v3.25.4
DERIVATIVE FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS DERIVATIVE FINANCIAL INSTRUMENTS
We are required to record derivatives on our Consolidated Statements of Financial Condition as assets and liabilities measured at their fair value. The accounting for increases and decreases in the value of derivatives depends upon the use of derivatives and whether the derivatives qualify for hedge accounting.
Our derivative financial instruments according to the type of hedge in which they are designated at December 31 follow:
2025
Notional
Amount		Average
Maturity
(years)		Fair
Value
(Dollars in thousands)
Fair value hedge designation
Pay-fixed interest rate swap agreement - commercial
$5,242 3.4$175 
Pay-fixed interest rate swap agreements - securities available for sale148,895 1.86,923 
Pay-fixed interest rate swap agreements - installment100,000 1.4(824)
Pay-fixed interest rate swap agreements - mortgage
117,000 1.7(1,186)
Interest rate cap agreements - securities available for sale40,970 2.332 
Total$412,107 1.8$5,120 
Cash flow hedge designation
Interest rate floor agreements - commercial
$450,000 1.8$4,669 
Interest rate cap agreements - short-term funding liabilities
50,000 2.146 
Total$500,000 1.8$4,715 
No hedge designation
Rate-lock mortgage loan commitments$17,180 0.1$230 
Mandatory commitments to sell mortgage loans24,909 0.1(32)
Pay-fixed interest rate swap agreements - commercial683,715 4.5(3,345)
Pay-variable interest rate swap agreements - commercial683,715 4.53,345 
Total$1,409,519 4.4$198 
2024
Notional
Amount		Average
Maturity
(years)		Fair
Value
(Dollars in thousands)
Fair value hedge designation
Pay-fixed interest rate swap agreement - commercial
$5,647 4.4$361 
Pay-fixed interest rate swap agreements - securities available for sale148,895 2.813,265 
Pay-fixed interest rate swap agreements - installment100,000 2.477 
Pay-fixed interest rate swap agreements - mortgage
147,000 2.2283 
Interest rate cap agreements - securities available for sale40,970 3.3334 
Total$442,512 2.6$14,320 
Cash flow hedge designation
Interest rate floor agreements - commercial
$375,000 2.3$3,642 
Interest rate cap agreements - short-term funding liabilities
25,000 3.4312 
Total$400,000 2.1$3,954 
No hedge designation
Rate-lock mortgage loan commitments$12,703 0.1$100 
Mandatory commitments to sell mortgage loans19,874 0.162 
Pay-fixed interest rate swap agreements - commercial538,053 5.013,325 
Pay-variable interest rate swap agreements - commercial538,053 5.0(13,325)
Total$1,108,683 4.9$162 
We have established management objectives and strategies that include interest-rate risk parameters for maximum fluctuations in net interest income and market value of portfolio equity. We monitor our interest rate risk position via simulation modeling reports. The goal of our asset/liability management efforts is to maintain profitable financial leverage within established risk parameters.
We have entered into pay-fixed interest rate swaps and caps to protect a portion of the fair value of a certain fixed rate commercial loan and certain mortgage and installment loans (‘‘Fair Value Hedge – Portfolio Loans’’). As a result, changes in the fair values of the pay-fixed interest rate swaps and caps are expected to offset changes in the fair values of the fixed rate portfolio loans due to fluctuations in interest rates. We record the fair values of Fair Value Hedge – Portfolio Loans in accrued income and other assets and accrued expenses and other liabilities on our Consolidated Statements of Financial Condition. The hedged items (a fixed rate commercial loan and certain fixed rate mortgage and installment loans) are also recorded at fair value which offsets the adjustment to the Fair Value Hedge – Portfolio Loans. On an ongoing basis, we adjust our Consolidated Statements of Financial Condition to reflect the then current fair values of both the Fair Value Hedge – Portfolio Loans and the hedged items. The related gains or losses are reported in interest income – interest and fees on loans in our Consolidated Statements of Operations. During the second quarter of 2023 we terminated the interest rate cap that was previously hedging certain installment loans. The remaining unrealized gain on this terminated interest cap of $0.12 million as of December 31, 2025 is being amortized into earnings over the original life of the interest rate cap which was February, 2030.
