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FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended
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Sep. 30, 2024
FAIR VALUE OF FINANCIAL INSTRUMENTS |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 9 — FAIR VALUE OF FINANCIAL INSTRUMENTS The Company uses fair value measurements to record fair value adjustments to certain assets and derivative contracts, and to determine fair value disclosures. Other than derivative contracts, the Company did not have any liabilities that were measured at fair value at September 30, 2024 and December 31, 2023. AFS securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as certain loans where the carrying value is based on the fair value of the underlying collateral. These non-recurring fair value adjustments generally involve the write-down of individual assets due to impairment losses. Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect a reporting entity’s own judgments about the assumptions that market participants would use in pricing an asset or liability. Assets and Liabilities Measured on a Recurring Basis Assets measured on a recurring basis are limited to the Company’s AFS securities portfolio, equity investments, and derivative contracts. The AFS portfolio is carried at estimated fair value with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in shareholders’ equity. Equity investments are carried at estimated fair value with changes in fair value reported as “unrealized gain/(loss)” on the statements of operations. Outstanding derivative contracts designated as cash flow hedges are carried at estimated fair value with changes in fair value reported as accumulated other comprehensive income or loss in shareholders’ equity. Outstanding derivatives not designated as hedges are carried at estimated fair value with changes in fair value reported as non-interest income. The fair values for substantially all of these assets are obtained monthly from an independent nationally recognized pricing service. On a quarterly basis, the Company assesses the reasonableness of the fair values obtained for the AFS portfolio by reference to a second independent nationally recognized pricing service. Based on the nature of these securities, the Company’s independent pricing service provides prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available for the majority of securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for the Company’s MBS, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. On an annual basis, the Company obtains the models, inputs and assumptions utilized by its pricing service and reviews them for reasonableness. Other than derivative contracts, the Company does not have any liabilities that were measured at fair value on a recurring basis. Assets measured at fair value on a recurring basis are summarized below (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurement using:
​ | ​ | ​ | ​ | ​ | Quoted Prices | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | in Active | ​ | Significant | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Markets | ​ | Other | ​ | Significant
​ | ​ | Carrying | ​ | For Identical | ​ | Observable | ​ | Unobservable
​ |  | Amount |  | Assets (Level 1) |  | Inputs (Level 2) |  | Inputs (Level 3)
At September 30, 2024 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. Government agency securities | ​ | $ | 63,857 | ​ | $ | — | ​ | $ | 63,857 | ​ | $ | —
U.S. State and Municipal securities | ​ | ​ | 9,808 | ​ | ​ | — | ​ | ​ | 9,808 | ​ | ​ | —
Residential mortgage securities | ​ | ​ | 389,824 | ​ | ​ | — | ​ | ​ | 389,824 | ​ | ​ | —
Commercial mortgage securities | ​ | ​ | 44,769 | ​ | ​ | — | ​ | ​ | 44,769 | ​ | ​ | —
Asset-backed securities | ​ | ​ | 2,708 | ​ | ​ | — | ​ | ​ | 2,708 | ​ | ​ | —
CRA Mutual Fund | ​ | ​ | 5,213 | ​ | ​ | 5,213 | ​ | ​ | — | ​ | ​ | —
Derivative assets | ​ | ​ | 1,298 | ​ | ​ | — | ​ | ​ | 1,298 | ​ | ​ | —
Derivative liabilities | ​ | ​ | 4,054 | ​ | ​ | — | ​ | ​ | 4,054 | ​ | ​ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurement using:
