West-coast regional bank with over $17 billion in assets.

Active in C&I, CRE and Corporate lending.

Had historically hedged some large fixed rate loans, but never offered interest rate derivative transactions to their commercial borrowers.


Large Bank Establishes Derivative Program


  • Newly-hired senior commercial lending bankers had familiarity with offering commercial clients interest rate hedging products at their previous bank, but the product was not yet approved to offer to their new Bank’s clients.

  • Conservative bank management wanted to carefully consider their willingness to offer interest rate derivatives as a product solution in a post-Dodd-Frank environment.

  • The Bank had executed a few derivative transactions for balance sheet management before, but did not have the in-house expertise to design and support a Dodd-Frank compliant client hedging program.

  • As a Bank over $10 billion in assets, the Bank was required to execute its derivative transactions that would not qualify for end-user or other exemptions on a Clearing Exchange through a Futures Commission Merchant (FCM).

  • The Bank wanted to remain competitive in winning commercial loans vs. large regional and national banks active in their market, who had greater legal. compliance, and capital markets resources to support a client hedging program.

  • The Bank wanted to continue to diversify revenue and create non-interest income opportunities.


  • The Bank entered into a partnership with Derivative Path, Inc. in 2013 and utilized the team as their fully outsourced client hedge program solution.

  • DPI provided a full set of white-labelled client marketing, legal and operational documentation.

  • DPI helped establish bank credit and risk management policies for client hedging program.

  • DPI provides ongoing assistance with full trade lifecycle processing and real-time information about the Bank’s derivatives portfolio utilizing DerivativeEDGE.

  • DPI helped analyze the incremental cost/benefit impact of clearing on the establishment of their client hedging program as well as helping to analyze and negotiate their best clearing exchange and FCM alternative.

  • The Bank has experienced strong loan growth and robust fee income generation since the client hedging program was established.