10q10k10q10k.net

What changed in Kearny Financial Corp.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Kearny Financial Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+325 added−312 removedSource: 10-K (2023-08-25) vs 10-K (2022-08-26)

Top changes in Kearny Financial Corp.'s 2023 10-K

325 paragraphs added · 312 removed · 242 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

119 edited+31 added−37 removed143 unchanged
Biggest changeKearny Bank’s operations are also subject to federal laws (and their implementing regulations) applicable to credit transactions, such as the: • Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and • Truth in Savings Act, prescribing disclosure and advertising requirements with respect to deposit accounts. 25 The operations of Kearny Bank also are subject to the: • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act, and Regulation E promulgated thereunder, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; • Check Clearing for the 21 st Century Act (also known as “Check 21”), which gives substitute checks, such as digital check images and copies made from that image, the same legal standing as the original paper check; • USA PATRIOT Act, which requires institutions operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering.
Biggest changeKearny Bank’s operations are also subject to federal laws (and their implementing regulations) applicable to credit transactions, such as the: • Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and • Truth in Savings Act, prescribing disclosure and advertising requirements with respect to deposit accounts.
Borrowings. The sources of wholesale funding we utilize include borrowings in the form of advances from the FHLB as well as other forms of borrowings. We generally use wholesale funding to manage our exposure to interest rate risk and liquidity risk in conjunction with our overall asset/liability management process.
The sources of wholesale funding we utilize include borrowings in the form of advances from the FHLB as well as other forms of borrowings. We generally use wholesale funding to manage our exposure to interest rate risk and liquidity risk in conjunction with our overall asset/liability management process.
Transactions with Related Parties. Transactions between a depository institution (and, generally, its subsidiaries) and its related parties or affiliates are limited by Sections 23A and 23B of the Federal Reserve Act. An affiliate of an institution is any company or entity that controls, is controlled by or is under common control with the institution.
Transactions between a depository institution (and, generally, its subsidiaries) and its related parties or affiliates are limited by Sections 23A and 23B of the Federal Reserve Act. An affiliate of an institution is any company or entity that controls, is controlled by or is under common control with the institution.
Treasury and the Federal Reserve Board; • our ability to manage market risk, credit risk and operational risk in the current economic conditions; • our ability to enter new markets successfully and capitalize on growth opportunities; • our ability to successfully integrate any assets, liabilities, clients, systems and management personnel we have acquired or may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; • changes in consumer demand, borrowing and savings habits; 2 • changes in accounting policies and practices, as may be adopted by bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; • our ability to retain key employees; • technological changes; • significant increases in our loan losses; • cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information and destroy data or disable our systems; • technological changes that may be more difficult or expensive than expected; • the ability of third-party providers to perform their obligations to us; • the ability of the U.S.
Treasury and the Federal Reserve Board; • our ability to manage market risk, credit risk and operational risk in the current economic conditions; • significant increases in our loan losses; • our ability to enter new markets successfully and capitalize on growth opportunities; • our ability to successfully integrate any assets, liabilities, clients, systems and management personnel we have acquired or may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; • changes in consumer demand, borrowing and savings habits; • changes in accounting policies and practices, as may be adopted by bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; • our ability to retain key employees; • technological changes; 2 Table of Contents • cyber-attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information and destroy data or disable our systems; • technological changes that may be more difficult or expensive than expected; • the ability of third-party providers to perform their obligations to us; • the ability of the U.S.
The adoption of regulations or the enactment of laws that restrict the operations of Kearny Bank and/or Kearny Financial or impose burdensome requirements upon one or both of them could reduce their profitability and could impair the value of Kearny Bank’s franchise, resulting in negative effects on the trading price of our common stock. 21 Regulation of Kearny Bank General.
The adoption of regulations or the enactment of laws that restrict the operations of Kearny Bank and/or Kearny Financial or impose burdensome requirements upon one or both of them could reduce their profitability and could impair the value of Kearny Bank’s franchise, resulting in negative effects on the trading price of our common stock. Regulation of Kearny Bank General.
Our Chief Executive Officer, Chief Financial Officer, Chief Risk Officer and Treasurer/Chief Investment Officer are the senior management members of our Capital Markets Committee (“CMC”) that are designated by the Board of Directors as the officers primarily responsible for securities portfolio management and all transactions require the approval of at least two of these designated officers.
Our Chief Executive Officer, Chief Financial Officer, Chief Risk Officer and Treasurer/Chief Investment Officer are the senior management members of our Capital Markets Committee that are designated by the Board of Directors as the officers primarily responsible for securities portfolio management and all transactions require the approval of at least two of these designated officers.
Each of our municipal obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling or exceeding A- or higher by S&P and/or A2 or higher by Moody’s, where rated by those agencies.
Each of our municipal obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling A- or higher by S&P or A2 or higher by Moody’s, where rated by those agencies.
These securities are reported at fair value and unrealized gains and losses on the securities are excluded from earnings and reported, net of deferred taxes, as adjustments to accumulated other comprehensive income, a separate component of equity.
These securities are reported at fair value and unrealized gains and losses on the securities are excluded from earnings and reported, net of deferred taxes, as adjustments to accumulated other comprehensive income (loss), a separate component of equity.
Our consumer loan portfolio includes unsecured overdraft lines of credit and personal loans as well as loans secured by savings accounts and certificates of deposit on deposit with the Bank. 8 Loans to One Borrower.
Our consumer loan portfolio includes unsecured overdraft lines of credit and personal loans as well as loans secured by savings accounts and certificates of deposit on deposit with the Bank. Loans to One Borrower.
Critically undercapitalized institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after such status is triggered. These actions are in addition to other discretionary supervisory or enforcement actions that the FDIC may take. As of June 30, 2022, Kearny Bank was well capitalized. Dividend Limitations.
Critically undercapitalized institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after such status is triggered. These actions are in addition to other discretionary supervisory or enforcement actions that the FDIC may take. As of June 30, 2023, Kearny Bank was well capitalized. Dividend Limitations.
All of our securities carry market risk insofar as increases in market interest rates have caused, and may continue to cause, a decrease in their market value. We believe that unrealized and unrecognized losses on securities held at June 30, 2022, are a function of changes in market interest rates and credit spreads, not changes in credit quality.
All of our securities carry market risk insofar as increases in market interest rates have caused, and may continue to cause, a decrease in their market value. We believe that unrealized and unrecognized losses on securities held at June 30, 2023, are a function of changes in market interest rates and credit spreads, not changes in credit quality.
Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions (including the community bank leverage ratio alternative) apply to savings and loan holding companies with $3 billion or more of consolidated assets, including Kearny Financial. Kearny Financial was in compliance with the holding company capital requirements and the capital conservation buffer as of June 30, 2022.
Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions (including the community bank leverage ratio alternative) apply to savings and loan holding companies with $3 billion or more of consolidated assets, including Kearny Financial. Kearny Financial was in compliance with the holding company capital requirements and the capital conservation buffer as of June 30, 2023.
As of June 30, 2022, Kearny Bank met the qualified thrift lender test. Acquisition of Control. Under the federal Change in Bank Control Act, a notice must be submitted to the Federal Reserve Board if any person (including a company), or group acting in concert, seeks to acquire control of a savings and loan holding company.
As of June 30, 2023, Kearny Bank met the qualified thrift lender test. Acquisition of Control. Under the federal Change in Bank Control Act, a notice must be submitted to the Federal Reserve Board if any person (including a company), or group acting in concert, seeks to acquire control of a savings and loan holding company.
A description of our methodology in establishing our allowance for credit losses is set forth in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies - Allowance for Credit Losses”. Additional information about our allowance for credit losses is also presented in Note 6 to the audited consolidated financial statements.
A description of our methodology in establishing our allowance for credit losses is set forth in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies - Allowance for Credit Losses.” Additional information about our allowance for credit losses is also presented in Note 6 to the audited consolidated financial statements.
At June 30, 2022, our primary market area consisted of the counties in which we currently operate branches, including Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Union counties in New Jersey and Kings (Brooklyn) and Richmond (Staten Island) counties in New York.
At June 30, 2023, our primary market area consisted of the counties in which we currently operate branches, including Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Union counties in New Jersey and Kings (Brooklyn) and Richmond (Staten Island) counties in New York.
The following table sets forth the maturities of our loan portfolio at June 30, 2022. Demand loans, loans having no stated maturity and overdrafts are shown as due in one year or less. Loans are stated in the following table at contractual maturity and actual maturities could differ due to prepayments.
The following table sets forth the maturities of our loan portfolio at June 30, 2023. Demand loans, loans having no stated maturity and overdrafts are shown as due in one year or less. Loans are stated in the following table at contractual maturity and actual maturities could differ due to prepayments.
At June 30, 2022, each of our collateralized loan obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling AAA by S&P and Aaa or by Moody’s, where rated by those agencies.
At June 30, 2023, each of our collateralized loan obligations were consistently rated by Moody’s and/or S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling AAA by S&P or Aaa by Moody’s, where rated by those agencies.
Allowance for Credit Losses - Loans On July 1, 2020, we 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, referred to as the “CECL” methodology.
Allowance for Credit Losses - Loans On July 1, 2020, we 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, referred to as the “CECL” methodology.
Other than securities issued or guaranteed by the U.S. government or its agencies, we did not hold securities of any one issuer having an aggregate book value in excess of 10% of our equity at June 30, 2022.
Other than securities issued or guaranteed by the U.S. government or its agencies, we did not hold securities of any one issuer having an aggregate book value in excess of 10% of our equity at June 30, 2023.
In accordance with accounting requirements, we formally designate all of our hedging relationships as either fair value hedges, or cash flow hedges, and documents the strategy for undertaking the hedge transactions and its method of assessing ongoing effectiveness.
In accordance with accounting requirements, we formally designate all of our hedging relationships as either fair value hedges or cash flow hedges, and document the strategy for undertaking the hedge transactions and its method of assessing ongoing effectiveness.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. At June 30, 2022, Kearny Bank has exercised the opt-out election regarding the treatment of Accumulated Other Comprehensive Income.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. At June 30, 2023, Kearny Bank has exercised the opt-out election regarding the treatment of Accumulated Other Comprehensive Income.
We generally offer fixed-rate and adjustable-rate balloon mortgage loans on multi-family and nonresidential properties with final stated maturities ranging from five to fifteen years with amortization terms which generally range from 15 to 30 years. Our commercial mortgage loans are primarily secured by properties located in New Jersey, New York and the surrounding states. Commercial Business (C&I) Loans.
We generally offer fixed-rate and adjustable-rate balloon mortgage loans on multi-family and nonresidential properties with final stated maturities ranging from three to 15 years with amortization terms which generally range from 15 to 30 years. Our commercial mortgage loans are primarily secured by properties located in New Jersey, New York and the surrounding states. Commercial Business (C&I) Loans.
As part of our acquisition of MSB, we acquired PCD loans with a par value of $69.4 million and an allowance for credit losses of $3.9 million. Additional information about our PCD loans is presented in Note 5 to the audited consolidated financial statements. 10 Nonperforming Assets.
As part of our acquisition of MSB, we acquired PCD loans with a par value of $69.4 million and an allowance for credit losses of $3.9 million. Additional information about our PCD loans is presented in Note 5 to the audited consolidated financial statements. 9 Table of Contents Nonperforming Assets.
Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and • Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and 25 Table of Contents • Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties.
Item 1. B usiness Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning.
Item 1. Business Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning.
The ACL at June 30, 2022 is maintained at a level that is management’s best estimate of lifetime expected credit losses inherent in loans at the balance sheet date.
The ACL at June 30, 2023 is maintained at a level that is management’s best estimate of lifetime expected credit losses inherent in loans at the balance sheet date.
A merger of another depository institution into Kearny Bank requires the prior approval of the NJDBI and FDIC, based on similar considerations. 26 Consolidated Capital Requirements.
A merger of another depository institution into Kearny Bank requires the prior approval of the NJDBI and FDIC, based on similar considerations. 26 Table of Contents Consolidated Capital Requirements.
Kearny Financial is a savings and loan holding company within the meaning of federal law. Kearny Financial maintained its savings and loan holding company status (rather than becoming a bank holding company), notwithstanding the June 2017 conversion of Kearny Bank to a New Jersey savings bank charter, through Kearny Bank exercising an election available to it under federal law.
Kearny Financial maintained its savings and loan holding company status (rather than becoming a bank holding company), notwithstanding the June 2017 conversion of Kearny Bank to a New Jersey savings bank charter, through Kearny Bank exercising an election available to it under federal law.
The Bank is principally engaged in the business of attracting deposits from the general public in New Jersey and New York and using these deposits, together with other funds, to originate or purchase loans for its portfolio and for sale into the secondary market.
The Bank is principally engaged in the business of attracting deposits from the general public and using these deposits, together with other funds, to originate or purchase loans for its portfolio and for sale into the secondary market.
Internal audit resources perform credit review functions utilizing guidance from regulatory and Institute of Internal Auditors standards in addition to assessing the adequacy of, and adherence to, internal credit policies and loan administration procedures and adherence to regulatory guidance. Our compliance resources monitor adherence to relevant lending-related and consumer protection-related laws and regulations. 11 Classification of Assets.
Internal audit resources perform credit review functions utilizing guidance from regulatory and Institute of Internal Auditors standards in addition to assessing the adequacy of, and adherence to, internal credit policies and loan administration procedures and adherence to regulatory guidance. Our compliance resources monitor adherence to relevant lending-related and consumer protection-related laws and regulations. 10 Table of Contents Classification of Assets.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: • the COVID-19 pandemic may continue to adversely impact the local and national economy and our business and results of operations may continue to be adversely affected; • general economic conditions, either nationally or in our market areas, that are worse than expected; • changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; • our ability to access cost-effective funding; • fluctuations in real estate values and both residential and commercial real estate market conditions; • demand for loans and deposits in our market area; • our ability to implement changes in our business strategies; • competition among depository and other financial institutions; • inflation and changes in the interest rate environment that reduce our margins and yields, or reduce the fair value of financial instruments or reduce the origination levels in our lending business, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary markets; • adverse changes in the securities markets; • changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; • changes in monetary or fiscal policies of the U.S.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: • general economic conditions, either nationally or in our market areas, that are worse than expected; • changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; • our ability to access cost-effective funding; • fluctuations in real estate values and both residential and commercial real estate market conditions; • demand for loans and deposits in our market area; • our ability to implement changes in our business strategies; • competition among depository and other financial institutions; • inflation and changes in the interest rate environment that reduce our margins and yields, or reduce the fair value of financial instruments or reduce the origination levels in our lending business, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary markets; • adverse changes in the securities markets; • changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; • changes in monetary or fiscal policies of the U.S.
Additional borrowing capacity up to 50% of our total assets may be authorized with the approval of the FHLB’s Board of Directors or Executive Committee. In addition, we had the capacity to borrow additional funds totaling $975.0 million via unsecured overnight borrowings from other financial institutions and $303.9 million from the FRB without pledging additional collateral.
Additional borrowing capacity up to 50% of our total assets may be authorized with the approval of the FHLB’s Board of Directors or Executive Committee. In addition, we had the capacity to borrow additional funds totaling $990.0 million via unsecured overnight borrowings from other financial institutions and $415.0 million from the FRB without pledging additional collateral.
We operate from our administrative headquarters in Fairfield, New Jersey and other administrative locations throughout the state of New Jersey. As of June 30, 2022, we had 45 branch offices. The Company maintains a website at www.kearnybank.com .
We operate from our administrative headquarters in Fairfield, New Jersey and other administrative locations throughout the state of New Jersey. As of June 30, 2023, we had 43 branch offices. The Company maintains a website at www.kearnybank.com.
At June 30, 2022, corporate bonds issued by large financial institutions were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling or exceeding BB or higher by S&P and/or Baa3 or higher by Moody’s, where rated by those agencies.
At June 30, 2023, corporate bonds issued by large financial institutions were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling BBB- or higher by S&P or Baa3 or higher by Moody’s, where rated by those agencies.
This table shows contractual maturities and does not reflect re-pricing or the effect of prepayments. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. At June 30, 2022, securities with a carrying value of $42.0 million are callable within one year.
This table shows contractual maturities and does not reflect re-pricing or the effect of prepayments. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. At June 30, 2023, securities with a carrying value of $40.4 million are callable within one year.
At June 30, 2022 and June 30, 2021, certificates of deposit maturing within one year were $1.47 billion and $1.51 billion, respectively. Historically, a significant portion of the certificates of deposit remain with us after they mature.
At June 30, 2023 and 2022, certificates of deposit maturing within one year were $1.90 billion and $1.47 billion, respectively. Historically, a significant portion of the certificates of deposit remain with us after they mature.
References in this Annual Report on Form 10‑K to the Company or Kearny Financial generally refer to the Company and the Bank, unless the context indicates otherwise. References to “we”, “us”, or “our” refer to the Bank or Company, or both, as the context indicates. The Company’s primary business is the ownership and operation of the Bank.
