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Derivative Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments DERIVATIVE INSTRUMENTS
The Company utilizes derivative instruments to manage exposure to various types of interest rate risk for itself and its customers within policy guidelines. Transactions should only be entered into with an associated underlying exposure. All derivative instruments are carried at fair value.

Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Institutional counterparties must have an investment grade credit rating and be approved by the Company’s asset/liability management committee. In arranging these products for its customers, the Company assumes additional credit risk from the customer and from the dealer counterparty with whom the transaction is undertaken. Credit risk exists due to the default credit risk created in the exchange of the payments over a period of time. Credit exposure on interest rate swaps is limited to the net favorable value and interest payments of all swaps with each counterparty. Access to collateral in the event of default is reasonably assured. Therefore, credit exposure may be reduced by the amount of collateral pledged by the counterparty.

Hedge Structures

The Company will seek to enter derivative structures that most effectively address the risk exposure and structural terms of the underlying position being hedged. The term and notional principal amount of a hedge transaction will not exceed the term or principal amount of the underlying exposure. In addition, the Company will use hedge indices which are the same as, or highly correlated to, the index or rate on the underlying exposure. Derivative credit exposure is monitored on an ongoing basis for each customer transaction and aggregate exposure to each counterparty is tracked. The Company has set a maximum outstanding notional contract amount at 25% of the Company’s assets.

Fair Value Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged asset or liability attributable to the hedged risk are recognized in current earnings. The gain or loss on the derivative instrument is presented on the same income statement line item as the earnings effect of the hedged item.
During the third quarter of 2021, the Company began utilizing interest rate swaps designated as fair value hedges to mitigate the effect of changing interest rates on the fair values of fixed rate callable AFS securities. The hedging strategy converts the fixed interest rates to variable interest rates based on federal funds rates. The two year forward start date for these swaps occurred during late third quarter of 2023 and involves the payment of fixed interest rates with a weighted average of 1.21% in exchange for variable interest rates based on federal funds rates.

During the third quarter of 2025, the Company began utilizing step-down interest rate swaps designated as fair value hedges to mitigate the risk of changes in the fair value of the $325.0 million in aggregate principal amount of the 2025 Notes due to changes in market interest rates. These receive-fixed/pay-variable swaps have maturities ranging from 2026 to 2030 and the fixed interest rate decreases in predetermined intervals over the contractual term of the agreement.

The following table summarizes the fair value hedges recorded in the accompanying consolidated balance sheets.

June 30, 2026December 31, 2025
(In thousands)Balance Sheet LocationWeighted Average Pay RateReceive RateNotionalFair ValueNotionalFair Value
Derivative assetsOther assets1.21%Federal Funds$1,001,715 $64,564 $1,001,715 $59,829 
Derivative liabilitiesAccrued interest and other liabilitiesDaily WA SOFR
3.07% - 3.56%
325,000 (9,057)325,000 (3,337)

The following amounts were recorded on the balance sheet related to carrying amounts and cumulative basis adjustments for fair value hedges:
Carrying Amount of Hedged Assets/LiabilitiesCumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/Liabilities
Line Item on the Balance Sheet (In thousands)June 30, 2026December 31, 2025June 30, 2026December 31, 2025
Investment securities - Available-for-sale$962,791 $970,976 $64,738 $60,013 
Subordinated debentures312,028 317,714 (9,339)(3,455)

Cash Flow Hedges

For derivative instruments that are designated and qualify as a cash flow hedge, the aggregate fair value of the derivative instrument is recorded in other assets or other liabilities with any gain or loss related to changes in fair value recorded in accumulated other comprehensive income (loss), net of tax. The gain or loss is reclassified into earnings in the same period during which the hedged asset or liability affects earnings and is presented in the same income statement line item as the earnings effect of the hedged asset or liability. During the third quarter of 2025, the Company executed step-down interest rate swaps on certain variable rate loans within the CRE and commercial and industrial portfolios with maturity dates ranging from 2026 to 2029 and certain securities within the variable rate commercial MBS portfolio with maturity dates ranging from 2026 to 2027. These receive-fixed/pay-variable swaps are used to manage variability in future cash flows related to interest rate exposure within each portfolio. The cash flow hedges were determined to be highly effective during the periods presented and as a result qualify for hedge accounting treatment.

