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): January 27, 2022
KEARNY FINANCIAL CORP.
(Exact name of Registrant as Specified in Its Charter)
| Maryland | 001-37399 | 30-0870244 |
|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 120 Passaic Avenue | 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 January 27, 2022, Kearny Financial Corp. (the “Company”), the holding company for Kearny Bank, issued a press release reporting its financial results for the period ended December 31, 2021.
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 January 27, 2022, the Company’s Board of Directors announced a quarterly cash dividend of $0.11 per share, payable on February 23, 2022 to stockholders of record as of February 9, 2022.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Shell Company Transaction. Not applicable.
(d) Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release dated January 27, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KEARNY FINANCIAL CORP. | ||
|---|---|---|
| Date: January 27, 2022 | By: | /s/ Craig L. Montanaro |
| Craig L. Montanaro | ||
| President and Chief Executive Officer |
EX-99.1
Exhibit 99.1
FOR IMMEDIATE RELEASE
January 27, 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 SECOND QUARTER FISCAL 2022 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., January 27, 2022 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended December 31, 2021 of $18.8 million, or $0.26 per diluted share, compared to $19.7 million, or $0.26 per diluted share, for the quarter ended September 30, 2021.
The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on February 23, 2022 to stockholders of record as of February 9, 2022.
Craig L. Montanaro, President and Chief Executive Officer, commented, “We are pleased to report another quarter of strong financial performance highlighted by growth in our commercial loan and core non-maturity deposit portfolios. Equally as important was the continued advancement of our long-term goals of growing core earnings per share and leveraging tangible capital, which now stands at 11.2% of tangible assets.” Mr. Montanaro continued, “As of quarter-end our commercial loan pipeline stood at a historically high level, which bodes well for our loan growth prospects in the coming quarters.”
Regarding expectations for upcoming fed funds rate increases, Mr. Montanaro noted, “Our balance sheet is as well-positioned as it has ever been for the forecasted rising rate environment. Changes in the composition of our loan and deposit portfolios, which have taken place over the past few years, have increased the resiliency of our net interest income to movements in interest rates. In addition, over the past year we have proactively positioned our wholesale balance sheet with an eye towards the forthcoming increase in short-term rates.”
Balance Sheet
Loans receivable increased $37.1 million to $4.83 billion at December 31, 2021, from $4.79 billion at September 30, 2021, despite a record level of loan repayment activity during the quarter, which totaled $375.8 million.
Deposits increased $58.9 million to $5.45 billion at December 31, 2021, from $5.40 billion at September 30, 2021, reflecting growth of $167.1 million in interest-bearing non-maturity deposits, partially offset by the controlled run-off of time deposits and seasonal fluctuations in non-interest bearing deposits.
Investment securities decreased $44.4 million to $1.64 billion, or 22.9% of total assets, at December 31, 2021, from $1.69 billion, or 23.5% of total assets, at September 30, 2021.
Borrowings decreased $34.9 million to $686.1 million, or 9.5% of total assets, at December 31, 2021, from $721.0 million, or 10.0% of total assets, at September 30, 2021.
Earnings
Performance Highlights
Return on average assets was 1.05% for the quarter ended December 31, 2021 compared to 1.09% for the quarter ended September 30, 2021.
Return on average equity was 7.46% and 7.66% for the quarters ended December 31, 2021 and September 30, 2021, respectively. Return on average tangible equity was 9.49% and 9.67%, for those same comparative periods.
Net Interest Income and Net Interest Margin
Net interest margin contracted three basis points to 2.96% for the quarter ended December 31, 2021, from 2.99% for the quarter ended September 30, 2021. The decrease in net interest margin was due largely to a five basis point reduction in yield on earning assets, partially offset by a two basis point 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 $903,000 to $48.7 million for the quarter ended December 31, 2021, from $49.6 million for the quarter ended September 30, 2021. Included in net interest income for the quarters ended December 31, 2021 and September 30, 2021, respectively, was purchase accounting accretion of $2.6 million and $2.9 million, and loan prepayment penalty income of $1.5 million and $1.7 million.
Non-Interest Income
Fees and service charges increased $91,000 to $698,000 for the quarter ended December 31, 2021 from $607,000 for the quarter ended September 30, 2021, which was largely attributable to growth in various deposit and loan-related fee categories.
Gain on sale of loans decreased $36,000 to $970,000 for the quarter ended December 31, 2021 from $1.0 million for the quarter ended September 30, 2021. This decrease largely reflected a lower average sales price of residential mortgage loans, partially offset by a modest increase in the volume of residential mortgage loans sold during the period.
Included in other income for the quarter ended December 31, 2021 were non-recurring gains of $356,000 attributable to the sale of one property recognized in conjunction with the Bank's ongoing retail branch consolidation efforts. No such gains were recorded during the quarter ended September 30, 2021.
Non-Interest Expense
Non-interest expense decreased $2.1 million to $29.7 million for the quarter ended December 31, 2021, from $31.8 million for the quarter ended September 30, 2021. Salary and benefit expense decreased $521,000 from September 30, 2021 due largely to reductions in payroll tax and stock benefit plan expense. Net occupancy expense decreased $1.4 million primarily due to non-recurring expense of $1.6 million that was recorded in the prior comparative period and previously disclosed.
The efficiency and non-interest expense ratios were 56.17% and 1.65%, respectively, for the quarter ended December 31, 2021.
Income Taxes
Income tax expense decreased $471,000 to $6.8 million for the quarter ended December 31, 2021 compared to $7.3 million for the quarter ended September 30, 2021, resulting in effective tax rates of 26.6% and 26.9%, respectively.
Asset Quality
The balance of non-performing assets decreased $327,000 to $72.8 million, or 1.01% of total assets, at December 31, 2021, from $73.1 million, or 1.02% of total assets, at September 30, 2021. At December 31, 2021, the Company had active COVID-19 payment deferrals on five residential mortgage and home equity loans totaling $2.6 million, representing 0.05% of total loans.
Net charge offs totaled $1.1 million, or 0.10% of average loans, on an annualized basis, for the quarter ended December 31, 2021 compared to $980,000, or 0.08%, for the quarter ended September 30, 2021. All of the charge-offs recorded during the quarter ended December 31, 2021 had previously been individually reserved for within the allowance for credit losses ("ACL").
For the quarter ended December 31, 2021, the Company recorded a provision for credit loss reversal of $2.4 million, compared to a provision for credit loss reversal of $5.4 million for the quarter ended September 30, 2021. The reversal for the quarter ended December 31, 2021 was primarily related to a net reduction in reserves on individually evaluated loans and a reduction in the expected life of various segments of the loan portfolio.
