XML 26 R16.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivatives and Hedging Activities | 9 Months Ended
--- | ---
Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative and Hedging Activities | Derivative and Hedging Activities The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. Non-designated Hedges. Derivatives not designated in qualifying hedging relationships are not speculative and result from a service the Company provides to certain qualified commercial borrowers in loan related transactions and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company executes interest rate swaps with qualified commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. The interest rate swap agreement which the Company executes with the commercial borrower is collateralized by the borrower's commercial real estate financed by the Company. The collateral exceeds the maximum potential amount of future payments under the credit derivative. As the interest rate swaps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. At September 30, 2017 and December 31, 2016, the Company had 46 interest rate swaps with an aggregate notional amount of $698.5 million and 36 interest rate swaps with an aggregate notional amount of $582.2 million, respectively, related to this program. The Company has credit derivatives resulting from participations in interest rate swaps provided to external lenders as part of loan participation arrangements; therefore, they are not used to manage interest rate risk in the Company's assets or liabilities. Cash Flow Hedges of Interest Rate Risk. The Company’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three and nine months ended September 30, 2017 and 2016, such derivatives were used to hedge the variable cash outflows associated with Federal Home Loan Bank borrowings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2017 and 2016, the Company did not record any hedge ineffectiveness. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s debt. During the next twelve months, the Company estimates that $52,400 will be reclassified as an increase to interest expense. As of September 30, 2017, the Company had two outstanding interest rate derivatives with an aggregate notional amount of $60.0 million that was designated as a cash flow hedge of interest rate risk. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition at September 30, 2017 and December 31, 2016 (in thousands):
|  | At September 30, 2017
|  | Asset Derivatives |  | Liability Derivatives
|  | Consolidated Statements of Financial Condition |  | Fair Value |  | Consolidated Statements of Financial Condition |  | Fair Value
Derivatives not designated as a hedging instrument: |  |  |  |  |  |  |  |
Interest rate products |  | Other assets |  | $ | 7,575 |  |  | Other liabilities |  | $ | 7,595 |
Credit contracts |  | Other assets |  | 2 |  |  | Other liabilities |  | — |
Total derivatives not designated as a hedging instrument |  |  |  | $ | 7,577 |  |  |  |  | $ | 7,595 |
Derivatives designated as a a hedging instrument: |  |  |  |  |  |  |  |
Interest rate products |  | Other assets |  | $ | 458 |  |  | Other liabilities |  | $ | — |
Total derivatives designated as a hedging instrument |  |  |  | $ | 458 |  |  |  |  | $ | — |
|  | At December 31, 2016
|  | Asset Derivatives |  | Liability Derivatives
|  | Consolidated Statements of Financial Condition |  | Fair Value |  | Consolidated Statements of Financial Condition |  | Fair Value
Derivatives not designated as a hedging instrument: |  |  |  |  |  |  |  |
Interest rate products |  | Other assets |  | $ | 7,156 |  |  | Other liabilities |  | $ | 6,750 |
Credit contracts |  | Other assets |  | 3 |  |  | Other liabilities |  | — |
Total derivatives not designated as a hedging instrument |  |  |  | $ | 7,159 |  |  |  |  | $ | 6,750 |
Derivatives designated as a a hedging instrument: |  |  |  |  |  |  |  |
Interest rate products |  | Other assets |  | $ | 282 |  |  | Other liabilities |  | $ | — |
Total derivatives designated as a hedging instrument |  |  |  | $ | 282 |  |  |  |  | $ | — |
The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three and nine months ended September 30, 2017 and 2016 (in thousands).
|  |  |  | Gain (loss) recognized in Income on derivatives for the three months ended
|  | Consolidated Statements of Income |  | September 30, 2017 |  | September 30, 2016
Derivatives not designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Other income (expense) |  | $ | (36 | ) |  | $ | (95 | )
Credit contracts |  | Other income (expense) |  | — |  |  | 5 |
Total |  |  |  | $ | (36 | ) |  | $ | (90 | )
Derivatives designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Other income (expense) |  | $ | (59 | ) |  | $ | (129 | )
Total |  |  |  | $ | (59 | ) |  | $ | (129 | )
|  |  |  | Gain (loss) recognized in Income on derivatives for the nine months ended
|  | Consolidated Statements of Income |  | September 30, 2017 |  | September 30, 2016
Derivatives not designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Other income (expense) |  | $ | (428 | ) |  | $ | (1,060 | )
Credit contracts |  | Other income (expense) |  | 1 |  |  | 103 |
Total |  |  |  | $ | (427 | ) |  | $ | (957 | )
Derivatives designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Other income (expense) |  | $ | (166 | ) |  | $ | (366 | )
Total |  |  |  | $ | (166 | ) |  | $ | (366 | )
The Company has agreements with certain of its derivative counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. In addition, the Company has agreements with certain of its derivative counterparties that contain a provision that if the Company fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements. As of September 30, 2017, the termination value of derivatives in a net liability position, which includes accrued interest, was $2.5 million. The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $3.1 million against its obligations under these agreements. If the Company had breached any of these provisions at September 30, 2017, it could have been required to settle its obligations under the agreements at the termination value.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration