Document

EX-99.1 2 krny-20230427xexx991.htm EX-99.1 Document

Exhibit 99.1

FOR IMMEDIATE RELEASE

April 27, 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 THIRD QUARTER FISCAL 2023 RESULTS

AND DECLARATION OF CASH DIVIDEND

Fairfield, N.J., April 27, 2023 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended March 31, 2023 of $10.3 million, or $0.16 per diluted share, compared to $2.0 million, or $0.03 per diluted share, for the quarter ended December 31, 2022. Net income for the quarters ended March 31, 2023 and December 31, 2022 was impacted by various non-recurring items, as described in further detail below.

The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on May 24, 2023 to stockholders of record as of May 10, 2023.

Craig L. Montanaro, President and Chief Executive Officer, commented, “While my comments in recent quarters have featured the terms ‘risk’ and ‘uncertainty’, the past few weeks have brought fresh challenges to the banking sector, and the economy at large. Despite the sudden failure of two large regional banks, the voluntary wind-down of a third and pressure on the industry as a whole, I am pleased to report that Kearny remains on solid footing. Our highly-diversified deposit base, conservative risk culture and abundance of available liquidity allows us to navigate these uncertain times, as we have throughout our 139 years in operation.”

Mr. Montanaro further noted, “Looking to this quarter’s earnings, the rate of our net interest margin compression has begun to slow, while our previously announced operating efficiency initiative has gotten off to a strong start. Non-interest expense, excluding non-recurring items, declined 7.3% quarter-over-quarter and will be further supported by the June 2023 consolidation of two branch locations.”

Liquidity & Funding

•Deposits decreased $168.0 million, or 2.8%, to $5.80 billion at March 31, 2023, from $5.97 billion at December 31, 2022. Details regarding the change in deposit balances are presented in the table below. The decrease in deposits was largely concentrated in three products: consumer savings, commercial non-interest checking and government deposits. The decline in consumer savings reflected the continuation of a multi-quarter trend resulting from the migration of low-rate savings balances into higher-rate money market and time deposit products. The reduction in non-interest checking deposits was a combination of outflow and the migration of non-interest bearing commercial deposits into interest-bearing products. The decrease in government deposits was largely attributable to seasonal outflows resulting from expected tax and pension payments.


(Dollars in Thousands)	March 31, 2023		December 31, 2022		Variance or Change		Variance or Change Pct.
Government deposits	$	607,925	$	677,923	$	(69,998)	(10.3)	%
Excluding government deposits:
Non-interest-bearing	615,696		649,044		(33,348)		(5.1)	%
Interest-bearing demand	1,699,407		1,663,302		36,105		2.2	%
Savings	795,310		881,837		(86,527)		(9.8)	%
Certificates of deposit	2,085,066		2,099,265		(14,199)		(0.7)	%
Total deposits	$	5,803,404	$	5,971,371	$	(167,967)	(2.8)	%

•The aggregate amount of uninsured deposits was $1.68 billion at March 31, 2023. Excluding collateralized deposits of state and local governments, and deposits of the Bank’s wholly-owned subsidiary and holding company, the aggregate amount of uninsured deposits was $705.7 million, or 12.2% of total deposits.

•Borrowings increased $228.1 million to $1.61 billion, or 19.3% of total assets, at March 31, 2023, from $1.38 billion, or 16.7% of total assets, at December 31, 2022. At March 31, 2023, borrowings were comprised of $1.54 billion of advances from the Federal Home Loan Bank of New York and $70.0 million from unsecured fed funds lines of credit. There were no borrowings outstanding from the Federal Reserve Bank at, or during the quarter ended, March 31, 2023.

•At March 31, 2023, the Company maintained available secured borrowing capacity of $2.37 billion, of which $1.88 billion was immediately accessible via in-place collateral and $493.2 million represented the market value of unpledged securities.

Assets

•Total assets increased $60.0 million, or 0.7%, to $8.35 billion at March 31, 2023, from $8.29 billion at December 31, 2022.

•Cash and cash equivalents increased $118.9 million, or 157.2%, to $194.6 million at March 31, 2023, from $75.7 million at December 31, 2022. The increase was driven by the Company’s decision to hold excess cash on its balance sheet due to external market conditions.

•Loans receivable decreased $17.8 million, or 0.3%, to $5.97 billion at March 31, 2023, from $5.98 billion at December 31, 2022.

•Investment securities decreased $23.3 million to $1.42 billion, or 17.0% of total assets, at March 31, 2023, from $1.44 billion, or 17.4% of total assets, at December 31, 2022. The decrease was driven by paydowns, partially offset by a $9.7 million improvement in unrealized losses on securities available for sale during the quarter ended March 31, 2023.

Earnings

Performance Highlights

•Return on average assets was 0.50% for the quarter ended March 31, 2023 compared to 0.10% for the quarter ended December 31, 2022.

•Return on average equity was 4.69% and 0.90% for the quarters ended March 31, 2023 and December 31, 2022, respectively. Return on average tangible equity was 6.20% and 1.20% for those same comparative periods.

