EX-99.1 2 krny-20221027xexx991.htm EX-99.1 Document

Exhibit 99.1
FOR IMMEDIATE RELEASE
October 27, 2022
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
KEARNY FINANCIAL CORP. ANNOUNCES FIRST QUARTER FISCAL 2023 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., October 27, 2022 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended September 30, 2022 of $16.5 million, or $0.25 per diluted share, compared to $11.4 million, or $0.17 per diluted share, for the quarter ended June 30, 2022.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on November 23, 2022 to stockholders of record as of November 9, 2022.
Craig L. Montanaro, President and Chief Executive Officer, commented, “Despite pressure on net interest margin, attributable to the rapidly rising interest rate environment, we delivered impressive results for the quarter. Growth in loans and deposits remained strong, expenses were well controlled and asset quality metrics notably improved. Over the past two quarters, our loan portfolio has grown at a 26% annualized rate, driven by strong origination volume and slowing prepayment activity. Looking ahead to the remainder of fiscal 2023, we expect loan growth to moderate, as we have right-sized our loan pipeline and are focusing our origination efforts on those loan segments which provide the greatest risk-adjusted returns.”
Mr. Montanaro further noted, “In recognition of the risks presented by the prevailing economic and interest rate environment we continue to position our balance sheet to support net interest income, and margin, in a variety of interest rate scenarios. To that end we have, since the start of this fiscal year, added $600 million of derivative notional and made targeted adjustments to our wholesale balance sheet designed to reduce risk and support future earnings.”
Balance Sheet
•Total assets increased $169.7 million, or 2.2%, to $7.89 billion at September 30, 2022, from $7.72 billion at June 30, 2022.
•Loans receivable increased $238.5 million, or 4.4%, to $5.66 billion at September 30, 2022, from $5.42 billion at June 30, 2022.
•Deposits increased $246.0 million, or 4.2%, to $6.11 billion at September 30, 2022, from $5.86 billion at June 30, 2022. Non-interest-bearing deposits increased $29.5 million, or 4.5%, for the quarter ended September 30, 2022.
•Investment securities decreased $83.3 million to $1.38 billion, or 17.5% of total assets, at September 30, 2022, from $1.46 billion, or 18.9% of total assets, at June 30, 2022.
•Borrowings decreased $49.9 million to $851.5 million, or 10.8% of total assets, at September 30, 2022, from $901.3 million, or 11.7% of total assets, at June 30, 2022.
Earnings
Performance Highlights
•Return on average assets was 0.85% for the quarter ended September 30, 2022 compared to 0.61% for the quarter ended June 30, 2022.
•Return on average equity was 7.38% and 4.92% for the quarters ended September 30, 2022 and June 30, 2022, respectively. Return on average tangible equity was 9.70% and 6.40% for those same comparative periods.
1

Net Interest Income and Net Interest Margin
•Net interest margin contracted 23 basis points to 2.69% for the quarter ended September 30, 2022, from 2.92% for the quarter ended June 30, 2022. The decrease was due largely to an increase in the cost of interest-bearing liabilities, partially offset by increases in the average balance and yield on interest-earning assets.
•Net interest income decreased $2.1 million to $48.5 million for the quarter ended September 30, 2022, from $50.6 million for the quarter ended June 30, 2022. Included in net interest income for the quarters ended September 30, 2022 and June 30, 2022, respectively, was purchase accounting accretion of $1.8 million and $1.6 million, and loan prepayment penalty income of $441,000 and $869,000.
Non-Interest Income
•Non-interest income increased $3.1 million to $5.9 million for the quarter ended September 30, 2022, from $2.8 million for the quarter ended June 30, 2022. The increase was largely attributable to higher income from bank owned life insurance that resulted from $2.1 million in payouts on life insurance policies.
•Non-interest income included no gain or loss on the sale of securities for the quarter ended September 30, 2022 compared to a loss of $563,000 on the sale of securities for the quarter ended June 30, 2022.
Non-Interest Expense
•Non-interest expense decreased $1.6 million to $32.0 million for the quarter ended September 30, 2022, from $33.6 million for the quarter ended June 30, 2022. The decrease was primarily attributable to $1.0 million of non-recurring expenses recorded in the prior quarter.
•The provision for credit losses on unfunded commitments, included in other expense, decreased $387,000 for the quarter ended September 30, 2022.
•The efficiency and non-interest expense ratios were 58.75% and 1.65%, respectively, for the quarter ended September 30, 2022, as compared to 62.93% and 1.79%, respectively, for the quarter ended June 30, 2022.
Income Taxes
•Income tax expense totaled $5.3 million for the quarter ended September 30, 2022 compared to $4.2 million for the quarter ended June 30, 2022, resulting in an effective tax rate of 24.1% and 27.0%, respectively. The decrease in the effective tax rate primarily resulted from the payouts on life insurance policies, noted above, which were not taxable.
Asset Quality
•The balance of non-performing assets decreased $14.8 million to $77.4 million, or 0.98% of total assets, at September 30, 2022, from $92.2 million, or 1.19% of total assets, at June 30, 2022. The decrease in non-performing assets was primarily attributable to the sale of two non-accrual loans that were recorded as held-for-sale at June 30, 2022.
•Net charge-offs totaled $115,000, or 0.01% of average loans, on an annualized basis, for the quarter ended September 30, 2022, compared to $1.0 million, or 0.08% of average loans, on an annualized basis, for the quarter ended June 30, 2022.
•For the quarter ended September 30, 2022, the Company recorded a provision for credit losses of $670,000, compared to $4.2 million for the quarter ended June 30, 2022. The provision for the quarter ended September 30, 2022 was largely driven by loan growth of $238.5 million, partially offset by a reduction in the expected life of the loan portfolio.
•The allowance for credit losses was $47.6 million, or 0.84% of total loans, at September 30, 2022, compared to $47.1 million, or 0.87% of total loans, at June 30, 2022.
Capital
•For the quarter ended September 30, 2022, book value per share decreased $0.14, or 1.1%, to $12.88 and tangible book value per share decreased $0.17, or 1.7%, to $9.73.
•On August 1, 2022, the Company announced the authorization of a new stock repurchase plan, which authorized the repurchase of up to 4,000,000 shares. During the quarter ended September 30, 2022, the Company repurchased 759,806 shares of common stock at a cost of $8.7 million, or $11.44 per share.
•At September 30, 2022, the Company’s tangible equity to tangible assets ratio equaled 8.61% 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.
2

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 dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business.
Category: Earnings
3

Linked-Quarter Comparative Financial Analysis
Kearny Financial Corp.
Consolidated Balance Sheets
(Dollars and Shares in Thousands,
Except Per Share Data)		September 30,
2022		June 30,
2022		Variance
or Change		Variance
or Change Pct.
(Unaudited)(Audited)
Assets
Cash and cash equivalents$96,076 $101,615 $(5,539)-5.5 %
Securities available for sale1,263,176 1,344,093 (80,917)-6.0 %
Securities held to maturity115,943 118,291 (2,348)-2.0 %
Loans held-for-sale12,936 28,874 (15,938)-55.2 %
Loans receivable5,656,370 5,417,845 238,525 4.4 %
Less: allowance for credit losses on loans(47,613)(47,058)555 1.2 %
Net loans receivable5,608,757 5,370,787 237,970 4.4 %
Premises and equipment52,642 53,281 (639)-1.2 %
Federal Home Loan Bank stock44,957 47,144 (2,187)-4.6 %
Accrued interest receivable23,817 20,466 3,351 16.4 %
Goodwill210,895 210,895 — — %
Core deposit intangible2,876 3,020 (144)-4.8 %
Bank owned life insurance289,690 289,177 513 0.2 %
Deferred income taxes, net54,278 49,350 4,928 10.0 %
Other real estate owned178 178 — — %
Other assets113,369 82,712 30,657 37.1 %
Total assets $7,889,590 $7,719,883 $169,707 2.2 %
Liabilities
Deposits:
Non-interest-bearing $683,406 $653,899 $29,507 4.5 %
Interest-bearing5,424,872 5,208,357 216,515 4.2 %
Total deposits6,108,278 5,862,256 246,022 4.2 %
Borrowings851,454 901,337 (49,883)-5.5 %
Advance payments by borrowers for taxes16,555 16,746 (191)-1.1 %
Other liabilities38,329 45,544 (7,215)-15.8 %
Total liabilities7,014,616 6,825,883 188,733 2.8 %
Stockholders' Equity
Common stock680 687 (7)-1.0 %
Paid-in capital520,245 528,396 (8,151)-1.5 %
Retained earnings454,710 445,451 9,259 2.1 %
Unearned ESOP shares(24,321)(24,807)486 2.0 %
Accumulated other comprehensive loss(76,340)(55,727)(20,613)-37.0 %
Total stockholders' equity874,974 894,000 (19,026)-2.1 %
Total liabilities and stockholders' equity$7,889,590 $7,719,883 $169,707 2.2 %
Consolidated capital ratios
Equity to assets11.09 %11.58 %-0.49 %
Tangible equity to tangible assets (1)
8.61 %9.06 %-0.45 %
Share data
Outstanding shares67,93868,666(728)-1.1 %
Book value per share$12.88 $13.02 $(0.14)-1.1 %
Tangible book value per share (2)
$9.73 $9.90 $(0.17)-1.7 %
_________________________
(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.
4

Kearny Financial Corp.
Consolidated Statements of Income
(Unaudited)
(Dollars and Shares in Thousands,
Except Per Share Data)		Three Months EndedVariance
or Change		Variance
or Change Pct.
September 30,
2022		June 30,
2022
Interest income
Loans$52,935 $48,869 $4,066 8.3 %
Taxable investment securities10,439 8,915 1,524 17.1 %
Tax-exempt investment securities285 297 (12)-4.0 %
Other interest-earning assets761 472 289 61.2 %
Total interest income64,420 58,553 5,867 10.0 %
Interest expense
Deposits10,869 3,915 6,954 177.6 %
Borrowings5,020 4,039 981 24.3 %
Total interest expense15,889 7,954 7,935 99.8 %
Net interest income48,531 50,599 (2,068)-4.1 %
Provision for credit losses 670 4,222 (3,552)-84.1 %
Net interest income after provision for credit losses47,861 46,377 1,484 3.2 %
Non-interest income
Fees and service charges763 658 105 16.0 %
Loss on sale and call of securities— (563)563 100.0 %
Gain on sale of loans395 187 208 111.2 %
Loss on sale of other real estate owned— (9)9 100.0 %
Income from bank owned life insurance3,698 1,533 2,165 141.2 %
Electronic banking fees and charges506 366 140 38.3 %
Other income555 638 (83)-13.0 %
Total non-interest income5,917 2,810 3,107 110.6 %
Non-interest expense
Salaries and employee benefits20,348 20,367 (19)-0.1 %
Net occupancy expense of premises3,090 3,188 (98)-3.1 %
Equipment and systems3,662 4,516 (854)-18.9 %
Advertising and marketing747 703 44 6.3 %
Federal deposit insurance premium906 762 144 18.9 %
Directors' compensation340 340 — — %
Other expense2,895 3,736 (841)-22.5 %
Total non-interest expense31,988 33,612 (1,624)-4.8 %
Income before income taxes21,790 15,575 6,215 39.9 %
Income taxes5,255 4,205 1,050 25.0 %
Net income$16,535 $11,370 $5,165 45.4 %
Net income per common share (EPS)
Basic$0.25 $0.17 $0.08 
Diluted$0.25 $0.17 $0.08 
Dividends declared
Cash dividends declared per common share$0.11 $0.11 $— 
Cash dividends declared$7,276 $7,441 $(165)
Dividend payout ratio44.0 %65.4 %(21.4)%
Weighted average number of common shares outstanding
Basic65,73767,240(1,503)
Diluted65,75667,276(1,520)
5

Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
(Dollars in Thousands)Three Months EndedVariance
or Change		Variance
or Change Pct.
September 30,
2022		June 30,
2022
Assets
Interest-earning assets:
Loans receivable, including loans held for sale$5,553,996 $5,181,983 $372,013 7.2 %
Taxable investment securities1,516,974 1,608,372 (91,398)-5.7 %
Tax-exempt investment securities48,973 51,672 (2,699)-5.2 %
Other interest-earning assets88,038 87,990 48 0.1 %
Total interest-earning assets7,207,981 6,930,017 277,964 4.0 %
Non-interest-earning assets570,225 564,734 5,491 1.0 %
Total assets $7,778,206 $7,494,751 $283,455 3.8 %
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand$2,354,340 $2,155,946 $198,394 9.2 %
Savings1,019,343 1,077,631 (58,288)-5.4 %
Certificates of deposit2,014,922 1,701,725 313,197 18.4 %
Total interest-bearing deposits5,388,605 4,935,302 453,303 9.2 %
Borrowings:
Federal Home Loan Bank advances642,399 752,579 (110,180)-14.6 %
Other borrowings127,456 185,901 (58,445)-31.4 %
Total borrowings769,855 938,480 (168,625)-18.0 %
Total interest-bearing liabilities6,158,460 5,873,782 284,678 4.8 %
Non-interest-bearing liabilities:
Non-interest-bearing deposits667,624 640,200 27,424 4.3 %
Other non-interest-bearing liabilities56,431 56,636 (205)-0.4 %
Total non-interest-bearing liabilities724,055 696,836 27,219 3.9 %
Total liabilities6,882,515 6,570,618 311,897 4.7 %
Stockholders' equity895,691 924,133 (28,442)-3.1 %
Total liabilities and stockholders' equity$7,778,206 $7,494,751 $283,455 3.8 %
Average interest-earning assets to average interest-bearing liabilities117.04 %117.98 %-0.94 %-0.8 %
6

Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)
Three Months EndedVariance
or Change
September 30,
2022		June 30,
2022
Average yield on interest-earning assets:
Loans receivable, including loans held for sale3.81 %3.77 %0.04 %
Taxable investment securities2.75 %2.22 %0.53 %
Tax-exempt investment securities (1)
2.33 %2.30 %0.03 %
Other interest-earning assets3.46 %2.15 %1.31 %
Total interest-earning assets 3.57 %3.38 %0.19 %
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand0.92 %0.31 %0.61 %
Savings 0.23 %0.11 %0.12 %
Certificates of deposit0.97 %0.46 %0.51 %
Total interest-bearing deposits0.81 %0.32 %0.49 %
Borrowings:
Federal Home Loan Bank advances2.68 %1.96 %0.72 %
Other borrowings2.26 %0.77 %1.49 %
Total borrowings2.61 %1.72 %0.89 %
Total interest-bearing liabilities1.03 %0.54 %0.49 %
Interest rate spread (2)
2.54 %2.84 %-0.30 %
Net interest margin (3)
2.69 %2.92 %-0.23 %
Non-interest income to average assets (annualized)0.30 %0.15 %0.15 %
Non-interest expense to average assets (annualized)1.65 %1.79 %-0.14 %
Efficiency ratio (4)
58.75 %62.93 %-4.18 %
Return on average assets (annualized)0.85 %0.61 %0.24 %
Return on average equity (annualized)7.38 %4.92 %2.46 %
Return on average tangible equity (annualized) (5)
9.70 %6.40 %3.30 %
_________________________
(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.


7

Five-Quarter Financial Trend Analysis
Kearny Financial Corp.
Consolidated Balance Sheets
(Dollars and Shares in Thousands,
Except Per Share Data)		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
(Unaudited)(Audited)(Unaudited)(Unaudited)(Unaudited)
Assets
Cash and cash equivalents$96,076 $101,615 $62,379 $60,452 $54,070 
Securities available for sale1,263,176 1,344,093 1,526,086 1,591,066 1,651,156 
Securities held to maturity115,943 118,291 121,853 53,142 37,497 
Loans held-for-sale12,936 28,874 2,822 12,549 12,884 
Loans receivable5,656,370 5,417,845 5,003,201 4,826,404 4,789,339 
Less: allowance for credit losses on loans(47,613)(47,058)(43,860)(48,216)(51,785)
Net loans receivable5,608,757 5,370,787 4,959,341 4,778,188 4,737,554 
Premises and equipment52,642 53,281 53,727 54,067 55,236 
Federal Home Loan Bank stock44,957 47,144 30,997 36,622 36,615 
Accrued interest receivable23,817 20,466 19,517 18,495 19,541 
Goodwill210,895 210,895 210,895 210,895 210,895 
Core deposit intangible2,876 3,020 3,166 3,344 3,524 
Bank owned life insurance289,690 289,177 287,644 286,433 284,871 
Deferred income taxes, net54,278 49,350 34,349 25,709 27,771 
Other real estate owned178 178 401 658 178 
Other assets113,369 82,712 76,714 54,603 51,896 
Total assets $7,889,590 $7,719,883 $7,389,891 $7,186,223 $7,183,688 
Liabilities
Deposits:
Non-interest-bearing $683,406 $653,899 $621,954 $604,805 $631,344 
Interest-bearing5,424,872 5,208,357 4,906,708 4,849,220 4,763,795 
Total deposits6,108,278 5,862,256 5,528,662 5,454,025 5,395,139 
Borrowings851,454 901,337 851,220 686,105 720,990 
Advance payments by borrowers for taxes16,555 16,746 16,979 16,772 16,222 
Other liabilities38,329 45,544 37,861 33,851 36,914 
Total liabilities7,014,616 6,825,883 6,434,722 6,190,753 6,169,265 
Stockholders' Equity
Common stock680 687 714 735 758 
Paid-in capital520,245 528,396 561,176 587,392 616,894 
Retained earnings454,710 445,451 441,522 431,549 420,701 
Unearned ESOP shares(24,321)(24,807)(25,294)(25,780)(26,266)
Accumulated other comprehensive (loss) income(76,340)(55,727)(22,949)1,574 2,336 
Total stockholders' equity874,974 894,000 955,169 995,470 1,014,423 
Total liabilities and stockholders' equity$7,889,590 $7,719,883 $7,389,891 $7,186,223 $7,183,688 
Consolidated capital ratios
Equity to assets11.09 %11.58 %12.93 %13.85 %14.12 %
Tangible equity to tangible assets (1)
8.61 %9.06 %10.33 %11.21 %11.48 %
Share data
Outstanding shares 67,93868,66671,42473,45375,800
Book value per share$12.88 $13.02 $13.37 $13.55 $13.38 
Tangible book value per share (2)
$9.73 $9.90 $10.38 $10.64 $10.55 
_________________________
(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.
8

