FAIRFIELD, N.J., Oct. 26, 2023 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended September 30, 2023 of $9.8 million, or $0.16 per diluted share, compared to $12.0 million, or $0.19 per diluted share, for the quarter ended June 30, 2023.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on November 22, 2023, to stockholders of record as of November 8, 2023.
Craig L. Montanaro, President and Chief Executive Officer, commented, “In the face of ongoing industry-wide macro-economic headwinds we continue to execute strategies to mitigate risk, manage our operating expenses and support the long-term franchise value of the Company. To that end, this quarter we de-levered our balance sheet by an additional $90 million, meaningfully slowed net interest margin compression and continued to focus on building high-value loan and deposit relationships. To further support these efforts we have formed a new Corporate Banking division under the executive leadership of our Chief Banking Officer, Anthony Bilotta. This division has been staffed with seasoned banking professionals whose sole focus is the origination of stable, long-term, non-interest-bearing deposits of corporate clients.”
Mr. Montanaro continued, “I am further pleased to announce that, subsequent to quarter end, we launched our enhanced digital banking platform, which expands our client-facing online and mobile capabilities while providing a state-of-the-art user experience. Our continued focus on digital engagement complements our high-touch, personalized service model and allows us to expand our brand into new markets in an efficient and cost-effective manner.”
Balance Sheet
Earnings
Performance Highlights
Net Interest Income and Net Interest Margin
Non-Interest Income
Non-Interest Expense
Income Taxes
Asset Quality
Capital
This earnings release should be read in conjunction with Kearny Financial Corp.’s Q1 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
(Dollars and Shares in Thousands, Except Per Share Data) | September 30, 2023 | June 30, 2023 | Variance or Change | Variance or Change Pct. | |||||||
(Unaudited) | (Audited) | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 57,219 | $ | 70,515 | $ | (13,296 | ) | -18.9 | % | ||
Securities available for sale | 1,215,633 | 1,227,729 | (12,096 | ) | -1.0 | % | |||||
Securities held to maturity | 143,730 | 146,465 | (2,735 | ) | -1.9 | % | |||||
Loans held-for-sale | 3,934 | 9,591 | (5,657 | ) | -59.0 | % | |||||
Loans receivable | 5,736,049 | 5,829,421 | (93,372 | ) | -1.6 | % | |||||
Less: allowance for credit losses on loans | (46,872 | ) | (48,734 | ) | (1,862 | ) | -3.8 | % | |||
Net loans receivable | 5,689,177 | 5,780,687 | (91,510 | ) | -1.6 | % | |||||
Premises and equipment | 46,868 | 48,309 | (1,441 | ) | -3.0 | % | |||||
Federal Home Loan Bank stock | 81,509 | 71,734 | 9,775 | 13.6 | % | ||||||
Accrued interest receivable | 29,766 | 28,133 | 1,633 | 5.8 | % | ||||||
Goodwill | 210,895 | 210,895 | — | — | % | ||||||
Core deposit intangible | 2,323 | 2,457 | (134 | ) | -5.5 | % | |||||
Bank owned life insurance | 294,491 | 292,825 | 1,666 | 0.6 | % | ||||||
Deferred income taxes, net | 56,500 | 51,973 | 4,527 | 8.7 | % | ||||||
Other real estate owned | 12,956 | 12,956 | — | — | % | ||||||
Other assets | 129,865 | 110,546 | 19,319 | 17.5 | % | ||||||
Total assets | $ | 7,974,866 | $ | 8,064,815 | $ | (89,949 | ) | -1.1 | % | ||
Liabilities | |||||||||||
Deposits: | |||||||||||
Non-interest-bearing | $ | 595,141 | $ | 609,999 | $ | (14,858 | ) | -2.4 | % | ||
Interest-bearing | 4,839,027 | 5,019,184 | (180,157 | ) | -3.6 | % | |||||
Total deposits | 5,434,168 | 5,629,183 | (195,015 | ) | -3.5 | % | |||||
Borrowings | 1,626,933 | 1,506,812 | 120,121 | 8.0 | % | ||||||
Advance payments by borrowers for taxes | 16,907 | 18,338 | (1,431 | ) | -7.8 | % | |||||
Other liabilities | 47,324 | 41,198 | 6,126 | 14.9 | % | ||||||
Total liabilities | 7,125,332 | 7,195,531 | (70,199 | ) | -1.0 | % | |||||
Stockholders' Equity | |||||||||||
Common stock | 652 | 659 | (7 | ) | -1.1 | % | |||||
Paid-in capital | 497,269 | 503,332 | (6,063 | ) | -1.2 | % | |||||
Retained earnings | 460,464 | 457,611 | 2,853 | 0.6 | % | ||||||
Unearned ESOP shares | (22,375 | ) | (22,862 | ) | 487 | 2.1 | % | ||||
Accumulated other comprehensive loss | (86,476 | ) | (69,456 | ) | (17,020 | ) | -24.5 | % | |||
