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Section 1: 8-K (8-K)

krny-8k_20190331.htm

 

 

 

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): April 29, 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 Number)

(IRS 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 (see General Instructions A.2. below):

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 2.02Results of Operation and Financial Condition

On April 29, 2019, Kearny Financial Corp. (the “Company”), the holding company for Kearny Bank, issued a press release reporting its financial results for the third quarter ended March 31, 2019 and the expected consolidation of seven retail branches during the quarter ending September 30, 2019.

A copy of the press release announcing the results is included as Exhibit 99.1 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

Item 9.01Financial Statements and Exhibits

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

(b)Pro Forma Financial Information. Not applicable.

(c)Shell Company Transaction. Not applicable.

(d)Exhibits.

 

Exhibit Number

 

Description

99.1

 

Press release dated April 29, 2019.

 


 

 

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 thereunto duly authorized.

 

 

 

KEARNY FINANCIAL CORP.

 

 

 

 

Date: April 30, 2019

 

By:

/s/ Craig L. Montanaro

 

 

 

Craig L. Montanaro

 

 

 

President and Chief Executive Officer

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

krny-ex991_6.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

April 29, 2019

 

For further information contact:

Keith Suchodolski, Executive Vice President and Chief Financial Officer

Kearny Financial Corp.

(973) 244-4500

 

KEARNY FINANCIAL CORP.

REPORTS THIRD QUARTER 2019 OPERATING RESULTS AND RETAIL BRANCH CONSOLIDATION

 

Fairfield, New Jersey, April 29, 2019 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended March 31, 2019 of $11.4 million, or $0.13 per basic and diluted share, as compared to net income of $10.8 million, or $0.12 per basic and diluted share, for the quarter ended December 31, 2018.

 

The Company concurrently announced the consolidation of seven of the Bank’s retail branches located in northern and central New Jersey as a part of its ongoing strategy to improve operating efficiency and enhance long-term shareholder value.  The Company considered several factors in identifying the locations to be consolidated including historical branch profitability, market demographic trajectory, geographic proximity to the consolidating branch and the expected impact on the Bank’s clients and communities served. Completion of these consolidations is expected to occur during the quarter ended September 30, 2019, subject to regulatory approval.  The Company anticipates these consolidations to result in annualized pre-tax cost savings of at least $3.0 million, after recognition of associated one-time charges.

 

Craig L. Montanaro, President and Chief Executive Officer, commented, “We are very pleased to report another quarter of solid earnings performance, particularly in the face of the continuing challenges presented by the flat yield curve.  Our decision to consolidate certain branch locations, while representing meaningful cost savings, also reflects the recognition that the preferences of our clients are rapidly evolving towards a more omni-channel banking model. As a result, our strategy remains focused on driving digital channel adoption and enhancing our suite of digital banking solutions to provide our clients with a frictionless experience through whichever channel is most convenient and appealing to them.”

Balance Sheet Highlights

 

Loans, excluding loans held for sale and the allowance for loan losses, decreased by $93.6 million to $4.66 billion, or 70.0% of total assets, at March 31, 2019 from $4.75 billion, or 70.9% of total assets, at December 31, 2018.  The decrease in loans was largely attributable to an elevated level of pre-payment activity in the commercial mortgage loan portfolio which outpaced loan origination volume during the period.  

 

Deposits decreased by $35.9 million to $4.14 billion at March 31, 2019, from $4.17 billion at December 31, 2018.  The net decrease was attributable to a decline of $47.3 million in wholesale deposits that was partially offset by an increase of $11.4 million in retail deposits reflecting the Company’s ongoing efforts to reallocate its funding mix from wholesale to retail deposits.

 

Investment securities increased by $54.2 million to $1.32 billion at March 31, 2019 from $1.26 billion at December 31, 2018 as a portion of the cash flows from the loan portfolio were deployed into U.S. agency commercial mortgage-backed securities with similar yields to the loans that pre-paid during the period.

 

Borrowings increased by $15.7 million to $1.33 billion at March 31, 2019, from $1.31 billion at December 31, 2018.  The net increase in borrowings reflected a $20.2 million increase in depositor sweep account balances that was partially offset by the repayment of a $5.0 million long-term Federal Home Loan Bank (“FHLB”) advance that matured during the period.  

