0001617242 us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember krny:MiscellaneousNonInterestExpenseMember 2021-01-01 2021-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~December~~March 31, ~~2017~~2021


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

For the transition period from to

Commission File Number 001-37399

KEARNY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

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)

Registrant’s telephone number, including area code

973-244-4500

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ 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.

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ 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.~~May 4, 2021.

$0.01 par value common stock — ~~78,843,460~~80,792,973 shares outstanding

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

INDEX

		Page Number
PART I—FINANCIAL INFORMATION

Item 1:	Financial Statements

	Consolidated Statements of Financial Condition at ~~December~~March 31, ~~2017~~2021 (Unaudited) and June 30, ~~2017~~2020	1

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

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

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

	Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~December~~March 31, ~~2017~~2021 and ~~December~~March 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	48

Item 3:	Quantitative and Qualitative Disclosure About Market Risk	6564

Item 4:	Controls and Procedures	7166

PART II—OTHER INFORMATION

Item 1:	Legal Proceedings	7267

Item 1A:	Risk Factors	7267

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	7267

Item 3:	Defaults Upon Senior Securities	7267

Item 4:	Mine Safety Disclosures	7267

Item 5:	Other Information	7267

Item 6:	Exhibits	7368

SIGNATURES		7469

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands, Except Share and Per Share Data)

	December 31,			June 30,			March 31,			June 30,
	2017			2017			2021			2020
	(Unaudited)						(Unaudited)
Assets
Cash and amounts due from depository institutions	$	17,899		$	18,889		$	20,502		$	20,391
Interest-bearing deposits in other banks		32,786			59,348			88,489			160,576
Cash and cash equivalents		50,685			78,237			108,991			180,967
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, at fair value (amortized cost $1,777,316), net of allowance for credit losses of $0 at March 31, 2021								1,778,970			1,385,703
Investment securities held to maturity (fair value $28,408 and $34,069), respectively, net of allowance for credit losses of $0 at March 31, 2021								27,168			32,556
Loans held-for-sale		3,490			4,692			5,172			20,789
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								4,798,239			4,498,397
Less: allowance for credit losses on loans								(63,762	)		(37,327	)
Net loans receivable		3,261,450			3,215,975			4,734,477			4,461,070
Premises and equipment		41,829			39,585			60,360			57,389
Federal Home Loan Bank of New York ("FHLB") stock		39,113			39,958
Federal Home Loan Bank ("FHLB") of New York stock								45,578			58,654
Accrued interest receivable		13,524			12,493			20,562			17,373
Goodwill		108,591			108,591			210,895			210,895
Core deposit intangibles								3,888			3,995
Bank owned life insurance		183,754			181,223			281,765			262,380
Deferred income tax assets, net		6,941			15,454			32,230			25,480
Other real estate owned								178			178
Other assets		25,347			14,838			47,760			40,746
Total Assets	$	4,843,847		$	4,818,127		$	7,357,994		$	6,758,175

Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest-bearing	$	275,065		$	267,412		$	545,746		$	419,138
Interest-bearing		2,758,701			2,662,715			4,828,706			4,011,144
Total deposits		3,033,766			2,930,127			5,374,452			4,430,282
Borrowings		798,864			806,228			865,763			1,173,165
Advance payments by borrowers for taxes		8,511			8,711			15,300			16,569
Other liabilities		13,433			15,880			38,667			53,982
Total Liabilities		3,854,574			3,760,946			6,294,182			5,673,998

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; 0ne issued and outstanding								-			-
Common stock, $0.01 par value; 800,000,000 shares authorized; 81,942,973 shares and 83,663,192 shares issued and outstanding, respectively								820			837
Paid-in capital		662,093			728,790			691,280			722,871
Retained earnings		353,536			361,039			397,594			387,911
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; 2,809,766 shares and 2,960,289 shares, respectively								(27,239	)		(28,699	)
Accumulated other comprehensive income								1,357			1,257
Total Stockholders' Equity		989,273			1,057,181			1,063,812			1,084,177
Total Liabilities and Stockholders' Equity	$	4,843,847		$	4,818,127		$	7,357,994		$	6,758,175

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

- 1 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Data)

(Unaudited)

	Three Months Ended				Six Months Ended						Three Months Ended				Nine Months Ended
	December 31,				December 31,						March 31,				March 31,
	2017			2016	2017				2016		2021		2020		2021		2020
Interest Income
Loans	$	30,610	$	27,407	$	61,083		$	53,104		$	49,307	$	46,603	$	150,953	$	140,811
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
Taxable investment securities												7,891		10,526		22,934		29,552
Tax-exempt investment securities												410		547		1,297		1,906
Other interest-earning assets		704		421		1,346			1,002			705		1,100		2,406		3,588
Total Interest Income		38,032		34,315		75,624			67,121			58,313		58,776		177,590		175,857

Interest Expense
Deposits		6,649		5,410		12,868			10,771			6,670		14,768		26,379		46,413
Borrowings		4,548		3,289		9,111			6,713			4,012		6,398		14,865		20,540
Total Interest Expense		11,197		8,699		21,979			17,484			10,682		21,166		41,244		66,953
Net Interest Income		26,835		25,616		53,645			49,637			47,631		37,610		136,346		108,904
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
Provision for credit losses												1,126		6,270		3,820		4,023
Net Interest Income after Provision for Credit Losses												46,505		31,340		132,526		104,881

Non-Interest Income
Fees and service charges		1,409		1,289		2,670			1,952			1,325		1,338		4,297		4,951
Gain on sale and call of securities		-		21		-			21			18		2,234		454		2,231
Gain on sale of loans		200		459		531			759			943		565		5,211		1,838
Gain (loss) on sale and write down of real estate owned		23		12		(86	)		(3	)
Loss on sale and write down of other real estate owned												-		-		-		(28	)
Income from bank owned life insurance		1,264		1,321		2,531			2,640			1,530		1,532		4,722		4,688
Electronic banking fees and charges		302		270		580			553			456		309		1,265		920
Miscellaneous		65		74		131			153
Bargain purchase gain												-		-		3,053		-
Other income												1,194		223		1,351		117
Total Non-Interest Income		3,263		3,446		6,357			6,075			5,466		6,201		20,353		14,717

Non-Interest Expense
Salaries and employee benefits		12,926		11,592		25,793			22,501			16,965		15,537		51,023		46,488
Net occupancy expense of premises		2,122		1,976		4,103			3,917			3,433		2,685		9,675		8,736
Equipment and systems		2,193		2,030		4,383			4,078			3,823		2,672		11,295		8,807
Advertising and marketing		748		387		1,458			936			567		612		1,580		2,037
Federal deposit insurance premium		343		339		703			644			488		-		1,450		-
Directors' compensation		688		379		1,377			604			748		771		2,244		2,310
Merger-related expenses		1,193		-		1,193			-			-		285		4,349		504
Miscellaneous		2,551		2,670		5,040			5,353
Debt extinguishment expenses												-		2,156		796		2,156
Other expense												3,792		3,344		11,487		9,695
Total Non-Interest Expense		22,764		19,373		44,050			38,033			29,816		28,062		93,899		80,733
Income before Income Taxes		6,398		8,434		14,386			15,295			22,155		9,479		58,980		38,865
Income taxes		5,129		2,970		7,885			5,164
Income tax expense												5,732		225		14,230		7,589
Net Income	$	1,269	$	5,464	$	6,501		$	10,131		$	16,423	$	9,254	$	44,750	$	31,276

See notes to unaudited consolidated financial statements.

- 2 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Continued)

(In Thousands, Except Per Share Data)

(Unaudited)

	Three Months Ended				Six Months Ended				Three Months Ended				Nine Months Ended
	December 31,				December 31,				March 31,				March 31,
	2017			2016	2017			2016	2021		2020		2021		2020
Net Income per Common Share (EPS)
Basic	$	0.02	$	0.06	$	0.08	$	0.12	$	0.20	$	0.11	$	0.53	$	0.38
Diluted	$	0.02	$	0.06	$	0.08	$	0.12	$	0.20	$	0.11	$	0.53	$	0.38
Weighted Average Number of Common Shares Outstanding
Basic		77,174		85,174		78,411		85,710		80,673		81,339		83,958		82,981
Diluted		77,239		85,258		78,474		85,782		80,690		81,358		83,961		83,016

Dividends Declared Per Common Share	$	0.03	$	0.02	$	0.18	$	0.04

See notes to unaudited consolidated financial statements.

- 3 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands, Unaudited)

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

Net Income
$
1,269

$
5,464

$
6,501

$
10,131

Other Comprehensive Income, net of tax:

Net unrealized loss on securities available
for sale

(1,208
)

(5,314
)

(60
)

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

44

(25
)

61

(21
)
Net realized gain on securities available for sale

-

6

-

6

Fair value adjustments on derivatives

4,429

14,051

5,403

17,212

Benefit plan adjustments

7

10

(36
)

(214
)
Total Other Comprehensive Income

3,272

8,728

5,368

12,742

Total Comprehensive Income
$
4,541

$
14,192

$
11,869

$
22,873

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2021			2020			2021			2020
Net Income	$	16,423		$	9,254		$	44,750		$	31,276
Other Comprehensive (Loss) Income, net of tax:
Net unrealized (loss) gain on securities available for sale		(15,671	)		2,705			(14,379	)		7,968
Amortization of net unrealized loss on securities available for sale transferred to held to maturity		-			-			-			421
Net realized gain on sale and call of securities available for sale		(13	)		(1,575	)		(319	)		(1,574	)
Fair value adjustments on derivatives		10,574			(13,213	)		14,750			(14,120	)
Benefit plan adjustments		14			3			48			341
Total Other Comprehensive (Loss) Income		(5,096	)		(12,080	)		100			(6,964	)
Total Comprehensive Income (Loss)	$	11,327		$	(2,826	)	$	44,850		$	24,312

See notes to unaudited consolidated financial statements.

- 4 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~Six Months Ended December 31, 2016~~

(In Thousands, Except Share and Per Share Data, Unaudited)

Common Stock

Paid-In

Retained

Unearned
ESOP

Accumulated
Other
Comprehensive

Shares

Amount

Capital

Earnings

Shares

Loss

Total

Balance - June 30, 2016

91,822

$
918

$
849,173

$
350,806

$
(36,481
)

$
(16,787
)

$
1,147,629

Net income

-

-

-

10,131

-

-

10,131

Other comprehensive income, net
  of income tax expense

-

-

-

-

-

12,742

12,742

ESOP shares committed to be
  released (100 shares)

-

-

434

-

973

-

1,407

Stock option expense

-

-

231

-

-

-

231

Share repurchases

(4,033
)

(40
)

(54,478
)

-

-

-

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

1,387

14

(14
)

-

-

-

-

Restricted stock plan shares
  earned (30 shares)

-

-

427

-

-

-

427

Cash dividends declared
  ($0.04 per common share)

-

-

-

(3,397
)

-

-

(3,397
)

Balance - December 31, 2016

89,176

$
892

$
795,773

$
357,540

$
(35,508
)

$
(4,045
)

$
1,114,652

	Common Stock						Paid-In			Retained			Unearned ESOP			Accumulated Other Comprehensive
	Shares			Amount			Capital			Earnings			Shares			Income			Total
Balance - December 31, 2019		85,150		$	851		$	737,539		$	377,896		$	(29,671	)	$	7,955		$	1,094,570

Net income		-			-			-			9,254			-			-			9,254
Other comprehensive loss, net of income tax		-			-			-			-			-			(12,080	)		(12,080	)
ESOP shares committed to be released (50 shares)		-			-			95			-			486			-			581
Stock option expense		-			-			465			-			-			-			465
Stock repurchases		(1,476	)		(14	)		(17,514	)		-			-			-			(17,528	)
Restricted stock plan shares earned (70 shares)		-			-			1,025			-			-			-			1,025
Cancellation of shares issued for restricted stock awards		(10	)		-			(136	)		-			-			-			(136	)
Cash dividends declared ($0.08 per common share)		-			-			-			(6,479	)		-			-			(6,479	)
Balance - March 31, 2020		83,664		$	837		$	721,474		$	380,671		$	(29,185	)	$	(4,125	)	$	1,069,672

	Common Stock						Paid-In			Retained			Unearned ESOP			Accumulated Other Comprehensive
	Shares			Amount			Capital			Earnings			Shares			Income			Total
Balance - June 30, 2019		89,126		$	891		$	787,394		$	366,679		$	(30,644	)	$	2,839		$	1,127,159

Net income		-			-			-			31,276			-			-			31,276
Other comprehensive loss, net of income tax		-			-			-			-			-			(6,964	)		(6,964	)
ESOP shares committed to be released (150 shares)		-			-			475			-			1,459			-			1,934
Stock option expense		-			-			1,382			-			-			-			1,382
Stock repurchases		(5,376	)		(53	)		(69,729	)		-			-			-			(69,782	)
Restricted stock plan shares earned (208 shares)		-			-			3,024			-			-			-			3,024
Cancellation of shares issued for restricted stock awards		(86	)		(1	)		(1,072	)		-			-			-			(1,073	)
Cash dividends declared ($0.21 per common share)		-			-			-			(17,284	)		-			-			(17,284	)
Balance - March 31, 2020		83,664		$	837		$	721,474		$	380,671		$	(29,185	)	$	(4,125	)	$	1,069,672

See notes to unaudited consolidated financial statements.

- 5 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~Six Months Ended December 31, 2017~~

(In Thousands, Except Share and Per Share Data, Unaudited)

Common Stock

Paid-In

Retained

Unearned
ESOP

Accumulated
Other
Comprehensive

Shares

Amount

Capital

Earnings

Shares

Income

Total

Balance - June 30, 2017

84,351

$
844

$
728,790

$
361,039

$
(34,536
)

$
1,044

$
1,057,181

Net income

-

-

-

6,501

-

-

6,501

Other comprehensive income, net
  of income tax expense

-

-

-

-

-

5,368

5,368

ESOP shares committed to be
  released (100 shares)

-

-

503

-

973

-

1,476

Stock option exercise

10

-

102

-

-

-

102

Stock option expense

-

-

1,045

-

-

-

1,045

Share repurchases

(4,747
)

(48
)

(69,266
)

-

-

-

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

-

-

2,196

-

-

-

2,196

Cancellation of shares issued for
  restricted stock awards

(87
)

(1
)

(1,277
)

-

-

-

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

-

-

-

(14,004
)

-

-

(14,004
)

Balance - December 31, 2017

79,527

$
795

$
662,093

$
353,536

$
(33,563
)

$
6,412

$
989,273

	Common Stock						Paid-In			Retained			Unearned ESOP			Accumulated Other Comprehensive
	Shares			Amount			Capital			Earnings			Shares			Income			Total
Balance - December 31, 2020		84,938		$	849		$	724,389		$	388,376		$	(27,726	)	$	6,453		$	1,092,341

Net income		-			-			-			16,423			-			-			16,423
Other comprehensive loss, net of income tax		-			-			-			-			-			(5,096	)		(5,096	)
ESOP shares committed to be released (50 shares)		-			-			87			-			487			-			574
Stock option exercise		41			-			373			-			-			-			373
Stock option expense		-			-			455			-			-			-			455
Stock repurchases		(3,026	)		(29	)		(34,834	)		-			-			-			(34,863	)
Restricted stock plan shares earned (69 shares)		-			-			924			-			-			-			924
Cancellation of shares issued for restricted stock awards		(10	)		-			(114	)		-			-			-			(114	)
Cash dividends declared ($0.09 per common share)		-			-			-			(7,205	)		-			-			(7,205	)
Balance - March 31, 2021		81,943		$	820		$	691,280		$	397,594		$	(27,239	)	$	1,357		$	1,063,812

	Common Stock						Paid-In			Retained			Unearned ESOP			Accumulated Other Comprehensive
	Shares			Amount			Capital			Earnings			Shares			Income		Total
Balance - June 30, 2020		83,663		$	837		$	722,871		$	387,911		$	(28,699	)	$	1,257		1,084,177

Cumulative effect of change in accounting principle - Topic 326		-			-			-			(14,239	)		-			-		(14,239	)
Balance - July 1, 2020 as adjusted for change in accounting principle		83,663			837			722,871			373,672			(28,699	)		1,257		1,069,938
Net income		-			-			-			44,750			-			-		44,750
Other comprehensive income, net of income tax		-			-			-			-			-			100		100
ESOP shares committed to be released (150 shares)		-			-			(25	)		-			1,460			-		1,435
Stock option exercise		41			-			373			-			-			-		373
Stock option expense		-			-			1,366			-			-			-		1,366
Stock repurchases		(7,535	)		(74	)		(80,493	)		-			-			-		(80,567	)
Restricted stock plan shares earned (207 shares)		-			-			2,915			-			-			-		2,915
Cancellation of shares issued for restricted stock awards		(80	)		(1	)		(802	)		-			-			-		(803	)
Shares issued in conjunction with the acquisition of MSB Financial Corp.		5,854			58			45,075			-			-			-		45,133
Cash dividends declared ($0.25 per common share)		-			-			-			(20,828	)		-			-		(20,828	)
Balance - March 31, 2021		81,943		$	820		$	691,280		$	397,594		$	(27,239	)	$	1,357	$	1,063,812

See notes to unaudited consolidated financial statements.

- 6 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

Six Months Ended

December 31,

2017

2016

Cash Flows from Operating Activities:

Net income
$
6,501

$
10,131

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

Depreciation and amortization of premises and equipment

1,475

1,471

Net amortization of premiums, discounts and loan fees and costs

2,250

2,785

Deferred income taxes

4,783

342

Amortization of intangible assets

60

72

Amortization of benefit plans’ unrecognized net (gain) loss

(61
)

33

Provision for loan losses

1,566

2,384

Loss on write-down and sales of real estate owned

86

3

Loans originated for sale

(41,833
)

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

43,448

55,344

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

(413
)

(409
)
Realized gain on sale of loans

(118
)

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

-

10

Realized gain on call of debt securities held to maturity

-

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

7

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

(2,531
)

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

4,717

2,065

Increase in interest receivable

(1,031
)

(597
)
(Increase) decrease in other assets

(1,672
)

154

Increase in interest payable

292

100

Decrease in other liabilities

(2,555
)

(1,319
)
Net Cash Provided by Operating Activities

14,971

11,232

Cash Flows from Investing Activities:

Purchases of:

Debt securities available for sale

(76,074
)

(36,926
)
Debt securities held to maturity

(16,419
)

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

-

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

(20,478
)

-

Proceeds from:

Repayments/calls/maturities of debt securities available for sale

35,458

30,476

Repayments/calls/maturities of debt securities held to maturity

35,315

52,198

Repayments/maturities of mortgage-backed securities available for sale

16,462

32,446

Repayments/maturities of mortgage-backed securities held to maturity

22,656

28,902

Purchase of loans

(48,905
)

(133,101
)
Proceeds from sale of loans

1,264

4,217

Net increase in loans receivable

(1,322
)

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

1,290

505

Additions to premises and equipment

(3,726
)

(1,416
)
Purchase of FHLB stock

(4,140
)

(10,080
)
Redemption of FHLB stock

4,985

6,167

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

$
(253,807
)

	Nine Months Ended
	March 31,
	2021			2020
Cash Flows from Operating Activities:
Net income	$	44,750		$	31,276
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		4,355			3,404
Net accretion of premiums, discounts and loan fees and costs		(11,257	)		(6,716	)
Deferred income taxes and valuation allowance		3,004			1,145
Realized gain on bargain purchase		(3,053	)		-
Amortization of intangible assets		797			918
Amortization of benefit plans’ unrecognized net gain		62			485
Provision for credit losses		3,820			4,023
Loss on write-down and sales of other real estate owned		-			28
Loans originated for sale		(249,671	)		(173,436	)
Proceeds from sale of mortgage loans held-for-sale		270,147			176,269
Gain on sale of mortgage loans held-for-sale, net		(4,859	)		(1,811	)
Realized gain on sale and call of investment securities available for sale		(454	)		(2,231	)
Realized loss on debt extinguishment		796			2,156
Realized gain on sale of loans receivable		(352	)		(27	)
Realized loss on disposition of premises and equipment		40			342
Increase in cash surrender value of bank owned life insurance		(4,722	)		(4,688	)
ESOP, stock option plan and restricted stock plan expenses		5,716			6,340
(Increase) decrease in interest receivable		(1,488	)		324
Increase in other assets		(1,021	)		(20,444	)
Decrease in interest payable		(406	)		(3,237	)
Increase in other liabilities		1,519			15,496
Net Cash Provided by Operating Activities		57,723			29,616

Cash Flows from Investing Activities:
Purchases of:
Investment securities available for sale		(865,163	)		(487,898	)
Proceeds from:
Repayments/calls/maturities of investment securities available for sale		407,489			111,194
Repayments/calls/maturities of investment securities held to maturity		5,280			4,155
Sales of investment securities available for sale		44,842			164,299
Purchase of loans		(34,635	)		(41,816	)
Net decrease in loans receivable		237,383			165,642
Proceeds from sale of loans receivable		43,931			497
Purchase of interest rate caps		-			(1,476	)
Additions to premises and equipment		(2,889	)		(6,272	)
Proceeds from cash settlement of premises and equipment		3,401			395
Purchase of FHLB stock		-			(2,250	)
Redemption of FHLB stock		16,421			7,116
Net cash acquired in acquisition		4,296			-
Net Cash Used in Investing Activities	$	(139,644	)	$	(86,414	)

See notes to unaudited consolidated financial statements.

- 7 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Thousands, Unaudited)

	Six Months Ended						Nine Months Ended
	December 31,						March 31,
	2017			2016			2021			2020
Cash Flows from Financing Activities:
Net increase in deposits	$	103,485			51,189			485,417			106,500
Repayment of term FHLB advances		(1,250,054	)		(853,051	)		(2,257,796	)		(2,633,146	)
Proceeds from term FHLB advances		1,250,000			850,000			1,955,000			2,525,000
Net change in overnight borrowings		-			90,000
Net (decrease) increase in other short-term borrowings		(7,317	)		472			(68,635	)		167,935
Net decrease in advance payments by borrowers for taxes		(200	)		(288	)		(2,063	)		(395	)
Repurchase and cancellation of common stock of Kearny Financial Corp.		(69,314	)		(54,518	)		(80,567	)		(69,782	)
Cancellation of shares issued for restricted stock awards		(1,278	)		-
Issuance of shares in consideration of exercise of stock options		102			-
Cancellation of shares repurchased on vesting to pay taxes								(803	)		(1,073	)
Exercise of stock options								373			-
Dividends paid		(14,313	)		(3,397	)		(20,981	)		(17,724	)
Net Cash Provided by Financing Activities		11,111			80,407			9,945			77,315
Net Decrease in Cash and Cash Equivalents		(27,552	)		(162,168	)
Net (Decrease) Increase in Cash and Cash Equivalents								(71,976	)		20,517
Cash and Cash Equivalents - Beginning		78,237			199,200			180,967			38,935
Cash and Cash Equivalents - Ending	$	50,685		$	37,032		$	108,991		$	59,452

Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Income taxes, net of refunds	$	10,156		$	3,934		$	13,675		$	8,029
Interest	$	21,687		$	17,385		$	41,649		$	70,189

Non-cash investing and financing activities:
Acquisition of real estate owned in settlement of loans	$	1,437		$	1,719
Transfers from loans receivable to loans receivable held-for-sale							$	43,579		$	-
Acquisition of other real estate owned in settlement of loans							$	-		$	206
Fair value of assets acquired, net of cash and cash equivalents acquired							$	567,816		$	-
Fair value of liabilities assumed							$	523,926		$	-

In conjunction with the adoption of ASU 2019-04, the following qualifying held to maturity securities were transferred to available for sale:
Debt securities transferred from held to maturity to available for sale							$	-		$	537,732

In conjunction with the adoption of ASU 2016-02, the following assets and liabilities were recognized:
Operating lease right-of-use assets							$	-		$	17,243
Operating lease liabilities							$	-		$	17,758

See notes to unaudited consolidated financial statements.

- 8 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. ~~PRINCIPLES~~SUMMARY OF ~~CONSOLIDATION~~SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

~~2. BASIS OF PRESENTATION~~Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the unaudited consolidated financial statements have been included. The results of operations for the three-month and ~~six-month~~nine-month periods ended ~~December~~March 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~~2020 was derived from the Company’s ~~2017 annual report~~2020 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~~2020 Annual Report on Form 10-K.

Risks and Uncertainties

As previously disclosed, on March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The COVID-19 pandemic has adversely affected, and may continue to adversely affect, local, national and global economic activity. The spread of the outbreak has caused significant disruptions to the U.S. economy, significant reductions in the targeted federal funds rate and has disrupted banking and other financial activity in the areas in which the Company operates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted to, among other provisions, provide emergency assistance for individuals, families and businesses affected by the COVID-19 pandemic. On December 27, 2020, the 2021 Consolidated Appropriations Act, was enacted as part of an omnibus spending bill for the 2021 federal fiscal year, included provisions intended to provide additional aid to those impacted by the pandemic.

Reductions in interest rates and other effects of the COVID-19 pandemic may continue to materially and adversely affect the Company's financial condition and results of operations in future periods. It is unknown how long the adverse conditions associated with the COVID-19 pandemic will last and what the complete financial effect will be to the Company. It is possible that estimates made in the financial statements could be materially and adversely impacted as a result of these conditions, including estimates regarding expected credit losses on loans receivable, impairment of investment securities and impairment of goodwill. Although the Company continues to operate while taking steps to ensure the safety of employees and clients, COVID-19 could also potentially create widespread business continuity issues for the Company.

The extent to which the COVID-19 pandemic will continue to impact the Company’s business, financial condition and results of operations in future periods will depend on future developments, including the scope and duration of the pandemic, the efficacy and adoption of COVID-19 vaccines and actions taken by governmental authorities and other third parties in response to the pandemic, as well as further actions the Company may take as may be required by government authorities or that the Company determines is in the best interests of its employees and clients. There is no certainty that such measures will be sufficient to mitigate the risks posed by the pandemic.

- 9 -

Adoption of New Accounting Standards

On July 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology. The Company adopted ASU 2016-13 using a modified retrospective approach. Results for reporting periods beginning after July 1, 2020 are presented under Topic 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP. At adoption, the Company increased its allowance for credit losses by $20.2 million, comprised of $19.6 million for loans receivable and $536,000 for unfunded commitments. Upon adoption the Company recorded a cumulative effect adjustment that reduced stockholders’ equity by $14.2 million, net of tax.

Allowance for Credit Losses

The allowance for credit losses represents the estimated amount considered necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The measurement of expected credit losses is applicable to loans receivable and securities measured at amortized cost. It also applies to off-balance sheet credit exposures such as loan commitments and unused lines of credit. The allowance is established through a provision for credit losses that is charged against income. The methodology for determining the allowance for credit losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses. The allowance for credit losses is reported separately as a contra-asset on the consolidated statement of financial condition. The expected credit loss for unfunded lending commitments and unfunded loan commitments is reported on the Consolidated Statement of Financial Condition in other liabilities while the provision for credit losses related to unfunded commitments is reported in other non-interest expense.

Allowance for Credit Losses on Loans Receivable

The allowance for credit losses on loans is deducted from the amortized cost basis of the loan to present the net amount expected to be collected. Expected losses are evaluated and calculated on a collective, or pooled, basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether loans within a pool continue to exhibit similar risk characteristics. If the risk characteristics of a loan change, such that they are no longer similar to other loans in the pool, the Company will evaluate the loan with a different pool of loans that share similar risk characteristics. If the loan does not share risk characteristics with other loans, the Company will evaluate the loan on an individual basis. The Company evaluates the pooling methodology at least annually. Loans are charged off against the allowance for credit losses when the Company believes the balances to be uncollectible. Expected recoveries do not exceed the aggregate of amounts previously charged off or expected to be charged off.

The Company has chosen to segment its portfolio consistent with the manner in which it manages credit risk. Such segments include multi-family, nonresidential mortgage, commercial business, construction, one- to four-family residential, home equity and consumer. For most segments the Company calculates estimated credit losses using a probability of default and loss given default methodology, the results of which are applied to the aggregated discounted cash flow of each individual loan within the segment. The point in time probability of default and loss given default are then conditioned by macroeconomic scenarios to incorporate reasonable and supportable forecasts that affect the collectability of the reported amount.

The Company estimates the allowance for credit losses on loans via a quantitative analysis which considers relevant available information from internal and external sources related to past events and current conditions, as well as the incorporation of reasonable and supportable forecasts. The Company evaluates a variety of factors including third party economic forecasts, industry trends and other available published economic information in arriving at its forecasts. After the reasonable and supportable forecast period, the Company reverts, on a straight-line basis, to average historical losses. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual borrower or the renewal option is included in the original or modified contract at the reporting date and are not unconditionally cancelable by the Company.

Also included in the allowance for credit losses on loans are qualitative reserves to cover losses that are expected but, in the Company’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above. Factors that the Company considers include changes in lending policies and procedures, business conditions, the nature and size of the portfolio, portfolio concentrations, the volume and severity of past due loans and non-accrual loans, the effect of external factors such as competition, legal and regulatory requirements, among others. Furthermore, the Company considers the inherent uncertainty in quantitative models that are built upon historical data.

- 10 -

Individually Evaluated Loans

On a case-by-case basis, the Company may conclude that a loan should be evaluated on an individual basis based on its disparate risk characteristics. When the Company determines that a loan no longer shares similar risk characteristics with other loans in the portfolio, the allowance will be determined on an individual basis using the present value of expected cash flows or, for collateral-dependent loans, the fair value of the collateral as of the reporting date, less estimated selling costs, as applicable. If the fair value of the collateral is less than the amortized cost basis of the loan, the Company will charge off the difference between the fair value of the collateral, less costs to sell at the reporting date and the amortized cost basis of the loan.

Acquired Loans

Acquired loans are included in the Company's calculation of the allowance for credit losses. How the allowance on an acquired loan is recorded depends on whether or not it has been classified as a Purchased Credit Deteriorated (“PCD”) loan. PCD loans are loans acquired at a discount that is due, in part, to credit quality. PCD loans are accounted for in accordance with ASC Subtopic 326-20 and are initially recorded at fair value as determined by the sum of the present value of expected future cash flows and an allowance for credit losses at acquisition. The allowance for PCD loans is recorded through a gross-up effect, while the allowance for acquired non-PCD loans is recorded through provision expense, consistent with originated loans. Thus, the determination of which loans are PCD and non-PCD can have a significant impact on the accounting for these loans. Subsequent to acquisition, the allowance for PCD loans will generally follow the same estimation, provision and charge-off process as non-PCD acquired and originated loans.

Allowance for Credit Losses on Off-Balance Sheet Commitments

The Company is required to include unfunded commitments that are expected to be funded in the future within the allowance calculation, other than those that are unconditionally cancelable. To arrive at that reserve, the reserve percentage for each applicable segment is applied to the unused portion of the expected commitment balance and is multiplied by the expected funding rate. To determine the expected funding rate, the Company uses a historical utilization rate for each segment. As noted above, the allowance for credit losses on unfunded loan commitments is included in other liabilities on the consolidated statement of financial condition and the related credit expense is recorded in other non-interest expense in the consolidated statements of income.

Allowance for Credit Losses on Held to Maturity Securities

At March 31, 2021, the Company’s entire portfolio of held to maturity securities consisted of municipal bonds which are highly rated by major rating agencies and have a long history of no credit losses. In estimating the net amount expected to be collected for held to maturity securities in an unrealized loss position, a historical loss based method is utilized.

Allowance for Credit Losses on Available for Sale Securities

For available for sale securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more than likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities available for sale that do not meet the above criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating by a rating agency, and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of tax. The Company elected the practical expedient of zero loss estimates for securities issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rate by major agencies and have a long history of no credit losses.

Changes in the allowance for credit losses are recorded as provision for, or reversal of, credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available for sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

- 11 -

Accrued Interest Receivable

The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans, available for sale securities, and held to maturity securities. Accrued interest receivable on loans is reported as a component of accrued interest receivable on the Consolidated Statement of Financial Condition, totaled $15.7 million at March 31, 2021 and is excluded from the estimate of credit losses. Accrued interest receivable on available of sale securities and held to maturity securities, also a component of accrued interest receivable on the Consolidated Statement of Financial Condition, totaled $4.7 million and $214,000, respectively, at March 31, 2021 and is excluded from the estimate of credit losses. There were 0 material accrued interest balances for loans on deferral under the CARES Act and Consolidated Appropriations Act.

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

Basic EPS is based on the weighted average number of common shares actually outstanding, including both vested and unvested restricted stock awards, adjusted for Employee Stock Ownership Plan (“ESOP”) shares not yet committed to be released. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities exercisable or which could be converted into common stock, if dilutive, using the treasury stock method. Shares issued and reacquired during any period are weighted for the portion of the period they were outstanding.

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

	Three Months Ended March 31,				Nine Months Ended March 31,
	2021		2020		2021		2020
	(In Thousands, Except Per Share Data)
Net income	$	16,423	$	9,254	$	44,750	$	31,276

Weighted average number of common shares outstanding - basic		80,673		81,339		83,958		82,981
Effect of dilutive securities		17		19		3		35
Weighted average number of common shares outstanding - diluted		80,690		81,358		83,961		83,016

Basic earnings per share	$	0.20	$	0.11	$	0.53	$	0.38
Diluted earnings per share	$	0.20	$	0.11	$	0.53	$	0.38

Stock options for 3,253,040 and 3,115,000 shares of ~~the numerators and denominators of the basic and~~common stock were not considered in computing 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~~at March 31, 2021 and ~~six months ended December~~March 31, ~~2017, the average number of options which~~2020, respectively, because they 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.anti-dilutive.

4.3. SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of ~~December~~March 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.

~~5. PROPOSED~~4. ACQUISITION OF ~~CLIFTON BANCORP INC.~~MSB FINANCIAL CORP.

~~On November 1, 2017,~~On July 10, 2020, the Company ~~and Clifton Bancorp Inc.~~completed its acquisition of MSB Financial Corp. (“~~Clifton”~~MSB”), and its subsidiary Millington Bank. In accordance with the ~~holding company~~merger agreement, approximately $9.8 million in cash and 5,853,811 shares of Company common stock were distributed to former MSB shareholders in exchange for ~~Clifton Savings Bank (“Clifton Bank”), announced that~~their shares of MSB common stock.

- 12 -

The assets acquired and liabilities assumed have been accounted for under the ~~companies have entered into~~acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of July 10, 2020 based on management’s best estimate using the information available as of the merger date. The application of the acquisition method of accounting resulted in the recognition of bargain purchase gain of $3.1 million and a ~~definitive agreement pursuant to which~~core deposit intangible of $690,000. During the nine months ended March 31, 2021 the Company ~~will acquire Clifton~~completed all MSB tax returns and determined that there were 0 material adjustments needed to the balance of deferred income tax assets or bargain purchase gain associated with the MSB acquisition.

The Company recorded the assets acquired and liabilities assumed through the merger at fair value as summarized in ~~an all-stock transaction. Under~~ the ~~terms~~following table:

	As Recorded by MSB			Fair Value Adjustments				As Recorded at Acquisition
	(In Thousands)
Cash paid for acquisition								$	9,830
Value of stock issued									45,133
Total purchase price								$	54,963

Cash and cash equivalents	$	14,126		$	-			$	14,126
Investment securities		4,000			(510	)	(a)		3,490
Loans receivable		537,589			(7,345	)	(b)		530,244
Allowance for loan losses		(6,037	)		6,037		(c)		-
Premises and equipment		7,698			(3,221	)	(d)		4,477
FHLB stock		3,345			-				3,345
Accrued interest receivable		1,701			-				1,701
Core deposit intangibles		-			690		(e)		690
Bank owned life insurance		14,663			-				14,663
Deferred income taxes, net		1,729			2,152		(f)		3,881
Other assets		4,830			495		(g)		5,325
Total assets acquired	$	583,644		$	(1,702	)		$	581,942

Deposits	$	458,392		$	1,786		(h)	$	460,178
FHLB borrowings		62,900			-				62,900
Advance payments by borrowers for taxes		794			-				794
Other liabilities		810			(756	)	(i)		54
Total liabilities assumed	$	522,896		$	1,030			$	523,926

Net assets acquired								$	58,016
Bargain purchase gain								$	(3,053	)

Explanation of ~~the agreement, Clifton will merge with and into the Company and each outstanding share of Clifton common stock will be exchanged for 1.191 shares of the Company common stock.~~certain fair value related adjustments:

(a)	Represents the fair value adjustments on investment securities.

(b)	Represents the fair value adjustments on the net book value of loans, which includes an interest rate mark and credit mark adjustment and the reversal of deferred fees/costs and premiums.

(c)	Represents the elimination of MSB’s allowance for loan losses.

(d)	Represents the fair value adjustments to reflect the fair value of land and buildings and premises and equipment, which will be amortized on a straight-line basis over the estimated useful lives of the individual assets.

(e)	Represents the intangible assets recorded to reflect the fair value of core deposits. The core deposit asset was recorded as an identifiable intangible asset and will be amortized on an accelerated basis over the estimated average life of the deposit base.

(f)	Represents an adjustment to net deferred tax assets resulting from the fair value adjustments related to the acquired assets, liabilities assumed and identifiable intangible assets recorded.

(g)	Represents an adjustment to other assets acquired.

(h)	Represents fair value adjustments on time deposits, which will be treated as a reduction of interest expense over the remaining term of the time deposits.

(i)	Represents an adjustment to other liabilities assumed.

- 13 -

~~As of December 31, 2017, Clifton had approximately $1.7 billion of assets, $1.2 billion~~The fair value of loans acquired from MSB was estimated using cash flow projections based on the remaining maturity and ~~$935 million~~repricing terms. Cash flows were adjusted by estimating future credit losses and the rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. There was no carryover of MSB’s allowance for loan losses associated with the loans that were acquired. For information regarding purchased loans which have been determined to be PCD, refer to Note 7, Loans Receivable.

The core deposit intangible asset recognized is being amortized over its estimated useful life of approximately 10 years utilizing the sum-of-the-years digits method.

The fair value of retail demand and interest bearing deposit accounts was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair value of time deposits ~~held across a network~~was estimated by discounting the contractual future cash flows using market rates offered for time deposits 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~~similar remaining maturities.

Merger-related expenses ~~are~~were recorded in the Consolidated Statements of Income as a component of non-interest expense and include costs ~~relating~~related to the Company’s ~~proposed~~ acquisition of ~~Clifton,~~MSB, as described above. These charges represent one-time costs associated with acquisition activities and ~~do not represent ongoing costs~~are expensed as incurred. Direct acquisition and other charges were recorded in merger-related expense on the consolidated statements of income. During the ~~fully integrated combined organization. Accounting guidance requires that acquisition-related transactional~~nine months ended March 31, 2021, merger-related expenses related to the MSB acquisition totaled $4.3 million. By comparison, for the three and ~~restructuring costs incurred by~~nine months ended March 31, 2020, merger-related expenses related to the ~~Company be charged to expense as incurred.~~MSB acquisition totaled $285,000 and $504,000, respectively.

~~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

- 1014 -

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.5. RECENT ACCOUNTING PRONOUNCEMENTS

In ~~January 2016,~~December 2019, the FASB issued ASU ~~2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition~~2019-12, “Income taxes (Topic 740); Simplifying the Accounting for Income Taxes”. ASU 2019-12 provides amendments intended to reduce the cost and ~~Measurement~~complexity in accounting for income taxes while maintaining or improving the usefulness of ~~Financial Assets~~the 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 ~~Financial Liabilities. The~~(iii) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU ~~requires an entity to:~~2019-12 provides the following amendments that simplify and improve guidance with Topic 740: (i) ~~measure equity investments at fair value through net income, with certain exceptions;~~franchise taxes that are based partially on income; (ii) ~~present~~transactions that result in ~~OCI~~a step up in the tax basis of goodwill; (iii) separate financial statements of legal entities that are not subject to 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 impact of adopting this ASU on its consolidated financial statements.

Adoption of New Accounting Standards

In ~~February 2016,~~ January 2021 the ~~FASB~~Financial Accounting Standards Board (the “FASB”), issued ASU ~~2016-02, Leases~~2021-01 to clarify the scope of ASU 2020-04, “Reference Rate Reform (Topic ~~842)~~848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. ASU 2020-04 provides temporary, optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships that reference the London Interbank Offered Rate or another reference rate that is expected to be discontinued. The ASU addresses questions about whether Topic 848 can be applied to derivative instruments that do not reference a rate that is expected to be discontinued but that use an interest rate for margining, discounting, or contract price alignment that is expected to be modified as a result of reference rate reform, commonly referred to as the “discounting transition”. The amendments clarify that certain optional expedients and exceptions in Topic 848 do apply to derivatives that are affected by the discounting transition. The amendments in ASU ~~requires~~2021-01 are effective immediately for all ~~lessees~~entities. The amendments do not apply to ~~recognize a lease liability~~contract modifications made after December 31, 2022; new hedging relationships entered into after December 31, 2022; and ~~right-of-use asset, measured at~~existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the ~~present value~~accounting effects are recorded through the end 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~~hedging relationship, including periods after December 31, 2022. The Company adopted ASU 2021-01 in January 2021, and its adoption did not have a significant impact on 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 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, 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,

On July 1, 2020 the Company ~~does not expect the amendment to have a material impact on its results of operations.~~

~~In June 2016, the FASB issued~~ adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. The ~~ASU requires~~measurement of expected credit losses ~~on most~~under the CECL methodology is applicable to financial assets measured at amortized cost including loan receivables and ~~certain other instruments~~held 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 troubledmaturity debt ~~restructuring exists) from the date of initial recognition of that instrument.~~

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

~~Further, the~~off-balance exposures. In addition, this ASU made certain ~~targeted amendments~~changes to the ~~existing impairment model~~accounting for ~~available-for-sale (AFS)~~available for sale securities debt securities. ~~For an AFS debt security for which there is neither the intent nor a more-likely-than-not requirement~~Credit losses are required to ~~sell, an entity will record credit losses~~be presented as an allowance rather than as a write-down ~~of the amortized cost basis.~~

~~For public business entities~~on available for sale debt securities management does not intend to sell or believes that ~~are SEC filers, the amendments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.~~it is more likely than not they will be required to sell. The Company ~~will apply~~adopted Topic 326 and all its related updates on July 1, 2020, using the ~~standard’s provisions as a cumulative-effect adjustment~~modified retrospective approach for financial assets measured at amortized cost. Results for reporting periods after July 1, 2020 are presented in accordance to ~~retained earnings as of the beginning of the first reporting period in which~~ the guidance ~~is effective (i.e. modified retrospective approach). The~~under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. Upon adoption the Company ~~has begun its evaluation~~recorded a cumulative effect adjustment that reduced stockholders’ equity by $14.2 million, net 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 attax. Additional information regarding 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~~ of ASU ~~2016-15, Statement~~2016-13 is presented in Note 1, Summary 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.Significant Accounting Policies.

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~~a quantitative 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 toapplying the amendments of ASU 2017-04 prospectively 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 beginninggoodwill impairment testing conducted 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~~July 1, 2020.

- 1215 -

6. SECURITIES

~~date of adoption.~~At March 31, 2021, there was no allowance for credit losses on available for sale securities. The ~~effect of adoption should be reflected as of~~following tables present 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~~the amortized cost, gross unrecognized gains and ~~stratification by contractual~~losses and estimated fair values for held to maturity securities as of the dates indicated:

	March 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:
Obligations of state and political subdivisions	$	42,219	$	841	$	-	$	43,060
Asset-backed securities		248,048		2,774		81		250,741
Collateralized loan obligations		169,863		136		223		169,776
Corporate bonds		172,123		2,090		751		173,462
Trust preferred securities		2,967		-		86		2,881
Total debt securities		635,220		5,841		1,141		639,920

Mortgage-backed securities:
Collateralized mortgage obligations ⁽¹⁾		16,380		420		-		16,800
Residential pass-through securities ⁽¹⁾		813,263		7,836		14,444		806,655
Commercial pass-through securities ⁽¹⁾		312,453		6,762		3,620		315,595
Total mortgage-backed securities		1,142,096		15,018		18,064		1,139,050

Total securities available for sale	$	1,777,316	$	20,859	$	19,205	$	1,778,970

(1)	Government-sponsored enterprises.

	June 30, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:
Obligations of state and political subdivisions	$	52,843	$	1,211	$	-		54,054
Asset-backed securities		177,413		-		4,966		172,447
Collateralized loan obligations		198,619		-		4,831		193,788
Corporate bonds		142,942		1,267		570		143,639
Trust preferred securities		2,967		-		340		2,627
Total debt securities		574,784		2,478		10,707		566,555

Mortgage-backed securities:
Collateralized mortgage obligations ⁽¹⁾		30,043		860		-		30,903
Residential pass-through securities ⁽¹⁾		543,819		18,135		-		561,954
Commercial pass-through securities ⁽¹⁾		214,575		11,716		-		226,291
Total mortgage-backed securities		788,437		30,711		-		819,148

Total securities available for sale	$	1,363,221	$	33,189	$	10,707	$	1,385,703

(1)	Government-sponsored enterprises.