Net Interest Income and Net Interest Margin

•Net interest margin contracted 18 basis points to 2.20% for the quarter ended March 31, 2023, from 2.38% for the quarter ended December 31, 2022. Excluding purchase accounting accretion and loan prepayment penalty income, net interest margin contracted 11 basis points.

•Net interest income decreased $2.4 million to $42.4 million for the quarter ended March 31, 2023, from $44.8 million for the quarter ended December 31, 2022. Included in net interest income for the quarters ended March 31, 2023 and December 31, 2022, respectively, was purchase accounting accretion of $711,000 and $1.9 million, and loan prepayment penalty income of $103,000 and $166,000.

Non-Interest Income

•Non-interest income increased $10.1 million to income of $1.6 million for the quarter ended March 31, 2023, from a loss of $8.5 million for the quarter ended December 31, 2022. The increase was primarily attributable to a loss of $15.2 million on the sale of securities during the prior comparative period.

•Loss on sale of loans was $2.4 million for the quarter ended March 31, 2023 compared to a gain on sale of loans of $134,000 for the quarter ended December 31, 2022. The loss in the current period was the result of the sale of a non-performing multi-family mortgage loan held-for-sale located in Queens, NY. The loan was acquired in 2018 and had been classified as held-for-sale since June 30, 2022.

•Other income decreased $2.7 million to $1.1 million for the quarter ended March 31, 2023, primarily due to a non-recurring gain of $2.9 million attributable to the sale of a former branch location recognized during the prior comparative period.

Non-Interest Expense

•Non-interest expense decreased $2.3 million to $30.4 million for the quarter ended March 31, 2023, from $32.7 million for the quarter ended December 31, 2022. Excluding $800,000 of branch consolidation expense, of which $250,000 was recorded in occupancy expense and $550,000 was recorded in other expense, non-interest expense for the quarter ended March 31, 2023 was $29.6 million.

•Salaries and benefits expense decreased $1.9 million to $18.0 million for the quarter ended March 31, 2023. This decrease was driven by lower salary expense as a result of reduced headcount and a decrease in incentive payments tied to loan origination volume.

•The efficiency and non-interest expense ratios were 68.96% and 1.47%, respectively, for the quarter ended March 31, 2023, as compared to 89.93% and 1.62%, respectively, for the quarter ended December 31, 2022.

Income Taxes

•Income tax expense totaled $2.9 million for the quarter ended March 31, 2023 compared to $33,000 for the quarter ended December 31, 2022, resulting in an effective tax rate of 22.0% and 1.7%, respectively. The effective tax rate, for the prior comparative period, was impacted by the loss on the sale of securities.

Asset Quality

•The balance of non-performing assets decreased $5.2 million to $57.4 million, or 0.69% of total assets, at March 31, 2023, from $62.6 million, or 0.76% of total assets, at December 31, 2022. The decrease in non-performing assets was primarily attributable to the sale of a non-performing multi-family mortgage loan held-for-sale, as previously noted.

•Net charge-offs totaled $206,000, or 0.01% of average loans, on an annualized basis, for the quarter ended March 31, 2023, compared to $407,000, or 0.03% of average loans, on an annualized basis, for the quarter ended December 31, 2022.

•For the quarter ended March 31, 2023, the Company recorded a provision for credit losses of $451,000, compared to $1.7 million for the quarter ended December 31, 2022. The provision for the quarter ended March 31, 2023 was largely driven by a slower prepayment rate assumption, partially offset by a net reduction in reserves on loans individually analyzed for impairment.

•The allowance for credit losses was $49.1 million, or 0.82% of total loans, at March 31, 2023, compared to $48.9 million, or 0.81% of total loans, at December 31, 2022.

Capital

•For the quarter ended March 31, 2023, book value per share increased $0.04, or 0.3%, to $12.99 and tangible book value per share increased $0.01, or 0.1%, to $9.79.

•During the quarter ended March 31, 2023, the Company repurchased 698,286 shares of common stock at a cost of $6.6 million, or $9.50 per share.

•At March 31, 2023, total stockholders’ equity included after-tax net unrealized losses on securities available for sale of $100.4 million, partially offset by after-tax unrealized gains on derivatives of $27.5 million. Pre-tax net unrecognized losses on securities held to maturity of $13.6 million were not reflected in total stockholders’ equity.

•At March 31, 2023, the Company’s tangible equity to tangible assets ratio equaled 8.02% and the regulatory capital ratios of both the Company and the Bank were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.

This earnings release should be read in conjunction with Kearny Financial Corp.’s Q3 Fiscal 2023 Investor Presentation, a copy of which is available through the Investor Relations link located at the bottom of the page of our website at www.kearnybank.com and via a Current Report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.

Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

Category: Earnings


Linked-Quarter Comparative Financial Analysis

Kearny Financial Corp.

Consolidated Balance Sheets

(Unaudited)


(Dollars and Shares in Thousands, Except Per Share Data)	March 31, 2023			December 31, 2022			Variance or Change			Variance or Change Pct.

