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Derivative Financial Instruments
6 Months Ended
Jun. 30, 2011
Derivative Financial Instruments [Abstract]  
Derivative Financial Instruments

NOTE 4. DERIVATIVE FINANCIAL INSTRUMENTS

 

In connection with the Company's interest rate risk management strategy, during the first quarter of 2011, the Company began economically hedging a portion of its interest rate risk by entering into derivative financial instrument contracts.  The Company has not elected hedging treatment under GAAP, and as such all gains and losses on these instruments are reflected in earnings for all periods presented.

 

As of December 31, 2011, such instruments were comprised entirely of Eurodollar futures contracts. Eurodollar futures are cash settled futures contracts on an interest rate, with gains and losses credited and charged to the Company's account on a daily basis. A minimum balance, or “margin”, is required to be maintained in the account on a daily basis. The Company is exposed to the changes in value of the futures by the amount of margin held by the broker. The total amount of margin at December 31, 2011 was approximately $34,000, respectively, and is reflected in restricted cash. As of December 31, 2012, the Company had no outstanding futures positions.

 

For the years ended December 31, 2012 and 2011, the Company recorded losses of approximately $40,000 and $139,000, respectively, on Eurodollar futures contracts.