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 26, 2023
_____________________________
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 26, 2023, 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, 2023.
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 26, 2023, 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 99.2 to this Current Report on Form 8-K. 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 and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933.
In addition, on October 26, 2023, 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 26, 2023, the Company’s Board of Directors announced a quarterly cash dividend of $0.11 per share, payable on November 22, 2023 to stockholders of record as of November 8, 2023.
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 26, 2023. |
| 99.2 | Kearny Financial Corp. annual meeting presentation dated October 26, 2023. |
| 99.3 | Kearny Financial Corp. investor presentation dated October 26, 2023. |
| 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 26, 2023 | By: | /s/ Keith Suchodolski |
| Keith Suchodolski | ||
| Senior Executive Vice President and Chief Financial Officer |
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
October 26, 2023
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 2024 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., October 26, 2023 – 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, 2023 of $9.8 million, or $0.16 per diluted share, compared to $12.0 million, or $0.19 per diluted share, for the quarter ended June 30, 2023.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on November 22, 2023, to stockholders of record as of November 8, 2023.
Craig L. Montanaro, President and Chief Executive Officer, commented,“In the face of ongoing industry-wide macro-economic headwinds we continue to execute strategies to mitigate risk, manage our operating expenses and support the long-term franchise value of the Company. To that end, this quarter we de-levered our balance sheet by an additional $90 million, meaningfully slowed net interest margin compression and continued to focus on building high-value loan and deposit relationships. To further support these efforts we have formed a new Corporate Banking division under the executive leadership of our Chief Banking Officer, Anthony Bilotta. This division has been staffed with seasoned banking professionals whose sole focus is the origination of stable, long-term, non-interest-bearing deposits of corporate clients.”
Mr. Montanaro continued, “I am further pleased to announce that, subsequent to quarter end, we launched our enhanced digital banking platform, which expands our client-facing online and mobile capabilities while providing a state-of-the-art user experience. Our continued focus on digital engagement complements our high-touch, personalized service model and allows us to expand our brand into new markets in an efficient and cost-effective manner.”
Balance Sheet
•Total assets were $7.97 billion at September 30, 2023, a decrease of $89.9 million, or 1.1%, from June 30, 2023.
•Investment securities totaled $1.36 billion at September 30, 2023, a decrease of $14.8 million, or 1.1%, from June 30, 2023.
•Loans receivable totaled $5.74 billion at September 30, 2023, a decrease of $93.4 million, or 1.6%, from June 30, 2023. The decrease for the quarter was largely driven by decreases in multi-family and nonresidential mortgage loans.
•Deposits were $5.43 billion at September 30, 2023, a decrease of $195.0 million, or 3.5%, from June 30, 2023. The decrease in deposits was largely concentrated in retail and brokered certificates of deposits and consumer savings.
•The aggregate amount of uninsured deposits was $1.73 billion at September 30, 2023. Excluding collateralized deposits of state and local governments and deposits of the Bank’s wholly-owned subsidiary and holding company, the aggregate amount of uninsured deposits was $683.3 million, or 12.6% of total deposits.
•Borrowings were $1.63 billion at September 30, 2023, an increase of $120.1 million, or 8.0%, from June 30, 2023. The increase in borrowings was driven by an increase in advances from the Federal Home Loan Bank of New York and resulted from the deposit decline previously disclosed.
•At September 30, 2023, the Company maintained available secured borrowing capacity of $2.09 billion, of which $1.65 billion was immediately accessible via in-place collateral and $444.3 million represented the market value of unpledged securities.
Earnings
Performance Highlights
•Return on average assets was 0.49% and 0.59% for the quarters ended September 30, 2023 and June 30, 2023, respectively.
•Return on average equity was 4.57% and 5.58% for the quarters ended September 30, 2023 and June 30, 2023, respectively.
•Return on average tangible equity was 6.07% and 7.41% for the quarters ended September 30, 2023 and June 30, 2023, respectively.
Net Interest Income and Net Interest Margin
•Net interest margin contracted one basis point to 2.10% for the quarter ended September 30, 2023. The decrease for the quarter was driven by an increase in the cost of interest-bearing liabilities and a decrease in the average balance of interest-earning assets, largely offset by a higher average yield on interest-earning assets.
•For the quarter ended September 30, 2023, net interest income decreased $1.0 million to $39.2 million from $40.2 million for the quarter ended June 30, 2023. Included in net interest income for the quarters ended September 30, 2023 and June 30, 2023, respectively, was purchase accounting accretion of $650,000 and $887,000, and loan prepayment penalty income of $267,000 and $185,000.
Non-Interest Income
•For the quarter ended September 30, 2023, non-interest income increased $344,000 from the quarter ended June 30, 2023 to $4.0 million. The increase was primarily attributable to higher income from the investment services division and the impact of a loss on the sale of real estate during the prior comparative period.
Non-Interest Expense
•For the quarter ended September 30, 2023, non-interest expense increased $1.0 million, or 3.5%, to $29.8 million from $28.8 million for the quarter ended June 30, 2023. The increase was primarily attributable to a $446,000 increase in compensation expense and a $205,000 increase in real estate owned expenses, partially offset by a $104,000 decrease in occupancy expense attributable to our previously announced branch closures.
•Equipment and systems expense increased $290,000 from the quarter ended June 30, 2023 due to a non-recurring vendor expense credit that was recorded in the prior comparative period.
•The efficiency and non-interest expense ratios were 68.97% and 1.49%, respectively, for the quarter ended September 30, 2023, as compared to 65.60% and 1.41%, respectively, for the quarter ended June 30, 2023.
Income Taxes
•Income tax expense totaled $3.3 million for the quarter ended September 30, 2023 compared to $3.4 million for the quarter ended June 30, 2023, resulting in an effective tax rate of 25.2% and 21.9%, respectively. The effective tax rate for the current quarter was elevated due to the discrete tax cost associated with the vesting of certain stock-based compensation awards.
Asset Quality
•The balance of non-performing assets decreased $4.7 million to $50.9 million, or 0.64% of total assets, at September 30, 2023, from $55.6 million, or 0.69% of total assets, at June 30, 2023.
•Net charge-offs totaled $2.1 million, or 0.15% of average loans, on an annualized basis, for the quarter ended September 30, 2023, compared to $82,000, or 0.01% of average loans, on an annualized basis, for the quarter ended June 30, 2023. All of the charge-offs recorded during the quarter ended September 30, 2023 had previously been individually reserved for within the allowance for credit losses.
•For the quarter ended September 30, 2023, the Company recorded a provision for credit losses of $245,000, compared to a reversal of credit losses of $306,000 for the quarter ended June 30, 2023. The provision for credit loss expense for the quarter ended September 30, 2023 was largely driven by an increase in reserves on individually analyzed loans and a slower prepayment rate assumption, partially offset by a decrease in the balance of loans receivable.
•The allowance for credit losses was $46.9 million, or 0.81% of total loans, at September 30, 2023, compared to $48.7 million, or 0.83% of total loans, at June 30, 2023.
Capital
•During the quarter ended September 30, 2023, the Company repurchased 817,607 shares of common stock at a cost of $6.4 million, or $7.84 per share.
•For the quarter ended September 30, 2023, book value per share decreased $0.16, or 1.2%, to $13.04 while tangible book value per share decreased $0.19, or 1.9%, to $9.77. These decreases were largely driven by an increase in accumulated other comprehensive loss.
•At September 30, 2023, total stockholders’ equity included after-tax net unrealized losses on securities available for sale of $131.4 million, partially offset by after-tax unrealized gains on derivatives of $44.8 million. After-tax net unrecognized losses on securities held to maturity of $14.7 million were not reflected in total stockholders’ equity.
•At September 30, 2023, the Company’s tangible equity to tangible assets ratio equaled 8.20% 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.
This earnings release should be read in conjunction with Kearny Financial Corp.’s Q1 2024 Investor Presentation, a copy of which is available through the Investor Relations link located at the bottom of the page of our website at www.kearnybank.com and via a Current Report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.
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.
