FAIRFIELD, N.J., Jan. 30, 2018 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ:KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended December 31, 2017 of $1.3 million, or $0.02 per basic and diluted share.  The results represent a decrease in net income of $3.9 million compared to net income of $5.2 million, or $0.07 per basic and diluted share, for the quarter ended September 30, 2017.

As discussed in greater detail below, the decrease in net income primarily reflected the impact of federal income tax reform that was codified through the passage of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017.  The decrease in net income also reflected the recognition of certain merger-related expenses related to the Company’s proposed acquisition of Clifton Bancorp, Inc. (“CSBK”), the holding company for Clifton Savings Bank (“Clifton”).

The Act permanently reduced the Company’s federal income tax rate from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company.  While, collectively, the provisions of the Act are expected to benefit the Company’s future earnings, it resulted in a $3.5 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the three months ended December 31, 2017.  The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognized for income tax reporting purposes.  That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.

The net charge of $3.5 million attributable to the changes in the carrying value of deferred income tax items was partially offset by a $769,000 reduction in current-year income tax expense attributable to the noted reduction in the Company’s income tax rate.  For the current “transition” year ending June 30, 2018, the Company’s statutory federal income tax rate has been reduced to 28%, reflecting effective statutory rates of 35% and 21% for the first and second halves of the year, respectively.  For the fiscal year ending June 30, 2019 and thereafter, the Company’s statutory federal income tax rate will be reduced to 21%.

As noted above, the decrease in net income between linked periods also reflects the Company’s recognition of $1.2 million of merger-related expenses related to its proposed acquisition of CSBK. The Company estimates that net income was adversely impacted by approximately $1.0 million for merger-related expenses recognized during the three months ended December 31, 2017 due to their limited income tax deductibility.  The proposed CSBK acquisition was announced on November 1, 2017, whereby the Company entered into a definitive agreement pursuant to which it will acquire CSBK in an all-stock transaction.  Under the terms of the agreement, each outstanding share of CSBK common stock will be exchanged for 1.191 shares of KRNY common stock.

Excluding the impacts on net income arising from federal income tax reform and merger-related expenses discussed above, the Company’s net income would have been $5.0 million or $0.06 per basic and diluted share for the three months ended December 31, 2017.

Overview

The Company continued to execute strategies during the second quarter of fiscal 2018 intended to grow and diversify its balance sheet while increasing its core earnings and prudently managing capital to promote long-term growth in shareholder value.  These strategies resulted in several incremental balance sheet growth and diversification achievements that are included among the following highlights for the quarter:

• The Company’s aggregate loan portfolio, excluding loans held for sale and the allowance for loan losses, increased by $31.2 million to $3.29 billion, or 68.0% of total assets, at December 31, 2017 from $3.26 billion, or 67.8% of total assets, at September 30, 2017.  The growth in the loan portfolio largely reflected the Company’s continued strategic focus on growing and diversifying its commercial loan portfolio with the outstanding balance of construction loans increasing by $13.9 million to $22.2 million at December 31, 2017 while the outstanding balance of commercial business loans increased by $10.8 million to $92.4 million for that same period.

• For those same comparative periods, the balance of commercial mortgage loans remained stable at $2.51 billion.  The overall stability in the balance of commercial mortgage loans reflected an accelerated pace of loan prepayments that offset the growth in loans arising from new loan origination volume.  The Company continues to execute strategies designed to increase the origination volume of commercial mortgage loans to compensate for the noted increase in prepayments.  Toward that end, the Company’s pipeline of commercial mortgage loans in the underwriting process increased during the quarter ended December 31, 2017.

• The outstanding balance of residential mortgage loans held in the portfolio, including home equity loans and lines of credit, increased by $15.0 million to $655.3 million at December 31, 2017 from $640.3 million at September 30, 2017.  The increase largely reflected loan purchases of approximately $22.2 million during the three months ended December 31, 2017 that were intended to augment the growth in the loan portfolio and partially offset the effects of the increase in prepayments noted above.

• Nonperforming loans decreased by $1.8 million to $16.3 million, or 0.50% of total loans, at December 31, 2017 from $18.1 million, or 0.56% of total loans, at September 30, 2017. 

• The allowance for loan losses increased to $30.1 million at December 31, 2017 from $29.4 million at September 30, 2017, resulting in a “total loan coverage ratio”, representing the balance of the allowance for loan losses as a percentage of total loans, of 0.91% and 0.90%, respectively.

