UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
☐
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
KEARNY FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Maryland
30-0870244
(State or other jurisdiction ofincorporation or organization)
(I.R.S. EmployerIdentification Number)
120 Passaic Ave., Fairfield, New Jersey
07004
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code
973-244-4500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value
KRNY
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filers,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: April 29, 2022.
$0.01 par value common stock — 70,421,270 shares outstanding
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
INDEX
Page
Number
PART I—FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Statements of Financial Condition at March 31, 2022 (Unaudited) and June 30, 2021
1
Consolidated Statements of Income for the Three Months and Nine Months Ended March 31, 2022 and March 31, 2021 (Unaudited)
2
Consolidated Statements of Comprehensive Income (Loss) for the Three Months and Nine Months Ended March 31, 2022 and March 31, 2021 (Unaudited)
3
Consolidated Statements of Changes in Stockholders’ Equity for the Three Months and Nine Months Ended March 31, 2022 and March 31, 2021 (Unaudited)
4
Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2022 and March 31, 2021 (Unaudited)
6
Notes to Consolidated Financial Statements (Unaudited)
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
39
Item 3.
Quantitative and Qualitative Disclosure About Market Risk
51
Item 4.
Controls and Procedures
52
PART II—OTHER INFORMATION
Legal Proceedings
53
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
54
SIGNATURES
55
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, Except Share and Per Share Data)
March 31,
June 30,
2022
2021
(Unaudited)
Assets
Cash and amounts due from depository institutions
$
22,864
21,463
Interest-bearing deposits in other banks
39,515
46,392
Cash and cash equivalents
62,379
67,855
Investment securities available for sale (amortized cost $1,590,074 and $1,666,853, respectively), net of allowance for credit losses of $0 at March 31, 2022 and June 30, 2021
1,526,086
1,676,864
Investment securities held to maturity (fair value $117,017 and $39,610, respectively), net of allowance for credit losses of $0 at March 31, 2022 and June 30, 2021
121,853
38,138
Loans held-for-sale
2,822
16,492
Loans receivable
5,003,201
4,851,394
Less: allowance for credit losses on loans
(43,860
)
(58,165
Net loans receivable
4,959,341
4,793,229
Premises and equipment
53,727
56,338
Federal Home Loan Bank (“FHLB”) of New York stock
30,997
36,615
Accrued interest receivable
19,517
19,362
Goodwill
210,895
Core deposit intangibles
3,166
3,705
Bank owned life insurance
287,644
283,310
Deferred income tax assets, net
34,349
29,323
Other real estate owned
401
178
Other assets
76,714
51,431
Total Assets
7,389,891
7,283,735
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Non-interest-bearing
621,954
593,718
Interest-bearing
4,906,708
4,891,588
Total deposits
5,528,662
5,485,306
Borrowings
851,220
685,876
Advance payments by borrowers for taxes
16,979
15,752
Other liabilities
37,861
53,857
Total Liabilities
6,434,722
6,240,791
Stockholders' Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized; none issued and outstanding
-
Common stock, $0.01 par value; 800,000,000 shares authorized; 71,424,469 shares and 78,964,859 shares issued and outstanding, respectively
714
790
Paid-in capital
561,176
654,396
Retained earnings
441,522
408,367
Unearned employee stock ownership plan shares; 2,609,069 shares and 2,759,594 shares, respectively
(25,294
(26,753
Accumulated other comprehensive (loss) income
(22,949
6,144
Total Stockholders' Equity
955,169
1,042,944
Total Liabilities and Stockholders' Equity
See notes to unaudited consolidated financial statements.
- 1 -
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
Three Months Ended
Nine Months Ended
Interest Income
Loans
45,846
50,159
141,651
153,776
Taxable investment securities
8,024
7,891
23,831
22,934
Tax-exempt investment securities
316
410
976
1,297
Other interest-earning assets
415
705
1,261
2,406
Total Interest Income
54,601
59,165
167,719
180,413
Interest Expense
Deposits
3,565
6,670
11,293
26,379
3,309
4,012
10,422
14,865
Total Interest Expense
6,874
10,682
21,715
41,244
Net Interest Income
47,727
48,483
146,004
139,169
(Reversal of) provision for credit losses
(3,920
1,126
(11,740
3,820
Net Interest Income after (Reversal of) Provision for Credit Losses
51,647
47,357
157,744
135,349
Non-Interest Income
Fees and service charges
617
473
1,922
1,474
Gain on sale and call of securities
18
454
Gain on sale of loans
376
943
2,352
5,211
Gain on sale of other real estate owned
14
Income from bank owned life insurance
1,511
1,530
4,634
4,722
Electronic banking fees and charges
432
456
1,260
1,265
Bargain purchase gain
3,053
Other income
238
1,194
938
1,351
Total Non-Interest Income
3,191
4,614
11,124
17,530
Non-Interest Expense
Salaries and employee benefits
19,184
16,965
55,897
51,023
Net occupancy expense of premises
3,223
3,433
10,926
9,675
Equipment and systems
3,822
3,823
11,370
11,295
Advertising and marketing
516
567
1,356
1,580
Federal deposit insurance premium
480
488
1,693
1,450
Directors' compensation
340
748
1,792
2,244
Merger-related expenses
4,349
Debt extinguishment expenses
796
Other expense
3,058
3,792
9,062
11,487
Total Non-Interest Expense
30,623
29,816
92,096
93,899
Income before Income Taxes
24,215
22,155
76,772
58,980
Income tax expense
6,522
5,732
20,595
14,230
Net Income
17,693
16,423
56,177
44,750
Net Income per Common Share (EPS)
Basic
0.25
0.20
0.78
0.53
Diluted
Weighted Average Number of Common Shares Outstanding
69,790
80,673
72,130
83,958
69,817
80,690
72,154
83,961
- 2 -
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Thousands, Unaudited)
Other Comprehensive (Loss) Income, net of tax:
Net unrealized loss on securities available for sale
(41,922
(15,671
(52,354
(14,379
Net realized gain on sale and call of securities available for sale
(2
(13
(3
(319
Fair value adjustments on derivatives
17,387
10,574
23,227
14,750
Benefit plan adjustments
37
48
Total Other Comprehensive (Loss) Income
(24,523
(5,096
(29,093
100
Total Comprehensive (Loss) Income
(6,830
11,327
27,084
44,850
- 3 -
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In Thousands, Except Per Share Data, Unaudited)
Common Stock
Paid-In
Retained
UnearnedESOP
AccumulatedOtherComprehensive
Shares
Amount
Capital
Earnings
Income
Total
Balance - December 31, 2020
84,938
849
724,389
388,376
(27,726
6,453
1,092,341
Net income
Other comprehensive loss, net of income tax
ESOP shares committed to be released (50 shares)
87
487
574
Stock option exercise
41
373
Share repurchases
(3,026
(29
(34,834
(34,863
Stock-based compensation expense
1,379
Cancellation of shares issued for restricted stock awards
(10
(114
Cash dividends declared ($0.09 per common share)
(7,205
Balance - March 31, 2021
81,943
820
691,280
397,594
(27,239
1,357
1,063,812
Balance - June 30, 2020
83,663
837
722,871
387,911
(28,699
1,257
1,084,177
Cumulative effect of change in accounting principle - Topic 326
(14,239
Balance - July 1, 2020 as adjusted for change in accounting principle
373,672
1,069,938
Other comprehensive income, net of income tax
ESOP shares committed to be released (150 shares)
(25
1,460
1,435
Stock repurchases
(7,535
(74
(80,493
(80,567
4,281
(80
(1
(802
(803
Shares issued in conjunction with the acquisition of MSB Financial Corp.
5,854
58
45,075
45,133
Cash dividends declared ($0.25 per common share)
(20,828
- 4 -
Income (Loss)
Balance - December 31, 2021
73,453
735
587,392
431,549
(25,780
1,574
995,470
ESOP shares committed to be released (51 shares)
180
486
666
(2,020
(21
(26,948
(26,969
676
(9
(124
Cash dividends declared ($0.11 per common share)
(7,720
Balance - March 31, 2022
71,424
Balance - June 30, 2021
78,965
ESOP shares committed to be released (151 shares)
1,459
1,945
(7,468
(75
(95,892
(95,967
3,117
(73
(931
(932
Cash dividends declared ($0.32 per common share)
(23,022
- 5 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash Flows from Operating Activities:
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment
4,470
4,355
Net accretion of premiums, discounts and loan fees and costs
(4,374
(11,257
Deferred income taxes and valuation allowance
6,943
3,004
(3,053
Amortization of intangible assets
539
797
Amortization of benefit plans’ unrecognized net loss
60
62
(14
Loans originated for sale
(151,783
(249,671
Proceeds from sale of mortgage loans held-for-sale
167,713
270,147
Gain on sale of mortgage loans held-for-sale, net
(2,260
(4,859
Realized gain on sale/call of investment securities available for sale
(4
(454
Realized loss on debt extinguishment
Realized gain on sale of loans receivable
(92
(352
Realized (gain) loss on disposition of premises and equipment
(356
40
Increase in cash surrender value of bank owned life insurance
(4,634
(4,722
ESOP and stock-based compensation expense
5,062
5,716
Increase in interest receivable
(155
(1,488
Decrease (increase) in other assets
6,679
(1,021
Increase (decrease) in interest payable
49
(406
(Decrease) increase in other liabilities
(15,125
1,519
Net Cash Provided by Operating Activities
57,155
57,723
Cash Flows from Investing Activities:
Purchases of:
Investment securities available for sale
(206,145
(865,163
Investment securities held to maturity
(86,406
Proceeds from:
Repayments/calls/maturities of investment securities available for sale
280,496
407,489
Repayments/calls/maturities of investment securities held to maturity
2,586
5,280
Sales of investment securities available for sale
44,842
Purchase of loans
(112,485
(34,635
Net (increase) decrease in loans receivable
(36,895
237,383
Proceeds from sale of loans receivable
43,931
Proceeds from the sale of other real estate owned
494
Additions to premises and equipment
(1,859
(2,889
Proceeds from death benefit of bank owned life insurance
300
Proceeds from cash settlement of premises and equipment
599
3,401
Redemption of FHLB stock
5,618
16,421
Net cash acquired in acquisition
4,296
Net Cash Used in Investing Activities
(152,571
(139,644
- 6 -
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Cash Flows from Financing Activities:
Net increase in deposits
43,903
485,417
Repayment of term FHLB advances
(1,170,000
(2,257,796
Proceeds from term FHLB advances
1,045,000
1,955,000
Net increase (decrease) in other short-term borrowings
290,000
(68,635
Net increase (decrease) in advance payments by borrowers for taxes
1,227
(2,063
Repurchase and cancellation of common stock of Kearny Financial Corp.
