The Company enters into derivative instruments, which may include interest rate swaps and interest rate options, in connection with our risk-management activities. Our primary objective for using derivative financial instruments is to manage interest rate risk associated with our fixed-rate and variable-rate assets and liabilities.

We monitor our mix of fixed-rate and variable-rate assets and liabilities and may enter into interest rate swaps, forwards, and options to achieve a more desired mix of fixed-rate and variable-rate assets and liabilities. We execute these trades to modify our exposure to interest rate risk by converting certain fixed-rate instruments to a variable-rate and certain variable-rate instruments to a fixed-rate. We use a mix of both derivatives that qualify for hedge accounting treatment and economic hedges that do not qualify for hedge accounting treatment.

Derivatives qualifying for hedge accounting treatment can include receive-fixed swaps designated as fair value hedges of specific fixed-rate unsecured debt obligations, receive-fixed swaps designated as fair value hedges of specific fixed-rate FHLB advances, and pay-fixed swaps designated as fair value hedges of securities within our available-for-sale portfolio. Other derivatives qualifying for hedge accounting consist of interest rate floor contracts designated as cash flow hedges of the expected future cash flows in the form of interest receipts on a portion of our commercial and commercial real estate loans. Both the fair value hedges and cash flow hedges were determined to be effective during all periods presented and the Company expects the hedges to remain effective during the remaining terms of the swaps.

We also enter into interest rate lock commitments and forward commitments that are executed as part of our mortgage business that do not meet the accounting definition of hedges, as well as interest rate swap contracts sold to commercial customers who wish to modify their interest rate sensitivity. These swaps are offset by contracts simultaneously purchased by the Company from other financial dealer institutions with mirror-image terms. Because of the mirror-image terms of the offsetting contracts, in addition to collateral provisions which mitigate the impact of non-performance risk, changes in the fair value subsequent to initial recognition have a minimal effect on earnings.

The following table summarizes the fair value of derivative instruments reported on our consolidated balance sheet. The amounts are presented on a gross basis, are segregated by derivatives that are designated and qualifying as hedging instruments or those that are not, and are further segregated by type of contract within those two categories. Derivative assets and derivative liabilities are included in other assets and other liabilities, respectively, on the consolidated balance sheet.

Notional amounts are reference amounts from which contractual obligations are derived and are not recorded on the balance sheet. In our view, derivative notional is not an accurate measure of our derivative exposure when viewed in isolation from other factors, such as market rate fluctuations and counterparty credit risk.


	December 31, 2024						December 31, 2023 (restated)
	Fair Value						Fair Value
(dollars in thousands)	Assets		Liabilities		Notional amount		Assets		Liabilities		Notional amount
Derivatives designated as accounting hedges
Interest rate contracts
Fixed-rate mortgage-backed securities	$	2,653	$	654	$	167,363	$	—	$	1,324	$	150,000
Pools of commercial and commercial real estate loans	—		4,502		200,000		—		6,654		200,000
FHLB advances, brokered CDs and other borrowings	863		281		75,000		—		465		50,000
Total derivatives designated as accounting hedges	$	3,516	$	5,437	$	442,363	$	—	$	8,443	$	400,000
Derivatives not designated as accounting hedges
Interest rate contracts
Swaps	$	218	$	218	$	54,390	$	310	$	310	$	13,832
Interest rate lock commitments	71		—		3,907		62		—		2,405
Forward commitments to sell mortgage-backed securities	32		—		10,198		—		83		5,000
Total derivatives not designated as accounting hedges	$	321	$	218	$	68,495	$	372	$	393	$	21,237


	Carrying amount of the hedged items				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items
(dollars in thousands)	December 31, 2024		December 31, 2023 (restated)		December 31, 2024		December 31, 2023 (restated)

Investment securities available for sale	$	286,982	$	220,501	$	3,323	$	(1,324)


	Location of gain (loss) recognized in income on derivative	Gain (loss) recognized in income on derivative				Location of gain (loss) recognized in income on related hedged item	Gain (loss) recognized in income on related hedged items
(dollars in thousands)		2024		2023			2024		2023




Years Ended December 31,
Gain (loss) on fair value hedging relationships
Interest rate contracts
Fixed-rate mortgage-backed securities	Interest income on investment securities available for sale	$	9,341	$	—	Interest income on investment securities available for sale	$	(9,484)	$	—


	Gain (loss) recognized in AOCI on derivative						Location of gain (loss) recognized in income on derivative	Gain (loss) reclassified from AOCI into income
(dollars in thousands)	2024		2023 (restated)		2022 (restated)				2024		2023 (restated)		2022 (restated)






Years Ended December 31,
Gain (loss) on cash flow hedging relationships
Interest rate contracts
Pools of commercial and commercial real estate loans	$	(3,705)	$	(2,242)	$	2,551	Interest income on loans		$	(5,857)	$	(5,588)	$	113
							Other noninterest income		—		—		17,531
FHLB advances, brokered CDs and other borrowings	2,013		(210)		—		Interest expense		966		324		—
Total gain (loss) on cash flow hedging relationships	$	(1,692)	$	(2,452)	$	2,551			$	(4,891)	$	(5,264)	$	17,644


(dollars in thousands)	Location of gain (loss) recognized in income on derivative	2024		2023 (restated)		2022 (restated)
Years Ended December 31,
Gain (loss) on derivative instruments not designated as accounting hedges
Interest rate contracts	Residential mortgage banking revenue	$	123	$	(70)	$	(269)
	Other income	—		15		(88)
Total gain (loss) on derivative instruments not designated as accounting hedges		$	123	$	(55)	$	(357)

The Company has recognized derivative instruments associated with agreements entered into with third-party providers that support loan programs for which the Company originates and holds loans on its balance sheet. These third-party agreements include contractual credit enhancements that transfer certain risks and benefits to or from the Company, resulting in recognition of a derivative. The value of these derivatives consists primarily of two components: (1) the credit loss reimbursement value, representing the present value of expected future payments from the third party for loan losses, and (2) the interest yield guarantee value, representing the present value of cash flows the Company expects to receive to ensure a minimum yield (e.g., Prime + 2%) on the portfolio when actual borrower payments fall short. Under certain programs, additional features such as reimbursement for waived promotional interest are also included in the derivative valuation.

The fair value of these derivative instruments was $16.8 million and $15.4 million as of December 31, 2024 and 2023, respectively. The Company utilizes a third-party valuation specialist to estimate fair value using the income approach, based on the present value of expected future cash flows. The valuation relies on Level 3 unobservable inputs, including assumptions regarding credit loss rates, borrower prepayments, program yield performance, and discount rates. Changes in fair value are recorded in noninterest income, and the Company does not apply hedge accounting to these instruments

The following table summarizes the most significant inputs and assumptions in determining the value of the credit enhancement derivatives as well as the resulting fair value as of December 31, 2024 and December 31, 2023:


	December 31, 2024		December 31, 2023
	MacTools commercial portfolio		Greensky consumer portfolio		LendingPoint consumer portfolio		MacTools commercial portfolio
Weighted average interest rate	9.50	%	10.47	%	14.62	%	10.50	%
Implied/selected cohort default rate (CDR)	15.00	%	4.02	%	17.50	%	15.00	%
Selected LGD	85.00	%	85.00	%	85.00	%	85.00	%
Annual expected loss	12.75	%	3.42	%	14.88	%	12.75	%
Credit mark	(20.66)	%	(7.18)	%	(23.82)	%	(23.32)	%
Interest mark	10.04	%	3.29	%	13.23	%	13.01	%

Fair value of derivative	10.61	%	1.56	%	(0.34)	%	10.31	%