FAIRFIELD, N.J., April 27, 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 March 31, 2023 of $10.3 million, or $0.16 per diluted share, compared to $2.0 million, or $0.03 per diluted share, for the quarter ended December 31, 2022. Net income for the quarters ended March 31, 2023 and December 31, 2022 was impacted by various non-recurring items, as described in further detail below.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on May 24, 2023 to stockholders of record as of May 10, 2023.
Craig L. Montanaro, President and Chief Executive Officer, commented, "While my comments in recent quarters have featured the terms 'risk' and 'uncertainty', the past few weeks have brought fresh challenges to the banking sector, and the economy at large. Despite the sudden failure of two large regional banks, the voluntary wind-down of a third and pressure on the industry as a whole, I am pleased to report that Kearny remains on solid footing. Our highly-diversified deposit base, conservative risk culture and abundance of available liquidity allows us to navigate these uncertain times, as we have throughout our 139 years in operation."
Mr. Montanaro further noted, "Looking to this quarter's earnings, the rate of our net interest margin compression has begun to slow, while our previously announced operating efficiency initiative has gotten off to a strong start. Non-interest expense, excluding non-recurring items, declined 7.3% quarter-over-quarter and will be further supported by the June 2023 consolidation of two branch locations."
Liquidity & Funding
- Deposits decreased $168.0 million, or 2.8%, to $5.80 billion at March 31, 2023, from $5.97 billion at December 31, 2022. Details regarding the change in deposit balances are presented in the table below. The decrease in deposits was largely concentrated in three products: consumer savings, commercial non-interest checking and government deposits. The decline in consumer savings reflected the continuation of a multi-quarter trend resulting from the migration of low-rate savings balances into higher-rate money market and time deposit products. The reduction in non-interest checking deposits was a combination of outflow and the migration of non-interest bearing commercial deposits into interest-bearing products. The decrease in government deposits was largely attributable to seasonal outflows resulting from expected tax and pension payments.
| (Dollars in Thousands) | March 31, 2023 | December 31, 2022 | Variance or Change | Variance or Change Pct. | |||||||||
| Government deposits | $ | 607,925 | $ | 677,923 | $ | (69,998 | ) | (10.3 | )% | ||||
| Excluding government deposits: | |||||||||||||
| Non-interest-bearing | 615,696 | 649,044 | (33,348 | ) | (5.1 | )% | |||||||
| Interest-bearing demand | 1,699,407 | 1,663,302 | 36,105 | 2.2 | % | ||||||||
| Savings | 795,310 | 881,837 | (86,527 | ) | (9.8 | )% | |||||||
| Certificates of deposit | 2,085,066 | 2,099,265 | (14,199 | ) | (0.7 | )% | |||||||
| Total deposits | $ | 5,803,404 | $ | 5,971,371 | $ | (167,967 | ) | (2.8 | )% | ||||
- The aggregate amount of uninsured deposits was $1.68 billion at March 31, 2023. Excluding collateralized deposits of state and local governments, and deposits of the Bank's wholly-owned subsidiary and holding company, the aggregate amount of uninsured deposits was $705.7 million, or 12.2% of total deposits.
- Borrowings increased $228.1 million to $1.61 billion, or 19.3% of total assets, at March 31, 2023, from $1.38 billion, or 16.7% of total assets, at December 31, 2022. At March 31, 2023, borrowings were comprised of $1.54 billion of advances from the Federal Home Loan Bank of New York and $70.0 million from unsecured fed funds lines of credit. There were no borrowings outstanding from the Federal Reserve Bank at, or during the quarter ended, March 31, 2023.
- At March 31, 2023, the Company maintained available secured borrowing capacity of $2.37 billion, of which $1.88 billion was immediately accessible via in-place collateral and $493.2 million represented the market value of unpledged securities.
Assets
- Total assets increased $60.0 million, or 0.7%, to $8.35 billion at March 31, 2023, from $8.29 billion at December 31, 2022.
- Cash and cash equivalents increased $118.9 million, or 157.2%, to $194.6 million at March 31, 2023, from $75.7 million at December 31, 2022. The increase was driven by the Company's decision to hold excess cash on its balance sheet due to external market conditions.
- Loans receivable decreased $17.8 million, or 0.3%, to $5.97 billion at March 31, 2023, from $5.98 billion at December 31, 2022.
- Investment securities decreased $23.3 million to $1.42 billion, or 17.0% of total assets, at March 31, 2023, from $1.44 billion, or 17.4% of total assets, at December 31, 2022. The decrease was driven by paydowns, partially offset by a $9.7 million improvement in unrealized losses on securities available for sale during the quarter ended March 31, 2023.
Earnings
Performance Highlights
- Return on average assets was 0.50% for the quarter ended March 31, 2023 compared to 0.10% for the quarter ended December 31, 2022.
- Return on average equity was 4.69% and 0.90% for the quarters ended March 31, 2023 and December 31, 2022, respectively. Return on average tangible equity was 6.20% and 1.20% for those same comparative periods.
Net Interest Income and Net Interest Margin
- Net interest margin contracted 18 basis points to 2.20% for the quarter ended March 31, 2023, from 2.38% for the quarter ended December 31, 2022. Excluding purchase accounting accretion and loan prepayment penalty income, net interest margin contracted 11 basis points.
- Net interest income decreased $2.4 million to $42.4 million for the quarter ended March 31, 2023, from $44.8 million for the quarter ended December 31, 2022. Included in net interest income for the quarters ended March 31, 2023 and December 31, 2022, respectively, was purchase accounting accretion of $711,000 and $1.9 million, and loan prepayment penalty income of $103,000 and $166,000.
Non-Interest Income
- Non-interest income increased $10.1 million to income of $1.6 million for the quarter ended March 31, 2023, from a loss of $8.5 million for the quarter ended December 31, 2022. The increase was primarily attributable to a loss of $15.2 million on the sale of securities during the prior comparative period.
- Loss on sale of loans was $2.4 million for the quarter ended March 31, 2023 compared to a gain on sale of loans of $134,000 for the quarter ended December 31, 2022. The loss in the current period was the result of the sale of a non-performing multi-family mortgage loan held-for-sale located in Queens, NY. The loan was acquired in 2018 and had been classified as held-for-sale since June 30, 2022.
- Other income decreased $2.7 million to $1.1 million for the quarter ended March 31, 2023, primarily due to a non-recurring gain of $2.9 million attributable to the sale of a former branch location recognized during the prior comparative period.
Non-Interest Expense
- Non-interest expense decreased $2.3 million to $30.4 million for the quarter ended March 31, 2023, from $32.7 million for the quarter ended December 31, 2022. Excluding $800,000 of branch consolidation expense, of which $250,000 was recorded in occupancy expense and $550,000 was recorded in other expense, non-interest expense for the quarter ended March 31, 2023 was $29.6 million.
