8-K

Exhibit 99.1

FOR IMMEDIATE RELEASE

October 27, 2021

For further information contact:

Craig L. Montanaro, President and Chief Executive Officer, or

Keith Suchodolski, Executive Vice President and Chief Financial Officer

Kearny Financial Corp.

(973) 244-4500

KEARNY FINANCIAL CORP. REPORTS FISCAL 2022 FIRST QUARTER RESULTS

AND 10% INCREASE IN CASH DIVIDEND

Fairfield, N.J., October 27, 2021 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended September 30, 2021 of $19.7 million, or $0.26 per diluted share, compared to $18.5 million, or $0.24 per diluted share, for the quarter ended June 30, 2021.

The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on November 24, 2021 to stockholders of record as of November 10, 2021. This dividend represents an increase of $0.01, or 10%, from the prior quarter’s dividend of $0.10 per share.

Craig L. Montanaro, President and Chief Executive Officer, commented, “We are very pleased with our first quarter results which reflected record earnings, continued net interest margin expansion and sustained growth in non-interest-bearing deposits, which increased 6.3% from June 30, 2021. Additionally, we continued to right-size our retail branch footprint with the announcement of three additional branch consolidations, bringing our total to 15 over the past two and a half years.” Mr. Montanaro continued, “Despite strong origination volume, loan balances for the quarter were negatively impacted by record levels of commercial loan repayment activity. However, we remain optimistic as our commercial loan pipeline stands at a historically high level heading into the second quarter of the fiscal year.”

Regarding the Company's capital management strategies Mr. Montanaro noted, “As we move further into fiscal 2022, capital management remains a strategic priority. Our recent authorization of a new 10% share repurchase plan, coupled with the increase in our quarterly cash dividend, demonstrates our commitment to returning excess capital to our shareholders while retaining sufficient capital to allow us to take advantage of strategic capital deployment opportunities as they may arise.”

Balance Sheet



Deposits decreased $90.2 million to $5.40 billion at September 30, 2021, from $5.49 billion at June 30, 2021, reflecting the controlled run-off of time deposits which was partially offset by growth in core non-maturity deposits. For the quarter ended September 30, 2021, non-interest-bearing deposits increased $37.6 million, or 6.3%.



Loans receivable decreased $62.1 million to $4.79 billion at September 30, 2021, from $4.85 billion at June 30, 2021, due primarily to record levels of repayment activity in the commercial real estate and multifamily mortgage portfolios that more than offset the strong loan origination volume for the quarter.



Investment securities decreased $26.3 million to $1.69 billion at September 30, 2021, from $1.72 billion at June 30, 2021, representing 23.5% of total assets at each of those comparative periods.



Borrowings increased $35.1 million to $721.0 million, or 10.0% of total assets, at September 30, 2021, from $685.9 million, or 9.4% of total assets, at June 30, 2021.

Earnings

Performance Highlights



Return on average assets improved to 1.09% for the quarter ended September 30, 2021. Excluding the impact of non-recurring items, including branch consolidation charges, impairment charges and net effect of sale and call of securities, return on average assets would have been 1.15%. (1)



Return on average equity improved to 7.66% for the quarter ended September 30, 2021 while return on average tangible equity improved to 9.67%. Excluding the impact of non-recurring items, as noted above, return on average tangible equity would have been 10.26%. (1)

Net Interest Income and Net Interest Margin



Effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Interest income and non-interest income for all periods presented in this earnings release reflect this reclassification. Except where noted in the footnotes to the tables provided in this earnings release, there were no other changes resulting from this reclassification.



Net interest margin expanded seven basis points to 2.99% for the quarter ended September 30, 2021, from 2.92% for the quarter ended June 30, 2021, and was largely due to a reduction in the cost of interest-bearing liabilities, which declined six basis points to 0.55%.



Net interest income increased $525,000 to $49.6 million for the quarter ended September 30, 2021, from $49.1 million for the quarter ended June 30, 2021. Included in net interest income for the quarters ended September 30, 2021 and June 30, 2021, respectively, was purchase accounting accretion of $2.9 million and $3.1 million, and loan prepayment penalty income of $1.7 million and $902,000.

Non-Interest Income



Fees and service charges increased $184,000 to $607,000 for the quarter ended September 30, 2021 from $423,000 for the quarter ended June 30, 2021, and was largely attributable to fluctuations in various loan-related fee categories.



Gain on sale of loans increased $643,000 to $1.0 million for the quarter ended September 30, 2021 from $363,000 for the quarter ended June 30, 2021. This increase largely reflected greater volume and an improved average sales price of residential mortgage loans sold during the period.



Included in other income for the prior quarter ended June 30, 2021 were non-recurring gains of $205,000 attributable to the sale of properties sold in connection with branch consolidation activities, as previously disclosed. No such gains were recorded during the quarter ended September 30, 2021.

Non-Interest Expense



Non-interest expense decreased $183,000 to $31.8 million for the quarter ended September 30, 2021, from $32.0 million for the quarter ended June 30, 2021. Salaries and benefits expense increased $840,000, or 4.7%, from June 30, 2021 due largely to annual merit increases and increases in benefit plan expense. Net occupancy expense increased $1.5 million, or 51.7%, primarily due to non-recurring expense of $1.3 million and $250,000, respectively, related to the consolidation of three retail branch locations and facility repairs made in connection with damage incurred during Tropical Storm Ida.



Other expense decreased $2.7 million to $3.1 million for the quarter ended September 30, 2021, from $5.8 million for the quarter ended June 30, 2021 and was largely comprised of declines of $1.6 million and $566,000, respectively, in asset impairment charges and provisions for credit losses on off-balance sheet credit exposures. Also contributing to the decrease were less noteworthy reductions in loan expense, legal fees and consulting fees. For the quarter ended September 30, 2021, asset impairment charges recorded in other expense, related to the previously noted branch consolidations, totaled $420,000, while provisions for credit losses on off-balance sheet credit exposures reflected a provision reversal of $124,000.



The efficiency and non-interest expense ratios were 59.57% and 1.76%, respectively, for the quarter ended September 30, 2021. Excluding the impact of non-recurring items, as noted above, the efficiency and non-interest expense ratios for the quarter ended September 30, 2021 would have been 56.36% and 1.66%, respectively. (1)

Income Taxes



Income tax expense increased $239,000 to $7.3 million for the quarter ended September 30, 2021 compared to $7.0 million for the quarter ended June 30, 2021, resulting in effective tax rates of 26.9% and 27.6%, respectively.

Asset Quality



The balance of non-performing loans decreased $6.8 million to $72.9 million, or 1.02% of total assets, at September 30, 2021, from $79.8 million, or 1.10% of total assets, at June 30, 2021. At September 30, 2021, the Company had active COVID-19 payment deferrals on 13 residential mortgage and home equity loans totaling $5.6 million, representing 0.12% of total loans.



Net charge offs totaled $980,000, or 0.08% of average loans, on an annualized basis, for the quarter ended September 30, 2021 compared to $656,000, or 0.05%, for the quarter ended June 30, 2021. Of the charge-offs recorded during the quarter ended September 30, 2021, $935,000, or 95.5%, had previously been individually reserved for within the allowance for credit losses ("ACL").



For the quarter ended September 30, 2021, the Company recorded a provision for credit loss reversal of $5.4 million, compared to a provision for credit loss reversal of $4.9 million for the quarter ended June 30, 2021. The reversal for the quarter ended September 30, 2021 primarily reflected a reduction in the expected life of various segments of the loan portfolio along with continued improvement in the Company's credit risk outlook.



The ACL decreased to $51.8 million, or 1.08% of total loans, at September 30, 2021, from $58.2 million, or 1.19% of total loans at June 30, 2021.

Capital



For the quarter ended September 30, 2021, book value per share increased by $0.17 to $13.38 while tangible book value per share increased by $0.06 to $10.55.



During the quarter ended September 30, 2021, the Company repurchased 3,157,788 shares of common stock at a cost of $39.0 million, or $12.35 per share.



On September 20, 2021, the Company announced the completion of its seventh stock repurchase plan which authorized the repurchase of 4,064,649 shares. Such shares were repurchased at a cost of $50.5 million, or an average price of $12.43 per share. On September 22, 2021, the Company announced the authorization of an eighth stock repurchase plan to repurchase up to 7,602,021 shares, or approximately 10% of the Company's outstanding shares as of that date. Through September 30, 2021, the Company repurchased a total of 213,139 shares, or 2.8% of the shares authorized for repurchase under the current repurchase program, at a total cost of $2.6 million and at an average cost of $12.41 per share.



At September 30, 2021, the Company’s tangible equity to tangible assets ratio equaled 11.48% and the regulatory capital ratios, of both the Company and the Bank, were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.

(1) Please reference the Reconciliation of GAAP to Non-GAAP tables for a reconciliation of the non-GAAP financial measures.

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

(Dollars and Shares in Thousands,	September 30,			June 30,			Variance			Variance
Except Per Share Data)	2021			2021			or Change			or Change Pct.
	(Unaudited)			(Audited)
Assets
Cash and cash equivalents	$	54,070		$	67,855		$	(13,785	)		-20.3	%
Securities available for sale		1,651,156			1,676,864			(25,708	)		-1.5	%
Securities held to maturity		37,497			38,138			(641	)		-1.7	%
Loans held-for-sale		12,884			16,492			(3,608	)		-21.9	%
Loans receivable		4,789,339			4,851,394			(62,055	)		-1.3	%
Less: allowance for credit losses on loans		(51,785	)		(58,165	)		6,380			-11.0	%
Net loans receivable		4,737,554			4,793,229			(55,675	)		-1.2	%
Premises and equipment		55,236			56,338			(1,102	)		-2.0	%
Federal Home Loan Bank stock		36,615			36,615			-			0.0	%
Accrued interest receivable		19,541			19,362			179			0.9	%
Goodwill		210,895			210,895			-			0.0	%
Core deposit intangible		3,524			3,705			(181	)		-4.9	%
Bank owned life insurance		284,871			283,310			1,561			0.6	%
Deferred income taxes, net		27,771			29,323			(1,552	)		-5.3	%
Other real estate owned		178			178			-			0.0	%
Other assets		51,896			51,431			465			0.9	%
Total assets	$	7,183,688		$	7,283,735		$	(100,047	)		-1.4	%

