Derivative Financial Instruments

12 Months Ended

Dec. 31, 2025

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

The following table presents the fair value and notional amount of our derivatives at December 31, 2025 and 2024.

Table 13.1 – Fair Value and Notional Amount of Derivatives

	December 31, 2025				December 31, 2024
	Fair Value		Notional Amount		Fair Value		Notional Amount
(In Thousands)
Assets - Risk Management Derivatives
TBAs	$	38,686	$	14,690,000	$	—	$	—
Interest rate futures	17,772		2,431,300		16,446		712,500
Swaptions	31,119		9,850,000		23,738		8,245,000
Assets - Other Derivatives
LPCs and IRLCs	18,020		3,497,565		5,819		919,888
Total Assets (1)	$	105,597	$	30,468,865	$	46,003	$	9,877,388
Liabilities - Risk Management Derivatives
TBAs	$	(22,252)	$	8,750,000	$	(16,249)	$	1,350,000
Interest rate futures	(4,721)		1,969,000		(6,915)		830,500
Liabilities - Other Derivatives
LPCs	(1,177)		369,734		(496)		157,985
Total Liabilities (1)	$	(28,150)	$	11,088,734	$	(23,660)	$	2,338,485
Total Derivatives, Net (1)	$	77,447	$	41,557,599	$	22,343	$	12,215,873

(1)     For the purpose of this presentation, derivative assets and liabilities are presented on a gross and a net basis.

The following table presents the market valuation gains and losses on our derivatives for the years ended December 31, 2025 and 2024.

Table 13.2 – Market Valuation Gains (Losses) on Derivatives, net

	Year Ended		Year Ended
(In Thousands)	December 31, 2025		December 31, 2024
Risk Management Derivatives (1)	$	106,065	$	(29,694)
LPCs and IRLCs (2)	129,735		9,571
Market Valuation Gains (Losses) on Derivatives, net	$	235,800	$	(20,123)

(1)Market valuation (losses) gains on risk management derivatives used to manage the mark-to-market risks associated with our Mortgage Banking operations are recorded in Mortgage banking activities, net and market valuation gains (losses) on all other derivatives are recorded in Investment fair value changes, net on our consolidated statements of (loss) income.

(2)Market valuation gains (losses) on LPCs and IRLCs are recorded in Mortgage banking activities, net on our consolidated statements of (loss) income.

Risk Management Derivatives

To manage, to varying degrees, risks associated with certain assets and liabilities on our consolidated balance sheets, we may enter into derivative contracts. At December 31, 2025, we were party to swaptions with an aggregate notional amount of $9.85 billion, TBA agreements with an aggregate notional amount of $23.44 billion, and interest rate futures contracts with an aggregate notional amount of $4.40 billion. At December 31, 2024, we were party to swaptions with an aggregate notional amount of $8.25 billion, TBA agreements with an aggregate notional amount of $1.35 billion, and interest rate futures contracts with an aggregate notional amount of $1.54 billion.

For the years ended December 31, 2025, 2024, and 2023, risk management derivatives had net market valuation gains of $106 million, net market valuation losses of $30 million, and net market valuation losses of $20 million, respectively. These market valuation gains and losses are recorded in Mortgage banking activities, net and Investment fair value changes, net on our consolidated statements of (loss) income.

Loan Purchase and Interest Rate Lock Commitments

Loan purchase commitments ("LPCs") and interest rate lock commitments ("IRLCs") that qualify as derivatives are recorded at their fair values. For the years ended December 31, 2025, 2024, and 2023, LPCs and IRLCs had net market valuation gains of $130 million, net market valuation gains of $10 million, and net market valuation gains of $23 million, respectively, that were recorded in Mortgage banking activities, net on our consolidated statements of (loss) income.

Derivatives Designated as Cash Flow Hedges

For interest rate agreements previously designated as cash flow hedges, our total unrealized loss reported in Accumulated other comprehensive (loss) income was $60 million and $64 million at December 31, 2025 and 2024, respectively. We are amortizing this loss into interest expense over the remaining term of our trust preferred securities and subordinated notes. For both the years ended December 31, 2025 and 2024, we reclassified $4 million of realized net losses from Accumulated other comprehensive loss into Interest expense. As of December 31, 2025, we expect to amortize $4 million of realized losses related to terminated cash flow hedges into interest expense over the next twelve months.

Derivative Counterparty Credit Risk

We incur credit risk to the extent that counterparties to our derivative financial instruments do not perform their obligations under specified contractual agreements. If a derivative counterparty does not perform, we may not receive amounts due under these agreements and could incur a loss to the extent of any uncollateralized exposure.

Each derivative counterparty that is not a clearinghouse must maintain compliance with International Swaps and Derivatives Association (“ISDA”) master agreements or similar arrangements, unless a documented review determines that such noncompliance does not materially increase our credit exposure. Derivative transactions with non-clearinghouse counterparties are executed under ISDA master agreements that provide for net settlement of exposures in the event of default. We review non-clearinghouse derivative counterparty credit standings on an ongoing basis and, in the event of deterioration in creditworthiness, may require additional collateral, limit further transactions, or terminate existing positions.

Our bilateral derivative agreements generally require daily collateralization of net unrealized loss exposures, subject to customary minimum transfer thresholds. Through a daily valuation margin process, derivative positions are revalued each business day, and collateral is exchanged based on changes in fair value. Accordingly, substantially all net derivative exposures are collateralized. We seek to manage concentration risk by transacting with multiple counterparties and monitoring our aggregate counterparty exposures.

Certain derivative instruments are cleared through central clearinghouses. Margin is posted in accordance with clearinghouse rules. While clearing reduces bilateral counterparty exposure, we remain subject to the risk of non-performance by the clearing member or clearinghouse.

We consider counterparty credit risk in determining the fair value of derivative financial instruments at each reporting date, including evaluating the need for credit valuation adjustments. At December 31, 2025, management concluded that any credit valuation adjustment would not be material, and no separate adjustment was recorded. At December 31, 2025, we were in compliance with our ISDA and related derivative agreements in all material respects.