[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements and management's analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Kearny Financial Corp.'s unaudited consolidated financial statements and detailed notes [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) This statement details assets, liabilities, and equity, showing increased total assets and deposits | Date | Amount (in Thousands) | | :--- | :--- | | March 31, 2025 | $7,733,141 | | June 30, 2024 | $7,683,461 | | Date | Amount (in Thousands) | | :--- | :--- | | March 31, 2025 | $6,985,028 | | June 30, 2024 | $6,929,890 | | Date | Amount (in Thousands) | | :--- | :--- | | March 31, 2025 | $748,113 | | June 30, 2024 | $753,571 | - Key Asset Changes (March 31, 2025 vs. June 30, 2024): - Cash and cash equivalents: Increased from **$63.9 million** to **$126.1 million**[10](index=10&type=chunk) - Net loans receivable: Increased from **$5.69 billion** to **$5.80 billion**[10](index=10&type=chunk) - Investment securities available for sale: Decreased from **$1.07 billion** to **$1.00 billion**[10](index=10&type=chunk) - Key Liability Changes (March 31, 2025 vs. June 30, 2024): - Total deposits: Increased from **$5.16 billion** to **$5.71 billion**[10](index=10&type=chunk) - Borrowings: Decreased from **$1.71 billion** to **$1.21 billion**[10](index=10&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This statement presents financial performance, showing increased nine-month net income **Net Income (Three Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $6,648 | | 2024 | $7,397 | **Net Income (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $19,306 | | 2024 | $3,412 | **Basic EPS (Three Months Ended March 31):** | Year | EPS | | :--- | :--- | | 2025 | $0.11 | | 2024 | $0.12 | **Basic EPS (Nine Months Ended March 31):** | Year | EPS | | :--- | :--- | | 2025 | $0.31 | | 2024 | $0.06 | **Total Non-Interest Income (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $14,061 | | 2024 | $(7,799) | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement details net income and other comprehensive income components, showing an increase **Total Comprehensive Income (Three Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $9,617 | | 2024 | $7,568 | **Total Comprehensive Income (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $13,341 | | 2024 | $9,209 | **Net unrealized gain (loss) on securities available for sale (Three Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $9,701 | | 2024 | $(6,449) | **Fair value adjustments on derivatives (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $(18,881) | | 2024 | $(10,206) | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This statement illustrates changes in stockholders' equity, showing a slight decrease for the nine-month period - Total Stockholders' Equity (March 31, 2025): **$748.1 million**[18](index=18&type=chunk) - Total Stockholders' Equity (June 30, 2024): **$753.6 million**[18](index=18&type=chunk) - Cash dividends declared (Nine Months Ended March 31, 2025): **$(20.7) million**[18](index=18&type=chunk) - Net income (Nine Months Ended March 31, 2025): **$19.3 million**[18](index=18&type=chunk) - Other comprehensive loss, net of income tax (Nine Months Ended March 31, 2025): **$(6.0) million**[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement categorizes cash movements, showing a significant net increase from financing activities **Net Cash Provided by Operating Activities (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $16,683 | | 2024 | $36,713 | **Net Cash Provided by Investing Activities (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $10,824 | | 2024 | $202,278 | **Net Cash Provided by (Used in) Financing Activities (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $34,724 | | 2024 | $(238,479) | **Net Increase in Cash and Cash Equivalents (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $62,231 | | 2024 | $512 | **Cash and Cash Equivalents - Ending (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $126,095 | | 2024 | $71,027 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures for financial statements, covering policies, events, and instruments [Note 1. Summary of Significant Accounting Policies](index=10&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines consolidation principles and presentation basis, confirming GAAP adherence - The unaudited consolidated financial statements include Kearny Financial Corp., its wholly-owned subsidiary Kearny Bank, and the Bank's wholly-owned subsidiaries[25](index=25&type=chunk) - Statements are prepared in conformity with GAAP and instructions for Form 10-Q, with all necessary adjustments included[26](index=26&type=chunk) - No material changes to the Company's significant accounting policies since June 30, 2024[28](index=28&type=chunk) [Note 2. Subsequent Events](index=10&type=section&id=2.%20SUBSEQUENT%20EVENTS) This note details subsequent events, including a declared quarterly cash dividend of $0.11 per share - On April 23, 2025, the Company declared a quarterly cash dividend of **$0.11 per share**[29](index=29&type=chunk) - The dividend is payable on May 21, 2025, to stockholders of record as of May 7, 2025[29](index=29&type=chunk) [Note 3. Recent Accounting Pronouncements](index=10&type=section&id=3.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) This note discusses recent ASUs, with most not materially impacting financials, but one is under evaluation - ASU 2023-07 (Segment Reporting): Not expected to have a material effect as the Company has one reportable segment[30](index=30&type=chunk) - ASU 2023-09 (Income Taxes): Not expected to have a material effect[31](index=31&type=chunk) - ASU 2024-01 (Compensation-Stock Compensation): Not expected to have an impact[32](index=32&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures): The Company is currently evaluating the impact[33](index=33&type=chunk) [Note 4. Securities](index=11&type=section&id=4.%20SECURITIES) This note details the securities portfolio, with AFS securities at $1.00 billion fair value and HTM at $124.9 million **Total Securities Available for Sale (March 31, 2025):** | Metric | Amount (in Thousands) | | :--- | :--- | | Amortized Cost | $1,116,087 | | Gross Unrealized Gains | $2,230 | | Gross Unrealized Losses | $114,924 | | Fair Value | $1,003,393 | **Total Securities Held to Maturity (March 31, 2025):** | Metric | Amount (in Thousands) | | :--- | :--- | | Amortized Cost | $124,859 | | Gross Unrecognized Gains | $47 | | Gross Unrecognized Losses | $14,056 | | Fair Value | $110,850 | - Securities Pledged (March 31, 2025): **$888.0 million**[42](index=42&type=chunk) - Management believes unrealized losses on securities are due to market interest rates and credit spreads, not changes in credit quality[43](index=43&type=chunk) - No allowance for credit losses was recorded for available for sale or held to maturity securities at March 31, 2025[43](index=43&type=chunk)[45](index=45&type=chunk) [Note 5. Loans Receivable](index=15&type=section&id=5.%20LOANS%20RECEIVABLE) This note details the loan portfolio, which increased to $5.85 billion, with nonperforming loans decreasing - Total Loans (March 31, 2025): **$5.85 billion**[47](index=47&type=chunk) **Loan Portfolio Composition (March 31, 2025):** | Loan Type | Amount (in Thousands) | | :--- | :--- | | Multi-family mortgage | $2,733,406 | | Nonresidential mortgage | $988,074 | | Commercial business | $140,224 | | Construction | $174,722 | | One- to four-family residential mortgage | $1,761,465 | | Home equity loans | $49,699 | | Other consumer | $2,859 | - Total Past Due Loans (March 31, 2025): **$40.9 million**[49](index=49&type=chunk) - Total Nonperforming Loans (March 31, 2025): **$37.7 million**[51](index=51&type=chunk) - Loan Modifications (Nine Months Ended March 31, 2025): Totaled **$34.0 million**, primarily multi-family mortgages (**$33.8 million**)[53](index=53&type=chunk) - Mortgage Loans in Foreclosure (March 31, 2025): One residential mortgage loan with a carrying value of **$558.1 thousand** and five commercial mortgage loans with aggregate carrying values totaling **$15.1 million**[67](index=67&type=chunk) [Note 6. Allowance for Credit Losses](index=23&type=section&id=6.%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note details the ACL on loans, which decreased slightly to $44.5 million, driven by lower loss rates - Total Allowance for Credit Losses on Loans (March 31, 2025): **$44.5 million**[69](index=69&type=chunk) - Total Allowance for Credit Losses on Loans (June 30, 2024): **$44.9 million**[70](index=70&type=chunk) **Provision for credit losses (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $581 | | 2024 | $2,699 | - The decrease in ACL was primarily due to a decrease in the quantitative reserve on one- to four-family residential mortgage loans due to lower assumed loss rates and a decrease in individually analyzed reserves on nonresidential mortgage loans[74](index=74&type=chunk) - Allowance for Credit Losses on Off Balance Sheet Commitments (March 31, 2025): **$990 thousand**[75](index=75&type=chunk) [Note 7. Deposits](index=26&type=section&id=7.%20DEPOSITS) This note breaks down deposits by type, showing a significant increase to $5.71 billion - Total Deposits (March 31, 2025): **$5.71 billion**[76](index=76&type=chunk) - Total Deposits (June 30, 2024): **$5.16 billion**[76](index=76&type=chunk) **Deposit Composition (March 31, 2025):** | Deposit Type | Amount (in Thousands) | | :--- | :--- | | Non-interest-bearing demand | $587,118 | | Interest-bearing demand | $2,410,925 | | Savings | $758,239 | | Certificates of deposits | $1,951,066 | [Note 8. Borrowings](index=26&type=section&id=8.%20BORROWINGS) This note details borrowings, which decreased to $1.21 billion due to reduced FHLB advances - Total Borrowings (March 31, 2025): **$1.21 billion**[77](index=77&type=chunk) - Total Borrowings (June 30, 2024): **$1.71 billion**[77](index=77&type=chunk) - FHLB advances (March 31, 2025): **$1.03 billion**[77](index=77&type=chunk) - Federal Reserve Bank Term Funding Program ("BTFP") borrowings (March 31, 2025): **$0**[77](index=77&type=chunk) - FHLB advances and overnight line of credit borrowings were collateralized by FHLB capital stock and mortgage loans totaling approximately **$3.29 billion** at March 31, 2025[79](index=79&type=chunk) [Note 9. Derivative Instruments and Hedging Activities](index=27&type=section&id=9.%20DERIVATIVE%20INSTRUMENTS%20AND%20HEDGING%20ACTIVITIES) This note details derivative instruments used for interest rate risk management, with asset derivatives' fair value decreasing - Fair Value of Asset Derivatives (March 31, 2025): **$23.4 million**[82](index=82&type=chunk) - Fair Value of Asset Derivatives (June 30, 2024): **$54.4 million**[82](index=82&type=chunk) - Fair Value of Liability Derivatives (March 31, 2025): **$3.9 million**[82](index=82&type=chunk) - As of March 31, 2025, the Company had **16 interest rate swaps, caps, and collars** with a notional amount of **$1.83 billion** hedging specific wholesale funding, and **five interest rate floors** with a notional amount of **$550.0 million** hedging floating-rate available for sale securities[83](index=83&type=chunk) - For cash flow hedges on wholesale funding, an estimated **$14.2 million** will be reclassified as a reduction in interest expense in the next twelve months[85](index=85&type=chunk) - As of March 31, 2025, the Company had **five interest rate swaps** with a notional amount of **$775.0 million** hedging fixed-rate residential mortgage loans[88](index=88&type=chunk) [Note 10. Benefit Plans](index=30&type=section&id=10.%20BENEFIT%20PLANS) This note outlines benefit plan expenses and details the granting of restricted stock units **Net periodic benefit cost (Three Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $66 | | 2024 | $75 | **Net periodic benefit cost (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $183 | | 2024 | $221 | - During the nine months ended March 31, 2025, the Company granted **380,007 restricted stock units (RSUs)**, consisting of **278,530 service-based RSUs** and **101,477 performance-based RSUs**[96](index=96&type=chunk) [Note 11. Income Taxes](index=31&type=section&id=11.