Cancellation of shares repurchased on vesting to pay taxes
Exercise of stock options
Dividends paid
(23,291
(20,981
Net Cash Provided by Financing Activities
89,940
9,945
Net Decrease in Cash and Cash Equivalents
(5,476
(71,976
Cash and Cash Equivalents - Beginning
180,967
Cash and Cash Equivalents - Ending
108,991
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Income taxes, net of refunds
9,497
13,675
Interest
21,666
41,649
Non-cash investing and financing activities:
Acquisition of other real estate owned in settlement of loans
703
Transfers from loans receivable to loans receivable held-for-sale
43,579
Fair value of assets acquired, net of cash and cash equivalents acquired
567,816
Fair value of liabilities assumed
523,926
- 7 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The unaudited consolidated financial statements include the accounts of Kearny Financial Corp. (the “Company”), its wholly-owned subsidiary, Kearny Bank (the “Bank”) and the Bank’s wholly-owned subsidiary, CJB Investment Corp. The Company conducts its business principally through the Bank. Management prepared the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), including the elimination of all significant inter-company accounts and transactions during consolidation.
Basis of Presentation
The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include the information or footnotes necessary for a complete presentation of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the unaudited consolidated financial statements have been included. The results of operations for the three months and nine months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period.
The data in the consolidated statement of financial condition for June 30, 2021 was derived from the Company’s 2021 Annual Report on Form 10-K. That data, along with the interim unaudited financial information presented in the consolidated statements of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s 2021 Annual Report on Form 10-K.
The accounting and reporting policies of the Company conform to U.S. GAAP and to general practice within the financial services industry. A discussion of these policies can be found in Note 1, Summary of Significant Accounting Policies, included in the Company’s 2021 Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies since June 30, 2021.
The Company has reclassified certain amounts in the prior period’s financial statements to conform to the current period’s presentation. Specifically, effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Interest income and non-interest income for all periods presented reflect this reclassification.
Update to Significant Accounting Policies
Allowance for Credit Losses (“ACL”) on Loans. In accordance with the ACL policy, the methodology is reviewed no less than annually. During the quarter ended September 30, 2021, the Company updated the econometric factors used in the determination of the probability of default for certain loan portfolio segments used in its ACL methodology for pooled loans. Econometric factors are selected based on the correlation of the factor to credit losses for each loan portfolio segment. Effective July 1, 2021, the primary econometric factor utilized in the determination of the probability of default for each loan portfolio segment is the national unemployment rate (“NUR”). Prior to July 1, 2021, NUR and gross domestic product (“GDP”) econometric factors were used in the determination of the probability of default for each loan portfolio segment.
- 8 -
2. SUBSEQUENT EVENTS
The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of March 31, 2022, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date this document was filed.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In March 2022, the Financial Accounting Standards Board (the “FASB”) issued ASU 2022-02, “Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” to improve the usefulness of information provided to investors about certain loan refinancings, restructurings and writeoffs. ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings by creditors and enhances disclosure requirements for certain modifications made to borrowers experiencing financial difficulty. In addition, ASU 2022-02 requires public business entities to disclose current-period gross writeoffs for financing receivables and net investments in leases by year of origination in the vintage disclosures. For entities that have adopted ASU 2016-13, the amendments in ASU 2022-02 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted if an entity has adopted ASU 2016-13, including adoption in an interim period. If an entity elects to early adopt the amendments in ASU 2022-02, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The amendments in ASU 2022-02 should be applied prospectively, but for the amendments related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method that would result in a cumulative-effect adjustment to retained earnings in the period of adoption. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements.
In March 2022, the FASB issued ASU 2022-01, “Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method” which clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets. This ASU amends the guidance in ASU 2017-12 (released in August 2017) that, among other things, established the last-of-layer method to enable fair value hedge accounting for these portfolios to be more accessible. ASU 2022-01 expands the current last-of-layer method to allow multiple hedged layers of a single closed portfolio under this method. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. The scope of last-of-layer hedging will be expanded so that the portfolio layer method can be utilized for nonprepayable financial assets. In addition, ASU 2022-01 specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. For public business entities, the amendments in ASU 2022-01 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted on any date on or after the issuance of ASU 2022-01 for any entity that has adopted the amendments in ASU 2017-12 for the corresponding period. The Company is currently evaluating the impact of the adoption of this ASU on its consolidated financial statements.
Adoption of New Accounting Standards
In December 2019, the FASB issued ASU 2019-12, “Income taxes (Topic 740): Simplifying the Accounting for Income Taxes”. ASU 2019-12 provides amendments intended to reduce the cost and complexity in accounting for income taxes while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 removes the following exceptions from ASC 740, Income Taxes: (i) exceptions to the incremental approach for intraperiod tax allocation; (ii) exceptions to accounting for basis differences when a foreign subsidiary becomes an equity method investment or a foreign equity method investment become a subsidiary; and (iii) exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 provides the following amendments that simplify and improve guidance with Topic 740: (i) franchise taxes that are based partially on income; (ii) transactions that result in a step up in the tax basis of goodwill; (iii) separate financial statements of legal entities that are not subject to tax; (iv) enacted changes in tax laws in interim periods; and (v) employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. For public business entities, the amendments in the ASU 2019-12 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted ASU 2019-12 in July 2021, and its adoption did not have a significant impact on the Company’s consolidated financial statements.
- 9 -
4. SECURITIES
The following tables present the amortized cost, gross unrealized gains and losses and estimated fair values for available for sale securities and the amortized cost, gross unrecognized gains and losses and estimated fair values for held to maturity securities as of the dates indicated:
March 31, 2022
AmortizedCost
GrossUnrealizedGains
GrossUnrealizedLosses
Allowance forCredit Losses
FairValue
(In Thousands)
Available for sale:
Debt securities:
Obligations of state and political subdivisions
30,973
118
13
31,078
Asset-backed securities
230,997
375
1,788
229,584
Collateralized loan obligations
313,651
11
2,042
311,620
Corporate bonds
154,922
1,193
2,620
153,495
Total debt securities
730,543
1,697
6,463
725,777
Mortgage-backed securities:
Collateralized mortgage obligations (1)
8,265
270
7,996
Residential pass-through securities (1)
617,387
332
47,569
570,150
Commercial pass-through securities (1)
233,879
249
11,965
222,163
Total mortgage-backed securities
859,531
582
59,804
800,309
Total securities available for sale
1,590,074
2,279
66,267
June 30, 2021
33,800
803
34,603
240,217
2,835
63
242,989
189,873
177
170
189,880
155,622
2,802
73
158,351
619,512
6,617
306
625,823
13,420
319
13,739
744,196
7,443
7,148
744,491
289,725
5,738
2,652
292,811
1,047,341
13,500
9,800
1,051,041
1,666,853
20,117
10,106
- 10 -
GrossUnrecognizedGains
GrossUnrecognizedLosses
Held to maturity:
23,546
122
24
23,644
86,017
3,989
82,028
12,290
945
11,345
98,307
4,934
93,373
Total securities held to maturity
4,958
117,017
25,824
1,204
27,028
12,314
268
12,582
1,472
39,610
Excluding the balances of mortgage-backed securities, the following tables present the amortized cost and estimated fair values of debt securities available for sale and held to maturity, by contractual maturity, at March 31, 2022:
Available for sale debt securities:
Due in one year or less
1,970
1,971
Due after one year through five years
18,939
19,008
Due after five years through ten years
353,679
351,676
Due after ten years
355,955
353,122
- 11 -
Held to maturity debt securities:
6,817
6,832
15,026
15,084
1,703
1,728
Sales of securities available for sale were as follows for the periods presented below:
Available for sale securities sold:
Proceeds from sales of securities
Gross realized gains
800
Gross realized losses
(385
Net gain on sales of securities
Gains resulting from calls of securities available for sale were as follows for the periods presented below:
Available for sale securities called:
Net gain on calls of securities
During the three months and nine months ended March 31, 2022 and 2021, there were no gains or losses recognized on sales of securities held to maturity.
The carrying value of securities pledged for borrowings at the FHLB and other institutions, and securities pledged for public funds and other purposes, were as follows as of the dates presented below:
Securities pledged:
Pledged for borrowings at the FHLB of New York
155,868
170,120
Pledged to secure public funds on deposit
324,425
137,778
Pledged for potential borrowings at the Federal Reserve Bank of New York
372,968
274,076
Total carrying value of securities pledged
853,261
581,974
- 12 -
The following tables present the gross unrealized losses on securities and the estimated fair value of the related securities, aggregated by investment category and length of time that securities have been in a continuous unrealized loss position within the available for sale portfolio at March 31, 2022 and June 30, 2021:
Less than 12 Months
12 Months or More
UnrealizedLosses
Number of Securities
(Dollars in Thousands)
Securities Available for Sale:
2,303
180,827
15
226,513
1,780
52,851
262
22
279,364
75,909
2,495
3,875
125
16
79,784
Collateralized mortgage obligations
6,819
5
Commercial pass-through securities
48,811
1,147
113,569
10,818
162,380
Residential pass-through securities
237,063
14,376
302,905
33,193
66
539,968
778,245
21,869
473,200
44,398
147
1,251,445
12,159
36,741
9
58,605
161
95,346
15,952
145,055
7
424,112
10
634,019
31
692,624
The following table presents the gross unrecognized losses on securities and the estimated fair value of the related securities, aggregated by investment category and length of time that securities have been in a continuous unrecognized loss position within the held to maturity portfolio at March 31, 2022:
UnrecognizedLosses
Unrecognized Losses
Securities Held to Maturity:
4,901
98,274
17
At June 30, 2021, there were no held to maturity securities with unrecognized losses.
- 13 -
Available for sale securities are evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or from other factors. An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the consolidated statement of income if management intends to sell, or may be required to sell, the securities before they recover in value. The issuers of these securities continue to make timely principal and interest payments and none of these securities were past due or were placed in nonaccrual status at March 31, 2022. Management believes that the unrealized losses on these securities are a function of changes in market interest rates and credit spreads, not changes in credit quality. No allowance for credit losses was recorded at March 31, 2022 on available for sale securities.
At March 31, 2022, the held to maturity securities portfolio consists of agency mortgage-backed securities and obligations of state and political subdivisions. The mortgage-backed securities are issued by U.S. government agencies and are implicitly guaranteed by the U.S. government. The obligations of state and political subdivisions in the portfolio are highly rated by major rating agencies and have a long history of no credit losses. The Company regularly monitors the obligations of state and political subdivisions sector of the market and reviews collectability including such factors as the financial condition of the issuers as well as credit ratings in effect as of the reporting period. No allowance for credit losses was recorded at March 31, 2022 on held to maturity securities.
5. LOANS RECEIVABLE
The following table sets forth the composition of the Company’s loan portfolio at March 31, 2022 and June 30, 2021:
Commercial loans:
Multi-family mortgage
2,076,003
2,039,260
Nonresidential mortgage
1,085,988
1,079,444
Commercial business
169,551
168,951
Construction
121,137
93,804
Total commercial loans
3,452,679
3,381,459
One- to four-family residential mortgage
1,527,980
1,447,721
Consumer loans:
Home equity loans
41,501
47,871
Other consumer
2,755
3,259
Total consumer loans
44,256
51,130
Total loans
5,024,915
4,880,310
Unaccreted yield adjustments
(21,714
(28,916
Total loans receivable, net of yield adjustments
- 14 -
Past Due Loans
Past due status is based on the contractual payment terms of the loans. The following tables present the payment status of past due loans as of March 31, 2022 and June 30, 2021, by loan segment:
Payment Status
30-59 Days
60-89 Days
90 Days and Over
Total Past Due
Current
28,197
2,047,806
2,101
25,283
27,384
1,058,604
64
281
345
169,206
3,410
520
2,968
6,898
1,521,082
25
59
88
41,413
5,536
588
56,788
62,912
4,962,003
16,094
2,023,166
32,891
1,046,553
168,550
382
2,734
5,104
8,220
1,439,501
32
43
47,828
3,258
389
2,739
54,522
57,650
4,822,660
Nonperforming Loans
Loans are generally placed on nonaccrual status when contractual payments become 90 or more days past due or when the Company does not expect to receive all principal and interest payments owed substantially in accordance with the terms of the loan agreement, regardless of past due status. Loans that become 90 days past due, but are well secured and in the process of collection, may remain on accrual status. Nonaccrual loans are generally returned to accrual status when all payments due are brought current and the Company expects to receive all remaining principal and interest payments owed substantially in accordance with the terms of the loan agreement. Payments received in cash on nonaccrual loans, including both the principal and interest portions of those payments, are generally applied to reduce the carrying value of the loan. The Company did not recognize interest income on non-accrual loans during the three months and nine months ended March 31, 2022 and 2021.
- 15 -
The following tables present information relating to the Company’s nonperforming loans as of March 31, 2022 and June 30, 2021:
Performance Status
90 Days and Over Past Due Accruing
Nonaccrual Loans with Allowance for Credit Losses
Nonaccrual Loans with no Allowance for Credit Losses
Total Nonperforming
Performing
11,369
28,646
40,015
2,035,988
3,667
24,523
28,190
1,057,798
430
493
169,058
1,791
119,346
4,376
4,241
8,617
1,519,363
313
1,176
1,489
40,012
19,788
60,807
80,595
4,944,320
8,300
10,226
18,526
2,020,734
12,612
24,575
37,187
1,042,257
236
912
168,039
2,228
91,576
7,422
11,748
19,170
1,428,551
452
1,292
1,744
46,127
29,022
50,745
79,767
4,800,543
Troubled Debt Restructurings (“TDRs”)
TDRs are loans where the Company has modified the contractual terms of the loan as a result of the financial condition of the borrower. Subsequent to their modification, TDRs are placed on non-accrual until such time as satisfactory payment performance has been demonstrated, at which time the loan may be returned to accrual status. On a case-by-case basis, the Company may agree to modify the contractual terms of a loan to assist a borrower who may be experiencing financial difficulty, as well as to preserve the Company’s position in the loan. If the borrower is experiencing financial difficulties and a concession has been made at the time of such modification, the loan is classified as a TDR. The Company had TDRs totaling $31.7 million and $17.8 million as of March 31, 2022 and June 30, 2021, respectively. The allowance for credit losses associated with the TDRs presented in the tables below totaled $672,000 and $256,000 as of March 31, 2022 and June 30, 2021, respectively. As of March 31, 2022, there were no significant commitments to lend additional funds to borrowers whose loans had been restructured in a TDR.
- 16 -
The following tables present total TDR loans at March 31, 2022 and June 30, 2021:
Accrual
Non-accrual
# of Loans
(Dollars In Thousands)
14,605
400
1,646
2,046
3,704
325
4,029
4,104
18,367
22,471
29
4,270
3,392
44
7,662
1,396
1,566
8,544
26
23,155
69
31,699
2,896
105
2,275
2,380
3,755
693
4,448
3,860
8,092
11,952
2,216
20
3,405
38
5,621
159
68
227
6,235
11,565
17,800
The following tables present information regarding troubled debt restructurings that occurred during the three months and nine months ended March 31, 2022 and 2021:
Three Months Ended March 31, 2022
Nine Months Ended March 31, 2022
Pre-modificationRecordedInvestment
Post-modificationRecordedInvestment
9,104
9,101
12,091
12,073
2,953
2,965
3,214
3,226
1,477
13,534
13,543
16,782
16,776
Three Months Ended March 31, 2021
Nine Months Ended March 31, 2021
309
308
333
- 17 -
During the three months and nine months ended March 31, 2022 and 2021, there were no charge-offs related to TDRs. During the three months and nine months ended March 31, 2022 and 2021, there were no defaults of TDRs.
Loan modifications generally involve a reduction in interest rates and/or extension of maturity dates and also may include step up interest rates in their modified terms which will impact their weighted average yield in the future. The loans which qualified as TDRs during the three months and nine months ended March 31, 2022 and 2021, capitalized prior past due amounts and modified the repayment terms.
In March 2020, various regulatory agencies, including the Board of Governors of the Federal Reserve System (the “FRB”) and the Federal Deposit Insurance Corporation (the “FDIC”), issued an interagency statement on loan modifications and reporting for financial institutions working with customers affected by COVID-19. The interagency statement was effective immediately and impacted accounting for loan modifications. The agencies confirmed with the staff of the FASB that short-term modifications, made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, were not to be considered TDRs. This included short-term modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays in payment that were insignificant. Provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) largely mirrored the provisions of the interagency statement, providing that modified loans were not to be considered TDRs if they were performing at December 31, 2019 and other considerations set forth in the interagency statements were met. Borrowers considered current are those that were less than 30 days past due at the time a modification program was implemented or at December 31, 2019.
On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law. The $900 billion relief package included legislation that extended certain relief provisions of the CARES Act that were set to expire on December 31, 2020. The relief expired on January 1, 2022. As of March 31, 2022, the Company did not have any non-TDR loan modifications granted under the CARES Act.
Individually Analyzed Loans
Effective July 1, 2020, individually analyzed loans include loans which do not share similar risk characteristics with other loans. TDRs will generally be evaluated for individual impairment, however, after a period of sustained repayment performance which permits the credit to be returned to accrual status, a TDR would generally be removed from individual impairment analysis and returned to its corresponding pool. As of March 31, 2022, the carrying value of individually analyzed loans totaled $82.7 million, of which $65.1 million were considered collateral dependent.
For collateral dependent loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the loan is to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral, less costs to sell, and the amortized cost basis of the loan as of the measurement date. See Note 12 for additional disclosure regarding fair value of individually analyzed collateral dependent loans.
- 18 -
The following table presents the carrying value and related allowance of collateral dependent individually analyzed loans at the dates indicated:
Carrying Value
Related Allowance
661
1,368
Nonresidential mortgage (1)
119
4,724
Commercial business (2)
176
183
60,429
780
51,600
6,092
One- to four-family residential mortgage (3)
4,581
196
7,612
420
Home equity loans (3)
65,069
59,243
6,512
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually to classify the loans as to credit risk. The Company uses the following definitions for risk ratings:
Pass – Loans that are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell, of any underlying collateral in a timely manner.
Special Mention – Loans which do not currently expose the Company to a sufficient degree of risk to warrant an adverse classification but have some credit deficiencies or other potential weaknesses.
Substandard – Loans which are inadequately protected by the paying capacity and net worth of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful – Loans which have all of the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions and values.
Loss – Loans which are considered uncollectible or of so little value that their continuance as assets is not warranted.