- 16 -

	March 31, 2021
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
	(In Thousands)
Held to maturity:
Debt securities:
Obligations of state and political subdivisions	$	27,168	$	1,240	$	-	$	28,408
Total debt securities		27,168		1,240		-		28,408

Total securities held to maturity	$	27,168	$	1,240	$	-	$	28,408

	June 30, 2020
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
	(In Thousands)
Held to maturity:
Debt securities:
Obligations of state and political subdivisions	$	32,556	$	1,513	$	-	$	34,069
Total debt securities		32,556		1,513		-		34,069

Total securities held to maturity	$	32,556	$	1,513	$	-	$	34,069

Excluding the balances of mortgage-backed securities, the following table presents the amortized cost and estimated fair values of debt securities available for sale and held to maturity, by contractual maturity, at ~~December~~March 31, ~~2017 are~~2021:

	March 31, 2021
	Amortized Cost		Fair Value
	(In Thousands)
Debt securities:
Due in one year or less	$	3,749	$	3,766
Due after one year through five years		88,469		89,718
Due after five years through ten years		331,520		334,300
Due after ten years		238,650		240,544
Total	$	662,388	$	668,328

Sales of securities available for sale were as follows for the periods 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

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2021		2020			2021			2020
	(In Thousands)					(In Thousands)
Available for sale securities sold:
Proceeds from sales of securities	$	-	$	160,653		$	44,842		$	164,299

Gross realized gains	$	-	$	2,350		$	800		$	2,363
Gross realized losses		-		(116	)		(385	)		(145	)
Net gain on sales of securities	$	-	$	2,234		$	415		$	2,218

- 1317 -

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~~Calls of securities available for sale during the three months ~~and six~~ended March 31, 2021 resulted in gross gains of $18,000. During the three months ended ~~December~~March 31, ~~2017~~2020, there were 0 gains or losses recognized on the calls of securities available for sale. During the nine months ended March 31, 2021 and ~~December~~March 31, ~~2016.~~

~~At December 31, 2017 and June 30, 2017,~~2020, calls of securities available for sale ~~with carrying values~~resulted in gross gains of ~~approximately $41.0 million~~$39,000 and ~~$41.8 million, respectively,~~$13,000, respectively. During the three and nine months ended March 31, 2021 and March 31, 2020, there were ~~utilized as collateral for borrowings through the FHLB~~0 gains or losses recorded on sales and calls 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 fair values of debt and mortgage-backed~~ securities held to ~~maturity~~maturity.

The carrying value of securities pledged for borrowings at ~~December 31, 2017~~the FHLB and ~~June 30, 2017~~other institutions, and ~~stratification by contractual maturity~~securities pledged for public funds and other purposes, were as follows as of ~~debt securities held to maturity at December 31, 2017 are~~the dates 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

	March 31,		June 30,
	2021		2020
	(In Thousands)
Securities pledged:
Pledged for borrowings at the FHLB of New York	$	158,531	$	155,288
Pledged to secure public funds on deposit		143,659		19,944
Pledged for potential borrowings at the Federal Reserve Bank of New York		297,100		366,482
Pledged as collateral for depositor sweep accounts		-		7,830
Total carrying value of securities pledged	$	599,290	$	549,544

~~- 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~~present the ~~fair values and~~ gross unrealized losses ~~within~~on securities and the ~~available for sale and held to maturity portfolios at December 31, 2017 and June 30, 2017. The gross unrealized and unrecognized losses, presented by security type, represent temporary impairments of~~estimated fair value ~~within each portfolio as~~ of the ~~dates presented. Temporary impairments~~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 typeat March 31, 2021 and ~~generally applies consistently to both the “available for sale” and “held to maturity” portfolios, except where specifically noted.~~June 30, 2020:

	December 31, 2017													March 31, 2021
	Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value			Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities		Fair Value		Unrealized Losses
	(In Thousands)													(Dollars 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	$	12,984	$	18	$	28,740	$	63		4	$	41,724	$	81
Collateralized loan obligations		71,100		243		-		-		71,100			243		9,440		1		94,575		222		9		104,015		223
Corporate bonds		-		-		68,886		1,134		68,886			1,134		30,393		751		-		-		6		30,393		751
Trust preferred securities		-		-		7,494		422		7,494			422		-		-		2,881		86		2		2,881		86
Collateralized mortgage obligations		5,181		45		22,006		823		27,187	��		868
Commercial pass-through securities															147,929		3,620		-		-		7		147,929		3,620
Residential pass-through securities		65,920		368		29,612		939		95,532			1,307		531,613		14,444		-		-		12		531,613		14,444
Commercial pass-through securities		4,029		6		-		-		4,029			6

Total	$	179,914	$	864	$	168,733	$	3,805	$	348,647		$	4,669	$	732,359	$	18,834	$	126,196	$	371		40	$	858,555	$	19,205

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

- 1718 -

~~The number of available for sale securities with unrealized losses at December~~

	June 30, 2020
	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	$	146,494	$	3,962	$	25,954	$	1,004		16	$	172,448	$	4,966
Collateralized loan obligations		71,282		1,245		122,506		3,586		19		193,788		4,831
Corporate bonds		24,764		236		39,651		334		8		64,415		570
Trust preferred securities		-		-		2,626		340		2		2,626		340

Total	$	242,540	$	5,443	$	190,737	$	5,264		45	$	433,277	$	10,707

At March 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.

December 31, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

(In Thousands)

Securities Held to Maturity:

Obligations of state and political
subdivisions
$
47,007

$
374

$
4,114

$
107

$
51,121

$
481

Collateralized mortgage obligations

20,134

194

14,927

500

35,061

694

Residential pass-through securities

47,939

306

72,364

1,209

120,303

1,515

Commercial pass-through securities

15,464

149

1,877

5

17,341

154

Total
$
130,544

$
1,023

$
93,282

$
1,821

$
223,826

$
2,844

June 30, 2017

Less than 12 Months

12 Months or More

Total

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

Fair
Value

Unrecognized
Losses

(In Thousands)

Securities Held to Maturity:

U.S. agency securities
$
24,969

$
31

$
9,983

$
17

$
34,952

$
48

Obligations of state and political
subdivisions

19,232

150

409

6

19,641

156

Collateralized mortgage obligations

17,317

403

22

-

17,339

403

Residential pass-through securities

119,538

887

1,750

48

121,288

935

Commercial pass-through securities

11,110

42

-

-

11,110

42

Total
$
192,166

$
1,513

$
12,164

$
71

$
204,330

$
1,584

~~The number of~~2020, there were 0 held to maturity securities with unrecognized losses.

Available for sale securities are evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the consolidated statement of income when management intends to sell, or may be required to sell, the securities before they recover in value. The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due or were placed in nonaccrual status at ~~December~~March 31, ~~2017 totaled 187~~2021. Management believes that the unrealized losses on these securities are a function of changes in market interest rates and ~~included 105 municipal obligations, seven collateralized mortgage obligations, 70 residential pass-through securities and five commercial pass-through securities. The number~~credit spreads, not changes in credit quality. Therefore, 0 allowance for credit losses was recorded at March 31, 2021.

At March 31, 2021, the Company’s entire portfolio of held to maturity securities ~~with unrecognized losses~~consisted of municipal bonds which are highly rated by major rating agencies and have a long history of no credit losses. None of the securities in the Company’s portfolio of held to maturity municipal bonds were in an unrealized loss position. The Company continually monitors the municipal bond sector of the market and reviews collectability including such factors as the financial condition of the issuers including credit ratings in effect as of the reporting period.

- 19 -

7. LOANS RECEIVABLE

The following table sets forth the composition of the Company’s loan portfolio at March 31, 2021 and 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.2020:

~~In general, if~~

	March 31,			June 30,
	2021			2020
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	2,055,396		$	2,059,568
Nonresidential mortgage		1,110,765			960,853
Commercial business ⁽¹⁾		183,181			138,788
Construction		95,533			20,961
Total commercial loans		3,444,875			3,180,170

One- to four-family residential mortgage		1,323,485			1,273,022

Consumer loans:
Home equity loans		59,721			82,920
Other consumer		3,445			3,991
Total consumer loans		63,166			86,911

Total loans		4,831,526			4,540,103

Unaccreted yield adjustments		(33,287	)		(41,706	)

Total loans receivable, net of yield adjustments	$	4,798,239		$	4,498,397

(1)	Includes Paycheck Protection Program (“PPP”) loans of $20.9 million and $69.0 million as of March 31, 2021 and June 30, 2020, respectively.

- 20 -

Past Due Loans

Past due status is based on the ~~fair value~~contractual payment terms of ~~a debt security is less than its amortized cost basis at~~ the time of evaluation, the security is “impaired” and the impairment is to be evaluated to determine if it is other than temporary. The Company evaluates the impaired securities in its portfolio for possible other than temporary impairment (OTTI) on at least a quarterly basis.loans. The following ~~represents~~tables present the ~~circumstances under which an impaired security is determined to be other than temporarily impaired:~~payment status of past due loans as of March 31, 2021 and June 30, 2020, by loan segment:

	March 31, 2021
	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Current	$	2,033,617	$	1,065,795	$	182,727	$	95,533	$	1,315,841	$	59,637	$	3,426	$	4,756,576
Past due:
30-59 days		2,459		849		2		-		1,212		-		2		4,524
60-89 days		6,123		22,566		-		-		1,072		5		15		29,781
90 days and over		13,197		21,555		452		-		5,360		79		2		40,645
Total past due		21,779		44,970		454		-		7,644		84		19		74,950

Total loans	$	2,055,396	$	1,110,765	$	183,181	$	95,533	$	1,323,485	$	59,721	$	3,445	$	4,831,526

	June 30, 2020

	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Current	$	2,059,568	$	941,714	$	138,439	$	20,961	$	1,264,267	$	82,358	$	3,981	$	4,511,288
Past due:
30-59 days		-		-		-		-		3,211		169		-		3,380
60-89 days		-		14,478		-		-		1,038		13		5		15,534
90 days and over		-		4,661		349		-		4,506		380		5		9,901
Total past due		-		19,139		349		-		8,755		562		10		28,815

Total loans	$	2,059,568	$	960,853	$	138,788	$	20,961	$	1,273,022	$	82,920	$	3,991	$	4,540,103

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

~~When the Company~~Nonperforming Loans

Loans are generally placed on nonaccrual status when contractual payments become 90 or more ~~likely than not will be required to sell the impaired debt security before recovery of its amortized cost (for example, whether liquidity requirements~~days past due or ~~contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs); or~~

~~When an impaired debt security does not meet either of the two conditions above, but~~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 three and nine months ended March 31, 2021 and March 31, 2020.

- 21 -

The following tables present information relating to ~~be collected is less than~~ the ~~amortized cost~~Company’s nonperforming loans as of ~~the security.~~March 31, 2021 and June 30, 2020:

	March 31, 2021
	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Performing	$	2,039,302	$	1,074,357	$	182,510	$	93,162	$	1,307,728	$	59,606	$	3,443	$	4,760,108
Nonperforming:
90 days and over past due accruing		-		-		-		-		-		-		2		2
Nonaccrual loans with allowance for credit losses		-		10,683		277		-		4,188		-		-		15,148
Nonaccrual loans with no allowance for credit losses		16,094		25,725		394		2,371		11,569		115		-		56,268
Total nonperforming		16,094		36,408		671		2,371		15,757		115		2		71,418

Total loans	$	2,055,396	$	1,110,765	$	183,181	$	95,533	$	1,323,485	$	59,721	$	3,445	$	4,831,526

	June 30, 2020
	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Performing	$	2,056,606	$	936,917	$	138,196	$	20,961	$	1,264,663	$	82,078	$	3,986	$	4,503,407
Nonperforming:
90 days and over past due accruing		-		-		-		-		-		-		5		5
Nonaccrual		2,962		23,936		592		-		8,359		842		-		36,691
Total nonperforming		2,962		23,936		592		-		8,359		842		5		36,696

Total loans	$	2,059,568	$	960,853	$	138,788	$	20,961	$	1,273,022	$	82,920	$	3,991	$	4,540,103

- 1822 -

InTroubled Debt Restructurings (“TDRs”)

On a case-by-case basis, the ~~first two circumstances noted above,~~Company may agree to modify the ~~amount~~contractual terms of ~~OTTI recognized~~a loan to assist a borrower who may be experiencing financial difficulty, as well as to preserve the Company’s position in ~~earnings~~the loan. If the borrower is ~~the entire difference between the security’s amortized cost basis~~experiencing financial difficulties 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 expecteda concession has been made at the time of ~~purchase.~~such modification, the loan is classified as a TDR. At March 31, 2021, the Company had TDRs totaling $19.2 million. The ~~absence~~allowance for credit losses associated with the TDRs presented in the tables below totaled $194,000 and $8,000 as of ~~an adverse change~~March 31, 2021 and June 30, 2020, respectively. As of March 31, 2021, there were no significant commitments to lend additional funds to borrowers whose loans had been restructured in ~~expected cash flows generally indicates that~~ a ~~security’s impairment is~~TDR.

The following tables present total TDR loans at March 31, 2021 and June 30, 2020:

	March 31, 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		107		7		2,476		8		2,583
Commercial business		5		4,900		5		409		10		5,309
Construction		-		-		1		2,371		1		2,371
Total commercial loans		6		5,007		14		8,152		20		13,159

One- to four-family residential mortgage		16		2,261		17		3,122		33		5,383

Consumer loans:
Home equity loans		9		606		1		24		10		630
Total		31	$	7,874		32	$	11,298		63	$	19,172

	June 30, 2020
	Accrual				Non-accrual				Total
	# of Loans		Amount		# of Loans		Amount		# of Loans		Amount
	(Dollars In Thousands)
Commercial loans:
Multi-family mortgage loans		-	$	-		1	$	2,962		1	$	2,962
Nonresidential mortgage		1		112		9		5,442		10		5,554
Commercial business		5		5,179		6		446		11		5,625
Total commercial loans		6		5,291		16		8,850		22		14,141

One- to four-family residential mortgage		14		2,407		20		3,811		34		6,218

Consumer loans:
Home equity loans		12		715		2		448		14		1,163
Total		32	$	8,413		38	$	13,109		70	$	21,522

- 23 -

The following tables present information regarding the restructuring of the Company’s troubled debts during the three and nine months ended March 31, 2021 and March 31, 2020:

	Three Months Ended March 31, 2021						Nine Months Ended March 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)
One- to four-family residential mortgage		-	$	-	$	-		1	$	309	$	308
Home equity loans		1		24		24		1		24		24
Total		1	$	24	$	24		2	$	333	$	332

	Three Months Ended March 31, 2020						Nine Months Ended March 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)
Multi-family mortgage		1	$	3,062	$	2,996		1	$	3,062	$	2,996
Nonresidential mortgage		1		521		517		1		521		517
Commercial business		1		2,482		2,494		5		4,349		4,415
One- to four-family residential mortgage		-		-		-		3		1,046		982
Home equity loans		-		-		-		1		82		81
Total		3	$	6,065	$	6,007		11	$	9,060	$	8,991

During the three and nine months ended March 31, 2021 and March 31 2020, there were 0 charge-offs related to TDRs. During the three and nine months ended March 31, 2021 there were 0 troubled debt restructuring defaults. During the three and nine months ended March 31, 2020, there was one troubled debt restructuring default totaling $514,000.

Loan modifications generally involve a reduction in interest rates and/or extension of maturity dates and also may include step up interest rates in their modified terms which will impact their weighted average yield in the future. The home equity loan which qualified as a TDR during the three months ended March 31, 2021, capitalized prior past due amounts and modified the loan’s repayment terms. The residential mortgage loan which qualified as a TDR during the nine months ended March 31, 2021, capitalized prior past due amounts and modified the loan’s repayment terms.

- 24 -

In March 2020, various regulatory agencies, including the Board of Governors of the 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 ~~“non-credit loss” factors~~delays in payment that are insignificant. Provisions of 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 interagency statements were met. Borrowers considered current are those that are less than 30 days past due at the time a modification program is ~~thereby generally not recognized as OTTI.~~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 CARES Act that were set to expire on December 31, 2020. The CARES Act permitted financial institutions to suspend TDR assessment and reporting requirements under GAAP for loan modifications. This new legislation extends this relief to the earlier of 60 days after the national emergency declared by the President is terminated or January 1, 2022. As of March 31, 2021, the Company had 32 non-TDR modified loans totaling approximately $52.9 million.

The ~~Company considers~~following table sets forth the composition of these loans by loan segments as of March 31, 2021:

	March 31, 2021
	# of Loans		Balance		% of Total Loans
	(Dollars In Thousands)
Commercial loans:
Multi-family mortgage loans		7	$	29,880	0.62%
Nonresidential mortgage		4		11,641	0.24%
Commercial business		2		2,121	0.04%
Total commercial loans		13		43,642	0.90%

One- to four-family residential mortgage		17		7,788	0.16%

Consumer loans:
Home equity loans		2		1,513	0.03%

Total		32	$	52,943	1.10%

- 25 -

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 ~~variety~~period of ~~factors when determining whether~~sustained repayment performance which permits the credit to be returned to accrual status, a ~~credit loss exists for an impaired security including, but not limited to:~~

~~The length~~TDR would generally be removed from individual impairment analysis and returned to its corresponding pool. As of ~~time and~~March 31, 2021, the ~~extent (a percentage) to~~carrying value of individually analyzed loans totaled $71.4 million, of which ~~the fair value~~$51.4 million were considered collateral dependent.

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

~~The historical and implied volatility of~~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 of the security to make scheduled interest or principal payments;~~

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

~~Recoveries or~~measurement date. See Note 14 for additional ~~declines in~~disclosure regarding fair value ~~subsequent to the balance sheet date.~~

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

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

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

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

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

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

~~- 19 -~~

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

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

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

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

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

The following table presents the ~~changes in the accretable yield relating to the acquired credit-impaired loans for the three months ended December 31, 2017 and December 30, 2016.~~carrying value of collateral dependent individually analyzed loans:

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

	March 31, 2021
	Carrying Value		Related Allowance
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	13,197	$	-
Nonresidential mortgage ⁽¹⁾		31,491		5,354
Commercial business ⁽²⁾		189		-
Construction		-		-
Total commercial loans		44,877		5,354

One- to four-family residential mortgage ⁽³⁾		6,458		190

Consumer loans:
Home equity loans ⁽³⁾		79		-

Total	$	51,414	$	5,544

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

(1)	Secured by income-producing nonresidential property.

(2)	Secured by business assets.

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

- 26 -

The following table presents, under previously applicable GAAP, loans individually evaluated for impairment by portfolio segment as of June 30, 2020:

	June 30, 2020
	Multi-Family Mortgage		Non- Residential Mortgage			Commercial Business			Construction		Residential Mortgage			Home Equity Loans		Other Consumer		Total
	(In Thousands)
Carrying value of impaired loans:

Non-impaired loans	$	2,056,606	$	936,805		$	132,999		$	20,961	$	1,262,256		$	81,363	$	3,991	$	4,494,981
Impaired loans:
Impaired loans with no allowance for impairment		2,962		22,516			5,622			-		10,659			1,557		-		43,316
Impaired loans with allowance for impairment:
Recorded investment		-		1,532			167			-		107			-		-		1,806
Allowance for impairment		-		(41	)		(47	)		-		(1	)		-		-		(89	)
Balance of impaired loans net of allowance for impairment		-		1,491			120			-		106			-		-		1,717
Total impaired loans, excluding allowance for impairment:		2,962		24,048			5,789			-		10,766			1,557		-		45,122

Total loans	$	2,059,568	$	960,853		$	138,788		$	20,961	$	1,273,022		$	82,920	$	3,991	$	4,540,103

Unpaid principal balance of impaired loans:
Total impaired loans	$	3,544	$	25,898		$	8,778		$	73	$	12,908		$	1,950	$	-	$	53,151

Credit Quality Indicators

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

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

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

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

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

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

- 27 -

The following table presents the risk category of loans as of March 31, 2021 by loan segment and vintage year:

	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	$	212,906	$	259,809	$	381,989	$	377,936	$	356,269	$	404,115	$	-	$	1,993,024
Special Mention		-		-		10,408		5,095		1,840		3,246		-		20,589
Substandard		-		-		16,723		2,896		13,197		8,967		-		41,783
Doubtful		-		-		-		-		-		-		-		-
Total multi-family mortgage		212,906		259,809		409,120		385,927		371,306		416,328		-		2,055,396
Non-residential mortgage:
Pass		77,508		77,604		57,255		65,443		262,070		485,535		6,212		1,031,627
Special Mention		-		-		23,520		4,156		9,815		4,540		-		42,031
Substandard		755		-		-		4,934		19,569		11,849		-		37,107
Doubtful		-		-		-		-		-		-		-		-
Total non-residential mortgage		78,263		77,604		80,775		74,533		291,454		501,924		6,212		1,110,765
Commercial business:
Pass		39,735		28,742		4,511		15,954		6,489		13,175		64,402		173,008
Special Mention		1,218		1,534		265		2,337		961		14		411		6,740
Substandard		43		79		216		1,571		179		1,325		20		3,433
Doubtful		-		-		-		-		-		-		-		-
Total commercial business		40,996		30,355		4,992		19,862		7,629		14,514		64,833		183,181
Construction loans:
Pass		25,561		16,166		11,238		18,763		14,226		1,453		5,735		93,142
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		2,391		-		2,391
Doubtful		-		-		-		-		-		-		-		-
Total construction loans		25,561		16,166		11,238		18,763		14,226		3,844		5,735		95,533
Residential mortgage:
Pass		326,309		144,050		83,745		84,259		137,357		525,530		-		1,301,250
Special Mention		-		-		1,238		-		-		742		-		1,980
Substandard		-		1,056		676		-		926		17,597		-		20,255
Doubtful		-		-		-		-		-		-		-		-
Total residential mortgage		326,309		145,106		85,659		84,259		138,283		543,869		-		1,323,485
Home equity loans:
Pass		626		3,123		5,784		3,123		2,557		17,287		26,160		58,660
Special Mention		-		-		-		-		-		386		-		386
Substandard		-		-		-		-		-		675		-		675
Doubtful		-		-		-		-		-		-		-		-
Total home equity loans		626		3,123		5,784		3,123		2,557		18,348		26,160		59,721
Other consumer loans
Pass		415		538		690		260		137		1,249		45		3,334
Special Mention		-		-		-		-		-		-		15		15
Substandard		-		-		-		-		-		-		1		1
Doubtful		-		-		-		-		-		-		95		95
Other consumer loans		415		538		690		260		137		1,249		156		3,445
Total loans	$	685,076	$	532,701	$	598,258	$	586,727	$	825,592	$	1,500,076	$	103,096	$	4,831,526

- 28 -

The following table presents, under previously applicable GAAP, the risk category of loans as of June 30, 2020 by loan segment:

	June 30, 2020
	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		Home Equity Loans		Other Consumer		Total
	(In Thousands)
Pass	$	2,055,520	$	932,202	$	132,818	$	20,961	$	1,258,246	$	81,120	$	3,979	$	4,484,846

Special Mention		1,086		4,373		2,585		-		981		157		5		9,187
Substandard		2,962		24,278		3,385		-		13,795		1,643		6		46,069
Doubtful		-		-		-		-		-		-		1		1

Total loans	$	2,059,568	$	960,853	$	138,788	$	20,961	$	1,273,022	$	82,920	$	3,991	$	4,540,103

Purchased Credit Deteriorated Loans

Loans acquired in a business combination after July 1, 2020 are recorded in accordance with ASC Topic 326, after which acquired loans are separated into two types. PCD loans are acquired loans that, as of the acquisition date, have experienced a more-than-insignificant deterioration in credit quality since origination. Non-PCD loans are acquired loans that have experienced no or insignificant deterioration in credit quality since origination. To distinguish between the two types of acquired loans, the Company evaluates risk characteristics that have been determined to be indicators of deteriorated credit quality. The determining criteria may involve loan specific characteristics such as payment status, debt service coverage or other changes in creditworthiness since the loan was originated, while others are relevant to recent economic conditions, such as borrowers in industries impacted by the pandemic.