%20INCOME%20TAXES) This note reconciles income taxes, showing a decreased effective tax rate due to lower pre-tax income **Total Income Tax Expense (Three Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $1,200 | | 2024 | $1,717 | **Total Income Tax Expense (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $3,537 | | 2024 | $6,808 | **Effective Income Tax Rate (Three Months Ended March 31):** | Year | Rate | | :--- | :--- | | 2025 | 15.29% | | 2024 | 18.84% | **Effective Income Tax Rate (Nine Months Ended March 31):** | Year | Rate | | :--- | :--- | | 2025 | 15.48% | | 2024 | 66.61% | [Note 12. Fair Value of Financial Instruments](index=31&type=section&id=12.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note explains fair value estimation for financial instruments, categorizing inputs and presenting measurements - Total Securities Available for Sale (March 31, 2025): **$1.00 billion** (Level 2)[103](index=103&type=chunk) - Interest Rate Contracts (Assets, March 31, 2025): **$23.4 million** (Level 2)[103](index=103&type=chunk) - Collateral Dependent Loans (March 31, 2025): **$7.8 million** (Level 3)[106](index=106&type=chunk) - At March 31, 2025, collateral dependent loans valued using Level 3 inputs comprised loans with principal balances totaling **$7.8 million** and a valuation allowance of **$8 thousand**[109](index=109&type=chunk) - The fair value of collateral dependent loans is generally determined based on an independent appraisal of the underlying collateral, adjusted for estimated selling costs[107](index=107&type=chunk)[108](index=108&type=chunk) [Note 13. Comprehensive Income (Loss)](index=37&type=section&id=13.%20COMPREHENSIVE%20INCOME%20(LOSS)) This note details AOCL components, which increased to $(69.1) million, driven by derivative fair value adjustments - Total Accumulated Other Comprehensive Loss (March 31, 2025): **$(69.1) million**[118](index=118&type=chunk) - Total Accumulated Other Comprehensive Loss (June 30, 2024): **$(63.2) million**[118](index=118&type=chunk) - Net unrealized loss on securities available for sale (March 31, 2025): **$(80.1) million** (net of tax)[118](index=118&type=chunk) - Fair value adjustments on derivatives (March 31, 2025): **$10.7 million** (net of tax)[118](index=118&type=chunk) **Total Other Comprehensive Income (Loss) (Nine Months Ended March 31):** | Year | Amount (in Thousands) | | :--- | :--- | | 2025 | $(5,965) | | 2024 | $5,797 | [Note 14. Net Income Per Common Share ("EPS")](index=38&type=section&id=14.%20NET%20INCOME%20PER%20COMMON%20SHARE%20(%22EPS%22)) This note presents basic and diluted EPS calculations, showing a significant increase in diluted EPS **Basic EPS (Nine Months Ended March 31):** | Year | EPS | | :--- | :--- | | 2025 | $0.31 | | 2024 | $0.06 | **Diluted EPS (Nine Months Ended March 31):** | Year | EPS | | :--- | :--- | | 2025 | $0.31 | | 2024 | $0.06 | - Weighted average number of common shares outstanding - diluted (Nine Months Ended March 31, 2025): **62,705 thousand**[120](index=120&type=chunk) - Stock options for **2,751,902 shares** and **444,202 RSUs** were anti-dilutive for the nine months ended March 31, 2025[120](index=120&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition and operating results, covering policies and performance [Forward-Looking Statements](index=39&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements about forward-looking information, noting potential material differences - Forward-looking statements are based on current management expectations and may differ materially from actual results[123](index=123&type=chunk) - Factors influencing actual results include general economic and geopolitical conditions, legislative and regulatory changes, interest rates, inflation, and competition[123](index=123&type=chunk) - The Company disclaims any obligation to publicly release revisions to forward-looking statements[123](index=123&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) This section highlights critical accounting policies requiring significant judgment, with no material changes - Accounting policies requiring significant judgment or discretion are considered critical[124](index=124&type=chunk) - No material changes to critical accounting policies since June 30, 2024[124](index=124&type=chunk) [Comparison of Financial Condition at March 31, 2025 and June 30, 2024](index=39&type=section&id=Comparison%20of%20Financial%20Condition%20at%20March%2031%2C%202025%20and%20June%2030%2C%202024) Total assets increased by $49.7 million to $7.73 billion, while deposits rose and borrowings fell - Total Assets: Increased **$49.7 million** to **$7.73 billion** at March 31, 2025, from **$7.68 billion** at June 30, 2024[125](index=125&type=chunk) - Investment Securities Available for Sale: Decreased **$69.4 million** to **$1.00 billion**, due to principal repayments of **$146.8 million**, partially offset by purchases of **$58.9 million** and an **$18.0 million** increase in fair value[126](index=126&type=chunk) - Net Loans Receivable: Increased **$113.9 million**, or **2.0%**, to **$5.80 billion**[129](index=129&type=chunk) - Total Deposits: Increased **$549.2 million**, or **10.6%**, to **$5.71 billion**, driven by a reallocation from FHLB advances into brokered certificates of deposits and growth in deposits from branch network and digital channels[138](index=138&type=chunk) - Borrowings: Decreased **$495.8 million** to **$1.21 billion**, primarily reflecting a decrease in FHLB and other borrowings[139](index=139&type=chunk) - Stockholders' Equity: Decreased **$5.5 million** to **$748.1 million**, largely reflected cash dividends of **$20.7 million** and an other comprehensive loss of **$6.0 million**, partially offset by net income of **$19.3 million**[142](index=142&type=chunk) [Comparison of Operating Results for the Quarter Ended March 31, 2025 and March 31, 2024](index=42&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Quarter%20Ended%20March%2031%2C%202025%20and%20March%2031%2C%202024) Quarterly net income decreased to $6.6 million ($0.11 diluted EPS) due to higher non-interest expense - Net Income (Q1 2025): **$6.6 million**, or **$0.11 per diluted share**[144](index=144&type=chunk) - Net Income (Q1 2024): **$7.4 million**, or **$0.12 per diluted share**[144](index=144&type=chunk) - Net Interest Income: Decreased by **$277 thousand** to **$34.0 million**[145](index=145&type=chunk) - Net Interest Margin: Increased **one basis point** to **1.90%**[146](index=146&type=chunk) - Non-Interest Income: Increased **$359 thousand** to **$4.6 million**, with a gain on sale of loans of **$112 thousand** compared to a loss of **$712 thousand** in the prior year period[154](index=154&type=chunk)[155](index=155&type=chunk) - Non-Interest Expense: Increased **$1.3 million** to **$30.4 million**, driven by higher salaries and employee benefits (**$789 thousand**), net occupancy expense (**$212 thousand**), equipment and systems (**$98 thousand**), and advertising and marketing (**$222 thousand**)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Provision for Income Taxes: Decreased **$517 thousand** to **$1.2 million**, reflecting a lower level of pre-tax income[160](index=160&type=chunk) [Comparison of Operating Results for the Nine Months Ended March 31, 2025 and March 31, 2024](index=44&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Nine%20Months%20Ended%20March%2031%2C%202025%20and%20March%2031%2C%202024) Nine-month net income significantly increased to $19.3 million ($0.31 diluted EPS) due to higher non-interest income - Net Income (9M 2025): **$19.3 million**, or **$0.31 per diluted share**[161](index=161&type=chunk) - Net Income (9M 2024): **$3.4 million**, or **$0.06 per diluted share**[161](index=161&type=chunk) - Net Interest Income: Decreased by **$10.2 million** to **$99.1 million**[162](index=162&type=chunk) - Net Interest Margin: Decreased **14 basis points** to **1.84%**[163](index=163&type=chunk) - Non-Interest Income: Increased **$21.9 million** to **$14.1 million**, primarily due to the absence of an **$18.1 million** loss on sale of securities in the prior year and improved income from bank owned life insurance[170](index=170&type=chunk)[171](index=171&type=chunk)[174](index=174&type=chunk) - Provision for Credit Losses: Decreased **$2.1 million** to **$581 thousand**[169](index=169&type=chunk) - Non-Interest Expense: Increased **$1.1 million** to **$89.7 million**, driven by higher salaries and employee benefits (**$823 thousand**), net occupancy expense (**$409 thousand**), equipment and systems (**$235 thousand**), and advertising and marketing (**$346 thousand**)[176](index=176&type=chunk)[177](index=177&type=chunk) - Provision for Income Taxes: Decreased **$3.3 million** to **$3.5 million**, reflecting the absence of **$5.7 million** of discrete tax cost associated with the BOLI restructure in the prior year period[179](index=179&type=chunk)[180](index=180&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $126.1 million cash and $1.00 billion AFS securities, exceeding capital requirements - Liquidity (March 31, 2025): **$126.1 million** of short-term cash and cash equivalents and **$1.00 billion** of investment securities available for sale[183](index=183&type=chunk) - Available Secured Borrowing Capacity (March 31, 2025): **$2.34 billion** from the Federal Reserve discount window and the FHLBNY without pledging additional collateral[183](index=183&type=chunk) - Outstanding Commitments to Originate and Purchase Loans (March 31, 2025): **$37.0 million**[184](index=184&type=chunk) **Bank Capital Ratios (March 31, 2025):** | Ratio | Actual | Minimum for Adequacy | Minimum for Well Capitalized | | :--- | :--- | :--- | :--- | | Total capital (to risk-weighted assets) | 14.41% | 8.00% | 10.00% | | Tier 1 capital (to risk-weighted assets) | 13.57% | 6.00% | 8.00% | | Common equity tier 1 capital (to risk-weighted assets) | 13.57% | 4.50% | 6.50% | | Tier 1 capital (to adjusted total assets) | 8.65% | 4.00% | 5.00% | - The Bank actively seeks to maintain its status as a well-capitalized institution in accordance with regulatory standards[187](index=187&type=chunk) [Off-Balance Sheet Arrangements](index=50&type=section&id=Off-Balance%20Sheet%20Arrangements) The company uses off-balance sheet arrangements primarily for credit commitments, with no significant capital expenditures - No significant off-balance sheet commitments for capital expenditures as of March 31, 2025[189](index=189&type=chunk) - Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract[186](index=186&type=chunk) - Construction loans in process and unused lines of credit were **$93.9 million** and **$164.8 million**, respectively, at March 31, 2025[185](index=185&type=chunk) [Recent Accounting Pronouncements](index=50&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 3 for discussion on the impact of recent accounting pronouncements - Refer to Note 3 to the unaudited consolidated financial statements for a discussion of the expected impact of recently issued accounting pronouncements[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company manages interest rate risk via its ALM program, analyzing NII and EVE sensitivity to rate changes - Interest rate risk is a significant form of market risk managed through an Asset/Liability Management ("ALM") program[191](index=191&type=chunk) - Quantitative analysis measures the sensitivity of projected Net Interest Income (NII) over a one-year period and the Economic Value of Equity (EVE) to movements in interest rates[192](index=192&type=chunk)[193](index=193&type=chunk) - EVE Sensitivity (March 31, 2025, 0 bps change): **$635.4 million**[195](index=195&type=chunk) - NII Sensitivity (March 31, 2025, 1 to 12 Months, 0 bps change): **$158.8 million**[195](index=195&type=chunk) - The model measures changes throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve up and down **100, 200 and 300 basis points**[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control - The Company's disclosure controls and procedures were evaluated and concluded to be effective as of March 31, 2025[199](index=199&type=chunk) - No material changes in the Company's internal control over financial reporting occurred during the quarter ended March 31, 2025[200](index=200&type=chunk) [PART II—OTHER INFORMATION](index=53&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section provides other information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) Neither the Company nor the Bank were involved in material legal proceedings as of March 31, 2025 - Neither the Company nor the Bank were involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business[203](index=203&type=chunk) - Amounts involved in legal proceedings are in the aggregate believed by management to be immaterial to the financial condition of the Company and the Bank[203](index=203&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K - No material changes to the Risk Factors previously disclosed under Item 1A of the Company's Annual Report on Form 10-K for the year ended June 30, 2024[204](index=204&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase any common stock shares during the three months ended March 31, 2025 - The Company did not repurchase any shares of its common stock during the three month period ended March 31, 2025[205](index=205&type=chunk) [Item 3. Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the current reporting period - Not applicable[206](index=206&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the current reporting period - Not applicable[207](index=207&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter - During the three months ended March 31, 2025, none of the Company's directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement"[208](index=208&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including corporate documents, certifications, and XBRL financial statements - Exhibits include Articles of Incorporation, Amended and Restated Bylaws, and Form of Common Stock Certificate[209](index=209&type=chunk) - Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed[209](index=209&type=chunk) - The Consolidated Statements of Financial Condition, Income, Comprehensive Income, Changes in Stockholder's Equity, Cash Flows, and Notes to Consolidated Financial Statements are formatted in Inline XBRL[209](index=209&type=chunk) [SIGNATURES](index=55&type=section&id=SIGNATURES) The report is duly signed by the President and CEO, and Executive Vice President and CFO, on May 7, 2025 [Signatures](index=55&type=section&id=SIGNATURES) The report is signed by the President and CEO, and Executive Vice President and CFO, on May 7, 2025 - The report is signed by Craig L. Montanaro, President and Chief Executive Officer, and Sean Byrnes, Executive Vice President and Chief Financial Officer[213](index=213&type=chunk) - The signing date for the report is May 7, 2025[213](index=213&type=chunk)

[Executive Summary & Dividend Declaration](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Dividend%20Declaration) This section summarizes the company's third-quarter fiscal 2025 results, dividend declaration, and CEO commentary [Third Quarter Fiscal 2025 Results](index=1&type=section&id=1.1%20Third%20Quarter%20Fiscal%202025%20Results) Kearny Financial Corp. reported stable net income for the third quarter of fiscal 2025 compared to the previous quarter, with a slight increase in diluted earnings per share Net Income and EPS (QoQ) | Metric | Quarter Ended March 31, 2025 | Quarter Ended December 31, 2024 | | :------------------- | :--------------------------- | :------------------------------ | | Net Income | $6.6 million | $6.6 million | | Diluted EPS | $0.11 | $0.10 | [Dividend Declaration](index=1&type=section&id=1.2%20Dividend%20Declaration) The Board of Directors declared a quarterly cash dividend of $0.11 per share, consistent with the previous quarter - A quarterly cash dividend of **$0.11 per share** was declared, payable on May 21, 2025, to stockholders of record as of May 7, 2025[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=1.3%20CEO%20Commentary) President and CEO Craig L. Montanaro highlighted a $1.4 million quarter-over-quarter growth in net interest income and an 8 basis point expansion in net interest margin, driven by loan and deposit growth and a decrease in the cost of funds. He expressed confidence in sustaining performance despite market volatility - Net interest income grew by **$1.4 million** quarter over quarter, leading to an **eight basis point** net interest margin expansion[3](index=3&type=chunk) - Margin expansion was attributed to growth in net loans and deposits, coupled with a **24 basis point** decrease in the cost of funds[3](index=3&type=chunk) - The Company anticipates continued strong margin expansion into the June quarter and is confident in its ability to sustain performance despite volatile market conditions[3](index=3&type=chunk) [Financial Performance Highlights](index=1&type=section&id=2.%20Financial%20Performance%20Highlights) This section details the company's financial performance, including balance sheet, earnings, asset quality, and capital [Balance Sheet Highlights](index=1&type=section&id=2.1%20Balance%20Sheet%20Highlights) As of March 31, 2025, total assets slightly increased, driven by growth in loans receivable and deposits, while investment securities and borrowings decreased Key Balance Sheet Changes (QoQ) | Metric | March 31, 2025 | December 31, 2024 | Change ($M) | Change (%) | | :--------------------- | :------------- | :---------------- | :---------- | :--------- | | Total Assets | $7.73 billion | $7.73 billion | $1.8 | 0.0% | | Investment Securities | $1.13 billion | $1.15 billion | ($17.3) | -1.5% | | Loans Receivable | $5.85 billion | $5.79 billion | $54.4 | 0.9% | | Deposits | $5.71 billion | $5.67 billion | $36.3 | 0.6% | | Borrowings | $1.21 billion | $1.26 billion | ($45.0) | -3.6% | - Growth in loans receivable was primarily due to **non-residential mortgage loans**[5](index=5&type=chunk) - Deposit increase was driven by **interest-bearing demand and consumer savings deposits**, partially offset by a decrease in non-interest-bearing demand deposits (excluding a single large outflow, non-interest bearing deposits increased **2.5%**)[5](index=5&type=chunk) - Borrowings decreased due to reductions in **Federal Home Loan Bank (FHLB) overnight borrowings**[5](index=5&type=chunk) [Earnings Overview](index=2&type=section&id=2.2%20Earnings%20Overview) The Company experienced an increase in net interest income and a decrease in non-interest income, while non-interest expenses rose, leading to a slight increase in net income [Net Interest Income and Net Interest Margin](index=2&type=section&id=2.2.1%20Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income increased by $1.4 million, and net interest margin expanded by eight basis points to 1.90%, primarily due to lower cost deposits and reduced borrowings Net Interest Income and Margin (QoQ) | Metric | Quarter Ended March 31, 2025 | Quarter Ended December 31, 2024 | Change ($M) | Change (bps) | | :----------------- | :--------------------------- | :------------------------------ | :---------- | :----------- | | Net Interest Income| $34.0 million | $32.6 million | $1.4 | - | | Net Interest Margin| 1.90% | 1.82% | - | 8 | - The increase in net interest margin was driven by the paydown of borrowings resulting from growth in **lower cost deposits** and **broad-based decreases in deposit rates**, partially offset by reduced yields on interest-earning assets[10](index=10&type=chunk) [Non-Interest Income](index=2&type=section&id=2.2.2%20Non-Interest%20Income) Non-interest income decreased by $311,000, or 6.4%, primarily due to lower gains on sale of loans and electronic banking fees Non-Interest Income Changes (QoQ) | Metric | Quarter Ended March 31, 2025 | Quarter Ended December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :--------------------------- | :------------------------------ | :--------- | :--------- | | Total Non-Interest Income | $4.6 million | $4.9 million | ($311,000) | -6.4% | | Gain on Sale of Loans | $112,000 | $304,000 | ($192,000) | -63.2% | | Electronic Banking Fees | $391,000 | $493,000 | ($102,000) | -20.7% | - The decrease in gain on sale of loans largely reflected a **seasonal decrease in residential mortgage loans sold**[10](index=10&type=chunk) - The decrease in electronic banking fees and charges largely reflected the **absence of a non-recurring increase** recorded in the prior period[10](index=10&type=chunk) [Non-Interest Expense](index=2&type=section&id=2.2.3%20Non-Interest%20Expense) Non-interest expense increased by $829,000, or 2.8%, driven by higher salary and benefits, net occupancy, advertising, and other expenses Non-Interest Expense Changes (QoQ) | Metric | Quarter Ended March 31, 2025 | Quarter Ended December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :--------------------------- | :------------------------------ | :--------- | :--------- | | Total Non-Interest Expense | $30.4 million | $29.6 million | $829,000 | 2.8% | | Salary and Benefits | $17.7 million | $17.6 million | $121,000 | 0.7% | | Net Occupancy Expense | $3.1 million | $2.8 million | $244,000 | 8.6% | | Advertising and Marketing | $609,000 | $311,000 | $298,000 | 95.8% | | Other Expense | $3.3 million | $3.1 million | $225,000 | 7.3% | - Salary and benefits increased primarily due to **higher payroll taxes and employee benefits** associated with the start of a new calendar year, partially offset by a non-recurring decrease in stock-based compensation[10](index=10&type=chunk) - Net occupancy expense increased due to **seasonally higher snow removal expenses**[10](index=10&type=chunk) - Advertising and marketing expense increased due to **marketing campaigns supporting loan and deposit growth initiatives**[10](index=10&type=chunk) [Income Taxes](index=2&type=section&id=2.2.4%20Income%20Taxes) Income tax expense slightly decreased, resulting in a lower effective tax rate for the quarter Income Tax Expense and Effective Rate (QoQ) | Metric | Quarter Ended March 31, 2025 | Quarter Ended December 31, 2024 | | :-------------------- | :--------------------------- | :------------------------------ | | Income Tax Expense | $1.2 million | $1.3 million | | Effective Tax Rate | 15.3% | 16.0% | [Asset Quality](index=3&type=section&id=2.3%20Asset%20Quality) Asset quality remained stable with non-performing assets consistent quarter-over-quarter. Net charge-offs decreased, but the provision for credit losses increased Asset Quality Metrics (QoQ) | Metric | March 31, 2025 | December 31, 2024 | | :----------------------------------- | :------------- | :---------------- | | Non-performing Assets | $37.7 million | $37.7 million | | Non-performing Assets (% of total assets) | 0.49% | 0.49% | | Net Charge-offs | $368,000 | $573,000 | | Net Charge-off Rate (annualized) | 0.03% | 0.04% | | Provision for Credit Losses | $366,000 | $107,000 | | ACL | $44.5 million | $44.5 million | | ACL (% of total loans) | 0.76% | 0.77% | - The provision for credit loss expense for the quarter ended March 31, 2025, was primarily driven by the **charge-offs**[15](index=15&type=chunk) [Capital](index=3&type=section&id=2.4%20Capital) The Company's capital position remained strong, with increases in both book value and tangible book value per share, and regulatory capital ratios exceeding 'well-capitalized' levels Capital Metrics (QoQ) | Metric | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------- | :------------- | :---------------- | :--------- | :--------- | | Book Value Per Share | $11.58 | $11.53 | $0.05 | 0.4% | | Tangible Book Value Per Share | $9.80 | $9.75 | $0.05 | 0.5% | | Tangible Equity to Tangible Assets Ratio | 8.31% | - | - | - | - Total stockholders' equity included after-tax net unrealized losses on securities available for sale of **$80.1 million**, partially offset by after-tax unrealized gains on derivatives of **$10.7 million**[15](index=15&type=chunk) - The Company and the Bank maintained regulatory capital ratios in excess of the levels required to be classified as **'well-capitalized'**[15](index=15&type=chunk) [Comparative Financial Analysis - Linked-Quarter](index=4&type=section&id=3.