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Derivative Financial Instruments | 6 Months Ended
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Jun. 30, 2019
Derivative Financial Instruments |
Derivative Financial Instruments | Note 4. Derivative Financial Instruments The Company enters into interest rate swap agreements (‘‘swap agreements’’) to facilitate the risk management strategies needed in order to accommodate the needs of its banking customers. The Company mitigates the risk of entering into these loan agreements by entering into equal and offsetting swap agreements with highly-rated third party financial institutions. These back-to-back swap agreements are free-standing derivatives and are recorded at fair value in the Company’s consolidated balance sheets (asset positions are included in other assets and liability positions are included in other liabilities) as of June 30, 2019 and December 31, 2018. The Company is party to master netting arrangements with its financial institution counterparty; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Parties to a centrally cleared over-the-counter derivative exchange daily payments that reflect the daily change in value of the derivative. These payments, commonly referred to as variation margin, are recorded as settlements of the derivatives’ mark-to-market exposure rather than collateral against the exposures, which effectively results in any centrally cleared derivative having a Level 2 fair value that approximates zero on a daily basis, and therefore, these swap agreements were not included in the offsetting table in the Fair Value Measurement section. As of June 30, 2019, the Company entered into fourteen interest rate swap agreements which are collateralized with $6.1 million in cash. There were eight agreements outstanding as of December 31, 2018 which were collateralized with $1.6 million in cash. The notional amount and fair value of the Company’s derivative financial instruments as of June 30, 2019 and December 31, 2018 were as follows:
|  | June 30, 2019
|  | Notional Amount |  | Fair Value
Interest Rate Swap Agreements |  |  | (In thousands)
Receive Fixed/Pay Variable Swaps |  | $ | 70,606 |  | $ | (5,611)
Pay Fixed/Receive Variable Swaps |  |  | 70,606 |  |  | 5,611
|  | December 31, 2018
|  | Notional Amount |  | Fair Value
Interest Rate Swap Agreements |  |  | (In thousands)
Receive Fixed/Pay Variable Swaps |  | $ | 47,381 |  | $ | (1,705)
Pay Fixed/Receive Variable Swaps |  |  | 47,381 |  |  | 1,705

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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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