Derivatives Financial Instruments

12 Months Ended

Dec. 31, 2011

Derivatives Financial Instruments [Abstract]

Derivatives Financial Instruments

NOTE 18: Derivative Financial Instruments

The Corporation uses derivatives to manage exposure to interest rate risk through the use of interest rate swaps. Interest rate swaps involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date with no exchange of underlying principal amounts. The Corporation's interest rate swaps qualify as cash flow hedges. The Corporation's cash flow hedges effectively modify a portion of the Corporation's exposure to interest rate risk by converting variable rates of interest on $10.0 million of the Corporation's trust preferred capital notes to fixed rates of interest until September 2015.

The cash flow hedges total notional amount is $10.0 million. At December 31, 2011, the cash flow hedges had a fair value of ($515,000), which is recorded in other liabilities. The cash flow hedges were fully effective at December 31, 2011 and therefore the loss on the cash flow hedges was recognized as a component of other comprehensive income (loss), net of deferred income taxes.