Short-term borrowing activity under this revolving credit loan facility for the years ended
December 31, 2017 and 2016 was:
(in thousands) 2017 2016
Established line as of December 31, $ 6,000 $ 10,000
Maximum amount outstanding during period 5,574 1,118
Average amount outstanding during period 228 73
Amount outstanding as of December 31, 5,574 -
Weighted average interest rate during period 3.01% 2.22%
Interest rate as of December 31, 3.10% 2.251%
As of December 31, 2017 and 2016, the Company had a $3.1 million and $3.3 million,
respectively, interest rate swap which qualifies as a derivative. This financial derivative is
designated as a cash flow hedge. This financial instrument is used to mitigate interest rate
risk associated with our outstanding $3.1 million loan which has a floating interest rate
based on the three-month London Interbank Offered Rate (“LIBOR”) plus 1.75% as of
December 31, 2017. The combined effect of the LIBOR-based borrowing formula and the
swap produces an “all-in fixed borrowing cost” equal to 5.95%. The fair value of the
financial derivative, as of December 31, 2017 and 2016, included in our Consolidated
Balance Sheets under “Other Liabilities and Deferred Credits” as “Derivative instrument” was
$374,000 and $453,000, respectively. Changes in the fair value of this derivative were deferred
in accumulated other comprehensive income (loss).
Swap settlements are recorded in the statement of income (loss) with the hedged item as
interest expense. During the years ended December 31, 2017 and 2016, $76,000 and
$123,000, respectively, was reclassified pre-tax from accumulated other comprehensive
income (loss) to interest expense as a result of swap settlements. The Company expects to
reclassify approximately $109,000, pre-tax, from accumulated other comprehensive income
(loss) to interest expense as a result of swap settlements, over the next twelve months.
Note 10 — Accumulated Other Comprehensive Income
The following table presents changes in accumulated other comprehensive income by
component for the years ended December 31, 2017 and 2016:
Interest Rate Contract
(in thousands) 2017 2016
Beginning balance $ 258 8=6$ 201
Other comprehensive income (loss) before reclassifications 1 (17)
Amounts reclassified from accumulated other
comprehensive income 46 74
Net current period other comprehensive income 47 37
Ending balance $ 305 $ 258
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