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Derivatives
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
The Company utilizes derivative financial instruments as part of its ongoing efforts to manage its interest rate risk exposure as well as interest rate exposure for its customers. Derivative financial instruments are included in the consolidated balance sheets line item other assets or other liabilities at fair value in accordance with ASC 815, “Derivatives and Hedging.” See Note 1, “Basis of presentation and summary of significant accounting policies,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for additional information on the Company’s accounting policies related to derivative instruments and hedging activities.
Derivatives designated as fair value hedges
The Company periodically enters into fair value hedging relationships using interest rates swaps to mitigate the Company’s exposure to losses in market value as interest rates change. Derivative instruments that are used as part of the Company’s interest rate risk management strategy include interest rate swaps that relate to pricing of specific balance sheet assets and liabilities. Interest rate swaps generally involve the exchange of fixed and variable rate interest payments between two parties, based on a common notional principal amount and maturity date. The critical terms of the interest
rate swaps match the terms of the corresponding hedged items. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Any initial and ongoing assessment of expected hedge effectiveness is based on regression analysis.
At both June 30, 2025 and December 31, 2024, the Company did not hold any interest rate swaps designated as fair value hedges. The Company did hold interest rate swaps designated as fair value hedges for a period of time during the six months ended June 30, 2024.
During the three and six months ended June 30, 2024, the Company had $1,752 and $3,595, respectively, of amortization expense in interest expense on deposits related to terminated fair value hedges. During the six months ended June 30, 2024, there was $645 of expense included in interest expense on borrowings related to fair value hedges. There was no such expense for the three months ended June 30, 2024.
Derivatives designated as cash flow hedges
The Company periodically enters into cash flow hedging relationships using interest rate swaps to mitigate the exposure to the variability in future cash flows or other forecast transactions associated with its floating rate assets and liabilities. The Company uses interest rate swap agreements to hedge the repricing characteristics of its floating rate subordinated debt. All components of each derivative instrument’s gain or loss are included in the assessment of hedge effectiveness. Any initial and ongoing assessment of expected hedge effectiveness is based on regression analysis. The ongoing periodic measures of hedge ineffectiveness are based on the expected change in cash flows of the hedged item caused by changes in the benchmark interest rate.
At both June 30, 2025 and December 31, 2024, the Company did not have any interest rate swaps that were designated as cash flow hedges. The Company did hold interest rate swaps designated as cash flow hedges during the six months ended June 30, 2024.
The Company’s consolidated statements of income included income of $275 and $522 for the three and six months ended June 30, 2024 in interest expense on borrowings related to these cash flow hedges, respectively. The cash flow hedges were highly effective during this period and as a result qualified for hedge accounting treatment. As such, no amounts were reclassified from accumulated other comprehensive loss into earnings as a result of hedge ineffectiveness during the period.
For the three and six months ended June 30, 2024, the Company had a loss of $195 and $369, respectively, in other comprehensive income, net of tax benefit of $68 and $130, respectively, for derivative instruments designated as cash flow hedges. No such activity was recorded during the three and six months ended June 30, 2025.
Derivatives not designated as hedging instruments
Derivatives not designated under hedge accounting rules include those that are entered into as either economic hedges as part of the Company’s overall risk management strategy or to facilitate client needs. Economic hedges are those that are not designated as a fair value or cash flow hedge for accounting purposes but are necessary to economically manage the risk exposure associated with the assets and liabilities of the Company.
The Company enters into derivative instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with customer contracts, the Company enters into an offsetting derivative contract. The Company manages its credit risk, or potential risk of default by its commercial customers through credit limit approval and monitoring procedures.
The Company enters into interest rate-lock commitments on residential loan commitments that will be held for resale. These are considered derivative instruments with no hedge accounting designation, and the interest rate exposure on these commitments is economically hedged primarily with forward contracts. Gains and losses arising from changes in the valuation of the interest rate-lock commitments are recognized currently in earnings and are reflected under the line-item mortgage banking income in the consolidated statements of income.
The Company also enters into forwards, futures and option contracts to economically hedge the change in fair value of mortgage servicing rights. Gains and losses associated with these instruments are included in earnings and are reflected under the line-item mortgage banking income in the consolidated statements of income.
The following tables provide details on the Company’s non-designated derivative financial instruments as of the dates presented:
June 30, 2025
Notional AmountAssetLiability
  Interest rate contracts$598,390 $23,135 $23,194 
  Forward commitments236,000 — 638 
  Interest rate-lock commitments127,004 2,322 — 
  Futures contracts185,000 2,109 — 
    Total$1,146,394 $27,566 $23,832 
 December 31, 2024
 Notional AmountAssetLiability
  Interest rate contracts$565,152 $29,298 $29,377 
  Forward commitments140,000 6 — 
  Interest rate-lock commitments65,687 647 — 
  Futures contracts217,000 — 3,006 
    Total$987,839 $29,951 $32,383 
Gains (losses) included in the consolidated statements of income related to the Company’s non-designated derivative financial instruments were as follows:
Three Months Ended June 30,Six Months Ended June 30,
 2025 2024 2025 2024 
Included in mortgage banking income:
  Interest rate lock commitments$254 $(693)$1,675 $176 
  Forward commitments(114)334 (323)434 
  Futures contracts(180)(1,402)2,131 (4,399)
    Total$(40)$(1,761)$3,483 $(3,789)
Netting of Derivative Instruments
Certain financial instruments, including derivatives, may be eligible for offset on the consolidated balance sheets when the “right of offset” exists or when the instruments are subject to an enforceable master netting agreement, which includes the right of the non-defaulting party or non-affected party to offset recognized amounts, including collateral posted with the counterparty, to determine a net receivable or net payable upon early termination of the agreement. Certain of the Company’s derivative instruments are subject to master netting agreements, however the Company has not elected to offset such financial instruments on the consolidated balance sheets. The following table presents the Company’s gross derivative positions as recognized on the consolidated balance sheets as well as the net derivative positions, including collateral pledged to the extent the application of such collateral did not reduce the net derivative liability position below zero, had the Company elected to offset those instruments subject to an enforceable master netting agreement:
Gross amounts not offset on the consolidated balance sheets
Gross amounts recognizedGross amounts offset on the consolidated balance sheetsNet amounts presented on the consolidated balance sheetsFinancial instrumentsFinancial collateral pledgedNet Amount
June 30, 2025
Derivative financial assets$18,093 $— $18,093 $5,104 $— $12,989 
Derivative financial liabilities$10,503 $— $10,503 $5,104 $5,399 $— 
December 31, 2024
Derivative financial assets$28,379 $— $28,379 $1,030 $— $27,349 
Derivative financial liabilities$9,144 $— $9,144 $1,030 $8,114 $— 
Collateral Requirements
Most derivative contracts with customers are secured by collateral. Additionally, in accordance with the interest rate agreements with derivative counterparties, the Company may be required to post collateral with these derivative counterparties. As of June 30, 2025 and December 31, 2024, the Company had collateral posted of $24,209 and $20,961, respectively, against its obligations under these agreements. Cash pledged as collateral on derivative contracts is recorded in other assets on the consolidated balance sheets.