DERIVATIVES |
6 Months Ended |
|---|---|
Jun. 30, 2025 | |
| DERIVATIVES | |
| DERIVATIVES | 13. DERIVATIVES The Company may enter into derivative financial instruments as part of its asset liability management strategy to help manage its interest rate risk position and to meet the needs of customers. Derivatives Designated as Hedging Instruments The Company had no derivatives designated as cash flow hedges as of June 30, 2025 and December 31, 2024. Derivatives Not Designated as Hedging Instruments Juniata entered into risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which Juniata is a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. These risk participation agreements are recorded within other liabilities on the Consolidated Statements of Financial Condition at their estimated fair value. At June 30, 2025 and December 31, 2024, the estimated fair value of the risk participation agreements was $30,000 and $24,000, respectively. Changes to the fair value of the risk participation agreements are included in fees derived from loan activity in the Consolidated Statements of Income. Changes to the fair value of the risk participation agreements resulted in expenses of $2,000 and $6,000 for the three and six months ended June 30, 2025, respectively, and income of $4,000 and $21,000 for the three and six months ended June 30, 2024, respectively. Juniata acts as an interest rate swap counterparty for commercial borrowers, which are accounted for at fair value. Juniata manages its exposure to such interest rate swaps by entering corresponding and offsetting interest rate swaps with a third party that mirrors the terms of the swap with the commercial borrower. This position, referred to as a “back-to-back swap”, directly offsets itself, and Juniata’s exposure is the fair value of the derivative due to changes in credit risk of the commercial borrower and third party. Back-to-back swaps are recorded within other assets and other liabilities on the Consolidated Statements of Financial Condition at the estimated fair value. At June 30, 2025 and December 31, 2024, the estimated fair value of the back-to-back swaps was $173,000 and $20,000, respectively. Fee income recorded upon the execution of a back-to-back swap contract is recorded in fees derived from loan activity in the Consolidated Statements of Income. Fee income of $20,000 was recorded for the three and six months ended June 30, 2025 and June 30, 2024. |