8-K

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 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 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 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 (annualized)		0.18	%		0.23	%		-0.05	%
Non-interest expense to average assets (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, Except Per Share Data)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 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 (Dollars in Thousands, Unaudited)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 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 (Dollars in Thousands, Unaudited)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 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, Except Per Share Data, Unaudited)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 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) 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 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 (Dollars in Thousands, Unaudited)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
Assets
Interest-earning assets:
Loans receivable, including loans held for 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 interest-bearing liabilities		118.89	%		119.45	%		119.47	%		118.80	%		118.41	%


	Three Months Ended
Performance Ratio Highlights	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
Average yield on interest-earning assets:
Loans receivable, including loans held for 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 (annualized) (1)		0.18	%		0.23	%		0.21	%		0.19	%		0.25	%
Non-interest expense to average assets (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)

(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, Except Per Share Data, Unaudited)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 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 impairment charges		-			132			1,209			870			264
Net effect of sale and call of securities		(2	)		-			(1	)		(220	)		(13	)
Reversal of income tax valuation 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 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 (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 (non-GAAP)	$	0.25		$	0.26		$	0.28		$	0.24		$	0.20
Adjusted earnings per share - diluted (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 (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 (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, Except Per Share Data, Unaudited)	March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 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 (non-GAAP)		9.27	%		9.49	%		9.67	%		8.81	%		7.57	%
Adjusted return on average tangible equity (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 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 (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	%


Maryland	001-37399	30-0870244
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

120 Passaic Avenue		07004
Fairfield, New Jersey (Address of Principal Executive Offices)		(Zip Code)


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


Exhibit Number		Description
99.1		Press release dated April 28, 2022.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).


	KEARNY FINANCIAL CORP.

Date: April 28, 2022	By:	/s/ Craig L. Montanaro
		Craig L. Montanaro
		President and Chief Executive Officer