XML 24 R13.htm IDEA: XBRL DOCUMENT
v3.25.2

Derivatives and Hedging Activities | 6 Months Ended
--- | ---
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative and Hedging Activities | The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through the management of its business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and derivative financial instruments. The Company enters into derivative financial instruments, such as interest rate swap contracts to manage or hedge exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates and interest rate exposures. The Company does not enter into interest rate swap agreements for trading or speculative purposes. The Company sells residential mortgage loans on either a best efforts or mandatory delivery basis. The Company mitigates the effect of the interest rate risk inherent in providing interest rate lock commitments by entering into forward loan sales contracts. The forward loan sales contracts are recorded at fair value with changes in fair value recorded through earnings and are not designated as accounting hedges. Exclusive of the fair value component associated with the projected cash flows from the loan delivery to the investor, the changes in fair value related to movements in market rates of the interest rate lock commitments and the forward loan sales contracts generally move in opposite directions, and the net impact of changes in these valuations on net income during the loan commitment period is generally inconsequential. When the loan is funded to the borrower, the interest rate lock commitment expires, and the Company records a loan held for sale. The forward loan sales contract acts as a hedge against movements in the market interest rates from the time the Company enters into the interest rate lock commitment. The changes in measurement of the estimated fair values of the interest rate lock commitments and forward loan sales contracts are included in mortgage banking revenues in the accompanying consolidated statements of income. The Company charges a fee for these transactions, which is included in mortgage banking revenues on the consolidated statements of income which were not material for the periods ended June 30, 2025 and 2024. The Company also enters into derivative contracts related to transactions in which the Company enters into an interest rate swap with a client while at the same time entering into an offsetting interest rate swap with a third-party financial institution. Because the Company acts as an intermediary for the client, changes in the fair value of the underlying derivative contracts primarily offset each other and do not significantly impact the Company’s results of operations. The Company charges a fee for these transactions, which is included in other service charges, commissions, and fees on the consolidated statements of income which were not material for the periods ended June 30, 2025 and 2024. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest income (expense) and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and collars as part of its interest rate risk management strategy. As part of the Company’s overall asset and liability management strategy, the Company has two active interest rate collars related to variable-rate loans that were designated as cash flow hedges with a total notional amount of $300.0 million with maturities of August 15, 2025. The collars designated as cash flow hedges synthetically fix the interest income received by the Company when the interest index falls below a floor rate on a reset and when the interest index exceeds the cap rate on a rate reset. Fair Value Hedges of Interest Rate Risk The Company is exposed to changes in the fair value of fixed-rate assets due to changes in benchmark interest rates. The Company uses 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 involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income. Derivatives Not Designated as Accounting Hedges Derivative instruments not designated as accounting hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously economically hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized in other income. Risk Participation Agreements The Company acquired, from Great Western Bank, risk participation agreements under which it assumed credit risk associated with a borrower’s performance related to derivative contracts. The Company only entered into these credit risk participation agreements in instances in which the Company was also a party to the related loan participation agreements for such borrowers. The Company manages its credit risk under risk participation agreements by monitoring the creditworthiness of the borrower, based on its normal credit review process. The following table summarizes the fair values of our derivative instruments on a gross and net basis for the periods indicated. The derivative asset and liability balances are presented on a gross basis, prior to the application of bilateral collateral and master netting agreements, but after the variation margin payments with central clearing organizations have been applied as settlement, as applicable. Total derivative assets and liabilities are adjusted to account for the impact of legally enforceable master netting agreements that allow us to settle all derivative contracts with a single counterparty on a net basis and to offset the net derivative position with the related cash collateral. Securities collateral related to legally enforceable master netting agreements is not offset on the consolidated balance sheets.
| June 30, 2025 |  | December 31, 2024
| Notional Amount | Consolidated Balance Sheet Location | Estimated Fair Value |  | Notional Amount | Consolidated Balance Sheet Location | Estimated Fair Value
Derivatives designated as accounting hedges: |  |  |  |  |  |  |
Interest rate swap contracts | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Derivatives not designated as accounting hedges: |  |  |  |  |  |  |
Interest rate swap contracts | 1,330.7 |  |  | 29.1 |  |  | 1,415.4 |  |  | 44.9 |
Interest rate lock commitments | 4.2 |  |  | — |  |  | 2.7 |  |  | — |
Forward loan sales contracts | 5.6 |  |  | — |  |  | 2.4 |  |  | — |
Derivative assets | $ | 1,340.5 |  | Other assets | $ | 29.1 |  |  | $ | 1,420.5 |  | Other assets | $ | 44.9 |
Derivatives designated as accounting hedges: |  |  |  |  |  |  |
Interest rate collars | $ | 300.0 |  |  | $ | 0.3 |  |  | $ | 300.0 |  |  | $ | 1.0 |
Interest rate swap contracts | — |  |  | — |  |  | 300.0 |  |  | 2.8 |
Derivatives not designated as accounting hedges: |  |  |  |  |  |  |
Interest rate swap contracts | 1,330.7 |  |  | 88.6 |  |  | 1,415.4 |  |  | 130.0 |
Risk participation agreements | 87.9 |  |  | — |  |  | 91.6 |  |  | — |
Derivative liabilities | $ | 1,718.6 |  | Accounts payable and accrued expenses | $ | 88.9 |  |  | $ | 2,107.0 |  | Accounts payable and accrued expenses | $ | 133.8 |
There was an unrealized fair value loss on cash flow hedging derivative instruments recognized in other comprehensive income of $0.9 million and $1.9 million for the three and the six months ended June 30, 2025 and an unrealized fair value gain of $5.1 million and $22.5 million for the three and the six months ended June 30, 2024. All derivatives are carried at fair value in either other assets or other liabilities and all related cash flows are reported in the operating section of the consolidated statements of cash flows.