Liabilities
Deposits:
Non-interest-bearing		631,344		$	593,718		$	37,626			6.3	%
Interest-bearing		4,763,795			4,891,588			(127,793	)		-2.6	%
Total deposits		5,395,139			5,485,306			(90,167	)		-1.6	%
Borrowings		720,990			685,876			35,114			5.1	%
Advance payments by borrowers for taxes		16,222			15,752			470			3.0	%
Other liabilities		36,914			53,857			(16,943	)		-31.5	%
Total liabilities		6,169,265			6,240,791			(71,526	)		-1.1	%

Stockholders' Equity
Common stock		758			790			(32	)		-4.1	%
Paid-in capital		616,894			654,396			(37,502	)		-5.7	%
Retained earnings		420,701			408,367			12,334			3.0	%
Unearned ESOP shares		(26,266	)		(26,753	)		487			-1.8	%
Accumulated other comprehensive income		2,336			6,144			(3,808	)		-62.0	%
Total stockholders' equity		1,014,423			1,042,944			(28,521	)		-2.7	%
Total liabilities and stockholders' equity	$	7,183,688		$	7,283,735		$	(100,047	)		-1.4	%

Consolidated capital ratios
Equity to assets		14.12	%		14.32	%		-0.20	%
Tangible equity to tangible assets (1)		11.48	%		11.72	%		-0.24	%

Share data
Outstanding shares		75,800			78,965			(3,165	)		-4.0	%
Book value per share	$	13.38		$	13.21		$	0.17			1.3	%
Tangible book value per share (2)	$	10.55		$	10.49		$	0.06			0.6	%

(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,	September 30,			June 30,			Variance			Variance
Except Per Share Data)	2021			2021			or Change			or Change Pct.
Interest income
Loans (1)	$	48,230		$	48,464		$	(234	)		-0.5	%
Taxable investment securities		8,212			8,304			(92	)		-1.1	%
Tax-exempt investment securities		333			355			(22	)		-6.2	%
Other interest-earning assets		431			549			(118	)		-21.5	%
Total Interest Income		57,206			57,672			(466	)		-0.8	%

Interest expense
Deposits		4,065			5,156			(1,091	)		-21.2	%
Borrowings		3,551			3,451			100			2.9	%
Total interest expense		7,616			8,607			(991	)		-11.5	%
Net interest income		49,590			49,065			525			1.1	%
Reversal of provision for credit losses		(5,400	)		(4,941	)		(459	)		9.3	%
Net interest income after reversal of provision for credit losses		54,990			54,006			984			1.8	%

Non-interest income
Fees and service charges (1)		607			423			184			43.5	%
Gain on sale and call of securities		1			313			(312	)		-99.7	%
Gain on sale of loans		1,006			363			643			177.1	%
Income from bank owned life insurance		1,561			1,545			16			1.0	%
Electronic banking fees and charges		407			452			(45	)		-10.0	%
Other income		218			400			(182	)		-45.5	%
Total non-interest income		3,800			3,496			304			8.7	%

Non-interest expense
Salaries and employee benefits		18,617			17,777			840			4.7	%
Net occupancy expense of premises		4,547			2,998			1,549			51.7	%
Equipment and systems		3,825			3,575			250			7.0	%
Advertising and marketing		392			581			(189	)		-32.5	%
Federal deposit insurance premium		492			490			2			0.4	%
Directors' compensation		803			749			54			7.2	%
Other expense		3,127			5,816			(2,689	)		-46.2	%
Total non-interest expense		31,803			31,986			(183	)		-0.6	%
Income before income taxes		26,987			25,516			1,471			5.8	%
Income taxes		7,272			7,033			239			3.4	%
Net income	$	19,715		$	18,483		$	1,232			6.7	%

Net income per common share (EPS)
Basic	$	0.26		$	0.24		$	0.02
Diluted	$	0.26		$	0.24		$	0.02

Dividends declared
Cash dividends declared per common share	$	0.10		$	0.10		$	-
Cash dividends declared	$	7,381		$	7,710		$	(329	)
Dividend payout ratio		37.4	%		41.7	%		-4.3	%

Weighted average number of common shares outstanding
Basic		74,537			77,658			(3,121	)
Diluted		74,556			77,680			(3,124	)

(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. Amounts shown for June 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the period ended June 30, 2021 was $902,000.


Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)

	Three Months Ended
	September 30,			June 30,			Variance			Variance
(Dollars in Thousands)	2021			2021			or Change			or Change Pct.
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	4,835,676		$	4,817,980		$	17,696			0.4	%
Taxable investment securities		1,649,953			1,720,838			(70,885	)		-4.1	%
Tax-exempt investment securities		59,115			63,047			(3,932	)		-6.2	%
Other interest-earning assets		85,749			117,212			(31,463	)		-26.8	%
Total interest-earning assets		6,630,493			6,719,077			(88,584	)		-1.3	%
Non-interest-earning assets		616,735			609,762			6,973			1.1	%
Total assets	$	7,247,228		$	7,328,839		$	(81,611	)		-1.1	%

