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DERIVATIVE HEDGING INSTRUMENTS | 3 Months Ended
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Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | ## 14. DERIVATIVE HEDGING INSTRUMENTS The Company can use various interest rate contracts, such as interest rate swaps, caps, floors and swaptions to help manage interest rate and market valuation risk exposure, which is incurred in normal recurrent banking activities. The Company can use derivative instruments, primarily interest rate swaps, to manage interest rate risk and match the rates on certain assets by hedging the fair value of certain fixed rate debt, which converts the debt to variable rates and by hedging the cash flow variability associated with certain variable rate debt by converting the debt to fixed rates. To accommodate a customer need and support the Company’s asset/liability positioning, we entered into an interest rate swap with the customer and Pittsburgh National Bank (PNC) in the first quarter of 2017. This arrangement involves the exchange of interest payments based on the notional amounts. The Company entered into a floating rate loan and a fixed rate swap with our customer. Simultaneously, the Company entered into an offsetting fixed rate swap with PNC. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay PNC the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. This transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. The Company received a $58,000 fee on the transaction. The following table summarizes the interest rate swap transactions that impacted the Company’s first quarter 2017 performance.
START DATE |  | MATURITY DATE |  | HEDGE TYPE |  | NOTIONAL AMOUNT |  | RATE RECEIVED |  | RATE PAID |  | REPRICING FREQUENCY |  | INCREASE (DECREASE) IN INTEREST EXPENSE
01/12/17 |  |  | 01/12/27 |  |  |  | FAIR VALUE |  |  | $ | 5,000,000 |  |  |  | 4.50 | % |  |  | 3.10 | % |  |  | MONTHLY |  |  | $ | 15,367 |
01/12/17 |  |  | 01/12/27 |  |  |  | FAIR VALUE |  |  |  | 5,000,000 |  |  |  | 3.10 |  |  |  | 4.50 |  |  |  | MONTHLY |  |  |  | (15,367 | )
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | — |
The Company monitors and controls all derivative products with a comprehensive Board of Director approved hedging policy. This policy permits a total maximum notional amount outstanding of $500 million for interest rate swaps, interest rate caps/floors, and swaptions. All hedge transactions must be approved in advance by the Investment Asset/Liability Committee (ALCO) of the Board of Directors. The Company had no caps or floors outstanding at March 31, 2017.

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