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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In accordance with applicable accounting guidance for derivatives and hedging, all derivatives are recognized as either assets or liabilities in the Consolidated Balance Sheets and are measured at fair value.
Interest Rate Swap Arrangements with Customers
Interest rate swaps are contracts under which a series of fixed and variable interest rate payments are exchanged over a specified period. The notional amounts on which the interest payments are based are not exchanged. The Company enters into interest rate swap transactions with commercial customers to facilitate customer risk management objectives. In these transactions, the Company originates a floating rate loan to the customer at a notional amount and simultaneously enters into a corresponding offsetting interest rate swap with a third-party financial institution or counterparty.
Under this structure, the customer enters into an interest rate swap with the Company to exchange the variable rate cash flows associated with the loan for fixed rate cash flows based on the same notional amount as the Company’s loan. These transactions allow customers to effectively convert variable rate loans to fixed rate loans, while the Company receives variable rate payments. Certain agreements may include contractual interest rate floors or caps.
Customer related interest rate swaps are considered derivatives, but are not designated as hedging instruments for accounting purposes. Accordingly, changes in the estimated fair value of these derivatives are recognized in current earnings in the Consolidated Statements of Income.
Balance Sheet Hedging Activities
The Company uses interest rate swaps as part of its interest rate risk management strategy to reduce its exposure to changes in the fair value of certain fixed-rate available-for-sale debt securities resulting from fluctuations in benchmark interest rates. During the six months ended June 30, 2026, the Company designated interest rate swaps with an aggregate notional amount of $29.9 million as fair value hedges of certain available-for-sale securities. The hedging relationships qualify for the shortcut method under ASC 815, Derivatives and Hedging, as management determined that the critical terms of the interest rate swaps and the hedged securities matched. Accordingly, changes in the fair value of the interest rate swaps are recognized in earnings and are expected to offset changes in the fair value of the hedged securities attributable to changes in the designated benchmark interest rate. Changes in the fair value of the available-for-sale securities that are not attributable to the hedged risk continue to be recognized in other comprehensive income. The Company assesses the qualifying criteria for application of the shortcut method on an ongoing basis.
The Company also utilizes derivatives to hedge interest rate risk associated with on balance sheet assets. On July 11, 2024, the Company entered into two related pay-fixed/receive floating interest rate swaps (the “Pay-Fixed/Receive Floating Interest Rate Swap Agreements”) with a combined notional amount of $300.0 million. These swaps were designated as fair value hedges to mitigate changes in the fair value of the fixed rate loans, including amortizing single-family residential mortgage loans and CRE loans. The hedges were intended to synthetically convert the hedged fixed rate loans to floating rate loans indexed to the Secured Overnight Financing Rate (“ SOFR”).
On December 19, 2024, the Company terminated the first Pay-Fixed/Receive Floating Swap Agreement with an original notional amount of $175.0 million, which was scheduled to mature on July 11, 2029. The termination resulted in a negative interest income adjustment of $154 thousand. On January 13, 2025, the Company terminated the remaining Pay-Fixed/Receive Floating Swap Agreement with an original notional amount of $125.0 million, which was scheduled to mature on July 11, 2027, resulting in a negative interest income adjustment of $110 thousand. While these Pay-Fixed/Receive Floating Swap Agreements were outstanding, the Company recognized $1.2 million of interest income related to these hedging instruments.
Hedge Accounting Treatment
As long as a hedging instrument is properly designated and effectiveness testing supports qualification for hedge accounting treatment, changes in fair value of the hedging instrument attributable to the hedged risk are recognized in net interest income. The fair value of the derivative is recorded in other assets or other liabilities, as applicable, with a corresponding adjustment recorded to the carrying amount of the hedged loans. Under this accounting treatment, there is no separate measurement or recognition of hedge ineffectiveness, and the full impact of hedge gains and losses is recognized in earnings in the period in which the hedged item affects earnings.
Collateral and Credit Risk
Pursuant to agreements with various financial institutions, the Company may be required to post collateral or may receive collateral based on the mark-to-market position of its derivative contracts. Beyond unsecured threshold levels, collateral may be provided in the form of cash or securities. Based on current derivative positions and related collateral requirements, management believes any impact on the Company’s liquidity or cash flows is immaterial.