Assets
Cash and cash equivalents	$	194,568		$	75,660		$	118,908		157.2	%
Securities available for sale	1,267,066			1,286,354			(19,288)			-1.5	%
Securities held to maturity	149,764			153,786			(4,022)			-2.6	%
Loans held-for-sale	5,401			12,940			(7,539)			-58.3	%
Loans receivable	5,966,325			5,984,133			(17,808)			-0.3	%
Less: allowance for credit losses on loans	(49,122)			(48,877)			245			0.5	%
Net loans receivable	5,917,203			5,935,256			(18,053)			-0.3	%
Premises and equipment	49,589			50,953			(1,364)			-2.7	%
Federal Home Loan Bank stock	76,319			69,022			7,297			10.6	%
Accrued interest receivable	28,794			27,368			1,426			5.2	%
Goodwill	210,895			210,895			—			—	%
Core deposit intangible	2,590			2,732			(142)			-5.2	%
Bank owned life insurance	291,220			289,673			1,547			0.5	%
Deferred income taxes, net	53,151			51,107			2,044			4.0	%
Other real estate owned	13,410			13,410			—			—	%
Other assets	89,366			110,162			(20,796)			-18.9	%
Total assets	$	8,349,336		$	8,289,318		$	60,018		0.7	%

Liabilities
Deposits:
Non-interest-bearing	$	617,778		$	650,950		$	(33,172)		-5.1	%
Interest-bearing	5,185,626			5,320,421			(134,795)			-2.5	%
Total deposits	5,803,404			5,971,371			(167,967)			-2.8	%
Borrowings	1,611,692			1,383,573			228,119			16.5	%
Advance payments by borrowers for taxes	18,706			17,307			1,399			8.1	%
Other liabilities	49,304			44,427			4,877			11.0	%
Total liabilities	7,483,106			7,416,678			66,428			0.9	%

Stockholders' Equity
Common stock	667			674			(7)			-1.0	%
Paid-in capital	509,359			515,332			(5,973)			-1.2	%
Retained earnings	452,605			449,489			3,116			0.7	%
Unearned ESOP shares	(23,348)			(23,834)			486			2.0	%
Accumulated other comprehensive loss	(73,053)			(69,021)			(4,032)			-5.8	%
Total stockholders' equity	866,230			872,640			(6,410)			-0.7	%
Total liabilities and stockholders' equity	$	8,349,336		$	8,289,318		$	60,018		0.7	%

Consolidated capital ratios
Equity to assets	10.37		%	10.53		%	-0.16		%
Tangible equity to tangible assets (1)	8.02		%	8.16		%	-0.14		%

Share data
Outstanding shares	66,680			67,388			(708)			-1.1	%
Book value per share	$	12.99		$	12.95		$	0.04		0.3	%
Tangible book value per share (2)	$	9.79		$	9.78		$	0.01		0.1	%

_________________________

(1)Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.

(2)Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

Kearny Financial Corp.

Consolidated Statements of Income

(Unaudited)


(Dollars and Shares in Thousands, Except Per Share Data)	Three Months Ended						Variance or Change			Variance or Change Pct.
	March 31, 2023			December 31, 2022
Interest income
Loans	$	60,172		$	57,996		$	2,176		3.8	%
Taxable investment securities	15,459			13,221			2,238			16.9	%
Tax-exempt investment securities	99			219			(120)			-54.8	%
Other interest-earning assets	1,441			1,005			436			43.4	%
Total interest income	77,171			72,441			4,730			6.5	%

Interest expense
Deposits	22,246			18,822			3,424			18.2	%
Borrowings	12,554			8,836			3,718			42.1	%
Total interest expense	34,800			27,658			7,142			25.8	%
Net interest income	42,371			44,783			(2,412)			-5.4	%
Provision for credit losses	451			1,671			(1,220)			-73.0	%
Net interest income after provision for credit losses	41,920			43,112			(1,192)			-2.8	%

Non-interest income
Fees and service charges	910			734			176			24.0	%
Loss on sale and call of securities	—			(15,227)			15,227			100.0	%
(Loss) gain on sale of loans	(2,373)			134			(2,507)			-1870.9	%

Income from bank owned life insurance	1,581			1,761			(180)			-10.2	%
Electronic banking fees and charges	457			397			60			15.1	%
Other income	1,071			3,723			(2,652)			-71.2	%
Total non-interest income	1,646			(8,478)			10,124			-119.4	%

Non-interest expense
Salaries and employee benefits	18,005			19,921			(1,916)			-9.6	%
Net occupancy expense of premises	3,097			2,987			110			3.7	%
Equipment and systems	3,537			3,867			(330)			-8.5	%
Advertising and marketing	413			731			(318)			-43.5	%
Federal deposit insurance premium	1,546			1,226			320			26.1	%
Directors' compensation	340			339			1			0.3	%
Other expense	3,414			3,579			(165)			-4.6	%
Total non-interest expense	30,352			32,650			(2,298)			-7.0	%
Income before income taxes	13,214			1,984			11,230			566.0	%
Income taxes	2,902			33			2,869			8693.9	%
Net income	$	10,312		$	1,951		$	8,361		428.5	%

Net income per common share (EPS)
Basic	$	0.16		$	0.03		$	0.13
Diluted	$	0.16		$	0.03		$	0.13

Dividends declared
Cash dividends declared per common share	$	0.11		$	0.11		$	—
Cash dividends declared	$	7,196		$	7,172		$	24
Dividend payout ratio	69.8		%	367.6		%	(297.8)		%

Weighted average number of common shares outstanding
Basic	64,769			65,030			(261)
Diluted	64,783			65,038			(255)

Kearny Financial Corp.

Average Balance Sheet Data

(Unaudited)


(Dollars in Thousands)	Three Months Ended						Variance or Change			Variance or Change Pct.
	March 31, 2023			December 31, 2022
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	5,986,669		$	5,839,903		$	146,766		2.5	%
Taxable investment securities	1,558,222			1,527,578			30,644			2.0	%
Tax-exempt investment securities	17,663			37,917			(20,254)			-53.4	%
Other interest-earning assets	131,682			114,175			17,507			15.3	%
Total interest-earning assets	7,694,236			7,519,573			174,663			2.3	%
Non-interest-earning assets	575,009			550,519			24,490			4.4	%
Total assets	$	8,269,245		$	8,070,092		$	199,153		2.5	%

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	2,363,762		$	2,359,977		$	3,785		0.2	%
Savings	858,673			931,584			(72,911)			-7.8	%
Certificates of deposit	2,069,396			2,192,722			(123,326)			-5.6	%
Total interest-bearing deposits	5,291,831			5,484,283			(192,452)			-3.5	%
Borrowings:
Federal Home Loan Bank advances	1,402,269			997,148			405,121			40.6	%
Other borrowings	1,611			—			1,611			—	%
Total borrowings	1,403,880			997,148			406,732			40.8	%
Total interest-bearing liabilities	6,695,711			6,481,431			214,280			3.3	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits	634,324			666,846			(32,522)			-4.9	%
Other non-interest-bearing liabilities	60,327			56,721			3,606			6.4	%
Total non-interest-bearing liabilities	694,651			723,567			(28,916)			-4.0	%
Total liabilities	7,390,362			7,204,998			185,364			2.6	%
Stockholders' equity	878,883			865,094			13,789			1.6	%
Total liabilities and stockholders' equity	$	8,269,245		$	8,070,092		$	199,153		2.5	%

Average interest-earning assets to average interest-bearing liabilities	114.91		%	116.02		%	-1.11		%	-1.0	%

Kearny Financial Corp.

Performance Ratio Highlights

(Unaudited)


	Three Months Ended				Variance or Change
	March 31, 2023		December 31, 2022
Average yield on interest-earning assets:
Loans receivable, including loans held for sale	4.02	%	3.97	%	0.05	%
Taxable investment securities	3.97	%	3.46	%	0.51	%
Tax-exempt investment securities (1)	2.23	%	2.32	%	-0.09	%
Other interest-earning assets	4.38	%	3.52	%	0.86	%
Total interest-earning assets	4.01	%	3.85	%	0.16	%

Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand	2.01	%	1.63	%	0.38	%
Savings	0.41	%	0.41	%	—	%
Certificates of deposit	1.84	%	1.50	%	0.34	%
Total interest-bearing deposits	1.68	%	1.37	%	0.31	%
Borrowings:
Federal Home Loan Bank advances	3.58	%	3.54	%	0.04	%
Other borrowings	5.15	%	—	%	5.15	%
Total borrowings	3.58	%	3.54	%	0.04	%
Total interest-bearing liabilities	2.08	%	1.71	%	0.37	%

Interest rate spread (2)	1.93	%	2.14	%	-0.21	%
Net interest margin (3)	2.20	%	2.38	%	-0.18	%

Non-interest income to average assets (annualized)	0.08	%	-0.42	%	0.50	%
Non-interest expense to average assets (annualized)	1.47	%	1.62	%	-0.15	%

Efficiency ratio (4)	68.96	%	89.93	%	-20.97	%

Return on average assets (annualized)	0.50	%	0.10	%	0.40	%
Return on average equity (annualized)	4.69	%	0.90	%	3.79	%
Return on average tangible equity (annualized) (5)	6.20	%	1.20	%	5.00	%

_________________________

(1)The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.

(2)Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.

(3)Net interest income divided by average interest-earning assets.

(4)Non-interest expense divided by the sum of net interest income and non-interest income.

(5)Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.



Five-Quarter Financial Trend Analysis

Kearny Financial Corp.

Consolidated Balance Sheets


(Dollars and Shares in Thousands, Except Per Share Data)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Audited)			(Unaudited)
Assets
Cash and cash equivalents	$	194,568		$	75,660		$	96,076		$	101,615		$	62,379
Securities available for sale	1,267,066			1,286,354			1,263,176			1,344,093			1,526,086
Securities held to maturity	149,764			153,786			115,943			118,291			121,853
Loans held-for-sale	5,401			12,940			12,936			28,874			2,822
Loans receivable	5,966,325			5,984,133			5,656,370			5,417,845			5,003,201
Less: allowance for credit losses on loans	(49,122)			(48,877)			(47,613)			(47,058)			(43,860)
Net loans receivable	5,917,203			5,935,256			5,608,757			5,370,787			4,959,341
Premises and equipment	49,589			50,953			52,642			53,281			53,727
Federal Home Loan Bank stock	76,319			69,022			44,957			47,144			30,997
Accrued interest receivable	28,794			27,368			23,817			20,466			19,517
Goodwill	210,895			210,895			210,895			210,895			210,895
Core deposit intangible	2,590			2,732			2,876			3,020			3,166
Bank owned life insurance	291,220			289,673			289,690			289,177			287,644
Deferred income taxes, net	53,151			51,107			54,278			49,350			34,349
Other real estate owned	13,410			13,410			178			178			401
Other assets	89,366			110,162			113,369			82,712			76,714
Total assets	$	8,349,336		$	8,289,318		$	7,889,590		$	7,719,883		$	7,389,891