References in this Annual Report on Form 10‑K to the Company or Kearny Financial generally refer to the Company and the Bank, unless the context indicates otherwise. References to “we,” “us,” or “our” refer to the Bank or Company, or both, as the context indicates. The Company’s primary business is the ownership and operation of the Bank.
At June 30, 2022, Kearny Bank exceeded all regulatory capital requirements. In assessing an institution’s capital adequacy, the FDIC takes into consideration, not only these numeric factors, but also qualitative factors. The FDIC has the authority to establish higher capital requirements for individual institutions where deemed necessary.
At June 30, 2023, Kearny Bank exceeded all regulatory capital requirements. 22 Table of Contents In assessing an institution’s capital adequacy, the FDIC takes into consideration, not only these numeric factors, but also qualitative factors. The FDIC has the authority to establish higher capital requirements for individual institutions where deemed necessary.
New Jersey law generally limits the amount that a savings bank may lend to a single borrower and related entities to 15% of the institution’s capital funds. Accordingly, as of June 30, 2022, our legal loans to one borrower limit was approximately $100.8 million.
New Jersey law generally limits the amount that a savings bank may lend to a single borrower and related entities to 15% of the institution’s capital funds. Accordingly, as of June 30, 2023, our legal loans to one borrower limit was approximately $104.3 million.
During the year ended June 30, 2021, proceeds from sales of securities available for sale totaled $98.1 million and resulted in gross gains of $1.2 million and gross losses of $470,000.
During the year ended June 30, 2022, proceeds from sales of securities available for sale totaled $100.3 million and resulted in no gross gains and gross losses of $565,000. During the year ended June 30, 2021, proceeds from sales of securities available for sale totaled $98.1 million and resulted in gross gains of $1.2 million and gross losses of $470,000.
The key components of our business strategy are as follows: • Maintain Robust Capital and Liquidity Levels As demonstrated by the June 30, 2022 Tier 1 Leverage ratios of the Company and the Bank of 10.14% and 8.70%, respectively, we currently maintain, and plan to continue to maintain, capital levels in excess of regulatory minimums and internal capital adequacy guidelines.
The key components of our business strategy are as follows: • Maintain Robust Capital and Liquidity Levels As demonstrated by the June 30, 2023 Tier 1 Leverage ratios of the Company and the Bank of 9.07% and 8.15%, respectively, we currently maintain, and plan to continue to maintain, capital levels in excess of regulatory minimums and internal capital adequacy guidelines.
The outstanding balance of our collateralized loan obligations totaled $307.8 million at June 30, 2022 and comprised 21.0% of total investments and 4.0% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities representing securitized commercial loans to large, U.S. corporations.
The outstanding balance of our collateralized loan obligations totaled $377.0 million at June 30, 2023 and comprised 27.4% of total investments and 4.7% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities representing securitized commercial loans to large, U.S. corporations.
Additional information about the ACL at June 30, 2022 and 2021 is presented in Note 6 to the audited consolidated financial statements. Investment Securities At June 30, 2022, our investment securities portfolio totaled $1.46 billion and comprised 18.9% of our total assets.
By comparison, at June 30, 2022, our securities portfolio totaled $1.46 billion and comprised 18.9% of our total assets. Additional information about our investment securities at June 30, 2023 is presented in Note 4 to the audited consolidated financial statements.
In addition, w e offer a first-time homebuyer program which provides financial incentives for persons who have not previously owned real estate and are purchasing a one- to four-family property in our primary lending area for use as a primary residence.
In addition, we offer a first-time homebuyer program which provides financial incentives for persons who have not previously owned real estate and are purchasing a one- to four-family property in our primary lending area for use as a primary residence. One- to Four-Family Residential Mortgage Loans Held for Sale.
The year-over-year net decrease in the securities portfolio totaled $252.6 million which largely reflected repayments, sales and calls that were partially offset by purchases.
The year-over-year net decrease in the securities portfolio totaled $88.2 million which largely reflected repayments and sales that were partially offset by purchases.
In the absence of, or as a complement to, such ratings, we rely upon our own internal analysis of the issuer’s financial condition to validate its investment grade assessment. The carrying value of our asset-backed securities totaled $166.6 million at June 30, 2022 and comprised 11.4% of total investments and 2.2% of total assets as of that date.
In the absence of, or as a complement to, such ratings, we rely upon our own internal analysis of the issuer’s financial condition to validate its investment grade assessment. The carrying value of our asset-backed securities totaled $136.2 million at June 30, 2023 and comprised 9.9% of total investments and 1.7% of total assets as of that date.
At June 30, 2022, our liquid assets included $101.6 million of short-term cash and equivalents supplemented by $1.34 billion of investment securities classified as available for sale which can be readily sold or pledged as collateral, if necessary.
At June 30, 2023, our liquid assets included $70.5 million of short-term cash and equivalents supplemented by $1.23 billion of investment securities classified as available for sale which can be readily sold or pledged as collateral, if necessary.
In addition, our employees share in our financial success while preparing for their retirement via participation in our 401(k) Plan, which includes a competitive company match, and our Employee Stock Ownership Plan (“ESOP”), which is 100% funded by the Company. Safety, Health and Wellness. We are committed to the safety and wellness of all of our employees and their families.
In addition, our employees share in our financial success while preparing for their retirement via participation in our 401(k) Plan, which includes a competitive company match, and our Employee Stock Ownership Plan (“ESOP”), which is 100% funded by the Company. Health and Wellness.
Management cannot predict what assessment rates will be in the future. 22 Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
Such loans are generally originated by, and sourced from, the same resources and markets as those loans originated and held in our portfolio. Our mortgage banking business strategy resulted in the recognition of $2.4 million in gains associated with the sale of $189.1 million of mortgage loans held for sale during the year ended June 30, 2022.
Such loans are generally originated by, and sourced from, the same resources and markets as those loans originated and held in our portfolio. Our mortgage banking business strategy resulted in the recognition of $760,000 in gains associated with the sale of $103.8 million of mortgage loans held for sale during the year ended June 30, 2023.
We also offer fixed-rate and adjustable-rate home equity lines of credit with terms of up to 20 years. Other Consumer Loans. At June 30, 2022, other consumer loans totaled $2.9 million, or 0.1% of our loan portfolio.
We also offer fixed-rate and adjustable-rate home equity lines of credit with terms of up to 20 years. 7 Table of Contents Other Consumer Loans. At June 30, 2023, other consumer loans totaled $2.5 million, or 0.04% of our loan portfolio.
The carrying value of our securities representing obligations of state and political subdivisions totaled $49.6 million at June 30, 2022 and comprised 3.4% of total investments and less than 1.0% of total assets as of that date.
The carrying value of our securities representing obligations of state and political subdivisions totaled $16.1 million at June 30, 2023 and comprised 1.2% of total investments and less than 1.0% of total assets as of that date.
Therefore, no allowance for credit losses was recorded at that time. During the year ended June 30, 2022, proceeds from sales of securities available for sale totaled $100.3 million and resulted in no gross gains and gross losses of $565,000.
Therefore, no allowance for credit losses was recorded at that time. During the year ended June 30, 2023, proceeds from sales of securities available for sale totaled $105.2 million and resulted in no gross gains and gross losses of $15.2 million.
One- to Four-Family Residential Mortgage Loans Held in Portfolio. At June 30, 2022, one- to four-family residential mortgage loans totaled $1.65 billion, or 30.3% of our loan portfolio.
One- to Four-Family Residential Mortgage Loans Held in Portfolio. At June 30, 2023, one- to four-family residential mortgage loans totaled $1.70 billion, or 29.1% of our loan portfolio.
At June 30, 2022, $1.53 billion, or 92.9%, of our one- to four-family residential mortgage loans are secured by properties located within New Jersey and New York with the remaining $117.1 million, or 7.1%, secured by properties in other states.
At June 30, 2023, $1.58 billion, or 93.1%, of our one- to four-family residential mortgage loans were secured by properties located within New Jersey and New York with the remaining $117.6 million, or 6.9%, secured by properties in other states.
At June 30, 2022, our derivative instruments were comprised of interest rate swaps and caps with a total notional amount of $750.0 million. These instruments are intended to manage the interest rate exposure relating to certain wholesale funding positions that were outstanding at June 30, 2022.
At June 30, 2023, our derivative instruments were comprised of interest rate swaps, caps and a floor with a total notional amount of $2.23 billion. These instruments are intended to manage the interest rate exposure relating to certain wholesale funding positions and assets that were outstanding at June 30, 2023.
The following table provides information regarding our nonperforming assets which are comprised of nonaccrual loans, accruing loans 90 days or more past due, nonaccrual loans held-for-sale and other real estate owned: At June 30, 2022 2021 (Dollars In Thousands) Nonaccrual loans (1) $ 70,321 $ 79,767 Accruing loans 90 days or more past due - - Total nonperforming loans 70,321 79,767 Nonaccrual loans held-for-sale 21,745 - Other real estate owned 178 178 Total nonperforming assets $ 92,244 $ 79,945 Total nonaccrual loans to total loans 1.30 % 1.64 % Total nonperforming loans to total loans 1.30 % 1.64 % Total nonperforming loans to total assets 0.91 % 1.10 % Total nonperforming assets to total assets 1.19 % 1.10 % (1) TDRs on accrual status not included above totaled $8.7 million and $6.2 million at June 30, 2022 and 2021.
The following table provides information regarding our nonperforming assets which are comprised of nonaccrual loans, accruing loans 90 days or more past due, nonaccrual loans held-for-sale and other real estate owned: At June 30, 2023 2022 (Dollars In Thousands) Nonaccrual loans (1) $ 42,627 $ 70,321 Accruing loans 90 days or more past due — — Total nonperforming loans 42,627 70,321 Nonaccrual loans held-for-sale — 21,745 Other real estate owned 12,956 178 Total nonperforming assets $ 55,583 $ 92,244 Total nonaccrual loans to total loans 0.73 % 1.30 % Total nonperforming loans to total loans 0.73 % 1.30 % Total nonperforming loans to total assets 0.53 % 0.91 % Total nonperforming assets to total assets 0.69 % 1.19 % ________________________________________ (1) TDRs on accrual status not included above totaled $10.5 million and $8.7 million at June 30, 2023 and 2022, respectively.
Our average length of tenure is eight years as we look to promote from within to leverage employees’ knowledge of the organization as we continue to grow. We offer many educational and learning initiatives to enhance our employees’ professional growth, including support for certifications and licenses, as well as offering a robust tuition reimbursement program.
We look to promote from within to leverage employee talent and knowledge of the organization. Additionally, we offer many educational and learning initiatives to enhance our employees’ professional growth, including support for certifications and licenses, as well as offering a robust tuition reimbursement program.
The decrease in the portfolio included a $128.0 million decrease in the fair value of the available for sale securities portfolio to an unrealized loss of $118.0 million at June 30, 2022 from an unrealized gain of $10.0 million at June 30, 2021.
The decrease in the portfolio included a $38.1 million decrease in the fair value of the available for sale securities portfolio to an unrealized loss of $156.1 million at June 30, 2023 from an unrealized loss of $118.0 million at June 30, 2022.
However, when a residential loan is 120 days delinquent and a commercial loan is 90 days delinquent, it is our general practice to refer it to an attorney for repossession, foreclosure or other form of collection action, as appropriate.
All reasonable attempts are made to collect from borrowers prior to referral to an attorney for collection. However, when a residential loan is 120 days delinquent and a commercial loan is 90 days delinquent, it is our general practice to refer it to an attorney for repossession, foreclosure or other form of collection action, as appropriate.
Additional information regarding our use of interest rate derivatives and our hedging activities is presented in Note 1 and Note 12 to the audited consolidated financial statements. Subsidiary Activity At June 30, 2022, Kearny Bank was the only wholly-owned operating subsidiary of Kearny Financial Corp. As of that date, Kearny Bank had one wholly-owned subsidiary, CJB Investment Corp.
Additional information regarding our use of interest rate derivatives and our hedging activities is presented in Note 1 and Note 12 to the audited consolidated financial statements. 19 Table of Contents Subsidiary Activity At June 30, 2023, Kearny Bank was the only wholly-owned operating subsidiary of Kearny Financial Corp.
On May 5, 2022, the FDIC, the Federal Reserve Board and the Office of the Comptroller of the Currency released a notice of proposed rulemaking to “strengthen and modernize” the CRA regulations and the related regulatory framework. Federal Home Loan Bank System.
On May 5, 2022, the FDIC, the Federal Reserve Board and the Office of the Comptroller of the Currency released a notice of proposed rulemaking to “strengthen and modernize” the CRA regulations and the related regulatory framework. Commercial Real Estate Lending Concentrations .
The FHLB imposes various limitations on advances such as limiting the amount of certain types of real estate related collateral and limiting total advances to a member. The FHLB of New York may pay periodic dividends to members.
As a member, Kearny Bank is required to purchase and maintain stock in the FHLB of New York in specified amounts. The FHLB imposes various limitations on advances such as limiting the amount of certain types of real estate related collateral and limiting total advances to a member. The FHLB of New York may pay periodic dividends to members.
For a portion of our short-term brokered certificates of deposit we utilized interest rate contracts to effectively extend their duration and to fix their cost. 18 The following table sets forth the distribution of average deposits for the periods indicated and the weighted average nominal interest rates for each period on each category of deposits presented: For the Years Ended June 30, 2022 2021 2020 Average Balance Percent of Total Deposits Weighted Average Nominal Rate Average Balance Percent of Total Deposits Weighted Average Nominal Rate Average Balance Percent of Total Deposits Weighted Average Nominal Rate (Dollars In Thousands) Non-interest-bearing deposits $ 624,666 11.37 % - % $ 518,149 9.88 % - % $ 334,522 7.89 % - % Interest-bearing demand 2,067,200 37.64 0.25 1,726,190 32.92 0.41 1,041,188 24.56 1.10 Savings 1,088,971 19.83 0.11 1,066,794 20.35 0.31 831,832 19.62 0.81 Certificates of deposit 1,711,276 31.16 0.52 1,931,887 36.85 1.10 2,032,046 47.93 2.00 .
For a portion of our short-term brokered certificates of deposit we utilized interest rate contracts to effectively extend their duration and to fix their cost. 17 Table of Contents The following table sets forth the distribution of average deposits for the periods indicated and the weighted average nominal interest rates for each period on each category of deposits presented: For the Years Ended June 30, 2023 2022 2021 Average Balance Percent of Total Deposits Weighted Average Nominal Rate Average Balance Percent of Total Deposits Weighted Average Nominal Rate Average Balance Percent of Total Deposits Weighted Average Nominal Rate (Dollars In Thousands) Non-interest-bearing deposits $ 644,543 10.79 % — % $ 624,666 11.37 % — % $ 518,149 9.88 % — % Interest-bearing demand 2,349,802 39.33 1.73 2,067,200 37.64 0.25 1,726,190 32.92 0.41 Savings 896,651 15.00 0.37 1,088,971 19.83 0.11 1,066,794 20.35 0.31 Certificates of deposit 2,083,864 34.88 1.64 1,711,276 31.16 0.52 1,931,887 36.85 1.10 .
Our sources of wholesale funding included brokered certificates of deposit and listing service certificates of deposit whose balances totaled approximately $761.9 million and $11.7 million, or 13.0% and 0.2% of total deposits, respectively, at June 30, 2022.
Our sources of wholesale funding included brokered certificates of deposit and listing service certificates of deposit whose balances totaled approximately $635.3 million and $5.2 million, or 11.3% and 0.1% of total deposits, respectively, at June 30, 2023.
Total average deposits $ 5,492,113 100.00 % 0.28 % $ 5,243,020 100.00 % 0.60 % $ 4,239,588 100.00 % 1.39 % As of June 30, 2022 and 2021, the aggregate amount of certificates of deposit of $250,000 and over was $897.4 billion and $635.3 million, respectively.
Total average deposits $ 5,974,860 100.00 % 1.31 % $ 5,492,113 100.00 % 0.28 % $ 5,243,020 100.00 % 0.60 % As of June 30, 2023 and 2022, the aggregate amount of certificates of deposit of $250,000 and over was $883.7 million and $897.4 million, respectively.
The following table discloses our designation of certain loans as special mention or adversely classified during each of the two years presented: At June 30, 2022 2021 (In Thousands) Special mention $ 12,740 $ 84,981 Substandard 81,650 95,394 Doubtful 165 516 Total classified loans $ 94,555 $ 180,891 Individually Evaluated Loans .
The following table discloses our designation of certain loans as special mention or adversely classified during each of the two years presented: At June 30, 2023 2022 (In Thousands) Special mention $ 17,674 $ 12,740 Substandard 75,777 81,650 Doubtful 75 165 Total classified loans $ 93,526 $ 94,555 Individually Evaluated Loans .
