Note (18)—Derivatives:

The Company utilizes derivative financial instruments as part of its ongoing efforts to manage its interest rate risk exposure as well as the exposure for its customers. Derivative financial instruments are included in the Consolidated Balance Sheets line item “Other assets” or “Other liabilities” at fair value in accordance with ASC 815, “Derivatives and Hedging.”

The Company enters into commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate-lock commitments). Under such commitments, interest rates for a mortgage loan are typically locked in for up to forty-five days with the customer. These interest rate lock commitments are recorded at fair value in the Company’s Consolidated Balance Sheets. The notional amount of commitments to fund fixed-rate mortgage loans was $532,920 and $263,395 at December 31, 2016 and 2015, respectively. The Company also enters into mandatory delivery forward commitments to sell residential mortgage loans to secondary market investors. The notional amount of commitments to sell residential mortgage loans to secondary market investors was $829,000 and $445,000 at December 31, 2016 and 2015, respectively. Gains and losses arising from changes in the valuation of the commitments are recognized currently in earnings and are reflected under the line item “Mortgage banking income” on the Consolidated Statements of Income.

The Company has entered into derivative instruments that are not designated as hedging instruments to help its commercial customers manage their exposure to interest rate fluctuations. To mitigate the interest rate risk associated with these customer contracts, the Company enters into an offsetting derivative contract position. The Company manages its credit risk, or potential risk of default by its commercial customers, through credit limit approval and monitoring procedures. At December 31, 2016 and 2015, the Company had notional amounts of $22,243 and $4,409, respectively, on interest rate contracts with corporate customers and $22,243 and $4,409, respectively, in offsetting interest rate contracts with other financial institutions to mitigate the Company’s rate exposure on its corporate customers’ contracts and certain fixed-rate loans. The fair value on the swaps was $586 and $(369) at December 31, 2016 and 2015, respectively.

During the year ended December 31, 2016, the Company entered into agreements to sell $3,370,396 of serviced mortgage loans. As part of these transactions, the Company entered into a fair value hedge that is designated as a hedging instrument to protect against changes in the fair value of the related mortgage servicing rights that is attributable to interest rate volatility. The Company recognized a loss of $5,569 during the year ended December 31, 2016 related to the hedging of these sales transactions.

Certain financial instruments, including derivatives, may be eligible for offset in the Consolidated Balance Sheet when the “right of setoff” exists or when the instruments are subject to an enforceable master netting agreement, which includes the right of the non-defaulting party or non-affected party to offset recognized amounts, including collateral posted with the counterparty, to determine a net receivable or net payable upon early termination of the agreement. Certain of the Company’s derivative instruments are subject to master netting agreements. The Company has not elected to offset such financial instruments in the Consolidated Balance Sheets.

The following table provides details on the Company’s derivative financial instruments as of the dates presented:

	Balance Sheet Classification	Fair Value
		At December 31,
		2016		2015
Derivative assets:
Not designated as hedging:
Interest rate swaps	Other Assets	$	586	$	369
Forward commitments	Other Assets		12,731		61
Interest rate-lock commitments	Other Assets		6,428		5,593
Total		$	19,745	$	6,023

Derivative liabilities:
Not designated as hedging:
Interest rate swaps	Other Liabilities	$	586	$	369
Forward commitments	Other Liabilities		—		—
Total		$	586	$	369

Gains (losses) included in the Consolidated Statements of Income related to the Company’s derivative financial instruments were as follows:

	Year Ended December 31,
	2016			2015			2014
Derivatives not designated as hedging instruments:
Interest rate lock commitments:
Included in mortgage banking income	$	835		$	2,073		$	2,535
Forward commitments:
Included in mortgage banking income		10,497			(3,600	)		(9,029	)
Derivatives designated as hedging instruments:
Fair value hedge
Included in loss on sale of mortgage servicing rights		(5,569	)		—			—
Total	$	5,763		$	(1,527	)	$	(6,494	)