The tables below present the gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of the dates indicated:
| June 30, 2025
| Gross Assets Recognized |  | Gross Assets Offset in the Balance Sheet |  | Net Assets in the Balance Sheet |  | Financial Instruments |  | Cash Collateral Received (1) |  | Net Amount
Interest rate swap and collar contracts | $ | 29.1 |  |  | $ | — |  |  | $ | 29.1 |  |  | $ | — |  |  | $ | 29.1 |  |  | $ | — |
Total derivatives | 29.1 |  |  | — |  |  | 29.1 |  |  | — |  |  | 29.1 |  |  | — |
Total assets | $ | 29.1 |  |  | $ | — |  |  | $ | 29.1 |  |  | $ | — |  |  | $ | 29.1 |  |  | $ | — |
(1) Netting adjustments represent the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the collateral cannot reduce the net derivative position below zero. Therefore, excess collateral, if any, is not reflected above.
| Gross Liabilities Recognized |  | Gross Liabilities Offset in the Balance Sheet |  | Net Liabilities in the Balance Sheet |  | Financial Instruments |  | Cash Collateral Posted |  | Net Amount
Interest rate swap and collar contracts | $ | 88.9 |  |  | $ | — |  |  | $ | 88.9 |  |  | $ | — |  |  | $ | — |  |  | $ | 88.9 |
Total derivatives | 88.9 |  |  | — |  |  | 88.9 |  |  | — |  |  | — |  |  | 88.9 |
Repurchase agreements(2) | 509.3 |  |  | — |  |  | 509.3 |  |  | — |  |  | — |  |  | 509.3 |
Total liabilities | $ | 598.2 |  |  | $ | — |  |  | $ | 598.2 |  |  | $ | — |  |  | $ | — |  |  | $ | 598.2 |
(2) Repurchase agreements are fully collateralized by investment securities.
| December 31, 2024
| Gross Assets Recognized |  | Gross Assets Offset in the Balance Sheet |  | Net Assets in the Balance Sheet |  | Financial Instruments |  | Cash Collateral Received(1) |  | Net Amount
Interest rate swap and collar contracts | $ | 44.9 |  |  | $ | — |  |  | $ | 44.9 |  |  | $ | — |  |  | $ | 42.4 |  |  | $ | 2.5 |
Total derivatives | 44.9 |  |  | — |  |  | 44.9 |  |  | — |  |  | 42.4 |  |  | 2.5 |
Total assets | $ | 44.9 |  |  | $ | — |  |  | $ | 44.9 |  |  | $ | — |  |  | $ | 42.4 |  |  | $ | 2.5 |
(1) Netting adjustments represent the amounts recorded to convert derivatives assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the collateral cannot reduce the net derivative position below zero. Therefore, excess collateral, if any, is not reflected above.
| Gross Liabilities Recognized |  | Gross Liabilities Offset in the Balance Sheet |  | Net Liabilities in the Balance Sheet |  | Financial Instruments |  | Cash Collateral Posted |  | Net Amount
Interest rate swap and collar contracts | $ | 133.8 |  |  | $ | — |  |  | $ | 133.8 |  |  | $ | — |  |  | $ | — |  |  | $ | 133.8 |
Total derivatives | 133.8 |  |  | — |  |  | 133.8 |  |  | — |  |  | — |  |  | 133.8 |
Repurchase agreements(2) | 523.9 |  |  | — |  |  | 523.9 |  |  | — |  |  | — |  |  | 523.9 |
Total liabilities | $ | 657.7 |  |  | $ | — |  |  | $ | 657.7 |  |  | $ | — |  |  | $ | — |  |  | $ | 657.7 |
(2) Repurchase agreements are fully collateralized by investment securities.
Credit-risk-related Contingent Feature The Company has agreements with certain of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. In addition, the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness. The Company has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well / adequately capitalized institution, then the counterparty could terminate the derivative positions and the Bank would be required to settle its obligations. Similarly, the Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as a publicly issued prompt corrective action directive, cease and desist order, or a capital maintenance agreement that required the Bank to maintain a specific capital level. If the Bank had breached any of these provisions at June 30, 2025 or December 31, 2024 it could have been required to settle its obligations under the agreements at the termination value. As of June 30, 2025, the fair value of derivatives in a net liability position that have contingent features described above was zero. As of June 30, 2025, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has not posted excess collateral. At June 30, 2025, the Company had not breached any of the settlement acceleration provisions.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration