide for a specified annual compensation and certain other benefits as defined in the agreement. Commencing on the first anniversary of the effective date of the agreement and continuing on each anniversary thereafter, members of the Board of Directors may extend the agreement for an additional year.

The Bank has also entered into agreements with certain executives setting forth the terms and conditions of payment due to the executive and the rights and obligations of the parties in the event of a change in control as defined in the agreement. The agreements are subject to renewal each year by the Board of Directors.

Various legal claims also arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Bank’s consolidated financial statements.