California Bank of Commerce NOTES TO FINANCIAL STATEMENTS 10.  COMMITMENTS AND CONTINGENCIES  (Continued) Operating Leases (Continued) Future minimum lease payments are as follows: Year Ending December 31,  2012 $ 435,050 2013 424,755 2014 434,970 2015 184,950 2016   -  Thereafter  - $ 1,479,725 December 31, 2011 2010 Commitments to extend credit  $  73,746,000 $  60,141,000 Standby letters of credit  2,265,000 $  2,960,000 Rental expense included in occupancy and equipment expense totaled $419,030 and $408,276 for  the years ended December 31, 2011 and 2010, respectively. The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of  business in order to meet the financing needs of its customers and to reduce its own exposure to  fluctuations in interest rates. The following financial instruments represent off-balance-sheet credit risk: The Bank’s exposure to credit loss in the event of nonperformance by the other party for commitments  to extend credit is represented by the contractual amount of those instruments. The Bank uses the  same credit policies in making commitments as it does for loans included on the balance sheet. 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 some of the commitments are expected to expire without being drawn upon, the total  commitment amounts do not necessarily represent future cash requirements. The Bank evaluates  each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is  based on management’s credit evaluation of the borrower. Collateral held varies, but may include  accounts receivable, inventory, and deeds of trust on residential real estate and income-producing  commercial properties. 40 Financial Instruments with Off-Balance-Sheet Risk