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## NOTESTO CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar Amounts in Thousands) 

## NOTE 13— Financial Guarantees (continued) 

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 drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the counter-party. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, residential and income-producing commercial properties. 

Standby letters of credit and commercial letters of credit written are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. 

Current notional amounts outstanding at December 31, 2003 for financial standby letters of credit and performance standby letters of credit include amounts of $9,510 and $927, respectively, issued during 2003 and subject to the provisions of FIN 45. There is currently no liability recorded on the Corporation’s balance sheet related to these letters of credit. 

## NOTE 14— Premises and Equipment 

Premises and equipment are described as follows: 

<img src='content_image/40107.jpg'>

Depreciation and amortization related to premises and equipment was $7,261 in 2003, $6,840 in 2002 and $6,153 in 2001. 

The Corporation leases various premises and assorted equipment under noncancellable agreements. Total future minimal rental commitments at December 31, 2003 were as follows: 

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Under the terms of various lease agreements, increases in utilities and taxes may be passed on to the lessee. Such adjustments are not reflected in the above table. Additionally, various lease renewal options are available and are not included in the minimum lease commitments until such options are exercised. Total lease expense amounted to $1,939 in 2003, $1,699 in 2002 and $2,105 in 2001. 

## NOTE 15— Interest-Bearing Deposits 

Components of interest-bearing deposits at December 31 were as follows: 

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Interest-bearing deposits at December 31, 2003 and 2002, include allocations from NOW and Super NOW accounts of $405,521 and $374,695, respectively, into Savings and MMDA accounts. These reallocations are based on a formula and have been made to reduce the Corporation’s reserve requirement in compliance with regulatory guidelines. 

Included in time deposits at December 31, 2003 and 2002, were certificates of deposit in denominations of $100 or more of $398,716 and $489,702, respectively. 

Interest expense related to $100 or greater certificates of deposit amounted to $18,227 in 2003, $21,685 in 2002 and $27,922 in 2001. 

Included in time deposits at December 31, 2003, were certificates of deposit with the following scheduled maturities: 

<img src='content_image/40108.jpg'>

