XML 47 R29.htm IDEA: XBRL DOCUMENT
v3.25.1

DERIVATIVE HEDGING INSTRUMENTS | 12 Months Ended
--- | ---
Dec. 31, 2024
DERIVATIVE HEDGING INSTRUMENTS |
DERIVATIVE HEDGING INSTRUMENTS | 21. DERIVATIVE HEDGING INSTRUMENTS The Company can use various interest rate contracts, such as interest rate swaps, caps, and floors to help manage interest rate and market valuation risk exposure, which is incurred in normal recurrent banking activities. The Company can use derivative instruments, primarily interest rate swaps, to manage interest rate risk and match the rates on certain assets by hedging the fair value of certain fixed rate debt, which converts the debt to variable rates and by hedging the cash flow variability associated with certain variable rate debt by converting the debt to fixed rates. Interest Rate Swap Agreements To accommodate the needs of our customers and support the Company’s asset/liability positioning, we may enter into interest rate swap agreements with customers and a large financial institution that specializes in these types of transactions. These arrangements involve the exchange of interest payments based on the notional amounts. The Company entered into floating rate loans and fixed rate swaps with our customers. Simultaneously, the Company entered into offsetting fixed rate swaps with this large financial institution. 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 the large financial institution 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 customers to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customers, changes in the fair value of the underlying derivative contracts offset each other and do not significantly impact the Company’s results of operations. Fees on the interest rate swap transactions are recognized as revenue when received. There were no new interest rate swap contracts executed during the year ended December 31, 2024, therefore, no fees were recognized. For the year ended December 31, 2023, the Company received $295,000 in fees on the interest rate swap transactions. These swaps are considered free-standing derivatives and are reported at fair value within other assets and other liabilities on the Consolidated Balance Sheets. Disclosures related to the fair value of the swap transactions can be found in Note 13. The following table summarizes the interest rate swap transactions that impacted the Company’s 2024 and 2023 performance (in thousands, except percentages). ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | DECEMBER 31, 2024
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | INCREASE
​ | ​ | ​ | ​ | AGGREGATE | ​ | WEIGHTED | ​ | ​ | ​ | (DECREASE)
​ | ​ | ​ | ​ | NOTIONAL | ​ | AVERAGE RATE | ​ | REPRICING | ​ | IN INTEREST
​ | ​ | HEDGE TYPE | ​ | AMOUNT | ​ | RECEIVED/(PAID) | ​ | FREQUENCY | ​ | INCOME
Swap assets |  | N/A |  | $ | 66,476 |  | 7.52 | % | Monthly |  | $ | 1,968
Swap liabilities |  | N/A | ​ |  | (66,476) |  | (7.52) |  | Monthly | ​ |  | (1,968)
Net exposure |  | ​ | ​ | $ | — |  | — | % |  | ​ | $ | —
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | DECEMBER 31, 2023
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | INCREASE
​ | ​ | ​ | ​ | AGGREGATE | ​ | WEIGHTED | ​ | ​ | ​ | (DECREASE)
​ | ​ | ​ | ​ | NOTIONAL | ​ | AVERAGE RATE | ​ | REPRICING | ​ | IN INTEREST
​ | ​ | HEDGE TYPE | ​ | AMOUNT | ​ | RECEIVED/(PAID) | ​ | FREQUENCY | ​ | INCOME
Swap assets |  | N/A |  | $ | 76,502 |  | 7.45 | % | Monthly |  | $ | 2,099
Swap liabilities |  | N/A | ​ |  | (76,502) |  | (7.45) |  | Monthly | ​ |  | (2,099)
Net exposure |  | ​ | ​ | $ | — |  | — | % |  | ​ | $ | —
​ Risk Participation Agreement ​ The Company has entered into risk participation agreements (RPAs) with the lead bank of certain commercial real estate loan arrangements. As a participating bank, the Company guarantees the performance on borrower-related interest rate swap contracts. The Company has no obligations under the RPAs unless the borrower defaults on their swap transaction with the lead bank and the swap is a liability to the borrower. In that instance, the Company has agreed to pay the lead bank a pre-determined percentage of the swap’s value at the time of default. In exchange for providing the guarantee, the Company receives an upfront fee from the lead bank. There were no new RPAs executed during the year ended December 31, 