EX-99.1 2 krny-ex99_1.htm EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

July 28, 2022

For further information contact:

Craig L. Montanaro, President and Chief Executive Officer, or

Keith Suchodolski, Senior Executive Vice President and Chief Financial Officer

Kearny Financial Corp.

(973) 244-4500

KEARNY FINANCIAL CORP. ANNOUNCES FOURTH QUARTER AND FISCAL YEAR END 2022 RESULTS

AND DECLARATION OF CASH DIVIDEND

Fairfield, N.J., July 28, 2022 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended June 30, 2022 of $11.4 million, or $0.17 per diluted share, compared to $17.7 million, or $0.25 per diluted share, for the quarter ended March 31, 2022. The decrease in net income and earnings per share for the quarter was largely attributable to a pre-tax increase of $8.1 million in provision for credit losses, as well as the recognition of a number of non-recurring expenses, as described in further detail below.

For the fiscal year ended June 30, 2022, the Company reported net income of $67.5 million, or $0.95 per diluted share, compared to $63.2 million, or $0.77 per diluted share, for the fiscal year ended June 30, 2021.

The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on August 24, 2022 to stockholders of record as of August 10, 2022.

Craig L. Montanaro, President and Chief Executive Officer, commented, “I am very proud of our fiscal 2022 performance which reflected record net income and earnings per share, continued margin expansion and double-digit annual growth in loans and core deposits. In addition, late this fiscal year we introduced Kearny Investment Services, the Company’s investment management division, with the goal of further diversifying our product set and revenue streams. By fiscal year end, this division was fully staffed with financial advisors and was generating a monthly after-tax net profit, which we anticipate will support future growth in non-interest income.”

Mr. Montanaro further noted, “Looking ahead to fiscal 2023, our most critical initiative is the acceleration of our digital strategy, spearheaded by the adoption of a cloud-based, best-in-breed digital banking platform. Complementing this technology enhancement will be the expansion of our data analytics, artificial intelligence and digital marketing capabilities.” Mr. Montanaro continued, “We believe that our strategic focus on digital client engagement is the ideal complement to the exceptional service that our team provides within the communities where we maintain a physical presence. This omnichannel approach allows us to further strengthen our existing client relationships while expanding our products and services into new markets in an efficient and cost-effective manner.”

Fiscal Year 2022 Highlights

•
Earnings per share increased 23.4% to $0.95 per diluted share, while net income increased 6.8% to $67.5 million.
•
Net interest margin increased 14 basis points to 2.94%, while net interest income increased 4.4% to $196.6 million.
•
Loans receivable increased $566.5 million, or 11.7%.
•
Core non-maturity deposits grew $365.1 million, or 10.1%, including growth of 10.1% in non-interest-bearing deposits.

Balance Sheet

•
Total assets were $7.72 billion at June 30, 2022, an increase of $330.0 million, or 4.5%, from March 31, 2022 and an increase of $436.1 million, or 6.0%, from June 30, 2021.
•
Loans receivable totaled $5.42 billion at June 30, 2022, an increase of $414.6 million, or 8.3%, from March 31, 2022 and an increase of $566.5 million, or 11.7%, from June 30, 2021.
•
Deposits totaled $5.86 billion at June 30, 2022, an increase of $333.6 million, or 6.0%, from March 31, 2022 and an increase of $377.0 million, or 6.9%, from June 30, 2021.

1

•
Investment securities totaled $1.46 billion at June 30, 2022, a decrease of $185.6 million, or 11.3%, from March 31, 2022 and a decrease of $252.6 million, or 14.7%, from June 30, 2021.
•
Borrowings totaled $901.3 million at June 30, 2022, an increase of $50.1 million, or 5.9%, from March 31, 2022 and an increase of $215.5 million, or 31.4%, from June 30, 2021.

Earnings

Performance Highlights

•
Return on average assets was 0.61% and 0.98% for the quarters ended June 30, 2022 and March 31, 2022, respectively, and 0.93% and 0.86% for the years ended June 30, 2022 and 2021, respectively.
•
Return on average equity was 4.92% and 7.24% for the quarters ended June 30, 2022 and March 31, 2022, respectively, and 6.86% and 5.79% for the years ended June 30, 2022 and 2021, respectively.
•
Return on average tangible equity was 6.40% and 9.27% for the quarters ended June 30, 2022 and March 31, 2022, respectively, and 8.77% and 7.22% for the years ended June 30, 2022 and 2021, respectively.

Net Interest Income and Net Interest Margin

•
Net interest margin expanded three basis points to 2.92% for the quarter ended June 30, 2022 and 14 basis points to 2.94% for the year ended June 30, 2022. The increase for the quarter was due largely to an increase in the average balance of loans receivable and an increase in the yield on taxable investment securities, partially offset by an increase in the average balance of borrowings. The increase for the year was due largely to decreases in the cost and average balance of interest-bearing liabilities, partially offset by a decrease in the yield on interest-earning assets.
•
For the quarter ended June 30, 2022, net interest income increased $2.9 million to $50.6 million from $47.7 million for the quarter ended March 31, 2022. Included in net interest income for the quarters ended June 30, 2022 and March 31, 2022, respectively, was purchase accounting accretion of $1.6 million and $1.9 million, and loan prepayment penalty income of $869,000 and $1.3 million.
•
For the year ended June 30, 2022, net interest income increased $8.4 million to $196.6 million from $188.2 million for the year ended June 30, 2021. Included in net interest income for the years ended June 30, 2022 and 2021, respectively, was purchase accounting accretion of $9.0 million and $16.6 million, and loan prepayment penalty income of $5.4 million and $3.7 million.

Non-Interest Income

•
Non-interest income decreased $381,000 to $2.8 million for the quarter ended June 30, 2022, from $3.2 million for the quarter ended March 31, 2022. The decrease was largely attributable to a loss of $563,000 on the sale of securities.
•
Non-interest income decreased $7.1 million to $13.9 million for the year ended June 30, 2022, from $21.0 million for the year ended June 30, 2021. The decrease was largely attributable to a decrease of $3.0 million in gain on sale of loans, as well as a bargain purchase gain of $3.1 million recognized in the prior year.
•
Included in other income for the quarter and year ended June 30, 2022 was $380,000 of income from the investment services division that began operations during the current quarter.

2

Non-Interest Expense

•
Non-interest expense increased $3.0 million to $33.6 million for the quarter ended June 30, 2022, from $30.6 million for the quarter ended March 31, 2022. The increase was partially attributable to a $1.2 million increase in salaries and employee benefits driven by higher loan origination-based incentive payments as a result of record-high quarterly loan origination volume. In addition, the Company recorded $1.0 million of non-recurring expense which consisted of $800,000 from the early termination of a contract with a service provider and an impairment of $200,000 related to an equity investment in a start-up financial technology company whose remaining book value was $0 at June 30, 2022.
•
Non-interest expense decreased $177,000 to $125.7 million for the year ended June 30, 2022, from $125.9 million for the year ended June 30, 2021. The decrease was largely attributable to a decline in non-recurring expenses, as described in further detail below, and a decrease in the provision for credit losses on unfunded commitments, partially offset by an increase in salaries and employee benefits.
•
For the year ended June 30, 2022, the Company recorded $1.5 million of branch consolidation expenses within occupancy expenses and $420,000 of impairment charges within other expenses. For the year ended June 30, 2021, $4.3 million of merger-related expenses, $2.0 million of branch consolidation expenses and impairment charges and $796,000 of debt extinguishment expenses were recorded.
•
The provision for credit losses on unfunded commitments, included in other expense, decreased $1.8 million for the year ended June 30, 2022.
•
Salaries and employee benefits increased $7.5 million, or 10.8%, for the year ended June 30, 2022 primarily due to staff additions, annual merit increases and an increase in incentive payments tied to record-high annual loan origination volume.
•
The efficiency and non-interest expense ratios were 62.93% and 1.79%, respectively, for the quarter ended June 30, 2022, as compared to 60.14% and 1.70%, respectively, for the quarter ended March 31, 2022. The efficiency and non-interest expense ratios were 59.71% and 1.73%, respectively, for the year ended June 30, 2022, as compared to 60.16% and 1.72%, respectively, for the year ended June 30, 2021.

Income Taxes

•
Income tax expense totaled $4.2 million for the quarter ended June 30, 2022 compared to $6.5 million for the quarter ended March 31, 2022, resulting in effective tax rates of 27.0% and 26.9%, respectively. For the year ended June 30, 2022, income tax expense was $24.8 million compared to $21.3 million for the year ended June 30, 2021, resulting in effective tax rates of 26.9% and 25.2% respectively.

Asset Quality

•
The balance of non-performing assets increased $11.2 million to $92.2 million, or 1.19% of total assets, at June 30, 2022, from $81.0 million, or 1.10% of total assets, at March 31, 2022. The balance of non-performing assets was $79.9 million, or 1.10% of total assets, at June 30, 2021. The increase in non-performing assets was primarily attributable to one relationship comprised of three individual loans located in Queens, NY which became non-performing during the quarter. Included in the balance of non-performing assets at June 30, 2022 was $21.7 million of nonaccrual loans held for sale.
•
Net charge-offs totaled $1.0 million, or 0.08% of average loans, on an annualized basis, for the quarter ended June 30, 2022, compared to $436,000, or 0.04% of average loans, on an annualized basis, for the quarter ended March 31, 2022. For the year ended June 30, 2022, net charge-offs totaled $3.6 million, or 0.07% of average loans, compared to $1.6 million, or 0.03% of average loans, for the year ended June 30, 2021.
•
For the quarter ended June 30, 2022, the Company recorded a provision for credit losses of $4.2 million, compared to a provision for credit losses reversal of $3.9 million for the quarter ended March 31, 2022. The provision for the quarter ended June 30, 2022 was driven by loan growth of $414.6 million in the quarter, coupled with a net increase in reserves on individually analyzed loans primarily related to lower collateral values for one relationship, as noted above. These increases to the provision were partially offset by both quantitative and qualitative improvements in the collectively evaluated loan portfolio. For the years ended June 30, 2022 and 2021, the Company recorded provision for credit losses reversals of $7.5 million and $1.1 million, respectively.
•
The allowance for credit losses was $47.1 million, or 0.87% of total loans, at June 30, 2022, compared to $43.9 million, or 0.87% of total loans, at March 31, 2022 and $58.2 million, or 1.19% of total loans, at June 30, 2021.

3

Capital

•
For the quarter ended June 30, 2022, book value per share decreased $0.35, or 2.6%, to $13.02 and tangible book value per share decreased $0.48, or 4.6%, to $9.90. For the year ended June 30, 2022, book value per share decreased $0.19, or 1.4%, to $13.02 and tangible book value per share decreased $0.59, or 5.6%, to $9.90. These decreases were largely driven by a decline in accumulated other comprehensive income (loss).
•
During the quarter and year ended June 30, 2022, the Company repurchased 2,754,575 and 10,221,525 shares of common stock at a cost of $33.6 million and $129.5 million, or $12.18 and $12.67 per share, respectively.
•
At June 30, 2022, the Company’s tangible equity to tangible assets ratio equaled 9.1% 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.

Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

In addition, the COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business.

Category: Earnings

4

Linked-Quarter Comparative Financial Analysis

Kearny Financial Corp. |
Consolidated Balance Sheets |
(Unaudited) |
(Dollars and Shares in Thousands, | June 30, |  | March 31, |  | Variance |  | Variance |
Except Per Share Data) | 2022 |  | 2022 |  | or Change |  | or Change Pct. |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 101,615 |  | $ | 62,379 |  | $ | 39,236 |  |  | 62.9 | %
Securities available for sale |  | 1,344,093 |  |  | 1,526,086 |  |  | (181,993 | ) |  | -11.9 | %
Securities held to maturity |  | 118,291 |  |  | 121,853 |  |  | (3,562 | ) |  | -2.9 | %
Loans held-for-sale |  | 28,874 |  |  | 2,822 |  |  | 26,052 |  |  | 923.2 | %
Loans receivable |  | 5,417,845 |  |  | 5,003,201 |  |  | 414,644 |  |  | 8.3 | %
Less: allowance for credit losses on loans |  | (47,058 | ) |  | (43,860 | ) |  | 3,198 |  |  | 7.3 | %
Net loans receivable |  | 5,370,787 |  |  | 4,959,341 |  |  | 411,446 |  |  | 8.3 | %
Premises and equipment |  | 53,281 |  |  | 53,727 |  |  | (446 | ) |  | -0.8 | %
Federal Home Loan Bank stock |  | 47,144 |  |  | 30,997 |  |  | 16,147 |  |  | 52.1 | %
Accrued interest receivable |  | 20,466 |  |  | 19,517 |  |  | 949 |  |  | 4.9 | %
Goodwill |  | 210,895 |  |  | 210,895 |  |  | - |  |  | 0.0 | %
Core deposit intangible |  | 3,020 |  |  | 3,166 |  |  | (146 | ) |  | -4.6 | %
Bank owned life insurance |  | 289,177 |  |  | 287,644 |  |  | 1,533 |  |  | 0.5 | %
Deferred income taxes, net |  | 49,350 |  |  | 34,349 |  |  | 15,001 |  |  | 43.7 | %
Other real estate owned |  | 178 |  |  | 401 |  |  | (223 | ) |  | -55.6 | %
Other assets |  | 82,712 |  |  | 76,714 |  |  | 5,998 |  |  | 7.8 | %
Total assets | $ | 7,719,883 |  | $ | 7,389,891 |  | $ | 329,992 |  |  | 4.5 | %
Liabilities |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |
Non-interest-bearing | $ | 653,899 |  | $ | 621,954 |  | $ | 31,945 |  |  | 5.1 | %
Interest-bearing |  | 5,208,357 |  |  | 4,906,708 |  |  | 301,649 |  |  | 6.1 | %
Total deposits |  | 5,862,256 |  |  | 5,528,662 |  |  | 333,594 |  |  | 6.0 | %
Borrowings |  | 901,337 |  |  | 851,220 |  |  | 50,117 |  |  | 5.9 | %
Advance payments by borrowers for taxes |  | 16,746 |  |  | 16,979 |  |  | (233 | ) |  | -1.4 | %
Other liabilities |  | 45,544 |  |  | 37,861 |  |  | 7,683 |  |  | 20.3 | %
Total liabilities |  | 6,825,883 |  |  | 6,434,722 |  |  | 391,161 |  |  | 6.1 | %
Stockholders' Equity |  |  |  |  |  |  |  |
Common stock |  | 687 |  |  | 714 |  |  | (27 | ) |  | -3.8 | %
Paid-in capital |  | 528,396 |  |  | 561,176 |  |  | (32,780 | ) |  | -5.8 | %
Retained earnings |  | 445,451 |  |  | 441,522 |  |  | 3,929 |  |  | 0.9 | %
Unearned ESOP shares |  | (24,807 | ) |  | (25,294 | ) |  | 487 |  |  | -1.9 | %
Accumulated other comprehensive loss |  | (55,727 | ) |  | (22,949 | ) |  | (32,778 | ) |  | 142.8 | %
Total stockholders' equity |  | 894,000 |  |  | 955,169 |  |  | (61,169 | ) |  | -6.4 | %
Total liabilities and stockholders' equity | $ | 7,719,883 |  | $ | 7,389,891 |  | $ | 329,992 |  |  | 4.5 | %
Consolidated capital ratios |  |  |  |  |  |  |  |
Equity to assets |  | 11.58 | % |  | 12.93 | % |  | -1.35 | % |  |
Tangible equity to tangible assets (1) |  | 9.06 | % |  | 10.33 | % |  | -1.27 | % |  |
Share data |  |  |  |  |  |  |  |
Outstanding shares |  | 68,666 |  |  | 71,424 |  |  | (2,758 | ) |  | -3.9 | %
Book value per share | $ | 13.02 |  | $ | 13.37 |  | $ | (0.35 | ) |  | -2.6 | %
Tangible book value per share (2) | $ | 9.90 |  | $ | 10.38 |  | $ | (0.48 | ) |  | -4.6 | %

(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.

5

Kearny Financial Corp. |
Consolidated Statements of Income |
(Unaudited) |
| Three Months Ended |  |  |  |  |
(Dollars and Shares in Thousands, | June 30, |  | March 31, |  | Variance |  | Variance |
Except Per Share Data) | 2022 |  | 2022 |  | or Change |  | or Change Pct. |
Interest income |  |  |  |  |  |  |  |
Loans | $ | 48,869 |  | $ | 45,846 |  | $ | 3,023 |  |  | 6.6 | %
Taxable investment securities |  | 8,915 |  |  | 8,024 |  |  | 891 |  |  | 11.1 | %
Tax-exempt investment securities |  | 297 |  |  | 316 |  |  | (19 | ) |  | -6.0 | %
Other interest-earning assets |  | 472 |  |  | 415 |  |  | 57 |  |  | 13.7 | %
Total interest income |  | 58,553 |  |  | 54,601 |  |  | 3,952 |  |  | 7.2 | %
Interest expense |  |  |  |  |  |  |  |
Deposits |  | 3,915 |  |  | 3,565 |  |  | 350 |  |  | 9.8 | %
Borrowings |  | 4,039 |  |  | 3,309 |  |  | 730 |  |  | 22.1 | %
Total interest expense |  | 7,954 |  |  | 6,874 |  |  | 1,080 |  |  | 15.7 | %
Net interest income |  | 50,599 |  |  | 47,727 |  |  | 2,872 |  |  | 6.0 | %
Provision for (reversal of) credit losses |  | 4,222 |  |  | (3,920 | ) |  | 8,142 |  |  | -207.7 | %
Net interest income after provision for (reversal of) credit losses |  | 46,377 |  |  | 51,647 |  |  | (5,270 | ) |  | -10.2 | %
Non-interest income |  |  |  |  |  |  |  |
Fees and service charges |  | 658 |  |  | 617 |  |  | 41 |  |  | 6.6 | %
(Loss) gain on sale and call of securities |  | (563 | ) |  | 3 |  |  | (566 | ) |  | -18866.7 | %
Gain on sale of loans |  | 187 |  |  | 376 |  |  | (189 | ) |  | -50.3 | %
(Loss) gain on sale of other real estate owned |  | (9 | ) |  | 14 |  |  | (23 | ) |  | -164.3 | %
Income from bank owned life insurance |  | 1,533 |  |  | 1,511 |  |  | 22 |  |  | 1.5 | %
Electronic banking fees and charges |  | 366 |  |  | 432 |  |  | (66 | ) |  | -15.3 | %
Other income |  | 638 |  |  | 238 |  |  | 400 |  |  | 168.1 | %
Total non-interest income |  | 2,810 |  |  | 3,191 |  |  | (381 | ) |  | -11.9 | %
Non-interest expense |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 20,367 |  |  | 19,184 |  |  | 1,183 |  |  | 6.2 | %
Net occupancy expense of premises |  | 3,188 |  |  | 3,223 |  |  | (35 | ) |  | -1.1 | %
Equipment and systems |  | 4,516 |  |  | 3,822 |  |  | 694 |  |  | 18.2 | %
Advertising and marketing |  | 703 |  |  | 516 |  |  | 187 |  |  | 36.2 | %
Federal deposit insurance premium |  | 762 |  |  | 480 |  |  | 282 |  |  | 58.8 | %
Directors' compensation |  | 340 |  |  | 340 |  |  | - |  |  | 0.0 | %
Other expense |  | 3,736 |  |  | 3,058 |  |  | 678 |  |  | 22.2 | %
Total non-interest expense |  | 33,612 |  |  | 30,623 |  |  | 2,989 |  |  | 9.8 | %
Income before income taxes |  | 15,575 |  |  | 24,215 |  |  | (8,640 | ) |  | -35.7 | %
Income taxes |  | 4,205 |  |  | 6,522 |  |  | (2,317 | ) |  | -35.5 | %
Net income | $ | 11,370 |  | $ | 17,693 |  | $ | (6,323 | ) |  | -35.7 | %
Net income per common share (EPS) |  |  |  |  |  |  |  |
Basic | $ | 0.17 |  | $ | 0.25 |  | $ | (0.08 | ) |  |
Diluted | $ | 0.17 |  | $ | 0.25 |  | $ | (0.08 | ) |  |
Dividends declared |  |  |  |  |  |  |  |
Cash dividends declared per common share | $ | 0.11 |  | $ | 0.11 |  | $ | - |  |  |
Cash dividends declared | $ | 7,441 |  | $ | 7,720 |  | $ | (279 | ) |  |
Dividend payout ratio |  | 65.4 | % |  | 43.6 | % |  | 21.8 | % |  |
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |
Basic |  | 67,240 |  |  | 69,790 |  |  | (2,550 | ) |  |
Diluted |  | 67,276 |  |  | 69,817 |  |  | (2,541 | ) |  |