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>2023 | June 30,<br>2023 | Variance <br>or Change | Variance <br>or Change Pct. | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Audited) | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 57,219 | $ | 70,515 | $ | (13,296) | -18.9 | % | |||
| Securities available for sale | 1,215,633 | 1,227,729 | (12,096) | -1.0 | % | ||||||
| Securities held to maturity | 143,730 | 146,465 | (2,735) | -1.9 | % | ||||||
| Loans held-for-sale | 3,934 | 9,591 | (5,657) | -59.0 | % | ||||||
| Loans receivable | 5,736,049 | 5,829,421 | (93,372) | -1.6 | % | ||||||
| Less: allowance for credit losses on loans | (46,872) | (48,734) | (1,862) | -3.8 | % | ||||||
| Net loans receivable | 5,689,177 | 5,780,687 | (91,510) | -1.6 | % | ||||||
| Premises and equipment | 46,868 | 48,309 | (1,441) | -3.0 | % | ||||||
| Federal Home Loan Bank stock | 81,509 | 71,734 | 9,775 | 13.6 | % | ||||||
| Accrued interest receivable | 29,766 | 28,133 | 1,633 | 5.8 | % | ||||||
| Goodwill | 210,895 | 210,895 | — | — | % | ||||||
| Core deposit intangible | 2,323 | 2,457 | (134) | -5.5 | % | ||||||
| Bank owned life insurance | 294,491 | 292,825 | 1,666 | 0.6 | % | ||||||
| Deferred income taxes, net | 56,500 | 51,973 | 4,527 | 8.7 | % | ||||||
| Other real estate owned | 12,956 | 12,956 | — | — | % | ||||||
| Other assets | 129,865 | 110,546 | 19,319 | 17.5 | % | ||||||
| Total assets | $ | 7,974,866 | $ | 8,064,815 | $ | (89,949) | -1.1 | % | |||
| Liabilities | |||||||||||
| Deposits: | |||||||||||
| Non-interest-bearing | $ | 595,141 | $ | 609,999 | $ | (14,858) | -2.4 | % | |||
| Interest-bearing | 4,839,027 | 5,019,184 | (180,157) | -3.6 | % | ||||||
| Total deposits | 5,434,168 | 5,629,183 | (195,015) | -3.5 | % | ||||||
| Borrowings | 1,626,933 | 1,506,812 | 120,121 | 8.0 | % | ||||||
| Advance payments by borrowers for taxes | 16,907 | 18,338 | (1,431) | -7.8 | % | ||||||
| Other liabilities | 47,324 | 41,198 | 6,126 | 14.9 | % | ||||||
| Total liabilities | 7,125,332 | 7,195,531 | (70,199) | -1.0 | % | ||||||
| Stockholders' Equity | |||||||||||
| Common stock | 652 | 659 | (7) | -1.1 | % | ||||||
| Paid-in capital | 497,269 | 503,332 | (6,063) | -1.2 | % | ||||||
| Retained earnings | 460,464 | 457,611 | 2,853 | 0.6 | % | ||||||
| Unearned ESOP shares | (22,375) | (22,862) | 487 | 2.1 | % | ||||||
| Accumulated other comprehensive loss | (86,476) | (69,456) | (17,020) | -24.5 | % | ||||||
| Total stockholders' equity | 849,534 | 869,284 | (19,750) | -2.3 | % | ||||||
| Total liabilities and stockholders' equity | $ | 7,974,866 | $ | 8,064,815 | $ | (89,949) | -1.1 | % | |||
| Consolidated capital ratios | |||||||||||
| Equity to assets | 10.65 | % | 10.78 | % | -0.13 | % | |||||
| Tangible equity to tangible assets (1) | 8.20 | % | 8.35 | % | -0.15 | % | |||||
| Share data | |||||||||||
| Outstanding shares | 65,132 | 65,864 | (732) | -1.1 | % | ||||||
| Book value per share | $ | 13.04 | $ | 13.20 | $ | (0.16) | -1.2 | % | |||
| Tangible book value per share (2) | $ | 9.77 | $ | 9.96 | $ | (0.19) | -1.9 | % |
_________________________
(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>2023 | June 30,<br>2023 | |||||||||||
| Interest income | ||||||||||||
| Loans | $ | 62,769 | $ | 62,044 | $ | 725 | 1.2 | % | ||||
| Taxable investment securities | 16,265 | 15,736 | 529 | 3.4 | % | |||||||
| Tax-exempt investment securities | 87 | 91 | (4) | -4.4 | % | |||||||
| Other interest-earning assets | 2,047 | 1,821 | 226 | 12.4 | % | |||||||
| Total interest income | 81,168 | 79,692 | 1,476 | 1.9 | % | |||||||
| Interest expense | ||||||||||||
| Deposits | 27,567 | 26,226 | 1,341 | 5.1 | % | |||||||
| Borrowings | 14,441 | 13,286 | 1,155 | 8.7 | % | |||||||
| Total interest expense | 42,008 | 39,512 | 2,496 | 6.3 | % | |||||||
| Net interest income | 39,160 | 40,180 | (1,020) | -2.5 | % | |||||||
| Provision for (reversal of) credit losses | 245 | (306) | 551 | -180.1 | % | |||||||
| Net interest income after provision for (reversal of) credit losses | 38,915 | 40,486 | (1,571) | -3.9 | % | |||||||
| Non-interest income | ||||||||||||
| Fees and service charges | 748 | 699 | 49 | 7.0 | % | |||||||
| Gain on sale of loans | 215 | 199 | 16 | 8.0 | % | |||||||
| Loss on sale of other real estate owned | — | (139) | 139 | 100.0 | % | |||||||
| Income from bank owned life insurance | 1,666 | 1,605 | 61 | 3.8 | % | |||||||
| Electronic banking fees and charges | 367 | 399 | (32) | -8.0 | % | |||||||
| Other income | 1,014 | 903 | 111 | 12.3 | % | |||||||
| Total non-interest income | 4,010 | 3,666 | 344 | 9.4 | % | |||||||
| Non-interest expense | ||||||||||||
| Salaries and employee benefits | 17,761 | 17,315 | 446 | 2.6 | % | |||||||
| Net occupancy expense of premises | 2,758 | 2,862 | (104) | -3.6 | % | |||||||
| Equipment and systems | 3,801 | 3,511 | 290 | 8.3 | % | |||||||
| Advertising and marketing | 228 | 231 | (3) | -1.3 | % | |||||||
| Federal deposit insurance premium | 1,524 | 1,455 | 69 | 4.7 | % | |||||||
| Directors' compensation | 393 | 345 | 48 | 13.9 | % | |||||||
| Other expense | 3,309 | 3,042 | 267 | 8.8 | % | |||||||
| Total non-interest expense | 29,774 | 28,761 | 1,013 | 3.5 | % | |||||||
| Income before income taxes | 13,151 | 15,391 | (2,240) | -14.6 | % | |||||||
| Income taxes | 3,309 | 3,378 | (69) | -2.0 | % | |||||||
| Net income | $ | 9,842 | $ | 12,013 | $ | (2,171) | -18.1 | % | ||||
| Net income per common share (EPS) | ||||||||||||
| Basic | $ | 0.16 | $ | 0.19 | $ | (0.03) | ||||||
| Diluted | $ | 0.16 | $ | 0.19 | $ | (0.03) | ||||||
| Dividends declared | ||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | — | ||||||
| Cash dividends declared | $ | 6,989 | $ | 7,007 | $ | (18) | ||||||
| Dividend payout ratio | 71.0 | % | 58.3 | % | 12.7 | % | ||||||
| Weighted average number of common shares outstanding | ||||||||||||
| Basic | 63,014 | 63,667 | (653) | |||||||||
| Diluted | 63,061 | 63,667 | (606) |
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>2023 | June 30,<br>2023 | |||||||||||
| Assets | ||||||||||||
| Interest-earning assets: | ||||||||||||
