Derivative Instruments and Other Hedging Activities

3 Months Ended

Mar. 31, 2013

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Other Hedging Activities

NOTE 11 – DERIVATIVE INSTRUMENTS AND OTHER HEDGING ACTIVITIES

At March 31, 2013 and December 31, 2012, the information pertaining to outstanding derivative instruments is as follows.

		Asset Derivatives					Liability Derivatives
(Dollars in thousands)	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
		March 31, 2013		December 31, 2012			March 31, 2013		December 31, 2012
Derivatives designated as hedging instruments under ASC Topic 815
Interest rate contracts	Other assets	$	1,744	$	499	Other liabilities	$	590	$	1,843
Total derivatives designated as hedging instruments under ASC Topic 815		$	1,744	$	499		$	590	$	1,843
Derivatives not designated as hedging instruments under ASC Topic 815
Interest rate contracts	Other assets	$	22,058	$	25,940	Other liabilities	$	22,059	$	25,940
Forward sales contracts	Other assets		593		2,774	Other liabilities		774		343
Written and purchased options	Other assets		16,813		12,906	Other liabilities		10,749		8,764
Total derivatives not designated as hedging instruments under ASC Topic 815		$	39,464	$	41,620		$	33,582	$	35,047

	Asset Derivatives				Liability Derivatives
(Dollars in thousands)	Notional Amount				Notional Amount
	March 31, 2013		December 31, 2012		March 31, 2013		December 31, 2012
Derivatives designated as hedging instruments under ASC Topic 815
Interest rate contracts	$	35,000	$	35,000	$	35,000	$	35,000
Total derivatives designated as hedging instruments under ASC Topic 815	$	35,000	$	35,000	$	35,000	$	35,000
Derivatives not designated as hedging instruments under ASC Topic 815
Interest rate contracts	$	361,679	$	374,536	$	361,679	$	374,536
Forward sales contracts		66,247		212,028		116,609		53,269
Written and purchased options		434,079		388,793		194,376		185,885
Total derivatives not designated as hedging instruments under ASC Topic 815	$	862,005	$	975,357	$	672,664	$	613,690

The Company is party to collateral agreements with certain derivative counterparties. Such agreements require that the Company maintain collateral based on the fair values of individual derivative transactions. In the event of default by the Company on the related obligation, the counterparty would be entitled to the collateral.

At March 31, 2013 and December 31, 2012, the Company was required to post $2,650,000 in cash as collateral for its derivative transactions, which is included in interest-bearing deposits in banks on the Company’s consolidated balance sheets. The Company does not anticipate additional assets will be required to be posted as collateral, nor does it believe additional assets would be required to settle its derivative instruments immediately if contingent features were triggered at March 31, 2013. The Company’s master netting agreements represent written, legally enforceable bilateral agreements that (1) create a single legal obligation for all individual transactions covered by the agreement to the non-defaulting entity upon an event of default of the counterparty, including bankruptcy, insolvency, or similar proceeding, and (2) provide the non-defaulting entity the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default of the counterparty. As permitted by generally-accepted accounting principles, the Company does not offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against recognized fair value amounts of derivatives executed with the same counterparty under a master netting agreement.

The following table reconciled the gross amounts presented in the consolidated balance sheet to the net amounts that would result in the event of offset as of March 31, 2013 and December 31, 2012.

	March 31, 2013
(Dollars in thousands)	Gross Amounts Presented in the Balance Sheet		Gross Amounts Not  Offset in the Balance Sheet						Net Amount
			Derivatives			Collateral(1)
Derivatives subject to master netting arrangements
Derivative assets
Interest rate contracts designated as hedging instruments	$	1,744	$	(185	)	$	—		$	1,559
Interest rate contracts not designated as hedging instruments		22,058		—			—			22,058
Written and purchased options		10,702		—			—			10,702
Total derivative assets subject to master netting arrangements	$	34,504	$	(185	)	$	—		$	34,319
Derivative liabilities
Interest rate contracts designated as hedging instruments		590		(185	)		—			405
Interest rate contracts not designated as hedging instruments		22,059		—			(12,317	)		9,742
Total derivative liabilities subject to master netting arrangements	$	22,649	$	(185	)	$	(12,317	)	$	10,147

(1) Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.

	December 31, 2012
(Dollars in thousands)	Gross Amounts Presented in the Balance Sheet		Gross Amounts Not  Offset in the Balance Sheet
			Derivatives			Collateral(1)			Net Amount
Derivatives subject to master netting arrangements
Derivative assets
Interest rate contracts designated as hedging instruments	$	499	$	(499	)	$	—		$	—
Interest rate contracts not designated as hedging instruments		25,940		—			—			25,940
Written and purchased options		8,763		—			—			8,763
Total derivative assets subject to master netting arrangements	$	35,202	$	(499	)	$	—		$	34,703
Derivative liabilities
Interest rate contracts designated as hedging instruments		1,843		(499	)		—			1,344
Interest rate contracts not designated as hedging instruments		25,940		—			(13,350	)		12,590
Total derivative liabilities subject to master netting arrangements	$	27,783	$	(499	)	$	(13,350	)	$	13,934

(1) Consists of cash collateral recorded at cost, which approximates fair value, and investment securities.

During the three months ended March 31, 2013 and 2012, the Company has not reclassified into earnings any gain or loss as a result of the discontinuance of cash flow hedges because it was probable the original forecasted transaction would not occur by the end of the originally specified term.

At March 31, 2013, the fair value of derivatives that will mature within the next twelve months is $563,000. The Company does not expect to reclassify any amount from accumulated other comprehensive income into interest income over the next twelve months for derivatives that will be settled.

At March 31, 2013 and 2012, and for the three months then ended, the information pertaining to the effect of the hedging instruments on the consolidated financial statements is as follows.

(Dollars in thousands)	Amount of Gain (Loss) Recognized in OCI, net of taxes (Effective Portion)				Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)						Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships	2013		2012			2013			2012				2013		2012
Interest rate contracts	$	751	$	1,558	Other income (expense)	$	(424	)	$	(386	)	Other income (expense)	$	—	$	—
Total	$	751	$	1,558		$	(424	)	$	(386	)		$	—	$	—

(Dollars in thousands)	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments under ASC Topic 815		2013			2012
Interest rate contracts	Other income (expense)	$	(1	)	$	—
Forward sales contracts	Mortgage income		(2,912	)		—
Written and purchased options	Mortgage income		1,085			56
Total		$	(1,828	)	$	56