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Derivatives
 6 Months Ended
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives 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 mortgage loans are typically locked in for between 45 to 90 days with the customer. These interest rate lock commitments are recorded at fair value in the Company’s consolidated balance sheets. The Company also enters into best effort or mandatory delivery forward commitments to sell residential mortgage loans to secondary market investors. Gains and losses arising from changes in the valuation of the rate-lock commitments and forward commitments are recognized currently in earnings and are reflected under the line item “Mortgage banking income” on the consolidated statements of income.
The Company enters into forward commitments, futures and options contracts that are not designated as hedging instruments as economic hedges to offset the changes in fair value of MSRs. Gains and losses associated with these instruments are included in earnings and are reflected under the line item “Mortgage banking income” on the consolidated statements of income.
Additionally, the Company enters 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 customer contracts, the Company enters into an offsetting derivative contract. The Company manages its credit risk, or potential risk of default by its commercial customers through credit limit approval and monitoring procedures.
The Company also maintains two interest rate swap agreements with notional amounts totaling $30,000 used to hedge interest rate exposure on outstanding subordinated debentures included in long-term debt totaling $30,930. Under these agreements, the Company receives a variable rate of interest equal to 3-month LIBOR and pays a weighted average fixed rate of interest of 2.08%. The interest rate swap contracts, which mature in June of 2024, are designated as cash flow
hedges with the objective of reducing the variability in cash flows resulting from changes in interest rates. As of June 30, 2020 and December 31, 2019, the fair value of these contracts resulted in a liability of $2,215 and $515, respectively.
In July 2017, the Company entered into three interest rate swap contracts on floating rate liabilities at the Bank level with notional amounts of $30,000, $35,000 and $35,000 for a period of three, four and five years, respectively. These interest rate swaps were designated as cash flow hedges with the objective of reducing the variability of cash flows associated with $100,000 of FHLB borrowings. During the first quarter of 2018, these swaps were canceled, locking in a tax-adjusted gain of $1,564 in other comprehensive income to be accreted over the three, four and five-year terms of the underlying contracts. As of June 30, 2020 and December 31, 2019, there was $660 and $955, respectively, remaining in the other comprehensive income to be accreted.
Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheets when the “right of offset” 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, however the Company has not elected to offset such financial instruments in the consolidated balance sheets. The following table presents the Company's gross derivative positions as recognized in the consolidated balance sheets as well as the net derivative positions, including collateral pledged to the extent the application of such collateral did not reduce the net derivative liability position below zero, had the Company elected to offset those instruments subject to an enforceable master netting agreement:
Offsetting Derivative AssetsOffsetting Derivative Liabilities
June 30, 2020December 31, 2019June 30, 2020December 31, 2019
Gross amounts recognized$4,562  $331  $41,059  $14,682  
Gross amounts offset in the consolidated
balance sheets		—  —  —  —  
Net amounts presented in the consolidated
balance sheets		4,562  331  41,059  14,682  
Gross amounts not offset in the
consolidated balance sheets
Less: financial instruments1,054  139  1,054  139  
Less: financial collateral pledged—  —  40,005  14,543  
Net amounts$3,508  $192  $—  $—  
Most derivative contracts with clients are secured by collateral. Additionally, in accordance with the interest rate agreements with derivatives dealers, the Company may be required to post margin to these counterparties. At June 30, 2020 and December 31, 2019, the Company had minimum collateral posting thresholds with certain derivative counterparties and had collateral posted of $46,267 and $33,616, respectively, against its obligations under these agreements. Cash collateral related to derivative contracts is recorded in other assets in the consolidated balance sheets.

The following tables provide details on the Company’s derivative financial instruments as of the dates presented:
June 30, 2020
Notional AmountAssetLiability
Not designated as hedging:
Interest rate contracts$541,983  $41,236  $41,068  
Forward commitments1,142,224  —  6,786  
Interest rate-lock commitments1,205,932  37,055  —  
Futures contracts248,700  2,253  —  
Total$3,138,839  $80,544  $47,854  
 December 31, 2019
 Notional AmountAssetLiability
Not designated as hedging:   
Interest rate contracts$440,556  $14,929  $14,929  
Forward commitments684,437  —  866  
Interest rate-lock commitments453,198  7,052  —  
Futures contracts389,000  —  1,623  
Total$1,967,191  $21,981  $17,418  
 
 June 30, 2020
 Notional AmountAssetLiability
Designated as hedging:   
Interest rate swaps$30,000  $—  $2,215  
December 31, 2019
Notional AmountAssetLiability
Designated as hedging:
Interest rate swaps$30,000  $—  $515  
Gains (losses) included in the consolidated statements of income related to the Company’s derivative financial instruments were as follows:
Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Not designated as hedging instruments (included in
mortgage banking income):
Interest rate lock commitments$9,541  $1,875  $30,003  $3,755  
Forward commitments(13,993) (5,264) (40,450) (9,668) 
Futures contracts631  4,107  11,542  5,978  
Option contracts—  31  —  44  
Total$(3,821) $749  $1,095  $109  
Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Designated as hedging:
Amount of gain reclassified from other comprehensive
   income and recognized in interest expense on
   borrowings, net of taxes of $(52), $(42), $(104), and $(75)
$148  $119  $295  $213  
(Loss) gain included in interest expense on borrowings(62) 39  (74) 94  
Total$86  $158  $221  $307  
The following discloses the amount included in other comprehensive income, net of tax, for derivative instruments designated as cash flow hedges for the periods presented: 
Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Designated as hedging:
Amount of loss recognized in other comprehensive
   income, net of taxes $40, $201, $443, and $317
$(112) $(564) $(1,257) $(895)