8-K
Kearny Financial Corp. (KRNY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________
FORM 8-K
_____________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2022
_____________________________
KEARNY FINANCIAL CORP.
(Exact name of Registrant as Specified in Its Charter)
_____________________________
| Maryland | 001-37399 | 30-0870244 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 120 Passaic Avenue Fairfield, New Jersey | 07004 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (973) 244-4500
(Former Name or Former Address, if Changed Since Last Report)
_____________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | KRNY | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operation and Financial Condition
On October 27, 2022, Kearny Financial Corp. (the “Company”), the holding company for Kearny Bank, issued a press release reporting its financial results for the period ended September 30, 2022.
A copy of the press release announcing the results is included as Exhibit 99.1 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 7.01 Regulation FD Disclosure
On October 27, 2022, the Company will utilize a slide presentation at its fiscal 2022 Annual Meeting of Stockholders.
A copy of the slide presentation that will be used in the Company’s presentation is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. The information included in this Current Report pursuant to this Item 7.01 is being furnished to, and not filed with, the Securities and Exchange Commission.
In addition, on October 27, 2022, the Company released a slide presentation that will be used in upcoming meetings with potential investors and current shareholders of the Company.
A copy of the slide presentation that will be used in the Company’s presentation is filed as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference. The information included in this Current Report pursuant to this Item 7.01 is being furnished to, and not filed with, the Securities and Exchange Commission.
Item 8.01 Other Events
On October 27, 2022, the Company’s Board of Directors announced a quarterly cash dividend of $0.11 per share, payable on November 23, 2022 to stockholders of record as of November 9, 2022.
Item 9.01 Financial Statements and Exhibits
(a)Financial Statements of Business Acquired. Not applicable.
(b)Pro Forma Financial Information. Not applicable.
(c)Shell Company Transaction. Not applicable.
(d)Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release dated October 27, 2022. |
| 99.2 | Kearny Financial Corp. annual meeting presentation dated October 27, 2022. |
| 99.3 | Kearny Financial Corp. investor presentation dated October 27, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KEARNY FINANCIAL CORP. | ||
|---|---|---|
| Date: October 27, 2022 | By: | /s/ Keith Suchodolski |
| Keith Suchodolski | ||
| Senior Executive Vice President and Chief Financial Officer |
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
October 27, 2022
For further information contact:
Craig L. Montanaro, President and Chief Executive Officer, or
Keith Suchodolski, Senior Executive Vice President and Chief Financial Officer
Kearny Financial Corp.
(973) 244-4500
KEARNY FINANCIAL CORP. ANNOUNCES FIRST QUARTER FISCAL 2023 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., October 27, 2022 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended September 30, 2022 of $16.5 million, or $0.25 per diluted share, compared to $11.4 million, or $0.17 per diluted share, for the quarter ended June 30, 2022.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on November 23, 2022 to stockholders of record as of November 9, 2022.
Craig L. Montanaro, President and Chief Executive Officer, commented, “Despite pressure on net interest margin, attributable to the rapidly rising interest rate environment, we delivered impressive results for the quarter. Growth in loans and deposits remained strong, expenses were well controlled and asset quality metrics notably improved. Over the past two quarters, our loan portfolio has grown at a 26% annualized rate, driven by strong origination volume and slowing prepayment activity. Looking ahead to the remainder of fiscal 2023, we expect loan growth to moderate, as we have right-sized our loan pipeline and are focusing our origination efforts on those loan segments which provide the greatest risk-adjusted returns.”
Mr. Montanaro further noted, “In recognition of the risks presented by the prevailing economic and interest rate environment we continue to position our balance sheet to support net interest income, and margin, in a variety of interest rate scenarios. To that end we have, since the start of this fiscal year, added $600 million of derivative notional and made targeted adjustments to our wholesale balance sheet designed to reduce risk and support future earnings.”
Balance Sheet
•Total assets increased $169.7 million, or 2.2%, to $7.89 billion at September 30, 2022, from $7.72 billion at June 30, 2022.
•Loans receivable increased $238.5 million, or 4.4%, to $5.66 billion at September 30, 2022, from $5.42 billion at June 30, 2022.
•Deposits increased $246.0 million, or 4.2%, to $6.11 billion at September 30, 2022, from $5.86 billion at June 30, 2022. Non-interest-bearing deposits increased $29.5 million, or 4.5%, for the quarter ended September 30, 2022.
•Investment securities decreased $83.3 million to $1.38 billion, or 17.5% of total assets, at September 30, 2022, from $1.46 billion, or 18.9% of total assets, at June 30, 2022.
•Borrowings decreased $49.9 million to $851.5 million, or 10.8% of total assets, at September 30, 2022, from $901.3 million, or 11.7% of total assets, at June 30, 2022.
Earnings
Performance Highlights
•Return on average assets was 0.85% for the quarter ended September 30, 2022 compared to 0.61% for the quarter ended June 30, 2022.
•Return on average equity was 7.38% and 4.92% for the quarters ended September 30, 2022 and June 30, 2022, respectively. Return on average tangible equity was 9.70% and 6.40% for those same comparative periods.
Net Interest Income and Net Interest Margin
•Net interest margin contracted 23 basis points to 2.69% for the quarter ended September 30, 2022, from 2.92% for the quarter ended June 30, 2022. The decrease was due largely to an increase in the cost of interest-bearing liabilities, partially offset by increases in the average balance and yield on interest-earning assets.
•Net interest income decreased $2.1 million to $48.5 million for the quarter ended September 30, 2022, from $50.6 million for the quarter ended June 30, 2022. Included in net interest income for the quarters ended September 30, 2022 and June 30, 2022, respectively, was purchase accounting accretion of $1.8 million and $1.6 million, and loan prepayment penalty income of $441,000 and $869,000.
Non-Interest Income
•Non-interest income increased $3.1 million to $5.9 million for the quarter ended September 30, 2022, from $2.8 million for the quarter ended June 30, 2022. The increase was largely attributable to higher income from bank owned life insurance that resulted from $2.1 million in payouts on life insurance policies.
•Non-interest income included no gain or loss on the sale of securities for the quarter ended September 30, 2022 compared to a loss of $563,000 on the sale of securities for the quarter ended June 30, 2022.
Non-Interest Expense
•Non-interest expense decreased $1.6 million to $32.0 million for the quarter ended September 30, 2022, from $33.6 million for the quarter ended June 30, 2022. The decrease was primarily attributable to $1.0 million of non-recurring expenses recorded in the prior quarter.
•The provision for credit losses on unfunded commitments, included in other expense, decreased $387,000 for the quarter ended September 30, 2022.
•The efficiency and non-interest expense ratios were 58.75% and 1.65%, respectively, for the quarter ended September 30, 2022, as compared to 62.93% and 1.79%, respectively, for the quarter ended June 30, 2022.
Income Taxes
•Income tax expense totaled $5.3 million for the quarter ended September 30, 2022 compared to $4.2 million for the quarter ended June 30, 2022, resulting in an effective tax rate of 24.1% and 27.0%, respectively. The decrease in the effective tax rate primarily resulted from the payouts on life insurance policies, noted above, which were not taxable.
Asset Quality
•The balance of non-performing assets decreased $14.8 million to $77.4 million, or 0.98% of total assets, at September 30, 2022, from $92.2 million, or 1.19% of total assets, at June 30, 2022. The decrease in non-performing assets was primarily attributable to the sale of two non-accrual loans that were recorded as held-for-sale at June 30, 2022.
•Net charge-offs totaled $115,000, or 0.01% of average loans, on an annualized basis, for the quarter ended September 30, 2022, compared to $1.0 million, or 0.08% of average loans, on an annualized basis, for the quarter ended June 30, 2022.
•For the quarter ended September 30, 2022, the Company recorded a provision for credit losses of $670,000, compared to $4.2 million for the quarter ended June 30, 2022. The provision for the quarter ended September 30, 2022 was largely driven by loan growth of $238.5 million, partially offset by a reduction in the expected life of the loan portfolio.
•The allowance for credit losses was $47.6 million, or 0.84% of total loans, at September 30, 2022, compared to $47.1 million, or 0.87% of total loans, at June 30, 2022.
Capital
•For the quarter ended September 30, 2022, book value per share decreased $0.14, or 1.1%, to $12.88 and tangible book value per share decreased $0.17, or 1.7%, to $9.73.
•On August 1, 2022, the Company announced the authorization of a new stock repurchase plan, which authorized the repurchase of up to 4,000,000 shares. During the quarter ended September 30, 2022, the Company repurchased 759,806 shares of common stock at a cost of $8.7 million, or $11.44 per share.
•At September 30, 2022, the Company’s tangible equity to tangible assets ratio equaled 8.61% and the regulatory capital ratios of both the Company and the Bank were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.
Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.
In addition, the COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves. Given its dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business.
Category: Earnings
| Linked-Quarter Comparative Financial Analysis |
|---|
Kearny Financial Corp.