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	1,954,271		$	1,930,193		$	24,078			1.2	%
Savings		1,102,865			1,118,402			(15,537	)		-1.4	%
Certificates of deposit		1,798,473			1,934,650			(136,177	)		-7.0	%
Total interest-bearing deposits		4,855,609			4,983,245			(127,636	)		-2.6	%
Borrowings:
Federal Home Loan Bank advances		665,915			665,802			113			0.0	%
Other borrowings		28,532			6,670			21,862			327.8	%
Total borrowings		694,447			672,472			21,975			3.3	%
Total interest-bearing liabilities		5,550,056			5,655,717			(105,661	)		-1.9	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		610,271			566,632			43,639			7.7	%
Other non-interest-bearing liabilities		56,893			52,292			4,601			8.8	%
Total non-interest-bearing liabilities		667,164			618,924			48,240			7.8	%
Total liabilities		6,217,220			6,274,641			(57,421	)		-0.9	%
Stockholders' equity		1,030,008			1,054,198			(24,190	)		-2.3	%
Total liabilities and stockholders' equity	$	7,247,228		$	7,328,839		$	(81,611	)		-1.1	%

Average interest-earning assets to average interest-bearing liabilities		119.47	%		118.80	%		0.67	%		0.6	%


Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)

	Three Months Ended
	September 30,			June 30,			Variance
	2021			2021			or Change
Average yield on interest-earning assets:
Loans receivable, including loans held for sale (1)		3.99	%		4.02	%		-0.03	%
Taxable investment securities		1.99	%		1.93	%		0.06	%
Tax-exempt investment securities (2)		2.25	%		2.25	%		0.00	%
Other interest-earning assets		2.01	%		1.87	%		0.14	%
Total interest-earning assets (1)		3.45	%		3.43	%		0.02	%

Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		0.23	%		0.27	%		-0.04	%
Savings		0.12	%		0.15	%		-0.03	%
Certificates of deposit		0.57	%		0.71	%		-0.14	%
Total interest-bearing deposits		0.33	%		0.41	%		-0.08	%
Borrowings:
Federal Home Loan Bank advances		2.13	%		2.07	%		0.06	%
Other borrowings		0.10	%		0.07	%		0.03	%
Total borrowings		2.05	%		2.05	%		0.00	%
Total interest-bearing liabilities		0.55	%		0.61	%		-0.06	%

Interest rate spread (1) (3)		2.90	%		2.82	%		0.08	%
Net interest margin (1) (4)		2.99	%		2.92	%		0.07	%

Non-interest income to average assets (annualized) (1)		0.21	%		0.19	%		0.02	%
Non-interest expense to average assets (annualized)		1.76	%		1.75	%		0.01	%

Efficiency ratio (5)		59.57	%		60.86	%		-1.29	%

Return on average assets (annualized)		1.09	%		1.01	%		0.08	%
Return on average equity (annualized)		7.66	%		7.01	%		0.65	%
Return on average tangible equity (annualized) (6)		9.67	%		8.81	%		0.86	%

(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.

Five-Quarter Financial Trend Analysis


Consolidated Balance Sheets	At
(Dollars and Shares in Thousands,	September 30,			June 30,			March 31,			December 31,			September 30,
Except Per Share Data)	2021			2021			2021			2020			2020
	(Unaudited)			(Audited)			(Unaudited)			(Unaudited)			(Unaudited)
Assets
Cash and cash equivalents	$	54,070		$	67,855		$	108,991		$	129,694		$	145,818
Securities available for sale		1,651,156			1,676,864			1,778,970			1,695,893			1,508,542
Securities held to maturity		37,497			38,138			27,168			29,549			31,576
Loans held-for-sale		12,884			16,492			5,172			12,601			20,170
Loans receivable		4,789,339			4,851,394			4,798,239			4,828,634			4,954,750
Less: allowance for credit losses on loans		(51,785	)		(58,165	)		(63,762	)		(63,386	)		(64,860	)
Net loans receivable		4,737,554			4,793,229			4,734,477			4,765,248			4,889,890
Premises and equipment		55,236			56,338			60,360			61,181			61,808
Federal Home Loan Bank stock		36,615			36,615			45,578			45,578			55,118
Accrued interest receivable		19,541			19,362			20,562			19,826			20,368
Goodwill		210,895			210,895			210,895			210,895			210,895
Core deposit intangible		3,524			3,705			3,888			4,151			4,420
Bank owned life insurance		284,871			283,310			281,765			280,235			278,639
Deferred income taxes, net		27,771			29,323			32,230			30,846			33,319
Other real estate owned		178			178			178			178			178
Other assets		51,896			51,431			47,760			49,278			49,468
Total assets	$	7,183,688		$	7,283,735		$	7,357,994		$	7,335,153		$	7,310,209

Liabilities
Deposits:
Non-interest-bearing	$	631,344		$	593,718		$	545,746		$	518,828		$	487,710
Interest-bearing		4,763,795			4,891,588			4,828,706			4,793,785			4,552,202
Total deposits		5,395,139			5,485,306			5,374,452			5,312,613			5,039,912
Borrowings		720,990			685,876			865,763			865,651			1,077,540
Advance payments by borrowers for taxes		16,222			15,752			15,300			16,100			17,008
Other liabilities		36,914			53,857			38,667			48,448			51,689
Total liabilities		6,169,265			6,240,791			6,294,182			6,242,812			6,186,149

