Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

Available-for-Sale Debt Securities

The following tables summarize available-for-sale debt securities held by the Company at September 30, 2023 and December 31, 2022:

	Available-for-Sale Debt Securities
September 30, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	114,220	$	0	$	6,926	$	107,294
Obligations of U.S. Government sponsored entities	491,968		10		32,037		459,941
Obligations of U.S. states and political subdivisions	90,154		2		12,919		77,237
Mortgage-backed securities – residential, issued by
U.S. Government agencies	52,263		0		6,864		45,399
U.S. Government sponsored entities	831,970		0		135,661		696,309
U.S. corporate debt securities	2,500		0		170		2,330
Total available-for-sale debt securities	$	1,583,075	$	12	$	194,577	$	1,388,510

	Available-for-Sale Debt Securities
December 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	190,170	$	0	$	22,919	$	167,251
Obligations of U.S. Government sponsored entities	681,192		0		80,025		601,167
Obligations of U.S. states and political subdivisions	93,599		8		8,326		85,281
Mortgage-backed securities – residential, issued by
U.S. Government agencies	58,727		12		6,071		52,668
U.S. Government sponsored entities	805,603		0		119,381		686,222
U.S. corporate debt securities	2,500		0		122		2,378
Total available-for-sale debt securities	$	1,831,791	$	20	$	236,844	$	1,594,967

Held-to-Maturity Debt Securities

The following tables summarize held-to-maturity debt securities held by the Company at September 30, 2023 and December 31, 2022:

	Held-to-Maturity Securities
September 30, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	86,318	$	0	$	14,767	$	71,551
Obligations of U.S. Government sponsored entities	226,067		0		44,640		181,427
Total held-to-maturity debt securities	$	312,385	$	0	$	59,407	$	252,978

	Held-to-Maturity Securities
December 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
(In thousands)
U.S. Treasuries	$	86,478	$	0	$	12,937	$	73,541
Obligations of U.S. Government sponsored entities	225,866		0		37,715		188,151
Total held-to-maturity debt securities	$	312,344	$	0	$	50,652	$	261,692

The Company may from time to time sell debt securities from its available-for-sale portfolio. Realized gains on sales of available-for-sale debt securities were $0 for both the three and nine months ended September 30, 2023 and September 30, 2022. Realized losses on sales of available-for-sale debt securities were $62.9 million and $70.0 million for the three and nine months ended September 30, 2023, respectively, and $49,000 for both the three and nine months ended September 30, 2022. During the three and nine months ended September 30, 2023, the Company sold $429.6 million and $510.5 million, respectively, of available-for-sale debt securities at a loss of $62.9 million and $70.0 million, respectively. Sales of available-for-sale debt securities were the result of general investment portfolio, interest rate risk and balance sheet management. The securities sold in the third quarter of 2023 had an average yield of 0.93% and were largely reinvested into securities with an estimated yield of approximately 5.12%. The weighted average life of the securities purchased and sold was approximately 4.3 years. Proceeds from the sale of available-for-sale debt securities were $366.7 million and $440.5 million for the three and nine months ended September 30, 2023, respectively, and $24.6 million for the three and nine months ended September 30, 2022. The Company's investment portfolio includes callable securities that may be called prior to maturity. There were no realized gains or losses on called available-for-sale debt securities for both the three and nine months ended September 30, 2023 and September 30, 2022. The Company also recognized net losses of $36,700 and $35,700 for the three and nine months ended September 30, 2023, compared to net losses of $46,900 and $130,600 for the three and nine months ended September 30, 2022, respectively, on equity securities, reflecting the change in fair value.

The following table summarizes available-for-sale debt securities that had unrealized losses at September 30, 2023, and December 31, 2022:

September 30, 2023	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasuries	$	43,560	$	23	$	63,734	$	6,903	$	107,294	$	6,926
Obligations of U.S. Government sponsored entities	197,508		1,492		232,541		30,545		430,049		32,037
Obligations of U.S. states and political subdivisions	11,449		592		65,436		12,327		76,885		12,919
Mortgage-backed securities – residential, issued by
U.S. Government agencies	1,436		48		43,963		6,816		45,399		6,864
U.S. Government sponsored entities	97,751		1,671		598,559		133,990		696,310		135,661
U.S. corporate debt securities	0		0		2,330		170		2,330		170
Total available-for-sale debt securities	$	351,704	$	3,826	$	1,006,563	$	190,751	$	1,358,267	$	194,577

December 31, 2022	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasuries	$	28,602	$	2,132	$	138,649	$	20,787	$	167,251	$	22,919
Obligations of U.S. Government sponsored entities	143,794		7,508		457,373		72,517		601,167		80,025
Obligations of U.S. states and political subdivisions	46,638		2,385		33,435		5,941		80,073		8,326
Mortgage-backed securities – residential, issued by
U.S. Government agencies	22,945		1,258		29,356		4,813		52,301		6,071
U.S. Government sponsored entities	186,690		16,869		499,532		102,512		686,222		119,381
U.S. corporate debt securities	0		0		2,378		122		2,378		122
Total available-for-sale debt securities	$	428,669	$	30,152	$	1,160,723	$	206,692	$	1,589,392	$	236,844

