Core Points - Kearny Financial Corp. reported a net income of $6.6 million for the quarter ended December 31, 2024, an increase from $6.1 million for the quarter ended September 30, 2024 [1][2] - Earnings per basic and diluted share were $0.11 and $0.10, respectively, for the quarter ended December 31, 2024, compared to $0.10 for the previous quarter [2] - The Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on February 26, 2025 [2] Financial Performance - Net interest income increased by $166,000 to $32.6 million from $32.4 million for the previous quarter [8] - Non-interest income rose by $247,000 to $4.9 million, driven by a larger gain on the sale of loans and an increase in electronic banking fees [6] - Non-interest expense decreased by $225,000, or 0.8%, to $29.6 million, primarily due to a decrease in other expenses [14] Balance Sheet Highlights - Total assets were $7.73 billion at December 31, 2024, a decrease of $41.0 million, or 0.5%, from September 30, 2024 [8] - Loans receivable totaled $5.79 billion, an increase of $7.5 million, or 0.1%, from the previous quarter [8] - Deposits increased by $200.5 million, or 3.7%, to $5.67 billion, driven by increases in both interest and non-interest bearing demand deposits [8] Asset Quality - The balance of non-performing assets decreased by $2.2 million to $37.7 million, or 0.49% of total assets [15] - Net charge-offs totaled $573,000, or 0.04% of average loans, for the quarter ended December 31, 2024 [15] - The allowance for credit losses was $44.5 million, or 0.77% of total loans, a decrease from the previous quarter [15] Capital and Ratios - Book value per share decreased by $0.11, or 0.9%, to $11.53, while tangible book value per share decreased by $0.10, or 1.0%, to $9.75 [15] - The tangible equity to tangible assets ratio was 8.27% at December 31, 2024, with regulatory capital ratios exceeding the levels required to be classified as "well-capitalized" [15]

Financial Performance - Net income for the three months ended September 30, 2024, was $6,092 thousand, a decline of 38.0% compared to $9,842 thousand in the same period of 2023[7]. - Basic and diluted earnings per share (EPS) decreased to $0.10 from $0.16, a drop of 37.5%[7]. - Net interest income after provision for credit losses was $32,338 thousand, down from $38,915 thousand, representing a decrease of 17.0%[7]. - Total non-interest income increased to $4,626 thousand, up from $4,010 thousand, marking a growth of 15.4%[7]. - Net cash provided by operating activities decreased to $2,539,000 for the three months ended September 30, 2024, compared to $12,284,000 for the same period in 2023[13]. - The company recognized a loss of $17.5 million in other comprehensive income for the three months ended September 30, 2024, compared to a gain of $14.1 million in the same period of 2023[75]. Assets and Liabilities - Total assets increased to $7,772,379 thousand as of September 30, 2024, compared to $7,683,461 thousand on June 30, 2024, reflecting a growth of 1.16%[4]. - Total liabilities increased to $7,020,842 thousand, up from $6,929,890 thousand, reflecting a growth of 1.32%[4]. - Total deposits increased to $5,470,512 thousand, a rise of 6.05% from $5,158,123 thousand[4]. - Cash and cash equivalents increased significantly to $155,574 thousand from $63,864 thousand, a growth of 143.5%[4]. - The total carrying value of pledged securities increased to $972,759 as of September 30, 2024, up from $671,181 on June 30, 2024[31]. Loans and Credit Quality - Net loans receivable rose to $5,739,323 thousand, up from $5,687,848 thousand, indicating an increase of 0.91%[4]. - The total past due loans as of September 30, 2024, were $28,935, compared to $36,885 as of June 30, 2024, showing a decrease of about 21.5%[38][40]. - The allowance for credit losses totaled $44.9 million, or 0.78% of total loans, at September 30, 2024[126]. - The provision for credit losses was $108 thousand, a decrease from $245 thousand, indicating improved credit quality[7]. - The company reported no allowance for credit losses on available for sale securities as of September 30, 2024, indicating stable credit quality[34]. Securities and Investments - Total available for sale securities amounted to $1,177,595, with a fair value of $1,070,811, reflecting gross unrealized losses of $110,112 as of September 30, 2024[25]. - The fair value of debt securities available for sale decreased from $601,780,000 on June 30, 2024, to $585,398,000 on September 30, 2024[96]. - The total fair value of held to maturity debt securities was $120,725, with an amortized cost of $135,742, reflecting gross unrecognized losses of $16,464[28]. - The company actively monitors the credit quality of its securities through ratings from various agencies[34]. - The unrealized losses on available for sale securities are attributed to changes in market interest rates and credit spreads, rather than changes in credit quality[34]. Capital and Equity - Stockholders' equity decreased by $2.0 million to $751.5 million at September 30, 2024, from $753.6 million at June 30, 2024[134]. - Total capital to risk-weighted assets was $697.3 million, representing a ratio of 14.48% as of September 30, 2024, exceeding the minimum regulatory requirement[153]. - Tier 1 capital to risk-weighted assets rose to $703,628, with a ratio of 14.60% as of September 30, 2024, up from 13.65%[155]. Dividends and Shareholder Returns - Cash dividends declared were $0.11 per common share, totaling $6,896,000 for the three months ended September 30, 2024[11]. - The company declared a quarterly cash dividend on October 24, 2024, payable on November 20, 2024[21]. Interest Rates and Economic Outlook - The weighted average interest rate for fixed rate advances from the FHLB was 4.71% as of September 30, 2024, compared to 5.07% as of June 30, 2024, indicating a decrease in borrowing costs[65]. - The company anticipates potential impacts from changes in interest rates, inflation, and competition affecting future results[115].

