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Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments

Note 8 - Derivative Financial Instruments 

Effective May 5, 2023, the Company entered into a pay-fixed/receive-floating interest rate swap (the “Loan Pay-Fixed Swap Agreement”) for a notional amount of $150.0 million that was designated as a fair value hedge in order to hedge the risk of changes in the fair value of the fixed rate loans held for investment. This fair value hedge converts the hedged loans from a fixed rate to a synthetic floating SOFR rate. The Loan Pay-Fixed Swap Agreement will mature on May 5, 2026 and will pay a fixed coupon rate of 3.58% while receiving the overnight SOFR rate. The fair value of this hedge is recorded in either other assets or in other liabilities depending on the position of the hedge with the offset recorded in loans.

Effective April 28, 2025, the Company entered into a pay-fixed/receive-floating interest rate swap (the “Investment Pay-Fixed Swap Agreement”) for a notional amount of $19.8 million that was designated as a fair value hedge to hedge the risk of changes in the fair value of securities held in the investment portfolio. This fair value hedge converts the hedged securities from a fixed rate to a USD-SOFR-OIS Compound. The Investment Pay-Fixed Swap Agreement will mature on April 28, 2038 and will pay a fixed coupon rate of 3.67% while receiving USD-SOFR-OIS Compound. The fair value of this hedge is recorded in either other assets or in other liabilities depending on the position of the hedge with the offset recorded in investments.

For both swaps, all changes in fair value are recorded in net interest income.

 

The interest rate swaps had a total notional amount of $169.8 million and $150.0 million at June 30, 2025 and December 31, 2024, respectively. The interest rate swaps had a positive fair value of $280 thousand and $896 thousand at June 30, 2025 and December 31, 2024, respectively.