FASB ASC 820, Fair Value Measurement ("ASC 820") defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

The Company has established and documented the process for determining the fair values of its assets and liabilities, where applicable. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, fair value is determined using valuation models or third-party appraisals. The following is a description of the valuation methodologies used to measure and report the fair value of financial assets and liabilities on a recurring or nonrecurring basis.

Securities available for sale are recorded at fair value on a recurring basis. The fair value of debt securities are priced using model pricing based on the securities' relationship to other benchmark quoted prices as provided by an independent third party, and under GAAP are considered a Level 2 input method. Securities that are traded on active exchanges are measured using the closing price in an active market and are considered a Level 1 input method.

The Company offers interest rate swaps to its variable rate borrowers who want to manage their interest rate risk. At the same time, the Company enters into the opposite trade with a counter party to offset its interest rate risk. The Company has also entered into commercial loan hedges, mortgage pool hedges and borrowings hedges using interest rate swaps. The fair value of these interest rate swaps are estimated by a third-party pricing service using a discounted cash flow technique. These are considered a Level 2 input method.


	March 31, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets
Available-for-sale securities:

U.S. government and agency securities	$	—	$	94,772	$	—	$	94,772
Asset-backed securities	—		654,070		—		654,070
Municipal bonds	—		35,297		—		35,297

Corporate debt securities	—		322,403		—		322,403
Mortgage-backed securities
Agency pass-through certificates	—		899,744		—		899,744

Total available-for-sale securities	—		2,006,286		—		2,006,286
Client swap program hedges	—		54,935		—		54,935
Commercial loan fair value hedges	—		1,854		—		1,854
Mortgage loan fair value hedges	—		27,971		—		27,971
Borrowings cash flow hedges	—		151,167		—		151,167
Total financial assets	$	—	$	2,242,213	$	—	$	2,242,213

Financial Liabilities
Client swap program hedges	$	—	$	54,910	$	—	$	54,910



Total financial liabilities	$	—	$	54,910	$	—	$	54,910


	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Financial Assets
Available-for-sale securities:

U.S. government and agency securities	$	—	$	39,354	$	—	$	39,354
Asset-backed securities	—		767,001				767,001
Municipal bonds	—		34,962		—		34,962

Corporate debt securities	—		313,757		—		313,757
Mortgage-backed securities
Agency pass-through certificates	—		895,963		—		895,963

Total available-for-sale securities	—		2,051,037		—		2,051,037
Client swap program hedges	—		67,260		—		67,260
Commercial loan fair value hedges	—		2,517		—		2,517
Mortgage loan fair value hedges	—		36,765		—		36,765
Borrowings cash flow hedges	—		179,945		—		179,945
Total financial assets	$	—	$	2,337,524	$	—	$	2,337,524

Financial Liabilities
Client swap program hedges	$	—	$	67,260	$	—	$	67,260



Total financial liabilities	$	—	$	67,260	$	—	$	67,260

Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as collateral dependent loans and real estate owned ("REO"). REO consists principally of properties acquired through foreclosure. From time to time, and on a nonrecurring basis, adjustments using fair value measurements are recorded to reflect increases or decreases based on the discounted cash flows, the current appraisal or estimated value of the collateral or REO property.

When management determines that the fair value of the collateral or the REO requires additional adjustments, either as a result of an updated appraised value or when there is no observable market price, the Company classifies the collateral dependent loan or real estate owned as Level 3. Level 3 assets recorded at fair value on a nonrecurring basis at March 31, 2023 included loans for which an allowance was established or a partial charge-off was recorded based on the fair value of collateral, as well as real estate owned where the fair value of the property was less than the cost basis.

The following tables present the aggregated balance of assets that were measured at fair value on a nonrecurring basis at March 31, 2023 and March 31, 2022, and the total gains (losses) resulting from those fair value adjustments during the respective periods. The estimated fair value measurements are shown gross of estimated selling costs.


	March 31, 2023								Three Months Ended March 31, 2023		Six Months Ended March 31, 2023
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(In thousands)								(In thousands)
Loans (1)	$	—	$	—	$	3,313	$	3,313	$	(6,120)	$	(6,243)
Real estate owned (2)	—		—		372		372		22		22
Balance at end of period	$	—	$	—	$	3,685	$	3,685	$	(6,098)	$	(6,221)


	March 31, 2022								Three Months Ended March 31, 2022		Six Months Ended March 31, 2022
	Level 1		Level 2		Level 3		Total		Total Gains (Losses)
	(In thousands)								(In thousands)
Loans (1)	$	—	$	—	$	3,816	$	3,816	$	(896)	$	(985)
Real estate owned (2)	—		—		1,571		1,571		32		(472)
Balance at end of period	$	—	$	—	$	5,387	$	5,387	$	(864)	$	(1,457)

FASB ASC 825, Financial Instruments ("ASC 825") requires disclosure of fair value information about financial instruments, whether or not recognized on the statement of financial condition, for which it is practicable to estimate those values. Certain financial instruments and all non-financial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value estimates presented do not reflect the underlying fair value of the Company. Although management is not aware of any factors that would materially affect the estimated fair value amounts presented below, such amounts have not been comprehensively revalued for purposes of these financial statements since the dates shown, and therefore, estimates of fair value subsequent to those dates may differ significantly from the amounts presented below.


		March 31, 2023				September 30, 2022
	Level in Fair Value Hierarchy	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		($ in thousands)
Financial assets
Cash and cash equivalents	1	$	1,118,544	$	1,118,544	$	683,965	$	683,965
Available-for-sale securities

U.S. government and agency securities	2	94,772		94,772		39,354		39,354
Asset-backed securities	2	654,070		654,070		767,001		767,001
Municipal bonds	2	35,297		35,297		34,962		34,962

Corporate debt securities	2	322,403		322,403		313,757		313,757
Mortgage-backed securities
Agency pass-through certificates	2	899,744		899,744		895,963		895,963

Total available-for-sale securities		2,006,286		2,006,286		2,051,037		2,051,037
Held-to-maturity securities





Mortgage-backed securities
Agency pass-through certificates	2	445,222		401,076		463,299		406,860

Total held-to-maturity securities		445,222		401,076		463,299		406,860

Loans receivable	3	17,271,906		16,632,415		16,113,564		15,417,635

FHLB stock	2	147,078		147,078		95,073		95,073
Other assets - client swap program hedges	2	54,935		54,935		67,260		67,260
Other assets - commercial fair value loan hedges	2	1,854		1,854		2,517		2,517
Other assets - mortgage loan fair value hedges	2	27,971		27,971		36,765		36,765
Other assets - borrowings cash flow hedges	2	151,167		151,167		179,945		179,945

Financial liabilities
Time deposits	2	3,980,605		3,902,413		3,338,043		3,249,169
Borrowings	2	3,800,000		3,789,250		2,125,000		1,940,813
Other liabilities - client swap program hedges	2	54,910		54,910		67,260		67,260
Other liabilities - commercial loan fair value hedges	2	—		—		—		—
Other liabilities - mortgage loan fair value hedges	2	—		—		—		—

Available-for-sale (AFS) securities and held-to-maturity (HTM) securities – Securities at fair value are primarily priced using model pricing based on the securities' relationship to other benchmark quoted prices as provided by an independent third party, and are considered a Level 2 input method. Equity securities that are exchange traded are considered a Level 1 input method.

