SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~December~~March 31, ~~2014~~2015

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

For the transition period from to

Commission File Number 000-51093

KEARNY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

UNITED STATES		22-3803741
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

120 Passaic Ave., Fairfield, New Jersey		07004-3510
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code

973-244-4500

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

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

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

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

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~January~~May 238, 2015.

$0.10 par value common stock — 67,375,247 shares outstanding

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

INDEX

		Page Number
PART I—FINANCIAL INFORMATION
Item 1:	Financial Statements
	Consolidated Statements of Financial Condition at December 31, 2014 and June 30, 2014 (Unaudited)	1
	Consolidated Statements of Financial Condition at March 31, 2015 and June 30, 2014 (Unaudited)	1
	Consolidated Statements of Income for the Three and Six Months Ended December 31, 2014 and December 31, 2013 (Unaudited)	2
	Consolidated Statements of Income for the Three and Nine Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	2
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended December 31, 2014 and December 31, 2013 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Six Months Ended December 31, 2014 and December 31, 2013 (Unaudited)	5
	Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2014 and December 31, 2013 (Unaudited)	7
	Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2015 and March 31, 2014 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6667
Item 3:	Quantitative and Qualitative Disclosure About Market Risk	8688
Item 4:	Controls and Procedures	9294
PART II—OTHER INFORMATION
Item 1:	Legal Proceedings	9395
Item 1A:	Risk Factors	9395
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	9395
Item 3:	Defaults Upon Senior Securities	9395
Item 4:	Mine Safety Disclosures	9395
Item 5:	Other Information	9395
SIGNATURES		9597

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands, Except Share and Per Share Data)

	December 31, 2014			June 30, 2014
	March 31, 2015			June 30, 2014
	(Unaudited)
Assets
Cash and amounts due from depository institutions	$	1413,~~133~~231		$	14,403
Interest-bearing deposits in other banks		82107,~~303~~725			120,631
Cash and Cash Equivalents		96120,~~436~~956			135,034
Debt securities available for sale (amortized cost $423,451 and $411,228)		420,458			407,898
Debt securities available for sale (amortized cost $423,249 and $411,228)		421,543			407,898
Debt securities held to maturity (fair value $218,064 and $213,472)		219,906			216,414
Debt securities held to maturity (fair value $218,678 and $213,472)		218,925			216,414
Loans receivable, including unamortized yield adjustments of $(1,439) and $(1,397)		1,814,071			1,741,471
Loans receivable, including unamortized yield adjustments of $(65) and $(1,397)		1,992,371			1,741,471
Less allowance for loan losses		(1214,~~584~~087	)		(12,387	)
Net Loans Receivable		1,~~801~~978,~~487~~284			1,729,084
Mortgage-backed securities available for sale (amortized cost $387,508 and $432,802)		391,548			437,223
Mortgage-backed securities available for sale (amortized cost $366,201 and $432,802)		372,617			437,223
Mortgage-backed securities held to maturity (fair value $325,709 and $293,781)		322,529			295,658
Mortgage-backed securities held to maturity (fair value $306,868 and $293,781)		299,945			295,658
Premises and equipment		39,~~584~~629			40,105
Federal Home Loan Bank of New York ("FHLB") stock		2731,~~382~~881			25,990
Accrued interest receivable		9,~~059~~688			9,013
Goodwill		108,591			108,591
Bank owned life insurance		9089,~~126~~823			88,820
Deferred income tax assets, net		912,~~998~~389			10,314
Other assets		109,~~765~~458			5,865
Total Assets	$	3,~~547~~713,~~869~~729		$	3,510,009
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest-bearing	$	~~208~~217,~~457~~894		$	224,054
Interest-bearing		2,~~256~~287,~~388~~172			2,255,887
Total Deposits		2,~~464~~505,~~845~~066			2,479,941
Borrowings		~~563~~669,~~002~~580			512,257
Advance payments by borrowers for taxes		8,~~636~~806			9,001
Other liabilities		1834,~~152~~536			14,134
Total Liabilities		3,~~054~~217,~~635~~988			3,015,333
Stockholders' Equity
Preferred stock, $0.10 par value, 25,000,000 shares authorized; none issued and outstanding		-			-
Common stock, $0.10 par value, 75,000,000 shares authorized; 73,781,587 issued; 67,375,247 and 67,267,865 outstanding, respectively		7,378			7,378
Paid-in capital		225,~~404~~602			231,870
Retained earnings		~~341~~345,~~447~~325			336,355
Unearned Employee Stock Ownership Plan shares; 315,195 shares and 387,924 shares, respectively		(3,152	)		(3,879	)
Unearned Employee Stock Ownership Plan shares; 278,827 shares and 387,924 shares, respectively		(2,788	)		(3,879	)
Treasury stock, at cost; 6,406,340 shares and 6,513,722 shares, respectively		(73,535	)		(74,768	)
Accumulated other comprehensive loss		(46,~~308~~241	)		(2,280	)
Total Stockholders' Equity		~~493~~495,~~234~~741			494,676
Total Liabilities and Stockholders' Equity	$	3,~~547~~713,~~869~~729		$	3,510,009

See notes to unaudited consolidated financial statements

- 1 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

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

	Three Months Ended December 31,				Six Months Ended December 31,
		2014		2013		2014			2013
Interest Income
Loans	$	18,648	$	16,509	$	37,053		$	32,325
Mortgage-backed securities		4,654		5,505		9,430			11,059
Debt securities:
Taxable		1,792		1,221		3,527			2,499
Tax-exempt		490		460		975			914
Other interest-earning assets		328		238		625			436
Total Interest Income		25,912		23,933		51,610			47,233
Interest Expense
Deposits		3,972		3,594		7,818			7,226
Borrowings		2,367		1,864		4,694			3,336
Total Interest Expense		6,339		5,458		12,512			10,562
Net Interest Income		19,573		18,475		39,098			36,671
Provision for Loan Loses		1,732		559		2,590			1,727
Net Interest Income after Provision for Loan Losses		17,841		17,916		36,508			34,944
Non-Interest Income
Fees and service charges		731		630		1,430			1,321
Gain on sale of securities		7		226		7			226
Gain on sale of loans		9		-		9			53
Gain (loss) on sale and write down of real estate owned		5		-		(146	)		1
Income from bank owned life insurance		654		707		1,306			1,409
Electronic banking fees and charges		258		296		542			640
Miscellaneous		54		70		150			140
Total Non-Interest Income		1,718		1,929		3,298			3,790
Non-Interest Expense
Salaries and employee benefits		9,588		8,723		19,664			17,676
Net occupancy expense of premises		1,795		1,607		3,437			3,269
Equipment and systems		2,034		2,055		3,964			3,929
Advertising and marketing		228		308		376			559
Federal deposit insurance premium		607		618		1,196			1,130
Directors' compensation		165		172		361			344
Miscellaneous		2,103		2,074		4,293			3,932
Total Non-Interest Expense		16,520		15,557		33,291			30,839
Income before Income Taxes		3,039		4,288		6,515			7,895
Income taxes		870		1,301		1,423			2,322
Net Income	$	2,169	$	2,987	$	5,092		$	5,573

(Unaudited)

	Three Months Ended March 31,						Nine Months Ended March 31,
		2015			2014			2015			2014
Interest Income
Loans	$	19,240		$	16,892		$	56,293		$	49,217
Mortgage-backed securities		4,934			4,987			14,364			16,046
Debt securities:
Taxable		1,838			1,308			5,365			3,807
Tax-exempt		501			460			1,476			1,374
Other interest-earning assets		356			309			981			745
Total Interest Income		26,869			23,956			78,479			71,189
Interest Expense
Deposits		3,953			3,599			11,771			10,825
Borrowings		2,351			1,876			7,045			5,212
Total Interest Expense		6,304			5,475			18,816			16,037
Net Interest Income		20,565			18,481			59,663			55,152
Provision for Loan Loses		1,761			880			4,351			2,607
Net Interest Income after Provision for Loan Losses		18,804			17,601			55,312			52,545
Non-Interest Income
Fees and service charges		826			513			2,256			1,834
Gain on sale of securities		-			830			7			1,056
Gain on sale of loans		82			27			91			80
Loss on sale and write down of real estate owned		(510	)		(71	)		(656	)		(70	)
Income from bank owned life insurance		2,063			668			3,369			2,077
Electronic banking fees and charges		218			237			760			877
Miscellaneous		447			181			597			321
Total Non-Interest Income		3,126			2,385			6,424			6,175
Non-Interest Expense
Salaries and employee benefits		9,817			9,098			29,481			26,774
Net occupancy expense of premises		2,229			2,106			5,666			5,375
Equipment and systems		1,954			3,168			5,918			7,097
Advertising and marketing		423			332			799			891
Federal deposit insurance premium		630			582			1,826			1,712
Directors' compensation		164			173			525			517
Merger-related expenses		-			190			-			190
Miscellaneous		2,175			1,866			6,468			5,798
Total Non-Interest Expense		17,392			17,515			50,683			48,354
Income before Income Taxes		4,538			2,471			11,053			10,366
Income taxes		660			685			2,083			3,007
Net Income	$	3,878		$	1,786		$	8,970		$	7,359

See notes to unaudited consolidated financial statements.

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KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Continued)

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

	Three Months Ended December 31,				Six Months Ended December 31,
		2014		2013		2014		2013
Net Income per Common Share (EPS)
Basic	$	0.03	$	0.05	$	0.08	$	0.08
Diluted	$	0.03	$	0.05	$	0.08	$	0.08
Weighted Average Number of Common Shares Outstanding
Basic		67,042		65,767		67,009		65,851
Diluted		67,055		65,767		67,185		65,851
Dividends Declared Per Common Share	$	-	$	-	$	-	$	-

(Unaudited)

	Three Months Ended March 31,				Nine Months Ended March 31,
		2015		2014		2015		2014
Net Income per Common Share (EPS)
Basic	$	0.06	$	0.03	$	0.13	$	0.11
Diluted	$	0.06	$	0.03	$	0.13	$	0.11
Weighted Average Number of Common Shares Outstanding
Basic		67,078		65,684		67,032		65,797
Diluted		67,092		65,782		67,146		65,829

Dividends Declared Per Common Share	$	-	$	-	$	-	$	-

See notes to unaudited consolidated financial statements.

- 3 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(In Thousands, Unaudited)

	Three Months Ended December 31,						Six Months Ended December 31,
	Three Months Ended March 31,						Nine Months Ended March 31,
		2014			2013			2014			2013
		2015			2014			2015			2014
Net Income	$	23,~~169~~878		$	21,~~987~~786		$	58,~~092~~970		$	57,~~573~~359
Other Comprehensive Loss:
Other Comprehensive (Loss) Income:
Net unrealized gain (loss) on securities available for sale, net of deferred income tax (benefit) expense of:
Net unrealized gain on securities available for sale, net of deferred income tax expense (benefit) of:
2014 $866, $(175);
2015 $1,485, $1,310;
2013 $(4,336), $(3,802)		2,169			(6,993	)		139			(6,050	)
2014 $3,231, $(571)		2,176			6,263			2,315			213
Net gain on securities transferred from available for sale to held to maturity, net of deferred income tax (benefit) expense of:
Net loss on securities transferred from available for sale to held to maturity, net of deferred income tax benefit of:
2014 $0, $0;
2015 $(9), $(9);
2013 $0, $0		-			-			2			-
2014 $0, $0		(13	)		-			(11	)		-
Net realized gain on securities available for sale, net of income tax expense of:
2014 $(3), $(3);
2015 $0, $(3);
2013 $(93), $(93)		(4	)		(133	)		(4	)		(133	)
2014 $(340), $(433)		-			(490	)		(4	)		(623	)
Fair value adjustments on derivatives, net of deferred income tax expense (benefit) of:
Fair value adjustments on derivatives, net of deferred income tax benefit of:
2014 $(2,551), $(1,362);
2015 $(2,836), $(4,198);
2013 $1,059, $(96)		(3,694	)		1,532			(1,972	)		(140	)
2014 $(930), $(1,026)		(4,107	)		(1,347	)		(6,079	)		(1,487	)
Benefit plan adjustments, net of deferred income tax (benefit) expense of:
Benefit plan adjustments, net of deferred income tax expense (benefit) of:
2014 $8, $(132);
2015 $8, $(124);
2013 $4, $337		11			7			(193	)		488
2014 $3, $340		11			7			(182	)		495
Total Other Comprehensive Loss		(1,518	)		(5,587	)		(2,028	)		(5,835	)
Total Other Comprehensive (Loss) Income		(1,933	)		4,433			(3,961	)		(1,402	)
Total Comprehensive Income (Loss)	$	651		$	(2,600	)	$	3,064		$	(262	)
Total Comprehensive Income	$	1,945		$	6,219		$	5,009		$	5,957

See notes to unaudited consolidated financial statements.

- 4 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~Six~~Nine Months Ended ~~December~~ March 31, ~~2013~~2014

(In Thousands, Unaudited)

	Common Stock					Paid-In		Retained		Unearned ESOP			Treasury			Accumulated Other Comprehensive
	Shares			Amount		Capital		Earnings		Shares			Stock			Loss			Total
Balance - June 30, 2013		66,501		$	7,274	$	215,722	$	326,167	$	(5,334	)	$	(71,983	)	$	(4,139	)	$	467,707
Net Income		-			-		-		57,~~573~~359		-			-			-			57,~~573~~359
Other comprehensive loss, net of income tax benefit		-			-		-		-		-			-			(51,~~835~~402	)		(51,~~835~~402	)
ESOP shares committed to be released (72 shares)		-			-		31		-		727			-			-			758
ESOP shares committed to be released (108 shares)		-			-		126		-		1,091			-			-			1,217
Stock option expense		-			-		2030		-		-			-			-			2030
Treasury stock purchases		(~~366~~386	)		-		-		-		-			(34,~~792~~020	)		-			(34,~~792~~020	)
Restricted stock plan shares earned (8 shares)		-			-		84		-		-			-			-			84
Treasury stock reissued		36			-		45		-		-			415			-			460
Balance - December 31, 2013	$	66,135		$	7,274	$	215,857	$	331,740	$	(4,607	)	$	(75,775	)	$	(9,974	)	$	464,515
Restricted stock plan shares earned (12 shares)		-			-		126		-		-			-			-			126
Balance - March 31, 2014		66,151		$	7,274	$	216,049	$	333,526	$	(4,243	)	$	(75,588	)	$	(5,541	)	$	471,477

See notes to unaudited consolidated financial statements.

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KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~Six~~Nine Months Ended ~~December~~March 31, ~~2014~~2015

(In Thousands, Unaudited)

	Common Stock				Paid-In			Retained		Unearned ESOP			Treasury			Accumulated Other Comprehensive
	Shares		Amount		Capital			Earnings		Shares			Stock			~~Income~~Loss			Total
Balance - June 30, 2014		67,268	$	7,378	$	231,870		$	336,355	$	(3,879	)	$	(74,768	)	$	(2,280	)	$	494,676
Net Income		-		-		-			58,~~092~~970		-			-			-			58,~~092~~970
Other comprehensive loss, net of income tax benefit		-		-		-			-		-			-			(23,~~028~~961	)		(23,~~028~~961	)
ESOP shares committed to be released (72 shares)		-		-		326			-		727			-			-			1,053
ESOP shares committed to be released (108 shares)		-		-		455			-		1,091			-			-			1,546
Stock option expense		-		-		~~100~~124			-		-			-			-			~~100~~124
Treasury stock reissued		107		-		132			-		-			1,233			-			1,365
Restricted stock plan shares earned (14 shares)		-		-		164			-		-			-			-			164
Restricted stock plan shares earned (18 shares)		-		-		209			-		-			-			-			209
Settlement of stock options with cash in lieu of shares		-		-		(7,188	)		-		-			-			-			(7,188	)
Balance - December 31, 2014	$	67,375	$	7,378	$	225,404		$	341,447	$	(3,152	)	$	(73,535	)	$	(4,308	)	$	493,234
Balance - March 31, 2015		67,375	$	7,378	$	225,602		$	345,325	$	(2,788	)	$	(73,535	)	$	(6,241	)	$	495,741

See notes to unaudited consolidated financial statements.

- 6 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

	Six Months Ended December 31,
	Nine Months Ended March 31,
		2014			2013
		2015			2014
Cash Flows from Operating Activities:
Net income	$	58,~~092~~970		$	57,~~573~~359
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		12,~~503~~210			1,~~262~~958
Net amortization of premiums, discounts and loan fees and costs		1,~~185~~709			12,~~663~~273
Deferred income taxes		1,~~988~~272			~~186~~146
Amortization of intangible assets		78			64
Realized gain on bargain purchase		(370	)		-
Amortization of benefit plans’ unrecognized net loss		39			22
Amortization of intangible assets		124			93
Provision for loan losses		2,590			1,727
Amortization of benefit plans’ unrecognized net loss		57			32
Loss (gain) on write-down and sales of real estate owned		146			(1	)
Provision for loan losses		4,351			2,607
Realized gain on sale of loans		(9	)		(53	)
Loss on write-down and sales of real estate owned		656			70
Proceeds from sale of loans		133			496
Realized gain on sale of loans		(91	)		(80	)
Proceeds from sale of loans		1,089			817
Realized loss on sale of debt securities available for sale		594			1,294
Realized gain on sale of mortgage-backed securities available for sale		(601	)		(12,~~520~~350	)
Realized gain on disposition of premises and equipment		(2513	)		-
Increase in cash surrender value of bank owned life insurance		(1,~~306~~936	)		(12,~~409~~077	)
ESOP, stock option plan and restricted stock plan expenses		1,~~317~~879			~~862~~1,373
(Increase) decrease in interest receivable		(46	)		103
Increase in interest receivable		(675	)		(887	)
Increase in other assets		(8,077	)		(1,361	)
(Increase) decrease in other assets		(14,301	)		345
Increase in interest payable		3720			~~113~~71
Increase in other liabilities		320,~~654~~079			~~991~~1,760
Net Cash Provided by Operating Activities		825,~~292~~023			1014,~~012~~804
Cash Flows from Investing Activities:
Purchase of debt securities available for sale		(52,528	)		(55108,~~217~~850	)
Proceeds from sale of debt securities available for sale		39,444			54,075
Proceeds from repayments of debt securities available for sale		~~288~~516			~~455~~497
Purchase of debt securities held to maturity		(67,~~243~~696	)		(24,~~530~~315	)
Proceeds from calls and maturities of debt securities held to maturity		24,~~530~~857			~~270~~1,468
Proceeds from repayments of debt securities held to maturity		~~116~~167			~~847~~341
Purchase of loans		(32161,~~050~~666	)		(58107,~~319~~969	)
Net increase in loans receivable		(4494,~~562~~174	)		(~~137~~185,~~695~~209	)
Proceeds from sale of real estate owned		1,047			~~403~~1,219
Purchases of mortgage-backed securities available for sale		(10,384	)		(1745,~~061~~076	)
Principal repayments on mortgage-backed securities available for sale		3758,~~613~~520			7093,~~719~~195
Proceeds from sale of mortgage-backed securities available for sale		17,780			5387,~~613~~728
Purchases of mortgage-backed securities held to maturity		(3335,~~210~~296	)		-
Principal repayments on mortgage-backed securities held to maturity		630,~~045~~383			~~827~~1,247
Purchase of FHLB stock		(611,~~930~~430	)		(1424,~~445~~120	)
Redemption of FHLB stock		5,~~538~~539			915,~~047~~348
Proceeds from cash settlement of premises and equipment		49			-
Proceeds from sale of premises and equipment		49			-
Additions to premises and equipment		(1,~~005~~769	)		(13,~~580~~105	)
Net Cash Provided by Investing Activities	$	(76,462	)	$	(96,591	)
Proceeds from repayment of BOLI cash surrender value		933			-
Adjustment to cash acquired in merger		53			-
Net Cash Used in Investing Activities	$	(215,655	)	$	(223,526	)

See notes to unaudited consolidated financial statements.

- 7 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Thousands, Unaudited)

	Six Months Ended December 31,
	Nine Months Ended March 31,
		2014			2013
		2015			2014
Cash Flows from Financing Activities:
Net (decrease) increase in deposits		(14,995	)		7,085
Net increase in deposits	$	25,234		$	26,187
Repayment of term FHLB advances		(~~678~~1,~~047~~053,070	)		(~~275~~500,~~043~~066	)
Proceeds from term FHLB advances		~~750~~1,225,000			~~400~~700,000
Net change in overnight borrowings		(17,000	)		(5,000	)
Decrease in other short-term borrowings		(4,198	)		(10,775	)
Increase (decrease) in other short-term borrowings		2,408			(1,410	)
(Decrease) increase in advance payments by borrowers for taxes		(~~365~~195	)		~~362~~969
Purchase of common stock of Kearny Financial Corp. for treasury		-			(34,~~792~~020	)
Issuance of common stock of Kearny Financial Corp. from treasury		1,365			-460
Payment of cash for exercise of stock options		(7,188	)		-
Net Cash Provided by Financing Activities		29176,~~572~~554			~~112~~217,~~837~~120
Net (Decrease) Increase in Cash and Cash Equivalents		(3814,~~598~~078	)		268,~~258~~398
Cash and Cash equivalents - Beginning		135,034			127,034
Cash and Cash equivalents - Ending	$	96120,~~436~~956		$	~~153~~135,~~292~~432
Supplemental Disclosures of Cash Flows Information:
Cash paid during the year for:
Income taxes, net of refunds	$	1,~~806~~825		$	25,~~341~~522
Interest	$	1218,~~424~~744		$	1015,~~448~~966
Non-cash investing and financing activities:
Acquisition of real estate owned in settlement of loans	$	1,465		$	~~720~~848
Fair value of assets acquired, net of cash and cash equivalents acquired	$	317		$	-

See notes to unaudited consolidated financial statements.

- 8 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. PRINCIPLES OF CONSOLIDATION

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

2. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the unaudited consolidated financial statements have been included. The results of operations for the three- month and ~~six~~nine-month periods ended ~~December~~March 31, ~~2014~~2015, are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period.

The data in the consolidated statement of financial condition for June 30, 2014 was derived from the Company’s 2014 annual report on Form 10-K. That data, along with the interim unaudited financial information presented in the consolidated statements of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s 2014 annual report on Form 10-K.

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

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

The Financial Accounting Standards Board (“FASB”) has issued guidance on determining whether instruments granted in share-based payment transactions are participating securities. This guidance clarifies that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted earnings per share must be applied.

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

Three Months Ended December 31, 2014

Six Months Ended December 31, 2014

Three Months Ended March 31, 2015

Nine Months Ended March 31, 2015

Income (Numerator)

Shares (Denominator)

Per Share Amount

Income (Numerator)

Shares (Denominator)

Per Share Amount

(In Thousands, Except Per Share Data)

Net income

23,~~169~~878

58,~~092~~970

Basic earnings per share, income available to common stockholders

23,~~169~~878

67,~~042~~078

0.0306

58,~~092~~970

67,~~009~~032

0.0813

Effect of dilutive securities:

Stock options

1314

~~176~~114

23,~~169~~878

67,~~055~~092

0.0306

58,~~092~~970

67,~~185~~146

0.0813

- 9 -

	Three Months Ended December 31, 2013						Six Months Ended December 31, 2013
	Three Months Ended March 31, 2014						Nine Months Ended March 31, 2014
	Income (Numerator)		Shares (Denominator)		Per Share Amount		Income (Numerator)		Shares (Denominator)		Per Share Amount
	(In Thousands, Except Per Share Data)						(In Thousands, Except Per Share Data)
Net income	$	21,~~987~~786					$	57,~~573~~359
Basic earnings per share, income available to common stockholders	$	21,~~987~~786		65,~~767~~684	$	0.0503	$	57,~~573~~359		65,~~851~~797	$	0.0811
Effect of dilutive securities:
Stock options		-		-98				-		-32
	$	21,~~987~~786		65,~~767~~782	$	0.0503	$	57,~~573~~359		65,~~851~~829	$	0.0811

During the three and ~~six~~nine months ended ~~December~~March 31, ~~2014~~2015, the average number of options which were considered anti-dilutive totaled approximately ~~185~~162,~~000~~333 and ~~185~~177,~~000~~555, respectively. During the three and ~~six~~nine months ended ~~December~~March 31, ~~2013~~2014, the average number of options which were considered anti-dilutive totaled approximately 31,~~053~~915,~~000~~850 and 31,~~122~~964,~~000~~126, respectively.

4. SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of ~~December~~March 31, ~~2014~~2015, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation ~~identified~~was ~~the~~conducted ~~following~~through ~~subsequent~~the ~~event~~date ~~that~~this ~~warranted~~document ~~disclosure~~was ~~in these consolidated financial statements:~~filed.

On January 21, 2015, the Bank changed its name from Kearny Federal Savings Bank to Kearny Bank.

The evaluation was conducted through the date this document was filed.

5. PLAN OF CONVERSION AND REORGANIZATION

On September 4, 2014, the Boards of Directors of Kearny MHC (the majority stockholder of the Company), the Company and the Bank adopted a Plan of Conversion and Reorganization (the “Plan”). Pursuant to the Plan, Kearny MHC will convert from the mutual holding company form of organization to the fully public form. Kearny MHC will be merged into the Company, and Kearny MHC will no longer exist. The Company will then merge into a new Maryland corporation, also named Kearny Financial Corp., which will become the holding company for the Bank.

As part of the conversion, Kearny MHC’s ownership interest in the Company will be offered for sale in a public offering. The existing publicly held shares of the Company, which represent the remaining ownership interest in the Company, will be exchanged for new shares of common stock of the new Maryland corporation. The exchange ratio will ensure that immediately after the conversion and public offering, the public shareholders of the Company will own the same aggregate percentage of common stock of the new Maryland corporation that they owned immediately prior to the completion of the conversion and public offering (excluding shares purchased in the stock offering and cash received in lieu of fractional shares).

When the conversion and public offering are completed, all of the capital stock of the Bank will be owned by the new Maryland corporation. The Plan provides for the establishment, upon the completion of the conversion, of special “liquidation accounts” for the benefit of certain depositors of the Bank in an amount equal to the greater of Kearny MHC’s ownership interest in the retained earnings of the Company as of the date of the latest balance sheet contained in the prospectus or the value of the net assets of Kearny MHC as of the date of the latest statement of financial condition of Kearny MHC prior to the consummation of the conversion (excluding its ownership of the Company).

Following the completion of the conversion, under the rules of the Federal Reserve Bank (“FRB”), the Bank will not be permitted to pay dividends on its capital stock to the Company, its sole shareholder, if the Company’s shareholders’ equity would be reduced below the amount of the liquidation accounts. The liquidation accounts will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation accounts. Direct costs of the conversion and public offering will be deferred and reduce the proceeds from the shares sold in the public offering. The Company has incurred approximately $12.51 million in such costs through December 31, 2014.

On May 5, 2015, the stockholders of the Company and members of Kearny MHC approved the plan of conversion and reorganization. Additionally, on May 5, 2015, the Company’s stockholders and Kearny MHC’s members each approved the establishment and funding of the KearnyBank Foundation with a contribution of 500,000 shares of New Kearny common stock and

- 10 -

$5.0 million in cash. The transactions contemplated by the Plan ~~are~~remain subject to approval by the ~~Company’s stockholders (including approval by a majority of the shares held by persons other than the MHC) and the members of the MHC as well as the~~ Board of Governors of the Federal Reserve System.

6. RECENT ACCOUNTING PRONOUNCEMENTS

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40) Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The purpose of the ASU is to reduce diversity in the application of guidance by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. This ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The ASU’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. For public entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016, however, on April 1, 2015 the FASB proposed to defer the effective date by one year. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860) Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The purpose of the ASU is to address the concern that current accounting guidance distinguishes between repurchase agreements that settle at the same time as the maturity of the transferred financial asset and those that settle any time before maturity. In particular, repurchase-to-maturity transactions are generally accounted for as sales with forward agreements under current accounting, whereas typical repurchase agreements that settle before the maturity of the transferred financial asset are accounted for as secured borrowings. Additionally, current accounting guidance requires an evaluation of whether an initial transfer of a financial asset and a contemporaneous repurchase agreement (a repurchase financing) should be accounted for separately or linked. If linked, the arrangement is accounted for on a combined basis as a forward agreement. Those outcomes often are referred to as off-balance-sheet accounting. The ASU changes the accounting for repurchase-to-maturity transactions and linked repurchase financings to secured borrowing accounting, which is consistent with the accounting for other repurchase agreements. The amendments also require two new related disclosures. This ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. The purpose of the ASU is to address a practice issue related to the classification of certain foreclosed residential and nonresidential mortgage loans that are either fully or partially guaranteed under government programs. Specifically, creditors should reclassify loans that meet certain conditions to "other receivables" upon foreclosure, rather than reclassifying them to other real estate owned (OREO). The separate other receivable recorded upon foreclosure is to be measured based on the amount of the loan balance (principal and interest) the creditor expects to recover from the guarantor. The ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

7. STOCK REPURCHASE PLANS

On December 2, 2013, the Company announced that the Board of Directors authorized a stock repurchase plan to acquire up to 762,640 shares, or 5%, of the Company’s outstanding stock held by persons other than Kearny MHC. Through ~~December~~March 31, ~~2014~~2015, the Company has repurchased a total of 62,900 shares in accordance with this repurchase plan at a total cost of approximately $700,000 and at an average cost per share of $11.13.

- 11 -

8. SECURITIES AVAILABLE FOR SALE

The amortized cost, gross unrealized gains and losses and fair values of debt and mortgage-backed securities available for sale at ~~December~~ March 31, ~~2014~~2015 and June 30, 2014 and stratification by contractual maturity of debt securities available for sale at ~~December~~ March 31, ~~2014~~2015 are presented below:

December 31, 2014

March 31, 2015

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

(In Thousands)

Securities available for sale:

Debt securities:

U.S. agency securities

7,~~814~~581

63122

1314

7,~~864~~689

Obligations of state and political subdivisions

27,~~525~~519

~~137~~243

~~219~~152

27,~~443~~610

Asset-backed securities

87,~~550~~584

1,~~259~~065

~~202~~216

88,~~607~~433

Collateralized loan obligations

128,~~607~~616

-95

~~2,299~~953

~~126~~127,~~308~~758

Corporate bonds

163,~~064~~056

~~431~~492

1,~~079~~198

162,~~416~~350

Trust preferred securities

8,~~891~~893

1,~~091~~210

7,~~820~~703

Total debt securities

423,~~451~~249

12,~~910~~037

43,~~903~~743

~~420~~421,~~458~~543

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

3130,~~637~~184

-69

~~470~~153

3130,~~167~~100

Federal National Mortgage Association

4947,~~017~~357

1699

~~1,206~~509

4746,~~827~~947

Non-agency securities

~~184~~178

~~182~~176

Total collateralized mortgage obligations

8077,~~838~~719

16168

~~1,678~~664

7977,~~176~~223

Mortgage pass-through securities:

Residential pass-through securities:

Government National Mortgage Association

2,~~748~~632

~~261~~260

32,~~008~~892

Federal Home Loan Mortgage Corporation

~~171~~163,~~495~~758

23,~~908~~466

~~772~~372

~~173~~166,~~631~~852

Federal National Mortgage Association

~~116~~109,~~052~~385

3,~~604~~566

~~373~~198

~~119~~112,~~283~~753

Total residential pass-through securities

~~290~~275,~~295~~775

67,~~773~~292

~~1,146~~570

~~295~~282,~~922~~497

Commercial pass-through securities:

Federal National Mortgage Association

1612,~~375~~707

75190

1612,~~450~~897

Total commercial pass-through securities

1612,~~375~~707

75190

1612,~~450~~897

Total mortgage-backed securities

~~387~~366,~~508~~201

67,~~864~~650

21,~~824~~234

~~391~~372,~~548~~617

Total securities available for sale

~~810~~789,~~959~~450

89,~~774~~687

74,~~727~~977

~~812~~794,~~006~~160

	December 31, 2014
	March 31, 2015
	Amortized Cost		Fair Value
	(In Thousands)
Debt securities available for sale:
Due in one year or less	$	-20,015	$	-20,123
Due after one year through five years		20,~~048~~700		20,~~175~~362
Due after five years through ten years		~~152~~153,~~413~~030		~~151~~152,~~661~~371
Due after ten years		~~250~~229,~~990~~504		~~248~~228,~~622~~687
Total	$	423,~~451~~249	$	~~420~~421,~~458~~543

- 12 -

	June 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Securities available for sale:
Debt securities:
U.S. agency securities	$	4,159	$	48	$	2	$	4,205
Obligations of state and political subdivisions		27,537		9		773		26,773
Asset-backed securities		87,480		663		827		87,316
Collateralized loan obligations		120,089		-		517		119,572
Corporate bonds		163,076		617		1,459		162,234
Trust preferred securities		8,887		32		1,121		7,798
Total debt securities		411,228		1,369		4,699		407,898

Mortgage-backed securities:
Collateralized mortgage obligations:
Federal Home Loan Mortgage Corporation		33,505		-		485		33,020
Federal National Mortgage Association		51,277		12		1,249		50,040
Non-agency securities		210		-		-		210
Total collateralized mortgage obligations		84,992		12		1,734		83,270

Mortgage pass-through securities:
Residential pass-through securities:
Government National Mortgage Association		3,055		221		-		3,276
Federal Home Loan Mortgage Corporation		196,882		3,937		1,929		198,890
Federal National Mortgage Association		147,873		4,750		836		151,787
Total residential pass-through securities		347,810		8,908		2,765		353,953

Total mortgage-backed securities		432,802		8,920		4,499		437,223

Total securities available for sale	$	844,030	$	10,289	$	9,198	$	845,121

During the ~~six~~nine months ended ~~December~~ March 31, ~~2014~~2015, proceeds from sales of securities available for sale totaled $57.2 million and resulted in gross gains of $601,000 and gross losses of $594,000. Proceeds from sales of securities available for sale during the ~~six~~nine months ended ~~December~~ March 31, ~~2013~~2014, totaled $~~107~~141.78 million and resulted in gross gains of $2,~~060~~891,000 and gross losses of $1,~~834~~835,000.

At ~~December~~ March 31, ~~2014~~2015 and June 30, 2014, securities available for sale with carrying values of approximately $6663.90 million and $76.1 million, respectively, were utilized as collateral for borrowings through the FHLB of New York. As of those same dates, securities available for sale with total carrying values of approximately $1.65 million and $1.8 million, respectively, were pledged to secure public funds on deposit.

At ~~December~~ March 31, ~~2014~~2015, the Company’s available for sale mortgage-backed securities were secured by residential and commercial mortgage loans with original contractual maturities of ten to thirty years. At June 30, 2014, the Company’s available for sale mortgage-backed securities were secured by residential mortgage loans only with original contractual maturities of ten to thirty years. The effective lives of mortgage-backed securities are generally shorter than their contractual maturities due to principal amortization and prepayment of the mortgage loans comprised within those securities. Investors in mortgage pass-through securities generally share in the receipt of principal repayments on a pro-rata basis as paid by the borrowers. By comparison, collateralized mortgage obligations generally represent individual tranches within a larger investment vehicle that is designed to distribute cash flows received on securitized mortgage loans to investors in a manner determined by the overall terms and structure of the investment vehicle and those applying to the individual tranches within that structure.

- 13 -

9. SECURITIES HELD TO MATURITY

The amortized cost, gross unrealized gains and losses and fair values of debt and mortgage-backed securities held to maturity at ~~December~~ March 31, ~~2014~~2015 and June 30, 2014 and stratification by contractual maturity of debt securities held to maturity at ~~December~~ March 31, ~~2014~~2015 are presented below:

December 31, 2014

March 31, 2015

Amortized Cost

Gross Unrealized Gains

Gross Unrealized Losses

Fair Value

(In Thousands)

Securities held to maturity:

Debt securities:

U.S. agency securities

144,~~236~~186

~~1,394~~379

~~142~~143,~~847~~808

Obligations of state and political subdivisions

7574,~~670~~739

~~271~~443

~~724~~312

7574,~~217~~870

Total debt securities

~~219~~218,~~906~~925

~~276~~444

~~2,118~~691

218,~~064~~678

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

1918

2120

Federal National Mortgage Association

~~241~~232

~~267~~258

Non-agency securities

4644

4443

Total collateralized mortgage obligations

~~306~~294

~~332~~321

Mortgage pass-through securities:

Residential pass-through securities:

Government National Mortgage Association

109

Federal Home Loan Mortgage Corporation

~~258~~245

1516

~~273~~261

Federal National Mortgage Association

~~129~~128,~~223~~298

12,~~943~~840

-18

131,~~166~~120

Total residential pass-through securities

~~129~~128,~~490~~551

12,~~959~~857

-18

131,~~449~~390

Commercial pass-through securities:

Government National Mortgage Association

10,~~305~~208

-54

~~188~~-

10,~~117~~262

Federal National Mortgage Association

~~182~~160,~~428~~892

14,~~812~~023

~~429~~20

~~183~~164,~~811~~895

Total commercial pass-through securities

~~192~~171,~~733~~100

14,~~812~~077

~~617~~20

~~193~~175,~~928~~157

Total mortgage-backed securities

~~322~~299,~~529~~945

36,~~799~~962

~~619~~39

~~325~~306,~~709~~868

Total securities held to maturity

~~542~~518,~~435~~870

47,~~075~~406

~~2,737~~730

~~543~~525,~~773~~546

	December 31, 2014
	March 31, 2015
	Amortized Cost		Fair Value
	(In Thousands)
Debt securities available for sale:
Due in one year or less	$	65,~~302~~372	$	65,~~312~~379
Due after one year through five years		~~149~~152,~~359~~032		~~147~~151,~~917~~628
Due after five years through ten years		3937,~~395~~631		3937,~~164~~737
Due after ten years		2423,~~850~~890		2423,~~671~~934
Total	$	~~219~~218,~~906~~925	$	218,~~064~~678

- 14 -

	June 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Securities held to maturity:
Debt securities:
U.S. agency securities	$	144,349	$	6	$	1,408	$	142,947
Obligations of state and political subdivisions		72,065		15		1,555		70,525
Total debt securities		216,414		21		2,963		213,472

Mortgage-backed securities:
Collateralized mortgage obligations:
Federal Home Loan Mortgage Corporation		20		2		-		22
Federal National Mortgage Association		264		30		-		294
Non-agency securities		54		-		1		53
Total collateralized mortgage obligations		338		32		1		369

Mortgage pass-through securities:
Residential pass-through securities:
Government National Mortgage Association		9		-		-		9
Federal Home Loan Mortgage Corporation		283		4		-		287
Federal National Mortgage Association		114,276		140		83		114,333
Total residential pass-through securities		114,568		144		83		114,629

Commercial pass-through securities:
Federal National Mortgage Association		180,752		73		2,042		178,783
Total commercial pass-through securities		180,752		73		2,042		178,783

Total mortgage-backed securities		295,658		249		2,126		293,781

Total securities held to maturity	$	512,072	$	270	$	5,089	$	507,253

There were no sales of securities held to maturity during the ~~six~~nine months ended ~~December~~ March 31, ~~2014~~2015 and ~~December~~ March 31, ~~2013~~2014.