As part of the acquisition of MSB, the Company purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:

	At July 10, 2020
	(In Thousands)
Purchase price of PCD loans at acquisition	$	69,415
Allowance for credit losses at acquisition		(3,901	)
Non-credit discount at acquisition		(167	)
Amortized cost of acquired PCD loans at acquisition	$	65,347

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~~March 31, ~~2017,~~2021, we held ~~four~~1 single-family ~~properties~~property in other real estate owned with an aggregate carrying value of ~~$1.6 million~~$178,000 that ~~were~~was acquired through ~~foreclosures~~a foreclosure on a residential mortgage ~~loans.~~loan. As of that same date, we held 1211 residential mortgage loans with aggregate carrying values totaling ~~$2.3~~$2.1 million which were in the process of foreclosure. ~~By comparison, as~~

As of June 30, ~~2017,~~2020, 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 189 residential mortgage loans with aggregate carrying values totaling ~~$3.7~~$1.9 million which were in the process of foreclosure.

The States of New Jersey and New York have issued executive orders and enacted legislation declaring moratoriums on removing individuals from a residential property as a result of an eviction or foreclosure proceeding. The New Jersey order will be in effect until two months after the Governor has declared an end to the COVID-19 health crisis. The New York law, which places a moratorium on evictions for tenants who have endured COVID-related hardship and on foreclosures, will be in effect until at least August 31, 2021. As a result, since March 28, 2020, the Company has temporarily suspended residential property foreclosure sales and evictions.

On September 4, 2020, the Centers for Disease Control and Prevention (“CDC”) imposed a nationwide temporary federal moratorium on residential evictions due to nonpayment of rent, for qualified tenants. The national eviction moratorium took effect after the expiration of eviction protections established by the CARES Act and was scheduled to extend through December 31, 2020, but was extended legislatively through January 31, 2021. On March 29, 2021, the CDC announced its intent to extend the existing eviction moratorium order through June 30, 2021.

- 2029 -

~~Loan Quality.~~8. ALLOWANCE FOR CREDIT LOSSES

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. See Note 1, Summary of Significant Accounting Policies for additional information on the adoption of Topic 326.

Allowance for Credit Losses on Loans Receivable

The following tables present the balance of the allowance for ~~loan~~credit losses at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017~~2020. For the three months and nine months ended March 31, 2021, the balance of the allowance for credit losses is based on the CECL methodology, as noted above. For the year ended June 30, 2020, the allowance for loan losses is based upon the calculation methodology as described in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2017.~~2020. 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
March 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	$	-	$	2,834	$	-	$	-	$	206	$	-	$	-	$	3,040
Loans acquired with deteriorated credit quality collectively analyzed		172		747		56		70		217		17		-		1,279
Loans individually evaluated for impairment		-		2,521		26		-		102		-		-		2,649
Loans collectively evaluated for impairment		28,814		13,875		2,444		1,175		9,853		591		42		56,794
Total allowance for credit losses	$	28,986	$	19,977	$	2,526	$	1,245	$	10,378	$	608	$	42	$	63,762

Balance of Loans Receivable
March 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	$	-	$	6,538	$	189	$	-	$	3,700	$	-	$	-	$	10,427
Loans acquired with deteriorated credit quality collectively evaluated		5,629		26,500		4,981		12,533		4,896		354		-		54,893
Loans individually evaluated for impairment		16,093		29,869		483		2,371		12,058		115		-		60,989
Loans collectively evaluated for impairment		2,033,674		1,047,858		177,528		80,629		1,302,831		59,252		3,445		4,705,217
Total loans	$	2,055,396	$	1,110,765	$	183,181	$	95,533	$	1,323,485	$	59,721	$	3,445	$	4,831,526
Unaccreted yield adjustments																(33,287	)
Loans receivable, net of yield adjustments															$	4,798,239

- 30 -

Allowance for Loan Losses
June 30, 2020

	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business		Construction		Residential Mortgage		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		-		41		47		-		1		-		-		89
Loans collectively evaluated for impairment		20,916		8,722		1,879		236		4,859		568		58		37,238
Total allowance for loan losses	$	20,916	$	8,763	$	1,926	$	236	$	4,860	$	568	$	58	$	37,327

Balance of Loans Receivable
June 30, 2020

	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	$	-	$	-	$	222	$	-	$	77	$	-	$	-		299
Loans individually evaluated for impairment		2,962		24,048		5,567		-		10,689		1,557		-		44,823
Loans collectively evaluated for impairment		2,056,606		936,805		132,999		20,961		1,262,256		81,363		3,991		4,494,981
Total loans	$	2,059,568	$	960,853	$	138,788	$	20,961	$	1,273,022	$	82,920	$	3,991	$	4,540,103
Unaccreted yield adjustments																(41,706	)
Loans receivable, net of yield adjustments															$	4,498,397

The following tables present the activity in the allowance for credit losses on loans for the three and nine months ended March 31, 2021:

	Three Months Ended March 31, 2021
	Multi-Family Mortgage			Non- Residential Mortgage			Commercial Business			Construction		Residential Mortgage			Home Equity Loans			Other Consumer			Total
	(In Thousands)
Changes in the allowance for credit losses for the three months ended March 31, 2021:

At December 31, 2020:	$	29,500		$	15,933		$	3,348		$	1,205	$	12,625		$	725		$	50		$	63,386
																		.
Charge offs		-			(9	)		(738	)		-		-			-			(9	)		(756	)
Recoveries		-			-			2			-		2			-			2			6
(Reversal of) provision for credit losses		(514	)		4,053			(86	)		40		(2,249	)		(117	)		(1	)		1,126

Total allowance for credit losses	$	28,986		$	19,977		$	2,526		$	1,245	$	10,378		$	608		$	42		$	63,762

- 31 -

	Nine Months Ended March 31, 2021
	Multi-Family Mortgage			Non- Residential Mortgage			Commercial Business			Construction		Residential Mortgage			Home Equity Loans			Other Consumer			Total
	(In Thousands)
Changes in the allowance for credit losses for the nine months ended March 31, 2021:

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		-			(75	)		(802	)		-		(13	)		(32	)		(22	)		(944	)
Recoveries		-			-			7			-		2			-			9			18
Initial allowance on PCD loans		250			1,720			1,007			99		720			105			-			3,901
(Reversal of) provision for credit losses		(588	)		7,179			809			830		(4,297	)		(125	)		12			3,820

Total allowance for credit losses	$	28,986		$	19,977		$	2,526		$	1,245	$	10,378		$	608		$	42		$	63,762

For the accounting policy on the allowance for loan losses that was in effect prior to the adoption of Topic 326, see Note 1 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2020. The following tables present the activity in the allowance for loan losses for the three ~~months~~ and ~~six~~nine months ended ~~December~~March 31, ~~2017 and December 31, 2016. Unless otherwise noted, the balance of loans reported in the tables below excludes yield adjustments and the allowance for loan loss.~~2020:

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

	Three Months Ended March 31, 2020
	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business			Construction		Residential Mortgage		Home Equity Loans		Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the three months ended March 31, 2020:

At December 31, 2019:	$	16,060	$	8,684	$	2,008		$	142	$	3,478	$	456	$	109		$	30,937

Total charge offs		-		-		-			-		-		-		(26	)		(26	)
Total recoveries		-		-		-			-		-		-		10			10
Provision for (reversal of) loan losses		2,831		2,026		(6	)		42		1,277		108		(8	)		6,270

Total allowance for loan losses	$	18,891	$	10,710	$	2,002		$	184	$	4,755	$	564	$	85		$	37,191

- 2132 -

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

	Nine Months Ended March 31, 2020
	Multi-Family Mortgage		Non- Residential Mortgage		Commercial Business			Construction		Residential Mortgage		Home Equity Loans		Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the nine months ended March 31, 2020:

At June 30, 2019:	$	16,959	$	9,672	$	2,467		$	136	$	3,377	$	491	$	172		$	33,274

Total charge offs		-		-		-			-		-		-		(134	)		(134	)
Total recoveries		-		-		-			-		-		-		28			28
Provision for (reversal of) loan losses		1,932		1,038		(465	)		48		1,378		73		19			4,023

Total allowance for loan losses	$	18,891	$	10,710	$	2,002		$	184	$	4,755	$	564	$	85		$	37,191

Allowance for Credit Losses on Off Balance Sheet Commitments

The following tables present the activity in the allowance for credit losses on off balance sheet commitments for the three and nine months ended March 31, 2021:

	Three Months Ended
	March 31, 2021
	(In Thousands)
Changes in the allowance for credit losses for the three months ended March 31, 2021:

At December 31, 2020:	$	1,058

Provision recorded in other non-interest expense		207

Total allowance for credit losses on off balance sheet commitments	$	1,265

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

	Nine Months Ended
	March 31, 2021
	(In Thousands)
Changes in the allowance for credit losses for the nine months ended March 31, 2021:

At June 30, 2020:	$	-

Impact of adopting Topic 326 ⁽¹⁾		536
Provision recorded in other non-interest expense		729

Total allowance for credit losses on off balance sheet commitments	$	1,265

(1)	Adoption of CECL accounting standard effective July 1, 2020.

- 2233 -

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 described in the Company’s Form 10-K 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 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 months ended December 31, 2017 and 2016 and any defaults during those periods of TDRs that were restructured within 12 months of the date of default.

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

1

-

1

-

-

-

-

2

Pre-modification outstanding
  recorded investment
$
24

$
-

$
179

$
-

$
-

$
-

$
-

$
203

Post-modification outstanding
  recorded investment

47

-

201

-

-

-

-

248

Charge offs against the allowance
  for loan loss recognized at
  modification

87

-

-

-

-

-

-

87

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2017

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

2

-

1

-

-

-

-

3

Pre-modification outstanding
  recorded investment
$
449

$
-

$
179

$
-

$
-

$
-

$
-

$
628

Post-modification outstanding
  recorded investment

414

-

201

-

-

-

-

615

Charge offs against the allowance
  for loan loss recognized at
  modification

87

-

-

-

-

-

-

87

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

~~- 30 -~~

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

1

-

-

-

-

1

-

2

Pre-modification outstanding
  recorded investment
$
197

$
-

$
-

$
-

$
-

$
87

$
-

$
284

Post-modification outstanding
  recorded investment

186

-

-

-

-

95

-

281

Charge offs against the allowance
  for loan loss recognized at
  modification

14

-

-

-

-

9

-

23

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

Troubled Debt Restructurings of Loans Receivable

Period Ended December 31, 2016

Residential
Mortgage

Multi-Family Mortgage

Non-
Residential
Mortgage

Construction

Commercial
Business

Home
Equity
Loans

Other
Consumer

Total

(In Thousands)

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

Number of loans

1

-

1

-

-

2

-

4

Pre-modification outstanding
  recorded investment
$
197

$
-

$
244

$
-

$
-

$
271

$
-

$
712

Post-modification outstanding
  recorded investment

186

-

223

-

-

279

-

688

Charge offs against the allowance
  for loan loss recognized at
  modification

14

-

27

-

-

12

-

53

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

Number of loans

-

-

-

-

-

-

-

-

Outstanding recorded investment
$
-

$
-

$
-

$
-

$
-

$
-

$
-

$
-

~~- 31 -~~

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

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

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

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

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

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

~~12.~~9. DEPOSITS

Deposits are summarized as follows:

	December 31,		June 30,		March 31,		June 30,
	2017		2017		2021			2020
	(Dollars in Thousands)				(In Thousands)
Non-interest-bearing demand	$	275,065	$	267,412	$	545,746	$	419,138
Interest-bearing demand		879,732		847,663		1,923,184		1,264,151
Savings and club		517,400		523,984
Savings						1,105,481		906,597
Certificates of deposits		1,361,569		1,291,068		1,800,041		1,840,396
Total deposits	$	3,033,766	$	2,930,127	$	5,374,452	$	4,430,282

~~13.~~

10. BORROWINGS

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

December 31, 2017

June 30, 2017

Balance

Weighted
Average
Interest Rate

Balance

Weighted
Average
Interest Rate

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

2018

630,225

1.60

630,225

1.29

2021

415

4.94

469

4.94

2023

145,000

3.04

145,000

3.04

Total advances

775,640

1.87

%

775,694

1.62

%
Unamortized fair value adjustments

9

2

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

$
775,696

	March 31, 2021						June 30, 2020
	Balance			Weighted Average Interest Rate			Balance			Weighted Average Interest Rate
	(Dollars in Thousands)
By remaining period to maturity:	��
Less than one year	$	590,000			0.36	%	$	865,000			0.45	%
One to two years		-			-			27,000			2.85
Two to three years		145,000			3.04			145,000			3.04
Three to four years		103,500			2.65			22,500			2.63
Four to five years		29,000			2.77			103,500			2.68
Greater than five years		-			-			6,500			2.82
Total advances		867,500			1.16	%		1,169,500			1.08	%
Unamortized fair value adjustments		(1,737	)					(2,071	)
Total advances, net of fair value adjustments	$	865,763					$	1,167,429

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

~~At December 31, 2017,~~2021, FHLB advances were collateralized by the FHLB capital stock owned by the Bank and mortgage loans and securities with carrying values totaling approximately ~~$2.0~~$3.15 billion and ~~$162.3~~$158.5 million, respectively. At June 30, ~~2017,~~2020, FHLB advances were collateralized by the FHLB capital stock owned by the Bank and mortgage loans and securities with carrying values totaling approximately ~~$1.9~~$3.21 billion and ~~$159.4~~$155.3 million, respectively.

~~- 32 -~~

Borrowings at ~~December 31, 2017 and~~ June 30, ~~2017~~2020 also included overnight borrowings in the form of depositor sweep accounts totaling ~~$23.2~~$5.7 million, ~~and $30.5 million, respectively. Depositor sweep accounts are short term~~while there were 0 such borrowings representing funds that are withdrawn from a customer’s noninterest-bearing deposit account and invested in an uninsured overnight investment account that is collateralized by specified investment securities owned by the Bank.at March 31, 2021.

- 34 -

~~14.~~11. 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~~March 31, ~~2017~~2021 and June 30, ~~2017:~~2020:

	December 31, 2017						March 31, 2021
	Asset Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value		Location	Fair Value		Location	Fair Value
	(Dollars in Thousands)						(In Thousands)
Derivatives designated as hedging instruments:
Interest rate swaps	Other assets	$	15,921	Other liabilities	$	-
Interest rate caps	Other assets		142	Other liabilities		-
Interest rate contracts							Other assets	$	4,302	Other liabilities	$	1,318
Total		$	16,063		$	-		$	4,302		$	1,318

	June 30, 2017						June 30, 2020
	Asset Derivatives			Liability Derivatives			Asset Derivatives			Liability Derivatives
	Location	Fair Value		Location	Fair Value		Location	Fair Value		Location	Fair Value
	(Dollars in Thousands)						(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		-
Interest rate contracts							Other assets	$	235	Other liabilities	$	18,177
Total		$	7,810		$	298		$	235		$	18,177

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~~March 31, ~~2017,~~2021, the Company had ~~fifteen~~a total of 12 interest rate swaps ~~with a notional of $1.2 billion~~ and ~~two interest rate~~ caps with a total notional amount of ~~$75.0 million~~$1.04 billion 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 and ~~six~~nine months ended

~~- 33 -~~

~~December~~ March 31, ~~2017,~~2021, the Company had ~~$1.3~~$2.0 million and ~~$2.7~~$6.6 million, respectively, of reclassifications to interest expense. During the next twelve months, the Company estimates that ~~$31,000~~$5.8 million will be reclassified as ~~a reduction~~an increase in interest expense.

- 35 -

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 and ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and ~~2016:~~

2020:

	Three Months Ended December 31, 2017									Three Months Ended March 31, 2021
	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)		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
	(Dollars in Thousands)									(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		-
Interest rate contracts										$	13,075	Interest expense	$	(1,987	)
Total	$	6,207		$	(1,282	)		$	-	$	13,075		$	(1,987	)

	Six Months Ended December 31, 2017									Nine Months Ended March 31, 2021
	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)		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
	(Dollars in Thousands)									(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		-
Interest rate contracts										$	14,353	Interest expense	$	(6,576	)
Total	$	6,452		$	(2,682	)		$	-	$	14,353		$	(6,576	)

	Three Months Ended December 31, 2016									Three Months Ended March 31, 2020
	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)		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
	(Dollars in Thousands)									(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		-
Interest rate contracts										$	(18,324	)	Interest expense	$	417
Total	$	22,049		$	(1,706	)		$	-	$	(18,324	)		$	417

~~- 34 -~~

	Six Months Ended December 31, 2016									Nine Months Ended March 31, 2020
	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)		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
	(Dollars in Thousands)									(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		-
Interest rate contracts										$	(17,405	)	Interest expense	$	2,623
Total	$	25,512		$	(3,587	)		$	-	$	(17,405	)		$	2,623

- 36 -

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~~March 31, ~~2017~~2021 and June 30, ~~2017,~~2020, 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															March 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																$	9,735	$	(5,433	)	$	4,302	$	-	$	-		$	4,302
Total	$	17,930	$	(1,867	)	$	16,063	$	-	$	(16,063	)	$	-		$	9,735	$	(5,433	)	$	4,302	$	-	$	-		$	4,302

								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																$	6,751	$	(5,433	)	$	1,318	$	-	$	(1,318	)	$	-
Total	$	1,867	$	(1,867	)	$	-	$	-	$	-		$	-		$	6,751	$	(5,433	)	$	1,318	$	-	$	(1,318	)	$	-

	June 30, 2020
								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	$	592	$	(357	)	$	235	$	-	$	-		$	235
Total	$	592	$	(357	)	$	235	$	-	$	-		$	235

								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	$	18,534	$	(357	)	$	18,177	$	-	$	(18,177	)	$	-
Total	$	18,534	$	(357	)	$	18,177	$	-	$	(18,177	)	$	-

- 3537 -

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~~March 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.~~$1.7 million.

As required under the enforceable master netting arrangement with its derivatives counterparties, at ~~December~~March 31, ~~2017,~~2021, the Company ~~received~~posted financial collateral of ~~$16.2~~$1.3 million 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~~March 31, ~~2017~~2021 and June 30, ~~2017,~~2020, included ~~$15.8~~$22.1 million and ~~$18.4~~$127.2 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.~~12. 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						Three Months Ended						Nine Months Ended						Affected Line Item in the Consolidated
	December 31,						December 31,						March 31,						March 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		$	26		$	20		$	79		$	59		Salaries and employee benefits
Interest cost		93			95			186			190			66			81			197			244		Miscellaneous non-interest expense
Amortization of unrecognized past service liability		-			-			-			-
Amortization of unrecognized loss		11			16			22			32			20			4			62			14		Miscellaneous non-interest expense
Expected return on assets		(30	)		(62	)		(60	)		(124	)		(28	)		(28	)		(85	)		(84	)	Miscellaneous non-interest expense
Net periodic benefit cost	$	86		$	57		$	172		$	114		$	84		$	77		$	253		$	233

- 38 -

~~16.~~13. 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~~three and nine 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 CutsMarch 31, 2021 and ~~Jobs Act on December 22, 2017.~~March 31, 2020:

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

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2021			2020			2021			2020
	(Dollars in Thousands)						(Dollars in Thousands)
Income before income taxes	$	22,155		$	9,479		$	58,980		$	38,865
Statutory federal tax rate		21	%		21	%		21	%		21	%
Federal income tax expense at statutory rate	$	4,653		$	1,991		$	12,386		$	8,162
(Reduction) increase in income taxes resulting from:
Tax exempt interest		(85	)		(114	)		(270	)		(396	)
State tax, net of federal tax effect		1,498			554			3,738			2,604
Incentive stock option compensation expense		23			21			63			58
Income from bank-owned life insurance		(324	)		(324	)		(989	)		(990	)
Non-deductible merger-related expenses		-			49			49			69
Bargain purchase gain		-			-			(641	)		-
Impact of Cares Act		-			(1,624	)		-			(1,624	)
Utilization of capital loss carryforward		-			-			(375	)		-
Other items, net		(21	)		97			804			131
		5,744			650			14,765			8,014
Reversal of valuation allowance		(12	)		(425	)		(535	)		(425	)
Total income tax expense	$	5,732		$	225		$	14,230		$	7,589
Effective income tax rate		25.87	%		2.37	%		24.13	%		19.53	%

~~17.~~14. 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 to disclose the fair value for assets and liabilities on both a recurring and non-recurring basis.~~

- 3839 -

~~Those~~Assets Measured on a Recurring Basis:

The following methods and significant assumptions were used to estimate the fair values of the Company’s assets ~~and liabilities~~ measured at fair value on a recurring basis ~~are summarized below:~~at March 31, 2021 and June 30, 2020:

December 31, 2017

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Debt securities available for sale:

U.S. agency securities
$
-

$
4,810

$
-

$
4,810

Obligations of state and political subdivisions

-

27,428

-

27,428

Asset-backed securities

-

169,484

-

169,484

Collateralized loan obligations

-

133,341

-

133,341

Corporate bonds

-

142,397

-

142,397

Trust preferred securities

-

7,494

1,000

8,494

Total debt securities

-

484,954

1,000

485,954

Mortgage-backed securities available for sale:

Collateralized mortgage obligations

-

27,187

-

27,187

Residential pass-through securities

-

116,496

-

116,496

Commercial pass-through securities

-

8,034

-

8,034

Total mortgage-backed securities

-

151,717

-

151,717

Total securities available for sale
$
-

$
636,671

$
1,000

$
637,671

Derivative instruments

Interest rate swaps
$
-

$
15,921

$
-

$
15,921

Interest rate caps

-

142

-

142

Total derivatives
$
-

$
16,063

$
-

$
16,063

~~- 39 -~~

June 30, 2017

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

(In Thousands)

Debt securities available for sale:

U.S. agency securities
$
-

$
5,316

$
-

$
5,316

Obligations of state and political subdivisions

-

27,740

-

27,740

Asset-backed securities

-

162,429

-

162,429

Collateralized loan obligations

-

98,154

-

98,154

Corporate bonds

-

142,318

-

142,318

Trust preferred securities

-

7,540

1,000

8,540

Total debt securities

-

443,497

1,000

444,497

Mortgage-backed securities available for sale:

Collateralized mortgage obligations

-

30,536

-

30,536

Residential pass-through securities

-

130,550

-

130,550

Commercial pass-through securities

-

8,177

-

8,177

Total mortgage-backed securities

-

169,263

-

169,263

Total securities available for sale
$
-

$
612,760

$
1,000

$
613,760

Derivative instruments

Interest rate swaps
$
-

$
7,372

$
-

$
7,372

Interest rate caps

-

140

-

140

Total derivatives
$
-

$
7,512

$
-

$
7,512

Investment Securities Available for Sale

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.

