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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
FORM 10-Q
__________________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to
Commission File Number 001-37399
__________________________________________
KEARNY FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
__________________________________________
Maryland30-0870244
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification Number)
120 Passaic Ave., Fairfield, New Jersey
07004
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code
973-244-4500
__________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueKRNYThe 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 o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No o
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 fileroAccelerated filerx
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: October 31, 2024.
$0.01 par value common stock — 64,579,683 shares outstanding

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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, Except Share and Per Share Data)
September 30,
2024		June 30,
2024
(Unaudited)
Assets
Cash and amounts due from depository institutions $18,369 $17,201 
Interest-bearing deposits in other banks137,205 46,663 
Cash and cash equivalents155,574 63,864 
Investment securities available for sale (amortized cost of $1,177,595 and $1,203,506, respectively)
1,070,811 1,072,833 
Investment securities held to maturity (fair value of $120,725 and $119,278, respectively)
132,256 135,742 
Loans held-for-sale8,866 6,036 
Loans receivable5,784,246 5,732,787 
Less: allowance for credit losses on loans(44,923)(44,939)
Net loans receivable5,739,323 5,687,848 
Premises and equipment45,189 44,940 
Federal Home Loan Bank (“FHLB”) of New York stock57,706 80,300 
Accrued interest receivable29,467 29,521 
Goodwill113,525 113,525 
Core deposit intangibles1,805 1,931 
Bank owned life insurance300,186 297,874 
Deferred income tax assets, net50,131 50,339 
Other assets67,540 98,708 
Total Assets $7,772,379 $7,683,461 
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest-bearing $592,099 $598,366 
Interest-bearing4,878,413 4,559,757 
Total deposits5,470,512 5,158,123 
Borrowings1,479,888 1,709,789 
Advance payments by borrowers for taxes17,824 17,409 
Other liabilities52,618 44,569 
Total Liabilities7,020,842 6,929,890 
Stockholders' Equity
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; 64,579,683 shares and 64,434,424 shares issued and outstanding, respectively
646 644 
Paid-in capital493,523 493,680 
Retained earnings342,522 343,326 
Unearned employee stock ownership plan shares; 2,107,326 shares and 2,157,501 shares, respectively
(20,430)(20,916)
Accumulated other comprehensive loss(64,724)(63,163)
Total Stockholders' Equity751,537 753,571 
Total Liabilities and Stockholders' Equity$7,772,379 $7,683,461 
See notes to unaudited consolidated financial statements.
- 1 -
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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended
September 30,
20242023
Interest Income
Loans$66,331 $62,769 
Taxable investment securities14,384 16,265 
Tax-exempt investment securities71 87 
Other interest-earning assets2,466 2,047 
Total Interest Income83,252 81,168 
Interest Expense
Deposits35,018 27,567 
Borrowings15,788 14,441 
Total Interest Expense50,806 42,008 
Net Interest Income32,446 39,160 
Provision for credit losses 108 245 
Net Interest Income after Provision for Credit Losses 32,338 38,915 
Non-Interest Income
Fees and service charges635 748 
Gain on sale of loans200 215 
Income from bank owned life insurance2,567 1,666 
Electronic banking fees and charges391 367 
Other income833 1,014 
Total Non-Interest Income4,626 4,010 
Non-Interest Expense
Salaries and employee benefits17,498 17,761 
Net occupancy expense of premises2,798 2,758 
Equipment and systems3,860 3,801 
Advertising and marketing342 228 
Federal deposit insurance premium1,563 1,524 
Directors' compensation361 393 
Other expense3,364 3,309 
Total Non-Interest Expense29,786 29,774 
Income before Income Taxes7,178 13,151 
Income tax expense 1,086 3,309 
Net Income$6,092 $9,842 
Net Income per Common Share (EPS)
Basic$0.10 $0.16 
Diluted$0.10 $0.16 
Weighted Average Number of Common Shares Outstanding
Basic62,38963,014
Diluted62,42063,061
See notes to unaudited consolidated financial statements.
- 2 -
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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Thousands, Unaudited)
Three Months Ended
September 30,
20242023
Net Income$6,092 $9,842 
Other Comprehensive Income (Loss), net of tax:
Net unrealized gain (loss) on securities available for sale16,982 (20,235)
Fair value adjustments on derivatives(18,624)3,293 
Benefit plan adjustments81 (78)
Total Other Comprehensive Loss(1,561)(17,020)
Total Comprehensive Income (Loss)$4,531 $(7,178)
See notes to unaudited consolidated financial statements.
- 3 -
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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(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 - June 30, 202365,864$659 $503,332 $457,611 $(22,862)$(69,456)$869,284 
Net income—— — 9,842 — — 9,842 
Other comprehensive loss, net of income tax —— — — — (17,020)(17,020)
ESOP shares committed to be released (50 shares)
—— (107)— 487 — 380 
Stock repurchases(818)(8)(6,459)— — — (6,467)
Issuance of stock under stock benefit plan1331 (1)— — — — 
Stock-based compensation expense—— 903 — — — 903 
Cancellation of shares issued for restricted stock awards(47)— (399)— — — (399)
Cash dividends declared ($0.11 per common share)
—— — (6,989)— — (6,989)
Balance - September 30, 202365,132$652 $497,269 $460,464 $(22,375)$(86,476)$849,534 

Common Stock Paid-In
Capital 		Retained
Earnings 		Unearned
ESOP
Shares 		Accumulated
Other
Comprehensive
Loss		Total
Shares Amount
Balance - June 30, 202464,434$644 $493,680 $343,326 $(20,916)$(63,163)$753,571 
Net Income—— — 6,092 — — 6,092 
Other comprehensive loss, net of income tax—— — — — (1,561)(1,561)
ESOP shares committed to be released (50 shares)
—— (156)— 486 — 330 
Issuance of stock under stock benefit plans2072 (2)— — — — 
Stock-based compensation expense—— 350 — — — 350 
Cancellation of shares issued for restricted stock awards(61)— (349)— — — (349)
Cash dividends declared ($0.11 per common share)
—— — (6,896)— — (6,896)
Balance - September 30, 202464,580 $646 $493,523 $342,522 $(20,430)$(64,724)$751,537 
See notes to unaudited consolidated financial statements.
- 4 -
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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)
Three Months Ended
September 30,
20242023
Cash Flows from Operating Activities:
Net income$6,092 $9,842 
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment1,108 1,230 
Net accretion of yield adjustments(388)(614)
Deferred income taxes875 2,426 
Amortization of intangible assets126 134 
Amortization (accretion) of benefit plans’ unrecognized net loss (gain)115 (110)
Provision for credit losses 108 245 
Loans originated for sale(29,463)(20,531)
Proceeds from sale of mortgage loans held-for-sale26,833 26,403 
Loss on sale of mortgage loans held-for-sale, net(200)(215)
Realized gain on disposition of premises and equipment(1)(8)
Increase in cash surrender value of bank owned life insurance(2,567)(1,666)
ESOP and stock-based compensation expense680 1,283 
Decrease (increase) in interest receivable54 (1,633)
Decrease (increase) in other assets486 (10,579)
Increase in interest payable1,625 2,134 
(Decrease) increase in other liabilities(2,944)3,943 
Net Cash Provided by Operating Activities2,539 12,284 
Cash Flows from Investing Activities:
Purchases of:
Investment securities available for sale(37,542)(40,500)
Proceeds from:
Repayments/calls/maturities of investment securities available for sale63,608 24,287 
Repayments/calls/maturities of investment securities held to maturity3,455 2,705 
Net (increase) decrease in loans receivable(37,293)87,794 
(Additions) deletions to premises and equipment(1,357)219 
Proceeds from death benefit of bank owned life insurance255 — 
Proceeds from cash settlement of premises and equipment1 — 
Purchase of FHLB stock(18,806)(15,913)
Redemption of FHLB stock41,400 6,138 
Net Cash Provided by Investing Activities13,721 64,730 
See notes to unaudited consolidated financial statements.
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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands, Unaudited)
Three Months Ended
September 30,
20242023
Cash Flows from Financing Activities:
Net increase (decrease) in deposits312,395 (195,003)
Repayment of term FHLB advances(1,425,000)(1,250,000)
Proceeds from term FHLB advances and other borrowings1,100,000 1,425,000 
Net increase (decrease) in other short-term borrowings95,000 (55,000)
Net increase (decrease) in advance payments by borrowers for taxes415 (1,431)
Repurchase and cancellation of common stock of Kearny Financial Corp.— (6,467)
Cancellation of shares repurchased on vesting to pay taxes(349)(399)
Dividends paid(7,011)(7,010)
Net Cash Provided by (Used in) Financing Activities75,450 (90,310)
Net Increase (Decrease) in Cash and Cash Equivalents91,710 (13,296)
Cash and Cash Equivalents - Beginning63,864 70,515 
Cash and Cash Equivalents - Ending$155,574 $57,219 
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Income taxes, net of refunds$1,268 $4,069 
Interest$49,181 $39,874 
See notes to unaudited consolidated financial statements.
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KEARNY FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1.    SUMMARY OF 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. 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.
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 months ended September 30, 2024 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 of Financial Condition at June 30, 2024 was derived from the Company’s 2024 Annual Report on Form 10-K. That data, along with the interim unaudited financial information presented in the Consolidated Statements of Financial Condition, Income, Comprehensive Income, Changes in Stockholders’ Equity and Cash Flows should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s 2024 Annual Report on Form 10-K.
The accounting and reporting policies of the Company conform to U.S. GAAP and to general practice within the financial services industry. A discussion of these policies can be found in Note 1, Summary of Significant Accounting Policies, included in the Company’s 2024 Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies since June 30, 2024.
2.    SUBSEQUENT EVENTS
The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of September 30, 2024, 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.
On October 24, 2024, the Company declared a quarterly cash dividend of $0.11 per share, payable on November 20, 2024 to stockholders of record as of November 6, 2024.
3.    RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Standards Issued Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures (Topic 280), to improve reportable segment disclosures by requiring public entities to disclose significant expense categories and amounts for each reportable segment, where significant expense categories are defined as those that are regularly reported to an entity’s chief operating decision-maker and included in a segment’s reported measures of profit or loss. For public companies, the requirements will become effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. As the Company has only one reportable segment, this ASU is not expected to have a material effect on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures (Topic 740), which requires reporting companies to improve the transparency of certain income tax related disclosures, including the rate reconciliation and taxes paid disclosures. For public companies, the requirements will become effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company does not expect this ASU to have a material effect on the Company’s consolidated financial statements.
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In March 2024, the FASB issued ASU 2024-01, Compensation-Stock Compensation (Topic 718): Scope Applications of Profits Interests and Similar Awards. ASU 2024-01 adds an example to Topic 718 which illustrates how to apply the scope guidance to determine whether profits interest and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other U.S. GAAP. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods, although early adoption is permitted. The Company does not expect this ASU to have an impact on our consolidated financial statements.
4.    SECURITIES
The following tables present the amortized cost, gross unrealized gains and losses and estimated fair values for available for sale securities and the amortized cost, gross unrecognized gains and losses and estimated fair values for held to maturity securities as of the dates indicated:
September 30, 2024
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Allowance for
Credit Losses		Fair
Value
(In Thousands)
Available for sale:    
Debt securities:    
Asset-backed securities$74,136 $145 $190 $— $74,091 
Collateralized loan obligations376,041 2,317 25 — 378,333 
Corporate bonds150,872 101 17,999 — 132,974 
Total debt securities601,049 2,563 18,214 — 585,398 
    