​ | ​ | ​ | ​ | ​ | Quoted Prices | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | in Active | ​ | Significant | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Markets | ​ | Other | ​ | Significant
​ | ​ | Carrying | ​ | For Identical | ​ | Observable | ​ | Unobservable
​ |  | Amount |  | Assets (Level 1) |  | Inputs (Level 2) |  | Inputs (Level 3)
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
At December 31, 2023 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. Government agency securities | ​ | $ | 61,775 | ​ | $ | — | ​ | $ | 61,775 | ​ | $ | —
U.S. State and Municipal securities | ​ | ​ | 9,699 | ​ | ​ | — | ​ | ​ | 9,699 | ​ | ​ | —
Residential mortgage securities | ​ | ​ | 351,920 | ​ | ​ | — | ​ | ​ | 351,920 | ​ | ​ | —
Commercial mortgage securities | ​ | ​ | 34,584 | ​ | ​ | — | ​ | ​ | 34,584 | ​ | ​ | —
Asset-backed securities | ​ | ​ | 3,229 | ​ | ​ | — | ​ | ​ | 3,229 | ​ | ​ | —
CRA Mutual Fund | ​ | ​ | 2,123 | ​ | ​ | 2,123 | ​ | ​ | — | ​ | ​ | —
Derivative assets | ​ | ​ | 2,687 | ​ | ​ | — | ​ | ​ | 2,687 | ​ | ​ | —
Derivative liabilities | ​ | ​ | 6,037 | ​ | ​ | — | ​ | ​ | 6,037 | ​ | ​ | —
​ There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2024 and 2023. Assets and Liabilities Not Measured on a Recurring Basis The Company has engaged independent pricing service providers to provide the fair values of its financial assets and liabilities not measured at fair value. These providers follow FASB’s exit pricing guidelines, as required by ASC 820 Fair Value Measurement, when calculating the fair market value. Cash and cash equivalents include cash and due from banks and overnight deposits. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities. For securities and the disability fund, if quoted market prices are not available for a specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. The estimated fair value of loans are measured at amortized cost using an exit price notion. Ownership in equity securities of the FRB and FHLB is generally restricted and there is no established liquid market for their resale. The fair values of deposit liabilities with no stated maturity (i.e., money market and savings deposits, and non-interest-bearing demand deposits) are equal to the carrying amounts payable on demand. Time deposits are valued using a replacement cost of funds approach. Trust preferred securities are valued using a replacement cost of funds approach. For all other assets and liabilities it is assumed that the carrying value equals their current fair value. There were no material assets measured at fair value on a non-recurring basis at September 30, 2024 and December 31, 2023. Carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Fair Value Measurement Using: | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Quoted Prices | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | in Active | ​ | Significant | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Markets | ​ | Other | ​ | Significant | ​ | ​ | ​
​ | ​ | Carrying | ​ | For Identical | ​ | Observable | ​ | Unobservable | ​ | Total Fair
At September 30, 2024 |  | Amount |  | Assets (Level 1) |  | Inputs (Level 2) |  | Inputs (Level 3) |  | Value
Financial Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and due from banks | ​ | $ | 16,674 | ​ | $ | 16,674 | ​ | $ | — | ​ | $ | — | ​ | $ | 16,674
Overnight deposits | ​ | ​ | 301,804 | ​ | ​ | 301,804 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 301,804
Securities held-to-maturity | ​ | ​ | 438,445 | ​ | ​ | — | ​ | ​ | 386,203 | ​ | ​ | — | ​ | ​ | 386,203
Loans, net | ​ | ​ | 5,834,626 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 5,763,888 | ​ | ​ | 5,763,888
Other investments | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FRB Stock | ​ | ​ | 11,410 | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A
FHLB Stock | ​ | ​ | 13,178 | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A
Disability Fund | ​ | ​ | 1,500 | ​ | ​ | — | ​ | ​ | 1,500 | ​ | ​ | — | ​ | ​ | 1,500
Time deposits at banks | ​ | ​ | 498 | ​ | ​ | 498 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 498
