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
Derivative Positions and Offsetting
Derivatives Designated in Hedge Relationships. Interest rate swaps allow the Company to change the fixed or variable nature of an interest rate without the exchange of the underlying notional amount. Certain pay fixed/receive variable interest rate swaps are designated as cash flow hedges to effectively convert variable-rate debt into fixed-rate debt, whereas certain receive fixed/pay variable interest rate swaps are designated as fair value hedges to effectively convert fixed-rate debt into variable-rate debt. Certain purchased options are also designated as cash flow hedges, allowing the Company to limit the potential adverse impact of variable interest rates by establishing a cap rate or floor rate in exchange for an upfront premium. The purchased options designated as cash flow hedges represent interest rate caps where payment is received from the counterparty if interest rates rise above the cap rate, and interest rate floors where payment is received from the counterparty when interest rates fall below the floor rate. The maximum length of time over which forecasted transactions are hedged is 2.0 years.
Derivatives Not Designated in Hedge Relationships. The Company also enters into derivative transactions that are not designated in hedge relationships. The Company has a back-to-back swap program, whereby it enters into an interest rate swap with a qualified customer and simultaneously enters into an equal and opposite interest rate swap with a swap counterparty, to hedge interest rate risk. Derivative assets and derivative liabilities with the same counterparty are presented on a net basis when master netting agreements are in place.
The following tables present the notional amounts and fair values, including accrued interest, of derivative positions:
June 30, 2026
Asset DerivativesLiability Derivatives
(In thousands)Notional AmountsFair ValueNotional AmountsFair Value
Designated in hedge relationships:
Interest rate derivatives (1)
$1,750,000 $2,947 $3,750,000 $3,716 
Not designated in hedge relationships:
Interest rate derivatives (1)
10,427,878 211,113 10,424,304 211,598 
Mortgage banking derivatives 913 7 — — 
Other (2)
481,996 694 1,091,921 479 
Total not designated in hedge relationships10,910,787 211,814 11,516,225 212,077 
Gross derivative financial instruments, before netting$12,660,787 214,761 $15,266,225 215,793 
Less: Master netting agreements20,951 20,951 
Cash collateral pledged164,198 2,254 
Total derivative financial instruments, after netting$29,612 $192,588 
December 31, 2025
Asset DerivativesLiability Derivatives
(In thousands)Notional AmountsFair ValueNotional AmountsFair Value
Designated in hedge relationships:
Interest rate derivatives (1)
$4,500,000 $6,258 $500,000 $403 
Not designated in hedge relationships:
Interest rate derivatives (1)
9,989,160 223,685 9,989,160 222,794 
Mortgage banking derivatives 4,032 67 — — 
Other (2)
412,075 191 1,014,621 517 
Total not designated in hedge relationships10,405,267 223,943 11,003,781 223,311 
Gross derivative financial instruments, before netting$14,905,267 230,201 $11,503,781 223,714 
Less: Master netting agreements65,063 65,063 
Cash collateral pledged84,056 12,053 
Total derivative financial instruments, after netting$81,082 $146,598 
(1)The notional amounts of interest rate swaps that were centrally-cleared through clearing houses was $190.3 million at June 30, 2026, and $65.3 million at December 31, 2025, for asset derivatives, and zero at June 30, 2026, and $126.5 million at December 31, 2025, for liability derivatives. Interest rate swaps that are centrally-cleared through clearing houses are “settled-to-market” and considered a single unit of account. In accordance with their rule books, clearing houses record the variation margin transferred for settled-to-market derivatives as a legal settlement of the derivative contract (i.e., the variation margin legally settles the outstanding exposure, but does not result in any other change or reset of the contractual terms of the derivative). The fair values of the Company’s settled-to-market interest rate swaps are presented net on the accompanying Condensed Consolidated Balance Sheets and approximated zero at June 30, 2026, and at December 31, 2025.
