The Company periodically enters into interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Cash Flow Hedges: In 2023, the Company executed an interest rate swap with a notional amount that was designated as a cash flow hedge of certain FHLB borrowings. The swap hedged the benchmark index (SOFR) with a receive float/pay fixed swap for the period March 21, 2023 through April 1, 2026. Upon maturity on April 1, 2026, the interest rate swap was not renewed. The notional amount of this interest rate swap as of June 30, 2026 and December 31, 2025 was $0.0 million and $50.0 million.

In 2025, the Company executed interest rate swaps with notional amounts that were designated as cash flow hedges of certain variable rate interest-bearing deposits. The swaps hedge the benchmark index (Federal funds) with a receive float/pay fixed swap with various maturities over a four-year period and total notional amount of $200.0 million as of June 30, 2026. As of June 30, 2026, these hedges were determined to be effective, and the Company expects the hedge to remain effective during the remaining terms of the contracts.

Fair Value Hedges: In 2025, the Company entered into interest rate swaps with notional amounts that were designated as fair value hedges of closed pools of fixed-rate loans. The instruments are designated as fair value hedges as the changes in the fair value of the interest rate swap are expected to offset changes in the fair value of the hedged item. The swap hedges the benchmark index (Federal funds) with a receive float/pay fixed swap with various maturities over a five-year period and total notional amount of $200.0 million as of June 30, 2026. As of June 30, 2026, this hedge was determined to be effective, and the Company expects the hedge to remain effective during the remaining terms of the contracts.

Derivatives Not Designated as Hedges: The Company periodically enters into interest rate swaps to offset interest rate exposure with its commercial and residential variable rate loan clients. Clients with variable rate loans may choose to enter into an interest rate swap to hedge the interest rate risk on the loan and effectively pay a fixed rate payment. The Company will simultaneously enter into an interest rate swap on the same underlying loan and notional amount to hedge risk on the fixed rate loan. The notional amount of interest rate swaps with its loan customers as of June 30, 2026 and December 31, 2025 was $65.5 million and $70.7 million, respectively. While these derivatives represent economic hedges, they do not qualify as hedges for accounting purposes.

The Company presents derivative position gross on the balance sheet. The following reflects the fair value of derivatives recorded on the Condensed Consolidated Balance Sheets as of the dates noted:


	As of June 30, 2026				As of December 31, 2025
(dollars in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in other assets:
Derivatives designated as hedges:
Interest rate swaps – cash flow hedge	$	200,000	$	2,083	$	—	$	—
Interest rate swaps – fair value hedge	200,000		1,899		—		—

Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans	65,474		659		70,703		952

Total included in other assets			$	4,641			$	952

Included in other liabilities:
Derivatives designated as hedges:
Interest rate swaps – cash flow hedge	$	—	$	—	$	250,000	$	777
Interest rate swaps – fair value hedge	—		—		200,000		719

Derivatives not designated as hedging instruments:
Interest rate swaps related to customer loans	65,474		684		70,703		976

Total included in other liabilities			$	684			$	2,472


		Three Months Ended June 30,
		2026				2025
(dollars in thousands)	Location of Gain (Loss) Reclassified from OCI into Income	Amount of Gain (Loss) Recognized in OCI on Derivative		Amount of Gain (Loss) Reclassified from OCI into Income		Amount of Gain (Loss) Recognized in OCI on Derivative		Amount of Gain (Loss) Reclassified from OCI into Income
Interest rate swap - FHLB borrowings	Interest expense - Other borrowed funds	$	(1)	$	(1)	$	66	$	60
Interest rate swaps - Variable rate deposits	Interest expense - Deposits	1,331		121		—		—
		$	1,330	$	120	$	66	$	60


		Six Months Ended June 30,
		2026				2025
(dollars in thousands)	Location of Gain (Loss) Reclassified from OCI into Income	Amount of Gain (Loss) Recognized in OCI on Derivative		Amount of Gain (Loss) Reclassified from OCI into Income		Amount of Gain (Loss) Recognized in OCI on Derivative		Amount of Gain (Loss) Reclassified from OCI into Income
Interest rate swap - FHLB borrowings	Interest expense - Other borrowed funds	$	(6)	$	(25)	$	41	$	119
Interest rate swaps - Variable rate deposits	Interest expense - Deposits	2,412		246		—		—
		$	2,406	$	221	$	41	$	119

The following amounts were recorded on the Condensed Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges for the respective period (dollars in thousands):


	June 30, 2026
Condensed Consolidated Balance Sheet line item	Amortized Cost of the Hedged Assets		Amortized Cost of Fair Value Hedging Included in the Carrying Amount of the Hedged Assets
Loans	$	410,528	$	(1,885)


		Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	Location of Gain (Loss)	2026		2025		2026		2025
Interest rate swap	Interest income - Loans	$	1,562	$	—	$	2,834	$	—
Loans	Interest income - Loans	(1,465)		$	—	(2,824)		—

The effect of derivatives not designated as hedging instruments recorded in Other non-interest income on the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025 was immaterial.