[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].

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

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

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

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