krny-20240425FALSE000161724200016172422024-04-252024-04-25
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 25, 2024
_____________________________
KEARNY FINANCIAL CORP.
(Exact name of Registrant as Specified in Its Charter)
_____________________________
| | | | | | | | |
| Maryland | 001-37399 | 30-0870244 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer 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 25, 2024, 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, 2024.
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 25, 2024, 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 and is incorporated herein by reference. 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.
Item 8.01 Other Events
On April 25, 2024, the Company’s Board of Directors announced a quarterly cash dividend of $0.11 per share, payable on May 22, 2024 to stockholders of record as of May 8, 2024.
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 | | |
| 99.2 | | |
| 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 25, 2024 | By: | /s/ Keith Suchodolski |
| | Keith Suchodolski |
| | Senior Executive Vice President and Chief Financial Officer |
Exhibit 99.1
FOR IMMEDIATE RELEASE
April 25, 2024
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 2024 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., April 25, 2024 – 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, 2024 of $7.4 million, or $0.12 per diluted share, compared to a net loss of $13.8 million, or $0.22 per diluted share, for the quarter ended December 31, 2023. The net loss for the quarter ended December 31, 2023 was impacted by various non-recurring items, as previously disclosed.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on May 22, 2024, to stockholders of record as of May 8, 2024.
Craig L. Montanaro, President and Chief Executive Officer, commented, “Once again uncertainty remains on the forefront of conversations taking place on Main Street and on Wall Street. As a company we manage through such challenging periods by staying true to our guiding principles, which have endured since our founding 140 years ago this month: prudent risk management, conservative posturing and an unwavering commitment to our depositors, borrowers, employees and communities.”
Mr. Montanaro continued, “Despite the media speculation surrounding commercial real estate lending in general, and multifamily lending specifically, we maintain a low loan-to-value, low-vacancy, well-diversified commercial loan portfolio with a long history of outstanding credit performance. We subject each loan to intense scrutiny at underwriting, and on an ongoing basis, and maintain peer-leading levels of commercial loan allowance coverage and regulatory capital, as represented by our 14.7% Common Equity Tier 1 capital ratio.”
Balance Sheet
•Total assets were $7.84 billion at March 31, 2024, a decrease of $55.9 million, or 0.7%, from December 31, 2023.
•Investment securities totaled $1.24 billion at March 31, 2024, a decrease of $47.8 million, or 3.7%, from December 31, 2023.
•Loans receivable totaled $5.76 billion at March 31, 2024, an increase of $12.7 million, or 0.2%, from December 31, 2023.
•Bank-owned life insurance (“BOLI”) totaled $296.5 million at March 31, 2024, an increase of $40.4 million, or 15.8%, from December 31, 2023. The increase for the quarter was largely attributable to the completion of the BOLI restructure initiated in the prior comparative period.
•Deposits were $5.21 billion at March 31, 2024, a decrease of $110.6 million, or 2.1%, from December 31, 2023. Excluding a decrease of $50.2 million in brokered certificates of deposits, deposits decreased $60.4 million, or 1.2%, from December 31, 2023. This decrease in non-brokered deposits was driven by a $48.4 million decline in retail certificates of deposits and a $15.7 million decline in consumer savings deposits, partially offset by growth in other deposit categories.
•Borrowings were $1.72 billion at March 31, 2024, an increase of $55.1 million, or 3.3%, from December 31, 2023.
•At March 31, 2024, the Company maintained available secured borrowing capacity of $1.81 billion, of which $1.47 billion was immediately accessible via in-place collateral and $336.7 million represented the market value of unpledged securities.
Earnings
Net Interest Income and Net Interest Margin
•Net interest margin contracted 5 basis point to 1.89% for the quarter ended March 31, 2024. The decrease for the quarter was driven by an increase in the cost of interest-bearing deposits and a decrease in the average balance of interest-earning assets, partially offset by a higher yield on interest-earning assets and a decrease in the cost of interest-bearing borrowings.
•For the quarter ended March 31, 2024, net interest income decreased $1.5 million to $34.3 million from $35.8 million for the quarter ended December 31, 2023. Included in net interest income for the quarters ended March 31, 2024 and December 31, 2023, respectively, was purchase accounting accretion of $734,000 and $640,000, and loan prepayment penalty income of $61,000 and $185,000.
Non-Interest Income
•Non-interest income increased $20.2 million to income of $4.2 million for the quarter ended March 31, 2024, from a loss of $16.0 million for the quarter ended December 31, 2023. The increase was primarily attributable to a pre-tax loss of $18.1 million related to the investment securities portfolio repositioning executed during the prior comparative period.
•Income from BOLI increased $1.8 million to $3.0 million for the quarter ended March 31, 2024 from $1.2 million for the quarter ended December 31, 2023. BOLI income included a $631,000 non-recurring payment on one life insurance policy in the current period, while BOLI income was reduced by non-recurring exchange charges of $573,000 in the prior comparative period. Excluding these non-recurring items, BOLI income improved by $673,000 resulting from the previously mentioned BOLI restructure.
•Loss on sale of loans was $712,000 for the quarter ended March 31, 2024 compared to a gain on sale of loans of $104,000 for the quarter ended December 31, 2023. The loss in the current period was the result of the sale of three related nonperforming commercial real estate loans held-for-sale.
Non-Interest Expense
•For the quarter ended March 31, 2024, non-interest expense decreased $708,000, or 2.4%, to $29.1 million from $29.8 million for the quarter ended December 31, 2023, primarily driven by a decrease in salary and benefits expense and other expense.
•Salary and benefits expense decreased $371,000 primarily attributable to a non-recurring decrease of $679,000 in stock-based compensation, partially offset by an increase of $374,000 in payroll taxes associated with the start of the new calendar year.
•Other expense decreased $522,000 primarily driven by a $637,000 decrease in OREO expense following the sale of the Company’s sole OREO asset, partially offset by an increase of $288,000 in the provision for credit losses on off balance sheet commitments.
Income Taxes
•Income tax expense totaled $1.7 million for the quarter ended March 31, 2024 compared to $1.8 million for the quarter ended December 31, 2023. The decrease in income tax expense was largely due to the discrete tax expense associated with the BOLI restructure recognized in the prior comparative period, partially offset by higher pre-tax income, due primarily to realized losses on the sale of securities in the prior comparative period.
Asset Quality
•The balance of non-performing assets decreased $10.2 million to $39.5 million, or 0.50% of total assets, at March 31, 2024, from $49.8 million, or 0.63% of total assets, at December 31, 2023. This decrease was driven by the January 2024 sale of three related non-performing commercial real estate loans held-for-sale and the Company’s sole OREO asset.
•Net charge-offs totaled $286,000, or 0.02% of average loans, on an annualized basis, for the quarter ended March 31, 2024, compared to $4.1 million, or 0.29% of average loans, on an annualized basis, for the quarter ended December 31, 2023.
•For the quarter ended March 31, 2024, the Company recorded a provision for credit losses of $349,000, compared to $2.1 million for the quarter ended December 31, 2023. The provision for credit loss expense for the quarter ended March 31, 2024 was primarily driven by loan growth.
•The allowance for credit losses (“ACL”) was $44.9 million, or 0.78% of total loans, at March 31, 2024 and unchanged from December 31, 2023.
Capital
•For the quarter ended March 31, 2024, book value per share increased $0.02, or 0.2%, to $13.18 while tangible book value per share increased $0.02, or 0.2%, to $9.87.
•At March 31, 2024, total stockholders’ equity included after-tax net unrealized losses on securities available for sale of $95.0 million, partially offset by after-tax unrealized gains on derivatives of $31.3 million. After-tax net unrecognized losses on securities held to maturity of $11.4 million were not reflected in total stockholders’ equity.
