FOR IMMEDIATE RELEASE
May 5, 2005
For further information contact:
Craig Montanaro
First Vice President
Kearny Financial Corp.
(973) 244-4510
KEARNY FINANCIAL CORP.
REPORTS THIRD QUARTER 2005 OPERATING RESULTS
Fairfield, New Jersey, May 5, 2005 - Kearny Financial Corp. (Nasdaq NMS: KRNY)
(the "Company"), the holding company of Kearny Federal Savings Bank, today
reported net income for the quarter ended March 31, 2005 of $3.8 million
compared with $3.7 million for the quarter ended March 31, 2004. Net income for
nine months ended March 31, 2005 was $10.8 million, an increase of 17.4%, from
$9.2 million for the nine months ended March 31, 2004.
The Company completed its initial public offering during the quarter ended March
31, 2005. A total of 21,821,250 shares, representing 30% of the outstanding
common stock, were sold to eligible subscribers, including 1,745,700 shares
issued to the Kearny Federal Savings Bank Employee Stock Ownership Plan. The
remaining 70% of the Company continues to be held by Kearny MHC, the mutual
holding company parent of the Company. Net proceeds of the offering were $214.6
million. Shares of the Company began trading on the Nasdaq National Market under
the symbol "KRNY" on February 24, 2005.
John N. Hopkins, President and CEO of the Company, commented "After over 120
years of serving the community as a mutual institution, we were excited to be
able to offer our eligible depositors the opportunity to subscribe for stock and
invest in Kearny. We look forward to enhancing the value of our new
shareholders' investment, and we would like to thank our depositors for their
overwhelming support of our initial public offering. "
Kearny Financial Corp. is the holding company for Kearny Federal Savings Bank,
which operates from its administrative headquarters building in Fairfield, New
Jersey, and twenty-five branch offices located in Bergen, Hudson, Passaic,
Morris, Middlesex, Essex, Union and Ocean Counties, New Jersey. At March 31,
2005, Kearny Financial Corp. had total assets, deposits and stockholders' equity
of $2.05 billion, $1.45 billion and $501.5 million, respectively.
The following is a financial overview of the quarter:
Net Interest Income
- -------------------
Net interest income for the quarter ended March 31, 2005 was $13.3 million. This
compares to $12.2 million for the same quarter in 2004 and $12.7 million
reported for the quarter ended December 31, 2004. The net interest margin
percentage of 2.69% for this quarter declined from 2.89% for the quarter ended
December 31, 2004. The net interest spread of 2.50% for this quarter compares to
2.66% for the quarter ended December 31, 2004. During this quarter, net interest
income was helped by the substantial increase in cash during the initial public
offering subscription period - the average balance of interest bearing deposits
in other banks was $244.0 million for this quarter as compared to $20.5 million
for the quarter ended December 31, 2004. The average yield on such deposits was
helped by rising short-term interest rates.
Noninterest Income
- ------------------
Total noninterest income increased $82,000, or 20%, to $492,000 for the quarter
ended March 31, 2005, compared to $410,000 for the quarter ended December 31,
2004. The increase was primarily the result of increased fee income from the
Bank's retail branch network.
Noninterest Expense
- -------------------
Noninterest expense for the quarter ended March 31, 2005 was $8.8 million, up
$44,000 as compared to the quarter ended December 31, 2004. The increase is
attributable mainly to higher office occupancy and equipment expense, offset by
lower salaries and employee benefits, advertising and miscellaneous expenses.
Loans and Asset Quality
- -----------------------
Loans receivable, net of deferred fees and the allowance for loan losses,
increased $6.7 million, or 1.3%, to $516.1 million at March 31, 2005, from
$509.4 million at December 31, 2004. The increase came primarily in one-to-four
family mortgage loans, particularly first mortgages and home equity loans, and
in non-residential mortgage loans, offset by decreases in home equity lines of
credit, commercial business loans and construction loans.
The Company made a $110,000 reduction in the provision for loan losses during
the quarter ended March 31, 2005. A $213,000 recovery was made during the
quarter in connection with a loan previously charged off. Total loans increased
to $520.7 million at March 31, 2005 from $513.8 million at December 31, 2004.
Non-performing loans were $2.4 million, or 0.47%, of total loans at March 31,
2005, as compared to $1.7 million, or 0.33%, of total loans at December 31,
2004. The allowance for loan losses as a percentage of gross loans outstanding
was 1.04% at March 31, 2005 and 1.03% at December 31, 2004, reflecting balances
of $5.4 million and $5.3 million, respectively.
Securities
- ----------
Investment securities held to maturity increased $9.6 million, or 2.2%, to
$450.3 million at March 31, 2005, from $440.7 million at December 31, 2004. The
increase came primarily in the tax-exempt category, emphasizing the purchase of
bank-qualified municipal bonds and resulted from the deployment of cash and cash
equivalents.
Mortgage-backed securities increased by $21.6 million, or 3.1%, to $727.6
million at March 31, 2005, from $706.0 million at December 31, 2004. The
increase resulted from the deployment of cash and cash equivalents.
Deposits
- --------
Deposits decreased $41.7 million, or 2.8%, to $1.45 billion at March 31, 2005,
from $1.49 billion at December 31, 2004. Initial stock offering subscriptions
funded from deposit withdrawals were $40.4 million. Thus, excluding the effect
of withdrawals to fund purchases of the Company's common stock, deposits
remained nearly flat for the quarter after decreases of $18.1 million and $26.7
million in the quarters ended December 31, 2004 and September 30, 2004,
respectively.
FHLB Advances
- -------------
Federal Home Loan Bank (the "FHLB") advances decreased slightly to $81.8 million
at March 31, 2005, from $82.0 million at December 31, 2004 primarily resulting
from maturing advances that were not renewed.