The following table presents allowance for credit losses ratios, along with the components of their calculation, for the periods indicated: At June 30, 2022 2021 (Dollars in Thousands) Allowance for credit losses - loans $ 47,058 $ 58,165 Total loans outstanding $ 5,436,576 $ 4,880,310 Total non-performing loans $ 70,321 $ 79,767 Allowance for credit losses as a percent of total loans outstanding 0.87 % 1.19 % Allowance for credit losses to non-performing loans 66.92 % 72.92 % 12 The following table presents the ratio of net charge-offs (recoveries) to average loans outstanding by loan category, along with the components of the calculation, for the periods indicated: For the Years Ended June 30, 2022 2021 2020 Net charge-offs (recoveries) Average loans outstanding Net charge- offs as a percent of average loans outstanding Net charge-offs Average loans outstanding Net charge- offs as a percent of average loans outstanding Net charge-offs (recoveries) Average loans outstanding Net charge- offs as a percent of average loans outstanding (Dollars in Thousands) Multi-family mortgage $ 1,896 $ 2,056,595 0.09 % $ - $ 2,075,450 0.00 % $ - $ 1,894,548 0.00 % Nonresidential mortgage 1,834 1,036,205 0.18 % 80 1,104,052 0.01 % (10 ) 1,188,862 0.00 % Commercial business 33 190,023 0.02 % 1,429 223,518 0.64 % 48 79,704 0.06 % Construction - 105,095 0.00 % - 76,309 0.00 % - 21,050 0.00 % One- to four-family residential mortgage (147 ) 1,487,208 -0.01 % 9 1,331,779 0.00 % - 1,335,798 0.00 % Home equity loans (27 ) 67,849 -0.04 % 32 88,961 0.04 % - 90,070 0.00 % Other consumer - 2,993 0.00 % 32 4,048 0.79 % 106 4,880 2.17 % Unaccreted yield adjustments - (23,568 ) 0.00 % - (37,681 ) 0.00 % - (46,096 ) 0.00 % Total $ 3,589 $ 4,922,400 0.07 % $ 1,582 $ 4,866,436 0.03 % $ 144 $ 4,568,816 0.00 % Our loan portfolio experienced an annualized net charge-off rate of 0.07% for the year ended June 30, 2022, an increase of four basis points from the 0.03% rate for the year ended June 30, 2021. 13 Allocation of Allowance for Credit Losses on Loans.
The following table presents allowance for credit losses ratios, along with the components of their calculation, for the periods indicated: At June 30, 2023 2022 (Dollars in Thousands) Allowance for credit losses - loans $ 48,734 $ 47,058 Total loans outstanding $ 5,850,476 $ 5,436,576 Total non-performing loans $ 42,627 $ 70,321 Allowance for credit losses as a percent of total loans outstanding 0.83 % 0.87 % Allowance for credit losses to non-performing loans 114.33 % 66.92 % 11 Table of Contents The following table presents the ratio of net charge-offs (recoveries) to average loans outstanding by loan category, along with the components of the calculation, for the periods indicated: For the Years Ended June 30, 2023 2022 2021 Net charge-offs (recoveries) Average loans outstanding Net charge- offs as a percent of average loans outstanding Net charge-offs (recoveries) Average loans outstanding Net charge- offs as a percent of average loans outstanding Net charge-offs Average loans outstanding Net charge- offs as a percent of average loans outstanding (Dollars in Thousands) Multi-family mortgage $ 493 $ 2,718,428 0.02 % $ 1,896 $ 2,056,595 0.09 % $ — $ 2,075,450 0.00 % Nonresidential mortgage 39 1,005,943 0.00 % 1,834 1,036,205 0.18 % 80 1,104,052 0.01 % Commercial business 335 188,794 0.18 % 33 190,023 0.02 % 1,429 223,518 0.64 % Construction — 176,185 0.00 % — 105,095 0.00 % — 76,309 0.00 % One- to four-family residential mortgage (2) 1,683,929 — % (147) 1,487,208 (0.01) % 9 1,331,779 0.00 % Home equity loans — 66,479 — % (27) 67,849 (0.04) % 32 88,961 0.04 % Other consumer (55) 2,805 (1.96) % — 2,993 0.00 % 32 4,048 0.79 % Unaccreted yield adjustments — (15,440) 0.00 % — (23,568) 0.00 % — (37,681) 0.00 % Total $ 810 $ 5,827,123 0.01 % $ 3,589 $ 4,922,400 0.07 % $ 1,582 $ 4,866,436 0.03 % Our loan portfolio experienced an annualized net charge-off rate of 0.01% for the year ended June 30, 2023, a decrease of six basis points from the 0.07% rate for the year ended June 30, 2022. 12 Table of Contents Allocation of Allowance for Credit Losses on Loans.
Total nonperforming assets increased by $12.3 million to $92.2 million at June 30, 2022 from $79.9 million at June 30, 2021. For those same comparative periods, the number of nonperforming loans decreased to 61 loans from 113 loans while there was one property in other real estate owned at June 30, 2022 and 2021, respectively.
Total nonperforming assets decreased by $36.7 million to $55.6 million at June 30, 2023 from $92.2 million at June 30, 2022. For those same comparative periods, the number of nonperforming loans decreased to 45 loans from 61 loans. There was one property in other real estate owned at June 30, 2023 and 2022, respectively.
Advances from the FHLB are typically secured by our FHLB capital stock and certain investment securities as well as residential and commercial mortgage loans that we choose to utilize as collateral for such borrowings.
Advances from the FHLB are typically secured by our FHLB capital stock and certain investment securities as well as residential and commercial mortgage loans that we choose to utilize as collateral for such borrowings. Additional information about our FHLB advances is included under Note 11 to the audited consolidated financial statements.
The following table shows the principal balances of portfolio loans originated, purchased, acquired and repaid during the periods indicated: For the Years Ended June 30, 2022 2021 2020 (In Thousands) Loan originations: (1) Commercial loans: Multi-family mortgage $ 911,021 $ 256,223 $ 193,158 Nonresidential mortgage 231,159 96,238 65,357 Commercial business 140,051 104,628 108,546 Construction 86,448 50,382 7,192 One- to four-family residential mortgage 415,602 553,194 197,825 Consumer loans: Home equity loans 18,634 15,804 16,396 Other consumer 1,167 1,227 1,312 Total loan originations 1,804,082 1,077,696 589,786 Loan purchases: Commercial loans: Multi-family mortgage 55,847 - 2,500 Nonresidential mortgage - 21,351 53,043 Commercial business 146 251 2,671 One- to four-family residential mortgage 67,396 60,105 15,048 Total loan purchases 123,389 81,707 73,262 Loans acquired from MSB (2) - 530,693 - Loan sales: (1) Commercial business (1,035 ) (44,450 ) (470 ) Total loans sold (1,035 ) (44,450 ) (470 ) Loan repayments (1,343,081 ) (1,311,576 ) (849,249 ) (Decrease) increase due to other items (5,797 ) (1,911 ) 2,087 Net increase (decrease) in loan portfolio $ 577,558 $ 332,159 $ (184,584 ) (1) Excludes origination and sales of one- to four-family mortgage loans held for sale.
The following table shows the principal balances of portfolio loans originated, purchased, acquired and repaid during the periods indicated: For the Years Ended June 30, 2023 2022 2021 (In Thousands) Loan originations: (1) Commercial loans: Multi-family mortgage $ 602,206 $ 911,021 $ 256,223 Nonresidential mortgage 114,184 231,159 96,238 Commercial business 91,803 140,051 104,628 Construction 87,669 86,448 50,382 One- to four-family residential mortgage 197,839 415,602 553,194 Consumer loans: Home equity loans 26,014 18,634 15,804 Other consumer 1,095 1,167 1,227 Total loan originations 1,120,810 1,804,082 1,077,696 Loan purchases: Commercial loans: Multi-family mortgage — 55,847 — Nonresidential mortgage — — 21,351 Commercial business 46 146 251 One- to four-family residential mortgage 656 67,396 60,105 Total loan purchases 702 123,389 81,707 Loans acquired from MSB (2) — — 530,693 Loan sales: (1) Commercial business (655) (1,035) (44,450) Total loans sold (655) (1,035) (44,450) Loan repayments (706,860) (1,343,081) (1,311,576) Decrease due to other items (4,097) (5,797) (1,911) Net increase in loan portfolio $ 409,900 $ 577,558 $ 332,159 ________________________________________ (1) Excludes origination and sales of one- to four-family mortgage loans held for sale.
At June 30, 2022, there were three nonaccrual loans held-for-sale. At June 30, 2022 and 2021, we had loans with aggregate outstanding balances totaling $22.2 million and $17.8 million, respectively, reported as TDRs. Loan Review System.
All nonaccrual loans held-for sale at June 30, 2022 were sold during the year ended June 30, 2023. At June 30, 2023 and 2022, we had loans with aggregate outstanding balances totaling $17.4 million and $22.2 million, respectively, reported as TDRs. Loan Review System.
In fiscal 2023, we plan to accelerate our digital strategy, spearheaded by the adoption of a cloud-based, best-in-breed digital banking platform, and continue to serve our clients’ needs in an omnichannel environment while expanding our products and services into new markets in an efficient and cost-effective manner. Market Area.
In fiscal 2024, we plan to accelerate our digital strategy, spearheaded by the adoption of a cloud-based, best-in-breed digital banking platform, and continue to serve our clients’ needs in an omnichannel environment while expanding our products and services into new markets in an efficient and cost-effective manner. • Focus on Relationship Banking and Core Deposits We focus on the acquisition and retention of core non-maturity deposit accounts and expanding customer relationships.
At June 30, 2022, multi-family mortgage loans totaled $2.41 billion, or 44.3% of our loan portfolio, while nonresidential mortgage loans totaled $1.02 billion, or 18.8% of our loan portfolio. We originate commercial mortgage loans on a variety of multi-family and nonresidential property types, including loans on mixed-use properties which combine residential and commercial space.
At June 30, 2023, multi-family mortgage loans totaled $2.76 billion, or 47.2% of our loan portfolio, while nonresidential mortgage loans totaled $968.6 million, or 16.6% of our loan portfolio. We originate commercial mortgage loans on a variety of multi-family and nonresidential property types, including loans on mixed-use properties which combine residential and commercial space.
By comparison, at June 30, 2021, our securities portfolio totaled $1.72 billion and comprised 23.5% of our total assets. Additional information about our investment securities at June 30, 2022 is presented in Note 4 to the audited consolidated financial statements.
Additional information about the ACL at June 30, 2023 and 2022 is presented in Note 6 to the audited consolidated financial statements. Investment Securities At June 30, 2023, our investment securities portfolio totaled $1.37 billion and comprised 17.0% of our total assets.
Our non-SBA commercial term loans generally have terms of up to 10 years. Our commercial lines of credit have terms of up to one year and are generally floating-rate loans. Construction Lending. At June 30, 2022, construction loans totaled $140.1 million, or 2.6% of our loan portfolio.
Our commercial lines of credit have terms of up to one year and are generally floating-rate loans. Construction Lending. At June 30, 2023, construction loans totaled $226.6 million, or 3.9% of our loan portfolio.
As of June 30, 2022, our available for sale securities portfolio had a carrying value of $1.34 billion or 91.9% of our total securities with the remaining $118.3 million or 8.1% of securities were classified as held to maturity.
As of June 30, 2023, our available for sale securities portfolio had a carrying value of $1.23 billion or 89.3% of our total securities with the remaining $146.5 million or 10.7% of securities were classified as held to maturity.
New Jersey law specifies that no dividend may be paid if the dividend would impair the capital stock of the savings bank. In addition, no dividend may be paid unless the savings bank would, after payment of the dividend, have a surplus of at least 50% of its capital stock (or if the payment of dividend would not reduce surplus).
In addition, no dividend may be paid unless the savings bank would, after payment of the dividend, have a surplus of at least 50% of its capital stock (or if the payment of dividend would not reduce surplus). 23 Table of Contents Transactions with Related Parties.
Supervision and Regulation Kearny Bank and Kearny Financial operate in a highly regulated industry. This regulation establishes a comprehensive framework of activities in which a savings and loan holding company and New Jersey savings bank may engage and is intended primarily for the protection of the deposit insurance fund and depositors.
This regulation establishes a comprehensive framework of activities in which a savings and loan holding company and New Jersey savings bank may engage and is intended primarily for the protection of the deposit insurance fund and depositors. Set forth below is a brief description of certain laws that relate to the regulation of Kearny Bank and Kearny Financial.
Kearny Bank is a member of the FHLB of New York, which is one of eleven regional Federal Home Loan Banks. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from funds deposited by financial institutions and proceeds derived from the sale of consolidated obligations of the FHLB System.
Federal Home Loan Bank System. Kearny Bank is a member of the FHLB of New York, which is one of eleven regional Federal Home Loan Banks. Each FHLB serves as a reserve or central bank for its members within its assigned region.

… 107 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

40 edited+24 added−11 removed82 unchanged
Biggest changeThese consequences could be exacerbated if we are not successful in introducing new products and other services, achieving market acceptance of its products and other services, developing and maintaining a strong client base, or prudently managing expenses. 29 Asset Quality and Interest Rate Changes in interest rates or the shape of the yield curve may adversely affect our profitability and financial condition.
Biggest changeThe actions that we take in response to competition may adversely affect its results of operations and financial condition. These consequences could be exacerbated if we are not successful in introducing new products and other services, achieving market acceptance of its products and other services, developing and maintaining a strong client base, or prudently managing expenses.
If the residential mortgage loan demand decreases or we are unable to sell such loans for an adequate profit, then our non-interest income will likely decline which would adversely affect our earnings. 31 We may be required to record impairment charges with respect to our investment securities portfolio.
If the residential mortgage loan demand decreases or we are unable to sell such loans for an adequate profit, then our non-interest income will likely decline which would adversely affect our earnings. We may be required to record impairment charges with respect to our investment securities portfolio.
Business Issues Our acquisitions and the integration of acquired businesses, subject us to various risks and may not result in all of the cost savings and benefits anticipated, which could adversely affect our financial condition or results of operations. We have in the past, and may in the future, seek to grow our business by acquiring other businesses.
Our acquisitions and the integration of acquired businesses, subject us to various risks and may not result in all of the cost savings and benefits anticipated, which could adversely affect our financial condition or results of operations. We have in the past, and may in the future, seek to grow our business by acquiring other businesses.
These changes may require us to invest significant management attention and resources to make any necessary changes to operations to comply and could have an adverse effect on our business, financial condition and results of operations. 33 Changes to tax laws and regulations could adversely affect our financial condition or results of operations.
These changes may require us to invest significant management attention and resources to make any necessary changes to operations to comply and could have an adverse effect on our business, financial condition and results of operations. Changes to tax laws and regulations could adversely affect our financial condition or results of operations.
If an impairment loss is recorded, it will have little or no impact on the tangible book value of our common stock or our regulatory capital levels, but recognition of such an impairment loss could significantly restrict Kearny Bank’s ability to make dividend payments to Kearny Financial and therefore adversely impact our ability to pay dividends to stockholders. 34 We cannot guarantee that our allocation of capital to various alternatives, including stock repurchase plans, will enhance long-term stockholder value.
If an impairment loss is recorded, it will have little or no impact on the tangible book value of our common stock or our regulatory capital levels, but recognition of such an impairment loss could significantly restrict Kearny Bank’s ability to make dividend payments to Kearny Financial and therefore adversely impact our ability to pay dividends to stockholders. 34 Table of Contents We cannot guarantee that our allocation of capital to various alternatives, including stock repurchase plans, will enhance long-term stockholder value.
Significant negative changes to valuations could result in impairments in the value of our securities portfolio, which could have an adverse effect on our financial condition or results of operations. Our investments in corporate and municipal debt securities, trust preferred and subordinated debt securities and collateralized loan obligations expose us to additional credit risks.
Significant negative changes to valuations could result in impairments in the value of our securities portfolio, which could have an adverse effect on our financial condition or results of operations. Our investments in corporate and municipal debt securities, subordinated debt securities and collateralized loan obligations expose us to additional credit risks.
The composition and allocation of our investment portfolio has historically emphasized U.S. agency mortgage-backed securities and U.S. agency debentures. While such assets remain a significant component of our investment portfolio at June 30, 2022, prior enhancements to our investment policies, strategies and infrastructure have enabled us to diversify the composition and allocation of our securities portfolio.
The composition and allocation of our investment portfolio has historically emphasized U.S. agency mortgage-backed securities and U.S. agency debentures. While such assets remain a significant component of our investment portfolio at June 30, 2023, prior enhancements to our investment policies, strategies and infrastructure have enabled us to diversify the composition and allocation of our securities portfolio.
Also, any sudden or prolonged market downturn in the U.S. or abroad as a result of the above factors or otherwise could result in a decline in revenues and adversely affect our results of operations and financial condition, including capital and liquidity levels. Our inability to achieve profitability on new branches may negatively affect our earnings.
