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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The Corporation uses derivatives to manage its exposure to certain market risks, including interest rate and foreign currency risks, and to assist customers with their risk management objectives. Certain of the Corporation's outstanding derivative contracts are designated as hedges, and none are entered into for speculative purposes. The Corporation enters into derivative contracts that are intended to economically hedge certain of its risks, even if hedge accounting does not apply or the Corporation elects not to apply hedge accounting.

For additional information on our derivative accounting policies see "Note 1 - Summary of Significant Accounting Policies" in our Annual Report on Form 10-K for the year ended December 31, 2024.

The following table presents a summary of the notional amounts and fair values of derivative financial instruments:

			March 31, 2025												December 31, 2024
			Notional Amount						Asset (Liability) Fair Value						Notional Amount						Asset (Liability) Fair Value
			(dollars in thousands)
Interest Rate Locks with Customers
Positive fair values			$	212,169					$	852					$	171,933					$	389
Negative fair values			668						(2)						3,888						(58)
Forward Commitments
Positive fair values			—						—						51,250						363
Negative fair values			44,185						(471)						—						—
Interest Rate Derivatives with Customers(1)
Positive fair values			1,275,789						24,899						767,905						8,480
Negative fair values			3,454,753						(183,590)						3,976,294						(239,058)
Interest Rate Derivatives with Dealer Counterparties
Positive fair values			3,454,753						110,551						3,976,294						150,480
Negative fair values			1,275,789						(25,265)						767,905						(10,734)
Interest Rate Derivatives used in Cash Flow Hedges
Positive fair values			2,250,000						4,011						2,500,000						227
Negative fair values			1,150,000						(537)						1,400,000						(2,971)
Foreign Exchange Contracts with Customers
Positive fair values			14,517						245						28,327						1,619
Negative fair values			12,352						(393)						693						(27)
Foreign Exchange Contracts with Correspondent Banks
Positive fair values			17,903						528						4,059						63
Negative fair values			12,100						(182)						32,406						(1,569)

(1) Fair values are net of a valuation allowance of $366.3 thousand as of March 31, 2025 and December 31, 2024.

The following table presents the effect of cash flow hedge accounting on AOCI:

			Amount of Gain (Loss) Recognized in OCI on Derivative						Amount of Gain (Loss) Recognized in OCI Included Component						Amount of Gain (Loss) Recognized in OCI Excluded Component						Location of Gain (Loss) Recognized from AOCI into Income						Amount of Gain (Loss) Reclassified from AOCI into Income						Amount of Gain (Loss) Reclassified from AOCI into Income Included Component						Amount of Gain (Loss) Reclassified from AOCI into Income Excluded Component
			(dollars in thousands)
Three months ended March 31, 2025
Interest Rate Products			$	3,541					$	3,541					$	—					Interest Income						$	(4,491)					$	(4,491)					$	—
Interest Rate Products			(1,260)						(1,260)						—						Interest Expense						(53)						(53)						—
Total			$	2,281					$	2,281					$	—											$	(4,544)					$	(4,544)					$	—
Three months ended March 31, 2024
Interest Rate Products			$	(5,659)					$	(5,659)					—						Interest Income						$	(7,032)					$	(7,032)					—
Interest Rate Products			11,215						11,215						—						Interest Expense						2,020						2,020						—
Total			$	5,556					$	5,556					—												$	(5,012)					$	(5,012)					—

The following table presents the effect of fair value and cash flow hedge accounting on the income statement:

			Consolidated Statements of Income Classification
			2025												2024
			Interest Income						Interest Expense						Interest Income						Interest Expense
			(dollars in thousands)
Three months ended March 31
Total amounts of income line items presented in the Consolidated Statements of Income in which the effects of fair value or cash flow hedges are recorded			$	(4,491)					$	(53)					$	(7,032)					$	2,020
The effects of fair value and cash flow hedging:
Amount of (loss) gain reclassified from AOCI into income			(4,491)						(53)						(7,032)						2,020
Interest rate derivatives:
Amount of (loss) gain reclassified from AOCI into income as a result that a forecasted transaction is no longer probable of occurring			—						—						—						—
Amount of (loss) gain reclassified from AOCI into income - included component			(4,491)						(53)						(7,032)						2,020
Amount of (loss) gain reclassified from AOCI into income - excluded component			—						—						—						—

During the next twelve months, the Corporation estimates that an additional $16.3 million will be reclassified as a decrease to net interest income.