The ACL decreased $3.6 million to $48.2 million, or 0.99% of total loans, at December 31, 2021, from $51.8 million, or 1.08% of total loans at September 30, 2021.
Capital
For the quarter ended December 31, 2021, book value per share increased by $0.17 to $13.55 while tangible book value per share increased by $0.09 to $10.64.
During the quarter ended December 31, 2021, the Company repurchased 2,289,537 shares of common stock at a cost of $30.0 million, or $13.10 per share. Through December 31, 2021, the Company repurchased a total of 2,502,676 shares, or 32.9% of the shares authorized for repurchase under the current repurchase program, at a total cost of $32.6 million or $13.05 per share.
At December 31, 2021, the Company’s tangible equity to tangible assets ratio equaled 11.2% 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; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; 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, | December 31, | September 30, | Variance | Variance | ||||||||
| Except Per Share Data) | 2021 | 2021 | or Change | or Change Pct. | ||||||||
| Assets | ||||||||||||
| Cash and cash equivalents | $ | 60,452 | $ | 54,070 | $ | 6,382 | 11.8 | % | ||||
| Securities available for sale | 1,591,066 | 1,651,156 | (60,090 | ) | -3.6 | % | ||||||
| Securities held to maturity | 53,142 | 37,497 | 15,645 | 41.7 | % | |||||||
| Loans held-for-sale | 12,549 | 12,884 | (335 | ) | -2.6 | % | ||||||
| Loans receivable | 4,826,404 | 4,789,339 | 37,065 | 0.8 | % | |||||||
| Less: allowance for credit losses on loans | (48,216 | ) | (51,785 | ) | 3,569 | -6.9 | % | |||||
| Net loans receivable | 4,778,188 | 4,737,554 | 40,634 | 0.9 | % | |||||||
| Premises and equipment | 54,067 | 55,236 | (1,169 | ) | -2.1 | % | ||||||
| Federal Home Loan Bank stock | 36,622 | 36,615 | 7 | 0.0 | % | |||||||
| Accrued interest receivable | 18,495 | 19,541 | (1,046 | ) | -5.4 | % | ||||||
| Goodwill | 210,895 | 210,895 | - | 0.0 | % | |||||||
| Core deposit intangible | 3,344 | 3,524 | (180 | ) | -5.1 | % | ||||||
| Bank owned life insurance | 286,433 | 284,871 | 1,562 | 0.5 | % | |||||||
| Deferred income taxes, net | 25,709 | 27,771 | (2,062 | ) | -7.4 | % | ||||||
| Other real estate owned | 658 | 178 | 480 | 269.7 | % | |||||||
| Other assets | 54,603 | 51,896 | 2,707 | 5.2 | % | |||||||
| Total assets | $ | 7,186,223 | $ | 7,183,688 | $ | 2,535 | 0.0 | % | ||||
| Liabilities | ||||||||||||
| Deposits: | ||||||||||||
| Non-interest-bearing | 604,805 | $ | 631,344 | $ | (26,539 | ) | -4.2 | % | ||||
| Interest-bearing | 4,849,220 | 4,763,795 | 85,425 | 1.8 | % | |||||||
| Total deposits | 5,454,025 | 5,395,139 | 58,886 | 1.1 | % | |||||||
| Borrowings | 686,105 | 720,990 | (34,885 | ) | -4.8 | % | ||||||
| Advance payments by borrowers for taxes | 16,772 | 16,222 | 550 | 3.4 | % | |||||||
| Other liabilities | 33,851 | 36,914 | (3,063 | ) | -8.3 | % | ||||||
| Total liabilities | 6,190,753 | 6,169,265 | 21,488 | 0.3 | % | |||||||
| Stockholders' Equity | ||||||||||||
| Common stock | 735 | 758 | (23 | ) | -3.0 | % | ||||||
| Paid-in capital | 587,392 | 616,894 | (29,502 | ) | -4.8 | % | ||||||
| Retained earnings | 431,549 | 420,701 | 10,848 | 2.6 | % | |||||||
| Unearned ESOP shares | (25,780 | ) | (26,266 | ) | 486 | -1.9 | % | |||||
| Accumulated other comprehensive income | 1,574 | 2,336 | (762 | ) | -32.6 | % | ||||||
| Total stockholders' equity | 995,470 | 1,014,423 | (18,953 | ) | -1.9 | % | ||||||
| Total liabilities and stockholders' equity | $ | 7,186,223 | $ | 7,183,688 | $ | 2,535 | 0.0 | % | ||||
| Consolidated capital ratios | ||||||||||||
| Equity to assets | 13.85 | % | 14.12 | % | -0.27 | % | ||||||
| Tangible equity to tangible assets (1) | 11.21 | % | 11.48 | % | -0.27 | % | ||||||
| Share data | ||||||||||||
| Outstanding shares | 73,453 | 75,800 | (2,347 | ) | -3.1 | % | ||||||
| Book value per share | $ | 13.55 | $ | 13.38 | $ | 0.17 | 1.3 | % | ||||
| Tangible book value per share (2) | $ | 10.64 | $ | 10.55 | $ | 0.09 | 0.8 | % |
(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, | December 31, | September 30, | Variance | Variance | ||||||||
| Except Per Share Data) | 2021 | 2021 | or Change | or Change Pct. | ||||||||
| Interest income | ||||||||||||
| Loans | $ | 47,575 | $ | 48,230 | $ | (655 | ) | -1.4 | % | |||
| Taxable investment securities | 7,595 | 8,212 | (617 | ) | -7.5 | % | ||||||
| Tax-exempt investment securities | 327 | 333 | (6 | ) | -1.8 | % | ||||||
| Other interest-earning assets | 415 | 431 | (16 | ) | -3.7 | % | ||||||
| Total Interest Income | 55,912 | 57,206 | (1,294 | ) | -2.3 | % | ||||||
| Interest expense | ||||||||||||
| Deposits | 3,663 | 4,065 | (402 | ) | -9.9 | % | ||||||
| Borrowings | 3,562 | 3,551 | 11 | 0.3 | % | |||||||
| Total interest expense | 7,225 | 7,616 | (391 | ) | -5.1 | % | ||||||
| Net interest income | 48,687 | 49,590 | (903 | ) | -1.8 | % | ||||||
| Reversal of provision for credit losses | (2,420 | ) | (5,400 | ) | 2,980 | -55.2 | % | |||||
