FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2023

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

24. 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 December 31, 2023 and December 31, 2022. 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. Obtaining market values as of December 31, 2023 and December 31, 2022 for these securities utilizing significant observable inputs was not difficult due to their liquid nature.

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 December 31, 2023 Using
			Level 1		Level 2		Level 3
(In thousands)	Total		Inputs		Inputs		Inputs
Financial Assets:
Securities available-for-sale:
Agency notes	$	9,371	$	—	$	9,371	$	—
Treasury securities		234,190		—		234,190		—
Corporate securities		151,170		—		151,170		—
Pass-through MBS issued by GSEs		205,285		—		205,285		—
Agency CMOs		259,415		—		259,415		—
State and municipal obligations		26,809		—		26,809		—
Derivative – cash flow hedges		7,461		—		7,461		—
Derivative – freestanding derivatives, net		114,671		—		114,671		—
Financial Liabilities:
Derivative – fair value hedges		6,594		—		6,594		—
Derivative – freestanding derivatives, net		114,671		—		114,671		—

			Fair Value Measurements
			at December 31, 2022 Using
			Level 1		Level 2		Level 3
(In thousands)	Total		Inputs		Inputs		Inputs
Financial Assets:
Securities available-for-sale:
Treasury securities	$	227,256	$	—	$	227,256	$	—
Corporate securities		166,773		—		166,773		—
Pass-through MBS issued by GSEs		241,240		—		241,240		—
Agency CMOs		281,339		—		281,339		—
State and municipal obligations		33,979		—		33,979		—
Derivative – cash flow hedges		17,150		—		17,150		—
Derivative – freestanding derivatives, net		137,335		—		137,335		—
Financial Liabilities:
Derivative – freestanding derivatives, net		137,335		—		137,335		—

Assets Measured at Fair Value on a Non-recurring Basis

Certain financial assets are measured at fair value on a nonrecurring 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.

	December 31, 2023
				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	$	6,336	$	—	$	—	$	6,336

	December 31, 2022
				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	$	1,179	$	—	$	—	$	1,179

Individually evaluated loans with an allowance for credit losses at December 31, 2023 had a carrying amount of $6.3 million, which is made up of the outstanding balance of $7.3 million, net of a valuation allowance of $1.0 million. Collateral dependent individually analyzed loans as of December 31, 2023 resulted in a credit loss recovery of $371 thousand, which is included in the amounts reported in the consolidated statements of operations for the year ended December 31, 2023.

Individually evaluated loans with an allowance for credit losses at December 31, 2022 had a carrying amount of $1.2 million, which is made up of the outstanding balance of $2.5 million, net of a valuation allowance of $1.3 million. Collateral dependent individually analyzed loans as of December 31, 2022 resulted in a credit loss provision of $0.7 million, which is included in the amounts reported in the consolidated statements of operations for the year ended December 31, 2022.

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 nonrecurring 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 December 31, 2023 Using
	Carrying		Level 1		Level 2		Level 3
(In thousands)	Amount		Inputs		Inputs		Inputs		Total
Financial Assets:
Cash and due from banks	$	457,547	$	457,547	$	—	$	—	$	457,547
Securities held-to-maturity		594,639		—		516,930		—		516,930
Loans held for investment, net		10,695,349		—		—		10,305,026		10,305,026
Accrued interest receivable		55,666		—		6,593		49,073		55,666
Financial Liabilities:
Savings, money market and checking accounts (1)		8,922,972		8,922,972		—		—		8,922,972
CDs		1,607,683		—		1,602,087		—		1,602,087
FHLBNY advances		1,313,000		—		1,312,940		—		1,312,940
Subordinated debt, net		200,196		—		160,696		—		160,696
Accrued interest payable		17,298		—		17,298		—		17,298

(1) Includes mortgage escrow deposits.

			Fair Value Measurements
			at December 31, 2022 Using
	Carrying		Level 1		Level 2		Level 3
(In thousands)	Amount		Inputs		Inputs		Inputs		Total
Financial Assets:
Cash and due from banks	$	169,297	$	169,297	$	—	$	—	$	169,297
Securities held-to-maturity		585,798		—		505,759		—		505,759
Loans held for investment, net		10,482,145		—		—		10,005,121		10,005,121
Accrued interest receivable		48,561		—		6,105		42,456		48,561
Financial Liabilities:
Savings, money market and checking accounts (1)		9,139,043		9,139,043		—		—		9,139,043
CDs		1,115,364		—		1,096,808		—		1,096,808
FHLBNY advances		1,131,000		—		1,131,217		—		1,131,217
Subordinated debt, net		200,283		—		180,583		—		180,583
Other short-term borrowings		1,360		1,360		—		—		1,360
Accrued interest payable		5,323		—		5,323		—		5,323

(1) Includes mortgage escrow deposits.