Investment Securities

9 Months Ended

Sep. 30, 2023

Investment Securities

Investment Securities

2.    Investment Securities

The amortized cost, gross unrealized gains and losses and fair values of available for sale securities are as follows:

	September 30, 2023
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	30,099	$	—	$	(1,533)	$	28,566
U.S. government agency mortgage-backed securities–residential		160,314		—		(33,092)		127,222
U.S. government agency securities		24,777		—		(2,247)		22,530
Municipal securities(1)		3,164		—		(365)		2,799
Corporate bonds		14,700		—		(2,261)		12,439
Other		748		—		(52)		696
Total	$	233,802	$	—	$	(39,550)	$	194,252

	December 31, 2022
			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
U.S. Treasury securities	$	40,172	$	—	$	(2,315)	$	37,857
U.S. government agency mortgage-backed securities–residential		173,926		—		(29,392)		144,534
U.S. government agency securities		24,785		—		(2,336)		22,449
Municipal securities(1)		5,117		—		(331)		4,786
Corporate bonds		14,700		—		(1,483)		13,217
Other		644		172		—		816
Total	$	259,344	$	172	$	(35,857)	$	223,659

⁽¹⁾ The issuers of municipal securities are all within New York State.

The following tables present the fair value and unrealized losses of the Company’s available for sale securities with gross unrealized losses aggregated by the length of time the individual securities have been in a continuous unrealized loss position:

	September 30, 2023
	Less Than 12 Months				12 Months or Longer				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities	$	—	$	—	$	28,566	$	(1,533)	$	28,566	$	(1,533)
U.S. government agency mortgage-backed securities-residential		—		—		127,222		(33,092)		127,222		(33,092)
U.S. government agency securities		—		—		22,530		(2,247)		22,530		(2,247)
Municipal securities		487		(43)		2,197		(322)		2,684		(365)
Corporate bonds		1,250		(250)		11,189		(2,011)		12,439		(2,261)
Other		669		(52)		—		—		669		(52)
Total	$	2,406	$	(345)	$	191,704	$	(39,205)	$	194,110	$	(39,550)

	December 31, 2022
	Less Than 12 Months				12 Months or Longer				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
U.S. Treasury securities	$	—	$	—	$	37,857	$	(2,315)	$	37,857	$	(2,315)
U.S. government agency mortgage-backed securities-residential		23,384		(2,711)		121,151		(26,681)		144,535		(29,392)
U.S. government agency securities		9,160		(869)		13,289		(1,467)		22,449		(2,336)
Municipal securities		1,529		(4)		3,127		(327)		4,656		(331)
Corporate bonds		6,873		(627)		5,844		(856)		12,717		(1,483)
Total	$	40,946	$	(4,211)	$	181,268	$	(31,646)	$	222,214	$	(35,857)

At September 30, 2023, the Company had 234 individual available-for-sale securities in an unrealized loss position with unrealized losses totaling $39,550 with an aggregate depreciation of 16.93% from the Company’s amortized cost.

On January 1, 2023, the Company adopted ASU 2016-13 and implemented the CECL methodology for allowance for credit losses on its investment securities available-for-sale. The new CECL methodology replaces the other-than-temporary impairment model that previously existed. The Company did not have a CECL day 1 impact attributable to its investment securities portfolio and did not have an allowance for credit losses on its investment securities available for sale as of September 30, 2023.

The Company evaluates securities in an unrealized loss position for impairment related to credit losses on at least a quarterly basis. Securities in unrealized loss positions are first assessed as to whether we intend to sell, or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If one of the criteria is met, the security’s amortized cost basis is written down to fair value through current earnings. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Unrealized losses on asset backed securities, state and municipal securities, and corporate bonds have not been recognized into income because the issuers are of high credit quality, we do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. No allowance for credit losses for available-for-sale securities was recorded as of September 30, 2023.

Federal agency obligations, residential mortgage backed pass-through securities and commercial mortgage backed pass-through securities are issued by U.S. Government agencies and U.S. Government sponsored enterprises. Although a government guarantee exists on these investments, these entities are not legally backed by the full faith and credit of the federal government. Nonetheless, at this time we do not foresee any set of circumstances in which the government would not fund its commitments on these investments.

The amortized cost and fair value of available for sale debt securities at September 30, 2023 and December 31, 2022, by contractual maturities, are presented below. Actual maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the securities may be called or repaid without any penalties. Because mortgage-backed securities are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary:

	September 30, 2023				December 31, 2022
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Maturity:
Within 1 year	$	20,470	$	19,949	$	16,923	$	16,512
After 1 but within 5 years		32,870		29,806		46,162		42,225
After 5 but within 10 years		19,400		16,579		21,689		19,572
After 10 years		—		—		—		—
Total Maturities		72,740		66,334		84,774		78,309
Mortgage-backed securities		160,314		127,222		173,926		144,534
Other		748		696		644		816
Total	$	233,802	$	194,252	$	259,344	$	223,659

At September 30, 2023 and December 31, 2022, available for sale securities with a carrying value of $13,151 and $15,407, respectively, were pledged to secure Federal Home Loan Bank of New York (“FHLB”) borrowings. In addition, at September 30, 2023 and December 31, 2022, $79,074 and $958 of available for sale securities were pledged to secure borrowings at the Federal Reserve Bank of New York (“FRB”), respectively.

During the nine months ended September 30, 2023, there were no sales of available for sale securities and no realized gains or losses.