| Loans receivable, including loans held for sale | $ | 5,788,074 | $ | 5,932,541 | $ | (144,467) | -2.4 | % | ||||
| Taxable investment securities | 1,516,393 | 1,529,582 | (13,189) | -0.9 | % | |||||||
| Tax-exempt investment securities | 15,483 | 16,346 | (863) | -5.3 | % | |||||||
| Other interest-earning assets | 130,829 | 128,158 | 2,671 | 2.1 | % | |||||||
| Total interest-earning assets | 7,450,779 | 7,606,627 | (155,848) | -2.0 | % | |||||||
| Non-interest-earning assets | 568,723 | 556,962 | 11,761 | 2.1 | % | |||||||
| Total assets | $ | 8,019,502 | $ | 8,163,589 | $ | (144,087) | -1.8 | % | ||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Interest-bearing demand | $ | 2,245,831 | $ | 2,321,120 | $ | (75,289) | -3.2 | % | ||||
| Savings | 719,508 | 774,854 | (55,346) | -7.1 | % | |||||||
| Certificates of deposit | 1,968,512 | 2,057,818 | (89,306) | -4.3 | % | |||||||
| Total interest-bearing deposits | 4,933,851 | 5,153,792 | (219,941) | -4.3 | % | |||||||
| Borrowings: | ||||||||||||
| Federal Home Loan Bank advances | 1,386,473 | 1,374,316 | 12,157 | 0.9 | % | |||||||
| Other borrowings | 158,098 | 100,055 | 58,043 | 58.0 | % | |||||||
| Total borrowings | 1,544,571 | 1,474,371 | 70,200 | 4.8 | % | |||||||
| Total interest-bearing liabilities | 6,478,422 | 6,628,163 | (149,741) | -2.3 | % | |||||||
| Non-interest-bearing liabilities: | ||||||||||||
| Non-interest-bearing deposits | 612,251 | 608,765 | 3,486 | 0.6 | % | |||||||
| Other non-interest-bearing liabilities | 66,701 | 64,970 | 1,731 | 2.7 | % | |||||||
| Total non-interest-bearing liabilities | 678,952 | 673,735 | 5,217 | 0.8 | % | |||||||
| Total liabilities | 7,157,374 | 7,301,898 | (144,524) | -2.0 | % | |||||||
| Stockholders' equity | 862,128 | 861,691 | 437 | 0.1 | % | |||||||
| Total liabilities and stockholders' equity | $ | 8,019,502 | $ | 8,163,589 | $ | (144,087) | -1.8 | % | ||||
| Average interest-earning assets to average interest-bearing liabilities | 115.01 | % | 114.76 | % | 0.25 | % | 0.2 | % |
Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)
| Three Months Ended | Variance <br>or Change | |||||
|---|---|---|---|---|---|---|
| September 30,<br>2023 | June 30,<br>2023 | |||||
| Average yield on interest-earning assets: | ||||||
| Loans receivable, including loans held for sale | 4.34 | % | 4.18 | % | 0.16 | % |
| Taxable investment securities | 4.29 | % | 4.12 | % | 0.17 | % |
| Tax-exempt investment securities (1) | 2.25 | % | 2.23 | % | 0.02 | % |
| Other interest-earning assets | 6.26 | % | 5.68 | % | 0.58 | % |
| Total interest-earning assets | 4.36 | % | 4.19 | % | 0.17 | % |
| Average cost of interest-bearing liabilities: | ||||||
| Deposits: | ||||||
| Interest-bearing demand | 2.58 | % | 2.38 | % | 0.20 | % |
| Savings | 0.47 | % | 0.48 | % | -0.01 | % |
| Certificates of deposit | 2.49 | % | 2.24 | % | 0.25 | % |
| Total interest-bearing deposits | 2.23 | % | 2.04 | % | 0.19 | % |
| Borrowings: | ||||||
| Federal Home Loan Bank advances | 3.54 | % | 3.51 | % | 0.03 | % |
| Other borrowings | 5.46 | % | 4.89 | % | 0.57 | % |
| Total borrowings | 3.74 | % | 3.60 | % | 0.14 | % |
| Total interest-bearing liabilities | 2.59 | % | 2.38 | % | 0.21 | % |
| Interest rate spread (2) | 1.77 | % | 1.81 | % | -0.04 | % |
| Net interest margin (3) | 2.10 | % | 2.11 | % | -0.01 | % |
| Non-interest income to average assets (annualized) | 0.20 | % | 0.18 | % | 0.02 | % |
| Non-interest expense to average assets (annualized) | 1.49 | % | 1.41 | % | 0.08 | % |
| Efficiency ratio (4) | 68.97 | % | 65.60 | % | 3.37 | % |
| Return on average assets (annualized) | 0.49 | % | 0.59 | % | -0.10 | % |
| Return on average equity (annualized) | 4.57 | % | 5.58 | % | -1.01 | % |
| Return on average tangible equity (annualized) (5) | 6.07 | % | 7.41 | % | -1.34 | % |
_________________________
(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>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Audited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 57,219 | $ | 70,515 | $ | 194,568 | $ | 75,660 | $ | 96,076 | |||||
| Securities available for sale | 1,215,633 | 1,227,729 | 1,267,066 | 1,286,354 | 1,263,176 | ||||||||||
| Securities held to maturity | 143,730 | 146,465 | 149,764 | 153,786 | 115,943 | ||||||||||
| Loans held-for-sale | 3,934 | 9,591 | 5,401 | 12,940 | 12,936 | ||||||||||
| Loans receivable | 5,736,049 | 5,829,421 | 5,966,325 | 5,984,133 | 5,656,370 | ||||||||||
| Less: allowance for credit losses on loans | (46,872) | (48,734) | (49,122) | (48,877) | (47,613) | ||||||||||
| Net loans receivable | 5,689,177 | 5,780,687 | 5,917,203 | 5,935,256 | 5,608,757 | ||||||||||
| Premises and equipment | 46,868 | 48,309 | 49,589 | 50,953 | 52,642 | ||||||||||
| Federal Home Loan Bank stock | 81,509 | 71,734 | 76,319 | 69,022 | 44,957 | ||||||||||
| Accrued interest receivable | 29,766 | 28,133 | 28,794 | 27,368 | 23,817 | ||||||||||
| Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
| Core deposit intangible | 2,323 | 2,457 | 2,590 | 2,732 | 2,876 | ||||||||||
| Bank owned life insurance | 294,491 | 292,825 | 291,220 | 289,673 | 289,690 | ||||||||||
| Deferred income taxes, net | 56,500 | 51,973 | 53,151 | 51,107 | 54,278 | ||||||||||
| Other real estate owned | 12,956 | 12,956 | 13,410 | 13,410 | 178 | ||||||||||
| Other assets | 129,865 | 110,546 | 89,366 | 110,162 | 113,369 | ||||||||||
| Total assets | $ | 7,974,866 | $ | 8,064,815 | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | |||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing | $ | 595,141 | $ | 609,999 | $ | 617,778 | $ | 650,950 | $ | 683,406 | |||||
| Interest-bearing | 4,839,027 | 5,019,184 | 5,185,626 | 5,320,421 | 5,424,872 | ||||||||||
| Total deposits | 5,434,168 | 5,629,183 | 5,803,404 | 5,971,371 | 6,108,278 | ||||||||||
| Borrowings | 1,626,933 | 1,506,812 | 1,611,692 | 1,383,573 | 851,454 | ||||||||||
| Advance payments by borrowers for taxes | 16,907 | 18,338 | 18,706 | 17,307 | 16,555 | ||||||||||
| Other liabilities | 47,324 | 41,198 | 49,304 | 44,427 | 38,329 | ||||||||||
| Total liabilities | 7,125,332 | 7,195,531 | 7,483,106 | 7,416,678 | 7,014,616 | ||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 652 | 659 | 667 | 674 | 680 | ||||||||||
