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Derivative Financial Instruments | 3 Months Ended
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Mar. 31, 2023
Notes to Financial Statements |
Derivative Financial Instruments | 11. Derivative Financial Instruments At March 31, 2023 and December 31, 2022, 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 and securities totaling $471.5 million and $273.6 million at March 31, 2023 and December 31, 2022, respectively; 2) to facilitate risk management strategies for our loan customers with $219.5 million of swaps outstanding, which include $109.7 million each with customers and with bank counterparties at March 31, 2023 and $221.2 million of swaps outstanding, which include $110.6 million each with customers and bank counterparties at December 31, 2022; 3) to mitigate exposure to rising interest rates on certain short-term advances and brokered deposits totaling $921.5 million at March 31, 2023, and $871.5 at December 31, 2022. At March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022, derivatives with a combined notional amount of $219.5 million and $221.2 million, respectively, were not designated as hedges. At March 31, 2023 and December 31, 2022, derivatives with a combined notional amount of $471.5 million and $273.6 million, respectively, were designated as fair value hedges. At March 31, 2023 and December 31, 2022, derivatives with a combined notional amount of $921.5 million and $871.5 million, respectively, were designated as cash flow hedges. For cash flow hedges, the changes in the fair value of the derivatives 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 March 31, 2023 and 2022, $4.3 million in reduced expense and $2.7 million in additional expense, 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 $15.5 million in reduced expense. 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: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Assets |  | Liabilities
​ | ​ | Notional | ​ | ​ | ​ | ​ | Notional | ​ | ​ | ​
​ |  | Amount |  | Fair Value (1) |  | Amount |  | Fair Value (1)
March 31, 2023 | ​ | (In thousands)
Cash flow hedges: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (borrowings and deposits) | ​ | $ | 650,750 | ​ | $ | 28,653 | ​ | $ | 270,750 | ​ | $ | 3,277
Fair value hedges: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (loans and securities) | ​ | ​ | 471,520 | ​ | ​ | 20,967 | ​ | ​ | — | ​ | ​ | —
Non hedge: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (loans) | ​ |  | 109,749 | ​ | ​ | 15,452 | ​ | ​ | 109,749 | ​ | ​ | 15,452
Total | ​ | $ | 1,232,019 | ​ | $ | 65,072 | ​ | $ | 380,499 | ​ | $ | 18,729
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2022 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash flow hedges: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (borrowings and deposits) | ​ | $ | 700,750 | ​ | $ | 31,716 | ​ | $ | 170,750 | ​ | $ | 210
Fair value hedges: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (loans) | ​ | ​ | 273,607 | ​ | ​ | 24,673 | ​ | ​ | — | ​ | ​ | —
Non hedge: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps (loans) | ​ |  | 110,598 | ​ | ​ | 18,197 | ​ | ​ | 110,598 | ​ | ​ | 18,197
Total | ​ | $ | 1,084,955 | ​ | $ | 74,586 | ​ | $ | 281,348 | ​ | $ | 18,407
| (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 Assets | ​ | ​ | the Hedged Assets
the Hedged Item is Included | ​ | ​ | Assets/(Liabilities) | ​ | ​ | Assets/(Liabilities)
(In thousands) |  | March 31, 2023 |  | December 31, 2022 |  | March 31, 2023 |  | December 31, 2022
Loans: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Multi-family residential | ​ | $ | 84,384 | ​ | $ | 82,613 | ​ | $ | (8,081) | ​ | $ | (10,480)
Commercial real estate | ​ | ​ | 168,311 | ​ | ​ | 167,353 | ​ | ​ | (12,797) | ​ | ​ | (15,442)
Total | ​ | $ | 252,695 | ​ | $ | 249,966 | ​ | $ | (20,878) | ​ | $ | (25,922)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Securities available for sale: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Mortgage-backed securities | ​ | $ | 306,425 | ​ | $ | — | ​ | $ | (1,238) | ​ | $ | —
Total | ​ | $ | 306,425 | ​ | $ | — | ​ | $ | (1,238) | ​ | $ | —
​ 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 | ​
​ | ​ | Affected Line Item in the Statements | ​ | March 31, | ​
(In thousands) |  | Where Net Income is Presented |  | 2023 |  | 2022 |
Financial Derivatives: | ​ | ​ |  | ​ |  |  | ​ |  |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps - fair value hedge (loans) | ​ | Interest and fees on loans | ​ | $ | 1,897 | ​ | $ | (1,435) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps - fair value hedge (securities) | ​ | Interest and dividends on securities | ​ | ​ | 58 | ​ | ​ | — | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps - cash flow hedge (borrowings) | ​ | Other interest expense | ​ | ​ | 1,421 | ​ |  | (2,465) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | — | ​
Interest rate swaps - cash flow hedge (deposits) | ​ | Deposits | ​ | ​ | 2,867 | ​ | ​ | (55) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total net income (loss) from the effects of derivative instruments | ​ | ​ | ​ | $ | 6,243 | ​ | $ | (3,955) | ​
​ The Company’s interest rate swaps are subject to master netting arrangements between the Company and its 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: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Gross Amount | ​ | Net Amount | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Gross Amounts | ​ | Offset in Statement of | ​ | Presented in Statement of | ​ | Financial | ​ | Cash | ​ | ​
(In thousands) |  | Recognized |  | Financial Condition |  | Financial Condition |  | Instruments |  | Collateral |  | Net Amount
March 31, 2023 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps | ​ | $ | 65,072 | ​ | $ | — | ​ | $ | 65,072 | ​ | $ | — | ​ | $ | (64,445) | ​ | $ | 627
Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps | ​ | ​ | 18,729 | ​ | ​ | — | ​ | ​ | 18,729 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 18,729
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
December 31, 2022 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps | ​ | $ | 74,586 | ​ | $ | — | ​ | $ | 74,586 | ​ | $ | — | ​ | $ | (72,185) | ​ | $ | 2,401
Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swaps | ​ | ​ | 18,407 | ​ | ​ | — | ​ | ​ | 18,407 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 18,407
​

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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 https://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 https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
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