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Section 1: 8-K (FORM 8-K KEARNY FINANCIAL CORP. FEBRUARY 25, 2019)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

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

Date of Report (Date of earliest event reported): February 25, 2019

KEARNY FINANCIAL CORP.
(Exact Name of Registrant as Specified in its Charter)

Maryland
 
001-37399
 
30-0870244
(State or Other Jurisdiction
of Incorporation)
 
(Commission File No.)
 
(I.R.S. Employer
Identification No.)

120 Passaic Avenue, Fairfield, New Jersey
 
07004
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (973) 244-4500

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
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. 


Item 7.01   Regulation FD Disclosure

On February 25, 2019, Kearny Financial Corp. (the “Company”) released a slide presentation that will be used in upcoming meetings with potential investors and current shareholders of the Company. A copy of the slide presentation is attached hereto as Exhibit 99.1 and is being furnished to the SEC and shall not be deemed “filed” for any purpose.
 
Item 9.01   Financial Statements and Exhibits

(a)
Financial Statements of Businesses Acquired.  Not applicable.

(b)
Pro Forma Financial Information.  Not applicable.

(c)
Shell Company Transactions.  Not applicable.

(d)
Exhibits.

Exhibit No.            Description

99.1




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

   
KEARNY FINANCIAL CORP.
 
 
DATE: February 25, 2019
By:  
 /s/ Craig L. Montanaro 
   
Craig L. Montanaro
   
President and Chief Executive Officer

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Section 2: EX-99.1 (INVESTOR PRESENTATION)

EXHIBIT 99.1

 Investor PresentationNASDAQ: KRNY  February 2019 
 

 This presentation may include certain “forward-looking statements,” which are made in good faith by Kearny Financial Corp. (the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.These forward-looking statements are subject to risks and uncertainties, such as statements of the Company’s plans, objectives, expectations, estimates and intentions that are subject to change based on various important factors (some of which are beyond the Company’s control). In addition to the factors described under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K, the following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economy in which the Company conducts operations, the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations,the impact of changes in laws, regulations and government policies regarding financial institutions (including laws concerning taxation, banking, securities and insurance), changes in accounting policies and practices, as may be adopted by regulatory agencies, the Financial Accounting Standards Board (“FASB”) or the Public Company Accounting Oversight Board, technological changes,competition among financial services providers and, the success of the Company at managing the risks involved in the foregoing and managing its business. The Company cautions that the foregoing list of important factors is not exhaustive. Readers should not place any undue reliance on any forward looking statements, which speak only as of the date made. The Company 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 Company.  Forward Looking Statements  1 
 

 Founded in 18845th Largest New Jersey-based financial institution by asset size55 branch locations in 11 counties throughout Northern and Central New Jersey and Southern New YorkTop 15 deposit market share in the counties of Bergen, Hudson, Passaic, Ocean, and Monmouth, New Jersey²Active acquirerCompleted 6 bank acquisitions since 1999 including most recently Clifton, NJ based Clifton Bancorp Inc. in April 2018  Overview of Kearny Financial Corp   Note: Branch map includes new branch location in Cliffside Park, NJ expected to be opened in Spring 2019As of February 15, 2019As of June 30, 2018Source: S&P Global Market Intelligence, Company Filings          Corporate Headquarters120 Passaic AvenueFairfield, NJ 07004Branch LocationsNew Branch Location (Spring 2019)      2 
 

 Investment Rationale  Conservative lending practices and strong credit culture resulting in outstanding credit metricsAttractive market demographicsHistory of successfully evaluating, executing and integrating acquisitionsRobust capital levels and history of capital returns via buybacks & dividendsContinually improving profitability, efficiency and performance metricsInvestment in, and strategy built upon, technology and innovationExperienced and dedicated Board and management team  3 
 

     Branch LocationsNew Branch Location (Spring 2019)  Attractive Market Demographics  Note: Deposit numbers as of June 30, 2018Branch map includes new branch location in Cliffside Park, NJ expected to be opened in Spring 20191) Defined as the New York-Newark-Jersey City, NY-NJ-PA MSASource: S&P Global Market Intelligence  Attractive marketsPart of the largest MSA in the U.S1Opportunities still exist for organic growth in existing branch footprint  Median 2019 projected household income in Kearny franchise counties was $85,094 vs. $63,174 nationwideHousehold income poised to grow      4 
 