Mortgage-backed securities:    
Residential pass-through securities (1)
421,377 20 73,546 — 347,851 
Commercial pass-through securities (1)
155,169 745 18,352 — 137,562 
Total mortgage-backed securities576,546 765 91,898 — 485,413 
    
Total securities available for sale$1,177,595 $3,328 $110,112 $— $1,070,811 
___________________________
(1)Government-sponsored enterprises.
June 30, 2024
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Allowance for
Credit Losses		Fair
Value
(In Thousands)
Available for sale:    
Debt securities:    
Asset-backed securities$80,305 $217 $82 $— $80,440 
Collateralized loan obligations386,983 2,574 14 — 389,543 
Corporate bonds150,891 64 19,158 — 131,797 
Total debt securities618,179 2,855 19,254 — 601,780 
    
Mortgage-backed securities:   
Residential pass-through securities (1)
429,473 2 92,211 — 337,264 
Commercial pass-through securities (1)
155,854 63 22,128 — 133,789 
Total mortgage-backed securities585,327 65 114,339 — 471,053 
   
Total securities available for sale$1,203,506 $2,920 $133,593 $— $1,072,833 
___________________________
(1)Government-sponsored enterprises.
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September 30, 2024
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$11,860 $1 $80 $— $11,781 
Total debt securities11,860 1 80 — 11,781 
    
Mortgage-backed securities:    
Residential pass-through securities (1)
108,190 313 10,174 — 98,329 
Commercial pass-through securities (1)
12,206 — 1,591 — 10,615 
Total mortgage-backed securities120,396 313 11,765 — 108,944 
    
Total securities held to maturity$132,256 $314 $11,845 $— $120,725 
___________________________
(1)Government-sponsored enterprises.
June 30, 2024
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$12,913 $— $277 $— $12,636 
Total debt securities12,913 — 277 — 12,636 
  
Mortgage-backed securities:  
Residential pass-through securities (1)
110,614 — 14,134 — 96,480 
Commercial pass-through securities (1)
12,215 — 2,053 — 10,162 
Total mortgage-backed securities122,829 — 16,187 — 106,642 
  
Total securities held to maturity$135,742 $— $16,464 $— $119,278 
___________________________
(1)Government-sponsored enterprises.
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Excluding the balances of mortgage-backed securities, the following tables present the amortized cost and estimated fair values of debt securities available for sale and held to maturity, by contractual maturity, at September 30, 2024:
September 30, 2024
Amortized
Cost		Fair
Value
(In Thousands)
Available for sale debt securities:
Due in one year or less$— $— 
Due after one year through five years33,890 32,351 
Due after five years through ten years400,225 388,163 
Due after ten years166,934 164,884 
Total$601,049 $585,398 
September 30, 2024
Amortized
Cost		Fair
Value
(In Thousands)
Held to maturity debt securities:
Due in one year or less$5,581 $5,569 
Due after one year through five years6,279 6,212 
Due after five years through ten years— — 
Due after ten years— — 
Total$11,860 $11,781 

The carrying value of securities pledged were as follows as of the dates presented below:
September 30,
2024		June 30,
2024
(In Thousands)
Securities pledged:
Pledged to secure public funds on deposit$99,919 $100,238 
Pledged for potential borrowings at the Federal Reserve Bank of New York781,017 482,044 
Pledged for the bank term funding program91,823 88,899 
Total carrying value of securities pledged$972,759 $671,181 
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 September 30, 2024 and June 30, 2024:
September 30, 2024
Less than 12 Months 12 Months or MoreTotal
Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Number of SecuritiesFair
Value		Unrealized
Losses
(Dollars in Thousands)
Securities Available for Sale:
Asset-backed securities$21,842 $77 $24,131 $113 9$45,973 $190 
Collateralized loan obligations17,529 11 24,986 14 342,515 25 
Corporate bonds— — 122,872 17,999 26122,872 17,999 
Commercial pass-through securities— — 113,939 18,352 7113,939 18,352 
Residential pass-through securities36 1 346,258 73,545 96346,294 73,546 
Total$39,407 $89 $632,186 $110,023 141$671,593 $110,112 
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June 30, 2024
Less than 12 Months12 Months or MoreTotal
Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Number of SecuritiesFair
Value		Unrealized
Losses
(Dollars in Thousands)
Securities Available for Sale:
Asset-backed securities$14,093 $16 $43,411 $66 8$57,504 $82 
Collateralized loan obligations3,863 — 24,986 14 428,849 14 
Corporate bonds— — 121,733 19,158 26121,733 19,158 
Commercial pass-through securities— — 110,741 22,128 8110,741 22,128 
Residential pass-through securities141 2 336,772 92,209 103336,913 92,211 
Total$18,097 $18 $637,643 $133,575 149$655,740 $133,593 
The following table presents the gross unrecognized losses on securities and the estimated fair value of the related securities, aggregated by investment category and length of time that securities have been in a continuous unrecognized loss position within the held to maturity portfolio at September 30, 2024 and June 30, 2024:
September 30, 2024
Less than 12 Months12 Months or MoreTotal
Fair
Value		Unrecognized
Losses		Fair
Value		Unrecognized
Losses		Number of SecuritiesFair
Value		Unrecognized
Losses
(Dollars in Thousands)
Securities Held to Maturity:
Obligations of state and political subdivisions$— $— $9,431 $80 17$9,431 $80 
Commercial pass-through securities— — 10,616 1,591 110,616 1,591 
Residential pass-through securities— — 63,270 10,174 863,270 10,174 
Total$— $— $83,317 $11,845 26$83,317 $11,845 
June 30, 2024
Less than 12 Months12 Months or MoreTotal
Fair
Value		Unrecognized
Losses		Fair
Value		Unrecognized
Losses		Number of SecuritiesFair
Value		Unrecognized
Losses
(Dollars in Thousands)
Securities Held to Maturity:
Obligations of state and political subdivisions$449 $14 $11,886 $263 23$12,335 $277 
Commercial pass-through securities— — 10,162 2,053 110,162 2,053 
Residential pass-through securities35,287 327 61,193 13,807 996,480 14,134 
Total$35,736 $341 $83,241 $16,123 33$118,977 $16,464 
Available for sale securities are 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 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 September 30, 2024. The Company also monitors the credit quality of the issuers through credit ratings from various rating agencies. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions. 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 September 30, 2024 on available for sale securities.
At September 30, 2024, 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
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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 September 30, 2024 on held to maturity securities.
5.    LOANS RECEIVABLE
The following table sets forth the composition of the Company’s loan portfolio at September 30, 2024 and June 30, 2024:
September 30,
2024		June 30,
2024
(In Thousands)
Commercial loans:
Multi-family mortgage$2,646,187 $2,645,851 
Nonresidential mortgage950,771 948,075 
Commercial business145,984 142,747 
Construction227,327 209,237 
Total commercial loans3,970,269 3,945,910 
One- to four-family residential mortgage1,768,230 1,756,051 
Consumer loans:
Home equity loans44,741 44,104 
Other consumer2,965 2,685 
Total consumer loans47,706 46,789 
Total loans5,786,205 5,748,750 
Unaccreted yield adjustments (1)
(1,959)(15,963)
Total loans receivable, net of yield adjustments$5,784,246 $5,732,787 
___________________________
(1)At September 30, 2024 and June 30, 2024, included a fair value adjustment to the carrying amount of hedged one- to four-family residential mortgage loans.
Past Due Loans
Past due status is based on the contractual payment terms of the loans. The following tables present the payment status of past due loans as of September 30, 2024 and June 30, 2024, by loan segment:
Payment Status
September 30, 2024
30-59 Days60-89 Days90 Days and OverTotal Past DueCurrentTotal
(In Thousands)
Multi-family mortgage$— $— $10,532 $10,532 $2,635,655 $2,646,187 
Nonresidential mortgage270 — 7,966 8,236 942,535 950,771 
Commercial business74 — 505 579 145,405 145,984 
Construction— — — — 227,327 227,327 
One- to four-family residential mortgage2,413 4,392 2,181 8,986 1,759,244 1,768,230 
Home equity loans553 — 40 593 44,148 44,741 
Other consumer4 — 5 9 2,956 2,965 
Total loans$3,314 $4,392 $21,229 $28,935 $5,757,270 $5,786,205 
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Payment Status
June 30, 2024
30-59 Days60-89 Days90 Days and OverTotal Past DueCurrentTotal
(In Thousands)
Multi-family mortgage$— $— $19,888 $19,888 $2,625,963 $2,645,851 
Nonresidential mortgage6,149 — 3,249 9,398 938,677 948,075 
Commercial business37 64 613 714 142,033 142,747 
Construction— — — — 209,237 209,237 
One- to four-family residential mortgage800 2,951 2,877 6,628 1,749,423 1,756,051 
Home equity loans208 — 44 252 43,852 44,104 
Other consumer— — 5 5 2,680 2,685 
Total loans$7,194 $3,015 $26,676 $36,885 $5,711,865 $5,748,750 
Nonperforming Loans
Loans are generally placed on nonaccrual status when contractual payments become 90 or more days past due or when the Company does not expect to receive all principal and interest payments owed substantially in accordance with the terms of the loan agreement, regardless of past due status. Loans that become 90 days or more past due, but are well secured and in the process of collection, may remain on accrual status. Nonaccrual loans are generally returned to accrual status when all payments due are brought current and the Company expects to receive all remaining principal and interest payments owed substantially in accordance with the terms of the loan agreement. Payments received in cash on nonaccrual loans, including both the principal and interest portions of those payments, are generally applied to reduce the carrying value of the loan. The Company did not recognize interest income on non-accrual loans during the three months ended September 30, 2024 and 2023.
The following tables present information relating to the Company’s nonperforming loans as of September 30, 2024 and June 30, 2024:
Performance Status
September 30, 2024
90 Days and Over Past Due AccruingNonaccrual Loans with Allowance for Credit LossesNonaccrual Loans with no Allowance for Credit LossesTotal NonperformingPerformingTotal
(In Thousands)
Multi-family mortgage$— $— $21,980 $21,980 $2,624,207 $2,646,187 
Nonresidential mortgage— 5,522 3,636 9,158 941,613 950,771 
Commercial business— 545 34 579 145,405 145,984 
Construction— — — — 227,327 227,327 
One- to four-family residential mortgage— 2,357 5,733 8,090 1,760,140 1,768,230 
Home equity loans— — 42 42 44,699 44,741 
Other consumer— — 5 5 2,960 2,965 
Total loans$— $8,424 $31,430 $39,854 $5,746,351 $5,786,205 
Performance Status
June 30, 2024
90 Days and Over Past Due AccruingNonaccrual Loans with Allowance for Credit LossesNonaccrual Loans with no Allowance for Credit LossesTotal NonperformingPerformingTotal
(In Thousands)
Multi-family mortgage$— $— $22,591 $22,591 $2,623,260 $2,645,851 
Nonresidential mortgage— 5,695 4,128 9,823 938,252 948,075 
Commercial business— 714 — 714 142,033 142,747 
Construction— — — — 209,237 209,237 
One- to four-family residential mortgage— 2,295 4,410 6,705 1,749,346 1,756,051 
Home equity loans— — 44 44 44,060 44,104 
Other consumer— — 5 5 2,680 2,685 
Total loans$— $8,704 $31,178 $39,882 $5,708,868 $5,748,750 
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Loan Modifications Made to Borrowers Experiencing Financial Difficulty

