8-K
Kearny Financial Corp. (KRNY)
8-K
2020-01-31
For: 2020-01-30
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Added on
April 06, 2026
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): January 30, 2020
KEARNY FINANCIAL CORP.
(Exact name of Registrant as Specified in Its Charter)
| Maryland | 001-37399 | 30-0870244 |
|---|---|---|
| (State or Other Jurisdiction<br><br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><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
Not Applicable
(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 2.02Results of Operation and Financial Condition
On January 30, 2020, Kearny Financial Corp. (the “Company”), the holding company for Kearny Bank, issued a press release reporting its financial results for the period ended December 31, 2019.
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 9.01Financial 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 January 30, 2020. |
| 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: January 31, 2020 | By: | /s/ Craig L. Montanaro |
| Craig L. Montanaro | ||
| President and Chief Executive Officer |
krny-ex991_6.htm
Exhibit 99.1
FOR IMMEDIATE RELEASE
January 30, 2020
For further information contact:
Craig L. Montanaro, President and Chief Executive Officer, or
Keith Suchodolski, Executive Vice President and Chief Financial Officer
Kearny Financial Corp.
(973) 244-4500
KEARNY FINANCIAL CORP.
REPORTS SECOND QUARTER 2020 OPERATING RESULTS
Fairfield, New Jersey, January 30, 2020 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended December 31, 2019 of $10.7 million, or $0.13 per basic and diluted share. The results represent a decrease of $718,000 compared to net income of $11.4 million, or $0.13 per basic and diluted share, for the quarter ended September 30, 2019.
The decrease in net income partially reflected the Company’s recognition of certain merger-related expenses totaling $219,000 related to its proposed acquisition of MSB Financial Corp. (NASDAQ: MSBF) (“MSBF”), the holding company for Millington Bank (“Millington”). The Company previously announced on December 18, 2019, that it had entered into a definitive agreement to acquire MSBF in a cash and stock transaction. Net income for the quarter ended December 31, 2019 was also impacted by a non-recurring increase of $153,000 in non-interest expense and a non-recurring decrease of $236,000 in non-interest income which were recognized in conjunction with the Company’s previously completed branch consolidations. Adjusting for the impact of such charges, net of tax benefit, the Company’s adjusted net income for the quarter ended December 31, 2019 was $11.1 million or $0.13 per basic and diluted share. This compares to adjusted net income of $11.8 million or $0.14 per basic and diluted share for the quarter ended September 30, 2019.
Craig L. Montanaro, President and Chief Executive Officer, commented, “I am very pleased to report another quarter of solid core earnings coupled with exceptionally strong core deposit growth. During the quarter, we grew core deposits by $147.3 million while facilitating the outflow of $120.5 million in wholesale funding. Our recently announced acquisition of MSB Financial Corp. will accelerate our funding realignment strategy as a majority of Millington’s deposits are comprised of core transaction accounts, while the Morris and Somerset county markets they serve offer tremendous opportunity for further growth in both deposits and loans. On the technology front, we continue to seek out, and partner with, best of breed technology providers as a means of strengthening our digital banking presence. Toward that end, we have committed to invest a total of $1.25 million in two separate FinTech firms whose product and service offerings will allow us to continue to provide our clients with the very best in digital banking solutions. As we move ahead our digital strategy focuses on the evaluation and implementation of technology solutions that leverage artificial intelligence, machine learning, robotic process automation and open API architecture.”
Balance Sheet Highlights
| • | Deposits decreased by $8.4 million to $4.19 billion at December 31, 2019 from $4.20 billion at September 30, 2019. This net decrease in deposits was attributable to a decrease of $115.9 million in wholesale deposits that was largely offset by an increase of $107.5 million in retail deposits. The reallocation of deposits for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits. |
|---|---|
| • | Loans receivable decreased by $112.0 million to $4.49 billion, or 68.0% of total assets, at December 31, 2019 from $4.60 billion, or 69.3% of total assets, at September 30, 2019. The decrease in loans receivable was attributable to an accelerated level of loan prepayment activity which outpaced loan origination volume. |
| --- | --- |
| • | Borrowings decreased by $6.1 million to $1.28 billion, or 19.3% of total assets, at December 31, 2019. As noted above, the decrease in borrowings for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits. |
| --- | --- |
| • | Investment securities increased by $168.7 million to $1.44 billion, or 21.8% of total assets, at December 31, 2019 from $1.27 billion, or 19.1% of total assets, at September 30, 2019. |
| --- | --- |
Earnings Highlights
Net Interest Income, Spread and Margin
| • | Net interest income decreased by $2.1 million to $34.6 million for the quarter ended December 31, 2019, from $36.7 million for the quarter ended September 30, 2019. The decrease in net interest income was the result of a decrease of $2.7 in interest income partially offset by a decrease of $637,000 in interest expense. |
|---|---|
| • | Net interest spread decreased 11 basis points to 2.04% for the quarter ended December 31, 2019 from 2.15% for the quarter ended September 30, 2019. The decrease in spread primarily reflected a 16 basis point decrease in the yield on interest-earning assets that was partially offset by a five basis point decrease in the cost of interest-bearing liabilities. |
| --- | --- |
| • | The factors that contributed to the quarterly change in net interest spread also contributed to a 13 basis point decrease in net interest margin to 2.29% for the quarter ended December 31, 2019 from 2.42% for the quarter ended September 30, 2019. |
| --- | --- |
Non-Interest Income
| • | Fees and service charges increased by $677,000 to $2.1 million for the quarter ended December 31, 2019 compared to $1.5 million for the quarter ended September 30, 2019. This increase was largely attributable to loan pre-payment penalty income associated with the accelerated loan pre-payment activity noted above. |
|---|---|
| • | Aggregate loan sale gains once again attained record levels increasing by $63,000 to $668,000 for the quarter ended December 31, 2019 from $605,000 for the quarter ended September 30, 2019. The increase in loan sale gains largely reflected an increase in the volume of residential mortgage loans sold during the period. |
| --- | --- |
| • | Miscellaneous non-interest income decreased by $116,000, to a net loss of $111,000 for the quarter ended December 31, 2019 from $5,000 for the quarter ended September 30, 2019. This decrease was attributable to a non-recurring loss on asset disposals associated with the branch consolidations noted above. |
| --- | --- |
Non-Interest Expense
| • | Non-interest expense increased by $183,000 to $26.4 million for the quarter ended December 31, 2019 compared to $26.2 million for the quarter ended September 30, 2019. The net increase was largely attributable to increases in advertising and marketing, net occupancy expense of premises, miscellaneous expense and non-recurring merger-related expenses. Partially offsetting these increases were decreases in salaries and employee benefits and equipment and systems expense. |
|---|
For the quarters ended December 31, 2019 and September 30, 2019, the Company recorded no expense associated with FDIC insurance premiums as a result of the FDIC’s Deposit Insurance Fund Reserve Ratio having reached a pre-established threshold defined by federal regulation. Upon reaching this threshold qualifying banks with total consolidated assets of less than $10 billion are awarded assessment credits to be utilized towards their FDIC insurance premiums.
