15. OFF-BALANCE SHEET ARRANGEMENTS, COMMITMENTS AND CONTINGENCIES

The following table summarizes the Company’s contractual obligations and other commitments to make future payments as of the date indicated (other than securities sold under agreements to repurchase). The Company’s future cash payments associated with its contractual obligations pursuant to its certificates and other time deposits and operating leases as of the date indicated are as follows:


	September 30, 2014
	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)

Certificates and other time deposits	$	286,137	$	140,643	$	118,427	$	-	$	545,207
Operating leases		1,020		1,747		969		2,228		5,964
Total	$	287,157	$	142,390	$	119,396	$	2,228	$	551,171

Payments related to leases are based on actual payments specified in underlying contracts.

Leases — A summary of the Company’s noncancelable future operating lease commitments as of the date indicated was as follows:


	September 30, 2014
	(Dollars in thousands)

2014	$	317
2015		918
2016		870
2017		802
2018		525
Thereafter		2,532
Total	$	5,964

The Company leases certain office facilities and equipment under operating leases. Rent expense under all noncancelable operating lease obligations, net of income from noncancelable subleases aggregated, was approximately $329 thousand and $355 thousand for the three months ended September 30, 2014 and 2013, respectively, and was $986 thousand and $1.1 million for the nine months ended September 30, 2014 and 2013, respectively. Following the completion of the SharePlus acquisition, the Company expects an increase in operating lease commitments and rent expense due to the addition of three leased branch locations.

Litigation — The Company from time to time is involved in routine litigation arising from the normal course of business. Management does not believe that there are any pending or threatened proceedings against the Company which, upon resolution, would have a material effect on the consolidated financial statements.

Financial Instruments with Off-Balance Sheet Risk — In the normal course of business, the Company is a party to various financial instruments with off-balance sheet risk to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated balance sheets. The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual or notional amount of these instruments. The Company uses the same credit policies in making these commitments and conditional obligations as it does for on-balance sheet instruments.

The following is a summary of the various financial instruments outstanding as of the date set forth:


	September 30, 2014
	1 year or less		More than 1 year but less than 3 years		3 years or more but less than 5 years		5 years or more		Total
	(Dollars in thousands)

Commitments to extend credit	$	148,848	$	159,352	$	108,689	$	72,945	$	489,834
Standby and commercial letters of credit		4,292		8,237		7		-		12,536
Total	$	153,140	$	167,589	$	108,696	$	72,945	$	502,370

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being fully drawn upon, the total commitment amounts disclosed above do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if considered necessary by the Company, upon extension of credit, is based on management’s credit evaluation of the customer.

Standby and commercial letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event of nonperformance by the customer, the Company has rights to the underlying collateral, which can include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities. The credit risk to the Company in issuing letters of credit is essentially the same as that involved in extending loan facilities to its customers.