•At March 31, 2024, the Company’s tangible equity to tangible assets ratio equaled 8.34% 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 2024 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,
Except Per Share Data) | March 31,
2024 | December 31,
2023 | Variance
or Change | Variance
or Change Pct. |
| | | | |
| Assets | | | | |
| Cash and cash equivalents | $ | 71,027 | | $ | 73,860 | | $ | (2,833) | | -3.8 | % |
| Securities available for sale | 1,098,655 | | 1,144,175 | | (45,520) | | -4.0 | % |
| Securities held to maturity | 139,643 | | 141,959 | | (2,316) | | -1.6 | % |
| Loans held-for-sale | 4,117 | | 14,030 | | (9,913) | | -70.7 | % |
| Loans receivable | 5,758,336 | | 5,745,629 | | 12,707 | | 0.2 | % |
| Less: allowance for credit losses on loans | (44,930) | | (44,867) | | 63 | | 0.1 | % |
| Net loans receivable | 5,713,406 | | 5,700,762 | | 12,644 | | 0.2 | % |
| Premises and equipment | 45,053 | | 45,928 | | (875) | | -1.9 | % |
| Federal Home Loan Bank stock | 81,347 | | 83,372 | | (2,025) | | -2.4 | % |
| Accrued interest receivable | 31,065 | | 30,258 | | 807 | | 2.7 | % |
| Goodwill | 210,895 | | 210,895 | | — | | — | % |
| Core deposit intangible | 2,057 | | 2,189 | | (132) | | -6.0 | % |
| Bank owned life insurance | 296,493 | | 256,064 | | 40,429 | | 15.8 | % |
| Deferred income taxes, net | 47,225 | | 46,116 | | 1,109 | | 2.4 | % |
| Other real estate owned | — | | 11,982 | | (11,982) | | -100.0 | % |
| Other assets | 100,989 | | 136,242 | | (35,253) | | -25.9 | % |
| Total assets | $ | 7,841,972 | | $ | 7,897,832 | | $ | (55,860) | | -0.7 | % |
| | | | |
| Liabilities | | | | |
| Deposits: | | | | |
| Non-interest-bearing | $ | 586,089 | | $ | 584,130 | | $ | 1,959 | | 0.3 | % |
| Interest-bearing | 4,622,961 | | 4,735,500 | | (112,539) | | -2.4 | % |
| Total deposits | 5,209,050 | | 5,319,630 | | (110,580) | | -2.1 | % |
| Borrowings | 1,722,178 | | 1,667,055 | | 55,123 | | 3.3 | % |
| Advance payments by borrowers for taxes | 17,387 | | 16,742 | | 645 | | 3.9 | % |
| Other liabilities | 44,279 | | 46,427 | | (2,148) | | -4.6 | % |
| Total liabilities | 6,992,894 | | 7,049,854 | | (56,960) | | -0.8 | % |
| | | | |
| Stockholders' Equity | | | | |
| Common stock | 644 | | 645 | | (1) | | -0.2 | % |
| Paid-in capital | 493,187 | | 493,297 | | (110) | | — | % |
| Retained earnings | 440,308 | | 439,755 | | 553 | | 0.1 | % |
| Unearned ESOP shares | (21,402) | | (21,889) | | 487 | | 2.2 | % |
| Accumulated other comprehensive loss | (63,659) | | (63,830) | | 171 | | 0.3 | % |
| Total stockholders' equity | 849,078 | | 847,978 | | 1,100 | | 0.1 | % |
| Total liabilities and stockholders' equity | $ | 7,841,972 | | $ | 7,897,832 | | $ | (55,860) | | -0.7 | % |
| | | | |
| Consolidated capital ratios | | | | |
| Equity to assets | 10.83 | % | 10.74 | % | 0.09 | % | |
Tangible equity to tangible assets (1) | 8.34 | % | 8.26 | % | 0.08 | % | |
| | | | |
| Share data | | | | |
| Outstanding shares | 64,437 | 64,445 | (8) | — | % |
| Book value per share | $ | 13.18 | | $ | 13.16 | | $ | 0.02 | | 0.2 | % |
Tangible book value per share (2) | $ | 9.87 | | $ | 9.85 | | $ | 0.02 | | 0.2 | % |
_________________________
(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 (Loss)
(Unaudited)
| | | | | | | | | | | | | | |
(Dollars and Shares in Thousands,
Except Per Share Data) | Three Months Ended | Variance
or Change | Variance
or Change Pct. |
March 31,
2024 | December 31,
2023 |
| Interest income | | | | |
| Loans | $ | 64,035 | | $ | 63,384 | | $ | 651 | | 1.0 | % |
| Taxable investment securities | 15,490 | | 16,756 | | (1,266) | | -7.6 | % |
| Tax-exempt investment securities | 85 | | 84 | | 1 | | 1.2 | % |
| Other interest-earning assets | 2,475 | | 2,401 | | 74 | | 3.1 | % |
| Total interest income | 82,085 | | 82,625 | | (540) | | -0.7 | % |
| | | | |
| Interest expense | | | | |
| Deposits | 32,320 | | 30,340 | | 1,980 | | 6.5 | % |
| Borrowings | 15,446 | | 16,446 | | (1,000) | | -6.1 | % |
| Total interest expense | 47,766 | | 46,786 | | 980 | | 2.1 | % |
| Net interest income | 34,319 | | 35,839 | | (1,520) | | -4.2 | % |
| Provision for credit losses | 349 | | 2,105 | | (1,756) | | -83.4 | % |
| Net interest income after provision for credit losses | 33,970 | | 33,734 | | 236 | | 0.7 | % |
| | | | |
| Non-interest income | | | | |
| Fees and service charges | 657 | | 624 | | 33 | | 5.3 | % |
| Loss on sale and call of securities | — | | (18,135) | | 18,135 | | 100.0 | % |
| (Loss) gain on sale of loans | (712) | | 104 | | (816) | | -784.6 | % |
| Loss on other real estate owned | — | | (974) | | 974 | | 100.0 | % |
| Income from bank owned life insurance | 3,039 | | 1,162 | | 1,877 | | 161.5 | % |
| Electronic banking fees and charges | 464 | | 396 | | 68 | | 17.2 | % |
| Other income | 755 | | 811 | | (56) | | -6.9 | % |
| Total non-interest income | 4,203 | | (16,012) | | 20,215 | | 126.2 | % |
| | | | |
| Non-interest expense | | | | |
| Salaries and employee benefits | 16,911 | | 17,282 | | (371) | | -2.1 | % |
| Net occupancy expense of premises | 2,863 | | 2,674 | | 189 | | 7.1 | % |
| Equipment and systems | 3,823 | | 3,814 | | 9 | | 0.2 | % |
| Advertising and marketing | 387 | | 301 | | 86 | | 28.6 | % |
| Federal deposit insurance premium | 1,429 | | 1,495 | | (66) | | -4.4 | % |
| Directors' compensation | 360 | | 393 | | (33) | | -8.4 | % |
| Other expense | 3,286 | | 3,808 | | (522) | | -13.7 | % |
| Total non-interest expense | 29,059 | | 29,767 | | (708) | | -2.4 | % |
| Income (loss) before income taxes | 9,114 | | (12,045) | | 21,159 | | 175.7 | % |
| Income taxes | 1,717 | | 1,782 | | (65) | | -3.6 | % |
