Kearny Financial Corp. Reports Second Quarter 2020 Operating Results

Company Release - 1/30/2020 4:15 PM ET

FAIRFIELD, N.J., Jan. 30, 2020 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended December 31, 2019 of $10.7 million, or $0.13 per basic and diluted share.  The results represent a decrease of $718,000 compared to net income of $11.4 million, or $0.13 per basic and diluted share, for the quarter ended September 30, 2019.

The decrease in net income partially reflected the Company’s recognition of certain merger-related expenses totaling $219,000 related to its proposed acquisition of MSB Financial Corp. (NASDAQ: MSBF) (“MSBF”), the holding company for Millington Bank (“Millington”). The Company previously announced on December 18, 2019, that it had entered into a definitive agreement to acquire MSBF in a cash and stock transaction. Net income for the quarter ended December 31, 2019 was also impacted by a non-recurring increase of $153,000 in non-interest expense and a non-recurring decrease of $236,000 in non-interest income which were recognized in conjunction with the Company’s previously completed branch consolidations.  Adjusting for the impact of such charges, net of tax benefit, the Company’s adjusted net income for the quarter ended December 31, 2019 was $11.1 million or $0.13 per basic and diluted share.  This compares to adjusted net income of $11.8 million or $0.14 per basic and diluted share for the quarter ended September 30, 2019.

Craig L. Montanaro, President and Chief Executive Officer, commented, “I am very pleased to report another quarter of solid core earnings coupled with exceptionally strong core deposit growth.  During the quarter, we grew core deposits by $147.3 million while facilitating the outflow of $120.5 million in wholesale funding.  Our recently announced acquisition of MSB Financial Corp. will accelerate our funding realignment strategy as a majority of Millington’s deposits are comprised of core transaction accounts, while the Morris and Somerset county markets they serve offer tremendous opportunity for further growth in both deposits and loans.  On the technology front, we continue to seek out, and partner with, best of breed technology providers as a means of strengthening our digital banking presence.  Toward that end, we have committed to invest a total of $1.25 million in two separate FinTech firms whose product and service offerings will allow us to continue to provide our clients with the very best in digital banking solutions.  As we move ahead our digital strategy focuses on the evaluation and implementation of technology solutions that leverage artificial intelligence, machine learning, robotic process automation and open API architecture.”

Balance Sheet Highlights

  • Deposits decreased by $8.4 million to $4.19 billion at December 31, 2019 from $4.20 billion at September 30, 2019.  This net decrease in deposits was attributable to a decrease of $115.9 million in wholesale deposits that was largely offset by an increase of $107.5 million in retail deposits.  The reallocation of deposits for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits.

  • Loans receivable decreased by $112.0 million to $4.49 billion, or 68.0% of total assets, at December 31, 2019 from $4.60 billion, or 69.3% of total assets, at September 30, 2019.  The decrease in loans receivable was attributable to an accelerated level of loan prepayment activity which outpaced loan origination volume.

  • Borrowings decreased by $6.1 million to $1.28 billion, or 19.3% of total assets, at December 31, 2019.  As noted above, the decrease in borrowings for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits.

  • Investment securities increased by $168.7 million to $1.44 billion, or 21.8% of total assets, at December 31, 2019 from $1.27 billion, or 19.1% of total assets, at September 30, 2019.

Earnings Highlights

Net Interest Income, Spread and Margin

  • Net interest income decreased by $2.1 million to $34.6 million for the quarter ended December 31, 2019, from $36.7 million for the quarter ended September 30, 2019.  The decrease in net interest income was the result of a decrease of $2.7 in interest income partially offset by a decrease of $637,000 in interest expense.

  • Net interest spread decreased 11 basis points to 2.04% for the quarter ended December 31, 2019 from 2.15% for the quarter ended September 30, 2019.  The decrease in spread primarily reflected a 16 basis point decrease in the yield on interest-earning assets that was partially offset by a five basis point decrease in the cost of interest-bearing liabilities.

  • The factors that contributed to the quarterly change in net interest spread also contributed to a 13 basis point decrease in net interest margin to 2.29% for the quarter ended December 31, 2019 from 2.42% for the quarter ended September 30, 2019.

Non-Interest Income

  • Fees and service charges increased by $677,000 to $2.1 million for the quarter ended December 31, 2019 compared to $1.5 million for the quarter ended September 30, 2019.  This increase was largely attributable to loan pre-payment penalty income associated with the accelerated loan pre-payment activity noted above.
  • Aggregate loan sale gains once again attained record levels increasing by $63,000 to $668,000 for the quarter ended December 31, 2019 from $605,000 for the quarter ended September 30, 2019.  The increase in loan sale gains largely reflected an increase in the volume of residential mortgage loans sold during the period.

