Commitments and Off-balance Sheet Items

In the normal course of business, there are various commitments and contingent liabilities, such as commitments to extend credit and commitments to sell loans, which are not reflected in the accompanying consolidated financial statements. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to make loans and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policy to make commitments as it uses for on-balance sheet items.

The Company’s exposure to credit risk for commitments to sell loans is dependent upon the ability of the counter-party to purchase the loans. This is generally assured by the use of government sponsored entity counterparts. These commitments are subject to market risk resulting from fluctuations in interest rates.

Commitments and contingent liabilities are summarized as follows, at December 31:



	2017				2016
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to Fund Loans:
Consumer Lines	$	10,997	$	260,934	$	10,081	$	237,087
Commercial Operating Lines	19,267		308,381		24,598		274,619
Residential Mortgages	17,255		655		13,760		765
Total Commitments to Fund Loans	$	47,519	$	569,970	$	48,439	$	512,471

Commitments to Sell Loans:
Mandatory	$	681	$	—	$	973	$	—
Non-mandatory	$	24,628	$	188	$	30,708	$	677

Standby Letters of Credit	$	959	$	4,736	$	1,059	$	7,869

The fixed rate commitments to fund loans have interest rates ranging from 2.00% to 18.00% and maturities ranging from less than 1 year to 32 years. Since many commitments to make loans expire without being used, these amounts do not necessarily represent future cash commitments. Collateral obtained upon exercise of the commitment is determined using management’s credit evaluation of the borrower, and may include accounts receivable, inventory, property, land, and other items.