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Derivative Instruments and Hedging Activities | 6 Months Ended
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Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company uses various financial instruments, including derivatives, to manage its exposure to interest rate risk. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to specific wholesale funding positions and assets. Fair Values of Derivative Instruments on the Statement of Financial Condition The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the Statements of Financial Condition as of December 31, 2022 and June 30, 2022:
| December 31, 2022
| Asset Derivatives |  | Liability Derivatives
| Location |  | Fair Value |  | Location |  | Fair Value
| (In Thousands)
Derivatives designated as hedging instruments: |  |  |  |  |  |  |
Interest rate contracts | Other assets |  | $ | 63,617 |  |  | Other liabilities |  | $ | 2,500 |
Total |  |  | $ | 63,617 |  |  |  |  | $ | 2,500 |
| June 30, 2022
| Asset Derivatives |  | Liability Derivatives
| Location |  | Fair Value |  | Location |  | Fair Value
| (In Thousands)
Derivatives designated as hedging instruments: |  |  |  |  |  |  |
Interest rate contracts | Other assets |  | $ | 41,223 |  |  | Other liabilities |  | $ | — |
Total |  |  | $ | 41,223 |  |  |  |  | $ | — |
Cash Flow Hedges of Interest Rate Risk The Company’s uses derivatives to add stability to interest expense and interest income and to manage its exposure to interest rate movements. The Company has entered into interest rate swaps, interest rate caps and an interest rate floor as part of its interest rate risk management strategy. These interest rate products are designated as cash flow hedges. As of December 31, 2022, the Company had a total of 12 interest rate swaps and caps with a total notional amount of $1.33 billion hedging specific wholesale funding and one interest rate floor with a notional amount of $100.0 million hedging floating-rate available for sale securities. For derivatives designated as cash flow hedges, the gain or loss on the derivative is recorded in other comprehensive income (loss), net of tax, and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. For cash flow hedges on the Company’s wholesale funding positions, amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s hedged variable rate wholesale funding positions. During the three months and six months ended December 31, 2022, the Company reclassified $4.1 million and $5.7 million, respectively, as a reduction in interest expense. During the next twelve months, the Company estimates that $28.2 million will be reclassified as a reduction in interest expense. For cash flow hedges on the Company’s assets, amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest income as interest payments are received on the Company’s hedged variable rate assets. During the three months and six months ended December 31, 2022, the Company did not reclassify any amount to interest income. During the next twelve months, the Company estimates that $81,000 will be reclassified as additional interest income. The table below presents the pre-tax effects of the Company’s derivative instruments designated as cash flow hedges on the Consolidated Statements of Income for the three months and six months ended December 31, 2022 and 2021:
| Three Months Ended December 31, |  | Six Months Ended December 31,
| 2022 |  | 2021 |  | 2022 |  | 2021
| (In Thousands)
Amount of (loss) gain recognized in other comprehensive income | $ | (2,183) |  |  | $ | 5,110 |  |  | $ | 19,987 |  |  | $ | 5,264 |
Amount of gain (loss) reclassified from accumulated other comprehensive income to interest expense | 4,104 |  |  | (1,506) |  |  | 5,724 |  |  | (3,003) |
Fair Value Hedges of Interest Rate Risk The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives are used to hedge the changes in fair value of certain of its pools of fixed rate assets. As of December 31, 2022, the Company had three interest rate swaps with a notional amount of $500.0 million hedging fixed-rate residential mortgage loans. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income. The table below presents the effects of the Company’s derivative instruments designated as fair value hedges on the Consolidated Statements of Income for the three months and six months ended December 31, 2022. There were no fair value hedges for the three months and six months ended December 31, 2021:
| Three Months Ended December 31, |  | Six Months Ended December 31,
| 2022 |  |  |  | 2022 |  |
| (In Thousands)
Loss on hedged items recorded in interest income on loans | $ | (995) |  |  |  |  | $ | (5,028) |  |  |
Gain on hedge recorded in interest income on loans | 1,183 |  |  |  |  | 5,110 |  |  |
As of December 31, 2022, the following amounts were recorded on the Statement of Financial Condition related to cumulative basis adjustment for fair value hedges. There were no fair value hedges at June 30, 2022:
| December 31, 2022 |  |
| (In Thousands)
Loans receivable: |  |  |
Carrying amount of the hedged assets(1) | $ | 494,972 |  |  |
Fair value hedging adjustment included in the carrying amount of the hedged assets | (5,028) |  |  |
___________________________________ (1)This amount includes the amortized cost basis of the closed portfolios of loans receivable used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At December 31, 2022, the amortized cost basis of the closed portfolios used in these hedging relationships was $852.4 million. Offsetting Derivatives The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives in the Consolidated Statements of Financial Condition as of December 31, 2022 and June 30, 2022, respectively. The net amounts presented for derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Consolidated Statements of Financial Condition.
| December 31, 2022
|  |  |  |  |  |  | Gross Amounts Not Offset |  |
| Gross Amount Recognized |  | Gross Amounts Offset |  | Net Amounts Presented |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
| (In Thousands)
Assets: |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | 64,641 |  |  | $ | (1,024) |  |  | $ | 63,617 |  |  | $ | — |  |  | $ | — |  |  | $ | 63,617 |
Total | $ | 64,641 |  |  | $ | (1,024) |  |  | $ | 63,617 |  |  | $ | — |  |  | $ | — |  |  | $ | 63,617 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | 3,524 |  |  | $ | (1,024) |  |  | $ | 2,500 |  |  | $ | — |  |  | $ | (2,500) |  |  | $ | — |
Total | $ | 3,524 |  |  | $ | (1,024) |  |  | $ | 2,500 |  |  | $ | — |  |  | $ | (2,500) |  |  | $ | — |
| June 30, 2022
|  |  |  |  |  |  | Gross Amounts Not Offset |  |
| Gross Amount Recognized |  | Gross Amounts Offset |  | Net Amounts Presented |  | Financial Instruments |  | Cash Collateral Received |  | Net Amount
| (In Thousands)
Assets: |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | 41,223 |  |  | $ | — |  |  | $ | 41,223 |  |  | $ | — |  |  | $ | — |  |  | $ | 41,223 |
Total | $ | 41,223 |  |  | $ | — |  |  | $ | 41,223 |  |  | $ | — |  |  | $ | — |  |  | $ | 41,223 |
Credit Risk-Related Contingent Features The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty. The Company also has agreements with its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the counterparty. At December 31, 2022, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to those agreements was $2.9 million. As required under the enforceable master netting arrangement with its derivatives counterparties, at December 31, 2022, the Company posted financial collateral of $2.5 million that was not included as an offsetting amount. In addition to the derivative instruments noted above, the Company’s pipeline of loans held for sale at December 31, 2022 and June 30, 2022, included $10.2 million and $20.3 million, respectively, of in process loans whose terms included interest rate locks to borrowers, which are considered free-standing derivative instruments whose fair values are not material to the Company’s financial condition or results of operations.

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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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