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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 | Derivative Instruments and Hedging Activities Interest Rate Swaps The Corporation periodically uses interest rate swap agreements to modify interest rate characteristics from variable to fixed or fixed to variable in order to reduce the impact of interest rate changes on future net interest income. The Corporation’s credit exposure on interest rate swaps includes changes in fair value and any collateral that is held by a third party. In May 2022, the Corporation entered into an interest rate swap classified as a cash flow hedge with a notional amount of $250.0 million to hedge the interest payments received on a pool of variable rate loans. Under the terms of the swap agreement, the Corporation paid a variable rate equal to the Prime Rate and received a fixed rate of 5.99% with a maturity date of May 4, 2026. On August 2, 2024, the Corporation terminated the swap. In connection with the termination, the Corporation incurred an unwind fee of $4.0 million, of which $2.7 million has been reclassified to earnings as a reduction to interest income since termination. Additionally, unamortized origination and third-party fees totaled $87 thousand at September 30, 2025. The $1.4 million will be amortized into interest income over the remaining seven months of the original swap. Credit Derivatives The Corporation has agreements with third-party financial institutions whereby the third-party financial institution enters into interest rate derivative contracts with loan customers referred to them by the Corporation. By the terms of the agreements, the third-party financial institution has recourse to the Corporation for any exposure created under each swap contract in the event the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution. These transactions represent credit derivatives and are a customary arrangement that allows the Corporation to provide access to interest rate swap transactions for customers without issuing the swap. At September 30, 2025, the Corporation had exposure to 133 variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and customers with a current notional amount of $829.4 million and remaining maturities ranging from three months to nine years. At September 30, 2025, the fair value of the Corporation's interest rate swap credit derivatives was a liability of $97 thousand. At September 30, 2025, the fair value of the swaps to the customers was a net gain of $27.0 million. At September 30, 2025, the Corporation's credit exposure related to customers totaled $4.3 million. The maximum potential payments by the Corporation to the third-party financial institution under these credit derivatives are not estimable as they are contingent on future interest rates and the agreements do not provide for a limitation of the maximum potential payment amount. Mortgage Banking Derivatives Derivative loan commitments represent agreements for delayed delivery of financial instruments in which the buyer agrees to purchase, and the seller agrees to deliver, at a specified future date, a specified instrument at a specified price or yield. The Corporation’s derivative loan commitments are commitments to sell loans secured by 1- to 4-family residential properties whose predominant risk characteristic is interest rate risk. Derivatives Tables The Corporation had no derivatives designated as hedging instruments recorded on the condensed consolidated balance sheets at September 30, 2025 or December 31, 2024.
The following table presents the notional amounts and fair values of derivatives not designated as hedging instruments recorded on the condensed consolidated balance sheets at September 30, 2025 and December 31, 2024:
|  |  | Derivative Assets |  | Derivative Liabilities
(Dollars in thousands) | Notional Amount |  | Balance Sheet Classification |  | Fair Value |  | Balance Sheet Classification |  | Fair Value
At September 30, 2025 |  |  |  |  |  |  |  |  |
Credit derivatives | $ | 829,412 |  |  |  |  | $ | — |  |  | Other liabilities |  | $ | 97 |
Interest rate locks with customers | 23,897 |  |  | Other assets |  | 304 |  |  |  |  | — |
Forward loan sale commitments | 30,227 |  |  |  |  | — |  |  | Other liabilities |  | 14 |
Total | $ | 883,536 |  |  |  |  | $ | 304 |  |  |  |  | $ | 111 |
At December 31, 2024 |  |  |  |  |  |  |  |  |
Credit derivatives | $ | 860,423 |  |  |  |  | $ | — |  |  | Other liabilities |  | $ | 67 |
Interest rate locks with customers | 23,291 |  |  | Other assets |  | 214 |  |  |  |  | — |
Forward loan sale commitments | 39,944 |  |  | Other assets |  | 12 |  |  |  |  | — |
Total | $ | 923,658 |  |  |  |  | $ | 226 |  |  |  |  | $ | 67 |
The following table presents amounts included in the condensed consolidated statements of income for derivatives designated as hedging instruments for the periods indicated:
| Statement of Income Classification |  | Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
(Dollars in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Interest rate swap—cash flow hedge—net interest payments | Interest expense |  | $ | — |  |  | $ | (575) |  |  | $ | — |  |  | $ | (3,747) |
Reclassification adjustment included in earnings (1) | Interest income |  | (577) |  |  | (370) |  |  | (1,711) |  |  | (370) |
Total net loss |  |  | $ | (577) |  |  | $ | (945) |  |  | $ | (1,711) |  |  | $ | (4,117) |
(1) Represents reclassification to earnings as a reduction to interest income of amounts included in accumulated other comprehensive income on the condensed consolidated balance sheet related to the interest rate swap terminated on August 2, 2024. The following table presents amounts included in the condensed consolidated statements of income for derivatives not designated as hedging instruments for the periods indicated:
| Statement of Income Classification |  | Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
(Dollars in thousands) | 2025 |  | 2024 |  | 2025 |  | 2024
Credit derivatives | Other noninterest income |  | $ | 347 |  |  | $ | 22 |  |  | $ | 500 |  |  | $ | 360 |
Interest rate locks with customers | Net (loss) gain on mortgage banking activities |  | (56) |  |  | (169) |  |  | 90 |  |  | (139) |
Forward loan sale commitments | Net gain (loss) on mortgage banking activities |  | 37 |  |  | 63 |  |  | (26) |  |  | 352 |
Total net gain (loss) |  |  | $ | 328 |  |  | $ | (84) |  |  | $ | 564 |  |  | $ | 573 |
The following table presents amounts included in accumulated other comprehensive (loss) income for derivatives designated as hedging instruments at September 30, 2025 and December 31, 2024:
(Dollars in thousands) | Accumulated Other Comprehensive (Loss) Income |  | At September 30, 2025 |  | At December 31, 2024
Interest rate swap—cash flow hedge (1) | Fair value, net of taxes |  | $ | (1,070) |  |  | $ | (2,422) |
Total |  |  | $ | (1,070) |  |  | $ | (2,422) |
(1) The interest rate swap was terminated on August 2, 2024. This after-tax amount will be reclassified to earnings as a reduction to interest income over the remaining 7 months of the original swap.

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