- 19 -
The following table presents the risk category of loans as of March 31, 2022 by loan segment and vintage year:
Term Loans by Origination Year for Fiscal Years ended June 30,
2020
2019
2018
Prior
Revolving Loans
Multi-family mortgage:
Pass
520,269
263,316
216,072
256,541
252,909
500,758
2,009,865
Special Mention
16,370
4,994
4,759
26,123
Substandard
10,182
2,788
27,045
Doubtful
Total multi-family mortgage
283,093
260,691
532,562
Nonresidential mortgage:
201,205
86,212
64,161
37,706
51,884
569,499
6,087
1,016,754
23,364
4,070
9,249
36,683
724
933
30,894
32,551
Total nonresidential mortgage
86,936
62,003
55,954
609,642
Commercial business:
36,918
39,481
12,441
3,961
9,147
7,370
54,513
163,831
65
189
2,173
895
216
3,538
230
1,422
285
2,034
145
148
Total commercial business
39,520
12,736
4,150
12,742
8,695
54,790
Construction loans:
7,868
85,564
9,492
6,513
1,117
5,735
119,347
1,790
Total construction loans
2,907
Residential mortgage:
312,625
531,111
90,576
53,262
56,834
464,738
1,509,521
1,213
439
1,652
1,704
83
15,020
16,807
Total residential mortgage
92,280
54,558
480,197
Home equity loans:
1,759
715
3,245
2,125
7,552
22,156
39,296
265
124
1,816
1,940
Total home equity loans
3,369
9,633
Other consumer loans
324
477
398
247
913
2,680
75
115
1,080,925
1,007,486
396,962
410,629
395,106
1,644,549
89,258
- 20 -
The following table presents the risk category of loans as of June 30, 2021 by loan segment and vintage year:
2017
281,402
257,970
374,871
341,304
343,370
374,909
1,973,826
26,974
5,079
4,834
1,054
37,941
13,198
11,399
27,493
401,845
349,279
361,402
387,362
99,602
77,146
56,435
64,616
254,940
441,696
6,150
1,000,585
23,520
4,146
8,801
4,513
40,980
743
20,602
11,600
37,879
100,345
79,955
73,696
284,343
457,809
44,514
18,988
4,701
12,654
3,322
12,892
65,657
162,728
2,304
12
461
3,722
76
160
132
2,072
429
44,555
19,064
4,861
16,432
4,399
13,513
66,127
40,332
17,404
11,203
13,860
1,641
1,382
91,557
2,247
3,629
560,543
124,606
69,917
74,754
119,238
472,587
1,422,020
1,233
712
1,040
671
511
1,468
20,066
23,756
125,646
71,821
75,265
120,706
493,365
834
2,508
4,585
2,778
2,241
7,798
24,788
45,532
393
1,935
1,946
2,252
10,126
550
517
633
256
127
1,044
3,171
1,028,561
500,255
574,903
531,566
774,870
1,366,848
103,307
Residential Mortgage Loans in Foreclosure
The Company may obtain physical possession of one- to four-family real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. As of March 31, 2022, the Company held two single-family properties in other real estate owned with an aggregate carrying value of $401,000 that were acquired through foreclosure on residential mortgage loans. As of that same date, the Company held eight residential mortgage loans with aggregate carrying values totaling $1.6 million which were in the process of foreclosure. As of June 30, 2021, the Company held one single-family property in other real estate owned with an aggregate carrying value of $178,000 that was acquired through a foreclosure on a residential mortgage loan. As of that same date, the Company held 11 residential mortgage loans with aggregate carrying values totaling $2.1 million which were in the process of foreclosure.
New Jersey’s moratorium on evictions ended on December 31, 2021. Under New Jersey’s new eviction protections for people under certain income levels, no evictions may occur now or in the future based on rent due during the time period of March 1, 2020 through August 31, 2021, for certain moderate income families, or March 1, 2020 through December 31, 2021 for certain low income families. The moratorium on home foreclosures ended on November 15, 2021, for all income levels. This included landlords facing foreclosure who currently have tenants. New York’s moratorium on evictions for tenants who have endured COVID-related hardships and on foreclosures ended on January 15, 2022. As a result, the Company has resumed residential property foreclosure sales and evictions. Eviction laws may be subject to legal challenges and could change based on the results of court proceedings.
- 21 -
6. ALLOWANCE FOR CREDIT LOSSES
Adoption of Topic 326
On July 1, 2020, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which replaces the incurred loss methodology with an expected loss methodology, referred to as the “CECL” methodology.
Allowance for Credit Losses on Loans Receivable
The following tables present the balance of the allowance for credit losses at March 31, 2022 and June 30, 2021. For the three months and nine months ended March 31, 2022 and 2021, the balance of the allowance for credit losses is based on the CECL methodology, as noted above. The tables identify the valuation allowances attributable to specifically identified impairments on individually evaluated loans, including those acquired with deteriorated credit quality, as well as valuation allowances for impairments on loans evaluated collectively. The tables include the underlying balance of loans receivable applicable to each category as of those dates.
Allowance for Credit Losses
Loansacquired withdeterioratedcredit qualityindividuallyanalyzed
Loansacquired withdeterioratedcredit qualitycollectivelyevaluated
Loans individually analyzed
Loans collectively evaluated
Total allowance for credit losses
1,083
23,144
24,227
363
8,557
9,039
1,708
1,725
1,274
242
278
6,758
7,278
214
81
616
1,486
41,736
43,860
Balance of Loans Receivable
381
13,179
29,911
1,042,517
1,267
317
167,791
113,611
6,666
8,386
1,512,698
342
39,952
1,129
26,907
81,567
4,915,312
Loans receivable, net of yield adjustments
- 22 -
155
26,927
28,450
2,700
692
2,025
10,826
16,243
33
2,038
2,086
1,121
1,170
204
447
8,974
9,747
21
433
36
2,843
1,116
3,874
50,332
58,165
5,599
2,015,135
6,519
25,844
30,668
1,016,413
2,533
729
165,506
12,970
78,606
3,617
4,785
15,553
1,423,766
380
1,364
46,062
10,699
51,796
69,068
4,748,747
- 23 -
The following tables present the activity in the allowance for credit losses on loans for the three months and nine months ended March 31, 2022 and 2021.
Changes in the Allowance for Credit Losses
Balance atDecember 31, 2021
Charge-offs
Recoveries
(Reversal of)provision forcredit losses
Balance atMarch 31, 2022
25,795
(1,568
10,078
(441
(598
1,903
(182
1,441
(167
8,601
(1,323
(72
90
48,216
Balance atJune 30, 2021
(104
(4,119
(2,538
(4,666
(175
(291
104
(2,616
(198
46
(2,819
254
- 24 -
Balance atDecember 31, 2020
Balance atMarch 31, 2021
29,500
(514
28,986
15,933
4,053
19,977
3,348
(738
(86
2,526
1,205
1,245
12,625
(2,249
10,378
725
(117
608
50
42
63,386
(756
63,762
Balance at June 30, 2020 (prior toadoption of ASC 326):
Impact of adoptingTopic 326
Initial allowance on PCD loans
20,916
8,408
250
(588
8,763
2,390
1,720
7,179
1,926
(421
1,007
809
80
99
830
4,860
9,106
720
(4,297
568
92
(32
(125
(15
(22
37,327
19,640
(944
3,901
Allowance for Credit Losses on Off Balance Sheet Commitments
The following table presents the activity in the allowance for credit losses on off balance sheet commitments recorded in other non-interest expense for the three months and nine months ended March 31, 2022 and 2021:
Balance at beginning of the period
1,148
1,058
Impact of adopting Topic 326 (1)
536
(208
207
(768
Balance at end of the period
940
- 25 -
7. DEPOSITS
Deposits are summarized as follows:
Non-interest-bearing demand
Interest-bearing demand
2,154,488
1,902,478
Savings
1,088,974
1,111,364
Certificates of deposits
1,663,246
1,877,746
8. BORROWINGS
Borrowings at March 31, 2022 and June 30, 2021 consisted of the following:
FHLB advances
541,220
665,876
Overnight borrowings
310,000
20,000
Total borrowings
Fixed rate advances from the FHLB of New York mature as follows:
Balance
WeightedAverageInterest Rate
By remaining period to maturity:
Less than one year
265,000
0.63
%
390,000
0.33
One to two years
145,000
3.04
Two to three years
103,500
2.65
22,500
2.63
Three to four years
29,000
2.77
2.68
Four to five years
6,500
2.82
Greater than five years
Total advances
542,500
1.77
667,500
1.38
Unamortized fair value adjustments
(1,280
(1,624
Total advances, net of fair value adjustments
At March 31, 2022, FHLB advances were collateralized by the FHLB capital stock owned by the Bank and mortgage loans and securities with carrying values totaling approximately $3.44 billion and $155.9 million, respectively. At June 30, 2021, FHLB advances were collateralized by the FHLB capital stock owned by the Bank and mortgage loans and securities with carrying values totaling approximately $3.27 billion and $170.1 million, respectively.
- 26 -
9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Risk Management Objective of Using Derivatives
The Company uses various financial instruments, including derivatives, to manage its exposure to interest rate risk. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to specific wholesale funding positions.
Fair Values of Derivative Instruments on the Statement of Financial Condition
The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the Statement of Financial Condition as of March 31, 2022 and June 30, 2021:
Asset Derivatives
Liability Derivatives
Location
Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts
34,007
1,832
673
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using derivatives are primarily to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company has entered into interest rate swaps and caps as part of its interest rate risk management strategy. These interest rate products are designated as cash flow hedges. As of March 31, 2022, the Company had a total of 10 interest rate swaps and caps with a total notional amount of $790.0 million hedging specific wholesale funding positions.
For derivatives designated as cash flow hedges, the gain or loss on the derivative is recorded in other comprehensive income, net of tax, and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate wholesale funding positions. During the three months and nine months ended March 31, 2022 the Company reclassified $1.3 million and $4.3 million, respectively, as additional interest expense. During the next twelve months, the Company estimates that $4.6 million will be reclassified as a reduction in interest expense.
The table below presents the pre-tax effects of the Company’s derivative instruments on the Consolidated Statements of Income for the three months and nine months ended March 31, 2022 and 2021:
Amount of gain recognized in other comprehensive income
23,343
13,075
28,607
14,353
Amount of loss reclassified from accumulated other comprehensive income to interest expense
(1,268
(1,987
(4,271
(6,576
- 27 -
Offsetting Derivatives
The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives in the Consolidated Statements of Financial Condition as of March 31, 2022 and June 30, 2021, respectively. The net amounts presented for derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Consolidated Statements of Financial Condition.
Gross Amounts Not Offset
Gross Amount Recognized
Gross Amounts Offset
Net Amounts Presented
Financial Instruments
Cash Collateral Received
Net Amount
Assets:
34,158
(151
Cash Collateral Posted
Liabilities:
151
6,847
(5,015
5,688
(673
Credit Risk-Related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, then the Company could also be declared in default on its derivative obligations and could be required to terminate its derivative positions with the counterparty. The Company also has agreements with its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well-capitalized institution, then the Company could be required to terminate its derivative positions with the counterparty. At March 31, 2022, none of the Company’s derivatives were in a net liability position. As required under the enforceable master netting arrangement with its derivatives counterparties, at March 31, 2022, the Company was not required to post financial collateral.
In addition to the derivative instruments noted above, the Company’s pipeline of loans held for sale at March 31, 2022 and June 30, 2021, included $16.0 million and $48.4 million, respectively, of in process loans whose terms included interest rate locks to borrowers, which are considered free-standing derivative instruments whose fair values are not material to the Company’s financial condition or results of operations.
