XML 54 R16.htm IDEA: XBRL DOCUMENT v3.2.0.727
Derivatives and Hedging Activities
 9 Months Ended
Jun. 30, 2015
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 and a swap agreement with the client. The swap agreement effectively converts the client’s variable rate loan into a fixed rate. The Bank enters into a corresponding swap agreement with a third party in order to offset its exposure on the variable and fixed components of the client's swap agreement. The interest rate swap agreements with the clients 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 June 30, 2015 was $736,232,000 compared to $264,169,000 as of September 30, 2014. There was no impact to the statement of operations for the nine months ended June 30, 2015 as the asset and liability side of the swaps offset each other. The fee income related to swaps was $936,673 for the nine months ended June 30, 2015.
Additionally, the Bank had $400,000,000 in forward starting interest rate swaps to hedge future borrowing rates as of June 30, 2015. Their impact on accumulated other comprehensive income as of June 30, 2015 was an after-tax loss of $2,476,000. These derivatives are designated as cash flow hedging instruments in accordance with ASC 815.
The following table presents the fair value and balance sheet classification of derivatives at June 30, 2015 and September 30, 2014:
 
 
Asset Derivatives
 
Liability Derivatives
 
 
June 30, 2015
 
September 30, 2014
 
June 30, 2015
 
September 30, 2014
 
 
Balance Sheet
 
 
 
Balance Sheet
 
 
 
Balance Sheet
 
 
 
Balance Sheet
 
 
 
 
Location
 
Fair Value
 
Location
 
Fair Value
 
Location
 
Fair Value
 
Location
 
Fair Value
 
 
(In thousands)
Interest rate contracts
 
Other assets
 
$
5,429

 
Other assets
 
$
2,879

 
Other liabilities
 
$
5,429

 
Other liabilities
 
$
2,879

Long term borrowing hedge
 
Other assets
 
—

 
Other assets
 
—

 
Other liabilities
 
3,914

 
Other liabilities
 
268