Total stockholders' equity | 849,534 | 869,284 | (19,750 | ) | -2.3 | % | |||||
Total liabilities and stockholders' equity | $ | 7,974,866 | $ | 8,064,815 | $ | (89,949 | ) | -1.1 | % | ||
Consolidated capital ratios | |||||||||||
Equity to assets | 10.65 | % | 10.78 | % | -0.13 | % | |||||
Tangible equity to tangible assets (1) | 8.20 | % | 8.35 | % | -0.15 | % | |||||
Share data | |||||||||||
Outstanding shares | 65,132 | 65,864 | (732 | ) | -1.1 | % | |||||
Book value per share | $ | 13.04 | $ | 13.20 | $ | (0.16 | ) | -1.2 | % | ||
Tangible book value per share (2) | $ | 9.77 | $ | 9.96 | $ | (0.19 | ) | -1.9 | % |
_________________________ | |
(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, Except Per Share Data) | Three Months Ended | Variance or Change | Variance or Change Pct. | ||||||||
September 30, 2023 | June 30, 2023 | ||||||||||
Interest income | |||||||||||
Loans | $ | 62,769 | $ | 62,044 | $ | 725 | 1.2 | % | |||
Taxable investment securities | 16,265 | 15,736 | 529 | 3.4 | % | ||||||
Tax-exempt investment securities | 87 | 91 | (4 | ) | -4.4 | % | |||||
Other interest-earning assets | 2,047 | 1,821 | 226 | 12.4 | % | ||||||
Total interest income | 81,168 | 79,692 | 1,476 | 1.9 | % | ||||||
Interest expense | |||||||||||
Deposits | 27,567 | 26,226 | 1,341 | 5.1 | % | ||||||
Borrowings | 14,441 | 13,286 | 1,155 | 8.7 | % | ||||||
Total interest expense | 42,008 | 39,512 | 2,496 | 6.3 | % | ||||||
Net interest income | 39,160 | 40,180 | (1,020 | ) | -2.5 | % | |||||
Provision for (reversal of) credit losses | 245 | (306 | ) | 551 | -180.1 | % | |||||
Net interest income after provision for (reversal of) credit losses | 38,915 | 40,486 | (1,571 | ) | -3.9 | % | |||||
Non-interest income | |||||||||||
Fees and service charges | 748 | 699 | 49 | 7.0 | % | ||||||
Gain on sale of loans | 215 | 199 | 16 | 8.0 | % | ||||||
Loss on sale of other real estate owned | — | (139 | ) | 139 | 100.0 | % | |||||
Income from bank owned life insurance | 1,666 | 1,605 | 61 | 3.8 | % | ||||||
Electronic banking fees and charges | 367 | 399 | (32 | ) | -8.0 | % | |||||
Other income | 1,014 | 903 | 111 | 12.3 | % | ||||||
Total non-interest income | 4,010 | 3,666 | 344 | 9.4 | % | ||||||
Non-interest expense | |||||||||||
Salaries and employee benefits | 17,761 | 17,315 | 446 | 2.6 | % | ||||||
Net occupancy expense of premises | 2,758 | 2,862 | (104 | ) | -3.6 | % | |||||
Equipment and systems | 3,801 | 3,511 | 290 | 8.3 | % | ||||||
Advertising and marketing | 228 | 231 | (3 | ) | -1.3 | % | |||||
Federal deposit insurance premium | 1,524 | 1,455 | 69 | 4.7 | % | ||||||
Directors' compensation | 393 | 345 | 48 | 13.9 | % | ||||||
Other expense | 3,309 | 3,042 | 267 | 8.8 | % | ||||||
Total non-interest expense | 29,774 | 28,761 | 1,013 | 3.5 | % | ||||||
Income before income taxes | 13,151 | 15,391 | (2,240 | ) | -14.6 | % | |||||
Income taxes | 3,309 | 3,378 | (69 | ) | -2.0 | % | |||||
Net income | $ | 9,842 | $ | 12,013 | $ | (2,171 | ) | -18.1 | % | ||
Net income per common share (EPS) | |||||||||||
Basic | $ | 0.16 | $ | 0.19 | $ | (0.03 | ) | ||||
Diluted | $ | 0.16 | $ | 0.19 | $ | (0.03 | ) | ||||
Dividends declared | |||||||||||
Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | — | |||||
Cash dividends declared | $ | 6,989 | $ | 7,007 | $ | (18 | ) | ||||
Dividend payout ratio | 71.0 | % | 58.3 | % | 12.7 | % | |||||
Weighted average number of common shares outstanding | |||||||||||
Basic | 63,014 | 63,667 | (653 | ) | |||||||
Diluted | 63,061 | 63,667 | (606 | ) | |||||||
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
(Dollars in Thousands) | Three Months Ended | Variance or Change | Variance or Change Pct. | ||||||||
September 30, 2023 | June 30, 2023 | ||||||||||
Assets | |||||||||||
Interest-earning assets: | |||||||||||
Loans receivable, including loans held for sale | $ | 5,788,074 | $ | 5,932,541 | $ | (144,467 | ) | -2.4 | % | ||
Taxable investment securities | 1,516,393 | 1,529,582 | (13,189 | ) | -0.9 | % | |||||
Tax-exempt investment securities | 15,483 | 16,346 | (863 | ) | -5.3 | % | |||||
Other interest-earning assets | 130,829 | 128,158 | 2,671 | 2.1 | % | ||||||
Total interest-earning assets | 7,450,779 | 7,606,627 | (155,848 | ) | -2.0 | % | |||||
Non-interest-earning assets | 568,723 | 556,962 | 11,761 | 2.1 | % | ||||||
Total assets | $ | 8,019,502 | $ | 8,163,589 | $ | (144,087 | ) | -1.8 | % | ||