Consolidated Balance Sheets
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | September 30,<br>2022 | June 30,<br>2022 | Variance <br>or Change | Variance <br>or Change Pct. | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Audited) | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 96,076 | $ | 101,615 | $ | (5,539) | -5.5 | % | |||
| Securities available for sale | 1,263,176 | 1,344,093 | (80,917) | -6.0 | % | ||||||
| Securities held to maturity | 115,943 | 118,291 | (2,348) | -2.0 | % | ||||||
| Loans held-for-sale | 12,936 | 28,874 | (15,938) | -55.2 | % | ||||||
| Loans receivable | 5,656,370 | 5,417,845 | 238,525 | 4.4 | % | ||||||
| Less: allowance for credit losses on loans | (47,613) | (47,058) | 555 | 1.2 | % | ||||||
| Net loans receivable | 5,608,757 | 5,370,787 | 237,970 | 4.4 | % | ||||||
| Premises and equipment | 52,642 | 53,281 | (639) | -1.2 | % | ||||||
| Federal Home Loan Bank stock | 44,957 | 47,144 | (2,187) | -4.6 | % | ||||||
| Accrued interest receivable | 23,817 | 20,466 | 3,351 | 16.4 | % | ||||||
| Goodwill | 210,895 | 210,895 | — | — | % | ||||||
| Core deposit intangible | 2,876 | 3,020 | (144) | -4.8 | % | ||||||
| Bank owned life insurance | 289,690 | 289,177 | 513 | 0.2 | % | ||||||
| Deferred income taxes, net | 54,278 | 49,350 | 4,928 | 10.0 | % | ||||||
| Other real estate owned | 178 | 178 | — | — | % | ||||||
| Other assets | 113,369 | 82,712 | 30,657 | 37.1 | % | ||||||
| Total assets | $ | 7,889,590 | $ | 7,719,883 | $ | 169,707 | 2.2 | % | |||
| Liabilities | |||||||||||
| Deposits: | |||||||||||
| Non-interest-bearing | $ | 683,406 | $ | 653,899 | $ | 29,507 | 4.5 | % | |||
| Interest-bearing | 5,424,872 | 5,208,357 | 216,515 | 4.2 | % | ||||||
| Total deposits | 6,108,278 | 5,862,256 | 246,022 | 4.2 | % | ||||||
| Borrowings | 851,454 | 901,337 | (49,883) | -5.5 | % | ||||||
| Advance payments by borrowers for taxes | 16,555 | 16,746 | (191) | -1.1 | % | ||||||
| Other liabilities | 38,329 | 45,544 | (7,215) | -15.8 | % | ||||||
| Total liabilities | 7,014,616 | 6,825,883 | 188,733 | 2.8 | % | ||||||
| Stockholders' Equity | |||||||||||
| Common stock | 680 | 687 | (7) | -1.0 | % | ||||||
| Paid-in capital | 520,245 | 528,396 | (8,151) | -1.5 | % | ||||||
| Retained earnings | 454,710 | 445,451 | 9,259 | 2.1 | % | ||||||
| Unearned ESOP shares | (24,321) | (24,807) | 486 | 2.0 | % | ||||||
| Accumulated other comprehensive loss | (76,340) | (55,727) | (20,613) | -37.0 | % | ||||||
| Total stockholders' equity | 874,974 | 894,000 | (19,026) | -2.1 | % | ||||||
| Total liabilities and stockholders' equity | $ | 7,889,590 | $ | 7,719,883 | $ | 169,707 | 2.2 | % | |||
| Consolidated capital ratios | |||||||||||
| Equity to assets | 11.09 | % | 11.58 | % | -0.49 | % | |||||
| Tangible equity to tangible assets (1) | 8.61 | % | 9.06 | % | -0.45 | % | |||||
| Share data | |||||||||||
| Outstanding shares | 67,938 | 68,666 | (728) | -1.1 | % | ||||||
| Book value per share | $ | 12.88 | $ | 13.02 | $ | (0.14) | -1.1 | % | |||
| Tangible book value per share (2) | $ | 9.73 | $ | 9.90 | $ | (0.17) | -1.7 | % |
_________________________
(1)Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
(2)Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.
Kearny Financial Corp.
Consolidated Statements of Income
(Unaudited)
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | Three Months Ended | Variance <br>or Change | Variance <br>or Change Pct. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | |||||||||||
| Interest income | ||||||||||||
| Loans | $ | 52,935 | $ | 48,869 | $ | 4,066 | 8.3 | % | ||||
| Taxable investment securities | 10,439 | 8,915 | 1,524 | 17.1 | % | |||||||
| Tax-exempt investment securities | 285 | 297 | (12) | -4.0 | % | |||||||
| Other interest-earning assets | 761 | 472 | 289 | 61.2 | % | |||||||
| Total interest income | 64,420 | 58,553 | 5,867 | 10.0 | % | |||||||
| Interest expense | ||||||||||||
| Deposits | 10,869 | 3,915 | 6,954 | 177.6 | % | |||||||
| Borrowings | 5,020 | 4,039 | 981 | 24.3 | % | |||||||
| Total interest expense | 15,889 | 7,954 | 7,935 | 99.8 | % | |||||||
| Net interest income | 48,531 | 50,599 | (2,068) | -4.1 | % | |||||||
| Provision for credit losses | 670 | 4,222 | (3,552) | -84.1 | % | |||||||
| Net interest income after provision for credit losses | 47,861 | 46,377 | 1,484 | 3.2 | % | |||||||
| Non-interest income | ||||||||||||
| Fees and service charges | 763 | 658 | 105 | 16.0 | % | |||||||
| Loss on sale and call of securities | — | (563) | 563 | 100.0 | % | |||||||
| Gain on sale of loans | 395 | 187 | 208 | 111.2 | % | |||||||
| Loss on sale of other real estate owned | — | (9) | 9 | 100.0 | % | |||||||
| Income from bank owned life insurance | 3,698 | 1,533 | 2,165 | 141.2 | % | |||||||
| Electronic banking fees and charges | 506 | 366 | 140 | 38.3 | % | |||||||
| Other income | 555 | 638 | (83) | -13.0 | % | |||||||
| Total non-interest income | 5,917 | 2,810 | 3,107 | 110.6 | % | |||||||
| Non-interest expense | ||||||||||||
| Salaries and employee benefits | 20,348 | 20,367 | (19) | -0.1 | % | |||||||
| Net occupancy expense of premises | 3,090 | 3,188 | (98) | -3.1 | % | |||||||
| Equipment and systems | 3,662 | 4,516 | (854) | -18.9 | % | |||||||
| Advertising and marketing | 747 | 703 | 44 | 6.3 | % | |||||||
| Federal deposit insurance premium | 906 | 762 | 144 | 18.9 | % | |||||||
| Directors' compensation | 340 | 340 | — | — | % | |||||||
| Other expense | 2,895 | 3,736 | (841) | -22.5 | % | |||||||
| Total non-interest expense | 31,988 | 33,612 | (1,624) | -4.8 | % | |||||||
| Income before income taxes | 21,790 | 15,575 | 6,215 | 39.9 | % | |||||||
| Income taxes | 5,255 | 4,205 | 1,050 | 25.0 | % | |||||||
| Net income | $ | 16,535 | $ | 11,370 | $ | 5,165 | 45.4 | % | ||||
| Net income per common share (EPS) | ||||||||||||
| Basic | $ | 0.25 | $ | 0.17 | $ | 0.08 | ||||||
| Diluted | $ | 0.25 | $ | 0.17 | $ | 0.08 | ||||||
| Dividends declared | ||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | — | ||||||
| Cash dividends declared | $ | 7,276 | $ | 7,441 | $ | (165) | ||||||
| Dividend payout ratio | 44.0 | % | 65.4 | % | (21.4) | % | ||||||
| Weighted average number of common shares outstanding | ||||||||||||
| Basic | 65,737 | 67,240 | (1,503) | |||||||||
| Diluted | 65,756 | 67,276 | (1,520) |
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
| (Dollars in Thousands) | Three Months Ended | Variance <br>or Change | Variance <br>or Change Pct. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | |||||||||||
| Assets | ||||||||||||
| Interest-earning assets: | ||||||||||||
| Loans receivable, including loans held for sale | $ | 5,553,996 | $ | 5,181,983 | $ | 372,013 | 7.2 | % | ||||
| Taxable investment securities | 1,516,974 | 1,608,372 | (91,398) | -5.7 | % | |||||||
| Tax-exempt investment securities | 48,973 | 51,672 | (2,699) | -5.2 | % | |||||||
| Other interest-earning assets | 88,038 | 87,990 | 48 | 0.1 | % | |||||||
| Total interest-earning assets | 7,207,981 | 6,930,017 | 277,964 | 4.0 | % | |||||||
| Non-interest-earning assets | 570,225 | 564,734 | 5,491 | 1.0 | % | |||||||
