EX-99.1 2 krny-20230126xexx991.htm EX-99.1 Document

Exhibit 99.1
FOR IMMEDIATE RELEASE
January 26, 2023
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 SECOND QUARTER FISCAL 2023 RESULTS
AND DECLARATION OF CASH DIVIDEND
Fairfield, N.J., January 26, 2023 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended December 31, 2022 of $2.0 million, or $0.03 per diluted share, compared to $16.5 million, or $0.25 per diluted share, for the quarter ended September 30, 2022. The decrease in net income and earnings per share for the quarter was largely attributable to a previously announced after-tax loss of $10.8 million on the sale of securities.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on February 22, 2023 to stockholders of record as of February 8, 2023.
Craig L. Montanaro, President and Chief Executive Officer, commented, “During the quarter ended December 31, 2022, in light of the challenges presented by the prevailing economic and interest rate environment, we completed the restructuring of a portion of our investment securities portfolio and adopted a company-wide operating efficiency initiative targeting a five to ten percent reduction in our annual operating expense. While these initiatives resulted in the recognition of various non-recurring charges, which adversely impacted this quarter’s net income, they are a part of our strategy to position ourselves for future earnings improvement, irrespective of the macro-economic environment.”
Balance Sheet
•Total assets increased $399.7 million, or 5.1%, to $8.29 billion at December 31, 2022, from $7.89 billion at September 30, 2022.
•Loans receivable increased $327.8 million, or 5.8%, to $5.98 billion at December 31, 2022, from $5.66 billion at September 30, 2022.
•Investment securities increased $61.0 million to $1.44 billion, or 17.4% of total assets, at December 31, 2022, from $1.38 billion, or 17.5% of total assets, at September 30, 2022.
•Deposits decreased $136.9 million, or 2.2%, to $5.97 billion at December 31, 2022, from $6.11 billion at September 30, 2022.
•Borrowings increased $532.1 million to $1.38 billion, or 16.7% of total assets, at December 31, 2022, from $851.5 million, or 10.8% of total assets, at September 30, 2022.
Earnings
Performance Highlights
•Return on average assets was 0.10% for the quarter ended December 31, 2022 compared to 0.85% for the quarter ended September 30, 2022.
•Return on average equity was 0.90% and 7.38% for the quarters ended December 31, 2022 and September 30, 2022, respectively. Return on average tangible equity was 1.20% and 9.70% for those same comparative periods.
1

Net Interest Income and Net Interest Margin
•Net interest margin contracted 31 basis points to 2.38% for the quarter ended December 31, 2022, from 2.69% for the quarter ended September 30, 2022. The decrease was due largely to increases in the cost and average balance of interest-bearing liabilities, partially offset by increases in the yield and average balance of interest-earning assets.
•Net interest income decreased $3.7 million to $44.8 million for the quarter ended December 31, 2022, from $48.5 million for the quarter ended September 30, 2022. Included in net interest income for the quarters ended December 31, 2022 and September 30, 2022, respectively, was purchase accounting accretion of $1.9 million and $1.8 million, and loan prepayment penalty income of $166,000 and $441,000.
Non-Interest Income
•Non-interest income decreased $14.4 million to a loss of $8.5 million for the quarter ended December 31, 2022, from income of $5.9 million for the quarter ended September 30, 2022. The decrease was primarily attributable to a loss of $15.2 million on the sale of securities for the quarter ended December 31, 2022.
•Income from bank owned life insurance decreased $1.9 million for the quarter ended December 31, 2022 as a result of $2.1 million in payouts on life insurance policies in the prior comparative period.
•Included in other income, during the quarter ended December 31, 2022, was a non-recurring gain of $2.9 million attributable to the sale of a former branch location.
Non-Interest Expense
•Non-interest expense increased $662,000 to $32.7 million for the quarter ended December 31, 2022, from $32.0 million for the quarter ended September 30, 2022. The increase was primarily attributable to $757,000 of non-recurring severance expense resulting from a workforce realignment.
•Other expense increased $684,000, largely due to a $353,000 increase in the provision for credit losses on unfunded commitments, a $230,000 increase in professional fees and a $147,000 increase in OREO expenses.
•Federal deposit insurance premium expense increased $320,000 to $1.2 million for the quarter ended December 31, 2022, largely driven by asset growth.
