FAIRFIELD, N.J., April 29, 2021 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended March 31, 2021 of $16.4 million, or $0.20 per diluted share, compared to $16.9 million, or $0.20 per diluted share, for the quarter ended December 31, 2020.
Craig L. Montanaro, President and Chief Executive Officer, commented, “This quarter’s performance was highlighted by double-digit margin expansion largely resulting from a 22 basis point decrease in the cost of our interest-bearing liabilities. The success we have had in shifting our funding mix, controlling operating expenses and building valuable long-term lending and deposit relationships serves us well today and into the future.”
With regard to the current credit environment, Mr. Montanaro further noted, “Despite an increase of $4.2 million in reserves on individually evaluated loans, largely attributable to two non-performing commercial real estate loans, asset quality remains solid. Our fortress-like balance sheet, comprised of significant levels of excess capital and a robust allowance for credit losses, positions us to withstand the ongoing economic impact of the pandemic while allowing us to take advantage of strategic capital deployment opportunities as they may arise.”
Balance Sheet
- Deposits increased by $61.8 million to $5.37 billion at March 31, 2021 from $5.31 billion at December 31, 2020, reflecting growth of $227.8 million, or 6.8%, in core non-maturity deposits.
- Loans receivable decreased by $30.4 million to $4.80 billion at March 31, 2021 from $4.83 billion at December 31, 2020. Included in the net decrease for the period was a reduction of $18.3 million in Paycheck Protection Program (“PPP”) loan balances.
- Investment securities increased to $1.81 billion, or 24.5% of total assets, at March 31, 2021 from $1.73 billion at December 31, 2020, while borrowings remained relatively flat, increasing to $865.8 million, or 11.8% of total assets, from $865.7 million, or 11.8% of total assets, for those same comparative periods.
Earnings
Net Interest Income and Net Interest Margin
- Net interest income increased by $3.1 million to $47.6 million for the quarter ended March 31, 2021 from $44.6 million for the quarter ended December 31, 2020. This increase was the result of a $3.2 million reduction in interest expense that was partially offset by an $80,000 decline in interest income. Included in net interest income was purchase accounting accretion of $4.8 million and $3.7 million, for the quarters ended March 31, 2021 and December 31, 2020, respectively.
- Net interest margin increased by 19 basis points to 2.83% for the quarter ended March 31, 2021 from 2.64% for the quarter ended December 31, 2020. For those same comparative periods, yield on interest-earning assets increased by one basis point to 3.46% while the cost of interest-bearing liabilities decreased by 22 basis points to 0.75%.
Non-Interest Income
- Fees and service charges totaled $1.3 million for the quarter ended March 31, 2021 compared to $1.9 million for the quarter ended December 31, 2020. This decrease was largely attributable to a decrease of $488,000 in loan pre-payment penalty income to $871,000 for the quarter ended March 31, 2021.
- Gain on sale of loans totaled $943,000 for the quarter ended March 31, 2021 compared to $2.4 million for the quarter ended December 31, 2020. This decrease was largely attributable to the strategic decision to retain a greater percentage of originated loans within the portfolio, compared to the prior quarter.
- Gain on sale and call of securities was $18,000 for the quarter ended March 31, 2021 compared to $813,000 for the quarter ended December 31, 2020. This decrease was largely attributable to a gain recorded in the prior comparative period in connection with a previously disclosed wholesale restructuring transaction.
- Included in other non-interest income was a non-recurring gain of $837,000 attributable to the sale of two properties which previously served as Kearny Bank retail branch locations and were sold in connection with branch consolidation activities.
Non-Interest Expense
- Non-interest expense decreased by $694,000 to $29.8 million for the quarter ended March 31, 2021 compared to $30.5 million for the quarter ended December 31, 2020. The decrease was largely attributable to $796,000 in debt extinguishment expense recognized in the prior comparative period with no such expense recognized in the current period.
- Included in other non-interest expense for the quarter ended March 31, 2021 was an asset impairment charge of $375,000 related to the consolidation and closure of one additional branch location.
- The efficiency and non-interest expense ratios were 56.15% and 1.62%, respectively, for the quarter ended March 31, 2021 as compared to 59.01% and 1.65%, respectively, for the quarter ended December 31, 2020.
Income Taxes
- Income tax expense totaled $5.7 million for the quarter ended March 31, 2021 compared to $5.6 million for the quarter ended December 31, 2020, resulting in effective tax rates of 25.9% and 24.9%, respectively.
Performance Highlights
- Return on average assets was 0.89% for the quarter ended March 31, 2021 as compared to 0.92% for the quarter ended December 31, 2020.
- Return on average equity was 6.07% for the quarters ended March 31, 2021 and December 31, 2020. Return on average tangible equity was 7.57% for the quarter ended March 31, 2021 as compared to 7.52% for the quarter ended December 31, 2020.
Asset Quality
- The balance of non-performing assets remained relatively stable at $71.6 million, or 0.97% of total assets, at March 31, 2021 compared $71.7 million, or 0.98% of total assets, at December 31, 2020.
- Based on Section 4013 of the CARES Act, the Consolidated Appropriations Act, 2021 and related guidance promulgated by federal banking regulators, qualifying loan modifications, including short-term payment deferrals, are not considered to be troubled debt restructurings. As of March 31, 2021, the Company had active payment deferrals on 32 loans totaling $52.9 million, representing 1.10% of total loans.
- Net charge offs totaled $750,000 for the quarter ended March 31, 2021 compared to $109,000 for the quarter ended December 31, 2020, reflecting annualized net charge off rates of 0.06% and 0.01% for the those same comparative periods. Net charge offs for the quarter were largely attributable to one Small Business Administration 7a loan totaling $675,000.
- Provision for credit losses totaled $1.1 million for the quarter ended March 31, 2021 compared to a provision for credit losses reversal of $1.4 million for the quarter ended December 31, 2020. The comparatively higher level of provision primarily reflected 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 segments, reflecting the improving credit risk outlook for that asset class.
- The increase in reserves on individually evaluated loans, noted above, was largely attributable to two non-performing commercial real estate loans, with principal balances totaling $9.8 million, secured by properties located in New York City.
- The Allowance for Credit Losses (“ACL”) increased to $63.8 million at March 31, 2021 from $63.4 million at December 31, 2020, with such balances reflecting an ACL to total loans ratio of 1.32% and 1.30%, respectively, as of those dates.
Liquidity & Capital
- At March 31, 2021, liquid assets included $109.0 million of short-term cash and equivalents supplemented by $1.78 billion of investment securities classified as available for sale. The Company had the capacity to borrow additional funds totaling $615.0 million via unsecured lines of credit and $1.81 billion and $257.0 million, without pledging additional collateral, from the FHLB of New York and Federal Reserve Bank, respectively.
- During the quarter ended March 31, 2021, the Company repurchased 3,026,564 shares of common stock at a cost of $34.9 million, or $11.52 per share.
- For the quarter ended March 31, 2021, book value per share increased by $0.12 to $12.98 while tangible book value per share increased by $0.03 to $10.36.
