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Derivative Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Total Notional or Contractual Amounts, Fair Value, Collateral and Net Exposure of Derivative Financial Instruments
The total notional or contractual amounts, fair value, collateral and net exposure of our derivative financial instruments at September 30, 2016 and December 31, 2015 were as follows:
 
 
 
 
September 30, 2016
 
December 31, 2015
(Dollars in thousands)
 
Balance Sheet
Location
 
Notional or
Contractual
Amount
 
Fair Value
 
Collateral
(1)
 
Net
Exposure
(2)
 
Notional or
Contractual
Amount
 
Fair Value
 
Collateral
(1)
 
Net
Exposure
(2)
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Interest rate risks:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
 
Other assets
 
$
45,964

 
$
1,324

 
$
—

 
$
1,324

 
$
45,964

 
$
2,768

 
$
—

 
$
2,768

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Currency exchange risks:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards
 
Other assets
 
138,796

 
1,676

 
—

 
1,676

 
49,287

 
809

 
—

 
809

Foreign exchange forwards
 
Other liabilities
 
53,051

 
(576
)
 
—

 
(576
)
 
6,586

 
(669
)
 
—

 
(669
)
Net exposure
 
 
 
 
 
1,100

 
—

 
1,100

 
 
 
140

 
—

 
140

 Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity warrant assets
 
Other assets
 
212,802

 
145,340

 
—

 
145,340

 
210,102

 
137,105

 
—

 
137,105

Other derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Client foreign exchange forwards
 
Other assets
 
1,056,821

 
44,636

 
2,421

 
42,215

 
935,514

 
29,722

 
1,900

 
27,822

Client foreign exchange forwards
 
Other liabilities
 
869,914

 
(36,188
)
 
—

 
(36,188
)
 
841,182

 
(24,978
)
 
—

 
(24,978
)
Client foreign currency options
 
Other assets
 
243,860

 
2,750

 
—

 
2,750

 
46,625

 
706

 
—

 
706

Client foreign currency options
 
Other liabilities
 
243,860

 
(2,750
)
 
—

 
(2,750
)
 
46,625

 
(706
)
 
—

 
(706
)
Client interest rate derivatives
 
Other assets
 
520,081

 
8,759

 
—

 
8,759

 
422,741

 
3,973

 
—

 
3,973

Client interest rate derivatives
 
Other liabilities
 
558,962

 
(9,324
)
 
—

 
(9,324
)
 
422,741

 
(4,384
)
 
—

 
(4,384
)
Net exposure
 
 
 
 
 
7,883

 
2,421

 
5,462

 
 
 
4,333

 
1,900

 
2,433

Net
 
 
 
 
 
$
155,647

 
$
2,421

 
$
153,226

 
 
 
$
144,346

 
$
1,900

 
$
142,446

 
 
(1)
Cash collateral received from our counterparties in relation to market value exposures of derivative contracts in our favor is recorded as a component of “short-term borrowings” on our consolidated balance sheets.
(2)
Net exposure for contracts in a gain position reflects the replacement cost in the event of nonperformance by all such counterparties. The credit ratings of our institutional counterparties as of September 30, 2016 remain at investment grade or higher and there were no material changes in their credit ratings during the three and nine months ended September 30, 2016.
Summary of Derivative Activity and Related Impact on Consolidated Statements of Income
A summary of our derivative activity and the related impact on our consolidated statements of income for the three and nine months ended September 30, 2016 and 2015 is as follows:
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
(Dollars in thousands)
 
Statement of income location   
 
2016
 
2015
 
2016
 
2015
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 Interest rate risks:
 
 
 
 
 
 
 
 
 
 
Net cash benefit associated with interest rate swaps
 
Interest expense—borrowings
 
$
580

 
$
631

 
$
1,778

 
$
1,903

Changes in fair value of interest rate swaps
 
Gains on derivative instruments, net
 
(3
)
 
(8
)
 
(33
)
 
(22
)
Net gains associated with interest rate risk derivatives
 
 
 
$
577

 
$
623

 
$
1,745

 
$
1,881

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 Currency exchange risks:
 
 
 
 
 
 
 
 
 
 
(Losses) gains on revaluations of internal foreign currency instruments, net
 
Other noninterest income
 
$
(1,406
)
 
$
186

 
$
(4,222
)
 
$
(11,667
)
Gains (losses) on internal foreign exchange forward contracts, net
 
Gains on derivative instruments, net
 
1,352

 
(218
)
 
3,067

 
11,626

Net losses associated with internal currency risk
 
 
 
$
(54
)
 
$
(32
)
 
$
(1,155
)
 
$
(41
)
 Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
Gains (losses) on revaluations of client foreign currency instruments, net
 
