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DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended
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Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company utilizes certain derivative financial instruments. Stand-alone derivative financial instruments such as interest rate swaps, are used to economically hedge interest rate risk related to the Company’s liabilities. These derivative instruments involve both credit and market risk. The notional amounts are amounts on which calculations, payments, and the value of the derivative are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instruments, is reflected on the Company’s consolidated balance sheet in other liabilities. The Company is exposed to credit related losses in the event of nonperformance by the counterparties to those agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures, and does not expect any counterparties to fail to perform their respective obligations. The Company entered into interest rate swaps to receive payments at a fixed rate in exchange for paying a floating rate on the debentures discussed in Note 6. Management believes that entering into the interest rate swaps exposed the Company to variability in their fair value due to changes in the level of interest rates. It is the Company’s objective to hedge the change in fair value of floating rate debentures at coverage levels that are appropriate, given anticipated or existing interest rate levels and other market considerations, as well as the relationship of change in this liability to other liabilities of the Company. To meet this objective, the Company utilizes interest rate swaps as an asset/liability management strategy to hedge the change in value of the cash flows due to changes in expected interest rate assumptions. Interest rate swaps with notional amounts totaling $5,000 as of September 30, 2017 and December 31, 2016, were designated as cash flow hedges of the debentures and were determined to be fully effective during all periods presented. As such, no amount of ineffectiveness has been included in net income. Therefore, the aggregate fair value of the swaps is recorded in accrued interest and other liabilities within the Company’s consolidated balance sheets with changes in fair value recorded in other comprehensive income. The amount included in accumulated other comprehensive income 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 terms of the swaps. The information pertaining to outstanding interest rate swap agreements used to hedge floating rate debentures was as follows as of:
September 30, 2017: |  |  |  |  |  |  |  |  |  |
Notional Amount |  | Pay Rate |  | Receive Rate |  | Effective Date |  | Maturity in Years |  | Unrealized Losses
$ | 2,000 |  |  | 5.979 | % |  | 3 month LIBOR plus 1.67% |  | October 1, 2016 |  | 8.51 |  | $ | 340 |
$ | 3,000 |  |  | 7.505 | % |  | 3 month LIBOR plus 3.35% |  | October 30, 2012 |  | 5.08 |  | $ | 326 |
December 31, 2016: |  |  |  |  |  |  |  |  |  |
Notional Amount |  | Pay Rate |  | Receive Rate |  | Effective Date |  | Maturity in Years |  | Unrealized Losses
$ | 2,000 |  |  | 5.979 | % |  | 3 month LIBOR plus 1.67% |  | October 1, 2016 |  | 9.25 |  | $ | 342 |
$ | 3,000 |  |  | 7.505 | % |  | 3 month LIBOR plus 3.35% |  | October 30, 2012 |  | 5.83 |  | $ | 353 |
Interest expense recorded on these swap transactions totaled $559 and $656 during the nine months ended September 30, 2017 and 2016, respectively, and is reported as a component of interest expense on the debentures. At September 30, 2017, the Company expected none of the unrealized loss to be reclassified as a reduction of interest expense during the remainder of 2017.

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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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