EX-99.1 2 krny-ex991_6.htm EX-99.1

krny-ex991_6.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

April 29, 2019

For further information contact:

Keith Suchodolski, Executive Vice President and Chief Financial Officer

Kearny Financial Corp.

(973) 244-4500

KEARNY FINANCIAL CORP.

REPORTS THIRD QUARTER 2019 OPERATING RESULTS AND RETAIL BRANCH CONSOLIDATION

Fairfield, New Jersey, April 29, 2019 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended March 31, 2019 of $11.4 million, or $0.13 per basic and diluted share, as compared to net income of $10.8 million, or $0.12 per basic and diluted share, for the quarter ended December 31, 2018.

The Company concurrently announced the consolidation of seven of the Bank’s retail branches located in northern and central New Jersey as a part of its ongoing strategy to improve operating efficiency and enhance long-term shareholder value.  The Company considered several factors in identifying the locations to be consolidated including historical branch profitability, market demographic trajectory, geographic proximity to the consolidating branch and the expected impact on the Bank’s clients and communities served. Completion of these consolidations is expected to occur during the quarter ended September 30, 2019, subject to regulatory approval.  The Company anticipates these consolidations to result in annualized pre-tax cost savings of at least $3.0 million, after recognition of associated one-time charges.

Craig L. Montanaro, President and Chief Executive Officer, commented, “We are very pleased to report another quarter of solid earnings performance, particularly in the face of the continuing challenges presented by the flat yield curve.  Our decision to consolidate certain branch locations, while representing meaningful cost savings, also reflects the recognition that the preferences of our clients are rapidly evolving towards a more omni-channel banking model. As a result, our strategy remains focused on driving digital channel adoption and enhancing our suite of digital banking solutions to provide our clients with a frictionless experience through whichever channel is most convenient and appealing to them.”

Balance Sheet Highlights

• Loans, excluding loans held for sale and the allowance for loan losses, decreased by $93.6 million to $4.66 billion, or 70.0% of total assets, at March 31, 2019 from $4.75 billion, or 70.9% of total assets, at December 31, 2018.  The decrease in loans was largely attributable to an elevated level of pre-payment activity in the commercial mortgage loan portfolio which outpaced loan origination volume during the period.  

• Deposits decreased by $35.9 million to $4.14 billion at March 31, 2019, from $4.17 billion at December 31, 2018.  The net decrease was attributable to a decline of $47.3 million in wholesale deposits that was partially offset by an increase of $11.4 million in retail deposits reflecting the Company’s ongoing efforts to reallocate its funding mix from wholesale to retail deposits.

• Investment securities increased by $54.2 million to $1.32 billion at March 31, 2019 from $1.26 billion at December 31, 2018 as a portion of the cash flows from the loan portfolio were deployed into U.S. agency commercial mortgage-backed securities with similar yields to the loans that pre-paid during the period.

• Borrowings increased by $15.7 million to $1.33 billion at March 31, 2019, from $1.31 billion at December 31, 2018.  The net increase in borrowings reflected a $20.2 million increase in depositor sweep account balances that was partially offset by the repayment of a $5.0 million long-term Federal Home Loan Bank (“FHLB”) advance that matured during the period.  

Earnings Highlights

• Interest income decreased by $365,000 to $59.7 million for the quarter ended March 31, 2019 from $60.0 million for the quarter ended December 31, 2018 while interest expense increased by $346,000 to $21.0 million from $20.7 million between the same comparative periods.  Consequently, net interest income decreased by $711,000 to $38.6 million for the quarter ended March 31, 2019, from $39.3 million for the quarter ended December 31, 2018.  

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• The Company’s interest rate spread decreased three basis points to 2.28% for the quarter ended March 31, 2019 from 2.31% for the quarter ended December 31, 2018.  The decrease in the interest rate spread primarily reflected a three basis point increase in the average cost of interest-bearing liabilities to 1.63% for the quarter ended March 31, 2019 from 1.60% for the quarter ended December 31, 2018 while the average yield on interest-earning assets remained stable at 3.91% for those same comparative periods.  The factors that contributed to the change in interest rate spread also contributed to a three basis point decrease in the Company’s net interest margin to 2.53% from 2.56%, for the same comparative periods.

The Company’s non-interest income continued to supplement and diversify its sources of revenue.

• Fees and service charges increased by $416,000, or 33.1%, to $1.7 million for the quarter ended March 31, 2019 compared to $1.3 million for the quarter ended December 31, 2018.  This increase was largely driven by pre-payment fee income on commercial real estate loans related to the elevated level of pre-payment activity noted above.

• Aggregate loan sale gains increased by $50,000, or 49.5%, to $151,000 for the quarter ended March 31, 2019 as compared to $101,000 for the quarter ended December 31, 2018 largely reflecting an increase in the volume of loans sold.

The Company continued to evaluate and implement tactics and strategies designed to improve operating efficiency and make more effective use of its supporting infrastructure while maintaining its effective income tax rate.

