Investment Securities

9 Months Ended

Sep. 30, 2022

Investment Securities

Investment Securities

Note 2:   Investment Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of available for sale and held to maturity securities as of September 30, 2022 and December 31, 2021 were as follows:

	September 30, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Available for sale securities:
Treasury notes	$	37,288	$	—	$	976	$	36,312
Federal agencies		284,982		—		14,629		270,353
Mortgage-backed - Government-sponsored entity (GSE)		15,405		10		11		15,404
Total available for sale securities	$	337,675	$	10	$	15,616	$	322,069
Held to maturity securities:
Mortgage-backed - Non-GSE multi-family	$	1,005,487	$	—	$	—	$	1,005,487
Total held to maturity securities	$	1,005,487	$	—	$	—	$	1,005,487

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Available for sale securities:
Treasury notes	$	8,232	$	4	$	27	$	8,209
Federal agencies		264,970		—		1,675		263,295
Municipals		4,300		—		—		4,300
Mortgage-backed - Government-sponsored entity (GSE)		18,664		32		336		18,360
Mortgage-backed - Non-GSE multi-family		16,424		41		—		16,465
Total available for sale securities	$	312,590	$	77	$	2,038	$	310,629

At September 30, 2022 and December 31, 2021, GSE mortgage-backed securities included in the tables above are primarily backed by multi-family loans. The September 30, 2022 table includes a held to maturity security that was purchased following a September 2022 loan sale and securitization transaction as described in Note 4: Loans and Allowance for Credit Losses on Loans. The December 31, 2021 table above also included 2 securities purchased from Freddie Mac following the loan sale and securitization arrangement with Freddie Mac described in Note 4: Loans and Allowance for Credit Losses on Loans. One of these securities was subsequently sold at book value resulting in no gain

or loss during the three and nine months ended September 30, 2022, and the other security was fully amortized resulting in no gain loss during the three and nine months ended September 30, 2022.

Accrued interest on available for sale securities totaled $0.6 million at September 30, 2022 and $0.4 million at December 31, 2021, respectively, and is excluded from the estimate of credit losses.

Accrued interest on held to maturity securities totaled $2.3 million at September 30, 2022 and $0 at December 31, 2021, respectively, and is excluded from the estimate of credit losses.

The amortized cost and fair value of available for sale and held to maturity securities at September 30, 2022 and December 31, 2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

	September 30, 2022				December 31, 2021
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale securities:	(In thousands)
Within one year	$	73,994	$	71,805	$	6,548	$	6,551
After one through five years		248,276		234,860		270,954		269,253
After five through ten years		—		—		—		—
After ten years		—		—		—		—
		322,270		306,665		277,502		275,804
Mortgage-backed - Government-sponsored entity (GSE)		15,405		15,404		18,664		18,360
Mortgage-backed - Non-GSE multi-family		—		—		16,424		16,465
	$	337,675	$	322,069	$	312,590	$	310,629
Held to maturity securities:
Within one year	$	—	$	—	$	—	$	—
After one through five years		1,005,487		1,005,487		—		—
After five through ten years		—		—		—		—
After ten years		—		—		—		—
	$	1,005,487	$	1,005,487	$	—	$	—

During the three and nine months ended September 30, 2022, one of the mortgage-backed – non-GSE multi-family securities available for sale was sold for $11.4 million resulting in no gain or loss. During the three and nine months ended September 30, 2021 proceeds from sales of $34.5 million securities available for sale were sold, and no gain or loss was recognized.

The following tables show the Company’s investments’ gross unrealized losses and fair value of the Company’s investment securities with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2022 and December 31, 2021:

	September 30, 2022
					12 Months or
	Less than 12 Months				Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Available for sale securities:
Treasury notes	$	34,357	$	931	$	1,955	$	45	$	36,312	$	976
Federal agencies		62,372		2,628		207,981		12,001		270,353		14,629
Mortgage-backed - Government-sponsored entity (GSE)		768		11		—		—		768		11
	$	97,497	$	3,570	$	209,936	$	12,046	$	307,433	$	15,616

	December 31, 2021
					12 Months or
	Less than 12 Months				Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Available for sale securities:
Treasury notes	$	7,957	$	27	$	—	$	—	$	7,957	$	27
Federal agencies		238,489		1,503		24,806		172		263,295		1,675
Mortgage-backed - Government-sponsored entity (GSE)		719		336		—		—		719		336
	$	247,165	$	1,866	$	24,806	$	172	$	271,971	$	2,038

For available for sale securities with an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or non-credit related factors. Any impairment that is not credit-related is recognized in AOCI, net of tax. Credit-related impairment is recognized as an ACL for available for sale securities on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Accrued interest receivable is excluded from the estimate of credit losses. Both the ACL and the adjustment to net income may be reversed if conditions change. However, if the Company expects, or is required, to sell an impaired available for sale security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there is no ACL in this situation.

In evaluating available for sale securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such securities, the Company considers the extent to which fair value is less than amortized cost, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuers’ financial condition, among other factors. Unrealized losses on the Company’s investment securities portfolio have not been recognized as an expense because the securities are of high credit quality, and the decline in fair values is attributable to changes in the prevailing interest rate environment since the purchase date. Fair value is expected to recover as securities reach maturity and/or the interest rate environment returns to conditions similar to when these securities were purchased. There were no credit related factors underlying unrealized losses on available for sale debt securities at September 30, 2022 and December 31, 2021.