Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | Securities Available-for-Sale Debt Securities The following table summarizes available-for-sale debt securities held by the Company at September 30, 2021:
The following table summarizes available-for-sale debt securities held by the Company at December 31, 2020:
Held-to-Maturity Debt Securities The following table summarizes held-to-maturity debt securities held by the Company at September 30, 2021:
There were no held-to-maturity debt securities at December 31, 2020. The available-for-sale portfolio also includes callable securities that may be called by the issuer prior to maturity. The Company may from time to time sell debt securities from its available-for-sale portfolio. Realized gains on sales of available-for-sale debt securities were $797,000 and $1.1 million for the three and nine months ended September 30, 2021 and $0 and $178,000 for the three and nine months ended September 30, 2020. Realized losses on available-for-sale debt securities were $851,000 for the three and nine months ended September 30, 2021 and $0 for the three and nine months ended September 30, 2020. Proceeds from the sale of available-for-sale debt securities were $103.8 million and $142.7 million for the three and nine months ended September 30, 2021, and $0 and $42.3 million for the three and nine months ended September 30, 2020. Sales of available-for-sale investment securities were the result of general investment portfolio and interest rate risk management. The Company's investment portfolio includes callable securities that may be called prior to maturity. There were no realized gains or losses on called available-for-sale debt securities for the three and nine months ended September 30, 2021. Realized gains on called available-for-sale debt securities were $0 and $251,000 for the three and nine months ended September 30, 2020. The Company also recognized net losses of $6,000 and $18,000 for the three and nine months ended September 30, 2021, and net losses of $2,000 and net gains of $17,000 for the three and nine months ended September 30, 2020 on equity securities, reflecting the change in fair value. The following table summarizes available-for-sale debt securities that had unrealized losses at September 30, 2021, and December 31, 2020.
The following table summarizes held-to-maturity debt securities that had unrealized losses at September 30, 2021.
There were no held-to-maturity debt securities at December 31, 2020. The Company evaluates available-for-sale debt securities for expected credit losses (“ECL”) in unrealized loss positions at each measurement date to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors. Factors that may be indicative of ECL include, but are not limited to, the following: • Extent to which the fair value is less than the amortized cost basis. • Adverse conditions specifically related to the security, an industry, or geographic area (changes in technology, business practice). • Payment structure of the debt security with respect to underlying issuer or obligor. • Failure of the issuer to make scheduled payment of principal and/or interest. • Changes to the rating of a security or issuer by a nationally recognized statistical rating organization. • Changes in tax or regulatory guidelines that impact a security or underlying issuer. For available-for-sale debt securities in an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (technical impairment) is the result of changes in interest rates or reflects a fundamental change in the credit worthiness of the underlying issuer. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. Credit-related impairment is recognized as an allowance for credit losses (“ACL”) on the Statement of Condition, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Both the ACL and the adjustment to net income may be reversed if conditions change. The gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, and U.S. government agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and not due to the credit-related quality of the investment securities. The Company does not have the intent to sell these securities and does not believe it is more likely than not that the Company will be required to sell these securities before a recovery of amortized cost. Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management has made the accounting policy election to exclude accrued interest receivable on held-to-maturity debt securities from the estimate of credit losses. As of September 30, 2021, the held-to-maturity portfolio consisted of U.S. Treasury securities and securities issued by U.S. government-sponsored enterprises, including The Federal National Mortgage Agency and the Federal Farm Credit Banks Funding Corporation. U.S. Treasury securities are backed by the full faith and credit of and/or guaranteed by the U.S. government, and it is expected that the securities will not be settled at prices less than the amortized cost bases of the securities. Securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government, are widely recognized as “risk-free,” and have a long history of zero credit loss. As such, the Company did not record an allowance for credit losses for these securities as of September 30, 2021. The amortized cost and estimated fair value of debt securities by contractual maturity are shown in the following table. 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. Mortgage-backed securities are shown separately since they are not due at a single maturity date.
There were no held-to-maturity debt securities at December 31, 2020. The Company also holds non-marketable Federal Home Loan Bank New York (“FHLBNY”) stock, non-marketable Federal Home Loan Bank Pittsburgh (“FHLBPITT”) stock and non-marketable Atlantic Community Bankers Bank ("ACBB") stock, all of which are required to be held for regulatory purposes and for borrowing availability. The required investment in FHLB stock is tied to the Company’s borrowing levels with the FHLB. Holdings of FHLBNY stock, FHLBPITT stock, and ACBB stock totaled $9.3 million, $1.0 million and $95,000, respectively, at September 30, 2021. These securities are carried at par, which is also cost. The FHLBNY and FHLBPITT continue to pay dividends and repurchase stock. Quarterly, we evaluate our investment in the FHLB for impairment. We evaluate recent and long-term operating performance, liquidity, funding and capital positions, stock repurchase history, dividend history and impact of legislative and regulatory changes. Based on our most recent evaluation, as of September 30, 2021, we determined that no impairment write-downs were required.
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