• Non-interest expense decreased by $499,000 to $26.8 million for the quarter ended March 31, 2019 compared to $27.3 million for the quarter ended December 31, 2018.  The decrease was largely attributable to various non-recurring expenses that were recognized during the quarter ended December 31, 2018 in conjunction with the October 2018 conversion of Clifton Savings Bank’s core processing system.  The decrease in non-interest expense also reflected a net decrease of $349,000 in salaries and employee benefit expense from $15.7 million for the quarter ended December 31, 2018 to $15.4 million for the quarter ended March 31, 2019 largely attributable to decreases in wages, overtime and employee bonus compensation, partially offset by an increase in employer payroll tax expense.  These decreases were partially offset by an increase in facilities occupancy expense which was primarily attributable to seasonal fluctuations in such expenses.

• The Company’s ratio of non-interest expense to average assets totaled 1.60% for the quarter ended March 31, 2019 compared to 1.62% for the prior quarter ended December 31, 2018.  For those same comparative periods, the Company’s efficiency ratios were 63.3% and 63.9%, respectively.  

• Income tax expense totaled $4.3 million for the quarter ended March 31, 2019 compared to $3.6 million for the quarter ended December 31, 2018 resulting in effective tax rates of 27.4% and 25.3%, respectively.

Collectively, these factors resulted in an increase of $649,000 in net income for the quarter ended March 31, 2019 compared to the prior quarter ended December 31, 2018.

• The Company’s return on average assets for the quarter ended March 31, 2019 increased to 0.68% from 0.64% for the quarter ended December 31, 2018.  

• The Company’s return on average equity increased to 3.89% for the quarter ended March 31, 2019 from 3.55% for the quarter ended December 31, 2018 while the Company’s return on average tangible equity increased to 4.78% from 4.33% for the comparative periods.

Asset Quality Highlights

• Asset quality remained strong throughout the quarter ended March 31, 2019.  The outstanding balance of nonperforming loans totaled $21.3 million, or 0.46% of total loans, at March 31, 2019 as compared to $20.8 million, or 0.44% of total loans, at December 31, 2018.  

• The allowance for loan losses decreased to $33.1 million at March 31, 2019 from $33.5 million at December 31, 2018, 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.

• The Company recognized net charge offs totaling approximately $242,000 for the quarter ended March 31, 2019, reflecting an annualized net charge off rate of 0.02% on the average balance of total loans for the period. By comparison, the Company’s

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net charge offs totaled approximately $176,000 for the quarter ended December 31, 2018, reflecting an annualized net charge off rate of 0.01%.

• The Company recorded a loan loss provision reversal of $179,000 for the quarter ended March 31, 2019 as compared to a provision for loan loss expense of $971,000 for the quarter ended December 31, 2018.  The decrease in provision for loan loss was largely attributable to the net decrease during the quarter ended March 31, 2019 in the performing portion of the loan portfolio that was collectively evaluated for impairment.

Capital Highlights

• The Company increased its regular quarterly cash dividend by $0.01 per share, to $0.06 per share during the quarter ended March 31, 2019, from $0.05 per share during the quarter ended December 31, 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.  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 March 31, 2019, the Company repurchased 2,445,689 shares of its common stock at a total cost of $32.4 million and an average cost of $13.24 per share.  The shares of common stock repurchased during the period included 1,757,572 shares attributed to the completion of the Company’s third share repurchase program, as noted above.  Such shares were repurchased at a total cost of $23.3 million and an average cost of $13.24 per share.  The additional 688,117 shares repurchased during the period represented 7.5% of the total shares to be repurchased under the Company’s fourth share repurchase program, also noted above.  Such shares were repurchased at a total cost of $9.1 million and at an average cost of $13.24 per share.

• The Company’s and Bank’s regulatory capital ratios at March 31, 2019 were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.  

The exhibits that follow this narrative begin with the presentation of the Linked-Quarter Comparative Financial Analysis that supports the discussion above by presenting the Company’s financial condition and operating results for the quarter ended March 31, 2019 compared to those for the prior linked-quarter ended December 31, 2018.  This analysis is followed by a tabular Five-Quarter Financial Trend Analysis that presents similar financial information, together with other financial highlights and performance metrics, over a consecutive five quarter look-back period that is intended to reflect the Company’s financial performance and strategic achievements over this extended period of time.  The exhibits conclude with the presentation of the Reconciliation of GAAP to Non-GAAP financial data included in this news release.

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.

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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)	2019			2018			or Change			Pct.
Assets
Cash and cash equivalents	$	54,160		$	51,483		$	2,677			5.2	%
Securities available for sale		726,920			666,602			60,318			9.0	%
Securities held to maturity		592,199			598,318			(6,119	)		-1.0	%
Loans held-for-sale		997			1,001			(4	)		-0.4	%
Loans receivable, including yield adjustments		4,659,804			4,753,392			(93,588	)		-2.0	%
Less allowance for loan losses		(33,105	)		(33,526	)		421			-1.3	%
Net loans receivable		4,626,699			4,719,866			(93,167	)		-2.0	%
Premises and equipment		58,274			58,414			(140	)		-0.2	%
Federal Home Loan Bank stock		64,288			64,514			(226	)		-0.4	%
Accrued interest receivable		20,326			19,435			891			4.6	%
Goodwill		210,895			210,895			-			0.0	%
Core deposit intangible		5,470			5,743			(273	)		-4.8	%
Bank owned life insurance		254,569			253,009			1,560			0.6	%
Deferred income taxes, net		24,182			24,692			(510	)		-2.1	%
Other real estate owned		209			508			(299	)		-58.9	%
Other assets		19,563			27,960			(8,397	)		-30.0	%
Total assets	$	6,658,751		$	6,702,440		$	(43,689	)		-0.7	%
Liabilities
Deposits	$	4,137,573		$	4,173,434		$	(35,861	)		-0.9	%
Borrowings		1,326,216			1,310,547			15,669			1.2	%
Advance payments by borrowers for taxes		17,208			17,201			7			0.0	%
Other liabilities		19,643			17,997			1,646			9.1	%
Total liabilities		5,500,640			5,519,179			(18,539	)		-0.3	%
Stockholders' Equity
Common stock		915			938			(23	)		-2.5	%
Paid-in capital		817,675			848,145			(30,470	)		-3.6	%
Retained earnings		363,072			356,993			6,079			1.7	%
Unearned ESOP shares		(31,130	)		(31,617	)		487			-1.5	%
Accumulated other comprehensive income, net		7,579			8,802			(1,223	)		-13.9	%
Total stockholders' equity		1,158,111			1,183,261			(25,150	)		-2.1	%
Total liabilities and stockholders' equity	$	6,658,751		$	6,702,440		$	(43,689	)		-0.7	%
Consolidated capital ratios
Equity to assets		17.39	%		17.65	%		-0.26	%
Tangible equity to tangible assets		14.62	%		14.90	%		-0.28	%
Share data
Outstanding shares		91,495			93,772			(2,277	)		-2.4	%
Equity per share	$	12.66		$	12.62		$	0.04			0.3	%
Tangible equity per share (1)	$	10.29		$	10.31		$	(0.02	)		-0.2	%

(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

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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)	2019			2018			or Change			Pct.
Interest income
Loans	$	48,116		$	49,015		$	(899	)		-1.8	%
Taxable investment securities		9,511			9,051			460			5.1	%
Tax-exempt investment securities		710			713			(3	)		-0.4	%
Other interest-earning assets		1,320			1,243			77			6.2	%
Total Interest Income		59,657			60,022			(365	)		-0.6	%
Interest expense
Deposits		14,114			12,727			1,387			10.9	%
Borrowings		6,905			7,946			(1,041	)		-13.1	%
Total interest expense		21,019			20,673			346			1.7	%
Net interest income		38,638			39,349			(711	)		-1.8	%
(Reversal of) provision for loan losses		(179	)		971			(1,150	)		-118.4	%
Net interest income after provision for   loan losses		38,817			38,378			439			1.1	%
Non-interest income
Fees and service charges		1,674			1,258			416			33.1	%
Loss on sale and call of securities		(182	)		-			(182	)	N/A
Gain on sale of loans		151			101			50			49.5	%
(Loss) gain on sale and write down of other real estate owned		(6	)		36			(42	)		-116.7	%
Income from bank owned life insurance		1,560			1,599			(39	)		-2.4	%
Electronic banking fees and charges		253			277			(24	)		-8.7	%
Miscellaneous		226			38			188			494.7	%
Total non-interest income		3,676			3,309			367			11.1	%
Non-interest expense
Salaries and employee benefits		15,350			15,699			(349	)		-2.2	%
Net occupancy expense of premises		2,979			2,761			218			7.9	%
Equipment and systems		3,053			3,377			(324	)		-9.6	%
Advertising and marketing		739			787			(48	)		-6.1	%
Federal deposit insurance premium		455			421			34			8.1	%
Directors' compensation		770			746			24			3.2	%
Miscellaneous		3,425			3,479			(54	)		-1.6	%
Total non-interest expense		26,771			27,270			(499	)		-1.8	%
Income before income taxes		15,722			14,417			1,305			9.1	%
Income taxes		4,305			3,649			656			18.0	%
Net income	$	11,417		$	10,768		$	649			6.0	%
Net income per common share (EPS)
Basic	$	0.13		$	0.12		$	0.01
Diluted	$	0.13		$	0.12		$	0.01
Dividends declared
Cash dividends declared per common share	$	0.06		$	0.05		$	0.01
Cash dividends declared	$	5,338		$	4,082		$	1,256
Dividend payout ratio		46.8	%		37.9	%		8.8	%
Weighted average number of  common shares outstanding
Basic		89,488			92,434			(2,946	)
Diluted		89,532			92,480			(2,948	)

