Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Note 3. Securities

Adoption of Topic 326

Effective January 1, 2023, the Company adopted the provisions of Topic 326 using the modified retrospective method. Therefore, prior period comparative information has not been adjusted and continues to be reported under GAAP in effect prior to the adoption of Topic 326. There was no ACL on available-for-sale securities recognized upon the adoption of Topic 326.

The amortized cost, gross unrealized gains and losses, and fair value of securities at September 30, 2023 and December 31, 2022 are summarized as follows:


	September 30, 2023
				Gross		Gross
	Amortized			Unrealized		Unrealized
	Cost			Gains		Losses			Fair Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,989		$	—	$	(276	)	$	2,713
Corporate Bonds		25,799			—		(2,609	)		23,190
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		40,646			—		(7,657	)		32,989
FHLMC Certificates		10,441			—		(1,904	)		8,537
FNMA Certificates		62,771			—		(13,552	)		49,219
GNMA Certificates		108			—		(3	)		105
Total available-for-sale securities	$	142,754		$	—	$	(26,001	)	$	116,753

Held-to-Maturity Securities:
U.S. Agency Bonds	$	25,000		$	—	$	(504	)	$	24,496
Corporate Bonds		82,500			—		(5,117	)		77,383
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		217,632			—		(12,198	)		205,434
FHLMC Certificates		3,923			—		(358	)		3,565
FNMA Certificates		121,940			—		(8,818	)		113,122
SBA Certificates		20,717			147		—			20,864
Allowance for Credit Losses		(647	)		—		—			—
Total held-to-maturity securities	$	471,065		$	147	$	(26,995	)	$	444,864

(1)

Comprised of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Ginnie Mae (“GNMA”) issued securities.


	December 31, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	2,985	$	—	$	(296	)	$	2,689
Corporate Bonds		25,824		—		(2,465	)		23,359
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		44,503		—		(6,726	)		37,777
FHLMC Certificates		11,310		—		(1,676	)		9,634
FNMA Certificates		67,199		—		(11,271	)		55,928
GNMA Certificates		122		—		(4	)		118
Total available-for-sale securities	$	151,943	$	—	$	(22,438	)	$	129,505

Held-to-Maturity Securities:
U.S. Agency Bonds	$	35,000	$	—	$	(380	)	$	34,620
Corporate Bonds		82,500		57		(3,819	)		78,738
Mortgage-Backed Securities:
Collateralized Mortgage Obligations (1)		235,479		192		(5,558	)		230,113
FHLMC Certificates		4,120		—		(268	)		3,852
FNMA Certificates		131,918		—		(5,227	)		126,691
SBA Certificates		21,803		34		—			21,837
Total held-to-maturity securities	$	510,820	$	283	$	(15,252	)	$	495,851

(1)

Comprised of FHLMC, FNMA and GNMA issued securities.

The Company’s securities portfolio had 40 and 42 available-for-sale securities and 33 and 34 held-to-maturity securities at September 30, 2023 and December 31, 2022, respectively. There were no available-for-sale and held-to-maturity securities sold during the nine months ended September 30, 2023. There were no held-to-maturity securities and available-for-sale securities sold during the year ended December 31, 2022. One held-to-maturity security in the amount of $10.0 million matured and/or was called during the nine months ended September 30, 2023. Two available-for-sale securities in the amount of $5.4 million matured and/or were called during the year ended December 31, 2022. The Company did not purchase any available-for-sale securities and held-to-maturity securities during the nine months ended September 30, 2023 and purchased $58.4 million in available-for-sale securities and $528.9 million in held-to-maturity securities during the year ended December 31, 2022.

The following table presents the Company's gross unrealized losses and fair values of its securities, aggregated by the length of time the individual securities have been in a continuous unrealized loss position, at September 30, 2023 and December 31, 2022:


	September 30, 2023
	Securities With Gross Unrealized Losses
	Less Than 12 Months					12 Months or More					Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	—	$	—		$	2,713	$	(276	)	$	2,713	$	(276	)
Corporate Bonds		—		—			23,190		(2,609	)		23,190		(2,609	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		—		—			32,989		(7,657	)		32,989		(7,657	)
FHLMC Certificates		—		—			8,537		(1,904	)		8,537		(1,904	)
FNMA Certificates		—		—			49,219		(13,552	)		49,219		(13,552	)
GNMA Certificates		—		—			105		(3	)		105		(3	)
Total available-for-sale securities	$	—	$	—		$	116,753	$	(26,001	)	$	116,753	$	(26,001	)
Held-to-Maturity Securities:
U.S. Agency Bonds	$	—	$	—		$	24,496	$	(504	)	$	24,496	$	(504	)
Corporate Bonds		3,206		(294	)		74,177		(4,823	)		77,383		(5,117	)
Collateralized Mortgage Obligations		93,209		(4,667	)		112,225		(7,531	)		205,434		(12,198	)
FHLMC Certificates		—		—			3,565		(358	)		3,565		(358	)
FNMA Certificates		—		—			113,122		(8,818	)		113,122		(8,818	)
Total held-to-maturity securities	$	96,415	$	(4,961	)	$	327,585	$	(22,034	)	$	424,000	$	(26,995	)


