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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES
 12 Months Ended
Dec. 31, 2016
Financial Instruments With Off- Balance Sheet Risk and Derivatives [Abstract]  
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES

NOTE 18 – Financial Instruments with Off-balance Sheet Risk and Derivatives

In the normal course of business, the Company has various outstanding credit commitments that are not reflected in the financial statements. These commitments are made to satisfy the financing needs of the Company's clients. The associated credit risk is controlled by subjecting such activity to the same credit and quality controls as exist for the Company's lending and investing activities. The commitments involve diverse business and consumer customers and are generally well collateralized. Collateral held varies, but may include residential real estate, commercial real estate, property and equipment, inventory and accounts receivable. Commitments do not necessarily represent future cash requirements as a portion of the commitments have some reduced likelihood being exercised. Additionally, many of the commitments are subject to annual reviews, material change clauses or requirements for inspections prior to draw funding that could result in a curtailment of the funding commitments.

A summary of the financial instruments with off-balance sheet credit risk is as follows at December 31 for the years indicated:

(In thousands)20162015
Commercial real estate development and construction$334,552$234,552
Residential real estate-development and construction97,52480,935
Real estate-residential mortgage22,97023,375
Lines of credit, principally home equity and business lines949,939879,326
Standby letters of credit68,74866,012
Total Commitments to extend credit and available credit lines$1,473,733$1,284,200

The Company has entered into interest rate swaps (“swaps”) to facilitate customer transactions and meet their financing needs. These swaps qualify as derivatives, but are not designated as hedging instruments. Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument contract 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. The swap positions are offset to minimize the potential impact on the Company’s financial statements. Credit risk exists if the borrower’s collateral or financial condition indicates that the underlying collateral or financial condition of the borrower makes it probable that amounts due will be uncollectible. Any amounts due to the Company will be expected to be collected from the borrower. Management reviews this credit exposure on a monthly basis. At December 31, 2016 and 2015, all loans associated with the swap agreements were determined to be “pass” rated credits as provided by regulatory guidance and therefore no component of credit loss was factored into the valuation of the swaps. A summary of the Company’s interest rate swaps at December 31 for the years indicated is included in the following table:

2016
NotionalEstimatedYears toReceivePay
(Dollars in thousands)AmountFair ValueMaturityRateRate
Interest Rate Swap Agreements:
Pay Fixed/Receive Variable Swaps$9,433$(1,010)6.31.86%5.38%
Pay Variable/Receive Fixed Swaps9,4331,0106.35.38%1.86%
Total Swaps$18,866$-6.33.62%3.62%

2015
NotionalEstimatedYears toReceivePay
(Dollars in thousands)AmountFair ValueMaturityRateRate
Interest Rate Swap Agreements:
Pay Fixed/Receive Variable Swaps$9,942$(1,312)7.41.56%5.34%
Pay Variable/Receive Fixed Swaps9,9421,3127.45.34%1.56%
Total Swaps$19,884$-7.43.45%3.45%

The estimated fair value of the swaps at December 31 for the periods indicated in the table above were recorded in other assets and other liabilities. The associated net gains and losses on the swaps are recorded in other non-interest income.