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	For the three months ended									Variance
Average Balance Sheet Data	March 31,			December 31,			Variance			or Change
(Dollars in Thousands, Unaudited)	2019			2018			or Change			Pct.
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	4,709,052		$	4,758,587		$	(49,535	)		-1.0	%
Taxable investment securities		1,161,492			1,158,720			2,772			0.2	%
Tax-exempt investment securities		134,309			135,453			(1,144	)		-0.8	%
Other interest-earning assets		107,554			87,916			19,638			22.3	%
Total interest-earning assets		6,112,407			6,140,676			(28,269	)		-0.5	%
Non-interest-earning assets		574,921			587,921			(13,000	)		-2.2	%
Total assets	$	6,687,328		$	6,728,597		$	(41,269	)		-0.6	%
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	790,567		$	792,989		$	(2,422	)		-0.3	%
Savings and club		773,308			743,676			29,632			4.0	%
Certificates of deposit		2,288,836			2,214,932			73,904			3.3	%
Total interest-bearing deposits		3,852,711			3,751,597			101,114			2.7	%
Borrowings:
Federal Home Loan Bank advances		1,292,168			1,293,470			(1,302	)		-0.1	%
Other borrowings		26,037			119,281			(93,244	)		-78.2	%
Total borrowings		1,318,205			1,412,751			(94,546	)		-6.7	%
Total interest-bearing liabilities		5,170,916			5,164,348			6,568			0.1	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		307,645			315,165			(7,520	)		-2.4	%
Other non-interest-bearing liabilities		35,930			37,374			(1,444	)		-3.9	%
Total non-interest-bearing liabilities		343,575			352,539			(8,964	)		-2.5	%
Total liabilities		5,514,491			5,516,887			(2,396	)		0.0	%
Stockholders' equity		1,172,837			1,211,710			(38,873	)		-3.2	%
Total liabilities and stockholders' equity	$	6,687,328		$	6,728,597		$	(41,269	)		-0.6	%
Average interest-earning assets to average interest-bearing liabilities		118.21	%		118.91	%		-0.70	%		-0.6	%

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	For the three months ended
	March 31,			December 31,			Variance
Performance Ratio Highlights	2019			2018			or Change
Average yield on interest-earning assets:
Loans receivable, including loans held for sale		4.09	%		4.12	%		-0.03	%
Taxable investment securities		3.28	%		3.12	%		0.16	%
Tax-exempt investment securities (1)		2.12	%		2.11	%		0.01	%
Other interest-earning assets		4.91	%		5.66	%		-0.75	%
Total interest-earning assets		3.91	%		3.91	%		0.00	%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		1.06	%		0.97	%		0.09	%
Savings and club		0.60	%		0.49	%		0.11	%
Certificates of deposit		1.90	%		1.79	%		0.11	%
Total interest-bearing deposits		1.47	%		1.36	%		0.11	%
Borrowings:
Federal Home Loan Bank advances		2.13	%		2.27	%		-0.14	%
Other borrowings		0.35	%		1.99	%		-1.64	%
Total borrowings		2.10	%		2.25	%		-0.15	%
Total interest-bearing liabilities		1.63	%		1.60	%		0.03	%
Interest rate spread (2)		2.28	%		2.31	%		-0.03	%
Net interest margin (3)		2.53	%		2.56	%		-0.03	%
Non-interest income to average assets (annualized)		0.22	%		0.20	%		0.02	%
Non-interest expense to average assets (annualized)		1.60	%		1.62	%		-0.02	%
Efficiency ratio (4)		63.27	%		63.93	%		-0.66	%
Return on average assets (annualized)		0.68	%		0.64	%		0.04	%
Return on average equity (annualized)		3.89	%		3.55	%		0.34	%
Return on average tangible equity (annualized) (5)		4.78	%		4.33	%		0.45	%

(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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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)	2019			2018			2018			2018			2018
Assets
Cash and cash equivalents	$	54,160		$	51,483		$	44,486		$	128,864		$	38,283
Securities available for sale		726,920			666,602			706,240			725,085			684,771
Securities held to maturity		592,199			598,318			602,838			589,730			459,380
Loans held-for-sale		997			1,001			1,503			863			2,377
Loans receivable, including yield adjustments		4,659,804			4,753,392			4,660,507			4,501,348			3,351,369
Less allowance for loan losses		(33,105	)		(33,526	)		(32,731	)		(30,865	)		(30,248	)
Net loans receivable		4,626,699			4,719,866			4,627,776			4,470,483			3,321,121
Premises and equipment		58,274			58,414			57,635			56,240			42,856
Federal Home Loan Bank stock		64,288			64,514			66,428			59,004			39,112
Accrued interest receivable		20,326			19,435			19,455			18,510			13,926
Goodwill		210,895			210,895			210,895			210,895			108,591
Core deposit intangible		5,470			5,743			6,018			6,295			206
Bank owned life insurance		254,569			253,009			251,410			249,816			184,981
Deferred income taxes, net		24,182			24,692			22,136			23,754			3,898
Other real estate owned		209			508			674			725			1,094
Other assets		19,563			27,960			38,717			39,610			33,104
Total assets	$	6,658,751		$	6,702,440		$	6,656,211		$	6,579,874		$	4,933,700
Liabilities
Deposits		4,137,573		$	4,173,434		$	3,954,821		$	4,073,604		$	3,067,102
Borrowings		1,326,216			1,310,547			1,419,424			1,198,646			852,009
Advance payments by borrowers for taxes		17,208			17,201			10,687			18,088			8,969
Other liabilities		19,643			17,997			35,198			20,788			14,419
Total liabilities		5,500,640			5,519,179			5,420,130			5,311,126			3,942,499
Stockholders' Equity
Common stock		915			938			978			996			788
Paid-in capital		817,675			848,145			897,551			922,711			653,045
Retained earnings		363,072			356,993			350,838			359,096			355,270
Unearned ESOP shares		(31,130	)		(31,617	)		(32,104	)		(32,590	)		(33,076	)
Accumulated other comprehensive income, net		7,579			8,802			18,818			18,535			15,174
Total stockholders' equity		1,158,111			1,183,261			1,236,081			1,268,748			991,201
Total liabilities and stockholders' equity	$	6,658,751		$	6,702,440		$	6,656,211		$	6,579,874		$	4,933,700
Consolidated capital ratios
Equity to assets		17.39	%		17.65	%		18.57	%		19.28	%		20.09	%
Tangible equity to tangible assets		14.62	%		14.90	%		15.83	%		16.53	%		18.29	%
Share data
Outstanding shares		91,495			93,772			97,754			99,626			78,765
Equity per share	$	12.66		$	12.62		$	12.64		$	12.74		$	12.58
Tangible equity per share (1)	$	10.29		$	10.31		$	10.43		$	10.56		$	11.20

