• Kearny Financial Corp. Announces Third Quarter Fiscal 2022 Results and Declaration of Cash Dividend

    Source: Nasdaq GlobeNewswire / 28 Apr 2022 08:30:02   America/New_York

    FAIRFIELD, N.J., April 28, 2022 (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, 2022 of $17.7 million, or $0.25 per diluted share, compared to $18.8 million, or $0.26 per diluted share, for the quarter ended December 31, 2021.

    The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on May 25, 2022 to stockholders of record as of May 11, 2022.

    Craig L. Montanaro, President and Chief Executive Officer, commented, “This quarter was highlighted by outstanding core growth on both sides of the balance sheet as total loans increased $176.8 million, or 14.8% annualized, and core non-maturity deposits increased $66.2 million or 6.8% annualized. While much of the earnings benefit of this growth will not begin to be recognized until the quarter ended June 30, I am very pleased with our performance and the ongoing strength of our commercial loan pipeline, which totaled $1.5 billion at quarter end.”

    Regarding the macroeconomic and geopolitical environment, Mr. Montanaro noted, “During the quarter, intermediate and long-term interest rates increased at a rapid pace. At the same time, inflation, supply chain and geopolitical risks cast a shadow over the U.S. economic outlook. Despite these risks, I believe that our core business prospects remain strong and our markets ripe with opportunity. As we head into the final quarter of our fiscal year, and beyond, we remain steadfast in the execution of our strategic plan, with its focus on the continued growth of long-term shareholder value.”

    Balance Sheet

    • Loans receivable increased $176.8 million to $5.00 billion at March 31, 2022, from $4.83 billion at December 31, 2021, reflecting growth of $68.6 million in multi-family mortgage loans, $59.5 million in nonresidential mortgage loans and $50.7 million in one- to four-family residential mortgage loans.
    • Deposits increased $74.6 million to $5.53 billion at March 31, 2022, from $5.45 billion at December 31, 2021, primarily reflecting growth of $66.2 million in core non-maturity deposits.
    • Investment securities increased $3.7 million to $1.65 billion, or 22.3% of total assets, at March 31, 2022, from $1.64 billion, or 22.9% of total assets, at December 31, 2021.
    • Borrowings increased $165.1 million to $851.2 million, or 11.5% of total assets, at March 31, 2022, from $686.1 million, or 9.5% of total assets, at December 31, 2021.

    Earnings

    Performance Highlights

    • Return on average assets was 0.98% for the quarter ended March 31, 2022 compared to 1.05% for the quarter ended December 31, 2021.
    • Return on average equity was 7.24% and 7.46% for the quarters ended March 31, 2022 and December 31, 2021, respectively. Return on average tangible equity was 9.27% and 9.49% for those same comparative periods.

    Net Interest Income and Net Interest Margin

    • Net interest margin contracted seven basis points to 2.89% for the quarter ended March 31, 2022, from 2.96% for the quarter ended December 31, 2021. The decrease in net interest margin was due largely to a reduction in yield on earning assets, partially offset by a reduction in cost of interest-bearing liabilities. The reduction in yield on earning assets was partly attributable to declines in purchase accounting accretion and loan prepayment penalty income.
    • Net interest income decreased $960,000 to $47.7 million for the quarter ended March 31, 2022, from $48.7 million for the quarter ended December 31, 2021. Included in net interest income for the quarters ended March 31, 2022 and December 31, 2021, respectively, was purchase accounting accretion of $1.9 million and $2.6 million, and loan prepayment penalty income of $1.3 million and $1.5 million.

    Non-Interest Income

    • Gain on sale of loans decreased $594,000 to $376,000 for the quarter ended March 31, 2022, from $970,000 for the quarter ended December 31, 2021. This decrease was largely attributable to the decrease in volume of loans sold driven by seasonal fluctuations in residential real estate activity and increases in market interest rates.
    • Included in other income for the quarter ended December 31, 2021 was a non-recurring gain of $356,000 attributable to the sale of one property recognized in conjunction with the Bank’s ongoing retail branch consolidation efforts. No such gain was recorded in the quarter ended March 31, 2022.

    Non-Interest Expense

    • Non-interest expense increased $953,000 to $30.6 million for the quarter ended March 31, 2022, from $29.7 million for the quarter ended December 31, 2021. Salary and benefit expense increased $1.1 million attributable largely to increases of $433,000 in payroll taxes associated with the start of the new calendar year and $354,000 in incentive payments tied to increased loan origination volume, as well as $120,000 of non-recurring incentive payments to front-line retail personnel.
    • The efficiency and non-interest expense ratios were 60.14% and 1.70%, respectively, for the quarter ended March 31, 2022, as compared to 56.17% and 1.65%, respectively, for the quarter ended December 31, 2021.

    Income Taxes

    • Income tax expense decreased $279,000 to $6.5 million for the quarter ended March 31, 2022 compared to $6.8 million for the quarter ended December 31, 2021, resulting in effective tax rates of 26.9% and 26.6%, respectively.

