8-K
Kearny Financial Corp. (KRNY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________
FORM 8-K
_____________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 27, 2023
_____________________________
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 Fairfield, New Jersey | 07004 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (973) 244-4500
(Former Name or Former Address, if Changed Since Last Report)
_____________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | KRNY | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operation and Financial Condition
On April 27, 2023, Kearny Financial Corp. (the “Company”), the holding company for Kearny Bank, issued a press release reporting its financial results for the period ended March 31, 2023.
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 7.01 Regulation FD Disclosure
On April 27, 2023, the Company released a slide presentation that will be used in upcoming meetings with potential investors and current shareholders of the Company.
A copy of the slide presentation that will be used in the Company’s presentation is filed as Exhibit 99.2 to this Current Report on Form 8-K. The information included in this Current Report pursuant to this Item 7.01 is being furnished to, and not filed with, the Securities and Exchange Commission and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933.
Item 8.01 Other Events
On April 27, 2023, the Company’s Board of Directors announced a quarterly cash dividend of $0.11 per share, payable on May 24, 2023 to stockholders of record as of May 10, 2023.
Item 9.01 Financial Statements and Exhibits
(a)Financial Statements of Business Acquired. Not applicable.
(b)Pro Forma Financial Information. Not applicable.
(c)Shell Company Transaction. Not applicable.
(d)Exhibits.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press release dated April 27, 2023. |
| 99.2 | Kearny Financial Corp. investor presentation dated April 27, 2023. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| KEARNY FINANCIAL CORP. | ||
|---|---|---|
| Date: April 27, 2023 | By: | /s/ Keith Suchodolski |
| Keith Suchodolski | ||
| Senior Executive Vice President and Chief Financial Officer |
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
April 27, 2023
For further information contact:
Craig L. Montanaro, President and Chief Executive Officer, or
Keith Suchodolski, Senior Executive Vice President and Chief Financial Officer
Kearny Financial Corp.
(973) 244-4500
KEARNY FINANCIAL CORP. ANNOUNCES THIRD QUARTER FISCAL 2023 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., April 27, 2023 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended March 31, 2023 of $10.3 million, or $0.16 per diluted share, compared to $2.0 million, or $0.03 per diluted share, for the quarter ended December 31, 2022. Net income for the quarters ended March 31, 2023 and December 31, 2022 was impacted by various non-recurring items, as described in further detail below.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on May 24, 2023 to stockholders of record as of May 10, 2023.
Craig L. Montanaro, President and Chief Executive Officer, commented, “While my comments in recent quarters have featured the terms ‘risk’ and ‘uncertainty’, the past few weeks have brought fresh challenges to the banking sector, and the economy at large. Despite the sudden failure of two large regional banks, the voluntary wind-down of a third and pressure on the industry as a whole, I am pleased to report that Kearny remains on solid footing. Our highly-diversified deposit base, conservative risk culture and abundance of available liquidity allows us to navigate these uncertain times, as we have throughout our 139 years in operation.”
Mr. Montanaro further noted, “Looking to this quarter’s earnings, the rate of our net interest margin compression has begun to slow, while our previously announced operating efficiency initiative has gotten off to a strong start. Non-interest expense, excluding non-recurring items, declined 7.3% quarter-over-quarter and will be further supported by the June 2023 consolidation of two branch locations.”
Liquidity & Funding
•Deposits decreased $168.0 million, or 2.8%, to $5.80 billion at March 31, 2023, from $5.97 billion at December 31, 2022. Details regarding the change in deposit balances are presented in the table below. The decrease in deposits was largely concentrated in three products: consumer savings, commercial non-interest checking and government deposits. The decline in consumer savings reflected the continuation of a multi-quarter trend resulting from the migration of low-rate savings balances into higher-rate money market and time deposit products. The reduction in non-interest checking deposits was a combination of outflow and the migration of non-interest bearing commercial deposits into interest-bearing products. The decrease in government deposits was largely attributable to seasonal outflows resulting from expected tax and pension payments.
| (Dollars in Thousands) | March 31,<br>2023 | December 31,<br>2022 | Variance <br>or Change | Variance <br>or Change Pct. | ||||
|---|---|---|---|---|---|---|---|---|
| Government deposits | $ | 607,925 | $ | 677,923 | $ | (69,998) | (10.3) | % |
| Excluding government deposits: | ||||||||
| Non-interest-bearing | 615,696 | 649,044 | (33,348) | (5.1) | % | |||
| Interest-bearing demand | 1,699,407 | 1,663,302 | 36,105 | 2.2 | % | |||
| Savings | 795,310 | 881,837 | (86,527) | (9.8) | % | |||
| Certificates of deposit | 2,085,066 | 2,099,265 | (14,199) | (0.7) | % | |||
| Total deposits | $ | 5,803,404 | $ | 5,971,371 | $ | (167,967) | (2.8) | % |
•The aggregate amount of uninsured deposits was $1.68 billion at March 31, 2023. Excluding collateralized deposits of state and local governments, and deposits of the Bank’s wholly-owned subsidiary and holding company, the aggregate amount of uninsured deposits was $705.7 million, or 12.2% of total deposits.
•Borrowings increased $228.1 million to $1.61 billion, or 19.3% of total assets, at March 31, 2023, from $1.38 billion, or 16.7% of total assets, at December 31, 2022. At March 31, 2023, borrowings were comprised of $1.54 billion of advances from the Federal Home Loan Bank of New York and $70.0 million from unsecured fed funds lines of credit. There were no borrowings outstanding from the Federal Reserve Bank at, or during the quarter ended, March 31, 2023.
•At March 31, 2023, the Company maintained available secured borrowing capacity of $2.37 billion, of which $1.88 billion was immediately accessible via in-place collateral and $493.2 million represented the market value of unpledged securities.
Assets
•Total assets increased $60.0 million, or 0.7%, to $8.35 billion at March 31, 2023, from $8.29 billion at December 31, 2022.
•Cash and cash equivalents increased $118.9 million, or 157.2%, to $194.6 million at March 31, 2023, from $75.7 million at December 31, 2022. The increase was driven by the Company’s decision to hold excess cash on its balance sheet due to external market conditions.
•Loans receivable decreased $17.8 million, or 0.3%, to $5.97 billion at March 31, 2023, from $5.98 billion at December 31, 2022.
•Investment securities decreased $23.3 million to $1.42 billion, or 17.0% of total assets, at March 31, 2023, from $1.44 billion, or 17.4% of total assets, at December 31, 2022. The decrease was driven by paydowns, partially offset by a $9.7 million improvement in unrealized losses on securities available for sale during the quarter ended March 31, 2023.
Earnings
Performance Highlights
•Return on average assets was 0.50% for the quarter ended March 31, 2023 compared to 0.10% for the quarter ended December 31, 2022.
•Return on average equity was 4.69% and 0.90% for the quarters ended March 31, 2023 and December 31, 2022, respectively. Return on average tangible equity was 6.20% and 1.20% for those same comparative periods.
Net Interest Income and Net Interest Margin
•Net interest margin contracted 18 basis points to 2.20% for the quarter ended March 31, 2023, from 2.38% for the quarter ended December 31, 2022. Excluding purchase accounting accretion and loan prepayment penalty income, net interest margin contracted 11 basis points.
•Net interest income decreased $2.4 million to $42.4 million for the quarter ended March 31, 2023, from $44.8 million for the quarter ended December 31, 2022. Included in net interest income for the quarters ended March 31, 2023 and December 31, 2022, respectively, was purchase accounting accretion of $711,000 and $1.9 million, and loan prepayment penalty income of $103,000 and $166,000.