(2)Other derivatives not designated in hedge relationships included foreign currency forward contracts related to lending arrangements, a Visa equity swap transaction, and risk participation agreements. The notional amount of risk participation agreements was $426.5 million at June 30, 2026, and $370.1 million at December 31, 2025, for asset derivatives, and $1.0 billion at June 30, 2026, and $965.4 million at December 31, 2025, for liability derivatives, all of which had immaterial related fair values.
The following tables represent the offsetting of derivative financial instruments that are subject to master netting agreements:
June 30, 2026
Gross Amounts of Recognized Assets/LiabilitiesGross Amounts Offset in the Statement of Financial PositionNet Amounts of Assets/Liabilities Presented in the Statement of Financial PositionGross Amounts Not Offset in the Statement of Financial Position
(In thousands)Financial InstrumentsCash Collateral PledgedNet Amount
Asset derivatives$195,704 $20,951 $174,753 $— $164,198 $10,555 
Liability derivatives23,205 20,951 2,254 — 2,254 — 
December 31, 2025
Gross Amounts of Recognized Assets/LiabilitiesGross Amounts Offset in the Statement of Financial PositionNet Amounts of Assets/Liabilities Presented in the Statement of Financial PositionGross Amounts Not Offset in the Statement of Financial Position
(In thousands)Financial InstrumentsCash Collateral PledgedNet Amount
Asset derivatives$153,854 $65,063 $88,791 $— $84,056 $4,735 
Liability derivatives77,167 65,063 12,104 — 12,053 51 
Derivative Activity
The following table summarizes the income statement effect of derivatives designated in hedge relationships:
Recognized inThree months ended June 30,Six months ended June 30,
(In thousands)Net Interest Income2026202520262025
Cash flow hedges:
Interest rate derivatives (1)
Interest and fees on loans and leases$320 $(2,689)$656 $(5,944)
(1)Additional information regarding the amounts recognized in net income related to cash flow hedge activities can be found within
Note 9: Accumulated Other Comprehensive (Loss), Net of Tax.
The following table summarizes the income statement effect of derivatives not designated in hedge relationships:
Recognized inThree months ended June 30,Six months ended June 30,
(In thousands)Non-interest Income2026202520262025
Interest rate derivativesOther income$2,952 $896 $6,816 $(1,928)
Mortgage banking derivativesOther income(3)(14)(60)(1)
OtherOther income(226)(4,020)(1,111)(5,007)
Total not designated in hedge relationships$2,723 $(3,138)$5,645 $(6,936)
Derivative Exposure. At June 30, 2026, the Company had $164.6 million of cash collateral received and $2.7 million of cash collateral posted included in Cash and due from banks on the accompanying Condensed Consolidated Balance Sheets. In addition, at June 30, 2026, the Company had $3.2 million in initial margin posted at clearing houses, which is included in Accrued interest receivable and other assets on the accompanying Condensed Consolidated Balance Sheets. The Company regularly evaluates the credit risk of its derivative customers, taking into account the likelihood of default, net exposures, and remaining contractual life, among other related factors. Credit risk exposure is mitigated as transactions with customers are generally secured by the same collateral of the underlying transactions. The current net credit exposure relating to customer derivatives was $19.1 million at June 30, 2026. The Company also monitors potential future exposure, which represents its best estimate of exposure to remaining contractual maturity. The potential future exposure relating to customer derivatives was $132.6 million at June 30, 2026. The Company has incorporated a credit valuation adjustment to reflect non-performance risk in the fair value measurement of its derivative financial instruments, which totaled $4.9 million at June 30, 2026, and $4.2 million at December 31, 2025. Various factors impact the change in the credit valuation adjustment over time, such as changes in the credit spreads of the contracted parties, and changes in market rates and volatilities, which can affect the total expected exposure of the derivative financial instruments.
Additional information regarding the Company’s accounting policies for derivative financial instruments can be found within Note 1: Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements contained in Part II - Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.