    Asset Quality

    • The balance of non-performing assets increased $8.2 million to $81.0 million, or 1.10% of total assets, at March 31, 2022, from $72.8 million, or 1.01% of total assets, at December 31, 2021. The increase was largely due to one $8.9 million loan that was placed on non-accrual during the quarter ended March 31, 2022.
    • Net charge-offs totaled $436,000, or 0.04% of average loans, on an annualized basis, for the quarter ended March 31, 2022, compared to $1.1 million, or 0.10%, for the quarter ended December 31, 2021.
    • For the quarter ended March 31, 2022, the Company recorded a provision for credit losses reversal of $3.9 million, compared to a provision for credit losses reversal of $2.4 million for the quarter ended December 31, 2021. The reversal for the quarter ended March 31, 2022 was primarily driven by continued improvement in the Company’s economic forecast. In addition, there was a net reduction in reserves on individually evaluated loans primarily related to improved collateral values.
    • The ACL decreased $4.4 million to $43.9 million, or 0.87% of total loans, at March 31, 2022, from $48.2 million, or 0.99% of total loans, at December 31, 2021.

    Capital

    • For the quarter ended March 31, 2022, book value per share decreased $0.18 to $13.37 and tangible book value per share decreased $0.26 to $10.38. These decreases were driven by a $24.5 million decline in accumulated other comprehensive (loss) income due primarily to a decrease in the fair value of the Company’s available for sale securities, partially offset by an increase in the fair value of the Company’s derivatives portfolio.
    • During the quarter ended March 31, 2022, the Company repurchased 2,019,625 shares of common stock at a cost of $27.0 million, or $13.35 per share. Through March 31, 2022, the Company repurchased a total of 4,522,301 shares, or 59.5% of the shares authorized for repurchase under the current repurchase program, at a total cost of $59.6 million or $13.18 per share.
    • At March 31, 2022, the Company’s tangible equity to tangible assets ratio equaled 10.3% while 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.

    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.

    In addition, the COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including whether the coronavirus can continue to be controlled and abated and if the economy is able to remain open. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially remain open, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for credit losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; due to a decline in our stock price or other factors, goodwill may become impaired and be required to be written down; and our cyber security risks are increased as the result of an increase in the number of employees working remotely.

    Category: Earnings

    Linked-Quarter Comparative Financial Analysis


    Kearny Financial Corp.
    Consolidated Balance Sheets
    (Unaudited)
             
    (Dollars and Shares in Thousands,March 31, December 31, Variance Variance 
    Except Per Share Data)2022 2021 or Change or Change Pct. 
    Assets        
    Cash and cash equivalents$62,379 $60,452 $1,927 3.2%
    Securities available for sale 1,526,086  1,591,066  (64,980)-4.1%
    Securities held to maturity 121,853  53,142  68,711 129.3%
    Loans held-for-sale 2,822  12,549  (9,727)-77.5%
    Loans receivable 5,003,201  4,826,404  176,797 3.7%
    Less: allowance for credit losses on loans (43,860) (48,216) 4,356 -9.0%
    Net loans receivable 4,959,341  4,778,188  181,153 3.8%
    Premises and equipment 53,727  54,067  (340)-0.6%
    Federal Home Loan Bank stock 30,997  36,622  (5,625)-15.4%
    Accrued interest receivable 19,517  18,495  1,022 5.5%
    Goodwill 210,895  210,895  - 0.0%
    Core deposit intangible 3,166  3,344  (178)-5.3%
    Bank owned life insurance 287,644  286,433  1,211 0.4%
    Deferred income taxes, net 34,349  25,709  8,640 33.6%
    Other real estate owned 401  658  (257)-39.1%
    Other assets 76,714  54,603  22,111 40.5%
    Total assets$7,389,891 $7,186,223 $203,668 2.8%
             
    Liabilities        
    Deposits:        
    Non-interest-bearing 621,954 $604,805 $17,149 2.8%
    Interest-bearing 4,906,708  4,849,220  57,488 1.2%
    Total deposits 5,528,662  5,454,025  74,637 1.4%
    Borrowings 851,220  686,105  165,115 24.1%
    Advance payments by borrowers for taxes 16,979  16,772  207 1.2%
    Other liabilities 37,861  33,851  4,010 11.8%
    Total liabilities 6,434,722  6,190,753  243,969 3.9%
             
    Stockholders' Equity        
    Common stock 714  735  (21)-2.9%
    Paid-in capital 561,176  587,392  (26,216)-4.5%
    Retained earnings 441,522  431,549  9,973 2.3%
    Unearned ESOP shares (25,294) (25,780) 486 -1.9%
    Accumulated other comprehensive (loss) income (22,949) 1,574  (24,523)-1558.0%
    Total stockholders' equity 955,169  995,470  (40,301)-4.0%
    Total liabilities and stockholders' equity$7,389,891 $7,186,223 $203,668 2.8%
             
    Consolidated capital ratios        
    Equity to assets 12.93% 13.85% -0.92%  
    Tangible equity to tangible assets (1) 10.33% 11.21% -0.88%  
             
