XML 27 R16.htm IDEA: XBRL DOCUMENT v3.25.3
Derivatives
 9 Months Ended
Sep. 30, 2025
Derivatives [Abstract]  
Derivatives DERIVATIVES
We use derivative instruments and other risk management techniques to reduce our exposure to adverse fluctuations in interest rates and foreign currency exchange rates in accordance with our risk management policies and for certain loan clients to allow them to hedge the risk of rising interest rates and on their variable rate loans.
Our derivatives are carried at fair value and recorded in "Other assets" or "Accrued interest payable and other liabilities," as appropriate, in the condensed consolidated balance sheets. On the date we enter into a derivative contract, the derivative is designated as a fair value hedge, cash flow hedge, or a hedge designation is not made as it is a customer-related transaction. When a derivative is designated as a fair value hedge or cash flow hedge, the Company performs an assessment at inception, and at least quarterly thereafter, to determine the effectiveness of the derivative in offsetting changes in the fair value or cash flows of the hedged items.
The following table presents the U.S. dollar notional amounts and fair values of our derivative instruments included in the condensed consolidated balance sheets as of the dates indicated:
September 30, 2025December 31, 2024
NotionalFair ValueNotionalFair Value
AmountAssetLiabilityAmountAssetLiability
(In thousands)
Derivatives Designated as Cash Flow Hedges:
Interest rate swaps$300,000 $— $4,281 $300,000 $1,442 $— 
Interest rate collars1,000,000 — 113 — — — 
Derivatives Not Designated as Hedging Instruments:
Interest rate contracts152,480 4,268 4,224 192,405 6,516 6,428 
Foreign exchange contracts97,312 128 119 36,155 515 1,134 
Equity warrant assets14,494 3,418 — 16,066 3,763 — 
Total contracts$1,564,286 $7,814 $8,737 $544,626 $12,236 $7,562 
Cash Flow Hedges
Cash flow hedges included pay-fixed, receive-floating interest rate swap contracts with notional amounts aggregating $300.0 million, five-year terms, and varying maturity dates throughout 2028. These swap contracts were entered into with institutional counterparties to hedge against variability in cash flow attributable to interest rate risk on a portion of the Company's borrowings. Cash flow hedges also included interest rate collars, which are option contracts designed to limit the Company's exposure to increases in short term interest rates while foregoing some of the upside if short term interest rates decrease significantly. The interest rate collars have notional amounts aggregating to $1.0 billion, with eighteen month terms, and maturing on October 31, 2026. These collars were entered into with institutional counterparties to hedge against variability in cash flows attributable to interest rate risk on a portion of the Company's floating rate deposits.
The cash flow hedges were deemed highly effective at inception and as of September 30, 2025. For derivatives designated as cash flow hedges, the portion of changes in fair value considered to be highly effective is reported as a component of AOCI on the condensed consolidated balance sheets until the related cash flows from the hedged items are recognized in earnings. As of September 30, 2025, the fair value of the cash flow hedges represented a net liability of $4.4 million, related to which a loss of $3.9 million (net of tax) was included in AOCI. The estimated amount to be reclassified in the next 12 months out of AOCI into earnings is $1.1 million.
Terminated Cash Flow Hedge
The Company terminated all of the pay-fixed, receive floating interest rate swap contracts classified as cash flow hedges with notional amounts of $355.0 million entered into during 2024, and all remaining deferred amounts in AOCI have been amortized into interest expense as of the end of the third quarter of 2025.
Other Interest Rate Swaps, Foreign Exchange Contracts, and Equity Warrant Assets Not Designated for Hedge Accounting
The Company offers borrowers interest rate swaps under a "back-to-back" loan hedging program and offsets these "pay floating/receive fixed" contracts with borrowers with "receive floating/pay fixed" swaps with counterparty banks. The total notional balance of these offsetting hedging contracts was $152.5 million at September 30, 2025.
The Company has also hedged the interest rate risk and foreign currency risk on €25.8 million of subordinated debt utilizing a cross-currency swap. Under the current terms of the swap, the Company receives three-month Euribor plus 205 basis points and pays a fixed rate of 5.92% with ultimate principal exchanged at maturity. For the quarter ended September 30, 2025, changes in fair value and fees recorded to "Noninterest income" in the condensed consolidated statements of earnings were immaterial.
See Note 12. Fair Value Measurements for additional information regarding equity warrant assets.