UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, ~~2017~~

2023

☐
o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

________to

Commission File Number 001-37399

KEARNY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code

973-244-4500

~~973-244-4500~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

KRNY

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒x No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filers,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐o No ☒

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~February 1, 2018.~~

January 31, 2024.

$0.01 par value common stock — ~~78,843,460~~64,436,995 shares outstanding

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

~~INDEX~~

TABLE OF CONTENTS


		Page Number
PART I—FINANCIAL INFORMATION

Item 1: 1.		Financial Statements

		Consolidated Statements of Financial Condition at December 31, ~~2017~~2023 (Unaudited) and June 30, ~~2017~~2023	1

		Consolidated Statements of Income (Loss) for the Three and Six Months Ended December 31, ~~2017~~2023 and December 31, ~~2016~~2022 (Unaudited)	2

		Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended December 31, ~~2017~~2023 and December 31, ~~2016~~2022 (Unaudited)	4 3

		Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended December 31, ~~2017~~2023 and December 31, ~~2016~~2022 (Unaudited)	5 4

		Consolidated Statements of Cash Flows for the Six Months Ended December 31, ~~2017~~2023 and December 31, ~~2016~~2022 (Unaudited)	7 6

		Notes to Consolidated Financial Statements (Unaudited)	9 8

Item 2: 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	48 38

Item 3: 3.		Quantitative and Qualitative Disclosure About Market Risk	65 49

Item 4: 4.		Controls and Procedures	71 50

PART II—OTHER INFORMATION

Item 1: 1.		Legal Proceedings	72 51

Item ~~1A:~~ 1A.		Risk Factors	72 51

Item 2: 2.		Unregistered Sales of Equity Securities and Use of Proceeds	72 51

Item 3: 3.		Defaults Upon Senior Securities	72 51

Item 4: 4.		Mine Safety Disclosures	72 51

Item 5: 5.		Other Information	72 51

Item 6.	Exhibits		52
~~Item 6:~~		~~Exhibits~~	73

SIGNATURES		74 53

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands, Except Share and Per Share Data)

	December 31,			June 30,
	2017			2017
	(Unaudited)
	December 31, 2023						December 31, 2023	June 30, 2023
	(Unaudited)
Assets
Assets
Assets
Cash and amounts due from depository institutions
Cash and amounts due from depository institutions
Cash and amounts due from depository institutions	$	17,899		$	18,889
Interest-bearing deposits in other banks		32,786			59,348
Cash and cash equivalents		50,685			78,237
Debt securities available for sale, at fair value		485,954			444,497
Mortgage-backed securities available for sale, at fair value		151,717			169,263
Securities available for sale		637,671			613,760
Debt securities held to maturity (fair value $125,882 and $145,505)		125,671			144,713
Mortgage-backed securities held to maturity (fair value $344,649 and $350,289)		345,781			348,608
Securities held to maturity		471,452			493,321
Investment securities available for sale (amortized cost of $1,268,632 and $1,383,867, respectively)
Investment securities held to maturity (fair value of $127,877 and $131,169, respectively)
Loans held-for-sale		3,490			4,692
Loans receivable, including unamortized yield adjustments of $1,999 and $2,808		3,291,516			3,245,261
Less allowance for loan losses		(30,066	)		(29,286	)
Loans receivable
Less: allowance for credit losses on loans
Net loans receivable		3,261,450			3,215,975
Premises and equipment		41,829			39,585
Federal Home Loan Bank of New York ("FHLB") stock		39,113			39,958
Federal Home Loan Bank (“FHLB”) of New York stock
Accrued interest receivable		13,524			12,493
Goodwill		108,591			108,591
Core deposit intangibles
Bank owned life insurance		183,754			181,223
Deferred income tax assets, net		6,941			15,454
Other real estate owned
Other assets		25,347			14,838
Total Assets	$	4,843,847		$	4,818,127

Liabilities and Stockholders' Equity
Liabilities and Stockholders' Equity
Liabilities and Stockholders' Equity
Liabilities
Liabilities
Liabilities
Deposits:
Deposits:
Deposits:
Non-interest-bearing
Non-interest-bearing
Non-interest-bearing	$	275,065		$	267,412
Interest-bearing		2,758,701			2,662,715
Total deposits		3,033,766			2,930,127
Borrowings		798,864			806,228
Advance payments by borrowers for taxes		8,511			8,711
Other liabilities		13,433			15,880
Total Liabilities		3,854,574			3,760,946

Stockholders' Equity
Preferred stock, $1.00 par value, 100,000,000 shares authorized; none issued and outstanding		-			-
Common stock, $0.01 par value; 800,000,000 shares authorized; 79,526,660 shares and 84,350,848 shares issued and outstanding, respectively		795			844
Stockholders' Equity
Stockholders' Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized; none issued and outstanding
Preferred stock, $0.01 par value, 100,000,000 shares authorized; none issued and outstanding
Preferred stock, $0.01 par value, 100,000,000 shares authorized; none issued and outstanding
Common stock, $0.01 par value; 800,000,000 shares authorized; 64,445,270 shares and 65,864,075 shares issued and outstanding, respectively
Paid-in capital		662,093			728,790
Retained earnings		353,536			361,039
Unearned employee stock ownership plan shares; 3,462,033 shares and 3,562,382 shares, respectively		(33,563	)		(34,536	)
Accumulated other comprehensive income, net		6,412			1,044
Unearned employee stock ownership plan shares; 2,257,850 shares and 2,358,198 shares, respectively
Accumulated other comprehensive loss
Total Stockholders' Equity		989,273			1,057,181
Total Liabilities and Stockholders' Equity	$	4,843,847		$	4,818,127

~~See notes to unaudited consolidated financial statements~~

~~- 1 -~~

~~KEARNY FINANCIAL CORP. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF INCOME~~

~~(In Thousands, Except Per Share Data)~~

~~(Unaudited)~~

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Interest Income

Loans

$
30,610

$
27,407

$
61,083

$
53,104

Mortgage-backed securities

2,848

3,779

5,744

7,716

Debt securities:

Taxable

3,229

2,146

6,189

4,186

Tax-exempt

641

562

1,262

1,113

Other interest-earning assets

704

421

1,346

1,002

Total Interest Income

38,032

34,315

75,624

67,121

Interest Expense

Deposits

6,649

5,410

12,868

10,771

Borrowings

4,548

3,289

9,111

6,713

Total Interest Expense

11,197

8,699

21,979

17,484

Net Interest Income

26,835

25,616

53,645

49,637

Provision for Loan Losses

936

1,255

1,566

2,384

Net Interest Income after Provision for
Loan Losses

25,899

24,361

52,079

47,253

Non-Interest Income

Fees and service charges

1,409

1,289

2,670

1,952

Gain on sale and call of securities

-

21

-

21

Gain on sale of loans

200

459

531

759

Gain (loss) on sale and write down of real estate owned

23

12

(86
)

(3
)
Income from bank owned life insurance

1,264

1,321

2,531

2,640

Electronic banking fees and charges

302

270

580

553

Miscellaneous

65

74

131

153

Total Non-Interest Income

3,263

3,446

6,357

6,075

Non-Interest Expense

Salaries and employee benefits

12,926

11,592

25,793

22,501

Net occupancy expense of premises

2,122

1,976

4,103

3,917

Equipment and systems

2,193

2,030

4,383

4,078

Advertising and marketing

748

387

1,458

936

Federal deposit insurance premium

343

339

703

644

Directors' compensation

688

379

1,377

604

Merger-related expenses

1,193

-

1,193

-

Miscellaneous

2,551

2,670

5,040

5,353

Total Non-Interest Expense

22,764

19,373

44,050

38,033

Income before Income Taxes

6,398

8,434

14,386

15,295

Income taxes

5,129

2,970

7,885

5,164

Net Income

$
1,269

$
5,464

$
6,501

$
10,131

See notes to unaudited consolidated financial statements.

- 21 -

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME ~~(Continued)~~

(LOSS)

(In Thousands, Except Per Share Data)

(Unaudited)

Three Months Ended
December 31,

Six Months Ended
December 31,

2023

2022

2023

2022

Interest Income

Loans

Taxable investment securities

Tax-exempt investment securities

Other interest-earning assets

Total Interest Income

Interest Expense

Deposits

Borrowings

Total Interest Expense

Net Interest Income

Provision for credit losses

Net Interest Income after Provision for Credit Losses

Non-Interest Income

Fees and service charges

Loss on sale and call of securities

Gain on sale of loans

Loss on write down of other real estate owned

Income from bank owned life insurance

Electronic banking fees and charges

Other income

Total Non-Interest Income

Non-Interest Expense

Salaries and employee benefits

Net occupancy expense of premises

Equipment and systems

Advertising and marketing

Federal deposit insurance premium

Directors' compensation

Three Months Ended

Six Months Ended

December 31,

Other expense

2017

2016

2017

2016

Net Income per Common Share (EPS)

Other expense

Total Non-Interest Expense

(Loss) Income before Income Taxes

Income tax expense

Net (Loss) Income

Net (Loss) Income per Common Share (EPS)

Basic

0.02

0.06

0.08

0.12

Diluted

0.02

0.06

0.08

0.12

Weighted Average Number of

Common Shares Outstanding

Basic

77,174

85,174

78,411

85,710

Basic

62,299

65,030

62,657

65,383

Diluted

77,239

85,258

78,474

85,782

Diluted

62,299

65,038

62,657

65,393

Dividends Declared Per Common Share

0.03

0.02

0.18

0.04

See notes to unaudited consolidated financial statements.

- 32 -

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(LOSS)

(In Thousands, Unaudited)

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net Income
$
1,269

$
5,464

$
6,501

$
10,131

Other Comprehensive Income, net of tax:

Net unrealized loss on securities available
for sale

(1,208
)

(5,314
)

(60
)

(4,241
)
Net gain (loss) on securities transferred from
available for sale to held to maturity

44

(25
)

61

(21
)
Net realized gain on securities available for sale

-

6

-

6

Fair value adjustments on derivatives

4,429

14,051

5,403

17,212

Benefit plan adjustments

7

10

(36
)

(214
)
Total Other Comprehensive Income

3,272

8,728

5,368

12,742

Total Comprehensive Income
$
4,541

$
14,192

$
11,869

$
22,873


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
Net (Loss) Income	$	(13,827)	$	1,951	$	(3,985)	$	18,486
Other Comprehensive (Loss) Income, net of tax:
Net unrealized gain (loss) on securities available for sale	29,909		977		9,674		(34,202)
Net realized loss on sale and call of securities available for sale	12,876		10,811		12,876		10,811
Fair value adjustments on derivatives	(20,129)		(4,465)		(16,836)		10,125
Benefit plan adjustments	(10)		(4)		(88)		(28)
Total Other Comprehensive Income (Loss)	22,646		7,319		5,626		(13,294)
Total Comprehensive Income	$	8,819	$	9,270	$	1,641	$	5,192

See notes to unaudited consolidated financial statements.

- 43 -

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~Six Months Ended December 31, 2016~~

(In Thousands, Except Per Share Data, Unaudited)

Common Stock

Paid-In

Retained

Unearned
ESOP

Accumulated
Other
Comprehensive

Shares

Amount

Capital

Earnings

Shares

Loss

Total

Balance - June 30, 2016

91,822

$
918

$
849,173

$
350,806

$
(36,481
)

$
(16,787
)

$
1,147,629

Net income

-

-

-

10,131

-

-

10,131

Other comprehensive income, net
  of income tax expense

-

-

-

-

-

12,742

12,742

ESOP shares committed to be
  released (100 shares)

-

-

434

-

973

-

1,407

Stock option expense

-

-

231

-

-

-

231

Share repurchases

(4,033
)

(40
)

(54,478
)

-

-

-

(54,518
)
Issuance of shares for stock benefit plan

1,387

14

(14
)

-

-

-

-

Restricted stock plan shares
  earned (30 shares)

-

-

427

-

-

-

427

Cash dividends declared
  ($0.04 per common share)

-

-

-

(3,397
)

-

-

(3,397
)

Balance - December 31, 2016

89,176

$
892

$
795,773

$
357,540

$
(35,508
)

$
(4,045
)

$
1,114,652


	Common Stock			Paid-In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance - September 30, 2022	67,938	$	680	$	520,245	$	454,710	$	(24,321)	$	(76,340)	$	874,974
Net income	—	—		—		1,951		—		—		1,951
Other comprehensive income, net of income tax	—	—		—		—		—		7,319		7,319
ESOP shares committed to be released (50 shares)	—	—		16		—		487		—		503
Stock repurchases	(550)	(6)		(5,739)		—		—		—		(5,745)

Stock-based compensation expense	—	—		810		—		—		—		810

Cash dividends declared ($0.11 per common share)	—	—		—		(7,172)		—		—		(7,172)
Balance - December 31, 2022	67,388	$	674	$	515,332	$	449,489	$	(23,834)	$	(69,021)	$	872,640


	Common Stock			Paid-In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance - June 30, 2022	68,666	$	687	$	528,396	$	445,451	$	(24,807)	$	(55,727)	$	894,000
Net income	—	—		—		18,486		—		—		18,486
Other comprehensive loss, net of income tax	—	—		—		—		—		(13,294)		(13,294)
ESOP shares committed to be released (100 shares)	—	—		106		—		973		—		1,079
Stock repurchases	(1,310)	(14)		(14,424)		—		—		—		(14,438)
Issuance of stock under stock benefit plans	61	1		(1)		—		—		—		—
Stock-based compensation expense	—	—		1,596		—		—		—		1,596
Cancellation of shares issued for restricted stock awards	(29)	—		(341)		—		—		—		(341)
Cash dividends declared ($0.22 per common share)	—	—		—		(14,448)		—		—		(14,448)
Balance - December 31, 2022	67,388	$	674	$	515,332	$	449,489	$	(23,834)	$	(69,021)	$	872,640

- 4 -

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Continued)

(In Thousands, Except Per Share Data, Unaudited)


	Common Stock			Paid-In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance - September 30, 2023	65,132	$	652	$	497,269	$	460,464	$	(22,375)	$	(86,476)	$	849,534
Net loss	—	—		—		(13,827)		—		—		(13,827)
Other comprehensive income, net of income tax	—	—		—		—		—		22,646		22,646
ESOP shares committed to be released (50 shares)	—	—		(95)		—		486		—		391
Stock repurchases	(687)	(7)		(4,766)		—		—		—		(4,773)

Stock-based compensation expense	—	—		889		—		—		—		889

Cash dividends declared ($0.11 per common share)	—	—		—		(6,882)		—		—		(6,882)
Balance - December 31, 2023	64,445	$	645	$	493,297	$	439,755	$	(21,889)	$	(63,830)	$	847,978


	Common Stock			Paid-In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance - June 30, 2023	65,864	$	659	$	503,332	$	457,611	$	(22,862)	$	(69,456)	$	869,284
Net loss	—	—		—		(3,985)		—		—		(3,985)
Other comprehensive income, net of income tax	—	—		—		—		—		5,626		5,626
ESOP shares committed to be released (100 shares)	—	—		(202)		—		973		—		771
Stock repurchases	(1,505)	(15)		(11,225)		—		—		—		(11,240)
Issuance of stock under stock benefit plans	133	1		(1)		—		—		—		—
Stock-based compensation expense	—	—		1,792		—		—		—		1,792
Cancellation of shares issued for restricted stock awards	(47)	—		(399)		—		—		—		(399)
Cash dividends declared ($0.22 per common share)	—	—		—		(13,871)		—		—		(13,871)
Balance - December 31, 2023	64,445	$	645	$	493,297	$	439,755	$	(21,889)	$	(63,830)	$	847,978

See notes to unaudited consolidated financial statements.

- 5 -

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~

~~Six Months Ended December 31, 2017~~

CASH FLOWS

(In Thousands, Unaudited)

Common Stock

Paid-In

Retained

Unearned
ESOP

Accumulated
Other
Comprehensive

Shares

Amount

Capital

Earnings

Shares

Income

Total

Balance - June 30, 2017

84,351

$
844

$
728,790

$
361,039

$
(34,536
)

$
1,044

$
1,057,181

Net income

-

-

-

6,501

-

-

6,501

Other comprehensive income, net
  of income tax expense

-

-

-

-

-

5,368

5,368

ESOP shares committed to be
  released (100 shares)

-

-

503

-

973

-

1,476

Stock option exercise

10

-

102

-

-

-

102

Stock option expense

-

-

1,045

-

-

-

1,045

Share repurchases

(4,747
)

(48
)

(69,266
)

-

-

-

(69,314
)
Restricted stock plan shares
  earned (146 shares)

-

-

2,196

-

-

-

2,196

Cancellation of shares issued for
  restricted stock awards

(87
)

(1
)

(1,277
)

-

-

-

(1,278
)
Cash dividends declared
  ($0.18 per common share)

-

-

-

(14,004
)

-

-

(14,004
)

Balance - December 31, 2017

79,527

$
795

$
662,093

$
353,536

$
(33,563
)

$
6,412

$
989,273


	Six Months Ended December 31,
	2023		2022
Cash Flows from Operating Activities:
Net (loss) income	$	(3,985)	$	18,486
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment	2,426		2,931
Net accretion of yield adjustments	(1,299)		(3,352)
Deferred income taxes	3,638		3,536

Amortization of intangible assets	268		288
Accretion of benefit plans’ unrecognized net gain	(124)		(39)
Provision for credit losses	2,350		2,341
Loss on write-down of other real estate owned	974		—
Loans originated for sale	(32,812)		(56,456)
Proceeds from sale of mortgage loans held-for-sale	39,446		75,492
Gain on sale of mortgage loans held-for-sale, net	(319)		(474)
Realized loss on sale/call of investment securities available for sale	18,135		15,227

Realized gain on sale of loans receivable	—		(55)
Realized gain on disposition of premises and equipment	(11)		(2,886)
Increase in cash surrender value of bank owned life insurance	(2,827)		(5,459)
ESOP and stock-based compensation expense	2,563		2,675
Increase in interest receivable	(2,125)		(6,902)
Increase in other assets	(8,745)		(5,511)
(Decrease) increase in interest payable	(296)		6,268
Increase (decrease) in other liabilities	1,889		(10,053)
Net Cash Provided by Operating Activities	19,146		36,057

Cash Flows from Investing Activities:
Purchases of:
Investment securities available for sale	(64,000)		(166,483)
Investment securities held to maturity	(300)		(40,398)
Proceeds from:
Repayments/calls/maturities of investment securities available for sale	57,430		70,793
Repayments/calls/maturities of investment securities held to maturity	4,740		4,855
Sales of investment securities available for sale	104,083		105,199
Purchase of loans	(49,652)		(656)
Net decrease (increase) in loans receivable	125,769		(583,893)
Proceeds from sale of loans receivable	—		706
Purchase of interest rate contracts	(887)		(758)

Deletions (additions) to premises and equipment	(34)		(668)
Proceeds from death benefit of bank owned life insurance	277		4,963
Purchase of bank owned life insurance	(5,000)		—
Proceeds from cash settlement of premises and equipment	—		3,480
Purchase of FHLB stock	(35,388)		(64,638)
Redemption of FHLB stock	23,750		42,760

Net Cash Provided by (Used in) Investing Activities	160,788		(624,738)

See notes to unaudited consolidated financial statements.

- 6 -

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Continued)

(In Thousands, Unaudited)

Six Months Ended

December 31,

2017

2016

Cash Flows from Operating Activities:

Net income
$
6,501

$
10,131

Adjustment to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of premises and equipment

1,475

1,471

Net amortization of premiums, discounts and loan fees and costs

2,250

2,785

Deferred income taxes

4,783

342

Amortization of intangible assets

60

72

Amortization of benefit plans’ unrecognized net (gain) loss

(61
)

33

Provision for loan losses

1,566

2,384

Loss on write-down and sales of real estate owned

86

3

Loans originated for sale

(41,833
)

(58,305
)
Proceeds from sale of loans held-for-sale

43,448

55,344

Realized gain on sale of loans held-for-sale, net

(413
)

(409
)
Realized gain on sale of loans

(118
)

(350
)
Realized loss on call of debt securities available for sale

-

10

Realized gain on call of debt securities held to maturity

-

(31
)
Realized loss (gain) on disposition of premises and equipment

7

(11
)
Increase in cash surrender value of bank owned life insurance

(2,531
)

(2,640
)
ESOP, stock option plan and restricted stock plan expenses

4,717

2,065

Increase in interest receivable

(1,031
)

(597
)
(Increase) decrease in other assets

(1,672
)

154

Increase in interest payable

292

100

Decrease in other liabilities

(2,555
)

(1,319
)
Net Cash Provided by Operating Activities

14,971

11,232

Cash Flows from Investing Activities:

Purchases of:

Debt securities available for sale

(76,074
)

(36,926
)
Debt securities held to maturity

(16,419
)

(22,793
)
Mortgage-backed securities available for sale

-

(30,663
)
Mortgage-backed securities held to maturity

(20,478
)

-

Proceeds from:

Repayments/calls/maturities of debt securities available for sale

35,458

30,476

Repayments/calls/maturities of debt securities held to maturity

35,315

52,198

Repayments/maturities of mortgage-backed securities available for sale

16,462

32,446

Repayments/maturities of mortgage-backed securities held to maturity

22,656

28,902

Purchase of loans

(48,905
)

(133,101
)
Proceeds from sale of loans

1,264

4,217

Net increase in loans receivable

(1,322
)

(173,739
)
Proceeds from sale of real estate owned

1,290

505

Additions to premises and equipment

(3,726
)

(1,416
)
Purchase of FHLB stock

(4,140
)

(10,080
)
Redemption of FHLB stock

4,985

6,167

Net Cash Used in Investing Activities
$
(53,634
)

$
(253,807
)


	Six Months Ended December 31,
	2023		2022

Cash Flows from Financing Activities:
Net (decrease) increase in deposits	(309,532)		109,294
Repayment of term FHLB advances	(3,375,000)		(2,865,000)
Proceeds from term FHLB advances	3,525,000		3,470,000
Net increase (decrease) in other short-term borrowings	10,000		(123,000)
Net (decrease) increase in advance payments by borrowers for taxes	(1,596)		561
Repurchase and cancellation of common stock of Kearny Financial Corp.	(11,240)		(14,438)
Cancellation of shares repurchased on vesting to pay taxes	(399)		(341)

Dividends paid	(13,822)		(14,350)
Net Cash (Used in) Provided by Financing Activities	(176,589)		562,726
Net Increase (Decrease) in Cash and Cash Equivalents	3,345		(25,955)
Cash and Cash Equivalents - Beginning	70,515		101,615
Cash and Cash Equivalents - Ending	$	73,860	$	75,660

Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Income taxes, net of refunds	$	4,319	$	8,318
Interest	$	89,090	$	37,279


Non-cash investing and financing activities:
Acquisition of other real estate owned in settlement of loans	$	—	$	13,232
Transfers from loans receivable to loans held-for-sale	$	10,754	$	2,628
Unsettled surrender of bank owned life insurance policies	$	44,311	$	—

See notes to unaudited consolidated financial statements.

- 7 -

Table of Contents

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)~~

~~(In Thousands, Unaudited)~~

Six Months Ended

December 31,

2017

2016

Cash Flows from Financing Activities:

Net increase in deposits
$
103,485

51,189

Repayment of term FHLB advances

(1,250,054
)

(853,051
)
Proceeds from term FHLB advances

1,250,000

850,000

Net change in overnight borrowings

-

90,000

Net (decrease) increase in other short-term borrowings

(7,317
)

472

Net decrease in advance payments by borrowers for taxes

(200
)

(288
)
Repurchase and cancellation of common stock of Kearny Financial Corp.

(69,314
)

(54,518
)
Cancellation of shares issued for restricted stock awards

(1,278
)

-

Issuance of shares in consideration of exercise of stock options

102

-

Dividends paid

(14,313
)

(3,397
)
Net Cash Provided by Financing Activities

11,111

80,407

Net Decrease in Cash and Cash Equivalents

(27,552
)

(162,168
)
Cash and Cash Equivalents - Beginning

78,237

199,200

Cash and Cash Equivalents - Ending
$
50,685

$
37,032

Supplemental Disclosures of Cash Flows Information:

Cash paid during the period for:

Income taxes, net of refunds
$
10,156

$
3,934

Interest
$
21,687

$
17,385

Non-cash investing and financing activities:

Acquisition of real estate owned in settlement of loans
$
1,437

$
1,719

~~See notes to unaudited consolidated financial statements.~~

~~- 8 -~~

~~KEARNY FINANCIAL CORP. AND SUBSIDIARIES~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. ~~PRINCIPLES~~SUMMARY OF ~~CONSOLIDATION~~

SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The unaudited consolidated financial statements include the accounts of Kearny Financial Corp. (the “Company”), its wholly-owned subsidiary, Kearny Bank (the “Bank”) and the Bank’s wholly-owned ~~subsidiaries, CJB Investment Corp. and KFS Financial Services, Inc. and its wholly-owned subsidiary, KFS Insurance Services, Inc.~~subsidiaries. The Company conducts its business principally through the Bank. Management prepared the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), including the elimination of all significant inter-company accounts and transactions during consolidation.

~~2. BASIS OF PRESENTATION~~

Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include the information or footnotes necessary for a complete presentation of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the unaudited consolidated financial statements have been included. The results of operations for the ~~three-month and six-month periods~~six months ended December 31, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period.

The data in the ~~consolidated statement~~Consolidated Statement of ~~financial condition for~~Financial Condition at June 30, ~~2017~~2023 was derived from the Company’s ~~2017 annual report~~2023 Annual Report on Form 10-K. That data, along with the interim unaudited financial information presented in the ~~consolidated statements~~Consolidated Statements of ~~financial condition, income, comprehensive income, changes~~Financial Condition, Income, Comprehensive Income, Changes in ~~stockholders’ equity~~Stockholders’ Equity and ~~cash flows~~Cash Flows should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s ~~2017 annual report~~2023 Annual Report on Form 10-K.

~~3. NET INCOME PER COMMON SHARE (“EPS”)~~

~~Basic EPS is based on~~

The accounting and reporting policies of the ~~weighted average number~~Company conform to U.S. GAAP and to general practice within the financial services industry. A discussion of ~~common shares actually outstanding including both vested and unvested restricted stock awards adjusted for Employee Stock Ownership Plan (“ESOP”) shares not yet committed to~~these policies can be released. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resultedfound in Note 1, Summary of Significant Accounting Policies, included in the ~~issuance of common stock that then shared in~~Company’s 2023 Annual Report on Form 10-K. There have been no material changes to the earnings of the Company. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities exercisable or which could be converted into common stock, if dilutive, using the treasury stock method. Shares issued and reacquired during any period are weighted for the portion of the period they were outstanding.

~~The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:~~

Company’s significant accounting policies since June 30, 2023.

Three Months Ended

Six Months Ended

December 31, 2017

December 31, 2017

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

(In Thousands, Except Per Share Data)

(In Thousands, Except Per Share Data)

Net income

$
1,269

$
6,501

Basic earnings per share, income
available to common stockholders

$
1,269

77,174

$
0.02

$
6,501

78,411

$
0.08

Effect of dilutive securities:

Stock options

65

63

$
1,269

77,239

$
0.02

$
6,501

78,474

$
0.08

~~- 9 -~~

Three Months Ended

Six Months Ended

December 31, 2016

December 31, 2016

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

(In Thousands, Except Per Share Data)

(In Thousands, Except Per Share Data)

Net income

$
5,464

$
10,131

Basic earnings per share, income
available to common stockholders

$
5,464

85,174

$
0.06

$
10,131

85,710

$
0.12

Effect of dilutive securities:

Stock options

84

72

$
5,464

85,258

$
0.06

$
10,131

85,782

$
0.12

During the three and six months ended December 31, 2017, the average number of options which were considered anti-dilutive totaled approximately 3,290,000 and 3,290,000, respectively. During the three and six months ended December 31, 2016, the average number of options which were considered anti-dilutive totaled approximately 1,108,587 and 554,293, respectively.

4.2. SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of December 31, ~~2017,~~2023, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date this document was filed.

~~5. PROPOSED ACQUISITION OF CLIFTON BANCORP INC.~~

On ~~November 1, 2017,~~January 25, 2024, the Company declared a quarterly cash dividend of $0.11 per share, payable on February 21, 2024 to stockholders of record as of February 7, 2024.

3. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Standards

In March 2022, the Financial Accounting Standards Board (the “FASB”) issuedAccounting Standards Update (“ASU”) 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and ~~Clifton Bancorp Inc. (“Clifton”~~Vintage Disclosures (“ASU 2022-02”), to improve the ~~holding company~~usefulness of information provided to investors about certain loan refinancings, restructurings and writeoffs. ASU 2022-02 eliminates the accounting guidance for ~~Clifton Savings Bank (“Clifton Bank”), announced that the companies have entered into a definitive agreement pursuant~~troubled debt restructurings by creditors and enhances disclosure requirements for certain modifications made to ~~which the Company will acquire Clifton~~borrowers experiencing financial difficulty. In addition, ASU 2022-02 requires public business entities to disclose current-period gross writeoffs for financing receivables and net investments in ~~an all-stock transaction. Under the terms~~leases by year of ~~the agreement, Clifton will merge with and into the Company and each outstanding share of Clifton common stock will be exchanged for 1.191 shares of the Company common stock.~~

As of December 31, 2017, Clifton had approximately $1.7 billion of assets, $1.2 billion of loans, and $935 million of deposits held across a network of 12 branches located in New Jersey throughout Bergen, Passaic, Hudson, and Essex counties. Upon closing, the Company stockholders and Clifton stockholders will own approximately 76% and 24% of the combined company, respectively.

~~6. MERGER RELATED EXPENSES~~

~~Merger-related expenses are recorded~~origination in the ~~Consolidated Statements of Income and include costs relating to~~vintage disclosures. For entities that have adopted ASU 2016-13, the Company’s proposed acquisition of Clifton, as described above. These charges represent one-time costs associated with acquisition activities and do not represent ongoing costs of the fully integrated combined organization. Accounting guidance requires that acquisition-related transactional and restructuring costs incurred by the Company be charged to expense as incurred.

~~7. RECENT ACCOUNTING PRONOUNCEMENTS~~

~~In May 2014, the FASB issued~~ amendments in ASU ~~2014-09, Revenue from Contracts with Customers (Topic 606)~~. The objective of this amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. This update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts2022-02 are ~~in the scope of other standards. For public entities, the guidance is~~ effective for ~~annual periods,~~fiscal years, and interim periods within those annual periods, beginning after December 15, 2017. Subsequently, the FASB issued the following standards related to ASU 2014-09: ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations”; ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting”; ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”; and ASU 2017-05, “Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of

~~- 10 -~~

Nonfinancial Assets.” These amendments are intended to improve and clarify the implementation guidance of ASU 2014-09 and have the same effective date as the original standard. The Company’s main source of revenue is comprised of net interest income on interest earning assets and liabilities and non-interest income. The scope of this ASU explicitly excludes net interest income as well as other revenues associated with financial assets and liabilities, including loans, leases, securities, certain insurance revenues and derivatives. Accordingly, the majority of the Company’s revenues will not be affected.

~~In January 2016, the FASB issued~~ ~~ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~. The ASU requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. The Update provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The Update also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. For public business entities, the amendments in this Update are effective for fiscal years, beginning after December 15, ~~2017, including interim periods within those fiscal years.~~ 2022.

Effective July 1, 2023, the Company adopted ASU 2022-02. Under ASU 2022-02, the Company assesses all loan modifications to determine whether one is granted to a borrower experiencing financial difficulty, regardless of whether the modified loan terms include a concession. Modifications granted to borrowers experiencing financial difficulty may be in the form of an interest rate reduction, an other-than-insignificant payment delay, a term extension, principal forgiveness or a combination thereof.

The Company ~~is currently evaluating the impact~~adopted ASU 2022-02 on a prospective basis. The adoption of ~~adopting~~ this ~~ASU~~update did not have a material effect on ~~its consolidated financial statements.~~

~~In February 2016, the FASB issued~~ ~~ASU 2016-02, Leases (Topic 842)~~. The ASU requires all lessees to recognize a lease liability and right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date for leases classified as operating leases or finance leases. This update also requires new quantitative disclosures related to leases in the Company’s consolidated financial statements. ~~There~~Additional disclosures are ~~practical expedients~~included in ~~this update that relate~~Note 5 to ~~leases that commenced before~~ the ~~effective date, initial direct costs and~~consolidated financial statements.

- 8 -

Table of Contents

Prior to the ~~use~~adoption of ~~hindsight to extend or terminate~~ASU 2022-02, a ~~lease or purchase~~Troubled Debt Restructuring (“TDR”) occurred when the lease asset. Lessor accounting remains largely unchanged under the new guidance. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. Aterms of a loan were modified ~~retrospective approach must be applied for leases existing at, or entered into after, the beginning~~because of ~~the earliest comparative period presented~~deterioration in the financial ~~statements. The Company continues to evaluate the impact~~condition of the ~~guidance, including determining whether other contracts exist that are deemed~~borrower. Modifications could include extension of the repayment terms of the loan, reduced interest rates, or forgiveness of accrued interest and/or principal. For the Company's accounting policy related to beTDRs granted prior to the adoption of ASU 2022-02, see “Note 1. Summary of Significant Accounting Policies” included in ~~scope. As such, no conclusions have yet been reached regarding the potential impact on adoption on~~“Item 8. Financial Statements and Supplementary Data” in the Company’s ~~consolidated financial statements and regulatory capital and risk-weighted assets; however,~~Annual Report on Form 10-K for the ~~Company does not expect~~year ended June 30, 2023.

4. SECURITIES

The following tables present the ~~amendment to have a material impact on its results of operations.~~

~~In June 2016, the FASB issued~~ ~~ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. The ASU requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of initial recognition of that instrument.

The ASU also replaces the current accounting model for purchased credit impaired loans and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial assets is the same expected loss model described above.

Further, the ASU made certain targeted amendments to the existing impairment model for available-for-sale (AFS) debt securities. For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance rather than a write-down of the amortized cost basis.

For public business entities that are SEC filers, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e. modified retrospective approach). The Company has begun its evaluation of this ASU including the potential impact on its Consolidated Financial Statements. The extent of change is indeterminable at this time as it will be dependent upon portfolio composition and credit quality at the adoption date, as well as economic conditions and forecasts at that time. Upon adoption, any impact to the allowance for credit losses, currently allowance for loan and lease losses, will have an offsetting impact on retained earnings.

~~In August 2016, the FASB issued~~ ~~ASU 2016-15, Statement of Cash Flows (Topic 230)~~, a consensus of the FASB’s Emerging Issues Task Force. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance addresses eight classification issues related to the statement of cash flows, which include

~~- 11 -~~

proceeds from settlement of corporate-owned and bank-owned life insurance policies. For a public entity, ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

~~In January 2017, the FASB issued~~ ~~ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. This ASU simplifies subsequent measurement of goodwill by eliminating Step 2 of the impairment test while retaining the option to perform the qualitative assessment for a reporting unit to determine whether the quantitative impairment test is necessary. The ASU also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. For public entities, ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 with early adoption permitted for interim or annual goodwill impairment testing dates beginning after January 1, 2017. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

~~In March 2017, the FASB issued~~ ~~ASU 2017-07, Compensation-Retirement Benefits (Topic715),~~ to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost in the income statement, and to narrow the amounts eligible for capitalization in assets. Topic 715does not currently prescribe where the amount of net benefit cost should be presented in an employer’s income statement, nor does it require entities to disclose by line item the amount of net benefit cost that is included in the income statement or capitalized in assets. This lack of guidance has resulted in diversity in practice in the presentation of such costs. For public entities, ASU 2017-07 becomes effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

~~In March 2017, the FASB issued~~ ~~ASU 2017-08~~, ~~Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20),~~ to amend the amortization period to the earliest call date for purchased callable debt securities held at a premium. Previously, Generally Accepted Accounting Principles (GAAP); generally required an investor to amortize the premium on a callable debt security as a component of interest income over the contractual life of the instrument (i.e., yield-to-maturity amortization) even when the issuer was certain to exercise the call option at an earlier date. This resulted in the investor recording a loss equal to the unamortized premium when the call option was exercised by the issuer. For public entities, ASU 2017-08 becomes effective for fiscal years beginning after December 15, 2018 including interim periods within those years. The company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

~~In May 2017, the FASB issued~~ ~~ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,~~ to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Topic 718 provides an accounting framework applicable to modifications of share-based payments, and currently defines a modification as “a change in any of the terms or conditions of a share-based payment award.” This definition is open to a broad range of interpretation and has resulted in diversity in practice as to whether certain changes in terms or conditions are treated as modifications. ASU 2017-09 further clarifies that an entity must apply modification accounting to changes in the terms or conditions of a share-based payment award unless certain criteria are met. For public entities, ASU 2017-09 becomes effective for fiscal years beginning after December 15, 2017. The company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

~~In August 2017, the FASB issued~~ ~~ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities,~~ to improve its hedge accounting guidance and simplify and expand eligible hedging strategies for financial and nonfinancial risks. ASU 2017-12 also enhances the transparency of how hedging results are presented and disclosed and provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings. This ASU more closely aligns hedge accounting with a company’s risk management activities and simplifies its application through targeted improvements in key practice areas. This includes expanding the list if items eligible to be hedged and amending the methods used to measure the effectiveness of hedging relationships. ASU 2017-12 eliminates the concept of benchmark interest rates, instead an entity can hedge any contractually specified interest rate, however for fair value hedges; the concept of benchmark interest rates was retained. Similar to the amendments for cash flow hedges of interest-rate risk, this ASU permits an entity to hedge the variability in cash flows attributable to changes in any contractually specified component of a nonfinancial asset. ASU 2017-12 eliminates the concept of hedge ineffectiveness for financial statement recognition purposes. While the hedging relationship is still required to be highly effective in order to apply hedge accounting, the ineffective portion of the hedging instrument is no longer required to be recognized currently in earnings or disclosed. Further, for cash flow and net investment hedges, all changes in the fair value of the hedging instrument, both the effective and ineffective portions, will be deferred to other comprehensive income and recognized in earnings at the same time that the hedged item affects earnings. For fair value hedges, the entire fair value change of the hedging instruments is presented in the same income statement line item that included the hedged item’s impact on earnings. For public entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period or annual period for existing hedging relationships on the

~~- 12 -~~

date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. The company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

~~8. SECURITIES AVAILABLE FOR SALE~~

~~The~~ amortized cost, gross unrealized gains and losses and estimated fair values ~~of debt and mortgage-backed securities~~for available for sale ~~at December 31, 2017~~securities and ~~June 30, 2017 and stratification by contractual maturity of debt securities available for sale at December 31, 2017 are presented below:~~

December 31, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

(In Thousands)

Securities available for sale:

Debt securities:

U.S. agency securities
$
4,830

$
7

$
27

$
4,810

Obligations of state and political subdivisions

27,452

89

113

27,428

Asset-backed securities

169,207

826

549

169,484

Collateralized loan obligations

133,246

338

243

133,341

Corporate bonds

143,012

519

1,134

142,397

Trust preferred securities

8,916

-

422

8,494

Total debt securities

486,663

1,779

2,488

485,954

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

8,836

-

142

8,694

Federal National Mortgage Association

19,219

-

726

18,493

Total collateralized mortgage obligations

28,055

-

868

27,187

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

86,363

133

1,102

85,394

Federal National Mortgage Association

31,025

282

205

31,102

Total residential pass-through securities

117,388

415

1,307

116,496

Commercial pass-through securities:

Federal National Mortgage Association

8,028

12

6

8,034

Total commercial pass-through securities

8,028

12

6

8,034

Total mortgage-backed securities

153,471

427

2,181

151,717

Total securities available for sale
$
640,134

$
2,206

$
4,669

$
637,671

December 31, 2017

Amortized
Cost

Fair
Value

(In Thousands)

Debt securities available for sale:

Due in one year or less
$
-

$
-

Due after one year through five years

54,792

54,981

Due after five years through ten years

146,192

145,249

Due after ten years

285,679

285,724

Total
$
486,663

$
485,954

~~- 13 -~~

June 30, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

(In Thousands)

Securities available for sale:

Debt securities:

U.S. agency securities
$
5,304

$
35

$
23

$
5,316

Obligations of state and political subdivisions

27,465

305

30

27,740

Asset-backed securities

163,120

316

1,007

162,429

Collateralized loan obligations

98,078

185

109

98,154

Corporate bonds

143,017

826

1,525

142,318

Trust preferred securities

8,912

-

372

8,540

Total debt securities

445,896

1,667

3,066

444,497

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

9,902

38

66

9,874

Federal National Mortgage Association

21,222

-

560

20,662

Total collateralized mortgage obligations

31,124

38

626

30,536

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

95,501

352

999

94,854

Federal National Mortgage Association

35,516

425

245

35,696

Total residential pass-through securities

131,017

777

1,244

130,550

Commercial pass-through securities:

Federal National Mortgage Association

8,108

69

-

8,177

Total commercial pass-through securities

8,108

69

-

8,177

Total mortgage-backed securities

170,249

884

1,870

169,263

Total securities available for sale
$
616,145

$
2,551

$
4,936

$
613,760

~~There were no sales of securities available for sale during~~ the ~~three months and six months ended December 31, 2017 and December 31, 2016.~~

At December 31, 2017 and June 30, 2017, securities available for sale with carrying values of approximately $41.0 million and $41.8 million, respectively, were utilized as collateral for borrowings through the FHLB of New York. At December 31, 2017 and June 30, 2017, securities available for sale with carrying values of approximately $33.2 million and $41.5 million, respectively, were utilized as collateral for potential borrowings through the Federal Reserve Bank of New York. As of those same dates, securities available for sale with total carrying values of approximately $9.4 million and $8.2 million, respectively, were utilized as collateral for depositor sweep accounts.

~~- 14 -~~

~~9. SECURITIES HELD TO MATURITY~~

~~The~~ amortized cost, gross unrecognized gains and losses and estimated fair values for held to maturity securities as of the dates indicated:


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:

Asset-backed securities	$	91,921	$	112	$	1,373	$	—	$	90,660
Collateralized loan obligations	425,155		1,109		2,131		—		424,133
Corporate bonds	150,930		—		18,658		—		132,272
Total debt securities	668,006		1,221		22,162		—		647,065

Mortgage-backed securities:

Residential pass-through securities (1)	442,608		18		83,115		—		359,511
Commercial pass-through securities (1)	158,018		—		20,419		—		137,599
Total mortgage-backed securities	600,626		18		103,534		—		497,110

Total securities available for sale	$	1,268,632	$	1,239	$	125,696	$	—	$	1,144,175

___________________________

(1)Government-sponsored enterprises.


	June 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:

Asset-backed securities	$	138,281	$	4	$	2,115	$	—	$	136,170
Collateralized loan obligations	381,915		268		5,187		—		376,996
Corporate bonds	159,666		—		24,648		—		135,018
Total debt securities	679,862		272		31,950		—		648,184

Mortgage-backed securities:

Residential pass-through securities (1)	539,506		2		103,357		—		436,151
Commercial pass-through securities (1)	164,499		—		21,105		—		143,394
Total mortgage-backed securities	704,005		2		124,462		—		579,545

Total securities available for sale	$	1,383,867	$	274	$	156,412	$	—	$	1,227,729

___________________________

(1)Government-sponsored enterprises.

- 9 -

Table of Contents


	December 31, 2023
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Allowance for Credit Losses		Fair Value
	(In Thousands)
Held to maturity:
Debt securities:
Obligations of state and political subdivisions	$	14,885	$	1	$	155	$	—	$	14,731
Total debt securities	14,885		1		155		—		14,731

Mortgage-backed securities:
Residential pass-through securities (1)	114,843		2		11,939		—		102,906
Commercial pass-through securities (1)	12,231		—		1,991		—		10,240
Total mortgage-backed securities	127,074		2		13,930		—		113,146

Total securities held to maturity	$	141,959	$	3	$	14,085	$	—	$	127,877

___________________________

(1)Government-sponsored enterprises.


	June 30, 2023
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Allowance for Credit Losses		Fair Value
	(In Thousands)
Held to maturity:
Debt securities:
Obligations of state and political subdivisions	$	16,051	$	—	$	321	$	—	$	15,730
Total debt securities	16,051		—		321		—		15,730

Mortgage-backed securities:
Residential pass-through securities (1)	118,166		—		12,736		—		105,430
Commercial pass-through securities (1)	12,248		—		2,239		—		10,009
Total mortgage-backed securities	130,414		—		14,975		—		115,439

Total securities held to maturity	$	146,465	$	—	$	15,296	$	—	$	131,169

___________________________

(1)Government-sponsored enterprises.

- 10 -

Table of Contents

Excluding the balances of mortgage-backed securities, the following tables present the amortized cost and estimated fair values of debt securities available for sale and ~~mortgage-backed securities~~ held to maturity, by contractual maturity, at December 31, ~~2017~~2023:


	December 31, 2023
	Amortized Cost		Fair Value
	(In Thousands)
Available for sale debt securities:
Due in one year or less	$	—	$	—
Due after one year through five years	31,865		30,781
Due after five years through ten years	375,781		360,118
Due after ten years	260,361		256,166
Total	$	668,007	$	647,065


	December 31, 2023
	Amortized Cost		Fair Value
	(In Thousands)
Held to maturity debt securities:
Due in one year or less	$	5,608	$	5,572
Due after one year through five years	8,668		8,562
Due after five years through ten years	609		597
Due after ten years	—		—
Total	$	14,885	$	14,731


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
	(In Thousands)
Available for sale securities sold:
Proceeds from sales of securities	$	104,083	$	105,199	$	104,083	$	105,199


Gross realized losses	$	(18,135)	$	(15,227)	$	(18,135)	$	(15,227)
Net loss on sales of securities	$	(18,135)	$	(15,227)	$	(18,135)	$	(15,227)

The carrying value of securities pledged were as follows as of the dates presented below:


	December 31, 2023		June 30, 2023
	(In Thousands)
Securities pledged:

Pledged to secure public funds on deposit	$	196,002	$	201,239
Pledged for potential borrowings at the Federal Reserve Bank of New York	529,378		529,216
Total carrying value of securities pledged	$	725,380	$	730,455

- 11 -

Table of Contents

The following tables present the gross unrealized losses on securities and the estimated fair value of the related securities, aggregated by investment category and length of time that securities have been in a continuous unrealized loss position within the available for sale portfolio at December 31, 2023 and June 30, ~~2017~~2023:


	December 31, 2023
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(Dollars in Thousands)
Securities Available for Sale:

Asset-backed securities	$	19,393	$	316	$	56,879	$	1,057	10	$	76,272	$	1,373
Collateralized loan obligations	43,863		137		269,329		1,994		24	313,192		2,131
Corporate bonds	6,858		7		125,414		18,651		28	132,272		18,658

Commercial pass-through securities	63,475		1,316		74,124		19,103		9	137,599		20,419
Residential pass-through securities	650		2		358,159		83,113		100	358,809		83,115
Total	$	134,239	$	1,778	$	883,905	$	123,918	171	$	1,018,144	$	125,696


	June 30, 2023
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(Dollars in Thousands)
Securities Available for Sale:

Asset-backed securities	$	33,833	$	129	$	98,828	$	1,986	14	$	132,661	$	2,115
Collateralized loan obligations	46,903		135		294,813		5,052		26	341,716		5,187
Corporate bonds	25,511		1,354		109,507		23,294		31	135,018		24,648

Commercial pass-through securities	63,531		1,380		79,863		19,725		12	143,394		21,105
Residential pass-through securities	10,520		702		425,170		102,655		108	435,690		103,357
Total	$	180,298	$	3,700	$	1,008,181	$	152,712	191	$	1,188,479	$	156,412

- 12 -

Table of Contents

The following table presents the gross unrecognized losses on securities and ~~stratification~~the estimated fair value of the related securities, aggregated by ~~contractual maturity~~investment category and length of ~~debt~~time that securities have been in a continuous unrecognized loss position within the held to maturity portfolio at December 31, ~~2017~~2023 and June 30, 2023:


	December 31, 2023
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Number of Securities	Fair Value		Unrecognized Losses
	(Dollars in Thousands)
Securities Held to Maturity:
Obligations of state and political subdivisions	$	4,120	$	23	$	9,847	$	132	27	$	13,967	$	155
Commercial pass-through securities	—		—		10,240		1,991		1	10,240		1,991
Residential pass-through securities	—		—		65,826		11,939		8	65,826		11,939

Total	$	4,120	$	23	$	85,913	$	14,062	36	$	90,033	$	14,085


	June 30, 2023
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Number of Securities	Fair Value		Unrecognized Losses
	(Dollars in Thousands)
Securities Held to Maturity:
Obligations of state and political subdivisions	$	13,642	$	268	$	2,088	$	53	32	$	15,730	$	321
Commercial pass-through securities	—		—		10,009		2,239		1	10,009		2,239
Residential pass-through securities	38,135		319		67,295		12,417		9	105,430		12,736

Total	$	51,777	$	587	$	79,392	$	14,709	42	$	131,169	$	15,296

Available for sale securities are ~~presented below:~~

evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or from other factors. An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the Consolidated Statement of Income (Loss) if management intends to sell, or may be required to sell, the securities before they recover in value. The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due or were placed in nonaccrual status at December 31, 2023. Management believes that the unrealized losses on these securities are a function of changes in market interest rates and credit spreads, not changes in credit quality. No allowance for credit losses was recorded at December 31, 2023 on available for sale securities.

December 31, 2017

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

(In Thousands)

Securities held to maturity:

Debt securities:

Obligations of state and political subdivisions
$
100,671

$
542

$
481

$
100,732

Subordinated debt

25,000

150

-

25,150

Total debt securities

125,671

692

481

125,882

Mortgage-backed securities:

Collateralized mortgage obligations:

Government National Mortgage Association

22,263

-

259

22,004

Federal Home Loan Mortgage Corporation

13,480

-

435

13,045

Federal National Mortgage Association

99

8

-

107

Non-agency securities

19

-

-

19

Total collateralized mortgage obligations

35,861

8

694

35,175

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

31,549

1

613

30,937

Federal National Mortgage Association

128,938

356

902

128,392

Total residential pass-through securities

160,487

357

1,515

159,329

Commercial pass-through securities:

Government National Mortgage Association

1,882

-

5

1,877

Federal National Mortgage Association

147,551

866

149

148,268

Total commercial pass-through securities

149,433

866

154

150,145

Total mortgage-backed securities

345,781

1,231

2,363

344,649

Total securities held to maturity
$
471,452

$
1,923

$
2,844

$
470,531

The sale of available for sale securities during the three months ended December 31, 2023 was part of an investment security repositioning. The sale proceeds were utilized for reinvestment into higher yielding loans and investment securities, and for repayment of higher-cost wholesale borrowings. The Company was not required to sell these securities.

December 31, 2017

Amortized
Cost

Fair
Value

(In Thousands)

Debt securities held to maturity:

Due in one year or less
$
5,428

$
5,418

Due after one year through five years

25,907

25,873

Due after five years through ten years

83,180

83,356

Due after ten years

11,156

11,235

Total
$
125,671

$
125,882

At December 31, 2023, the held to maturity securities portfolio consists of agency mortgage-backed securities and obligations of state and political subdivisions. The mortgage-backed securities are issued by U.S. government agencies and are implicitly guaranteed by the U.S. government. The obligations of state and political subdivisions in the portfolio are highly rated by major rating agencies and have a long history of no credit losses. The Company regularly monitors the obligations of state and political subdivisions sector of the market and reviews collectability including such factors as the financial condition of the issuers as well as credit ratings in effect as of the reporting period. No allowance for credit losses was recorded at December 31, 2023 on held to maturity securities.

- 13 -

Table of Contents

5. LOANS RECEIVABLE

The following table sets forth the composition of the Company’s loan portfolio at December 31, 2023 and June 30, 2023:


	December 31, 2023		June 30, 2023
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	2,651,274	$	2,761,775
Nonresidential mortgage	947,287		968,574
Commercial business	144,134		146,861
Construction	221,933		226,609
Total commercial loans	3,964,628		4,103,819

One- to four-family residential mortgage	1,746,065		1,700,559

Consumer loans:
Home equity loans	43,517		43,549
Other consumer	2,728		2,549
Total consumer loans	46,245		46,098

Total loans	5,756,938		5,850,476

Unaccreted yield adjustments (1)	(11,309)		(21,055)

Total loans receivable, net of yield adjustments	$	5,745,629	$	5,829,421

___________________________

(1)At December 31, 2023 and June 30, 2023, included a fair value adjustment to the carrying amount of hedged one- to four-family residential mortgage loans.

Past Due Loans

Past due status is based on the contractual payment terms of the loans. The following tables present the payment status of past due loans as of December 31, 2023 and June 30, 2023, by loan segment:


	Payment Status December 31, 2023
	30-59 Days		60-89 Days		90 Days and Over		Total Past Due		Current		Total
	(In Thousands)
Multi-family mortgage	$	9,357	$	—	$	10,625	$	19,982	$	2,631,292	$	2,651,274
Nonresidential mortgage	488		—		4,023		4,511		942,776		947,287
Commercial business	4,133		893		646		5,672		138,462		144,134
Construction	—		—		—		—		221,933		221,933
One- to four-family residential mortgage	2,554		1,331		4,022		7,907		1,738,158		1,746,065
Home equity loans	96		99		22		217		43,300		43,517
Other consumer	—		—		—		—		2,728		2,728
Total loans	$	16,628	$	2,323	$	19,338	$	38,289	$	5,718,649	$	5,756,938


	Payment Status June 30, 2023
	30-59 Days		60-89 Days		90 Days and Over		Total Past Due		Current		Total
	(In Thousands)
Multi-family mortgage	$	2,958	$	—	$	10,756	$	13,714	$	2,748,061	$	2,761,775
Nonresidential mortgage	792		—		8,233		9,025		959,549		968,574
Commercial business	528		16		236		780		146,081		146,861
Construction	—		—		—		—		226,609		226,609
One- to four-family residential mortgage	2,019		1,202		3,731		6,952		1,693,607		1,700,559
Home equity loans	25		—		50		75		43,474		43,549
Other consumer	—		—		—		—		2,549		2,549
Total loans	$	6,322	$	1,218	$	23,006	$	30,546	$	5,819,930	$	5,850,476

- 14 -

Table of Contents

Nonperforming Loans

Loans are generally placed on nonaccrual status when contractual payments become 90 or more days past due or when the Company does not expect to receive all principal and interest payments owed substantially in accordance with the terms of the loan agreement, regardless of past due status. Loans that become 90 days past due, but are well secured and in the process of collection, may remain on accrual status. Nonaccrual loans are generally returned to accrual status when all payments due are brought current and the Company expects to receive all remaining principal and interest payments owed substantially in accordance with the terms of the loan agreement. Payments received in cash on nonaccrual loans, including both the principal and interest portions of those payments, are generally applied to reduce the carrying value of the loan. The Company did not recognize interest income on non-accrual loans during the six months ended December 31, 2023 and 2022.

The following tables present information relating to the Company’s nonperforming loans as of December 31, 2023 and June 30, 2023:


	Performance Status December 31, 2023
	90 Days and Over Past Due Accruing		Nonaccrual Loans with Allowance for Credit Losses		Nonaccrual Loans with no Allowance for Credit Losses		Total Nonperforming		Performing		Total
	(In Thousands)
Multi-family mortgage	$	—	$	1,939	$	14,049	$	15,988	$	2,635,286	$	2,651,274
Nonresidential mortgage	—		—		4,335		4,335		942,952		947,287
Commercial business	—		814		1		815		143,319		144,134
Construction	—		—		—		—		221,933		221,933
One- to four-family residential mortgage	—		385		6,519		6,904		1,739,161		1,746,065
Home equity loans	—		—		47		47		43,470		43,517
Other consumer	—		—		—		—		2,728		2,728
Total loans	$	—	$	3,138	$	24,951	$	28,089	$	5,728,849	$	5,756,938


	Performance Status June 30, 2023
	90 Days and Over Past Due Accruing		Nonaccrual Loans with Allowance for Credit Losses		Nonaccrual Loans with no Allowance for Credit Losses		Total Nonperforming		Performing		Total
	(In Thousands)
Multi-family mortgage	$	—	$	5,686	$	13,428	$	19,114	$	2,742,661	$	2,761,775
Nonresidential mortgage	—		11,815		4,725		16,540		952,034		968,574
Commercial business	—		71		181		252		146,609		146,861
Construction	—		—		—		—		226,609		226,609
One- to four-family residential mortgage	—		1,640		5,031		6,671		1,693,888		1,700,559
Home equity loans	—		—		50		50		43,499		43,549
Other consumer	—		—		—		—		2,549		2,549
Total loans	$	—	$	19,212	$	23,415	$	42,627	$	5,807,849	$	5,850,476

Loan Modifications Made to Borrowers Experiencing Financial Difficulty

Effective July 1, 2023, the Company adopted ASU 2022-02, which eliminated the accounting for TDRs while expanding loan modification and vintage disclosure requirements. See Note 3 to the consolidated financial statements for further information.

- 15 -

June 30, 2017

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

(In Thousands)

Securities held to maturity:

Debt securities:

U.S. agency securities
$
35,000

$
-

$
48

$
34,952

Obligations of state and political subdivisions

94,713

996

156

95,553

Subordinated debt

15,000

-

-

15,000

Total debt securities

144,713

996

204

145,505

Mortgage-backed securities:

Collateralized mortgage obligations:

Government National Mortgage Association

2,199

-

46

2,153

Federal Home Loan Mortgage Corporation

15,522

-

357

15,165

Federal National Mortgage Association

111

10

-

121

Non-agency securities

22

-

-

22

Total collateralized mortgage obligations

17,854

10

403

17,461

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

35,289

1

338

34,952

Federal National Mortgage Association

143,524

428

597

143,355

Total residential pass-through securities

178,813

429

935

178,307

Commercial pass-through securities:

Government National Mortgage Association

1,989

-

11

1,978

Federal National Mortgage Association

149,952

2,622

31

152,543

Total commercial pass-through securities

151,941

2,622

42

154,521

Total mortgage-backed securities

348,608

3,061

1,380

350,289

Total securities held to maturity
$
493,321

$
4,057

$
1,584

$
495,794

Table of Contents

~~There~~

The following tables presents the amortized cost basis at December 31, 2023 of loan modifications made to borrowers experiencing financial difficulty that were ~~no sales of securities held to maturity~~restructured during the three and six months ended December 31, ~~2017 and December 31, 2016.~~

~~At December 31, 2017 and June 30, 2017, securities held~~2023 by type of modification:


	Three Months Ended December 31, 2023
	Payment Delay		Term Extension		Total		Percent of Total Class
	(Dollars In Thousands)
Multi-family mortgage	$	2,774	$	—	$	2,774	0.10	%

One- to four-family residential mortgage	—		45		45		0.00	%
Home equity loans	—		25		25		0.06	%
Total	$	2,774	$	70	$	2,844	0.06	%


	Six Months Ended December 31, 2023
	Payment Delay		Term Extension		Total		Percent of Total Class
	(Dollars In Thousands)
Multi-family mortgage	$	2,774	$	—	$	2,774	0.10	%
Commercial business	45		—		45		0.03	%
One- to four-family residential mortgage	489		45		534		0.03	%
Home equity loans	—		25		25		0.06	%
Total	$	3,308	$	70	$	3,378	0.07	%

No modifications involved forgiveness of principal or interest rate reductions. There were no commitments to maturity with carrying values of approximately $121.4 million and $117.5 million, respectively, were utilized as collateral for borrowings from the FHLB of New York. As of those same dates, securities heldlend additional funds to maturity with total carrying values of approximately $6.5 million and $6.9 million, respectively, were pledged to secure public funds on deposit. At December 31, 2017 and June 30, 2017, securities held to maturity with carrying values of approximately $95.5 million and $88.8 million, respectively, were utilized as collateral for potential borrowings from the Federal Reserve Bank of New York. As of those same dates, securities held to maturity with carrying values of approximately $27.8 million and $32.7 million, respectively, were utilized as collateral for depositor sweep accounts.

~~- 16 -~~

~~10. IMPAIRMENT OF SECURITIES~~

~~The following two tables summarize the fair values and gross unrealized losses within the available for sale and held to maturity portfolios~~borrowers experiencing financial difficulty whose terms have been restructured at December 31, 2017 and June 30, 2017. The gross unrealized and unrecognized losses, presented by security type, represent temporary impairments of value within each portfolio as of the dates presented. Temporary impairments within the available for sale portfolio2023.

All loans to borrowers experiencing financial difficulty that have been ~~recognized through other comprehensive income as reductions in stockholders’ equity on a tax-effected basis.~~

The tables are followed by a discussion that summarizes the Company’s rationale for recognizing impairments, where applicable, as “temporary” versus those identified as “other-than-temporary”. Such rationale is presented by investment type and generally applies consistently to both the “available for sale” and “held to maturity” portfolios, except where specifically noted.

December 31, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

(In Thousands)

Securities Available for Sale:

U.S. agency securities
$
363

$
4

$
1,605

$
23

$
1,968

$
27

Obligations of state and political
subdivisions

16,450

107

571

6

17,021

113

Asset-backed securities

16,871

91

38,559

458

55,430

549

Collateralized loan obligations

71,100

243

-

-

71,100

243

Corporate bonds

-

-

68,886

1,134

68,886

1,134

Trust preferred securities

-

-

7,494

422

7,494

422

Collateralized mortgage obligations

5,181

45

22,006

823

27,187
��

868

Residential pass-through securities

65,920

368

29,612

939

95,532

1,307

Commercial pass-through securities

4,029

6

-

-

4,029

6

Total
$
179,914

$
864

$
168,733

$
3,805

$
348,647

$
4,669

June 30, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

(In Thousands)

Securities Available for Sale:

U.S. agency securities
$
440

$
-

$
1,746

$
23

$
2,186

$
23

Obligations of state and political
subdivisions

3,872

30

-

-

3,872

30

Asset-backed securities

16,860

84

86,975

923

103,835

1,007

Collateralized loan obligations

46,016

108

6,000

1

52,016

109

Corporate bonds

-

-

73,500

1,525

73,500

1,525

Trust preferred securities

-

-

7,540

372

7,540

372

Collateralized mortgage obligations

26,090

626

-

-

26,090

626

Residential pass-through securities

77,301

1,244

-

-

77,301

1,244

Total
$
170,579

$
2,092

$
175,761

$
2,844

$
346,340

$
4,936

~~- 17 -~~

The number of available for sale securities with unrealized losses at December 31, 2017 totaled 92 and included seven U.S. agency securities, 40 municipal obligations, seven asset-backed securities, eight collateralized loan obligations, six corporate obligations, four trust preferred securities, seven collateralized mortgage obligations and twelve residential pass-through securities and one commercial pass-through security. The number of available for sale securities with unrealized losses at June 30, 2017 totaled 57 and included seven U.S. agency securities, nine municipal obligations, nine asset-backed securities, eight collateralized loan obligations, seven corporate obligations, four trust preferred securities and five collateralized mortgage obligations and eight residential pass-through securities.

December 31, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

(In Thousands)

Securities Held to Maturity:

Obligations of state and political
subdivisions
$
47,007

$
374

$
4,114

$
107

$
51,121

$
481

Collateralized mortgage obligations

20,134

194

14,927

500

35,061

694

Residential pass-through securities

47,939

306

72,364

1,209

120,303

1,515

Commercial pass-through securities

15,464

149

1,877

5

17,341

154

Total
$
130,544

$
1,023

$
93,282

$
1,821

$
223,826

$
2,844

June 30, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

(In Thousands)

Securities Held to Maturity:

U.S. agency securities
$
24,969

$
31

$
9,983

$
17

$
34,952

$
48

Obligations of state and political
subdivisions

19,232

150

409

6

19,641

156

Collateralized mortgage obligations

17,317

403

22

-

17,339

403

Residential pass-through securities

119,538

887

1,750

48

121,288

935

Commercial pass-through securities

11,110

42

-

-

11,110

42

Total
$
192,166

$
1,513

$
12,164

$
71

$
204,330

$
1,584

The number of held to maturity securities with unrecognized losses at December 31, 2017 totaled 187 and included 105 municipal obligations, seven collateralized mortgage obligations, 70 residential pass-through securities and five commercial pass-through securities. The number of held to maturity securities with unrecognized losses at June 30, 2017 totaled 90 and included two U.S. agency securities, 44 municipal obligations, seven collateralized mortgage obligations, 34 residential pass-through securities and three commercial pass-through securities.

In general, if the fair value of a debt security is less than its amortized cost basis at the time of evaluation, the security is “impaired” and the impairment is to be evaluated to determine if it is other than temporary. The Company evaluates the impaired securities in its portfolio for possible other than temporary impairment (OTTI) on at least a quarterly basis. The following represents the circumstances under which an impaired security is determined to be other than temporarily impaired:

~~When the Company intends to sell the impaired debt security;~~

When the Company more likely than not will be required to sell the impaired debt security before recovery of its amortized cost (for example, whether liquidity requirements or contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs); or

When an impaired debt security does not meet either of the two conditions above, but the Company does not expect to recover the entire amortized cost of the security. According to applicable accounting guidance for debt securities, this is generally when the present value of cash flows expected to be collected is less than the amortized cost of the security.

~~- 18 -~~

In the first two circumstances noted above, the amount of OTTI recognized in earnings is the entire difference between the security’s amortized cost basis and its fair value at the balance sheet date. In the third circumstance, however, the OTTI is to be separated into the amount representing the credit loss from the amount related to all other factors. The credit loss component is to be recognized in earnings while the non-credit loss component is to be recognized in other comprehensive income. In these cases, OTTI is generally predicated on an adverse change in cash flows (e.g. principal and/or interest payment deferrals or losses) versus those expected at the time of purchase. The absence of an adverse change in expected cash flows generally indicates that a security’s impairment is related to other “non-credit loss” factors and is thereby generally not recognized as OTTI.

~~The Company considers a variety of factors when determining whether a credit loss exists for an impaired security including, but not limited to:~~

~~The length of time and the extent (a percentage) to which the fair value has been less than the amortized cost basis;~~

Adverse conditions specifically related to the security, an industry, or a geographic area (e.g. changes in the financial condition of the issuer of the security, or in the case of an asset backed debt security, in the financial condition of the underlying loan obligors, including changes in technology or the discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security or changes in the quality of the credit enhancement);

~~The historical and implied volatility of the fair value of the security;~~

~~The payment structure of the debt security;~~

~~Actual or expected failure of the issuer of the security to make scheduled interest or principal payments;~~

~~Changes to the rating of the security by external rating agencies; and~~

~~Recoveries or additional declines in fair value subsequent to the balance sheet date.~~

At December 31, 2017 and June 30, 2017, the Company held no securities for which credit-related OTTI had been recognized in earnings based on the Company’s analysis and determination that the impairment reported in the tables above was “temporary” in nature as of both dates.

The rationale for making that determination is based on several factors which are generally shared among the various sectors represented in the Company’s available for sale and held to maturity portfolios. The most significant of these is the general mitigation of credit risk arising from the U.S. government, agency and GSE guarantees supporting the Company’s mortgage-backed securities, U.S. agency debt securities and asset-backed securities.

While not supported by such guarantees, the Company’s collateralized loan obligations represent tranches within a larger investment vehicle that reallocate cash flows and credit risk among the individual tranches comprised within that vehicle. Through this structure, the Company is afforded significant protection against the risk that the securities within this sector will be adversely impacted by borrowers defaulting on the underlying loans.

In the absence of the guarantor or structural protections noted above, the securities within the other sectors of the Company’s securities portfolio, including its municipal obligations, corporate bonds and single-issuer trust preferred securities are generally issued by credit-worthy entities with the ability and resources to fully meet their financial obligations. The Company regularly monitors the historical cash flows and financial strength of all issuers and/or guarantors to confirm that security impairment, where applicable, is not due to an actual or expected adverse change in security cash flows that would result in the recognition of credit-related OTTI.

With credit risk being mitigated in the manner outlined above, the unrealized and unrecognized losses on the Company’s securities are due largely to the combined effects of several market-related factors including, most notably, changes in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

The Company has the stated ability and intent to “hold until forecasted recovery” those securities so designated at December 31, 2017 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital

~~- 19 -~~

position as of that date. In light of the factors noted above, the Company does not consider its balance of securities with unrealized and unrecognized losses at December 31, 2017 and June 30, 2017, to be “other-than-temporarily” impaired as of those dates.

~~11. LOAN QUALITY AND ALLOWANCE FOR LOAN LOSSES~~

~~Acquired Credit-Impaired Loans.~~ At December 31, 2017, the remaining outstanding principal balance and carrying amount of acquired credit-impaired loans totaled approximately $592,000 and $388,000, respectively. By comparison, at June 30, 2017, the remaining outstanding principal balance and carrying amount of acquired credit-impaired loans totaled approximately $839,000 and $594,000, respectively.

The carrying amount of acquired credit-impaired loans for which interest is not being recognized due to the uncertainty of the cash flows relating to such loans totaled $365,000 and $371,000 at December 31, 2017 and June 30, 2017, respectively.

~~There were no valuation allowances for specifically identified impairment attributable to acquired credit-impaired loans at December 31, 2017 and June 30, 2017, respectively.~~

~~The following table presents the changes in the accretable yield relating to the acquired credit-impaired loans for~~modified during the three months ended December 31, ~~2017~~2023 were current to their contractual payments as of December 31, 2023. During the six months ended December 31, 2023 (since adoption of ASU 2022-02), one residential mortgage loan with a carrying value of $490,000 was modified and subsequently defaulted on payment. For restructured loans, a subsequent payment default is defined in terms of delinquency, when a principal or interest payment is 90 days past due or classified into non-accrual status during the reporting period.

Troubled Debt Restructured Loans prior to the adoption of ASU 2022-02

Prior to the adoption of ASU 2022-02, the Company classified certain loans as TDRs when credit terms to a borrower in financial difficulty were modified, in accordance with ASC 310-40. With the adoption of ASU 2022-02 the Company has ceased to recognize or measure for new TDRs, but those existing at June 30, 2023 will remain until settled.

At June 30, 2023 the Company had TDRs totaling $17.4 million. The allowance for credit losses associated with these TDRs totaled $274,000 as of June 30, 2023.

