On April 24, 2025, Kearny Financial Corp (KRNY, Financial) released its 8-K filing for the third quarter of fiscal 2025, reporting a net income of $6.6 million, or $0.11 per diluted share. This aligns with the analyst estimate of $0.11 per share. However, the company's revenue of $34.0 million fell short of the estimated $36.40 million. Kearny Financial Corp is a federally-chartered stock savings bank operating in New Jersey and New York, primarily generating income through net interest income from loans and securities investments.
Performance and Challenges
Kearny Financial Corp's performance in the third quarter was marked by a steady net income compared to the previous quarter, with earnings per share increasing slightly from $0.10 to $0.11. The company's net interest margin expanded by eight basis points to 1.90%, driven by a reduction in borrowing costs and growth in lower-cost deposits. Despite these positive developments, the company faced challenges with a decrease in non-interest income, which fell by 6.4% to $4.6 million, primarily due to lower gains on loan sales and electronic banking fees.
Financial Achievements
The bank's ability to expand its net interest margin is a significant achievement, reflecting effective management of interest expenses and deposit growth. This is crucial for banks like Kearny Financial Corp, as net interest income is a primary revenue source. The company also declared a quarterly cash dividend of $0.11 per share, maintaining shareholder returns.
Key Financial Metrics
From the balance sheet, total assets increased slightly to $7.73 billion, with loans receivable growing by $54.4 million, primarily in non-residential mortgage loans. Deposits rose by $36.3 million, driven by interest-bearing demand and consumer savings deposits. The company's borrowings decreased by $45.0 million, reflecting a strategic reduction in Federal Home Loan Bank overnight borrowings.
| Metric | March 31, 2025 | December 31, 2024 | Change |
|---|---|---|---|
| Total Assets | $7.73 billion | $7.73 billion | +0.0% |
| Net Loans Receivable | $5.85 billion | $5.79 billion | +0.9% |
| Total Deposits | $5.71 billion | $5.67 billion | +0.6% |
| Borrowings | $1.21 billion | $1.26 billion | -3.6% |
Analysis and Commentary
Craig L. Montanaro, President and CEO, noted the positive impact of net interest income growth, stating,
Quarter over quarter net interest income grew by $1.4 million, resulting in eight basis points of net interest margin expansion. Contributing to this expansion was growth in net loans and deposits, coupled with a 24 basis point decrease in our cost of funds."This commentary highlights the strategic focus on optimizing interest margins and managing costs effectively.
Conclusion
Kearny Financial Corp's third-quarter results demonstrate resilience in maintaining net income and expanding interest margins despite revenue challenges. The company's strategic focus on deposit growth and cost management positions it well for future performance, although it must address the decline in non-interest income to enhance overall financial health. Investors and stakeholders will be keen to see how the bank navigates these challenges in the coming quarters.
Explore the complete 8-K earnings release (here) from Kearny Financial Corp for further details.
