Note

Derivatives

Patriot is a party to interest rate derivatives that are

not

designated as hedging instruments. Under a program, Patriot will execute interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that Patriot executes with a

third

party, such that Patriot minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps associated with this program do

not

meet the strict hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. Patriot entered the

two

initial interest rate swaps under the program in

November 2018.

As of

March 31, 2019

and

December 31, 2018,

Patriot had

$450,000

and

$300,000,

respectively, in cash pledged for collateral on its interest rate swaps.

The following table presents summary information regarding these derivatives for the periods presented (dollars in thousands):

(In thousands)	Notional Amount		Maturity (Years)		Fixed Rate			Variable Rate	Fair Value
March 31, 2019:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	417

Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(417	)

December 31, 2018:
Classified in Other Assets:
Customer interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	286

Classified in Other Liabilities:
3rd party interest rate swap	$	5,000		10.5		5.25	%	1 Mo. LIBOR + 1.96%	$	(286	)