Earnings Highlights

 

Interest income decreased by $365,000 to $59.7 million for the quarter ended March 31, 2019 from $60.0 million for the quarter ended December 31, 2018 while interest expense increased by $346,000 to $21.0 million from $20.7 million between the same comparative periods.  Consequently, net interest income decreased by $711,000 to $38.6 million for the quarter ended March 31, 2019, from $39.3 million for the quarter ended December 31, 2018.  

1

 


 

The Company’s interest rate spread decreased three basis points to 2.28% for the quarter ended March 31, 2019 from 2.31% for the quarter ended December 31, 2018.  The decrease in the interest rate spread primarily reflected a three basis point increase in the average cost of interest-bearing liabilities to 1.63% for the quarter ended March 31, 2019 from 1.60% for the quarter ended December 31, 2018 while the average yield on interest-earning assets remained stable at 3.91% for those same comparative periods.  The factors that contributed to the change in interest rate spread also contributed to a three basis point decrease in the Company’s net interest margin to 2.53% from 2.56%, for the same comparative periods.

The Company’s non-interest income continued to supplement and diversify its sources of revenue.

 

Fees and service charges increased by $416,000, or 33.1%, to $1.7 million for the quarter ended March 31, 2019 compared to $1.3 million for the quarter ended December 31, 2018.  This increase was largely driven by pre-payment fee income on commercial real estate loans related to the elevated level of pre-payment activity noted above.

 

Aggregate loan sale gains increased by $50,000, or 49.5%, to $151,000 for the quarter ended March 31, 2019 as compared to $101,000 for the quarter ended December 31, 2018 largely reflecting an increase in the volume of loans sold.

The Company continued to evaluate and implement tactics and strategies designed to improve operating efficiency and make more effective use of its supporting infrastructure while maintaining its effective income tax rate.

 

Non-interest expense decreased by $499,000 to $26.8 million for the quarter ended March 31, 2019 compared to $27.3 million for the quarter ended December 31, 2018.  The decrease was largely attributable to various non-recurring expenses that were recognized during the quarter ended December 31, 2018 in conjunction with the October 2018 conversion of Clifton Savings Bank’s core processing system.  The decrease in non-interest expense also reflected a net decrease of $349,000 in salaries and employee benefit expense from $15.7 million for the quarter ended December 31, 2018 to $15.4 million for the quarter ended March 31, 2019 largely attributable to decreases in wages, overtime and employee bonus compensation, partially offset by an increase in employer payroll tax expense.  These decreases were partially offset by an increase in facilities occupancy expense which was primarily attributable to seasonal fluctuations in such expenses.

 

The Company’s ratio of non-interest expense to average assets totaled 1.60% for the quarter ended March 31, 2019 compared to 1.62% for the prior quarter ended December 31, 2018.  For those same comparative periods, the Company’s efficiency ratios were 63.3% and 63.9%, respectively.  

 

Income tax expense totaled $4.3 million for the quarter ended March 31, 2019 compared to $3.6 million for the quarter ended December 31, 2018 resulting in effective tax rates of 27.4% and 25.3%, respectively.

Collectively, these factors resulted in an increase of $649,000 in net income for the quarter ended March 31, 2019 compared to the prior quarter ended December 31, 2018.

 

The Company’s return on average assets for the quarter ended March 31, 2019 increased to 0.68% from 0.64% for the quarter ended December 31, 2018.  

 

The Company’s return on average equity increased to 3.89% for the quarter ended March 31, 2019 from 3.55% for the quarter ended December 31, 2018 while the Company’s return on average tangible equity increased to 4.78% from 4.33% for the comparative periods.

Asset Quality Highlights

 

Asset quality remained strong throughout the quarter ended March 31, 2019.  The outstanding balance of nonperforming loans totaled $21.3 million, or 0.46% of total loans, at March 31, 2019 as compared to $20.8 million, or 0.44% of total loans, at December 31, 2018.  

 

The allowance for loan losses decreased to $33.1 million at March 31, 2019 from $33.5 million at December 31, 2018, resulting in a total loan coverage ratio, representing the balance of the allowance for loan losses as a percentage of total loans, excluding loans held for sale, of 0.70% for both comparative periods.  The total loan coverage ratio for both periods 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.

