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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location

The following table presents the amounts recorded in the consolidated balance sheets related to the cumulative adjustments for fair value hedges (in thousands):

						Amortized Cost of Hedged Assets (2)															Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Items
						December 31, 2024									December 31, 2023						December 31, 2024						December 31, 2023
Securities AFS (1) (3)						$	903,168								$	487,486					$	16,617					$	13,642
Loans (1) (3)						265,845									—						1,545						—

1) Amounts include the amortized cost basis of closed portfolios used to designate hedging relationships under the portfolio layer method. The hedged item is a layer of the closed portfolio which is expected to be remaining at the end of the hedging relationship. As of December 31, 2024, the amortized cost basis of the closed MBS portfolio used in these hedging relationships was $558.5 million, the amount of the designated hedged items were $134.0 million and the cumulative amount of fair value hedging adjustments associated with these MBS hedging relationships was a gain of $1.1 million. As of December 31, 2024, the amortized cost basis of the closed loan portfolio used in these hedging relationships was $265.8 million, the amount of the designated hedged items were $155.0 million and the cumulative amount of fair value hedging adjustments associated with these loan hedging relationships was a gain of $1.5 million.

2) Excludes fair value hedging adjustments.

3) Excluded from the table above are the cumulative amount of fair value hedging adjustments for securities AFS and loans for which hedge accounting has been discontinued in the amounts of a loss of $4.8 million and a loss of $3.7 million, respectively, at December 31, 2024. There were no discontinued hedges as of December 31, 2023.

Schedule of derivative instruments in statement of financial position, fair value

The following tables present the notional and estimated fair value amount of derivative positions outstanding (in thousands):

						December 31, 2024																		December 31, 2023
						Estimated Fair Value																		Estimated Fair Value
						Notional Amount (1)						Asset Derivative						Liability Derivative						Notional Amount (1)						Asset Derivative						Liability Derivative
Derivatives designated as hedging instruments
Interest rate contracts:
Swaps-Cash Flow Hedge-Financial institution counterparties						$	790,000					$	12,625					$	1,078					$	1,010,000					$	24,223					$	6,910
Swaps-Fair Value Hedge-Financial institution counterparties						602,950						18,331						217						453,440						13,658						16
Derivatives designated as non-hedging instruments
Interest rate contracts:
Swaps-Financial institution counterparties						408,749						21,534						1,321						248,073						18,249						509
Swaps-Customer counterparties						408,749						1,321						21,534						248,073						509						18,249
Gross derivatives												53,811						24,150												56,639						25,684
Offsetting derivative assets/liabilities												(2,616)						(2,616)												(7,435)						(7,435)
Cash collateral received/posted												(49,874)						—												(46,760)						—
Net derivatives included in the consolidated balance sheets (2)												$	1,321					$	21,534											$	2,444					$	18,249

(1)    Notional amounts, which represent the extent of involvement in the derivatives market, are used to determine the contractual cash flows required in accordance with the terms of the agreement. These amounts are typically not exchanged, significantly exceed amounts subject to credit or market risk and are not reflected in the consolidated balance sheets.

(2)    Net derivative assets are included in other assets and net derivative liabilities are included in other liabilities on the consolidated balance sheets. Included in the fair value of net derivative assets and net derivative liabilities are credit valuation adjustments reflecting counterparty credit risk and our credit risk. At December 31, 2024, we had no credit exposure related to interest rate swaps with financial institutions and $1.3 million related to interest rate swaps with customers. At December 31, 2023, we had $1.9 million credit exposure related to interest rate swaps with financial institutions and $509,000 related to interest rate swaps with customers. The credit risk associated with customer transactions is partially mitigated as these are generally secured by the non-cash collateral securing the underlying transaction being hedged.

^[1]

Weighted average maturity and interest rates on risk management interest rate swaps

The summarized expected weighted average remaining maturity of the notional amount of interest rate swaps and the weighted average interest rates associated with the amounts expected to be received or paid on interest rate swap agreements are presented below (dollars in thousands). Variable rates received on fixed pay swaps are based on overnight SOFR rates in effect at December 31, 2024 and December 31, 2023:

						December 31, 2024																								December 31, 2023
												Weighted Average																								Weighted Average
						Notional Amount						Remaining Maturity  (in years)						Receive Rate						Pay Rate						Notional Amount						Remaining Maturity  (in years)						Receive Rate						Pay Rate
Swaps-Cash Flow hedge
Financial institution counterparties						$	790,000					1.6						4.60		%				2.62		%				$	1,010,000					2.3						5.44		%				2.65		%
Swaps-Fair Value hedge
Financial institution counterparties						602,950						3.0						4.76		%				3.33		%				453,440						5.4						5.37		%				3.13		%
Swaps-Non-hedging
Financial institution counterparties						408,749						5.4						4.65		%				3.39		%				248,073						7.4						5.84		%				2.88		%
Customer counterparties						408,749						5.4						3.39		%				4.65		%				248,073						7.4						2.88		%				5.84		%

Derivative Instruments, Gain (Loss)

The following table presents amounts included in the consolidated statements of income related to interest rate swap agreements (in thousands):

			Years Ended December 31,
			2024						2023						2022
Derivatives designated as hedging instruments
Swaps-Cash Flow hedge
Gain (loss) included in interest expense on deposits			$	13,833					$	15,225					$	3,575
Gain (loss) included in interest expense on FHLB borrowings			8,209						8,432						63
Gain (loss) included in interest expense on other borrowings			—						887						—
			22,042						24,544						3,638
Swaps-Fair Value hedge
Gain (loss) included in interest income on tax-exempt investment securities			8,646						12,834						422
Gain (loss) included in interest income on MBS			1,167						—						—
Gain (loss) included in interest income on loans			999						—						—
Derivatives designated as non-hedging instruments
Swaps-Non-hedging
Other noninterest income			1,458						352						472

[1] Net derivative assets are included in other assets and net derivative liabilities are included in other liabilities on the consolidated balance sheets. Included in the fair value of net derivative assets and net derivative liabilities are credit valuation adjustments reflecting counterparty credit risk and our credit risk. At December 31, 2024, we had no credit exposure related to interest rate swaps with financial institutions and $1.3 million related to interest rate swaps with customers. At December 31, 2023, we had $1.9 million credit exposure related to interest rate swaps with financial institutions and $509,000 related to interest rate swaps with customers. The credit risk associated with customer transactions is partially mitigated as these are generally secured by the non-cash collateral securing the underlying transaction being hedged.

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Tabular disclosure of the location and amount of derivative instruments and nonderivative instruments designated as hedging instruments reported before netting adjustments, and the amount of gain (loss) on derivative instruments and nonderivative instruments designated and qualified as hedging instruments.

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