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Derivatives and Hedging Activities | 6 Months Ended
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Jun. 30, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative and Hedging Activities | Derivative and Hedging Activities The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through the management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities. Non-designated Hedges. Derivatives not designated in qualifying hedging relationships are not speculative and result from a service the Company provides to certain qualified commercial borrowers in loan related transactions which, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company may execute interest rate swaps with qualified commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. The interest rate swap agreement which the Company executes with the commercial borrower is collateralized by the borrower's commercial real estate financed by the Company. As the Company has not elected to apply hedge accounting and these interest rate swaps do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. As of June 30, 2024 and December 31, 2023, the Company had 321 and 154 loan related interest rate swaps with aggregate notional amounts of $4.64 billion and $2.30 billion, respectively. The Company periodically enters into risk participation agreements ("RPAs"), with the Company functioning as either the lead institution, or as a participant when another company is the lead institution on a commercial loan. These RPAs are entered into to manage the credit exposure on interest rate contracts associated with these loan participation agreements. Under the RPAs, the Company will either receive or make a payment in the event the borrower defaults on the related interest rate contract. The Company has minimum collateral posting thresholds with certain of its risk participation counterparties, and has posted collateral of $70,000 against the potential risk of default by the borrower under these agreements. For June 30, 2024 and December 31, 2023, the Company had 8 and 12 credit derivatives, respectively, with aggregate notional amounts of $87.7 million and $142.8 million, respectively, from participations in interest rate swaps as part of these loan participation arrangements. As of June 30, 2024, both the asset and liability positions of these fair value credit derivatives were insignificant, compared to $17,000 and $8,000, respectively, as of December 31, 2023. Cash Flow Hedges of Interest Rate Risk. The Company’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable payment amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive (loss) income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three and six months ended June 30, 2024 and 2023, such derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings or demand deposits. During the next twelve months, the Company estimates that $9.9 million will be reclassified as a reduction to interest expense. As of June 30, 2024, the Company had 7 outstanding interest rate derivatives with an aggregate notional amount of $375.0 million that were each designated as a cash flow hedge of interest rate risk, compared to 9 outstanding interest rate derivatives with an aggregate notional amount of $455.0 million, as of December 31, 2023. The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of cash or marketable investment securities, is posted by or received from the counterparty with net liability or asset positions, respectively, in accordance with contract thresholds. Master repurchase agreements which include “right of set-off” provisions generally have a legally enforceable right to offset recognized amounts. In such cases, the collateral would be used to settle the fair value of the swap or repurchase agreement should the Company be in default. Total amount of collateral held or pledged cannot exceed the net derivative fair values with the counterparty. The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are eligible for offset in the Consolidated Statements of Condition as of June 30, 2024 and December 31, 2023 (in thousands).
|  | Fair Values of Derivative Instruments as of June 30, 2024
|  | Asset Derivatives |  | Liability Derivatives
|  | Notional Amount |  | Consolidated Statements of Financial Condition |  | Fair value (1) |  | Notional Amount |  | Consolidated Statements of Financial Condition |  | Fair value (2)
Derivatives not designated as a hedging instrument: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate products |  | $ | 2,320,802 |  |  | Other assets |  | $ | 197,311 |  |  | $ | 2,320,802 |  |  | Other liabilities |  | $ | 197,395 |
Credit contracts |  | 11,796 |  |  | Other assets |  | — |  |  | 75,909 |  |  | Other liabilities |  | — |
Total derivatives not designated as a hedging instrument |  |  |  |  |  | 197,311 |  |  |  |  |  |  | 197,395 |
