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Derivatives | 9 Months Ended
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Sep. 30, 2022
Derivative Instruments And Hedging Activities Disclosure [Abstract] |
Derivatives | (14) Derivatives To accommodate customer need and to support the Company’s asset/liability positioning, on occasion we enter into interest rate swaps with a customer and a bank counterparty. The interest rate swaps are free-standing derivatives and are recorded at fair value. The Company enters into a floating rate loan and a fixed rate swap with our customer. Simultaneously, the Company enters into an offsetting fixed rate swap with a bank counterparty. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay a bank counterparty the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. These transactions allow the Company’s customer to effectively convert variable rate loans to fixed rate loans. Since the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. None of the Company’s derivatives are designated as hedging instruments. The Company presents derivative positions net on the balance sheet for customers and financial institution counterparty positions subject to master netting arrangements. The following table reflects the derivatives recorded on the balance sheet:
|  | September 30, 2022 |  |  | December 31, 2021 |
|  | Notional Amount |  |  | Fair Value |  |  | Notional Amount |  |  | Fair Value |
Included in other assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps with loan customers in an asset position |  | $ | — |  |  | $ | — |  |  | $ | 173,491 |  |  | $ | 11,072 |
Counterparty positions with financial institutions in an asset position |  |  | 215,383 |  |  |  | 18,448 |  |  |  | — |  |  |  | — |
Total included in other assets |  |  |  |  |  | $ | 18,448 |  |  |  |  |  |  | $ | 11,072 |
Included in accrued expenses and other liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps with loan customers in a liability position |  | $ | 215,383 |  |  | $ | 18,448 |  |  | $ | 71,327 |  |  | $ | 1,628 |
Counterparty positions with financial institutions in a liability position |  |  | — |  |  |  | — |  |  |  | 244,818 |  |  |  | 9,444 |
Total included in accrued expenses and other liabilities |  |  |  |  |  | $ | 18,448 |  |  |  |  |  |  | $ | 11,072 |
Gross notional positions with customers |  | $ | 215,383 |  |  |  |  |  |  | $ | 244,818 |  |  |  |  |
Gross notional positions with financial institution counterparties |  | $ | 215,383 |  |  |  |  |  |  | $ | 244,818 |  |  |  |  |
The presentation for derivatives for the current and prior periods was revised to present derivative positions net for customer positions. Fair value of swap assets and liabilities for the prior period was not impacted. The effect of swap fair value changes on the Consolidated Statement of Operations are as follows:
|  | Location of |  | Amount of Gain or (Loss) |
Derivatives |  | Gain or (Loss) |  | Recognized in |
Not Designated |  | Recognized in |  | Income on Derivatives |
as Hedging Instruments |  | Income on Derivative |  | September 30, 2022 |  |  | September 30, 2021 |
Interest rate swaps related to customer loans |  | Other income |  | $ | — |  |  | $ | 64 |
Total |  |  |  | $ | — |  |  | $ | 64 |
The Company monitors and controls all derivative products with a comprehensive Board of Director approved commercial loan swap policy. All interest rate swap transactions must be approved in advance by the Lenders Loan Committee or the Directors Loan Committee of the Board of Directors. The Company classifies changes in fair value of derivatives with “Other” in the Consolidated Statements of Operation. At September 30, 2022, the Company did not have any cash or securities pledged for collateral on its interest rate swaps with third party financial institutions. At December 31, 2021, the Company had cash and securities with a fair value of $10,780 and $509, respectively, pledged as collateral. Cash pledged for collateral on interest rate swaps is classified as restricted cash on the Consolidated Balance Sheet.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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