Liabilities
Deposits:
Non-interest-bearing	$	617,778		$	650,950		$	683,406		$	653,899		$	621,954
Interest-bearing	5,185,626			5,320,421			5,424,872			5,208,357			4,906,708
Total deposits	5,803,404			5,971,371			6,108,278			5,862,256			5,528,662
Borrowings	1,611,692			1,383,573			851,454			901,337			851,220
Advance payments by borrowers for taxes	18,706			17,307			16,555			16,746			16,979
Other liabilities	49,304			44,427			38,329			45,544			37,861
Total liabilities	7,483,106			7,416,678			7,014,616			6,825,883			6,434,722

Stockholders' Equity
Common stock	667			674			680			687			714
Paid-in capital	509,359			515,332			520,245			528,396			561,176
Retained earnings	452,605			449,489			454,710			445,451			441,522
Unearned ESOP shares	(23,348)			(23,834)			(24,321)			(24,807)			(25,294)
Accumulated other comprehensive loss	(73,053)			(69,021)			(76,340)			(55,727)			(22,949)
Total stockholders' equity	866,230			872,640			874,974			894,000			955,169
Total liabilities and stockholders' equity	$	8,349,336		$	8,289,318		$	7,889,590		$	7,719,883		$	7,389,891

Consolidated capital ratios
Equity to assets	10.37		%	10.53		%	11.09		%	11.58		%	12.93		%
Tangible equity to tangible assets (1)	8.02		%	8.16		%	8.61		%	9.06		%	10.33		%

Share data
Outstanding shares	66,680			67,388			67,938			68,666			71,424
Book value per share	$	12.99		$	12.95		$	12.88		$	13.02		$	13.37
Tangible book value per share (2)	$	9.79		$	9.78		$	9.73		$	9.90		$	10.38

_________________________

(2)Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

Kearny Financial Corp.

Supplemental Balance Sheet Highlights

(Unaudited)


(Dollars in Thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Loan portfolio composition:
Commercial loans:
Multi-family mortgage	$	2,835,852		$	2,851,721		$	2,570,297		$	2,409,090		$	2,076,003
Nonresidential mortgage	1,002,643			1,017,341			1,040,688			1,019,838			1,085,988
Commercial business	162,038			177,530			186,361			176,807			169,551
Construction	215,524			186,663			166,052			140,131			121,137
Total commercial loans	4,216,057			4,233,255			3,963,398			3,745,866			3,452,679
One- to four-family residential mortgage	1,713,343			1,719,514			1,666,730			1,645,816			1,527,980
Consumer loans:
Home equity loans	44,376			45,690			43,269			42,028			41,501
Other consumer	2,592			2,648			2,869			2,866			2,755
Total consumer loans	46,968			48,338			46,138			44,894			44,256
Total loans, excluding yield adjustments	5,976,368			6,001,107			5,676,266			5,436,576			5,024,915
Unaccreted yield adjustments	(10,043)			(16,974)			(19,896)			(18,731)			(21,714)
Loans receivable, net of yield adjustments	5,966,325			5,984,133			5,656,370			5,417,845			5,003,201
Less: allowance for credit losses on loans	(49,122)			(48,877)			(47,613)			(47,058)			(43,860)
Net loans receivable	$	5,917,203		$	5,935,256		$	5,608,757		$	5,370,787		$	4,959,341

Asset quality:
Nonperforming assets:
Accruing loans - 90 days and over past due	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans	44,026			40,549			68,574			70,321			80,595
Total nonperforming loans	44,026			40,549			68,574			70,321			80,595
Nonaccrual loans held-for-sale	—			8,650			8,650			21,745			—
Other real estate owned	13,410			13,410			178			178			401
Total nonperforming assets	$	57,436		$	62,609		$	77,402		$	92,244		$	80,996

Nonperforming loans (% total loans)	0.74		%	0.68		%	1.21		%	1.30		%	1.61		%
Nonperforming assets (% total assets)	0.69		%	0.76		%	0.98		%	1.19		%	1.10		%

Classified loans	$	103,461		$	86,069		$	92,610		$	94,555		$	163,621

Allowance for credit losses on loans (ACL):
ACL to total loans	0.82		%	0.81		%	0.84		%	0.87		%	0.87		%
ACL to nonperforming loans	111.57		%	120.54		%	69.43		%	66.92		%	54.42		%
Net charge-offs	$	206		$	407		$	115		$	1,024		$	436
Average net charge-off rate (annualized)	0.01		%	0.03		%	0.01		%	0.08		%	0.04		%

Kearny Financial Corp.