| Net income (loss) | $ | 7,397 | | $ | (13,827) | | $ | 21,224 | | 153.5 | % |
| | | | |
| Net income (loss) per common share (EPS) | | | | |
| Basic | $ | 0.12 | | $ | (0.22) | | $ | 0.34 | | |
| Diluted | $ | 0.12 | | $ | (0.22) | | $ | 0.34 | | |
| | | | |
| Dividends declared | | | | |
| Cash dividends declared per common share | $ | 0.11 | | $ | 0.11 | | $ | — | | |
| Cash dividends declared | $ | 6,844 | | $ | 6,882 | | $ | (38) | | |
| Dividend payout ratio | 92.5 | % | -49.8 | % | 142.3 | % | |
| | | | |
| Weighted average number of common shares outstanding | | | | |
| Basic | 62,205 | 62,299 | (94) | |
| Diluted | 62,211 | 62,367 | (156) | |
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
| | | | | | | | | | | | | | |
| (Dollars in Thousands) | Three Months Ended | Variance
or Change | Variance
or Change Pct. |
March 31,
2024 | December 31,
2023 |
| Assets | | | | |
| Interest-earning assets: | | | | |
| Loans receivable, including loans held for sale | $ | 5,752,477 | | $ | 5,726,321 | | $ | 26,156 | | 0.5 | % |
| Taxable investment securities | 1,382,064 | | 1,509,165 | | (127,101) | | -8.4 | % |
| Tax-exempt investment securities | 14,614 | | 15,025 | | (411) | | -2.7 | % |
| Other interest-earning assets | 125,155 | | 139,740 | | (14,585) | | -10.4 | % |
| Total interest-earning assets | 7,274,310 | | 7,390,251 | | (115,941) | | -1.6 | % |
| Non-interest-earning assets | 577,411 | | 554,335 | | 23,076 | | 4.2 | % |
| Total assets | $ | 7,851,721 | | $ | 7,944,586 | | $ | (92,865) | | -1.2 | % |
| | | | |
| Liabilities and Stockholders' Equity | | | | |
| Interest-bearing liabilities: | | | | |
| Deposits: | | | | |
| Interest-bearing demand | $ | 2,378,831 | | $ | 2,301,169 | | $ | 77,662 | | 3.4 | % |
| Savings | 635,226 | | 664,926 | | (29,700) | | -4.5 | % |
| Certificates of deposit | 1,705,513 | | 1,824,316 | | (118,803) | | -6.5 | % |
| Total interest-bearing deposits | 4,719,570 | | 4,790,411 | | (70,841) | | -1.5 | % |
| Borrowings: | | | | |
| Federal Home Loan Bank advances | 1,428,801 | | 1,513,497 | | (84,696) | | -5.6 | % |
| Other borrowings | 210,989 | | 142,283 | | 68,706 | | 48.3 | % |
| Total borrowings | 1,639,790 | | 1,655,780 | | (15,990) | | -1.0 | % |
| Total interest-bearing liabilities | 6,359,360 | | 6,446,191 | | (86,831) | | -1.3 | % |
| Non-interest-bearing liabilities: | | | | |
| Non-interest-bearing deposits | 581,870 | | 597,294 | | (15,424) | | -2.6 | % |
| Other non-interest-bearing liabilities | 65,709 | | 62,387 | | 3,322 | | 5.3 | % |
| Total non-interest-bearing liabilities | 647,579 | | 659,681 | | (12,102) | | -1.8 | % |
| Total liabilities | 7,006,939 | | 7,105,872 | | (98,933) | | -1.4 | % |
| Stockholders' equity | 844,782 | | 838,714 | | 6,068 | | 0.7 | % |
| Total liabilities and stockholders' equity | $ | 7,851,721 | | $ | 7,944,586 | | $ | (92,865) | | -1.2 | % |
| | | | |
| Average interest-earning assets to average interest-bearing liabilities | 114.39 | % | 114.65 | % | -0.26 | % | -0.2 | % |
Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)
| | | | | | | | | | | |
| Three Months Ended | Variance
or Change |
| March 31,
2024 | December 31,
2023 |
| Average yield on interest-earning assets: | | | |
| Loans receivable, including loans held for sale | 4.45 | % | 4.43 | % | 0.02 | % |
| Taxable investment securities | 4.48 | % | 4.44 | % | 0.04 | % |
Tax-exempt investment securities (1) | 2.32 | % | 2.25 | % | 0.07 | % |
| Other interest-earning assets | 7.91 | % | 6.87 | % | 1.04 | % |
| Total interest-earning assets | 4.51 | % | 4.47 | % | 0.04 | % |
| | | |
| Average cost of interest-bearing liabilities: | | | |
| Deposits: | | | |
| Interest-bearing demand | 3.08 | % | 2.91 | % | 0.17 | % |
| Savings | 0.46 | % | 0.44 | % | 0.02 | % |
| Certificates of deposit | 3.11 | % | 2.82 | % | 0.29 | % |
| Total interest-bearing deposits | 2.74 | % | 2.53 | % | 0.21 | % |
| Borrowings: | | | |
| Federal Home Loan Bank advances | 3.55 | % | 3.82 | % | -0.27 | % |
| Other borrowings | 5.22 | % | 5.65 | % | -0.43 | % |
| Total borrowings | 3.77 | % | 3.97 | % | -0.20 | % |
| Total interest-bearing liabilities | 3.00 | % | 2.90 | % | 0.10 | % |
| | | |
Interest rate spread (2) | 1.51 | % | 1.57 | % | -0.06 | % |
Net interest margin (3) | 1.89 | % | 1.94 | % | -0.05 | % |
| | | |
| Non-interest income to average assets (annualized) | 0.21 | % | -0.81 | % | 1.02 | % |
| Non-interest expense to average assets (annualized) | 1.48 | % | 1.50 | % | -0.02 | % |
| | | |
Efficiency ratio (4) | 75.43 | % | 150.13 | % | -74.70 | % |
| | | |
| Return on average assets (annualized) | 0.38 | % | -0.70 | % | 1.08 | % |
| Return on average equity (annualized) | 3.50 | % | -6.59 | % | 10.09 | % |
Return on average tangible equity (annualized) (5) | 4.68 | % | -8.84 | % | 13.52 | % |
_________________________
(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,
Except Per Share Data) | March 31,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | (Unaudited) |
| Assets | | | | | |
| Cash and cash equivalents | $ | 71,027 | | $ | 73,860 | | $ | 57,219 | | $ | 70,515 | | $ | 194,568 | |
| Securities available for sale | 1,098,655 | | 1,144,175 | | 1,215,633 | | 1,227,729 | | 1,267,066 | |
| Securities held to maturity | 139,643 | | 141,959 | | 143,730 | | 146,465 | | 149,764 | |
| Loans held-for-sale | 4,117 | | 14,030 | | 3,934 | | 9,591 | | 5,401 | |
| Loans receivable | 5,758,336 | | 5,745,629 | | 5,736,049 | | 5,829,421 | | 5,966,325 | |
| Less: allowance for credit losses on loans | (44,930) | | (44,867) | | (46,872) | | (48,734) | | (49,122) | |
| Net loans receivable | 5,713,406 | | 5,700,762 | | 5,689,177 | | 5,780,687 | | 5,917,203 | |