Non-Interest Income
•Non-interest income increased $10.1 million to income of $1.6 million for the quarter ended March 31, 2023, from a loss of $8.5 million for the quarter ended December 31, 2022. The increase was primarily attributable to a loss of $15.2 million on the sale of securities during the prior comparative period.
•Loss on sale of loans was $2.4 million for the quarter ended March 31, 2023 compared to a gain on sale of loans of $134,000 for the quarter ended December 31, 2022. The loss in the current period was the result of the sale of a non-performing multi-family mortgage loan held-for-sale located in Queens, NY. The loan was acquired in 2018 and had been classified as held-for-sale since June 30, 2022.
•Other income decreased $2.7 million to $1.1 million for the quarter ended March 31, 2023, primarily due to a non-recurring gain of $2.9 million attributable to the sale of a former branch location recognized during the prior comparative period.
Non-Interest Expense
•Non-interest expense decreased $2.3 million to $30.4 million for the quarter ended March 31, 2023, from $32.7 million for the quarter ended December 31, 2022. Excluding $800,000 of branch consolidation expense, of which $250,000 was recorded in occupancy expense and $550,000 was recorded in other expense, non-interest expense for the quarter ended March 31, 2023 was $29.6 million.
•Salaries and benefits expense decreased $1.9 million to $18.0 million for the quarter ended March 31, 2023. This decrease was driven by lower salary expense as a result of reduced headcount and a decrease in incentive payments tied to loan origination volume.
•The efficiency and non-interest expense ratios were 68.96% and 1.47%, respectively, for the quarter ended March 31, 2023, as compared to 89.93% and 1.62%, respectively, for the quarter ended December 31, 2022.
Income Taxes
•Income tax expense totaled $2.9 million for the quarter ended March 31, 2023 compared to $33,000 for the quarter ended December 31, 2022, resulting in an effective tax rate of 22.0% and 1.7%, respectively. The effective tax rate, for the prior comparative period, was impacted by the loss on the sale of securities.
Asset Quality
•The balance of non-performing assets decreased $5.2 million to $57.4 million, or 0.69% of total assets, at March 31, 2023, from $62.6 million, or 0.76% of total assets, at December 31, 2022. The decrease in non-performing assets was primarily attributable to the sale of a non-performing multi-family mortgage loan held-for-sale, as previously noted.
•Net charge-offs totaled $206,000, or 0.01% of average loans, on an annualized basis, for the quarter ended March 31, 2023, compared to $407,000, or 0.03% of average loans, on an annualized basis, for the quarter ended December 31, 2022.
•For the quarter ended March 31, 2023, the Company recorded a provision for credit losses of $451,000, compared to $1.7 million for the quarter ended December 31, 2022. The provision for the quarter ended March 31, 2023 was largely driven by a slower prepayment rate assumption, partially offset by a net reduction in reserves on loans individually analyzed for impairment.
•The allowance for credit losses was $49.1 million, or 0.82% of total loans, at March 31, 2023, compared to $48.9 million, or 0.81% of total loans, at December 31, 2022.
Capital
•For the quarter ended March 31, 2023, book value per share increased $0.04, or 0.3%, to $12.99 and tangible book value per share increased $0.01, or 0.1%, to $9.79.
•During the quarter ended March 31, 2023, the Company repurchased 698,286 shares of common stock at a cost of $6.6 million, or $9.50 per share.
•At March 31, 2023, total stockholders’ equity included after-tax net unrealized losses on securities available for sale of $100.4 million, partially offset by after-tax unrealized gains on derivatives of $27.5 million. Pre-tax net unrecognized losses on securities held to maturity of $13.6 million were not reflected in total stockholders’ equity.
•At March 31, 2023, the Company’s tangible equity to tangible assets ratio equaled 8.02% 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.
This earnings release should be read in conjunction with Kearny Financial Corp.’s Q3 Fiscal 2023 Investor Presentation, a copy of which is available through the Investor Relations link located at the bottom of the page of our website at www.kearnybank.com and via a Current Report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.
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.
Category: Earnings
| Linked-Quarter Comparative Financial Analysis |
|---|
Kearny Financial Corp.
Consolidated Balance Sheets
(Unaudited)
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | March 31,<br>2023 | December 31,<br>2022 | Variance <br>or Change | Variance <br>or Change Pct. | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||
| Cash and cash equivalents | $ | 194,568 | $ | 75,660 | $ | 118,908 | 157.2 | % | |||
| Securities available for sale | 1,267,066 | 1,286,354 | (19,288) | -1.5 | % | ||||||
| Securities held to maturity | 149,764 | 153,786 | (4,022) | -2.6 | % | ||||||
| Loans held-for-sale | 5,401 | 12,940 | (7,539) | -58.3 | % | ||||||
| Loans receivable | 5,966,325 | 5,984,133 | (17,808) | -0.3 | % | ||||||
| Less: allowance for credit losses on loans | (49,122) | (48,877) | 245 | 0.5 | % | ||||||
| Net loans receivable | 5,917,203 | 5,935,256 | (18,053) | -0.3 | % | ||||||
| Premises and equipment | 49,589 | 50,953 | (1,364) | -2.7 | % | ||||||
| Federal Home Loan Bank stock | 76,319 | 69,022 | 7,297 | 10.6 | % | ||||||
| Accrued interest receivable | 28,794 | 27,368 | 1,426 | 5.2 | % | ||||||
| Goodwill | 210,895 | 210,895 | — | — | % | ||||||
| Core deposit intangible | 2,590 | 2,732 | (142) | -5.2 | % | ||||||
| Bank owned life insurance | 291,220 | 289,673 | 1,547 | 0.5 | % | ||||||
| Deferred income taxes, net | 53,151 | 51,107 | 2,044 | 4.0 | % | ||||||
| Other real estate owned | 13,410 | 13,410 | — | — | % | ||||||
| Other assets | 89,366 | 110,162 | (20,796) | -18.9 | % | ||||||
| Total assets | $ | 8,349,336 | $ | 8,289,318 | $ | 60,018 | 0.7 | % | |||
| Liabilities | |||||||||||
| Deposits: | |||||||||||
| Non-interest-bearing | $ | 617,778 | $ | 650,950 | $ | (33,172) | -5.1 | % | |||
| Interest-bearing | 5,185,626 | 5,320,421 | (134,795) | -2.5 | % | ||||||
| Total deposits | 5,803,404 | 5,971,371 | (167,967) | -2.8 | % | ||||||
| Borrowings | 1,611,692 | 1,383,573 | 228,119 | 16.5 | % | ||||||
| Advance payments by borrowers for taxes | 18,706 | 17,307 | 1,399 | 8.1 | % | ||||||
| Other liabilities | 49,304 | 44,427 | 4,877 | 11.0 | % | ||||||
| Total liabilities | 7,483,106 | 7,416,678 | 66,428 | 0.9 | % | ||||||
| Stockholders' Equity | |||||||||||
| Common stock | 667 | 674 | (7) | -1.0 | % | ||||||
| Paid-in capital | 509,359 | 515,332 | (5,973) | -1.2 | % | ||||||
| Retained earnings | 452,605 | 449,489 | 3,116 | 0.7 | % | ||||||
| Unearned ESOP shares | (23,348) | (23,834) | 486 | 2.0 | % | ||||||
| Accumulated other comprehensive loss | (73,053) | (69,021) | (4,032) | -5.8 | % | ||||||
| Total stockholders' equity | 866,230 | 872,640 | (6,410) | -0.7 | % | ||||||
| Total liabilities and stockholders' equity | $ | 8,349,336 | $ | 8,289,318 | $ | 60,018 | 0.7 | % | |||
| Consolidated capital ratios | |||||||||||
| Equity to assets | 10.37 | % | 10.53 | % | -0.16 | % | |||||
| Tangible equity to tangible assets (1) | 8.02 | % | 8.16 | % | -0.14 | % | |||||
| Share data | |||||||||||
| Outstanding shares | 66,680 | 67,388 | (708) | -1.1 | % | ||||||
