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DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended
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Sep. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments are negotiated contracts entered into by two issuing counterparties containing specific agreement terms, including the underlying instrument, amount, exercise price, and maturities. The derivatives accounting guidance requires that the Company recognize all derivative financial instruments as either assets or liabilities at fair value in the consolidated balance sheets. The Company may utilize interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. Interest Rate Swaps Designated as Cash Flow Hedges The Company designated certain interest rate swap agreements as cash flow hedges on variable-rate borrowings. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on interest rate swaps designated as cash flow hedging instruments, net of tax, is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The interest rate swap agreements designated as cash flow hedges were as follows:
| September 30, 2024 |  | December 31, 2023
(dollars in thousands) | Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value
Fair value recorded in other assets | $ | 7,000 |  |  | $ | 71 |  |  | $ | 17,000 |  |  | $ | 322 |
As of September 30, 2024, the interest rate swap agreement designated as a cash flow hedge matures in April 2025. As of September 30, 2024 and December 31, 2023, counterparties had cash pledged and held on deposit by the Company of $0.4 million and $0.6 million, respectively. The effect of interest rate swap agreements designated as cash flow hedges on the consolidated statements of income was as follows:
Location of gross gain (loss) reclassified from accumulated other comprehensive income (loss) to income |  | Amounts of gross gain (loss) reclassified from accumulated other comprehensive income (loss) |  | Amounts of gross gain (loss) reclassified from accumulated other comprehensive income (loss)
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Designated as cash flow hedges: |  |  |  |  |  |  |  |  |  |
Junior subordinated debentures interest expense |  | $ | 55 |  | $ | 131 |  |  | $ | 305 |  | $ | 334 |  |  |
Interest Rate Swaps Not Designated as Hedging Instruments The Company may offer interest rate swap agreements to its commercial borrowers in connection with their risk management needs. The Company manages the interest rate risk associated with these contracts by entering into an equal and offsetting derivative with a third-party financial institution. While these interest rate swap agreements generally work together as an economic interest rate hedge, the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred. The interest rate swap agreements not designated as hedging instruments were as follows:
| September 30, 2024 |  | December 31, 2023
(dollars in thousands) | Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value
Fair value recorded in other assets: |  |  |  |  |  |  |
Interest rate swaps with a commercial borrower counterparty | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest rate swaps with a financial institution counterparty | 80,621 |  |  | 3,651 |  |  | 94,497 |  |  | 6,227 |
Total fair value recorded in other assets | $ | 80,621 |  |  | $ | 3,651 |  |  | $ | 94,497 |  |  | $ | 6,227 |
Fair value recorded in other liabilities: |  |  |  |  |  |  |
Interest rate swaps with a commercial borrower counterparty | $ | 80,621 |  |  | $ | (3,651) |  |  | $ | 94,497 |  |  | $ | (6,227) |
Interest rate swaps with a financial institution counterparty | — |  |  | — |  |  | — |  |  | — |
Total fair value recorded in other liabilities | $ | 80,621 |  |  | $ | (3,651) |  |  | $ | 94,497 |  |  | $ | (6,227) |
As of September 30, 2024, the interest rate swap agreements not designated as hedging instruments had contractual maturities between 2027 and 2035. The effect of interest rate contracts not designated as hedging instruments recognized in other noninterest income on the consolidated statements of income was as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(dollars in thousands) | 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Not designated as hedging instruments: |
Gross gains | $ | 5,554 |  |  | $ | 2,510 |  |  | $ | 8,375 |  |  | $ | 6,950 |  |  |
Gross losses | (5,554) |  |  | (2,510) |  |  | (8,375) |  |  | (6,950) |  |  |
Net gains (losses) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  |

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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