Derivative Financial Instruments and Hedging

9 Months Ended

Sep. 30, 2014

Derivative Financial Instruments and Hedging

Derivative Financial Instruments and Hedging

Note 11 — Derivative Financial Instruments and Hedging

Information about our derivative financial instruments at September 30, 2014 and December 31, 2013 follows (dollars in thousands):

	September 30, 2014						December 31, 2013
	Number of Instruments	Notional Amount		Fair Value			Number of Instruments	Notional Amount		Fair Value
Interest rate swaps (asset)	3	$	28,322	$	218		3	$	29,273	$	253
Interest rate swaps (liability)	1	75,000		(1,626		)	1	75,000		(1,772		)
	4	$	103,322	$	(1,408	)	4	$	104,273	$	(1,519	)

Our interest rate swaps are designated as cash flow hedges and are valued using a market approach, which is a Level 2 valuation technique.  At September 30, 2014, three of our interest rate swaps were in an asset position and one was in a liability position. We have not posted, and are not required under the terms of the swaps to post, any collateral related to these agreements and are not in breach of any financial provisions of the agreements. If we had breached any agreement provisions at September 30, 2014, we could have been required to settle our obligations under these agreements that were in a liability position at their aggregate termination value, including accrued interest, of $1.7 million at September 30, 2014.

Details of the location in the financial statements of the loss recognized on derivative financial instruments designated as cash flow hedges follows (in thousands):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2014			2013			2014			2013
Gain (loss) recognized in accumulated other comprehensive income on derivative financial instruments (effective portion)	$	414		$	(2,215	)	$	(1,192	)	$	(1,571	)
Loss reclassified from accumulated other comprehensive income to interest expense (effective portion)	$	(441	)	$	(88	)	$	(1,303	)	$	(261	)
Gain recognized in gain on derivative financial instruments (ineffective portion)	$	1		$	—		$	—		$	2

Amounts reported in accumulated other comprehensive income related to derivative financial instruments will be reclassified to interest expense as interest payments are made on the hedged variable-rate debt.