(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

8

	At
Supplemental Balance Sheet Highlights	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in Thousands, Unaudited)	2019			2018			2018			2018			2018
Cash and cash equivalents
Cash and due from depository institutions	$	15,943		$	24,361		$	21,973		$	26,199		$	18,229
Interest-bearing deposits in other banks		38,217			27,122			22,513			102,665			20,054
Total cash and cash equivalents	$	54,160		$	51,483		$	44,486		$	128,864		$	38,283
Securities available for sale
Debt securities:
U.S. agency securities	$	3,737		$	3,942		$	4,070		$	4,411		$	4,667
Municipal and state obligations		26,731			26,205			25,907			26,088			26,733
Asset-backed securities		180,145			180,828			182,390			182,620			182,066
Collateralized loan obligations		207,906			184,439			215,569			226,066			178,342
Corporate bonds		121,597			144,692			147,811			147,594			142,202
Trust preferred securities		3,775			3,726			3,794			3,783			8,485
Debt securities available for sale		543,891			543,832			579,541			590,562			542,495
Mortgage-backed securities:
Collateralized mortgage obligations		21,660			23,019			23,097			24,292			25,601
Residential pass-through securities		70,513			91,918			95,795			102,359			108,736
Commercial pass-through securities		90,856			7,833			7,807			7,872			7,939
Mortgage-backed securities		183,029			122,770			126,699			134,523			142,276
Total securities available for sale	$	726,920		$	666,602		$	706,240		$	725,085		$	684,771
Securities held to maturity
Debt securities:
Municipal and state obligations	$	107,375		$	107,826		$	109,061		$	109,483		$	98,011
Subordinated debt		63,107			56,255			46,275			46,294			30,000
Debt securities held to maturity		170,482			164,081			155,336			155,777			128,011
Mortgage-backed securities:
Collateralized mortgage obligations		49,368			51,540			54,130			56,886			34,309
Residential pass-through securities		174,338			182,335			190,812			200,622			151,605
Commercial pass-through securities		198,011			200,362			202,560			176,445			145,455
Mortgage-backed securities		421,717			434,237			447,502			433,953			331,369
Total securities held to maturity	$	592,199		$	598,318		$	602,838		$	589,730		$	459,380
Total securities	$	1,319,119		$	1,264,920		$	1,309,078		$	1,314,815		$	1,144,151

9

	At
Supplemental Balance Sheet Highlights	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in Thousands, Unaudited)	2019			2018			2018			2018			2018
Loan portfolio composition:
Residential first mortgage loans	$	1,325,105		$	1,334,284		$	1,303,249		$	1,297,453		$	563,807
Home equity loans and lines of credit		97,788			96,001			93,473			90,761			79,522
Residential mortgage loans		1,422,893			1,430,285			1,396,722			1,388,214			643,329
Multifamily mortgage loans		1,956,571			1,974,409			1,898,831			1,758,584			1,471,573
Nonresidential and mixed use mortgage loans		1,249,215			1,302,583			1,315,279			1,302,961			1,113,385
Commercial mortgage loans		3,205,786			3,276,992			3,214,110			3,061,545			2,584,958
Commercial business loans		66,476			70,059			78,317			85,825			88,216
Construction loans		14,377			28,405			26,581			23,271			22,963
Account loans		3,360			3,310			3,133			3,283			3,038
Other consumer loans		2,624			3,524			4,427			5,777			7,186
Consumer loans		5,984			6,834			7,560			9,060			10,224
Total loans, excluding yield adjustments		4,715,516			4,812,575			4,723,290			4,567,915			3,349,690
Unamortized yield adjustments		(55,712	)		(59,183	)		(62,783	)		(66,567	)		1,679
Loans receivable, including yield adjustments		4,659,804			4,753,392			4,660,507			4,501,348			3,351,369
Less allowance for loan losses		(33,105	)		(33,526	)		(32,731	)		(30,865	)		(30,248	)
Net loans receivable	$	4,626,699		$	4,719,866		$	4,627,776		$	4,470,483		$	3,321,121
Loan portfolio allocation:
Residential first mortgage loans		28.1	%		27.7	%		27.6	%		28.4	%		16.8	%
Home equity loans and lines of credit		2.1	%		2.0	%		2.0	%		2.0	%		2.4	%
Residential mortgage loans		30.2	%		29.7	%		29.6	%		30.4	%		19.2	%
Multifamily mortgage loans		41.5	%		41.0	%		40.2	%		38.5	%		43.9	%
Nonresidential and mixed use mortgage loans		26.5	%		27.1	%		27.8	%		28.5	%		33.2	%
Commercial mortgage loans		68.0	%		68.1	%		68.0	%		67.0	%		77.1	%
Commercial business loans		1.3	%		1.4	%		1.6	%		1.9	%		2.6	%
Construction loans		0.3	%		0.6	%		0.6	%		0.5	%		0.7	%
Account loans		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%
Other consumer loans		0.1	%		0.1	%		0.1	%		0.1	%		0.3	%
Consumer loans		0.2	%		0.2	%		0.2	%		0.2	%		0.4	%
Total loans, excluding yield adjustments		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Asset quality:
Nonperforming assets:
Accruing loans > 90 days past due	$	23		$	32		$	19		$	60		$	45
Nonaccrual loans		21,297			20,743			20,473			16,799			14,190
Total nonperforming loans		21,320			20,775			20,492			16,859			14,235
Other real estate owned		209			508			674			725			1,094
Total nonperforming assets	$	21,529		$	21,283		$	21,166		$	17,584		$	15,329
Nonperforming loans (% total loans)		0.46	%		0.44	%		0.44	%		0.37	%		0.42	%
Nonperforming assets (% total assets)		0.32	%		0.32	%		0.32	%		0.27	%		0.31	%
Allowance for loan losses (ALLL):
ALLL to total loans		0.70	%		0.70	%		0.69	%		0.68	%		0.90	%
ALLL to nonperforming loans		155.28	%		161.38	%		159.73	%		183.08	%		212.49	%
Net charge offs	$	242		$	176		$	234		$	101		$	241
Average net charge off rate (annualized)		0.02	%		0.01	%		0.02	%		0.01	%		0.03	%