•Salaries and benefits expense decreased $427,000 to $19.9 million for the quarter ended December 31, 2022. This decrease was driven by lower salary, payroll tax and incentive compensation expense. Partially offsetting these decreases were non-recurring severance expense resulting from a workforce realignment and an increase in incentive payments tied to loan origination volume.
•The efficiency and non-interest expense ratios were 89.93% and 1.62%, respectively, for the quarter ended December 31, 2022, as compared to 58.75% and 1.65%, respectively, for the quarter ended September 30, 2022.
Income Taxes
•Income tax expense totaled $33,000 for the quarter ended December 31, 2022 compared to $5.3 million for the quarter ended September 30, 2022, resulting in an effective tax rate of 1.7% and 24.1%, respectively. The decrease in the effective tax rate was primarily due to a year-to-date tax rate true-up which resulted from the loss on the sale of securities during the current quarter. The loss lowered the Company’s full year projected taxable income and income tax provision.
2

Asset Quality
•The balance of non-performing assets decreased $14.8 million to $62.6 million, or 0.76% of total assets, at December 31, 2022, from $77.4 million, or 0.98% of total assets, at September 30, 2022. The decrease in non-performing assets was primarily attributable to loans previously on non-accrual returning to accrual status. During the current period, the Company acquired a $13.0 million nonresidential real estate property through foreclosure, which is included in the balance of non-performing assets.
•Net charge-offs totaled $407,000, or 0.03% of average loans, on an annualized basis, for the quarter ended December 31, 2022, compared to $115,000, or 0.01% of average loans, on an annualized basis, for the quarter ended September 30, 2022.
•For the quarter ended December 31, 2022, the Company recorded a provision for credit losses of $1.7 million, compared to $670,000 for the quarter ended September 30, 2022. The provision for the quarter ended December 31, 2022 was largely driven by loan growth, partially offset by a reduction in the qualitative component of the Company’s allowance for credit losses.
•The allowance for credit losses was $48.9 million, or 0.81% of total loans, at December 31, 2022, compared to $47.6 million, or 0.84% of total loans, at September 30, 2022.
Capital
•For the quarter ended December 31, 2022, book value per share increased $0.07, or 0.5%, to $12.95 and tangible book value per share increased $0.05, or 0.5%, to $9.78.
•During the quarter ended December 31, 2022, the Company repurchased 549,800 shares of common stock at a cost of $5.7 million, or $10.45 per share.
•At December 31, 2022, the Company’s tangible equity to tangible assets ratio equaled 8.16% 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.


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
(Unaudited)
(Dollars and Shares in Thousands,
Except Per Share Data)		December 31,
2022		September 30,
2022		Variance
or Change		Variance
or Change Pct.
Assets
Cash and cash equivalents$75,660 $96,076 $(20,416)-21.2 %
Securities available for sale1,286,354 1,263,176 23,178 1.8 %
Securities held to maturity153,786 115,943 37,843 32.6 %
Loans held-for-sale12,940 12,936 4 — %
Loans receivable5,984,133 5,656,370 327,763 5.8 %
Less: allowance for credit losses on loans(48,877)(47,613)1,264 2.7 %
Net loans receivable5,935,256 5,608,757 326,499 5.8 %
Premises and equipment50,953 52,642 (1,689)-3.2 %
Federal Home Loan Bank stock69,022 44,957 24,065 53.5 %
Accrued interest receivable27,368 23,817 3,551 14.9 %
Goodwill210,895 210,895 — — %
Core deposit intangible2,732 2,876 (144)-5.0 %
Bank owned life insurance289,673 289,690 (17)— %
Deferred income taxes, net51,107 54,278 (3,171)-5.8 %
Other real estate owned13,410 178 13,232 7433.7 %
Other assets110,162 113,369 (3,207)-2.8 %
Total assets $8,289,318 $7,889,590 $399,728 5.1 %
Liabilities
Deposits:
Non-interest-bearing $650,950 $683,406 $(32,456)-4.7 %
Interest-bearing5,320,421 5,424,872 (104,451)-1.9 %
Total deposits5,971,371 6,108,278 (136,907)-2.2 %
Borrowings1,383,573 851,454 532,119 62.5 %
Advance payments by borrowers for taxes17,307 16,555 752 4.5 %
Other liabilities44,427 38,329 6,098 15.9 %
Total liabilities7,416,678 7,014,616 402,062 5.7 %
Stockholders' Equity
Common stock674 680 (6)-0.9 %
Paid-in capital515,332 520,245 (4,913)-0.9 %
Retained earnings449,489 454,710 (5,221)-1.1 %
Unearned ESOP shares(23,834)(24,321)487 2.0 %
Accumulated other comprehensive loss(69,021)(76,340)7,319 9.6 %
Total stockholders' equity872,640 874,974 (2,334)-0.3 %
Total liabilities and stockholders' equity$8,289,318 $7,889,590 $399,728 5.1 %
Consolidated capital ratios
Equity to assets10.53 %11.09 %-0.56 %
Tangible equity to tangible assets (1)
8.16 %8.61 %-0.45 %
Share data
Outstanding shares67,38867,938(550)-0.8 %
Book value per share$12.95 $12.88 $0.07 0.5 %
Tangible book value per share (2)
$9.78 $9.73 $0.05 0.5 %
_________________________
(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.
December 31,
2022		September 30,
2022
Interest income
Loans$57,996 $52,935 $5,061 9.6 %
Taxable investment securities13,221 10,439 2,782 26.7 %
Tax-exempt investment securities219 285 (66)-23.2 %
Other interest-earning assets1,005 761 244 32.1 %
Total interest income72,441 64,420 8,021 12.5 %
Interest expense
Deposits18,822 10,869 7,953 73.2 %
Borrowings8,836 5,020 3,816 76.0 %
Total interest expense27,658 15,889 11,769 74.1 %
Net interest income44,783 48,531 (3,748)-7.7 %
Provision for credit losses 1,671 670 1,001 149.4 %
Net interest income after provision for credit losses43,112 47,861 (4,749)-9.9 %
Non-interest income
Fees and service charges734 763 (29)-3.8 %
Loss on sale and call of securities(15,227)— (15,227)— %
Gain on sale of loans134 395 (261)-66.1 %
Income from bank owned life insurance1,761 3,698 (1,937)-52.4 %
Electronic banking fees and charges397 506 (109)-21.5 %
Other income3,723 555 3,168 570.8 %
Total non-interest income(8,478)5,917 (14,395)-243.3 %
Non-interest expense
Salaries and employee benefits19,921 20,348 (427)-2.1 %
Net occupancy expense of premises2,987 3,090 (103)-3.3 %
Equipment and systems3,867 3,662 205 5.6 %
Advertising and marketing731 747 (16)-2.1 %
Federal deposit insurance premium1,226 906 320 35.3 %
Directors' compensation339 340 (1)-0.3 %
Other expense3,579 2,895 684 23.6 %
Total non-interest expense32,650 31,988 662 2.1 %
Income before income taxes1,984 21,790 (19,806)-90.9 %
Income taxes33 5,255 (5,222)-99.4 %
Net income$1,951 $16,535 $(14,584)-88.2 %
Net income per common share (EPS)
Basic$0.03 $0.25 $(0.22)
Diluted$0.03 $0.25 $(0.22)
Dividends declared
Cash dividends declared per common share$0.11 $0.11 $— 
Cash dividends declared$7,172 $7,276 $(104)
Dividend payout ratio367.6 %44.0 %323.6 %
Weighted average number of common shares outstanding
Basic65,03065,737(707)
Diluted65,03865,756(718)
5

Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
(Dollars in Thousands)Three Months EndedVariance
or Change		Variance
or Change Pct.
