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DERIVATIVES AND HEDGING ACTIVITIES
 9 Months Ended
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.