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.Derivatives

The Company has contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate caps and swaps. 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 to the financial instruments noted above,~~

Those assets measured at December 31, 2017 and June 30, 2017, the Company’s pipeline of loans held for sale included $15.8 million and $18.4 million, respectively, of “in process” loans whose terms included interest rate locks to borrowers that were paired withfair value on a ~~“non-binding” best-efforts commitment to sell the loan to a buyer at a fixed price and within a predetermined timeframe after the sale commitment was established.~~recurring basis are summarized below:

	March 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		-		43,060		-		43,060
Asset-backed securities		-		250,741		-		250,741
Collateralized loan obligations		-		169,776		-		169,776
Corporate bonds		-		173,462		-		173,462
Trust preferred securities		-		2,881		-		2,881
Total debt securities		-		639,920		-		639,920

Mortgage-backed securities available for sale:
Collateralized mortgage obligations		-		16,800		-		16,800
Residential pass-through securities		-		806,655		-		806,655
Commercial pass-through securities		-		315,595		-		315,595
Total mortgage-backed securities		-		1,139,050		-		1,139,050
Total securities available for sale	$	-	$	1,778,970	$	-	$	1,778,970
Interest rate contracts		-		4,302		-		4,302

Total assets	$	-	$	1,783,272	$	-	$	1,783,272

Liabilities:
Interest rate contracts	$	-	$	1,318	$	-	$	1,318
Total liabilities	$	-	$	1,318	$	-	$	1,318

- 40 -

	June 30, 2020
	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		-		54,054		-		54,054
Asset-backed securities		-		172,447		-		172,447
Collateralized loan obligations		-		193,788		-		193,788
Corporate bonds		-		143,639		-		143,639
Trust preferred securities		-		2,627		-		2,627
Total debt securities		-		566,555		-		566,555

Mortgage-backed securities available for sale:
Collateralized mortgage obligations		-		30,903		-		30,903
Residential pass-through securities		-		561,954		-		561,954
Commercial pass-through securities		-		226,291		-		226,291
Total mortgage-backed securities		-		819,148		-		819,148
Total securities available for sale		-		1,385,703		-		1,385,703
Interest rate contracts		-		235		-		235

Total assets	$	-	$	1,385,938	$	-	$	1,385,938

Liabilities:
Interest rate contracts	$	-	$	18,177	$	-	$	18,177
Total liabilities	$	-	$	18,177	$	-	$	18,177

Assets Measured on a Non-Recurring Basis:

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a non-recurring basis at March 31, 2021 and June 30, 2020:

Collateral Dependent Individually Analyzed / Impaired Loans:

The fair value of collateral dependent loans that are individually analyzed or were previously deemed impaired is determined based upon the appraised fair value of the underlying collateral, less costs to sell. Such collateral primarily consists of real estate and, to a lesser extent, other business assets. Management may also adjust appraised values to reflect estimated changes in market values or apply other adjustments to appraised values resulting from its knowledge of the collateral. Internal valuations may be utilized to determine the fair value of other business assets. For non-collateral-dependent loans, management estimates fair value using discounted cash flows based on inputs that are largely unobservable and instead reflect management’s own estimates of the assumptions as a market participant would in pricing such loans. Collateral dependent individually analyzed / impaired loans are considered a Level 3 valuation by the Company.

- 41 -

Other Real Estate Owned

Other real estate owned is recorded at estimated fair value, less estimated selling costs when acquired, thus establishing a new cost basis. Fair value is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for credit losses. If further declines in the estimated fair value of the asset occur, a write-down is recorded through expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions.

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

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

Real estate owned, net:
Collateral dependent loans:
Residential mortgage	$	-	$	-	$	-	$	-	$	-	$	-	$	1,887	$	1,887
Non-residential mortgage		-		-		108		108		-		-		7,577		7,577
Total	$	-	$	-	$	108	$	108	$	-	$	-	$	9,464	$	9,464

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

	June 30, 2017								June 30, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In Thousands)								(In Thousands)
Impaired loans:
Residential mortgage	$	-	$	-	$	5,711	$	5,711	$	-	$	-	$	2,339	$	2,339
Non-residential mortgage		-		-		2,126		2,126		-		-		2,282		2,282
Commercial business		-		-		119		119		-		-		129		129
Total	$	-	$	-	$	7,956	$	7,956	$	-	$	-	$	4,750	$	4,750

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

- 4142 -

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, 2017										March 31, 2021
	Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average			Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average
	(In Thousands)										(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:
Collateral dependent loans:
Residential mortgage	$	-	Market valuation of property	(2)	Selling costs	(3)	N/A	N/A			$	1,887	Market valuation of underlying collateral	⁽¹⁾	Adjustments to reflect current conditions/selling costs	⁽²⁾	7% - 12%		8.57	%
Non-residential mortgage		108	Market valuation of property	(2)	Selling costs	(3)	6%		6.00	%		7,577	Market valuation of underlying collateral	⁽¹⁾	Adjustments to reflect current conditions/selling costs	⁽²⁾	9% - 20%		14.77	%
Total	$	108									$	9,464

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

	June 30, 2017										June 30, 2020
	Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average			Fair Value		Valuation Techniques		Unobservable Input		Range	Weighted Average
	(In Thousands)										(In Thousands)
Impaired loans:
Residential mortgage	$	5,711	Market valuation of collateral	(1)	Selling costs	(3)	6% - 21%		8.12	%	$	2,339	Market valuation of underlying collateral	⁽¹⁾	Adjustments to reflect current conditions/selling costs	⁽²⁾	7% - 9%		8.17	%
Non-residential mortgage		2,126	Market valuation of collateral	(1)	Selling costs	(3)	0% - 12%		6.93	%		2,282	Market valuation of underlying collateral	⁽¹⁾	Adjustments to reflect current conditions/selling costs	⁽²⁾	9% - 12%		10.27	%
Commercial business		119	Market valuation of collateral	(1)	Selling costs	(3)	9% - 20%		12.79	%		129	Market valuation of underlying collateral	⁽¹⁾	Adjustments to reflect current conditions/selling costs	⁽²⁾	0% - 0%		0.00	%
Total	$	7,956									$	4,750

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

(1)

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

(2)

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

(3)

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

~~An impaired loan is evaluated and~~At March 31, 2021, collateral dependent loans 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 ausing Level 3 ~~in the~~inputs comprised loans with principal balances totaling $15.0 million and valuation allowances of $5.5 million reflecting 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~~values 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 the expected repayments or collateral exceeds the recorded investments in such loans. Impaired loans are reviewed and evaluated on$9.5 million. By comparison, at ~~least a quarterly basis for additional impairment and adjusted accordingly.~~

~~At December 31, 2017,~~June 30, 2020, under previously applicable GAAP, impaired loans valued using Level 3 inputs comprised loans with principal balances totaling ~~$5.0~~$4.8 million and valuation allowances of ~~$43,000~~$89,000 reflecting fair values of $5.0 million. By comparison, at June 30, 2017, impaired loans valued using Level 3 inputs comprised loans with principal balances totaling $8.2 million and valuation allowances of $199,000 reflecting fair values of $8.0$4.8 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~~March 31, ~~2017,~~2021 and June 30, 2020, the Company held other real estate owned totaling ~~$108,000 whose carrying value was written down utilizing Level 3 inputs. At June 30, 2017, the Company held no real estate owned~~$178,000 whose carrying value was written down utilizing Level 3 inputs.

- 4243 -

The following ~~methods~~tables present the carrying amount, fair value, and ~~assumptions were used to estimate~~placement in the fair value hierarchy of ~~each class of~~the Company’s financial instruments ~~at December~~as of March 31, ~~2017~~2021 and June 30, ~~2017:~~2020:

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

	March 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	$	108,991	$	108,991	$	108,991	$	-	$	-
Investment securities available for sale		1,778,970		1,778,970		-		1,778,970		-
Investment securities held to maturity		27,168		28,408		-		28,408		-
Loans held-for-sale		5,172		5,181		-		5,181		-
Net loans receivable		4,734,477		4,763,215		-		-		4,763,215
FHLB Stock		45,578		-		-		-		-
Interest receivable		20,562		20,562		3		4,887		15,672
Interest rate contracts		4,302		4,302		-		4,302		-

Financial liabilities:
Deposits		5,374,452		5,382,474		3,574,411		-		1,808,063
Borrowings		865,763		881,900		-		-		881,900
Interest payable on deposits		183		183		138		-		45
Interest payable on borrowings		1,528		1,528		-		-		1,528
Interest rate contracts		1,318		1,318		-		1,318		-

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

	June 30, 2020
	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	$	180,967	$	180,967	$	180,967	$	-	$	-
Investment securities available for sale		1,385,703		1,385,703		-		1,385,703		-
Investment securities held to maturity		32,556		34,069		-		34,069		-
Loans held-for-sale		20,789		21,550		-		21,550		-
Net loans receivable		4,461,070		4,462,232		-		-		4,462,232
FHLB Stock		58,654		-		-		-		-
Interest receivable		17,373		17,373		4		4,154		13,215
Interest rate contracts		235		235		-		235		-

Financial liabilities:
Deposits		4,430,282		4,449,877		2,589,886		-		1,859,991
Borrowings		1,173,165		1,215,529		-		-		1,215,529
Interest payable on deposits		395		395		295		-		100
Interest payable on borrowings		1,723		1,723		-		-		1,723
Interest rate contracts		18,177		18,177		-		18,177		-

~~Loans Receivable.~~ Except for certain impaired loans as previously discussed, the fair value of loans receivable is estimated by discounting the future cash flows, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, of such loans.- 44 -

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

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

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

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

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

~~- 43 -~~

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

December 31, 2017

Carrying
Amount

Fair
Value

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(In Thousands)

Financial assets:

Cash and cash equivalents
$
50,685

$
50,685

$
50,685

$
-

$
-

Debt securities available for sale

485,954

485,954

-

484,954

1,000

Mortgage-backed securities
available for sale

151,717

151,717

-

151,717

-

Debt securities held to maturity

125,671

125,882

-

125,882

-

Mortgage-backed securities
held to maturity

345,781

344,649

-

344,649

-

Loans held-for-sale

3,490

3,490

-

3,490

-

Net loans receivable

3,261,450

3,180,407

-

-

3,180,407

FHLB Stock

39,113

N/A

N/A

N/A

N/A

Interest receivable

13,524

13,524

5

3,557

9,962

Financial liabilities:

Deposits⁽¹⁾

3,033,766

3,047,812

1,672,197

-

1,375,615

Borrowings

798,864

814,732

-

-

814,732

Interest payable on borrowings

1,530

1,530

-

-

1,530

~~(1)~~

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

~~- 44 -~~

June 30, 2017

Carrying
Amount

Fair
Value

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

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(In Thousands)

Financial assets:

Cash and cash equivalents
$
78,237

$
78,237

$
78,237

$
-

$
-

Debt securities available for sale

444,497

444,497

-

443,497

1,000

Mortgage-backed securities
available for sale

169,263

169,263

-

169,263

-

Debt securities held to maturity

144,713

145,505

-

145,505

-

Mortgage-backed securities
held to maturity

348,608

350,289

-

350,289

-

Loans held-for-sale

4,692

4,692

-

4,692

-

Net loans receivable

3,215,975

3,137,304

-

-

3,137,304

FHLB Stock

39,958

N/A

N/A

N/A

N/A

Interest receivable

12,493

12,493

6

3,169

9,318

Financial liabilities:

Deposits⁽¹⁾

2,930,127

2,943,908

1,639,059

-

1,304,849

Borrowings

806,228

823,435

-

-

823,435

Interest payable on borrowings

1,391

1,391

-

-

1,391

~~(1)~~

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

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

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

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

~~- 45 -~~

~~18.~~15. COMPREHENSIVE INCOME

The components of accumulated other comprehensive income included in stockholders’ equity at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017~~2020 are as follows:

	December 31,			June 30,			March 31,			June 30,
	2017			2017			2021			2020
	(In Thousands)						(In Thousands)
Net unrealized loss on securities available for sale	$	(2,463	)	$	(2,385	)
Stranded tax effect ⁽¹⁾		316			-
Tax effect		677			975
Net of tax amount		(1,470	)		(1,410	)

Net unrealized loss on securities available for sale transferred to held to maturity		(1,006	)		(1,109	)
Stranded tax effect ⁽¹⁾		128			-
Net unrealized gain on securities available for sale							$	1,654		$	22,482
Tax effect		283			453			(411	)		(6,541	)
Net of tax amount		(595	)		(656	)		1,243			15,941

Fair value adjustments on derivatives		15,453			6,319			1,511			(19,418	)
Stranded tax effect ⁽¹⁾		(1,969	)		-
Tax effect		(4,344	)		(2,582	)		(449	)		5,730
Net of tax amount		9,140			3,737			1,062			(13,688	)

Benefit plan adjustments		(1,122	)		(1,061	)		(1,350	)		(1,412	)
Stranded tax effect ⁽¹⁾		144			-
Tax effect		315			434			402			416
Net of tax amount		(663	)		(627	)		(948	)		(996	)

Total accumulated other comprehensive income	$	6,412		$	1,044		$	1,357		$	1,257

~~(1)~~

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

- 4645 -

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

Three Months Ended

Six Months Ended

December 31,

December 31,

2017

2016

2017

2016

(In Thousands)

(In Thousands)

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

$
(8,251
)

$
(78
)

$
(6,436
)

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

74

(43
)

103

(36
)

Net realized gain on securities available for sale

-

10

-

10

Net unrealized gain on derivatives

7,489

23,755

9,134

29,099

Benefit plans:

Amortization of actuarial loss ⁽²⁾

11

16

22

32

Net actuarial loss

-

-

(83
)

(394
)
Net change in benefit plan accrued expense

11

16

(61
)

(362
)

Other comprehensive income before taxes

5,563

15,487

9,098

22,275

Stranded tax effects ⁽³⁾

(1,381
)

-

(1,381
)

-

Tax effect⁽⁴⁾

(910
)

(6,759
)

(2,349
)

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

$
8,728

$
5,368

$
12,742

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2021			2020			2021			2020
	(In Thousands)						(In Thousands)
Net unrealized holding (loss) gain on securities available for sale	$	(22,285	)	$	3,975		$	(20,374	)	$	11,286

Amortization of net unrealized holding loss on securities available for sale transferred to held to maturity⁽¹⁾		-			-			-			596

Net realized gain on sale and call of securities available for sale ⁽²⁾		(18	)		(2,234	)		(454	)		(2,231	)

Fair value adjustments on derivatives		15,062			(18,742	)		20,929			(20,028	)

Benefit plans:
Amortization of actuarial loss		20			4			62			14
Net actuarial gain ⁽³⁾		-			-			-			471
Net change in benefit plan accrued expense		20			4			62			485

Other comprehensive (loss) income before taxes		(7,221	)		(16,997	)		163			(9,892	)
Tax effect		2,125			4,917			(63	)		2,928
Total other comprehensive (loss) income	$	(5,096	)	$	(12,080	)	$	100		$	(6,964	)

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

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

(3)	Represents amounts reclassified out of accumulated other comprehensive income and included in the computation of net periodic pension expense. See Note 1512 – Benefit Plans for additional information.

~~(3)~~

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

~~(4)~~

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

- 46 -

16. REVENUE RECOGNITION

All of the Company’s revenue from contracts with customers within the scope of ASC 606, Revenue from Contracts with Customers, is recognized within non-interest income. The following table presents the Company’s sources of non-interest income for the three and nine months ended March 31, 2021 and 2020. Sources of revenue outside the scope of ASC 606 are noted as such.

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2021		2020		2021		2020
	(In Thousands)				(In Thousands)
Non-interest income:
Deposit-related fees and charges	$	343	$	423	$	1,077	$	1,362
Loan-related fees and charges ⁽¹⁾		982		915		3,220		3,589
Gain on sale and call of securities ⁽¹⁾		18		2,234		454		2,231
Gain on sale of loans ⁽¹⁾		943		565		5,211		1,838
Loss on sale and write down of other real estate owned		-		-		-		(28	)
Income from bank owned life insurance ⁽¹⁾		1,530		1,532		4,722		4,688
Electronic banking fees and charges (interchange income)		456		309		1,265		920
Bargain purchase gain ⁽¹⁾		-		-		3,053		-
Other income ⁽¹⁾		1,194		223		1,351		117
Total non-interest income	$	5,466	$	6,201	$	20,353	$	14,717

(1)	Not within the scope of ASC 606.

A description of the Company’s revenue streams accounted for under ASC 606 is as follows:

Service Charges on Deposit Accounts

The Company earns fees from deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed at the point in the time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Gain (Loss) on Sales of Other Real Estate Owned (“OREO”)

The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. Gain (loss) on the sales of OREO falls within the scope of ASC 606, if the Company finances the transaction. Under ASC 606, if the Company finances the sale of OREO to the buyer, the Company is required to assess whether the buyer is committed to perform their obligations under the contract and whether the collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. Generally, the Company does not finance the sale of OREO properties.

Interchange Income

The Company earns interchange fees from debit and credit card holder transactions conducted through various payment networks. Interchange fees from cardholder transactions are recognized daily, concurrently with the transaction processing services provided by an outsourced technology solution.

- 47 -

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This ~~report~~Quarterly Report on Form 10-Q may include certain forward-looking statements based on current management expectations. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may”, “will”, “believe”, “expect”, “estimate”, “anticipate”, “continue”, or similar terms or variations on those terms, or the negative of those terms. The actual results of the Company could differ materially from those management expectations.This includes statements regarding ~~the planned merger of Clifton Bancorp Inc. (“Clifton”) with and into the Company, with the Company surviving the merger~~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.

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

~~Proposed Merger with Clifton Bancorp Inc.~~Impact of COVID-19

~~On November 1, 2017, Kearny Financial Corp.~~As the Company’s business is primarily conducted within the states of New Jersey and ~~Clifton Bancorp Inc., announced that~~New York, which have each been significantly impacted by COVID-19, the ~~companies have entered into a definitive agreement pursuant to which~~operations and operating results of the Company ~~will acquire Clifton in an all-stock transaction. Under~~have been similarly impacted.

Employee Matters. As the ~~terms~~COVID-19 pandemic has unfolded, and stay-at-home orders were mandated by government officials, many of our non-branch personnel have transitioned to working remotely, and have continued to do so through March 31, 2021. Our information technology infrastructure has afforded us the ability to work remotely with little interruption as we continue to service the needs of our clients. For those essential employees who are unable to work from home, we have provided personal protective equipment, established guidelines to maintain appropriate social distancing and have initiated enhanced cleaning of our facilities to ensure a safe working environment.

Retail Branches. At the outset of the ~~agreement, Clifton will merge~~pandemic we modified our branch hours and access to ensure the safety of our employees and clients. Where possible, branch lobbies were initially transitioned to appointment-only access, with the majority of branch operations being conducted via our drive-up windows. As certain branches did not have drive-up capabilities or suitable alternatives, we temporarily closed certain locations. In the months following, and in accordance with the protocols recommended by the CDC, we have outfitted our branches with protective barriers and continued to provide our staff with personal protective equipment. In addition, we have instituted policies requiring our clients to wear face masks and to adhere to social distancing protocols while visiting our branch locations. As the result of these modifications, as of March 31, 2021, all of our branches had re-opened their lobbies and were fully operational.

CARES Act, Paycheck Protection Program and Health Care Enhancement Act (“PPP Enhancement Act”). On March 27, 2020 the CARES Act was signed into law. Among the more significant components of the CARES Act, as it pertains to the Company, ~~and each outstanding share of Clifton common stock will be exchanged for 1.191 shares~~was the creation of the ~~Company’s common stock.~~PPP, the modification of rules and regulations surrounding troubled debt restructured loans and modifications to the tax code to allow for the carryback of net operating losses.

The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program called the Paycheck Protection Program. As part of this program the SBA guarantees 100% of the PPP loans made to eligible borrowers. As a qualified SBA lender, the Bank is automatically authorized to originate PPP loans. On April 16, 2020, the original authorization of $349 billion in funding for the PPP program was exhausted. On April 23, 2020, the PPP Enhancement Act was signed into law and provided an additional $310 billion in funding for the PPP program.

As of March 31, 2021 and including loans acquired in conjunction with the Company’s acquisition of MSB, we had approximately 35 loans with total outstanding balances of $20.9 million under the PPP.

- 48 -

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, including short-term payment deferrals, are not considered to be TDRs. Additional information regarding loans modified in accordance with this guidance are provided in the tables below.

The CARES Act included multiple provisions which impacted the tax code. One such provision restored net operating loss (“NOL”) carrybacks that were eliminated by the 2017 Tax Cuts and Jobs Act. The new carryback provision allows for a five year carryback of NOLs incurred by corporations in the 2018, 2019 and 2020 tax years. As a result of this provision the Company was able to carry back NOLs, which had been recorded at the current statutory federal rate of 21%, at the prior statutory rate of 34%.

2021 Consolidated Appropriations Act. As noted earlier, the 2021 Consolidated Appropriations Act was signed into law on December 27, 2020. This new legislation is a $900 billion relief package that includes legislation extending certain relief provisions from the CARES Act that were set to expire on December 31, ~~2017, Clifton~~2020. Of note for financial institutions, $286 billion was approved for additional PPP loans. As it relates to TDRs, the CARES Act permitted financial institutions to suspend TDR assessment and reporting requirements under GAAP for loan modifications. Set to expire on December 31, 2020, this new legislation extends this relief to the earlier of 60 days after the national emergency declared by the President is terminated or January 1, 2022.

Loan Portfolio. The government-mandated modification or suspension of certain business conduct or activities and the curtailment of non-essential travel has created an increased level of risk to certain segments of the loan portfolio. Additional disclosures surrounding portfolio-wide loan-to-value ratios for real estate secured loans, exposures to certain loan sectors and non-TDR loan modifications granted under section 4013 of the CARES Act are provided below.

The following table sets forth the composition of our real estate secured loans indicating the loan-to-value, by loan category, at March 31, 2021:

	March 31, 2021
	Balance		LTV
	(In Thousands)
Commercial mortgage loans:
Multi-family mortgage loans	$	2,055,396	63%
Nonresidential mortgage loans		1,110,765	55%
Total commercial mortgage loans		3,166,161	60%

One- to four-family residential mortgage		1,323,485	59%

Consumer loans:
Home equity loans		59,721	44%

Total mortgage loans	$	4,549,367	60%

The following table identifies our exposure to various loan sectors at March 31, 2021:

	March 31, 2021
	Real-Estate Secured							Non-Real Estate Secured				Total
	# of Loans		Balance		LTV			# of Loans		Balance		# of Loans		Balance
	(Dollars In Thousands)
Hotel		3	$	3,841		60	%		6	$	1,341		9	$	5,182
Restaurant		13		7,891		50	%		35		4,739		48		12,630
Retail shopping center		126		319,561		55	%		2		51		128		319,612
Entertainment & recreation		5		6,653		45	%		13		2,933		18	��	9,586
Wholesale commercial business		-		-	N/A				13		17,930		13		17,930
Wholesale consumer unsecured		-		-	N/A				15		25		15		25
Total		147	$	337,946		55	%		84	$	27,019		231	$	364,965

- 49 -

Loan modifications in the table below reflect those loans whose modification includes a deferral that was still in effect at March 31, 2021. As of March 31, 2021, the Company had ~~approximately $1.7 billion~~active modifications on 32 loans totaling $52.9 million in principal balances, representing 1.10% of ~~assets, $1.2 billion~~total loans.