December 31,
2022		September 30,
2022
Assets
Interest-earning assets:
Loans receivable, including loans held for sale$5,839,903 $5,553,996 $285,907 5.1 %
Taxable investment securities1,527,578 1,516,974 10,604 0.7 %
Tax-exempt investment securities37,917 48,973 (11,056)-22.6 %
Other interest-earning assets114,175 88,038 26,137 29.7 %
Total interest-earning assets7,519,573 7,207,981 311,592 4.3 %
Non-interest-earning assets550,519 570,225 (19,706)-3.5 %
Total assets $8,070,092 $7,778,206 $291,886 3.8 %
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand$2,359,977 $2,354,340 $5,637 0.2 %
Savings931,584 1,019,343 (87,759)-8.6 %
Certificates of deposit2,192,722 2,014,922 177,800 8.8 %
Total interest-bearing deposits5,484,283 5,388,605 95,678 1.8 %
Borrowings:
Federal Home Loan Bank advances997,148 642,399 354,749 55.2 %
Other borrowings— 127,456 (127,456)-100.0 %
Total borrowings997,148 769,855 227,293 29.5 %
Total interest-bearing liabilities6,481,431 6,158,460 322,971 5.2 %
Non-interest-bearing liabilities:
Non-interest-bearing deposits666,846 667,624 (778)-0.1 %
Other non-interest-bearing liabilities56,721 56,431 290 0.5 %
Total non-interest-bearing liabilities723,567 724,055 (488)-0.1 %
Total liabilities7,204,998 6,882,515 322,483 4.7 %
Stockholders' equity865,094 895,691 (30,597)-3.4 %
Total liabilities and stockholders' equity$8,070,092 $7,778,206 $291,886 3.8 %
Average interest-earning assets to average interest-bearing liabilities116.02 %117.04 %-1.02 %-0.9 %
6

Kearny Financial Corp.
Performance Ratio Highlights
(Unaudited)
Three Months EndedVariance
or Change
December 31,
2022		September 30,
2022
Average yield on interest-earning assets:
Loans receivable, including loans held for sale3.97 %3.81 %0.16 %
Taxable investment securities3.46 %2.75 %0.71 %
Tax-exempt investment securities (1)
2.32 %2.33 %-0.01 %
Other interest-earning assets3.52 %3.46 %0.06 %
Total interest-earning assets 3.85 %3.57 %0.28 %
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand1.63 %0.92 %0.71 %
Savings 0.41 %0.23 %0.18 %
Certificates of deposit1.50 %0.97 %0.53 %
Total interest-bearing deposits1.37 %0.81 %0.56 %
Borrowings:
Federal Home Loan Bank advances3.54 %2.68 %0.86 %
Other borrowings— %2.26 %-2.26 %
Total borrowings3.54 %2.61 %0.93 %
Total interest-bearing liabilities1.71 %1.03 %0.68 %
Interest rate spread (2)
2.14 %2.54 %-0.40 %
Net interest margin (3)
2.38 %2.69 %-0.31 %
Non-interest income to average assets (annualized)-0.42 %0.30 %-0.72 %
Non-interest expense to average assets (annualized)1.62 %1.65 %-0.03 %
Efficiency ratio (4)
89.93 %58.75 %31.18 %
Return on average assets (annualized)0.10 %0.85 %-0.75 %
Return on average equity (annualized)0.90 %7.38 %-6.48 %
Return on average tangible equity (annualized) (5)
1.20 %9.70 %-8.50 %
_________________________
(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)		December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
(Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)
Assets
Cash and cash equivalents$75,660 $96,076 $101,615 $62,379 $60,452 
Securities available for sale1,286,354 1,263,176 1,344,093 1,526,086 1,591,066 
Securities held to maturity153,786 115,943 118,291 121,853 53,142 
Loans held-for-sale12,940 12,936 28,874 2,822 12,549 
Loans receivable5,984,133 5,656,370 5,417,845 5,003,201 4,826,404 
Less: allowance for credit losses on loans(48,877)(47,613)(47,058)(43,860)(48,216)
Net loans receivable5,935,256 5,608,757 5,370,787 4,959,341 4,778,188 
Premises and equipment50,953 52,642 53,281 53,727 54,067 
Federal Home Loan Bank stock69,022 44,957 47,144 30,997 36,622 
Accrued interest receivable27,368 23,817 20,466 19,517 18,495 
Goodwill210,895 210,895 210,895 210,895 210,895 
Core deposit intangible2,732 2,876 3,020 3,166 3,344 
Bank owned life insurance289,673 289,690 289,177 287,644 286,433 
Deferred income taxes, net51,107 54,278 49,350 34,349 25,709 
Other real estate owned13,410 178 178 401 658 
Other assets110,162 113,369 82,712 76,714 54,603 
Total assets $8,289,318 $7,889,590 $7,719,883 $7,389,891 $7,186,223 
Liabilities
Deposits:
Non-interest-bearing $650,950 $683,406 $653,899 $621,954 $604,805 
Interest-bearing5,320,421 5,424,872 5,208,357 4,906,708 4,849,220 
Total deposits5,971,371 6,108,278 5,862,256 5,528,662 5,454,025 
Borrowings1,383,573 851,454 901,337 851,220 686,105 
Advance payments by borrowers for taxes17,307 16,555 16,746 16,979 16,772 
Other liabilities44,427 38,329 45,544 37,861 33,851 
Total liabilities7,416,678 7,014,616 6,825,883 6,434,722 6,190,753 
Stockholders' Equity
Common stock674 680 687 714 735 
Paid-in capital515,332 520,245 528,396 561,176 587,392 
Retained earnings449,489 454,710 445,451 441,522 431,549 
Unearned ESOP shares(23,834)(24,321)(24,807)(25,294)(25,780)
Accumulated other comprehensive (loss) income(69,021)(76,340)(55,727)(22,949)1,574 
Total stockholders' equity872,640 874,974 894,000 955,169 995,470 
Total liabilities and stockholders' equity$8,289,318 $7,889,590 $7,719,883 $7,389,891 $7,186,223 
Consolidated capital ratios
Equity to assets10.53 %11.09 %11.58 %12.93 %13.85 %
Tangible equity to tangible assets (1)
8.16 %8.61 %9.06 %10.33 %11.21 %
Share data
Outstanding shares 67,38867,93868,66671,42473,453
Book value per share$12.95 $12.88 $13.02 $13.37 $13.55 
Tangible book value per share (2)
$9.78 $9.73 $9.90 $10.38 $10.64 
_________________________
(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)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Loan portfolio composition:
Commercial loans:
Multi-family mortgage$2,851,721 $2,570,297 $2,409,090 $2,076,003 $2,007,431 
Nonresidential mortgage1,017,341 1,040,688 1,019,838 1,085,988 1,026,447 
Commercial business177,530 186,361 176,807 169,551 180,429 
Construction186,663 166,052 140,131 121,137 110,703 
Total commercial loans4,233,255 3,963,398 3,745,866 3,452,679 3,325,010 
One- to four-family residential mortgage1,719,514 1,666,730 1,645,816 1,527,980 1,477,267 
Consumer loans:
Home equity loans45,690 43,269 42,028 41,501 43,934 
Other consumer2,648 2,869 2,866 2,755 3,040 
Total consumer loans48,338 46,138 44,894 44,256 46,974 
Total loans, excluding yield adjustments6,001,107 5,676,266 5,436,576 5,024,915 4,849,251 
Unaccreted yield adjustments(16,974)(19,896)(18,731)(21,714)(22,847)
Loans receivable, net of yield adjustments5,984,133 5,656,370 5,417,845 5,003,201 4,826,404 
Less: allowance for credit losses on loans(48,877)(47,613)(47,058)(43,860)(48,216)
Net loans receivable$5,935,256 $5,608,757 $5,370,787 $4,959,341 $4,778,188 
Asset quality:
Nonperforming assets:
Accruing loans - 90 days and over past due$— $— $— $— $— 
Nonaccrual loans40,549 68,574 70,321 80,595 72,138 
Total nonperforming loans40,549 68,574 70,321 80,595 72,138 
Nonaccrual loans held-for-sale8,650 8,650 21,745 — — 
Other real estate owned13,410 178 178 401 658 
Total nonperforming assets$62,609 $77,402 $92,244 $80,996 $72,796 
Nonperforming loans (% total loans)0.68 %1.21 %1.30 %1.61 %1.49 %
Nonperforming assets (% total assets)0.76 %0.98 %1.19 %1.10 %1.01 %
Classified loans$86,069 $92,610 $94,555 $163,621 $162,174 
Allowance for credit losses on loans (ACL):
ACL to total loans0.81 %0.84 %0.87 %0.87 %0.99 %
ACL to nonperforming loans120.54 %69.43 %66.92 %54.42 %66.84 %
Net charge-offs $407 $115 $1,024 $436 $1,149 
Average net charge-off rate (annualized)0.03 %0.01 %0.08 %0.04 %0.10 %
Funding composition:
Deposits:
Non-interest-bearing deposits$650,950 $683,406 $653,899 $621,954 $604,805 
Interest-bearing demand2,316,485 2,382,411 2,265,597 2,154,488 2,106,693 
Savings 901,514 982,916 1,053,198 1,088,974 1,087,740 
Certificates of deposit (retail)1,354,907 1,263,124 1,116,035 1,122,228 1,184,530 
Certificates of deposit (brokered and listing service)747,515 796,421 773,527 541,018 470,257 
Interest-bearing deposits5,320,421 5,424,872 5,208,357 4,906,708 4,849,220 
Total deposits5,971,371 6,108,278 5,862,256 5,528,662 5,454,025 
Borrowings:
Federal Home Loan Bank advances1,256,573 796,454 651,337 541,220 666,105 
Overnight borrowings127,000 55,000 250,000 310,000 20,000 
Total borrowings1,383,573 851,454 901,337 851,220 686,105 
Total funding$7,354,944 $6,959,732 $6,763,593 $6,379,882 $6,140,130 
Loans as a % of deposits99.6 %92.0 %92.1 %89.8 %87.8 %
Deposits as a % of total funding81.2 %87.8 %86.7 %86.7 %88.8 %
Borrowings as a % of total funding18.8 %12.2 %13.3 %13.3 %11.2 %
9

Kearny Financial Corp.
