Derivative Instruments and Other Hedging Activities

12 Months Ended

Dec. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Other Hedging Activities

NOTE 13 –DERIVATIVE INSTRUMENTS AND OTHER HEDGING ACTIVITIES

Information pertaining to outstanding derivative instruments is as follows:

	Balance Sheet	Asset Derivatives Fair Value				Balance Sheet	Liability Derivatives Fair Value
(Dollars in thousands)	Location	December 31, 2014		December 31, 2013		Location	December 31, 2014		December 31, 2013
Derivatives not designated as hedging instruments under ASC Topic 815:
Interest rate contracts	Other assets	$	15,434	$	10,621	Other liabilities	$	15,434	$	10,620
Forward sales contracts	Other assets		25		1,468	Other liabilities		2,556		287
Written and purchased options	Other assets		17,444		17,987	Other liabilities		13,364		15,828
Total		$	32,903	$	30,076		$	31,354	$	26,735
		Asset Derivatives Notional Amount					Liability Derivatives Notional Amount
(Dollars in thousands)		December 31, 2014		December 31, 2013			December 31, 2014		December 31, 2013
Derivatives not designated as hedging instruments under ASC Topic 815:
Interest rate contracts		$	444,703	$	380,303		$	444,703	$	380,303
Forward sales contracts			15,897		192,876			391,992		45,091
Written and purchased options			362,580		295,425			225,741		199,061
Total		$	823,180	$	868,604		$	1,062,436	$	624,455

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, the counterparty would be entitled to the collateral.

At December 31, 2014 and 2013, the Company was required to post $11.5 million and $5.0 million, respectively, in cash as collateral for its derivative transactions, which are 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 December 31, 2014. 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 master agreement and (2) in the event of default, provide the non-defaulting counterparty the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to promptly liquidate or set-off collateral posted by the defaulting counterparty. As permitted by U.S. GAAP, 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 reconciles the gross amounts presented in the consolidated balance sheets to the net amounts that would result in the event of offset.

	December 31, 2014
(Dollars in thousands) Derivatives subject to master netting arrangements	Gross Amounts		Gross Amounts Not Offset
	Presented in the		in the Balance Sheet
	Balance Sheet		Derivatives		Collateral (1)			Net
Derivative assets
Interest rate contracts designated as hedging instruments	$	—	$	—	$	—		$	—
Interest rate contracts not designated as hedging instruments		15,411		—		—			15,411
Written and purchased options		13,387		—		—			13,387
Total derivative assets subject to master netting arrangements	$	28,798	$	—	$	—		$	28,798
Derivative liabilities
Interest rate contracts designated as hedging instruments	$	—	$	—	$	—		$	—
Interest rate contracts not designated as hedging instruments		15,411		—		(3,735	)		11,676
Total derivative liabilities subject to master netting arrangements	$	15,411	$	—	$	(3,735	)	$	11,676

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

	December 31, 2013
(Dollars in thousands) Derivatives subject to master netting arrangements	Gross Amounts		Gross Amounts Not Offset
	Presented in the		in the Balance Sheet
	Balance Sheet		Derivatives		Collateral (1)			Net
Derivative assets
Interest rate contracts designated as hedging instruments	$	—	$	—	$	—		$	—
Interest rate contracts not designated as hedging instruments		10,621		—		—			10,621
Written and purchased options		15,801		—		—			15,801
Total derivative assets subject to master netting arrangements	$	26,422	$	—	$	—		$	26,422
Derivative liabilities
Interest rate contracts designated as hedging instruments	$	—	$	—	$	—		$	—
Interest rate contracts not designated as hedging instruments		10,620		—		(5,419	)		5,201
Total derivative liabilities subject to master netting arrangements	$	10,620	$	—	$	(5,419	)	$	5,201

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

During the years ended December 31, 2014 and 2013, 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 December 31, 2014, the fair value of derivatives that will mature within the next twelve months is $0.4 million. 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 December 31, 2014 and 2013, and for years then ended, 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)
	As of December 31					For the Years Ended December 31
	2014		2013			2014		2013				2014			2013
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships
Interest rate contracts	$	—	$	—	Other income (expense)	$	—	$	(392	)	Other income (expense)	$	(1	)	$	1
Total	$	—	$	—		$	—	$	(392	)		$	(1	)	$	1

(Dollars in thousands)
	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss) Recognized in Income on Derivatives
		2014			2013
Derivatives Not Designated as Hedging Instruments under ASC Topic 815
Interest rate contracts	Other income (expense)	$	2,513		$	2,991
Forward sales contracts	Mortgage Income		(3,225	)		(1,716	)
Written and purchased options	Mortgage Income		(5,739	)		(3,032	)
Total		$	(6,451	)	$	(1,757	)

At December 31, additional information pertaining to outstanding interest rate swap agreements not designated as hedging instruments is as follows:

(Dollars in thousands)	2014			2013
Weighted average pay rate		2.9	%		3.0	%
Weighted average receive rate		0.4	%		0.2	%
Weighted average maturity in years		7.7	yrs		7.6	yrs
Unrealized gain (loss) relating to interest rate swaps	$	—		$	—