%20Comparative%20Financial%20Analysis%20-%20Linked-Quarter) This section provides a detailed quarter-over-quarter comparison of consolidated financial statements and performance ratios [Consolidated Balance Sheets (Linked-Quarter)](index=4&type=section&id=3.1%20Consolidated%20Balance%20Sheets%20%28Linked-Quarter%29) This section provides a detailed comparison of the Company's consolidated balance sheets for the quarters ended March 31, 2025, and December 31, 2024, highlighting changes in assets, liabilities, and stockholders' equity Consolidated Balance Sheets (QoQ) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | Variance or Change | Variance or Change Pct. | | :--------------------- | :------------- | :---------------- | :----------------- | :---------------------- | | Cash and cash equivalents | $126,095 | $141,554 | ($15,459) | -10.9 % | | Securities available for sale | $1,003,393 | $1,018,279 | ($14,886) | -1.5 % | | Loans receivable | $5,846,175 | $5,791,758 | $54,417 | 0.9 % | | Total assets | $7,733,141 | $7,731,385 | $1,756 | 0.0 % | | Non-interest-bearing deposits | $587,118 | $601,510 | ($14,392) | -2.4 % | | Interest-bearing deposits | $5,120,230 | $5,069,550 | $50,680 | 1.0 % | | Total deposits | $5,707,348 | $5,671,060 | $36,288 | 0.6 % | | Borrowings | $1,213,976 | $1,258,949 | ($44,973) | -3.6 % | | Total liabilities | $6,985,028 | $6,986,532 | ($1,504) | -0.0 % | | Total stockholders' equity | $748,113 | $744,853 | $3,260 | 0.4 % | | Equity to assets | 9.67 % | 9.63 % | 0.04 % | - | | Book value per share | $11.58 | $11.53 | $0.05 | 0.4 % | [Consolidated Statements of Income (Linked-Quarter)](index=5&type=section&id=3.2%20Consolidated%20Statements%20of%20Income%20%28Linked-Quarter%29) This section presents a comparative analysis of the Company's consolidated statements of income for the quarters ended March 31, 2025, and December 31, 2024, detailing changes in interest income, interest expense, non-interest income, and non-interest expense Consolidated Statements of Income (QoQ) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | Variance or Change | Variance or Change Pct. | | :--------------------- | :------------- | :---------------- | :----------------- | :---------------------- | | Total interest income | $79,334 | $81,485 | ($2,151) | -2.6 % | | Total interest expense | $45,292 | $48,873 | ($3,581) | -7.3 % | | Net interest income | $34,042 | $32,612 | $1,430 | 4.4 % | | Provision for credit losses | $366 | $107 | $259 | 242.1 % | | Total non-interest income | $4,562 | $4,873 | ($311) | -6.4 % | | Total non-interest expense | $30,390 | $29,561 | $829 | 2.8 % | | Income before income taxes | $7,848 | $7,817 | $31 | 0.4 % | | Income taxes | $1,200 | $1,251 | ($51) | -4.1 % | | Net income | $6,648 | $6,566 | $82 | 1.2 % | | Diluted EPS | $0.11 | $0.10 | $0.01 | - | | Cash dividends declared per common share | $0.11 | $0.11 | — | - | [Average Balance Sheet Data (Linked-Quarter)](index=6&type=section&id=3.3%20Average%20Balance%20Sheet%20Data%20%28Linked-Quarter%29) This section provides average balance sheet data for the quarters ended March 31, 2025, and December 31, 2024, detailing average interest-earning assets, interest-bearing liabilities, and their respective components Average Balance Sheet Data (QoQ) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | Variance or Change | Variance or Change Pct. | | :--------------------- | :------------- | :---------------- | :----------------- | :---------------------- | | Total interest-earning assets | $7,176,528 | $7,173,918 | $2,610 | 0.0 % | | Loans receivable, including loans held for sale | $5,805,045 | $5,762,053 | $42,992 | 0.7 % | | Total interest-bearing deposits | $5,103,596 | $4,973,900 | $129,696 | 2.6 % | | Total borrowings | $1,122,347 | $1,241,977 | ($119,630) | -9.6 % | | Total interest-bearing liabilities | $6,225,943 | $6,215,877 | $10,066 | 0.2 % | | Total assets | $7,633,734 | $7,633,900 | ($166) | -0.0 % | | Stockholders' equity | $745,225 | $747,850 | ($2,625) | -0.4 % | [Performance Ratio Highlights (Linked-Quarter)](index=7&type=section&id=3.4%20Performance%20Ratio%20Highlights%20%28Linked-Quarter%29) This section highlights key performance ratios for the quarters ended March 31, 2025, and December 31, 2024, including yields on assets, costs of liabilities, interest rate spread, net interest margin, and profitability ratios Performance Ratio Highlights (QoQ) | Metric | March 31, 2025 | December 31, 2024 | Variance or Change | | :----------------------------------- | :------------- | :---------------- | :----------------- | | Average yield on total interest-earning assets | 4.42 % | 4.54 % | -0.12 % | | Average cost of total interest-bearing liabilities | 2.91 % | 3.15 % | -0.24 % | | Interest rate spread | 1.51 % | 1.39 % | 0.12 % | | Net interest margin | 1.90 % | 1.82 % | 0.08 % | | Non-interest income to average assets (annualized) | 0.24 % | 0.26 % | -0.02 % | | Non-interest expense to average assets (annualized) | 1.59 % | 1.55 % | 0.04 % | | Efficiency ratio | 78.72 % | 78.86 % | -0.14 % | | Return on average assets (annualized) | 0.35 % | 0.34 % | 0.01 % | | Return on average equity (annualized) | 3.57 % | 3.51 % | 0.06 % | | Return on average tangible equity (annualized) | 4.28 % | 4.21 % | 0.07 % | [Five-Quarter Financial Trend Analysis](index=8&type=section&id=4.%20Five-Quarter%20Financial%20Trend%20Analysis) This section offers a comprehensive five-quarter trend analysis of financial statements, loan portfolio, funding, and key ratios [Consolidated Balance Sheets (Five-Quarter Trend)](index=8&type=section&id=4.1%20Consolidated%20Balance%20Sheets%20%28Five-Quarter%20Trend%29) This section provides a five-quarter trend analysis of the Company's consolidated balance sheets, offering a broader perspective on asset, liability, and equity movements from March 2024 to March 2025 Consolidated Balance Sheets (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total assets | $7,733,141 | $7,731,385 | $7,772,379 | $7,683,461 | $7,841,972 | | Loans receivable | $5,846,175 | $5,791,758 | $5,784,246 | $5,732,787 | $5,758,336 | | Total deposits | $5,707,348 | $5,671,060 | $5,470,512 | $5,158,123 | $5,209,050 | | Borrowings | $1,213,976 | $1,258,949 | $1,479,888 | $1,709,789 | $1,722,178 | | Total stockholders' equity | $748,113 | $744,853 | $751,537 | $753,571 | $849,078 | | Equity to assets | 9.67 % | 9.63 % | 9.67 % | 9.81 % | 10.83 % | | Book value per share | $11.58 | $11.53 | $11.64 | $11.70 | $13.18 | [Supplemental Balance Sheet Highlights - Loan Portfolio & Asset Quality (Five-Quarter Trend)](index=9&type=section&id=4.2%20Supplemental%20Balance%20Sheet%20Highlights%20-%20Loan%20Portfolio%20%26%20Asset%20Quality%20%28Five-Quarter%20Trend%29) This section details the composition of the loan portfolio and key asset quality metrics over the past five quarters, showing trends in commercial, residential, and consumer loans, as well as non-performing assets and credit loss allowances Loan Portfolio Composition (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total commercial loans | $4,036,426 | $3,985,261 | $3,970,269 | $3,945,910 | $3,987,517 | | One- to four-family residential mortgage | $1,761,465 | $1,765,160 | $1,768,230 | $1,756,051 | $1,741,644 | | Total consumer loans | $52,558 | $49,879 | $47,706 | $46,789 | $45,929 | | Total loans, excluding yield adjustments | $5,850,449 | $5,800,300 | $5,786,205 | $5,748,750 | $5,775,090 | Asset Quality Metrics (Five-Quarter Trend) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :----------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total nonperforming assets | $37,683 | $37,697 | $39,854 | $39,882 | $39,546 | | Nonperforming assets (% total assets) | 0.49 % | 0.49 % | 0.51 % | 0.52 % | 0.50 % | | ACL to total loans | 0.76 % | 0.77 % | 0.78 % | 0.78 % | 0.78 % | | Net charge-offs | $368 | $573 | $124 | $3,518 | $286 | [Supplemental Balance Sheet Highlights - Funding Composition (Five-Quarter Trend)](index=10&type=section&id=4.3%20Supplemental%20Balance%20Sheet%20Highlights%20-%20Funding%20Composition%20%28Five-Quarter%20Trend%29) This section provides a five-quarter overview of the Company's funding composition, including trends in various deposit types, borrowings, and the proportion of uninsured deposits Funding Composition (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Non-interest-bearing deposits | $587,118 | $601,510 | $592,099 | $598,367 | $586,089 | | Interest-bearing deposits | $5,120,230 | $5,069,550 | $4,878,413 | $4,559,757 | $4,622,961 | | Total deposits | $5,707,348 | $5,671,060 | $5,470,512 | $5,158,124 | $5,209,050 | | Total borrowings | $1,213,976 | $1,258,949 | $1,479,888 | $1,709,789 | $1,722,178 | | Deposits as a % of total funding | 82.5 % | 81.8 % | 78.7 % | 75.1 % | 75.2 % | | Borrowings as a % of total funding | 17.5 % | 18.2 % | 21.3 % | 24.9 % | 24.8 % | | Uninsured deposits (reported) | $1,959,070 | $1,935,607 | $1,799,726 | $1,772,623 | $1,760,740 | [Consolidated Statements of Income (Loss) (Five-Quarter Trend)](index=11&type=section&id=4.4%20Consolidated%20Statements%20of%20Income%20%28Loss%29%20%28Five-Quarter%20Trend%29) This section provides a five-quarter trend analysis of the Company's consolidated statements of income (loss), illustrating the evolution of interest income, interest expense, non-interest income, non-interest expense, and net income Consolidated Statements of Income (Loss) (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total interest income | $79,334 | $81,485 | $83,252 | $82,990 | $82,085 | | Total interest expense | $45,292 | $48,873 | $50,806 | $49,714 | $47,766 | | Net interest income | $34,042 | $32,612 | $32,446 | $33,276 | $34,319 | | Provision for credit losses | $366 | $107 | $108 | $3,527 | $349 | | Total non-interest income | $4,562 | $4,873 | $4,626 | $5,806 | $4,203 | | Total non-interest expense | $30,390 | $29,561 | $29,786 | $126,551 | $29,059 | | Net income (loss) | $6,648 | $6,566 | $6,092 | ($90,079) | $7,397 | | Diluted EPS | $0.11 | $0.10 | $0.10 | ($1.45) | $0.12 | | Dividend payout ratio | 104.3 % | 105.6 % | 113.2 % | -7.7 % | 92.5 % | [Average Balance Sheet Data (Five-Quarter Trend)](index=12&type=section&id=4.5%20Average%20Balance%20Sheet%20Data%20%28Five-Quarter%20Trend%29) This section provides average balance sheet data over five quarters, offering insights into the trends of average interest-earning assets, interest-bearing liabilities, and their components Average Balance Sheet Data (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Total interest-earning assets | $7,176,528 | $7,173,918 | $7,220,763 | $7,228,543 | $7,274,310 | | Loans receivable, including loans held-for-sale | $5,805,045 | $5,762,053 | $5,761,593 | $5,743,008 | $5,752,477 | | Total interest-bearing deposits | $5,103,596 | $4,973,900 | $4,706,437 | $4,555,941 | $4,719,570 | | Total borrowings | $1,122,347 | $1,241,977 | $1,562,594 | $1,735,653 | $1,639,790 | | Total assets | $7,633,734 | $7,633,900 | $7,688,433 | $7,695,080 | $7,851,721 | | Stockholders' equity | $745,225 | $747,850 | $750,678 | $751,070 | $844,782 | [Performance Ratio Highlights (Five-Quarter Trend)](index=13&type=section&id=4.6%20Performance%20Ratio%20Highlights%20%28Five-Quarter%20Trend%29) This section presents a five-quarter trend analysis of key performance ratios, including average yields, costs, interest rate spread, net interest margin, and profitability metrics, providing a historical view of the Company's operational efficiency and financial health Performance Ratio Highlights (Five-Quarter Trend) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :----------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Average yield on total interest-earning assets | 4.42 % | 4.54 % | 4.61 % | 4.59 % | 4.51 % | | Average cost of total interest-bearing liabilities | 2.91 % | 3.15 % | 3.24 % | 3.16 % | 3.00 % | | Interest rate spread | 1.51 % | 1.39 % | 1.37 % | 1.43 % | 1.51 % | | Net interest margin | 1.90 % | 1.82 % | 1.80 % | 1.84 % | 1.89 % | | Efficiency ratio | 78.72 % | 78.86 % | 80.35 % | 323.81 % | 75.43 % | | Return on average assets (annualized) | 0.35 % | 0.34 % | 0.32 % | -4.68 % | 0.38 % | | Return on average equity (annualized) | 3.57 % | 3.51 % | 3.25 % | -47.97 % | 3.50 % | [Reconciliation of GAAP to Non-GAAP Measures](index=14&type=section&id=5.