Consolidated Statements of Income
(Unaudited)
Three Months Ended
(Dollars and Shares in Thousands,
Except Per Share Data)		December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Interest income
Loans$57,996 $52,935 $48,869 $45,846 $47,575 
Taxable investment securities13,221 10,439 8,915 8,024 7,595 
Tax-exempt investment securities219 285 297 316 327 
Other interest-earning assets1,005 761 472 415 415 
Total interest income72,441 64,420 58,553 54,601 55,912 
Interest expense
Deposits18,822 10,869 3,915 3,565 3,663 
Borrowings8,836 5,020 4,039 3,309 3,562 
Total interest expense27,658 15,889 7,954 6,874 7,225 
Net interest income44,783 48,531 50,599 47,727 48,687 
Provision for (reversal of) credit losses1,671 670 4,222 (3,920)(2,420)
Net interest income after provision for (reversal of) credit losses43,112 47,861 46,377 51,647 51,107 
Non-interest income
Fees and service charges734 763 658 617 698 
(Loss) gain on sale and call of securities(15,227)— (563)3 — 
Gain on sale of loans134 395 187 376 970 
(Loss) gain on sale of other real estate owned— — (9)14 — 
Income from bank owned life insurance1,761 3,698 1,533 1,511 1,562 
Electronic banking fees and charges397 506 366 432 421 
Other income3,723 555 638 238 482 
Total non-interest income(8,478)5,917 2,810 3,191 4,133 
Non-interest expense
Salaries and employee benefits19,921 20,348 20,367 19,184 18,096 
Net occupancy expense of premises2,987 3,090 3,188 3,223 3,156 
Equipment and systems3,867 3,662 4,516 3,822 3,723 
Advertising and marketing731 747 703 516 448 
Federal deposit insurance premium1,226 906 762 480 721 
Directors' compensation339 340 340 340 649 
Other expense3,579 2,895 3,736 3,058 2,877 
Total non-interest expense32,650 31,988 33,612 30,623 29,670 
Income before income taxes1,984 21,790 15,575 24,215 25,570 
Income taxes33 5,255 4,205 6,522 6,801 
Net income$1,951 $16,535 $11,370 $17,693 $18,769 
Net income per common share (EPS)
Basic$0.03 $0.25 $0.17 $0.25 $0.26 
Diluted$0.03 $0.25 $0.17 $0.25 $0.26 
Dividends declared
Cash dividends declared per common share$0.11 $0.11 $0.11 $0.11 $0.11 
Cash dividends declared$7,172 $7,276 $7,441 $7,720 $7,921 
Dividend payout ratio367.6 %44.0 %65.4 %43.6 %42.2 %
Weighted average number of common shares outstanding
Basic65,03065,73767,24069,79072,011
Diluted65,03865,75667,27669,81772,037
10

Kearny Financial Corp.
