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Derivatives and Hedging Activities
 3 Months Ended
Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities
Derivatives and Hedging Activities

The Bank periodically enters into certain commercial loan interest rate swap agreements in order to provide commercial loan customers the ability to convert from variable to fixed interest rate payments, while the bank retains a variable rate loan. Under these agreements, the Bank enters into a variable-rate loan agreement with a customer in addition to a swap agreement. This swap agreement effectively converts the customer’s variable rate loan into a fixed rate. The Bank then enters into a corresponding swap agreement with a third party in order to offset its exposure on the variable and fixed components of the customer agreement. As the interest rate swap agreements with the customers and third parties are not designated as hedges under ASC 815, the Derivatives and Hedging topic, the instruments are marked to market in earnings.
The notional amount of open interest rate swap agreements at December 31, 2014 was $291,896,000 compared to $264,169,000 as of September 30, 2014. There was no impact to the statement of operations for the three months ended December 31, 2014 as the asset and liability side of the swaps offset each other. The fee income related to swaps was $196,000 for the Quarter Ended December 31, 2014.
Additionally, the Bank had $200,000,000 in forward starting interest rate swaps to hedge future borrowing rates. Their impact on accumulated other comprehensive income as of December 31, 2014 was an after-tax loss of $2,857,000.
The following table presents the fair value and balance sheet classification of derivatives at December 31, 2014 and September 30, 2014:
 
 
Asset Derivatives
 
Liability Derivatives
 
 
December 31, 2014
 
September 30, 2014
 
December 31, 2014
 
September 30, 2014
 
 
Location
 
Fair Value
 
Location
 
Fair Value
 
Location
 
Fair Value
 
Location
 
Fair Value
 
 
(In thousands)
Interest rate contracts
 
Other assets
 
$
5,626

 
Other assets
 
$
2,879

 
Other liabilities
 
$
5,626

 
Other liabilities
 
$
2,879

Long term borrowing hedge
 
Other assets
 
—

 
Other assets
 
—

 
Other liabilities
 
4,517

 
Other liabilities
 
—