XML 21 R10.htm IDEA: XBRL DOCUMENT

Securities

3 Months Ended

Sep. 30, 2023

(3) Securities

The following tables summarize the amortized cost and fair value of securities available-for-sale by major type:

	At September 30, 2023
(In thousands)	Amortized Cost⁽¹⁾		Unrealized Gains		Unrealized Losses		Fair Value
U.S. government sponsored enterprises	$	13,051	$	-	$	2,584	$	10,467
U.S. Treasury securities		18,321		-		2,113		16,208
State and political subdivisions		171,032		593		5		171,620
Mortgage-backed securities-residential		28,661		-		5,069		23,592
Mortgage-backed securities-multi-family		90,918		-		22,034		68,884
Corporate debt securities		19,818		-		1,873		17,945
Total securities available-for-sale	$	341,801	$	593	$	33,678	$	308,716

	At June 30, 2023
(In thousands)	Amortized Cost ⁽¹⁾		Unrealized Gains		Unrealized Losses		Fair Value
U.S. government sponsored enterprises	$	13,054	$	-	$	2,231	$	10,823
U.S. Treasury securities		18,349		-		1,849		16,500
State and political subdivisions		137,343		670		2		138,011
Mortgage-backed securities-residential		29,586		-		3,985		25,601
Mortgage-backed securities-multi-family		91,016		-		18,930		72,086
Corporate debt securities		19,805		-		1,693		18,112
Total securities available-for-sale	$	309,153	$	670	$	28,690	$	281,133

(1)	Amortized cost excludes accrued interest receivable of $3.1 million and $2.9 million at September 30, 2023 and June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.

There was no allowance for credit losses on securities available-for-sale at the quarter ended September 30, 2023.

The following tables summarize the amortized cost, fair value, and allowance for credit loss on securities held-to-maturity by major type:

	At September 30, 2023
(In thousands)	Amortized Cost⁽¹⁾		Unrealized Gains		Unrealized Losses		Fair Value		Allowance⁽²⁾		Net Carrying Value
U.S. Treasury securities	$	33,726	$	-	$	2,525	$	31,201	$	-	$	33,726
State and political subdivisions		467,693		1,945		48,799		420,839		46		467,647
Mortgage-backed securities-residential		35,927		-		4,507		31,420		-		35,927
Mortgage-backed securities-multi-family		152,504		-		23,140		129,364		-		152,504
Corporate debt securities		22,327		-		3,025		19,302		451		21,876
Other securities		37		-		-		37		1		36
Total securities held-to-maturity	$	712,214	$	1,945	$	81,996	$	632,163	$	498	$	711,716

	At June 30, 2023
(In thousands)	Amortized Cost⁽¹⁾		Unrealized Gains		Unrealized Losses		Fair Value		Allowance⁽²⁾		Net Carrying Value
U.S. Treasury securities	$	33,705	$	-	$	2,438	$	31,267	$	-	$	33,705
State and political subdivisions		478,756		5,178		30,662		453,272		-		478,756
Mortgage-backed securities-residential		37,186		-		3,625		33,561		-		37,186
Mortgage-backed securities-multi-family		155,046		-		20,324		134,722		-		155,046
Corporate debt securities		21,632		-		3,426		18,206		-		21,632
Other securities		38		-		-		38		-		38
Total securities held-to-maturity	$	726,363	$	5,178	$	60,475	$	671,066	$	-	$	726,363

(1)	Amortized cost excludes accrued interest receivable of $4.6 million and $3.9 million at September 30, 2023 and June 30, 2023, respectively, which is included in accrued interest receivable in the consolidated statement of financial condition.

(2)	The Company adopted ASU 2016-13 (CECL) on July 1, 2023. For periods subsequent to adoption, an allowance is calculated under the CECL methodology. The periods prior to adoption did not have an allowance for credit losses under applicable GAAP for those periods.

U.S. Treasury and mortgage-backed securities are issued by U.S. government entities and agencies. These securities are either explicitly and/or implicitly guaranteed by the U.S. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of zero credit losses. Therefore, the Company determined a zero credit loss assumption, and did not calculate or record an allowance for credit loss for these securities. An allowance for credit losses on investment securities held-to-maturity as of September 30, 2023 has been recorded for certain municipal securities issued by state and political subdivisions and corporate debt securities to account for expected lifetime credit loss using the CECL methodology.

The Company’s current policies generally limit securities investments to U.S. Government and securities of government sponsored enterprises, federal funds sold, municipal bonds, corporate debt obligations, subordinated debt of banks and certain mutual funds. In addition, the Company’s policies permit investments in mortgage-backed securities, including securities issued and guaranteed by Fannie Mae, Freddie Mac, and GNMA, and collateralized mortgage obligations issued by these entities. As of September 30, 2023, all mortgage-backed securities including collateralized mortgage obligations were securities of government sponsored enterprises, no private-label mortgage-backed securities or collateralized mortgage obligations were held in the securities portfolio. The Company’s investments in state and political subdivisions securities generally are municipal obligations that are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. The obligations issued by school districts are supported by state aid. Primarily, these investments are issued by municipalities within New York State.

The Company’s current securities investment strategy utilizes a risk management approach of diversified investing among three categories: short-, intermediate- and long-term. The emphasis of this approach is to increase overall investment securities yields while managing interest rate risk. The Company will only invest in high quality securities as determined by management’s analysis at the time of purchase. The Company generally does not engage in any derivative or hedging transactions, such as balance sheet interest rate swaps or caps.

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

(In thousands)	Three months ended September 30, 2023
Balance beginning of period	$	-
Adoption of ASU 2016-13 (CECL) on July 1, 2023		503
Benefit for credit losses		(5	)
Balance end of period	$	498

The following table shows fair value and gross unrealized losses, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2023.