Stockholders' Equity
Common stock		758			790			820			849			895
Paid-in capital		616,894			654,396			691,280			724,389			769,269
Retained earnings		420,701			408,367			397,594			388,376			378,134
Unearned ESOP shares		(26,266	)		(26,753	)		(27,239	)		(27,726	)		(28,212	)
Accumulated other comprehensive income		2,336			6,144			1,357			6,453			3,974
Total stockholders' equity		1,014,423			1,042,944			1,063,812			1,092,341			1,124,060
Total liabilities and stockholders' equity	$	7,183,688		$	7,283,735		$	7,357,994		$	7,335,153		$	7,310,209

Consolidated capital ratios
Equity to assets		14.12	%		14.32	%		14.46	%		14.89	%		15.38	%
Tangible equity to tangible assets (1)		11.48	%		11.72	%		11.89	%		12.32	%		12.81	%

Share data
Outstanding shares		75,800			78,965			81,943			84,938			89,510
Book value per share	$	13.38		$	13.21		$	12.98		$	12.86		$	12.56
Tangible book value per share (2)	$	10.55		$	10.49		$	10.36		$	10.33		$	10.15

(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	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in Thousands, Unaudited)	2021			2021			2021			2020			2020
Loan portfolio composition:
Commercial loans:
Multi-family	$	1,978,681		$	2,039,260		$	2,055,396		$	2,076,483		$	2,110,300
Nonresidential		1,023,391			1,079,444			1,110,765			1,123,695			1,124,330
Commercial business		169,392			168,951			183,181			202,010			255,888
Construction		112,226			93,804			95,533			90,398			79,178
Total commercial loans		3,283,690			3,381,459			3,444,875			3,492,586			3,569,696
One- to four-family residential mortgage loans		1,483,106			1,447,721			1,323,485			1,305,351			1,353,197
Consumer loans:
Home equity loans and lines of credit		44,912			47,871			59,721			65,298			71,540
Other consumer loans		3,020			3,259			3,445			4,123			4,136
Total consumer loans		47,932			51,130			63,166			69,421			75,676
Total loans, excluding yield adjustments		4,814,728			4,880,310			4,831,526			4,867,358			4,998,569
Unaccreted yield adjustments		(25,389	)		(28,916	)		(33,287	)		(38,724	)		(43,819	)
Loans receivable, net of yield adjustments		4,789,339			4,851,394			4,798,239			4,828,634			4,954,750
Less: allowance for credit losses on loans		(51,785	)		(58,165	)		(63,762	)		(63,386	)		(64,860	)
Net loans receivable	$	4,737,554		$	4,793,229		$	4,734,477		$	4,765,248		$	4,889,890

Loan portfolio allocation:
Commercial loans:
Multi-family		41.1	%		41.8	%		42.5	%		42.7	%		42.2	%
Nonresidential		21.3	%		22.1	%		23.0	%		23.1	%		22.5	%
Commercial business		3.5	%		3.5	%		3.8	%		4.2	%		5.1	%
Construction		2.3	%		1.9	%		2.0	%		1.8	%		1.6	%
Total commercial loans		68.2	%		69.3	%		71.3	%		71.8	%		71.4	%
One- to four-family residential mortgage loans		30.8	%		29.7	%		27.4	%		26.8	%		27.1	%
Consumer loans:
Home equity loans and lines of credit		0.9	%		0.9	%		1.2	%		1.3	%		1.4	%
Other consumer loans		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%
Total consumer loans		1.0	%		1.0	%		1.3	%		1.4	%		1.5	%
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		$	-		$	238
Nonaccrual loans		72,945			79,767			71,416			71,472			44,837
Total nonperforming loans		72,945			79,767			71,418			71,472			45,075
Other real estate owned		178			178			178			178			178
Total nonperforming assets	$	73,123		$	79,945		$	71,596		$	71,650		$	45,253

Nonperforming loans (% total loans)		1.52	%		1.64	%		1.49	%		1.48	%		0.91	%
Nonperforming assets (% total assets)		1.02	%		1.10	%		0.97	%		0.98	%		0.62	%

Allowance for credit losses on loans (ACL):
ACL to total loans		1.08	%		1.19	%		1.32	%		1.30	%		1.30	%
ACL to nonperforming loans		70.99	%		72.92	%		89.28	%		88.69	%		143.89	%
Net charge offs	$	980		$	656		$	750		$	109		$	67
Average net charge off rate (annualized)		0.08	%		0.05	%		0.06	%		0.01	%		0.01	%


	At
Supplemental Balance Sheet Highlights	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in Thousands, Unaudited)	2021			2021			2021			2020			2020
Funding by type:
Deposits:
Non-interest-bearing deposits	$	631,344		$	593,718		$	545,746		$	518,828		$	487,710
Interest-bearing demand		1,937,661			1,902,478			1,923,184			1,752,699			1,561,135
Savings		1,089,699			1,111,364			1,105,481			1,075,122			1,025,245
Certificates of deposit		1,736,435			1,877,746			1,800,041			1,965,964			1,965,822
Interest-bearing deposits		4,763,795			4,891,588			4,828,706			4,793,785			4,552,202
Total deposits		5,395,139			5,485,306			5,374,452			5,312,613			5,039,912