    Share data        
    Outstanding shares 71,424  73,453  (2,029)-2.8%
    Book value per share$13.37 $13.55 $(0.18)-1.3%
    Tangible book value per share (2)$10.38 $10.64 $(0.26)-2.4%


    ________________________
    (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)
             
     Three Months Ended     
    (Dollars and Shares in Thousands,March 31, December 31, Variance Variance 
    Except Per Share Data)2022 2021 or Change or Change Pct. 
    Interest income        
    Loans$45,846 $47,575 $(1,729)-3.6%
    Taxable investment securities 8,024  7,595  429 5.6%
    Tax-exempt investment securities 316  327  (11)-3.4%
    Other interest-earning assets 415  415  - 0.0%
    Total interest income 54,601  55,912  (1,311)-2.3%
             
    Interest expense        
    Deposits 3,565  3,663  (98)-2.7%
    Borrowings 3,309  3,562  (253)-7.1%
    Total interest expense 6,874  7,225  (351)-4.9%
    Net interest income 47,727  48,687  (960)-2.0%
    Reversal of provision for credit losses (3,920) (2,420) (1,500)62.0%
    Net interest income after reversal of provision
    for credit losses    		 51,647  51,107  540 1.1%
             
    Non-interest income        
    Fees and service charges 617  698  (81)-11.6%
    Gain on sale and call of securities 3  -  3 0.0%
    Gain on sale of loans 376  970  (594)-61.2%
    Gain on sale of other real estate owned 14  -  14 0.0%
    Income from bank owned life insurance 1,511  1,562  (51)-3.3%
    Electronic banking fees and charges 432  421  11 2.6%
    Other income 238  482  (244)-50.6%
    Total non-interest income 3,191  4,133  (942)-22.8%
             
    Non-interest expense        
    Salaries and employee benefits 19,184  18,096  1,088 6.0%
    Net occupancy expense of premises 3,223  3,156  67 2.1%
    Equipment and systems 3,822  3,723  99 2.7%
    Advertising and marketing 516  448  68 15.2%
    Federal deposit insurance premium 480  721  (241)-33.4%
    Directors' compensation 340  649  (309)-47.6%
    Other expense 3,058  2,877  181 6.3%
    Total non-interest expense 30,623  29,670  953 3.2%
    Income before income taxes 24,215  25,570  (1,355)-5.3%
    Income taxes 6,522  6,801  (279)-4.1%
    Net income$17,693 $18,769 $(1,076)-5.7%
             
    Net income per common share (EPS)        
    Basic$0.25 $0.26 $(0.01)  
    Diluted$0.25 $0.26 $(0.01)  
             
    Dividends declared        
    Cash dividends declared per common share$0.11 $0.11 $-   
    Cash dividends declared$7,720 $7,921 $(201)  
    Dividend payout ratio 43.6% 42.2% 1.4%  
             
    Weighted average number of common
    shares outstanding    		        
    Basic 69,790  72,011  (2,221)  
    Diluted 69,817  72,037  (2,220)  


    Kearny Financial Corp.
    Average Balance Sheet Data
    (Unaudited)
             
     Three Months Ended     
     March 31, December 31, Variance Variance 
    (Dollars in Thousands)2022 2021 or Change or Change Pct. 
    Assets        
    Interest-earning assets:        
    Loans receivable, including loans held for sale$4,850,236 $4,822,959 $27,277 0.6%
    Taxable investment securities 1,620,996  1,610,395  10,601 0.7%
    Tax-exempt investment securities 55,390  57,686  (2,296)-4.0%
    Other interest-earning assets 79,644  77,811  1,833 2.4%
    Total interest-earning assets 6,606,266  6,568,851  37,415 0.6%
    Non-interest-earning assets 601,684  611,390  (9,706)-1.6%
    Total assets$7,207,950 $7,180,241 $27,709 0.4%
             
    Liabilities and Stockholders' Equity        
    Interest-bearing liabilities:        
    Deposits:        
    Interest-bearing demand$2,133,977 $2,027,021 $106,956 5.3%
    Savings 1,088,351  1,086,903  1,448 0.1%
    Certificates of deposit 1,650,048  1,693,423  (43,375)-2.6%
    Total interest-bearing deposits 4,872,376  4,807,347  65,029 1.4%
    Borrowings:        
    Federal Home Loan Bank advances 632,811  666,029  (33,218)-5.0%
    Other borrowings 51,667  26,033  25,634 98.5%
    Total borrowings 684,478  692,062  (7,584)-1.1%
    Total interest-bearing liabilities 5,556,854  5,499,409  57,445 1.0%
    Non-interest-bearing liabilities:        
    Non-interest-bearing deposits 624,152  624,200  (48)0.0%
    Other non-interest-bearing liabilities 49,455  50,870  (1,415)-2.8%
    Total non-interest-bearing liabilities 673,607  675,070  (1,463)-0.2%
    Total liabilities 6,230,461  6,174,479  55,982 0.9%
    Stockholders' equity 977,489  1,005,762  (28,273)-2.8%
    Total liabilities and stockholders' equity$7,207,950 $7,180,241 $27,709 0.4%
             
