• Kearny Financial Corp. Revises Second Quarter Fiscal 2024 Results

    المصدر: Nasdaq GlobeNewswire / 31 يناير 2024 15:30:01   America/Chicago

    FAIRFIELD, N.J., Jan. 31, 2024 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), revised the Company’s earnings release for the quarter ended December 31, 2023 (the “Revised Earnings Release”), which was issued on January 25, 2024 (the “Original Earnings Release”), to adjust the timing of income recognition associated with a $4.8 million non-recurring increase in cash surrender value (the “enhancement fee”) associated with restructuring of its Bank-Owned Life Insurance (“BOLI”) portfolio that was originally recognized as non-interest income during the quarter.

    During the quarter ended December 31, 2023, the Company recorded a $4.8 million non-recurring increase in BOLI cash surrender value and recognized the enhancement fee within non-interest income. Subsequent to the issuance of the Original Earnings Release, the Company continued to evaluate the matter and determined it was necessary to revise its accounting for the enhancement fee and derecognize the enhancement fee and the increase in BOLI cash surrender value initially recorded in the financial statements as of and for the quarter ended December 31, 2023. As a result, the $4.8 million enhancement fee will be recognized prospectively as non-interest income in future periods.

    The impact to the Company’s income statement, as a result of this revision, was to increase the Company’s net loss for the quarter ended December 31, 2023 by $4.8 million, resulting in a net loss of $13.8 million, or $0.22 per diluted share.

    Other than the $4.8 million revision discussed above, all of the financial results of the BOLI portfolio restructuring transaction remain the same as reported on January 25, 2024.

    The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on February 21, 2024, to stockholders of record as of February 7, 2024.

    Craig L. Montanaro, President and Chief Executive Officer, commented, “This quarter we executed strategies, as described in further detail below, to enhance our balance sheet, liquidity position, risk profile and asset quality metrics. In addition, we have begun to see deposit pressures ease, while run-rate non-interest expense remains very well controlled. As we look ahead, we remain laser-focused on sustainable growth in core loan and deposit relationships, while continuing to further leverage our recently implemented, best-in-class, digital banking platform.”

    Strategic Actions Taken During the Quarter Ended December 31, 2023

    Investment Securities Repositioning

    As previously announced, the Company executed the sale of $122.2 million of its available-for-sale (“AFS”) debt securities. The sale resulted in a pre-tax net loss of $18.1 million and had a nominal impact on tangible book value, as the loss was previously reflected in capital via accumulated other comprehensive loss. Proceeds from the sale were utilized to retire higher-cost wholesale funding and to reinvest in loans yielding approximately 7.0%.

    Bank-Owned Life Insurance (“BOLI”) Restructuring

    The Company initiated a restructuring of its BOLI portfolio in which $103.4 million of policies yielding 2.1% were exchanged or surrendered and replaced with policies yielding 5.1%. As a result of this restructure, the Company recognized tax expense of $5.7 million and exchange charges of $573 thousand.

    Resolution of Non-performing Assets (“NPAs”)

    At December 31, 2023, the Company was under contract to sell a $12.0 million Other Real Estate Owned (“OREO”) asset that was subsequently sold in January 2024. Proceeds from the sale were immediately redeployed into interest earning assets and will improve forward-looking earnings thru the reduction of net OREO expenses, which totaled approximately $469 thousand for the quarter ended December 31, 2023.

    In addition, the Company reclassified three non-performing commercial real estate loans to loans held-for-sale as a result of its intent to sell these assets in the near term. These loans are attributable to one borrower relationship and had a fair value of $9.7 million at December 31, 2023.

    Hedging Activities

    As part of the ongoing strategy to manage interest rate risk and support earnings, the Company added $500.0 million of derivative notional, comprised of $200.0 million of cash flow swaps and $300.0 million of interest rate floor spreads, all of which mature in two years or less. Collectively, these derivatives hedge a portion of the Company’s wholesale funding position and mitigate the interest rate risk associated with a modest decrease in short-term interest rates.

    Balance Sheet

    • Total assets were $7.90 billion at December 31, 2023, a decrease of $77.0 million, or 1.0%, from September 30, 2023.
    • Investment securities totaled $1.29 billion at December 31, 2023, a decrease of $73.2 million, or 5.4%, from September 30, 2023. The decrease for the quarter was largely driven by the sale of available-for-sale debt securities, as discussed above.
    • Loans receivable totaled $5.75 billion at December 31, 2023, an increase of $9.6 million, or 0.2%, from September 30, 2023.
    • BOLI totaled $256.1 million at December 31, 2023, a decrease of $38.4 million, or 13.0%, from September 30, 2023. The decrease for the quarter was largely attributable to the surrender of $43.2 million of BOLI policies, as discussed above, that did not settle until January 2024.
    • Deposits were $5.32 billion at December 31, 2023, a decrease of $114.5 million, or 2.1%, from September 30, 2023. Excluding a decrease of $154.5 million in brokered certificates of deposits, deposits increased $40.0 million, or 0.8%, from September 30, 2023.
    • The aggregate amount of uninsured deposits at the Bank was $1.81 billion at December 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 $694.5 million, or 13.1% of total deposits.
    • Borrowings were $1.67 billion at December 31, 2023, an increase of $40.1 million, or 2.5%, from September 30, 2023.
    • At December 31, 2023, the Company maintained available secured borrowing capacity of $1.78 billion, of which $1.38 billion was immediately accessible via in-place collateral and $400.8 million represented the market value of unpledged securities.