• The “nonperforming loan coverage ratio”, representing the balance of the allowance for loan losses as a percentage of nonperforming loans, increased to 184.0% at December 31, 2017 from 162.6% at September 30, 2017.

• The Company’s securities portfolio decreased by $10.4 million to $1.11 billion, or 22.9% of total assets, at December 31, 2017 from $1.12 billion, or 23.3% of total assets, at September 30, 2017.  The net decrease in the securities portfolio partly reflected normal principal repayments arising from amortization and maturities of securities. A portion of the security repayments were used to fund the growth in loans while the remainder was reinvested into uncapped, floating-rate securities, tax-advantaged municipal securities, mortgage-backed securities and subordinated debt issued by two community banks located in New Jersey and eastern Pennsylvania.  The decrease in the securities portfolio also reflected a $2.0 million decrease in the fair value of the available for sale securities portfolio during the period. 

• The balance of cash and cash equivalents increased by $11.9 million to $50.7 million at December 31, 2017 from $38.8 million at September 30, 2017.  The increase largely reflected day-to-day operating fluctuations in the Company’s balance of cash and cash equivalents.  Notwithstanding the noted increase in the comparative period-end balances, the Company continues to limit the balance of cash and cash equivalents held to the minimum levels needed to meet its day-to-day funding obligations and overall liquidity risk management objectives.  Toward that end, the average balance of other interest-earning assets remained stable at $82.5 million for the quarter ended December 31, 2017 compared to $79.9 million for the quarter ended September 30, 2017.  Other interest-earning assets generally include the balance of interest-earning cash deposits held in other banks coupled with the balance of the Bank’s mandatory investment in the capital stock of the Federal Home Loan Bank of New York.

• The Company’s total deposits increased by $80.5 million to $3.03 billion at December 31, 2017, from $2.95 billion at September 30, 2017.  The net growth in deposits included an $84.7 million increase in interest-bearing deposits that was partially offset by a $4.2 million decrease in non-interest-bearing deposits.  The growth in interest-bearing deposits largely reflected the continuing effects of product, pricing and marketing strategies enacted during fiscal 2017.  The decrease in non-interest-bearing deposits largely reflected day-to-day operating fluctuations in such balances.  Notwithstanding the noted decrease in the comparative period-end balances, the average balance of non-interest-bearing deposits increased by $2.4 million between comparative periods.

• Total borrowings decreased by $9.7 million to $798.9 million at December 31, 2017, from $808.6 million at September 30, 2017.  The decrease in borrowings largely reflected a $9.7 million decrease in depositor sweep account balances representing normal day-to-day fluctuations in such balances.

• The Company’s stockholders’ equity decreased by $25.0 million to $989.3 million at December 31, 2017 from $1.01 billion at September 30, 2017.  The decrease largely reflected the effects of the Company’s share repurchases and cash dividends paid to stockholders during the period.  The decrease in stockholders’ equity was partially offset by net income earned during the period coupled with a net increase in accumulated other comprehensive income reflecting an increase in the fair value of the Company’s derivatives portfolio, which was partially offset by a decrease in the fair value of the Company’s available for sale securities portfolio.

• At December 31, 2017, the Company’s total consolidated equity to assets ratio was 20.42% while the Bank’s total consolidated equity to assets ratio was 17.68%. The Company’s and Bank’s capital ratios at December 31, 2017 were well in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines. 

As highlighted below, the noted balance sheet growth, reinvestment and reallocation achievements helped to offset the adverse effects of an increase in market interest rates and a flattening yield curve on the Company’s net interest margin:

• The Company’s net interest income was $26.8 million for the quarters ended December 31, 2017 and September 30, 2017, reflecting an increase of $25,000 between comparative periods. 

• The Company’s net interest margin increased by one basis point to 2.41% for the quarter ended December 31, 2017 from 2.40% for the quarter ended September 30, 2017 while the net interest rate spread also increased by one basis point to 2.14% from 2.13% for those same comparative periods, respectively.

The level of the Company’s charge offs and provision for loan losses continued to reflect strong asset quality metrics:

• The Company recognized net charge offs totaling approximately $315,000, reflecting an annualized charge off rate of 0.04% on the average balance of total loans for the quarter ended December 31, 2017. By comparison, the Company’s net charge offs totaled approximately $471,000 for the quarter ended September 30, 2017, reflecting a net charge off rate of 0.06%.