The following table summarizes held-to-maturity debt securities that had unrealized losses at September 30, 2023 and December 31, 2022:

September 30, 2023	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasuries	$	0	$	0	$	71,551	$	14,767	$	71,551	$	14,767
Obligations of U.S. Government sponsored entities	0		0		181,427		44,640		181,427		44,640
Total held-to-maturity debt securities	$	0	$	0	$	252,978	$	59,407	$	252,978	$	59,407

December 31, 2022	Less than 12 Months				12 Months or Longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasuries	$	0	$	0	$	73,542	$	12,937	$	73,542	$	12,937
Obligations of U.S. Government sponsored entities	24,543		3,903		163,607		33,812		188,150		37,715
Total held-to-maturity debt securities	$	24,543	$	3,903	$	237,149	$	46,749	$	261,692	$	50,652

The Company evaluates available-for-sale debt securities for expected credit losses ("ECL") in unrealized loss positions at each measurement date 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.

Factors that may be indicative of ECL include, but are not limited to, the following:

•Extent to which the fair value is less than the amortized cost basis.

•Adverse conditions specifically related to the security, an industry, or geographic area (changes in technology, business practice).

•Payment structure of the debt security with respect to underlying issuer or obligor.

•Failure of the issuer to make scheduled payment of principal and/or interest.

•Changes to the rating of a security or issuer by a nationally recognized statistical rating organization.

•Changes in tax or regulatory guidelines that impact a security or underlying issuer.

For available-for-sale debt securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (technical impairment) is the result of changes in interest rates or reflects a fundamental change in the credit worthiness of the underlying issuer. Any impairment that is not credit related is recognized in other comprehensive income (loss), net of applicable taxes. Credit-related impairment is recognized as an

allowance for credit losses ("ACL") on the Consolidated Statements of Condition, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Both the ACL and the adjustment to net income may be reversed if conditions change.

The gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and

U.S. government agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and not due to the credit-related quality of the investment securities. The Company does not have the intent to sell these securities and does not believe it is more likely than not that the Company will be required to sell these securities before a recovery of amortized cost.

Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management has made the accounting policy election to exclude accrued interest receivable on held-to-maturity debt securities from the estimate of credit losses. As of September 30, 2023, the held-to-maturity portfolio consisted of U.S. Treasury securities and securities issued by U.S. government-sponsored enterprises, including the Federal National Mortgage Agency, the Federal Home Loan Bank ("FHLB") and the Federal Farm Credit Banks Funding Corporation. U.S. Treasury securities are backed by the full faith and credit of and/or guaranteed by the U.S. government, and it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities. Securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as "risk-free," and have a long history of zero credit loss. As such, the Company did not record an allowance for credit losses for these securities as of September 30, 2023 or December 31, 2022.

The amortized cost and estimated fair value of debt securities by contractual maturity are shown in the following table. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities are shown separately since they are not due at a single maturity date.

September 30, 2023
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	79,189	$	78,511
Due after one year through five years	334,059		316,627
Due after five years through ten years	234,283		208,592
Due after ten years	51,311		43,072
Total	698,842		646,802
Mortgage-backed securities	884,233		741,708
Total available-for-sale debt securities	$	1,583,075	$	1,388,510

December 31, 2022
(In thousands)	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	50,922	$	50,269
Due after one year through five years	508,880		459,721
Due after five years through ten years	367,743		314,408
Due after ten years	39,916		31,679
Total	967,461		856,077
Mortgage-backed securities	864,330		738,890
Total available-for-sale debt securities	$	1,831,791	$	1,594,967

September 30, 2023
(In thousands)	Amortized Cost		Fair Value
Held-to-maturity debt securities:
Due after five years through ten years	$	312,385	$	252,978
Total held-to-maturity debt securities	$	312,385	$	252,978

December 31, 2022
(In thousands)	Amortized Cost		Fair Value
Held-to-maturity debt securities:
Due after five years through ten years	$	312,344	$	261,692
Total held-to-maturity debt securities	$	312,344	$	261,692

The Company also holds non-marketable Federal Home Loan Bank of New York ("FHLBNY") stock and non-marketable Atlantic Community Bankers Bank ("ACBB") stock, all of which are required to be held for regulatory purposes and for borrowing availability. The required investment in FHLB stock is tied to the Company’s borrowing levels with the FHLB. Holdings of FHLBNY stock and ACBB stock totaled $19.9 million and $95,000, respectively, at September 30, 2023. These securities are carried at par, which is also cost. The FHLBNY continues to pay dividends and repurchase stock. Quarterly, we evaluate our investment in the FHLB for impairment. We evaluate recent and long-term operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. Based on our most recent evaluation, as of September 30, 2023, we determined that no impairment write-downs were required.