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Derivative and Hedging Activities and Restricted Cash | 3 Months Ended
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Mar. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative and Hedging Activities and Restricted Cash | Derivative and Hedging Activities and Restricted Cash Derivative financial instruments are recorded at fair value in Other assets and Other liabilities on the Condensed Consolidated Statements of Condition. The Company's policy is to present our derivative assets and derivative liabilities on the Condensed Consolidated Statements of Condition on a gross basis, even when provisions allowing for set-off are in place. However, for derivative contracts cleared through certain central clearing parties, variation margin payments are recognized as settlements. We are exposed to non-performance risk by the counterparties to our various derivative financial instruments. A majority of our derivatives are centrally cleared through a Central Counterparty Clearing House or consist of residential mortgage interest rate lock commitments further limiting our exposure to non-performance risk. We believe that the non-performance risk inherent in our remaining derivative contracts is minimal based on credit standards and the collateral provisions of the derivative agreements. Derivatives not designated as hedging instruments. The Company maintained a derivative portfolio of interest rate swaps, foreign currency swaps, futures, swaptions and forward commitments used to manage exposure to changes in interest rates and mortgage servicing right asset values and to meet the needs of customers. The Company also enters into interest rate lock commitments, which are commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding and the customers have locked into that interest rate. Market risk on interest rate lock commitments and mortgage loans held for sale is managed using corresponding forward sale commitments and U.S. Treasury futures. Changes in the fair value of derivatives not designated as hedging instruments are recognized on the Condensed Consolidated Statements of (Loss) Income. Derivatives designated as hedging instruments. The Company has historically designated certain interest rate swaps as cash flow hedges on overnight Secured Overnight Financing Rates-based variable interest payments on federal home loan bank advances. Changes in the fair value of derivatives designated as cash flow hedges are recorded in Accumulated other comprehensive loss on the Condensed Consolidated Statements of Condition and reclassified into interest expense in the same period in which the hedged transaction is recognized in e arnings. At March 31, 2025, the Company had $40 million (net-of-tax) of unrealized gains related to terminated derivatives that had been in cash flow hedge relationships of forecasted interest payments classified as cash flow hedges recorded in Accumulated other comprehensive loss. The Company had $47 million (net-of-tax) of unrealized gains on derivatives previously classified as cash flow hedges recorded in Accumulated other comprehensive loss at December 31, 2024. There were no designated cash flow hedging relationships as of March 31, 2025. Fair Value Hedges of Interest Rate Risk The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in interest rates. The Company previously used interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involved the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Interest rate swaps were previously used to hedge the changes in fair value of certain of our pools of prepayable fixed rate assets and beginning in the three months ended March 31, 2025, we began to use interest rate swaps to hedge the changes in fair value of certain debt securities available for sale. For derivatives designated and that qualified as fair value hedges, the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item attributable to the hedged risk are recognized in interest income within loans and leases or securities and money market investments. The fair value basis adjustments remaining from discontinued hedges are recognized in interest income over the remaining life of the hedged items. The fair value basis adjustment on our hedged real estate loans is included in Loans and leases held for investment on our Condensed Consolidated Statements of Condition. The following table sets forth information regarding the Company's carrying amounts on our hedged loans:
| March 31, 2025 |  | December 31, 2024
| Carrying Amount of Hedged Items |  | Cumulative Amount of Fair Value Hedging Adjustments |  | Carrying Amount of Hedged Items |  | Cumulative Amount of Fair Value Hedging Adjustments
Debt securities available-for-sale(1) | $ | 993 |  |  | $ | 7 |  |  | $ | — |  |  | $ | — |
Loans and leases held-for-investment(2) | 4,245 |  |  | (12) |  |  | 5,861 |  |  | (18) |
(1)During the three months ended March 31, 2025, the amount recorded in Interest Income - Securities and money market investments was immaterial. (2)Relates to discontinued hedges on multi-family loans. During the three months ended March 31, 2025 and 2024, the amount recorded to Interest Income - Loans and leases was immaterial. The following tables set forth information regarding the Company’s derivative financial instruments:
| March 31, 2025
|  |  | Fair Value |  |
| Notional Amount |  | Other Assets |  | Other Liabilities |  | Expiration Dates
Derivatives designated as hedging instruments: |  |  |  |  |  |  |
Interest rate swaps | $ | 993 |  |  | $ | — |  |  | $ | — |  |  | 2028-2029
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
Rate lock commitments(1) | $ | 547 |  |  | $ | 4 |  |  | $ | 3 |  |  | 2025
Mortgage-backed securities forwards(1) | 281 |  |  | — |  |  | 3 |  |  | 2025
Interest rate swaps(2) | 3,234 |  |  | 15 |  |  | 23 |  |  | 2025-2041
(1)During the three months ended March 31, 2025 and 2024, the amount recorded in Net gain on loan sales and securitizations in the Condensed Consolidated Statement of Income was immaterial. (2)During the three months ended March 31, 2025 and 2024, the amount recorded in Non-interest income - Other was immaterial.
