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Note 10 - Derivatives and Hedging Activities | 9 Months Ended
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Sep. 30, 2025
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] | 10. DERIVATIVES AND HEDGING ACTIVITIES We are exposed to certain risks arising from both business operations and economic conditions. We principally manage the exposure to a wide variety of operational risks through core business activities. Economic risks, including interest rate, liquidity and credit risk, are primarily administered via the amount, sources and duration of assets and liabilities. Derivative financial instruments may also be used to assist in managing economic risks. Derivatives not designated as hedges are not speculative and result from a service provided to certain commercial loan borrowers. We execute interest rate swaps with commercial banking customers desiring longer-term fixed rate loans, while simultaneously entering into interest rate swaps with correspondent banks to offset the impact of the interest rate swaps with the commercial banking customers. The net result is the desired floating rate loans and a minimization of the risk exposure of the interest rate swap transactions. As the interest rate swaps associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the commercial banking customer interest rate swaps and the offsetting interest rate swaps with the correspondent banks are recognized directly to earnings. Fees paid to us by the correspondent banks are recognized as noninterest income on our Consolidated Statements of Income on the settlement date. The fair values of derivative instruments as of September 30, 2025, are reflected in the following table.
|  |  |  |  | Balance Sheet |  |  |  |
(Dollars in thousands) |  | Notional Amount |  | Location |  | Fair Value |
Derivative Assets |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 967,503 |  | Other Assets |  | $ | 25,103 |
Derivative Liabilities |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 965,476 |  | Other Liabilities |  |  | 25,515 |
The effect of interest rate swaps that are not designated as hedging instruments resulted in expense of $0.2 million during the nine months ended September 30, 2025 that was recorded in other noninterest expense on our Consolidated Statements of Income. We have master netting arrangements with our correspondent banks that allow us to net receivables and payables. The netting agreement also allows us to net related cash collateral received and transferred up to the fair value exposure amount. We have elected to not offset these transactions on the Consolidated Balance Sheets. The netting of derivative instruments as of September 30, 2025 is presented in the following table.
|  |  |  |  |  | Gross Amounts Not Offset on the Consolidated Balance Sheet |
(Dollars in thousands) |  | Net Amounts Recognized |  |  | Financial Instruments |  |  | Cash Collateral Received or Posted |  |  | Net Amount |
Derivative Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 25,103 |  |  | $ | 10,821 |  |  | $ | 1,710 |  |  | $ | 12,572 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 25,515 |  |  |  | 10,837 |  |  |  | 6,420 |  |  |  | 8,258 |
The fair values of derivative instruments as of December 31, 2024, are reflected in the following table.
|  |  |  |  | Balance Sheet |  |  |  |
(Dollars in thousands) |  | Notional Amount |  | Location |  | Fair Value
Derivative Assets |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 866,157 |  | Other Assets |  | $ | 26,793 |
Derivative Liabilities |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 864,130 |  | Other Liabilities |  |  | 27,050 |
The effect of interest rate swaps that are not designated as hedging instruments resulted in expense of $0.1 million during the nine months ended September 30, 2024 that was recorded in other noninterest expense on our Consolidated Statements of Income. The netting of derivative instruments as of December 31, 2024 is presented in the following table.
|  |  |  |  |  | Gross Amounts Not Offset on the Consolidated Balance Sheet |
(Dollars in thousands) |  | Net Amounts Recognized |  |  | Financial Instruments |  |  | Cash Collateral Received or Posted |  |  | Net Amount |
Derivative Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 26,793 |  |  | $ | 3,064 |  |  | $ | 19,040 |  |  | $ | 4,689 |
Derivative Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps |  |  | 27,050 |  |  |  | 2,915 |  |  |  | 1,640 |  |  |  | 22,495 |

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