10

	At
Supplemental Balance Sheet Highlights	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in Thousands, Unaudited)	2019			2018			2018			2018			2018
Funding by type:
Deposits
Non-interest-bearing deposits	$	303,713		$	305,392		$	308,631		$	311,938		$	270,217
Interest-bearing demand		800,023			807,389			786,069			1,000,989			871,425
Savings and club		777,678			760,499			743,289			744,039			515,805
Certificates of deposit		2,256,159			2,300,154			2,116,832			2,016,638			1,409,655
Interest-bearing deposits		3,833,860			3,868,042			3,646,190			3,761,666			2,796,885
Total deposits		4,137,573			4,173,434			3,954,821			4,073,604			3,067,102
Borrowings:
Federal Home Loan Bank advances		1,289,285			1,293,845			1,335,844			1,170,144			775,625
Overnight borrowings		-			-			60,000			-			42,000
Depositor sweep accounts		36,931			16,702			23,580			28,502			34,384
Total borrowings		1,326,216			1,310,547			1,419,424			1,198,646			852,009
Total funding	$	5,463,789		$	5,483,981		$	5,374,245		$	5,272,250		$	3,919,111
Loans as a % of deposits		111.8	%		113.1	%		117.1	%		109.8	%		108.4	%
Deposits as a % of total funding		75.7	%		76.1	%		73.6	%		77.3	%		78.3	%
Borrowings as a % of total funding		24.3	%		23.9	%		26.4	%		22.7	%		21.7	%
Funding by source:
Retail funding
Non-interest-bearing deposits	$	303,713		$	305,392		$	308,631		$	311,938		$	270,217
Interest-bearing demand		800,023			807,389			786,069			790,164			656,114
Savings and club		777,678			760,499			743,289			744,039			515,805
Certificates of deposit		1,925,630			1,922,287			1,871,903			1,828,039			1,247,900
Total retail deposits		3,807,044			3,795,567			3,709,892			3,674,180			2,690,036
Depositor sweep accounts		36,931			16,702			23,580			28,502			34,384
Total retail funding		3,843,975			3,812,269			3,733,472			3,702,682			2,724,420
Wholesale funding:
Interest-bearing demand	$	-		$	-		$	-		$	210,825		$	215,311
Certificates of deposit (listing service)		78,704			108,067			104,990			104,256			104,934
Certificates of deposit (brokered)		251,825			269,800			139,939			84,343			56,821
Total wholesale deposits		330,529			377,867			244,929			399,424			377,066
FHLB advances		1,289,285			1,293,845			1,335,844			1,170,144			775,625
Overnight borrowings		-			-			60,000			-			42,000
Total wholesale funding		1,619,814			1,671,712			1,640,773			1,569,568			1,194,691
Total funding	$	5,463,789		$	5,483,981		$	5,374,245		$	5,272,250		$	3,919,111
Retail funding as a % of total funding		70.4	%		69.5	%		69.5	%		70.2	%		69.5	%
Wholesale funding as a % of total funding		29.6	%		30.5	%		30.5	%		29.8	%		30.5	%