2024, therefore, no fees were recognized. For the year ended December 31, 2023, the Company received $52,000 in fees on an RPA transaction, which was recognized as revenue when received. ​ RPAs are derivative financial instruments and are recorded at fair value. These derivatives are not designated as hedges and therefore, changes in fair value are recognized in earnings with a corresponding offset within other liabilities. Disclosures related to the fair value of the RPAs can be found in Note 13. The notional amount of the risk participation agreements outstanding at December 31, 2024 and 2023 was $4.9 million and $6.8 million, respectively. ​ Interest Rate Hedges ​ The Company has entered into interest rate swaps with a total notional value of $70 million as of December 31, 2024 and 2023 in order to hedge the interest rate risk associated with certain floating-rate time deposit accounts. The hedge transactions allow the Company to add stability to interest expense and manage its exposure to interest rate movements. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed payments. ​ For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is reported in accumulated other comprehensive loss (within Shareholders’ Equity), net of tax, with a corresponding offset within other liabilities. Disclosures related to the fair value of the interest rate hedges can be found in Note 13. Amounts recorded in accumulated other comprehensive loss for the effective portion of changes in the fair value are subsequently reclassified to earnings when the hedged transaction affects earnings. The ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of the hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The Company did not recognize any hedge ineffectiveness in earnings during 2024 and 2023. ​ Amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on certain of the Company’s variable rate time deposit accounts. During the years ended December 31, 2024 and 2023, the Company had $687,000 and $460,000 of gains, respectively, which resulted in a decrease to interest expense. In the twelve months that follow December 31, 2024, the Company estimates that approximately $57,000 will be reclassified as a decrease to interest expense. This reclassified amount could differ from amounts actually recognized due to changes in interest rates. As of December 31, 2024, the maximum length of time over which forecasted transactions are hedged is approximately two years with all hedge transactions terminating in 2026. ​ The following table summarizes the effect of the effective portion of the Company’s cash flow hedge accounting on accumulated other comprehensive loss for the years ended December 31, 2024 and 2023 (in thousands). ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | YEAR ENDED DECEMBER 31, 2024
Derivatives in Cash Flow Hedging Relationships | ​ | Amount Recognized in Other Comprehensive Income (Loss) on Derivative | ​ | Location on Consolidated Statements of Operations of Reclassification from Accumulated Other Comprehensive Loss | ​ | Amount Reclassified from Accumulated Other Comprehensive Loss
Interest rate hedge | ​ | $ | 275 |  | Interest expense - Deposits |  | $ | (687)
Total | ​ | $ | 275 | ​ | ​ |  | $ | (687)
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | YEAR ENDED DECEMBER 31, 2023
Derivatives in Cash Flow Hedging Relationships | ​ | Amount Recognized in Other Comprehensive Income (Loss) on Derivative | ​ | Location on Consolidated Statements of Operations of Reclassification from Accumulated Other Comprehensive Loss | ​ | Amount Reclassified from Accumulated Other Comprehensive Loss
Interest rate hedge | ​ | $ | (446) |  | Interest expense - Deposits |  | $ | (460)
Total | ​ | $ | (446) | ​ | ​ |  | $ | (460)
​ The Company monitors and controls all derivative products with a comprehensive Board of Directors approved Hedging Policy. This policy permits a total maximum notional amount outstanding of $500 million for interest rate swaps and interest rate caps/floors. All hedge transactions must be approved in advance by the Investment Asset/Liability Committee (ALCO) of the Board of Directors, unless otherwise approved, as per the terms, within the Board of Directors approved Hedging Policy. The Company had no caps or floors outstanding at December 31, 2024 and 2023.

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