At ~~December~~ March 31, ~~2014~~2015 and June 30, 2014, securities held to maturity with carrying values of approximately $127.84 million and $128.1 million, respectively, were utilized as collateral for borrowings from the FHLB of New York. As of those same dates, securities held to maturity with total carrying values of approximately $87.09 million and $4.5 million, respectively, were pledged to secure public funds on deposit.

At ~~December~~ March 31, ~~2014~~2015 and June 30, 2014, the Company’s held to maturity mortgage-backed securities were secured by both residential and commercial mortgage loans with original contractual maturities of ten to thirty years. The effective lives of mortgage-backed securities are generally shorter than their contractual maturities due to principal amortization and prepayment of the mortgage loans comprised within those securities. Investors in mortgage pass-through securities generally share in the receipt of principal repayments on a pro-rata basis as paid by the borrowers. By comparison, collateralized mortgage obligations generally represent individual tranches within a larger investment vehicle that is designed to distribute cash flows received on securitized mortgage loans to investors in a manner determined by the overall terms and structure of the investment vehicle and those applying to the individual tranches within that structure.

10. IMPAIRMENT OF SECURITIES

The following two tables summarize the fair values and gross unrealized losses within the available for sale and held to maturity portfolios at ~~December~~ March 31, ~~2014~~2015 and June 30, 2014. The gross unrealized losses, presented by security type, represent temporary impairments of value within each portfolio as of the dates presented. Temporary impairments within the available for sale portfolio have been recognized through other comprehensive income as reductions in stockholders’ equity on a tax-effected basis.

- 15 -

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

December 31, 2014

March 31, 2015

Less than 12 Months

12 Months or More

Total

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

Fair Value

Unrealized Losses

(In Thousands)

Securities Available for Sale:

U.S. agency securities

1,~~570~~549

~~856~~716

2,~~426~~265

1314

Obligations of state and political subdivisions

~~656~~5,505

246

113,~~952~~025

~~217~~106

128,~~608~~530

~~219~~152

Asset-backed securities

30,~~121~~100

~~202~~216

30,~~121~~100

~~202~~216

Collateralized loan obligations

~~126~~98,~~309~~321

~~2,299~~951

-4,982

-2

~~126~~103,~~309~~303

~~2,299~~953

Corporate bonds

4339,~~814~~772

~~203~~228

54,~~178~~082

~~876~~970

9793,~~992~~854

1,~~079~~198

Trust preferred securities

6,~~800~~683

1,~~091~~210

6,~~800~~683

1,~~091~~210

Collateralized mortgage obligations

~~26,739~~176

~~222~~1

4754,~~010~~708

~~1,456~~663

7354,~~749~~884

~~1,678~~664

Residential pass-through securities

~~43,435~~4

~~306~~-

7552,~~149~~629

~~840~~570

~~118~~52,~~584~~633

~~1,146~~570

Total

~~242~~145,~~523~~327

31,~~040~~235

~~226~~206,~~066~~925

43,~~687~~742

~~468~~352,~~589~~252

74,~~727~~977

	June 30, 2014
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Securities Available for Sale:

U.S. agency securities	$	826	$	1	$	84	$	1	$	910	$	2
Obligations of state and political subdivisions		946		3		23,140		770		24,086		773
Asset-backed securities		28,404		630		25,169		197		53,573		827
Collateralized loan obligations		84,705		270		24,829		247		109,534		517
Corporate bonds		19,790		210		53,811		1,249		73,601		1,459
Trust preferred securities		-		-		6,766		1,121		6,766		1,121
Collateralized mortgage obligations		21,806		219		50,028		1,515		71,834		1,734
Residential pass-through securities		-		-		123,666		2,765		123,666		2,765
Total	$	156,477	$	1,333	$	307,493	$	7,865	$	463,970	$	9,198

The number of available for sale securities with unrealized losses at December 31, 2014 totaled 95 and included five U.S. agency securities, 35 municipal obligations, four asset-backed securities, 20 collateralized loan obligations, nine corporate obligations, four trust preferred securities and 18 mortgage-backed securities comprising nine collateralized mortgage obligations and nine residential pass-through securities. The number of available for sale securities with unrealized losses at June 30, 2014 totaled 111 and included four U.S. agency securities, 63 municipal obligations, five asset-backed securities, 16 collateralized loan obligations, six corporate obligations, four trust preferred securities and 13 mortgage-backed securities comprising six collateralized mortgage obligations and seven residential pass-through securities.

- 16 -

	December 31, 2014
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Securities Held to Maturity:
At December 31, 2014
U.S. agency securities	$	-	$	-	$	141,936	$	1,394	$	141,936	$	1,394
Obligations of state and political subdivisions		13,964		66		30,580		658		44,544		724
Collateralized mortgage obligations		41		1		5		1		46		2
Commercial pass-through securities		13,077		203		24,105		414		37,182		617
Total	$	27,082	$	270	$	196,626	$	2,467	$	223,708	$	2,737

The number of available for sale securities with unrealized losses at March 31, 2015 totaled 73 and included five U.S. agency securities, 24 municipal obligations, four asset-backed securities, 16 collateralized loan obligations, seven corporate obligations, four trust preferred securities and 13 mortgage-backed securities comprising six collateralized mortgage obligations and seven residential pass-through securities. The number of available for sale securities with unrealized losses at June 30, 2014 totaled 111 and included four U.S. agency securities, 63 municipal obligations, five asset-backed securities, 16 collateralized loan obligations, six corporate obligations, four trust preferred securities and 13 mortgage-backed securities comprising six collateralized mortgage obligations and seven residential pass-through securities.

	March 31, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Securities Held to Maturity:

U.S. agency securities	$	-	$	-	$	142,953	$	379	$	142,953	$	379
Obligations of state and political subdivisions		15,843		75		8,086		237		23,929		312
Collateralized mortgage obligations		18		-		24		1		42		1
Residential pass-through securities		2,064		18						2,064		18
Commercial pass-through securities		9,769		20		-		-		9,769		20
Total	$	27,694	$	113	$	151,063	$	617	$	178,757	$	730

	June 30, 2014
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Securities Held to Maturity:

U.S. agency securities	$	-	$	-	$	141,919	$	1,408	$	141,919	$	1,408
Obligations of state and political subdivisions		5,808		36		57,056		1,519		62,864		1,555
Collateralized mortgage obligations		30		1		-		-		30		1
Residential pass-through securities		59,993		83		-		-		59,993		83
Commercial pass-through securities		56,234		230		96,937		1,812		153,171		2,042
Total	$	122,065	$	350	$	295,912	$	4,739	$	417,977	$	5,089

The number of held to maturity securities with unrealized losses at ~~December~~ March 31, ~~2014~~2015 totaled ~~109~~73 and included seven U.S. agency securities, 9159 municipal obligations and 11seven mortgage-backed securities comprising four collateralized mortgage obligations, ~~and~~two ~~seven~~ commercial pass-through securities and one residential pass-through security. The number of held to maturity securities with unrealized losses at June 30, 2014 totaled 198 and included seven U.S. agency securities, 137 municipal obligations and 54 mortgage-backed securities comprising three collateralized mortgage obligations, 26 residential pass-through securities and 25 commercial pass-through securities.

- 17 -

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

●· When the Company intends to sell the impaired debt security;

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

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

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

- 17 -

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

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

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

●· The historical and implied volatility of the fair value of the security;

●· The payment structure of the debt security;

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

●· Changes to the rating of the security by external rating agencies; and

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

At ~~December~~March 31, ~~2014~~2015 and June 30, 2014, the Company held no securities on which credit-related OTTI had been recognized in earnings. The following discussion summarizes the Company’s rationale for recognizing the impairments reported in the tables above as “temporary” versus “other-than-temporary”. Such rationale is presented by investment type and generally applies consistently to both the available for sale and held to maturity portfolios, except where specifically noted.

Mortgage-backed Securities.

The carrying value of the Company’s mortgage-backed securities totaled $~~714~~672.16 million at ~~December~~ March 31, ~~2014~~2015 and comprised 5251.72% of total investments and 2018.1% of total assets as of that date. This category of securities primarily includes mortgage pass-through securities and collateralized mortgage obligations issued by U.S. government agencies and/or government-sponsored entities (“GSEs”) such as Ginnie Mae, Fannie Mae and Freddie Mac who guarantee the contractual cash flows associated with those securities. Those guarantees were strengthened during the 2008-2009 financial crisis at which time Fannie Mae and Freddie Mac were placed into receivership by the federal government. Through those actions, the U.S. government effectively reinforced the guarantees of their agencies thereby strengthening the creditworthiness of the mortgage-backed securities issued by those agencies.

With credit risk being reduced to negligible levels due primarily to the U.S. government’s support of most of these agencies, the unrealized losses on the Company’s investment in U.S. agency mortgage-backed securities are due largely to the combined effects of several market-related factors including, most notably, changes in market interest rates. In general, the fair value of certain debt securities, including the Company’s mortgage-backed securities, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are largely characterized by fixed interest rates or adjustable rates that lag the movement in market interest rates, generally decline and vice-versa.

- 18 -

securities, including the Company’s mortgage-backed securities, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are largely characterized by fixed interest rates or adjustable rates that lag the movement in market interest rates, generally decline and vice-versa.

Additionally, movements in market interest rates significantly impact the average lives of mortgage-backed securities by influencing the rate of principal prepayment attributable to refinancing activity. Changes in the expected average lives of such securities significantly impact their fair values due to the extension or contraction of the cash flows that an investor expects to receive over the life of the security. Generally, lower market interest rates prompt greater refinancing activity thereby shortening the average lives of mortgage-backed securities and vice-versa. The historically low mortgage rates prevalent in the marketplace during recent years created significant refinancing incentive for qualified borrowers.

Prepayment rates are also influenced by fluctuating real estate values and the overall availability of credit in the marketplace which significantly impacts the ability of borrowers to qualify for refinancing. The residential real estate marketplace in recent years has been characterized by diminished property values and reduced availability of credit due to tightening underwriting standards. As a consequence, the ability of certain borrowers to qualify for the refinancing of existing loans has been reduced while residential real estate purchase activity has been stifled. These factors have partially offset the effects of historically low interest rates on mortgage-backed security prepayment rates.

The market price of mortgage-backed securities, being the key measure of the fair value to an investor in such securities, is also influenced by the overall supply and demand for such securities in the marketplace. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

- 18 -

In sum, the factors influencing the fair value of the Company’s U.S. agency mortgage-backed securities, as described above, generally result from movements in market interest rates and changing real estate and financial market conditions which affect the supply and demand for such securities. Such market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company has the stated ability and intent to “hold to maturity” those securities so designated at ~~December~~ March 31, ~~2014~~2015 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Moreover, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its U.S. agency and GSE mortgage-backed securities with unrealized losses at ~~December~~ March 31, ~~2014~~2015 to be “other-than-temporarily” impaired as of that date.

