The Company is exposed to certain risks arising from both economic conditions and its business operations. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. The Company manages a matched book with respect to its derivative instruments in order to minimize its net risk exposure resulting from such transactions. The Company does not use derivative financial instruments for trading purposes.


	Fair Values of Derivative Instruments
(Dollars in thousands)		Count	Notional		Balance Sheet Location	Derivatives (Fair Value)
Derivatives designated as hedging instruments:
Interest rate products		1	$	100,000	Other assets	$	1,822
Total			$	100,000		$	1,822
Derivatives not designated as hedging instruments:
Interest rate products			$	1,916,460	Other assets	$	119,336
Interest rate products			1,919,729		Other liabilities	(119,336)
Interest rate lock commitments with customers			38,957		Other assets	752
Interest rate lock commitments with customers			859		Other liabilities	(1)
Forward sale commitments			11,257		Other assets	29
Forward sale commitments			23,850		Other liabilities	(167)
FX forwards			3,653		Other assets	146
FX forwards			3,000		Other liabilities	(118)
Risk participation agreements sold			106,926		Other liabilities	(4)
Risk participation agreements purchased			90,591		Other assets	78
Financial derivatives related to sales of certain Visa Class B shares			113,177		Other liabilities	(16,291)
Total derivatives			$	4,328,459		$	(13,754)


	Fair Values of Derivative Instruments
(Dollars in thousands)		Notional		Balance Sheet Location	Derivatives (Fair Value)



Derivatives not designated as hedging instruments:
Interest rate products		$	1,794,678	Other assets	$	156,414
Interest rate products		1,794,678		Other liabilities	(156,414)
Interest rate lock commitments with customers		24,673		Other assets	385
Interest rate lock commitments with customers		1,179		Other liabilities	(7)
Forward sale commitments		9,072		Other assets	75
Forward sale commitments		20,719		Other liabilities	(54)
FX forwards		4,177		Other assets	38
FX forwards		3,052		Other liabilities	(45)
Risk participation agreements sold		68,459		Other liabilities	(2)
Risk participation agreements purchased		87,168		Other assets	81
Financial derivatives related to sales of certain Visa Class B shares		113,177		Other liabilities	(17,100)
Total derivatives		$	3,921,032		$	(16,629)

The Company's objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate options, including floors, caps, collars, or swaps as part of its interest rate risk management strategy. Interest rate options designated as cash flow hedges involve the receipt of fixed amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount.

The Company has agreements with certain derivative counterparties that contain a provision under which, if it defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has agreements with certain derivative counterparties that contain a provision where if it fails to maintain its status as a well-capitalized or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

In February 2023, the Company purchased an interest rate floor at a premium of $1.4 million with a $100.0 million notional amount to hedge variable cash flows associated with a variable rate loan pool through the first quarter of 2026. Changes to the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecast transaction affects earnings. If the Company determines that a cash flow hedge is no longer highly effective, future changes in the fair value of the hedging instrument would be reported in earnings. During the three months ending March 31, 2023, less than $0.1 million of amortization expense on the premium was reclassified into interest income. The Company does not expect any unrealized gains or losses related to cash flow hedges to be reclassified into earnings in the next twelve months.

In 2020, the Company terminated its three interest rate swaps that were designated as cash flow hedges for a net gain of $1.3 million, recognized in accumulated other comprehensive income. The derivatives were used to hedge the variable cash flows associated with a variable rate loan pool. Hedge accounting was discontinued, and the net gain in accumulated comprehensive income is reclassified into earnings when the transaction affects earnings. As the underlying hedged transaction continues to be probable, the $1.3 million net gain will be recognized into earnings on a straight-line basis over each derivative's original contract term. During the three months ended March 31, 2023, less than $0.1 million was reclassified into interest income. During the next twelve months, the Company estimates that an additional $0.1 million will be reclassified as an increase to interest income.