Loans receivable – Fair values are estimated first by stratifying the portfolios of loans with similar financial characteristics. Loans are segregated by type such as multi-family real estate, residential mortgage, construction, commercial, consumer and land loans. Each loan category is further segmented into fixed- and adjustable-rate interest terms. For residential mortgages and multi-family loans, the bank determined that its best exit price was by securitization. MBS benchmark prices are used as a base price, with further loan level pricing adjustments made based on individual loan characteristics such as FICO score, LTV, property type and occupancy. For all other loan categories an estimate of fair value is then calculated based on discounted cash flows using a discount rate offered and observed in the market on similar products, plus an adjustment for liquidity to reflect the non-homogeneous nature of the loans, as well as an annual loss rate based on historical losses to arrive at an estimated exit price

fair value. Fair value for impaired loans is also based on recent appraisals or estimated cash flows discounted using rates commensurate with risk associated with the estimated cash flows. Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information.

Interest rate swaps – The Company offers interest rate swaps to its variable rate borrowers who want to manage their interest rate risk. At the same time, the Company enters into the opposite trade with a counterparty to offset its interest rate risk. The Company also uses interest rate swaps for various fair value hedges and cash flow hedges. The fair value of these interest rate swaps is estimated by a third-party pricing service using a discounted cash flow technique.


	March 31, 2023
	Amortized Cost		Gross Unrealized				Fair Value		Yield
			Gains		Losses
	($ in thousands)
Available-for-sale securities
U.S. government and agency securities due
Within 1 year	$	7,003	$	—	$	(39)	$	6,964	5.29	%
1 to 5 years	24,228		—		(604)		23,624		4.29

Over 10 years	63,740		444		—		64,184		5.15
Asset-backed securities

1 to 5 years	20,059		—		(763)		19,296		5.48
5 to 10 years	49,023		4		(280)		48,747		5.51
Over 10 years	600,080		753		(14,806)		586,027		5.52




Corporate debt securities due
Within 1 year	75,023		2		(107)		74,918		5.36
1 to 5 years	151,652		793		(1,683)		150,762		4.75
5 to 10 years	113,817		—		(17,094)		96,723		3.87

Municipal bonds due


5 to 10 years	5,735		—		(201)		5,534		3.00
Over 10 years	29,851		275		(363)		29,763		5.85
Mortgage-backed securities
Agency pass-through certificates	960,254		532		(61,042)		899,744		3.02

	2,100,465		2,803		(96,982)		2,006,286		4.18
Held-to-maturity securities







Mortgage-backed securities
Agency pass-through certificates	445,222		55		(44,201)		401,076		2.88

	445,222		55		(44,201)		401,076		2.88
	$	2,545,687	$	2,858	$	(141,183)	$	2,407,362	3.97	%


	September 30, 2022
	Amortized Cost		Gross Unrealized					Fair Value		Yield
			Gains		Losses
	($ in thousands)
Available-for-sale securities
U.S. government and agency securities due

1 to 5 years	$	40,403	$	—		$	(1,049)	$	39,354	3.03	%


Asset-backed securities

1 to 5 years	22,527		—			(1,141)		21,386		3.27
5 to 10 years	82,962		4			(547)		82,419		3.53
Over 10 years	668,482		783			(6,069)		663,196		3.86




Corporate debt securities due
Within 1 year	75,000		4			(200)		74,804		3.74
1 to 5 years	151,411		—			(2,748)		148,663		3.59
5 to 10 years	114,414		—			(24,124)		90,290		3.87

Municipal bonds due


5 to 10 years	5,751		—			(361)		5,390		3.00
Over 10 years	29,871		400			(699)		29,572		5.85
Mortgage-backed securities
Agency pass-through certificates	971,916		117			(76,070)		895,963		2.81

	2,162,737		1,308			(113,008)		2,051,037		3.36
Held-to-maturity securities







Mortgage-backed securities
Agency pass-through certificates	463,299		22			(56,461)		406,860		2.88

	463,299		22			(56,461)		406,860		2.88
	$	2,626,036	$	1,330		$	(169,469)	$	2,457,897	3.28	%

For AFS investment securities, there were purchases of $115,931,000 during the six months ended March 31, 2023 and purchases of $124,651,000 during the six months ended March 31, 2022. There were no sales of AFS investment securities during the six months ended March 31, 2023 and $4,510,000 in sales during the prior year same period. For HTM investment securities, there were no purchases during the six months ended March 31, 2023 and no purchases during the six months ended March 31, 2022. There were no sales of held-to-maturity investment securities during the six months ended March 31, 2023 or March 31, 2022. Substantially all of the agency mortgage-backed securities have contractual due dates that exceed 10 years.