| Paid-in capital | 497,269 | 503,332 | 509,359 | 515,332 | 520,245 | ||||||||||
| Retained earnings | 460,464 | 457,611 | 452,605 | 449,489 | 454,710 | ||||||||||
| Unearned ESOP shares | (22,375) | (22,862) | (23,348) | (23,834) | (24,321) | ||||||||||
| Accumulated other comprehensive loss | (86,476) | (69,456) | (73,053) | (69,021) | (76,340) | ||||||||||
| Total stockholders' equity | 849,534 | 869,284 | 866,230 | 872,640 | 874,974 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,974,866 | $ | 8,064,815 | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | |||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 10.65 | % | 10.78 | % | 10.37 | % | 10.53 | % | 11.09 | % | |||||
| Tangible equity to tangible assets (1) | 8.20 | % | 8.35 | % | 8.02 | % | 8.16 | % | 8.61 | % | |||||
| Share data | |||||||||||||||
| Outstanding shares | 65,132 | 65,864 | 66,680 | 67,388 | 67,938 | ||||||||||
| Book value per share | $ | 13.04 | $ | 13.20 | $ | 12.99 | $ | 12.95 | $ | 12.88 | |||||
| Tangible book value per share (2) | $ | 9.77 | $ | 9.96 | $ | 9.79 | $ | 9.78 | $ | 9.73 |
_________________________
(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>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loan portfolio composition: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family mortgage | $ | 2,699,151 | $ | 2,761,775 | $ | 2,835,852 | $ | 2,851,721 | $ | 2,570,297 | |||||
| Nonresidential mortgage | 946,801 | 968,574 | 1,002,643 | 1,017,341 | 1,040,688 | ||||||||||
| Commercial business | 149,229 | 146,861 | 162,038 | 177,530 | 186,361 | ||||||||||
| Construction | 230,703 | 226,609 | 215,524 | 186,663 | 166,052 | ||||||||||
| Total commercial loans | 4,025,884 | 4,103,819 | 4,216,057 | 4,233,255 | 3,963,398 | ||||||||||
| One- to four-family residential mortgage | 1,689,051 | 1,700,559 | 1,713,343 | 1,719,514 | 1,666,730 | ||||||||||
| Consumer loans: | |||||||||||||||
| Home equity loans | 42,896 | 43,549 | 44,376 | 45,690 | 43,269 | ||||||||||
| Other consumer | 2,644 | 2,549 | 2,592 | 2,648 | 2,869 | ||||||||||
| Total consumer loans | 45,540 | 46,098 | 46,968 | 48,338 | 46,138 | ||||||||||
| Total loans, excluding yield adjustments | 5,760,475 | 5,850,476 | 5,976,368 | 6,001,107 | 5,676,266 | ||||||||||
| Unaccreted yield adjustments | (24,426) | (21,055) | (10,043) | (16,974) | (19,896) | ||||||||||
| Loans receivable, net of yield adjustments | 5,736,049 | 5,829,421 | 5,966,325 | 5,984,133 | 5,656,370 | ||||||||||
| Less: allowance for credit losses on loans | (46,872) | (48,734) | (49,122) | (48,877) | (47,613) | ||||||||||
| Net loans receivable | $ | 5,689,177 | $ | 5,780,687 | $ | 5,917,203 | $ | 5,935,256 | $ | 5,608,757 | |||||
| Asset quality: | |||||||||||||||
| Nonperforming assets: | |||||||||||||||
| Accruing loans - 90 days and over past due | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
| Nonaccrual loans | 37,912 | 42,627 | 44,026 | 40,549 | 68,574 | ||||||||||
| Total nonperforming loans | 37,912 | 42,627 | 44,026 | 40,549 | 68,574 | ||||||||||
| Nonaccrual loans held-for-sale | — | — | — | 8,650 | 8,650 | ||||||||||
| Other real estate owned | 12,956 | 12,956 | 13,410 | 13,410 | 178 | ||||||||||
| Total nonperforming assets | $ | 50,868 | $ | 55,583 | $ | 57,436 | $ | 62,609 | $ | 77,402 | |||||
| Nonperforming loans (% total loans) | 0.66 | % | 0.73 | % | 0.74 | % | 0.68 | % | 1.21 | % | |||||
| Nonperforming assets (% total assets) | 0.64 | % | 0.69 | % | 0.69 | % | 0.76 | % | 0.98 | % | |||||
| Classified loans | $ | 98,616 | $ | 93,526 | $ | 103,461 | $ | 86,069 | $ | 92,610 | |||||
| Allowance for credit losses on loans (ACL): | |||||||||||||||
| ACL to total loans | 0.81 | % | 0.83 | % | 0.82 | % | 0.81 | % | 0.84 | % | |||||
| ACL to nonperforming loans | 123.63 | % | 114.33 | % | 111.57 | % | 120.54 | % | 69.43 | % | |||||
| Net charge-offs | $ | 2,107 | $ | 82 | $ | 206 | $ | 407 | $ | 115 | |||||
| Average net charge-off rate (annualized) | 0.15 | % | 0.01 | % | 0.01 | % | 0.03 | % | 0.01 | % |
Kearny Financial Corp.
Supplemental Balance Sheet Highlights
(Unaudited)
| (Dollars in Thousands) | September 30,<br>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Funding composition: | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 595,141 | $ | 609,999 | $ | 617,778 | $ | 650,950 | $ | 683,406 | |||||
| Interest-bearing demand | 2,236,573 | 2,252,912 | 2,285,799 | 2,316,485 | 2,382,411 | ||||||||||
| Savings | 689,163 | 748,721 | 811,483 | 901,514 | 982,916 | ||||||||||
| Certificates of deposit (retail) | 1,300,382 | 1,377,028 | 1,327,343 | 1,354,907 | 1,263,124 | ||||||||||
| Certificates of deposit (brokered and listing service) | 612,909 | 640,523 | 761,001 | 747,515 | 796,421 | ||||||||||
| Interest-bearing deposits | 4,839,027 | 5,019,184 | 5,185,626 | 5,320,421 | 5,424,872 | ||||||||||
| Total deposits | 5,434,168 | 5,629,183 | 5,803,404 | 5,971,371 | 6,108,278 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,456,933 | 1,281,812 | 1,156,692 | 1,256,573 | 796,454 | ||||||||||
| Overnight borrowings | 170,000 | 225,000 | 455,000 | 127,000 | 55,000 | ||||||||||
| Total borrowings | 1,626,933 | 1,506,812 | 1,611,692 | 1,383,573 | 851,454 | ||||||||||
| Total funding | $ | 7,061,101 | $ | 7,135,995 | $ | 7,415,096 | $ | 7,354,944 | $ | 6,959,732 | |||||
| Loans as a % of deposits | 104.8 | % | 102.9 | % | 102.1 | % | 99.6 | % | 92.0 | % | |||||
| Deposits as a % of total funding | 77.0 | % | 78.9 | % | 78.3 | % | 81.2 | % | 87.8 | % | |||||
| Borrowings as a % of total funding | 23.0 | % | 21.1 | % | 21.7 | % | 18.8 | % | 12.2 | % | |||||
| Uninsured deposits: | |||||||||||||||
| Uninsured deposits (reported) (1) | $ | 1,734,288 | $ | 1,771,416 | $ | 1,678,051 | $ | 1,815,854 | $ | 1,771,851 | |||||
| Uninsured deposits (adjusted) (2) | $ | 683,265 | $ | 710,377 | $ | 705,727 | $ | 794,407 | $ | 883,351 |
_________________________
(1)Uninsured deposits of Kearny Bank.
(2)Uninsured deposits of Kearny Bank adjusted to exclude deposits of its wholly-owned subsidiary and holding company and collateralized deposits of state and local governments.
