(14) Commitments, Contingencies and Concentrations of Credit Risk

The Company, in the normal course of business, is party to financial instruments and commitments which involve, to varying degrees, elements of risk in excess of the amounts recognized in the consolidated financial statements. These financial instruments and commitments include unused consumer lines of credit and commitments to extend credit.

At December 31, 2011, the following commitments and contingent liabilities existed which are not reflected in the accompanying consolidated financial statements (in thousands):


	December 31, 2011
Unused consumer and construction loan lines of credit (primarily floating-rate)	$	106,729
Unused commercial loan lines of credit (primarily floating-rate)		122,081
Other commitments to extend credit:
Fixed-Rate		40,064
Adjustable-Rate		3,638
Floating-Rate		33,208

The Company's fixed-rate loan commitments expire within 90 days of issuance and carried interest rates ranging from 3.25% to 6.00% at December 31, 2011.

The Company's maximum exposure to credit losses in the event of nonperformance by the other party to these financial instruments and commitments is represented by the contractual amounts. The Company uses the same credit policies in granting commitments and conditional obligations as it does for financial instruments recorded in the consolidated statements of financial condition.

These commitments and obligations do not necessarily represent future cash flow requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management's assessment of risk. Substantially all of the unused consumer and construction loan lines of credit are collateralized by mortgages on real estate.

The Bank and Columbia each entered into loan sale agreements with investors in the normal course of business. The loan sale agreements generally require the Bank or Columbia to repurchase loans previously sold in the event of a violation of various representations and warranties customary to the mortgage banking industry. In the opinion of management, the potential exposure related to the loan sale agreements is adequately provided for in the reserve for repurchased loans which is included in other liabilities with a corresponding provision which reduced the net gain on sale of loans. The reserve for repurchased loans was established to provide for expected losses related to outstanding loan repurchase requests and additional repurchase requests which may be received on loans previously sold to investors. In establishing the reserve for repurchased loans, the Company considered all types of sold loans. At December 31, 2011, there were four outstanding loan repurchase requests on loans with a principal balance of $1.2 million which the Company is disputing.

An analysis of the reserve for repurchased loans for the years ended December 31, 2011, 2010 and 2009 follows (in thousands).


	Years Ended December 31,
	2011			2010			2009
Balance at beginning of year	$	809		$	819		$	1,143
Recovery charged to operations, net		—			—			(245	)
Loss on loans repurchased or settlements		(104	)		(10	)		(79	)

Balance at end of year	$	705		$	809		$	819

At December 31, 2011, the Company is obligated under noncancelable operating leases for premises and equipment. Rental expense under these leases aggregated approximately $1,811,000, $1,982,000 and $2,721,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

The projected minimum rental commitments as of December 31, 2011 are as follows (in thousands):


Year Ended December 31,
2012	$	1,852
2013		1,827
2014		1,821
2015		1,404
2016		1,234
Thereafter		12,658

	$	20,796

The Company grants one-to-four family and commercial first mortgage real estate loans to borrowers primarily located in Ocean, Middlesex and Monmouth Counties, New Jersey. The Company also originates interest-only one-to-four family mortgage loans in which the borrower makes only interest payments for the first five, seven or ten years of the mortgage loan term. This feature will result in future increases in the borrower's loan repayment when the contractually required repayments increase due to the required amortization of the principal amount. These payment increases could affect a borrower's ability to repay the loan. The amount of interest-only one-to-four family mortgage loans at December 31, 2011 and 2010 was $54.9 million and $80.1 million, respectively. The amount of interest-only one-to-four family mortgage loans on non-accrual status at December 31, 2011 and 2010 was $4.6 million and $5.5 million, respectively. The ability of borrowers to repay their obligations is dependent upon various factors including the borrowers' income and net worth, cash flows generated by the underlying collateral, value of the underlying collateral and priority of the Company's lien on the property. Such factors are dependent upon various economic conditions and individual circumstances beyond the Company's control; the Company is, therefore, subject to risk of loss. In recent years, there has been a weakening in the local economy coupled with declining real estate values. A further decline in real estate values could cause some residential and commercial mortgage loans to become inadequately collateralized, which would expose the Bank to a greater risk of loss.

The Company believes its lending policies and procedures adequately minimize the potential exposure to such risks. Collateral and/or guarantees are required for all loans.

The Company is a defendant in certain claims and legal actions arising in the ordinary course of business. Management and its legal counsel are of the opinion that the ultimate disposition of these matters will not have a material adverse effect on the Company's consolidated financial condition, results of operations or liquidity.