| • | The Company’s non-interest expense ratio totaled 1.60% for the quarter ended December 31, 2019 compared to 1.58% for the prior quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s non-interest expense ratio would have been 1.57% for the quarter ended December 31, 2019. |
|---|---|
| • | The Company’s efficiency ratio was 67.5% for the quarter ended December 31, 2019 compared to 64.6% for the prior quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s efficiency ratio would have been 66.1% for the quarter ended December 31, 2019. |
| --- | --- |
Income Taxes
| • | Income tax expense totaled $3.5 million for the quarter ended December 31, 2019 compared to $3.8 million for the quarter ended September 30, 2019 resulting in effective tax rates of 25.0% and 25.1%, respectively. The decrease in income tax expense largely reflected a lower level of pre-tax net income as compared to the prior period. |
|---|
Performance Ratios
| • | Return on average assets for the quarter ended December 31, 2019 decreased to 0.64% from 0.68% for the quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average assets would have been 0.67% for the quarter ended December 31, 2019. |
|---|---|
| • | Return on average equity decreased to 3.86% for the quarter ended December 31, 2019 from 4.08% for the quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average equity would have been 4.02% for the quarter ended December 31, 2019. |
| --- | --- |
| • | Return on average tangible equity decreased to 4.80% for the quarter ended December 31, 2019 from 5.06% for the quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average tangible equity would have been 5.00% for the quarter ended December 31, 2019. |
| --- | --- |
Asset Quality Highlights
| • | Asset quality remained strong throughout the quarter ended December 31, 2019. The outstanding balance of non-performing loans totaled $22.0 million, or 0.49% of total loans, at December 31, 2019 as compared to $21.8 million, or 0.47% of total loans, at September 30, 2019. |
|---|---|
| • | The allowance for loan losses (“ALLL”) decreased to $30.9 million at December 31, 2019 from $32.4 million at September 30, 2019, resulting in an ALLL to total loans ratio of 0.68% and 0.70%, respectively. The balance of the allowance for loan losses reflects the impact of purchase accounting which generally precludes acquired loan balances from being considered in the balance of the allowance for loan losses at the time of their acquisition and thereafter. |
| --- | --- |
| • | Net charge offs totaled $30,000 for the quarter ended December 31, 2019, reflecting an annualized net charge off rate of 0.00% on the average balance of total loans for the period. By comparison, net charge offs totaled $60,000 for the quarter ended September 30, 2019, reflecting an annualized net charge off rate of 0.01%. |
| --- | --- |
| • | The Company recorded a loan loss provision reversal of $1.5 million for the quarter ended December 31, 2019 compared to a loan loss provision reversal of $782,000 for the quarter ended September 30, 2019. The increase in provision reversal was largely attributable to a comparatively larger decrease in the balance of the loan portfolio that was collectively evaluated for impairment during the quarter ended December 31, 2019 compared to the quarter ended September 30, 2019. |
| --- | --- |
Capital Highlights
| • | During the quarter ended December 31, 2019, the Company repurchased 1,574,500 shares of its common stock at a total cost of $21.7 million and an average cost of $13.76 per share. Through December 31, 2019, the Company repurchased a total of 6,982,294 shares, or 75.7% of the shares authorized for repurchase under the current repurchase program, at a total cost of $93.6 million and at an average cost of $13.40 per share. |
|---|---|
| • | The Company increased its regular quarterly cash dividend by $0.01 to $0.07 per share during the quarter ended December 31, 2019. The Company continually evaluates its dividend policies in relation to its overall capital management and shareholder value objectives. |
| --- | --- |
| • | Book value per share increased by $0.05 to $12.85 at December 31, 2019, from $12.80 at September 30, 2019. Tangible book value per share increased by $0.01 to $10.32 at December 31, 2019, from $10.31 at September 30, 2019. |
| --- | --- |
| • | The Company’s and Bank’s regulatory capital ratios at December 31, 2019 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.
| Linked-Quarter Comparative Financial Analysis | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Summary Balance Sheet | At | Variance | |||||||||||||
| (Dollars and Shares in Thousands, | December 31, | September 30, | Variance | or Change | |||||||||||
| Except Per Share Data, Unaudited) | 2019 | 2019 | or Change | Pct. | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 41,796 | $ | 129,305 | $ | (87,509 | ) | -67.7 | % | ||||||
| Securities available for sale | 1,402,206 | 1,231,691 | 170,515 | 13.8 | % | ||||||||||
| Securities held to maturity | 36,073 | 37,888 | (1,815 | ) | -4.8 | % | |||||||||
| Loans held-for-sale | 5,952 | 10,495 | (4,543 | ) | -43.3 | % | |||||||||
| Loans receivable, including yield adjustments | 4,492,697 | 4,604,738 | (112,041 | ) | -2.4 | % | |||||||||
| Less allowance for loan losses | (30,937 | ) | (32,432 | ) | 1,495 | -4.6 | % | ||||||||
| Net loans receivable | 4,461,760 | 4,572,306 | (110,546 | ) | -2.4 | % | |||||||||
| Premises and equipment | 56,542 | 56,599 | (57 | ) | -0.1 | % | |||||||||
| Federal Home Loan Bank stock | 62,838 | 63,739 | (901 | ) | -1.4 | % | |||||||||
| Accrued interest receivable | 18,261 | 19,393 | (1,132 | ) | -5.8 | % | |||||||||
| Goodwill | 210,895 | 210,895 | - | 0.0 | % | ||||||||||
| Core deposit intangible | 4,545 | 4,852 | (307 | ) | -6.3 | % | |||||||||
| Bank owned life insurance | 259,312 | 257,735 | 1,577 | 0.6 | % | ||||||||||
| Deferred income taxes, net | 20,438 | 21,742 | (1,304 | ) | -6.0 | % | |||||||||
| Other real estate owned | 178 | - | 178 | 0.0 | % | ||||||||||
| Other assets | 29,605 | 24,366 | 5,239 | 21.5 | % | ||||||||||
| Total assets | $ | 6,610,401 | $ | 6,641,006 | $ | (30,605 | ) | -0.5 | % | ||||||
| Liabilities | |||||||||||||||
| Deposits | $ | 4,188,822 | $ | 4,197,250 | $ | (8,428 | ) | -0.2 | % | ||||||
| Borrowings | 1,275,049 | 1,281,118 | (6,069 | ) | -0.5 | % | |||||||||
| Advance payments by borrowers for taxes | 16,585 | 16,102 | 483 | 3.0 | % | ||||||||||
| Other liabilities | 35,375 | 35,747 | (372 | ) | -1.0 | % | |||||||||
| Total liabilities | 5,515,831 | 5,530,217 | (14,386 | ) | -0.3 | % | |||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 851 | 868 | (17 | ) | -2.0 | % | |||||||||
| Paid-in capital | 737,539 | 758,385 | (20,846 | ) | -2.7 | % | |||||||||
| Retained earnings | 377,896 | 373,004 | 4,892 | 1.3 | % | ||||||||||
| Unearned ESOP shares | (29,671 | ) | (30,158 | ) | 487 | -1.6 | % | ||||||||
| Accumulated other comprehensive income, net | 7,955 | 8,690 | (735 | ) | -8.5 | % | |||||||||
| Total stockholders' equity | 1,094,570 | 1,110,789 | (16,219 | ) | -1.5 | % | |||||||||
| Total liabilities and stockholders' equity | $ | 6,610,401 | $ | 6,641,006 | $ | (30,605 | ) | -0.5 | % | ||||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 16.56 | % | 16.73 | % | -0.17 | % | |||||||||
| Tangible equity to tangible assets | 13.75 | % | 13.93 | % | -0.18 | % | |||||||||
| Share data | |||||||||||||||
| Outstanding shares | 85,150 | 86,786 | (1,636 | ) | -1.9 | % | |||||||||
| Book value per share | $ | 12.85 | $ | 12.80 | $ | 0.05 | 0.4 | % | |||||||
| Tangible book value per share^(1)^ | $ | 10.32 | $ | 10.31 | $ | 0.01 | 0.1 | % | |||||||
| (1) | Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets. | ||||||||||||||
| --- | --- | ||||||||||||||
| Summary Income Statement | For the three months ended | Variance | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (Dollars and Shares in Thousands, | December 31, | September 30, | Variance | or Change | |||||||||||
| Except Per Share Data, Unaudited) | 2019 | 2019 | or Change | Pct. | |||||||||||
| Interest income | |||||||||||||||
| Loans | $ | 45,608 | $ | 48,600 | $ | (2,992 | ) | -6.2 | % | ||||||
| Taxable investment securities | 9,698 | 9,328 | 370 | 4.0 | % | ||||||||||
| Tax-exempt investment securities | 666 | 693 | (27 | ) | -3.9 | % | |||||||||
| Other interest-earning assets | 1,210 | 1,278 | (68 | ) | -5.3 | % | |||||||||
| Total Interest Income | 57,182 | 59,899 | (2,717 | ) | -4.5 | % | |||||||||
| Interest expense | |||||||||||||||
| Deposits | 15,590 | 16,055 | (465 | ) | -2.9 | % | |||||||||
| Borrowings | 6,985 | 7,157 | (172 | ) | -2.4 | % | |||||||||
| Total interest expense | 22,575 | 23,212 | (637 | ) | -2.7 | % | |||||||||
| Net interest income | 34,607 | 36,687 | (2,080 | ) | -5.7 | % | |||||||||
| Reversal of loan losses | (1,465 | ) | (782 | ) | (683 | ) | 87.3 | % | |||||||
| Net interest income after reversal of<br><br><br>loan losses | 36,072 | 37,469 | (1,397 | ) | -3.7 | % | |||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges | 2,145 | 1,468 | 677 | 46.1 | % | ||||||||||
| Gain (loss) on sale and call of securities | 11 | (14 | ) | 25 | -178.6 | % | |||||||||
| Gain on sale of loans | 668 | 605 | 63 | 10.4 | % | ||||||||||
| Loss on sale and write down of other real estate owned | (28 | ) | - | (28 | ) | -100.0 | % | ||||||||
| Income from bank owned life insurance | 1,576 | 1,580 | (4 | ) | -0.3 | % | |||||||||
| Electronic banking fees and charges | 293 | 318 | (25 | ) | -7.9 | % | |||||||||
| Miscellaneous | (111 | ) | 5 | (116 | ) | -2320.0 | % | ||||||||
| Total non-interest income | 4,554 | 3,962 | 592 | 14.9 | % | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 15,174 | 15,777 | (603 | ) | -3.8 | % | |||||||||
| Net occupancy expense of premises | 3,082 | 2,969 | 113 | 3.8 | % | ||||||||||
| Equipment and systems | 3,046 | 3,089 | (43 | ) | -1.4 | % | |||||||||
| Advertising and marketing | 890 | 535 | 355 | 66.4 | % | ||||||||||
| Directors' compensation | 769 | 770 | (1 | ) | -0.1 | % | |||||||||
| Merger-related expenses | 219 | - | 219 | 0.0 | % | ||||||||||
| Miscellaneous | 3,247 | 3,104 | 143 | 4.6 | % | ||||||||||
| Total non-interest expense | 26,427 | 26,244 | 183 | 0.7 | % | ||||||||||
| Income before income taxes | 14,199 | 15,187 | (988 | ) | -6.5 | % | |||||||||
| Income taxes | 3,547 | 3,817 | (270 | ) | -7.1 | % | |||||||||
| Net income | $ | 10,652 | $ | 11,370 | $ | (718 | ) | -6.3 | % | ||||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.13 | $ | 0.13 | $ | - | |||||||||
| Diluted | $ | 0.13 | $ | 0.13 | $ | - | |||||||||
| Dividends declared | |||||||||||||||
| Cash dividends declared per common share | $ | 0.07 | $ | 0.06 | $ | 0.01 | |||||||||
| Cash dividends declared | $ | 5,760 | $ | 5,045 | $ | 715 | |||||||||
| Dividend payout ratio | 54.1 | % | 44.4 | % | 9.7 | % | |||||||||
| Weighted average number of common<br><br><br>shares outstanding | |||||||||||||||
| Basic | 82,831 | 84,756 | (1,925 | ) | |||||||||||
| Diluted | 82,876 | 84,793 | (1,917 | ) | |||||||||||
| For the three months ended | Variance | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Average Balance Sheet Data | December 31, | September 30, | Variance | or Change | |||||||||||
| (Dollars in Thousands, Unaudited) | 2019 | 2019 | or Change | Pct. | |||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for sale | 4,547,126 | $ | 4,656,192 | $ | (109,066 | ) | -2.3 | % | |||||||
| Taxable investment securities | 1,244,475 | 1,147,698 | 96,777 | 8.4 | % | ||||||||||
| Tax-exempt investment securities | 125,187 | 129,339 | (4,152 | ) | -3.2 | % | |||||||||
| Other interest-earning assets | 117,811 | 125,114 | (7,303 | ) | -5.8 | % | |||||||||
| Total interest-earning assets | 6,034,599 | 6,058,343 | (23,744 | ) | -0.4 | % | |||||||||
| Non-interest-earning assets | 590,746 | 585,826 | 4,920 | 0.8 | % | ||||||||||
| Total assets | $ | 6,625,345 | $ | 6,644,169 | $ | (18,824 | ) | -0.3 | % | ||||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 982,163 | $ | 883,843 | $ | 98,320 | 11.1 | % | |||||||
| Savings | 813,626 | 799,181 | 14,445 | 1.8 | % | ||||||||||
| Certificates of deposit | 2,063,066 | 2,179,333 | (116,267 | ) | -5.3 | % | |||||||||
| Total interest-bearing deposits | 3,858,855 | 3,862,357 | (3,502 | ) | -0.1 | % | |||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,255,597 | 1,277,145 | (21,548 | ) | -1.7 | % | |||||||||
| Other borrowings | 34,733 | 10,012 | 24,721 | 246.9 | % | ||||||||||
| Total borrowings | 1,290,330 | 1,287,157 | 3,173 | 0.2 | % | ||||||||||
