XML 37 R23.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Derivatives and Hedging Activities | 12 Months Ended
--- | ---
Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activities | Derivatives and Hedging Activities Risk Management Objective of Using Derivatives The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s existing credit derivatives result from loan participation arrangements, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company occasionally enters into credit risk participation agreements with counterparty banks to accept a portion of the credit risk related to interest rate swaps. The agreements, which are typically executed in conjunction with a participation in a loan with the same customer, allow customers to execute an interest rate swap with one bank while allowing for the distribution of the credit risk among participating members. Collateral used to support the credit risk for the underlying lending relationship is also available to offset the risk of credit risk participations and customer derivative positions. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. As part of its efforts to accomplish this objective, during the second quarter of 2020, the Company entered into certain interest rate swap agreements as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2023 and 2022, such derivatives were used to hedge the variable cash flows associated with existing variable rate liabilities. For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate liabilities. During the next twelve months, the Company estimates that an additional $1,919,000 will be reclassified as additional interest income. Non-designated Hedges The Company’s existing credit derivatives result from participations in interest rate swaps provided by external lenders as part of loan participation arrangements, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain lenders which participate in loans. For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately. Fair Values of Derivative Instruments The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statement of Financial Condition.
|  | December 31, 2023 |  | December 31, 2022
|  | Derivative Assets(1) |  | Derivative Liabilities(1) |  | Derivative Assets(1) |  | Derivative Liabilities(1)
(dollars in thousands) |  | Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value |  | Notional Amount |  | Fair Value
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps - variable rate liabilities |  | $ | 60,000 |  |  | $ | 3,914 |  |  | $ | — |  |  | $ | — |  |  | $ | 40,000 |  |  | $ | 5,144 |  |  | $ | — |  |  | $ | — |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk participation agreements |  | — |  |  | — |  |  | 11,797 |  |  | 3 |  |  | — |  |  | — |  |  | 12,036 |  |  | 9 |
Netting adjustments |  |  |  | — |  |  |  |  | — |  |  |  |  | — |  |  |  |  | — |
Net derivative amounts |  |  |  | $ | 3,914 |  |  |  |  | $ | 3 |  |  |  |  | $ | 5,144 |  |  |  |  | $ | 9 |
(1)Derivative assets and liabilities are reported at fair value in accrued interest receivable and other assets and accrued interest payable and other liabilities, respectively, in the Consolidated Statements of Financial Condition. At December 31, 2023 and 2022, accumulated unrealized gains, net of taxes, on derivative instruments totaled $2,928,000 and $3,961,000, respectively. Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income The following tables below presents the effect of cash flow hedge accounting on Accumulated Other Comprehensive (Loss) Income as of December 31, 2023 and 2022.
|  | Year Ended December 31, 2023
|  | Amount of Gain Recognized in OCI |  | Location of Gain Reclassified from AOCI into Income |  | Amount of Gain Reclassified from AOCI into Income
(dollars in thousands) |  | Total |  | Included Component |  |  | Total |  | Included Component
Derivatives in cash flows hedging relationships: |  |  |  |  |  |  |  |  |  |
Interest rate swaps - variable rate liabilities |  | $ | 878 |  |  | $ | 878 |  |  | Interest income |  | $ | 2,185 |  |  | $ | 2,185 |
|  | For the Year Ended December 31, 2022
|  | Amount of Gain Recognized in OCI |  | Location of Gain Reclassified from AOCI into Income |  | Amount of Gain Reclassified from AOCI into Income
(dollars in thousands) |  | Total |  | Included Component |  |  | Total |  | Included Component
Derivatives in cash flows hedging relationships: |  |  |  |  |  |  |  |  |  |
Interest rate swaps - variable rate liabilities |  | $ | 3,991 |  |  | $ | 3,991 |  |  | Interest income |  | $ | 572 |  |  | $ | 572 |
Effect of Cash Flow Hedge Accounting on the Consolidated Statements of Income The following tables below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income as of December 31, 2023 and 2022.
(dollars in thousands) |  | Location of Gain Reclassified from AOCI into Income |  | For the Year Ended December 31, 2023
Effects of cash flow hedging |  |  |  |
Interest rate swaps - variable rate liabilities |  | Interest income |  | $ | 2,185 |
(dollars in thousands) |  | Location of Gain Reclassified from AOCI into Income |  | For the Year Ended December 31, 2022
Effects of cash flow hedging |  |  |  |
Interest rate swaps - variable rate liabilities |  | Interest income |  | $ | 572 |
Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Income The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements of Income as of December 31, 2023 and 2022.
(dollars in thousands) |  | Location of Income Recognized on Non-designated Hedges |  | For the Year Ended December 31, 2023
Effects of non-designated hedges |  |  |  |
Risk participation agreements |  | Other noninterest income |  | $ | 5 |
(dollars in thousands) |  | Location of Income Recognized on Non-designated Hedges |  | For the Year Ended December 31, 2022
Effects of non-designated hedges |  |  |  |
Risk participation agreements |  | Other noninterest income |  | $ | 74 |
Credit-risk-related Contingent Features The Company has agreements with each of its derivative counterparties that contain a provision to the effect that, if the Company (either) defaults (or is capable of being declared in default) on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. The Company has agreements with certain of its derivative counterparties that contain a provision to the effect that, if the Company fails to maintain its status as a well or adequately capitalized institution, then the Company could be required to post additional collateral. As of December 31, 2023, there were no derivatives with credit-risk-related contingent features in a net liability position. Such derivatives are measured at fair value, which includes accrued interest but excludes any adjustment for nonperformance risk. If the Company had breached any provisions at December 31, 2023, it would not have been required to settle any obligations under the agreements since the termination value was $0.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration