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Kearny Financial Corp. Reports Fourth Quarter and Fiscal Year End 2019 Operating Results

FAIRFIELD, N.J., July 30, 2019 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended June 30, 2019 of $8.8 million, or $0.10 per basic and diluted share, as compared to net income of $11.4 million, or $0.13 per basic and diluted share, for the quarter ended March 31, 2019.  For the fiscal year ended June 30, 2019, the Company reported net income of $42.1 million, or $0.46 per basic and diluted share.  The results represent an increase of $22.5 million compared to net income of $19.6 million, or $0.24 per basic and diluted share, for the fiscal year ended June 30, 2018.

Net income for the quarter and year ended June 30, 2019 was impacted by $1.7 million of non-recurring expenses which were recognized in conjunction with the Company’s previously announced consolidation of seven retail branches located in northern and central New Jersey.  The Company anticipates that additional non-recurring charges of approximately $950,000 will be recognized in conjunction with the noted branch consolidations during the quarter ending September 30, 2019.  Adjusting for the impact of such charges, net of tax benefit, the Company’s net income would have been $10.0 million or $0.11 per basic and diluted share for the quarter ended June 30, 2019 and $43.4 million or $0.47 per basic and diluted share for the fiscal year ended June 30, 2019.

Craig L. Montanaro, President and Chief Executive Officer, commented, “Looking back on fiscal 2019 we are very pleased with the progress that we have made which included vastly improved earnings performance compared to prior years, a seamless integration of the Clifton Bancorp, Inc. (“CSBK”) acquisition and the return of over $175 million in capital to shareholders via dividends and share repurchases.  Looking forward to fiscal 2020, our focus remains on the continued execution of our long-term strategic plan which emphasizes the growth of our core deposit franchise, the evolution of our digital banking platform and the deployment of our capital in a prudent and profitable manner.  In support of these goals, we will be enhancing our digital delivery channels with online deposit account opening capabilities during the first quarter of fiscal 2020 with additional best-of-breed digital products and services to follow throughout the remainder of the year.”

Balance Sheet Highlights

  • Loans receivable increased by $19.1 million to $4.68 billion, or 70.5% of total assets, at June 30, 2019 from $4.66 billion, or 70.0% of total assets, at March 31, 2019.  For the year ended June 30, 2019, the Company’s aggregate loan portfolio increased by $177.6 million, or 3.9%, from $4.50 billion, or 68.4% of total assets, at June 30, 2018.

  • Deposits increased by $10.0 million to $4.15 billion at June 30, 2019 from $4.14 billion at March 31, 2019.  For the year ended June 30, 2019, total deposits increased by $74.0 million from $4.07 billion at June 30, 2018.  The net increase in deposits for the quarter ended June 30, 2019 was attributable to an increase of $38.7 million in retail deposits that was partially offset by a decline of $28.6 million in wholesale deposits. For the year ended June 30, 2019 the net increase in deposits was attributable to an increase of $171.5 million in retail deposits that was partially offset by $97.5 million decrease in wholesale deposits.  The net growth and reallocation of the Company’s deposits for both the quarter and year ended June 30, 2019 reflected its continuing effort to relocate its funding mix in favor of retail deposits.

  • Investment securities decreased by $28.2 million to $1.29 billion, or 19.5% of total assets, at June 30, 2019 from $1.32 billion at March 31, 2019.  For the year ended June 30, 2019, the securities portfolio decreased by $23.9 million, or 1.8%, from $1.31 billion, or 20.0% of total assets, at June 30, 2018.

  • Borrowings decreased by $4.2 million to $1.32 billion at June 30, 2019, from $1.33 billion at March 31, 2019.  For the year ended June 30, 2019, total borrowings increased by $123.3 million from $1.20 billion at June 30, 2018.  The net increase in borrowings for the quarter ended June 30, 2019 reflected an increase of $30.0 million in overnight borrowings partially offset by a $28.2 million decrease in depositor sweep account balances coupled with the repayment of a $6.5 million Federal Home Loan Bank (“FHLB”) advance that matured during the period.  The increase in borrowings for the year ended June 30, 2019 partly reflected new FHLB advances totaling $227.0 million coupled with the increase of $30.0 million in overnight borrowings, noted above.  These increases were partially offset by a $19.7 million decrease in depositor sweep account balances coupled with the repayment of $116.0 million in FHLB advances that matured during the period. 