| Total interest-bearing liabilities | 5,149,185 | 5,149,514 | (329 | ) | 0.0 | % | |||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 320,161 | 320,641 | (480 | ) | -0.1 | % | |||||||||
| Other non-interest-bearing liabilities | 53,479 | 60,078 | (6,599 | ) | -11.0 | % | |||||||||
| Total non-interest-bearing liabilities | 373,640 | 380,719 | (7,079 | ) | -1.9 | % | |||||||||
| Total liabilities | 5,522,825 | 5,530,233 | (7,408 | ) | -0.1 | % | |||||||||
| Stockholders' equity | 1,102,520 | 1,113,936 | (11,416 | ) | -1.0 | % | |||||||||
| Total liabilities and stockholders' equity | $ | 6,625,345 | $ | 6,644,169 | $ | (18,824 | ) | -0.3 | % | ||||||
| Average interest-earning assets to average<br><br><br>interest-bearing liabilities | 117.20 | % | 117.65 | % | -0.45 | % | -0.4 | % | |||||||
| For the three months ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| December 31, | September 30, | Variance | |||||||||||||
| Performance Ratio Highlights | 2019 | 2019 | or Change | ||||||||||||
| Average yield on interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for sale | 4.01 | % | 4.18 | % | -0.17 | % | |||||||||
| Taxable investment securities | 3.12 | % | 3.25 | % | -0.13 | % | |||||||||
| Tax-exempt investment securities ^(1)^ | 2.13 | % | 2.14 | % | -0.01 | % | |||||||||
| Other interest-earning assets | 4.11 | % | 4.09 | % | 0.02 | % | |||||||||
| Total interest-earning assets | 3.79 | % | 3.95 | % | -0.16 | % | |||||||||
| Average cost of interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | 1.29 | % | 1.30 | % | -0.01 | % | |||||||||
| Savings | 0.81 | % | 0.77 | % | 0.04 | % | |||||||||
| Certificates of deposit | 2.09 | % | 2.14 | % | -0.05 | % | |||||||||
| Total interest-bearing deposits | 1.62 | % | 1.66 | % | -0.04 | % | |||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 2.19 | % | 2.24 | % | -0.05 | % | |||||||||
| Other borrowings | 1.36 | % | 0.66 | % | 0.70 | % | |||||||||
| Total borrowings | 2.17 | % | 2.22 | % | -0.05 | % | |||||||||
| Total interest-bearing liabilities | 1.75 | % | 1.80 | % | -0.05 | % | |||||||||
| Interest rate spread^(2)^ | 2.04 | % | 2.15 | % | -0.11 | % | |||||||||
| Net interest margin^(3)^ | 2.29 | % | 2.42 | % | -0.13 | % | |||||||||
| Non-interest income to average assets<br><br><br>(annualized) | 0.27 | % | 0.24 | % | 0.03 | % | |||||||||
| Non-interest expense to average assets<br><br><br>(annualized) | 1.60 | % | 1.58 | % | 0.02 | % | |||||||||
| Efficiency ratio^(4)^ | 67.48 | % | 64.56 | % | 2.92 | % | |||||||||
| Return on average assets (annualized) | 0.64 | % | 0.68 | % | -0.04 | % | |||||||||
| Return on average equity (annualized) | 3.86 | % | 4.08 | % | -0.22 | % | |||||||||
| Return on average tangible equity (annualized) ^(5)^ | 4.80 | % | 5.06 | % | -0.26 | % | |||||||||
| (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 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Summary Balance Sheet | At | ||||||||||||||
| (Dollars and Shares in Thousands, | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| Except Per Share Data, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 41,796 | $ | 129,305 | $ | 38,935 | $ | 54,160 | $ | 51,483 | |||||
| Securities available for sale | 1,402,206 | 1,231,691 | 714,263 | 726,920 | 666,602 | ||||||||||
| Securities held to maturity | 36,073 | 37,888 | 576,652 | 592,199 | 598,318 | ||||||||||
| Loans held-for-sale | 5,952 | 10,495 | 12,267 | 997 | 1,001 | ||||||||||
| Loans receivable, including yield adjustments | 4,492,697 | 4,604,738 | 4,678,928 | 4,659,804 | 4,753,392 | ||||||||||
| Less allowance for loan losses | (30,937 | ) | (32,432 | ) | (33,274 | ) | (33,105 | ) | (33,526 | ) | |||||
| Net loans receivable | 4,461,760 | 4,572,306 | 4,645,654 | 4,626,699 | 4,719,866 | ||||||||||
| Premises and equipment | 56,542 | 56,599 | 56,854 | 58,274 | 58,414 | ||||||||||
| Federal Home Loan Bank stock | 62,838 | 63,739 | 64,190 | 64,288 | 64,514 | ||||||||||
| Accrued interest receivable | 18,261 | 19,393 | 19,360 | 20,326 | 19,435 | ||||||||||
| Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
| Core deposit intangible | 4,545 | 4,852 | 5,160 | 5,470 | 5,743 | ||||||||||
| Bank owned life insurance | 259,312 | 257,735 | 256,155 | 254,569 | 253,009 | ||||||||||
| Deferred income taxes, net | 20,438 | 21,742 | 25,367 | 24,182 | 24,692 | ||||||||||
| Other real estate owned | 178 | - | - | 209 | 508 | ||||||||||
| Other assets | 29,605 | 24,366 | 9,077 | 19,563 | 27,960 | ||||||||||
| Total assets | $ | 6,610,401 | $ | 6,641,006 | $ | 6,634,829 | $ | 6,658,751 | $ | 6,702,440 | |||||
| Liabilities | |||||||||||||||
| Deposits | 4,188,822 | $ | 4,197,250 | $ | 4,147,610 | $ | 4,137,573 | $ | 4,173,434 | ||||||
| Borrowings | 1,275,049 | 1,281,118 | 1,321,982 | 1,326,216 | 1,310,547 | ||||||||||
| Advance payments by borrowers for taxes | 16,585 | 16,102 | 16,887 | 17,208 | 17,201 | ||||||||||
| Other liabilities | 35,375 | 35,747 | 21,191 | 19,643 | 17,997 | ||||||||||
| Total liabilities | 5,515,831 | 5,530,217 | 5,507,670 | 5,500,640 | 5,519,179 | ||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 851 | 868 | 891 | 915 | 938 | ||||||||||
| Paid-in capital | 737,539 | 758,385 | 787,394 | 817,675 | 848,145 | ||||||||||
| Retained earnings | 377,896 | 373,004 | 366,679 | 363,072 | 356,993 | ||||||||||
| Unearned ESOP shares | (29,671 | ) | (30,158 | ) | (30,644 | ) | (31,130 | ) | (31,617 | ) | |||||
| Accumulated other comprehensive income, net | 7,955 | 8,690 | 2,839 | 7,579 | 8,802 | ||||||||||
| Total stockholders' equity | 1,094,570 | 1,110,789 | 1,127,159 | 1,158,111 | 1,183,261 | ||||||||||
| Total liabilities and stockholders' equity | $ | 6,610,401 | $ | 6,641,006 | $ | 6,634,829 | $ | 6,658,751 | $ | 6,702,440 | |||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 16.56 | % | 16.73 | % | 16.99 | % | 17.39 | % | 17.65 | % | |||||
| Tangible equity to tangible assets | 13.75 | % | 13.93 | % | 14.19 | % | 14.62 | % | 14.90 | % | |||||
| Share data | |||||||||||||||
| Outstanding shares | 85,150 | 86,786 | 89,126 | 91,495 | 93,772 | ||||||||||
| Book value per share | $ | 12.85 | $ | 12.80 | $ | 12.65 | $ | 12.66 | $ | 12.62 | |||||
| Tangible book value per share^(1)^ | $ | 10.32 | $ | 10.31 | $ | 10.22 | $ | 10.29 | $ | 10.31 | |||||