%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles GAAP financial metrics to non-GAAP adjusted measures for core performance analysis [Adjusted Net Income and Pre-tax, Pre-provision Net Revenue](index=14&type=section&id=5.1%20Adjusted%20Net%20Income%20and%20Pre-tax%2C%20Pre-provision%20Net%20Revenue) This section reconciles GAAP net income to adjusted net income and calculates pre-tax, pre-provision net revenue by adjusting for non-recurring transactions like goodwill impairment and the net effect of bank-owned life insurance restructure Adjusted Net Income and Pre-tax, Pre-provision Net Revenue (Five-Quarter Trend) | (Dollars in Thousands) | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :--------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Net income (loss) (GAAP) | $6,648 | $6,566 | $6,092 | ($90,079) | $7,397 | | Adjusted net income | $6,648 | $6,566 | $6,092 | $5,596 | $7,397 | | Pre-tax, pre-provision net revenue (non-GAAP) | $8,214 | $7,924 | $7,286 | ($87,469) | $9,463 | [Adjusted Earnings Per Share](index=14&type=section&id=5.2%20Adjusted%20Earnings%20Per%20Share) This section provides the reconciliation of GAAP earnings per share to adjusted earnings per share, reflecting the impact of non-recurring items on per-share metrics Adjusted Earnings Per Share (Five-Quarter Trend) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :----------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Earnings per share - basic (GAAP) | $0.11 | $0.11 | $0.10 | ($1.45) | $0.12 | | Adjusted earnings per share - basic (non-GAAP) | $0.11 | $0.11 | $0.10 | $0.09 | $0.12 | | Earnings per share - diluted (GAAP) | $0.11 | $0.10 | $0.10 | ($1.45) | $0.12 | | Adjusted earnings per share - diluted (non-GAAP) | $0.11 | $0.10 | $0.10 | $0.09 | $0.12 | [Adjusted Return on Average Assets and Equity](index=15&type=section&id=5.3%20Adjusted%20Return%20on%20Average%20Assets%20and%20Equity) This section reconciles GAAP return on average assets and equity to their adjusted non-GAAP counterparts, providing a clearer view of core profitability by excluding the effects of non-recurring items Adjusted Return on Average Assets and Equity (Five-Quarter Trend) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :----------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Return on average assets (GAAP) | 0.35 % | 0.34 % | 0.32 % | -4.68 % | 0.38 % | | Adjusted return on average assets (non-GAAP) | 0.35 % | 0.34 % | 0.32 % | 0.29 % | 0.38 % | | Return on average equity (GAAP) | 3.57 % | 3.51 % | 3.25 % | -47.97 % | 3.50 % | | Adjusted return on average equity (non-GAAP) | 3.57 % | 3.51 % | 3.25 % | 2.98 % | 3.50 % | | Return on average tangible equity (non-GAAP) | 4.28 % | 4.21 % | 3.89 % | 3.33 % | 4.68 % | | Adjusted return on average tangible equity (non-GAAP) | 4.28 % | 4.21 % | 3.89 % | 3.58 % | 4.68 % | [Adjusted Non-Interest Expense Ratio and Efficiency Ratio](index=15&type=section&id=5.4%20Adjusted%20Non-Interest%20Expense%20Ratio%20and%20Efficiency%20Ratio) This section provides the reconciliation of GAAP non-interest expense ratio and efficiency ratio to their adjusted non-GAAP equivalents, offering a normalized view of operational efficiency by excluding specific non-recurring expenses Adjusted Non-Interest Expense Ratio and Efficiency Ratio (Five-Quarter Trend) | Metric | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | | :----------------------------------- | :------------- | :---------------- | :----------------- | :------------ | :------------- | | Non-interest expense (GAAP) | $30,390 | $29,561 | $29,786 | $126,551 | $29,059 | | Non-interest expense (non-GAAP) | $30,390 | $29,561 | $29,786 | $29,181 | $29,059 | | Non-interest expense ratio (GAAP) | 1.59 % | 1.55 % | 1.55 % | 6.58 % | 1.48 % | | Adjusted non-interest expense ratio (non-GAAP) | 1.59 % | 1.55 % | 1.55 % | 1.52 % | 1.48 % | | Efficiency ratio (GAAP) | 78.72 % | 78.86 % | 80.35 % | 323.81 % | 75.43 % | | Adjusted efficiency ratio (non-GAAP) | 78.72 % | 78.86 % | 80.35 % | 73.92 % | 75.43 % |

Core Points - Kearny Financial Corp. reported a net income of $6.6 million for the quarter ended March 31, 2025, which is an increase from $6.6 million for the previous quarter, with diluted earnings per share rising from $0.10 to $0.11 [1][21][24] - The Board of Directors declared a quarterly cash dividend of $0.11 per share, payable on May 21, 2025 [2] - The company experienced a quarter-over-quarter net interest income growth of $1.4 million, leading to an expansion of net interest margin by eight basis points [3][5] Financial Performance - Total assets increased to $7.73 billion, up by $1.8 million from the previous quarter [7] - Loans receivable rose to $5.85 billion, reflecting a growth of $54.4 million or 0.9%, primarily due to non-residential mortgage loans [7] - Deposits increased to $5.71 billion, a rise of $36.3 million or 0.6%, driven by interest-bearing demand deposits and consumer savings deposits [7] - Non-interest income decreased by $311,000 or 6.4% to $4.6 million, mainly due to lower gains on loan sales and electronic banking fees [6][8][24] Expense and Taxation - Non-interest expenses increased by $829,000 or 2.8% to $30.4 million, primarily due to higher salaries and benefits, net occupancy, and advertising expenses [9][13] - Income tax expense totaled $1.2 million, resulting in an effective tax rate of 15.3% for the quarter [10] Asset Quality and Capital - Non-performing assets remained stable at $37.7 million, representing 0.49% of total assets [14] - The allowance for credit losses was $44.5 million, or 0.76% of total loans, showing a slight decrease from the previous quarter [14] - Book value per share increased by $0.05 to $11.58, while tangible book value per share also rose by $0.05 to $9.80 [14]

Financial Position - Total assets increased by $47.9 million to $7.73 billion at December 31, 2024, from $7.68 billion at June 30, 2024[118] - Total deposits increased by $512.9 million, or 9.9%, to $5.67 billion at December 31, 2024, from $5.16 billion at June 30, 2024[130] - Total assets decreased to $7.66 billion as of December 31, 2024, from $7.98 billion a year earlier[1] - Total investment securities available for sale decreased by $54.6 million to $1.02 billion at December 31, 2024[119] - Uninsured deposits totaled $1.96 billion as of December 31, 2024, compared to $1.77 billion as of June 30, 2024[130] Loan and Credit Quality - Net loans receivable rose by $59.5 million, or 1.0%, to $5.75 billion at December 31, 2024, compared to $5.69 billion at June 30, 2024[122] - Nonperforming assets decreased by $2.2 million to $37.7 million, or 0.49% of total assets, at December 31, 2024[125] - The allowance for credit losses totaled $44.5 million, or 0.77% of total loans, at December 31, 2024[127] - Provision for credit losses decreased $2.0 million to $107,000 for the quarter ended December 31, 2024, compared to $2.1 million for the same quarter in 2023[144] - Provision for credit losses decreased by $2.1 million to $215,000 for the six months ended December 31, 2024, driven primarily by loan growth[2] Income and Expenses - Net income for the quarter ended December 31, 2024 was $6.6 million, or $0.10 per diluted share, compared to a net loss of $13.8 million, or $0.22 per diluted share, for the same period in 2023[136] - Net income for the six months ended December 31, 2024 was $12.7 million, or $0.20 per diluted share, compared to a net loss of $4.0 million, or $0.06 per diluted share, for the same period in 2023[154] - Net interest income decreased by $3.2 million to $32.6 million for the quarter ended December 31, 2024, down from $35.8 million in the prior year[137] - Net interest income for the six months ended December 31, 2024 decreased by $9.9 million to $65.1 million compared to $75.0 million for the same period in 2023[155] - Total non-interest income increased $20.9 million to $4.9 million for the quarter ended December 31, 2024, compared to a loss of $16.0 million for the same period in 2023[145] - Total non-interest income increased by $21.5 million to $9.5 million for the six months ended December 31, 2024, compared to a loss of $12.0 million in the prior year[3] - Total non-interest expense decreased $206,000 to $29.6 million for the quarter ending December 31, 2024, compared to $29.8 million in the prior year[149] - Income from BOLI increased $1.5 million to $2.6 million for the quarter ended December 31, 2024, primarily due to improved income from the BOLI restructure[148] Capital and Ratios - Stockholders' equity decreased by $8.7 million to $744.9 million at December 31, 2024, primarily due to cash dividends of $13.8 million[134] - Book value per share decreased by $0.16 to $11.53 at December 31, 2024[135] - Total capital to risk-weighted assets at December 31, 2024, was $699,334, representing a ratio of 14.49%, exceeding the minimum requirement of 8.00%[178] - Tier 1 capital to risk-weighted assets at December 31, 2024, was $658,410, with a ratio of 13.64%, above the minimum requirement of 6.00%[178] - Common equity tier 1 capital to risk-weighted assets at December 31, 2024, was $658,410, with a ratio of 13.64%, surpassing the minimum requirement of 4.50%[178] Interest Rate Risk - Economic Value of Equity (EVE) decreased by 39.08% to $346,622 under a +300 basis points interest rate scenario as of December 31, 2024[187] - Net interest income (NII) decreased by 8.72% to $136,617 under a +300 basis points interest rate scenario as of December 31, 2024[187] - Interest rate risk is managed through an Asset/Liability Management program overseen by the Board of Directors, with sensitivity analyses conducted for both earnings and capital[183][184] - The sensitivity of EVE and NII to interest rate changes is influenced by the composition and allocation of the balance sheet and the use of off-balance sheet instruments[188] - Future interest rates and their impact on net interest income are unpredictable and based on numerous assumptions, including market interest rates and borrower behavior[189] Other Financial Metrics - Total interest-earning assets were $7.20 billion with an average yield of 4.58% for the six months ended December 31, 2024, compared to $7.42 billion and 4.41% in 2023[1] - Total interest-bearing liabilities were $6.24 billion with an average cost of 3.19% for the six months ended December 31, 2024, compared to $6.46 billion and 2.75% in 2023[1] - Commitments to originate and purchase loans totaled $94.8 million as of December 31, 2024, up from $47.9 million at June 30, 2024[4] - Effective tax rate for the quarter ended December 31, 2024 was 16.0%, compared to (14.8)% for the same period in 2023[153] - Effective tax rate decreased to 15.6% for the six months ended December 31, 2024, from 460.3% in the prior year[4] - Equipment and systems expense increased by $137,000 to $7.8 million for the quarter ended December 31, 2024, due to ongoing digital banking initiatives[4]

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) Kearny Financial Corp. reported increased net income and EPS for Q2 FY2025, with management highlighting robust deposit growth and expanding net interest margin [Second Quarter Fiscal 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%20Fiscal%202025%20Performance%20Overview) Kearny Financial Corp. reported an increase in net income and earnings per share for the quarter ended December 31, 2024, compared to the previous quarter. The Board of Directors also declared a quarterly cash dividend Key Financial Performance (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :--------------------------- | :----------------------- | :----------------------- | :----- | :---------- | | Net Income | $6.6 million | $6.1 million | $0.5 million | 8.2% | | Basic EPS | $0.11 | $0.10 | $0.01 | 10.0% | | Diluted EPS | $0.10 | $0.10 | $0.00 | 0.0% | | Quarterly Cash Dividend per Share | $0.11 | $0.11 | $0.00 | 0.0% | - The Company's Board of Directors declared a quarterly cash dividend of **$0.11 per share**, payable on February 26, 2025, to stockholders of record as of February 12, 2025[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) President and CEO Craig L. Montanaro noted the early stages of growth in net interest income and expansion of net interest margin. He highlighted robust deposit growth of 3.7% quarter-over-quarter, which allowed for a reduction in outstanding borrowings and a 9 basis point decrease in the cost of funds. Montanaro anticipates continued positive deposit trends and reinvestment of low-coupon cash flows to serve as future earnings tailwinds - Net interest income and net interest margin showed early stages of growth[3](index=3&type=chunk) - Deposits grew by **3.7%** from September 30, 2024, driven by branch network, digital channels, and commercial lending relationships[3](index=3&type=chunk) - Outstanding borrowings were reduced, and the cost of funds decreased by **nine basis points** quarter-over-quarter[3](index=3&type=chunk) - Positive deposit trends and reinvestment of low-coupon cash flows from loan and securities portfolios are expected to be earnings tailwinds in coming quarters[3](index=3&type=chunk) [Balance Sheet Review](index=1&type=section&id=Balance%20Sheet%20Review) The company's balance sheet reflects a slight asset decrease, significant deposit growth enabling borrowing reduction, and stable asset quality with a shift in funding composition [Key Balance