Earnings Highlights

Net Interest Income, Spread and Margin

  • Net interest income decreased by $1.5 million to $37.1 million for the quarter ended June 30, 2019, from $38.6 million for the quarter ended March 31, 2019.  The decrease in net interest income was the result of a $1.3 million increase in interest expense coupled with a $200,000 decrease in interest income between comparative periods.  For the year ended June 30, 2019, net interest income increased by $34.0 million to $155.3 million from $121.3 million for the year ended June 30, 2018.  The increase in net interest income between comparative periods largely reflected the impact of the Company’s acquisition of CSBK during the fourth quarter of the prior fiscal year ended June 30, 2018.

  • The Company’s net interest rate spread decreased ten basis points to 2.18% for the quarter ended June 30, 2019 from 2.28% for the quarter ended March 31, 2019.  The decrease in spread primarily reflected an eleven basis point increase in the average cost of interest-bearing liabilities to 1.74% for the quarter ended June 30, 2019 from 1.63% for the quarter ended March 31, 2019 while the average yield on interest-earning assets increased by one basis point to 3.92% from 3.91% for those same comparative periods.  For the year ended June 30, 2019, the net interest rate spread increased by six basis points to 2.31% from 2.25% for the year ended June 30, 2018.

  • The factors that contributed to the quarterly change in interest rate spread also contributed to an eight basis point decrease in the Company’s net interest margin to 2.45% for the quarter ended June 30, 2019 from 2.53% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the net interest margin increased by six basis points to 2.56% from 2.50% for the year ended June 30, 2018.

Non-Interest Income

  • Fees and service charges decreased by $334,000, or 20.0%, to $1.3 million for the quarter ended June 30, 2019 compared to $1.7 million for the quarter ended March 31, 2019.  This decrease largely reflected a decline in pre-payment fee income on commercial real estate loans related to an elevated level of pre-payment activity during the earlier comparative period.  For the years ended June 30, 2019 and June 30, 2018 fees and service charges remained stable at $5.4 million. 

  • Aggregate loan sale gains increased by $45,000, or 29.8%, to $196,000 for the quarter ended June 30, 2019 as compared to $151,000 for the quarter ended March 31, 2019.  Such gains totaled $580,000 and $1.0 million for the years ended June 30, 2019 and June 30, 2018 respectively.   Variances in loan sale gains largely reflected fluctuations in the volume of loans sold.

Non-Interest Expense

  • Non-interest expense increased by $2.0 million to $28.7 million for the quarter ended June 30, 2019 compared to $26.8 million for the quarter ended March 31, 2019.  The increase was largely attributable to $1.7 million of non-recurring branch consolidation expenses, recognized during the quarter ended June 30, 2019, as discussed earlier.  Other, less noteworthy, increases in salaries and employee benefits and marketing expense were partially offset by a decrease in net occupancy expense of premises.  For the year ended June 30, 2019, non-interest expense increased by $11.3 million to $109.2 million from $97.9 for the year ended June 30, 2018.  In addition to reflecting the impact of the $1.7 million of non-recurring branch consolidation expenses noted above, the increase in non-interest expense between comparative periods reflected the larger effects of Company’s acquisition of CSBK in April 2018 whose impact on the Company’s ongoing operating expenses was fully reflected throughout the fiscal year ended June 30, 2019.  These noted increases in non-interest expense were partially offset by the $6.7 million of non-recurring merger-related expenses attributable to the CSBK acquisition that were recorded during the year ended June 30, 2018 for which no comparable expenses were recorded during the year ending June 30, 2019.

