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☒ No ☐

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

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

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

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

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: February ~~1, 2018.~~2, 2022.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

~~1. 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,~~subsidiary, CJB Investment Corp. ~~and KFS Financial Services, Inc. and its wholly-owned subsidiary, KFS Insurance Services, Inc.~~ 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

~~2. 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 information or footnotes necessary for a complete presentation of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the unaudited consolidated financial statements have been included. The results of operations for the ~~three-month~~quarter and ~~six-month periods~~six months ended December 31, ~~2017~~2021 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 for June 30, ~~2017~~2021 was derived from the Company’s ~~2017 annual report~~2021 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 ~~2017 annual report~~2021 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 2021 Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies since June 30, 2021.

We have reclassified certain amounts in the prior period's financial statements to conform to the current period's presentation. Specifically, effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Interest income and non-interest income for all periods presented reflect this reclassification.

~~3. NET INCOME PER COMMON SHARE (“EPS”)~~Update to Significant Accounting Policies

~~Basic EPS~~Allowance for Credit Losses on Loans ("ACL").In accordance with the ACL policy, the methodology is reviewed no less than annually. During the quarter ended September 30, 2021, the Company updated the econometric factors used in the determination of the probability of default for certain loan portfolio segments used in its ACL methodology for pooled loans. Econometric factors are selected based on the ~~weighted average number~~correlation of ~~common shares actually outstanding including both vested and unvested restricted stock awards adjusted~~the factor to credit losses for ~~Employee Stock Ownership Plan (“ESOP”) shares not yet committed to be released. Diluted EPS reflects~~each loan portfolio segment. Effective July 1, 2021, the ~~potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resulted~~primary econometric factor utilized in the ~~issuance~~determination of ~~common stock that then shared~~the probability of default for each loan portfolio segment is the national unemployment rate (“NUR”). Prior to July 1, 2021, NUR and gross domestic product (“GDP”) econometric factors were used in the ~~earnings~~determination of the ~~Company. Diluted EPS is calculated by adjusting the weighted average number~~probability of shares of common stock outstanding to include the effect of contracts or securities exercisable or which could be converted into common stock, if dilutive, using the treasury stock method. Shares issued and reacquired during any period are weighteddefault for ~~the portion of the period they were outstanding.~~each loan portfolio segment.

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

Three Months Ended

Six Months Ended

December 31, 2017

December 31, 2017

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

(In Thousands, Except Per Share Data)

(In Thousands, Except Per Share Data)

Net income

$
1,269

$
6,501

Basic earnings per share, income
available to common stockholders

$
1,269

77,174

$
0.02

$
6,501

78,411

$
0.08

Effect of dilutive securities:

Stock options

65

63

$
1,269

77,239

$
0.02

$
6,501

78,474

$
0.08

- 9 -

Three Months Ended

Six Months Ended

December 31, 2016

December 31, 2016

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

Income
(Numerator)

Shares
(Denominator)

Per
Share
Amount

(In Thousands, Except Per Share Data)

(In Thousands, Except Per Share Data)

Net income

$
5,464

$
10,131

Basic earnings per share, income
available to common stockholders

$
5,464

85,174

$
0.06

$
10,131

85,710

$
0.12

Effect of dilutive securities:

Stock options

84

72

$
5,464

85,258

$
0.06

$
10,131

85,782

$
0.12

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

4.2. SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of December 31, ~~2017,~~2021, 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.

3. RECENT ACCOUNTING PRONOUNCEMENTS

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

~~On November 1, 2017,~~In December 2019, the ~~Company~~Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, “Income taxes (Topic 740); Simplifying the Accounting for Income Taxes”. ASU 2019-12 provides amendments intended to reduce the cost and ~~Clifton Bancorp Inc. (“Clifton”),~~complexity in accounting for income taxes while maintaining or improving the holding company for Clifton Savings Bank (“Clifton Bank”), announced that the companies have entered into a definitive agreement pursuant to which the Company will acquire Clifton in an all-stock transaction. Under the termsusefulness of the ~~agreement, Clifton will merge~~information provided to users of financial statements. ASU 2019-12 removes the following exceptions from ASC 740, Income Taxes: (i) exceptions to the incremental approach for intraperiod tax allocation; (ii) exceptions to accounting for basis differences when a foreign subsidiary becomes an equity method investment or a foreign equity method investment become a subsidiary; and (iii) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 provides the following amendments that simplify and improve guidance with ~~and into the Company and each outstanding share of Clifton common stock will be exchanged for 1.191 shares of the Company common stock.~~

~~As of December 31, 2017, Clifton had approximately $1.7 billion of assets, $1.2 billion of loans, and $935 million of deposits held across~~Topic 740: (i) franchise taxes that are based partially on income; (ii) transactions that result in a network of 12 branches located in New Jersey throughout Bergen, Passaic, Hudson, and Essex counties. Upon closing, the Company stockholders and Clifton stockholders will own approximately 76% and 24% of the combined company, respectively.

~~6. MERGER RELATED EXPENSES~~

~~Merger-related expenses are recorded~~step up in the ~~Consolidated Statements~~tax basis of ~~Income and include costs relating~~goodwill; (iii) separate financial statements of legal entities that are not subject to the Company’s proposed acquisition of Clifton, as described above. These charges represent one-time costs associated with acquisition activities and do not represent ongoing costs of the fully integrated combined organization. Accounting guidance requires that acquisition-related transactional and restructuring costs incurred by the Company be charged to expense as incurred.

~~7. RECENT ACCOUNTING PRONOUNCEMENTS~~

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

~~- 10 -~~

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

~~In January 2016, the FASB issued~~ ~~ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The ASU requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in OCI the~~tax; (iv) enacted changes in ~~instrument-specific credit risk~~tax laws in interim periods; and (v) employee stock ownership plans and investments in qualified affordable housing projects accounted for ~~financial liabilities measured~~ using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. The Update provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The Update also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements.method. For public business entities, the amendments in ~~this Update~~the ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2017, including interim periods within those fiscal years.~~2020. The Company ~~is currently evaluating the~~adopted ASU 2019-12 in July 2021, and its adoption did not have a significant impact ~~of adopting this ASU~~ on ~~its consolidated financial statements.~~

~~In February 2016, the FASB issued~~ ~~ASU 2016-02, Leases (Topic 842)~~. The ASU requires all lessees to recognize a lease liability and right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date for leases classified as operating leases or finance leases. This update also requires new quantitative disclosures related to leases in the Company’s consolidated financial statements. There are practical expedients in this update that relate to leases that commenced before the effective date, initial direct costs and the use of hindsight to extend or terminate a lease or purchase the lease asset. Lessor accounting remains largely unchanged under the new guidance. For public business entities, the amendments in this Update are effective for fiscal years beginning after

4. SECURITIES

At December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. A modified retrospective approach must be applied for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company continues to evaluate the impact of the guidance, including determining whether other contracts exist that are deemed to be in scope. As such,31, 2021, there was no conclusions have yet been reached regarding the potential impact on adoption on the Company’s consolidated financial statements and regulatory capital and risk-weighted assets; however, the Company does not expect the amendment to have a material impact on its results of operations.

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

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

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

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

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

~~- 11 -~~

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

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

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

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

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

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

~~- 12 -~~

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

~~8. SECURITIES AVAILABLE FOR SALE~~

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

December 31, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

(In Thousands)

Securities available for sale:

Debt securities:

U.S. agency securities
$
4,830

$
7

$
27

$
4,810

Obligations of state and political subdivisions

27,452

89

113

27,428

Asset-backed securities

169,207

826

549

169,484

Collateralized loan obligations

133,246

338

243

133,341

Corporate bonds

143,012

519

1,134

142,397

Trust preferred securities

8,916

-

422

8,494

Total debt securities

486,663

1,779

2,488

485,954

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

8,836

-

142

8,694

Federal National Mortgage Association

19,219

-

726

18,493

Total collateralized mortgage obligations

28,055

-

868

27,187

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

86,363

133

1,102

85,394

Federal National Mortgage Association

31,025

282

205

31,102

Total residential pass-through securities

117,388

415

1,307

116,496

Commercial pass-through securities:

Federal National Mortgage Association

8,028

12

6

8,034

Total commercial pass-through securities

8,028

12

6

8,034

Total mortgage-backed securities

153,471

427

2,181

151,717

Total securities available for sale
$
640,134

$
2,206

$
4,669

$
637,671

December 31, 2017

Amortized
Cost

Fair
Value

(In Thousands)

Debt securities available for sale:

Due in one year or less
$
-

$
-

Due after one year through five years

54,792

54,981

Due after five years through ten years

146,192

145,249

Due after ten years

285,679

285,724

Total
$
486,663

$
485,954

~~- 13 -~~

June 30, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

(In Thousands)

Securities available for sale:

Debt securities:

U.S. agency securities
$
5,304

$
35

$
23

$
5,316

Obligations of state and political subdivisions

27,465

305

30

27,740

Asset-backed securities

163,120

316

1,007

162,429

Collateralized loan obligations

98,078

185

109

98,154

Corporate bonds

143,017

826

1,525

142,318

Trust preferred securities

8,912

-

372

8,540

Total debt securities

445,896

1,667

3,066

444,497

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

9,902

38

66

9,874

Federal National Mortgage Association

21,222

-

560

20,662

Total collateralized mortgage obligations

31,124

38

626

30,536

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

95,501

352

999

94,854

Federal National Mortgage Association

35,516

425

245

35,696

Total residential pass-through securities

131,017

777

1,244

130,550

Commercial pass-through securities:

Federal National Mortgage Association

8,108

69

-

8,177

Total commercial pass-through securities

8,108

69

-

8,177

Total mortgage-backed securities

170,249

884

1,870

169,263

Total securities available for sale
$
616,145

$
2,551

$
4,936

$
613,760

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

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

~~- 14 -~~

~~9. SECURITIES HELD TO MATURITY~~

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


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:
Obligations of state and political subdivisions	$	32,594	$	580	$	-	$	-	$	33,174
Asset-backed securities		224,825		1,979		90		-		226,714
Collateralized loan obligations		290,589		64		173		-		290,480
Corporate bonds		157,973		2,476		205		-		160,244
Total debt securities		705,981		5,099		468		-		710,612

Mortgage-backed securities:
Collateralized mortgage obligations (1)		9,608		93		-		-		9,701
Residential pass-through securities (1)		646,188		4,003		11,643		-		638,548
Commercial pass-through securities (1)		234,025		2,651		4,471		-		232,205
Total mortgage-backed securities		889,821		6,747		16,114		-		880,454

Total securities available for sale	$	1,595,802	$	11,846	$	16,582	$	-	$	1,591,066

(1)

Government-sponsored enterprises.


	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:
Obligations of state and political subdivisions	$	33,800	$	803	$	0	$	-	$	34,603
Asset-backed securities		240,217		2,835		63		-		242,989
Collateralized loan obligations		189,873		177		170		-		189,880
Corporate bonds		155,622		2,802		73		-		158,351
Total debt securities		619,512		6,617		306		-		625,823

Mortgage-backed securities:
Collateralized mortgage obligations (1)		13,420		319		0		-		13,739
Residential pass-through securities (1)		744,196		7,443		7,148		-		744,491
Commercial pass-through securities (1)		289,725		5,738		2,652		-		292,811
Total mortgage-backed securities		1,047,341		13,500		9,800		-		1,051,041

Total securities available for sale	$	1,666,853	$	20,117	$	10,106	$	-	$	1,676,864

(1)

Government-sponsored enterprises.

- 11 -


	December 31, 2021
	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	$	24,698	$	983	$	-	$	-	$	25,681
Total debt securities		24,698		983		-		-		25,681

Mortgage-backed securities:
Residential pass-through securities (1)		16,146		0		74		-		16,072
Commercial pass-through securities (1)		12,298		5		-		-		12,303
Total mortgage-backed securities		28,444		5		74		-		28,375

Total securities held to maturity	$	53,142	$	988	$	74	$	-	$	54,056

(1)

Government-sponsored enterprises.


	June 30, 2021
	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	$	25,824	$	1,204	$	-	$	-	$	27,028
Total debt securities		25,824		1,204		-		-		27,028

Mortgage-backed securities:
Commercial pass-through securities (1)		12,314		268		-		-		12,582
Total mortgage-backed securities		12,314		268		-		-		12,582

Total securities held to maturity	$	38,138	$	1,472	$	-	$	-	$	39,610

(1)

Government-sponsored enterprises.

Excluding the balances of mortgage-backed securities, the following table presents the amortized cost and estimated fair values of debt ~~and mortgage-backed~~ securities ~~held to maturity at December 31, 2017 and June 30, 2017 and stratification by contractual maturity of debt securities held to maturity at December 31, 2017 are presented below:~~

December 31, 2017

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

(In Thousands)

Securities held to maturity:

Debt securities:

Obligations of state and political subdivisions
$
100,671

$
542

$
481

$
100,732

Subordinated debt

25,000

150

-

25,150

Total debt securities

125,671

692

481

125,882

Mortgage-backed securities:

Collateralized mortgage obligations:

Government National Mortgage Association

22,263

-

259

22,004

Federal Home Loan Mortgage Corporation

13,480

-

435

13,045

Federal National Mortgage Association

99

8

-

107

Non-agency securities

19

-

-

19

Total collateralized mortgage obligations

35,861

8

694

35,175

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

31,549

1

613

30,937

Federal National Mortgage Association

128,938

356

902

128,392

Total residential pass-through securities

160,487

357

1,515

159,329

Commercial pass-through securities:

Government National Mortgage Association

1,882

-

5

1,877

Federal National Mortgage Association

147,551

866

149

148,268

Total commercial pass-through securities

149,433

866

154

150,145

Total mortgage-backed securities

345,781

1,231

2,363

344,649

Total securities held to maturity
$
471,452

$
1,923

$
2,844

$
470,531

December 31, 2017

Amortized
Cost

Fair
Value

(In Thousands)

Debt securities held to maturity:

Due in one year or less
$
5,428

$
5,418

Due after one year through five years

25,907

25,873

Due after five years through ten years

83,180

83,356

Due after ten years

11,156

11,235

Total
$
125,671

$
125,882

~~- 15 -~~

June 30, 2017

Amortized
Cost

Gross
Unrecognized
Gains

Gross
Unrecognized
Losses

Fair
Value

(In Thousands)

Securities held to maturity:

Debt securities:

U.S. agency securities
$
35,000

$
-

$
48

$
34,952

Obligations of state and political subdivisions

94,713

996

156

95,553

Subordinated debt

15,000

-

-

15,000

Total debt securities

144,713

996

204

145,505

Mortgage-backed securities:

Collateralized mortgage obligations:

Government National Mortgage Association

2,199

-

46

2,153

Federal Home Loan Mortgage Corporation

15,522

-

357

15,165

Federal National Mortgage Association

111

10

-

121

Non-agency securities

22

-

-

22

Total collateralized mortgage obligations

17,854

10

403

17,461

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

35,289

1

338

34,952

Federal National Mortgage Association

143,524

428

597

143,355

Total residential pass-through securities

178,813

429

935

178,307

Commercial pass-through securities:

Government National Mortgage Association

1,989

-

11

1,978

Federal National Mortgage Association

149,952

2,622

31

152,543

Total commercial pass-through securities

151,941

2,622

42

154,521

Total mortgage-backed securities

348,608

3,061

1,380

350,289

Total securities held to maturity
$
493,321

$
4,057

$
1,584

$
495,794

~~There were no sales of securities held to maturity during the three and six months ended December 31, 2017 and December 31, 2016.~~

At December 31, 2017 and June 30, 2017, securities held to maturity with carrying values of approximately $121.4 million and $117.5 million, respectively, were utilized as collateral for borrowings from the FHLB of New York. As of those same dates, securities held to maturity with total carrying values of approximately $6.5 million and $6.9 million, respectively, were pledged to secure public funds on deposit. At December 31, 2017 and June 30, 2017, securities held to maturity with carrying values of approximately $95.5 million and $88.8 million, respectively, were utilized as collateral for potential borrowings from the Federal Reserve Bank of New York. As of those same dates, securities held to maturity with carrying values of approximately $27.8 million and $32.7 million, respectively, were utilized as collateral for depositor sweep accounts.

~~- 16 -~~

~~10. IMPAIRMENT OF SECURITIES~~

~~The following two tables summarize the fair values and gross unrealized losses within the~~ available for sale and held to maturity, ~~portfolios~~by contractual maturity, at December 31, ~~2017~~2021:


	December 31, 2021
	Amortized Cost		Fair Value
	(In Thousands)
Debt securities:
Due in one year or less	$	7,273	$	7,317
Due after one year through five years		38,529		39,570
Due after five years through ten years		358,834		361,685
Due after ten years		326,043		327,721
Total	$	730,679	$	736,293

- 12 -

Sales of securities available for sale were as follows for the periods presented below:


	Quarter Ended				Six Months Ended
	December 31,				December 31,
	2021		2020		2021		2020
	(In Thousands)
Available for sale securities sold:
Proceeds from sales of securities	$	0	$	25,242	$	0	$	44,842

Gross realized gains	$	0	$	800	$	0	$	800
Gross realized losses		0		0		0		(385	)
Net gain on sales of securities	$	0	$	800	$	0	$	415

Calls of securities available for sale during quarter ended December 31, 2021 resulted in no gain or loss. Calls of securities available for sale during the quarter ended December 31, 2020 resulted in gross gains of $13,000. Calls of securities available for sale during the six months ended December 31, 2021 and ~~June 30, 2017.~~ 2020 resulted in gross gains of $1,000 and $21,000, respectively. During the quarter and six months ended December 31, 2021 and 2020, there were 0 gains or losses recognized on sales of securities held to maturity.

The ~~gross unrealized~~carrying value of securities pledged for borrowings at the FHLB and ~~unrecognized losses, presented by security type, represent temporary impairments of value within each portfolio~~other institutions, and securities pledged for public funds and other purposes, were as follows as of the dates ~~presented. Temporary impairments~~presented below:


	December 31,		June 30,
	2021		2021
	(In Thousands)
Securities pledged:
Pledged for borrowings at the FHLB of New York	$	154,731	$	170,120
Pledged to secure public funds on deposit		250,943		137,778
Pledged for potential borrowings at the Federal Reserve Bank of New York		371,112		274,076
Total carrying value of securities pledged	$	776,786	$	581,974

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 ~~have been recognized through other comprehensive income as reductions in stockholders’ equity on a tax-effected basis.~~

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

December 31, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

(In Thousands)

Securities Available for Sale:

U.S. agency securities
$
363

$
4

$
1,605

$
23

$
1,968

$
27

Obligations of state and political
subdivisions

16,450

107

571

6

17,021

113

Asset-backed securities

16,871

91

38,559

458

55,430

549

Collateralized loan obligations

71,100

243

-

-

71,100

243

Corporate bonds

-

-

68,886

1,134

68,886

1,134

Trust preferred securities

-

-

7,494

422

7,494

422

Collateralized mortgage obligations

5,181

45

22,006

823

27,187
��

868

Residential pass-through securities

65,920

368

29,612

939

95,532

1,307

Commercial pass-through securities

4,029

6

-

-

4,029

6

Total
$
179,914

$
864

$
168,733

$
3,805

$
348,647

$
4,669

June 30, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

(In Thousands)

Securities Available for Sale:

U.S. agency securities
$
440

$
-

$
1,746

$
23

$
2,186

$
23

Obligations of state and political
subdivisions

3,872

30

-

-

3,872

30

Asset-backed securities

16,860

84

86,975

923

103,835

1,007

Collateralized loan obligations

46,016

108

6,000

1

52,016

109

Corporate bonds

-

-

73,500

1,525

73,500

1,525

Trust preferred securities

-

-

7,540

372

7,540

372

Collateralized mortgage obligations

26,090

626

-

-

26,090

626

Residential pass-through securities

77,301

1,244

-

-

77,301

1,244

Total
$
170,579

$
2,092

$
175,761

$
2,844

$
346,340

$
4,936

~~- 17 -~~

~~The number of available for sale securities with unrealized losses~~ at December 31, ~~2017 totaled 92~~2021 and included seven U.S. agency securities, 40 municipal obligations, seven asset-backed securities, eight collateralized loan obligations, six corporate obligations, four trust preferred securities, seven collateralized mortgage obligations and twelve residential pass-through securities and one commercial pass-through security. The number of available for sale securities with unrealized losses at June 30, 2017 totaled 57 and included seven U.S. agency securities, nine municipal obligations, nine asset-backed securities, eight collateralized loan obligations, seven corporate obligations, four trust preferred securities and five collateralized mortgage obligations and eight residential pass-through securities.2021:

	December 31, 2017
	Less than 12 Months				12 Months or More				Total				December 31, 2021
	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Less than 12 Months				12 Months or More				Total
	(In Thousands)												Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses
Securities Held to Maturity:
Obligations of state and political subdivisions	$	47,007	$	374	$	4,114	$	107	$	51,121	$	481
Collateralized mortgage obligations		20,134		194		14,927		500		35,061		694
													(Dollars in Thousands)
Securities Available for Sale:
Asset-backed securities													$	25,833	$	85	$	5,531	$	5		5	$	31,364	$	90
Collateralized loan obligations														133,703		90		53,697		83		15		187,400		173
Corporate bonds														36,186		205		-		-		8		36,186		205
Commercial pass-through securities														48,569		1,656		80,731		2,815		8		129,300		4,471
Residential pass-through securities		47,939		306		72,364		1,209		120,303		1,515		247,436		3,923		247,750		7,720		12		495,186		11,643
Commercial pass-through securities		15,464		149		1,877		5		17,341		154

Total	$	130,544	$	1,023	$	93,282	$	1,821	$	223,826	$	2,844	$	491,727	$	5,959	$	387,709	$	10,623		48	$	879,436	$	16,582

- 13 -


	June 30, 2021
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses
	(Dollars in Thousands)
Securities Available for Sale:
Asset-backed securities	$	12,159	$	63	$	-	$	-		2	$	12,159	$	63
Collateralized loan obligations		36,741		9		58,605		161		8		95,346		170
Corporate bonds		15,952		73		-		-		4		15,952		73
Commercial pass-through securities		145,055		2,652		-		-		7		145,055		2,652
Residential pass-through securities		424,112		7,148		-		-		10		424,112		7,148

Total	$	634,019	$	9,945	$	58,605	$	161		31	$	692,624	$	10,106


	December 31, 2021
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Number of Securities		Fair Value		Unrecognized Losses
	(Dollars in Thousands)
Securities Held to Maturity:
Residential pass-through securities	$	16,072	$	74	$	-	$	-		2	$	16,072	$	74

Total	$	16,072	$	74	$	-	$	-		2	$	16,072	$	74

June 30, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

(In Thousands)

Securities Held to Maturity:

U.S. agency securities
$
24,969

$
31

$
9,983

$
17

$
34,952

$
48

Obligations of state and political
subdivisions

19,232

150

409

6

19,641

156

Collateralized mortgage obligations

17,317

403

22

-

17,339

403

Residential pass-through securities

119,538

887

1,750

48

121,288

935

Commercial pass-through securities

11,110

42

-

-

11,110

42

Total
$
192,166

$
1,513

$
12,164

$
71

$
204,330

$
1,584

~~The number of~~At June 30, 2021, there were 0 held to maturity securities with unrecognized ~~losses at December 31, 2017 totaled 187 and included 105 municipal obligations, seven collateralized mortgage obligations, 70 residential pass-through~~losses.

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

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

~~When the Company~~consolidated statement of income when management intends to sell, ~~the impaired debt security;~~

~~When the Company more likely than not will~~or may be required to sell, the ~~impaired debt security~~securities before ~~recovery~~they recover in value. The issuers of ~~its amortized cost (for example, whether liquidity requirements~~these securities continue to make timely principal and interest payments and none of these securities were past due or ~~contractual or regulatory obligations indicate~~were placed in nonaccrual status at December 31, 2021. Management believes that the ~~security will be required~~unrealized losses on these securities are a function of changes in market interest rates and credit spreads, not changes in credit quality. Therefore, 0 allowance for credit losses was recorded at December 31, 2021.

At December 31, 2021, the held to ~~be sold before~~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 ~~forecasted recovery occurs); or~~

~~When an impaired debt security does not meet either~~long history of no credit losses. The Company regularly monitors the obligations of state and political subdivisions sector of the ~~two conditions above, but~~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.

- 14 -

5. LOANS RECEIVABLE

The following table sets forth the composition of the Company’s loan portfolio at December 31, 2021 and June 30, 2021:


	December 31,			June 30,
	2021			2021
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	2,007,431		$	2,039,260
Nonresidential mortgage		1,026,447			1,079,444
Commercial business		180,429			168,951
Construction		110,703			93,804
Total commercial loans		3,325,010			3,381,459

One- to four-family residential mortgage		1,477,267			1,447,721

Consumer loans:
Home equity loans		43,934			47,871
Other consumer		3,040			3,259
Total consumer loans		46,974			51,130

Total loans		4,849,251			4,880,310

Unaccreted yield adjustments		(22,847	)		(28,916	)

Total loans receivable, net of yield adjustments	$	4,826,404		$	4,851,394

- 15 -

Past Due Loans

Past due status is based on the contractual payment terms of the loans. The following tables present the payment status of past due loans as of December 31, 2021 and June 30, 2021, by loan segment:


	December 31, 2021
	Multi- Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Current	$	1,979,128	$	1,000,240	$	180,075	$	109,712	$	1,471,842	$	43,742	$	3,040	$	4,787,779
Past due:
30-59 days		-		-		72		991		1,544		-		-		2,607
60-89 days		10,285		-		48		-		309		59		-		10,701
90 days and over		18,018		26,207		234		-		3,572		133		-		48,164
Total past due		28,303		26,207		354		991		5,425		192		-		61,472

Total loans	$	2,007,431	$	1,026,447	$	180,429	$	110,703	$	1,477,267	$	43,934	$	3,040	$	4,849,251


	June 30, 2021
	Multi- Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Current	$	2,023,166	$	1,046,553	$	168,550	$	93,804	$	1,439,501	$	47,828	$	3,258	$	4,822,660
Past due:
30-59 days		-		-		-		-		382		6		1		389
60-89 days		-		-		-		-		2,734		5		-		2,739
90 days and over		16,094		32,891		401		-		5,104		32		-		54,522
Total past due		16,094		32,891		401		-		8,220		43		1		57,650

Total loans	$	2,039,260	$	1,079,444	$	168,951	$	93,804	$	1,447,721	$	47,871	$	3,259	$	4,880,310

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 ~~recover~~receive all principal and interest payments (“P&I”) owed substantially in accordance with the ~~entire amortized cost~~terms of the ~~security. According~~loan agreement, regardless of past due status. Loans that become 90 days past due, but are well secured and in the process of collection, may remain on accrual status. Nonaccrual loans are generally returned to ~~applicable accounting guidance for debt securities, this is~~accrual status when all payments due are brought current and we expect to receive all remaining P&I 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 ~~when~~applied to reduce the ~~present~~carrying value of ~~cash flows expected~~the loan. The Company did not recognize interest income on non-accrual loans during the quarter and six months ended December 31, 2021 and 2020.

- 16 -

The following tables present information relating to ~~be collected is less than~~ the ~~amortized cost~~Company’s nonperforming loans as of December 31, 2021 and June 30, 2021:


	December 31, 2021
	Multi- Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Performing	$	1,976,220	$	996,970	$	179,994	$	108,774	$	1,469,806	$	42,309	$	3,040	$	4,777,113
Nonperforming:
90 days and over past due accruing		-		-		-		-		-		-		-		-
Nonaccrual loans with allowance for credit losses		18,415		818		-		-		2,827		324		-		22,384
Nonaccrual loans with no allowance for credit losses		12,796		28,659		435		1,929		4,634		1,301		-		49,754
Total nonperforming		31,211		29,477		435		1,929		7,461		1,625		-		72,138

Total loans	$	2,007,431	$	1,026,447	$	180,429	$	110,703	$	1,477,267	$	43,934	$	3,040	$	4,849,251


	June 30, 2021
	Multi- Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Performing	$	2,020,734	$	1,042,257	$	168,039	$	91,576	$	1,428,551	$	46,127	$	3,259	$	4,800,543
Nonperforming:
90 days and over past due accruing		-		-		-		-		-		-		-		-
Nonaccrual loans with allowance for credit losses		8,300		12,612		236		0		7,422		452		-		29,022
Nonaccrual loans with no allowance for credit losses		10,226		24,575		676		2,228		11,748		1,292		-		50,745
Total nonperforming		18,526		37,187		912		2,228		19,170		1,744		-		79,767

Total loans	$	2,039,260	$	1,079,444	$	168,951	$	93,804	$	1,447,721	$	47,871	$	3,259	$	4,880,310

- 17 -

Troubled Debt Restructurings (“TDRs”)

TDRs are loans where the Company has modified the contractual terms of the ~~security.~~

~~- 18 -~~

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

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

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

~~Adverse conditions specifically related to the security, an industry, or a geographic area (e.g. changes in~~ the financial condition of the ~~issuer~~borrower. Subsequent to their modification, TDRs are placed on non-accrual until such time as satisfactory payment performance has been demonstrated, at which time the loan may be returned to accrual status. On a case-by-case basis, the Company may agree to modify the contractual terms of a loan to assist a borrower who may be experiencing financial difficulty, as well as to preserve the Company’s position in the loan. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a TDR. The Company had TDRs totaling $19.2 million and $17.8 million as of December 31, 2021 and June 30, 2021, respectively. The allowance for credit losses associated with the TDRs presented in the tables below totaled $711,000 and $256,000 as of December 31, 2021 and June 30, 2021, respectively. As of December 31, 2021, there were no significant commitments to lend additional funds to borrowers whose loans had been restructured in a TDR.

The following tables present total TDR loans at December 31, 2021 and June 30, 2021:


	December 31, 2021
	Accrual				Non-accrual				Total
	# of Loans		Amount		# of Loans		Amount		# of Loans		Amount
	(Dollars In Thousands)
Commercial loans:
Multi-family mortgage loans		-	$	-		2	$	5,699		2	$	5,699
Nonresidential mortgage		3		248		4		2,000		7		2,248
Commercial business		4		3,735		4		329		8		4,064
Construction		-		-		1		1,929		1		1,929
Total commercial loans		7		3,983		11		9,957		18		13,940

One- to four-family residential mortgage		32		4,527		4		595		36		5,122

Consumer loans:
Home equity loans		5		175		0		0		5		175
Total		44	$	8,685		15	$	10,552		59	$	19,237


	June 30, 2021
	Accrual				Non-accrual				Total
	# of Loans		Amount		# of Loans		Amount		# of Loans		Amount
	(Dollars In Thousands)
Commercial loans:
Multi-family mortgage loans		-	$	-		1	$	2,896		1	$	2,896
Nonresidential mortgage		1		105		6		2,275		7		2,380
Commercial business		3		3,755		6		693		9		4,448
Construction		-		-		1		2,228		1		2,228
Total commercial loans		4		3,860		14		8,092		18		11,952

One- to four-family residential mortgage		18		2,216		20		3,405		38		5,621

Consumer loans:
Home equity loans		4		159		3		68		7		227
Total		26	$	6,235		37	$	11,565		63	$	17,800

- 18 -

The following tables present information regarding troubled debt restructurings that occurred during quarter and six months ended December 31, 2021 and 2020:


	Quarter Ended December 31, 2021						Six Months Ended December 31, 2021
	# of Loans		Pre-modification Recorded Investment		Post-modification Recorded Investment		# of Loans		Pre-modification Recorded Investment		Post-modification Recorded Investment
	(Dollars In Thousands)						(Dollars In Thousands)
Multi-family mortgage loans		-	$	-	$	-		1	$	2,987	$	2,972
One- to four-family residential mortgage		2		261		261		2		261		261
Total		2	$	261	$	261		3	$	3,248	$	3,233


	Quarter Ended December 31, 2020						Six Months Ended December 31, 2020
	# of Loans		Pre-modification Recorded Investment		Post-modification Recorded Investment		# of Loans		Pre-modification Recorded Investment		Post-modification Recorded Investment
	(Dollars In Thousands)						(Dollars In Thousands)
One- to four-family residential mortgage		-	$	-	$	-		1	$	309	$	308
Total		-	$	-	$	-		1	$	309	$	308

During the quarter and six months ended December 31, 2021 and 2020, there were 0 charge-offs related to TDRs. During quarter and six months ended December 31, 2021 and 2020, there were 0 troubled debt restructuring defaults.

Loan modifications generally involve a reduction in interest rates and/or extension of maturity dates and also may include step up interest rates in their modified terms which will impact their weighted average yield in the future. The loans which qualified as TDRs during the quarter and six months ended December 31, 2021 and 2020, capitalized prior past due amounts and modified the loan’s repayment terms.

In March 2020, various regulatory agencies, including the Board of Governors of the ~~security,~~Federal Reserve System (the “FRB”) and the Federal Deposit Insurance Corporation (the “FDIC”), issued an interagency statement on loan modifications and reporting for financial institutions working with customers affected by COVID-19. The interagency statement was effective immediately and impacted accounting for loan modifications. The agencies confirmed with the staff of the FASB that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays in payment that are insignificant. Provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) largely mirrored the provisions of the interagency statement, providing that modified loans were not to be considered TDRs if they were performing at December 31, 2019 and other considerations set forth in the ~~case of an asset backed debt security, in~~interagency statements were met. Borrowers considered current are those that were less than 30 days past due at the ~~financial condition~~time a modification program was implemented or at December 31, 2019.

On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law. The $900 billion relief package includes legislation that extends certain relief provisions of the ~~underlying~~CARES Act that were set to expire on December 31, 2020. The legislation that extended this relief was terminated on January 1, 2022. As of December 31, 2021, the Company had five non-TDR loan ~~obligors, including changes in technology or~~modifications granted under the ~~discontinuance~~CARES Act totaling approximately $2.6 million.

- 19 -

Individually Analyzed Loans

Effective July 1, 2020, individually analyzed loans include loans which do not share similar risk characteristics with other loans. TDR’s 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, a ~~segment~~TDR would generally be removed from individual impairment analysis and returned to its corresponding pool. As of December 31, 2021, the carrying value of individually analyzed loans totaled $72.1 million, of which $65.0 million were considered collateral dependent.

For collateral dependent loans where management has determined that foreclosure of the ~~business that may affect~~collateral is probable, or where the ~~future earnings potential~~borrower is experiencing financial difficulty and repayment of the ~~issuer~~loan is to be provided substantially through the operation or ~~underlying loan obligors~~sale of the ~~security or changes in~~collateral, the ~~quality of~~ACL is measured based on the ~~credit enhancement);~~

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

~~The payment structure~~collateral, less costs to sell, and the amortized cost basis of the ~~debt security;~~

~~Actual or expected failure~~loan as of the ~~issuer~~measurement date. See Note 12 for additional disclosure regarding fair value of individually analyzed collateral dependent loans.

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


	December 31, 2021
	Carrying Value		Related Allowance
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	31,211	$	2,691
Nonresidential mortgage (1)		26,207		429
Commercial business (2)		176		-
Construction		1,929		-
Total commercial loans		59,523		3,120

One- to four-family residential mortgage (3)		5,359		220

Consumer loans:
Home equity loans (3)		161		-

Total	$	65,043	$	3,340


	June 30, 2021
	Carrying Value		Related Allowance
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	18,526	$	1,368
Nonresidential mortgage (1)		32,891		4,724
Commercial business (2)		183		-
Construction		-		-
Total commercial loans		51,600		6,092

One- to four-family residential mortgage (3)		7,612		420

Consumer loans:
Home equity loans (3)		31		-

Total	$	59,243	$	6,512

(1)

Secured by income-producing nonresidential property.

(2)

Secured by business assets.

(3)

Secured by one- to four-family residential properties.

- 20 -

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 ~~security~~obligor (or guarantors, if any) or by the fair value, less cost to ~~make scheduled interest~~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 ~~principal payments;~~other potential weaknesses.

~~Changes to~~Substandard – Loans which are inadequately protected by the ~~rating~~paying capacity and net worth of the ~~security~~obligor or the collateral pledged, if any. Substandard assets include those characterized by ~~external rating agencies; and~~

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

~~At December 31, 2017 and June 30, 2017,~~distinct possibility that the Company ~~held no securities for~~will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans which ~~credit-related OTTI had been recognized~~have all of the weaknesses inherent in ~~earnings based~~those classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the ~~Company’s analysis~~basis of currently existing facts, conditions and ~~determination that the impairment reported in the tables above was “temporary” in nature as of both dates.~~values.

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

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

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

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

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

- 1921 -

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

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

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

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

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

The following table presents the ~~changes in the accretable yield relating to the acquired credit-impaired~~risk category of loans ~~for the three months ended~~as of December 31, ~~2017~~2021 by loan segment and ~~December~~vintage year:


	Term Loans by Origination Year for Fiscal Years ended June 30,
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Total
	(In Thousands)
Multi-family mortgage:
Pass	$	257,520	$	276,031	$	243,081	$	273,672	$	284,322	$	606,354	$	-	$	1,940,980
Special Mention		-		-		-		16,461		5,023		4,788		-		26,272
Substandard		-		-		-		10,286		2,790		27,103		-		40,179
Doubtful		-		-		-		-		-		-		-		-
Total multi-family mortgage		257,520		276,031		243,081		300,419		292,135		638,245		-		2,007,431
Non-residential mortgage:
Pass		97,596		97,060		61,367		52,144		49,719		594,931		6,112		958,929
Special Mention		-		-		-		23,458		4,089		9,312		-		36,859
Substandard		-		727		-		-		0		29,932		-		30,659
Doubtful		-		-		-		-		-		-		-		-
Total non-residential mortgage		97,596		97,787		61,367		75,602		53,808		634,175		6,112		1,026,447
Commercial business:
Pass		31,192		40,381		10,942		4,330		9,569		8,215		70,059		174,688
Special Mention		-		-		68		-		2,240		916		457		3,681
Substandard		-		40		139		-		1,447		286		0		1,912
Doubtful		-		-		-		-		-		145		3		148
Total commercial business		31,192		40,421		11,149		4,330		13,256		9,562		70,519		180,429
Construction loans:
Pass		4,320		70,251		8,353		2,818		14,419		2,878		5,735		108,774
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		1,929		-		1,929
Doubtful		-		-		-		-		-		-		-		-
Total construction loans		4,320		70,251		8,353		2,818		14,419		4,807		5,735		110,703
Residential mortgage:
Pass		209,786		539,163		94,541		55,958		61,352		497,899		375		1,459,074
Special Mention		-		-		-		1,219		-		893		-		2,112
Substandard		-		-		1,718		658		-		13,705		-		16,081
Doubtful		-		-		-		-		-		-		-		-
Total residential mortgage		209,786		539,163		96,259		57,835		61,352		512,497		375		1,477,267
Home equity loans:
Pass		1,212		738		1,856		3,357		2,370		8,140		24,006		41,679
Special Mention		-		-		-		-		-		271		-		271
Substandard		-		-		-		129		-		1,855		-		1,984
Doubtful		-		-		-		-		-		-		-		-
Total home equity loans		1,212		738		1,856		3,486		2,370		10,266		24,006		43,934
Other consumer loans
Pass		311		344		493		469		250		1,042		44		2,953
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		0		0
Doubtful		-		-		-		-		-		-		87		87
Other consumer loans		311		344		493		469		250		1,042		131		3,040
Total loans	$	601,937	$	1,024,735	$	422,558	$	444,959	$	437,590	$	1,810,594	$	106,878	$	4,849,251

- 22 -

The following table presents the risk category of loans as of June 30, ~~2016.~~2021 by loan segment and vintage year:

Three Months Ended December 31,

2017

2016

(In Thousands)

Beginning balance
$
206

$
314

Accretion to interest income

-

(2
)
Disposals

-

-

Reclassifications from nonaccretable difference

-

-

Ending balance
$
206

$
312


	Term Loans by Origination Year for Fiscal Years ended June 30,
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Total
	(In Thousands)
Multi-family mortgage:
Pass	$	281,402	$	257,970	$	374,871	$	341,304	$	343,370	$	374,909	$	-	$	1,973,826
Special Mention		-		-		26,974		5,079		4,834		1,054		-		37,941
Substandard		-		-		-		2,896		13,198		11,399		-		27,493
Doubtful		-		-		-		-		-		-		-		-
Total multi-family mortgage		281,402		257,970		401,845		349,279		361,402		387,362		-		2,039,260
Non-residential mortgage:
Pass		99,602		77,146		56,435		64,616		254,940		441,696		6,150		1,000,585
Special Mention		-		-		23,520		4,146		8,801		4,513		-		40,980
Substandard		743		-		-		4,934		20,602		11,600		-		37,879
Doubtful		-		-		-		-		-		-		-		-
Total non-residential mortgage		100,345		77,146		79,955		73,696		284,343		457,809		6,150		1,079,444
Commercial business:
Pass		44,514		18,988		4,701		12,654		3,322		12,892		65,657		162,728
Special Mention		-		-		-		2,304		945		12		461		3,722
Substandard		41		76		160		1,474		132		189		-		2,072
Doubtful		-		-		-		-		-		420		9		429
Total commercial business		44,555		19,064		4,861		16,432		4,399		13,513		66,127		168,951
Construction loans:
Pass		40,332		17,404		11,203		13,860		1,641		1,382		5,735		91,557
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		2,247		-		2,247
Doubtful		-		-		-		-		-		-		-		-
Total construction loans		40,332		17,404		11,203		13,860		1,641		3,629		5,735		93,804
Residential mortgage:
Pass		560,543		124,606		69,917		74,754		119,238		472,587		375		1,422,020
Special Mention		-		-		1,233		-		-		712		-		1,945
Substandard		-		1,040		671		511		1,468		20,066		-		23,756
Doubtful		-		-		-		-		-		-		-		-
Total residential mortgage		560,543		125,646		71,821		75,265		120,706		493,365		375		1,447,721
Home equity loans:
Pass		834		2,508		4,585		2,778		2,241		7,798		24,788		45,532
Special Mention		-		-		-		-		-		393		-		393
Substandard		-		-		-		-		11		1,935		-		1,946
Doubtful		-		-		-		-		-		-		-		-
Total home equity loans		834		2,508		4,585		2,778		2,252		10,126		24,788		47,871
Other consumer loans
Pass		550		517		633		256		127		1,044		44		3,171
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		1		1
Doubtful		-		-		-		-		-		-		87		87
Other consumer loans		550		517		633		256		127		1,044		132		3,259
Total loans	$	1,028,561	$	500,255	$	574,903	$	531,566	$	774,870	$	1,366,848	$	103,307	$	4,880,310

Six Months Ended December 31,

2017

2016

(In Thousands)

Beginning balance
$
215

$
335

Accretion to interest income

(9
)

(4
)
Disposals

-

(19
)
Reclassifications from nonaccretable difference

-

-

Ending balance
$
206

$
312

Residential Mortgage Loans in ~~Foreclosure.~~ Foreclosure

We may obtain physical possession of one- to four-family real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. As of December 31, ~~2017,~~2021, we held ~~four~~2 single-family properties in other real estate owned with an aggregate carrying value of ~~$1.6 million~~$658,000 that were acquired through ~~foreclosures~~foreclosure on residential mortgage loans. As of that same date, we held 1210 residential mortgage loans with aggregate carrying values totaling ~~$2.3~~$1.8 million which were in the process of foreclosure. ~~By comparison, as~~As of June 30, ~~2017,~~2021, we held ~~two~~1 single-family ~~properties~~property in other real estate owned with an aggregate carrying value of ~~$981,000~~$178,000 that ~~were~~was acquired through ~~foreclosures~~a foreclosure on a residential mortgage ~~loans.~~loan. As of that same date, we held 1811 residential mortgage loans with aggregate carrying values totaling ~~$3.7~~$2.1 million which were in the process of foreclosure.