| Total assets | $ | 7,778,206 | $ | 7,494,751 | $ | 283,455 | 3.8 | % | ||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Interest-bearing demand | $ | 2,354,340 | $ | 2,155,946 | $ | 198,394 | 9.2 | % | ||||
| Savings | 1,019,343 | 1,077,631 | (58,288) | -5.4 | % | |||||||
| Certificates of deposit | 2,014,922 | 1,701,725 | 313,197 | 18.4 | % | |||||||
| Total interest-bearing deposits | 5,388,605 | 4,935,302 | 453,303 | 9.2 | % | |||||||
| Borrowings: | ||||||||||||
| Federal Home Loan Bank advances | 642,399 | 752,579 | (110,180) | -14.6 | % | |||||||
| Other borrowings | 127,456 | 185,901 | (58,445) | -31.4 | % | |||||||
| Total borrowings | 769,855 | 938,480 | (168,625) | -18.0 | % | |||||||
| Total interest-bearing liabilities | 6,158,460 | 5,873,782 | 284,678 | 4.8 | % | |||||||
| Non-interest-bearing liabilities: | ||||||||||||
| Non-interest-bearing deposits | 667,624 | 640,200 | 27,424 | 4.3 | % | |||||||
| Other non-interest-bearing liabilities | 56,431 | 56,636 | (205) | -0.4 | % | |||||||
| Total non-interest-bearing liabilities | 724,055 | 696,836 | 27,219 | 3.9 | % | |||||||
| Total liabilities | 6,882,515 | 6,570,618 | 311,897 | 4.7 | % | |||||||
| Stockholders' equity | 895,691 | 924,133 | (28,442) | -3.1 | % | |||||||
| Total liabilities and stockholders' equity | $ | 7,778,206 | $ | 7,494,751 | $ | 283,455 | 3.8 | % | ||||
| Average interest-earning assets to average interest-bearing liabilities | 117.04 | % | 117.98 | % | -0.94 | % | -0.8 | % |
Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)
| Three Months Ended | Variance <br>or Change | |||||
|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | |||||
| Average yield on interest-earning assets: | ||||||
| Loans receivable, including loans held for sale | 3.81 | % | 3.77 | % | 0.04 | % |
| Taxable investment securities | 2.75 | % | 2.22 | % | 0.53 | % |
| Tax-exempt investment securities (1) | 2.33 | % | 2.30 | % | 0.03 | % |
| Other interest-earning assets | 3.46 | % | 2.15 | % | 1.31 | % |
| Total interest-earning assets | 3.57 | % | 3.38 | % | 0.19 | % |
| Average cost of interest-bearing liabilities: | ||||||
| Deposits: | ||||||
| Interest-bearing demand | 0.92 | % | 0.31 | % | 0.61 | % |
| Savings | 0.23 | % | 0.11 | % | 0.12 | % |
| Certificates of deposit | 0.97 | % | 0.46 | % | 0.51 | % |
| Total interest-bearing deposits | 0.81 | % | 0.32 | % | 0.49 | % |
| Borrowings: | ||||||
| Federal Home Loan Bank advances | 2.68 | % | 1.96 | % | 0.72 | % |
| Other borrowings | 2.26 | % | 0.77 | % | 1.49 | % |
| Total borrowings | 2.61 | % | 1.72 | % | 0.89 | % |
| Total interest-bearing liabilities | 1.03 | % | 0.54 | % | 0.49 | % |
| Interest rate spread (2) | 2.54 | % | 2.84 | % | -0.30 | % |
| Net interest margin (3) | 2.69 | % | 2.92 | % | -0.23 | % |
| Non-interest income to average assets (annualized) | 0.30 | % | 0.15 | % | 0.15 | % |
| Non-interest expense to average assets (annualized) | 1.65 | % | 1.79 | % | -0.14 | % |
| Efficiency ratio (4) | 58.75 | % | 62.93 | % | -4.18 | % |
| Return on average assets (annualized) | 0.85 | % | 0.61 | % | 0.24 | % |
| Return on average equity (annualized) | 7.38 | % | 4.92 | % | 2.46 | % |
| Return on average tangible equity (annualized) (5) | 9.70 | % | 6.40 | % | 3.30 | % |
_________________________
(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.
(5)Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
| Five-Quarter Financial Trend Analysis |
|---|
Kearny Financial Corp.
Consolidated Balance Sheets
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Audited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 96,076 | $ | 101,615 | $ | 62,379 | $ | 60,452 | $ | 54,070 | |||||
| Securities available for sale | 1,263,176 | 1,344,093 | 1,526,086 | 1,591,066 | 1,651,156 | ||||||||||
| Securities held to maturity | 115,943 | 118,291 | 121,853 | 53,142 | 37,497 | ||||||||||
| Loans held-for-sale | 12,936 | 28,874 | 2,822 | 12,549 | 12,884 | ||||||||||
| Loans receivable | 5,656,370 | 5,417,845 | 5,003,201 | 4,826,404 | 4,789,339 | ||||||||||
| Less: allowance for credit losses on loans | (47,613) | (47,058) | (43,860) | (48,216) | (51,785) | ||||||||||
| Net loans receivable | 5,608,757 | 5,370,787 | 4,959,341 | 4,778,188 | 4,737,554 | ||||||||||
| Premises and equipment | 52,642 | 53,281 | 53,727 | 54,067 | 55,236 | ||||||||||
| Federal Home Loan Bank stock | 44,957 | 47,144 | 30,997 | 36,622 | 36,615 | ||||||||||
| Accrued interest receivable | 23,817 | 20,466 | 19,517 | 18,495 | 19,541 | ||||||||||
| Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
| Core deposit intangible | 2,876 | 3,020 | 3,166 | 3,344 | 3,524 | ||||||||||
| Bank owned life insurance | 289,690 | 289,177 | 287,644 | 286,433 | 284,871 | ||||||||||
| Deferred income taxes, net | 54,278 | 49,350 | 34,349 | 25,709 | 27,771 | ||||||||||
| Other real estate owned | 178 | 178 | 401 | 658 | 178 | ||||||||||
| Other assets | 113,369 | 82,712 | 76,714 | 54,603 | 51,896 | ||||||||||
| Total assets | $ | 7,889,590 | $ | 7,719,883 | $ | 7,389,891 | $ | 7,186,223 | $ | 7,183,688 | |||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing | $ | 683,406 | $ | 653,899 | $ | 621,954 | $ | 604,805 | $ | 631,344 | |||||
| Interest-bearing | 5,424,872 | 5,208,357 | 4,906,708 | 4,849,220 | 4,763,795 | ||||||||||
| Total deposits | 6,108,278 | 5,862,256 | 5,528,662 | 5,454,025 | 5,395,139 | ||||||||||
| Borrowings | 851,454 | 901,337 | 851,220 | 686,105 | 720,990 | ||||||||||
| Advance payments by borrowers for taxes | 16,555 | 16,746 | 16,979 | 16,772 | 16,222 | ||||||||||
| Other liabilities | 38,329 | 45,544 | 37,861 | 33,851 | 36,914 | ||||||||||
| Total liabilities | 7,014,616 | 6,825,883 | 6,434,722 | 6,190,753 | 6,169,265 | ||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 680 | 687 | 714 | 735 | 758 | ||||||||||
| Paid-in capital | 520,245 | 528,396 | 561,176 | 587,392 | 616,894 | ||||||||||
| Retained earnings | 454,710 | 445,451 | 441,522 | 431,549 | 420,701 | ||||||||||
| Unearned ESOP shares | (24,321) | (24,807) | (25,294) | (25,780) | (26,266) | ||||||||||
| Accumulated other comprehensive (loss) income | (76,340) | (55,727) | (22,949) | 1,574 | 2,336 | ||||||||||
| Total stockholders' equity | 874,974 | 894,000 | 955,169 | 995,470 | 1,014,423 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,889,590 | $ | 7,719,883 | $ | 7,389,891 | $ | 7,186,223 | $ | 7,183,688 | |||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 11.09 | % | 11.58 | % | 12.93 | % | 13.85 | % | 14.12 | % | |||||
| Tangible equity to tangible assets (1) | 8.61 | % | 9.06 | % | 10.33 | % | 11.21 | % | 11.48 | % | |||||
| Share data | |||||||||||||||
| Outstanding shares | 67,938 | 68,666 | 71,424 | 73,453 | 75,800 | ||||||||||
| Book value per share | $ | 12.88 | $ | 13.02 | $ | 13.37 | $ | 13.55 | $ | 13.38 | |||||
| Tangible book value per share (2) | $ | 9.73 | $ | 9.90 | $ | 10.38 | $ | 10.64 | $ | 10.55 |
_________________________
(1)Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
(2)Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.
Kearny Financial Corp.