- At March 31, 2021, the Company’s ratio of tangible equity to tangible assets equaled 11.89%. At March 31, 2021, the regulatory capital ratios, of both the Company and the Bank were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.
Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.
In addition, the COVID-19 pandemic is having an adverse impact on the Company, its customers and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the economy may be reopened or remain open. 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 is unable to substantially reopen or remain open, and high levels of unemployment continue for an extended period of time, 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; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; 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.
Category: Earnings
Linked-Quarter Comparative Financial Analysis | ||||||||||||
Summary Balance Sheet | At | Variance | ||||||||||
(Dollars and Shares in Thousands, | March 31, | December 31, | Variance | or Change | ||||||||
Except Per Share Data, Unaudited) | 2021 | 2020 | or Change | Pct. | ||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 108,991 | $ | 129,694 | $ | (20,703 | ) | -16.0 | % | |||
Securities available for sale | 1,778,970 | 1,695,893 | 83,077 | 4.9 | % | |||||||
Securities held to maturity | 27,168 | 29,549 | (2,381 | ) | -8.1 | % | ||||||
Loans held-for-sale | 5,172 | 12,601 | (7,429 | ) | -59.0 | % | ||||||
Loans receivable | 4,798,239 | 4,828,634 | (30,395 | ) | -0.6 | % | ||||||
Less allowance for credit losses on loans | (63,762 | ) | (63,386 | ) | (376 | ) | 0.6 | % | ||||
Net loans receivable | 4,734,477 | 4,765,248 | (30,771 | ) | -0.6 | % | ||||||
Premises and equipment | 60,360 | 61,181 | (821 | ) | -1.3 | % | ||||||
Federal Home Loan Bank stock | 45,578 | 45,578 | - | 0.0 | % | |||||||
Accrued interest receivable | 20,562 | 19,826 | 736 | 3.7 | % | |||||||
Goodwill | 210,895 | 210,895 | - | 0.0 | % | |||||||
Core deposit intangible | 3,888 | 4,151 | (263 | ) | -6.3 | % | ||||||
Bank owned life insurance | 281,765 | 280,235 | 1,530 | 0.5 | % | |||||||
Deferred income taxes, net | 32,230 | 30,846 | 1,384 | 4.5 | % | |||||||
Other real estate owned | 178 | 178 | - | 0.0 | % | |||||||
Other assets | 47,760 | 49,278 | (1,518 | ) | -3.1 | % | ||||||
Total assets | $ | 7,357,994 | $ | 7,335,153 | $ | 22,841 | 0.3 | % | ||||
Liabilities | ||||||||||||
Deposits | $ | 5,374,452 | $ | 5,312,613 | $ | 61,839 | 1.2 | % | ||||
Borrowings | 865,763 | 865,651 | 112 | 0.0 | % | |||||||
Advance payments by borrowers for taxes | 15,300 | 16,100 | (800 | ) | -5.0 | % | ||||||
Other liabilities | 38,667 | 48,448 | (9,781 | ) | -20.2 | % | ||||||
Total liabilities | 6,294,182 | 6,242,812 | 51,370 | 0.8 | % | |||||||
Stockholders' Equity | ||||||||||||
Common stock | 820 | 849 | (29 | ) | -3.4 | % | ||||||
Paid-in capital | 691,280 | 724,389 | (33,109 | ) | -4.6 | % | ||||||
Retained earnings | 397,594 | 388,376 | 9,218 | 2.4 | % | |||||||
Unearned ESOP shares | (27,239 | ) | (27,726 | ) | 487 | -1.8 | % | |||||
Accumulated other comprehensive income | 1,357 | 6,453 | (5,096 | ) | -79.0 | % | ||||||
Total stockholders' equity | 1,063,812 | 1,092,341 | (28,529 | ) | -2.6 | % | ||||||
Total liabilities and stockholders' equity | $ | 7,357,994 | $ | 7,335,153 | $ | 22,841 | 0.3 | % | ||||
Consolidated capital ratios | ||||||||||||
Equity to assets | 14.46 | % | 14.89 | % | -0.43 | % | ||||||
Tangible equity to tangible assets (1) | 11.89 | % | 12.32 | % | -0.44 | % | ||||||
Share data | ||||||||||||
Outstanding shares | 81,943 | 84,938 | (2,995 | ) | -3.5 | % | ||||||
Book value per share | $ | 12.98 | $ | 12.86 | $ | 0.12 | 0.9 | % | ||||
Tangible book value per share (2) | $ | 10.36 | $ | 10.33 | $ | 0.03 | 0.3 | % |
_______________________
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
(2) Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.
Summary Income Statement | For the three months ended | Variance | ||||||||||
(Dollars and Shares in Thousands, | March 31, | December 31, | Variance | or Change | ||||||||
Except Per Share Data, Unaudited) | 2021 | 2020 | or Change | Pct. | ||||||||
Interest income | ||||||||||||
Loans | $ | 49,307 | $ | 49,466 | $ | (159 | ) | -0.3 | % | |||
Taxable investment securities | 7,891 | 7,707 | 184 | 2.4 | % | |||||||
Tax-exempt investment securities | 410 | 433 | (23 | ) | -5.3 | % | ||||||
Other interest-earning assets | 705 | 787 | (82 | ) | -10.4 | % | ||||||
Total Interest Income | 58,313 | 58,393 | (80 | ) | -0.1 | % | ||||||
Interest expense | ||||||||||||
Deposits | 6,670 | 8,647 | (1,977 | ) | -22.9 | % | ||||||
Borrowings | 4,012 | 5,193 | (1,181 | ) | -22.7 | % | ||||||
Total interest expense | 10,682 | 13,840 | (3,158 | ) | -22.8 | % | ||||||
Net interest income | 47,631 | 44,553 | 3,078 | 6.9 | % | |||||||
Provision for (reversal of) credit losses | 1,126 | (1,365 | ) | 2,491 | 182.5 | % | ||||||
Net interest income after provision for (reversal of) credit losses | 46,505 | 45,918 | 587 | 1.3 | % | |||||||
Non-interest income | ||||||||||||
Fees and service charges | 1,325 | 1,896 | (571 | ) | -30.1 | % | ||||||
Gain on sale and call of securities | 18 | 813 | (795 | ) | -97.8 | % | ||||||
Gain on sale of loans | 943 | 2,378 | (1,435 | ) | -60.3 | % | ||||||
Income from bank owned life insurance | 1,530 | 1,596 | (66 | ) | -4.1 | % | ||||||
Electronic banking fees and charges | 456 | 404 | 52 | 12.9 | % | |||||||
Other income | 1,194 | 67 | 1,127 | 1682.1 | % | |||||||
Total non-interest income | 5,466 | 7,154 | (1,688 | ) | -23.6 | % | ||||||
