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Derivative Instruments And Hedging Activities
 3 Months Ended
Mar. 31, 2012
Derivative Instruments And Hedging Activities [Abstract]  
Derivative Instruments And Hedging Activities

NOTE 11. Derivative Instruments and Hedging Activities

Interest Rate Swaps

The Company uses interest rate swaps to reduce interest rate risk and to manage interest expense. By entering into these agreements, the Company converts floating rate debt into fixed rate debt, or alternatively, converts fixed rate debt into floating rate debt. Interest differentials paid or received under the swap agreements are reflected as adjustments to interest expense. These interest rate swap agreements are derivative instruments that qualify for hedge accounting as discussed in Note 1. The notional amounts of the interest rate swaps are not exchanged and do not represent exposure to credit loss. In the event of default by a counterparty, the risk in these transactions is the cost of replacing the agreements at current market rates.

On December 4, 2008, the Company entered into an interest rate swap agreement related to the outstanding trust preferred capital notes. The swap agreement became effective on December 1, 2008. The notional amount of the interest rate swap was $7.0 million and has an expiration date of December 1, 2016. Under the terms of the agreement, the Company pays interest quarterly at a fixed rate of 2.85% and receives interest quarterly at a variable rate of three month LIBOR. The variable rate resets on each interest payment date.

The following table summarizes the fair value of derivative instruments at March 31, 2012 and December 31, 2011:

               
  March 31, 2012 December 31, 2011  
  Balance Sheet   Fair Balance Sheet   Fair  
  Location   Value Location   Value  
      (dollars in thousands)      
Derivatives designated              
as hedging instruments              
under GAAP              
 
Interest rate swap contracts Other Liabilities $ 561 Other Liabilities $   580

 

The following tables present the effect of the derivative instrument on the Consolidated Balance Sheet at March 31, 2012 and 2011 and the Consolidated Statements of Income for the three months ended March 31, 2012 and 2011:

                   
        Three Months Ended March 31,      
Derivatives in GAAP
Cash Flow Hedging
Relationships		 Amount of Gain (Loss)
Recognized in OCI
on Derivative
(Effective Portion)		 Location of Gain (Loss)
Recognized in Income
(Ineffective Portion)		 Amount of Gain (Loss)
Recognized in Income
(Ineffective Portion)
2012 2011 2012 2011
    (dollars in thousands)         (dollars in thousands)  
Interest rate swap
contracts, net of tax		 $  12 $ 40 Not applicable $  - $ -