 M&A History and Strategy  Experienced acquirer and integrator, having successfully completed 6 bank acquisitions over the past 19 yearsOpportunistic acquisition strategy with a focus onLow premium dealsSimilar or complementary business modelsExpansion in existing or contiguous marketsCultural compatibilitySensitive to key merger metrics such as TBV dilution and earn-back periods  Source: S&P Global Intelligence, Company Filings  5 
 

 Robust capital to support continued growthOur 2015 second step offering has allowed us to pursue organic and strategic growth opportunitiesLarger public float and strong liquidity results in an active market for our common stock. Average daily trading volume of 363,493 shares¹Index membershipABA Nasdaq Indices (ABAQ, ABQI, XABQ)Nasdaq Bank IndexRussell 2000  Capital Strength  One-year average daily trading volume as of February 15, 2019Note: 2019 YTD metrics are not annualized  6  Capital Returned to Shareholders 
 

 Normalizing Capital Ratios  Tier 1 Leverage Ratio  Tier 1 Risk Based Capital Ratio  Risk-Based Capital Ratio  Peer group includes CNOB, CUBI, DCOM, FCF, FFIC, LBAI, NBTB, NWBI OCFC, PFS, STBA, TSC, TMP, TRST, UBNK, UVSPSource: S&P Global Market Intelligence. Bank level financial numbers used where unavailable at the holding company  7 
 

 Improving Performance Metrics  Profitability1  Efficiency Ratio2  Performance Metrics  Although management believes these non-GAAP measures are useful to investors by providing a greater level of understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies.1) FY2015 GAAP ROAA was 0.15% while FY2015 core ROAA includes a pre-tax adjustment of $10M reflecting a contribution to the charitable foundation. FY2018 GAAP ROAA was 0.37%, FY2018 core ROAA includes adjustments for after tax merger related expenses of $5.1 million, net reduction of $3.5 million in the carrying value of deferred income taxes, and $769,000 reduction in current year income tax related to the passage of the Tax Cuts and Jobs Act effective December 2017. 2) FY2018 GAAP efficiency ratio of 72.72% includes merger related expenses of $6.7 million, excluding such expenses would result in non-GAAP efficiency ratio of 67.71%. FY2019 YTD metrics are annualized.Source: S&P Global Market Intelligence  8  Ann.  Ann.  Earnings per Share  Ann. 
 

 Loan Portfolio Growth  Kearny Financial Corp. Historical Loan Growth (dollars in millions)  3.5-Year CAGR: 26.2%   Loan growth focus:Expand upon expertise in C&I, SBA, and construction lendingContinue to enhance credit and risk management infrastructure to support loan growthLift out small teams of residential lenders to fill in strategic gaps in current footprint (NY, NJ, PA)Over $395 million in commercial loan originations in the first half of fiscal 2019Utilize mortgage banking platform opportunistically: sell or portfolio residential mortgages as desired  9 
 

 Loan Portfolio Composition  $4.7 billion in loans receivable, representing 70.4% of total assets4.12% loan yield for Q2 2019Continuing focus on loan portfolio diversificationAverage LTV:CRE 47.3%Multifamily 61.2%Construction/Land 48.1%1-4 Family 48.7%Home Equity 37.0%  MRQ Loan Portfolio  CRE, Multifamily & Resi. Portfolio Distribution  10 
 

 Conservative underwriting standards, dedicated special assets group and prompt attention to potential problem loans supports a track record of consistently strong asset quality metricsALLL coverage ratio declined in fiscal 2018 due to purchase accounting adjustments related to the CSBK acquisition  Credit Metrics  NCOs / Average Loans  Nonaccrual, 90+ Past Due & OREO / Assets  Loan Loss Reserves / Gross Loans  11  1) Peer group includes CNOB, CUBI, DCOM, FCF, FFIC, LBAI, NBTB, NWBI OCFC, PFS, STBA, TSC, TMP, TRST, UBNK, UVSPNote: Peer comparison periods changed to conform to the same time periods as Kearny Financial Corp.’s fiscal periods (June 30 fiscal year-end); MRQ NCOs / Average Loans data shown for peers Source: S&P Global Market Intelligence 
 

