Derivatives and Balance Sheet Offsetting

9 Months Ended

Sep. 30, 2014

General Discussion of Derivative Instruments and Hedging Activities [Abstract]

Derivatives and Hedging Activities

Derivatives and Balance Sheet Offsetting

The Company periodically enters into certain commercial loan interest rate swap agreements in order to provide commercial loan customers the ability to convert from variable to fixed interest rates. Under these agreements, the Company enters into a variable-rate loan agreement with a customer in addition to a swap agreement. This swap agreement effectively converts the customer’s variable rate loan into a fixed rate. The Company then enters into a corresponding swap agreement with a third-party in order to offset its exposure on the variable and fixed components of the customer agreement. As the interest rate swap agreements with the customers and third parties are not designated as hedges under the Derivatives and Hedging topic of the FASB ASC, the instruments are marked to market in earnings. The notional amount of open interest rate swap agreements at September 30, 2014 and December 31, 2013 was $199.7 million and $179.5 million, respectively. There was no impact to the statement of income for the three and nine month periods ending September 30, 2014 and 2013.

The following table presents the fair value of derivatives not designated as hedging instruments at September 30, 2014 and December 31, 2013:

Asset Derivatives

Liability Derivatives

September 30, 2014

December 31, 2013

September 30, 2014

December 31, 2013

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

(in thousands)

Interest rate contracts

Other assets

$

9,472

Other assets

$

9,044

Other liabilities

$

9,472

Other liabilities

$

9,044

The Company is party to interest rate contracts and repurchase agreements that are subject to enforceable master netting arrangements or similar agreements. Under these agreements, the Company may have the right to net settle multiple contracts with the same counterparty. The following tables show the gross interest rate swap agreements and repurchase agreements in the consolidated balance sheets and the respective collateral received or pledged in the form of other financial instruments, which are generally marketable securities. The collateral amounts in these tables are limited to the outstanding balances of the related asset or liability. Therefore, instances of overcollateralization are not shown.

	Gross Amounts of Recognized Assets/Liabilities		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets/Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets
							Collateral Posted			Net Amount
September 30, 2014	(in thousands)
Assets
Interest rate contracts	$	9,472	$	—	$	9,472	$	—		$	9,472
Liabilities
Interest rate contracts	$	9,472	$	—	$	9,472	$	(9,472	)	$	—
Repurchase agreements	$	25,000	$	—	$	25,000	$	(25,000	)	$	—
December 31, 2013
Assets
Interest rate contracts	$	9,044	$	—	$	9,044	$	—		$	9,044
Liabilities
Interest rate contracts	$	9,044	$	—	$	9,044	$	(9,044	)	$	—
Repurchase agreements	$	25,000	$	—	$	25,000	$	(25,000	)	$	—