Also, any sudden or prolonged market downturn in the U.S. or abroad as a result of the above factors or otherwise could result in a decline in revenues and adversely affect our results of operations and financial condition, including capital and liquidity levels. 29 Table of Contents Our inability to achieve profitability on new branches may negatively affect our earnings.
The successful execution of our business strategy is partially dependent on our ability to attract and retain experienced and qualified personnel. Failure to do so could adversely affect our strategy, client relationships and internal operations. Item 1B. Unresolved Staff Comments Not applicable. 35
The inability to attract and retain key personnel could adversely affect our business. The successful execution of our business strategy is partially dependent on our ability to attract and retain experienced and qualified personnel. Failure to do so could adversely affect our strategy, client relationships and internal operations. Item 1B. Unresolved Staff Comments Not applicable.
Our allowance for credit losses on loans was 0.87% of total loans at June 30, 2022 and significant additions to our allowance could materially decrease our net income. In addition, bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or recognize further loan charge-offs.
Our allowance for credit losses on loans was 0.83% of total loans at June 30, 2023 and significant additions to our allowance could materially decrease our net income. 30 Table of Contents In addition, bank regulators periodically review our allowance for credit losses and may require us to increase our provision for credit losses or recognize further loan charge-offs.
When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities will fluctuate. This can cause decreases in our spread and can adversely affect our income.
In general, the larger the spread, the more we earn. When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities will fluctuate. This can cause decreases in our spread and can adversely affect our income.
If these assets are considered to be either partially or fully impaired in the future, our earnings would decrease. At June 30, 2022, we had approximately $213.9 million in intangible assets on our balance sheet comprising $210.9 million of goodwill and $3.0 million of core deposit intangibles.
If these assets are considered to be either partially or fully impaired in the future, our earnings would decrease. At June 30, 2023, we had approximately $213.4 million in intangible assets on our balance sheet comprising $210.9 million of goodwill and $2.5 million of core deposit intangibles.
Since repayment of commercial business loans may depend on the successful operation of the borrower’s business, repayment of such loans can be affected by adverse conditions in the real estate market or the local economy.
Since repayment of commercial business and construction loans may depend on the successful operation of the borrower’s business or the successful completion of a construction project, repayment of such loans can be affected by adverse conditions in the real estate market or the local economy.
Additionally, at June 30, 2022, $1.34 billion, or 91.9% of our investment securities, are classified as available for sale and reported at fair value with unrealized gains or losses excluded from earnings and reported in other comprehensive income, which affects our reported equity.
Additionally, at June 30, 2023, $1.23 billion, or 89.3% of our investment securities, are classified as available for sale and reported at fair value with unrealized gains or losses excluded from earnings and reported in other comprehensive income, which affects our reported equity.
We have a significant concentration in commercial real estate loans. If our regulators were to curtail our commercial real estate lending activities, our earnings, dividend paying capacity and/or ability to repurchase shares could be adversely affected.
If our regulators were to curtail our commercial real estate lending activities, our earnings, dividend paying capacity and/or ability to repurchase shares could be adversely affected.
For the year ended June 30, 2022, gains attributable to the sale of residential mortgage loans totaled $2.4 million, or approximately 17.3% of our non-interest income, a decline of $2.7 million from $5.1 million for the year ended June 30, 2021.
For the year ended June 30, 2023, gains attributable to the sale of residential mortgage loans totaled $760,000, or approximately 27.6% of our non-interest income, a decline of $1.7 million from $2.4 million for the year ended June 30, 2022.
Because we plan to continue to increase our originations of these loans, it may be necessary to increase the level of our allowance for credit losses because of the increased risk characteristics associated with these types of loans. Any such increase to our allowance for credit losses would adversely affect our earnings.
If we continue to increase our originations of these loans, it may be necessary to increase the level of our allowance for credit losses because of the increased risk characteristics associated with these types of loans. Any such increase to our allowance for credit losses would adversely affect our earnings. We have a significant concentration in commercial real estate loans.
Moreover, given that we actively manage our investment securities portfolio classified as available for sale, we may sell securities which could result in a realized loss, thereby reducing our net income. 30 Our increased commercial lending exposes us to additional risk. As part of our business strategy we intend to increase our focus on commercial lending.
Moreover, given that we actively manage our investment securities portfolio classified as available for sale, we may sell securities which could result in a realized loss, thereby reducing our net income. Our commercial lending exposes us to additional risk. Over the past several years, we have increased our focus on commercial lending.
In addition, changes to regulatory requirements could increase our costs of regulatory compliance and may significantly affect the markets in which we do business, the markets for and value of our loans and investments, and our ongoing operations, costs and profitability.
In addition, changes to regulatory requirements could increase our costs of regulatory compliance and may significantly affect the markets in which we do business, the markets for and value of our loans and investments, and our ongoing operations, costs and profitability. Business Issues We hold certain intangible assets, including goodwill, which could become impaired in the future.
Among other sources of funds, we rely on wholesale funding, including short- and long-term borrowings, brokered deposits and non-brokered deposits acquired through listing services, to provide funds with which to make loans, purchase investment securities and provide for other liquidity needs. On June 30, 2022, wholesale funding totaled $1.67 billion, or approximately 21.7% of total assets.
Among other sources of funds, we rely on wholesale funding, including short- and long-term borrowings, brokered deposits and non-brokered deposits acquired through listing services, to provide funds with which to make loans, purchase investment securities and provide for other liquidity needs.
If these service providers encounter difficulties, or if we have difficulty communicating with them, our ability to timely and accurately process and account for transactions could be adversely affected.
In addition, we outsource a majority of our data processing to certain third-party service providers. If these service providers encounter difficulties, or if we have difficulty communicating with them, our ability to timely and accurately process and account for transactions could be adversely affected.
At June 30, 2022, we had investment securities with fair values of approximately $1.45 billion on which we had approximately $128.5 million in gross unrealized losses and $304,000 of gross unrealized gains.
At June 30, 2023, we had investment securities with fair values of approximately $1.36 billion on which we had approximately $171.7 million in gross unrealized losses and $274,000 of gross unrealized gains.
As of June 30, 2022, our securities portfolio totaled $1.46 billion, or 18.9% of our total assets. Investment securities typically have lower yields than loans. For the year ended June 30, 2022, the weighted average yield of our investment securities portfolio was 2.03%, as compared to 3.87% for our loan portfolio.
As of June 30, 2023, our securities portfolio totaled $1.37 billion, or 17.0% of our total assets. Investment securities typically have lower yields than loans. For the year ended June 30, 2023, the weighted average yield of our investment securities portfolio was 3.55%, as compared to 4.00% for our loan portfolio.
We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions.
Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks. We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions.
Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
Inflation rose sharply at the end of 2021 and has remained at an elevated level through 2022 and 2023. Small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses.
Income from secondary mortgage market operations is volatile, and we may incur losses with respect to our secondary mortgage market operations that could negatively affect our earnings. A component of our business strategy is to sell a portion of residential mortgage loans originated into the secondary market, earning non-interest income in the form of gains on sale.
A component of our business strategy is to sell a portion of residential mortgage loans originated into the secondary market, earning non-interest income in the form of gains on sale.
Federal and state banking regulations are designed primarily to protect the deposit insurance funds and consumers, not to benefit a company’s shareholders. These regulations may sometimes impose significant limitations on operations. The significant federal and state banking regulations that affect us are described under the heading “Item 1.
These regulations may sometimes impose significant limitations on operations. The significant federal and state banking regulations that affect us are described under the heading “Item 1.
One such change is a 1% excise tax on stock repurchases, which will increase the cost of stock repurchases and may impact our future decisions on how to return value to stockholders in the most efficient manner. Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks.
One such change is a 1% excise tax on stock repurchases, which increased the cost of stock repurchases and may impact our future decisions on how to return value to stockholders in the most efficient manner.
We intend to continue to increase our originations of commercial business loans, including C&I and SBA loans, which generally have more risk than both one- to four-family residential and commercial mortgage loans.
Our increased commercial business and construction loan originations exposes us to increased credit risk. We have increased our originations of commercial business and construction loans, which generally have more risk than both one- to four-family residential and commercial mortgage loans.
We use various technology systems to manage our client relationships, general ledger, securities investments, deposits, and loans. We have established policies and procedures to prevent or limit the effect of system failures, service interruptions or other performance exceptions, but such events may still occur or may not be adequately addressed if they do occur.
We have established policies and procedures to prevent or limit the effect of system failures, service interruptions or other performance exceptions, but such events may still occur or may not be adequately addressed if they do occur. In addition, performance failures or other exceptions of our client-facing technologies could deter clients from using our products and services.
We derive our income mainly from the difference or spread between the interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings and other interest-bearing liabilities. In general, the larger the spread, the more we earn.
Asset Quality and Interest Rate Changes in interest rates or the shape of the yield curve may adversely affect our profitability and financial condition. We derive our income mainly from the difference or spread between the interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings and other interest-bearing liabilities.
Accordingly, we could suffer losses as a result of our failure to properly anticipate and manage these risks. We could be adversely affected by failure in our internal controls. A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that clients, regulators and investors may have of us.
Accordingly, we could suffer losses as a result of our failure to properly anticipate and manage these risks. 35 Table of Contents We could be adversely affected by failure in our internal controls.
We have increased our commercial lending staff and continue to seek additional commercial lenders to help grow the commercial loan portfolio. Our increased commercial lending, however, exposes us to greater risks than one- to four-family residential lending.
Our increased commercial lending, however, exposes us to greater risks than one- to four-family residential lending.
Our level of non-owner occupied commercial real estate equaled 514% of Bank total risk-based capital at June 30, 2022, however our commercial real estate loan portfolio increased by only 12% during the preceding 36 months.
Our level of non-owner occupied commercial real estate equaled 553% of Bank total risk-based capital at June 30, 2023, however our commercial real estate loan portfolio increased by only 31% during the preceding 36 months. 31 Table of Contents Income from secondary mortgage market operations is volatile, and we may incur losses with respect to our secondary mortgage market operations that could negatively affect our earnings.
We continue to devote a significant amount of effort, time and resources to continually strengthening our controls and ensuring compliance with complex accounting standards and banking regulations. The inability to attract and retain key personnel could adversely affect our business.
A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that clients, regulators and investors may have of us. We continue to devote a significant amount of effort, time and resources to continually strengthening our controls and ensuring compliance with complex accounting standards and banking regulations.
Paying higher interest rates to maintain or replace funding would adversely affect our net interest margin and operating results. 32 Information Security Risks associated with system failures, service interruptions or other performance exceptions could negatively affect our earnings. Information technology systems are critical to our business.
Information Security Risks associated with system failures, service interruptions or other performance exceptions could negatively affect our earnings. Information technology systems are critical to our business. We use various technology systems to manage our client relationships, general ledger, securities investments, deposits, and loans.
Furthermore, a prolonged period of inflation could cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition. The COVID-19 pandemic could continue to pose risks to our business, our results of operations and the future prospects of the Company.
Furthermore, a prolonged period of inflation could cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition. Our stock price may be negatively impacted by unrelated bank failures and negative depositor confidence in depository institutions.
Any of these events could have a material adverse effect on our financial condition and results of operations. Regulatory Matters We operate in a highly regulated environment and may be adversely affected by changes in federal and state laws and regulations. The financial services industry is extensively regulated.
Regulatory Matters We operate in a highly regulated environment and may be adversely affected by changes in federal and state laws and regulations. The financial services industry is extensively regulated. Federal and state banking regulations are designed primarily to protect the deposit insurance funds and consumers, not to benefit a company’s shareholders.
Generally wholesale funding may not be as stable as funding acquired through traditional retail channels. In the future, this funding may not be readily replaced as it matures, or we may have to pay a higher rate of interest to maintain it. Not being able to maintain or replace those funds as they mature would adversely affect our liquidity.
On June 30, 2023, wholesale funding totaled $2.15 billion, or approximately 26.6% of total assets. 32 Table of Contents In the future, this funding may not be readily replaced as it matures, or we may have to pay a higher rate of interest to maintain it.
In response to rising inflation in 2022, the Committee increased the target rate to 0.25% – 0.50% in March 2022, to 0.75% – 1.00% in May 2022, to 1.50% – 1.75% in June 2022 and to 2.25% – 2.50% in July 2022.
Beginning in March 2022, in response to rising inflation, the Federal Reserve Board’s Federal Open Market Committee systemically increased the target rate from 0.00% – 0.25% to 5.25% – 5.50% in July 2023. In addition, at June 30, 2023, short-term rates were meaningfully lower than long-term rates, which results in an inverted yield curve.
Removed
Inflation rose sharply at the end of 2021 and has continued rising in 2022 at levels not seen for over 40 years. Inflationary pressures are currently expected to remain elevated throughout 2022.
Added
Further, if we were unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, which have come under greater scrutiny in light of recent bank failures, it may have a material adverse effect on our financial condition and results of operations.
Removed
The COVID-19 pandemic has adversely impacted the global and national economy and certain industries and geographies in which our clients operate. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on the business of the Company, its clients, employees and third-party service providers.
Added
On March 9, 2023, Silvergate Bank, La Jolla, California, announced its decision to voluntarily liquidate its assets and wind down operations.
Removed
The extent of such impact will depend on future developments, which are highly uncertain. Additionally, the responses of various governmental and nongovernmental authorities and consumers to the pandemic may have material long-term effects on the Company and its clients which are difficult to quantify in the near-term or long-term. 28 Severe weather could harm our business.
Added
On March 10, 2023, Silicon Valley Bank, Santa Clara, California, was closed by the California Department of Financial Protection and Innovation (the “DFPI”), on March 12, 2023, Signature Bank, New York, New York, was closed by the New York State Department of Financial Services and on May 1, 2023, First Republic Bank, San Francisco, California, was closed by the DFPI, and in each case the FDIC was appointed receiver for the failed institution.
Removed
The actions that we take in response to competition may adversely affect its results of operations and financial condition.
Added
These banks had elevated levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. These failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions.
Removed
In July 2019, the Federal Reserve Board’s Federal Open Market Committee’s federal funds rate target was a range of 2.25% – 2.50% and the Committee began lowering the target rate in response to a slowing economy.
Added
These events have led to a greater focus by institutions, investors and regulators on the on-balance sheet liquidity of and funding sources for financial institutions, the composition of its deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management. 28 Table of Contents If we are unable to adequately manage our liquidity, deposits, capital levels and interest rate risk, it may have a material adverse effect on our financial condition and results of operations.
Removed
In March 2020, the Committee quickly lowered the target rate from 1.50% – 1.75% to 0.00 – 0.25% in response to the accelerating COVID-19 crisis and the Committee’s objective to inject liquidity into the banking system and stimulate the credit markets.
Added
We must maintain sufficient funds to respond to the needs of depositors and borrowers. Deposits have traditionally been our primary source of funds for use in lending and investment activities. We also receive funds from loan repayments, investment maturities and income on other interest-earning assets.
Removed
Because we intend to continue to increase our commercial business loan originations, our credit risk will increase. Historically we have not had a significant portfolio of commercial business loans.
Added
While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff.
Removed
In addition, performance failures or other exceptions of our client-facing technologies could deter clients from using our products and services. In addition, we outsource a majority of our data processing to certain third-party service providers.
Added
Accordingly, as a part of our liquidity management, we must use a number of funding sources in addition to deposits and repayments and maturities of loans and investments, which may include Federal Home Loan Bank of New York advances, federal funds purchased and brokered certificates of deposit.
Removed
Changes to LIBOR may adversely impact the value of, and the return on, our loans, investment securities and derivatives which are indexed to LIBOR. ICE Benchmark Administration, the authorized and regulated administrator of LIBOR, ended publication of the one-week and two-month USD LIBOR tenors on December 31, 2021 and the remaining USD LIBOR tenors will end publication in June 2023.
Added
Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources.
Removed
Financial services regulators and industry groups have collaborated to develop alternate reference rate indices or reference rates. The transition to a new reference rate requires changes to contracts, risk and pricing models, valuation tools, systems, product design and hedging strategies.
Added
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, pay our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
Removed
Uncertainty as to the nature of such potential changes, alternative reference rates, the elimination or replacement of LIBOR, or other reforms may adversely affect the value of, and the return on our loans, and our investment securities. We hold certain intangible assets, including goodwill, which could become impaired in the future.
Added
A lack of liquidity could also attract increased regulatory scrutiny and potential restraints imposed on us by regulators.
Added
Depending on the capitalization status and regulatory treatment of depository institutions, including whether an institution is subject to a supervisory prompt corrective action directive, certain additional regulatory restrictions and prohibitions may apply, including restrictions on growth, restrictions on interest rates paid on deposits, restrictions or prohibitions on payment of dividends and restrictions on the acceptance of brokered deposits.