| Book value per share | $ | 12.99 | $ | 12.95 | $ | 0.04 | 0.3 | % | |||
| Tangible book value per share (2) | $ | 9.79 | $ | 9.78 | $ | 0.01 | 0.1 | % |
_________________________
(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)
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | Three Months Ended | Variance <br>or Change | Variance <br>or Change Pct. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2023 | December 31,<br>2022 | |||||||||||
| Interest income | ||||||||||||
| Loans | $ | 60,172 | $ | 57,996 | $ | 2,176 | 3.8 | % | ||||
| Taxable investment securities | 15,459 | 13,221 | 2,238 | 16.9 | % | |||||||
| Tax-exempt investment securities | 99 | 219 | (120) | -54.8 | % | |||||||
| Other interest-earning assets | 1,441 | 1,005 | 436 | 43.4 | % | |||||||
| Total interest income | 77,171 | 72,441 | 4,730 | 6.5 | % | |||||||
| Interest expense | ||||||||||||
| Deposits | 22,246 | 18,822 | 3,424 | 18.2 | % | |||||||
| Borrowings | 12,554 | 8,836 | 3,718 | 42.1 | % | |||||||
| Total interest expense | 34,800 | 27,658 | 7,142 | 25.8 | % | |||||||
| Net interest income | 42,371 | 44,783 | (2,412) | -5.4 | % | |||||||
| Provision for credit losses | 451 | 1,671 | (1,220) | -73.0 | % | |||||||
| Net interest income after provision for credit losses | 41,920 | 43,112 | (1,192) | -2.8 | % | |||||||
| Non-interest income | ||||||||||||
| Fees and service charges | 910 | 734 | 176 | 24.0 | % | |||||||
| Loss on sale and call of securities | — | (15,227) | 15,227 | 100.0 | % | |||||||
| (Loss) gain on sale of loans | (2,373) | 134 | (2,507) | -1870.9 | % | |||||||
| Income from bank owned life insurance | 1,581 | 1,761 | (180) | -10.2 | % | |||||||
| Electronic banking fees and charges | 457 | 397 | 60 | 15.1 | % | |||||||
| Other income | 1,071 | 3,723 | (2,652) | -71.2 | % | |||||||
| Total non-interest income | 1,646 | (8,478) | 10,124 | -119.4 | % | |||||||
| Non-interest expense | ||||||||||||
| Salaries and employee benefits | 18,005 | 19,921 | (1,916) | -9.6 | % | |||||||
| Net occupancy expense of premises | 3,097 | 2,987 | 110 | 3.7 | % | |||||||
| Equipment and systems | 3,537 | 3,867 | (330) | -8.5 | % | |||||||
| Advertising and marketing | 413 | 731 | (318) | -43.5 | % | |||||||
| Federal deposit insurance premium | 1,546 | 1,226 | 320 | 26.1 | % | |||||||
| Directors' compensation | 340 | 339 | 1 | 0.3 | % | |||||||
| Other expense | 3,414 | 3,579 | (165) | -4.6 | % | |||||||
| Total non-interest expense | 30,352 | 32,650 | (2,298) | -7.0 | % | |||||||
| Income before income taxes | 13,214 | 1,984 | 11,230 | 566.0 | % | |||||||
| Income taxes | 2,902 | 33 | 2,869 | 8693.9 | % | |||||||
| Net income | $ | 10,312 | $ | 1,951 | $ | 8,361 | 428.5 | % | ||||
| Net income per common share (EPS) | ||||||||||||
| Basic | $ | 0.16 | $ | 0.03 | $ | 0.13 | ||||||
| Diluted | $ | 0.16 | $ | 0.03 | $ | 0.13 | ||||||
| Dividends declared | ||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | — | ||||||
| Cash dividends declared | $ | 7,196 | $ | 7,172 | $ | 24 | ||||||
| Dividend payout ratio | 69.8 | % | 367.6 | % | (297.8) | % | ||||||
| Weighted average number of common shares outstanding | ||||||||||||
| Basic | 64,769 | 65,030 | (261) | |||||||||
| Diluted | 64,783 | 65,038 | (255) |
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
| (Dollars in Thousands) | Three Months Ended | Variance <br>or Change | Variance <br>or Change Pct. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2023 | December 31,<br>2022 | |||||||||||
| Assets | ||||||||||||
| Interest-earning assets: | ||||||||||||
| Loans receivable, including loans held for sale | $ | 5,986,669 | $ | 5,839,903 | $ | 146,766 | 2.5 | % | ||||
| Taxable investment securities | 1,558,222 | 1,527,578 | 30,644 | 2.0 | % | |||||||
| Tax-exempt investment securities | 17,663 | 37,917 | (20,254) | -53.4 | % | |||||||
| Other interest-earning assets | 131,682 | 114,175 | 17,507 | 15.3 | % | |||||||
| Total interest-earning assets | 7,694,236 | 7,519,573 | 174,663 | 2.3 | % | |||||||
| Non-interest-earning assets | 575,009 | 550,519 | 24,490 | 4.4 | % | |||||||
| Total assets | $ | 8,269,245 | $ | 8,070,092 | $ | 199,153 | 2.5 | % | ||||
| Liabilities and Stockholders' Equity | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Interest-bearing demand | $ | 2,363,762 | $ | 2,359,977 | $ | 3,785 | 0.2 | % | ||||
| Savings | 858,673 | 931,584 | (72,911) | -7.8 | % | |||||||
| Certificates of deposit | 2,069,396 | 2,192,722 | (123,326) | -5.6 | % | |||||||
| Total interest-bearing deposits | 5,291,831 | 5,484,283 | (192,452) | -3.5 | % | |||||||
| Borrowings: | ||||||||||||
| Federal Home Loan Bank advances | 1,402,269 | 997,148 | 405,121 | 40.6 | % | |||||||
| Other borrowings | 1,611 | — | 1,611 | — | % | |||||||
| Total borrowings | 1,403,880 | 997,148 | 406,732 | 40.8 | % | |||||||
| Total interest-bearing liabilities | 6,695,711 | 6,481,431 | 214,280 | 3.3 | % | |||||||
| Non-interest-bearing liabilities: | ||||||||||||
| Non-interest-bearing deposits | 634,324 | 666,846 | (32,522) | -4.9 | % | |||||||
| Other non-interest-bearing liabilities | 60,327 | 56,721 | 3,606 | 6.4 | % | |||||||
| Total non-interest-bearing liabilities | 694,651 | 723,567 | (28,916) | -4.0 | % | |||||||
| Total liabilities | 7,390,362 | 7,204,998 | 185,364 | 2.6 | % | |||||||
| Stockholders' equity | 878,883 | 865,094 | 13,789 | 1.6 | % | |||||||
| Total liabilities and stockholders' equity | $ | 8,269,245 | $ | 8,070,092 | $ | 199,153 | 2.5 | % | ||||
| Average interest-earning assets to average interest-bearing liabilities | 114.91 | % | 116.02 | % | -1.11 | % | -1.0 | % |
Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)
| Three Months Ended | Variance <br>or Change | |||||
|---|---|---|---|---|---|---|
| March 31,<br>2023 | December 31,<br>2022 | |||||
| Average yield on interest-earning assets: | ||||||
| Loans receivable, including loans held for sale | 4.02 | % | 3.97 | % | 0.05 | % |
| Taxable investment securities | 3.97 | % | 3.46 | % | 0.51 | % |
| Tax-exempt investment securities (1) | 2.23 | % | 2.32 | % | -0.09 | % |
| Other interest-earning assets | 4.38 | % | 3.52 | % | 0.86 | % |
| Total interest-earning assets | 4.01 | % | 3.85 | % | 0.16 | % |
| Average cost of interest-bearing liabilities: | ||||||
| Deposits: | ||||||
| Interest-bearing demand | 2.01 | % | 1.63 | % | 0.38 | % |
| Savings | 0.41 | % | 0.41 | % | — | % |
| Certificates of deposit | 1.84 | % | 1.50 | % | 0.34 | % |
| Total interest-bearing deposits | 1.68 | % | 1.37 | % | 0.31 | % |
| Borrowings: | ||||||
| Federal Home Loan Bank advances | 3.58 | % | 3.54 | % | 0.04 | % |
| Other borrowings | 5.15 | % | — | % | 5.15 | % |
| Total borrowings | 3.58 | % | 3.54 | % | 0.04 | % |
| Total interest-bearing liabilities | 2.08 | % | 1.71 | % | 0.37 | % |
| Interest rate spread (2) | 1.93 | % | 2.14 | % | -0.21 | % |
| Net interest margin (3) | 2.20 | % | 2.38 | % | -0.18 | % |
| Non-interest income to average assets (annualized) | 0.08 | % | -0.42 | % | 0.50 | % |
| Non-interest expense to average assets (annualized) | 1.47 | % | 1.62 | % | -0.15 | % |
| Efficiency ratio (4) | 68.96 | % | 89.93 | % | -20.97 | % |
| Return on average assets (annualized) | 0.50 | % | 0.10 | % | 0.40 | % |
| Return on average equity (annualized) | 4.69 | % | 0.90 | % | 3.79 | % |
| Return on average tangible equity (annualized) (5) | 6.20 | % | 1.20 | % | 5.00 | % |
_________________________
(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 |
|---|
Kearny Financial Corp.
