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DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended
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Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to certain risk 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, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial 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 as risk management tools by the Company 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 the Company’s borrowings and are not used for trading or speculative purposes. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. At March 31, 2020, the Company had two interest rate derivatives designated as hedging instruments with an aggregate notional amount of $100.0 million. The Company had no derivative instruments at December 31, 2019. Such derivatives were used to hedge the variable cash flows associated with the Company's borrowings. Interest rate lock commitments on residential mortgage loans As a part of its normal residential mortgage operations, the Company will enter into an interest rate lock commitment with a potential borrower. The Company enters into a corresponding commitment to an investor to sell that loan at a specific price shortly after origination. In accordance with FASB ASC 820, adjustments are recorded through earnings to account for the net change in fair value of these transactions for the held for sale pipeline. The following table summarizes the fair value of the Company's derivative instruments at March 31, 2020 and December 31, 2019:
| 3/31/2020 |  |  |  |  |  | 12/31/2019 |  |  |  |
| Notional Amount |  | Balance Sheet Location |  | Fair Value |  | Notional Amount |  | Balance Sheet Location |  | Fair Value
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |
Interest rate products | $ | 50,000 |  |  | Other assets |  |  | $ | 104 |  |  |  | $ | — |  |  |  |  |  | $ | — |
Interest rate products | 50,000 |  |  | Other liabilities |  |  | (1,359) |  |  |  | — |  |  |  |  |  | — |
Total derivatives designated as hedging instruments |  |  |  |  |  |  | $ | (1,255) |  |  |  |  |  |  |  |  |  | $ | — |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate lock commitments with customers | $ | 22,732 |  |  | Other assets |  |  | $ | 435 |  |  |  | $ | 4,408 |  |  | Other assets |  |  | $ | 103 |
Forward sale commitments | 30,650 |  |  | Other liabilities |  |  | (195) |  |  |  | 8,969 |  |  | Other assets |  |  | 1 |
Total derivatives not designated as hedging instruments |  |  |  |  |  |  | $ | 239 |  |  |  |  |  |  |  |  |  | $ | 104 |
The following tables summarize the effect of the Company's derivative financial instruments on OCI and net income for the three months ended March 31, 2020 and 2019:
|  |  |  |  | Amount of Loss Recognized in OCI on Derivative |  |
|  |  |  |  | Three Months Ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
Derivatives in cash flow hedging relationships: |  |  |  |  |  |  |
Interest rate products |  |  |  |  | $ | (1,259) |  |  |  | $ | — |
Total |  |  |  |  | $ | (1,259) |  |  |  | $ | — |
|  |  |  |  | Amount of Loss Reclassified from AOCI into Income |  |  |  | Location of Loss Recognized from AOCI into Income
|  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  | 2020 |  | 2019 |  |
Derivatives in cash flow hedging relationships: |  |  |  |  |  |  |  |  |
Interest rate products |  |  |  |  | $ | (4) |  |  |  | $ | — |  |  | Interest expense
Total |  |  |  |  | $ | (4) |  |  |  | $ | — |  |  |
|  |  |  |  | Amount of Gain (Loss) Recognized in Income |  |  |  | Location of Gain (Loss) Recognized in Income
|  |  |  |  | Three Months Ended March 31, |  |  |  |
|  |  |  |  | 2020 |  | 2019 |  |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |
Interest rate lock commitments with customers |  |  |  |  | $ | 332 |  |  |  | $ | — |  |  | Mortgage banking activities
Forward sale commitment |  |  |  |  | (197) |  |  |  | — |  |  | Mortgage banking activities
Total |  |  |  |  | $ | 135 |  |  |  | $ | — |  |  |
The following table is a summary of interest rate swap components at March 31, 2020 and December 31, 2019:
| March 31, 2020 |  | December 31, 2019
Weighted average pay rate | 0.54 | % |  |  | — | %
Weighted average receive rate | 0.08 | % |  |  | — | %
Weighted average maturity in years | 6.0 |  | —

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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