  • Miscellaneous non-interest income decreased by $116,000, to a net loss of $111,000 for the quarter ended December 31, 2019 from $5,000 for the quarter ended September 30, 2019.  This decrease was attributable to a non-recurring loss on asset disposals associated with the branch consolidations noted above.

Non-Interest Expense

  • Non-interest expense increased by $183,000 to $26.4 million for the quarter ended December 31, 2019 compared to $26.2 million for the quarter ended September 30, 2019.  The net increase was largely attributable to increases in advertising and marketing, net occupancy expense of premises, miscellaneous expense and non-recurring merger-related expenses.  Partially offsetting these increases were decreases in salaries and employee benefits and equipment and systems expense.

    For the quarters ended December 31, 2019 and September 30, 2019, the Company recorded no expense associated with FDIC insurance premiums as a result of the FDIC’s Deposit Insurance Fund Reserve Ratio having reached a pre-established threshold defined by federal regulation.  Upon reaching this threshold qualifying banks with total consolidated assets of less than $10 billion are awarded assessment credits to be utilized towards their FDIC insurance premiums.
  • The Company’s non-interest expense ratio totaled 1.60% for the quarter ended December 31, 2019 compared to 1.58% for the prior quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s non-interest expense ratio would have been 1.57% for the quarter ended December 31, 2019.

  • The Company’s efficiency ratio was 67.5% for the quarter ended December 31, 2019 compared to 64.6% for the prior quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s efficiency ratio would have been 66.1% for the quarter ended December 31, 2019.

Income Taxes

  • Income tax expense totaled $3.5 million for the quarter ended December 31, 2019 compared to $3.8 million for the quarter ended September 30, 2019 resulting in effective tax rates of 25.0% and 25.1%, respectively.  The decrease in income tax expense largely reflected a lower level of pre-tax net income as compared to the prior period.

Performance Ratios

  • Return on average assets for the quarter ended December 31, 2019 decreased to 0.64% from 0.68% for the quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average assets would have been 0.67% for the quarter ended December 31, 2019.

  • Return on average equity decreased to 3.86% for the quarter ended December 31, 2019 from 4.08% for the quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average equity would have been 4.02% for the quarter ended December 31, 2019.

  • Return on average tangible equity decreased to 4.80% for the quarter ended December 31, 2019 from 5.06% for the quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average tangible equity would have been 5.00% for the quarter ended December 31, 2019.

Asset Quality Highlights

  • Asset quality remained strong throughout the quarter ended December 31, 2019.  The outstanding balance of non-performing loans totaled $22.0 million, or 0.49% of total loans, at December 31, 2019 as compared to $21.8 million, or 0.47% of total loans, at September 30, 2019.

  • The allowance for loan losses (“ALLL”) decreased to $30.9 million at December 31, 2019 from $32.4 million at September 30, 2019, resulting in an ALLL to total loans ratio of 0.68% and 0.70%, respectively. The balance of the allowance for loan losses reflects the impact of purchase accounting which generally precludes acquired loan balances from being considered in the balance of the allowance for loan losses at the time of their acquisition and thereafter.
  • Net charge offs totaled $30,000 for the quarter ended December 31, 2019, reflecting an annualized net charge off rate of 0.00% on the average balance of total loans for the period.  By comparison, net charge offs totaled $60,000 for the quarter ended September 30, 2019, reflecting an annualized net charge off rate of 0.01%.

  • The Company recorded a loan loss provision reversal of $1.5 million for the quarter ended December 31, 2019 compared to a loan loss provision reversal of $782,000 for the quarter ended September 30, 2019.  The increase in provision reversal was largely attributable to a comparatively larger decrease in the balance of the loan portfolio that was collectively evaluated for impairment during the quarter ended December 31, 2019 compared to the quarter ended September 30, 2019.

Capital Highlights

  • During the quarter ended December 31, 2019, the Company repurchased 1,574,500 shares of its common stock at a total cost of $21.7 million and an average cost of $13.76 per share.  Through December 31, 2019, the Company repurchased a total of 6,982,294 shares, or 75.7% of the shares authorized for repurchase under the current repurchase program, at a total cost of $93.6 million and at an average cost of $13.40 per share.

  • The Company increased its regular quarterly cash dividend by $0.01 to $0.07 per share during the quarter ended December 31, 2019.  The Company continually evaluates its dividend policies in relation to its overall capital management and shareholder value objectives.

