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): April 28, 2022
KEARNY FINANCIAL CORP.
(Exact name of Registrant as Specified in Its Charter)
| Maryland | 001-37399 | 30-0870244 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 120 Passaic Avenue | 07004 | |
| Fairfield, New Jersey<br><br>(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 April 28, 2022, Kearny Financial Corp. (the “Company”), the holding company for Kearny Bank, issued a press release reporting its financial results for the period ended March 31, 2022.
A copy of the press release announcing the results is included as Exhibit 99.1 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 8.01 Other Events
On April 28, 2022, the Company’s Board of Directors announced a quarterly cash dividend of $0.11 per share, payable on May 25, 2022 to stockholders of record as of May 11, 2022.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Shell Company Transaction. Not applicable.
(d) Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release dated April 28, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KEARNY FINANCIAL CORP. | ||
|---|---|---|
| Date: April 28, 2022 | By: | /s/ Craig L. Montanaro |
| Craig L. Montanaro | ||
| President and Chief Executive Officer |
EX-99.1
Exhibit 99.1
FOR IMMEDIATE RELEASE
April 28, 2022
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. ANNOUNCES THIRD QUARTER FISCAL 2022 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., April 28, 2022 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended March 31, 2022 of $17.7 million, or $0.25 per diluted share, compared to $18.8 million, or $0.26 per diluted share, for the quarter ended December 31, 2021.
The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on May 25, 2022 to stockholders of record as of May 11, 2022.
Craig L. Montanaro, President and Chief Executive Officer, commented, “This quarter was highlighted by outstanding core growth on both sides of the balance sheet as total loans increased $176.8 million, or 14.8% annualized, and core non-maturity deposits increased $66.2 million or 6.8% annualized. While much of the earnings benefit of this growth will not begin to be recognized until the quarter ended June 30, I am very pleased with our performance and the ongoing strength of our commercial loan pipeline, which totaled $1.5 billion at quarter end.”
Regarding the macroeconomic and geopolitical environment, Mr. Montanaro noted, “During the quarter, intermediate and long-term interest rates increased at a rapid pace. At the same time, inflation, supply chain and geopolitical risks cast a shadow over the U.S. economic outlook. Despite these risks, I believe that our core business prospects remain strong and our markets ripe with opportunity. As we head into the final quarter of our fiscal year, and beyond, we remain steadfast in the execution of our strategic plan, with its focus on the continued growth of long-term shareholder value.”
Balance Sheet
• Loans receivable increased $176.8 million to $5.00 billion at March 31, 2022, from $4.83 billion at December 31, 2021, reflecting growth of $68.6 million in multi-family mortgage loans, $59.5 million in nonresidential mortgage loans and $50.7 million in one- to four-family residential mortgage loans.
• Deposits increased $74.6 million to $5.53 billion at March 31, 2022, from $5.45 billion at December 31, 2021, primarily reflecting growth of $66.2 million in core non-maturity deposits.
• Investment securities increased $3.7 million to $1.65 billion, or 22.3% of total assets, at March 31, 2022, from $1.64 billion, or 22.9% of total assets, at December 31, 2021.
• Borrowings increased $165.1 million to $851.2 million, or 11.5% of total assets, at March 31, 2022, from $686.1 million, or 9.5% of total assets, at December 31, 2021.
Earnings
Performance Highlights
• Return on average assets was 0.98% for the quarter ended March 31, 2022 compared to 1.05% for the quarter ended December 31, 2021.
• Return on average equity was 7.24% and 7.46% for the quarters ended March 31, 2022 and December 31, 2021, respectively. Return on average tangible equity was 9.27% and 9.49% for those same comparative periods.
Net Interest Income and Net Interest Margin
• Net interest margin contracted seven basis points to 2.89% for the quarter ended March 31, 2022, from 2.96% for the quarter ended December 31, 2021. The decrease in net interest margin was due largely to a reduction in yield on earning assets, partially offset by a reduction in cost of interest-bearing liabilities. The reduction in yield on earning assets was partly attributable to declines in purchase accounting accretion and loan prepayment penalty income.
• Net interest income decreased $960,000 to $47.7 million for the quarter ended March 31, 2022, from $48.7 million for the quarter ended December 31, 2021. Included in net interest income for the quarters ended March 31, 2022 and December 31, 2021, respectively, was purchase accounting accretion of $1.9 million and $2.6 million, and loan prepayment penalty income of $1.3 million and $1.5 million.
Non-Interest Income
• Gain on sale of loans decreased $594,000 to $376,000 for the quarter ended March 31, 2022, from $970,000 for the quarter ended December 31, 2021. This decrease was largely attributable to the decrease in volume of loans sold driven by seasonal fluctuations in residential real estate activity and increases in market interest rates.
• Included in other income for the quarter ended December 31, 2021 was a non-recurring gain of $356,000 attributable to the sale of one property recognized in conjunction with the Bank’s ongoing retail branch consolidation efforts. No such gain was recorded in the quarter ended March 31, 2022.
Non-Interest Expense
• Non-interest expense increased $953,000 to $30.6 million for the quarter ended March 31, 2022, from $29.7 million for the quarter ended December 31, 2021. Salary and benefit expense increased $1.1 million attributable largely to increases of $433,000 in payroll taxes associated with the start of the new calendar year and $354,000 in incentive payments tied to increased loan origination volume, as well as $120,000 of non-recurring incentive payments to front-line retail personnel.
• The efficiency and non-interest expense ratios were 60.14% and 1.70%, respectively, for the quarter ended March 31, 2022, as compared to 56.17% and 1.65%, respectively, for the quarter ended December 31, 2021.
Income Taxes
• Income tax expense decreased $279,000 to $6.5 million for the quarter ended March 31, 2022 compared to $6.8 million for the quarter ended December 31, 2021, resulting in effective tax rates of 26.9% and 26.6%, respectively.
Asset Quality
• The balance of non-performing assets increased $8.2 million to $81.0 million, or 1.10% of total assets, at March 31, 2022, from $72.8 million, or 1.01% of total assets, at December 31, 2021. The increase was largely due to one $8.9 million loan that was placed on non-accrual during the quarter ended March 31, 2022.
• Net charge-offs totaled $436,000, or 0.04% of average loans, on an annualized basis, for the quarter ended March 31, 2022, compared to $1.1 million, or 0.10%, for the quarter ended December 31, 2021.
• For the quarter ended March 31, 2022, the Company recorded a provision for credit losses reversal of $3.9 million, compared to a provision for credit losses reversal of $2.4 million for the quarter ended December 31, 2021. The reversal for the quarter ended March 31, 2022 was primarily driven by continued improvement in the Company’s economic forecast. In addition, there was a net reduction in reserves on individually evaluated loans primarily related to improved collateral values.
