v3.25.2
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments

NOTE 7 DERIVATIVE FINANCIAL INSTRUMENTS

The Bank uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. The Bank enters into interest rate swap agreements as part of its asset/liability management strategy to help manage its interest rate risk position.

The Bank entered into three pay-fixed receive variable interest rate swap transactions, with a combined notional value of $100 million, designated and qualifying as accounting hedges during the last quarter of 2023. Designating an interest rate swap as an accounting hedge allows the Company to recognize gains and losses, less any ineffectiveness, in the Company's consolidated statement of income within the same period that the hedged item affects earnings. The Company includes the gain or loss on the hedged items in the same line item as the offsetting loss or gain on the related interest rate swaps. The fair value of interest rate swaps with a positive fair value are reported in other assets in the Company's consolidated balance sheets while interest rate swaps with a negative fair value are reported in accrued expenses and other liabilities in the Company's consolidated balance sheets.

The following table presents amounts that were recorded on the Company's consolidated balance sheets related to cumulative basis adjustments for interest rate swap derivatives designated as fair value accounting hedges as of June 30, 2025 and December 31, 2024.

 

 

 

(In Thousands)

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Line Item in the Consolidated Balance Sheets in which the Hedged Item is Included

 

Carrying Amount of
the Hedged Assets

 

 

Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of
the Hedged Assets

 

 

Carrying Amount of
the Hedged Assets

 

 

Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of
the Hedged Assets

 

Loans

 

$

236,783

 

 

$

1,947

 

 

$

249,127

 

 

$

1,074

 

 

The following tables present a summary of interest rate swap derivatives designated as fair value accounting hedges of fixed-rate receivables used in the Bank's asset/liability management activities at June 30, 2025 and December 31, 2024, identified by the underlying interest rate-sensitive instruments.

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

 

 

Notional Value (In

 

 

Remaining Maturity

 

 

Fair Value (In

 

 

Weighted Average Rate

 

Instruments Associated With

 

Thousands)

 

 

(In Years)

 

 

Thousands)

 

 

Receive

 

Pay

 

Loans

 

$

100,000

 

 

 

2.1

 

 

$

(1,826

)

 

 USD-SOFR-OIS

 

 

4.47

%

Total swap portfolio at June 30, 2025

 

$

100,000

 

 

 

2.1

 

 

$

(1,826

)

 

 USD-SOFR-OIS

 

 

4.47

%

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

 

 

Notional Value (In

 

 

Remaining Maturity

 

 

Fair Value (In

 

 

Weighted Average Rate

 

Instruments Associated With

 

Thousands)

 

 

(In Years)

 

 

Thousands)

 

 

Receive

 

Pay

 

Loans

 

$

100,000

 

 

 

2.6

 

 

$

(976

)

 

 USD-SOFR-OIS

 

 

4.47

%

Total swap portfolio at December 31, 2024

 

$

100,000

 

 

 

2.6

 

 

$

(976

)

 

 USD-SOFR-OIS

 

 

4.47

%

 

These derivative financial instruments were entered into for the purpose of managing the interest rate risk of certain assets and liabilities. The Bank pledged $2.3 million of cash collateral to counterparties as security for its obligations related to these interest rate swap transactions at both June 30, 2025 and December 31, 2024. Collateral posted and received is dependent on the market valuation of the underlying hedges.

The following table presents the notional amount and fair value of interest rate swaps utilized by the Bank at June 30, 2025 and December 31, 2024.

 

 

 

(In Thousands)

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

Notional Amount

 

 

Fair Value

 

 

Notional Amount

 

 

Fair Value

 

Asset Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps associated with loans

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

Total contracts

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

Liability Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives designated as hedging instruments

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps associated with loans

 

$

100,000

 

 

$

(1,826

)

 

$

100,000

 

 

$

(976

)

Total contracts

 

$

100,000

 

 

$

(1,826

)

 

$

100,000

 

 

$

(976

)

 

The following table presents the effects of the Bank's interest rate swap agreements on the Company’s consolidated statement of income during the three and six months ended June 30, 2025 and June 30, 2024.

 

 

 

(In Thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

Line Item in the Consolidated Statements of Income

 

June 30, 2025

 

 

June 30, 2024

 

 

June 30, 2025

 

 

June 30, 2024

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

(21

)

 

$

19

 

 

$

(45

)

 

$

5

 

Other

 

 

25

 

 

 

216

 

 

 

50

 

 

 

427

 

Total interest income

 

$

4

 

 

$

235

 

 

$

5

 

 

$

432