NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES

Some financial instruments, such as loan commitments, credit lines, letters of credit and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance-sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amounts of financial instruments with off-balance-sheet risk at year end were as follows:

Commitments to make loans are generally made for periods of 30 days or less. There is one fixed rate loan commitment for 2015 that has an interest rate of 3.89% and matures within fifteen years. Variable rate loan commitments have interest rates that at December 31, 2015 ranged from 4.25% to 5.00%.  The fixed rate loan commitments for 2014 have interest rates that range from 4.00% to 4.63% and mature within thirty years.  Fixed rate unused lines of credit have interest rates ranging from 0.20% to 21.90% at December 31, 2015 and 2.11% to 13.50% at December 31, 2014.

Standby letters of credit are considered financial guarantees. The standby letters of credit have a contractual value of $5.6 million at December 31, 2015 and $5.2 million at December 31, 2014. The carrying amount of these items on the balance sheet is not material.