Note 12 - Derivative Financial Instruments

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

12. Derivative Financial Instruments

At June 30, 2015 and December 31, 2014, the Company’s derivative financial instruments consist of interest rate swaps. The Company’s interest rate swaps are used to mitigate the Company’s exposure to rising interest rates on a portion ($18.0 million) of its floating rate junior subordinated debentures that have a contractual value of $61.9 million. Additionally, the Company at times may use interest rate swaps to mitigate the Company’s exposure to rising interest rates on its fixed rate loans.

At June 30, 2015 and December 31, 2014, derivatives with a combined notional amount of $36.3 million were not designated as hedges. At June 30, 2015 and December 31, 2014, derivatives with a combined notional amount of $19.4 million and $14.5 million, respectively, were designated as fair value hedges. Changes in the fair value of the derivatives not designated as hedges are reflected in “Net gain/loss from fair value adjustments” in the Consolidated Statements of Income. The portion of the changes in the fair value of the derivative designated as a fair value hedge which is considered ineffective are reflected in “Net gain/loss from fair value adjustments” in the Consolidated Statements of Income.

The following table sets forth information regarding the Company’s derivative financial instruments at June 30, 2015:

	Notional Amount		Net Carrying Value (1)
	(In thousands)
Interest rate swaps (non-hedge)	$	36,321	$	(1,367	)
Interest rate swaps (hedge)		4,087		94
Interest rate swaps (hedge)		15,305		(344	)
Total derivatives	$	55,713	$	(1,617	)

The following table sets forth information regarding the Company’s derivative financial instruments at December 31, 2014:

	Notional Amount		Net Carrying Value (1)
	(In thousands)
Interest rate swaps (non-hedge)	$	36,321	$	(2,239	)
Interest rate swaps (hedge)		4,131		84
Interest rate swaps (hedge)		10,340		(410	)
Total derivatives	$	50,792	$	(2,565	)

(1) Derivatives in a net positive position are recorded as “Other assets” and derivatives in a net negative position are recorded as “Other liabilities” in the Consolidated Statements of Financial Condition.

The following table sets forth the effect of derivative instruments on the Consolidated Statements of Income for the periods indicated:

	For the three months ended June 30,						For the six months ended June 30,
(In thousands)	2015			2014			2015			2014
Financial Derivatives:
Interest rate swaps (non-hedge)	$	(2,125	)	$	(719	)	$	871		$	(1,733	)
Interest rate swaps (hedge)		(8	)		(33	)		(46	)		(61	)
Net Gain (loss) (1)	$	(2,133	)	$	(752	)	$	825		$	(1,794	)

(1) Net gains and losses are recorded as part of “Net gain/loss from fair value adjustments” in the Consolidated Statements of Income.