v3.26.1
Note 13 - Derivative Financial Instruments
12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

13.

Derivative Financial Instruments

 

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and other terms of the individual interest rate swap agreements.

 

Fair Value Hedges: Interest rate swaps with notional amounts totaling $17.2 million and $75.3 million as of December 31, 2025 and 2024, respectively, were designated as fair value last of layer hedges of certain government agency mortgage backed securities. The hedges were determined to be effective during all periods presented. The Company expects the hedges to remain effective during the remaining terms of the swaps.

 

The following table presents the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges at December 31, 2025 and 2024:

 

Line Item in the

         

Carrying

           

Carrying

 

Balance Sheet in

 

Carrying

   

amount of fair

   

Carrying

   

amount of fair

 

Which the Hedged

 

amount of the

   

value hedging

   

amount of the

   

value hedging

 

Item is Included

 

hedged assets

   

adjustment

   

hedged assets

   

adjustment

 

(Dollars in thousands)

 

December 31, 2025

   

December 31, 2025

   

December 31, 2024

   

December 31, 2024

 
                                 

Securities available for sale

  $ 21,130     $ 211     $ 103,174     $ 556  

 

The Company presents derivative positions gross on the balance sheet. The following table reflects the derivatives recorded on the balance sheet at December 31, 2025 and 2024:

 

   

December 31, 2025

   

December 31, 2024

 
   

Fair

   

Fair

 

(Dollars in thousands)

 

Value

   

Value

 
                 

Included in other assets:

               

Derivatives designated as hedges:

               

Interest rate swaps related to securities available for sale

  $ -     $ 626  
                 

Total included in other assets

  $ -     $ 626  
                 

Included in other liabilities:

               

Derivatives designated as hedges:

               

Interest rate swaps related to securities available for sale

  $ 192     $ 28  
                 

Total included in other liabilities

  $ 192     $ 28  

 

The effect of fair value hedge accounting on the statement of income for the years ended December 31, 2025 and 2024 is as follows:

 

Fair Value  Hedging Relationships

 

 

Total amounts of income and expense line items presented in the statements of income in

 which the effects of the fair value hedge is recorded are as follows:

 

   

Year Ended

December 31, 2025

   

Year Ended

December 31, 2024

 
   

Interest

   

Interest

 

(Dollars in thousands)

 

Income

   

Income

 

The effects of fair value hedging:

               

Gain (loss) on fair value hedging relationships:

               
Hedged items   $ 4     $ (16 )

Interest rate contracts designated as hedging instruments

    404       784  

Net gain on fair value hedging relationships included in interest income from investment securities - taxable

  $ 408     $ 768