Supplemental Balance Sheet Highlights

(Unaudited)


(Dollars in Thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Funding composition:
Deposits:
Non-interest-bearing deposits	$	617,778		$	650,950		$	683,406		$	653,899		$	621,954
Interest-bearing demand	2,285,799			2,316,485			2,382,411			2,265,597			2,154,488
Savings	811,483			901,514			982,916			1,053,198			1,088,974
Certificates of deposit (retail)	1,327,343			1,354,907			1,263,124			1,116,035			1,122,228
Certificates of deposit (brokered and listing service)	761,001			747,515			796,421			773,527			541,018
Interest-bearing deposits	5,185,626			5,320,421			5,424,872			5,208,357			4,906,708
Total deposits	5,803,404			5,971,371			6,108,278			5,862,256			5,528,662

Borrowings:
Federal Home Loan Bank advances	1,156,692			1,256,573			796,454			651,337			541,220
Overnight borrowings	455,000			127,000			55,000			250,000			310,000
Total borrowings	1,611,692			1,383,573			851,454			901,337			851,220

Total funding	$	7,415,096		$	7,354,944		$	6,959,732		$	6,763,593		$	6,379,882

Loans as a % of deposits	102.1		%	99.6		%	92.0		%	92.1		%	89.8		%
Deposits as a % of total funding	78.3		%	81.2		%	87.8		%	86.7		%	86.7		%
Borrowings as a % of total funding	21.7		%	18.8		%	12.2		%	13.3		%	13.3		%

Uninsured deposits:
Uninsured deposits (reported) (1)	$	1,678,051		$	1,815,854		$	1,771,851		$	1,525,940		$	1,427,658
Uninsured deposits (adjusted) (2)	$	705,727		$	794,407		$	883,351		$	792,067		$	749,141

_________________________

(1)Uninsured deposits of Kearny Bank.

(2)Uninsured deposits of Kearny Bank adjusted to exclude deposits of its wholly-owned subsidiary and holding company and collateralized deposits of state and local governments.

Kearny Financial Corp.

Consolidated Statements of Income

(Unaudited)


	Three Months Ended
(Dollars and Shares in Thousands, Except Per Share Data)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Interest income
Loans	$	60,172		$	57,996		$	52,935		$	48,869		$	45,846
Taxable investment securities	15,459			13,221			10,439			8,915			8,024
Tax-exempt investment securities	99			219			285			297			316
Other interest-earning assets	1,441			1,005			761			472			415
Total interest income	77,171			72,441			64,420			58,553			54,601

Interest expense
Deposits	22,246			18,822			10,869			3,915			3,565
Borrowings	12,554			8,836			5,020			4,039			3,309
Total interest expense	34,800			27,658			15,889			7,954			6,874
Net interest income	42,371			44,783			48,531			50,599			47,727
Provision for (reversal of) credit losses	451			1,671			670			4,222			(3,920)
Net interest income after provision for (reversal of) credit losses	41,920			43,112			47,861			46,377			51,647

Non-interest income
Fees and service charges	910			734			763			658			617
(Loss) gain on sale and call of securities	—			(15,227)			—			(563)			3
(Loss) gain on sale of loans	(2,373)			134			395			187			376
(Loss) gain on sale of other real estate owned	—			—			—			(9)			14
Income from bank owned life insurance	1,581			1,761			3,698			1,533			1,511
Electronic banking fees and charges	457			397			506			366			432
Other income	1,071			3,723			555			638			238
Total non-interest income	1,646			(8,478)			5,917			2,810			3,191

Non-interest expense
Salaries and employee benefits	18,005			19,921			20,348			20,367			19,184
Net occupancy expense of premises	3,097			2,987			3,090			3,188			3,223
Equipment and systems	3,537			3,867			3,662			4,516			3,822
Advertising and marketing	413			731			747			703			516
Federal deposit insurance premium	1,546			1,226			906			762			480
Directors' compensation	340			339			340			340			340
Other expense	3,414			3,579			2,895			3,736			3,058
Total non-interest expense	30,352			32,650			31,988			33,612			30,623
Income before income taxes	13,214			1,984			21,790			15,575			24,215
Income taxes	2,902			33			5,255			4,205			6,522
Net income	$	10,312		$	1,951		$	16,535		$	11,370		$	17,693

Net income per common share (EPS)
Basic	$	0.16		$	0.03		$	0.25		$	0.17		$	0.25
Diluted	$	0.16		$	0.03		$	0.25		$	0.17		$	0.25

Dividends declared
Cash dividends declared per common share	$	0.11		$	0.11		$	0.11		$	0.11		$	0.11
Cash dividends declared	$	7,196		$	7,172		$	7,276		$	7,441		$	7,720
Dividend payout ratio	69.8		%	367.6		%	44.0		%	65.4		%	43.6		%

Weighted average number of common shares outstanding
Basic	64,769			65,030			65,737			67,240			69,790
Diluted	64,783			65,038			65,756			67,276			69,817

Kearny Financial Corp.