    Average interest-earning assets to average
     interest-bearing liabilities    		 118.89% 119.45% -0.56%-0.5%


    Kearny Financial Corp.
    Performance Ratio Highlights
    (Unaudited)
           
     Three Months Ended   
     March 31, December 31, Variance 
     2022 2021 or Change 
    Average yield on interest-earning assets:      
    Loans receivable, including loans held for sale3.78%3.95%-0.17%
    Taxable investment securities1.98%1.89%0.09%
    Tax-exempt investment securities (1)2.28%2.26%0.02%
    Other interest-earning assets2.08%2.13%-0.05%
    Total interest-earning assets3.31%3.40%-0.09%
           
    Average cost of interest-bearing liabilities:      
    Deposits:      
    Interest-bearing demand0.22%0.22%0.00%
    Savings0.10%0.11%-0.01%
    Certificates of deposit0.52%0.53%-0.01%
    Total interest-bearing deposits0.29%0.30%-0.01%
    Borrowings:      
    Federal Home Loan Bank advances2.08%2.14%-0.06%
    Other borrowings0.17%0.09%0.08%
    Total borrowings1.93%2.06%-0.13%
    Total interest-bearing liabilities0.49%0.53%-0.04%
           
    Interest rate spread (2)2.82%2.87%-0.05%
    Net interest margin (3)2.89%2.96%-0.07%
           
    Non-interest income to average assets
     (annualized)    		0.18%0.23%-0.05%
    Non-interest expense to average assets
     (annualized)    		1.70%1.65%0.05%
           
    Efficiency ratio (4)60.14%56.17%3.97%
           
    Return on average assets (annualized)0.98%1.05%-0.07%
    Return on average equity (annualized)7.24%7.46%-0.22%
    Return on average tangible equity (annualized) (5)9.27%9.49%-0.22%


    ________________________
    (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


    Consolidated Balance SheetsAt 
    (Dollars and Shares in Thousands,
    Except Per Share Data)    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
     (Unaudited)(Unaudited)(Unaudited)(Audited)(Unaudited)
    Assets          
    Cash and cash equivalents$62,379 $60,452 $54,070 $67,855 $108,991 
    Securities available for sale 1,526,086  1,591,066  1,651,156  1,676,864  1,778,970 
    Securities held to maturity 121,853  53,142  37,497  38,138  27,168 
    Loans held-for-sale 2,822  12,549  12,884  16,492  5,172 
    Loans receivable 5,003,201  4,826,404  4,789,339  4,851,394  4,798,239 
    Less: allowance for credit losses on loans (43,860) (48,216) (51,785) (58,165) (63,762)
    Net loans receivable 4,959,341  4,778,188  4,737,554  4,793,229  4,734,477 
    Premises and equipment 53,727  54,067  55,236  56,338  60,360 
    Federal Home Loan Bank stock 30,997  36,622  36,615  36,615  45,578 
    Accrued interest receivable 19,517  18,495  19,541  19,362  20,562 
    Goodwill 210,895  210,895  210,895  210,895  210,895 
    Core deposit intangible 3,166  3,344  3,524  3,705  3,888 
    Bank owned life insurance 287,644  286,433  284,871  283,310  281,765 
    Deferred income taxes, net 34,349  25,709  27,771  29,323  32,230 
    Other real estate owned 401  658  178  178  178 
    Other assets 76,714  54,603  51,896  51,431  47,760 
    Total assets$7,389,891 $7,186,223 $7,183,688 $7,283,735 $7,357,994 
               
    Liabilities          
    Deposits:          
    Non-interest-bearing$621,954 $604,805 $631,344 $593,718 $545,746 
    Interest-bearing 4,906,708  4,849,220  4,763,795  4,891,588  4,828,706 
    Total deposits 5,528,662  5,454,025  5,395,139  5,485,306  5,374,452 
    Borrowings 851,220  686,105  720,990  685,876  865,763 
    Advance payments by borrowers for taxes 16,979  16,772  16,222  15,752  15,300 
    Other liabilities 37,861  33,851  36,914  53,857  38,667 
    Total liabilities 6,434,722  6,190,753  6,169,265  6,240,791  6,294,182 
               
    Stockholders' Equity          
    Common stock 714  735  758  790  820 
    Paid-in capital 561,176  587,392  616,894  654,396  691,280 
    Retained earnings 441,522  431,549  420,701  408,367  397,594 
    Unearned ESOP shares (25,294) (25,780) (26,266) (26,753) (27,239)
    Accumulated other comprehensive (loss)
     income    		 (22,949) 1,574  2,336  6,144  1,357 
    Total stockholders' equity 955,169  995,470  1,014,423  1,042,944  1,063,812 
    Total liabilities and stockholders' equity$7,389,891 $7,186,223 $7,183,688 $7,283,735 $7,357,994 
               
    Consolidated capital ratios          
    Equity to assets 12.93% 13.85% 14.12% 14.32% 14.46%
    Tangible equity to tangible assets (1) 10.33% 11.21% 11.48% 11.72% 11.89%
               