The following table summarizes the cash flow hedges recorded in the accompanying consolidated balance sheets:


June 30, 2026December 31, 2025
(In thousands)Balance Sheet LocationWeighted Average Pay RateReceive RateNotionalFair ValueNotionalFair Value
Variable rate loansAccrued interest and other liabilities1M CME Term SOFR
3.18% - 4.05%
$1,000,000 $(16,022)$1,000,000 $(919)
Variable rate commercial MBSAccrued interest and other liabilitiesSOFR 30A
3.07% - 3.82%
300,000 (1,673)300,000 317 
The following table summarizes the cash flow hedges relationships on the statement of comprehensive income (loss).

Net Change in Other Comprehensive Income (Loss)
Three Months Ended
June 30,		Six Months Ended
June 30,
(In thousands)2026202520262025
Variable rate loans$(8,060)$— $(15,102)$— 
Variable rate commercial MBS(776)— (1,990)— 

The following table summarizes the gains (losses) related to our fair value and cash flow hedges in the accompanying consolidated statements of income:

Three Months Ended
June 30, 2026June 30, 2025
Interest IncomeInterest ExpenseInterest IncomeInterest Expense
(In thousands)Loans (including fees)Investment securities Subordinated debenturesLoans (including fees)Investment securitiesSubordinated debentures
Net swap settlement on fair value hedges $— $6,251 $78 $— $8,061 $— 
Cash flow hedges:
Amount of derivative gains (losses) reclassified into income(1,019)136 — — — — 
Total amounts reported on the Consolidated Income Statement(1,019)6,387 78 — 8,061 — 
Six Months Ended
June 30, 2026June 30, 2025
Interest IncomeInterest ExpenseInterest IncomeInterest Expense
(In thousands)Loans (including fees)Investment securitiesSubordinated debenturesLoans (including fees)Investment securitiesSubordinated debentures
Net swap settlement on fair value hedges$— $12,436 $34 $— $16,000 $— 
Cash flow hedges:
Amount of derivative gains (losses) reclassified into income(1,258)198 — — — — 
Total amounts reported on the Consolidated Income Statement(1,258)12,634 34 — 16,000 — 


As of June 30, 2026, net losses related to the variable rate loans and variable rate commercial MBS in other comprehensive income that are expected to be reclassified into earnings within the next 12 months totaled $6.9 million and $1.4 million, respectively.
Customer Risk Management Interest Rate Swaps

The Company’s qualified loan customers have the opportunity to participate in its interest rate swap program for the purpose of managing interest rate risk on their variable rate loans with the Company. The Company enters into such agreements with customers, then offsetting agreements are executed between the Company and an approved dealer counterparty to minimize market risk from changes in interest rates. The counterparty contracts are identical to customer contracts in terms of notional amounts, interest rates, and maturity dates, except for a fixed pricing spread or fee paid to the Company by the dealer counterparty. These interest rate swaps carry varying degrees of credit, interest rate and market or liquidity risks. The fair value of these derivative instruments is recognized as either derivative assets or liabilities in the accompanying consolidated balance sheets. The Company has a limited number of swaps that are standalone without a similar agreement with the loan customer.

The following table summarizes the fair values of loan derivative contracts recorded in the accompanying consolidated balance sheets.
June 30, 2026December 31, 2025
(In thousands)NotionalFair ValueNotionalFair Value
Derivative assets$1,505,189 $19,208 $1,190,958 $26,734 
Derivative liabilities1,506,072 19,148 1,191,858 26,682 

Risk Participation Agreements

The Company has a limited number of Risk Participation Agreement swaps, that are associated with loan participations, where the Company is not the counterparty to the interest rate swaps that are associated with the risk participation sold. The interest rate swap mark to market only impacts the Company if the swap is in a liability position to the counterparty and the customer defaults on payments to the counterparty. The notional amount of these contingent agreements is $4.0 million as of June 30, 2026.

Energy Hedging

The Company, from time-to-time, has provided energy derivative services to qualifying, high quality oil and gas borrowers for hedging purposes. The Company has served as an intermediary on energy derivative products between the Company’s borrowers and dealers. The Company will only enter into back-to-back trades, thus maintaining a balanced book between the dealer and the borrower.

The energy hedging risk exposure to the Company’s customer would increase as energy prices for crude oil and natural gas rise. As prices decrease, exposure to the exchange would increase. These risks are mitigated by customer credit underwriting policies and establishing a predetermined hedge line for each borrower and by monitoring the exchange margin.

The Company has no outstanding notional values related to energy hedge swap contracts as of June 30, 2026. Currently, the Company generally does not intend to offer hedging services to any remaining energy related customers.