Core Viewpoint - Kearny Financial Corp. reported a net income of $6.1 million for Q3 2024, a significant recovery from a net loss of $90.1 million in Q2 2024, primarily due to a prior goodwill impairment of $95.3 million [1][12]. Financial Performance - Net interest income decreased by $830,000 to $32.4 million in Q3 2024 from $33.3 million in Q2 2024, with a net interest margin of 1.80%, down four basis points [3][12]. - Non-interest income fell by $1.2 million to $4.6 million in Q3 2024, influenced by the absence of non-recurring items that were present in the previous quarter [4][12]. - Non-interest expense decreased dramatically by $96.8 million, or 76.5%, to $29.8 million, largely due to the prior quarter's goodwill impairment [5][12]. Balance Sheet Highlights - Total assets increased by $88.9 million, or 1.2%, to $7.77 billion as of September 30, 2024 [2][19]. - Loans receivable rose by $51.5 million, or 0.9%, to $5.78 billion, driven by growth in residential mortgage and construction loans [2][19]. - Deposits increased by $312.4 million, or 6.1%, to $5.47 billion, attributed to a shift from FHLB advances to brokered certificates of deposits [2][19]. Asset Quality - Non-performing assets remained stable at $39.9 million, or 0.51% of total assets, with net charge-offs significantly reduced to $124,000, or 0.01% of average loans [7][12]. - The allowance for credit losses was $44.9 million, unchanged from the previous quarter, reflecting a stable asset quality [7][12]. Capital Position - Book value per share decreased by $0.06, or 0.5%, to $11.64, while tangible book value per share also decreased by $0.05, or 0.5%, to $9.85 [8][12]. - The Company maintained a tangible equity to tangible assets ratio of 8.31%, with regulatory capital ratios exceeding the "well-capitalized" requirements [8][12]. Dividend Declaration - The Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on November 20, 2024, to stockholders of record as of November 6, 2024 [1].

Credit Losses and Loan Performance - The allowance for credit losses (ACL) totaled $44.9 million at June 30, 2024, representing 0.78% of total loans, down from $48.7 million or 0.83% at June 30, 2023, a decrease of $3.8 million [51]. - The annualized net charge-off rate increased to 0.17% for the year ended June 30, 2024, up from 0.01% for the year ended June 30, 2023, reflecting a rise of 16 basis points [48]. - The total non-performing loans were $39.9 million at June 30, 2024, down from $42.6 million at June 30, 2023 [51]. - The ACL allocated to multi-family mortgage loans was $24.1 million, representing 46.02% of total loans in that category as of June 30, 2024 [51]. Loan and Securities Portfolio - Total loans outstanding were $5.75 billion at June 30, 2024, compared to $5.85 billion at June 30, 2023, indicating a reduction in loan volume [51]. - The investment securities portfolio decreased to $1.21 billion at June 30, 2024, from $1.37 billion at June 30, 2023, a year-over-year decline of $165.6 million [54]. - Total securities available for sale decreased from $1,227,729 thousand in 2023 to $1,072,833 thousand in 2024, a decline of approximately 12.7% [67]. - Total debt securities available for sale amounted to $601,780 thousand in 2024, down from $648,184 thousand in 2023, representing a decrease of about 7.1% [67]. - The carrying value of residential pass-through securities available for sale dropped from $436,151 thousand in 2023 to $337,264 thousand in 2024, a reduction of approximately 22.7% [67]. - The total carrying value of mortgage-backed securities available for sale fell from $579,545 thousand in 2023 to $471,053 thousand in 2024, a decrease of approximately 18.7% [67]. Deposits and Funding - Certificates of deposit maturing within one year were $1.49 billion in 2024, down from $1.90 billion in 2023, indicating a decrease of about 21.6% [75]. - As of June 30, 2024, 68.2% of certificates of deposit were $100,000 or more, compared to 70.6% in 2023, showing a decline in higher balance deposits [76]. - The total average deposits decreased from $5,974,860 thousand in 2023 to $5,345,822 thousand in 2024, reflecting a decline of about 10.5% [79]. - The total amount of brokered certificates of deposit was approximately $408.2 million, accounting for 7.9% of total deposits as of June 30, 2024 [77]. - Wholesale funding amounted to $2.12 billion, representing approximately 27.6% of total assets as of June 30, 2024 [172]. - Public funds deposits from local government entities totaled $531.5 million, accounting for 10.3% of total deposits as of June 30, 2024 [174]. Interest Rate and Risk Management - The weighted average nominal interest rate for total average deposits increased to 2.29% in 2024 from 1.31% in 2023 [79]. - The weighted average interest rate on FHLB advances increased to 5.07% in 2024 from 4.92% in 2023 [82]. - Kearny Bank utilized interest rate derivatives with a total notional amount of $2.75 billion to manage interest rate exposure [86]. - The company’s interest rate risk analysis measures the sensitivity of projected net interest income (NII) over a one-year period, utilizing a static balance sheet assumption [270]. - The Economic Value of Equity (EVE) is calculated to assess the impact of interest rate movements on the present value of expected cash