| (1) | Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets. | ||||||||||||||
| --- | --- | ||||||||||||||
| At | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Supplemental Balance Sheet Highlights | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| (Dollars in Thousands, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Cash and cash equivalents | |||||||||||||||
| Cash and due from depository institutions | $ | 17,843 | $ | 16,106 | $ | 19,032 | $ | 15,943 | $ | 24,361 | |||||
| Interest-bearing deposits in other banks | 23,953 | 113,199 | 19,903 | 38,217 | 27,122 | ||||||||||
| Total cash and cash equivalents | $ | 41,796 | $ | 129,305 | $ | 38,935 | $ | 54,160 | $ | 51,483 | |||||
| Securities available for sale | |||||||||||||||
| Debt securities: | |||||||||||||||
| U.S. agency securities | $ | 606 | $ | 694 | $ | 3,678 | $ | 3,737 | $ | 3,942 | |||||
| Municipal and state obligations | 88,057 | 91,050 | 26,951 | 26,731 | 26,205 | ||||||||||
| Asset-backed securities | 177,676 | 181,068 | 179,313 | 180,145 | 180,828 | ||||||||||
| Collateralized loan obligations | 198,324 | 198,549 | 208,611 | 207,906 | 184,439 | ||||||||||
| Corporate bonds | 192,074 | 191,241 | 122,024 | 121,597 | 144,692 | ||||||||||
| Trust preferred securities | 3,795 | 3,775 | 3,756 | 3,775 | 3,726 | ||||||||||
| Debt securities | 660,532 | 666,377 | 544,333 | 543,891 | 543,832 | ||||||||||
| Mortgage-backed securities: | |||||||||||||||
| Collateralized mortgage obligations | 57,839 | 63,594 | 21,390 | 21,660 | 23,019 | ||||||||||
| Residential pass-through securities | 360,900 | 202,858 | 44,303 | 70,513 | 91,918 | ||||||||||
| Commercial pass-through securities | 322,935 | 298,862 | 104,237 | 90,856 | 7,833 | ||||||||||
| Mortgage-backed securities | 741,674 | 565,314 | 169,930 | 183,029 | 122,770 | ||||||||||
| Total securities available for sale | $ | 1,402,206 | $ | 1,231,691 | $ | 714,263 | $ | 726,920 | $ | 666,602 | |||||
| Securities held to maturity | |||||||||||||||
| Debt securities: | |||||||||||||||
| Municipal and state obligations | $ | 36,073 | $ | 37,888 | $ | 104,086 | $ | 107,375 | $ | 107,826 | |||||
| Corporate bonds | - | - | 63,086 | 63,107 | 56,255 | ||||||||||
| Debt securities | 36,073 | 37,888 | 167,172 | 170,482 | 164,081 | ||||||||||
| Mortgage-backed securities: | |||||||||||||||
| Collateralized mortgage obligations | - | - | 46,381 | 49,368 | 51,540 | ||||||||||
| Residential pass-through securities | - | - | 166,283 | 174,338 | 182,335 | ||||||||||
| Commercial pass-through securities | - | - | 196,816 | 198,011 | 200,362 | ||||||||||
| Mortgage-backed securities | - | - | 409,480 | 421,717 | 434,237 | ||||||||||
| Total securities held to maturity | $ | 36,073 | $ | 37,888 | $ | 576,652 | $ | 592,199 | $ | 598,318 | |||||
| Total securities | $ | 1,438,279 | $ | 1,269,579 | $ | 1,290,915 | $ | 1,319,119 | $ | 1,264,920 | |||||
| At | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Supplemental Balance Sheet Highlights | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| (Dollars in Thousands, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Loan portfolio composition: | |||||||||||||||
| Residential first mortgage loans | $ | 1,331,301 | $ | 1,319,750 | $ | 1,344,044 | $ | 1,325,105 | $ | 1,334,284 | |||||
| Home equity loans and lines of credit | 89,916 | 93,304 | 96,165 | 97,788 | 96,001 | ||||||||||
| Residential mortgage loans | 1,421,217 | 1,413,054 | 1,440,209 | 1,422,893 | 1,430,285 | ||||||||||
| Multifamily mortgage loans | 1,856,591 | 1,922,968 | 1,946,391 | 1,956,571 | 1,974,409 | ||||||||||
| Nonresidential and mixed use mortgage loans | 1,172,213 | 1,230,963 | 1,258,869 | 1,249,215 | 1,302,583 | ||||||||||
| Commercial mortgage loans | 3,028,804 | 3,153,931 | 3,205,260 | 3,205,786 | 3,276,992 | ||||||||||
| Commercial business loans | 67,887 | 66,889 | 65,763 | 66,476 | 70,059 | ||||||||||
| Construction loans | 16,221 | 14,637 | 13,907 | 14,377 | 28,405 | ||||||||||
| Account loans | 3,581 | 3,530 | 3,732 | 3,360 | 3,310 | ||||||||||
| Other consumer loans | 1,327 | 1,679 | 2,082 | 2,624 | 3,524 | ||||||||||
| Consumer loans | 4,908 | 5,209 | 5,814 | 5,984 | 6,834 | ||||||||||
| Total loans, excluding yield adjustments | 4,539,037 | 4,653,720 | 4,730,953 | 4,715,516 | 4,812,575 | ||||||||||
| Unamortized yield adjustments | (46,340 | ) | (48,982 | ) | (52,025 | ) | (55,712 | ) | (59,183 | ) | |||||
| Loans receivable, including yield adjustments | 4,492,697 | 4,604,738 | 4,678,928 | 4,659,804 | 4,753,392 | ||||||||||
| Less allowance for loan losses | (30,937 | ) | (32,432 | ) | (33,274 | ) | (33,105 | ) | (33,526 | ) | |||||
| Net loans receivable | $ | 4,461,760 | $ | 4,572,306 | $ | 4,645,654 | $ | 4,626,699 | $ | 4,719,866 | |||||
| Loan portfolio allocation: | |||||||||||||||
| Residential first mortgage loans | 29.3 | % | 28.4 | % | 28.4 | % | 28.1 | % | 27.7 | % | |||||
| Home equity loans and lines of credit | 2.0 | % | 2.0 | % | 2.0 | % | 2.1 | % | 2.0 | % | |||||
| Residential mortgage loans | 31.3 | % | 30.4 | % | 30.4 | % | 30.2 | % | 29.7 | % | |||||
| Multifamily mortgage loans | 40.9 | % | 41.3 | % | 41.2 | % | 41.5 | % | 41.0 | % | |||||
| Nonresidential and mixed use mortgage loans | 25.8 | % | 26.5 | % | 26.6 | % | 26.5 | % | 27.1 | % | |||||
| Commercial mortgage loans | 66.7 | % | 67.8 | % | 67.8 | % | 68.0 | % | 68.1 | % | |||||
| Commercial business loans | 1.5 | % | 1.4 | % | 1.4 | % | 1.3 | % | 1.4 | % | |||||
| Construction loans | 0.4 | % | 0.3 | % | 0.3 | % | 0.3 | % | 0.6 | % | |||||
| Account loans | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | |||||
| Other consumer loans | 0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | 0.1 | % | |||||
| Consumer loans | 0.1 | % | 0.1 | % | 0.1 | % | 0.2 | % | 0.2 | % | |||||
| Total loans, excluding yield adjustments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||
| Asset quality: | |||||||||||||||
| Nonperforming assets: | |||||||||||||||
| Accruing loans - 90 days and over past due | $ | 19 | $ | 15 | $ | 22 | $ | 24 | $ | 32 | |||||
| Nonaccrual loans | 21,935 | 21,766 | 20,248 | 21,297 | 20,743 | ||||||||||
| Total nonperforming loans | 21,954 | 21,781 | 20,270 | 21,321 | 20,775 | ||||||||||
| Other real estate owned | 178 | - | - | 209 | 508 | ||||||||||
| Total nonperforming assets | $ | 22,132 | $ | 21,781 | $ | 20,270 | $ | 21,530 | $ | 21,283 | |||||
