Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

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 March 31, 2019 and December 31, 2018 were as follows:



	March 31, 2019						December 31, 2018
	Notional or Contractual Amount		Fair Value				Notional or Contractual Amount		Fair Value
(Dollars in thousands)	Notional or Contractual Amount		Derivative Assets (1)		Derivative Liabilities (1)		Notional or Contractual Amount		Derivative Assets (1)		Derivative Liabilities (1)
Derivatives designated as hedging instruments:
Interest rate risks:
Interest rate swaps	$	165,000	$	1,408	$	—	$	—	$	—	$	—
Interest rate swaps	200,000		—		303		—		—		—
Derivatives not designated as hedging instruments:
Currency exchange risks:
Foreign exchange forwards	180,055		3,312		—		263,733		4,767		—
Foreign exchange forwards	184,353		—		2,845		178,310		—		1,094
Other derivative instruments:
Equity warrant assets	226,734		162,215		—		223,532		149,238		—
Client foreign exchange forwards	2,907,771		87,716		—		2,759,878		93,876		—
Client foreign exchange forwards	2,779,090		—		78,287		2,568,085		—		85,706
Client foreign currency options	91,808		1,333		—		93,556		1,759		—
Client foreign currency options	91,908		—		1,336		93,579		—		1,759
Client interest rate derivatives (2)	1,198,257		11,763		—		1,020,416		8,499		—
Client interest rate derivatives (2)	1,274,564		—		8,841		1,337,328		—		9,491
Total derivatives not designated as hedging instruments			266,339		91,309				258,139		98,050
Total derivatives			$	267,747	$	91,612			$	258,139	$	98,050


(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 March 31, 2019 reflects rule changes implemented by two central clearing houses that require entities 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 reflect reductions of approximately $3.9 million of derivative liabilities and approximately $0.4 million of derivative assets at March 31, 2019 and December 31, 2018, respectively.

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 months ended March 31, 2019 and 2018 is as follows:



		Three months ended March 31,
(Dollars in thousands)	Statement of income location	2019			2018
Derivatives designated as hedging instruments:
Interest rate risks:
Amounts reclassified from accumulated other comprehensive income into income	Interest income—loans	$	(3	)	$	—
Derivatives not designated as hedging instruments:
Currency exchange risks:
Gains on revaluations of internal foreign currency instruments, net	Other noninterest income	$	1,050		$	2,926
Losses on internal foreign exchange forward contracts, net	Other noninterest income	(469		)	(3,512		)
Net gains (losses) associated with internal currency risk		$	581		$	(586	)
Other derivative instruments:
(Losses) gains on revaluations of client foreign currency instruments, net	Other noninterest income	$	(13,571	)	$	7,653
Gains (losses) on client foreign exchange forward contracts, net	Other noninterest income	12,654			(7,114		)
Net (losses) gains associated with client currency risk		$	(917	)	$	539
Net gains on equity warrant assets	Gains on equity warrant assets, net	$	21,305		$	19,191
Net (losses) gains on other derivatives	Other noninterest income	$	(365	)	$	431

Offsetting Assets

The following table summarizes our assets subject to enforceable master netting arrangements as of March 31, 2019 and December 31, 2018:



	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
(Dollars in thousands)	Gross Amounts of Recognized Assets		Gross Amounts offset in the Statement of Financial Position				Financial Instruments			Cash Collateral Received (1)			Net Amount
March 31, 2019
Derivative assets:
Interest rate swaps	$	1,408	$	—	$	1,408	$	(1,408	)	$	—		$	—
Foreign exchange forwards	91,028		—		91,028		(32,638		)	(13,991		)	44,399
Foreign currency options	1,333		—		1,333		(222		)	(425		)	686
Client interest rate derivatives	11,763		—		11,763		(11,724		)	(39		)	—
Total derivative assets	105,532		—		105,532		(45,992		)	(14,455		)	45,085
Reverse repurchase, securities borrowing, and similar arrangements	298,755		—		298,755		(298,755		)	—			—
Total	$	404,287	$	—	$	404,287	$	(344,747	)	$	(14,455	)	$	45,085
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


(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.

Offsetting Liabilities

The following table summarizes our liabilities subject to enforceable master netting arrangements as of March 31, 2019 and December 31, 2018:



	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
(Dollars in thousands)	Gross Amounts of Recognized Liabilities		Gross Amounts offset in the Statement of Financial Position				Financial Instruments			Cash Collateral Pledged (1)			Net Amount
March 31, 2019
Derivative liabilities:
Interest rate swaps	$	303	$	—	$	303	$	(303	)	$	—		$	—
Foreign exchange forwards	81,132		—		81,132		(10,238		)	(32,690		)	38,204
Foreign currency options	1,336		—		1,336		(346		)	(341		)	649
Client interest rate derivatives	8,841		—		8,841		—			(8,680		)	161
Total derivative liabilities	91,612		—		91,612		(10,887		)	(41,711		)	39,014
Repurchase, securities lending, and similar arrangements	—		—		—		—			—			—
Total	$	91,612	$	—	$	91,612	$	(10,887	)	$	(41,711	)	$	39,014
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


(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.