    Earnings

    Net Interest Income and Net Interest Margin

    • Net interest margin contracted 16 basis point to 1.94% for the quarter ended December 31, 2023. The decrease for the quarter was driven by an increase in the cost of interest-bearing liabilities and a decrease in the average balance of interest-earning assets, partially offset by a higher yield on interest-earning assets.
    • For the quarter ended December 31, 2023, net interest income decreased $3.3 million to $35.8 million from $39.2 million for the quarter ended September 30, 2023. Included in net interest income for the quarters ended December 31, 2023 and September 30, 2023, respectively, was purchase accounting accretion of $640,000 and $650,000, and loan prepayment penalty income of $185,000 and $267,000.

    Non-Interest Income

    • For the quarter ended December 31, 2023, non-interest income decreased $20.0 million from the quarter ended September 30, 2023 to a loss of $16.0 million. The decrease was primarily attributable to a pre-tax loss of $18.1 million related to the investment securities portfolio repositioning, as discussed above.
    • Income from BOLI decreased $504,000 to $1.2 million for the quarter ended December 31, 2023 from $1.7 million for the quarter ended September 30, 2023, due to non-recurring exchange charges related to the BOLI restructure, as discussed above.
    • Included in other income for the quarter ended December 31, 2023 were non-recurring losses of $974,000 attributable to the write-down of one OREO property, as discussed above. No such losses were recorded during the quarter ended September 30, 2023. OREO income for the quarter ended December 31, 2023 was $182,000.

    Non-Interest Expense

    • For the quarter ended December 31, 2023, non-interest expense remained flat at $29.8 million compared to the quarter ended September 30, 2023.
    • Included in other expenses for the quarter ended December 31, 2023 were OREO expenses totaling $651,000.

    Income Taxes

    • Income tax expense totaled $1.8 million for the quarter ended December 31, 2023 compared to $3.3 million for the quarter ended September 30, 2023. The decrease in income tax expense was due to lower pre-tax income, primarily attributable to realized losses on the sale of securities, as discussed above, partially offset by $5.7 million of tax expense related to the surrender of BOLI policies, as discussed above.

    Asset Quality

    • The balance of non-performing assets decreased $1.1 million to $49.8 million, or 0.63% of total assets, at December 31, 2023, from $50.9 million, or 0.64% of total assets, at September 30, 2023. Adjusting for the sale of the OREO asset completed in January 2024, the non-performing assets decrease to $37.8 million, or 0.48% of total assets.
    • Net charge-offs totaled $4.1 million, or 0.29% of average loans, on an annualized basis, for the quarter ended December 31, 2023, compared to $2.1 million, or 0.15% of average loans, on an annualized basis, for the quarter ended September 30, 2023. The charge-offs recorded during the quarter ended December 31, 2023 were primarily driven by the reclassification of three non-performing loans to held-for-sale status, reflecting the Company’s intent to sell these assets, as discussed above. Of the $4.1 million of net charge-offs recorded during the quarter ended December 31, 2023, $1.7 million had previously been individually reserved for within the allowance for credit losses.
    • For the quarter ended December 31, 2023, the Company recorded a provision for credit losses of $2.1 million, compared to $245,000 for the quarter ended September 30, 2023. The provision for credit loss expense for the quarter ended December 31, 2023 was primarily attributable to charge-offs on the three commercial real estate loans, as discussed above.
    • The allowance for credit losses (“ACL”) was $44.9 million, or 0.78% of total loans, at December 31, 2023, compared to $46.9 million, or 0.81% of total loans, at September 30, 2023. The decrease in the ACL was largely attributable to a reduction in reserves for individually evaluated loans, resulting from the charge-offs noted above.

    Capital

    • During the quarter ended December 31, 2023, the Company repurchased 687,140 shares of common stock at a cost of $4.7 million, or $6.88 per share.
    • On November 7, 2023, the Company announced the completion of its ninth stock repurchase plan which authorized the repurchase of 4,000,000 shares. Such shares were repurchased at a cost of $34.9 million, or $8.74 per share.
    • For the quarter ended December 31, 2023, book value per share increased $0.12, or 0.9%, to $13.16 while tangible book value per share increased $0.08, or 0.8%, to $9.85. These increases were largely driven by a decrease in accumulated other comprehensive loss.
    • At December 31, 2023, total stockholders’ equity included after-tax net unrealized losses on securities available for sale of $88.6 million, partially offset by after-tax unrealized gains on derivatives of $24.6 million. After-tax net unrecognized losses on securities held to maturity of $10.0 million were not reflected in total stockholders’ equity.
    • At December 31, 2023, the Company’s tangible equity to tangible assets ratio equaled 8.26% 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 Q2 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.

    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

    Category: Earnings

    Linked-Quarter Comparative Financial Analysis

    Kearny Financial Corp.
    Consolidated Balance Sheets
    (Unaudited)

    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2023 (3)    		September 30,
    2023    		Variance
    or Change    		Variance
    or Change Pct.
    Assets    
    Cash and cash equivalents$73,860 $57,219 $16,641 29.1%
    Securities available for sale 1,144,175  1,215,633  (71,458)-5.9%
    Securities held to maturity 141,959  143,730  (1,771)-1.2%
    Loans held-for-sale 14,030  3,934  10,096 256.6%
    Loans receivable 5,745,629  5,736,049  9,580 0.2%
    Less: allowance for credit losses on loans (44,867) (46,872) (2,005)-4.3%
    Net loans receivable 5,700,762  5,689,177  11,585 0.2%
    Premises and equipment 45,928  46,868  (940)-2.0%
    Federal Home Loan Bank stock 83,372  81,509  1,863 2.3%
    Accrued interest receivable 30,258  29,766  492 1.7%
    Goodwill 210,895  210,895  — —%
    Core deposit intangible 2,189  2,323  (134)-5.8%
    Bank owned life insurance 256,064  294,491  (38,427)-13.0%
    Deferred income taxes, net 46,116  56,500  (10,384)-18.4%
    Other real estate owned 11,982  12,956  (974)-7.5%
    Other assets 136,242  129,865  6,377 4.9%
    Total assets$7,897,832 $7,974,866 $(77,034)-1.0%
         
    Liabilities    
    Deposits:    
    Non-interest-bearing$584,130 $595,141 $(11,011)-1.9%
    Interest-bearing 4,735,500  4,839,027  (103,527)-2.1%
    Total deposits 5,319,630  5,434,168  (114,538)-2.1%
    Borrowings 1,667,055  1,626,933  40,122 2.5%
    Advance payments by borrowers for taxes 16,742  16,907  (165)-1.0%
    Other liabilities 46,427  47,324  (897)-1.9%
    Total liabilities 7,049,854  7,125,332  (75,478)-1.1%
         
    Stockholders' Equity    
    Common stock 645  652  (7)-1.1%
    Paid-in capital 493,297  497,269  (3,972)-0.8%
    Retained earnings 439,755  460,464  (20,709)-4.5%
    Unearned ESOP shares (21,889) (22,375) 486 2.2%
    Accumulated other comprehensive loss (63,830) (86,476) 22,646 26.2%
    Total stockholders' equity 847,978  849,534  (1,556)-0.2%
    Total liabilities and stockholders' equity$7,897,832 $7,974,866 $(77,034)-1.0%
         
    Consolidated capital ratios    
    Equity to assets 10.74% 10.65% 0.09% 
    Tangible equity to tangible assets(1) 8.26% 8.20% 0.06% 
         
    Share data    
    Outstanding shares 64,445  65,132  (687)-1.1%
    Book value per share$13.16 $13.04 $0.12 0.9%
    Tangible book value per share(2)$9.85 $9.77 $0.08 0.8%

    _________________________
    (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.
    (3) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
     

    Kearny Financial Corp.
    Consolidated Statements of Income (Loss)
    (Unaudited)

    (Dollars and Shares in Thousands,
    Except Per Share Data)

    		Three Months EndedVariance
    or Change
    		Variance
    or Change Pct.
    December 31,
    2023 (1)    		September 30,
    2023
    Interest income    
    Loans$63,384 $62,769 $615 1.0%
    Taxable investment securities 16,756  16,265  491 3.0%
    Tax-exempt investment securities 84  87  (3)-3.4%
    Other interest-earning assets 2,401  2,047  354 17.3%
    Total interest income 82,625  81,168  1,457 1.8%
         
    Interest expense    
    Deposits 30,340  27,567  2,773 10.1%
    Borrowings 16,446  14,441  2,005 13.9%
    Total interest expense 46,786  42,008  4,778 11.4%
    Net interest income 35,839  39,160  (3,321)-8.5%
    Provision for credit losses 2,105  245  1,860 759.2%
    Net interest income after provision for credit losses 33,734  38,915  (5,181)-13.3%
         
    Non-interest income    
    Fees and service charges 624  748  (124)-16.6%
    Loss on sale and call of securities (18,135) —  (18,135)—%
    Gain on sale of loans 104  215  (111)-51.6%
    Loss on sale of other real estate owned (974) —  (974)—%
    Income from bank owned life insurance 1,162  1,666  (504)-30.3%
    Electronic banking fees and charges 396  367  29 7.9%
    Other income 811  1,014  (203)-20.0%
    Total non-interest income (16,012) 4,010  (20,022)-499.3%
         
    Non-interest expense    
    Salaries and employee benefits 17,282  17,761  (479)-2.7%
    Net occupancy expense of premises 2,674  2,758  (84)-3.0%
    Equipment and systems 3,814  3,801  13 0.3%
    Advertising and marketing 301  228  73 32.0%
    Federal deposit insurance premium 1,495  1,524  (29)-1.9%
    Directors' compensation 393  393  — —%
    Other expense 3,808  3,309  499 15.1%
    Total non-interest expense 29,767  29,774  (7)—%
    (Loss) income before income taxes (12,045) 13,151  (25,196)-191.6%
    Income taxes 1,782  3,309  (1,527)-46.1%
    Net (loss) income$(13,827)$9,842 $(23,669)-240.5%
         
