Debt Securities

9 Months Ended

Sep. 30, 2022

Debt Securities

Debt Securities

NOTE 2 — Debt Securities

The following tables summarize the amortized cost and fair value of securities available-for-sale and securities held-to-maturity and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses:

	September 30, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities – agency	$	113,658	$	—	$	(19,587)	$	94,071
Collateralized mortgage obligations (CMOs) – agency		19,706		—		(2,402)		17,304
Total available-for-sale	$	133,364	$	—	$	(21,989)	$	111,375
			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Securities held-to-maturity:
Collateralized mortgage obligations (CMOs) – agency	$	80,102	$	—	$	(8,666)	$	71,436
Total held-to-maturity	$	80,102	$	—	$	(8,666)	$	71,436
	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities – agency	$	122,258	$	673	$	(2,050)	$	120,881
Collateralized mortgage obligations (CMOs) – agency		27,316		237		(50)		27,503
Total available-for-sale	$	149,574	$	910	$	(2,100)	$	148,384

As of December 31, 2021, there were no securities held-to-maturity.

Mortgage-backed securities include all pass-through certificates guaranteed by FHLMC, FNMA, or GNMA and the CMOs are backed by government agency pass-through certificates. CMOs, by virtue of the underlying residential collateral or structure, are fixed rate current pay sequentials or planned amortization classes (PACs). As actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations, these securities are not considered to have a single maturity date.

There were no sales or calls of securities for the three and nine months ended September 30, 2022 and 2021.

At September 30, 2022, securities having a carrying value of $153.8 million were pledged to the Federal Home Loan Bank of New York (FHLB) for borrowing capacity totaling $139.0 million. At December 31, 2021, securities having a fair value of $121.5 million were pledged to the FHLB for borrowing capacity totaling $115.4 million. At September 30, 2022 and December 31, 2021, the Company had no outstanding FHLB advances.

At September 30, 2022, securities having a fair value of $37.7 million were pledged to the Federal Reserve Bank of New York (FRB) for borrowing capacity totaling $36.6 million. At December 31, 2021, securities having a fair value of $26.9 million were pledged to the FRB for borrowing capacity totaling $26.1 million. At September 30, 2022 and December 31, 2021, the Company had no outstanding FRB borrowings.

The following table provides the gross unrealized and unrecognized losses and fair value, aggregated by investment category and length of time the individual securities have been in a continuous unrealized or unrecognized loss position as of:

	September 30, 2022
	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities – agency	$	24,357	$	(3,618)	$	69,714	$	(15,969)	$	94,071	$	(19,587)
CMOs – agency		16,315		(2,291)		989		(111)		17,304		(2,402)
Total temporarily impaired securities	$	40,672	$	(5,909)	$	70,703	$	(16,080)	$	111,375	$	(21,989)
	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrecognized Losses		Fair Value		Gross Unrecognized Losses		Fair Value		Gross Unrecognized Losses
	(In thousands)
Securities held-to-maturity:
CMOs – agency	$	71,436	$	(8,666)	$	—	$	—	$	71,436	$	(8,666)
Total temporarily impaired securities	$	71,436	$	(8,666)	$	—	$	—	$	71,436	$	(8,666)
	December 31, 2021
	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities - agency	$	101,235	$	(1,813)	$	4,503	$	(237)	$	105,738	$	(2,050)
CMOs - Agency		7,416		(50)		—		—		7,416		(50)
Total temporarily impaired securities	$	108,651	$	(1,863)	$	4,503	$	(237)	$	113,154	$	(2,100)

Management reviews the investment portfolio on a quarterly basis to determine the cause, magnitude and duration of declines in the fair value of each security. In estimating other-than-temporary impairment (OTTI), management considers many factors including: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether any other than temporary decline exists may involve a high degree of subjectivity and judgment and is based on the information available to management at a point in time. Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.

At September 30, 2022, securities in unrealized or unrecognized loss positions were issuances from government sponsored entities. Due to the decline in fair value being attributable to changes in interest rates, not credit quality and because the Company does not have the intent to sell the securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider the securities to be other-than-temporarily impaired at September 30, 2022.

No impairment charges were recorded for the three and nine months ended September 30, 2022 and 2021.