Kearny Financial Corp.
Supplemental Balance Sheet Highlights
(Unaudited)
(Dollars in Thousands)September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Loan portfolio composition:
Commercial loans:
Multi-family mortgage$2,570,297 $2,409,090 $2,076,003 $2,007,431 $1,978,681 
Nonresidential mortgage1,040,688 1,019,838 1,085,988 1,026,447 1,023,391 
Commercial business186,361 176,807 169,551 180,429 169,392 
Construction166,052 140,131 121,137 110,703 112,226 
Total commercial loans3,963,398 3,745,866 3,452,679 3,325,010 3,283,690 
One- to four-family residential mortgage1,666,730 1,645,816 1,527,980 1,477,267 1,483,106 
Consumer loans:
Home equity loans43,269 42,028 41,501 43,934 44,912 
Other consumer2,869 2,866 2,755 3,040 3,020 
Total consumer loans46,138 44,894 44,256 46,974 47,932 
Total loans, excluding yield adjustments5,676,266 5,436,576 5,024,915 4,849,251 4,814,728 
Unaccreted yield adjustments(19,896)(18,731)(21,714)(22,847)(25,389)
Loans receivable, net of yield adjustments5,656,370 5,417,845 5,003,201 4,826,404 4,789,339 
Less: allowance for credit losses on loans(47,613)(47,058)(43,860)(48,216)(51,785)
Net loans receivable$5,608,757 $5,370,787 $4,959,341 $4,778,188 $4,737,554 
Asset quality:
Nonperforming assets:
Accruing loans - 90 days and over past due$— $— $— $— $— 
Nonaccrual loans68,574 70,321 80,595 72,138 72,945 
Total nonperforming loans68,574 70,321 80,595 72,138 72,945 
Nonaccrual loans held-for-sale8,650 21,745 — — — 
Other real estate owned178 178 401 658 178 
Total nonperforming assets$77,402 $92,244 $80,996 $72,796 $73,123 
Nonperforming loans (% total loans)1.21 %1.30 %1.61 %1.49 %1.52 %
Nonperforming assets (% total assets)0.98 %1.19 %1.10 %1.01 %1.02 %
Classified loans$92,610 $94,555 $163,621 $162,174 $170,449 
Allowance for credit losses on loans (ACL):
ACL to total loans0.84 %0.87 %0.87 %0.99 %1.08 %
ACL to nonperforming loans69.43 %66.92 %54.42 %66.84 %70.99 %
Net charge-offs $115 $1,024 $436 $1,149 $980 
Average net charge-off rate (annualized)0.01 %0.08 %0.04 %0.10 %0.08 %
Funding composition:
Deposits:
Non-interest-bearing deposits$683,406 $653,899 $621,954 $604,805 $631,344 
Interest-bearing demand2,382,411 2,265,597 2,154,488 2,106,693 1,937,661 
Savings 982,916 1,053,198 1,088,974 1,087,740 1,089,699 
Certificates of deposit (retail)1,263,124 1,116,035 1,122,228 1,184,530 1,264,016 
Certificates of deposit (brokered and listing service)796,421 773,527 541,018 470,257 472,419 
Interest-bearing deposits5,424,872 5,208,357 4,906,708 4,849,220 4,763,795 
Total deposits6,108,278 5,862,256 5,528,662 5,454,025 5,395,139 
Borrowings:
Federal Home Loan Bank advances796,454 651,337 541,220 666,105 665,990 
Overnight borrowings55,000 250,000 310,000 20,000 55,000 
Total borrowings851,454 901,337 851,220 686,105 720,990 
Total funding$6,959,732 $6,763,593 $6,379,882 $6,140,130 $6,116,129 
Loans as a % of deposits92.0 %92.1 %89.8 %87.8 %88.1 %
Deposits as a % of total funding87.8 %86.7 %86.7 %88.8 %88.2 %
Borrowings as a % of total funding12.2 %13.3 %13.3 %11.2 %11.8 %
9