Sheet Changes (QoQ)](index=1&type=section&id=Key%20Balance%20Sheet%20Changes%20(QoQ)) The Company's total assets experienced a slight decrease, while deposits saw significant growth, enabling a substantial reduction in borrowings. Loans receivable showed a minor increase, and available secured borrowing capacity improved Key Balance Sheet Changes (QoQ) | Metric | Dec 31, 2024 | Sep 30, 2024 | Change | Change Pct. | | :-------------------------------- | :----------- | :----------- | :------- | :---------- | | Total assets | $7.73 billion | $7.77 billion | $(41.0) million | -0.5% | | Investment securities | $1.15 billion | $1.21 billion | $(57.5) million | -4.8% | | Loans receivable | $5.79 billion | $5.78 billion | $7.5 million | 0.1% | | Deposits | $5.67 billion | $5.47 billion | $200.5 million | 3.7% | | Borrowings | $1.26 billion | $1.48 billion | $(220.9) million | -14.9% | | Available secured borrowing capacity | $2.32 billion | $2.06 billion | $256.0 million | 12.4% | - The increase in deposits was primarily driven by increases in interest and non-interest bearing demand deposits (**$142.1 million**) and consumer savings deposits (**$60.6 million**)[5](index=5&type=chunk) - The decrease in borrowings reflected reductions in Federal Home Loan Bank ("FHLB") and other borrowings[5](index=5&type=chunk) [Consolidated Balance Sheets (QoQ)](index=4&type=section&id=Consolidated%20Balance%20Sheets%20(QoQ)) The consolidated balance sheet provides a detailed quarter-over-quarter comparison of assets, liabilities, and stockholders' equity, highlighting specific changes in various accounts such as cash, securities, loans, deposits, and borrowings Consolidated Balance Sheets (QoQ) | (Dollars and Shares in Thousands, Except Per Share Data) | December 31, 2024 | September 30, 2024 | Variance or Change | Variance or Change Pct. | | :------------------------------------------------------- | :---------------- | :----------------- | :----------------- | :---------------------- | | **Assets** | | | | | | Cash and cash equivalents | $141,554 | $155,574 | $(14,020) | -9.0 % | | Securities available for sale | 1,018,279 | 1,070,811 | (52,532) | -4.9 % | | Securities held to maturity | 127,266 | 132,256 | (4,990) | -3.8 % | | Loans held-for-sale | 5,695 | 8,866 | (3,171) | -35.8 % | | Loans receivable | 5,791,758 | 5,784,246 | 7,512 | 0.1 % | | Less: allowance for credit losses on loans | (44,457) | (44,923) | (466) | -1.0 % | | Net loans receivable | 5,747,301 | 5,739,323 | 7,978 | 0.1 % | | Premises and equipment | 45,127 | 45,189 | (62) | -0.1 % | | Federal Home Loan Bank stock | 64,443 | 57,706 | 6,737 | 11.7 % | | Accrued interest receivable | 27,772 | 29,467 | (1,695) | -5.8 % | | Goodwill | 113,525 | 113,525 | — | — % | | Core deposit intangible | 1,679 | 1,805 | (126) | -7.0 % | | Bank owned life insurance | 301,339 | 300,186 | 1,153 | 0.4 % | | Deferred income taxes, net | 53,325 | 50,131 | 3,194 | 6.4 % | | Other assets | 84,080 | 67,540 | 16,540 | 24.5 % | | **Total assets** | **$7,731,385** | **$7,772,379** | **$(40,994)** | **-0.5 %** | | **Liabilities** | | | | | | Deposits: | | | | | | Non-interest-bearing | $601,510 | $592,099 | $9,411 | 1.6 % | | Interest-bearing | 5,069,550 | 4,878,413 | 191,137 | 3.9 % | | Total deposits | 5,671,060 | 5,470,512 | 200,548 | 3.7 % | | Borrowings | 1,258,949 | 1,479,888 | (220,939) | -14.9 % | | Advance payments by borrowers for taxes | 17,986 | 17,824 | 162 | 0.9 % | | Other liabilities | 38,537 | 52,618 | (14,081) | -26.8 % | | **Total liabilities** | **6,986,532** | **7,020,842** | **(34,310)** | **-0.5 %** | | **Stockholders' Equity** | | | | | | Common stock | 646 | 646 | — | — % | | Paid-in capital | 494,092 | 493,523 | 569 | 0.1 % | | Retained earnings | 342,155 | 342,522 | (367) | -0.1 % | | Unearned ESOP shares | (19,943) | (20,430) | 487 | 2.4 % | | Accumulated other comprehensive loss | (72,097) | (64,724) | (7,373) | -11.4 % | | **Total stockholders' equity** | **744,853** | **751,537** | **(6,684)** | **-0.9 %** | | **Total liabilities and stockholders' equity** | **$7,731,385** | **$7,772,379** | **$(40,994)** | **-0.5 %** | | Consolidated capital ratios | | | | | | Equity to assets | 9.63 % | 9.67 % | -0.04 % | | | (1) Tangible equity to tangible assets | 8.27 % | 8.31 % | -0.04 % | | | Share data | | | | | | Outstanding shares | 64,580 | 64,580 | — | — % | | Book value per share | $11.53 | $11.64 | $(0.11) | -0.9 % | | (2) Tangible book value per share | $9.75 | $9.85 | $(0.10) | -1.0 % | [Five-Quarter Balance Sheet Trends](index=8&type=section&id=Five-Quarter%20Balance%20Sheet%20Trends) This section provides a five-quarter historical view of the consolidated balance sheet, illustrating trends in assets, liabilities, and stockholders' equity from December 2023 to December 2024 Consolidated Balance Sheets (Five-Quarter Trend) | (Dollars and Shares in Thousands, Except Per Share Data) | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | | :------------------------------------------------------- | :---------------- | :----------------- | :------------ | :------------- | :---------------- | | **Assets** | | | | | | | Cash and cash equivalents | $141,554 | $155,574 | $63,864 | $71,027 | $73,860 | | Securities available for sale | 1,018,279 | 1,070,811 | 1,072,833 | 1,098,655 | 1,144,175 | | Securities held to maturity | 127,266 | 132,256 | 135,742 | 139,643 | 141,959 | | Loans held-for-sale | 5,695 | 8,866 | 6,036 | 4,117 | 14,030 | | Loans receivable | 5,791,758 | 5,784,246 | 5,732,787 | 5,758,336 | 5,745,629 | | Less: allowance for credit losses on loans | (44,457) | (44,923) | (44,939) | (44,930) | (44,867) | | Net loans receivable | 5,747,301 | 5,739,323 | 5,687,848 | 5,713,406 | 5,700,762 | | Premises and equipment | 45,127 | 45,189 | 44,940 | 45,053 | 45,928 | | Federal Home Loan Bank stock | 64,443 | 57,706 | 80,300 | 81,347 | 83,372 | | Accrued interest receivable | 27,772 | 29,467 | 29,521 | 31,065 | 30,258 | | Goodwill | 113,525 | 113,525 | 113,525 | 210,895 | 210,895 | | Core deposit intangible | 1,679 | 1,805 | 1,931 | 2,057 | 2,189 | | Bank owned life insurance | 301,339 | 300,186 | 297,874 | 296,493 | 256,064 | | Deferred income taxes, net | 53,325 | 50,131 | 50,339 | 47,225 | 46,116 | | Other real estate owned | — | — | — | — | 11,982 | | Other assets | 84,080 | 67,540 | 98,708 | 100,989 | 136,242 | | **Total assets** | **$7,731,385** | **$7,772,379** | **$7,683,461**| **$7,841,972** | **$7,897,832** | | **Liabilities** | | | | | | | Deposits: | | | | | | | Non-interest-bearing | $601,510 | $592,099 | $598,366 | $586,089 | $584,130 | | Interest-bearing | 5,069,550 | 4,878,413 | 4,559,757 | 4,622,961 | 4,735,500 | | Total deposits | 5,671,060 | 5,470,512 | 5,158,123 | 5,209,050 | 5,319,630 | | Borrowings | 1,258,949 | 1,479,888 | 1,709,789 | 1,722,178 | 1,667,055 | | Advance payments by borrowers for taxes | 17,986 | 17,824 | 17,409 | 17,387 | 16,742 | | Other liabilities | 38,537 | 52,618 | 44,569 | 44,279 | 46,427 | | **Total liabilities** | **6,986,532** | **7,020,842** | **6,929,890** | **6,992,894** | **7,049,854** | | **Stockholders' Equity** | | | | | | | Common stock | 646 | 646 | 644 | 644 | 645 | | Paid-in capital | 494,092 | 493,523 | 493,680 | 493,187 | 493,297 | | Retained earnings | 342,155 | 342,522 | 343,326 | 440,308 | 439,755 | | Unearned ESOP shares | (19,943) | (20,430) | (20,916) | (21,402) | (21,889) | | Accumulated other comprehensive loss | (72,097) | (64,724) | (63,163) | (63,659) | (63,830) | | **Total stockholders' equity** | **744,853** | **751,537** | **753,571** | **849,078** | **847,978** | | **Total liabilities and stockholders' equity** | **$7,731,385** | **$7,772,379** | **$7,683,461**| **$7,841,972** | **$7,897,832** | | Consolidated capital ratios | | | | | | | Equity to assets | 9.63 % | 9.67 % | 9.81 % | 10.83 % | 10.74 % | | (1) Tangible equity to tangible assets | 8.27 % | 8.31 % | 8.43 % | 8.34 % | 8.26 % | | Share data | | | | | | | Outstanding shares | 64,580 | 64,580 | 64,434 | 64,437 | 64,445 | | Book value per share | $11.53 | $11.64 | $11.70 | $13.18 | $13.16 | | (2) Tangible book value per share | $9.75 | $9.85 | $9.90 | $9.87 | $9.85 | [Loan Portfolio Composition](index=10&type=section&id=Loan%20Portfolio%20Composition) The loan portfolio composition shows a slight increase in total loans, with multi-family mortgages being the primary driver of commercial loan growth, while construction loans decreased Loan Portfolio Composition (Five-Quarter Trend) | (Dollars in Thousands) | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | | :--------------------- | :---------------- | :----------------- | :------------ | :------------- | :---------------- | | **Commercial loans:** | | | | | | | Multi-family mortgage | $2,722,623 | $2,646,187 | $2,645,851 | $2,645,195 | $2,651,274 | | Nonresidential mortgage| 950,194 | 950,771 | 948,075 | 965,539 | 947,287 | | Commercial business | 135,740 | 145,984 | 142,747 | 147,326 | 144,134 | | Construction | 176,704 | 227,327 | 209,237 | 229,457 | 221,933 | | Total commercial loans | 3,985,261 | 3,970,269 | 3,945,910 | 3,987,517 | 3,964,628 | | One- to four-family residential mortgage | 1,765,160 | 1,768,230 | 1,756,051 | 1,741,644 | 1,746,065 | | **Consumer loans:** | | | | | | | Home equity loans | 47,101 | 44,741 | 44,104 | 42,731 | 43,517 | | Other consumer | 2,778 | 2,965 | 2,685 | 3,198 | 2,728 | | Total consumer loans | 49,879 | 47,706 | 46,789 | 45,929 | 46,245 | | Total loans, excluding yield adjustments | 5,800,300 | 5,786,205 | 5,748,750 | 5,775,090 | 5,756,938 | | Unaccreted yield adjustments | (8,542) | (1,959) | (15,963) | (16,754) | (11,309) | | Loans receivable, net of yield adjustments | 5,791,758 | 5,784,246 | 5,732,787 | 5,758,336 | 5,745,629 | | Less: allowance for credit losses on loans | (44,457) | (44,923) | (44,939) | (44,930) | (44,867) | | Net loans receivable | $5,747,301 | $5,739,323 | $5,687,848 | $5,713,406 | $5,700,762 | [Asset Quality Trends](index=10&type=section&id=Asset%20Quality%20Trends) Asset quality metrics show a decrease in total nonperforming assets and nonperforming loans quarter-over-quarter, although classified loans increased. The allowance for credit losses to total loans remained stable Asset Quality (Five-Quarter Trend) | (Dollars in Thousands) | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | | :--------------------- | :---------------- | :----------------- | :------------ | :------------- | :---------------- | | **Nonperforming assets:** | | | | | | | Accruing loans - 90 days and over past due | $— | $— | $— | $— | $— | | Nonaccrual loans | 37,697 | 39,854 | 39,882 | 39,546 | 28,089 | | Total nonperforming loans | 37,697 | 39,854 | 39,882 | 39,546 | 28,089 | | Nonaccrual loans held-for-sale | — | — | — | — | 9,700 | | Other real estate owned | — | — | — | — | 11,982 | | Total nonperforming assets | $37,697 | $39,854 | $39,882 | $39,546 | $49,771 | | Nonperforming loans (% total loans) | 0.65 % | 0.69 % | 0.70 % | 0.69 % | 0.49 % | | Nonperforming assets (% total assets) | 0.49 % | 0.51 % | 0.52 % | 0.50 % | 0.63 % | | Classified loans | $132,216 | $119,534 | $118,700 | $115,772 | $94,676 | | **Allowance for credit losses on loans (ACL):** | | | | | | | ACL to total loans | 0.77 % | 0.78 % | 0.78 % | 0.78 % | 0.78 % | | ACL to nonperforming loans | 117.93 % | 112.72 % | 112.68 % | 113.61 % | 159.73 % | | Net charge-offs | $573 | $124 | $3,518 | $286 | $4,110 | | Average net charge-off rate (annualized) | 0.04 % | 0.01 % | 0.25 % | 0.02 % | 0.29 % | [Funding Composition](index=11&type=section&id=Funding%20Composition) The funding composition shows a notable increase in total deposits, particularly in interest-bearing demand and brokered CDs, while total borrowings decreased significantly. Deposits now represent a larger percentage of total funding Funding Composition (Five-Quarter Trend) | (Dollars in Thousands) | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | | :--------------------- | :---------------- | :----------------- | :------------ | :------------- | :---------------- | | **Deposits:** | | | | | | | Non-interest-bearing deposits | $601,510 | $592,099 | $598,367 | $586,089 | $584,130 | | Interest-bearing demand | 2,380,408 | 2,247,685 | 2,308,915 | 2,349,032 | 2,347,262 | | Savings | 742,266 | 681,709 | 643,481 | 630,456 | 646,182 | | Certificates of deposit (retail) | 1,194,865 | 1,215,746 | 1,199,127 | 1,235,261 | 1,283,676 | | Certificates of deposit (brokered and listing