The following table presents the fair value gains (losses) on derivative financial instruments:

			Consolidated Statements of Income Classification						Three months ended March 31
									2025						2024
									(dollars in thousands)
Mortgage banking derivatives(1)			Mortgage banking income						$	802					$	1,167
Interest rate derivatives			Other income						149						151
Foreign exchange contracts			Other income						170						39
Net fair value gains (losses) on derivative financial instruments									$	1,121					$	1,357

(1) Includes interest rate locks with customers and forward commitments.

The Corporation has elected to measure mortgage loans held for sale at fair value. The following table presents mortgage loans held for sale and the impact of the fair value election on the Consolidated Financial Statements:

			March 31, 2025						December 31, 2024
			(dollars in thousands)
Amortized cost(1)			$	15,637					$	25,316
Fair value			15,965						25,618

(1) Cost basis of mortgage loans held for sale represents the unpaid principal balance.

Gains and losses related to changes in fair values of mortgage loans held for sale were a gain of $25.7 thousand for the three months ended March 31, 2025 compared to a loss of $0.2 million for the three months ended March 31, 2024. Gains and losses are recorded on the Consolidated Income Statements as adjustments to mortgage banking income.

Balance Sheet Offsetting

The fair values of interest rate derivative agreements and foreign exchange contracts the Corporation enters into with customers and dealer counterparties may be eligible for offset on the Consolidated Balance Sheets if they are subject to master netting arrangements or similar agreements. The Corporation has elected to net its financial assets and liabilities designated as interest rate derivatives when offsetting is permitted. The following table presents the Corporation's financial instruments that are eligible for offset, and the effects of offsetting, on the Consolidated Balance Sheets:

			Gross Amounts						Gross Amounts Not Offset
			Recognized						on the Consolidated
			on the						Balance Sheets
			Consolidated						Financial						Cash						Net
			Balance Sheets						Instruments(1)						Collateral(2)						Amount
			(dollars in thousands)
March 31, 2025
Interest rate derivative assets			$	139,461					$	(16,003)					$	—					$	123,458
Foreign exchange derivative assets with correspondent banks			528						(528)						—						—
Total			$	139,989					$	(16,531)					$	—					$	123,458
Interest rate derivative liabilities			$	209,392					$	(19,477)					$	(72,464)					$	117,451
Foreign exchange derivative liabilities with correspondent banks			182						(528)						—						(346)
Total			$	209,574					$	(20,005)					$	(72,464)					$	117,105
December 31, 2024
Interest rate derivative assets			$	159,187					$	(12,739)					$	—					$	146,448
Foreign exchange derivative assets with correspondent banks			63						(63)						—						—
Total			$	159,250					$	(12,802)					$	—					$	146,448
Interest rate derivative liabilities			$	252,763					$	(9,995)					$	(94,339)					$	148,429
Foreign exchange derivative liabilities with correspondent banks			1,569						(63)						—						1,506
Total			$	254,332					$	(10,058)					$	(94,339)					$	149,935

(1) For interest rate derivative assets, amounts represent any derivative liability fair values that could be offset in the event of counterparty or customer default.

For interest rate derivative liabilities, amounts represent any derivative asset fair values that could be offset in the event of counterparty or customer default.

(2) Amounts represent cash collateral received from the counterparty or posted by the Corporation on interest rate derivative transactions and foreign exchange

contracts with financial institution counterparties. Interest rate derivatives with customers are collateralized by the same collateral securing the underlying

loans to those borrowers. Cash and securities collateral amounts are included in the table only to the extent of the net derivative fair values.

Cash Flow Hedge Terminations

In October 2024, the Corporation terminated interest rate derivatives designated as cash flow hedges with a combined notional amount of $250.0 million. As the hedged transaction continues to be probable, the unrealized losses will be recorded in AOCI and will be recognized as an increase to interest expense when the previously forecasted hedged items affect earnings in future periods. During the three months ended March 31, 2025, $0.2 million of these unrealized losses were reclassified as an increase to interest expense on borrowings on the Consolidated Statements of Income. During the year ended December 31, 2024, $0.2 million of these unrealized losses were reclassified as an increase to interest expense on borrowings on the Consolidated Statements of Income.

In January 2023, the Corporation terminated interest rate derivatives designated as cash flow hedges with a combined notional amount of $1.0 billion. As the hedged transaction continues to be probable, the unrealized losses that have been recorded in AOCI are recognized as a reduction to interest income, including fees, when the previously forecasted hedged item affects earnings in future periods. During the three months ended March 31, 2025, $3.3 million of these unrealized losses have been reclassified as a reduction of interest income on loans, including fees, on the Consolidated Statements of Income. During the year ended December 31, 2024, $27.9 million of these unrealized losses have been reclassified as a reduction of interest income on loans, including fees, on the Consolidated Statements of Income.

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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

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