COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, the Company enters into commitments with off-balance-sheet risk to meet the financing needs of its customers. 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 to originate or acquire loans generally have fixed expiration dates of 60 to 360 days or other termination clauses and may require payment of a fee. Unfunded commitments related to home equity lines of credit generally expire 10 years following the date that the line of credit was established, subject to various conditions including compliance with payment obligation, adequacy of collateral securing the line and maintenance of a satisfactory credit profile by the borrower. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Off-balance sheet commitments to extend credit involve elements of credit risk and interest rate risk in excess of the amount recognized in the CONSOLIDATED STATEMENTS OF CONDITION. The Company’s exposure to credit loss in the event of nonperformance by the other party to the commitment is represented by the contractual amount of the commitment. The Company generally uses the same credit policies in making commitments as it does for on-balance-sheet instruments. The allowance for credit losses related to off-balance sheet commitments is recorded in other liabilities in the CONSOLIDATED STATEMENTS OF CONDITION. Refer to Note 5. LOANS AND ALLOWANCES FOR CREDIT LOSSES for discussion on credit loss methodology. Interest rate risk on commitments to extend credit results from the possibility that interest rates may move unfavorably from the position of the Company since the time the commitment was made.
At September 30, 2025, the Company had commitments to originate or acquire loans and related allowances as follows:
| | | | | | | | | | | |
| Commitment | | Allowance |
| Fixed-rate mortgage loans | $ | 94,476 | | | $ | 706 | |
Adjustable-rate mortgage loans | 12,118 | | | 109 | |
| Home equity lines of credit | 131,348 | | | 1,391 | |
| Home equity loans | 90,206 | | | 1,905 | |
| Total | $ | 328,148 | | | $ | 4,111 | |
At September 30, 2025, the Company had unfunded commitments outstanding and related allowances as follows:
| | | | | | | | | | | |
| Commitment | | Allowance |
| Home equity lines of credit | $ | 5,551,788 | | | $ | 25,974 | |
| Construction loans | 4,934 | | | 30 | |
| Total | $ | 5,556,722 | | | $ | 26,004 | |
At September 30, 2025, the unfunded commitment on home equity lines of credit, including commitments for accounts suspended as a result of material default or a decline in equity, is $5,600,845.
At September 30, 2025 and September 30, 2024, the Company had $59,340 and $17,411, respectively, in commitments to sell mortgage loans. At September 30, 2025 and September 30, 2024, the Company had $28,460 and $15,891, respectively, in commitments to acquire mortgage loans, which are included in mortgage loan commitments above.
The above commitments are expected to be funded through normal operations.
The Association is undergoing an escheat audit covering Ohio, Kentucky and Florida. Any potential loss that may result from this matter is not reasonably estimable at September 30, 2025.
The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operation, or statements of cash flows.