The following table sets forth the composition of loans ~~and $935 million~~with modifications by loan segment as 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.March 31, 2021:

	March 31, 2021
	# of Loans ⁽¹⁾		Balance		% of Total Loans
	(Dollars In Thousands)
Commercial loans:
Multi-family mortgage loans		7	$	29,880	0.62%
Nonresidential mortgage		4		11,641	0.24%
Commercial business		2		2,121	0.04%
Total commercial loans		13		43,642	0.90%

One- to four-family residential mortgage		17		7,788	0.16%

Consumer loans:
Home equity loans		2		1,513	0.03%

Total		32	$	52,943	1.10%

Comparison of Financial Condition at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017~~2020

~~General.~~Executive Summary. Total assets increased ~~$25.7~~by $599.8 million to ~~$4.84~~$7.36 billion at ~~December~~March 31, ~~2017~~2021 from ~~$4.82~~$6.76 billion at June 30, ~~2017. The net increase~~2020. As described in ~~total assets primarily reflected increases in net loans receivable and securities available for sale that were partially offset by decreases in~~greater detail below, the ~~balances of cash and cash equivalents, securities held to maturity and deferred income taxes. The~~ net increase in total assets was ~~largely funded by an~~due, in part, to the Company’s July 10, 2020 acquisition of MSB. The increase primarily reflected increases in ~~deposits that was~~investment securities, net loans receivable and other assets, partially offset by decreases in ~~the balance of borrowings and stockholders’ equity.~~

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

~~Debt Securities Available for Sale.~~ ~~Debt~~Investment Securities. Investment securities ~~classified as~~ available for sale increased by ~~$41.5~~$393.3 million, to ~~$486.0 million~~$1.78 billion at ~~December~~March 31, ~~2017~~2021, from ~~$444.5 million~~$1.39 billion at June 30, ~~2017.~~2020. The net increase in the portfolio ~~partly~~during the nine months ended March 31, 2021 reflected security purchases totaling ~~$76.1 million for the six months ended December 31, 2017 coupled with a $689,000~~$865.2 million. The net increase in the ~~fair value of the portfolio to a net unrealized loss of $709,000 at December 31, 2017 from a net unrealized loss of $1.4 million at June 30, 2017. The increase in~~

~~- 48 -~~

~~the fair value of the~~ portfolio was ~~partly attributable to movements in market interest rates coupled with a tightening of pricing spreads within certain sectors in the portfolio. The noted increases in the portfolio were~~ partially offset by security sales totaling $44.4 million, $410.1 million in principal ~~repayments,~~repayment, net of premium amortization and discount accretion, ~~totaling $35.3~~and a $20.8 million ~~during the six months ended December 31, 2017.~~

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

~~Mortgage-backed Securities Available for Sale.~~ Mortgage-backed 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~~gain of ~~$1.8~~$1.7 million. Also included in this increase were securities acquired from MSB with fair values of $3.5 million at ~~December 31, 2017 from a net unrealized loss~~the time of ~~$986,000 at June 30, 2017.~~ acquisition.

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

~~Debt Securities Held to Maturity.~~ ~~Debt securities classified as~~ held to maturity decreased by ~~$19.0~~$5.4 million to ~~$125.7~~$27.2 million at ~~December~~March 31, ~~2017~~2021 from ~~$144.7~~$32.6 million at June 30, ~~2017. The net~~2020. This decrease ~~in the portfolio partly reflected cash~~was attributable to principal 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.amortization.

Additional information regarding investment securities ~~held to maturity at December 31, 2017~~as of those dates is presented in Note ~~9 and Note 10~~6 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~~held-for-sale totaled ~~$3.5~~$5.2 million at ~~December~~March 31, ~~2017~~2021 as compared to ~~$4.7~~$20.8 million at June 30, ~~2017~~2020 and are reported separately from the balance of net loans ~~receivable as~~receivable. During the nine months ended March 31, 2021, $265.3 million of ~~those dates.~~residential mortgage loans were sold, resulting in net gains on sale of $4.9 million.

- 50 -

Net Loans Receivable. ~~Loans~~Net loans receivable ~~net of unamortized premiums, deferred costs and the allowance for loan losses,~~ increased by ~~$45.5~~$273.4 million to ~~$3.26~~$4.73 billion at ~~December~~March 31, ~~2017~~2021 from ~~$3.22~~$4.46 billion at June 30, ~~2017. The~~2020. Included in this increase were loans with fair values totaling $530.2 million that were acquired in ~~net loans receivable was primarily attributable to new loan origination and purchase volume outpacing loan repayments during~~conjunction with the ~~six months ended December 31, 2017.~~

~~Residential mortgage loans held in portfolio, including home equity loans and lines~~acquisition of ~~credit, increased by $5.1 million to $655.3 million at December 31, 2017 from $650.1 million at June 30, 2017. The~~MSB. Partially offsetting this increase was ~~primarily attributable~~a net decrease in non-acquired loans which resulted, in part, from elevated levels of loan prepayment activity, largely concentrated within the one- to ~~an increase~~four-family residential portfolio, and a decrease of $48.0 million in PPP loan balances. Detail regarding the changes in the balance of one-to-four family first mortgage loans of $7.0 million to $574.3 million at December 31, 2017 from $567.3 million at June 30, 2017. The increase in one-to-four family first mortgage loans was partially offset be an aggregate decrease of $1.9 million inloan portfolio is presented below:

~~- 49 -~~

	March 31,			June 30,			Increase/
	2021			2020			(Decrease)
	(In Thousands)
Commercial loans:
Multi-family mortgage	$	2,055,396		$	2,059,568		$	(4,172	)
Nonresidential mortgage		1,110,765			960,853			149,912
Commercial business		183,181			138,788			44,393
Construction		95,533			20,961			74,572
Total commercial loans		3,444,875			3,180,170			264,705

One- to four-family residential mortgage		1,323,485			1,273,022			50,463

Consumer loans:
Home equity loans		59,721			82,920			(23,199	)
Other consumer		3,445			3,991			(546	)
Total consumer		63,166			86,911			(23,745	)

Total loans		4,831,526			4,540,103			291,423

Unaccreted yield adjustments		(33,287	)		(41,706	)		8,419
Allowance for credit losses		(63,762	)		(37,327	)		(26,435	)

Net loans receivable	$	4,734,477		$	4,461,070		$	273,407

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

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

Commercial and construction loans, in aggregate, increased by $46.4 million to $2.62 billion at December 31, 2017 from $2.58 billion 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.

Commercial loan origination volume for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 totaled ~~$198.5~~$371.4 million, which comprised ~~of $164.7~~$258.7 million of commercial mortgage loan originations, ~~augmented by $14.5~~$79.2 million of commercial business loan originations and construction loan disbursements ~~totaling $19.4 million during the period.~~of $33.5 million. Commercial loan originations for the period were augmented by the funding of purchased loans totaling $21.6 million. Additionally, in conjunction with the acquisition of MSB, the Company acquired commercial loans with fair values totaling approximately $389.3 million. At March 31, 2021, the balance of commercial loans included PPP loans totaling $20.9 million.

One- to four-family residential mortgage loan origination volume for the nine months ended March 31, 2021, excluding loans held-for-sale, totaled $352.9 million and was augmented with the ~~purchase~~funding of ~~business~~purchased loans totaling ~~$26.7 million during~~$13.0 million. Home equity loan and line of credit origination volume for the ~~six months ended December 31, 2017.~~

~~Other~~same period totaled $11.5 million. Additionally, in conjunction with the acquisition of MSB, the Company acquired one- to four-family residential mortgage loans ~~primarily account~~and home equity loans ~~deposit account overdraft~~and lines of credit with fair values totaling approximately $121.7 million and ~~other consumer~~$19.1 million, respectively.

Additional information about the Company’s loans ~~decreased~~at March 31, 2021 and June 30, 2020 is presented in Note 7 to the unaudited consolidated financial statements.

Nonperforming Loans and TDRs. Nonperforming loans increased by ~~$4.5~~$34.7 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~~$71.4 million, or ~~0.50%~~1.49% of total loans at ~~December~~March 31, ~~2017,~~2021, from ~~$18.9~~$36.7 million, or ~~0.58%~~0.82% of total loans at June 30, ~~2017. Nonperforming~~2020. Included in this increase were $10.4 million of non-performing loans ~~generally~~acquired from MSB, whose fair values at acquisition reflected various levels of impairment. Non-performing loans at March 31, 2021 did not include $54.9 million of performing PCD loans ~~reported~~acquired from MSB.

- 51 -

TDRs are loans where the Company has modified the contractual terms of the loan as ~~“accruing loans over 90 days past due”~~a result of the financial condition of the 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. As noted above, based on Section 4013 of the CARES Act, the 2021 Consolidated Appropriations Act and ~~loans reported as “nonaccrual” with such balances~~related regulatory guidance promulgated by federal banking regulators, qualifying loan modifications, including short-term payment deferrals, are not considered to be TDRs. At March 31, 2021, the Company had accruing TDRs totaling ~~$31,000 and $16.3~~$7.9 million, ~~respectively,~~a decrease of $539,000 from $8.4 million at ~~December~~June 30, 2020. At March 31, ~~2017.~~2021, the Company had non-accrual TDRs totaling $11.3 million, a decrease of $1.8 million from $13.1 million at June 30, 2020.

Additional information about the Company’s nonperforming loans at ~~December~~March 31, ~~2017~~2021 and June 30, 2020 is presented in Note 117 to the unaudited consolidated financial statements.

Allowance for ~~Loan Losses.~~ ~~During~~Credit Losses (“ACL”). At March 31, 2021, the ~~six months ended December 31, 2017, the balance of the allowance for loan losses increased by $780,000 to $30.1~~ACL totaled $63.8 million, or ~~0.91%~~1.32% of total loans, ~~at December 31, 2017~~reflecting an increase of $26.4 million from ~~$29.3~~$37.3 million, or ~~0.90%~~0.82% of total loans, at June 30, ~~2017. The~~2020. This increase resulted from ~~provisions~~the adoption of ~~$1.6~~CECL, which increased the ACL for loans receivable by $19.6 million, ~~during~~ the ~~six months ended December 31, 2017 that were partially offset by charge-offs, net~~establishment of ~~recoveries,~~an ACL for loans acquired from MSB totaling ~~$786,000 during that same period.~~

~~With regard~~$9.0 million and an increase in the portion of the ACL attributable to loans individually evaluated for ~~impairment, the balance of our allowance for loan losses~~impairment. This increase was partially offset by a reduction in ACL attributable to ~~such loans decreased by $156,000 to $43,000 at December 31, 2017 from $199,000 at June 30, 2017. The balance at December 31, 2017 reflected~~ the allowance for impairment identified on $661,000 of impaired loans while an additional $19.2 million of impaired loans had no allowance for impairment as of that date. By comparison, the balance at June 30, 2017 reflected the allowance for impairment identified on $3.1 million of impaired loans while an additional $18.9 million of impaired loans had no allowance for impairment as of that date. The outstanding balances of impaired loans reflect the cumulative effects of ~~various adjustments including, but not limited to, purchase accounting valuations and prior charge-offs, where applicable, which are considered in the evaluation of impairment.~~

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

~~- 50 -~~

~~was partly attributable to~~ a $49.3 million increase in the aggregate outstanding balance of loans collectively evaluated for impairment to $3.27 billion at December 31, 2017 from $3.22 billion at June 30, 2017, as well as the ongoing reallocation of loans within the portfolio in favor of commercial and construction loans, to which we generally assign comparatively higher historical and environmental loss factors in our allowance 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 increasedecrease 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.that was collectively evaluated for impairment and net charge-offs.

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 inSee Note 71 to the unaudited consolidated financial statements regarding the ~~use of a current expected credit loss (“CECL”) model~~process and methodology employed to ~~calculate credit losses, may require increases in~~estimate the ~~allowance for loan losses upon adoption of the applicable accounting standard.~~

ACL. Additional information about the ~~allowance for loan losses~~ACL at ~~December~~March 31, ~~2017~~2021 and June 30, 2020 is presented in Note 118 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~~$26.1 million to ~~$419.1~~$703.2 million at ~~December~~March 31, ~~2017~~2021 from ~~$412.1~~$677.1 million at June 30, ~~2017.~~2020.

The increase in other assets ~~partly~~primarily reflected ~~an $8.3 million increase in~~ the ~~fair value~~impact 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~~MSB acquisition through which the Company acquired other assets with fair values totaling $34.1 million. The increase 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~~was partially offset by ~~an $8.6 million~~a 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 expenseFHLB stock during the ~~three~~nine months ended ~~December~~March 31, 2017. The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognized for income tax reporting purposes. That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the

~~- 51 -~~

Company’s interest rate derivatives and available for sale securities portfolios. The remaining change in the balance of the Company’s net deferred income tax asset was attributable to recurring changes in its underlying components, as discussed above.2021.

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

Deposits. Total deposits increased by ~~$103.6~~$944.2 million to ~~$3.03~~$5.37 billion at ~~December~~March 31, ~~2017~~2021 from ~~$2.93~~$4.43 billion at June 30, ~~2017.~~2020. The increase in ~~deposit balances~~deposits reflected ~~a $7.7~~the impact of the MSB acquisition through which the Company assumed deposits with fair values totaling $460.2 million ~~increase in non-interest-bearing deposits~~ coupled with ~~a $96.0 million increase~~organic growth in ~~interest-bearing deposits.~~deposits of $484.0 million. The ~~increase in interest-bearing deposits included increases in~~following table sets forth the balances of interest-bearing checking accounts and certificates of deposit totaling $32.1 million and $70.5 million, respectively, that were partially offset by a decrease in the balance of savings and clubs accounts totaling $6.6 million for the period.

The change in deposit balances for the period reflected changes in the balances of retail deposits as well as “non-retail” deposits acquired through various wholesale channels. The $32.1 million increase in the balance of interest-bearing checking accounts primarily reflected a $32.6 million increase in the balance of retail accounts. The increase in retail account balances was partially offset by a $566,000 decrease in the balance of brokered money market deposits acquired through Promontory Interfinancial Network’s (“Promontory”) Insured Network Deposits (“IND”) program to $222.0 million, or 7.3%distribution of total deposits, by type, at ~~December 31, 2017 from $222.6 million, or 7.6% of total~~the dates indicated:

	March 31,		June 30,
	2021			2020	Increase
	(In Thousands)
Non-interest-bearing deposits	$	545,746	$	419,138	$	126,608

Interest-bearing deposits:
Interest-bearing demand		1,923,184		1,264,151		659,033
Savings		1,105,481		906,597		198,884
Certificates of deposit		1,800,041		1,840,396		(40,355	)
Interest-bearing deposits		4,828,706		4,011,144		817,562
Total deposits	$	5,374,452	$	4,430,282	$	944,170

Additional information about the Company’s deposits at March 31, 2021 and June 30, ~~2017. The terms of~~2020 is presented in Note 9 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. 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.- 52 -

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

Borrowings. The balance of borrowings decreased by ~~$7.3~~$307.4 million to ~~$798.9~~$865.8 million at ~~December~~March 31, ~~2017~~2021 from ~~$806.2 million~~$1.17 billion at June 30, ~~2017. The~~2020 and reflected the repayment of maturing FHLB advances totaling $275.0 million, the pre-payment of FHLB advances totaling $27.0 million and a decrease in depositor sweep accounts totaling $5.7 million. In conjunction with the acquisition of MSB, the Company assumed overnight FHLB advances with fair values totaling $62.9 million, which were immediately repaid.

Additional information about the Company’s borrowings ~~primarily reflected a $7.3 million decrease~~at March 31, 2021 and June 30, 2020 is presented in Note 10 to the ~~outstanding balance of overnight “sweep account” balances linked to customer demand deposits that generally reflected normal operating fluctuations in such balances.~~unaudited consolidated financial statements.

Other Liabilities. The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, decreased by ~~$2.7~~$16.6 million to ~~$21.9~~$54.0 million at ~~December~~March 31, ~~2017~~2021 from ~~$24.6~~$70.6 million at June 30, ~~2017.~~2020. The change in the balance of other liabilities reflected the adoption of CECL, as noted above. At adoption the Company increased its ACL by $536,000 for unfunded loan commitments while also recording a provision for ACL of $730,000 during the nine months ended March 31, 2021. The change in other liabilities also reflected a $16.9 million decrease in the fair value of the Company’s outstanding liability derivatives positions. The remaining change generally reflected normal operating fluctuations in the balances of other liabilities during the period.

Stockholders’ Equity. Stockholders’ equity decreased by ~~$67.9~~$20.4 million to ~~$989.3 million~~$1.06 billion at ~~December~~March 31, ~~2017~~2021 from ~~$1.06~~$1.08 billion at June 30, ~~2017.~~2020. The decrease in stockholders’ equity during the nine months ended March 31, 2021 largely reflected ~~the impact of the Company’s~~ share repurchases ~~during~~totaling $80.6 million, cash dividends totaling $20.8 million and a $14.2 million cumulative effect adjustment related to the ~~first six months~~adoption of ~~fiscal 2018. The~~CECL, partially offset by the issuance of $45.1 million of capital stock in conjunction with the acquisition of MSB and net income of $44.8 million.

Book value per share increased by $0.02 to $12.98 at March 31, 2021 while tangible book value per share decreased by $0.03 to $10.36 at March 31, 2021.

In March 2019 the Company ~~had previously~~ announced its ~~second share~~fourth stock repurchase ~~program in May 2017 through~~plan which ~~it intends to~~authorized the repurchase ~~a total~~ of ~~8,559,084~~9,218,324 shares, or 10%, of the outstanding shares as of that date. On March 25, 2020, that plan was temporarily suspended due to the risks and uncertainties associated with the COVID-19 pandemic. On October 19, 2020, the Company announced the resumption of that plan which had, as of that date, 761,030 shares of common stock remained to be repurchased. In addition, the Company announced the approval of a fifth repurchase plan totaling 4,475,523 shares, or 5% of the Company’s then outstanding common stock which was implemented upon the completion of the fourth stock repurchase plan. On January 22, 2021, the Company announced the completion of its ~~outstanding shares.~~ fifth stock repurchase plan and the authorization of a sixth stock repurchase plan to repurchase up to 4,210,520 shares, or 5% of the shares then outstanding.

During the ~~six~~nine months ended ~~December~~March 31, ~~2017,~~2021, the Company repurchased ~~4,746,840~~a total of 7,535,253 shares of its common stock which were repurchased in conjunction with the Company’s fourth, fifth and sixth repurchase plans. Such shares were repurchased at a total cost of ~~$69.3~~$80.6 million orand at an average cost of ~~$14.60~~$10.69 per share. ~~Cumulatively, the Company has~~

Including shares previously repurchased, ~~a total of 5,986,840 shares, or 70% of~~ the shares ~~to be~~associated with the fourth repurchase plan were repurchased ~~under its second share repurchase program~~ at a total cost of ~~$87.0~~$117.9 million orand at an average cost of ~~$14.54~~$12.79 per share. The ~~cumulative~~Company fully repurchased shares associated with the Company’s fifth share repurchase plan during the quarter ended March 31, 2021, such shares were repurchased at a total cost of $46.9 million and at an average cost of $10.48 per share. The shares repurchased related to the Company’s sixth share repurchase plan were repurchased ~~shares has directly reduced the balance~~at a total cost of ~~stockholders’ equity~~$26.9 million and at ~~December 31, 2017.~~

~~The net decrease in stockholders’ equity was partially offset by net income~~an average cost 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~~$11.69 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.share.

- 5253 -

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 December~~Quarter ended March 31, ~~2017~~2021 and ~~December~~March 31, ~~2016~~2020

~~General~~Net Income. Net income for the ~~three months~~quarter ended ~~December~~March 31, ~~2017~~2021 was ~~$1.3~~$16.4 million, or ~~$0.02~~$0.20 per diluted ~~share; a decrease of $4.2 million from $5.5~~share, compared to $9.3 million, or ~~$0.06~~$0.11 per diluted share for the ~~three months~~quarter ended ~~December~~March 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, partially offset by a decrease in ~~greater detail below, the noted~~non-interest income, an increase in non-interest expense and an increase in income tax expense primarily reflected the impact of federal income tax reform that was codified by the Act during the three months ended December 31, 2017 while the noted increase in non-interest expense partly reflected the recognition of certain merger-related expenses related to the Company’s proposed acquisition of Clifton during the period.expense.

Net Interest Income. Net interest income ~~for the three months ended December 31, 2017 was $26.8 million; an increase of $1.2~~increased by $10.0 million ~~from $25.6~~to $47.6 million for the ~~three months~~quarter ended ~~December~~March 31, ~~2016.~~2021. The increase ~~in net interest income~~ between the comparative periods resulted from ~~an increase~~a decrease of $10.5 million in interest ~~income of $3.7 million that was~~expense partially offset by ~~an increase~~a decrease of ~~$2.5 million~~$463,000 in interest ~~expense.~~ income.

The ~~increase~~decrease in interest ~~income was attributable to~~expense for the quarter ended March 31, 2021, reflected an ~~increase~~86 basis points decrease in the average ~~balance~~cost of ~~interest-earning assets coupled with an increase in their average yield. The increase in interest expense resulted from an~~interest-bearing liabilities to 0.75%, partially offset by a $435.5 million increase in the average balance of interest-bearing liabilities ~~coupled with~~to $5.69 billion. For the same period, interest expense on deposits decreased by $8.1 million to $6.7 million and was attributable to a 94 basis points decrease in the cost of interest-bearing deposits, partially offset by an $865.5 million increase in their average ~~cost.~~

~~These factors contributed~~balance. For the quarter ended March 31, 2021, interest expense on borrowings decreased by $2.4 million to $4.0 million and was attributable to a ~~four~~decrease of $430.0 million in the average balance of borrowings coupled with a 13 basis points decrease in ~~our net interest rate spread to 2.14% for the three months ended December 31, 2017 from 2.18% for the three months ended December 31, 2016.~~ their cost.

The decrease in ~~the net~~ interest ~~rate spread~~income of $463,000 reflected a 1638 basis points ~~increase~~decrease in the ~~average cost~~yield on ~~interest-bearing liabilities to 1.27% for three months ended December 31, 2017 from 1.11% for the three months ended December 31, 2016. For those same comparative periods,~~ the average ~~yield~~balance of interest-earning assets to 3.46% that was partially offset by an increase to their average balance of $616.7 million to $6.73 billion. Interest income on loans 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~~$2.7 million to ~~$38.0~~$49.3 million for the ~~three months~~quarter ended ~~December~~March 31, ~~2017 from $34.3 million for the three months ended December 31, 2016. The increase in interest income partly reflected~~2021 and was primarily attributable to a ~~$284.4~~$312.6 million increase in the average balance of ~~interest-earning assets~~loans to ~~$4.46 billion for~~$4.82 billion. For the ~~three months ended December 31, 2017 from $4.18 billion for~~same period, the ~~three months ended December 31, 2016. For those same comparative periods, the~~average yield on ~~earning assets increased by 12~~loans decreased five basis points to ~~3.41% from 3.29%~~4.09%.

