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DERIVATIVES AND HEDGING ACTIVITIES
 3 Months Ended
Mar. 31, 2026
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. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.
Cooperative Rabobank, U.A. and a subsidiary of Rabobank International Holding B.V.’s parent also provided various interest rate swap services to the Company. The applicable Rabobank International Holding B.V. counterparties deposited $3.2 million and $3.7 million in cash collateral with the Company to secure underlying derivative contracts as of March 31, 2026 and December 31, 2025, respectively. B&F Capital Markets, LLC (a Stifel Company) has provided interest rate swap services to the Company since 2023.
The following table presents the notional amounts and fair values for derivatives which are economic hedges. The fair values for derivatives are included in interest receivable and other assets or interest payable and other liabilities on the consolidated balance sheets.
March 31, 2026December 31, 2025
(in thousands)Notional amountFair ValueNotional amountFair Value
Included in interest receivable and other assets:
Interest rate lock commitments$11,493 $130 $4,929 $75 
Forward sale commitments40,792 241 32,217 148 
Interest rate swaps359,106 8,927 398,536 9,406 
Futures6,100 2 — — 
Total derivatives before netting$417,491 $9,300 $435,682 $9,629 
Netting adjustment/cash collateral (1)
(5,424)(5,438)
Carrying value on consolidated balance sheets$3,876 $4,191 
Included in interest payable and other liabilities:
Interest rate lock commitments$1,767 $10 $— $— 
Forward sale commitments53,115 482 10,363 28 
Interest rate swaps359,106 8,279 398,536 8,543 
Futures— — 2,200 2 
Total derivatives before netting$413,988 $8,771 $411,099 $8,573 
Netting adjustment/cash collateral (1)
(359)38 
Carrying value on consolidated balance sheets$8,412 $8,611 
(1)Includes net cash collateral received of $5.1 million and $5.5 million at March 31, 2026 and December 31, 2025, 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 March 31, 2026 and December 31, 2025, the Company had liabilities of $5.4 million and $5.6 million, respectively, in cash collateral received from counterparties and receivables of $322 thousand and $122 thousand, 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 March 31,
(in thousands)20262025
Recognized in noninterest income:
Net gain on loan origination and sale activities (1)
$178 $— 
Loan servicing income (loss) (2)
(354)— 
Other (3)
(3)54 
(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 $473 thousand and zero for the quarter ended March 31, 2026 and 2025, respectively.