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Derivative Financial Instruments | 6 Months Ended
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Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments The fair value of derivative positions outstanding is included in accrued interest receivable and other assets and accrued interest payable and other liabilities in the accompanying consolidated balance sheets and in the net change in each of these financial statement line items in the accompanying consolidated statements of cash flows. Interest Rate Derivatives. We utilize interest rate swaps, caps and floors to mitigate exposure to interest rate risk and to facilitate the needs of our customers. Our objectives for utilizing our currently outstanding derivative positions are described below: We have entered into certain interest rate derivative contracts that are not designated as hedging instruments to accommodate the business needs of our customers. These derivative contracts relate to transactions in which we enter into an interest rate swap, cap and/or floor with a customer while at the same time entering into an offsetting interest rate swap, cap and/or floor with a third-party financial institution. In connection with each swap transaction, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay a third-party financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows our customer to effectively convert a variable rate loan to a fixed rate. Because we act as an intermediary for our customers, changes in the fair value of the underlying derivative contracts largely offset each other and do not significantly impact our results of operations. The notional amounts and estimated fair values of interest rate derivative contracts outstanding are presented in the following table. The fair values of these contracts are estimated utilizing internal valuation methods with observable market data inputs, or as determined by the Chicago Mercantile Exchange (“CME”) for centrally cleared derivative contracts. CME rules legally characterize variation margin payments for centrally cleared derivatives as settlements of the derivatives' exposure rather than collateral. As a result, the variation margin payment and the related derivative instruments are considered a single unit of account for accounting and financial reporting purposes. Variation margin, as determined by the CME, is settled daily. As a result, derivative contracts that clear through the CME have an estimated fair value of zero as of June 30, 2025 and December 31, 2024.
| June 30, 2025 |  | December 31, 2024
| Notional Amount |  | Estimated Fair Value |  | Notional Amount |  | Estimated Fair Value
Non-hedging interest rate derivatives: |  |  |  |  |  |  |
Financial institution counterparties: |  |  |  |  |  |  |
Loan/lease interest rate swaps – assets | 821,359 |  |  | $ | 39,336 |  |  | 1,213,519 |  |  | $ | 63,001 |
Loan/lease interest rate swaps – liabilities | 1,100,546 |  |  | (21,782) |  |  | 663,078 |  |  | (9,068) |
Loan/lease interest rate caps – assets | 196,091 |  |  | 4,563 |  |  | 205,164 |  |  | 7,053 |
Customer counterparties: |  |  |  |  |  |  |
Loan/lease interest rate swaps – assets | 1,100,546 |  |  | 21,783 |  |  | 663,078 |  |  | 9,068 |
Loan/lease interest rate swaps – liabilities | 821,359 |  |  | (39,336) |  |  | 1,213,519 |  |  | (63,000) |
Loan/lease interest rate caps – liabilities | 196,091 |  |  | (4,564) |  |  | 205,164 |  |  | (7,054) |
The weighted-average rates paid and received for interest rate swaps outstanding at June 30, 2025, were as follows:
| Weighted-Average
| Interest Rate Paid |  | Interest Rate Received
Interest rate swaps: |  |  |
Non-hedging interest rate swaps – financial institution counterparties | 5.16 | % |  | 6.10 | %
Non-hedging interest rate swaps – customer counterparties | 6.10 |  |  | 5.16 |
The weighted-average strike rate for outstanding interest rate caps was 3.71% at June 30, 2025. Commodity Derivatives. We enter into certain commodity derivative contracts that are not designated as hedging instruments to accommodate the business needs of our customers. Upon the origination of a commodity derivative contract with a customer, we simultaneously enter into an offsetting contract with a third-party financial institution to mitigate our exposure to fluctuations in commodity prices. Because we act as an intermediary for our customers, changes in the fair value of the underlying derivative contracts largely offset each other and do not significantly impact our results of operations. The notional amounts and estimated fair values of non-hedging commodity derivative contracts outstanding are presented in the following table. The fair values of these contracts are estimated utilizing internal valuation methods with observable market data inputs.