~~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~~decrease in interest income on interest-earning assets, excluding loans, was ~~attributable~~due to decreases in interest income on taxable securities, tax-exempt securities and other interest-earning assets.

Net interest spread increased by 48 basis points to 2.71% for the quarter ended March 31, 2021, from 2.23% for the quarter ended March 31, 2020. Net interest margin increased 37 basis points to 2.83%, from 2.46%, for the same comparative periods. The increase in spread and margin was the result of a ~~net increase~~decrease in the average ~~balance~~cost of ~~loans~~interest-bearing liabilities that was partially offset by a ~~decline~~decrease in the average ~~yield.~~yield on interest-earning assets.

~~The~~Additional 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 of commercial~~balances, however interest receivable on these loans has been fully reserved for and construction loans to $2.60 billion for the three months ended December 31, 2017 from $2.21 billion for the three months ended December 31, 2016. Our commercial loans generally comprise commercial mortgage loans, including multi-familytherefore not included in interest income. The yields and ~~nonresidential mortgage loans, as well as secured and unsecured commercial business loans while construction loans generally~~costs set forth below include ~~loans secured by one- to four-family residential, multi-family and non-residential properties.~~

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

~~- 53 -~~

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

The effect on interest income attributable to the net increase in the average balance of loans was partially offset by the noted decrease in their average yield. The average yield on loans decreased by two basis points to 3.76% for the three months ended December 31, 2017 from 3.78% for the three months ended December 31, 2016. The reduction in the overall yield on our loan portfolio largely reflected the effect of ~~the comparatively lower average yield on most newly originated loans in relation~~deferred fees, discounts and premiums that are amortized or accreted 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~~or expense and exclude the ~~average balance~~impact of ~~mortgage-backed securities partially offset by an increase in their average yield.~~prepayment penalties, which are recorded to non-interest income.

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

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

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

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

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

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

Interest expense attributed to deposits increased by $1.2 million to $6.6 million for 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 in the average balance and average cost of interest-bearing deposits.

- 54 -

~~The average balance of interest-bearing deposits increased~~

	For the Quarter Ended March 31,
	2021								2020
	Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable ⁽¹⁾	$	4,816,592		$	49,307		4.09	%	$	4,503,996		$	46,603		4.14	%
Taxable investment securities⁽²⁾		1,674,223			7,891		1.89			1,406,973			10,526		2.99
Tax-exempt securities ⁽²⁾		73,573			410		2.23			101,771			547		2.15
Other interest-earning assets⁽³⁾		169,291			705		1.67			104,241			1,100		4.22
Total interest-earning assets		6,733,679			58,313		3.46			6,116,981			58,776		3.84
Non-interest-earning assets		617,440								598,335
Total assets	$	7,351,119							$	6,715,316

Interest-bearing liabilities:
Interest-bearing demand	$	1,831,617		$	1,558		0.34		$	1,112,080		$	3,251		1.17
Savings		1,084,981			557		0.21			838,501			1,782		0.85
Certificates of deposit		1,904,234			4,555		0.96			2,004,785			9,735		1.94
Total interest-bearing deposits		4,820,832			6,670		0.55			3,955,366			14,768		1.49
Borrowings		865,690			4,012		1.85			1,295,699			6,398		1.98
Total interest-bearing liabilities		5,686,522			10,682		0.75			5,251,065			21,166		1.61
Non-interest-bearing liabilities⁽⁴⁾		582,036								372,986
Total liabilities		6,268,558								5,624,051
Stockholders' equity		1,082,561								1,091,265
Total liabilities and stockholders' equity	$	7,351,119							$	6,715,316

Net interest income				$	47,631							$	37,610
Interest rate spread⁽⁵⁾							2.71	%							2.23	%
Net interest margin⁽⁶⁾							2.83	%							2.46	%
Ratio of interest-earning assets to interest-bearing liabilities		1.18	X							1.16	X

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

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

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

(4)	Includes average balances of non-interest-bearing deposits of $525,018,000 and $317,530,000, for the quarter ended March 31, 2021, and 2020, respectively.

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

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

Provision for Credit Losses. For the quarter ended March 31, 2021 the provision for credit losses decreased by ~~$205.9~~$5.2 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$1.1 million compared 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~~$6.3 million for the ~~three months~~quarter ended ~~December~~March 31, ~~2017 from $3.3 million for the three months ended December 31, 2016.~~2020. 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~~between comparative periods was largely ~~reflected~~attributable to increases in qualitative factors associated with the ~~lower growth~~impact of COVID-19 on economic conditions and an increase in the outstanding balance of ~~loans~~the loan portfolio that was collectively evaluated for impairment during the ~~three months ended December 31, 2017 compared~~prior comparative period. Also contributing to ~~the three months ended December 31, 2016. To a lesser extent,~~ the change in the level of provision during the quarter was an increase in reserves on ~~such~~individually evaluated 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~~of $4.2 million, partially offset by ana release of reserves within the one- to four-family residential segments, reflecting the improving credit risk outlook for that asset class.

The increase in ~~the provision for specific losses recognized~~reserves on ~~nonperforming loans charged off or~~ individually evaluated ~~for impairment between comparative periods.~~loans, noted above, was largely attributable to two non-performing commercial real estate loans, with principal balances totaling $9.8 million, secured by properties located in New York City.

Additional information regarding the allowance for ~~loan~~credit losses and the associated provisions recognized during the ~~three months~~quarter ended ~~December~~March 31, ~~2017~~2021 and 2020 is presented in Note 118 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017.~~

~~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 to $3.2 million for the three month period ended December 31, 2017 from $3.4 million for the three months ended December 31, 2016. The decrease in non-interest income largely reflected a decrease in the gain on sale of loans of $259,000. The decrease in loan sale gains partly reflected a decrease in gains associated with residential mortgage loans sold in conjunction with the Company’s mortgage banking strategy coupled by a decrease in SBA loan sale gains between comparative periods. In both cases, such decreases primarily reflected a lower volume of loans originated and sold between comparative periods.2020.

- 55 -

~~The decrease in non-interest~~Non-Interest Income. Non-interest income ~~also~~decreased by $735,000 to $5.5 million for the quarter ended March 31, 2021.

Gain on sale and call of securities reflected a ~~$57,000 decrease in the income recognized on bank-owned life insurance attributable to the continuing effects~~net gain of ~~lower market interest rates on the yields earned by the Company on its underlying policies.~~

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

~~We also recognized net gains totaling $23,000 arising from the write down and sale of REO~~$18,000 during the ~~three months~~quarter ended ~~December~~March 31, ~~2017~~2021 compared to a net ~~gains totaling $12,000 recognized~~gain of $2.2 million, recorded during the earlier comparative period. ~~Additionally, we previously recognized $21,000~~The gain recorded in ~~gain~~the earlier comparative period was related to the Company’s execution of a wholesale restructuring transaction.

Gain on sale of ~~securities during~~loans increased by $378,000 to $943,000 for the ~~three months~~quarter ended ~~December~~March 31, ~~2016~~2021. The increase in loan sale gains largely reflected an increase in the average net price, between comparative periods, at which such loans were sold, partially offset by a decrease in the volume of loans originated and sold.

Other non-interest income increased by $971,000 to $1.2 million for the quarter ended March 31, 2021. The increase primarily reflected $239,000 of referral fees related to PPP loans and $837,000 of non-recurring gains on asset disposals recognized in the current period for which no such gains were ~~recognized during~~recorded in the ~~three months ended December 31, 2017.~~prior comparative period.

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

Non-Interest ~~Expenses~~Expense. ~~Non-interest~~Total non-interest expense increased by ~~$3.4~~$1.8 million to ~~$22.8~~$29.8 million for the ~~three months~~quarter ended ~~December~~March 31, 2017 from $19.4 million for the three months ended December 31, 2016. The increase in non-interest expense partly reflected the recognition of certain merger-related expenses related to the Company’s proposed acquisition of Clifton. The Company estimates that net income was adversely impacted by approximately $1.0 million for merger-related expenses recognized during the three 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 expense.2021.

Salaries and employee benefits ~~expense~~ increased by ~~$1.3~~$1.4 million to ~~$12.9~~$17.0 million for the ~~three months~~quarter ended ~~December~~March 31, ~~2017 from $11.6 million for~~2021. This increase reflected additional salary and payroll tax expense associated with employees retained in conjunction with the ~~three months ended December 31, 2016. The increase in salaries~~MSB acquisition and ~~employee benefit expense was partly attributable to~~new hires, who were largely concentrated within the lending and retail banking lines of business, coupled with 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.incentive compensation expense. These increases were partially offset by decreases in ~~employee incentive~~medical and ~~commission compensation expenses between comparative periods.~~stock benefit plan expense.

~~The increase in premises~~Net occupancy expense ~~partly reflected increases in facility lease expenses, arising primarily from costs~~of premises increased by $748,000 to $3.4 million for the quarter ended March 31, 2021. This increase was largely attributable to ongoing operating expense associated with ~~forthcoming branch additions~~the addition of four office locations and ~~relocations, coupled with increases in facility repairs and maintenance and depreciation expenses relating to existing administrative and branch facilities. These~~the acquisition of five office locations from MSB. Partially offsetting these increases were ~~partially offset by a decrease in property tax~~ expense ~~arising from successful real estate tax appeals negotiated in prior periods.~~reductions associated with the consolidation of multiple office locations during the period.

~~The increase in equipment~~Equipment and systems expense increased by $1.2 million to $3.8 million for the quarter ended March 31, 2021. This increase was ~~partly~~largely attributable to increases in ~~service provider expenses supporting~~equipment, technology infrastructure, core processing and electronic banking delivery ~~channels as well as increases~~channel expense associated with the Company’s growth in ~~internal information technology infrastructure costs.~~clients and accounts, a portion of which was attributable to the acquisition of MSB. This increase was also attributable to non-recurring core processing expense reductions totaling $500,000 that were recorded in the prior comparative period, and were associated with the re-negotiation of the Company’s core processing contract.

~~The increase in advertising~~Advertising and marketing expense decreased by $45,000 to $567,000 for the quarter ended March 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.

FDIC insurance premiums totaled $488,000 for the quarter ended March 31, 2021 for which no comparable expense was recorded during the prior comparative period. No expense was recorded in the prior comparative period as a result of credits available to the Bank under the FDIC’s Small Bank Assessment Credit program.

Merger-related expenses, associated with the Company’s acquisition of MSB, totaled $285,000 for the quarter ended March 31, 2020 for which no such costs were recorded in the current period.

Debt extinguishment expenses totaled $2.2 million for the quarter ended March 31, 2020 and were related to the Company’s execution of a wholesale restructuring transaction, for which no such expense was recorded in the current period.

Other non-interest expense increased by $448,000 to $3.8 million for the quarter ended March 31, 2021. The increase in ~~director compensation~~other expense during the quarter 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~~primarily attributable to a ~~decrease in regulatory oversight and examination expense primarily attributable to the Bank’s conversion from a federally-charted stock savings bank~~non-recurring asset impairment charge of $375,000 related to a ~~nonmember New Jersey state-chartered stock savings bank in June 2017.~~

~~Provision~~branch consolidation and resulting closure and $207,000 of credit loss expense for ~~Income Taxes~~. The provision for income taxes increased by $2.1 million to $5.1 million for the three months ended December 31, 2017 from $3.0 million for the three months ended December 31, 2016. As noted earlier, the 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 provisionsoff-balance sheet exposures.

- 56 -

of the Act are expected to benefit the Company’s future earnings, it resulted in a $3.5 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the three 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 itemsProvision for ~~financial statement reporting purposes versus that recognized~~Income Taxes. Provision for income ~~tax reporting purposes. That charge was partially offset~~taxes increased by ~~a $1.4~~$5.5 million ~~reduction in~~to $5.7 million for the ~~net deferred income tax liability primarily attributable to~~quarter ended March 31, 2021, from $225,000 for the ~~net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.~~quarter ended March 31, 2020.

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~~increase in income tax expense ~~primarily~~largely reflected ~~the impact of the underlying differences~~a $1.6 million reduction in income tax expense that was recorded in the prior comparative period, which was attributable to the carryback of net operating losses into prior periods. Also recorded during the prior comparative period, the Company reversed valuation allowances totaling $591,000 which were associated with capital loss carryforwards and were determined to be realizable due to the sale of investment securities at the Bank’s New Jersey investment company subsidiary. Finally, a higher level of pre-tax net income, as compared to the ~~taxable portion of pre-tax~~prior period, resulted in a higher provision for income ~~between comparative periods.~~tax expense.

~~Our effective~~Effective tax rates ~~during~~for the ~~three month periods~~quarter ended ~~December~~March 31, ~~2017~~2021 and ~~December~~March 31, ~~2016~~2020 were ~~80.2%~~25.9% and ~~35.2%. In~~2.4% which, 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,~~income as well as the impact of various non-recurring items noted above. The effective tax rate for the ~~three months ended December 31, 2017 further reflected the effects~~prior comparative period was primarily driven by a reduction of ~~federal~~ income tax ~~reform~~expense attributable to the carryback of net operating losses and ~~certain non-deductible merger-related expenses recognized during~~ the ~~period,~~reversal of valuation allowances, as discussed above.

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

~~General~~Net Income. Net income for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 was ~~$6.5~~$44.8 million, or ~~$0.08~~$0.53 per diluted ~~share; a decrease of $3.6 million from $10.1~~share, compared to $31.3 million, or ~~$0.12~~$0.38 per diluted share for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2020. The ~~decrease~~increase in net income ~~primarily~~ reflected increases in net interest income and non-interest income and a decrease in the provision for credit losses that was partially offset by increases in non-interest expense and income tax expense. ~~These factors were partially offset by increases in net interest~~Net income ~~and non-interest income as well as a decrease in~~for the ~~provision 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~~nine months ended ~~December~~March 31, ~~2017 while the noted increase~~2021 also reflected various non-recurring items recognized in ~~non-interest expense partly reflected the recognition of certain merger-related expenses related to~~conjunction with the Company’s ~~proposed~~ acquisition of ~~Clifton during the period.~~MSB.

Net Interest Income. Net interest income ~~for the six months ended December 31, 2017 was $53.6 million; an increase of $4.0~~increased by $27.4 million ~~from $49.6~~to $136.3 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2021. The increase ~~in net interest income~~ between the comparative periods resulted from a decrease of $25.7 million in interest expense and an increase of $1.7 million in interest ~~income~~income.

The decrease in interest expense for the nine months ended March 31, 2021, reflected a 75 basis points decrease in the average cost of ~~$8.5 million that was~~interest-bearing liabilities to 0.97%, partially offset by a ~~$4.5~~$476.5 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~~to $5.66 billion. For the same period, interest expense on deposits decreased by $20.0 million to $26.4 million and was attributable to an 83 basis points decrease in the cost of interest-bearing deposits partially offset by a $747.1 million increase in their average ~~cost.~~

~~These factors contributed~~balance. For the nine months ended March 31, 2021, interest expense on borrowings decreased by $5.7 million to $14.9 million and was attributable to a three basis points increase in our net interest rate spread to 2.13% for the six months ended December 31, 2017 from 2.10% for the six months ended December 31, 2016. The increase in the net interest rate spread reflected a 17 basis points increasedecrease of $270.6 million 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 cost~~balance of ~~interest-bearing liabilities increased by 14~~borrowings coupled with an 18 basis points ~~to 1.26% from 1.12%. A discussion of the factors contributing to changes~~decrease 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.their cost.

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

~~Interest Income. Total interest income increased $8.5 million to $75.6 million for the six months ended December 31, 2017 from $67.1 million for the six months ended December 31, 2016.~~ The increase in interest income ~~partly~~of $1.7 million reflected an increase to the average balance of interest-earning assets of $641.1 million to $6.71 billion, partially offset by a ~~$298.1~~33 basis points decrease in their yield to 3.53%. Interest income on loans increased by $10.1 million to $151.0 million for the nine months ended March 31, 2021 and was primarily attributable to a $313.2 million increase in the average balance of ~~interest-earning assets~~loans to ~~$4.46 billion for~~$4.88 billion. For the ~~six months ended December 31, 2017 from $4.16~~

~~- 57 -~~

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

~~Interest income from~~ loans increased ~~$8.0 million~~one basis point to ~~$61.1 million for the six months ended December 31, 2017 from $53.1 million for the six months ended December 31, 2016.~~4.12%. The ~~increase~~decrease in interest income on interest-earning assets, excluding loans, was ~~attributable~~due to ~~a net increase~~decreases in ~~the average balance of loans that was partially offset by a decline in the average yield.~~interest income on taxable securities, tax-exempt securities and other interest-earning assets.

~~The average balance of loans~~Net interest spread increased by ~~$458.2 million~~42 basis points to ~~$3.26 billion~~2.56% for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021, from ~~$2.80 billion~~2.14% for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2020. Net interest margin increased 32 basis points to 2.71%, from 2.39%, for the same comparative periods. The increase in ~~the average balance of loans primarily reflected an aggregate increase of $496.1 million in the average balance of commercial~~spread 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 largelymargin reflected a decrease in the average ~~outstanding balance~~cost of ~~unsecured consumer term loans acquired through Lending Club.~~

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

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

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

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

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

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

~~- 58 -~~

Interest income from other interest-earning assets increased by $344,000 to $1.3 million for the six months ended December 31, 2017 from $1.0 million for the six months ended December 31, 2016 reflecting an increase in their average yieldinterest-bearing liabilities that was partially offset by a decrease in ~~their average balance. The~~the average yield on ~~other~~ interest-earning ~~assets increased by 186 basis points~~assets.

Additional details surrounding the composition of, and changes to, ~~3.31%~~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 ~~six months ended December 31, 2017 from 1.45% for~~periods indicated. We derived the ~~six months ended December 31, 2016. For those same comparative periods,~~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 and exclude the impact of prepayment penalties, which are recorded to non-interest income.

- 57 -

	For the Nine Months Ended March 31,
	2021								2020
	Average Balance			Interest		Average Yield/ Cost			Average Balance			Interest		Average Yield/ Cost
	(Dollars in Thousands)
Interest-earning assets:
Loans receivable ⁽¹⁾	$	4,882,529		$	150,953		4.12	%	$	4,569,341		$	140,811		4.11	%
Taxable investment securities⁽²⁾		1,521,839			22,934		2.01			1,265,871			29,552		3.11
Tax-exempt securities ⁽²⁾		78,442			1,297		2.20			118,828			1,906		2.14
Other interest-earning assets⁽³⁾		228,075			2,406		1.41			115,764			3,588		4.13
Total interest-earning assets		6,710,885			177,590		3.53			6,069,804			175,857		3.86
Non-interest-earning assets		624,644								591,611
Total assets	$	7,335,529							$	6,661,415

Interest-bearing liabilities:
Interest-bearing demand	$	1,658,437		$	5,727		0.46		$	992,261		$	9,304		1.25
Savings		1,049,655			2,874		0.37			817,025			4,964		0.81
Certificates of deposit		1,930,970			17,778		1.23			2,082,677			32,145		2.06
Total interest-bearing deposits		4,639,062			26,379		0.76			3,891,963			46,413		1.59
Borrowings		1,020,472			14,865		1.94			1,291,045			20,540		2.12
Total interest-bearing liabilities		5,659,534			41,244		0.97			5,183,008			66,953		1.72
Non-interest-bearing liabilities⁽⁴⁾		572,249								375,792
Total liabilities		6,231,783								5,558,800
Stockholders' equity		1,103,746								1,102,615
Total liabilities and stockholders' equity	$	7,335,529							$	6,661,415

Net interest income				$	136,346							$	108,904
Interest rate spread⁽⁵⁾							2.56	%							2.14	%
Net interest margin⁽⁶⁾							2.71	%							2.39	%
Ratio of interest-earning assets to interest-bearing liabilities		1.19	X							1.17	X

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

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

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

(4)	Includes average balances of non-interest-bearing deposits of $502,046,000 and $319,451,000, for the nine months ended March 31, 2021, and 2020, respectively.

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

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

Provision for Credit Losses. The provision for credit losses decreased by ~~$56.6~~$203,000 to $3.8 million for the nine months ended March 31, 2021 compared to ~~$81.2~~$4.0 million ~~from $137.8 million.~~for the nine months ended March 31, 2020. The level of provision for the nine months ended March 31, 2021 was largely attributable to $5.1 million of provision expense on non-PCD loans acquired in connection with the acquisition of MSB, an increase of $5.7 million in ~~average yield of other interest earning assets primarily reflected the effects of recent increases in short-term market interest rates~~reserves 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 wasindividually evaluated loans, partially offset by ~~an increase~~a release of reserves within the one- to four-family residential segments, reflecting the improving credit risk outlook for that asset class and provision for credit loss reversals associated with a decline in balances of loans collectively evaluated for impairment. By comparison, the ~~average balance~~level of ~~the Bank’s required investment in FHLB stock.~~

~~Interest Expense. Total interest expense increased by $4.5 million to $22.0 million~~provision for the ~~six~~nine months ended ~~December~~March 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 expense2020 was attributable to increases in qualitative factors associated with the ~~average balance~~economic impact of COVID-19 and ~~average cost of interest-bearing deposits.~~

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

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

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

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

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

~~Provision for Loan 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.

~~- 59 -~~

~~Regarding the provision on non-impaired loans, the net decrease in the provision expense largely reflected the lower growth~~ in the outstanding balance of ~~loans~~the loan portfolio that was 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.impairment.

The ~~decrease~~increase in ~~provision expense~~reserves on individually evaluated loans, noted above, was largely attributable to ~~non-impaired~~two non-performing commercial real estate loans, ~~was partially offset~~with principal balances totaling $9.8 million, secured by ~~an increase~~properties located in ~~the provision for specific losses recognized on nonperforming loans charged off or individually evaluated for impairment between comparative periods.~~New York City.

Additional information regarding the allowance for ~~loan~~credit losses and the associated provisions recognized during the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 and 2020 is presented in Note 118 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017.~~2020.

- 58 -

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~~$5.6 million to ~~$6.4~~$20.4 million for the ~~six month period~~nine months ended ~~December~~March 31, ~~2017 from $6.1~~2021.

Fees and service charges decreased by $654,000 to $4.3 million for the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~2021. The ~~increase in non-interest income~~decrease primarily reflected a ~~$745,000 increase in fees and service charges, including electronic banking fees and charges. The noted increase included an increase~~decrease in loan-related fees ~~and charges, primarily~~ attributable to ~~an increase in loan prepayment penalties, while also reflecting an increase in deposit-related service charges.~~

~~The increase in non-interest income was partially offset by~~ a decrease in commercial loan prepayment activity.

Gain on sale and call of securities reflected a net gain of $454,000 during the nine months ended March 31, 2021 compared to a net gain of $2.2 million, recorded during the earlier comparative period. The gain recorded in the prior comparative period was related to the Company’s execution of a wholesale restructuring transaction.