flows from assets and liabilities [271]. - The company acknowledges that future interest rates and their effects on net interest income are unpredictable and based on numerous assumptions [276]. Regulatory and Compliance - Kearny Bank's regulatory capital requirements include a common equity Tier 1 capital ratio of 4.5%, a Tier 1 capital ratio of 6.0%, and a total capital ratio of 8.0% [103]. - As of June 30, 2024, Kearny Bank exceeded all regulatory capital requirements and was classified as "well capitalized" with a total risk-based capital ratio of 10.0% or greater [110]. - Kearny Financial must comply with consolidated capital requirements applicable to savings and loan holding companies with $3 billion or more in consolidated assets, and was in compliance as of June 30, 2024 [136]. - Kearny Bank did not opt into the community bank leverage ratio framework, which requires maintaining a leverage ratio of greater than 9.0% [109]. - Kearny Bank must file notice with the Federal Reserve Board at least thirty days before paying a dividend, which may be disapproved under certain conditions [113]. Economic and Operational Risks - Economic conditions, including inflation, could negatively impact the company's results of operations and financial condition [166]. - The company faces risks associated with system failures and cyber-security threats that could disrupt operations and negatively affect earnings [176][177]. - Severe weather events and natural disasters could lead to increased loan delinquencies and reduced demand for products and services, adversely impacting financial performance [167]. - Increased competition from financial services technology companies may pressure the company to lower interest rates or fees, affecting profitability [170]. - Changes in tax laws and regulations could adversely affect the company’s financial condition and results of operations, potentially increasing regulatory compliance costs [184]. Human Resources and Corporate Governance - Kearny Bank employed 552 employees as of June 30, 2024, with approximately 60% identifying as female [90]. - The company’s ability to attract and retain key personnel is crucial for executing its business strategy and maintaining client relationships [193]. - The company’s Board of Directors oversees the Asset/Liability Management (ALM) program to manage interest rate risk, which is operationally managed by the Asset/Liability Management Committee (ALCO) [269]. - The company’s Board of Directors actively engages in cybersecurity oversight, with the Risk Committee responsible for monitoring the information security program [197]. Investment Strategy and Performance - Kearny Financial's investment strategy includes actively managing its investment securities portfolio, which may lead to realized losses affecting net income [148]. - The company may incur impairment charges if the fair value of investment securities declines below their carrying value, impacting financial results [158]. - Gains from the sale of residential mortgage loans totaled $602,000 for the year ended June 30, 2024, a decline of 20.8% from $760,000 in the previous year [156]. - As of June 30, 2024, the company had investment securities with fair values of approximately $1.19 billion, including $150.1 million in gross unrealized losses [160].

Financial Performance - Kearny Financial Corp. reported a GAAP net loss of $90.1 million, or $1.45 per diluted share, for Q4 2024, primarily due to a non-cash goodwill impairment of $95.3 million[1]. - For the fiscal year ended June 30, 2024, the company reported a GAAP net loss of $86.7 million, or $1.39 per diluted share, compared to a net income of $40.8 million, or $0.63 per diluted share, for the previous year[2]. - Adjusted net income for Q4 2024 was $5.6 million, or $0.09 per diluted share, down from $7.4 million, or $0.12 per diluted share, in Q1 2024[1]. - The net loss for the quarter was $90.1 million, compared to a net income of $7.4 million in the previous quarter[21]. - Net loss for the year was $(86,667,000) in 2024, a significant decline from net income of $40,811,000 in 2023, representing a 312.4% change[32]. - Basic and diluted net loss per common share was $(1.39) in 2024, compared to earnings of $0.63 per share in 2023[32]. - The company reported a net loss of $90,079 thousand compared to a net income of $7,397 thousand in the previous quarter[51]. - Basic and diluted net loss per common share was $(1.45), compared to earnings of $0.12 in the previous quarter[51]. Asset and Equity Changes - Total assets decreased by $158.5 million, or 2.0%, to $7.68 billion from March 31, 2024, and by $381.4 million, or 4.7%, from June 30, 2023[6]. - Total stockholders' equity decreased by 11.2% to $753.6 million from $849.1 million[18]. - Book value per share fell by 11.2% to $11.70, while tangible book value per share increased slightly by 0.3% to $9.90[18]. - Total assets decreased by 2.4% to $7,878,292,000 in 2024 from $8,068,937,000 in 2023[35]. - Stockholders' equity decreased by $93,712, or 11.1%, from $844,782 to $751,070[23]. - Total stockholders' equity decreased to $753,571 thousand, down from $849,078 thousand, a decline of 11.3%[41]. Income and Expense Analysis - Non-interest expense increased by $97.5 million, or 335.5%, to $126.6 million