Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017 and December 31, 2016 were as follows:



		September 30, 2017										December 31, 2016
(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	$	810		$	89	$	721
Derivatives not designated as hedging instruments:
Currency exchange risks:
Foreign exchange forwards	Other assets	286,378		3,166			—		3,166			219,950		3,057			—		3,057
Foreign exchange forwards	Other liabilities	84,618		(1,244		)	—		(1,244		)	54,338		(968		)	—		(968		)
Net exposure				1,922			—		1,922					2,089			—		2,089
Other derivative instruments:
Equity warrant assets	Other assets	211,018		141,785			—		141,785			211,434		131,123			—		131,123
Other derivatives:
Client foreign exchange forwards	Other assets	1,925,726		90,691			4,840		85,851			1,251,308		54,587			12,579		42,008
Client foreign exchange forwards	Other liabilities	1,838,439		(86,627		)	—		(86,627		)	1,068,991		(43,317		)	—		(43,317		)
Client foreign currency options	Other assets	101,544		1,090			—		1,090			775,000		10,383			—		10,383
Client foreign currency options	Other liabilities	101,544		(1,090		)	—		(1,090		)	775,000		(10,383		)	—		(10,383		)
Client interest rate derivatives	Other assets	676,148		11,824			—		11,824			583,511		10,110			—		10,110
Client interest rate derivatives	Other liabilities	711,969		(11,955		)	—		(11,955		)	627,639		(9,770		)	—		(9,770		)
Net exposure				3,933			4,840		(907		)			11,610			12,579		(969		)
Net				$	147,640		$	4,840	$	142,800				$	145,632		$	12,668	$	132,964


(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, 2017 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, 2017.

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, 2017 and 2016 is as follows:



		Three months ended September 30,						Nine months ended September 30,
(Dollars in thousands)	Statement of income location	2017			2016			2017			2016
Derivatives designated as hedging instruments:
Interest rate risks:
Net cash benefit associated with interest rate swaps	Interest expense—borrowings	$	62		$	580		$	997		$	1,778
Changes in fair value of interest rate swaps	Other noninterest income	—			(3		)	(7		)	(33		)
Net gains associated with interest rate risk derivatives		$	62		$	577		$	990		$	1,745
Derivatives not designated as hedging instruments:
Currency exchange risks:
Gains (losses) on revaluations of internal foreign currency instruments, net	Other noninterest income	$	10,561		$	(1,406	)	$	29,265		$	(4,222	)
(Losses) gains on internal foreign exchange forward contracts, net	Other noninterest income	(10,550		)	1,352			(28,349		)	3,067
Net gains (losses) associated with internal currency risk		$	11		$	(54	)	$	916		$	(1,155	)
Other derivative instruments:
Gains on revaluations of client foreign currency instruments, net	Other noninterest income	$	3,760		$	3,488		$	8,889		$	7,009
Losses on client foreign exchange forward contracts, net	Other noninterest income	(3,871		)	(3,194		)	(8,350		)	(8,780		)
Net (losses) gains associated with client currency risk		$	(111	)	$	294		$	539		$	(1,771	)
Net gains on equity warrant assets	Gains on equity warrant assets, net	$	24,922		$	21,558		$	42,432		$	33,252
Net (losses) gains on other derivatives	Other noninterest income	$	(38	)	$	31		$	(524	)	$	(659	)

Offsetting Assets

The following table summarizes our assets subject to enforceable master netting arrangements as of September 30, 2017 and December 31, 2016:



	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		Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements						Net Amount
(Dollars in thousands)	Gross Amounts of Recognized Assets		Gross Amounts offset in the Statement of Financial Position				Financial Instruments			Cash Collateral Received			Net Amount
September 30, 2017
Derivative Assets:
Interest rate swaps	$	—	$	—	$	—	$	—		$	—		$	—
Foreign exchange forwards	93,857		—		93,857		(21,154		)	(4,840		)	67,863
Foreign currency options	1,090		—		1,090		(331		)	—			759
Client interest rate derivatives	11,824		—		11,824		(11,808		)	—			16
Total derivative assets	106,771		—		106,771		(33,293		)	(4,840		)	68,638
Reverse repurchase, securities borrowing, and similar arrangements	62,664		—		62,664		(62,664		)	—			—
Total	$	169,435	$	—	$	169,435	$	(95,957	)	$	(4,840	)	$	68,638
December 31, 2016
Derivative Assets:
Interest rate swaps	$	810	$	—	$	810	$	(721	)	$	(89	)	$	—
Foreign exchange forwards	57,644		—		57,644		(22,738		)	(12,579		)	22,327
Foreign currency options	10,383		—		10,383		(8,806		)	—			1,577
Client interest rate derivatives	10,110		—		10,110		(10,091		)	—			19
Total derivative assets	78,947		—		78,947		(42,356		)	(12,668		)	23,923
Reverse repurchase, securities borrowing, and similar arrangements	64,028		—		64,028		(64,028		)	—			—
Total	$	142,975	$	—	$	142,975	$	(106,384	)	$	(12,668	)	$	23,923

Offsetting Liabilities

The following table summarizes our liabilities subject to enforceable master netting arrangements as of September 30, 2017 and December 31, 2016:



	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		Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements					Net Amount
(Dollars in thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts offset in the Statement of Financial Position				Financial Instruments			Cash Collateral Pledged		Net Amount
September 30, 2017
Derivative Liabilities:
Foreign exchange forwards	$	87,871	$	—	$	87,871	$	(68,852	)	$	—	$	19,019
Foreign currency options	1,090		—		1,090		(759		)	—		331
Client interest rate derivatives	11,955		—		11,955		(11,936		)	—		19
Total derivative liabilities	100,916		—		100,916		(81,547		)	—		19,369
Repurchase, securities lending, and similar arrangements	—		—		—		—			—		—
Total	$	100,916	$	—	$	100,916	$	(81,547	)	$	—	$	19,369
December 31, 2016
Derivative Liabilities:
Foreign exchange forwards	$	44,285	$	—	$	44,285	$	(17,964	)	$	—	$	26,321
Foreign currency options	10,383		—		10,383		(1,585		)	—		8,798
Client interest rate derivatives	9,770		—		9,770		(9,770		)	—		—
Total derivative liabilities	64,438		—		64,438		(29,319		)	—		35,119
Repurchase, securities lending, and similar arrangements	—		—		—		—			—		—
Total	$	64,438	$	—	$	64,438	$	(29,319	)	$	—	$	35,119