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COMMITMENTS AND OFF BALANCE SHEET ACTIVITIES
12 Months Ended
Dec. 31, 2011
COMMITMENTS AND OFF BALANCE SHEET ACTIVITIES

NOTE 16 - COMMITMENTS AND OFF BALANCE SHEET ACTIVITIES

 

The Bank leases branch facilities and sites and is committed under various non-cancelable lease contracts that expire at various dates through the year 2017. Most of these leases are with members of the Bank’s Board of Directors or companies they control. Expense for leased premises was $839, $870 and $929 for 2011, 2010 and 2009, respectively. Minimum lease payments at December 31, 2011 for all non-cancelable leases were as follows:

 

2012   $ 910  
2013     784  
2014     668  
2015     450  
2016     205  
Thereafter     1,153  
         
Total minimum lease payments   $ 4,170  

 

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, so 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.

 

Financial instruments with off-balance-sheet risk were as follows at year-end:

 

    2011     2010  
    Fixed     Variable     Fixed     Variable  
    Rate     Rate     Rate     Rate  
Commitments to make loans (at market rates)   $ 6,354     $ 9,304     $ 6,149     $ 13,818  
Unused lines of credit     -       306,262       -       273,418  
Unused letters of credit     -       49,229       -       52,859  

 

The loan commitments are generally extended for terms of up to 60 days and, in many cases, allow the customer to select from one of several financing options offered. For the fixed rate commitments, the interest range was 4.25% to 6.00% in 2011 and 4.75% to 6.50% in 2010.

 

At December 31, 2011 and 2010, the Bank was required to have $8,460 and $8,122, respectively, on deposit with the Federal Reserve or as cash on hand as reserve.

 

On March 3, 2005, the Bank entered into an agreement with Northern Kentucky University whereby the University granted to the Bank the naming rights for the new Northern Kentucky University Arena constructed on the campus of the University for a term commencing immediately upon execution of the agreement and expiring twenty years after the opening of the Arena. In consideration therefore, the Bank is paying $6,000 in seven equal annual installments which began after substantial completion and opening of the Arena which occurred in September 2009. The cost of the naming rights are being amortized over the life of the contract commencing on the opening of the Arena, which took place in September 2009. The Company recorded $300 in expense for these naming rights in 2011, 2010 and 2009, the year end balances for this asset was $2,429 and $1,871 at December 31, 2011 and 2010, respectively.

  

In the second quarter of 2007, the Bank and Thomas More College announced a naming rights agreement for the new athletic field being constructed on Thomas More’s campus. The Bank committed $1,000 to the project, which has been named The Bank of Kentucky Field. The cost of the naming rights are being amortized over the twenty-five year life of the agreement commencing on the opening of the field, which took place in September 2008. The Company recorded $40 in expense for these naming rights in 2011, 2010 and 2009, the year end balances for this asset was $667 and $507 at December 31, 2011 and 2010 respectively.