    Net (loss) income per common share (EPS)    
    Basic$(0.22)$0.16 $(0.38) 
    Diluted$(0.22)$0.16 $(0.38) 
         
    Dividends declared    
    Cash dividends declared per common share$0.11 $0.11 $—  
    Cash dividends declared$6,882 $6,989 $(107) 
    Dividend payout ratio -49.8% 71.0% -120.8% 
         
    Weighted average number of common shares outstanding    
    Basic 62,299  63,014  (715) 
    Diluted 62,367  63,061  (694) 

    _________________________
    (1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
       

    Kearny Financial Corp.
    Average Balance Sheet Data
    (Unaudited)

    (Dollars in Thousands)

    		Three Months EndedVariance
    or Change
    		Variance
    or Change Pct.
    December 31,
    2023 (1)    		September 30,
    2023
    Assets    
    Interest-earning assets:    
    Loans receivable, including loans held for sale$5,726,321 $5,788,074 $(61,753)-1.1%
    Taxable investment securities 1,509,165  1,516,393  (7,228)-0.5%
    Tax-exempt investment securities 15,025  15,483  (458)-3.0%
    Other interest-earning assets 139,740  130,829  8,911 6.8%
    Total interest-earning assets 7,390,251  7,450,779  (60,528)-0.8%
    Non-interest-earning assets 554,335  568,723  (14,388)-2.5%
    Total assets$7,944,586 $8,019,502 $(74,916)-0.9%
         
    Liabilities and Stockholders' Equity    
    Interest-bearing liabilities:    
    Deposits:    
    Interest-bearing demand$2,301,169 $2,245,831 $55,338 2.5%
    Savings 664,926  719,508  (54,582)-7.6%
    Certificates of deposit 1,824,316  1,968,512  (144,196)-7.3%
    Total interest-bearing deposits 4,790,411  4,933,851  (143,440)-2.9%
    Borrowings:    
    Federal Home Loan Bank advances 1,513,497  1,386,473  127,024 9.2%
    Other borrowings 142,283  158,098  (15,815)-10.0%
    Total borrowings 1,655,780  1,544,571  111,209 7.2%
    Total interest-bearing liabilities 6,446,191  6,478,422  (32,231)-0.5%
    Non-interest-bearing liabilities:    
    Non-interest-bearing deposits 597,294  612,251  (14,957)-2.4%
    Other non-interest-bearing liabilities 62,387  66,701  (4,314)-6.5%
    Total non-interest-bearing liabilities 659,681  678,952  (19,271)-2.8%
    Total liabilities 7,105,872  7,157,374  (51,502)-0.7%
    Stockholders' equity 838,714  862,128  (23,414)-2.7%
    Total liabilities and stockholders' equity$7,944,586 $8,019,502 $(74,916)-0.9%
         
    Average interest-earning assets to average interest-bearing liabilities 114.65% 115.01% -0.36%-0.3%

    _________________________
    (1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

    Kearny Financial Corp.
    Performance Ratio Highlights
    (Unaudited)

     Three Months EndedVariance
    or Change
     December 31,
    2023 (6)    		September 30,
    2023
    Average yield on interest-earning assets:   
    Loans receivable, including loans held for sale4.43%4.34%0.09%
    Taxable investment securities4.44%4.29%0.15%
    Tax-exempt investment securities (1)2.25%2.25%—%
    Other interest-earning assets6.87%6.26%0.61%
    Total interest-earning assets4.47%4.36%0.11%
        
    Average cost of interest-bearing liabilities:   
    Deposits:   
    Interest-bearing demand2.91%2.58%0.33%
    Savings0.44%0.47%-0.03%
    Certificates of deposit2.82%2.49%0.33%
    Total interest-bearing deposits2.53%2.23%0.30%
    Borrowings:   
    Federal Home Loan Bank advances3.82%3.54%0.28%
    Other borrowings5.65%5.46%0.19%
    Total borrowings3.97%3.74%0.23%
    Total interest-bearing liabilities2.90%2.59%0.31%
        
    Interest rate spread (2)1.57%1.77%-0.20%
    Net interest margin (3)1.94%2.10%-0.16%
        
    Non-interest income to average assets (annualized)-0.81%0.20%-1.01%
    Non-interest expense to average assets (annualized)1.50%1.49%0.01%
        
    Efficiency ratio (4)150.13%68.97%81.16%
        
    Return on average assets (annualized)-0.70%0.49%-1.19%
    Return on average equity (annualized)-6.59%4.57%-11.16%
    Return on average tangible equity (annualized) (5)-8.84%6.07%-14.91%

    _________________________
    (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.
    (6) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