Consolidated Balance Sheets
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | (Unaudited) | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 194,568 | $ | 75,660 | $ | 96,076 | $ | 101,615 | $ | 62,379 | |||||
| Securities available for sale | 1,267,066 | 1,286,354 | 1,263,176 | 1,344,093 | 1,526,086 | ||||||||||
| Securities held to maturity | 149,764 | 153,786 | 115,943 | 118,291 | 121,853 | ||||||||||
| Loans held-for-sale | 5,401 | 12,940 | 12,936 | 28,874 | 2,822 | ||||||||||
| Loans receivable | 5,966,325 | 5,984,133 | 5,656,370 | 5,417,845 | 5,003,201 | ||||||||||
| Less: allowance for credit losses on loans | (49,122) | (48,877) | (47,613) | (47,058) | (43,860) | ||||||||||
| Net loans receivable | 5,917,203 | 5,935,256 | 5,608,757 | 5,370,787 | 4,959,341 | ||||||||||
| Premises and equipment | 49,589 | 50,953 | 52,642 | 53,281 | 53,727 | ||||||||||
| Federal Home Loan Bank stock | 76,319 | 69,022 | 44,957 | 47,144 | 30,997 | ||||||||||
| Accrued interest receivable | 28,794 | 27,368 | 23,817 | 20,466 | 19,517 | ||||||||||
| Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
| Core deposit intangible | 2,590 | 2,732 | 2,876 | 3,020 | 3,166 | ||||||||||
| Bank owned life insurance | 291,220 | 289,673 | 289,690 | 289,177 | 287,644 | ||||||||||
| Deferred income taxes, net | 53,151 | 51,107 | 54,278 | 49,350 | 34,349 | ||||||||||
| Other real estate owned | 13,410 | 13,410 | 178 | 178 | 401 | ||||||||||
| Other assets | 89,366 | 110,162 | 113,369 | 82,712 | 76,714 | ||||||||||
| Total assets | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | $ | 7,719,883 | $ | 7,389,891 | |||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing | $ | 617,778 | $ | 650,950 | $ | 683,406 | $ | 653,899 | $ | 621,954 | |||||
| Interest-bearing | 5,185,626 | 5,320,421 | 5,424,872 | 5,208,357 | 4,906,708 | ||||||||||
| Total deposits | 5,803,404 | 5,971,371 | 6,108,278 | 5,862,256 | 5,528,662 | ||||||||||
| Borrowings | 1,611,692 | 1,383,573 | 851,454 | 901,337 | 851,220 | ||||||||||
| Advance payments by borrowers for taxes | 18,706 | 17,307 | 16,555 | 16,746 | 16,979 | ||||||||||
| Other liabilities | 49,304 | 44,427 | 38,329 | 45,544 | 37,861 | ||||||||||
| Total liabilities | 7,483,106 | 7,416,678 | 7,014,616 | 6,825,883 | 6,434,722 | ||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 667 | 674 | 680 | 687 | 714 | ||||||||||
| Paid-in capital | 509,359 | 515,332 | 520,245 | 528,396 | 561,176 | ||||||||||
| Retained earnings | 452,605 | 449,489 | 454,710 | 445,451 | 441,522 | ||||||||||
| Unearned ESOP shares | (23,348) | (23,834) | (24,321) | (24,807) | (25,294) | ||||||||||
| Accumulated other comprehensive loss | (73,053) | (69,021) | (76,340) | (55,727) | (22,949) | ||||||||||
| Total stockholders' equity | 866,230 | 872,640 | 874,974 | 894,000 | 955,169 | ||||||||||
| Total liabilities and stockholders' equity | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | $ | 7,719,883 | $ | 7,389,891 | |||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 10.37 | % | 10.53 | % | 11.09 | % | 11.58 | % | 12.93 | % | |||||
| Tangible equity to tangible assets (1) | 8.02 | % | 8.16 | % | 8.61 | % | 9.06 | % | 10.33 | % | |||||
| Share data | |||||||||||||||
| Outstanding shares | 66,680 | 67,388 | 67,938 | 68,666 | 71,424 | ||||||||||
| Book value per share | $ | 12.99 | $ | 12.95 | $ | 12.88 | $ | 13.02 | $ | 13.37 | |||||
| Tangible book value per share (2) | $ | 9.79 | $ | 9.78 | $ | 9.73 | $ | 9.90 | $ | 10.38 |
_________________________
(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.
