Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2018

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 and fair value of our derivative financial instruments at December 31, 2018 and 2017 were as follows:

	December 31, 2018						December 31, 2017
	Notional or Contractual Amount		Fair Value				Notional or Contractual Amount		Fair Value
(Dollars in thousands)			Derivative Assets (1)		Derivative Liabilities (1)				Derivative Assets (1)		Derivative Liabilities (1)
Derivatives not designated as hedging instruments:
Currency exchange risks:
Foreign exchange forwards	$	263,733	$	4,767	$	—	$	50,889	$	414	$	—
Foreign exchange forwards	178,310		—		1,094		425,055		—		5,201
Other derivative instruments:
Equity warrant assets	223,532		149,238		—		211,253		123,763		—
Client foreign exchange forwards	2,759,878		93,876		—		2,203,643		95,035		—
Client foreign exchange forwards	2,568,085		—		85,706		2,092,207		—		90,253
Client foreign currency options	93,556		1,759		—		102,678		1,187		—
Client foreign currency options	93,579		—		1,759		102,678		—		1,187
Client interest rate derivatives (2)	1,020,416		8,499		—		726,984		11,753		—
Client interest rate derivatives	1,337,328		—		9,491		782,586		—		11,940
Total Derivatives not designated as hedging instruments			$	258,139	$	98,050			$	232,152	$	108,581

(1) Derivative assets and liabilities are included in "accrued interest receivable and other assets" and "other liabilities", respectively, on our consolidated balance sheets.

(2) The amount reported for December 31, 2018 reflects rule changes implemented by two central clearing houses that allow entities to elect to treat derivative assets, liabilities and the related variation margin as settlement of the related derivative fair values for legal and accounting purposes, as opposed to presenting gross derivative assets and liabilities. As a result, client interest rate derivatives at December 31, 2018, reflect reductions of approximately $0.4 million of derivative assets that previously would have been reported on a gross basis and approximately $212.3 million in related notional amounts for these derivative assets cleared through central clearing houses.

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 2018, 2017 and 2016 is as follows:

		Year ended December 31,
(Dollars in thousands)	Statement of income location	2018			2017			2016
Derivatives designated as hedging instruments:
Interest rate risks:
Net cash benefit associated with interest rate swaps	Interest expense—borrowings	$	—		$	1,053		$	2,341
Changes in fair value of interest rate swaps	Other noninterest income	—			(7		)	(35		)
Net gains associated with interest rate risk derivatives		$	—		$	1,046		$	2,306
Derivatives not designated as hedging instruments:
Currency exchange risks:
(Losses) gains on revaluations of internal foreign currency instruments, net	Other noninterest income	$	(373	)	$	33,161		$	(16,676	)
Gains (losses) on internal foreign exchange forward contracts, net	Other noninterest income	52			(32,286		)	16,136
Net (losses) gains associated with internal currency risk		$	(321	)	$	875		$	(540	)
Other derivative instruments:
Gains on revaluations of client foreign currency instruments, net	Other noninterest income	$	4,998		$	10,882		$	4,215
Losses on client foreign exchange forward contracts, net	Other noninterest income	(4,011		)	(9,969		)	(5,674		)
Net gains (losses) associated with client currency risk		$	987		$	913		$	(1,459	)
Net gains on equity warrant assets	Gains on equity warrant assets, net	$	89,142		$	54,555		$	37,892
Net (losses) gains on other derivatives	Other noninterest income	$	(179	)	$	(564	)	$	262

Offsetting Assets

The following table summarizes our assets subject to enforceable master netting arrangements as of December 31, 2018 and 2017:

(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		Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements						Net Amount
							Financial Instruments			Cash Collateral Received (1)
December 31, 2018:
Derivative Assets:
Foreign exchange forwards	$	98,643	$	—	$	98,643	$	(38,213	)	$	(11,825	)	$	48,605
Foreign currency options	1,759		—		1,759		(613		)	(90		)	1,056
Client interest rate derivatives	8,499		—		8,499		(8,416		)	(83		)	—
Total derivative assets:	108,901		—		108,901		(47,242		)	(11,998		)	49,661
Reverse repurchase, securities borrowing, and similar arrangements	123,611		—		123,611		(123,611		)	—			—
Total	$	232,512	$	—	$	232,512	$	(170,853	)	$	(11,998	)	$	49,661
December 31, 2017:
Derivative Assets:
Foreign exchange forwards (2)	$	95,449	$	—	$	95,449	$	(14,570	)	$	(3,616	)	$	77,263
Foreign currency options	1,187		—		1,187		(557		)	—			630
Client interest rate derivatives (2)	11,753		—		11,753		(11,627		)	(114		)	12
Total derivative assets:	108,389		—		108,389		(26,754		)	(3,730		)	77,905
Reverse repurchase, securities borrowing, and similar arrangements	247,876		—		247,876		(247,876		)	—			—
Total	$	356,265	$	—	$	356,265	$	(274,630	)	$	(3,730	)	$	77,905

(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) For the period ended December 31, 2017, previously reported amounts for our foreign exchange forwards and client interest rate derivatives were reclassified between "Financial Instruments" and "Cash Collateral Received" to properly reflect cash collateral received for these derivative assets subject to master netting arrangements, respectively. The correction of this immaterial error had no impact on the "Net Amount" of derivative assets subject to enforceable master netting arrangements.

Offsetting Liabilities

The following table summarizes our liabilities subject to enforceable master netting arrangements as of December 31, 2018 and 2017:

(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		Gross Amounts Not Offset in the Statement of Financial Position But Subject to Master Netting Arrangements						Net Amount
							Financial Instruments			Cash Collateral Pledged (1)
December 31, 2018:
Derivative Liabilities:
Foreign exchange forwards	$	86,800	$	—	$	86,800	$	(24,778	)	$	(20,732	)	$	41,290
Foreign currency options	1,759		—		1,759		(1,054		)	—			705
Client interest rate derivatives	9,491		—		9,491		—			(9,207		)	284
Total derivative liabilities:	98,050		—		98,050		(25,832		)	(29,939		)	42,279
Repurchase, securities lending, and similar arrangements	319,414		—		319,414		—			—			319,414
Total	$	417,464	$	—	$	417,464	$	(25,832	)	$	(29,939	)	$	361,693
December 31, 2017:
Derivative Liabilities:
Foreign exchange forwards (2)	$	95,454	$	—	$	95,454	$	(10,997	)	$	(69,110	)	$	15,347
Foreign currency options (2)	1,187		—		1,187		(501		)	(130		)	556
Client interest rate derivatives (2)	11,940		—		11,940		—			(11,924		)	16
Total derivative liabilities: (2)	108,581		—		108,581		(11,498		)	(81,164		)	15,919
Repurchase, securities lending, and similar arrangements	—		—		—		—			—			—
Total (2)	$	108,581	$	—	$	108,581	$	(11,498	)	$	(81,164	)	$	15,919

(1) Cash collateral pledged to our counterparties in relation to market value exposures of derivative contracts in a liability position and repurchase agreements are recorded as a component of “cash and cash equivalents" on our consolidated balance sheets.

(2) For the period ended December 31, 2017, previously reported amounts included in "Financial Instruments" were reclassified to "Cash Collateral Pledged" to properly reflect cash collateral pledged for these derivative liabilities subject to master netting arrangements. The correction of this immaterial error had no impact on the "Net Amount" of derivative liabilities subject to enforceable master netting arrangements.