v3.26.1
Derivative Financial Instruments
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments
Note 6    Derivative Financial Instruments
Derivatives designated as hedging instruments
The Company has entered into interest rate derivatives designated as cash flow hedges with the objective of limiting the variability of interest payment cash flows. Changes in fair value of derivative instruments designated as cash flow hedges are reported in accumulated other comprehensive income.

The following table summarizes the Company's derivatives designated as hedging instruments as of the dates indicated (in thousands):
June 30, 2026December 31, 2025
Notional Amount
Fair Value(1)
Notional Amount
Fair Value(1)
AssetLiabilityAssetLiability
Derivatives designated as cash flow hedges:
Interest rate swaps$3,505,000 $691 $(16,694)$4,555,000 $7,104 $(1,955)
Interest rate collar125,000 — — 125,000 1 — 
$3,630,000 $691 $(16,694)$4,680,000 $7,105 $(1,955)
(1)The fair values of derivatives are included in other assets or other liabilities in the consolidated balance sheets.
The following table provides information about the amount of gain (loss) related to derivatives designated as cash flow hedges reclassified from AOCI into interest income or expense for the periods indicated (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Location of gain (loss) reclassified from AOCI into income:
Interest expense on deposits$— $832 $— $2,177 
Interest expense on borrowings531 5,074 1,480 11,115 
Interest income on loans784 (1,305)1,358 (2,609)
$1,315 $4,601 $2,838 $10,683 
During the three and six months ended June 30, 2026 and 2025, no derivative positions designated as cash flow hedges were discontinued and none of the gains and losses reported in AOCI were reclassified into earnings as a result of the discontinuance of cash flow hedges or because of the early extinguishment of debt.
As of June 30, 2026, the amount of net loss expected to be reclassified from AOCI into earnings during the next 12 months was $7.7 million, based on the forward curve. See Note 7 to the consolidated financial statements for additional information about the reclassification adjustments from AOCI into earnings.
Derivatives not designated as hedging instruments
The Company enters into interest rate derivative contracts with certain of its commercial borrowers to enable those borrowers to manage their exposure to interest rate fluctuations. To mitigate interest rate risk associated with these derivative contracts, the Company enters into offsetting derivative contract positions with primary dealers. In addition, the Company purchases and sells credit protection under RPAs with the objective of sharing with financial institution counterparties some of the credit exposure related to interest rate derivative contracts entered into with commercial borrowers related to participations purchased or sold. The Company will make or receive payments under these agreements if a customer defaults on an obligation to perform under certain interest rate derivative contracts. The Company also enters into foreign currency forward derivative contracts with commercial borrowers to enable borrowers to manage their exposure to foreign currency fluctuations. The Company enters into offsetting forward contracts with primary dealers to mitigate the foreign currency risk associated with these contracts.
These derivative contracts are not designated as hedging instruments; therefore, changes in the fair value of these derivatives are recognized in earnings. Fees recognized related to these derivative instruments were $6.8 million and $9.4 million for the three and six months ended June 30, 2026, respectively, and $3.6 million and $6.9 million for the three and six months ended June 30, 2025. These fees are included in "capital markets income" in the accompanying consolidated statements of income.
The Company may be exposed to credit risk in the event of non-performance by the counterparties to its commercial customer derivative agreements. The Company assesses the credit risk of its financial institution counterparties by monitoring publicly available credit rating and financial information. The Company manages dealer credit risk by entering into derivatives only with primary and highly rated counterparties, the use of ISDA master agreements, central clearing mechanisms and counterparty limits. The agreements contain bilateral collateral arrangements with the amount of collateral to be posted generally governed by the settlement value of outstanding swaps. The Company manages the risk of default by its commercial borrower counterparties through its normal loan underwriting and credit monitoring policies and procedures. The Company does not currently anticipate any significant losses from failure of derivative counterparties to honor their obligations.
The following table summarizes the Company's derivatives not designated as hedging instruments as of the dates indicated (in thousands):
June 30, 2026December 31, 2025
Notional Amount
Fair Value(1)
Notional Amount
Fair Value(1)
AssetLiabilityAssetLiability
Pay-fixed interest rate swaps$4,640,723 $41,641 $(18,399)$4,136,758 $26,526 $(50,883)
Pay-variable interest rate swaps4,640,723 18,425 (41,641)4,136,758 51,012 (26,526)
Interest rate caps and collars purchased
265,908 1,005 — 280,537 198 (42)
Interest rate caps and collars sold
265,908 — (1,005)280,537 42 (198)
RPAs purchased304,584 410 — 245,198 273 — 
RPAs sold419,233 — (178)357,889 — (212)
$10,537,079 $61,481 $(61,223)$9,437,677 $78,051 $(77,861)
(1)Fair values of these derivatives are included in other assets and other liabilities in the consolidated balance sheets. The notional amount and fair value of the foreign currency forward derivative contracts not designated as hedging instruments were not significant at June 30, 2026 and December 31, 2025.
Some of the Company’s ISDA master agreements with financial institution counterparties contain provisions that permit either counterparty to terminate the agreements and require settlement in the event that regulatory capital ratios fall below certain designated thresholds, upon the initiation of other defined regulatory actions or upon suspension or withdrawal of the Bank’s credit rating. Currently, there are no circumstances that would trigger these provisions of the agreements.
Master netting agreements
The Company does not offset assets and liabilities under master netting agreements for financial reporting purposes. Information on interest rate derivative instruments subject to these agreements is as follows at the dates indicated (in thousands):
June 30, 2026
Gross Amounts Offset in Balance
Sheet		Net Amounts Presented in
Balance Sheet		Gross Amounts Not Offset in
Balance Sheet
Gross Amounts
Recognized		Derivative
Instruments		Collateral
Pledged		Net Amount
Derivative assets$43,337 $— $43,337 $(20,225)$(21,506)$1,606 
Derivative liabilities(35,093)— (35,093)20,225 14,868 — 
$8,244 $— $8,244 $— $(6,638)$1,606 
December 31, 2025
Gross Amounts Offset in Balance
Sheet		Net Amounts Presented in
Balance Sheet		Gross Amounts Not Offset in
Balance Sheet
Gross Amounts
Recognized		Derivative
Instruments		Collateral
Pledged		Net Amount
Derivative assets$33,829 $— $33,829 $(23,382)$(9,258)$1,189 
Derivative liabilities(52,880)— (52,880)23,382 29,498 — 
$(19,051)$— $(19,051)$— $20,240 $1,189 
The difference between the amounts reported for interest rate swaps subject to master netting agreements and the total fair value of interest rate contract derivative financial instruments reported in the consolidated balance sheets is related to interest rate derivative contracts not subject to master netting agreements.