• The ACL decreased $4.4 million to $43.9 million, or 0.87% of total loans, at March 31, 2022, from $48.2 million, or 0.99% of total loans, at December 31, 2021.
Capital
• For the quarter ended March 31, 2022, book value per share decreased $0.18 to $13.37 and tangible book value per share decreased $0.26 to $10.38. These decreases were driven by a $24.5 million decline in accumulated other comprehensive (loss) income due primarily to a decrease in the fair value of the Company’s available for sale securities, partially offset by an increase in the fair value of the Company’s derivatives portfolio.
• During the quarter ended March 31, 2022, the Company repurchased 2,019,625 shares of common stock at a cost of $27.0 million, or $13.35 per share. Through March 31, 2022, the Company repurchased a total of 4,522,301 shares, or 59.5% of the shares authorized for repurchase under the current repurchase program, at a total cost of $59.6 million or $13.18 per share.
• At March 31, 2022, the Company’s tangible equity to tangible assets ratio equaled 10.3% while the regulatory capital ratios of both the Company and the Bank were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.
Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.
In addition, the COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including whether the coronavirus can continue to be controlled and abated and if the economy is able to remain open. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially remain open, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for credit losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; due to a decline in our stock price or other factors, goodwill may become impaired and be required to be written down; and our cyber security risks are increased as the result of an increase in the number of employees working remotely.
Category: Earnings
| Linked-Quarter Comparative Financial Analysis | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Kearny Financial Corp. | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Consolidated Balance Sheets | ||||||||||||
| (Unaudited) | ||||||||||||
| (Dollars and Shares in Thousands, | March 31, | December 31, | Variance | Variance | ||||||||
| Except Per Share Data) | 2022 | 2021 | or Change | or Change Pct. | ||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | 62,379 | $ | 60,452 | $ | 1,927 | 3.2 | % | ||||
| Securities available for sale | 1,526,086 | 1,591,066 | (64,980 | ) | -4.1 | % | ||||||
| Securities held to maturity | 121,853 | 53,142 | 68,711 | 129.3 | % | |||||||
| Loans held-for-sale | 2,822 | 12,549 | (9,727 | ) | -77.5 | % | ||||||
| Loans receivable | 5,003,201 | 4,826,404 | 176,797 | 3.7 | % | |||||||
| Less: allowance for credit losses on loans | (43,860 | ) | (48,216 | ) | 4,356 | -9.0 | % | |||||
| Net loans receivable | 4,959,341 | 4,778,188 | 181,153 | 3.8 | % | |||||||
| Premises and equipment | 53,727 | 54,067 | (340 | ) | -0.6 | % | ||||||
| Federal Home Loan Bank stock | 30,997 | 36,622 | (5,625 | ) | -15.4 | % | ||||||
| Accrued interest receivable | 19,517 | 18,495 | 1,022 | 5.5 | % | |||||||
| Goodwill | 210,895 | 210,895 | - | 0.0 | % | |||||||
| Core deposit intangible | 3,166 | 3,344 | (178 | ) | -5.3 | % | ||||||
| Bank owned life insurance | 287,644 | 286,433 | 1,211 | 0.4 | % | |||||||
| Deferred income taxes, net | 34,349 | 25,709 | 8,640 | 33.6 | % | |||||||
| Other real estate owned | 401 | 658 | (257 | ) | -39.1 | % | ||||||
| Other assets | 76,714 | 54,603 | 22,111 | 40.5 | % | |||||||
| Total assets | $ | 7,389,891 | $ | 7,186,223 | $ | 203,668 | 2.8 | % | ||||
| Liabilities | ||||||||||||
| Deposits: | ||||||||||||
| Non-interest-bearing | 621,954 | $ | 604,805 | $ | 17,149 | 2.8 | % | |||||
| Interest-bearing | 4,906,708 | 4,849,220 | 57,488 | 1.2 | % | |||||||
| Total deposits | 5,528,662 | 5,454,025 | 74,637 | 1.4 | % | |||||||
| Borrowings | 851,220 | 686,105 | 165,115 | 24.1 | % | |||||||
| Advance payments by borrowers for taxes | 16,979 | 16,772 | 207 | 1.2 | % | |||||||
| Other liabilities | 37,861 | 33,851 | 4,010 | 11.8 | % | |||||||
| Total liabilities | 6,434,722 | 6,190,753 | 243,969 | 3.9 | % | |||||||
| Stockholders' Equity | ||||||||||||
| Common stock | 714 | 735 | (21 | ) | -2.9 | % | ||||||
| Paid-in capital | 561,176 | 587,392 | (26,216 | ) | -4.5 | % | ||||||
| Retained earnings | 441,522 | 431,549 | 9,973 | 2.3 | % | |||||||
| Unearned ESOP shares | (25,294 | ) | (25,780 | ) | 486 | -1.9 | % | |||||
| Accumulated other comprehensive (loss) income | (22,949 | ) | 1,574 | (24,523 | ) | -1558.0 | % | |||||
| Total stockholders' equity | 955,169 | 995,470 | (40,301 | ) | -4.0 | % | ||||||
| Total liabilities and stockholders' equity | $ | 7,389,891 | $ | 7,186,223 | $ | 203,668 | 2.8 | % | ||||
| Consolidated capital ratios | ||||||||||||
| Equity to assets | 12.93 | % | 13.85 | % | -0.92 | % | ||||||
| Tangible equity to tangible assets (1) | 10.33 | % | 11.21 | % | -0.88 | % | ||||||
| Share data | ||||||||||||
| Outstanding shares | 71,424 | 73,453 | (2,029 | ) | -2.8 | % | ||||||
| Book value per share | $ | 13.37 | $ | 13.55 | $ | (0.18 | ) | -1.3 | % | |||
| Tangible book value per share (2) | $ | 10.38 | $ | 10.64 | $ | (0.26 | ) | -2.4 | % |
(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) | ||||||||||||
| Three Months Ended | ||||||||||||
| (Dollars and Shares in Thousands, | March 31, | December 31, | Variance | Variance | ||||||||
