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Derivative Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2014
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, 2014 and December 31, 2013 were as follows:
 
 
 
 
September 30, 2014
 
December 31, 2013
(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

 
$
4,965

 
$
3,910

 
$
1,055

 
$
45,964

 
$
6,492

 
$
5,080

 
$
1,412

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Currency exchange risks:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange forwards
 
Other assets
 
33,840

 
1,032

 
1,935

 
(903
)
 
140,760

 
1,423

 
—

 
1,423

Foreign exchange forwards
 
Other liabilities
 
30,306

 
(387
)
 
—

 
(387
)
 
62,649

 
(634
)
 
—

 
(634
)
Net exposure
 
 
 
 
 
645

 
1,935

 
(1,290
)
 
 
 
789

 
—

 
789

 Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity warrant assets
 
Other assets
 
186,853

 
94,960

 
—

 
94,960

 
179,934

 
103,513

 
—

 
103,513

Other derivatives:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Client foreign exchange forwards
 
Other assets
 
526,329

 
16,111

 
785

 
15,326

 
424,983

 
13,673

 
—

 
13,673

Client foreign exchange forwards
 
Other liabilities
 
483,262

 
(15,355
)
 
—

 
(15,355
)
 
367,079

 
(11,549
)
 
—

 
(11,549
)
Client foreign currency options
 
Other assets
 
6,500

 
91

 
—

 
91

 
91,854

 
434

 
—

 
434

Client foreign currency options
 
Other liabilities
 
6,500

 
(91
)
 
—

 
(91
)
 
91,854

 
(434
)
 
—

 
(434
)
Loan conversion options
 
Other assets
 
1,442

 
—

 
—

 
—

 
3,455

 
314

 
—

 
314

Client interest rate derivatives
 
Other assets
 
359,074

 
2,173

 
—

 
2,173

 
216,773

 
1,265

 
—

 
1,265

Client interest rate derivatives
 
Other liabilities
 
359,074

 
(2,317
)
 
—

 
(2,317
)
 
216,773

 
(1,396
)
 
—

 
(1,396
)
Net exposure
 
 
 
 
 
612

 
785

 
(173
)
 
 
 
2,307

 
—

 
2,307

Net
 
 
 
 
 
$
101,182

 
$
6,630

 
$
94,552

 
 
 
$
113,101

 
$
5,080

 
$
108,021

 
 
(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, 2014 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, 2014.
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, 2014 and 2013 is as follows:
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
(Dollars in thousands)
 
Statement of income location   
 
2014
 
2013
 
2014
 
2013
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 Interest rate risks:
 
 
 
 
 
 
 
 
 
 
Net cash benefit associated with interest rate swaps
 
Interest expense—borrowings
 
$
638

 
$
634

 
$
1,915

 
$
1,901

Changes in fair value of interest rate swaps
 
Net gains on derivative instruments
 
(12
)
 
(7
)
 
(37
)
 
20

Net gains associated with interest rate risk derivatives
 
 
 
$
626

 
$
627

 
$
1,878

 
$
1,921

Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 Currency exchange risks:
 
 
 
 
 
 
 
 
 
 
(Losses) gains on revaluations of foreign currency instruments
 
Other noninterest income
 
$
(12,640
)
 
$
8,101

 
$
(12,347
)
 
$
451

Gains (losses) on internal foreign exchange forward contracts, net
 
Net gains on derivative instruments
 
12,529

 
(8,423
)
 
12,038

 
(1,511
)
Net (losses) associated with currency risk
 
 
 
$
(111
)
 
$
(322
)
 
$
(309
)
 
$
(1,060
)
 Other derivative instruments:
 
 
 
 
 
 
 
 
 
 
Net gains on equity warrant assets
 
Net gains on derivative instruments
 
$
13,157

 
$
18,780

 
$
50,859

 
$
29,475

Gains (losses) on client foreign exchange forward contracts, net
 
Net gains on derivative instruments
 
$
886

 
$
(411
)
 
