DERIVATIVE INSTRUMENTS

As of December 31, 2018 and 2017, the Company primarily utilizes non-hedging derivative financial instruments with commercial banking customers to facilitate their interest rate management strategies. For these instruments, the Company acts as an intermediary for its customers and has offsetting contracts with financial institution counterparties. Changes in the fair value of these underlying derivative contracts generally offset each other and do not significantly impact the Company's results of operations.

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



	December 31, 2018				December 31, 2017
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	132,146	$	3,131	$	225,480	$	4,877
Loan interest rate swap - liabilities	372,223		13,774		314,450		9,513

Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	403,500		13,902		320,949		9,591
Loan interest rate swap - liabilities	132,146		3,131		218,924		4,877

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



	Year Ended December 31,
	2018			2017			2016
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	1,316		$	(3,379	)	$	3,904
Other income - derivative liabilities	(1,316		)	3,379			(3,904		)
Other expense - derivative liabilities	50			86			(52		)

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, 2018 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

Recognized in

Offset in the

presented in

Applicable

Agreement

Statement of

the Statement

Master

Fair Value

and Fair

Financial

of Financial

Netting

of Financial

Value of

Description

Position

Arrangements

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)*

Non-hedging derivative assets:

Interest rate swap agreements - customer counterparties^(a)

3,131

—

3,131

—

3,131

—

Interest rate swap agreements - financial institution counterparties^(b)

10,771

—

10,771

—

10,771

—



Non-hedging derivative liabilities:
Interest rate swap agreements - customer counterparties^(a)	$	13,774	$	—	$	13,774	$	—	$	13,774	$	13,774	$	—
Interest rate swap agreements -financial institution counterparties^(c)	—		—		—		—		—		—		—

* 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.
(a) The underlying collateral on the loan serves as collateral for the derivative financial instrument.
(b) The financial institution counterparty posts collateral to the Company.
(c) The Company posts collateral to the financial institution counterparty.