| Except Per Share Data) | 2022 | 2021 | or Change | or Change Pct. | ||||||||
| Interest income | ||||||||||||
| Loans | $ | 45,846 | $ | 47,575 | $ | (1,729 | ) | -3.6 | % | |||
| Taxable investment securities | 8,024 | 7,595 | 429 | 5.6 | % | |||||||
| Tax-exempt investment securities | 316 | 327 | (11 | ) | -3.4 | % | ||||||
| Other interest-earning assets | 415 | 415 | - | 0.0 | % | |||||||
| Total interest income | 54,601 | 55,912 | (1,311 | ) | -2.3 | % | ||||||
| Interest expense | ||||||||||||
| Deposits | 3,565 | 3,663 | (98 | ) | -2.7 | % | ||||||
| Borrowings | 3,309 | 3,562 | (253 | ) | -7.1 | % | ||||||
| Total interest expense | 6,874 | 7,225 | (351 | ) | -4.9 | % | ||||||
| Net interest income | 47,727 | 48,687 | (960 | ) | -2.0 | % | ||||||
| Reversal of provision for credit losses | (3,920 | ) | (2,420 | ) | (1,500 | ) | 62.0 | % | ||||
| Net interest income after reversal of provision<br> for credit losses | 51,647 | 51,107 | 540 | 1.1 | % | |||||||
| Non-interest income | ||||||||||||
| Fees and service charges | 617 | 698 | (81 | ) | -11.6 | % | ||||||
| Gain on sale and call of securities | 3 | - | 3 | 0.0 | % | |||||||
| Gain on sale of loans | 376 | 970 | (594 | ) | -61.2 | % | ||||||
| Gain on sale of other real estate owned | 14 | - | 14 | 0.0 | % | |||||||
| Income from bank owned life insurance | 1,511 | 1,562 | (51 | ) | -3.3 | % | ||||||
| Electronic banking fees and charges | 432 | 421 | 11 | 2.6 | % | |||||||
| Other income | 238 | 482 | (244 | ) | -50.6 | % | ||||||
| Total non-interest income | 3,191 | 4,133 | (942 | ) | -22.8 | % | ||||||
| Non-interest expense | ||||||||||||
| Salaries and employee benefits | 19,184 | 18,096 | 1,088 | 6.0 | % | |||||||
| Net occupancy expense of premises | 3,223 | 3,156 | 67 | 2.1 | % | |||||||
| Equipment and systems | 3,822 | 3,723 | 99 | 2.7 | % | |||||||
| Advertising and marketing | 516 | 448 | 68 | 15.2 | % | |||||||
| Federal deposit insurance premium | 480 | 721 | (241 | ) | -33.4 | % | ||||||
| Directors' compensation | 340 | 649 | (309 | ) | -47.6 | % | ||||||
| Other expense | 3,058 | 2,877 | 181 | 6.3 | % | |||||||
| Total non-interest expense | 30,623 | 29,670 | 953 | 3.2 | % | |||||||
| Income before income taxes | 24,215 | 25,570 | (1,355 | ) | -5.3 | % | ||||||
| Income taxes | 6,522 | 6,801 | (279 | ) | -4.1 | % | ||||||
| Net income | $ | 17,693 | $ | 18,769 | $ | (1,076 | ) | -5.7 | % | |||
| Net income per common share (EPS) | ||||||||||||
| Basic | $ | 0.25 | $ | 0.26 | $ | (0.01 | ) | |||||
| Diluted | $ | 0.25 | $ | 0.26 | $ | (0.01 | ) | |||||
| Dividends declared | ||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | - | ||||||
| Cash dividends declared | $ | 7,720 | $ | 7,921 | $ | (201 | ) | |||||
| Dividend payout ratio | 43.6 | % | 42.2 | % | 1.4 | % | ||||||
| Weighted average number of common<br> shares outstanding | ||||||||||||
| Basic | 69,790 | 72,011 | (2,221 | ) | ||||||||
| Diluted | 69,817 | 72,037 | (2,220 | ) | ||||||||
| Kearny Financial Corp. | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Average Balance Sheet Data | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | Variance | Variance | |||||||||
| (Dollars in Thousands) | 2022 | 2021 | or Change | or Change Pct. | ||||||||
| Assets | ||||||||||||
| Interest-earning assets: | ||||||||||||
| Loans receivable, including loans held for sale | $ | 4,850,236 | $ | 4,822,959 | $ | 27,277 | 0.6 | % | ||||
| Taxable investment securities | 1,620,996 | 1,610,395 | 10,601 | 0.7 | % | |||||||
| Tax-exempt investment securities | 55,390 | 57,686 | (2,296 | ) | -4.0 | % | ||||||
| Other interest-earning assets | 79,644 | 77,811 | 1,833 | 2.4 | % | |||||||
| Total interest-earning assets | 6,606,266 | 6,568,851 | 37,415 | 0.6 | % | |||||||
| Non-interest-earning assets | 601,684 | 611,390 | (9,706 | ) | -1.6 | % | ||||||
| Total assets | $ | 7,207,950 | $ | 7,180,241 | $ | 27,709 | 0.4 | % | ||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Interest-bearing demand | $ | 2,133,977 | $ | 2,027,021 | $ | 106,956 | 5.3 | % | ||||
| Savings | 1,088,351 | 1,086,903 | 1,448 | 0.1 | % | |||||||
| Certificates of deposit | 1,650,048 | 1,693,423 | (43,375 | ) | -2.6 | % | ||||||
| Total interest-bearing deposits | 4,872,376 | 4,807,347 | 65,029 | 1.4 | % | |||||||
| Borrowings: | ||||||||||||
| Federal Home Loan Bank advances | 632,811 | 666,029 | (33,218 | ) | -5.0 | % | ||||||
| Other borrowings | 51,667 | 26,033 | 25,634 | 98.5 | % | |||||||
| Total borrowings | 684,478 | 692,062 | (7,584 | ) | -1.1 | % | ||||||
| Total interest-bearing liabilities | 5,556,854 | 5,499,409 | 57,445 | 1.0 | % | |||||||
| Non-interest-bearing liabilities: | ||||||||||||
| Non-interest-bearing deposits | 624,152 | 624,200 | (48 | ) | 0.0 | % | ||||||
| Other non-interest-bearing liabilities | 49,455 | 50,870 | (1,415 | ) | -2.8 | % | ||||||
| Total non-interest-bearing liabilities | 673,607 | 675,070 | (1,463 | ) | -0.2 | % | ||||||
| Total liabilities | 6,230,461 | 6,174,479 | 55,982 | 0.9 | % | |||||||
| Stockholders' equity | 977,489 | 1,005,762 | (28,273 | ) | -2.8 | % | ||||||
| Total liabilities and stockholders' equity | $ | 7,207,950 | $ | 7,180,241 | $ | 27,709 | 0.4 | % | ||||
| Average interest-earning assets to average<br> interest-bearing liabilities | 118.89 | % | 119.45 | % | -0.56 | % | -0.5 | % | ||||
| Kearny Financial Corp. | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Performance Ratio Highlights | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | December 31, | Variance | ||||||||||