  • The Company’s non-interest expense ratio totaled 1.73% for the quarter ended June 30, 2019 compared to 1.60% for the prior quarter ended March 31, 2019.  For the year ended June 30, 2019, the Company’s non-interest expense ratio totaled 1.64% compared to 1.86% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s non-interest expense ratios would have been 1.63% for the quarter ended June 30, 2019.  Similarly, adjusting for the both impact of the branch consolidation expenses and merger-related expenses noted earlier, the Company’s non-interest expense ratios would have been 1.61% and 1.73% for the years ended June 30, 2019 and June 30, 2018, respectively.

  • The Company’s efficiency ratio was 70.9% for the quarter ended June 30, 2019 compared to 63.3% for the prior quarter ended March 31, 2019.  For the year ended June 30, 2019, the Company’s efficiency ratio totaled 64.7% compared to 72.7% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s efficiency ratio would have been 66.6% for the quarter ended June 30, 2019.  Similarly, adjusting for both the impact of the branch consolidation expenses and merger-related expenses noted earlier, the Company’s efficiency ratios would have been 63.7% and 67.7% for the years ended June 30, 2019 and June 30, 2018, respectively.

Income Taxes

  • Income tax expense totaled $2.3 million for the quarter ended June 30, 2019 compared to $4.3 million for the quarter ended March 31, 2019 resulting in effective tax rates of 20.8% and 27.4%, respectively.  The decrease in income tax expense, and corresponding effective tax rate, for the current period largely reflected a lower level of pre-tax net income as compared to the prior period coupled with adjustments to deferred income taxes arising from updates to state income tax apportionment levels.  For the year ended June 30, 2019, income tax expense was $13.9 million compared to $14.4 million for the year ended June 30, 2018 resulting in effective tax rates of 24.8% and 42.4%, respectively.  The effective tax rate for the year ended June 30, 2018 reflected the impact of federal income tax reform and certain non-deductible merger-related expenses whose effects collectively increased the effective tax rate during the prior comparative period.  The effective tax rate for the year ended June 30, 2019 reflects the Company’s current statutory federal income tax rate of 21%.

Performance Ratios

  • The Company’s return on average assets for the quarter ended June 30, 2019 decreased to 0.53% from 0.68% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the return on average assets increased to 0.63% from 0.37% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average assets would have been 0.60% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses, merger-related expenses and tax reform noted earlier, the Company’s return on average assets would have been 0.65% and 0.52% for the years ended June 30, 2019 and June 30, 2018.

  • The Company’s return on average equity decreased to 3.08% for the quarter ended June 30, 2019 from 3.89% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the return on average equity increased to 3.52% from 1.81% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average equity would have been 3.50% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses, merger-related expenses and tax reform noted earlier, the Company’s return on average equity would have been and 3.62% and 2.53% for the years ended June 30, 2019 and June 30, 2018.

  • The Company’s return on average tangible equity decreased to 3.80% for the quarter ended June 30, 2019 from 4.78% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the return on average tangible equity increased to 4.30% from 2.08% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average tangible equity would have been 4.32% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses, merger-related expenses and tax reform noted earlier, the Company’s return on average tangible equity would have been 4.42% and 2.91% for the years ended June 30, 2019 and June 30, 2018.

Asset Quality Highlights

  • Asset quality remained strong throughout the quarter ended June 30, 2019.  The outstanding balance of nonperforming loans totaled $20.3 million, or 0.43% of total loans, at June 30, 2019 as compared to $21.3 million, or 0.46% of total loans, at March 31, 2019.  For the year ended June 30, 2019, nonperforming loans increased by $3.4 million from $16.9 million, or 0.37% of total loans, at June 30, 2018. 

