Kearny Financial Corp.: Q1 FY2027 earnings call

What management said about Q1 FY2027, from the documents filed with the SEC on 22 October 2026: press release. Guidance figures: 1 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Net income rose to $10.0 million: Net income was $10.0 million, or $0.16 diluted, up from $7.2 million, or $0.11 diluted, in the prior quarter. Source
• Pre-tax, pre-provision earnings rose 14%: Pre-tax, pre-provision net revenue (non-GAAP) was $13.5 million, or $0.21 diluted, up 14.0%. Management linked it to ongoing strengthening of core earnings. Source
• Net interest margin dipped to 2.23%: Net interest margin was 2.23%, down three basis points from 2.26% in the prior quarter. Source
• Funding repricing offset gains: Management said higher asset yields were offset by repricing of the final COVID-era wholesale funding position and lower accretion and prepayment penalty income. Source
• Deposits rose 2.2% to $5.83 billion: Deposits reached $5.83 billion, up 2.2%, or 8.7% annualized, mainly from interest-bearing demand deposits. Non-interest-bearing deposits were $790.2 million. Source
• Non-interest expense fell 6.1%: Non-interest expense fell $2.1 million to $31.8 million, with salaries, advertising, equipment and other expense lower. Efficiency ratio was 70.20% against 74.09%. Source
• Non-performing assets rose $3.2 million: Non-performing assets reached $56.6 million, or 0.73% of total assets, up from $53.4 million, or 0.70%. Nonaccrual loans were $51.2 million. Source
• Book value per share fell to $11.64: Book value per share fell $0.20 to $11.64, and tangible book value per share fell $0.19 to $9.88. The release attributes this mainly to securities fair value changes. Source

“We are pleased to report continued progress this quarter, reflecting ongoing execution of our strategic plan, solid loan and deposit growth, and disciplined expense management.”

Craig L. Montanaro, President and Chief Executive Officer

Guidance

What changed from last quarter

• New: Launched a Nonprofit and Independent Education Banking team during the quarter, adding deposit-gathering capability. Source

Net income and core earnings

• Net income rose to $10.0 million: Net income was $10.0 million, or $0.16 diluted, up from $7.2 million, or $0.11 diluted, in the prior quarter. Source
• Pre-tax, pre-provision earnings rose 14%: Pre-tax, pre-provision net revenue (non-GAAP) was $13.5 million, or $0.21 diluted, up 14.0%. Management linked it to ongoing strengthening of core earnings. Source
• Effective tax rate fell to 20.7%: Income tax expense was $2.6 million, an effective rate of 20.7%, against 34.9% in the prior quarter, which included a $1.6 million valuation allowance. Source

Net interest income and margin

• Net interest margin dipped to 2.23%: Net interest margin was 2.23%, down three basis points from 2.26% in the prior quarter. Source
• Loan yields rose; interest income up: Average loan yields rose 10 basis points and interest income rose $2.2 million, or 2.7%, while net interest income fell $294,000 to $40.1 million. Source
• Funding repricing offset gains: Management said higher asset yields were offset by repricing of the final COVID-era wholesale funding position and lower accretion and prepayment penalty income. Source
• Accretion and prepayment income declined: Purchase accounting accretion was $396,000 against $537,000, and prepayment penalty income was $336,000 against $622,000. Excluding both, net interest income rose $132,000. Source
• Deposit and borrowing costs rose: Total interest-bearing deposit cost was 2.68%, up from 2.53%, and brokered certificates cost 4.03% against 2.87%. Deposit interest expense rose $1.4 million, or 4.5%; borrowing interest expense rose 10.4%. Source

“While our net interest margin reflected the impact of lower prepayment-related income and the repricing of our final remaining COVID-era wholesale funding position, our underlying margin drivers remain intact.”

Craig L. Montanaro, President and Chief Executive Officer

Loans, deposits and funding

• Loans grew 1.8% to $5.98 billion: Loans receivable reached $5.98 billion, up 1.8% from June 30, 2026, which the release states as 7.2% on an annualized basis. Source
• Multifamily down; construction up: Multifamily mortgages fell to $2.44 billion from $2.50 billion, while construction loans rose to $303.0 million from $263.2 million. Source
• Deposits rose 2.2% to $5.83 billion: Deposits reached $5.83 billion, up 2.2%, or 8.7% annualized, mainly from interest-bearing demand deposits. Non-interest-bearing deposits were $790.2 million. Source
• Average brokered deposits fell: Average brokered certificates of deposit fell $107.8 million, or 16.0%, to $565.2 million, while average FHLB advances rose $114.6 million. Source
• Borrowings down $15 million: Borrowings were $1.14 billion, down $15.0 million, reflecting lower overnight borrowings partly offset by higher FHLB advances. Source
• Secured borrowing capacity $2.21 billion: Available secured borrowing capacity with the FHLB and Discount Window was $2.21 billion, or 28.5% of total assets, against $2.35 billion and 30.6% at June 30, 2026. Source

