Derivative Instruments

12 Months Ended

Dec. 31, 2013

Derivative instruments and hedging activities disclosure abstract

Derivative Instruments And Hedging Activities Disclosure Text Block

NOTE 15: DERIVATIVE INSTRUMENTS

Financial derivatives are reported at fair value in other assets or other liabilities on the accompanying Consolidated Balance Sheets. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship. For derivatives not designated as part of a hedging relationship, the gain or loss is recognized in current earningswithin other noninterest income on the accompanying Consolidated Statements of Earnings. From time to time, the Company may enter into interest rate swaps (“swaps”) to facilitate customer transactions and meet their financing needs. Upon entering into these swaps, the Company enters into offsetting positions in order to minimize the risk to the Company. These swaps qualify as derivatives, but are not designated as hedging instruments. At December 31, 2013 and December 31, 2012, the Company had no derivative contracts to assist in managing its own interest rate sensitivity.

Interest rate swap agreements involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument is positive, this generally indicates that the counterparty or customer owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is negative, the Company owes the customer or counterparty and therefore, has no credit risk.

A summary of the Company’s interest rate swaps as of and for the years ended December 31, 2013 and 2012 is presented below.

							Other
				Other	Other		noninterest
				Assets	Liabilities		income
				Estimated	Estimated		Gains
(Dollars in thousands)			Notional	Fair Value	Fair Value		(Losses)
December 31, 2013:
Pay fixed / receive variable		$	5,017	—	844	$	366
Pay variable / receive fixed			5,017	844	—		(366)
	Total interest rate swap agreements	$	10,034	844	844	$	—
December 31, 2012:
Pay fixed / receive variable		$	5,367	—	1,210	$	115
Pay variable / receive fixed			5,367	1,210	—		(115)
	Total interest rate swap agreements	$	10,734	1,210	1,210	$	—