- 16 -

Table of Contents

The following table presents total TDRs at June 30, 2023:


	June 30, 2023
	Accrual			Non-accrual			Total
	# of Loans	Amount		# of Loans	Amount		# of Loans	Amount
	(Dollars In Thousands)
Commercial loans:
Multi-family mortgage	—	$	—	2	$	5,400	2	$	5,400
Nonresidential mortgage	3	170		2	700		5	870
Commercial business	6	3,197		—	—		6	3,197
Construction	—	—		—	—		—	—
Total commercial loans	9	3,367		4	6,100		13	9,467

One- to four-family residential mortgage	39	6,752		4	774		43	7,526

Consumer loans:
Home equity loans	6	368		—	—		6	368
Total	54	$	10,487	8	$	6,874	62	$	17,361

As of December 31, 2023, there were no significant commitments to lend additional funds to borrowers whose loans had been restructured in a TDR.

The following table presents information regarding TDRs that occurred during the three and six months ended December 31, 2022:


	Three Months Ended December 31, 2022
		# of Loans	Pre- modification Recorded Investment		Post- modification Recorded Investment
		(Dollars In Thousands)


Commercial business		1	$	7	$	7
One- to four-family residential mortgage		1	273		270

Total		2	$	280	$	277


	Six Months Ended December 31, 2022
		# of Loans	Pre- modification Recorded Investment		Post- modification Recorded Investment
		(Dollars In Thousands)


Commercial business		1	$	7	$	7
One- to four-family residential mortgage		2	708		705
Home equity loans		1	35		35
Total		4	$	750	$	747

During the three and six months ended December 31, 2022, there were charge-offs of $5,000 and $15,000, respectively, related to TDRs. During the three and six months ended December 31, 2022, there were two TDR defaults totaling $170,000.

Loan modifications generally involve a reduction in interest rates and/or extension of maturity dates and also may include step up interest rates in their modified terms which will impact their weighted average yield in the future. The loans which qualified as TDRs during the three and six months ended December 31, 2022, capitalized prior past due amounts and modified the repayment terms.

- 17 -

Table of Contents

Individually Analyzed Loans

Individually analyzed loans include loans which do not share similar risk characteristics with other loans. Loans previously modified as TDRs and loan modifications made to borrowers experiencing financial difficulty will generally be evaluated for individual impairment, however, after a period of sustained repayment performance which permits the credit to be returned to accrual status, the loans would generally be removed from individual impairment analysis and returned to its corresponding pool. As of December 31, 2023, the carrying value of individually analyzed loans, including loans acquired with deteriorated credit quality that were individually analyzed, totaled $28.1 million, of which $19.9 million were considered collateral dependent.

For collateral dependent loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the loan is to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, less costs to sell, and the amortized cost basis of the loan as of the measurement date. See Note 12 for additional disclosure regarding fair value of individually analyzed collateral dependent loans.

The following table presents the carrying value and related allowance of collateral dependent individually analyzed loans at the dates indicated:


	December 31, 2023				June 30, 2023
	Carrying Value		Related Allowance		Carrying Value		Related Allowance
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	13,213	$	35	$	19,114	$	326
Nonresidential mortgage (1)	4,022		—		16,207		3,001


Total commercial loans	17,235		35		35,321		3,327

One- to four-family residential mortgage (2)	2,635		—		2,875		—

Consumer loans:
Home equity loans (2)	20		—		—		—

Total	$	19,890	$	35	$	38,196	$	3,327

___________________________

(1)Secured by income-producing nonresidential property.

(2)Secured by one- to four-family residential properties.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. The Company uses the following definitions for risk ratings:

Pass – Loans that are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.

Special Mention – Loans which do not currently expose the Company to a sufficient degree of risk to warrant an adverse classification but have some credit deficiencies or other potential weaknesses.

Substandard – Loans which are inadequately protected by the paying capacity and net worth of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans which have all of the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values.

Loss – Loans which are considered uncollectible or of so little value that their continuance as assets is not warranted.

- 18 -

Table of Contents

The following table presents the risk category of loans and current period gross charge-offs as of December 31, 2023 by loan segment and vintage year:


	Term Loans by Origination Year for Fiscal Years ended June 30,
	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
	(In Thousands)
Multi-family mortgage:
Pass	$	—	$	600,028	$	955,665	$	218,580	$	202,206	$	627,429	$	—	$	2,603,908
Special Mention	—		—		—		—		—		6,562		—		6,562
Substandard	—		—		—		9,681		—		31,123		—		40,804
Doubtful	—		—		—		—		—		—		—		—
Total multi-family mortgage	—		600,028		955,665		228,261		202,206		665,114		—		2,651,274
Multi-family current period gross charge-offs											354				354
Nonresidential mortgage:
Pass	23,888		107,076		207,213		90,901		51,173		439,953		100		920,304
Special Mention	—		—		—		—		—		11,271		—		11,271
Substandard	—		—		—		876		—		14,836		—		15,712
Doubtful	—		—		—		—		—		—		—		—
Total nonresidential mortgage	23,888		107,076		207,213		91,777		51,173		466,060		100		947,287
Nonresidential current period gross charge-offs											5,722				5,722
Commercial business:
Pass	4,323		9,548		26,708		20,230		6,832		8,748		58,601		134,990
Special Mention	—		—		1,428		—		—		1,798		—		3,226
Substandard	—		—		—		3,563		182		1,971		202		5,918
Doubtful	—		—		—		—		—		—		—		—
Total commercial business	4,323		9,548		28,136		23,793		7,014		12,517		58,803		144,134
Commercial current period gross charge-offs									336		11				347
Construction loans:
Pass	7,768		39,693		41,296		115,593		7,995		3,853		5,735		221,933
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total construction loans	7,768		39,693		41,296		115,593		7,995		3,853		5,735		221,933
Residential mortgage:
Pass	115,046		189,082		443,771		473,953		78,719		434,754		—		1,735,325
Special Mention	—		—		—		—		—		1,822		—		1,822
Substandard	—		—		532		—		—		8,386		—		8,918
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage	115,046		189,082		444,303		473,953		78,719		444,962		—		1,746,065
Residential current period gross charge-offs											37				37
Home equity loans:
Pass	907		6,226		2,369		389		1,119		8,645		23,502		43,157
Special Mention	—		—		—		—		—		—		99		99
Substandard	—		—		—		—		—		261		—		261
Doubtful	—		—		—		—		—		—		—		—
Total home equity loans	907		6,226		2,369		389		1,119		8,906		23,601		43,517
Other consumer loans
Pass	458		236		228		112		486		1,085		40		2,645
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		1		1
Doubtful	—		—		—		—		—		—		82		82
Other consumer loans	458		236		228		112		486		1,085		123		2,728
Total loans	$	152,390	$	951,889	$	1,679,210	$	933,878	$	348,712	$	1,602,497	$	88,362	$	5,756,938
Total current period gross charge-offs	$	—	$	—	$	—	$	—	$	336	$	6,124	$	—	$	6,460

- 19 -

Table of Contents

The following table presents the risk category of loans as of June 30, ~~2016.~~

2023 by loan segment and vintage year:

Three Months Ended December 31,

2017

2016

(In Thousands)

Beginning balance
$
206

$
314

Accretion to interest income

-

(2
)
Disposals

-

-

Reclassifications from nonaccretable difference

-

-

Ending balance
$
206

$
312


	Term Loans by Origination Year for Fiscal Years ended June 30,
	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total
	(In Thousands)
Multi-family mortgage:
Pass	$	603,260	$	954,554	$	213,482	$	198,969	$	226,929	$	510,485	$	—	$	2,707,679
Special Mention	—		—		—		—		6,006		6,647		—		12,653
Substandard	—		—		9,809		—		9,432		22,202		—		41,443
Doubtful	—		—		—		—		—		—		—		—
Total multi-family mortgage	603,260		954,554		223,291		198,969		242,367		539,334		—		2,761,775
Nonresidential mortgage:
Pass	109,725		220,443		83,032		51,933		59,197		414,742		6,000		945,072
Special Mention	—		—		—		—		—		378		—		378
Substandard	—		—		708		—		919		21,497		—		23,124
Doubtful	—		—		—		—		—		—		—		—
Total nonresidential mortgage	109,725		220,443		83,740		51,933		60,116		436,617		6,000		968,574
Commercial business:
Pass	10,364		28,644		25,304		7,875		1,731		8,776		59,031		141,725
Special Mention	—		—		—		47		176		2,456		371		3,050
Substandard	—		—		—		395		60		1,385		246		2,086
Doubtful	—		—		—		—		—		—		—		—
Total commercial business	10,364		28,644		25,304		8,317		1,967		12,617		59,648		146,861
Construction loans:
Pass	25,070		36,389		143,086		12,275		2,961		1,093		5,735		226,609
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total construction loans	25,070		36,389		143,086		12,275		2,961		1,093		5,735		226,609
Residential mortgage:
Pass	195,521		454,504		491,460		80,431		45,741		422,472		—		1,690,129
Special Mention	—		—		—		—		1,168		425		—		1,593
Substandard	—		542		—		—		80		8,215		—		8,837
Doubtful	—		—		—		—		—		—		—		—
Total residential mortgage	195,521		455,046		491,460		80,431		46,989		431,112		—		1,700,559
Home equity loans:
Pass	7,682		2,567		607		1,264		2,478		7,280		21,384		43,262
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		287		—		287
Doubtful	—		—		—		—		—		—		—		—
Total home equity loans	7,682		2,567		607		1,264		2,478		7,567		21,384		43,549
Other consumer loans
Pass	367		247		110		494		302		912		42		2,474
Special Mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		75		75
Other consumer loans	367		247		110		494		302		912		117		2,549
Total loans	$	951,989	$	1,697,890	$	967,598	$	353,683	$	357,180	$	1,429,252	$	92,884	$	5,850,476

Six Months Ended December 31,

2017

2016

(In Thousands)

Beginning balance
$
215

$
335

Accretion to interest income

(9
)

(4
)
Disposals

-

(19
)
Reclassifications from nonaccretable difference

-

-

Ending balance
$
206

$
312

- 20 -

~~Residential~~

Table of Contents

Mortgage Loans in ~~Foreclosure.~~ WeForeclosure

The Company may obtain physical possession of one- to four-family real estate collateralizing a residential mortgage loan or nonresidential real estate collateralizing a nonresidential mortgage loan via foreclosure or through an in-substance repossession. As of December 31, ~~2017, we~~2023, the Company held ~~four single-family properties~~one nonresidential property with a carrying value of $12.0 million in other real estate owned ~~with an aggregate carrying value of $1.6 million~~ that ~~were~~was acquired through ~~foreclosures~~foreclosure on ~~residential~~a nonresidential mortgage ~~loans.~~loan. As of that same date, wethe Company held 12four commercial mortgage loans with aggregate carrying values totaling $8.1 million which were in the process of foreclosure. As of June 30, 2023, the Company held one nonresidential property with a carrying value of $13.0 million in other real estate owned that was acquired through foreclosure on a nonresidential mortgage loan. As of that same date, the Company held three residential mortgage loans with aggregate carrying values totaling ~~$2.3~~$950,000 and six commercial mortgage loans with aggregate carrying values totaling $9.2 million which were in the process of foreclosure. ~~By comparison, as of June 30, 2017, we held two single-family properties in real estate owned with an aggregate carrying value of $981,000 that were acquired through foreclosures~~

6. ALLOWANCE FOR CREDIT LOSSES

Allowance for Credit Losses on ~~residential mortgage loans. As of that same date, we held 18 residential mortgage loans with aggregate carrying values totaling $3.7 million which were in the process of foreclosure.~~

~~- 20 -~~

~~Loan Quality.~~Loans Receivable

The following tables present the balance of the allowance for ~~loan~~credit losses at December 31, ~~2017~~2023 and June 30, ~~2017~~2023. The balance of the allowance for credit losses is based ~~upon~~on an expected loss methodology, referred to as the ~~calculation methodology as described in the Company’s Form 10-K for the fiscal year ended June 30, 2017.~~“CECL” methodology. The tables identify the valuation allowances attributable to specifically identified impairments on individually ~~evaluated~~analyzed loans, including those acquired with deteriorated credit quality, as well as valuation allowances for impairments on loans ~~evaluated collectively.~~collectively evaluated. The tables include the underlying balance of loans receivable applicable to each category as of those ~~dates as well as~~dates.


	Allowance for Credit Losses December 31, 2023
	Loans acquired with deteriorated credit quality individually analyzed		Loans acquired with deteriorated credit quality collectively evaluated		Loans individually analyzed		Loans collectively evaluated		Total allowance for credit losses
	(In Thousands)
Multi-family mortgage	$	—	$	—	$	35	$	24,427	$	24,462
Nonresidential mortgage	—		38		—		5,850		5,888
Commercial business	—		42		106		1,145		1,293
Construction	—		—		—		1,171		1,171
One- to four-family residential mortgage	—		85		13		11,555		11,653
Home equity loans	—		—		—		330		330
Other consumer	—		—		—		70		70
Total loans	$	—	$	165	$	154	$	44,548	$	44,867


	Balance of Loans Receivable December 31, 2023
	Loans acquired with deteriorated credit quality individually analyzed		Loans acquired with deteriorated credit quality collectively evaluated		Loans individually analyzed		Loans collectively evaluated		Total loans
	(In Thousands)
Multi-family mortgage	$	—	$	—	$	15,988	$	2,635,286	$	2,651,274
Nonresidential mortgage	313		2,269		4,022		940,683		947,287
Commercial business	—		4,774		815		138,545		144,134
Construction	—		5,735		—		216,198		221,933
One- to four-family residential mortgage	1,452		3,432		5,452		1,735,729		1,746,065
Home equity loans	25		—		22		43,470		43,517
Other consumer	—		—		—		2,728		2,728
Total loans	$	1,790	$	16,210	$	26,299	$	5,712,639	$	5,756,938
Unaccreted yield adjustments									(11,309)
Loans receivable, net of yield adjustments									$	5,745,629

- 21 -

Table of Contents


	Allowance for Credit Losses June 30, 2023
	Loans acquired with deteriorated credit quality individually analyzed		Loans acquired with deteriorated credit quality collectively evaluated		Loans individually analyzed		Loans collectively evaluated		Total allowance for credit losses
	(In Thousands)
Multi-family mortgage	$	—	$	—	$	326	$	26,036	$	26,362
Nonresidential mortgage	—		70		3,001		5,882		8,953
Commercial business	—		9		20		1,411		1,440
Construction	—		—		—		1,336		1,336
One- to four-family residential mortgage	3		132		70		10,032		10,237
Home equity loans	—		—		—		338		338
Other consumer	—		—		—		68		68
Total loans	$	3	$	211	$	3,417	$	45,103	$	48,734


	Balance of Loans Receivable June 30, 2023
	Loans acquired with deteriorated credit quality individually analyzed		Loans acquired with deteriorated credit quality collectively evaluated		Loans individually analyzed		Loans collectively evaluated		Total loans
	(In Thousands)
Multi-family mortgage	$	—	$	—	$	19,114	$	2,742,661	$	2,761,775
Nonresidential mortgage	333		3,562		16,207		948,472		968,574
Commercial business	—		4,237		252		142,372		146,861
Construction	—		5,735		—		220,874		226,609
One- to four-family residential mortgage	570		4,433		6,101		1,689,455		1,700,559
Home equity loans	25		—		25		43,499		43,549
Other consumer	—		—		—		2,549		2,549
Total loans	$	928	$	17,967	$	41,699	$	5,789,882	$	5,850,476
Unaccreted yield adjustments									(21,055)
Loans receivable, net of yield adjustments									$	5,829,421

The following tables present the activity in the allowance for ~~loan~~credit losses on loans for the three ~~months~~ and six months ended December 31, ~~2017~~2023 and ~~December 31, 2016. Unless otherwise noted, the balance of loans reported in the tables below excludes yield adjustments and the allowance for loan loss.~~

2022.

Allowance for Loan Losses and Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of allowance for loan losses:

Loans acquired with deteriorated
  credit quality
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Loans individually
  evaluated for impairment

37

-

4

-

2

-

-

43

Loans collectively
  evaluated for impairment

2,403

13,909

9,661

246

2,704

457

643

30,023

Total allowance for loan losses
$
2,440

$
13,909

$
9,665

$
246

$
2,706

$
457

$
643

$
30,066


	Changes in the Allowance for Credit Losses Three Months Ended December 31, 2023
	Balance at September 30, 2023		Charge-offs		Recoveries		Provision for (reversal of) credit losses		Balance at December 31, 2023
	(In Thousands)
Multi-family mortgage	$	25,590	$	(354)	$	—	$	(774)	$	24,462
Nonresidential mortgage	7,437		(3,689)		11		2,129		5,888
Commercial business	1,413		(158)		4		34		1,293
Construction	1,317		—		—		(146)		1,171
One- to four-family residential mortgage	10,703		(37)		113		874		11,653
Home equity loans	342		—		—		(12)		330
Other consumer	70		—		—		—		70
Total loans	$	46,872	$	(4,238)	$	128	$	2,105	$	44,867

Allowance for Loan Losses and Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of loans receivable:

Loans acquired with deteriorated
  credit quality
$
106

$
-

$
-

$
-

$
282

$
-

$
-

$
388

Loans individually
  evaluated for impairment

7,983

135

7,205

-

2,569

1,556

-

19,448

Loans collectively
  evaluated for impairment

566,233

1,438,251

1,062,049

22,205

89,591

79,405

11,947

3,269,681

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Unamortized yield
  adjustments

1,999

Loans receivable, net of
   yield adjustments

$
3,291,516

~~- 21 -~~

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Changes in the allowance for loan
losses for the three months ended
December 31, 2017:

At September 30, 2017:
$
2,501

$
13,807

$
9,893

$
89

$
1,948

$
470

$
737

$
29,445

Total charge offs

(143
)

-

-

-

-

-

(263
)

(406
)
Total recoveries

57

-

-

-

-

-

34

91

Total provisions

25

102

(228
)

157

758

(13
)

135

936

Total allowance for loan losses
$
2,440

$
13,909

$
9,665

$
246

$
2,706

$
457

$
643

$
30,066

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Changes in the allowance for loan
losses for the six months ended
December 31, 2017:

At June 30, 2017:
$
2,384

$
13,941

$
9,939

$
35

$
1,709

$
501

$
777

$
29,286

Total charge offs

(410
)

-

(38
)

-

(6
)

-

(560
)

(1,014
)
Total recoveries

77

-

-

-

34

65

52

228

Total provisions

389

(32
)

(236
)

211

969

(109
)

374

1,566

Total allowance for loan losses
$
2,440

$
13,909

$
9,665

$
246

$
2,706

$
457

$
643

$
30,066

- 22 -

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Changes in the allowance for loan
losses for the three months ended
December 31, 2016:

At September 30, 2016:
$
2,806

$
10,269

$
8,316

$
39

$
2,319

$
534

$
720

$
25,003

Total charge offs

(41
)

-

(37
)

-

-

(74
)

(241
)

(393
)
Total recoveries

182

-

-

-

1

1

11

195

Total provisions

(517
)

1,957

76

(10
)

(541
)

95

195

1,255

Total allowance for loan losses
$
2,430

$
12,226

$
8,355

$
29

$
1,779

$
556

$
685

$
26,060

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Changes in the allowance for loan
losses for the six months ended
December 31, 2016:

At June 30, 2016:
$
2,370

$
9,995

$
7,846

$
24

$
2,784

$
432

$
778

$
24,229

Total charge offs

(64
)

-

(78
)

-

(194
)

(95
)

(336
)

(767
)
Total recoveries

182

-

-

-

16

1

15

214

Total provisions

(58
)

2,231

587

5

(827
)

218

228

2,384

Total allowance for loan losses
$
2,430

$
12,226

$
8,355

$
29

$
1,779

$
556

$
685

$
26,060

~~- 23 -~~

Allowance for Loan Losses and Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of allowance for loan losses:

Loans acquired with deteriorated
  credit quality
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Loans individually
  evaluated for impairment

154

-

39

-

6

-

-

199

Loans collectively
  evaluated for impairment

2,230

13,941

9,900

35

1,703

501

777

29,087

Total allowance for loan losses
$
2,384

$
13,941

$
9,939

$
35

$
1,709

$
501

$
777

$
29,286

Allowance for Loan Losses and Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of loans receivable:

Loans acquired with deteriorated
  credit quality
$
97

$
-

$
-

$
-

$
497

$
-

$
-

594

Loans individually
  evaluated for impairment

10,546

158

5,877

612

2,365

1,894

-

21,452

Loans collectively
  evaluated for impairment

556,680

1,412,417

1,079,187

3,203

71,609

80,928

16,383

3,220,407

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

Unamortized yield
  adjustments

2,808

Loans receivable, net of
   yield adjustments

$
3,245,261

~~- 24 -~~

~~The following tables present key indicators~~Table of ~~credit quality regarding the Company’s loan portfolio based upon loan classification and contractual payment status at December 31, 2017 and June 30, 2017 based upon the methodology~~Contents


	Changes in the Allowance for Credit Losses Six Months Ended December 31, 2023
	Balance at June 30, 2023		Charge-offs		Recoveries		Provision for (reversal of) credit losses		Balance at December 31, 2023
	(In Thousands)
Multi-family mortgage	$	26,362	$	(354)	$	—	$	(1,546)	$	24,462
Nonresidential mortgage	8,953		(5,722)		120		2,537		5,888
Commercial business	1,440		(347)		10		190		1,293
Construction	1,336		—		—		(165)		1,171
One- to four-family residential mortgage	10,237		(37)		113		1,340		11,653
Home equity loans	338		—		—		(8)		330
Other consumer	68		—		—		2		70
Total loans	$	48,734	$	(6,460)	$	243	$	2,350	$	44,867


	Changes in the Allowance for Credit Losses Three Months Ended December 31, 2022
	Balance at September 30, 2022		Charge-offs		Recoveries		Provision for (reversal of) credit losses		Balance at December 31, 2022
	(In Thousands)
Multi-family mortgage	$	26,246	$	(395)	$	—	$	1,647	$	27,498
Nonresidential mortgage	9,152		(5)		—		(554)		8,593
Commercial business	1,972		(15)		5		(143)		1,819
Construction	1,120		—		—		81		1,201
One- to four-family residential mortgage	8,801		—		—		554		9,355
Home equity loans	244		—		—		95		339
Other consumer	78		—		3		(9)		72
Total loans	$	47,613	$	(415)	$	8	$	1,671	$	48,877


	Changes in the Allowance for Credit Losses Six Months Ended December 31, 2022
	Balance at June 30, 2022		Charge-offs		Recoveries		(Reversal of) provision for credit losses		Balance at December 31, 2022
	(In Thousands)
Multi-family mortgage	$	25,321	$	(395)	$	—	$	2,572	$	27,498
Nonresidential mortgage	10,590		(15)		—		(1,982)		8,593
Commercial business	1,792		(133)		17		143		1,819
Construction	1,486		—		—		(285)		1,201
One- to four-family residential mortgage	7,540		—		—		1,815		9,355
Home equity loans	245		—		—		94		339
Other consumer	84		—		4		(16)		72
Total loans	$	47,058	$	(543)	$	21	$	2,341	$	48,877

Allowance for ~~identifying and reporting such loans as described in the Company’s Form 10-K for the fiscal year ended June 30, 2017.~~

Credit Losses on Off Balance Sheet Commitments

Credit-Rating Classification of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Non-classified
$
563,388

$
1,438,251

$
1,058,926

$
21,902

$
84,839

$
78,771

$
11,841

$
3,257,918

Classified:

Special Mention

607

-

-

303

1,137

112

72

2,231

Substandard

10,327

135

10,328

-

6,466

2,078

32

29,366

Doubtful

-

-

-

-

-

-

2

2

Loss

-

-

-

-

-

-

-

-

Total classified loans

10,934

135

10,328

303

7,603

2,190

106

31,599

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Credit-Rating Classification of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Non-classified
$
552,961

$
1,412,417

$
1,078,711

$
2,894

$
66,886

$
80,393

$
16,166

$
3,210,428

Classified:

Special Mention

928

-

-

309

1,098

120

139

2,594

Substandard

13,434

158

6,353

612

6,487

2,309

75

29,428

Doubtful

-

-

-

-

-

-

3

3

Loss

-

-

-

-

-

-

-

-

Total classified loans

14,362

158

6,353

921

7,585

2,429

217

32,025

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

~~- 25 -~~

Contractual Payment Status of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Current
$
568,948

$
1,438,386

$
1,063,235

$
22,205

$
90,293

$
80,537

$
11,752

$
3,275,356

Past due:

30-59 days

2,190

-

2,226

-

255

134

96

4,901

60-89 days

312

-

137

-

2

8

68

527

90+ days

2,872

-

3,656

-

1,892

282

31

8,733

Total past due

5,374

-

6,019

-

2,149

424

195

14,161

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Contractual Payment Status of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Current
$
560,054

$
1,412,575

$
1,083,736

$
3,560

$
72,826

$
81,946

$
16,083

$
3,230,780

Past due:

30-59 days

1,749

-

60

255

29

187

91

2,371

60-89 days

403

-

318

-

-

141

135

997

90+ days

5,117

-

950

-

1,616

548

74

8,305

Total past due

7,269

-

1,328

255

1,645

876

300

11,673

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

~~- 26 -~~

The following tables present information relating to the Company’s nonperforming and impaired loans at December 31, 2017 and June 30, 2017 based upon the methodology for identifying and reporting such loans as described in the Company’s Form 10-K for the fiscal year ended June 30, 2017. Loans reported as “90+ days past due accruing” in the table immediately below are also reported in the preceding contractual payment status table under the heading “90+ days past due”.

Performance Status of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Performing
$
568,953

$
1,438,251

$
1,062,196

$
22,205

$
89,616

$
80,034

$
11,916

$
3,273,171

Nonperforming:

90+ days past due accruing

-

-

-

-

-

-

31

31

Nonaccrual

5,369

135

7,058

-

2,826

927

-

16,315

Total nonperforming

5,369

135

7,058

-

2,826

927

31

16,346

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Performance Status of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Performing
$
558,533

$
1,412,417

$
1,079,344

$
3,560

$
71,837

$
81,581

$
16,309

$
3,223,581

Nonperforming:

90+ days past due accruing

-

-

-

-

-

-

74

74

Nonaccrual

8,790

158

5,720

255

2,634

1,241

-

18,798

Total nonperforming

8,790

158

5,720

255

2,634

1,241

74

18,872

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

~~- 27 -~~

Impairment Status of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Carrying value of impaired loans:

Non-impaired loans
$
566,233

$
1,438,251

$
1,062,049

$
22,205

$
89,591

$
79,405

$
11,947

$
3,269,681

Impaired loans:

Impaired loans with no allowance
  for impairment

7,772

135

6,863

-

2,849

1,556

-

19,175

Impaired loans with allowance
  for impairment:

Recorded investment

317

-

342

-

2

-

-

661

Allowance for impairment

(37
)

-

(4
)

-

(2
)

-

-

(43
)
Balance of impaired loans net
  of allowance for impairment

280

-

338

-

-

-

-

618

Total impaired loans, excluding
  allowance for impairment:

8,089

135

7,205

-

2,851

1,556

-

19,836

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Unpaid principal balance
  of impaired loans:

Total impaired loans
$
12,656

$
930

$
10,549

$
106

$
6,777

$
2,528

$
-

$
33,546

Impairment Status of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Carrying value of impaired loans:

Non-impaired loans
$
556,680

$
1,412,417

$
1,079,187

$
3,203

$
71,609

$
80,928

$
16,383

$
3,220,407

Impaired loans:

Impaired loans with no allowance
  for impairment

8,971

158

4,521

612

2,755

1,894

-

18,911

Impaired loans with allowance
  for impairment:

Recorded investment

1,672

-

1,356

-

107

-

-

3,135

Allowance for impairment

(154
)

-

(39
)

-

(6
)

-

-

(199
)
Balance of impaired loans net
  of allowance for impairment

1,518

-

1,317

-

101

-

-

2,936

Total impaired loans, excluding
  allowance for impairment:

10,643

158

5,877

612

2,862

1,894

-

22,046

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

Unpaid principal balance
  of impaired loans:

Total impaired loans
$
16,479

$
930

$
10,002

$
691

$
6,682

$
2,961

$
-

$
37,745

~~- 28 -~~

Impairment Status of Loans Receivable

Periods Ended December 31, 2017 and 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

For the three months ended
  December 31, 2017:

Average balance of impaired loans
$
8,860

$
141

$
7,254

$
63

$
2,865

$
1,579

$
-

$
20,762

Interest earned on impaired loans
$
31

$
-

$
2

$
-

$
1

$
7

$
-

$
41

For the six months ended
  December 31, 2017:

Average balance of impaired loans
$
9,441

$
146

$
6,755

$
196

$
2,836

$
1,747

$
-

$
21,121

Interest earned on impaired loans
$
66

$
-

$
4

$
-

$
2

$
15

$
-

$
87

For the three months ended
  December 31, 2016:

Average balance of impaired loans
$
13,262

$
187

$
6,263

$
282

$
3,225

$
2,072

$
-

$
25,291

Interest earned on impaired loans
$
28

$
-

$
7

$
-

$
2

$
10

$
-

$
47

For the six months ended
  December 31, 2016:

Average balance of impaired loans
$
13,140

$
193

$
6,515

$
313

$
3,166

$
2,117

$
-

$
25,444

Interest earned on impaired loans
$
49

$
-

$
19

$
-

$
6

$
24

$
-

$
98

~~- 29 -~~

The following table presents ~~information regarding~~ the ~~restructuring of~~activity in the ~~Company’s troubled debts during~~allowance for credit losses on off balance sheet commitments recorded in other non-interest expense for the three and six months ended December 31, ~~2017~~2023 and ~~2016~~2022:


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
	(In Thousands)				(In Thousands)
Balance at beginning of the period	$	667	$	753	$	741	$	1,041
Provision for (reversal of) credit losses	(100)		66		(174)		(222)
Balance at end of the period	$	567	$	819	$	567	$	819

- 23 -

Table of Contents

7. DEPOSITS

Deposits at December 31, 2023 and ~~any defaults during those periods of TDRs that were restructured within 12 months of the date of default.~~

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Troubled debt restructuring activity
  for the three months ended
  December 31, 2017:

Number of loans

1

-

1

-

-

-

-

2

Pre-modification outstanding
  recorded investment
$
24

$
-

$
179

$
-

$
-

$
-

$
-

$
203

Post-modification outstanding
  recorded investment

47

-

201

-

-

-

-

248

Charge offs against the allowance
  for loan loss recognized at
  modification

87

-

-

-

-

-

-

87

Troubled debt restructuring defaults
  for the three months ended
  December 31, 2017:

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Troubled debt restructuring activity
  for the six months ended
  December 31, 2017:

Number of loans

2

-

1

-

-

-

-

3

Pre-modification outstanding
  recorded investment
$
449

$
-

$
179

$
-

$
-

$
-

$
-

$
628

Post-modification outstanding
  recorded investment

414

-

201

-

-

-

-

615

Charge offs against the allowance
  for loan loss recognized at
  modification

87

-

-

-

-

-

-

87

Troubled debt restructuring defaults
  for the six months ended
  December 31, 2017:

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

-June 30, -

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Troubled debt restructuring activity
  for the three months ended
  December 31, 2016:

Number of loans

1

-

-

-

-

1

-

2

Pre-modification outstanding
  recorded investment
$
197

$
-

$
-

$
-

$
-

$
87

$
-

$
284

Post-modification outstanding
  recorded investment

186

-

-

-

-

95

-

281

Charge offs against the allowance
  for loan loss recognized at
  modification

14

-

-

-

-

9

-

23

Troubled debt restructuring defaults
  for the three months ended
  December 31, 2016:

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Troubled debt restructuring activity
  for the six months ended
  December 31, 2016:

Number of loans

1

-

1

-

-

2

-

4

Pre-modification outstanding
  recorded investment
$
197

$
-

$
244

$
-

$
-

$
271

$
-

$
712

Post-modification outstanding
  recorded investment

186

-

223

-

-

279

-

688

Charge offs against the allowance
  for loan loss recognized at
  modification

14

-

27

-

-

12

-

53

Troubled debt restructuring defaults
  for the six months ended
  December 31, 2016:

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

~~- 31 -~~

~~The manner in which the terms of a loan are modified through a troubled debt restructuring generally includes one or more of the following changes to the loan’s repayment terms:~~

~~Interest Rate Reduction: Temporary or permanent reduction of the interest rate charged against the outstanding balance of the loan.~~

~~Capitalization of Prior Past Dues: Capitalization of prior amounts due to the outstanding balance of the loan.~~

~~Extension of Maturity or Balloon Date: Extending the term of the loan past its original balloon or maturity date.~~

~~Deferral of Principal Payments:~~ ~~Temporary deferral of the principal portion of a loan payment.~~

~~Payment Recalculation and Re-amortization: Recalculation of the recurring payment obligation and resulting loan amortization/repayment schedule based on the loan’s modified terms.~~

~~12. DEPOSITS~~

~~Deposits~~2023 are summarized as follows:

	December 31,		June 30,
	2017		2017
	(Dollars in Thousands)
	December 31, 2023				December 31, 2023		June 30, 2023
	(In Thousands)					(In Thousands)
Non-interest-bearing demand	$	275,065	$	267,412
Interest-bearing demand		879,732		847,663
Savings and club		517,400		523,984
Savings
Certificates of deposits		1,361,569		1,291,068
Total deposits	$	3,033,766	$	2,930,127

~~13.~~

8. BORROWINGS

Borrowings at December 31, 2023 and June 30, 2023 consisted of the following:


	December 31, 2023		June 30, 2023
	(In Thousands)
FHLB advances	$	1,432,055	$	1,281,812
Overnight borrowings (1)	235,000		225,000
Total borrowings	$	1,667,055	$	1,506,812

___________________________

(1)At December 31, 2023, represented $235.0 million of FHLB overnight line of credit borrowings. At June 30, 2023, represented $125.0 million of FHLB overnight line of credit borrowings and $100.0 million of unsecured overnight borrowings from other financial institutions.

Fixed rate advances from the FHLB of New York mature as follows:

December 31, 2017

June 30, 2017

Balance

Weighted
Average
Interest Rate

Balance

Weighted
Average
Interest Rate

(Dollars in Thousands)
Maturing in years ending June 30:

2018

630,225

1.60

630,225

1.29

2021

415

4.94

469

4.94

2023

145,000

3.04

145,000

3.04

Total advances

775,640

1.87

%

775,694

1.62

%
Unamortized fair value adjustments

9

2

Total advances, net of
fair value adjustments
$
775,649

$
775,696


	December 31, 2023				June 30, 2023
	Balance		Weighted Average Interest Rate		Balance		Weighted Average Interest Rate
	(Dollars in Thousands)
By remaining period to maturity:
Less than one year	$	1,203,500	5.29	%	$	972,500	5.36	%
One to two years	29,000		2.77		103,500		2.68
Two to three years	—		—		6,500		2.82
Three to four years	—		—		—		—
Four to five years	200,000		3.98		200,000		3.98
Greater than five years	—		—		—		—
Total advances	1,432,500		5.06	%	1,282,500		4.92	%
Unamortized fair value adjustments	(445)				(688)
Total advances, net of fair value adjustments	$	1,432,055			$	1,281,812

At December 31, ~~2017, $630.2 million in~~2023, FHLB advances ~~are due within one year while the remaining $145.4 million in advances are due after one year~~and overnight line of ~~which $145.0 million are callable in April 2018.~~

~~At December 31, 2017, FHLB advances~~credit borrowings were collateralized by the FHLB capital stock owned by the Bank and mortgage loans ~~and securities~~ with carrying values totaling approximately ~~$2.0 billion and $162.3 million, respectively.~~$4.39 billion. At June 30, ~~2017,~~2023, FHLB advances and overnight line of credit borrowings were collateralized by the FHLB capital stock owned by the Bank and mortgage loans ~~and securities~~ with carrying values totaling approximately ~~$1.9 billion and $159.4 million, respectively.~~

$4.60 billion.

