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Derivative Activities | 9 Months Ended
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Sep. 30, 2015
Derivative Activities [Abstract] |
Derivative Acitivities | NOTE 8 — DERIVATIVE S The following table presents the Company’s derivative assets and liabilities at September 30, 2015 and December 31, 2014:
| September 30, |  | December 31,
| 2015 |  | 2014
| (In thousands)
Derivative assets: |  |  |  |  |
Options tied to S&P 500 Index | $ | 1,115 |  | $ | 5,555
Interest rate swaps not designated as hedges |  | 2,139 |  |  | 2,399
Interest rate caps |  | 36 |  |  | 152
Other |  | - |  |  | 1
| $ | 3,290 |  | $ | 8,107
Derivative liabilities: |  |  |  |  |
Interest rate swaps designated as cash flow hedges |  | 6,395 |  |  | 8,585
Interest rate swaps not designated as hedges |  | 2,139 |  |  | 2,399
Interest rate caps |  | 36 |  |  | 152
Other |  | 52 |  |  | 85
| $ | 8,622 |  | $ | 11,221
Interest Rate Swaps The Company enters into interest rate swap contract s to hedge the variability of future interest cash flows of forecasted wholesale borrowings attributable to changes in a predetermined variable index rate. T he interest rate swap s effectively fix the Company’s interest payments on an amount of forecasted interest expense attributable to the variable index rate corresponding to the swap notional stated rate. These swaps are designated as cash flow hedges for the forecasted wholesale borrowing transactions, are properly documented as such, and therefore, qualify for cash flow hedge accounting. Any gain or loss associated w ith the effective portion of the cash flow hedges is recognized in other comprehensive income (loss) and is subsequently reclassified into operations in the period during which the hedged forecasted transactions affect earnings. Changes in the fair value of these derivatives are recorded in accu mulated other comprehensive income to the extent there is no significant ineffectiveness in the cash flow hedging relationships. Currently, the Company does not expect to reclassify any amount included in other comprehensive income (loss) related to these interes t rate swaps to operations in the next twelve months. The following table shows a summary of these swaps and their terms at September 30, 2015:
|  | Notional |  | Fixed |  | Variable |  | Trade |  | Settlement |  | Maturity
Type |  | Amount |  | Rate |  | Rate Index |  | Date |  | Date |  | Date
|  | (In thousands) |  |  |  |  |  |  |  |  |  |
Interest Rate Swaps |  | $ | 25,000 |  | 2.4400% |  | 1-Month LIBOR |  | 05/05/11 |  | 05/04/12 |  | 05/04/16
|  |  | 25,000 |  | 2.6200% |  | 1-Month LIBOR |  | 05/05/11 |  | 07/24/12 |  | 07/24/16
|  |  | 25,000 |  | 2.6400% |  | 1-Month LIBOR |  | 05/05/11 |  | 07/30/12 |  | 07/30/16
|  |  | 50,000 |  | 2.6600% |  | 1-Month LIBOR |  | 05/05/11 |  | 08/10/12 |  | 08/10/16
|  |  | 100,000 |  | 2.6800% |  | 1-Month LIBOR |  | 05/05/11 |  | 08/16/12 |  | 08/16/16
|  |  | 38,322 |  | 2.4200% |  | 1-Month LIBOR |  | 07/03/13 |  | 07/03/13 |  | 08/01/23
|  | $ | 263,322 |  |  |  |  |  |  |  |  |  |
An accumulated unrealized loss of $6.4 million and $8.6 million was recognized in accumulated other comprehensive income (loss) related to the valuation of these swaps at September 30, 2015 and December 31, 2014, respectively, and the related l iability is being reflected in the accompanying unaudited consolidated statements of financial condition. For September 30, 2015 and December 31, 2014, interest rate swaps not designated as hedging instruments that were offered to clients represented an asset of $2.1 million and $2.4 million, respectively, and were included as part of derivative assets in the unaudited consolidated statements of financial position. The credit risk to these clients stemming from these derivatives, if any, is not material. At September 30, 2015 and December 31, 2014, interest rate swaps not designated as hedging instruments that are the mirror-images of the derivatives offered to clients represented a liability of $2.1 million and $2.4 million, respectively, and were included as part of derivative liabilities in the unaudited consolidated statements of financial conditio n. T he following table shows a summary of these interest rate swaps not designated as hedging instruments and their terms at September 30, 2015:
|  | Notional |  | Fixed |  | Variable |  | Settlement |  | Maturity
Type |  | Amount |  | Rate |  | Rate Index |  | Date |  | Date
|  | (In thousands) |  |  |  |  |  |  |  |
Interest Rate Swaps - Derivatives Offered to Clients |  | $ | 3,819 |  | 5.1300% |  | 1-Month LIBOR |  | 07/03/06 |  | 07/03/16
|  |  | 12,500 |  | 5.5100% |  | 1-Month LIBOR |  | 04/11/09 |  | 04/11/19
|  | $ | 16,319 |  |  |  |  |  |  |  |
Interest Rate Swaps - Mirror Image Derivatives |  | $ | 3,819 |  | 5.1300% |  | 1-Month LIBOR |  | 07/03/06 |  | 07/03/16
|  |  | 12,500 |  | 5.5100% |  | 1-Month LIBOR |  | 04/11/09 |  | 04/11/19
|  | $ | 16,319 |  |  |  |  |  |  |  |
Options T ied to Standard & Poor’s 500 Stock Market Index The Company has offered its customers certificates of deposit with an option tied to the performance of the S&P 500 Index. The Company uses option agreements with major broker-dealers to manage its exposure to changes in this index. Under the terms of the option agreements, the Company receives the average increase in the month-end value of the index in exchange for a fixed pre m ium. The changes in fair value of the option agreements used to manag e the exposure in the stock market in the certificates of deposit are recorded in earnings. At September 30, 2015 and December 31, 2014, the purchased options used to manage exposure to the S&P 500 Index on stock indexed deposits represented an asset of $1.1 million (notional amount of $3.4 million) and $5.6 million (notional amount of $10.7 million), respectively, and the options sold to customers embedded in the certificates of deposit and recorded as deposits in the unaudited consolidated statements of f inancial condition, represented a liability of $1.0 million (notional amount of $3.2 million) and $5.5 million (notional amount of $10.5 million), respectively. Interest Rate C aps The Company has entered into interest rate cap transactions with various clients with floating-rate debt who wish to protect their financial results against increases in interest rates. In these cases, the Company simultaneously enters into mirror-image interest rate cap transactions with financial counterparties. None of these cap transactions qualify for hedge accounting, and therefore, they are marked to market through earnings. For both September 30, 2015 and December 31, 2014, t he outstanding total notional amount of interest rate caps was $1 09.9 million. At September 30, 2015 and December 31, 2014, the interest rate caps sold to clients represented a liability of $36 thousand and $152 thousand, respectively, and were included as pa rt of derivative liabilities in the unaudited consolidated statements of financial condition. At September 30, 2015 and December 31, 2014, the interest rate caps purchased as mirror-images represented an asset of $36 thousand and $152 thousand, respectivel y, and were included as part of derivative assets in the unaudited consolidated statements of financial condition.

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