Non-interest expense | ||||||||||||
Salaries and employee benefits | 16,965 | 17,081 | (116 | ) | -0.7 | % | ||||||
Net occupancy expense of premises | 3,433 | 3,120 | 313 | 10.0 | % | |||||||
Equipment and systems | 3,823 | 3,902 | (79 | ) | -2.0 | % | ||||||
Advertising and marketing | 567 | 513 | 54 | 10.5 | % | |||||||
Federal deposit insurance premium | 488 | 490 | (2 | ) | -0.4 | % | ||||||
Directors' compensation | 748 | 748 | - | 0.0 | % | |||||||
Debt extinguishment expenses | - | 796 | (796 | ) | -100.0 | % | ||||||
Other expense | 3,792 | 3,860 | (68 | ) | -1.8 | % | ||||||
Total non-interest expense | 29,816 | 30,510 | (694 | ) | -2.3 | % | ||||||
Income before income taxes | 22,155 | 22,562 | (407 | ) | -1.8 | % | ||||||
Income taxes | 5,732 | 5,614 | 118 | 2.1 | % | |||||||
Net income | $ | 16,423 | $ | 16,948 | $ | (525 | ) | -3.1 | % | |||
Net income per common share (EPS) | ||||||||||||
Basic | $ | 0.20 | $ | 0.20 | $ | 0.00 | ||||||
Diluted | $ | 0.20 | $ | 0.20 | $ | 0.00 | ||||||
Dividends declared | ||||||||||||
Cash dividends declared per common share | $ | 0.09 | $ | 0.08 | $ | 0.01 | ||||||
Cash dividends declared | $ | 7,205 | $ | 6,706 | $ | 499 | ||||||
Dividend payout ratio | 43.9 | % | 39.6 | % | 4.3 | % | ||||||
Weighted average number of common shares outstanding | ||||||||||||
Basic | 80,673 | 85,120 | (4,447 | ) | ||||||||
Diluted | 80,690 | 85,123 | (4,433 | ) | ||||||||
For the three months ended | Variance | |||||||||||
Average Balance Sheet Data | March 31, | December 31, | Variance | or Change | ||||||||
(Dollars in Thousands, Unaudited) | 2021 | 2020 | or Change | Pct. | ||||||||
Assets | ||||||||||||
Interest-earning assets: | ||||||||||||
Loans receivable, including loans held for sale | $ | 4,816,592 | $ | 4,871,268 | $ | (54,676 | ) | -1.1 | % | |||
Taxable investment securities | 1,674,223 | 1,544,095 | 130,128 | 8.4 | % | |||||||
Tax-exempt investment securities | 73,573 | 79,044 | (5,471 | ) | -6.9 | % | ||||||
Other interest-earning assets | 169,291 | 266,114 | (96,823 | ) | -36.4 | % | ||||||
Total interest-earning assets | 6,733,679 | 6,760,521 | (26,842 | ) | -0.4 | % | ||||||
Non-interest-earning assets | 617,440 | 632,084 | (14,644 | ) | -2.3 | % | ||||||
Total assets | $ | 7,351,119 | $ | 7,392,605 | $ | (41,486 | ) | -0.6 | % | |||
Liabilities and Stockholders' Equity | ||||||||||||
Interest-bearing liabilities: | ||||||||||||
Deposits: | ||||||||||||
Interest-bearing demand | $ | 1,831,617 | $ | 1,683,222 | $ | 148,395 | 8.8 | % | ||||
Savings | 1,084,981 | 1,058,675 | 26,306 | 2.5 | % | |||||||
Certificates of deposit | 1,904,234 | 1,899,406 | 4,828 | 0.3 | % | |||||||
Total interest-bearing deposits | 4,820,832 | 4,641,303 | 179,529 | 3.9 | % | |||||||
Borrowings: | ||||||||||||
Federal Home Loan Bank advances | 865,690 | 1,057,958 | (192,268 | ) | -18.2 | % | ||||||
Total interest-bearing liabilities | 5,686,522 | 5,699,261 | (12,739 | ) | -0.2 | % | ||||||
Non-interest-bearing liabilities: | ||||||||||||
Non-interest-bearing deposits | 525,018 | 502,479 | 22,539 | 4.5 | % | |||||||
Other non-interest-bearing liabilities | 57,018 | 73,683 | (16,665 | ) | -22.6 | % | ||||||
Total non-interest-bearing liabilities | 582,036 | 576,162 | 5,874 | 1.0 | % | |||||||
Total liabilities | 6,268,558 | 6,275,423 | (6,865 | ) | -0.1 | % | ||||||
Stockholders' equity | 1,082,561 | 1,117,182 | (34,621 | ) | -3.1 | % | ||||||
Total liabilities and stockholders' equity | $ | 7,351,119 | $ | 7,392,605 | $ | (41,486 | ) | -0.6 | % | |||
Average interest-earning assets to average interest-bearing liabilities | 118.41 | % | 118.62 | % | -0.21 | % | -0.2 | % | ||||
For the three months ended | |||||||||
March 31, | December 31, | Variance | |||||||
Performance Ratio Highlights | 2021 | 2020 | or Change | ||||||
Average yield on interest-earning assets: | |||||||||
Loans receivable, including loans held for sale | 4.09 | % | 4.06 | % | 0.03 | % | |||
Taxable investment securities | 1.89 | % | 2.00 | % | -0.11 | % | |||
Tax-exempt investment securities (1) | 2.23 | % | 2.19 | % | 0.04 | % | |||
Other interest-earning assets | 1.67 | % | 1.18 | % | 0.49 | % | |||
Total interest-earning assets | 3.46 | % | 3.45 | % | 0.01 | % | |||
Average cost of interest-bearing liabilities: | |||||||||
Deposits: | |||||||||
Interest-bearing demand | 0.34 | % | 0.47 | % | -0.13 | % | |||
Savings | 0.21 | % | 0.33 | % | -0.12 | % | |||
Certificates of deposit | 0.96 | % | 1.22 | % | -0.26 | % | |||
Total interest-bearing deposits | 0.55 | % | 0.75 | % | -0.20 | % | |||
Borrowings: | |||||||||
Federal Home Loan Bank advances | 1.85 | % | 1.96 | % | -0.11 | % | |||
Total interest-bearing liabilities | 0.75 | % | 0.97 | % | -0.22 | % | |||
Interest rate spread (2) | 2.71 | % | 2.48 | % | 0.23 | % | |||
Net interest margin (3) | 2.83 | % | 2.64 | % | 0.19 | % | |||
Non-interest income to average assets (annualized) | 0.30 | % | 0.39 | % | -0.09 | % | |||
Non-interest expense to average assets (annualized) | 1.62 | % | 1.65 | % | -0.03 | % | |||
Efficiency ratio (4) | 56.15 | % | 59.01 | % | -2.86 | % | |||
Return on average assets (annualized) | 0.89 | % | 0.92 | % | -0.03 | % | |||
Return on average equity (annualized) | 6.07 | % | 6.07 | % | 0.00 | % | |||
Return on average tangible equity (annualized) (5) | 7.57 | % | 7.52 | % | 0.05 | % |
_______________________
(1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(3) Net interest income divided by average interest-earning assets.
(4) Non-interest expense divided by the sum of net interest income and non-interest income.
