Note 11 - Derivatives and Risk Management Activities

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note

11:

Derivatives and Risk Management Activities

Republic did not have any derivative instruments designated as hedging instruments, or subject to master netting and collateral agreements for the

three

months ended

March

31,

2017

and the

three

months ended

March

31,

2016.

The following table summarizes the amounts recorded in Republic’s statement of financial condition for derivatives not designated as hedging instruments as of

March

31,

2017

and

December

31,

2016

(in thousands):

March 31, 2017	Balance Sheet Presentation	Fair Value		Notional Amount
Asset derivatives:
IRLC’s	Other Assets	$	831	$	33,875
Best efforts forward loan sales commitments	Other Assets		3		2,467
Mandatory forward loan sales commitments	Other Assets		8		2,500
Liability derivatives:
IRLC’s	Other Liabilities	$	7	$	3,882
Best efforts forward loan sales commitments	Other Liabilities		270		35,290
Mandatory forward loan sales commitments	Other Liabilities		125		16,527

December 31, 2016	Balance Sheet Presentation	Fair Value		Notional Amount
Asset derivatives:
IRLC’s	Other Assets	$	439	$	20,792
Best efforts forward loan sales commitments	Other Assets		103		8,586
Mandatory forward loan sales commitments	Other Assets		229		18,373
Liability derivatives:
IRLC’s	Other Liabilities	$	55	$	6,757
Best efforts forward loan sales commitments	Other Liabilities		125		18,963
Mandatory forward loan sales commitments	Other Liabilities		38		5,024

The following table summarizes the amounts recorded in Republic’s statement of income for derivative instruments not designated as hedging instruments for the

three

months ended

March

31,

2017

(in thousands):

Three Months Ended March 31, 201 7	Income Statement Presentation	Gain/(Loss)
Asset derivatives:
IRLC’s	Mortgage banking income	$	392
Best efforts forward loan sales commitments	Mortgage banking income		(100	)
Mandatory forward loan sales commitments	Mortgage banking income		(221	)
Liability derivatives:
IRLC’s	Mortgage banking income	$	48
Best efforts forward loan sales commitments	Mortgage banking income		(145	)
Mandatory forward loan sales commitments	Mortgage banking income		(87	)

There was

no

income from derivative instruments for the

three

months ended

March

31,

2016.

The fair value of Republic’s IRLCs, best efforts forward loan sales commitments, and mandatory forward loan sales commitments are based upon the estimated value of the underlying mortgage loan (determined consistent with “Loans Held for Sale”), adjusted for

(1)

estimated costs to complete and originate the loan, and

(2)

the estimated percentage of IRLCs that will result in a closed mortgage loan. The valuation of the IRLCs issued by Republic includes the value of the servicing released premium. Republic sells loans servicing released, and the servicing released premium is included in the market price.