The Company uses derivative instruments to manage its exposure to market risks, including interest rate risk, and to assist customers with their risk management objectives. The Company designates certain derivatives as hedging instruments in a qualifying hedge accounting relationship, while other derivatives serve as economic hedges that do not qualify for hedge accounting.

The Company enters into certain interest rate swap contracts that are matched to closed portfolios of fixed-rate residential mortgage loans and available-for-sale investment securities. These contracts have been designated as hedging instruments to hedge the risk of changes in the fair value of the underlying loans or investment securities due to changes in interest rates. The related contracts are structured so that the notional amounts reduce over time to generally match the expected amortization of the underlying loan or investment security.


	March 31, 2025					December 31, 2024
(dollars in thousands)	Notional Amount		Fair Value			Notional Amount		Fair Value
Derivatives designated as hedging instruments
Interest Rate Swap Agreements 1	$	2,000,000	$	(9,006	)	$	2,000,000	$	2,738
Derivatives not designated as hedging instruments
Interest Rate Lock Commitments		2,470		58			1,534		34
Forward Commitments		4,836		(15	)		3,517		6
Interest Rate Swap Agreements
Receive Fixed/Pay Variable Swaps		2,192,824		(100,625	)		2,123,665		(136,218	)
Pay Fixed/Receive Variable Swaps		2,192,824		100,513			2,123,665		136,125
Conversion Rate Swap Agreements 2		106,672	NA				96,466	NA
Makewhole Agreements 3		72,647	NA				65,763	NA

As of March 31, 2025 and December 31, 2024, the amounts presented in the table above exclude forward starting swaps with a notional value of $300 million and a fair value of $2.4 million and $4.7 million, respectively. These swaps are scheduled to begin between August 2025 and March 2026.

The conversion rate swap agreements were valued at zero as further reductions to the conversion rate were not reasonably estimable.

The makewhole agreements were valued at zero as the likelihood of a payment required to the buyer was not reasonably estimable.

The following table presents the Company’s derivative financial instruments, their fair values, and their location in the unaudited consolidated statements of condition as of March 31, 2025 and December 31, 2024:


	March 31, 2025				December 31, 2024
(dollars in thousands)	Asset Derivatives 1		Liability Derivatives 1		Asset Derivatives 1		Liability Derivatives 1
Interest Rate Swap Agreements
Not designated as hedging instruments	$	120,021	$	120,133	$	146,923	$	147,016
Designated as hedging instruments		5,604		12,177		14,507		7,039
		125,625		132,310		161,430		154,055
Derivatives not designated as hedging instruments
Interest Rate Lock Commitments		58		—		34		—
Forward Commitments		—		15		9		3
Total Derivatives	$	125,683	$	132,325	$	161,473	$	154,058

Asset derivatives are included in other assets and liability derivatives are included in other liabilities in the unaudited consolidated statements of condition. Derivatives are recognized on the Company's unaudited consolidated statements of condition at fair value.

The following table presents the Company’s derivative financial instruments and the amount and location of the net gains or losses recognized in the unaudited consolidated statements of income for the three months ended March 31, 2025 and 2024:


	Location of Net Gains (Losses)	Three Months Ended March 31,
(dollars in thousands)	Recognized in the Statements of Income	2025			2024
Derivatives designated as hedging instruments
Recognized on Interest Rate Swap Agreements	Interest Income on Investment Securities Available-for-Sale	$	(5,662	)	$	16,893
Recognized on Hedged Item	Interest Income on Investment Securities Available-for-Sale		5,673			(17,002	)
Net Cash Settlements	Interest Income on Investment Securities Available-for-Sale		(1,868	)		2,722
Recognized on Interest Rate Swap Agreements	Interest and Fees on Loans and Leases		(8,379	)		22,603
Recognized on Hedged Item	Interest and Fees on Loans and Leases		8,372			(22,751	)
Net Cash Settlements	Interest and Fees on Loans and Leases		1,533			3,348
Derivatives not designated as hedging instruments
Interest Rate Lock Commitments	Mortgage Banking		200			123
Forward Commitments	Mortgage Banking		(35	)		96
Interest Rate Swap Agreements	Other Noninterest Income		(18	)		44
Conversion Rate Swap Agreement	Investment Securities Gains (Losses), Net		(578	)		—
Total		$	(762	)	$	6,076