Kearny Financial Corp.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | September 30,<br>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||||||
| Interest income | |||||||||||||||
| Loans | $ | 62,769 | $ | 62,044 | $ | 60,172 | $ | 57,996 | $ | 52,935 | |||||
| Taxable investment securities | 16,265 | 15,736 | 15,459 | 13,221 | 10,439 | ||||||||||
| Tax-exempt investment securities | 87 | 91 | 99 | 219 | 285 | ||||||||||
| Other interest-earning assets | 2,047 | 1,821 | 1,441 | 1,005 | 761 | ||||||||||
| Total interest income | 81,168 | 79,692 | 77,171 | 72,441 | 64,420 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 27,567 | 26,226 | 22,246 | 18,822 | 10,869 | ||||||||||
| Borrowings | 14,441 | 13,286 | 12,554 | 8,836 | 5,020 | ||||||||||
| Total interest expense | 42,008 | 39,512 | 34,800 | 27,658 | 15,889 | ||||||||||
| Net interest income | 39,160 | 40,180 | 42,371 | 44,783 | 48,531 | ||||||||||
| Provision for (reversal of) credit losses | 245 | (306) | 451 | 1,671 | 670 | ||||||||||
| Net interest income after provision for (reversal of) credit losses | 38,915 | 40,486 | 41,920 | 43,112 | 47,861 | ||||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges | 748 | 699 | 910 | 734 | 763 | ||||||||||
| Loss on sale and call of securities | — | — | — | (15,227) | — | ||||||||||
| Gain (loss) on sale of loans | 215 | 199 | (2,373) | 134 | 395 | ||||||||||
| Loss on sale of other real estate owned | — | (139) | — | — | — | ||||||||||
| Income from bank owned life insurance | 1,666 | 1,605 | 1,581 | 1,761 | 3,698 | ||||||||||
| Electronic banking fees and charges | 367 | 399 | 457 | 397 | 506 | ||||||||||
| Other income | 1,014 | 903 | 1,071 | 3,723 | 555 | ||||||||||
| Total non-interest income | 4,010 | 3,666 | 1,646 | (8,478) | 5,917 | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 17,761 | 17,315 | 18,005 | 19,921 | 20,348 | ||||||||||
| Net occupancy expense of premises | 2,758 | 2,862 | 3,097 | 2,987 | 3,090 | ||||||||||
| Equipment and systems | 3,801 | 3,511 | 3,537 | 3,867 | 3,662 | ||||||||||
| Advertising and marketing | 228 | 231 | 413 | 731 | 747 | ||||||||||
| Federal deposit insurance premium | 1,524 | 1,455 | 1,546 | 1,226 | 906 | ||||||||||
| Directors' compensation | 393 | 345 | 340 | 339 | 340 | ||||||||||
| Other expense | 3,309 | 3,042 | 3,414 | 3,579 | 2,895 | ||||||||||
| Total non-interest expense | 29,774 | 28,761 | 30,352 | 32,650 | 31,988 | ||||||||||
| Income before income taxes | 13,151 | 15,391 | 13,214 | 1,984 | 21,790 | ||||||||||
| Income taxes | 3,309 | 3,378 | 2,902 | 33 | 5,255 | ||||||||||
| Net income | $ | 9,842 | $ | 12,013 | $ | 10,312 | $ | 1,951 | $ | 16,535 | |||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
| Diluted | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
| Dividends declared | |||||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | |||||
| Cash dividends declared | $ | 6,989 | $ | 7,007 | $ | 7,196 | $ | 7,172 | $ | 7,276 | |||||
| Dividend payout ratio | 71.0 | % | 58.3 | % | 69.8 | % | 367.6 | % | 44.0 | % | |||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Basic | 63,014 | 63,667 | 64,769 | 65,030 | 65,737 | ||||||||||
| Diluted | 63,061 | 63,667 | 64,783 | 65,038 | 65,756 |
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Thousands) | September 30,<br>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held-for-sale | $ | 5,788,074 | $ | 5,932,541 | $ | 5,986,669 | $ | 5,839,903 | $ | 5,553,996 | |||||
| Taxable investment securities | 1,516,393 | 1,529,582 | 1,558,222 | 1,527,578 | 1,516,974 | ||||||||||
| Tax-exempt investment securities | 15,483 | 16,346 | 17,663 | 37,917 | 48,973 | ||||||||||
| Other interest-earning assets | 130,829 | 128,158 | 131,682 | 114,175 | 88,038 | ||||||||||
| Total interest-earning assets | 7,450,779 | 7,606,627 | 7,694,236 | 7,519,573 | 7,207,981 | ||||||||||
| Non-interest-earning assets | 568,723 | 556,962 | 575,009 | 550,519 | 570,225 | ||||||||||
| Total assets | $ | 8,019,502 | $ | 8,163,589 | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 2,245,831 | $ | 2,321,120 | $ | 2,363,762 | $ | 2,359,977 | $ | 2,354,340 | |||||
| Savings | 719,508 | 774,854 | 858,673 | 931,584 | 1,019,343 | ||||||||||
| Certificates of deposit | 1,968,512 | 2,057,818 | 2,069,396 | 2,192,722 | 2,014,922 | ||||||||||
| Total interest-bearing deposits | 4,933,851 | 5,153,792 | 5,291,831 | 5,484,283 | 5,388,605 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,386,473 | 1,374,316 | 1,402,269 | 997,148 | 642,399 | ||||||||||
| Other borrowings | 158,098 | 100,055 | 1,611 | — | 127,456 | ||||||||||
| Total borrowings | 1,544,571 | 1,474,371 | 1,403,880 | 997,148 | 769,855 | ||||||||||
| Total interest-bearing liabilities | 6,478,422 | 6,628,163 | 6,695,711 | 6,481,431 | 6,158,460 | ||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 612,251 | 608,765 | 634,324 | 666,846 | 667,624 | ||||||||||
| Other non-interest-bearing liabilities | 66,701 | 64,970 | 60,327 | 56,721 | 56,431 | ||||||||||
| Total non-interest-bearing liabilities | 678,952 | 673,735 | 694,651 | 723,567 | 724,055 | ||||||||||
| Total liabilities | 7,157,374 | 7,301,898 | 7,390,362 | 7,204,998 | 6,882,515 | ||||||||||
| Stockholders' equity | 862,128 | 861,691 | 878,883 | 865,094 | 895,691 | ||||||||||
| Total liabilities and stockholders' equity | $ | 8,019,502 | $ | 8,163,589 | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | |||||
| Average interest-earning assets to average<br>interest-bearing liabilities | 115.01 | % | 114.76 | % | 114.91 | % | 116.02 | % | 117.04 | % |
Kearny Financial Corp.
Performance Ratio Highlights
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||
| Average yield on interest-earning assets: | ||||||||||
| Loans receivable, including loans held-for-sale | 4.34 | % | 4.18 | % | 4.02 | % | 3.97 | % | 3.81 | % |
| Taxable investment securities | 4.29 | % | 4.12 | % | 3.97 | % | 3.46 | % | 2.75 | % |
| Tax-exempt investment securities (1) | 2.25 | % | 2.23 | % | 2.23 | % | 2.32 | % | 2.33 | % |
| Other interest-earning assets | 6.26 | % | 5.68 | % | 4.38 | % | 3.52 | % | 3.46 | % |
| Total interest-earning assets | 4.36 | % | 4.19 | % | 4.01 | % | 3.85 | % | 3.57 | % |
| Average cost of interest-bearing liabilities: | ||||||||||
| Deposits: | ||||||||||
| Interest-bearing demand | 2.58 | % | 2.38 | % | 2.01 | % | 1.63 | % | 0.92 | % |
| Savings | 0.47 | % | 0.48 | % | 0.41 | % | 0.41 | % | 0.23 | % |
| Certificates of deposit | 2.49 | % | 2.24 | % | 1.84 | % | 1.50 | % | 0.97 | % |
| Total interest-bearing deposits | 2.23 | % | 2.04 | % | 1.68 | % | 1.37 | % | 0.81 | % |
| Borrowings: | ||||||||||
| Federal Home Loan Bank advances | 3.54 | % | 3.51 | % | 3.58 | % | 3.54 | % | 2.68 | % |
| Other borrowings | 5.46 | % | 4.89 | % | 5.15 | % | — | % | 2.26 | % |
| Total borrowings | 3.74 | % | 3.60 | % | 3.58 | % | 3.54 | % | 2.61 | % |
| Total interest-bearing liabilities | 2.59 | % | 2.38 | % | 2.08 | % | 1.71 | % | 1.03 | % |
| Interest rate spread (2) | 1.77 | % | 1.81 | % | 1.93 | % | 2.14 | % | 2.54 | % |
| Net interest margin (3) | 2.10 | % | 2.11 | % | 2.20 | % | 2.38 | % | 2.69 | % |
