Derivative Financial Instruments - Interest Rate Swap

9 Months Ended

Sep. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Derivative Financial Instruments - Interest Rate Swap

Cash Flow Hedge

The Company uses interest rate swaps as part of its risk management strategy to manage interest rate risk and cash flow risk that may arise in connection with the variable interest rate provision of the Company's preferred trust securities. The Company accounts for its derivative financial instruments in accordance with ASC 815, Derivatives and Hedging, which requires all derivative instruments to be carried at fair value on the balance sheet.

Changes in fair value associated with the effective portion of a derivative instrument designated as a qualifying cash flow hedge are recognized initially in other comprehensive income (loss). When the cash flows for which the derivative is hedging materialize and are recorded in income or expense, the associated gain or (loss) from the hedging derivative previously recorded in accumulated other comprehensive income (loss) is recognized in earnings. If a cash flow hedge is de-designated because it is no longer highly effective, or if the hedge relationship is terminated, the cumulative gain or loss on the hedging derivative to that date will continue to be reported in accumulated other comprehensive income (loss) unless the hedged forecasted transaction is no longer expected to occur, at which time the cumulative gain or loss is recorded into earnings.

The Company records the fair value of the derivative instrument in other assets or other liabilities. To the extent a derivative is an effective hedge of the cash flow risk of the hedged debt obligation, any change in the derivative's fair value is recorded in accumulated other comprehensive income ("AOCI"), net of income tax. To the extent the derivative is an ineffective hedge, that portion of the change in fair value is recorded in other operating expenses or interest expense as appropriate. The Company is not a party to leveraged derivatives and does not enter into derivative financial instruments for trading or speculative purposes.

The Company has a single interest rate swap (the "Swap"), designated as a cash flow hedge, with Wells Fargo Bank, N.A., pursuant to which the Company swapped the floating rate portion of its outstanding preferred trust securities to a fixed rate. The Swap commenced in June 2012 and expires in June 2017. The following table summarizes the fair value (including accrued interest) and related outstanding notional amounts of derivative instruments and indicates where within the Consolidated Balance Sheets each is reported:

		At
	Balance Sheet Location	September 30, 2012			December 31, 2011
Derivatives designated as cash flow hedging instruments:
Interest rate swap - notional value		$	35,000		$	35,000
Fair value of the Swap	Other Liabilities	$	(4,599	)	$	(3,601	)
Unrealized loss, net of tax, on the fair value of the Swap	AOCI	$	(2,989	)	$	(2,340	)
Variable rate of the interest rate swap (1)		0.39		%	—		%
Fixed rate of the interest rate swap (1)		3.47		%	—		%

^{(1) -} The swap took effect in June 2012.

The following table summarizes the pretax impact of the interest rate swap designated as a cash flow hedge on the Consolidated Financial Statements for the following periods:

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
(Loss) recognized in AOCI on the derivative-effective portion	$	(159	)	$	(2,030	)	$	(915	)	$	(3,300	)
(Loss) reclassified from AOCI into income-effective portion	$	39		$	—		$	83		$	—
Gain (loss) recognized in income on the derivative-ineffective portion	$	—		$	—		$	—		$	—

The table below shows the estimated amount to be reclassified to earnings from AOCI during the next 12 months. These net losses reclassified into earnings are expected to primarily increase net interest expense related to the respective hedged item.

	At
	September 30, 2012
Estimated loss to be reclassified to earnings from AOCI during the next 12 months	$	1,105