(5) Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
Five-Quarter Financial Trend Analysis | |||||||||||||||
Summary Balance Sheet | At | ||||||||||||||
(Dollars and Shares in Thousands, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
Except Per Share Data, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 108,991 | $ | 129,694 | $ | 145,818 | $ | 180,967 | $ | 59,452 | |||||
Securities available for sale | 1,778,970 | 1,695,893 | 1,508,542 | 1,385,703 | 1,476,344 | ||||||||||
Securities held to maturity | 27,168 | 29,549 | 31,576 | 32,556 | 34,618 | ||||||||||
Loans held-for-sale | 5,172 | 12,601 | 20,170 | 20,789 | 11,245 | ||||||||||
Loans receivable | 4,798,239 | 4,828,634 | 4,954,750 | 4,498,397 | 4,562,512 | ||||||||||
Less allowance for credit losses on loans | (63,762 | ) | (63,386 | ) | (64,860 | ) | (37,327 | ) | (37,191 | ) | |||||
Net loans receivable | 4,734,477 | 4,765,248 | 4,889,890 | 4,461,070 | 4,525,321 | ||||||||||
Premises and equipment | 60,360 | 61,181 | 61,808 | 57,389 | 58,985 | ||||||||||
Federal Home Loan Bank stock | 45,578 | 45,578 | 55,118 | 58,654 | 59,324 | ||||||||||
Accrued interest receivable | 20,562 | 19,826 | 20,368 | 17,373 | 19,036 | ||||||||||
Goodwill | 210,895 | 210,895 | 210,895 | 210,895 | 210,895 | ||||||||||
Core deposit intangible | 3,888 | 4,151 | 4,420 | 3,995 | 4,242 | ||||||||||
Bank owned life insurance | 281,765 | 280,235 | 278,639 | 262,380 | 260,843 | ||||||||||
Deferred income taxes, net | 32,230 | 30,846 | 33,319 | 25,480 | 27,150 | ||||||||||
Other real estate owned | 178 | 178 | 178 | 178 | 178 | ||||||||||
Other assets | 47,760 | 49,278 | 49,468 | 40,746 | 26,200 | ||||||||||
Total assets | $ | 7,357,994 | $ | 7,335,153 | $ | 7,310,209 | $ | 6,758,175 | $ | 6,773,833 | |||||
Liabilities | |||||||||||||||
Deposits | $ | 5,374,452 | $ | 5,312,613 | $ | 5,039,912 | $ | 4,430,282 | $ | 4,253,254 | |||||
Borrowings | 865,763 | 865,651 | 1,077,540 | 1,173,165 | 1,384,025 | ||||||||||
Advance payments by borrowers for taxes | 15,300 | 16,100 | 17,008 | 16,569 | 16,492 | ||||||||||
Other liabilities | 38,667 | 48,448 | 51,689 | 53,982 | 50,390 | ||||||||||
Total liabilities | 6,294,182 | 6,242,812 | 6,186,149 | 5,673,998 | 5,704,161 | ||||||||||
Stockholders' Equity | |||||||||||||||
Common stock | 820 | 849 | 895 | 837 | 837 | ||||||||||
Paid-in capital | 691,280 | 724,389 | 769,269 | 722,871 | 721,474 | ||||||||||
Retained earnings | 397,594 | 388,376 | 378,134 | 387,911 | 380,671 | ||||||||||
Unearned ESOP shares | (27,239 | ) | (27,726 | ) | (28,212 | ) | (28,699 | ) | (29,185 | ) | |||||
Accumulated other comprehensive income (loss) | 1,357 | 6,453 | 3,974 | 1,257 | (4,125 | ) | |||||||||
Total stockholders' equity | 1,063,812 | 1,092,341 | 1,124,060 | 1,084,177 | 1,069,672 | ||||||||||
Total liabilities and stockholders' equity | $ | 7,357,994 | $ | 7,335,153 | $ | 7,310,209 | $ | 6,758,175 | $ | 6,773,833 | |||||
Consolidated capital ratios | |||||||||||||||
Equity to assets | 14.46 | % | 14.89 | % | 15.38 | % | 16.04 | % | 15.79 | % | |||||
Tangible equity to tangible assets (1) | 11.89 | % | 12.32 | % | 12.81 | % | 13.29 | % | 13.03 | % | |||||
Share data | |||||||||||||||
Outstanding shares | 81,943 | 84,938 | 89,510 | 83,663 | 83,664 | ||||||||||
Book value per share | $ | 12.98 | $ | 12.86 | $ | 12.56 | $ | 12.96 | $ | 12.79 | |||||
Tangible book value per share (2) | $ | 10.36 | $ | 10.33 | $ | 10.15 | $ | 10.39 | $ | 10.21 |
_______________________
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
(2) Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.
At | |||||||||||||||
Supplemental Balance Sheet Highlights | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
(Dollars in Thousands, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Cash and cash equivalents | |||||||||||||||
Cash and due from depository institutions | $ | 20,502 | $ | 23,968 | $ | 18,628 | $ | 20,391 | $ | 20,200 | |||||
Interest-bearing deposits in other banks | 88,489 | 105,726 | 127,190 | 160,576 | 39,252 | ||||||||||
Total cash and cash equivalents | $ | 108,991 | $ | 129,694 | $ | 145,818 | $ | 180,967 | $ | 59,452 | |||||
Securities available for sale | |||||||||||||||
Debt securities: | |||||||||||||||
Municipal and state obligations | $ | 43,060 | $ | 47,763 | $ | 50,877 | $ | 54,054 | $ | 58,151 | |||||
Asset-backed securities | 250,741 | 255,407 | 258,801 | 172,447 | 169,102 | ||||||||||
Collateralized loan obligations | 169,776 | 196,685 | 196,398 | 193,788 | 189,565 | ||||||||||
Corporate bonds | 173,462 | 167,168 | 122,276 | 143,639 | 163,715 | ||||||||||
Trust preferred securities | 2,881 | 2,866 | 2,773 | 2,627 | 2,852 | ||||||||||
Debt securities | 639,920 | 669,889 | 631,125 | 566,555 | 583,385 | ||||||||||
Mortgage-backed securities: | |||||||||||||||
Collateralized mortgage obligations | 16,800 | 20,510 | 25,770 | 30,903 | 34,671 | ||||||||||
Residential pass-through securities | 806,655 | 705,991 | 625,715 | 561,954 | 607,113 | ||||||||||
Commercial pass-through securities | 315,595 | 299,503 | 225,932 | 226,291 | 251,175 | ||||||||||
Mortgage-backed securities | 1,139,050 | 1,026,004 | 877,417 | 819,148 | 892,959 | ||||||||||
Total securities available for sale | $ | 1,778,970 | $ | 1,695,893 | $ | 1,508,542 | $ | 1,385,703 | $ | 1,476,344 | |||||
Securities held to maturity | |||||||||||||||
