v3.26.1
Derivatives and Hedging Activities
 9 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives and Hedging Activities Derivatives and Hedging Activities
The following tables present the fair value, notional amount and balance sheet classification of derivative assets and liabilities at June 30, 2026 and September 30, 2025.

June 30, 2026Derivative AssetsDerivative Liabilities
Interest rate contract purposeBalance Sheet LocationNotionalFair ValueBalance Sheet LocationNotionalFair Value
(In thousands)(In thousands)
Client swap program hedgesOther assets$959,875 $37,009 Other liabilities$959,875 $37,088 
Mortgage loan fair value hedgesOther assets670,000 10,034 Other liabilities700,000 2,825 
Mortgage backed securities fair value hedgesOther assets210,000 1,947 Other liabilities400,000 3,727 
Borrowings cash flow hedgesOther assets1,350,000 104,446 Other liabilities— — 
$3,189,875 $153,436 $2,059,875 $43,640 

September 30, 2025Derivative AssetsDerivative Liabilities
Interest rate contract purposeBalance Sheet LocationNotionalFair ValueBalance Sheet LocationNotionalFair Value
(In thousands)(In thousands)
Client swap program hedgesOther assets$977,017 $37,347 Other liabilities$977,017 $37,818 
Commercial loan fair value hedgesOther assets34,341 1,611 Other liabilities— — 
Mortgage backed securities fair value hedgesOther assets— — Other liabilities610,000 15,086 
Mortgage loan fair value hedgesOther assets470,000 13,082 Other liabilities1,100,000 20,426 
Borrowings cash flow hedgesOther assets900,000 99,231 Other liabilities— — 
$2,381,358 $151,271 $2,687,017 $73,330 

The Company enters into interest rate swaps to hedge interest rate risk. These arrangements include hedges of individual fixed rate commercial loans and also hedges of a specified portion of pools of prepayable fixed rate mortgage loans and mortgage backed securities under the "portfolio layer" method. These relationships qualify as fair value hedges under FASB ASC 815, Derivatives and Hedging ("ASC 815"), which provides for offsetting of the recognition of gains and losses of the respective interest rate swap and the hedged items. Gains and losses on interest rate swaps designated in these hedge relationships, along with the offsetting gains and losses on the hedged items attributable to the hedged risk, are recognized in current earnings within the same income statement line item.

The Company also enters into credit risk participation agreements with financial counterparties for interest rate swaps related to loans in which the Company is a participant. The risk participation agreements entered into by the Company as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution. The Company is party to two risk participation agreements with a total notional amount of $69,665,000 at June 30, 2026. The estimated exposure when applying a credit valuation adjustment framework to these exposures and the fair value of these exposures was insignificant to the consolidated financial statements as of June 30, 2026.

Upon electing to apply ASC 815 fair value hedge accounting, the carrying value of the hedged item is adjusted to reflect the cumulative impact of changes in fair value attributable to the hedged risk. The hedge basis adjustment remains with the hedged item until the hedged item is de-recognized from the balance sheet. The following tables present the impact of fair value hedge accounting on the carrying value of the hedged items at June 30, 2026 and September 30, 2025.
(In thousands)June 30, 2026
Balance sheet line item in which hedged item is recordedCarrying value of hedged itemsCumulative gain (loss) fair value hedge adjustment included in carrying amount of hedged items
Loans receivable (1)$5,003,997 $(6,486)
Available-for-sale securities, at fair value (2)
$882,040 $2,022 
$5,886,037 $(4,464)

(1) Includes the amortized cost basis of the closed mortgage loan portfolios used to designate the hedging relationships in which the hedged items are a portfolio layer expected to be remaining at the end of the hedging relationships. At June 30, 2026, the amortized cost basis of the closed loan portfolios used in the hedging relationships was $5,003,997,000, the cumulative basis adjustment associated with the hedging relationships was $(6,486,000), and the amount of the designated hedged items was $1,370,000,000.

(2) Includes the fair value basis of mortgage backed securities designated in fair value hedging relationships. At June 30, 2026, the fair value of the hedged mortgage backed securities was $882,040,000, the cumulative basis adjustment associated with the hedging relationships was $2,022,000, and the amount of the designated hedged items was $610,000,000.

(In thousands)September 30, 2025
Balance sheet line item in which hedged item is recordedCarrying value of hedged itemsCumulative gain (loss) fair value hedge adjustment included in carrying amount of hedged items
Loans receivable (1) (2)$5,426,086 $6,794 
Available-for-sale securities, at fair value (3)
940,110 15,452 
$6,366,196 $22,246 

(1) Includes the amortized cost basis of the closed mortgage loan portfolios used to designate the hedging relationships in which the hedged items are the last layer expected to be remaining at the end of the hedging relationships. At September 30, 2025, the amortized cost basis of the closed loan portfolios used in the hedging relationships was $5,393,257,000, the cumulative basis adjustment associated with the hedging relationships was $8,262,000, and the amount of the designated hedged items was $1,570,000,000. During fiscal 2025, hedge accounting was discontinued on a $1,600,000,000 last of layer hedge. A basis adjustment of $4,016,668 associated with the terminated portion of the hedge was deferred and is being amortized over the remaining life of the associated pool of loans.

(2) Includes the amortized cost basis of commercial loans designated in fair value hedging relationships. At September 30, 2025, the amortized cost basis of the hedged commercial loans was $32,829,000 and the cumulative basis adjustment associated with the hedging relationships was $(1,468,000).