New Jersey's moratorium on evictions ended on December 31, 2021. Under New Jersey's new eviction protections for people under certain income levels, no evictions may occur now or in the future based on rent due during the time period of March 1, 2020 through August 31, 2021, for certain moderate income families, or March 1, 2020 through December 31, 2021 for certain low income families. The moratorium on home foreclosures ended on November 15, 2021, for all income levels. This included landlords facing foreclosure who currently have tenants. New York's moratorium on evictions for tenants who have endured COVID-related hardships and on foreclosures ended on January 15, 2022. As a result, the Company has resumed residential property foreclosure sales and evictions. Eviction laws may be subject to legal challenges and could change based on the results of court proceedings.

- 2023 -

6. ALLOWANCE FOR CREDIT LOSSES

~~Loan Quality.~~Adoption of Topic 326

On July 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaces the incurred loss methodology with an expected loss methodology, referred to as the “CECL” methodology.

Allowance for Credit Losses on Loans Receivable

The following tables present the balance of the allowance for ~~loan~~credit losses at December 31, ~~2017~~2021 and June 30, ~~2017~~2021. For the quarter and six months ended December 31, 2021 and 2020, the balance of the allowance for credit losses is based ~~upon~~on the ~~calculation~~CECL methodology, as ~~described in the Company’s Form 10-K for the fiscal year ended June 30, 2017.~~noted above. The tables identify the valuation allowances attributable to specifically identified impairments on individually evaluated loans, including those acquired with deteriorated credit quality, as well as valuation allowances for impairments on loans evaluated collectively. The tables include the underlying balance of loans receivable applicable to each category as of those ~~dates as well as~~dates.


Allowance for Credit Losses
December 31, 2021

	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Balance of allowance for credit losses:
Loans acquired with deteriorated credit quality individually analyzed	$	0	$	429	$	0	$	0	$	0	$	22	$	0	$	451
Loans acquired with deteriorated credit quality collectively analyzed		0		637		2		4		288		0		0		931
Loans individually evaluated		2,690		0		0		0		252		0		0		2,942
Loans collectively evaluated		23,105		9,012		1,901		1,437		8,061		286		90		43,892
Total allowance for credit losses	$	25,795	$	10,078	$	1,903	$	1,441	$	8,601	$	308	$	90	$	48,216


Balance of Loans Receivable
December 31, 2021

	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Balance of loans receivable:
Loans acquired with deteriorated credit quality individually evaluated	$	0	$	818	$	176	$	0	$	752	$	355	$	0	$	2,101
Loans acquired with deteriorated credit quality collectively evaluated		0		23,564		1,424		5,735		7,180		61		0		37,964
Loans individually evaluated		31,211		28,659		259		1,929		6,709		1,270		0		70,037
Loans collectively evaluated		1,976,220		973,406		178,570		103,039		1,462,626		42,248		3,040		4,739,149
Total loans	$	2,007,431	$	1,026,447	$	180,429	$	110,703	$	1,477,267	$	43,934	$	3,040	$	4,849,251
Unaccreted yield adjustments																(22,847	)
Loans receivable, net of yield adjustments															$	4,826,404

- 24 -


Allowance for Credit Losses
June 30, 2021

	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Balance of allowance for credit losses:
Loans acquired with deteriorated credit quality individually analyzed	$	0	$	2,700	$	0	$	0	$	122	$	21	$	0	$	2,843
Loans acquired with deteriorated credit quality collectively analyzed		155		692		15		49		204		1		0		1,116
Loans individually evaluated		1,368		2,025		33		0		447		1		0		3,874
Loans collectively evaluated		26,927		10,826		2,038		1,121		8,974		410		36		50,332
Total allowance for loan losses	$	28,450	$	16,243	$	2,086	$	1,170	$	9,747	$	433	$	36	$	58,165


Balance of Loans Receivable
June 30, 2021

	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Balance of loans receivable:
Loans acquired with deteriorated credit quality individually evaluated	$	0	$	6,519	$	183	$	0	$	3,617	$	380	$	0	$	10,699
Loans acquired with deteriorated credit quality collectively evaluated		5,599		25,844		2,533		12,970		4,785		65		0		51,796
Loans individually evaluated		18,526		30,668		729		2,228		15,553		1,364		0		69,068
Loans collectively evaluated		2,015,135		1,016,413		165,506		78,606		1,423,766		46,062		3,259		4,748,747
Total loans	$	2,039,260	$	1,079,444	$	168,951	$	93,804	$	1,447,721	$	47,871	$	3,259	$	4,880,310
Unaccreted yield adjustments																(28,916	)
Loans receivable, net of yield adjustments															$	4,851,394

- 25 -

The following tables present the activity in the allowance for ~~loan~~credit losses on loans for the ~~three months~~quarter and six months ended December 31, ~~2017~~2021 and ~~December 31, 2016. Unless otherwise noted, the balance of loans reported in the tables below excludes yield adjustments and the allowance~~2020.


	Quarter Ended December 31, 2021
	Multi-Family Mortgage		Non- Residential Mortgage			Commercial Business			Construction		Residential Mortgage			Home Equity Loans			Other Consumer		Total
	(In Thousands)
At September 30, 2021:	$	24,982	$	13,845		$	1,994		$	1,430	$	9,129		$	318		$	87	$	51,785
Charge offs		0		(1,284	)		(15	)		0		0			0			0		(1,299	)
Recoveries		0		0			4			0		145			1			0		150
Provision for (reversal of) credit losses		813		(2,483	)		(80	)		11		(673	)		(11	)		3		(2,420	)
At December 31, 2021:	$	25,795	$	10,078		$	1,903		$	1,441	$	8,601		$	308		$	90	$	48,216


	Six Months Ended December 31, 2021
	Multi-Family Mortgage			Non- Residential Mortgage			Commercial Business			Construction		Residential Mortgage			Home Equity Loans			Other Consumer			Total
	(In Thousands)
At June 30, 2021	$	28,450		$	16,243		$	2,086		$	1,170	$	9,747		$	433		$	36		$	58,165
Charge offs		(104	)		(2,097	)		(175	)		0		0			0			(2	)		(2,378	)
Recoveries		0			0			101			0		147			1			0			249
(Reversal of) provision for credit losses		(2,551	)		(4,068	)		(109	)		271		(1,293	)		(126	)		56			(7,820	)
At December 31, 2021:	$	25,795		$	10,078		$	1,903		$	1,441	$	8,601		$	308		$	90		$	48,216


	Quarter Ended December 31, 2020
	Multi-Family Mortgage		Non- Residential Mortgage			Commercial Business			Construction		Residential Mortgage			Home Equity Loans			Other Consumer			Total
	(In Thousands)
At September 30, 2020:	$	28,566	$	15,094		$	4,355		$	1,105	$	14,835		$	858		$	47		$	64,860
Charge offs		0		(66	)		0			0		(13	)		(32	)		(4	)		(115	)
Recoveries		0		0			3			0		0			0			3			6
Provision for (Reversal of) credit losses		934		905			(1,010	)		100		(2,197	)		(101	)		4			(1,365	)
At December 31, 2020:	$	29,500	$	15,933		$	3,348		$	1,205	$	12,625		$	725		$	50		$	63,386


	Six Months Ended December 31, 2020
	Multi-Family Mortgage			Non- Residential Mortgage			Commercial Business			Construction		Residential Mortgage			Home Equity Loans			Other Consumer			Total
	(In Thousands)
At June 30, 2020 (prior to adoption of ASC 326):	$	20,916		$	8,763		$	1,926		$	236	$	4,860		$	568		$	58		$	37,327
Impact of adopting Topic 326		8,408			2,390			(421	)		80		9,106			92			(15	)		19,640
Charge offs		0			(66	)		(64	)		0		(13	)		(32	)		(13	)		(188	)
Recoveries		0			0			5			0		0			0			7			12
Initial allowance on PCD loans		250			1,720			1,007			99		720			105			0			3,901
(Reversal of) provision for credit losses		(74	)		3,126			895			790		(2,048	)		(8	)		13			2,694
At December 31, 2020:	$	29,500		$	15,933		$	3,348		$	1,205	$	12,625		$	725		$	50		$	63,386

- 26 -

Allowance for ~~loan loss.~~

Credit Losses on Off Balance Sheet Commitments

Allowance for Loan Losses and Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of allowance for loan losses:

Loans acquired with deteriorated
  credit quality
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Loans individually
  evaluated for impairment

37

-

4

-

2

-

-

43

Loans collectively
  evaluated for impairment

2,403

13,909

9,661

246

2,704

457

643

30,023

Total allowance for loan losses
$
2,440

$
13,909

$
9,665

$
246

$
2,706

$
457

$
643

$
30,066

Allowance for Loan Losses and Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of loans receivable:

Loans acquired with deteriorated
  credit quality
$
106

$
-

$
-

$
-

$
282

$
-

$
-

$
388

Loans individually
  evaluated for impairment

7,983

135

7,205

-

2,569

1,556

-

19,448

Loans collectively
  evaluated for impairment

566,233

1,438,251

1,062,049

22,205

89,591

79,405

11,947

3,269,681

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Unamortized yield
  adjustments

1,999

Loans receivable, net of
   yield adjustments

$
3,291,516

~~- 21 -~~

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

At September 30, 2017:
$
2,501

$
13,807

$
9,893

$
89

$
1,948

$
470

$
737

$
29,445

Total charge offs

(143
)

-

-

-

-

-

(263
)

(406
)
Total recoveries

57

-

-

-

-

-

34

91

Total provisions

25

102

(228
)

157

758

(13
)

135

936

Total allowance for loan losses
$
2,440

$
13,909

$
9,665

$
246

$
2,706

$
457

$
643

$
30,066

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

At June 30, 2017:
$
2,384

$
13,941

$
9,939

$
35

$
1,709

$
501

$
777

$
29,286

Total charge offs

(410
)

-

(38
)

-

(6
)

-

(560
)

(1,014
)
Total recoveries

77

-

-

-

34

65

52

228

Total provisions

389

(32
)

(236
)

211

969

(109
)

374

1,566

Total allowance for loan losses
$
2,440

$
13,909

$
9,665

$
246

$
2,706

$
457

$
643

$
30,066

~~- 22 -~~

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

At September 30, 2016:
$
2,806

$
10,269

$
8,316

$
39

$
2,319

$
534

$
720

$
25,003

Total charge offs

(41
)

-

(37
)

-

-

(74
)

(241
)

(393
)
Total recoveries

182

-

-

-

1

1

11

195

Total provisions

(517
)

1,957

76

(10
)

(541
)

95

195

1,255

Total allowance for loan losses
$
2,430

$
12,226

$
8,355

$
29

$
1,779

$
556

$
685

$
26,060

Allowance for Loan Losses and Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

At June 30, 2016:
$
2,370

$
9,995

$
7,846

$
24

$
2,784

$
432

$
778

$
24,229

Total charge offs

(64
)

-

(78
)

-

(194
)

(95
)

(336
)

(767
)
Total recoveries

182

-

-

-

16

1

15

214

Total provisions

(58
)

2,231

587

5

(827
)

218

228

2,384

Total allowance for loan losses
$
2,430

$
12,226

$
8,355

$
29

$
1,779

$
556

$
685

$
26,060

~~- 23 -~~

Allowance for Loan Losses and Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of allowance for loan losses:

Loans acquired with deteriorated
  credit quality
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Loans individually
  evaluated for impairment

154

-

39

-

6

-

-

199

Loans collectively
  evaluated for impairment

2,230

13,941

9,900

35

1,703

501

777

29,087

Total allowance for loan losses
$
2,384

$
13,941

$
9,939

$
35

$
1,709

$
501

$
777

$
29,286

Allowance for Loan Losses and Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Balance of loans receivable:

Loans acquired with deteriorated
  credit quality
$
97

$
-

$
-

$
-

$
497

$
-

$
-

594

Loans individually
  evaluated for impairment

10,546

158

5,877

612

2,365

1,894

-

21,452

Loans collectively
  evaluated for impairment

556,680

1,412,417

1,079,187

3,203

71,609

80,928

16,383

3,220,407

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

Unamortized yield
  adjustments

2,808

Loans receivable, net of
   yield adjustments

$
3,245,261

~~- 24 -~~

The following tables present ~~key indicators of credit quality regarding~~ the Company’s loan portfolio based upon loan classification and contractual payment status at December 31, 2017 and June 30, 2017 based upon the methodology for identifying and reporting such loans as describedactivity in the ~~Company’s Form 10-K~~allowance for credit losses on off balance sheet commitments for the ~~fiscal year ended June 30, 2017.~~

Credit-Rating Classification of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Non-classified
$
563,388

$
1,438,251

$
1,058,926

$
21,902

$
84,839

$
78,771

$
11,841

$
3,257,918

Classified:

Special Mention

607

-

-

303

1,137

112

72

2,231

Substandard

10,327

135

10,328

-

6,466

2,078

32

29,366

Doubtful

-

-

-

-

-

-

2

2

Loss

-

-

-

-

-

-

-

-

Total classified loans

10,934

135

10,328

303

7,603

2,190

106

31,599

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Credit-Rating Classification of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Non-classified
$
552,961

$
1,412,417

$
1,078,711

$
2,894

$
66,886

$
80,393

$
16,166

$
3,210,428

Classified:

Special Mention

928

-

-

309

1,098

120

139

2,594

Substandard

13,434

158

6,353

612

6,487

2,309

75

29,428

Doubtful

-

-

-

-

-

-

3

3

Loss

-

-

-

-

-

-

-

-

Total classified loans

14,362

158

6,353

921

7,585

2,429

217

32,025

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

~~- 25 -~~

Contractual Payment Status of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Current
$
568,948

$
1,438,386

$
1,063,235

$
22,205

$
90,293

$
80,537

$
11,752

$
3,275,356

Past due:

30-59 days

2,190

-

2,226

-

255

134

96

4,901

60-89 days

312

-

137

-

2

8

68

527

90+ days

2,872

-

3,656

-

1,892

282

31

8,733

Total past due

5,374

-

6,019

-

2,149

424

195

14,161

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Contractual Payment Status of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Current
$
560,054

$
1,412,575

$
1,083,736

$
3,560

$
72,826

$
81,946

$
16,083

$
3,230,780

Past due:

30-59 days

1,749

-

60

255

29

187

91

2,371

60-89 days

403

-

318

-

-

141

135

997

90+ days

5,117

-

950

-

1,616

548

74

8,305

Total past due

7,269

-

1,328

255

1,645

876

300

11,673

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

~~- 26 -~~

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

Performance Status of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Performing
$
568,953

$
1,438,251

$
1,062,196

$
22,205

$
89,616

$
80,034

$
11,916

$
3,273,171

Nonperforming:

90+ days past due accruing

-

-

-

-

-

-

31

31

Nonaccrual

5,369

135

7,058

-

2,826

927

-

16,315

Total nonperforming

5,369

135

7,058

-

2,826

927

31

16,346

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Performance Status of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Performing
$
558,533

$
1,412,417

$
1,079,344

$
3,560

$
71,837

$
81,581

$
16,309

$
3,223,581

Nonperforming:

90+ days past due accruing

-

-

-

-

-

-

74

74

Nonaccrual

8,790

158

5,720

255

2,634

1,241

-

18,798

Total nonperforming

8,790

158

5,720

255

2,634

1,241

74

18,872

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

~~- 27 -~~

Impairment Status of Loans Receivable

At December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Carrying value of impaired loans:

Non-impaired loans
$
566,233

$
1,438,251

$
1,062,049

$
22,205

$
89,591

$
79,405

$
11,947

$
3,269,681

Impaired loans:

Impaired loans with no allowance
  for impairment

7,772

135

6,863

-

2,849

1,556

-

19,175

Impaired loans with allowance
  for impairment:

Recorded investment

317

-

342

-

2

-

-

661

Allowance for impairment

(37
)

-

(4
)

-

(2
)

-

-

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

280

-

338

-

-

-

-

618

Total impaired loans, excluding
  allowance for impairment:

8,089

135

7,205

-

2,851

1,556

-

19,836

Total loans
$
574,322

$
1,438,386

$
1,069,254

$
22,205

$
92,442

$
80,961

$
11,947

$
3,289,517

Unpaid principal balance
  of impaired loans:

Total impaired loans
$
12,656

$
930

$
10,549

$
106

$
6,777

$
2,528

$
-

$
33,546

Impairment Status of Loans Receivable

At June 30, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

Carrying value of impaired loans:

Non-impaired loans
$
556,680

$
1,412,417

$
1,079,187

$
3,203

$
71,609

$
80,928

$
16,383

$
3,220,407

Impaired loans:

Impaired loans with no allowance
  for impairment

8,971

158

4,521

612

2,755

1,894

-

18,911

Impaired loans with allowance
  for impairment:

Recorded investment

1,672

-

1,356

-

107

-

-

3,135

Allowance for impairment

(154
)

-

(39
)

-

(6
)

-

-

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

1,518

-

1,317

-

101

-

-

2,936

Total impaired loans, excluding
  allowance for impairment:

10,643

158

5,877

612

2,862

1,894

-

22,046

Total loans
$
567,323

$
1,412,575

$
1,085,064

$
3,815

$
74,471

$
82,822

$
16,383

$
3,242,453

Unpaid principal balance
  of impaired loans:

Total impaired loans
$
16,479

$
930

$
10,002

$
691

$
6,682

$
2,961

$
-

$
37,745

~~- 28 -~~

Impairment Status of Loans Receivable

Periods Ended December 31, 2017 and 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

For the three months ended
  December 31, 2017:

Average balance of impaired loans
$
8,860

$
141

$
7,254

$
63

$
2,865

$
1,579

$
-

$
20,762

Interest earned on impaired loans
$
31

$
-

$
2

$
-

$
1

$
7

$
-

$
41

For the six months ended
  December 31, 2017:

Average balance of impaired loans
$
9,441

$
146

$
6,755

$
196

$
2,836

$
1,747

$
-

$
21,121

Interest earned on impaired loans
$
66

$
-

$
4

$
-

$
2

$
15

$
-

$
87

For the three months ended
  December 31, 2016:

Average balance of impaired loans
$
13,262

$
187

$
6,263

$
282

$
3,225

$
2,072

$
-

$
25,291

Interest earned on impaired loans
$
28

$
-

$
7

$
-

$
2

$
10

$
-

$
47

For the six months ended
  December 31, 2016:

Average balance of impaired loans
$
13,140

$
193

$
6,515

$
313

$
3,166

$
2,117

$
-

$
25,444

Interest earned on impaired loans
$
49

$
-

$
19

$
-

$
6

$
24

$
-

$
98

~~- 29 -~~

~~The following table presents information regarding the restructuring of the Company’s troubled debts during the three~~six months ended December 31, ~~2017~~2021 and ~~2016 and any defaults during those periods~~2020:


	Quarter Ended
	December 31, 2021
	(In Thousands)
At September 30, 2021:	$	1,584
Provision reversal recorded in other non-interest expense		(436	)
At December 31, 2021:	$	1,148


	Six Months Ended
	December 31, 2021
	(In Thousands)
At June 30, 2021:	$	1,708
Provision reversal recorded in other non-interest expense		(560	)
At December 31, 2021:	$	1,148


	Quarter Ended
	December 31, 2020
	(In Thousands)
At September 30, 2020:	$	1,004
Provision recorded in other non-interest expense		54
At December 31, 2020:	$	1,058


	Six Months Ended
	December 31, 2020
	(In Thousands)
At June 30, 2020	$	0
Impact of adopting Topic 326 (1)		536
Provision recorded in other non-interest expense		522
At December 31, 2020:	$	1,058

(1)

Adoption of ~~TDRs that were restructured within 12 months of the date of default.~~

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

1

-

1

-

-

-

-

2

Pre-modification outstanding
  recorded investment
$
24

$
-

$
179

$
-

$
-

$
-

$
-

$
203

Post-modification outstanding
  recorded investment

47

-

201

-

-

-

-

248

Charge offs against the allowance
  for loan loss recognized at
  modification

87

-

-

-

-

-

-

87

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

CECL accounting standard effective July 1, 2020.