service) | 752,011 | 733,273 | 408,234 | 408,212 | 458,380 | | Interest-bearing deposits | 5,069,550 | 4,878,413 | 4,559,757 | 4,622,961 | 4,735,500 | | Total deposits | 5,671,060 | 5,470,512 | 5,158,124 | 5,209,050 | 5,319,630 | | **Borrowings:** | | | | | | | Federal Home Loan Bank advances | 1,028,949 | 1,209,888 | 1,534,789 | 1,457,178 | 1,432,055 | | Overnight borrowings | 230,000 | 270,000 | 175,000 | 265,000 | 235,000 | | Total borrowings | 1,258,949 | 1,479,888 | 1,709,789 | 1,722,178 | 1,667,055 | | Total funding | $6,930,009 | $6,950,400 | $6,867,913 | $6,931,228 | $6,986,685 | | Loans as a % of deposits | 101.4 % | 105.1 % | 110.4 % | 109.8 % | 107.4 % | | Deposits as a % of total funding | 81.8 % | 78.7 % | 75.1 % | 75.2 % | 76.1 % | | Borrowings as a % of total funding | 18.2 % | 21.3 % | 24.9 % | 24.8 % | 23.9 % | | Uninsured deposits (reported) | $1,935,607 | $1,799,726 | $1,772,623 | $1,760,740 | $1,813,122 | | Uninsured deposits (adjusted) | $797,721 | $773,375 | $764,447 | $718,026 | $694,510 | [Earnings Performance](index=2&type=section&id=Earnings%20Performance) The company's earnings improved quarter-over-quarter, driven by increased net interest income and non-interest income, coupled with reduced non-interest expenses [Net Interest Income and Margin](index=2&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased slightly, and net interest margin expanded by two basis points, primarily driven by the replacement of higher-cost borrowings with lower-cost deposits and broad decreases in deposit rates Net Interest Income and Margin (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :------------------ | :----------------------- | :----------------------- | :----- | :---------- | | Net Interest Income | $32.6 million | $32.4 million | $0.2 million | 0.5% | | Net Interest Margin | 1.82% | 1.80% | 0.02% | 1.1% | - The increase in net interest margin was driven by replacing borrowings with relatively lower cost deposits and broad-based decreases in deposit rates, partially offset by higher costs and average balances of brokered certificates of deposit and reduced average balances and yields on interest-earning assets[11](index=11&type=chunk) [Non-Interest Income](index=2&type=section&id=Non-Interest%20Income) Non-interest income increased quarter-over-quarter, primarily due to a larger gain on the sale of loans held-for-sale and an increase in electronic banking fees and charges Non-Interest Income (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :-------------------------- | :----------------------- | :----------------------- | :----- | :---------- | | Total Non-Interest Income | $4.9 million | $4.6 million | $0.247 million | 5.3% | | Gain on sale of loans held-for-sale | $304,000 | $200,000 | $104,000 | 52.0% | | Electronic banking fees and charges | $493,000 | $391,000 | $102,000 | 26.1% | [Non-Interest Expense](index=2&type=section&id=Non-Interest%20Expense) Non-interest expense decreased quarter-over-quarter, primarily driven by a reduction in other expenses, partially offset by a slight increase in salary and benefits expense Non-Interest Expense (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :-------------------------- | :----------------------- | :----------------------- | :----- | :---------- | | Total Non-Interest Expense | $29.6 million | $29.8 million | $(0.225) million | -0.8% | | Other expense | $3.084 million | $3.364 million | $(0.280) million | -8.3% | | Salaries and employee benefits | $17.579 million | $17.498 million | $0.081 million | 0.5% | - The decrease in other expense was primarily due to a reversal of **$116,000** for credit losses related to off-balance sheet commitments, compared to a provision of **$274,000** in the prior period[11](index=11&type=chunk) - Salary and benefits expense increased due to the absence of a non-recurring decrease in stock-based compensation recorded in the prior comparative period, partially offset by a decrease in payroll taxes[11](index=11&type=chunk) [Income Taxes](index=2&type=section&id=Income%20Taxes) Income tax expense increased for the quarter, reflecting higher pre-tax income, which also led to a slight increase in the effective tax rate Income Taxes (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :------------------ | :----------------------- | :----------------------- | :----- | :---------- | | Income Tax Expense | $1.3 million | $1.1 million | $0.2 million | 15.2% | | Effective Tax Rate | 16.0% | 15.1% | 0.9% | 6.0% | [Consolidated Statements of Income (QoQ)](index=5&type=section&id=Consolidated%20Statements%20of%20Income%20(QoQ)) The consolidated statements of income show a quarter-over-quarter increase in net income, driven by higher net interest income and non-interest income, coupled with a decrease in non-interest expense Consolidated Statements of Income (QoQ) | (Dollars and Shares in Thousands, Except Per Share Data) | December 31, 2024 | September 30, 2024 | Variance or Change | Variance or Change Pct. | | :------------------------------------------------------- | :---------------- | :----------------- | :----------------- | :---------------------- | | **Interest income** | | | | | | Loans | $65,408 | $66,331 | $(923) | -1.4 % | | Taxable investment securities | 13,803 | 14,384 | (581) | -4.0 % | | Tax-exempt investment securities | 59 | 71 | (12) | -16.9 % | | Other interest-earning assets | 2,215 | 2,466 | (251) | -10.2 % | | **Total interest income** | **81,485** | **83,252** | **(1,767)** | **-2.1 %** | | **Interest expense** | | | | | | Deposits | 36,721 | 35,018 | 1,703 | 4.9 % | | Borrowings | 12,152 | 15,788 | (3,636) | -23.0 % | | **Total interest expense** | **48,873** | **50,806** | **(1,933)** | **-3.8 %** | | **Net interest income** | **32,612** | **32,446** | **166** | **0.5 %** | | Provision for credit losses | 107 | 108 | (1) | -0.9 % | | **Net interest income after provision for credit losses**| **32,505** | **32,338** | **167** | **0.5 %** | | **Non-interest income** | | | | | | Fees and service charges | 627 | 635 | (8) | -1.3 % | | Gain on sale of loans | 304 | 200 | 104 | 52.0 % | | Income from bank owned life insurance | 2,619 | 2,567 | 52 | 2.0 % | | Electronic banking fees and charges | 493 | 391 | 102 | 26.1 % | | Other income | 830 | 833 | (3) | -0.4 % | | **Total non-interest income** | **4,873** | **4,626** | **247** | **5.3 %** | | **Non-interest expense** | | | | | | Salaries and employee benefits | 17,579 | 17,498 | 81 | 0.5 % | | Net occupancy expense of premises | 2,831 | 2,798 | 33 | 1.2 % | | Equipment and systems | 3,892 | 3,860 | 32 | 0.8 % | | Advertising and marketing | 311 | 342 | (31) | -9.1 % | | Federal deposit insurance premium | 1,503 | 1,563 | (60) | -3.8 % | | Directors' compensation | 361 | 361 | — | — % | | Other expense | 3,084 | 3,364 | (280) | -8.3 % | | **Total non-interest expense** | **29,561** | **29,786** | **(225)** | **-0.8 %** | | **Income before income taxes** | **7,817** | **7,178** | **639** | **8.9 %** | | Income taxes | 1,251 | 1,086 | 165 | 15.2 % | | **Net income** | **$6,566** | **$6,092** | **$474** | **7.8 %** | | **Net income per common share (EPS)** | | | | | | Basic | $0.11 | $0.10 | $0.01 | | | Diluted | $0.10 | $0.10 | $— | | | **Dividends declared** | | | | | | Cash dividends declared per common share | $0.11 | $0.11 | $— | | | Cash dividends declared | $6,933 | $6,896 | $37 | | | Dividend payout ratio | 105.6 % | 113.2 % | -7.6 % | | | **Weighted average number of common shares outstanding** | | | | | | Basic | 62,443 | 62,389 | 54 | | | Diluted | 62,576 | 62,420 | 156 | | [Five-Quarter Income Statement Trends](index=12&type=section&id=Five-Quarter%20Income%20Statement%20Trends) This section presents a five-quarter trend analysis of the consolidated statements of income, providing a historical perspective on interest income, interest expense, non-interest income, non-interest expense, and net income Consolidated Statements of Income (Loss) (Five-Quarter Trend) | (Dollars and Shares in Thousands, Except Per Share Data) | December 31, 2024 | September 30, 2024 | Three Months Ended June 30, 2024 | March 31, 2024 | December 31, 2023 | | :------------------------------------------------------- | :---------------- | :----------------- | :------------------------------- | :------------- | :---------------- | | **Interest income** | | | | | | | Loans | $65,408 | $66,331 | $65,819 | $64,035 | $63,384 | | Taxable investment securities | 13,803 | 14,384 | 14,802 | 15,490 | 16,756 | | Tax-exempt investment securities | 59 | 71 | 80 | 85 | 84 | | Other interest-earning assets | 2,215 | 2,466 | 2,289 | 2,475 | 2,401 | | **Total interest income** | **81,485** | **83,252** | **82,990** | **82,085** | **82,625** | | **Interest expense** | | | | | | | Deposits | 36,721 | 35,018 | 32,187 | 32,320 | 30,340 | | Borrowings | 12,152 | 15,788 | 17,527 | 15,446 | 16,446 | | **Total interest expense** | **48,873** | **50,806** | **49,714** | **47,766** | **46,786** | | **Net interest income** | **32,612** | **32,446** | **33,276** | **34,319** | **35,839** | | Provision for credit losses | 107 | 108 | 3,527 | 349 | 2,105 | | **Net interest income after provision for credit losses**| **32,505** | **32,338** | **29,749** | **33,970** | **33,734** | | **Non-interest income** | | | | | | | Fees and service charges | 627 | 635 | 580 | 657 | 624 | | Loss on sale and call of securities | — | — | — | — | (18,135) | | Gain (loss) on sale of loans | 304 | 200 | 111 | (712) | 104 | | Loss on sale of other real estate owned | — | — | — | — | (974) | | Income from bank owned life insurance | 2,619 | 2,567 | 3,209 | 3,039 | 1,162 | | Electronic banking fees and charges | 493 | 391 | 1,130 | 464 | 396 | | Other income | 830 | 833 | 776 | 755 | 811 | | **Total non-interest income** | **4,873** | **4,626** | **5,806** | **4,203** | **(16,012)** | | **Non-interest expense** | | | | | | | Salaries and employee benefits | 17,579 | 17,498 | 17,266 | 16,911 | 17,282 | | Net occupancy expense of premises | 2,831 | 2,798 | 2,738 | 2,863 | 2,674 | | Equipment and systems | 3,892 | 3,860 | 3,785 | 3,823 | 3,814 | | Advertising and marketing | 311 | 342 | 480 | 387 | 301 | | Federal deposit insurance premium | 1,503 | 1,563 | 1,532 | 1,429 | 1,495 | | Directors' compensation | 361 | 361 | 360 | 360 | 393 | | Goodwill impairment | — | — | 97,370 | — | — | | Other expense | 3,084 | 3,364 | 3,020 | 3,286 | 3,808 | | **Total non-interest expense** | **29,561** | **29,786** | **126,551** | **29,059** | **29,767** | | **Income (loss) before income taxes** | **7,817** | **7,178** | **(90,996)** | **9,114** | **(12,045)** | | Income taxes | 1,251 | 1,086 | (917) | 1,717 | 1,782 | | **Net income (loss)** | **$6,566** | **$6,092** | **$(90,079)** | **$7,397** | **$(13,827)** | | **Net income (loss) per common share (EPS)** | | | | | | | Basic | $0.11 | $0.10 | $(1.45) | $0.12 | $(0.22) | | Diluted | $0.10 | $0.10 | $(1.45) | $0.12 | $(0.22) | | **Dividends declared** | | | | | | | Cash dividends declared per common share | $0.11 | $0.11 | $0.11 | $0.11 | $0.11 | | Cash dividends declared | $6,933 | $6,896 | $6,903 | $6,844 | $6,882 | | Dividend payout ratio | 105.6 % | 113.2 % | -7.7 % | 92.5 % | -49.8 % | | **Weighted average number of common shares outstanding** | | | | | | | Basic | 62,443 | 62,389 | 62,254 | 62,205 | 62,299 | | Diluted | 62,576 | 62,420 | 62,254 | 62,211 | 62,299 | [Asset Quality](index=2&type=section&id=Asset%20Quality) The company's asset quality improved with a decrease in non-performing assets, though net charge-offs increased, while the allowance for credit losses remained stable [Non-Performing Assets and Net Charge-offs](index=2&type=section&id=Non-Performing%20Assets%20and%20Net%20Charge-offs) Non-performing assets decreased both in absolute terms and as a percentage of total assets. However, net charge-offs increased significantly quarter-over-quarter, though they had been individually reserved for Non-Performing Assets and Net Charge-offs (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :-------------------------- | :----------------------- | :----------------------- | :----- | :---------- | | Non-performing assets | $37.7 million | $39.9 million | $(2.2) million | -5.5% | | Non-performing assets (% of total assets) | 0.49% | 0.51% | -0.02% | -3.9% | | Net charge-offs | $573,000 | $124,000 | $449,000 | 362.1% | | Net charge-off rate (annualized) | 0.04% | 0.01% | 0.03% | 300.0% | - The net charge-offs recorded for the