COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS

12 Months Ended

Dec. 31, 2011

COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS [Abstract]

COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS

NOTE N:  COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS

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.  These financial instruments consist primarily of commitments to extend credit and standby letters of credit.  Commitments to extend credit are agreements to lend to customers, generally having fixed expiration dates or other termination clauses that may require payment of a fee.  These commitments consist principally of unused commercial and consumer credit lines.  Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of an underlying contract with a third party.  The credit risks associated with commitments to extend credit and standby letters of credit are essentially the same as that involved with extending loans to customers and are subject to normal credit policies.  Collateral may be obtained based on management's assessment of the customer's creditworthiness.  The fair value of the standby letters of credit is immaterial for disclosure.   The contract amount of commitment and contingencies is as follows:

(000's omitted)	2011	2010
Commitments to extend credit	$572,393	$445,625
Standby letters of credit	25,279	21,456
Total	$597,672	$467,081

The Company has unused lines of credit of $65.0 million at December 31, 2011.  The Company has unused borrowing capacity of approximately $424.4 million through collateralized transactions with the Federal Home Loan Bank and $16.4 million through collateralized transactions with the Federal Reserve Bank.

The Company is required to maintain a reserve balance, as established by the Federal Reserve Bank of New York.  The required average total reserve for the 14-day maintenance period of December 29, 2011 through January 11, 2012 was $28.5 million of which $2.0 million was required to be on deposit with the Federal Reserve Bank of New York.  The remaining $26.5 million was represented by cash on hand.

The Company is subject in the normal course of business to various pending and threatened legal proceedings in which claims for monetary damages are asserted. Management, after consultation with legal counsel, does not anticipate that the aggregate ultimate liability arising out of litigation pending or threatened against the Company will be material to its consolidated financial position. On an on-going basis the Company assesses its liabilities and contingencies in connection with such legal proceedings. For those matters where it is probable that the Company will incur losses and the amounts of the losses can be reasonably estimated, the Company records an expense and corresponding liability in its consolidated financial statements. To the extent the pending or threatened litigation could result in exposure in excess of that liability, the amount of such excess is not currently estimable. Although not considered probable, the range of reasonably possible losses for such matters in the aggregate, beyond the existing recorded liability, was between $0 and $2 million. Although the Company does not believe that the outcome of pending litigations will be material to the Company's consolidated financial position, it cannot rule out the possibility that such outcomes will be material to the consolidated results of operations for a particular reporting period in the future.