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

2

-

1

-

-

-

-

3

Pre-modification outstanding
  recorded investment
$
449

$
-

$
179

$
-

$
-

$
-

$
-

$
628

Post-modification outstanding
  recorded investment

414

-

201

-

-

-

-

615

Charge offs against the allowance
  for loan loss recognized at
  modification

87

-

-

-

-

-

-

87

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

- 3027 -

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

1

-

-

-

-

1

-

2

Pre-modification outstanding
  recorded investment
$
197

$
-

$
-

$
-

$
-

$
87

$
-

$
284

Post-modification outstanding
  recorded investment

186

-

-

-

-

95

-

281

Charge offs against the allowance
  for loan loss recognized at
  modification

14

-

-

-

-

9

-

23

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

1

-

1

-

-

2

-

4

Pre-modification outstanding
  recorded investment
$
197

$
-

$
244

$
-

$
-

$
271

$
-

$
712

Post-modification outstanding
  recorded investment

186

-

223

-

-

279

-

688

Charge offs against the allowance
  for loan loss recognized at
  modification

14

-

27

-

-

12

-

53

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

~~- 31 -~~

~~The manner in which the terms of a loan are modified through a troubled debt restructuring generally includes one or more of the following changes to the loan’s repayment terms:~~7. DEPOSITS

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

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

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

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

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

~~12. DEPOSITS~~

Deposits are summarized as follows:


	December 31,		June 30,
	2021		2021
	(In Thousands)
Non-interest-bearing demand	$	604,805	$	593,718
Interest-bearing demand		2,106,693		1,902,478
Savings		1,087,740		1,111,364
Certificates of deposits		1,654,787		1,877,746
Total deposits	$	5,454,025	$	5,485,306

~~14.~~9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

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

Fair Values of Derivative Instruments on the Statement of Financial Condition

The ~~table~~tables below ~~presents~~present the fair value of the Company’s derivative financial instruments as well as their classification on the Statement of Financial Condition as of December 31, ~~2017~~2021 and June 30, ~~2017:~~2021:

December 31, 2017

Asset Derivatives

Liability Derivatives

Location

Fair Value

Location

Fair Value

(Dollars in Thousands)

Derivatives designated as hedging
instruments:

Interest rate swaps
Other assets

$
15,921

Other liabilities

$
-

Interest rate caps
Other assets

142

Other liabilities

-

Total

$
16,063

$
-


	December 31, 2021
	Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value
	(In Thousands)
Derivatives designated as hedging instruments:
Interest rate contracts	Other assets	$	9,622	Other liabilities	$	210
Total		$	9,622		$	210


	June 30, 2021
	Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value
	(In Thousands)
Derivatives designated as hedging instruments:
Interest rate contracts	Other assets	$	1,832	Other liabilities	$	673
Total		$	1,832		$	673

June 30, 2017

Asset Derivatives

Liability Derivatives

Location

Fair Value

Location

Fair Value

(Dollars in Thousands)

Derivatives designated as hedging
instruments:

Interest rate swaps
Other assets

$
7,670

Other liabilities

$
298

Interest rate caps
Other assets

140

Other liabilities

-

Total

$
7,810

$
298

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using derivatives are primarily to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company has entered into interest rate swaps and caps as part of its interest rate risk management strategy. These interest rate products are designated as cash flow hedges. As of December 31, ~~2017,~~2021, the Company had ~~fifteen~~a total of 11 interest rate swaps ~~with a notional of $1.2 billion~~ and ~~two interest rate~~ caps with a total notional amount of ~~$75.0~~$840.0 million hedging ~~certain FHLB advances and brokered deposits.~~specific wholesale funding positions.

For derivatives designated as cash flow hedges, the ~~effective portion of changes in the fair value of~~gain or loss on the derivative is ~~initially reported~~recorded in other comprehensive income, net of tax, and subsequently reclassified ~~to earnings when~~into interest expense in the same period during which the hedged transaction affects ~~earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in~~ earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. The Company did not recognize any hedge ineffectiveness in earnings during the three and six months ended December 31, 2017 and 2016.

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

~~- 33 -~~

December 31, ~~2017,~~2021 the Company had ~~$1.3~~$1.5 million and ~~$2.7~~$3.0 million, respectively, of reclassifications to interest expense. During the next twelve months, the Company estimates that ~~$31,000~~$2.7 million will be reclassified as ~~a reduction~~an increase in interest expense.

- 29 -

The ~~table~~tables below ~~presents~~present the pre-tax effects of the Company’s derivative instruments on the Consolidated Statements of Income for the ~~three~~quarter and six months ended December 31, ~~2017~~2021 and ~~2016:~~2020:

Three Months Ended December 31, 2017

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

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

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

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

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

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
6,167

Interest expense

$
(997
)

Not applicable

$
-

Interest rate caps

40

Interest expense

(285
)

Not applicable

-

Total
$
6,207

$
(1,282
)

$
-


	Quarter Ended December 31, 2021
	Amount of Gain (Loss) Recognized in OCI on Derivatives		Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
	(In Thousands)
Derivatives in cash flow hedging relationships:
Interest rate contracts	$	5,110	Interest expense	$	(1,506	)
Total	$	5,110		$	(1,506	)


	Six Months Ended December 31, 2021
	Amount of Gain (Loss) Recognized in OCI on Derivatives		Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
	(In Thousands)
Derivatives in cash flow hedging relationships:
Interest rate contracts	$	5,264	Interest expense	$	(3,003	)
Total	$	5,264		$	(3,003	)


	Quarter Ended December 31, 2020
	Amount of Gain (Loss) Recognized in OCI on Derivatives		Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
	(In Thousands)
Derivatives in cash flow hedging relationships:
Interest rate contracts	$	1,389	Interest expense	$	(2,217	)
Total	$	1,389		$	(2,217	)


	Six Months Ended December 31, 2020
	Amount of Gain (Loss) Recognized in OCI on Derivatives		Location of Gain (Loss) Reclassified from Accumulated OCI into Income	Amount of Gain (Loss) Reclassified from Accumulated OCI into Income
	(In Thousands)
Derivatives in cash flow hedging relationships:
Interest rate contracts	$	1,278	Interest expense	$	(4,589	)
Total	$	1,278		$	(4,589	)

Six Months Ended December 31, 2017

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

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

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

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

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

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
6,426

Interest expense

$
(2,122
)

Not applicable

$
-

Interest rate caps

26

Interest expense

(560
)

Not applicable

-

Total
$
6,452

$
(2,682
)

$
-

Three Months Ended December 31, 2016

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

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

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

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

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

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
21,969

Interest expense

$
(1,515
)

Not applicable

$
-

Interest rate caps

80

Interest expense

(191
)

Not applicable

-

Total
$
22,049

$
(1,706
)

$
-

- 3430 -

Six Months Ended December 31, 2016

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

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

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

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

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

(Dollars in Thousands)

Derivatives in cash flow
hedging relationships:

Interest rate swaps
$
25,422

Interest expense

$
(3,235
)

Not applicable

$
-

Interest rate caps

90

Interest expense

(352
)

Not applicable

-

Total
$
25,512

$
(3,587
)

$
-

Offsetting Derivatives

The ~~table~~tables below ~~presents~~present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives in the Consolidated ~~Statement~~Statements of Financial Condition as of December 31, ~~2017~~2021 and June 30, ~~2017,~~2021, respectively. The net amounts presented for derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Consolidated ~~Statement~~Statements of Financial Condition.


	December 31, 2017															December 31, 2021
								Gross Amounts Not Offset															Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Received			Net Amount			Gross Amount Recognized		Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Received			Net Amount
	(Dollars in Thousands)															(In Thousands)
Assets:
Interest rate swaps	$	17,788	$	(1,867	)	$	15,921	$	-	$	(16,063	)	$	(142	)
Interest rate caps		142		-			142		-		-			142
Interest rate contracts																$	11,754	$	(2,132	)	$	9,622	$	-	$	-		$	9,622
Total	$	17,930	$	(1,867	)	$	16,063	$	-	$	(16,063	)	$	-		$	11,754	$	(2,132	)	$	9,622	$	-	$	-		$	9,622

								Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Posted			Net Amount
	(Dollars in Thousands)																						Gross Amounts Not Offset
																Gross Amount Recognized		Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Posted			Net Amount
																(In Thousands)
Liabilities:
Interest rate swaps	$	1,867	$	(1,867	)	$	-	$	-	$	-		$	-
Interest rate caps		-		-			-		-		-			-
Interest rate contracts																$	2,342	$	(2,132	)	$	210	$	-	$	(210	)	$	-
Total	$	1,867	$	(1,867	)	$	-	$	-	$	-		$	-		$	2,342	$	(2,132	)	$	210	$	-	$	(210	)	$	-


	June 30, 2021
								Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Received			Net Amount
	(In Thousands)
Assets:
Interest rate contracts	$	6,847	$	(5,015	)	$	1,832	$	-	$	-		$	1,832
Total	$	6,847	$	(5,015	)	$	1,832	$	-	$	-		$	1,832

								Gross Amounts Not Offset
	Gross Amount Recognized		Gross Amounts Offset			Net Amounts Presented		Financial Instruments		Cash Collateral Posted			Net Amount
	(In Thousands)
Liabilities:
Interest rate contracts	$	5,688	$	(5,015	)	$	673	$	-	$	(673	)	$	-
Total	$	5,688	$	(5,015	)	$	673	$	-	$	(673	)	$	-

- 3531 -

June 30, 2017

Gross Amounts Not Offset

Gross Amount Recognized

Gross Amounts Offset

Net Amounts Presented

Financial Instruments

Cash Collateral Received

Net Amount

(Dollars in Thousands)

Assets:

Interest rate swaps
$
12,839

$
(5,169
)

$
7,670

$
-

$
(5,770
)

$
1,900

Interest rate caps

140

-

140

-

-

140

Total
$
12,979

$
(5,169
)

$
7,810

$
-

$
(5,770
)

$
2,040

Gross Amounts Not Offset

Gross Amount Recognized

Gross Amounts Offset

Net Amounts Presented

Financial Instruments

Cash Collateral Posted

Net Amount

Liabilities:

Interest rate swaps
$
5,467

$
(5,169
)

$
298

$
-

$
(298
)

$
-

Interest rate caps

-

-

-

-

-

-

Total
$
5,467

$
(5,169
)

$
298

$
-

$
(298
)

$
-

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

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty. The Company also has agreements with its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the counterparty. As of December 31, ~~2017 and June 30, 2017,~~2021, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to those agreements was ~~$0 and $302,000, respectively.~~ $217,000.

As required under the enforceable master netting arrangement with its derivatives counterparties, at December 31, ~~2017,~~2021, the Company ~~received~~posted financial collateral of ~~$16.2 million~~$220,000 that was not included as an offsetting amount. ~~By comparison, at June 30, 2017, the Company received financial collateral of $5.8 million and posted financial collateral in the amount of $1.0 million that were not included as offsetting amounts.~~

In addition to the derivative instruments noted above, the Company’s pipeline of loans held for sale at December 31, ~~2017~~2021 and June 30, ~~2017,~~2021, included ~~$15.8~~$19.6 million and ~~$18.4~~$48.4 million, respectively, of ~~“in process”~~in process loans whose terms included interest rate locks to borrowers, which are considered free-standing derivative instruments whose fair values are not material to our financial condition or results of operations.

~~- 36 -~~

~~15.~~10. BENEFIT PLANS

Components of Net Periodic Expense

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


	Three Months Ended						Six Months Ended						Quarter Ended						Six Months Ended						Affected Line Item in the Consolidated
	December 31,						December 31,						December 31,						December 31,						Statements of Income
	2017				2016		2017				2016		2021			2020			2021			2020
	(In Thousands)						(In Thousands)						(In Thousands)						(In Thousands)
Service cost	$	12		$	8		$	24		$	16		$	29		$	27		$	58		$	53		Salaries and employee benefits
Interest cost		93			95			186			190			69			65			138			131		Miscellaneous non-interest expense
Amortization of unrecognized past service liability		-			-			-			-
Amortization of unrecognized loss		11			16			22			32			20			21			40			42		Miscellaneous non-interest expense
Expected return on assets		(30	)		(62	)		(60	)		(124	)		(28	)		(29	)		(56	)		(57	)	Miscellaneous non-interest expense
Net periodic benefit cost	$	86		$	57		$	172		$	114		$	90		$	84		$	180		$	169

~~16.~~- 32 -

11. INCOME TAXES

The following table presents a reconciliation between the reported income taxes for the periods presented and the income taxes which would be computed by applying the federal income tax ~~rates applicable to those periods. The income tax~~ rate of ~~28%, applicable~~21% to income for the ~~reported periods in the current year ending June 30, 2018, reflects the transitional effect of a reduction in the Company’s federal income tax rate from 35%, applicable to the prior year~~quarter and six months ended June 30, 2017, to 21%, applicable to the forthcoming year ending June 30, 2019. The noted decrease in the Company’s federal income tax rate reflects the impact of federal income tax reform that was codified through the passage of the Tax CutsDecember 31, 2021 and ~~Jobs Act on December 22, 2017.~~2020:


	Quarter Ended						Six Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
	(Dollars in Thousands)						(Dollars in Thousands)
Income before income taxes	$	25,570		$	22,562		$	52,557		$	36,825
Statutory federal tax rate		21	%		21	%		21	%		21	%
Federal income tax expense at statutory rate	$	5,370		$	4,738		$	11,037		$	7,733
(Reduction) increase in income taxes resulting from:
Tax exempt interest		(68	)		(91	)		(138	)		(185	)
State tax, net of federal tax effect		1,990			1,456			4,118			2,240
Incentive stock option compensation expense		16			20			39			40
Income from bank-owned life insurance		(328	)		(338	)		(656	)		(665	)
Non-deductible merger-related expenses		0			0			0			49
Bargain purchase gain		0			0			0			(641	)
Other items, net		(179	)		352			(327	)		450
	$	6,801		$	6,137		$	14,073		$	9,021
Reversal of valuation allowance		0			(523	)		0			(523	)
Total income tax expense	$	6,801		$	5,614		$	14,073		$	8,498
Effective income tax rate		26.60	%		24.88	%		26.78	%		23.08	%

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Income before income taxes
$
6,398

$
8,434

$
14,386

$
15,295

Statutory federal tax rate

28
%

35
%

28
%

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

$
2,952

$
4,028

$
5,353

(Reduction) increases in income taxes resulting from:

Tax exempt interest

(177
)

(203
)

(349
)

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

461

519

970

859

Incentive stock options compensation expense

37

23

72

35

Income from bank-owned life insurance

(354
)

(462
)

(710
)

(901
)
Disqualifying disposition on incentive stock
options

(11
)

-

(11
)

-

Non-deductible merger-related expenses

200

-

200

-

Other items, net

113

141

199

212

Impact of federal income tax reform

3,069

-

3,486

-

Total income tax expense
$
5,129

$
2,970

$
7,885

$
5,164

Effective income tax rate

80.17
%

35.21
%

54.81
%

33.76
%

~~- 37 -~~

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

December 31,

June 30,

2017

2017

(Unaudited)

Deferred income tax assets:

Purchase accounting

$
234

$
466

Accumulated other comprehensive income:

Defined benefit plans

315

434

Unrealized loss on securities available for sale

677

975

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

283

453

Allowance for loan losses

8,452

11,963

Benefit plans

2,035

2,675

Compensation

353

1,146

Stock-based compensation

1,206

2,278

Uncollected interest

1,339

2,700

Depreciation

891

1,221

Charitable contribution carryover

1,276

2,139

Other items

506

642

17,567

27,092

Valuation allowance

(135
)

(135
)

17,432

26,957

Deferred income tax liabilities:

Deferred costs

1,454

2,083

Derivatives

4,344

2,582

Goodwill

4,240

6,167

Other items

453

671

10,491

11,503

Net deferred income tax asset

$
6,941

$
15,454

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

~~The guidance~~Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on ~~fair value~~the measurement ~~establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy describes~~date. There are three levels of inputs that may be used to measure fair ~~value:~~values:


	Level 1:		Quoted prices ~~in active markets~~(unadjusted) for identical assets or ~~liabilities.~~liabilities in active markets that the entity has the ability to access as of the measurement date.
	Level 2:		~~Observable inputs~~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 ~~such as quoted~~ for similar assets or ~~liabilities;~~liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not ~~active;~~active, inputs other than quoted prices that are observable for the asset or liability or inputs that are ~~observable~~derived principally from, or ~~can be~~ corroborated by, ~~observable~~ market data ~~for substantially the full term of the assets~~by correlation or ~~liabilities.~~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.

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

- 33 -

Assets Measured on a Recurring Basis:

The following methods and significant assumptions were used to ~~disclose~~estimate the fair ~~value for~~values of the Company’s assets ~~and liabilities on both a recurring and non-recurring basis.~~

~~- 38 -~~

~~Those assets and liabilities~~ measured at fair value on a recurring basis ~~are summarized below:~~at December 31, 2021 and June 30, 2021:

December 31, 2017

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Debt securities available for sale:

U.S. agency securities
$
-

$
4,810

$
-

$
4,810

Obligations of state and political subdivisions

-

27,428

-

27,428

Asset-backed securities

-

169,484

-

169,484

Collateralized loan obligations

-

133,341

-

133,341

Corporate bonds

-

142,397

-

142,397

Trust preferred securities

-

7,494

1,000

8,494

Total debt securities

-

484,954

1,000

485,954

Mortgage-backed securities available for sale:

Collateralized mortgage obligations

-

27,187

-

27,187

Residential pass-through securities

-

116,496

-

116,496

Commercial pass-through securities

-

8,034

-

8,034

Total mortgage-backed securities

-

151,717

-

151,717

Total securities available for sale
$
-

$
636,671

$
1,000

$
637,671

Derivative instruments

Interest rate swaps
$
-

$
15,921

$
-

$
15,921

Interest rate caps

-

142

-

142

Total derivatives
$
-

$
16,063

$
-

$
16,063

Investment Securities Available for Sale

~~- 39 -~~

June 30, 2017

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Debt securities available for sale:

U.S. agency securities
$
-

$
5,316

$
-

$
5,316

Obligations of state and political subdivisions

-

27,740

-

27,740

Asset-backed securities

-

162,429

-

162,429

Collateralized loan obligations

-

98,154

-

98,154

Corporate bonds

-

142,318

-

142,318

Trust preferred securities

-

7,540

1,000

8,540

Total debt securities

-

443,497

1,000

444,497

Mortgage-backed securities available for sale:

Collateralized mortgage obligations

-

30,536

-

30,536

Residential pass-through securities

-

130,550

-

130,550

Commercial pass-through securities

-

8,177

-

8,177

Total mortgage-backed securities

-

169,263

-

169,263

Total securities available for sale
$
-

$
612,760

$
1,000

$
613,760

Derivative instruments

Interest rate swaps
$
-

$
7,372

$
-

$
7,372

Interest rate caps

-

140

-

140

Total derivatives
$
-

$
7,512

$
-

$
7,512

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

Derivatives

The Company held one trust preferred security whose fair value of $1.0 million at December 31, 2017 was determined using Level 3 inputs. For the periods ended December 31, 2017 and June 30, 2017, management has been unable to obtain a market quote for this security. Consequently, the security’s fair value as reported at December 31, 2017 and June 30, 2017, is based upon the present value of expected future cash flows assuming the security continues to meet all of its payment obligations and utilizing a discount rate based upon the security’s contractual interest rate.

