Derivatives (Tables)

9 Months Ended

Sep. 30, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The table below presents the fair value of the Company’s derivative financial instruments, which includes accrued interest, as well as their classification on the Consolidated Balance Sheets as of September 30, 2025, and December 31, 2024 (in thousands):


	September 30, 2025
	Balance Sheet Location	Notional Amount		Fair Value
Derivatives designated as hedges:
Interest rate swaps related to cash flow hedges	Other assets	$	200,000	$	127
Interest rate swaps related to cash flow hedges	Other liabilities	250,000		174

Derivatives not designated as hedges:
Interest rate swaps related to customer loans	Other assets	$	184,943	$	2,373
Interest rate swaps related to customer loans	Other liabilities	184,943		2,373


	December 31, 2024
	Balance Sheet Location	Notional Amount		Fair Value
Derivatives designated as hedges:
Interest rate swaps related to cash flow hedges	Other assets	$	250,000	$	1,368

Interest rate swaps related to cash flow hedges	Other liabilities	50,000		165

Derivatives not designated as hedges:
Interest rate swaps related to customer loans	Other assets	$	99,899	$	1,823
Interest rate swaps related to customer loans	Other liabilities	99,899		1,823

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income

The table below presents the effect of cash flow hedge accounting on AOCI for the three months ended September 30, 2025, and September 30, 2024 (in thousands):


Derivatives in Cash Flow Hedging Relationships	September 30, 2025						Location of Gain or (Loss) Reclassified from AOCI into Income	September 30, 2025
	Amount of Gain or (Loss) Recognized in OCI on Derivative		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Amount of Gain or (Loss) Reclassified from AOCI into Income		Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
Interest Rate Products	$	—	$	—	$	—	Interest Income	$	—	$	—	$	—
Interest Rate Products	221		221		—		Interest Expense	709		709		—
Total	$	221	$	221	$	—		$	709	$	709	$	—


Derivatives in Cash Flow Hedging Relationships	September 30, 2024						Location of Gain or (Loss) Reclassified from AOCI into Income	September 30, 2024
	Amount of Gain or (Loss) Recognized in OCI on Derivative		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Amount of Gain or (Loss) Reclassified from AOCI into Income		Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
Interest Rate Products	$	—	$	—	$	—	Interest Income	$	—	$	—	$	—
Interest Rate Products	(3,887)		(3,887)		—		Interest Expense	1,080		1,080		—
Total	$	(3,887)	$	(3,887)	$	—		$	1,080	$	1,080	$	—

The table below presents the effect of cash flow hedge accounting on AOCI for the nine months ended September 30, 2025, and September 30, 2024 (in thousands):


Derivatives in Cash Flow Hedging Relationships	September 30, 2025						Location of Gain or (Loss) Reclassified from AOCI into Income	September 30, 2025
	Amount of Gain or (Loss) Recognized in OCI on Derivative		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Amount of Gain or (Loss) Reclassified from AOCI into Income		Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
Interest Rate Products	$	—	$	—	$	—	Interest Income	$	—	$	—	$	—
Interest Rate Products	617		617		—		Interest Expense	1,868		1,868		—
Total	$	617	$	617	$	—		$	1,868	$	1,868	$	—


Derivatives in Cash Flow Hedging Relationships	September 30, 2024						Location of Gain or (Loss) Reclassified from AOCI into Income	September 30, 2024
	Amount of Gain or (Loss) Recognized in OCI on Derivative		Amount of Gain or (Loss) Recognized in OCI Included Component		Amount of Gain or (Loss) Recognized in OCI Excluded Component			Amount of Gain or (Loss) Reclassified from AOCI into Income		Amount of Gain or (Loss) Reclassified from AOCI into Income Included Component		Amount of Gain or (Loss) Reclassified from AOCI into Income Excluded Component
Interest Rate Products	$	(19)	$	(19)	$	—	Interest Income	$	(611)	$	(611)	$	—
Interest Rate Products	631		631		—		Interest Expense	2,113		2,113		—
Total	$	612	$	612	$	—		$	1,502	$	1,502	$	—

Schedule of Derivative Instruments

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the three and nine months ended September 30, 2025, and September 30, 2024 (in thousands).


	Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Three months ended
	September 30, 2025				September 30, 2024
	Interest Income		Interest Expense		Interest Income		Interest Expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded	$	40	$	709	$	40	$	1,080
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged items (1)	40		—		40		—
Derivatives designated as hedging instruments	—		—		—		—
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest contracts
Amount of gain or (loss) reclassified from AOCI into income	—		709		—		1,080
Amount of gain or (loss) reclassified from AOCI into income as a result that a forecasted transaction is no longer probable of occurring	—		—		—		—
Amount of gain or (loss) reclassified from AOCI into income - included component	—		709		—		1,080
Amount of gain or (loss) reclassified from AOCI into income - excluded component	—		—		—		—


	Location and Amount of Gain or (Loss) Recognized in Income on Fair Value and Cash Flow Hedging Relationships
	Nine months ended
	September 30, 2025				September 30, 2024
	Interest Income		Interest Expense		Interest Income		Interest Expense
Total amounts of income and expense line items presented in the consolidated statements of income in which the effects of fair value or cash flow hedges are recorded	$	120	$	1,868	$	(491)	$	2,113
The effects of fair value and cash flow hedging:
Gain or (loss) on fair value hedging relationships in Subtopic 815-20
Interest contracts
Hedged items (1)	120		—		120		—
Derivatives designated as hedging instruments	—		—		—		—
Gain or (loss) on cash flow hedging relationships in Subtopic 815-20
Interest contracts
Amount of gain or (loss) reclassified from AOCI into income	—		1,868		(611)		2,113
Amount of gain or (loss) reclassified from AOCI into income as a result that a forecasted transaction is no longer probable of occurring	—		—		—		—
Amount of gain or (loss) reclassified from AOCI into income - included component	—		1,868		(611)		2,113
Amount of gain or (loss) reclassified from AOCI into income - excluded component	—		—		—		—

(1) The Company voluntarily discontinued a fair value hedging relationship and these amounts include the gain or (loss) and the hedging adjustment on a voluntary discontinued hedging relationship. The Company has allocated the basis adjustment to the remaining individual assets in the closed portfolio and will amortize the basis adjustment over a period consistent with amortization of other discounts or premiums on the assets.

Burke & Herbert Financial Services Corp. 10-Q