    Share data          
    Outstanding shares 71,424  73,453  75,800  78,965  81,943 
    Book value per share$13.37 $13.55 $13.38 $13.21 $12.98 
    Tangible book value per share (2)$10.38 $10.64 $10.55 $10.49 $10.36 


    ________________________
    (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.


     At 
    Supplemental Balance Sheet Highlights
    (Dollars in Thousands, Unaudited)    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
    Loan portfolio composition:          
    Commercial loans:          
    Multi-family mortgage$2,076,003 $2,007,431 $1,978,681 $2,039,260 $2,055,396 
    Nonresidential mortgage 1,085,988  1,026,447  1,023,391  1,079,444  1,110,765 
    Commercial business 169,551  180,429  169,392  168,951  183,181 
    Construction 121,137  110,703  112,226  93,804  95,533 
    Total commercial loans 3,452,679  3,325,010  3,283,690  3,381,459  3,444,875 
    One- to four-family residential mortgage 1,527,980  1,477,267  1,483,106  1,447,721  1,323,485 
    Consumer loans:          
    Home equity loans 41,501  43,934  44,912  47,871  59,721 
    Other consumer 2,755  3,040  3,020  3,259  3,445 
    Total consumer loans 44,256  46,974  47,932  51,130  63,166 
    Total loans, excluding yield adjustments 5,024,915  4,849,251  4,814,728  4,880,310  4,831,526 
    Unaccreted yield adjustments (21,714) (22,847) (25,389) (28,916) (33,287)
    Loans receivable, net of yield adjustments 5,003,201  4,826,404  4,789,339  4,851,394  4,798,239 
    Less: allowance for credit losses on loans (43,860) (48,216) (51,785) (58,165) (63,762)
    Net loans receivable$4,959,341 $4,778,188 $4,737,554 $4,793,229 $4,734,477 
               
    Loan portfolio allocation:          
    Commercial loans:          
    Multi-family mortgage 41.3% 41.4% 41.1% 41.8% 42.5%
    Nonresidential mortgage 21.6% 21.2% 21.3% 22.1% 23.0%
    Commercial business 3.4% 3.7% 3.5% 3.5% 3.8%
    Construction 2.4% 2.3% 2.3% 1.9% 2.0%
    Total commercial loans 68.7% 68.6% 68.2% 69.3% 71.3%
    One- to four-family residential mortgage 30.4% 30.5% 30.8% 29.7% 27.4%
    Consumer loans:          
    Home equity loans 0.8% 0.9% 0.9% 0.9% 1.2%
    Other consumer 0.1% 0.0% 0.1% 0.1% 0.1%
    Total consumer loans 0.9% 0.9% 1.0% 1.0% 1.3%
    Total loans, excluding yield adjustments 100.0% 100.0% 100.0% 100.0% 100.0%
               
    Asset quality:          
    Nonperforming assets:          
    Accruing loans - 90 days and over past due$- $- $- $- $2 
    Nonaccrual loans 80,595  72,138  72,945  79,767  71,416 
    Total nonperforming loans 80,595  72,138  72,945  79,767  71,418 
    Other real estate owned 401  658  178  178  178 
    Total nonperforming assets$80,996 $72,796 $73,123 $79,945 $71,596 
               
    Nonperforming loans (% total loans) 1.61% 1.49% 1.52% 1.64% 1.49%
    Nonperforming assets (% total assets) 1.10% 1.01% 1.02% 1.10% 0.97%
               
    Allowance for credit losses on loans (ACL):          
    ACL to total loans 0.87% 0.99% 1.08% 1.19% 1.32%
    ACL to nonperforming loans 54.42% 66.84% 70.99% 72.92% 89.28%
    Net charge-offs$436 $1,149 $980 $656 $750 
    Average net charge-off rate (annualized) 0.04% 0.10% 0.08% 0.05% 0.06%


     At 
    Supplemental Balance Sheet Highlights
    (Dollars in Thousands, Unaudited)    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
    Funding by type:          
    Deposits:          
    Non-interest-bearing deposits$621,954 $604,805 $631,344 $593,718 $545,746 
    Interest-bearing demand 2,154,488  2,106,693  1,937,661  1,902,478  1,923,184 
    Savings 1,088,974  1,087,740  1,089,699  1,111,364  1,105,481 
    Certificates of deposit 1,663,246  1,654,787  1,736,435  1,877,746  1,800,041 
    Interest-bearing deposits 4,906,708  4,849,220  4,763,795  4,891,588  4,828,706 
    Total deposits 5,528,662  5,454,025  5,395,139  5,485,306  5,374,452 
               
    Borrowings:          
    Federal Home Loan Bank advances 541,220  666,105  665,990  665,876  865,763 
    Overnight borrowings 310,000  20,000  55,000  20,000  - 
    Total borrowings 851,220  686,105  720,990  685,876  865,763 
               
    Total funding$6,379,882 $6,140,130 $6,116,129 $6,171,182 $6,240,215 
               
    Loans as a % of deposits 89.8% 87.8% 88.1% 87.7% 88.2%
    Deposits as a % of total funding 86.7% 88.8% 88.2% 88.9% 86.1%
    Borrowings as a % of total funding 13.3% 11.2% 11.8% 11.1% 13.9%
               