| Net interest income after reversal of provision<br> for credit losses | 51,107 | 54,990 | (3,883 | ) | -7.1 | % | ||||||
| Non-interest income | ||||||||||||
| Fees and service charges | 698 | 607 | 91 | 15.0 | % | |||||||
| Gain on sale and call of securities | - | 1 | (1 | ) | -100.0 | % | ||||||
| Gain on sale of loans | 970 | 1,006 | (36 | ) | -3.6 | % | ||||||
| Income from bank owned life insurance | 1,562 | 1,561 | 1 | 0.1 | % | |||||||
| Electronic banking fees and charges | 421 | 407 | 14 | 3.4 | % | |||||||
| Other income | 482 | 218 | 264 | 121.1 | % | |||||||
| Total non-interest income | 4,133 | 3,800 | 333 | 8.8 | % | |||||||
| Non-interest expense | ||||||||||||
| Salaries and employee benefits | 18,096 | 18,617 | (521 | ) | -2.8 | % | ||||||
| Net occupancy expense of premises | 3,156 | 4,547 | (1,391 | ) | -30.6 | % | ||||||
| Equipment and systems | 3,723 | 3,825 | (102 | ) | -2.7 | % | ||||||
| Advertising and marketing | 448 | 392 | 56 | 14.3 | % | |||||||
| Federal deposit insurance premium | 721 | 492 | 229 | 46.5 | % | |||||||
| Directors' compensation | 649 | 803 | (154 | ) | -19.2 | % | ||||||
| Other expense | 2,877 | 3,127 | (250 | ) | -8.0 | % | ||||||
| Total non-interest expense | 29,670 | 31,803 | (2,133 | ) | -6.7 | % | ||||||
| Income before income taxes | 25,570 | 26,987 | (1,417 | ) | -5.3 | % | ||||||
| Income taxes | 6,801 | 7,272 | (471 | ) | -6.5 | % | ||||||
| Net income | $ | 18,769 | $ | 19,715 | $ | (946 | ) | -4.8 | % | |||
| Net income per common share (EPS) | ||||||||||||
| Basic | $ | 0.26 | $ | 0.26 | $ | 0.00 | ||||||
| Diluted | $ | 0.26 | $ | 0.26 | $ | 0.00 | ||||||
| Dividends declared | ||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.10 | $ | 0.01 | ||||||
| Cash dividends declared | $ | 7,921 | $ | 7,381 | $ | 540 | ||||||
| Dividend payout ratio | 42.2 | % | 37.4 | % | 4.8 | % | ||||||
| Weighted average number of common<br> shares outstanding | ||||||||||||
| Basic | 72,011 | 74,537 | (2,526 | ) | ||||||||
| Diluted | 72,037 | 74,556 | (2,519 | ) | ||||||||
| Kearny Financial Corp. | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Average Balance Sheet Data | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, | September 30, | Variance | Variance | |||||||||
| (Dollars in Thousands) | 2021 | 2021 | or Change | or Change Pct. | ||||||||
| Assets | ||||||||||||
| Interest-earning assets: | ||||||||||||
| Loans receivable, including loans held for sale | $ | 4,822,959 | $ | 4,835,676 | $ | (12,717 | ) | -0.3 | % | |||
| Taxable investment securities | 1,610,395 | 1,649,953 | (39,558 | ) | -2.4 | % | ||||||
| Tax-exempt investment securities | 57,686 | 59,115 | (1,429 | ) | -2.4 | % | ||||||
| Other interest-earning assets | 77,811 | 85,749 | (7,938 | ) | -9.3 | % | ||||||
| Total interest-earning assets | 6,568,851 | 6,630,493 | (61,642 | ) | -0.9 | % | ||||||
| Non-interest-earning assets | 611,390 | 616,735 | (5,345 | ) | -0.9 | % | ||||||
| Total assets | $ | 7,180,241 | $ | 7,247,228 | $ | (66,987 | ) | -0.9 | % | |||
| Liabilities and Stockholders' Equity | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Interest-bearing demand | $ | 2,027,021 | $ | 1,954,271 | $ | 72,750 | 3.7 | % | ||||
| Savings | 1,086,903 | 1,102,865 | (15,962 | ) | -1.4 | % | ||||||
| Certificates of deposit | 1,693,423 | 1,798,473 | (105,050 | ) | -5.8 | % | ||||||
| Total interest-bearing deposits | 4,807,347 | 4,855,609 | (48,262 | ) | -1.0 | % | ||||||
| Borrowings: | ||||||||||||
| Federal Home Loan Bank advances | 666,029 | 665,915 | 114 | 0.0 | % | |||||||
| Other borrowings | 26,033 | 28,532 | (2,499 | ) | -8.8 | % | ||||||
| Total borrowings | 692,062 | 694,447 | (2,385 | ) | -0.3 | % | ||||||
| Total interest-bearing liabilities | 5,499,409 | 5,550,056 | (50,647 | ) | -0.9 | % | ||||||
| Non-interest-bearing liabilities: | ||||||||||||
| Non-interest-bearing deposits | 624,200 | 610,271 | 13,929 | 2.3 | % | |||||||
| Other non-interest-bearing liabilities | 50,870 | 56,893 | (6,023 | ) | -10.6 | % | ||||||
| Total non-interest-bearing liabilities | 675,070 | 667,164 | 7,906 | 1.2 | % | |||||||
| Total liabilities | 6,174,479 | 6,217,220 | (42,741 | ) | -0.7 | % | ||||||
| Stockholders' equity | 1,005,762 | 1,030,008 | (24,246 | ) | -2.4 | % | ||||||
| Total liabilities and stockholders' equity | $ | 7,180,241 | $ | 7,247,228 | $ | (66,987 | ) | -0.9 | % | |||
| Average interest-earning assets to average<br> interest-bearing liabilities | 119.45 | % | 119.47 | % | -0.02 | % | 0.0 | % | ||||
| Kearny Financial Corp. | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| Performance Ratio Highlights | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, | September 30, | Variance | ||||||||||
| 2021 | 2021 | or Change | ||||||||||
| Average yield on interest-earning assets: | ||||||||||||
| Loans receivable, including loans held for sale | 3.95 | % | 3.99 | % | -0.04 | % | ||||||
| Taxable investment securities | 1.89 | % | 1.99 | % | -0.10 | % | ||||||
| Tax-exempt investment securities (1) | 2.26 | % | 2.25 | % | 0.01 | % | ||||||
