DERIVATIVES

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVES

Customer Interest Rate Swaps

The Company has entered into interest rate swaps (“swaps”) with qualifying commercial banking customers to facilitate their risk management strategies and financing needs. These swaps provide customers with the ability to convert variable rates into fixed rates. They are economically hedged by offsetting interest rate swaps that the Company executes with derivative counterparties in order to offset its exposure on the fixed components of the customers' swaps. Swaps qualify as derivatives, but are not designated as hedging instruments. Fair values of the swaps are carried as both gross assets and gross liabilities in other assets and other liabilities, respectively, in the Condensed Consolidated Statements of Condition. The associated changes in fair values of gross assets and gross liabilities net to zero in the Condensed Consolidated Statements of Income.

Mortgage Banking Derivatives

The Company enters into interest rate lock commitments, which are commitments to originate loans where the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. The loans are sold to the secondary market on either a mandatory or best efforts basis. Loans sold on a mandatory basis are not committed to an investor until the loan is closed with the borrower. The Company enters into forward to-be-announced (“TBA”) sales contracts to manage the interest rate risk between the interest rate lock commitment and the funding of those loans. Loans sold on a best efforts basis are committed to an investor simultaneous to the interest rate lock commitment with the borrower, and as a result, the Company does not enter into a separate forward TBA contract to offset the fair value risk as the investor accepts such risk. Interest rate lock commitments and commitments to deliver loans to investors are considered derivatives but are not designated as hedging instruments.

Fair Values of Derivative Instruments on the Balance Sheet

Derivatives are carried at fair value and are classified under other assets and other liabilities in the Condensed Consolidated Statements of Condition. Changes in fair value are recognized in earnings. None of the Company's derivatives are designated in a qualifying hedging relationship.

The table below presents the fair value of the Company’s derivative financial instruments as of March 31, 2024 and December 31, 2023:

	March 31, 2024						December 31, 2023
(In thousands)	Notional		Asset		Liability		Notional		Asset		Liability
Derivatives
Loan Swaps:
Interest Rate Swaps	$	502,766	$	17,758	$	17,758	$	495,750	$	15,867	$	15,867
Mortgage Banking Derivatives:
Interest Rate Lock Commitments	40,488		673		—		16,608		358		—
Forward TBA Contracts	35,500		—		111		11,750		—		102
Total Derivatives	$	578,754	$	18,431	$	17,869	$	524,108	$	16,225	$	15,969

Effect of Derivatives on the Income Statement

The table below presents the changes in the fair value of the Company’s derivative financial instruments reflected within non-interest income on the Condensed Consolidated Statements of Income for the three months ended March 31, 2024 and 2023, respectively.

		Three Months Ended March 31,
(In thousands)	Location of Gain/(Loss)	2024		2023
Interest rate lock commitments	Mortgage banking activities	$	1,778	$	1,452
Forward TBA contracts	Mortgage banking activities	(1,472)		(1,247)
Total		$	306	$	205