$
1,358

 
$
(237
)
Net (losses) gains on other derivatives (1)
 
Net gains on derivative instruments
 
$
(22
)
 
$
(517
)
 
$
(738
)
 
$
55

 
 
(1)
Primarily represents the change in fair value of loan conversion options.
Offsetting Assets
The following table summarizes our assets subject to enforceable master netting arrangements as of September 30, 2014 and December 31, 2013:
 
 
 
 
 
 
 
 
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, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Assets:
 
 
 
 
 
 
 
 
 
 
 
 
   Interest rate swaps
 
$
4,965

 
$
—

 
$
4,965

 
$
(1,055
)
 
$
(3,910
)
 
$
—

Foreign exchange forwards
 
17,143

 
—

 
17,143

 
(8,002
)
 
(2,720
)
 
6,421

   Foreign currency options
 
92

 
(1
)
 
91

 
(91
)
 
—

 
—

   Client interest rate derivatives
 
2,173

 
—

 
2,173

 
(2,173
)
 
—

 
—

Total derivative assets:
 
24,373

 
(1
)
 
24,372

 
(11,321
)
 
(6,630
)
 
6,421

Reverse repurchase, securities borrowing, and similar arrangements
 
50,834

 
—

 
50,834

 
(50,834
)
 
—

 
—

Total
 
$
75,207

 
$
(1
)
 
$
75,206

 
$
(62,155
)
 
$
(6,630
)
 
$
6,421

December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Assets:
 
 
 
 
 
 
 
 
 
 
 
 
   Interest rate swaps
 
$
6,492

 
$
—

 
$
6,492

 
$
(1,412
)
 
$
(5,080
)
 
$
—

Foreign exchange forwards
 
15,096

 
—

 
15,096

 
(6,735
)
 
—

 
8,361

   Foreign currency options
 
504

 
(70
)
 
434

 
(155
)
 
—

 
279

   Client interest rate derivatives
 
1,265

 
—

 
1,265

 
(256
)
 
—

 
1,009

Total derivative assets:
 
23,357

 
(70
)
 
23,287

 
(8,558
)
 
(5,080
)
 
9,649

Reverse repurchase, securities borrowing, and similar arrangements
 
172,989

 
—

 
172,989

 
(172,989
)
 
—

 
—

Total
 
$
196,346

 
$
(70
)
 
$
196,276

 
$
(181,547
)
 
$
(5,080
)
 
$
9,649
Offsetting Liabilities
The following table summarizes our liabilities subject to enforceable master netting arrangements as of September 30, 2014 and December 31, 2013:
 
 
 
 
 
 
 
 
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, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
   Foreign exchange forwards
 
$
15,742

 
$
—

 
$
15,742

 
$
(9,294
)
 
$
—

 
$
6,448

   Foreign currency options
 
92

 
(1
)
 
91

 
—

 
—

 
91

   Client interest rate derivatives
 
2,317

 
—

 
2,317

 
(2,317
)
 
—

 
—

Total derivative liabilities:
 
18,151

 
(1
)
 
18,150

 
(11,611
)
 
—

 
6,539

Repurchase, securities lending, and similar arrangements
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
18,151

 
$
(1
)
 
$
18,150

 
$
(11,611
)
 
$
—

 
$
6,539

December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
   Foreign exchange forwards
 
$
12,183

 
$
—

 
$
12,183

 
$
(8,282
)
 
$
—

 
$
3,901

   Foreign currency options
 
504

 
(70
)
 
434

 
(279
)
 
—

 
155

   Client interest rate derivatives
 
1,396

 
—

 
1,396

 
(1,087
)
 
—

 
309

Total derivative liabilities:
 
14,083

 
(70
)
 
14,013

 
(9,648
)
 
—

 
4,365

Repurchase, securities lending, and similar arrangements
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
14,083

 
$
(70
)
 
$
14,013

 
$
(9,648
)
 
$
—

 
$
4,365