The Company enters into interest rate swap agreements to accommodate the needs of its banking customers. The Company mitigates the interest rate risk entering into these swap agreements by entering into equal and offsetting swap agreements with highly-rated third-party financial institutions. These back-to-back swap agreements are free-standing derivatives and are recorded at fair value in the Company’s consolidated balance sheets (asset positions are included in other assets and liability positions are included in other liabilities).

The following tables present the notional and fair value of interest rate swap agreements as of the dates stated.


	June 30, 2022
(Dollars in thousands)	Notional Amount		Fair Value
Interest rate swap agreement
Receive fixed/pay variable swaps	$	2,026	$	—
Pay fixed/receive variable swaps		2,026		—

	December 31, 2021
(Dollars in thousands)	Notional Amount		Fair Value
Interest rate swap agreement
Receive fixed/pay variable swaps	$	2,052	$	199
Pay fixed/receive variable swaps		2,052		(199	)

As part of its efforts to sell originated government guaranteed and conventional residential mortgages into the secondary market, the Bank had entered into $29.2 million and $64.8 million of rate lock commitments with borrowers, net of expected fallout, as of June 30, 2022 and December 31, 2021, respectively, and $22.4 million and $113.6 million of closed loan inventory waiting for sale, which were hedged by $48.5 million and $169.5 million in forward to-be-announced mortgage-backed securities as of June 30, 2022 and December 31, 2021, respectively. Mortgage derivative assets totaled $937 thousand and $1.9 million as of June 30, 2022 and December 31, 2021, respectively, and mortgage

derivative liabilities, which are included in other liabilities on the consolidated balance sheets, were $30 thousand and $75 thousand as of June 30, 2022 and December 31, 2021, respectively.