  • The allowance for loan losses increased to $33.3 million at June 30, 2019 from $33.1 million at March 31, 2019, resulting in a total loan coverage ratio, representing the balance of the allowance for loan losses as a percentage of total loans, excluding loans held for sale, of 0.70% for both comparative periods.  The total loan coverage ratio for both periods reflects the impact of purchase accounting which generally precludes acquired loan balances from being considered in the balance of the allowance for loan losses at the time of their acquisition.  For the year ended June 30, 2019, the allowance for loan losses increased by $2.4 million from $30.9 million, or 0.68% of total loans, at June 30, 2018.

  • The Company recognized net charge offs totaling approximately $495,000 for the quarter ended June 30, 2019, reflecting an annualized net charge off rate of 0.04% on the average balance of total loans for the period. By comparison, the Company’s net charge offs totaled approximately $242,000 for the quarter ended March 31, 2019, reflecting an annualized net charge off rate of 0.02%.  For the year ended June 30, 2019, the Company recognized net charge offs totaling $1.1 million reflecting an annualized charge off rate of 0.02% on the average balance of total loans for fiscal 2019.  By comparison, the Company’s net charge offs totaled approximately $1.1 million for the year ended June 30, 2018 reflecting an annualized charge off rate of 0.03% on the average balance of total loans for fiscal 2018. 

  • The Company recorded a loan loss provision of $664,000 for the quarter ended June 30, 2019 compared to a loan loss provision reversal of $179,000 for the quarter ended March 31, 2019.  The increase in provision for loan losses was largely attributable to a net increase during the quarter ended June 30, 2019 in the balance of the performing portion of the loan portfolio that was collectively evaluated for impairment compared to a decline in such balances during the prior quarter ending March 31, 2019 while also reflecting an increase in net charge-offs between the comparative periods.  For the year ended June 30, 2019, the provision for loan losses increased by $850,000 to $3.6 million from $2.7 million for the year ended June 30, 2018.  The increase in the provision partly reflected the effects of greater growth during the year ended June 30, 2019 in the balance of the performing portion of the loan portfolio that was collectively evaluated for impairment compared to that of the prior year ended June 30, 2018.  Additionally, the increase reflected the effects of updates to environmental loss factors that increased the applicable portion of the allowance and the associated provision expense between comparative periods.

Capital Highlights

  • The Company maintained its regular quarterly cash dividend paid to stockholders of $0.06 per share for both quarters ended June 30, 2019, and March 31, 2019.  For the year ended June 30, 2019, total cash dividends paid to stockholders, including both regular and special dividends, increased by $0.12 to $0.37 per share compared to $0.25 per share for the year ended June 30, 2018.   The Company continually evaluates its dividend policies and practices in relation to its overall capital management and shareholder value objectives.

  • In March 2019, the Company completed the repurchase of its shares of common stock under its third share repurchase program announced in April 2018 through which it authorized the repurchase of 10,238,557 shares, or 10%, of the Company’s outstanding shares as of that date.  The shares associated with this third program were repurchased at a total cost of $138.8 million and at an average cost of $13.55 per share.  Concurrently, the Company announced its fourth share repurchase program through which it authorized the repurchase of 9,218,324 shares, or 10%, of the Company’s outstanding shares as of that date.  During the quarter ended June 30, 2019, the Company repurchased 2,393,626 shares of its common stock at a total cost of $32.2 million and an average cost of $13.46 per share. 

  • The Company’s and Bank’s regulatory capital ratios at June 30, 2019 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.

