•

Total loans, excluding loans held for sale and the allowance for loan losses, increased by $92.9 million to $4.75 billion, or 70.9% of total assets, at December 31, 2018 from $4.66 billion, or 70.0% of total assets, at September 30, 2018.  Commercial mortgage loans comprised $62.9 million of this increase whose aggregate balances represented 68.9% of total loans at December 31, 2018.

•

Total deposits increased by $218.6 million to $4.17 billion at December 31, 2018, from $3.95 billion at September 30, 2018.  The net increase in deposits reflected increases of $85.7 million and $132.9 million in retail and wholesale deposits, respectively.

•

Total borrowings decreased by $108.9 million to $1.31 billion at December 31, 2018, from $1.42 billion at September 30, 2018.  The net decrease in borrowings reflected the maturity of $69.5 million in long-term Federal Home Loan Bank (“FHLB”) advances, a $60.0 million decrease in the balance of overnight borrowings and a $6.9 million decrease in depositor sweep account balances.  These decreases were partially offset by the addition of a $27.0 million FHLB Community Investment Program (“CIP”) long-term advance during the period.

•

Interest income totaled $60.0 million for the quarter ended December 31, 2018, an increase of $1.8 million or 3.1% from the quarter ended September 30, 2018.  Despite this achievement, interest expense increased by $2.6 million between the same comparative periods resulting in an $831,000 decrease in net interest income to $39.3 million for the quarter ended December 31, 2018, from $40.2 million for the quarter ended September 30, 2018.  

•

The Company’s net interest margin decreased to 2.56% for the quarter ended December 31, 2018 from 2.68% for the quarter ended September 30, 2018, primarily driven by a 15 basis point increase in the cost of interest-bearing liabilities that was partially offset by a two basis point increase in the yield on earning assets.

•

Fees and service charges increased by $85,000 to $1.3 million for the quarter ended December 31, 2018 compared to $1.2 million for the quarter ended September 30, 2018.

•

Aggregate loan sale gains totaled $101,000 for the quarter ended December 31, 2018 compared to $132,000 for the quarter ended September 30, 2018.  The modest decrease in gains on sale of loans reflected a seasonal decline in the volume of loans sold between comparative periods.

•

Non-interest expense totaled $27.3 million for the quarter ended December 31, 2018, an increase of $813,000 from the quarter ended September 30, 2018.  This increase was largely attributable to $659,000 of non-recurring expenses associated with the October 2018 conversion and integration of Clifton Savings Bank’s core processing system arising from the Company’s prior acquisition of Clifton Bancorp during fiscal 2018 and an increase of $210,000 in advertising and marketing expense.

•

The Company’s ratio of non-interest expense to average assets totaled 1.62% for the quarter ended December 31, 2018 compared to 1.61% for the prior quarter ended September 30, 2018.  For those same comparative periods, the Company’s efficiency ratios were 63.9% and 61.0%, respectively.  

•

Income tax expense totaled $3.6 million for the quarter ended December 31, 2018 as compared to $3.7 million for the quarter ended September 30, 2018 resulting in an effective tax rate of 25.3% and 24.7%, respectively.

•

The Company’s return on average assets for the quarter ended December 31, 2018 totaled 0.64% compared to 0.68% for the quarter ended September 30, 2018.  

•

The Company’s return on average equity remained stable, totaling 3.55% for the quarters ended December 31, 2018 and September 30, 2018.  

•

Asset quality remained strong throughout the quarter ended December 31, 2018.  The outstanding balance of nonperforming loans totaled $20.8 million, or 0.44% of total loans, at December 31, 2018 as compared to $20.5 million, or 0.44% of total loans, at September 30, 2018.  

•

The allowance for loan losses increased to $33.5 million at December 31, 2018 from $32.7 million at September 30, 2018, resulting in a total loan coverage ratio, representing the balance of the allowance for loan losses as a percentage of total loans, excluding loans held for sale, of 0.70% and 0.69%, respectively.  The total loan coverage ratio for both periods reflects the impact of purchase accounting which generally precludes acquired loan balances from being considered in the balance of the allowance for loan losses at the time of their acquisition.

•

The Company recognized net charge offs totaling approximately $176,000 for the quarter ended December 31, 2018, reflecting an annualized net charge off rate of 0.01% on the average balance of total loans for the period. By comparison, the Company’s net charge offs totaled approximately $234,000 for the quarter ended September 30, 2018, reflecting an annualized net charge off rate of 0.02%.

•

The Company’s provision for loan losses decreased by $1.1 million to $971,000 for the quarter ended December 31, 2018 compared to $2.1 million for the quarter ended September 30, 2018.  The decrease in provision expense was largely attributable to the effects of comparatively lower growth during the quarter ended December 31, 2018 in the performing portion of the loan portfolio that is collectively evaluated for impairment.

•

The Company increased its regular quarterly cash dividend by $0.01 per share, from $0.04 per share during the quarter ended September 30, 2018, to $0.05 per share during the quarter ended December 31, 2018.  In addition to the payment of its regular dividend, the Company paid a special dividend of $0.16 during the quarter ended September 30, 2018. The Company continually evaluates its dividend policies and practices in relation to its overall capital management and shareholder value objectives.

•

During the quarter ended December 31, 2018, the Company repurchased 3,827,925 shares of its common stock at a total cost of $50.2 million and at an average cost of $13.11 per share.  Such shares were repurchased in conjunction with the Company’s third share repurchase program announced in April 2018, through which it authorized the repurchase of 10,238,557 shares, or 10% of its outstanding shares of common stock.  Through December 31, 2018, the Company has repurchased a total of 8,480,985 shares, or 82.8% of the shares authorized for repurchase under this third program, at a total cost of $115.5 million and at an average cost of $13.62 per share.

•

The Company’s and Bank’s regulatory capital ratios at December 31, 2018 were well in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.  

Linked-Quarter Comparative Financial Analysis

Summary Balance Sheet

At

Variance

(Dollars and Shares in Thousands,

December 31,

September 30,

Variance

or Change

Except per Share Data, Unaudited)

2018

2018

or Change

Pct.

Assets

Cash and cash equivalents

$

51,483

$

44,486

$

6,997

15.7

%

Securities available for sale

666,602

706,240

(39,638

)

-5.6

%

Securities held to maturity

598,318

602,838

(4,520

)

-0.7

%

Loans held-for-sale

1,001

1,503

(502

)

-33.4

%

Loans receivable, including yield adjustments

4,753,392

4,660,507

92,885

2.0

%

Less allowance for loan losses

(33,526

)

(32,731

)

(795

)

2.4

%

Net loans receivable

4,719,866

4,627,776

92,090

2.0

%

Premises and equipment

58,414

57,635

779

1.4

%

Federal Home Loan Bank stock

64,514

66,428

(1,914

)

-2.9

%

Accrued interest receivable

19,435

19,455

(20

)

-0.1

%

Goodwill

210,895

210,895

-

0.0

%

Core deposit intangible

5,743

6,018

(275

)

-4.6

%

Bank owned life insurance

253,009

251,410

1,599

0.6

%

Deferred income taxes, net

24,692

22,136

2,556

11.5

%

Other real estate owned

508

674

(166

)

-24.6

%

Other assets

27,960

38,717

(10,757

)

-27.8

%

Total assets

$

6,702,440

$

6,656,211

$

46,229

0.7

%

Liabilities

Deposits

$

4,173,434

$

3,954,821

$

218,613

5.5

%

Borrowings

1,310,547

1,419,424

(108,877

)

-7.7

%

Advance payments by borrowers for taxes

17,201

10,687

6,514

61.0

%

Other liabilities

17,997

35,198

(17,201

)

-48.9

%

Total liabilities

5,519,179

5,420,130

99,049

1.8

%

Stockholders' Equity

Common stock

938

978

(40

)

-4.1

%

Paid-in capital

848,145

897,551

(49,406

)

-5.5

%

Retained earnings

356,993

350,838

6,155

1.8

%

Unearned ESOP shares

(31,617

)

(32,104

)

487

-1.5

%

Accumulated other comprehensive income, net

8,802

18,818

(10,016

)

-53.2

%

Total stockholders' equity

1,183,261

1,236,081

(52,820

)

-4.3

%

Total liabilities and stockholders' equity

$

6,702,440

$

6,656,211

$

46,229

0.7

%

Consolidated capital ratios

Equity to assets

17.65

%

18.57

%

-0.92

%

Tangible equity to tangible assets

14.90

%

15.83

%

-0.93

%

Share data

Outstanding shares

93,772

97,754

(3,982

)

-4.1

%

Equity per share

$

12.62

$

12.64

$

(0.02

)

-0.2

%

Tangible equity per share ⁽¹⁾

$

10.31

$

10.43

$

(0.12

)

-1.2

%

(1)

Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

Summary Income Statement

For the three months ended

Variance

(Dollars and Shares in Thousands,

December 31,

September 30,

Variance

or Change

Except per Share Data, Unaudited)

2018

2018

or Change

Pct.

Interest income

Loans

$

49,015

$

47,437

$

1,578

3.3

%

Taxable investment securities

9,051

8,879

172

1.9

%

Tax-exempt investment securities

713

716

(3

)

-0.4

%

Other interest-earning assets

1,243

1,174

69

5.9

%

Total Interest Income

60,022

58,206

1,816

3.1

%

Interest expense

Deposits

12,727

10,539

2,188

20.8

%

Borrowings

7,946

7,487

459

6.1

%

Total interest expense

20,673

18,026

2,647

14.7

%

Net interest income

39,349

40,180

(831

)

-2.1

%

Provision for loan losses

971

2,100

(1,129

)

-53.8

%

Net interest income after provision for

  loan losses

38,378

38,080

298

0.8

%

Non-interest income

Fees and service charges

1,258

1,173

85

7.2

%

Gain on sale of loans

101

132

(31

)

-23.5

%

Gain (loss) on sale of other real estate owned

36

(50

)

86

-172.0

%

Income from bank owned life insurance

1,599

1,594

5

0.3

%

Electronic banking fees and charges

277

250

27

10.8

%

Miscellaneous

38

83

(45

)

-54.2

%

Total non-interest income

3,309

3,182

127

4.0

%

Non-interest expense

Salaries and employee benefits

15,699

15,642

57

0.4

%

Net occupancy expense of premises

2,761

2,736

25

0.9

%

Equipment and systems

3,377

2,926

451

15.4

%

Advertising and marketing

787

577

210

36.4

%

Federal deposit insurance premium

421

465

(44

)

-9.5

%

Directors' compensation

746

758

(12

)

-1.6

%

Miscellaneous

3,479

3,353

126

3.8

%

Total non-interest expense

27,270

26,457

813

3.1

%

Income before income taxes

14,417

14,805

(388

)

-2.6

%

Income taxes

3,649

3,659

(10

)

-0.3

%

Net income

$

10,768

$

11,146

$

(378

)

-3.4

%

Net income per common share (EPS)

Basic

$

0.12

$

0.12

$

-

Diluted

$

0.12

$

0.12

$

-

Dividends declared ⁽¹⁾

Cash dividends declared per common share

$

0.05

$

0.20

$

(0.15

)

Cash dividends declared

$

4,082

$

19,404

$

(15,322

)

Dividend payout ratio

37.9

%

174.1

%

-136.2

%

Weighted average number of  common

shares outstanding

Basic

92,434

95,127

(2,693

)

Diluted

92,480

95,181

(2,701

)

(1)

Dividends declared during the quarter ended September 30, 2018 include a $0.16 special dividend representing a supplemental distribution of net income to stockholders from the fiscal year ended June 30, 2018.