 

The Company recognized net charge offs totaling approximately $242,000 for the quarter ended March 31, 2019, reflecting an annualized net charge off rate of 0.02% on the average balance of total loans for the period. By comparison, the Company’s

2

 


 

net charge offs totaled approximately $176,000 for the quarter ended December 31, 2018, reflecting an annualized net charge off rate of 0.01%.

 

The Company recorded a loan loss provision reversal of $179,000 for the quarter ended March 31, 2019 as compared to a provision for loan loss expense of $971,000 for the quarter ended December 31, 2018.  The decrease in provision for loan loss was largely attributable to the net decrease during the quarter ended March 31, 2019 in the performing portion of the loan portfolio that was collectively evaluated for impairment.

Capital Highlights

 

The Company increased its regular quarterly cash dividend by $0.01 per share, to $0.06 per share during the quarter ended March 31, 2019, from $0.05 per share during the quarter ended December 31, 2018.  The Company continually evaluates its dividend policies and practices in relation to its overall capital management and shareholder value objectives.

 

In March 2019, the Company completed the repurchase of its shares of common stock under its third share repurchase program announced in April 2018 through which it authorized the repurchase of 10,238,557 shares, or 10%, of the Company’s outstanding shares.  The shares associated with this third program were repurchased at a total cost of $138.8 million and at an average cost of $13.55 per share.  Concurrently, the Company announced its fourth share repurchase program through which it authorized the repurchase of 9,218,324 shares, or 10%, of the Company’s outstanding shares as of that date.

 

During the quarter ended March 31, 2019, the Company repurchased 2,445,689 shares of its common stock at a total cost of $32.4 million and an average cost of $13.24 per share.  The shares of common stock repurchased during the period included 1,757,572 shares attributed to the completion of the Company’s third share repurchase program, as noted above.  Such shares were repurchased at a total cost of $23.3 million and an average cost of $13.24 per share.  The additional 688,117 shares repurchased during the period represented 7.5% of the total shares to be repurchased under the Company’s fourth share repurchase program, also noted above.  Such shares were repurchased at a total cost of $9.1 million and at an average cost of $13.24 per share.

 

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

The exhibits that follow this narrative begin with the presentation of the Linked-Quarter Comparative Financial Analysis that supports the discussion above by presenting the Company’s financial condition and operating results for the quarter ended March 31, 2019 compared to those for the prior linked-quarter ended December 31, 2018.  This analysis is followed by a tabular Five-Quarter Financial Trend Analysis that presents similar financial information, together with other financial highlights and performance metrics, over a consecutive five quarter look-back period that is intended to reflect the Company’s financial performance and strategic achievements over this extended period of time.  The exhibits conclude with the presentation of the Reconciliation of GAAP to Non-GAAP financial data included in this news release.

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.

3

 


Linked-Quarter Comparative Financial Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Balance Sheet

At

 

 

 

 

Variance

 

(Dollars and Shares in Thousands,

March 31,

 

December 31,

 

Variance

 

or Change

 

Except Per Share Data, Unaudited)

2019

 

2018

 

or Change

 

Pct.

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

54,160

 

$

51,483

 

$

2,677

 

 

5.2

%

Securities available for sale

 

726,920

 

 

666,602

 

 

60,318

 

 

9.0

%

Securities held to maturity

 

592,199

 

 

598,318

 

 

(6,119

)

 

-1.0

%

Loans held-for-sale

 

997

 

 

1,001

 

 

(4

)

 

-0.4

%

Loans receivable, including yield adjustments

 

4,659,804

 

 

4,753,392

 

 

(93,588

)

 

-2.0

%

Less allowance for loan losses

 

(33,105

)

 

(33,526

)

 

421

 

 

-1.3

%

Net loans receivable

 

4,626,699

 

 

4,719,866

 

 

(93,167

)

 

-2.0

%

Premises and equipment

 

58,274

 

 

58,414

 

 

(140

)

 

-0.2

%

Federal Home Loan Bank stock

 

64,288

 

 

64,514

 

 

(226

)

 

-0.4

%

Accrued interest receivable

 

20,326

 

 

19,435

 

 

891

 

 

4.6

%

Goodwill

 

210,895

 

 

210,895

 

 

-

 

 

0.0

%

Core deposit intangible

 

5,470

 

 

5,743

 

 

(273

)

 

-4.8

%

Bank owned life insurance

 

254,569

 

 

253,009

 

 

1,560

 

 

0.6

%

Deferred income taxes, net

 

