v3.26.1
Derivatives and Hedging Activities
 3 Months Ended
Mar. 31, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative and Hedging Activities Derivative and Hedging Activities
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through the management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities.
Non-designated Hedges. Derivatives not designated in qualifying hedging relationships are not speculative and result from a service the Company provides to certain qualified commercial borrowers in loan-related transactions which, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company may execute interest rate swaps with qualified commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. The interest rate swap agreement which the Company executes with the commercial borrower is collateralized by the borrower's commercial real estate financed by the Company. As the Company has not elected to apply hedge accounting and these interest rate swaps do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. As of March 31, 2026 and December 31, 2025, the Company had 428 and 438 loan-related interest rate swaps with aggregate notional amounts of $3.89 billion and $4.00 billion, respectively.
The Company periodically enters into risk participation agreements ("RPAs"), with the Company functioning as either the lead institution, or as a participant when another company is the lead institution on a commercial loan. These RPAs are entered into to manage the credit exposure on interest rate contracts associated with these loan participation agreements. Under the RPAs, the Company will either receive or make a payment in the event the borrower defaults on the related interest rate contract. The Company has minimum collateral posting thresholds with certain of its risk participation counterparties but as of March 31, 2026, it was not required to post collateral against the potential risk of default by the borrower under these agreements. For March 31, 2026 and December 31, 2025, the Company had 6 and 10 credit derivatives with aggregate notional amounts of $88.3 million and $98.6 million, respectively, from participations in interest rate swaps as part of these loan participation arrangements. As of March 31, 2026 and December 31, 2025, the asset and liability positions of these fair value credit derivatives were insignificant.
Cash Flow Hedges of Interest Rate Risk. The Company’s objective in using interest rate derivatives is to add stability to interest expense and to manage exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable payment amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. 
Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive (loss) income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2026 and 2025, such derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings or demand deposits. During the next twelve months, the Company estimates that $409,000 will be reclassified as a reduction to interest expense. As of March 31, 2026, the Company had 8 outstanding interest rate derivatives with an aggregate notional amount of $675.0 million that were each designated as a cash flow hedge of interest rate risk, compared to 7 outstanding interest rate derivatives with an aggregate notional amount of $575.0 million that was designated as a cash flow hedge of interest rate risk, as of December 31, 2025.
The Company is party to master netting arrangements with its financial institution counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all swap agreements, as well as collateral, in the event of default on, or termination of, any one contract. Collateral, usually in the form of cash or marketable investment securities, is posted by or received from the counterparty with net liability or asset positions, respectively, in accordance with contract thresholds. Master repurchase agreements which include “right of set-off” provisions generally have a legally enforceable right to offset recognized amounts. In such cases, the collateral would be used to settle the fair value of the swap or repurchase agreement should the Company be in default. The total amount of collateral held or pledged cannot exceed the net derivative fair values with the counterparty.
The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are eligible for offset in the Consolidated Statements of Condition as of March 31, 2026 and December 31, 2025 (in thousands).
Fair Values of Derivative Instruments as of March 31, 2026
Asset DerivativesLiability Derivatives
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (1)
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (1)
Derivatives not designated as a hedging instrument:
Interest rate products$1,944,208 Other assets$103,989 1,944,208 Other liabilities104,217 
Credit contracts33,314 Other assets6 55,003 Other liabilities
Total derivatives not designated as a hedging instrument103,995 104,217 
Derivatives designated as a hedging instrument:
Interest rate products450,000 Other assets1,262 225,000 Other liabilities781 
Total gross derivative amounts recognized on the balance sheet105,257 104,998 
Netting Adjustments1,262 — 
Gross amounts offset on the balance sheet— — 
Net derivative amounts presented on the balance sheet$103,995 104,998 
Gross amounts not offset on the balance sheet:
Financial instruments - institutional counterparties$4,798 4,798 
Cash collateral - institutional counterparties95,081 — 
Net derivatives not offset$4,116 100,200 
Fair Values of Derivative Instruments as of December 31, 2025
Asset DerivativesLiability Derivatives
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (1)
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (1)
Derivatives not designated as a hedging instrument:
Interest rate products$2,000,609 Other assets$105,251 $2,000,609 Other liabilities105,453 
Credit contracts33,385 Other assets9 65,167 Other liabilities— 
Total derivatives not designated as a hedging instrument105,260 105,453 
Derivatives designated as a hedging instrument:
Interest rate products— Other assets— 575 Other liabilities2,670 
Total gross derivative amounts recognized on the balance sheet105,260 108,123 
Netting Adjustments— 1,678 
Gross amounts offset on the balance sheet— — 
Net derivative amounts presented on the balance sheet$105,260 106,445 
Gross amounts not offset on the balance sheet:
Financial instruments - institutional counterparties$7,814 7,814 
Cash collateral - institutional counterparties89,000 — 
Net derivatives not offset$8,446 98,631 
(1) The fair values related to interest rate products in the above net derivative tables show the total value of assets and liabilities, which include accrued interest receivable and accrued interest payable for the periods ended March 31, 2026 and December 31, 2025.
The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three months ended March 31, 2026 and 2025 (in thousands).
Gain (loss) recognized in income on derivatives for the three months ended
Consolidated Statements of IncomeMarch 31, 2026March 31, 2025
Derivatives not designated as a hedging instrument:
Interest rate productsOther income$(22)(86)
Credit contractsOther income(3)(1)
Total derivatives not designated as hedging instruments$(25)(87)
Derivatives designated as a hedging instrument:
Interest rate productsInterest expense$(93)(1,940)
Total derivatives designated as a hedging instruments$(93)(1,940)
The Company has agreements with certain of its dealer counterparties which contain a provision that if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be deemed in default on its derivative obligations. In addition, the Company has agreements with certain of its dealer counterparties which contain a provision that if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.
As of March 31, 2026, the Company had six dealer counterparties and the Company was in a net asset position with respect to all of its counterparties.