Commitments and Contingencies First Financial offers a variety of financial instruments with off-balance-sheet risk to its clients to assist them in meeting their requirement for liquidity and credit enhancement. These financial instruments include standby letters of credit and outstanding commitments to extend credit.GAAP does not require these financial instruments to be recorded in the Consolidated Financial Statements. First Financial utilizes the same credit policies in issuing commitments and conditional obligations as it does for credit instruments recorded on the Consolidated Balance Sheets. First Financials exposure to credit loss, in the event of nonperformance by the counterparty to the financial instrument for standby letters of credit and outstanding commitments to extend credit, is represented by the contractual amounts of those instruments. First Financial utilizes the ALLL methodology to maintain a reserve that it considers sufficient to absorb probable losses incurred in standby letters of credit and outstanding loan commitments and records the reserve within Accrued interest and other liabilities on the Consolidated Balance Sheets. Loan commitments. Loan commitments are agreements to extend credit to a client as long as there is no violation of any condition established in the commitment agreement.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 amount of collateral obtained, if deemed necessary by First Financial upon extension of credit, is based on managements credit evaluation of the client.The collateral held varies, but may include securities, real estate, inventory, plant or equipment.First Financial had commitments outstanding to extend credit, primarily variable in nature, totaling $2.0 billion at both December31, 2016 and December31, 2015 with i