for Q4 2024, primarily due to the goodwill impairment[12]. - Net interest income after provision for credit losses dropped by 12.4% to $29.7 million[21]. - Provision for credit losses surged by 910.6% to $3.5 million, indicating increased risk[21]. - Non-interest income increased by 38.1% to $5.8 million, driven by gains in electronic banking fees[21]. - Total non-interest expense skyrocketed by 335.5% to $126.6 million, primarily due to a goodwill impairment of $97.4 million[21]. - Total non-interest expense rose by 73.9% to $215,151,000 in 2024 from $123,751,000 in 2023, largely due to a goodwill impairment of $97,370,000[32]. - Non-interest income turned negative at $(1,993,000) in 2024, a decline of 172.4% from $2,751,000 in 2023[32]. Asset Quality and Loan Performance - Non-performing assets increased to $39.9 million, or 0.52% of total assets, from $39.5 million, or 0.50% of total assets, at March 31, 2024[12]. - Net charge-offs for Q4 2024 totaled $3.5 million, or 0.25% of average loans, compared to $286,000, or 0.02% of average loans, in Q1 2024[12]. - Nonperforming loans increased to $39,882 thousand, representing 0.70% of total loans, compared to 0.69% in the previous quarter[45]. - The allowance for credit losses on loans was $44,939 thousand, maintaining a ratio of 0.78% to total loans[45]. Dividend and Capital Ratios - The company declared a quarterly cash dividend of $0.11 per share, payable on August 26, 2024[3]. - Cash dividends declared remained stable at $0.11 per common share, with a dividend payout ratio of -7.7%[21]. - As of June 30, 2024, the tangible equity to tangible assets ratio increased to 8.43%, and the Common Equity Tier 1 Capital Ratio rose to 14.79%[16]. Interest Income and Yield - Total interest income increased by 12.0% to $328,868,000 in 2024 from $293,724,000 in 2023[32]. - Average yield on interest-earning assets increased by 0.08% from 4.51% to 4.59%[25]. - Average yield on interest-earning assets increased to 4.48% in 2024 from 3.91% in 2023[36]. - Average yield on loans receivable increased to 4.58% for the quarter ended June 30, 2024, compared to 4.45% in the prior quarter, reflecting a rise of 2.92%[57]. Efficiency and Operational Metrics - The efficiency ratio significantly increased to 323.81% for the quarter ended June 30, 2024, compared to 75.43% in the previous quarter, indicating a substantial rise in operational costs relative to income[57]. - Return on average assets (annualized) was -4.68% for the quarter ended June 30, 2024, down from 0.38% in the prior quarter, showing a decline in profitability[57]. - Non-interest expense (GAAP) for the quarter was $126,551 thousand, significantly higher than $29,059 thousand in the previous quarter due to non-recurring transactions[64]. - The adjusted efficiency ratio (non-GAAP) improved to 73.92% from 75.43% in the previous quarter, indicating better cost management[64].

FAIRFIELD, N.J., July 25, 2024 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the "Company"), the holding company of Kearny Bank (the "Bank"), reported a GAAP net loss for the quarter ended June 30, 2024 of $90.1 million, or $1.45 per diluted share, attributable to a non-cash, after-tax, goodwill impairment of $95.3 million. Excluding the impact of the goodwill impairment and other non-recurring transactions, adjusted net income for the quarter ended June 30, 2024 was $5.6 million, or $0.09 p ...

Company Overview - Kearny Financial Corp. is the parent company of Kearny Bank, headquartered in Fairfield, New Jersey, with 43 retail branch offices in northern and central New Jersey, as well as Brooklyn and Staten Island, New York [1] - As of March 31, 2024, Kearny Financial Corp. reported total assets of approximately $7.8 billion [1] Leadership Changes - Keith Suchodolski has been promoted to Senior Executive Vice President and Chief Operating Officer, effective July 1, 2024, having served in various leadership roles since 2013, including Chief Financial Officer since July 2018 [2][4] - Sean Byrnes has been promoted to Executive Vice President and Chief Financial Officer, also effective July 1, 2024. He joined the Bank in September 2020 and has held the position of Deputy Chief Financial Officer [4] Strategic Vision - Craig L. Montanaro, President and CEO, emphasized that Suchodolski's leadership and experience will be crucial in shaping and implementing the Company's strategic vision moving forward [3][5] - Byrnes will be responsible for all aspects of corporate finance and will collaborate with the senior leadership team to achieve the Company's strategic goals [4]

FAIRFIELD, N.J., June 20, 2024 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the "Company"), the holding company for Kearny Bank (the "Bank"), announced today that the Board of Directors promoted Keith Suchodolski to Senior Executive Vice President and Chief Operating Officer, effective July 1, 2024. Mr. Suchodolski has held progressive leadership roles within the Company since 2013, most recently serving as Chief Financial Officer since July 2018. In his new role, Mr. Suchodolski's range of ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________ FORM 10-Q __________________________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to Commission File Number 001-37399 __________ ...

