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DERIVATIVES AND HEDGING ACTIVITIES | 9 Months Ended
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Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES AND HEDGING ACTIVITIES | DERIVATIVES AND HEDGING ACTIVITIES To reduce the risk of significant interest rate fluctuations on the value of certain assets and liabilities, such as single family mortgage LHFS and MSRs, the Company utilizes derivatives as economic hedges. As a part of its mortgage origination process, the Company enters into contracts that qualify as derivatives, including forward sale commitments and interest rate lock commitments. It is the Company’s practice to enter into forward commitments for the future delivery of residential mortgage loans when interest rate lock commitments are entered into to economically hedge the effect of changes in the interest rates resulting from its commitments to fund the loans. These mortgage banking derivatives are not designated in hedge relationships. The Company enters into interest rate swaps with loan customers. The specific terms of the interest rate swap agreements are tied to the terms of the underlying loan agreements. To avoid increasing internal interest rate risk as a result of these business activities, the Company enters into offsetting swap agreements. The Company enters into interest rate swaps executed with commercial banking customers and broker dealer counterparties. The Company’s customer related interest rate swaps provide an economic hedge but do not qualify for hedge accounting treatment. Cooperative Rabobank, U.A. (CRUA) and a subsidiary of Rabo’s parent also provided various interest rate swap services to the Company. The applicable Rabo counterparties deposited $5.5 million in cash collateral with the Company to secure underlying derivative contracts as of September 30, 2025. B&F Capital Markets, LLC (a Stifel Company) has provided the interest rate swap services to the Company since 2023. The notional amounts and fair values for derivatives, all of which are economic hedges, are included in interest receivable and other assets or interest payable and other liabilities on the consolidated balance sheet, consist of the following:
| September 30, 2025 |  | December 31, 2024
(in thousands) | Notional amount |  | Fair Value |  | Notional amount |  | Fair Value
Included in interest receivable and other assets: |  |  |  |  |  |  |
Interest rate lock commitments | $14,385 |  | $277 |  | $— |  | $—
Forward sale commitments | 34,230 |  | 131 |  | — |  | —
Interest rate swaps | 430,236 |  | 11,347 |  | 379,696 |  | 12,835
Total derivatives before netting | $478,851 |  | $11,755 |  | $379,696 |  | $12,835
Netting adjustment/cash collateral (1) |  |  | (5,741) |  |  |  | —
Carrying value on consolidated balance sheet |  |  | $6,014 |  |  |  | $12,835
Included in interest payable and other liabilities: |  |  |  |  |  |  |
Interest rate lock commitments | $— |  | $— |  | $430 |  | $7
Forward sale commitments | 30,862 |  | 112 |  | 430 |  | —
Interest rate swaps | 430,236 |  | 10,259 |  | 379,696 |  | 11,056
Futures | 1,800 |  | 1 |  | — |  | —
Total derivatives before netting | $462,898 |  | $10,372 |  | $380,556 |  | $11,063
Netting adjustment/cash collateral (1) |  |  | 147 |  |  |  | —
Carrying value on consolidated balance sheet |  |  | $10,519 |  |  |  | $11,063
(1)Includes net cash collateral received of $5.9 million and zero at September 30, 2025 and December 31, 2024, respectively. The collateral used under the Company’s master netting agreements is typically cash, but securities may be used under agreements with certain counterparties. Receivables related to cash collateral that has been paid to counterparties are included in interest receivable and other assets. Payables related to cash collateral that has been received from counterparties are included in interest payable and other liabilities. Interest is owed on amounts received from counterparties and we earn interest on cash paid to counterparties. Any securities pledged to counterparties as collateral remain on the consolidated balance sheets. At September 30, 2025 and December 31, 2024, the Company had liabilities of $6.1 million and zero, respectively, in cash collateral received from counterparties and receivables of $193 thousand and zero, respectively, in cash collateral paid to counterparties. The following table presents the net gain (loss) recognized on economic hedge derivatives, within the respective line items in the consolidated income statements for the periods indicated:
| Quarter Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Recognized in noninterest income: |  |  |  |  |  |  |
Net loss on loan origination and sale activities (1) | $(146) |  | $— |  | $(146) |  | $—
Loan servicing income (2) | 78 |  | — |  | 78 |  | —
Other (3) | 21 |  | 53 |  | 96 |  | 93
(1)Comprised of forward contracts used as an economic hedge of loans held for sale and IRLCs to customers. Included in other noninterest income in the consolidated income statements. (2)Comprised of futures, U.S. Treasury options and forward contracts used as economic hedges of single family MSRs. (3)Impact of interest rate swap agreements executed with commercial banking customers and broker dealer counterparties. The interest income from U.S. Treasury notes trading securities used for hedging purposes, which is included in interest income on the consolidated income statements, was $160 thousand for both the quarter and nine months ended September 30, 2025, and was zero for the quarter and nine months ended September 30, 2024, respectively.

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