Supplemental Balance Sheet Highlights
(Unaudited)
| (Dollars in Thousands) | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loan portfolio composition: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family mortgage | $ | 2,570,297 | $ | 2,409,090 | $ | 2,076,003 | $ | 2,007,431 | $ | 1,978,681 | |||||
| Nonresidential mortgage | 1,040,688 | 1,019,838 | 1,085,988 | 1,026,447 | 1,023,391 | ||||||||||
| Commercial business | 186,361 | 176,807 | 169,551 | 180,429 | 169,392 | ||||||||||
| Construction | 166,052 | 140,131 | 121,137 | 110,703 | 112,226 | ||||||||||
| Total commercial loans | 3,963,398 | 3,745,866 | 3,452,679 | 3,325,010 | 3,283,690 | ||||||||||
| One- to four-family residential mortgage | 1,666,730 | 1,645,816 | 1,527,980 | 1,477,267 | 1,483,106 | ||||||||||
| Consumer loans: | |||||||||||||||
| Home equity loans | 43,269 | 42,028 | 41,501 | 43,934 | 44,912 | ||||||||||
| Other consumer | 2,869 | 2,866 | 2,755 | 3,040 | 3,020 | ||||||||||
| Total consumer loans | 46,138 | 44,894 | 44,256 | 46,974 | 47,932 | ||||||||||
| Total loans, excluding yield adjustments | 5,676,266 | 5,436,576 | 5,024,915 | 4,849,251 | 4,814,728 | ||||||||||
| Unaccreted yield adjustments | (19,896) | (18,731) | (21,714) | (22,847) | (25,389) | ||||||||||
| Loans receivable, net of yield adjustments | 5,656,370 | 5,417,845 | 5,003,201 | 4,826,404 | 4,789,339 | ||||||||||
| Less: allowance for credit losses on loans | (47,613) | (47,058) | (43,860) | (48,216) | (51,785) | ||||||||||
| Net loans receivable | $ | 5,608,757 | $ | 5,370,787 | $ | 4,959,341 | $ | 4,778,188 | $ | 4,737,554 | |||||
| Asset quality: | |||||||||||||||
| Nonperforming assets: | |||||||||||||||
| Accruing loans - 90 days and over past due | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
| Nonaccrual loans | 68,574 | 70,321 | 80,595 | 72,138 | 72,945 | ||||||||||
| Total nonperforming loans | 68,574 | 70,321 | 80,595 | 72,138 | 72,945 | ||||||||||
| Nonaccrual loans held-for-sale | 8,650 | 21,745 | — | — | — | ||||||||||
| Other real estate owned | 178 | 178 | 401 | 658 | 178 | ||||||||||
| Total nonperforming assets | $ | 77,402 | $ | 92,244 | $ | 80,996 | $ | 72,796 | $ | 73,123 | |||||
| Nonperforming loans (% total loans) | 1.21 | % | 1.30 | % | 1.61 | % | 1.49 | % | 1.52 | % | |||||
| Nonperforming assets (% total assets) | 0.98 | % | 1.19 | % | 1.10 | % | 1.01 | % | 1.02 | % | |||||
| Classified loans | $ | 92,610 | $ | 94,555 | $ | 163,621 | $ | 162,174 | $ | 170,449 | |||||
| Allowance for credit losses on loans (ACL): | |||||||||||||||
| ACL to total loans | 0.84 | % | 0.87 | % | 0.87 | % | 0.99 | % | 1.08 | % | |||||
| ACL to nonperforming loans | 69.43 | % | 66.92 | % | 54.42 | % | 66.84 | % | 70.99 | % | |||||
| Net charge-offs | $ | 115 | $ | 1,024 | $ | 436 | $ | 1,149 | $ | 980 | |||||
| Average net charge-off rate (annualized) | 0.01 | % | 0.08 | % | 0.04 | % | 0.10 | % | 0.08 | % | |||||
| Funding composition: | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 683,406 | $ | 653,899 | $ | 621,954 | $ | 604,805 | $ | 631,344 | |||||
| Interest-bearing demand | 2,382,411 | 2,265,597 | 2,154,488 | 2,106,693 | 1,937,661 | ||||||||||
| Savings | 982,916 | 1,053,198 | 1,088,974 | 1,087,740 | 1,089,699 | ||||||||||
| Certificates of deposit (retail) | 1,263,124 | 1,116,035 | 1,122,228 | 1,184,530 | 1,264,016 | ||||||||||
| Certificates of deposit (brokered and listing service) | 796,421 | 773,527 | 541,018 | 470,257 | 472,419 | ||||||||||
| Interest-bearing deposits | 5,424,872 | 5,208,357 | 4,906,708 | 4,849,220 | 4,763,795 | ||||||||||
| Total deposits | 6,108,278 | 5,862,256 | 5,528,662 | 5,454,025 | 5,395,139 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 796,454 | 651,337 | 541,220 | 666,105 | 665,990 | ||||||||||
| Overnight borrowings | 55,000 | 250,000 | 310,000 | 20,000 | 55,000 | ||||||||||
| Total borrowings | 851,454 | 901,337 | 851,220 | 686,105 | 720,990 | ||||||||||
| Total funding | $ | 6,959,732 | $ | 6,763,593 | $ | 6,379,882 | $ | 6,140,130 | $ | 6,116,129 | |||||
| Loans as a % of deposits | 92.0 | % | 92.1 | % | 89.8 | % | 87.8 | % | 88.1 | % | |||||
| Deposits as a % of total funding | 87.8 | % | 86.7 | % | 86.7 | % | 88.8 | % | 88.2 | % | |||||
| Borrowings as a % of total funding | 12.2 | % | 13.3 | % | 13.3 | % | 11.2 | % | 11.8 | % |
Kearny Financial Corp.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | ||||||||||
| Interest income | |||||||||||||||
| Loans | $ | 52,935 | $ | 48,869 | $ | 45,846 | $ | 47,575 | $ | 48,230 | |||||
| Taxable investment securities | 10,439 | 8,915 | 8,024 | 7,595 | 8,212 | ||||||||||
| Tax-exempt investment securities | 285 | 297 | 316 | 327 | 333 | ||||||||||
| Other interest-earning assets | 761 | 472 | 415 | 415 | 431 | ||||||||||
| Total interest income | 64,420 | 58,553 | 54,601 | 55,912 | 57,206 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 10,869 | 3,915 | 3,565 | 3,663 | 4,065 | ||||||||||
| Borrowings | 5,020 | 4,039 | 3,309 | 3,562 | 3,551 | ||||||||||
| Total interest expense | 15,889 | 7,954 | 6,874 | 7,225 | 7,616 | ||||||||||
| Net interest income | 48,531 | 50,599 | 47,727 | 48,687 | 49,590 | ||||||||||
| Provision for (reversal of) credit losses | 670 | 4,222 | (3,920) | (2,420) | (5,400) | ||||||||||
| Net interest income after provision for (reversal of) credit losses | 47,861 | 46,377 | 51,647 | 51,107 | 54,990 | ||||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges | 763 | 658 | 617 | 698 | 607 | ||||||||||
| (Loss) gain on sale and call of securities | — | (563) | 3 | — | 1 | ||||||||||
| Gain on sale of loans | 395 | 187 | 376 | 970 | 1,006 | ||||||||||
| (Loss) gain on sale of other real estate owned | — | (9) | 14 | — | — | ||||||||||
| Income from bank owned life insurance | 3,698 | 1,533 | 1,511 | 1,562 | 1,561 | ||||||||||
| Electronic banking fees and charges | 506 | 366 | 432 | 421 | 407 | ||||||||||
| Other income | 555 | 638 | 238 | 482 | 218 | ||||||||||
| Total non-interest income | 5,917 | 2,810 | 3,191 | 4,133 | 3,800 | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 20,348 | 20,367 | 19,184 | 18,096 | 18,617 | ||||||||||