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10. BENEFIT PLANS
Components of Net Periodic Expense
The following table sets forth the aggregate net periodic benefit expense for the Bank’s Benefit Equalization Plan, Postretirement Welfare Plan, Directors’ Consultation and Retirement Plan and Atlas Bank Retirement Income Plan:
Affected Line Item in the Consolidated
Statements of Income
Service cost
79
Interest cost
67
205
197
Amortization of unrecognized loss
Expected return on assets
(27
(28
(83
(85
Net periodic benefit cost
89
84
269
253
2021 Equity Incentive Plan
At the Company’s 2021 Annual Meeting of Stockholders held on October 28, 2021, the stockholders approved the Kearny Financial Corp. 2021 Equity Incentive Plan (“2021 Plan”) which provides for the grant of stock options, restricted stock and restricted stock units (“RSUs”). The 2021 Plan authorized the issuance of up to 7,500,000 shares (the “Share Limit”); provided, however that the Share Limit is reduced, on a one-for-one-basis, for each share of common stock subject to a stock option grant, and on a three-for-one basis for each share of common stock issued pursuant to restricted stock awards or RSUs.
During the quarter ended March 31, 2022, the Company granted 251,905 RSUs comprised of 181,588 service-based RSUs and 70,317 performance-based RSUs. The service-based RSUs will vest in three tranches over a period of 2.6 years and the performance-based RSUs will cliff vest upon the achievement of performance measures over the three-year period ending June 30, 2024. The total number of performance-based RSUs that will vest, if any, will depend on whether and to what extent the performance measures are achieved. Common stock will be issued from authorized shares upon the vesting of the RSUs.
11. INCOME TAXES
The following table presents a reconciliation between the reported income taxes for the periods presented and the income taxes which would be computed by applying the federal income tax rate of 21% to income for the three months and nine months ended March 31, 2022 and 2021:
Income before income taxes
Statutory federal tax rate
Federal income tax expense at statutory rate
5,085
4,653
16,122
12,386
(Reduction) increase in income taxes resulting from:
Tax exempt interest
(66
(204
(270
State tax, net of federal tax effect
1,908
1,498
6,026
3,738
Incentive stock option compensation expense
23
Income from bank-owned life insurance
(317
(324
(973
(989
Non-deductible merger-related expenses
(641
Other items, net
(91
(418
5,744
14,765
Reversal of valuation allowance
(12
(535
Total income tax expense
Effective income tax rate
26.93
25.87
26.83
24.13
- 29 -
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1:
Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2:
Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability or inputs that are derived principally from, or corroborated by, market data by correlation or other means.
Level 3:
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
Assets Measured on a Recurring Basis:
The following methods and significant assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis at March 31, 2022 and June 30, 2021:
Investment Securities Available for Sale
The Company’s available for sale investment securities are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. From time to time, the Company validates prices supplied by the independent pricing service by comparison to prices obtained from third-party sources or derived using internal models.
Derivatives
The Company has contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate caps and swaps. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis and extensions of the Black-Scholes model. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.
- 30 -
Those assets measured at fair value on a recurring basis are summarized below:
QuotedPricesin ActiveMarkets forIdenticalAssets(Level 1)
SignificantOtherObservableInputs(Level 2)
SignificantUnobservableInputs(Level 3)
Debt securities available for sale:
Mortgage-backed securities available for sale:
Total assets
1,560,093
- 31 -
Quoted Pricesin ActiveMarkets forIdenticalAssets(Level 1)
1,678,696
Total liabilities
Assets Measured on a Non-Recurring Basis:
The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a non-recurring basis at March 31, 2022 and June 30, 2021:
Collateral Dependent Individually Analyzed Loans
The fair value of collateral dependent loans that are individually analyzed is determined based upon the appraised fair value of the underlying collateral, less costs to sell. Such collateral primarily consists of real estate and, to a lesser extent, other business assets. Management may also adjust appraised values to reflect estimated changes in market values or apply other adjustments to appraised values resulting from its knowledge of the collateral. Internal valuations may be utilized to determine the fair value of other business assets. For non-collateral-dependent loans, management estimates fair value using discounted cash flows based on inputs that are largely unobservable and instead reflect management’s own estimates of the assumptions as a market participant would in pricing such loans. Collateral dependent individually analyzed loans are considered a Level 3 valuation by the Company.
- 32 -
Other Real Estate Owned
Other real estate owned is recorded at estimated fair value, less estimated selling costs when acquired, thus establishing a new cost basis. Fair value is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for credit losses. If further declines in the estimated fair value of the asset occur, a write-down is recorded through expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions.
Those assets measured at fair value on a non-recurring basis are summarized below:
Collateral dependent loans:
Residential mortgage
2,239
4,558
5,799
12,596
Other real estate owned, net:
Residential
3,051
6,932
8,679
18,662
- 33 -
The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value:
ValuationTechniques
UnobservableInput
Range
WeightedAverage
Market valuation of underlying collateral
(1)
Adjustments to reflect current conditions/selling costs
(2)
7% - 14%
10.39
10% - 11%
10.60
9% - 19%
14.97
(3)
5% - 6%
5.44
7% - 13%
9.77
9% - 16%
14.48
6.00%
6.00
- 34 -
At March 31, 2022, collateral dependent loans valued using Level 3 inputs comprised loans with principal balance totaling $13.6 million and valuation allowances of $976,000 reflecting fair values of $12.6 million. By comparison, at June 30, 2021, collateral dependent loans valued using Level 3 inputs comprised loans with principal balance totaling $25.2 million and valuation allowances of $6.5 million reflecting fair values of $18.7 million.
Once a loan is foreclosed, the fair value of the other real estate owned continues to be evaluated based upon the fair value of the repossessed real estate originally securing the loan. At March 31, 2022 and June 30, 2021, the Company held other real estate owned totaling $401,000 and $178,000, respectively, whose carrying value was written down utilizing Level 3 inputs.
The following tables present the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2022 and June 30, 2021:
CarryingAmount
Financial assets:
2,759
4,877,212
FHLB Stock
Interest receivable
5,311
14,203
Financial liabilities:
5,515,560
3,865,416
1,650,144
853,824
Interest payable on deposits
164
85
Interest payable on borrowings
1,365
- 35 -
16,934
4,830,136
4,238
15,123
5,490,923
3,607,560
1,883,363
701,419
96
1,335
Commitments. The fair value of commitments to fund credit lines and originate or participate in loans held in portfolio or loans held for sale is estimated using fees currently charged to enter into similar agreements taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, including those relating to loans held for sale that are considered derivative instruments for financial statement reporting purposes, the fair value also considers the difference between current levels of interest and the committed rates. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, is not considered material for disclosure.
Limitations. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no fair value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment, and advances from borrowers for taxes and insurance. In addition, the ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.
Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.
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13. COMPREHENSIVE INCOME (LOSS)
The components of accumulated other comprehensive (loss) income included in stockholders’ equity at March 31, 2022 and June 30, 2021 are as follows:
Net unrealized (loss) gain on securities available for sale
(63,988
10,011
Tax effect
18,760
(2,882
Net of tax amount
(45,228
7,129
32,566
(312
(9,557
94
23,009
(218
(1,033
(1,093
303
326
(730
(767
Total accumulated other comprehensive (loss) income
Other comprehensive (loss) income and related tax effects for the three months and nine months ended March 31, 2022 and 2021 are presented in the following table:
Net unrealized holding loss on securities available for sale
(59,249
(22,285
(73,995
(20,374
Net realized gain on sale and call of securities available for sale (1)
(18
24,611
15,062
32,878
20,929
Amortization of benefit plan net actuarial loss
Other comprehensive (loss) income before taxes
(34,621
(7,221
(41,061
163
10,098
11,968
(63
Total other comprehensive (loss) income
- 37 -
14. NET INCOME PER COMMON SHARE (“EPS”)
The following schedule shows the Company’s earnings per share calculations for the periods presented:
Three Months Ended March 31,
Nine Months Ended March 31,
Weighted average number of common shares outstanding - basic
Effect of dilutive securities
27
Weighted average number of common shares outstanding - diluted
Basic earnings per share
Diluted earnings per share
Stock options for 3,115,000 and 3,253,040 shares of common stock were not considered in computing diluted earnings per share at March 31, 2022 and March 31, 2021, respectively, because the stock options were considered anti-dilutive. In addition, 251,905 RSUs were not considered in computing diluted earnings per share at March 31, 2022 because the RSUs were considered anti-dilutive.
- 38 -
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q may include certain forward-looking statements based on current management expectations. Such forward-looking statements may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may”, “will”, “believe”, “expect”, “estimate”, “anticipate”, “continue”, or similar terms or variations on those terms, or the negative of those terms. The actual results of the Company could differ materially from those management expectations. This includes statements regarding general economic conditions, public health crisis such as the governmental, social and economic effects of the novel coronavirus, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities and failure to integrate or profitably operate acquired businesses. Additional potential factors include changes in interest rates, the rate of inflation, deposit flows, cost of funds, demand for loan products and financial services, competition and changes in the quality or composition of loan and investment portfolios of the Company. Other factors that could cause future results to vary from current management expectations include changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and prices. Further description of the risks and uncertainties to the business are included in the Company’s other filings with the Securities and Exchange Commission.
In addition, the COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including whether the coronavirus can continue to be controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for credit losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; due to a decline in our stock price or other factors, goodwill may become impaired and be required to be written down; and our cyber security risks are increased as the result of an increase in the number of employees working remotely. Reference is made to Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021.
Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.
Critical Accounting Policies
Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. At March 31, 2022, we consider the determination of the allowance for credit losses on loans, individually evaluating loans, calculating the allowance of credit losses on acquired loans, accounting for business combinations and the valuation of goodwill and identifiable intangible assets to be our critical accounting policies. Reference is made to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, for a description of the Company’s critical accounting policies.
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Comparison of Financial Condition at March 31, 2022 and June 30, 2021
Executive Summary. Total assets increased $106.2 million to $7.39 billion at March 31, 2022 from $7.28 billion at June 30, 2021. The increase primarily reflected an increase in net loans receivable, partially offset by a decrease in investment securities.
