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Derivative Financial Instruments
 9 Months Ended
Sep. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
DERIVATIVE FINANCIAL INSTRUMENTS

Risk Management Instruments. The Company enters into certain derivative contracts to economically hedge state tax credits and certain loans. The table below summarizes the notional amounts and fair values of the derivative instruments used to manage risk.
 
 
 
 
Asset Derivatives
(Other Assets)
 
Liability Derivatives
(Other Liabilities)
Notional Amount
 
Fair Value
 
Fair Value
(in thousands)
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
Non-designated hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Interest rate cap contracts
$
23,800

 
$
23,800

 
$
2

 
$
10

 
$
—

 
$
—



The following table shows the location and amount of gains and losses related to derivatives used for risk management purposes recorded in the condensed consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013.
 
 
Location of Gain or (Loss) Recognized in Operations on Derivative
Amount of Gain or (Loss) Recognized in Operations on Derivative
 
Amount of Gain or (Loss) Recognized in Operations on Derivative
Three months ended September 30,
 
Nine months ended September 30,
(in thousands)
2014
 
2013
 
2014
 
2013
Non-designated hedging instruments
 
 
 
 
 
 
 
 
Interest rate cap contracts
Gain on state tax credits, net
$
—

 
$
(9
)
 
$
(8
)
 
$
1



Client-Related Derivative Instruments. As an accommodation to certain customers, the Company enters into interest rate swaps to economically hedge changes in fair value of certain loans. The table below summarizes the notional amounts and fair values of the client-related derivative instruments.

 
 
Asset Derivatives
(Other Assets)
 
Liability Derivatives
(Other Liabilities)
 
Notional Amount
 
Fair Value
 
Fair Value
(in thousands)
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
Non-designated hedging instruments
 
 
 
 
 
 
 
 
 
 
 
Interest rate swap contracts
$
175,906

 
$
185,213

 
$
949

 
$
990

 
$
949

 
$
990



Changes in the fair value of client-related derivative instruments are recognized currently in operations. The following table shows the location and amount of gains and losses recorded in the condensed consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013. For the three and nine months ended September 30, 2014 and 2013 the Company entered into derivative contracts with third parties to fully offset the client-related derivative instruments. Accordingly, there was no fair value adjustment recorded.
 
 
Location of Gain or (Loss) Recognized in Operations on Derivative
Amount of Gain or (Loss) Recognized in Operations on Derivative
 
Amount of Gain or (Loss) Recognized in Operations on Derivative
Three months ended September 30,
 
Nine months ended September 30,
(in thousands)
2014
 
2013
 
2014
 
2013
Non-designated hedging instruments
 
 
 
 
 
 
 
 
Interest rate swap contracts
Interest and fees on loans
$
—

 
$
(32
)
 
$
—

 
$
(205
)


At September 30, 2014 and December 31, 2013, the Company had $0.9 million and $1.0 million, respectively, of counterparty credit exposure on derivatives. At both September 30, 2014, and December 31, 2013, the Company had pledged cash of $1.0 million, as collateral in connection with our interest rate swap agreements.