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Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. The Company’s existing credit derivatives result from participation in loan participation arrangements, and therefore, are not used to manage interest rate risk in the Company’s assets or liabilities.

Non-designated Hedges

Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company has entered into risk participation agreements with other banks in commercial loan arrangements, where participating banks guarantee performance on borrower related interest rate swap contracts. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings. As of December 31, 2022 the Company has entered into a risk participation-in agreement with a notional value of $7.5 million. Under a risk participation-in agreement, a derivative liability, the Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank.

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated statements of condition as of December 31, 2022 and December 31, 2021. The Company began entering into derivative transactions in the second quarter of 2022.

Derivative Liabilities
			December 31, 2022
			Notional			Balance Sheet			Fair
(In thousands)			Amount			Location			Value
Derivatives not designated as hedging instruments
Risk Participation Agreement			7,499			Other Liabilities			$	21
Total derivatives not designated as hedging instruments									$	21

Tabular Disclosure of the Effect of Derivatives Not Designated as Hedging Instruments on the Income statement

The table below presents the effect of the Company's derivative financial instruments that are not designated as hedging instruments on the consolidated statements of income for the year-ended December 31, 2022.

Effect of Derivatives Not Designated as Hedging Instruments on the Statement of Financial Performance
Derivatives Not Designated as Hedging Instruments under Subtopic 815-20			Location of Gain or (Loss) Recognized in Income on Derivative			Amount of Gain or (Loss) Recognized in Income on Derivative			Amount of Gain or (Loss) Recognized in Income on Derivative
(In thousands)						Three Months Ended December 31, 2022			Year Ended December 31, 2022
Risk Participation Agreement			Other income / (expense)			$	13		$	57
Total						$	13		$	57

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- References

No definition available.

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- Definition

The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-URI https://asc.fasb.org/topic&trid=2229140

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 5
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008

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