11

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)	2019			2018			2018			2018			2018
Interest income
Loans	$	48,116		$	49,015		$	47,437		$	46,615		$	30,728
Taxable investment securities		9,511			9,051			8,879			8,670			6,450
Tax-exempt investment securities		710			713			716			702			652
Other interest-earning assets		1,320			1,243			1,174			1,275			715
Total interest income		59,657			60,022			58,206			57,262			38,545
Interest expense
Deposits		14,114			12,727			10,539			9,755			7,026
Borrowings		6,905			7,946			7,487			6,916			4,462
Total interest expense		21,019			20,673			18,026			16,671			11,488
Net interest income		38,638			39,349			40,180			40,591			27,057
(Reversal of) provision for loan losses		(179	)		971			2,100			717			423
Net interest income after provision for   loan losses		38,817			38,378			38,080			39,874			26,634
Non-interest income
Fees and service charges		1,674			1,258			1,173			1,205			1,537
(Loss) gain on sale and call of securities		(182	)		-			-			9			(1	)
Gain on sale of loans		151			101			132			127			346
(Loss) gain on sale and write down of other real estate owned		(6	)		36			(50	)		60			7
Income from bank owned life insurance		1,560			1,599			1,594			1,604			1,227
Electronic banking fees and charges		253			277			250			278			243
Miscellaneous		226			38			83			75			189
Total non-interest income		3,676			3,309			3,182			3,358			3,548
Non-interest expense
Salaries and employee benefits		15,350			15,699			15,642			15,277			12,814
Net occupancy expense of premises		2,979			2,761			2,736			2,716			2,359
Equipment and systems		3,053			3,377			2,926			2,776			2,323
Advertising and marketing		739			787			577			757			745
Federal deposit insurance premium		455			421			465			463			350
Directors' compensation		770			746			758			754			689
Merger-related expenses		-			-			-			5,149			401
Miscellaneous		3,425			3,479			3,353			3,365			2,862
Total non-interest expense		26,771			27,270			26,457			31,257			22,543
Income before income taxes		15,722			14,417			14,805			11,975			7,639
Income taxes		4,305			3,649			3,659			4,257			2,262
Net income	$	11,417		$	10,768		$	11,146		$	7,718		$	5,377
Net income per common share (EPS)
Basic	$	0.13		$	0.12		$	0.12		$	0.08		$	0.07
Diluted	$	0.13		$	0.12		$	0.12		$	0.08		$	0.07
Dividends declared (1)
Cash dividends declared per common share	$	0.06		$	0.05		$	0.20		$	0.04		$	0.03
Cash dividends declared	$	5,338		$	4,082		$	19,404		$	3,892		$	2,262
Dividend payout ratio		46.8	%		37.9	%		174.1	%		50.4	%		42.1	%
Weighted average number of  common shares outstanding
Basic		89,488			92,434			95,127			98,046			75,492
Diluted		89,532			92,480			95,181			98,100			75,539

(1) Dividends declared during the quarter ended September 30, 2018 include a $0.16 special dividend representing a supplemental distribution of net income to stockholders from the fiscal year ended June 30, 2018.

12

	For the three months ended
Average Balance Sheet Data	March 31,			December 31,			September 30,			June 30,			March 31,
(Dollars in Thousands, Unaudited)	2019			2018			2018			2018			2018
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	4,709,052		$	4,758,587		$	4,562,375		$	4,507,336		$	3,293,664
Taxable investment securities		1,161,492			1,158,720			1,180,655			1,192,066			1,003,600
Tax-exempt investment securities		134,309			135,453			136,056			134,683			127,605
Other interest-earning assets		107,554			87,916			112,629			142,591			67,770
Total interest-earning assets		6,112,407			6,140,676			5,991,715			5,976,676			4,492,639
Non-interest-earning assets		574,921			587,921			596,006			586,976			369,299
Total assets	$	6,687,328		$	6,728,597		$	6,587,721		$	6,563,652		$	4,861,938
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	790,567		$	792,989		$	788,148		$	1,004,445		$	870,762
Savings and club		773,308			743,676			747,743			724,430			513,948
Certificates of deposit		2,288,836			2,214,932			2,046,997			1,983,372			1,385,151
Total interest-bearing deposits		3,852,711			3,751,597			3,582,888			3,712,247			2,769,861
Borrowings:
Federal Home Loan Bank advances		1,292,168			1,293,470			1,350,113			1,179,147			777,721
Other borrowings		26,037			119,281			40,981			34,636			33,529
Total borrowings		1,318,205			1,412,751			1,391,094			1,213,783			811,250
Total interest-bearing liabilities		5,170,916			5,164,348			4,973,982			4,926,030			3,581,111
Non-interest-bearing liabilities:
Non-interest-bearing deposits		307,645			315,165			314,114			305,763			267,152
Other non-interest-bearing liabilities		35,930			37,374			43,533			39,340			24,953
Total non-interest-bearing liabilities		343,575			352,539			357,647			345,103			292,105
Total liabilities		5,514,491			5,516,887			5,331,629			5,271,133			3,873,216
Stockholders' equity		1,172,837			1,211,710			1,256,092			1,292,519			988,722
Total liabilities and stockholders' equity	$	6,687,328		$	6,728,597		$	6,587,721		$	6,563,652		$	4,861,938
Average interest-earning assets to average interest-bearing liabilities		118.21	%		118.91	%		120.46	%		121.33	%		125.45	%

