COMMITMENTS AND CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2011

COMMITMENTS AND CONTINGENT LIABILITIES [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE K – COMMITMENTS AND CONTINGENT LIABILITIES

The consolidated financial statements do not reflect various commitments and contingent liabilities which arise in the normal course of the Bank's business and which involve elements of credit risk, interest rate risk and liquidity risk.  These commitments and contingent liabilities are commitments to extend credit, commercial letters of credit, credit card agreements, and standby letters of credit.  A summary of the Bank's approximate commitments and contingent liabilities arising from the normal course of business at December 31 is as follows:

	Contractual Amount
	2011		2010
	(In thousands)
Commitments to extend credit	$	20,119	$	14,890
Credit card arrangements		2,568		2,571
Letters of credit		11,818		10,533

Commitments to extend credit, credit card agreements, commercial letters of credit, and standby letters of credit include some exposure to credit loss in the event of nonperformance of the customer.  The Bank's credit policies and procedures for such commitments and financial guarantees are the same as those used for lending activities.  Because these instruments have fixed maturity dates, and because many of them expire without being drawn upon, they do not generally present any significant liquidity risk.  No significant losses on commitments were incurred during the three year ended December 31, 2011, nor are any significant losses as a result of these transactions anticipated.

The Bank leases property for branch offices under non-cancellable lease agreement that expires in 2012.  The lease is for a five-year period with an option to renew.  The total minimum rental commitment at December 31, 2011, under the leases is approximately $10,200 which is due as follows:

Year	Amount
2012	10,200
	$ 10,200

The annual rental expense was $10,200 for 2011, 2010 and 2009.

The Bank is a defendant in various pending and threatened legal actions arising in the normal course of business.  In the opinion of management, based upon the advice of legal counsel, the ultimate disposition of these matters will not have a material effect on the consolidated financial statements.