Quarterly report pursuant to Section 13 or 15(d)

Derivative Financial Instruments

v2.4.0.8
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments

The following table summarizes the terms and fair values of our derivative financial instruments, as well as their classifications within the consolidated balance sheets as of June 30, 2014 and December 31, 2013 (in thousands):
 
 
 
 
 
 
 
 
 
 
Fair Value
Effective Date
 
Maturity Date
 
Notional Amount
 
Bank Pay Rate
 
Company Fixed Pay Rate
 
June 30, 2014
 
December 31, 2013
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
November 14, 2013
 
August 14, 2018
 
$
50,000

 
1 month LIBOR
 
1.3075
%
 
$
4

 
$
455

November 14, 2013
 
August 14, 2018
 
50,000

 
1 month LIBOR
 
1.2970
%
 
26

 
440

November 14, 2013
 
August 14, 2018
 
50,000

 
1 month LIBOR
 
1.3025
%
 
14

 
487

Total
 
 
 
$
150,000

 
 
 
 
 
$
44

 
$
1,382



The derivative financial instruments are comprised of interest rate swaps, which are designated and qualify as cash flow hedges, each with a separate counterparty. We do not use derivatives for trading or speculative purposes and currently do not have any derivatives that are not designated as hedges.

The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in accumulated other comprehensive income (loss) and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivative, if any, is recognized directly in earnings.
The following table represents the effect of the derivative financial instruments on the accompanying consolidated financial statements for the three and six months ended June 30, 2014 and 2013, respectively (in thousands):
 
 
Location of Reclassification from Accumulated OCI Into Income
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
 
2014
 
2013
 
2014
 
2013
Interest Rate Swaps (Effective Portion):
 
 
 

 

 

 

Amount of loss recognized in OCI on derivative
 
 
 
$
(1,018
)
 
$
—

 
$
(1,338
)
 
$
—

 
 
 
 
 
 
 
 
 
 
 
Treasury Rate Lock (Effective Portion):
 
 
 

 

 


 


Amount of gain reclassified from accumulated OCI into income
 
Interest Expense
 
$
98

 
$
92

 
$
194

 
$
182



In 2005, we settled two US treasury rate lock agreements associated with a 10 year senior, unsecured bond offering and received approximately $3.2 million. The unamortized balance of the settled agreements as of June 30, 2014 and December 31, 2013 was approximately $546,000 and $741,000, respectively. As of June 30, 2014, we expect approximately $406,000 of deferred gains on derivative instruments in accumulated other comprehensive income to be reclassified into earnings during the next twelve months.