XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.19.1

NOTE 4 - DERIVATIVES | 3 Months Ended
--- | ---
Mar. 31, 2019
Notes to Financial Statements |
Derivatives and Hedging Activities | NOTE 4 – DERIVATIVES The Company uses interest rate swap and cap instruments to manage interest rate risk related to the variability of interest payments due to changes in interest rates. The Company entered into interest rate caps on June 5, 2014 to hedge against the risk of rising interest rates on short-term liabilities. The short-term liabilities consist of $30.0 million of 1-month FHLB advances, and the benchmark rate hedged is 1-month LIBOR. The interest rate caps are designated as a cash flow hedge in accordance with ASC 815. An initial premium of $2.1 million was paid upfront for the two caps. The details of the interest rate caps are as follows:
|  |  |  |  |  | Balance Sheet |  |  |  |  | 1-Month LIBOR |  | Fair Value as of |  |
Hedged Instrument |  | Effective Date |  | Maturity Date |  | Location |  | Notional Amount |  | Strike Rate |  |  | March 31, 2019 |  | December 31, 2018 |  |
(dollars in thousands) |
1-month FHLB Advance |  | 6/3/2014 |  | 6/5/2019 |  | Other Assets |  | $ | 15,000 |  | 0.94 | % |  | $ | 56 |  | $ |  | 117 |  |
1-month FHLB Advance |  | 6/5/2014 |  | 6/5/2021 |  | Other Assets |  |  | 15,000 |  | 1.44 | % |  |  | 241 |  |  |  | 342 |  |
|  |  |  |  |  |  |  | $ | 30,000 |  |  |  |  | $ | 297 |  | $ |  | 459 |  |
On June 21, 2018, the Company entered into interest rate swaps to hedge against the risk of rising rates on its variable rate trust preferred securities. The floating rate trust preferred securities are tied to 3-month LIBOR, and the interest rate swaps utilize 3-month LIBOR, so the hedge is effective. The interest rate swaps are designated as a cash flow hedge in accordance with ASC 815. The details of the interest rate swaps are as follows:
|  |  |  |  |  | Balance Sheet |  |  |  |  |  |  |  |  |  |  |  | Fair Value as of
Hedged Instrument |  | Effective Date |  | Maturity Date |  | Location |  | Notional Amount |  | Receive Rate |  |  | Pay Rate |  | March 31, 2019 |  | December 31, 2018
(dollars in thousands)
QCR Holdings Statutory Trust II |  | 9/30/2018 |  | 9/30/2028 |  | Other Liabilities |  | $ | 10,000 |  | 5.44 | % |  |  | 5.85 | % |  | $ | (557) |  | $ | (298)
QCR Holdings Statutory Trust III |  | 9/30/2018 |  | 9/30/2028 |  | Other Liabilities |  |  | 8,000 |  | 5.44 | % |  |  | 5.85 | % |  |  | (445) |  |  | (239)
QCR Holdings Statutory Trust V |  | 7/7/2018 |  | 7/7/2028 |  | Other Liabilities |  |  | 10,000 |  | 4.34 | % |  |  | 4.54 | % |  |  | (540) |  |  | (288)
Community National Statutory Trust II |  | 9/20/2018 |  | 9/20/2028 |  | Other Liabilities |  |  | 3,000 |  | 4.80 | % |  |  | 5.17 | % |  |  | (166) |  |  | (89)
Community National Statutory Trust III |  | 9/15//2018 |  | 9/15/2028 |  | Other Liabilities |  |  | 3,500 |  | 4.36 | % |  |  | 4.75 | % |  |  | (194) |  |  | (104)
Guaranty Bankshares Statutory Trust I |  | 9/15/2018 |  | 9/15/2028 |  | Other Liabilities |  |  | 4,500 |  | 4.36 | % |  |  | 4.75 | % |  |  | (249) |  |  | (133)
|  |  |  |  |  |  |  | $ | 39,000 |  | 4.89 | % |  |  | 5.24 | % |  | $ | (2,151) |  | $ | (1,151)
Changes in fair values of derivatives designated as cash flow hedgers are recorded in OCI to the extent the hedge is effective, and reclassified to earnings as the hedged transaction (interest payments on debt) impact earnings. The caps and swaps are valued by the transaction counterparty on a monthly basis and corroborated by a third party annually. The Company has also entered into interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer while at the same time entering into an equal and offsetting interest rate swap with a third party financial institution. Because the Company acts as an intermediary for the customer, changes in the fair value of the underlying derivative contracts, for the most part, offset each other and do not significantly impact the Company’s results of operations.
|  |  |  | March 31, 2019 |  |  | December 31, 2018
|  |  | Notional Amount |  | Estimated Fair Value |  | Notional Amount |  | Estimated Fair Value
|  |  | (dollars in thousands)
Non-Hedging Interest Rate Derivatives Assets: |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap contracts |  |  | $ | 490,780 |  | $ | 36,078 |  | $ | 445,022 |  | $ | 22,196
Non-Hedging Interest Rate Derivatives Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap contracts |  |  | $ | 490,780 |  | $ | 36,078 |  | $ | 445,022 |  | $ | 22,196
Swap fee income totaled $3.2 million and $959 thousand for the three months ended March 31, 2019 and 2018, respectively. Swap fee income totaled $10.8 million for the year ended December 31, 2018.

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration