Note

Commitments and Contingencies

Operating leases

Patriot

has

eight

non-cancelable operating leases, including

five

Bank branch locations and

three

for administrative and operational space. The leases expire on various dates through

2024.

Most of the leases contain rent escalation provisions, as well as renewal options for

one

or more periods. The last potential year the leases can be extended through is

2024.

Certain leases require Patriot to reimburse the lessors for a proportion of property operating costs such as insurance and property taxes. The Company also leases certain equipment under a single non-cancelable contract.

Future minimum rental commitments under the terms of these leases by year and in the aggregate, are as follows:

(In thousands)
Year ending December 31,	Amount
2018	$	376
2019		321
2020		299
2021		300
2022		259
thereafter		1,077

Total minimum payments required*	$	2,632

* Minimum payments have

not

been reduced by minimum sublease rentals of

$1.4

million due in the future under non-cancelable subleases.

Rent expense for operating leases is recognized in earnings on a straight-line basis

over the base term of the respective lease and is included in the Statement of Income as a component of Occupancy and Equipment expense. For each of the years in the

three

-year period ended

December

31,

2017,

total rent expense for cancellable and non-cancellable operating leases was

$953,000,

$1.1

million, and

$1.1

million, respectively.

For each of the years in the

three

-year period ended

December

31,

2017,

Patriot recognized gross rental income of

$399,000,

$414,000,

and

$402,000

offset by rental costs of

$5,000,

and

$4,000,

respectively. As of

December

31,

2017,

future minimum rentals to be received under non-cancelable leases were

$1.4

million.

Employment Agreements

The Company has a severance agreement for each of the Executive Vice Presidents that provides for severance equal to

months of current salary

, if the EVP is terminated within

months of a change of control of Patriot.

Legal Matters

Patriot does

not

have

any pending legal proceedings, other than ordinary routine litigation, incidental to its business, to which Patriot is a party or any of its property is subject. Management and Patriot’s legal counsel are of the opinion that the ultimate disposition of these routine legal matters will

not

have a material adverse effect on the consolidated financial condition, results of operations, or liquidity of Patriot.