The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on November 19, 2025, to stockholders of record as of November 5, 2025.
Craig L. Montanaro, President and Chief Executive Officer, commented, "We are pleased to report a strong quarter that underscores our continued momentum in profitability growth. Net interest margin expansion of 10 basis points, in conjunction with solid credit quality and well-controlled expenses, led to a 36% quarter-over-quarter increase in earnings per share. Our proactive balance sheet management, combined with the expected tailwinds from anticipated reductions in the federal funds rate, positions us well for sustained performance in the quarters ahead."
Mr. Montanaro continued, "Strategically, we advanced several key initiatives designed to enhance operational efficiency and drive shareholder value. The launch of our partnership with The Lab Consulting—a leading provider of end-to-end robotic process automation—represents a key milestone in our efforts to elevate the client experience and scale revenue efficiently. Additionally, the execution of our previously announced branch consolidations enables us to reallocate capital toward higher-return opportunities, reinforcing our commitment to long-term growth and value creation."
First Quarter Highlights
Net interest margin expanded by 10 basis points to 2.10%, while net interest income increased 5.2% to $37.7 million.
Net income per share increased 36.4% to $0.15 per diluted share, and pre-tax, pre-provision earnings per share increased 18.8% to $0.19 per diluted share.
The Company continued its loan portfolio diversification efforts, growing construction and commercial business loans by 26.8% and 10.2%, respectively, on an annualized basis.
The Company is consolidating three branches as part of an optimization of its real estate footprint, streamlining to 40 locations by October 2025.
In September 2025, the Company entered into a strategic partnership with The Lab Consulting to deploy advanced automation and analytics, designed to enhance operational efficiency, elevate client service, and deliver shareholder value.
Balance Sheet
Total assets were $7.65 billion at September 30, 2025, a decrease of $92.4 million, or 1.2%, from June 30, 2025.
Investment securities totaled $1.13 billion at September 30, 2025, consistent with the balance reported at June 30, 2025.
Loans receivable totaled $5.77 billion at September 30, 2025, a decrease of $45.5 million, or 0.8%, from June 30, 2025, primarily reflecting a decrease in multifamily mortgage loans, partially offset by increases in construction and commercial and industrial loans.
Deposits were $5.63 billion at September 30, 2025, a decrease of $43.3 million, or 0.8%, from June 30, 2025. This decrease was primarily driven by declines in interest bearing demand deposits and certificates of deposits ("CDs").
Borrowings were $1.21 billion at September 30, 2025, a decrease of $50.0 million, or 4.0%, from June 30, 2025, reflecting reductions in Federal Home Loan Bank ("FHLB") advances.
At September 30, 2025, the Company maintained available secured borrowing capacity with the FHLB and the Federal Reserve Discount Window of $2.54 billion, representing 33.2% of total assets.
Earnings
Net Interest Income and Net Interest Margin
Net interest margin expanded by 10 basis points to 2.10% for the quarter ended September 30, 2025. The increase for the quarter was primarily driven by improved asset yields and reductions in borrowings, partially offset by lower average balances on interest-earning assets and higher costs on interest-bearing liabilities.
For the quarter ended September 30, 2025, net interest income increased $1.9 million to $37.7 million from $35.8 million for the quarter ended June 30, 2025. Included in net interest income for the quarters ended September 30, 2025 and June 30, 2025, respectively, was purchase accounting accretion of $601,000 and $511,000, and loan prepayment penalty income of $490,000 and $217,000.
Non-Interest Income
For the quarter ended September 30, 2025, non-interest income increased $856,000, or 17.2%, to $5.8 million from $5.0 million for the quarter ended June 30, 2025, primarily driven by a non-recurring pre-tax gain of $749,000 on the sale of property held for sale in the current period. Excluding this item, non-interest income increased $107,000, or 2.1%, to $5.1 million for the quarter ended September 30, 2025.
Fees and service charges increased $237,000, or 36.2%, to $892,000 for the quarter ended September 30, 2025 from $655,000 for the quarter ended June 30, 2025. The increase primarily reflected higher deposit and branch related fee income.
Income from BOLI decreased $180,000, or 6.3%, to $2.7 million for the quarter ended September 30, 2025 from $2.9 million for the quarter ended June 30, 2025, primarily driven by the absence of $223,000 in non-recurring payments recorded in the prior period. No such non-recurring items were recorded in the current period.
Non-Interest Expense
For the quarter ended September 30, 2025, non-interest expense increased $773,000, or 2.5%, to $31.7 million from $30.9 million for the quarter ended June 30, 2025, primarily driven by increases in salary and benefits and net occupancy, partially offset by declines in federal deposit insurance premiums and other expense.
Salary and benefits expense increased $652,000 to $18.7 million for the quarter ended September 30, 2025 from $18.1 million for the quarter ended June 30, 2025, primarily driven by annual merit increases and higher non-recurring payroll taxes of $185,000 associated with annual incentive compensation.
Net occupancy expense of premises increased $487,000 to $3.3 million for the quarter ended September 30, 2025 from $2.8 million for the quarter ended June 30, 2025, primarily driven by a non-recurring pre-tax expense of $250,000 associated with our previously announced branch consolidations and non-recurring branch maintenance expenses of $102,000. Excluding these items, net occupancy expense of premises increased $135,000 to $3.0 million, primarily driven by higher repairs and other maintenance expenses.
Federal deposit insurance premium expense decreased $94,000 to $1.3 million for the quarter ended September 30, 2025 from $1.4 million for the quarter ended June 30, 2025, primarily driven by higher capital ratios.
Other expense decreased $163,000 to $3.5 million for the quarter September 30, 2025 from $3.6 million for the quarter ended June 30, 2025, primarily driven the absence of non-recurring professional fees incurred in the prior period, partially offset by elevated fraud losses in the current period. The remaining changes in the other components of non-interest expense between comparative periods reflected normal operating fluctuations within those line items.
Income Taxes
Income tax expense totaled $2.5 million for the quarter ended September 30, 2025 compared to $1.4 million for the quarter ended June 30, 2025, resulting in an effective tax rate of 20.6% and 17.0%, respectively. The increase in income tax expense was due to higher pre-tax income in the current quarter coupled with the tax cost associated with the vesting of certain stock-based compensation awards.
Asset Quality
The balance of non-performing assets increased to $64.6 million, or 0.84% of total assets, at September 30, 2025 from $45.6 million, or 0.59% of total assets, at June 30, 2025. The increase was driven by a single construction loan that became 90 days past due but remains on accrual status. The loan is secured by collateral under contract for sale, with all covenants satisfied and a loan-to-sale price ratio of 72%. No provision for credit losses related to this loan was recorded as of September 30, 2025, as full repayment is expected upon completion of the sale.
Net charge-offs totaled $1.0 million, or 0.07% of average loans, on an annualized basis, for the quarter ended September 30, 2025, compared to $49,000, or less than 0.01% of average loans, on an annualized basis, for the quarter ended June 30, 2025. The net charge-offs recorded for the quarter ended September 30, 2025 were primarily driven by a wholesale commercial and industrial ("C&I") loan, representing the final wholesale C&I loan in the portfolio. This charge-off had previously been individually reserved for within the allowance for credit losses ("ACL").
For the quarter ended September 30, 2025, the Company recorded a reversal of credit losses of $82,000, compared to a provision for credit losses of $1.8 million for the quarter ended June 30, 2025. The reversal for the quarter ended September 30, 2025 was largely driven by decreases in the balance of loans receivable, partially offset by qualitative risk factor adjustments.
The ACL was $45.1 million, or 0.78% of total loans, at September 30, 2025, a decrease of $1.1 million from $46.2 million, or 0.79% of total loans, at June 30, 2025. The decrease in the ACL from June 30, 2025 was largely attributable to a reduction in reserves for individually evaluated loans, resulting from the charge-offs noted above.
Capital
For the quarter ended September 30, 2025, book value per share increased $0.08, or 0.7%, to $11.63 while tangible book value per share increased $0.09, or 0.9%, to $9.86.
At September 30, 2025, total stockholders' equity included after-tax net unrealized losses on securities available for sale of $71.5 million, partially offset by after-tax unrealized gains on derivatives of $3.1 million. After-tax net unrecognized losses on securities held to maturity of $8.4 million were not reflected in total stockholders' equity.
At September 30, 2025, the Company's tangible equity to tangible assets ratio equaled 8.47% and 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.
This earnings release should be read in conjunction with Kearny Financial Corp.'s Q1 2026 Investor Presentation, a copy of which is available through the Investor Relations link located at the bottom of the page of our website at www.kearnybank.com and via a Current Report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.
Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.
Category: Earnings
Linked-Quarter Comparative Financial Analysis
Kearny Financial Corp.Consolidated Balance Sheets(Unaudited)
(Dollars and Shares in Thousands,Except Per Share Data)
September 30,2025
June 30,2025
Varianceor Change
Varianceor Change Pct.