Kearny Financial Corp.
Consolidated Statements of Income
(Unaudited)
Three Months Ended
(Dollars and Shares in Thousands,
Except Per Share Data)		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Interest income
Loans$52,935 $48,869 $45,846 $47,575 $48,230 
Taxable investment securities10,439 8,915 8,024 7,595 8,212 
Tax-exempt investment securities285 297 316 327 333 
Other interest-earning assets761 472 415 415 431 
Total interest income64,420 58,553 54,601 55,912 57,206 
Interest expense
Deposits10,869 3,915 3,565 3,663 4,065 
Borrowings5,020 4,039 3,309 3,562 3,551 
Total interest expense15,889 7,954 6,874 7,225 7,616 
Net interest income48,531 50,599 47,727 48,687 49,590 
Provision for (reversal of) credit losses670 4,222 (3,920)(2,420)(5,400)
Net interest income after provision for (reversal of) credit losses47,861 46,377 51,647 51,107 54,990 
Non-interest income
Fees and service charges763 658 617 698 607 
(Loss) gain on sale and call of securities— (563)3 — 1 
Gain on sale of loans395 187 376 970 1,006 
(Loss) gain on sale of other real estate owned— (9)14 — — 
Income from bank owned life insurance3,698 1,533 1,511 1,562 1,561 
Electronic banking fees and charges506 366 432 421 407 
Other income555 638 238 482 218 
Total non-interest income5,917 2,810 3,191 4,133 3,800 
Non-interest expense
Salaries and employee benefits20,348 20,367 19,184 18,096 18,617 
Net occupancy expense of premises3,090 3,188 3,223 3,156 4,547 
Equipment and systems3,662 4,516 3,822 3,723 3,825 
Advertising and marketing747 703 516 448 392 
Federal deposit insurance premium906 762 480 721 492 
Directors' compensation340 340 340 649 803 
Other expense2,895 3,736 3,058 2,877 3,127 
Total non-interest expense31,988 33,612 30,623 29,670 31,803 
Income before income taxes21,790 15,575 24,215 25,570 26,987 
Income taxes5,255 4,205 6,522 6,801 7,272 
Net income$16,535 $11,370 $17,693 $18,769 $19,715 
Net income per common share (EPS)
Basic$0.25 $0.17 $0.25 $0.26 $0.26 
Diluted$0.25 $0.17 $0.25 $0.26 $0.26 
Dividends declared
Cash dividends declared per common share$0.11 $0.11 $0.11 $0.11 $0.10 
Cash dividends declared$7,276 $7,441 $7,720 $7,921 $7,381 
Dividend payout ratio44.0 %65.4 %43.6 %42.2 %37.4 %
Weighted average number of common shares outstanding
Basic65,73767,24069,79072,01174,537
Diluted65,75667,27669,81772,03774,556
10

Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
Three Months Ended
(Dollars in Thousands)September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Assets
Interest-earning assets:
Loans receivable, including loans held-for-sale$5,553,996 $5,181,983 $4,850,236 $4,822,959 $4,835,676 
Taxable investment securities1,516,974 1,608,372 1,620,996 1,610,395 1,649,953 
Tax-exempt investment securities48,973 51,672 55,390 57,686 59,115 
Other interest-earning assets88,038 87,990 79,644 77,811 85,749 
Total interest-earning assets7,207,981 6,930,017 6,606,266 6,568,851 6,630,493 
Non-interest-earning assets570,225 564,734 601,684 611,390 616,735 
Total assets $7,778,206 $7,494,751 $7,207,950 $7,180,241 $7,247,228 
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand$2,354,340 $2,155,946 $2,133,977 $2,027,021 $1,954,271 
Savings 1,019,343 1,077,631 1,088,351 1,086,903 1,102,865 
Certificates of deposit2,014,922 1,701,725 1,650,048 1,693,423 1,798,473 
Total interest-bearing deposits5,388,605 4,935,302 4,872,376 4,807,347 4,855,609 
Borrowings:
Federal Home Loan Bank advances642,399 752,579 632,811 666,029 665,915 
Other borrowings127,456 185,901 51,667 26,033 28,532 
Total borrowings769,855 938,480 684,478 692,062 694,447 
Total interest-bearing liabilities6,158,460 5,873,782 5,556,854 5,499,409 5,550,056 
Non-interest-bearing liabilities:
Non-interest-bearing deposits667,624 640,200 624,152 624,200 610,271 
Other non-interest-bearing liabilities56,431 56,636 49,455 50,870 56,893 
Total non-interest-bearing liabilities724,055 696,836 673,607 675,070 667,164 
Total liabilities6,882,515 6,570,618 6,230,461 6,174,479 6,217,220 
Stockholders' equity895,691 924,133 977,489 1,005,762 1,030,008 
Total liabilities and stockholders' equity$7,778,206 $7,494,751 $7,207,950 $7,180,241 $7,247,228 
Average interest-earning assets to average
 interest-bearing liabilities
117.04 %117.98 %118.89 %119.45 %119.47 %
11

Kearny Financial Corp.
Performance Ratio Highlights
Three Months Ended
September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Average yield on interest-earning assets:
Loans receivable, including loans held-for-sale3.81 %3.77 %3.78 %3.95 %3.99 %
Taxable investment securities2.75 %2.22 %1.98 %1.89 %1.99 %
Tax-exempt investment securities (1)
2.33 %2.30 %2.28 %2.26 %2.25 %
Other interest-earning assets3.46 %2.15 %2.08 %2.13 %2.01 %
Total interest-earning assets3.57 %3.38 %3.31 %3.40 %3.45 %
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand0.92 %0.31 %0.22 %0.22 %0.23 %
Savings 0.23 %0.11 %0.10 %0.11 %0.12 %
Certificates of deposit0.97 %0.46 %0.52 %0.53 %0.57 %
Total interest-bearing deposits0.81 %0.32 %0.29 %0.30 %0.33 %
Borrowings:
Federal Home Loan Bank advances2.68 %1.96 %2.08 %2.14 %2.13 %
Other borrowings2.26 %0.77 %0.17 %0.09 %0.10 %
Total borrowings2.61 %1.72 %1.93 %2.06 %2.05 %
Total interest-bearing liabilities1.03 %0.54 %0.49 %0.53 %0.55 %
Interest rate spread (2)
2.54 %2.84 %2.82 %2.87 %2.90 %
Net interest margin (3)
2.69 %2.92 %2.89 %2.96 %2.99 %
Non-interest income to average assets
 (annualized)
0.30 %0.15 %0.18 %0.23 %0.21 %
Non-interest expense to average assets
 (annualized)
1.65 %1.79 %1.70 %1.65 %1.76 %
Efficiency ratio (4)
58.75 %62.93 %60.14 %56.17 %59.57 %
Return on average assets (annualized)0.85 %0.61 %0.98 %1.05 %1.09 %
Return on average equity (annualized)7.38 %4.92 %7.24 %7.46 %7.66 %
Return on average tangible equity (annualized) (5)
9.70 %6.40 %9.27 %9.49 %9.67 %
_________________________
(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.
12