| 2022 | 2021 | or Change | ||||||||||
| Average yield on interest-earning assets: | ||||||||||||
| Loans receivable, including loans held for sale | 3.78 | % | 3.95 | % | -0.17 | % | ||||||
| Taxable investment securities | 1.98 | % | 1.89 | % | 0.09 | % | ||||||
| Tax-exempt investment securities (1) | 2.28 | % | 2.26 | % | 0.02 | % | ||||||
| Other interest-earning assets | 2.08 | % | 2.13 | % | -0.05 | % | ||||||
| Total interest-earning assets | 3.31 | % | 3.40 | % | -0.09 | % | ||||||
| Average cost of interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Interest-bearing demand | 0.22 | % | 0.22 | % | 0.00 | % | ||||||
| Savings | 0.10 | % | 0.11 | % | -0.01 | % | ||||||
| Certificates of deposit | 0.52 | % | 0.53 | % | -0.01 | % | ||||||
| Total interest-bearing deposits | 0.29 | % | 0.30 | % | -0.01 | % | ||||||
| Borrowings: | ||||||||||||
| Federal Home Loan Bank advances | 2.08 | % | 2.14 | % | -0.06 | % | ||||||
| Other borrowings | 0.17 | % | 0.09 | % | 0.08 | % | ||||||
| Total borrowings | 1.93 | % | 2.06 | % | -0.13 | % | ||||||
| Total interest-bearing liabilities | 0.49 | % | 0.53 | % | -0.04 | % | ||||||
| Interest rate spread (2) | 2.82 | % | 2.87 | % | -0.05 | % | ||||||
| Net interest margin (3) | 2.89 | % | 2.96 | % | -0.07 | % | ||||||
| Non-interest income to average assets<br> (annualized) | 0.18 | % | 0.23 | % | -0.05 | % | ||||||
| Non-interest expense to average assets<br> (annualized) | 1.70 | % | 1.65 | % | 0.05 | % | ||||||
| Efficiency ratio (4) | 60.14 | % | 56.17 | % | 3.97 | % | ||||||
| Return on average assets (annualized) | 0.98 | % | 1.05 | % | -0.07 | % | ||||||
| Return on average equity (annualized) | 7.24 | % | 7.46 | % | -0.22 | % | ||||||
| Return on average tangible equity (annualized) (5) | 9.27 | % | 9.49 | % | -0.22 | % |
(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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Balance Sheets | At | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | (Unaudited) | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 62,379 | $ | 60,452 | $ | 54,070 | $ | 67,855 | $ | 108,991 | |||||
| Securities available for sale | 1,526,086 | 1,591,066 | 1,651,156 | 1,676,864 | 1,778,970 | ||||||||||
| Securities held to maturity | 121,853 | 53,142 | 37,497 | 38,138 | 27,168 | ||||||||||
| Loans held-for-sale | 2,822 | 12,549 | 12,884 | 16,492 | 5,172 | ||||||||||
| Loans receivable | 5,003,201 | 4,826,404 | 4,789,339 | 4,851,394 | 4,798,239 | ||||||||||
| Less: allowance for credit losses on loans | (43,860 | ) | (48,216 | ) | (51,785 | ) | (58,165 | ) | (63,762 | ) | |||||
| Net loans receivable | 4,959,341 | 4,778,188 | 4,737,554 | 4,793,229 | 4,734,477 | ||||||||||
| Premises and equipment | 53,727 | 54,067 | 55,236 | 56,338 | 60,360 | ||||||||||
| Federal Home Loan Bank stock | 30,997 | 36,622 | 36,615 | 36,615 | 45,578 | ||||||||||
| Accrued interest receivable | 19,517 | 18,495 | 19,541 | 19,362 | 20,562 | ||||||||||
| Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
| Core deposit intangible | 3,166 | 3,344 | 3,524 | 3,705 | 3,888 | ||||||||||
| Bank owned life insurance | 287,644 | 286,433 | 284,871 | 283,310 | 281,765 | ||||||||||
| Deferred income taxes, net | 34,349 | 25,709 | 27,771 | 29,323 | 32,230 | ||||||||||
| Other real estate owned | 401 | 658 | 178 | 178 | 178 | ||||||||||
| Other assets | 76,714 | 54,603 | 51,896 | 51,431 | 47,760 | ||||||||||
| Total assets | $ | 7,389,891 | $ | 7,186,223 | $ | 7,183,688 | $ | 7,283,735 | $ | 7,357,994 | |||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing | $ | 621,954 | $ | 604,805 | $ | 631,344 | $ | 593,718 | $ | 545,746 | |||||
| Interest-bearing | 4,906,708 | 4,849,220 | 4,763,795 | 4,891,588 | 4,828,706 | ||||||||||
| Total deposits | 5,528,662 | 5,454,025 | 5,395,139 | 5,485,306 | 5,374,452 | ||||||||||
| Borrowings | 851,220 | 686,105 | 720,990 | 685,876 | 865,763 | ||||||||||
| Advance payments by borrowers for taxes | 16,979 | 16,772 | 16,222 | 15,752 | 15,300 | ||||||||||
| Other liabilities | 37,861 | 33,851 | 36,914 | 53,857 | 38,667 | ||||||||||
| Total liabilities | 6,434,722 | 6,190,753 | 6,169,265 | 6,240,791 | 6,294,182 | ||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 714 | 735 | 758 | 790 | 820 | ||||||||||
| Paid-in capital | 561,176 | 587,392 | 616,894 | 654,396 | 691,280 | ||||||||||
| Retained earnings | 441,522 | 431,549 | 420,701 | 408,367 | 397,594 | ||||||||||
| Unearned ESOP shares | (25,294 | ) | (25,780 | ) | (26,266 | ) | (26,753 | ) | (27,239 | ) | |||||
| Accumulated other comprehensive (loss) income | (22,949 | ) | 1,574 | 2,336 | 6,144 | 1,357 | |||||||||
| Total stockholders' equity | 955,169 | 995,470 | 1,014,423 | 1,042,944 | 1,063,812 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,389,891 | $ | 7,186,223 | $ | 7,183,688 | $ | 7,283,735 | $ | 7,357,994 | |||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 12.93 | % | 13.85 | % | 14.12 | % | 14.32 | % | 14.46 | % | |||||
| Tangible equity to tangible assets (1) | 10.33 | % | 11.21 | % | 11.48 | % | 11.72 | % | 11.89 | % | |||||
| Share data | |||||||||||||||
| Outstanding shares | 71,424 | 73,453 | 75,800 | 78,965 | 81,943 | ||||||||||
| Book value per share | $ | 13.37 | $ | 13.55 | $ | 13.38 | $ | 13.21 | $ | 12.98 | |||||
| Tangible book value per share (2) | $ | 10.38 | $ | 10.64 | $ | 10.55 | $ | 10.49 | $ | 10.36 |
(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.
