Notes to Consolidated Financial Statements
for the Three Years in the Period Ended June 30, 1999

15. COMMITMENTS

In the normal course of business, the Bank makes various commitments to extend credit which are not reflected in the accompanying consolidated financial statements. At June 30, 1999 and 1998, the Bank had loan commitments approximating $24.6 million and $24.1 million, respectively, excluding undisbursed portions of loans in process. Loan commitments at June 30, 1999, included commitments to originate fixed rate loans with interest rates ranging from 6.9% to 10.0% totaling $4.3 million and adjustable rate loan commitments with interest rates ranging from 6.2% to 8.9% totaling $20.3 million. Commitments, which are disbursed subject to certain limitations, extend over various periods of time. Generally, unused commitments are canceled upon expiration of the commitment term as outlined in each individual contract.

Outstanding letters of credit were $3.4 million and $2.8 million for 1999 and 1998, respectively. Additionally, the Bank had approximately $7.8 million in commitments to sell fixed rate residential loans and $5.3 million in commitments to sell adjustable rate commercial loans at June 30, 1999.

The Bank's exposure to credit loss for commitments to extend credit, in the event of nonperformance by the other parties to the financial instruments, is represented by the contract amount of those instruments. The Bank uses the same credit policies and collateral requirements in making commitments as it does for on-balance sheet instruments.

Employment Agreements

The Company has entered into employment agreements with certain executive officers. Under certain circumstances provided in the agreements, the Company may be obligated to continue the officer's salary for a period of up to three years.