Debt securities: | |||||||||||||||
Municipal and state obligations | $ | 27,168 | $ | 29,549 | $ | 31,576 | $ | 32,556 | $ | 34,618 | |||||
Total securities held to maturity | $ | 27,168 | $ | 29,549 | $ | 31,576 | $ | 32,556 | $ | 34,618 | |||||
Total securities | $ | 1,806,138 | $ | 1,725,442 | $ | 1,540,118 | $ | 1,418,259 | $ | 1,510,962 | |||||
At | |||||||||||||||
Supplemental Balance Sheet Highlights | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
(Dollars in Thousands, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Loan portfolio composition: | |||||||||||||||
Commercial loans: | |||||||||||||||
Multi-family | $ | 2,055,396 | $ | 2,076,483 | $ | 2,110,300 | $ | 2,059,568 | $ | 1,879,907 | |||||
Nonresidential | 1,110,765 | 1,123,695 | 1,124,330 | 960,853 | 1,202,652 | ||||||||||
Commercial business | 183,181 | 202,010 | 255,888 | 138,788 | 73,922 | ||||||||||
Construction | 95,533 | 90,398 | 79,178 | 20,961 | 17,880 | ||||||||||
Total commercial loans | 3,444,875 | 3,492,586 | 3,569,696 | 3,180,170 | 3,174,361 | ||||||||||
One- to four-family residential mortgage loans | 1,323,485 | 1,305,351 | 1,353,197 | 1,273,022 | 1,338,099 | ||||||||||
Consumer loans: | |||||||||||||||
Home equity loans and lines of credit | 59,721 | 65,298 | 71,540 | 82,920 | 87,909 | ||||||||||
Other consumer loans | 3,445 | 4,123 | 4,136 | 3,991 | 4,604 | ||||||||||
Total consumer loans | 63,166 | 69,421 | 75,676 | 86,911 | 92,513 | ||||||||||
Total loans, excluding yield adjustments | 4,831,526 | 4,867,358 | 4,998,569 | 4,540,103 | 4,604,973 | ||||||||||
Unaccreted yield adjustments | (33,287 | ) | (38,724 | ) | (43,819 | ) | (41,706 | ) | (42,461 | ) | |||||
Loans receivable, net of yield adjustments | 4,798,239 | 4,828,634 | 4,954,750 | 4,498,397 | 4,562,512 | ||||||||||
Less allowance for credit losses on loans | (63,762 | ) | (63,386 | ) | (64,860 | ) | (37,327 | ) | (37,191 | ) | |||||
Net loans receivable | $ | 4,734,477 | $ | 4,765,248 | $ | 4,889,890 | $ | 4,461,070 | $ | 4,525,321 | |||||
Loan portfolio allocation: | |||||||||||||||
Commercial loans: | |||||||||||||||
Multi-family | 42.5 | % | 42.7 | % | 42.2 | % | 45.3 | % | 40.8 | % | |||||
Nonresidential | 23.0 | % | 23.1 | % | 22.5 | % | 21.2 | % | 26.1 | % | |||||
Commercial business | 3.8 | % | 4.2 | % | 5.1 | % | 3.1 | % | 1.6 | % | |||||
Construction | 2.0 | % | 1.8 | % | 1.6 | % | 0.4 | % | 0.4 | % | |||||
Total commercial loans | 71.3 | % | 71.8 | % | 71.4 | % | 70.0 | % | 68.9 | % | |||||
One- to four-family residential mortgage loans | 27.4 | % | 26.8 | % | 27.1 | % | 28.1 | % | 29.1 | % | |||||
Consumer loans: | |||||||||||||||
Home equity loans and lines of credit | 1.2 | % | 1.3 | % | 1.4 | % | 1.8 | % | 1.9 | % | |||||
Other consumer loans | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | |||||
Total consumer loans | 1.3 | % | 1.4 | % | 1.5 | % | 1.9 | % | 2.0 | % | |||||
Total loans, excluding yield adjustments | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||
Asset quality: | |||||||||||||||
Nonperforming assets: | |||||||||||||||
Accruing loans - 90 days and over past due | $ | 2 | $ | - | $ | 238 | $ | 5 | $ | 12 | |||||
Nonaccrual loans | 71,416 | 71,472 | 44,837 | 36,691 | 35,384 | ||||||||||
Total nonperforming loans | 71,418 | 71,472 | 45,075 | 36,696 | 35,396 | ||||||||||
Other real estate owned | 178 | 178 | 178 | 178 | 178 | ||||||||||
Total nonperforming assets | $ | 71,596 | $ | 71,650 | $ | 45,253 | $ | 36,874 | $ | 35,574 | |||||
Nonperforming loans (% total loans) | 1.49 | % | 1.48 | % | 0.91 | % | 0.82 | % | 0.78 | % | |||||
Nonperforming assets (% total assets) | 0.97 | % | 0.98 | % | 0.62 | % | 0.55 | % | 0.53 | % | |||||
Allowance for credit losses on loans (ACL): | |||||||||||||||
ACL to total loans | 1.32 | % | 1.30 | % | 1.30 | % | 0.82 | % | 0.81 | % | |||||
ACL to nonperforming loans | 89.28 | % | 88.69 | % | 143.89 | % | 101.72 | % | 105.07 | % | |||||
Net charge offs | $ | 750 | $ | 109 | $ | 67 | $ | 38 | $ | 16 | |||||
Average net charge off rate (annualized) | 0.06 | % | 0.01 | % | 0.01 | % | 0.00 | % | 0.00 | % | |||||
At | |||||||||||||||
Supplemental Balance Sheet Highlights | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
(Dollars in Thousands, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Funding by type: | |||||||||||||||
Deposits: | |||||||||||||||
Non-interest-bearing deposits | $ | 545,746 | $ | 518,828 | $ | 487,710 | $ | 419,138 | $ | 321,824 | |||||
Interest-bearing demand | 1,923,184 | 1,752,699 | 1,561,135 | 1,264,151 | 1,134,420 | ||||||||||
Savings | 1,105,481 | 1,075,122 | 1,025,245 | 906,597 | 848,950 | ||||||||||
Certificates of deposit | 1,800,041 | 1,965,964 | 1,965,822 | 1,840,396 | 1,948,060 | ||||||||||
Interest-bearing deposits | 4,828,706 | 4,793,785 | 4,552,202 | 4,011,144 | 3,931,430 | ||||||||||
Total deposits | 5,374,452 | 5,312,613 | 5,039,912 | 4,430,282 | 4,253,254 | ||||||||||
Borrowings: | |||||||||||||||
Federal Home Loan Bank advances | 865,763 | 865,651 | 1,077,540 | 1,167,429 | 1,177,319 | ||||||||||
Overnight borrowings | - | - | - | - | 200,000 | ||||||||||
Depositor sweep accounts | - | - | - | 5,736 | 6,706 | ||||||||||
Total borrowings | 865,763 | 865,651 | 1,077,540 | 1,173,165 | 1,384,025 | ||||||||||
Total funding | $ | 6,240,215 | $ | 6,178,264 | $ | 6,117,452 | $ | 5,603,447 | $ | 5,637,279 | |||||