| Nonperforming loans (% total loans) | 0.49 | % | 0.47 | % | 0.43 | % | 0.46 | % | 0.44 | % | |||||
| Nonperforming assets (% total assets) | 0.33 | % | 0.33 | % | 0.31 | % | 0.32 | % | 0.32 | % | |||||
| Allowance for loan losses (ALLL): | |||||||||||||||
| ALLL to total loans | 0.68 | % | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | |||||
| ALLL to nonperforming loans | 140.92 | % | 148.90 | % | 164.15 | % | 155.27 | % | 161.38 | % | |||||
| Net charge offs | $ | 30 | $ | 60 | $ | 495 | $ | 242 | $ | 176 | |||||
| Average net charge off rate (annualized) | 0.00 | % | 0.01 | % | 0.04 | % | 0.02 | % | 0.01 | % | |||||
| At | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Supplemental Balance Sheet Highlights | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| (Dollars in Thousands, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Funding by type: | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 312,098 | $ | 322,846 | $ | 309,063 | $ | 303,713 | $ | 305,392 | |||||
| Interest-bearing demand | 1,060,434 | 931,188 | 843,432 | 800,023 | 807,389 | ||||||||||
| Savings | 829,321 | 800,514 | 790,658 | 777,678 | 760,499 | ||||||||||
| Certificates of deposit | 1,986,969 | 2,142,702 | 2,204,457 | 2,256,159 | 2,300,154 | ||||||||||
| Interest-bearing deposits | 3,876,724 | 3,874,404 | 3,838,547 | 3,833,860 | 3,868,042 | ||||||||||
| Total deposits | 4,188,822 | 4,197,250 | 4,147,610 | 4,137,573 | 4,173,434 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,253,958 | 1,273,618 | 1,283,211 | 1,289,285 | 1,293,845 | ||||||||||
| Overnight borrowings | 15,000 | - | 30,000 | - | - | ||||||||||
| Depositor sweep accounts | 6,091 | 7,500 | 8,771 | 36,931 | 16,702 | ||||||||||
| Total borrowings | 1,275,049 | 1,281,118 | 1,321,982 | 1,326,216 | 1,310,547 | ||||||||||
| Total funding | $ | 5,463,871 | $ | 5,478,368 | $ | 5,469,592 | $ | 5,463,789 | $ | 5,483,981 | |||||
| Loans as a % of deposits | 106.7 | % | 109.2 | % | 112.3 | % | 111.8 | % | 113.1 | % | |||||
| Deposits as a % of total funding | 76.7 | % | 76.6 | % | 75.8 | % | 75.7 | % | 76.1 | % | |||||
| Borrowings as a % of total funding | 23.3 | % | 23.4 | % | 24.2 | % | 24.3 | % | 23.9 | % | |||||
| Funding by source: | |||||||||||||||
| Retail funding: | |||||||||||||||
| Non-interest-bearing deposits | $ | 312,098 | $ | 322,846 | $ | 309,063 | $ | 303,713 | $ | 305,392 | |||||
| Interest-bearing demand | 1,060,434 | 931,188 | 843,432 | 800,023 | 807,389 | ||||||||||
| Savings | 829,321 | 800,514 | 790,658 | 777,678 | 760,499 | ||||||||||
| Certificates of deposit | 1,876,280 | 1,916,132 | 1,902,542 | 1,925,630 | 1,922,287 | ||||||||||
| Total retail deposits | 4,078,133 | 3,970,680 | 3,845,695 | 3,807,044 | 3,795,567 | ||||||||||
| Depositor sweep accounts | 6,091 | 7,500 | 8,771 | 36,931 | 16,702 | ||||||||||
| Total retail funding | 4,084,224 | 3,978,180 | 3,854,466 | 3,843,975 | 3,812,269 | ||||||||||
| Wholesale funding: | |||||||||||||||
| Certificates of deposit (listing service) | $ | 42,119 | $ | 57,534 | $ | 66,110 | $ | 78,704 | $ | 108,067 | |||||
| Certificates of deposit (brokered) | 68,570 | 169,036 | 235,805 | 251,825 | 269,800 | ||||||||||
| Total wholesale deposits | 110,689 | 226,570 | 301,915 | 330,529 | 377,867 | ||||||||||
| FHLB advances | 1,253,958 | 1,273,618 | 1,283,211 | 1,289,285 | 1,293,845 | ||||||||||
| Overnight borrowings | 15,000 | - | 30,000 | - | - | ||||||||||
| Total wholesale funding | 1,379,647 | 1,500,188 | 1,615,126 | 1,619,814 | 1,671,712 | ||||||||||
| Total funding | $ | 5,463,871 | $ | 5,478,368 | $ | 5,469,592 | $ | 5,463,789 | $ | 5,483,981 | |||||
| Retail funding as a % of total funding | 74.7 | % | 72.6 | % | 70.5 | % | 70.4 | % | 69.5 | % | |||||
| Wholesale funding as a % of total funding | 25.3 | % | 27.4 | % | 29.5 | % | 29.6 | % | 30.5 | % | |||||
| Summary Income Statement | For the three months ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars and Shares in Thousands, | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| Except Per Share Data, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Interest income | |||||||||||||||
| Loans | $ | 45,608 | $ | 48,600 | $ | 47,818 | $ | 48,116 | $ | 49,015 | |||||
| Taxable investment securities | 9,698 | 9,328 | 9,772 | 9,511 | 9,051 | ||||||||||
| Tax-exempt investment securities | 666 | 693 | 700 | 710 | 713 | ||||||||||
| Other interest-earning assets | 1,210 | 1,278 | 1,158 | 1,320 | 1,243 | ||||||||||
| Total interest income | 57,182 | 59,899 | 59,448 | 59,657 | 60,022 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 15,590 | 16,055 | 15,131 | 14,114 | 12,727 | ||||||||||
| Borrowings | 6,985 | 7,157 | 7,171 | 6,905 | 7,946 | ||||||||||
| Total interest expense | 22,575 | 23,212 | 22,302 | 21,019 | 20,673 | ||||||||||
| Net interest income | 34,607 | 36,687 | 37,146 | 38,638 | 39,349 | ||||||||||
| (Reversal of) provision for loan losses | (1,465 | ) | (782 | ) | 664 | (179 | ) | 971 | |||||||
| Net interest income after (reversal of)<br><br><br>provision for loan losses | 36,072 | 37,469 | 36,482 | 38,817 | 38,378 | ||||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges | 2,145 | 1,468 | 1,340 | 1,674 | 1,258 | ||||||||||
| Gain (loss) on sale and call of securities | 11 | (14 | ) | (141 | ) | (182 | ) | - | |||||||
| Gain on sale of loans | 668 | 605 | 196 | 151 | 101 | ||||||||||
| (Loss) gain on sale and write down of other real estate owned | (28 | ) | - | 9 | (6 | ) | 36 | ||||||||
| Income from bank owned life insurance | 1,576 | 1,580 | 1,586 | 1,560 | 1,599 | ||||||||||
| Electronic banking fees and charges | 293 | 318 | 270 | 253 | 277 | ||||||||||
| Miscellaneous | (111 | ) | 5 | 128 | 226 | 38 | |||||||||
| Total non-interest income | 4,554 | 3,962 | 3,388 | 3,676 | 3,309 | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 15,174 | 15,777 | 16,338 | 15,350 | 15,699 | ||||||||||
| Net occupancy expense of premises | 3,082 | 2,969 | 2,744 | 2,979 | 2,761 | ||||||||||
| Equipment and systems | 3,046 | 3,089 | 2,917 | 3,053 | 3,377 | ||||||||||
| Advertising and marketing | 890 | 535 | 948 | 739 | 787 | ||||||||||
| Federal deposit insurance premium | - | - | 438 | 455 | 421 | ||||||||||
| Directors' compensation | 769 | 770 | 770 | 770 | 746 | ||||||||||