Derivative instruments expose the Company to credit risk, representing the risk that a counterparty may fail to perform under the terms of a contract. All derivative transactions with financial institutions are executed only with counterparties approved by the Asset and Liability Committee (“ALCO”). Derivative transactions with customers are subject to approval by members of senior management with appropriate training and experience in interest rate risk management.
The following tables indicate the amounts representing the fair value of derivative assets and derivative liabilities at the dates presented:
Fair Values of Derivative Instruments
Asset Derivatives (Included in Other Assets)
June 30, 2026December 31, 2025
(Dollars in Thousands)Number of
Transactions		Notional
Amount		Fair
Value		Number of
Transactions		Notional
Amount		Fair
Value
Derivatives Designated as Hedging Instruments
Interest Rate Swaps - Balance Sheet Hedge— $— $— — $— $— 
Total Derivatives Designated as Hedging Instruments— $— $— — $— $— 
Derivatives not Designated as Hedging Instruments
Interest Rate Lock Commitments – Mortgage Loans11 $3,788 $6 3 $1,328 $— 
Interest Rate Swap Contracts – Commercial Loans54 345,176 10,932 54 352,184 10,182 
Total Derivatives not Designated as Hedging Instruments65 $348,964 $10,938 57 $353,512 $10,182 
Total Derivatives65 $348,964 $10,938 57 $353,512 $10,182 
Fair Values of Derivative Instruments
Liability Derivatives (Included in Other Liabilities)
June 30, 2026December 31, 2025
(Dollars in Thousands)Number of
Transactions		Notional
Amount		Fair
Value		Number of
Transactions		Notional
Amount		Fair
Value
Derivatives Designated as Hedging Instruments
Interest Rate Swaps - Balance Sheet Hedge5 $29,852 $539 — $— $— 
Total Derivatives Designated as Hedging Instruments5 $29,852 $539 — $— $— 
Derivatives not Designated as Hedging Instruments
Forward Sale Contracts – Mortgage Loans11 $3,788 $6 3 $1,328 $— 
Interest Rate Swap Contracts – Commercial Loans54 345,176 10,847 54 352,184 10,089 
Total Derivatives not Designated as Hedging Instruments65 $348,964 $10,853 57 $353,512 $10,089 
Total Derivatives70 $378,816 $11,392 57 $353,512 $10,089 
The following table indicates the net loss recognized within “other noninterest income or expense” for derivatives not designated as hedging instruments and the loss recognized within “interest income on taxable loans” for derivatives designated as hedging instruments in the Consolidated Statements of Income for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in Thousands)2026202520262025
Derivatives Designated as Hedging Instruments
Interest Rate Swaps - Balance Sheet Hedge$— $— $— $(140)
Total Derivative Loss Designated as Hedging Instruments$— $— — (140)
Derivatives not Designated as Hedging Instruments
Interest Rate Lock Commitments – Mortgage Loans$(6)$(7)6 (1)
Forward Sale Contracts – Mortgage Loans6 7 (6)1 
Interest Rate Swap Contracts – Commercial Loans(8)(52)(8)(96)
Total Derivative Loss not Designated as Hedging Instruments$(8)$(52)(8)(96)
Net Derivative Loss$(8)$(52)$(8)$(236)
The Company is permitted to offset derivatives assets and derivative liabilities that are subject to legally enforceable master netting arrangements with the same counterparty. Accordingly, derivative positions with the same counterparty may be
presented on a net basis in the Consolidated Balance Sheets when the Company has both a derivative asset and a derivative liability related to swap transactions with that counterparty.
The following table indicates the gross amounts of derivative assets and derivative liabilities not designated as hedging instruments, the amounts offset and the carrying values included in the Consolidated Balance Sheets at the dates presented:
Asset DerivativesLiability Derivatives
(Included in Other Assets)(Included in Other Liabilities)
(Dollars in Thousands)June 30, 2026December 31, 2025June 30, 2026December 31, 2025
Derivatives Designated as Hedging Instruments
Gross Amounts Recognized$— $— $539 $— 
Gross Amounts Offset— — — — 
Net Amounts Presented in the Consolidated Balance Sheets$— $— $539 $— 
Derivatives not Designated as Hedging Instruments
Gross Amounts Recognized$10,938 $10,182 $10,853 $10,089 
Gross Amounts Offset— — — — 
Net Amounts Presented in the Consolidated Balance Sheets$10,938 $10,182 $10,853 $10,089 
Net Amount$10,938 $10,182 $11,392 $10,089