 Deposit Composition  $4.17 billion in deposits as of December 31, 20181.25% Q2 2019 cost of total depositsCompetitive deposit gathering environment in New York MSAUtilizing CRM system to help drive core deposit growthCSBK footprint provides new opportunities to grow core depositsShift in deposit base towards more valuable, lower cost core transaction accounts  MRQ Deposit Portfolio  12 
 

 Securities excludes FHLB StockSource: S&P Global Market Intelligence, Company Filings  Securities Portfolio  Yield on securities was 3.02% in Q2 2019, an increase of 49 basis points from FY 2018Securities portfolio serves as both a source of liquidity and yieldAs of December 31, 2018, 18.9% of total assets were comprised of securities as compared to 41.8% of total assets at June 30, 2011¹  Yield on Securities  MRQ Securities Portfolio  13 
 

 Technology / Innovation Strategy  14  Recently deployed EnAct Customer Relationship Management (CRM) suiteFocus on expanding wallet share from single-service households & businessesUpcoming digital product and service deploymentsOnline account openingEnhanced escrow management systemFDIC-insured liquidity sweepRetail vault solutionIntelligent ATM’sZelle P2P payment system  Online Banking Users + 30% year over year  Card ValetUsers + 218% year over year  Mobile Banking Transactions + 43% year over year  Mobile Banking Users + 51% year over year 
 

 @KearnyBank NewsfeedSocial media followers collectively increased by 74% in 2018  facebook.com/kearnybank/  twitter.com/KearnyBank  instagram.com/kearny_bank/  linkedin.com/company/kearny-bank/  pinterest.com/KearnyBank/  15 
 

 Traditional Community BankingGrowth and diversification of loan mixCRE, C&I, SBA, constructionGrowth and diversification of funding utilizing technologyMobile banking, online account opening, intelligent ATMsGovernment & business relationship bankingExpand Treasury management services:Insured liquidity sweepLock box & retail vault solutionsPositive payEnhanced escrow servicesFee income growth opportunitiesMortgage banking platform (sell or portfolio loan production)SBA (sell or retain SBA guaranteed loan portion)Customer centric focusFocus on deepening relationshipsComprehensive training and development programs for the retail and lending teamsUtilize CRM system to expand relationships / single service households & businessesImprove customer experienceAnnual surveys & focus groupsFeedback on new products, services and technologies  Strategic Focus  16 
 

 Strategic Focus  Capital management strategiesDividendsQuarterly cash dividend increased to $0.06 per share in Q3 fiscal 2019Buybacks26.4 million shares repurchased through 12/31/18M&AMost recent transaction, $1.6 billion asset Clifton Bancorp, closed on 4/2/18Control operating expensesBranch consolidation / rationalizationContinuation of line-of-business profitability analysisTechnology enhancements to improve operational efficiencyTalent acquisition strategySeasoned bankersEntrepreneurial spiritStrong technology backgroundExperience in other industries  17 
 

 Comparative Equity Performance  Note: Market data as of February 15, 2019Peer group includes CNOB, CUBI, DCOM, FCF, FFIC, LBAI, NBTB, NWBI OCFC, PFS, STBA, TSC, TMP, TRST, UBNK, UVSPSource: S&P Global Market Intelligence  Stock Price Performance since January 1, 2013  18 
 

 Peer Group Valuation Comparison  Note: Market data as of February 15, 2019Source: S&P Global Intelligence  19 
 

