Derivatives

9 Months Ended

Sep. 30, 2026

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Note 6 – Derivatives

Interest Rate Contracts

The Company offers interest rate swaps when requested by customers to allow them to hedge the risk of rising interest rates on their variable rate loans. Upon entering into these swaps, the Company enters into offsetting positions with counterparties in order to minimize the interest rate risk. These back-to-back swaps are freestanding financial derivatives with the fair values reported in Other assets and Other liabilities. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under the arrangements for financial statement presentation purposes. Gains and losses on these back-to-back swaps, which offset, are recorded through Noninterest income.

Cash Flow Hedges

The Company periodically enters into contracts to mitigate exposure to the variability of future cash flows due to changes in interest rates on certain assets and liabilities. During the fourth quarter of 2025, the Company entered into three interest rate caps, each with a notional amount of $100.0 million, maturing in November 2030 and December 2030. The Company has designated these instruments as cash flow hedges and considers them highly effective in offsetting changes in forecasted cash flows attributable to interest rate movements on certain liabilities. Changes in the fair value of the interest rate caps are recorded in AOCI and subsequently reclassified into earnings when the hedged cash flows affect earnings. Premiums paid for the interest rate caps are amortized into interest income over the term of the hedges.

During the third quarter of 2026, the Company entered into a $200.0 million receive-fixed interest rate swap with an embedded interest rate cap and designated the instrument as a cash flow hedge of forecasted interest receipts on variable-rate assets indexed to one-month SOFR. The hedge, which matures in August 2029, is intended to reduce the impact of declining interest rates on future earnings.

For the three and nine months ended September 30, 2026, the Company recognized gains of $5.3 million and $6.7 million, respectively, in Other comprehensive income related to its cash flow hedges. During the same periods, the Company reclassified $0.1 million and $0.4 million, respectively, from AOCI into interest income as the hedged forecasted transactions affected earnings. The Company expects to reclassify approximately $1.0 million from AOCI into interest income during the next twelve months related to these agreements, which includes the premiums paid.

Fair Value Hedges

The Company periodically enters into interest rate swap contracts to hedge the risk of changes in fair value of the AFS securities portfolio due to changes in SOFR. The Company considers these derivatives to be highly effective at offsetting changes in interest rates and assesses the effectiveness on a quarterly basis. The effect of changes in interest rates on the fair value of these derivative contracts is recognized in Other comprehensive income. These derivative instruments are primarily for risk management purposes. There were no securities fair value hedges during the three and nine months ended September 30, 2026. For the nine months ended September 30, 2025, the Company recognized through Other comprehensive income, net losses of $0.4 million, and reclassified net losses of $0.5 million out of AOCI into interest income.

The Company has entered into interest rate swap contracts to hedge the risk of changes in the fair value of a pool of residential mortgages due to changes in SOFR. These fair value hedges utilize the portfolio layer method. The Company considers these derivatives to be highly effective at offsetting changes in interest rates and assesses the effectiveness on a quarterly basis. The effect of changes in interest rates on the fair value of these derivative contracts is recognized in interest income. These derivative instruments are primarily for risk management purposes. For each of the three and nine months ended September 30, 2026, the Company recognized gains through interest income of $0.1 million. For the three and nine months ended September 30, 2025, the Company recognized losses through interest income of $0.5 million and $0.4 million, respectively.

Economic Hedges

The Company enters into IRLCs to originate mortgage loans for which the interest rate on the loan is determined prior to funding, forward loan sale commitments for the future delivery of these mortgage loans for sale on the secondary market, and forward TBA mortgage-backed securities, all of which are classified as freestanding derivatives. For the three and nine months ended September 30, 2026, the Company recognized losses of $0.2 million and gains of $0.3 million, respectively, in Mortgage banking income in the Consolidated Statements of Income related to these non-hedging derivative financial instruments.

(In thousands)	Notional Amount		Fair Value		Balance Sheet Category
September 30, 2026
Interest rate contracts1	$	1,390,910	$	39,850	Other assets and Other liabilities
Residential mortgage fair value hedges	250,000		580		Other assets
Interest rate cash flow hedges	500,000		9,358		Other assets
IRLCs	7,673		123		Other liabilities
Forward TBA mortgage-backed securities	7,149		149		Other assets
Forward loan sale commitments	2,019		30		Other liabilities
December 31, 2025
Interest rate contracts1	$	1,152,442	$	25,009	Other assets and Other liabilities
Residential mortgage fair value hedges	400,000		380		Other liabilities
Interest rate caps cash flow hedges	300,000		3,064		Other assets
IRLCs	5,106		495		Other assets
Forward TBA mortgage-backed securities	5,122		94		Other liabilities
Forward loan sale commitments	285		51		Other assets
1Interest rate contracts include risk participation agreements with notional amounts of $131.4 million and $65.3 million at September 30, 2026, and December 31, 2025, respectively with nominal fair value in both periods.

The following table presents amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges.

	Carrying amount of the hedged items				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items
(In thousands)	September 30, 2026		December 31, 2025		September 30, 2026		December 31, 2025
Loans, net1	$	1,420,491	$	1,043,345	$	(577)	$	559
1These amounts represent the amortized cost basis of closed portfolios used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At September 30, 2026, the portfolio layer method was $250 million, of which $250 million was designated as hedged. At December 31, 2025, the portfolio layer method was $400 million, of which $400 million was designated as hedged.