Liabilities and Stockholders' Equity | |||||||||||
Interest-bearing liabilities: | |||||||||||
Deposits: | |||||||||||
Interest-bearing demand | $ | 2,245,831 | $ | 2,321,120 | $ | (75,289 | ) | -3.2 | % | ||
Savings | 719,508 | 774,854 | (55,346 | ) | -7.1 | % | |||||
Certificates of deposit | 1,968,512 | 2,057,818 | (89,306 | ) | -4.3 | % | |||||
Total interest-bearing deposits | 4,933,851 | 5,153,792 | (219,941 | ) | -4.3 | % | |||||
Borrowings: | |||||||||||
Federal Home Loan Bank advances | 1,386,473 | 1,374,316 | 12,157 | 0.9 | % | ||||||
Other borrowings | 158,098 | 100,055 | 58,043 | 58.0 | % | ||||||
Total borrowings | 1,544,571 | 1,474,371 | 70,200 | 4.8 | % | ||||||
Total interest-bearing liabilities | 6,478,422 | 6,628,163 | (149,741 | ) | -2.3 | % | |||||
Non-interest-bearing liabilities: | |||||||||||
Non-interest-bearing deposits | 612,251 | 608,765 | 3,486 | 0.6 | % | ||||||
Other non-interest-bearing liabilities | 66,701 | 64,970 | 1,731 | 2.7 | % | ||||||
Total non-interest-bearing liabilities | 678,952 | 673,735 | 5,217 | 0.8 | % | ||||||
Total liabilities | 7,157,374 | 7,301,898 | (144,524 | ) | -2.0 | % | |||||
Stockholders' equity | 862,128 | 861,691 | 437 | 0.1 | % | ||||||
Total liabilities and stockholders' equity | $ | 8,019,502 | $ | 8,163,589 | $ | (144,087 | ) | -1.8 | % | ||
Average interest-earning assets to average interest-bearing liabilities | 115.01 | % | 114.76 | % | 0.25 | % | 0.2 | % | |||
Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)
Three Months Ended | Variance or Change | |||||
September 30, 2023 | June 30, 2023 | |||||
Average yield on interest-earning assets: | ||||||
Loans receivable, including loans held for sale | 4.34 | % | 4.18 | % | 0.16 | % |
Taxable investment securities | 4.29 | % | 4.12 | % | 0.17 | % |
Tax-exempt investment securities (1) | 2.25 | % | 2.23 | % | 0.02 | % |
Other interest-earning assets | 6.26 | % | 5.68 | % | 0.58 | % |
Total interest-earning assets | 4.36 | % | 4.19 | % | 0.17 | % |
Average cost of interest-bearing liabilities: | ||||||
Deposits: | ||||||
Interest-bearing demand | 2.58 | % | 2.38 | % | 0.20 | % |
Savings | 0.47 | % | 0.48 | % | -0.01 | % |
Certificates of deposit | 2.49 | % | 2.24 | % | 0.25 | % |
Total interest-bearing deposits | 2.23 | % | 2.04 | % | 0.19 | % |
Borrowings: | ||||||
Federal Home Loan Bank advances | 3.54 | % | 3.51 | % | 0.03 | % |
Other borrowings | 5.46 | % | 4.89 | % | 0.57 | % |
Total borrowings | 3.74 | % | 3.60 | % | 0.14 | % |
Total interest-bearing liabilities | 2.59 | % | 2.38 | % | 0.21 | % |
Interest rate spread (2) | 1.77 | % | 1.81 | % | -0.04 | % |
Net interest margin (3) | 2.10 | % | 2.11 | % | -0.01 | % |
Non-interest income to average assets (annualized) | 0.20 | % | 0.18 | % | 0.02 | % |
Non-interest expense to average assets (annualized) | 1.49 | % | 1.41 | % | 0.08 | % |
Efficiency ratio (4) | 68.97 | % | 65.60 | % | 3.37 | % |
Return on average assets (annualized) | 0.49 | % | 0.59 | % | -0.10 | % |
Return on average equity (annualized) | 4.57 | % | 5.58 | % | -1.01 | % |
Return on average tangible equity (annualized) (5) | 6.07 | % | 7.41 | % | -1.34 | % |
_________________________ | |
(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) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||
(Unaudited) | (Audited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 57,219 | $ | 70,515 | $ | 194,568 | $ | 75,660 | $ | 96,076 | |||||
Securities available for sale | 1,215,633 | 1,227,729 | 1,267,066 | 1,286,354 | 1,263,176 | ||||||||||
Securities held to maturity | 143,730 | 146,465 | 149,764 | 153,786 | 115,943 | ||||||||||
Loans held-for-sale | 3,934 | 9,591 | 5,401 | 12,940 | 12,936 | ||||||||||
Loans receivable | 5,736,049 | 5,829,421 | 5,966,325 | 5,984,133 | 5,656,370 | ||||||||||
Less: allowance for credit losses on loans | (46,872 | ) | (48,734 | ) | (49,122 | ) | (48,877 | ) | (47,613 | ) | |||||
Net loans receivable | 5,689,177 | 5,780,687 | 5,917,203 | 5,935,256 | 5,608,757 | ||||||||||
Premises and equipment | 46,868 | 48,309 | 49,589 | 50,953 | 52,642 | ||||||||||
Federal Home Loan Bank stock | 81,509 | 71,734 | 76,319 | 69,022 | 44,957 | ||||||||||
Accrued interest receivable | 29,766 | 28,133 | 28,794 | 27,368 | 23,817 | ||||||||||
Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
Core deposit intangible | 2,323 | 2,457 | 2,590 | 2,732 | 2,876 | ||||||||||