Added
Our financial flexibility would be severely constrained if we were unable to maintain our access to funding or if adequate financing were not available at acceptable interest rates. Further, if we were required to rely more heavily on more expensive funding sources to support liquidity, our revenues may not increase proportionately to cover our increased costs.
Added
In this case, our operating margins and profitability would be adversely affected. If alternative funding sources were no longer available to us, we may need to sell a portion of our investment and/or loan portfolio to raise funds, which, depending upon market conditions, could result in us realizing a loss on the sale of such assets.
Added
As of June 30, 2023, we had a net unrealized loss of $156.1 million on our available-for-sale investment securities portfolio as a result of the rising interest rate environment. Our investment securities totaled $1.37 billion, or 17.0% of total assets, at June 30, 2023. The details of this portfolio are included in Note 4 to the consolidated financial statements.
Added
Not being able to maintain or replace those funds as they mature would adversely affect our liquidity. Paying higher interest rates to maintain or replace funding would adversely affect our net interest margin and operating results.
Added
Public funds deposits are a notable source of funds for us and a reduced level of those deposits may hurt our profits and liquidity position. Public funds deposits are a notable source of funds for our lending and investment activities.
Added
At June 30, 2023, $672.0 million, or 11.9% of our total deposits, consisted of public funds deposits from local government entities in the state of New Jersey, such as townships, counties and school districts. These deposits are collateralized by letters of credit from the FHLB or through the pledge of eligible investment securities.
Added
Given our reliance on these typically high-average balance public funds deposits as a source of funds, our inability to retain such funds could adversely affect our liquidity. Further, our public funds deposits are primarily floating rate interest-bearing demand deposit accounts and therefore their pricing is more sensitive to changes in interest rates.
Added
If we are forced to pay higher rates on our public funds accounts to retain those funds, or if we are unable to retain such funds and we are forced to rely on other sources of funds for our lending and investment activities, such as borrowings from the FHLB, the interest expense associated with these other funding sources may be higher than the rates we are currently paying on our public funds deposits, which would adversely affect our net interest income.
Added
Any of these events could have a material adverse effect on our financial condition and results of operations. 33 Table of Contents While our Board of Directors takes an active role in cybersecurity risk tolerance, we rely to a large degree on management and outside consultants in overseeing cybersecurity risk management.
Added
Our Board of Directors takes an active role in the cybersecurity risk tolerance of the Company and all members receive cybersecurity training annually. The Board reviews the annual risk assessments and approves information technology policies, which include cybersecurity.
Added
Furthermore, our Audit Committee is responsible for reviewing all audit findings related to information technology general controls, internal and external vulnerability, and penetration testing. The Board receives an annual information security report and the Enterprise Risk Management Committee receives an annual presentation from our Information Security Officer as it relates to cybersecurity and related issues.
Added
We also engage outside consultants to support our cybersecurity efforts. However, our directors do not have significant experience in cybersecurity risk management outside of the Company and therefore, its ability to fulfill its oversight function remains dependent on the input it receives from management and outside consultants.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeAt June 30, 2022, the Company operated 45 branch offices located in Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Union counties, New Jersey and Kings and Richmond counties, New York. At June 30, 2022, 19 of our branch offices are leased with remaining terms between 7 months and 10 years.
Biggest changeAt June 30, 2023, the Company operated 43 branch offices located in Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Union counties, New Jersey and Kings and Richmond counties, New York. At June 30, 2023, 18 of our branch offices are leased with remaining terms between seven months and nine years.
Item 2. Properties The Company and the Bank conduct business from their corporate headquarters at 120 Passaic Avenue in Fairfield, New Jersey and from administrative offices located in Fairfield, Clifton, Millington and Oakhurst, New Jersey.
Item 2. Properties The Company and the Bank conduct business from their corporate headquarters at 120 Passaic Avenue in Fairfield, New Jersey and from administrative offices located in Fairfield, Clifton and Oakhurst, New Jersey.
At June 30, 2022, our net investment in property and equipment totaled $53.3 million. Additional information regarding our properties as of June 30, 2022, is presented in Note 8 to the audited consolidated financial statements.
At June 30, 2023, our net investment in property and equipment totaled $48.3 million. Additional information regarding our properties as of June 30, 2023, is presented in Note 8 to the audited consolidated financial statements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeAt June 30, 2022, there were no lawsuits pending or known to be contemplated against us that would be expected to have a material effect on operations or income. Item 4. Mine Saf ety Disclosures Not applicable. 36 PART II
Biggest changeAt June 30, 2023, there were no lawsuits pending or known to be contemplated against us that would be expected to have a material effect on operations or income. Item 4. Mine Safety Disclosures Not applicable. 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed3 unchanged
Biggest changePeriod 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 April 1-30, 2022 1,003,199 $ 12.63 1,003,199 2,076,521 May 1-31, 2022 1,233,710 $ 11.93 1,233,710 842,811 June 1-30, 2022 517,666 $ 11.90 517,666 325,145 Total 2,754,575 $ 12.18 2,754,575 325,145 On September 22, 2021, the Company announced the authorization of a new stock repurchase plan to repurchase up to 7,602,021 shares, or 10% of the shares then outstanding.
Biggest changePeriod 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 April 1-30, 2023 596,479 $ 7.91 596,479 1,720,774 May 1-31, 2023 216,027 $ 7.62 216,027 1,504,747 June 1-30, 2023 — $ — — 1,504,747 Total 812,506 $ 7.83 812,506 1,504,747 On August 1, 2022, the Company announced the authorization of a new stock repurchase plan to repurchase up to 4,000,000 shares.
Set forth below is information regarding the Company’s stock repurchases during the fourth quarter of the fiscal year ended June 30, 2022.
Set forth below is information regarding the Company’s stock repurchases during the fourth quarter of the fiscal year ended June 30, 2023.
Item 5. Market for Registrant’s Common Equity, Related Sto ckholder Matters and Issuer Purchases of Equity Securities (a) Market Information.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Market Information.
There can be no assurance that the Company’s future stock performance will be the same or similar to the historical stock performance shown in the graph above. The Company neither makes nor endorses any predictions as to stock performance. Item 6. [ R eserved] 38
There can be no assurance that the Company’s future stock performance will be the same or similar to the historical stock performance shown in the graph above. The Company neither makes nor endorses any predictions as to stock performance. Item 6. [Reserved] 38 Table of Contents
For discussion of corporate and regulatory limitations applicable to the payment of dividends, see “Item 1. Business-Regulation.” As of August 19, 2022, there were 4,351 registered holders of record of the Company’s common stock.
For discussion of corporate and regulatory limitations applicable to the payment of dividends, see “Item 1. Business-Regulation.” As of August 18, 2023, there were 4,207 registered holders of record of the Company’s common stock.
SmallCap Banks Index 100 111 102 77 129 119 The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. The S&P U.S. SmallCap Banks Index includes all major exchange (NYSE, NYSE American and NASDAQ) traded banks under $15 billion in market capitalization in S&P’s coverage universe.
SmallCap Banks Index 100 92 69 116 107 87 The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. The S&P U.S. SmallCap Banks Index includes all major exchange (NYSE, NYSE American and NASDAQ) traded banks under $15 billion in market capitalization in S&P’s coverage universe.
This plan has no expiration date. 37 Stock Performance Graph. The following graph compares the cumulative total shareholder return on the Company’s common stock with the cumulative total return on the NASDAQ Composite Index and a peer group of the SNL Thrift Index, in each case assuming an investment of $100 as of June 30, 2017.
This current plan has no expiration date. 37 Table of Contents Stock Performance Graph. The following graph compares the cumulative total shareholder return on the Company’s common stock with the cumulative total return on the NASDAQ Composite Index and a peer group of the S&P U.S.
Total return assumes the reinvestment of all dividends. At June 30, 2017 2018 2019 2020 2021 2022 Kearny Financial Corp. $ 100 $ 92 $ 94 $ 59 $ 89 $ 86 NASDAQ Composite 100 124 133 169 246 188 S&P U.S.
SmallCap Banks Index, in each case assuming an investment of $100 as of June 30, 2018. Total return assumes the reinvestment of all dividends. At June 30, 2018 2019 2020 2021 2022 2023 Kearny Financial Corp. $ 100 $ 102 $ 64 $ 97 $ 93 $ 62 NASDAQ Composite Index 100 108 137 199 152 192 S&P U.S.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

68 edited+28 added−20 removed15 unchanged
Biggest changeOur ACL on individually analyzed loans decreased $3.0 million, which resulted from charge-offs, a loan payoff and an increase in the fair value of collateral for collateral-dependent loans, partially offset by new individually analyzed loans. 39 Financial Overview The following financial information and other data in this section are derived from our audited consolidated financial statements and should be read together therewith: At June 30, 2022 2021 2020 (In Thousands) Balance Sheet Data: Cash and equivalents $ 101,615 $ 67,855 $ 180,967 Assets 7,719,883 7,283,735 6,758,175 Net loans receivable 5,370,787 4,793,229 4,461,070 Investment securities available for sale 1,344,093 1,676,864 1,385,703 Investment securities held to maturity 118,291 38,138 32,556 Goodwill 210,895 210,895 210,895 Deposits 5,862,256 5,485,306 4,430,282 Borrowings 901,337 685,876 1,173,165 Stockholders' equity 894,000 1,042,944 1,084,177 For the Years Ended June 30, 2022 2021 2020 (Dollars in Thousands, Except Per Share Amounts) Summary of Operations: Interest income $ 226,272 $ 238,085 $ 237,804 Interest expense 29,669 49,851 83,854 Net interest income 196,603 188,234 153,950 (Reversal of) provision for credit losses (7,518 ) (1,121 ) 4,197 Net interest income after (reversal of) provision for credit losses 204,121 189,355 149,753 Non-interest income 13,934 21,026 15,123 Non-interest expenses 125,708 125,885 107,624 Income before taxes 92,347 84,496 57,252 Income tax expense 24,800 21,263 12,287 Net income $ 67,547 $ 63,233 $ 44,965 Per Share Data: Net income per share - Basic and diluted $ 0.95 $ 0.77 $ 0.55 Weighted average number of common shares outstanding (in thousands): Basic 70,911 82,387 82,409 Diluted 70,933 82,391 82,430 Cash dividends per share $ 0.43 $ 0.35 $ 0.29 Dividend payout ratio (1) 45.1 % 45.1 % 52.8 % (1) Represents cash dividends declared divided by net income. 40 At or For the Years Ended June 30, 2022 2021 2020 Performance ratios: Return on average assets (net income divided by average total assets) 0.93 % 0.86 % 0.67 % Return on average equity (net income divided by average total equity) 6.86 % 5.79 % 4.10 % Return on average tangible equity (net income divided by average tangible equity) (1) 8.77 % 7.22 % 5.10 % Net interest rate spread 2.86 % 2.61 % 2.22 % Net interest margin 2.94 % 2.75 % 2.45 % Average interest-earning assets to average interest-earning liabilities 118.93 % 118.63 % 117.24 % Efficiency ratio (non-interest expenses divided by the sum of net interest income and non-interest income) 59.71 % 60.16 % 63.66 % Non-interest expense to average assets 1.73 % 1.72 % 1.61 % Asset Quality Ratios: Non-performing loans to total loans 1.30 % 1.64 % 0.82 % Non-performing assets to total assets 1.19 % 1.10 % 0.55 % Net charge-offs to average loans outstanding 0.07 % 0.03 % 0.00 % Allowance for credit losses to total loans 0.87 % 1.19 % 0.82 % Allowance for credit losses to non-performing loans 66.92 % 72.92 % 101.72 % Capital Ratios: Average equity to average assets 13.52 % 14.88 % 16.39 % Equity to assets at period end 11.58 % 14.32 % 16.04 % Tangible equity to tangible assets at period end (2) 9.06 % 11.72 % 13.29 % (1) Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
Biggest changeTo quantify the impact of a potential goodwill impairment charge at June 30, 2023, the impact of a five percent impairment charge on goodwill would result in a reduction in pre-tax income of approximately $10.5 million. 40 Table of Contents Financial Overview The following financial information and other data in this section are derived from our audited consolidated financial statements and should be read together therewith: At June 30, 2023 2022 2021 (In Thousands) Balance Sheet Data: Cash and equivalents $ 70,515 $ 101,615 $ 67,855 Assets 8,064,815 7,719,883 7,283,735 Net loans receivable 5,780,687 5,370,787 4,793,229 Investment securities available for sale 1,227,729 1,344,093 1,676,864 Investment securities held to maturity 146,465 118,291 38,138 Goodwill 210,895 210,895 210,895 Deposits 5,629,183 5,862,256 5,485,306 Borrowings 1,506,812 901,337 685,876 Stockholders' equity 869,284 894,000 1,042,944 For the Years Ended June 30, 2023 2022 2021 (Dollars in Thousands, Except Per Share Amounts) Summary of Operations: Interest income $ 293,724 $ 226,272 $ 238,085 Interest expense 117,859 29,669 49,851 Net interest income 175,865 196,603 188,234 Provision for (reversal of) credit losses 2,486 (7,518) (1,121) Net interest income after provision for (reversal of) credit losses 173,379 204,121 189,355 Non-interest income 2,751 13,934 21,026 Non-interest expenses 123,751 125,708 125,885 Income before taxes 52,379 92,347 84,496 Income tax expense 11,568 24,800 21,263 Net income $ 40,811 $ 67,547 $ 63,233 Per Share Data: Net income per share - Basic and diluted $ 0.63 $ 0.95 $ 0.77 Weighted average number of common shares outstanding (in thousands): Basic 64,804 70,911 82,387 Diluted 64,804 70,933 82,391 Cash dividends per share $ 0.44 $ 0.43 $ 0.35 Dividend payout ratio (1) 70.2 % 45.1 % 45.1 % ________________________________________ (1) Represents cash dividends declared divided by net income. 41 Table of Contents At or For the Years Ended June 30, 2023 2022 2021 Performance ratios: Return on average assets (ratio of net income to average total assets) 0.51 % 0.93 % 0.86 % Return on average equity (ratio of net income to average total equity) 4.66 % 6.86 % 5.79 % Return on average tangible equity (ratio of net income to average tangible equity) (1) 6.17 % 8.77 % 7.22 % Net interest rate spread 2.09 % 2.86 % 2.61 % Net interest margin 2.34 % 2.94 % 2.75 % Average interest-earning assets to average interest-bearing liabilities 115.66 % 118.93 % 118.63 % Efficiency ratio (2) 69.28 % 59.71 % 60.16 % Non-interest expense to average assets 1.53 % 1.73 % 1.72 % Asset Quality Ratios: Non-performing loans to total loans 0.73 % 1.30 % 1.64 % Non-performing assets to total assets 0.69 % 1.19 % 1.10 % Net charge-offs to average loans outstanding 0.01 % 0.07 % 0.03 % Allowance for credit losses to total loans 0.83 % 0.87 % 1.19 % Allowance for credit losses to non-performing loans 114.33 % 66.92 % 72.92 % Capital Ratios: Average equity to average assets 10.85 % 13.52 % 14.88 % Equity to assets at period end 10.78 % 11.58 % 14.32 % Tangible equity to tangible assets at period end (3) 8.35 % 9.06 % 11.72 % ________________________________________ (1) Average tangible equity equals average total stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
In a period of rapidly rising interest rates, the liquidity and maturities of our assets and liabilities are critical to the maintenance of acceptable performance levels. 49 The principal effect of inflation on earnings, as distinct from levels of interest rates, is in the area of non-interest expense.
In a period of rapidly rising interest rates, the liquidity and maturities of our assets and liabilities are critical to the maintenance of acceptable performance levels. The principal effect of inflation on earnings, as distinct from levels of interest rates, is in the area of non-interest expense.
Business” of this Annual Report on Form 10-K, as well as in Note 10 to the audited consolidated financial statements. 43 Borrowings.
Business” of this Annual Report on Form 10-K, as well as in Note 10 to the audited consolidated financial statements. Borrowings.
Additional information about our borrowings at June 30, 2022 is presented under “Item 1. Business” of this Annual Report on Form 10-K, as well as in Note 11 to the audited consolidated financial statements. Other Liabilities.
Additional information about our borrowings at June 30, 2023 is presented under “Item 1. Business” of this Annual Report on Form 10-K, as well as in Note 11 to the audited consolidated financial statements. Other Liabilities.
Item 7. Management’s Discussion and Analysis o f Financial Condition and Results of Operations General This discussion and analysis reflects Kearny Financial Corp.’s consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations General This discussion and analysis reflects Kearny Financial Corp.’s consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations.
Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for credit losses. Allowance for Credit Losses.
Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for credit losses and goodwill. Allowance for Credit Losses.
Additional information regarding the allowance for credit losses and the associated provisions recognized during the year ended June 30, 2022 is presented under “Item 1, Business” on this Annual Report on Form 10-K as well as in Note 1 and Note 6 to the audited consolidated financial statements as well as the Comparison of Financial Condition at June 30, 2022.
