9. DERIVATIVES

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swap does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Interest rate swaps with a notional amount totaling $15.0 million and $25.0 million were entered into on June 28, 2012 and July 15, 2013, respectively and were designated as cash flow hedges of certain Federal Home Loan Bank advances. A forward starting interest rate swap with a notional amount totaling $10.0 million was entered into on July 15, 2013 and was designated as a cash flow hedge of certain repurchase agreements. The swaps were determined to be fully effective during the period presented and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps is recorded in other assets/(other liabilities) with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings if the hedge transactions becomes probable of not occurring. The Company expects the hedges to remain fully effective during the remaining term of the swaps.

Summary information about the interest rate swap designated as a cash flow hedge as of December 31 is as follows:

(Dollars in thousands)	2013			2012
Notional amounts	$	50,000		$	15,000
Weighted average pay rates	1.39		%	0.99		%
Weighted average receive rates	0.24		%	0.31		%
Weighted average maturity	4.56 years			4.49 years
Unrealized (losses)	$	(164	)	$	(176	)

Interest expense recorded on these swap transactions totaled $271,000 and $45,000 during 2013 and 2012, respectively, and is reported as a component of interest expense on FHLB Advances.

Cash Flow Hedge

The following tables present the net gains (losses), net of income tax, recorded in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments for the twelve months ended December 31:

	2013
(In thousands)	Amount of (loss) recognized in OCI (Effective Portion)			Amount of gain (loss) reclassified from OCI to interest income		Amount of gain (loss) recognized in other non- interest income (Ineffective Portion)
Interest rate contracts	$	(99	)	$	—	$	—

				2012
(In thousands)	Amount of (loss) recognized in OCI (Effective Portion)			Amount of gain (loss) reclassified from OCI to interest income		Amount of gain (loss) recognized in other non- interest income (Ineffective Portion)
Interest rate contracts	$	(106	)	$	—	$	—

The following table reflects the cash flow hedge included in the Consolidated Balance Sheets:

As of December 31,	2013					2012
(In thousands)	Notional Amount		Fair Value			Notional Amount		Fair Value
Included in other asset/(liabilities):
Interest rate swap related to FHLB advances	$	40,000	$	(122	)	$	15,000	$	(176	)
Forward starting interest rate swap related to repurchase agreements	10,000		(42		)	—		—