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Note 10 - Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2025
Notes to Financial Statements |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
10. | Derivative Financial Instruments
Fair Value Hedges The Company uses interest rate swaps to convert certain long term fixed rate loans to floating rates to hedge interest rate risk exposure. The Company uses hedge accounting in accordance with ASC 815, with the unrealized gains and losses, representing the change in fair value of the derivative and the change in fair value of the risk being hedged on the related loan, being recorded in the consolidated statements of income. The ineffective portions of the unrealized gains or losses, if any, are recorded in interest income and interest expense in the consolidated statements of income. During 2023, the Company executed an interest rate swap designated as a fair value hedge with an original notional amount of $25.0 million to convert certain long-term fixed rate 1-4 family loans to floating rates to hedge interest rate risk exposure using the portfolio layer method. The portfolio layer method allows the Company to designate as the hedged item a stated amount of the assets that are not expected to be affected by prepayments, defaults and other factors that would affect the timing and amount of cash flow. The fair value portfolio level basis adjustment on the hedged loans has not been attributed to the individual loans on the consolidated balance sheet. The table below identifies the notional amount, fair value and balance sheet category of the Company's interest rate swaps at September 30, 2025, and December 31, 2024 (in thousands):
|  | Notional Amount |  |  | Fair Value |  | Balance Sheet Category
September 30, 2025 |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 8,221 |  |  | $ | 581 |  | Other assets
Interest rate swaps |  |  | 25,000 |  |  |  | (175 | ) | Other liabilities
December 31, 2024 |  |  |  |  |  |  |  |  |
Interest rate swaps |  | $ | 8,531 |  |  | $ | 909 |  | Other assets
Interest rate swaps |  |  | 25,000 |  |  |  | (161 | ) | Other liabilities
The table below identifies the carrying amount of the hedged assets and cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged assets that are designated as a fair value hedge accounting relationship at September 30, 2025, and December 31, 2024 (in thousands):
|  |  |  |  |  |  | Cumulative Amount of Fair Value |
| Location in the consolidated |  | Carrying Amount of |  |  | Hedging Adjustment Included in |
| balance sheet |  | the Hedged Assets |  |  | Carrying Amount of Hedged Assets |
September 30, 2025 |  |  |  |  |  |  |  |  |
Interest rate swaps | Loans receivable, net |  | $ | 49,062 |  |  | $ | (405 | )
December 31, 2024 |  |  |  |  |  |  |  |  |
Interest rate swaps | Loans receivable, net |  | $ | 52,567 |  |  | $ | (748 | )
Back-to-Back Loan Swaps The Company has interest rate swap loan relationships with customers to assist them in managing their interest rate risk. Upon entering into these loan swaps, the Company enters into offsetting positions with counterparties in order to minimize interest rate risk. These back-to-back loan swaps qualify as free standing financial derivatives with the fair values reported in other assets and other liabilities on the consolidated balance sheets. Any gains and losses on these back-to-back swaps are recorded in noninterest income on the consolidated statements of income, and for the three and nine months ended September 30, 2025, and September 30, 2024, no gain or loss was recognized. The table below identifies the balance sheet category and fair values of the derivative instruments designated as loan swaps at September 30, 2025, and December 31, 2024 (in thousands):
|  |  |  |  |  |  |  |  |  |  | Weighted Average |  |  | Weighted Average |
|  | Notional Amount |  |  | Fair Value |  | Balance Sheet Category |  | Receive Rate |  |  | Pay Rate |
September 30, 2025 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer interest rate swaps |  | $ | 8,811 |  |  | $ | 234 |  | Other assets |  |  | 6.19 | % |  |  | 5.98 | %
Customer interest rate swaps |  |  | 8,811 |  |  |  | (234 | ) | Other liabilities |  |  | 5.98 | % |  |  | 6.19 | %
December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer interest rate swaps |  | $ | 12,258 |  |  | $ | 87 |  | Other assets |  |  | 6.48 | % |  |  | 5.81 | %
Customer interest rate swaps |  |  | 12,258 |  |  |  | (87 | ) | Other liabilities |  |  | 5.81 | % |  |  | 6.48 | %
The Company was required to pledge $1.1 million and $1.3 million of securities as collateral for these derivative financial instruments at September 30, 2025, and December 31, 2024, respectively. The Company's counterparties were not required to pledge collateral at September 30, 2025 and December 31, 2024.

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