6

Kearny Financial Corp. |
Average Balance Sheet Data |
(Unaudited) |
| Three Months Ended |  |  |  |  |
| June 30, |  | March 31, |  | Variance |  | Variance |
(Dollars in Thousands) | 2022 |  | 2022 |  | or Change |  | or Change Pct. |
Assets |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |
Loans receivable, including loans held for sale | $ | 5,181,983 |  | $ | 4,850,236 |  | $ | 331,747 |  |  | 6.8 | %
Taxable investment securities |  | 1,608,372 |  |  | 1,620,996 |  |  | (12,624 | ) |  | -0.8 | %
Tax-exempt investment securities |  | 51,672 |  |  | 55,390 |  |  | (3,718 | ) |  | -6.7 | %
Other interest-earning assets |  | 87,990 |  |  | 79,644 |  |  | 8,346 |  |  | 10.5 | %
Total interest-earning assets |  | 6,930,017 |  |  | 6,606,266 |  |  | 323,751 |  |  | 4.9 | %
Non-interest-earning assets |  | 564,734 |  |  | 601,684 |  |  | (36,950 | ) |  | -6.1 | %
Total assets | $ | 7,494,751 |  | $ | 7,207,950 |  | $ | 286,801 |  |  | 4.0 | %
Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |
Interest-bearing demand | $ | 2,155,946 |  | $ | 2,133,977 |  | $ | 21,969 |  |  | 1.0 | %
Savings |  | 1,077,631 |  |  | 1,088,351 |  |  | (10,720 | ) |  | -1.0 | %
Certificates of deposit |  | 1,701,725 |  |  | 1,650,048 |  |  | 51,677 |  |  | 3.1 | %
Total interest-bearing deposits |  | 4,935,302 |  |  | 4,872,376 |  |  | 62,926 |  |  | 1.3 | %
Borrowings: |  |  |  |  |  |  |  |
Federal Home Loan Bank advances |  | 752,579 |  |  | 632,811 |  |  | 119,768 |  |  | 18.9 | %
Other borrowings |  | 185,901 |  |  | 51,667 |  |  | 134,234 |  |  | 259.8 | %
Total borrowings |  | 938,480 |  |  | 684,478 |  |  | 254,002 |  |  | 37.1 | %
Total interest-bearing liabilities |  | 5,873,782 |  |  | 5,556,854 |  |  | 316,928 |  |  | 5.7 | %
Non-interest-bearing liabilities: |  |  |  |  |  |  |  |
Non-interest-bearing deposits |  | 640,200 |  |  | 624,152 |  |  | 16,048 |  |  | 2.6 | %
Other non-interest-bearing liabilities |  | 56,636 |  |  | 49,455 |  |  | 7,181 |  |  | 14.5 | %
Total non-interest-bearing liabilities |  | 696,836 |  |  | 673,607 |  |  | 23,229 |  |  | 3.4 | %
Total liabilities |  | 6,570,618 |  |  | 6,230,461 |  |  | 340,157 |  |  | 5.5 | %
Stockholders' equity |  | 924,133 |  |  | 977,489 |  |  | (53,356 | ) |  | -5.5 | %
Total liabilities and stockholders' equity | $ | 7,494,751 |  | $ | 7,207,950 |  | $ | 286,801 |  |  | 4.0 | %
Average interest-earning assets to average interest-bearing liabilities |  | 117.98 | % |  | 118.89 | % |  | -0.91 | % |  | -0.8 | %

7

Kearny Financial Corp. |
Performance Ratio Highlights |
(Unaudited) |
| Three Months Ended |  |  |
| June 30, |  | March 31, |  | Variance |
| 2022 |  | 2022 |  | or Change |
Average yield on interest-earning assets: |  |  |  |  |  |
Loans receivable, including loans held for sale |  | 3.77 | % |  | 3.78 | % |  | -0.01 | %
Taxable investment securities |  | 2.22 | % |  | 1.98 | % |  | 0.24 | %
Tax-exempt investment securities (1) |  | 2.30 | % |  | 2.28 | % |  | 0.02 | %
Other interest-earning assets |  | 2.15 | % |  | 2.08 | % |  | 0.07 | %
Total interest-earning assets |  | 3.38 | % |  | 3.31 | % |  | 0.07 | %
Average cost of interest-bearing liabilities: |  |  |  |  |  |
Deposits: |  |  |  |  |  |
Interest-bearing demand |  | 0.31 | % |  | 0.22 | % |  | 0.09 | %
Savings |  | 0.11 | % |  | 0.10 | % |  | 0.01 | %
Certificates of deposit |  | 0.46 | % |  | 0.52 | % |  | -0.06 | %
Total interest-bearing deposits |  | 0.32 | % |  | 0.29 | % |  | 0.03 | %
Borrowings: |  |  |  |  |  |
Federal Home Loan Bank advances |  | 1.96 | % |  | 2.08 | % |  | -0.12 | %
Other borrowings |  | 0.77 | % |  | 0.17 | % |  | 0.60 | %
Total borrowings |  | 1.72 | % |  | 1.93 | % |  | -0.21 | %
Total interest-bearing liabilities |  | 0.54 | % |  | 0.49 | % |  | 0.05 | %
Interest rate spread (2) |  | 2.84 | % |  | 2.82 | % |  | 0.02 | %
Net interest margin (3) |  | 2.92 | % |  | 2.89 | % |  | 0.03 | %
Non-interest income to average assets (annualized) |  | 0.15 | % |  | 0.18 | % |  | -0.03 | %
Non-interest expense to average assets (annualized) |  | 1.79 | % |  | 1.70 | % |  | 0.09 | %
Efficiency ratio (4) |  | 62.93 | % |  | 60.14 | % |  | 2.79 | %
Return on average assets (annualized) |  | 0.61 | % |  | 0.98 | % |  | -0.37 | %
Return on average equity (annualized) |  | 4.92 | % |  | 7.24 | % |  | -2.32 | %
Return on average tangible equity (annualized) (5) |  | 6.40 | % |  | 9.27 | % |  | -2.87 | %

(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.

8

Year-to-Year Comparative Financial Analysis

Kearny Financial Corp. |
Consolidated Balance Sheets |
(Dollars and Shares in Thousands, | June 30, |  | June 30, |  | Variance |  | Variance |
Except Per Share Data) | 2022 |  | 2021 |  | or Change |  | or Change Pct. |
| (Unaudited) |  | (Audited) |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 101,615 |  | $ | 67,855 |  | $ | 33,760 |  |  | 49.8 | %
Securities available for sale |  | 1,344,093 |  |  | 1,676,864 |  |  | (332,771 | ) |  | -19.8 | %
Securities held to maturity |  | 118,291 |  |  | 38,138 |  |  | 80,153 |  |  | 210.2 | %
Loans held-for-sale |  | 28,874 |  |  | 16,492 |  |  | 12,382 |  |  | 75.1 | %
Loans receivable, including yield adjustments |  | 5,417,845 |  |  | 4,851,394 |  |  | 566,451 |  |  | 11.7 | %
Less: allowance for credit losses on loans |  | (47,058 | ) |  | (58,165 | ) |  | (11,107 | ) |  | -19.1 | %
Net loans receivable |  | 5,370,787 |  |  | 4,793,229 |  |  | 577,558 |  |  | 12.0 | %
Premises and equipment |  | 53,281 |  |  | 56,338 |  |  | (3,057 | ) |  | -5.4 | %
Federal Home Loan Bank of New York stock |  | 47,144 |  |  | 36,615 |  |  | 10,529 |  |  | 28.8 | %
Accrued interest receivable |  | 20,466 |  |  | 19,362 |  |  | 1,104 |  |  | 5.7 | %
Goodwill |  | 210,895 |  |  | 210,895 |  |  | - |  |  | 0.0 | %
Core deposit intangible |  | 3,020 |  |  | 3,705 |  |  | (685 | ) |  | -18.5 | %
Bank owned life insurance |  | 289,177 |  |  | 283,310 |  |  | 5,867 |  |  | 2.1 | %
Deferred income tax assets, net |  | 49,350 |  |  | 29,323 |  |  | 20,027 |  |  | 68.3 | %
Other real estate owned |  | 178 |  |  | 178 |  |  | - |  |  | 0.0 | %
Other assets |  | 82,712 |  |  | 51,431 |  |  | 31,281 |  |  | 60.8 | %
Total assets | $ | 7,719,883 |  | $ | 7,283,735 |  | $ | 436,148 |  |  | 6.0 | %
Liabilities |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |
Non-interest-bearing | $ | 653,899 |  | $ | 593,718 |  | $ | 60,181 |  |  | 10.1 | %
Interest-bearing |  | 5,208,357 |  |  | 4,891,588 |  |  | 316,769 |  |  | 6.5 | %
Total deposits |  | 5,862,256 |  |  | 5,485,306 |  |  | 376,950 |  |  | 6.9 | %
Borrowings |  | 901,337 |  |  | 685,876 |  |  | 215,461 |  |  | 31.4 | %
Advance payments by borrowers for taxes |  | 16,746 |  |  | 15,752 |  |  | 994 |  |  | 6.3 | %
Other liabilities |  | 45,544 |  |  | 53,857 |  |  | (8,313 | ) |  | -15.4 | %
Total liabilities |  | 6,825,883 |  |  | 6,240,791 |  |  | 585,092 |  |  | 9.4 | %
Stockholders' Equity |  |  |  |  |  |  |  |
Common stock | $ | 687 |  | $ | 790 |  | $ | (103 | ) |  | -13.0 | %
Paid-in capital |  | 528,396 |  |  | 654,396 |  |  | (126,000 | ) |  | -19.3 | %
Retained earnings |  | 445,451 |  |  | 408,367 |  |  | 37,084 |  |  | 9.1 | %
Unearned ESOP shares |  | (24,807 | ) |  | (26,753 | ) |  | 1,946 |  |  | -7.3 | %
Accumulated other comprehensive (loss) income |  | (55,727 | ) |  | 6,144 |  |  | (61,871 | ) |  | -1007.0 | %
Total stockholders' equity |  | 894,000 |  |  | 1,042,944 |  |  | (148,944 | ) |  | -14.3 | %
Total liabilities and stockholders' equity | $ | 7,719,883 |  | $ | 7,283,735 |  | $ | 436,148 |  |  | 6.0 | %
Consolidated capital ratios |  |  |  |  |  |  |  |
Equity to assets |  | 11.58 | % |  | 14.32 | % |  | -2.74 | % |  |
Tangible equity to tangible assets (1) |  | 9.06 | % |  | 11.72 | % |  | -2.66 | % |  |
Share data |  |  |  |  |  |  |  |
Outstanding shares |  | 68,666 |  |  | 78,965 |  |  | (10,299 | ) |  | -13.0 | %
Book value per share | $ | 13.02 |  | $ | 13.21 |  | $ | (0.19 | ) |  | -1.4 | %
Tangible book value per share (2) | $ | 9.90 |  | $ | 10.49 |  | $ | (0.59 | ) |  | -5.6 | %

(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.

