Derivative Financial Instruments

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

Commitments to originate residential mortgage loans held for sale and forward commitments to sell residential mortgage loans are considered derivative instruments. See Note 7 for further information.

The Company has certain interest rate derivative positions that are not designated as hedging instruments. Derivative assets and liabilities are recorded at fair value on the balance sheet and do take into account the effects of master netting agreements. Master netting agreements allow the Company to settle all derivative contracts held with a single counterparty on a net basis, and to offset net derivative positions with related collateral, where applicable. These derivative positions relate to transactions in which the Company enters into an interest rate swap with a client while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each transaction, the Company agrees to pay interest to the client on a notional amount at a variable interest rate and receive interest from the client on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the client to effectively convert a variable rate loan to a fixed rate. Because the terms of the swaps with the customers and the other financial institutions offset each other, with the only difference being counterparty credit risk, changes in the fair value of the underlying derivative contracts are not materially different and do not significantly impact the Company’s results of operations.

The following table shows the amounts of non-hedging derivative financial instruments at March 31, 2014 and December 31, 2013.

			Asset derivatives			Liability derivatives
(Dollars in thousands)	Notional or contractual amount		Statement of Financial Condition classification	Fair value		Statement of Financial Condition classification	Fair value
March 31, 2014
Interest rate swap contracts	$	465,980	Other assets	$	9,531	Other liabilities	$	9,719
Loan commitments	18,217		Mortgages held for sale	122		N/A	—
Forward contracts - mortgage loan	23,650		Mortgages held for sale	1		N/A	—
Forward contracts - foreign exchange	1,142		N/A	—		Other assets	2
Total	$	508,989		$	9,654		$	9,721
December 31, 2013
Interest rate swap contracts	$	462,790	Other assets	$	9,894	Other liabilities	$	10,087
Loan commitments	7,878		Mortgages held for sale	12		N/A	—
Forward contracts - mortgage loan	10,600		Mortgages held for sale	121		N/A	—
Forward contracts - foreign exchange	1,308		N/A	—		Other assets	7
Total	$	482,576		$	10,027		$	10,094

The following table shows the amounts included in the Statements of Income for non-hedging derivative financial instruments for the three months ended March 31, 2014 and 2013.

		Gain (loss)
		Three Months Ended   March 31,
(Dollars in thousands)	Statement of Income classification	2014			2013
Interest rate swap contracts	Other expense	$	6		$	30
Interest rate swap contracts	Other income	92			194
Loan commitments	Mortgage banking income	110			44
Forward contracts - mortgage loan	Mortgage banking income	(120		)	17
Forward contracts - foreign exchange	Other income	(1		)	—
Total		$	87		$	285

The following table shows the offsetting of financial assets and derivative assets at March 31, 2014 and December 31, 2013.

							Gross Amounts Not Offset in the Statement of Financial Condition
(Dollars in thousands)	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Received		Net Amount
March 31, 2014
Interest rate swaps	$	10,065	$	534	$	9,531	$	—	$	—	$	9,531
December 31, 2013
Interest rate swaps	$	10,511	$	617	$	9,894	$	—	$	—	$	9,894

The following table shows the offsetting of financial liabilities and derivative liabilities at March 31, 2014 and December 31, 2013.

							Gross Amounts Not Offset in the Statement of Financial Condition
(Dollars in thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments		Cash Collateral Pledged		Net Amount
March 31, 2014
Interest rate swaps	$	10,253	$	534	$	9,719	$	—	$	9,032	$	687
Repurchase agreements	124,339		—		124,339		124,339		—		—
Total	$	134,592	$	534	$	134,058	$	124,339	$	9,032	$	687
December 31, 2013
Interest rate swaps	$	10,704	$	617	$	10,087	$	—	$	8,409	$	1,678
Repurchase agreements	117,620		—		117,620		117,620		—		—
Total	$	128,324	$	617	$	127,707	$	117,620	$	8,409	$	1,678

If a default in performance of any obligation of a repurchase agreement occurs, each party will set-off property held in respect of transactions against obligations owing in respect of any other transactions.