Derivatives and Balance Sheet Offsetting

3 Months Ended

Mar. 31, 2015

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 March 31, 2015 and December 31, 2014 was $222.9 million and $215.6 million, respectively. During the current quarter, a mark-to-market loss of $5 thousand was recorded to other noninterest expense. There was no earnings impact for the three month period ending March 31, 2014.

The following table presents the fair value of derivatives not designated as hedging instruments at March 31, 2015 and December 31, 2014:

Asset Derivatives

Liability Derivatives

March 31, 2015

December 31, 2014

March 31, 2015

December 31, 2014

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

$

14,244

Other assets

$

11,800

Other liabilities

$

14,300

Other liabilities

$

11,851

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
March 31, 2015	(in thousands)
Assets
Interest rate contracts	$	14,244	$	—	$	14,244	$	—		$	14,244
Liabilities
Interest rate contracts	$	14,300	$	—	$	14,300	$	(14,300	)	$	—
Repurchase agreements	$	96,852	$	—	$	96,852	$	(96,852	)	$	—
December 31, 2014
Assets
Interest rate contracts	$	11,800	$	—	$	11,800	$	—		$	11,800
Liabilities
Interest rate contracts	$	11,851	$	—	$	11,851	$	(11,851	)	$	—
Repurchase agreements	$	105,080	$	—	$	105,080	$	(105,080	)	$	—