The following tables presents the amortized cost basis at September 30, 2024 and September 30, 2023 of loan modifications made to borrowers experiencing financial difficulty that were restructured during the three months ended September 30, 2024 and 2023, by type of modification:
Three Months Ended September 30, 2024
Payment DelayTerm ExtensionPayment Delay and Interest Rate ReductionsTotalPercent of Total Class
(Dollars In Thousands)
Multi-family mortgage$8,782 $— $2,666 $11,448 0.43 %
Nonresidential mortgage178 — — 178 0.02 %
Total$8,960 $— $2,666 $11,626 0.21 %

Three Months Ended September 30, 2023
 Payment Delay  Term Extension  Total  Percent of Total Class
(Dollars In Thousands)
Commercial business$45 $— $45 0.03 %
One- to four-family residential mortgage489 — 489 0.03 %
Total$534 $— $534 0.03 %

No modifications involved forgiveness of principal for the three months ended September 30, 2024, and September 30, 2023, respectively. There were no commitments to lend additional funds to borrowers experiencing financial difficulty whose terms have been restructured at September 30, 2024 and September 30, 2023.
Of the loans restructured during the three months ended September 30, 2024 and September 30, 2023 there were no subsequent defaults as of September 30, 2024. 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.
The following tables presents the payment status of the loans that were modified to borrowers experiencing financial difficulties in the last twelve months:
September 30, 2024
Current30-89 Days Past Due90 Days or More Past DueTotal
Past Due
(Dollars In Thousands)
Multi-family mortgage$11,448 $— $— $— 
Nonresidential mortgage922— — — 
One- to four-family residential mortgage46142 — 42 
Home equity loans—— 23 23 
Total$12,831 $42 $23 $65 
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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 September 30, 2024, the carrying value of individually analyzed loans, including loans acquired with deteriorated credit quality that were individually analyzed, totaled $39.8 million, of which $32.3 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:
September 30, 2024June 30, 2024
Carrying ValueRelated AllowanceCarrying ValueRelated Allowance
(In Thousands)
Commercial loans:
Multi-family mortgage$21,980 $— $22,591 $— 
Nonresidential mortgage (1)
7,966 493 8,598 508 
Total commercial loans29,946 493 31,189 508 
One- to four-family residential mortgage (2)
2,343 — 1,406 — 
Consumer loans:
Home equity loans (2)
18 — 18 — 
Total$32,307 $493 $32,613 $508 
___________________________
(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.
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The following table presents the risk category of loans and current period gross charge-offs as of September 30, 2024 by loan segment and vintage year:
Term Loans by Origination Year for Fiscal Years ended June 30,
20252024202320222021PriorRevolving LoansTotal
(In Thousands)
Multi-family mortgage:
Pass$19,838 $26,626 $594,460 $945,315 $216,063 $798,849 $— $2,601,151 
Special Mention— — — — — 7,836 — 7,836 
Substandard— — — — 9,514 27,686 — 37,200 
Doubtful— — — — — — — — 
Total multi-family mortgage19,838 26,626 594,460 945,315 225,577 834,371 — 2,646,187 
Multi-family current period gross charge-offs— — — — — — — — 
Nonresidential mortgage:
Pass22,105 82,431 105,083 198,361 86,790 424,686 — 919,456 
Special Mention— — — — 2,083 14,637 — 16,720 
Substandard— — — — 868 13,727 — 14,595 
Doubtful— — — — — — — — 
Total nonresidential mortgage22,105 82,431 105,083 198,361 89,741 453,050 — 950,771 
Nonresidential current period gross charge-offs— — — — — — — — 
Commercial business:
Pass4,892 12,087 7,900 24,419 17,928 10,810 61,965 140,001 
Special Mention— — — 1,907 144 168 — 2,219 
Substandard— — — — — 3,611 153 3,764 
Doubtful— — — — — — — — 
Total commercial business4,892 12,087 7,900 26,326 18,072 14,589 62,118 145,984 
Commercial current period gross charge-offs— — — — — 127 — 127 
Construction loans:
Pass2,069 65,718 45,180 14,831 63,155 6,145 5,735 202,833 
Special Mention— 4,000 — — 20,494 — — 24,494 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total construction loans2,069 69,718 45,180 14,831 83,649 6,145 5,735 227,327 
Residential mortgage:
Pass48,656 180,515 183,056 424,749 453,243 465,698 24 1,755,941 
Special Mention— — — — — 315 — 315 
Substandard— — 500 790 — 10,684 — 11,974 
Doubtful— — — — — — — — 
Total residential mortgage48,656 180,515 183,556 425,539 453,243 476,697 24 1,768,230 
Residential current period gross charge-offs— — — — — 2 — 2 
Home equity loans:
Pass771 1,950 5,093 2,122 334 8,645 25,509 44,424 
Special Mention— — — — — — 97 97 
Substandard— — — — — 220 — 220 
Doubtful— — — — — — — — 
Total home equity loans771 1,950 5,093 2,122 334 8,865 25,606 44,741 
Other consumer loans
Pass546 516 210 127 257 1,168 41 2,865 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — 100 100 
Other consumer loans546 516 210 127 257 1,168 141 2,965 
Total loans$98,877 $373,843 $941,482 $1,612,621 $870,873 $1,794,885 $93,624 $5,786,205 
Total current period gross charge-offs$— $— $— $— $— $129 $— $129 
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The following table presents the risk category of loans as of June 30, 2024 by loan segment and vintage year:
Term Loans by Origination Year for Fiscal Years ended June 30,
20242023202220212020PriorRevolving LoansTotal
(In Thousands)
Multi-family mortgage:
Pass$26,683 $596,321 $949,690 $219,850 $201,611 $607,332 $— $2,601,487 
Special Mention— — — — — 6,475 — 6,475 
Substandard— — — 9,570 — 28,319 — 37,889 
Doubtful— — — — — — — — 
Total multi-family mortgage26,683 596,321 949,690 229,420 201,611 642,126 — 2,645,851 
Multi-family current period gross charge-offs— — — — — 398 — 398 
Nonresidential mortgage:
Pass87,380 105,768 199,829 90,312 44,598 389,680 30 917,597 
Special Mention— — — 447 — 14,714 — 15,161 
Substandard— — — 867 — 14,450 — 15,317 
Doubtful— — — — — — — — 
Total nonresidential mortgage87,380 105,768 199,829 91,626 44,598 418,844 30 948,075 
Nonresidential current period gross charge-offs— — — — — 5,975 — 5,975 
Commercial business:
Pass12,152 8,273 27,615 18,242 4,337 7,863 56,592 135,074 
Special Mention— — 1,559 437 — 1,754 — 3,750 
Substandard— — — — 1,767 2,003 153 3,923 
Doubtful— — — — — — — — 
Total commercial business12,152 8,273 29,174 18,679 6,104 11,620 56,745 142,747 
Commercial current period gross charge-offs— — — 3,391 464 11 — 3,866 
Construction loans:
Pass51,261 45,180 14,284 62,584 2,602 3,647 5,735 185,293 
Special Mention3,450 — — 20,494 — — — 23,944 
Substandard— — — — — — — — 
Doubtful— — — — — — — — 
Total construction loans54,711 45,180 14,284 83,078 2,602 3,647 5,735 209,237 
Residential mortgage:
Pass185,034 184,737 431,346 458,696 77,442 406,677 291 1,744,223 
Special Mention— — — — — 1,453 — 1,453 
Substandard— 509 796 — — 9,070 — 10,375 
Doubtful— — — — — — — — 
Total residential mortgage185,034 185,246 432,142 458,696 77,442 417,200 291 1,756,051 
Residential current period gross charge-offs— — — — — 37 — 37 
Home equity loans:
Pass1,919 5,698 2,173 347 1,019 8,086 24,535 43,777 
Special Mention— — — — — — 93 93 
Substandard— — — — — 234 — 234 
Doubtful— — — — — — — — 
Total home equity loans1,919 5,698 2,173 347 1,019 8,320 24,628 44,104 
Other consumer loans
Pass804 211 204 127 224 990 39 2,599 
Special Mention— — — — — — — — 
Substandard— — — — — — — — 
Doubtful— — — — — — 86 86 
Other consumer loans804 211 204 127 224 990 125 2,685 
Total loans$368,683 $946,697 $1,627,496 $881,973 $333,600 $1,502,747 $87,554 $5,748,750 
Total current period gross charge-offs$— $— $— $3,391 $464 $6,421 $— 10,276 
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Mortgage Loans in Foreclosure
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 September 30, 2024, the Company held no nonresidential property in other real estate owned that was acquired through foreclosure on a nonresidential mortgage loan. As of that same date, the Company held two residential mortgage loans with an aggregate carrying value of $678,500 and six commercial mortgage loans with aggregate carrying values totaling $18.2 million which were in the process of foreclosure. As of June 30, 2024, the Company held no nonresidential property 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 $1.2 million and six commercial mortgage loans with aggregate carrying values totaling $13.6 million which were in the process of foreclosure.
6.    ALLOWANCE FOR CREDIT LOSSES
Allowance for Credit Losses on Loans Receivable
The following tables present the balance of the allowance for credit losses at September 30, 2024 and June 30, 2024. The balance of the allowance for credit losses is based on an expected loss methodology, referred to as the “CECL” methodology. The tables identify the valuation allowances attributable to specifically identified impairments on individually analyzed loans, including those acquired with deteriorated credit quality, as well as valuation allowances for impairments on loans collectively evaluated. The tables include the underlying balance of loans receivable applicable to each category as of those dates.
Allowance for Credit Losses
September 30, 2024
Loans
acquired with
deteriorated
credit quality
individually
analyzed		Loans
acquired with
deteriorated
credit quality
collectively
evaluated		Loans individually
analyzed		Loans collectively
evaluated		Total allowance for credit losses
(In Thousands)
Multi-family mortgage$— $— $— $24,368 $24,368 
Nonresidential mortgage— 28 493 6,392 6,913 
Commercial business— 7 124 1,574 1,705 
Construction— 13 — 1,490 1,503 
One- to four-family residential mortgage57 73 81 9,774 9,985 
Home equity loans— — — 357 357 
Other consumer— — — 92 92 
Total loans$57 $121 $698 $44,047 $44,923 
Balance of Loans Receivable
September 30, 2024
Loans
acquired with
deteriorated
credit quality
individually
analyzed		Loans
acquired with
deteriorated
credit quality
collectively
evaluated		Loans individually
analyzed		Loans collectively
evaluated		Total loans
(In Thousands)
Multi-family mortgage$— $— $21,980 $2,624,207 $2,646,187 
Nonresidential mortgage613 1,741 8,545 939,872 950,771 
Commercial business— 2,811 579 142,594 145,984 
Construction— 5,735 — 221,592 227,327 
One- to four-family residential mortgage1,519 3,119 6,571 1,757,021 1,768,230 
Home equity loans23 — 19 44,699 44,741 
Other consumer— — — 2,965 2,965 
Total loans$2,155 $13,406 $37,694 $5,732,950 $5,786,205 
Unaccreted yield adjustments(1,959)
Loans receivable, net of yield adjustments$5,784,246 
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Allowance for Credit Losses
June 30, 2024
Loans
acquired with
deteriorated
credit quality
individually
analyzed		Loans
acquired with
deteriorated
credit quality
collectively
evaluated		Loans individually
analyzed		Loans collectively
evaluated		Total allowance for credit losses
(In Thousands)
Multi-family mortgage$— $— $— $24,125 $24,125 
Nonresidential mortgage— 31 517 5,577 6,125 
Commercial business— 6 228 1,339 1,573 
Construction— — — 1,230 1,230 
One- to four-family residential mortgage9 95 108 11,249 11,461 
Home equity loans— — — 349 349 
Other consumer— — — 76 76 
Total loans$9 $132 $853 $43,945 $44,939 
Balance of Loans Receivable
June 30, 2024
Loans
acquired with
deteriorated
credit quality
individually
analyzed		Loans
acquired with
deteriorated
credit quality
collectively
evaluated		Loans individually
analyzed		Loans collectively
evaluated		Total loans
(In Thousands)
Multi-family mortgage$— $— $22,591 $2,623,260 $2,645,851 
Nonresidential mortgage284 2,145 9,539 936,107 948,075 
Commercial business— 2,794 714 139,239 142,747 
Construction— 5,735 — 203,502 209,237 
One- to four-family residential mortgage1,276 3,431 5,429 1,745,915 1,756,051 
Home equity loans24 — 20 44,060 44,104 
Other consumer— — — 2,685 2,685 
Total loans$1,584 $14,105 $38,293 $5,694,768 $5,748,750 
Unaccreted yield adjustments(15,963)
Loans receivable, net of yield adjustments$5,732,787 
The following tables present the activity in the allowance for credit losses on loans for the three months ended September 30, 2024 and 2023.
Changes in the Allowance for Credit Losses
Three Months Ended September 30, 2024
Balance at
June 30, 2024		Charge-offs RecoveriesProvision for
(reversal of)
credit losses 		Balance at
September 30, 2024
(In Thousands)
Multi-family mortgage$24,125 $— $— $243 $24,368 
Nonresidential mortgage6,125 — — 788 6,913 
Commercial business1,573 (127)5 254 1,705 
Construction1,230 — — 273 1,503 
One- to four-family residential mortgage11,461 (2)— (1,474)9,985 
Home equity loans349 — — 8 357 
Other consumer76 — — 16 92 
Total loans$44,939 $(129)$5 $108 $44,923 


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Changes in the Allowance for Credit Losses
Three Months Ended September 30, 2023
Balance at
June 30, 2023		Charge-offs RecoveriesProvision for
(reversal of)
credit losses		Balance at
September 30, 2023
(In Thousands)
Multi-family mortgage$26,362 $— $— $(772)$25,590 
Nonresidential mortgage8,953 (2,033)109 408 7,437 
Commercial business1,440 (189)6 156 1,413 
Construction1,336 — — (19)1,317 
One- to four-family residential mortgage10,237 — — 466 10,703 
Home equity loans338 — — 4 342 
Other consumer68 — — 2 70 
Total loans$48,734 $(2,222)$115 $245 $46,872 

Allowance for Credit Losses on Off Balance Sheet Commitments
The following table presents the activity in the allowance for credit losses on off balance sheet commitments recorded in other non-interest expense for the three months ended September 30, 2024 and 2023:
Three Months Ended
September 30,
20242023
(In Thousands)
Balance at beginning of the period$796 $741 
Provision for (reversal of) credit losses273 (74)
Balance at end of the period$1,069 $667 
7.    DEPOSITS
Deposits at September 30, 2024 and June 30, 2024 are summarized as follows:
September 30,
2024		June 30,
2024
(In Thousands)
Non-interest-bearing demand$592,099 $598,366 
Interest-bearing demand2,247,685 2,308,915 
Savings681,709 643,481 
Certificates of deposits1,949,019 1,607,361 
Total deposits$5,470,512 $5,158,123 
8.    BORROWINGS
Borrowings at September 30, 2024 and June 30, 2024 consisted of the following:
September 30,
2024		June 30,
2024
(In Thousands)
FHLB advances$1,109,888 $1,434,789 
Federal Reserve Bank Term Funding Program ("BTFP") borrowings100,000 100,000 
Overnight borrowings (1)
270,000 175,000 
Total borrowings$1,479,888 $1,709,789 
___________________________
(1)At September 30, 2024, there were no FHLB overnight line of credit borrowings and $270.0 million of unsecured overnight borrowings from other financial institutions. At June 30, 2024, represented $175.0 million of FHLB overnight line of credit borrowings.
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Fixed rate advances from the FHLB of New York and BTFP borrowings mature as follows:
September 30, 2024June 30, 2024
BalanceWeighted
Average
Interest Rate		BalanceWeighted
Average
Interest Rate
(Dollars in Thousands)
By remaining period to maturity:
Less than one year$1,003,500 4.87 %$1,328,500 5.25 %
One to two years6,500 2.82 6,500 2.82 
Two to three years— — — — 
Three to four years200,000 3.98 200,000 3.98 
Four to five years— — — — 
Greater than five years— — — — 
Total advances1,210,000 4.71 %1,535,000 5.07 %
Unamortized fair value adjustments(112)(211)
Total advances, net of fair value adjustments$1,209,888 $1,534,789 
At September 30, 2024, FHLB advances and overnight line of credit borrowings were collateralized by the FHLB capital stock owned by the Bank and mortgage loans with carrying values totaling approximately $4.40 billion. At June 30, 2024, FHLB advances and overnight line of credit borrowings were collateralized by the FHLB capital stock owned by the Bank and mortgage loans with carrying values totaling approximately $4.38 billion.
At September 30, 2024 and June 30, 2024, BTFP borrowings were secured by agency mortgage-backed securities with a par value of $111.5 million and $113.5 million, respectively. The BTFP allows depository institutions to borrow up to the par value of eligible securities pledged at the Federal Reserve Bank.
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 positions and assets.
Fair Values of Derivative Instruments on the Statement of Financial Condition
The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the Statements of Financial Condition as of September 30, 2024 and June 30, 2024:
September 30, 2024
Asset DerivativesLiability Derivatives
LocationFair ValueLocationFair Value
(In Thousands)
Derivatives designated as hedging instruments:
Interest rate contractsOther assets$23,331 Other liabilities$9,136 
Total$23,331 $9,136 