Bank owned life insurance | 294,491 | 292,825 | 291,220 | 289,673 | 289,690 | ||||||||||
Deferred income taxes, net | 56,500 | 51,973 | 53,151 | 51,107 | 54,278 | ||||||||||
Other real estate owned | 12,956 | 12,956 | 13,410 | 13,410 | 178 | ||||||||||
Other assets | 129,865 | 110,546 | 89,366 | 110,162 | 113,369 | ||||||||||
Total assets | $ | 7,974,866 | $ | 8,064,815 | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | |||||
Liabilities | |||||||||||||||
Deposits: | |||||||||||||||
Non-interest-bearing | $ | 595,141 | $ | 609,999 | $ | 617,778 | $ | 650,950 | $ | 683,406 | |||||
Interest-bearing | 4,839,027 | 5,019,184 | 5,185,626 | 5,320,421 | 5,424,872 | ||||||||||
Total deposits | 5,434,168 | 5,629,183 | 5,803,404 | 5,971,371 | 6,108,278 | ||||||||||
Borrowings | 1,626,933 | 1,506,812 | 1,611,692 | 1,383,573 | 851,454 | ||||||||||
Advance payments by borrowers for taxes | 16,907 | 18,338 | 18,706 | 17,307 | 16,555 | ||||||||||
Other liabilities | 47,324 | 41,198 | 49,304 | 44,427 | 38,329 | ||||||||||
Total liabilities | 7,125,332 | 7,195,531 | 7,483,106 | 7,416,678 | 7,014,616 | ||||||||||
Stockholders' Equity | |||||||||||||||
Common stock | 652 | 659 | 667 | 674 | 680 | ||||||||||
Paid-in capital | 497,269 | 503,332 | 509,359 | 515,332 | 520,245 | ||||||||||
Retained earnings | 460,464 | 457,611 | 452,605 | 449,489 | 454,710 | ||||||||||
Unearned ESOP shares | (22,375 | ) | (22,862 | ) | (23,348 | ) | (23,834 | ) | (24,321 | ) | |||||
Accumulated other comprehensive loss | (86,476 | ) | (69,456 | ) | (73,053 | ) | (69,021 | ) | (76,340 | ) | |||||
Total stockholders' equity | 849,534 | 869,284 | 866,230 | 872,640 | 874,974 | ||||||||||
Total liabilities and stockholders' equity | $ | 7,974,866 | $ | 8,064,815 | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | |||||
Consolidated capital ratios | |||||||||||||||
Equity to assets | 10.65 | % | 10.78 | % | 10.37 | % | 10.53 | % | 11.09 | % | |||||
Tangible equity to tangible assets (1) | 8.20 | % | 8.35 | % | 8.02 | % | 8.16 | % | 8.61 | % | |||||
Share data | |||||||||||||||
Outstanding shares | 65,132 | 65,864 | 66,680 | 67,388 | 67,938 | ||||||||||
Book value per share | $ | 13.04 | $ | 13.20 | $ | 12.99 | $ | 12.95 | $ | 12.88 | |||||
Tangible book value per share (2) | $ | 9.77 | $ | 9.96 | $ | 9.79 | $ | 9.78 | $ | 9.73 |
_________________________ | |
(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) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||
Loan portfolio composition: | |||||||||||||||
Commercial loans: | |||||||||||||||
Multi-family mortgage | $ | 2,699,151 | $ | 2,761,775 | $ | 2,835,852 | $ | 2,851,721 | $ | 2,570,297 | |||||
Nonresidential mortgage | 946,801 | 968,574 | 1,002,643 | 1,017,341 | 1,040,688 | ||||||||||
Commercial business | 149,229 | 146,861 | 162,038 | 177,530 | 186,361 | ||||||||||
Construction | 230,703 | 226,609 | 215,524 | 186,663 | 166,052 | ||||||||||
Total commercial loans | 4,025,884 | 4,103,819 | 4,216,057 | 4,233,255 | 3,963,398 | ||||||||||
One- to four-family residential mortgage | 1,689,051 | 1,700,559 | 1,713,343 | 1,719,514 | 1,666,730 | ||||||||||
Consumer loans: | |||||||||||||||
Home equity loans | 42,896 | 43,549 | 44,376 | 45,690 | 43,269 | ||||||||||
Other consumer | 2,644 | 2,549 | 2,592 | 2,648 | 2,869 | ||||||||||
Total consumer loans | 45,540 | 46,098 | 46,968 | 48,338 | 46,138 | ||||||||||
Total loans, excluding yield adjustments | 5,760,475 | 5,850,476 | 5,976,368 | 6,001,107 | 5,676,266 | ||||||||||
Unaccreted yield adjustments | (24,426 | ) | (21,055 | ) | (10,043 | ) | (16,974 | ) | (19,896 | ) | |||||
Loans receivable, net of yield adjustments | 5,736,049 | 5,829,421 | 5,966,325 | 5,984,133 | 5,656,370 | ||||||||||
Less: allowance for credit losses on loans | (46,872 | ) | (48,734 | ) | (49,122 | ) | (48,877 | ) | (47,613 | ) | |||||
Net loans receivable | $ | 5,689,177 | $ | 5,780,687 | $ | 5,917,203 | $ | 5,935,256 | $ | 5,608,757 | |||||
Asset quality: | |||||||||||||||
Nonperforming assets: | |||||||||||||||
Accruing loans - 90 days and over past due | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
Nonaccrual loans | 37,912 | 42,627 | 44,026 | 40,549 | 68,574 | ||||||||||
Total nonperforming loans | 37,912 | 42,627 | 44,026 | 40,549 | 68,574 | ||||||||||
Nonaccrual loans held-for-sale | — | — | — | 8,650 | 8,650 | ||||||||||
