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Derivatives

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 5 – Derivatives

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swap does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Interest rate swaps were entered into on August 24, 2015, December 30, 2014 and October 15, 2014, each with a respective notional amount of $25 million and were designated as cash flow hedges of a Federal Home Loan Bank advance. The swaps were determined to be fully effective during the period presented and therefore no amount of ineffectiveness has been included in net income while the aggregate fair value of the swaps is recorded in other assets (liabilities) with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining term of the swaps.

Summary information about the interest rate swaps designated as cash flow hedges as of March 31, 2017, December 31, 2016 and March 31, 2016 are presented in the following table.

	March 31,			December 31,			March 31,
(dollars in thousands)	2017			2016			2016
Notional amount	$	75,000		$	75,000		$	75,000
Weighted average pay rates		1.58	%		1.59	%		1.57	%
Weighted average receive rates		1.00	%		0.69	%		0.56	%
Weighted average maturity		2.5 years			2.8 years			3.6 years
Fair value	$	248		$	88		$	(1,568	)

Interest expense recorded on these swap transactions totaled approximately $108 thousand for the three months ended March 31, 2017 and $191 thousand for the three months ended March 31, 2016.

Cash Flow Hedge

The following table presents the net gains (losses), recorded in other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments for the following periods:

	Three Months Ended March 31, 2017
		Amount of gain			Amount of gain		Amount of gain (loss)
		(loss) recognized			(loss) reclassified		recognized in other
		in OCI (Effective			from OCI to		Noninterest income
(dollars in thousands)		Portion)			interest income		(Ineffective Portion)
Interest rate contracts		$	160		$	-	$	-

	Three Months Ended March 31, 2016
		Amount of gain			Amount of gain		Amount of gain (loss)
		(loss) recognized			(loss) reclassified		recognized in other
		in OCI (Effective			from OCI to		Noninterest income
(dollars in thousands)		Portion)			interest income		(Ineffective Portion)
Interest rate contracts		$	(1,437	)	$	-	$	-

The following table reflects the cash flow hedges included in the consolidated statements of condition as of March 31, 2017 and December 31, 2016:

	March 31, 2017				December 31, 2016
	Notional				Notional
(dollars in thousands)	Amount		Fair Value		Amount		Fair Value
Interest rate swaps related to FHLB advances included in assets	$	75,000	$	248	$	75,000	$	88