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June 30, 2024
Asset DerivativesLiability Derivatives
LocationFair ValueLocationFair Value
(In Thousands)
Derivatives designated as hedging instruments:
Interest rate contractsOther assets$54,362 Other liabilities$— 
Total$54,362 $— 
Cash Flow Hedges of Interest Rate Risk
The Company’s uses derivatives to add stability to interest expense and interest income and to manage its exposure to interest rate movements. The Company has entered into interest rate swaps, interest rate caps and 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 September 30, 2024, the Company had a total of 13 interest rate swaps and caps with a total notional amount of $1.53 billion hedging specific wholesale funding and six interest rate floors with a notional amount of $600.0 million hedging floating-rate available for sale securities.
For derivatives designated as cash flow hedges, the gain or loss on the derivative is recorded in other comprehensive income, net of tax, and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.
For cash flow hedges on the 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 months ended September 30, 2024, the Company reclassified $8.7 million as a reduction in interest expense. During the next twelve months, the Company estimates that $12.6 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 months ended September 30, 2024, the Company did not reclassify any amount to interest income. During the next twelve months, the Company estimates that $1.9 million will be reclassified as a reduction in interest income.
The table below presents the pre-tax effects of the Company’s derivative instruments designated as cash flow hedges on the Consolidated Statements of Income for the three months ended September 30, 2024 and 2023:
Three Months Ended
September 30,
20242023
(In Thousands)
Amount of (loss) gain recognized in other comprehensive income$(17,538)$14,109 
Amount of gain reclassified from accumulated other comprehensive income to interest expense$8,693 $9,471 
Fair Value Hedges of Interest Rate Risk
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 September 30, 2024, the Company had five interest rate swaps with a notional amount of $725.0 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.
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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 months ended September 30, 2024 and September 30, 2023:
Three Months Ended
September 30,
20242023
(In Thousands)
Gain (loss) on hedged items recorded in interest income on loans$13,655 $(4,120)
(Loss) gain on hedges recorded in interest income on loans$(10,798)$6,650 
As of September 30, 2024 and June 30, 2024, the following amounts were recorded on the Statement of Financial Condition related to cumulative basis adjustment for fair value hedges:
September 30,
2024		June 30,
2024
(In Thousands)
Loans receivable:
Carrying amount of the hedged assets(1)
$729,335 $715,680 
Fair value hedging adjustment included in the carrying amount of the hedged assets$4,335 $(9,320)
___________________________________
(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 September 30, 2024 and June 30, 2024, the amortized cost basis of the closed portfolios used in these hedging relationships was $1.16 billion and $1.29 billion, respectively.
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 Statements of Financial Condition as of September 30, 2024 and June 30, 2024, 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 Statements of Financial Condition.
September 30, 2024
Gross Amounts Not Offset
Gross Amount RecognizedGross Amounts Offset Net Amounts PresentedFinancial InstrumentsCash Collateral Received (Posted)Net Amount
(In Thousands)
Assets:
Interest rate contracts$27,191 $(3,860)$23,331 $— $— $23,331 
Total$27,191 $(3,860)$23,331 $— $— $23,331 
Liabilities:
Interest rate contracts$12,996 $(3,860)$9,136 $— $(8,060)$1,076 
Total$12,996 $(3,860)$9,136 $— $(8,060)$1,076 
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June 30, 2024
Gross Amounts Not Offset
Gross Amount RecognizedGross Amounts Offset Net Amounts PresentedFinancial InstrumentsCash Collateral Received (Posted)Net Amount
(In Thousands)
Assets:
Interest rate contracts$54,423 $(61)$54,362 $— $— $54,362 
Total$54,423 $(61)$54,362 $— $— $54,362 
Liabilities:
Interest rate contracts$61 $(61)$— $— $— $— 
Total$61 $(61)$— $— $— $— 
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. At September 30, 2024, eight of the Company’s derivatives were in a net liability position. As required under the enforceable master netting arrangement with its derivatives counterparties, as of September 30, 2024 the Company posted $8.1 million in financial collateral, and as of June 30, 2024, the Company was not required to post financial collateral.
In addition to the derivative instruments noted above, the Company’s pipeline of loans held for sale at September 30, 2024 and June 30, 2024, included $17.8 million and $16.0 million, respectively, of 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 the Company’s financial condition or results of operations.
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, Atlas Bank Retirement Income Plan and Supplemental Executive Retirement Plan:
Three Months Ended
September 30,		Affected Line Item in the Consolidated Statements of Income
20242023
(In Thousands)
Service cost$18 $18 Salaries and employee benefits
Interest cost83 91 Other expense
Accretion of unrecognized gain(26)(15)Other expense
Expected return on assets(23)(23)Other expense
Net periodic benefit cost$52 $71 
2021 Equity Incentive Plan
During the three months ended September 30, 2024, the Company granted 380,007 restricted stock units (“RSUs”) comprised of 278,530 service-based RSUs and 101,477 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, 2027. 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.
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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 rate of 21% to income for the three months ended September 30, 2024 and 2023:
Three Months Ended
September 30,
20242023
(Dollars in Thousands)
Income before income taxes$7,178 $13,151 
Statutory federal tax rate21 %21 %
Federal income tax at statutory rate$1,507 $2,762 
(Reduction) increase in income taxes resulting from:
Tax exempt interest(14)(18)
State tax, net of federal tax effect186 778 
Incentive stock option compensation expense— 3 
Income from bank-owned life insurance(539)(350)
Other items, net(54)134 
Total income tax expense$1,086 $3,309 
Effective income tax rate15.13 %25.16 %
12.    FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1:Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2:Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability or inputs that are derived principally from, or corroborated by, market data by correlation or other means.
Level 3:Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
Assets and Liabilities Measured on a Recurring Basis:
The following methods and significant assumptions were used to estimate the fair values as of September 30, 2024 and June 30, 2024:
Investment Securities Available for Sale
The Company’s available for sale investment securities are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. From time to time, the Company validates prices supplied by the independent pricing service by comparison to prices obtained from third-party sources or derived using internal models.
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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 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.
Those assets and liabilities measured at fair value on a recurring basis are summarized below:
September 30, 2024
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$— $74,091 $— $74,091 
Collateralized loan obligations— 378,333 — 378,333 
Corporate bonds— 132,974 — 132,974 
Total debt securities— 585,398 — 585,398 
Mortgage-backed securities available for sale:
Residential pass-through securities— 347,851 — 347,851 
Commercial pass-through securities— 137,562 — 137,562 
Total mortgage-backed securities— 485,413 — 485,413 
Total securities available for sale$— $1,070,811 $— $1,070,811 
Interest rate contracts$— $23,331 $— $23,331 
Total assets$— $1,094,142 $— $1,094,142 
Liabilities:
Interest rate contracts$— $9,136 $— $9,136 
Total liabilities$— $9,136 $— $9,136 
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June 30, 2024
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
(In Thousands)
Assets:
Debt securities available for sale:
Asset-backed securities$— $80,440 $— $80,440 
Collateralized loan obligations— 389,543 — 389,543 
Corporate bonds— 131,797 — 131,797 
Total debt securities— 601,780 — 601,780 
Mortgage-backed securities available for sale:
Residential pass-through securities— 337,264 — 337,264 
Commercial pass-through securities— 133,789 — 133,789 
Total mortgage-backed securities— 471,053 — 471,053 
Total securities available for sale$— $1,072,833 $— $1,072,833 
Interest rate contracts$— $54,362 $— $54,362 
Total assets$— $1,127,195 $— $1,127,195 
Assets Measured on a Non-Recurring Basis:
The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a non-recurring basis at September 30, 2024 and June 30, 2024:
Individually Analyzed Collateral Dependent Loans
The fair value of collateral dependent loans that are individually analyzed is determined based upon the 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, management estimates fair value using discounted cash flows based on inputs that are largely unobservable and instead reflect management’s own estimates of the assumptions as a market participant would in pricing such loans. Individually analyzed collateral dependent loans 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 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 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 Level 3 valuation by the Company.
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Those assets measured at fair value on a non-recurring basis are summarized below:
September 30, 2024
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$— $— $1,896 $1,896 
Nonresidential mortgage— — 5,028 5,028 
Total$— $— $6,924 $6,924 
June 30, 2024
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
(In Thousands)
Collateral dependent loans:
Multi-family mortgage$— $— $1,896 $1,896 
Nonresidential mortgage— — 5,014 5,014 
Total$— $— $6,910 $6,910 
The following 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:
September 30, 2024
Fair
Value		Valuation
Techniques		Unobservable
Input		RangeWeighted
Average
(Dollars in Thousands)
Collateral dependent loans:
Multi-family mortgage$1,896 Market valuation of underlying collateral
(1)
Adjustments to reflect current conditions/selling costs
(2)
13.37%
13.37 %
Nonresidential mortgage5,028 Market valuation of underlying collateral
(1)
Adjustments to reflect current conditions/selling costs
(2)
8.64%
8.64 %
Total$6,924 
June 30, 2024
Fair
Value		Valuation
Techniques		Unobservable
Input		RangeWeighted
Average
(Dollars in Thousands)
Collateral dependent loans:
Multi-family mortgage$1,896 Market valuation of underlying collateral
(1)
Adjustments to reflect current conditions/selling costs
(2)
13.32%
13.32 %
Nonresidential mortgage5,014 Market valuation of underlying collateral
(1)
Adjustments to reflect current conditions/selling costs
(2)
8.93%
8.93 %
Total$6,910 
___________________________________
(1)The fair value of collateral dependent loans is generally determined based on an independent appraisal of the fair value of a loan’s underlying collateral.
(2)The fair value basis of collateral dependent loans is adjusted to reflect management’s estimates of selling costs including, but not limited to, real estate brokerage commissions and title transfer fees.
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At September 30, 2024, collateral dependent loans valued using Level 3 inputs comprised loans with principal balances totaling $6.9 million and a valuation allowance of $493,000 reflecting an aggregate fair value of $7.4 million. By comparison, at June 30, 2024, collateral dependent loans valued using Level 3 inputs comprised loans with principal balances totaling $6.9 million and a valuation allowance of $508,000 reflecting an aggregate fair value of $7.4 million.
Once a loan is foreclosed, the fair value of the other real estate owned continues to be evaluated based upon the fair value of the repossessed real estate originally securing the loan. At September 30, 2024 and June 30, 2024, the Company had no other real estate owned assets, respectively.
The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of September 30, 2024 and June 30, 2024:
September 30, 2024
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$155,574 $155,574 $155,574 $— $— 
Investment securities available for sale1,070,811 1,070,811 — 1,070,811 — 
Investment securities held to maturity132,256 120,725 — 120,725 — 
Loans held-for-sale8,866 9,046 — 9,046 — 
Net loans receivable5,739,323 5,289,412 — — 5,289,412 
FHLB Stock57,706 — — — — 
Interest receivable29,467 29,467 32 8,896 20,539 
Interest rate contracts23,331 23,331 — 23,331 — 
Financial liabilities:
Deposits other than certificates of deposits3,521,493 3,521,493 3,521,493 — — 
Certificates of deposits1,949,019 1,945,367 — — 1,945,367 
Borrowings1,479,888 1,481,326 — — 1,481,326 
Interest payable on deposits7,493 7,493 3,286 — 4,207 
Interest payable on borrowings7,578 7,578 — — 7,578 
Interest rate contracts9,136 9,136 — 9,136 — 
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June 30, 2024
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$63,864 $63,864 $63,864 $— $— 
Investment securities available for sale1,072,833 1,072,833 — 1,072,833 — 
Investment securities held to maturity135,742 119,278 — 119,278 — 
Loans held-for-sale6,036 6,077 — 6,077 — 
Net loans receivable5,687,848 5,114,459 — — 5,114,459 
FHLB Stock80,300 — — — — 
Interest receivable29,521 29,521 11 8,986 20,524 
Interest rate contracts54,362 54,362 — 54,362 — 
Financial liabilities:
Deposits other than certificates of deposits3,550,762 3,550,762 3,550,762 — — 
Certificates of deposits1,607,361 1,597,939 — — 1,597,939 
Borrowings1,709,789 1,703,924 — — 1,703,924 
Interest payable on deposits5,662 5,662 3,397 — 2,265 
Interest payable on borrowings7,784 7,784 — — 7,784 
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.
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 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 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.
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13.    COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss included in stockholders’ equity at September 30, 2024 and June 30, 2024 are as follows:
September 30,
2024		June 30,
2024
(In Thousands)
Net unrealized loss on securities available for sale$(106,785)$(130,673)
Tax effect30,777 37,683 
Net of tax amount(76,008)(92,990)
Fair value adjustments on derivatives15,443 41,673 
Tax effect(4,479)(12,085)
Net of tax amount10,964 29,588 
Benefit plan adjustments452 337 
Tax effect(132)(98)
Net of tax amount320 239 
Total accumulated other comprehensive loss$(64,724)$(63,163)
Other comprehensive loss and related tax effects for the three months ended September 30, 2024 and 2023 are presented in the following table:
Three Months Ended
September 30,
20242023
(In Thousands)
Net unrealized holding gain (loss) on securities available for sale$23,888 $(28,502)
Fair value adjustments on derivatives(26,230)4,638 
Benefit plans:
Accretion of net actuarial gain (1)
(26)(15)
Net actuarial gain (loss)141 (95)
Net change in benefit plan accrued expense115 (110)
Other comprehensive loss before taxes(2,227)(23,974)
Tax effect 666 6,954 
Total other comprehensive loss$(1,561)$(17,020)
___________________________________
(1)Represents amounts reclassified out of accumulated other comprehensive loss and included in the computation of net periodic pension expense. See Note 10 - Benefit Plans for additional information.
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14.    NET INCOME PER COMMON SHARE (“EPS”)
The following schedule shows the Company’s earnings per share calculations for the periods presented:
Three Months Ended
September 30,
20242023
(In Thousands, Except Per Share Data)
Net income$6,092 $9,842 
Weighted average number of common shares outstanding - basic62,389 63,014 
Effect of dilutive securities31 47 
Weighted average number of common shares outstanding - diluted62,420 63,061 
Basic earnings per share$0.10 $0.16 
Diluted earnings per share$0.10 $0.16 
Stock options for 2,751,902 and 2,963,530 shares of common stock were not considered in computing diluted earnings per share for the three months ended September 30, 2024 and 2023, respectively, because they were considered anti-dilutive. In addition, 698,445 and 643,690 RSUs were not considered in computing diluted earnings per share for the three months ended September 30, 2024 and September 30, 2023, respectively, because they were considered anti-dilutive.
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ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This 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 general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax 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, 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 Annual Report on Form 10-K for the year ended June 30, 2024, 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.
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 September 30, 2024, 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 Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2024.
Comparison of Financial Condition at September 30, 2024 and June 30, 2024
Executive Summary. Total assets increased $88.9 million to $7.77 billion at September 30, 2024 from $7.68 billion at June 30, 2024. The increase primarily reflected increases in cash and cash equivalents and in net loans receivable, partially offset by decreases in the market values of interest rate derivatives and a decrease in Federal Home Loan Bank of New York (“FHLB”) capital stock.
Investment Securities. Investment securities available for sale decreased $2.0 million to $1.07 billion at September 30, 2024, from $1.07 billion at June 30, 2024. This decrease was largely the result of principal repayments of $63.6 million, partially offset by purchases of $37.5 million and a $23.9 million increase in the fair value of the portfolio to a net unrealized loss of $106.8 million.
Investment securities held to maturity decreased $3.5 million to $132.3 million at September 30, 2024 from $135.7 million at June 30, 2024. This decrease was driven by principal repayments of $3.5 million.
Additional information regarding our investment securities at September 30, 2024 and June 30, 2024 is presented in Note 4 to the unaudited consolidated financial statements.
Loans Held-for-Sale. Loans held-for-sale totaled $8.9 million at September 30, 2024 as compared to $6.0 million at June 30, 2024 and are reported separately from the balance of net loans receivable. During the three months ended September 30, 2024, we sold $26.6 million of residential mortgage loans, resulting in a gain on sale of $200,000.
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Net Loans Receivable. Net loans receivable increased $51.5 million, or 0.9%, to $5.74 billion at September 30, 2024 from $5.69 billion at June 30, 2024. Details regarding the change in the loan portfolio, by loan segment, are presented below:
September 30,
2024		June 30,
2024		Increase/
(Decrease)
(In Thousands)
Commercial loans:
Multi-family mortgage$2,646,187 $2,645,851 $336 
Nonresidential mortgage950,771 948,075 2,696 
Commercial business145,984 142,747 3,237 
Construction227,327 209,237 18,090 
Total commercial loans3,970,269 3,945,910 24,359 
One- to four-family residential mortgage1,768,230 1,756,051 12,179 
Consumer loans:
Home equity loans44,741 44,104 637 
Other consumer2,965 2,685 280 
Total consumer loans47,706 46,789 917 
Total loans5,786,205 5,748,750 37,455 
Unaccreted yield adjustments(1,959)(15,963)14,004 
Allowance for credit losses(44,923)(44,939)16 
Net loans receivable$5,739,323 $5,687,848 $51,475 
Commercial loan origination volume for the three months ended September 30, 2024 totaled $85.2 million, comprised of $37.3 million of commercial mortgage loan originations, $29.7 million of commercial business loan originations and construction loan disbursements of $18.2 million.
One- to four-family residential mortgage loan origination volume, excluding loans held-for-sale, totaled $50.1 million for the three months ended September 30, 2024. Home equity loan and line of credit origination volume for the same period totaled $4.6 million.
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 September 30, 2024 and June 30, 2024:
September 30, 2024June 30, 2024
BalanceLTVBalanceLTV
(Dollars in Thousands)
Commercial mortgage loans:
Multi-family mortgage$2,646,187 63 %$2,645,851 63 %
Nonresidential mortgage950,771 53 948,075 53 
Construction227,327 56 209,237 56 
Total commercial mortgage loans3,824,285 60 3,803,163 60 
One- to four-family residential mortgage1,768,230 62 1,756,051 62 
Consumer loans:
Home equity loans44,741 49 44,104 49 
Total mortgage loans$5,637,256 61 %$5,603,318 61 %
Additional information about our loan portfolio at September 30, 2024 and June 30, 2024 is presented in Note 5 to the unaudited consolidated financial statements.
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Nonperforming Assets. Nonperforming assets remained steady at $39.9 million, or 0.51% of total assets, at September 30, 2024, and $39.9 million, or 0.52% of total assets, at June 30, 2024, respectively.
Additional information about our nonperforming loans and loan modifications at September 30, 2024 and June 30, 2024 is presented in Note 5 to the unaudited consolidated financial statements.
Allowance for Credit Losses (“ACL”). At September 30, 2024 and June 30, 2024, the ACL totaled $44.9 million, or 0.78% of total loans. The ACL for the three months ended September 30, 2024 reflected net charge-offs of $124,000, partially offset by a provision for credit losses of $108,000. The provision for credit losses for the three months ended September 30, 2024 was primarily driven by an increase in the balance of loans receivable.