For the three months ended

Variance

Average Balance Sheet Data

December 31,

September 30,

Variance

or Change

(Dollars in Thousands, Unaudited)

2018

2018

or Change

Pct.

Assets

Interest-earning assets:

Loans receivable, including loans held for sale

$

4,758,587

$

4,562,375

$

196,212

4.3

%

Taxable investment securities

1,158,720

1,180,655

(21,935

)

-1.9

%

Tax-exempt investment securities

135,453

136,056

(603

)

-0.4

%

Other interest-earning assets

87,916

112,629

(24,713

)

-21.9

%

Total interest-earning assets

6,140,676

5,991,715

148,961

2.5

%

Non-interest-earning assets

587,921

596,006

(8,085

)

-1.4

%

Total assets

$

6,728,597

$

6,587,721

$

140,876

2.1

%

Liabilities and Stockholders' Equity

Interest-bearing liabilities:

Deposits:

Interest-bearing demand

$

792,989

$

788,148

$

4,841

0.6

%

Savings and club

743,676

747,743

(4,067

)

-0.5

%

Certificates of deposit

2,214,932

2,046,997

167,935

8.2

%

Total interest-bearing deposits

3,751,597

3,582,888

168,709

4.7

%

Borrowings:

Federal Home Loan Bank advances

1,293,470

1,350,113

(56,643

)

-4.2

%

Other borrowings

119,281

40,981

78,300

191.1

%

Total borrowings

1,412,751

1,391,094

21,657

1.6

%

Total interest-bearing liabilities

5,164,348

4,973,982

190,366

3.8

%

Non-interest-bearing liabilities:

Non-interest-bearing deposits

315,165

314,114

1,051

0.3

%

Other non-interest-bearing liabilities

37,374

43,533

(6,159

)

-14.1

%

Total non-interest-bearing liabilities

352,539

357,647

(5,108

)

-1.4

%

Total liabilities

5,516,887

5,331,629

185,258

3.5

%

Stockholders' equity

1,211,710

1,256,092

(44,382

)

-3.5

%

Total liabilities and stockholders' equity

$

6,728,597

$

6,587,721

$

140,876

2.1

%

Average interest-earning assets to average

interest-bearing liabilities

118.91

%

120.46

%

-1.56

%

-1.3

%

For the three months ended

Performance Ratio Highlights

December 31,

September 30,

Variance

2018

2018

or Change

Average yield on interest-earning assets:

Loans receivable, including loans held for sale

4.12

%

4.16

%

-0.04

%

Taxable investment securities

3.12

%

3.01

%

0.11

%

Tax-exempt investment securities ⁽¹⁾

2.11

%

2.10

%

0.01

%

Other interest-earning assets

5.66

%

4.17

%

1.49

%

Total interest-earning assets

3.91

%

3.89

%

0.02

%

Average cost of interest-bearing liabilities:

Deposits:

Interest-bearing demand

0.97

%

0.86

%

0.11

%

Savings and club

0.49

%

0.41

%

0.08

%

Certificates of deposit

1.79

%

1.58

%

0.21

%

Total interest-bearing deposits

1.36

%

1.18

%

0.18

%

Borrowings:

Federal Home Loan Bank advances

2.27

%

2.19

%

0.08

%

Other borrowings

1.99

%

0.94

%

1.05

%

Total borrowings

2.25

%

2.15

%

0.10

%

Total interest-bearing liabilities

1.60

%

1.45

%

0.15

%

Interest rate spread ⁽²⁾

2.31

%

2.44

%

-0.13

%

Net interest margin ⁽³⁾

2.56

%

2.68

%

-0.12

%

Non-interest income to average assets

(annualized)

0.20

%

0.19

%

0.01

%

Non-interest expense to average assets

(annualized)

1.62

%

1.61

%

0.01

%

Efficiency ratio ⁽⁴⁾

63.93

%

61.01

%

2.92

%

Return on average assets (annualized)

0.64

%

0.68

%

-0.04

%

Return on average equity (annualized)

3.55

%

3.55

%

0.00

%

(1)

The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.

