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Note 9 - Derivative Instruments and Hedging Activities | 3 Months Ended
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Mar. 31, 2018
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | Note 9 . Derivative Instruments and Hedging Activities As of March 31, 2018, the Company’s derivative instruments consisted of interest rate swaps. Generally, derivative instruments help the Company manage exposure to market risk and meet customer financing needs. Market risk represents the possibility that fluctuations in external factors such as interest rates, market-driven loan rates, prices, or other economic factors will adversely affect economic value or net interest income. The Company uses interest rate swap contracts to modify its exposure to interest rate risk caused by changes in the LIBOR curve in relation to certain designated fixed rate loans. These instruments are used to convert these fixed rate loans to an effective floating rate. If the LIBOR rate falls below the loan’s stated fixed rate for a given period, the Company will owe the floating rate payer the notional amount times the difference between LIBOR and the stated fixed rate. If LIBOR is above the stated rate for a given period, the Company will receive payments based on the notional amount times the difference between LIBOR and the stated fixed rate. The Company’s interest rate swaps qualify as fair value hedging instruments; therefore, fair value changes in the derivative and hedged item attributable to the hedged risk are recognized in earnings in the same period. The Company’s interest rate swap agreements include a ten -year, $1.28 million notional swap entered into in August 2017; a fourteen -year, $1.20 million notional swap entered into in March 2015; and a fifteen -year, $4.37 million notional swap entered into in February 2014. The swap agreements, which are accounted for as fair value hedges, and the loans hedged by the agreements are recorded at fair value. The fair value hedges were effective as of March 31, 2018. The following table presents the notional, or contractual, amounts and fair values of derivative instruments as of the dates indicated:
|  | March 31, 2018 |  |  | December 31, 2017 |
|  | Notional or |  |  | Fair Value |  |  | Notional or |  |  | Fair Value |
(Amounts in thousands) |  | Contractual Amount |  |  | Derivative Assets |  |  | Derivative Liabilities |  |  | Contractual Amount |  |  | Derivative Assets |  |  | Derivative Liabilities |
Derivatives designated as hedges |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 5,731 |  |  | $ | 45 |  |  | $ | - |  |  | $ | 5,813 |  |  | $ | - |  |  | $ | 90 |
Total derivatives |  | $ | 5,731 |  |  | $ | 45 |  |  | $ | - |  |  | $ | 5,813 |  |  | $ | - |  |  | $ | 90 |
The following table presents the effect of derivative and hedging activity, if applicable, on the consolidated statements of income for the periods indicated:
|  | Three Months Ended March 31, |  |
(Amounts in thousands) |  | 2018 |  |  | 2017 |  | Income Statement Location
Derivatives designated as hedges |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 13 |  |  | $ | 22 |  | Interest and fees on loans
Total derivative expense |  | $ | 13 |  |  | $ | 22 |  |

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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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- References No definition available. + Details
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