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Section 1: 10-Q (KRNY-Q1-20180930)

krny-10q_20180930.htm

 

 

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-37399

 

KEARNY FINANCIAL CORP.

(Exact name of registrant as specified in its charter)

 

 

Maryland

  

30-0870244

(State or other jurisdiction of
incorporation or organization)

  

(I.R.S. Employer
Identification Number)

 

 

 

120 Passaic Ave., Fairfield, New Jersey

  

07004

(Address of principal executive offices)

  

(Zip Code)

Registrant’s telephone number, including area code

973-244-4500

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filers,” “accelerated filers,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: November 2, 2018.

$0.01 par value common stock — 96,331,850 shares outstanding

 

 

 

 

 


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

INDEX

 

 

 

 

 

Page

Number

PART I—FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1:

 

Financial Statements

 

 

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition at September 30, 2018 (Unaudited) and June 30, 2018

 

1

 

 

 

 

 

 

 

Consolidated Statements of Income for the Three Months Ended September 30, 2018 and September 30, 2017 (Unaudited)

 

2

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the Three Months Ended September 30, 2018 and September 30, 2017 (Unaudited)

 

4

 

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended September 30, 2018 and September 30, 2017 (Unaudited)

 

5

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2018 and September 30, 2017 (Unaudited)

 

6

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

 

8

 

 

 

 

 

Item 2:

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

44

 

 

 

 

 

Item 3:

 

Quantitative and Qualitative Disclosure About Market Risk

 

56

 

 

 

 

 

Item 4:

 

Controls and Procedures

 

62

 

 

 

 

 

PART II—OTHER INFORMATION

 

 

 

 

 

 

 

Item 1:

 

Legal Proceedings

 

63

 

 

 

 

 

Item 1A:

 

Risk Factors

 

63

 

 

 

 

 

Item 2:

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

63

 

 

 

 

 

Item 3:

 

Defaults Upon Senior Securities

 

63

 

 

 

 

 

Item 4:

 

Mine Safety Disclosures

 

63

 

 

 

 

 

Item 5:

 

Other Information

 

63

 

 

 

 

 

Item 6:

 

Exhibits

 

64

 

 

 

 

 

SIGNATURES

 

65

 

 

 

 


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands, Except Share and Per Share Data)

 

 

September 30,

 

 

June 30,

 

 

2018

 

 

2018

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Cash and amounts due from depository institutions

$

21,973

 

 

$

26,199

 

Interest-bearing deposits in other banks

 

22,513

 

 

 

102,665

 

Cash and cash equivalents

 

44,486

 

 

 

128,864

 

Investment securities available for sale, at fair value

 

706,240

 

 

 

725,085

 

Investment securities held to maturity (fair value $589,130 and $579,499, respectively)

 

602,838

 

 

 

589,730

 

Loans held-for-sale

 

1,503

 

 

 

863

 

Loans receivable, including unaccreted yield adjustments of $(62,783) and $(66,567), respectively

 

4,660,507

 

 

 

4,501,348

 

Less allowance for loan losses

 

(32,731

)

 

 

(30,865

)

Net loans receivable

 

4,627,776

 

 

 

4,470,483

 

Premises and equipment

 

57,635

 

 

 

56,240

 

Federal Home Loan Bank of New York stock

 

66,428

 

 

 

59,004

 

Accrued interest receivable

 

19,455

 

 

 

18,510

 

Goodwill

 

210,895

 

 

 

210,895

 

Core deposit intangibles

 

6,018

 

 

 

6,295

 

Bank owned life insurance

 

251,410

 

 

 

249,816

 

Deferred income tax assets, net

 

22,136

 

 

 

23,754

 

Other real estate owned

 

674

 

 

 

725

 

Other assets

 

38,717

 

 

 

39,610

 

Total Assets

$

6,656,211

 

 

$

6,579,874

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Non-interest-bearing

$

308,631

 

 

$

311,938

 

Interest-bearing

 

3,646,190

 

 

 

3,761,666

 

Total deposits

 

3,954,821

 

 

 

4,073,604

 

Borrowings

 

1,419,424

 

 

 

1,198,646

 

Advance payments by borrowers for taxes

 

10,687

 

 

 

18,088

 

Other liabilities

 

35,198

 

 

 

20,788

 

Total Liabilities

 

5,420,130

 

 

 

5,311,126

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 100,000,000 shares authorized;

  none issued and outstanding

 

-

 

 

 

-

 

Common stock, $0.01 par value; 800,000,000 shares authorized;

  97,753,800 shares and 99,626,400 shares issued and outstanding, respectively

 

978

 

 

 

996

 

Paid-in capital

 

897,551

 

 

 

922,711

 

Retained earnings

 

350,838

 

 

 

359,096

 

Unearned employee stock ownership plan shares;

  3,311,510 shares and 3,361,684 shares, respectively

 

(32,104

)

 

 

(32,590

)

Accumulated other comprehensive income

 

18,818

 

 

 

18,535

 

Total Stockholders' Equity

 

1,236,081

 

 

 

1,268,748

 

Total Liabilities and Stockholders' Equity

$

6,656,211

 

 

$

6,579,874

 

 

See notes to unaudited consolidated financial statements.