Gain on sale of loans ~~of $228,000.~~increased by $3.4 million to $5.2 million for the nine months ended March 31, 2021. The ~~decrease~~increase in loan sale gains ~~partly~~ reflected ~~a decrease~~an increase 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.~~periods coupled with an increase in the average net price at which such loans were sold. The increase for the nine months ended March 31, 2021 also included gains recognized on the sale of $43.6 million of PPP loans, which resulted in a gain on sale of $352,000.

The ~~decrease in non-interest income also reflected~~Company recognized a ~~$109,000 decrease in the income recognized on bank-owned life insurance attributable~~net loss of $28,000 related 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~~OREO during the ~~six~~nine months ended ~~December~~March 31, ~~2017 compared to net losses of $3,000 recognized~~2020, while there was no such loss recorded during the ~~earlier~~current period.

Bargain purchase gain, recognized in conjunction with the acquisition of MSB, totaled $3.1 million for the nine months ended March 31, 2021. There was no such gain recorded in the prior comparable period.

Other non-interest income increased by $1.2 million to $1.4 million for the nine months ended March 31, 2021. The increase primarily reflected $239,000 of referral fees related to PPP loans and $837,000 of non-recurring gains on asset disposals recognized in the current period and $342,000 of non-recurring losses on asset disposals recognized in the prior comparative period. Additionally, we previously recognized $21,000 in gain 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.

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 expense increased by ~~$6.0~~$13.2 million to ~~$44.0~~$93.9 million for the ~~six~~nine months ended ~~December~~March 31, 2017 from $38.0 million for the six months ended December 31, 2016. The net increase in non-interest expense partly reflected the recognition of certain merger-related expenses related to the Company’s proposed acquisition of Clifton. The Company estimates that net income was adversely impacted by approximately $1.0 million for merger-related expenses recognized during the 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 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 expense.2021.

Salaries and employee benefits expense increased by ~~$3.3~~$4.5 million to ~~$25.8~~$51.0 million for the ~~six~~nine months ended ~~December~~March 31, ~~2017 from $22.5 million for the six months ended December 31, 2016. The~~2021. This increase ~~in salaries~~reflected additional salary and ~~employee benefit~~payroll tax 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~~employees retained in conjunction with the MSB acquisition and ~~employee retirement plan expenses.~~new hires, who were largely concentrated within the lending and retail banking lines of business. These increases were partially offset by decreases in employee ~~incentive~~severance, ESOP expense and ~~commission compensation expenses between comparative periods.~~stock benefit plan expense.

~~The increase in premises~~Net occupancy expense ~~partly reflected increases in facility lease~~of premises increased by $939,000 to $9.7 million for the nine months ended March 31, 2021. This increase was largely attributable to the ongoing operating expenses ~~arising primarily from costs~~ associated with ~~forthcoming branch additions~~the owned and ~~relocations,~~leased office facilities acquired by the Company in conjunction with the MSB acquisition coupled with ~~increases~~an increase of $441,000 in ~~facility repairs and maintenance and depreciation expenses relating to existing administrative and branch facilities. These increases~~snow removal expense. The change in net occupancy expense also reflected $517,000 of lease termination costs incurred in the prior comparative period for which no such costs were ~~partially offset by a decrease~~recorded in ~~property tax expense arising from successful real estate tax appeals negotiated in prior periods.~~the current period.

~~- 60 -~~

~~The increase in equipment~~Equipment and systems expense increased by $2.5 million to $11.3 million for the nine months ended March 31, 2021. This increase was ~~partly~~largely attributable to increases in ~~service provider expenses supporting~~equipment, technology infrastructure, core processing and electronic banking delivery ~~channels as well as increases~~channel expense associated with the Company’s growth in ~~internal information technology infrastructure costs.~~clients and accounts, a portion of which was attributable to the acquisition of MSB. This increase was also attributable to non-recurring core processing expense reductions totaling $500,000 that were recorded in the prior comparative period, and were associated with the re-negotiation of the Company’s core processing contract.

~~The increase in advertising~~Advertising and marketing expense decreased by $457,000 to $1.6 million for the nine months ended March 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.

- 59 -

FDIC insurance premiums totaled $1.5 million for the nine months ended March 31, 2021 for which no comparable expense was recorded during the prior comparative period. No expense was recorded in the prior comparative period as a result of credits available to the Bank under the FDIC’s Small Bank Assessment Credit program.

Merger-related expenses, associated with the Company’s acquisition of MSB, increased by $3.8 million to $4.3 million for the nine months ended March 31, 2021.

Debt extinguishment expenses totaled $796,000 for the nine months ended March 31, 2021 which was related to the pre-payment of FHLB borrowings. By comparison, debt extinguishment expenses totaled $2.2 million for the nine months ended March 31, 2020 and were related to the Company’s execution of a wholesale restructuring transaction.

Other expense increased by $1.8 million to $11.5 million for the nine months ended March 31, 2021. The increase in ~~director compensation~~other expense was ~~fully~~primarily attributable to non-recurring items recorded in both comparative periods. For the nine months ended March 31, 2021 asset impairment charges of $722,000, related to a branch closures, was recognized as was $729,000 of credit loss expense for off-balance sheet exposures required in connection with the Company’s adoption of CECL. For the nine months ended March 31, 2020 the recovery of an asset write-down totaling $288,000 was recorded.

Provision for Income Taxes. Provision for income taxes increased by $6.6 million to $14.2 million for the nine months ended March 31, 2021, from $7.6 million for the nine months ended March 31, 2020.

The increase in income tax expense largely reflected a $1.6 million reduction in income tax expense that was recorded in the prior comparative period, which was attributable to the ~~additional expense arising from~~carryback of net operating losses into prior periods. Also recorded during the ~~granting~~prior comparative period, the Company reversed valuation allowances totaling $591,000 which were associated with capital loss carryforwards and were determined to be realizable due to the sale of ~~restricted stock and stock option benefits~~investment securities at the Bank’s New Jersey investment company subsidiary. Finally, a higher level of pre-tax net income, as compared to ~~directors, as noted above.~~the prior period, resulted in a higher provision for income tax expense.

The ~~noted increases~~effects of a higher level of pre-tax net income was partially offset by the reversal of valuation allowances totaling $535,000 which was associated with the realization of a capital loss carryforward during the period.

Effective tax rates for the nine months ended March 31, 2021 and March 31, 2020 were 24.1% and 19.5%, respectively. The effective tax rate for the nine months ended March 31, 2021 reflected the effects of various non-recurring items recorded in ~~non-interest expense~~conjunction with the Company’s acquisition of MSB, including non-deductible merger related expenses, which 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 million for the six months ended December 31, 2017 from $5.2 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 reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the six months ended December 31, 2017. The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognized for income tax reporting purposes. That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.

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

~~Our effective tax rates during the six month periods ended December 31, 2017 and December 31, 2016 were 54.8% and 33.8%.~~non-taxable bargain purchase gain. 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,~~addition, the effective tax rate for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2021 further reflected the effects of ~~federal income tax reform and certain non-deductible merger-related expenses~~the reversal of valuation allowances recognized during the period, as discussed above. The effective tax rate for the prior comparative period was primarily driven by a reduction of income tax expense attributable to the carryback of net operating losses, as discussed above.

- 60 -

Liquidity and Capital Resources

~~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~~Liquidity, at March 31, 2021, included $109.0 million of our cash and cash equivalents decreased by $27.6 million to $50.7 million at December 31, 2017 from $78.2 million at June 30, 2017. The decrease in the balance of cash and cash equivalents 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.~~

~~- 61 -~~

~~Investments that formally qualify as liquid assets are~~ supplemented by ~~our portfolio~~$1.78 billion of investment securities classified as available for ~~sale whose balances at December~~sale. In addition, as of March 31, ~~2017 included $151.7~~2021, the Company had the capacity to borrow additional funds totaling $1.81 billion and $257.0 million, without pledging additional collateral, from the FHLB of New York and FRB, respectively. The Company also had the capacity to borrow, as of March 31, 2021, $615.0 million of ~~mortgage-backed securities and $486.0 million~~additional funds, on an unsecured basis, via lines of ~~debt securities that can readily be sold if necessary.~~credit established with other financial institutions.

At ~~December~~March 31, ~~2017,~~2021, the Company had outstanding commitments to originate and purchase loans ~~held in portfolio~~ totaling approximately ~~$64.0~~$256.7 million while such commitments totaled ~~$95.2~~$45.6 million at June 30, ~~2017.~~2020. As of those same dates, the Company’s pipeline of loans held for sale included ~~$15.8~~$22.1 million and ~~$18.4~~$127.2 million 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~~$75.3 million and ~~$60.6~~$180.5 million, respectively, at ~~December~~March 31, ~~2017~~2021 compared to ~~$8.1~~$17.0 million and ~~$60.7~~$82.5 million, respectively, at June 30, ~~2017.~~2020. The Company is also subject to the contingent liabilities resulting from letters of credit whose outstanding balances totaled ~~$1.1 million~~$689,000 and ~~$715,000~~$217,000 at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017,~~2020, 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~~Deposits increased ~~by $103.6~~$944.2 million to ~~$3.03~~$5.37 billion at March 31, 2021 from ~~$2.93~~$4.43 billion at June 30, ~~2017.~~2020. The ~~net~~ increase in ~~deposits~~deposit balances reflected ~~a net increase in non-interest-bearing checking accounts totaling $7.7~~an $817.6 million ~~coupled with an~~ increase in interest-bearing deposits ~~totaling $96.0 million. The~~coupled with a $126.6 million 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~~non-interest-bearing deposits. Borrowings from the FHLB of New York and other sources are generally available to supplement the ~~Company’s~~Bank’s liquidity position ~~and,~~or to ~~the extent that~~replace maturing ~~deposits do not remain with the Company, management may replace such funds with advances.~~deposits. As of ~~December~~March 31, ~~2017,~~2021, the ~~Company’s~~Bank’s outstanding balance of FHLB advances, excluding fair value adjustments, totaled ~~$775.6~~$867.5 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~~March 31, ~~2017,~~2021, the Company and the Bank exceeded all capital requirements of federal banking regulators.

- 6261 -

The following table sets forth the Bank’s capital position at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017,~~2020, as compared to the minimum regulatory capital requirements that were in effect as of those dates:

	At December 31, 2017															At March 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	%	$	807,658		18.12	%	$	356,678		8.00	%	$	445,848		10.00	%
Tier 1 capital (to risk-weighted assets)		736,627		22.89	%		193,073		6.00	%		257,430		8.00	%		769,007		17.25	%		267,509		6.00	%		356,678		8.00	%
Common equity tier 1 capital (to risk-weighted assets)		736,627		22.89	%		144,805		4.50	%		209,162		6.50	%		769,007		17.25	%		200,631		4.50	%		289,801		6.50	%
Tier 1 capital (to adjusted total assets)		736,627		15.68	%		187,961		4.00	%		234,952		5.00	%		769,007		10.81	%		284,660		4.00	%		355,825		5.00	%

	At June 30, 2017															At June 30, 2020
	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)	$	753,790		23.30	%	$	258,809		8.00	%	$	323,512		10.00	%	$	816,577		21.38	%	$	305,562		8.00	%	$	381,953		10.00	%
Tier 1 capital (to risk-weighted assets)		724,504		22.39	%		194,107		6.00	%		258,809		8.00	%		779,250		20.40	%		229,172		6.00	%		305,562		8.00	%
Common equity tier 1 capital (to risk-weighted assets)		724,504		22.39	%		145,580		4.50	%		210,283		6.50	%		779,250		20.40	%		171,879		4.50	%		248,269		6.50	%
Tier 1 capital (to adjusted total assets)		724,504		15.47	%		187,308		4.00	%		234,136		5.00	%		779,250		11.95	%		260,893		4.00	%		326,116		5.00	%

~~- 63 -~~

The following table sets forth the Company’s capital position at ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017,~~2020, as compared to the minimum regulatory capital requirements that were in effect as of those dates:

	At December 31, 2017										At March 31, 2021
	Actual					For Capital Adequacy Purposes					Actual					For Capital Adequacy Purposes
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)										(Dollars in Thousands)
Total capital (to risk-weighted assets)	$	903,056		27.93	%	$	258,709		8.00	%	$	903,110		20.18	%	$	358,018		8.00	%
Tier 1 capital (to risk-weighted assets)		872,990		27.00	%		194,032		6.00	%		864,459		19.32	%		268,513		6.00	%
Common equity tier 1 capital (to risk-weighted assets)		872,990		27.00	%		145,524		4.50	%		864,459		19.32	%		201,385		4.50	%
Tier 1 capital (to adjusted total assets)		872,990		18.50	%		188,707		4.00	%		864,459		12.12	%		285,393		4.00	%

	At June 30, 2017										At June 30, 2020
	Actual					For Capital Adequacy Purposes					Actual					For Capital Adequacy Purposes
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)										(Dollars in Thousands)
Total capital (to risk-weighted assets)	$	974,545		29.98	%	$	260,065		8.00	%	$	906,058		23.61	%	$	306,958		8.00	%
Tier 1 capital (to risk-weighted assets)		945,259		29.08	%		195,049		6.00	%		868,731		22.64	%		230,219		6.00	%
Common equity tier 1 capital (to risk-weighted assets)		945,259		29.08	%		146,287		4.50	%		868,731		22.64	%		172,664		4.50	%
Tier 1 capital (to adjusted total assets)		945,259		20.11	%		188,012		4.00	%		868,731		13.27	%		261,783		4.00	%

- 62 -

As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies have adopted a rule to establish for institutions with assets of less than $10 billion that meet other specified criteria a community bank leverage ratio (“CBLR”) that such institutions may elect to utilize in lieu of the generally applicable leverage and risk-based capital requirements noted above. The federal banking agencies have adopted 9% as the applicable ratio, effective March 31, 2020, and as a result of the CARES Act, temporarily reduced the ratio to 8% in response to COVID-19. Institutions with capital meeting the specified requirements and electing to follow the alternative framework will be considered compliant with all applicable regulatory capital and leverage requirements, including the requirement to be “well capitalized.” The Company has elected not to utilize the CBLR framework.

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 maintains the three-year transition option in the previous rule and provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss methodology’s effect on regulatory capital, followed by a three-year transition period (five-year transition option). The Company has adopted the capital transition relief over the permissible five-year period.

Off-Balance Sheet Arrangements

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

Recent Accounting Pronouncements

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 75 to the unaudited consolidated financial statements.

- 6463 -

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

~~Qualitative Analysis.~~The majority of our assets and liabilities are sensitive to changes in interest rates. Consequently, interest rate risk is a significant form of business 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: the differences between the timing 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~~including re-pricing risk, ~~to our earnings, movements in interest rates significantly influence the amount of net interest income we recognized. Net interest income is the difference between:~~

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

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

Net interest income is, by far, our largest revenue source to which we add our non-interest income and from which we deduct our provision for loan losses, non-interest expense and income taxes to calculate net income. Movements in market interest rates, and the effect of such movements on thebasis risk, factors noted above, significantly influence the “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 internal interest rate risk analysis, we are considered to be liability sensitive. Liability sensitivity is generally attributable to the comparatively shorter contractual maturity and/or re-pricing characteristics of the institution’s deposits and borrowings versus those of its loans and investment securities.

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

~~- 65 -~~

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

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

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

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

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

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

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

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

~~- 66 -~~

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

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

Given the inherent liability sensitivity of our 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 strategy 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-rate and other shorter-term fixed-rate C&I and consumer loans are acquired through wholesale resources.option risk.

We maintain an Asset/Liability Management (“ALM”) ~~Program to address all matters relating to the management of~~program in order manage our interest rate ~~risk and liquidity~~ risk. The program is overseen by the Board of Directors through ~~our~~its 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 other asset and liability management topics. The results of the committee’s quarterly review are reported to the full Board, which ~~adjusts our ALM policies and strategies, as it considers necessary and appropriate.~~

~~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~~Chief Credit Officer, Chief Banking Officer, Chief Risk Officer and Treasurer/Chief Investment ~~Officer and Controller.~~Officer. Additional members of our management team may be asked to participate on the ALCO, as appropriate.

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

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

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

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

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

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

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

~~Quantitative Analysis.~~The quantitative analysis ~~regularly conducted by management~~that we conduct measures interest rate risk from both a capital and earnings perspective. With regard to earnings, movements in interest rates and the shape of the yield curve significantly influence the amount of net interest income (“NII”) that we recognize. Movements in market interest rates, and the effect of such movements on the risk factors noted above, significantly influence the spread between the interest earned on our interest-earning assets and the interest paid on our interest-bearing liabilities. Our internal interest rate risk analysis calculates the sensitivity of our projected NII over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into similar instruments. Product pricing and earning asset prepayment speeds are appropriately adjusted for each rate scenario.

With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our Economic Value of Equity (“EVE”) ratio to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities adjusted for the value of off-balance sheet

~~- 67 -~~

~~contracts. The EVE ratio represents the dollar amount of our EVE divided by the present value of our total assets for a given interest rate scenario. In essence,~~ instruments. EVE attempts to quantify our economic value using a discounted cash flow methodology while the EVE ratio reflects that value as a form of capital ratio. 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~~March 31, ~~2017~~2021 and June 30, ~~2017~~2020 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.

- 64 -

The following tables present the results of our internal EVE analysis as of ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017, respectively.~~2020, respectively:

	December 31, 2017																March 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		1,081,732		(133,502	)		(11	)	%		16.31	%		(56	)	bps
+200 bps		861,427		(95,232	)		(10	)	%		19.32	%		(111	)	bps		1,136,072		(79,162	)		(7	)	%		16.65	%		(22	)	bps
+100 bps		914,127		(42,532	)		(4	)	%		19.99	%		(44	)	bps		1,188,829		(26,405	)		(2	)	%		16.93	%		6		bps
0 bps		956,659	-			-					20.43	%	-					1,215,234	-			-					16.87	%	-
-100 bps		982,389		25,730			3		%		20.53	%		10		bps		1,124,639		(90,595	)		(8	)	%		15.42	%		(145	)	bps

	June 30, 2017																June 30, 2020
	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		846,983		(147,879	)		(15	)	%		19.60	%		(176	)	bps		961,579		11,882			1		%		15.57	%		113		bps
+200 bps		903,090		(91,772	)		(9	)	%		20.37	%		(99	)	bps		988,278		38,581			4		%		15.61	%		117		bps
+100 bps		954,652		(40,210	)		(4	)	%		20.99	%		(37	)	bps		988,410		38,713			4		%		15.28	%		84		bps
0 bps		994,862	-			-					21.36	%	-					949,697	-			-					14.44	%	-
-100 bps		1,020,221		25,359			3		%		21.42	%		6		bps		829,775		(119,922	)		(13	)	%		12.60	%		(184	)	bps

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.

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

~~- 68 -~~

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

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

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

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

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

~~- 69 -~~

The following tables present the results of our internal NII analysis as of ~~December~~March 31, ~~2017~~2021 and June 30, ~~2017, respectively.~~2020, respectively:

			December 31, 2017											March 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	$	177,268	$	(15,221	)		(7.91	)	%
+200 bps	Static	One Year		109,833		161			0.15			Static	One Year		183,053		(9,436	)		(4.90	)
+100 bps	Static	One Year		110,242		570			0.52			Static	One Year		188,541		(3,948	)		(2.05	)
0 bps	Static	One Year		109,672		-			-			Static	One Year		192,489		-			-
-100 bps	Static	One Year		107,695		(1,977	)		(1.80	)		Static	One Year		184,032		(8,457	)		(4.39	)

			June 30, 2017											June 30, 2020
			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	$	105,658	$	(727	)		(0.68	)	%	Static	One Year	$	146,062	$	(9,010	)		(5.81	)	%
+200 bps	Static	One Year		106,436		51			0.05			Static	One Year		150,502		(4,570	)		(2.95	)
+100 bps	Static	One Year		106,614		229			0.22			Static	One Year		154,612		(460	)		(0.30	)
0 bps	Static	One Year		106,385		-			-			Static	One Year		155,072		-			-
-100 bps	Static	One Year		104,900		(1,485	)		(1.40	)		Static	One Year		162,070		6,998			4.51

- 65 -

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

~~- 70 -~~

ITEM 4.

CONTROLS AND PROCEDURES

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

During the quarter ended ~~December~~March 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.

- 7166 -

PART II

ITEM 1.1.

Legal Proceedings

At ~~December~~March 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.

ITEM 1A.

Risk Factors

There have been no material changes to the Risk Factors previously disclosed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2020, previously filed with the Securities and Exchange Commission.

ITEM 2.

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

~~ITEM 2.~~

Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY ~~SECURITIES~~SECURITIES:

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

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

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1-31, 2021		727,864	$	10.99		727,864		4,210,520
February 1-28, 2021		1,108,700	$	10.91		1,108,700		3,101,820
March 1-31, 2021		1,190,000	$	12.41		1,190,000		1,911,820

Total		3,026,564	$	11.52		3,026,564		1,911,820

On October 19, 2020, the Company announced the resumption of its fourth stock repurchase plan and completed that plan during the quarter ended December 31, 2020. Also on October 19, 2020, the Company announced the authorization of a fifth stock repurchase plan totaling 4,475,523 shares, or 5% of the shares then outstanding.

On January 22, 2021, the Company announced the completion of its fifth stock repurchase plan and the authorization of a sixth stock repurchase plan to repurchase up to 4,210,520 shares, or 5% of the shares then outstanding. This current plan has no expiration date.

ITEM 3.

~~(1)~~

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

~~ITEM 3.~~

Defaults Upon Senior Securities

Not applicable.

ITEM 4.

Mine Safety Disclosures

Not applicable.

ITEM 5.

Other Information

None.

- 7267 -

~~ITE~~MITEM 6.

Exhibits

The following Exhibits are filed as part of this report:

3.1

~~3.1~~

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

3.2

~~3.2~~

Bylaws 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)

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

31.1

~~31.1~~

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

31.2

~~31.2~~

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

32.1

~~32.1~~

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

32.2

~~32.2~~

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

101

~~101~~

The following materials from the Company’s Form 10-Q for the quarter ended ~~December~~March 31, ~~2017,~~2021, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

101.INS

~~101.INS~~

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

101.SCH

~~101.SCH~~

Inline XBRL Taxonomy Extension Schema Document

101.CAL

~~101.CAL~~

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

~~101.DEF~~

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

~~101.LAB~~

Inline XBRL Taxonomy Extension Labels Linkbase Document

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

- 7368 -

SIGNATURES

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

	KEARNY FINANCIAL CORP.

Date: ~~February 8, 2018~~May 7, 2021	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~~May 7, 2021	By:	/s/ ~~Eric B. Heyer~~Keith Suchodolski
		~~Eric B. Heyer~~Keith Suchodolski
		Executive Vice President and
		Chief Financial Officer
		(Principal ~~financial~~Financial and ~~accounting officer)~~Accounting Officer)

- 7469 -

	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

	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

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

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

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

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

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

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

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

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

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

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

Performance Status of Loans Receivable
At December 31, 2017

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

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

Impairment Status of Loans Receivable
At December 31, 2017

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

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

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

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

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

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

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

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

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