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Derivative Financial Instruments | 9 Months Ended
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Sep. 30, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments Banking Derivative Financial Instruments: We use fair value hedges to seek to manage our exposure to changes in the fair value of certain recognized assets attributable to changes in a benchmark interest rate, such as SOFR. The fair value 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 offset by 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. Derivative instruments are measured at fair value and recorded as 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:
| Number of Transactions |  | Expiration Dates |  | Outstanding Notional |  | Estimated Fair Value |  |
September 30, 2023 |  |  |  |  |  |  |  |  |
Derivative financial instruments designated as hedging instruments: |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |
Interest Rate Products | 32 |  | 2028 - 2036 |  | $ | 198,424 |  |  | $ | 19,246 |  |  |
Derivative financial instruments not designated as hedging instruments: |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |
Interest Rate Products | 45 |  | 2023 - 2037 |  | $ | 397,422 |  |  | $ | 30,938 |  |  |
Other | 1 |  | 2025 |  | $ | 14,638 |  |  | $ | 4 |  |  |
Liabilities: |  |  |  |  |  |  |  |  |
Interest Rate Products | 45 |  | 2023 - 2037 |  | $ | 397,422 |  |  | $ | 30,319 |  |  |
December 31, 2022 |  |  |  |  |  |  |  |  |
Derivative financial instruments designated as hedging instruments: |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |
Interest Rate Products | 32 |  | 2028-2036 |  | $ | 201,906 |  |  | $ | 15,636 |  |  |
Derivative financial instruments not designated as hedging instruments: |  |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |  |
Interest Rate Products | 41 |  | 2024-2037 |  | $ | 338,770 |  |  | $ | 24,615 |  |  |
Other | 1 |  | 2025 |  | $ | 14,638 |  |  | $ | — |  |  |
Liabilities: |  |  |  |  |  |  |  |  |
Interest Rate Products | 41 |  | 2024-2037 |  | $ | 338,770 |  |  | $ | 24,242 |  |  |
We recorded gains and losses on banking derivative assets and liabilities as follows:
| For the three months ended September 30, |  | For the nine months ended September 30, |  |  |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |  |
Recorded gain on banking derivative assets | $ | 10,700 |  |  | $ | 15,123 |  |  | $ | 15,745 |  |  | $ | 30,192 |  |  |  |  |
Recorded loss on banking derivative liabilities | $ | (10,263) |  |  | $ | (14,771) |  |  | $ | (15,494) |  |  | $ | (29,095) |  |  |  |  |
For the three months ended September 30, 2023 and 2022, our banking derivative financial instruments not designated as hedging instruments generated fee income of $111 and $492, respectively. For the nine months ended September 30, 2023 and 2022 our banking derivative financial instruments not designated as hedging instruments generated fee income of $1,079, and $1,294, respectively. The carrying amount of hedged loans receivable as of September 30, 2023 and December 31, 2022 was $182,447 and $181,377, respectively. The cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged loans receivable as of September 30, 2023 and December 31, 2022 was $(14,249) and $(12,752), respectively. The carrying amount of hedged securities available-for-sale as of September 30, 2023 and December 31, 2022 was $35,449 and $35,869, respectively. The cumulative amount of fair value hedging adjustment, net of tax included in other comprehensive income (loss) as of September 30, 2023 and December 31, 2022 was $3,768, and $2,174, 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 September 30, 2023 and December 31, 2022, 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 $31,061 and $24,677, respectively. As of September 30, 2023 and December 31, 2022, we have minimum collateral posting thresholds with our derivative counterparties and have posted collateral of $10,890 and $8,790, respectively. If we had breached any of these provisions at September 30, 2023, we could have been required to settle our obligations under the agreements at their termination value of $31,061. Mortgage Banking Derivative Financial Instruments: The components of our mortgage banking derivative financial instruments consisted of the following as of:
| Expiration Dates |  | Outstanding Notional |  | Estimated Fair Value |  |
September 30, 2023 |  |  |  |  |  |  |
Derivative financial instruments |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Interest rate lock commitments (IRLC) | 2023 |  | $ | 57,868 |  |  | $ | 59 |  |  |
Forward MBS trades | 2023 |  | $ | 74,000 |  |  | $ | 568 |  |  |
Liabilities: |  |  |  |  |  |  |
Futures | 2023 |  | $ | 18,800 |  |  | $ | 1,274 |  |  |
December 31, 2022 |  |  |  |  |  |  |
Derivative financial instruments |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |
Forward MBS trades | 2023 |  | $ | 85,000 |  |  | $ | 36 |  |  |
Liabilities: |  |  |  |  |  |  |
Futures | 2023 |  | $ | 21,800 |  |  | $ | 225 |  |  |
Interest rate lock commitments (IRLC) | 2023 |  | $ | 52,533 |  |  | $ | 60 |  |  |
We recorded gains and losses on mortgage banking derivative assets and liabilities as follows:
| For the three months ended September 30, |  | For the nine months ended September 30, |  |  |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |  |
Recorded gain on mortgage banking derivative assets | $ | 955 |  |  | $ | 3,277 |  |  | $ | 651 |  |  | $ | 5,189 |  |  |  |  |
Recorded loss on mortgage banking derivative liabilities | $ | (3,459) |  |  | $ | (2,844) |  |  | $ | (3,499) |  |  | $ | (16,940) |  |  |  |  |

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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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