v3.26.1
Derivative Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Derivative Instruments And Hedging Activities Disclosure [Text Block]
NOTE 7: DERIVATIVE
INSTRUMENTS
The Company enters into interest rate swaps to manage exposure to changes in interest
rates on certain loans. The Company
does not enter into derivative instruments for speculative or trading purposes.
The Company had two swaps designated as fair value hedges of changes
in the fair value of specified loans attributable to
changes in the benchmark interest rate (the SOFR overnight index
swap rate) that qualified for the shortcut method under
ASC 815,
Derivatives and Hedging
at June 30, 2026, compared to one such swap at December 31, 2025.
Accrued interest
receivable related to the swaps is included in Other Assets or Other Liabilities, as applicable.
Under the terms of the swaps, the Company pays fixed rates and receives variable
rates based on SOFR (daily SOFR
compounded in arrears). Because the hedges qualify for the shortcut method,
the hedge relationships are assumed to be
perfectly effective, and therefore no hedge ineffectiveness
is recognized.
The following table presents the fair value of derivative instruments designated
as hedging instruments as of June 30, 2026
and December 31, 2025:
Balance Sheet
Notional
Fair Value
Fair Value
(Dollars in thousands)
Location
Amount
Asset
Liability
June 30, 2026:
Interest rate swaps (fair value hedge)
Other Assets
$
21,840
292
$
—
Total interest rate swap
agreements
$
21,840
292
$
—
Balance Sheet
Notional
Fair Value
Fair Value
(Dollars in thousands)
Location
Amount
Asset
Liability
December 31, 2025:
Interest rate swap (fair value hedge)
Other Liabilities
$
9,988
—
$
22
Total interest rate swap
agreements
$
9,988
—
$
22
The following table presents the carrying amount of hedged loans and
the cumulative amount of fair value hedging
adjustments included in the carrying amount of the hedged loans:
Cumulative Fair
Value Hedging
Carrying Amount
Adjustment Included
(Dollars in thousands)
of Hedged Loans
in Carrying Amount
June 30, 2026:
Loans, net of unearned income
$
21,548
$
(292)
December 31, 2025:
Loans, net of unearned income
$
10,010
$
22
The following table presents the effect of fair value hedge accounting
on the Consolidated Statements of Earnings for the
quarters and six months ended June 30, 2026 and 2025.
Gains and losses on both the interest rate swaps and the hedged
items attributable to the hedged risk are recognized in interest income (loans):
Quarter ended June 30,
Six months ended June 30,
(Dollars in thousands)
2026
2025
2026
2025
Amount of gain (loss) recognized in income
on derivative
$
271
$
—
$
314
$
—
Amount of gain (loss) recognized in income
on hedged item attributable to hedged risk
(271)
—
(314)
—
Net impact on interest income (loans)
$
—
$
—
$
—
$
—
The Company had no derivatives designated as hedging instruments during
the quarter and six months ended June 30,
2025.
The Company is exposed to credit risk in the event of nonperformance by
the counterparty to the interest rate swaps. The
Company manages this risk by transacting with a counterparty that meets established
credit standards. The Company does
not anticipate nonperformance by the counterparty.
These derivatives
are subject to a master netting arrangement; however,
the Company does not offset derivative assets and
liabilities on the Consolidated Balance Sheets.