  • Book value per share increased by $0.05 to $12.85 at December 31, 2019, from $12.80 at September 30, 2019.  Tangible book value per share increased by $0.01 to $10.32 at December 31, 2019, from $10.31 at September 30, 2019.

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

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


Linked-Quarter Comparative Financial Analysis 
             
Summary Balance SheetAt    Variance 
(Dollars and Shares in Thousands,December 31, September 30, Variance or Change 
Except Per Share Data, Unaudited)2019 2019 or Change Pct. 
Assets            
Cash and cash equivalents$41,796 $129,305 $(87,509) -67.7%
Securities available for sale 1,402,206  1,231,691  170,515  13.8%
Securities held to maturity 36,073  37,888  (1,815) -4.8%
Loans held-for-sale 5,952  10,495  (4,543) -43.3%
Loans receivable, including yield adjustments 4,492,697  4,604,738  (112,041) -2.4%
Less allowance for loan losses (30,937) (32,432) 1,495  -4.6%
Net loans receivable 4,461,760  4,572,306  (110,546) -2.4%
Premises and equipment 56,542  56,599  (57) -0.1%
Federal Home Loan Bank stock 62,838  63,739  (901) -1.4%
Accrued interest receivable 18,261  19,393  (1,132) -5.8%
Goodwill 210,895  210,895  -  0.0%
Core deposit intangible 4,545  4,852  (307) -6.3%
Bank owned life insurance 259,312  257,735  1,577  0.6%
Deferred income taxes, net 20,438  21,742  (1,304) -6.0%
Other real estate owned 178  -  178  0.0%
Other assets 29,605  24,366  5,239  21.5%
Total assets$6,610,401 $6,641,006 $(30,605) -0.5%
             
Liabilities            
Deposits$4,188,822 $4,197,250 $(8,428) -0.2%
Borrowings 1,275,049  1,281,118  (6,069) -0.5%
Advance payments by borrowers for taxes 16,585  16,102  483  3.0%
Other liabilities 35,375  35,747  (372) -1.0%
Total liabilities 5,515,831  5,530,217  (14,386) -0.3%
             
Stockholders' Equity            
Common stock 851  868  (17) -2.0%
Paid-in capital 737,539  758,385  (20,846) -2.7%
Retained earnings 377,896  373,004  4,892  1.3%
Unearned ESOP shares (29,671) (30,158) 487  -1.6%
Accumulated other comprehensive income, net 7,955  8,690  (735) -8.5%
Total stockholders' equity 1,094,570  1,110,789  (16,219) -1.5%
Total liabilities and stockholders' equity$6,610,401 $6,641,006 $(30,605) -0.5%
             
Consolidated capital ratios            
Equity to assets 16.56% 16.73% -0.17%   
Tangible equity to tangible assets 13.75% 13.93% -0.18%   
             
Share data            
Outstanding shares 85,150  86,786  (1,636) -1.9%
Book value per share$12.85 $12.80 $0.05  0.4%
Tangible book value per share (1)$10.32 $10.31 $0.01  0.1%

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


Summary Income StatementFor the three months ended    Variance 
(Dollars and Shares in Thousands,December 31, September 30, Variance or Change 
Except Per Share Data, Unaudited)2019 2019 or Change Pct. 
Interest income            
Loans$45,608 $48,600 $(2,992) -6.2%
Taxable investment securities 9,698  9,328  370  4.0%
Tax-exempt investment securities 666  693  (27) -3.9%
Other interest-earning assets 1,210  1,278  (68) -5.3%
Total Interest Income 57,182  59,899  (2,717) -4.5%
             
Interest expense            
Deposits 15,590  16,055  (465) -2.9%
Borrowings 6,985  7,157  (172) -2.4%
Total interest expense 22,575  23,212  (637) -2.7%
Net interest income 34,607  36,687  (2,080) -5.7%
Reversal of loan losses (1,465) (782) (683) 87.3%
Net interest income after reversal of
 loan losses
 36,072  37,469  (1,397) -3.7%
             
Non-interest income            
Fees and service charges 2,145  1,468  677  46.1%
Gain (loss) on sale and call of securities 11  (14) 25  -178.6%
Gain on sale of loans 668  605  63  10.4%
Loss on sale and write down of other real estate owned (28) -  (28) -100.0%
Income from bank owned life insurance 1,576  1,580  (4) -0.3%
Electronic banking fees and charges 293  318  (25) -7.9%
Miscellaneous (111) 5  (116) -2320.0%
Total non-interest income 4,554  3,962  592  14.9%
             
