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Investment Securities

3 Months Ended

Mar. 31, 2024

Investment Securities

Investment Securities

Note 2: Investment Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities available for sale and held to maturity were as follows:


		March 31, 2024
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
		Cost			Gains			Losses			Value

		(In thousands)
Securities available for sale:
Treasury notes		$	109,146		$	15		$	58		$	109,103
Federal agencies			240,000			—			1,499			238,501
Mortgage-backed - Government Agency ("Agency") ⁽²⁾ - multi-family			13,044			—			—			13,044
Mortgage-backed - Non-Agency residential - fair value option⁽¹⁾			472,192			—			—			472,192
Mortgage-backed - Agency - residential - fair value option ⁽¹⁾			228,448			—			—			228,448
Total securities available for sale		$	1,062,830		$	15		$	1,557		$	1,061,288
Securities held to maturity:
Mortgage-backed - Non-Agency - multi-family		$	710,024		$	—		$	419		$	709,605
Mortgage-backed - Non-Agency - residential			453,167			2,385			87			455,465
Mortgage-backed - Agency			11,976			—			868			11,108
Total securities held to maturity		$	1,175,167		$	2,385		$	1,374		$	1,176,178

(1)

For fair value option securities, the amortized cost reflects the carrying value, which is also equal to the fair value.

(2)

Agency includes government sponsored agencies, such as Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”), and Government National Mortgage Association (“Ginnie Mae”).


		December 31, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
		Cost			Gains			Losses			Value

		(In thousands)
Securities available for sale:
Treasury notes		$	129,261		$	45		$	338		$	128,968
Federal agencies			250,731			—			2,976			247,755
Mortgage-backed - Government Agency ("Agency") ⁽²⁾ - multi-family			14,465			5			3			14,467
Mortgage-backed - Non-Agency residential - fair value option⁽¹⁾			485,500			—			—			485,500
Mortgage-backed - Agency - residential - fair value option ⁽¹⁾			236,997			—			—			236,997
Total securities available for sale		$	1,116,954		$	50		$	3,317		$	1,113,687
Securities held to maturity:
Mortgage-backed - Non-Agency - multi-family		$	719,662		$	—		$	415		$	719,247
Mortgage-backed - Non-Agency - residential			472,539			973			418			473,094
Mortgage-backed - Agency			12,016			—			822			11,194
Total securities held to maturity		$	1,204,217		$	973		$	1,655		$	1,203,535

(1)

For fair value option securities, the amortized cost reflects the carrying value, which is also equal to the fair value.

(2)

Agency includes government sponsored agencies, such as Fannie Mae, Freddie Mac, and Ginnie Mae.

Accrued interest on securities available for sale totaled $5.1 million at March 31, 2024 and $6.7 million at December 31, 2023, and is excluded from the estimate of credit losses.

Accrued interest on securities held to maturity totaled $5.6 million at March 31, 2024 and $5.8 million at December 31, 2023, and is excluded from the estimate of credit losses.

The amortized cost and fair value of available for sale securities at March 31, 2024 and December 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


		March 31, 2024						December 31, 2023
		Amortized			Fair			Amortized			Fair
		Cost			Value			Cost			Value

Securities available for sale:		(In thousands)
Within one year		$	209,146		$	207,796		$	308,474		$	305,406
After one through five years			140,000			139,808			71,518			71,317
			349,146			347,604			379,992			376,723
Mortgage-backed - Agency			13,044			13,044			14,465			14,467
Mortgage-backed - Non-Agency residential - fair value option			472,192			472,192			485,500			485,500
Mortgage-backed - Agency - residential - fair value option			228,448			228,448			236,997			236,997
		$	1,062,830		$	1,061,288		$	1,116,954		$	1,113,687
Securities held to maturity:
Mortgage-backed - Non-Agency - multi-family		$	710,024		$	709,605		$	719,662		$	719,247
Mortgage-backed - Non-Agency - residential			453,167			455,465			472,539			473,094
Mortgage-backed - Agency			11,976			11,108			12,016			11,194
		$	1,175,167		$	1,176,178		$	1,204,217		$	1,203,535

During the three months ended March 31, 2024, the Company recognized a net loss of $108,000 from sales of securities available for sale. The $108,000 net loss consisted of $10,000 in gains and $118,000 of losses. During the three months ended March 31, 2023, no securities available for sale were sold.

The following tables show the Company’s gross unrealized losses and fair value of the Company’s investment securities with unrealized losses, for which an allowance for credit losses (“ACL”) has not been recorded, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2024 and December 31, 2023:


		March 31, 2024
								12 Months or
		Less than 12 Months						Longer						Total
					Gross						Gross						Gross
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
		Value			Losses			Value			Losses			Value			Losses

		(In thousands)
Securities available for sale:
Treasury notes		$	3,092		$	1		$	26,938		$	57		$	30,030		$	58
Federal agencies			139,808			192			98,693			1,307			238,501			1,499
		$	142,900		$	193		$	125,631		$	1,364		$	268,531		$	1,557


		December 31, 2023
								12 Months or
		Less than 12 Months						Longer						Total
					Gross						Gross						Gross
		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
		Value			Losses			Value			Losses			Value			Losses

		(In thousands)
Securities available for sale:
Treasury notes		$	3,052		$	6		$	32,080		$	332		$	35,132		$	338
Federal agencies			60,541			189			167,213			2,787			227,754			2,976
Mortgage-backed - Agency			364			1			186			2			550			3
		$	63,957		$	196		$	199,479		$	3,121		$	263,436		$	3,317

Allowance for Credit Losses (ACL)

For available for sale securities with an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit related factors. Any impairment that is not credit-related is recognized in accumulated other comprehensive income (loss), net of tax. Credit-related impairment is recognized as an ACL for available for sale securities on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Accrued interest receivable is excluded from the estimate of credit losses. Both the ACL and the adjustment to net income may be reversed if conditions change. However, if the Company expects, or is required, to sell an impaired available for sale security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there is no ACL in this situation.

In evaluating available for sale securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such securities, the Company considers the extent to which fair value is less than amortized cost, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuers’ financial condition, among other factors. Unrealized losses on the Company’s investment securities portfolio have not been recognized as an expense because the securities are of high credit quality, and the decline in fair values is attributable to changes in the prevailing interest rate environment since the purchase date. Fair value is expected to recover as securities reach maturity and/or the interest rate environment returns to conditions similar to when these securities were purchased. There were no credit related factors underlying unrealized losses on available for sale debt securities at March 31, 2024 and December 31, 2023.

Securities held to maturity are comprised of non-agency mortgage-backed securities secured by multi-family or single-family properties, and agency mortgage-backed securities secured by multi-family properties. The agency securities are Ginnie Mae mortgage-backed securities and backed by the full faith and credit of the U.S. government. Accordingly, no allowance for credit losses has been recorded for these securities. The non-agency securities were purchased under securitization arrangements where a credit loss component was purchased by third party investors. These securities were evaluated for credit losses over and above the credit loss percentage sold under the arrangements, and the Company does not anticipate any such losses. Additional qualitative factors are evaluated, including the timeliness of principal and interest payments under the contractual terms of the securities. Accordingly, no allowance for credit losses has been recorded for the non-agency securities.