The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments. The Bank also enters into interest rate derivative agreements as a service to certain qualifying customers. The Bank manages a matched book with respect to these customer derivatives in order to minimize its net interest rate risk exposure resulting from such agreements. In addition, the Bank also enters into risk participation agreements under which it may either sell or buy credit risk associated with a customer’s performance under certain interest rate derivative contracts related to loans in which participation interests have been sold to or purchased from other banks.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the notional or contractual amounts and fair values of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets at December 31, 2024 and 2023.


		December 31, 2024							December 31, 2023
				Derivative (1)							Derivative (1)
($ in thousands)	Type of Hedge	Notional or Contractual Amount		Assets			Liabilities		Notional or Contractual Amount		Assets			Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps - variable rate loans	Cash Flow	$	1,350,000	$	—		$	48,022	$	1,550,000	$	—		$	73,611
Interest rate swaps - securities	Fair Value		477,500		39,647			—		477,500		22,819			—
		$	1,827,500	$	39,647		$	48,022	$	2,027,500	$	22,819		$	73,611
Derivatives not designated as hedging instruments:
Interest rate swaps	N/A	$	4,926,461	$	108,702		$	108,761	$	5,128,144	$	131,271		$	129,994
Risk participation agreements	N/A		445,554		7			9		364,906		34			18
Forward commitments to sell residential mortgage loans	N/A		25,526		—			383		13,355		—			286
Interest rate-lock commitments on residential mortgage loans	N/A		27,465		420			—		18,563		372			—
To Be Announced (TBA) securities	N/A		15,250		88			1		13,500		—			47
Foreign exchange forward contracts	N/A		82,756		1,389			1,358		83,134		1,864			1,840
Visa Class B derivative contract	N/A		42,020		—			2,089		42,617		—			1,342
		$	5,565,032	$	110,606		$	112,601	$	5,664,219	$	133,541		$	133,527
Total derivatives		$	7,392,532	$	150,253		$	160,623	$	7,691,719	$	156,360		$	207,138
Less: netting adjustments (2)					(76,413	)		—				(65,648	)		—
Total derivate assets/liabilities				$	73,840		$	160,623			$	90,712		$	207,138

(1) Derivative assets and liabilities are reported in other assets or other liabilities, respectively, in the consolidated balance sheets.

(2) Represents balance sheet netting of derivative assets and liabilities for variation margin collateral held or placed with the same central clearing counterparty. See offsetting assets and liabilities for further information.

The Company is party to various interest rate swap agreements designated and qualifying as cash flow hedges of the Company’s forecasted variable cash flows for pools of variable rate loans. For each agreement, the Company receives interest at a fixed rate and pays at a variable rate. The Company terminated four and six swap agreements during the twelve months ended December 31, 2024 and 2023, respectively, and paid cash of approximately $13.7 million and $2.9 million, respectively, for those same periods. The net cash received/paid for these transactions was recorded as accumulated other comprehensive income (loss) and is being amortized into earnings through the original maturity dates of the respective contracts. Using the elections allowed for ASU 2022-06 "Reference Rate Return (Topic 848)," as amended, the Company converted all of its LIBOR-based swaps to SOFR and replaced the variable rate loan pools with SOFR based instruments during the second quarter of 2023, with minimal impact to financial results. The notional amounts of the swap agreements in place at December 31, 2024 expire as follows: $50 million in 2025; $425 million in 2026, $825 million in 2027 and $50 million thereafter.

The Company is party to forward-starting fixed payer swaps that convert the latter portion of the term of certain available for sale securities to a floating rate. These derivative instruments are designated as fair value hedges of interest rate risk. This strategy provides the Company with a fixed rate coupon during the front-end unhedged tenor of the bonds and results in a floating rate security during the back-end hedged tenor. At December 31, 2024, these single layer instruments have hedge start dates between January 2025 and

July 2026, and maturity dates from December 2027 through March 2031. The fair value of the hedged item attributable to interest rate risk is presented in interest income along with the fair value of the hedging instrument.

The hedged available for sale securities are part of closed portfolios of pre-payable commercial mortgage-backed securities. In accordance with ASC 815, prepayment risk may be excluded when measuring the change in fair value of such hedged items attributable to interest rate risk under the portfolio layer method (formerly referred to as last-of-layer). At December 31, 2024, the amortized cost basis of the closed portfolio of pre-payable commercial mortgage-backed securities totaled $514.1 million, excluding any basis adjustment. The amount that represents the hedged items was $437.7 million and the basis adjustment associated with the hedged items was a loss totaling $39.8 million.