- Salaries and benefits expense decreased $1.9 million to $18.0 million for the quarter ended March 31, 2023. This decrease was driven by lower salary expense as a result of reduced headcount and a decrease in incentive payments tied to loan origination volume.
- The efficiency and non-interest expense ratios were 68.96% and 1.47%, respectively, for the quarter ended March 31, 2023, as compared to 89.93% and 1.62%, respectively, for the quarter ended December 31, 2022.
Income Taxes
- Income tax expense totaled $2.9 million for the quarter ended March 31, 2023 compared to $33,000 for the quarter ended December 31, 2022, resulting in an effective tax rate of 22.0% and 1.7%, respectively. The effective tax rate, for the prior comparative period, was impacted by the loss on the sale of securities.
Asset Quality
- The balance of non-performing assets decreased $5.2 million to $57.4 million, or 0.69% of total assets, at March 31, 2023, from $62.6 million, or 0.76% of total assets, at December 31, 2022. The decrease in non-performing assets was primarily attributable to the sale of a non-performing multi-family mortgage loan held-for-sale, as previously noted.
- Net charge-offs totaled $206,000, or 0.01% of average loans, on an annualized basis, for the quarter ended March 31, 2023, compared to $407,000, or 0.03% of average loans, on an annualized basis, for the quarter ended December 31, 2022.
- For the quarter ended March 31, 2023, the Company recorded a provision for credit losses of $451,000, compared to $1.7 million for the quarter ended December 31, 2022. The provision for the quarter ended March 31, 2023 was largely driven by a slower prepayment rate assumption, partially offset by a net reduction in reserves on loans individually analyzed for impairment.
- The allowance for credit losses was $49.1 million, or 0.82% of total loans, at March 31, 2023, compared to $48.9 million, or 0.81% of total loans, at December 31, 2022.
Capital
- For the quarter ended March 31, 2023, book value per share increased $0.04, or 0.3%, to $12.99 and tangible book value per share increased $0.01, or 0.1%, to $9.79.
- During the quarter ended March 31, 2023, the Company repurchased 698,286 shares of common stock at a cost of $6.6 million, or $9.50 per share.
- At March 31, 2023, total stockholders' equity included after-tax net unrealized losses on securities available for sale of $100.4 million, partially offset by after-tax unrealized gains on derivatives of $27.5 million. Pre-tax net unrecognized losses on securities held to maturity of $13.6 million were not reflected in total stockholders' equity.
- At March 31, 2023, the Company's tangible equity to tangible assets ratio equaled 8.02% and the regulatory capital ratios of both the Company and the Bank were in excess of the levels required by federal banking regulators to be classified as "well-capitalized" under regulatory guidelines.
This earnings release should be read in conjunction with Kearny Financial Corp.'s Q3 Fiscal 2023 Investor Presentation, a copy of which is available through the Investor Relations link located at the bottom of the page of our website at www.kearnybank.com and via a Current Report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.
Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.
Category: Earnings
| Linked-Quarter Comparative Financial Analysis | |||||||||||
| Kearny Financial Corp. Consolidated Balance Sheets (Unaudited) | |||||||||||
| (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2023 | December 31, 2022 | Variance or Change | Variance or Change Pct. | |||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 194,568 | $ | 75,660 | $ | 118,908 | 157.2 | % | |||
| Securities available for sale | 1,267,066 | 1,286,354 | (19,288 | ) | -1.5 | % | |||||
| Securities held to maturity | 149,764 | 153,786 | (4,022 | ) | -2.6 | % | |||||
| Loans held-for-sale | 5,401 | 12,940 | (7,539 | ) | -58.3 | % | |||||
| Loans receivable | 5,966,325 | 5,984,133 | (17,808 | ) | -0.3 | % | |||||
| Less: allowance for credit losses on loans | (49,122 | ) | (48,877 | ) | 245 | 0.5 | % | ||||
| Net loans receivable | 5,917,203 | 5,935,256 | (18,053 | ) | -0.3 | % | |||||
| Premises and equipment | 49,589 | 50,953 | (1,364 | ) | -2.7 | % | |||||
| Federal Home Loan Bank stock | 76,319 | 69,022 | 7,297 | 10.6 | % | ||||||
| Accrued interest receivable | 28,794 | 27,368 | 1,426 | 5.2 | % | ||||||
| Goodwill | 210,895 | 210,895 | - | - | % | ||||||
| Core deposit intangible | 2,590 | 2,732 | (142 | ) | -5.2 | % | |||||
| Bank owned life insurance | 291,220 | 289,673 | 1,547 | 0.5 | % | ||||||
| Deferred income taxes, net | 53,151 | 51,107 | 2,044 | 4.0 | % | ||||||
| Other real estate owned | 13,410 | 13,410 | - | - | % | ||||||
| Other assets | 89,366 | 110,162 | (20,796 | ) | -18.9 | % | |||||
| Total assets | $ | 8,349,336 | $ | 8,289,318 | $ | 60,018 | 0.7 | % | |||
| Liabilities | |||||||||||
| Deposits: | |||||||||||
| Non-interest-bearing | $ | 617,778 | $ | 650,950 | $ | (33,172 | ) | -5.1 | % | ||
| Interest-bearing | 5,185,626 | 5,320,421 | (134,795 | ) | -2.5 | % | |||||
| Total deposits | 5,803,404 | 5,971,371 | (167,967 | ) | -2.8 | % | |||||
| Borrowings | 1,611,692 | 1,383,573 | 228,119 | 16.5 | % | ||||||
| Advance payments by borrowers for taxes | 18,706 | 17,307 | 1,399 | 8.1 | % | ||||||
| Other liabilities | 49,304 | 44,427 | 4,877 | 11.0 | % | ||||||
| Total liabilities | 7,483,106 | 7,416,678 | 66,428 | 0.9 | % | ||||||
| Stockholders' Equity | |||||||||||
| Common stock | 667 | 674 | (7 | ) | -1.0 | % | |||||
| Paid-in capital | 509,359 | 515,332 | (5,973 | ) | -1.2 | % | |||||
| Retained earnings | 452,605 | 449,489 | 3,116 | 0.7 | % | ||||||
| Unearned ESOP shares | (23,348 | ) | (23,834 | ) | 486 | 2.0 | % | ||||
| Accumulated other comprehensive loss | (73,053 | ) | (69,021 | ) | (4,032 | ) | -5.8 | % | |||
| Total stockholders' equity | 866,230 | 872,640 | (6,410 | ) | -0.7 | % | |||||
| Total liabilities and stockholders' equity | $ | 8,349,336 | $ | 8,289,318 | $ | 60,018 | 0.7 | % | |||
| Consolidated capital ratios | |||||||||||
| Equity to assets | 10.37 | % | 10.53 | % | -0.16 | % | |||||
| Tangible equity to tangible assets (1) | 8.02 | % | 8.16 | % | -0.14 | % | |||||
| Share data | |||||||||||
| Outstanding shares | 66,680 | 67,388 | (708 | ) | -1.1 | % | |||||
| Book value per share | $ | 12.99 | $ | 12.95 | $ | 0.04 | 0.3 | % | |||
| Tangible book value per share (2) | $ | 9.79 | $ | 9.78 | $ | 0.01 | 0.1 | % | |||
_________________________
| (1) | Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets. | |
| (2) | Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets. |
| Kearny Financial Corp. Consolidated Statements of Income (Unaudited) | |||||||||||
| (Dollars and Shares in Thousands, Except Per Share Data) | Three Months Ended | Variance or Change | Variance or Change Pct. | ||||||||
| March 31, 2023 | December 31, 2022 | ||||||||||
| Interest income | |||||||||||
| Loans | $ | 60,172 | $ | 57,996 | $ | 2,176 | 3.8 | % | |||
| Taxable investment securities | 15,459 | 13,221 | 2,238 | 16.9 | % | ||||||
| Tax-exempt investment securities | 99 | 219 | (120 | ) | -54.8 | % | |||||
| Other interest-earning assets | 1,441 | 1,005 | 436 | 43.4 | % | ||||||
| Total interest income | 77,171 | 72,441 | 4,730 | 6.5 | % | ||||||
| Interest expense | |||||||||||
| Deposits | 22,246 | 18,822 | 3,424 | 18.2 | % | ||||||
| Borrowings | 12,554 | 8,836 | 3,718 | 42.1 | % | ||||||
| Total interest expense | 34,800 | 27,658 | 7,142 | 25.8 | % | ||||||
| Net interest income | 42,371 | 44,783 | (2,412 | ) | -5.4 | % | |||||
| Provision for credit losses | 451 | 1,671 | (1,220 | ) | -73.0 | % | |||||
| Net interest income after provision for credit losses | 41,920 | 43,112 | (1,192 | ) | -2.8 | % | |||||
| Non-interest income | |||||||||||
| Fees and service charges | 910 | 734 | 176 | 24.0 | % | ||||||
| Loss on sale and call of securities | - | (15,227 | ) | 15,227 | 100.0 | % | |||||
| (Loss) gain on sale of loans | (2,373 | ) | 134 | (2,507 | ) | -1870.9 | % | ||||
| Income from bank owned life insurance | 1,581 | 1,761 | (180 | ) | -10.2 | % | |||||
| Electronic banking fees and charges | 457 | 397 | 60 | 15.1 | % | ||||||
| Other income | 1,071 | 3,723 | (2,652 | ) | -71.2 | % | |||||
| Total non-interest income | 1,646 | (8,478 | ) | 10,124 | -119.4 | % | |||||
| Non-interest expense | |||||||||||
| Salaries and employee benefits | 18,005 | 19,921 | (1,916 | ) | -9.6 | % | |||||
| Net occupancy expense of premises | 3,097 | 2,987 | 110 | 3.7 | % | ||||||
| Equipment and systems | 3,537 | 3,867 | (330 | ) | -8.5 | % | |||||
| Advertising and marketing | 413 | 731 | (318 | ) | -43.5 | % | |||||
| Federal deposit insurance premium | 1,546 | 1,226 | 320 | 26.1 | % | ||||||
| Directors' compensation | 340 | 339 | 1 | 0.3 | % | ||||||
| Other expense | 3,414 | 3,579 | (165 | ) | -4.6 | % | |||||
| Total non-interest expense | 30,352 | 32,650 | (2,298 | ) | -7.0 | % | |||||
| Income before income taxes | 13,214 | 1,984 | 11,230 | 566.0 | % | ||||||
| Income taxes | 2,902 | 33 | 2,869 | 8693.9 | % | ||||||
| Net income | $ | 10,312 | $ | 1,951 | $ | 8,361 | 428.5 | % | |||
| Net income per common share (EPS) | |||||||||||
| Basic | $ | 0.16 | $ | 0.03 | $ | 0.13 | |||||
| Diluted | $ | 0.16 | $ | 0.03 | $ | 0.13 | |||||
| Dividends declared | |||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | - | |||||
| Cash dividends declared | $ | 7,196 | $ | 7,172 | $ | 24 | |||||
| Dividend payout ratio | 69.8 | % | 367.6 | % | (297.8 | )% | |||||
| Weighted average number of common shares outstanding | |||||||||||
| Basic | 64,769 | 65,030 | (261 | ) | |||||||
| Diluted | 64,783 | 65,038 | (255 | ) | |||||||
| Kearny Financial Corp. Average Balance Sheet Data (Unaudited) | |||||||||||
| (Dollars in Thousands) | Three Months Ended | Variance or Change | Variance or Change Pct. | ||||||||
| March 31, 2023 | December 31, 2022 | ||||||||||
| Assets | |||||||||||
| Interest-earning assets: | |||||||||||
| Loans receivable, including loans held for sale | $ | 5,986,669 | $ | 5,839,903 | $ | 146,766 | 2.5 | % | |||
| Taxable investment securities | 1,558,222 | 1,527,578 | 30,644 | 2.0 | % | ||||||
| Tax-exempt investment securities | 17,663 | 37,917 | (20,254 | ) | -53.4 | % | |||||
| Other interest-earning assets | 131,682 | 114,175 | 17,507 | 15.3 | % | ||||||
| Total interest-earning assets | 7,694,236 | 7,519,573 | 174,663 | 2.3 | % | ||||||
| Non-interest-earning assets | 575,009 | 550,519 | 24,490 | 4.4 | % | ||||||
| Total assets | $ | 8,269,245 | $ | 8,070,092 | $ | 199,153 | 2.5 | % | |||
| Liabilities and Stockholders' Equity | |||||||||||
| Interest-bearing liabilities: | |||||||||||
| Deposits: | |||||||||||
| Interest-bearing demand | $ | 2,363,762 | $ | 2,359,977 | $ | 3,785 | 0.2 | % | |||
| Savings | 858,673 | 931,584 | (72,911 | ) | -7.8 | % | |||||
| Certificates of deposit | 2,069,396 | 2,192,722 | (123,326 | ) | -5.6 | % | |||||
| Total interest-bearing deposits | 5,291,831 | 5,484,283 | (192,452 | ) | -3.5 | % | |||||
| Borrowings: | |||||||||||
| Federal Home Loan Bank advances | 1,402,269 | 997,148 | 405,121 | 40.6 | % | ||||||
| Other borrowings | 1,611 | - | 1,611 | - | % | ||||||
| Total borrowings | 1,403,880 | 997,148 | 406,732 | 40.8 | % | ||||||
| Total interest-bearing liabilities | 6,695,711 | 6,481,431 | 214,280 | 3.3 | % | ||||||
| Non-interest-bearing liabilities: | |||||||||||
| Non-interest-bearing deposits | 634,324 | 666,846 | (32,522 | ) | -4.9 | % | |||||
| Other non-interest-bearing liabilities | 60,327 | 56,721 | 3,606 | 6.4 | % | ||||||
| Total non-interest-bearing liabilities | 694,651 | 723,567 | (28,916 | ) | -4.0 | % | |||||
| Total liabilities | 7,390,362 | 7,204,998 | 185,364 | 2.6 | % | ||||||
| Stockholders' equity | 878,883 | 865,094 | 13,789 | 1.6 | % | ||||||
| Total liabilities and stockholders' equity | $ | 8,269,245 | $ | 8,070,092 | $ | 199,153 | 2.5 | % | |||
| Average interest-earning assets to average interest-bearing liabilities | 114.91 | % | 116.02 | % | -1.11 | % | -1.0 | % | |||
| Kearny Financial Corp. Performance Ratio Highlights (Unaudited) | ||||||
| Three Months Ended | Variance or Change | |||||
| March 31, 2023 | December 31, 2022 | |||||
| Average yield on interest-earning assets: | ||||||
| Loans receivable, including loans held for sale | 4.02 | % | 3.97 | % | 0.05 | % |
| Taxable investment securities | 3.97 | % | 3.46 | % | 0.51 | % |
| Tax-exempt investment securities (1) | 2.23 | % | 2.32 | % | -0.09 | % |
| Other interest-earning assets | 4.38 | % | 3.52 | % | 0.86 | % |
| Total interest-earning assets | 4.01 | % | 3.85 | % | 0.16 | % |
| Average cost of interest-bearing liabilities: | ||||||
| Deposits: | ||||||
| Interest-bearing demand | 2.01 | % | 1.63 | % | 0.38 | % |
| Savings | 0.41 | % | 0.41 | % | - | % |
| Certificates of deposit | 1.84 | % | 1.50 | % | 0.34 | % |
| Total interest-bearing deposits | 1.68 | % | 1.37 | % | 0.31 | % |
| Borrowings: | ||||||
| Federal Home Loan Bank advances | 3.58 | % | 3.54 | % | 0.04 | % |
| Other borrowings | 5.15 | % | - | % | 5.15 | % |
| Total borrowings | 3.58 | % | 3.54 | % | 0.04 | % |
| Total interest-bearing liabilities | 2.08 | % | 1.71 | % | 0.37 | % |
| Interest rate spread (2) | 1.93 | % | 2.14 | % | -0.21 | % |
| Net interest margin (3) | 2.20 | % | 2.38 | % | -0.18 | % |
| Non-interest income to average assets (annualized) | 0.08 | % | -0.42 | % | 0.50 | % |
| Non-interest expense to average assets (annualized) | 1.47 | % | 1.62 | % | -0.15 | % |
| Efficiency ratio (4) | 68.96 | % | 89.93 | % | -20.97 | % |
| Return on average assets (annualized) | 0.50 | % | 0.10 | % | 0.40 | % |
| Return on average equity (annualized) | 4.69 | % | 0.90 | % | 3.79 | % |
| Return on average tangible equity (annualized) (5) | 6.20 | % | 1.20 | % | 5.00 | % |
_________________________
| (1) | The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield. | |
| (2) | Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities. | |
| (3) | Net interest income divided by average interest-earning assets. | |
| (4) | Non-interest expense divided by the sum of net interest income and non-interest income. | |
| (5) | Average tangible equity equals total average stockholders' equity reduced by average goodwill and average core deposit intangible assets. | |
| Five-Quarter Financial Trend Analysis | |||||||||||||||
| Kearny Financial Corp. Consolidated Balance Sheets | |||||||||||||||
| (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | (Unaudited) | |||||||||||
| Assets | |||||||||||||||
| Cash and cash equivalents | $ | 194,568 | $ | 75,660 | $ | 96,076 | $ | 101,615 | $ | 62,379 | |||||
| Securities available for sale | 1,267,066 | 1,286,354 | 1,263,176 | 1,344,093 | 1,526,086 | ||||||||||
| Securities held to maturity | 149,764 | 153,786 | 115,943 | 118,291 | 121,853 | ||||||||||
| Loans held-for-sale | 5,401 | 12,940 | 12,936 | 28,874 | 2,822 | ||||||||||
| Loans receivable | 5,966,325 | 5,984,133 | 5,656,370 | 5,417,845 | 5,003,201 | ||||||||||
| Less: allowance for credit losses on loans | (49,122 | ) | (48,877 | ) | (47,613 | ) | (47,058 | ) | (43,860 | ) | |||||
| Net loans receivable | 5,917,203 | 5,935,256 | 5,608,757 | 5,370,787 | 4,959,341 | ||||||||||
| Premises and equipment | 49,589 | 50,953 | 52,642 | 53,281 | 53,727 | ||||||||||
| Federal Home Loan Bank stock | 76,319 | 69,022 | 44,957 | 47,144 | 30,997 | ||||||||||
| Accrued interest receivable | 28,794 | 27,368 | 23,817 | 20,466 | 19,517 | ||||||||||
| Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
| Core deposit intangible | 2,590 | 2,732 | 2,876 | 3,020 | 3,166 | ||||||||||
| Bank owned life insurance | 291,220 | 289,673 | 289,690 | 289,177 | 287,644 | ||||||||||
| Deferred income taxes, net | 53,151 | 51,107 | 54,278 | 49,350 | 34,349 | ||||||||||
| Other real estate owned | 13,410 | 13,410 | 178 | 178 | 401 | ||||||||||
| Other assets | 89,366 | 110,162 | 113,369 | 82,712 | 76,714 | ||||||||||
| Total assets | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | $ | 7,719,883 | $ | 7,389,891 | |||||
