v3.26.1
Derivative Financial Instruments
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments DERIVATIVE FINANCIAL INSTRUMENTS
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s loans and borrowings. The Company does not enter into derivative financial instruments for trading purposes.

Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest income and expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

For hedges of the Company’s variable-rate loans, interest rate swaps designated as cash flow hedges involve the receipt of fixed amounts and the Company making variable rate payments. The Company has executed cash flow hedges to reduce a portion of variability in cash flows on the Company’s prime based loan portfolio. Select terms of the hedges are as follows:

($ in thousands)
Notional Fixed RateEffective DateMaturity Date
$50,000 6.56 %January 25, 2023February 1, 2027
$100,000 6.63 %December 20, 2022January 1, 2028
$100,000 6.66 %April 1, 2025April 1, 2030

The Company executed a prime based interest rate collar in the fourth quarter of 2022 with a notional amount of $100.0 million. The collar includes a cap of 8.14% and a floor of 5.25%. The collar matures on October 1, 2029.

The Company also executed a 1-month SOFR based interest rate collar in the fourth quarter of 2024 with a notional amount of $50.0 million. The collar includes a cap of 4.21% and a floor of 3.23%. The collar matures on November 1, 2029. These transactions are commonly referred to as zero cost collars, which involves the Company selling an interest rate cap where payments will be made when the index exceeds the cap rate, and the purchase of a floor where payments will be received if the index falls below the floor.

At December 31, 2025, the Company had executed a series of cash flow hedges to fix the effective interest rate for payments due on $32.1 million of junior subordinated debentures to a weighted-average-fixed rate of 2.64%. These hedges matured in the first quarter 2026.
The gain or loss on derivatives designated and qualified as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive income and subsequently reclassified into interest income or expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income or expense as interest payments are paid on the Company’s variable-rate loans and debt. During the next twelve months, the Company estimates $0.1 million will be reclassified as a decrease to interest income.

Non-designated Hedges
Derivatives not designated as hedges are not considered speculative and result from a service the Company provides to certain clients. The Company executes interest rate swaps with commercial banking clients to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the client derivatives and the offsetting derivatives are recognized directly in earnings as a component of other noninterest income.

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of the dates indicated:
Notional Amount Derivative AssetsDerivative Liabilities
($ in thousands)March 31,
2026		December 31, 2025March 31,
2026		December 31, 2025March 31,
2026		December 31, 2025
Derivatives designated as hedging instruments
Interest rate swaps$250,000 $282,064 $427 $1,876 $53 $— 
Interest rate collars150,000 150,000 237 498 — — 
Total$400,000 $432,064 $664 $2,374 $53 $— 
Derivatives not designated as hedging instruments
Interest rate swaps$866,506 $878,278 $9,165 $10,110 $9,169 $10,114 

Derivative assets are reported in “Other assets” on the Consolidated Balance Sheets. Derivative liabilities are reported in “Other liabilities” on the Consolidated Balance Sheets.
The following tables present a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments subject to offsetting. The gross amounts of assets or liabilities can be reconciled to the tabular disclosure of fair value. The fair value table above provides the location of financial assets and liabilities presented on the Consolidated Balance Sheets.

As of March 31, 2026
Gross Amounts Not Offset in the Statement of Financial Position
($ in thousands)Gross Amounts RecognizedGross Amounts Offset in the Statement of Financial PositionNet Amounts of Assets presented in the Statement of Financial PositionFinancial InstrumentsFair Value Collateral PostedNet Amount
Assets:
Interest rate swaps$9,592 $— $9,592 $1,926 $6,356 $1,309 
Interest rate collars237 — 237 — — 237 
Liabilities:
Interest rate swaps$9,222 $— $9,222 $1,926 $— $7,296 
Securities sold under agreements to repurchase226,669 — 226,669 — 226,669 — 

As of December 31, 2025
Gross Amounts Not Offset in the Statement of Financial Position
($ in thousands)Gross Amounts RecognizedGross Amounts Offset in the Statement of Financial PositionNet Amounts of Assets presented in the Statement of Financial PositionFinancial InstrumentsFair Value Collateral PostedNet Amount
Assets:
Interest rate swaps$11,986 $— $11,986 $3,142 $6,470 $2,374 
Interest rate collar498 — 498 — — 498 
Liabilities:
Interest rate swaps$10,114 $— $10,114 $3,142 $— $6,972 
Securities sold under agreements to repurchase292,782 — 292,782 — 292,782 — 

As of March 31, 2026, the fair value of counterparty derivatives in a net liability position, which includes accrued interest related to these agreements was $7.4 million. The Company has minimum collateral posting thresholds with certain of its derivative counterparties and posts collateral related to derivatives in a net liability position. The Company has received cash collateral from counterparties on derivatives that were in a net asset position as noted in the tables above.