- 3224 -

~~Borrowings at December 31, 2017 and June 30, 2017 also included overnight borrowings in the form~~Table of depositor sweep accounts totaling $23.2 million and $30.5 million, respectively. Depositor sweep accounts are short term borrowings representing funds that are withdrawn from a customer’s noninterest-bearing deposit account and invested in an uninsured overnight investment account that is collateralized by specified investment securities owned by the Bank.

~~14.~~Contents

9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company uses various financial instruments, including derivatives, to manage its exposure to interest rate risk. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to specific wholesale funding ~~positons.~~

positions and assets.

Fair Values of Derivative Instruments on the Statement of Financial Condition

The ~~table~~tables below ~~presents~~present the fair value of the Company’s derivative financial instruments as well as their classification on the ~~Statement~~Statements of Financial Condition as of December 31, ~~2017~~2023 and June 30, ~~2017:~~

2023:

December 31, 2017

Asset Derivatives

Liability Derivatives

Location

Fair Value

Location

Fair Value

(Dollars in Thousands)

Derivatives designated as hedging
instruments:

Interest rate swaps
Other assets

$
15,921

Other liabilities

$
-

Interest rate caps
Other assets

142

Other liabilities

-

Total

$
16,063

$
-

December 31, 2023

Asset Derivatives

Liability Derivatives

Location

Fair Value

Location

Fair Value

(In Thousands)

Derivatives designated as hedging instruments:

Interest rate contracts

Other assets

44,120

Other liabilities

3,448

Total

44,120

3,448

June 30, 2017

Asset Derivatives

Liability Derivatives

Location

Fair Value

Location

Fair Value

(Dollars in Thousands)

Derivatives designated as hedging
instruments:

Interest rate swaps
Other assets

$
7,670

Other liabilities

$
298

Interest rate caps
Other assets

140

Other liabilities

-

Total

$
7,810

$
298

June 30, 2023

Asset Derivatives

Liability Derivatives

Location

Fair Value

Location

Fair Value

(In Thousands)

Derivatives designated as hedging instruments:

Interest rate contracts

Other assets

71,624

Other liabilities

—

Total

71,624

—

Cash Flow Hedges of Interest Rate Risk

The Company’s ~~objectives in using~~uses derivatives ~~are primarily~~ to add stability to interest expense and interest income and to manage its exposure to interest rate movements. ~~To accomplish this objective, the~~The Company has entered into interest rate swaps, interest rate caps and ~~caps~~an interest rate floor as part of its interest rate risk management strategy. These interest rate products are designated as cash flow hedges. As of December 31, ~~2017,~~2023, the Company had ~~fifteen~~a total of 13 interest rate swaps and caps with a total notional amount of $1.50 billion hedging specific wholesale funding and four interest rate floor with a notional amount of ~~$1.2 billion and two interest rate caps with a notional of $75.0~~$400.0 million hedging ~~certain FHLB advances and brokered deposits.~~

floating-rate available for sale securities.

For derivatives designated as cash flow hedges, the ~~effective portion of changes in the fair value of~~gain or loss on the derivative is ~~initially reported~~recorded in other comprehensive income (loss), net of tax, and subsequently reclassified ~~to earnings when~~into interest expense in the same period during which the hedged transaction affects ~~earnings, and~~earnings.

For cash flow hedges on the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The Company did not recognize any hedge ineffectiveness in earnings during the three and six months ended December 31, 2017 and 2016.

~~Amounts~~Company’s wholesale funding positions, amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s hedged variable rate wholesale funding positions. During the three and six months ended

~~- 33 -~~

December 31, ~~2017,~~2023, the Company ~~had $1.3~~reclassified $9.4 million and ~~$2.7~~$18.8 million, respectively, ~~of reclassifications to~~as a reduction in interest expense. During the next twelve months, the Company estimates that ~~$31,000~~$26.1 million will be reclassified as a reduction in interest expense.

For cash flow hedges on the Company’s assets, amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest income as interest payments are received on the Company’s hedged variable rate assets. During the three and six months ended December 31, 2023, the Company did not reclassify any amount to interest income. During the next twelve months, the Company estimates that $253,000 will be reclassified as a reduction in interest income.

- 25 -

Table of Contents

The table below presents the pre-tax effects of the Company’s derivative instruments designated as cash flow hedges on the Consolidated Statements of Income for the three and six months ended December 31, ~~2017~~2023 and ~~2016:~~

2022:

Three Months Ended December 31, 2017

Amount of Gain
(Loss) Recognized
in OCI on
Derivatives
(Effective Portion)

Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Amount of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Location of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

Amount of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
6,167

Interest expense

$
(997
)

Not applicable

$
-

Interest rate caps

40

Interest expense

(285
)

Not applicable

-

Total
$
6,207

$
(1,282
)

$
-


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
	(In Thousands)
Amount of (loss) gain recognized in other comprehensive income	$	(18,987)	$	(2,183)	$	(4,878)	$	19,987
Amount of gain reclassified from accumulated other comprehensive income to interest expense	9,363		4,104		18,834		5,724

Six Months Ended December 31, 2017

Amount of Gain
(Loss) Recognized
in OCI on
Derivatives
(Effective Portion)

Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Amount of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Location of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

Amount of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
6,426

Interest expense

$
(2,122
)

Not applicable

$
-

Interest rate caps

26

Interest expense

(560
)

Not applicable

-

Total
$
6,452

$
(2,682
)

$
-

Fair Value Hedges of Interest Rate Risk

Three Months Ended December 31, 2016

Amount of Gain
(Loss) Recognized
in OCI on
Derivatives
(Effective Portion)

Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Amount of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Location of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

Amount of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
21,969

Interest expense

$
(1,515
)

Not applicable

$
-

Interest rate caps

80

Interest expense

(191
)

Not applicable

-

Total
$
22,049

$
(1,706
)

$
-

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount. Such derivatives are used to hedge the changes in fair value of certain of its pools of fixed rate assets. As of December 31, 2023, the Company had five interest rate swaps with a notional amount of $675.0 million hedging fixed-rate residential mortgage loans.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

~~- 34 -~~

Six Months Ended December 31, 2016

Amount of Gain
(Loss) Recognized
in OCI on
Derivatives
(Effective Portion)

Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Amount of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Location of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

Amount of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective Portion)

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
25,422

Interest expense

$
(3,235
)

Not applicable

$
-

Interest rate caps

90

Interest expense

(352
)

Not applicable

-

Total
$
25,512

$
(3,587
)

$
-

~~Offsetting Derivatives~~

The table below presents the effects of the Company’s derivative instruments designated as fair value hedges on the Consolidated Statements of Income for the three and six months ended December 31, 2023 and December 31, 2022:


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
	(In Thousands)
Gain (loss) on hedged items recorded in interest income on loans	$	12,126	$	(995)	$	8,006	$	(5,028)
(Loss) gain on hedge recorded in interest income on loans	(9,383)		1,183		(2,733)		5,110

As of December 31, 2023 and June 30, 2023, the following amounts were recorded on the Statement of Financial Condition related to cumulative basis adjustment for fair value hedges:


	December 31, 2023		June 30, 2023
	(In Thousands)
Loans receivable:
Carrying amount of the hedged assets(1)	$	671,569	$	663,563
Fair value hedging adjustment included in the carrying amount of the hedged assets	(3,431)		(11,437)

(1)This amount includes the amortized cost basis of the closed portfolios of loans receivable used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolios anticipated to be outstanding for the designated hedge period. At December 31, 2023 and June 30, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $1.07 billion and $1.10 billion, respectively.

- 26 -

Table of Contents

Offsetting Derivatives

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives in the Consolidated ~~Statement~~Statements of Financial Condition as of December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, respectively. The net amounts presented for derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Consolidated ~~Statement~~Statements of Financial Condition.

	December 31, 2017
									Gross Amounts Not Offset
	Gross Amount Recognized			Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Received			Net Amount
	(Dollars in Thousands)
	December 31, 2023																			December 31, 2023
													Gross Amounts Not Offset
			Gross Amount Recognized
			Gross Amount Recognized
			Gross Amount Recognized														Gross Amounts Offset	Net Amounts Presented	Financial Instruments		Cash Collateral Received (Posted)	Net Amount
	(In Thousands)																			(In Thousands)
Assets:
Interest rate swaps	$	17,788		$	(1,867	)	$	15,921	$	-	$	(16,063	)	$	(142	)
Interest rate caps		142			-			142		-		-			142
Interest rate contracts
Interest rate contracts
Interest rate contracts
Total	$	17,930		$	(1,867	)	$	16,063	$	-	$	(16,063	)	$	-

									Gross Amounts Not Offset
	Gross Amount Recognized			Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Posted			Net Amount
	(Dollars in Thousands)
Liabilities:
Interest rate swaps	$	1,867		$	(1,867	)	$	-	$	-	$	-		$	-
Interest rate caps		-			-			-		-		-			-
Liabilities:
Liabilities:
Interest rate contracts
Interest rate contracts
Interest rate contracts
Total	$	1,867		$	(1,867	)	$	-	$	-	$	-		$	-


	June 30, 2023
							Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amounts Offset		Net Amounts Presented		Financial Instruments		Cash Collateral Received (Posted)		Net Amount
	(In Thousands)
Assets:
Interest rate contracts	$	72,418	$	(794)	$	71,624	$	—	$	—	$	71,624
Total	$	72,418	$	(794)	$	71,624	$	—	$	—	$	71,624

Liabilities:
Interest rate contracts	$	794	$	(794)	$	—	$	—	$	—	$	—
Total	$	794	$	(794)	$	—	$	—	$	—	$	—

~~- 35 -~~

June 30, 2017

Gross Amounts Not Offset

Gross Amount Recognized

Gross Amounts Offset

Net Amounts Presented

Financial Instruments

Cash Collateral Received

Net Amount

(Dollars in Thousands)

Assets:

Interest rate swaps
$
12,839

$
(5,169
)

$
7,670

$
-

$
(5,770
)

$
1,900

Interest rate caps

140

-

140

-

-

140

Total
$
12,979

$
(5,169
)

$
7,810

$
-

$
(5,770
)

$
2,040

Gross Amounts Not Offset

Gross Amount Recognized

Gross Amounts Offset

Net Amounts Presented

Financial Instruments

Cash Collateral Posted

Net Amount

Liabilities:

Interest rate swaps
$
5,467

$
(5,169
)

$
298

$
-

$
(298
)

$
-

Interest rate caps

-

-

-

-

-

-

Total
$
5,467

$
(5,169
)

$
298

$
-

$
(298
)

$
-

~~Credit-risk-related~~Credit Risk-Related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty. The Company also has agreements with its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the counterparty. ~~As of~~At December 31, ~~2017 and June 30, 2017,~~2023, none of the ~~termination value of~~Company’s derivatives were in a net liability ~~position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to those agreements was $0 and $302,000, respectively.~~

position. As required under the enforceable master netting arrangement with its derivatives counterparties, atas of December 31, ~~2017,~~2023 and June 30, 2023, the Company ~~received financial collateral of $16.2 million that~~ was not ~~included as an offsetting amount. By comparison, at June 30, 2017, the Company received~~required to post financial ~~collateral of $5.8 million and posted financial collateral in the amount of $1.0 million that were not included as offsetting amounts.~~

collateral.

In addition to the derivative instruments noted above, the Company’s pipeline of loans held for sale at December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, included ~~$15.8~~$11.0 million and ~~$18.4~~$11.7 million, respectively, of ~~“in process”~~in process loans whose terms included interest rate locks to borrowers, which are considered free-standing derivative instruments whose fair values are not material to ~~our~~the Company’s financial condition or results of operations.

- 3627 -

Table of Contents~~15.~~

10. BENEFIT PLANS

Components of Net Periodic Expense

The following table sets forth the aggregate net periodic benefit expense for the Bank’s Benefit Equalization Plan, Postretirement Welfare Plan, Directors’ Consultation and Retirement Plan, ~~and~~ Atlas Bank Retirement Income Plan and Supplemental Executive Retirement Plan:

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2017				2016		2017				2016
	(In Thousands)						(In Thousands)
	Three Months Ended December 31,																					Three Months Ended December 31,								Six Months Ended December 31,						Affected Line Item in the Consolidated Statements of Income
	2023
			(In Thousands)
			(In Thousands)
			(In Thousands)
Service cost
Service cost
Service cost	$	12		$	8		$	24		$	16		$	20		$		$	117			$		$	38		$		$	234		Salaries and employee benefits			Salaries and employee benefits
Interest cost		93			95			186			190		Interest cost		93		96				96		184				184	192					192	Other expense		Other expense
Amortization of unrecognized past service liability		-			-			-			-
Amortization of unrecognized loss		11			16			22			32
Accretion of unrecognized gain													Accretion of unrecognized gain		(15)					(6)						(30)					(12)				Other expense
Expected return on assets		(30	)		(62	)		(60	)		(124	)	Expected return on assets		(23)		(25)				(25)		(46)				(46)	(50)					(50)	Other expense		Other expense
Net periodic benefit cost	$	86		$	57		$	172		$	114

~~16.~~

2021 Equity Incentive Plan

During the six months ended December 31, 2023, the Company granted 349,257 restricted stock units (“RSUs”) comprised of 255,062 service-based RSUs and 94,195 performance-based RSUs. The service-based RSUs will vest in three tranches over a period of three years and the performance-based RSUs will cliff vest upon the achievement of performance measures over the three-year period ending June 30, 2026. The number of performance-based RSUs that will vest, if any, will depend on whether, and to what extent, the performance measures are achieved. Common stock will be issued from authorized shares upon the vesting of the RSUs.

11. INCOME TAXES

The following table presents a reconciliation between the reported income taxes for the periods presented and the income taxes which would be computed by applying the federal income tax ~~rates applicable to those periods. The income tax~~ rate of ~~28%, applicable~~21% to income for the ~~reported periods in the current year ending June 30, 2018, reflects the transitional effect~~three and six months ended December 31, 2023 and 2022:


	Three Months Ended December 31,						Six Months Ended December 31,
	2023			2022			2023			2022
	(Dollars in Thousands)						(Dollars in Thousands)
(Loss) income before income taxes	$	(12,045)		$	1,984		$	1,106		$	23,774
Statutory federal tax rate	21		%	21		%	21		%	21		%
Federal income tax at statutory rate	$	(2,529)		$	417		$	232		$	4,993
(Reduction) increase in income taxes resulting from:
Tax exempt interest	(17)			(46)			(35)			(105)
State tax, net of federal tax effect	(966)			(124)			(188)			1,296
Incentive stock option compensation expense	2			3			5			6
Income from bank-owned life insurance	(364)			(362)			(714)			(1,137)


Surrender of bank-owned life insurance polices	5,713			—			5,713			—
Other items, net	(57)			145			78			235


Total income tax expense	$	1,782		$	33		$	5,091		$	5,288
Effective income tax rate	(14.79)		%	1.66		%	460.31		%	22.24		%

- 28 -

Table of a reduction in the Company’s federal income tax rate from 35%, applicable to the prior year ended June 30, 2017, to 21%, applicable to the forthcoming year ending June 30, 2019. The noted decrease in the Company’s federal income tax rate reflects the impact of federal income tax reform that was codified through the passage of the Tax Cuts and Jobs Act on December 22, 2017.

Contents

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Income before income taxes
$
6,398

$
8,434

$
14,386

$
15,295

Statutory federal tax rate

28
%

35
%

28
%

35
%
Federal income tax expense at statutory rate
$
1,791

$
2,952

$
4,028

$
5,353

(Reduction) increases in income taxes resulting from:

Tax exempt interest

(177
)

(203
)

(349
)

(394
)
New Jersey state tax, net of federal tax effect

461

519

970

859

Incentive stock options compensation expense

37

23

72

35

Income from bank-owned life insurance

(354
)

(462
)

(710
)

(901
)
Disqualifying disposition on incentive stock
options

(11
)

-

(11
)

-

Non-deductible merger-related expenses

200

-

200

-

Other items, net

113

141

199

212

Impact of federal income tax reform

3,069

-

3,486

-

Total income tax expense
$
5,129

$
2,970

$
7,885

$
5,164

Effective income tax rate

80.17
%

35.21
%

54.81
%

33.76
%

~~- 37 -~~

~~The tax effects of existing temporary differences that give rise to deferred income tax assets and liabilities are as follows:~~

December 31,

June 30,

2017

2017

(Unaudited)

Deferred income tax assets:

Purchase accounting

$
234

$
466

Accumulated other comprehensive income:

Defined benefit plans

315

434

Unrealized loss on securities available for sale

677

975

Unrealized loss on securities available for sale
transferred to held to maturity

283

453

Allowance for loan losses

8,452

11,963

Benefit plans

2,035

2,675

Compensation

353

1,146

Stock-based compensation

1,206

2,278

Uncollected interest

1,339

2,700

Depreciation

891

1,221

Charitable contribution carryover

1,276

2,139

Other items

506

642

17,567

27,092

Valuation allowance

(135
)

(135
)

17,432

26,957

Deferred income tax liabilities:

Deferred costs

1,454

2,083

Derivatives

4,344

2,582

Goodwill

4,240

6,167

Other items

453

671

10,491

11,503

Net deferred income tax asset

$
6,941

$
15,454

~~17.~~12. FAIR VALUE OF FINANCIAL INSTRUMENTS

~~The guidance~~

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 ~~fair value~~the measurement ~~establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy describes~~date. There are three levels of inputs that may be used to measure fair ~~value:~~

values:

~~In addition, the guidance requires the Company~~

Assets and Liabilities Measured on a Recurring Basis:

The following methods and significant assumptions were used to ~~disclose~~estimate the fair ~~value~~values as of December 31, 2023 and June 30, 2023:

Investment Securities Available for ~~assets and liabilities on both a recurring and non-recurring basis.~~

~~- 38 -~~

~~Those assets and liabilities measured~~Sale

The Company’s available for sale investment securities are reported at fair value ~~on a recurring basis are summarized below:~~

December 31, 2017

Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Debt securities available for sale:

U.S. agency securities
$
-

$
4,810

$
-

$
4,810

Obligations of state and political subdivisions

-

27,428

-

27,428

Asset-backed securities

-

169,484

-

169,484

Collateralized loan obligations

-

133,341

-

133,341

Corporate bonds

-

142,397

-

142,397

Trust preferred securities

-

7,494

1,000

8,494

Total debt securities

-

484,954

1,000

485,954

Mortgage-backed securities available for sale:

Collateralized mortgage obligations

-

27,187

-

27,187

Residential pass-through securities

-

116,496

-

116,496

Commercial pass-through securities

-

8,034

-

8,034

Total mortgage-backed securities

-

151,717

-

151,717

Total securities available for sale
$
-

$
636,671

$
1,000

$
637,671

Derivative instruments

Interest rate swaps
$
-

$
15,921

$
-

$
15,921

Interest rate caps

-

142

-

142

Total derivatives
$
-

$
16,063

$
-

$
16,063

~~- 39 -~~

June 30, 2017

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Debt securities available for sale:

U.S. agency securities
$
-

$
5,316

$
-

$
5,316

Obligations of state and political subdivisions

-

27,740

-

27,740

Asset-backed securities

-

162,429

-

162,429

Collateralized loan obligations

-

98,154

-

98,154

Corporate bonds

-

142,318

-

142,318

Trust preferred securities

-

7,540

1,000

8,540

Total debt securities

-

443,497

1,000

444,497

Mortgage-backed securities available for sale:

Collateralized mortgage obligations

-

30,536

-

30,536

Residential pass-through securities

-

130,550

-

130,550

Commercial pass-through securities

-

8,177

-

8,177

Total mortgage-backed securities

-

169,263

-

169,263

Total securities available for sale
$
-

$
612,760

$
1,000

$
613,760

Derivative instruments

Interest rate swaps
$
-

$
7,372

$
-

$
7,372

Interest rate caps

-

140

-

140

Total derivatives
$
-

$
7,512

$
-

$
7,512

utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair values of securities available for sale (carried at fair value) or held to maturity (carried at amortized cost) are primarily determined by obtaining matrix pricing, which is a mathematical technique widely used invalue measurements consider observable data that may include dealer quotes, market spreads, cash flows, the ~~industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on~~U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the securities’ ~~relationship~~terms and conditions, among other things. From time to ~~other benchmark quoted securities (Level 2 inputs).~~

~~The~~time, the Company ~~held one trust preferred security whose fair value of $1.0 million at December 31, 2017 was determined~~validates prices supplied by the independent pricing service by comparison to prices obtained from third-party sources or derived using Level 3 inputs. For the periods ended December 31, 2017 and June 30, 2017, management has been unable to obtain a market quote for this security. Consequently, the security’s fair value as reported at December 31, 2017 and June 30, 2017, is based upon the present value of expected future cash flows assuming the security continues to meet all of its payment obligations and utilizing a discount rate based upon the security’s contractual interest rate.

internal models.

Derivatives

The Company has contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate ~~caps and swaps.~~contracts. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis and extensions of the Black-Scholes model. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.

~~In addition~~

- 29 -

Table of Contents

Those assets and liabilities measured at fair value on a recurring basis are summarized below:


	December 31, 2023
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In Thousands)
Assets:
Debt securities available for sale:

Asset-backed securities	$	—	$	90,660	$	—	$	90,660
Collateralized loan obligations	—		424,133		—		424,133
Corporate bonds	—		132,272		—		132,272
Total debt securities	—		647,065		—		647,065

Mortgage-backed securities available for sale:

Residential pass-through securities	—		359,511		—		359,511
Commercial pass-through securities	—		137,599		—		137,599
Total mortgage-backed securities	—		497,110		—		497,110
Total securities available for sale	$	—	$	1,144,175	$	—	$	1,144,175

Interest rate contracts	$	—	$	44,120	$	—	$	44,120

Total assets	$	—	$	1,188,295	$	—	$	1,188,295

Liabilities:
Interest rate contracts	$	—	$	3,448	$	—	$	3,448
Total liabilities	$	—	$	3,448	$	—	$	3,448

- 30 -

Table of Contents


	June 30, 2023
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In Thousands)
Assets:
Debt securities available for sale:
Obligations of state and political subdivisions	$	—	$	—	$	—	$	—
Asset-backed securities	—		136,170		—		136,170
Collateralized loan obligations	—		376,996		—		376,996
Corporate bonds	—		135,018		—		135,018
Total debt securities	—		648,184		—		648,184

Mortgage-backed securities available for sale:
Collateralized mortgage obligations	—		—		—		—
Residential pass-through securities	—		436,151		—		436,151
Commercial pass-through securities	—		143,394		—		143,394
Total mortgage-backed securities	—		579,545		—		579,545
Total securities available for sale	$	—	$	1,227,729	$	—	$	1,227,729

Interest rate contracts	$	—	$	71,624	$	—	$	71,624

Total assets	$	—	$	1,299,353	$	—	$	1,299,353

Assets Measured on a Non-Recurring Basis:

The following methods and assumptions were used to estimate the ~~financial instruments noted above,~~fair values of the Company’s assets measured at fair value on a non-recurring basis at December 31, ~~2017~~2023 and June 30, ~~2017,~~2023:

Individually Analyzed Collateral Dependent Loans

The fair value of collateral dependent loans that are individually analyzed is determined based upon the ~~Company’s pipeline~~appraised fair value of the underlying collateral, less costs to sell. Such collateral primarily consists of real estate and, to a lesser extent, other business assets. Management may also adjust appraised values to reflect estimated changes in market values or apply other adjustments to appraised values resulting from its knowledge of the collateral. Internal valuations may be utilized to determine the fair value of other business assets. For non-collateral-dependent loans, ~~held for sale included $15.8 million~~management estimates fair value using discounted cash flows based on inputs that are largely unobservable and ~~$18.4 million, respectively,~~instead reflect management’s own estimates of ~~“in process”~~the assumptions as a market participant would in pricing such loans. Individually analyzed collateral dependent loans ~~whose terms included interest rate locks~~are considered a Level 3 valuation by the Company.

Other Real Estate Owned

Other real estate owned is recorded at estimated fair value, less estimated selling costs when acquired, thus establishing a new cost basis. Fair value is generally based on independent appraisals. These appraisals include adjustments to ~~borrowers that were paired with a “non-binding” best-efforts commitment to sell~~comparable assets based on the appraisers’ market knowledge and experience. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for credit losses. If further declines in the estimated fair value of the asset occur, a ~~buyer at~~write-down is recorded through expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions. Other real estate owned is considered a ~~fixed price and within a predetermined timeframe after~~Level 3 valuation by the ~~sale commitment was established.~~

Company.

- 4031 -

Table of Contents

Those assets ~~and liabilities~~ measured at fair value on a non-recurring basis are summarized below:

December 31, 2017

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Impaired loans:

Residential mortgage
$
-

$
-

$
3,712

$
3,712

Non-residential mortgage

-

-

1,139

1,139

Commercial business

-

-

114

114

Total
$
-

$
-

$
4,965

$
4,965

Real estate owned, net:

Residential mortgage
$
-

$
-

$
-

$
-

Non-residential mortgage

-

-

108

108

Total
$
-

$
-

$
108

$
108


	December 31, 2023
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In Thousands)
Collateral dependent loans:

Multi-family mortgage	$	—	$	—	$	1,904	$	1,904

Total	$	—	$	—	$	1,904	$	1,904

Other real estate owned, net:

Nonresidential	$	—	$	—	$	11,982	$	11,982
Total	$	—	$	—	$	11,982	$	11,982

June 30, 2017

Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Impaired loans:

Residential mortgage
$
-

$
-

$
5,711

$
5,711

Non-residential mortgage

-

-

2,126

2,126

Commercial business

-

-

119

119

Total
$
-

$
-

$
7,956

$
7,956


	June 30, 2023
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In Thousands)
Collateral dependent loans:
Residential mortgage	$	—	$	—	$	449	$	449
Multi-family mortgage	—		—		7,300		7,300
Nonresidential mortgage	—		—		9,972		9,972
Total	$	—	$	—	$	17,721	$	17,721

Other real estate owned, net:
Nonresidential	$	—	$	—	$	12,956	$	12,956
Total	$	—	$	—	$	12,956	$	12,956

~~- 41 -~~

The following ~~table presents~~tables present additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value:


	December 31, 2023
	Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average
	(Dollars in Thousands)
Collateral dependent loans:

Multi-family mortgage	$	1,904	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	12.73%	12.73	%

Total	$	1,904

Other real estate owned, net:

Nonresidential	$	11,982	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	4.00%	4.00	%
Total	$	11,982

- 32 -

Table of Contents


	June 30, 2023
	Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average
	(Dollars in Thousands)
Collateral dependent loans:
Residential mortgage	$	449	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	6% - 9%	6.93	%
Multi-family mortgage	7,300		Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	6% - 9%	7.78	%
Nonresidential mortgage	9,972		Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	9% - 16%	11.78	%
Total	$	17,721

Other real estate owned, net:
Nonresidential	$	12,956	Market valuation of underlying collateral	(3)	Adjustments to reflect current conditions/selling costs	(2)	4.00%	4.00	%
Total	$	12,956

December 31, 2017

Fair
Value

Valuation
Techniques

Unobservable
Input

Range

Weighted
Average

(In Thousands)

Impaired loans:

Residential mortgage
$
3,712

Market valuation of collateral
(1)
Selling costs
(3)
6% - 25%

10.39
%
Non-residential mortgage

1,139

Market valuation of collateral
(1)
Selling costs
(3)
8% - 13%

12.01
%
Commercial business

114

Market valuation of collateral
(1)
Selling costs
(3)
11% - 20%

13.76
%
Total
$
4,965

Real estate owned, net:

Residential mortgage
$
-

Market valuation of property
(2)
Selling costs
(3)
N/A

N/A

Non-residential mortgage

108

Market valuation of property
(2)
Selling costs
(3)
6%

6.00
%
Total
$
108

June 30, 2017

Fair
Value

Valuation
Techniques

Unobservable
Input

Range

Weighted
Average

(In Thousands)

Impaired loans:

Residential mortgage
$
5,711

Market valuation of collateral
(1)
Selling costs
(3)
6% - 21%

8.12
%
Non-residential mortgage

2,126

Market valuation of collateral
(1)
Selling costs
(3)
0% - 12%

6.93
%
Commercial business

119

Market valuation of collateral
(1)
Selling costs
(3)
9% - 20%

12.79
%
Total
$
7,956

~~(1)~~

~~The fair value of impaired~~(1)The fair value of collateral dependent loans is generally determined based on an independent appraisal of ~~the market value of a loan’s underlying collateral.~~

~~(2)~~

The fair value basis of impaired loans and real estate owned is adjusted to reflect management estimates of selling costs including, but not necessarily limited to, real estate brokerage commissions and title transfer fees.

~~(3)~~

The fair value basis of real estate owned is generally determined based upon the lower of an independent appraisal of the property’s market value or the applicable listing price or contracted sales price.

An impaired loan is evaluated and valued at the time the loan is identified as impaired at the lower of cost or market value. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Market value is measured based on the value of the collateral securing the loan and is classified at a Level 3 in the fair value hierarchy. Once a loan is identified as individually impaired, management measures impairment in accordance with the FASB’s guidance on accounting by creditors for impairment of a loan with the fair value estimated using the market value of the collateral reduced by estimated disposal costs. Those impaired loans not requiring an allowance represent loans for which the fair value of a loan’s underlying collateral.

(2)The fair value basis of collateral dependent loans and other real estate owned is adjusted to reflect management’s estimates of selling costs including, but not limited to, real estate brokerage commissions and title transfer fees.

(3)The fair value of other real estate owned is generally determined based upon the ~~expected repayments~~lower of an independent appraisal of the property’s fair value or ~~collateral exceeds~~ the ~~recorded investments in such loans. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly.~~

applicable listing price or contracted sales price.

At December 31, ~~2017, impaired~~2023, collateral dependent loans valued using Level 3 inputs comprised loans with principal ~~balances~~balance totaling ~~$5.0~~$1.9 million and valuation ~~allowances~~allowance of ~~$43,000~~$35,000 reflecting an aggregate fair ~~values~~value of ~~$5.0~~$1.9 million. By comparison, at June 30, ~~2017, impaired~~2023, collateral dependent loans valued using Level 3 inputs comprised loans with principal ~~balances~~balance totaling ~~$8.2~~$21.0 million and valuation ~~allowances~~allowance of ~~$199,000~~$3.3 million reflecting an aggregate fair ~~values~~value of ~~$8.0~~$17.7 million.

Once a loan is foreclosed, the fair value of the other real estate owned continues to be evaluated based upon the ~~market~~fair value of the repossessed real estate originally securing the loan. At December 31, ~~2017,~~2023 and June 30, 2023, the Company held other real estate owned totaling ~~$108,000~~$12.0 million and $13.0 million, respectively, whose carrying value was written down utilizing Level 3 inputs. ~~At June 30, 2017, the Company held no real estate owned whose carrying value was written down utilizing Level 3 inputs.~~

- 4233 -

Table of Contents

The following ~~methods~~tables present the carrying amount, fair value, and ~~assumptions were used to estimate~~placement in the fair value hierarchy of ~~each class of~~the Company’s financial instruments atas of December 31, ~~2017~~2023 and June 30, ~~2017:~~

~~Cash and Cash Equivalents, Interest Receivable and Interest Payable.~~ ~~The carrying amounts for cash and cash equivalents, interest receivable and interest payable approximate fair value because they mature in three months or less.~~

~~Securities.~~ ~~See the discussion presented above concerning assets measured at fair value on a recurring basis.~~

~~Loans Receivable.~~ ~~Except for certain impaired loans as previously discussed, the fair value~~2023:


	December 31, 2023
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	73,860	$	73,860	$	73,860	$	—	$	—
Investment securities available for sale	1,144,175		1,144,175		—		1,144,175		—
Investment securities held to maturity	141,959		127,877		—		127,877		—
Loans held-for-sale	14,030		14,117		—		14,117		—
Net loans receivable	5,700,762		5,211,713		—		—		5,211,713
FHLB Stock	83,372		—		—		—		—
Interest receivable	30,258		30,258		18		9,729		20,511
Interest rate contracts	44,120		44,120		—		44,120		—

Financial liabilities:
Deposits other than certificates of deposits	3,577,574		3,577,574		3,577,574		—		—
Certificates of deposits	1,742,056		1,729,407		—		—		1,729,407
Borrowings	1,667,055		1,663,644		—		—		1,663,644
Interest payable on deposits	6,177		6,177		3,134		—		3,043
Interest payable on borrowings	5,637		5,637		—		—		5,637
Interest rate contracts	3,448		3,448		—		3,448		—

- 34 -

Table of loans receivable is estimated by discounting the future cash flows, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, of such loans.

~~FHLB of New York Stock.~~ ~~The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.~~

~~Deposits.~~ The fair value of demand, savings and club accounts is equal to the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated using rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the benefit that results from the low-cost funding provided by deposit liabilities compared to the cost of borrowing funds in the market.

~~Advances from FHLB.~~ ~~Fair value is estimated using rates currently offered for advances of similar remaining maturities.~~

~~Interest Rate Derivatives.~~ ~~See the discussion presented above concerning assets measured at fair value on a recurring basis.~~

Contents


	June 30, 2023
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	70,515	$	70,515	$	70,515	$	—	$	—
Investment securities available for sale	1,227,729		1,227,729		—		1,227,729		—
Investment securities held to maturity	146,465		131,169		—		131,169		—
Loans held-for-sale	9,591		9,442		—		9,442		—
Net loans receivable	5,780,687		5,261,808		—		—		5,261,808
FHLB Stock	71,734		—		—		—		—
Interest receivable	28,133		28,133		14		8,924		19,195
Interest rate contracts	71,624		71,624		—		71,624		—

Financial liabilities:
Deposits other than certificates of deposits	3,611,632		3,611,632		3,611,632		—		—
Certificates of deposits	2,017,551		1,989,434		—		—		1,989,434
Borrowings	1,506,812		1,498,920		—		—		1,498,920
Interest payable on deposits	6,826		6,826		1,933		—		4,893
Interest payable on borrowings	5,282		5,282		—		—		5,282

Commitments. The fair value of commitments to fund credit lines and originate or participate in loans held in portfolio or loans held for sale is estimated using fees currently charged to enter into similar agreements taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, including those relating to loans held for sale that are considered derivative instruments for financial statement reporting purposes, the fair value also considers the difference between current levels of interest and the committed rates. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, is not considered material for disclosure.

