FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2025

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

10. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 Inputs – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs – Significant other observable inputs such as any of the following: (1) quoted prices for similar assets or liabilities in active markets, (2) quoted prices for identical or similar assets or liabilities in markets that are not active, (3) inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates and yield curves observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates),

or (4) inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

Level 3 Inputs – Significant unobservable inputs for the asset or liability. Significant unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Significant unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Securities

The Company’s available-for-sale securities are reported at fair value, which were determined utilizing prices obtained from independent parties. The valuations obtained are based upon market data, and often utilize evaluated pricing models that vary by asset and incorporate available trade, bid and other market information. For securities that do not trade on a daily basis, pricing applications apply available information such as benchmarking and matrix pricing. The market inputs normally sought in the evaluation of securities include benchmark yields, reported trades, broker/dealer quotes (obtained only from market makers or broker/dealers recognized as market participants), issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. For certain securities, additional inputs may be used or some market inputs may not be applicable. Prioritization of inputs may vary on any given day based on market conditions.

All MBS, CMOs, treasury securities, and agency notes are guaranteed either implicitly or explicitly by GSEs as of March 31, 2025 and December 31, 2024. In accordance with the Company’s investment policy, corporate securities are rated “investment grade” at the time of purchase and the financials of the issuers are reviewed quarterly.

Derivatives

Derivatives represent interest rate swaps and estimated fair values are based on valuation models using observable market data as of the measurement date.

The following tables present financial assets and liabilities measured at fair value on a recurring basis as of the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

			Fair Value Measurements
			at March 31, 2025 Using
			Level 1		Level 2		Level 3
(In thousands)	Total		Inputs		Inputs		Inputs
Financial Assets:
Securities available-for-sale:
Agency notes	$	9,703	$	—	$	9,703	$	—
Corporate securities		175,536		—		175,536		—
Pass-through MBS issued by GSEs		299,513		—		299,513		—
Agency CMOs		203,006		—		203,006		—
State and municipal obligations		22,821		—		22,821		—
Derivative – cash flow hedges		6,591		—		6,591		—
Derivative – freestanding derivatives, net		92,149		—		92,149		—
Financial Liabilities:
Derivative – fair value hedges		39		—		39		—
Derivative – cash flow hedges		313		—		313		—
Derivative – freestanding derivatives, net		92,149		—		92,149		—
Derivative – risk participations		15		—		15		—

			Fair Value Measurements
			at December 31, 2024 Using
			Level 1		Level 2		Level 3
(In thousands)	Total		Inputs		Inputs		Inputs
Financial Assets:
Securities available-for-sale:
Agency Notes	$	9,607	$	—	$	9,607	$	—
Corporate securities		163,949		—		163,949		—
Pass-through MBS issued by GSEs		300,221		—		300,221		—
Agency CMOs		191,888		—		191,888		—
State and municipal obligations		25,028		—		25,028		—
Derivative – cash flow hedges		8,318		—		8,318		—
Derivative – freestanding derivatives, net		108,178		—		108,178		—
Financial Liabilities:
Derivative – cash flow hedges		159		—		159		—
Derivative – freestanding derivatives, net		108,178		—		108,178		—
Derivative – risk participations		10		—		10		—

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis. That is, they are subject to fair value adjustments in certain circumstances. Financial assets measured at fair value on a non-recurring basis include certain individually evaluated loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.

	March 31, 2025
				Fair Value Measurements Using:
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(In thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Individually evaluated loans	$	1,958	$	—	$	—	$	1,958

	December 31, 2024
				Fair Value Measurements Using:
			Quoted Prices
			In Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Carrying		Assets		Inputs		Inputs
(In thousands)	Value		(Level 1)		(Level 2)		(Level 3)
Individually evaluated loans	$	7,584	$	—	$	—	$	7,584

Individually evaluated loans with an allowance for credit losses at March 31, 2025 had a carrying amount of $2.0 million, which is made up of the outstanding balance of $3.7 million, net of a valuation allowance of $1.7 million. There was a credit loss recovery of $398 thousand on collateral dependent individually evaluated loans during the three months ended March 31, 2025, which is included in the amounts reported in the Consolidated Statements of Operations.

Individually evaluated loans with an allowance for credit losses at December 31, 2024 had a carrying amount of $7.6 million, which is made up of the outstanding balance of $9.7 million, net of a valuation allowance of $2.1 million.

Financial Instruments Not Measured at Fair Value

The following tables present the carrying amounts and estimated fair values of financial instruments other than those measured at fair value on either a recurring or non-recurring basis for the dates indicated, segmented by level within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

			Fair Value Measurements
			at March 31, 2025 Using
	Carrying		Level 1		Level 2		Level 3
(In thousands)	Amount		Inputs		Inputs		Inputs		Total
Financial Assets:
Cash and due from banks	$	1,030,702	$	1,030,702	$	—	$	—	$	1,030,702
Securities held-to-maturity		631,334		—		558,786		—		558,786
Loans held for sale		2,527		—		—		2,527		2,527
Loans held for investment, net		10,776,322		—		—		10,419,587		10,419,587
Accrued interest receivable		56,044		—		6,438		49,606		56,044
Financial Liabilities:
Savings, money market and checking accounts (1)		10,494,856		10,494,856		—		—		10,494,856
Certificates of deposit ("CDs")		1,121,068		—		1,118,156		—		1,118,156
FHLBNY advances		508,000		—		510,485		—		510,485
Subordinated debt, net		272,370		—		256,150		—		256,150
Accrued interest payable		9,302		—		9,302		—		9,302

⁽¹⁾ Includes mortgage escrow deposits.

			Fair Value Measurements
			at December 31, 2024 Using
	Carrying		Level 1		Level 2		Level 3
(In thousands)	Amount		Inputs		Inputs		Inputs		Total
Financial Assets:
Cash and due from banks	$	1,283,571	$	1,283,571	$	—	$	—	$	1,283,571
Securities held-to-maturity		637,339		—		552,277		—		552,277
Loans held for sale		22,625		—		—		22,625		22,625
Loans held for investment, net		10,775,608		—		—		10,354,366		10,354,366
Accrued interest receivable		55,970		—		6,676		49,294		55,970
Financial Liabilities:
Savings, money market and checking accounts (1)		10,617,060		10,617,060		—		—		10,617,060
CDs		1,069,081		—		1,066,630		—		1,066,630
FHLBNY advances		608,000		—		608,908		—		608,908
Subordinated debt, net		272,325		—		257,464		—		257,464
Other short-term borrowings		50,000		50,000		—		—		50,000
Accrued interest payable		8,586		—		8,586		—		8,586

⁽¹⁾ Includes mortgage escrow deposits.