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Note 12 - Derivative Financial Instruments | 3 Months Ended
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Mar. 31, 2018
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
12. | DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments to add stability to interest income or expense and to manage its exposure to movements in interest rates. The Company does not use derivatives for trading or speculative purposes and only enters into transactions that have a qualifying hedging relationship. The Company's hedging strategies involving interest rate derivatives are classified as either Fair Value Hedges or Cash Flow Hedges, depending upon the rate characteristic of the hedged item. Effective April 5, 2016, the Bank entered into a forward interest rate swap contract on a variable rate FHLB advance (indexed to three -month LIBOR) with a total notional amount of $10.0 million. The FHLB advance will be renewed at least every 18 months and will remain outstanding until April 5, 2023. The interest rate swap was designated as a derivative instrument in a cash flow hedge with the objective of protecting the quarterly interest rate payments on the FHLB advance from the risk of variability of those payments resulting from changes in the three -month LIBOR interest rate throughout the seven -year period beginning on April 5, 2016 and ending on April 5, 2023. Under the swap arrangement, the Bank will pay a fixed interest rate of 1.46% and receive a variable interest rate based on three -month LIBOR on the notional amount of $10.0 million, with quarterly net settlements. On October 18, 2017, the Bank entered into a forward interest rate swap contract on a variable rate FHLB advance (indexed to three -month LIBOR) with a total notional amount of $10.0 million. The FHLB advance will be renewed on at least a semi-annual basis and will remain outstanding until October 18, 2024. The interest rate swap was designated as a derivative instrument in a cash flow hedge with the objective of protecting the quarterly interest rate payments on the FHLB advance from the risk of variability of those payments resulting from changes in the three -month LIBOR interest rate throughout the seven -year period beginning on October 18, 2017 and ending on October 18, 2024. Under the swap arrangement, which became effective on October 18, 2017, the Bank will pay a fixed interest rate of 2.16% and receive a variable interest rate based on three -month LIBOR on the notional amount of $10.0 million, with quarterly net settlements. No ineffectiveness related to the interest rate swaps designated as cash flow hedges was recognized in the consolidated statements of operations for the three months ended March 31, 2018. The accumulated net after-tax gain related to the effective cash flow hedge included in accumulated other comprehensive income totaled $0.7 million and $0.3 million as of March 31, 2018 and December 31, 2017, respectively.

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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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