Loans as a % of deposits | 88.2 | % | 89.9 | % | 97.4 | % | 101.2 | % | 106.7 | % | |||||
Deposits as a % of total funding | 86.1 | % | 86.0 | % | 82.4 | % | 79.1 | % | 75.4 | % | |||||
Borrowings as a % of total funding | 13.9 | % | 14.0 | % | 17.6 | % | 20.9 | % | 24.6 | % | |||||
Funding by source: | |||||||||||||||
Retail funding: | |||||||||||||||
Non-interest-bearing deposits | $ | 545,746 | $ | 518,828 | $ | 487,710 | $ | 419,138 | $ | 321,824 | |||||
Interest-bearing demand | 1,923,184 | 1,752,699 | 1,561,135 | 1,264,151 | 1,134,420 | ||||||||||
Savings | 1,105,481 | 1,075,122 | 1,025,245 | 906,597 | 848,950 | ||||||||||
Certificates of deposit | 1,508,494 | 1,658,277 | 1,775,189 | 1,773,257 | 1,833,081 | ||||||||||
Total retail deposits | 5,082,905 | 5,004,926 | 4,849,279 | 4,363,143 | 4,138,275 | ||||||||||
Depositor sweep accounts | - | - | - | 5,736 | 6,706 | ||||||||||
Total retail funding | 5,082,905 | 5,004,926 | 4,849,279 | 4,368,879 | 4,144,981 | ||||||||||
Wholesale funding: | |||||||||||||||
Certificates of deposit (listing service) | $ | 32,952 | $ | 43,112 | $ | 57,251 | $ | 35,760 | $ | 33,608 | |||||
Certificates of deposit (brokered) | 258,595 | 264,575 | 133,382 | 31,379 | 81,371 | ||||||||||
Total wholesale deposits | 291,547 | 307,687 | 190,633 | 67,139 | 114,979 | ||||||||||
FHLB advances | 865,763 | 865,651 | 1,077,540 | 1,167,429 | 1,177,319 | ||||||||||
Overnight borrowings | - | - | - | - | 200,000 | ||||||||||
Total wholesale funding | 1,157,310 | 1,173,338 | 1,268,173 | 1,234,568 | 1,492,298 | ||||||||||
Total funding | $ | 6,240,215 | $ | 6,178,264 | $ | 6,117,452 | $ | 5,603,447 | $ | 5,637,279 | |||||
Retail funding as a % of total funding | 81.5 | % | 81.0 | % | 79.3 | % | 78.0 | % | 73.5 | % | |||||
Wholesale funding as a % of total funding | 18.5 | % | 19.0 | % | 20.7 | % | 22.0 | % | 26.5 | % | |||||
Summary Income Statement | For the three months ended | ||||||||||||||
(Dollars and Shares in Thousands, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
Except Per Share Data, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Interest income | |||||||||||||||
Loans | $ | 49,307 | $ | 49,466 | $ | 52,180 | $ | 46,192 | $ | 46,603 | |||||
Taxable investment securities | 7,891 | 7,707 | 7,336 | 9,769 | 10,526 | ||||||||||
Tax-exempt investment securities | 410 | 433 | 454 | 487 | 547 | ||||||||||
Other interest-earning assets | 705 | 787 | 914 | 903 | 1,100 | ||||||||||
Total interest income | 58,313 | 58,393 | 60,884 | 57,351 | 58,776 | ||||||||||
Interest expense | |||||||||||||||
Deposits | 6,670 | 8,647 | 11,062 | 12,439 | 14,768 | ||||||||||
Borrowings | 4,012 | 5,193 | 5,660 | 4,462 | 6,398 | ||||||||||
Total interest expense | 10,682 | 13,840 | 16,722 | 16,901 | 21,166 | ||||||||||
Net interest income | 47,631 | 44,553 | 44,162 | 40,450 | 37,610 | ||||||||||
Provision for (reversal of) credit losses | 1,126 | (1,365 | ) | 4,059 | 174 | 6,270 | |||||||||
Net interest income after provision for (reversal of) credit losses | 46,505 | 45,918 | 40,103 | 40,276 | 31,340 | ||||||||||
Non-interest income | |||||||||||||||
Fees and service charges | 1,325 | 1,896 | 1,076 | 1,696 | 1,338 | ||||||||||
Gain (loss) on sale and call of securities | 18 | 813 | (377 | ) | 19 | 2,234 | |||||||||
Gain on sale of loans | 943 | 2,378 | 1,890 | 1,348 | 565 | ||||||||||
Income from bank owned life insurance | 1,530 | 1,596 | 1,596 | 1,537 | 1,532 | ||||||||||
Electronic banking fees and charges | 456 | 404 | 405 | 325 | 309 | ||||||||||
Bargain purchase gain | - | - | 3,053 | - | - | ||||||||||
Other income | 1,194 | 67 | 90 | 77 | 223 | ||||||||||
Total non-interest income | 5,466 | 7,154 | 7,733 | 5,002 | 6,201 | ||||||||||
Non-interest expense | |||||||||||||||
Salaries and employee benefits | 16,965 | 17,081 | 16,977 | 15,527 | 15,537 | ||||||||||
Net occupancy expense of premises | 3,433 | 3,120 | 3,122 | 2,688 | 2,685 | ||||||||||
Equipment and systems | 3,823 | 3,902 | 3,570 | 2,948 | 2,672 | ||||||||||
Advertising and marketing | 567 | 513 | 500 | 751 | 612 | ||||||||||
Federal deposit insurance premium | 488 | 490 | 472 | 286 | - | ||||||||||
Directors' compensation | 748 | 748 | 748 | 769 | 771 | ||||||||||
Merger-related expenses | - | - | 4,349 | 447 | 285 | ||||||||||
Debt extinguishment expenses | - | 796 | - | - | 2,156 | ||||||||||
Other expense | 3,792 | 3,860 | 3,835 | 3,475 | 3,344 | ||||||||||
Total non-interest expense | 29,816 | 30,510 | 33,573 | 26,891 | 28,062 | ||||||||||
Income before income taxes | 22,155 | 22,562 | 14,263 | 18,387 | 9,479 | ||||||||||
Income taxes | 5,732 | 5,614 | 2,884 | 4,698 | 225 | ||||||||||
Net income | $ | 16,423 | $ | 16,948 | $ | 11,379 | $ | 13,689 | $ | 9,254 | |||||
Net income per common share (EPS) | |||||||||||||||
Basic | $ | 0.20 | $ | 0.20 | $ | 0.13 | $ | 0.17 | $ | 0.11 | |||||
Diluted | $ | 0.20 | $ | 0.20 | $ | 0.13 | $ | 0.17 | $ | 0.11 | |||||
Dividends declared | |||||||||||||||
Cash dividends declared per common share | $ | 0.09 | $ | 0.08 | $ | 0.08 | $ | 0.08 | $ | 0.08 | |||||
Cash dividends declared | $ | 7,205 | $ | 6,706 | $ | 6,917 | $ | 6,449 | $ | 6,479 | |||||
Dividend payout ratio | 43.9 | % | 39.6 | % | 60.8 | % | 47.1 | % | 70.0 | % | |||||
Weighted average number of common shares outstanding | |||||||||||||||
Basic | 80,673 | 85,120 | 86,008 | 80,678 | 81,339 | ||||||||||