In addition to those mortgage-backed securities issued by U.S. agencies and GSEs, the Company held a nominal balance of non-agency mortgage-backed securities at ~~December~~ March 31, ~~2014~~2015. Unlike agency and GSE mortgage-backed securities, non-agency collateralized mortgage obligations are not explicitly guaranteed by a U.S. government sponsored entity. Rather, such securities generally utilize the structure of the larger investment vehicle to reallocate credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying mortgage loans. The creditworthiness of certain tranches may also be further enhanced by additional credit insurance protection embedded within the terms of the total investment vehicle.

The fair values of the non-agency mortgage-backed securities are subject to many of the factors applicable to the agency securities that may result in “temporary” impairments in value. However, due to the lack of agency guaranty, the Company also monitors the general level of credit risk for each of its non-agency mortgage-backed securities based upon a variety of factors including, but not limited to, the ratings assigned to its specific tranches by one or more credit rating agencies, where available. As noted above, the level of such ratings and changes thereto, is one of several factors considered by the Company in identifying those securities that may be other-than-temporarily impaired.

The applicable securities generally maintained their credit-ratings at levels supporting the investment grade assessment by the Company. The Company has the stated ability and intent to “hold to maturity” those securities at ~~December~~ March 31, ~~2014~~2015 and has further concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its non-agency mortgage-backed securities with unrealized losses at ~~December~~ March 31, ~~2014~~2015 to be “other-than-temporarily” impaired as of that date.

- 19 -

U.S. Agency Debt Securities.

The carrying value of the Company’s U.S. agency debt securities totaled $~~152~~151.19 million at ~~December~~ March 31, ~~2014~~2015 and comprised 11.26% of total investments and 4.31% of total assets as of that date. Such securities included U.S. agency debentures and securitized pools of loans issued and fully guaranteed by the Small Business Administration (“SBA”), a U.S. government agency.

With credit risk being reduced to negligible levels due to the issuer’s guarantee, the unrealized losses on the Company’s investment in U.S. agency debentures are due largely to the combined effects of several market-related factors including, most notably, changes in market interest rates. In general, the fair value of certain debt securities, including the Company’s U.S. agency debentures, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are largely characterized by fixed interest rates, generally decline and vice-versa.

The market price of U.S. agency debentures is also influenced by the overall supply and demand for such securities in the marketplace. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s U.S. agency debentures, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

-Finally, 19the Company has the stated ability and intent to “hold to maturity” those securities so designated at March 31, 2015 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its balance of U.S. agency securities with unrealized losses at March 31, 2015 to be “other-than-temporarily” impaired as of that date.

Finally, the Company has the stated ability and intent to “hold to maturity” those securities so designated at December 31, 2014 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its balance of U.S. agency securities with unrealized losses at December 31, 2014 to be “other-than-temporarily” impaired as of that date.

Obligations of State and Political Subdivisions.

The carrying value of the Company’s securities representing obligations of state and political subdivisions totaled $~~103~~102.13 million at ~~December~~ March 31, ~~2014~~2015 and comprised 7.68% of total investments and 2.98% of total assets as of that date. Such securities primarily include ~~approximately $101.5 million of~~ fixed-rate, bank-qualified securities representing general obligations of municipalities located within the U.S. or the obligations of their related entities such as boards of education or school districts. The portfolio also includes ~~$1.6~~a ~~million~~nominal balance of non-rated bond anticipation notes (“BANs”) comprising ~~five~~ short-term obligations issued by ~~a total of three~~ New Jersey municipalities with whom the Company maintains or seeks to maintain deposit relationships. At ~~December~~ March 31, ~~2014~~2015, the fair value of each of the Company’s BANs equaled or exceeded their respective carrying values resulting in no reported impairment on those securities as of that date.

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where available, in its evaluation of the impairment attributable to each of its municipal obligations. The Company uses such ratings, in conjunction with the other criteria noted earlier, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

Unrealized losses associated with municipal obligations whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s periodic internal investment grade assessment of the security.

At ~~December~~ March 31, ~~2014~~2015, each of the Company’s impaired municipal obligations were consistently rated by Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Financial Services (“S&P”) well above the thresholds that generally support the Company’s investment grade assessment with such ratings equaling “A” or higher by S&P and/or “A2” or higher by Moody’s, where rated by those agencies. In the absence of such ratings, the Company relies upon its own internal analysis of the issuer’s financial condition to validate its investment grade assessment.

Given the absence of any expectation for an adverse change in cash flows signifying a credit loss, the unrealized losses on the Company’s investment in municipal obligations are due largely to the combined effects of several market-related factors including, most notably, changes in market interest rates. In general, the fair value of certain debt securities, including the Company’s municipal obligations, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are largely characterized by fixed interest rates, generally decline and vice-versa.

- 20 -

obligations, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are largely characterized by fixed interest rates, generally decline and vice-versa.

The market price of municipal obligations is also influenced by the overall supply and demand for such securities in the marketplace. While these factors may generally reflect the level of available liquidity in the marketplace, demand for individual securities will specifically reflect investors’ assessment of an issuer’s creditworthiness and resulting expectations for timely and full repayment in accordance with the terms of the applicable security agreement. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s municipal obligations, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company has the stated ability and intent to “hold to maturity” those securities so designated at ~~December~~ March 31, ~~2014~~2015 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its balance of obligations of state and political subdivisions with unrealized losses at March 31, 2015 to be “other-than-temporarily” impaired as of that date.

- 20 -

that date. In light of the factors noted, the Company does not consider its balance of obligations of state and political subdivisions with unrealized losses at December 31, 2014 to be “other-than-temporarily” impaired as of that date.

Asset-backed Securities.

The carrying value of the Company’s asset-backed securities totaled $88.64 million at ~~December~~ March 31, ~~2014~~2015 and comprised 6.57% of total investments and 2.54% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities representing securitized federal education loans with 97% U.S. government guarantees. The securities represent tranches of a larger investment vehicle designed to reallocate credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying loans. The Company’s securities represent the highest credit-quality tranches within the overall structures with each being rated “AA+” by S&P at ~~December~~ March 31, ~~2014~~2015.

With credit risk being reduced to nominal levels due to the guarantees and structural support noted above, the unrealized losses on the Company’s investment in asset-backed securities are due largely to the combined effects of several market-related factors, including changes in market interest rates and fluctuating demand for such securities in the marketplace. In general, the fair value of certain debt securities, including the Company’s asset-backed securities, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities generally decline and vice-versa. However, the floating-rate nature of the Company’s asset-backed securities greatly reduces their sensitivity to such changes in market rates.

More significantly, the market price of asset-backed securities is also influenced by the overall supply and demand for such securities in the marketplace. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s asset-backed securities, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of ~~December~~ March 31, ~~2014~~2015. In light of the factors noted, the Company does not consider its balance of asset-backed securities with unrealized losses at ~~December~~ March 31, ~~2014~~2015 to be “other-than-temporarily” impaired as of that date.

- 21 -

Collateralized Loan Obligations.

The outstanding balance of the Company’s collateralized loan obligations totaled $~~126~~127.38 million at ~~December~~ March 31, ~~2014~~2015 and comprised 9.37% of total investments and 3.64% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities comprised of securitized commercial loans to large U.S. corporations. The Company’s securities represent tranches of a larger investment vehicle designed to reallocate cash flows and credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying loans.

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where available, in its evaluation of the impairment attributable to each of its collateralized loan obligations. The Company uses such ratings, in conjunction with the other criteria noted earlier, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

Unrealized losses associated with collateralized loan obligations whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s periodic internal investment grade assessment of the security.

-At 21March -31, 2015, each of the Company’s impaired collateralized loan obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support the Company’s investment grade assessment, with such ratings equaling “AA” or higher by S&P and “Aa2” or higher by Moody’s, where rated by those agencies.

At December 31, 2014, each of the Company’s impaired collateralized loan obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support the Company’s investment grade assessment, with such ratings equaling “AA” or higher by S&P and “Aa2” or higher by Moody’s, where rated by those agencies.

Given the absence of any expectation for an adverse change in cash flows signifying a credit loss, the unrealized losses on the Company’s investment in collateralized loan obligations are due largely to the combined effects of several market-related factors, including changes in market interest rates and fluctuating demand for such securities in the marketplace. In general, the fair value of certain debt securities, including the Company’s collateralized loan obligations, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities generally decline and vice-versa. However, the floating-rate nature of the Company’s collateralized loan obligations greatly reduces their sensitivity to such changes in market rates.

More significantly, the market price of collateralized loan obligations is also influenced by the overall supply and demand for such securities in the marketplace. While these factors may generally reflect the level of available liquidity in the marketplace, demand for individual securities will specifically reflect the performance of the underlying collateral in conjunction with the resiliency of the security’s structural support as they affect investors’ expectations for timely and full repayment. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s collateralized loan obligations, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

During fiscal 2014, the Company sold certain collateralized loan obligations that it had identified as potentially ineligible investments under the terms of the “Volcker Rule” and related regulations enacted by regulatory agencies in conjunction with the ongoing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Such ineligibility was primarily based upon the actual composition of the securitized financial assets within the applicable securities.

At ~~December~~ March 31, ~~2014~~2015, the Company’s entire portfolio of collateralized loan obligations remains compliant with the Volcker Rule in that regard. As such, the Company concluded that the possibility of being required to sell its collateralized loan obligations prior to their anticipated recovery is currently unlikely which is further reinforced by the overall strength of the Company’s liquidity, asset quality and capital position as of that date. Moreover, the Company does not otherwise intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost at ~~December~~ March 31, ~~2014~~2015.

~~During~~The ~~the~~Company ~~quarter~~has ~~ended~~also ~~December 31, 2014, the Company~~ reviewed the underlying security agreements for each of its collateralized loan obligations to determine if the terms of such agreements could potentially allow for the inclusion of ineligible assets within the security’s structure in the future. To the extent the agreements contained such provisions and could or would not be modified by the issuer to ensure ongoing compliance with the Volcker Rule, the Bank sold such securities during the quarter ended December 31, 2014.

~~In light of the factors noted, the Company does not consider its balance of collateralized loan obligations with unrealized losses at December 31, 2014 to be “other~~-~~than-temporarily”~~ ~~impaired~~22 ~~as of that date.~~ -

To the extent the agreements contained such provisions and could or would not be modified by the issuer to ensure ongoing compliance with the Volcker Rule, the Bank sold such securities during the first half of fiscal 2015.

In light of the factors noted, the Company does not consider its balance of collateralized loan obligations with unrealized losses at March 31, 2015 to be “other-than-temporarily” impaired as of that date.

Corporate Bonds.

The carrying value of the Company’s corporate bonds totaled $162.4 million at ~~December~~ March 31, ~~2014~~2015 and comprised 12.04% of total investments and 4.64% of total assets as of that date. This category of securities is comprised entirely of floating-rate corporate debt obligations of large financial institutions.

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where available, in its evaluation of the impairment attributable to each of its corporate bonds. The Company uses such ratings, in conjunction with the other criteria noted earlier, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

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Unrealized losses associated with corporate bonds whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s periodic internal investment grade assessment of the security.

At ~~December~~ March 31, ~~2014~~2015, each of the Company’s impaired corporate bonds were consistently rated by Moody’s and S&P above the thresholds that generally support the Company’s investment grade assessment with such ratings equaling “A-” or higher by S&P and/or “Baa1” or higher by Moody’s, where rated by those agencies.

Given the absence of any expectation for an adverse change in cash flows signifying a credit loss, the unrealized losses on the Company’s investment in corporate bonds are due largely to the combined effects of several market-related factors including changes in market interest rates and fluctuating demand for such securities in the marketplace. In general, the fair value of certain debt securities, including the Company’s corporate bonds, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities generally decline and vice-versa. However, the floating-rate nature of the Company’s corporate bonds greatly reduces their sensitivity to such changes in market rates.

More significantly, the market price of corporate bonds is also influenced by the overall supply and demand for such securities in the marketplace. While these factors may generally reflect the level of available liquidity in the marketplace, demand for individual securities will specifically reflect investors’ assessment of an issuer’s creditworthiness and resulting expectations for timely and full repayment in accordance with the terms of the applicable security agreement. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s corporate bonds, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of ~~December~~ March 31, ~~2014~~2015. In light of the factors noted, the Company does not consider its balance of corporate bonds with unrealized losses at ~~December~~ March 31, ~~2014~~2015 to be “other-than-temporarily” impaired as of that date.

Trust Preferred Securities.