There were no fair value swap agreements terminated during the year ended December 31, 2024. The Company terminated four fair value swap agreements during the year ended December 31, 2023, and received cash of approximately $19.3 million. The Company terminated 25 fair value swap agreements during the year ended December 31, 2022, and received cash of approximately $90.6 million. At the time of termination, the value of the swaps was recorded as an adjustment to the book value of the underlying security, thereby changing its current book yield and extending its duration, if held, or impacting the net gain or loss, if sold.

The Bank enters into interest rate derivative agreements, primarily rate swaps, with commercial banking customers to facilitate their risk management strategies. The Bank enters into offsetting agreements with unrelated financial institutions, thereby mitigating its net risk exposure resulting from such transactions. Because the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

The Bank also enters into risk participation agreements under which it may either assume or sell credit risk associated with a borrower’s performance under certain interest rate derivative contracts. In those instances where the Bank has assumed credit risk, it is not a direct counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because it is a party to the related loan agreement with the borrower. In those instances in which the Bank has sold credit risk, it is the sole counterparty to the derivative contract with the borrower and has entered into the risk participation agreement because other banks participate in the related loan agreement. The Bank manages its credit risk under risk participation agreements by monitoring the creditworthiness of the borrower, based on the Bank’s normal credit review process.

The Bank also enters into certain derivative agreements as part of its mortgage banking activities. These agreements include interest rate lock commitments on prospective residential mortgage loans and forward commitments to sell loans to investors on either a best efforts or a mandatory delivery basis. The Company uses these forward sales commitments, which may include To Be Announced (TBA) security contracts, on the open market to protect the value of its rate locks and mortgage loans held for sale from changes in interest rates and pricing between the origination of the rate lock and the final sale of these loans. These instruments meet the definition of derivative financial instruments and are reflected in other assets and other liabilities in the Consolidated Balance Sheets, with changes to the fair value recorded in noninterest income within the secondary mortgage market operations line item in the Consolidated Statements of Income.

The loans sold on a mandatory basis commit the Company to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, we may be obligated to pay a pair-off fee, based on then-current market prices, to the investor/counterparty to compensate the investor for the shortfall. Mandatory delivery forward commitments include TBA security contracts on the open market to provide protection against changes in interest rates on the locked mortgage pipeline. The Company expects that mandatory delivery contracts, including TBA security contracts, will experience changes in fair value opposite to the changes in the fair value of derivative loan commitments. Certain assumptions, including pull through rates and rate lock periods, are used in managing the existing and future hedges. The accuracy of underlying assumptions could impact the ultimate effectiveness of any hedging strategies.

Forward commitments under best effort contracts commit the Company to deliver a specific individual mortgage loan to an investor if the loan to the underlying borrower closes. Generally, best efforts cash contracts have no pair-off risk regardless of market movement. The price the investor will pay the seller for an individual loan is specified prior to the loan being funded, generally the same day the

Company enters into the interest rate lock commitment with the potential borrower. The Company expects that these best efforts forward loan sale commitments will experience a net neutral shift in fair value with related derivative loan commitments.

At the closing of the loan, the rate lock commitment derivative expires and the Company generally records a loan held for sale at fair value under the election of fair value option.

The Company enters into foreign exchange forward derivative agreements, primarily forward foreign currency contracts, with commercial banking customers to facilitate their risk management strategies. The Bank manages its risk exposure from such transactions by entering into offsetting agreements with unrelated financial institutions. The Bank has not elected to designate these foreign exchange forward contract derivatives as hedges; as such, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.

The Company is a member of Visa USA. In 2018, the Company sold the majority of its Visa Class B holdings, at which time it entered into a derivative agreement with the purchaser whereby the Company will make or receive cash payments whenever the conversion ratio of the Visa Class B shares into Visa Class A shares is adjusted. The conversion ratio changes when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The Company is also required to make periodic financing payments to the purchaser until all of Visa’s covered litigation matters are resolved. Thus, the derivative contract extends until the end of Visa’s covered litigation matters, the timing of which is uncertain.