9

Kearny Financial Corp. |
Consolidated Statements of Income |
(Unaudited) |
| Year Ended |  |  |  |  |
(Dollars and Shares in Thousands, | June 30, |  | June 30, |  | Variance |  | Variance |
Except Per Share Data) | 2022 |  | 2021 |  | or Change |  | or Change Pct. |
Interest income |  |  |  |  |  |  |  |
Loans (1) | $ | 190,520 |  | $ | 202,240 |  | $ | (11,720 | ) |  | -5.8 | %
Taxable investment securities |  | 32,746 |  |  | 31,238 |  |  | 1,508 |  |  | 4.8 | %
Tax-exempt investment securities |  | 1,273 |  |  | 1,652 |  |  | (379 | ) |  | -22.9 | %
Other interest-earning assets |  | 1,733 |  |  | 2,955 |  |  | (1,222 | ) |  | -41.4 | %
Total Interest Income |  | 226,272 |  |  | 238,085 |  |  | (11,813 | ) |  | -5.0 | %
Interest expense |  |  |  |  |  |  |  |
Deposits |  | 15,208 |  |  | 31,535 |  |  | (16,327 | ) |  | -51.8 | %
Borrowings |  | 14,461 |  |  | 18,316 |  |  | (3,855 | ) |  | -21.0 | %
Total interest expense |  | 29,669 |  |  | 49,851 |  |  | (20,182 | ) |  | -40.5 | %
Net interest income |  | 196,603 |  |  | 188,234 |  |  | 8,369 |  |  | 4.4 | %
Reversal of provision for credit losses |  | (7,518 | ) |  | (1,121 | ) |  | (6,397 | ) |  | 570.7 | %
Net interest income after reversal of provision for credit losses |  | 204,121 |  |  | 189,355 |  |  | 14,766 |  |  | 7.8 | %
Non-interest income |  |  |  |  |  |  |  |
Fees and service charges (1) |  | 2,580 |  |  | 1,897 |  |  | 683 |  |  | 36.0 | %
(Loss) gain on sale and call of securities |  | (559 | ) |  | 767 |  |  | (1,326 | ) |  | -172.9 | %
Gain on sale of loans |  | 2,539 |  |  | 5,574 |  |  | (3,035 | ) |  | -54.4 | %
Gain on sale of real estate owned |  | 5 |  |  | - |  |  | 5 |  |  | 0.0 | %
Income from bank owned life insurance |  | 6,167 |  |  | 6,267 |  |  | (100 | ) |  | -1.6 | %
Electronic banking fees and charges |  | 1,626 |  |  | 1,717 |  |  | (91 | ) |  | -5.3 | %
Bargain purchase gain |  | - |  |  | 3,053 |  |  | (3,053 | ) |  | -100.0 | %
Other income |  | 1,576 |  |  | 1,751 |  |  | (175 | ) |  | -10.0 | %
Total non-interest income |  | 13,934 |  |  | 21,026 |  |  | (7,092 | ) |  | -33.7 | %
Non-interest expense |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 76,264 |  |  | 68,800 |  |  | 7,464 |  |  | 10.8 | %
Net occupancy expense of premises |  | 14,114 |  |  | 12,673 |  |  | 1,441 |  |  | 11.4 | %
Equipment and systems |  | 15,886 |  |  | 14,870 |  |  | 1,016 |  |  | 6.8 | %
Advertising and marketing |  | 2,059 |  |  | 2,161 |  |  | (102 | ) |  | -4.7 | %
Federal deposit insurance premium |  | 2,455 |  |  | 1,940 |  |  | 515 |  |  | 26.5 | %
Directors' compensation |  | 2,132 |  |  | 2,993 |  |  | (861 | ) |  | -28.8 | %
Merger-related expenses |  | - |  |  | 4,349 |  |  | (4,349 | ) |  | -100.0 | %
Debt extinguishment expenses |  | - |  |  | 796 |  |  | (796 | ) |  | -100.0 | %
Other expense |  | 12,798 |  |  | 17,303 |  |  | (4,505 | ) |  | -26.0 | %
Total non-interest expense |  | 125,708 |  |  | 125,885 |  |  | (177 | ) |  | -0.1 | %
Income before income taxes |  | 92,347 |  |  | 84,496 |  |  | 7,851 |  |  | 9.3 | %
Income taxes |  | 24,800 |  |  | 21,263 |  |  | 3,537 |  |  | 16.6 | %
Net income | $ | 67,547 |  | $ | 63,233 |  | $ | 4,314 |  |  | 6.8 | %
Net income per common share (EPS) |  |  |  |  |  |  |  |
Basic | $ | 0.95 |  | $ | 0.77 |  | $ | 0.18 |  |  |
Diluted | $ | 0.95 |  | $ | 0.77 |  | $ | 0.18 |  |  |
Dividends declared |  |  |  |  |  |  |  |
Cash dividends declared per common share | $ | 0.43 |  | $ | 0.35 |  | $ | 0.08 |  |  |
Cash dividends declared | $ | 30,463 |  | $ | 28,538 |  | $ | 1,925 |  |  |
Dividend payout ratio |  | 45.1 | % |  | 45.1 | % |  | 0.0 | % |  |
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |
Basic |  | 70,911 |  |  | 82,387 |  |  | (11,476 | ) |  |
Diluted |  | 70,933 |  |  | 82,391 |  |  | (11,458 | ) |  |

(1)
Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Amounts shown for the year ended June 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the year ended June 30, 2021 was $3.7 million.

10

Kearny Financial Corp. |
Average Balance Sheet Data |
(Unaudited) |
| Year Ended |  |  |  |  |
| June 30, |  | June 30, |  | Variance |  | Variance |
(Dollars in Thousands) | 2022 |  | 2021 |  | or Change |  | or Change Pct. |
Assets |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |
Loans receivable, including loans held for sale | $ | 4,922,400 |  | $ | 4,866,436 |  | $ | 55,964 |  |  | 1.1 | %
Taxable investment securities |  | 1,622,475 |  |  | 1,571,452 |  |  | 51,023 |  |  | 3.2 | %
Tax-exempt investment securities |  | 55,981 |  |  | 74,604 |  |  | (18,623 | ) |  | -25.0 | %
Other interest-earning assets |  | 82,802 |  |  | 200,435 |  |  | (117,633 | ) |  | -58.7 | %
Total interest-earning assets |  | 6,683,658 |  |  | 6,712,927 |  |  | (29,269 | ) |  | -0.4 | %
Non-interest-earning assets |  | 598,712 |  |  | 620,934 |  |  | (22,222 | ) |  | -3.6 | %
Total assets | $ | 7,282,370 |  | $ | 7,333,861 |  | $ | (51,491 | ) |  | -0.7 | %
Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |
Interest-bearing demand | $ | 2,067,200 |  | $ | 1,726,190 |  | $ | 341,010 |  |  | 19.8 | %
Savings |  | 1,088,971 |  |  | 1,066,794 |  |  | 22,177 |  |  | 2.1 | %
Certificates of deposit |  | 1,711,276 |  |  | 1,931,887 |  |  | (220,611 | ) |  | -11.4 | %
Total interest-bearing deposits |  | 4,867,447 |  |  | 4,724,871 |  |  | 142,576 |  |  | 3.0 | %
Borrowings: |  |  |  |  |  |  |  |
Federal Home Loan Bank Advances |  | 679,388 |  |  | 931,148 |  |  | (251,760 | ) |  | -27.0 | %
Other borrowings |  | 72,841 |  |  | 2,563 |  |  | 70,278 |  |  | 2742.0 | %
Total borrowings |  | 752,229 |  |  | 933,711 |  |  | (181,482 | ) |  | -19.4 | %
Total interest-bearing liabilities |  | 5,619,676 |  |  | 5,658,582 |  |  | (38,906 | ) |  | -0.7 | %
Non-interest-bearing liabilities: |  |  |  |  |  |  |  |
Non-interest-bearing deposits |  | 624,666 |  |  | 518,149 |  |  | 106,517 |  |  | 20.6 | %
Other non-interest-bearing liabilities |  | 53,477 |  |  | 65,737 |  |  | (12,260 | ) |  | -18.7 | %
Total non-interest-bearing liabilities |  | 678,143 |  |  | 583,886 |  |  | 94,257 |  |  | 16.1 | %
Total liabilities |  | 6,297,819 |  |  | 6,242,468 |  |  | 55,351 |  |  | 0.9 | %
Stockholders' equity |  | 984,551 |  |  | 1,091,393 |  |  | (106,842 | ) |  | -9.8 | %
Total liabilities and stockholders' equity | $ | 7,282,370 |  | $ | 7,333,861 |  | $ | (51,491 | ) |  | -0.7 | %
Average interest-earning assets to average interest-bearing liabilities |  | 118.93 | % |  | 118.63 | % |  | 0.30 | % |  | 0.3 | %

11

Kearny Financial Corp. |
Performance Ratio Highlights |
| Year Ended |  |  |
| June 30, |  | June 30, |  | Variance |
| 2022 |  | 2021 |  | or Change |
Average yield on interest-earning assets: |  |  |  |  |  |
Loans receivable, including loans held for sale (1) |  | 3.87 | % |  | 4.16 | % |  | -0.29 | %
Taxable investment securities |  | 2.02 | % |  | 1.99 | % |  | 0.03 | %
Tax-exempt investment securities (2) |  | 2.27 | % |  | 2.21 | % |  | 0.06 | %
Other interest-earning assets |  | 2.09 | % |  | 1.47 | % |  | 0.62 | %
Total interest-earning assets (1) |  | 3.39 | % |  | 3.55 | % |  | -0.16 | %
Average cost of interest-bearing liabilities: |  |  |  |  |  |
Deposits: |  |  |  |  |  |
Interest-bearing demand |  | 0.25 | % |  | 0.41 | % |  | -0.16 | %
Savings |  | 0.11 | % |  | 0.31 | % |  | -0.20 | %
Certificates of deposit |  | 0.52 | % |  | 1.10 | % |  | -0.58 | %
Total interest-bearing deposits |  | 0.31 | % |  | 0.67 | % |  | -0.36 | %
Borrowings: |  |  |  |  |  |
Federal Home Loan Bank Advances |  | 2.07 | % |  | 1.97 | % |  | 0.10 | %
Other borrowings |  | 0.54 | % |  | 0.06 | % |  | 0.48 | %
Total borrowings |  | 1.92 | % |  | 1.96 | % |  | -0.04 | %
Total interest-bearing liabilities |  | 0.53 | % |  | 0.88 | % |  | -0.35 | %
Interest rate spread (1)(3) |  | 2.86 | % |  | 2.67 | % |  | 0.19 | %
Net interest margin (1)(4) |  | 2.94 | % |  | 2.80 | % |  | 0.14 | %
Non-interest income to average assets (1) |  | 0.19 | % |  | 0.29 | % |  | -0.10 | %
Non-interest expense to average assets |  | 1.73 | % |  | 1.72 | % |  | 0.01 | %
Efficiency ratio (5) |  | 59.71 | % |  | 60.16 | % |  | -0.45 | %
Return on average assets |  | 0.93 | % |  | 0.86 | % |  | 0.07 | %
Return on average equity |  | 6.86 | % |  | 5.79 | % |  | 1.07 | %
Return on average tangible equity (6) |  | 8.77 | % |  | 7.22 | % |  | 1.55 | %

(1)
Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Amounts shown for the year ended June 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the year ended June 30, 2021 was $3.7 million.
(2)
The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(3)
Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(4)
Net interest income divided by average interest-earning assets.
(5)
Non-interest expense divided by the sum of net interest income and non-interest income.
(6)
Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.