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

~~In addition~~

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


	December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In Thousands)
Assets:
Debt securities available for sale:
Obligations of state and political subdivisions		-		33,174		-		33,174
Asset-backed securities		-		226,714		-		226,714
Collateralized loan obligations		-		290,480		-		290,480
Corporate bonds		-		160,244		-		160,244
Total debt securities		-		710,612		-		710,612

Mortgage-backed securities available for sale:
Collateralized mortgage obligations		-		9,701		-		9,701
Residential pass-through securities		-		638,548		-		638,548
Commercial pass-through securities		-		232,205		-		232,205
Total mortgage-backed securities		-		880,454		-		880,454
Total securities available for sale	$	-	$	1,591,066	$	-	$	1,591,066
Interest rate contracts		-		9,622		-		9,622

Total assets	$	-	$	1,600,688	$	-	$	1,600,688

Liabilities:
Interest rate contracts	$	-	$	210	$	-	$	210
Total liabilities	$	-	$	210	$	-	$	210

- 34 -


	June 30, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In Thousands)
Assets:
Debt securities available for sale:
Obligations of state and political subdivisions		-		34,603		-		34,603
Asset-backed securities		-		242,989		-		242,989
Collateralized loan obligations		-		189,880		-		189,880
Corporate bonds		-		158,351		-		158,351
Total debt securities		-		625,823		-		625,823

Mortgage-backed securities available for sale:
Collateralized mortgage obligations		-		13,739		-		13,739
Residential pass-through securities		-		744,491		-		744,491
Commercial pass-through securities		-		292,811		-		292,811
Total mortgage-backed securities		-		1,051,041		-		1,051,041
Total securities available for sale		-		1,676,864		-		1,676,864
Interest rate contracts		-		1,832		-		1,832

Total assets	$	-	$	1,678,696	$	-	$	1,678,696

Liabilities:
Interest rate contracts	$	-	$	673	$	-	$	673
Total liabilities	$	-	$	673	$	-	$	673

Assets Measured on a Non-Recurring Basis:

The following methods and assumptions were used to estimate the ~~financial instruments noted above,~~fair values of the Company’s assets measured at fair value on a non-recurring basis at December 31, ~~2017~~2021 and June 30, ~~2017,~~2021:

Collateral Dependent Individually Analyzed Loans:

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

- 35 -

Other Real Estate Owned

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

~~- 40 -~~

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

	December 31, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		December 31, 2021
	(In Thousands)								Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Impaired loans:
									(In Thousands)
Collateral dependent loans:
Residential mortgage	$	-	$	-	$	3,712	$	3,712	$	-	$	-	$	2,257	$	2,257
Non-residential mortgage		-		-		1,139		1,139
Commercial business		-		-		114		114
Total	$	-	$	-	$	4,965	$	4,965

Real estate owned, net:
Residential mortgage	$	-	$	-	$	-	$	-
Multi-family mortgage										-		-		15,725		15,725
Non-residential mortgage		-		-		108		108		-		-		5,942		5,942
Total	$	-	$	-	$	108	$	108	$	-	$	-	$	23,924	$	23,924

Other real estate owned, net:
Residential											$	-	$	658	$	658
Total									$	-	$	-	$	658	$	658

	June 30, 2017
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		June 30, 2021
	(In Thousands)								Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Impaired loans:
									(In Thousands)
Collateral dependent loans:
Residential mortgage	$	-	$	-	$	5,711	$	5,711	$	-	$	-	$	3,051	$	3,051
Multi-family mortgage														6,932		6,932
Non-residential mortgage		-		-		2,126		2,126		-		-		8,679		8,679
Commercial business		-		-		119		119
Total	$	-	$	-	$	7,956	$	7,956	$	-	$	-	$	18,662	$	18,662

Other real estate owned, net:
Residential										-		-		178		178
Total									$	-	$	-	$	178	$	178

- 4136 -

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


	December 31, 2021
	Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average
	(Dollars in Thousands)
Collateral dependent loans:
Residential mortgage	$	2,257	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	7% - 14%		10.26	%
Multi-family mortgage		15,725	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	10% - 13%		12.05	%
Non-residential mortgage		5,942	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	9% - 16%		13.12	%
Total	$	23,924

Other real estate owned, net:
Residential	$	658	Market valuation of underlying collateral	(3)	Adjustments to reflect current conditions/selling costs	(2)	6.00%		6.00	%
Total	$	658


	June 30, 2021
	Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average
	(Dollars in Thousands)
Collateral dependent loans:
Residential mortgage	$	3,051	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	7% - 13%		9.77	%
Multi-family mortgage		6,932	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	10% - 11%		10.39	%
Non-residential mortgage		8,679	Market valuation of underlying collateral	(1)	Adjustments to reflect current conditions/selling costs	(2)	9% - 16%		14.48	%
Total	$	18,662

Other real estate owned, net:
Residential	$	178	Market valuation of underlying collateral	(3)	Adjustments to reflect current conditions/selling costs	(2)	6.00%		6.00	%
Total	$	178

December 31, 2017

Fair
Value

Valuation
Techniques

Unobservable
Input

Range

Weighted
Average

(In Thousands)

Impaired loans:

Residential mortgage
$
3,712

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

10.39
%
Non-residential mortgage

1,139

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

12.01
%
Commercial business

114

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

13.76
%
Total
$
4,965

Real estate owned, net:

Residential mortgage
$
-

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

N/A

Non-residential mortgage

108

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

6.00
%
Total
$
108

(1)

June 30, 2017

Fair
Value

Valuation
Techniques

Unobservable
Input

Range

Weighted
Average

(In Thousands)

Impaired loans:

Residential mortgage
$
5,711

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

8.12
%
Non-residential mortgage

2,126

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

6.93
%
Commercial business

119

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

12.79
%
Total
$
7,956

~~(1)~~

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

~~(2)~~

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

~~(3)~~

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

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

(2)

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

(3)

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

At December 31, ~~2017, impaired~~2021, collateral dependent loans valued using Level 3 inputs comprised loans with principal balances totaling ~~$5.0~~$27.3 million and valuation allowances of ~~$43,000~~$3.3 million reflecting fair values of ~~$5.0~~$23.9 million. By comparison, at June 30, ~~2017, impaired~~2021, collateral dependent loans valued using Level 3 inputs comprised loans with principal balances totaling ~~$8.2~~$25.2 million and valuation allowances of ~~$199,000~~$6.5 million reflecting fair values of ~~$8.0~~$18.7 million.

Once a loan is foreclosed, the fair value of the other real estate owned continues to be evaluated based upon the ~~market~~fair value of the repossessed real estate originally securing the loan. At December 31, ~~2017,~~2021 and June 30, 2021, the Company held other real estate owned totaling ~~$108,000~~$658,000 and $178,000, respectively, at December 31, 2021 and June 30, 2021, whose carrying value was written down utilizing Level 3 inputs. ~~At June 30, 2017, the Company held no real estate owned whose carrying value was written down utilizing Level 3 inputs.~~

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

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

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.

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

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

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

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

~~18.~~13. COMPREHENSIVE INCOME

The components of accumulated other comprehensive income included in stockholders’ equity at December 31, ~~2017~~2021 and June 30, ~~2017~~2021 are as follows:


	December 31,			June 30,
	2021			2021
	(In Thousands)
Net unrealized (loss) gain on securities available for sale	$	(4,736	)	$	10,011
Tax effect		1,432			(2,882	)
Net of tax amount		(3,304	)		7,129

Fair value adjustments on derivatives		7,955			(312	)
Tax effect		(2,333	)		94
Net of tax amount		5,622			(218	)

Benefit plan adjustments		(1,053	)		(1,093	)
Tax effect		309			326
Net of tax amount		(744	)		(767	)

Total accumulated other comprehensive income	$	1,574		$	6,144

December 31,

June 30,

2017

2017

(In Thousands)

Net unrealized loss on securities available for sale
$
(2,463
)

$
(2,385
)
Stranded tax effect ⁽¹⁾

316

-

Tax effect

677

975

Net of tax amount

(1,470
)

(1,410
)

Net unrealized loss on securities available for sale transferred to held to maturity

(1,006
)

(1,109
)
Stranded tax effect ⁽¹⁾

128

-

Tax effect

283

453

Net of tax amount

(595
)

(656
)

Fair value adjustments on derivatives

15,453

6,319

Stranded tax effect ⁽¹⁾

(1,969
)

-

Tax effect

(4,344
)

(2,582
)
Net of tax amount

9,140

3,737

Benefit plan adjustments

(1,122
)

(1,061
)
Stranded tax effect ⁽¹⁾

144

-

Tax effect

315

434

Net of tax amount

(663
)

(627
)

Total accumulated other comprehensive income
$
6,412

$
1,044

~~(1)~~

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

~~- 46 -~~

Other comprehensive (loss) income and related tax effects for the ~~three~~quarter and six months ended December 31, ~~2017~~2021 and ~~December 31, 2016~~2020 are presented in the following table:


	Quarter Ended						Six Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
	(In Thousands)
Net unrealized holding (loss) gain on securities available for sale	$	(7,700	)	$	730		$	(14,746	)	$	1,912

Net realized gain on sale and call of securities available for sale (1)		0			(813	)		(1	)		(436	)

Fair value adjustments on derivatives		6,616			3,606			8,267			5,867

Benefit plans:
Amortization of actuarial loss		20			21			40			42
Net actuarial gain (2)		0			0			0			0
Net change in benefit plan accrued expense		20			21			40			42

Other comprehensive (loss) income before taxes		(1,064	)		3,544			(6,440	)		7,385
Tax effect		302			(1,065	)		1,870			(2,189	)
Total other comprehensive (loss) income	$	(762	)	$	2,479		$	(4,570	)	$	5,196

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

(In Thousands)

(In Thousands)

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

$
(8,251
)

$
(78
)

$
(6,436
)

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

74

(43
)

103

(36
)

Net realized gain on securities available for sale

-

10

-

10

Net unrealized gain on derivatives

7,489

23,755

9,134

29,099

Benefit plans:

Amortization of actuarial loss ⁽²⁾

11

16

22

32

Net actuarial loss

-

-

(83
)

(394
)
Net change in benefit plan accrued expense

11

16

(61
)

(362
)

Other comprehensive income before taxes

5,563

15,487

9,098

22,275

Stranded tax effects ⁽³⁾

(1,381
)

-

(1,381
)

-

Tax effect⁽⁴⁾

(910
)

(6,759
)

(2,349
)

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

$
8,728

$
5,368

$
12,742

(1)

Represents amounts reclassified out of accumulated other comprehensive income and included in gain on sale of securities on the consolidated statements of income.

(2)

Represents amounts reclassified out of accumulated other comprehensive income and included in the computation of net periodic pension expense. See Note 10 – Benefit Plans for additional information.

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

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


	Quarter Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
	(In Thousands, Except Per Share Data)
Net income	$	18,769	$	16,948	$	38,484	$	28,327

Weighted average number of common shares outstanding - basic		72,011		85,120		73,274		85,564
Effect of dilutive securities		26		3		23		2
Weighted average number of common shares outstanding - diluted		72,037		85,123		73,297		85,566

Basic earnings per share	$	0.26	$	0.20	$	0.53	$	0.33
Diluted earnings per share	$	0.26	$	0.20	$	0.53	$	0.33

Stock options for 3,115,000 and 3,280,648 shares of common stock were not considered in computing diluted earnings per share at December 31, 2021 and December 31, 2020, respectively, because they were considered anti-dilutive.

This ~~report~~Quarterly Report on Form 10-Q may include certain forward-looking statements based on current management expectations. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may”, “will”, “believe”, “expect”, “estimate”, “anticipate”, “continue”, or similar terms or variations on those terms, or the negative of those terms. The actual results of the Company could differ materially from those management expectations. This includes statements regarding ~~the planned merger of Clifton Bancorp Inc. (“Clifton”) with and into the Company, with the Company surviving the merger~~general economic conditions, public health crisis such as the ~~surviving corporation (the “Merger").~~ ~~Factors that could cause future results to vary from current management expectations include, but are not limited to, the inability to obtain requisite approvals and/or meet~~governmental, social and economic effects of the ~~other closing conditions required to close the Merger in a timely manner,~~ ~~general economic conditions,~~novel coronavirus, legislative and regulatory changes, monetary and fiscal policies of the federal government, ~~and~~ changes in tax policies, rates and regulations of federal, state and local tax ~~authorities.~~authorities and failure to integrate or profitably operate acquired businesses. Additional potential factors include changes in interest rates, 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 the Company’s other filings with the Securities and Exchange Commission.

In addition, the COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including whether the coronavirus can continue to be controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for credit losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; due to a decline in our stock price or other factors, goodwill may become impaired and be required to be written down; and our cyber security risks are increased as the result of an increase in the number of employees working remotely. Reference is made to Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021.

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.

~~On November 1, 2017, Kearny Financial Corp. and Clifton Bancorp Inc., announced~~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 ~~companies have entered into a definitive agreement pursuant~~carrying value of certain assets or on income to ~~which~~be critical accounting policies. At December 31, 2021, the Company ~~will acquire Clifton in an all-stock transaction. Under~~considers the ~~terms~~determination of the ~~agreement, Clifton will merge with~~allowance for credit losses on loans, individually evaluating loans, calculating the allowance of credit losses on acquired loans, accounting for business combinations and ~~into~~ the ~~Company,~~valuation of goodwill and ~~each outstanding share~~identifiable intangible assets to be our critical accounting policies. Reference is made to Item 7 “Management's Discussion and Analysis of ~~Clifton common stock will be exchanged~~Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for ~~1.191 shares~~the year ended June 30, 2021, for a description of the ~~Company’s common stock.~~Company's critical accounting policies.

As of December 31, 2017, Clifton had approximately $1.7 billion of assets, $1.2 billion of loans, and $935 million of deposits held across a network of 12 branches located in New Jersey throughout Bergen, Passaic, Hudson, and Essex counties. The Merger is subject to obtaining stockholder and regulatory approvals, among other closing conditions, and is expected to close late in the first calendar quarter or early in the second calendar quarter of 2018.- 42 -

Comparison of Financial Condition at December 31, ~~2017~~2021 and June 30, ~~2017~~2021

~~General.~~Executive Summary. Total assets ~~increased $25.7~~decreased $97.5 million to ~~$4.84~~$7.19 billion at December 31, ~~2017~~2021 from ~~$4.82~~$7.28 billion at June 30, ~~2017.~~2021. The ~~net increase in total assets~~decrease primarily reflected ~~increases~~decreases in investment securities and net loans ~~receivable and~~receivable.

Investment Securities. Investment securities available for sale ~~that were~~decreased $85.8 million, to $1.59 billion at December 31, 2021, from $1.68 billion at June 30, 2021. This decrease was largely the result of principal repayments of $209.7 million, partially offset by ~~decreases in the balances~~security purchases of ~~cash and cash equivalents,~~$140.6 million. Investment securities held to maturity and deferred income taxes. The net increase in total assets was largely funded by an increase in deposits that was partially offset by decreases in the balance of borrowings and stockholders’ equity.

~~Cash and Cash Equivalents.~~ ~~Cash and cash equivalents, which consist primarily of interest-earning and non-interest-earning deposits in other banks, decreased by $27.6~~increased $15.0 million to ~~$50.7~~$53.1 million at December 31, ~~2017~~2021 from ~~$78.2~~$38.1 million at June 30, ~~2017. The decrease in~~2021. This increase was largely the ~~balance~~result of cash and cash equivalents at December 31, 2017 largely reflected the continuing effort to limit the balance of cash and cash equivalents to the levels needed to meet its day-to-day funding obligations and overall liquidity risk management objectives while reinvesting excess liquidity into comparatively higher-yielding assets. Toward that end, the average balance of other interest-earning assets decreased to $81.2 million for the six months ended December 31, 2017 compared to $114.1 million for the prior year ended June 30, 2017. Other interest-earning assets generally include the balance of interest-earning cash deposits held in other banks coupled with the balance of the Bank’s mandatory investment in the capital stock of the Federal Home Loan Bank of New York.

~~Debt Securities Available for Sale.~~ Debt securities classified as available for sale increased by $41.5 million to $486.0 million at December 31, 2017 from $444.5 million at June 30, 2017. The net increase in the portfolio partly reflected security purchases ~~totaling $76.1~~of $16.2 million, for the six months ended December 31, 2017 coupled with a $689,000 increase in the fair value of the portfolio to a net unrealized loss of $709,000 at December 31, 2017 from a net unrealized loss of $1.4 million at June 30, 2017. The increase in

the fair value of the portfolio was partly attributable to movements in market interest rates coupled with a tightening of pricing spreads within certain sectors in the portfolio. The noted increases in the portfolio were partially offset by principal repayments ~~net~~ of ~~premium amortization and discount accretion, totaling $35.3 million during the six months ended December 31, 2017.~~$1.1 million.

~~The increase in the fair value of debt~~Additional information regarding investment securities available for sale was primarily reflected within the applicable “credit sectors” of the portfolio which include asset-backed securities, collateralized loan obligations, corporate bonds and non-pooled trust preferred securities. The fair value of this subset of securities increased by $1.0 million to a net unrealized loss of $665,000 at December 31, ~~2017 from a net unrealized loss of $1.7 million at~~2021 and June 30, 2017. The decrease in the unrealized loss largely reflected a general tightening of pricing spreads within these sectors resulting in an overall increase in the market price of such securities. The decrease in the net unrealized loss on the noted securities was partially offset by a $331,000 decline in the fair value of government and agency securities, including U.S. agency debentures and municipal obligations, to an unrealized loss of $44,000 at December 31, 2017 from an unrealized gain of $287,000 at June 30, 2017.

~~Mortgage-backed Securities Available for Sale.~~ Mortgage-backed securities available for sale decreased by $17.5 million to $151.7 million at December 31, 2017 from $169.3 million at June 30, 2017. The net decrease partly reflected cash repayment of principal, net of discount accretion and premium amortization, totaling $16.8 million coupled with a $767,000 decrease in the fair value of the portfolio to a net unrealized loss of $1.8 million at December 31, 2017 from a net unrealized loss of $986,000 at June 30, 2017.

~~Additional information regarding securities available for sale at December 31, 2017~~2021 is presented in Note ~~8 and Note 10~~4 to the unaudited consolidated financial statements.

~~Debt Securities Held to Maturity.~~ ~~Debt securities classified as held to maturity decreased by $19.0 million to $125.7~~Loans Held-for-Sale. Loans held-for-sale totaled $12.5 million at December 31, ~~2017 from $144.7~~2021 as compared to $16.5 million at June 30, 2017. The net decrease in the portfolio partly reflected cash repayment of principal, net of discount accretion and premium amortization, totaling $35.5 million for the six months ended December 31, 2017 that was partially offset by security purchases totaling $16.4 million during the same period.

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

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

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

~~Loans Held-for-Sale.~~ The Company continues to expand its residential lending infrastructure to support strategies focused on increasing the origination volume of residential mortgage loans for sale into the secondary market. The increase in residential mortgage loan origination and sale activity has increased the Company’s level of non-interest income through the recognition of recurring loan sale gains while helping to manage the Company’s exposure to interest rate risk. During the six months ended December 31, 2017, we sold $43.0 million of residential mortgage loans resulting in net sale gains totaling $413,000 for the period. Loans held for sale totaled $3.5 million at December 31, 2017 compared to $4.7 million at June 30, 20172021 and are reported separately from the balance of net loans ~~receivable as of those dates.~~

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

~~Residential~~2021, $131.4 million of residential mortgage loans ~~held~~were sold, resulting in ~~portfolio, including home equity~~a gain on sale of $1.9 million.

Net Loans Receivable. Net loans ~~and lines of credit, increased by $5.1~~receivable decreased $15.0 million, or 0.3%, to ~~$655.3 million~~$4.78 billion at December 31, ~~2017~~2021 from ~~$650.1 million~~$4.79 billion at June 30, ~~2017. The increase was primarily attributable to an increase~~2021. Detail regarding the change in the ~~balance~~loan portfolio, by loan segment, is presented below:

Commercial loan origination volume for the six months ended December 31, 2021 totaled $432.7 million, comprised of ~~one-to-four family first~~$307.0 million of commercial mortgage loan originations, $84.3 million of commercial business loan originations and construction loan disbursements of $41.4 million. Commercial loan origination volume was augmented with the funding of purchased commercial mortgage loans ~~of $7.0 million~~totaling $48.4 million.

One- to ~~$574.3 million at December 31, 2017 from $567.3 million at June 30, 2017. The increase in one-to-four family first mortgage loans was partially offset be an aggregate decrease of $1.9 million in~~

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

~~Residential~~four-family residential mortgage loan origination volume for the six months ended December 31, ~~2017~~2021, excluding loans held-for-sale, totaled ~~$28.7~~$190.8 million ~~comprised~~and was augmented with the funding of ~~$19.1 million of one-to-four family first mortgage loan originations and $9.6 million of home~~purchased loans totaling $23.9 million. Home equity loan and ~~home equity~~ line of credit ~~originations during~~origination volume for the ~~period. Residential mortgage~~same period totaled $8.9 million.

Loan-to-value ("LTV") ratios are based on current period loan ~~originations~~balances and original appraised values at the time of origination unless a current appraisal has been obtained as a result of the loan being deemed collateral dependent and individually analyzed. The following table sets forth the composition of our real estate secured loans indicating the LTV, by loan category, at December 31, 2021 and June 30, 2021:

Additional information about the Company’s loans at December 31, 2021 and June 30, 2021 is presented in Note 5 to the unaudited consolidated financial statements.

Nonperforming Assets and TDRs. Nonperforming assets decreased by $7.1 million to $72.8 million, or 1.01% of total assets at December 31, 2021, from $79.9 million, or 1.10% of total assets at June 30, 2021. At December 31, 2021, the Company had accruing TDRs totaling $8.7 million, an increase of $2.5 million from $6.2 million at June 30, 2021. At December 31, 2021, the Company had non-accrual TDRs totaling $10.6 million, a decrease of $1.0 million from $11.6 million at June 30, 2021.

Based on Section 4013 of the CARES Act, the 2021 Consolidated Appropriations Act and related regulatory guidance promulgated by federal banking regulators, qualifying loan modifications made in response to the COVID-19 pandemic, including short-term payment deferrals, are not considered to be TDRs. The Company had active payment deferrals, which were ~~augmented with~~not considered TDRs, of $2.6 million and $5.6 million, respectively, as of December 31, 2021 and June 30, 2021.

Additional information about the ~~purchase~~Company’s nonperforming loans and TDRs at December 31, 2021 and June 30, 2021 is presented in Note 5 to the unaudited consolidated financial statements.