| Premises and equipment | 45,053 | | 45,928 | | 46,868 | | 48,309 | | 49,589 | |
| Federal Home Loan Bank stock | 81,347 | | 83,372 | | 81,509 | | 71,734 | | 76,319 | |
| Accrued interest receivable | 31,065 | | 30,258 | | 29,766 | | 28,133 | | 28,794 | |
| Goodwill | 210,895 | | 210,895 | | 210,895 | | 210,895 | | 210,895 | |
| Core deposit intangible | 2,057 | | 2,189 | | 2,323 | | 2,457 | | 2,590 | |
| Bank owned life insurance | 296,493 | | 256,064 | | 294,491 | | 292,825 | | 291,220 | |
| Deferred income taxes, net | 47,225 | | 46,116 | | 56,500 | | 51,973 | | 53,151 | |
| Other real estate owned | — | | 11,982 | | 12,956 | | 12,956 | | 13,410 | |
| Other assets | 100,989 | | 136,242 | | 129,865 | | 110,546 | | 89,366 | |
| Total assets | $ | 7,841,972 | | $ | 7,897,832 | | $ | 7,974,866 | | $ | 8,064,815 | | $ | 8,349,336 | |
| | | | | |
| Liabilities | | | | | |
| Deposits: | | | | | |
| Non-interest-bearing | $ | 586,089 | | $ | 584,130 | | $ | 595,141 | | $ | 609,999 | | $ | 617,778 | |
| Interest-bearing | 4,622,961 | | 4,735,500 | | 4,839,027 | | 5,019,184 | | 5,185,626 | |
| Total deposits | 5,209,050 | | 5,319,630 | | 5,434,168 | | 5,629,183 | | 5,803,404 | |
| Borrowings | 1,722,178 | | 1,667,055 | | 1,626,933 | | 1,506,812 | | 1,611,692 | |
| Advance payments by borrowers for taxes | 17,387 | | 16,742 | | 16,907 | | 18,338 | | 18,706 | |
| Other liabilities | 44,279 | | 46,427 | | 47,324 | | 41,198 | | 49,304 | |
| Total liabilities | 6,992,894 | | 7,049,854 | | 7,125,332 | | 7,195,531 | | 7,483,106 | |
| | | | | |
| Stockholders' Equity | | | | | |
| Common stock | 644 | | 645 | | 652 | | 659 | | 667 | |
| Paid-in capital | 493,187 | | 493,297 | | 497,269 | | 503,332 | | 509,359 | |
| Retained earnings | 440,308 | | 439,755 | | 460,464 | | 457,611 | | 452,605 | |
| Unearned ESOP shares | (21,402) | | (21,889) | | (22,375) | | (22,862) | | (23,348) | |
| Accumulated other comprehensive loss | (63,659) | | (63,830) | | (86,476) | | (69,456) | | (73,053) | |
| Total stockholders' equity | 849,078 | | 847,978 | | 849,534 | | 869,284 | | 866,230 | |
| Total liabilities and stockholders' equity | $ | 7,841,972 | | $ | 7,897,832 | | $ | 7,974,866 | | $ | 8,064,815 | | $ | 8,349,336 | |
| | | | | |
| Consolidated capital ratios | | | | | |
| Equity to assets | 10.83 | % | 10.74 | % | 10.65 | % | 10.78 | % | 10.37 | % |
Tangible equity to tangible assets (1) | 8.34 | % | 8.26 | % | 8.20 | % | 8.35 | % | 8.02 | % |
| | | | | |
| Share data | | | | | |
| Outstanding shares | 64,437 | 64,445 | 65,132 | 65,864 | 66,680 |
| Book value per share | $ | 13.18 | | $ | 13.16 | | $ | 13.04 | | $ | 13.20 | | $ | 12.99 | |
Tangible book value per share (2) | $ | 9.87 | | $ | 9.85 | | $ | 9.77 | | $ | 9.96 | | $ | 9.79 | |
_________________________
(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,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| Loan portfolio composition: | | | | | |
| Commercial loans: | | | | | |
| Multi-family mortgage | $ | 2,645,195 | | $ | 2,651,274 | | $ | 2,699,151 | | $ | 2,761,775 | | $ | 2,835,852 | |
| Nonresidential mortgage | 965,539 | | 947,287 | | 946,801 | | 968,574 | | 1,002,643 | |
| Commercial business | 147,326 | | 144,134 | | 149,229 | | 146,861 | | 162,038 | |
| Construction | 229,457 | | 221,933 | | 230,703 | | 226,609 | | 215,524 | |
| Total commercial loans | 3,987,517 | | 3,964,628 | | 4,025,884 | | 4,103,819 | | 4,216,057 | |
| One- to four-family residential mortgage | 1,741,644 | | 1,746,065 | | 1,689,051 | | 1,700,559 | | 1,713,343 | |
| Consumer loans: | | | | | |
| Home equity loans | 42,731 | | 43,517 | | 42,896 | | 43,549 | | 44,376 | |
| Other consumer | 3,198 | | 2,728 | | 2,644 | | 2,549 | | 2,592 | |
| Total consumer loans | 45,929 | | 46,245 | | 45,540 | | 46,098 | | 46,968 | |
| Total loans, excluding yield adjustments | 5,775,090 | | 5,756,938 | | 5,760,475 | | 5,850,476 | | 5,976,368 | |
| Unaccreted yield adjustments | (16,754) | | (11,309) | | (24,426) | | (21,055) | | (10,043) | |
| Loans receivable, net of yield adjustments | 5,758,336 | | 5,745,629 | | 5,736,049 | | 5,829,421 | | 5,966,325 | |
| Less: allowance for credit losses on loans | (44,930) | | (44,867) | | (46,872) | | (48,734) | | (49,122) | |
| Net loans receivable | $ | 5,713,406 | | $ | 5,700,762 | | $ | 5,689,177 | | $ | 5,780,687 | | $ | 5,917,203 | |
| | | | | |
| Asset quality: | | | | | |
| Nonperforming assets: | | | | | |
| Accruing loans - 90 days and over past due | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| Nonaccrual loans | 39,546 | | 28,089 | | 37,912 | | 42,627 | | 44,026 | |
| Total nonperforming loans | 39,546 | | 28,089 | | 37,912 | | 42,627 | | 44,026 | |
| Nonaccrual loans held-for-sale | — | | 9,700 | | — | | — | | — | |
| Other real estate owned | — | | 11,982 | | 12,956 | | 12,956 | | 13,410 | |
| Total nonperforming assets | $ | 39,546 | | $ | 49,771 | | $ | 50,868 | | $ | 55,583 | | $ | 57,436 | |
| | | | | |
| Nonperforming loans (% total loans) | 0.69 | % | 0.49 | % | 0.66 | % | 0.73 | % | 0.74 | % |
| Nonperforming assets (% total assets) | 0.50 | % | 0.63 | % | 0.64 | % | 0.69 | % | 0.69 | % |
| | | | | |
| Classified loans | $ | 115,772 | | $ | 94,676 | | $ | 98,616 | | $ | 93,526 | | $ | 103,461 | |
| | | | | |
| Allowance for credit losses on loans (ACL): | | | | | |
| ACL to total loans | 0.78 | % | 0.78 | % | 0.81 | % | 0.83 | % | 0.82 | % |
| ACL to nonperforming loans | 113.61 | % | 159.73 | % | 123.63 | % | 114.33 | % | 111.57 | % |
| Net charge-offs | $ | 286 | | $ | 4,110 | | $ | 2,107 | | $ | 82 | | $ | 206 | |
| Average net charge-off rate (annualized) | 0.02 | % | 0.29 | % | 0.15 | % | 0.01 | % | 0.01 | % |
Kearny Financial Corp.