We have entered into pay-fixed interest rate swap and interest rate cap agreements to protect a portion of the fair value of certain securities available for sale (‘‘Fair Value Hedge – AFS Securities’’). As a result, the change in the fair value of the pay-fixed interest rate swap and interest rate cap agreements is expected to offset a portion of the change in the fair value of the fixed rate securities available for sale due to fluctuations in interest rates. We record the fair value of Fair Value Hedge – AFS Securities in accrued income and other assets and accrued expenses and other liabilities on our Consolidated Statements of Financial Condition. The hedged items (fixed rate securities available for sale) are also recorded at fair value which offsets the adjustment to the Fair Value Hedge – AFS Securities. On an ongoing basis, we adjust our Consolidated Statements of Financial Condition to reflect the then current fair value of both the Fair Value
Hedge – AFS Securities and the hedged item. The related gains or losses are reported in interest income – interest on securities – tax-exempt in our Consolidated Statements of Operations.
We have entered into interest rate floor agreements to manage the variability in future expected cash flows of certain commercial loans (‘‘Cash Flow Hedge – Portfolio Loans’’). We record the fair value of Cash Flow Hedge – Portfolio Loans in accrued income and other assets and accrued expenses and other liabilities on our Consolidated Statements of Financial Condition. The changes in the fair value of Cash Flow Hedge - Portfolio Loans are recorded in accumulated other comprehensive loss and are reclassified into the line item in our Consolidated Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings.
We have entered into an interest rate cap agreement to manage the variability in future expected cash flows of certain short-term funding liabilities (‘‘Cash Flow Hedge – Short-term Funding Liabilities’’). We record the fair value of Cash Flow Hedge – Short-term Funding Liabilities in accrued income and other assets and accrued expenses and other liabilities on our Consolidated Statements of Financial Condition. The changes in the fair value of Cash Flow Hedge - Short-term Funding Liabilities are recorded in accumulated other comprehensive loss and are reclassified into the line item in our Consolidated Statements of Operations in which the hedged items are recorded in the same period the hedged items affect earnings.
For Cash Flow Hedges, it is anticipated that as of December 31, 2025, $0.9 million will be reclassified from accumulated other comprehensive loss as a reduction to earnings over the next twelve months. The maximum term of any Cash Flow Hedge at December 31, 2025 is 3.62 years.
Certain derivative financial instruments have not been designated as hedges. The fair value of these derivative financial instruments has been recorded on our Consolidated Statements of Financial Condition and is adjusted on an ongoing basis to reflect their then current fair value. The changes in fair value of derivative financial instruments not designated as hedges are recognized in earnings.
In the ordinary course of business, we enter into rate-lock mortgage loan commitments with customers (‘‘Rate-Lock Commitments’’). These commitments expose us to interest rate risk. We also enter into mandatory commitments to sell mortgage loans (‘‘Mandatory Commitments’’) to reduce the impact of price fluctuations of mortgage loans held for sale and Rate-Lock Commitments. Mandatory Commitments help protect our loan sale profit margin from fluctuations in interest rates. The changes in the fair value of Rate-Lock Commitments and Mandatory Commitments are recognized currently as part of net gains on mortgage loans in our Consolidated Statements of Operations. We obtain market prices on Mandatory Commitments and Rate-Lock Commitments. Net gains on mortgage loans, as well as net income may be more volatile as a result of these derivative instruments, which are not designated as hedges.
We have a program that allows commercial loan customers to lock in a fixed rate for a longer period of time than we would normally offer for interest rate risk reasons. We will enter into a variable rate commercial loan and an interest rate swap agreement with a customer and then enter into an offsetting interest rate swap agreement with an unrelated party. The interest rate swap agreement fair values will generally move in opposite directions resulting in little or no net impact on our Consolidated Statements of Operations. All of the interest rate swap agreements - commercial with no hedge designation in the table above relate to this program.
We had entered into a no hedge designation pay-variable interest rate swap agreement in an attempt to manage the cost of certain funding liabilities. The changes in fair value of this no hedge pay-variable interest rate swap is recorded in non-interest expense-other in our Consolidated Statements of Operations. This no hedge designation pay-variable interest rate swap agreement matured during the third quarter of 2023.