13

	For the three months ended
	March 31,			December 31,			September 30,			June 30,			March 31,
Performance Ratio Highlights	2019			2018			2018			2018			2018
Average yield on interest-earning assets:
Loans receivable, including loans held for sale		4.09	%		4.12	%		4.16	%		4.14	%		3.73	%
Taxable investment securities		3.28	%		3.12	%		3.01	%		2.91	%		2.57	%
Tax-exempt investment securities (1)		2.12	%		2.11	%		2.10	%		2.09	%		2.04	%
Other interest-earning assets		4.91	%		5.66	%		4.17	%		3.58	%		4.22	%
Total interest-earning assets		3.91	%		3.91	%		3.89	%		3.83	%		3.43	%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		1.06	%		0.97	%		0.86	%		0.89	%		0.84	%
Savings and club		0.60	%		0.49	%		0.41	%		0.29	%		0.12	%
Certificates of deposit		1.90	%		1.79	%		1.58	%		1.41	%		1.46	%
Total interest-bearing deposits		1.47	%		1.36	%		1.18	%		1.05	%		1.01	%
Borrowings:
Federal Home Loan Bank advances		2.13	%		2.27	%		2.19	%		2.34	%		2.27	%
Other borrowings		0.35	%		1.99	%		0.94	%		0.34	%		0.56	%
Total borrowings		2.10	%		2.25	%		2.15	%		2.28	%		2.20	%
Total interest-bearing liabilities		1.63	%		1.60	%		1.45	%		1.35	%		1.28	%
Interest rate spread (2)		2.28	%		2.31	%		2.44	%		2.48	%		2.15	%
Net interest margin (3)		2.53	%		2.56	%		2.68	%		2.72	%		2.41	%
Non-interest income to average assets (annualized)		0.22	%		0.20	%		0.19	%		0.20	%		0.29	%
Non-interest expense to average assets (annualized)		1.60	%		1.62	%		1.61	%		1.90	%		1.85	%
Efficiency ratio (4)		63.27	%		63.93	%		61.01	%		71.12	%		73.66	%
Return on average assets (annualized)		0.68	%		0.64	%		0.68	%		0.47	%		0.44	%
Return on average equity (annualized)		3.89	%		3.55	%		3.55	%		2.39	%		2.18	%
Return on average tangible equity (annualized) (5)		4.78	%		4.33	%		4.29	%		2.90	%		2.44	%

(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.

14

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)	2019			2018			2018			2018			2018
Adjusted Net Income
Net income (GAAP)	$	11,417		$	10,768		$	11,146		$	7,718		$	5,377
Effect to adjust for:
Merger-related expenses		-			-			-			5,149			401
Income tax benefit from merger-related expenses		-			-			-			(1,451	)		(22	)
Adjusted net income (non-GAAP)	$	11,417		$	10,768		$	11,146		$	11,416		$	5,756
Adjusted Net Income per Common Share (EPS)
Net income per common share Basic and Diluted (GAAP)	$	0.13		$	0.12		$	0.12		$	0.08		$	0.07
Effect to adjust for:
Merger-related expenses		-			-			-			0.05			0.01
Income tax benefit from merger-related expenses		-			-			-			(0.01	)		-
Adjusted net income per common share Basic and Diluted (non-GAAP)	$	0.13		$	0.12		$	0.12		$	0.12		$	0.08
Adjusted Non-Interest Expense
Non-interest expense (GAAP)	$	26,771		$	27,270		$	26,457		$	31,257		$	22,543
Effect to adjust for:
Merger-related expenses		-			-			-			(5,149	)		(401	)
Adjusted non-interest expense (non-GAAP)	$	26,771		$	27,270		$	26,457		$	26,108		$	22,142
Adjusted Non-Interest Expense Ratio
Non-interest expense to average assets (GAAP)		1.60	%		1.62	%		1.61	%		1.90	%		1.85	%
Effect to adjust for:
Merger-related expenses		0.00	%		0.00	%		0.00	%		-0.31	%		-0.03	%
Adjusted non-interest expense ratio (non-GAAP)		1.60	%		1.62	%		1.61	%		1.59	%		1.82	%
Adjusted Efficiency Ratio
Non-interest expense / (Net interest income + non-interest income) (GAAP)		63.3	%		63.9	%		61.0	%		71.1	%		73.7	%
Effect to adjust for:
Merger-related expenses		0.0	%		0.0	%		0.0	%		-11.7	%		-1.3	%
Adjusted efficiency ratio (non-GAAP)		63.3	%		63.9	%		61.0	%		59.4	%		72.4	%

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	For the three months ended
Reconciliation of GAAP to Non-GAAP	March 31,			December 31,			September 30,			June 30,			March 31,
(Unaudited)	2019			2018			2018			2018			2018
Adjusted Return on Average Assets
Return on average assets (GAAP)		0.68	%		0.64	%		0.68	%		0.47	%		0.44	%
Effect to adjust for:
Merger-related expenses		0.00	%		0.00	%		0.00	%		0.31	%		0.03	%
Income tax benefit from merger-related expenses		0.00	%		0.00	%		0.00	%		-0.09	%		0.00	%
Adjusted return on average assets (non-GAAP)		0.68	%		0.64	%		0.68	%		0.69	%		0.47	%
Adjusted Return on Average Equity
Return on average equity (GAAP)		3.89	%		3.55	%		3.55	%		2.39	%		2.18	%
Effect to adjust for:
Merger-related expenses		0.00	%		0.00	%		0.00	%		1.59	%		0.16	%
Income tax benefit from merger-related expenses		0.00	%		0.00	%		0.00	%		-0.45	%		-0.01	%
Adjusted return on average equity (non-GAAP)		3.89	%		3.55	%		3.55	%		3.53	%		2.33	%

16