Allowance for Credit Losses. At December 31, 2021, the ACL totaled $48.2 million, or 0.99% of ~~one-to-four family first mortgage~~total loans, ~~totaling $22.2~~reflecting a decrease of $9.9 million from $58.2 million, or 1.19% of total loans, at June 30, 2021. The decrease during the six months ended December 31, ~~2017. The Company may continue~~2021 was largely attributable to ~~modestly increase the outstanding balance~~a provision for credit loss reversal of ~~residential mortgage loans held in portfolio~~$7.8 million, primarily resulting from continued improvement in the ~~future while allowing~~Company's credit risk outlook, a reduction in the ~~segment~~expected life of various segments of the loan portfolio and a net reduction in reserves on loans individually evaluated for impairment. Also contributing to ~~continue to decline as a percentage~~this decrease were net charge-offs of ~~total loans and earning assets.~~

~~Commercial and construction loans, in aggregate, increased by $46.4~~$2.1 million, ~~to $2.62 billion at December 31, 2017 from $2.58 billion~~all of which had been individually reserved for within the ACL at June 30, 2017. The components of the aggregate increase included an increase in commercial mortgage loans totaling $10.0 million that was augmented by increases in the outstanding balances of construction loans and commercial business loans of $18.4 million and $18.0 million, respectively. The outstanding balance of commercial mortgage loans at December 31, 2017 totaled $2.51 billion while the outstanding balances of construction and commercial business loans, totaled $22.2 million and $92.4 million, respectively, as of that date.2021.

Commercial loan origination volume for the six months ended December 31, 2017 totaled $198.5 million, comprised of $164.7 million of commercial mortgage loan originations augmented by $14.5 million of commercial business loan originations and construction loan disbursements totaling $19.4 million during the period. Commercial loan originations were augmented with the purchase of business loans totaling $26.7 million during the six months ended December 31, 2017.

Other loans, primarily account loans, deposit account overdraft lines of credit and other consumer loans, decreased by $4.5 million to $11.9 million at December 31, 2017 from $16.4 million at June 30, 2017. The balance of other consumer loans at December 31, 2017 included loans with outstanding balances totaling $8.6 million that were originally acquired through the Company’s relationship with Lending Club, an established peer-to-peer (i.e. marketplace) lender. The Company limited its original investment in Lending Club loans to approximately $25.0 million in aggregate outstanding balances. Since their original acquisition, the Company has independently monitored and validated the performance of its portfolio of Lending Club loans. During that time, the return on the portfolio has been generally consistent with the range of performance expectations forecast by Lending Club’s proprietary credit risk model. While the Company continues to carefully monitor and assess the performance of its portfolio and the quality of loan servicing and reporting rendered by Lending Club, it has suspended future purchases of such loans in favor of investing in other loan alternatives.

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

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

Additional information about the ~~Company’s nonperforming loans~~ACL at December 31, ~~2017~~2021 and June 30, 2021 is presented in Note 116 to the unaudited consolidated financial statements.

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

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

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

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

With regard to historical loss factors, our loan portfolio experienced a net annualized average charge-off rate of 0.05% for the six months ended December 31, 2017 representing an increase of four basis points from the 0.01% of average charge offs reported for the year ended June 30, 2017. The annual average net charge off rate for the year ended June 30, 2017 had previously decreased by seven basis points from 0.08% for the prior year ended June 30, 2016. The historical loss factors used in our allowance for loan loss calculation methodology were updated to reflect the effect of these changes by individual loan segment reflecting the two year look-back period used by that methodology. Together with the impact of the increase in the overall balance of the unimpaired portion of the loan portfolio during the period, the applicable portion of the allowance attributable to historical loss factors increased by approximately $456,000 to $2.6 million at December 31, 2017 from $2.1 million at June 30, 2017.

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

The calculation of probable incurred losses within a loan portfolio and the resulting allowance for loan losses is subject to estimates and assumptions that are susceptible to significant revisions as more information becomes available and as events or conditions effecting individual borrowers and the marketplace as a whole change over time. Future additions to the allowance for loan losses may be necessary if economic and market conditions deteriorate in the future from those currently prevalent in the marketplace. In addition, the federal and state banking regulators, as an integral part of their examination process, periodically review our loan and foreclosed real estate portfolios and the related allowance for loan losses and valuation allowance for foreclosed real estate. The regulators may require the allowance for loan losses to be increased based on their review of information available at the time of the examination, which may negatively affect our earnings. Finally, changes in accounting standards promulgated by the Financial Accounting Standards Board, such as those discussed in Note 7 to the unaudited consolidated financial statements regarding the use of a current expected credit loss (“CECL”) model to calculate credit losses, may require increases in the allowance for loan losses upon adoption of the applicable accounting standard.

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

Other Assets.The aggregate balance of other assets, including premises and equipment, FHLB stock, interest receivable, goodwill, core deposit intangibles, bank owned life insurance, deferred income taxes, OREO and other assets, ~~increased by $7.0 million~~decreased $331,000 to ~~$419.1~~$690.8 million at December 31, ~~2017~~2021 from ~~$412.1~~$691.2 million at June 30, ~~2017.~~

2021. The increase in other assets partly reflected an $8.3 million increase in the fair value of the Company’s interest rate derivatives portfolio to a net asset value of $16.1 million at December 31, 2017 compared to a net asset value of $7.8 million at June 30, 2017. Less noteworthy increases in other assets included a $2.5 million increase in the cash surrender value of the Company’s bank-owned life insurance policies as well as increases of $2.2 million and $1.0 million in premises and equipment and interest receivable, respectively. The balance of real estate owned (“REO”) also increased to $1.7 million, representing the carrying value of five properties at December 31, 2017, from $1.6 million, representing the carrying value of four properties at June 30, 2017.

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

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

~~The remaining increases and decreases in~~these other assets ~~for~~during the six months ended December 31, ~~2017~~2021 generally ~~comprised~~reflected normal operating fluctuations in their respective balances.

Deposits.Total deposits ~~increased by $103.6~~decreased $31.3 million, or 0.6%, to ~~$3.03~~$5.45 billion at December 31, ~~2017~~2021 from ~~$2.93~~$5.49 billion at June 30, ~~2017.~~2021. The increase in deposit balances reflected a $7.7 million increase in non-interest-bearing deposits coupled with a $96.0 million increase in interest-bearing deposits. The increase in interest-bearing deposits included increases in the balances of interest-bearing checking accounts and certificates of deposit totaling $32.1 million and $70.5 million, respectively, that were partially offset by a decrease in deposits largely reflected the ~~balance~~controlled run-off of ~~savings and clubs accounts totaling $6.6 million for the period.~~

~~The change in deposit balances for the period reflected changes in the balances of retail~~time deposits, as well as “non-retail” deposits acquired through various wholesale channels. The $32.1 million increase in the balance of interest-bearing checking accounts primarily reflected a $32.6 million increase in the balance of retail accounts. The increase in retail account balanceswhich was partially offset by ~~a $566,000 decrease~~growth in core non-maturity deposits. The following table sets forth the ~~balance~~distribution of, ~~brokered money market~~and changes in, deposits, ~~acquired through Promontory Interfinancial Network’s (“Promontory”) Insured Network Deposits (“IND”) program to $222.0 million, or 7.3% of total~~by type, for the periods indicated:

Additional information about the Company’s deposits at December 31, ~~2017 from $222.6 million, or 7.6% of total deposits at~~2021 and June 30, ~~2017. The terms of~~2021 is presented in Note 7 to the IND program generally establish a reciprocal commitment for Promontory to deliver and for us to accept such deposits for a period of no less than five years during which time total aggregate balances shall be maintained within a range of $200.0 million to $230.0 million. Such deposits are generally sourced by Promontory from large retail and institutional brokerage firms whose individual clients seek to have a portion of their investments held in interest-bearing accounts at FDIC-insured institutions.unaudited consolidated financial statements.

We continued to utilize a deposit listing service through which we attract “non-brokered” wholesale time deposits targeting institutional investors with an original investment horizon of two-to-five years. We generally prohibit the withdrawal of our listing service deposits prior to maturity. Borrowings. The balance of the Bank’s listing service time deposits decreased by $7.5 million to $93.9 million, or 3.1% of total deposits at December 31, 2017, compared to $101.4 million, or 3.5% of total deposits at June 30, 2017.

~~We also maintain a portfolio of longer-term, brokered certificates of deposit whose balances~~borrowings increased by ~~$35.5 million~~$229,000, to ~~$57.1~~$686.1 million at December 31, ~~2017~~2021 from ~~$21.6~~$685.9 million at June 30, ~~2017. In combination with our Promontory IND money market deposits, our brokered deposits totaled $279.1 million, or 9.2% of deposits~~2021.

Additional information about the Company’s borrowings at December 31, ~~2017 compared to $244.2 million, or 8.3% of deposits at~~2021 and June 30, ~~2017.~~2021 is presented in Note 8 to the unaudited consolidated financial statements.

~~Borrowings.~~ The balance of borrowings decreased by $7.3 million to $798.9 million at December 31, 2017 from $806.2 million at June 30, 2017. The decrease in borrowings primarily reflected a $7.3 million decrease in the outstanding balance of overnight “sweep account” balances linked to customer demand deposits that generally reflected normal operating fluctuations in such balances.

Other Liabilities. The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, decreased ~~by $2.7~~$19.0 million to ~~$21.9~~$50.6 million at December 31, ~~2017~~2021 from ~~$24.6~~$69.6 million at June 30, ~~2017.~~2021. The decrease in these other liabilities largely reflected the payment of a $12.5 million loan participation liability which was outstanding at June 30, 2021. The remaining change in the balance of these other liabilities generally reflected normal operating fluctuations ~~in the balances of other liabilities~~ during the period.

Stockholders’ Equity. Stockholders’ equity decreased ~~by $67.9~~$47.5 million to ~~$989.3~~$995.5 million at December 31, ~~2017~~2021 from ~~$1.06~~$1.04 billion at June 30, ~~2017.~~2021. The decrease in stockholders’ equity ~~largely reflected the impact of the Company’s share repurchases~~ during the first six months of fiscal 2018. The Company had previously announced its second share repurchase program in May 2017 through which it intends to repurchase a total of 8,559,084 shares, or 10%, of its outstanding shares. During the six months ended December 31, ~~2017,~~2021 largely reflected share repurchases totaling $69.0 million and cash dividends totaling $15.3 million, partially offset by net income of $38.5 million.

Book value per share increased by $0.34 to $13.55 at December 31, 2021 while tangible book value per share increased by $0.15 to $10.64 at December 31, 2021.

On September 22, 2021, the Company announced the authorization of a new stock repurchase plan, which authorized the repurchase of up to 7,602,021 shares, or 10% of the shares then outstanding. During the quarter ended December 31, 2021, the Company repurchased ~~4,746,840~~2,289,537 shares of common stock at a ~~total~~ cost of ~~$69.3~~$30.0 million, or ~~an average cost of $14.60~~$13.10 per share. ~~Cumulatively,~~Through December 31, 2021, the Company ~~has~~ repurchased a total of ~~5,986,840~~2,502,676 shares, or ~~70%~~32.9% of the shares ~~to be repurchased~~authorized for repurchase under ~~its second share~~the current repurchase program, at a total cost of ~~$87.0~~$32.6 million or ~~an average cost of $14.54~~$13.05 per share. ~~The cumulative cost of the Company’s repurchased shares has directly reduced the balance of stockholders’ equity at December 31, 2017.~~

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

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

Comparison of Operating Results for the ~~Three Months Ended~~Quarter ended December 31, ~~2017~~2021 and December 31, ~~2016~~2020

~~General~~Net Income. Net income for the ~~three months~~quarter ended December 31, ~~2017~~2021 was ~~$1.3~~$18.8 million, or ~~$0.02~~$0.26 per diluted ~~share; a decrease of $4.2 million from $5.5~~share, compared to $16.9 million, or ~~$0.06~~$0.20 per diluted share for the ~~three months~~quarter ended December 31, ~~2016.~~2020. The ~~decrease~~increase in net income ~~primarily~~ reflected ~~increases in non-interest expense and income tax expense as well as a decrease in non-interest income. These factors were partially offset by~~ an increase in net interest income, ~~and~~ a decrease in the provision for ~~loan losses.~~

~~As discussed~~credit losses and a decrease in ~~greater detail below, the noted~~non-interest expense, partially offset by a decrease in non-interest income and an increase in income tax ~~expense primarily reflected~~expense.

Net Interest Income. Effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Interest income and non-interest income for all periods presented reflect this reclassification.

Net interest income increased by $2.8 million to $48.7 million for the ~~impact of federal income tax reform that was codified by the Act during the three months~~quarter ended December 31, ~~2017 while the noted increase in non-interest expense partly reflected the recognition of certain merger-related expenses related~~2021 compared to ~~the Company’s proposed acquisition of Clifton during the period.~~

~~Net Interest Income. Net interest income~~$45.9 million for the ~~three months~~quarter ended December 31, ~~2017 was $26.8 million; an increase of $1.2 million from $25.6 million for the three months ended December 31, 2016.~~2020. The increase ~~in net interest income~~ between the comparative periods resulted from ~~an increase~~a decrease of $6.6 million in interest ~~income of $3.7 million that was~~expense, partially offset by ~~an increase~~a decrease of ~~$2.5~~$3.8 million in interest ~~expense. The increase~~income. Included in net interest income was attributable to an increase in the average balance of interest-earning assets coupled with an increase in their average yield. The increase in interest expense resulted from an increase in the average balance of interest-bearing liabilities coupled with an increase in their average cost.

~~These factors contributed to a four basis points decrease in our net interest rate spread to 2.14%~~ for the ~~three months~~quarters ended December 31, ~~2017 from 2.18%~~2021 and December 31, 2020, respectively, was purchase accounting accretion of $2.6 million and $3.7 million and loan prepayment penalty income of $1.5 million and $1.3 million.

Net interest margin increased 24 basis points to 2.96% for the ~~three months~~quarter ended December 31, ~~2016. The decrease in~~2021, from 2.72% for the ~~net interest rate spread~~quarter ended December 31, 2020 and reflected a ~~16 basis points increase~~decrease in the average cost onof interest-bearing liabilities to 1.27% for three months ended December 31, 2017 from 1.11% for the three months ended December 31, 2016. For those same comparative periods, the average yield of interest-earning assets increased by 12 basis points to 3.41% from 3.29%. A discussion of the factors contributing to changes in the average yield and average cost of categories within interest-earning assets and interest-bearing liabilities, respectively, is presented in the separate discussion and analysis of interest income and interest expense below.

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

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

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

~~The~~Details surrounding the composition of, and changes to, net interest income are presented in the table below which reflects the components of the average balance sheet and of ~~loans increased by $356.1 million to $3.26 billion~~net interest income for the ~~three months ended December 31, 2017 from $2.90 billion for~~periods indicated. We derived the ~~three months ended December 31, 2016. The increase in~~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 ~~primarily reflected an aggregate increase of $384.7 million~~were included in the calculation of average ~~balance~~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 ~~commercial~~deferred fees, discounts and ~~construction~~premiums that are amortized or accreted to interest income or expense.

Provision for Credit Losses. The provision for credit losses decreased $1.1 million to a provision for credit losses reversal of $2.4 million for the ~~three months~~quarter ended December 31, 2016. Our commercial loans generally comprise commercial mortgage loans, including multi-family and nonresidential mortgage loans, as well as secured and unsecured commercial business loans while construction loans generally include loans secured by one-2021, compared to ~~four-family residential, multi-family and non-residential properties.~~

~~The increase in the average balance~~a provision for credit losses reversal of ~~commercial and construction loans was partially offset by an $18.6 million decrease in the average balance of residential mortgage loans to $645.3~~$1.4 million for the ~~three months~~quarter ended December 31, ~~2017 from $663.9 million~~2020. The provision reversal for the ~~three months~~quarter ended December 31, ~~2016. Our residential mortgages generally comprise one- to four-family first mortgage loans, home equity loans and home equity lines of credit.~~

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

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

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

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

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

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

The average yield on debt securities increased by 45 basis points to 2.49% for the three months ended December 31, 2017 from 2.04% for the three months ended December 31, 2016. The increase in the average yield reflected a 57 basis points increase in the yield on taxable securities to 2.61% during the three months ended December 31, 2017 from 2.04% during the three months ended December 31, 2016. The increase in yield on taxable securities2021 was largely attributable to ~~floating rate securities whose interest rates have increased due to recent increases~~a net reduction in ~~short-term market interest rates. For those same comparative periods,~~reserves on individually evaluated loans and a reduction in the ~~yield on tax-exempt securities increased by three basis points to 2.03% from 2.00%.~~

~~Interest income from other interest-earning assets increased by $283,000 to $704,000~~expected life of various segments of the loan portfolio. By comparison, the provision reversal for the ~~three months~~quarter ended December 31, 2017 from $421,000 for the three months ended December 31, 2016 reflecting an increase in their average yield coupled with an increase in their average balance. The average yield on other interest-earning assets increased by 105 basis points to 3.42% for the three months ended December 31, 2017 from 2.37% for the three months ended December 31, 2016. For those same comparative periods, the average balance of other interest-earning assets increased by $11.4 million to $82.5 million from $71.1 million. The increase in average yield of other interest earning assets primarily reflected the effects of recent increases in short-term market interest rates on the yield on Company’s short-term liquid assets while the increase in the average balance2020, was largely ~~reflected an increase in the average balance of the Bank’s required investment in FHLB stock.~~

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

Interest expense attributed to deposits increased by $1.2 million to $6.6 million for the three months ended December 31, 2017 from $5.4 million for the three months ended December 31, 2016. The increase in interest expense was attributable to ~~increases~~an improved economic forecast and credit risk outlook resulting in ~~the average balance and average cost~~a release of ~~interest-bearing deposits.~~reserves within multiple loan segments.

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

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

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

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

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

~~Provision for Loan Losses~~. The provision for loan losses decreased by $319,000 to $936,000 for the three months ended December 31, 2017 from $1.3 million for the three months ended December 31, 2016. The decrease was partly attributable to a lower provision on non-impaired loans evaluated collectively for impairment that was partially offset by an increase in the provision attributable to losses recognized on loans individually reviewed for impairment.

Regarding the provision on non-impaired loans, the net decrease in the provision expense largely reflected the lower growth in the outstanding balance of loans collectively evaluated for impairment during the three months ended December 31, 2017 compared to the three months ended December 31, 2016. To a lesser extent, the change in the provision on such loans also reflected the comparative effects periodic updates to historical and environmental loss factors between periods.

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

Additional information regarding the ~~allowance for loan losses~~ACL and the associated provisions recognized during the ~~three months~~quarters ended December 31, ~~2017~~2021 and 2020 is presented in Note 116 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at December 31, ~~2017~~2021 and June 30, ~~2017.~~2021.

Non-Interest Income. Non-interest income ~~excluding gains and losses on the sale of securities and gains and losses on the sale and write-down of real estate owned,~~ decreased ~~by $173,000~~$1.7 million to ~~$3.2~~$4.1 million for the ~~three month period~~quarter ended December 31, ~~2017 from $3.4~~2021, primarily due to a $1.4 million decrease in gain on sale of loans.

Fees and service charges increased $142,000 to $698,000 for the ~~three months~~quarter ended December 31, ~~2016.~~2021. The increase primarily reflected increases in various loan-related and deposit-related fees and charges.

Gain on sale and call of securities reflected a net gain of $813,000 during the quarter ended December 31, 2020 for which no such gains were recorded during the current period.

Gain on sale of loans decreased $1.4 million to $970,000 for the quarter ended December 31, 2021. The decrease in ~~non-interest income~~loan sale gains largely reflected a decrease in the gain on sale of loans of $259,000. The decrease in loan sale gains partly reflected a decrease in gains associated with residential mortgage loans sold in conjunction with the Company’s mortgage banking strategy coupled by a decrease in SBA loan sale gains between comparative periods. In both cases, such decreases primarily reflected a lower volume of loans originated and sold between comparative ~~periods.~~

~~The decrease in non-interest income also reflected~~periods coupled with a ~~$57,000~~ decrease in the ~~income recognized on bank-owned life insurance attributable to the continuing effects of lower market interest rates on the yields earned by the Company on its underlying policies.~~average net price at which such loans were sold.

~~The noted decreases in~~Other non-interest income were partially offset by a $152,000 increase in fees and service charges, including electronic banking fees and charges. The noted increase included an increase in loan-related fees and charges, primarily attributableincreased $415,000 to ~~an increase in loan prepayment penalties, while also reflecting an increase in deposit-related service charges.~~

~~We also recognized net gains totaling $23,000 arising from~~$482,000 for the ~~write down and sale of REO during the three months~~quarter ended December 31, ~~2017 compared to net~~2021. The increase in other non-interest income primarily reflected $356,000 of non-recurring gains ~~totaling $12,000 recognized during the earlier comparative period. Additionally, we previously recognized $21,000 in gain~~ on ~~sale of securities during the three months ended December 31, 2016 for which no such gains were recognized during the three months ended December 31, 2017.~~asset disposals.

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

Non-Interest ~~Expenses~~Expense. ~~Non-interest~~Total non-interest expense ~~increased by $3.4 million~~decreased $840,000 to ~~$22.8~~$29.7 million for the ~~three months~~quarter ended December 31, ~~2017 from $19.4~~2021.

Salaries and employee benefits increased $1.0 million to $18.1 million for quarter ended December 31, 2021. This increase was largely due to the impact of staff additions, annual merit increases and increases in benefit plan expense, including employee medical benefit, post-retirement plan and ESOP expense.