| Liabilities | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing | $ | 617,778 | $ | 650,950 | $ | 683,406 | $ | 653,899 | $ | 621,954 | |||||
| Interest-bearing | 5,185,626 | 5,320,421 | 5,424,872 | 5,208,357 | 4,906,708 | ||||||||||
| Total deposits | 5,803,404 | 5,971,371 | 6,108,278 | 5,862,256 | 5,528,662 | ||||||||||
| Borrowings | 1,611,692 | 1,383,573 | 851,454 | 901,337 | 851,220 | ||||||||||
| Advance payments by borrowers for taxes | 18,706 | 17,307 | 16,555 | 16,746 | 16,979 | ||||||||||
| Other liabilities | 49,304 | 44,427 | 38,329 | 45,544 | 37,861 | ||||||||||
| Total liabilities | 7,483,106 | 7,416,678 | 7,014,616 | 6,825,883 | 6,434,722 | ||||||||||
| Stockholders' Equity | |||||||||||||||
| Common stock | 667 | 674 | 680 | 687 | 714 | ||||||||||
| Paid-in capital | 509,359 | 515,332 | 520,245 | 528,396 | 561,176 | ||||||||||
| Retained earnings | 452,605 | 449,489 | 454,710 | 445,451 | 441,522 | ||||||||||
| Unearned ESOP shares | (23,348 | ) | (23,834 | ) | (24,321 | ) | (24,807 | ) | (25,294 | ) | |||||
| Accumulated other comprehensive loss | (73,053 | ) | (69,021 | ) | (76,340 | ) | (55,727 | ) | (22,949 | ) | |||||
| Total stockholders' equity | 866,230 | 872,640 | 874,974 | 894,000 | 955,169 | ||||||||||
| Total liabilities and stockholders' equity | $ | 8,349,336 | $ | 8,289,318 | $ | 7,889,590 | $ | 7,719,883 | $ | 7,389,891 | |||||
| Consolidated capital ratios | |||||||||||||||
| Equity to assets | 10.37 | % | 10.53 | % | 11.09 | % | 11.58 | % | 12.93 | % | |||||
| Tangible equity to tangible assets (1) | 8.02 | % | 8.16 | % | 8.61 | % | 9.06 | % | 10.33 | % | |||||
| Share data | |||||||||||||||
| Outstanding shares | 66,680 | 67,388 | 67,938 | 68,666 | 71,424 | ||||||||||
| Book value per share | $ | 12.99 | $ | 12.95 | $ | 12.88 | $ | 13.02 | $ | 13.37 | |||||
| Tangible book value per share (2) | $ | 9.79 | $ | 9.78 | $ | 9.73 | $ | 9.90 | $ | 10.38 | |||||
_________________________
| (1) | Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets. | |
| (2) | Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets. |
| Kearny Financial Corp. Supplemental Balance Sheet Highlights (Unaudited) | |||||||||||||||
| (Dollars in Thousands) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
| Loan portfolio composition: | |||||||||||||||
| Commercial loans: | |||||||||||||||
| Multi-family mortgage | $ | 2,835,852 | $ | 2,851,721 | $ | 2,570,297 | $ | 2,409,090 | $ | 2,076,003 | |||||
| Nonresidential mortgage | 1,002,643 | 1,017,341 | 1,040,688 | 1,019,838 | 1,085,988 | ||||||||||
| Commercial business | 162,038 | 177,530 | 186,361 | 176,807 | 169,551 | ||||||||||
| Construction | 215,524 | 186,663 | 166,052 | 140,131 | 121,137 | ||||||||||
| Total commercial loans | 4,216,057 | 4,233,255 | 3,963,398 | 3,745,866 | 3,452,679 | ||||||||||
| One- to four-family residential mortgage | 1,713,343 | 1,719,514 | 1,666,730 | 1,645,816 | 1,527,980 | ||||||||||
| Consumer loans: | |||||||||||||||
| Home equity loans | 44,376 | 45,690 | 43,269 | 42,028 | 41,501 | ||||||||||
| Other consumer | 2,592 | 2,648 | 2,869 | 2,866 | 2,755 | ||||||||||
| Total consumer loans | 46,968 | 48,338 | 46,138 | 44,894 | 44,256 | ||||||||||
| Total loans, excluding yield adjustments | 5,976,368 | 6,001,107 | 5,676,266 | 5,436,576 | 5,024,915 | ||||||||||
| Unaccreted yield adjustments | (10,043 | ) | (16,974 | ) | (19,896 | ) | (18,731 | ) | (21,714 | ) | |||||
| Loans receivable, net of yield adjustments | 5,966,325 | 5,984,133 | 5,656,370 | 5,417,845 | 5,003,201 | ||||||||||
| Less: allowance for credit losses on loans | (49,122 | ) | (48,877 | ) | (47,613 | ) | (47,058 | ) | (43,860 | ) | |||||
| Net loans receivable | $ | 5,917,203 | $ | 5,935,256 | $ | 5,608,757 | $ | 5,370,787 | $ | 4,959,341 | |||||
| Asset quality: | |||||||||||||||
| Nonperforming assets: | |||||||||||||||
| Accruing loans - 90 days and over past due | $ | - | $ | - | $ | - | $ | - | $ | - | |||||
| Nonaccrual loans | 44,026 | 40,549 | 68,574 | 70,321 | 80,595 | ||||||||||
| Total nonperforming loans | 44,026 | 40,549 | 68,574 | 70,321 | 80,595 | ||||||||||
| Nonaccrual loans held-for-sale | - | 8,650 | 8,650 | 21,745 | - | ||||||||||
| Other real estate owned | 13,410 | 13,410 | 178 | 178 | 401 | ||||||||||
| Total nonperforming assets | $ | 57,436 | $ | 62,609 | $ | 77,402 | $ | 92,244 | $ | 80,996 | |||||
| Nonperforming loans (% total loans) | 0.74 | % | 0.68 | % | 1.21 | % | 1.30 | % | 1.61 | % | |||||
| Nonperforming assets (% total assets) | 0.69 | % | 0.76 | % | 0.98 | % | 1.19 | % | 1.10 | % | |||||
| Classified loans | $ | 103,461 | $ | 86,069 | $ | 92,610 | $ | 94,555 | $ | 163,621 | |||||
| Allowance for credit losses on loans (ACL): | |||||||||||||||
| ACL to total loans | 0.82 | % | 0.81 | % | 0.84 | % | 0.87 | % | 0.87 | % | |||||
| ACL to nonperforming loans | 111.57 | % | 120.54 | % | 69.43 | % | 66.92 | % | 54.42 | % | |||||
| Net charge-offs | $ | 206 | $ | 407 | $ | 115 | $ | 1,024 | $ | 436 | |||||
| Average net charge-off rate (annualized) | 0.01 | % | 0.03 | % | 0.01 | % | 0.08 | % | 0.04 | % | |||||
| Kearny Financial Corp. Supplemental Balance Sheet Highlights (Unaudited) | |||||||||||||||
| (Dollars in Thousands) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
| Funding composition: | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing deposits | $ | 617,778 | $ | 650,950 | $ | 683,406 | $ | 653,899 | $ | 621,954 | |||||
