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Derivative Financial Instruments | 6 Months Ended
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Jun. 30, 2022
Notes to Financial Statements |
Derivative Financial Instruments | 11. Derivative Financial Instruments At June 30, 2022 and December 31, 2021, the Company’s derivative financial instruments consisted of interest rate swaps. The Company’s interest rate swaps are used for three purposes: 1) to mitigate the Company’s exposure to rising interest rates on certain fixed rate loans totaling $289.2 million and $299.6 million at June 30, 2022 and December 31, 2021, respectively; 2) to facilitate risk management strategies for our loan customers with $224.6 million of swaps outstanding, which include $112.3 million with customers and $112.3 million with bank counterparties at June 30, 2022 and $228.0 million of swaps outstanding, which include $114.0 million with customers and $114.0 million with bank counterparties at December 31, 2021; and 3) to mitigate exposure to rising interest rates on certain short-term advances and brokered deposits totaling $871.5 million at June 30, 2022, and $996.5 at December 31, 2021. At June 30, 2022 and December 31, 2021, we held derivatives designated as cash flow hedges, fair value hedges and certain derivatives not designated as hedges. The Company’s derivative instruments are carried at fair value in the Company’s financial statements as part of Other Assets for derivatives with positive fair values and Other Liabilities for derivatives with negative fair values. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies and has been designated as a hedge for accounting purposes, and further, by the type of hedging relationship. At June 30, 2022 and December 31, 2021, derivatives with a combined notional amount of $224.6 million and $228.0 million, respectively, were not designated as hedges. At June 30, 2022 and December 31, 2021, derivatives with a combined notional amount of $289.2 million and $299.6 million, respectively, were designated as fair value hedges. At June 30, 2022 and December 31, 2021, derivatives with a combined notional amount of $871.5 million and $996.5 million, respectively, were designated as cash flow hedges. For cash flow hedges, the changes in the fair value of the derivative are reported in accumulated other comprehensive income (loss), net of tax. Amounts in accumulated other comprehensive loss are reclassified into earnings in the same period during which the hedged forecasted transaction effects earnings. During the three months ended June 30, 2022 and 2021, $2.4 million and $2.6 million, respectively, was reclassified from accumulated other comprehensive loss to interest expense. The estimated amount to be reclassified in the next 12 months out of accumulated other comprehensive loss is $5.7 million. Changes in the fair value of interest rate swaps not designated as hedges are reflected in “Net gain (loss) from fair value adjustments” in the Consolidated Statements of Income. The following table sets forth information regarding the Company’s derivative financial instruments at the periods indicated: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | June 30, 2022 |  | December 31, 2021
​ | ​ | Notional | ​ | ​ | ​ | ​ | Notional | ​ | ​ | ​
​ |  | Amount |  | Fair Value (1) |  | Amount |  | Fair Value (1)
​ | ​ | (In thousands)
Interest rate swaps (cash flow hedge) | ​ | $ | 871,500 | ​ | $ | 26,483 | ​ | $ | 355,000 | ​ | $ | 7,328
Interest rate swaps (fair value hedge) | ​ |  | 279,615 | ​ |  | 14,274 | ​ |  | — | ​ |  | —
Interest rate swaps (non-hedge) | ​ | ​ | 112,293 | ​ | ​ | 13,228 | ​ | ​ | 113,988 | ​ | ​ | 3,355
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (fair value hedge) | ​ |  | 9,585 | ​ |  | (30) | ​ |  | 299,555 | ​ |  | (12,329)
Interest rate swaps (cash flow hedge) | ​ |  | — | ​ |  | — | ​ |  | 641,500 | ​ |  | (9,387)
Interest rate swaps (non-hedge) | ​ |  | 112,293 | ​ |  | (13,228) | ​ |  | 113,988 | ​ |  | (3,355)
Total derivatives | ​ | $ | 1,385,286 | ​ | $ | 40,727 | ​ | $ | 1,524,031 | ​ | $ | (14,388)
(1)Derivatives in a positive position are recorded as “Other assets” and derivatives in a negative position are recorded as “Other liabilities” in the Consolidated Statements of Financial Condition. ​ ​ The following table presents information regarding the Company’s fair value hedged items for the periods indicated: ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Cumulative Amount
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | of the Fair Hedging Adjustment
Line Item in the Consolidated Statement | ​ | ​ | Carrying Amount of the | ​ | ​ | Included in the Carrying Amount of
of Financial Condition in Which | ​ | ​ | Hedged | ​ | ​ | the Hedged
the Hedged Item Is Included | ​ | ​ | Assets/(Liabilities) | ​ | ​ | Assets/(Liabilities)
(In thousands) | ​ | ​ | June 30, 2022 | ​ | ​ | December 31, 2021 | ​ | ​ | June 30, 2022 | ​ | ​ | December 31, 2021
Loans | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Multi-family residential | ​ | $ | 98,970 | ​ | $ | 113,730 | ​ | $ | (5,819) | ​ | $ | 7,608