(3) Includes the fair value basis of mortgage backed securities designated in fair value hedging relationships. At September 30, 2025, the fair value of the hedged mortgage backed securities was $940,110,000, the cumulative basis adjustment associated with the hedging relationships was $15,452,000, and the amount of the designated hedged items was $610,000,000.

The Company has entered into interest rate swaps to convert certain short-term borrowings to fixed rate payments. The primary purpose of these hedges is to mitigate the risk of changes in future cash flows resulting from increasing interest rates. For qualifying cash flow hedges under ASC 815, gains and losses on the interest rate swaps are recorded in accumulated other comprehensive income ("AOCI") and then reclassified into earnings in the same period the hedged cash flows affect earnings and within the same income statement line item as the hedged cash flows. As of June 30, 2026, the maturities for hedges of adjustable rate borrowings ranged from one year to seven years, with the weighted average being 3.6 years.
The following tables present the impact of derivative instruments (cash flow hedges on borrowings) on AOCI for the periods presented.

(In thousands)Three Months Ended June 30,
Amount of gain/(loss) recognized in AOCI on derivatives in cash flow hedging relationships20262025
Interest rate contracts:
Pay fixed/receive floating swaps on borrowings cash flow hedges$7,068 $(14,040)
Reclassification adjustment of net (gain)/loss included in net income— (70)
Total pre-tax gain/(loss) recognized in AOCI $7,068 $(14,110)


(In thousands)Nine Months Ended June 30,
Amount of gain/(loss) recognized in AOCI on derivatives in cash flow hedging relationships20262025
Interest rate contracts:
Pay fixed/receive floating swaps on borrowings cash flow hedges$5,216 $(10,716)
Reclassification adjustment of net (gain)/loss included in net income— — 
Total pre-tax gain/(loss) recognized in AOCI $5,216 $(10,716)

The following tables present the gain (loss) on derivative instruments in fair value and cash flow accounting hedging relationships under ASC 815 for the periods presented.
Three Months Ended June 30, 2026Three Months Ended June 30, 2025
Interest income on loans receivableInterest on Mortgage-backed securitiesInterest expense on FHLB advancesInterest income on loans receivableInterest on Mortgage-backed securitiesInterest expense on FHLB advances
(In thousands)(In thousands)
Interest income/(expense), including the effects of fair value and cash flow hedges$267,243 $46,569 $(27,708)$279,476 $27,855 $(16,991)
Gain/(loss) on fair value hedging relationships:
Interest rate contracts
Amounts related to interest settlements on derivatives$1,366 $(500)$3,780 $314 
Recognized on derivatives7,736 $6,393 (10,789)(4,822)
Recognized on hedged items(7,791)(6,442)10,800 4,927 
Net income/(expense) recognized on fair value hedges$1,311 $(549)$3,791 $419 
Gain/(loss) on cash flow hedging relationships:
Interest rate contracts
Amounts related to interest settlements on derivatives$6,841 $8,649 
Amount of derivative gain/(loss) reclassified from AOCI into interest income/expense— — 
Net income/(expense) recognized on cash flow hedges$6,841 $8,649 
Nine Months Ended June 30, 2026Nine Months Ended June 30, 2025
Interest income on loans receivableInterest on Mortgage-backed securitiesInterest expense on FHLB advancesInterest income on loans receivableInterest on Mortgage-backed securitiesInterest expense on FHLB advances
(In thousands)(In thousands)
Interest income/(expense), including the effects of fair value and cash flow hedges$793,598 $129,812 $(64,044)$848,150 $70,118 $(67,753)
Gain/(loss) on fair value hedging relationships:
Interest rate contracts
Amounts related to interest settlements on derivatives$5,735 $(832)$16,762 $430 
Recognized on derivatives14,600 13,305 6,031 (13,504)
Recognized on hedged items(14,783)(13,431)(13,002)13,828 
Net income/(expense) recognized on fair value hedges$5,552 $(958)$9,791 $754 
Gain/(loss) on cash flow hedging relationships:
Interest rate contracts
Amounts related to interest settlements on derivatives$22,492 $26,702 
Amount of derivative gain/(loss) reclassified from AOCI into interest income/expense— — 
Net income/(expense) recognized on cash flow hedges$22,492 $26,702 


The Company periodically enters into certain interest rate swap agreements in order to provide commercial loan customers the ability to convert from variable to fixed interest rate payments, while the Company retains a variable rate loan. Under these agreements, the Company enters into a variable rate loan agreement and a swap agreement with the client. The swap agreement effectively converts the client’s variable rate loan into a fixed rate. The Company enters into a corresponding swap agreement with a third party in order to offset its exposure on the variable and fixed components of the client's swap agreement. The interest rate swaps are derivatives under ASC 815, with changes in fair value recorded in earnings. The impact to the Consolidated Statement of Operations for the nine months ended June 30, 2026 was an increase in other income of $392,000 and an increase of $126,000 for the nine months ended June 30, 2025.

The following tables present the impact of derivative instruments (client swap program) that are not designated in accounting hedges under ASC 815 for the periods presented.

(In thousands)Three Months Ended June 30,
Derivative instrumentsClassification of gain/(loss) recognized in income on derivative instrument20262025
Interest rate contracts:
Pay fixed/receive floating swapOther non-interest income$5,105 $(7,677)
Receive fixed/pay floating swapOther non-interest income(5,117)7,733 
$(12)$56 
(In thousands)Nine Months Ended June 30,
Derivative instrumentsClassification of gain/(loss) recognized in income on derivative instrument20262025
Interest rate contracts:
Pay fixed/receive floating swapOther non-interest income$4,389 $1,013 
Receive fixed/pay floating swapOther non-interest income(3,997)(887)
$392 $126