Page 38 - Annual Report 2017

TEXAS GULF BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Statements
December 31, 2016 and 2015

NOTE K COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

Lease Commitments

Pursuant to the terms of noncancelable lease agreements pertaining to banking premises,
future minimum rent commitments under various operating leases are as follows at
December 31, 2016:

2017 $ 352,092
2018 375,056
2019 326,095
2020 264,705
2021 274,720
Thereafter 984,413
$ 2,577,081

The Company entered into a noncancelable lease agreement to expand their rented space at
the Houston Voss branch location in February 2014, which expires June 30, 2017. Future
minimum lease commitments related to this lease total $17,088 at December 31, 2016. The
Company then entered a sublease agreement with a third party, with substantially the same
terms. Estimated future minimum sublease rental receipts are $13,670. The related lease
commitments and future sublease rental receipts have been netted against one another and
included in the calculation of future minimum lease commitments.

The Company entered into a noncancelable lease agreement related to a new branch location
at 900 Town & Country Lane in Houston in December 2014. The lease commencement date
was May 1, 2015 with a termination date of July 31, 2025. The related lease commitments
are included in the above calculation of future minimum lease commitments. The Company
received 19 months of rent abatement and records rent expense on the straight line basis
over the full term of the lease. The resulting deferred rent payable of $358,625 and
$148,569 is included in Other Liabilities at December 31, 2016 and 2015, respectively.

The Company entered into a sublease agreement with a third party to sublease
approximately 5,929 square feet of rented space at the Houston Voss branch location In
March 2015. The term of the sublease is 24 months, commencing July 1, 2015 and expiring
June 30, 2017. Future minimum lease commitments related to this lease total $71,768 and
estimated future minimum sublease rental receipts are $68,094. The related lease
commitments and future sublease rental receipts have been netted against one another and
included in the calculation of future minimum lease commitments.

It is expected that the Houston Voss branch location leases and subleases will not be
renewed upon expiration June 30, 2017, and in the normal course of business, other leases
that expire will be renewed or replaced by leases on other property. Rent expense was
approximately $565,000 and $500,000 for 2016 and 2015, respectively.

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