Commercial real estate | ​ | ​ | 176,894 | ​ | ​ | 192,694 | ​ | ​ | (9,749) | ​ | ​ | 3,477
Commercial business and other | ​ | ​ | — | ​ | ​ | 6,298 | ​ | ​ | — | ​ | ​ | 122
Total | ​ | $ | 275,864 | ​ | $ | 312,722 | ​ | $ | (15,568) | ​ | $ | 11,207
​ ​ The following table sets forth the effect of derivative instruments on the Consolidated Statements of Income for the periods indicated: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ |  | For the three months ended |  | For the six months ended
​ | ​ | ​ | June 30, | ​ | June 30,
(In thousands) | Affected Line Item in the Statements Where Net Income is Presented |  | 2022 |  | 2021 |  | 2022 |  | 2021
Financial Derivatives: | ​ |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
​ | Other interest expense | ​ | $ | — | ​ | $ | (138) | ​ | $ | — | ​ | $ | (272)
​ | Net gain (loss) from fair value adjustments | ​ | ​ | — | ​ | ​ | (1,195) | ​ | ​ | — | ​ | ​ | 1,423
Interest rate swaps (non-hedge) | ​ | ​ | ​ | — | ​ | ​ | (1,333) | ​ | ​ | — | ​ | ​ | 1,151
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (fair value hedge) | Interest and fees on loans | ​ | ​ | (886) | ​ | ​ | (2,062) | ​ | ​ | (2,321) | ​ | ​ | (2,025)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Other interest expense | ​ |  | (1,489) | ​ |  | (2,619) | ​ |  | (3,954) | ​ | ​ | (5,205)
​ | Deposit | ​ | ​ | 104 | ​ | ​ | — | ​ | ​ | 49 | ​ | ​ | —
Interest rate swaps (cash flow hedge) | ​ | ​ | ​ | (1,385) | ​ | ​ | (2,619) | ​ | ​ | (3,905) | ​ | ​ | (5,205)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net loss | ​ | ​ | $ | (2,271) | ​ | $ | (6,014) | ​ | $ | (6,226) | ​ | $ | (6,079)
​ The Company’s interest rate swaps are subject to master netting arrangements between the Company and its three designated counterparties. The Company has not made a policy election to offset its derivative positions. The following tables present the effect of the master netting arrangements on the presentation of the derivative assets and liabilities in the Consolidated Statements of Financial Condition as of the dates indicated: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, 2022
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Gross Amounts Not Offset in the | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Consolidated Statements of | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross Amount Offset in | ​ | Net Amount of Assets | ​ | Financial Condition | ​ | ​ | ​
​ | ​ | Gross Amount of | ​ | the Statements | ​ | Presented in the | ​ | Financial | ​ | Cash Collateral | ​ | ​ | ​
(In thousands) |  | Recognized Assets |  | of Condition |  | Statements of Condition |  | Instruments |  | Received |  | Net Amount
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Interest rate swaps | ​ | $ | 53,985 | ​ | $ | — | ​ | $ | 53,985 | ​ | $ | — | ​ | $ | 38,972 |  | $ | 15,013
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Gross Amounts Not Offset in the | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Consolidated Statements of | ​ | ​ | ​
​ | ​ | Gross Amount of | ​ | Gross Amount Offset in | ​ | Net Amount of Liabilities | ​ | Financial Condition | ​ | ​ | ​
​ | ​ | Recognized | ​ | the Statements | ​ | Presented in the | ​ | Financial | ​ | Cash Collateral | ​ | ​
(In thousands) |  | Liabilities |  | of Condition |  | Statements of Condition |  | Instruments |  | Pledged |  | Net Amount
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Interest rate swaps | ​ | $ | 13,258 | ​ | $ | — | ​ | $ | 13,258 | ​ | $ | — | ​ | $ | — |  | $ | 13,258
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2021
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Gross Amounts Not Offset in the | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Consolidated Statements of | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross Amount Offset in | ​ | Net Amount of Assets | ​ | Financial Condition | ​ | ​ | ​
​ | ​ | Gross Amount of | ​ | the Statements | ​ | Presented in the | ​ | Financial | ​ | Cash Collateral | ​ | ​ | ​
(In thousands) |  | Recognized Assets |  | of Condition |  | Statements of Condition |  | Instruments |  | Received |  | Net Amount
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Interest rate swaps | ​ | $ | 10,683 | ​ | $ | — | ​ | $ | 10,683 | ​ | $ | — | ​ | $ | — |  | $ | 10,683
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Gross Amounts Not Offset in the | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Consolidated Statements of | ​ | ​ | ​
​ | ​ | Gross Amount of | ​ | Gross Amount Offset in | ​ | Net Amount of Liabilities | ​ | Financial Condition | ​ | ​ | ​
​ | ​ | Recognized | ​ | the Statements | ​ | Presented in the | ​ | Financial | ​ | Cash Collateral | ​ | ​
(In thousands) |  | Liabilities |  | of Condition |  | Statements of Condition |  | Instruments |  | Pledged |  | Net Amount
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ | ​
Interest rate swaps | ​ | $ | 25,071 | ​ | $ | — | ​ | $ | 25,071 | ​ | $ | — | ​ | $ | 21,527 |  | $ | 3,544
​

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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