| Merger-related expenses | 219 | - | - | - | - | ||||||||||
| Miscellaneous | 3,247 | 3,104 | 4,590 | 3,425 | 3,479 | ||||||||||
| Total non-interest expense | 26,427 | 26,244 | 28,745 | 26,771 | 27,270 | ||||||||||
| Income before income taxes | 14,199 | 15,187 | 11,125 | 15,722 | 14,417 | ||||||||||
| Income taxes | 3,547 | 3,817 | 2,314 | 4,305 | 3,649 | ||||||||||
| Net income | $ | 10,652 | $ | 11,370 | $ | 8,811 | $ | 11,417 | $ | 10,768 | |||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.13 | $ | 0.13 | $ | 0.10 | $ | 0.13 | $ | 0.12 | |||||
| Diluted | $ | 0.13 | $ | 0.13 | $ | 0.10 | $ | 0.13 | $ | 0.12 | |||||
| Dividends declared^(1)^ | |||||||||||||||
| Cash dividends declared per common share | $ | 0.07 | $ | 0.06 | $ | 0.06 | $ | 0.06 | $ | 0.05 | |||||
| Cash dividends declared | $ | 5,760 | $ | 5,045 | $ | 5,204 | $ | 5,338 | $ | 4,082 | |||||
| Dividend payout ratio | 54.1 | % | 44.4 | % | 59.1 | % | 46.8 | % | 37.9 | % | |||||
| Weighted average number of common<br><br><br>shares outstanding | |||||||||||||||
| Basic | 82,831 | 84,756 | 87,090 | 89,488 | 92,434 | ||||||||||
| Diluted | 82,876 | 84,793 | 87,132 | 89,532 | 92,480 | ||||||||||
| For the three months ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Average Balance Sheet Data | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| (Dollars in Thousands, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for sale | $ | 4,547,126 | $ | 4,656,192 | $ | 4,648,362 | $ | 4,709,052 | $ | 4,758,587 | |||||
| Taxable investment securities | 1,244,475 | 1,147,698 | 1,184,401 | 1,161,492 | 1,158,720 | ||||||||||
| Tax-exempt investment securities | 125,187 | 129,339 | 132,110 | 134,309 | 135,453 | ||||||||||
| Other interest-earning assets | 117,811 | 125,114 | 98,374 | 107,554 | 87,916 | ||||||||||
| Total interest-earning assets | 6,034,599 | 6,058,343 | 6,063,247 | 6,112,407 | 6,140,676 | ||||||||||
| Non-interest-earning assets | 590,746 | 585,826 | 572,218 | 574,921 | 587,921 | ||||||||||
| Total assets | $ | 6,625,345 | $ | 6,644,169 | $ | 6,635,465 | $ | 6,687,328 | $ | 6,728,597 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 982,163 | $ | 883,843 | $ | 815,624 | $ | 790,567 | $ | 792,989 | |||||
| Savings | 813,626 | 799,181 | 780,558 | 773,308 | 743,676 | ||||||||||
| Certificates of deposit | 2,063,066 | 2,179,333 | 2,229,723 | 2,288,836 | 2,214,932 | ||||||||||
| Total interest-bearing deposits | 3,858,855 | 3,862,357 | 3,825,905 | 3,852,711 | 3,751,597 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,255,597 | 1,277,145 | 1,284,427 | 1,292,168 | 1,293,470 | ||||||||||
| Other borrowings | 34,733 | 10,012 | 29,439 | 26,037 | 119,281 | ||||||||||
| Total borrowings | 1,290,330 | 1,287,157 | 1,313,866 | 1,318,205 | 1,412,751 | ||||||||||
| Total interest-bearing liabilities | 5,149,185 | 5,149,514 | 5,139,771 | 5,170,916 | 5,164,348 | ||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 320,161 | 320,641 | 311,648 | 307,645 | 315,165 | ||||||||||
| Other non-interest-bearing liabilities | 53,479 | 60,078 | 39,294 | 35,930 | 37,374 | ||||||||||
| Total non-interest-bearing liabilities | 373,640 | 380,719 | 350,942 | 343,575 | 352,539 | ||||||||||
| Total liabilities | 5,522,825 | 5,530,233 | 5,490,713 | 5,514,491 | 5,516,887 | ||||||||||
| Stockholders' equity | 1,102,520 | 1,113,936 | 1,144,752 | 1,172,837 | 1,211,710 | ||||||||||
| Total liabilities and stockholders' equity | $ | 6,625,345 | $ | 6,644,169 | $ | 6,635,465 | $ | 6,687,328 | $ | 6,728,597 | |||||
| Average interest-earning assets to average<br><br><br>interest-bearing liabilities | 117.20 | % | 117.65 | % | 117.97 | % | 118.21 | % | 118.91 | % | |||||
| For the three months ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| Performance Ratio Highlights | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Average yield on interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for sale | 4.01 | % | 4.18 | % | 4.11 | % | 4.09 | % | 4.12 | % | |||||
| Taxable investment securities | 3.12 | % | 3.25 | % | 3.30 | % | 3.28 | % | 3.12 | % | |||||
| Tax-exempt investment securities ^(1)^ | 2.13 | % | 2.14 | % | 2.12 | % | 2.12 | % | 2.11 | % | |||||
| Other interest-earning assets | 4.11 | % | 4.09 | % | 4.71 | % | 4.91 | % | 5.66 | % | |||||
| Total interest-earning assets | 3.79 | % | 3.95 | % | 3.92 | % | 3.91 | % | 3.91 | % | |||||
| Average cost of interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | 1.29 | % | 1.30 | % | 1.19 | % | 1.06 | % | 0.97 | % | |||||
| Savings | 0.81 | % | 0.77 | % | 0.68 | % | 0.60 | % | 0.49 | % | |||||
| Certificates of deposit | 2.09 | % | 2.14 | % | 2.04 | % | 1.90 | % | 1.79 | % | |||||
| Total interest-bearing deposits | 1.62 | % | 1.66 | % | 1.58 | % | 1.47 | % | 1.36 | % | |||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 2.19 | % | 2.24 | % | 2.21 | % | 2.13 | % | 2.27 | % | |||||
| Other borrowings | 1.36 | % | 0.66 | % | 0.99 | % | 0.35 | % | 1.99 | % | |||||
| Total borrowings | 2.17 | % | 2.22 | % | 2.18 | % | 2.10 | % | 2.25 | % | |||||
| Total interest-bearing liabilities | 1.75 | % | 1.80 | % | 1.74 | % | 1.63 | % | 1.60 | % | |||||
| Interest rate spread^(2)^ | 2.04 | % | 2.15 | % | 2.18 | % | 2.28 | % | 2.31 | % | |||||
| Net interest margin^(3)^ | 2.29 | % | 2.42 | % | 2.45 | % | 2.53 | % | 2.56 | % | |||||
| Non-interest income to average assets<br><br><br>(annualized) | 0.27 | % | 0.24 | % | 0.20 | % | 0.22 | % | 0.20 | % | |||||
| Non-interest expense to average assets<br><br><br>(annualized) | 1.60 | % | 1.58 | % | 1.73 | % | 1.60 | % | 1.62 | % | |||||
| Efficiency ratio^(4)^ | 67.48 | % | 64.56 | % | 70.91 | % | 63.27 | % | 63.93 | % | |||||
| Return on average assets (annualized) | 0.64 | % | 0.68 | % | 0.53 | % | 0.68 | % | 0.64 | % | |||||
| Return on average equity (annualized) | 3.86 | % | 4.08 | % | 3.08 | % | 3.89 | % | 3.55 | % | |||||
| Return on average tangible equity (annualized) ^(5)^ | 4.80 | % | 5.06 | % | 3.80 | % | 4.78 | % | 4.33 | % | |||||
| (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. | ||||||||||||||
| --- | --- |
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). 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. A reconciliation of non-GAAP financial measures to GAAP measures is included below. 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.