Net occupancy expense of premises increased $36,000 to $3.2 million for the ~~three months~~quarter ended December 31, ~~2016.~~2021. The increase was largely attributable to non-recurring expenses of $187,000 associated with the closure of a leased office facility acquired in ~~non-interest expense partly reflected~~conjunction with the ~~recognition of certain merger-related expenses related to the Company’s proposed acquisition of Clifton. The Company estimates that net income~~MSB acquisition. This increase was ~~adversely impacted by approximately $1.0 million for merger-related expenses recognized during the three months ended December 31, 2017 due to their limited income tax deductibility.~~

The remaining $2.2 million increase in non-interest expense primarily included increases in salary and employee benefits expense, premises occupancy expense, equipment and systems expense, advertising and marketing expense and director compensation expense that were partially offset by a decrease in ~~miscellaneous~~building maintenance expense.

~~Salaries~~Equipment and ~~employee benefits~~systems expense ~~increased by $1.3 million~~decreased $179,000 to ~~$12.9~~$3.7 million for the ~~three months~~quarter ended December 31, ~~2017 from $11.6 million~~2021, largely attributable to cost savings related to the Company's core system contract.

Advertising and marketing expense decreased $65,000 to $448,000 for the ~~three months~~quarter ended December 31, 2016. The increase in salaries and employee benefit expense was partly attributable to an increase in employee stock benefit plan expenses arising from the granting of benefits to employees under the terms of the Company’s 2016 Equity Incentive Plan approved by stockholders in October 2016. The increase also2021. This decrease largely reflected annual increases in non-executive wages and salaries for fiscal 2017 and the cost of staffing additions within certain lending, business development and operational support functions. The noted increase in salaries and employee benefits expense also reflected increases in expenses associated with health insurance and employee retirement plan expenses. These increases were partially offset by decreases in employee incentive and commission compensation expenses between comparative periods.

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

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

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

Debt extinguishment expenses totaled $796,000 for the quarter ended December 31, 2020 for which no such costs were recorded in the current period.

FDIC insurance premiums increased $231,000 to $721,000 for the quarter ended December 31, 2021. The increase ~~in director compensation expense was fully attributable to the additional expense arising from the granting of restricted stock and stock option benefits to directors, as noted above.~~

~~The noted increases in non-interest expense were partially offset by a decrease in miscellaneous expense that~~ was largely attributable to an updated assessment rate from the FDIC based on changes to underlying bank capital ratios.

Director compensation decreased $99,000 to $649,000 for the quarter end December 31, 2021. The decrease in expense primarily reflected a decrease in ~~regulatory oversight and examination~~director stock-based compensation.

Other non-interest expense decreased $983,000 to $2.9 million for the quarter ended December 31, 2021. The decrease in other expense during the quarter was primarily attributable to the ~~Bank’s conversion from a federally-charted stock savings bank~~reversal of provision for credit losses on off-balance sheet credit exposures and decreases in loan expenses. This decrease was also attributable to ~~a nonmember New Jersey state-chartered stock savings bank in June 2017.~~non-recurring asset impairment charges of $347,000, recognized during the prior comparative quarter, related to branch consolidation activity.

Provision for Income Taxes. ~~The provision~~Provision for income taxes increased ~~by $2.1~~$1.2 million to ~~$5.1~~$6.8 million for the ~~three months~~quarter ended December 31, ~~2017~~2021, from ~~$3.0~~$5.6 million for the ~~three months~~quarter ended December 31, ~~2016. As noted earlier, the~~2020.

The increase in income tax expense ~~primarily~~ reflected a higher level of pre-tax net income, as compared to the impact of federal income tax reform that was codified through the passage of the Act on December 22, 2017. The Act permanently reduced the Company’s federal income tax rate from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company. While, collectively, the provisions

~~of the Act are expected to benefit the Company’s future earnings, it resulted~~prior period, resulting in a $3.5 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the three months ended December 31, 2017. The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognizedhigher provision for income tax reporting purposes. That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.

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

~~The remaining variance~~change in income tax expense ~~primarily~~also reflected the ~~impact~~reversal of a valuation allowance totaling $523,000 which was associated with the ~~underlying differences~~realization of a capital loss carryforward recorded in the ~~level of~~prior comparative period for which no such amount was recorded in the ~~taxable portion of pre-tax income between comparative periods.~~current period.

~~Our effective~~Effective tax rates ~~during~~for the ~~three month periods~~quarter ended December 31, ~~2017~~2021 and ~~December 31, 2016~~2020 were ~~80.2%~~26.6% and 35.2%. In relation to statutory income tax rates, the effective tax rate for both periods reflected the effects of recurring sources of tax-favored income included in pre-tax income. However, the24.9%, respectively. The effective tax rate for the ~~three months ended December 31, 2017 further~~prior comparative period reflected the ~~effects~~reversal of ~~federal income tax reform and certain non-deductible merger-related expenses recognized during the period,~~a valuation allowance, as ~~discussed~~noted above.

Comparison of Operating Results for the Six Months ~~Ended~~ended December 31, ~~2017~~2021 and December 31, ~~2016~~2020

~~General~~Net Income. Net income for the six months ended December 31, ~~2017~~2021 was ~~$6.5~~$38.5 million, or ~~$0.08~~$0.53 per diluted ~~share;~~share, compared to $28.3 million, or $0.33 per diluted share for the quarter ended December 31, 2020. The increase in net income reflected an increase in net interest income, a decrease ~~of $3.6~~in the provision for credit losses and a decrease in non-interest expense, partially offset by a decrease in non-interest income and an increase in income tax expense.

Net Interest Income. As noted above, effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Interest income and non-interest income for all periods presented reflect this reclassification.

Net interest income increased by $7.6 million ~~from $10.1~~to $98.3 million ~~or $0.12 per diluted share~~ for the six months ended December 31, 2016. The decrease in net income primarily reflected increases in non-interest expense and income tax expense. These factors were partially offset by increases in net interest income and non-interest income as well as a decrease in the provision2021 compared to $90.7 million for ~~loan losses.~~

~~As discussed in greater detail below, the noted increase in income tax expense primarily reflected the impact of federal income tax reform that was codified during~~ the six months ended December 31, ~~2017 while~~2021. The increase between the ~~noted increase~~comparative periods resulted from a decrease of $15.7 million in ~~non-interest~~interest expense, ~~partly reflected the recognition~~partially offset by a decrease of ~~certain merger-related expenses related to the Company’s proposed acquisition of Clifton during the period.~~

~~Net Interest Income. Net~~$8.1 million in interest income. Included in net interest income, for the six months ended December 31, ~~2017~~2021 and 2020, respectively, was ~~$53.6 million; an increase~~purchase accounting accretion of ~~$4.0~~$5.5 million and $8.7 million and loan prepayment penalty income of $3.2 million and $2.0 million.

Net interest margin increased 27 basis points to 2.98% for the six months ended December 31, 2021, from ~~$49.6~~2.71% for six months ended December 31, 2020 and reflected a decrease in the average cost of interest-bearing liabilities that was partially offset by a decrease in the average yield on interest-earning assets.

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

Provision for Credit Losses. The provision for credit losses decreased $10.5 million to a provision for credit losses reversal of $7.8 million for the six months ended December 31, 2016. The increase in net interest income between the comparative periods resulted from an increase in interest income of $8.5 million that was partially offset by a $4.5 million increase in interest expense. The increase in interest income was attributable to an increase in the average balance of interest-earning assets coupled with an increase in their average yield. The increase in interest expense resulted from an increase in the average balance of interest-bearing liabilities coupled with an increase in their average cost.

~~These factors contributed~~2021, compared to a ~~three basis points increase in our net interest rate spread to 2.13%~~provision for the six months ended December 31, 2017 from 2.10% for the six months ended December 31, 2016. The increase in the net interest rate spread reflected a 17 basis points increase in the average yield on interest-earning assets to 3.39% for the six months ended December 31, 2017 from 3.22% for the six months ended December 31, 2016. For those same comparative periods, the average costcredit losses of interest-bearing liabilities increased by 14 basis points to 1.26% from 1.12%. A discussion of the factors contributing to changes in the average yield and average cost of categories within interest-earning assets and interest-bearing liabilities, respectively, is presented in the separate discussion and analysis of interest income and interest expense below.

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

~~Interest Income. Total interest income increased $8.5 million to $75.6~~$2.7 million for the six months ended December 31, ~~2017 from $67.1 million~~2020. The provision reversal for the six months ended December 31, ~~2016. The increase in interest income partly reflected~~2021 was largely attributable to a ~~$298.1 million increase~~release of reserves, reflecting a continued improvement in the ~~average balance~~Company’s credit risk outlook and a reduction in the expected life of ~~interest-earning assets to $4.46 billion~~various segments of the loan portfolio. By comparison, the provision for the six months ended December 31, ~~2017 from $4.16~~

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

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

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

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

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

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

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

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

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

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

The average yield on debt securities increased by 46 basis points to 2.42% for the six months ended December 31, 2017 from 1.96% for the six months ended December 31, 2016. The increase in the average yield reflected a 57 basis points increase in the yield on taxable securities to 2.51% during the six months ended December 31, 2017 from 1.94% during the six months ended December 31, 2016. The increase in yield on taxable securities2020, was largely attributable to floating rate securities whose interest rates have increased due to recent increases in short-term market interest rates. For those same comparative periods, the yield on tax-exempt securities increased by two basis points to 2.03% from 2.01%.

~~Interest income from other interest-earning assets increased by $344,000 to $1.3~~$5.1 million for the six months ended December 31, 2017 from $1.0 million for the six months ended December 31, 2016 reflecting an increase in their average yield that was partially offset by a decrease in their average balance. The average yield on other interest-earning assets increased by 186 basis points to 3.31% for the six months ended December 31, 2017 from 1.45% for the six months ended December 31, 2016. For those same comparative periods, the average balance of other interest-earning assets decreased by $56.6 million to $81.2 million from $137.8 million. The increase in average yield of other interest earning assets primarily reflected the effects of recent increases in short-term market interest rates on the yield on Company’s short-term liquid assets. The corresponding the decrease in the average balance largely reflected the Company’s efforts to reduce the opportunity cost of maintaining excess liquidity by reinvesting a portion of cash and cash equivalents into the loan portfolio. The effect of these efforts was partially offset by an increase in the average balance of the Bank’s required investment in FHLB stock.

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

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

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

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

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

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

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

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

Regarding the provision on non-impaired loans, the net decrease in the provision expense largely reflected the lower growth in the outstanding balance of loans collectively evaluated for impairment during the six months ended December 31, 2017 compared to the six months ended December 31, 2016. To a lesser extent, the change in the provision on such loans also reflected the comparative effects periodic updates to historical and environmental loss factors between periods.

Additional information regarding the ~~allowance for loan losses~~ACL and the associated provisions recognized during the six months ended December 31, ~~2017~~2021 and 2020 is presented in Note 116 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at December 31, ~~2017~~2021 and June 30, ~~2017.~~2021.

Non-Interest Income. Non-interest income ~~excluding gains and losses on the sale of securities and gains and losses on the sale and write-down of real estate owned, increased by $386,000~~decreased $5.0 million to ~~$6.4 million for the six month period ended December 31, 2017 from $6.1~~$7.9 million for the six months ended December 31, ~~2016. The increase~~2021, primarily due to the $3.1 million bargain purchase gain that was recognized in ~~non-interest income primarily reflected~~the prior comparative period in connection with the acquisition of MSB and a $745,000 increase in fees and service charges, including electronic banking fees and charges. The noted increase included an increase in loan-related fees and charges, primarily attributable to an increase in loan prepayment penalties, while also reflecting an increase in deposit-related service charges.

~~The increase in non-interest income was partially offset by a~~$2.3 million decrease in ~~the~~ gain on sale of loans.

Fees and service charges increased $304,000 to $1.3 million for the six months ended December 31, 2021. The increase primarily reflected increases in loan-related and deposit-related fees and charges.

Gain on sale and call of securities reflected a net gain of $1,000 during the six months ended December 31, 2021 compared to a net gain of $436,000, recorded during the earlier comparative period.

Gain on sale of loans ~~of $228,000.~~decreased $2.3 million to $2.0 million for the six months ended December 31, 2021. The decrease in loan sale gains ~~partly~~largely reflected a decrease in ~~gains associated with residential mortgage loans sold in conjunction with~~ the ~~Company’s mortgage banking strategy coupled with a decrease in SBA loan sale gains between comparative periods. In both cases, such decreases primarily reflected a lower~~ volume of loans originated and sold between comparative ~~periods.~~

~~The decrease in non-interest income also reflected~~periods coupled with a ~~$109,000~~ decrease in the average net price at which such loans were sold.

Other non-interest income ~~recognized on bank-owned life insurance attributable~~increased $543,000 to ~~the continuing effects of lower market interest rates on the yields earned by the Company on its underlying policies.~~

~~We also recognized net losses totaling $86,000 arising from the write down and sale of REO during~~$700,000 for the six months ended December 31, ~~2017 compared~~2021. The increase primarily reflected $44,000 of referral fees related to ~~net losses~~PPP loans, $88,000 of ~~$3,000 recognized during the earlier comparative period. Additionally, we previously recognized $21,000 in gain~~broker fees related to residential mortgage loans and $356,000 of non-recurring gains on ~~sale of securities during the six months ended December 31, 2016 for which no such gains were recognized during the six months ended December 31, 2017.~~asset disposals.

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

Non-Interest ~~Expenses~~Expense. ~~Non-interest~~Total non-interest expense ~~increased by $6.0~~decreased $2.6 million to ~~$44.0~~$61.5 million for the six months ended December 31, ~~2017 from $38.0~~2021.

Salaries and employee benefits increased $2.7 million to $36.7 million for the six months ended December 31, ~~2016. The net~~2021. This increase ~~in non-interest expense partly reflected the recognition of certain merger-related expenses related~~was largely due to the ~~Company’s proposed acquisition~~impact of Clifton. The Company estimates that net income was adversely impacted by approximately $1.0 million for merger-related expenses recognized during the six months ended December 31, 2017 due to their limited income tax deductibility.

~~The remaining $4.8 million increase in non-interest expense primarily included~~staff additions, annual merit increases and increases in ~~salary~~benefit plan expense, including employee medical, post-retirement plan and ~~employee benefits expense, premises~~ESOP expense.

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

~~Salaries and employee benefits expense~~of premises increased ~~by $3.3~~$1.5 million to ~~$25.8~~$7.7 million for the six months ended December 31, ~~2017 from $22.5~~2021. This increase was primarily due to non-recurring expenses of $1.3 million related to the consolidation of three retail branch locations, $250,000 related to facility repairs made in connection with damage incurred during Tropical Storm Ida and $187,000 related to the closure of a leased office facility acquired in conjunction with the MSB acquisition.

Equipment and systems expense increased $76,000 to $7.5 million for the six months ended December 31, 2016. The increase in salaries and employee benefit expense was partly attributable to an increase in employee stock benefit plan expenses arising from the granting of benefits to employees under the terms of the Company’s 2016 Equity Incentive Plan approved by stockholders in October 2016. The increase also reflected annual increases in non-executive wages and salaries for fiscal 2017 and the cost of staffing additions within certain lending, business development and operational support functions. The noted increase in salaries and employee benefits expense also reflected increases in expenses associated with health insurance and employee retirement plan expenses. These increases were partially offset by decreases in employee incentive and commission compensation expenses between comparative periods.

~~The increase in equipment and systems expense was partly~~2021, largely attributable to increases in ~~service provider expenses supporting electronic~~technology expense associated with the Company's ongoing digital banking ~~delivery channels as well as increases in internal information technology infrastructure costs.~~initiatives, partially offset by cost savings related to the Company's core system contract.

~~The increase in advertising~~Advertising and marketing expense decreased $173,000 to $840,000 for the six months ended December 31, 2021. This decrease largely reflected ~~increases~~changes in advertising ~~expenses~~expense across a variety of advertising formats ~~including outdoor and electronic media~~ reflecting normal fluctuations in the timing of certain ~~advertising~~ campaigns supporting ~~the Company’s~~our loan and deposit growth initiatives.

~~The increase in director compensation expense was fully attributable~~FDIC insurance premiums increased $251,000 to ~~the additional expense arising from the granting of restricted stock and stock option benefits to directors, as noted above.~~

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

~~Provision for Income Taxes. The provision for income taxes increased by $2.7 million to $7.9~~$1.2 million for the six months ended December 31, ~~2017~~2021. The increase was largely attributable to an updated assessment rate from ~~$5.2~~the FDIC based on changes to underlying bank capital ratios.

Merger-related expenses, associated with the Company’s acquisition of MSB, totaled $4.3 million for the six months ended December 31, 2016. As noted earlier, increase in income tax expense primarily reflected the impact of federal income tax reform that was codified through the passage of the Act on December 22, 2017. The Act permanently reduced the Company’s federal income tax rate from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company. While, collectively, the provisions of the Act are expected to benefit the Company’s future earnings, it resulted in a $3.5 million net reduction2020 for which no such costs were recorded in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the six months ended December 31, 2017. The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognized for income tax reporting purposes. That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.current period.

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

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

Our effective tax rates during the six month periods ended December 31, 2017 and December 31, 2016 were 54.8% and 33.8%. In relation to statutory income tax rates, the effective tax rate for both periods reflected the effects of recurring sources of tax-favored income included in pre-tax income. However, the effective tax rateDebt extinguishment expenses totaled $796,000 for the six months ended December 31, ~~2017 further~~2020 for which no such costs were recorded in the current period.

Other non-interest expense decreased $1.7 million to $6.0 million for the six months ended December 31, 2021. The decrease in other expense during the period was primarily attributable to the reversal of provision for credit losses on off-balance sheet credit exposures and decreases in loan expenses.

Provision for Income Taxes. Provision for income taxes increased $5.6 million to $14.1 million for the six months ended December 31, 2021, from $8.5 million for the six months ended December 31, 2020.

The increase in income tax expense reflected a higher level of pre-tax net income, as compared to the prior period, resulting in a higher provision for income tax expense. The increase also reflected the effects of ~~federal~~various non-recurring items recorded in conjunction with the Company’s acquisition of MSB, recorded in the prior comparative period, including non-deductible merger related expenses, which were partially offset by a non-taxable bargain purchase gain. The change in income tax ~~reform~~expense also reflected the reversal of a valuation allowance totaling $523,000 which was associated with the realization of a capital loss carryforward recorded in the prior comparative period for which no such amount was recorded in the current period.

Effective tax rates for the six months ended December 31, 2021 and ~~certain non-deductible merger-related expenses recognized during~~2020 were 26.8% and 23.1%, respectively. The effective tax rate for the prior comparative period reflected the effects of various non-recurring items recorded in conjunction with the Company’s acquisition of MSB and reversal of a valuation allowance, as ~~discussed~~noted above.

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

The Bank is required to have enough investments that qualify as liquid assets in order to maintain sufficient liquidity to ensure a safe operation. The balance of our cash and cash equivalents decreased by $27.6 million to $50.7 million atAt December 31, ~~2017 from $78.2~~2021, liquidity included $60.5 million ~~at June 30, 2017. The decrease in the balance~~ of ~~cash and cash equivalents largely reflected the Company’s ongoing effort to enhance earnings by generally reducing the level of lower-yielding,~~ short-term liquid assets to only the amount needed to fund the Company’s strategic initiatives while meeting its operational and risk management objectives. Toward that end, the Company’s average balance of cash and equivalents ~~declined to $61.5 million for the six months ended December 31, 2017 compared to their average balance of $100.3 million for the prior fiscal year ended June 30, 2017.~~

~~Investments that formally qualify as liquid assets are~~ supplemented by ~~our portfolio~~$1.59 billion of investment securities classified as available for ~~sale whose balances at~~sale. In addition, as of December 31, ~~2017 included $151.7~~2021, the Company had the capacity to borrow additional funds totaling $2.24 billion and $301.2 million from the FHLB of New York and FRB, respectively, without pledging additional collateral. As of that same date, the Company also had access to unsecured overnight borrowings with other financial institutions totaling $890.0 million of ~~mortgage-backed securities and $486.0~~which $20.0 million ~~of debt securities that can readily be sold if necessary.~~was outstanding.

At December 31, ~~2017,~~2021, the Company had outstanding commitments to originate and purchase loans ~~held in portfolio~~ totaling approximately ~~$64.0~~$177.1 million while such commitments totaled ~~$95.2~~$192.8 million at June 30, ~~2017.~~2021. As of those same dates, the Company’s pipeline of loans held for sale included ~~$15.8~~$19.6 million and ~~$18.4~~$48.4 million, respectively, of ~~“in process”~~ loans ~~respectively,~~in process whose terms included interest rate locks to borrowers that were paired with a ~~“non-binding”~~non-binding, best-efforts commitment to sell the loan to a buyer at a fixed price and within a predetermined timeframe after the sale commitment is established.

Construction loans in process and unused lines of credit were ~~$16.4~~$98.5 million and ~~$60.6~~$154.5 million, respectively, at December 31, ~~2017~~2021 compared to ~~$8.1~~$138.3 million and ~~$60.7~~$181.1 million, respectively, at June 30, ~~2017.~~2021. The Company is also subject to the contingent liabilities resulting from letters of credit whose outstanding balances totaled ~~$1.1 million~~$180,000 and ~~$715,000~~$739,000, at December 31, ~~2017~~2021 and June 30, ~~2017,~~2021, respectively.