	Less Than 12 Months						More Than 12 Months						Total
(In thousands, except number of securities)	Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities
Securities available-for-sale:
U.S. government sponsored enterprises	$	-	$	-		-	$	10,467	$	2,584		5	$	10,467	$	2,584		5
U.S. Treasury securities		756		63		2		15,452		2,050		6		16,208		2,113		8
State and political subdivisions		5,022		3		3		81		2		1		5,103		5		4
Mortgage-backed securities-residential		-		-		-		23,592		5,069		27		23,592		5,069		27
Mortgage-backed securities-multi-family		-		-		-		68,884		22,034		31		68,884		22,034		31
Corporate debt securities		1,847		49		1		16,098		1,824		16		17,945		1,873		17
Total securities available-for-sale		7,625		115		6		134,574		33,563		86		142,199		33,678		92
Securities held-to-maturity:
U.S. Treasury securities		-		-		-		31,201		2,525		8		31,201		2,525		8
State and political subdivisions		64,946		1,994		649		293,513		46,805		2,215		358,459		48,799		2,864
Mortgage-backed securities-residential		5		-		2		31,415		4,507		27		31,420		4,507		29
Mortgage-backed securities-multi-family		-		-		-		129,364		23,140		55		129,364		23,140		55
Corporate debt securities		6,753		995		6		12,549		2,030		13		19,302		3,025		19
Total securities held-to-maturity		71,704		2,989		657		498,042		79,007		2,318		569,746		81,996		2,975
Total securities	$	79,329	$	3,104		663	$	632,616	$	112,570		2,404	$	711,945	$	115,674		3,067

	Less Than 12 Months						More Than 12 Months						Total
(In thousands, except number of securities)	Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses		Number of Securities
Securities available-for-sale:
U.S. government sponsored enterprises	$	-	$	-		-	$	10,823	$	2,231		5	$	10,823	$	2,231		5
U.S. Treasury securities		761		57		2		15,739		1,792		6		16,500		1,849		8
State and political subdivisions		-		-		-		82		2		1		82		2		1
Mortgage-backed securities-residential		476		29		7		25,125		3,956		21		25,601		3,985		28
Mortgage-backed securities-multi-family		2,679		182		1		69,407		18,748		30		72,086		18,930		31
Corporate debt securities		2,352		40		2		15,760		1,653		15		18,112		1,693		17
Total securities available-for-sale		6,268		308		12		136,936		28,382		78		143,204		28,690		90
Securities held-to-maturity:
U.S. Treasury securities		-		-		-		31,267		2,438		8		31,267		2,438		8
State and political subdivisions		40,412		520		448		295,479		30,142		2,018		335,891		30,662		2,466
Mortgage-backed securities-residential		1,982		120		12		31,579		3,505		18		33,561		3,625		30
Mortgage-backed securities-multi-family		5,362		245		2		129,360		20,079		54		134,722		20,324		56
Corporate debt securities		10,236		2,012		9		7,970		1,414		10		18,206		3,426		19
Total securities held-to-maturity		57,992		2,897		471		495,655		57,578		2,108		553,647		60,475		2,579
Total securities	$	64,260	$	3,205		483	$	632,591	$	85,960		2,186	$	696,851	$	89,165		2,669

There were no transfers of securities available-for-sale to held-to-maturity during the three months ended September 30, 2023 or 2022. During the three months ended September 30, 2023 and 2022, there were no sales of securities and no gains or losses were recognized.

The estimated fair values of debt securities at September 30, 2023, by contractual maturity are shown below. 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.

(In thousands)

Securities available-for-sale	Amortized Cost		Fair Value
Within one year	$	171,471	$	172,049
After one year through five years		38,162		34,285
After five years through ten years		11,089		8,757
After ten years		1,500		1,149
Total securities available-for-sale		222,222		216,240
Mortgage-backed and asset-backed securities		119,579		92,476
Total securities available-for-sale		341,801		308,716

Securities held-to-maturity
Within one year		60,158		58,999
After one year through five years		167,354		158,761
After five years through ten years		149,902		133,552
After ten years		146,369		120,067
Total securities held-to-maturity		523,783		471,379
Mortgage-backed securities		188,431		160,784
Total securities held-to-maturity		712,214		632,163
Total securities	$	1,054,015	$	940,879

At September 30, 2023 and June 30, 2023, securities with an aggregate fair value of $825.7 million and $904.8 million, respectively, were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with the Commercial Bank. At September 30, 2023 and June 30, 2023, securities with an aggregate fair value of $23.7 million and $20.8 million, respectively, were pledged as collateral for potential borrowings at the Federal Reserve Bank discount window and the Bank Term Funding Program. The Company did not participate in any securities lending programs during the three months ended September 30, 2023 or 2022.

Federal Home Loan Bank Stock

Federal law requires a member institution of the Federal Home Loan Bank (“FHLB”) system to hold stock of its district FHLB according to a predetermined formula. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is carried at cost. FHLB stock is held as a long-term investment and its value is determined based on the ultimate recoverability of the par value. Estimated credit loss of this investment is evaluated quarterly and is a matter of judgment that reflects management’s view of the FHLB’s long-term performance, which includes factors such as the following: its operating performance; the severity and duration of declines in the fair value of its net assets related to its capital stock amount; its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance; the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of the FHLB; and its liquidity and funding position. After evaluating these considerations, the Company concluded that the par value of its investment in FHLB stock will be recovered and, therefore, no credit loss was recorded during the three months September 30, 2023 or 2022.