Note 14: Commitments

In the normal course of business, there are outstanding commitments that are not reflected in the Consolidated Financial Statements. Commitments include financial instruments that involve, to varying degrees, elements of credit, interest rate, and liquidity risk. In management’s opinion, these do not represent unusual risks and management does not anticipate significant losses as a result of these transactions. The Company uses the same credit policies in making commitments and conditional obligations for borrowers as it does for on-balance sheet instruments.

The following table is a summary of financial instrument commitments (in thousands):


	December 31, 2015						December 31, 2014
	Fixed		Variable		Total		Fixed		Variable		Total
Letters of credit:
Borrower:
Financial standby	$	60	$	3,572	$	3,632	$	55	$	4,745	$	4,800
Commercial standby		-		47		47		-		49		49
Performance standby		66		7,350		7,416		416		5,690		6,106
		126		10,969		11,095		471		10,484		10,955
Non-borrower:
Performance standby		-		575		575		-		572		572
		-		575		575		-		572		572
Total letters of credit	$	126	$	11,544	$	11,670	$	471	$	11,056	$	11,527

Unused loan commitments:	$	71,016	$	197,909	$	268,925	$	62,391	$	169,717	$	232,108

The Bank occupies facilities under long-term operating leases, some of which include provisions for future rent increases. In addition, the Company leases space at sites that house automatic teller machines (ATMs). As of December 31, 2015, the estimated aggregate minimum annual rental commitments under these leases totaled $50,000 in 2016, $33,000 in 2017, $24,000 in 2018, and $15,000 thereafter. The Company also receives rental income on certain leased properties. As of December 31, 2015, aggregate future minimum rental income to be received under noncancelable leases totaled $113,000. Total facility net operating lease expense or revenue recorded under all operating leases was a net expense of $11,000 in 2015 net revenue of $67,000 in 2014 and $64,000 in 2013. Total ATM lease expense, including the costs related to servicing those ATM’s, was $826,000, $829,000 and $830,000 in 2015, 2014 and 2013, respectively.

Legal proceedings

The Company and its subsidiaries, from time to time, pursue collection suits and other actions that arise in the ordinary course of business against their borrowers and are defendants in legal actions arising from normal business activities. Management, after consultation with legal counsel, believes that the ultimate liabilities, if any, resulting from these actions will not have a material adverse effect on the financial position of the Bank or on the consolidated financial position of the Company based on all known information at this time.