| Non-interest income to average assets (annualized) | 0.20 | % | 0.18 | % | 0.08 | % | -0.42 | % | 0.30 | % |
| Non-interest expense to average assets (annualized) | 1.49 | % | 1.41 | % | 1.47 | % | 1.62 | % | 1.65 | % |
| Efficiency ratio (4) | 68.97 | % | 65.60 | % | 68.96 | % | 89.93 | % | 58.75 | % |
| Return on average assets (annualized) | 0.49 | % | 0.59 | % | 0.50 | % | 0.10 | % | 0.85 | % |
| Return on average equity (annualized) | 4.57 | % | 5.58 | % | 4.69 | % | 0.90 | % | 7.38 | % |
| Return on average tangible equity (annualized) (5) | 6.07 | % | 7.41 | % | 6.20 | % | 1.20 | % | 9.70 | % |
_________________________
(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>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||||||
| Adjusted net income: | |||||||||||||||
| Net income (GAAP) | $ | 9,842 | $ | 12,013 | $ | 10,312 | $ | 1,951 | $ | 16,535 | |||||
| Non-recurring transactions - net of tax: | |||||||||||||||
| Branch consolidation expenses | — | — | 568 | — | — | ||||||||||
| Net effect of sale and call of securities | — | — | — | 10,811 | — | ||||||||||
| Net effect of sale of other assets | — | — | — | (2,081) | — | ||||||||||
| Severance expense from workforce realignment | — | — | — | 538 | — | ||||||||||
| Adjusted net income | $ | 9,842 | $ | 12,013 | $ | 10,880 | $ | 11,219 | $ | 16,535 | |||||
| Calculation of pre-tax, pre-provision net revenue: | |||||||||||||||
| Net income (GAAP) | $ | 9,842 | $ | 12,013 | $ | 10,312 | $ | 1,951 | $ | 16,535 | |||||
| Adjustments to net income (GAAP): | |||||||||||||||
| Provision for income taxes | 3,309 | 3,378 | 2,902 | 33 | 5,255 | ||||||||||
| Provision for (reversal of) credit losses | 245 | (306) | 451 | 1,671 | 670 | ||||||||||
| Pre-tax, pre-provision net revenue (non-GAAP) | $ | 13,396 | $ | 15,085 | $ | 13,665 | $ | 3,655 | $ | 22,460 | |||||
| Adjusted earnings per share: | |||||||||||||||
| Weighted average common shares - basic | 63,014 | 63,667 | 64,769 | 65,030 | 65,737 | ||||||||||
| Weighted average common shares - diluted | 63,061 | 63,667 | 64,783 | 65,038 | 65,756 | ||||||||||
| Earnings per share - basic (GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
| Earnings per share - diluted (GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
| Adjusted earnings per share - basic (non-GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.25 | |||||
| Adjusted earnings per share - diluted (non-GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.25 | |||||
| Pre-tax, pre-provision net revenue per share: | |||||||||||||||
| Pre-tax, pre-provision net revenue per share - basic<br>(non-GAAP) | $ | 0.21 | $ | 0.24 | $ | 0.21 | $ | 0.06 | $ | 0.34 | |||||
| Pre-tax, pre-provision net revenue per share - diluted<br>(non-GAAP) | $ | 0.21 | $ | 0.24 | $ | 0.21 | $ | 0.06 | $ | 0.34 | |||||
| Adjusted return on average assets: | |||||||||||||||
| Total average assets | $ | 8,019,502 | $ | 8,163,589 | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | |||||
| Return on average assets (GAAP) | 0.49 | % | 0.59 | % | 0.50 | % | 0.10 | % | 0.85 | % | |||||
| Adjusted return on average assets (non-GAAP) | 0.49 | % | 0.59 | % | 0.53 | % | 0.56 | % | 0.85 | % | |||||
| Adjusted return on average equity: | |||||||||||||||
| Total average equity | $ | 862,128 | $ | 861,691 | $ | 878,883 | $ | 865,094 | $ | 895,691 | |||||
| Return on average equity (GAAP) | 4.57 | % | 5.58 | % | 4.69 | % | 0.90 | % | 7.38 | % | |||||
| Adjusted return on average equity (non-GAAP) | 4.57 | % | 5.58 | % | 4.95 | % | 5.19 | % | 7.38 | % |
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>2023 | June 30,<br>2023 | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | ||||||||||
| Adjusted return on average tangible equity: | |||||||||||||||
| Total average equity | $ | 862,128 | $ | 861,691 | $ | 878,883 | $ | 865,094 | $ | 895,691 | |||||
| Less: average goodwill | (210,895) | (210,895) | (210,895) | (210,895) | (210,895) | ||||||||||
| Less: average other intangible assets | (2,411) | (2,544) | (2,683) | (2,826) | (2,971) | ||||||||||
| Total average tangible equity | $ | 648,822 | $ | 648,252 | $ | 665,305 | $ | 651,373 | $ | 681,825 | |||||
| Return on average tangible equity (non-GAAP) | 6.07 | % | 7.41 | % | 6.20 | % | 1.20 | % | 9.70 | % | |||||
| Adjusted return on average tangible equity (non-GAAP) | 6.07 | % | 7.41 | % | 6.54 | % | 6.89 | % | 9.70 | % | |||||
| Adjusted non-interest expense ratio: | |||||||||||||||
| Non-interest expense (GAAP) | $ | 29,774 | $ | 28,761 | $ | 30,352 | $ | 32,650 | $ | 31,988 | |||||
| Non-recurring transactions: | |||||||||||||||
| Branch consolidation expenses | — | — | (800) | — | — | ||||||||||
| Severance expense from workforce realignment | — | — | — | (757) | — | ||||||||||
| Early contract termination | — | — | — | — | — | ||||||||||
| Non-interest expense (non-GAAP) | $ | 29,774 | $ | 28,761 | $ | 29,552 | $ | 31,893 | $ | 31,988 | |||||
| Non-interest expense ratio (GAAP) | 1.49 | % | 1.41 | % | 1.47 | % | 1.62 | % | 1.65 | % | |||||
| Adjusted non-interest expense ratio (non-GAAP) | 1.49 | % | 1.41 | % | 1.43 | % | 1.58 | % | 1.65 | % | |||||
| Adjusted efficiency ratio: | |||||||||||||||
| Non-interest expense (non-GAAP) | $ | 29,774 | $ | 28,761 | $ | 29,552 | $ | 31,893 | $ | 31,988 | |||||
| Net interest income (GAAP) | $ | 39,160 | $ | 40,180 | $ | 42,371 | $ | 44,783 | $ | 48,531 | |||||
| Total non-interest income (GAAP) | 4,010 | 3,666 | 1,646 | (8,478) | 5,917 | ||||||||||
| Non-recurring transactions: | |||||||||||||||
| Net effect of sale and call of securities | — | — | — | 15,227 | — | ||||||||||
| Net effect of sale of other assets | — | — | — | (2,931) | — | ||||||||||
| Total revenue (non-GAAP) | $ | 43,170 | $ | 43,846 | $ | 44,017 | $ | 48,601 | $ | 54,448 | |||||
| Efficiency ratio (GAAP) | 68.97 | % | 65.60 | % | 68.96 | % | 89.93 | % | 58.75 | % | |||||
| Adjusted efficiency ratio (non-GAAP) | 68.97 | % | 65.60 | % | 67.14 | % | 65.62 | % | 58.75 | % |
15
a2023annualmeetingpresen
A N N U A L M E E T I N G O F STOCKHOLDERS OCTOBER 26, 2023 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 Curtland E. Fields Leopold W. Montanaro John N. Hopkins Christopher Petermann Catherine A. Lawton Charles J. Pivirotto Joseph P. Mazza John F. Regan Melvina Wong-Zaza 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 Sean M. Byrnes Executive Vice President Deputy Chief Financial Officer
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 six directors for the terms indicated; Ratification of the appointment of Crowe LLP as the Company’s independent auditor for the fiscal year ending June 30, 2024; 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 inancia l Results Fiscal Year Ended June 30, 2023
Forward Looking Statements & Non-GAAP Financial Measures 8 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, and subsequent filings with the Securities and Exchange Commission, 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 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 at the end of this presentation.