Non-interest expense            
Salaries and employee benefits 15,174  15,777  (603) -3.8%
Net occupancy expense of premises 3,082  2,969  113  3.8%
Equipment and systems 3,046  3,089  (43) -1.4%
Advertising and marketing 890  535  355  66.4%
Directors' compensation 769  770  (1) -0.1%
Merger-related expenses 219  -  219  0.0%
Miscellaneous 3,247  3,104  143  4.6%
Total non-interest expense 26,427  26,244  183  0.7%
Income before income taxes 14,199  15,187  (988) -6.5%
Income taxes 3,547  3,817  (270) -7.1%
Net income$10,652 $11,370 $(718) -6.3%
             
Net income per common share (EPS)            
Basic$0.13 $0.13 $-    
Diluted$0.13 $0.13 $-    
             
Dividends declared            
Cash dividends declared per common share$0.07 $0.06 $0.01    
Cash dividends declared$5,760 $5,045 $715    
Dividend payout ratio 54.1% 44.4% 9.7%   
             
Weighted average number of  common
 shares outstanding
            
Basic 82,831  84,756  (1,925)   
Diluted 82,876  84,793  (1,917)   


 For the three months ended    Variance 
Average Balance Sheet DataDecember 31, September 30, Variance or Change 
(Dollars in Thousands, Unaudited)2019 2019 or Change Pct. 
Assets            
Interest-earning assets:            
Loans receivable, including loans held for sale 4,547,126 $4,656,192 $(109,066) -2.3%
Taxable investment securities 1,244,475  1,147,698  96,777  8.4%
Tax-exempt investment securities 125,187  129,339  (4,152) -3.2%
Other interest-earning assets 117,811  125,114  (7,303) -5.8%
Total interest-earning assets 6,034,599  6,058,343  (23,744) -0.4%
Non-interest-earning assets 590,746  585,826  4,920  0.8%
  Total assets$6,625,345 $6,644,169 $(18,824) -0.3%
             
Liabilities and Stockholders' Equity            
Interest-bearing liabilities:            
Deposits:            
Interest-bearing demand$982,163 $883,843 $98,320  11.1%
Savings 813,626  799,181  14,445  1.8%
Certificates of deposit 2,063,066  2,179,333  (116,267) -5.3%
Total interest-bearing deposits 3,858,855  3,862,357  (3,502) -0.1%
Borrowings:            
Federal Home Loan Bank advances 1,255,597  1,277,145  (21,548) -1.7%
Other borrowings 34,733  10,012  24,721  246.9%
Total borrowings 1,290,330  1,287,157  3,173  0.2%
Total interest-bearing liabilities 5,149,185  5,149,514  (329) 0.0%
Non-interest-bearing liabilities:            
Non-interest-bearing deposits 320,161  320,641  (480) -0.1%
Other non-interest-bearing liabilities 53,479  60,078  (6,599) -11.0%
Total non-interest-bearing liabilities 373,640  380,719  (7,079) -1.9%
Total liabilities 5,522,825  5,530,233  (7,408) -0.1%
Stockholders' equity 1,102,520  1,113,936  (11,416) -1.0%
Total liabilities and stockholders' equity$6,625,345 $6,644,169 $(18,824) -0.3%
             
Average interest-earning assets to average
 interest-bearing liabilities
 117.20% 117.65% -0.45% -0.4%
             


  For the three months ended    
 December 31, September 30, Variance 
Performance Ratio Highlights2019 2019 or Change 
Average yield on interest-earning assets:         
Loans receivable, including loans held for sale 4.01% 4.18% -0.17%
Taxable investment securities 3.12% 3.25% -0.13%
Tax-exempt investment securities (1) 2.13% 2.14% -0.01%
Other interest-earning assets 4.11% 4.09% 0.02%
Total interest-earning assets 3.79% 3.95% -0.16%
          
Average cost of interest-bearing liabilities:         
Deposits:         
Interest-bearing demand 1.29% 1.30% -0.01%
Savings 0.81% 0.77% 0.04%
Certificates of deposit 2.09% 2.14% -0.05%
Total interest-bearing deposits 1.62% 1.66% -0.04%
Borrowings:         
Federal Home Loan Bank advances 2.19% 2.24% -0.05%
Other borrowings 1.36% 0.66% 0.70%
Total borrowings 2.17% 2.22% -0.05%
Total interest-bearing liabilities 1.75% 1.80% -0.05%
          
Interest rate spread (2) 2.04% 2.15% -0.11%
Net interest margin (3) 2.29% 2.42% -0.13%
          
Non-interest income to average assets
 (annualized)
 0.27% 0.24% 0.03%
Non-interest expense to average assets
 (annualized)
 1.60% 1.58% 0.02%
          
Efficiency ratio (4) 67.48% 64.56% 2.92%
          
Return on average assets (annualized) 0.64% 0.68% -0.04%
Return on average equity (annualized) 3.86% 4.08% -0.22%
Return on average tangible equity (annualized) (5) 4.80% 5.06% -0.26%

(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.