Borrowings:
Federal Home Loan Bank advances		665,990			665,876			865,763			865,651			1,077,540
Overnight borrowings		55,000			20,000			-			-			-
Total borrowings		720,990			685,876			865,763			865,651			1,077,540

Total funding	$	6,116,129		$	6,171,182		$	6,240,215		$	6,178,264		$	6,117,452

Loans as a % of deposits		88.1	%		87.7	%		88.2	%		89.9	%		97.4	%
Deposits as a % of total funding		88.2	%		88.9	%		86.1	%		86.0	%		82.4	%
Borrowings as a % of total funding		11.8	%		11.1	%		13.9	%		14.0	%		17.6	%

Funding by source:
Retail deposits:
Non-interest-bearing deposits	$	631,344		$	593,718		$	545,746		$	518,828		$	487,710
Interest-bearing demand		1,937,661			1,902,478			1,923,184			1,752,699			1,561,135
Savings		1,089,699			1,111,364			1,105,481			1,075,122			1,025,245
Certificates of deposit		1,264,016			1,398,808			1,508,494			1,658,277			1,775,189
Total retail deposits		4,922,720			5,006,368			5,082,905			5,004,926			4,849,279

Wholesale funding:
Certificates of deposit (listing service)	$	13,817		$	20,322		$	32,952		$	43,112		$	57,251
Certificates of deposit (brokered)		458,602			458,616			258,595			264,575			133,382
Total wholesale deposits		472,419			478,938			291,547			307,687			190,633
FHLB advances		665,990			665,876			865,763			865,651			1,077,540
Overnight borrowings		55,000			20,000			-			-			-
Total wholesale funding		1,193,409			1,164,814			1,157,310			1,173,338			1,268,173

Total funding	$	6,116,129		$	6,171,182		$	6,240,215		$	6,178,264		$	6,117,452

Retail funding as a % of total funding		80.5	%		81.1	%		81.5	%		81.0	%		79.3	%
Wholesale funding as a % of total funding		19.5	%		18.9	%		18.5	%		19.0	%		20.7	%


Consolidated Statements of Income	Three Months Ended
(Dollars and Shares in Thousands,	September 30,			June 30,			March 31,			December 31,			September 30,
Except Per Share Data, Unaudited)	2021			2021			2021			2020			2020
Interest income
Loans (1)	$	48,230		$	48,464		$	50,159		$	50,806		$	52,811
Taxable investment securities		8,212			8,304			7,891			7,707			7,336
Tax-exempt investment securities		333			355			410			433			454
Other interest-earning assets		431			549			705			787			914
Total interest income		57,206			57,672			59,165			59,733			61,515

Interest expense
Deposits		4,065			5,156			6,670			8,647			11,062
Borrowings		3,551			3,451			4,012			5,193			5,660
Total interest expense		7,616			8,607			10,682			13,840			16,722
Net interest income		49,590			49,065			48,483			45,893			44,793
(Reversal of) provision for credit losses		(5,400	)		(4,941	)		1,126			(1,365	)		4,059
Net interest income after (reversal of) provision for credit losses		54,990			54,006			47,357			47,258			40,734

Non-interest income
Fees and service charges (1)		607			423			473			556			445
Gain (loss) on sale and call of securities		1			313			18			813			(377	)
Gain on sale of loans		1,006			363			943			2,378			1,890
Income from bank owned life insurance		1,561			1,545			1,530			1,596			1,596
Electronic banking fees and charges		407			452			456			404			405
Bargain purchase gain		-			-			-			-			3,053
Other income		218			400			1,194			67			90
Total non-interest income		3,800			3,496			4,614			5,814			7,102

Non-interest expense
Salaries and employee benefits		18,617			17,777			16,965			17,081			16,977
Net occupancy expense of premises		4,547			2,998			3,433			3,120			3,122
Equipment and systems		3,825			3,575			3,823			3,902			3,570
Advertising and marketing		392			581			567			513			500
Federal deposit insurance premium		492			490			488			490			472
Directors' compensation		803			749			748			748			748
Merger-related expenses		-			-			-			-			4,349
Debt extinguishment expenses		-			-			-			796			-
Other expense		3,127			5,816			3,792			3,860			3,835
Total non-interest expense		31,803			31,986			29,816			30,510			33,573
Income before income taxes		26,987			25,516			22,155			22,562			14,263
Income taxes		7,272			7,033			5,732			5,614			2,884
Net income	$	19,715		$	18,483		$	16,423		$	16,948		$	11,379

Net income per common share (EPS)
Basic	$	0.26		$	0.24		$	0.20		$	0.20		$	0.13
Diluted	$	0.26		$	0.24		$	0.20		$	0.20		$	0.13

Dividends declared
Cash dividends declared per common share	$	0.10		$	0.10		$	0.09		$	0.08		$	0.08
Cash dividends declared	$	7,381		$	7,710		$	7,205		$	6,706		$	6,917
Dividend payout ratio		37.4	%		41.7	%		43.9	%		39.6	%		60.8	%

Weighted average number of common shares outstanding
Basic		74,537			77,658			80,673			85,120			86,008
Diluted		74,556			77,680			80,690			85,123			86,009

(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, December 31, 2020 and September 30, 2020 was $902,000, $852,000, $1,340,000 and $631,000, respectively.