quarter ended December 31, 2024, had previously been individually reserved for within the allowance for credit losses ("ACL")[11](index=11&type=chunk) [Allowance for Credit Losses](index=2&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses (ACL) slightly decreased, primarily due to a reduction in reserves for individually evaluated loans resulting from charge-offs. The provision for credit losses remained stable, driven by loan growth Allowance for Credit Losses (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :-------------------------- | :----------------------- | :----------------------- | :----- | :---------- | | ACL | $44.5 million | $44.9 million | $(0.4) million | -1.0% | | ACL (% of total loans) | 0.77% | 0.78% | -0.01% | -1.3% | | Provision for credit losses | $107,000 | $108,000 | $(1,000) | -0.9% | - The decrease in the ACL was largely attributable to a reduction in reserves for individually evaluated loans, resulting from the charge-offs[11](index=11&type=chunk) - The provision for credit loss expense for the quarter was primarily driven by loan growth[11](index=11&type=chunk) [Capital Position](index=2&type=section&id=Capital%20Position) The company's book value and tangible book value per share decreased due to increased accumulated other comprehensive loss, yet regulatory capital ratios remained strong [Capital Ratios and Book Value](index=2&type=section&id=Capital%20Ratios%20and%20Book%20Value) Book value and tangible book value per share decreased due to a larger accumulated other comprehensive loss, primarily from a decline in the fair value of available-for-sale securities. Despite this, the Company and Bank maintained regulatory capital ratios in excess of 'well-capitalized' levels Capital Metrics (QoQ) | Metric | Q2 FY2025 (Dec 31, 2024) | Q1 FY2025 (Sep 30, 2024) | Change | Change Pct. | | :-------------------------- | :----------------------- | :----------------------- | :----- | :---------- | | Book value per share | $11.53 | $11.64 | $(0.11) | -0.9% | | Tangible book value per share | $9.75 | $9.85 | $(0.10) | -1.0% | | Tangible equity to tangible assets ratio | 8.27% | 8.31% | -0.04% | -0.5% | - Decreases in book value and tangible book value per share were driven by a **$7.4 million** larger accumulated other comprehensive loss, primarily due to a decrease in the fair value of available-for-sale securities, partially offset by an increase in the fair value of derivatives[11](index=11&type=chunk)[12](index=12&type=chunk) - At December 31, 2024, total stockholders' equity included after-tax net unrealized losses on securities available for sale of **$89.8 million**, partially offset by after-tax unrealized gains on derivatives of **$17.4 million**[15](index=15&type=chunk) - The Company and the Bank's regulatory capital ratios were in excess of the levels required by federal banking regulators to be classified as 'well-capitalized'[15](index=15&type=chunk) [Performance Ratios](index=7&type=section&id=Performance%20Ratios) The company's performance ratios indicate improved operational efficiency and profitability, with expanded net interest margin and enhanced returns on assets and equity [Key Performance Ratios (QoQ)](index=7&type=section&id=Key%20Performance%20Ratios%20(QoQ)) Key performance ratios show an expansion in net interest margin and interest rate spread, alongside improvements in the efficiency ratio and returns on average assets and equity, reflecting improved operational performance Performance Ratio Highlights (QoQ) | Metric | Dec 31, 2024 | Sep 30, 2024 | Variance or Change | | :------------------------------------------ | :----------- | :----------- | :----------------- | | Average yield on interest-earning assets: | | | | | Loans receivable, including loans held for sale | 4.54 % | 4.61 % | -0.07 % | | Taxable investment securities | 4.29 % | 4.38 % | -0.09 % | | (1) Tax-exempt investment securities | 2.42 % | 2.32 % | 0.10 % | | Other interest-earning assets | 7.62 % | 7.47 % | 0.15 % | | Total interest-earning assets | 4.54 % | 4.61 % | -0.07 % | | Average cost of interest-bearing liabilities: | | | | | Deposits: | | | | | Interest-bearing demand | 2.96 % | 3.13 % | -0.17 % | | Savings | 1.29 % | 1.05 % | 0.24 % | | Certificates of deposit (retail) | 4.06 % | 4.12 % | -0.06 % | | Certificates of deposit (brokered and listing service) | 2.71 % | 2.18 % | 0.53 % | | Total interest-bearing deposits | 2.95 % | 2.98 % | -0.03 % | | Borrowings: | | | | | Federal Home Loan Bank advances | 3.78 % | 3.82 % | -0.04 % | | Other borrowings | 4.88 % | 5.28 % | -0.40 % | | Total borrowings | 3.91 % | 4.04 % | -0.13 % | | Total interest-bearing liabilities | 3.15 % | 3.24 % | -0.09 % | | (2) Interest rate spread | 1.39 % | 1.37 % | 0.02 % | | (3) Net interest margin | 1.82 % | 1.80 % | 0.02 % | | Non-interest income to average assets (annualized) | 0.26 % | 0.24 % | 0.02 % | | Non-interest expense to average assets (annualized) | 1.55 % | 1.55 % | — % | | (4) Efficiency ratio | 78.86 % | 80.35 % | -1.49 % | | Return on average assets (annualized) | 0.34 % | 0.32 % | 0.02 % | | Return on average equity (annualized) | 3.51 % | 3.25 % | 0.26 % | | (5) Return on average tangible equity (annualized) | 4.21 % | 3.89 % | 0.32 % | [Five-Quarter Performance Ratio Trends](index=15&type=section&id=Five-Quarter%20Performance%20Ratio%20Trends) This section provides a five-quarter trend analysis of key performance ratios, including average yields on assets, average costs of liabilities, interest rate spread, net interest margin, efficiency ratio, and returns on assets and equity, offering a broader historical perspective Performance Ratio Highlights (Five-Quarter Trend) | Metric | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | | :------------------------------------------ | :---------------- | :----------------- | :------------ | :------------- | :---------------- | | Average yield on interest-earning assets: | | | | | | | Loans receivable, including loans held-for-sale | 4.54 % | 4.61 % | 4.58 % | 4.45 % | 4.43 % | | Taxable investment securities | 4.29 % | 4.38 % | 4.41 % | 4.48 % | 4.44 % | | (1) Tax-exempt investment securities | 2.42 % | 2.32 % | 2.32 % | 2.32 % | 2.25 % | | Other interest-earning assets | 7.62 % | 7.47 % | 7.14 % | 7.91 % | 6.87 % | | Total interest-earning assets | 4.54 % | 4.61 % | 4.59 % | 4.51 % | 4.47 % | | Average cost of interest-bearing liabilities: | | | | | | | Deposits: | | | | | | | Interest-bearing demand | 2.96 % | 3.13 % | 3.06 % | 3.08 % | 2.91 % | | Savings | 1.29 % | 1.05 % | 0.63 % | 0.46 % | 0.44 % | | Certificates of deposit (retail) | 4.06 % | 4.12 % | 3.95 % | 3.52 % | 3.06 % | | Certificates of deposit (brokered and listing service) | 2.71 % | 2.18 % | 1.59 % | 1.97 % | 2.24 % | | Total interest-bearing deposits | 2.95 % | 2.98 % | 2.83 % | 2.74 % | 2.53 % | | Borrowings: | | | | | | | Federal Home Loan Bank advances | 3.78 % | 3.82 % | 3.86 % | 3.55 % | 3.82 % | | Other borrowings | 4.88 % | 5.28 % | 5.24 % | 5.22 % | 5.65 % | | Total borrowings | 3.91 % | 4.04 % | 4.04 % | 3.77 % | 3.97 % | | Total interest-bearing liabilities | 3.15 % | 3.24 % | 3.16 % | 3.00 % | 2.90 % | | (2) Interest rate spread | 1.39 % | 1.37 % | 1.43 % | 1.51 % | 1.57 % | | (3) Net interest margin | 1.82 % | 1.80 % | 1.84 % | 1.89 % | 1.94 % | | Non-interest income to average assets (annualized) | 0.26 % | 0.24 % | 0.30 % | 0.21 % | -0.81 % | | Non-interest expense to average assets (annualized) | 1.55 % | 1.55 % | 6.58 % | 1.48 % | 1.50 % | | (4) Efficiency ratio | 78.86 % | 80.35 % | 323.81 % | 75.43 % | 150.13 % | | Return on average assets (annualized) | 0.34 % | 0.32 % | -4.68 % | 0.38 % | -0.70 % | | Return on average equity (annualized) | 3.51 % | 3.25 % | -47.97 % | 3.50 % | -6.59 % | | Return on average tangible equity (annualized) | (5) 4.21 % | 3.89 % | 3.33 % | 4.68 % | -8.84 % | [Average Balance Sheet Data](index=6&type=section&id=Average%20Balance%20Sheet%20Data) The average balance sheet data shows a slight decrease in total assets, with a shift from borrowings to increased interest-bearing deposits [Average Balance Sheet (QoQ)](index=6&type=section&id=Average%20Balance%20Sheet%20(QoQ)) The average balance sheet data for the quarter shows a slight decrease in total average assets and interest-earning assets, while total interest-bearing deposits increased, and total borrowings decreased Average Balance Sheet Data (QoQ) | (Dollars in Thousands) | December 31, 2024 | September 30, 2024 | Variance or Change | Variance or Change Pct. | | :--------------------- | :---------------- | :----------------- | :----------------- | :---------------------- | | **Assets** | | | | | | Interest-earning assets: | | | | | | Loans receivable, including loans held for sale | $5,762,053 | $5,761,593 | $460 | — % | | Taxable investment securities | 1,285,800 | 1,314,945 | (29,145) | -2.2 % | | Tax-exempt investment securities | 9,711 | 12,244 | (2,533) | -20.7 % | | Other interest-earning assets | 116,354 | 131,981 | (15,627) | -11.8 % | | Total interest-earning assets | 7,173,918 | 7,220,763 | (46,845) | -0.6 % | | Non-interest-earning assets | 459,982 | 467,670 | (7,688) | -1.6 % | | **Total assets** | **$7,633,900** | **$7,688,433** | **$(54,533)** | **-0.7 %** | | **Liabilities and Stockholders' Equity** | | | | | | Interest-bearing liabilities: | | | | | | Deposits: | | | | | | Interest-bearing demand | $2,314,378 | $2,282,608 | $31,770 | 1.4 % | | Savings | 711,801 | 668,240 | 43,561 | 6.5 % | | Certificates of deposit (retail) | 1,211,985 | 1,203,770 | 8,215 | 0.7 % | | Certificates of deposit (brokered and listing service) | 735,736 | 551,819 | 183,917 | 33.3 % | | Total interest-bearing deposits | 4,973,900 | 4,706,437 | 267,463 | 5.7 % | | Borrowings: | | | | | | Federal Home Loan Bank advances | 1,085,455 | 1,325,583 | (240,128) | -18.1 % | | Other borrowings | 156,522 | 237,011 | (80,489) | -34.0 % | | Total borrowings | 1,241,977 | 1,562,594 | (320,617) | -20.5 % | | Total interest-bearing liabilities | 6,215,877 | 6,269,031 | (53,154) | -0.8 % | | Non-interest-bearing liabilities: | | | | | | Non-interest-bearing deposits | 604,915 | 599,095 | 5,820 | 1.0 % | | Other non-interest-bearing liabilities | 65,258 | 69,629 | (4,371) | -6.3 % | | Total non-interest-bearing liabilities | 670,173 | 668,724 | 1,449 | 0.2 % | | **Total liabilities** | **6,886,050** | **6,937,755** | **(51,705)** | **-0.7 %** | | Stockholders' equity | 747,850 | 750,678 | (2,828) | -0.4 % | | **Total liabilities and stockholders' equity** | **$7,633,900** | **$7,688,433** | **$(54,533)** | **-0.7 %** | | Average interest-earning assets to average interest-bearing liabilities | 115.41 % | 115.18 % | 0.23 % | 0.2 % | [Five-Quarter Average Balance Sheet Trends](index=14&type=section&id=Five-Quarter%20Average%20Balance%20Sheet%20Trends) This section provides a five-quarter trend analysis of average balance sheet data, detailing the movements in average interest-earning assets, non-interest-earning assets, interest-bearing liabilities, and non-interest-bearing liabilities Average Balance Sheet Data (Five-Quarter Trend) | (Dollars in Thousands) | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | | :--------------------- | :---------------- | :----------------- | :------------ | :------------- | :---------------- | | **Assets** | | | | | | | Interest-earning assets: | | | | | | | Loans receivable, including loans held-for-sale | $5,762,053 | $5,761,593 | $5,743,008 | $5,752,477 | $5,726,321 | | Taxable investment securities | 1,285,800 | 1,314,945 | 1,343,541 | 1,382,064 | 1,509,165 | | Tax-exempt investment securities | 9,711 | 12,244 | 13,737 | 14,614 | 15,025 | | Other interest-earning assets | 116,354 | 131,981 | 128,257 | 125,155 | 139,740 | | Total interest-earning assets | 7,173,918 | 7,220,763 | 7,228,543 | 7,274,310 | 7,390,251 | | Non-interest-earning assets | 459,982 | 467,670 | 466,537 | 577,411 | 554,335 | | **Total assets** | **$7,633,900** | **$7,688,433** | **$7,695,080**| **$7,851,721** | **$7,944,586** | | **Liabilities and Stockholders' Equity** | | | | | | | Interest-bearing liabilities: | | | | | | | Deposits: | | | | | | | Interest-bearing demand | $2,314,378 | $2,282,608 | $2,310,521 | $2,378,831 | $2,301,169 | | Savings | 711,801 | 668,240 | 631,622 | 635,226 | 664,926 | | Certificates of deposit (retail) | 1,211,985 | 1,203,770 | 1,208,101 | 1,257,362 | 1,292,837 | | C

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].