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Note 4 - Mortgage Banking Derivative | 3 Months Ended
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Mar. 31, 2017
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | Note 4 . Mortgage Banking Derivative As part of its mortgage banking activities, the Bank enters into interest rate lock commitments, which are commitments to originate loans where the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. The Bank then locks in the loan and interest rate with an investor and commits to deliver the loan if settlement occurs (“best efforts”) or commits to deliver the locked loan in a binding (“mandatory”) delivery program with an investor. Certain loans under interest rate lock commitments are covered under forward sales contracts of mortgage backed securities (“MBS”). Forward sales contracts of MBS are recorded at fair value with changes in fair value recorded in noninterest income. Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives. The market value of interest rate lock commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. The Bank determines the fair value of interest rate lock commitments and delivery contracts by measuring the fair value of the underlying asset, which is impacted by current interest rates, taking into consideration the probability that the interest rate lock commitments will close or will be funded. Certain additional risks arise from these forward delivery contracts in that the counterparties to the contracts may not be able to meet the terms of the contracts. The Bank does not expect any counterparty to any MBS to fail to meet its obligation. Additional risks inherent in mandatory delivery programs include the risk that, if the Bank does not close the loans subject to interest rate risk lock commitments, it will still be obligated to deliver MBS to the counterparty under the forward sales agreement. Should this be required, the Bank could incur significant costs in acquiring replacement loans or MBS and such costs could have an adverse effect on mortgage banking operations. The fair value of the mortgage banking derivatives is recorded as a freestanding asset or liability with the change in value being recognized in current earnings during the period of change. At March 31, 2017 the Bank had mortgage banking derivative financial instruments with a notional value of $38.7 million related to its forward contracts as compared to $99.6 million at March 31, 2016. The fair value of these mortgage banking derivative instruments at March 31, 2017 was $93 thousand included in other assets and $71 thousand included in other liabilities as compared to $377 thousand included in other assets and $306 thousand included in other liabilities at March 31, 2016 . Included in other noninterest income for the three months ended March 31, 2017 was a net gain of $290 thousand, relating to mortgage banking derivative instruments as compared to a net gain of $209 thousand as of March 31, 2016. The amount included in other noninterest income for the three months ended March 31, 2017 pertaining to its mortgage banking hedging activities was a net realized loss of $845 thousand as compared to a net realized loss of $168 thousand as of March 31, 2016.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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