| Other interest-earning assets | 2.13 | % | 2.01 | % | 0.12 | % | ||||||
| Total interest-earning assets | 3.40 | % | 3.45 | % | -0.05 | % | ||||||
| Average cost of interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Interest-bearing demand | 0.22 | % | 0.23 | % | -0.01 | % | ||||||
| Savings | 0.11 | % | 0.12 | % | -0.01 | % | ||||||
| Certificates of deposit | 0.53 | % | 0.57 | % | -0.04 | % | ||||||
| Total interest-bearing deposits | 0.30 | % | 0.33 | % | -0.03 | % | ||||||
| Borrowings: | ||||||||||||
| Federal Home Loan Bank advances | 2.14 | % | 2.13 | % | 0.01 | % | ||||||
| Other borrowings | 0.09 | % | 0.10 | % | -0.01 | % | ||||||
| Total borrowings | 2.06 | % | 2.05 | % | 0.01 | % | ||||||
| Total interest-bearing liabilities | 0.53 | % | 0.55 | % | -0.02 | % | ||||||
| Interest rate spread (2) | 2.87 | % | 2.90 | % | -0.03 | % | ||||||
| Net interest margin (3) | 2.96 | % | 2.99 | % | -0.03 | % | ||||||
| Non-interest income to average assets<br> (annualized) | 0.23 | % | 0.21 | % | 0.02 | % | ||||||
| Non-interest expense to average assets<br> (annualized) | 1.65 | % | 1.76 | % | -0.11 | % | ||||||
| Efficiency ratio (4) | 56.17 | % | 59.57 | % | -3.40 | % | ||||||
| Return on average assets (annualized) | 1.05 | % | 1.09 | % | -0.04 | % | ||||||
| Return on average equity (annualized) | 7.46 | % | 7.66 | % | -0.20 | % | ||||||
| Return on average tangible equity (annualized) (5) | 9.49 | % | 9.67 | % | -0.18 | % |
(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) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| (Unaudited) | (Unaudited) | (Audited) | (Unaudited) | (Unaudited) | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 60,452 | $ | 54,070 | $ | 67,855 | $ | 108,991 | $ | 129,694 | |||||
| Securities available for sale | 1,591,066 | 1,651,156 | 1,676,864 | 1,778,970 | 1,695,893 | ||||||||||
| Securities held to maturity | 53,142 | 37,497 | 38,138 | 27,168 | 29,549 | ||||||||||
| Loans held-for-sale | 12,549 | 12,884 | 16,492 | 5,172 | 12,601 | ||||||||||
| Loans receivable | 4,826,404 | 4,789,339 | 4,851,394 | 4,798,239 | 4,828,634 | ||||||||||
| Less: allowance for credit losses on loans | (48,216 | ) | (51,785 | ) | (58,165 | ) | (63,762 | ) | (63,386 | ) | |||||
| Net loans receivable | 4,778,188 | 4,737,554 | 4,793,229 | 4,734,477 | 4,765,248 | ||||||||||
| Premises and equipment | 54,067 | 55,236 | 56,338 | 60,360 | 61,181 | ||||||||||
| Federal Home Loan Bank stock | 36,622 | 36,615 | 36,615 | 45,578 | 45,578 | ||||||||||
| Accrued interest receivable | 18,495 | 19,541 | 19,362 | 20,562 | 19,826 | ||||||||||
| Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
| Core deposit intangible | 3,344 | 3,524 | 3,705 | 3,888 | 4,151 | ||||||||||
| Bank owned life insurance | 286,433 | 284,871 | 283,310 | 281,765 | 280,235 | ||||||||||
| Deferred income taxes, net | 25,709 | 27,771 | 29,323 | 32,230 | 30,846 | ||||||||||
| Other real estate owned | 658 | 178 | 178 | 178 | 178 | ||||||||||
| Other assets | 54,603 | 51,896 | 51,431 | 47,760 | 49,278 | ||||||||||
| Total assets | $ | 7,186,223 | $ | 7,183,688 | $ | 7,283,735 | $ | 7,357,994 | $ | 7,335,153 | |||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing | $ | 604,805 | $ | 631,344 | $ | 593,718 | $ | 545,746 | $ | 518,828 | |||||
| Interest-bearing | 4,849,220 | 4,763,795 | 4,891,588 | 4,828,706 | 4,793,785 | ||||||||||
| Total deposits | 5,454,025 | 5,395,139 | 5,485,306 | 5,374,452 | 5,312,613 | ||||||||||
| Borrowings | 686,105 | 720,990 | 685,876 | 865,763 | 865,651 | ||||||||||
| Advance payments by borrowers for taxes | 16,772 | 16,222 | 15,752 | 15,300 | 16,100 | ||||||||||
| Other liabilities | 33,851 | 36,914 | 53,857 | 38,667 | 48,448 | ||||||||||
| Total liabilities | 6,190,753 | 6,169,265 | 6,240,791 | 6,294,182 | 6,242,812 | ||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 735 | 758 | 790 | 820 | 849 | ||||||||||
| Paid-in capital | 587,392 | 616,894 | 654,396 | 691,280 | 724,389 | ||||||||||
| Retained earnings | 431,549 | 420,701 | 408,367 | 397,594 | 388,376 | ||||||||||
| Unearned ESOP shares | (25,780 | ) | (26,266 | ) | (26,753 | ) | (27,239 | ) | (27,726 | ) | |||||
| Accumulated other comprehensive income | 1,574 | 2,336 | 6,144 | 1,357 | 6,453 | ||||||||||
| Total stockholders' equity | 995,470 | 1,014,423 | 1,042,944 | 1,063,812 | 1,092,341 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,186,223 | $ | 7,183,688 | $ | 7,283,735 | $ | 7,357,994 | $ | 7,335,153 | |||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 13.85 | % | 14.12 | % | 14.32 | % | 14.46 | % | 14.89 | % | |||||
| Tangible equity to tangible assets (1) | 11.21 | % | 11.48 | % | 11.72 | % | 11.89 | % | 12.32 | % | |||||
| Share data | |||||||||||||||
| Outstanding shares | 73,453 | 75,800 | 78,965 | 81,943 | 84,938 | ||||||||||
| Book value per share | $ | 13.55 | $ | 13.38 | $ | 13.21 | $ | 12.98 | $ | 12.86 | |||||
| Tangible book value per share (2) | $ | 10.64 | $ | 10.55 | $ | 10.49 | $ | 10.36 | $ | 10.33 |