The carrying value of the Company’s trust preferred securities totaled $7.87 million at ~~December~~ March 31, ~~2014~~2015 and comprised less than one percent of total investments and total assets as of that date. The category comprises a total of five “single-issuer” (i.e. non-pooled) trust preferred securities, four of which are impaired as of ~~December~~ March 31, ~~2014~~2015, that were originally issued by four separate financial institutions. As a result of bank mergers involving the issuers of these securities, the Company’s five trust preferred securities currently represent the de-facto obligations of three separate financial institutions.

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institutions. As a result of bank mergers involving the issuers of these securities, the Company’s five trust preferred securities currently represent the de-facto obligations of three separate financial institutions.

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where such ratings are available, in its evaluation of the impairment attributable to each of its trust preferred securities. The Company uses such ratings, in conjunction with other criteria, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

Unrealized losses associated with trust preferred securities whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s internal investment grade assessment of the security.

At ~~December~~ March 31, ~~2014~~2015, the Company owned two securities at an amortized cost of $3.0 million that were consistently rated by Moody’s and S&P above the thresholds that generally support the Company’s investment grade assessment. The securities were originally issued through Chase Capital II and currently represent de facto obligations of JPMorgan Chase & Co.

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The Company has attributed the unrealized losses on these securities to the combined effects of several market-related factors, including movements in market interest rates and general level of liquidity of such securities in the marketplace based on overall supply and demand.

With regard to interest rates, the Company’s impaired trust preferred securities are variable rate securities whose interest rates generally float with three-month LIBOR plus a margin. Based upon the historically low level of short-term market interest rates, the current yield on these securities is comparatively low. Consequently, the fair value of the securities, as determined based upon their market price, reflects the adverse effects of the historically low market interest rates at ~~December~~ March 31, ~~2014~~2015.

More significantly, the market prices of the impaired trust preferred securities also currently reflect the effect of reduced demand for such securities in the current marketplace.

In addition to the securities noted above, the Company owned two additional trust preferred securities at an amortized cost of $4.9 million whose external credit ratings by both S&P and Moody’s fell below the thresholds that the Company normally associates with investment grade securities. The securities were originally issued through BankBoston Capital Trust IV and MBNA Capital Trust B and currently represent de-facto obligations of Bank of America Corporation.

The Company’s evaluation of the unrealized loss associated with these securities considered a variety of factors to determine if any portion of the impairment was credit-related at ~~December~~ March 31, ~~2014~~2015. Factors generally considered in such evaluations included the financial strength and viability of the issuer and its parent company, the security’s historical performance through prior business and economic cycles, rating consistency or variability among rating companies, the security’s current and anticipated status regarding payment default or deferral of contractual payments to investors and the impact of these factors on the present value of the security’s expected future cash flows in relation to its amortized cost basis.

In its evaluation, the Company noted the overall financial strength and continuing expected viability of the issuing entity’s parent, particularly given their systemically critical role in the marketplace. The Company noted the security’s absence of historical defaults or payment deferrals throughout prior business cycles including the recent fiscal crisis that triggered the current economic weaknesses prevalent in the marketplace. Given these factors, the Company had no basis upon which to estimate an adverse change in the expected cash flows over the securities’ remaining terms to maturity.

In sum, the factors influencing the fair value of the Company’s trust preferred securities and the resulting impairment attributable to each generally resulted from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Such market conditions may generally fluctuate over time resulting in the securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value arising from these changing market conditions are both “noncredit-related” and “temporary” in nature.

Finally, the Company does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of December 31, 2014. In light of the factors noted, the Company does not consider its investments in trust preferred securities with unrealized losses at December 31, 2014 to be “other-than-temporarily” impaired as of that date.

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quality and capital position as of March 31, 2015. In light of the factors noted, the Company does not consider its investments in trust preferred securities with unrealized losses at March 31, 2015 to be “other-than-temporarily” impaired as of that date.

11. LOAN QUALITY AND ALLOWANCE FOR LOAN LOSSES

Past Due Loans. A loan’s “past due” status is generally determined based upon its “P&I delinquency” status in conjunction with its “past maturity” status, where applicable. A loan’s “P&I delinquency” status is based upon the number of calendar days between the date of the earliest P&I payment due and the “as of” measurement date. A loan’s “past maturity” status, where applicable, is based upon the number of calendar days between a loan’s contractual maturity date and the “as of” measurement date. Based upon the larger of these criteria, loans are categorized into the following “past due” tiers for financial statement reporting and disclosure purposes: Current (including 1-29 days past due), 30-59 days, 60-89 days and 90 or more days.

Nonaccrual Loans. Loans are generally placed on nonaccrual status when contractual payments become 90 days or more past due, and are otherwise placed on nonaccrual status when the Company does not expect to receive all P&I payments owed substantially in accordance with the terms of the loan agreement. Loans that become 90 days past maturity, but remain non-delinquent with regard to ongoing P&I payments, may remain on accrual status if: (1) the Company expects to receive all P&I payments owed substantially in accordance with the terms of the loan agreement, past maturity status notwithstanding, and (2) the borrower is working actively and cooperatively with the Company to remedy the past maturity status through an expected refinance, payoff or modification of the loan agreement that is not expected to result in a troubled debt restructuring (“TDR”) classification. All TDRs are placed on nonaccrual status for a period of no less than six months after restructuring, irrespective of past due status. The sum of nonaccrual loans plus accruing loans that are 90 days or more past due are generally defined collectively as “nonperforming loans”.

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agreement that is not expected to result in a troubled debt restructuring (“TDR”) classification. All TDRs are placed on nonaccrual status for a period of no less than six months after restructuring, irrespective of past due status. The sum of nonaccrual loans plus accruing loans that are 90 days or more past due are generally defined collectively as “nonperforming loans”.

Payments received in cash on nonaccrual loans, including both the principal and interest portions of those payments, are generally applied to reduce the carrying value of the loan for financial statement purposes. When a loan is returned to accrual status, any accumulated interest payments previously applied to the carrying value of the loan during its nonaccrual period are recognized as interest income as an adjustment to the loan’s yield over its remaining term.

Loans that are not considered to be TDRs are generally returned to accrual status when payments due are brought current and the Company expects to receive all remaining P&I payments owed substantially in accordance with the terms of the loan agreement. Non-TDR loans may also be returned to accrual status when a loan’s payment status falls below 90 days past due and the Company: (1) expects receipt of the remaining past due amounts within a reasonable timeframe, and (2) expects to receive all remaining P&I payments owed substantially in accordance with the terms of the loan agreement.

Acquired Loans. Loans that we acquire through acquisitions are recorded at fair value with no carryover of the related allowance for credit losses. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable yield. The nonaccretable yield represents estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows require us to evaluate the need for an allowance for credit losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable yield which we then reclassify as accretable yield that is recognized into interest income over the remaining life of the loan using the interest method. Our evaluation of the amount of future cash flows that we expect to collect is performed in a similar manner as that used to determine our allowance for credit losses. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable yield portion of the fair value adjustment.

Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans. As such, we may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield.

At ~~December~~ March 31, ~~2014~~2015, the remaining outstanding principal balance and carrying amount of acquired credit-impaired loans totaled approximately $1110,~~691~~610,000 and $9,~~971~~022,000, respectively. By comparison, at June 30, 2014, the remaining outstanding principal balance and carrying amount of acquired credit-impaired loans totaled approximately $11,778,000 and $10,138,000, respectively.

The carrying amount of acquired credit-impaired loans for which interest is not being recognized due to the uncertainty of the cash flows relating to such loans totaled $1,969,000 and $2,374,000 at December 31, 2014 and June 30, 2014, respectively.

The balance of the allowance for loan losses at December 31, 2014 and June 30, 2014 included approximately $91,000 and $98,000 of valuation allowances, respectively, for a specifically identified impairment attributable to acquired credit-impaired loans. The valuation allowances were attributable to additional impairment recognized on the applicable loans subsequent to their acquisition, net of any charge offs recognized during that time.

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The ~~following~~carrying ~~table~~amount ~~presents~~of ~~the~~acquired ~~changes~~credit-impaired inloans ~~the~~for ~~accretable~~which ~~yield~~interest ~~relating~~is not being recognized due to the ~~acquired~~uncertainty ~~credit-impaired~~of ~~loans~~the ~~for~~cash ~~the~~flows ~~three~~relating to such loans totaled $1,947,000 and ~~six~~$2,374,000 ~~months~~at ~~ended~~March ~~December~~ 31, ~~2014~~2015 and ~~December~~June 3130, ~~2013~~2014, respectively.

	Three Months Ended December 31, 2014			Six Months Ended December 31, 2014
	(In Thousands)			(In Thousands)
Beginning balance	$	1,827		$	1,891
Accretion to interest income		(143	)		(207	)
Disposals		-			-
Reclassifications from nonaccretable difference		-			-
Ending balance	$	1,684		$	1,684

The balance of the allowance for loan losses at March 31, 2015 and June 30, 2014 included approximately $88,000 and $98,000 of valuation allowances, respectively, for a specifically identified impairment attributable to acquired credit-impaired loans. The valuation allowances were attributable to additional impairment recognized on the applicable loans subsequent to their acquisition, net of any charge offs recognized during that time.

	Three Months Ended December 31, 2013			Six Months Ended December 31, 2013
	(In Thousands)			(In Thousands)
Beginning balance	$	2,180		$	741
Accretion to interest income		(57	)		(112	)
Disposals		-			-
Reclassifications from nonaccretable difference		-			1,494
Ending balance	$	2,123		$	2,123

The following table presents the changes in the accretable yield relating to the acquired credit-impaired loans for the three and nine months ended March 31, 2015 and March 31, 2014.

	Three Months Ended March 31, 2015			Nine Months Ended March 31, 2015
	(In Thousands)			(In Thousands)
Beginning balance	$	1,684		$	1,891
Accretion to interest income		(379	)		(586	)
Disposals		-			-
Reclassifications from nonaccretable difference		-			-
Ending balance	$	1,305		$	1,305

	Three Months Ended March 31, 2014			Nine Months Ended March 31, 2014
	(In Thousands)			(In Thousands)
Beginning balance	$	2,123		$	741
Accretion to interest income		(60	)		(172	)
Disposals		-			-
Reclassifications from nonaccretable difference		-			1,494
Ending balance	$	2,063		$	2,063

Classification of Assets. In compliance with regulatory guidelines, the Company’s loan review system includes an evaluation process through which certain loans exhibiting adverse credit quality characteristics are classified “Special Mention”, “Substandard”, “Doubtful” or “Loss”.

An asset is classified as “Substandard” if it is inadequately protected by the paying capacity and net worth of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Assets classified as “Doubtful” have all of the weaknesses inherent in those classified as “Substandard”, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values. Assets, or portions thereof, classified as “Loss” are considered uncollectible or of so little value that their continuance as assets is not warranted.

Management evaluates loans classified as substandard or doubtful for impairment in accordance with applicable accounting requirements. As discussed in greater detail below, a valuation allowance is established through the provision for loan losses for any impairment identified through such evaluations.

To the extent that impairment identified on a loan is classified as “Loss”, that portion of the loan is charged off against the allowance for loan losses. The classification of loan impairment as “Loss” is based upon a confirmed expectation for loss. For loans primarily secured by real estate, the expectation for loss is generally confirmed when: (a) impairment is identified on a loan individually evaluated in the manner described below, and (b) the loan is presumed to be collateral-dependent such that the source of loan repayment is expected to arise solely from sale of the collateral securing the applicable loan. Impairment identified on non-collateral-dependent loans may or may not be eligible for a “Loss” classification depending upon the other salient facts and circumstances that affect the manner and likelihood of loan repayment. However, loan impairment that is classified as “Loss” is charged off against the allowance for loan losses concurrent with that classification.

The timeframe between when loan impairment is first identified by the Company and when such impairment may ultimately be charged off varies by loan type. For example, unsecured consumer and commercial loans are generally classified as “Loss” at 120 days past due, resulting in their outstanding balances being charged off at that time. For the Company’s secured loans, the condition of collateral dependency generally serves as the basis upon which a “Loss” classification is ascribed to a loan’s impairment thereby confirming an expected loss and triggering charge off of that impairment. While the facts and circumstances that effect the manner and likelihood of repayment vary from loan to loan, the Company generally considers the referral of a loan to foreclosure, coupled with the absence of other viable sources of loan repayment, to be demonstrable evidence of collateral dependency. Depending upon the nature of the collections process applicable to a particular loan, an early determination of collateral dependency could result in a nearly concurrent charge off of a newly identified impairment. By contrast, a presumption of collateral dependency may only be determined after the completion of lengthy loan collection and/or workout efforts, including bankruptcy proceedings, which may extend several months or more after a loan’s impairment is first identified.