    Funding by source:          
    Retail deposits:          
    Non-interest-bearing deposits$621,954 $604,805 $631,344 $593,718 $545,746 
    Interest-bearing demand 2,154,488  2,106,693  1,937,661  1,902,478  1,923,184 
    Savings 1,088,974  1,087,740  1,089,699  1,111,364  1,105,481 
    Certificates of deposit 1,122,228  1,184,530  1,264,016  1,398,808  1,508,494 
    Total retail deposits 4,987,644  4,983,768  4,922,720  5,006,368  5,082,905 
               
    Wholesale funding:          
    Certificates of deposit (listing service)$9,981 $11,622 $13,817 $20,322 $32,952 
    Certificates of deposit (brokered) 531,037  458,635  458,602  458,616  258,595 
    Total wholesale deposits 541,018  470,257  472,419  478,938  291,547 
    FHLB advances 541,220  666,105  665,990  665,876  865,763 
    Overnight borrowings 310,000  20,000  55,000  20,000  - 
    Total wholesale funding 1,392,238  1,156,362  1,193,409  1,164,814  1,157,310 
               
    Total funding$6,379,882 $6,140,130 $6,116,129 $6,171,182 $6,240,215 
               
    Retail funding as a % of total funding 78.2% 81.2% 80.5% 81.1% 81.5%
    Wholesale funding as a % of total funding 21.8% 18.8% 19.5% 18.9% 18.5%


    Consolidated Statements of IncomeThree Months Ended 
    (Dollars and Shares in Thousands,
    Except Per Share Data, Unaudited)    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
    Interest income          
    Loans (1)$45,846 $47,575 $48,230 $48,464 $50,159 
    Taxable investment securities 8,024  7,595  8,212  8,304  7,891 
    Tax-exempt investment securities 316  327  333  355  410 
    Other interest-earning assets 415  415  431  549  705 
    Total interest income 54,601  55,912  57,206  57,672  59,165 
               
    Interest expense          
    Deposits 3,565  3,663  4,065  5,156  6,670 
    Borrowings 3,309  3,562  3,551  3,451  4,012 
    Total interest expense 6,874  7,225  7,616  8,607  10,682 
    Net interest income 47,727  48,687  49,590  49,065  48,483 
    (Reversal of) provision for credit losses (3,920) (2,420) (5,400) (4,941) 1,126 
    Net interest income after (reversal of)
     provision for credit losses    		 51,647  51,107  54,990  54,006  47,357 
               
    Non-interest income          
    Fees and service charges (1) 617  698  607  423  473 
    Gain on sale and call of securities 3  -  1  313  18 
    Gain on sale of loans 376  970  1,006  363  943 
    Gain on sale of other real estate owned 14  -  -  -  - 
    Income from bank owned life insurance 1,511  1,562  1,561  1,545  1,530 
    Electronic banking fees and charges 432  421  407  452  456 
    Other income 238  482  218  400  1,194 
    Total non-interest income 3,191  4,133  3,800  3,496  4,614 
               
    Non-interest expense          
    Salaries and employee benefits 19,184  18,096  18,617  17,777  16,965 
    Net occupancy expense of premises 3,223  3,156  4,547  2,998  3,433 
    Equipment and systems 3,822  3,723  3,825  3,575  3,823 
    Advertising and marketing 516  448  392  581  567 
    Federal deposit insurance premium 480  721  492  490  488 
    Directors' compensation 340  649  803  749  748 
    Other expense 3,058  2,877  3,127  5,816  3,792 
    Total non-interest expense 30,623  29,670  31,803  31,986  29,816 
    Income before income taxes 24,215  25,570  26,987  25,516  22,155 
    Income taxes 6,522  6,801  7,272  7,033  5,732 
    Net income$17,693 $18,769 $19,715 $18,483 $16,423 
               
    Net income per common share (EPS)          
    Basic$0.25 $0.26 $0.26 $0.24 $0.20 
    Diluted$0.25 $0.26 $0.26 $0.24 $0.20 
               
    Dividends declared          
    Cash dividends declared per common share$0.11 $0.11 $0.10 $0.10 $0.09 
    Cash dividends declared$7,720 $7,921 $7,381 $7,710 $7,205 
    Dividend payout ratio 43.6% 42.2% 37.4% 41.7% 43.9%
               
    Weighted average number of common
     shares outstanding    		          
    Basic 69,790  72,011  74,537  77,658  80,673 
    Diluted 69,817  72,037  74,556  77,680  80,690 


    ________________________
    (1)Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Periods prior to the quarter ended September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the quarters ended June 30, 2021 and March 31, 2021 was $902,000 and $852,000, respectively.