Supplemental Balance Sheet Highlights
(Unaudited)
| | | | | | | | | | | | | | | | | |
| (Dollars in Thousands) | March 31,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| Funding composition: | | | | | |
| Deposits: | | | | | |
| Non-interest-bearing deposits | $ | 586,089 | | $ | 584,130 | | $ | 595,141 | | $ | 609,999 | | $ | 617,778 | |
| Interest-bearing demand | 2,349,032 | | 2,347,262 | | 2,236,573 | | 2,252,912 | | 2,285,799 | |
| Savings | 630,456 | | 646,182 | | 689,163 | | 748,721 | | 811,483 | |
| Certificates of deposit (retail) | 1,235,261 | | 1,283,676 | | 1,300,382 | | 1,377,028 | | 1,327,343 | |
| Certificates of deposit (brokered and listing service) | 408,212 | | 458,380 | | 612,909 | | 640,523 | | 761,001 | |
| Interest-bearing deposits | 4,622,961 | | 4,735,500 | | 4,839,027 | | 5,019,184 | | 5,185,626 | |
| Total deposits | 5,209,050 | | 5,319,630 | | 5,434,168 | | 5,629,183 | | 5,803,404 | |
| | | | | |
| Borrowings: | | | | | |
| Federal Home Loan Bank advances | 1,357,178 | | 1,432,055 | | 1,456,933 | | 1,281,812 | | 1,156,692 | |
| Other borrowings | 365,000 | | 235,000 | | 170,000 | | 225,000 | | 455,000 | |
| Total borrowings | 1,722,178 | | 1,667,055 | | 1,626,933 | | 1,506,812 | | 1,611,692 | |
| | | | | |
| Total funding | $ | 6,931,228 | | $ | 6,986,685 | | $ | 7,061,101 | | $ | 7,135,995 | | $ | 7,415,096 | |
| | | | | |
| Loans as a % of deposits | 109.8 | % | 107.4 | % | 104.8 | % | 102.9 | % | 102.1 | % |
| Deposits as a % of total funding | 75.2 | % | 76.1 | % | 77.0 | % | 78.9 | % | 78.3 | % |
| Borrowings as a % of total funding | 24.8 | % | 23.9 | % | 23.0 | % | 21.1 | % | 21.7 | % |
| | | | | |
| Uninsured deposits: | | | | | |
Uninsured deposits (reported) (1) | $ | 1,760,740 | | $ | 1,813,122 | | $ | 1,734,288 | | $ | 1,771,416 | | $ | 1,678,051 | |
Uninsured deposits (adjusted) (2) | $ | 718,026 | | $ | 694,510 | | $ | 683,265 | | $ | 710,377 | | $ | 705,727 | |
_________________________
(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 (Loss)
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
(Dollars and Shares in Thousands,
Except Per Share Data) | March 31,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| Interest income | | | | | |
| Loans | $ | 64,035 | | $ | 63,384 | | $ | 62,769 | | $ | 62,044 | | $ | 60,172 | |
| Taxable investment securities | 15,490 | | 16,756 | | 16,265 | | 15,736 | | 15,459 | |
| Tax-exempt investment securities | 85 | | 84 | | 87 | | 91 | | 99 | |
| Other interest-earning assets | 2,475 | | 2,401 | | 2,047 | | 1,821 | | 1,441 | |
| Total interest income | 82,085 | | 82,625 | | 81,168 | | 79,692 | | 77,171 | |
| | | | | |
| Interest expense | | | | | |
| Deposits | 32,320 | | 30,340 | | 27,567 | | 26,226 | | 22,246 | |
| Borrowings | 15,446 | | 16,446 | | 14,441 | | 13,286 | | 12,554 | |
| Total interest expense | 47,766 | | 46,786 | | 42,008 | | 39,512 | | 34,800 | |
| Net interest income | 34,319 | | 35,839 | | 39,160 | | 40,180 | | 42,371 | |
| Provision for (reversal of) credit losses | 349 | | 2,105 | | 245 | | (306) | | 451 | |
| Net interest income after provision for (reversal of) credit losses | 33,970 | | 33,734 | | 38,915 | | 40,486 | | 41,920 | |
| | | | | |
| Non-interest income | | | | | |
| Fees and service charges | 657 | | 624 | | 748 | | 699 | | 910 | |
| Loss on sale and call of securities | — | | (18,135) | | — | | — | | — | |
| Gain (loss) on sale of loans | (712) | | 104 | | 215 | | 199 | | (2,373) | |
| Loss on sale of other real estate owned | — | | (974) | | — | | (139) | | — | |
| Income from bank owned life insurance | 3,039 | | 1,162 | | 1,666 | | 1,605 | | 1,581 | |
| Electronic banking fees and charges | 464 | | 396 | | 367 | | 399 | | 457 | |
| Other income | 755 | | 811 | | 1,014 | | 903 | | 1,071 | |
| Total non-interest income | 4,203 | | (16,012) | | 4,010 | | 3,666 | | 1,646 | |
| | | | | |
| Non-interest expense | | | | | |
| Salaries and employee benefits | 16,911 | | 17,282 | | 17,761 | | 17,315 | | 18,005 | |
| Net occupancy expense of premises | 2,863 | | 2,674 | | 2,758 | | 2,862 | | 3,097 | |
| Equipment and systems | 3,823 | | 3,814 | | 3,801 | | 3,511 | | 3,537 | |
| Advertising and marketing | 387 | | 301 | | 228 | | 231 | | 413 | |
| Federal deposit insurance premium | 1,429 | | 1,495 | | 1,524 | | 1,455 | | 1,546 | |
| Directors' compensation | 360 | | 393 | | 393 | | 345 | | 340 | |
| Other expense | 3,286 | | 3,808 | | 3,309 | | 3,042 | | 3,414 | |
| Total non-interest expense | 29,059 | | 29,767 | | 29,774 | | 28,761 | | 30,352 | |
| Income (loss) before income taxes | 9,114 | | (12,045) | | 13,151 | | 15,391 | | 13,214 | |
| Income taxes | 1,717 | | 1,782 | | 3,309 | | 3,378 | | 2,902 | |
| Net income (loss) | $ | 7,397 | | $ | (13,827) | | $ | 9,842 | | $ | 12,013 | | $ | 10,312 | |
| | | | | |
| Net income (loss) per common share (EPS) | | | | | |
| Basic | $ | 0.12 | | $ | (0.22) | | $ | 0.16 | | $ | 0.19 | | $ | 0.16 | |
| Diluted | $ | 0.12 | | $ | (0.22) | | $ | 0.16 | | $ | 0.19 | | $ | 0.16 | |
| | | | | |
| Dividends declared | | | | | |
| Cash dividends declared per common share | $ | 0.11 | | $ | 0.11 | | $ | 0.11 | | $ | 0.11 | | $ | 0.11 | |
| Cash dividends declared | $ | 6,844 | | $ | 6,882 | | $ | 6,989 | | $ | 7,007 | | $ | 7,196 | |
| Dividend payout ratio | 92.5 | % | -49.8 | % | 71.0 | % | 58.3 | % | 69.8 | % |
| | | | | |
| Weighted average number of common shares outstanding | | | | | |
| Basic | 62,205 | 62,299 | 63,014 | 63,667 | 64,769 |
| Diluted | 62,211 | 62,367 | 63,061 | 63,667 | 64,783 |
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| (Dollars in Thousands) | March 31,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| Assets | | | | | |
| Interest-earning assets: | | | | | |
| Loans receivable, including loans held-for-sale | $ | 5,752,477 | | $ | 5,726,321 | | $ | 5,788,074 | | $ | 5,932,541 | | $ | 5,986,669 | |
| Taxable investment securities | 1,382,064 | | 1,509,165 | | 1,516,393 | | 1,529,582 | | 1,558,222 | |
| Tax-exempt investment securities | 14,614 | | 15,025 | | 15,483 | | 16,346 | | 17,663 | |
| Other interest-earning assets | 125,155 | | 139,740 | | 130,829 | | 128,158 | | 131,682 | |
| Total interest-earning assets | 7,274,310 | | 7,390,251 | | 7,450,779 | | 7,606,627 | | 7,694,236 | |
| Non-interest-earning assets | 577,411 | | 554,335 | | 568,723 | | 556,962 | | 575,009 | |
| Total assets | $ | 7,851,721 | | $ | 7,944,586 | | $ | 8,019,502 | | $ | 8,163,589 | | $ | 8,269,245 | |
| | | | | |
| Liabilities and Stockholders' Equity | | | | | |
| Interest-bearing liabilities: | | | | | |
| Deposits: | | | | | |
| Interest-bearing demand | $ | 2,378,831 | | $ | 2,301,169 | | $ | 2,245,831 | | $ | 2,321,120 | | $ | 2,363,762 | |
| Savings | 635,226 | | 664,926 | | 719,508 | | 774,854 | | 858,673 | |
| Certificates of deposit | 1,705,513 | | 1,824,316 | | 1,968,512 | | 2,057,818 | | 2,069,396 | |
| Total interest-bearing deposits | 4,719,570 | | 4,790,411 | | 4,933,851 | | 5,153,792 | | 5,291,831 | |
| Borrowings: | | | | | |
| Federal Home Loan Bank advances | 1,428,801 | | 1,513,497 | | 1,386,473 | | 1,374,316 | | 1,402,269 | |
| Other borrowings | 210,989 | | 142,283 | | 158,098 | | 100,055 | | 1,611 | |
| Total borrowings | 1,639,790 | | 1,655,780 | | 1,544,571 | | 1,474,371 | | 1,403,880 | |
| Total interest-bearing liabilities | 6,359,360 | | 6,446,191 | | 6,478,422 | | 6,628,163 | | 6,695,711 | |
| Non-interest-bearing liabilities: | | | | | |
| Non-interest-bearing deposits | 581,870 | | 597,294 | | 612,251 | | 608,765 | | 634,324 | |
| Other non-interest-bearing liabilities | 65,709 | | 62,387 | | 66,701 | | 64,970 | | 60,327 | |
| Total non-interest-bearing liabilities | 647,579 | | 659,681 | | 678,952 | | 673,735 | | 694,651 | |
| Total liabilities | 7,006,939 | | 7,105,872 | | 7,157,374 | | 7,301,898 | | 7,390,362 | |
| Stockholders' equity | 844,782 | | 838,714 | | 862,128 | | 861,691 | | 878,883 | |
| Total liabilities and stockholders' equity | $ | 7,851,721 | | $ | 7,944,586 | | $ | 8,019,502 | | $ | 8,163,589 | | $ | 8,269,245 | |
| | | | | |
| Average interest-earning assets to average interest-bearing liabilities | 114.39 | % | 114.65 | % | 115.01 | % | 114.76 | % | 114.91 | % |
Kearny Financial Corp.