Executive Summary & Q3 FY2024 Highlights [Q3 FY2024 Financial Performance Overview](index=1&type=section&id=Q3%20FY2024%20Financial%20Performance%20Overview) Kearny Financial Corp. reported **net income of $7.4 million** ($0.12 diluted EPS) in Q3 FY2024, reversing a prior quarter **$13.8 million net loss** Q3 FY2024 vs. Q2 FY2023 Net Income & EPS | Metric | Q3 FY2024 | Q2 FY2023 | | :---------------- | :-------- | :-------- | | Net Income | $7.4 million | $(13.8) million | | Diluted EPS | $0.12 | $(0.22) | [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) The Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on May 22, 2024 - Quarterly cash dividend declared: **$0.11 per share**[2](index=2&type=chunk) [CEO Commentary & Strategic Focus](index=1&type=section&id=CEO%20Commentary%20%26%20Strategic%20Focus) CEO Craig L. Montanaro emphasized prudent risk management, strong credit performance, and peer-leading capital levels amidst market uncertainty - Company maintains a low loan-to-value, low-vacancy, well-diversified commercial loan portfolio with outstanding credit performance[3](index=3&type=chunk) - Common Equity Tier 1 capital ratio: **14.7%**[3](index=3&type=chunk) Q3 FY2024 Financial Review [Balance Sheet Highlights](index=1&type=section&id=Balance%20Sheet%20Highlights) Total assets decreased slightly to **$7.84 billion**, with loan growth offset by declines in investment securities and deposits, while BOLI significantly increased Key Balance Sheet Changes (QoQ) | Metric | March 31, 2024 | Change from Dec 31, 2023 | Change Pct. | | :-------------------------- | :------------- | :----------------------- | :---------- | | Total assets | $7.84 billion | $(55.9) million | -0.7% | | Investment securities | $1.24 billion | $(47.8) million | -3.7% | | Loans receivable | $5.76 billion | $12.7 million | 0.2% | | Bank-owned life insurance (BOLI) | $296.5 million | $40.4 million | 15.8% | | Deposits | $5.21 billion | $(110.6) million | -2.1% | | Borrowings | $1.72 billion | $55.1 million | 3.3% | - Decrease in non-brokered deposits was driven by a **$48.4 million decline** in retail certificates of deposits and a **$15.7 million decline** in consumer savings deposits[5](index=5&type=chunk) - Available secured borrowing capacity: **$1.81 billion**, of which **$1.47 billion** was immediately accessible[5](index=5&type=chunk) [Earnings Highlights](index=2&type=section&id=Earnings%20Highlights) Net interest income decreased due to a contracted net interest margin, but non-interest income significantly increased, primarily due to the absence of prior period's investment securities portfolio repositioning losses and higher BOLI income [Net Interest Income and Net Interest Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income decreased by **$1.5 million** to **$34.3 million**, with the net interest margin contracting by **5 basis points** to **1.89%** Net Interest Income and Margin (QoQ) | Metric | Q3 FY2024 | Q2 FY2023 | Change | | :------------------ | :-------- | :-------- | :----- | | Net Interest Income | $34.3 million | $35.8 million | $(1.5) million | | Net Interest Margin | 1.89% | 1.94% | -5 bps | - Decrease in net interest margin driven by an increase in the cost of interest-bearing deposits and a decrease in the average balance of interest-earning assets, partially offset by a higher yield on interest-earning assets and a decrease in the cost of interest-bearing borrowings[9](index=9&type=chunk) [Non-Interest Income](index=2&type=section&id=Non-Interest%20Income) Total non-interest income significantly increased by **$20.2 million** to **$4.2 million**, primarily due to the absence of prior period's investment securities portfolio repositioning losses Non-Interest Income (QoQ) | Metric | Q3 FY2024 | Q2 FY2023 | Change | | :-------------------------- | :-------- | :-------- | :------- | | Total Non-Interest Income | $4.2 million | $(16.0) million | $20.2 million | | Income from BOLI | $3.0 million | $1.2 million | $1.8 million | | Loss on sale of loans | $(712,000) | $104,000 | $(816,000) | - Increase in non-interest income primarily attributable to the absence of a pre-tax loss of **$18.1 million** related to investment securities portfolio repositioning in the prior comparative period[9](index=9&type=chunk) - BOLI income included a **$631,000 non-recurring payment** in the current period and was reduced by **$573,000 non-recurring exchange charges** in the prior period, with underlying improvement from BOLI restructure[9](index=9&type=chunk) - Loss on sale of loans resulted from the sale of three related nonperforming commercial real estate loans held-for-sale[9](index=9&type=chunk) [Non-Interest Expense](index=2&type=section&id=Non-Interest%20Expense) Total non-interest expense decreased by **$708,000** to **$29.1 million**, driven by lower salary and benefits and other expenses Non-Interest Expense (QoQ) | Metric | Q3 FY2024 | Q2 FY2023 | Change | | :-------------------------- | :-------- | :-------- | :------- | | Total Non-Interest Expense | $29.1 million | $29.8 million | $(708,000) | | Salary and benefits expense | | | $(371,000) | | Other expense | | | $(522,000) | - Decrease in salary and benefits expense primarily attributable to a non-recurring decrease of **$679,000** in stock-based compensation, partially offset by an increase of **$374,000** in payroll taxes[9](index=9&type=chunk) - Decrease