12. 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.

The following table presents summary information about the interest rate swap designated as a cash flow hedge as of March 31, 2014 and 2013 and December 31, 2013:

	For the three months ended						For the year ended
(Dollars in thousands)	March 31, 2014			March 31, 2013			December 31, 2013
Notional amount	$	50,000		$	15,000		$	50,000
Weighted average pay rates	1.39		%	0.99		%	1.39		%
Weighted average receive rates		0.24	%		0.28	%	0.24		%
Weighted average maturity	4.31 years			4.24 years			4.56 years
Unrealized (losses)	$	(314	)	$	(148	)	$	(164	)

Interest expense recorded on this swap transaction totaled $115,000 and $25,000 for the three months ended March 31, 2014 and 2013, respectively, and is reported as a component of interest expense on FHLB Advances.

Cash Flow Hedge

The following table presents the net gains (losses) recorded, net of tax, in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments for the three months ended March 31, 2014 and 2013:

	2014
	Amount of gain			Amount of gain		Amount of gain (loss)
	(loss) recognized			(loss) reclassified		recognized in other
	in OCI			from OCI to		Non-interest income
(In thousands)	(Effective Portion)			interest income		(Ineffective Portion)
Interest rate contracts	$	(190	)	$	—	$	—

	2013
	Amount of gain			Amount of gain		Amount of gain (loss)
	(loss) recognized			(loss) reclassified		recognized in other
	in OCI			from OCI to		Non-interest income
(In thousands)	(Effective Portion)			interest income		(Ineffective Portion)
Interest rate contracts	$	(89	)	$	—	$	—

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

	March 31, 2014					December 31, 2013
	Notional		Fair			Notional		Fair
(In thousands)	Amount		Value			Amount		Value
Included in other assets (liabilities):
Interest rate swaps related to FHLB Advances	$	40,000	$	(158	)	$	40,000	$	(122	)
Forward starting interest rate swap related to repurchase agreements	10,000		(156		)	10,000		(42		)