     
    Five-Quarter Financial Trend Analysis

    Kearny Financial Corp.
    Consolidated Balance Sheets

    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2023 (3)    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
     (Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)
    Assets     
    Cash and cash equivalents$73,860 $57,219 $70,515 $194,568 $75,660 
    Securities available for sale 1,144,175  1,215,633  1,227,729  1,267,066  1,286,354 
    Securities held to maturity 141,959  143,730  146,465  149,764  153,786 
    Loans held-for-sale 14,030  3,934  9,591  5,401  12,940 
    Loans receivable 5,745,629  5,736,049  5,829,421  5,966,325  5,984,133 
    Less: allowance for credit losses on loans (44,867) (46,872) (48,734) (49,122) (48,877)
    Net loans receivable 5,700,762  5,689,177  5,780,687  5,917,203  5,935,256 
    Premises and equipment 45,928  46,868  48,309  49,589  50,953 
    Federal Home Loan Bank stock 83,372  81,509  71,734  76,319  69,022 
    Accrued interest receivable 30,258  29,766  28,133  28,794  27,368 
    Goodwill 210,895  210,895  210,895  210,895  210,895 
    Core deposit intangible 2,189  2,323  2,457  2,590  2,732 
    Bank owned life insurance 256,064  294,491  292,825  291,220  289,673 
    Deferred income taxes, net 46,116  56,500  51,973  53,151  51,107 
    Other real estate owned 11,982  12,956  12,956  13,410  13,410 
    Other assets 136,242  129,865  110,546  89,366  110,162 
    Total assets$7,897,832 $7,974,866 $8,064,815 $8,349,336 $8,289,318 
          
    Liabilities     
    Deposits:     
    Non-interest-bearing$584,130 $595,141 $609,999 $617,778 $650,950 
    Interest-bearing 4,735,500  4,839,027  5,019,184  5,185,626  5,320,421 
    Total deposits 5,319,630  5,434,168  5,629,183  5,803,404  5,971,371 
    Borrowings 1,667,055  1,626,933  1,506,812  1,611,692  1,383,573 
    Advance payments by borrowers for taxes 16,742  16,907  18,338  18,706  17,307 
    Other liabilities 46,427  47,324  41,198  49,304  44,427 
    Total liabilities 7,049,854  7,125,332  7,195,531  7,483,106  7,416,678 
          
    Stockholders' Equity     
    Common stock 645  652  659  667  674 
    Paid-in capital 493,297  497,269  503,332  509,359  515,332 
    Retained earnings 439,755  460,464  457,611  452,605  449,489 
    Unearned ESOP shares (21,889) (22,375) (22,862) (23,348) (23,834)
    Accumulated other comprehensive loss (63,830) (86,476) (69,456) (73,053) (69,021)
    Total stockholders' equity 847,978  849,534  869,284  866,230  872,640 
    Total liabilities and stockholders' equity$7,897,832 $7,974,866 $8,064,815 $8,349,336 $8,289,318 
          
    Consolidated capital ratios     
    Equity to assets 10.74% 10.65% 10.78% 10.37% 10.53%
    Tangible equity to tangible assets(1) 8.26% 8.20% 8.35% 8.02% 8.16%
          
    Share data     
    Outstanding shares 64,445  65,132  65,864  66,680  67,388 
    Book value per share$13.16 $13.04 $13.20 $12.99 $12.95 
    Tangible book value per share(2)$9.85 $9.77 $9.96 $9.79 $9.78 

    _________________________
    (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.
    (3) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
     

    Kearny Financial Corp.
    Supplemental Balance Sheet Highlights
    (Unaudited)

    (Dollars in Thousands)December 31,
    2023    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
    Loan portfolio composition:     
    Commercial loans:     
    Multi-family mortgage$2,651,274 $2,699,151 $2,761,775 $2,835,852 $2,851,721 
    Nonresidential mortgage 947,287  946,801  968,574  1,002,643  1,017,341 
    Commercial business 144,134  149,229  146,861  162,038  177,530 
    Construction 221,933  230,703  226,609  215,524  186,663 
    Total commercial loans 3,964,628  4,025,884  4,103,819  4,216,057  4,233,255 
    One- to four-family residential mortgage 1,746,065  1,689,051  1,700,559  1,713,343  1,719,514 
    Consumer loans:     
    Home equity loans 43,517  42,896  43,549  44,376  45,690 
    Other consumer 2,728  2,644  2,549  2,592  2,648 
    Total consumer loans 46,245  45,540  46,098  46,968  48,338 
    Total loans, excluding yield adjustments 5,756,938  5,760,475  5,850,476  5,976,368  6,001,107 
    Unaccreted yield adjustments (11,309) (24,426) (21,055) (10,043) (16,974)
    Loans receivable, net of yield adjustments 5,745,629  5,736,049  5,829,421  5,966,325  5,984,133 
    Less: allowance for credit losses on loans (44,867) (46,872) (48,734) (49,122) (48,877)
    Net loans receivable$5,700,762 $5,689,177 $5,780,687 $5,917,203 $5,935,256 
          
    Asset quality:     
    Nonperforming assets:     
    Accruing loans - 90 days and over past due$— $— $— $— $— 
    Nonaccrual loans 28,089  37,912  42,627  44,026  40,549 
    Total nonperforming loans 28,089  37,912  42,627  44,026  40,549 
    Nonaccrual loans held-for-sale 9,700  —  —  —  8,650 
    Other real estate owned 11,982  12,956  12,956  13,410  13,410 
    Total nonperforming assets$49,771 $50,868 $55,583 $57,436 $62,609 
          
    Nonperforming loans (% total loans) 0.49% 0.66% 0.73% 0.74% 0.68%
    Nonperforming assets (% total assets) 0.63% 0.64% 0.69% 0.69% 0.76%
          
