DERIVATIVE INSTRUMENTS

3 Months Ended

Mar. 31, 2013

DERIVATIVE INSTRUMENTS [Abstract]

DERIVATIVE INSTRUMENTS

NOTE 13 – DERIVATIVE INSTRUMENTS AND OFFSETTING ASSETS AND LIABILITIES

The derivatives held by the Company include commitments to fund fixed-rate mortgage loans to customers and forward commitments to sell individual fixed-rate mortgage loans. The Company's objective in obtaining the forward commitments is to mitigate the interest rate risk associated with the commitments to fund the fixed-rate mortgage loans. Both the commitments to fund fixed-rate mortgage loans and the forward commitments to sell individual fixed-rate mortgage loans are reported at fair value, with adjustments being recorded in current period earnings, and are not accounted for as hedges. At March 31, 2013, the notional amount of forward commitments to sell individual fixed-rate mortgage loans was $201.3 million with a carrying value and fair value reflecting a loss of approximately $968,000. At March 31, 2012, the notional amount of forward commitments to sell individual fixed-rate mortgage loans was $213.3 million with a carrying value and fair value reflecting a loss of approximately $98,000. At March 31, 2013, the notional amount of commitments to fund individual fixed-rate mortgage loans was $188.4 million with a carrying value and fair value reflecting a gain of $3.7 million. At March 31, 2012, the notional amount of commitments to fund individual fixed-rate mortgage loans was $159.1 million with a carrying value and fair value reflecting a gain of $2.7 million.

The Company also enters into derivative financial instruments in the form of interest rate swaps to meet the financing, interest rate and equity risk management needs of its customers. Upon entering into these interest rate swaps to meet customer needs, the Company enters into offsetting positions to minimize interest rate and equity risk

to the Company. These derivative financial instruments are reported at fair value with any resulting gain or loss recorded in current period earnings. These instruments and their offsetting positions are recorded in other assets and other liabilities on the consolidated balance sheets. As of March 31, 2013, the notional amount of customer related derivative financial instruments was $479.1 million with an average maturity of 60 months, an average interest receive rate of 2.5% and an average interest pay rate of 5.6%. As of March 31, 2012, the notional amount of customer related derivative financial instruments was $479.4 million with an average maturity of 59 months, an average interest receive rate of 2.5% and an average interest pay rate of 5.8%.

Certain financial instruments such as derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements or similar agreements. The Bank's derivative transactions with upstream financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of set-off" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Bank does not generally offset such financial instruments for financial reporting purposes.

	March 31, 2013
							Gross Amounts Not Offset
							in the Consolidated
							Balance Sheet
										Financial
	Gross Amount		Gross Amount		Net Amount		Financial			Collateral			Net
	Recognized		Offset		Recognized		Instruments			Pledged			Amount
	(In thousands)
Financial assets:
Derivatives:
Forward commitments	$	3,666	$	-	$	3,666	$	-		$	-		$	3,666
Loan/lease interest rate swaps		46,284		-		46,284		-			-			46,284
Total financial assets	$	49,950	$	-	$	49,950	$	-		$	-		$	49,950
Financial liabilities:
Derivatives:
Forward commitments	$	968	$	-	$	968	$	-		$	-		$	968
Loan/lease interest rate swaps		46,284		-		46,284		-			(46,284	)		-
Repurchase arrangements		353,742		-		353,742		(353,742	)		-			-
Total financial liabilities	$	400,994	$	-	$	400,994	$	(353,742	)	$	(46,284	)	$	968

	December 31, 2012
							Gross Amounts Not Offset
							in the Consolidated
							Balance Sheet
										Financial
	Gross Amount		Gross Amount		Net Amount		Financial			Collateral			Net
	Recognized		Offset		Recognized		Instruments			Pledged			Amount
	(In thousands)
Financial assets:
Derivatives:
Forward commitments	$	4,168	$	-	$	4,168	$	-		$	-		$	4,168
Loan/lease interest rate swaps		52,154		-		52,154		-			-			52,154
Total financial assets	$	56,322	$	-	$	56,322	$	-		$	-		$	56,322
Financial liabilities:
Derivatives:
Forward commitments	$	622	$	-	$	622	$	-		$	-		$	622
Loan/lease interest rate swaps		52,154		-		52,154		-			(52,154	)		-
Repurchase arrangements		414,611		-		414,611		(414,611	)		-			-
Total financial liabilities	$	467,387	$	-	$	467,387	$	(414,611	)	$	(52,154	)	$	622

	March 31, 2012
							Gross Amounts Not Offset
							in the Consolidated
							Balance Sheet
										Financial
	Gross Amount		Gross Amount		Net Amount		Financial			Collateral			Net
	Recognized		Offset		Recognized		Instruments			Pledged			Amount
	(In thousands)
Financial assets:
Derivatives:
Forward commitments	$	2,963	$	-	$	2,963	$	-		$	-		$	2,963
Loan/lease interest rate swaps		50,857		-		50,857		-			-			50,857
Total financial assets	$	53,820	$	-	$	53,820	$	-		$	-		$	53,820
Financial liabilities:
Derivatives:
Forward commitments	$	351	$	-	$	351	$	-		$	-		$	351
Loan/lease interest rate swaps		50,857		-		50,857		-			(50,857	)		-
Repurchase arrangements		401,089		-		401,089		(401,089	)		-			-
Total financial liabilities	$	452,297	$	-	$	452,297	$	(401,089	)	$	(50,857	)	$	351