| Interest-bearing demand | 2,285,799 | 2,316,485 | 2,382,411 | 2,265,597 | 2,154,488 | ||||||||||
| Savings | 811,483 | 901,514 | 982,916 | 1,053,198 | 1,088,974 | ||||||||||
| Certificates of deposit (retail) | 1,327,343 | 1,354,907 | 1,263,124 | 1,116,035 | 1,122,228 | ||||||||||
| Certificates of deposit (brokered and listing service) | 761,001 | 747,515 | 796,421 | 773,527 | 541,018 | ||||||||||
| Interest-bearing deposits | 5,185,626 | 5,320,421 | 5,424,872 | 5,208,357 | 4,906,708 | ||||||||||
| Total deposits | 5,803,404 | 5,971,371 | 6,108,278 | 5,862,256 | 5,528,662 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,156,692 | 1,256,573 | 796,454 | 651,337 | 541,220 | ||||||||||
| Overnight borrowings | 455,000 | 127,000 | 55,000 | 250,000 | 310,000 | ||||||||||
| Total borrowings | 1,611,692 | 1,383,573 | 851,454 | 901,337 | 851,220 | ||||||||||
| Total funding | $ | 7,415,096 | $ | 7,354,944 | $ | 6,959,732 | $ | 6,763,593 | $ | 6,379,882 | |||||
| Loans as a % of deposits | 102.1 | % | 99.6 | % | 92.0 | % | 92.1 | % | 89.8 | % | |||||
| Deposits as a % of total funding | 78.3 | % | 81.2 | % | 87.8 | % | 86.7 | % | 86.7 | % | |||||
| Borrowings as a % of total funding | 21.7 | % | 18.8 | % | 12.2 | % | 13.3 | % | 13.3 | % | |||||
| Uninsured deposits: | |||||||||||||||
| Uninsured deposits (reported) (1) | $ | 1,678,051 | $ | 1,815,854 | $ | 1,771,851 | $ | 1,525,940 | $ | 1,427,658 | |||||
| Uninsured deposits (adjusted) (2) | $ | 705,727 | $ | 794,407 | $ | 883,351 | $ | 792,067 | $ | 749,141 | |||||
_________________________
| (1) | Uninsured deposits of Kearny Bank. | |
| (2) | Uninsured deposits of Kearny Bank adjusted to exclude deposits of its wholly-owned subsidiary and holding company and collateralized deposits of state and local governments. |
| Kearny Financial Corp. Consolidated Statements of Income (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
| Interest income | |||||||||||||||
| Loans | $ | 60,172 | $ | 57,996 | $ | 52,935 | $ | 48,869 | $ | 45,846 | |||||
| Taxable investment securities | 15,459 | 13,221 | 10,439 | 8,915 | 8,024 | ||||||||||
| Tax-exempt investment securities | 99 | 219 | 285 | 297 | 316 | ||||||||||
| Other interest-earning assets | 1,441 | 1,005 | 761 | 472 | 415 | ||||||||||
| Total interest income | 77,171 | 72,441 | 64,420 | 58,553 | 54,601 | ||||||||||
| Interest expense | |||||||||||||||
| Deposits | 22,246 | 18,822 | 10,869 | 3,915 | 3,565 | ||||||||||
| Borrowings | 12,554 | 8,836 | 5,020 | 4,039 | 3,309 | ||||||||||
| Total interest expense | 34,800 | 27,658 | 15,889 | 7,954 | 6,874 | ||||||||||
| Net interest income | 42,371 | 44,783 | 48,531 | 50,599 | 47,727 | ||||||||||
| Provision for (reversal of) credit losses | 451 | 1,671 | 670 | 4,222 | (3,920 | ) | |||||||||
| Net interest income after provision for (reversal of) credit losses | 41,920 | 43,112 | 47,861 | 46,377 | 51,647 | ||||||||||
| Non-interest income | |||||||||||||||
| Fees and service charges | 910 | 734 | 763 | 658 | 617 | ||||||||||
| (Loss) gain on sale and call of securities | - | (15,227 | ) | - | (563 | ) | 3 | ||||||||
| (Loss) gain on sale of loans | (2,373 | ) | 134 | 395 | 187 | 376 | |||||||||
| (Loss) gain on sale of other real estate owned | - | - | - | (9 | ) | 14 | |||||||||
| Income from bank owned life insurance | 1,581 | 1,761 | 3,698 | 1,533 | 1,511 | ||||||||||
| Electronic banking fees and charges | 457 | 397 | 506 | 366 | 432 | ||||||||||
| Other income | 1,071 | 3,723 | 555 | 638 | 238 | ||||||||||
| Total non-interest income | 1,646 | (8,478 | ) | 5,917 | 2,810 | 3,191 | |||||||||
| Non-interest expense | |||||||||||||||
| Salaries and employee benefits | 18,005 | 19,921 | 20,348 | 20,367 | 19,184 | ||||||||||
| Net occupancy expense of premises | 3,097 | 2,987 | 3,090 | 3,188 | 3,223 | ||||||||||
| Equipment and systems | 3,537 | 3,867 | 3,662 | 4,516 | 3,822 | ||||||||||
| Advertising and marketing | 413 | 731 | 747 | 703 | 516 | ||||||||||
| Federal deposit insurance premium | 1,546 | 1,226 | 906 | 762 | 480 | ||||||||||
| Directors' compensation | 340 | 339 | 340 | 340 | 340 | ||||||||||
| Other expense | 3,414 | 3,579 | 2,895 | 3,736 | 3,058 | ||||||||||
| Total non-interest expense | 30,352 | 32,650 | 31,988 | 33,612 | 30,623 | ||||||||||
| Income before income taxes | 13,214 | 1,984 | 21,790 | 15,575 | 24,215 | ||||||||||
| Income taxes | 2,902 | 33 | 5,255 | 4,205 | 6,522 | ||||||||||
| Net income | $ | 10,312 | $ | 1,951 | $ | 16,535 | $ | 11,370 | $ | 17,693 | |||||
| Net income per common share (EPS) | |||||||||||||||
| Basic | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Diluted | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Dividends declared | |||||||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.11 | |||||
| Cash dividends declared | $ | 7,196 | $ | 7,172 | $ | 7,276 | $ | 7,441 | $ | 7,720 | |||||
| Dividend payout ratio | 69.8 | % | 367.6 | % | 44.0 | % | 65.4 | % | 43.6 | % | |||||
| Weighted average number of common shares outstanding | |||||||||||||||
| Basic | 64,769 | 65,030 | 65,737 | 67,240 | 69,790 | ||||||||||
| Diluted | 64,783 | 65,038 | 65,756 | 67,276 | 69,817 | ||||||||||
| Kearny Financial Corp. Average Balance Sheet Data (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| (Dollars in Thousands) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