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

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

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

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

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

The following table sets forth the Bank’s capital position at December 31, ~~2017~~2021 and June 30, ~~2017,~~2021, as compared to the minimum regulatory capital requirements that were in effect as of those dates:

The following table sets forth the Company’s capital position at December 31, ~~2017~~2021 and June 30, ~~2017,~~2021, as compared to the minimum regulatory capital requirements that were in effect as of those dates:

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). The Company has adopted the capital transition relief over the permissible five-year period.

~~We are a party to financial instruments with off-balance-sheet risk in~~In the normal course of our business of investing in loans and securities ~~as well as in the normal course of maintaining and improving Kearny Bank’s facilities.~~we are a party to financial instruments with off-balance-sheet risk. These financial instruments include significant purchase commitments, such as commitments related to capital expenditure plans and commitments to ~~purchase securities or mortgage-backed securities and commitments to~~ extend credit to meet the financing needs of our customers. ~~At December 31, 2017, we~~We had no significant off-balance sheet commitments ~~to purchase securities or~~ for capital ~~expenditures.~~expenditures as of December 31, 2021.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

As illustrated in the tables below, our EVE would be negatively impacted by an increase in interest rates. This result is expected given our liability sensitivity noted earlier. Specifically, based upon the comparatively shorter maturity and/or re-pricing characteristics of our interest-bearing liabilities compared with that of our interest-earning assets, an upward movement in interest rates would have a disproportionately adverse impact on the present value of our assets compared to the beneficial impact arising from the reduced present value of our liabilities. Hence, our EVE and EVE ratio decline in the increasing interest rate scenarios. The relatively low level of interest rates prevalent at December 31, ~~2017~~2021 and June 30, ~~2017~~2021 precluded the modeling of ~~most decreasing~~certain falling rate ~~scenarios as parallel downward shifts in the yield curve would have resulted in negative interest rates for many points along that curve as of those analysis dates.~~scenarios.

The following tables present the results of our internal EVE analysis as of December 31, ~~2017~~2021 and June 30, ~~2017, respectively.~~2021, respectively:

As seen in the table above, the dollar amount of EVE and the EVE ratio have declined between comparative periods across most scenarios modeled while the sensitivity of those measures to movements in interest rates remained generally stable between comparative periods. The decrease in the EVE ratios across all rate scenarios largely reflected the overall decrease in stockholders’ equity arising from the Company’s repurchase of its shares of common stock during the six months ended December 31, 2017. - 55 -

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

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

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

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

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

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

The following tables present the results of our internal NII analysis as of December 31, ~~2017~~2021 and June 30, ~~2017, respectively.~~2021, respectively:

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

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

During the quarter ended December 31, ~~2017,~~2021, 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.

At December 31, ~~2017,~~2021, 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.

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, 2021, previously filed with the Securities and Exchange Commission.

The following table reports information regarding repurchases of the Company’s common stock during the quarter ended December 31, ~~2017.~~2021:

On September 22, 2021, the Company announced the authorization of a new stock repurchase plan to repurchase up to 7,602,021 shares, or 10% of the shares then outstanding. This current plan has no expiration date.

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.


Maryland		30-0870244
(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)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	KRNY	The NASDAQ Stock Market LLC


		Page Number
PART I—FINANCIAL INFORMATION

Item 1:	Financial Statements

	Consolidated Statements of Financial Condition at December 31, ~~2017~~2021 (Unaudited) and June 30, ~~2017~~2021	1

	Consolidated Statements of Income for the ~~Three~~Quarter and Six Months ~~Ended~~ended December 31, ~~2017~~2021 and December 31, ~~2016~~2020 (Unaudited)	2

	Consolidated Statements of Comprehensive Income for the ~~Three~~Quarter and Six Months ~~Ended~~ended December 31, ~~2017~~2021 and December 31, ~~2016~~2020 (Unaudited)	4

	Consolidated Statements of Changes in Stockholders’ Equity for the Quarter and Six Months Ended December 31, ~~2017~~2021 and December 31, ~~2016~~2020 (Unaudited)	5

	Consolidated Statements of Cash Flows for the Six Months ~~Ended~~ended December 31, ~~2017~~2021 and December 31, ~~2016~~2020 (Unaudited)	7

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4842

Item 3:	Quantitative and Qualitative Disclosure About Market Risk	6555

Item 4:	Controls and Procedures	7157

PART II—OTHER INFORMATION

Item 1:	Legal Proceedings	7258

Item 1A:	Risk Factors	7258

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	7258

Item 3:	Defaults Upon Senior Securities	7258

Item 4:	Mine Safety Disclosures	7258

Item 5:	Other Information	7258

Item 6:	Exhibits	7359

SIGNATURES		7460


	December 31,			June 30,			December 31,			June 30,
	2017			2017			2021			2021
	(Unaudited)						(Unaudited)
Assets
Cash and amounts due from depository institutions	$	17,899		$	18,889		$	19,909		$	21,463
Interest-bearing deposits in other banks		32,786			59,348			40,543			46,392
Cash and cash equivalents		50,685			78,237			60,452			67,855
Debt securities available for sale, at fair value		485,954			444,497
Mortgage-backed securities available for sale, at fair value		151,717			169,263
Securities available for sale		637,671			613,760
Debt securities held to maturity (fair value $125,882 and $145,505)		125,671			144,713
Mortgage-backed securities held to maturity (fair value $344,649 and $350,289)		345,781			348,608
Securities held to maturity		471,452			493,321
Investment securities available for sale (amortized cost $1,595,802 and $1,666,853, respectively), net of allowance for credit losses of $0 at December 31, 2021 and June 30, 2021								1,591,066			1,676,864
Investment securities held to maturity (fair value $54,056 and $39,610, respectively), net of allowance for credit losses of $0 at December 31, 2021 and June 30, 2021								53,142			38,138
Loans held-for-sale		3,490			4,692			12,549			16,492
Loans receivable, including unamortized yield adjustments of $1,999 and $2,808		3,291,516			3,245,261
Less allowance for loan losses		(30,066	)		(29,286	)
Loans receivable								4,826,404			4,851,394
Less: allowance for credit losses on loans								(48,216	)		(58,165	)
Net loans receivable		3,261,450			3,215,975			4,778,188			4,793,229
Premises and equipment		41,829			39,585			54,067			56,338
Federal Home Loan Bank of New York ("FHLB") stock		39,113			39,958
Federal Home Loan Bank ("FHLB") of New York stock								36,622			36,615
Accrued interest receivable		13,524			12,493			18,495			19,362
Goodwill		108,591			108,591			210,895			210,895
Core deposit intangibles								3,344			3,705
Bank owned life insurance		183,754			181,223			286,433			283,310
Deferred income tax assets, net		6,941			15,454			25,709			29,323
Other real estate owned								658			178
Other assets		25,347			14,838			54,603			51,431
Total Assets	$	4,843,847		$	4,818,127		$	7,186,223		$	7,283,735

Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest-bearing	$	275,065		$	267,412		$	604,805		$	593,718
Interest-bearing		2,758,701			2,662,715			4,849,220			4,891,588
Total deposits		3,033,766			2,930,127			5,454,025			5,485,306
Borrowings		798,864			806,228			686,105			685,876
Advance payments by borrowers for taxes		8,511			8,711			16,772			15,752
Other liabilities		13,433			15,880			33,851			53,857
Total Liabilities		3,854,574			3,760,946			6,190,753			6,240,791

Stockholders' Equity
Preferred stock, $1.00 par value, 100,000,000 shares authorized; none issued and outstanding		-			-
Common stock, $0.01 par value; 800,000,000 shares authorized; 79,526,660 shares and 84,350,848 shares issued and outstanding, respectively		795			844
Preferred stock, $0.01 par value, 100,000,000 shares authorized; NaN issued and outstanding								0			0
Common stock, $0.01 par value; 800,000,000 shares authorized; 73,453,230 shares and 78,964,859 shares issued and outstanding, respectively								735			790
Paid-in capital		662,093			728,790			587,392			654,396
Retained earnings		353,536			361,039			431,549			408,367
Unearned employee stock ownership plan shares; 3,462,033 shares and 3,562,382 shares, respectively		(33,563	)		(34,536	)
Accumulated other comprehensive income, net		6,412			1,044
Unearned employee stock ownership plan shares; 2,659,244 shares and 2,759,594 shares, respectively								(25,780	)		(26,753	)
Accumulated other comprehensive income								1,574			6,144
Total Stockholders' Equity		989,273			1,057,181			995,470			1,042,944
Total Liabilities and Stockholders' Equity	$	4,843,847		$	4,818,127		$	7,186,223		$	7,283,735

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2017			2016	2017				2016
Interest Income
Loans	$	30,610	$	27,407	$	61,083		$	53,104
Mortgage-backed securities		2,848		3,779		5,744			7,716
Debt securities:
Taxable		3,229		2,146		6,189			4,186
Tax-exempt		641		562		1,262			1,113
Other interest-earning assets		704		421		1,346			1,002
Total Interest Income		38,032		34,315		75,624			67,121

Interest Expense
Deposits		6,649		5,410		12,868			10,771
Borrowings		4,548		3,289		9,111			6,713
Total Interest Expense		11,197		8,699		21,979			17,484
Net Interest Income		26,835		25,616		53,645			49,637
Provision for Loan Losses		936		1,255		1,566			2,384
Net Interest Income after Provision for Loan Losses		25,899		24,361		52,079			47,253

Non-Interest Income
Fees and service charges		1,409		1,289		2,670			1,952
Gain on sale and call of securities		-		21		-			21
Gain on sale of loans		200		459		531			759
Gain (loss) on sale and write down of real estate owned		23		12		(86	)		(3	)
Income from bank owned life insurance		1,264		1,321		2,531			2,640
Electronic banking fees and charges		302		270		580			553
Miscellaneous		65		74		131			153
Total Non-Interest Income		3,263		3,446		6,357			6,075

Non-Interest Expense
Salaries and employee benefits		12,926		11,592		25,793			22,501
Net occupancy expense of premises		2,122		1,976		4,103			3,917
Equipment and systems		2,193		2,030		4,383			4,078
Advertising and marketing		748		387		1,458			936
Federal deposit insurance premium		343		339		703			644
Directors' compensation		688		379		1,377			604
Merger-related expenses		1,193		-		1,193			-
Miscellaneous		2,551		2,670		5,040			5,353
Total Non-Interest Expense		22,764		19,373		44,050			38,033
Income before Income Taxes		6,398		8,434		14,386			15,295
Income taxes		5,129		2,970		7,885			5,164
Net Income	$	1,269	$	5,464	$	6,501		$	10,131


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


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


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

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

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

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

	Three Months Ended December 31,
	2017		2016
	(In Thousands)
Beginning balance	$	206	$	314
Accretion to interest income		-		(2	)
Disposals		-		-
Reclassifications from nonaccretable difference		-		-
Ending balance	$	206	$	312

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

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

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

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

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

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

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

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

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

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

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

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

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

Allowance for Loan Losses and Loans Receivable
At June 30, 2017

	Residential Mortgage		Multi-Family Mortgage		Non- Residential Mortgage		Construction		Commercial Business		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Balance of allowance for loan losses:

Loans acquired with deteriorated credit quality	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Loans individually evaluated for impairment		154		-		39		-		6		-		-		199
Loans collectively evaluated for impairment		2,230		13,941		9,900		35		1,703		501		777		29,087

Total allowance for loan losses	$	2,384	$	13,941	$	9,939	$	35	$	1,709	$	501	$	777	$	29,286

Performance Status of Loans Receivable
At December 31, 2017

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

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

Impairment Status of Loans Receivable
At December 31, 2017

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

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

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

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

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

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

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

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

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

	December 31, 2017					June 30, 2017
	Balance		Weighted Average Interest Rate			Balance		Weighted Average Interest Rate
	(Dollars in Thousands)
Maturing in years ending June 30:
2018		630,225		1.60			630,225		1.29
2021		415		4.94			469		4.94
2023		145,000		3.04			145,000		3.04
Total advances		775,640		1.87	%		775,694		1.62	%
Unamortized fair value adjustments		9					2
Total advances, net of fair value adjustments	$	775,649				$	775,696

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

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

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

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


	December 31, 2021
	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	$	60,452	$	60,452	$	60,452	$	-	$	-
Investment securities available for sale		1,591,066		1,591,066		-		1,591,066		-
Investment securities held to maturity		53,142		54,056		-		54,056		-
Loans held-for-sale		12,549		12,732		-		12,732		-
Net loans receivable		4,778,188		4,785,409		-		-		4,785,409
FHLB Stock		36,622		-		-		-		-
Interest receivable		18,495		18,495		0		4,331		14,164
Interest rate contracts		9,622		9,622		-		9,622		-

Financial liabilities:
Deposits		5,454,025		5,453,304		3,799,238		-		1,654,066
Borrowings		686,105		687,555		-		-		687,555
Interest payable on deposits		152		152		89		-		63
Interest payable on borrowings		1,379		1,379		-		-		1,379
Interest rate contracts		210		210		-		210		-


	December 31,			June 30,			Increase/
	2021			2021			(Decrease)
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	2,007,431		$	2,039,260		$	(31,829	)
Nonresidential mortgage		1,026,447			1,079,444			(52,997	)
Commercial business		180,429			168,951			11,478
Construction		110,703			93,804			16,899
Total commercial loans		3,325,010			3,381,459			(56,449	)

One- to four-family residential mortgage		1,477,267			1,447,721			29,546

Consumer loans:
Home equity loans		43,934			47,871			(3,937	)
Other consumer		3,040			3,259			(219	)
Total consumer		46,974			51,130			(4,156	)

Total loans		4,849,251			4,880,310			(31,059	)

Unaccreted yield adjustments		(22,847	)		(28,916	)		6,069
Allowance for credit losses		(48,216	)		(58,165	)		9,949

Net loans receivable	$	4,778,188		$	4,793,229		$	(15,041	)


	For the Quarter Ended December 31,
	2021								2020
	Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable (1)	$	4,822,959		$	47,575		3.95	%	$	4,871,268		$	50,806		4.17	%
Taxable investment securities (2)		1,610,395			7,595		1.89			1,544,095			7,707		2.00
Tax-exempt securities (2)		57,686			327		2.26			79,044			433		2.19
Other interest-earning assets (3)		77,811			415		2.13			266,114			787		1.18
Total interest-earning assets		6,568,851			55,912		3.40			6,760,521			59,733		3.53
Non-interest-earning assets		611,390								632,084
Total assets	$	7,180,241							$	7,392,605

Interest-bearing liabilities:
Interest-bearing demand	$	2,027,021		$	1,134		0.22		$	1,683,222		$	1,987		0.47
Savings		1,086,903			288		0.11			1,058,675			872		0.33
Certificates of deposit		1,693,423			2,241		0.53			1,899,406			5,788		1.22
Total interest-bearing deposits		4,807,347			3,663		0.30			4,641,303			8,647		0.75
Borrowings		692,062			3,562		2.06			1,057,958			5,193		1.96
Total interest-bearing liabilities		5,499,409			7,225		0.53			5,699,261			13,840		0.97
Non-interest-bearing liabilities (4)		675,070								576,162
Total liabilities		6,174,479								6,275,423
Stockholders' equity		1,005,762								1,117,182
Total liabilities and stockholders' equity	$	7,180,241							$	7,392,605

Net interest income				$	48,687							$	45,893
Interest rate spread (5)							2.87	%							2.56	%
Net interest margin (6)							2.96	%							2.72	%
Ratio of interest-earning assets to interest-bearing liabilities		1.19	X							1.19	X


	For the Six Months Ended December 31,
	2021								2020
	Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable (1)	$	4,829,318		$	95,805		3.97	%	$	4,914,780		$	103,617		4.22	%
Taxable investment securities (2)		1,630,174			15,807		1.94			1,447,303			15,043		2.08
Tax-exempt securities (2)		58,400			660		2.26			80,824			887		2.19
Other interest-earning assets (3)		81,780			846		2.07			256,828			1,701		1.32
Total interest-earning assets		6,599,672			113,118		3.43			6,699,735			121,248		3.62
Non-interest-earning assets		614,062								628,168
Total assets	$	7,213,734							$	7,327,903

Interest-bearing liabilities:
Interest-bearing demand	$	1,990,646		$	2,280		0.23		$	1,573,730		$	4,169		0.53
Savings		1,094,884			622		0.11			1,032,375			2,317		0.45
Certificates of deposit		1,745,948			4,826		0.55			1,944,047			13,223		1.36
Total interest-bearing deposits		4,831,478			7,728		0.32			4,550,152			19,709		0.87
Borrowings		693,255			7,113		2.05			1,096,181			10,853		1.98
Total interest-bearing liabilities		5,524,733			14,841		0.54			5,646,333			30,562		1.08
Non-interest-bearing liabilities (4)		671,116								567,462
Total liabilities		6,195,849								6,213,795
Stockholders' equity		1,017,885								1,114,108
Total liabilities and stockholders' equity	$	7,213,734							$	7,327,903

Net interest income				$	98,277							$	90,686
Interest rate spread (5)							2.89	%							2.54	%
Net interest margin (6)							2.98	%							2.71	%
Ratio of interest-earning assets to interest-bearing liabilities		1.19	X							1.19	X


	At December 31, 2017															At December 31, 2021
	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions					Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)															(Dollars in Thousands)
Total capital (to risk-weighted assets)	$	766,693		23.83	%	$	257,430		8.00	%	$	321,788		10.00	%	$	667,328		14.88	%	$	358,891		8.00	%	$	448,614		10.00	%
Tier 1 capital (to risk-weighted assets)		736,627		22.89	%		193,073		6.00	%		257,430		8.00	%		637,487		14.21	%		269,168		6.00	%		358,891		8.00	%
Common equity tier 1 capital (to risk-weighted assets)		736,627		22.89	%		144,805		4.50	%		209,162		6.50	%		637,487		14.21	%		201,876		4.50	%		291,599		6.50	%
Tier 1 capital (to adjusted total assets)		736,627		15.68	%		187,961		4.00	%		234,952		5.00	%		637,487		9.15	%		278,563		4.00	%		348,204		5.00	%


	December 31, 2017																December 31, 2021
	Economic Value of Equity ("EVE")									EVE as a % of Present Value of Assets							Economic Value of Equity ("EVE")									EVE as a % of Present Value of Assets
Change in Interest Rates	$ Amount of EVE		$ Change in EVE			% Change in EVE				EVE Ratio			Change in EVE Ratio				$ Amount of EVE		$ Change in EVE			% Change in EVE				EVE Ratio			Change in EVE Ratio
	(Dollars in Thousands)																(Dollars in Thousands)
+300 bps		804,455		(152,204	)		(16	)	%		18.50	%		(193	)	bps		1,114,584		(87,695	)		(7.29	)	%		17.20	%		4		bps
+200 bps		861,427		(95,232	)		(10	)	%		19.32	%		(111	)	bps		1,153,298		(48,981	)		(4.07	)	%		17.33	%		17		bps
+100 bps		914,127		(42,532	)		(4	)	%		19.99	%		(44	)	bps		1,198,856		(3,423	)		(0.28	)	%		17.51	%		35		bps
0 bps		956,659	-			-					20.43	%	-					1,202,279	-			-					17.16	%		-
-100 bps		982,389		25,730			3		%		20.53	%		10		bps		1,105,647		(96,632	)		(8.04	)	%		15.52	%		(164	)	bps


			December 31, 2017											December 31, 2021
			Net Interest Income ("NII")											Net Interest Income ("NII")
Change in Interest Rates	Balance Sheet Composition	Measurement Period	$ Amount of NII		$ Change in NII			% Change in NII				Balance Sheet Composition	Measurement Period	$ Amount of NII		$ Change in NII			% Change in NII
			(Dollars In Thousands)											(Dollars In Thousands)
+300 bps	Static	One Year	$	107,752	$	(1,920	)		(1.75	)	%	Static	One Year	$	177,165	$	(14,457	)		(7.54	)	%
+200 bps	Static	One Year		109,833		161			0.15			Static	One Year		183,325		(8,297	)		(4.33	)
+100 bps	Static	One Year		110,242		570			0.52			Static	One Year		188,938		(2,684	)		(1.40	)
0 bps	Static	One Year		109,672		-			-			Static	One Year		191,622		-			-
-100 bps	Static	One Year		107,695		(1,977	)		(1.80	)		Static	One Year		180,969		(10,653	)		(5.56	)

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1-31, 2017		530,000	$	15.39		530,000		3,986,084
November 1-30, 2017		579,663	$	14.50		579,663		3,406,421
December 1-31, 2017		834,177	$	14.70		834,177		2,572,244

Total		1,943,840	$	14.83		1,943,840		2,572,244


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

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


	KEARNY FINANCIAL CORP.

Date: February 8, ~~2018~~2022	By:	/s/ Craig L. Montanaro
		Craig L. Montanaro
		President and Chief Executive Officer
		~~(Duly authorized officer and principal executive officer)~~ (Principal Executive Officer)

Date: February 8, ~~2018~~2022	By:	/s/ ~~Eric B. Heyer~~Keith Suchodolski
		~~Eric B. Heyer~~ Keith Suchodolski
		Executive Vice President and Chief Financial Officer
		~~Chief~~ (Principal Financial ~~Officer~~
		~~(Principal financial~~ and ~~accounting officer)~~Accounting Officer)