During the second quarter of 2024, Visa allowed Class B holders to convert some but not all of their Class B shares to Class A shares. As a result of this conversion event, the Bank and its counterparty agreed to modify the transaction agreement to reflect the partial exchange and include certain provisions related to conversion rate changes. The conversion plan approved by Visa requires a minimum of 12 months before another exchange event and thus extends the expected time for a full resolution of the matter.

The contract includes a contingent accelerated termination clause based on the credit ratings of the Company. At December 31, 2024 and 2023, the fair value of the liability associated with this contract was $2.1 million and $1.3 million respectively. Refer to Note 20 – Fair Value of Financial Instruments for discussion of the valuation inputs and process for this derivative liability.

Using the elections allowed for ASU 2022-06 "Reference Rate Return (Topic 848)," as amended, and in accordance with the Federal Reserve Bank Board’s Final Rule published pursuant to the authority granted under the LIBOR Act, all of the Company’s remaining derivative instruments with LIBOR based indexes were transitioned to the Fallback Rate SOFR benchmark as recommended by the International Swap and Derivatives Association effective July 1, 2023. Transitioned LIBOR based instruments included interest rate swaps and risk participation agreements with notional amounts totaling $3.5 billion and $163.5 million, respectively, at July 1, 2023. There was no material financial impact to the Company’s operating results from this transition.


		Years Ended December 31,
($ in thousands) Derivative Instruments:	Location of Gain (Loss) Recognized in the Statements of Income:	2024			2023			2022
Cash flow hedges:
Variable rate loans	Interest income - loans	$	(47,944	)	$	(40,714	)	$	9,928
Fair value hedges:
Securities	Interest income - securities - taxable		12,627			11,945			4,963
Securities - termination	Noninterest income - securities transactions, net		—			2,725			1,620
Derivatives not designated as hedging:
Residential mortgage banking	Noninterest income - secondary mortgage market operations		335			753			2,918
Customer and all other instruments	Noninterest income - other noninterest income		(3,790	)		420			5,832
Total gain (loss)		$	(38,772	)	$	(24,871	)	$	25,261

Certain of the Bank’s derivative instruments contain provisions allowing the financial institution counterparty to terminate the contracts in certain circumstances, such as the downgrade of the Bank’s credit ratings below specified levels, a default by the Bank on its indebtedness, or the failure of the Bank to maintain specified minimum regulatory capital ratios or its regulatory status as a well-capitalized institution. These derivative agreements also contain provisions regarding the posting of collateral by each party. The Company is not in violation of any such provisions. The aggregate fair value of derivative instruments with credit risk-related contingent features that were in a net liability position at December 31, 2024 and 2023 was $39.1 million and $65.6 million, respectively, for which the Company had posted collateral of $38.0 million and $66.0 million, respectively.

The Bank’s derivative instruments with certain counterparties contain legally enforceable netting provisions that allow for net settlement of multiple transactions to a single amount, which may be positive, negative, or zero. Agreements with certain bilateral counterparties require both parties to maintain collateral in the event that the fair values of derivative instruments exceed established exposure thresholds. For centrally cleared derivatives, the Company is subject to initial margin posting and daily variation margin exchange with the central clearinghouses. Offsetting information in regards to all derivative assets and liabilities, including accrued interest subject to these master netting agreements at December 31, 2024 and 2023 is presented in the following tables:


As of December 31, 2024
			Gross Amounts Offset in the			Net Amounts Presented in the		Gross Amounts Not Offset in the Statement of Financial Position
($ in thousands)	Gross Amounts Recognized		Statement of Financial Position			Statement of Financial Position		Financial Instruments		Cash Collateral		Net Amount
Derivative Assets	$	149,808	$	(77,915	)	$	71,893	$	54,707	$	64,260	$	81,446
Derivative Liabilities	$	54,707	$	—		$	54,707	$	54,707	$	—	$	—


As of December 31, 2023
			Gross Amounts Offset in the			Net Amounts Presented in the		Gross Amounts Not Offset in the Statement of Financial Position
($ in thousands)	Gross Amounts Recognized		Statement of Financial Position			Statement of Financial Position		Financial Instruments		Cash Collateral		Net Amount
Derivative Assets	$	152,740	$	(68,282	)	$	84,458	$	84,458	$	—	$	—
Derivative Liabilities	$	87,567	$	—		$	87,567	$	84,458	$	96,176	$	(93,067	)

The Company has excess posted collateral compared to total exposure due to initial margin requirements for day-to-day rate volatility.