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confirming an expected loss and triggering charge off of that impairment. While the facts and circumstances that effect the manner and likelihood of repayment vary from loan to loan, the Company generally considers the referral of a loan to foreclosure, coupled with the absence of other viable sources of loan repayment, to be demonstrable evidence of collateral dependency. Depending upon the nature of the collections process applicable to a particular loan, an early determination of collateral dependency could result in a nearly concurrent charge off of a newly identified impairment. By contrast, a presumption of collateral dependency may only be determined after the completion of lengthy loan collection and/or workout efforts, including bankruptcy proceedings, which may extend several months or more after a loan’s impairment is first identified.

In a limited number of cases, the entire net carrying value of a loan may be determined to be impaired based upon a collateral-dependent impairment analysis. However, the borrower’s adherence to contractual repayment terms precludes the recognition of a “Loss” classification and charge off. In these limited cases, a valuation allowance equal to 100% of the impaired loan’s carrying value may be maintained against the net carrying value of the asset.

Assets which do not currently expose the Company to a sufficient degree of risk to warrant an adverse classification but have some credit deficiencies or other potential weaknesses are designated as “Special Mention” by management. Adversely classified assets, together with those rated as “Special Mention”, are generally referred to as “Classified Assets”. Non-classified assets are internally rated within one of four “Pass” categories or as “Watch” with the latter denoting a potential deficiency or concern that warrants increased oversight or tracking by management until remediated.

Management performs a classification of assets review, including the regulatory classification of assets, generally on a monthly basis. The results of the classification of assets review are validated by the Company’s third party loan review firm during their quarterly independent review. In the event of a difference in rating or classification between those assigned by the internal and external resources, the Company will generally utilize the more critical or conservative rating or classification. Final loan ratings and regulatory classifications are presented monthly to the Board of Directors and are reviewed by regulators during the examination process.

Allowance for Loan Losses. The allowance for loan losses is a valuation account that reflects the Company’s estimation of the losses in its loan portfolio to the extent they are both probable and reasonable to estimate. The balance of the allowance is generally maintained through provisions for loan losses that are charged to income in the period that estimated losses on loans are identified by the Company’s loan review system. The Company charges confirmed losses on loans against the allowance as such losses are identified. Recoveries on loans previously charged-off are added back to the allowance.

The Company’s allowance for loan loss calculation methodology utilizes a “two-tier” loss measurement process that is generally performed monthly. Based upon the results of the classification of assets and credit file review processes described earlier, the Company first identifies the loans that must be reviewed individually for impairment. Factors considered in identifying individual loans to be reviewed include, but may not be limited to, loan type, classification status, contractual payment status, performance/accrual status and impaired status.

The loans considered by the Company to be eligible for individual impairment review include its commercial mortgage loans, comprising multi-family and nonresidential real estate loans, construction loans, commercial business loans as well as its one-to-four family mortgage loans, home equity loans and home equity lines of credit.

A reviewed loan is deemed to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Once a loan is determined to be impaired, management performs an analysis to determine the amount of impairment associated with that loan.

In measuring the impairment associated with collateral-dependent loans, the fair value of the collateral securing the loan is generally used as a measurement proxy for that of the impaired loan itself as a practical expedient. In the case of real estate collateral, such values are generally determined based upon a discounted market value obtained through an automated valuation module or prepared by a qualified, independent real estate appraiser. The value of non-real estate collateral is similarly determined based upon an independent assessment of fair market value by a qualified resource.

The Company generally obtains independent appraisals on properties securing mortgage loans when such loans are initially placed on nonperforming or impaired status with such values updated approximately every six to twelve months thereafter throughout the collections, bankruptcy and/or foreclosure processes. Appraised values are typically updated at the point of foreclosure, where applicable, and approximately every six to twelve months thereafter while the repossessed property is held as real estate owned.

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As supported by accounting and regulatory guidance, the Company reduces the fair value of the collateral by estimated selling costs, such as real estate brokerage commissions, to measure impairment when such costs are expected to reduce the cash flows available to repay the loan.

The Company establishes valuation allowances in the fiscal period during which the loan impairments are identified. The results of management’s individual loan impairment evaluations are validated by the Company’s third party loan review firm during their quarterly independent review. Such valuation allowances are adjusted in subsequent fiscal periods, where appropriate, to reflect any changes in carrying value or fair value identified during subsequent impairment evaluations which are generally updated monthly by management.

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The second tier of the loss measurement process involves estimating the probable and estimable losses which addresses loans not otherwise reviewed individually for impairment as well as those individually reviewed loans that are determined to be non-impaired. Such loans include groups of smaller-balance homogeneous loans that may generally be excluded from individual impairment analysis, and therefore collectively evaluated for impairment, as well as the non-impaired loans within categories that are otherwise eligible for individual impairment review.

Valuation allowances established through the second tier of the loss measurement process utilize historical and environmental loss factors to collectively estimate the level of probable losses within defined segments of the Company’s loan portfolio. These segments aggregate homogeneous subsets of loans with similar risk characteristics based upon loan type. For allowance for loan loss calculation and reporting purposes, the Company currently stratifies its loan portfolio into seven primary segments: residential mortgage loans, commercial mortgage loans, construction loans, commercial business loans, home equity loans, home equity lines of credit and other consumer loans.

The risks presented by residential mortgage loans are primarily related to adverse changes in the borrower’s financial condition that threaten repayment of the loan in accordance with its contractual terms. Such risk to repayment can arise from job loss, divorce, illness and the personal bankruptcy of the borrower. For collateral dependent residential mortgage loans, additional risk of loss is presented by potential declines in the fair value of the collateral securing the loan.

Home equity loans and home equity lines of credit generally share the same risks as those applicable to residential mortgage loans. However, to the extent that such loans represent junior liens, they are comparatively more susceptible to such risks given their subordinate position behind senior liens.

In addition to sharing similar risks as those presented by residential mortgage loans, risks relating to commercial mortgage also arise from comparatively larger loan balances to single borrowers or groups of related borrowers. Moreover, the repayment of such loans is typically dependent on the successful operation of an underlying real estate project and may be further threatened by adverse changes to demand and supply of commercial real estate as well as changes generally impacting overall business or economic conditions.

The risks presented by construction loans are generally considered to be greater than those attributable to residential and commercial mortgage loans. Risks from construction lending arise, in part, from the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost, including interest, of the project. The nature of these loans is such that they are comparatively more difficult to evaluate and monitor than permanent mortgage loans.

Commercial business loans are also considered to present a comparatively greater risk of loss due to the concentration of principal in a limited number of loans and/or borrowers and the effects of general economic conditions on the business. Commercial business loans may be secured by varying forms of collateral including, but not limited to, business equipment, receivables, inventory and other business assets which may not provide an adequate source of repayment of the outstanding loan balance in the event of borrower default. Moreover, the repayment of commercial business loans is primarily dependent on the successful operation of the underlying business which may be threatened by adverse changes to the demand for the business’ products and/or services as well as the overall efficiency and effectiveness of the business’ operations and infrastructure.

Finally, our unsecured consumer loans generally have shorter terms and higher interest rates than other forms of lending but generally involve more credit risk due to the lack of collateral to secure the loan in the event of borrower default. Consumer loan repayment is dependent on the borrower’s continuing financial stability, and therefore is more likely to be adversely affected by job loss, divorce, illness and personal bankruptcy. By contrast, our consumer loans also include account loans that are fully secured by the borrower’s deposit accounts and generally present nominal risk to the Bank.

Each primary segment is further stratified to distinguish between loans originated and purchased through third parties from loans acquired through business combinations. Commercial business loans include secured and unsecured loans as well as loans originated through SBA programs. Additional criteria may be used to further group loans with common risk characteristics. For example, such criteria may distinguish between loans secured by different collateral types or separately identify loans supported by government guarantees such as those issued by the SBA.

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~~experience~~Each primary segment is further stratified to distinguish between loans originated and purchased through third parties from loans acquired through business combinations. ~~The~~Commercial ~~outstanding~~business ~~principal~~loans ~~balance~~include ofsecured ~~the~~and ~~non-impaired~~unsecured ~~portion~~loans ofas ~~each~~well ~~loan~~as ~~segment~~loans isoriginated ~~multiplied~~through bySBA ~~the~~programs. ~~applicable~~Additional ~~historical~~criteria ~~loss~~may ~~factor~~be used to ~~estimate~~further ~~the~~group ~~level~~loans ofwith ~~probable~~common ~~losses~~risk ~~based~~characteristics. ~~upon~~For ~~the~~example, ~~Company’s~~such ~~historical~~criteria ~~loss~~may ~~experience~~distinguish between loans secured by different collateral types or separately identify loans supported by government guarantees such as those issued by the SBA.

In regard to historical loss factors, the Company’s allowance for loan loss calculation calls for an analysis of historical charge-offs and recoveries for each of the defined segments within the loan portfolio. The Company utilizes a two-year moving average of annual net charge-off rates (charge-offs net of recoveries) by loan segment, where available, to calculate its actual, historical loss experience. The outstanding principal balance of the non-impaired portion of each loan segment is multiplied by the applicable historical loss factor to estimate the level of probable losses based upon the Company’s historical loss experience.

As noted, the second tier of the Company’s allowance for loan loss calculation also utilizes environmental loss factors to estimate the probable losses within the loan portfolio. Environmental loss factors are based upon specific qualitative criteria representing key sources of risk within the loan portfolio. Such risk criteria includes the level of and trends in nonperforming loans; the effects of changes in credit policy; the experience, ability and depth of the lending function’s management and staff; national and local economic trends and conditions; credit risk concentrations and changes in local and regional real estate values. During fiscal 2014, the environmental factors utilized by the Company in its allowance for loan loss calculation were expanded to include changes in the nature, volume and terms of loans, changes in the quality of loan review systems and resources and the effects of regulatory, legal and other external factors.

For each category of the loan portfolio, a level of risk, developed from a number of internal and external resources, is assigned to each of the qualitative criteria utilizing a scale ranging from zero (negligible risk) to 15 (high risk), with higher values potentially ascribed to exceptional levels of risk that exceed the standard range, as appropriate. The sum of the risk values, expressed as a whole number, is multiplied by .01% to arrive at an overall environmental loss factor, expressed in basis points, for each loan category.

The Company incorporates its credit-rating classification system into the calculation of environmental loss factors by loan type by including risk-rating classification “weights” in its calculation of those factors. The Company’s risk-rating classification system ascribes a numerical rating of “1” through “9” to each loan within the portfolio. The ratings “5” through “9” represent the numerical equivalents of the traditional loan classifications “Watch”, “Special Mention”, “Substandard”, “Doubtful” and “Loss”, respectively, while lower ratings, “1” through “4”, represent risk-ratings within the least risky “Pass” category. The environmental loss factor applicable to each non-impaired loan within a category, as described above, is “weighted” by a multiplier based upon the loan’s risk-rating classification. Within any single loan category, a “higher” environmental loss factor is ascribed to those loans with comparatively higher risk-rating classifications resulting in a proportionately greater ALLL requirement attributable to such loans compared to the comparatively lower risk-rated loans within that category.

In evaluating the impact of the level and trends in nonperforming loans on environmental loss factors, the Company first broadly considers the occurrence and overall magnitude of prior losses recognized on such loans over an extended period of time. For this purpose, losses are considered to include both charge offs as well as loan impairments for which valuation allowances have been recognized through provisions to the allowance for loan losses, but have not yet been charged off. To the extent that prior losses have generally been recognized on nonperforming loans within a category, a basis is established to recognize existing losses on loans collectively evaluated for impairment based upon the current levels of nonperforming loans within that category. Conversely, the absence of material prior losses attributable to delinquent or nonperforming loans within a category may significantly diminish, or even preclude, the consideration of the level of nonperforming loans in the calculation of the environmental loss factors attributable to that category of loans.

Once the basis for considering the level of nonperforming loans on environmental loss factors is established, the Company then considers the current dollar amount of nonperforming loans by loan type in relation to the total outstanding balance of loans within the category. A greater portion of nonperforming loans within a category in relation to the total suggests a comparatively greater level of risk and expected loss within that loan category and vice-versa.

In addition to considering the current level of nonperforming loans in relation to the total outstanding balance for each category, the Company also considers the degree to which those levels have changed from period to period. A significant and sustained increase in nonperforming loans over a 12-24 month period suggests a growing level of expected loss within that loan category and vice-versa.

As noted above, the Company considers these factors in a qualitative, rather than quantitative fashion when ascribing the risk value, as described above, to the level and trends of nonperforming loans that is applicable to a particular loan category. As with all ~~environmental loss factors, the risk value assigned ultimately reflects the Company’s best judgment as to the level of expected losses on loans collectively evaluated for impairment.~~

- 29 -

environmental loss factors, the risk value assigned ultimately reflects the Company’s best judgment as to the level of expected losses on loans collectively evaluated for impairment.