| Reconciliation of GAAP to Non-GAAP | For the three months ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Thousands, | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| Except Per Share Data, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Adjusted Net Income | |||||||||||||||
| Net income (GAAP) | $ | 10,652 | $ | 11,370 | $ | 8,811 | $ | 11,417 | $ | 10,768 | |||||
| Add: Merger-related expenses - net of tax | 154 | - | - | - | - | ||||||||||
| Add: Branch consolidation expenses - net of tax | 274 | 475 | 1,216 | - | - | ||||||||||
| Adjusted net income (non-GAAP) | $ | 11,080 | $ | 11,845 | $ | 10,027 | $ | 11,417 | $ | 10,768 | |||||
| Adjusted Net Income per Common Share (EPS) | |||||||||||||||
| Net income per common share Basic and<br><br><br>Diluted (GAAP) | $ | 0.13 | $ | 0.13 | $ | 0.10 | $ | 0.13 | $ | 0.12 | |||||
| Add: Merger-related expenses - net of tax | - | - | - | - | - | ||||||||||
| Add: Branch consolidation expenses - net of tax | - | 0.01 | 0.01 | - | - | ||||||||||
| Adjusted net income per common share Basic<br><br><br>and Diluted (non-GAAP) | $ | 0.13 | $ | 0.14 | $ | 0.11 | $ | 0.13 | $ | 0.12 | |||||
| Adjusted Non-Interest Expense | |||||||||||||||
| Non-interest expense (GAAP) | $ | 26,427 | $ | 26,244 | $ | 28,745 | $ | 26,771 | $ | 27,270 | |||||
| Less: Merger-related expenses | (219 | ) | - | - | - | - | |||||||||
| Less: Branch consolidation expenses | (153 | ) | (567 | ) | (1,725 | ) | - | - | |||||||
| Adjusted non-interest expense (non-GAAP) | $ | 26,055 | $ | 25,677 | $ | 27,020 | $ | 26,771 | $ | 27,270 | |||||
| Adjusted Non-Interest Income | |||||||||||||||
| Non-interest income (GAAP) | $ | 4,554 | $ | 3,962 | $ | 3,388 | $ | 3,676 | $ | 3,309 | |||||
| Add: Branch consolidation expenses | 236 | 106 | - | - | - | ||||||||||
| Adjusted non-interest income (non-GAAP) | $ | 4,790 | $ | 4,068 | $ | 3,388 | $ | 3,676 | $ | 3,309 | |||||
| Adjusted Non-Interest Expense Ratio | |||||||||||||||
| Non-interest expense to average assets (GAAP) | 1.60 | % | 1.58 | % | 1.73 | % | 1.60 | % | 1.62 | % | |||||
| Less: Merger-related expenses | -0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||
| Less: Branch consolidation expenses | -0.01 | % | -0.03 | % | -0.10 | % | 0.00 | % | 0.00 | % | |||||
| Adjusted non-interest expense ratio (non-GAAP) | 1.57 | % | 1.55 | % | 1.63 | % | 1.60 | % | 1.62 | % | |||||
| Adjusted Efficiency Ratio | |||||||||||||||
| Non-interest expense / (Net interest income<br><br><br>+ non-interest income) (GAAP) | 67.5 | % | 64.6 | % | 70.9 | % | 63.3 | % | 63.9 | % | |||||
| Calculation of Adjusted Efficiency Ratio<br><br><br>(non-GAAP) | |||||||||||||||
| Non-interest expense (GAAP) | $ | 26,427 | $ | 26,244 | $ | 28,745 | $ | 26,771 | $ | 27,270 | |||||
| Less: Merger-related expenses | (219 | ) | - | - | - | - | |||||||||
| Less: Branch consolidation expenses | (153 | ) | (567 | ) | (1,725 | ) | - | - | |||||||
| Non-interest expense (non-GAAP) | $ | 26,055 | $ | 25,677 | $ | 27,020 | $ | 26,771 | $ | 27,270 | |||||
| Net interest income (GAAP) | 34,607 | 36,687 | 37,146 | 38,638 | 39,349 | ||||||||||
| Total non-interest income (GAAP) | 4,554 | 3,962 | 3,388 | 3,676 | 3,309 | ||||||||||
| Add: Branch consolidation expenses | 236 | 106 | - | - | - | ||||||||||
| Total revenue (non-GAAP) | $ | 39,397 | $ | 40,755 | $ | 40,534 | $ | 42,314 | $ | 42,658 | |||||
| Adjusted efficiency ratio (non-GAAP) | 66.1 | % | 63.0 | % | 66.6 | % | 63.3 | % | 63.9 | % | |||||
| For the three months ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reconciliation of GAAP to Non-GAAP | December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||
| (Dollars in Thousands, Unaudited) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Adjusted Return on Average Assets | |||||||||||||||
| Return on average assets (GAAP) | 0.64 | % | 0.68 | % | 0.53 | % | 0.68 | % | 0.64 | % | |||||
| Add: Merger-related expenses - net of tax | 0.01 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||
| Add: Branch consolidation expenses - net of tax | 0.02 | % | 0.03 | % | 0.07 | % | 0.00 | % | 0.00 | % | |||||
| Adjusted return on average assets (non-GAAP) | 0.67 | % | 0.71 | % | 0.60 | % | 0.68 | % | 0.64 | % | |||||
| Adjusted Return on Average Equity | |||||||||||||||
| Return on average equity (GAAP) | 3.86 | % | 4.08 | % | 3.08 | % | 3.89 | % | 3.55 | % | |||||
| Add: Merger-related expenses - net of tax | 0.06 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||
| Add: Branch consolidation expenses - net of tax | 0.10 | % | 0.17 | % | 0.42 | % | 0.00 | % | 0.00 | % | |||||
| Adjusted return on average equity (non-GAAP) | 4.02 | % | 4.25 | % | 3.50 | % | 3.89 | % | 3.55 | % | |||||
| Calculation of Return on Average Tangible<br><br><br>Equity | |||||||||||||||
| Net income annualized (GAAP) | $ | 42,608 | $ | 45,480 | $ | 35,244 | $ | 45,668 | $ | 43,072 | |||||
| Total Average equity (GAAP) | $ | 1,102,520 | $ | 1,113,936 | $ | 1,144,752 | $ | 1,172,837 | $ | 1,211,710 | |||||
| Less: average goodwill | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | |||||
| Less: average other intangible assets | (4,711 | ) | (5,006 | ) | (5,313 | ) | (5,606 | ) | (5,915 | ) | |||||
| Average tangible equity (non-GAAP) | $ | 886,914 | $ | 898,035 | $ | 928,544 | $ | 956,336 | $ | 994,900 | |||||
| Return on average tangible equity (non-GAAP) | 4.80 | % | 5.06 | % | 3.80 | % | 4.78 | % | 4.33 | % | |||||
| Calculation of Adjusted Return on Average<br><br><br>Tangible Equity | |||||||||||||||
| Adjusted net income annualized (non-GAAP) | $ | 44,320 | $ | 47,380 | $ | 40,108 | $ | 45,668 | $ | 43,072 | |||||
| Total Average equity (GAAP) | $ | 1,102,520 | $ | 1,113,936 | $ | 1,144,752 | $ | 1,172,837 | $ | 1,211,710 | |||||
| Less: average goodwill | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | |||||
| Less: average other intangible assets | (4,711 | ) | (5,006 | ) | (5,313 | ) | (5,606 | ) | (5,915 | ) | |||||
| Average tangible equity (non-GAAP) | $ | 886,914 | $ | 898,035 | $ | 928,544 | $ | 956,336 | $ | 994,900 | |||||
| Adjusted return on average tangible equity<br><br><br>(non-GAAP) | 5.00 | % | 5.28 | % | 4.32 | % | 4.78 | % | 4.33 | % |
16