v3.26.1
Derivatives
 3 Months Ended
Mar. 31, 2026
Derivatives [Abstract]  
Derivatives Note 9. Derivatives

The Corporation is exposed to certain risks arising from both its business operations and economic conditions.  The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. 

Fair Value Hedges – The Corporation entered into certain interest rate swap contracts designated as fair value portfolio layer hedges of certain available-for-sale investment securities. The Corporation makes a fixed payment and receives a variable payment over the life of the contracts. The hedges were determined to be effective during all periods presented and are expected to be effective during the remaining term of the contracts. On March 16, 2026, the Corporation terminated the interest rate swap contracts and recognized $69 thousand of interest income on investments, and no cash collateral was posted as of March 31, 2026.

Derivatives Not Designated as Hedges – These derivatives result from participations in interest rate swaps provided by external lenders as part of loan participation arrangements, therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities. Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain lenders which participate in loans.


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The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the Balance Sheet.

(Dollars in thousands)

As of March 31, 2026

As of December 31, 2025

Notional amount

Balance Sheet Location

Fair Value

Notional amount

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments

Interest rate swaps

$

-

-

$

—

$

100,344 

Other Assets

$

124 

Total derivatives designated as hedging instruments

$

—

$

124 

Derivatives not designated as hedging instruments

Other Contracts

$

5,799

Other Liabilities

$

—

$

5,853 

Other Liabilities

$

—

Total derivatives not designated as hedging instruments

$

—

$

—

The table below presents the effect of the Corporation’s derivative financial instruments that are designated as hedging instruments on the Income Statement.

Effect of Derivatives Designated as Hedging Instruments on the Statement of Financial Performance

Derivatives Designated as Hedging Instruments under Subtopic 815-20

Location of Gain or (Loss) Recognized in Income on Derivative

Amount of Gain or (Loss) Recognized in Income on Derivatives

Three Months Ended

(Dollars in thousands)

March 31,

2026

2025

Interest rate swaps

Investment income

$

53

$

199

The table below presents the effect of the Corporation’s derivative financial instruments that are not designated as hedging instruments on the Income Statement.

Effect of Derivatives Not Designated as Hedging Instruments on the Statement of Financial Performance

Derivatives Not Designated as Hedging Instruments under Subtopic 815-20

Location of Gain or (Loss) Recognized in Income on Derivative

Amount of Gain or (Loss) Recognized in Income on Derivatives

Three Months Ended

(Dollars in thousands)

March 31,

2026

2025

Other Contracts

Other income

$

-

$

-

The table below presents the carrying amount of the derivative financial instruments for the periods shown:

Carrying amount of the hedged items

(Dollars in thousands)

As of March 31,

2026

2025

Investment securities, AFS (1)

$

-

$

110,364

(1)The amounts represent the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedge period.