Other noninterest income
 
$
3,488

 
2

 
$
7,009

 
(177
)
(Losses) gains on client foreign exchange forward contracts, net
 
Gains on derivative instruments, net
 
(3,194
)
 
179

 
(8,780
)
 
459

Net gains (losses) associated with client currency risk
 
 
 
$
294

 
$
181

 
$
(1,771
)
 
$
282

Net gains on equity warrant assets
 
Gains on derivative instruments, net
 
$
21,558

 
$
10,685

 
$
33,252

 
$
54,579

Net gains (losses) on other derivatives
 
Gains on derivative instruments, net
 
$
31

 
$
(394
)
 
$
(659
)
 
$
(352
)
Offsetting Assets
The following table summarizes our assets subject to enforceable master netting arrangements as of September 30, 2016 and December 31, 2015:
 
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements
 
 
(Dollars in thousands)
 
Gross Amounts of Recognized Assets
 
Gross Amounts offset in the Statement of Financial Position
 
Net Amounts of Assets Presented in the Statement of Financial Position
 
Financial Instruments
 
Cash Collateral Received
 
Net Amount
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Assets:
 
 
 
 
 
 
 
 
 
 
 
 
   Interest rate swaps
 
$
1,324

 
$
—

 
$
1,324

 
$
(1,324
)
 
$
—

 
$
—

Foreign exchange forwards
 
46,312

 
—

 
46,312

 
(19,377
)
 
(2,421
)
 
24,514

   Foreign currency options
 
2,750

 
—

 
2,750

 
(1,246
)
 
—

 
1,504

   Client interest rate derivatives
 
8,759

 
—

 
8,759

 
(8,719
)
 
—

 
40

Total derivative assets:
 
59,145

 
—

 
59,145

 
(30,666
)
 
(2,421
)
 
26,058

Reverse repurchase, securities borrowing, and similar arrangements
 
163,719

 
—

 
163,719

 
(163,719
)
 
—

 
—

Total
 
$
222,864

 
$
—

 
$
222,864

 
$
(194,385
)
 
$
(2,421
)
 
$
26,058

December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Assets:
 
 
 
 
 
 
 
 
 
 
 
 
   Interest rate swaps
 
$
2,768

 
$
—

 
$
2,768

 
$
(2,768
)
 
$
—

 
$
—

Foreign exchange forwards
 
30,531

 
—

 
30,531

 
(18,141
)
 
(1,900
)
 
10,490

   Foreign currency options
 
711

 
(5
)
 
706

 
(706
)
 
—

 
—

   Client interest rate derivatives
 
3,973

 
—

 
3,973

 
(3,973
)
 
—

 
—

Total derivative assets:
 
37,983

 
(5
)
 
37,978

 
(25,588
)
 
(1,900
)
 
10,490

Reverse repurchase, securities borrowing, and similar arrangements
 
125,391

 
—

 
125,391

 
(125,391
)
 
—

 
—

Total
 
$
163,374

 
$
(5
)
 
$
163,369

 
$
(150,979
)
 
$
(1,900
)
 
$
10,490
Offsetting Liabilities
The following table summarizes our liabilities subject to enforceable master netting arrangements as of September 30, 2016 and December 31, 2015:
 
 
 
 
 
 
 
 
Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements
 
 
(Dollars in thousands)
 
Gross Amounts of Recognized Liabilities
 
Gross Amounts offset in the Statement of Financial Position
 
Net Amounts of Liabilities Presented in the Statement of Financial Position
 
Financial Instruments
 
Cash Collateral Pledged
 
Net Amount
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
   Foreign exchange forwards
 
$
36,764

 
$
—

 
$
36,764

 
$
(17,675
)
 
$
—

 
$
19,089

   Foreign currency options
 
2,750

 
—

 
2,750

 
(1,925
)
 
—

 
825

   Client interest rate derivatives
 
9,324

 
—

 
9,324

 
(9,324
)
 
—

 
—

Total derivative liabilities:
 
48,838

 
—

 
48,838

 
(28,924
)
 
—

 
19,914

Repurchase, securities lending, and similar arrangements
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
48,838

 
$
—

 
$
48,838

 
$
(28,924
)
 
$
—

 
$
19,914

December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
   Foreign exchange forwards
 
$
25,647

 
$
—

 
$
25,647

 
$
(10,818
)
 
$
—

 
$
14,829

   Foreign currency options
 
711

 
(5
)
 
706

 
—

 
—

 
706

   Client interest rate derivatives
 
4,384

 
—

 
4,384

 
(4,384
)
 
—

 
—

Total derivative liabilities:
 
30,742

 
(5
)
 
30,737

 
(15,202
)
 
—

 
15,535

Repurchase, securities lending, and similar arrangements
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
30,742

 
$
(5
)
 
$
30,737

 
$
(15,202
)
 
$
—

 
$
15,535