Assets
Cash and cash equivalents
$
130,139
$
167,269
$
(37,130
)
-22.2
%
Securities available for sale
1,016,182
1,012,969
3,213
0.3
%
Securities held to maturity
116,681
120,217
(3,536
)
-2.9
%
Loans held-for-sale
6,650
5,931
719
12.1
%
Loans receivable
5,767,419
5,812,937
(45,518
)
-0.8
%
Less: allowance for credit losses on loans
(45,060
)
(46,191
)
(1,131
)
-2.4
%
Net loans receivable
5,722,359
5,766,746
(44,387
)
-0.8
%
Premises and equipment
43,222
43,897
(675
)
-1.5
%
Federal Home Loan Bank stock
62,011
64,261
(2,250
)
-3.5
%
Accrued interest receivable
29,460
28,098
1,362
4.8
%
Goodwill
113,525
113,525
—
—
%
Core deposit intangible
1,317
1,436
(119
)
-8.3
%
Bank owned life insurance
307,248
304,717
2,531
0.8
%
Deferred income taxes, net
51,587
55,203
(3,616
)
-6.6
%
Other assets
47,629
56,181
(8,552
)
-15.2
%
Total assets
$
7,648,010
$
7,740,450
$
(92,440
)
-1.2
%
Liabilities
Deposits:
Non-interest-bearing
$
578,481
$
582,045
$
(3,564
)
-0.6
%
Interest-bearing
5,053,401
5,093,172
(39,771
)
-0.8
%
Total deposits
5,631,882
5,675,217
(43,335
)
-0.8
%
Borrowings
1,206,497
1,256,491
(49,994
)
-4.0
%
Advance payments by borrowers for taxes
19,261
19,317
(56
)
-0.3
%
Other liabilities
37,166
43,463
(6,297
)
-14.5
%
Total liabilities
6,894,806
6,994,488
(99,682
)
-1.4
%
Stockholders' Equity
Common stock
648
646
2
0.3
%
Paid-in capital
494,490
494,546
(56
)
0.0
%
Retained earnings
344,287
341,744
2,543
0.7
%
Unearned ESOP shares
(18,484
)
(18,970
)
486
2.6
%
Accumulated other comprehensive loss
(67,737
)
(72,004
)
4,267
5.9
%
Total stockholders' equity
753,204
745,962
7,242
1.0
%
Total liabilities and stockholders' equity
$
7,648,010
$
7,740,450
$
(92,440
)
-1.2
%
Consolidated capital ratios
Equity to assets
9.85
%
9.64
%
0.21
%
Tangible equity to tangible assets(1)
8.47
%
8.27
%
0.20
%
Share data
Outstanding shares
64,739
64,577
162
0.3
%
Book value per share
$
11.63
$
11.55
$
0.08
0.7
%
Tangible book value per share(2)
$
9.86
$
9.77
$
0.09
0.9
%
_________________________
(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.
Kearny Financial Corp.Consolidated Statements of Income(Unaudited)
Three Months Ended
(Dollars and Shares in Thousands,Except Per Share Data)
September 30,2025
June 30,2025
Varianceor Change
Varianceor Change Pct.
Interest income
Loans
$
68,349
$
66,485
$
1,864
2.8
%
Taxable investment securities
12,600
12,322
278
2.3
%
Tax-exempt investment securities
41
49
(8
)
-16.3
%
Other interest-earning assets
1,518
1,549
(31
)
-2.0
%
Total interest income
82,508
80,405
2,103
2.6
%
Interest expense
Deposits
33,931
33,607
324
1.0
%
Borrowings
10,873
10,955
(82
)
-0.7
%
Total interest expense
44,804
44,562
242
0.5
%
Net interest income
37,704
35,843
1,861
5.2
%
(Reversal of) provision for credit losses
(82
)
1,785
(1,867
)
-104.6
%
Net interest income after (reversal of) provision for credit losses
37,786
34,058
3,728
10.9
%
Non-interest income
Fees and service charges
892
655
237
36.2
%
Gain on sale of loans
199
190
9
4.7
%
Income from bank owned life insurance
2,689
2,869
(180
)
-6.3
%
Electronic banking fees and charges
416
442
(26
)
-5.9
%
Other income
1,651
835
816
97.7
%
Total non-interest income
5,847
4,991
856
17.2
%
Non-interest expense
Salaries and employee benefits
18,745
18,093
652
3.6
%
Net occupancy expense of premises
3,307
2,820
487
17.3
%
Equipment and systems
3,974
4,030
(56
)
-1.4
%
Advertising and marketing
562
615
(53
)
-8.6
%
Federal deposit insurance premium
1,301
1,395
(94
)
-6.7
%
Directors' compensation
307
307
—
—
%
Other expense
3,470
3,633
(163
)
-4.5
%
Total non-interest expense
31,666
30,893
773
2.5
%
Income before income taxes
11,967
8,156
3,811
46.7
%
Income taxes
2,461
1,387
1,074
77.4
%
Net income
$
9,506
$
6,769
$
2,737
40.4
%
Net income per common share (EPS)
Basic
$
0.15
$
0.11
$
0.04
Diluted
$
0.15
$
0.11
$
0.04
Dividends declared
Cash dividends declared per common share
$
0.11
$
0.11
$
—
Cash dividends declared
$
6,963
$
6,946
$
17
Dividend payout ratio
73.2
%
102.6
%
-29.4
%
Weighted average number of common shares outstanding
Basic
62,741
62,597
144
Diluted
62,951
62,755
196
Kearny Financial Corp.Average Balance Sheet Data(Unaudited)
(Dollars in Thousands)
Three Months Ended
Varianceor Change
Varianceor Change Pct.