Linked-Quarter Comparative Financial Analysis  
                         
Summary Balance Sheet At         Variance  
(Dollars and Shares in Thousands, June 30,   March 31,   Variance   or Change  
Except Per Share Data, Unaudited) 2019   2019   or Change   Pct.  
Assets                        
Cash and cash equivalents $ 38,935   $ 54,160   $ (15,225 )   -28.1 %
Securities available for sale   714,263     726,920     (12,657 )   -1.7 %
Securities held to maturity   576,652     592,199     (15,547 )   -2.6 %
Loans held-for-sale   12,267     997     11,270     1130.4 %
Loans receivable, including yield adjustments   4,678,928     4,659,804     19,124     0.4 %
Less allowance for loan losses   (33,274 )   (33,105 )   (169 )   0.5 %
Net loans receivable   4,645,654     4,626,699     18,955     0.4 %
Premises and equipment   56,854     58,274     (1,420 )   -2.4 %
Federal Home Loan Bank stock   64,190     64,288     (98 )   -0.2 %
Accrued interest receivable   19,360     20,326     (966 )   -4.8 %
Goodwill   210,895     210,895     -     0.0 %
Core deposit intangible   5,160     5,470     (310 )   -5.7 %
Bank owned life insurance   256,155     254,569     1,586     0.6 %
Deferred income taxes, net   25,367     24,182     1,185     4.9 %
Other real estate owned   -     209     (209 )   -100.0 %
Other assets   9,077     19,563     (10,486 )   -53.6 %
Total assets $ 6,634,829   $ 6,658,751   $ (23,922 )   -0.4 %
                         
Liabilities                        
Deposits $ 4,147,610   $ 4,137,573   $ 10,037     0.2 %
Borrowings   1,321,982     1,326,216     (4,234 )   -0.3 %
Advance payments by borrowers for taxes   16,887     17,208     (321 )   -1.9 %
Other liabilities   21,191     19,643     1,548     7.9 %
Total liabilities   5,507,670     5,500,640     7,030     0.1 %
                         
Stockholders' Equity                        
Common stock   891     915     (24 )   -2.6 %
Paid-in capital   787,394     817,675     (30,281 )   -3.7 %
Retained earnings   366,679     363,072     3,607     1.0 %
Unearned ESOP shares   (30,644 )   (31,130 )   486     -1.6 %
Accumulated other comprehensive income, net   2,839     7,579     (4,740 )   -62.5 %
Total stockholders' equity   1,127,159     1,158,111     (30,952 )   -2.7 %
Total liabilities and stockholders' equity $ 6,634,829   $ 6,658,751   $ (23,922 )   -0.4 %
                         
Consolidated capital ratios                        
Equity to assets   16.99 %   17.39 %   -0.40 %      
Tangible equity to tangible assets   14.19 %   14.62 %   -0.43 %      
                         
Share data                        
Outstanding shares   89,126     91,495     (2,369 )   -2.6 %
Equity per share $ 12.65   $ 12.66   $ (0.01 )   -0.1 %
Tangible equity per share (1) $ 10.22   $ 10.29   $ (0.07 )   -0.7 %

____________________ 
(1) Tangible equity 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, June 30,   March 31,   Variance   or Change  
Except Per Share Data, Unaudited) 2019   2019   or Change   Pct.  
Interest income                        
Loans $ 47,818   $ 48,116   $ (298 )   -0.6 %
Taxable investment securities   9,772     9,511     261     2.7 %
Tax-exempt investment securities   700     710     (10 )   -1.4 %
Other interest-earning assets   1,158     1,320     (162 )   -12.3 %
Total Interest Income   59,448     59,657     (209 )   -0.4 %
                         
Interest expense                        
Deposits   15,131     14,114     1,017     7.2 %
Borrowings   7,171     6,905     266     3.9 %
Total interest expense   22,302     21,019     1,283     6.1 %
Net interest income   37,146     38,638     (1,492 )   -3.9 %
Provision for loan losses (provision reversal)   664     (179 )   843     470.9 %
Net interest income after provision
 (provision reversal) for loan losses
  36,482     38,817     (2,335 )   -6.0 %
                         
Non-interest income                        
Fees and service charges   1,340     1,674     (334 )   -20.0 %
Loss on sale and call of securities   (141 )   (182 )   41     22.5 %
Gain on sale of loans   196     151     45     29.8 %
Gain (loss) on sale and write down of other real estate owned   9     (6 )   15     250.0 %
Income from bank owned life insurance   1,586     1,560     26     1.7 %
Electronic banking fees and charges   270     253     17     6.7 %
Miscellaneous   128     226     (98 )   -43.4 %
Total non-interest income   3,388     3,676     (288 )   -7.8 %
                         
