Kearny Financial Corp. Announces Third Quarter Fiscal 2024 Results and Declaration of Cash Dividend

FAIRFIELD, N.J., April 25, 2024 (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 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 %
                               

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

 


Bay Street News