XML 29 R16.htm IDEA: XBRL DOCUMENT v3.22.4
Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
Banking Derivative Financial Instruments:
We are exposed to changes in the fair value of certain of our fixed-rate assets due to changes in benchmark interest rates. We use interest rate swaps to manage our exposure to changes in fair value on these instruments attributable to changes a designated benchmark interest rate, such as SOFR. Interest rate swaps designated as fair value hedges involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. The carrying amount of hedged loans receivable and available-for-sale securities as of December 31, 2022 and 2021 was $181,377 and $205,235, respectively. The cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged loans receivable as of December 31, 2022 and 2021 was $(12,752) and $5,614, respectively. The cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged available-for-sale securities as of December 31, 2022 and 2021 was $2,879 and $0, respectively. The hedges were determined to be effective during all periods presented and we expect the hedges to remain effective during their remaining terms.
Derivatives not designated as hedges are not speculative and result from a service we provide to certain customers. We execute interest rate swaps with banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that we execute with a third party, such that we minimize our 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 directly in earnings. These instruments are a component of prepaid expenses and other assets and accrued expenses and other liabilities.
The components of our banking derivative financial instruments consisted of the following as of December 31,:
Number of
Transactions		Expiration
Dates		Outstanding
Notional		Estimated
Fair
Value
2022
Derivative financial instruments designated as hedging instruments:
Assets:
Interest Rate Products322028-2036$201,906 $15,636 
Derivative financial instruments not designated as hedging instruments:
Assets:
Interest Rate Products412024-2037$338,770 $24,615 
Other12025$14,638 $— 
Liabilities:
Interest Rate Products412024-2037$338,770 $24,242 
2021
Derivative financial instruments designated as hedging instruments:
Assets:
Interest Rate Products12029$20,190 $1,213 
Liabilities:
Interest Rate Products122022-2029$179,431 $7,107 
Derivative financial instruments not designated as hedging instruments:
Assets:
Interest Rate Products382024-2036$232,849 $6,923 
Liabilities:
Interest Rate Products382024-2036$232,849 $7,366 
We recorded gains and losses on banking derivatives assets as follows for the years ended December 31,:
202220212020
Recorded gain (loss) on banking derivative assets$28,783 $(777)$6,944 
Recorded (loss) gain on banking derivative liabilities$(27,973)$1,172 $(7,477)
For the years ended December 31, 2022, 2021 and 2020 our banking derivative financial instruments not designated as hedging instruments generated fee income of $2,152, $2,309 and $3,066, respectively.
Credit-risk-related Contingent Features:
We have agreements with each of our derivative counterparties that contain a provision where if we either default or are capable of being declared in default on any of our indebtedness, then we could also be declared in default on our derivative obligations.
We also have agreements with our derivative counterparties that contain a provision where if we fail to maintain our status as a well-capitalized institution, then our derivative counterparties have the right, but not the obligation to terminate existing swaps. As of December 31, 2022 and 2021, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $24,677 and $14,882, respectively. As of December 31, 2022 and 2021, we have minimum collateral posting thresholds with our derivative counterparties and have posted collateral of $8,790 and $14,970, respectively. If we had breached any of these provisions at December 31, 2022, we could have been required to settle our obligations under the agreements at their termination value of $24,677.
Mortgage Banking Derivative Financial Instruments:
The components of our mortgage banking derivative financial instruments consisted of the following as of December 31,:
Expiration
Dates		Outstanding
Notional		Estimated
Fair
Value
2022
Derivative financial instruments
Assets:
Forward MBS trades2023$85,000 $36 
Liabilities:
Forward MBS trades2023$21,800 $225 
Interest rate lock commitments (IRLC)2023$52,533 $60 
2021
Derivative financial instruments
Assets:
Forward MBS trades2022$450,600 $1,329 
Interest rate lock commitments (IRLC)2022$142,334 $1,350 
Liabilities:
Forward MBS trades2022$16,600 $52 
We recorded gains and losses on mortgage banking derivatives assets as follows for the years ended December 31,:
202220212020
Recorded gain (loss) on mortgage banking derivative assets$233 $(9,655)$27,396 
Recorded (loss) gain on mortgage banking derivative liabilities$(15,863)$246 $(6,984)