| Net occupancy expense of premises | 3,090 | 3,188 | 3,223 | 3,156 | 4,547 | ||||||||||
| Equipment and systems | 3,662 | 4,516 | 3,822 | 3,723 | 3,825 | ||||||||||
| Advertising and marketing | 747 | 703 | 516 | 448 | 392 | ||||||||||
| Federal deposit insurance premium | 906 | 762 | 480 | 721 | 492 | ||||||||||
| Directors' compensation | 340 | 340 | 340 | 649 | 803 | ||||||||||
| Other expense | 2,895 | 3,736 | 3,058 | 2,877 | 3,127 | ||||||||||
| Total non-interest expense | 31,988 | 33,612 | 30,623 | 29,670 | 31,803 | ||||||||||
| Income before income taxes | 21,790 | 15,575 | 24,215 | 25,570 | 26,987 | ||||||||||
| Income taxes | 5,255 | 4,205 | 6,522 | 6,801 | 7,272 | ||||||||||
| Net income | $ | 16,535 | $ | 11,370 | $ | 17,693 | $ | 18,769 | $ | 19,715 | |||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.25 | $ | 0.17 | $ | 0.25 | $ | 0.26 | $ | 0.26 | |||||
| Diluted | $ | 0.25 | $ | 0.17 | $ | 0.25 | $ | 0.26 | $ | 0.26 | |||||
| Dividends declared | |||||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.10 | |||||
| Cash dividends declared | $ | 7,276 | $ | 7,441 | $ | 7,720 | $ | 7,921 | $ | 7,381 | |||||
| Dividend payout ratio | 44.0 | % | 65.4 | % | 43.6 | % | 42.2 | % | 37.4 | % | |||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Basic | 65,737 | 67,240 | 69,790 | 72,011 | 74,537 | ||||||||||
| Diluted | 65,756 | 67,276 | 69,817 | 72,037 | 74,556 |
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Thousands) | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | ||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held-for-sale | $ | 5,553,996 | $ | 5,181,983 | $ | 4,850,236 | $ | 4,822,959 | $ | 4,835,676 | |||||
| Taxable investment securities | 1,516,974 | 1,608,372 | 1,620,996 | 1,610,395 | 1,649,953 | ||||||||||
| Tax-exempt investment securities | 48,973 | 51,672 | 55,390 | 57,686 | 59,115 | ||||||||||
| Other interest-earning assets | 88,038 | 87,990 | 79,644 | 77,811 | 85,749 | ||||||||||
| Total interest-earning assets | 7,207,981 | 6,930,017 | 6,606,266 | 6,568,851 | 6,630,493 | ||||||||||
| Non-interest-earning assets | 570,225 | 564,734 | 601,684 | 611,390 | 616,735 | ||||||||||
| Total assets | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | $ | 7,180,241 | $ | 7,247,228 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 2,354,340 | $ | 2,155,946 | $ | 2,133,977 | $ | 2,027,021 | $ | 1,954,271 | |||||
| Savings | 1,019,343 | 1,077,631 | 1,088,351 | 1,086,903 | 1,102,865 | ||||||||||
| Certificates of deposit | 2,014,922 | 1,701,725 | 1,650,048 | 1,693,423 | 1,798,473 | ||||||||||
| Total interest-bearing deposits | 5,388,605 | 4,935,302 | 4,872,376 | 4,807,347 | 4,855,609 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 642,399 | 752,579 | 632,811 | 666,029 | 665,915 | ||||||||||
| Other borrowings | 127,456 | 185,901 | 51,667 | 26,033 | 28,532 | ||||||||||
| Total borrowings | 769,855 | 938,480 | 684,478 | 692,062 | 694,447 | ||||||||||
| Total interest-bearing liabilities | 6,158,460 | 5,873,782 | 5,556,854 | 5,499,409 | 5,550,056 | ||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 667,624 | 640,200 | 624,152 | 624,200 | 610,271 | ||||||||||
| Other non-interest-bearing liabilities | 56,431 | 56,636 | 49,455 | 50,870 | 56,893 | ||||||||||
| Total non-interest-bearing liabilities | 724,055 | 696,836 | 673,607 | 675,070 | 667,164 | ||||||||||
| Total liabilities | 6,882,515 | 6,570,618 | 6,230,461 | 6,174,479 | 6,217,220 | ||||||||||
| Stockholders' equity | 895,691 | 924,133 | 977,489 | 1,005,762 | 1,030,008 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | $ | 7,180,241 | $ | 7,247,228 | |||||
| Average interest-earning assets to average<br>interest-bearing liabilities | 117.04 | % | 117.98 | % | 118.89 | % | 119.45 | % | 119.47 | % |
Kearny Financial Corp.
Performance Ratio Highlights
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | ||||||
| Average yield on interest-earning assets: | ||||||||||
| Loans receivable, including loans held-for-sale | 3.81 | % | 3.77 | % | 3.78 | % | 3.95 | % | 3.99 | % |
| Taxable investment securities | 2.75 | % | 2.22 | % | 1.98 | % | 1.89 | % | 1.99 | % |
| Tax-exempt investment securities (1) | 2.33 | % | 2.30 | % | 2.28 | % | 2.26 | % | 2.25 | % |
| Other interest-earning assets | 3.46 | % | 2.15 | % | 2.08 | % | 2.13 | % | 2.01 | % |
| Total interest-earning assets | 3.57 | % | 3.38 | % | 3.31 | % | 3.40 | % | 3.45 | % |
| Average cost of interest-bearing liabilities: | ||||||||||
| Deposits: | ||||||||||
| Interest-bearing demand | 0.92 | % | 0.31 | % | 0.22 | % | 0.22 | % | 0.23 | % |
| Savings | 0.23 | % | 0.11 | % | 0.10 | % | 0.11 | % | 0.12 | % |
| Certificates of deposit | 0.97 | % | 0.46 | % | 0.52 | % | 0.53 | % | 0.57 | % |
| Total interest-bearing deposits | 0.81 | % | 0.32 | % | 0.29 | % | 0.30 | % | 0.33 | % |
| Borrowings: | ||||||||||
| Federal Home Loan Bank advances | 2.68 | % | 1.96 | % | 2.08 | % | 2.14 | % | 2.13 | % |
| Other borrowings | 2.26 | % | 0.77 | % | 0.17 | % | 0.09 | % | 0.10 | % |
| Total borrowings | 2.61 | % | 1.72 | % | 1.93 | % | 2.06 | % | 2.05 | % |
| Total interest-bearing liabilities | 1.03 | % | 0.54 | % | 0.49 | % | 0.53 | % | 0.55 | % |
| Interest rate spread (2) | 2.54 | % | 2.84 | % | 2.82 | % | 2.87 | % | 2.90 | % |
| Net interest margin (3) | 2.69 | % | 2.92 | % | 2.89 | % | 2.96 | % | 2.99 | % |
| Non-interest income to average assets<br>(annualized) | 0.30 | % | 0.15 | % | 0.18 | % | 0.23 | % | 0.21 | % |
| Non-interest expense to average assets<br>(annualized) | 1.65 | % | 1.79 | % | 1.70 | % | 1.65 | % | 1.76 | % |
| Efficiency ratio (4) | 58.75 | % | 62.93 | % | 60.14 | % | 56.17 | % | 59.57 | % |
| Return on average assets (annualized) | 0.85 | % | 0.61 | % | 0.98 | % | 1.05 | % | 1.09 | % |
| Return on average equity (annualized) | 7.38 | % | 4.92 | % | 7.24 | % | 7.46 | % | 7.66 | % |
| Return on average tangible equity (annualized) (5) | 9.70 | % | 6.40 | % | 9.27 | % | 9.49 | % | 9.67 | % |
_________________________
(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.