~~- 43 -~~

~~The carrying amounts and fair values of financial instruments are as follows:~~

December 31, 2017

Carrying
Amount

Fair
Value

Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(In Thousands)

Financial assets:

Cash and cash equivalents
$
50,685

$
50,685

$
50,685

$
-

$
-

Debt securities available for sale

485,954

485,954

-

484,954

1,000

Mortgage-backed securities
available for sale

151,717

151,717

-

151,717

-

Debt securities held to maturity

125,671

125,882

-

125,882

-

Mortgage-backed securities
held to maturity

345,781

344,649

-

344,649

-

Loans held-for-sale

3,490

3,490

-

3,490

-

Net loans receivable

3,261,450

3,180,407

-

-

3,180,407

FHLB Stock

39,113

N/A

N/A

N/A

N/A

Interest receivable

13,524

13,524

5

3,557

9,962

Financial liabilities:

Deposits⁽¹⁾

3,033,766

3,047,812

1,672,197

-

1,375,615

Borrowings

798,864

814,732

-

-

814,732

Interest payable on borrowings

1,530

1,530

-

-

1,530

~~(1)~~

~~Includes accrued interest payable on deposits of $535,000 at December 31, 2017.~~

~~- 44 -~~

June 30, 2017

Carrying
Amount

Fair
Value

Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(In Thousands)

Financial assets:

Cash and cash equivalents
$
78,237

$
78,237

$
78,237

$
-

$
-

Debt securities available for sale

444,497

444,497

-

443,497

1,000

Mortgage-backed securities
available for sale

169,263

169,263

-

169,263

-

Debt securities held to maturity

144,713

145,505

-

145,505

-

Mortgage-backed securities
held to maturity

348,608

350,289

-

350,289

-

Loans held-for-sale

4,692

4,692

-

4,692

-

Net loans receivable

3,215,975

3,137,304

-

-

3,137,304

FHLB Stock

39,958

N/A

N/A

N/A

N/A

Interest receivable

12,493

12,493

6

3,169

9,318

Financial liabilities:

Deposits⁽¹⁾

2,930,127

2,943,908

1,639,059

-

1,304,849

Borrowings

806,228

823,435

-

-

823,435

Interest payable on borrowings

1,391

1,391

-

-

1,391

~~(1)~~

~~Includes accrued interest payable on deposits of $382,000 at June 30, 2017.~~

Limitations. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no ~~market~~fair value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment, and advances from borrowers for ~~taxes.~~taxes and insurance. In addition, the ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.

- 4535 -

Table of Contents~~18.~~

13. COMPREHENSIVE ~~INCOME~~

LOSS

The components of accumulated other comprehensive ~~income~~loss included in stockholders’ equity at December 31, ~~2017~~2023 and June 30, ~~2017~~2023 are as follows:

	December 31,			June 30,
	2017			2017
	(In Thousands)
	December 31, 2023						December 31, 2023		June 30, 2023
	(In Thousands)							(In Thousands)
Net unrealized loss on securities available for sale	$	(2,463	)	$	(2,385	)
Stranded tax effect ⁽¹⁾		316			-
Tax effect		677			975
Net of tax amount		(1,470	)		(1,410	)

Net unrealized loss on securities available for sale transferred to held to maturity		(1,006	)		(1,109	)
Stranded tax effect ⁽¹⁾		128			-
Tax effect		283			453
Net of tax amount		(595	)		(656	)

Fair value adjustments on derivatives		15,453			6,319
Stranded tax effect ⁽¹⁾		(1,969	)		-
Fair value adjustments on derivatives
Fair value adjustments on derivatives
Tax effect		(4,344	)		(2,582	)
Net of tax amount		9,140			3,737

Benefit plan adjustments		(1,122	)		(1,061	)
Stranded tax effect ⁽¹⁾		144			-
Benefit plan adjustments
Benefit plan adjustments
Tax effect		315			434
Net of tax amount		(663	)		(627	)

Total accumulated other comprehensive income	$	6,412		$	1,044
Total accumulated other comprehensive loss
Total accumulated other comprehensive loss
Total accumulated other comprehensive loss

~~(1)~~

~~Represents amounts related to the tax effects of items within accumulated other comprehensive income that do not reflect the appropriate tax rate.~~

~~- 46 -~~

Other comprehensive ~~income~~loss and related tax effects for the three and six months ended December 31, ~~2017~~2023 and ~~December 31, 2016~~2022 are presented in the following table:

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

(In Thousands)

(In Thousands)

Net unrealized holding gain on securities
  available for sale
$
(2,011
)

$
(8,251
)

$
(78
)

$
(6,436
)

Amortization of net unrealized holding gain on
  securities available for sale transferred to held
  to maturity⁽¹⁾

74

(43
)

103

(36
)

Net realized gain on securities available for sale

-

10

-

10

Net unrealized gain on derivatives

7,489

23,755

9,134

29,099

Benefit plans:

Amortization of actuarial loss ⁽²⁾

11

16

22

32

Net actuarial loss

-

-

(83
)

(394
)
Net change in benefit plan accrued expense

11

16

(61
)

(362
)

Other comprehensive income before taxes

5,563

15,487

9,098

22,275

Stranded tax effects ⁽³⁾

(1,381
)

-

(1,381
)

-

Tax effect⁽⁴⁾

(910
)

(6,759
)

(2,349
)

(9,533
)
Total other comprehensive income
$
3,272

$
8,728

$
5,368

$
12,742

~~(1)~~

~~Represents amounts reclassified out of accumulated other comprehensive income and included in interest income on taxable securities.~~

~~(2)~~

~~Represents amounts reclassified out of accumulated other comprehensive income and included in the computation of net periodic pension expense. See Note 15 – Benefit Plans for additional information.~~


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
	(In Thousands)
Net unrealized holding gain (loss) on securities available for sale	$	42,048	$	1,328	$	13,546	$	(48,037)

Net realized loss on sale and call of securities available for sale (1)	18,135		15,227		18,135		15,227

Fair value adjustments on derivatives	(28,350)		(6,287)		(23,712)		14,263

Benefit plans:
Accretion of net actuarial (gain) (2)	(14)		(6)		(29)		(12)
Net actuarial loss	—		—		(95)		(27)
Net change in benefit plan accrued expense	(14)		(6)		(124)		(39)

Other comprehensive income (loss) before taxes	31,819		10,262		7,845		(18,586)
Tax effect	(9,173)		(2,943)		(2,219)		5,292
Total other comprehensive income (loss)	$	22,646	$	7,319	$	5,626	$	(13,294)

~~(3)~~

~~Represents amounts related to the tax effects of items within accumulated other comprehensive income that do not reflect the appropriate tax rate.~~

___________________________________

~~(4)~~

The amounts included in income taxes for items reclassified out of accumulated other comprehensive income totaled $148 and $119 for the three and six months ended December 31, 2017, respectively, and $10 and $(144) for the three and six months ended December 31, 2016, respectively.

(1)Represents amounts reclassified out of accumulated other comprehensive (loss) income and included in loss on sale of securities on the Consolidated Statements of Income (Loss).

(2)Represents amounts reclassified out of accumulated other comprehensive (loss) income and included in the computation of net periodic pension expense. See Note 10 - 47 Benefit Plans for additional information.

36 -

Table of Contents

14. NET INCOME (LOSS) PER COMMON SHARE (“EPS”)

The following schedule shows the Company’s earnings per share calculations for the periods presented:


	Three Months Ended December 31,				Six Months Ended December 31,
	2023		2022		2023		2022
	(In Thousands, Except Per Share Data)
Net (loss) income	$	(13,827)	$	1,951	$	(3,985)	$	18,486

Weighted average number of common shares outstanding - basic	62,299		65,030		62,657		65,383
Effect of dilutive securities	—		8		—		10
Weighted average number of common shares outstanding - diluted	62,299		65,038		62,657		65,393

Basic earnings per share	$	(0.22)	$	0.03	$	(0.06)	$	0.28
Diluted earnings per share	$	(0.22)	$	0.03	$	(0.06)	$	0.28

Stock options for 2,820,922 and 3,096,138 shares of common stock were not considered in computing diluted earnings per share for the three months ended December 31, 2023 and 2022, respectively, and stock options for 2,820,922 and 2,965,000 shares of common stock were not considered in computing diluted earnings per share for the six months ended December 31, 2023 and 2022, respectively, because they were considered anti-dilutive. In addition, 415,999 and 427,347 RSUs were not considered in computing diluted earnings per share for the three months ended December 31, 2023 and December 31, 2022, respectively and 533,838 and 323,218 RSUs were not considered in computing diluted earnings per share for the three and six months ended December 31, 2023 and December 31, 2022, respectively because they were considered anti-dilutive.

- 37 -

Table of Contents

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This ~~report~~Quarterly Report on Form 10-Q may include certain forward-looking statements based on current management expectations. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may”, “will”, “believe”, “expect”, “estimate”, “anticipate”, “continue”, or similar terms or variations on those terms, or the negative of those terms. The actual results of the Company could differ materially from those management expectations. This includes statements regarding ~~the planned merger of Clifton Bancorp Inc. (“Clifton”) with and into the Company, with the Company surviving the merger as the surviving corporation (the “Merger").~~ ~~Factors that could cause future results to vary from current management expectations include, but are not limited to, the inability to obtain requisite approvals and/or meet the other closing conditions required to close the Merger in a timely manner,~~ general economic conditions, the effects of the recent turmoil in the banking industry (including the failure of three financial institutions), legislative and regulatory changes, monetary and fiscal policies of the federal government, ~~and~~ changes in tax policies, rates and regulations of federal, state and local tax ~~authorities.~~authorities and failure to integrate or profitably operate acquired businesses. Additional potential factors include changes in interest rates, the rate of inflation, deposit flows, cost of funds, demand for loan products and financial services, competition and changes in the quality or composition of loan and investment portfolios of the Company. Other factors that could cause future results to vary from current management expectations include changes in accounting principles, policies or guidelines, a potential government shutdown and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and prices. Further description of the risks and uncertainties to the business are included in this Quarterly Report on Form 10-Q and in the Company’s ~~other filings with~~Annual Report on Form 10-K for the ~~Securities and Exchange Commission.~~

year ended June 30, 2023, under “Item 1A. Risk Factors.”

Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

~~Proposed Merger with Clifton Bancorp Inc.~~

~~On November 1, 2017, Kearny~~

Critical Accounting Policies

Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. At December 31, 2023, there have been no material changes to our critical accounting policies as compared to the critical accounting policies disclosed in our most recent Annual Report on Form 10-K. Reference is made to Item 7 “Management’s Discussion and Analysis of Financial ~~Corp.~~Condition and ~~Clifton Bancorp Inc., announced that the companies have entered into a definitive agreement pursuant to which the Company will acquire Clifton~~Results of Operations” in ~~an all-stock transaction. Under the terms of the agreement, Clifton will merge with and into the Company, and each outstanding share of Clifton common stock will be exchanged for 1.191 shares of~~ the Company’s ~~common stock.~~

~~As of~~Annual Report on Form 10-K for the year ended June 30, 2023.

Strategic Actions Taken During the Quarter Ended December 31, ~~2017, Clifton had approximately $1.7 billion~~2023

Investment Securities Repositioning

As previously announced, we executed the sale of ~~assets, $1.2 billion of loans, and $935~~$122.2 million of ~~deposits held across~~our available-for-sale (“AFS”) debt securities. The sale resulted in a ~~network~~pre-tax net loss of ~~12 branches located~~$18.1 million and had a nominal impact on tangible book value, as the loss was previously reflected in ~~New Jersey throughout Bergen, Passaic, Hudson,~~capital via accumulated other comprehensive loss. Proceeds from the sale were utilized to retire higher-cost wholesale funding and ~~Essex counties.~~ ~~The Merger is subject~~ to ~~obtaining stockholder~~reinvest in loans yielding approximately 7.0%.

Bank-Owned Life Insurance (“BOLI”) Restructuring

We initiated a restructuring of our BOLI portfolio in which $103.4 million of policies yielding 2.1% were exchanged or surrendered and ~~regulatory approvals, among other closing conditions,~~replaced with policies yielding 5.1%. As a result of this restructure, we recognized tax expense of $5.7 million and ~~is expected to close late in the first calendar quarter or early in the second calendar quarter~~exchange charges of ~~2018.~~

$573 thousand.

Comparison of Financial Condition at December 31, ~~2017~~2023 and June 30, ~~2017~~

~~General.~~2023

Executive Summary. Total assets ~~increased $25.7~~decreased $167.0 million to ~~$4.84~~$7.90 billion at December 31, ~~2017~~2023 from ~~$4.82~~$8.06 billion at June 30, ~~2017.~~2023. The ~~net increase in total assets~~decrease primarily reflected ~~increases~~decreases in ~~net loans receivable and~~investment securities available for sale, ~~that were partially offset by decreases~~as discussed below, and in ~~the balances of cash and cash equivalents, securities held to maturity and deferred income taxes. The~~ net ~~increase in total assets was largely funded by an increase in deposits that was partially offset by decreases in the balance of borrowings and stockholders’ equity.~~

~~Cash and Cash Equivalents.~~ Cash and cash equivalents, which consist primarily of interest-earning and non-interest-earning deposits in other banks, decreased by $27.6 million to $50.7 million at December 31, 2017 from $78.2 million at June 30, 2017. The decrease in the balance of cash and cash equivalents at December 31, 2017 largely reflected the continuing effort to limit the balance of cash and cash equivalents to the levels needed to meet its day-to-day funding obligations and overall liquidity risk management objectives while reinvesting excess liquidity into comparatively higher-yielding assets. Toward that end, the average balance of other interest-earning assets decreased to $81.2 million for the six months ended December 31, 2017 compared to $114.1 million for the prior year ended June 30, 2017. Other interest-earning assets generally include the balance of interest-earning cash deposits held in other banks coupled with the balance of the Bank’s mandatory investment in the capital stock of the Federal Home Loan Bank of New York.

~~Debt Securities Available for Sale.~~ Debt securities classified as available for sale increased by $41.5 million to $486.0 million at December 31, 2017 from $444.5 million at June 30, 2017. The net increase in the portfolio partly reflected security purchases totaling $76.1 million for the six months ended December 31, 2017 coupled with a $689,000 increase in the fair value of the portfolio to a net unrealized loss of $709,000 at December 31, 2017 from a net unrealized loss of $1.4 million at June 30, 2017. The increase in

~~- 48 -~~

the fair value of the portfolio was partly attributable to movements in market interest rates coupled with a tightening of pricing spreads within certain sectors in the portfolio. The noted increases in the portfolio were partially offset by principal repayments, net of premium amortization and discount accretion, totaling $35.3 million during the six months ended December 31, 2017.

The increase in the fair value of debt securities available for sale was primarily reflected within the applicable “credit sectors” of the portfolio which include asset-backed securities, collateralized loan obligations, corporate bonds and non-pooled trust preferred securities. The fair value of this subset of securities increased by $1.0 million to a net unrealized loss of $665,000 at December 31, 2017 from a net unrealized loss of $1.7 million at June 30, 2017. The decrease in the unrealized loss largely reflected a general tightening of pricing spreads within these sectors resulting in an overall increase in the market price of such securities. The decrease in the net unrealized loss on the noted securities was partially offset by a $331,000 decline in the fair value of government and agency securities, including U.S. agency debentures and municipal obligations, to an unrealized loss of $44,000 at December 31, 2017 from an unrealized gain of $287,000 at June 30, 2017.

~~Mortgage-backed Securities Available for Sale.~~ ~~Mortgage-backed~~loans receivable.

Investment Securities. Investment securities available for sale decreased ~~by $17.5~~$83.6 million to ~~$151.7~~$1.14 billion at December 31, 2023, from $1.23 billion at June 30, 2023. This decrease was largely the result of sales of $122.2 million and principal repayments of $57.4 million, partially offset by purchases of $64.0 million and a fair value increase of $31.7 million.

Investment securities held to maturity decreased $4.5 million to $142.0 million at December 31, ~~2017~~2023 from ~~$169.3~~$146.5 million at June 30, ~~2017. The net~~2023. This decrease ~~partly reflected cash repayment~~was largely the result of principal ~~net~~repayments of ~~discount accretion and premium amortization, totaling $16.8 million coupled with a $767,000 decrease in the fair value~~$4.7 million.

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Table of ~~the portfolio to a net unrealized loss of $1.8 million~~Contents

Additional information regarding our investment securities at December 31, ~~2017 from a net unrealized loss of $986,000 at~~2023 and June 30, ~~2017.~~

~~Additional information regarding securities available for sale at December 31, 2017~~2023 is presented in Note ~~8 and Note 10~~4 to the unaudited consolidated financial statements.

~~Debt Securities Held to Maturity.~~ ~~Debt securities classified as held to maturity decreased by $19.0 million to $125.7~~

Loans Held-for-Sale. Loans held-for-sale totaled $14.0 million at December 31, ~~2017 from $144.7~~2023 as compared to $9.6 million at June 30, 2017. The net decrease in the portfolio partly reflected cash repayment of principal, net of discount accretion and premium amortization, totaling $35.5 million for the six months ended December 31, 2017 that was partially offset by security purchases totaling $16.4 million during the same period.

~~Mortgage-backed Securities Held to Maturity.~~ Mortgage-backed securities held to maturity decreased by $2.8 million to $345.8 million at December 31, 2017 from $348.6 million at June 30, 2017. The net decrease in the portfolio partly reflected cash repayment of principal, net of discount accretion and premium amortization, totaling $23.3 million for the six months ended December 31, 2017 that was partially offset by security purchases totaling $20.5 million during the same period.

At December 31, 2017, the held to maturity mortgage-backed securities portfolio primarily included agency pass-through securities and agency collateralized mortgage obligations. As of that date, we also held three non-agency mortgage-backed securities in the held to maturity portfolio whose aggregate carrying value and fair value both totaled $19,000. Based on its evaluation, management has concluded that no other-than-temporary impairment is present within this segment of the investment portfolio as of that date.

~~Additional information regarding securities held to maturity at December 31, 2017 is presented in Note 9 and Note 10 to the unaudited consolidated financial statements.~~

~~Loans Held-for-Sale.~~ The Company continues to expand its residential lending infrastructure to support strategies focused on increasing the origination volume of residential mortgage loans for sale into the secondary market. The increase in residential mortgage loan origination and sale activity has increased the Company’s level of non-interest income through the recognition of recurring loan sale gains while helping to manage the Company’s exposure to interest rate risk. During the six months ended December 31, 2017, we sold $43.0 million of residential mortgage loans resulting in net sale gains totaling $413,000 for the period. Loans held for sale totaled $3.5 million at December 31, 2017 compared to $4.7 million at June 30, 20172023 and are reported separately from the balance of net loans ~~receivable as of those dates.~~

~~Loans Receivable.~~ Loans receivable, net of unamortized premiums, deferred costs and the allowance for loan losses, increased by $45.5 million to $3.26 billion at December 31, 2017 from $3.22 billion at June 30, 2017. The increase in net loans receivable was primarily attributable to new loan origination and purchase volume outpacing loan repayments duringreceivable. During the six months ended December 31, ~~2017.~~

~~Residential~~2023, we sold $39.1 million of residential mortgage loans, ~~held~~resulting in ~~portfolio, including home equity~~a gain on sale of $319,000. Additionally, we reclassified three non-performing commercial real estate loans to loans held-for-sale as a result of our intent to sell these assets in the near term. These loans are attributable to one borrower relationship and ~~lines~~had a fair value of ~~credit, increased by $5.1 million to $655.3~~$9.7 million at December 31, ~~2017 from $650.1~~2023.

Net Loans Receivable. Net loans receivable decreased $79.9 million, ~~at June 30, 2017. The increase was primarily attributable~~or 1.4%, to an increase in the balance of one-to-four family first mortgage loans of $7.0 million to $574.3 million at December 31, 2017 from $567.3 million at June 30, 2017. The increase in one-to-four family first mortgage loans was partially offset be an aggregate decrease of $1.9 million in

~~- 49 -~~

~~the balance of home equity loans and home equity lines of credit to $81.0 million at December 31, 2017 from $82.8 million at June 30, 2017.~~

Residential mortgage loan origination volume for the six months ended December 31, 2017 totaled $28.7 million, comprised of $19.1 million of one-to-four family first mortgage loan originations and $9.6 million of home equity loan and home equity line of credit originations during the period. Residential mortgage loan originations were augmented with the purchase of one-to-four family first mortgage loans totaling $22.2 million during the six months ended December 31, 2017. The Company may continue to modestly increase the outstanding balance of residential mortgage loans held in portfolio in the future while allowing the segment to continue to decline as a percentage of total loans and earning assets.

~~Commercial and construction loans, in aggregate, increased by $46.4 million to $2.62~~$5.70 billion at December 31, ~~2017~~2023 from ~~$2.58~~$5.78 billion at June 30, ~~2017. The components of~~2023. Details regarding the ~~aggregate increase included an increase in commercial mortgage loans totaling $10.0 million that was augmented by increases~~change in the outstanding balances of construction loans and commercial business loans of $18.4 million and $18.0 million, respectively. The outstanding balance of commercial mortgage loans at December 31, 2017 totaled $2.51 billion while the outstanding balances of construction and commercial business loans, totaled $22.2 million and $92.4 million, respectively, as of that date.

loan portfolio, by loan segment, are presented below:


	December 31, 2023		June 30, 2023		Increase/ (Decrease)
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	2,651,274	$	2,761,775	$	(110,501)
Nonresidential mortgage	947,287		968,574		(21,287)
Commercial business	144,134		146,861		(2,727)
Construction	221,933		226,609		(4,676)
Total commercial loans	3,964,628		4,103,819		(139,191)

One- to four-family residential mortgage	1,746,065		1,700,559		45,506

Consumer loans:
Home equity loans	43,517		43,549		(32)
Other consumer	2,728		2,549		179
Total consumer loans	46,245		46,098		147

Total loans	5,756,938		5,850,476		(93,538)

Unaccreted yield adjustments	(11,309)		(21,055)		9,746
Allowance for credit losses	(44,867)		(48,734)		3,867

Net loans receivable	$	5,700,762	$	5,780,687	$	(79,925)

Commercial loan origination volume for the six months ended December 31, ~~2017~~2023 totaled ~~$198.5~~$104.7 million, comprised of ~~$164.7~~$17.2 million of commercial mortgage loan originations, ~~augmented by $14.5~~$47.1 million of commercial business loan originations and construction loan disbursements ~~totaling $19.4~~of $40.4 million.

One- to four-family residential mortgage loan origination volume, excluding loans held-for-sale, totaled $66.2 million ~~during~~for the ~~period. Commercial loan originations were augmented~~six months ended December 31, 2023 and was supplemented with the purchase of ~~business~~ loans totaling ~~$26.7~~$49.4 million. Home equity loan and line of credit origination volume for the same period totaled $8.5 million.

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Table of Contents

Loan-to-value (“LTV”) ratios are based on current period loan balances and original appraised values at the time of origination unless a current appraisal has been obtained as a result of the loan being deemed collateral dependent and individually analyzed. The following table sets forth the composition of our real estate secured loans indicating the LTV, by loan category, at December 31, 2023 and June 30, 2023:


	December 31, 2023				June 30, 2023
	Balance		LTV		Balance		LTV
	(Dollars in Thousands)
Commercial mortgage loans:
Multi-family mortgage	$	2,651,274	64	%	$	2,761,775	64	%
Nonresidential mortgage	947,287		53		968,574		54
Construction	221,933		56		226,609		58
Total commercial mortgage loans	3,820,494		61		3,956,958		61

One- to four-family residential mortgage	1,746,065		62		1,700,559		62

Consumer loans:
Home equity loans	43,517		50		43,549		49

Total mortgage loans	$	5,610,076	61	%	$	5,701,066	61	%

Additional information about our loan portfolio at December 31, 2023 and June 30, 2023 is presented in Note 5 to the unaudited consolidated financial statements.

Nonperforming Assets. Nonperforming assets decreased by $5.8 million to $49.8 million, or 0.63% of total assets, at December 31, 2023, from $55.6 million, or 0.69% of total assets, at June 30, 2023.

At December 31, 2023, nonperforming assets consisted of $28.1 million of nonperforming loans, $9.7 million of non-accrual commercial loans held for sale and $12.0 million of other real estate owned (“OREO”). At June 30, 2023, nonperforming assets consisted of $42.6 million of nonperforming loans and $13.0 million of OREO.

Additional information about our nonperforming loans and loan modifications at December 31, 2023 and June 30, 2023 is presented in Note 5 to the unaudited consolidated financial statements.

Allowance for Credit Losses (“ACL”). At December 31, 2023, the ACL totaled $44.9 million, or 0.78% of total loans, reflecting a decrease of $3.9 million from $48.7 million, or 0.83% of total loans, at June 30, 2023. The decrease during the six months ended December 31, ~~2017.~~

~~Other loans, primarily account loans, deposit account overdraft lines~~2023 was largely attributable to net charge-offs of ~~credit~~$6.2 million and ~~other consumer loans, decreased by $4.5 million to $11.9 million at December 31, 2017 from $16.4 million at June 30, 2017. The~~a decrease in the balance of ~~other consumer~~ loans ~~at December 31, 2017 included~~receivable, partially offset by a provision for credit losses of $2.4 million. The charge-offs recorded were primarily driven by the reclassification of three non-performing loans ~~with outstanding balances totaling $8.6 million that were originally acquired through~~to held-for-sale status, reflecting the Company’s ~~relationship with Lending Club, an established peer-to-peer (i.e. marketplace) lender. The Company limited its original investment in Lending Club loans~~intent to ~~approximately $25.0~~sell these assets. Of the $6.2 million ~~in aggregate outstanding balances. Since their original acquisition, the Company has independently monitored and validated the performance~~ of its portfolio of Lending Club loans. During that time, the return on the portfolio has been generally consistent with the range of performance expectations forecast by Lending Club’s proprietary credit risk model. While the Company continues to carefully monitor and assess the performance of its portfolio and the quality of loan servicing and reporting rendered by Lending Club, it has suspended future purchases of such loans in favor of investing in other loan alternatives.

~~The Company originated $884,000 of consumer loans~~net charge-offs recorded during the six months ended December 31, ~~2017 while no additional consumer loans were purchased during the period.~~

~~Nonperforming Loans.~~ ~~Nonperforming loans decreased by $2.6~~2023, $2.2 million to $16.3 million, or 0.50% of total loans at December 31, 2017, from $18.9 million, or 0.58% of total loans at June 30, 2017. Nonperforming loans generally include loans reported as “accruing loans over 90 days past due” and loans reported as “nonaccrual” with such balances totaling $31,000 and $16.3 million, respectively, at December 31, 2017.

~~Additional information about the Company’s nonperforming loans at December 31, 2017 is presented in Note 11 to the unaudited consolidated financial statements.~~

~~Allowance~~had previously been individually reserved for ~~Loan Losses.~~ During the six months ended December 31, 2017, the balance of the allowance for loan losses increased by $780,000 to $30.1 million or 0.91% of total loans at December 31, 2017 from $29.3 million or 0.90% of total loans at June 30, 2017. The increase resulted from provisions of $1.6 million during the six months ended December 31, 2017 that were partially offset by charge-offs, net of recoveries, totaling $786,000 during that same period.

With regard to loans individually evaluated for impairment, the balance of our allowance for loan losses attributable to such loans decreased by $156,000 to $43,000 at December 31, 2017 from $199,000 at June 30, 2017. The balance at December 31, 2017 reflected the allowance for impairment identified on $661,000 of impaired loans while an additional $19.2 million of impaired loans had no allowance for impairment as of that date. By comparison, the balance at June 30, 2017 reflected the allowance for impairment identified on $3.1 million of impaired loans while an additional $18.9 million of impaired loans had no allowance for impairment as of that date. The outstanding balances of impaired loans reflect the cumulative effects of various adjustments including, but not limited to, purchase accounting valuations and prior charge-offs, where applicable, which are considered in the evaluation of impairment.

With regard to loans evaluated collectively for impairment, the balance of our allowance for loan losses attributable to such loans increased by $936,000 to $30.0 million at December 31, 2017 from $29.1 million at June 30, 2017. The increase in valuation

~~- 50 -~~

was partly attributable to a $49.3 million increase in the aggregate outstanding balance of loans collectively evaluated for impairment to $3.27 billion at December 31, 2017 from $3.22 billion at June 30, 2017, as well as the ongoing reallocation of loans within the ~~portfolio in favor of commercial and construction loans, to which we generally assign comparatively higher historical and environmental loss factors in our allowance~~ACL. The provision for ~~loan loss calculation. The increase in the allowance also reflected updates to historical and environmental loss factors during the six months ended December 31, 2017.~~

~~With regard to historical loss factors, our loan portfolio experienced a net annualized average charge-off rate of 0.05%~~credit losses for the six months ended December 31, 2017 representing an increase of four basis points from the 0.01% of average charge offs reported for the year ended June 30, 2017. The annual average net charge off rate for the year ended June 30, 2017 had previously decreased2023 was primarily driven by seven basis points from 0.08% for the prior year ended June 30, 2016. The historical loss factors used in our allowance for loan loss calculation methodology were updated to reflect the effect of these changescharge-offs, as discussed above, partially offset by ~~individual loan segment reflecting the two year look-back period used by that methodology. Together with the impact of the increase~~a decrease in the ~~overall~~ balance of ~~the unimpaired portion of the loan portfolio during the period, the applicable portion of the allowance attributable to historical loss factors increased by approximately $456,000 to $2.6 million~~loans receivable.

Additional information about our ACL at December 31, ~~2017 from $2.1 million at~~2023 and June 30, ~~2017.~~

With regard to environmental loss factors, the portion of the allowance for loan loss attributable to such factors increased by $480,000 to $27.4 million at December 31, 2017 from $27.0 million at June 30, 2017. The noted increase in the allowance was primarily attributable to the growth in the unimpaired portion of the loan portfolio. Such growth was concentrated in specific segments of the loan portfolio whose estimated credit losses for ALLL calculation purposes are based on comparatively higher loss factors compared to other segments in the portfolio. Additionally, periodic updates to environmental loss factors resulted in a nominal increase in the applicable portion of the allowance during the period.

~~The calculation of probable incurred losses within a loan portfolio and the resulting allowance for loan losses~~2023 is subject to estimates and assumptions that are susceptible to significant revisions as more information becomes available and as events or conditions effecting individual borrowers and the marketplace as a whole change over time. Future additions to the allowance for loan losses may be necessary if economic and market conditions deteriorate in the future from those currently prevalent in the marketplace. In addition, the federal and state banking regulators, as an integral part of their examination process, periodically review our loan and foreclosed real estate portfolios and the related allowance for loan losses and valuation allowance for foreclosed real estate. The regulators may require the allowance for loan losses to be increased based on their review of information available at the time of the examination, which may negatively affect our earnings. Finally, changes in accounting standards promulgated by the Financial Accounting Standards Board, such as those discussedpresented in Note 76 to the unaudited consolidated financial statements regarding the use of a current expected credit loss (“CECL”) model to calculate credit losses, may require increases in the allowance for loan losses upon adoption of the applicable accounting standard.

~~Additional information about the allowance for loan losses at December 31, 2017 is presented in Note 11 to the unaudited consolidated financial~~ statements.

Other Assets.The aggregate balance of other assets, including premises and equipment, FHLB stock, interest receivable, goodwill, core deposit intangibles, bank owned life insurance (“BOLI”), deferred income taxes, OREO and other assets, ~~increased by $7.0~~decreased $6.8 million to ~~$419.1~~$823.0 million at December 31, ~~2017~~2023 from ~~$412.1~~$829.8 million at June 30, ~~2017.~~

2023. The increase in other assets partly reflected an $8.3 million increase in the fair value of the Company’s interest rate derivatives portfolio to a net asset value of $16.1 million at December 31, 2017 compared to a net asset value of $7.8 million at June 30, 2017. Less noteworthy increases in other assets included a $2.5 million increase in the cash surrender value of the Company’s bank-owned life insurance policies as well as increases of $2.2 million and $1.0 million in premises and equipment and interest receivable, respectively. The balance of real estate owned (“REO”) also increased to $1.7 million, representing the carrying value of five properties at December 31, 2017, from $1.6 million, representing the carrying value of four properties at June 30, 2017.

~~The noted increases in other assets were partially offset by an $8.6 million~~ decrease in the balance of deferred income tax assets to $6.9 million at December 31, 2017 from $15.5 million at June 30, 2017. The decrease partly reflected the impact of federal income tax reform that was codified through the passage of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017. The Act permanently reduced the Company’s federal income tax rate from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company. While, collectively, the provisions of the Act are expected to benefit the Company’s future earnings, it resulted in a $3.5 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the three months ended December 31, 2017. The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognized for income tax reporting purposes. That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the

~~- 51 -~~

Company’s interest rate derivatives and available for sale securities portfolios. The remaining change in the balance of the Company’s net deferred income tax asset was attributable to recurring changes in its underlying components, as discussed above.

~~The remaining increases and decreases in~~these other assets ~~for~~during the six months ended December 31, ~~2017~~2023 reflected a decrease in BOLI due to the restructuring, as discussed above, and a decrease in the market value of interest rate derivatives, partially offset by an increase in receivables resulting from surrendered BOLI policies that did not settle until January 2024, and an increase in Federal Home Loan Bank of New York (“FHLB”) stock. The remaining change generally ~~comprised~~reflected normal operating fluctuations ~~in their respective balances.~~

within these line items.

Deposits.Total deposits ~~increased by $103.6~~decreased $309.6 million, or 5.5%, to ~~$3.03~~$5.32 billion at December 31, ~~2017~~2023 from ~~$2.93~~$5.63 billion at June 30, ~~2017.~~2023. Included in total deposits are brokered and listing service time deposits of $458.4 million at December 31, 2023 and $640.5 million at June 30, 2023. The ~~increase~~following table sets forth the distribution of, and changes in, ~~deposit balances reflected a $7.7 million increase in non-interest-bearing~~ deposits, coupled with a $96.0 million increase in interest-bearing deposits. The increase in interest-bearing deposits included increases in the balances of interest-bearing checking accounts and certificates of deposit totaling $32.1 million and $70.5 million, respectively, that were partially offset by ~~a decrease in the balance of savings and clubs accounts totaling $6.6 million~~type, for the ~~period.~~

~~The change in deposit balances for~~periods indicated:

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Table of Contents


	December 31, 2023		June 30, 2023		Increase/ (Decrease)
	(In Thousands)
Non-interest-bearing deposits	$	584,130	$	609,999	$	(25,869)

Interest-bearing deposits:
Interest-bearing demand	2,347,262		2,252,912		94,350
Savings	646,182		748,721		(102,539)
Certificates of deposit (retail)	1,283,676		1,377,028		(93,352)
Certificates of deposit (brokered and listing service)	458,380		640,523		(182,143)
Interest-bearing deposits	4,735,500		5,019,184		(283,684)
Total deposits	$	5,319,630	$	5,629,183	$	(309,553)

Uninsured deposits totaled $1.81 billion as of December 31, 2023 compared to $1.77 billion as of June 30, 2023. Excluding collateralized deposits of state and local governments, and deposits of the ~~period reflected changes in the balances of retail~~Bank’s wholly-owned subsidiary and holding company, uninsured deposits as well as “non-retail” deposits acquired through various wholesale channels. The $32.1 million increase in the balance of interest-bearing checking accounts primarily reflected a $32.6 million increase in the balance of retail accounts. The increase in retail account balances was partially offset by a $566,000 decrease in the balance of brokered money market deposits acquired through Promontory Interfinancial Network’s (“Promontory”) Insured Network Deposits (“IND”) program to $222.0totaled $695.7 million, or ~~7.3%~~13.1% of total deposits, at December 31, ~~2017 from $222.6~~2023 compared to $710.4 million, or ~~7.6%~~12.6% of total deposits, at June 30, 2017. The terms of the IND program generally establish a reciprocal commitment for Promontory to deliver and for us to accept such deposits for a period of no less than five years during which time total aggregate balances shall be maintained within a range of $200.0 million to $230.0 million. Such deposits are generally sourced by Promontory from large retail and institutional brokerage firms whose individual clients seek to have a portion of their investments held in interest-bearing accounts at FDIC-insured institutions.