     Three Months Ended 
    Average Balance Sheet Data
    (Dollars in Thousands, Unaudited)    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
    Assets          
    Interest-earning assets:          
    Loans receivable, including loans held for
    sale    		$4,850,236 $4,822,959 $4,835,676 $4,817,980 $4,816,592 
    Taxable investment securities 1,620,996  1,610,395  1,649,953  1,720,838  1,674,223 
    Tax-exempt investment securities 55,390  57,686  59,115  63,047  73,573 
    Other interest-earning assets 79,644  77,811  85,749  117,212  169,291 
    Total interest-earning assets 6,606,266  6,568,851  6,630,493  6,719,077  6,733,679 
    Non-interest-earning assets 601,684  611,390  616,735  609,762  617,440 
    Total assets$7,207,950 $7,180,241 $7,247,228 $7,328,839 $7,351,119 
               
    Liabilities and Stockholders' Equity          
    Interest-bearing liabilities:          
    Deposits:          
    Interest-bearing demand$2,133,977 $2,027,021 $1,954,271 $1,930,193 $1,831,617 
    Savings 1,088,351  1,086,903  1,102,865  1,118,402  1,084,981 
    Certificates of deposit 1,650,048  1,693,423  1,798,473  1,934,650  1,904,234 
    Total interest-bearing deposits 4,872,376  4,807,347  4,855,609  4,983,245  4,820,832 
    Borrowings:          
    Federal Home Loan Bank advances 632,811  666,029  665,915  665,802  865,690 
    Other borrowings 51,667  26,033  28,532  6,670  - 
    Total borrowings 684,478  692,062  694,447  672,472  865,690 
    Total interest-bearing liabilities 5,556,854  5,499,409  5,550,056  5,655,717  5,686,522 
    Non-interest-bearing liabilities:          
    Non-interest-bearing deposits 624,152  624,200  610,271  566,632  525,018 
    Other non-interest-bearing liabilities 49,455  50,870  56,893  52,292  57,018 
    Total non-interest-bearing liabilities 673,607  675,070  667,164  618,924  582,036 
    Total liabilities 6,230,461  6,174,479  6,217,220  6,274,641  6,268,558 
    Stockholders' equity 977,489  1,005,762  1,030,008  1,054,198  1,082,561 
    Total liabilities and stockholders' equity$7,207,950 $7,180,241 $7,247,228 $7,328,839 $7,351,119 
               
    Average interest-earning assets to average
     interest-bearing liabilities    		 118.89% 119.45% 119.47% 118.80% 118.41%


     Three Months Ended 
    Performance Ratio HighlightsMarch 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
    Average yield on interest-earning assets:          
    Loans receivable, including loans held for
     sale (1)    		 3.78% 3.95% 3.99% 4.02% 4.17%
    Taxable investment securities 1.98% 1.89% 1.99% 1.93% 1.89%
    Tax-exempt investment securities (2) 2.28% 2.26% 2.25% 2.25% 2.23%
    Other interest-earning assets 2.08% 2.13% 2.01% 1.87% 1.67%
    Total interest-earning assets (1) 3.31% 3.40% 3.45% 3.43% 3.51%
               
    Average cost of interest-bearing liabilities:          
    Deposits:          
    Interest-bearing demand 0.22% 0.22% 0.23% 0.27% 0.34%
    Savings 0.10% 0.11% 0.12% 0.15% 0.21%
    Certificates of deposit 0.52% 0.53% 0.57% 0.71% 0.96%
    Total interest-bearing deposits 0.29% 0.30% 0.33% 0.41% 0.55%
    Borrowings:          
    Federal Home Loan Bank advances 2.08% 2.14% 2.13% 2.07% 1.85%
    Other borrowings 0.17% 0.09% 0.10% 0.07% 0.00%
    Total borrowings 1.93% 2.06% 2.05% 2.05% 1.85%
    Total interest-bearing liabilities 0.49% 0.53% 0.55% 0.61% 0.75%
               
    Interest rate spread (1) (3) 2.82% 2.87% 2.90% 2.82% 2.76%
    Net interest margin (1) (4) 2.89% 2.96% 2.99% 2.92% 2.88%
               
    Non-interest income to average assets
     (annualized) (1)    		 0.18% 0.23% 0.21% 0.19% 0.25%
    Non-interest expense to average assets
     (annualized)    		 1.70% 1.65% 1.76% 1.75% 1.62%
               
    Efficiency ratio (5) 60.14% 56.17% 59.57% 60.86% 56.15%
               
    Return on average assets (annualized) 0.98% 1.05% 1.09% 1.01% 0.89%
    Return on average equity (annualized) 7.24% 7.46% 7.66% 7.01% 6.07%
    Return on average tangible equity
     (annualized) (6)    		 9.27% 9.49% 9.67% 8.81% 7.57%


    ________________________
    (1)Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Periods prior to the quarter ended September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the quarters ended June 30, 2021 and March 31, 2021 was $902,000 and $852,000, respectively.
    (2)The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
    (3)Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
    (4)Net interest income divided by average interest-earning assets.
    (5)Non-interest expense divided by the sum of net interest income and non-interest income.
    (6)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.