(5)Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | ||||||||||
| Adjusted net income: | |||||||||||||||
| Net income (GAAP) | $ | 16,535 | $ | 11,370 | $ | 17,693 | $ | 18,769 | $ | 19,715 | |||||
| Non-recurring transactions - net of tax: | |||||||||||||||
| Early contract termination | — | 568 | — | — | — | ||||||||||
| Branch consolidation expenses and<br>impairment charges | — | — | — | 132 | 1,209 | ||||||||||
| Net effect of sale and call of securities | — | 400 | (2) | — | (1) | ||||||||||
| Net effect of sale of other assets | — | — | — | (251) | — | ||||||||||
| Adjusted net income | $ | 16,535 | $ | 12,338 | $ | 17,691 | $ | 18,650 | $ | 20,923 | |||||
| Calculation of pre-tax, pre-provision net revenue: | |||||||||||||||
| Net income (GAAP) | $ | 16,535 | $ | 11,370 | $ | 17,693 | $ | 18,769 | $ | 19,715 | |||||
| Adjustments to net income (GAAP): | |||||||||||||||
| Provision for income taxes | 5,255 | 4,205 | 6,522 | 6,801 | 7,272 | ||||||||||
| Provision for (reversal of) credit losses | 670 | 4,222 | (3,920) | (2,420) | (5,400) | ||||||||||
| Pre-tax, pre-provision net revenue (non-GAAP) | $ | 22,460 | $ | 19,797 | $ | 20,295 | $ | 23,150 | $ | 21,587 | |||||
| Adjusted earnings per share: | |||||||||||||||
| Weighted average common shares - basic | 65,737 | 67,240 | 69,790 | 72,011 | 74,537 | ||||||||||
| Weighted average common shares - diluted | 65,756 | 67,276 | 69,817 | 72,037 | 74,556 | ||||||||||
| Earnings per share - basic (GAAP) | $ | 0.25 | $ | 0.17 | $ | 0.25 | $ | 0.26 | $ | 0.26 | |||||
| Earnings per share - diluted (GAAP) | $ | 0.25 | $ | 0.17 | $ | 0.25 | $ | 0.26 | $ | 0.26 | |||||
| Adjusted earnings per share - basic (non-GAAP) | $ | 0.25 | $ | 0.18 | $ | 0.25 | $ | 0.26 | $ | 0.28 | |||||
| Adjusted earnings per share - diluted (non-GAAP) | $ | 0.25 | $ | 0.18 | $ | 0.25 | $ | 0.26 | $ | 0.28 | |||||
| Pre-tax, pre-provision net revenue per share: | |||||||||||||||
| Pre-tax, pre-provision net revenue per share - basic<br>(non-GAAP) | $ | 0.34 | $ | 0.29 | $ | 0.29 | $ | 0.32 | $ | 0.29 | |||||
| Pre-tax, pre-provision net revenue per share - diluted<br>(non-GAAP) | $ | 0.34 | $ | 0.29 | $ | 0.29 | $ | 0.32 | $ | 0.29 | |||||
| Adjusted return on average assets: | |||||||||||||||
| Total average assets | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | $ | 7,180,241 | $ | 7,247,228 | |||||
| Return on average assets (GAAP) | 0.85 | % | 0.61 | % | 0.98 | % | 1.05 | % | 1.09 | % | |||||
| Adjusted return on average assets (non-GAAP) | 0.85 | % | 0.66 | % | 0.98 | % | 1.04 | % | 1.15 | % | |||||
| Adjusted return on average equity: | |||||||||||||||
| Total average equity | $ | 895,691 | $ | 924,133 | $ | 977,489 | $ | 1,005,762 | $ | 1,030,008 | |||||
| Return on average equity (GAAP) | 7.38 | % | 4.92 | % | 7.24 | % | 7.46 | % | 7.66 | % | |||||
| Adjusted return on average equity (non-GAAP) | 7.38 | % | 5.34 | % | 7.24 | % | 7.42 | % | 8.13 | % |
Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | ||||||||||
| Adjusted return on average tangible equity: | |||||||||||||||
| Total average equity | $ | 895,691 | $ | 924,133 | $ | 977,489 | $ | 1,005,762 | $ | 1,030,008 | |||||
| Less: average goodwill | (210,895) | (210,895) | (210,895) | (210,895) | (210,895) | ||||||||||
| Less: average other intangible assets | (2,971) | (3,116) | (3,282) | (3,462) | (3,641) | ||||||||||
| Total average tangible equity | $ | 681,825 | $ | 710,122 | $ | 763,312 | $ | 791,405 | $ | 815,472 | |||||
| Return on average tangible equity (non-GAAP) | 9.70 | % | 6.40 | % | 9.27 | % | 9.49 | % | 9.67 | % | |||||
| Adjusted return on average tangible equity (non-GAAP) | 9.70 | % | 6.95 | % | 9.27 | % | 9.43 | % | 10.26 | % | |||||
| Adjusted non-interest expense ratio: | |||||||||||||||
| Non-interest expense (GAAP) | $ | 31,988 | $ | 33,612 | $ | 30,623 | $ | 29,670 | $ | 31,803 | |||||
| Non-recurring transactions: | |||||||||||||||
| Early contract termination | — | (800) | — | — | — | ||||||||||
| Branch consolidation expenses and<br> impairment charges | — | — | — | (187) | (1,711) | ||||||||||
| Non-interest expense (non-GAAP) | $ | 31,988 | $ | 32,812 | $ | 30,623 | $ | 29,483 | $ | 30,092 | |||||
| Non-interest expense ratio (GAAP) | 1.65 | % | 1.79 | % | 1.70 | % | 1.65 | % | 1.76 | % | |||||
| Adjusted non-interest expense ratio (non-GAAP) | 1.65 | % | 1.75 | % | 1.70 | % | 1.64 | % | 1.66 | % | |||||
| Adjusted efficiency ratio: | |||||||||||||||
| Non-interest expense (non-GAAP) | $ | 31,988 | $ | 32,812 | $ | 30,623 | $ | 29,483 | $ | 30,092 | |||||
| Net interest income (GAAP) | $ | 48,531 | $ | 50,599 | $ | 47,727 | $ | 48,687 | $ | 49,590 | |||||
| Total non-interest income (GAAP) | 5,917 | 2,810 | 3,191 | 4,133 | 3,800 | ||||||||||
| Non-recurring transactions: | |||||||||||||||
| Net effect of sale and call of securities | — | 563 | (3) | — | (1) | ||||||||||
| Net effect of sale of other assets | — | — | — | (356) | — | ||||||||||
| Total revenue (non-GAAP) | $ | 54,448 | $ | 53,972 | $ | 50,915 | $ | 52,464 | $ | 53,389 | |||||
| Efficiency ratio (GAAP) | 58.75 | % | 62.93 | % | 60.14 | % | 56.17 | % | 59.57 | % | |||||
| Adjusted efficiency ratio (non-GAAP) | 58.75 | % | 60.79 | % | 60.15 | % | 56.20 | % | 56.36 | % |
14
a2022annualmeetingpresen
A N N U A L M E E T I N G O F STOCKHOLDERS OCTOBER 27, 2022 10:00 AM Exhibit 99.2
Welcome and Introductory Remarks Craig L. Montanaro Director, President and Chief Executive Officer 2
Members of the Board of Directors John J. Mazur, Jr., Chairman Theodore J. Aanensen John F. McGovern Raymond E. Chandonnet Craig L. Montanaro John N. Hopkins Leopold W. Montanaro Catherine A. Lawton Christopher Petermann Joseph P. Mazza Charles J. Pivirotto John F. Regan 3
Executive Management Team Keith Suchodolski Senior Executive Vice President Chief Financial Officer Patrick M. Joyce Executive Vice President Chief Lending Officer Anthony V. Bilotta, Jr. Executive Vice President Chief Banking Officer Thomas D. DeMedici Executive Vice President Chief Credit Officer John V. Dunne Executive Vice President Chief Risk Officer Erika K. Parisi Executive Vice President Chief Administrative Officer Timothy A. Swansson Executive Vice President Chief Technology & Innovation Officer 4
Other Participants Corporate Secretary Kearny Financial Corp. Gail Corrigan Senior Vice President Legal Counsel Luse Gorman, PC Marc Levy, Esq. Independent Registered Public Accounting Firm Crowe LLP Andrey Dragun, CPA Partner Inspector of Election Computershare Amilja Regan Assistant Vice President 5
Business of the Meeting Proposals to be voted upon: Election of four directors, each for a three-year term; Ratification of the appointment of Crowe LLP as the Company’s independent auditor for the fiscal year ending June 30, 2023; Advisory, non-binding resolution to approve our executive compensation as described in the Proxy Statement; Review of Financial Results Stockholder Questions Report of the Inspector of Election 6
A N N U A L M E E T I N G O F STOCKHOLDERS Review of F inancial Results Fiscal Year Ended June 30 ,2022
Forward Looking Statements & Non-GAAP Financial Measures This presentation may include certain “forward-looking statements,” which are made in good faith by Kearny Financial Corp. (the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company’s control). In addition to the factors described under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K, the following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: • the strength of the United States economy in general and the strength of the local economy in which the Company conducts operations, • the effects of COVID-19 on our business, financial condition or results of operations, • the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, • the impact of changes in laws, regulations and government policies regarding financial institutions (including laws concerning taxation, banking, securities and insurance), • changes in accounting policies and practices, as may be adopted by regulatory agencies, the Financial Accounting Standards Board (“FASB”) or the Public Company Accounting Oversight Board, • technological changes, • competition among financial services providers, and • the success of the Company at managing the risks involved in the foregoing and managing its business. The Company cautions that the foregoing list of important factors is not exhaustive. Readers should not place any undue reliance on any forward looking statements, which speak only as of the date made. The Company does not undertake any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company. This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses these “non-GAAP” measures in its analysis of the Company’s performance. Management believes these non-GAAP financial measures allow for better comparability of period to period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of the non-GAAP measures used in this presentation to the most directly comparable GAAP measures is provided in the Appendix to this presentation. 8