Derivatives designated as a hedging instrument: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate products |  | 375,000 |  |  | Other assets |  | 11,837 |  |  | — |  |  | Other liabilities |  | — |
Total gross derivative amounts recognized on the balance sheet |  |  |  |  |  | 209,148 |  |  |  |  |  |  | 197,395 |
Gross amounts offset on the balance sheet |  |  |  |  |  | — |  |  |  |  |  |  | — |
Net derivative amounts presented on the balance sheet |  |  |  |  |  | $ | 209,148 |  |  |  |  |  |  | 197,395 |
Gross amounts not offset on the balance sheet: |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments - institutional counterparties |  |  |  |  |  | $ | — |  |  |  |  |  |  | — |
Cash collateral - institutional counterparties |  |  |  |  |  | 201,390 |  |  |  |  |  |  | — |
Net derivatives not offset |  |  |  |  |  | $ | 7,758 |  |  |  |  |  |  | 197,395 |
|  | Fair Values of Derivative Instruments as of December 31, 2023
|  | Asset Derivatives |  | Liability Derivatives
|  | Notional Amount |  | Consolidated Statements of Financial Condition |  | Fair value (1) |  | Notional Amount |  | Consolidated Statements of Financial Condition |  | Fair value (2)
Derivatives not designated as a hedging instrument: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate products |  | $ | 1,152,200 |  |  | Other assets |  | $ | 89,261 |  |  | $ | 1,152,200 |  |  | Other liabilities |  | $ | 89,461 |
Credit contracts |  | 46,359 |  |  | Other assets |  | 17 |  |  | 96,462 |  |  | Other liabilities |  | 8 |
Total derivatives not designated as a hedging instrument |  |  |  |  |  | 89,278 |  |  |  |  |  |  | 89,469 |
Derivatives designated as a hedging instrument: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate products |  | 330,000 |  |  | Other assets |  | 15,886 |  |  | 125,000 |  |  | Other liabilities |  | 1,365 |
Total gross derivative amounts recognized on the balance sheet |  |  |  |  |  | 105,164 |  |  |  |  |  |  | 90,834 |
Gross amounts offset on the balance sheet |  |  |  |  |  | — |  |  |  |  |  |  | — |
Net derivative amounts presented on the balance sheet |  |  |  |  |  | $ | 105,164 |  |  |  |  |  |  | 90,834 |
Gross amounts not offset on the balance sheet: |  |  |  |  |  |  |  |  |  |  |  |
Financial instruments - institutional counterparties |  |  |  |  |  | $ | — |  |  |  |  |  |  | — |
Cash collateral - institutional counterparties |  |  |  |  |  | 101,328 |  |  |  |  |  |  | — |
Net derivatives not offset |  |  |  |  |  | $ | 3,836 |  |  |  |  |  |  | 90,834 |
(1) The fair values related to interest rate products in the above net derivative tables show the total value of assets and liabilities, which include accrued interest receivable and accrued interest payable for the periods ended June 30, 2024 and December 31, 2023. The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three and six months ended June 30, 2024 and 2023 (in thousands).
|  |  |  | Gain (loss) recognized in income on derivatives for the three months ended
|  | Consolidated Statements of Income |  | June 30, 2024 |  | June 30, 2023
Derivatives not designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Other income |  | $ | 21 |  |  | 126 |
Credit contracts |  | Other income |  | (6) |  |  | (8) |
Total |  |  |  | $ | 15 |  |  | 118 |
Derivatives designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Interest (benefit) expense |  | $ | (3,734) |  |  | (4,124) |
Total |  |  |  | $ | (3,734) |  |  | (4,124) |
|  |  |  | Gain (loss) recognized in income on derivatives for the six months ended
|  | Consolidated Statements of Income |  | June 30, 2024 |  | June 30, 2023
Derivatives not designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Other income |  | $ | 117 |  |  | 52 |
Credit contracts |  | Other income |  | (9) |  |  | (4) |
Total |  |  |  | $ | 108 |  |  | 48 |
Derivatives designated as a hedging instrument: |  |  |  |  |  |
Interest rate products |  | Interest (benefit) expense |  | $ | (7,909) |  |  | (8,343) |
Total |  |  |  | $ | (7,909) |  |  | (8,343) |
The Company has agreements with certain of its dealer counterparties which contain a provision that if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be deemed in default on its derivative obligations. In addition, the Company has agreements with certain of its dealer counterparties which contain a provision that if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements. As of June 30, 2024, the Company had five dealer counterparties and the Company was in a net asset position with respect to all of its counterparties.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 40 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480237/815-40-50-5 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 5C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-5C Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent + Details
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