Performance Ratio Highlights
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| March 31,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| Average yield on interest-earning assets: | | | | | |
| Loans receivable, including loans held-for-sale | 4.45 | % | 4.43 | % | 4.34 | % | 4.18 | % | 4.02 | % |
| Taxable investment securities | 4.48 | % | 4.44 | % | 4.29 | % | 4.12 | % | 3.97 | % |
Tax-exempt investment securities (1) | 2.32 | % | 2.25 | % | 2.25 | % | 2.23 | % | 2.23 | % |
| Other interest-earning assets | 7.91 | % | 6.87 | % | 6.26 | % | 5.68 | % | 4.38 | % |
| Total interest-earning assets | 4.51 | % | 4.47 | % | 4.36 | % | 4.19 | % | 4.01 | % |
| | | | | |
| Average cost of interest-bearing liabilities: | | | | | |
| Deposits: | | | | | |
| Interest-bearing demand | 3.08 | % | 2.91 | % | 2.58 | % | 2.38 | % | 2.01 | % |
| Savings | 0.46 | % | 0.44 | % | 0.47 | % | 0.48 | % | 0.41 | % |
| Certificates of deposit | 3.11 | % | 2.82 | % | 2.49 | % | 2.24 | % | 1.84 | % |
| Total interest-bearing deposits | 2.74 | % | 2.53 | % | 2.23 | % | 2.04 | % | 1.68 | % |
| Borrowings: | | | | | |
| Federal Home Loan Bank advances | 3.55 | % | 3.82 | % | 3.54 | % | 3.51 | % | 3.58 | % |
| Other borrowings | 5.22 | % | 5.65 | % | 5.46 | % | 4.89 | % | 5.15 | % |
| Total borrowings | 3.77 | % | 3.97 | % | 3.74 | % | 3.60 | % | 3.58 | % |
| Total interest-bearing liabilities | 3.00 | % | 2.90 | % | 2.59 | % | 2.38 | % | 2.08 | % |
| | | | | |
Interest rate spread (2) | 1.51 | % | 1.57 | % | 1.77 | % | 1.81 | % | 1.93 | % |
Net interest margin (3) | 1.89 | % | 1.94 | % | 2.10 | % | 2.11 | % | 2.20 | % |
| | | | | |
| Non-interest income to average assets (annualized) | 0.21 | % | -0.81 | % | 0.20 | % | 0.18 | % | 0.08 | % |
| Non-interest expense to average assets (annualized) | 1.48 | % | 1.50 | % | 1.49 | % | 1.41 | % | 1.47 | % |
| | | | | |
Efficiency ratio (4) | 75.43 | % | 150.13 | % | 68.97 | % | 65.60 | % | 68.96 | % |
| | | | | |
| Return on average assets (annualized) | 0.38 | % | -0.70 | % | 0.49 | % | 0.59 | % | 0.50 | % |
| Return on average equity (annualized) | 3.50 | % | -6.59 | % | 4.57 | % | 5.58 | % | 4.69 | % |
Return on average tangible equity (annualized) (5) | 4.68 | % | -8.84 | % | 6.07 | % | 7.41 | % | 6.20 | % |
_________________________
(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,
Except Per Share Data) | March 31,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| Adjusted net income: | | | | | |
| Net income (loss) (GAAP) | $ | 7,397 | | $ | (13,827) | | $ | 9,842 | | $ | 12,013 | | $ | 10,312 | |
| Non-recurring transactions - net of tax: | | | | | |
| Branch consolidation expenses | — | | — | | — | | — | | 568 | |
| Net effect of sale and call of securities | — | | 12,876 | | — | | — | | — | |
| | | | | |
| | | | | |
| Net effect of bank-owned life insurance restructure | — | | 6,286 | | — | | — | | — | |
| Adjusted net income | $ | 7,397 | | $ | 5,335 | | $ | 9,842 | | $ | 12,013 | | $ | 10,880 | |
| | | | | |
| Calculation of pre-tax, pre-provision net revenue: | | | | | |
| Net income (loss) (GAAP) | $ | 7,397 | | $ | (13,827) | | $ | 9,842 | | $ | 12,013 | | $ | 10,312 | |
| Adjustments to net income (GAAP): | | | | | |
| Provision for income taxes | 1,717 | | 1,782 | | 3,309 | | 3,378 | | 2,902 | |
| Provision for (reversal of) credit losses | 349 | | 2,105 | | 245 | | (306) | | 451 | |
| Pre-tax, pre-provision net revenue (non-GAAP) | $ | 9,463 | | $ | (9,940) | | $ | 13,396 | | $ | 15,085 | | $ | 13,665 | |
| | | | | |
| Adjusted earnings per share: | | | | | |
| Weighted average common shares - basic | 62,205 | 62,299 | 63,014 | 63,667 | 64,769 |
| Weighted average common shares - diluted | 62,211 | 62,367 | 63,061 | 63,667 | 64,783 |
| | | | | |
| Earnings per share - basic (GAAP) | $ | 0.12 | | $ | (0.22) | | $ | 0.16 | | $ | 0.19 | | $ | 0.16 | |
| Earnings per share - diluted (GAAP) | $ | 0.12 | | $ | (0.22) | | $ | 0.16 | | $ | 0.19 | | $ | 0.16 | |
| | | | | |
| Adjusted earnings per share - basic (non-GAAP) | $ | 0.12 | | $ | 0.09 | | $ | 0.16 | | $ | 0.19 | | $ | 0.17 | |
| Adjusted earnings per share - diluted (non-GAAP) | $ | 0.12 | | $ | 0.09 | | $ | 0.16 | | $ | 0.19 | | $ | 0.17 | |
| | | | | |
| Pre-tax, pre-provision net revenue per share: | | | | | |
| Pre-tax, pre-provision net revenue per share - basic (non-GAAP) | $ | 0.15 | | $ | (0.16) | | $ | 0.21 | | $ | 0.24 | | $ | 0.21 | |
| Pre-tax, pre-provision net revenue per share - diluted (non-GAAP) | $ | 0.15 | | $ | (0.16) | | $ | 0.21 | | $ | 0.24 | | $ | 0.21 | |
| | | | | |
| Adjusted return on average assets: | | | | | |
| Total average assets | $ | 7,851,721 | | $ | 7,944,586 | | $ | 8,019,502 | | $ | 8,163,589 | | $ | 8,269,245 | |
| | | | | |
| Return on average assets (GAAP) | 0.38 | % | -0.70 | % | 0.49 | % | 0.59 | % | 0.50 | % |
| Adjusted return on average assets (non-GAAP) | 0.38 | % | 0.27 | % | 0.49 | % | 0.59 | % | 0.53 | % |
| | | | | |
| Adjusted return on average equity: | | | | | |
| Total average equity | $ | 844,782 | | $ | 838,714 | | $ | 862,128 | | $ | 861,691 | | $ | 878,883 | |
| | | | | |
| Return on average equity (GAAP) | 3.50 | % | -6.59 | % | 4.57 | % | 5.58 | % | 4.69 | % |
| Adjusted return on average equity (non-GAAP) | 3.50 | % | 2.54 | % | 4.57 | % | 5.58 | % | 4.95 | % |
Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
(Dollars and Shares in Thousands,
Except Per Share Data) | March 31,
2024 | December 31,
2023 | September 30,
2023 | June 30,
2023 | March 31,
2023 |
| Adjusted return on average tangible equity: | | | | | |
| Total average equity | $ | 844,782 | | $ | 838,714 | | $ | 862,128 | | $ | 861,691 | | $ | 878,883 | |
| Less: average goodwill | (210,895) | | (210,895) | | (210,895) | | (210,895) | | (210,895) | |