24,182

 

 

24,692

 

 

(510

)

 

-2.1

%

Other real estate owned

 

209

 

 

508

 

 

(299

)

 

-58.9

%

Other assets

 

19,563

 

 

27,960

 

 

(8,397

)

 

-30.0

%

Total assets

$

6,658,751

 

$

6,702,440

 

$

(43,689

)

 

-0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

4,137,573

 

$

4,173,434

 

$

(35,861

)

 

-0.9

%

Borrowings

 

1,326,216

 

 

1,310,547

 

 

15,669

 

 

1.2

%

Advance payments by borrowers for taxes

 

17,208

 

 

17,201

 

 

7

 

 

0.0

%

Other liabilities

 

19,643

 

 

17,997

 

 

1,646

 

 

9.1

%

Total liabilities

 

5,500,640

 

 

5,519,179

 

 

(18,539

)

 

-0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

915

 

 

938

 

 

(23

)

 

-2.5

%

Paid-in capital

 

817,675

 

 

848,145

 

 

(30,470

)

 

-3.6

%

Retained earnings

 

363,072

 

 

356,993

 

 

6,079

 

 

1.7

%

Unearned ESOP shares

 

(31,130

)

 

(31,617

)

 

487

 

 

-1.5

%

Accumulated other comprehensive income, net

 

7,579

 

 

8,802

 

 

(1,223

)

 

-13.9

%

Total stockholders' equity

 

1,158,111

 

 

1,183,261

 

 

(25,150

)

 

-2.1

%

Total liabilities and stockholders' equity

$

6,658,751

 

$

6,702,440

 

$

(43,689

)

 

-0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated capital ratios

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets

 

17.39

%

 

17.65

%

 

-0.26

%

 

 

 

Tangible equity to tangible assets

 

14.62

%

 

14.90

%

 

-0.28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares

 

91,495

 

 

93,772

 

 

(2,277

)

 

-2.4

%

Equity per share

$

12.66

 

$

12.62

 

$

0.04

 

 

0.3

%

Tangible equity per share (1)

$

10.29

 

$

10.31

 

$

(0.02

)

 

-0.2

%

 

(1)

Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

 

4

 


Summary Income Statement

For the three months ended

 

 

 

 

Variance

 

(Dollars and Shares in Thousands,

March 31,

 

December 31,

 

Variance

 

or Change

 

Except Per Share Data, Unaudited)

2019

 

2018

 

or Change

 

Pct.

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

48,116

 

$

49,015

 

$

(899

)

 

-1.8

%

Taxable investment securities

 

9,511

 

 

9,051

 

 

460

 

 

5.1

%

Tax-exempt investment securities

 

710

 

 

713

 

 

(3

)

 

-0.4

%

Other interest-earning assets

 

1,320

 

 

1,243

 

 

77

 

 

6.2

%

Total Interest Income

 

59,657

 

 

60,022

 

 

(365

)

 

-0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

14,114

 

 

12,727

 

 

1,387

 

 

10.9

%

Borrowings

 

6,905

 

 

7,946

 

 

(1,041

)

 

-13.1

%

Total interest expense

 

21,019

 

 

20,673

 

 

346

 

 

1.7

%

Net interest income

 

38,638

 

 

39,349

 

 

(711

)

 

-1.8

%

(Reversal of) provision for loan losses

 

(179

)

 

971

 

 

(1,150

)

 

-118.4

%

Net interest income after provision for

  loan losses

 

38,817

 

 

38,378

 

 

439

 

 

1.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

1,674

 

 

1,258

 

 

416

 

 

33.1

%

Loss on sale and call of securities

 

(182

)

 

-

 

 

(182

)

N/A

 

Gain on sale of loans

 

151

 

 

101

 

 

50

 

 

49.5

%

(Loss) gain on sale and write down of other real estate owned

 

(6

)

 

36

 

 

(42

)

 

-116.7

%

Income from bank owned life insurance

 

1,560

 

 

1,599

 

 

(39

)

 

-2.4

%

Electronic banking fees and charges

 

253

 

 

277

 

 

(24

)

 

-8.7

%

Miscellaneous

 

226

 

 

38

 

 

188

 

 

494.7

%

Total non-interest income

 

3,676

 

 

3,309

 

 

367

 

 

11.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

15,350

 

 

15,699

 

 