The Company enters into interest rate swaps with commercial loan customers wishing to manage interest rate risk. The Company then enters into corresponding swap agreements with swap dealer counterparties to economically hedge the exposure arising from these contracts. The interest rate swaps with both the customers and third parties are not designated as hedges under ASC 815, Derivatives and Hedging (ASC 815) and are marked to market through earnings. As the interest rate swaps are structured to offset each other, changes to the underlying benchmark interest rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. As of March 31, 2023, there were no fair value adjustments related to credit quality.

Derivative financial instruments related to mortgage banking activities are recorded at fair value and are not designated as accounting hedges. This includes commitments to originate certain fixed-rate residential mortgage loans to customers, also referred to as interest rate lock commitments. The Company may also enter into forward sale commitments to sell loans to investors at a fixed price at a future date and trade asset-backed securities to mitigate interest rate risk.








	Amount of (Loss) or Gain Recognized in Income				Location of Gain or (Loss) Recognized in Income
(Dollars in thousands)	Three Months Ended March 31,
Derivatives not designated as hedging instruments	2023		2022
Interest rate lock commitments with customers	$	421	$	(1,227)		Mortgage banking activities, net
Forward sale commitments	(148)		3,137			Mortgage banking activities, net
Total	$	273	$	1,910

The Company enters into foreign exchange forward contracts (FX forwards) with customers to exchange one currency for another on an agreed date in the future at an agreed exchange rate. The Corporation then enters into corresponding FX forwards with swap dealer counterparties to economically hedge its exposure on the exchange rate component of the customer agreements. The FX forwards with both the customers and third parties are not designated as hedges under ASC 815 and are marked to market through earnings. Exposure to gains and losses on these contracts increase or decrease over their respective lives as currency exchange and interest rates fluctuate. As the FX forwards are structured to offset each other, changes to the underlying term structure of currency exchange rates considered in the valuation of these instruments do not result in an impact to earnings; however, there may be fair value adjustments related to credit quality variations between counterparties, which may impact earnings as required by ASC 820. As of March 31, 2023, there were no fair value adjustments related to credit quality.

The Company may enter into a risk participation agreement (RPA) with another institution as a means to assume a portion of the credit risk associated with a loan structure which includes a derivative instrument, in exchange for fee income commensurate with the risk assumed. This type of derivative is referred to as an “RPA sold.” In addition, in an effort to reduce the credit risk associated with an interest rate swap agreement with a borrower for whom the Corporation has provided a loan structured with a derivative, the Corporation may purchase an RPA from an institution participating in the facility in exchange for a fee commensurate with the risk shared. This type of derivative is referred to as an “RPA purchased.”

The Company entered into agreements with one unrelated financial institutions whereby those financial institutions entered into interest rate derivative contracts (interest rate swap transactions) directly with customers referred to them by the Company. Under the terms of the agreements, those financial institutions have recourse to us for any exposure created under each swap transaction, only in the event that the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution. This is a customary arrangement that allows us to provide access to interest rate swap transactions for our customers without creating the swap ourselves. These swap guarantees are accounted for as credit derivatives.

At March 31, 2023 and December 31, 2022, there were 203 and 209 variable-rate to fixed-rate swap transactions between the third-party financial institutions and the Company's customers, respectively. The initial notional aggregate amount was approximately $0.8 billion at March 31, 2023 and December 31, 2022. At March 31, 2023, the swap transactions remaining maturities ranged from under 1 year to 12 years. At March 31, 2023, 1 of these customer swaps was in a paying position to third parties for less than $0.1 million, with our swap guarantees having a fair value of $9.9 million. At December 31, 2022, none of these customer swaps were in a paying position to third parties, with the Company's swap guarantees having a fair value of $10.4 million. However, for both periods, none of the Company's customers were in default of the swap agreements.

The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $6.7 million in cash against its obligations under these agreements which meets or exceeds the minimum collateral posting requirements. If the Company had breached any of these provisions at March 31, 2023, it could have been required to settle its obligations under the agreements at the termination value.