Additional information about our ACL at September 30, 2024 and June 30, 2024 is presented in Note 6 to the unaudited consolidated financial statements.
Other Assets. The aggregate balance of other assets, including premises and equipment, Federal Home Loan Bank (“FHLB”) stock, interest receivable, goodwill, core deposit intangibles, bank owned life insurance (“BOLI”), deferred income taxes, and other assets, decreased $51.6 million to $665.5 million at September 30, 2024 from $717.1 million at June 30, 2024. The decrease in the balance of these other assets during the three months ended September 30, 2024 largely reflected a decrease in the market value of interest rate derivatives and a decrease in FHLB stock, partially offset by an increase in BOLI. The remaining change generally reflected normal operating fluctuations within these line items.
Deposits. Total deposits increased $312.4 million, or 6.1%, to $5.47 billion at September 30, 2024 from $5.16 billion at June 30, 2024. Included in total deposits are brokered time deposits of $733.3 million at September 30, 2024 and $408.2 million at June 30, 2024. This increase was largely the result of a reallocation from FHLB advances into brokered certificates of deposits, due to the relatively more favorable economics of brokered deposits compared to advances in the current economic environment. The following table sets forth the distribution of, and changes in, deposits, by type, for the periods indicated:
September 30,
2024		June 30,
2024		Increase/
(Decrease)
(In Thousands)
Non-interest-bearing deposits$592,099 $598,366 $(6,267)
Interest-bearing deposits:
Interest-bearing demand2,247,685 2,308,915 (61,230)
Savings681,709 643,481 38,228 
Certificates of deposit (retail)1,215,746 1,199,127 16,619 
Certificates of deposit (brokered)733,273 408,234 325,039 
Interest-bearing deposits4,878,413 4,559,757 318,656 
Total deposits$5,470,512 $5,158,123 $312,389 
Uninsured deposits totaled $1.80 billion as of September 30, 2024 compared to $1.77 billion as of June 30, 2024. Excluding collateralized deposits of state and local governments, and deposits of the Bank’s wholly-owned subsidiary and holding company, uninsured deposits totaled $773.4 million, or 14.1% of total deposits, at September 30, 2024 compared to $764.4 million, or 14.8% of total deposits, at June 30, 2024.
Additional information about our deposits at September 30, 2024 and June 30, 2024 is presented in Note 7 to the unaudited consolidated financial statements.
Borrowings. The balance of borrowings decreased by $229.9 million to $1.48 billion at September 30, 2024 from $1.71 billion at June 30, 2024, primarily reflecting a decrease in FHLB borrowings offset by an increase in brokered certificates of deposits, as noted above.
At September 30, 2024, we maintained available secured borrowing capacity with the FHLB and the Federal Reserve Discount Window of $2.06 billion, an increase of $240.0 million from June 30, 2024, and represents 26.5% of total assets.
Additional information about our borrowings at September 30, 2024 and June 30, 2024 is presented in Note 8 to the unaudited consolidated financial statements.
Other Liabilities. The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, increased $8.5 million to $70.4 million at September 30, 2024 from $62.0 million at June 30, 2024. The change in the balance of these other liabilities generally reflected normal operating fluctuations during the period.
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Stockholders’ Equity. Stockholders’ equity decreased $2.0 million to $751.5 million at September 30, 2024 from $753.6 million at June 30, 2024. The decrease in stockholders’ equity during the three months ended September 30, 2024 largely reflected cash dividends of $6.9 million and an other comprehensive loss of $1.6 million, partially offset by net income of $6.1 million. The other comprehensive loss for the three months ended September 30, 2024 was driven by a decrease in the fair value of our derivatives portfolio, partially offset by an increase in the fair value of our available for sale securities.
Book value per share decreased by $0.06 to $11.64 at September 30, 2024 while tangible book value per share decreased by $0.05 to $9.85 at September 30, 2024.
Comparison of Operating Results for the Quarter Ended September 30, 2024 and September 30, 2023
Net Income. Net income for the quarter ended September 30, 2024 was $6.1 million, or $0.10 per diluted share, compared to $9.8 million, or $0.16 per diluted share, for the quarter ended September 30, 2023. The decrease in net income reflected a decrease in net interest income, partially offset by an increase in non-interest income and decreases in income tax expense and the provision for credit losses.
Net Interest Income. Net interest income decreased by $6.7 million to $32.4 million for the quarter ended September 30, 2024 compared to $39.2 million for the quarter ended September 30, 2023. The decrease between the comparative periods resulted from an increase of $8.8 million in interest expense, partially offset by an increase of $2.1 million in interest income. Included in net interest income for the quarters ended September 30, 2024 and 2023, respectively, was purchase accounting accretion of $649,000 and $650,000, and loan prepayment penalty income of $52,000 and $267,000.
Net interest margin decreased 30 basis points to 1.80% for the quarter ended September 30, 2024, from 2.10% for the quarter ended September 30, 2023 reflecting an increase in the cost of interest-bearing liabilities, an increase in the average balance of interest-bearing borrowings and a decrease in the average balance of interest-earning assets, partially offset by an increase in the yield on interest-earning assets and a decrease in the average balance of interest-bearing deposits.
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Details regarding 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 September 30,
20242023
Average
Balance		InterestAverage
Yield/
Cost		Average
Balance		InterestAverage
Yield/
Cost
(Dollars in Thousands)
Interest-earning assets:
Loans receivable (1)
$5,761,593 $66,331 4.61 %$5,788,074 $62,769 4.34 %
Taxable investment securities (2)
1,314,945 14,384 4.38 1,516,393 16,265 4.29 
Tax-exempt securities (2)
12,244 71 2.32 15,483 87 2.25 
Other interest-earning assets (3)
131,981 2,466 7.47 130,829 2,047 6.26 
Total interest-earning assets7,220,763 83,252 4.61 7,450,779 81,168 4.36 
Non-interest-earning assets467,670 568,723 
Total assets$7,688,433 $8,019,502 
Interest-bearing liabilities:
Interest-bearing demand$2,282,608 17,862 3.13 $2,245,831 14,468 2.58 
Savings668,240 1,757 1.05 719,508 837 0.47 
Certificates of deposit1,755,589 15,399 3.51 1,968,512 12,262 2.49 
Total interest-bearing deposits4,706,437 35,018 2.98 4,933,851 27,567 2.23 
Federal Home Loan Bank advances1,325,583 12,662 3.82 1,386,473 12,284 3.54 
Other borrowings237,011 3,126 5.28 158,098 2,157 5.46 
Borrowings1,562,594 15,788 4.04 1,544,571 14,441 3.74 
Total interest-bearing liabilities6,269,031 50,806 3.24 6,478,422 42,008 2.59 
Non-interest-bearing liabilities (4)
668,724 678,952 
Total liabilities6,937,755 7,157,374 
Stockholders' equity750,678 862,128 
Total liabilities and stockholders' equity$7,688,433 $8,019,502 
Net interest income$32,446 $39,160 
Interest rate spread (5)
1.37 %1.77 %
Net interest margin (6)
1.80 %2.10 %
Ratio of interest-earning assets to interest-bearing liabilities1.151.15
___________________________________
(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 $599.1 million and $612.3 million for the quarter ended September 30, 2024 and 2023, 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.
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Provision for Credit Losses. The provision for credit losses decreased $137,000 to $108,000 for the quarter ended September 30, 2024, compared to $245,000 for the quarter ended September 30, 2023. The provision for the quarter ended September 30, 2024 was primarily driven by loan growth compared to previous quarter end loan balances. By comparison, the provision for credit losses for the quarter ended September 30, 2023 was largely driven by additional reserves provided for individually analyzed loans and a slower prepayment rate assumption, partially offset by a decrease in the balance of loans receivable.
Additional information regarding the ACL and the associated provisions recognized during the quarters ended September 30, 2024 and 2023 is presented in Note 6 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at September 30, 2024 and June 30, 2024.
Non-Interest Income. Total non-interest income increased $616,000 to $4.6 million for the quarter ended September 30, 2024, compared to $4.0 million for the quarter ended September 30, 2023.
Income from BOLI increased $901,000 to $2.6 million for the quarter ended September 30, 2024, primarily driven by improved income resulting from the BOLI restructure initiated in December 2023.
Fees and service charges decreased $113,000 to $635,000 for the quarter ended September 30, 2024. The decrease primarily reflected decreases in various loan-related fees and charges.
Other non-interest income decreased $181,000 to $833,000 for the quarter ended September 30, 2024. The decrease in other non-interest income was primarily driven by the absence of OREO income recorded in the current period due to the sale of our sole OREO asset in January 2024.
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 Expense. Total non-interest expense remained flat at $29.8 million for the quarter ending September 30, 2024 compared to the quarter ended September 30, 2023.
Salaries and employee benefits decreased $263,000 to $17.5 million for quarter ended September 30, 2024. This decrease was primarily driven by a non-recurring decrease in stock-based compensation and lower incentive compensation, partially offset by annual merit increases and higher payroll taxes.
Equipment and systems expense increased $59,000 to $3.9 million for the quarter ended September 30, 2024, largely driven by increases in technology expense associated with the Company’s ongoing digital banking initiatives.
Advertising and marketing expense increased $114,000 to $342,000 for the quarter ended September 30, 2024, largely driven by an increase in digital and online advertising campaigns to support our deposit growth initiatives.
Other non-interest expense increased $55,000 to $3.4 million for the quarter ended September 30, 2024. This increase reflected an increase in the provision for credit losses on off balance sheet commitments, offset by a decrease in OREO expenses following the sale of a our sole OREO asset in January 2024.
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 $2.2 million to $1.1 million for the quarter ended September 30, 2024 from $3.3 million for the quarter ended September 30, 2023.