(349

)

 

-2.2

%

Net occupancy expense of premises

 

2,979

 

 

2,761

 

 

218

 

 

7.9

%

Equipment and systems

 

3,053

 

 

3,377

 

 

(324

)

 

-9.6

%

Advertising and marketing

 

739

 

 

787

 

 

(48

)

 

-6.1

%

Federal deposit insurance premium

 

455

 

 

421

 

 

34

 

 

8.1

%

Directors' compensation

 

770

 

 

746

 

 

24

 

 

3.2

%

Miscellaneous

 

3,425

 

 

3,479

 

 

(54

)

 

-1.6

%

Total non-interest expense

 

26,771

 

 

27,270

 

 

(499

)

 

-1.8

%

Income before income taxes

 

15,722

 

 

14,417

 

 

1,305

 

 

9.1

%

Income taxes

 

4,305

 

 

3,649

 

 

656

 

 

18.0

%

Net income

$

11,417

 

$

10,768

 

$

649

 

 

6.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.13

 

$

0.12

 

$

0.01

 

 

 

 

Diluted

$

0.13

 

$

0.12

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.06

 

$

0.05

 

$

0.01

 

 

 

 

Cash dividends declared

$

5,338

 

$

4,082

 

$

1,256

 

 

 

 

Dividend payout ratio

 

46.8

%

 

37.9

%

 

8.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of  common

shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

89,488

 

 

92,434

 

 

(2,946

)

 

 

 

Diluted

 

89,532

 

 

92,480

 

 

(2,948

)

 

 

 

 

 

 

5

 


For the three months ended

 

 

 

 

Variance

 

Average Balance Sheet Data

March 31,

 

December 31,

 

Variance

 

or Change

 

(Dollars in Thousands, Unaudited)

2019

 

2018

 

or Change

 

Pct.

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

$

4,709,052

 

$

4,758,587

 

$

(49,535

)

 

-1.0

%

Taxable investment securities

 

1,161,492

 

 

1,158,720

 

 

2,772

 

 

0.2

%

Tax-exempt investment securities

 

134,309

 

 

135,453

 

 

(1,144

)

 

-0.8

%

Other interest-earning assets

 

107,554

 

 

87,916

 

 

19,638

 

 

22.3

%

Total interest-earning assets

 

6,112,407

 

 

6,140,676

 

 

(28,269

)

 

-0.5

%

Non-interest-earning assets

 

574,921

 

 

587,921

 

 

(13,000

)

 

-2.2

%

Total assets

$

6,687,328

 

$

6,728,597

 

$

(41,269

)

 

-0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

$

790,567

 

$

792,989

 

$

(2,422

)

 

-0.3

%

Savings and club

 

773,308

 

 

743,676

 

 

29,632

 

 

4.0

%

Certificates of deposit

 

2,288,836

 

 

2,214,932

 

 

73,904

 

 

3.3

%

Total interest-bearing deposits

 

3,852,711

 

 

3,751,597

 

 

101,114

 

 

2.7

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,292,168

 

 

1,293,470

 

 

(1,302

)

 

-0.1

%

Other borrowings

 

26,037

 

 

119,281

 

 

(93,244

)

 

-78.2

%

Total borrowings

 

1,318,205

 

 

1,412,751

 

 

(94,546

)

 

-6.7

%

Total interest-bearing liabilities

 

5,170,916

 

 

5,164,348

 

 

6,568

 

 

0.1

%

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

307,645

 

 

315,165

 

 

(7,520

)

 

-2.4

%

Other non-interest-bearing liabilities

 

35,930

 

 

37,374

 

 

(1,444

)

 

-3.9

%

Total non-interest-bearing liabilities

 

343,575

 

 

352,539

 

 

(8,964

)

 

-2.5

%

Total liabilities

 

5,514,491

 

 

5,516,887

 

 

(2,396

)

 

0.0

%

Stockholders' equity

 

1,172,837

 

 

1,211,710

 

 

(38,873

)

 

-3.2

%

Total liabilities and stockholders' equity

$

6,687,328

 

$

6,728,597

 

$

(41,269

)

 

-0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to average

interest-bearing liabilities

 

118.21

%

 

118.91

%

 

-0.70

%

 

-0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 


For the three months ended

 

 

 

 

 

March 31,

 

December 31,

 

Variance

 

