Financial Instruments with Off-Balance Sheet Risk

We make commitments to extend credit in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit in the form of loans or through standby letters of credit. 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 and may require payment of a fee. Because various commitments will expire without being fully drawn, the total commitment amount does not necessarily represent future cash requirements.

Our credit loss exposure is equal to the contractual amount of the commitment in the event of nonperformance by the borrower. We use the same credit underwriting criteria for all credit exposure. The amount of collateral obtained, if deemed necessary by us, is based on Management's credit evaluation of the borrower. Collateral types pledged may include accounts receivable, inventory, other personal property and real property.

The contractual amount of undrawn loan commitments and standby letters of credit not reflected in the consolidated statements of condition are as follows:



(in thousands)	December 31, 2018		December 31, 2017
Commercial lines of credit	$	238,361	$	224,370
Revolving home equity lines	189,971		177,678
Undisbursed construction loans	46,229		35,322
Personal and other lines of credit	14,109		11,758
Standby letters of credit	2,636		4,074
Total commitments and standby letters of credit	$	491,306	$	453,202

We record an allowance for losses on these off-balance sheet commitments based on an estimate of probabilities of the utilization of these commitments according to our historical experience on different types of commitments and expected loss. The allowance for losses on off-balance sheet commitments totaled $958 thousand as of December 31, 2018 and 2017, which is recorded in interest payable and other liabilities in the consolidated statements of condition. Approximately 35% of the commitments expire in 2019, approximately 51% expire between 2020 and 2026 and approximately 14% expire thereafter.