Other real estate owned | 12,956 | 12,956 | 13,410 | 13,410 | 178 | ||||||||||
Total nonperforming assets | $ | 50,868 | $ | 55,583 | $ | 57,436 | $ | 62,609 | $ | 77,402 | |||||
Nonperforming loans (% total loans) | 0.66 | % | 0.73 | % | 0.74 | % | 0.68 | % | 1.21 | % | |||||
Nonperforming assets (% total assets) | 0.64 | % | 0.69 | % | 0.69 | % | 0.76 | % | 0.98 | % | |||||
Classified loans | $ | 98,616 | $ | 93,526 | $ | 103,461 | $ | 86,069 | $ | 92,610 | |||||
Allowance for credit losses on loans (ACL): | |||||||||||||||
ACL to total loans | 0.81 | % | 0.83 | % | 0.82 | % | 0.81 | % | 0.84 | % | |||||
ACL to nonperforming loans | 123.63 | % | 114.33 | % | 111.57 | % | 120.54 | % | 69.43 | % | |||||
Net charge-offs | $ | 2,107 | $ | 82 | $ | 206 | $ | 407 | $ | 115 | |||||
Average net charge-off rate (annualized) | 0.15 | % | 0.01 | % | 0.01 | % | 0.03 | % | 0.01 | % | |||||
Kearny Financial Corp.
Supplemental Balance Sheet Highlights
(Unaudited)
(Dollars in Thousands) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||
Funding composition: | |||||||||||||||
Deposits: | |||||||||||||||
Non-interest-bearing deposits | $ | 595,141 | $ | 609,999 | $ | 617,778 | $ | 650,950 | $ | 683,406 | |||||
Interest-bearing demand | 2,236,573 | 2,252,912 | 2,285,799 | 2,316,485 | 2,382,411 | ||||||||||
Savings | 689,163 | 748,721 | 811,483 | 901,514 | 982,916 | ||||||||||
Certificates of deposit (retail) | 1,300,382 | 1,377,028 | 1,327,343 | 1,354,907 | 1,263,124 | ||||||||||
Certificates of deposit (brokered and listing service) | 612,909 | 640,523 | 761,001 | 747,515 | 796,421 | ||||||||||
Interest-bearing deposits | 4,839,027 | 5,019,184 | 5,185,626 | 5,320,421 | 5,424,872 | ||||||||||
Total deposits | 5,434,168 | 5,629,183 | 5,803,404 | 5,971,371 | 6,108,278 | ||||||||||
Borrowings: | |||||||||||||||
Federal Home Loan Bank advances | 1,456,933 | 1,281,812 | 1,156,692 | 1,256,573 | 796,454 | ||||||||||
Overnight borrowings | 170,000 | 225,000 | 455,000 | 127,000 | 55,000 | ||||||||||
Total borrowings | 1,626,933 | 1,506,812 | 1,611,692 | 1,383,573 | 851,454 | ||||||||||
Total funding | $ | 7,061,101 | $ | 7,135,995 | $ | 7,415,096 | $ | 7,354,944 | $ | 6,959,732 | |||||
Loans as a % of deposits | 104.8 | % | 102.9 | % | 102.1 | % | 99.6 | % | 92.0 | % | |||||
Deposits as a % of total funding | 77.0 | % | 78.9 | % | 78.3 | % | 81.2 | % | 87.8 | % | |||||
Borrowings as a % of total funding | 23.0 | % | 21.1 | % | 21.7 | % | 18.8 | % | 12.2 | % | |||||
Uninsured deposits: | |||||||||||||||
Uninsured deposits (reported) (1) | $ | 1,734,288 | $ | 1,771,416 | $ | 1,678,051 | $ | 1,815,854 | $ | 1,771,851 | |||||
Uninsured deposits (adjusted) (2) | $ | 683,265 | $ | 710,377 | $ | 705,727 | $ | 794,407 | $ | 883,351 |
_________________________ | |
(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, Except Per Share Data) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||
Interest income | |||||||||||||||
Loans | $ | 62,769 | $ | 62,044 | $ | 60,172 | $ | 57,996 | $ | 52,935 | |||||
Taxable investment securities | 16,265 | 15,736 | 15,459 | 13,221 | 10,439 | ||||||||||
Tax-exempt investment securities | 87 | 91 | 99 | 219 | 285 | ||||||||||
Other interest-earning assets | 2,047 | 1,821 | 1,441 | 1,005 | 761 | ||||||||||
Total interest income | 81,168 | 79,692 | 77,171 | 72,441 | 64,420 | ||||||||||
Interest expense | |||||||||||||||
Deposits | 27,567 | 26,226 | 22,246 | 18,822 | 10,869 | ||||||||||
Borrowings | 14,441 | 13,286 | 12,554 | 8,836 | 5,020 | ||||||||||
Total interest expense | 42,008 | 39,512 | 34,800 | 27,658 | 15,889 | ||||||||||
Net interest income | 39,160 | 40,180 | 42,371 | 44,783 | 48,531 | ||||||||||
Provision for (reversal of) credit losses | 245 | (306 | ) | 451 | 1,671 | 670 | |||||||||
Net interest income after provision for (reversal of) credit losses | 38,915 | 40,486 | 41,920 | 43,112 | 47,861 | ||||||||||
Non-interest income | |||||||||||||||
Fees and service charges | 748 | 699 | 910 | 734 | 763 | ||||||||||
Loss on sale and call of securities | — | — | — | (15,227 | ) | — | |||||||||
Gain (loss) on sale of loans | 215 | 199 | (2,373 | ) | 134 | 395 | |||||||||
Loss on sale of other real estate owned | — | (139 | ) | — | — | — | |||||||||
Income from bank owned life insurance | 1,666 | 1,605 | 1,581 | 1,761 | 3,698 | ||||||||||
Electronic banking fees and charges | 367 | 399 | 457 | 397 | 506 | ||||||||||