Supplemental Balance Sheet Highlights
(Unaudited)
| (Dollars in Thousands) | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Loan portfolio composition: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family mortgage | $ | 2,835,852 | $ | 2,851,721 | $ | 2,570,297 | $ | 2,409,090 | $ | 2,076,003 | |||||
| Nonresidential mortgage | 1,002,643 | 1,017,341 | 1,040,688 | 1,019,838 | 1,085,988 | ||||||||||
| Commercial business | 162,038 | 177,530 | 186,361 | 176,807 | 169,551 | ||||||||||
| Construction | 215,524 | 186,663 | 166,052 | 140,131 | 121,137 | ||||||||||
| Total commercial loans | 4,216,057 | 4,233,255 | 3,963,398 | 3,745,866 | 3,452,679 | ||||||||||
| One- to four-family residential mortgage | 1,713,343 | 1,719,514 | 1,666,730 | 1,645,816 | 1,527,980 | ||||||||||
| Consumer loans: | |||||||||||||||
| Home equity loans | 44,376 | 45,690 | 43,269 | 42,028 | 41,501 | ||||||||||
| Other consumer | 2,592 | 2,648 | 2,869 | 2,866 | 2,755 | ||||||||||
| Total consumer loans | 46,968 | 48,338 | 46,138 | 44,894 | 44,256 | ||||||||||
| Total loans, excluding yield adjustments | 5,976,368 | 6,001,107 | 5,676,266 | 5,436,576 | 5,024,915 | ||||||||||
| Unaccreted yield adjustments | (10,043) | (16,974) | (19,896) | (18,731) | (21,714) | ||||||||||
| Loans receivable, net of yield adjustments | 5,966,325 | 5,984,133 | 5,656,370 | 5,417,845 | 5,003,201 | ||||||||||
| Less: allowance for credit losses on loans | (49,122) | (48,877) | (47,613) | (47,058) | (43,860) | ||||||||||
| Net loans receivable | $ | 5,917,203 | $ | 5,935,256 | $ | 5,608,757 | $ | 5,370,787 | $ | 4,959,341 | |||||
| Asset quality: | |||||||||||||||
| Nonperforming assets: | |||||||||||||||
| Accruing loans - 90 days and over past due | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
| Nonaccrual loans | 44,026 | 40,549 | 68,574 | 70,321 | 80,595 | ||||||||||
| Total nonperforming loans | 44,026 | 40,549 | 68,574 | 70,321 | 80,595 | ||||||||||
| Nonaccrual loans held-for-sale | — | 8,650 | 8,650 | 21,745 | — | ||||||||||
| Other real estate owned | 13,410 | 13,410 | 178 | 178 | 401 | ||||||||||
| Total nonperforming assets | $ | 57,436 | $ | 62,609 | $ | 77,402 | $ | 92,244 | $ | 80,996 | |||||
| Nonperforming loans (% total loans) | 0.74 | % | 0.68 | % | 1.21 | % | 1.30 | % | 1.61 | % | |||||
| Nonperforming assets (% total assets) | 0.69 | % | 0.76 | % | 0.98 | % | 1.19 | % | 1.10 | % | |||||
| Classified loans | $ | 103,461 | $ | 86,069 | $ | 92,610 | $ | 94,555 | $ | 163,621 | |||||
| Allowance for credit losses on loans (ACL): | |||||||||||||||
| ACL to total loans | 0.82 | % | 0.81 | % | 0.84 | % | 0.87 | % | 0.87 | % | |||||
| ACL to nonperforming loans | 111.57 | % | 120.54 | % | 69.43 | % | 66.92 | % | 54.42 | % | |||||
| Net charge-offs | $ | 206 | $ | 407 | $ | 115 | $ | 1,024 | $ | 436 | |||||
| Average net charge-off rate (annualized) | 0.01 | % | 0.03 | % | 0.01 | % | 0.08 | % | 0.04 | % |
Kearny Financial Corp.
Supplemental Balance Sheet Highlights
(Unaudited)
| (Dollars in Thousands) | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Funding composition: | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 617,778 | $ | 650,950 | $ | 683,406 | $ | 653,899 | $ | 621,954 | |||||
| Interest-bearing demand | 2,285,799 | 2,316,485 | 2,382,411 | 2,265,597 | 2,154,488 | ||||||||||
| Savings | 811,483 | 901,514 | 982,916 | 1,053,198 | 1,088,974 | ||||||||||
| Certificates of deposit (retail) | 1,327,343 | 1,354,907 | 1,263,124 | 1,116,035 | 1,122,228 | ||||||||||
| Certificates of deposit (brokered and listing service) | 761,001 | 747,515 | 796,421 | 773,527 | 541,018 | ||||||||||
| Interest-bearing deposits | 5,185,626 | 5,320,421 | 5,424,872 | 5,208,357 | 4,906,708 | ||||||||||
| Total deposits | 5,803,404 | 5,971,371 | 6,108,278 | 5,862,256 | 5,528,662 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,156,692 | 1,256,573 | 796,454 | 651,337 | 541,220 | ||||||||||
| Overnight borrowings | 455,000 | 127,000 | 55,000 | 250,000 | 310,000 | ||||||||||
| Total borrowings | 1,611,692 | 1,383,573 | 851,454 | 901,337 | 851,220 | ||||||||||
| Total funding | $ | 7,415,096 | $ | 7,354,944 | $ | 6,959,732 | $ | 6,763,593 | $ | 6,379,882 | |||||
| Loans as a % of deposits | 102.1 | % | 99.6 | % | 92.0 | % | 92.1 | % | 89.8 | % | |||||
| Deposits as a % of total funding | 78.3 | % | 81.2 | % | 87.8 | % | 86.7 | % | 86.7 | % | |||||
| Borrowings as a % of total funding | 21.7 | % | 18.8 | % | 12.2 | % | 13.3 | % | 13.3 | % | |||||
| Uninsured deposits: | |||||||||||||||
| Uninsured deposits (reported) (1) | $ | 1,678,051 | $ | 1,815,854 | $ | 1,771,851 | $ | 1,525,940 | $ | 1,427,658 | |||||
| Uninsured deposits (adjusted) (2) | $ | 705,727 | $ | 794,407 | $ | 883,351 | $ | 792,067 | $ | 749,141 |
_________________________
(1)Uninsured deposits of Kearny Bank.
(2)Uninsured deposits of Kearny Bank adjusted to exclude deposits of its wholly-owned subsidiary and holding company and collateralized deposits of state and local governments.
Kearny Financial Corp.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||||||
| Interest income | |||||||||||||||
| Loans | $ | 60,172 | $ | 57,996 | $ | 52,935 | $ | 48,869 | $ | 45,846 | |||||
| Taxable investment securities | 15,459 | 13,221 | 10,439 | 8,915 | 8,024 | ||||||||||
| Tax-exempt investment securities | 99 | 219 | 285 | 297 | 316 | ||||||||||
| Other interest-earning assets | 1,441 | 1,005 | 761 | 472 | 415 | ||||||||||
| Total interest income | 77,171 | 72,441 | 64,420 | 58,553 | 54,601 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 22,246 | 18,822 | 10,869 | 3,915 | 3,565 | ||||||||||
| Borrowings | 12,554 | 8,836 | 5,020 | 4,039 | 3,309 | ||||||||||
| Total interest expense | 34,800 | 27,658 | 15,889 | 7,954 | 6,874 | ||||||||||
| Net interest income | 42,371 | 44,783 | 48,531 | 50,599 | 47,727 | ||||||||||
| Provision for (reversal of) credit losses | 451 | 1,671 | 670 | 4,222 | (3,920) | ||||||||||
| Net interest income after provision for (reversal of) credit losses | 41,920 | 43,112 | 47,861 | 46,377 | 51,647 | ||||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges | 910 | 734 | 763 | 658 | 617 | ||||||||||
| (Loss) gain on sale and call of securities | — | (15,227) | — | (563) | 3 | ||||||||||
| (Loss) gain on sale of loans | (2,373) | 134 | 395 | 187 | 376 | ||||||||||
