8. Shareholders’ Equity The following table presents a summary of the fair value gains and losses on derivative financial instruments for the year ended December 31, 2013 and 2012 ( in thousands):  On July 14, 2011, as part of the Treasury Small Business Lending Fund ( SBLF) program, the Bank entered into a Securities Purchase Agreement ( SBLF Purchase Agreement) with the United States Department of the Treasury ( Treasury) pursuant to which the Bank sold to the Treasury, for an aggregate purchase price of $ 5, 115, 000, 5, 115 shares of senior non - cumulative, perpetual preferred stock, Series C, $ 1, 000 liquidation value, $ 1. 00 par value. The preferred stock was issued pursuant to the SBLF program, a $ 30 billion fund established under the Small Business Lending Jobs Act of 2010 that was created to encourage lending to small businesses by providing capital to qualified community banks with assets of less than $ 10 billion.  The SBLF Preferred Stock qualifies as Tier 1 regulatory capital and pays quarterly non - cumulative dividends. The dividend rate fluctuates for the first nine quarters based upon changes in the Bank’ s level of " Qualified Small Business Lending"  or " QSBL" ( as defined in the SBLF Purchase Agreement).  The dividend rate may be adjusted between one percent ( 1%)  and five percent ( 5%)  per annum to reflect the amount of change in the Bank’ s level of QSBL. For the tenth calendar quarter through four and one half years after issuance, the dividend rate will be fixed at between one percent ( 1%)  and seven percent ( 7%) based upon the increase in QSBL as compared to the baseline ( as defined in the SBLF Purchase Agreement). After four and one half years from issuance, the dividend rate will increase to 9 %. At December 31, 2013 and 2012, the Bank was paying a 1%  dividend on SBLF Preferred Stock.  The SBLF Preferred Stock is non - voting, except in limited circumstances. The SBLF Preferred Stock Agreement imposes limits on the ability of the Bank to pay dividends and repurchase shares of common stock. No repurchases may be effected, and no dividends may be declared or paid on common stock during the current calendar quarter and for the next three calendar quarters following the failure to declare and pay dividends on the SBLF Preferred Stock.  The Bank may only declare and pay a dividend on its common stock or repurchase shares if the dollar amount of the Bank’ s Tier 1 Capital would be at least 90% of Tier 1 Capital at the date of the SBLF Purchase Agreement. This threshold is subject to reduction by 10%  for each one percent increase in QSBL over the baseline level.  Fair Value Gains ( Losses)  Statement of Income 2013 2012 Classification Interest rate locks with customers $  292 $  336 Gains on sale of loans Forward commitments 88 ( 19)  Gains on sale of loans 380 $  317 29