| Assets | |||||||||||||||
| Interest-earning assets: | |||||||||||||||
| Loans receivable, including loans held-for-sale | $ | 5,986,669 | $ | 5,839,903 | $ | 5,553,996 | $ | 5,181,983 | $ | 4,850,236 | |||||
| Taxable investment securities | 1,558,222 | 1,527,578 | 1,516,974 | 1,608,372 | 1,620,996 | ||||||||||
| Tax-exempt investment securities | 17,663 | 37,917 | 48,973 | 51,672 | 55,390 | ||||||||||
| Other interest-earning assets | 131,682 | 114,175 | 88,038 | 87,990 | 79,644 | ||||||||||
| Total interest-earning assets | 7,694,236 | 7,519,573 | 7,207,981 | 6,930,017 | 6,606,266 | ||||||||||
| Non-interest-earning assets | 575,009 | 550,519 | 570,225 | 564,734 | 601,684 | ||||||||||
| Total assets | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||
| Deposits: | |||||||||||||||
| Interest-bearing demand | $ | 2,363,762 | $ | 2,359,977 | $ | 2,354,340 | $ | 2,155,946 | $ | 2,133,977 | |||||
| Savings | 858,673 | 931,584 | 1,019,343 | 1,077,631 | 1,088,351 | ||||||||||
| Certificates of deposit | 2,069,396 | 2,192,722 | 2,014,922 | 1,701,725 | 1,650,048 | ||||||||||
| Total interest-bearing deposits | 5,291,831 | 5,484,283 | 5,388,605 | 4,935,302 | 4,872,376 | ||||||||||
| Borrowings: | |||||||||||||||
| Federal Home Loan Bank advances | 1,402,269 | 997,148 | 642,399 | 752,579 | 632,811 | ||||||||||
| Other borrowings | 1,611 | - | 127,456 | 185,901 | 51,667 | ||||||||||
| Total borrowings | 1,403,880 | 997,148 | 769,855 | 938,480 | 684,478 | ||||||||||
| Total interest-bearing liabilities | 6,695,711 | 6,481,431 | 6,158,460 | 5,873,782 | 5,556,854 | ||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||
| Non-interest-bearing deposits | 634,324 | 666,846 | 667,624 | 640,200 | 624,152 | ||||||||||
| Other non-interest-bearing liabilities | 60,327 | 56,721 | 56,431 | 56,636 | 49,455 | ||||||||||
| Total non-interest-bearing liabilities | 694,651 | 723,567 | 724,055 | 696,836 | 673,607 | ||||||||||
| Total liabilities | 7,390,362 | 7,204,998 | 6,882,515 | 6,570,618 | 6,230,461 | ||||||||||
| Stockholders' equity | 878,883 | 865,094 | 895,691 | 924,133 | 977,489 | ||||||||||
| Total liabilities and stockholders' equity | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | |||||
| Average interest-earning assets to average interest-bearing liabilities | 114.91 | % | 116.02 | % | 117.04 | % | 117.98 | % | 118.89 | % | |||||
| Kearny Financial Corp. Performance Ratio Highlights | ||||||||||
| Three Months Ended | ||||||||||
| March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||
| Average yield on interest-earning assets: | ||||||||||
| Loans receivable, including loans held-for-sale | 4.02 | % | 3.97 | % | 3.81 | % | 3.77 | % | 3.78 | % |
| Taxable investment securities | 3.97 | % | 3.46 | % | 2.75 | % | 2.22 | % | 1.98 | % |
| Tax-exempt investment securities (1) | 2.23 | % | 2.32 | % | 2.33 | % | 2.30 | % | 2.28 | % |
| Other interest-earning assets | 4.38 | % | 3.52 | % | 3.46 | % | 2.15 | % | 2.08 | % |
| Total interest-earning assets | 4.01 | % | 3.85 | % | 3.57 | % | 3.38 | % | 3.31 | % |
| Average cost of interest-bearing liabilities: | ||||||||||
| Deposits: | ||||||||||
| Interest-bearing demand | 2.01 | % | 1.63 | % | 0.92 | % | 0.31 | % | 0.22 | % |
| Savings | 0.41 | % | 0.41 | % | 0.23 | % | 0.11 | % | 0.10 | % |
| Certificates of deposit | 1.84 | % | 1.50 | % | 0.97 | % | 0.46 | % | 0.52 | % |
| Total interest-bearing deposits | 1.68 | % | 1.37 | % | 0.81 | % | 0.32 | % | 0.29 | % |
| Borrowings: | ||||||||||
| Federal Home Loan Bank advances | 3.58 | % | 3.54 | % | 2.68 | % | 1.96 | % | 2.08 | % |
| Other borrowings | 5.15 | % | - | % | 2.26 | % | 0.77 | % | 0.17 | % |
| Total borrowings | 3.58 | % | 3.54 | % | 2.61 | % | 1.72 | % | 1.93 | % |
| Total interest-bearing liabilities | 2.08 | % | 1.71 | % | 1.03 | % | 0.54 | % | 0.49 | % |
| Interest rate spread (2) | 1.93 | % | 2.14 | % | 2.54 | % | 2.84 | % | 2.82 | % |
| Net interest margin (3) | 2.20 | % | 2.38 | % | 2.69 | % | 2.92 | % | 2.89 | % |
| Non-interest income to average assets (annualized) | 0.08 | % | -0.42 | % | 0.30 | % | 0.15 | % | 0.18 | % |
| Non-interest expense to average assets (annualized) | 1.47 | % | 1.62 | % | 1.65 | % | 1.79 | % | 1.70 | % |
| Efficiency ratio (4) | 68.96 | % | 89.93 | % | 58.75 | % | 62.93 | % | 60.14 | % |
| Return on average assets (annualized) | 0.50 | % | 0.10 | % | 0.85 | % | 0.61 | % | 0.98 | % |
| Return on average equity (annualized) | 4.69 | % | 0.90 | % | 7.38 | % | 4.92 | % | 7.24 | % |
| Return on average tangible equity (annualized) (5) | 6.20 | % | 1.20 | % | 9.70 | % | 6.40 | % | 9.27 | % |
_________________________
| (1) | The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield. | |
| (2) | Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities. | |
| (3) | Net interest income divided by average interest-earning assets. | |
| (4) | Non-interest expense divided by the sum of net interest income and non-interest income. | |
| (5) | Average tangible equity equals total average stockholders' equity reduced by average goodwill and average core deposit intangible assets. | |
The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles ("GAAP") (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
| Kearny Financial Corp. Reconciliation of GAAP to Non-GAAP (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