| Less: average other intangible assets | (2,138) | | (2,277) | | (2,411) | | (2,544) | | (2,683) | |
| Total average tangible equity | $ | 631,749 | | $ | 625,542 | | $ | 648,822 | | $ | 648,252 | | $ | 665,305 | |
| | | | | |
| Return on average tangible equity (non-GAAP) | 4.68 | % | -8.84 | % | 6.07 | % | 7.41 | % | 6.20 | % |
| Adjusted return on average tangible equity (non-GAAP) | 4.68 | % | 3.41 | % | 6.07 | % | 7.41 | % | 6.54 | % |
| | | | | |
| Adjusted non-interest expense ratio: | | | | | |
| Non-interest expense (GAAP) | $ | 29,059 | | $ | 29,767 | | $ | 29,774 | | $ | 28,761 | | $ | 30,352 | |
| Non-recurring transactions: | | | | | |
| Branch consolidation expenses | — | | — | | — | | — | | (800) | |
| | | | | |
| | | | | |
| Non-interest expense (non-GAAP) | $ | 29,059 | | $ | 29,767 | | $ | 29,774 | | $ | 28,761 | | $ | 29,552 | |
| | | | | |
| Non-interest expense ratio (GAAP) | 1.48 | % | 1.50 | % | 1.49 | % | 1.41 | % | 1.47 | % |
| Adjusted non-interest expense ratio (non-GAAP) | 1.48 | % | 1.50 | % | 1.49 | % | 1.41 | % | 1.43 | % |
| | | | | |
| Adjusted efficiency ratio: | | | | | |
| Non-interest expense (non-GAAP) | $ | 29,059 | | $ | 29,767 | | $ | 29,774 | | $ | 28,761 | | $ | 29,552 | |
| | | | | |
| Net interest income (GAAP) | $ | 34,319 | | $ | 35,839 | | $ | 39,160 | | $ | 40,180 | | $ | 42,371 | |
| Total non-interest income (GAAP) | 4,203 | | (16,012) | | 4,010 | | 3,666 | | 1,646 | |
| Non-recurring transactions: | | | | | |
| Net effect of sale and call of securities | — | | 18,135 | | — | | — | | — | |
| | | | | |
| Net effect of bank-owned life insurance restructure | — | | 573 | | — | | — | | — | |
| Total revenue (non-GAAP) | $ | 38,522 | | $ | 38,535 | | $ | 43,170 | | $ | 43,846 | | $ | 44,017 | |
| | | | | |
| Efficiency ratio (GAAP) | 75.43 | % | 150.13 | % | 68.97 | % | 65.60 | % | 68.96 | % |
| Adjusted efficiency ratio (non-GAAP) | 75.43 | % | 77.25 | % | 68.97 | % | 65.60 | % | 67.14 | % |
krny-20240425xexx992xfin
APRIL 25, 2024 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 4 EXHIBIT 99.2
Forward Looking Statements & Financial Measures 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, and subsequent filings with the Securities and Exchange Commission, 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, 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 Headquartered in Fairfield, NJ 43 full-service branches1 in New Jersey and New York City Active acquirer, having completed 7 whole-bank acquisitions since 1999 1 As of March 31, 2024. Source: S&P Global Market Intelligence & Company Filings. 3
140 Years of Serving our Communities and Clients 4
3Q24 Financial Highlights 1 Excludes Yield Adjustments. Source: Company Filings. 5 3Q24 Highlights: Net Interest Margin - Compression slowed, declining five basis points from the prior quarter BOLI Restructure – Excluding non-recurring items, run-rate BOLI earnings improved by $673,000 compared to the prior quarter Non-performing assets improved to 0.50% in 3Q24 compared to 0.63% in 2Q24 Net Income Total Assets $7.8 billion Net Interest Income Diluted EPS $7.4 million $34.3 million $0.12 Total Loans1 Total Deposits $5.8 billion $5.2 billion
Capital Strength Equity Capitalization Level 1 Kearny Financial Corp. (NASDAQ: KRNY) Regulatory Capital Ratios as of March 31, 2024 are preliminary. 2 S&P U.S. Small Cap Banks Index comprised of 243 constituents, based on December 31, 2023 results. Source: Company Filings. 6 Regulatory Capital Ratios1,2 8.02% 8.35% 8.20% 8.26% 8.34% 10.37% 10.78% 10.65% 10.74% 10.83% 3Q23 4Q23 1Q24 2Q24 3Q24 Tangible Common Equity / Tangible Assets Equity / Assets 9.07% 14.68% 14.68% 15.45% 9.65% 11.53% 11.73% 14.16% Tier 1 Leverage Common Equity Tier 1 Tier 1 Risk-Based Capital Total Risk-Based Capital KRNY S&P US Small Cap Banks
7 Conservative Underwriting Culture Comprehensive CRE / Multifamily Underwriting Highly disciplined LTV and DSCR standards Interest rates stressed a minimum of +300bps at origination DSCR based on in-place rents, not projections, with conservative allowances for vacancy NOI underwritten to include forecasted expense increases and full taxes (where a tax abatement exists) Approval Authority & Underwriting Consistency Lending authority aggregated by borrower/group of related borrowers Technology ensures consistent and efficient underwriting and risk rating process Multi-faceted Loan Review & Stress Testing Semi-annual third-party loan-level stress testing and annual capital-based stress testing Quarterly third-party portfolio loan review with 65% of total portfolio reviewed on an annual basis Annual internal loan reviews on all commercial loans with balances of $2.5 million or greater Proactive Workout Process Dedicated team of portfolio managers and loan workout specialists Weekly meetings comprised of loan officers, credit personnel and special assets group to pre-emptively address delinquencies or problem credits Philosophy of aggressively addressing impaired assets in a timely fashion Senior Credit Officer Approval Management Loan Committee Approval Board Loan Committee Approval
Track Record of Strong Credit Performance 1 Data provided by Federal Reserve Bank of St. Louis. Source: Company Filings. 8 From 2006 to 2023, inclusive of the Global Financial Crisis and the COVID -19 Pandemic, KRNY’s NCO to average total loans totaled 9 bps per year compared to 50 bps for all Commercial Banks (US Banks not among the top 100)1. Net Charge-offs to Average Total Loans 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 3Q24 Commercial Banks (not among top 100) KRNY Global Financial Crisis COVID-19 Pandemic Cumulative charge-offs for KRNY between 2006 and 3Q24 were minimal, totaling $35.1 million.
