Derivative Instruments

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

As of December 31, 2016 and 2015, the Company has derivative financial instruments not included in hedge relationships. These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. For the majority of these instruments the Company acts as an intermediary for its customers. Changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company's results of operations.

The Company also has an interest rate swap that serves as a fair value hedge for changes in long term fixed interest rates related to commercial real estate loans. Hedge ineffectiveness is assessed quarterly and any ineffectiveness is recorded as non-interest expense. For the year ended December 31, 2016, the hedge ineffectiveness was less than $0.1 million.

The following table summarizes the notional and fair value of these derivative instruments (in thousands):

	December 31, 2016				December 31, 2015
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	234,806	$	7,352	$	372,995	$	10,811
Loan interest rate swap - liabilities	207,201		8,111		—		—
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	207,201		8,111		—		—
Loan interest rate swap - liabilities	241,995		7,360		380,995		10,872
Derivatives designated as hedges of fair value:
Financial institution counterparties:
Loan interest rate swap - liabilities	4,626		12		5,475		61

The following table summarizes the change in fair value of these derivative instruments (in thousands): 

	Year Ended December 31,
	2016			2015			2014
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	3,904		$	1,030		$	6,811
Other income - derivative liabilities	(3,904		)	(1,030		)	(6,811		)
Other expense - derivative liabilities	(52		)	(61		)	—
Change in Fair Value Hedging Interest Rate Derivatives:
Hedged item - derivative asset	$	(36	)	25			—
Other income (expense) - derivative liability with financial institution counterparties	13			(12		)	—

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of setoff" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset financial instruments for financial reporting purposes. Information about financial instruments that are eligible for offset in the consolidated balance sheet as of December 31, 2016 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Assets

per

Netting

Gross

Offset in the

presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Assets

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)

Non-hedging derivative assets:

Interest rate swap agreements - customer counterparties

$

7,352

$

—

$

7,352

$

—

$

7,352

$

7,352

$

—

Interest rate swap agreements - financial institution counterparties

8,111

—

8,111

—

—

—

8,111

							Gross Amounts
							Not Offset in the Statement
							of Financial Position
											Total
											of Gross
											Amounts
											Not Offset in
											the Statement
											of Financial
											Position
							Netting				Including
			Gross		Net Amounts		Adjustment				Applicable
			Amounts		of Liabilities		per				Netting
	Gross		Offset in the		presented in		Applicable				Agreement
	Amounts of		Statement of		the Statement		Master		Fair Value		and Fair
	Recognized		Financial		of Financial		Netting		of Financial		Value of
Description	Liabilities		Position		Position		Arrangements		Collateral		Collateral		Net Amount
	(a)		(b)		(c)=(a)-(b)						(d)		(c)-(d)*
Non-hedging derivative liabilities:
Interest rate swap agreements - customer counterparties	$	7,360	$	—	$	7,360	$	—	$	29,812	$	29,812	$	—
Interest rate swap agreements -financial institution counterparties	$	8,111	$	—	$	8,111	$	—	$	8,111	$	8,111	$	—
Hedging derivative liabilities:
Interest rate swap agreements	$	12	$	—	$	12	$	—	$	23	$	23	$	—
* For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, a value of zero is displayed to represent full collateralization.