Kearny Financial Corp. Announces Second Quarter Fiscal 2026 Results and Declaration of Cash Dividend

Kearny Financial Corp. (Nasdaq GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended December 31, 2025 of $9.4 million, or $0.15 per diluted share, compared to $9.5 million, or $0.15 per diluted share, for the quarter ended September 30, 2025. The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on February 18, 2026, to stockholders of record as of February 4, 2026. Craig L. Montanaro, President and Chief Executive Officer, commented, “We are pleased to report continued improvement in our core earnings. Net interest margin expanded, up 32 basis points year-over-year, reflecting the strategic remix of our balance sheet and the repricing of our loan portfolio. In addition, recent reductions in the federal funds rate are expected to serve as an earnings tailwind, given our liability-sensitive balance sheet.” Mr. Montanaro continued, “In addition, we made progress on several key strategic initiatives this quarter. First, our previously announced partnership with The Lab Consulting commenced this quarter, and a bank-wide opportunity assessment was completed. Significant automation and process improvement opportunities have been identified, and near-term deliverables under this initiative remain centered on strengthening operational efficiency, enhancing the client experience, and supporting sustainable growth in the periods ahead. Second, this quarter we were pleased to add a five-person residential lending team to grow our pipeline of residential loans held-for-sale and support fee income generation. Their expertise supports our efforts to diversify revenue streams and deepen our residential lending franchise.” Second Quarter Highlights Pre-tax, pre-provision net revenue increased 3.9% to $12.3 million, reflecting ongoing strengthening of core earnings.Net interest margin expanded by four basis points to 2.14%, extending the momentum of margin improvement from the previous quarter.Non-performing assets decreased 20.6% to $51.3 million, or 0.67% of total assets, demonstrating that credit quality remained solid and continued to improve.The Company advanced its loan portfolio diversification strategy, growing commercial business and home equity loans while strategically reducing multifamily mortgage loans.Total deposits increased by $79.7 million, or 1.4%, providing additional funding capacity to reduce higher-cost wholesale borrowings and further strengthen the balance sheet. Balance Sheet Total assets were $7.62 billion at December 31, 2025, a decrease of $27.1 million, or 0.4%, from September 30, 2025.Investment securities totaled $1.11 billion at December 31, 2025, a decrease of $19.7 million, or 1.7%, from September 30, 2025.Loans receivable totaled $5.75 billion at December 31, 2025, a decrease of $14.0 million, or 0.2%, from September 30, 2025, primarily reflecting a decrease in multifamily and residential mortgage loans, partially offset by increases in commercial and industrial (“C&I”) and home equity loans.Deposits were $5.71 billion at December 31, 2025, an increase of $79.7 million, or 1.4%, from September 30, 2025, primarily driven by increases in non-interest bearing and interest bearing demand deposits, partially offset by a decrease in certificates of deposits. The increase in non-interest bearing demand deposits was largely the result of migrating $69.8 million from a consumer interest bearing product to a non-interest bearing product.Borrowings were $1.10 billion at December 31, 2025, a decrease of $111.5 million, or 9.2%, from September 30, 2025, reflecting reductions in Federal Home Loan Bank (“FHLB”) advances, partially offset by an increase in overnight borrowings.At December 31, 2025, the Company maintained available secured borrowing capacity with the FHLB and the Federal Reserve Discount Window of $2.70 billion, representing 35.4% of total assets. Earnings Net Interest Income and Net Interest Margin Net interest margin expanded by four basis points to 2.14% for the quarter ended December 31, 2025. The increase for the quarter was primarily driven by lower costs on interest-bearing liabilities and a reduction in borrowings, partially offset by lower average yields and balances on interest-earning assets.For the quarter ended December 31, 2025, net interest income increased $265,000 to $38.0 million from $37.7 million for the quarter ended September 30, 2025. Included in net interest income for the quarters ended December 31, 2025 and September 30, 2025, respectively, was purchase accounting accretion of $494,000 and $601,000, and loan prepayment penalty income of $544,000 and $490,000. Non-Interest Income For the quarter ended December 31, 2025, non-interest income decreased $276,000, or 4.7%, to $5.6 million from $5.8 million for the quarter ended September 30, 2025, primarily driven by the absence of a non-recurring pre-tax gain of $749,000 on the sale of property held for sale recorded in the prior period. Excluding this item, non-interest income increased $473,000, or 9.3%, to $5.6 million for the quarter ended December 31, 2025.Fees and service charges increased $403,000, or 45.2%, to $1.3 million for the quarter ended December 31, 2025 from $892,000 for the quarter ended September 30, 2025. The increase primarily reflected higher loan related fee income of $245,000 associated with the payoff of a single construction loan, and $71,000 of higher branch related fee income.Electronic banking fees and charges increased $57,000, or 13.7%, to $473,000 for the quarter ended December 31, 2025 from $416,000 for the quarter ended September 30, 2025, primarily driven by higher income from interchange fees. Non-Interest Expense For the quarter ended December 31, 2025, non-interest expense decreased $475,000, or 1.5%, to $31.2 million from $31.7 million for the quarter ended September 30, 2025, primarily driven by declines in salary and benefits, net occupancy, and advertising, partially offset by increases in other expense.Salary and benefits expense decreased $372,000 to $18.4 million for the quarter ended December 31, 2025 from $18.7 million for the quarter ended September 30, 2025, primarily driven by a decline in payroll taxes, partially offset by an increase in incentive compensation.Net occupancy expense of premises decreased $419,000 to $2.9 million for the quarter ended December 31, 2025 from $3.3 million for the quarter ended September 30, 2025, primarily driven by the absence of non-recurring branch consolidation and maintenance expenses recorded in the prior period. Excluding these items, net occupancy expense of premises decreased $67,000 to $2.9 million for the quarter ended December 31, 2025, primarily driven by lower repairs and other maintenance expense, partially offset by higher snow removal expenses.Advertising and marketing expense decreased $150,000 to $412,000 for the quarter ended December 31, 2025 from $562,000 for the quarter ended September 30, 2025, primarily driven by lower advertising expenses across various formats.Other expense increased $378,000 to $3.8 million for the quarter December 31, 2025 from $3.5 million for the quarter ended September 30, 2025, primarily driven by $242,000 in non-recurring professional fees incurred in the current period associated with the Company’s partnership with The Lab Consulting and higher loan related legal expenses. Changes in the other components of non-interest expense between comparative periods reflected normal operating fluctuations within those line items. Income Taxes Income tax expense totaled $2.3 million for the quarter ended December 31, 2025 compared to $2.5 million for the quarter ended September 30, 2025, resulting in an effective tax rate of 19.8% and 20.6%, respectively. Asset Quality The balance of non-performing assets decreased to $51.3 million, or 0.67% of total assets, at December 31, 2025 from $64.6 million, or 0.84% of total assets, at September 30, 2025. The decrease was primarily driven by the full repayment of a previously disclosed non-performing construction loan.Net charge-offs totaled $669,000, or 0.05% of average loans, on an annualized basis, for the quarter ended December 31, 2025, compared to $1.0 million, or 0.07% of average loans, on an annualized basis, for the quarter ended September 30, 2025. Charge-offs in the current quarter were related to the resolution of two individually evaluated loans that were partially reserved for in prior periods.For the quarter ended December 31, 2025, the Company recorded a provision for credit losses of $567,000, compared to a reversal of credit losses of $82,000 for the quarter ended September 30, 2025. The increase in the provision was primarily driven by quantitative risk-factor adjustments and individually evaluated reserves associated with a non-performing C&I loan that was fully charged off during the quarter, partially offset by decreases in the balance of loans receivable.Allowance for credit losses (“ACL”) was $45.0 million, or 0.78% of total loans, at December 31, 2025, a decrease of $102,000 from $45.1 million, or 0.78% of total loans, at September 30, 2025. The decrease in the ACL from September 30, 2025 was largely attributable to a reduction in reserves for individually evaluated loans, resulting from the charge-offs noted above. Capital For the quarter ended December 31, 2025, book value per share increased $0.07, or 0.6%, to $11.70 while tangible book value per share increased $0.07, or 0.7%, to $9.93.At December 31, 2025, total stockholders’ equity included after-tax net unrealized losses on securities available for sale of $68.2 million, partially offset by after-tax unrealized gains on derivatives of $663,000. After-tax net unrecognized losses on securities held to maturity of $7.9 million were not reflected in total stockholders’ equity.At December 31, 2025, the Company’s tangible equity to tangible assets ratio equaled 8.56%. Additionally, the regulatory capital ratios of both the Company and the Bank continued to be in excess of all applicable regulatory requirements as of December 31, 2025. This earnings release should be read in conjunction with Kearny Financial Corp.’s Q2 2026 Investor Presentation, a copy of which is available through the Investor Relations link located at the bottom of the page of our website at www.kearnybank.com and via a Current Report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov. Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company. Category: Earnings The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. For further information contact:Keith Suchodolski, Senior Executive Vice President and Chief Operating Officer, orSean Byrnes, Executive Vice President and Chief Financial OfficerKearny Financial Corp.(973) 244-4500... Read more

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