| At | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Supplemental Balance Sheet Highlights<br>(Dollars in Thousands, Unaudited) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Loan portfolio composition: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family mortgage | $ | 2,076,003 | $ | 2,007,431 | $ | 1,978,681 | $ | 2,039,260 | $ | 2,055,396 | |||||
| Nonresidential mortgage | 1,085,988 | 1,026,447 | 1,023,391 | 1,079,444 | 1,110,765 | ||||||||||
| Commercial business | 169,551 | 180,429 | 169,392 | 168,951 | 183,181 | ||||||||||
| Construction | 121,137 | 110,703 | 112,226 | 93,804 | 95,533 | ||||||||||
| Total commercial loans | 3,452,679 | 3,325,010 | 3,283,690 | 3,381,459 | 3,444,875 | ||||||||||
| One- to four-family residential mortgage | 1,527,980 | 1,477,267 | 1,483,106 | 1,447,721 | 1,323,485 | ||||||||||
| Consumer loans: | |||||||||||||||
| Home equity loans | 41,501 | 43,934 | 44,912 | 47,871 | 59,721 | ||||||||||
| Other consumer | 2,755 | 3,040 | 3,020 | 3,259 | 3,445 | ||||||||||
| Total consumer loans | 44,256 | 46,974 | 47,932 | 51,130 | 63,166 | ||||||||||
| Total loans, excluding yield adjustments | 5,024,915 | 4,849,251 | 4,814,728 | 4,880,310 | 4,831,526 | ||||||||||
| Unaccreted yield adjustments | (21,714 | ) | (22,847 | ) | (25,389 | ) | (28,916 | ) | (33,287 | ) | |||||
| Loans receivable, net of yield adjustments | 5,003,201 | 4,826,404 | 4,789,339 | 4,851,394 | 4,798,239 | ||||||||||
| Less: allowance for credit losses on loans | (43,860 | ) | (48,216 | ) | (51,785 | ) | (58,165 | ) | (63,762 | ) | |||||
| Net loans receivable | $ | 4,959,341 | $ | 4,778,188 | $ | 4,737,554 | $ | 4,793,229 | $ | 4,734,477 | |||||
| Loan portfolio allocation: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family mortgage | 41.3 | % | 41.4 | % | 41.1 | % | 41.8 | % | 42.5 | % | |||||
| Nonresidential mortgage | 21.6 | % | 21.2 | % | 21.3 | % | 22.1 | % | 23.0 | % | |||||
| Commercial business | 3.4 | % | 3.7 | % | 3.5 | % | 3.5 | % | 3.8 | % | |||||
| Construction | 2.4 | % | 2.3 | % | 2.3 | % | 1.9 | % | 2.0 | % | |||||
| Total commercial loans | 68.7 | % | 68.6 | % | 68.2 | % | 69.3 | % | 71.3 | % | |||||
| One- to four-family residential mortgage | 30.4 | % | 30.5 | % | 30.8 | % | 29.7 | % | 27.4 | % | |||||
| Consumer loans: | |||||||||||||||
| Home equity loans | 0.8 | % | 0.9 | % | 0.9 | % | 0.9 | % | 1.2 | % | |||||
| Other consumer | 0.1 | % | 0.0 | % | 0.1 | % | 0.1 | % | 0.1 | % | |||||
| Total consumer loans | 0.9 | % | 0.9 | % | 1.0 | % | 1.0 | % | 1.3 | % | |||||
| 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 | $ | - | $ | - | $ | - | $ | - | $ | 2 | |||||
| Nonaccrual loans | 80,595 | 72,138 | 72,945 | 79,767 | 71,416 | ||||||||||
| Total nonperforming loans | 80,595 | 72,138 | 72,945 | 79,767 | 71,418 | ||||||||||
| Other real estate owned | 401 | 658 | 178 | 178 | 178 | ||||||||||
| Total nonperforming assets | $ | 80,996 | $ | 72,796 | $ | 73,123 | $ | 79,945 | $ | 71,596 | |||||
| Nonperforming loans (% total loans) | 1.61 | % | 1.49 | % | 1.52 | % | 1.64 | % | 1.49 | % | |||||
| Nonperforming assets (% total assets) | 1.10 | % | 1.01 | % | 1.02 | % | 1.10 | % | 0.97 | % | |||||
| Allowance for credit losses on loans (ACL): | |||||||||||||||
| ACL to total loans | 0.87 | % | 0.99 | % | 1.08 | % | 1.19 | % | 1.32 | % | |||||
| ACL to nonperforming loans | 54.42 | % | 66.84 | % | 70.99 | % | 72.92 | % | 89.28 | % | |||||
| Net charge-offs | $ | 436 | $ | 1,149 | $ | 980 | $ | 656 | $ | 750 | |||||
| Average net charge-off rate (annualized) | 0.04 | % | 0.10 | % | 0.08 | % | 0.05 | % | 0.06 | % | |||||
| At | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Supplemental Balance Sheet Highlights<br>(Dollars in Thousands, Unaudited) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Funding by type: | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 621,954 | $ | 604,805 | $ | 631,344 | $ | 593,718 | $ | 545,746 | |||||
| Interest-bearing demand | 2,154,488 | 2,106,693 | 1,937,661 | 1,902,478 | 1,923,184 | ||||||||||
| Savings | 1,088,974 | 1,087,740 | 1,089,699 | 1,111,364 | 1,105,481 | ||||||||||
| Certificates of deposit | 1,663,246 | 1,654,787 | 1,736,435 | 1,877,746 | 1,800,041 | ||||||||||
| Interest-bearing deposits | 4,906,708 | 4,849,220 | 4,763,795 | 4,891,588 | 4,828,706 | ||||||||||
| Total deposits | 5,528,662 | 5,454,025 | 5,395,139 | 5,485,306 | 5,374,452 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 541,220 | 666,105 | 665,990 | 665,876 | 865,763 | ||||||||||
| Overnight borrowings | 310,000 | 20,000 | 55,000 | 20,000 | - | ||||||||||
| Total borrowings | 851,220 | 686,105 | 720,990 | 685,876 | 865,763 | ||||||||||
| Total funding | $ | 6,379,882 | $ | 6,140,130 | $ | 6,116,129 | $ | 6,171,182 | $ | 6,240,215 | |||||
| Loans as a % of deposits | 89.8 | % | 87.8 | % | 88.1 | % | 87.7 | % | 88.2 | % | |||||
| Deposits as a % of total funding | 86.7 | % | 88.8 | % | 88.2 | % | 88.9 | % | 86.1 | % | |||||
| Borrowings as a % of total funding | 13.3 | % | 11.2 | % | 11.8 | % | 11.1 | % | 13.9 | % | |||||
| Funding by source: | |||||||||||||||