|  |  | June 30, 2025 |  | December 31, 2024
| Notional Units |  | Notional Amount |  | Estimated Fair Value |  | Notional Amount |  | Estimated Fair Value
Financial institution counterparties: |  |  |  |  |  |  |  |  |
Oil – assets | Barrels |  | 9,247 |  |  | $ | 47,032 |  |  | 7,097 |  |  | $ | 27,471 |
Oil – liabilities | Barrels |  | 6,324 |  |  | (13,874) |  |  | 4,768 |  |  | (12,897) |
Natural gas – assets | MMBTUs |  | 26,784 |  |  | 5,880 |  |  | 25,454 |  |  | 3,804 |
Natural gas – liabilities | MMBTUs |  | 39,267 |  |  | (10,257) |  |  | 26,082 |  |  | (4,054) |
Customer counterparties: |  |  |  |  |  |  |  |  |
Oil – assets | Barrels |  | 6,426 |  |  | 14,331 |  |  | 4,872 |  |  | 12,973 |
Oil – liabilities | Barrels |  | 9,146 |  |  | (45,885) |  |  | 6,993 |  |  | (26,753) |
Natural gas – assets | MMBTUs |  | 39,267 |  |  | 10,601 |  |  | 26,767 |  |  | 4,255 |
Natural gas – liabilities | MMBTUs |  | 26,784 |  |  | (5,808) |  |  | 24,769 |  |  | (3,600) |
Foreign Currency Derivatives. We enter into foreign currency derivative contracts that are not designated as hedging instruments to accommodate the business needs of our customers and to mitigate our exposure to foreign currency. Upon the origination of a foreign currency derivative contract with a customer, we simultaneously enter into an offsetting contract with a third-party financial institution to mitigate our exposure to fluctuations in foreign currency exchange rates. Because we act as an intermediary for our customers, changes in the fair value of the underlying derivative contracts largely offset each other and do not significantly impact our results of operations. We also utilize foreign currency derivative contracts that are not designated as hedging instruments to mitigate the economic effect of fluctuations in foreign currency exchange rates on foreign currency holdings and certain short-term, non-U.S. dollar denominated loans. The notional amounts and fair values of non-hedging foreign currency derivative contracts are presented in the following table. The fair values of these contracts are estimated utilizing internal valuation methods with observable market data inputs.
|  |  | June 30, 2025 |  | December 31, 2024
| Notional Currency |  | Notional Amount |  | Estimated Fair Value |  | Notional Amount |  | Estimated Fair Value
Financial institution counterparties: |  |  |  |  |  |  |  |  |
Forward and option contracts – assets | EUR |  | 8,000 |  |  | $ | 454 |  |  | — |  |  | $ | — |
Forward and option contracts – liabilities | EUR |  | 8,000 |  |  | (5) |  |  | — |  |  | — |
Customer counterparties: |  |  |  |  |  |  |  |  |
Forward and option contracts – assets | EUR |  | 8,000 |  |  | 5 |  |  | — |  |  | — |
Forward and option contracts – liabilities | EUR |  | 8,000 |  |  | (454) |  |  | — |  |  | — |
Gains, Losses and Derivative Cash Flows. For non-hedging derivative instruments, gains and losses due to changes in fair value and all cash flows are included in other non-interest income and other non-interest expense as presented in the table below.
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Non-hedging interest rate derivatives: |  |  |  |  |  |  |
Other non-interest income | $ | 733 |  |  | $ | 512 |  |  | $ | 1,122 |  |  | $ | 1,637 |
Other non-interest expense | — |  |  | 3 |  |  | (1) |  |  | 3 |
Non-hedging commodity derivatives: |  |  |  |  |  |  |
Other non-interest income | 937 |  |  | 946 |  |  | 2,703 |  |  | 1,325 |
Non-hedging foreign currency derivatives: |  |  |  |  |  |  |
Other non-interest income | — |  |  | — |  |  | 55 |  |  | 11 |
Counterparty Credit Risk. At June 30, 2025, our credit exposure relating to outstanding derivative contracts with bank customers was approximately $22.3 million. This credit exposure is partly mitigated as transactions with customers are generally secured by the collateral, if any, securing the underlying transaction being hedged. At June 30, 2025, after consideration of collateral pledged, we had $5.1 million credit exposure relating to outstanding derivative contracts with upstream financial institution counterparties. Collateral positions are generally cleared on the next business day. Collateral levels for upstream financial institution counterparties are monitored and adjusted, as necessary. See Note 8 – Balance Sheet Offsetting and Repurchase Agreements for additional information regarding our credit exposure with upstream financial institution counterparties. At June 30, 2025, we had $11.4 million in cash collateral related to derivative contracts on deposit with other financial institution counterparties.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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