We continued to utilize a deposit listing service through which we attract “non-brokered” wholesale time deposits targeting institutional investors with an original investment horizon of two-to-five years. We generally prohibit the withdrawal of2023.

Additional information about our ~~listing service deposits prior to maturity. The balance of the Bank’s listing service time deposits decreased by $7.5 million to $93.9 million, or 3.1% of total~~ deposits at December 31, ~~2017, compared to $101.4 million, or 3.5% of total deposits at~~2023 and June 30, ~~2017.~~

~~We also maintain a portfolio of longer-term, brokered certificates of deposit whose balances increased by $35.5 million~~2023 is presented in Note 7 to $57.1 million at December 31, 2017 from $21.6 million at June 30, 2017. In combination with our Promontory IND money market deposits, our brokered deposits totaled $279.1 million, or 9.2% of deposits at December 31, 2017 compared to $244.2 million, or 8.3% of deposits at June 30, 2017.

the unaudited consolidated financial statements.

Borrowings.The balance of borrowings ~~decreased~~increased by ~~$7.3~~$160.2 million to ~~$798.9 million~~$1.67 billion at December 31, ~~2017~~2023 from ~~$806.2 million~~$1.51 billion at June 30, ~~2017.~~2023. The ~~decrease~~growth in borrowings ~~primarily reflected a $7.3~~was driven by an increase in advances from the FHLB and resulted from the decline in brokered deposits of $182.1 million.

At December 31, 2023, we maintained available secured borrowing capacity of $1.78 billion, of which $1.38 billion was immediately accessible via in-place collateral and $400.8 million ~~decrease~~represented the market value of unpledged securities.

Additional information about our borrowings at December 31, 2023 and June 30, 2023 is presented in Note 8 to the ~~outstanding balance of overnight “sweep account” balances linked to customer demand deposits that generally reflected normal operating fluctuations in such balances.~~

unaudited consolidated financial statements.

Other Liabilities. The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, ~~decreased by $2.7~~increased $3.6 million to ~~$21.9~~$63.2 million at December 31, ~~2017~~2023 from ~~$24.6~~$59.5 million at June 30, ~~2017.~~2023. The change in the balance of these other liabilities generally reflected normal operating fluctuations ~~in the balances of other liabilities~~ during the period.

Stockholders’ Equity. Stockholders’ equity decreased ~~by $67.9~~$21.3 million to ~~$989.3~~$848.0 million at December 31, ~~2017~~2023 from ~~$1.06 billion~~$869.3 million at June 30, ~~2017.~~2023. The decrease in stockholders’ equity during the six months ended December 31, 2023 largely reflected ~~the impact~~cash dividends of ~~the Company’s~~$13.9 million, share repurchases ~~during~~of $11.2 million and a net loss of $4.0 million. These items were offset by a decrease in other comprehensive loss of $5.6 million, which was driven by an increase in the ~~first six months~~fair value of ~~fiscal 2018. The Company~~our available for sale securities, partially offset by a decrease in the fair value of our derivatives portfolio.

Book value per share decreased by $0.04 to $13.16 at December 31, 2023 while tangible book value per share decreased by $0.11 to $9.85 at December 31, 2023.

On August 1, 2022, we announced that the Board of Directors had ~~previously announced its second share~~authorized a new stock repurchase ~~program in May 2017 through which it intends~~plan to repurchase ~~a total~~up to 4,000,000 shares, and the completion of ~~8,559,084 shares, or 10%,~~our previous stock repurchase plan, which authorized the repurchase of ~~its outstanding~~7,602,021 shares. During the six months ended December 31, ~~2017, the Company~~2023, we repurchased ~~4,746,840~~1,504,747 shares of common stock at a ~~total~~ cost of ~~$69.3~~$11.2 million, or ~~an average cost of $14.60~~$7.47 per share. ~~Cumulatively,~~On November 7, 2023, we announced the ~~Company has repurchased a total~~completion of ~~5,986,840 shares, or 70% of the shares to be repurchased under its second share~~this stock repurchase program at a total cost of $87.0 million, or an average cost of $14.54 per share. The cumulative cost of the Company’s repurchased shares has directly reduced the balance of stockholders’ equity at December 31, 2017.

The net decrease in stockholders’ equity was partially offset by net income of $6.5 million for the six months ended December 31, 2017 from which the Company declared and paid regular quarterly cash dividends totaling $0.06 per share to stockholders during the period. Additionally, in September 2017, the Company declared a $0.12 special cash dividend payable to stockholders in October 2017. When combined with the regular cash dividends of $0.10 declared and paid during the prior fiscal year, the special dividend of $0.12 effectively increased the Company’s dividend payout ratio to approximately 100% based on its basic and diluted earnings per share of $0.22 reported for the prior fiscal year ended June 30, 2017. Together, the regular and special cash dividends declared during the six months ended December 31, 2017 reduced stockholders’ equity by $14.0 million during the period.

~~- 52 -~~

Finally, the change in stockholders’ equity also reflected a $5.4 million increase in accumulated other comprehensive income, due primarily to changes in the fair value of the Company’s available for sale securities portfolio and outstanding derivatives, while also reflecting a $973,000 decrease in unearned ESOP shares for shares earned by plan participants during the six months ended December 31, 2017.

plan.

Comparison of Operating Results for the ~~Three Months~~Quarter Ended December 31, ~~2017~~2023 and December 31, ~~2016~~

~~General~~2022

Net (Loss) Income. Net ~~income~~loss for the ~~three months~~quarter ended December 31, ~~2017~~2023 was ~~$1.3~~$13.8 million, or ~~$0.02~~$0.22 per diluted ~~share; a decrease~~share, compared to net income of ~~$4.2 million from $5.5~~$2.0 million, or ~~$0.06~~$0.03 per diluted share for the ~~three months~~quarter ended December 31, ~~2016.~~2022. The decrease in net income ~~primarily~~ reflected ~~increases~~a decrease in ~~non-interest expense and~~net interest income, ~~tax expense as well as~~ a decrease in non-interest ~~income. These factors were partially offset by~~income, an increase ~~in net interest income and a decrease~~ in the provision for ~~loan losses.~~

~~As discussed in greater detail below, the noted~~credit losses and an increase in income tax expense, ~~primarily reflected the impact of federal income tax reform that was codified~~partially offset by ~~the Act during the three months ended December 31, 2017 while the noted increase~~a decrease in non-interest ~~expense partly reflected~~expense. The net loss for the ~~recognition~~current quarter included a $12.9 million after-tax net loss on the sale of ~~certain merger-related expenses related to~~securities that resulted from a previously announced investment securities repositioning and an after-tax net loss of $6.3 million from the ~~Company’s proposed acquisition of Clifton during the period.~~

BOLI restructure, as discussed above.

Net Interest Income. Net interest income decreased by $8.9 million to $35.8 million for the ~~three months~~quarter ended December 31, ~~2017 was $26.8 million; an increase of $1.2 million from $25.6~~2023 compared to $44.8 million for the ~~three months~~quarter ended December 31, ~~2016.~~2022. The ~~increase in net interest income~~decrease between the comparative periods resulted

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from an increase of $19.1 million in interest ~~income of $3.7 million that was~~expense, partially offset by an increase of ~~$2.5~~$10.2 million in interest ~~expense. The~~income. Included in net interest income for the quarters ended December 31, 2023 and 2022, respectively, was purchase accounting accretion of $640,000 and $1.9 million, and loan prepayment penalty income of $185,000 and $166,000.

Net interest margin decreased 44 basis points to 1.94% for the quarter ended December 31, 2023, from 2.38% for the quarter ended December 31, 2022 and reflected an increase in ~~interest income was attributable to an increase~~the cost of interest-bearing liabilities and a decrease in the average balance of interest-earning assets, ~~coupled with an increase in their average yield. The increase in interest expense resulted from~~partially offset by an increase in the ~~average balance of interest-bearing liabilities coupled with an increase in their average cost.~~

These factors contributed to a four basis points decrease in our net interest rate spread to 2.14% for the three months ended December 31, 2017 from 2.18% for the three months ended December 31, 2016. The decrease in the net interest rate spread reflected a 16 basis points increase in the average costyield on ~~interest-bearing liabilities to 1.27% for three months ended December 31, 2017 from 1.11% for the three months ended December 31, 2016. For those same comparative periods, the average yield of~~ interest-earning assets ~~increased by 12 basis points to 3.41% from 3.29%. A discussion of the factors contributing to changes in the average yield~~ and average cost of categories within interest-earning assets and interest-bearing liabilities, respectively, is presented in the separate discussion and analysis of interest income and interest expense below.

The factors resulting in the reported decrease in our net interest rate spread also affected our net interest margin. In total, the Company’s net interest margin decreased four basis points to 2.41% for the three months ended December 31, 2017 compared to 2.45% for the three months ended December 31, 2016.

~~Interest Income~~. Total interest income increased $3.7 million to $38.0 million for the three months ended December 31, 2017 from $34.3 million for the three months ended December 31, 2016. The increase in interest income partly reflected a $284.4 million increase in the average balance of interest-earning assets to $4.46 billion for the three months ended December 31, 2017 from $4.18 billion for the three months ended December 31, 2016. For those same comparative periods, the yield on earning assets increased by 12 basis points to 3.41% from 3.29%.

Interest income from loans increased $3.2 million to $30.6 million for the three months ended December 31, 2017 from $27.4 million for the three months ended December 31, 2016. The increase in interest income on loans was attributable to a net increase in the average balance of loans that was partially offset by a decline in the average yield.

The average balance of loans increased by $356.1 million to $3.26 billion for the three months ended December 31, 2017 from $2.90 billion for the three months ended December 31, 2016. The increase in the average balance of loans primarily reflected an aggregate increase of $384.7 million in the average balance of commercial and construction loans to $2.60 billion for the three months ended December 31, 2017 from $2.21 billion for the three months ended December 31, 2016. Our commercial loans generally comprise commercial mortgage loans, including multi-family and nonresidential mortgage loans, as well as secured and unsecured commercial business loans while construction loans generally include loans secured by one- to four-family residential, multi-family and non-residential properties.

The increase in the average balance of commercial and construction loans was partially offset by an $18.6 million decrease in the average balance of residential mortgage loans to $645.3 million for the three months ended December 31, 2017 from $663.9 million for the three months ended December 31, 2016. Our residential mortgages generally comprise one- to four-family first mortgage loans, home equity loans and home equity lines of credit.

~~- 53 -~~

For those same comparative periods, the average balance of other loans, primarily comprising unsecured consumer term loans, account loans and deposit account overdraft lines of credit, decreased by $8.8 million to $12.9 million from $21.7 million. The decrease in the average balance of other loans largely reflected a decrease in the average outstanding balance of unsecured consumer term loans acquired through Lending Club.

The effect on interest income attributable to the net increase in the average balance of loans was partially offset by the noted decrease in their average yield. The average yield on loans decreased by two basis points to 3.76% for the three months ended December 31, 2017 from 3.78% for the three months ended December 31, 2016. The reduction in the overall yield on our loan portfolio largely reflected the effect of the comparatively lower average yield on most newly originated loans in relation to that of the portfolio of existing loans which has reduced the overall yield of the aggregate portfolio. To a lesser extent, the decline in the average yield generally reflects the effects of low market interest rates that provide “rate reduction” refinancing incentive to existing borrowers.

Interest income from mortgage-backed securities decreased by $930,000 to $2.8 million for the three months ended December 31, 2017 from $3.8 million for the three months ended December 31, 2016. The decrease in interest income reflected a decrease in the average balance of ~~mortgage-backed securities partially offset by an increase in their average yield.~~

interest-earning liabilities. The average balance of mortgage-backed securities decreased by $172.5 million to $501.1 million for the three months ended December 31, 2017 from $673.6 million for the three months ended December 31, 2016. The decrease in the average balance of mortgage-backed securities largely reflected the level of aggregate principal repayments outpacing aggregate security purchases. For those same comparative periods, the average yield on mortgage-backed securities increased ~~by three basis points to 2.27% from 2.24%.~~

Interest income from debt securities increased by $1.2 million to $3.9 million for the three months ended December 31, 2017 from $2.7 million for the three months ended December 31, 2016. The increase in interest income reflected an increase in the average balance of debt securities coupled with an increase in their average yield.

The increase in the average balance of debt securities was partly attributable to a $75.3 million increase in the average balance of taxable securities to $495.3 million for the three months ended December 31, 2017 from $420.0 million for the three months ended December 31, 2016. The increase in taxable securities was augmented with a $14.0 million increase in the average balance of tax-exempt securities to $126.2 million from $112.2 million.

The average yield on debt securities increased by 45 basis points to 2.49% for the three months ended December 31, 2017 from 2.04% for the three months ended December 31, 2016. The increase in the average yield reflected a 57 basis points increase in the yield on taxable securities to 2.61% during the three months ended December 31, 2017 from 2.04% during the three months ended December 31, 2016. The increase in yield on taxable securities was largely attributable to floating rate securities whose interest rates have increased due to recent increases in short-term market interest rates. For those same comparative periods, the yield on tax-exempt securities increased by three basis points to 2.03% from 2.00%.

Interest income from other interest-earning assets increased by $283,000 to $704,000 for the three months ended December 31, 2017 from $421,000 for the three months ended December 31, 2016 reflecting an increase in their average yield coupled with an increase in their average balance. The average yield on other interest-earning assets increased by 105 basis points to 3.42% for the three months ended December 31, 2017 from 2.37% for the three months ended December 31, 2016. For those same comparative periods, the average balance of other interest-earning assets increased by $11.4 million to $82.5 million from $71.1 million. The increase in average yield of other interest earning assets primarily reflected the effects of recent increases in short-term market interest rates on the yield on Company’s short-term liquid assets while the increase in the average balance largely reflected an increase in the average balance of the Bank’s required investment in FHLB stock.

~~Interest Expense~~. Total interest expense increased by $2.5 million to $11.2 million for the three months ended December 31, 2017 from $8.7 million for the three months ended December 31, 2016. The increase in interest expense resulted from an increase in the average balance of interest-bearing liabilities coupled with an increase in their average cost. The average balance of interest-bearing liabilities increased by $384.5 million to $3.52 billion for the three months ended December 31, 2017 from $3.13 billion for the three months ended December 31, 2016. For those same comparative periods, the average cost of interest-bearing liabilities ~~increased 16 basis points to 1.27% from 1.11%.~~

~~Interest expense attributed to deposits increased by $1.2 million to $6.6 million for~~and yield on interest-earning assets is the ~~three months ended December 31, 2017 from $5.4 million for the three months ended December 31, 2016. The increase in~~result of higher market interest ~~expense was attributable to increases in the average balance and average cost of interest-bearing deposits.~~

~~- 54 -~~

The average balance of interest-bearing deposits increased by $205.9 million to $2.71 billion for the three months ended December 31, 2017 from $2.50 billion for the three months ended December 31, 2016. The increase in the average balance was reflected across all categories of interest-bearing deposits. For the comparative periods noted, the average balance of interest-bearing checking accounts increased by $92.6 million to $854.4 million from $761.8 million, the average balance of certificates of deposit increased by $113.0 million to $1.34 billion from $1.22 billion and the average balance of savings and club accounts increased by $317,000 to $518.5 million from $518.2 million.

The average cost of interest-bearing deposits increased by 12 basis points to 0.98% for the three months ended December 31, 2017 from 0.86% for the three months ended December 31, 2016. The net increase in the average cost largely reflected increases in the average cost of certificates of deposit and interest-bearing checking accounts. For the comparative periods noted, the average cost of certificates of deposit increased 10 basis points to 1.43% from 1.33% while the average cost of interest-bearing checking accounts increased 18 basis points to 0.80% from 0.62%. For these same comparative periods, the average cost of savings and club accounts was unchanged at 0.12%.

Interest expense attributed to borrowings increased by $1.2 million to $4.5 million for the three months ended December 31, 2017 from $3.3 million for the three months ended December 31, 2016. The increase in interest expense on borrowings reflected an increase in their average balance coupled with an increase in their average cost. The average balance of borrowings increased by $178.6 million to $808.1 million for the three months ended December 31, 2017, from $629.5 million for the three months ended December 31, 2016. For those same comparative periods, the average cost of borrowings increased by 16 basis points to 2.25% from 2.09%.

The increase in the average balance of borrowings partly reflected a $183.2 million increase in the average balance of FHLB advances to $777.5 million for the three months ended December 31, 2017 from $594.2 million for the three months ended December 31, 2016. For those same comparative periods, the average cost of FHLB advances increased 13 basis points to 2.33% from 2.20%. The increase in average balance of borrowings primarily reflected the effect of additional short-term FHLB advances drawn during the latter half of fiscal 2017 to fund a portion of our growth during the prior fiscal year. We utilized interest rate derivatives at the time the borrowingsrates that were ~~drawn to effectively swap their rolling 90-day maturity/repricing characteristics into fixed rates for longer terms.~~

The increase in the average balance of borrowings also reflected a $4.7 million decrease in the average balance of other borrowings, comprised primarily of depositor sweep accounts, to $30.6 million from $35.3 million. The average cost of sweep accounts decreased by two basis points to 0.27% from 0.29% between the same comparative periods.

~~Provision for Loan Losses~~. The provision for loan losses decreased by $319,000 to $936,000 for the three months ended December 31, 2017 from $1.3 million for the three months ended December 31, 2016. The decrease was partly attributable to a lower provision on non-impaired loans evaluated collectively for impairment that was partially offsetcaused by an increase in the federal funds target rate from 0% - 0.25% in March 2022 to 5.25% - 5.50% in July 2023.

Details surrounding the composition of, and changes to, net interest income are presented in the table below which reflects the components of the average balance sheet and of net interest income for the periods indicated. We derived the average yields and costs by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented with daily balances used to derive average balances. No tax equivalent adjustments have been made to yield or costs. Non-accrual loans were included in the calculation of average balances, however interest receivable on these loans has been fully reserved for and therefore not included in interest income. The yields and costs set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.


	Three Months Ended December 31,
	2023						2022
	Average Balance		Interest		Average Yield/ Cost		Average Balance		Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable (1)	$	5,726,321	$	63,384	4.43	%	$	5,839,903	$	57,996	3.97	%
Taxable investment securities (2)	1,509,165		16,756		4.44		1,527,578		13,221		3.46
Tax-exempt securities (2)	15,025		84		2.25		37,917		219		2.32
Other interest-earning assets (3)	139,740		2,401		6.87		114,175		1,005		3.52
Total interest-earning assets	7,390,251		82,625		4.47		7,519,573		72,441		3.85
Non-interest-earning assets	554,335						550,519
Total assets	$	7,944,586					$	8,070,092

Interest-bearing liabilities:
Interest-bearing demand	$	2,301,169	16,736		2.91		$	2,359,977	9,625		1.63
Savings	664,926		738		0.44		931,584		953		0.41
Certificates of deposit	1,824,316		12,866		2.82		2,192,722		8,244		1.50
Total interest-bearing deposits	4,790,411		30,340		2.53		5,484,283		18,822		1.37
Federal Home Loan Bank advances	1,513,497		14,436		3.82		997,148		8,836		3.54
Other borrowings	142,283		2,010		5.65		—		—		—
Borrowings	1,655,780		16,446		3.97		997,148		8,836		3.54
Total interest-bearing liabilities	6,446,191		46,786		2.90		6,481,431		27,658		1.71
Non-interest-bearing liabilities (4)	659,681						723,567
Total liabilities	7,105,872						7,204,998
Stockholders' equity	838,714						865,094
Total liabilities and stockholders' equity	$	7,944,586					$	8,070,092

Net interest income			$	35,839					$	44,783
Interest rate spread (5)					1.57	%					2.14	%
Net interest margin (6)					1.94	%					2.38	%
Ratio of interest-earning assets to interest-bearing liabilities	1.15						1.16

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(1)Loans held-for-sale and non-accruing loans have been included in loans receivable and the effect of such inclusion was not material. Allowance for credit losses has been included in non-interest-earning assets.

(2)Fair value adjustments have been excluded in the balances of interest-earning assets.

(3)Includes interest-bearing deposits at other banks and FHLB of New York capital stock.

(4)Includes average balances of non-interest-bearing deposits of $597.3 million and $666.8 million for the quarter ended December 31, 2023 and 2022, respectively.

(5)Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

(6)Net interest margin represents net interest income as a percentage of average interest-earning assets.

Provision for Credit Losses. The provision ~~attributable~~for credit losses increased $434,000 to a provision for credit losses ~~recognized~~of $2.1 million for the quarter ended December 31, 2023, compared to provision for credit losses of $1.7 million for the quarter ended December 31, 2022. The provision for the quarter ended December 31, 2023 was primarily driven by charge-offs on three commercial real estate loans, ~~individually reviewed for impairment.~~

~~Regarding the provision on non-impaired loans, the net~~as discussed above, partially offset by a decrease in the balance of loans receivable. By comparison, the provision ~~expense~~for credit losses for the quarter ended December 31, 2022 was largely ~~reflected the lower~~attributable to loan growth in the outstanding balance of loans collectively evaluated for impairment during the three months ended December 31, 2017 compared to the three months ended December 31, 2016. To a lesser extent, the change in the provision on such loans also reflected the comparative effects periodic updates to historical and environmental loss factors between periods.

~~The decrease in provision expense attributable to non-impaired loans was~~quarter, partially offset by ~~an increase~~a reduction in the ~~provision for specific losses recognized on nonperforming loans charged off or individually evaluated for impairment between comparative periods.~~

qualitative component of our ACL.

Additional information regarding the ~~allowance for loan losses~~ACL and the associated provisions recognized during the ~~three months~~quarters ended December 31, ~~2017~~2023 and 2022 is presented in Note 116 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at December 31, ~~2017~~2023 and June 30, ~~2017.~~

2023.

Non-Interest Income. ~~Non-interest~~Total non-interest income ~~excluding gains~~decreased $7.5 million to a loss of $16.0 million for the quarter ended December 31, 2023.

Loss on sale and ~~losses on~~call of securities was $18.1 million during the quarter ended December 31, 2023 compared to $15.2 million during the prior period. The loss in the current period was due to a previously announced repositioning of our investment securities portfolio that involved the sale of ~~securities and gains and losses on~~$122.2 million of available for sale debt securities. Proceeds from the sale were utilized to retire higher-cost wholesale funding and to reinvest in loans yielding approximately 7.0%.

We recognized a non-recurring loss of $974,000 attributable to the write-down of one other real estate owned (“OREO”) property during the quarter ended December 31, 2023, while there were no such losses recorded in the prior period. OREO income for the quarter ended December 31, 2023 was $182,000.

Income from BOLI decreased ~~by $173,000~~$599,000 to ~~$3.2~~$1.2 million for the ~~three month period~~quarter ended December 31, ~~2017 from $3.4~~2023, due to non-recurring exchange charges related to the BOLI restructure, as discussed above.

Other non-interest income decreased $2.9 million to $811,000 for the ~~three months~~quarter ended December 31, ~~2016.~~2023. The decrease in other non-interest income largely reflected a decrease in the gain on sale of loans of $259,000. The decrease in loan sale gains partly reflected a decrease in gains associated with residential mortgage loans sold in conjunction with the Company’s mortgage banking strategy coupled by a decrease in SBA loan sale gains between comparative periods. In both cases, such decreases primarily reflected a lower volume of loans originated and sold between comparative periods.

~~- 55 -~~

The decrease in non-interest income also reflected a $57,000 decrease in the income recognized on bank-owned life insurance attributable to the continuing effects of lower market interest rates on the yields earned by the Company on its underlying policies.

The noted decreases in non-interest income were partially offset by a $152,000 increase in fees and service charges, including electronic banking fees and charges. The noted increase included an increase in loan-related fees and charges,was primarily attributable to ~~an increase in loan prepayment penalties, while also reflecting an increase in deposit-related service charges.~~

~~We also recognized net gains totaling $23,000 arising~~a $2.9 million gain from the ~~write down and~~ sale of ~~REO~~a former branch location during the ~~three months ended December 31, 2017 compared to net gains totaling $12,000 recognized during the earlier comparative~~prior year period. Additionally, we previously recognized $21,000 in gain on sale of securities during the three months ended December 31, 2016 for which no such gains were recognized during the three months ended December 31, 2017.

The remaining changes in the other components of non-interest income between comparative periods generally reflected normal operating fluctuations within those line items.

Non-Interest ~~Expenses~~Expense. ~~Non-interest~~Total non-interest expense ~~increased by $3.4~~decreased $2.9 million to ~~$22.8~~$29.8 million for the ~~three months~~quarter ended December 31, ~~2017~~2023.

Salaries and employee benefits decreased $2.6 million to $17.3 million for quarter ended December 31, 2023. This decrease was primarily driven by lower salary expense resulting from ~~$19.4~~a decrease in employee headcount from December 31, 2022 to December 31, 2023, and a decrease in incentive payments tied to loan origination volume. The headcount reductions were mainly attributable to the workforce realignment completed in the quarter ended December 31, 2022, which included $250,000 of non-recurring severance expense.

Net occupancy expense of premises decreased $313,000 to $2.7 million for the ~~three months~~quarter ended December 31, ~~2016. The increase~~2023. This decrease was primarily due to lower depreciation expense, rent expense and maintenance expense associated with two retail branch closures completed in ~~non-interest~~the quarter ended June 30, 2023.

Advertising and marketing expense ~~partly reflected~~decreased $430,000 to $301,000 for the recognition of certain merger-related expenses related to the Company’s proposed acquisition of Clifton. The Company estimates that net income was adversely impacted by approximately $1.0 million for merger-related expenses recognized during the three monthsquarter ended December 31, ~~2017 due~~2023. This decrease in advertising expense resulted from the adoption of lower cost in-house digital campaigns supporting our loan and deposit growth initiatives.

FDIC insurance premiums increased $269,000 to ~~their limited income tax deductibility.~~

$1.5 million for the quarter ended December 31, 2023. The ~~remaining $2.2~~increase was largely attributable to an updated assessment rate from the FDIC which did not impact the prior year period.

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Other non-interest expense increased $229,000 to $3.8 million for the quarter ended December 31, 2023. This increase was primarily attributable to a $502,000 increase in ~~non-interest expense primarily included increases~~real estate owned expenses. At December 31, 2023, we were under contract to sell a $12 million OREO asset that was subsequently sold in ~~salary and employee benefits expense, premises occupancy expense, equipment and systems expense, advertising and marketing expense and director compensation expense that were~~January 2024. This increase was partially offset by a $166,000 decrease in ~~miscellaneous expense.~~

~~Salaries and employee benefits~~the provision for credit losses on unfunded commitments.

The remaining changes in the other components of non-interest expense increased by $1.3 million to $12.9 million for the three months ended December 31, 2017 from $11.6 million for the three months ended December 31, 2016. The increase in salaries and employee benefit expense was partly attributable to an increase in employee stock benefit plan expenses arising from the granting of benefits to employees under the terms of the Company’s 2016 Equity Incentive Plan approved by stockholders in October 2016. The increase also reflected annual increases in non-executive wages and salaries for fiscal 2017 and the cost of staffing additions within certain lending, business development and operational support functions. The noted increase in salaries and employee benefits expense also reflected increases in expenses associated with health insurance and employee retirement plan expenses. These increases were partially offset by decreases in employee incentive and commission compensation expenses between comparative ~~periods.~~

~~The increase in premises occupancy expense partly~~periods generally reflected increases in facility lease expenses, arising primarily from costs associated with forthcoming branch additions and relocations, coupled with increases in facility repairs and maintenance and depreciation expenses relating to existing administrative and branch facilities. These increases were partially offset by a decrease in property tax expense arising from successful real estate tax appeals negotiated in prior periods.

The increase in equipment and systems expense was partly attributable to increases in service provider expenses supporting electronic banking delivery channels as well as increases in internal information technology infrastructure costs.

~~The increase in advertising and marketing expense largely reflected increases in advertising expenses across a variety of advertising formats including outdoor and electronic media reflecting~~ normal operating fluctuations ~~in the timing of certain advertising campaigns supporting the Company’s loan and deposit growth initiatives.~~

~~The increase in director compensation expense was fully attributable to the additional expense arising from the granting of restricted stock and stock option benefits to directors, as noted above.~~

The noted increases in non-interest expense were partially offset by a decrease in miscellaneous expense that was largely attributable to a decrease in regulatory oversight and examination expense primarily attributable to the Bank’s conversion from a federally-charted stock savings bank to a nonmember New Jersey state-chartered stock savings bank in June 2017.

within those line items.

Provision for Income Taxes. ~~The provision~~Provision for income taxes increased ~~by $2.1~~$1.7 million to ~~$5.1~~$1.8 million for the ~~three months~~quarter ended December 31, ~~2017~~2023 from ~~$3.0 million~~$33,000 for the ~~three months~~quarter ended December 31, ~~2016. As noted earlier, the~~2022.

The increase in income tax expense ~~primarily~~ reflected $5.7 million of discrete tax costs related to the ~~impact~~BOLI restructure, as discussed above, partially offset by lower income driven by higher realized losses on the sale of ~~federal income~~securities, as discussed above.

Effective tax ~~reform that was codified through~~rates for the passage of the Act on December 22, 2017. The Act permanently reduced the Company’s federal income tax rate from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company. While, collectively, the provisions

~~- 56 -~~

of the Act are expected to benefit the Company’s future earnings, it resulted in a $3.5 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the three monthsquarter ended December 31, ~~2017.~~2023 and 2022 were (14.8)% and 1.7%, respectively. The ~~$3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences~~increase in the ~~recognition~~effective tax rate was primarily due to $5.7 million of ~~certain income and expense items for financial statement reporting purposes versus that recognized for income~~discrete tax ~~reporting purposes. That charge~~cost associated with the BOLI restructure, as discussed above. This increase was partially offset by a ~~$1.4 million reduction in~~year-to-date tax rate true-up which resulted from the ~~net deferred~~loss on the sale of securities during the current quarter. The loss lowered our full year projected taxable income and income tax ~~liability primarily attributable to the net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.~~

The net charge of $3.5 million attributable to the changes in the carrying value of deferred income tax items was partially offset by a $769,000 reduction in current-year income tax expense attributable to the noted reduction in the Company’s income tax rate. For the current transition year ending June 30, 2018, the Company’s statutory federal income tax rate has been reduced to 28%, reflecting effective statutory rates of 35% and 21% for the first and second halves of the year, respectively. For the fiscal year ending June 30, 2019 and thereafter, the Company’s statutory federal income tax rate will be reduced to 21%.

~~The remaining variance in income tax expense primarily reflected the impact of the underlying differences in the level of the taxable portion of pre-tax income between comparative periods.~~

Our effective tax rates during the three month periods ended December 31, 2017 and December 31, 2016 were 80.2% and 35.2%. In relation to statutory income tax rates, the effective tax rate for both periods reflected the effects of recurring sources of tax-favored income included in pre-tax income. However, the effective tax rate for the three months ended December 31, 2017 further reflected the effects of federal income tax reform and certain non-deductible merger-related expenses recognized during the period, as discussed above.

provision.

Comparison of Operating Results for the Six Months Ended December 31, ~~2017~~2023 and December 31, ~~2016~~

~~General~~2022

Net (Loss) Income. Net ~~income~~loss for the six months ended December 31, ~~2017~~2023 was ~~$6.5~~$4.0 million, or ~~$0.08~~$0.06 per diluted ~~share; a decrease~~share, compared to net income of ~~$3.6 million from $10.1~~$18.5 million, or ~~$0.12~~$0.28 per diluted share for the six months ended December 31, ~~2016.~~2022. The decrease in net income ~~primarily~~ reflected ~~increases~~a decrease in net interest income, a decrease in non-interest income and an increase in the provision for credit losses, partially offset by decreases in non-interest expense and income tax expense. ~~These factors were partially offset by increases in~~The net loss for the current year period included a $12.9 million after-tax net loss on the sale of securities that resulted from a previously announced investment securities repositioning and an after-tax net loss of $6.3 million from the BOLI restructure, as discussed above.

Net Interest Income. Net interest income ~~and non-interest income as well as a decrease in the provision~~decreased by $18.3 million to $75.0 million for ~~loan losses.~~

~~As discussed in greater detail below, the noted increase in income tax expense primarily reflected the impact of federal income tax reform that was codified during~~ the six months ended December 31, ~~2017 while~~2023 compared to $93.3 million for the ~~noted~~six months ended December 31, 2022. The decrease between the comparative periods resulted from an increase of $45.2 million in ~~non-interest~~interest expense, ~~partly reflected the recognition~~partially offset by an increase of ~~certain merger-related expenses related to the Company’s proposed acquisition of Clifton during the period.~~

~~Net Interest Income. Net~~$26.9 million in interest income. Included in net interest income for the six months ended December 31, ~~2017~~2023 and 2022, respectively, was ~~$53.6 million;~~purchase accounting accretion of $1.3 million and $3.7 million, and loan prepayment penalty income of $452,000 and $607,000.

Net interest margin decreased 51 basis points to 2.02% for the six months ended December 31, 2023, from 2.53% for the six months ended December 31, 2022 and reflected increases in the cost and average balance of interest-bearing liabilities, partially offset by increases in the average balance of and yield on interest-earning assets. The increased cost of interest-bearing liabilities and yield on interest-earning assets is the result of higher market interest rates that were caused by an increase in the federal funds target rate from 0% - 0.25% in March 2022 to 5.25% - 5.50% in July 2023.

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Table of ~~$4.0~~Contents


	Six Months Ended December 31,
	2023						2022
	Average Balance		Interest		Average Yield/ Cost		Average Balance		Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable(1)	$	5,757,197	$	126,153	4.38	%	$	5,696,949	$	110,931	3.89	%
Taxable investment securities(2)	1,512,779		33,021		4.37		1,522,276		23,660		3.11
Tax-exempt securities(2)	15,254		171		2.25		43,445		504		2.32
Other interest-earning assets(3)	135,285		4,448		6.58		101,107		1,766		3.49
Total interest-earning assets	7,420,515		163,793		4.41		7,363,777		136,861		3.72
Non-interest-earning assets	561,529						560,372
Total assets	$	7,982,044					$	7,924,149

Interest-bearing liabilities:
Interest-bearing demand	$	2,273,500	$	31,204	2.75		$	2,357,159	$	15,016	1.27
Savings	692,217		1,576		0.46		975,463		1,549		0.32
Certificates of deposit	1,896,414		25,127		2.65		2,103,822		13,126		1.25
Total interest-bearing deposits	4,862,131		57,907		2.38		5,436,444		29,691		1.09
Federal Home Loan Bank advances	1,449,985		26,720		3.69		819,773		13,138		3.21
Other borrowings	150,190		4,167		5.55		63,728		718		2.26
Borrowings	1,600,175		30,887		3.86		883,501		13,856		3.14
Total interest-bearing liabilities	6,462,306		88,794		2.75		6,319,945		43,547		1.38
Non-interest-bearing liabilities(4)	669,317						723,811
Total liabilities	7,131,623						7,043,756
Stockholders' equity	850,421						880,393
Total liabilities and stockholders' equity	$	7,982,044					$	7,924,149

Net interest income			$	74,999					$	93,314
Interest rate spread(5)					1.66	%					2.34	%
Net interest margin(6)					2.02	%					2.53	%
Ratio of interest-earning assets to interest-bearing liabilities	1.15						1.17

___________________________________

(2)Fair value adjustments have been excluded in the balances of interest-earning assets.

(3)Includes interest-bearing deposits at other banks and FHLB of New York capital stock.