Five-Quarter Financial Trend Analysis 
                
Summary Balance SheetAt 
(Dollars and Shares in Thousands,December 31, September 30, June 30, March 31, December 31, 
Except Per Share Data, Unaudited)2019 2019 2019 2019 2018 
Assets               
Cash and cash equivalents$41,796 $129,305 $38,935 $54,160 $51,483 
Securities available for sale 1,402,206  1,231,691  714,263  726,920  666,602 
Securities held to maturity 36,073  37,888  576,652  592,199  598,318 
Loans held-for-sale 5,952  10,495  12,267  997  1,001 
Loans receivable, including yield adjustments 4,492,697  4,604,738  4,678,928  4,659,804  4,753,392 
Less allowance for loan losses (30,937) (32,432) (33,274) (33,105) (33,526)
Net loans receivable 4,461,760  4,572,306  4,645,654  4,626,699  4,719,866 
Premises and equipment 56,542  56,599  56,854  58,274  58,414 
Federal Home Loan Bank stock 62,838  63,739  64,190  64,288  64,514 
Accrued interest receivable 18,261  19,393  19,360  20,326  19,435 
Goodwill 210,895  210,895  210,895  210,895  210,895 
Core deposit intangible 4,545  4,852  5,160  5,470  5,743 
Bank owned life insurance 259,312  257,735  256,155  254,569  253,009 
Deferred income taxes, net 20,438  21,742  25,367  24,182  24,692 
Other real estate owned 178  -  -  209  508 
Other assets 29,605  24,366  9,077  19,563  27,960 
Total assets$6,610,401 $6,641,006 $6,634,829 $6,658,751 $6,702,440 
                
Liabilities               
Deposits 4,188,822 $4,197,250 $4,147,610 $4,137,573 $4,173,434 
Borrowings 1,275,049  1,281,118  1,321,982  1,326,216  1,310,547 
Advance payments by borrowers for taxes 16,585  16,102  16,887  17,208  17,201 
Other liabilities 35,375  35,747  21,191  19,643  17,997 
Total liabilities 5,515,831  5,530,217  5,507,670  5,500,640  5,519,179 
                
Stockholders' Equity               
Common stock 851  868  891  915  938 
Paid-in capital 737,539  758,385  787,394  817,675  848,145 
Retained earnings 377,896  373,004  366,679  363,072  356,993 
Unearned ESOP shares (29,671) (30,158) (30,644) (31,130) (31,617)
Accumulated other comprehensive income, net 7,955  8,690  2,839  7,579  8,802 
Total stockholders' equity 1,094,570  1,110,789  1,127,159  1,158,111  1,183,261 
 Total liabilities and stockholders' equity$6,610,401 $6,641,006 $6,634,829 $6,658,751 $6,702,440 
                
Consolidated capital ratios               
Equity to assets 16.56% 16.73% 16.99% 17.39% 17.65%
Tangible equity to tangible assets 13.75% 13.93% 14.19% 14.62% 14.90%
                
Share data               
Outstanding shares 85,150  86,786  89,126  91,495  93,772 
Book value per share$12.85 $12.80 $12.65 $12.66 $12.62 
Tangible book value per share (1)$10.32 $10.31 $10.22 $10.29 $10.31 

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


  At 
Supplemental Balance Sheet HighlightsDecember 31, September 30, June 30, March 31, December 31, 
(Dollars in Thousands, Unaudited)2019 2019 2019 2019 2018 
Cash and cash equivalents               
Cash and due from depository institutions$17,843 $16,106 $19,032 $15,943 $24,361 
Interest-bearing deposits in other banks 23,953  113,199  19,903  38,217  27,122 
Total cash and cash equivalents$41,796 $129,305 $38,935 $54,160 $51,483 
                
