Derivatives

9 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

As part of its asset liability management activities, the Company may enter into interest rate swaps to help manage its interest rate risk position and mitigate exposure to the variability of future cash flows or other forecasted transactions. The Company entered into two interest rate swaps during the second quarter of 2023, to hedge the variability of cash flows due to changes in interest rates on certain variable rate liabilities. There were no additional interest rate swaps during the third quarter of 2023.

The notional amount of an interest rate swap does not represent the amount exchanged by the parties. The exchange of cash flows is determined by reference to the notional amount and the other terms of the interest rate swap agreements.

On June 23, 2023, the Company entered into a five-year interest rate swap with a notional amount totaling $25.0 million. On June 26, 2023 the Company entered into a three-year interest rate swap with a notional amount totaling $25.0 million. Both of the swaps were designated as cash flow hedges of certain variable rate liabilities.

The derivatives are recorded in other assets on the Company's balance sheet and has a value of $914,000 as of September 30, 2023.

Gains were recorded on the swap transactions, which totaled $164,000 and $173,000 for the three and nine months ended September 30, 2023, respectively as a component of interest expense in the consolidated statements of income. Amounts

reported in accumulated OCI related to swaps are reclassified to interest expense as interest payments are made on the Bank's variable rate liabilities.

The following table presents the amounts recorded in the consolidated statements of income and the consolidated statements of comprehensive income relating to the interest rate swaps for the three and nine months ended September 30, 2023.


(dollars in thousands)	Three Months Ended September 30, 2023		Nine Months Ended September 30, 2023

Amount of gain recognized in OCI	$	482	$	681
Amount of gain reclassified from OCI to interest expense	164		173