(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) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Loan portfolio composition: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family | $ | 2,007,431 | $ | 1,978,681 | $ | 2,039,260 | $ | 2,055,396 | $ | 2,076,483 | |||||
| Nonresidential | 1,026,447 | 1,023,391 | 1,079,444 | 1,110,765 | 1,123,695 | ||||||||||
| Commercial business | 180,429 | 169,392 | 168,951 | 183,181 | 202,010 | ||||||||||
| Construction | 110,703 | 112,226 | 93,804 | 95,533 | 90,398 | ||||||||||
| Total commercial loans | 3,325,010 | 3,283,690 | 3,381,459 | 3,444,875 | 3,492,586 | ||||||||||
| One- to four-family residential mortgage loans | 1,477,267 | 1,483,106 | 1,447,721 | 1,323,485 | 1,305,351 | ||||||||||
| Consumer loans: | |||||||||||||||
| Home equity loans and lines of credit | 43,934 | 44,912 | 47,871 | 59,721 | 65,298 | ||||||||||
| Other consumer loans | 3,040 | 3,020 | 3,259 | 3,445 | 4,123 | ||||||||||
| Total consumer loans | 46,974 | 47,932 | 51,130 | 63,166 | 69,421 | ||||||||||
| Total loans, excluding yield adjustments | 4,849,251 | 4,814,728 | 4,880,310 | 4,831,526 | 4,867,358 | ||||||||||
| Unaccreted yield adjustments | (22,847 | ) | (25,389 | ) | (28,916 | ) | (33,287 | ) | (38,724 | ) | |||||
| Loans receivable, net of yield adjustments | 4,826,404 | 4,789,339 | 4,851,394 | 4,798,239 | 4,828,634 | ||||||||||
| Less: allowance for credit losses on loans | (48,216 | ) | (51,785 | ) | (58,165 | ) | (63,762 | ) | (63,386 | ) | |||||
| Net loans receivable | $ | 4,778,188 | $ | 4,737,554 | $ | 4,793,229 | $ | 4,734,477 | $ | 4,765,248 | |||||
| Loan portfolio allocation: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family | 41.4 | % | 41.1 | % | 41.8 | % | 42.5 | % | 42.7 | % | |||||
| Nonresidential | 21.2 | % | 21.3 | % | 22.1 | % | 23.0 | % | 23.1 | % | |||||
| Commercial business | 3.7 | % | 3.5 | % | 3.5 | % | 3.8 | % | 4.2 | % | |||||
| Construction | 2.3 | % | 2.3 | % | 1.9 | % | 2.0 | % | 1.8 | % | |||||
| Total commercial loans | 68.6 | % | 68.2 | % | 69.3 | % | 71.3 | % | 71.8 | % | |||||
| One- to four-family residential mortgage loans | 30.5 | % | 30.8 | % | 29.7 | % | 27.4 | % | 26.8 | % | |||||
| Consumer loans: | |||||||||||||||
| Home equity loans and lines of credit | 0.9 | % | 0.9 | % | 0.9 | % | 1.2 | % | 1.3 | % | |||||
| Other consumer loans | 0.0 | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | |||||
| Total consumer loans | 0.9 | % | 1.0 | % | 1.0 | % | 1.3 | % | 1.4 | % | |||||
| 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 | 72,138 | 72,945 | 79,767 | 71,416 | 71,472 | ||||||||||
| Total nonperforming loans | 72,138 | 72,945 | 79,767 | 71,418 | 71,472 | ||||||||||
| Other real estate owned | 658 | 178 | 178 | 178 | 178 | ||||||||||
| Total nonperforming assets | $ | 72,796 | $ | 73,123 | $ | 79,945 | $ | 71,596 | $ | 71,650 | |||||
| Nonperforming loans (% total loans) | 1.49 | % | 1.52 | % | 1.64 | % | 1.49 | % | 1.48 | % | |||||
| Nonperforming assets (% total assets) | 1.01 | % | 1.02 | % | 1.10 | % | 0.97 | % | 0.98 | % | |||||
| Allowance for credit losses on loans (ACL): | |||||||||||||||
| ACL to total loans | 0.99 | % | 1.08 | % | 1.19 | % | 1.32 | % | 1.30 | % | |||||
| ACL to nonperforming loans | 66.84 | % | 70.99 | % | 72.92 | % | 89.28 | % | 88.69 | % | |||||
| Net charge offs | $ | 1,149 | $ | 980 | $ | 656 | $ | 750 | $ | 109 | |||||
| Average net charge off rate (annualized) | 0.10 | % | 0.08 | % | 0.05 | % | 0.06 | % | 0.01 | % | |||||
| At | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Supplemental Balance Sheet Highlights<br>(Dollars in Thousands, Unaudited) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Funding by type: | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 604,805 | $ | 631,344 | $ | 593,718 | $ | 545,746 | $ | 518,828 | |||||
| Interest-bearing demand | 2,106,693 | 1,937,661 | 1,902,478 | 1,923,184 | 1,752,699 | ||||||||||
| Savings | 1,087,740 | 1,089,699 | 1,111,364 | 1,105,481 | 1,075,122 | ||||||||||
| Certificates of deposit | 1,654,787 | 1,736,435 | 1,877,746 | 1,800,041 | 1,965,964 | ||||||||||
| Interest-bearing deposits | 4,849,220 | 4,763,795 | 4,891,588 | 4,828,706 | 4,793,785 | ||||||||||
| Total deposits | 5,454,025 | 5,395,139 | 5,485,306 | 5,374,452 | 5,312,613 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 666,105 | 665,990 | 665,876 | 865,763 | 865,651 | ||||||||||
| Overnight borrowings | 20,000 | 55,000 | 20,000 | - | - | ||||||||||
| Total borrowings | 686,105 | 720,990 | 685,876 | 865,763 | 865,651 | ||||||||||
| Total funding | $ | 6,140,130 | $ | 6,116,129 | $ | 6,171,182 | $ | 6,240,215 | $ | 6,178,264 | |||||
| Loans as a % of deposits | 87.8 | % | 88.1 | % | 87.7 | % | 88.2 | % | 89.9 | % | |||||
| Deposits as a % of total funding | 88.8 | % | 88.2 | % | 88.9 | % | 86.1 | % | 86.0 | % | |||||
| Borrowings as a % of total funding | 11.2 | % | 11.8 | % | 11.1 | % | 13.9 | % | 14.0 | % | |||||
| Funding by source: | |||||||||||||||