| (Loss) gain on sale of other real estate owned | — | — | — | (9) | 14 | ||||||||||
| Income from bank owned life insurance | 1,581 | 1,761 | 3,698 | 1,533 | 1,511 | ||||||||||
| Electronic banking fees and charges | 457 | 397 | 506 | 366 | 432 | ||||||||||
| Other income | 1,071 | 3,723 | 555 | 638 | 238 | ||||||||||
| Total non-interest income | 1,646 | (8,478) | 5,917 | 2,810 | 3,191 | ||||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 18,005 | 19,921 | 20,348 | 20,367 | 19,184 | ||||||||||
| Net occupancy expense of premises | 3,097 | 2,987 | 3,090 | 3,188 | 3,223 | ||||||||||
| Equipment and systems | 3,537 | 3,867 | 3,662 | 4,516 | 3,822 | ||||||||||
| Advertising and marketing | 413 | 731 | 747 | 703 | 516 | ||||||||||
| Federal deposit insurance premium | 1,546 | 1,226 | 906 | 762 | 480 | ||||||||||
| Directors' compensation | 340 | 339 | 340 | 340 | 340 | ||||||||||
| Other expense | 3,414 | 3,579 | 2,895 | 3,736 | 3,058 | ||||||||||
| Total non-interest expense | 30,352 | 32,650 | 31,988 | 33,612 | 30,623 | ||||||||||
| Income before income taxes | 13,214 | 1,984 | 21,790 | 15,575 | 24,215 | ||||||||||
| Income taxes | 2,902 | 33 | 5,255 | 4,205 | 6,522 | ||||||||||
| Net income | $ | 10,312 | $ | 1,951 | $ | 16,535 | $ | 11,370 | $ | 17,693 | |||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Diluted | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Dividends declared | |||||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | |||||
| Cash dividends declared | $ | 7,196 | $ | 7,172 | $ | 7,276 | $ | 7,441 | $ | 7,720 | |||||
| Dividend payout ratio | 69.8 | % | 367.6 | % | 44.0 | % | 65.4 | % | 43.6 | % | |||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Basic | 64,769 | 65,030 | 65,737 | 67,240 | 69,790 | ||||||||||
| Diluted | 64,783 | 65,038 | 65,756 | 67,276 | 69,817 |
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Thousands) | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held-for-sale | $ | 5,986,669 | $ | 5,839,903 | $ | 5,553,996 | $ | 5,181,983 | $ | 4,850,236 | |||||
| Taxable investment securities | 1,558,222 | 1,527,578 | 1,516,974 | 1,608,372 | 1,620,996 | ||||||||||
| Tax-exempt investment securities | 17,663 | 37,917 | 48,973 | 51,672 | 55,390 | ||||||||||
| Other interest-earning assets | 131,682 | 114,175 | 88,038 | 87,990 | 79,644 | ||||||||||
| Total interest-earning assets | 7,694,236 | 7,519,573 | 7,207,981 | 6,930,017 | 6,606,266 | ||||||||||
| Non-interest-earning assets | 575,009 | 550,519 | 570,225 | 564,734 | 601,684 | ||||||||||
| Total assets | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 2,363,762 | $ | 2,359,977 | $ | 2,354,340 | $ | 2,155,946 | $ | 2,133,977 | |||||
| Savings | 858,673 | 931,584 | 1,019,343 | 1,077,631 | 1,088,351 | ||||||||||
| Certificates of deposit | 2,069,396 | 2,192,722 | 2,014,922 | 1,701,725 | 1,650,048 | ||||||||||
| Total interest-bearing deposits | 5,291,831 | 5,484,283 | 5,388,605 | 4,935,302 | 4,872,376 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,402,269 | 997,148 | 642,399 | 752,579 | 632,811 | ||||||||||
| Other borrowings | 1,611 | — | 127,456 | 185,901 | 51,667 | ||||||||||
| Total borrowings | 1,403,880 | 997,148 | 769,855 | 938,480 | 684,478 | ||||||||||
| Total interest-bearing liabilities | 6,695,711 | 6,481,431 | 6,158,460 | 5,873,782 | 5,556,854 | ||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 634,324 | 666,846 | 667,624 | 640,200 | 624,152 | ||||||||||
| Other non-interest-bearing liabilities | 60,327 | 56,721 | 56,431 | 56,636 | 49,455 | ||||||||||
| Total non-interest-bearing liabilities | 694,651 | 723,567 | 724,055 | 696,836 | 673,607 | ||||||||||
| Total liabilities | 7,390,362 | 7,204,998 | 6,882,515 | 6,570,618 | 6,230,461 | ||||||||||
| Stockholders' equity | 878,883 | 865,094 | 895,691 | 924,133 | 977,489 | ||||||||||
| Total liabilities and stockholders' equity | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | |||||
| Average interest-earning assets to average<br>interest-bearing liabilities | 114.91 | % | 116.02 | % | 117.04 | % | 117.98 | % | 118.89 | % |
Kearny Financial Corp.
Performance Ratio Highlights
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||
| Average yield on interest-earning assets: | ||||||||||
| Loans receivable, including loans held-for-sale | 4.02 | % | 3.97 | % | 3.81 | % | 3.77 | % | 3.78 | % |
| Taxable investment securities | 3.97 | % | 3.46 | % | 2.75 | % | 2.22 | % | 1.98 | % |
| Tax-exempt investment securities (1) | 2.23 | % | 2.32 | % | 2.33 | % | 2.30 | % | 2.28 | % |
| Other interest-earning assets | 4.38 | % | 3.52 | % | 3.46 | % | 2.15 | % | 2.08 | % |
| Total interest-earning assets | 4.01 | % | 3.85 | % | 3.57 | % | 3.38 | % | 3.31 | % |
| Average cost of interest-bearing liabilities: | ||||||||||
| Deposits: | ||||||||||
| Interest-bearing demand | 2.01 | % | 1.63 | % | 0.92 | % | 0.31 | % | 0.22 | % |
| Savings | 0.41 | % | 0.41 | % | 0.23 | % | 0.11 | % | 0.10 | % |
| Certificates of deposit | 1.84 | % | 1.50 | % | 0.97 | % | 0.46 | % | 0.52 | % |
| Total interest-bearing deposits | 1.68 | % | 1.37 | % | 0.81 | % | 0.32 | % | 0.29 | % |
| Borrowings: | ||||||||||
| Federal Home Loan Bank advances | 3.58 | % | 3.54 | % | 2.68 | % | 1.96 | % | 2.08 | % |
| Other borrowings | 5.15 | % | — | % | 2.26 | % | 0.77 | % | 0.17 | % |
| Total borrowings | 3.58 | % | 3.54 | % | 2.61 | % | 1.72 | % | 1.93 | % |
| Total interest-bearing liabilities | 2.08 | % | 1.71 | % | 1.03 | % | 0.54 | % | 0.49 | % |
| Interest rate spread (2) | 1.93 | % | 2.14 | % | 2.54 | % | 2.84 | % | 2.82 | % |
| Net interest margin (3) | 2.20 | % | 2.38 | % | 2.69 | % | 2.92 | % | 2.89 | % |
| Non-interest income to average assets (annualized) | 0.08 | % | -0.42 | % | 0.30 | % | 0.15 | % | 0.18 | % |
| Non-interest expense to average assets (annualized) | 1.47 | % | 1.62 | % | 1.65 | % | 1.79 | % | 1.70 | % |
| Efficiency ratio (4) | 68.96 | % | 89.93 | % | 58.75 | % | 62.93 | % | 60.14 | % |
| Return on average assets (annualized) | 0.50 | % | 0.10 | % | 0.85 | % | 0.61 | % | 0.98 | % |
| Return on average equity (annualized) | 4.69 | % | 0.90 | % | 7.38 | % | 4.92 | % | 7.24 | % |
| Return on average tangible equity (annualized) (5) | 6.20 | % | 1.20 | % | 9.70 | % | 6.40 | % | 9.27 | % |
_________________________
(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.
