Derivative Financial Instruments
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Dec. 31, 2014
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Derivative Financial Instruments |
Note 19: Derivative Financial Instruments
Starting in the first quarter of 2014, the Company began entering into loan agreements that settled in non-U.S. dollar denominations. The foreign loan balance, gross, translated into U.S. dollars as of December 31, 2014 was $1.8 million.
Foreign Currency Derivatives. The Company enters into foreign currency forward contracts that are not designated as hedging instruments to mitigate the economic effect of fluctuations in foreign currency exchange rates on certain non-U.S. dollar denominated loans. Because the foreign currency forward contracts do not meet hedge accounting requirements, gains and losses due to changes in their fair values are recognized in other income.
The notional amount and fair values of open foreign currency forward contracts were as follows:
The amount of gains and losses relating to foreign currency forward contracts included in other income for the year ended December 31, 2014 was insignificant.
Foreign currency forward contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. We believe the risk of incurring losses due to nonperformance by our counterparties is manageable.
As of December 31, 2014, the Company had no other interest rate futures, forwards, swaps or option contracts, or other financial instruments with similar characteristics with the exception of rate lock commitments on mortgage loans to be held for sale, which netted to an insignificant amount.
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