Diversified Loan Portfolio Loan Composition1 Geographic Distribution2Loan Trend 1 For the quarter ended March 31, 2024. 2 As of March 31, 2024. Source: S&P Global Market Intelligence & Company Filings. 9 ($ millions) 1-4 Family 30.2% Home Equity 0.7% Multi-family 45.8% CRE 16.7% Construction 4.0% C&I 2.6% QTD Yield on Loans 4.45% $1,713 $1,701 $1,689 $1,746 $1,742 $2,836 $2,762 $2,699 $2,651 $2,645 $1,003 $969 $947 $947 $966 $5,976 $5,850 $5,760 $5,757 $5,775 3Q23 4Q23 1Q24 2Q24 3Q24 1-4 Family Home Equity Multi-family CRE Construction C&I New York 34.4% New Jersey 54.9% Pennsylvania 5.9% Other 4.8% LTV 61.3%
Multifamily Loan Portfolio Multifamily Loan Portfolio Composition1 New York City (“NYC”) Multifamily1 Source: Company Filings 1 As of March 31, 2024. 10 Less than half of our Multifamily portfolio is collateralized by properties in NYC Only 8% of our Multifamily portfolio is collateralized by majority or fully rent-regulated NYC properties There are limited levels of maturing or repricing NYC Multifamily loans in calendar 2024 and 2025 Outstanding asset quality over multiple credit cycles NYC Multifamily Portfolio: $1.2 billion Average Loan Balance: $3.45 million Weighted Average LTV: 62.7% Nonperforming Loans / Total MF Loans: 0.4% Apr to Dec 2024 Maturity & Repricing: $27.9 million Calendar Year 2025 Maturity & Repricing: $120.7 million Majority NYC Free Market 39.3% Outside NYC 52.9% 100% NYC Rent Regulated 3.7% Majority NYC Rent Regulated 4.1% Total MF $2.6B
NYC Multifamily Loan Portfolio 1 As of March 31, 2024. 2 Source: “New York City Multifamily In Review Report 2023” by Ariel Property Advisors; https://arielpa.nyc/investor-relations/research-reports 3 “New York City Multifamily In Review Report 2023” by Ariel Property Advisors; https://arielpa.nyc/insights/240206-how-low-can-it-go-finding-value-in-new-york-city-apartment-building-sales [arielpa.nyc] 11 Independent Market Research Report Data Industry Market Reports indicate that real estate prices in Brooklyn outperformed the other boroughs of NYC 66.5% of the Company’s NYC Multifamily portfolio is located in Brooklyn, NY Brooklyn 66.5% Queens 12.8% Manhattan 10.8% Bronx 9.5% Staten Island 0.4% Total NYC MF $1.2 B LTV 62.7% Rent Stabilized Location Building Value Change Bronx (29%) Brooklyn (7%) Manhattan (below 96th St) (37%) Northern Manhattan (above 96th St) (51%) Queens (22%) NYC Average (18%) Free Market Location Building Value Change Bronx 1% Brooklyn 1% Manhattan (below 96th St) (31%) Northern Manhattan (above 96th St) (25%) Queens 6% NYC Average (11%) Pricing Drop from Peak Pricing2 Free Market - Pricing Drop from Peak Pricing3
CRE Loan Detail Source: Company Filings. 1 As of March 31, 2024. 12 CRE Portfolio by Collateral Type1 CRE Loan Geographic Distribution1 Retail 36.3% Mixed Use 26.1% Office 15.1% Industrial 16.7% Specialty & Other 2.0% Medical 3.8% New Jersey 56.2% Brooklyn 9.9% New York (Ex. Brooklyn) 26.5% Pennsylvania 4.8% Other 2.6% Total CRE $1.0 B LTV 52%
Office Portfolio 1 As of March 31, 2024. Source: Company Filings. 13 Office Portfolio by Contractual Maturity1 Office Loan Geographic Distribution1 Office Portfolio Profile 15.7% of total CRE portfolio or $146 million Average loan size of $1.7 million Classified office loans comprised of 0.7% of total office loans ($ millions) ($ millions) $6 $5 $17 $49 $22 $10 $37 $- $10 $20 $30 $40 $50 $60 2024 2025 2026 2027 2028 2029 2030+ Other 3.1% Manhattan 22.4% New York (Ex. Manhattan) 4.5% New Jersey 70.0% Total Office $146 M LTV 48.4% DSCR 1.8x
Asset Quality Metrics Non-Performing Assets / Total Assets Non-Performing Loans1 Allowance for Credit Losses 1 As of March 31, 2024; amounts shown in millions. Source: S&P Global Market Intelligence & Company Filings. 14 NPL's $39.5 MM 0.69% 0.69% 0.64% 0.63% 0.50% 0.25% 0.50% 0.75% 1.00% 3Q23 4Q23 1Q24 2Q24 3Q24 Multi-family $25.2 CRE $4.5 C&I $4.2 1-4 Family $5.6 NPL's $39.5 MM $46.6 $45.3 $45.0 $44.7 $44.7 $2.5 $3.4 $1.9 $0.2 $0.2 0.82% 0.83% 0.81% 0.78% 0.78% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 3Q23 4Q23 1Q24 2Q24 3Q24 ACL Balance - Individually Analyzed ACL Balance - Collectively Evaluated ACL to Total Loans Receivable Net Charge-Offs / Average Loans 0.01% 0.01% 0.15% 0.29% 0.02% -0.10% 0.00% 0.10% 0.20% 0.30% 0.40% 3Q23 4Q23 1Q24 2Q24 3Q24 Increase driven by a single commercial real estate relationship
Granular Deposit Franchise 1 For the quarter ended March 31, 2024. 2 As of March 31,2024; excludes Wholesale and state & local government deposits. Source: S&P Global Market Intelligence & Company Filings. 15 Deposit Composition1 Deposit Trend Deposit Segmentation2Non-Maturity Deposit Mix Retail CDs 23.7% Wholesale CDs 7.8% Savings 12.1% Interest Bearing DDA 45.1% Non-interest Bearing DDA 11.3% ($ millions) $1,327 $1,377 $1,300 $1,284 $1,235 $761 $640 $613 $458 $408 $811 $749 $689 $646 $630 $2,286 $2,253 $2,237 $2,348 $2,349 $618 $610 $595 $584 $586 $5,803 $5,629 $5,434 $5,320 $5,209 3Q23 4Q23 1Q24 2Q24 3Q24 Retail CDs Wholesale CDs Savings Interest Bearing DDA Non-interest Bearing DDA Consumer 62.8% Commercial 21.4% Government 15.8% Product # of Accounts Balance ($ millions) Average Balance per Account Checking 53,349 $ 2,379 $ 44,594 Savings 32,098 623 19,419 CD 26,242 1,640 62,502 Total Retail Deposits 111,689 $ 4,642 $ 41,557 QTD Cost of Deposits 2.74%
Liquidity Available for Uninsured Deposits Estimated Uninsured Deposits Analysis2 1 Estimated amount of uninsured deposits reported in March 31, 2024 Call Report. 2 As of March 31, 2024. 16 Available liquidity is 2.5x greater than estimated uninsured deposits (excluding items above) Liquidity Capacity2 Estimated Uninsured Deposit Analysis ($ millions) Estimated Uninsured Deposits 1,761$ Less: Collateralized State & Local Government Deposits (552) Less: Bank's wholly-owned subsidiary & Holding Company Deposits (491) Estimated uninsured deposits excluding items above: 718$ Total Deposits 5,209$ Estimated uninsured deposits, excluding items above, as a % of Total Deposits 13.8% 1 Sources of Liquidity ($ millions) Liquidity Capacity Funding Utilized Available Capacity Internal Sources: Free Securities and other 337$ -$ 337$ External Sources: FRB 503 100 403 FHLB 2,690 1,623 1,067 Total Liquidity 3,530$ 1,723$ 1,807$
Investment Securities 1 As of March 31, 2024. 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. 17 Securities Composition1 Securities Average Balance & Yield TrendAFS/HTM & Effective Duration Total Effective Duration ≈ 3.2 years Floating rate securities ≈ 38.3% ($ millions) $1,576 $1,546 $1,532 $1,524 $1,397 3.95% 4.10% 4.27% 4.42% 4.46% 3Q23 4Q23 1Q24 2Q24 3Q24 Corporate Bonds 10.1% CLO 32.8% ABS Student Loans 7.0% Agency MBS 49.0% Municipal Bonds 1.1% 2 QTD Yield on Securities 4.46% AFS , 88.7% HTM , 11.3% At March 31, 2024, the after-tax net unrecognized loss on securities held-to-maturity was $11.4 million, or 1.79% of tangible equity3
Best-in-Class Operating Efficiency Source: S&P Global Market Intelligence & Company Filings. 18 Non-interest Expense to Average Assets $68 $74 $75 $96 $114 $130 $131 $121 1 21 41 61 81 101 121 2017 2018 2019 2020 2021 2022 2023 3Q24 ($ millions) Deposits per Branch 1.8x 2017 3Q24 1.76% 1.48% Core Non-interest Expense to Total Average Assets -28 bps 1.76% 1.86% 1.64% 1.61% 1.72% 1.73% 1.53% 1.48% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2.00% 2017 2018 2019 2020 2021 2022 2023 3Q24
Best-in-Class Technology Embedded Throughout the Organization 19