Securities available for sale               
Debt securities:               
U.S. agency securities$606 $694 $3,678 $3,737 $3,942 
Municipal and state obligations 88,057  91,050  26,951  26,731  26,205 
Asset-backed securities 177,676  181,068  179,313  180,145  180,828 
Collateralized loan obligations 198,324  198,549  208,611  207,906  184,439 
Corporate bonds 192,074  191,241  122,024  121,597  144,692 
Trust preferred securities 3,795  3,775  3,756  3,775  3,726 
Debt securities 660,532  666,377  544,333  543,891  543,832 
                
Mortgage-backed securities:               
Collateralized mortgage obligations 57,839  63,594  21,390  21,660  23,019 
Residential pass-through securities 360,900  202,858  44,303  70,513  91,918 
Commercial pass-through securities 322,935  298,862  104,237  90,856  7,833 
Mortgage-backed securities 741,674  565,314  169,930  183,029  122,770 
Total securities available for sale$1,402,206 $1,231,691 $714,263 $726,920 $666,602 
                
Securities held to maturity               
Debt securities:               
Municipal and state obligations$36,073 $37,888 $104,086 $107,375 $107,826 
Corporate bonds -  -  63,086  63,107  56,255 
Debt securities 36,073  37,888  167,172  170,482  164,081 
                
Mortgage-backed securities:               
Collateralized mortgage obligations -  -  46,381  49,368  51,540 
Residential pass-through securities -  -  166,283  174,338  182,335 
Commercial pass-through securities -  -  196,816  198,011  200,362 
Mortgage-backed securities -  -  409,480  421,717  434,237 
Total securities held to maturity$36,073 $37,888 $576,652 $592,199 $598,318 
                
   Total securities$1,438,279 $1,269,579 $1,290,915 $1,319,119 $1,264,920 


  At 
Supplemental Balance Sheet HighlightsDecember 31, September 30, June 30, March 31, December 31, 
(Dollars in Thousands, Unaudited)2019 2019 2019 2019 2018 
Loan portfolio composition:               
Residential first mortgage loans$1,331,301 $1,319,750 $1,344,044 $1,325,105 $1,334,284 
Home equity loans and lines of credit 89,916  93,304  96,165  97,788  96,001 
Residential mortgage loans 1,421,217  1,413,054  1,440,209  1,422,893  1,430,285 
Multifamily mortgage loans 1,856,591  1,922,968  1,946,391  1,956,571  1,974,409 
Nonresidential and mixed use mortgage loans 1,172,213  1,230,963  1,258,869  1,249,215  1,302,583 
Commercial mortgage loans 3,028,804  3,153,931  3,205,260  3,205,786  3,276,992 
Commercial business loans 67,887  66,889  65,763  66,476  70,059 
Construction loans 16,221  14,637  13,907  14,377  28,405 
Account loans 3,581  3,530  3,732  3,360  3,310 
Other consumer loans 1,327  1,679  2,082  2,624  3,524 
Consumer loans 4,908  5,209  5,814  5,984  6,834 
Total loans, excluding yield adjustments 4,539,037  4,653,720  4,730,953  4,715,516  4,812,575 
Unamortized yield adjustments (46,340) (48,982) (52,025) (55,712) (59,183)
Loans receivable, including yield adjustments 4,492,697  4,604,738  4,678,928  4,659,804  4,753,392 
Less allowance for loan losses (30,937) (32,432) (33,274) (33,105) (33,526)
  Net loans receivable$4,461,760 $4,572,306 $4,645,654 $4,626,699 $4,719,866 
                
Loan portfolio allocation:               
Residential first mortgage loans 29.3% 28.4% 28.4% 28.1% 27.7%
Home equity loans and lines of credit 2.0% 2.0% 2.0% 2.1% 2.0%
Residential mortgage loans 31.3% 30.4% 30.4% 30.2% 29.7%
Multifamily mortgage loans 40.9% 41.3% 41.2% 41.5% 41.0%
Nonresidential and mixed use mortgage loans 25.8% 26.5% 26.6% 26.5% 27.1%
Commercial mortgage loans 66.7% 67.8% 67.8% 68.0% 68.1%
Commercial business loans 1.5% 1.4% 1.4% 1.3% 1.4%
Construction loans 0.4% 0.3% 0.3% 0.3% 0.6%
Account loans 0.1% 0.1% 0.1% 0.1% 0.1%
Other consumer loans 0.0% 0.0% 0.0% 0.1% 0.1%
Consumer loans 0.1% 0.1% 0.1% 0.2% 0.2%
 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$19 $15 $22 $24 $32 
Nonaccrual loans 21,935  21,766  20,248  21,297  20,743 
Total nonperforming loans 21,954  21,781  20,270  21,321  20,775 
Other real estate owned 178  -  -  209  508 
Total nonperforming assets$22,132 $21,781 $20,270 $21,530 $21,283 
                
