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Securities

6 Months Ended

Dec. 31, 2024

(3) Securities

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

	At December 31, 2024
(In thousands)	Amortized cost ⁽¹⁾		Unrealized gains		Unrealized losses		Fair value
U.S. Treasury securities	$	18,177	$	-	$	1,250	$	16,927
U.S. government sponsored enterprises		13,036		-		1,846		11,190
State and political subdivisions		221,696		1,122		1		222,817
Mortgage-backed securities-residential		36,853		43		3,815		33,081
Mortgage-backed securities-multi-family		89,071		-		17,116		71,955
Corporate debt securities		19,386		56		959		18,483
Total securities available-for-sale	$	398,219	$	1,221	$	24,987	$	374,453

	At June 30, 2024
(In thousands)	Amortized cost ⁽¹⁾		Unrealized gains		Unrealized losses		Fair value
U.S. Treasury securities	$	43,024	$	-	$	1,829	$	41,195
U.S. government sponsored enterprises		13,042		-		2,068		10,974
State and political subdivisions		169,842		828		1		170,669
Mortgage-backed securities-residential		40,402		67		3,894		36,575
Mortgage-backed securities-multi-family		90,261		-		17,961		72,300
Corporate debt securities		19,608		15		1,335		18,288
Total securities available-for-sale	$	376,179	$	910	$	27,088	$	350,001

(1)

Amortized cost excludes accrued interest receivable of $4.5 million and $4.0 million at December 31, 2024 and June 30, 2024, respectively, which is included in accrued interest receivable in the consolidated statements of financial condition.

There was no allowance for credit losses on securities available-for-sale as of quarter ended December 31, 2024 and June 30, 2024.

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

	At December 31, 2024
(In thousands)	Amortized cost ⁽¹⁾		Unrealized gains		Unrealized losses		Fair value		Allowance		Net carrying value
U.S. Treasury securities	$	23,820	$	-	$	1,335	$	22,485	$	-	$	23,820
State and political subdivisions		458,289		6,480		35,267		429,502		42		458,247
Mortgage-backed securities-residential		123,544		72		4,165		119,451		-		123,544
Mortgage-backed securities-multi-family		140,306		-		15,777		124,529		-		140,306
Corporate debt securities		25,355		28		1,857		23,526		396		24,959
Other securities		30		-		-		30		1		29
Total securities held-to-maturity	$	771,344	$	6,580	$	58,401	$	719,523	$	439	$	770,905

	At June 30, 2024
(In thousands)	Amortized cost ⁽¹⁾		Unrealized gains		Unrealized losses		Fair value		Allowance		Net carrying value
U.S. Treasury securities	$	23,785	$	-	$	1,749	$	22,036	$	-	$	23,785
State and political subdivisions		450,343		4,541		40,235		414,649		44		450,299
Mortgage-backed securities-residential		48,033		51		3,314		44,770		-		48,033
Mortgage-backed securities-multi-family		143,363		-		17,397		125,966		-		143,363
Corporate debt securities		25,282		12		2,505		22,789		438		24,844
Other securities		31		-		-		31		1		30
Total securities held-to-maturity	$	690,837	$	4,604	$	65,200	$	630,241	$	483	$	690,354

(1)

Amortized cost excludes accrued interest receivable of $5.2 million and $4.1 million at December 31, 2024 and June 30, 2024, respectively, which is included in accrued interest receivable in the consolidated statements of financial condition.

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 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 December 31, 2024, 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 balance sheet derivative or hedging investment 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 December 31, 2024			Six months ended December 31, 2024
Balance at beginning of period	$	466		$	483
Benefit for credit losses		(27	)		(44	)
Balance at end of period	$	439		$	439

(In thousands)	Three months ended December 31, 2023			Six months ended December 31, 2023
Balance at beginning of period	$	498		$	-
Adoption of ASU 2016-13 (CECL) on July 1, 2023		-			503
Benefit for credit losses		(13	)		(18	)
Balance at end of period	$	485		$	485

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 December 31, 2024.