| Retail deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 621,954 | $ | 604,805 | $ | 631,344 | $ | 593,718 | $ | 545,746 | |||||
| Interest-bearing demand | 2,154,488 | 2,106,693 | 1,937,661 | 1,902,478 | 1,923,184 | ||||||||||
| Savings | 1,088,974 | 1,087,740 | 1,089,699 | 1,111,364 | 1,105,481 | ||||||||||
| Certificates of deposit | 1,122,228 | 1,184,530 | 1,264,016 | 1,398,808 | 1,508,494 | ||||||||||
| Total retail deposits | 4,987,644 | 4,983,768 | 4,922,720 | 5,006,368 | 5,082,905 | ||||||||||
| Wholesale funding: | |||||||||||||||
| Certificates of deposit (listing service) | $ | 9,981 | $ | 11,622 | $ | 13,817 | $ | 20,322 | $ | 32,952 | |||||
| Certificates of deposit (brokered) | 531,037 | 458,635 | 458,602 | 458,616 | 258,595 | ||||||||||
| Total wholesale deposits | 541,018 | 470,257 | 472,419 | 478,938 | 291,547 | ||||||||||
| FHLB advances | 541,220 | 666,105 | 665,990 | 665,876 | 865,763 | ||||||||||
| Overnight borrowings | 310,000 | 20,000 | 55,000 | 20,000 | - | ||||||||||
| Total wholesale funding | 1,392,238 | 1,156,362 | 1,193,409 | 1,164,814 | 1,157,310 | ||||||||||
| Total funding | $ | 6,379,882 | $ | 6,140,130 | $ | 6,116,129 | $ | 6,171,182 | $ | 6,240,215 | |||||
| Retail funding as a % of total funding | 78.2 | % | 81.2 | % | 80.5 | % | 81.1 | % | 81.5 | % | |||||
| Wholesale funding as a % of total funding | 21.8 | % | 18.8 | % | 19.5 | % | 18.9 | % | 18.5 | % | |||||
| Consolidated Statements of Income | Three Months Ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars and Shares in Thousands,<br>Except Per Share Data, Unaudited) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Interest income | |||||||||||||||
| Loans (1) | $ | 45,846 | $ | 47,575 | $ | 48,230 | $ | 48,464 | $ | 50,159 | |||||
| Taxable investment securities | 8,024 | 7,595 | 8,212 | 8,304 | 7,891 | ||||||||||
| Tax-exempt investment securities | 316 | 327 | 333 | 355 | 410 | ||||||||||
| Other interest-earning assets | 415 | 415 | 431 | 549 | 705 | ||||||||||
| Total interest income | 54,601 | 55,912 | 57,206 | 57,672 | 59,165 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 3,565 | 3,663 | 4,065 | 5,156 | 6,670 | ||||||||||
| Borrowings | 3,309 | 3,562 | 3,551 | 3,451 | 4,012 | ||||||||||
| Total interest expense | 6,874 | 7,225 | 7,616 | 8,607 | 10,682 | ||||||||||
| Net interest income | 47,727 | 48,687 | 49,590 | 49,065 | 48,483 | ||||||||||
| (Reversal of) provision for credit losses | (3,920 | ) | (2,420 | ) | (5,400 | ) | (4,941 | ) | 1,126 | ||||||
| Net interest income after (reversal of)<br> provision for credit losses | 51,647 | 51,107 | 54,990 | 54,006 | 47,357 | ||||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges (1) | 617 | 698 | 607 | 423 | 473 | ||||||||||
| Gain on sale and call of securities | 3 | - | 1 | 313 | 18 | ||||||||||
| Gain on sale of loans | 376 | 970 | 1,006 | 363 | 943 | ||||||||||
| Gain on sale of other real estate owned | 14 | - | - | - | - | ||||||||||
| Income from bank owned life insurance | 1,511 | 1,562 | 1,561 | 1,545 | 1,530 | ||||||||||
| Electronic banking fees and charges | 432 | 421 | 407 | 452 | 456 | ||||||||||
| Other income | 238 | 482 | 218 | 400 | 1,194 | ||||||||||
| Total non-interest income | 3,191 | 4,133 | 3,800 | 3,496 | 4,614 | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 19,184 | 18,096 | 18,617 | 17,777 | 16,965 | ||||||||||
| Net occupancy expense of premises | 3,223 | 3,156 | 4,547 | 2,998 | 3,433 | ||||||||||
| Equipment and systems | 3,822 | 3,723 | 3,825 | 3,575 | 3,823 | ||||||||||
| Advertising and marketing | 516 | 448 | 392 | 581 | 567 | ||||||||||
| Federal deposit insurance premium | 480 | 721 | 492 | 490 | 488 | ||||||||||
| Directors' compensation | 340 | 649 | 803 | 749 | 748 | ||||||||||
| Other expense | 3,058 | 2,877 | 3,127 | 5,816 | 3,792 | ||||||||||
| Total non-interest expense | 30,623 | 29,670 | 31,803 | 31,986 | 29,816 | ||||||||||
| Income before income taxes | 24,215 | 25,570 | 26,987 | 25,516 | 22,155 | ||||||||||
| Income taxes | 6,522 | 6,801 | 7,272 | 7,033 | 5,732 | ||||||||||
| Net income | $ | 17,693 | $ | 18,769 | $ | 19,715 | $ | 18,483 | $ | 16,423 | |||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.25 | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | |||||
| Diluted | $ | 0.25 | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | |||||
| Dividends declared | |||||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | 0.10 | $ | 0.10 | $ | 0.09 | |||||
| Cash dividends declared | $ | 7,720 | $ | 7,921 | $ | 7,381 | $ | 7,710 | $ | 7,205 | |||||
| Dividend payout ratio | 43.6 | % | 42.2 | % | 37.4 | % | 41.7 | % | 43.9 | % | |||||
| Weighted average number of common<br> shares outstanding | |||||||||||||||
| Basic | 69,790 | 72,011 | 74,537 | 77,658 | 80,673 | ||||||||||
| Diluted | 69,817 | 72,037 | 74,556 | 77,680 | 80,690 |
(1) Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Periods prior to the quarter ended September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the quarters ended June 30, 2021 and March 31, 2021 was $902,000 and $852,000, respectively.
