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DERIVATIVES | 12 Months Ended
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Dec. 31, 2018
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
DERIVATIVES | 16. 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 swaps 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 Swap Designated as Cash Flow Hedge: Interest rate swaps with a notional amount of $230.0 million and $180.0 million at December 31, 2018 and 2017, respectively, were designated as a cash flow hedge of certain interest-bearing demand brokered deposits and were determined to be fully effective during 2018 and 2017. As such, no amount of ineffectiveness has been included in net income. Therefore, the aggregate fair value of these swaps is recorded in other assets/liabilities 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. Information about the interest rate swaps designated as cash flow hedges as of December 31, 2018 and 2017 is presented in the following table:
(Dollars in thousands) |  | 2018 |  |  | 2017 |
Notional amount |  | $ | 230,000 |  |  | $ | 180,000 |
Weighted average pay rate |  |  | 2.04 | % |  |  | 1.64 | %
Weighted average receive rate |  |  | 2.33 | % |  |  | 1.33 | %
Weighted average maturity |  | 2.65 years |  |  | 2.25 years |
Unrealized gain/(loss), net |  | $ | 808 |  |  | $ | 1,394 |
Number of contracts |  |  | 11 |  |  |  | 9 |
Net interest income/(expense) recorded on these swap transactions totaled approximately $390 thousand and ($898) thousand for the twelve months ended December 31, 2018 and 2017, respectively, and is reported as a component of interest expense. Cash Flow Hedges The following table presents the net gains/(losses) recorded in accumulated other comprehensive income and the consolidated financial statements relating to the cash flow derivative instruments for the year ended December 31:
2018 |
|  |  |  |  |  |  |  |  |  | Amount of |
|  | Amount of |  |  | Amount of |  |  | Gain/(Loss) |
|  | Gain/(Loss) |  |  | Gain/(Loss) |  |  | Recognized in |
|  | Recognized |  |  | Reclassified |  |  | Other Non- Interest |
|  | In OCI |  |  | From OCI to |  |  | Expense |
(In thousands) |  | (Effective Portion) |  |  | Interest Expense |  |  | (Ineffective Portion) |
Interest rate contracts |  | $ | (328 | ) |  | $ | (124 | ) |  | $ | — |
2017 |
|  |  |  |  |  |  |  |  |  | Amount of |
|  | Amount of |  |  | Amount of |  |  | Gain/(Loss) |
|  | Gain/(Loss) |  |  | Gain/(Loss) |  |  | Recognized in |
|  | Recognized |  |  | Reclassified |  |  | Other Non- Interest |
|  | In OCI |  |  | From OCI to |  |  | Expense |
(In thousands) |  | (Effective Portion) |  |  | Interest Expense |  |  | (Ineffective Portion) |
Interest rate contracts |  | $ | 2,138 |  |  | $ | — |  |  | $ | — |
During the first quarter of 2018, the Company recognized an unrealized after-tax gain of $220 thousand in accumulated other comprehensive income/(loss) related to the termination of two interest rate swaps designated as cash flow hedges. The gain will be amortized into earnings over the remaining life of the terminated swaps. The Company recognized pre-tax interest income of $124 thousand for the year ended December 31, 2018 related to the amortization of the gain on the terminated interest rate swaps designated as cash flow hedges. The following tables reflect the cash flow hedges included in the financial statements as of December 31, 2018 and 2017:
|  | December 31, 2018 |
|  | Notional |  |  | Fair |
(In thousands) |  | Amount |  |  | Value |
Interest rate swaps related to interest-bearing demand brokered deposits |  | $ | 230,000 |  |  | $ | 808 |
Total included in other assets |  |  | 130,000 |  |  |  | 1,657 |
Total included in other liabilities |  |  | 100,000 |  |  |  | (849 | )
|  | December 31, 2017 |
|  | Notional |  |  | Fair |
(In thousands) |  | Amount |  |  | Value |
Interest rate swaps related to interest-bearing demand brokered deposits |  | $ | 180,000 |  |  | $ | 1,394 |
Derivatives Not Designated as Accounting Hedges: The Company offers facility specific/loan level swaps to its customers and offset its exposure from such contracts by entering into mirror image swaps with a financial institution/swap counterparty (loan level / back to back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions. Information about these swaps is as follows:
(Dollars in thousands) |  | December 31, 2018 |  |  | December 31, 2017 |
Notional amount |  | $ | 558,690 |  |  | $ | 317,363 |
Fair value |  | $ | 9,689 |  |  | $ | 3,131 |
Weighted average pay rates |  |  | 4.44 | % |  |  | 4.11 | %
Weighted average receive rates |  |  | 4.24 | % |  |  | 3.43 | %
Weighted average maturity |  | 7.1 years |  |  | 7.6 years |
Number of contracts |  |  | 67 |  |  |  | 42 |

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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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