v3.26.1
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments Derivative Financial Instruments
The notional amounts and estimated fair values of derivative positions outstanding are presented in the following table.
 June 30, 2026December 31, 2025
Estimated Fair ValueEstimated Fair Value
(in thousands)Notional
Amount		Asset DerivativeLiability DerivativeNotional
Amount		Asset DerivativeLiability Derivative
Derivatives designated as hedges
Cash flow hedges:
Interest rate contracts:
Swaps hedging loans$2,600,000 $118 $18,833 $2,050,000 $4,067 $770 
Fair value hedges:
Interest rate contracts:
Swaps hedging long-term debt400,000 — 10,200 — — — 
Non-hedging derivatives
Customer-initiated and other derivatives:
Foreign currency forward contracts724,896 10,053 9,600 265,943 1,212 984 
Commodity contracts112,146 3,219 2,784 — — — 
Interest rate contracts:
Swaps7,097,543 28,013 28,013 6,669,382 31,587 31,587 
Caps and floors written2,594,043 630 2,620 2,740,883 3,718 1,054 
Caps and floors purchased2,635,322 2,685 695 2,782,162 1,179 3,842 
Forward contracts28,453,690 49,846 49,198 22,454,928 40,214 40,021 
Gross derivatives94,564 121,943 81,977 78,258 
Netting adjustment - offsetting derivative assets/liabilities(48,744)(48,744)(33,926)(33,926)
Netting adjustment - cash collateral received/posted(30,498)(30,729)(7,159)(19,874)
Net derivatives included on the consolidated balance sheets$15,322 $42,470 $40,892 $24,458 
In the second quarter of 2026, the Company entered into commodity contract derivative instruments with customers while at the same time entering into offsetting commodity contract derivative instruments with another financial institution. These transactions allow the customer to effectively manage their exposure to commodity value fluctuations. Any changes in the fair value of the underlying derivative instruments substantially offset each other, with any difference recorded in trading income on the consolidated statements of income and other comprehensive income.
The Company’s credit exposure on derivative instruments is limited to the net favorable value and interest payments by each counterparty. In some cases, collateral may be required from the counterparties involved if the net value of the derivative instruments exceeds a nominal amount. The Company’s credit exposure associated with these instruments, net of any collateral pledged, was approximately $15.3 million at June 30, 2026 and approximately $40.9 million at December 31, 2025. Collateral levels are monitored and adjusted on a regular basis for changes in the value of derivative instruments. At June 30, 2026, the Company had $116.2 million in cash collateral pledged to counterparties included in interest bearing cash and cash equivalents on the consolidated balance sheet and $33.7 million in cash collateral received from counterparties included in interest bearing deposits on the consolidated balance sheet. The comparative amounts at December 31, 2025, were $29.5 million in cash collateral pledged to counterparties and $7.6 million cash collateral received from counterparties.
The Company also enters into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which the Company is either a participant or a lead bank. The risk participation agreements entered into by the Company as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution. The Company is party to 24 risk participation agreements where it acts as a participant bank with a notional amount of $425.6 million at June 30, 2026, compared to 23 risk participation agreements with a notional amount of $338.1 million at December 31, 2025. The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $3.4 million at June 30, 2026 and $510,000 at December 31, 2025. The fair value of these exposures was insignificant to the consolidated financial statements at both June 30, 2026 and December 31, 2025. Risk participation agreements entered into by the Company as the lead bank provide credit protection should the borrower fail to perform on its interest rate derivative contract. The Company is party to 52 risk participation agreements where the Company acts as the lead bank having a notional amount of $665.1 million at June 30, 2026, compared to 47 agreements having a notional amount of $603.1 million at December 31, 2025.
Derivatives Designated as Cash Flow Hedges
The Company enters into interest rate derivative contracts that are designated as qualifying cash flow hedges to hedge the exposure to variability in expected future cash flows attributable to changes in a contractually specified interest rate.
During the six months ended June 30, 2026, the Company recorded $24.7 million in unrealized losses to adjust its cash flow hedges to fair value, which was recorded net of tax to AOCI, and reclassified $2.2 million from AOCI as a decrease to interest income on loans. Based on current market conditions, the Company estimates that during the next 12 months, an additional $10.4 million will be reclassified from AOCI as a decrease to interest income. As of June 30, 2026, the maximum length of time over which forecasted transactions are hedged is 2.09 years.
Derivatives Designated as Fair Value Hedges
The Company enters into interest rate derivative contracts that are designated as qualifying fair value hedges to hedge the exposure to variability in fair value attributable to changes in a contractually specified interest rate. To qualify for hedge accounting the hedging relationship, both at inception and on an ongoing basis, must be expected to be highly effective in achieving offsetting fair value adjustments attributable to the hedged risk during the term of the hedge if a fair value hedge. As of June 30, 2026, all of the Company’s fair value hedges are accounted for using the shortcut method. The shortcut method assumes perfect hedge effectiveness and eliminates the quantitative aspect of assessing hedge effectiveness. The fair value hedges are recorded at fair value in other assets and other liabilities on the consolidated balance sheets with changes in fair value recorded in the same income statement line item as the offsetting unrealized loss or gain on the hedged item attributable to the risk being hedged.
During the first quarter of 2026, the Company entered into a receive-fixed, pay-variable interest rate swap contract to hedge the change in the fair value due to fluctuations in market interest rates for the $400.0 million Company-issued 5.301% fixed rate senior notes. The change in fair value of the fair value hedge is recorded through earnings with an exact offset against the change in the fair value of the hedged item within interest expense on long-term debt in the consolidated statements of income. During the six months ended June 30, 2026, the Company recorded $413,000 in interest expense on long-term debt related to interest settlements on derivatives. As of June 30, 2026, the carrying amount of the hedged liability was $387.5 million, which included a $10.2 million cumulative basis reduction related to the application of hedge accounting.