12

Five-Quarter Financial Trend Analysis

Kearny Financial Corp. |
Consolidated Balance Sheets |
(Dollars and Shares in Thousands, Except Per Share Data) | June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
| (Unaudited) |  | (Unaudited) |  | (Unaudited) |  | (Unaudited) |  | (Audited) |
Assets |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 101,615 |  | $ | 62,379 |  | $ | 60,452 |  | $ | 54,070 |  | $ | 67,855 |
Securities available for sale |  | 1,344,093 |  |  | 1,526,086 |  |  | 1,591,066 |  |  | 1,651,156 |  |  | 1,676,864 |
Securities held to maturity |  | 118,291 |  |  | 121,853 |  |  | 53,142 |  |  | 37,497 |  |  | 38,138 |
Loans held-for-sale |  | 28,874 |  |  | 2,822 |  |  | 12,549 |  |  | 12,884 |  |  | 16,492 |
Loans receivable |  | 5,417,845 |  |  | 5,003,201 |  |  | 4,826,404 |  |  | 4,789,339 |  |  | 4,851,394 |
Less: allowance for credit losses on loans |  | (47,058 | ) |  | (43,860 | ) |  | (48,216 | ) |  | (51,785 | ) |  | (58,165 | )
Net loans receivable |  | 5,370,787 |  |  | 4,959,341 |  |  | 4,778,188 |  |  | 4,737,554 |  |  | 4,793,229 |
Premises and equipment |  | 53,281 |  |  | 53,727 |  |  | 54,067 |  |  | 55,236 |  |  | 56,338 |
Federal Home Loan Bank stock |  | 47,144 |  |  | 30,997 |  |  | 36,622 |  |  | 36,615 |  |  | 36,615 |
Accrued interest receivable |  | 20,466 |  |  | 19,517 |  |  | 18,495 |  |  | 19,541 |  |  | 19,362 |
Goodwill |  | 210,895 |  |  | 210,895 |  |  | 210,895 |  |  | 210,895 |  |  | 210,895 |
Core deposit intangible |  | 3,020 |  |  | 3,166 |  |  | 3,344 |  |  | 3,524 |  |  | 3,705 |
Bank owned life insurance |  | 289,177 |  |  | 287,644 |  |  | 286,433 |  |  | 284,871 |  |  | 283,310 |
Deferred income taxes, net |  | 49,350 |  |  | 34,349 |  |  | 25,709 |  |  | 27,771 |  |  | 29,323 |
Other real estate owned |  | 178 |  |  | 401 |  |  | 658 |  |  | 178 |  |  | 178 |
Other assets |  | 82,712 |  |  | 76,714 |  |  | 54,603 |  |  | 51,896 |  |  | 51,431 |
Total assets | $ | 7,719,883 |  | $ | 7,389,891 |  | $ | 7,186,223 |  | $ | 7,183,688 |  | $ | 7,283,735 |
Liabilities |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |
Non-interest-bearing | $ | 653,899 |  | $ | 621,954 |  | $ | 604,805 |  | $ | 631,344 |  | $ | 593,718 |
Interest-bearing |  | 5,208,357 |  |  | 4,906,708 |  |  | 4,849,220 |  |  | 4,763,795 |  |  | 4,891,588 |
Total deposits |  | 5,862,256 |  |  | 5,528,662 |  |  | 5,454,025 |  |  | 5,395,139 |  |  | 5,485,306 |
Borrowings |  | 901,337 |  |  | 851,220 |  |  | 686,105 |  |  | 720,990 |  |  | 685,876 |
Advance payments by borrowers for taxes |  | 16,746 |  |  | 16,979 |  |  | 16,772 |  |  | 16,222 |  |  | 15,752 |
Other liabilities |  | 45,544 |  |  | 37,861 |  |  | 33,851 |  |  | 36,914 |  |  | 53,857 |
Total liabilities |  | 6,825,883 |  |  | 6,434,722 |  |  | 6,190,753 |  |  | 6,169,265 |  |  | 6,240,791 |
Stockholders' Equity |  |  |  |  |  |  |  |  |  |
Common stock |  | 687 |  |  | 714 |  |  | 735 |  |  | 758 |  |  | 790 |
Paid-in capital |  | 528,396 |  |  | 561,176 |  |  | 587,392 |  |  | 616,894 |  |  | 654,396 |
Retained earnings |  | 445,451 |  |  | 441,522 |  |  | 431,549 |  |  | 420,701 |  |  | 408,367 |
Unearned ESOP shares |  | (24,807 | ) |  | (25,294 | ) |  | (25,780 | ) |  | (26,266 | ) |  | (26,753 | )
Accumulated other comprehensive (loss) income |  | (55,727 | ) |  | (22,949 | ) |  | 1,574 |  |  | 2,336 |  |  | 6,144 |
Total stockholders' equity |  | 894,000 |  |  | 955,169 |  |  | 995,470 |  |  | 1,014,423 |  |  | 1,042,944 |
Total liabilities and stockholders' equity | $ | 7,719,883 |  | $ | 7,389,891 |  | $ | 7,186,223 |  | $ | 7,183,688 |  | $ | 7,283,735 |
Consolidated capital ratios |  |  |  |  |  |  |  |  |  |
Equity to assets |  | 11.58 | % |  | 12.93 | % |  | 13.85 | % |  | 14.12 | % |  | 14.32 | %
Tangible equity to tangible assets (1) |  | 9.06 | % |  | 10.33 | % |  | 11.21 | % |  | 11.48 | % |  | 11.72 | %
Share data |  |  |  |  |  |  |  |  |  |
Outstanding shares |  | 68,666 |  |  | 71,424 |  |  | 73,453 |  |  | 75,800 |  |  | 78,965 |
Book value per share | $ | 13.02 |  | $ | 13.37 |  | $ | 13.55 |  | $ | 13.38 |  | $ | 13.21 |
Tangible book value per share (2) | $ | 9.90 |  | $ | 10.38 |  | $ | 10.64 |  | $ | 10.55 |  | $ | 10.49 |

(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.

13

Kearny Financial Corp. |
Supplemental Balance Sheet Highlights |
(Unaudited) |
(Dollars in Thousands) | June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
Loan portfolio composition: |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |
Multi-family mortgage | $ | 2,409,090 |  | $ | 2,076,003 |  | $ | 2,007,431 |  | $ | 1,978,681 |  | $ | 2,039,260 |
Nonresidential mortgage |  | 1,019,838 |  |  | 1,085,988 |  |  | 1,026,447 |  |  | 1,023,391 |  |  | 1,079,444 |
Commercial business |  | 176,807 |  |  | 169,551 |  |  | 180,429 |  |  | 169,392 |  |  | 168,951 |
Construction |  | 140,131 |  |  | 121,137 |  |  | 110,703 |  |  | 112,226 |  |  | 93,804 |
Total commercial loans |  | 3,745,866 |  |  | 3,452,679 |  |  | 3,325,010 |  |  | 3,283,690 |  |  | 3,381,459 |
One- to four-family residential mortgage |  | 1,645,816 |  |  | 1,527,980 |  |  | 1,477,267 |  |  | 1,483,106 |  |  | 1,447,721 |
Consumer loans: |  |  |  |  |  |  |  |  |  |
Home equity loans |  | 42,028 |  |  | 41,501 |  |  | 43,934 |  |  | 44,912 |  |  | 47,871 |
Other consumer |  | 2,866 |  |  | 2,755 |  |  | 3,040 |  |  | 3,020 |  |  | 3,259 |
Total consumer loans |  | 44,894 |  |  | 44,256 |  |  | 46,974 |  |  | 47,932 |  |  | 51,130 |
Total loans, excluding yield adjustments |  | 5,436,576 |  |  | 5,024,915 |  |  | 4,849,251 |  |  | 4,814,728 |  |  | 4,880,310 |
Unaccreted yield adjustments |  | (18,731 | ) |  | (21,714 | ) |  | (22,847 | ) |  | (25,389 | ) |  | (28,916 | )
Loans receivable, net of yield adjustments |  | 5,417,845 |  |  | 5,003,201 |  |  | 4,826,404 |  |  | 4,789,339 |  |  | 4,851,394 |
Less: allowance for credit losses on loans |  | (47,058 | ) |  | (43,860 | ) |  | (48,216 | ) |  | (51,785 | ) |  | (58,165 | )
Net loans receivable | $ | 5,370,787 |  | $ | 4,959,341 |  | $ | 4,778,188 |  | $ | 4,737,554 |  | $ | 4,793,229 |
Loan portfolio allocation: |  |  |  |  |  |  |  |  |  |
Commercial loans: |  |  |  |  |  |  |  |  |  |
Multi-family mortgage |  | 44.3 | % |  | 41.3 | % |  | 41.4 | % |  | 41.1 | % |  | 41.8 | %
Nonresidential mortgage |  | 18.8 | % |  | 21.6 | % |  | 21.2 | % |  | 21.3 | % |  | 22.1 | %
Commercial business |  | 3.2 | % |  | 3.4 | % |  | 3.7 | % |  | 3.5 | % |  | 3.5 | %
Construction |  | 2.6 | % |  | 2.4 | % |  | 2.3 | % |  | 2.3 | % |  | 1.9 | %
Total commercial loans |  | 68.9 | % |  | 68.7 | % |  | 68.6 | % |  | 68.2 | % |  | 69.3 | %
One- to four-family residential mortgage |  | 30.3 | % |  | 30.4 | % |  | 30.5 | % |  | 30.8 | % |  | 29.7 | %
Consumer loans: |  |  |  |  |  |  |  |  |  |
Home equity loans |  | 0.8 | % |  | 0.8 | % |  | 0.9 | % |  | 0.9 | % |  | 0.9 | %
Other consumer |  | 0.0 | % |  | 0.1 | % |  | 0.0 | % |  | 0.1 | % |  | 0.1 | %
Total consumer loans |  | 0.8 | % |  | 0.9 | % |  | 0.9 | % |  | 1.0 | % |  | 1.0 | %
Total loans, excluding yield adjustments |  | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %
Asset quality: |  |  |  |  |  |  |  |  |  |
Nonperforming assets: |  |  |  |  |  |  |  |  |  |
Accruing loans - 90 days and over past due | $ | - |  | $ | - |  | $ | - |  | $ | - |  | $ | - |
Nonaccrual loans |  | 70,321 |  |  | 80,595 |  |  | 72,138 |  |  | 72,945 |  |  | 79,767 |
Total nonperforming loans |  | 70,321 |  |  | 80,595 |  |  | 72,138 |  |  | 72,945 |  |  | 79,767 |
Nonaccrual loans held-for-sale |  | 21,745 |  |  | - |  |  | - |  |  | - |  |  | - |
Other real estate owned |  | 178 |  |  | 401 |  |  | 658 |  |  | 178 |  |  | 178 |
Total nonperforming assets | $ | 92,244 |  | $ | 80,996 |  | $ | 72,796 |  | $ | 73,123 |  | $ | 79,945 |
Nonperforming loans (% total loans) |  | 1.30 | % |  | 1.61 | % |  | 1.49 | % |  | 1.52 | % |  | 1.64 | %
Nonperforming assets (% total assets) |  | 1.19 | % |  | 1.10 | % |  | 1.01 | % |  | 1.02 | % |  | 1.10 | %
Allowance for credit losses on loans (ACL): |  |  |  |  |  |  |  |  |  |
ACL to total loans |  | 0.87 | % |  | 0.87 | % |  | 0.99 | % |  | 1.08 | % |  | 1.19 | %
ACL to nonperforming loans |  | 66.92 | % |  | 54.42 | % |  | 66.84 | % |  | 70.99 | % |  | 72.92 | %
Net charge-offs | $ | 1,024 |  | $ | 436 |  | $ | 1,149 |  | $ | 980 |  | $ | 656 |
Average net charge-off rate (annualized) |  | 0.08 | % |  | 0.04 | % |  | 0.10 | % |  | 0.08 | % |  | 0.05 | %