 

- 1 -


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Data)

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2018

 

 

2017

 

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

 

 

 

$

47,437

 

 

$

30,473

 

Taxable investment securities

 

 

 

 

 

 

8,879

 

 

 

5,856

 

Tax-exempt investment securities

 

 

 

 

 

 

716

 

 

 

621

 

Other interest-earning assets

 

 

 

 

 

 

1,174

 

 

 

642

 

Total Interest Income

 

 

 

 

 

 

58,206

 

 

 

37,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

10,539

 

 

 

6,219

 

Borrowings

 

 

 

 

 

 

7,487

 

 

 

4,563

 

Total Interest Expense

 

 

 

 

 

 

18,026

 

 

 

10,782

 

Net Interest Income

 

 

 

 

 

 

40,180

 

 

 

26,810

 

Provision for Loan Losses

 

 

 

 

 

 

2,100

 

 

 

630

 

Net Interest Income after Provision for

  Loan Losses

 

 

 

 

 

 

38,080

 

 

 

26,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

 

 

 

 

 

1,173

 

 

 

1,261

 

Gain on sale of loans

 

 

 

 

 

 

132

 

 

 

331

 

Loss on sale and write down of other real estate owned

 

 

 

 

 

 

(50

)

 

 

(109

)

Income from bank owned life insurance

 

 

 

 

 

 

1,594

 

 

 

1,267

 

Electronic banking fees and charges

 

 

 

 

 

 

250

 

 

 

278

 

Miscellaneous

 

 

 

 

 

 

83

 

 

 

66

 

Total Non-Interest Income

 

 

 

 

 

 

3,182

 

 

 

3,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

 

 

 

 

15,642

 

 

 

12,793

 

Net occupancy expense of premises

 

 

 

 

 

 

2,736

 

 

 

1,981

 

Equipment and systems

 

 

 

 

 

 

2,926

 

 

 

2,190

 

Advertising and marketing

 

 

 

 

 

 

577

 

 

 

710

 

Federal deposit insurance premium

 

 

 

 

 

 

465

 

 

 

360

 

Directors' compensation

 

 

 

 

 

 

758

 

 

 

689

 

Miscellaneous

 

 

 

 

 

 

3,353

 

 

 

2,563

 

Total Non-Interest Expense

 

 

 

 

 

 

26,457

 

 

 

21,286

 

Income before Income Taxes

 

 

 

 

 

 

14,805

 

 

 

7,988

 

Income tax expense

 

 

 

 

 

 

3,659

 

 

 

2,756

 

Net Income

 

 

 

 

 

$

11,146

 

 

$

5,232

 

 

See notes to unaudited consolidated financial statements.

 

- 2 -


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Continued)

(In Thousands, Except Per Share Data)

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

2018

 

 

2017

 

Net Income per Common Share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

$

0.12

 

 

$

0.07

 

Diluted

 

 

 

 

 

$

0.12

 

 

$

0.07

 

Weighted Average Number of

  Common Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

95,127

 

 

 

79,649

 

Diluted

 

 

 

 

 

 

95,181

 

 

 

79,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends Declared Per Common Share

 

 

 

 

 

$

0.20

 

 

$

0.15

 

 

See notes to unaudited consolidated financial statements.

 

 

 

- 3 -


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands, Unaudited)

 

 

 

 

Three Months Ended

 

 

 

 

September 30,

 

 

 

 

 

 

2018

 

 

2017

 

Net Income

 

 

 

 

$

11,146

 

 

$

5,232

 

Other Comprehensive Income, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (loss) gain on securities available

  for sale

 

 

 

 

 

(653

)

 

 

1,148

 

Change in net unrealized gain on securities

  transferred to held to maturity

 

 

 

 

 

102

 

 

 

17

 

Fair value adjustments on derivatives

 

 

 

 

 

856

 

 

 

974

 

Benefit plan adjustments

 

 

 

 

 

(22

)

 

 

(43

)

Total Other Comprehensive Income

 

 

 

 

 

283

 

 

 

2,096

 

Total Comprehensive Income

 

 

 

 

$

11,429

 

 

$

7,328

 

 

See notes to unaudited consolidated financial statements.