in other expense primarily driven by a **$637,000 decrease** in OREO expense following the sale of the Company's sole OREO asset[9](index=9&type=chunk) [Income Taxes](index=2&type=section&id=Income%20Taxes) Income tax expense decreased by **$0.1 million** to **$1.7 million**, largely due to discrete tax expense associated with BOLI restructure recognized in the prior period Income Tax Expense (QoQ) | Metric | Q3 FY2024 | Q2 FY2023 | Change | | :---------------- | :-------- | :-------- | :------- | | Income Tax Expense | $1.7 million | $1.8 million | $(0.1) million | - Decrease in income tax expense largely due to discrete tax expense associated with BOLI restructure recognized in the prior period, partially offset by higher pre-tax income[9](index=9&type=chunk) [Asset Quality Highlights](index=3&type=section&id=Asset%20Quality%20Highlights) Asset quality improved significantly, with non-performing assets decreasing by **$10.2 million** to **$39.5 million** (0.50% of total assets), driven by the sale of non-performing loans and OREO Asset Quality Metrics (QoQ) | Metric | March 31, 2024 | December 31, 2023 | Change | | :--------------------------------- | :------------- | :---------------- | :------- | | Non-performing assets | $39.5 million | $49.8 million | $(10.2) million | | Non-performing assets (% of total assets) | 0.50% | 0.63% | -0.13% | | Net charge-offs (annualized) | $286,000 (0.02%) | $4.1 million (0.29%) | $(3.8) million | | Provision for credit losses | $349,000 | $2.1 million | $(1.8) million | | Allowance for credit losses (ACL) | $44.9 million (0.78% of total loans) | $44.9 million (0.78% of total loans) | Unchanged | - Decrease in non-performing assets driven by the January 2024 sale of three related non-performing commercial real estate loans held-for-sale and the Company's sole OREO asset[14](index=14&type=chunk) - Provision for credit loss expense for Q3 FY2024 was primarily driven by loan growth[14](index=14&type=chunk) [Capital Highlights](index=3&type=section&id=Capital%20Highlights) Book value and tangible book value per share both increased by **$0.02** (0.2%), with the company maintaining strong regulatory capital ratios exceeding 'well-capitalized' levels Capital Metrics (QoQ) | Metric | March 31, 2024 | Change | | :--------------------------------- | :------------- | :------- | | Book value per share | $13.18 | $0.02 (0.2%) | | Tangible book value per share | $9.87 | $0.02 (0.2%) | | Tangible equity to tangible assets ratio | 8.34% | | - Total stockholders' equity included after-tax net unrealized losses on securities available for sale of **$95.0 million**, partially offset by after-tax unrealized gains on derivatives of **$31.3 million**[14](index=14&type=chunk) - 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'[14](index=14&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section includes a standard disclaimer regarding forward-looking statements, noting that such statements are subject to risks and uncertainties that could cause actual results to differ materially - Statements contained in this news release that are not historical facts are forward-looking statements subject to risks and uncertainties[13](index=13&type=chunk) Linked-Quarter Comparative Financial Analysis [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased slightly by **0.7%** to **$7.84 billion**, driven by lower investment securities and cash, partially offset by increased loans receivable and BOLI, while total liabilities decreased due to lower deposits Consolidated Balance Sheets (QoQ) | (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2024 | December 31, 2023 | Variance or Change | Variance or Change Pct. | | :------------------------------------------------------- | :------------- | :---------------- | :----------------- | :---------------------- | | Total assets | $7,841,972 | $7,897,832 | $(55,860) | -0.7% | | Loans receivable | $5,758,336 | $5,745,629 | $12,707 | 0.2% | | Bank owned life insurance | $296,493 | $256,064 | $40,429 | 15.8% | | Total deposits | $5,209,050 | $5,319,630 | $(110,580) | -2.1% | | Borrowings | $1,722,178 | $1,667,055 | $55,123 | 3.3% | | Total stockholders' equity | $849,078 | $847,978 | $1,100 | 0.1% | | Equity to assets | 10.83% | 10.74% | 0.09% | | | Tangible equity to tangible assets | 8.34% | 8.26% | 0.08% | | | Book value per share | $13.18 | $13.16 | $0.02 | 0.2% | | Tangible book value per share | $9.87 | $9.85 | $0.02 | 0.2% | [Consolidated Statements of Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)) The company reported a **net income of $7.4 million** for Q3 FY2024, a significant improvement from a **net loss of $13.8 million** in the previous quarter, driven by increased non-interest income and decreased non-interest expense Consolidated Statements of Income (Loss) (QoQ) | (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2024 | December 31, 2023 | Variance or Change | Variance or Change Pct. | | :------------------------------------------------------- | :------------- | :---------------- | :----------------- | :---------------------- | | Total interest income | $82,085 | $82,625 | $(540) | -0.7% | | Total interest expense | $47,766 | $46,786 | $980 | 2.1% | | Net interest income | $34,319 | $35,839 | $(1,520) | -4.2% | | Provision for credit losses | $349 | $2,105 | $(1,756) | -83.4% | | Total non-interest income | $4,203 | $(16,012) | $20,215 | 126.2% | | Total non-interest expense | $29,059 | $29,767 | $(708) | -2.4% | | Income (loss) before income taxes | $9,114 | $(12,045) | $21,159 | 175.7% | | Net income (loss) | $7,397 | $(13,827) | $21,224 | 153.5% | | Diluted EPS | $0.12 | $(0.22) | $0.34 | | | Dividend payout ratio | 92.5% | -49.8% | 142.3% | | [Average Balance Sheet Data](index=8&type=section&id=Average%20Balance%20Sheet%20Data) Average interest-earning assets decreased by **1.6%** to **$7.27 billion**, while average interest-bearing liabilities decreased by **1.3%** to **$6.36 billion**, leading to a slight contraction in their ratio Average Balance Sheet Data (QoQ) | (Dollars in Thousands) | March 31, 2024 | December 31, 2023 | Variance or Change | Variance or Change Pct. | | :--------------------- | :------------- | :---------------- | :----------------- | :---------------------- | | Total interest-earning assets | $7,274,310 | $7,390,251 | $(115,941) | -1.6% | | Total interest-bearing deposits | $4,719,570 | $4,790,411 | $(70,841) | -1.5% | | Total borrowings | $1,639,790 | $1,655,780 | $(15,990) | -1.0% | | Total interest-bearing liabilities | $6,359,360 | $6,446,191 | $(86,831) | -1.3% | | Average interest-earning assets to average interest-bearing liabilities | 114.39% | 114.65% | -0.26% | -0.2% | [Performance Ratio Highlights](index=9&type=section&id=Performance%20Ratio%20Highlights) Net interest margin contracted to **1.89%**, but the efficiency ratio significantly improved to **75.43%** from **150.13%**, and returns on average assets and equity turned positive, reflecting improved net income Performance Ratio Highlights (QoQ) | Metric | March 31, 2024 | December 31, 2023 | Variance | | :--------------------------------- | :------------- | :---------------- | :------- | | Average yield on interest-earning assets | 4.51% | 4.47% | 0.04% | | Average cost of interest-bearing liabilities | 3.00% | 2.90% | 0.10% | | Interest rate spread | 1.51% | 1.57% | -0.06% | | Net interest margin | 1.89% | 1.94% | -0.05% | | Non-interest income to average assets (annualized) | 0.21% | -0.81% | 1.02% | | Non-interest expense to average assets (annualized) | 1.48% | 1.50% | -0.02% | | Efficiency ratio | 75.43% | 150.13% | -74.70% | | Return on average assets (annualized) | 0.38% | -0.70% | 1.08% | | Return on average equity (annualized) | 3.50% | -6.59% | 10.09% | | Return on average tangible equity (annualized) | 4.68% | -8.84% | 13.52% | Five-Quarter Financial Trend Analysis [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets_5Q) Total assets have declined from **$8.35 billion** in March 2023 to **$7.84 billion** in March 2024, with loans receivable also decreasing, while deposits trended downwards and borrowings generally increased Consolidated Balance Sheets (Five-Quarter Trend) | (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :------------------------------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total assets | $7,841,972 | $7,897,832 | $7,974,866 | $8,064,815 | $8,349,336 | | Loans receivable | $5,758,336 | $5,745,629 | $5,736,049 | $5,829,421 | $5,966,325 | | Total deposits | $5,209,050 | $5,319,630 | $5,434,168 | $5,629,183 | $5,803,404 | | Borrowings | $1,722,178 | $1,667,055 | $1,626,933 | $1,506,812 | $1,611,692 | | Total stockholders' equity | $849,078 | $847,978 | $849,534 | $869,284 | $866,230 | | Equity to assets | 10.83% | 10.74% | 10.65% | 10.78% | 10.37% | | Tangible equity to tangible assets | 8.34% | 8.26% | 8.20% | 8.35% | 8.02% | | Book value per share | $13.18 | $13.16 | $13.04 | $13.20 | $12.99 | | Tangible book value per share | $9.87 | $9.85 | $9.77 | $9.96 | $9.79 | [Supplemental Balance Sheet Highlights](index=12&type=section&id=Supplemental%20Balance%20Sheet%20Highlights) This section details the five-quarter trends in loan portfolio composition, asset quality, and funding, showing declining commercial loans and deposits, increasing borrowings, and improved non-performing assets [Loan Portfolio Composition and Asset Quality](index=12&type=section&id=Loan%20Portfolio%20Composition%20and%20Asset%20Quality) Multi-family mortgages, the largest segment of the loan portfolio, have shown a declining trend, while total non-performing assets have generally decreased over the five quarters Loan Portfolio Composition (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Multi-family mortgage | $2,645,195 | $2,651,274 | $2,699,151 | $2,761,775 | $2,835,852 | | Total commercial loans | $3,987,517 | $3,964,628 | $4,025,884 | $4,103,819 | $4,216,057 | | One- to four-family residential mortgage | $1,741,644 | $1,746,065 | $1,689,051 | $1,700,559 | $1,713,343 | | Total loans, excluding yield adjustments | $5,775,090 | $5,756,938 | $5,760,475 | $5,850,476 | $5,976,368 | Asset Quality (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total nonperforming assets | $39,546 | $49,771 | $50,868 | $55,583 | $57,436 | | Nonperforming assets (% total assets) | 0.50% | 0.63% | 0.64% | 0.69% | 0.69% | | ACL to total loans | 0.78% | 0.78% | 0.81% | 0.83% | 0.82% | | Net charge-offs | $286 | $4,110 | $2,107 | $82 | $206 | [Funding Composition](index=13&type=section&id=Funding%20Composition) Total deposits have consistently declined over five quarters, while total borrowings have generally increased, leading to a higher loans-to-deposits ratio Funding Composition (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total