    Classified loans$94,676 $98,616 $93,526 $103,461 $86,069 
          
    Allowance for credit losses on loans (ACL):     
    ACL to total loans 0.78% 0.81% 0.83% 0.82% 0.81%
    ACL to nonperforming loans 159.73% 123.63% 114.33% 111.57% 120.54%
    Net charge-offs$4,110 $2,107 $82 $206 $407 
    Average net charge-off rate (annualized) 0.29% 0.15% 0.01% 0.01% 0.03%
                    

    Kearny Financial Corp.
    Supplemental Balance Sheet Highlights
    (Unaudited)

    (Dollars in Thousands)December 31,
    2023    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
    Funding composition:     
    Deposits:     
    Non-interest-bearing deposits$584,130 $595,141 $609,999 $617,778 $650,950 
    Interest-bearing demand 2,347,262  2,236,573  2,252,912  2,285,799  2,316,485 
    Savings 646,182  689,163  748,721  811,483  901,514 
    Certificates of deposit (retail) 1,283,676  1,300,382  1,377,028  1,327,343  1,354,907 
    Certificates of deposit (brokered and listing service) 458,380  612,909  640,523  761,001  747,515 
    Interest-bearing deposits 4,735,500  4,839,027  5,019,184  5,185,626  5,320,421 
    Total deposits 5,319,630  5,434,168  5,629,183  5,803,404  5,971,371 
          
    Borrowings:     
    Federal Home Loan Bank advances 1,432,055  1,456,933  1,281,812  1,156,692  1,256,573 
    Overnight borrowings 235,000  170,000  225,000  455,000  127,000 
    Total borrowings 1,667,055  1,626,933  1,506,812  1,611,692  1,383,573 
          
    Total funding$6,986,685 $7,061,101 $7,135,995 $7,415,096 $7,354,944 
          
    Loans as a % of deposits 107.4% 104.8% 102.9% 102.1% 99.6%
    Deposits as a % of total funding 76.1% 77.0% 78.9% 78.3% 81.2%
    Borrowings as a % of total funding 23.9% 23.0% 21.1% 21.7% 18.8%
          
    Uninsured deposits:     
    Uninsured deposits (reported)(1)$1,813,122 $1,734,288 $1,771,416 $1,678,051 $1,815,854 
    Uninsured deposits (adjusted)(2)$694,510 $683,265 $710,377 $705,727 $794,407 

    _________________________
    (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)    		December 31,
    2023 (1)    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
    Interest income     
    Loans$63,384 $62,769 $62,044 $60,172 $57,996 
    Taxable investment securities 16,756  16,265  15,736  15,459  13,221 
    Tax-exempt investment securities 84  87  91  99  219 
    Other interest-earning assets 2,401  2,047  1,821  1,441  1,005 
    Total interest income 82,625  81,168  79,692  77,171  72,441 
          
    Interest expense     
    Deposits 30,340  27,567  26,226  22,246  18,822 
    Borrowings 16,446  14,441  13,286  12,554  8,836 
    Total interest expense 46,786  42,008  39,512  34,800  27,658 
    Net interest income 35,839  39,160  40,180  42,371  44,783 
    Provision for (reversal of) credit losses 2,105  245  (306) 451  1,671 
    Net interest income after provision for (reversal of) credit losses 33,734  38,915  40,486  41,920  43,112 
          
    Non-interest income     
    Fees and service charges 624  748  699  910  734 
    Loss on sale and call of securities (18,135) —  —  —  (15,227)
    Gain (loss) on sale of loans 104  215  199  (2,373) 134 
    Loss on sale of other real estate owned (974) —  (139) —  — 
    Income from bank owned life insurance 1,162  1,666  1,605  1,581  1,761 
    Electronic banking fees and charges 396  367  399  457  397 
    Other income 811  1,014  903  1,071  3,723 
    Total non-interest income (16,012) 4,010  3,666  1,646  (8,478)
          
    Non-interest expense     
    Salaries and employee benefits 17,282  17,761  17,315  18,005  19,921 
    Net occupancy expense of premises 2,674  2,758  2,862  3,097  2,987 
    Equipment and systems 3,814  3,801  3,511  3,537  3,867 
    Advertising and marketing 301  228  231  413  731 
    Federal deposit insurance premium 1,495  1,524  1,455  1,546  1,226 
    Directors' compensation 393  393  345  340  339 
    Other expense 3,808  3,309  3,042  3,414  3,579 
    Total non-interest expense 29,767  29,774  28,761  30,352  32,650 
    (Loss) income before income taxes (12,045) 13,151  15,391  13,214  1,984 
    Income taxes 1,782  3,309  3,378  2,902  33 
    Net (loss) income$(13,827)$9,842 $12,013 $10,312 $1,951 
          
    Net (loss) income per common share (EPS)     
    Basic$(0.22)$0.16 $0.19 $0.16 $0.03 
    Diluted$(0.22)$0.16 $0.19 $0.16 $0.03 
          
    Dividends declared     
    Cash dividends declared per common share$0.11 $0.11 $0.11 $0.11 $0.11 
    Cash dividends declared$6,882 $6,989 $7,007 $7,196 $7,172 
    Dividend payout ratio -49.8% 71.0% 58.3% 69.8% 367.6%
          