(2)

Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.

(3)

Net interest income divided by average interest-earning assets.

(4)

Non-interest expense divided by the sum of net interest income and non-interest income.

Five-Quarter Financial Trend Analysis

Summary Balance Sheet

At

(Dollars and Shares in Thousands,

December 31,

September 30,

June 30,

March 31,

December 31,

Except Per Share Data, Unaudited)

2018

2018

2018

2018

2017

Assets

Cash and cash equivalents

$

51,483

$

44,486

$

128,864

$

38,283

$

50,685

Securities available for sale

666,602

706,240

725,085

684,771

637,671

Securities held to maturity

598,318

602,838

589,730

459,380

471,452

Loans held-for-sale

1,001

1,503

863

2,377

3,490

Loans receivable, including yield adjustments

4,753,392

4,660,507

4,501,348

3,351,369

3,291,516

Less allowance for loan losses

(33,526

)

(32,731

)

(30,865

)

(30,248

)

(30,066

)

Net loans receivable

4,719,866

4,627,776

4,470,483

3,321,121

3,261,450

Premises and equipment

58,414

57,635

56,240

42,856

41,829

Federal Home Loan Bank stock

64,514

66,428

59,004

39,112

39,113

Accrued interest receivable

19,435

19,455

18,510

13,926

13,524

Goodwill

210,895

210,895

210,895

108,591

108,591

Core deposit intangible

5,743

6,018

6,295

206

233

Bank owned life insurance

253,009

251,410

249,816

184,981

183,754

Deferred income taxes, net

24,692

22,136

23,754

3,898

6,941

Other real estate owned

508

674

725

1,094

1,693

Other assets

27,960

38,717

39,610

33,104

23,421

Total assets

$

6,702,440

$

6,656,211

$

6,579,874

$

4,933,700

$

4,843,847

Liabilities

Deposits

4,173,434

$

3,954,821

$

4,073,604

$

3,067,102

$

3,033,231

Borrowings

1,310,547

1,419,424

1,198,646

852,009

798,864

Advance payments by borrowers for taxes

17,201

10,687

18,088

8,969

8,511

Other liabilities

17,997

35,198

20,788

14,419

13,968

Total liabilities

5,519,179

5,420,130

5,311,126

3,942,499

3,854,574

Stockholders' Equity

Common stock

938

978

996

788

795

Paid-in capital

848,145

897,551

922,711

653,045

662,093

Retained earnings

356,993

350,838

359,096

355,270

353,536

Unearned ESOP shares

(31,617

)

(32,104

)

(32,590

)

(33,076

)

(33,563

)

Accumulated other comprehensive income, net

8,802

18,818

18,535

15,174

6,412

Total stockholders' equity

1,183,261

1,236,081

1,268,748

991,201

989,273

Total liabilities and stockholders' equity

$

6,702,440

$

6,656,211

$

6,579,874

$

4,933,700

$

4,843,847

Consolidated capital ratios

Equity to assets

17.65

%

18.57

%

19.28

%

20.09

%

20.42

%

Tangible equity to tangible assets

14.90

%

15.83

%

16.53

%

18.29

%

18.59

%

Share data

Outstanding shares

93,772

97,754

99,626

78,765

79,527

Equity per share

$

12.62

$

12.64

$

12.74

$

12.58

$

12.44

Tangible equity per share ⁽¹⁾

$

10.31

$

10.43

$

10.56

$

11.20

$

11.07

(1)

Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

At

Supplemental Balance Sheet Highlights

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in Thousands, Unaudited)