Other income | 1,014 | 903 | 1,071 | 3,723 | 555 | ||||||||||
Total non-interest income | 4,010 | 3,666 | 1,646 | (8,478 | ) | 5,917 | |||||||||
Non-interest expense | |||||||||||||||
Salaries and employee benefits | 17,761 | 17,315 | 18,005 | 19,921 | 20,348 | ||||||||||
Net occupancy expense of premises | 2,758 | 2,862 | 3,097 | 2,987 | 3,090 | ||||||||||
Equipment and systems | 3,801 | 3,511 | 3,537 | 3,867 | 3,662 | ||||||||||
Advertising and marketing | 228 | 231 | 413 | 731 | 747 | ||||||||||
Federal deposit insurance premium | 1,524 | 1,455 | 1,546 | 1,226 | 906 | ||||||||||
Directors' compensation | 393 | 345 | 340 | 339 | 340 | ||||||||||
Other expense | 3,309 | 3,042 | 3,414 | 3,579 | 2,895 | ||||||||||
Total non-interest expense | 29,774 | 28,761 | 30,352 | 32,650 | 31,988 | ||||||||||
Income before income taxes | 13,151 | 15,391 | 13,214 | 1,984 | 21,790 | ||||||||||
Income taxes | 3,309 | 3,378 | 2,902 | 33 | 5,255 | ||||||||||
Net income | $ | 9,842 | $ | 12,013 | $ | 10,312 | $ | 1,951 | $ | 16,535 | |||||
Net income per common share (EPS) | |||||||||||||||
Basic | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
Diluted | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
Dividends declared | |||||||||||||||
Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | |||||
Cash dividends declared | $ | 6,989 | $ | 7,007 | $ | 7,196 | $ | 7,172 | $ | 7,276 | |||||
Dividend payout ratio | 71.0 | % | 58.3 | % | 69.8 | % | 367.6 | % | 44.0 | % | |||||
Weighted average number of common shares outstanding | |||||||||||||||
Basic | 63,014 | 63,667 | 64,769 | 65,030 | 65,737 | ||||||||||
Diluted | 63,061 | 63,667 | 64,783 | 65,038 | 65,756 | ||||||||||
Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
Three Months Ended | |||||||||||||||
(Dollars in Thousands) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||
Assets | |||||||||||||||
Interest-earning assets: | |||||||||||||||
Loans receivable, including loans held-for-sale | $ | 5,788,074 | $ | 5,932,541 | $ | 5,986,669 | $ | 5,839,903 | $ | 5,553,996 | |||||
Taxable investment securities | 1,516,393 | 1,529,582 | 1,558,222 | 1,527,578 | 1,516,974 | ||||||||||
Tax-exempt investment securities | 15,483 | 16,346 | 17,663 | 37,917 | 48,973 | ||||||||||
Other interest-earning assets | 130,829 | 128,158 | 131,682 | 114,175 | 88,038 | ||||||||||
Total interest-earning assets | 7,450,779 | 7,606,627 | 7,694,236 | 7,519,573 | 7,207,981 | ||||||||||
Non-interest-earning assets | 568,723 | 556,962 | 575,009 | 550,519 | 570,225 | ||||||||||
Total assets | $ | 8,019,502 | $ | 8,163,589 | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | |||||
Liabilities and Stockholders' Equity | |||||||||||||||
Interest-bearing liabilities: | |||||||||||||||
Deposits: | |||||||||||||||
Interest-bearing demand | $ | 2,245,831 | $ | 2,321,120 | $ | 2,363,762 | $ | 2,359,977 | $ | 2,354,340 | |||||
Savings | 719,508 | 774,854 | 858,673 | 931,584 | 1,019,343 | ||||||||||
Certificates of deposit | 1,968,512 | 2,057,818 | 2,069,396 | 2,192,722 | 2,014,922 | ||||||||||
Total interest-bearing deposits | 4,933,851 | 5,153,792 | 5,291,831 | 5,484,283 | 5,388,605 | ||||||||||
Borrowings: | |||||||||||||||
Federal Home Loan Bank advances | 1,386,473 | 1,374,316 | 1,402,269 | 997,148 | 642,399 | ||||||||||
Other borrowings | 158,098 | 100,055 | 1,611 | — | 127,456 | ||||||||||
Total borrowings | 1,544,571 | 1,474,371 | 1,403,880 | 997,148 | 769,855 | ||||||||||
Total interest-bearing liabilities | 6,478,422 | 6,628,163 | 6,695,711 | 6,481,431 | 6,158,460 | ||||||||||
Non-interest-bearing liabilities: | |||||||||||||||
Non-interest-bearing deposits | 612,251 | 608,765 | 634,324 | 666,846 | 667,624 | ||||||||||
Other non-interest-bearing liabilities | 66,701 | 64,970 | 60,327 | 56,721 | 56,431 | ||||||||||
Total non-interest-bearing liabilities | 678,952 | 673,735 | 694,651 | 723,567 | 724,055 | ||||||||||
Total liabilities | 7,157,374 | 7,301,898 | 7,390,362 | 7,204,998 | 6,882,515 | ||||||||||
Stockholders' equity | 862,128 | 861,691 | 878,883 | 865,094 | 895,691 | ||||||||||
Total liabilities and stockholders' equity | $ | 8,019,502 | $ | 8,163,589 | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | |||||
Average interest-earning assets to average interest-bearing liabilities | 115.01 | % | 114.76 | % | 114.91 | % | 116.02 | % | 117.04 | % | |||||
Kearny Financial Corp.