| December 31, 2024
|  |  | Fair Value |  |
| Notional Amount |  | Other Assets |  | Other Liabilities |  | Expiration Date
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |
Rate lock commitments | $ | 563 |  |  | $ | 3 |  |  | $ | 3 |  |  | 2025
Mortgage-backed securities forwards | 344 |  |  | 7 |  |  | 2 |  |  | 2025
Interest rate swaps | 3,323 |  |  | 15 |  |  | 30 |  |  | 2024-2041
The tables below present the gross derivative assets and liabilities, and the related cash pledged as collateral at March 31, 2025 and December 31, 2024. No amounts were netted in the Statement of Condition.
|  | March 31, 2025
|  | Gross Amounts Not Offset in the Statements of Condition |  | Cash Collateral Pledged (Received)
Derivatives not designated as hedging instruments: |  |  |  |
Assets |  |  |  |
Interest rate swaptions |  | $ | 15 |  |  | $ | — |
Total derivative assets |  | $ | 15 |  |  | $ | — |
Liabilities |  |  |  |
Mortgage-backed securities forwards |  | $ | 3 |  |  | $ | 30 |
Interest rate swaps (1) |  | 23 |  |  | 4 |
Total derivative liabilities |  | $ | 26 |  |  | $ | 34 |
(1)Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior day's fair value of open positions is considered settlement of the derivative position for accounting purposes.
|  | December 31, 2024
|  | Gross Amounts Not Offset in the Statements of Condition |  | Cash Collateral Pledged (Received)
Derivatives not designated as hedging instruments: |  |  |  |
Assets |  |  |  |
Mortgage-backed securities forwards |  | $ | 7 |  |  | $ | (2) |
Interest rate swaptions |  | 15 |  |  | (3) |
Total derivative assets |  | $ | 22 |  |  | $ | (5) |
Liabilities |  |  |  |
Mortgage-backed securities forwards |  | $ | 2 |  |  | $ | 10 |
Interest rate swaps (1) |  | 30 |  |  | 47 |
Total derivative liabilities |  | $ | 32 |  |  | $ | 57 |
(1)Variation margin pledged to, or received from, a Central Counterparty Clearing House to cover the prior day's fair value of open positions is considered settlement of the derivative position for accounting purposes. Cash Flow Hedges of Interest Rate Risk The following table presents the effect of the Company’s cash flow derivative instruments on Accumulated other comprehensive loss:
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Amount of gain (loss) recognized in accumulated other comprehensive loss | $ | — |  |  | $ | 91 |  |  |  |  |
Amount reclassified from accumulated other comprehensive loss to interest expense | $ | (9) |  |  | $ | (23) |  |  |  |  |
Amounts reported in Accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate borrowings. We will recognize $28 million of lower interest expense over the next rolling twelve month period related to the reclassification. Derivatives not Designated as Hedging Instruments The following table presents the net gain (loss) recognized on derivatives not designated as hedging instruments, net of the impact of offsetting positions:
|  | Three Months Ended March 31, |  |  |
|  | 2025 |  | 2024 |  |  |  |  |
Derivatives not designated as hedging instruments | Income Statement Classification |  |  |  |  |  |  |  |
Futures | Net return on mortgage servicing rights | $ | — |  |  | $ | 2 |  |  |  |  |  |
Interest rate swaps and swaptions | Net return on mortgage servicing rights | — |  |  | (34) |  |  |  |  |  |
Mortgage-backed securities forwards | Net return on mortgage servicing rights | — |  |  | (12) |  |  |  |  |  |
Rate lock commitments, MBS forwards, and US Treasury Futures | Net gain on loan sales | (7) |  |  | 22 |  |  |  |  |  |
Interest rate swaps (1) | Other non-interest income | — |  |  | (3) |  |  |  |  |  |
Total derivative (loss) gain |  | $ | (7) |  |  | $ | (25) |  |  |  |  |  |
(1) Includes customer-initiated commercial interest rate swaps. The following table provides a reconciliation of cash, cash equivalents and restricted cash within the Condensed Consolidated Statements of Condition that sum to the total of the same amounts shown in the Condensed Consolidated Statements of Cash Flows:
| March 31, 2025
Cash and cash equivalents | $ | 12,614 |
Restricted cash included in other assets | 33 |
Total | $ | 12,647 |

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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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