    Reconciliation of GAAP to Non-GAAPThree Months Ended 
    (Dollars and Shares in Thousands,
    Except Per Share Data, Unaudited)    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
    Adjusted net income:          
    Net income (GAAP)$17,693 $18,769 $19,715 $18,483 $16,423 
    Non-recurring transactions - net of tax:          
    Branch consolidation expenses and
     impairment charges    		 -  132  1,209  870  264 
    Net effect of sale and call of securities (2) -  (1) (220) (13)
    Reversal of income tax valuation
     allowance    		 -  -  -  (12) - 
    Net effect of sales of other assets -  (251) -  (144) (587)
    Adjusted net income$17,691 $18,650 $20,923 $18,977 $16,087 
               
    Calculation of pre-tax, pre-provision net revenue:          
    Net income (GAAP)$17,693 $18,769 $19,715 $18,483 $16,423 
    Adjustments to net income (GAAP):          
    Provision for income taxes 6,522  6,801  7,272  7,033  5,732 
    (Reversal of) provision for credit losses (3,920) (2,420) (5,400) (4,941) 1,126 
    Pre-tax, pre-provision net revenue
     (non-GAAP)    		$20,295 $23,150 $21,587 $20,575 $23,281 
               
    Adjusted earnings per share:          
    Weighted average common shares - basic 69,790  72,011  74,537  77,658  80,673 
    Weighted average common shares - diluted 69,817  72,037  74,556  77,680  80,690 
               
    Earnings per share - basic (GAAP)$0.25 $0.26 $0.26 $0.24 $0.20 
    Earnings per share - diluted (GAAP)$0.25 $0.26 $0.26 $0.24 $0.20 
               
    Adjusted earnings per share - basic
     (non-GAAP)    		$0.25 $0.26 $0.28 $0.24 $0.20 
    Adjusted earnings per share - diluted
     (non-GAAP)    		$0.25 $0.26 $0.28 $0.24 $0.20 
               
    Adjusted return on average assets:          
    Total average assets$7,207,950 $7,180,241 $7,247,228 $7,328,839 $7,351,119 
               
    Return on average assets (GAAP) 0.98% 1.05% 1.09% 1.01% 0.89%
    Adjusted return on average assets
     (non-GAAP)    		 0.98% 1.04% 1.15% 1.04% 0.88%
               
    Adjusted return on average equity:          
    Total average equity$977,489 $1,005,762 $1,030,008 $1,054,198 $1,082,561 
               
    Return on average equity (GAAP) 7.24% 7.46% 7.66% 7.01% 6.07%
    Adjusted return on average equity
     (non-GAAP)    		 7.24% 7.42% 8.13% 7.20% 5.94%


    Reconciliation of GAAP to Non-GAAPThree Months Ended 
    (Dollars and Shares in Thousands,
    Except Per Share Data, Unaudited)    		March 31,
    2022    		December 31,
    2021    		September 30,
    2021    		June 30,
    2021    		March 31,
    2021
    Adjusted return on average tangible
     equity:    		          
    Total average equity$977,489 $1,005,762 $1,030,008 $1,054,198 $1,082,561 
    Less: average goodwill (210,895) (210,895) (210,895) (210,895) (210,895)
    Less: average other intangible assets (3,282) (3,462) (3,641) (3,825) (4,045)
     $763,312 $791,405 $815,472 $839,478 $867,621 
               
    Return on average tangible equity
     (non-GAAP)    		 9.27% 9.49% 9.67% 8.81% 7.57%
    Adjusted return on average tangible equity
     (non-GAAP)    		 9.27% 9.43% 10.26% 9.04% 7.42%
               
    Adjusted non-interest expense ratio:          
    Non-interest expense (GAAP)$30,623 $29,670 $31,803 $31,986 $29,816 
    Non-recurring transactions:          
    Branch consolidation expenses and
     impairment charges    		 -  (187) (1,711) (1,239) (375)
    Non-interest expense (non-GAAP)$30,623 $29,483 $30,092 $30,747 $29,441 
               
    Non-interest expense ratio (GAAP) 1.70% 1.65% 1.76% 1.75% 1.62%
    Adjusted non-interest expense ratio
     (non-GAAP)    		 1.70% 1.64% 1.66% 1.68% 1.60%
               
    Adjusted efficiency ratio:          
    Non-interest expense (non-GAAP)$30,623 $29,483 $30,092 $30,747 $29,441 
               
    Net interest income (GAAP)$47,727 $48,687 $49,590 $49,065 $48,483 
    Total non-interest income (GAAP) 3,191  4,133  3,800  3,496  4,614 
    Non-recurring transactions:          
    Net effect of sale and call of securities (3) -  (1) (313) (18)
    Net effect of sales of other assets -  (356) -  (205) (837)
    Total revenue (non-GAAP)$50,915 $52,464 $53,389 $52,043 $52,242 
               
    Efficiency ratio (GAAP) 60.14% 56.17% 59.57% 60.86% 56.15%
    Adjusted efficiency ratio (non-GAAP) 60.15% 56.20% 56.36% 59.08% 56.36%


    For further information contact:
    Craig L. Montanaro, President and Chief Executive Officer, or
    Keith Suchodolski, Executive Vice President and Chief Financial Officer
    Kearny Financial Corp.
    (973) 244-4500


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