2018

2018

2018

2018

2017

Cash and cash equivalents

Cash and due from depository institutions

$

24,361

$

21,973

$

26,199

$

18,229

$

17,899

Interest-bearing deposits in other banks

27,122

22,513

102,665

20,054

32,786

Total cash and cash equivalents

$

51,483

$

44,486

$

128,864

$

38,283

$

50,685

Securities available for sale

Debt securities:

U.S. agency securities

$

3,942

$

4,070

$

4,411

$

4,667

$

4,810

Municipal and state obligations

26,205

25,907

26,088

26,733

27,428

Asset-backed securities

180,828

182,390

182,620

182,066

169,484

Collateralized loan obligations

184,439

215,569

226,066

178,342

133,341

Corporate bonds

144,692

147,811

147,594

142,202

142,397

Trust preferred securities

3,726

3,794

3,783

8,485

8,494

Debt securities available for sale

543,832

579,541

590,562

542,495

485,954

Mortgage-backed securities:

Collateralized mortgage obligations

23,019

23,097

24,292

25,601

27,187

Residential pass-through securities

91,918

95,795

102,359

108,736

116,496

Commercial pass-through securities

7,833

7,807

7,872

7,939

8,034

Mortgage-backed securities

122,770

126,699

134,523

142,276

151,717

Total securities available for sale

$

666,602

$

706,240

$

725,085

$

684,771

$

637,671

Securities held to maturity

Debt securities:

Municipal and state obligations

$

107,826

$

109,061

$

109,483

$

98,011

$

100,671

Subordinated debt

56,255

46,275

46,294

30,000

25,000

Debt securities held to maturity

164,081

155,336

155,777

128,011

125,671

Mortgage-backed securities:

Collateralized mortgage obligations

51,540

54,130

56,886

34,309

35,861

Residential pass-through securities

182,335

190,812

200,622

151,605

160,487

Commercial pass-through securities

200,362

202,560

176,445

145,455

149,433

Mortgage-backed securities

434,237

447,502

433,953

331,369

345,781

Total securities held to maturity

$

598,318

$

602,838

$

589,730

$

459,380

$

471,452

Total securities

$

1,264,920

$

1,309,078

$

1,314,815

$

1,144,151

$

1,109,123

At

Supplemental Balance Sheet Highlights

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in Thousands, Unaudited)

2018

2018

2018

2018

2017

Loan portfolio composition:

Residential first mortgage loans

$

1,334,284

$

1,303,249

$

1,297,453

$

563,807

$

574,322

Home equity loans and lines of credit

96,001

93,473

90,761

79,522

80,961

Residential mortgage loans

1,430,285

1,396,722

1,388,214

643,329

655,283

Multifamily mortgage loans

1,974,409

1,898,831

1,758,584

1,471,573

1,438,386

Nonresidential and mixed use mortgage loans

1,302,583

1,315,279

1,302,961

1,113,385

1,069,254

Commercial mortgage loans

3,276,992

3,214,110

3,061,545

2,584,958

2,507,640

Commercial business loans

70,059

78,317

85,825

88,216

92,442

Construction loans

28,405

26,581

23,271

22,963

22,205

Account loans

3,310

3,133

3,283

3,038

2,996

Other consumer loans

3,524

4,427

5,777

7,186

8,951

Consumer loans

6,834

7,560

9,060

10,224

11,947

Total loans, excluding yield adjustments

4,812,575

4,723,290

4,567,915

3,349,690

3,289,517

Unamortized yield adjustments

(59,183

)

(62,783

)

(66,567

)

1,679

1,999

Loans receivable, including yield adjustments

4,753,392

4,660,507

4,501,348

3,351,369

3,291,516

Less allowance for loan losses

(33,526

)

(32,731

)

(30,865

)

(30,248

)

(30,066

)

Net loans receivable

$

4,719,866