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Derivative Instruments and Hedging Activities | 12 Months Ended
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Dec. 31, 2017
Derivative Instruments and Hedging Activities [Abstract] |
Derivative Instruments and Hedging Activities |
20. | Derivative Instruments 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, primarily by managing the amount, sources and duration of its assets and liabilities and through the use of derivative instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to certain fixed rate borrowings. The Company also has interest rate derivatives that result from a service provided to certain qualifying customers and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions. Derivatives Not Designated as Hedging Instruments The Company enters into interest rate swaps to facilitate customer transactions and meet their financing needs. These swaps are considered derivatives, but are not designated in hedging relationships. These instruments have interest rate and credit risk associated with them. To mitigate the interest rate risk, the Company enters into offsetting interest rate swaps with counterparties. The counterparty swaps are also considered derivatives and are also not designated in hedging relationships. Interest rate swaps are recorded within other assets or other liabilities on the consolidated balance sheet at their estimated fair value. Changes to the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the consolidated statement of income. The Company has seven risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreement provides credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. Derivatives Designated as Hedging Instruments The Company has entered into interest rate swaps to modify the interest rate characteristics of certain short-term FHLB advances from variable rate to fixed rate in order to reduce the impact of changes in future cash flows due to market interest rate changes. These agreements are designated as cash flow hedges. The following table depicts the fair value adjustment recorded related to the notional amount of derivatives outstanding as well as the notional amount of risk participation agreements:
|  | December 31, |
(In thousands) |  | 2017 |  |  | 2016 |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |
Fair value adjustment |  | $ | 210 |  |  | $ | 309 |
Notional amount: |  |  |  |  |  |  |  |
Interest rate derivatives |  |  | 481,185 |  |  |  | 371,101 |
Risk participation agreements |  |  | 35,628 |  |  |  | 11,421 |
Derivatives Designated as Hedging Instruments: |  |  |  |  |  |  |  |
Fair value adjustment - interest rate derivatives |  |  | 3,510 |  |  |  | 2,704 |
Notional amount - interest rate derivatives |  |  | 250,000 |  |  |  | 250,000 |
The following table indicates the gain or loss recognized in income on derivatives for the years ended December 31:
|  | December 31, |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Non-hedging interest rate derivatives: |  |  |  |  |  |  |  |  |
Increase in interest income |  | $ | 179 |  |  | $ | 95 |  |  | $ | 33 |
Increase in other income |  |  | 2,945 |  |  |  | 3,480 |  |  |  | 684 |
Hedging interest rate derivatives: |  |  |  |  |  |  |  |  |  |  |  |
Decrease (increase) in interest expense |  |  | 289 |  |  |  | (70 | ) |  |  | - |

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- References No definition available. + Details
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- 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
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