The Company elected to exclude AIR from the amortized cost basis of debt securities disclosed throughout this footnote. For AFS securities, AIR totaled $6,174,000 and $5,694,000 as of March 31, 2023 and September 30, 2022, respectively. For HTM debt securities, AIR totaled $1,065,000 and $1,108,000 as of March 31, 2023 and September 30, 2022, respectively. AIR for securities is included in the "Interest receivable" line item balance on the Company’s consolidated statements of financial condition.

The following tables show the gross unrealized losses and fair value of securities as of March 31, 2023 and September 30, 2022, by length of time that individual securities in each category have been in a continuous loss position. There were 220 and 223 securities with an unrealized loss as of March 31, 2023 and September 30, 2022, respectively. The decline in fair value since purchase is attributable to changes in interest rates. Because the Company does not intend to sell these securities and does not consider it more likely than not that it will be required to sell these securities before the recovery of amortized cost basis, which may be upon maturity, the Company does not consider these investments to have any credit impairment.


March 31, 2023	Less than 12 months				12 months or more				Total
	Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value
	(In thousands)
Available-for-sale securities
Corporate debt securities	$	(1,790)	$	136,214	$	(17,094)	$	96,723	$	(18,884)	$	232,937
Municipal bonds	(363)		9,488		(201)		5,534		(564)		15,022
U.S. government and agency securities	(15)		10,126		(628)		20,463		(643)		30,589
Asset-backed securities	(8,353)		387,918		(7,496)		231,114		(15,849)		619,032

Mortgage-backed securities	(30,101)		577,018		(30,941)		271,694		(61,042)		848,712
	(40,622)		1,120,764		(56,360)		625,528		(96,982)		1,746,292
Held-to-maturity securities
Mortgage-backed securities	(18,843)		165,224		(25,358)		233,935		(44,201)		399,159
	$	(59,465)	$	1,285,988	$	(81,718)	$	859,463	$	(141,183)	$	2,145,451


September 30, 2022	Less than 12 months				12 months or more				Total
	Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value		Unrealized Gross Losses		Fair Value
	(In thousands)
Available-for-sale securities
Corporate debt securities	$	(27,072)	$	288,753	$	—	$	—	$	(27,072)	$	288,753
Municipal bonds due	(1,061)		14,561		—		—		(1,061)		14,561
U.S. government and agency securities	(1,049)		39,354		—		—		(1,049)		39,354
Asset-backed securities	(6,374)		601,248		(1,383)		50,070		(7,757)		651,318

Mortgage-backed securities	(63,738)		833,683		(12,331)		53,533		(76,069)		887,216
	(99,294)		1,777,599		(13,714)		103,603		(113,008)		1,881,202
Held-to-maturity securities
Mortgage-backed securities	(56,461)		405,166		—		—		(56,461)		405,166
	$	(155,755)	$	2,182,765	$	(13,714)	$	103,603	$	(169,469)	$	2,286,368

Substantially all of the Company’s held-to-maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Therefore, the Company did not record an allowance for credit losses for these securities as of March 31, 2023 or September 30, 2022.

The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position have any credit loss impairment as of March 31, 2023 or September 30, 2022. The Company does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Company will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity. Available-for-sale debt securities issued by U.S. government agencies or U.S. government-sponsored enterprises carry the explicit and/or implicit guarantee of the U.S. government and have a long history of zero credit loss. Corporate debt securities and municipal bonds are considered to have an issuer of high credit quality and the decline in fair value is due to changes in interest rates and other market conditions. The issuer continues to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.