Non-interest income and expense

• Non-interest expense fell 6.1%: Non-interest expense fell $2.1 million to $31.8 million, with salaries, advertising, equipment and other expense lower. Efficiency ratio was 70.20% against 74.09%. Source
• Salaries flat before one-time items: Salaries and benefits fell $883,000 to $19.4 million. Excluding a $745,000 prior-quarter severance charge and a $193,000 current stock-compensation decrease, they were flat at $19.6 million. Source
• Advertising and equipment costs declined: Advertising and marketing fell $365,000 to $381,000. Equipment and systems fell $126,000 to $3.7 million on lower third-party core processing fees. Other expense fell $705,000. Source
• One-time write-down reduced fee income: Non-interest income fell $110,000 to $5.2 million, mainly from a $122,000 write-down on one other real estate owned property after an updated appraisal. Source

“Our strategic transformation continues to gain momentum as we deepen commercial client relationships, expand relationship-based deposit growth, and further reposition the balance sheet toward higher-yielding commercial and construction lending”

Craig L. Montanaro, President and Chief Executive Officer

Asset quality and credit costs

• Non-performing assets rose $3.2 million: Non-performing assets reached $56.6 million, or 0.73% of total assets, up from $53.4 million, or 0.70%. Nonaccrual loans were $51.2 million. Source
• Net charge-offs were $277,000: Net charge-offs were $277,000, or 0.02% of average loans on an annualized basis, against $49,000 in the prior quarter. Source
• Provision rose with loan growth: Provision for credit losses was $830,000, against $822,000 in the prior quarter. Management said it was primarily driven by loan growth. Source
• Allowance rose to $46.0 million: Allowance for credit losses was $46.0 million, or 0.77% of total loans, up $553,000, with the provision partly offset by charge-offs. Source
• Classified loans rose to $90.9 million: Classified loans were $90.9 million, up from $88.2 million at June 30, 2026. Nonperforming loans were 0.86% of total loans. Source

Capital and book value

• Book value per share fell to $11.64: Book value per share fell $0.20 to $11.64, and tangible book value per share fell $0.19 to $9.88. The release attributes this mainly to securities fair value changes. Source
• Unrealized securities losses reached $90.6 million: After-tax unrealized losses on available-for-sale securities were $90.6 million, partly offset by $13.1 million of derivative gains. Held-to-maturity losses of $11.6 million are not in equity. Source
• Tangible equity ratio 8.37%: Tangible equity to tangible assets was 8.37%, down from 8.62%, and equity to assets was 9.72%. Regulatory capital ratios of the Company and the Bank were above requirements. Source

Dividend and share count

• Dividends declared were $7.0 million: Cash dividends declared totaled $7.0 million, up $27,000. The payout ratio was 70.0%, against 97.7% in the prior quarter. Source
• Dividend payable November 18: The $0.11 dividend is payable to holders of record as of November 4, 2026. Source
• Outstanding shares rose slightly: Outstanding shares were 64.93 million, up 191,000 from June 30, 2026. Diluted weighted average shares were 63.56 million, up 160,000. Source

Strategy and commercial build-out

• Strategic transformation continues: Management said the transformation continues through deeper commercial client relationships, relationship-based deposit growth, and a balance sheet repositioned toward commercial and construction lending. Source
• Nonprofit and education deposit team: Management said the launch expands deposit-gathering capability, adding a dedicated team for mission-driven and education clients. Source
• Team led by experienced professional: The release says the team is led by a seasoned industry professional and further strengthens the Bank's commercial banking capabilities. Source

Coming up, as management said on 22 October 2026

• Further margin expansion expected: Management expects ongoing loan repricing and balance sheet remixing to support further margin expansion in the quarters ahead. Source

Figures management reported

Risks management discussed

• Financial: Management noted that lower accretion and prepayment penalty income offset the benefit of higher asset yields this quarter. Source
• External: Market interest rate movements lowered the fair value of available-for-sale securities, reducing book value and tangible book value per share. Source
• Financial: The provision was primarily driven by loan growth, while non-performing assets and classified loans rose in the quarter. Source

Earlier plans management reported on

• Not stated: Management said it continued the remixing, growing total loans 7.2% on an annualized basis while reducing multifamily exposure. Source
• Not stated: Management described the quarter as reflecting ongoing execution of the strategic plan. Source

Other quarters

• Q4 FY2026 earnings call
• Q3 FY2026 earnings call
• Q2 FY2026 earnings call
• Q1 FY2026 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.