 

 

 

- 4 -


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2017 and September 30, 2018

(In Thousands, Unaudited)

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Unearned

ESOP

 

 

Accumulated

Other

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Shares

 

 

Income

 

 

Total

 

Balance - June 30, 2017

 

84,351

 

 

$

844

 

 

$

728,790

 

 

$

361,039

 

 

$

(34,536

)

 

$

1,044

 

 

$

1,057,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

5,232

 

 

 

-

 

 

 

-

 

 

 

5,232

 

Other comprehensive income, net

  of income tax expense

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,096

 

 

 

2,096

 

ESOP shares committed to be

  released (50 shares)

 

-

 

 

 

-

 

 

 

245

 

 

 

-

 

 

 

487

 

 

 

-

 

 

 

732

 

Stock option expense

 

-

 

 

 

-

 

 

 

522

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

522

 

Share repurchases

 

(2,803

)

 

 

(29

)

 

 

(40,453

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(40,482

)

Restricted stock plan shares

  earned (73 shares)

 

-

 

 

 

-

 

 

 

1,100

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,100

 

Cash dividends declared

  ($0.15 per common share)

 

-

 

 

 

-

 

 

 

-

 

 

 

(12,148

)

 

 

-

 

 

 

-

 

 

 

(12,148

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - September 30, 2017

 

81,548

 

 

$

815

 

 

$

690,204

 

 

$

354,123

 

 

$

(34,049

)

 

$

3,140

 

 

$

1,014,233

 

 

 

 

 

Common Stock

 

 

Paid-In

 

 

Retained

 

 

Unearned

ESOP

 

 

Accumulated

Other

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Earnings

 

 

Shares

 

 

Income

 

 

Total

 

Balance - June 30, 2018

 

99,626

 

 

$

996

 

 

$

922,711

 

 

$

359,096

 

 

$

(32,590

)

 

$

18,535

 

 

$

1,268,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

-

 

 

 

-

 

 

 

-

 

 

 

11,146

 

 

 

-

 

 

 

-

 

 

 

11,146

 

Other comprehensive income, net

  of income tax expense

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

283

 

 

 

283

 

ESOP shares committed to be

  released (50 shares)

 

-

 

 

 

-

 

 

 

202

 

 

 

-

 

 

 

486

 

 

 

-

 

 

 

688

 

Stock option expense

 

-

 

 

 

-

 

 

 

500

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

500

 

Share repurchases

 

(1,957

)

 

 

(19

)

 

 

(26,897

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(26,916

)

Issuance of shares under stock benefit plans

 

85

 

 

 

1

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Restricted stock plan shares

  earned (70 shares)

 

-

 

 

 

-

 

 

 

1,036

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,036

 

Cash dividends declared

  ($0.20 per common share)

 

-

 

 

 

-

 

 

 

-

 

 

 

(19,404

)

 

 

-

 

 

 

-

 

 

 

(19,404

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - September 30, 2018

 

97,754

 

 

$

978

 

 

$

897,551

 

 

$

350,838

 

 

$

(32,104

)

 

$

18,818

 

 

$

1,236,081

 

 

See notes to unaudited consolidated financial statements.

 

 

 

- 5 -


 

 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

 

 

Three Months Ended

 

 

September 30,

 

 

2018

 

 

2017

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

Net income

$

11,146

 

 

$

5,232

 

Adjustment to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization of premises and equipment

 

1,017

 

 

 

726

 

Net (accretion) amortization of premiums, discounts and loan fees and costs

 

(2,651

)

 

 

1,201

 

Deferred income taxes and valuation allowance

 

1,006

 

 

 

785

 

Amortization of intangible assets

 

278

 

 

 

31

 

Accretion of benefit plans’ unrecognized net gain

 

(47

)

 

 

(72

)

Provision for loan losses

 

2,100

 

 

 

630

 

Loss on write-down and sales of other real estate owned

 

50

 

 

 

109

 

Loans originated for sale

 

(12,209

)

 

 

(21,902

)

Proceeds from sale of mortgage loans held-for-sale

 

11,683

 

 

 

22,999

 

Gain on sale of mortgage loans held-for-sale, net

 

(114

)

 

 

(213

)

Proceeds from sale of SBA loans

 

215

 

 

 

1,264

 

Realized gain on sale of SBA loans

 

(18

)

 

 

(118

)

Realized (gain) loss on disposition of premises and equipment

 

(6

)

 

 

8

 

Increase in cash surrender value of bank owned life insurance

 

(1,594

)

 

 

(1,267

)

ESOP, stock option plan and restricted stock plan expenses

 

2,224

 

 

 

2,354

 

Increase in interest receivable

 

(945

)

 

 

(775

)

Decrease (increase) in other assets

 

2,737

 

 

 