The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||||||
| Adjusted net income: | |||||||||||||||
| Net income (GAAP) | $ | 10,312 | $ | 1,951 | $ | 16,535 | $ | 11,370 | $ | 17,693 | |||||
| Non-recurring transactions - net of tax: | |||||||||||||||
| Branch consolidation expenses | 568 | — | — | — | — | ||||||||||
| Net effect of sale and call of securities | — | 10,811 | — | 400 | (2) | ||||||||||
| Net effect of sale of other assets | — | (2,081) | — | — | — | ||||||||||
| Severance expense from workforce realignment | — | 538 | — | — | — | ||||||||||
| Early contract termination | — | — | — | 568 | — | ||||||||||
| Adjusted net income | $ | 10,880 | $ | 11,219 | $ | 16,535 | $ | 12,338 | $ | 17,691 | |||||
| Calculation of pre-tax, pre-provision net revenue: | |||||||||||||||
| Net income (GAAP) | $ | 10,312 | $ | 1,951 | $ | 16,535 | $ | 11,370 | $ | 17,693 | |||||
| Adjustments to net income (GAAP): | |||||||||||||||
| Provision for income taxes | 2,902 | 33 | 5,255 | 4,205 | 6,522 | ||||||||||
| Provision for (reversal of) credit losses | 451 | 1,671 | 670 | 4,222 | (3,920) | ||||||||||
| Pre-tax, pre-provision net revenue (non-GAAP) | $ | 13,665 | $ | 3,655 | $ | 22,460 | $ | 19,797 | $ | 20,295 | |||||
| Adjusted earnings per share: | |||||||||||||||
| Weighted average common shares - basic | 64,769 | 65,030 | 65,737 | 67,240 | 69,790 | ||||||||||
| Weighted average common shares - diluted | 64,783 | 65,038 | 65,756 | 67,276 | 69,817 | ||||||||||
| Earnings per share - basic (GAAP) | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Earnings per share - diluted (GAAP) | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Adjusted earnings per share - basic (non-GAAP) | $ | 0.17 | $ | 0.17 | $ | 0.25 | $ | 0.18 | $ | 0.25 | |||||
| Adjusted earnings per share - diluted (non-GAAP) | $ | 0.17 | $ | 0.17 | $ | 0.25 | $ | 0.18 | $ | 0.25 | |||||
| Pre-tax, pre-provision net revenue per share: | |||||||||||||||
| Pre-tax, pre-provision net revenue per share - basic<br>(non-GAAP) | $ | 0.21 | $ | 0.06 | $ | 0.34 | $ | 0.29 | $ | 0.29 | |||||
| Pre-tax, pre-provision net revenue per share - diluted<br>(non-GAAP) | $ | 0.21 | $ | 0.06 | $ | 0.34 | $ | 0.29 | $ | 0.29 | |||||
| Adjusted return on average assets: | |||||||||||||||
| Total average assets | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | |||||
| Return on average assets (GAAP) | 0.50 | % | 0.10 | % | 0.85 | % | 0.61 | % | 0.98 | % | |||||
| Adjusted return on average assets (non-GAAP) | 0.53 | % | 0.56 | % | 0.85 | % | 0.66 | % | 0.98 | % | |||||
| Adjusted return on average equity: | |||||||||||||||
| Total average equity | $ | 878,883 | $ | 865,094 | $ | 895,691 | $ | 924,133 | $ | 977,489 | |||||
| Return on average equity (GAAP) | 4.69 | % | 0.90 | % | 7.38 | % | 4.92 | % | 7.24 | % | |||||
| Adjusted return on average equity (non-GAAP) | 4.95 | % | 5.19 | % | 7.38 | % | 5.34 | % | 7.24 | % |
Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars and Shares in Thousands,<br>Except Per Share Data) | March 31,<br>2023 | December 31,<br>2022 | September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | ||||||||||
| Adjusted return on average tangible equity: | |||||||||||||||
| Total average equity | $ | 878,883 | $ | 865,094 | $ | 895,691 | $ | 924,133 | $ | 977,489 | |||||
| Less: average goodwill | (210,895) | (210,895) | (210,895) | (210,895) | (210,895) | ||||||||||
| Less: average other intangible assets | (2,683) | (2,826) | (2,971) | (3,116) | (3,282) | ||||||||||
| Total average tangible equity | $ | 665,305 | $ | 651,373 | $ | 681,825 | $ | 710,122 | $ | 763,312 | |||||
| Return on average tangible equity (non-GAAP) | 6.20 | % | 1.20 | % | 9.70 | % | 6.40 | % | 9.27 | % | |||||
| Adjusted return on average tangible equity (non-GAAP) | 6.54 | % | 6.89 | % | 9.70 | % | 6.95 | % | 9.27 | % | |||||
| Adjusted non-interest expense ratio: | |||||||||||||||
| Non-interest expense (GAAP) | $ | 30,352 | $ | 32,650 | $ | 31,988 | $ | 33,612 | $ | 30,623 | |||||
| Non-recurring transactions: | |||||||||||||||
| Branch consolidation expenses | (800) | — | — | — | — | ||||||||||
| Severance expense from workforce realignment | — | (757) | — | — | — | ||||||||||
| Early contract termination | — | — | — | (800) | — | ||||||||||
| Non-interest expense (non-GAAP) | $ | 29,552 | $ | 31,893 | $ | 31,988 | $ | 32,812 | $ | 30,623 | |||||
| Non-interest expense ratio (GAAP) | 1.47 | % | 1.62 | % | 1.65 | % | 1.79 | % | 1.70 | % | |||||
| Adjusted non-interest expense ratio (non-GAAP) | 1.43 | % | 1.58 | % | 1.65 | % | 1.75 | % | 1.70 | % | |||||
| Adjusted efficiency ratio: | |||||||||||||||
| Non-interest expense (non-GAAP) | $ | 29,552 | $ | 31,893 | $ | 31,988 | $ | 32,812 | $ | 30,623 | |||||
| Net interest income (GAAP) | $ | 42,371 | $ | 44,783 | $ | 48,531 | $ | 50,599 | $ | 47,727 | |||||
| Total non-interest income (GAAP) | 1,646 | (8,478) | 5,917 | 2,810 | 3,191 | ||||||||||
| Non-recurring transactions: | |||||||||||||||
| Net effect of sale and call of securities | — | 15,227 | — | 563 | (3) | ||||||||||
| Net effect of sale of other assets | — | (2,931) | — | — | — | ||||||||||
| Total revenue (non-GAAP) | $ | 44,017 | $ | 48,601 | $ | 54,448 | $ | 53,972 | $ | 50,915 | |||||
| Efficiency ratio (GAAP) | 68.96 | % | 89.93 | % | 58.75 | % | 62.93 | % | 60.14 | % | |||||
| Adjusted efficiency ratio (non-GAAP) | 67.14 | % | 65.62 | % | 58.75 | % | 60.79 | % | 60.15 | % |
15
krny03_31x2023investorpr
APRIL 27, 2023 I N V E S T O R P R E S E N T A T I O N T H I R D Q U A R T E R F I S C A L 2 0 2 3 Exhibit 99.2
Forward Looking Statements 2 This presentation may include certain “forward-looking statements,” which are made in good faith by Kearny Financial Corp. (the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company’s control). In addition to the factors described under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K, the following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: • the strength of the United States economy in general and the strength of the local economy in which the Company conducts operations, • the effects of the recent turmoil in the banking industry (including the failure of two financial institutions), • the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, • the impact of changes in laws, regulations and government policies regarding financial institutions (including laws concerning taxation, banking, securities and insurance), • changes in accounting policies and practices, as may be adopted by regulatory agencies, the Financial Accounting Standards Board (“FASB”) or the Public Company Accounting Oversight Board, • technological changes, • competition among financial services providers, and • the success of the Company at managing the risks involved in the foregoing and managing its business. The Company cautions that the foregoing list of important factors is not exhaustive. Readers should not place any undue reliance on any forward looking statements, which speak only as of the date made. The Company does not undertake 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.