(4)Includes average balances of non-interest-bearing deposits of $604.8 million ~~from $49.6~~and $667.2 million for the six months ended December 31, ~~2016. The increase in net interest income~~2023 and 2022, respectively.

(5)Interest rate spread represents the difference between the comparative periods resulted from an increase in interest income of $8.5 million that was partially offset by a $4.5 million increase in interest expense. The increase in interest income was attributable to an increase in the average balance of interest-earning assets coupled with an increase in their average yield. The increase in interest expense resulted from an increase in the average balance of interest-bearing liabilities coupled with an increase in their average cost.

These factors contributed to a three basis points increase in our net interest rate spread to 2.13% for the six months ended December 31, 2017 from 2.10% for the six months ended December 31, 2016. The increase in the net interest rate spread reflected a 17 basis points increase in the average yield on interest-earning assets ~~to 3.39% for~~and the ~~six months ended December 31, 2017 from 3.22% for the six months ended December 31, 2016. For those same comparative periods, the average~~ cost of interest-bearing liabilities increased by 14 basis points to 1.26% from 1.12%. A discussion of the factors contributing to changes in the average yield and average cost of categories within interest-earning assets and interest-bearing liabilities, respectively, is presented in the separate discussion and analysis ofliabilities.

(6)Net interest margin represents net interest income ~~and interest expense below.~~

The factors resulting in the reported increase in our net interest rate spread also affected our net interest margin. In total, the Company’s net interest margin increased two basis points to 2.40% for the six months ended December 31, 2017 compared to 2.38% for the six months ended December 31, 2016.

~~Interest Income~~. Total interest income increased $8.5 million to $75.6 million for the six months ended December 31, 2017 from $67.1 million for the six months ended December 31, 2016. The increase in interest income partly reflectedas a ~~$298.1 million increase in the~~percentage of average ~~balance of~~ interest-earning ~~assets to $4.46 billion for the six months ended December 31, 2017 from $4.16~~

~~- 57 -~~

~~billion for the six months ended December 31, 2016. For those same comparative periods, the yield on earning assets increased by 17 basis points to 3.39% from 3.22%.~~

Interest income from loans increased $8.0 million to $61.1 million for the six months ended December 31, 2017 from $53.1 million for the six months ended December 31, 2016. The increase in interest income on loans was attributable to a net increase in the average balance of loans that was partially offset by a decline in the average yield.

The average balance of loans increased by $458.2 million to $3.26 billion for the six months ended December 31, 2017 from $2.80 billion for the six months ended December 31, 2016. The increase in the average balance of loans primarily reflected an aggregate increase of $496.1 million in the average balance of commercial and construction loans to $2.59 billion for the six months ended December 31, 2017 from $2.10 billion for the six months ended December 31, 2016. Our commercial loans generally comprise commercial mortgage loans, including multi-family and nonresidential mortgage loans, as well as secured and unsecured commercial business loans while construction loans generally include loans secured by one- to four-family residential, multi-family and non-residential properties.

The increase in the average balance of commercial and construction loans was partially offset by a $28.3 million decrease in the average balance of residential mortgage loans to $647.5 million for the six months ended December 31, 2017 from $675.8 million for the six months ended December 31, 2016. Our residential mortgages generally comprise one- to four-family first mortgage loans, home equity loans and home equity lines of credit.

For those same comparative periods, the average balance of other loans, primarily comprising unsecured consumer term loans, account loans and deposit account overdraft lines of credit, decreased by $9.2 million to $13.8 million from $23.0 million. The decrease in the average balance of other loans largely reflected a decrease in the average outstanding balance of unsecured consumer term loans acquired through Lending Club.

The effect on interest income attributable to the net increase in the average balance of loans was partially offset by the noted decrease in their average yield. The average yield on loans decreased by five basis points to 3.75% for the six months ended December 31, 2017 from 3.80% for the six months ended December 31, 2016. The reduction in the overall yield on our loan portfolio largely reflected the effect of the comparatively lower average yield on most newly originated loans in relation to that of the portfolio of existing loans which has reduced the overall yield of the aggregate portfolio. To a lesser extent, the decline in the average yield generally reflects the effects of low market interest rates that provide “rate reduction” refinancing incentive to existing borrowers.

Interest income from mortgage-backed securities decreased by $2.0 million to $5.7 million for the six months ended December 31, 2017 from $7.7 million for the six months ended December 31, 2016. The decrease in interest income reflected a decrease in the average balance of mortgage-backed securities that was partially offset by an increase in their average yield.

The average balance of mortgage-backed securities decreased by $178.2 million to $506.5 million for the six months ended December 31, 2017 from $684.7 million for the six months ended December 31, 2016. The decrease in the average balance of mortgage-backed securities largely reflected the level of aggregate principal repayments outpacing aggregate security purchases. For those same comparative periods, the average yield on mortgage-backed securities increased by two basis points to 2.27% from 2.25%.

Interest income from debt securities increased by $2.2 million to $7.5 million for the six months ended December 31, 2017 from $5.3 million for the six months ended December 31, 2016. The increase in interest income reflected an increase in the average balance of debt securities coupled with an increase in their average yield.

The increase in the average balance of debt securities was partly attributable to a $61.2 million increase in the average balance of taxable securities to $492.3 million for the six months ended December 31, 2017 from $431.1 million for the six months ended December 31, 2016. The increase in taxable securities was augmented with a $13.5 million increase in the average balance of tax-exempt securities to $124.4 million from $110.9 million.

The average yield on debt securities increased by 46 basis points to 2.42% for the six months ended December 31, 2017 from 1.96% for the six months ended December 31, 2016. The increase in the average yield reflected a 57 basis points increase in the yield on taxable securities to 2.51% during the six months ended December 31, 2017 from 1.94% during the six months ended December 31, 2016. The increase in yield on taxable securities was largely attributable to floating rate securities whose interest rates have increased due to recent increases in short-term market interest rates. For those same comparative periods, the yield on tax-exempt securities increased by two basis points to 2.03% from 2.01%.

~~- 58 -~~

Interest income from other interest-earning assets increased by $344,000 to $1.3 million for the six months ended December 31, 2017 from $1.0 million for the six months ended December 31, 2016 reflecting an increase in their average yield that was partially offset by a decrease in their average balance. The average yield on other interest-earning assets increased by 186 basis points to 3.31% for the six months ended December 31, 2017 from 1.45% for the six months ended December 31, 2016. For those same comparative periods, the average balance of other interest-earning assets decreased by $56.6 million to $81.2 million from $137.8 million. The increase in average yield of other interest earning assets primarily reflected the effects of recent increases in short-term market interest rates on the yield on Company’s short-term liquid assets. The corresponding the decrease in the average balance largely reflected the Company’s efforts to reduce the opportunity cost of maintaining excess liquidity by reinvesting a portion of cash and cash equivalents into the loan portfolio. The effect of these efforts was partially offset by an increase in the average balance of the Bank’s required investment in FHLB stock.

~~Interest Expense~~. Total interest expense increased by $4.5 million to $22.0 million for the six months ended December 31, 2017 from $17.5 million for the six months ended December 31, 2016. The increase in interest expense resulted from an increase in the average balance of interest-bearing liabilities coupled with an increase in their average cost. The average balance of interest-bearing liabilities increased by $385.7 million to $3.50 billion for the six months ended December 31, 2017 from $3.11 billion for the six months ended December 31, 2016. For those same comparative periods, the average cost of interest-bearing liabilities increased 14 basis points to 1.26% from 1.12%.

Interest expense attributed to deposits increased by $2.1 million to $12.9 million for the six months ended December 31, 2017 from $10.8 million for the six months ended December 31, 2016. The increase in interest expense was attributable to increases in the average balance and average cost of interest-bearing deposits.

The average balance of interest-bearing deposits increased by $196.8 million to $2.69 billion for the six months ended December 31, 2017 from $2.49 billion for the six months ended December 31, 2016. The increase in the average balance was reflected across all categories of interest-bearing deposits. For the comparative periods noted, the average balance of interest-bearing checking accounts increased by $101.2 million to $856.3 million from $755.1 million, the average balance of certificates of deposit increased by $91.9 million to $1.31 billion from $1.22 billion and the average balance of savings and club accounts increased by $3.7 million to $520.6 million from $516.9 million.

The average cost of interest-bearing deposits increased by 10 basis points to 0.96% for the six months ended December 31, 2017 from 0.86% for the six months ended December 31, 2016. The net increase in the average cost largely reflected increases in the average cost of certificates of deposit and interest-bearing checking accounts that were partially offset by a decrease in the cost of savings and club accounts. For the comparative periods noted, the average cost of certificates of deposit increased eight basis points to 1.40% from 1.32% while the average cost of interest-bearing checking accounts increased 15 basis points to 0.78% from 0.63%. For these same comparative periods, the average cost of savings and club accounts decreased two basis points to 0.12% from 0.14%.

Interest expense attributed to borrowings increased by $2.4 million to $9.1 million for the six months ended December 31, 2017 from $6.7 million for the six months ended December 31, 2016. The increase in interest expense on borrowings reflected an increase in their average balance coupled with an increase in their average cost. The average balance of borrowings increased by $188.9 million to $809.1 million for the six months ended December 31, 2017, from $620.2 million for the six months ended December 31, 2016. For those same comparative periods, the average cost of borrowings increased by nine basis points to 2.25% from 2.16%.

The increase in the average balance of borrowings primarily reflected a $192.0 million increase in the average balance of FHLB advances to $777.8 million for the six months ended December 31, 2017 from $585.8 million for the six months ended December 31, 2016. For those same comparative periods, the average cost of FHLB advances increased six basis points to 2.33% from 2.27%. The increase in the average balance of borrowings primarily reflected the effect of additional short-term FHLB advances drawn during the latter half of fiscal 2017 to fund a portion of our growth during the prior fiscal year. We utilized interest rate derivatives at the time the borrowings were drawn to effectively swap their rolling 90-day maturity/repricing characteristics into fixed rates for longer terms.

The increase in the average balance of borrowings was partially offset by a $3.1 million decrease in the average balance of other borrowings, comprised primarily of depositor sweep accounts, to $31.3 million from $34.4 million. The average cost of sweep accounts decreased by eight basis points to 0.27% from 0.35% between the same comparative periods.

Provision for ~~Loan~~Credit Losses. The provision for ~~loan~~credit losses ~~decreased by $818,000~~increased $9,000 to ~~$1.6 million~~a provision for ~~the six months ended December 31, 2017 from~~credit losses of $2.4 million for the six months ended December 31, ~~2016. The decrease was partly attributable~~2023, compared to a ~~lower~~ provision ~~on non-impaired loans evaluated collectively~~ for ~~impairment that was partially offset by an increase in~~credit losses of $2.3 million for the six months ended

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Table of Contents

December 31, 2022. The provision ~~attributable to losses recognized on loans individually reviewed~~ for ~~impairment.~~

~~- 59 -~~

Regarding the provision on non-impaired loans, the net decrease in the provision expense largely reflected the lower growth in the outstanding balance of loans collectively evaluated for impairment during the six months ended December 31, ~~2017 compared~~2023 was primarily driven by charge-offs on three commercial real estate loans attributable to one borrower relationship. By comparison, the provision for credit losses for the six months ended December 31, ~~2016. To a lesser extent, the change in the provision on such loans also reflected the comparative effects periodic updates to historical and environmental loss factors between periods.~~

~~The decrease in provision expense~~2022 was largely attributable to ~~non-impaired loans was~~loan growth, partially offset by ~~an increase~~a reduction in the ~~provision for specific losses recognized on nonperforming loans charged off or individually evaluated for impairment between comparative periods.~~

qualitative component of our ACL and a reduction in the expected life of the loan portfolio.

Additional information regarding the ~~allowance for loan losses~~ACL and the associated provisions recognized during the six months ended December 31, ~~2017~~2023 and 2022 is presented in Note 116 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at December 31, ~~2017~~2023 and June 30, ~~2017.~~

2023.

Non-Interest Income. ~~Non-interest~~Total non-interest income ~~excluding gains and losses on the sale~~decreased $9.4 million to a loss of ~~securities and gains and losses on the sale and write-down of real estate owned, increased by $386,000 to $6.4 million for the six month period ended December 31, 2017 from $6.1~~$12.0 million for the six months ended December 31, 2016. The increase in non-interest income primarily reflected a $745,000 increase in fees and service charges, including electronic banking fees and charges. The noted increase included an increase in loan-related fees and charges, primarily attributable to an increase in loan prepayment penalties, while also reflecting an increase in deposit-related service charges.

~~The increase in non-interest income was partially offset by a decrease in the gain~~2023.

Loss on sale and call of loans of $228,000. The decrease in loan sale gains partly reflected a decrease in gains associated with residential mortgage loans sold in conjunction with the Company’s mortgage banking strategy coupled with a decrease in SBA loan sale gains between comparative periods. In both cases, such decreases primarily reflected a lower volume of loans originated and sold between comparative periods.

The decrease in non-interest income also reflected a $109,000 decrease in the income recognized on bank-owned life insurance attributable to the continuing effects of lower market interest rates on the yields earned by the Company on its underlying policies.

~~We also recognized net losses totaling $86,000 arising from the write down and sale of REO~~securities was $18.1 million during the six months ended December 31, ~~2017~~2023 compared to ~~net losses~~a loss of ~~$3,000 recognized~~$15.2 million recorded during the ~~earlier comparative~~prior year period. ~~Additionally, we~~The loss in the current period was due to a previously ~~recognized $21,000 in gain on~~announced repositioning of our investment securities portfolio that involved the sale of ~~securities~~$122.2 million of available for sale debt securities. Proceeds from the sale were utilized to retire higher-cost wholesale funding and to reinvest in loans yielding approximately 7.0%.

Income from bank owned life insurance decreased $2.6 million to $2.8 million for ~~which no such gains were recognized during~~ the six months ended December 31, ~~2017.~~

2023. The decrease was primarily attributable to non-recurring exchange charges related to the BOLI restructure, as discussed above, and the absence of non-recurring payments from life insurance policies reflected in the prior year period.

Other non-interest income decreased $2.5 million to $1.8 million for the six months ended December 31, 2023. The decrease in other non-interest income was primarily attributable to a non-recurring gain of $2.9 million from the sale of a former branch location during the prior year period.

The remaining changes in the other components of non-interest income between comparative periods generally reflected normal operating fluctuations within those line items.

Non-Interest ~~Expenses~~Expense. ~~Non-interest~~Total non-interest expense ~~increased by $6.0~~decreased $5.1 million to ~~$44.0~~$59.5 million for the six months ended December 31, ~~2017 from $38.0~~2023.

Salaries and employee benefits decreased $5.2 million to $35.0 million for the six months ended December 31, ~~2016.~~2023. This decrease was primarily driven by lower salary expense resulting from a decrease in employee headcount from December 31, 2022 to December 31, 2023, and a decrease in incentive payments tied to loan origination volume. The ~~net increase in non-interest expense partly reflected the recognition of certain merger-related expenses related~~headcount reductions were mainly attributable to the ~~Company’s proposed acquisition of Clifton. The Company estimates that net income was adversely impacted by approximately $1.0 million for merger-related expenses recognized during~~workforce realignment completed in the ~~six months~~quarter ended December 31, ~~2017 due to their limited income tax deductibility.~~

~~The remaining $4.8 million increase in non-interest expense primarily~~2022, which included ~~increases in salary and employee benefits expense, premises~~$250,000 of non-recurring severance expense.

Net occupancy expense ~~equipment and systems expense, advertising and marketing expense and director compensation expense that were partially offset by a decrease in miscellaneous expense.~~

~~Salaries and employee benefits expense increased by $3.3 million~~of premises decreased $645,000 to ~~$25.8~~$5.4 million for the six months ended December 31, ~~2017~~2023. This decrease was primarily due to decreases in rent expense, depreciation expense, and building repairs and maintenance expense. These decreases are a result of the consolidation of two branch locations during the quarter ended June 30, 2023.

Advertising and marketing expense decreased $949,000 to $529,000 for the quarter ended December 31, 2023. This decrease in advertising expense resulted from ~~$22.5~~the adoption of lower cost in-house digital campaigns supporting our loan and deposit growth initiatives.

FDIC insurance premiums increased $887,000 to $3.0 million for the six months ended December 31, ~~2016.~~2023. The increase in salaries and employee benefit expense was partly attributable to an increase in employee stock benefit plan expenses arising from the granting of benefits to employees under the terms of the Company’s 2016 Equity Incentive Plan approved by stockholders in October 2016. The increase also reflected annual increases in non-executive wages and salaries for fiscal 2017 and the cost of staffing additions within certain lending, business development and operational support functions. The noted increase in salaries and employee benefits expense also reflected increases in expenses associated with health insurance and employee retirement plan expenses. These increases were partially offset by decreases in employee incentive and commission compensation expenses between comparative periods.

The increase in premises occupancy expense partly reflected increases in facility lease expenses, arising primarily from costs associated with forthcoming branch additions and relocations, coupled with increases in facility repairs and maintenance and depreciation expenses relating to existing administrative and branch facilities. These increases were partially offset by a decrease in property tax expense arising from successful real estate tax appeals negotiated in prior periods.

~~- 60 -~~

The increase in advertising and marketing expense largely reflected increases in advertising expenses across a variety of advertising formats including outdoor and electronic media reflecting normal fluctuations in the timing of certain advertising campaigns supporting the Company’s loan and deposit growth initiatives.

~~The noted increases in non-interest expense were partially offset by a decrease in miscellaneous expense that~~ was largely attributable to ~~a decrease in regulatory oversight and examination expense. The decrease was primarily attributable~~an updated assessment rate from the FDIC which did not impact the prior year period.

Other non-interest expense increased $643,000 to ~~the Bank’s conversion from a federally-charted stock savings bank to a nonmember New Jersey state-chartered stock savings bank in June 2017.~~

~~Provision for Income Taxes. The provision for income taxes increased by $2.7 million to $7.9~~$7.1 million for the six months ended December 31, ~~2017 from $5.2~~2023. This increase was primarily attributable to a $1.1 million increase in OREO expenses. At December 31, 2023, we were under contract to sell a $12 million OREO asset that was subsequently sold in January 2024. This increase was partially offset by a decrease in professional and consulting and loan expense.

The remaining changes in the other components of non-interest expense between comparative periods generally reflected normal operating fluctuations within those line items.

Provision for Income Taxes. Provision for income taxes decreased $197,000 to $5.1 million for the six months ended December 31, 2016. As noted earlier, increase in income tax expense primarily reflected the impact of federal income tax reform that was codified through the passage of the Act on December 22, 2017. The Act permanently reduced the Company’s federal income tax rate2023 from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company. While, collectively, the provisions of the Act are expected to benefit the Company’s future earnings, it resulted in a $3.5$5.3 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the six months ended December 31, 2017. The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognized for income tax reporting purposes. That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.

~~The remaining variance in income tax expense primarily reflected the impact of the underlying differences in the level of the taxable portion of pre-tax income between comparative periods.~~

Our effective tax rates during the six month periods ended December 31, 2017 and December 31, 2016 were 54.8% and 33.8%. In relation to statutory income tax rates, the effective tax rate for both periods reflected the effects of recurring sources of tax-favored income included in pre-tax income. However, the effective tax rate for the six months ended December 31, ~~2017 further reflected the effects of federal~~2022.

The decrease in income tax ~~reform and certain non-deductible merger-related expenses recognized during~~expense reflected a lower level of pre-tax income as compared to the prior period, partially offset by $5.7 million of discrete tax cost associated with the BOLI restructure, as discussed above.

Effective tax rates for the six months ended December 31, 2023 and 2022 were 460.3% and 22.2%, respectively. The increase in the effective tax rate was primarily due to discrete tax costs of $5.7 million associated with the BOLI restructure, as discussed above.

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Table of Contents

Liquidity and Capital Resources

~~Our liquidity,~~

Liquidity, represented by cash and cash equivalents, is a product of ~~our~~ operating, investing and financing activities. Our primary sources of funds are deposits, borrowings, ~~amortization, prepayments and maturities of mortgage-backed~~cash flows from investment securities and ~~outstanding~~ loans ~~maturities and calls of debt securities~~receivable and funds provided from operations. In addition to cash and cash equivalents, we invest excess funds in short-term interest-earning assets such as overnight deposits or U.S. agency securities, which provide liquidity to meet lending requirements. While scheduled payments from the amortization and maturity of loans and ~~mortgage-backed~~investment securities ~~and maturing securities and short-term investments~~ are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and prepayments on loans and ~~mortgage-backed~~ securities.

~~The Bank is required to have enough investments that qualify as liquid assets in order to maintain sufficient~~

At December 31, 2023, liquidity ~~to ensure a safe operation. The balance~~included $73.9 million of ~~our~~short-term cash and ~~cash~~ equivalents ~~decreased by $27.6~~and $1.14 billion of investment securities available for sale. As of December 31, 2023, we had the capacity to borrow additional funds totaling $972.7 million and $405.3 million from the FHLB of New York and FRB, respectively, without pledging additional collateral. We had the ability to ~~$50.7~~pledge additional securities to borrow an additional $400.8 million at December 31, ~~2017 from $78.2 million at June 30, 2017. The decrease in the balance~~2023. As of ~~cash and cash equivalents largely reflected the Company’s ongoing effort~~that same date, we also had access to enhance earnings by generally reducing the level of lower-yielding, short-term liquid assets to only the amount needed to fund the Company’s strategic initiatives while meeting its operational and risk management objectives. Toward that end, the Company’s average balance of cash and equivalents declined to $61.5 million for the six months ended December 31, 2017 compared to their average balance of $100.3 million for the prior fiscal year ended June 30, 2017.

~~- 61 -~~

~~Investments that formally qualify as liquid assets are supplemented by our portfolio of securities classified as available for sale whose balances at December 31, 2017 included $151.7~~unsecured overnight borrowings with other financial institutions totaling $950.0 million of ~~mortgage-backed securities and $486.0 million of debt securities that can readily be sold if necessary.~~

which none was outstanding.

At December 31, ~~2017, the Company~~2023, we had outstanding commitments to originate and purchase loans ~~held in portfolio~~ totaling ~~approximately $64.0~~$16.7 million while such commitments totaled ~~$95.2~~$23.3 million at June 30, ~~2017.~~2023. As of those same dates, ~~the Company’s~~our pipeline of loans held for sale included ~~$15.8~~$11.0 million and ~~$18.4~~$11.7 million, respectively, of ~~“in process”~~ loans ~~respectively,~~in process whose terms included interest rate locks to borrowers that were paired with a ~~“non-binding”~~ best-efforts commitment to sell the loan to a buyer at a fixed price and within a predetermined timeframe after the sale commitment is established.

Construction loans in process and unused lines of credit were ~~$16.4~~$35.1 million and ~~$60.6~~$159.3 million, respectively, at December 31, ~~2017~~2023 compared to ~~$8.1~~$58.5 million and ~~$60.7~~$169.5 million, respectively, at June 30, ~~2017. The Company is~~2023. We are also subject to the contingent liabilities resulting from letters of credit whose outstanding balances totaled ~~$1.1 million and $715,000~~$115,000 at December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, respectively.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the customer. Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

As noted earlier, for the six months ended December 31, 2017, the balance of total deposits increased by $103.6 million to $3.03 billion from $2.93 billion at June 30, 2017. The net increase in deposits reflected a net increase in non-interest-bearing checking accounts totaling $7.7 million coupled with an increase in interest-bearing deposits totaling $96.0 million. The increase in interest-bearing deposits included an increase in the balance of interest-bearing checking accounts totaling $32.1 million and an increase in the balance of certificates of deposit totaling $70.5 million that were partially offset by a decrease in the balance of savings and club accounts totaling $6.6 million. The balance of certificates of deposit with maturities within one year increased to $617.6 million at December 31, 2017 compared to $610.8 million at June 30, 2017 with such balances representing 45.4% and 47.3% of total certificates of deposit at the close of each period, respectively.

Advances from the FHLB of New York are available to supplement the Company’s liquidity position and, to the extent that maturing deposits do not remain with the Company, management may replace such funds with advances. As of December 31, 2017, the Company’s outstanding balance of FHLB advances, excluding fair value adjustments, totaled $775.6 million. Of these advances, $145.0 million represent long-term, fixed-rate advances maturing in 2023 that have terms enabling the FHLB to call the borrowing at their option prior to maturity. The remaining balance of long-term, fixed rate advances includes one $5.2 million term advance maturing during fiscal 2018 and one fixed-rate, amortizing advance maturing in 2021 with an outstanding balance of $415,000 at December 31, 2017. Short-term FHLB advances at December 31, 2017 included $625.0 million of fixed-rate borrowings which have been effectively converted to longer duration funding sources through the use of interest rate derivatives.

The Company has the capacity to borrow additional funds from the FHLB, through a line of credit or by taking additional short-term or long-term advances. Such borrowings are an option available to management if funding needs change or to lengthen the duration of liabilities. Most of the Bank’s mortgage-backed and debt securities are held in safekeeping at the FHLB of New York and the Federal Reserve Bank of New York, with a majority being available as collateral if necessary. As of December 31, 2017, the Bank’s remaining borrowing potential at the FHLB of New York totaled $922.1 million. In addition to the FHLB advances, the Bank has other borrowings totaling $23.2 million at December 31, 2017 representing overnight “sweep account” balances linked to customer demand deposits.

Consistent with its goals to operate a sound and profitable financial organization, the Bank actively seeks to maintain its status as a well-capitalized institution in accordance with regulatory standards. ~~As of December 31, 2017, the Company and the Bank exceeded all capital requirements of federal banking regulators.~~

~~- 62 -~~

The following table sets forth the Bank’s capital position at December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, as compared to the minimum regulatory capital requirements that were in effect as of those dates:

	At December 31, 2017
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
	At December 31, 2023																															At December 31, 2023
	Actual																					Actual						For Capital Adequacy Purposes							To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount																			Amount				Ratio			Amount				Ratio				Amount			Ratio
	(Dollars in Thousands)																															(Dollars in Thousands)
Total capital (to risk-weighted assets)	$	766,693		23.83	%	$	257,430		8.00	%	$	321,788		10.00	%	Total capital (to risk-weighted assets)	$	677,211	13.87		13.87		%		$	390,573	8.00		8.00	%			$	488,217		10.00	10.00	%
Tier 1 capital (to risk-weighted assets)		736,627		22.89	%		193,073		6.00	%		257,430		8.00	%	Tier 1 capital (to risk-weighted assets)	640,522		13.12		13.12		%		292,930		6.00		6.00	%			390,573			8.00	8.00	%
Common equity tier 1 capital (to risk-weighted assets)		736,627		22.89	%		144,805		4.50	%		209,162		6.50	%	Common equity tier 1 capital (to risk-weighted assets)	640,522		13.12		13.12		%		219,698		4.50		4.50	%			317,341			6.50	6.50	%
Tier 1 capital (to adjusted total assets)		736,627		15.68	%		187,961		4.00	%		234,952		5.00	%	Tier 1 capital (to adjusted total assets)	640,522		8.10		8.10		%		316,318		4.00		4.00	%			395,398			5.00	5.00	%

	At June 30, 2017
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
	At June 30, 2023																															At June 30, 2023
	Actual																					Actual						For Capital Adequacy Purposes							To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount																			Amount				Ratio			Amount				Ratio				Amount			Ratio
	(Dollars in Thousands)																															(Dollars in Thousands)
Total capital (to risk-weighted assets)	$	753,790		23.30	%	$	258,809		8.00	%	$	323,512		10.00	%	Total capital (to risk-weighted assets)	$	695,417	13.31		13.31		%		$	417,853	8.00		8.00	%			$	522,316		10.00	10.00	%
Tier 1 capital (to risk-weighted assets)		724,504		22.39	%		194,107		6.00	%		258,809		8.00	%	Tier 1 capital (to risk-weighted assets)	659,783		12.63		12.63		%		313,389		6.00		6.00	%			417,853			8.00	8.00	%
Common equity tier 1 capital (to risk-weighted assets)		724,504		22.39	%		145,580		4.50	%		210,283		6.50	%	Common equity tier 1 capital (to risk-weighted assets)	659,783		12.63		12.63		%		235,042		4.50		4.50	%			339,505			6.50	6.50	%
Tier 1 capital (to adjusted total assets)		724,504		15.47	%		187,308		4.00	%		234,136		5.00	%	Tier 1 capital (to adjusted total assets)	659,783		8.15		8.15		%		323,922		4.00		4.00	%			404,902			5.00	5.00	%

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Table of Contents

The following table sets forth the Company’s capital position at December 31, ~~2017~~2023 and June 30, ~~2017,~~2023, as compared to the minimum regulatory capital requirements that were in effect as of those dates:

	At December 31, 2017
	Actual					For Capital Adequacy Purposes
	Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
	At December 31, 2023																					At December 31, 2023
	Actual																Actual						For Capital Adequacy Purposes
	Amount														Amount				Ratio			Amount				Ratio
	(Dollars in Thousands)																					(Dollars in Thousands)
Total capital (to risk-weighted assets)	$	903,056		27.93	%	$	258,709		8.00	%	Total capital (to risk-weighted assets)	$	741,060	15.17		15.17		%		$	390,758	8.00		8.00	%
Tier 1 capital (to risk-weighted assets)		872,990		27.00	%		194,032		6.00	%	Tier 1 capital (to risk-weighted assets)	704,372		14.42		14.42		%		293,069		6.00		6.00	%
Common equity tier 1 capital (to risk-weighted assets)		872,990		27.00	%		145,524		4.50	%	Common equity tier 1 capital (to risk-weighted assets)	704,372		14.42		14.42		%		219,802		4.50		4.50	%
Tier 1 capital (to adjusted total assets)		872,990		18.50	%		188,707		4.00	%	Tier 1 capital (to adjusted total assets)	704,372		8.89		8.89		%		316,855		4.00		4.00	%

	At June 30, 2017
	Actual					For Capital Adequacy Purposes
	Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
	At June 30, 2023																					At June 30, 2023
	Actual																Actual						For Capital Adequacy Purposes
	Amount														Amount				Ratio			Amount				Ratio
	(Dollars in Thousands)																					(Dollars in Thousands)
Total capital (to risk-weighted assets)	$	974,545		29.98	%	$	260,065		8.00	%	Total capital (to risk-weighted assets)	$	770,621	14.75		14.75		%		$	418,015	8.00		8.00	%
Tier 1 capital (to risk-weighted assets)		945,259		29.08	%		195,049		6.00	%	Tier 1 capital (to risk-weighted assets)	734,987		14.07		14.07		%		313,511		6.00		6.00	%
Common equity tier 1 capital (to risk-weighted assets)		945,259		29.08	%		146,287		4.50	%	Common equity tier 1 capital (to risk-weighted assets)	734,987		14.07		14.07		%		235,133		4.50		4.50	%
Tier 1 capital (to adjusted total assets)		945,259		20.11	%		188,012		4.00	%	Tier 1 capital (to adjusted total assets)	734,987		9.07		9.07		%		324,170		4.00		4.00	%

In March 2020, the federal banking agencies announced an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The interim final rule provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss method, followed by a three-year transition period established in the previous rule (five-year transition option). We have adopted the capital transition relief over the permissible five-year period. The two-year delay ended for us as of June 30, 2022 and we then began the three-year transition period.

Off-Balance Sheet Arrangements

~~We are a party to financial instruments with off-balance-sheet risk in~~

In the normal course of our business of investing in loans and securities ~~as well as in the normal course of maintaining and improving Kearny Bank’s facilities.~~we are a party to financial instruments with off-balance-sheet risk. These financial instruments include significant purchase commitments, such as commitments related to capital expenditure plans and commitments to ~~purchase securities or mortgage-backed securities and commitments to~~ extend credit to meet the financing needs of our customers. ~~At December 31, 2017, we~~We had no significant off-balance sheet commitments ~~to purchase securities or~~ for capital ~~expenditures.~~

expenditures as of December 31, 2023.

Recent Accounting Pronouncements

For a discussion of the expected impact of recently issued accounting pronouncements that we have ~~yet to be~~ adopted, ~~by the Company,~~ please refer to Note 73 to the unaudited consolidated financial statements.

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ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

~~Qualitative Analysis.~~

The majority of our assets and liabilities are sensitive to changes in interest ~~rates. Consequently,~~rates and as such, interest rate risk is a significant form of ~~business~~market risk that we must manage. Interest rate risk is generally defined in regulatory nomenclature as the risk to ~~our~~ earnings or capital arising from the movement of interest ~~rates. It~~rates and arises from several risk factors ~~including:~~including re-pricing risk, basis risk, yield curve risk and option risk. We maintain an Asset/Liability Management (“ALM”) program in order manage our interest rate risk. The program is overseen by the ~~differences between~~Board of Directors through its Interest Rate Risk Management Committee which has assigned the ~~timing~~responsibility for the operational aspects of ~~rate changes and~~ the timing of cash flows (re-pricing risk); the changing rate relationships among different yield curves that affect bank activities (basis risk); the changing rate relationships across the spectrum of maturities (yield curve risk); and the interest-rate-related options embedded in bank products (option risk).

~~Regarding the risk~~ALM program to our Asset/Liability Management Committee (“ALCO”), which is comprised of various members of the senior and executive management team.

The quantitative analysis that we conduct measures interest rate risk from both a capital and earnings perspective. With regard to earnings, movements in interest rates and the shape of the yield curve significantly influence the amount of net interest income (“NII”) that we ~~recognized. Net interest income is the difference between:~~

~~the interest income recorded on our interest-earning assets, such as loans, securities and other interest-earning assets; and~~

~~the interest expense recorded on our interest-bearing liabilities, such as interest-bearing deposits and borrowings.~~

Net interest income is, by far, our largest revenue source to which we add our non-interest income and from which we deduct our provision for loan losses, non-interest expense and income taxes to calculate net income.recognize. Movements in market interest rates, and the effect of such movements on the risk factors noted above, significantly influence the ~~“spread”~~spread between the interest earned on our ~~loans, securities and other~~ interest-earning assets and the interest paid on our deposits and borrowings. Movements in interest rates that increase, or “widen”, that net interest spread enhance our net income. Conversely, movements in interest rates that reduce, or “tighten”, that net interest spread adversely impact our net income.

For any given movement in interest rates, the resulting degree of movement in an institution’s yield on interest-earning assets compared with that of its cost of interest-bearing liabilities determines if an institution is deemed “asset sensitive” or “liability sensitive”. An asset sensitive institution is one whose yield on interest-earning assets reacts more quickly to movements in interest rates than its cost of interest-bearing liabilities. In general, the earnings of asset sensitive institutions are enhanced by upward movements in interest rates through which the yield on its interest-earning assets increases faster than its cost of interest-bearing liabilities resulting in a widening of its net interest spread. Conversely, the earnings of asset sensitive institutions are adversely impacted by downward movements in interest rates through which the yield on its interest-earning assets decreases faster than its cost of interest-bearing liabilities resulting in a tightening of its net interest spread.

In contrast, a liability sensitive institution is one whose cost of interest-bearing liabilities reacts more quickly to movements in interest rates than its yield on interest-earning assets. In general, the earnings of liability sensitive institutions are enhanced by downward movements in interest rates through which the cost of interest-bearing liabilities decreases faster than its yield on its interest-earning assets resulting in a widening of its net interest spread. Conversely, the earnings of liability sensitive institutions are adversely impacted by upward movements in interest rates through which the cost of interest-bearing liabilities increases faster than its yield on its interest-earning assets resulting in a tightening of its net interest spread.