 Management Team    20  Name  Years in Banking  Years with KRNY  Biography  Craig L. MontanaroPresident & Chief Executive Officer  31  16  Craig L. Montanaro was appointed President and Chief Executive Officer in April 2011. Prior to that time, he served as President and Chief Operating Officer since April 2010. He previously performed the duties of Senior Vice President and Director of Strategic Planning for Kearny Federal Savings Bank and Kearny Financial Corp. from 2005 to March 2010 and from 2003 to 2004 served as Vice President and Regional Branch Administrator. Mr. Montanaro was formerly employed by West Essex Bank as Senior Vice President and Chief Operating Officer and joined Kearny when that bank was acquired by Kearny Federal Savings Bank in 2003. He had been employed by West Essex Bank from 1988 until the completion of the merger with Kearny Federal Savings Bank. He is the son of Director Leopold W. Montanaro  Eric B. HeyerSenior Executive Vice President and Chief Operating Officer  34  10  Eric B. Heyer was appointed Executive Vice President and Chief Financial Officer effective April 1, 2014, previously serving as Senior Vice President and Chief Financial Officer since April 1, 2011. He became First Vice President and Chief Accounting Officer of the Company in October 2009 and of Kearny Federal Savings Bank in July 2009. Mr. Heyer had previously served as Senior Vice President, Treasurer and Chief Financial Officer of American Bancorp of New Jersey, Inc. from 1997 until its acquisition by Investors Bancorp in May 2009.  Patrick M. JoyceExecutive Vice President and Chief Lending Officer  34  20  Patrick M. Joyce was appointed Executive Vice President and Chief Lending Officer of Kearny Federal Savings Bank in April 2014, previously serving as Senior Vice President and Chief Lending Officer of Kearny Federal Savings Bank since 2002 and served as Vice President of loan originations from 1999 to 2002. He was formerly employed by South Bergen Savings Bank as an Assistant Corporate Secretary and as a loan originator starting in 1989. He joined Kearny when South Bergen Savings Bank was acquired by Kearny Federal Savings Bank in 1999 and was employed by such bank from 1985 until the completion of the merger with Kearny Federal Savings Bank.  Keith SuchodolskiExecutive Vice President and Chief Financial Officer  18  6  Keith Suchodolski was appointed Executive Vice President and Chief Financial Officer of Kearny Financial and Kearny Bank in July 2018, having previously served as Senior Vice President, Corporate Finance and Chief Accounting Officer since March 2018, Senior Vice President and Controller since June 2014 and First Vice President and Controller since January 2013. Mr. Suchodolski had previously served as the Controller of various financial institutions in the Mid-Atlantic region since 2005 and has been employed within the banking industry since 2001. Mr. Suchodolski holds a Master of Business Administration degree, with a specialization in Finance, from Fairleigh Dickinson University and a Bachelor of Science degree from Ramapo College of New Jersey. 
 

 Management Team    21  Name  Years in Banking  Years with KRNY  Biography  Erika K. ParisiExecutive Vice President/Director of CRM and Analytics  28  20  Erika K. Parisi was appointed Executive Vice President and Director of Customer Relationship Management Analytics of Kearny Bank in June 2016, previously serving as Executive Vice President and Branch Administrator of Kearny Bank since April 2014, and as Senior Vice President and Branch Administrator of Kearny Bank since 2002 and Vice President and Branch Administrator from 1999 to 2002. She was formerly employed by South Bergen Savings Bank as Vice President/Branch Administrator and joined Kearny Bank when South Bergen Savings Bank was acquired by Kearny Bank in 1999. She joined South Bergen Savings Bank in 1991. Ms. Parisi holds a Bachelor of Science degree, majoring in accounting, from the State University of New York at Albany.  Thomas D. DeMediciExecutive Vice President and Chief Credit Officer  34  9  Thomas D. DeMedici was appointed Executive Vice President and Chief Credit Officer of Kearny Bank in June 2017, having previously served as Senior Vice President and Chief Credit Officer of Kearny Bank since September 2010. He is a seasoned Banking professional with over 34 years of banking experience. Mr. DeMedici during his career has held previous positions at other Banking institutions including Executive Vice President/Chief Lending Officer and President and Chief Operating Officer.   Anthony V. Bilotta, Jr.Executive Vice President and Chief Banking Officer  37  1  Anthony V. Bilotta, Jr. was appointed Executive Vice President and Chief Banking Officer of Kearny Bank effective June 2018. Mr. Bilotta is an experienced banker with more than 37 years of banking experience. Mr. Bilotta previously served as Executive Vice President and Director of Retail Banking of Peapack Gladstone Bank from 2013 until his appointment as an executive officer of Kearny Bank. Prior to Peapack Gladstone Bank, Mr. Bilotta held executive positions at a variety of financial institutions.  
 

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