Performance Ratio Highlights
Three Months Ended | ||||||||||
September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||
Average yield on interest-earning assets: | ||||||||||
Loans receivable, including loans held-for-sale | 4.34 | % | 4.18 | % | 4.02 | % | 3.97 | % | 3.81 | % |
Taxable investment securities | 4.29 | % | 4.12 | % | 3.97 | % | 3.46 | % | 2.75 | % |
Tax-exempt investment securities (1) | 2.25 | % | 2.23 | % | 2.23 | % | 2.32 | % | 2.33 | % |
Other interest-earning assets | 6.26 | % | 5.68 | % | 4.38 | % | 3.52 | % | 3.46 | % |
Total interest-earning assets | 4.36 | % | 4.19 | % | 4.01 | % | 3.85 | % | 3.57 | % |
Average cost of interest-bearing liabilities: | ||||||||||
Deposits: | ||||||||||
Interest-bearing demand | 2.58 | % | 2.38 | % | 2.01 | % | 1.63 | % | 0.92 | % |
Savings | 0.47 | % | 0.48 | % | 0.41 | % | 0.41 | % | 0.23 | % |
Certificates of deposit | 2.49 | % | 2.24 | % | 1.84 | % | 1.50 | % | 0.97 | % |
Total interest-bearing deposits | 2.23 | % | 2.04 | % | 1.68 | % | 1.37 | % | 0.81 | % |
Borrowings: | ||||||||||
Federal Home Loan Bank advances | 3.54 | % | 3.51 | % | 3.58 | % | 3.54 | % | 2.68 | % |
Other borrowings | 5.46 | % | 4.89 | % | 5.15 | % | — | % | 2.26 | % |
Total borrowings | 3.74 | % | 3.60 | % | 3.58 | % | 3.54 | % | 2.61 | % |
Total interest-bearing liabilities | 2.59 | % | 2.38 | % | 2.08 | % | 1.71 | % | 1.03 | % |
Interest rate spread (2) | 1.77 | % | 1.81 | % | 1.93 | % | 2.14 | % | 2.54 | % |
Net interest margin (3) | 2.10 | % | 2.11 | % | 2.20 | % | 2.38 | % | 2.69 | % |
Non-interest income to average assets (annualized) | 0.20 | % | 0.18 | % | 0.08 | % | -0.42 | % | 0.30 | % |
Non-interest expense to average assets (annualized) | 1.49 | % | 1.41 | % | 1.47 | % | 1.62 | % | 1.65 | % |
Efficiency ratio (4) | 68.97 | % | 65.60 | % | 68.96 | % | 89.93 | % | 58.75 | % |
Return on average assets (annualized) | 0.49 | % | 0.59 | % | 0.50 | % | 0.10 | % | 0.85 | % |
Return on average equity (annualized) | 4.57 | % | 5.58 | % | 4.69 | % | 0.90 | % | 7.38 | % |
Return on average tangible equity (annualized) (5) | 6.07 | % | 7.41 | % | 6.20 | % | 1.20 | % | 9.70 | % |
_________________________ | |
(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) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||
Adjusted net income: | |||||||||||||||
Net income (GAAP) | $ | 9,842 | $ | 12,013 | $ | 10,312 | $ | 1,951 | $ | 16,535 | |||||
Non-recurring transactions - net of tax: | |||||||||||||||
Branch consolidation expenses | — | — | 568 | — | — | ||||||||||
Net effect of sale and call of securities | — | — | — | 10,811 | — | ||||||||||
Net effect of sale of other assets | — | — | — | (2,081 | ) | — | |||||||||
Severance expense from workforce realignment | — | — | — | 538 | — | ||||||||||
Adjusted net income | $ | 9,842 | $ | 12,013 | $ | 10,880 | $ | 11,219 | $ | 16,535 | |||||
Calculation of pre-tax, pre-provision net revenue: | |||||||||||||||
Net income (GAAP) | $ | 9,842 | $ | 12,013 | $ | 10,312 | $ | 1,951 | $ | 16,535 | |||||
Adjustments to net income (GAAP): | |||||||||||||||
Provision for income taxes | 3,309 | 3,378 | 2,902 | 33 | 5,255 | ||||||||||
Provision for (reversal of) credit losses | 245 | (306 | ) | 451 | 1,671 | 670 | |||||||||
Pre-tax, pre-provision net revenue (non-GAAP) | $ | 13,396 | $ | 15,085 | $ | 13,665 | $ | 3,655 | $ | 22,460 | |||||
Adjusted earnings per share: | |||||||||||||||
Weighted average common shares - basic | 63,014 | 63,667 | 64,769 | 65,030 | 65,737 | ||||||||||
Weighted average common shares - diluted | 63,061 | 63,667 | 64,783 | 65,038 | 65,756 | ||||||||||
Earnings per share - basic (GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
Earnings per share - diluted (GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.16 | $ | 0.03 | $ | 0.25 | |||||