Kearny Financial Corp. NASDAQ: KRNY Market Cap: $512.1 million1 Founded in 1884 Top 10 New Jersey-based financial institution by assets 45 full-service branches2 in 12 counties throughout New Jersey and New York City Active acquirer, having completed 7 whole-bank acquisitions since 1999 1 As of April 24, 2023 2 As of March 31, 2023 Source: S&P Global Market Intelligence & Company Filings 3
139 Years of Serving our Communities and Clients 4
Financial Highlights Source: Company Filings 5 3Q23 quarterly earnings were negatively impacted by the following non-recurring items: $2.5 million loss on sale of a non-performing multi-family loan that had been held-for-sale since June 2022 $800,000 of non-interest expense associated with the consolidation of two branches scheduled for closure in June 2023 Excluding non-recurring items, non-interest expense declined 7.3% quarter-over-quarter Profitability and Performance Ratios ($ in millions, except per share data) 3Q23 2Q23 3Q22 Net Income $10.3 $2.0 $17.7 Earnings per share $0.16 $0.03 $0.25 Net Interest Income $42.4 $44.8 $47.7 Net Interest Margin 2.20% 2.38% 2.89% Return on Average Assets 0.50% 0.10% 0.98% Return on Average Equity 4.69% 0.90% 7.24% Return on Average Tangible Equity 6.20% 1.20% 9.27% GAAP Reported
Equity & Capitalization Equity Capitalization Level 1 Kearny Regulatory Capital Ratios as of March 31, 2023 are preliminary. 2 S&P U.S. Small Cap Banks Index comprised of 235 constituents, based on December 31, 2022 results. Source: Company Filings 6 10.33% 9.06% 8.61% 8.16% 8.02% 12.93% 11.58% 11.09% 10.53% 10.37% 3Q22 4Q22 1Q23 2Q23 3Q23 Tangible Common Equity / Tangible Assets Equity / Assets 8.96% 13.37% 13.37% 14.02% 9.57% 11.20% 11.47% 14.00% Tier 1 Leverage Common Equity Tier 1 Tier 1 Risk-Based Capital Total Risk-Based Capital KRNY S&P US Small Cap Banks Regulatory Capital Ratios1,2
Deposits 1 For the quarter ended March 31, 2023; excludes Wholesale CDs Source: S&P Global Market Intelligence & Company Filings 7 Deposit Composition1 Deposit Trend Retail Deposit Segmentation1 $1,122 $1,116 $1,263 $1,355 $1,327 $541 $773 $797 $747 $761 $1,089 $1,053 $983 $902 $811 $2,155 $2,266 $2,382 $2,316 $2,286 $622 $654 $683 $651 $618 $5,529 $5,862 $6,108 $5,971 $5,803 3Q22 4Q22 1Q23 2Q23 3Q23 Retail CDs Wholesale CDs Savings Interest Bearing DDA Non-interest Bearing DDA Consumer 61.7% Commercial 22.0% Government 16.3% Product # of Accounts Balance ($ millions) Average Balance per Account Checking 53,272 $ 2,903 $ 54,501 Savings 35,073 812 23,137 CD 28,423 1,335 46,984 Total Retail Deposits 116,768 $ 5,050 $ 43,251 Non-Maturity Account Deposit Mix QTD Cost of Deposits 1.68% Retail CDs 22.9% Wholesale CDs 13.1% Savings 14.0% Interest Bearing DDA 39.4% Non-interest Bearing DDA 10.6%
Liquidity Available for Uninsured Deposits Estimated Uninsured Deposits Analysis2 1 Estimated amount of uninsured deposits reported in 3/31/23 Call Report. 2 As of March 31, 2023 8 Estimated Uninsured Deposit Analysis ($ millions) Estimated Uninsured Deposits 1,678$ Less: Collateralized State & Local Government Deposits (588) Less: Bank's wholly-owned subsidiary & Holding Company Deposits (384) Estimated uninsured deposits excluding items above: 706$ Total Deposits 5,803$ Estimated uninsured deposits, excluding items above, as a % of Total Deposits 12.2% Available liquidity is 3.4x greater than estimated uninsured deposits (excluding items above) Liquidity Capacity2 Sources of Liquidity ($ millions) Liquidity Capacity Funding Utilized Available Capacity Internal Sources: Free Securities and other 493$ -$ 493$ External Sources: FRB 426 - 426 FHLB 2,993 1,543 1,450 Total Liquidity 3,912$ 1,543$ 2,369$ 1
Investment Securities 1 For the quarter ended March 31, 2023 2 Comprised entirely of securitized federal education loans with 97% U.S. government guarantees 3 Assumes 29% marginal tax rate Source: S&P Global Market Intelligence & Company Filings 9 10.0% 27.0% 10.1% 51.7% 1.2% Corporate Bonds CLO ABS Student Loans Agency MBS Municipal Bonds 2 Securities Composition1 Securities Balance & Yield TrendAFS/HTM & Effective Duration At March 31, 2023, the tax-adjusted unrecognized loss on held-to maturity securities was $9.7 million, or 1.5% of tangible equity3 AFS 89.4% HTM 10.6% Total Effective Duration ≈ 3.4 years Floating rate securities ≈ 34.5% $1,648 $1,462 $1,379 $1,440 $1,417 1.99% 2.22% 2.74% 3.43% 3.95% 3Q22 4Q22 1Q23 2Q23 3Q23 ($ millions)
Portfolio Lending Loan Composition1 Geographic Distribution2Loan Growth The weighted average loan-to-value ratio1 for our real estate secured loans was 62% 1 For the quarter ended March 31, 2023. 2 As of March 31, 2023. Source: S&P Global Market Intelligence & Company Filings 10 New York (Ex. Brooklyn) 17.2% Brooklyn 18.2% New Jersey 54.9% Pennsylvania 5.4% Other 4.3% $1,569 $1,688 $1,710 $1,765 $1,758 $2,076 $2,409 $2,570 $2,852 $2,836 $1,086 $1,020 $1,041 $1,017 $1,003 $5,025 $5,437 $5,676 $6,001 $5,976 3Q22 4Q22 1Q23 2Q23 3Q23 1-4 Family Multifamily CRE C&D Other ($ millions) 1-4 Family 28.7% Home Equity 0.7% Multifamily 47.5% CRE 16.8% Construction 3.6% Commercial 2.7% QTD Yield on Loans 4.02%
CRE Lending 1 As of March 31, 2023 Source: S&P Global Market Intelligence & Company Filings 11 CRE Portfolio by Collateral Type1 Retail 37.9% Mixed Use 26.8% Office 16.3% Industrial 14.5% Specialty & Other 4.5% CRE Loan Distribution1 Office Portfolio Profile 16.3% of total CRE portfolio or $163 million Average loan size of $1.7 million Weighted average LTV was 50% WA LTV 54% Total CRE $1.0 B New Jersey 56.0% Brooklyn 9.9% New York (Ex. Brooklyn) 27.6% Pennsylvania 4.1% Other 2.4%
Asset Quality Net Charge-Offs / Average Loans Non-Performing Assets / Total Assets Non-Performing Loans1 Allowance for Credit Losses 1 As of March 31, 2023; amounts shown in millions. Source: S&P Global Market Intelligence & Company Filings 1.10% 1.19% 0.98% 0.76% 0.69% 0.60% 0.80% 1.00% 1.20% 1.40% 3Q22 4Q22 1Q23 2Q23 3Q23 $43.9 $47.1 $47.6 $48.9 $49.1 0.87% 0.87% 0.84% 0.81% 0.82% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% $0.0 $20.0 $40.0 $60.0 $80.0 3Q22 4Q22 1Q23 2Q23 3Q23 ACL Balance ACL to Total Loans Receivable ($ millions) 12 NPL's $44.0MM $20.1 $17.6 $0.3 $6.0 Multi-family Non-Residential Commercial Construction Residential Home Equity Other Consumer 0.04% 0.08% 0.01% 0.03% 0.01% -0.05% 0.00% 0.05% 0.10% 3Q22 4Q22 1Q23 2Q23 3Q23
Select Technology Partners 13