XML 27 R16.htm IDEA: XBRL DOCUMENT v3.24.3
DERIVATIVE FINANCIAL INSTRUMENTS
 9 Months Ended
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, 2024December 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)2024202320242023
Designated as cash flow hedges:
Junior subordinated debentures interest expense$55$131 $305$334 
Interest Rate Swaps Not Designated as Hedging Instruments
The Company may offer interest rate swap agreements to its commercial borrowers in connection with their risk management needs. The Company manages the interest rate risk associated with these contracts by entering into an equal and offsetting derivative with a third-party financial institution. While these interest rate swap agreements generally work together as an economic interest rate hedge, the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.
The interest rate swap agreements not designated as hedging instruments were as follows:
September 30, 2024December 31, 2023
(dollars in thousands)Notional
Amount		Fair
Value		Notional
Amount		Fair
Value
Fair value recorded in other assets:
Interest rate swaps with a commercial borrower counterparty$— $— $— $— 
Interest rate swaps with a financial institution counterparty80,621 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)2024202320242023
Not designated as hedging instruments:
Gross gains$5,554 $2,510 $8,375 $6,950 
Gross losses(5,554)(2,510)(8,375)(6,950)
Net gains (losses)$— $— $— $—