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average Balance Sheet Data<br>(Dollars in Thousands, Unaudited) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for<br> sale | $ | 4,850,236 | $ | 4,822,959 | $ | 4,835,676 | $ | 4,817,980 | $ | 4,816,592 | |||||
| Taxable investment securities | 1,620,996 | 1,610,395 | 1,649,953 | 1,720,838 | 1,674,223 | ||||||||||
| Tax-exempt investment securities | 55,390 | 57,686 | 59,115 | 63,047 | 73,573 | ||||||||||
| Other interest-earning assets | 79,644 | 77,811 | 85,749 | 117,212 | 169,291 | ||||||||||
| Total interest-earning assets | 6,606,266 | 6,568,851 | 6,630,493 | 6,719,077 | 6,733,679 | ||||||||||
| Non-interest-earning assets | 601,684 | 611,390 | 616,735 | 609,762 | 617,440 | ||||||||||
| Total assets | $ | 7,207,950 | $ | 7,180,241 | $ | 7,247,228 | $ | 7,328,839 | $ | 7,351,119 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 2,133,977 | $ | 2,027,021 | $ | 1,954,271 | $ | 1,930,193 | $ | 1,831,617 | |||||
| Savings | 1,088,351 | 1,086,903 | 1,102,865 | 1,118,402 | 1,084,981 | ||||||||||
| Certificates of deposit | 1,650,048 | 1,693,423 | 1,798,473 | 1,934,650 | 1,904,234 | ||||||||||
| Total interest-bearing deposits | 4,872,376 | 4,807,347 | 4,855,609 | 4,983,245 | 4,820,832 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 632,811 | 666,029 | 665,915 | 665,802 | 865,690 | ||||||||||
| Other borrowings | 51,667 | 26,033 | 28,532 | 6,670 | - | ||||||||||
| Total borrowings | 684,478 | 692,062 | 694,447 | 672,472 | 865,690 | ||||||||||
| Total interest-bearing liabilities | 5,556,854 | 5,499,409 | 5,550,056 | 5,655,717 | 5,686,522 | ||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 624,152 | 624,200 | 610,271 | 566,632 | 525,018 | ||||||||||
| Other non-interest-bearing liabilities | 49,455 | 50,870 | 56,893 | 52,292 | 57,018 | ||||||||||
| Total non-interest-bearing liabilities | 673,607 | 675,070 | 667,164 | 618,924 | 582,036 | ||||||||||
| Total liabilities | 6,230,461 | 6,174,479 | 6,217,220 | 6,274,641 | 6,268,558 | ||||||||||
| Stockholders' equity | 977,489 | 1,005,762 | 1,030,008 | 1,054,198 | 1,082,561 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,207,950 | $ | 7,180,241 | $ | 7,247,228 | $ | 7,328,839 | $ | 7,351,119 | |||||
| Average interest-earning assets to average<br> interest-bearing liabilities | 118.89 | % | 119.45 | % | 119.47 | % | 118.80 | % | 118.41 | % | |||||
| Three Months Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Performance Ratio Highlights | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Average yield on interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for<br> sale (1) | 3.78 | % | 3.95 | % | 3.99 | % | 4.02 | % | 4.17 | % | |||||
| Taxable investment securities | 1.98 | % | 1.89 | % | 1.99 | % | 1.93 | % | 1.89 | % | |||||
| Tax-exempt investment securities (2) | 2.28 | % | 2.26 | % | 2.25 | % | 2.25 | % | 2.23 | % | |||||
| Other interest-earning assets | 2.08 | % | 2.13 | % | 2.01 | % | 1.87 | % | 1.67 | % | |||||
| Total interest-earning assets (1) | 3.31 | % | 3.40 | % | 3.45 | % | 3.43 | % | 3.51 | % | |||||
| Average cost of interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | 0.22 | % | 0.22 | % | 0.23 | % | 0.27 | % | 0.34 | % | |||||
| Savings | 0.10 | % | 0.11 | % | 0.12 | % | 0.15 | % | 0.21 | % | |||||
| Certificates of deposit | 0.52 | % | 0.53 | % | 0.57 | % | 0.71 | % | 0.96 | % | |||||
| Total interest-bearing deposits | 0.29 | % | 0.30 | % | 0.33 | % | 0.41 | % | 0.55 | % | |||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 2.08 | % | 2.14 | % | 2.13 | % | 2.07 | % | 1.85 | % | |||||
| Other borrowings | 0.17 | % | 0.09 | % | 0.10 | % | 0.07 | % | 0.00 | % | |||||
| Total borrowings | 1.93 | % | 2.06 | % | 2.05 | % | 2.05 | % | 1.85 | % | |||||
| Total interest-bearing liabilities | 0.49 | % | 0.53 | % | 0.55 | % | 0.61 | % | 0.75 | % | |||||
| Interest rate spread (1) (3) | 2.82 | % | 2.87 | % | 2.90 | % | 2.82 | % | 2.76 | % | |||||
| Net interest margin (1) (4) | 2.89 | % | 2.96 | % | 2.99 | % | 2.92 | % | 2.88 | % | |||||
| Non-interest income to average assets<br> (annualized) (1) | 0.18 | % | 0.23 | % | 0.21 | % | 0.19 | % | 0.25 | % | |||||
| Non-interest expense to average assets<br> (annualized) | 1.70 | % | 1.65 | % | 1.76 | % | 1.75 | % | 1.62 | % | |||||
| Efficiency ratio (5) | 60.14 | % | 56.17 | % | 59.57 | % | 60.86 | % | 56.15 | % | |||||
| Return on average assets (annualized) | 0.98 | % | 1.05 | % | 1.09 | % | 1.01 | % | 0.89 | % | |||||
| Return on average equity (annualized) | 7.24 | % | 7.46 | % | 7.66 | % | 7.01 | % | 6.07 | % | |||||
| Return on average tangible equity (annualized) (6) | 9.27 | % | 9.49 | % | 9.67 | % | 8.81 | % | 7.57 | % |
(1) Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Periods prior to the quarter ended September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the quarters ended June 30, 2021 and March 31, 2021 was $902,000 and $852,000, respectively.
(2) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(3) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(4) Net interest income divided by average interest-earning assets.
(5) Non-interest expense divided by the sum of net interest income and non-interest income.