The following table illustrates the impact that the derivative financial instruments discussed above have on individual line items in the Consolidated Statements of Financial Condition for the periods presented:
Fair Values of Derivative Instruments
Asset DerivativesLiability Derivatives
December 31,December 31,
2025202420252024
Balance
Sheet
Location		Fair
Value		Balance
Sheet
Location		Fair
Value		Balance
Sheet
Location		Fair
Value		Balance
Sheet
Location		Fair
Value
(In thousands)
Derivatives designated as hedging instruments
Pay-fixed interest rate swap agreementsOther assets$7,114 Other assets$14,336 Other liabilities$2,026 Other liabilities$350 
Interest rate cap agreementsOther assets78 Other assets646 Other liabilities— Other liabilities— 
Interest rate floor agreementsOther assets4,669 Other assets3,642 Other liabilities— Other liabilities— 
11,861 18,624 2,026 350 
Derivatives not designated as hedging instruments
Rate-lock mortgage loan commitmentsOther assets230 Other assets100 Other liabilities— Other liabilities— 
Mandatory commitments to sell mortgage loansOther assets— Other assets62 Other liabilities32 Other liabilities— 
Pay-fixed interest rate swap agreements - commercialOther assets7,074 Other assets15,799 Other liabilities10,419 Other liabilities2,474 
Pay-variable interest rate swap agreements - commercialOther assets10,419 Other assets2,474 Other liabilities7,074 Other liabilities15,799 
17,723 18,435 17,525 18,273 
Total derivatives$29,584 $37,059 $19,551 $18,623 
The effect of derivative financial instruments on the Consolidated Statements of Operations follows:
Year Ended December 31,
Gain (loss) Recognized
in Other
Comprehensive
Income
(Effective Portion)
Location of
Loss
Reclassified
from
Accumulated
Other
Comprehensive
Loss
into Income
(Effective
Portion)
Loss
Reclassified from
Accumulated Other
Comprehensive Loss into Income
(Effective Portion)
Location of
Gain (Loss)
Recognized
in Income		Gain (Loss)
Recognized
in Income
202520242023202520242023202520242023
(In thousands)
Fair Value Hedges
Pay-fixed interest rate swap agreement - commercialInterest and fees on loans$(186)$12 $(98)
Pay-fixed interest rate swap agreement - securities available for sale
Interest on securities
(6,342)(2,022)(4,619)
Pay-fixed interest rate swap agreement - installmentInterest and fees on loans(901)1,305 (1,305)
Pay-fixed interest rate swap agreements - MortgageInterest and fees on loans(1,469)2,414 (2,131)
Interest rate cap agreements - securities available for sale$(302)$23 $(848)
Interest on securities
$(227)$(167)$(262)
Interest on securities
— (145)90 
Interest rate cap agreements - installment— — — Interest and fees on loans— — — Interest and fees on loans— — (14)
Total$(302)$23 $(848)$(227)$(167)$(262)$(8,898)$1,564 $(8,077)
Cash Flow Hedges
Interest rate floor agreements - commercial$(612)$(4,223)$635 Interest and fees on loans$(1,861)$(1,199)$(175)Interest and fees on loans$(1,861)$(1,199)$(175)
Interest rate cap agreements - short-term funding liabilities
(324)(12)— Interest expense(23)— — Interest expense(23)— — 
Total$(936)$(4,235)$635 $(1,884)$(1,199)$(175)$(1,884)$(1,199)$(175)
No hedge designation       
Rate-lock mortgage loan commitmentsNet gains on mortgage loans$130 $(73)$1,229 
Mandatory commitments to sell mortgage loansNet gains on mortgage loans(94)341 (594)
Pay-fixed interest rate swap agreements - commercialInterest and fees on loans(16,670)6,156 (9,894)
Pay-variable interest rate swap agreements -commercialInterest and fees on loans16,670 (6,156)9,894 
Pay-variable interest rate swap agreement
Non-interest expense -
     other
— — (12)
Total$36 $268 $623