Additional information regarding the allowance for credit losses and the associated provision recognized during the year ended June 30, 2023 is presented under “Item 1, Business” on this Annual Report on Form 10-K as well as in Note 1 and Note 6 to the audited consolidated financial statements as well as the Comparison of Financial Condition at June 30, 2023.
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets. 45 The following table reflects the dollar amount of changes in interest income and interest expense to changes in volume and in prevailing interest rates during the periods indicated.
(6) Net interest margin represents net interest income as a percentage of average interest-earning assets. 46 Table of Contents The following table reflects the dollar amount of changes in interest income and interest expense to changes in volume and in prevailing interest rates during the periods indicated.
(4) Includes average balances of non-interest-bearing deposits of $624.7 million, $518.1 million and $334.5 million for the years ended June 30, 2022, 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.
(4) Includes average balances of non-interest-bearing deposits of $644.5 million, $624.7 million and $518.1 million for the years ended June 30, 2023, 2022 and 2021, respectively. (5) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
At June 30, 2022, the most severe historical loss rate for multi-family and nonresidential mortgages loans was 1.92%. Management performed a hypothetical sensitivity analysis to understand the impact of a change in a key input on our ACL.
At June 30, 2023, the most severe historical loss rate for multi-family and nonresidential mortgages loans was 1.72%. Management performed a hypothetical sensitivity analysis to understand the impact of a change in a key input on our ACL.
Business” of this Annual Report on Form 10-K, as well as in Note 4 to the audited consolidated financial statements. Loans Held-for-Sale. Loans held-for-sale totaled $28.9 million at June 30, 2022 as compared to $16.5 million at June 30, 2021 and are reported separately from the balance of net loans receivable.
Business” of this Annual Report on Form 10-K, as well as in Note 4 to the audited consolidated financial statements. Loans Held-for-Sale. Loans held-for-sale totaled $9.6 million at June 30, 2023 as compared to $28.9 million at June 30, 2022 and are reported separately from the balance of net loans receivable.
Our primary assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates, however, do not necessarily move in the same direction or with the same magnitude as the price of goods and services, since such prices are affected by inflation.
As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates, however, do not necessarily move in the same direction or with the same magnitude as the price of goods and services, since such prices are affected by inflation.
See Note 1 to our audited consolidated financial statements for a detailed discussion of our accounting policies and methodologies for establishing the ACL. Management believes the following information may enable investors to better understand the changes in our ACL. Our ACL totaled $47.1 million and $58.2 million at June 30, 2022 and 2021, respectively.
See Note 1 to our audited consolidated financial statements for a detailed discussion of our accounting policies and methodologies for establishing the ACL. Management believes the following information may enable investors to better understand the changes in our ACL. Our ACL totaled $48.7 million and $47.1 million at June 30, 2023 and 2022, respectively.
Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. At June 30, 2022, outstanding loan commitments relating to loans held in portfolio totaled $510.5 million compared to $512.2 million at June 30, 2021.
At June 30, 2023, outstanding loan commitments relating to loans held in portfolio totaled $251.2 million compared to $510.5 million at June 30, 2022. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Comparison of Operating Results for the Years Ended June 30, 2021 and June 30, 2020 A comparison of our operating results for the years ended June 30, 2021 and June 30, 2020 can be found in our Annual Report on Form 10-K for the year ended June 30, 2021, filed with the SEC on August 27, 2021. 47 Liquidity and Commitments Liquidity, represented by cash and cash equivalents, is a product of operating, investing and financing activities.
Comparison of Operating Results for the Years Ended June 30, 2022 and June 30, 2021 A comparison of our operating results for the years ended June 30, 2022 and June 30, 2021 can be found in our Annual Report on Form 10-K for the year ended June 30, 2022, filed with the SEC on August 26, 2022. 48 Table of Contents Liquidity and Commitments Liquidity, represented by cash and cash equivalents, is a product of operating, investing and financing activities.
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 $65.0 million to $756.2 million at June 30, 2022 from $691.2 million at June 30, 2021.
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 $73.6 million to $829.8 million at June 30, 2023 from $756.2 million at June 30, 2022.
As of the same date, we had $250.0 million outstanding via the Bank’s overnight line of credit with the FHLB.
As of the same date, we had $125.0 million outstanding via our overnight line of credit with the FHLB.
The provision for credit losses reversal for the year ended June 30, 2022 was largely attributable to continued improvement in our economic forecast, a reduction in the expected life of various segments of the loan portfolio and a net reduction of $3.0 million in reserves on individually evaluated loans.
By comparison, the reversal of credit losses for the year ended June 30, 2022 was largely attributable to an improvement in our economic forecast, a reduction in the expected life of various segments of the loan portfolio and a net reduction in reserves on loans individually analyzed for impairment.
Liquidity, at June 30, 2022, included $101.6 million of short-term cash and equivalents supplemented by $1.34 billion of investment securities classified as available for sale which can readily be sold or pledged as collateral, if necessary. In addition, we have the capacity to borrow additional funds from the FHLB, Federal Reserve Bank or via unsecured overnight borrowings.
Liquidity, at June 30, 2023, included $70.5 million of short-term cash and equivalents and $1.23 billion of investment securities available for sale which can readily be sold or pledged as collateral, if necessary. In addition, we have the capacity to borrow additional funds from the FHLB, FRB or via unsecured overnight borrowings.
Investment securities held to maturity increased by $80.2 million to $118.3 million at June 30, 2022 from $38.1 million at June 30, 2021. The increase was largely the result of purchases totaling $86.4 million, partially offset by principal repayments totaling $6.1 million. Additional information regarding investment securities at June 30, 2022 is presented under “Item 1.
Investment securities held to maturity increased by $28.2 million to $146.5 million at June 30, 2023 from $118.3 million at June 30, 2022. The increase was largely the result of purchases of $40.4 million, partially offset by principal repayments of $12.1 million. Additional information regarding investment securities at June 30, 2023 is presented under “Item 1.
Comparison of Operating Results for the Years Ended June 30, 2022 and June 30, 2021 Net Income . Net income for the year ended June 30, 2022 was $67.5 million, or $0.95 per diluted share, an increase of 6.8% from $63.2 million, or $0.77 per diluted share for the year ended June 30, 2021.
Comparison of Operating Results for the Years Ended June 30, 2023 and June 30, 2022 Net Income . Net income for the year ended June 30, 2023 was $40.8 million, or $0.63 per diluted share, a decrease of 39.6% from $67.5 million, or $0.95 per diluted share for the year ended June 30, 2022.
The increase between the comparative periods resulted from a decrease of $20.2 million in interest expense, partially offset by a decrease of $11.8 million in interest income.
The decrease between the comparative periods resulted from an increase of $88.2 million in interest expense, partially offset by an increase of $67.5 million in interest income.
The remaining changes in the other components of non-interest income between comparative periods generally reflected normal operating fluctuations within those line items. 46 Non-Interest Expense . Non-interest expense decreased by $177,000 to $125.7 million for the year ended June 30, 2022.
The remaining changes in the other components of non-interest expense between comparative periods generally reflected normal operating fluctuations within those line items. Provision for Income Taxes . Provision for income taxes decreased by $13.2 million to $11.6 million for the year ended June 30, 2023, from $24.8 million for the year ended June 30, 2022.
The qualitative component of our ACL, which is largely based on management’s judgment of qualitative loss factors, increased $2.1 million. Our ACL totaled $47.1 million at June 30, 2022 and the amount allocated to our collectively evaluated multi-family and nonresidential mortgage loans was $32.4 million, of which $28.2 million was attributable to qualitative loss factors.
The qualitative component of our ACL, which is largely based on management’s judgment of qualitative loss factors, decreased $6.5 million. Our ACL totaled $48.7 million at June 30, 2023 and the amount allocated to our collectively evaluated multi-family and nonresidential mortgage loans was $32.0 million, of which $23.3 million was attributable to qualitative loss factors.
The provision for credit losses decreased by $6.4 million to a provision for credit losses reversal of $7.5 million for the year ended June 30, 2022, compared to a provision for credit losses reversal of $1.1 million for the year ended June 30, 2021.
The provision for credit losses increased by $10.0 million to a provision for credit losses of $2.5 million for the year ended June 30, 2023, compared to a reversal of credit losses of $7.5 million for the year ended June 30, 2022.
For the Years Ended June 30, 2022 2021 2020 Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost (Dollars in Thousands) Interest-earning assets: Loans receivable (1) $ 4,922,400 $ 190,520 3.87 % $ 4,866,436 $ 202,240 4.16 % $ 4,568,816 $ 191,599 4.19 % Taxable investment securities (2) 1,622,475 32,746 2.02 1,571,452 31,238 1.99 1,291,516 39,321 3.04 Tax-exempt securities (2) 55,981 1,273 2.27 74,604 1,652 2.21 111,477 2,393 2.15 Other interest-earning assets (3) 82,802 1,733 2.09 200,435 2,955 1.47 122,278 4,491 3.67 Total interest-earning assets 6,683,658 226,272 3.39 6,712,927 238,085 3.55 6,094,087 237,804 3.90 Non-interest-earning assets 598,712 620,934 595,158 Total assets $ 7,282,370 $ 7,333,861 $ 6,689,245 Interest-bearing liabilities: Interest-bearing demand $ 2,067,200 $ 5,123 0.25 $ 1,726,190 $ 7,028 0.41 $ 1,041,188 $ 11,433 1.10 Savings 1,088,971 1,190 0.11 1,066,794 3,299 0.31 831,832 6,735 0.81 Certificates of deposit 1,711,276 8,895 0.52 1,931,887 21,208 1.10 2,032,046 40,684 2.00 Total interest-bearing deposits 4,867,447 15,208 0.31 4,724,871 31,535 0.67 3,905,066 58,852 1.51 FHLB advances 679,388 14,067 2.07 931,148 18,314 1.97 1,236,139 24,582 1.99 Other borrowings 72,841 394 0.54 2,563 2 0.06 56,957 420 0.74 Total borrowings 752,229 14,461 1.92 933,711 18,316 1.96 1,293,096 25,002 1.93 Total interest-bearing liabilities 5,619,676 29,669 0.53 5,658,582 49,851 0.88 5,198,162 83,854 1.61 Non-interest-bearing liabilities (4) 678,143 583,886 394,758 Total liabilities 6,297,819 6,242,468 5,592,920 Stockholders' equity 984,551 1,091,393 1,096,325 Total liabilities and stockholders' equity $ 7,282,370 $ 7,333,861 $ 6,689,245 Net interest income $ 196,603 $ 188,234 $ 153,950 Interest rate spread (5) 2.86 % 2.67 % 2.29 % Net interest margin (6) 2.94 % 2.80 % 2.53 % Ratio of interest-earning assets to interest-bearing liabilities 1.19 X 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.
For the Years Ended June 30, 2023 2022 2021 Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost Average Balance Interest Average Yield/ Cost (Dollars in Thousands) Interest-earning assets: Loans receivable (1) $ 5,827,123 $ 233,147 4.00 % $ 4,922,400 $ 190,520 3.87 % $ 4,866,436 $ 202,240 4.16 % Taxable investment securities (2) 1,532,961 54,855 3.58 1,622,475 32,746 2.02 1,571,452 31,238 1.99 Tax-exempt securities (2) 30,332 694 2.29 55,981 1,273 2.27 74,604 1,652 2.21 Other interest-earning assets (3) 115,390 5,028 4.36 82,802 1,733 2.09 200,435 2,955 1.47 Total interest-earning assets 7,505,806 293,724 3.91 6,683,658 226,272 3.39 6,712,927 238,085 3.55 Non-interest-earning assets 563,131 598,712 620,934 Total assets $ 8,068,937 $ 7,282,370 $ 7,333,861 Interest-bearing liabilities: Interest-bearing demand $ 2,349,802 $ 40,650 1.73 $ 2,067,200 $ 5,123 0.25 $ 1,726,190 $ 7,028 0.41 Savings 896,651 3,351 0.37 1,088,971 1,190 0.11 1,066,794 3,299 0.31 Certificates of deposit 2,083,864 34,162 1.64 1,711,276 8,895 0.52 1,931,887 21,208 1.10 Total interest-bearing deposits 5,330,317 78,163 1.47 4,867,447 15,208 0.31 4,724,871 31,535 0.67 FHLB advances 1,101,658 37,734 3.43 679,388 14,067 2.07 931,148 18,314 1.97 Other borrowings 57,468 1,962 3.41 72,841 394 0.54 2,563 2 0.06 Total borrowings 1,159,126 39,696 3.42 752,229 14,461 1.92 933,711 18,316 1.96 Total interest-bearing liabilities 6,489,443 117,859 1.82 5,619,676 29,669 0.53 5,658,582 49,851 0.88 Non-interest-bearing liabilities (4) 704,136 678,143 583,886 Total liabilities 7,193,579 6,297,819 6,242,468 Stockholders' equity 875,358 984,551 1,091,393 Total liabilities and stockholders' equity $ 8,068,937 $ 7,282,370 $ 7,333,861 Net interest income $ 175,865 $ 196,603 $ 188,234 Interest rate spread (5) 2.09 % 2.86 % 2.67 % Net interest margin (6) 2.34 % 2.94 % 2.80 % Ratio of interest-earning assets to interest-bearing liabilities 1.16 1.19 1.19 ________________________________________ (1) Loans held-for-sale and non-accruing loans have been included in loans receivable and the effect of such inclusion was not material.
We had active payment deferrals that were not considered TDRs of $5.6 million at June 30, 2021. Additional information about nonperforming loans and TDRs at June 30, 2022 is presented under “Item 1. Business” of this Annual Report on Form 10-K, as well as in Note 5 to the audited consolidated financial statements. Allowance for Credit Losses (“ACL”).
Additional information about the allowance for credit losses at June 30, 2023 is presented under “Item 1. Business” of this Annual Report on Form 10-K, as well as in Note 1 and Note 6 to the audited consolidated financial statements. Other Assets.
This increase was primarily due to non-recurring expenses of $1.3 million related to the consolidation of three retail branch locations, $250,000 related to facility repairs made in connection with damage incurred during Tropical Storm Ida and $187,000 related to the closure of a leased office facility acquired in conjunction with the MSB acquisition.
This decrease was largely due to expenses recognized in the prior period including $1.5 million of non-recurring expenses related to the consolidation of three retail branch locations and an office facility and $250,000 related to facility repairs made in connection with damage incurred during Tropical Storm Ida.
At June 30, 2022, if the four-quarter national unemployment rate forecast had been 9% rather than an average of approximately 3.5%, our ACL would have been approximately $11.1 million higher. This sensitivity analysis includes the impact to both the quantitative and qualitative components of our ACL.
At June 30, 2023, if the four-quarter national unemployment rate forecast had been 9% rather than an average of approximately 4.0%, our ACL as a percent of total loans would have increased 33 basis points from 0.83% to 1.16%. This sensitivity analysis includes the impact to both the quantitative and qualitative components of our ACL.
Loss on sale and call of securities was $559,000 during the year ended June 30, 2022 compared to a net gain of $767,000 recorded during the earlier comparative period. Gain on sale of loans decreased by $3.0 million to $2.5 million for the year ended June 30, 2022.
Non-Interest Income . Non-interest income decreased by $11.2 million to $2.8 million for the year ended June 30, 2023. Loss on sale and call of securities was $15.2 million during the year ended June 30, 2023 compared to $559,000 recorded during the earlier comparative period.
Net occupancy expense of premises increased by $1.4 million to $14.1 million for the year ended June 30, 2022.
Net occupancy expense of premises decreased by $2.1 million to $12.0 million for the year ended June 30, 2023.
Stockholders’ equity decreased by $148.9 million to $894.0 million at June 30, 2022 from $1.04 billion at June 30, 2021. The decrease in stockholders’ equity during the year ended June 30, 2022 largely reflected share repurchases totaling $129.5 million and dividends totaling $30.5 million.
Stockholders’ equity decreased by $24.7 million to $869.3 million at June 30, 2023 from $894.0 million at June 30, 2022. The decrease in stockholders’ equity during the year ended June 30, 2023 largely reflected dividends totaling $28.7 million and share repurchases totaling $27.4 million.
The increase in net income reflected an increase in net interest income and decreases in the provision for credit losses and non-interest expense, partially offset by a decrease in non-interest income and an increase in income tax expense. Net Interest Income . Effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans.
The decrease in net income reflected a decrease in net interest income, an increase in the provision for credit losses and a decrease in non-interest income, partially offset by a decrease in non-interest expense and a decrease in income tax expense.
Included in net interest income for the years ended June 30, 2022 and 2021, respectively, was purchase accounting accretion of $9.0 million and $16.6 million and loan prepayment penalty income of $5.4 million and $3.7 million.
