AUBURN NATIONAL BANCORPORATION, INCAUBN

AUBURN NATIONAL BANCORPORATION, INC Commitments Disclosure

10-KFiled Mar 17, 20262 min read
NOTE 13:
COMMITMENTS AND CONTINGENT LIABILITIES
Credit-Related Financial Instruments
The Company is 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 standby
letters 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 Company’s exposure to
credit loss is represented by the contractual amount of these commitments.
The Company
follows the same credit policies in making commitments as it does for on-balance
sheet instruments.
At December 31, 2025 and 2024, the following financial instruments were
outstanding whose contract amount represents
credit risk.
December 31
(Dollars in thousands)
2025
2024
Commitments to extend credit
$
48,061
$
84,667
Standby letters of credit
1,001
738
Commitments to extend credit are agreements to lend to a customer provided
there is no violation of any condition
established in the commitment agreement and provided the
commitments are not otherwise cancelable by the Bank.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee.
The
commitments for lines of credit may expire without being drawn upon.
Therefore, total commitment amounts do not
necessarily represent future cash requirements.
The amount of collateral obtained, if it is deemed necessary by the
Company, is based on
management’s credit evaluation of the customer.
The Company records an allowance for credit
losses on off-balance sheet exposures, unless the commitments to
extend credit are unconditionally cancelable, through a
charge to provision for credit losses in the Company’s
Consolidated Statement of Earnings.
The allowance for credit losses
related to unfunded commitments was $
0.3
million at both December 31, 2025 and 2024, respectively,
and is included in
other liabilities on the Company’s
Consolidated Balance Sheet.
See “Note 1: Summary of Significant Accounting Policies –
Allowance for credit losses – Unfunded commitments.”
Standby letters of credit are conditional commitments issued by the
Company to guarantee the performance of 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.
The Company holds various assets as collateral, including accounts receivable,
inventory,
equipment, marketable securities, and property to support those commitments
for which collateral is deemed necessary.
The Company has a recorded a liability for the estimated fair value of these
standby letters of credit in the amount of $
12
thousand and $
13
thousand at December 31, 2025 and 2024, respectively.
Contingent Liabilities
The Company and the Bank are involved in various legal proceedings, arising
in connection with their business.
In the
opinion of management, based upon consultation with legal counsel, the
ultimate resolution of these proceedings will not
have a material adverse effect upon the consolidated financial
condition or results of operations of the Company and the
Bank.

Historical Timeline

Fiscal YearFiled
2025Mar 17, 2026Showing above
2024Mar 11, 2025
2023Mar 14, 2024
2022Mar 17, 2023
2021Mar 8, 2022
2020Mar 9, 2021
2019Mar 6, 2020
2018Mar 12, 2019
2017Mar 13, 2018
2016Mar 3, 2017
2015Mar 10, 2016

About Commitments Disclosures

Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.

Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.

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