deposits | $5,209,050 | $5,319,630 | $5,434,168 | $5,629,183 | $5,803,404 | | Total borrowings | $1,722,178 | $1,667,055 | $1,626,933 | $1,506,812 | $1,611,692 | | Loans as a % of deposits | 109.8% | 107.4% | 104.8% | 102.9% | 102.1% | | Deposits as a % of total funding | 75.2% | 76.1% | 77.0% | 78.9% | 78.3% | | Uninsured deposits (reported) | $1,760,740 | $1,813,122 | $1,734,288 | $1,771,416 | $1,678,051 | [Consolidated Statements of Income (Loss)](index=14&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)_5Q) Net interest income has consistently declined over five quarters, from **$42.37 million** to **$34.32 million**, while net income fluctuated, with a significant loss in December 2023 followed by a strong recovery Consolidated Statements of Income (Loss) (Five-Quarter Trend) | (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :------------------------------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Net interest income | $34,319 | $35,839 | $39,160 | $40,180 | $42,371 | | Provision for (reversal of) credit losses | $349 | $2,105 | $245 | $(306) | $451 | | Total non-interest income | $4,203 | $(16,012) | $4,010 | $3,666 | $1,646 | | Total non-interest expense | $29,059 | $29,767 | $29,774 | $28,761 | $30,352 | | Net income (loss) | $7,397 | $(13,827) | $9,842 | $12,013 | $10,312 | | Diluted EPS | $0.12 | $(0.22) | $0.16 | $0.19 | $0.16 | | Dividend payout ratio | 92.5% | -49.8% | 71.0% | 58.3% | 69.8% | [Average Balance Sheet Data](index=16&type=section&id=Average%20Balance%20Sheet%20Data_5Q) Average interest-earning assets have steadily decreased over five quarters, from **$7.69 billion** to **$7.27 billion**, with a similar decline in average interest-bearing liabilities Average Balance Sheet Data (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total interest-earning assets | $7,274,310 | $7,390,251 | $7,450,779 | $7,606,627 | $7,694,236 | | Total interest-bearing deposits | $4,719,570 | $4,790,411 | $4,933,851 | $5,153,792 | $5,291,831 | | Total borrowings | $1,639,790 | $1,655,780 | $1,544,571 | $1,474,371 | $1,403,880 | | Average interest-earning assets to average interest-bearing liabilities | 114.39% | 114.65% | 115.01% | 114.76% | 114.91% | [Performance Ratio Highlights](index=17&type=section&id=Performance%20Ratio%20Highlights_5Q) Net interest margin and interest rate spread have consistently declined over five quarters, while efficiency ratio and returns on assets and equity fluctuated, showing significant improvement in Q3 FY2024 after a prior dip Performance Ratio Highlights (Five-Quarter Trend) | Metric | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :--------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Net interest margin | 1.89% | 1.94% | 2.10% | 2.11% | 2.20% | | Interest rate spread | 1.51% | 1.57% | 1.77% | 1.81% | 1.93% | | Efficiency ratio | 75.43% | 150.13% | 68.97% | 65.60% | 68.96% | | Return on average assets (annualized) | 0.38% | -0.70% | 0.49% | 0.59% | 0.50% | | Return on average equity (annualized) | 3.50% | -6.59% | 4.57% | 5.58% | 4.69% | | Return on average tangible equity (annualized) | 4.68% | -8.84% | 6.07% | 7.41% | 6.20% | Reconciliation of GAAP to Non-GAAP Measures [Adjusted Net Income and Pre-tax, Pre-provision Net Revenue](index=18&type=section&id=Adjusted%20Net%20Income%20and%20Pre-tax,%20Pre-provision%20Net%20Revenue) Adjusted net income for Q2 FY2023 significantly improved from a GAAP loss to a positive figure after accounting for non-recurring items, providing a clearer view of underlying operational performance Adjusted Net Income and Pre-tax, Pre-provision Net Revenue (Five-Quarter Trend) | (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :------------------------------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Net income (loss) (GAAP) | $7,397 | $(13,827) | $9,842 | $12,013 | $10,312 | | Non-recurring transactions - net of tax: | | | | | | | Branch consolidation expenses | — | — | — | — | $568 | | Net effect of sale and call of securities | — | $12,876 | — | — | — | | Net effect of bank-owned life insurance restructure | — | $6,286 | — | — | — | | Adjusted net income | $7,397 | $5,335 | $9,842 | $12,013 | $10,880 | | Pre-tax, pre-provision net revenue (non-GAAP) | $9,463 | $(9,940) | $13,396 | $15,085 | $13,665 | | Earnings per share - diluted (GAAP) | $0.12 | $(0.22) | $0.16 | $0.19 | $0.16 | | Adjusted earnings per share - diluted (non-GAAP) | $0.12 | $0.09 | $0.16 | $0.19 | $0.17 | [Adjusted Returns and Efficiency Ratios](index=20&type=section&id=Adjusted%20Returns%20and%20Efficiency%20Ratios) Non-GAAP adjustments significantly transform Q2 FY2023's negative GAAP efficiency ratio and return on average tangible equity into positive adjusted figures, offering a clearer view of core operational performance Adjusted Returns and Efficiency Ratios (Five-Quarter Trend) | (Dollars and Shares in Thousands, Except Per Share Data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | | :------------------------------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Return on average tangible equity (non-GAAP) | 4.68% | -8.84% | 6.07% | 7.41% | 6.20% | | Adjusted return on average tangible equity (non-GAAP) | 4.68% | 3.41% | 6.07% | 7.41% | 6.54% | | Efficiency ratio (GAAP) | 75.43% | 150.13% | 68.97% | 65.60% | 68.96% | | Adjusted efficiency ratio (non-GAAP) | 75.43% | 77.25% | 68.97% | 65.60% | 67.14% |