v3.26.1
Derivatives
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives Derivatives
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 the other terms of the individual interest rate swap agreements.
Cash flow hedges of interest rate risk
The Company’s objective in using interest rate derivatives is to add stability to net interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps, caps, and floors as part of its interest rate risk management strategy. Interest rate swaps, designated as cash flow hedges, involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2026, such derivatives were
used to hedge the variable cash flows associated with variable-rate liabilities. As of March 31, 2025, such derivatives were used to hedge the variable cash flows associated with variable-rate debt and variable-rate securities.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest expense or interest income in the same period(s) during which the hedged transaction affects earnings. During the next twelve months, the Company estimates that an additional $1.4 million will be reclassified as a reduction in interest expense.

Derivatives not designated as hedges
The Company enters into interest rate swaps with its loan customers to facilitate their financing requests. Upon entering into swaps with our loan customers, the Company will enter into corresponding offsetting derivatives with third parties. These derivatives represent economic hedges and do not qualify as hedges for accounting. These back-to-back interest rate swaps are reported at fair value in other assets and accrued interest and other liabilities in the Company’s Consolidated Balance Sheets. Changes in the fair value of interest rate swaps are recorded in other non-interest expense and sum to zero because of offsetting terms of swaps with borrowers and swaps with dealer counterparties.
The table below presents the fair value of the Company’s derivative financial instruments, which includes accrued interest, as well as their classification on the Consolidated Balance Sheets as of March 31, 2026, and December 31, 2025 (in thousands):
March 31, 2026
Balance Sheet LocationNotional AmountFair Value
Derivatives designated as hedges:
Interest rate swaps related to cash flow hedgesOther assets$425,000 $1,589 
Interest rate swaps related to cash flow hedgesOther liabilities200,000 5 
Derivatives not designated as hedges:
Interest rate swaps related to customer loansOther assets$228,711 $1,447 
Interest rate swaps related to customer loansOther liabilities228,711 1,447 
December 31, 2025
Balance Sheet LocationNotional AmountFair Value
Derivatives designated as hedges:
Interest rate swaps related to cash flow hedgesOther assets$150,000 $273 
Interest rate swaps related to cash flow hedgesOther liabilities400,000 340 
Derivatives not designated as hedges:
Interest rate swaps related to customer loansOther assets$203,904 $2,331 
Interest rate swaps related to customer loansOther liabilities203,904 2,331 
The table below presents the effect of cash flow hedge accounting on AOCI for the three months ended March 31, 2026, and March 31, 2025 (in thousands):

Derivatives in Cash Flow
Hedging Relationships		March 31, 2026Location of Gain or (Loss) Reclassified from AOCI into IncomeMarch 31, 2026
Amount of Gain or (Loss) Recognized in OCI on Derivative
Amount of Gain or (Loss) Recognized in OCI Included ComponentAmount of Gain or (Loss) Recognized in OCI Excluded ComponentAmount of Gain or (Loss) Reclassified from AOCI into IncomeAmount of Gain or (Loss) Reclassified from AOCI into Income Included ComponentAmount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
Interest Rate Products$— $— $— Interest Income$— $— $— 
Interest Rate Products1,668 1,668 — Interest Expense36 36 — 
Total$1,668 $1,668 $— $36 $36 $— 
Derivatives in Cash Flow
Hedging Relationships		March 31, 2025Location of Gain or (Loss) Reclassified from AOCI into IncomeMarch 31, 2025
Amount of Gain or (Loss) Recognized in OCI on Derivative
Amount of Gain or (Loss) Recognized in OCI Included ComponentAmount of Gain or (Loss) Recognized in OCI Excluded ComponentAmount of Gain or (Loss) Reclassified from AOCI into IncomeAmount of Gain or (Loss) Reclassified from AOCI into Income Included ComponentAmount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
Interest Rate Products$— $— $— Interest Income$— $— $— 
Interest Rate Products480 480 — Interest Expense428 428 — 
Total$480 $480 $— $428 $428 $— 
The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the three months ended March 31, 2026, and March 31, 2025 (in thousands).
Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
Three months ended
March 31, 2026March 31, 2025
Interest Income Interest ExpenseInterest IncomeInterest Expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded$40 $36 $40 $428 
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged items (1)
40 — 40 — 
Derivatives designated as hedging instruments— — — — 
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest contracts
Amount of gain or (loss) reclassified from AOCI into income
— 36 — 428 
Amount of gain or (loss) reclassified from AOCI into income as a result that a forecasted transaction is no longer probable of occurring— — — — 
Amount of gain or (loss) reclassified from AOCI into income - included component— 36 — 428 
Amount of gain or (loss) reclassified from AOCI into income - excluded component— — — — 
(1) The Company voluntarily discontinued a fair value hedging relationship and these amounts include the gain or (loss) and the hedging adjustment on a voluntary discontinued hedging relationship. The Company has allocated the basis adjustment to the remaining individual assets in the closed portfolio and will amortize the basis adjustment over a period consistent with amortization of other discounts or premiums on the assets.
Credit-risk-related Contingent Features
As of March 31, 2026, the fair value of derivatives in a liability position, which includes accrued interest but excludes any adjustment for non-performance risk related to these agreements, was $4.6 thousand. As of December 31, 2025, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for non-performance risk related to these agreements, was $340.0 thousand. As of March 31, 2026, and as of December 31, 2025, the Company has posted the full amount of collateral related to these agreements.