Average Balance Sheet Data
(Unaudited)
Three Months Ended
(Dollars in Thousands)December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Assets
Interest-earning assets:
Loans receivable, including loans held-for-sale$5,839,903 $5,553,996 $5,181,983 $4,850,236 $4,822,959 
Taxable investment securities1,527,578 1,516,974 1,608,372 1,620,996 1,610,395 
Tax-exempt investment securities37,917 48,973 51,672 55,390 57,686 
Other interest-earning assets114,175 88,038 87,990 79,644 77,811 
Total interest-earning assets7,519,573 7,207,981 6,930,017 6,606,266 6,568,851 
Non-interest-earning assets550,519 570,225 564,734 601,684 611,390 
Total assets $8,070,092 $7,778,206 $7,494,751 $7,207,950 $7,180,241 
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand$2,359,977 $2,354,340 $2,155,946 $2,133,977 $2,027,021 
Savings 931,584 1,019,343 1,077,631 1,088,351 1,086,903 
Certificates of deposit2,192,722 2,014,922 1,701,725 1,650,048 1,693,423 
Total interest-bearing deposits5,484,283 5,388,605 4,935,302 4,872,376 4,807,347 
Borrowings:
Federal Home Loan Bank advances997,148 642,399 752,579 632,811 666,029 
Other borrowings— 127,456 185,901 51,667 26,033 
Total borrowings997,148 769,855 938,480 684,478 692,062 
Total interest-bearing liabilities6,481,431 6,158,460 5,873,782 5,556,854 5,499,409 
Non-interest-bearing liabilities:
Non-interest-bearing deposits666,846 667,624 640,200 624,152 624,200 
Other non-interest-bearing liabilities56,721 56,431 56,636 49,455 50,870 
Total non-interest-bearing liabilities723,567 724,055 696,836 673,607 675,070 
Total liabilities7,204,998 6,882,515 6,570,618 6,230,461 6,174,479 
Stockholders' equity865,094 895,691 924,133 977,489 1,005,762 
Total liabilities and stockholders' equity$8,070,092 $7,778,206 $7,494,751 $7,207,950 $7,180,241 
Average interest-earning assets to average
 interest-bearing liabilities
116.02 %117.04 %117.98 %118.89 %119.45 %
11

Kearny Financial Corp.
Performance Ratio Highlights
Three Months Ended
December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Average yield on interest-earning assets:
Loans receivable, including loans held-for-sale3.97 %3.81 %3.77 %3.78 %3.95 %
Taxable investment securities3.46 %2.75 %2.22 %1.98 %1.89 %
Tax-exempt investment securities (1)
2.32 %2.33 %2.30 %2.28 %2.26 %
Other interest-earning assets3.52 %3.46 %2.15 %2.08 %2.13 %
Total interest-earning assets3.85 %3.57 %3.38 %3.31 %3.40 %
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand1.63 %0.92 %0.31 %0.22 %0.22 %
Savings 0.41 %0.23 %0.11 %0.10 %0.11 %
Certificates of deposit1.50 %0.97 %0.46 %0.52 %0.53 %
Total interest-bearing deposits1.37 %0.81 %0.32 %0.29 %0.30 %
Borrowings:
Federal Home Loan Bank advances3.54 %2.68 %1.96 %2.08 %2.14 %
Other borrowings— %2.26 %0.77 %0.17 %0.09 %
Total borrowings3.54 %2.61 %1.72 %1.93 %2.06 %
Total interest-bearing liabilities1.71 %1.03 %0.54 %0.49 %0.53 %
Interest rate spread (2)
2.14 %2.54 %2.84 %2.82 %2.87 %
Net interest margin (3)
2.38 %2.69 %2.92 %2.89 %2.96 %
Non-interest income to average assets (annualized)-0.42 %0.30 %0.15 %0.18 %0.23 %
Non-interest expense to average assets (annualized)1.62 %1.65 %1.79 %1.70 %1.65 %
Efficiency ratio (4)
89.93 %58.75 %62.93 %60.14 %56.17 %
Return on average assets (annualized)0.10 %0.85 %0.61 %0.98 %1.05 %
Return on average equity (annualized)0.90 %7.38 %4.92 %7.24 %7.46 %
Return on average tangible equity (annualized) (5)
1.20 %9.70 %6.40 %9.27 %9.49 %
_________________________
(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)		December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Adjusted net income:
Net income (GAAP)$1,951 $16,535 $11,370 $17,693 $18,769 