Included in net interest income for the years ended June 30, 2023 and 2022, respectively, was purchase accounting accretion of $5.3 million and $9.0 million and loan prepayment penalty income of $895,000 and $5.4 million. Net interest margin decreased 60 basis points to 2.34% for the year ended June 30, 2023, from 2.94% for the year ended June 30, 2022.
Net loans receivable increased by $577.6 million, or 12.0%, to $5.37 billion at June 30, 2022 from $4.79 billion at June 30, 2021.
Net loans receivable increased by $409.9 million, or 7.6%, to $5.78 billion at June 30, 2023 from $5.37 billion at June 30, 2022.
This decrease was largely the result of principal repayments totaling $330.2 million, sales of $100.3 million and a $128.0 million decrease in the fair value of the portfolio to a net unrealized loss of $118.0 million, partially offset by purchases totaling $229.1 million.
This decrease was largely the result of principal repayments of $124.7 million, sales of $120.4 million and a $38.1 million decrease in the fair value of the portfolio to a net unrealized loss of $156.1 million, partially offset by purchases of $166.5 million.
In addition, accumulated other comprehensive (loss) income decreased $61.9 million due primarily to a decline in the fair value of our available for sale securities, partially offset by an increase in the fair value of our derivatives portfolio. These decreases were partially offset by net income of $67.5 million.
In addition, other comprehensive loss, net of tax, was $13.7 million, which was driven by a decline in the fair value of our available for sale securities, partially offset by an increase in the fair value of our derivatives portfolio.
The balance of borrowings increased by $215.5 million, or 31.4%, to $901.3 million at June 30, 2022 from $685.9 million at June 30, 2021 which included overnight borrowings totaling $250.0 million and $20.0 million at June 30, 2022 and 2021, respectively. Partially offsetting the increase in overnight borrowings was the repayment of maturing FHLB advances totaling $15.0 million.
The balance of borrowings increased by $605.5 million, or 67.2%, to $1.51 billion at June 30, 2023 from $901.3 million at June 30, 2022 which included overnight borrowings totaling $225.0 million and $250.0 million at June 30, 2023 and 2022, respectively. The increase was primarily driven by a net increase in FHLB advances.
The $11.1 million decrease in our ACL was primarily driven by our collectively evaluated loans. The quantitative component of our ACL, which is largely based on the national unemployment rate forecast, decreased $10.2 million, which resulted from continued improvement in our economic forecast and a reduction in the expected life of various segments of the loan portfolio.
The $1.7 million increase in our ACL was primarily driven by our collectively evaluated loans. The quantitative component of our ACL, which is largely based on the national unemployment rate forecast, increased $8.5 million, which largely resulted from loan growth, slower prepayment speeds and a higher forecasted national unemployment rate.
Borrowings from the FHLB of New York and other sources are generally available to supplement the Bank’s liquidity position or to replace maturing deposits. As of June 30, 2022, the Bank’s outstanding balance of FHLB advances, excluding fair value adjustments, totaled $652.5 million.
The decrease in deposit balances reflected a $189.2 million decrease in interest-bearing deposits coupled with a $43.9 million decrease in non-interest-bearing deposits. Borrowings from the FHLB and other sources are generally available to supplement our liquidity position or to replace maturing deposits. As of June 30, 2023, our outstanding balance of FHLB advances, excluding fair value adjustments, totaled $1.28 billion.
The increase primarily reflected an increase in net loans receivable, partially offset by a decrease in investment securities. Investment Securities. Investment securities available for sale decreased by $332.8 million to $1.34 billion at June 30, 2022 from $1.68 billion at June 30, 2021.
Total assets increased by $344.9 million, or 4.5%, to $8.06 billion at June 30, 2023 from $7.72 billion at June 30, 2022. The increase primarily reflected an increase in net loans receivable, partially offset by a decrease in investment securities. Investment Securities.
Impact of Inflation The financial statements included in this document have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation.
These principles require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. Our primary assets and liabilities are monetary in nature.
Capital Consistent with our goals to operate as a sound and profitable financial organization, Kearny Financial and Kearny Bank actively seek to maintain our well capitalized status in accordance with regulatory standards. As of June 30, 2022, Kearny Financial and Kearny Bank exceeded all capital requirements of the federal banking regulators and were considered well capitalized.
For additional information regarding our outstanding lending commitments at June 30, 2023, see Note 17 to the audited consolidated financial statements. Capital Consistent with our goals to operate as a sound and profitable financial organization, Kearny Financial and Kearny Bank actively seek to maintain our well capitalized status in accordance with regulatory standards.
Year Ended June 30, 2022 versus Year Ended June 30, 2021 Year Ended June 30, 2021 versus Year Ended June 30, 2020 Increase (Decrease) Due to Increase (Decrease) Due to Volume Rate Net Volume Rate Net (In Thousands) (In Thousands) Interest and dividend income Loans receivable $ 2,337 $ (14,057 ) $ (11,720 ) $ 12,057 $ (1,416 ) $ 10,641 Taxable investment securities 1,030 478 1,508 7,341 (15,424 ) (8,083 ) Tax-exempt securities (423 ) 44 (379 ) (807 ) 66 (741 ) Other interest-earning assets (2,157 ) 935 (1,222 ) 1,984 (3,520 ) (1,536 ) Total interest-earning assets $ 787 $ (12,600 ) $ (11,813 ) $ 20,575 $ (20,294 ) $ 281 Interest expense: Interest-bearing demand $ 1,216 $ (3,121 ) $ (1,905 ) $ 5,100 $ (9,505 ) $ (4,405 ) Savings 67 (2,176 ) (2,109 ) 1,533 (4,969 ) (3,436 ) Certificates of deposit (2,192 ) (10,121 ) (12,313 ) (1,923 ) (17,553 ) (19,476 ) Borrowings (3,489 ) (366 ) (3,855 ) (7,067 ) 381 (6,686 ) Total interest-bearing liabilities $ (4,398 ) $ (15,784 ) $ (20,182 ) $ (2,357 ) $ (31,646 ) $ (34,003 ) Change in net interest income $ 5,185 $ 3,184 $ 8,369 $ 22,932 $ 11,352 $ 34,284 Provision for Credit Losses .
Year Ended June 30, 2023 versus Year Ended June 30, 2022 Year Ended June 30, 2022 versus Year Ended June 30, 2021 Increase (Decrease) Due to Increase (Decrease) Due to Volume Rate Net Volume Rate Net (In Thousands) (In Thousands) Interest and dividend income Loans receivable $ 36,040 $ 6,587 $ 42,627 $ 2,337 $ (14,057) $ (11,720) Taxable investment securities (1,901) 24,010 22,109 1,030 478 1,508 Tax-exempt securities (590) 11 (579) (423) 44 (379) Other interest-earning assets 876 2,419 3,295 (2,157) 935 (1,222) Total interest-earning assets $ 34,425 $ 33,027 $ 67,452 $ 787 $ (12,600) $ (11,813) Interest expense: Interest-bearing demand $ 802 $ 34,725 $ 35,527 $ 1,216 $ (3,121) $ (1,905) Savings (243) 2,404 2,161 67 (2,176) (2,109) Certificates of deposit 2,320 22,947 25,267 (2,192) (10,121) (12,313) Borrowings 10,324 14,911 25,235 (3,489) (366) (3,855) Total interest-bearing liabilities $ 13,203 $ 74,987 $ 88,190 $ (4,398) $ (15,784) $ (20,182) Change in net interest income $ 21,222 $ (41,960) $ (20,738) $ 5,185 $ 3,184 $ 8,369 Provision for Credit Losses .
Equipment and systems expense increased by $1.0 million to $15.9 million for the year ended June 30, 2022. This increase was largely attributable to a non-recurring expense of $800,000 from the early termination of a contract with a service provider. Director compensation decreased by $861,000 to $2.1 million for the year ended June 30, 2022.
The current year includes $250,000 of non-recurring occupancy expenses related to the consolidation of two retail branch locations. Equipment and systems expense decreased by $1.3 million to $14.6 million for the year ended June 30, 2023. This decrease was largely attributable to a prior period non-recurring expense of $800,000 from the early termination of a contract with a service provider.
TDRs are loans where we have modified the contractual terms of the loan as 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.
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. At June 30, 2023, we had accruing TDRs totaling $10.5 million, an increase of $1.8 million from $8.7 million at June 30, 2022.
The increase reflected decreases in the cost and average balance of interest-bearing liabilities, partially offset by a decrease in the yield on interest-earning assets. 44 Details surrounding the composition of, and changes to, net interest income are presented in the table below which reflects the components of the average balance sheet and of net interest income for the periods indicated.
The increased cost of interest-bearing liabilities and yield on interest-earning assets is the result of higher market interest rates that were caused by an increase in the federal funds target rate from 0% - 0.25% in March 2022 to 5.00% - 5.25% in May 2023. 45 Table of Contents Details surrounding the composition of, and changes to, net interest income are presented in the table below which reflects the components of the average balance sheet and of net interest income for the periods indicated.
Home equity loan and line of credit origination volume for the same period totaled $18.6 million. 42 Additional information about our loans at June 30, 2022 is presented under “Item 1. Business” of this Annual Report on Form 10-K, as well as in Note 5 to the audited consolidated financial statements. Nonperforming Loans and TDRs.
Business” of this Annual Report on Form 10-K, as well as in Note 5 to the audited consolidated financial statements. Nonperforming Loans and TDRs. Nonperforming loans decreased by $27.7 million to $42.6 million, or 0.73% of total loans, at June 30, 2023 from $70.3 million, or 1.30% of total loans, at June 30, 2022.
The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, decreased by $7.3 million to $62.3 million at June 30, 2022 from $69.6 million at June 30, 2021. The change in other liabilities largely reflected the payment of a $12.5 million loan participation liability which was outstanding at June 30, 2021.
The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, decreased by $2.8 million to $59.5 million at June 30, 2023 from $62.3 million at June 30, 2022. The change in the balance of other liabilities generally reflected normal operating fluctuations within these line items. Stockholders’ Equity.
Included in non-interest expense for the years ended June 30, 2022 and 2021 were various non-recurring items as described below. Salaries and employee benefits expense increased by $7.5 million to $76.3 million for the year ended June 30, 2022.
Net income for the years ended June 30, 2023 and June 30, 2022 was impacted by various non-recurring items, as described in further detail below. Net Interest Income . Net interest income decreased by $20.7 million to $175.9 million for the year ended June 30, 2023.
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.
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.
For the years ended June 30, 2022 and 2021, non-recurring asset impairment charges related to branch and administrative facility consolidation activity totaled $420,000 and $1.9 million, respectively. The remaining changes in the other components of non-interest expense between comparative periods generally reflected normal operating fluctuations within those line items. Provision for Income Taxes .
The remaining changes in the other components of non-interest income between comparative periods generally reflected normal operating fluctuations within those line items. Non-Interest Expense . Non-interest expense decreased by $2.0 million to $123.8 million for the year ended June 30, 2023. Salaries and employee benefits expense decreased by $675,000 to $75.6 million for the year ended June 30, 2023.
(2) Tangible equity equals total stockholders’ equity reduced by goodwill and core deposit intangible assets. 41 Comparison of Financial Condition at June 30, 2022 and June 30, 2021 Executive Summary. Total assets increased by $436.1 million, or 6.0%, to $7.72 billion at June 30, 2022 from $7.28 billion at June 30, 2021.
(2) Efficiency ratio equals non-interest expense divided by the sum of net interest income and non-interest income. (3) Tangible equity equals total stockholders’ equity reduced by goodwill and core deposit intangible assets. Comparison of Financial Condition at June 30, 2023 and June 30, 2022 Executive Summary.
Detail regarding the change in the loan portfolio is presented below: June 30, June 30, Increase/ 2022 2021 (Decrease) (In Thousands) Commercial loans: Multi-family mortgage $ 2,409,090 $ 2,039,260 $ 369,830 Nonresidential mortgage 1,019,838 1,079,444 (59,606 ) Commercial business 176,807 168,951 7,856 Construction 140,131 93,804 46,327 Total commercial loans 3,745,866 3,381,459 364,407 One- to four-family residential mortgage 1,645,816 1,447,721 198,095 Consumer loans: Home equity loans 42,028 47,871 (5,843 ) Other consumer 2,866 3,259 (393 ) Total consumer loans 44,894 51,130 (6,236 ) Total loans 5,436,576 4,880,310 556,266 Unaccreted yield adjustments (18,731 ) (28,916 ) 10,185 Allowance for credit losses (47,058 ) (58,165 ) 11,107 Net loans receivable $ 5,370,787 $ 4,793,229 $ 577,558 Commercial loan origination volume for the year ended June 30, 2022 totaled $1.37 billion, which comprised $1.14 billion of commercial mortgage loan originations, $140.1 million of commercial business loan originations and construction loan disbursements of $86.4 million.
Detail regarding the change in the loan portfolio is presented below: June 30, 2023 June 30, 2022 Increase/ (Decrease) (In Thousands) Commercial loans: Multi-family mortgage $ 2,761,775 $ 2,409,090 $ 352,685 Nonresidential mortgage 968,574 1,019,838 (51,264) Commercial business 146,861 176,807 (29,946) Construction 226,609 140,131 86,478 Total commercial loans 4,103,819 3,745,866 357,953 One- to four-family residential mortgage 1,700,559 1,645,816 54,743 Consumer loans: Home equity loans 43,549 42,028 1,521 Other consumer 2,549 2,866 (317) Total consumer loans 46,098 44,894 1,204 Total loans 5,850,476 5,436,576 413,900 Unaccreted yield adjustments (21,055) (18,731) (2,324) Allowance for credit losses (48,734) (47,058) (1,676) Net loans receivable $ 5,780,687 $ 5,370,787 $ 409,900 Commercial loan origination volume for the year ended June 30, 2023 totaled $895.9 million, comprised of $716.4 million of commercial mortgage loan originations, $91.8 million of commercial business loan originations and construction loan disbursements of $87.7 million.
At June 30, 2022, we had accruing TDRs totaling $8.7 million, an increase of $2.5 million from $6.2 million at June 30, 2021. At June 30, 2022, we had non-accrual TDRs totaling $13.5 million, an increase of $1.9 million from $11.6 million at June 30, 2021.
At June 30, 2023, we had non-accrual TDRs totaling $6.9 million, a decrease of $6.6 million from $13.5 million at June 30, 2022. Additional information about nonperforming loans and TDRs at June 30, 2023 is presented under “Item 1.
As of June 30, 2022, we had the capacity to borrow additional funds totaling $2.04 billion and $303.9 million from the FHLB of New York and Federal Reserve Bank, respectively, without pledging additional collateral. As of that same date, we also had access to unsecured overnight borrowings with other financial institutions totaling $975.0 million, of which none was outstanding.
As of that same date, we also had access to unsecured overnight borrowings with other financial institutions totaling $990.0 million, of which $100.0 million was outstanding. Deposits decreased $233.1 million to $5.63 billion at June 30, 2023 from $5.86 billion at June 30, 2022.
The following table sets forth information concerning balances and interest rates on our short-term borrowings at and for the periods shown: At or For the Years Ended June 30, 2022 2021 2020 (Dollars in Thousands) Balance at end of year $ 625,000 $ 390,000 $ 865,000 Average balance during year $ 476,142 $ 646,896 $ 904,262 Maximum outstanding at any month end $ 684,000 $ 815,000 $ 1,075,000 Weighted average interest rate at end of year 1.72 % 0.33 % 0.45 % Weighted average interest rate during year 0.58 % 1.08 % 2.14 % The following table discloses our contractual obligations and commitments as of June 30, 2022: At June 30, 2022 Less than One Year One to Three Years Over Three Years to Five Years Over Five Years Total (In Thousands) Contractual obligations Operating lease obligations $ 3,614 $ 6,092 $ 5,524 $ 5,956 $ 21,186 Certificates of deposit 1,468,565 356,374 58,929 5,694 1,889,562 Federal Home Loan Bank Advances 520,000 22,500 103,500 6,500 652,500 Total contractual obligations $ 1,992,179 $ 384,966 $ 167,953 $ 18,150 $ 2,563,248 Commitments Undisbursed funds from approved lines of credit (1) $ 75,755 $ 18,548 $ 6,423 $ 58,540 $ 159,266 Construction loans in process (1) 109,047 - - - 109,047 Other commitments to extend credit (1) 242,148 - - - 242,148 Total commitments $ 426,950 $ 18,548 $ 6,423 $ 58,540 $ 510,461 (1) Represents amounts committed to customers.