Kearny Financial Corp. NASDAQ: KRNY Market Cap: $741.2 million1 Founded in 1884 Top 10 New Jersey-based financial institution by assets 45 full-service branches2 in 12 counties throughout New Jersey and New York City Active acquirer, having completed 7 whole-bank acquisitions since 1999 1 As of October 17, 2022 2 As of June 30, 2022 Source: S&P Global Market Intelligence & Company Filings 9
138 Years of Serving our Communities and Clients 10 1884 1941 1999 2003 2004 2005 2011 2014 2015 2017 2018 2020 Obtained Federal Charter Pulaski Bancorp Acquired Completed First-Step Mutual Conversion & IPO Atlas Bank Acquired MSB Financial Corp. Acquired Converted to NJ State -Chartered Savings Bank 2021 2022 Achieved Record Net Income and Earnings per Share Established Kearny Investment Services Completed Second- Step Conversion and $717.5M Stock Offering Clifton Bancorp Acquired Introduced Private Client Services Central Jersey Bancorp Acquired West Essex Bank Acquired Founded, Kearny, NJ Formed the KearnyBank foundation funded with $10M South Bergen Savings Bank Acquired
Financial Highlights Source: Company Filings Balance Sheet ($ in billions) 2022FY 2021FY Total Assets $7.72 $7.28 Total Loans $5.44 $4.88 Total Deposits $5.86 $5.49 Profitability and Performance Ratios ($ in millions, except per share data) 2022FY 2021FY Net Income $67.5 $63.2 Earnings per share $0.95 $0.77 Net Interest Income $196.6 $188.2 Net Interest Margin 2.94% 2.80% Return on Average Assets 0.93% 0.86% Return on Average Equity 6.86% 5.79% Return on Average Tangible Equity 8.77% 7.22% 11
10.14% 14.58% 14.58% 15.17% 9.37% 11.86% 11.90% 14.37% Tier 1 Leverage Common Equity Tier 1 Tier 1 Risk-Based Capital Total Risk-Based Capital KRNY S&P US Small Cap Banks Equity & Capitalization 1 Kearny Regulatory Capital Ratios based on June 30, 2022 results 2 S&P U.S. Small Cap Banks Index comprised of 280 constituents, based on March 31, 2022 results. Source: Company Filings Equity Capitalization Level Regulatory Capital Ratios1,2 12 16.53% 14.19% 13.29% 11.72% 9.06% 19.28% 16.99% 16.04% 14.32% 11.58% 0.00% 4.00% 8.00% 12.00% 16.00% 20.00% 2018FY 2019FY 2020FY 2021FY 2022FY Tangible Common Equity / Tangible Assets Equity / Assets
$291 $433 $502 $621 $751 $36 $69 $94 $122 $152 $327 $502 $596 $743 $903 2018FY 2019FY 2020FY 2021FY 2022FY Repurchase of Common Stock Dividends Paid ($ millions) Capital Management Source: Company Filings 1 Since conclusion of second step conversion in May 2015. Repurchased 10.2 million shares during Fiscal 2022 at an average price of $12.67 per share Cumulative Capital Returned to Stockholders1 13
Earnings Performance 1 Although management believes core net income, EPS and ROAA, which are non-GAAP measures, are useful to investors by providing a greater level of understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. Core net income, EPS and ROAA exclude non-recurring income and expenses, including branch consolidation expenses and impairment charges. Refer to reconciliation of GAAP to non-GAAP at the end of this presentation. Source: S&P Global Market Intelligence & Company Filings Earnings per Share1 Net Income & Return on Assets1 Sustained growth trajectory in net income, earnings per share and return on assets Annual GAAP EPS for Fiscal 2022 represented a 23% increase from Fiscal 2021 14 $0.33 $0.47 $0.54 $0.81 $0.98 $0.24 $0.46 $0.55 $0.77 $0.95 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 2018FY 2019FY 2020FY 2021FY 2022FY Core EPS GAAP EPS $27.4 $43.4 $44.3 $66.7 $69.6 $19.6 $42.1 $45.0 $63.2 $67.5 0.52% 0.65% 0.66% 0.91% 0.96% 0.37% 0.63% 0.67% 0.86% 0.93% 0.00% 0.15% 0.30% 0.45% 0.60% 0.75% 0.90% 1.05% $0 $20 $40 $60 $80 $100 $120 $140 2018FY 2019FY 2020FY 2021FY 2022FY Core Net Income Net Income Core ROAA ROAA ($ millions)
QTD Cost of Deposits 0.32% 11.2% 38.6% 18.0% 19.0% 13.2% $1,828 $1,902 $1,773 $1,399 $1,116 $189 $302 $67 $479 $773 $744 $791 $907 $1,111 $1,053 $1,001 $843 $1,264 $1,902 $2,266 $312 $309 $419 $594 $654 $4,074 $4,147 $4,430 $5,485 $5,862 2018FY 2019FY 2020FY 2021FY 2022FY Retail CDs Wholesale CDs Savings Interest bearing DDA Noninterest bearing DDA Deposits 1 For the quarter ended June 30, 2022. Source: S&P Global Market Intelligence & Company Filings Deposit Composition1 Deposit Growth Consolidated 25% of branches over a three-year period Grew non-maturity deposits 10% during Fiscal 2022 ($ millions) 15
30.3% 44.3% 18.8% 2.6% 3.2% 0.8% 1-4 Family Multifamily CRE C&D Commercial Other Portfolio Lending 1 For the quarter ended June 30, 2022. 2 As of June 30, 2022 Source: S&P Global Market Intelligence & Company Filings Loan Composition1 Geographic Distribution2Loan-to-Value by Real Estate Secured Segment2 Strategy designed to grow and diversify the loan portfolio with a focus on increasing the allocation of C&I and construction credits Grew net loans by 11% during Fiscal 2022 New York 36.0% New Jersey 55.7% Pennsylvania 5.1% Other 3.2% QTD Yield on Loans 3.77% 16 Loan Type Balance ($ millions) Loan to Value (LTV) 1-4 Family $1,646 62% Multifamily $2,409 64% CRE $1,020 54% Construction $140 61% Home Equity $42 46% Total $5,257 61%
$26.7 $31.8 $0.3 $1.6 $8.5 $1.4 Multi-family Non-Residential Commercial Construction Residential Home Equity Asset Quality 1 As of June 30, 2022; amounts shown in millions. 2 The Company adopted CECL methodology effective FY 2021 Q1 Source: S&P Global Market Intelligence & Company Filings Net Charge-Offs / Average Loans Non-Performing Assets / Total Assets Non-Performing Loans1 Allowance for Credit Losses on Loans (ACL)2 17 0.03% 0.02% 0.00% 0.03% 0.07% -0.05% 0.00% 0.05% 0.10% 0.15% 2018FY 2019FY 2020FY 2021FY 2022FY $30.9 $33.3 $37.3 $58.2 $47.10.68% 0.70% 0.82% 1.19% 0.87% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 2018FY 2019FY 2020FY 2021FY 2022FY ACL Balance ACL to Total Loans Receivable 0.27% 0.31% 0.55% 1.10% 1.19% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 2018FY 2019FY 2020FY 2021FY 2022FY
Selected Technology Partners 18
M&A History and Strategy Experienced and disciplined acquirer and integrator Opportunistic acquisition strategy with an emphasis on: Low premium deals Similar or complementary business models Expansion in existing or contiguous markets Cultural compatibility Focus on limiting tangible book value dilution and earn- back periods while generating strong EPS accretion and operating leverage 19
Environmental, Social & Governance (ESG) 20 The Company’s expanded ESG Report was recently released, disclosing the Company’s ongoing efforts related to: Environmental sustainability and climate risk management Cyber security, community re-investment and affordable housing initiatives Human capital initiatives, including our diversity, equity & inclusion program Corporate governance and compliance
A N N U A L M E E T I N G O F STOCKHOLDERS Financial Update First Quarter F iscal 2023
First Quarter Fiscal 2023 22 Balance Sheet ($ in billions) 2023Q1 2022Q4 Total Assets $7.89 $7.72 Total Loans $5.68 $5.44 Total Deposits $6.11 $5.86 Profitability and Performance Ratios ($ in millions, except per share data) 2023Q1 2022Q4 Net Income $16.5 $11.4 Earnings per share $0.25 $0.17 Net Interest Income $48.5 $50.6 Net Interest Margin 2.69% 2.92% Return on Average Assets 0.85% 0.61% Return on Average Equity 7.38% 4.92% Return on Average Tangible Equity 9.70% 6.40%
First Quarter Fiscal 2023 1 For the quarter ended September 30, 2022 Source: S&P Global Market Intelligence & Company Filings Loan Growth Deposit GrowthNon-Performing Assets / Total Assets 23 $1,902 $1,773 $1,399 $1,116 $1,263 $302 $67 $479 $773 $797 $791 $907 $1,111 $1,053 $983 $843 $1,264 $1,902 $2,266 $2,382 $309 $419 $594 $654 $683 $4,147 $4,430 $5,485 $5,862 $6,108 2019FY 2020FY 2021FY 2022FY 2023Q1 Retail CDs Wholesale CDs Savings Interest bearing DDA Noninterest bearing DDA $1,440 $1,356 $1,496 $1,688 $1,710 $1,946 $2,060 $2,039 $2,409 $2,570 $1,259 $961 $1,079 $1,020 $1,041 $4,731 $4,540 $4,880 $5,437 $5,676 2019FY 2020FY 2021FY 2022FY 2023Q1 1-4 Family Multi-family CRE C&D Other 0.31% 0.55% 1.10% 1.19% 0.98% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2019FY 2020FY 2021FY 2022FY 2023Q11 1
Stockholder Questions Questions? 24
Results of Voting Report of the Inspector of Election 25