The decrease in income tax expense reflected a lower level of pre-tax income compared to the prior period.
Effective tax rates for the quarter ended September 30, 2024 and 2023 were 15.1% and 25.2%, respectively. The decrease in the effective tax rate was primarily due to lower full year projected taxable income and an increase in non-taxable BOLI income compared to the prior year period.
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Liquidity and Capital Resources
Liquidity, represented by cash and cash equivalents, is a product of operating, investing and financing activities. Our primary sources of funds are deposits, borrowings, cash flows from investment securities and loans receivable and funds provided from operations. While scheduled payments from the amortization and maturity of loans and investment securities are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and prepayments on loans and securities.
At September 30, 2024, liquidity included $155.6 million of short-term cash and cash equivalents and $1.07 billion of investment securities available for sale. As of September 30, 2024, we had the capacity to borrow additional cash funds totaling $2.06 billion and $663.9 million from the FHLBNY and the Federal Reserve discount window, respectively, without pledging additional collateral. We had the ability to pledge additional securities to borrow an additional $62.8 million at September 30, 2024. As of that same date, we also had access to unsecured overnight borrowings with other financial institutions totaling $920.0 million of which $270.0 million was outstanding.
At September 30, 2024, we had outstanding commitments to originate and purchase loans totaling $52.2 million while such commitments totaled $47.9 million at June 30, 2024. As of those same dates, our pipeline of loans held for sale included $17.8 million and $16.0 million, respectively, of loans in process whose terms included interest rate locks to borrowers that were paired with a 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 $117.4 million and $154.1 million, respectively, at September 30, 2024 compared to $75.7 million and $157.3 million, respectively, at June 30, 2024. We are also subject to the contingent liabilities resulting from letters of credit whose outstanding balances totaled $160,000 at September 30, 2024 and June 30, 2024, 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.
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.
The following table sets forth the Bank’s capital position at September 30, 2024 and June 30, 2024, as compared to the minimum regulatory capital requirements that were in effect as of those dates:
At September 30, 2024
ActualFor Capital
Adequacy Purposes		To Be Well Capitalized
Under Prompt
Corrective Action
Provisions
AmountRatioAmountRatioAmountRatio
(Dollars in Thousands)
Total capital (to risk-weighted assets)$697,316 14.48 %$385,336 8.00 %$481,670 10.00 %
Tier 1 capital (to risk-weighted assets)655,826 13.62 %289,002 6.00 %385,336 8.00 %
Common equity tier 1 capital (to risk-weighted assets)655,826 13.62 %216,751 4.50 %313,085 6.50 %
Tier 1 capital (to adjusted total assets)655,826 8.53 %307,498 4.00 %384,372 5.00 %
At June 30, 2024
ActualFor Capital
Adequacy Purposes		To Be Well Capitalized
Under Prompt
Corrective Action
Provisions
AmountRatioAmountRatioAmountRatio
(Dollars in Thousands)
Total capital (to risk-weighted assets)$688,597 14.42 %$382,034 8.00 %$477,542 10.00 %
Tier 1 capital (to risk-weighted assets)651,620 13.65 %286,525 6.00 %382,034 8.00 %
Common equity tier 1 capital (to risk-weighted assets)651,620 13.65 %214,894 4.50 %310,402 6.50 %
Tier 1 capital (to adjusted total assets)651,620 8.44 %308,656 4.00 %385,820 5.00 %
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The following table sets forth the Company’s capital position at September 30, 2024 and June 30, 2024, as compared to the minimum regulatory capital requirements that were in effect as of those dates:
At September 30, 2024
ActualFor Capital
Adequacy Purposes
AmountRatioAmountRatio
(Dollars in Thousands)
Total capital (to risk-weighted assets)$745,118 15.46 %$385,562 8.00 %
Tier 1 capital (to risk-weighted assets)703,628 14.60 %289,171 6.00 %
Common equity tier 1 capital (to risk-weighted assets)703,628 14.60 %216,878 4.50 %
Tier 1 capital (to adjusted total assets)703,628 9.14 %307,891 4.00 %
At June 30, 2024
ActualFor Capital
Adequacy Purposes
AmountRatioAmountRatio
(Dollars in Thousands)
Total capital (to risk-weighted assets)$743,741 15.57 %$382,247 8.00 %
Tier 1 capital (to risk-weighted assets)706,764 14.79 %286,685 6.00 %
Common equity tier 1 capital (to risk-weighted assets)706,764 14.79 %215,014 4.50 %
Tier 1 capital (to adjusted total assets)706,764 9.15 %309,031 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
In the normal course of our business of investing in loans and securities 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 extend credit to meet the financing needs of our customers. We had no significant off-balance sheet commitments for capital expenditures as of September 30, 2024.
Recent Accounting Pronouncements
For a discussion of the expected impact of recently issued accounting pronouncements that we have adopted, please refer to Note 3 to the unaudited consolidated financial statements.
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ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The majority of our assets and liabilities are sensitive to changes in interest rates and as such, interest rate risk is a significant form of market risk that we must manage. Interest rate risk is generally defined in regulatory nomenclature as the risk to earnings or capital arising from the movement of interest rates and arises from several risk factors 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 Board of Directors through its Interest Rate Risk Management Committee which has assigned the responsibility for the operational aspects of the 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 recognize. Movements in market interest rates, and the effect of such movements on the risk factors noted above, significantly influence the spread between the interest earned on our interest-earning assets and the interest paid on our interest-bearing liabilities. Our internal interest rate risk analysis calculates the sensitivity of our projected NII over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into similar instruments. Product pricing and earning asset prepayment speeds are appropriately adjusted for each rate scenario.
With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our Economic Value of Equity (“EVE”) 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 instruments. EVE attempts to quantify our economic value using a discounted cash flow methodology. The degree to which our EVE changes for any hypothetical interest rate scenario from its base case measurement is a reflection of our sensitivity to interest rate risk.
For both earnings and capital at risk, our interest rate risk analysis calculates a base case scenario that assumes no change in interest rates. The model then measures 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 falling rate scenarios during periods of lower market interest rates.
The following tables present the results of our internal EVE and NII analyses as of September 30, 2024 and June 30, 2024, respectively:
September 30, 2024
1 to 12 Months13 to 24 Months
Change in Interest RatesEVE% Change
in EVE		NII% Change
in NII		NII% Change
in NII
(Dollars in Thousands)
+300 bps$337,481 (41.13)%$130,861 (7.30)%$137,642 (11.30)%
+200 bps409,658 (28.54)%133,714 (5.28)%142,909 (7.91)%
+100 bps493,835 (13.86)%137,077 (2.90)%149,484 (3.67)%
0 bps573,301 — 141,164 — 155,178 — 
-100 bps642,587 12.09 %145,963 3.40 %161,207 3.89 %
-200 bps688,422 20.08 %147,303 4.35 %163,562 5.40 %
-300 bps750,729 30.95 %149,611 5.98 %166,197 7.10 %
June 30, 2024
1 to 12 Months13 to 24 Months
Change in Interest RatesEVE% Change
in EVE		NII% Change
in NII		NII% Change
in NII
(Dollars in Thousands)
+300 bps$331,842 (41.07)%$127,382 (8.51)%$135,753 (10.66)%
+200 bps400,548 (28.87)%131,003 (5.91)%140,351 (7.64)%
+100 bps483,724 (14.10)%135,289 (2.83)%146,594 (3.53)%
0 bps563,098 — 139,236 — 151,955 — 
-100 bps640,024 13.66 %144,991 4.13 %157,821 3.86 %
-200 bps693,495 23.16 %148,189 6.43 %159,928 5.25 %
-300 bps767,451 36.29 %150,478 8.07 %160,093 5.36 %
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There are numerous internal and external factors that may contribute to changes in our EVE and its sensitivity. Changes in the composition and allocation of our balance sheet, or utilization of 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. 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 our interest-earning assets and interest-costing liabilities and the associated present values thereof.
Notwithstanding the rate change scenarios presented in the EVE and NII-based analyses above, future interest rates and their effect on 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 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 the analyses set forth above. Additionally, an increase in credit risk may result as the ability of borrowers to service their debt may decrease in the event of an interest rate increase.
ITEM 4.
CONTROLS AND PROCEDURES
As of the end of the period covered by 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 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 September 30, 2024, 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.
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PART II
ITEM 1.    Legal Proceedings
At September 30, 2024, 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 Annual Report on Form 10-K for the year ended June 30, 2024, previously filed with the Securities and Exchange Commission.
ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds
The Company did not repurchase any shares of its common stock during the three month period ended September 30, 2024.
ITEM 3.    Defaults Upon Senior Securities
Not applicable.
ITEM 4.    Mine Safety Disclosures
Not applicable.
ITEM 5.    Other Information
Securities Trading Plans of Directors and Executive Officers
During the three months ended September 30, 2024, 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”.
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ITEM 6.    Exhibits
The following Exhibits are filed as part of this report:
3.1
3.2
4
31.1
31.2
32.1
32.2
101
The following materials from the Company’s Form 10-Q for the quarter ended September 30, 2024, 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.INSInline 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.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Labels Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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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: November 5, 2024
By:/s/ Craig L. Montanaro
Craig L. Montanaro
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 5, 2024
By:/s/ Sean Byrnes
Sean Byrnes
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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