| Retail deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 604,805 | $ | 631,344 | $ | 593,718 | $ | 545,746 | $ | 518,828 | |||||
| Interest-bearing demand | 2,106,693 | 1,937,661 | 1,902,478 | 1,923,184 | 1,752,699 | ||||||||||
| Savings | 1,087,740 | 1,089,699 | 1,111,364 | 1,105,481 | 1,075,122 | ||||||||||
| Certificates of deposit | 1,184,530 | 1,264,016 | 1,398,808 | 1,508,494 | 1,658,277 | ||||||||||
| Total retail deposits | 4,983,768 | 4,922,720 | 5,006,368 | 5,082,905 | 5,004,926 | ||||||||||
| Wholesale funding: | |||||||||||||||
| Certificates of deposit (listing service) | $ | 11,622 | $ | 13,817 | $ | 20,322 | $ | 32,952 | $ | 43,112 | |||||
| Certificates of deposit (brokered) | 458,635 | 458,602 | 458,616 | 258,595 | 264,575 | ||||||||||
| Total wholesale deposits | 470,257 | 472,419 | 478,938 | 291,547 | 307,687 | ||||||||||
| FHLB advances | 666,105 | 665,990 | 665,876 | 865,763 | 865,651 | ||||||||||
| Overnight borrowings | 20,000 | 55,000 | 20,000 | - | - | ||||||||||
| Total wholesale funding | 1,156,362 | 1,193,409 | 1,164,814 | 1,157,310 | 1,173,338 | ||||||||||
| Total funding | $ | 6,140,130 | $ | 6,116,129 | $ | 6,171,182 | $ | 6,240,215 | $ | 6,178,264 | |||||
| Retail funding as a % of total funding | 81.2 | % | 80.5 | % | 81.1 | % | 81.5 | % | 81.0 | % | |||||
| Wholesale funding as a % of total funding | 18.8 | % | 19.5 | % | 18.9 | % | 18.5 | % | 19.0 | % | |||||
| Consolidated Statements of Income | Three Months Ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars and Shares in Thousands,<br>Except Per Share Data, Unaudited) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Interest income | |||||||||||||||
| Loans (1) | $ | 47,575 | $ | 48,230 | $ | 48,464 | $ | 50,159 | $ | 50,806 | |||||
| Taxable investment securities | 7,595 | 8,212 | 8,304 | 7,891 | 7,707 | ||||||||||
| Tax-exempt investment securities | 327 | 333 | 355 | 410 | 433 | ||||||||||
| Other interest-earning assets | 415 | 431 | 549 | 705 | 787 | ||||||||||
| Total interest income | 55,912 | 57,206 | 57,672 | 59,165 | 59,733 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 3,663 | 4,065 | 5,156 | 6,670 | 8,647 | ||||||||||
| Borrowings | 3,562 | 3,551 | 3,451 | 4,012 | 5,193 | ||||||||||
| Total interest expense | 7,225 | 7,616 | 8,607 | 10,682 | 13,840 | ||||||||||
| Net interest income | 48,687 | 49,590 | 49,065 | 48,483 | 45,893 | ||||||||||
| (Reversal of) provision for credit losses | (2,420 | ) | (5,400 | ) | (4,941 | ) | 1,126 | (1,365 | ) | ||||||
| Net interest income after (reversal of)<br> provision for credit losses | 51,107 | 54,990 | 54,006 | 47,357 | 47,258 | ||||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges (1) | 698 | 607 | 423 | 473 | 556 | ||||||||||
| Gain on sale and call of securities | - | 1 | 313 | 18 | 813 | ||||||||||
| Gain on sale of loans | 970 | 1,006 | 363 | 943 | 2,378 | ||||||||||
| Income from bank owned life insurance | 1,562 | 1,561 | 1,545 | 1,530 | 1,596 | ||||||||||
| Electronic banking fees and charges | 421 | 407 | 452 | 456 | 404 | ||||||||||
| Other income | 482 | 218 | 400 | 1,194 | 67 | ||||||||||
| Total non-interest income | 4,133 | 3,800 | 3,496 | 4,614 | 5,814 | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 18,096 | 18,617 | 17,777 | 16,965 | 17,081 | ||||||||||
| Net occupancy expense of premises | 3,156 | 4,547 | 2,998 | 3,433 | 3,120 | ||||||||||
| Equipment and systems | 3,723 | 3,825 | 3,575 | 3,823 | 3,902 | ||||||||||
| Advertising and marketing | 448 | 392 | 581 | 567 | 513 | ||||||||||
| Federal deposit insurance premium | 721 | 492 | 490 | 488 | 490 | ||||||||||
| Directors' compensation | 649 | 803 | 749 | 748 | 748 | ||||||||||
| Debt extinguishment expenses | - | - | - | - | 796 | ||||||||||
| Other expense | 2,877 | 3,127 | 5,816 | 3,792 | 3,860 | ||||||||||
| Total non-interest expense | 29,670 | 31,803 | 31,986 | 29,816 | 30,510 | ||||||||||
| Income before income taxes | 25,570 | 26,987 | 25,516 | 22,155 | 22,562 | ||||||||||
| Income taxes | 6,801 | 7,272 | 7,033 | 5,732 | 5,614 | ||||||||||
| Net income | $ | 18,769 | $ | 19,715 | $ | 18,483 | $ | 16,423 | $ | 16,948 | |||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | $ | 0.20 | |||||
| Diluted | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | $ | 0.20 | |||||
| Dividends declared | |||||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.10 | $ | 0.10 | $ | 0.09 | $ | 0.08 | |||||
| Cash dividends declared | $ | 7,921 | $ | 7,381 | $ | 7,710 | $ | 7,205 | $ | 6,706 | |||||
| Dividend payout ratio | 42.2 | % | 37.4 | % | 41.7 | % | 43.9 | % | 39.6 | % | |||||
| Weighted average number of common<br> shares outstanding | |||||||||||||||
| Basic | 72,011 | 74,537 | 77,658 | 80,673 | 85,120 | ||||||||||
| Diluted | 72,037 | 74,556 | 77,680 | 80,690 | 85,123 |
(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 September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the periods ended June 30, 2021, March 31, 2021 and December 31, 2020 was $902,000, $852,000 and $1,340,000, respectively.
