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Note 19 - Derivatives and Risk Management Activities
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 19. Derivatives and Risk Management Activities

 

The Bank uses derivative financial instruments (or “derivatives”) primarily to assist customers with their risk management objectives. The Bank classifies these items as free standing derivatives consisting of customer accommodation interest rate loan swaps (or “interest rate loan swaps”). The Bank enters into interest rate swaps with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Bank simultaneously enters into interest rate swaps with dealer counterparties, with identical notional amounts and terms. The net result of these interest rate swaps is that the customer pays a fixed rate of interest and the Bank receives a floating rate. These back-to-back interest rate loan swaps qualify as financial derivatives with fair values reported in “Other assets” and “Other liabilities” in the consolidated financial statements. Changes in fair value are recorded in other noninterest expense and net to zero because of the identical amounts and terms of the interest rate loan swaps.

 

The following tables summarize key elements of the Banks’s derivative instruments as of December 31, 2024 and December 31, 2023.

 

December 31, 2024

                    

Customer-related interest rate contracts

                    

(Dollars in thousands)

 

Notional Amount

  

Positions

  

Assets

  

Liabilities

  Collateral Pledges 

Matched interest rate swap with borrower

 $230,417   43  $—  $21,715  $— 

Matched interest rate swap with counterparty

 $230,417   43  $21,715  $—  $— 

 

December 31, 2023

                    

Customer-related interest rate contracts

                    

(Dollars in thousands)

 

Notional Amount

  

Positions

  

Assets

  

Liabilities

  Collateral Pledges 

Matched interest rate swap with borrower

 $224,008   42  $—  $18,569  $— 

Matched interest rate swap with counterparty

 $224,008   42  $18,569  $—  $— 

 

The Company is able to recognize fee income upon execution of the interest rate swap contract. Interest rate swap fee income for the twelve months ended December 31, 2024, 2023, and 2022 was $0, $0, and $619,000, respectively.