Nonperforming loans (% total loans) 0.49% 0.47% 0.43% 0.46% 0.44%
Nonperforming assets (% total assets) 0.33% 0.33% 0.31% 0.32% 0.32%
                
Allowance for loan losses (ALLL):               
ALLL to total loans 0.68% 0.70% 0.70% 0.70% 0.70%
ALLL to nonperforming loans 140.92% 148.90% 164.15% 155.27% 161.38%
Net charge offs$30 $60 $495 $242 $176 
Average net charge off rate (annualized) 0.00% 0.01% 0.04% 0.02% 0.01%


  At 
Supplemental Balance Sheet HighlightsDecember 31, September 30, June 30, March 31, December 31, 
(Dollars in Thousands, Unaudited)2019 2019 2019 2019 2018 
Funding by type:               
Deposits:               
Non-interest-bearing deposits$312,098 $322,846 $309,063 $303,713 $305,392 
Interest-bearing demand 1,060,434  931,188  843,432  800,023  807,389 
Savings 829,321  800,514  790,658  777,678  760,499 
Certificates of deposit 1,986,969  2,142,702  2,204,457  2,256,159  2,300,154 
Interest-bearing deposits 3,876,724  3,874,404  3,838,547  3,833,860  3,868,042 
Total deposits 4,188,822  4,197,250  4,147,610  4,137,573  4,173,434 
                
Borrowings:               
Federal Home Loan Bank advances 1,253,958  1,273,618  1,283,211  1,289,285  1,293,845 
Overnight borrowings 15,000  -  30,000  -  - 
Depositor sweep accounts 6,091  7,500  8,771  36,931  16,702 
Total borrowings 1,275,049  1,281,118  1,321,982  1,326,216  1,310,547 
                
 Total funding$5,463,871 $5,478,368 $5,469,592 $5,463,789 $5,483,981 
                
Loans as a % of deposits 106.7% 109.2% 112.3% 111.8% 113.1%
Deposits as a % of total funding 76.7% 76.6% 75.8% 75.7% 76.1%
Borrowings as a % of total funding 23.3% 23.4% 24.2% 24.3% 23.9%
                
Funding by source:               
Retail funding:               
Non-interest-bearing deposits$312,098 $322,846 $309,063 $303,713 $305,392 
Interest-bearing demand 1,060,434  931,188  843,432  800,023  807,389 
Savings 829,321  800,514  790,658  777,678  760,499 
Certificates of deposit 1,876,280  1,916,132  1,902,542  1,925,630  1,922,287 
Total retail deposits 4,078,133  3,970,680  3,845,695  3,807,044  3,795,567 
Depositor sweep accounts 6,091  7,500  8,771  36,931  16,702 
Total retail funding 4,084,224  3,978,180  3,854,466  3,843,975  3,812,269 
                
Wholesale funding:               
Certificates of deposit (listing service)$42,119 $57,534 $66,110 $78,704 $108,067 
Certificates of deposit (brokered) 68,570  169,036  235,805  251,825  269,800 
Total wholesale deposits 110,689  226,570  301,915  330,529  377,867 
FHLB advances 1,253,958  1,273,618  1,283,211  1,289,285  1,293,845 
Overnight borrowings 15,000  -  30,000  -  - 
Total wholesale funding 1,379,647  1,500,188  1,615,126  1,619,814  1,671,712 
                
Total funding$5,463,871 $5,478,368 $5,469,592 $5,463,789 $5,483,981 
                
Retail funding as a % of total funding 74.7% 72.6% 70.5% 70.4% 69.5%
Wholesale funding as a % of total funding 25.3% 27.4% 29.5% 29.6% 30.5%


Summary Income StatementFor the three months ended 
(Dollars and Shares in Thousands,December 31, September 30, June 30, March 31, December 31, 
Except Per Share Data, Unaudited)2019 2019 2019 2019 2018 
Interest income               
Loans$45,608 $48,600 $47,818 $48,116 $49,015 
Taxable investment securities 9,698  9,328  9,772  9,511  9,051 
Tax-exempt investment securities 666  693  700  710  713 
Other interest-earning assets 1,210  1,278  1,158  1,320  1,243 
Total interest income 57,182  59,899  59,448  59,657  60,022 
                