Diluted | 80,690 | 85,123 | 86,009 | 80,680 | 81,358 |
For the three months ended | |||||||||||||||
Average Balance Sheet Data | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
(Dollars in Thousands, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Assets | |||||||||||||||
Interest-earning assets: | |||||||||||||||
Loans receivable, including loans held for sale | $ | 4,816,592 | $ | 4,871,268 | $ | 4,958,293 | $ | 4,567,229 | $ | 4,503,996 | |||||
Taxable investment securities | 1,674,223 | 1,544,095 | 1,350,511 | 1,369,014 | 1,406,973 | ||||||||||
Tax-exempt investment securities | 73,573 | 79,044 | 82,603 | 89,263 | 101,771 | ||||||||||
Other interest-earning assets | 169,291 | 266,114 | 247,543 | 141,964 | 104,241 | ||||||||||
Total interest-earning assets | 6,733,679 | 6,760,521 | 6,638,950 | 6,167,470 | 6,116,981 | ||||||||||
Non-interest-earning assets | 617,440 | 632,084 | 624,252 | 605,876 | 598,335 | ||||||||||
Total assets | $ | 7,351,119 | $ | 7,392,605 | $ | 7,263,202 | $ | 6,773,346 | $ | 6,715,316 | |||||
Liabilities and Stockholders' Equity | |||||||||||||||
Interest-bearing liabilities: | |||||||||||||||
Deposits: | |||||||||||||||
Interest-bearing demand | $ | 1,831,617 | $ | 1,683,222 | $ | 1,464,238 | $ | 1,189,044 | $ | 1,112,080 | |||||
Savings | 1,084,981 | 1,058,675 | 1,006,075 | 876,580 | 838,501 | ||||||||||
Certificates of deposit | 1,904,234 | 1,899,406 | 1,988,689 | 1,879,039 | 2,004,785 | ||||||||||
Total interest-bearing deposits | 4,820,832 | 4,641,303 | 4,459,002 | 3,944,663 | 3,955,366 | ||||||||||
Borrowings: | |||||||||||||||
Federal Home Loan Bank advances | 865,690 | 1,057,958 | 1,130,836 | 1,202,522 | 1,208,627 | ||||||||||
Other borrowings | - | - | 3,568 | 96,770 | 87,072 | ||||||||||
Total borrowings | 865,690 | 1,057,958 | 1,134,404 | 1,299,292 | 1,295,699 | ||||||||||
Total interest-bearing liabilities | 5,686,522 | 5,699,261 | 5,593,406 | 5,243,955 | 5,251,065 | ||||||||||
Non-interest-bearing liabilities: | |||||||||||||||
Non-interest-bearing deposits | 525,018 | 502,479 | 479,141 | 380,067 | 317,530 | ||||||||||
Other non-interest-bearing liabilities | 57,018 | 73,683 | 79,620 | 72,007 | 55,456 | ||||||||||
Total non-interest-bearing liabilities | 582,036 | 576,162 | 558,761 | 452,074 | 372,986 | ||||||||||
Total liabilities | 6,268,558 | 6,275,423 | 6,152,167 | 5,696,029 | 5,624,051 | ||||||||||
Stockholders' equity | 1,082,561 | 1,117,182 | 1,111,035 | 1,077,317 | 1,091,265 | ||||||||||
Total liabilities and stockholders' equity | $ | 7,351,119 | $ | 7,392,605 | $ | 7,263,202 | $ | 6,773,346 | $ | 6,715,316 | |||||
Average interest-earning assets to average interest-bearing liabilities | 118.41 | % | 118.62 | % | 118.69 | % | 117.61 | % | 116.49 | % |
For the three months ended | |||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
Performance Ratio Highlights | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Average yield on interest-earning assets: | |||||||||||||||
Loans receivable, including loans held for sale | 4.09 | % | 4.06 | % | 4.21 | % | 4.05 | % | 4.14 | % | |||||
Taxable investment securities | 1.89 | % | 2.00 | % | 2.17 | % | 2.85 | % | 2.99 | % | |||||
Tax-exempt investment securities (1) | 2.23 | % | 2.19 | % | 2.20 | % | 2.18 | % | 2.15 | % | |||||
Other interest-earning assets | 1.67 | % | 1.18 | % | 1.48 | % | 2.54 | % | 4.22 | % | |||||
Total interest-earning assets | 3.46 | % | 3.45 | % | 3.67 | % | 3.72 | % | 3.84 | % | |||||
Average cost of interest-bearing liabilities: | |||||||||||||||
Deposits: | |||||||||||||||
Interest-bearing demand | 0.34 | % | 0.47 | % | 0.60 | % | 0.72 | % | 1.17 | % | |||||
Savings | 0.21 | % | 0.33 | % | 0.57 | % | 0.81 | % | 0.85 | % | |||||
Certificates of deposit | 0.96 | % | 1.22 | % | 1.50 | % | 1.82 | % | 1.94 | % | |||||
Total interest-bearing deposits | 0.55 | % | 0.75 | % | 0.99 | % | 1.26 | % | 1.49 | % | |||||
Borrowings: | |||||||||||||||
Federal Home Loan Bank advances | 1.85 | % | 1.96 | % | 2.00 | % | 1.47 | % | 2.03 | % | |||||
Other borrowings | 0.00 | % | 0.00 | % | 0.04 | % | 0.13 | % | 1.17 | % | |||||
Total borrowings | 1.85 | % | 1.96 | % | 2.00 | % | 1.37 | % | 1.98 | % | |||||
Total interest-bearing liabilities | 0.75 | % | 0.97 | % | 1.20 | % | 1.29 | % | 1.61 | % | |||||
Interest rate spread (2) | 2.71 | % | 2.48 | % | 2.47 | % | 2.43 | % | 2.23 | % | |||||
Net interest margin (3) | 2.83 | % | 2.64 | % | 2.66 | % | 2.62 | % | 2.46 | % | |||||
Non-interest income to average assets (annualized) | 0.30 | % | 0.39 | % | 0.43 | % | 0.30 | % | 0.37 | % | |||||
Non-interest expense to average assets (annualized) | 1.62 | % | 1.65 | % | 1.85 | % | 1.59 | % | 1.67 | % | |||||
Efficiency ratio (4) | 56.15 | % | 59.01 | % | 64.69 | % | 59.16 | % | 64.05 | % | |||||
Return on average assets (annualized) | 0.89 | % | 0.92 | % | 0.63 | % | 0.81 | % | 0.55 | % | |||||
Return on average equity (annualized) | 6.07 | % | 6.07 | % | 4.10 | % | 5.08 | % | 3.39 | % | |||||
Return on average tangible equity (annualized) (5) | 7.57 | % | 7.52 | % | 5.08 | % | 6.35 | % | 4.23 | % |
_______________________
(1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(3) Net interest income divided by average interest-earning assets.
(4) Non-interest expense divided by the sum of net interest income and non-interest income.