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average Balance Sheet Data<br>(Dollars in Thousands, Unaudited) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for<br> sale | $ | 4,822,959 | $ | 4,835,676 | $ | 4,817,980 | $ | 4,816,592 | $ | 4,871,268 | |||||
| Taxable investment securities | 1,610,395 | 1,649,953 | 1,720,838 | 1,674,223 | 1,544,095 | ||||||||||
| Tax-exempt investment securities | 57,686 | 59,115 | 63,047 | 73,573 | 79,044 | ||||||||||
| Other interest-earning assets | 77,811 | 85,749 | 117,212 | 169,291 | 266,114 | ||||||||||
| Total interest-earning assets | 6,568,851 | 6,630,493 | 6,719,077 | 6,733,679 | 6,760,521 | ||||||||||
| Non-interest-earning assets | 611,390 | 616,735 | 609,762 | 617,440 | 632,084 | ||||||||||
| Total assets | $ | 7,180,241 | $ | 7,247,228 | $ | 7,328,839 | $ | 7,351,119 | $ | 7,392,605 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 2,027,021 | $ | 1,954,271 | $ | 1,930,193 | $ | 1,831,617 | $ | 1,683,222 | |||||
| Savings | 1,086,903 | 1,102,865 | 1,118,402 | 1,084,981 | 1,058,675 | ||||||||||
| Certificates of deposit | 1,693,423 | 1,798,473 | 1,934,650 | 1,904,234 | 1,899,406 | ||||||||||
| Total interest-bearing deposits | 4,807,347 | 4,855,609 | 4,983,245 | 4,820,832 | 4,641,303 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 666,029 | 665,915 | 665,802 | 865,690 | 1,057,958 | ||||||||||
| Other borrowings | 26,033 | 28,532 | 6,670 | - | - | ||||||||||
| Total borrowings | 692,062 | 694,447 | 672,472 | 865,690 | 1,057,958 | ||||||||||
| Total interest-bearing liabilities | 5,499,409 | 5,550,056 | 5,655,717 | 5,686,522 | 5,699,261 | ||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 624,200 | 610,271 | 566,632 | 525,018 | 502,479 | ||||||||||
| Other non-interest-bearing liabilities | 50,870 | 56,893 | 52,292 | 57,018 | 73,683 | ||||||||||
| Total non-interest-bearing liabilities | 675,070 | 667,164 | 618,924 | 582,036 | 576,162 | ||||||||||
| Total liabilities | 6,174,479 | 6,217,220 | 6,274,641 | 6,268,558 | 6,275,423 | ||||||||||
| Stockholders' equity | 1,005,762 | 1,030,008 | 1,054,198 | 1,082,561 | 1,117,182 | ||||||||||
| Total liabilities and stockholders' equity | $ | 7,180,241 | $ | 7,247,228 | $ | 7,328,839 | $ | 7,351,119 | $ | 7,392,605 | |||||
| Average interest-earning assets to average<br> interest-bearing liabilities | 119.45 | % | 119.47 | % | 118.80 | % | 118.41 | % | 118.62 | % | |||||
| Three Months Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Performance Ratio Highlights | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Average yield on interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held for<br> sale (1) | 3.95 | % | 3.99 | % | 4.02 | % | 4.17 | % | 4.17 | % | |||||
| Taxable investment securities | 1.89 | % | 1.99 | % | 1.93 | % | 1.89 | % | 2.00 | % | |||||
| Tax-exempt investment securities (2) | 2.26 | % | 2.25 | % | 2.25 | % | 2.23 | % | 2.19 | % | |||||
| Other interest-earning assets | 2.13 | % | 2.01 | % | 1.87 | % | 1.67 | % | 1.18 | % | |||||
| Total interest-earning assets (1) | 3.40 | % | 3.45 | % | 3.43 | % | 3.51 | % | 3.53 | % | |||||
| Average cost of interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | 0.22 | % | 0.23 | % | 0.27 | % | 0.34 | % | 0.47 | % | |||||
| Savings | 0.11 | % | 0.12 | % | 0.15 | % | 0.21 | % | 0.33 | % | |||||
| Certificates of deposit | 0.53 | % | 0.57 | % | 0.71 | % | 0.96 | % | 1.22 | % | |||||
| Total interest-bearing deposits | 0.30 | % | 0.33 | % | 0.41 | % | 0.55 | % | 0.75 | % | |||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 2.14 | % | 2.13 | % | 2.07 | % | 1.85 | % | 1.96 | % | |||||
| Other borrowings | 0.09 | % | 0.10 | % | 0.07 | % | 0.00 | % | 0.00 | % | |||||
| Total borrowings | 2.06 | % | 2.05 | % | 2.05 | % | 1.85 | % | 1.96 | % | |||||
| Total interest-bearing liabilities | 0.53 | % | 0.55 | % | 0.61 | % | 0.75 | % | 0.97 | % | |||||
| Interest rate spread (1) (3) | 2.87 | % | 2.90 | % | 2.82 | % | 2.76 | % | 2.56 | % | |||||
| Net interest margin (1) (4) | 2.96 | % | 2.99 | % | 2.92 | % | 2.88 | % | 2.72 | % | |||||
| Non-interest income to average assets<br> (annualized) (1) | 0.23 | % | 0.21 | % | 0.19 | % | 0.25 | % | 0.31 | % | |||||
| Non-interest expense to average assets<br> (annualized) | 1.65 | % | 1.76 | % | 1.75 | % | 1.62 | % | 1.65 | % | |||||
| Efficiency ratio (5) | 56.17 | % | 59.57 | % | 60.86 | % | 56.15 | % | 59.01 | % | |||||
| Return on average assets (annualized) | 1.05 | % | 1.09 | % | 1.01 | % | 0.89 | % | 0.92 | % | |||||
| Return on average equity (annualized) | 7.46 | % | 7.66 | % | 7.01 | % | 6.07 | % | 6.07 | % | |||||
| Return on average tangible equity (annualized) (6) | 9.49 | % | 9.67 | % | 8.81 | % | 7.57 | % | 7.52 | % |
(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 September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the periods ended June 30, 2021, March 31, 2021 and December 31, 2020 was $902,000, $852,000 and $1,340,000, 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.
