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Derivative Hedging Instruments | 6 Months Ended
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Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
| 16. | 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 the needs of our customers and support the Company’s asset/liability positioning, we may enter into interest rate swap agreements with customers and a large financial institution that specializes in these types of transactions. These arrangements involve the exchange of interest payments based on the notional amounts. The Company entered into floating rate loans and fixed rate swaps with our customers. Simultaneously, the Company entered into offsetting fixed rate swaps with Pittsburgh National Bank (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. These transactions allow the Company’s customers to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customers, 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 following table summarizes the interest rate swap transactions that impacted the Company’s first six months of 2019 and 2018 performance (in thousands, except percentages)
At June 30, 2019 |
|  | HEDGE TYPE |  |  | AGGREGATE NOTIONAL AMOUNT |  |  | WEIGHTED AVERAGE RATE RECEIVED/(PAID) |  |  | REPRICING FREQUENCY |  |  | INCREASE (DECREASE) IN INTEREST EXPENSE |
SWAP ASSETS |  | FAIR VALUE |  |  | $ | 22,628 |  |  |  | 4.78 | % |  | MONTHLY |  |  | $ | 16 |
SWAP LIABILITIES |  | FAIR VALUE |  |  |  | (22,628 | ) |  |  | (4.78 | ) |  | MONTHLY |  |  |  | (16 | )
NET EXPOSURE |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |
At June 30, 2018 |
|  | HEDGE TYPE |  |  | AGGREGATE NOTIONAL AMOUNT |  |  | WEIGHTED AVERAGE RATE RECEIVED/(PAID) |  |  | REPRICING FREQUENCY |  |  | INCREASE (DECREASE) IN INTEREST EXPENSE |
SWAP ASSETS |  | FAIR VALUE |  |  | $ | 16,681 |  |  |  | 4.04 | % |  | MONTHLY |  |  | $ | (33 | )
SWAP LIABILITIES |  | FAIR VALUE |  |  |  | (16,681 | ) |  |  | (4.04 | ) |  | MONTHLY |  |  |  | 33 |
NET EXPOSURE |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |
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, unless otherwise approved, as per the terms, within the Board of Directors approved Hedging Policy. The Company had no caps or floors outstanding at June 30, 2019 and 2018.

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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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