A N N U A L M E E T I N G O F STOCKHOLDERS OCTOBER 27, 2022 10:00 AM
Non-GAAP Reconciliation 27 Appendix A: Reconciliation of GAAP to Non-GAAP For the year ended For the year ended (Dollars in Thousands, Except Per Share Data) June 30, 2022 June 30, 2021 Adjusted net income: Net Income (GAAP) $67,547 $63,233 Non-recurring transactions - net of tax: Early contract termination 568 - Bargain purchase gain - (3,053) Provision for credit losses on non-PCD loans - 3,563 Merger-related expenses - 3,123 Branch consolidation expenses and impairment charges 1,341 1,377 Net effect of sales and calls of securities 397 (804) Debt extinguishment expenses - 558 Reversal of income tax valuation allowance - (535) Net effect of sales of other assets (251) (731) Adjusted net income $69,602 $66,731 Adjusted earnings per share: Weighted average common shares - basic 70,911 82,387 Weighted average common shares - diluted 70,933 82,391 Earnings per share - basic (GAAP) $0.95 $0.77 Earnings per share - diluted (GAAP) $0.95 $0.77 Adjusted earnings per share - basic (non-GAAP) $0.98 $0.81 Adjusted earnings per share - diluted (non-GAAP) $0.98 $0.81 Adjusted return on average assets: Total average assets $7,282,370 $7,333,861 Return on average assets (GAAP) 0.93% 0.86% Adjusted return on average assets (non-GAAP) 0.96% 0.91%
krny09_30x2022investorpr
I N V E S T O R P R E S E N TAT I O N FIRST QUARTER F ISCAL 2023 OCTOBER 27, 2022 Exhibit 99.3
Forward Looking Statements This presentation may include certain “forward-looking statements,” which are made in good faith by Kearny Financial Corp. (the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company’s control). In addition to the factors described under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K, the following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: • the strength of the United States economy in general and the strength of the local economy in which the Company conducts operations, • the effects of COVID-19 on our business, financial condition or results of operations, • the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, • the impact of changes in laws, regulations and government policies regarding financial institutions (including laws concerning taxation, banking, securities and insurance), • changes in accounting policies and practices, as may be adopted by regulatory agencies, the Financial Accounting Standards Board (“FASB”) or the Public Company Accounting Oversight Board, • technological changes, • competition among financial services providers, and • the success of the Company at managing the risks involved in the foregoing and managing its business. The Company cautions that the foregoing list of important factors is not exhaustive. Readers should not place any undue reliance on any forward looking statements, which speak only as of the date made. The Company does not undertake any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company. 2
Kearny Financial Corp. NASDAQ: KRNY Market Cap: $741.2 million1 Founded in 1884 Top 10 New Jersey-based financial institution by assets 45 full-service branches2 in 12 counties throughout New Jersey and New York City Active acquirer, having completed 7 whole-bank acquisitions since 1999 1 As of October 17, 2022 2 As of September 30, 2022 Source: S&P Global Market Intelligence & Company Filings 3
138 Years of Serving our Communities and Clients 4 1884 1941 1999 2003 2004 2005 2011 2014 2015 2017 2018 2020 Obtained Federal Charter Pulaski Bancorp Acquired Completed First-Step Mutual Conversion & IPO Atlas Bank Acquired MSB Financial Corp. Acquired Converted to NJ State -Chartered Savings Bank 2021 2022 Established Kearny Investment Services Completed Second- Step Conversion and $717.5M Stock Offering Clifton Bancorp Acquired Introduced Private Client Services Central Jersey Bancorp Acquired West Essex Bank Acquired Founded, Kearny, NJ Formed the KearnyBank foundation funded with $10M South Bergen Savings Bank Acquired
Financial Highlights Source: Company Filings 5 Balance Sheet ($ in billions) 2023Q1 2022Q4 Total Assets $7.89 $7.72 Total Loans $5.68 $5.44 Total Deposits $6.11 $5.86 Profitability and Performance Ratios ($ in millions, except per share data) 2023Q1 2022Q4 Net Income $16.5 $11.4 Earnings per share $0.25 $0.17 Net Interest Margin 2.69% 2.92% Return on Average Assets 0.85% 0.61% Return on Average Equity 7.38% 4.92% Return on Average Tangible Equity 9.70% 6.40%
Equity & Capitalization 1 Kearny Regulatory Capital Ratios as of September 30, 2022 are preliminary. 2 S&P U.S. Small Cap Banks Index comprised of 255 constituents, based on June 30, 2022 results. Source: Company Filings Equity Capitalization Level Regulatory Capital Ratios1,2 6 9.72% 13.86% 13.86% 14.49% 9.45% 11.47% 11.73% 14.12% Tier 1 Leverage Common Equity Tier 1 Tier 1 Risk-Based Capital Total Risk-Based Capital KRNY S&P US Small Cap Banks 14.19% 13.29% 11.72% 9.06% 8.61% 16.99% 16.04% 14.32% 11.58% 11.09% 2019FY 2020FY 2021FY 2022FY 2023Q1 Tangible Common Equity / Tangible Assets Equity / Assets
$433 $502 $621 $751 $759 $69 $94 $122 $152 $160 $502 $596 $743 $903 $919 2019FY 2020FY 2021FY 2022FY 2023Q1 Repurchase of Common Stock Dividends Paid ($ millions) Capital Management 1 Since conclusion of second step conversion in May 2015. Source: Company Filings Repurchased 760 thousand shares during Fiscal 2023 Q1 at an average price of $11.44 per share 3.6 million shares remain available for repurchase pursuant to the current repurchase plan Cumulative Capital Returned to Stockholders1 7
Earnings Performance Earnings per Share Net Income & Return on Assets 8 $42.1 $45.0 $63.2 $67.5 $16.5 0.63% 0.67% 0.86% 0.93% 0.85% 0.00% 0.15% 0.30% 0.45% 0.60% 0.75% 0.90% 1.05% $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 2019FY 2020FY 2021FY 2022FY 2023Q1 Net Income ROAA ($ millions) $0.46 $0.55 $0.77 $0.95 $0.25 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 2019FY 2020FY 2021FY 2022FY 2023Q1 GAAP EPS
$1,902 $1,773 $1,399 $1,116 $1,263 $302 $67 $479 $773 $797 $791 $907 $1,111 $1,053 $983 $843 $1,264 $1,902 $2,266 $2,382 $309 $419 $594 $654 $683 $4,147 $4,430 $5,485 $5,862 $6,108 2019FY 2020FY 2021FY 2022FY 2023Q1 Retail CDs Wholesale CDs Savings Interest bearing DDA Noninterest bearing DDA QTD Cost of Deposits 0.81% 11.2% 39.0% 16.1% 20.7% 13.0% Deposits 1 For the quarter ended September 30, 2022. Source: S&P Global Market Intelligence & Company Filings Deposit Composition1 Deposit Growth Consolidated 25% of branches over a three-year period Non-interest bearing deposits increased $29 million, or 4.5% during Fiscal 2023 Q1 ($ millions) 9
29.4% 0.8% 45.2% 18.3% 2.9% 0.1%3.3% 1-4 Family Home Equity Multifamily CRE Construction Consumer Commercial Portfolio Lending 1 For the quarter ended September 30, 2022. 2 As of September 30, 2022 Source: S&P Global Market Intelligence & Company Filings Loan Composition1 Geographic Distribution2Loan Growth New York 36.1% New Jersey 55.4% Pennsylvania 5.0% Other 3.5% 10 QTD Yield on Loans 3.81% $1,440 $1,356 $1,496 $1,688 $1,710 $1,946 $2,060 $2,039 $2,409 $2,570 $1,259 $961 $1,079 $1,020 $1,041 $4,731 $4,540 $4,880 $5,437 $5,676 2019FY 2020FY 2021FY 2022FY 2023Q1 1-4 Family Multi-family CRE C&D Other Grew net loans by 4.4% from the prior quarter ended June 30, 2022 The weighted average loan-to-value ratio1 for our real estate secured loans is 61%
Asset Quality 1 As of September 30, 2022; amounts shown in millions. 2 The Company adopted CECL methodology effective FY 2021 Q1 Source: S&P Global Market Intelligence & Company Filings Net Charge-Offs / Average Loans Non-Performing Assets / Total Assets Non-Performing Loans1 Allowance for Credit Losses on Loans (ACL)2 11 0.31% 0.55% 1.10% 1.19% 0.98% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2019FY 2020FY 2021FY 2022FY 2023Q1 0.02% 0.00% 0.03% 0.07% 0.01% -0.05% 0.00% 0.05% 0.10% 0.15% 2019FY 2020FY 2021FY 2022FY 2023Q1 $33.3 $37.3 $58.2 $47.1 $47.6 0.70% 0.82% 1.19% 0.87% 0.84% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 2019FY 2020FY 2021FY 2022FY 2023Q1 ACL Balance ACL to Total Loans Receivable ($ millions) $26.4 $31.4 $0.3 $1.4 $9.0 $0.1 Multi-family Non-Residential Commercial Construction Residential Home Equity NPL's $68.6MM
M&A History and Strategy Experienced and disciplined acquirer and integrator Opportunistic acquisition strategy with an emphasis on: Low premium deals Similar or complementary business models Expansion in existing or contiguous markets Cultural compatibility Focus on limiting tangible book value dilution and earn- back periods while generating strong EPS accretion and operating leverage 12
Select Technology Partners 13