Kearny Financial(US:KRNY)2025-08-21 15:54Loan and Credit Losses - The allowance for credit losses (ACL) totaled $46.2 million at June 30, 2025, representing 0.79% of total loans, an increase from $44.9 million or 0.78% at June 30, 2024[67]. - Total loans outstanding were $5.81 billion at June 30, 2025, compared to $5.75 billion at June 30, 2024[63]. - The annualized net charge-off rate for the year ended June 30, 2025, was 0.02%, a decrease of 15 basis points from 0.17% for the year ended June 30, 2024[64]. - The ACL allocated to multi-family mortgage loans was $24.9 million, accounting for 46.60% of total loans as of June 30, 2025[67]. Investment Securities - The investment securities portfolio was $1.13 billion at June 30, 2025, down from $1.21 billion at June 30, 2024, reflecting a year-over-year net decrease of $75.4 million[70]. - The carrying value of mortgage-backed securities was $602.8 million at June 30, 2025, comprising 53.2% of total investments and 7.8% of total assets[74]. - The carrying value of corporate bonds was $140.1 million at June 30, 2025, representing 12.4% of total investments and 1.8% of total assets[78]. - The outstanding balance of collateralized loan obligations was $323.2 million at June 30, 2025, comprising 28.5% of total investments[77]. - The fair value of available for sale securities had a carrying value of $1.01 billion, or 89.4% of total securities, as of June 30, 2025[80]. - As of June 30, 2025, total securities available for sale amounted to $1,012.97 million, a decrease of 5.57% from $1,072.83 million in 2024[83]. - The carrying value of debt securities available for sale was $522.86 million, down 13.06% from $601.78 million in 2024[83]. - Total mortgage-backed securities available for sale increased to $490.11 million, up 4.05% from $471.05 million in 2024[83]. - At June 30, 2025, the total carrying value of securities held to maturity was $120.22 million, a decrease of 11.43% from $135.74 million in 2024[83]. Deposits and Funding - Retail deposits as of June 30, 2025, totaled $5.56 billion, with a weighted average nominal interest rate of 2.53%, compared to $5.35 billion and 2.29% in 2024[95]. - Certificates of deposit maturing within one year were $1.91 billion in 2025, an increase from $1.49 billion in 2024[91]. - At June 30, 2025, 76.0% of certificates of deposit were $100,000 or more, compared to 68.2% in 2024[92]. - Brokered certificates of deposit totaled approximately $757.7 million, representing 13.4% of total deposits as of June 30, 2025[93]. - The weighted average yield on total securities was 4.04% as of June 30, 2025[85]. - The company utilizes wholesale funding, including borrowings from the Federal Home Loan Bank, to manage interest rate and liquidity risks[96]. - As of June 30, 2025, Kearny Financial Corp had $1.11 billion in FHLB advances outstanding, down from $1.54 billion in the previous year, with a weighted average interest rate decrease from 5.07% to 4.36%[98]. - The maturity schedule for FHLB advances shows $906.5 million maturing in less than one year and $200 million maturing in two to three years as of June 30, 2025[99]. - Kearny Financial Corp is eligible to borrow an additional $695 million from the FHLB based on the market value of collateral posted as of June 30, 2025[100]. - The company has the capacity to borrow an additional $845 million via unsecured overnight borrowings and $1.19 billion from the FRB without additional collateral[101]. Risk Management - At June 30, 2025, Kearny Financial Corp's derivative instruments included interest rate swaps, caps, and a floor with a total notional amount of $3.08 billion to manage interest rate exposure[103]. - Interest rate risk is a significant market risk for Kearny Financial, managed through an Asset/Liability Management program overseen by the Board of Directors[308][309]. - As of June 30, 2025, a 300 basis point increase in interest rates would decrease the Economic Value of Equity (EVE) by 37.02%[313]. - The projected net interest income (NII) would decrease by 6.79% with a 300 basis point increase in interest rates over a 1 to 12 month period[313]. Employment and Benefits - Kearny Bank employed 504 full-time and 53 part-time employees as of June 30, 2025, with an average tenure of 8.4 years[106]. - The company offers a comprehensive benefits package, including a 401(k) plan with a competitive company match and an Employee Stock Ownership Plan (ESOP) fully funded by the company[110]. Regulatory Compliance - Kearny Bank's deposits are insured by the FDIC, with a maximum deposit insurance amount of $250,000 per depositor per account ownership category[119]. - As of June 30, 2025, Kearny Bank has exercised the opt-out election regarding the treatment of Accumulated Other Comprehensive Income, affecting its regulatory capital calculations[125]. - Regulatory capital requirements mandate a common equity Tier 1 capital ratio of 4.5%, with Kearny Bank needing to comply with these standards to maintain its operations[123]. - As of June 30, 2025, Kearny Bank exceeded all regulatory capital requirements and was classified as well capitalized[134]. - Kearny Bank did not opt into the community bank leverage ratio framework, which requires a leverage ratio of greater than 9.0%[129]. - The FDIC defines a well-capitalized institution as having a total risk-based capital ratio of 10.0% or greater and a Tier 1 risk-based capital ratio of 8.0% or greater[131]. - 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[135]. - New Jersey law prohibits dividend payments that would impair the capital stock of the savings bank[136]. - Kearny Bank received a satisfactory rating under the Community Reinvestment Act (CRA) in its most recent evaluation[140]. - The bank's total reported loans for construction, land development, and other land represent 100% or more of its capital[143]. - Kearny Bank is a member of the Federal Home Loan Bank of New York, which provides loans to its members[144]. - The Federal Reserve Board has enforcement authority over Kearny Financial, allowing it to restrict activities posing risks to Kearny Bank[150]. - Kearny Financial is required to obtain regulatory approval from the Federal Reserve Board before engaging in certain transactions, such as mergers[149]. - Kearny Financial must obtain Federal Reserve Board approval for acquiring more than 5% of voting stock in another savings institution[153]. - As of June 30, 2025, Kearny Financial was compliant with capital requirements, maintaining a capital conservation buffer[154]. - The source of strength doctrine requires holding companies to support their subsidiary depository institutions during financial distress[155]. - Kearny Bank met the qualified thrift lender test as of June 30, 2025, maintaining at least 65% of its portfolio in qualified thrift investments[156]. Corporate Governance - The company adopted a clawback policy in October 2023 in compliance with NASDAQ standards[159]. - Kearny Financial's ability to pay dividends may be restricted if a subsidiary becomes undercapitalized[155]. - Future interest rates and their effects on net interest income are unpredictable and based on numerous assumptions[315].