The following amounts were recorded on the unaudited consolidated statements of condition related to the cumulative basis adjustment for fair value hedges as of March 31, 2025 and December 31, 2024:


Line Item in the Unaudited Consolidated Statements of Condition	Carrying Amount of the Hedged Assets				Cumulative Amount of Fair Value Hedging Adjustment Included In the Carrying Amount of the Hedged Assets
(dollars in thousands)	March 31, 2025		December 31, 2024		March 31, 2025		December 31, 2024
Investment Securities, Available-for-Sale 1	$	1,005,268	$	999,594	$	5,268	$	(406	)
Loans and Leases 2		1,301,042		1,292,670		1,042		(7,330	)

1 These amounts were included in the fair value of closed portfolios of investment securities, AFS used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. As of March 31, 2025 and December 31, 2024, the fair value of the closed portfolios used in these hedging relationships was $1.6 billion and $1.7 billion, respectively.

2 These amounts were included in the amortized cost basis of closed portfolios of loans used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. As of March 31, 2025 and December 31, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $2.9 billion and $3.0 billion, respectively.

The Company enters into interest rate lock commitments (“IRLCs”) for residential mortgage loans which commit us to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs that relate to the origination of mortgage loans that will be held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. To mitigate this risk, the Company utilizes forward commitments as economic hedges against the potential decreases in the values of the loans held for sale. IRLCs and forward commitments are free-standing derivatives which are carried at fair value with changes recorded in the mortgage banking component of noninterest income in the Company’s consolidated statements of income.

The Company enters into interest rate swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. The Company mitigates the risk of entering into these agreements by entering into equal and offsetting interest rate swap agreements with highly rated third-party financial institutions. The interest rate swap agreements are free-standing derivatives and are recorded at fair value in the Company’s unaudited consolidated statements of condition (asset positions are included in other assets and liability positions are included in other liabilities). The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of cash and marketable securities, is posted by the party (i.e., the Company or the financial institution counterparty) with net liability positions in accordance with contract thresholds. The Company had net asset positions with its financial institution counterparties totaling $100.5 million and $136.1 million as of March 31, 2025 and December 31, 2024, respectively.

As certain sales of Visa Class B restricted shares were completed, the Company entered into a conversion rate swap agreement with the buyer that requires payment to the buyer in the event Visa further reduces the conversion ratio of Class B into Class A unrestricted common shares. In the event of Visa increasing the conversion ratio, the buyer would be required to make payment to the Company. As of March 31, 2025 and December 31, 2024, the conversion rate swap agreement was valued at zero (i.e., no contingent liability recorded) as further reductions to the conversion ratio were deemed not reasonably estimable by management.

In 2024, the Company entered into makewhole agreements with certain buyers of its Visa Class B restricted shares that reduces the payments that would be required pursuant to the conversion rate swap agreement described above, but would require payment to the buyer in the event Visa requires additional legal reserves to settle ongoing litigation. As of March 31, 2025 and December 31, 2024, the makewhole agreements were valued at zero (i.e., no contingent liability recorded) as the likelihood of the Company being required to make a payment to the buyer is not reasonably estimable by management.

The Company is exposed to changes in the fair value of fixed-rate assets due to changes in benchmark interest rates. The Company entered into pay-fixed and receive-floating interest rate swaps to manage its exposure to changes in fair value of its AFS investment securities and fixed rate loans. These interest rate swaps are designated as fair value hedges using the portfolio layer method. The Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts. The fair value hedges are recorded as components of other assets and other liabilities in the Company’s unaudited consolidated statements of financial condition. The gain or loss on these derivatives, as well as the offsetting loss or gain on the hedged items attributable to the hedged risk are recognized in interest income in the Company’s unaudited consolidated statements of income.