	Three Months Ended
Average Balance Sheet Data	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in Thousands, Unaudited)	2021			2021			2021			2020			2020
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	4,835,676		$	4,817,980		$	4,816,592		$	4,871,268		$	4,958,293
Taxable investment securities		1,649,953			1,720,838			1,674,223			1,544,095			1,350,511
Tax-exempt investment securities		59,115			63,047			73,573			79,044			82,603
Other interest-earning assets		85,749			117,212			169,291			266,114			247,543
Total interest-earning assets		6,630,493			6,719,077			6,733,679			6,760,521			6,638,950
Non-interest-earning assets		616,735			609,762			617,440			632,084			624,252
Total assets	$	7,247,228		$	7,328,839		$	7,351,119		$	7,392,605		$	7,263,202

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	1,954,271		$	1,930,193		$	1,831,617		$	1,683,222		$	1,464,238
Savings		1,102,865			1,118,402			1,084,981			1,058,675			1,006,075
Certificates of deposit		1,798,473			1,934,650			1,904,234			1,899,406			1,988,689
Total interest-bearing deposits		4,855,609			4,983,245			4,820,832			4,641,303			4,459,002
Borrowings:
Federal Home Loan Bank advances		665,915			665,802			865,690			1,057,958			1,130,836
Other borrowings		28,532			6,670			-			-			3,568
Total borrowings		694,447			672,472			865,690			1,057,958			1,134,404
Total interest-bearing liabilities		5,550,056			5,655,717			5,686,522			5,699,261			5,593,406
Non-interest-bearing liabilities:
Non-interest-bearing deposits		610,271			566,632			525,018			502,479			479,141
Other non-interest-bearing liabilities		56,893			52,292			57,018			73,683			79,620
Total non-interest-bearing liabilities		667,164			618,924			582,036			576,162			558,761
Total liabilities		6,217,220			6,274,641			6,268,558			6,275,423			6,152,167
Stockholders' equity		1,030,008			1,054,198			1,082,561			1,117,182			1,111,035
Total liabilities and stockholders' equity	$	7,247,228		$	7,328,839		$	7,351,119		$	7,392,605		$	7,263,202

Average interest-earning assets to average interest-bearing liabilities		119.47	%		118.80	%		118.41	%		118.62	%		118.69	%


	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
Performance Ratio Highlights	2021			2021			2021			2020			2020
Average yield on interest-earning assets:
Loans receivable, including loans held for sale (1)		3.99	%		4.02	%		4.17	%		4.17	%		4.26	%
Taxable investment securities		1.99	%		1.93	%		1.89	%		2.00	%		2.17	%
Tax-exempt investment securities (2)		2.25	%		2.25	%		2.23	%		2.19	%		2.20	%
Other interest-earning assets		2.01	%		1.87	%		1.67	%		1.18	%		1.48	%
Total interest-earning assets (1)		3.45	%		3.43	%		3.51	%		3.53	%		3.71	%

Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		0.23	%		0.27	%		0.34	%		0.47	%		0.60	%
Savings		0.12	%		0.15	%		0.21	%		0.33	%		0.57	%
Certificates of deposit		0.57	%		0.71	%		0.96	%		1.22	%		1.50	%
Total interest-bearing deposits		0.33	%		0.41	%		0.55	%		0.75	%		0.99	%
Borrowings:
Federal Home Loan Bank advances		2.13	%		2.07	%		1.85	%		1.96	%		2.00	%
Other borrowings		0.10	%		0.07	%		0.00	%		0.00	%		0.04	%
Total borrowings		2.05	%		2.05	%		1.85	%		1.96	%		2.00	%
Total interest-bearing liabilities		0.55	%		0.61	%		0.75	%		0.97	%		1.20	%

Interest rate spread (1) (3)		2.90	%		2.82	%		2.76	%		2.56	%		2.51	%
Net interest margin (1) (4)		2.99	%		2.92	%		2.88	%		2.72	%		2.70	%

Non-interest income to average assets (annualized) (1)		0.21	%		0.19	%		0.25	%		0.31	%		0.39	%
Non-interest expense to average assets (annualized)		1.76	%		1.75	%		1.62	%		1.65	%		1.85	%

Efficiency ratio (5)		59.57	%		60.86	%		56.15	%		59.01	%		64.69	%

Return on average assets (annualized)		1.09	%		1.01	%		0.89	%		0.92	%		0.63	%
Return on average equity (annualized)		7.66	%		7.01	%		6.07	%		6.07	%		4.10	%
Return on average tangible equity (annualized) (6)		9.67	%		8.81	%		7.57	%		7.52	%		5.08	%

