15. Derivative Financial Instruments

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the Company’s practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. First Federal had approximately $37.1 million and $8.6 million of interest rate lock commitments at June 30, 2019, and December 31, 2018, respectively. There were $37.1 million and $11.5 million of forward commitments for the future delivery of residential mortgage loans at June 30, 2019, and December 31, 2018, respectively.

The fair value of these mortgage banking derivatives are reflected by a derivative asset recorded in other assets in the Consolidated Statements of Financial Condition. The table below provides data about the carrying values of these derivative instruments:

June 30, 2019

December 31, 2018

Assets

(Liabilities)

Assets

(Liabilities)

Derivative

Carrying

Net Carrying

Carrying

Net Carrying

Value

(In Thousands)

Derivatives not designated as hedging instruments

Mortgage Banking Derivatives

1,392

205

1,187

367

294

The table below provides data about the amount of gains and losses recognized in income on derivative instruments not designated as hedging instruments:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
	(In Thousands)
Derivatives not designated as hedging instruments

Mortgage Banking Derivatives – Gain (Loss)	$	455	$	136	$	893	$	178

The above amounts are included in mortgage banking income with gain on sale of mortgage loans.