Kearny Financial Corp. NASDAQ: KRNY Market Cap: $448.1 million1 Founded in 1884 Top 10 New Jersey-based financial institution by assets 43 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, 2023 2 As of June 30, 2023 Source: S&P Global Market Intelligence & Company Filings 9
139 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 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
Fiscal 2023 – Financial Highlights 1 Excludes Yield Adjustments 2 Refer to Non-GAAP Reconciliation at the end of this presentation – Adjusted non-interest expenses were reduced by $3.1 million from $31.9 million to $28.8 million for 2Q ’23 and 4Q ’23, respectively. Source: Company Filings 11 Operating Efficiency Initiative Added $675 million of fair value asset swaps Hedged an additional $700 million of borrowings Sold $121 million of securities and reinvested in securities yielding, on average, 440 basis points higher than the securities that were sold Purchased $100 million of securities, funded by wholesale borrowings, which produced an average spread of 216 basis points Reduced adjusted non-interest expenses by 9.7% through optimization and reduction of vendor spend2 Continued investment in technology to automate routine activities Realignment of the Company’s workforce Consolidation of 2 branch locations Wholesale Restructuring Reduction in Interest Rate Sensitivity Net Income (GAAP) (Adjusted)2 $0.63 $0.78 Total Assets $8.1 billion $5.6 billion $40.8 million $5.9 billion $50.6 million Adjusted Net Income2 Total Loans1 Diluted EPS Total Deposits
9.07% 14.07% 14.07% 14.75% 9.59% 11.20% 11.46% 13.95% 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, 2023 results. 2 S&P U.S. Small Cap Banks Index comprised of 236 constituents, based on June 30, 2023 results. Source: Company Filings Equity Capitalization Level Regulatory Capital Ratios1,2 12 14.19% 13.29% 11.72% 9.06% 8.35% 16.99% 16.04% 14.32% 11.58% 10.78% 0.00% 5.00% 10.00% 15.00% 20.00% 2019FY 2020FY 2021FY 2022FY 2023FY Tangible Common Equity / Tangible Assets Equity / Assets
$433 $502 $621 $751 $779 $69 $94 $122 $152 $181 $502 $596 $743 $903 $960 2019FY 2020FY 2021FY 2022FY 2023FY Repurchase of Common Stock Dividends Paid Capital Management Source: Company Filings 1 Since conclusion of second step conversion in May 2015. Repurchased 2.8 million shares during Fiscal 2023 at an average price of $9.73 per share Cumulative Capital Returned to Stockholders1 13 ($ millions)
Earnings Performance 1 Although management believes adjusted EPS, which is a non-GAAP measure, is useful to investors by providing a greater level of understanding of its business, it should not be considered a substitute for a financial measure determined in accordance with GAAP, nor is it necessarily comparable to a non-GAAP financial measure that may be presented by other companies. Adjusted EPS excludes 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 Fiscal 2023 earnings per share were challenged due to the rapid increase in short-term interest rates which resulted in an inverted yield curve. 14 $0.47 $0.54 $0.81 $0.98 $0.78 $0.46 $0.55 $0.77 $0.95 $0.63 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 2019FY 2020FY 2021FY 2022FY 2023FY Adjusted EPS GAAP EPS Earnings per Share1 1
$1,902 $1,773 $1,399 $1,116 $1,377 $302 $67 $479 $773 $640 $791 $907 $1,111 $1,053 $749 $843 $1,264 $1,902 $2,266 $2,253$309 $419 $594 $654 $610 $4,147 $4,430 $5,485 $5,862 $5,629 2019FY 2020FY 2021FY 2022FY 2023FY Deposits 1 For the quarter ended June 30, 2023. Source: S&P Global Market Intelligence & Company Filings Deposit Composition1 Deposit Growth Consolidated 17 branches since the end of Fiscal 2019 ($ millions) 15 YTD Cost of Deposits 1.47% 10.8% 40.0% 13.3% 24.5% 11.4% Noninterest bearing deposits Interest bearing DDA Savings Retail CDs Wholesale CDs
$1,344 $1,273 $1,448 $1,646 $1,701 $1,946 $2,060 $2,039 $2,409 $2,762 $1,259 $961 $1,079 $1,020 $969$4,731 $4,540 $4,880 $5,437 $5,850 2019FY 2020FY 2021FY 2022FY 2023FY 1-4 Family Home Equity Multi-family CRE Construction C&I 29.1% 0.7% 47.2% 16.6% 3.9% 2.5% 1-4 Family Home Equity Multi-family CRE Construction C&I Portfolio Lending 1 For the quarter ended June 30, 2023. 2 As of June 30, 2023 Source: S&P Global Market Intelligence & Company Filings Loan Composition1 Geographic Distribution2Loan Growth Grew net loans by 8% during Fiscal 2023 16 YTD Yield on Loans 4.00% New York 35.3% New Jersey 54.5% Pennsylvania 5.8% Other 4.4% LTV 61.0% ($ millions)
Asset Quality 1 As of June 30, 2023; 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 0.02% 0.00% 0.03% 0.07% 0.01% -0.05% 0.00% 0.05% 0.10% 0.15% 2019FY 2020FY 2021FY 2022FY 2023FY 0.31% 0.55% 1.10% 1.19% 0.69% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 2019FY 2020FY 2021FY 2022FY 2023FY $33.3 $37.3 $58.2 $47.1 $48.7 0.70% 0.82% 1.19% 0.87% 0.83% 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 $120.0 2019FY 2020FY 2021FY 2022FY 2023FY ACL Balance ACL to Total Loans Receivable NPL's $42.6MM $6.7 $19.1 $16.5 $0.3 1-4 Family Home Equity Multi-family CRE Construction C&I
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 18
Selected Technology Partners 19
Environmental, Social & Governance (ESG) 20 The Company recently released an ESG Highlights Report disclosing updates to our ESG program during fiscal 2023 including: Welcoming two new directors to the Boards of Kearny Financial Corp. and Kearny Bank Appointing a Director of Diversity, Equity and Inclusion Implementing an energy management system in our corporate headquarters
Non-GAAP Reconciliation 21 Appendix A: Reconciliation of GAAP to Non-GAAP For the year ended For the year ended For the quarter ended For the quarter ended For the quarter ended For the quarter ended (Dollars and Shares in Thousands, Except Per Share Data) June 30, 2023 June 30, 2022 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Adjusted net income: Net Income (GAAP) $40,811 $67,547 $12,013 $10,312 $1,951 $16,535 Non-recurring transactions - net of tax: Branch consolidation expenses and impairment charges 568 1,341 - 568 - - Net effect of sales and calls of securities 10,811 397 - - 10,811 - Net effect of sales of other assets (2,081) (251) - - (2,081) - Severance expense from workforce alignment 538 - - - 538 - Early contract termination - 568 - - - Adjusted net income $50,647 $69,602 $12,013 $10,880 $11,219 $16,535 Adjusted earnings per share: Weighted average common shares - basic 64,804 70,911 63,667 64,769 65,030 65,737 Weighted average common shares - diluted 64,804 70,933 63,667 64,783 65,038 65,736 Earnings per share - basic (GAAP) $0.63 $0.95 $0.19 $0.16 $0.03 $0.25 Earnings per share - diluted (GAAP) $0.63 $0.95 $0.19 $0.16 $0.03 $0.25 Adjusted earnings per share - basic (non-GAAP) $0.78 $0.98 $0.19 $0.17 $0.17 $0.25 Adjusted earnings per share - diluted (non-GAAP) $0.78 $0.98 $0.19 $0.17 $0.17 $0.25 Adjusted return on average assets: Total average assets $8,068,937 $7,282,370 $8,163,589 $8,269,245 $8,070,992 $7,778,206 Return on average assets (GAAP) 0.51% 0.93% 0.59% 0.50% 0.10% 0.85% Adjusted return on average assets (non-GAAP) 0.63% 0.96% 0.59% 0.53% 0.56% 0.85%
Non-GAAP Reconciliation 22 Appendix A: Reconciliation of GAAP to Non-GAAP For the year ended For the year ended For the quarter ended For the quarter ended For the quarter ended For the quarter ended (Dollars and Shares in Thousands, Except Per Share Data) June 30, 2023 June 30, 2022 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 Adjusted non-interest expense ratio: Non-interest expense (GAAP) $123,751 $125,708 $28,761 $30,352 $32,650 $31,988 Non-recurring transactions: Branch consolidation expenses (800) (1,898) - (800) - - Severance expense from workforce alignment (757) - - - (757) - Early contract termination - (800) - - - - Non-interest expense (non-GAAP) $122,194 $123,010 $28,761 $29,552 $31,893 $31,988 Non-interest expense ratio (GAAP) 1.53% 1.73% 1.41% 1.47% 1.62% 1.65% Adjusted non-interest expense ratio (non-GAAP) 1.51% 1.69% 1.41% 1.43% 1.58% 1.65%
Stockholder Questions Questions? 23
Results of Voting Report of the Inspector of Election 24
A N N U A L M E E T I N G O F STOCKHOLDERS OCTOBER 26, 2023 10:00 AM
sep23investorpresentatio
OCTOBER 26, 2023 I N V E S T O R P R E S E N T A T I O N F I R S T Q U A R T E R F I S C A L 2 0 2 4 EXHIBIT 99.3
Forward Looking Statements & Financial Measures 2 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, and subsequent filings with the Securities and Exchange Commission, 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 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.