Investment Securities. Investment securities available for sale decreased $150.8 million to $1.53 billion at March 31, 2022, from $1.68 billion at June 30, 2021. This decrease was largely the result of principal repayments of $280.5 million and a fair value decrease of $74.0 million, partially offset by security purchases of $206.1 million. Investment securities held to maturity increased $83.7 million to $121.9 million at March 31, 2022 from $38.1 million at June 30, 2021. This increase was largely the result of security purchases of $86.4 million, partially offset by principal repayments of $2.6 million.
Additional information regarding our investment securities at March 31, 2022 and June 30, 2021 is presented in Note 4 to the unaudited consolidated financial statements.
Loans Held-for-Sale. Loans held-for-sale totaled $2.8 million at March 31, 2022 as compared to $16.5 million at June 30, 2021 and are reported separately from the balance of net loans receivable. During the nine months ended March 31, 2022, $165.5 million of residential mortgage loans were sold, resulting in a gain on sale of $2.3 million.
Net Loans Receivable. Net loans receivable increased $166.1 million, or 3.5%, to $4.96 billion at March 31, 2022 from $4.79 billion at June 30, 2021. Detail regarding the change in the loan portfolio, by loan segment, is presented below:
Increase/
(Decrease)
36,743
6,544
600
27,333
71,220
80,259
(6,370
(504
(6,874
144,605
7,202
Allowance for credit losses
14,305
166,112
Commercial loan origination volume for the nine months ended March 31, 2022 totaled $834.0 million, comprised of $667.1 million of commercial mortgage loan originations, $105.5 million of commercial business loan originations and construction loan disbursements of $61.4 million. Commercial loan origination volume was augmented with the funding of purchased commercial mortgage loans totaling $55.8 million.
One- to four-family residential mortgage loan origination volume for the nine months ended March 31, 2022, excluding loans held-for-sale, totaled $262.7 million and was augmented with the funding of purchased loans totaling $56.5 million. Home equity loan and line of credit origination volume for the same period totaled $13.5 million.
- 40 -
Loan-to-value (“LTV”) ratios are based on current period loan balances and original appraised values at the time of origination unless a current appraisal has been obtained as a result of the loan being deemed collateral dependent and individually analyzed. The following table sets forth the composition of our real estate secured loans indicating the LTV, by loan category, at March 31, 2022 and June 30, 2021:
LTV
Commercial mortgage loans:
61
Total commercial mortgage loans
3,283,128
3,212,508
47
Total mortgage loans
4,852,609
4,708,100
Additional information about our loans at March 31, 2022 and June 30, 2021 is presented in Note 5 to the unaudited consolidated financial statements.
Nonperforming Assets and TDRs. Nonperforming assets increased by $1.1 million to $81.0 million, or 1.10% of total assets at March 31, 2022, from $79.9 million, or 1.10% of total assets at June 30, 2021. At March 31, 2022, we had accruing TDRs totaling $8.5 million, an increase of $2.3 million from $6.2 million at June 30, 2021. At March 31, 2022, we had non-accrual TDRs totaling $23.2 million, an increase of $11.6 million from $11.6 million at June 30, 2021.
Based on Section 4013 of the CARES Act, the 2021 Consolidated Appropriations Act and related regulatory guidance promulgated by federal banking regulators, qualifying loan modifications made in response to the COVID-19 pandemic, including short-term payment deferrals, were not considered to be TDRs. We had no active payment deferrals that were not considered TDRs as of March 31, 2022. We had active payment deferrals, which were not considered TDRs, of $5.6 million as of June 30, 2021.
Additional information about our nonperforming loans and TDRs at March 31, 2022 and June 30, 2021 is presented in Note 5 to the unaudited consolidated financial statements.
Allowance for Credit Losses (“ACL”). At March 31, 2022, the ACL totaled $43.9 million, or 0.87% of total loans, reflecting a decrease of $14.3 million from $58.2 million, or 1.19% of total loans, at June 30, 2021. The decrease during the nine months ended March 31, 2022 was largely attributable to a provision for credit losses reversal of $11.7 million, primarily driven by continued improvement in our economic forecast, a reduction in the expected life of various segments of the loan portfolio and a net reduction in reserves on loans individually evaluated for impairment. Also contributing to this decrease were net charge-offs of $2.6 million, which had been individually reserved for within the ACL at June 30, 2021.
Additional information about our ACL at March 31, 2022 and June 30, 2021 is presented in Note 6 to the unaudited consolidated financial statements.
Other Assets. The aggregate balance of other assets, including premises and equipment, FHLB stock, interest receivable, goodwill, core deposit intangibles, bank owned life insurance, deferred income taxes, OREO and other assets, increased $26.3 million to $717.4 million at March 31, 2022 from $691.2 million at June 30, 2021. The increase in the balance of these other assets during the nine months ended March 31, 2022 largely reflected a $32.2 million increase in the fair value of our derivatives portfolio. The remaining change generally reflected normal operating fluctuations within these line items.
- 41 -
Deposits. Total deposits increased $43.4 million, or 0.8%, to $5.53 billion at March 31, 2022 from $5.49 billion at June 30, 2021. The increase in deposits largely reflected growth in core non-maturity deposits, which was partially offset by the controlled run-off of time deposits. The following table sets forth the distribution of, and changes in, deposits, by type, for the periods indicated:
Non-interest-bearing deposits
28,236
Interest-bearing deposits:
252,010
(22,390
Certificates of deposit
(214,500
Interest-bearing deposits
15,120
43,356
Additional information about our deposits at March 31, 2022 and June 30, 2021 is presented in Note 7 to the unaudited consolidated financial statements.
Borrowings. The balance of borrowings increased by $165.3 million to $851.2 million at March 31, 2022 from $685.9 million at June 30, 2021.
Additional information about our borrowings at March 31, 2022 and June 30, 2021 is presented in Note 8 to the unaudited consolidated financial statements.
Other Liabilities. The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, decreased $14.8 million to $54.8 million at March 31, 2022 from $69.6 million at June 30, 2021. The decrease in these other liabilities largely reflected the payment of a $12.5 million loan participation liability which was outstanding at June 30, 2021. The remaining change in the balance of these other liabilities generally reflected normal operating fluctuations during the period.
Stockholders’ Equity. Stockholders’ equity decreased $87.8 million to $955.2 million at March 31, 2022 from $1.04 billion at June 30, 2021. The decrease in stockholders’ equity during the nine months ended March 31, 2022 largely reflected share repurchases totaling $96.0 million and cash dividends totaling $23.0 million. In addition, accumulated other comprehensive (loss) income decreased $29.1 million due primarily to a decline in the fair value of our available for sale securities, partially offset by an increase in the fair value of our derivatives portfolio. These decreases were partially offset by net income of $56.2 million.
Book value per share increased by $0.16 to $13.37 at March 31, 2022 while tangible book value per share decreased by $0.11 to $10.38 at March 31, 2022.
On September 22, 2021, we announced the authorization of a new stock repurchase plan, which authorized the repurchase of up to 7,602,021 shares, or 10% of the shares then outstanding. During the quarter ended March 31, 2022, we repurchased 2,019,625 shares of common stock at a cost of $27.0 million, or $13.35 per share. Through March 31, 2022, we repurchased a total of 4,522,301 shares, or 59.5% of the shares authorized for repurchase under the current repurchase program, at a total cost of $59.6 million or $13.18 per share.
- 42 -
Comparison of Operating Results for the Quarter Ended March 31, 2022 and March 31, 2021
Net Income. Net income for the quarter ended March 31, 2022 was $17.7 million, or $0.25 per diluted share, compared to $16.4 million, or $0.20 per diluted share for the quarter ended March 31, 2021. The increase in net income reflected a decrease in the provision for credit losses, partially offset by a decrease in net interest income, a decrease in non-interest income, an increase in non-interest expense and an increase in income tax expense.
Net Interest Income. Effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Interest income and non-interest income for all periods presented reflect this reclassification.
Net interest income decreased by $756,000 to $47.7 million for the quarter ended March 31, 2022 compared to $48.5 million for the quarter ended March 31, 2021. The decrease between the comparative periods resulted from a decrease of $4.6 million in interest income, partially offset by a decrease of $3.8 million in interest expense. Included in net interest income for the quarters ended March 31, 2022 and March 31, 2021, respectively, was purchase accounting accretion of $1.9 million and $4.8 million and loan prepayment penalty income of $1.3 million and $852,000.
Net interest margin increased one basis point to 2.89% for the quarter ended March 31, 2022, from 2.88% for the quarter ended March 31, 2021 and reflected a decrease in the average cost of interest-bearing liabilities that was partially offset by a decrease in the average yield on interest-earning assets.
Details surrounding the composition of, and changes to, net interest income are presented in the table below which reflects the components of the average balance sheet and of net interest income for the periods indicated. We derived the average yields and costs by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented with daily balances used to derive average balances. No tax equivalent adjustments have been made to yield or costs. Non-accrual loans were included in the calculation of average balances, however interest receivable on these loans has been fully reserved for and therefore not included in interest income. The yields and costs set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.
- 43 -
For the Three Months Ended March 31,
AverageBalance
AverageYield/Cost
Interest-earning assets:
Loans receivable (1)
4,850,236
3.78
4,816,592
4.17
Taxable investment securities (2)
1,620,996
1.98
1,674,223
1.89
Tax-exempt securities (2)
55,390
2.28
73,573
2.23
Other interest-earning assets (3)
79,644
2.08
169,291
1.67
Total interest-earning assets
6,606,266
3.31
6,733,679
3.51
Non-interest-earning assets
601,684
617,440
7,207,950
7,351,119
Interest-bearing liabilities:
2,133,977
1,166
0.22
1,831,617
1,558
0.34
1,088,351
274
0.10
1,084,981
557
0.21
1,650,048
0.52
1,904,234
4,555
0.96
Total interest-bearing deposits
4,872,376
0.29
4,820,832
0.55
684,478
1.93
865,690
1.85
Total interest-bearing liabilities
5,556,854
0.49
5,686,522
0.75
Non-interest-bearing liabilities (4)
673,607
582,036
6,230,461
6,268,558
Stockholders' equity
977,489
1,082,561
Total liabilities and stockholders' equity
Net interest income
Interest rate spread (5)
2.76
Net interest margin (6)
2.89
2.88
Ratio of interest-earning assets to interest-bearing liabilities
1.19
1.18
Provision for Credit Losses. The provision for credit losses decreased $5.0 million to a provision for credit losses reversal of $3.9 million for the quarter ended March 31, 2022, compared to a provision for credit losses of $1.1 million for the quarter ended March 31, 2021. The provision reversal for the quarter ended March 31, 2022 was largely attributable to continued improvement in our economic forecast. In addition, there was a net reduction in reserves on individually evaluated loans primarily related to improved collateral values. By comparison, the provision for the quarter ended March 31, 2021 was largely attributable to increases in qualitative factors associated with the impact of COVID-19 on economic conditions and an increase in reserves on individually evaluated loans of $4.2 million, partially offset by a release of reserves within the one- to four-family residential segment, reflecting the improved credit risk outlook for that asset class.