Adjusted earnings per share - basic (non-GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.25 | |||||
Adjusted earnings per share - diluted (non-GAAP) | $ | 0.16 | $ | 0.19 | $ | 0.17 | $ | 0.17 | $ | 0.25 | |||||
Pre-tax, pre-provision net revenue per share: | |||||||||||||||
Pre-tax, pre-provision net revenue per share - basic (non-GAAP) | $ | 0.21 | $ | 0.24 | $ | 0.21 | $ | 0.06 | $ | 0.34 | |||||
Pre-tax, pre-provision net revenue per share - diluted (non-GAAP) | $ | 0.21 | $ | 0.24 | $ | 0.21 | $ | 0.06 | $ | 0.34 | |||||
Adjusted return on average assets: | |||||||||||||||
Total average assets | $ | 8,019,502 | $ | 8,163,589 | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | |||||
Return on average assets (GAAP) | 0.49 | % | 0.59 | % | 0.50 | % | 0.10 | % | 0.85 | % | |||||
Adjusted return on average assets (non-GAAP) | 0.49 | % | 0.59 | % | 0.53 | % | 0.56 | % | 0.85 | % | |||||
Adjusted return on average equity: | |||||||||||||||
Total average equity | $ | 862,128 | $ | 861,691 | $ | 878,883 | $ | 865,094 | $ | 895,691 | |||||
Return on average equity (GAAP) | 4.57 | % | 5.58 | % | 4.69 | % | 0.90 | % | 7.38 | % | |||||
Adjusted return on average equity (non-GAAP) | 4.57 | % | 5.58 | % | 4.95 | % | 5.19 | % | 7.38 | % |
Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
Three Months Ended | |||||||||||||||
(Dollars and Shares in Thousands, Except Per Share Data) | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | ||||||||||
Adjusted return on average tangible equity: | |||||||||||||||
Total average equity | $ | 862,128 | $ | 861,691 | $ | 878,883 | $ | 865,094 | $ | 895,691 | |||||
Less: average goodwill | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | |||||
Less: average other intangible assets | (2,411 | ) | (2,544 | ) | (2,683 | ) | (2,826 | ) | (2,971 | ) | |||||
Total average tangible equity | $ | 648,822 | $ | 648,252 | $ | 665,305 | $ | 651,373 | $ | 681,825 | |||||
Return on average tangible equity (non-GAAP) | 6.07 | % | 7.41 | % | 6.20 | % | 1.20 | % | 9.70 | % | |||||
Adjusted return on average tangible equity (non-GAAP) | 6.07 | % | 7.41 | % | 6.54 | % | 6.89 | % | 9.70 | % | |||||
Adjusted non-interest expense ratio: | |||||||||||||||
Non-interest expense (GAAP) | $ | 29,774 | $ | 28,761 | $ | 30,352 | $ | 32,650 | $ | 31,988 | |||||
Non-recurring transactions: | |||||||||||||||
Branch consolidation expenses | — | — | (800 | ) | — | — | |||||||||
Severance expense from workforce realignment | — | — | — | (757 | ) | — | |||||||||
Early contract termination | — | — | — | — | — | ||||||||||
Non-interest expense (non-GAAP) | $ | 29,774 | $ | 28,761 | $ | 29,552 | $ | 31,893 | $ | 31,988 | |||||
Non-interest expense ratio (GAAP) | 1.49 | % | 1.41 | % | 1.47 | % | 1.62 | % | 1.65 | % | |||||
Adjusted non-interest expense ratio (non-GAAP) | 1.49 | % | 1.41 | % | 1.43 | % | 1.58 | % | 1.65 | % | |||||
Adjusted efficiency ratio: | |||||||||||||||
Non-interest expense (non-GAAP) | $ | 29,774 | $ | 28,761 | $ | 29,552 | $ | 31,893 | $ | 31,988 | |||||
Net interest income (GAAP) | $ | 39,160 | $ | 40,180 | $ | 42,371 | $ | 44,783 | $ | 48,531 | |||||
Total non-interest income (GAAP) | 4,010 | 3,666 | 1,646 | (8,478 | ) | 5,917 | |||||||||
Non-recurring transactions: | |||||||||||||||
Net effect of sale and call of securities | — | — | — | 15,227 | — | ||||||||||
Net effect of sale of other assets | — | — | — | (2,931 | ) | — | |||||||||
Total revenue (non-GAAP) | $ | 43,170 | $ | 43,846 | $ | 44,017 | $ | 48,601 | $ | 54,448 | |||||
Efficiency ratio (GAAP) | 68.97 | % | 65.60 | % | 68.96 | % | 89.93 | % | 58.75 | % | |||||
Adjusted efficiency ratio (non-GAAP) | 68.97 | % | 65.60 | % | 67.14 | % | 65.62 | % | 58.75 | % | |||||
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
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