Kearny Financial Corp. NASDAQ: KRNY Market Cap: $429.2 million1 Founded in 1884 Top 10 New Jersey-based financial institution by assets 43 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 23, 2023 2 As of September 30, 2023 Source: S&P Global Market Intelligence & Company Filings 3
139 Years of Serving our Communities and Clients 4
1Q24 Financial Highlights 1 Excludes Yield Adjustments Source: Company Filings 5 1Q24 Highlights: Corporate Banking Division Formed – Staffed with seasoned banking professionals whose sole focus is the origination of stable, long-term non-interest bearing deposits of corporate clients. Digital Banking Platform – Launched in October 2023. Expands our client-facing online and mobile capabilities while providing a state-of-the-art user experience. Net Interest Margin - Compression slowed, declining one basis point from the prior quarter. Net Income Total Assets $8.0 billion Net Interest Income Diluted EPS $9.8 million $39.2 million $0.16 Total Loans1 Total Deposits $5.7 billion $5.4 billion
Equity & Capitalization Equity Capitalization Level 1 Kearny Financial Corp. (NASDAQ: KRNY) Regulatory Capital Ratios as of September 30, 2023 are preliminary. 2 S&P U.S. Small Cap Banks Index comprised of 236 constituents, based on June 30, 2023 results. Source: Company Filings 6 Regulatory Capital Ratios1,2 9.14% 14.57% 14.57% 15.34% 9.62% 11.20% 11.47% 13.97% Tier 1 Leverage Common Equity Tier 1 Tier 1 Risk-Based Capital Total Risk-Based Capital KRNY S&P US Small Cap Banks 8.61% 8.16% 8.02% 8.35% 8.20% 11.09% 10.53% 10.37% 10.78% 10.65% 1Q23 2Q23 3Q23 4Q23 1Q24 Tangible Common Equity / Tangible Assets Equity / Assets
Deposits 1 For the quarter ended September 30, 2023 2 For the quarter ended September 30, 2023; excludes Wholesale CDs Source: S&P Global Market Intelligence & Company Filings 7 Deposit Composition1 Deposit Trend Deposit Segmentation2 Consumer 60.7% Commercial 21.0% Government 18.3% Product # of Accounts Balance ($ millions) Average Balance per Account Checking 53,728 $ 2,832 $ 53,728 Savings 33,640 689 33,640 CD 28,665 1,300 28,665 Total Retail Deposits 116,033 $ 4,821 $ 41,550 Non-Maturity Account Deposit Mix $1,263 $1,355 $1,327 $1,377 $1,300 $797 $747 $761 $640 $613 $983 $902 $811 $749 $689 $2,382 $2,316 $2,286 $2,253 $2,237 $683 $651 $618 $610 $595 $6,108 $5,971 $5,803 $5,629 $5,434 1Q23 2Q23 3Q23 4Q23 1Q24 Wholesale CDs Savings Interest Bearing DDA Non-interest Bearing DDA ($ millions) QTD Cost of Deposits 2.23% Retail CDs 23.9% Wholesale CDs 11.3% Savings 12.7% Interest Bearing DDA 41.1% Non-interest Bearing DDA 11.0%
Liquidity Available for Uninsured Deposits Estimated Uninsured Deposits Analysis2 1 Estimated amount of uninsured deposits reported in September 30, 2023 Call Report. 2 As of September 30, 2023 8 Estimated Uninsured Deposit Analysis ($ millions) Estimated Uninsured Deposits 1,734$ Less: Collateralized State & Local Government Deposits (630) Less: Bank's wholly-owned subsidiary & Holding Company Deposits (421) Estimated uninsured deposits excluding items above: 683$ Total Deposits 5,434$ Estimated uninsured deposits, excluding items above, as a % of Total Deposits 12.6% Available liquidity is 3.1x greater than estimated uninsured deposits (excluding items above) Liquidity Capacity2 Sources of Liquidity ($ millions) Liquidity Capacity Funding Utilized Available Capacity Internal Sources: Free Securities and other 444$ -$ 444$ External Sources: FRB 435 - 435 FHLB 2,840 1,628 1,212 Total Liquidity 3,719$ 1,628$ 2,091$ 1
Investment Securities 1 For the quarter ended September 30, 2023 2 Comprised entirely of securitized federal education loans with 97% U.S. government guarantees 3 Assumes 29% marginal tax rate Source: S&P Global Market Intelligence & Company Filings 9 2 Securities Composition1 Securities Average Balance & Yield TrendAFS/HTM & Effective Duration At September 30, 2023, the after-tax net unrecognized loss on securities held-to maturity was $14.7 million, or 2.3% of tangible equity3 $1,566 $1,565 $1,576 $1,546 $1,532 2.74% 3.43% 3.95% 4.10% 4.27% 1Q23 2Q23 3Q23 4Q23 1Q24 ($ millions) 10.0% 30.2% 9.7% 49.0% 1.1% Corporate Bonds CLO ABS Student Loans Agency MBS Municipal Bonds AFS , 89.4% HTM , 10.6% Total Effective Duration ≈ 3.4 years Floating rate securities ≈ 37.1%
Portfolio Lending Loan Composition1 Geographic Distribution2Loan Trend 1 For the quarter ended September 30, 2023. 2 As of September 30, 2023. Source: S&P Global Market Intelligence & Company Filings 10 ($ millions) New York (Ex. Brooklyn) 16.7% Brooklyn 18.1% New Jersey 55.0% Pennsylvania 5.8% Other 4.4% $1,667 $1,720 $1,713 $1,701 $1,689 $2,570 $2,852 $2,836 $2,762 $2,699 $1,041 $1,017 $1,003 $969 $947 $5,676 $6,001 $5,976 $5,850 $5,760 1Q23 2Q23 3Q23 4Q23 1Q24 1-4 Family Home Equity Multi-family CRE Construction C&I 29.3% 0.8% 46.9% 16.4% 4.0% 2.6% 1-4 Family Home Equity Multi-family CRE Construction C&I QTD Yield on Loans 4.34% LTV 61.3%
CRE Lending 1 As of September 30, 2023 Source: Company Filings 11 CRE Portfolio by Collateral Type1 CRE Loan Geographic Distribution1 Total CRE $0.9 B New Jersey 55.6% Brooklyn 10.0% New York (Ex. Brooklyn) 27.9% Pennsylvania 3.9% Other 2.6% WA LTV 53% $358.9 Retail 38.0% $259.4 Mixed Use 27.4% $135.7 Office 14.3% $142.4 Industrial 15.0% $15.2 Specialty & Other 1.6% $35.2 Medical 3.7% ($ millions)
Office Portfolio 1 As of September 30, 2023 Source: Company Filings 12 Office Portfolio by Contractual Maturity1 Office Loan Geographic Distribution1 Office Portfolio Profile 15.0% of total CRE portfolio or $136 million Average loan size of $1.5 million Classified office loans comprised of 2.7% of total office loans ($ millions) ($ millions) $2 $6 $5 $17 $50 $20 $36 2023 2024 2025 2026 2027 2028 2029+ $3.1 Other 2.3% $33.2 Manhattan 24.4% $8.5 New York (Ex. Manhattan) 6.3% $90.9 New Jersey 67.0% Total Office $135.7 M LTV 50.2% DSCR 1.8x
Asset Quality Net Charge-Offs / Average Loans1 Non-Performing Assets / Total Assets Non-Performing Loans2 Allowance for Credit Losses 1 All of the charge-offs recorded during 1Q24 had previously been individually reserved for within the allowance for credit losses. 2 As of September 30, 2023; amounts shown in millions. Source: S&P Global Market Intelligence & Company Filings 13 0.01% 0.03% 0.01% 0.01% 0.15% -0.05% 0.00% 0.05% 0.10% 0.15% 0.20% 1Q23 2Q23 3Q23 4Q23 1Q24 0.98% 0.76% 0.69% 0.69% 0.64% 0.50% 0.75% 1.00% 1.25% 1Q23 2Q23 3Q23 4Q23 1Q24 $47.6 $48.9 $49.1 $48.7 $46.9 0.84% 0.81% 0.82% 0.83% 0.81% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% $0.0 $20.0 $40.0 $60.0 $80.0 1Q23 2Q23 3Q23 4Q23 1Q24 ACL Balance ACL to Total Loans Receivable ($ millions) $16.4 $14.9 $0.4 $6.2 Multi-family CRE C&I 1-4 Family Home Equity NPL's $37.9 MM
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