(5) Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included below. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
Reconciliation of GAAP to Non-GAAP | For the three months ended | ||||||||||||||
(Dollars in Thousands, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
Except Per Share Data, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Adjusted net income: | |||||||||||||||
Net income (GAAP) | $ | 16,423 | $ | 16,948 | $ | 11,379 | $ | 13,689 | $ | 9,254 | |||||
Non-recurring transactions - net of tax: | |||||||||||||||
Bargain purchase gain | - | - | (3,053 | ) | - | - | |||||||||
Provision for credit losses on non-PCD loans | - | - | 3,563 | - | - | ||||||||||
Merger-related expenses | - | - | 3,123 | 426 | 269 | ||||||||||
Branch consolidation expenses | 264 | 243 | - | - | - | ||||||||||
Net effect of sales and calls of securities | (13 | ) | (571 | ) | - | - | (1,575 | ) | |||||||
Debt extinguishment expenses | - | 559 | - | - | 1,520 | ||||||||||
Reversal of income tax valuation allowance | - | (523 | ) | - | - | (591 | ) | ||||||||
Tax benefit arising from adoption of the CARES Act provisions | - | - | - | - | (1,624 | ) | |||||||||
Net effect of sales of other assets | (587 | ) | - | - | - | - | |||||||||
Net income (non-GAAP) | $ | 16,087 | $ | 16,656 | $ | 15,012 | $ | 14,115 | $ | 7,253 | |||||
Calculation of pre-tax, pre-provision net revenue: | |||||||||||||||
Net income (GAAP) | $ | 16,423 | $ | 16,948 | $ | 11,379 | $ | 13,689 | $ | 9,254 | |||||
Adjustments to net income (GAAP): | |||||||||||||||
Provision for income taxes | 5,732 | 5,614 | 2,884 | 4,698 | 225 | ||||||||||
Provision for (reversal of) credit losses | 1,126 | (1,365 | ) | 4,059 | 174 | 6,270 | |||||||||
Pre-tax, pre-provision net revenue (non-GAAP) | $ | 23,281 | $ | 21,197 | $ | 18,322 | $ | 18,561 | $ | 15,749 | |||||
Adjusted earnings per share: | |||||||||||||||
Weighted average common shares - basic | 80,673 | 85,120 | 86,008 | 80,678 | 81,339 | ||||||||||
Weighted average common shares - diluted | 80,690 | 85,123 | 86,009 | 80,680 | 81,358 | ||||||||||
Earnings per share - basic (GAAP) | $ | 0.20 | $ | 0.20 | $ | 0.13 | $ | 0.17 | $ | 0.11 | |||||
Earnings per share - diluted (GAAP) | $ | 0.20 | $ | 0.20 | $ | 0.13 | $ | 0.17 | $ | 0.11 | |||||
Adjusted earnings per share - basic (non-GAAP) | $ | 0.20 | $ | 0.20 | $ | 0.17 | $ | 0.17 | $ | 0.09 | |||||
Adjusted earnings per share - diluted (non-GAAP) | $ | 0.20 | $ | 0.20 | $ | 0.17 | $ | 0.17 | $ | 0.09 | |||||
Adjusted return on average assets: | |||||||||||||||
Total average assets | $ | 7,351,119 | $ | 7,392,605 | $ | 7,263,202 | $ | 6,773,346 | $ | 6,715,316 | |||||
Return on average assets (GAAP) | 0.89 | % | 0.92 | % | 0.63 | % | 0.81 | % | 0.55 | % | |||||
Adjusted return on average assets (non-GAAP) | 0.88 | % | 0.90 | % | 0.83 | % | 0.83 | % | 0.43 | % | |||||
Adjusted return on average equity: | |||||||||||||||
Total average equity | $ | 1,082,561 | $ | 1,117,182 | $ | 1,111,035 | $ | 1,077,317 | $ | 1,091,265 | |||||
Return on average equity (GAAP) | 6.07 | % | 6.07 | % | 4.10 | % | 5.08 | % | 3.39 | % | |||||
Adjusted return on average equity (non-GAAP) | 5.94 | % | 5.96 | % | 5.40 | % | 5.24 | % | 2.66 | % | |||||
Reconciliation of GAAP to Non-GAAP | For the three months ended | ||||||||||||||
(Dollars in Thousands, | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
Except Per Share Data, Unaudited) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||
Adjusted return on average tangible equity: | |||||||||||||||
Total average equity | $ | 1,082,561 | $ | 1,117,182 | $ | 1,111,035 | $ | 1,077,317 | $ | 1,091,265 | |||||
Less: average goodwill | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | (210,895 | ) | |||||
Less: average other intangible assets | (4,045 | ) | (4,317 | ) | (4,341 | ) | (4,124 | ) | (4,408 | ) | |||||
$ | 867,621 | $ | 901,970 | $ | 895,799 | $ | 862,298 | $ | 875,962 | ||||||
Return on average tangible equity (non-GAAP) | 7.57 | % | 7.52 | % | 5.08 | % | 6.35 | % | 4.23 | % | |||||
Adjusted return on average tangible equity (non-GAAP) | 7.42 | % | 7.39 | % | 6.70 | % | 6.55 | % | 3.31 | % | |||||
Adjusted non-interest expense ratio: | |||||||||||||||
Non-interest expense (GAAP) | $ | 29,816 | $ | 30,510 | $ | 33,573 | $ | 26,891 | $ | 28,062 | |||||
Non-recurring transactions: | |||||||||||||||
Merger-related expenses | - | - | (4,349 | ) | (447 | ) | (285 | ) | |||||||
Branch consolidation expenses | (375 | ) | (347 | ) | - | - | - | ||||||||
Debt extinguishment expenses | - | (796 | ) | - | - | (2,156 | ) | ||||||||
Non-interest expense (non-GAAP) | $ | 29,441 | $ | 29,367 | $ | 29,224 | $ | 26,444 | $ | 25,621 | |||||
Non-interest expense ratio (GAAP) | 1.62 | % | 1.65 | % | 1.85 | % | 1.59 | % | 1.67 | % | |||||
Adjusted non-interest expense ratio (non-GAAP) | 1.60 | % | 1.59 | % | 1.61 | % | 1.56 | % | 1.53 | % | |||||
Adjusted efficiency ratio: | |||||||||||||||
Non-interest expense (non-GAAP) | $ | 29,441 | $ | 29,367 | $ | 29,224 | $ | 26,444 | $ | 25,621 | |||||
Net interest income (GAAP) | $ | 47,631 | $ | 44,553 | $ | 44,162 | $ | 40,450 | $ | 37,610 | |||||
Total non-interest income (GAAP) | 5,466 | 7,154 | 7,733 | 5,002 | 6,201 | ||||||||||
Non-recurring transactions: | |||||||||||||||
Net effect of sales and calls of securities | (18 | ) | (813 | ) | - | - | (2,234 | ) | |||||||
Bargain purchase gain | - | - | (3,053 | ) | - | - | |||||||||
Net effect of sales of other assets | (837 | ) | - | - | - | - | |||||||||
Total revenue (non-GAAP) | $ | 52,242 | $ | 50,894 | $ | 48,842 | $ | 45,452 | $ | 41,577 | |||||
Efficiency ratio (GAAP) | 56.15 | % | 59.01 | % | 64.69 | % | 59.16 | % | 64.05 | % | |||||
Adjusted efficiency ratio (non-GAAP) | 56.36 | % | 57.70 | % | 59.83 | % | 58.18 | % | 61.62 | % | |||||
For further information contact:
Craig L. Montanaro, President and Chief Executive Officer, or
Keith Suchodolski, Executive Vice President and Chief Financial Officer
Kearny Financial Corp.
(973) 244-4500