| Adjusted net income: | |||||||||||||||
| Net income (GAAP) | $ | 10,312 | $ | 1,951 | $ | 16,535 | $ | 11,370 | $ | 17,693 | |||||
| Non-recurring transactions - net of tax: | |||||||||||||||
| Branch consolidation expenses | 568 | - | - | - | - | ||||||||||
| Net effect of sale and call of securities | - | 10,811 | - | 400 | (2 | ) | |||||||||
| Net effect of sale of other assets | - | (2,081 | ) | - | - | - | |||||||||
| Severance expense from workforce realignment | - | 538 | - | - | - | ||||||||||
| Early contract termination | - | - | - | 568 | - | ||||||||||
| Adjusted net income | $ | 10,880 | $ | 11,219 | $ | 16,535 | $ | 12,338 | $ | 17,691 | |||||
| Calculation of pre-tax, pre-provision net revenue: | |||||||||||||||
| Net income (GAAP) | $ | 10,312 | $ | 1,951 | $ | 16,535 | $ | 11,370 | $ | 17,693 | |||||
| Adjustments to net income (GAAP): | |||||||||||||||
| Provision for income taxes | 2,902 | 33 | 5,255 | 4,205 | 6,522 | ||||||||||
| Provision for (reversal of) credit losses | 451 | 1,671 | 670 | 4,222 | (3,920 | ) | |||||||||
| Pre-tax, pre-provision net revenue (non-GAAP) | $ | 13,665 | $ | 3,655 | $ | 22,460 | $ | 19,797 | $ | 20,295 | |||||
| Adjusted earnings per share: | |||||||||||||||
| Weighted average common shares - basic | 64,769 | 65,030 | 65,737 | 67,240 | 69,790 | ||||||||||
| Weighted average common shares - diluted | 64,783 | 65,038 | 65,756 | 67,276 | 69,817 | ||||||||||
| Earnings per share - basic (GAAP) | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Earnings per share - diluted (GAAP) | $ | 0.16 | $ | 0.03 | $ | 0.25 | $ | 0.17 | $ | 0.25 | |||||
| Adjusted earnings per share - basic (non-GAAP) | $ | 0.17 | $ | 0.17 | $ | 0.25 | $ | 0.18 | $ | 0.25 | |||||
| Adjusted earnings per share - diluted (non-GAAP) | $ | 0.17 | $ | 0.17 | $ | 0.25 | $ | 0.18 | $ | 0.25 | |||||
| Pre-tax, pre-provision net revenue per share: | |||||||||||||||
| Pre-tax, pre-provision net revenue per share - basic (non-GAAP) | $ | 0.21 | $ | 0.06 | $ | 0.34 | $ | 0.29 | $ | 0.29 | |||||
| Pre-tax, pre-provision net revenue per share - diluted (non-GAAP) | $ | 0.21 | $ | 0.06 | $ | 0.34 | $ | 0.29 | $ | 0.29 | |||||
| Adjusted return on average assets: | |||||||||||||||
| Total average assets | $ | 8,269,245 | $ | 8,070,092 | $ | 7,778,206 | $ | 7,494,751 | $ | 7,207,950 | |||||
| Return on average assets (GAAP) | 0.50 | % | 0.10 | % | 0.85 | % | 0.61 | % | 0.98 | % | |||||
| Adjusted return on average assets (non-GAAP) | 0.53 | % | 0.56 | % | 0.85 | % | 0.66 | % | 0.98 | % | |||||
| Adjusted return on average equity: | |||||||||||||||
| Total average equity | $ | 878,883 | $ | 865,094 | $ | 895,691 | $ | 924,133 | $ | 977,489 | |||||
| Return on average equity (GAAP) | 4.69 | % | 0.90 | % | 7.38 | % | 4.92 | % | 7.24 | % | |||||
| Adjusted return on average equity (non-GAAP) | 4.95 | % | 5.19 | % | 7.38 | % | 5.34 | % | 7.24 | % | |||||
| Kearny Financial Corp. Reconciliation of GAAP to Non-GAAP (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||
| Adjusted return on average tangible equity: | |||||||||||||||
| Total average equity | $ | 878,883 | $ | 865,094 | $ | 895,691 | $ | 924,133 | $ | 977,489 | |||||
| Less: average goodwill | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | |||||
| Less: average other intangible assets | (2,683 | ) | (2,826 | ) | (2,971 | ) | (3,116 | ) | (3,282 | ) | |||||
| Total average tangible equity | $ | 665,305 | $ | 651,373 | $ | 681,825 | $ | 710,122 | $ | 763,312 | |||||
| Return on average tangible equity (non-GAAP) | 6.20 | % | 1.20 | % | 9.70 | % | 6.40 | % | 9.27 | % | |||||
| Adjusted return on average tangible equity (non-GAAP) | 6.54 | % | 6.89 | % | 9.70 | % | 6.95 | % | 9.27 | % | |||||
| Adjusted non-interest expense ratio: | |||||||||||||||
| Non-interest expense (GAAP) | $ | 30,352 | $ | 32,650 | $ | 31,988 | $ | 33,612 | $ | 30,623 | |||||
| Non-recurring transactions: | |||||||||||||||
| Branch consolidation expenses | (800 | ) | - | - | - | - | |||||||||
| Severance expense from workforce realignment | - | (757 | ) | - | - | - | |||||||||
| Early contract termination | - | - | - | (800 | ) | - | |||||||||
| Non-interest expense (non-GAAP) | $ | 29,552 | $ | 31,893 | $ | 31,988 | $ | 32,812 | $ | 30,623 | |||||
| Non-interest expense ratio (GAAP) | 1.47 | % | 1.62 | % | 1.65 | % | 1.79 | % | 1.70 | % | |||||
| Adjusted non-interest expense ratio (non-GAAP) | 1.43 | % | 1.58 | % | 1.65 | % | 1.75 | % | 1.70 | % | |||||
| Adjusted efficiency ratio: | |||||||||||||||
| Non-interest expense (non-GAAP) | $ | 29,552 | $ | 31,893 | $ | 31,988 | $ | 32,812 | $ | 30,623 | |||||
| Net interest income (GAAP) | $ | 42,371 | $ | 44,783 | $ | 48,531 | $ | 50,599 | $ | 47,727 | |||||
| Total non-interest income (GAAP) | 1,646 | (8,478 | ) | 5,917 | 2,810 | 3,191 | |||||||||
| Non-recurring transactions: | |||||||||||||||
| Net effect of sale and call of securities | - | 15,227 | - | 563 | (3 | ) | |||||||||
| Net effect of sale of other assets | - | (2,931 | ) | - | - | - | |||||||||
| Total revenue (non-GAAP) | $ | 44,017 | $ | 48,601 | $ | 54,448 | $ | 53,972 | $ | 50,915 | |||||
| Efficiency ratio (GAAP) | 68.96 | % | 89.93 | % | 58.75 | % | 62.93 | % | 60.14 | % | |||||
| Adjusted efficiency ratio (non-GAAP) | 67.14 | % | 65.62 | % | 58.75 | % | 60.79 | % | 60.15 | % | |||||
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