14

Kearny Financial Corp. |
Supplemental Balance Sheet Highlights |
(Unaudited) |
(Dollars in Thousands) | June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
Funding by type: |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |
Non-interest-bearing deposits | $ | 653,899 |  | $ | 621,954 |  | $ | 604,805 |  | $ | 631,344 |  | $ | 593,718 |
Interest-bearing demand |  | 2,265,597 |  |  | 2,154,488 |  |  | 2,106,693 |  |  | 1,937,661 |  |  | 1,902,478 |
Savings |  | 1,053,198 |  |  | 1,088,974 |  |  | 1,087,740 |  |  | 1,089,699 |  |  | 1,111,364 |
Certificates of deposit |  | 1,889,562 |  |  | 1,663,246 |  |  | 1,654,787 |  |  | 1,736,435 |  |  | 1,877,746 |
Interest-bearing deposits |  | 5,208,357 |  |  | 4,906,708 |  |  | 4,849,220 |  |  | 4,763,795 |  |  | 4,891,588 |
Total deposits |  | 5,862,256 |  |  | 5,528,662 |  |  | 5,454,025 |  |  | 5,395,139 |  |  | 5,485,306 |
Borrowings: |  |  |  |  |  |  |  |  |  |
Federal Home Loan Bank advances |  | 651,337 |  |  | 541,220 |  |  | 666,105 |  |  | 665,990 |  |  | 665,876 |
Overnight borrowings |  | 250,000 |  |  | 310,000 |  |  | 20,000 |  |  | 55,000 |  |  | 20,000 |
Total borrowings |  | 901,337 |  |  | 851,220 |  |  | 686,105 |  |  | 720,990 |  |  | 685,876 |
Total funding | $ | 6,763,593 |  | $ | 6,379,882 |  | $ | 6,140,130 |  | $ | 6,116,129 |  | $ | 6,171,182 |
Loans as a % of deposits |  | 92.1 | % |  | 89.8 | % |  | 87.8 | % |  | 88.1 | % |  | 87.7 | %
Deposits as a % of total funding |  | 86.7 | % |  | 86.7 | % |  | 88.8 | % |  | 88.2 | % |  | 88.9 | %
Borrowings as a % of total funding |  | 13.3 | % |  | 13.3 | % |  | 11.2 | % |  | 11.8 | % |  | 11.1 | %
Funding by source: |  |  |  |  |  |  |  |  |  |
Retail deposits: |  |  |  |  |  |  |  |  |  |
Non-interest-bearing deposits | $ | 653,899 |  | $ | 621,954 |  | $ | 604,805 |  | $ | 631,344 |  | $ | 593,718 |
Interest-bearing demand |  | 2,265,597 |  |  | 2,154,488 |  |  | 2,106,693 |  |  | 1,937,661 |  |  | 1,902,478 |
Savings |  | 1,053,198 |  |  | 1,088,974 |  |  | 1,087,740 |  |  | 1,089,699 |  |  | 1,111,364 |
Certificates of deposit |  | 1,116,035 |  |  | 1,122,228 |  |  | 1,184,530 |  |  | 1,264,016 |  |  | 1,398,808 |
Total retail deposits |  | 5,088,729 |  |  | 4,987,644 |  |  | 4,983,768 |  |  | 4,922,720 |  |  | 5,006,368 |
Wholesale funding: |  |  |  |  |  |  |  |  |  |
Certificates of deposit (listing service) | $ | 11,665 |  | $ | 9,981 |  | $ | 11,622 |  | $ | 13,817 |  | $ | 20,322 |
Certificates of deposit (brokered) |  | 761,862 |  |  | 531,037 |  |  | 458,635 |  |  | 458,602 |  |  | 458,616 |
Total wholesale deposits |  | 773,527 |  |  | 541,018 |  |  | 470,257 |  |  | 472,419 |  |  | 478,938 |
FHLB advances |  | 651,337 |  |  | 541,220 |  |  | 666,105 |  |  | 665,990 |  |  | 665,876 |
Overnight borrowings |  | 250,000 |  |  | 310,000 |  |  | 20,000 |  |  | 55,000 |  |  | 20,000 |
Total wholesale funding |  | 1,674,864 |  |  | 1,392,238 |  |  | 1,156,362 |  |  | 1,193,409 |  |  | 1,164,814 |
Total funding | $ | 6,763,593 |  | $ | 6,379,882 |  | $ | 6,140,130 |  | $ | 6,116,129 |  | $ | 6,171,182 |
Retail funding as a % of total funding |  | 75.2 | % |  | 78.2 | % |  | 81.2 | % |  | 80.5 | % |  | 81.1 | %
Wholesale funding as a % of total funding |  | 24.8 | % |  | 21.8 | % |  | 18.8 | % |  | 19.5 | % |  | 18.9 | %

15

Kearny Financial Corp. |
Consolidated Statements of Income |
(Unaudited) |
| Three Months Ended |
(Dollars and Shares in Thousands, Except Per Share Data) | June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
Interest income |  |  |  |  |  |  |  |  |  |
Loans (1) | $ | 48,869 |  | $ | 45,846 |  | $ | 47,575 |  | $ | 48,230 |  | $ | 48,464 |
Taxable investment securities |  | 8,915 |  |  | 8,024 |  |  | 7,595 |  |  | 8,212 |  |  | 8,304 |
Tax-exempt investment securities |  | 297 |  |  | 316 |  |  | 327 |  |  | 333 |  |  | 355 |
Other interest-earning assets |  | 472 |  |  | 415 |  |  | 415 |  |  | 431 |  |  | 549 |
Total interest income |  | 58,553 |  |  | 54,601 |  |  | 55,912 |  |  | 57,206 |  |  | 57,672 |
Interest expense |  |  |  |  |  |  |  |  |  |
Deposits |  | 3,915 |  |  | 3,565 |  |  | 3,663 |  |  | 4,065 |  |  | 5,156 |
Borrowings |  | 4,039 |  |  | 3,309 |  |  | 3,562 |  |  | 3,551 |  |  | 3,451 |
Total interest expense |  | 7,954 |  |  | 6,874 |  |  | 7,225 |  |  | 7,616 |  |  | 8,607 |
Net interest income |  | 50,599 |  |  | 47,727 |  |  | 48,687 |  |  | 49,590 |  |  | 49,065 |
Provision for (reversal of) credit losses |  | 4,222 |  |  | (3,920 | ) |  | (2,420 | ) |  | (5,400 | ) |  | (4,941 | )
Net interest income after provision for (reversal of) credit losses |  | 46,377 |  |  | 51,647 |  |  | 51,107 |  |  | 54,990 |  |  | 54,006 |
Non-interest income |  |  |  |  |  |  |  |  |  |
Fees and service charges (1) |  | 658 |  |  | 617 |  |  | 698 |  |  | 607 |  |  | 423 |
(Loss) gain on sale and call of securities |  | (563 | ) |  | 3 |  |  | - |  |  | 1 |  |  | 313 |
Gain on sale of loans |  | 187 |  |  | 376 |  |  | 970 |  |  | 1,006 |  |  | 363 |
(Loss) gain on sale of other real estate owned |  | (9 | ) |  | 14 |  |  | - |  |  | - |  |  | - |
Income from bank owned life insurance |  | 1,533 |  |  | 1,511 |  |  | 1,562 |  |  | 1,561 |  |  | 1,545 |
Electronic banking fees and charges |  | 366 |  |  | 432 |  |  | 421 |  |  | 407 |  |  | 452 |
Other income |  | 638 |  |  | 238 |  |  | 482 |  |  | 218 |  |  | 400 |
Total non-interest income |  | 2,810 |  |  | 3,191 |  |  | 4,133 |  |  | 3,800 |  |  | 3,496 |
Non-interest expense |  |  |  |  |  |  |  |  |  |
Salaries and employee benefits |  | 20,367 |  |  | 19,184 |  |  | 18,096 |  |  | 18,617 |  |  | 17,777 |
Net occupancy expense of premises |  | 3,188 |  |  | 3,223 |  |  | 3,156 |  |  | 4,547 |  |  | 2,998 |
Equipment and systems |  | 4,516 |  |  | 3,822 |  |  | 3,723 |  |  | 3,825 |  |  | 3,575 |
Advertising and marketing |  | 703 |  |  | 516 |  |  | 448 |  |  | 392 |  |  | 581 |
Federal deposit insurance premium |  | 762 |  |  | 480 |  |  | 721 |  |  | 492 |  |  | 490 |
Directors' compensation |  | 340 |  |  | 340 |  |  | 649 |  |  | 803 |  |  | 749 |
Other expense |  | 3,736 |  |  | 3,058 |  |  | 2,877 |  |  | 3,127 |  |  | 5,816 |
Total non-interest expense |  | 33,612 |  |  | 30,623 |  |  | 29,670 |  |  | 31,803 |  |  | 31,986 |
Income before income taxes |  | 15,575 |  |  | 24,215 |  |  | 25,570 |  |  | 26,987 |  |  | 25,516 |
Income taxes |  | 4,205 |  |  | 6,522 |  |  | 6,801 |  |  | 7,272 |  |  | 7,033 |
Net income | $ | 11,370 |  | $ | 17,693 |  | $ | 18,769 |  | $ | 19,715 |  | $ | 18,483 |
Net income per common share (EPS) |  |  |  |  |  |  |  |  |  |
Basic | $ | 0.17 |  | $ | 0.25 |  | $ | 0.26 |  | $ | 0.26 |  | $ | 0.24 |
Diluted | $ | 0.17 |  | $ | 0.25 |  | $ | 0.26 |  | $ | 0.26 |  | $ | 0.24 |
Dividends declared |  |  |  |  |  |  |  |  |  |
Cash dividends declared per common share | $ | 0.11 |  | $ | 0.11 |  | $ | 0.11 |  | $ | 0.10 |  | $ | 0.10 |
Cash dividends declared | $ | 7,441 |  | $ | 7,720 |  | $ | 7,921 |  | $ | 7,381 |  | $ | 7,710 |
Dividend payout ratio |  | 65.4 | % |  | 43.6 | % |  | 42.2 | % |  | 37.4 | % |  | 41.7 | %
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |  |  |
Basic |  | 67,240 |  |  | 69,790 |  |  | 72,011 |  |  | 74,537 |  |  | 77,658 |
Diluted |  | 67,276 |  |  | 69,817 |  |  | 72,037 |  |  | 74,556 |  |  | 77,680 |

(1)
Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Periods prior to the quarter ended September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the quarter ended June 30, 2021 was $902,000.