Average Balance Sheet Data

(Unaudited)


	Three Months Ended
(Dollars in Thousands)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Assets
Interest-earning assets:
Loans receivable, including loans held-for-sale	$	5,986,669		$	5,839,903		$	5,553,996		$	5,181,983		$	4,850,236
Taxable investment securities	1,558,222			1,527,578			1,516,974			1,608,372			1,620,996
Tax-exempt investment securities	17,663			37,917			48,973			51,672			55,390
Other interest-earning assets	131,682			114,175			88,038			87,990			79,644
Total interest-earning assets	7,694,236			7,519,573			7,207,981			6,930,017			6,606,266
Non-interest-earning assets	575,009			550,519			570,225			564,734			601,684
Total assets	$	8,269,245		$	8,070,092		$	7,778,206		$	7,494,751		$	7,207,950

Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	2,363,762		$	2,359,977		$	2,354,340		$	2,155,946		$	2,133,977
Savings	858,673			931,584			1,019,343			1,077,631			1,088,351
Certificates of deposit	2,069,396			2,192,722			2,014,922			1,701,725			1,650,048
Total interest-bearing deposits	5,291,831			5,484,283			5,388,605			4,935,302			4,872,376
Borrowings:
Federal Home Loan Bank advances	1,402,269			997,148			642,399			752,579			632,811
Other borrowings	1,611			—			127,456			185,901			51,667
Total borrowings	1,403,880			997,148			769,855			938,480			684,478
Total interest-bearing liabilities	6,695,711			6,481,431			6,158,460			5,873,782			5,556,854
Non-interest-bearing liabilities:
Non-interest-bearing deposits	634,324			666,846			667,624			640,200			624,152
Other non-interest-bearing liabilities	60,327			56,721			56,431			56,636			49,455
Total non-interest-bearing liabilities	694,651			723,567			724,055			696,836			673,607
Total liabilities	7,390,362			7,204,998			6,882,515			6,570,618			6,230,461
Stockholders' equity	878,883			865,094			895,691			924,133			977,489
Total liabilities and stockholders' equity	$	8,269,245		$	8,070,092		$	7,778,206		$	7,494,751		$	7,207,950

Average interest-earning assets to average interest-bearing liabilities	114.91		%	116.02		%	117.04		%	117.98		%	118.89		%

Kearny Financial Corp.

Performance Ratio Highlights


	Three Months Ended
	March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
Average yield on interest-earning assets:
Loans receivable, including loans held-for-sale	4.02	%	3.97	%	3.81	%	3.77	%	3.78	%
Taxable investment securities	3.97	%	3.46	%	2.75	%	2.22	%	1.98	%
Tax-exempt investment securities (1)	2.23	%	2.32	%	2.33	%	2.30	%	2.28	%
Other interest-earning assets	4.38	%	3.52	%	3.46	%	2.15	%	2.08	%
Total interest-earning assets	4.01	%	3.85	%	3.57	%	3.38	%	3.31	%

Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand	2.01	%	1.63	%	0.92	%	0.31	%	0.22	%
Savings	0.41	%	0.41	%	0.23	%	0.11	%	0.10	%
Certificates of deposit	1.84	%	1.50	%	0.97	%	0.46	%	0.52	%
Total interest-bearing deposits	1.68	%	1.37	%	0.81	%	0.32	%	0.29	%
Borrowings:
Federal Home Loan Bank advances	3.58	%	3.54	%	2.68	%	1.96	%	2.08	%
Other borrowings	5.15	%	—	%	2.26	%	0.77	%	0.17	%
Total borrowings	3.58	%	3.54	%	2.61	%	1.72	%	1.93	%
Total interest-bearing liabilities	2.08	%	1.71	%	1.03	%	0.54	%	0.49	%

Interest rate spread (2)	1.93	%	2.14	%	2.54	%	2.84	%	2.82	%
Net interest margin (3)	2.20	%	2.38	%	2.69	%	2.92	%	2.89	%

Non-interest income to average assets (annualized)	0.08	%	-0.42	%	0.30	%	0.15	%	0.18	%
Non-interest expense to average assets (annualized)	1.47	%	1.62	%	1.65	%	1.79	%	1.70	%

Efficiency ratio (4)	68.96	%	89.93	%	58.75	%	62.93	%	60.14	%

Return on average assets (annualized)	0.50	%	0.10	%	0.85	%	0.61	%	0.98	%
Return on average equity (annualized)	4.69	%	0.90	%	7.38	%	4.92	%	7.24	%
Return on average tangible equity (annualized) (5)	6.20	%	1.20	%	9.70	%	6.40	%	9.27	%

_________________________

(1)The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.

(2)Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.

(3)Net interest income divided by average interest-earning assets.

(4)Non-interest expense divided by the sum of net interest income and non-interest income.

(5)Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.

The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.

Kearny Financial Corp.

