Commitments and Contingent Liabilities

Lease Commitments: The Company’s lease commitments consist primarily of leased locations under various non-cancellable operating leases that expire between 2017 and 2043. The majority of the leases contain renewal options and provisions for increases in rental rates based on an agreed upon index or predetermined escalation schedule. As of December 31, 2016, minimum future rental payments, exclusive of taxes and other charges, of these leases were:



Years Ending December 31,	(in thousands)
2017	$	8,891
2018	8,184
2019	7,355
2020	6,514
2021	5,138
Thereafter	13,474
Total minimum payments	$	49,556

Total rental expense on buildings and equipment, net of rental income of $992 thousand, $1.1 million and $756 thousand, was $8.7 million, $7.4 million and $8.3 million, for the years ended December 31, 2016, 2015 and 2014, respectively.

Sale-leaseback transaction: On August 24, 2016, the Company sold one of its Washington facilities and leased back the portion of the facility utilized for branch operations. The lease term is through July 2026, with monthly payments of approximately $12 thousand. The resulting gain on sale of $742 thousand was deferred in accordance with the Leases topic of the FASB ASC and is being amortized over the life of the respective lease. At December 31, 2016, the deferred gain was $713 thousand and is included in “Other liabilities” on the Consolidated Balance Sheets.

Exit or disposal activities: As part of ongoing evaluations of facilities owned or leased by the Company for ongoing economic benefit, a decision was made to cease using one of our Idaho branch locations during the current year. As a result, in addition to recording a cease-use liability of $849 thousand in the current year, the Company also made a change in estimate for the useful lives of the fixed assets associated with this facility. The total expense related to the exit activity for the year ended December 31, 2016 was $883 thousand, which was recorded in the noninterest expense line item "Occupancy" in the Consolidated Statements of Income.

Financial Instruments with Off-Balance Sheet Risk: In the normal course of business, the Company makes loan commitments (typically unfunded loans and unused lines of credit) and issues standby letters of credit to accommodate the financial needs of its customers.

Standby letters of credit commit the Company to make payments on behalf of customers under specified conditions. Historically, no significant losses have been incurred by the Company under standby letters of credit. Both arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Company’s normal credit policies, including collateral requirements, where appropriate. At December 31, 2016 and 2015, the Company’s loan commitments amounted to $2.17 billion and $1.93 billion, respectively. Standby letters of credit were $49.7 million and $38.7 million at December 31, 2016 and 2015, respectively. In addition, commitments under commercial letters of credit used to facilitate customers’ trade transactions and other off-balance sheet liabilities amounted to $3.4 million and $5.0 million at December 31, 2016 and 2015, respectively.

Legal Proceedings: The Company and its subsidiaries are from time to time defendants in and are threatened with various legal proceedings arising from their regular business activities. Management, after consulting with legal counsel, is of the opinion that the ultimate liability, if any, resulting from these pending or threatened actions and proceedings will not have a material effect on the financial statements of the Company.