16

Kearny Financial Corp. |
Average Balance Sheet Data |
(Unaudited) |
| Three Months Ended |
(Dollars in Thousands) | June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
Assets |  |  |  |  |  |  |  |  |  |
Interest-earning assets: |  |  |  |  |  |  |  |  |  |
Loans receivable, including loans held-for-sale | $ | 5,181,983 |  | $ | 4,850,236 |  | $ | 4,822,959 |  | $ | 4,835,676 |  | $ | 4,817,980 |
Taxable investment securities |  | 1,608,372 |  |  | 1,620,996 |  |  | 1,610,395 |  |  | 1,649,953 |  |  | 1,720,838 |
Tax-exempt investment securities |  | 51,672 |  |  | 55,390 |  |  | 57,686 |  |  | 59,115 |  |  | 63,047 |
Other interest-earning assets |  | 87,990 |  |  | 79,644 |  |  | 77,811 |  |  | 85,749 |  |  | 117,212 |
Total interest-earning assets |  | 6,930,017 |  |  | 6,606,266 |  |  | 6,568,851 |  |  | 6,630,493 |  |  | 6,719,077 |
Non-interest-earning assets |  | 564,734 |  |  | 601,684 |  |  | 611,390 |  |  | 616,735 |  |  | 609,762 |
Total assets | $ | 7,494,751 |  | $ | 7,207,950 |  | $ | 7,180,241 |  | $ | 7,247,228 |  | $ | 7,328,839 |
Liabilities and Stockholders' Equity |  |  |  |  |  |  |  |  |  |
Interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |
Interest-bearing demand | $ | 2,155,946 |  | $ | 2,133,977 |  | $ | 2,027,021 |  | $ | 1,954,271 |  | $ | 1,930,193 |
Savings |  | 1,077,631 |  |  | 1,088,351 |  |  | 1,086,903 |  |  | 1,102,865 |  |  | 1,118,402 |
Certificates of deposit |  | 1,701,725 |  |  | 1,650,048 |  |  | 1,693,423 |  |  | 1,798,473 |  |  | 1,934,650 |
Total interest-bearing deposits |  | 4,935,302 |  |  | 4,872,376 |  |  | 4,807,347 |  |  | 4,855,609 |  |  | 4,983,245 |
Borrowings: |  |  |  |  |  |  |  |  |  |
Federal Home Loan Bank advances |  | 752,579 |  |  | 632,811 |  |  | 666,029 |  |  | 665,915 |  |  | 665,802 |
Other borrowings |  | 185,901 |  |  | 51,667 |  |  | 26,033 |  |  | 28,532 |  |  | 6,670 |
Total borrowings |  | 938,480 |  |  | 684,478 |  |  | 692,062 |  |  | 694,447 |  |  | 672,472 |
Total interest-bearing liabilities |  | 5,873,782 |  |  | 5,556,854 |  |  | 5,499,409 |  |  | 5,550,056 |  |  | 5,655,717 |
Non-interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |
Non-interest-bearing deposits |  | 640,200 |  |  | 624,152 |  |  | 624,200 |  |  | 610,271 |  |  | 566,632 |
Other non-interest-bearing liabilities |  | 56,636 |  |  | 49,455 |  |  | 50,870 |  |  | 56,893 |  |  | 52,292 |
Total non-interest-bearing liabilities |  | 696,836 |  |  | 673,607 |  |  | 675,070 |  |  | 667,164 |  |  | 618,924 |
Total liabilities |  | 6,570,618 |  |  | 6,230,461 |  |  | 6,174,479 |  |  | 6,217,220 |  |  | 6,274,641 |
Stockholders' equity |  | 924,133 |  |  | 977,489 |  |  | 1,005,762 |  |  | 1,030,008 |  |  | 1,054,198 |
Total liabilities and stockholders' equity | $ | 7,494,751 |  | $ | 7,207,950 |  | $ | 7,180,241 |  | $ | 7,247,228 |  | $ | 7,328,839 |
Average interest-earning assets to average interest-bearing liabilities |  | 117.98 | % |  | 118.89 | % |  | 119.45 | % |  | 119.47 | % |  | 118.80 | %

17

Kearny Financial Corp. |
Performance Ratio Highlights |
| Three Months Ended |
| June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
Average yield on interest-earning assets: |  |  |  |  |  |  |  |  |  |
Loans receivable, including loans held-for- sale (1) |  | 3.77 | % |  | 3.78 | % |  | 3.95 | % |  | 3.99 | % |  | 4.02 | %
Taxable investment securities |  | 2.22 | % |  | 1.98 | % |  | 1.89 | % |  | 1.99 | % |  | 1.93 | %
Tax-exempt investment securities (2) |  | 2.30 | % |  | 2.28 | % |  | 2.26 | % |  | 2.25 | % |  | 2.25 | %
Other interest-earning assets |  | 2.15 | % |  | 2.08 | % |  | 2.13 | % |  | 2.01 | % |  | 1.87 | %
Total interest-earning assets (1) |  | 3.38 | % |  | 3.31 | % |  | 3.40 | % |  | 3.45 | % |  | 3.43 | %
Average cost of interest-bearing liabilities: |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |
Interest-bearing demand |  | 0.31 | % |  | 0.22 | % |  | 0.22 | % |  | 0.23 | % |  | 0.27 | %
Savings |  | 0.11 | % |  | 0.10 | % |  | 0.11 | % |  | 0.12 | % |  | 0.15 | %
Certificates of deposit |  | 0.46 | % |  | 0.52 | % |  | 0.53 | % |  | 0.57 | % |  | 0.71 | %
Total interest-bearing deposits |  | 0.32 | % |  | 0.29 | % |  | 0.30 | % |  | 0.33 | % |  | 0.41 | %
Borrowings: |  |  |  |  |  |  |  |  |  |
Federal Home Loan Bank advances |  | 1.96 | % |  | 2.08 | % |  | 2.14 | % |  | 2.13 | % |  | 2.07 | %
Other borrowings |  | 0.77 | % |  | 0.17 | % |  | 0.09 | % |  | 0.10 | % |  | 0.07 | %
Total borrowings |  | 1.72 | % |  | 1.93 | % |  | 2.06 | % |  | 2.05 | % |  | 2.05 | %
Total interest-bearing liabilities |  | 0.54 | % |  | 0.49 | % |  | 0.53 | % |  | 0.55 | % |  | 0.61 | %
Interest rate spread (1) (3) |  | 2.84 | % |  | 2.82 | % |  | 2.87 | % |  | 2.90 | % |  | 2.82 | %
Net interest margin (1) (4) |  | 2.92 | % |  | 2.89 | % |  | 2.96 | % |  | 2.99 | % |  | 2.92 | %
Non-interest income to average assets (annualized) (1) |  | 0.15 | % |  | 0.18 | % |  | 0.23 | % |  | 0.21 | % |  | 0.19 | %
Non-interest expense to average assets (annualized) |  | 1.79 | % |  | 1.70 | % |  | 1.65 | % |  | 1.76 | % |  | 1.75 | %
Efficiency ratio (5) |  | 62.93 | % |  | 60.14 | % |  | 56.17 | % |  | 59.57 | % |  | 60.86 | %
Return on average assets (annualized) |  | 0.61 | % |  | 0.98 | % |  | 1.05 | % |  | 1.09 | % |  | 1.01 | %
Return on average equity (annualized) |  | 4.92 | % |  | 7.24 | % |  | 7.46 | % |  | 7.66 | % |  | 7.01 | %
Return on average tangible equity (annualized) (6) |  | 6.40 | % |  | 9.27 | % |  | 9.49 | % |  | 9.67 | % |  | 8.81 | %

(1)
Effective July 1, 2021, loan prepayment penalty income is recorded as a component of interest income on loans. Previously, loan prepayment penalty income was recorded within non-interest income. Periods prior to the quarter ended September 30, 2021 have been adjusted to reflect this change. Loan prepayment penalty income for the quarter ended June 30, 2021 was $902,000.
(2)
The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(3)
Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(4)
Net interest income divided by average interest-earning assets.
(5)
Non-interest expense divided by the sum of net interest income and non-interest income.
(6)
Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.

18

The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. 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. 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.

Kearny Financial Corp. |
Reconciliation of GAAP to Non-GAAP |
(Unaudited) |
| Three Months Ended |
(Dollars and Shares in Thousands, Except Per Share Data) | June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
Adjusted net income: |  |  |  |  |  |  |  |  |  |
Net income (GAAP) | $ | 11,370 |  | $ | 17,693 |  | $ | 18,769 |  | $ | 19,715 |  | $ | 18,483 |
Non-recurring transactions - net of tax: |  |  |  |  |  |  |  |  |  |
Early contract termination |  | 568 |  |  | - |  |  | - |  |  | - |  |  | - |
Branch consolidation expenses and impairment charges |  | - |  |  | - |  |  | 132 |  |  | 1,209 |  |  | 870 |
Net effect of sale and call of securities |  | 400 |  |  | (2 | ) |  | - |  |  | (1 | ) |  | (220 | )
Reversal of income tax valuation allowance |  | - |  |  | - |  |  | - |  |  | - |  |  | (12 | )
Net effect of sale of other assets |  | - |  |  | - |  |  | (251 | ) |  | - |  |  | (144 | )
Adjusted net income | $ | 12,338 |  | $ | 17,691 |  | $ | 18,650 |  | $ | 20,923 |  | $ | 18,977 |
Calculation of pre-tax, pre-provision net revenue: |  |  |  |  |  |  |  |  |  |
Net income (GAAP) | $ | 11,370 |  | $ | 17,693 |  | $ | 18,769 |  | $ | 19,715 |  | $ | 18,483 |
Adjustments to net income (GAAP): |  |  |  |  |  |  |  |  |  |
Provision for income taxes |  | 4,205 |  |  | 6,522 |  |  | 6,801 |  |  | 7,272 |  |  | 7,033 |
Provision for (reversal of) credit losses |  | 4,222 |  |  | (3,920 | ) |  | (2,420 | ) |  | (5,400 | ) |  | (4,941 | )
Pre-tax, pre-provision net revenue (non-GAAP) | $ | 19,797 |  | $ | 20,295 |  | $ | 23,150 |  | $ | 21,587 |  | $ | 20,575 |
Adjusted earnings per share: |  |  |  |  |  |  |  |  |  |
Weighted average common shares - basic |  | 67,240 |  |  | 69,790 |  |  | 72,011 |  |  | 74,537 |  |  | 77,658 |
Weighted average common shares - diluted |  | 67,276 |  |  | 69,817 |  |  | 72,037 |  |  | 74,556 |  |  | 77,680 |
Earnings per share - basic (GAAP) | $ | 0.17 |  | $ | 0.25 |  | $ | 0.26 |  | $ | 0.26 |  | $ | 0.24 |
Earnings per share - diluted (GAAP) | $ | 0.17 |  | $ | 0.25 |  | $ | 0.26 |  | $ | 0.26 |  | $ | 0.24 |
Adjusted earnings per share - basic (non-GAAP) | $ | 0.18 |  | $ | 0.25 |  | $ | 0.26 |  | $ | 0.28 |  | $ | 0.24 |
Adjusted earnings per share - diluted (non-GAAP) | $ | 0.18 |  | $ | 0.25 |  | $ | 0.26 |  | $ | 0.28 |  | $ | 0.24 |
Adjusted return on average assets: |  |  |  |  |  |  |  |  |  |
Total average assets | $ | 7,494,751 |  | $ | 7,207,950 |  | $ | 7,180,241 |  | $ | 7,247,228 |  | $ | 7,328,839 |
Return on average assets (GAAP) |  | 0.61 | % |  | 0.98 | % |  | 1.05 | % |  | 1.09 | % |  | 1.01 | %
Adjusted return on average assets (non-GAAP) |  | 0.66 | % |  | 0.98 | % |  | 1.04 | % |  | 1.15 | % |  | 1.04 | %
Adjusted return on average equity: |  |  |  |  |  |  |  |  |  |
Total average equity | $ | 924,133 |  | $ | 977,489 |  | $ | 1,005,762 |  | $ | 1,030,008 |  | $ | 1,054,198 |
Return on average equity (GAAP) |  | 4.92 | % |  | 7.24 | % |  | 7.46 | % |  | 7.66 | % |  | 7.01 | %
Adjusted return on average equity (non-GAAP) |  | 5.34 | % |  | 7.24 | % |  | 7.42 | % |  | 8.13 | % |  | 7.20 | %