Additional information regarding the ACL and the associated provisions recognized during the quarters ended March 31, 2022 and 2021 is presented in Note 6 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at March 31, 2022 and June 30, 2021.
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Non-Interest Income. Total non-interest income decreased $1.4 million to $3.2 million for the quarter ended March 31, 2022.
Fees and service charges increased $144,000 to $617,000 for the quarter ended March 31, 2022. The increase primarily reflected increases in various deposit-related and loan-related fees and charges.
Gain on sale of loans decreased $567,000 to $376,000 for the quarter ended March 31, 2022. The decrease in loan sale gains largely reflected a lower average sales price of loans sold and a decrease in the volume of loans sold between comparative periods largely attributable to increases in market interest rates.
Other non-interest income decreased $956,000 to $238,000 for the quarter ended March 31, 2022. The decrease in other non-interest income primarily reflected $837,000 of non-recurring gains on asset disposals recognized in the prior comparative period for which no such gains were recorded in the current period.
The remaining changes in the other components of non-interest income between comparative periods generally reflected normal operating fluctuations within those line items.
Non-Interest Expense. Total non-interest expense increased $807,000 to $30.6 million for the quarter ended March 31, 2022.
Salaries and employee benefits increased $2.2 million to $19.2 million for quarter ended March 31, 2022. This increase was largely due to the impact of staff additions, annual merit increases, increases in benefit plan expense, including employee medical, post-retirement plan and ESOP expense, and an increase in incentive payments tied to loan origination volume. Partially offsetting these increases was a decrease in stock-based compensation expense.
Director compensation decreased $408,000 to $340,000 for the quarter ended March 31, 2022. This decrease primarily reflected a decline in director-related stock-based compensation expense.
Other non-interest expense decreased $734,000 to $3.1 million for the quarter ended March 31, 2022. This decrease was primarily attributable to the reversal of provision for credit losses on off-balance sheet credit exposures and a decrease in loan expenses. The decrease was also attributable to non-recurring asset impairment charges of $375,000 related to branch consolidation activity recognized during the prior comparative quarter.
The remaining changes in the other components of non-interest expense between comparative periods generally reflected normal operating fluctuations within those line items.
Provision for Income Taxes. Provision for income taxes increased $790,000 to $6.5 million for the quarter ended March 31, 2022 from $5.7 million for the quarter ended March 31, 2021.
The increase in income tax expense reflected a higher level of pre-tax net income, as compared to the prior period, resulting in a higher provision for income tax expense.
Effective tax rates for the quarter ended March 31, 2022 and 2021 were 26.9% and 25.9%, respectively.
Comparison of Operating Results for the Nine Months Ended March 31, 2022 and March 31, 2021
Net Income. Net income for the nine months ended March 31, 2022 was $56.2 million, or $0.78 per diluted share, compared to $44.8 million, or $0.53 per diluted share for the nine months ended March 31, 2021. The increase in net income reflected an increase in net interest income, a decrease in the provision for credit losses and a decrease in non-interest expense, partially offset by a decrease in non-interest income and an increase in income tax expense.
Net Interest Income. As noted above, effective July 1, 2021, loan prepayment penalty income was reclassified to interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Interest income and non-interest income for all periods presented reflect this reclassification.
Net interest income increased by $6.8 million to $146.0 million for the nine months ended March 31, 2022 compared to $139.2 million for the nine months ended March 31, 2021. The increase between the comparative periods resulted from a decrease of $19.5 million in interest expense, partially offset by a decrease of $12.7 million in interest income. Included in net interest income, for the nine months ended March 31, 2022 and 2021, respectively, was purchase accounting accretion of $7.4 million and $13.5 million and loan prepayment penalty income of $4.5 million and $2.8 million.
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Net interest margin increased 18 basis points to 2.95% for the nine months ended March 31, 2022, from 2.77% for the nine months ended March 31, 2021 and reflected a decrease in the average cost of interest-bearing liabilities that was partially offset by a decrease in the average yield on interest-earning assets.
For the Nine Months Ended March 31,
4,836,189
3.91
4,882,529
4.20
1,627,160
1.95
1,521,839
2.01
57,411
2.27
78,442
2.20
81,078
2.07
228,075
1.41
6,601,838
3.39
6,710,885
3.58
609,996
624,644
7,211,834
7,335,529
2,037,725
3,446
0.23
1,658,437
5,727
0.46
1,092,738
896
0.11
1,049,655
2,874
0.37
1,714,448
6,951
0.54
1,930,970
17,778
1.23
4,844,911
0.31
4,639,062
0.76
690,372
1,020,472
1.94
5,535,283
5,659,534
0.97
671,935
572,249
6,207,218
6,231,783
1,004,616
1,103,746
2.87
2.61
2.95
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Provision for Credit Losses. The provision for credit losses decreased $15.6 million to a provision for credit losses reversal of $11.7 million for the nine months ended March 31, 2022, compared to a provision for credit losses of $3.8 million for the nine months ended March 31, 2021. The provision reversal for the nine months ended March 31, 2022 was largely attributable to a continued improvement in our economic forecast, a reduction in the expected life of various segments of the loan portfolio and a net reduction in reserves on loans individually evaluated for impairment. By comparison, the provision for the nine months ended March 31, 2021, was largely attributable to an increase of $5.7 million in reserves on individually evaluated loans and $5.1 million of provision expense on non-PCD loans acquired in connection with the acquisition of MSB, partially offset by a release of reserves within the one- to four-family residential segment, reflecting the improved credit risk outlook for that asset class and provision for credit losses reversal associated with a decline in balances of loans collectively evaluated for impairment.
Additional information regarding the ACL and the associated provisions recognized during the nine months ended March 31, 2022 and 2021 is presented in Note 6 to the unaudited consolidated financial statements as well as the Comparison of Financial Condition at March 31, 2022 and June 30, 2021.
Non-Interest Income. Total non-interest income decreased $6.4 million to $11.1 million for the nine months ended March 31, 2022.
Fees and service charges increased $448,000 to $1.9 million for the nine months ended March 31, 2022. The increase primarily reflected increases in loan-related and deposit-related fees and charges.
Gain on sale and call of securities reflected a net gain of $4,000 during the nine months ended March 31, 2022 compared to a net gain of $454,000 recorded during the earlier comparative period.
Gain on sale of loans decreased $2.9 million to $2.4 million for the nine months ended March 31, 2022. The decrease in loan sale gains largely reflected a decrease in the volume of loans sold between comparative periods and a lower average sales price of loans sold.
Bargain purchase gain recognized in the prior comparative period in connection with our acquisition of MSB was $3.1 million. No such gain was recorded in the current period.
Other non-interest income decreased $413,000 to $938,000 for the nine months ended March 31, 2022. The decrease primarily reflected a $356,000 non-recurring gain on asset disposals recognized in the current period compared to $837,000 of non-recurring gains on asset disposals recorded in the prior period.
Non-Interest Expense. Total non-interest expense decreased $1.8 million to $92.1 million for the nine months ended March 31, 2022.
Salaries and employee benefits increased $4.9 million to $55.9 million for the nine months ended March 31, 2022. This increase was largely due to the impact of staff additions, annual merit increases, increases in benefit plan expense, including employee medical, post-retirement plan and ESOP expense, and an increase in incentive payments tied to loan origination volume. Partially offsetting these increases was a decrease in stock-based compensation expense.
Net occupancy expense of premises increased $1.3 million to $10.9 million for the nine months ended March 31, 2022. This increase was primarily due to non-recurring expenses of $1.3 million related to the consolidation of three retail branch locations, $250,000 related to facility repairs made in connection with damage incurred during Tropical Storm Ida and $187,000 related to the closure of a leased office facility acquired in conjunction with the MSB acquisition.
Director compensation decreased $452,000 to $1.8 million for the nine months ended March 31, 2022. This decrease primarily reflected a decline in director-related stock-based compensation expense.
Merger-related expenses, associated with our acquisition of MSB, totaled $4.3 million for the nine months ended March 31, 2021 for which no such costs were recorded in the current period.
Debt extinguishment expenses totaled $796,000 for the nine months ended March 31, 2021 for which no such costs were recorded in the current period.
Other non-interest expense decreased $2.4 million to $9.1 million for the nine months ended March 31, 2022. This decrease was primarily attributable to the reversal of provision for credit losses on off-balance sheet credit exposures and a decrease in loan expenses. The decrease was also attributable to non-recurring asset impairment charges related to branch consolidation activity of $420,000 in the current period compared to $722,000 during the prior period.
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Provision for Income Taxes. Provision for income taxes increased $6.4 million to $20.6 million for the nine months ended March 31, 2022, from $14.2 million for the nine months ended March 31, 2021.
The increase in income tax expense reflected a higher level of pre-tax net income, as compared to the prior period, resulting in a higher provision for income tax expense. The increase also reflected the effects of various non-recurring items recorded in conjunction with our acquisition of MSB, recorded in the prior comparative period, including non-deductible merger related expenses, which were partially offset by a non-taxable bargain purchase gain. The change in income tax expense also reflected the reversal of a valuation allowance totaling $535,000 which was associated with the realization of a capital loss carryforward recorded in the prior comparative period for which no such amount was recorded in the current period.
Effective tax rates for the nine months ended March 31, 2022 and 2021 were 26.8% and 24.1%, respectively. The effective tax rate for the prior comparative period reflected the effects of various non-recurring items recorded in conjunction with our acquisition of MSB and reversal of a valuation allowance, as noted above.