Reconciliation of GAAP to Non-GAAP

(Unaudited)


	Three Months Ended
(Dollars and Shares in Thousands, Except Per Share Data)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Adjusted net income:
Net income (GAAP)	$	10,312		$	1,951		$	16,535		$	11,370		$	17,693
Non-recurring transactions - net of tax:
Branch consolidation expenses	568			—			—			—			—
Net effect of sale and call of securities	—			10,811			—			400			(2)
Net effect of sale of other assets	—			(2,081)			—			—			—
Severance expense from workforce realignment	—			538			—			—			—
Early contract termination	—			—			—			568			—
Adjusted net income	$	10,880		$	11,219		$	16,535		$	12,338		$	17,691

Calculation of pre-tax, pre-provision net revenue:
Net income (GAAP)	$	10,312		$	1,951		$	16,535		$	11,370		$	17,693
Adjustments to net income (GAAP):
Provision for income taxes	2,902			33			5,255			4,205			6,522
Provision for (reversal of) credit losses	451			1,671			670			4,222			(3,920)
Pre-tax, pre-provision net revenue (non-GAAP)	$	13,665		$	3,655		$	22,460		$	19,797		$	20,295

Adjusted earnings per share:
Weighted average common shares - basic	64,769			65,030			65,737			67,240			69,790
Weighted average common shares - diluted	64,783			65,038			65,756			67,276			69,817

Earnings per share - basic (GAAP)	$	0.16		$	0.03		$	0.25		$	0.17		$	0.25
Earnings per share - diluted (GAAP)	$	0.16		$	0.03		$	0.25		$	0.17		$	0.25

Adjusted earnings per share - basic (non-GAAP)	$	0.17		$	0.17		$	0.25		$	0.18		$	0.25
Adjusted earnings per share - diluted (non-GAAP)	$	0.17		$	0.17		$	0.25		$	0.18		$	0.25

Pre-tax, pre-provision net revenue per share:
Pre-tax, pre-provision net revenue per share - basic (non-GAAP)	$	0.21		$	0.06		$	0.34		$	0.29		$	0.29
Pre-tax, pre-provision net revenue per share - diluted (non-GAAP)	$	0.21		$	0.06		$	0.34		$	0.29		$	0.29

Adjusted return on average assets:
Total average assets	$	8,269,245		$	8,070,092		$	7,778,206		$	7,494,751		$	7,207,950

Return on average assets (GAAP)	0.50		%	0.10		%	0.85		%	0.61		%	0.98		%
Adjusted return on average assets (non-GAAP)	0.53		%	0.56		%	0.85		%	0.66		%	0.98		%

Adjusted return on average equity:
Total average equity	$	878,883		$	865,094		$	895,691		$	924,133		$	977,489

Return on average equity (GAAP)	4.69		%	0.90		%	7.38		%	4.92		%	7.24		%
Adjusted return on average equity (non-GAAP)	4.95		%	5.19		%	7.38		%	5.34		%	7.24		%

Kearny Financial Corp.

Reconciliation of GAAP to Non-GAAP

(Unaudited)


	Three Months Ended
(Dollars and Shares in Thousands, Except Per Share Data)	March 31, 2023			December 31, 2022			September 30, 2022			June 30, 2022			March 31, 2022
Adjusted return on average tangible equity:
Total average equity	$	878,883		$	865,094		$	895,691		$	924,133		$	977,489
Less: average goodwill	(210,895)			(210,895)			(210,895)			(210,895)			(210,895)
Less: average other intangible assets	(2,683)			(2,826)			(2,971)			(3,116)			(3,282)
Total average tangible equity	$	665,305		$	651,373		$	681,825		$	710,122		$	763,312

Return on average tangible equity (non-GAAP)	6.20		%	1.20		%	9.70		%	6.40		%	9.27		%
Adjusted return on average tangible equity (non-GAAP)	6.54		%	6.89		%	9.70		%	6.95		%	9.27		%

Adjusted non-interest expense ratio:
Non-interest expense (GAAP)	$	30,352		$	32,650		$	31,988		$	33,612		$	30,623
Non-recurring transactions:
Branch consolidation expenses	(800)			—			—			—			—
Severance expense from workforce realignment	—			(757)			—			—			—
Early contract termination	—			—			—			(800)			—
Non-interest expense (non-GAAP)	$	29,552		$	31,893		$	31,988		$	32,812		$	30,623

Non-interest expense ratio (GAAP)	1.47		%	1.62		%	1.65		%	1.79		%	1.70		%
Adjusted non-interest expense ratio (non-GAAP)	1.43		%	1.58		%	1.65		%	1.75		%	1.70		%

Adjusted efficiency ratio:
Non-interest expense (non-GAAP)	$	29,552		$	31,893		$	31,988		$	32,812		$	30,623

Net interest income (GAAP)	$	42,371		$	44,783		$	48,531		$	50,599		$	47,727
Total non-interest income (GAAP)	1,646			(8,478)			5,917			2,810			3,191
Non-recurring transactions:
Net effect of sale and call of securities	—			15,227			—			563			(3)
Net effect of sale of other assets	—			(2,931)			—			—			—
Total revenue (non-GAAP)	$	44,017		$	48,601		$	54,448		$	53,972		$	50,915

Efficiency ratio (GAAP)	68.96		%	89.93		%	58.75		%	62.93		%	60.14		%
Adjusted efficiency ratio (non-GAAP)	67.14		%	65.62		%	58.75		%	60.79		%	60.15		%