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Capital Management
- ------------------
During the quarter ended March 31, 2005, the Company completed its initial
public offering, selling 21,821,250 shares, representing 30% of the outstanding
common stock, to eligible subscribers, including 1,745,700 shares issued to the
Kearny Federal Savings Bank Employee Stock Ownership Plan. The remaining 70% of
the Company continues to be held by Kearny MHC, the mutual holding company
parent of the Company. Net proceeds of the offering were $214.6 million.
The ratio of tangible equity to assets was 20.93% at March 31, 2005. The Tier 1
capital ratio was 59.42%, which is far in excess of the 6.00% level required to
be considered "well-capitalized" under regulatory definitions.
Statements contained in this news release, which 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 Kearny Financial
Corp. with the Securities and Exchange Commission from time to time. The
Corporation does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by or on behalf of the
Corporation.
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KEARNY FINANCIAL CORP.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)
March 31, December 31,
2005 2004
---- ----
Summary of Operations:
Assets................................................. $2,045,995 $1,888,176
Loans receivable, net.................................. 516,109 509,364
Mortgage-backed securities held to maturity............ 727,628 705,967
Securities available for sale.......................... 40,680 43,295
Investment securities held to maturity................. 450,270 440,693
Cash and cash equivalents.............................. 164,592 38,911
Goodwill............................................... 82,263 82,263
Deposits............................................... 1,451,024 1,492,656
FHLB borrowings........................................ 81,826 81,964
Total stockholders' equity............................. 501,466 302,236
Three Months Ended
----------------------------------------------
March 31, December 31, March 31,
2005 2004 2004
---- ---- ----
Summary of Operations:
Interest income........................................ $ 21,078 $ 19,832 $ 19,780
Interest expense....................................... 7,764 7,174 7,597
-------- -------- --------
Net interest income.................................... 13,314 12,658 12,183
Provision for loan losses.............................. (110) (34) -
-------- -------- --------
Net interest income after provision for loan losses.... 13,424 12,692 12,183
Noninterest income..................................... 492 410 403
Noninterest expense.................................... 8,811 8,767 7,310
-------- -------- --------
Income before income taxes............................. 5,105 4,335 5,276
Income taxes........................................... 1,279 1,143 1,583
-------- -------- --------
Net income............................................. $ 3,826 $ 3,192 $ 3,693
======= ======== =======
Nine Months Ended
--------------------------
March 31, March 31,
2005 2004
---- ----
Summary of Operations:
Interest income........................................ $ 60,817 $ 59,100
Interest expense....................................... 22,041 24,953
-------- --------
Net interest income.................................... 38,776 34,147
Provision for loan losses.............................. 7 -
-------- --------
Net interest income after provision for loan losses.... 38,769 34,147
Noninterest income..................................... 1,396 1,196
Noninterest expense.................................... 25,367 22,146
-------- --------
Income before income taxes............................. 14,798 13,197
Income taxes........................................... 3,984 3,959
-------- --------
Net income............................................. $ 10,814 $ 9,238
======== ========
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KEARNY FINANCIAL CORP.
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------------------------------------
2005 2004 2005 2004
---- ---- ---- ----
Average Balances:
Loans.................................................. $ 510,947 $ 500,600 $ 511,220 $ 498,174
Mortgage-backed securities held to maturity............ 724,620 738,516 732,843 698,856
Investment and available for sale securities........... 488,273 439,580 486,120 410,561
Other interest-earnings assets......................... 255,429 98,471 106,213 191,041
Total interest-earnings assets..................... 1,979,269 1,777,167 1,836,396 1,798,632
Non-interest-earnings assets........................... 160,185 148,126 150,833 124,048
Total assets...................................... 2,139,454 1,925,293 1,987,229 1,922,680
Deposits............................................... 1,673,586 1,510,233 1,531,056 1,529,058
FHLB advances.......................................... 88,529 70,681 85,854 73,359
Total interest-bearing liabilities assets.......... 1,762,115 1,580,914 1,616,910 1,602,417
Non-interest-bearing liabilities....................... 377,339 344,379 370,319 320,263
Total liabilities................................. 2,193,454 1,925,293 1,987,229 1,922,680
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------------------------------------
2005 2004 2005 2004
---- ---- ---- ----
Spread and Margin Analysis:
Average yield on:
Loans.............................................. 5.63% 5.76% 5.64% 5.92%
Mortgage-backed securities held to maturity........ 4.60 4.72 4.60 4.80
Investment and available for sale securities....... 3.38 3.47 3.35 3.46
Other interest-earnings assets..................... 2.23 0.16 2.10 0.83
Average cost of:
Deposits........................................... 1.61 1.75 1.66 1.91
FHLB advances...................................... 4.63 5.52 4.67 5.61
Interest rate spread................................... 2.50 2.53 2.60 2.30
Net interest margin.................................... 2.69 2.74 2.82 2.53
Average interest-earning assets to average
interest-bearing liabilities......................... 1.12x 1.12x 1.14x 1.12x
March 31, December 31,
2005 2004
---- ----
Asset Quality Ratios:
Nonperforming loans to total loans, net................ 0.47% 0.33%
Nonperforming assets to total assets................... 0.13 0.10
Net charge-offs to average loans outstanding........... 0.00 0.00
Allowance for loan losses to total loans............... 1.04 1.03
Allowance for loan losses to non-performing loans...... 219.61 315.11
Capital Ratios:
Average equity to average assets (average equity
divided by average total assets)..................... 15.06% 15.50%
Equity to assets at period end......................... 24.51 16.01
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