(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, December 31, 2020 and September 30, 2020 was $902,000, $852,000, $1,340,000 and $631,000, 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,	September 30,			June 30,			March 31,			December 31,			September 30,
Except Per Share Data)	2021			2021			2021			2020			2020
Adjusted net income:
Net income (GAAP)	$	19,715		$	18,483		$	16,423		$	16,948		$	11,379
Non-recurring transactions - net of tax:
Bargain purchase gain		-			-			-			-			(3,053	)
Provision for credit losses on non-PCD loans		-			-			-			-			3,563
Merger-related expenses		-			-			-			-			3,123
Branch consolidation expenses and impairment charges		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 allowance		-			(12	)		-			(523	)		-
Net effect of sales of other assets		-			(144	)		(587	)		-			-
Adjusted net income	$	20,923		$	18,977		$	16,087		$	16,655		$	15,012

Calculation of pre-tax, pre-provision net revenue:
Net income (GAAP)	$	19,715		$	18,483		$	16,423		$	16,948		$	11,379
Adjustments to net income (GAAP):
Provision for income taxes		7,272			7,033			5,732			5,614			2,884
(Reversal of) provision for credit losses		(5,400	)		(4,941	)		1,126			(1,365	)		4,059
Pre-tax, pre-provision net revenue (non-GAAP)	$	21,587		$	20,575		$	23,281		$	21,197		$	18,322

Adjusted earnings per share:
Weighted average common shares - basic		74,537			77,658			80,673			85,120			86,008
Weighted average common shares - diluted		74,556			77,680			80,690			85,123			86,009

Earnings per share - basic (GAAP)	$	0.26		$	0.24		$	0.20		$	0.20		$	0.13
Earnings per share - diluted (GAAP)	$	0.26		$	0.24		$	0.20		$	0.20		$	0.13

Adjusted earnings per share - basic (non-GAAP)	$	0.28		$	0.24		$	0.20		$	0.20		$	0.17
Adjusted earnings per share - diluted (non-GAAP)	$	0.28		$	0.24		$	0.20		$	0.20		$	0.17

Adjusted return on average assets:
Total average assets	$	7,247,228		$	7,328,839		$	7,351,119		$	7,392,605		$	7,263,202

Return on average assets (GAAP)		1.09	%		1.01	%		0.89	%		0.92	%		0.63	%
Adjusted return on average assets (non-GAAP)		1.15	%		1.04	%		0.88	%		0.90	%		0.83	%

Adjusted return on average equity:
Total average equity	$	1,030,008		$	1,054,198		$	1,082,561		$	1,117,182		$	1,111,035

Return on average equity (GAAP)		7.66	%		7.01	%		6.07	%		6.07	%		4.10	%
Adjusted return on average equity (non-GAAP)		8.13	%		7.20	%		5.94	%		5.96	%		5.40	%


	Three Months Ended
Reconciliation of GAAP to Non-GAAP	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in Thousands)	2021			2021			2021			2020			2020
Adjusted return on average tangible equity:
Total average equity	$	1,030,008		$	1,054,198		$	1,082,561		$	1,117,182		$	1,111,035
Less: average goodwill		(210,895	)		(210,895	)		(210,895	)		(210,895	)		(210,895	)
Less: average other intangible assets		(3,641	)		(3,825	)		(4,045	)		(4,317	)		(4,341	)
	$	815,472		$	839,478		$	867,621		$	901,970		$	895,799
					-			-			-			-
Return on average tangible equity (non-GAAP)		9.67	%		8.81	%		7.57	%		7.52	%		5.08	%
Adjusted return on average tangible equity (non-GAAP)		10.26	%		9.04	%		7.42	%		7.39	%		6.70	%

Adjusted non-interest expense ratio:
Non-interest expense (GAAP)	$	31,803		$	31,986		$	29,816		$	30,510		$	33,573
Non-recurring transactions:
Merger-related expenses		-			-			-			-			(4,349	)
Branch consolidation expenses and impairment charges		(1,711	)		(1,239	)		(375	)		(347	)		-
Debt extinguishment expenses		-			-			-			(796	)		-
Non-interest expense (non-GAAP)	$	30,092		$	30,747		$	29,441		$	29,367		$	29,224

Non-interest expense ratio (GAAP)		1.76	%		1.75	%		1.62	%		1.65	%		1.85	%
Adjusted non-interest expense ratio (non-GAAP)		1.66	%		1.68	%		1.60	%		1.59	%		1.61	%

Adjusted efficiency ratio:
Non-interest expense (non-GAAP)	$	30,092		$	30,747		$	29,441		$	29,367		$	29,224

Net interest income (GAAP)	$	49,590		$	49,065		$	48,483		$	45,893		$	44,793
Total non-interest income (GAAP)		3,800			3,496			4,614			5,814			7,102
Non-recurring transactions:
Net effect of sale and call of securities		(1	)		(313	)		(18	)		(813	)		-
Bargain purchase gain		-			-			-			-			(3,053	)
Net effect of sales of other assets		-			(205	)		(837	)		-			-
Total revenue (non-GAAP)	$	53,389		$	52,043		$	52,242		$	50,894		$	48,842

Efficiency ratio (GAAP)		59.57	%		60.86	%		56.15	%		59.01	%		64.69	%
Adjusted efficiency ratio (non-GAAP)		56.36	%		59.08	%		56.36	%		57.70	%		59.83	%


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 October 27, 2021.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).


	KEARNY FINANCIAL CORP.

Date: October 28, 2021	By:	/s/ Craig L. Montanaro
		Craig L. Montanaro
		President and Chief Executive Officer