    Weighted average number of common shares outstanding     
    Basic 62,299  63,014  63,667  64,769  65,030 
    Diluted 62,367  63,061  63,667  64,783  65,038 

    _________________________
    (1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

    Kearny Financial Corp.
    Average Balance Sheet Data
    (Unaudited)

     Three Months Ended
    (Dollars in Thousands)December 31,
    2023 (1)    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
    Assets     
    Interest-earning assets:     
    Loans receivable, including loans held-for-sale$5,726,321 $5,788,074 $5,932,541 $5,986,669 $5,839,903 
    Taxable investment securities 1,509,165  1,516,393  1,529,582  1,558,222  1,527,578 
    Tax-exempt investment securities 15,025  15,483  16,346  17,663  37,917 
    Other interest-earning assets 139,740  130,829  128,158  131,682  114,175 
    Total interest-earning assets 7,390,251  7,450,779  7,606,627  7,694,236  7,519,573 
    Non-interest-earning assets 554,335  568,723  556,962  575,009  550,519 
    Total assets$7,944,586 $8,019,502 $8,163,589 $8,269,245 $8,070,092 
          
    Liabilities and Stockholders' Equity     
    Interest-bearing liabilities:     
    Deposits:     
    Interest-bearing demand$2,301,169 $2,245,831 $2,321,120 $2,363,762 $2,359,977 
    Savings 664,926  719,508  774,854  858,673  931,584 
    Certificates of deposit 1,824,316  1,968,512  2,057,818  2,069,396  2,192,722 
    Total interest-bearing deposits 4,790,411  4,933,851  5,153,792  5,291,831  5,484,283 
    Borrowings:     
    Federal Home Loan Bank advances 1,513,497  1,386,473  1,374,316  1,402,269  997,148 
    Other borrowings 142,283  158,098  100,055  1,611  — 
    Total borrowings 1,655,780  1,544,571  1,474,371  1,403,880  997,148 
    Total interest-bearing liabilities 6,446,191  6,478,422  6,628,163  6,695,711  6,481,431 
    Non-interest-bearing liabilities:     
    Non-interest-bearing deposits 597,294  612,251  608,765  634,324  666,846 
    Other non-interest-bearing liabilities 62,387  66,701  64,970  60,327  56,721 
    Total non-interest-bearing liabilities 659,681  678,952  673,735  694,651  723,567 
    Total liabilities 7,105,872  7,157,374  7,301,898  7,390,362  7,204,998 
    Stockholders' equity 838,714  862,128  861,691  878,883  865,094 
    Total liabilities and stockholders' equity$7,944,586 $8,019,502 $8,163,589 $8,269,245 $8,070,092 
          
    Average interest-earning assets to average interest-bearing liabilities 114.65% 115.01% 114.76% 114.91% 116.02%

    _________________________
    (1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
      

    Kearny Financial Corp.
    Performance Ratio Highlights

     Three Months Ended
     December 31,
    2023 (6)    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
    Average yield on interest-earning assets:     
    Loans receivable, including loans held-for-sale4.43%4.34%4.18%4.02%3.97%
    Taxable investment securities4.44%4.29%4.12%3.97%3.46%
    Tax-exempt investment securities (1)2.25%2.25%2.23%2.23%2.32%
    Other interest-earning assets6.87%6.26%5.68%4.38%3.52%
    Total interest-earning assets4.47%4.36%4.19%4.01%3.85%
          
    Average cost of interest-bearing liabilities:     
    Deposits:     
    Interest-bearing demand2.91%2.58%2.38%2.01%1.63%
    Savings0.44%0.47%0.48%0.41%0.41%
    Certificates of deposit2.82%2.49%2.24%1.84%1.50%
    Total interest-bearing deposits2.53%2.23%2.04%1.68%1.37%
    Borrowings:     
    Federal Home Loan Bank advances3.82%3.54%3.51%3.58%3.54%
    Other borrowings5.65%5.46%4.89%5.15%—%
    Total borrowings3.97%3.74%3.60%3.58%3.54%
    Total interest-bearing liabilities2.90%2.59%2.38%2.08%1.71%
          
    Interest rate spread (2)1.57%1.77%1.81%1.93%2.14%
    Net interest margin (3)1.94%2.10%2.11%2.20%2.38%
          
    Non-interest income to average assets (annualized)-0.81%0.20%0.18%0.08%-0.42%
    Non-interest expense to average assets (annualized)1.50%1.49%1.41%1.47%1.62%
          
    Efficiency ratio (4)150.13%68.97%65.60%68.96%89.93%
          
    Return on average assets (annualized)-0.70%0.49%0.59%0.50%0.10%
    Return on average equity (annualized)-6.59%4.57%5.58%4.69%0.90%
    Return on average tangible equity (annualized) (5)-8.84%6.07%7.41%6.20%1.20%

    _________________________
    (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.
    (6) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.