The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
Three Months Ended
(Dollars and Shares in Thousands,
Except Per Share Data)		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Adjusted net income:
Net income (GAAP)$16,535 $11,370 $17,693 $18,769 $19,715 
Non-recurring transactions - net of tax:
Early contract termination— 568 — — — 
Branch consolidation expenses and
 impairment charges
— — — 132 1,209 
Net effect of sale and call of securities— 400 (2)— (1)
Net effect of sale of other assets— — — (251)— 
Adjusted net income$16,535 $12,338 $17,691 $18,650 $20,923 
Calculation of pre-tax, pre-provision net revenue:
Net income (GAAP)$16,535 $11,370 $17,693 $18,769 $19,715 
Adjustments to net income (GAAP):
Provision for income taxes5,255 4,205 6,522 6,801 7,272 
Provision for (reversal of) credit losses670 4,222 (3,920)(2,420)(5,400)
Pre-tax, pre-provision net revenue (non-GAAP)$22,460 $19,797 $20,295 $23,150 $21,587 
Adjusted earnings per share:
Weighted average common shares - basic65,73767,24069,79072,01174,537
Weighted average common shares - diluted65,75667,27669,81772,03774,556
Earnings per share - basic (GAAP)$0.25 $0.17 $0.25 $0.26 $0.26 
Earnings per share - diluted (GAAP)$0.25 $0.17 $0.25 $0.26 $0.26 
Adjusted earnings per share - basic (non-GAAP)$0.25 $0.18 $0.25 $0.26 $0.28 
Adjusted earnings per share - diluted (non-GAAP)$0.25 $0.18 $0.25 $0.26 $0.28 
Pre-tax, pre-provision net revenue per share:
Pre-tax, pre-provision net revenue per share - basic
  (non-GAAP)
$0.34 $0.29 $0.29 $0.32 $0.29 
Pre-tax, pre-provision net revenue per share - diluted
  (non-GAAP)
$0.34 $0.29 $0.29 $0.32 $0.29 
Adjusted return on average assets:
Total average assets$7,778,206 $7,494,751 $7,207,950 $7,180,241 $7,247,228 
Return on average assets (GAAP)0.85 %0.61 %0.98 %1.05 %1.09 %
Adjusted return on average assets (non-GAAP)0.85 %0.66 %0.98 %1.04 %1.15 %
Adjusted return on average equity:
Total average equity$895,691 $924,133 $977,489 $1,005,762 $1,030,008 
Return on average equity (GAAP)7.38 %4.92 %7.24 %7.46 %7.66 %
Adjusted return on average equity (non-GAAP)7.38 %5.34 %7.24 %7.42 %8.13 %
13

Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
Three Months Ended
(Dollars and Shares in Thousands,
Except Per Share Data)		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021		September 30,
2021
Adjusted return on average tangible equity:
Total average equity$895,691 $924,133 $977,489 $1,005,762 $1,030,008 
Less: average goodwill(210,895)(210,895)(210,895)(210,895)(210,895)
Less: average other intangible assets(2,971)(3,116)(3,282)(3,462)(3,641)
Total average tangible equity$681,825 $710,122 $763,312 $791,405 $815,472 
Return on average tangible equity (non-GAAP)9.70 %6.40 %9.27 %9.49 %9.67 %
Adjusted return on average tangible equity (non-GAAP)9.70 %6.95 %9.27 %9.43 %10.26 %
Adjusted non-interest expense ratio:
Non-interest expense (GAAP)$31,988 $33,612 $30,623 $29,670 $31,803 
Non-recurring transactions:
Early contract termination— (800)— — — 
Branch consolidation expenses and
 impairment charges		— — — (187)(1,711)
Non-interest expense (non-GAAP)$31,988 $32,812 $30,623 $29,483 $30,092 
Non-interest expense ratio (GAAP)1.65 %1.79 %1.70 %1.65 %1.76 %
Adjusted non-interest expense ratio (non-GAAP)1.65 %1.75 %1.70 %1.64 %1.66 %
Adjusted efficiency ratio:
Non-interest expense (non-GAAP)$31,988 $32,812 $30,623 $29,483 $30,092 
Net interest income (GAAP)$48,531 $50,599 $47,727 $48,687 $49,590 
Total non-interest income (GAAP)5,917 2,810 3,191 4,133 3,800 
Non-recurring transactions:
Net effect of sale and call of securities— 563 (3)— (1)
Net effect of sale of other assets— — — (356)— 
Total revenue (non-GAAP)$54,448 $53,972 $50,915 $52,464 $53,389 
Efficiency ratio (GAAP)58.75 %62.93 %60.14 %56.17 %59.57 %
Adjusted efficiency ratio (non-GAAP)58.75 %60.79 %60.15 %56.20 %56.36 %
14