September 30,2025
June 30,2025
Assets
Interest-earning assets:
Loans receivable, including loans held for sale
$
5,806,767
$
5,830,421
$
(23,654
)
-0.4
%
Taxable investment securities
1,236,705
1,227,825
8,880
0.7
%
Tax-exempt investment securities
6,856
8,039
(1,183
)
-14.7
%
Other interest-earning assets
115,776
117,622
(1,846
)
-1.6
%
Total interest-earning assets
7,166,104
7,183,907
(17,803
)
-0.2
%
Non-interest-earning assets
453,215
454,975
(1,760
)
-0.4
%
Total assets
$
7,619,319
$
7,638,882
$
(19,563
)
-0.3
%
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand
$
2,343,809
$
2,342,523
$
1,286
0.1
%
Savings
754,244
754,192
52
0.0
%
Certificates of deposit (retail)
1,211,026
1,215,661
(4,635
)
-0.4
%
Certificates of deposit (brokered)
755,813
744,345
11,468
1.5
%
Total interest-bearing deposits
5,064,892
5,056,721
8,171
0.2
%
Borrowings:
Federal Home Loan Bank advances
1,077,146
1,083,902
(6,756
)
-0.6
%
Other borrowings
85,489
107,582
(22,093
)
-20.5
%
Total borrowings
1,162,635
1,191,484
(28,849
)
-2.4
%
Total interest-bearing liabilities
6,227,527
6,248,205
(20,678
)
-0.3
%
Non-interest-bearing liabilities:
Non-interest-bearing deposits
581,625
582,085
(460
)
-0.1
%
Other non-interest-bearing liabilities
65,024
64,405
619
1.0
%
Total non-interest-bearing liabilities
646,649
646,490
159
0.0
%
Total liabilities
6,874,176
6,894,695
(20,519
)
-0.3
%
Stockholders' equity
745,143
744,187
956
0.1
%
Total liabilities and stockholders' equity
$
7,619,319
$
7,638,882
$
(19,563
)
-0.3
%
Average interest-earning assets to average interest-bearing liabilities
115.07
%
114.98
%
0.09
%
0.1
%
Kearny Financial Corp.Performance Ratio Highlights(Unaudited)
Three Months Ended
Varianceor Change
September 30,2025
June 30,2025
Average yield on interest-earning assets:
Loans receivable, including loans held for sale
4.71
%
4.56
%
0.15
%
Taxable investment securities
4.08
%
4.01
%
0.07
%
Tax-exempt investment securities(1)
2.42
%
2.43
%
-0.01
%
Other interest-earning assets
5.24
%
5.27
%
-0.03
%
Total interest-earning assets
4.61
%
4.48
%
0.13
%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand
2.63
%
2.63
%
—
%
Savings
1.41
%
1.33
%
0.08
%
Certificates of deposit (retail)
3.56
%
3.56
%
—
%
Certificates of deposit (brokered)
2.67
%
2.62
%
0.05
%
Total interest-bearing deposits
2.68
%
2.66
%
0.02
%
Borrowings:
Federal Home Loan Bank advances
3.69
%
3.60
%
0.09
%
Other borrowings
4.44
%
4.45
%
-0.01
%
Total borrowings
3.74
%
3.68
%
0.06
%
Total interest-bearing liabilities
2.88
%
2.85
%
0.03
%
Interest rate spread(2)
1.73
%
1.62
%
0.11
%
Net interest margin(3)
2.10
%
2.00
%
0.10
%
Non-interest income to average assets (annualized)
0.31
%
0.26
%
0.05
%
Non-interest expense to average assets (annualized)
1.66
%
1.62
%
0.04
%
Efficiency ratio(4)
72.71
%
75.66
%
-2.95
%
Return on average assets (annualized)
0.50
%
