v3.26.3
Derivative Financial Instruments
9 Months Ended
Sep. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Note 7 - Derivative Financial Instruments
The Company may enter into mortgage origination commitments, which are commitments to originate loans as part of its mortgage banking activities. The Company then locks the loan with an investor and commits to deliver the loan if settlement occurs (Best Efforts). Certain loans under mortgage origination commitments are covered under forward sales contracts. Forward sales contracts are recorded at fair value with changes in fair value recorded in mortgage banking revenue. Mortgage origination commitments and commitments to deliver loans to investors are considered to be derivatives. These derivatives are used to economically manage interest rate risk in the Company’s mortgage banking pipeline and are not designated as hedging instruments. Changes in fair value are reported in mortgage banking revenue. The volume of mortgage origination commitments and forward commitments fluctuates with mortgage origination activity. These derivatives generally have short contractual terms (less than 90 days), and period-end notional amounts may not reflect average activity.
The market value of mortgage origination commitments and best efforts contracts are not readily ascertainable with precision because they are not actively traded in stand-alone markets. The Company determines the fair value of mortgage origination commitments by estimating the fair value of the underlying asset, which is impacted by current interest rates and takes into consideration the probability that the rate lock commitments will close or will be funded. See Note 10 - Fair Value Measurements for information regarding valuation techniques, significant inputs, and fair value hierarchy classification for derivative instruments.
The notional amount and estimated fair value of mortgage banking derivatives included in the consolidated balance sheets is summarized as follows:
September 30, 2026December 31, 2025
(in thousands)Notional AmountFair ValueNotional AmountFair Value
Included in other assets:
Mortgage origination commitments$220,990 $7,219 $176,106 $5,892 
Open forward delivery sales agreements (hedge MTM)8,500 227 — — 
Open mandatory delivery commitments— — 7,981 31 
Open forward delivery sales agreements (pipeline hedge)— — 4,772 18 
Total included in other assets$229,490 $7,446 $188,859 $5,941 
Included in other liabilities:
Open forward delivery sales agreements (pipeline hedge)$4,262 $63 $— $— 
Open mandatory delivery commitments5,893 160 — — 
Open forward delivery sales agreements (hedge MTM)— — 8,500 30 
Total included in other liabilities$10,155 $223 $8,500 $30 
The net gains (losses) relating to mortgage banking derivative instruments included in mortgage banking revenue is summarized as follows:
Three months endedNine months ended
September 30, 2026September 30, 2025September 30, 2026September 30, 2025
(in thousands)
Mortgage origination commitments$773 $541 $1,326 $1,326 
Open forward delivery sales agreements (hedge MTM)224 91 257 (5)
Open forward delivery sales agreements (pipeline hedge)(57)(59)(81)14 
Open mandatory delivery commitments(166)(29)(191)46 
Total$774 $544 $1,311 $1,381