(13) 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, 2014, the following commitments and contingent liabilities existed which are not reflected in the accompanying consolidated financial statements (in thousands):


	December 31, 2014
Unused consumer and construction loan lines of credit (primarily floating-rate)	$	120,205
Unused commercial loan lines of credit (primarily floating-rate)		200,020
Other commitments to extend credit:
Fixed-Rate		61,868
Adjustable-Rate		3,033
Floating-Rate		5,494

The Company’s fixed-rate loan commitments expire within 90 days of issuance and carried interest rates ranging from 3.0% to 5.49% at December 31, 2014.

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.

At December 31, 2014, the Company is obligated under noncancelable operating leases for premises and equipment. Rental expense under these leases aggregated approximately $1,984,000, $2,378,000 and $2,034,000 for the years ended December 31, 2014, 2013 and 2012, respectively.

The projected minimum rental commitments as of December 31, 2014 are as follows (in thousands):


Year Ended December 31,
2015	$	1,678
2016		1,646
2017		1,656
2018		1,585
2019		1,552
Thereafter		11,123

	$	19,240

The Company grants one-to-four family and commercial first mortgage real estate loans to borrowers primarily located in Ocean, Monmouth, Middlesex and Mercer Counties, New Jersey. The Company previously offered interest-only one-to-four family mortgage loans on a limited basis, 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, 2014 and 2013 was $17.6 million and $28.8 million, respectively. There were no interest-only one-to-four family mortgage loans on non-accrual status at December 31, 2014, compared to $2.2 million at December 31, 2013. The Company previously originated stated income loans on a limited basis through November 2010. These loans were only offered to self-employed borrowers for purposes of financing primary residences and second home properties. The amount of stated income loans at December 31, 2014 and 2013 was $27.3 million and $36.6 million, respectively. The amount of stated income loans on non-accrual status at December 31, 2014 and 2013 was $259,000 and $6.4 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. A 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.