The sum of the probable and estimable loan losses calculated through the first and second tiers of the loss measurement processes as described above, represents the total targeted balance for the Company’s allowance for loan losses at the end of a fiscal period. As noted earlier, the Company establishes all additional valuation allowances in the fiscal period during which additional individually identified loan impairments and additional estimated losses on loans collectively evaluated for impairment are identified. The Company adjusts its balance of valuation allowances through the provision for loan losses as required to ensure that the balance of the allowance for loan losses reflects all probable and estimable loans losses at the close of the fiscal period. Notwithstanding calculation methodology and the noted distinction between valuation allowances established on loans collectively versus individually evaluated for impairment, the Company’s entire allowance for loan losses is available to cover all charge-offs that arise from the loan portfolio.

Although the Company’s allowance for loans losses is established in accordance with management’s best estimate, actual losses are dependent upon future events and, as such, further additions to the level of loan loss allowances may be necessary.

The following tables present the balance of the allowance for loan losses at ~~December~~ March 31, ~~2014~~2015 and June 30, 2014 based upon the calculation methodology described above. The tables identify the valuation allowances attributable to specifically identified impairments on individually evaluated loans, including those acquired with deteriorated credit quality, as well as valuation allowances for impairments on loans evaluated collectively. The tables include the underlying balance of loans receivable applicable to each category as of those dates as well as the activity in the allowance for loan losses for the three and ~~six~~nine months ended ~~December~~ March 31, ~~2014~~2015 and ~~2013~~2014. Unless otherwise noted, the balance of loans reported in the tables below excludes yield adjustments and the allowance for loan loss.

- 30 -

Allowance for Loan Losses and Loans Receivable
at December 31, 2014
at March 31, 2015
	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Balance of allowance for loan losses:
Originated and purchased loans:
Loans individually evaluated for impairment	$	~~151~~130	$	~~388~~381	$	-	$	-43	$	1914	$	-	$	-	$	~~558~~568
Loans collectively evaluated for impairment		2,~~137~~018		78,~~528~~978		5527		~~556~~933		~~220~~203		34		2119		1012,~~551~~212
Allowance for loan losses on originated and purchased loans		2,~~288~~148		79,~~916~~359		5527		~~556~~976		~~239~~217		34		2119		1112,~~109~~780
Loans acquired at fair value:
Loans acquired with deteriorated credit quality		-		-		-		9188		-		-		-		9188
Other acquired loans individually evaluated for impairment		-		64138		-		~~125~~79		18-		-		-		~~207~~217
Acquired loans collectively evaluated for impairment		2213		~~412~~338		4		~~635~~541		5764		4641		1		1,~~177~~002
Allowance for loan losses on loans acquired at fair value		2213		476		4		~~851~~708		7564		4641		1		1,~~475~~307
Total allowance for loan losses	$	2,~~310~~161	$	89,~~392~~835	$	5931	$	1,~~407~~684	$	~~314~~281	$	8075	$	2220	$	1214,~~584~~087

- 31 -

Allowance for Loan Losses and Loans Receivable
Period Ended December 31, 2014
Period Ended March 31, 2015
	Residential Mortgage			Commercial Mortgage			Construction			Commercial Business			Home Equity Loans			Home Equity Lines of Credit			Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the three months ended December 31, 2014:
Changes in the allowance for loan losses for the three months ended March 31, 2015:
At September 30, 2014:
At December 31, 2014:
Allocated	$	2,~~575~~310		$	78,~~942~~392		$	5859		$	1,~~362~~407		$	~~362~~314		$	8480		$	2322		$	12,~~406~~584
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses		2,~~575~~310			78,~~942~~392			5859			1,~~362~~407			~~362~~314			8480			2322			12,~~406~~584
Total charge offs		(~~1,134~~183	)		~~(266~~-	)		-			(~~259~~38	)		(3938	)		-			-(1	)		(~~1,698~~260	)
Total recoveries		~~141~~-			-			-			32			-			-			-			~~144~~2
Total allocated provisions		~~728~~34			~~716~~1,443			1(28	)		~~301~~313			(95	)		(45	)		(1	)		1,~~732~~761
Total unallocated provisions		-			-			-			-			-			-			-			-
At December 31, 2014:
At March 31, 2015:
Allocated		2,~~310~~161			89,~~392~~835			5931			1,~~407~~684			~~314~~281			8075			2220			1214,~~584~~087
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses	$	2,~~310~~161		$	89,~~392~~835		$	5931		$	1,~~407~~684		$	~~314~~281		$	8075		$	2220		$	1214,~~584~~087

- 32 -

Allowance for Loan Losses and Loans Receivable
Period Ended December 31, 2014 (continued)
Period Ended March 31, 2015 (continued)
	Residential Mortgage			Commercial Mortgage			Construction			Commercial Business			Home Equity Loans			Home Equity Lines of Credit			Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the six months ended December 31, 2014:
Changes in the allowance for loan losses for the nine months ended March 31, 2015:
At June 30, 2014:
Allocated	$	2,729		$	7,737		$	67		$	1,284		$	460		$	88		$	22		$	12,387
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses		2,729			7,737			67			1,284			460			88			22			12,387
Total charge offs		(1,~~437~~620	)		(612	)		-			(~~451~~489	)		(3977	)		-			-(1	)		(2,~~539~~799	)
Total recoveries		141			-			-			57			-			-			-			~~146~~148
Total allocated provisions		~~877~~911			12,~~267~~710			(836	)		~~569~~882			(~~107~~102	)		(813	)		-(1	)		24,~~590~~351
Total unallocated provisions		-			-			-			-			-			-			-			-
At December 31, 2014:
At March 31, 2015:
Allocated		2,~~310~~161			89,~~392~~835			5931			1,~~407~~684			~~314~~281			8075			2220			1214,~~584~~087
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses	$	2,~~310~~161		$	89,~~392~~835		$	5931		$	1,~~407~~684		$	~~314~~281		$	8075		$	2220		$	1214,~~584~~087

- 33 -

Allowance for Loan Losses and Loans Receivable
Period Ended December 31, 2013
Period Ended March 31, 2014
	Residential Mortgage			Commercial Mortgage			Construction			Commercial Business			Home Equity Loans			Home Equity Lines of Credit			Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the three months ended December 31, 2013:
Changes in the allowance for loan losses for the three months ended March 31, 2014:
At September 30, 2013:
At December 31, 2013:
Allocated	$	3,~~547~~274		$	6,~~220~~574		$	~~103~~71		$	~~980~~1,042		$	~~469~~435		$	7674		$	1123		$	11,~~406~~493
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses		3,~~547~~274			6,~~220~~574			~~103~~71			~~980~~1,042			~~469~~435			7674			1123			11,~~406~~493
Total charge offs		(~~278~~296	)		-			-			~~(672~~-	)		(1-	)		-			~~(28~~-	)		(~~979~~296	)
Total recoveries		7			~~497~~-			-			32			-2			-			-			~~507~~11
Total allocated provisions		(28	)		~~(143~~681	)		(3211	)		~~731~~176			~~(33~~27	)		(21	)		40(2	)		~~559~~880
Total unallocated provisions		-			-			-			-			-			-			-			-
At December 31, 2013:
At March 31, 2014:
Allocated		32,~~274~~993			67,~~574~~255			7160			1,~~042~~220			~~435~~464			7475			2321			1112,~~493~~088
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses	$	32,~~274~~993		$	67,~~574~~255		$	7160		$	1,~~042~~220		$	~~435~~464		$	7475		$	2321		$	1112,~~493~~088

- 34 -

Allowance for Loan Losses and Loans Receivable
Period Ended December 31, 2013 (continued)
Period Ended March 31, 2014 (continued)
	Residential Mortgage			Commercial Mortgage			Construction			Commercial Business			Home Equity Loans			Home Equity Lines of Credit			Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the six months ended December 31, 2013:
Changes in the allowance for loan losses for the nine months ended March 31, 2014:
At June 30, 2013:
Allocated	$	3,660		$	5,359		$	81		$	1,218		$	490		$	76		$	12		$	10,896
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses		3,660			5,359			81			1,218			490			76			12			10,896
Total charge offs		(~~508~~804	)		(34	)		-			(1,080	)		(34	)		-			(29	)		(1,~~685~~981	)
Total recoveries		2532			525			-			57			-2			-			-			~~555~~566
Total allocated provisions		97105			~~724~~1,405			(1021	)		~~899~~1,075			~~(21~~6	)		(21	)		4038			12,~~727~~607
Total unallocated provisions		-			-			-			-			-			-			-			-
At December 31, 2013:
At March 31, 2014:
Allocated		32,~~274~~993			67,~~574~~255			7160			1,~~042~~220			~~435~~464			7475			2321			1112,~~493~~088
Unallocated		-			-			-			-			-			-			-			-
Total allowance for loan losses	$	32,~~274~~993		$	67,~~574~~255		$	7160		$	1,~~042~~220		$	~~435~~464		$	7475		$	2321		$	1112,~~493~~088

- 35 -

Allowance for Loan Losses and Loans Receivable

at December 31, 2014

at March 31, 2015

Residential Mortgage

Commercial Mortgage

Construction

Commercial Business

Home Equity Loans

Home Equity Lines of Credit

Other Consumer

Total

(In Thousands)

Balance of loans receivable:

Originated and purchased loans:

Loans individually evaluated for impairment

11,~~693~~021

34,~~546~~089

1,~~453~~881

1,~~095~~038

1718,~~804~~046

Loans collectively evaluated for impairment

~~493~~482,~~311~~648

~~947~~1,~~350~~136,177

52,~~700~~907

4366,~~148~~905

63,~~901~~420

10,~~771~~860

4,~~758~~120

1,~~568~~767,~~939~~037

Total originated and purchased loans

~~505~~493,~~004~~669

~~950~~1,~~896~~140,266

52,~~700~~907

4468,~~601~~786

64,~~996~~458

10,~~788~~877

4,~~758~~120

1,~~586~~785,~~743~~083

Loans acquired at fair value:

Loans acquired with deteriorated credit quality

~~730~~727

~~1,039~~322

87,~~201~~973

9,~~970~~022

Other acquired loans individually evaluated for impairment

~~259~~330

14,~~976~~239

2,~~656~~329

21,~~194~~924

~~596~~525

~~965~~948

810,~~646~~295

Acquired loans collectively evaluated for impairment

6463,~~607~~062

~~103~~89,~~377~~034

~~352~~349

2319,~~452~~103

65,~~603~~994

1110,~~658~~403

~~102~~91

~~210~~188,~~151~~036

Total loans acquired at fair value

6564,~~596~~119

~~106~~93,~~392~~595

32,~~008~~678

3329,~~847~~000

76,~~199~~519

1211,~~623~~351

~~102~~91

~~228~~207,~~767~~353

Total loans

~~570~~557,~~600~~788

1,~~057~~233,~~288~~861

85,~~708~~585

7897,~~448~~786

7270,~~195~~977

2322,~~411~~228

4,~~860~~211

1,~~815~~992,~~510~~436

Unamortized yield adjustments

(~~1,439~~65

)

Loans receivable, including unamortized yield adjustments

1,~~814~~992,~~071~~371

- 36 -

Allowance for Loan Losses and Loans Receivable
at June 30, 2014
	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Balance of allowance for loan losses:

Originated and purchased loans:
Loans individually evaluated for impairment	$	528	$	404	$	-	$	-	$	75	$	-	$	-	$	1,007
Loans collectively evaluated for impairment		2,172		6,760		29		352		272		35		21		9,641
Allowance for loan losses on originated and purchased loans		2,700		7,164		29		352		347		35		21		10,648

Loans acquired at fair value:
Loans acquired with deteriorated credit quality		-		-		-		98		-		-		-		98
Other acquired loans individually evaluated for impairment		-		165		-		346		57		-		-		568
Acquired loans collectively evaluated for impairment		29		408		38		488		56		53		1		1,073
Allowance for loan losses on loans acquired at fair value		29		573		38		932		113		53		1		1,739

Total allowance for loan losses	$	2,729	$	7,737	$	67	$	1,284	$	460	$	88	$	22	$	12,387

- 37 -

Allowance for Loan Losses and Loans Receivable
at June 30, 2014 (continued)
	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer	Total
	(In Thousands)
Balance of loans receivable:

Originated and purchased loans:
Loans individually evaluated for impairment	$	11,923	$	5,403	$	-	$	1,263	$	1,010	$	17	$

Filing Compare · Kearny Financial Corp.