(1,338

)

Increase in interest payable

 

1,340

 

 

 

69

 

Decrease in other liabilities

 

(2,541

)

 

 

(3,436

)

Net Cash Provided by Operating Activities

 

13,671

 

 

 

6,287

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

Purchases of:

 

 

 

 

 

 

 

Investment securities available for sale

 

-

 

 

 

(39,999

)

Investment securities held to maturity

 

(38,376

)

 

 

(1,628

)

Proceeds from:

 

 

 

 

 

 

 

Repayments/calls/maturities of investment securities available for sale

 

17,609

 

 

 

18,943

 

Repayments/calls/maturities of investment securities held to maturity

 

25,057

 

 

 

11,609

 

Purchase of loans

 

(21,412

)

 

 

(13,795

)

Net increase in loans receivable

 

(134,896

)

 

 

(4,120

)

Additions to premises and equipment

 

(2,423

)

 

 

(1,281

)

Proceeds from cash settlement of premises and equipment

 

17

 

 

 

-

 

Purchase of FHLB stock

 

(9,000

)

 

 

(2,070

)

Redemption of FHLB stock

 

1,576

 

 

 

2,913

 

Net Cash Used in Investing Activities

$

(161,848

)

 

$

(29,428

)

 

See notes to unaudited consolidated financial statements.

- 6 -


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Thousands, Unaudited)

 

 

Three Months Ended

 

 

September 30,

 

 

2018

 

 

2017

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

Net (decrease) increase in deposits

$

(118,143

)

 

 

23,141

 

Repayment of term FHLB advances

 

(585,028

)

 

 

(625,027

)

Proceeds from term FHLB advances

 

750,000

 

 

 

625,000

 

Net increase in other short-term borrowings

 

55,078

 

 

 

2,349

 

Net (decrease) increase in advance payments by borrowers for taxes

 

(7,401

)

 

 

1,076

 

Repurchase and cancellation of common stock of Kearny Financial Corp.

 

(26,916

)

 

 

(40,482

)

Dividends paid

 

(3,791

)

 

 

(2,330

)

Net Cash Provided by (Used in) Financing Activities

 

63,799

 

 

 

(16,273

)

Net Decrease in Cash and Cash Equivalents

 

(84,378

)

 

 

(39,414

)

Cash and Cash Equivalents - Beginning

 

128,864

 

 

 

78,237

 

Cash and Cash Equivalents - Ending

$

44,486

 

 

$

38,823

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flows Information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Income taxes, net of refunds

$

(241

)

 

$

4,468

 

Interest

$

16,686

 

 

$

10,713

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

Acquisition of other real estate owned in settlement of loans

$

-

 

 

$

901

 

 

See notes to unaudited consolidated financial statements.

 

 

 

- 7 -


 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

1.     PRINCIPLES OF CONSOLIDATION

The unaudited consolidated financial statements include the accounts of Kearny Financial Corp. (the “Company”), its wholly-owned subsidiary, Kearny Bank (the “Bank”) and the Bank’s wholly-owned subsidiaries, CJB Investment Corp. and KFS Financial Services, Inc. and its wholly-owned subsidiary, KFS Insurance Services, Inc. The Company conducts its business principally through the Bank. Management prepared the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), including the elimination of all significant inter-company accounts and transactions during consolidation.

 

 

2.     BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows in conformity with GAAP. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the unaudited consolidated financial statements have been included. The results of operations for the three-month period ended September 30, 2018 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period.

The data in the consolidated statement of financial condition for June 30, 2018 was derived from the Company’s 2018 Annual Report on Form 10-K. That data, along with the interim unaudited financial information presented in the consolidated statements of financial condition, income, comprehensive income, changes in stockholders’ equity and cash flows should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s 2018 Annual Report on Form 10-K.

 

 

3.     NET INCOME PER COMMON SHARE (“EPS”)

Basic EPS is based on the weighted average number of common shares actually outstanding including both vested and unvested restricted stock awards adjusted for Employee Stock Ownership Plan (“ESOP”) shares not yet committed to be released. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities exercisable or which could be converted into common stock, if dilutive, using the treasury stock method. Shares issued and reacquired during any period are weighted for the portion of the period they were outstanding.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:

 

 

 

 

 

Three Months Ended

 

 

 

 

 

September 30, 2018

 

 

 

 

 

 

 

 

 

Income

(Numerator)

 

 

Shares

(Denominator)

 

 

Per

Share

Amount

 

 

 

 

 

(In Thousands, Except Per Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

$

11,146

 

 

 

 

 

 

 

 

 

Basic earnings per share, income

  available to common stockholders

 

 

 

 

 

 

 

$

11,146

 

 

 

95,127

 

 

$

0.12

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options