Non-recurring transactions - net of tax:
Net effect of sale and call of securities10,811 — 400 (2)— 
Net effect of sale of other assets(2,081)— — — (251)
Severance expense from workforce realignment538 — — — — 
Branch consolidation expenses and impairment charges— — — — 132 
Adjusted net income$11,219 $16,535 $12,338 $17,691 $18,650 
Calculation of pre-tax, pre-provision net revenue:
Net income (GAAP)$1,951 $16,535 $11,370 $17,693 $18,769 
Adjustments to net income (GAAP):
Provision for income taxes33 5,255 4,205 6,522 6,801 
Provision for (reversal of) credit losses1,671 670 4,222 (3,920)(2,420)
Pre-tax, pre-provision net revenue (non-GAAP)$3,655 $22,460 $19,797 $20,295 $23,150 
Adjusted earnings per share:
Weighted average common shares - basic65,03065,73767,24069,79072,011
Weighted average common shares - diluted65,03865,75667,27669,81772,037
Earnings per share - basic (GAAP)$0.03 $0.25 $0.17 $0.25 $0.26 
Earnings per share - diluted (GAAP)$0.03 $0.25 $0.17 $0.25 $0.26 
Adjusted earnings per share - basic (non-GAAP)$0.17 $0.25 $0.18 $0.25 $0.26 
Adjusted earnings per share - diluted (non-GAAP)$0.17 $0.25 $0.18 $0.25 $0.26 
Pre-tax, pre-provision net revenue per share:
Pre-tax, pre-provision net revenue per share - basic
  (non-GAAP)
$0.06 $0.34 $0.29 $0.29 $0.32 
Pre-tax, pre-provision net revenue per share - diluted
  (non-GAAP)
$0.06 $0.34 $0.29 $0.29 $0.32 
Adjusted return on average assets:
Total average assets$8,070,092 $7,778,206 $7,494,751 $7,207,950 $7,180,241 
Return on average assets (GAAP)0.10 %0.85 %0.61 %0.98 %1.05 %
Adjusted return on average assets (non-GAAP)0.56 %0.85 %0.66 %0.98 %1.04 %
Adjusted return on average equity:
Total average equity$865,094 $895,691 $924,133 $977,489 $1,005,762 
Return on average equity (GAAP)0.90 %7.38 %4.92 %7.24 %7.46 %
Adjusted return on average equity (non-GAAP)5.19 %7.38 %5.34 %7.24 %7.42 %
13

Kearny Financial Corp.
Reconciliation of GAAP to Non-GAAP
(Unaudited)
Three Months Ended
(Dollars and Shares in Thousands,
Except Per Share Data)		December 31,
2022		September 30,
2022		June 30,
2022		March 31,
2022		December 31,
2021
Adjusted return on average tangible equity:
Total average equity$865,094 $895,691 $924,133 $977,489 $1,005,762 
Less: average goodwill(210,895)(210,895)(210,895)(210,895)(210,895)
Less: average other intangible assets(2,826)(2,971)(3,116)(3,282)(3,462)
Total average tangible equity$651,373 $681,825 $710,122 $763,312 $791,405 
Return on average tangible equity (non-GAAP)1.20 %9.70 %6.40 %9.27 %9.49 %
Adjusted return on average tangible equity (non-GAAP)6.89 %9.70 %6.95 %9.27 %9.43 %
Adjusted non-interest expense ratio:
Non-interest expense (GAAP)$32,650 $31,988 $33,612 $30,623 $29,670 
Non-recurring transactions:
Severance expense from workforce realignment(757)— — — — 
Early contract termination— — (800)— — 
Branch consolidation expenses and impairment charges— — — — (187)
Non-interest expense (non-GAAP)$31,893 $31,988 $32,812 $30,623 $29,483 
Non-interest expense ratio (GAAP)1.62 %1.65 %1.79 %1.70 %1.65 %
Adjusted non-interest expense ratio (non-GAAP)1.58 %1.65 %1.75 %1.70 %1.64 %
Adjusted efficiency ratio:
Non-interest expense (non-GAAP)$31,893 $31,988 $32,812 $30,623 $29,483 
Net interest income (GAAP)$44,783 $48,531 $50,599 $47,727 $48,687 
Total non-interest income (GAAP)(8,478)5,917 2,810 3,191 4,133 
Non-recurring transactions:
Net effect of sale and call of securities15,227 — 563 (3)— 
Net effect of sale of other assets(2,931)— — — (356)
Total revenue (non-GAAP)$48,601 $54,448 $53,972 $50,915 $52,464 
Efficiency ratio (GAAP)89.93 %58.75 %62.93 %60.14 %56.17 %
Adjusted efficiency ratio (non-GAAP)65.62 %58.75 %60.79 %60.15 %56.20 %

14