Note 7 – Commitments to Extend Credit and Other Obligations

The Company enters into various commitments and contingent obligations in the ordinary course of business. These commitments primarily consist of obligations to extend credit to customers through loan commitments, lines of credit, and letters of credit which involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. In addition, the Company may enter into other contractual commitments, including capital commitments related to investment activities. Such commitments are subject to the terms of the underlying agreements and may not result in the future use of all committed amounts.

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. The commitments for 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 Company, is based on management’s credit evaluation of the customer.

The Company’s exposure to credit losses is represented by the contractual amount of these commitments. There was a $495,000 and $361,000 allowance for credit losses associated with these commitments at June 30, 2026 and December 31, 2025, respectively.

During the six months ended June 30, 2026, the Company committed to invest up to $2.0 million in Castle Creek Launchpad Fund II (SBIC) LP, a limited partnership investment fund, and funded an initial capital contribution of $248,000. The funded investment does not have a readily determinable fair value, is carried at cost less impairment, and is included in other assets in the consolidated statements of financial condition. No impairment or observable price adjustments were recognized during the three and six months ended June 30, 2026. As of June 30, 2026, the Company's remaining unfunded capital commitment was approximately $1.8 million. Future capital contributions are subject to capital calls by the fund's general partner in accordance with the terms of the limited partnership agreement. The unfunded commitment is not reflected as a liability in the Company's consolidated statements of financial condition and is included in commitments and contingencies.