19

Kearny Financial Corp. |
Reconciliation of GAAP to Non-GAAP |
(Unaudited) |
| Three Months Ended |
(Dollars and Shares in Thousands, Except Per Share Data) | June 30, 2022 |  | March 31, 2022 |  | December 31, 2021 |  | September 30, 2021 |  | June 30, 2021 |
Adjusted return on average tangible equity: |  |  |  |  |  |  |  |  |  |
Total average equity | $ | 924,133 |  | $ | 977,489 |  | $ | 1,005,762 |  | $ | 1,030,008 |  | $ | 1,054,198 |
Less: average goodwill |  | (210,895 | ) |  | (210,895 | ) |  | (210,895 | ) |  | (210,895 | ) |  | (210,895 | )
Less: average other intangible assets |  | (3,116 | ) |  | (3,282 | ) |  | (3,462 | ) |  | (3,641 | ) |  | (3,825 | )
Total average tangible equity | $ | 710,122 |  | $ | 763,312 |  | $ | 791,405 |  | $ | 815,472 |  | $ | 839,478 |
Return on average tangible equity (non-GAAP) |  | 6.40 | % |  | 9.27 | % |  | 9.49 | % |  | 9.67 | % |  | 8.81 | %
Adjusted return on average tangible equity (non-GAAP) |  | 6.95 | % |  | 9.27 | % |  | 9.43 | % |  | 10.26 | % |  | 9.04 | %
Adjusted non-interest expense ratio: |  |  |  |  |  |  |  |  |  |
Non-interest expense (GAAP) | $ | 33,612 |  | $ | 30,623 |  | $ | 29,670 |  | $ | 31,803 |  | $ | 31,986 |
Non-recurring transactions: |  |  |  |  |  |  |  |  |  |
Early contract termination |  | (800 | ) |  | - |  |  | - |  |  | - |  |  | - |
Branch consolidation expenses and impairment charges |  | - |  |  | - |  |  | (187 | ) |  | (1,711 | ) |  | (1,239 | )
Non-interest expense (non-GAAP) | $ | 32,812 |  | $ | 30,623 |  | $ | 29,483 |  | $ | 30,092 |  | $ | 30,747 |
Non-interest expense ratio (GAAP) |  | 1.79 | % |  | 1.70 | % |  | 1.65 | % |  | 1.76 | % |  | 1.75 | %
Adjusted non-interest expense ratio (non-GAAP) |  | 1.75 | % |  | 1.70 | % |  | 1.64 | % |  | 1.66 | % |  | 1.68 | %
Adjusted efficiency ratio: |  |  |  |  |  |  |  |  |  |
Non-interest expense (non-GAAP) | $ | 32,812 |  | $ | 30,623 |  | $ | 29,483 |  | $ | 30,092 |  | $ | 30,747 |
Net interest income (GAAP) | $ | 50,599 |  | $ | 47,727 |  | $ | 48,687 |  | $ | 49,590 |  | $ | 49,065 |
Total non-interest income (GAAP) |  | 2,810 |  |  | 3,191 |  |  | 4,133 |  |  | 3,800 |  |  | 3,496 |
Non-recurring transactions: |  |  |  |  |  |  |  |  |  |
Net effect of sale and call of securities |  | 563 |  |  | (3 | ) |  | - |  |  | (1 | ) |  | (313 | )
Net effect of sale of other assets |  | - |  |  | - |  |  | (356 | ) |  | - |  |  | (205 | )
Total revenue (non-GAAP) | $ | 53,972 |  | $ | 50,915 |  | $ | 52,464 |  | $ | 53,389 |  | $ | 52,043 |
Efficiency ratio (GAAP) |  | 62.93 | % |  | 60.14 | % |  | 56.17 | % |  | 59.57 | % |  | 60.86 | %
Adjusted efficiency ratio (non-GAAP) |  | 60.79 | % |  | 60.15 | % |  | 56.20 | % |  | 56.36 | % |  | 59.08 | %

20

Kearny Financial Corp. |
Reconciliation of GAAP to Non-GAAP |
(Unaudited) |
| Year Ended |
(Dollars and Shares in Thousands, | June 30, |  | June 30, |
Except Per Share Data) | 2022 |  | 2021 |
Adjusted net income: |  |  |  |
Net income (GAAP) | $ | 67,547 |  | $ | 63,233 |
Non-recurring transactions - net of tax: |  |  |  |
Early contract termination |  | 568 |  |  | - |
Bargain purchase gain |  | - |  |  | (3,053 | )
Provision for credit losses on non-PCD loans |  | - |  |  | 3,563 |
Merger-related expenses |  | - |  |  | 3,123 |
Branch consolidation expenses and impairment charges |  | 1,341 |  |  | 1,377 |
Net effect of sale and call of securities |  | 397 |  |  | (804 | )
Debt extinguishment expenses |  | - |  |  | 558 |
Reversal of income tax valuation allowance |  | - |  |  | (535 | )
Net effect of sale of other assets |  | (251 | ) |  | (731 | )
Adjusted net income | $ | 69,602 |  | $ | 66,731 |
Calculation of pre-tax, pre-provision income: |  |  |  |
Net income (GAAP) | $ | 67,547 |  | $ | 63,233 |
Adjustments to net income (GAAP): |  |  |  |
Provision for income taxes |  | 24,800 |  |  | 21,263 |
Reversal of provision for credit losses |  | (7,518 | ) |  | (1,121 | )
Pre-tax, pre-provision income | $ | 84,829 |  | $ | 83,375 |
Adjusted earnings per share: |  |  |  |
Weighted average common shares - basic |  | 70,911 |  |  | 82,387 |
Weighted average common shares - diluted |  | 70,933 |  |  | 82,391 |
Earnings per share - basic (GAAP) | $ | 0.95 |  | $ | 0.77 |
Earnings per share - diluted (GAAP) | $ | 0.95 |  | $ | 0.77 |
Adjusted earnings per share - basic (non-GAAP) | $ | 0.98 |  | $ | 0.81 |
Adjusted earnings per share - diluted (non-GAAP) | $ | 0.98 |  | $ | 0.81 |
Adjusted return on average assets: |  |  |  |
Total average assets | $ | 7,282,370 |  | $ | 7,333,861 |
Return on average assets (GAAP) |  | 0.93 | % |  | 0.86 | %
Adjusted return on average assets (non-GAAP) |  | 0.96 | % |  | 0.91 | %
Adjusted return on average equity: |  |  |  |
Total average equity | $ | 984,551 |  | $ | 1,091,393 |
Return on average equity (GAAP) |  | 6.86 | % |  | 5.79 | %
Adjusted return on average equity (non-GAAP) |  | 7.07 | % |  | 6.11 | %
Adjusted return on average tangible equity: |  |  |  |
Total average equity | $ | 984,551 |  | $ | 1,091,393 |
Less: average goodwill |  | (210,895 | ) |  | (210,895 | )
Less: average other intangible assets |  | (3,377 | ) |  | (4,133 | )
Total average tangible equity | $ | 770,279 |  | $ | 876,365 |
Return on average tangible equity (non-GAAP) |  | 8.77 | % |  | 7.22 | %
Adjusted return on average tangible equity (non-GAAP) |  | 9.04 | % |  | 7.61 | %

21

Kearny Financial Corp. |
Reconciliation of GAAP to Non-GAAP |
(Unaudited) |
| Year Ended |
| June 30, |  | June 30, |
(Dollars in Thousands) | 2022 |  | 2021 |
Adjusted non-interest expense ratio: |  |  |  |
Non-interest expense (GAAP) | $ | 125,708 |  | $ | 125,885 |
Non-routine transactions: |  |  |  |
Early contract termination |  | (800 | ) |  | - |
Merger-related expenses |  | - |  |  | (4,349 | )
Branch consolidation expenses and impairment charges |  | (1,898 | ) |  | (1,961 | )
Debt extinguishment expenses |  | - |  |  | (796 | )
Non-interest expense (non-GAAP) | $ | 123,010 |  | $ | 118,779 |
Non-interest expense ratio (GAAP) |  | 1.73 | % |  | 1.72 | %
Adjusted non-interest expense ratio (non-GAAP) |  | 1.69 | % |  | 1.62 | %
Adjusted efficiency ratio: |  |  |  |
Non-interest expense (non-GAAP) | $ | 123,010 |  | $ | 118,779 |
Net interest income (GAAP) | $ | 196,603 |  | $ | 188,234 |
Total non-interest income (GAAP) |  | 13,934 |  |  | 21,026 |
Non-routine transactions: |  |  |  |
Net effect of sale and call of securities |  | 559 |  |  | (1,144 | )
Bargain purchase gain |  | - |  |  | (3,053 | )
Net effect of sale of other assets |  | (356 | ) |  | (1,042 | )
Total revenue (non-GAAP) | $ | 210,740 |  | $ | 204,021 |
Efficiency ratio (GAAP) |  | 59.71 | % |  | 60.16 | %
Adjusted efficiency ratio (non-GAAP) |  | 58.37 | % |  | 58.22 | %

22