DERIVATIVES

12 Months Ended

Dec. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

As part of the Corporation's product offerings, the Corporation acts as an interest rate swap counterparty for certain commercial borrowers in the normal course of servicing our customers. The interest rate swap agreements are free-standing derivatives and are recorded at fair value in the Corporation's Consolidated Balance Sheets. The Corporation manages its exposure to such interest rate swaps by entering into corresponding and offsetting interest rate swaps with third parties which mirror the terms of the interest rate swaps entered into with the commercial borrowers. These positions directly offset each other and the Corporation's exposure is the fair value of the derivatives due to potential changes in credit risk of our commercial borrowers and third parties. The Corporation also enters into risk participation agreements with lead banks on commercial loans in which it participates. The Corporation receives an upfront fee for participating in the credit exposure of the interest rate swap associated with the commercial loan in which it is a participant and the fee received is recognized immediately in other non-interest income. The Corporation is exposed to its share of the credit loss equal to the fair value of the interest rate swap in the event of nonperformance by the counterparty of the interest rate swap. The Corporation determines the fair value of the credit loss exposure using an estimated credit default rate based on the historical performance of similar assets.

The notional amount of an interest rate swap does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreement. As of December 31, 2024, the Corporation held derivatives not designated as hedging instruments with a total notional amount of $703.2 million. Derivatives not designated as hedging instruments included back-to-back interest rate swaps of $680.2 million, consisting of $340.1 million of interest rate swaps with commercial borrowers and an additional $340.1 million of offsetting interest rate swaps with third-party counterparties on substantially the same terms, and risk participation agreements with lead banks of $23.0 million. Free-standing derivatives are not designated as hedges for accounting purposes and are therefore recorded at fair value with changes in fair value recorded in other non-interest income.

Accrued interest receivable and payable related to these swaps of $0.5 million and $0.7 million, respectively, is included in other assets and liabilities in the Corporation's Consolidated Balance Sheets as of December 31, 2024 and 2023.

The following table presents information regarding derivative financial instruments, as of December 31:


2024
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received	Weighted Average Contract Pay Rate	Fair Value
Interest rate swap agreements on loans with commercial loan customers	51	$	340,117	5.5	4.53%	6.37%	$	(23,411)
Interest rate swap agreements with third-party counter-parties	51	340,117		5.5	6.37%	4.53%	23,395
Risk participation agreements	5	22,988		7.8			(6)
Total	107	$	703,222				$	(22)


2023
Derivatives not designated as hedging instruments:	Number of Instruments	Notional Amount		Weighted Average Maturity (in years)	Weighted Average Interest Rate Received		Weighted Average Contract Pay Rate		Fair Value
Interest rate swap agreements on loans with commercial loan customers	47	$	315,526	6.6	4.36	%	7.36	%	$	(19,355)
Interest rate swap agreements with third-party counter-parties	47	315,526		6.6	7.36	%	4.36	%	19,316
Risk participation agreements	4	16,432		7.8					—
Total	98	$	647,484						$	(39)

There was an immaterial off-balance sheet exposure for the risk participation agreements as of December 31, 2024, and December 31, 2023.

Amounts included in the Consolidated Statements of Income related to derivatives not designated as hedging instruments were as follows:


	Years Ended December 31,
Derivatives not designated as hedging instruments:	2024		2023
Interest rate swap agreements with commercial loan customers:
Unrealized (loss) recognized in non-interest income	$	(4,056)	$	7,081
Interest rate swap agreements with third-party counter-parties:
Unrealized gain recognized in non-interest income	4,079		(7,065)
Risk participation agreements:
Unrealized gain (loss) recognized in non-interest income	(6)		—
Unrealized gain (loss) recognized in non-interest income	$	17	$	16