Performance Ratio Highlights

2019

 

2018

 

or Change

 

Average yield on interest-earning assets:

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

 

4.09

%

 

4.12

%

 

-0.03

%

Taxable investment securities

 

3.28

%

 

3.12

%

 

0.16

%

Tax-exempt investment securities (1)

 

2.12

%

 

2.11

%

 

0.01

%

Other interest-earning assets

 

4.91

%

 

5.66

%

 

-0.75

%

Total interest-earning assets

 

3.91

%

 

3.91

%

 

0.00

%

 

 

 

 

 

 

 

 

 

 

Average cost of interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

1.06

%

 

0.97

%

 

0.09

%

Savings and club

 

0.60

%

 

0.49

%

 

0.11

%

Certificates of deposit

 

1.90

%

 

1.79

%

 

0.11

%

Total interest-bearing deposits

 

1.47

%

 

1.36

%

 

0.11

%

Borrowings:

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

2.13

%

 

2.27

%

 

-0.14

%

Other borrowings

 

0.35

%

 

1.99

%

 

-1.64

%

Total borrowings

 

2.10

%

 

2.25

%

 

-0.15

%

Total interest-bearing liabilities

 

1.63

%

 

1.60

%

 

0.03

%

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

2.28

%

 

2.31

%

 

-0.03

%

Net interest margin (3)

 

2.53

%

 

2.56

%

 

-0.03

%

 

 

 

 

 

 

 

 

 

 

Non-interest income to average assets

(annualized)

 

0.22

%

 

0.20

%

 

0.02

%

Non-interest expense to average assets

(annualized)

 

1.60

%

 

1.62

%

 

-0.02

%

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

63.27

%

 

63.93

%

 

-0.66

%

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

0.68

%

 

0.64

%

 

0.04

%

Return on average equity (annualized)

 

3.89

%

 

3.55

%

 

0.34

%

Return on average tangible equity (annualized) (5)

 

4.78

%

 

4.33

%

 

0.45

%

 

(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.

 

 

7

 


Five-Quarter Financial Trend Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Balance Sheet

At

 

(Dollars and Shares in Thousands,

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

Except Per Share Data, Unaudited)

2019

 

2018

 

2018

 

2018

 

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

54,160

 

$

51,483

 

$

44,486

 

$

128,864

 

$

38,283

 

Securities available for sale

 

726,920

 

 

666,602

 

 

706,240

 

 

725,085

 

 

684,771

 

Securities held to maturity

 

592,199

 

 

598,318

 

 

602,838

 

 

589,730

 

 

459,380

 

Loans held-for-sale

 

997

 

 

1,001

 

 

1,503

 

 

863

 

 

2,377

 

Loans receivable, including yield adjustments

 

4,659,804

 

 

4,753,392

 

 

4,660,507

 

 

4,501,348

 

 

3,351,369

 

Less allowance for loan losses

 

(33,105

)

 

(33,526

)

 

(32,731

)

 

(30,865

)

 

(30,248

)

Net loans receivable

 

4,626,699

 

 

4,719,866

 

 

4,627,776

 

 

4,470,483

 

 

3,321,121

 

Premises and equipment

 

58,274

 

 

58,414

 

 

57,635

 

 

56,240

 

 

42,856

 

Federal Home Loan Bank stock

 

64,288

 

 

64,514

 

 

66,428

 

 

59,004

 

 

39,112

 

Accrued interest receivable

 

20,326

 

 

19,435

 

 

19,455

 

 

18,510

 

 

13,926

 

Goodwill

 

210,895

 

 

210,895

 

 

210,895

 

 

210,895

 

 

108,591

 

Core deposit intangible

 

5,470

 

 

5,743

 

 

6,018

 

 

6,295

 

 

206

 

Bank owned life insurance

 

254,569

 

 

253,009

 

 

251,410

 

 

249,816

 

 

184,981

 

Deferred income taxes, net

 

24,182

 

 

24,692

 

 

22,136

 

 

23,754

 

 

3,898

 

Other real estate owned

 

209

 

 

508

 

 

674

 

 

725

 

 

1,094

 

Other assets

 

19,563

 

 

27,960

 

 

38,717

 

 

39,610

 

 

33,104

 

Total assets

$

6,658,751

 

$

6,702,440

 

$

6,656,211

 

$

6,579,874

 

$

4,933,700