Non-interest expense                        
Salaries and employee benefits   16,338     15,350     988     6.4 %
Net occupancy expense of premises   2,744     2,979     (235 )   -7.9 %
Equipment and systems   2,917     3,053     (136 )   -4.5 %
Advertising and marketing   948     739     209     28.3 %
Federal deposit insurance premium   438     455     (17 )   -3.7 %
Directors' compensation   770     770     -     0.0 %
Miscellaneous   4,590     3,425     1,165     34.0 %
Total non-interest expense   28,745     26,771     1,974     7.4 %
Income before income taxes   11,125     15,722     (4,597 )   -29.2 %
Income taxes   2,314     4,305     (1,991 )   -46.2 %
Net income $ 8,811   $ 11,417   $ (2,606 )   -22.8 %
                         
Net income per common share (EPS)                        
Basic $ 0.10   $ 0.13   $ (0.03 )      
Diluted $ 0.10   $ 0.13   $ (0.03 )      
                         
Dividends declared                        
Cash dividends declared per common share $ 0.06   $ 0.06   $ -        
Cash dividends declared $ 5,204   $ 5,338   $ (134 )      
Dividend payout ratio   59.1 %   46.8 %   12.3 %      
                         
Weighted average number of  common
 shares outstanding
                       
Basic   87,090     89,488     (2,398 )      
Diluted   87,132     89,532     (2,400 )      


  For the three months ended         Variance  
Average Balance Sheet Data June 30,   March 31,   Variance   or Change  
(Dollars in Thousands, Unaudited) 2019   2019   or Change   Pct.  
Assets                        
Interest-earning assets:                        
Loans receivable, including loans held for sale $ 4,648,362   $ 4,709,052   $ (60,690 )   -1.3 %
Taxable investment securities   1,184,401     1,161,492     22,909     2.0 %
Tax-exempt investment securities   132,110     134,309     (2,199 )   -1.6 %
Other interest-earning assets   98,374     107,554     (9,180 )   -8.5 %
Total interest-earning assets   6,063,247     6,112,407     (49,160 )   -0.8 %
Non-interest-earning assets   572,218     574,921     (2,703 )   -0.5 %
Total assets $ 6,635,465   $ 6,687,328   $ (51,863 )   -0.8 %
                         
Liabilities and Stockholders' Equity                        
Interest-bearing liabilities:                        
Deposits:                        
Interest-bearing demand $ 815,624   $ 790,567   $ 25,057     3.2 %
Savings and club   780,558     773,308     7,250     0.9 %
Certificates of deposit   2,229,723     2,288,836     (59,113 )   -2.6 %
Total interest-bearing deposits   3,825,905     3,852,711     (26,806 )   -0.7 %
Borrowings:                        
Federal Home Loan Bank advances   1,284,427     1,292,168     (7,741 )   -0.6 %
Other borrowings   29,439     26,037     3,402     13.1 %
Total borrowings   1,313,866     1,318,205     (4,339 )   -0.3 %
Total interest-bearing liabilities   5,139,771     5,170,916     (31,145 )   -0.6 %
Non-interest-bearing liabilities:                        
Non-interest-bearing deposits   311,648     307,645     4,003     1.3 %
Other non-interest-bearing liabilities   39,294     35,930     3,364     9.4 %
Total non-interest-bearing liabilities   350,942     343,575     7,367     2.1 %
Total liabilities   5,490,713     5,514,491     (23,778 )   -0.4 %
Stockholders' equity   1,144,752     1,172,837     (28,085 )   -2.4 %
Total liabilities and stockholders' equity $ 6,635,465   $ 6,687,328   $ (51,863 )   -0.8 %
                         
Average interest-earning assets to average
 interest-bearing liabilities
  117.97 %   118.21 %   -0.24 %   -0.2 %
                         