	December 31, 2022
	Securities With Gross Unrealized Losses
	Less Than 12 Months					12 Months or More					Total		Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds	$	—	$	—		$	2,689	$	(296	)	$	2,689	$	(296	)
Corporate Bonds		13,138		(1,186	)		10,221		(1,279	)		23,359		(2,465	)
Mortgage-Backed Securities:
Collateralized Mortgage Obligations		4,537		(300	)		33,240		(6,426	)		37,777		(6,726	)
FHLMC Certificates		—		—			9,634		(1,676	)		9,634		(1,676	)
FNMA Certificates		12,111		(1,230	)		43,817		(10,041	)		55,928		(11,271	)
GNMA Certificates		118		(4	)		—		—			118		(4	)
Total available-for-sale securities	$	29,904	$	(2,720	)	$	99,601	$	(19,718	)	$	129,505	$	(22,438	)
Held-to-Maturity Securities:
U.S. Agency Bonds	$	24,620	$	(380	)	$	—	$	—		$	24,620	$	(380	)
Corporate Bonds		75,181		(3,819	)		—		—			75,181		(3,819	)
Collateralized Mortgage Obligations		215,300		(5,558	)		—		—			215,300		(5,558	)
FHLMC Certificates		3,177		(115	)		675		(153	)		3,852		(268	)
FNMA Certificates		126,691		(5,227	)		—		—			126,691		(5,227	)
Total held-to-maturity securities	$	444,969	$	(15,099	)	$	675	$	(153	)	$	445,644	$	(15,252	)

At September 30, 2023 and December 31, 2022, the Company had 40 and 42 available-for-sale securities, respectively, and 30 and 27 held-to-maturity securities at September 30, 2023 and December 31, 2022, respectively, with gross unrealized loss positions. Management reviewed the financial condition of the entities underlying the securities at both September 30, 2023 and December 31, 2022. The unrealized losses related to the Company debt securities were issued by U.S. government-sponsored entities and agencies. The Company does not believe that the debt securities that were in an unrealized loss position as of September 30, 2023 represents a credit loss impairment. The gross unrealized loss positions related to mortgage-backed securities and other obligations issued by the

U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Total gross unrealized losses were primarily attributable to changes in interest rates relative to when the investment securities were purchased and not due to the credit quality of the investment securities.

Management reviewed the collectability of the corporate bonds taking into consideration of such factors as the financial condition of the issuers, reported regulatory capital ratios of the issuers, credit ratings, including ratings in effect as of the reporting date. Management believes the unrealized losses on the corporate bonds are primarily attributable to changes in the interest rates and not changes in the credit quality of the issuers of the corporate bonds.

The following is a summary of maturities of securities at September 30, 2023 and December 31, 2022. Amounts are shown by contractual maturity. Because borrowers for mortgage-backed securities have the right to prepay obligations with or without prepayment penalties, at any time, these securities are included as a total within the table.


	September 30, 2023
	Amortized			Fair
	Cost			Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		—			—
More than one year through five years		2,989			2,713
More than five years through ten years		—			—
		2,989			2,713
Corporate Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		4,000			3,802
More than one year through five years		1,000			729
More than five years through ten years		20,799			18,659
		25,799			23,190
Mortgage-Backed Securities		113,966			90,850
Total available-for-sale securities	$	142,754		$	116,753
Held-to-Maturity Securities:
U.S. Agency Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		—			—
More than one year through five years		25,000			24,496
More than five years through ten years		—			—
		25,000			24,496
Corporate Bonds:
Amounts maturing:
Three months or less	$	—		$	—
More than three months through one year		—			—
More than one year through five years		75,000			70,381
More than five years through ten years		7,500			7,002
		82,500			77,383
Mortgage-Backed Securities		364,212			342,985
Allowance for Credit Losses		(647	)		—
Total held-to-maturity securities	$	471,065		$	444,864


	December 31, 2022
	Amortized		Fair
	Cost		Value
	(in thousands)
Available-for-Sale Securities:
U.S. Government Bonds:
Amounts maturing:
Three months or less	$	—	$	—
More than three months through one year		—		—
More than one year through five years		2,985		2,689
More than five years through ten years		—		—
		2,985		2,689
Corporate Bonds:
Amounts maturing:
Three months or less	$	—	$	—
More than three months through one year		—		—
More than one year through five years		4,000		3,710
More than five years through ten years		21,824		19,649
		25,824		23,359
Mortgage-Backed Securities		123,134		103,457
Total available-for-sale securities	$	151,943	$	129,505
Held-to-Maturity Securities:
U.S. Agency Bonds:
Amounts maturing:
Three months or less	$	—	$	—
More than three months through one year		—		—
More than one year through five years		35,000		34,620
More than five years through ten years		—		—
		35,000		34,620
Corporate Bonds:
Amounts maturing:
Three months or less	$	—	$	—
More than three months through one year		—		—
More than one year through five years		75,000		71,328
More than five years through ten years		7,500		7,410
		82,500		78,738
Mortgage-Backed Securities		393,320		382,493
Total held-to-maturity securities	$	510,820	$	495,851

The following table presents the activity in the allowance for credit losses for held-to-maturity securities:


	September 30,			December 31,
	2023			2022
Beginning balance	$	—		$	—
Impact on CECL adoption		662			—
Benefit for credit losses		(15	)		—
Allowance for credit losses	$	647		$	—

At September 30, 2023, 26 available-for-sale securities with a fair value totaling $90.7 million and 14 held-to-maturity securities with an amortized cost totaling $189.9 million were pledged at the Federal Reserve Bank of New York ("FRBNY") as collateral for borrowing activities. At December 31, 2022 six held-to-maturity securities with an amortized costs totaling $194.9 million were pledged at the FHLBNY as collateral for borrowing activities. No available-for-sale securities were pledged at December 31, 2022.