The following table sets forth information concerning balances and interest rates on our short-term borrowings at and for the periods shown: At or For the Years Ended June 30, 2023 2022 2021 (Dollars in Thousands) Balance at end of year $ 1,175,000 $ 625,000 $ 390,000 Average balance during year $ 900,997 $ 476,142 $ 646,896 Maximum outstanding at any month end $ 1,280,000 $ 684,000 $ 815,000 Weighted average interest rate at end of year 5.42 % 1.72 % 0.33 % Weighted average interest rate during year 4.49 % 0.58 % 1.08 % The following table discloses our contractual obligations and commitments as of June 30, 2023: June 30, 2023 Less than One Year One to Three Years Over Three Years to Five Years Over Five Years Total (In Thousands) Contractual obligations Operating lease obligations $ 3,445 $ 6,254 $ 4,904 $ 4,305 $ 18,908 Certificates of deposit 1,896,132 94,472 21,365 5,582 2,017,551 Federal Home Loan Bank Advances 972,500 110,000 200,000 — 1,282,500 Total contractual obligations $ 2,872,077 $ 210,726 $ 226,269 $ 9,887 $ 3,318,959 Commitments Undisbursed funds from approved lines of credit (1) $ 87,467 $ 20,942 $ 4,123 $ 56,961 $ 169,493 Construction loans in process (1) 58,485 — — — 58,485 Other commitments to extend credit (1) 23,261 — — — 23,261 Total commitments $ 169,213 $ 20,942 $ 4,123 $ 56,961 $ 251,239 ________________________________________ (1) Represents amounts committed to customers. 49 Table of Contents In addition to the loan commitments noted above, the pipeline of loans held for sale included $11.7 million of in process loans whose terms included interest rate locks to borrowers that were paired with a best-efforts commitment to sell the loan to a buyer at a fixed price and within a predetermined timeframe after the sale commitment is established.
Commercial loan originations for the period were augmented by the purchase of loans totaling $56.0 million. One- to four-family residential mortgage loan origination volume, excluding loans held-for-sale, totaled $415.6 million for the year ended June 30, 2022 and was augmented by the purchase of loans totaling $67.4 million.
One- to four-family residential mortgage loan origination volume, excluding loans held-for-sale, totaled $197.8 million for the year ended June 30, 2023 and was supplemented with loan purchases totaling $656,000. Home equity loan and line of credit origination volume for the same period totaled $26.0 million. Additional information about our loans at June 30, 2023 is presented under “Item 1.
This increase was largely due to the impact of staff additions, annual merit increases, an increase in incentive payments tied to loan origination volume, and increases in benefit plan expense, including employee medical, post-retirement plan and ESOP expense. These increases were partially offset by a decrease in stock-based compensation expense.
This decrease was largely due to lower incentive compensation, lower incentive payments tied to loan origination volume and lower expense from retirement plans. These decreases were partially offset by higher salary expense and non-recurring severance expense resulting from a reduction in headcount.
The following table presents information regarding the Bank’s regulatory capital levels at June 30, 2022: At June 30, 2022 Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in Thousands) Total capital (to risk-weighted assets) $ 672,274 13.10 % $ 410,429 8.00 % $ 513,036 10.00 % Tier 1 capital (to risk-weighted assets) 642,336 12.52 % 307,822 6.00 % 410,429 8.00 % Common equity tier 1 capital (to risk-weighted assets) 642,336 12.52 % 230,866 4.50 % 333,473 6.50 % Tier 1 capital (to adjusted total assets) 642,336 8.70 % 295,163 4.00 % 368,954 5.00 % The following table presents information regarding the consolidated Company’s regulatory capital levels at June 30, 2022: At June 30, 2022 Actual For Capital Adequacy Purposes Amount Ratio Amount Ratio (Dollars in Thousands) Total capital (to risk-weighted assets) $ 778,253 15.17 % $ 410,515 8.00 % Tier 1 capital (to risk-weighted assets) 748,315 14.58 % 307,886 6.00 % Common equity tier 1 capital (to risk-weighted assets) 748,315 14.58 % 230,914 4.50 % Tier 1 capital (to adjusted total assets) 748,315 10.14 % 295,290 4.00 % For additional information regarding regulatory capital at June 30, 2022, see Note 15 to the audited consolidated financial statements.
The following table presents information regarding the Bank’s regulatory capital levels at June 30, 2023: June 30, 2023 Actual For Capital Adequacy Purposes To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio Amount Ratio Amount Ratio (Dollars in Thousands) Total capital (to risk-weighted assets) $ 695,417 13.31 % $ 417,853 8.00 % $ 522,316 10.00 % Tier 1 capital (to risk-weighted assets) 659,783 12.63 % 313,389 6.00 % 417,853 8.00 % Common equity tier 1 capital (to risk-weighted assets) 659,783 12.63 % 235,042 4.50 % 339,505 6.50 % Tier 1 capital (to adjusted total assets) 659,783 8.15 % 323,922 4.00 % 404,902 5.00 % The following table presents information regarding the consolidated Company’s regulatory capital levels at June 30, 2023: June 30, 2023 Actual For Capital Adequacy Purposes Amount Ratio Amount Ratio (Dollars in Thousands) Total capital (to risk-weighted assets) $ 770,621 14.75 % $ 418,015 8.00 % Tier 1 capital (to risk-weighted assets) 734,987 14.07 % 313,511 6.00 % Common equity tier 1 capital (to risk-weighted assets) 734,987 14.07 % 235,133 4.50 % Tier 1 capital (to adjusted total assets) 734,987 9.07 % 324,170 4.00 % For additional information regarding regulatory capital at June 30, 2023, see Note 15 to the audited consolidated financial statements. 50 Table of Contents Impact of Inflation The financial statements included in this document have been prepared in accordance with accounting principles generally accepted in the United States of America.
Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. For additional information regarding our outstanding lending commitments at June 30, 2022, see Note 17 to the audited consolidated financial statements.
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.
The following table sets forth the distribution of, and changes in, deposits, by type, at the dates indicated: June 30, June 30, Increase/ 2022 2021 (Decrease) (In Thousands) Non-interest-bearing deposits $ 653,899 $ 593,718 $ 60,181 Interest-bearing deposits: Interest-bearing demand 2,265,597 1,902,478 363,119 Savings 1,053,198 1,111,364 (58,166 ) Certificates of deposit 1,889,562 1,877,746 11,816 Interest-bearing deposits 5,208,357 4,891,588 316,769 Total deposits $ 5,862,256 $ 5,485,306 $ 376,950 Additional information about our deposits at June 30, 2022 is presented under “Item 1.
The following table sets forth the distribution of, and changes in, deposits, by type, at the dates indicated: June 30, 2023 June 30, 2022 Increase/ (Decrease) (In Thousands) Non-interest-bearing deposits $ 609,999 $ 653,899 $ (43,900) Interest-bearing deposits: Interest-bearing demand 2,252,912 2,265,597 (12,685) Savings 748,721 1,053,198 (304,477) Certificates of deposit 2,017,551 1,889,562 127,989 Interest-bearing deposits 5,019,184 5,208,357 (189,173) Total deposits $ 5,629,183 $ 5,862,256 $ (233,073) Uninsured deposits totaled $1.77 billion as of June 30, 2023 compared to $1.53 billion as of June 30, 2022.
Loans held-for-sale at June 30, 2022 included $21.7 million of non-accrual commercial loans. During the year ended June 30, 2022, $189.1 million of residential mortgage loans were sold, resulting in net gains on sale of $2.4 million. Net Loans Receivable.
During the year ended June 30, 2023, we sold $103.8 million of residential mortgage loans, resulting in a net gain on sale of $760,000, and $25.3 million of commercial mortgage loans, resulting in a net loss on sale of $2.5 million. 42 Table of Contents Net Loans Receivable.
Provision for income taxes increased by $3.5 million to $24.8 million for the year ended June 30, 2022, from $21.3 million for the year ended June 30, 2021. The increase in income tax expense largely reflected a higher level of pre-tax net income, as compared to the prior period.
The decrease in income tax expense reflected a lower level of pre-tax income as compared to the prior period. Effective tax rates for the years ended June 30, 2023 and 2022 were 22.1% and 26.9%, respectively.
In addition to the loan commitments noted above, the pipeline of loans held for sale included $20.3 million of in process loans whose terms included interest rate locks to borrowers that were paired with a best-efforts commitment to sell the loan to a buyer at a fixed price and within a predetermined timeframe after the sale commitment is established. 48 In addition to the commitments noted above, we are party to standby letters of credit totaling approximately $130,000 at June 30, 2022 through which we guarantee certain specific business obligations of our commercial customers.
In addition to the commitments noted above, we are party to standby letters of credit totaling approximately $115,000 at June 30, 2023 through which we guarantee certain specific business obligations of our commercial customers. 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.
The decrease was largely attributable to a provision for credit losses reversal of $7.5 million, primarily driven by continued improvement in our economic forecast, a reduction in the expected life of various segments of the loan portfolio and a net reduction in reserves on loans individually evaluated for impairment.
The increase was largely attributable to a provision for credit losses of $2.5 million, primarily driven by loan growth, partially offset by a reduction in the expected life of the loan portfolio. Partially offsetting the provision for credit losses were net charge-offs of $810,000, of which $396,000 had been individually reserved for within the ACL at June 30, 2022.
Business” of this Annual Report on Form 10-K, as well as in Note 1 and Note 6 to the audited consolidated financial statements. Other Assets.
Business” of this Annual Report on Form 10-K, as well as in Note 5 to the audited consolidated financial statements. 43 Table of Contents Allowance for Credit Losses. At June 30, 2023, the ACL totaled $48.7 million, or 0.83% of total loans, reflecting an increase of $1.7 million from $47.1 million, or 0.87% of total loans, at June 30, 2022.
Non-Interest Income . Non-interest income decreased by $7.1 million to $13.9 million for the year ended June 30, 2022. Fees and service charges increased by $683,000 to $2.6 million for the year ended June 30, 2022. The increase primarily reflected increases in various loan-related and deposit-related fees and charges.
FDIC insurance premiums increased $2.7 million to $5.1 million for the year ended June 30, 2023. This increase was largely driven by asset growth. Director compensation decreased by $768,000 to $1.4 million for the year ended June 30, 2023. This decrease primarily reflected a decline in director-related stock-based compensation expense.
Removed
Nonperforming loans decreased by $9.5 million to $70.3 million, or 1.30% of total loans, at June 30, 2022 from $79.8 million, or 1.64% of total loans, at June 30, 2021. The decrease in nonperforming loans was largely attributable to a decrease of $10.7 million in non-performing one- to four-family residential mortgage loans.
Added
Our ACL on individually analyzed loans decreased $315,000 during the year ended June 30, 2023. 39 Table of Contents Goodwill. We have goodwill of $210.9 million at June 30, 2023.
Removed
Based on Section 4013 of the CARES Act, the 2021 Consolidated Appropriations Act and related regulatory guidance promulgated by federal banking regulators, qualifying loan modifications made in response to the COVID-19 pandemic, including short-term payment deferrals, were not considered to be TDRs. We had no active payment deferrals that were not considered to be TDRs as of June 30, 2022.
Added
Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.
Removed
At June 30, 2022, the ACL totaled $47.1 million, or 0.87% of total loans, reflecting a decrease of $11.1 million from $58.2 million, or 1.19% of total loans, at June 30, 2021.
Added
Goodwill is not amortized, but is tested for impairment at least annually or more frequently if events and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
Removed
Also contributing to this decrease were net charge-offs of $3.6 million, of which $1.8 million had previously been individually reserved for within the ACL. Additional information about the allowance for credit losses at June 30, 2022 is presented under “Item 1.
Added
In assessing impairment, we have the option to perform a qualitative analysis to determine whether the existence of events or circumstances leads to a determination that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount.
Removed
The increase in other assets primarily reflected a $39.4 million increase in the fair value of our derivatives portfolio and a $20.0 million increase in net deferred income tax assets during the year ended June 30, 2022. The remaining change generally reflected normal operating fluctuations within these line items. Deposits.
Added
Due to a significant decline in bank stock prices, triggered by regional bank failures, we performed a quantitative goodwill impairment during the fourth quarter of the year ended June 30, 2023. The quantitative goodwill impairment test compares the estimated fair value of the reporting unit with its carrying amount, including goodwill.
Removed
Total deposits increased by $377.0 million, or 6.9%, to $5.86 billion at June 30, 2022 from $5.49 billion at June 30, 2021.
Added
If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. However, if the carrying amount of the reporting unit were to exceed its estimated fair value, and impairment loss would be recorded.

… 36 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−2 removed17 unchanged
Biggest changeThe relatively low level of interest rates prevalent at June 30, 2022 and June 30, 2021 precluded the modeling of certain falling rate scenarios. 50 The following tables present the results of our internal EVE and NII analyses as of June 30, 2022 and 2021, respectively: June 30, 2022 1 to 12 Months 13 to 24 Months Change in Interest Rates $ Amount of EVE % Change in EVE $ Amount of NII % Change in NII $ Amount of NII % Change in NII (Dollars in Thousands) +300 bps 1,089,795 (15.37 ) % 178,865 (13.62 ) % 214,839 (1.68 ) % +200 bps 1,156,219 (10.21 ) % 187,601 (9.40 ) % 215,528 (1.36 ) % +100 bps 1,239,935 (3.71 ) % 198,126 (4.32 ) % 219,594 0.50 % 0 bps 1,287,700 - 207,069 - 218,501 - -100 bps 1,272,203 (1.20 ) % 205,241 (0.88 ) % 204,568 (6.38 ) % June 30, 2021 1 to 12 Months 13 to 24 Months Change in Interest Rates $ Amount of EVE % Change in EVE $ Amount of NII % Change in NII $ Amount of NII % Change in NII (Dollars in Thousands) +300 bps 1,083,847 (8.82 ) % 175,830 (8.38 ) % 196,307 4.11 % +200 bps 1,132,915 (4.69 ) % 182,089 (5.12 ) % 195,756 3.82 % +100 bps 1,176,890 (0.99 ) % 187,961 (2.06 ) % 194,543 3.17 % 0 bps 1,188,656 - 191,908 - 188,559 - -100 bps 1,071,463 (9.86 ) % 181,645 (5.35 ) % 169,447 (10.14 ) % There are numerous internal and external factors that may contribute to changes in our EVE and its sensitivity.
Biggest changeThe relatively low level of interest rates prevalent at June 30, 2022 precluded the modeling of certain falling rate scenarios. 51 Table of Contents The following tables present the results of our internal EVE and NII analyses as of June 30, 2023 and 2022, respectively: June 30, 2023 1 to 12 Months 13 to 24 Months Change in Interest Rates $ Amount of EVE % Change in EVE $ Amount of NII % Change in NII $ Amount of NII % Change in NII (Dollars in Thousands) +300 bps 507,998 (32.36) % 154,552 (5.26) % 168,366 (3.87) % +200 bps 571,129 (23.95) % 156,274 (4.20) % 167,683 (4.26) % +100 bps 673,314 (10.35) % 160,344 (1.71) % 173,170 (1.13) % 0 bps 751,040 — 163,132 — 175,143 — -100 bps 799,675 6.48 % 163,455 0.20 % 173,319 (1.04) % -200 bps 814,293 8.42 % 161,284 (1.13) % 166,473 (4.95) % -300 bps 849,208 13.07 % 158,526 (2.82) % 156,507 (10.64) % June 30, 2022 1 to 12 Months 13 to 24 Months Change in Interest Rates $ Amount of EVE % Change in EVE $ Amount of NII % Change in NII $ Amount of NII % Change in NII (Dollars in Thousands) +300 bps 1,089,795 (15.37) % 178,865 (13.62) % 214,839 (1.68) % +200 bps 1,156,219 (10.21) % 187,601 (9.40) % 215,528 (1.36) % +100 bps 1,239,935 (3.71) % 198,126 (4.32) % 219,594 0.50 % 0 bps 1,287,700 — 207,069 — 218,501 — -100 bps 1,272,203 (1.20) % 205,241 (0.88) % 204,568 (6.38) % There are numerous internal and external factors that may contribute to changes in our EVE and its sensitivity.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk Management of Interest Rate Risk and Market Risk The majority of our assets and liabilities are sensitive to changes in interest rates and as such, interest rate risk is a significant form of market risk that we must manage.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Management of Interest Rate Risk and Market Risk The majority of our assets and liabilities are sensitive to changes in interest rates and as such, interest rate risk is a significant form of market risk that we must manage.
Additionally, an increase in credit risk may result as the ability of borrowers to service their debt may decrease in the event of an interest rate increase. 51 Item 8. Financial Statemen ts and Supplementary Data The Company’s consolidated financial statements are contained in this Annual Report on Form 10-K immediately following Item 16. Item 9.
Additionally, an increase in credit risk may result as the ability of borrowers to service their debt may decrease in the event of an interest rate increase.
Removed
Subsequent to June 30, 2022, we executed a series of derivative transactions designed to reduce our net interest income exposure to interest rate shocks in a rising rate environment. These transactions were structured to minimize any adverse impact on current period net interest income.
Removed
Changes In and Disagreements with Acco untants on Accounting and Financial Disclosure Not applicable.

Other KRNY 10-K year-over-year comparisons