    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)    		December 31,
    2023 (1)    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
    Adjusted net income:     
    Net (loss) income (GAAP)$(13,827)$9,842 $12,013 $10,312 $1,951 
    Non-recurring transactions - net of tax:     
    Branch consolidation expenses —  —  —  568  — 
    Net effect of sale and call of securities 12,876  —  —  —  10,811 
    Net effect of sale of other assets —  —  —  —  (2,081)
    Severance expense from workforce realignment —  —  —  —  538 
    Net effect of bank-owned life insurance restructure 6,286  —  —  —  — 
    Adjusted net income$5,335 $9,842 $12,013 $10,880 $11,219 
          
    Calculation of pre-tax, pre-provision net revenue:     
    Net (loss) income (GAAP)$(13,827)$9,842 $12,013 $10,312 $1,951 
    Adjustments to net income (GAAP):     
    Provision for income taxes 1,782  3,309  3,378  2,902  33 
    Provision for (reversal of) credit losses 2,105  245  (306) 451  1,671 
    Pre-tax, pre-provision net revenue (non-GAAP)$(9,940)$13,396 $15,085 $13,665 $3,655 
          
    Adjusted earnings per share:     
    Weighted average common shares - basic 62,299  63,014  63,667  64,769  65,030 
    Weighted average common shares - diluted 62,367  63,061  63,667  64,783  65,038 
          
    Earnings per share - basic (GAAP)$(0.22)$0.16 $0.19 $0.16 $0.03 
    Earnings per share - diluted (GAAP)$(0.22)$0.16 $0.19 $0.16 $0.03 
          
    Adjusted earnings per share - basic (non-GAAP)$0.09 $0.16 $0.19 $0.17 $0.17 
    Adjusted earnings per share - diluted (non-GAAP)$0.09 $0.16 $0.19 $0.17 $0.17 
          
    Pre-tax, pre-provision net revenue per share:     
    Pre-tax, pre-provision net revenue per share - basic
    (non-GAAP)    		$(0.16)$0.21 $0.24 $0.21 $0.06 
    Pre-tax, pre-provision net revenue per share - diluted
    (non-GAAP)    		$(0.16)$0.21 $0.24 $0.21 $0.06 
          
    Adjusted return on average assets:     
    Total average assets$7,944,586 $8,019,502 $8,163,589 $8,269,245 $8,070,092 
          
    Return on average assets (GAAP) -0.70% 0.49% 0.59% 0.50% 0.10%
    Adjusted return on average assets (non-GAAP) 0.27% 0.49% 0.59% 0.53% 0.56%
          
    Adjusted return on average equity:     
    Total average equity$838,714 $862,128 $861,691 $878,883 $865,094 
          
    Return on average equity (GAAP) -6.59% 4.57% 5.58% 4.69% 0.90%
    Adjusted return on average equity (non-GAAP) 2.54% 4.57% 5.58% 4.95% 5.19%

    _________________________
    (1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.

    Kearny Financial Corp.
    Reconciliation of GAAP to Non-GAAP
    (Unaudited)

     Three Months Ended
    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2023 (1)    		September 30,
    2023    		June 30,
    2023    		March 31,
    2023    		December 31,
    2022
    Adjusted return on average tangible equity:     
    Total average equity$838,714 $862,128 $861,691 $878,883 $865,094 
    Less: average goodwill (210,895) (210,895) (210,895) (210,895) (210,895)
    Less: average other intangible assets (2,277) (2,411) (2,544) (2,683) (2,826)
    Total average tangible equity$625,542 $648,822 $648,252 $665,305 $651,373 
          
    Return on average tangible equity (non-GAAP) -8.84% 6.07% 7.41% 6.20% 1.20%
    Adjusted return on average tangible equity (non-GAAP) 3.41% 6.07% 7.41% 6.54% 6.89%
          
    Adjusted non-interest expense ratio:     
    Non-interest expense (GAAP)$29,767 $29,774 $28,761 $30,352 $32,650 
    Non-recurring transactions:     
    Branch consolidation expenses —  —  —  (800) — 
    Severance expense from workforce realignment —  —  —  —  (757)
    Non-interest expense (non-GAAP)$29,767 $29,774 $28,761 $29,552 $31,893 
          
    Non-interest expense ratio (GAAP) 1.50% 1.49% 1.41% 1.47% 1.62%
    Adjusted non-interest expense ratio (non-GAAP) 1.50% 1.49% 1.41% 1.43% 1.58%
          
    Adjusted efficiency ratio:     
    Non-interest expense (non-GAAP)$29,767 $29,774 $28,761 $29,552 $31,893 
          
    Net interest income (GAAP)$35,839 $39,160 $40,180 $42,371 $44,783 
    Total non-interest income (GAAP) (16,012) 4,010  3,666  1,646  (8,478)
    Non-recurring transactions:     
    Net effect of sale and call of securities 18,135  —  —  —  15,227 
    Net effect of sale of other assets —  —  —  —  (2,931)
    Net effect of bank-owned life insurance restructure 573  —  —  —  — 
    Total revenue (non-GAAP)$38,535 $43,170 $43,846 $44,017 $48,601 
          
    Efficiency ratio (GAAP) 150.13% 68.97% 65.60% 68.96% 89.93%
    Adjusted efficiency ratio (non-GAAP) 77.25% 68.97% 65.60% 67.14% 65.62%

    _________________________
    (1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.


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