The degree of an institution’s asset or liability sensitivity is traditionally represented by its “gap position”. In general, gap is a measurement that describes the net mismatch between the balance of an institution’s interest-earning assets that are maturing and/or re-pricing over a selected period of time compared to that of its interest-costing liabilities. Positive gaps represent the greater dollar amount of interest-earning assets maturing or re-pricing over the selected period of time than interest-costing liabilities. Conversely, negative gaps represent the greater dollar amount of interest-costing liabilities than interest-earning assets maturing or re-pricing over the selected period of time. The degree to which an institution is asset or liability sensitive is reported as a negative or positive percentage of assets, respectively. The industry commonly focuses on cumulative one-year and three-year gap percentages as fundamental indicators of interest rate risk sensitivity.

~~Based upon the findings of our~~Our internal interest rate risk analysis ~~we are considered to be liability sensitive. Liability sensitivity is generally attributable to~~calculates the ~~comparatively shorter contractual maturity and/or re-pricing characteristics of the institution’s deposits and borrowings versus those of its loans and investment securities.~~

With respect to the maturity and re-pricing of our interest-bearing liabilities, at December 31, 2017, $617.6 million, or 45.4%, of our certificates of deposit mature within one year with an additional $438.3 million, or 32.2%, of our certificates of deposit maturing after one year but within two years. The remaining $305.7 million or 22.4% of certificates, at December 31, 2017 have remaining terms to maturity exceeding two years.

~~- 65 -~~

Excluding fair value adjustments, the balance of FHLB advances totaled $775.6 million at December 31, 2017 and comprised both short-term and long-term advances with fixed rates of interest. Short-term FHLB advances generally have original maturities of less than one year and may include overnight borrowings which the Bank typically utilizes to address short term funding needs as they arise. Short-term FHLB advances at December 31, 2017 included $625.0 million of 90-day FHLB term advances that are generally forecasted to be periodically redrawn at maturity for the same 90 day term as the original advance. Based on this presumption, the Bank has utilized interest rate swaps to effectively extend the duration of each of these advances at the time they were drawn to effectively fix their cost for longer periods of time.

Long-term advances generally include advances with original maturities of greater than one year. At December 31, 2017, our outstanding balance of long-term FHLB advances totaled $150.6 million. Such advances included $145.0 million of fixed-rate, callable term advances and $5.2 million of fixed-rate, non-callable term advances as well as a $415,000 fixed-rate amortizing advance.

With respect to the maturity and re-pricing of our interest-earning assets, at December 31, 2017, $39.2 million, or 1.2% of our total loans, will reach their contractual maturity dates within one year with the remaining $3.25 billion, or 98.8% of total loans having remaining terms to contractual maturity in excess of one year. Of loans maturing after one year, $1.46 billion had fixed rates of interest while the remaining $1.79 billion had adjustable rates of interest, with such loans representing 44.5% and 54.3% of total loans, respectively.

At December 31, 2017, $5.5 million, or 0.5% of our total securities, will reach their contractual maturity dates within one year with the remaining $1.10 billion, or 99.5% of total securities, having remaining terms to contractual maturity in excess of one year. Of the latter category, $623.8 million comprising 56.2% of our total securities had fixed rates of interest while the remaining $479.9 million comprising 43.3% of our total securities had adjustable or floating rates of interest.

At December 31, 2017, mortgage-related assets, including mortgage loans and mortgage-backed securities, totaled $3.66 billion and comprised 75.6% of total assets. In addition to remaining term to maturity and interest rate type as discussed above, other factors contribute significantly to the level of interest rate risk associated with mortgage-related assets. In particular, the scheduled amortization of principal and the borrower’s option to prepay any or all of a mortgage loan’s principal balance, where applicable, have a significant effect on the average lives of such assets and, therefore, the interest rate risk associated with them. In general, the prepayment rate on lower yielding assets tends to slow as interest rates rise due to the reduced financial incentive for borrowers to refinance their loans. By contrast, the prepayment rate of higher yielding assets tends to accelerate as interest rates decline due to the increased financial incentive for borrowers to prepay or refinance their loans to comparatively lower interest rates. These characteristics tend to diminish the benefits of falling interest rates to liability sensitive institutions while exacerbating the adverse impact of rising interest rates.

We generally retained our liability sensitivity during the first six months of fiscal 2018 while the degree of that sensitivity, as measured internally by the institution’s one-year and three-year gap percentages decreased nominally during the period. Specifically, our cumulative one-year gap percentage changed to (13.15)% at December 31, 2017 from (13.73)% at June 30, 2017 while our cumulative three-year gap percentage changed to (6.94)% from (8.27)% over those same comparative periods.

As a liability-sensitive institution, our net interest spread is generally expected to benefit from overall reductions in market interest rates. Conversely, our net interest spread is generally expected to be adversely impacted by overall increases in market interest rates. However, the general effects of movements in market interest rates can be diminished or exacerbated by “nonparallel” movements in interest rates across a yield curve. Nonparallel movements in interest rates generally occur when shorter term and longer term interest rates move disproportionately in a directionally consistent manner. For example, shorter term interest rates may decrease faster than longer term interest rates which would generally result in a “steeper” yield curve. Alternately, nonparallel movements in interest rates may also occur when shorter term and longer term interest rates move in a directionally inconsistent manner. For example, shorter term interest rates may rise while longer term interest rates remain steady or decline which would generally result in a “flatter” yield curve.

In general, the interest rates paid on our deposits tend to be determined based upon the level of shorter term interest rates. By contrast, the interest rates earned on our loans and investment securities generally tend to be based upon the level of comparatively longer term interest rates to the extent such assets are fixed-rate in nature. As such, the overall “spread” between shorter term and longer term interest rates when earning assets and costing liabilities re-price greatly influences our overall net interest spread over time. In general, a wider spread between shorter term and longer term interest rates, implying a “steeper” yield curve, is beneficial to our net interest spread. By contrast, a narrower spread between shorter term and longer term interest rates, implying a “flatter” yield curve, or a negative spread between those measures, implying an inverted yield curve, adversely impacts our net interest spread.

~~- 66 -~~

We continue to execute various strategies to mitigate the risk to our net interest rate spread and margin arising from adverse changes in interest rates and the shape of the yield curve. Such strategies include deploying excess liquidity in higher yielding interest-earning assets, such as commercial loans and investment securities, while continuing to generally maintain our cost of interest-bearing liabilities at low levels while extending their duration through various deposit pricing strategies. For example, we have extended the duration of our wholesale funding sources through cost effective use of interest rate derivatives that effectively converted short-term wholesale funding sources into longer-term, fixed-rate funding sources.

Notwithstanding these efforts, the risk of further net interest rate spread and margin compression is significant as the yield on our interest-earning assets continues to reflect the impact of the greater declines in longer term market interest rates in prior years compared to the lesser concurrent reductions in shorter term market interest rates that affect the cost of our interest-bearing liabilities. Our liability sensitivity may adversely affect net income in the future as market interest rates continue to increase from their prior historical lows and our cost of interest-bearing liabilities may rise faster than our yield on interest-earning assets. This risk to earnings could be exacerbated by a flattening of the yield curve in which an increase in shorter term market interest rates rise might outpace an increase in longer term market interest rates.

~~Given the inherent liability~~ sensitivity of our projected NII over a one year period utilizing a static balance sheet our business plan also calls for greater expansion into C&I and construction lending. Toward that end, we are continuing to expand our retail lending resources with an experienced team of business lenders focused on the origination of floating-rate and shorter-term fixed-rate loans and the corresponding core deposit account balances typically associated with such relationships. We are also developing an interest rate risk management strategyassumption through which certain longer-duration, fixed-rate commercial mortgage loan originations may be effectively converted into floating-rate assets through the use of interest rate derivatives in loan hedging transactions. As a complement to these retail business lending strategies, we have also implemented strategies through which floating-rateincoming and ~~other shorter-term fixed-rate C&I and consumer loans are acquired through wholesale resources.~~

We maintain an Asset/Liability Management (“ALM”) Program to address all matters relating to the management of interest rate risk and liquidity risk. The program is overseen by the Board of Directors through our Interest Rate Risk Management Committee comprising five members of the Board with our Chief Operating Officer, Chief Financial Officer, Treasurer/Chief Investment Officer and Chief Risk Officer participating as management’s liaison to the committee. The committee meets quarterly to address management of our assets and liabilities, including review of our liquidity and interest rate risk profiles, loan and deposit pricing and production volumes, investment and wholesale funding strategies, and a variety of otheroutgoing asset and liability ~~management topics. The results of the committee’s quarterly review~~cash flows are ~~reported to the full Board, which adjusts our ALM policies~~reinvested into similar instruments. Product pricing and ~~strategies, as it considers necessary and appropriate.~~

~~The Board of Directors has assigned the responsibility~~earning asset prepayment speeds are appropriately adjusted for the operational aspects of the ALM program to our Asset/Liability Management Committee (“ALCO”). The ALCO is a management committee comprising the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Lending Officer, Director of Retail Banking, Chief Risk Officer, Treasurer/Chief Investment Officer and Controller. Additional members of our management team may be asked to participate on the ALCO, as appropriate.

~~Responsibilities conveyed to the ALCO by the Board of Directors include:~~

developing ALM-related policies and associated operating procedures and controls that will identify and measure the risks associated with ALM while establishing the limits and thresholds relating thereto;

each rate scenario.

developing ALM-related operating strategies and tactics designed to manage the relevant risks within the applicable policy thresholds and limits while supporting the achievement of the goals and objectives of our strategic business plan;

~~developing, implementing and maintaining a management- and Board-level ALM monitoring and reporting system;~~

ensuring that the ALCO and the Board of Directors are kept abreast of current technologies, procedures and industry best practices that may be utilized to carry out their ALM-related duties and responsibilities;

~~ensuring the periodic independent validation of Kearny Bank’s ALM risk management policies and operating practices and controls; and~~

~~conducting periodic ALCO committee meetings to review all matters relating to ALM strategies and risk management activities.~~

~~Quantitative Analysis.~~ ~~The quantitative analysis regularly conducted by management measures interest rate risk from both a capital and earnings perspective.~~ With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our Economic Value of Equity (“EVE”) ~~ratio~~ to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities adjusted for the value of off-balance sheet

~~- 67 -~~

~~contracts. The EVE ratio represents the dollar amount of our EVE divided by the present value of our total assets for a given interest rate scenario. In essence,~~ instruments. EVE attempts to quantify our economic value using a discounted cash flow ~~methodology while the EVE ratio reflects that value as a form of capital ratio.~~methodology. The degree to which ~~the~~our EVE ~~ratio~~ changes for any hypothetical interest rate scenario from its ~~“base case”~~base case measurement is a reflection of ~~an institution’s~~our sensitivity to interest rate risk.

~~Our EVE ratio is first calculated in~~

For both earnings and capital at risk, our interest rate risk analysis calculates a ~~“base case”~~base case scenario that assumes no change in interest ~~rates as of the measurement date.~~rates. The model then measures ~~the change in the EVE ratio~~changes throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve up and down 100, 200 and 300 basis points with additional scenarios modeled where appropriate. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain ~~“down rate”~~falling rate scenarios during periods of lower market interest rates. ~~Our interest rate risk management policy establishes acceptable floors for the EVE ratio and caps for the maximum percentage change in the dollar amount of EVE throughout the scenarios modeled.~~

As illustrated in the tables below, our EVE would be negatively impacted by an increase in interest rates. This result is expected given our liability sensitivity noted earlier. Specifically, based upon the comparatively shorter maturity and/or re-pricing characteristics of our interest-bearing liabilities compared with that of our interest-earning assets, an upward movement in interest rates would have a disproportionately adverse impact on the present value of our assets compared to the beneficial impact arising from the reduced present value of our liabilities. Hence, our EVE and EVE ratio decline in the increasing interest rate scenarios. The low level of interest rates prevalent at December 31, 2017 and June 30, 2017 precluded the modeling of most decreasing rate scenarios as parallel downward shifts in the yield curve would have resulted in negative interest rates for many points along that curve as of those analysis dates.

The following tables present the results of our internal EVE ~~analysis~~and NII analyses as of December 31, ~~2017~~2023 and June 30, ~~2017, respectively.~~

2023, respectively:

	December 31, 2017
	Economic Value of Equity ("EVE")										EVE as a % of Present Value of Assets
			December 31, 2023																															December 31, 2023
												1 to 12 Months																										1 to 12 Months				13 to 24 Months
Change in Interest Rates	$ Amount of EVE			$ Change in EVE			% Change in EVE				EVE Ratio			Change in EVE Ratio				Change in Interest Rates	EVE			% Change in EVE				NII				% Change in NII			NII					% Change in NII
	(Dollars in Thousands)
			(Dollars in Thousands)																															(Dollars in Thousands)
+300 bps		804,455			(152,204	)		(16	)	%		18.50	%		(193	)	bps	+300 bps	$	417,960	(35.18)		(35.18)		%		$	140,570	(5.52)		(5.52)	%			$	156,590	(7.00)			(7.00)	%
+200 bps		861,427			(95,232	)		(10	)	%		19.32	%		(111	)	bps	+200 bps	474,390		(26.43)		(26.43)		%		141,950		(4.59)		(4.59)	%			157,112		(6.69)			(6.69)	%
+100 bps		914,127			(42,532	)		(4	)	%		19.99	%		(44	)	bps	+100 bps	571,906		(11.31)		(11.31)		%		146,105		(1.80)		(1.80)	%			164,709		(2.18)			(2.18)	%
0 bps		956,659		-			-					20.43	%	-
-100 bps		982,389			25,730			3		%		20.53	%		10		bps	-100 bps	686,268		6.43		6.43		%		152,172		2.28		2.28	%			168,925		0.32			0.32	%
-200 bps																		-200 bps	694,235			7.66		%		152,304				2.37	%		163,628					(2.82)	%
-300 bps																		-300 bps	719,245			11.54		%		150,566				1.20	%		155,006					(7.94)	%

	June 30, 2017
	Economic Value of Equity ("EVE")										EVE as a % of Present Value of Assets
			June 30, 2023																															June 30, 2023
												1 to 12 Months																										1 to 12 Months				13 to 24 Months
Change in Interest Rates	$ Amount of EVE			$ Change in EVE			% Change in EVE				EVE Ratio			Change in EVE Ratio				Change in Interest Rates	EVE			% Change in EVE				NII				% Change in NII			NII					% Change in NII
	(Dollars in Thousands)
			(Dollars in Thousands)																															(Dollars in Thousands)
+300 bps		846,983			(147,879	)		(15	)	%		19.60	%		(176	)	bps	+300 bps	$	507,998	(32.36)		(32.36)		%		$	154,552	(5.26)		(5.26)	%			$	168,366	(3.87)			(3.87)	%
+200 bps		903,090			(91,772	)		(9	)	%		20.37	%		(99	)	bps	+200 bps	571,129		(23.95)		(23.95)		%		156,274		(4.20)		(4.20)	%			167,683		(4.26)			(4.26)	%
+100 bps		954,652			(40,210	)		(4	)	%		20.99	%		(37	)	bps	+100 bps	673,314		(10.35)		(10.35)		%		160,344		(1.71)		(1.71)	%			173,170		(1.13)			(1.13)	%
0 bps		994,862		-			-					21.36	%	-
-100 bps		1,020,221			25,359			3		%		21.42	%		6		bps	-100 bps	799,675		6.48		6.48		%		163,455		0.20		0.20	%			173,319		(1.04)			(1.04)	%
-200 bps																		-200 bps	814,293			8.42		%		161,284				(1.13)	%		166,473					(4.95)	%
-300 bps																		-300 bps	849,208			13.07		%		158,526				(2.82)	%		156,507					(10.64)	%

~~As seen in the table above, the dollar amount~~

- 49 -

Table of EVE and the EVE ratio have declined between comparative periods across most scenarios modeled while the sensitivity of those measures to movements in interest rates remained generally stable between comparative periods. The decrease in the EVE ratios across all rate scenarios largely reflected the overall decrease in stockholders’ equity arising from the Company’s repurchase of its shares of common stock during the six months ended December 31, 2017.

Contents~~In addition to the specific considerations noted above, there~~

There are numerous internal and external factors that may ~~also~~ contribute to changes in ~~an institution’s~~our EVE ~~ratio~~ and its sensitivity. ~~Internally, changes~~Changes in the composition and allocation of ~~an institution’s~~our balance sheet, ~~and the interest rate risk characteristics~~or utilization of ~~its components~~off-balance sheet instruments such as derivatives, can significantly alter the exposure to interest rate risk as quantified by the changes in the EVE sensitivity measures. In that regard, the stability in the sensitivity of EVE to movements in interest rates largely reflected a corresponding stability in both the composition and allocation of the Company’s interest-earning

~~- 68 -~~

~~assets and interest-bearing liabilities between the comparative periods noted.~~ Changes to certain external factors, most notably changes in the level of market interest rates and overall shape of the yield curve, can also alter the projected cash flows of ~~the institution’s~~our interest-earning assets and interest-costing liabilities and the associated present values thereof. Changes in internal and external factors from period to period can complement one another’s effects to reduce overall sensitivity, partly or wholly offset one another’s effects, or exacerbate one another’s adverse effects and thereby increase the institution’s exposure to interest rate risk as quantified by EVE sensitivity measures.

Our internal interest rate risk analysis also includes an “earnings-based” component. A quantitative, earnings-based approach to measuring interest rate risk is strongly encouraged by bank regulators as a complement to the “EVE-based” methodology. However, there are no commonly accepted “industry best practices” that specify the manner in which “earnings-based” interest rate risk analysis should be performed with regard to certain key modeling variables. Such variables include, but are not limited to, those relating to rate scenarios (e.g., immediate and permanent rate “shocks” versus gradual rate change “ramps”, “parallel” versus “nonparallel” yield curve changes), measurement periods (e.g., one year versus two year, cumulative versus noncumulative), measurement criteria (e.g., net interest income versus net income) and balance sheet composition and allocation (“static” balance sheet, reflecting reinvestment of cash flows into like instruments, versus “dynamic” balance sheet, reflecting internal budget and planning assumptions).

The absence of a commonly shared, industry-standard set of analysis criteria and assumptions on which to base an “earnings-based” analysis could result in inconsistent or misinterpreted disclosure concerning an institution’s level of interest rate risk. Consequently, we limit the presentation of our earnings-based interest rate risk analysis to the scenarios presented in the table below. Consistent with the EVE analysis above, such scenarios utilize immediate and permanent rate “shocks” that result in parallel shifts in the yield curve. For each scenario, projected net interest income is measured over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into the same instruments. Product pricing and earning asset prepayment speeds are appropriately adjusted for each rate scenario.

As illustrated in the tables below, at both December 31, 2017 and June 30, 2017, our net interest income (“NII”) would have been only nominally impacted by a parallel upward shift in the yield curve. In large part, the stability of NII sensitivity between comparative periods largely reflected the corresponding stability in both the composition and allocation of the Company’s interest-earning assets and interest-bearing liabilities between the comparative periods, as noted above.

To some degree, the NII-based findings contrast with those of the EVE-based analysis discussed above that indicates that the Company was generally liability sensitive at both December 31, 2017 and June 30, 2017. To a large extent, the level and direction of risk exposure assessed by the NII-based and EVE-based methodologies may differ based on the comparative terms over which risk exposure is measured by those methodologies. As noted earlier, EVE-based analysis generally takes a longer-term view of interest rate risk by measuring changes in the present value of cash flows of interest-earning assets and interest-bearing liabilities over their expected lives. By contrast, the NII-based analysis presented below takes a comparatively shorter-term view of interest rate risk by measuring the forecasted changes in the net interest income generated by those interest-earning assets and interest-bearing liabilities over a one-year period. As noted above, the low level of interest rates prevalent at December 31, 2017 and June 30, 2017 precluded the modeling of most decreasing rate scenarios as parallel downward shifts in the yield curve would have resulted in negative interest rates for many points along that curve as of those analysis dates.

~~- 69 -~~

~~The following tables present the results of our internal NII analysis as of December 31, 2017 and June 30, 2017, respectively.~~

December 31, 2017

Net Interest
Income ("NII")
Change in
Interest Rates

Balance Sheet
Composition

Measurement
Period

$ Amount
of NII

$ Change
in NII

% Change
in NII

(Dollars In Thousands)

+300 bps

Static

One Year

$
107,752

$
(1,920
)

(1.75
)
%
+200 bps

Static

One Year

109,833

161

0.15

+100 bps

Static

One Year

110,242

570

0.52

0 bps

Static

One Year

109,672

-

-

-100 bps

Static

One Year

107,695

(1,977
)

(1.80
)

June 30, 2017

Net Interest
Income ("NII")
Change in
Interest Rates

Balance Sheet
Composition

Measurement
Period

$ Amount
of NII

$ Change
in NII

% Change
in NII

(Dollars In Thousands)

+300 bps

Static

One Year

$
105,658

$
(727
)

(0.68
)
%
+200 bps

Static

One Year

106,436

51

0.05

+100 bps

Static

One Year

106,614

229

0.22

0 bps

Static

One Year

106,385

-

-

-100 bps

Static

One Year

104,900

(1,485
)

(1.40
)

Notwithstanding the rate change scenarios presented in the EVE and ~~earnings-based~~NII-based analyses above, future interest rates and their effect on ~~net portfolio value or~~ net interest income are not predictable. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, prepayments and deposit run-offs and should not be relied upon as indicative of actual results. Certain shortcomings are inherent in this type of computation. Although certain assets and liabilities may have similar ~~maturity~~maturities or periods of re-pricing, they may react at different times and in different degrees to changes in market interest rates. The interest rate on certain types of assets and liabilities, such as demand deposits and savings accounts, may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag behind changes in market interest rates. Certain assets, such as adjustable-rate mortgages, generally have features which restrict changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayments and early withdrawal levels could deviate significantly from those assumed in ~~making calculations~~the analyses set forth above. Additionally, an ~~increased~~increase in credit risk may result as the ability of ~~many~~ borrowers to service their debt may decrease in the event of an interest rate increase.

~~- 70 -~~

ITEM 4.

CONTROLS AND PROCEDURES

As of the end of the period covered by ~~the report,~~this Report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities ~~and~~ Exchange Act of 1934, as amended). Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended December 31, ~~2017,~~2023, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 7150 -

Table of Contents

PART II

~~ITEM 1.~~

~~Legal Proceedings~~

ITEM 1. Legal Proceedings

At December 31, ~~2017,~~2023, neither the Company nor the Bank were involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition of the Company and the Bank.

~~ITEM 1A.~~

~~Risk Factors~~

There have been no material changes to the Risk Factors previously disclosed under Item 1A of the Company’s Form 10-Q for the quarter ended September 30, 2017 and Risk Factors previously disclosed under Item 1A of the Company’s Form 10-K for the year ended June 30, 2017, previously filed with the Securities and Exchange Commission.

~~ITEM 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

ITEM 1A. Risk Factors

~~ISSUER PURCHASES OF EQUITY SECURITIES~~

There have been no material changes to the Risk Factors previously disclosed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2023, previously filed with the Securities and Exchange Commission.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities:

The following table reports information regarding repurchases of the Company’s common stock during the quarter ended December 31, ~~2017.~~

2023:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
October 1-31, 2023	593,363	$	6.85	593,363	93,777
November 1-30, 2023	93,777	7.06		93,777	—
December 1-31, 2023	—	—		—	—
Total	687,140	$	6.88	687,140	—

Period

Total Number
of Shares
Purchased

Average Price
Paid per Share

Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs⁽¹⁾

Maximum
Number of Shares
that May Yet Be
Purchased Under
the Plans or
Programs

October 1-31, 2017

530,000

$
15.39

530,000

3,986,084

November 1-30, 2017

579,663

$
14.50

579,663

3,406,421

December 1-31, 2017

834,177

$
14.70

834,177

2,572,244

Total

1,943,840

$
14.83

1,943,840

2,572,244

(1)On August 1, 2022, the Company announced the authorization of a new stock repurchase plan to repurchase up to 4,000,000 shares. On November 7, 2023, the Company announced the completion of the stock repurchase plan, with a total of 4,000,000 shares repurchased at a cost of $34.9 million, or $8.74 per share.

~~(1)~~

~~On May 24, 2017, the Company announced the authorization of a second stock repurchase plan for up to 8,559,084 shares or 10% of shares then outstanding. This plan has no expiration date.~~

~~ITEM 3.~~

~~Defaults Upon Senior Securities~~

ITEM 3. Defaults Upon Senior Securities

Not applicable.

~~ITEM 4.~~

~~Mine Safety Disclosures~~

ITEM 4. Mine Safety Disclosures

Not applicable.

~~ITEM 5.~~

~~Other Information~~

~~None.~~

ITEM 5. Other Information

Securities Trading Plans of Directors and Executive Officers

During the three months ended December 31, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement”.

- 7251 -

~~ITEM 6.~~

~~Exhibits~~

Table of Contents

ITEM 6. Exhibits

The following Exhibits are filed as part of this report:


3.1			~~3.1~~			Articles of Incorporation of Kearny Financial Corp. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-198602), originally filed on September 5, 2014)

3.2

~~3.2~~

Amended and Restated Bylaws of Kearny Financial Corp. (Incorporated by reference to the Registrant’s ~~Registration Statement~~Current Report on Form ~~S-1 (File No. 333-198602), originally~~8-K, filed on ~~September 5, 2014)~~August 16, 2023 )

Form of Common Stock Certificate of Kearny Financial Corp. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-198602), originally filed on September 5, 2014)

31.1

~~31.1~~

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

~~31.2~~

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

~~32.1~~

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

~~32.2~~

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

~~101~~

The following materials from the Company’s Form 10-Q for the quarter ended December 31, ~~2017,~~2023, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

101.INS

~~101.INS~~

Inline XBRL Instance Document

(The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

~~101.SCH~~

Inline XBRL Taxonomy Extension Schema Document

101.CAL

~~101.CAL~~

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

~~101.DEF~~

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

~~101.LAB~~

Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE			~~101.PRE~~			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

- 7352 -

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		KEARNY FINANCIAL CORP.

Date: February 8, ~~2018~~ 2024		By:	~~/s/~~/s/ Craig L. Montanaro
			Craig L. Montanaro
			President and Chief Executive Officer
			~~(Duly authorized officer and principal executive officer)~~ (Principal Executive Officer)

Date: February 8, 2024		By:	/s/ Keith Suchodolski
~~Date:~~ ~~February 8, 2018~~		~~By:~~	~~/s/ Eric B. Heyer~~ Keith Suchodolski
			~~Eric B. Heyer~~
	Senior Executive Vice President and
	Chief Financial Officer
			~~(Principal financial~~(Principal Financial and ~~accounting officer)~~ Accounting Officer)

- 7453 -

	Common Stock						Paid-In			Retained			Unearned ESOP			Accumulated Other Comprehensive
	Shares			Amount			Capital			Earnings			Shares			Loss			Total
Balance - June 30, 2016		91,822		$	918		$	849,173		$	350,806		$	(36,481	)	$	(16,787	)	$	1,147,629

Net income		-			-			-			10,131			-			-			10,131
Other comprehensive income, net of income tax expense		-			-			-			-			-			12,742			12,742
ESOP shares committed to be released (100 shares)		-			-			434			-			973			-			1,407
Stock option expense		-			-			231			-			-			-			231
Share repurchases		(4,033	)		(40	)		(54,478	)		-			-			-			(54,518	)
Issuance of shares for stock benefit plan		1,387			14			(14	)		-			-			-			-
Restricted stock plan shares earned (30 shares)		-			-			427			-			-			-			427
Cash dividends declared ($0.04 per common share)		-			-			-			(3,397	)		-			-			(3,397	)

Balance - December 31, 2016		89,176		$	892		$	795,773		$	357,540		$	(35,508	)	$	(4,045	)	$	1,114,652

	Three Months Ended						Six Months Ended
	December 31, 2016						December 31, 2016
	Income (Numerator)		Shares (Denominator)		Per Share Amount		Income (Numerator)		Shares (Denominator)		Per Share Amount
	(In Thousands, Except Per Share Data)						(In Thousands, Except Per Share Data)

Net income	$	5,464					$	10,131
Basic earnings per share, income available to common stockholders	$	5,464		85,174	$	0.06	$	10,131		85,710	$	0.12
Effect of dilutive securities:
Stock options				84						72
	$	5,464		85,258	$	0.06	$	10,131		85,782	$	0.12

Allowance for Loan Losses and Loans Receivable
At December 31, 2017

	Residential Mortgage		Multi-Family Mortgage		Non- Residential Mortgage		Construction		Commercial Business		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Balance of allowance for loan losses:
Loans acquired with deteriorated credit quality	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Loans individually evaluated for impairment		37		-		4		-		2		-		-		43
Loans collectively evaluated for impairment		2,403		13,909		9,661		246		2,704		457		643		30,023

Total allowance for loan losses	$	2,440	$	13,909	$	9,665	$	246	$	2,706	$	457	$	643	$	30,066

Allowance for Loan Losses and Loans Receivable
Period Ended December 31, 2017

	Residential Mortgage			Multi-Family Mortgage		Non- Residential Mortgage			Construction		Commercial Business		Home Equity Loans			Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the three months ended December 31, 2017:

At September 30, 2017:	$	2,501		$	13,807	$	9,893		$	89	$	1,948	$	470		$	737		$	29,445

Total charge offs		(143	)		-		-			-		-		-			(263	)		(406	)
Total recoveries		57			-		-			-		-		-			34			91
Total provisions		25			102		(228	)		157		758		(13	)		135			936

Total allowance for loan losses	$	2,440		$	13,909	$	9,665		$	246	$	2,706	$	457		$	643		$	30,066

Allowance for Loan Losses and Loans Receivable
Period Ended December 31, 2016

	Residential Mortgage			Multi-Family Mortgage		Non- Residential Mortgage			Construction			Commercial Business			Home Equity Loans			Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the three months ended December 31, 2016:

At September 30, 2016:	$	2,806		$	10,269	$	8,316		$	39		$	2,319		$	534		$	720		$	25,003

Total charge offs		(41	)		-		(37	)		-			-			(74	)		(241	)		(393	)
Total recoveries		182			-		-			-			1			1			11			195
Total provisions		(517	)		1,957		76			(10	)		(541	)		95			195			1,255

Total allowance for loan losses	$	2,430		$	12,226	$	8,355		$	29		$	1,779		$	556		$	685		$	26,060

Performance Status of Loans Receivable
At December 31, 2017

	Residential Mortgage		Multi-Family Mortgage		Non- Residential Mortgage		Construction		Commercial Business		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Performing	$	568,953	$	1,438,251	$	1,062,196	$	22,205	$	89,616	$	80,034	$	11,916	$	3,273,171
Nonperforming:
90+ days past due accruing		-		-		-		-		-		-		31		31
Nonaccrual		5,369		135		7,058		-		2,826		927		-		16,315
Total nonperforming		5,369		135		7,058		-		2,826		927		31		16,346

Total loans	$	574,322	$	1,438,386	$	1,069,254	$	22,205	$	92,442	$	80,961	$	11,947	$	3,289,517

Impairment Status of Loans Receivable
At December 31, 2017

	Residential Mortgage			Multi-Family Mortgage		Non- Residential Mortgage			Construction		Commercial Business			Home Equity Loans		Other Consumer		Total
	(In Thousands)
Carrying value of impaired loans:

Non-impaired loans	$	566,233		$	1,438,251	$	1,062,049		$	22,205	$	89,591		$	79,405	$	11,947	$	3,269,681
Impaired loans:
Impaired loans with no allowance for impairment		7,772			135		6,863			-		2,849			1,556		-		19,175
Impaired loans with allowance for impairment:
Recorded investment		317			-		342			-		2			-		-		661
Allowance for impairment		(37	)		-		(4	)		-		(2	)		-		-		(43	)
Balance of impaired loans net of allowance for impairment		280			-		338			-		-			-		-		618
Total impaired loans, excluding allowance for impairment:		8,089			135		7,205			-		2,851			1,556		-		19,836

Total loans	$	574,322		$	1,438,386	$	1,069,254		$	22,205	$	92,442		$	80,961	$	11,947	$	3,289,517

Unpaid principal balance of impaired loans:
Total impaired loans	$	12,656		$	930	$	10,549		$	106	$	6,777		$	2,528	$	-	$	33,546

Impairment Status of Loans Receivable
Periods Ended December 31, 2017 and 2016

	Residential Mortgage		Multi-Family Mortgage		Non- Residential Mortgage		Construction		Commercial Business		Home Equity Loans		Other Consumer		Total
	(In Thousands)
For the three months ended December 31, 2017:
Average balance of impaired loans	$	8,860	$	141	$	7,254	$	63	$	2,865	$	1,579	$	-	$	20,762
Interest earned on impaired loans	$	31	$	-	$	2	$	-	$	1	$	7	$	-	$	41

For the six months ended December 31, 2017:
Average balance of impaired loans	$	9,441	$	146	$	6,755	$	196	$	2,836	$	1,747	$	-	$	21,121
Interest earned on impaired loans	$	66	$	-	$	4	$	-	$	2	$	15	$	-	$	87

For the three months ended December 31, 2016:
Average balance of impaired loans	$	13,262	$	187	$	6,263	$	282	$	3,225	$	2,072	$	-	$	25,291
Interest earned on impaired loans	$	28	$	-	$	7	$	-	$	2	$	10	$	-	$	47

For the six months ended December 31, 2016:
Average balance of impaired loans	$	13,140	$	193	$	6,515	$	313	$	3,166	$	2,117	$	-	$	25,444
Interest earned on impaired loans	$	49	$	-	$	19	$	-	$	6	$	24	$	-	$	98

	Three Months Ended December 31, 2017
	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)		Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)	Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)
	(Dollars in Thousands)
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	6,167	Interest expense	$	(997	)	Not applicable	$	-
Interest rate caps		40	Interest expense		(285	)	Not applicable		-
Total	$	6,207		$	(1,282	)		$	-

	Six Months Ended December 31, 2017
	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)		Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)	Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)
	(Dollars in Thousands)
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	6,426	Interest expense	$	(2,122	)	Not applicable	$	-
Interest rate caps		26	Interest expense		(560	)	Not applicable		-
Total	$	6,452		$	(2,682	)		$	-

	Three Months Ended December 31, 2016
	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)		Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)	Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)
	(Dollars in Thousands)
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	21,969	Interest expense	$	(1,515	)	Not applicable	$	-
Interest rate caps		80	Interest expense		(191	)	Not applicable		-
Total	$	22,049		$	(1,706	)		$	-

	Six Months Ended December 31, 2016
	Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)		Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)			Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)	Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)
	(Dollars in Thousands)
Derivatives in cash flow hedging relationships:
Interest rate swaps	$	25,422	Interest expense	$	(3,235	)	Not applicable	$	-
Interest rate caps		90	Interest expense		(352	)	Not applicable		-
Total	$	25,512		$	(3,587	)		$	-

			December 31, 2017
			Net Interest Income ("NII")
Change in Interest Rates	Balance Sheet Composition	Measurement Period	$ Amount of NII		$ Change in NII			% Change in NII
			(Dollars In Thousands)
+300 bps	Static	One Year	$	107,752	$	(1,920	)		(1.75	)	%
+200 bps	Static	One Year		109,833		161			0.15
+100 bps	Static	One Year		110,242		570			0.52
0 bps	Static	One Year		109,672		-			-
-100 bps	Static	One Year		107,695		(1,977	)		(1.80	)

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

120 Passaic Ave., Fairfield, New Jersey

(Address of principal executive offices)

(Zip Code)