(6) 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.
| Reconciliation of GAAP to Non-GAAP | Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data, Unaudited) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Adjusted net income: | |||||||||||||||
| Net income (GAAP) | $ | 17,693 | $ | 18,769 | $ | 19,715 | $ | 18,483 | $ | 16,423 | |||||
| Non-recurring transactions - net of tax: | |||||||||||||||
| Branch consolidation expenses and<br> impairment charges | - | 132 | 1,209 | 870 | 264 | ||||||||||
| Net effect of sale and call of securities | (2 | ) | - | (1 | ) | (220 | ) | (13 | ) | ||||||
| Reversal of income tax valuation<br> allowance | - | - | - | (12 | ) | - | |||||||||
| Net effect of sales of other assets | - | (251 | ) | - | (144 | ) | (587 | ) | |||||||
| Adjusted net income | $ | 17,691 | $ | 18,650 | $ | 20,923 | $ | 18,977 | $ | 16,087 | |||||
| Calculation of pre-tax, pre-provision net<br> revenue: | |||||||||||||||
| Net income (GAAP) | $ | 17,693 | $ | 18,769 | $ | 19,715 | $ | 18,483 | $ | 16,423 | |||||
| Adjustments to net income (GAAP): | |||||||||||||||
| Provision for income taxes | 6,522 | 6,801 | 7,272 | 7,033 | 5,732 | ||||||||||
| (Reversal of) provision for credit losses | (3,920 | ) | (2,420 | ) | (5,400 | ) | (4,941 | ) | 1,126 | ||||||
| Pre-tax, pre-provision net revenue<br> (non-GAAP) | $ | 20,295 | $ | 23,150 | $ | 21,587 | $ | 20,575 | $ | 23,281 | |||||
| Adjusted earnings per share: | |||||||||||||||
| Weighted average common shares - basic | 69,790 | 72,011 | 74,537 | 77,658 | 80,673 | ||||||||||
| Weighted average common shares - diluted | 69,817 | 72,037 | 74,556 | 77,680 | 80,690 | ||||||||||
| Earnings per share - basic (GAAP) | $ | 0.25 | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | |||||
| Earnings per share - diluted (GAAP) | $ | 0.25 | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | |||||
| Adjusted earnings per share - basic<br> (non-GAAP) | $ | 0.25 | $ | 0.26 | $ | 0.28 | $ | 0.24 | $ | 0.20 | |||||
| Adjusted earnings per share - diluted<br> (non-GAAP) | $ | 0.25 | $ | 0.26 | $ | 0.28 | $ | 0.24 | $ | 0.20 | |||||
| Adjusted return on average assets: | |||||||||||||||
| Total average assets | $ | 7,207,950 | $ | 7,180,241 | $ | 7,247,228 | $ | 7,328,839 | $ | 7,351,119 | |||||
| Return on average assets (GAAP) | 0.98 | % | 1.05 | % | 1.09 | % | 1.01 | % | 0.89 | % | |||||
| Adjusted return on average assets<br> (non-GAAP) | 0.98 | % | 1.04 | % | 1.15 | % | 1.04 | % | 0.88 | % | |||||
| Adjusted return on average equity: | |||||||||||||||
| Total average equity | $ | 977,489 | $ | 1,005,762 | $ | 1,030,008 | $ | 1,054,198 | $ | 1,082,561 | |||||
| Return on average equity (GAAP) | 7.24 | % | 7.46 | % | 7.66 | % | 7.01 | % | 6.07 | % | |||||
| Adjusted return on average equity<br> (non-GAAP) | 7.24 | % | 7.42 | % | 8.13 | % | 7.20 | % | 5.94 | % | |||||
| Reconciliation of GAAP to Non-GAAP | Three Months Ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars and Shares in Thousands,<br>Except Per Share Data, Unaudited) | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | ||||||||||
| Adjusted return on average tangible equity: | |||||||||||||||
| Total average equity | $ | 977,489 | $ | 1,005,762 | $ | 1,030,008 | $ | 1,054,198 | $ | 1,082,561 | |||||
| Less: average goodwill | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | |||||
| Less: average other intangible assets | (3,282 | ) | (3,462 | ) | (3,641 | ) | (3,825 | ) | (4,045 | ) | |||||
| $ | 763,312 | $ | 791,405 | $ | 815,472 | $ | 839,478 | $ | 867,621 | ||||||
| Return on average tangible equity<br> (non-GAAP) | 9.27 | % | 9.49 | % | 9.67 | % | 8.81 | % | 7.57 | % | |||||
| Adjusted return on average tangible equity<br> (non-GAAP) | 9.27 | % | 9.43 | % | 10.26 | % | 9.04 | % | 7.42 | % | |||||
| Adjusted non-interest expense ratio: | |||||||||||||||
| Non-interest expense (GAAP) | $ | 30,623 | $ | 29,670 | $ | 31,803 | $ | 31,986 | $ | 29,816 | |||||
| Non-recurring transactions: | |||||||||||||||
| Branch consolidation expenses and<br> impairment charges | - | (187 | ) | (1,711 | ) | (1,239 | ) | (375 | ) | ||||||
| Non-interest expense (non-GAAP) | $ | 30,623 | $ | 29,483 | $ | 30,092 | $ | 30,747 | $ | 29,441 | |||||
| Non-interest expense ratio (GAAP) | 1.70 | % | 1.65 | % | 1.76 | % | 1.75 | % | 1.62 | % | |||||
| Adjusted non-interest expense ratio<br> (non-GAAP) | 1.70 | % | 1.64 | % | 1.66 | % | 1.68 | % | 1.60 | % | |||||
| Adjusted efficiency ratio: | |||||||||||||||
| Non-interest expense (non-GAAP) | $ | 30,623 | $ | 29,483 | $ | 30,092 | $ | 30,747 | $ | 29,441 | |||||
| Net interest income (GAAP) | $ | 47,727 | $ | 48,687 | $ | 49,590 | $ | 49,065 | $ | 48,483 | |||||
| Total non-interest income (GAAP) | 3,191 | 4,133 | 3,800 | 3,496 | 4,614 | ||||||||||
| Non-recurring transactions: | |||||||||||||||
| Net effect of sale and call of securities | (3 | ) | - | (1 | ) | (313 | ) | (18 | ) | ||||||
| Net effect of sales of other assets | - | (356 | ) | - | (205 | ) | (837 | ) | |||||||
| Total revenue (non-GAAP) | $ | 50,915 | $ | 52,464 | $ | 53,389 | $ | 52,043 | $ | 52,242 | |||||
| Efficiency ratio (GAAP) | 60.14 | % | 56.17 | % | 59.57 | % | 60.86 | % | 56.15 | % | |||||
| Adjusted efficiency ratio (non-GAAP) | 60.15 | % | 56.20 | % | 56.36 | % | 59.08 | % | 56.36 | % |