Interest expense               
Deposits 15,590  16,055  15,131  14,114  12,727 
Borrowings 6,985  7,157  7,171  6,905  7,946 
Total interest expense 22,575  23,212  22,302  21,019  20,673 
Net interest income 34,607  36,687  37,146  38,638  39,349 
(Reversal of) provision for loan losses (1,465) (782) 664  (179) 971 
Net interest income after (reversal of)
 provision for loan losses
 36,072  37,469  36,482  38,817  38,378 
                
Non-interest income               
Fees and service charges 2,145  1,468  1,340  1,674  1,258 
Gain (loss) on sale and call of securities 11  (14) (141) (182) - 
Gain on sale of loans 668  605  196  151  101 
(Loss) gain on sale and write down of other real estate owned (28) -  9  (6) 36 
Income from bank owned life insurance 1,576  1,580  1,586  1,560  1,599 
Electronic banking fees and charges 293  318  270  253  277 
Miscellaneous (111) 5  128  226  38 
Total non-interest income 4,554  3,962  3,388  3,676  3,309 
                
Non-interest expense               
Salaries and employee benefits 15,174  15,777  16,338  15,350  15,699 
Net occupancy expense of premises 3,082  2,969  2,744  2,979  2,761 
Equipment and systems 3,046  3,089  2,917  3,053  3,377 
Advertising and marketing 890  535  948  739  787 
Federal deposit insurance premium -  -  438  455  421 
Directors' compensation 769  770  770  770  746 
Merger-related expenses 219  -  -  -  - 
Miscellaneous 3,247  3,104  4,590  3,425  3,479 
Total non-interest expense 26,427  26,244  28,745  26,771  27,270 
  Income before income taxes 14,199  15,187  11,125  15,722  14,417 
Income taxes 3,547  3,817  2,314  4,305  3,649 
  Net income$10,652 $11,370 $8,811 $11,417 $10,768 
                
Net income per common share (EPS)               
Basic$0.13 $0.13 $0.10 $0.13 $0.12 
Diluted$0.13 $0.13 $0.10 $0.13 $0.12 
                
Dividends declared (1)               
Cash dividends declared per common share$0.07 $0.06 $0.06 $0.06 $0.05 
Cash dividends declared$5,760 $5,045 $5,204 $5,338 $4,082 
Dividend payout ratio 54.1% 44.4% 59.1% 46.8% 37.9%
                
Weighted average number of  common
 shares outstanding
               
Basic 82,831  84,756  87,090  89,488  92,434 
Diluted 82,876  84,793  87,132  89,532  92,480 


  For the three months ended 
Average Balance Sheet DataDecember 31, September 30, June 30, March 31, December 31, 
(Dollars in Thousands, Unaudited)2019 2019 2019 2019 2018 
Assets               
Interest-earning assets:               
Loans receivable, including loans held for sale$4,547,126 $4,656,192 $4,648,362 $4,709,052 $4,758,587 
Taxable investment securities 1,244,475  1,147,698  1,184,401  1,161,492  1,158,720 
Tax-exempt investment securities 125,187  129,339  132,110  134,309  135,453 
Other interest-earning assets 117,811  125,114  98,374  107,554  87,916 
Total interest-earning assets 6,034,599  6,058,343  6,063,247  6,112,407  6,140,676 
Non-interest-earning assets 590,746  585,826  572,218  574,921  587,921 
   Total assets$6,625,345 $6,644,169 $6,635,465 $6,687,328 $6,728,597 
                
Liabilities and Stockholders' Equity               
Interest-bearing liabilities:               
Deposits:               
Interest-bearing demand$982,163 $883,843 $815,624 $790,567 $792,989 
Savings 813,626  799,181  780,558  773,308  743,676 
Certificates of deposit 2,063,066  2,179,333  2,229,723  2,288,836  2,214,932 
Total interest-bearing deposits 3,858,855  3,862,357  3,825,905  3,852,711  3,751,597 
Borrowings:               
Federal Home Loan Bank advances 1,255,597  1,277,145  1,284,427  1,292,168  1,293,470 
Other borrowings 34,733  10,012  29,439  26,037  119,281 
Total borrowings 1,290,330  1,287,157  1,313,866  1,318,205  1,412,751 
Total interest-bearing liabilities 5,149,185  5,149,514  5,139,771  5,170,916  5,164,348 
Non-interest-bearing liabilities:               
Non-interest-bearing deposits 320,161  320,641  311,648  307,645  315,165 
Other non-interest-bearing liabilities 53,479  60,078  39,294  35,930  37,374 
Total non-interest-bearing liabilities 373,640  380,719  350,942  343,575  352,539 
Total liabilities <