Receivable from global payments business, net | ​ | ​ | 96,048 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 96,048 | ​ | ​ | 96,048
Accrued interest receivable | ​ | ​ | 31,289 | ​ | ​ | — | ​ | ​ | 1,909 | ​ | ​ | 29,380 | ​ | ​ | 31,289
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-interest-bearing demand deposits | ​ | $ | 1,780,305 | ​ | $ | 1,780,305 | ​ | $ | — | ​ | $ | — | ​ | $ | 1,780,305
Money market and savings deposits | ​ | ​ | 4,400,236 | ​ | ​ | 4,400,236 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 4,400,236
Time deposits | ​ | ​ | 89,366 | ​ | ​ | — | ​ | ​ | 89,374 | ​ | ​ | — | ​ | ​ | 89,374
Federal Home Loan Bank of New York advances | ​ | ​ | 150,000 | ​ | ​ | — | ​ | ​ | 150,000 | ​ | ​ | — | ​ | ​ | 150,000
Trust preferred securities payable | ​ | ​ | 20,620 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 20,040 | ​ | ​ | 20,040
Prepaid debit cardholder balances | ​ | ​ | 21,970 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 21,970 | ​ | ​ | 21,970
Accrued interest payable | ​ | ​ | 5,669 | ​ | ​ | 1,129 | ​ | ​ | 4,150 | ​ | ​ | 390 | ​ | ​ | 5,669
Secured and other borrowings | ​ | ​ | 107,478 | ​ | ​ | — | ​ | ​ | 7,478 | ​ | ​ | 100,120 | ​ | ​ | 107,598
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Fair Value Measurement Using: | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Quoted Prices | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | in Active | ​ | Significant | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | Markets | ​ | Other | ​ | Significant | ​ | ​ | ​
​ | ​ | Carrying | ​ | For Identical | ​ | Observable | ​ | Unobservable | ​ | Total Fair
At December 31, 2023 |  | Amount |  | Assets (Level 1) |  | Inputs (Level 2) |  | Inputs (Level 3) |  | Value
Financial Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and due from banks | ​ | $ | 31,973 | ​ | $ | 31,973 | ​ | $ | — | ​ | $ | — | ​ | $ | 31,973
Overnight deposits | ​ | ​ | 237,492 | ​ | ​ | 237,492 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 237,492
Securities held-to-maturity | ​ | ​ | 468,860 | ​ | ​ | — | ​ | ​ | 404,252 | ​ | ​ | — | ​ | ​ | 404,252
Loans, net | ​ | ​ | 5,566,832 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 5,474,238 | ​ | ​ | 5,474,238
Other investments | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
FRB Stock | ​ | ​ | 11,410 | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A
FHLB Stock | ​ | ​ | 25,558 | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A | ​ | ​ | N/A
Disability Fund | ​ | ​ | 1,500 | ​ | ​ | — | ​ | ​ | 1,500 | ​ | ​ | — | ​ | ​ | 1,500
Time deposits at banks | ​ | ​ | 498 | ​ | ​ | 498 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 498
Receivable from global payments business, net | ​ | ​ | 87,648 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 87,648 | ​ | ​ | 87,648
Accrued interest receivable | ​ | ​ | 31,948 | ​ | ​ | — | ​ | ​ | 2,007 | ​ | ​ | 29,941 | ​ | ​ | 31,948
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Financial Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Non-interest-bearing demand deposits | ​ | $ | 1,837,874 | ​ | $ | 1,837,874 | ​ | $ | — | ​ | $ | — | ​ | $ | 1,837,874
Money market and savings deposits | ​ | ​ | 3,864,018 | ​ | ​ | 3,864,018 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 3,864,018
Time deposits | ​ | ​ | 35,400 | ​ | ​ | — | ​ | ​ | 35,011 | ​ | ​ | — | ​ | ​ | 35,011
Federal funds purchased | ​ | ​ | 99,000 | ​ | ​ | — | ​ | ​ | 99,000 | ​ | ​ | — | ​ | ​ | 99,000
Federal Home Loan Bank of New York advances | ​ | ​ | 440,000 | ​ | ​ | — | ​ | ​ | 440,000 | ​ | ​ | — | ​ | ​ | 440,000
Trust preferred securities payable | ​ | ​ | 20,620 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 20,007 | ​ | ​ | 20,007
Prepaid debit cardholder balances | ​ | ​ | 10,178 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 10,178 | ​ | ​ | 10,178
Accrued interest payable | ​ | ​ | 1,894 | ​ | ​ | 1,028 | ​ | ​ | 475 | ​ | ​ | 391 | ​ | ​ | 1,894
Secured and other borrowings | ​ | ​ | 7,585 | ​ | ​ | — | ​ | ​ | 7,585 | ​ | ​ | — | ​ | ​ | 7,585
​ ​

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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