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included below. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
| Reconciliation of GAAP to Non-GAAP | Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data, Unaudited) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Adjusted net income: | |||||||||||||||
| Net income (GAAP) | $ | 18,769 | $ | 19,715 | $ | 18,483 | $ | 16,423 | $ | 16,948 | |||||
| Non-recurring transactions - net of tax: | |||||||||||||||
| Branch consolidation expenses and<br> impairment charges | 132 | 1,209 | 870 | 264 | 243 | ||||||||||
| Net effect of sale and call of securities | - | (1 | ) | (220 | ) | (13 | ) | (571 | ) | ||||||
| Debt extinguishment expenses | - | - | - | - | 558 | ||||||||||
| Reversal of income tax valuation<br> allowance | - | - | (12 | ) | - | (523 | ) | ||||||||
| Net effect of sales of other assets | (251 | ) | - | (144 | ) | (587 | ) | - | |||||||
| Adjusted net income | $ | 18,650 | $ | 20,923 | $ | 18,977 | $ | 16,087 | $ | 16,655 | |||||
| Calculation of pre-tax, pre-provision net<br> revenue: | |||||||||||||||
| Net income (GAAP) | $ | 18,769 | $ | 19,715 | $ | 18,483 | $ | 16,423 | $ | 16,948 | |||||
| Adjustments to net income (GAAP): | |||||||||||||||
| Provision for income taxes | 6,801 | 7,272 | 7,033 | 5,732 | 5,614 | ||||||||||
| (Reversal of) provision for credit losses | (2,420 | ) | (5,400 | ) | (4,941 | ) | 1,126 | (1,365 | ) | ||||||
| Pre-tax, pre-provision net revenue<br> (non-GAAP) | $ | 23,150 | $ | 21,587 | $ | 20,575 | $ | 23,281 | $ | 21,197 | |||||
| Adjusted earnings per share: | |||||||||||||||
| Weighted average common shares - basic | 72,011 | 74,537 | 77,658 | 80,673 | 85,120 | ||||||||||
| Weighted average common shares - diluted | 72,037 | 74,556 | 77,680 | 80,690 | 85,123 | ||||||||||
| Earnings per share - basic (GAAP) | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | $ | 0.20 | |||||
| Earnings per share - diluted (GAAP) | $ | 0.26 | $ | 0.26 | $ | 0.24 | $ | 0.20 | $ | 0.20 | |||||
| Adjusted earnings per share - basic<br> (non-GAAP) | $ | 0.26 | $ | 0.28 | $ | 0.24 | $ | 0.20 | $ | 0.19 | |||||
| Adjusted earnings per share - diluted<br> (non-GAAP) | $ | 0.26 | $ | 0.28 | $ | 0.24 | $ | 0.20 | $ | 0.20 | |||||
| Adjusted return on average assets: | |||||||||||||||
| Total average assets | $ | 7,180,241 | $ | 7,247,228 | $ | 7,328,839 | $ | 7,351,119 | $ | 7,392,605 | |||||
| Return on average assets (GAAP) | 1.05 | % | 1.09 | % | 1.01 | % | 0.89 | % | 0.92 | % | |||||
| Adjusted return on average assets<br> (non-GAAP) | 1.04 | % | 1.15 | % | 1.04 | % | 0.88 | % | 0.90 | % | |||||
| Adjusted return on average equity: | |||||||||||||||
| Total average equity | $ | 1,005,762 | $ | 1,030,008 | $ | 1,054,198 | $ | 1,082,561 | $ | 1,117,182 | |||||
| Return on average equity (GAAP) | 7.46 | % | 7.66 | % | 7.01 | % | 6.07 | % | 6.07 | % | |||||
| Adjusted return on average equity<br> (non-GAAP) | 7.42 | % | 8.13 | % | 7.20 | % | 5.94 | % | 5.96 | % | |||||
| Reconciliation of GAAP to Non-GAAP | Three Months Ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars and Shares in Thousands,<br>Except Per Share Data, Unaudited) | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Adjusted return on average tangible equity: | |||||||||||||||
| Total average equity | $ | 1,005,762 | $ | 1,030,008 | $ | 1,054,198 | $ | 1,082,561 | $ | 1,117,182 | |||||
| Less: average goodwill | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | |||||
| Less: average other intangible assets | (3,462 | ) | (3,641 | ) | (3,825 | ) | (4,045 | ) | (4,317 | ) | |||||
| $ | 791,405 | $ | 815,472 | $ | 839,478 | $ | 867,621 | $ | 901,970 | ||||||
| - | - | - | - | ||||||||||||
| Return on average tangible equity<br> (non-GAAP) | 9.49 | % | 9.67 | % | 8.81 | % | 7.57 | % | 7.52 | % | |||||
| Adjusted return on average tangible equity<br> (non-GAAP) | 9.43 | % | 10.26 | % | 9.04 | % | 7.42 | % | 7.39 | % | |||||
| Adjusted non-interest expense ratio: | |||||||||||||||
| Non-interest expense (GAAP) | $ | 29,670 | $ | 31,803 | $ | 31,986 | $ | 29,816 | $ | 30,510 | |||||
| Non-recurring transactions: | |||||||||||||||
| Branch consolidation expenses and<br> impairment charges | (187 | ) | (1,711 | ) | (1,239 | ) | (375 | ) | (347 | ) | |||||
| Debt extinguishment expenses | - | - | - | - | (796 | ) | |||||||||
| Non-interest expense (non-GAAP) | $ | 29,483 | $ | 30,092 | $ | 30,747 | $ | 29,441 | $ | 29,367 | |||||
| Non-interest expense ratio (GAAP) | 1.65 | % | 1.76 | % | 1.75 | % | 1.62 | % | 1.65 | % | |||||
| Adjusted non-interest expense ratio<br> (non-GAAP) | 1.64 | % | 1.66 | % | 1.68 | % | 1.60 | % | 1.59 | % | |||||
| Adjusted efficiency ratio: | |||||||||||||||
| Non-interest expense (non-GAAP) | $ | 29,483 | $ | 30,092 | $ | 30,747 | $ | 29,441 | $ | 29,367 | |||||
| Net interest income (GAAP) | $ | 48,687 | $ | 49,590 | $ | 49,065 | $ | 48,483 | $ | 45,893 | |||||
| Total non-interest income (GAAP) | 4,133 | 3,800 | 3,496 | 4,614 | 5,814 | ||||||||||
| Non-recurring transactions: | |||||||||||||||
| Net effect of sale and call of securities | - | (1 | ) | (313 | ) | (18 | ) | (813 | ) | ||||||
| Net effect of sales of other assets | (356 | ) | - | (205 | ) | (837 | ) | - | |||||||
| Total revenue (non-GAAP) | $ | 52,464 | $ | 53,389 | $ | 52,043 | $ | 52,242 | $ | 50,894 | |||||
| Efficiency ratio (GAAP) | 56.17 | % | 59.57 | % | 60.86 | % | 56.15 | % | 59.01 | % | |||||
| Adjusted efficiency ratio (non-GAAP) | 56.20 | % | 56.36 | % | 59.08 | % | 56.36 | % | 57.70 | % |