	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. Treasury securities	$	236	$	2		1	$	16,691	$	1,248		7	$	16,927	$	1,250		8
U.S. government sponsored enterprises		-		-		-		11,190		1,846		5		11,190		1,846		5
State and political subdivisions		-		-		-		63		1		1		63		1		1
Mortgage-backed securities-residential		4,685		23		2		21,360		3,792		23		26,045		3,815		25
Mortgage-backed securities-multi-family		-		-		-		71,955		17,116		30		71,955		17,116		30
Corporate debt securities		-		-		-		16,503		959		14		16,503		959		14
Total securities available-for-sale		4,921		25		3		137,762		24,962		80		142,683		24,987		83
Securities held-to-maturity:
U.S. Treasury securities		-		-		-		22,485		1,335		7		22,485		1,335		7
State and political subdivisions		48,382		777		415		245,698		34,490		1,671		294,080		35,267		2,086
Mortgage-backed securities-residential		77,859		1,178		12		27,747		2,987		27		105,606		4,165		39
Mortgage-backed securities-multi-family		-		-		-		124,529		15,777		49		124,529		15,777		49
Corporate debt securities		-		-		-		20,999		1,857		18		20,999		1,857		18
Total securities held-to-maturity		126,241		1,955		427		441,458		56,446		1,772		567,699		58,401		2,199
Total securities	$	131,162	$	1,980		430	$	579,220	$	81,408		1,852	$	710,382	$	83,388		2,282

	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. Treasury securities	$	24,574	$	215		1	$	16,621	$	1,614		8	$	41,195	$	1,829		9
U.S. government sponsored enterprises		-		-		-		10,974		2,068		5		10,974		2,068		5
State and political subdivisions		-		-		-		62		1		1		62		1		1
Mortgage-backed securities-residential		1,913		8		2		22,700		3,886		23		24,613		3,894		25
Mortgage-backed securities-multi-family		-		-		-		72,300		17,961		31		72,300		17,961		31
Corporate debt securities		-		-		-		16,360		1,335		16		16,360		1,335		16
Total securities available-for-sale		26,487		223		3		139,017		26,865		84		165,504		27,088		87
Securities held-to-maturity:
U.S. Treasury securities		-		-		-		22,036		1,749		7		22,036		1,749		7
State and political subdivisions		32,215		474		294		278,521		39,761		2,025		310,736		40,235		2,319
Mortgage-backed securities-residential		-		-		-		29,510		3,314		28		29,510		3,314		28
Mortgage-backed securities-multi-family		-		-		-		125,966		17,397		47		125,966		17,397		47
Corporate debt securities		-		-		-		20,276		2,505		41		20,276		2,505		41
Total securities held-to-maturity		32,215		474		294		476,309		64,726		2,148		508,524		65,200		2,442
Total securities	$	58,702	$	697		297	$	615,326	$	91,591		2,232	$	674,028	$	92,288		2,529

There were no transfers of securities available-for-sale to held-to-maturity during the three and six months ended December 31, 2024 and 2023. During the three and six months ended December 31, 2024 and 2023, there were no sales of securities and no gains or losses were recognized.

The estimated fair values of debt securities at December 31, 2024, 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	$	221,897	$	223,014
After one year through five years		39,978		37,718
After five years through ten years		10,420		8,685
After ten years		-		-
Total securities available-for-sale		272,295		269,417
Mortgage-backed securities		125,924		105,036
Total securities available-for-sale		398,219		374,453

Securities held-to-maturity
Within one year		57,659		57,233
After one year through five years		164,880		161,660
After five years through ten years		181,286		164,244
After ten years		103,669		92,406
Total securities held-to-maturity		507,494		475,543
Mortgage-backed securities		263,850		243,980
Total securities held-to-maturity		771,344		719,523
Total securities	$	1,169,563	$	1,093,976

At December 31, 2024 and June 30, 2024, securities with an aggregate fair value of $1.0 billion and $894.5 million, respectively, were pledged as collateral for deposits in excess of FDIC insurance limits for various municipalities placing deposits with the Commercial Bank. At December 31, 2024 and June 30, 2024, securities with an aggregate fair value of $19.4 million and $40.0 million, respectively, were pledged as collateral for potential borrowings at the Federal Reserve Bank discount window. The Company did not participate in any securities lending programs during the three and six months ended December 31, 2024 or 2023.

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 and six months ended December 31, 2024 or 2023.