Note 10 - Derivatives

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE

1

0

–

DERIVATIVES

In connection with its mortgage banking operation, the

Company enters into the following derivatives to mitigate exposure to interest rate risk. These derivatives are

not

designated as hedge accounting under GAAP and accordingly the fair value of these derivatives is included in Prepaid and other assets or Other liabilities in the Consolidated Balance Sheets with fair value changes recorded in Gain on sale of loans in the Consolidated Statement of Comprehensive Income:

Forward Commitments

- At

December 31, 2017

the Company had aggregate forward commitments with a notional value of

$13.5

million and a fair value liability of

$15,820.

There were

no

derivative instruments outstanding at

December 31, 2016.

Interest Rate Lock Commitments

- 

The Company had Interest Rate Lock Commitments (“IRLC”) to set mortgage loan interest rates with its mortgage loan customers prior to funding. At

December 31, 2017,

the IRLC's had a fair value of

$183,000

and a notional value of

$11.9

million.

The

following table shows the fair value of derivatives included in Gain on sale of loans in the Consolidated Statement of Comprehensive Income:

	For the Years Ended December 31,
	2017		2016
Forward Commitments	$	25,806	$	-
Interest rate lock commitments		183,087		-
Total	$	208,893	$	-

The following table shows the fair value of derivatives included

in Prepaid and other assets in the Consolidated Balance Sheets:

	At December 31,
	2017					2016
	Notional Amount		Fair Value			Notional Amount		Fair Value
Forward Commitments (liability included in Other Liabilities)	$	13,500,000	$	(15,820	)	$	-	$	-
Interest rate lock commitments (asset included in Other Assets)		11,900,000		183,087			-		-
Total	$	25,400,000	$	167,267		$	-	$	-