   For the three months ended        
  June 30,   March 31,   Variance  
Performance Ratio Highlights 2019   2019   or Change  
Average yield on interest-earning assets:                  
Loans receivable, including loans held for sale   4.11 %   4.09 %   0.02 %
Taxable investment securities   3.30 %   3.28 %   0.02 %
Tax-exempt investment securities (1)   2.12 %   2.12 %   0.00 %
Other interest-earning assets   4.71 %   4.91 %   -0.20 %
Total interest-earning assets   3.92 %   3.91 %   0.01 %
                   
Average cost of interest-bearing liabilities:                  
Deposits:                  
Interest-bearing demand   1.19 %   1.06 %   0.13 %
Savings and club   0.68 %   0.60 %   0.08 %
Certificates of deposit   2.04 %   1.90 %   0.14 %
Total interest-bearing deposits   1.58 %   1.47 %   0.11 %
Borrowings:                  
Federal Home Loan Bank advances   2.21 %   2.13 %   0.08 %
Other borrowings   0.99 %   0.35 %   0.64 %
Total borrowings   2.18 %   2.10 %   0.08 %
Total interest-bearing liabilities   1.74 %   1.63 %   0.11 %
                   
Interest rate spread (2)   2.18 %   2.28 %   -0.10 %
Net interest margin (3)   2.45 %   2.53 %   -0.08 %
                   
Non-interest income to average assets
 (annualized)
  0.20 %   0.22 %   -0.02 %
Non-interest expense to average assets
 (annualized)
  1.73 %   1.60 %   0.13 %
                   
Efficiency ratio (4)   70.91 %   63.27 %   7.64 %
                   
Return on average assets (annualized)   0.53 %   0.68 %   -0.15 %
Return on average equity (annualized)   3.08 %   3.89 %   -0.81 %
Return on average tangible equity (annualized) (5)   3.80 %   4.78 %   -0.98 %

____________________
(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.


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Year-to-Year Comparative Financial Analysis  
                         
Summary Balance Sheet At         Variance  
(Dollars in Thousands, June 30,   June 30,   Variance   or Change  
Except Per Share Data, Unaudited) 2019   2018   or Change   Pct.  
Assets                        
Cash and cash equivalents $ 38,935   $ 128,864   $ (89,929 )   -69.8 %
Securities available for sale   714,263     725,085     (10,822 )   -1.5 %
Securities held to maturity   576,652     589,730     (13,078 )   -2.2 %
Loans held-for-sale   12,267     863     11,404     1321.4 %
Loans receivable, including yield adjustments   4,678,928     4,501,348     177,580     3.9 %
Less allowance for loan losses   (33,274 )   (30,865 )   (2,409 )   7.8 %
Net loans receivable   4,645,654     4,470,483     175,171     3.9 %
Premises and equipment   56,854     56,240     614     1.1 %
Federal Home Loan Bank of New York stock   64,190     59,004     5,186     8.8 %
Accrued interest receivable   19,360     18,510     850     4.6 %
Goodwill   210,895     210,895     -     0.0 %
Core deposit intangible   5,160     6,295     (1,135 )   -18.0 %
Bank owned life insurance   256,155     249,816     6,339     2.5 %
Deferred income tax assets, net   25,367     23,754     1,613     6.8 %
Other real estate owned   -     725     (725 )   -100.0 %
Other assets   9,077     39,610     (30,533 )   -77.1 %
Total assets $ 6,634,829   $ 6,579,874   $ 54,955     0.8 %
                         
Liabilities                        
Deposits $ 4,147,610   $ 4,073,604   $ 74,006     1.8 %
Borrowings   1,321,982     1,198,646     123,336     10.3 %
Advance payments by borrowers for taxes   16,887     18,088     (1,201 )   -6.6 %
Other liabilities   21,191     20,788     403     1.9 %
Total liabilities   5,507,670     5,311,126     196,544     3.7 %
                         
Stockholders' Equity                        
Common stock $ 891     996     (105 )   -10.5 %
Paid-in capital   787,394     922,711     (135,317 )   -14.7 %
Retained earnings