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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 10 – DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Mortgage Banking Derivatives The Company maintains a risk management program to manage interest rate risk and pricing risk associated with its mortgage lending activities. This program includes the use of forward contracts and other derivatives that are used to offset changes in value of the mortgage inventory due to changes in market interest rates. Forward contracts to sell primarily fixed-rate mortgage loans are entered into to reduce the exposure to market risk arising from potential changes in interest rates, which could affect the fair value of mortgage loans held for sale and outstanding interest rate lock commitments, which guarantee a certain interest rate if the loan is ultimately funded or granted by the Company as a mortgage loan held for sale. The commitments to sell mortgage loans are at fixed prices and are scheduled to settle at specified dates. The Company enters into interest rate lock commitments for residential mortgage loans which commits it to lend funds to a potential borrower at a specific interest rate and within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that, if originated, will be held for sale, are considered derivative financial instruments under applicable accounting guidance. Outstanding interest rate lock commitments expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan and the eventual commitment for sale into the secondary market. These mortgage banking derivatives are carried at fair value and are not designated in hedge relationships. Fair values are estimated based on changes in mortgage interest rates from the date of the commitments. Changes in the fair values of these mortgage banking derivatives are included as a component of mortgage banking activity in the consolidated statements of income and comprehensive income. Customer Related Derivative Positions The Company enters into interest rate derivative contracts to facilitate the risk management strategies of certain clients. The Company mitigates this risk largely by entering into equal and offsetting interest rate derivative agreements with highly rated counterparties. The interest rate contracts are free-standing derivatives and are recorded at fair value on the Company's consolidated balance sheets. The credit risk to these clients is evaluated and included in the calculation of fair value. Fair value changes including credit-related adjustments are recorded as a component of other noninterest income. Risk Participation Agreement The Company has entered into a risk participation agreement swap, that is associated with a loan participation, where the Company is not the counterparty to the interest rate swap that is 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 following table reflects the notional amount and fair value of derivative instruments not designated as hedging instruments included in the consolidated balance sheets as of September 30, 2025 and December 31, 2024.
| September 30, 2025 |  | December 31, 2024
|  |  | Fair Value |  |  |  | Fair Value
(dollars in thousands) | Notional Amount |  | Derivative Assets(1) |  | Derivative Liabilities(2) |  | Notional Amount |  | Derivative Assets(1) |  | Derivative Liabilities(2)
Interest rate contracts(3) | $ | 1,169,971 |  |  | $ | 7,133 |  |  | $ | 7,426 |  |  | $ | 901,597 |  |  | $ | 8,717 |  |  | $ | 8,718 |
Risk participation agreement | 26,096 |  |  | — |  |  | 20 |  |  | 26,163 |  |  | — |  |  | 13 |
Mortgage derivatives - interest rate lock commitments | 339,782 |  |  | 5,012 |  |  | — |  |  | 192,528 |  |  | 1,504 |  |  | — |
Mortgage derivatives - forward contracts related to mortgage loans held for sale | 1,174,374 |  |  | — |  |  | 1,980 |  |  | 1,153,717 |  |  | 5,795 |  |  | — |
(1)Derivative assets are included in other assets on the consolidated balance sheets. (2)Derivative liabilities are included in other liabilities on the consolidated balance sheets. (3)Includes interest rate contracts for client derivatives and offsetting positions. The net gains (losses) relating to changes in fair value from derivative instruments not designated as hedging instruments are summarized below for the three and nine months ended September 30, 2025 and 2024.
|  |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | Location |  | 2025 |  | 2024 |  | 2025 |  | 2024
Interest rate contracts(1) | Other noninterest income |  | $ | (48) |  |  | $ | (337) |  |  | $ | (291) |  |  | $ | (150) |
Risk participation agreement | Other noninterest income |  | 6 |  |  | (24) |  |  | (7) |  |  | 17 |
Interest rate lock commitments | Mortgage banking activity |  | (1,193) |  |  | 257 |  |  | 3,508 |  |  | 1,425 |
Forward contracts related to mortgage loans held for sale | Mortgage banking activity |  | 5,255 |  |  | (2,434) |  |  | (7,775) |  |  | 3,808 |
(1)Gain (loss) represents net fair value adjustments (including credit related adjustments) for client derivatives and offsetting positions.

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