Interest Rate Swaps

3 Months Ended

Mar. 31, 2021

Interest Rate Swaps [Abstract]

Interest Rate Swaps

11.          Interest Rate Swaps

The Company enters into interest rate swaps that allow our commercial loan customers to effectively convert a variable-rate commercial loan agreement to a fixed-rate commercial loan agreement. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to an interest rate swap agreement, which serves to effectively swap the customer’s variable-rate into a fixed-rate. The Company then enters into a corresponding swap agreement with a third party in order to economically hedge its exposure through the customer agreement. The interest rate swaps with both the customers and third parties are not designated as hedges under FASB ASC 815 and are not marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by FASB ASC 820. There was no effect on earnings in any periods presented. At March 31, 2021 and December 31, 2020, based upon the swap contract values, the company pledged cash in the amount of $350,000 as collateral for its interest rate swaps with a third-party financial institution. The fair value of the swaps as of March 31, 2021 and December 31, 2020 was $334,000 and $276,000, respectively.

Summary information regarding these derivatives is presented below:

(Amounts in thousands)
	Notional Amount								Fair Value
		March 31, 2021		December 31, 2020		Interest Rate Paid		Interest Rate Received		March 31, 2021		December 31, 2020
Customer interest rate swap
Maturing November, 2030	$	7,135	$	7,222	1 month LIBOR + Margin			Fixed	$	206	$	165
Maturing December, 2030		4,738		4,800	1 month LIBOR + Margin			Fixed		128		111
Total	$	11,873	$	12,022					$	334	$	276
Third party interest rate swap
Maturing November, 2030	$	7,135	$	7,222		Fixed	1 month LIBOR + Margin		$	206	$	165
Maturing December, 2030		4,738		4,800		Fixed	1 month LIBOR + Margin			128		111
Total	$	11,873	$	12,022					$	334	$	276

The following table presents the fair values of derivative instruments in the Consolidated Balance Sheet.

	(Amounts in thousands)
	Assets			Liabilities
	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
March 31, 2021
Interest rate derivatives	Other assets	$	334	Other liabilities	$	334
December 31, 2020
Interest rate derivatives	Other assets		276	Other liabilities		276