Liquidity and Capital Resources
Liquidity, represented by cash and cash equivalents, is a product of operating, investing and financing activities. Our primary sources of funds are deposits, borrowings, cash flows from investment securities and loans receivable and funds provided from operations. While scheduled payments from the amortization and maturity of loans and investment securities are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and prepayments on loans and securities.
At March 31, 2022, liquidity included $62.4 million of short-term cash and equivalents supplemented by $1.53 billion of investment securities classified as available for sale. In addition, as of March 31, 2022, we had the capacity to borrow additional funds totaling $2.38 billion and $312.5 million from the FHLB of New York and FRB, respectively, without pledging additional collateral. As of that same date, we also had access to unsecured overnight borrowings with other financial institutions totaling $950.0 million of which $310.0 million was outstanding.
At March 31, 2022, we had outstanding commitments to originate and purchase loans totaling approximately $198.1 million while such commitments totaled $192.8 million at June 30, 2021. As of those same dates, our pipeline of loans held for sale included $16.0 million and $48.4 million, respectively, of loans in process whose terms included interest rate locks to borrowers that were paired with a non-binding, best-efforts commitment to sell the loan to a buyer at a fixed price and within a predetermined timeframe after the sale commitment is established.
Construction loans in process and unused lines of credit were $88.2 million and $165.8 million, respectively, at March 31, 2022 compared to $138.3 million and $181.1 million, respectively, at June 30, 2021. We are also subject to the contingent liabilities resulting from letters of credit whose outstanding balances totaled $180,000 and $739,000, at March 31, 2022 and June 30, 2021, respectively.
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. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the customer. Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Consistent with its goals to operate a sound and profitable financial organization, the Bank actively seeks to maintain its status as a well-capitalized institution in accordance with regulatory standards.
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The following table sets forth the Bank’s capital position at March 31, 2022 and June 30, 2021, as compared to the minimum regulatory capital requirements that were in effect as of those dates:
At March 31, 2022
Actual
For CapitalAdequacy Purposes
To Be Well CapitalizedUnder PromptCorrective ActionProvisions
Ratio
Total capital (to risk-weighted assets)
668,961
14.14
378,457
8.00
473,071
10.00
Tier 1 capital (to risk-weighted assets)
641,798
13.57
283,843
Common equity tier 1 capital (to risk-weighted assets)
212,882
4.50
307,496
6.50
Tier 1 capital (to adjusted total assets)
9.14
280,960
4.00
351,200
5.00
At June 30, 2021
To Be Well Capitalized Under Prompt Corrective ActionProvisions
761,883
17.22
353,970
442,462
726,737
16.42
265,477
199,108
287,600
10.23
284,114
355,142
The following table sets forth the Company’s capital position at March 31, 2022 and June 30, 2021, as compared to the minimum regulatory capital requirements that were in effect as of those dates:
802,929
16.97
378,574
775,766
16.39
283,931
212,948
11.04
281,055
872,823
19.65
355,274
837,677
18.86
266,456
199,842
11.76
284,877
In March 2020, the federal banking agencies announced an interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of CECL. The interim final rule provides banks the option to delay for two years an estimate of CECL’s effect on regulatory capital, relative to the incurred loss method, followed by a three-year transition period established in the previous rule (five-year transition option). We have adopted the capital transition relief over the permissible five-year period.
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Off-Balance Sheet Arrangements
In the normal course of our business of investing in loans and securities we are a party to financial instruments with off-balance-sheet risk. These financial instruments include significant purchase commitments, such as commitments related to capital expenditure plans and commitments to extend credit to meet the financing needs of our customers. We had no significant off-balance sheet commitments for capital expenditures as of March 31, 2022.
Recent Accounting Pronouncements
For a discussion of the expected impact of recently issued accounting pronouncements that we have yet to adopt, please refer to Note 3 to the unaudited consolidated financial statements.
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ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The majority of our assets and liabilities are sensitive to changes in interest rates and as such interest rate risk is a significant form of market risk that we must manage. Interest rate risk is generally defined in regulatory nomenclature as the risk to earnings or capital arising from the movement of interest rates and arises from several risk factors including re-pricing risk, basis risk, yield curve risk and option risk. We maintain an Asset/Liability Management (“ALM”) program in order manage our interest rate risk. The program is overseen by the Board of Directors through its Interest Rate Risk Management Committee which has assigned the responsibility for the operational aspects of the ALM program to our Asset/Liability Management Committee (“ALCO”), which is comprised of various members of the senior and executive management team.
The quantitative analysis that we conduct measures interest rate risk from both a capital and earnings perspective. With regard to earnings, movements in interest rates and the shape of the yield curve significantly influence the amount of net interest income (“NII”) that we recognize. Movements in market interest rates, and the effect of such movements on the risk factors noted above, significantly influence the spread between the interest earned on our interest-earning assets and the interest paid on our interest-bearing liabilities. Our internal interest rate risk analysis calculates the sensitivity of our projected NII over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into similar instruments. Product pricing and earning asset prepayment speeds are appropriately adjusted for each rate scenario.
With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our Economic Value of Equity (“EVE”) to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities adjusted for the value of off-balance sheet instruments. EVE attempts to quantify our economic value using a discounted cash flow methodology. The degree to which our EVE changes for any hypothetical interest rate scenario from its base case measurement is a reflection of our sensitivity to interest rate risk.
For both earnings and capital at risk, our interest rate risk analysis calculates a base case scenario that assumes no change in interest rates. The model then 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 with additional scenarios modeled where appropriate. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain falling rate scenarios during periods of lower market interest rates. The relatively low level of interest rates prevalent at March 31, 2022 and June 30, 2021 precluded the modeling of certain falling rate scenarios.
The following tables present the results of our internal EVE and NII analyses as of March 31, 2022 and June 30, 2021, respectively:
1 to 12 Months
13 to 24 Months
Change inInterest Rates
$ Amountof EVE
% Changein EVE
$ Amountof NII
% Changein NII
+300 bps
1,139,213
(11.91
182,874
(10.70
216,395
3.42
+200 bps
1,191,919
(7.84
189,586
(7.43
213,631
2.10
+100 bps
1,261,373
(2.47
199,005
(2.83
213,632
0 bps
1,293,258
204,792
209,236
-100 bps
1,244,971
(3.73
196,007
(4.29
190,088
(9.15
1,083,847
(8.82
175,830
(8.38
196,307
4.11
1,132,915
(4.69
182,089
(5.12
195,756
3.82
1,176,890
(0.99
187,961
(2.06
194,543
3.17
1,188,656
191,908
188,559
1,071,463
(9.86
181,645
(5.35
169,447
(10.14
At March 31, 2022, our interest rate risk analysis was impacted by $310.0 million of overnight borrowings, compared to $20.0 million of overnight borrowings at June 30, 2021. This increased level of overnight borrowings resulted in a relatively greater level of interest rate sensitivity in the rising rate shock scenarios and does not reflect any future actions we may take to replace or extend the maturity of these borrowings.
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There are numerous internal and external factors that may contribute to changes in our EVE and its sensitivity. Changes in the composition and allocation of our balance sheet, or utilization of off-balance sheet instruments such as derivatives, can significantly alter the exposure to interest rate risk as quantified by the changes in the EVE sensitivity measures. Changes to certain external factors, most notably changes in the level of market interest rates and overall shape of the yield curve, can also alter the projected cash flows of our interest-earning assets and interest-costing liabilities and the associated present values thereof.
Notwithstanding the rate change scenarios presented in the EVE and NII-based analyses above, future interest rates and their effect on net interest income are not predictable. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, prepayments and deposit run-offs and should not be relied upon as indicative of actual results. Certain shortcomings are inherent in this type of computation. Although certain assets and liabilities may have similar maturities or periods of re-pricing, they may react at different times and in different degrees to changes in market interest rates. The interest rate on certain types of assets and liabilities, such as demand deposits and savings accounts, may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag behind changes in market interest rates. Certain assets, such as adjustable-rate mortgages, generally have features which restrict changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayments and early withdrawal levels could deviate significantly from those assumed in the analyses set forth above. Additionally, an increase in credit risk may result as the ability of borrowers to service their debt may decrease in the event of an interest rate increase.
ITEM 4.
CONTROLS AND PROCEDURES
As of the end of the period covered by this Report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.
During the quarter ended March 31, 2022, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II
ITEM 1. Legal Proceedings
At March 31, 2022, 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, which involve amounts in the aggregate believed by management to be immaterial to the financial condition of the Company and the Bank.
ITEM 1A. Risk Factors
There have been 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, 2021, previously filed with the Securities and Exchange Commission.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities:
The following table reports information regarding repurchases of the Company’s common stock during the quarter ended March 31, 2022:
Period
Total Numberof SharesPurchased
Average PricePaid per Share
Total Numberof SharesPurchased asPart of PubliclyAnnounced Plansor Programs
MaximumNumber of Sharesthat May Yet BePurchased Underthe Plans orPrograms
January 1-31, 2022
599,585
13.49
4,499,760
February 1-28, 2022
751,431
13.37
3,748,329
March 1-31, 2022
668,609
13.21
3,079,720
2,019,625
13.35
On September 22, 2021, the Company announced the authorization of a new stock repurchase plan to repurchase up to 7,602,021 shares, or 10% of the shares then outstanding. This current plan has no expiration date.
ITEM 3. Defaults Upon Senior Securities
Not applicable.
ITEM 4. Mine Safety Disclosures
ITEM 5. Other Information
None.
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ITEM 6. Exhibits
The following Exhibits are filed as part of this report:
3.1
Articles of Incorporation of Kearny Financial Corp. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-198602), originally filed on September 5, 2014)
3.2
Bylaws of Kearny Financial Corp. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-198602), originally filed on September 5, 2014)
Form of Common Stock Certificate of Kearny Financial Corp. (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 (File No. 333-198602), originally filed on September 5, 2014)
10.1
Kearny Bank Amended and Restated Change in Control Severance Pay Plan
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101
The following materials from the Company’s Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.
101.INS
Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document)
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 6, 2022
By:
/s/ Craig L. Montanaro
Craig L. Montanaro
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Keith Suchodolski
Keith Suchodolski
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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