Note 10 - Derivatives

12 Months Ended

Dec. 31, 2018

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, 2018

and

2017,

the Company had aggregate forward commitments with a notional value of

$21.5

million and

$13.5

million, with fair value losses of

$154,000

 and

$16,000,

respectively.

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, 2018

and

2017,

the IRLCs had fair values of

$381,000

and

$183,000,

and notional values of

$27,000

and

$11.9

million, respectively.

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 Year Ended December 31,
	2018			2017
Forward Commitments	$	(58,344	)	$	25,806
Interest rate lock commitments		197,779			183,087
	$	139,435		$	208,893

The following table shows the fair value of derivatives included in Prepaid and other assets in the Consolidated Balance Sheets:

	As of December 31,
	2018					2017
	Notional Amount		Fair Value			Notional Amount		Fair Value
Forward Commitments	$	21,500,000		(153,906	)	$	13,500,000	$	(15,820	)
Interest rate lock commitments		27,000,000		380,886			11,900,000		183,087
	$	48,500,000	$	226,980		$	25,400,000	$	167,267