15 .	Financial Instruments With Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. The financial instruments include commitments to extend credit

in the form of unused lines of credit and standby letters of credit.

These financial instruments involve to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract amounts of these instruments reflect the e

xtent of involvement the Company has in particular classes of financial instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is

violation of any condition established in the contract. Commitments generally hav

e fixed expiration dates or other termination clauses and

may

require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does

not

necessarily represent future cash requirements. Total commitments to extend credit were

$220

million and

$188

million at

December 31, 2017

and

2016,

respectively. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained upon extension of credit, if deemed necessary by the Company, is based on management’s credit evaluation of the counter

party. Collateral held varies, but

may

include accounts receivable, marketable securities, inventory, premises and equipment, residential real estate, and income producing commercial properties.

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a

third

party. Since many of the commitments are expected to expire without being drawn upon, the to

tal commitment amount does

not

necessarily represent future cash requirements. The credit risk involved in issuing letters of credit is essentially the same as that received when extending credit to customers. The fair value of these instruments is

not

considered material for disclosure

The Company had

$2.9

million and

$4.1

million in irrevocable letters of credit outstanding at

December 31, 2017

and

2016,

respectively.

The contractual amount of financial instruments with off-balance sheet risk was as

follows at year-end:


December 31,	201 7				201 6
(In thousands)	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to extend credit, including unused lines of credit	$	108,269	$	111,603	$	71,369	$	116,926
Standby letters of credit		1,722		1,154		2,284		1,769
Total	$	109,991	$	112,757	$	73,653	$	118,695