• The Company’s provision for loan losses increased by $306,000 to $936,000 for the quarter ended December 31, 2017 compared to $630,000 for the quarter ended September 30, 2017.  The increase in the provision was partly attributable to the comparatively greater level of growth during the quarter ended December 31, 2017 in the performing portion of the loan portfolio that is collectively evaluated for impairment using historical and environmental loss factors.  Such growth was concentrated in specific segments of the loan portfolio whose estimated credit losses for ALLL calculation purposes are based on comparatively higher loss factors compared to other segments in the portfolio.  The effects of the greater level of growth in the portfolio was partially offset by the decrease in net charge offs between the two comparative periods, as discussed above.  The increase in the provision also reflected updates to historical and environmental loss factors during the period.

The strategies executed by the Company during the quarter ended December 31, 2017 continued to strengthen and diversify its sources of non-interest income, as highlighted below:

• Gains on sale of residential mortgage loans totaled $200,000 for the quarter ended December 31, 2017 compared to $213,000 for the quarter ended September 30, 2017.  The modest decrease in sale gains reflected a decrease in the volume of loans originated and sold that was partially offset by an increase in the average net gain recognized per loan sold between comparative periods.  There were no SBA loans originated and sold during the three months ended December 31, 2017.

In addition to the items noted above, fees and service charges increased by $148,000 to $1.4 million for the quarter ended December 31, 2017 from $1.3 million for the quarter ended September 30, 2017.  The increase was largely attributable to an increase in commercial mortgage loan prepayment charges recognized between comparative periods.

The Company continues to evaluate and implement tactics and strategies designed to improve operating practices, policies and procedures while making more efficient and effective use of its supporting infrastructure, including human resources, facilities and information technology systems. 

• The Company’s ratio of non-interest expense to average assets totaled 1.89% for the quarter ended December 31, 2017 compared to 1.77% for the prior quarter ended September 30, 2017.  For those same comparative periods, the Company’s operating efficiency ratio increased to 75.6% from 71.2%, respectively.  As noted earlier, the increases in these ratios reflect the recognition of $1.2 million in non-recurring merger-related expenses during the three months ended December 31, 2017 for which no such expenses were recognized during the earlier comparative quarter.  Excluding the impact of merger-related expenses, the Company’s non-interest expense to average assets and efficiency ratios would have been 1.79% and 71.7%, respectively, for the three months ended December 31, 2017.

Collectively, the factors noted above contributed to the decrease in net income for the quarter ended December 31, 2017 compared to the prior quarter ended September 30, 2017.  The decrease in net income had an unfavorable impact on the Company’s earnings-based performance ratios as highlighted below:

• The Company’s return on average assets for the quarter ended December 31, 2017 totaled 0.11% compared to 0.43% for the prior quarter ended September 30, 2017.  Excluding the impacts on net income arising from federal income tax reform and merger-related expenses discussed above, the Company’s return on average assets would have been 0.42% for the three months ended December 31, 2017.

• The Company’s return on average equity for the quarter ended December 31, 2017 totaled 0.51% compared to 2.00% for the prior quarter ended September 30, 2017.  Excluding the impacts on net income arising from federal income tax reform and merger-related expenses discussed above, the Company’s return on average equity would have been 2.00% for the three months ended December 31, 2017.

The Company continued to execute key capital management strategies during the second quarter of fiscal 2018 to further support shareholder value:

• The Company maintained its regular quarterly cash dividend payable to stockholders of $0.03 per share declared and paid during the quarter ended December 31, 2017.

• In May 2017, the Company announced its second share repurchase program through which it authorized the repurchase of 8,559,084 shares, or 10%, of the Company’s outstanding shares.  During the quarter ended December 31, 2017, the Company repurchased a total of 1,943,840 of its shares at an average cost of $14.83 per share.  Through December 31, 2017, the Company has repurchased a total of 5,986,840 shares, or 69.9% of the number of shares authorized under the current program, at a total cost of $87.0 million and at an average cost of $14.54 per share.

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 December 31, 2017 compared to those for the prior quarter ended September 30, 2017.  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.

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 Kearny Financial Corp. 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.

For further information contact:
Craig L. Montanaro, President and Chief Executive Officer, or
Eric B. Heyer, Executive Vice President and Chief Financial Officer
Kearny Financial Corp.
(973) 244-4500

Linked-Quarter Comparative Financial Analysis
Summary Balance Sheet (Dollars and Shares in Thousands, Except Per Share Data, Unaudited)	At						Variance or Change			Variance or Change Pct.
	December 31,			September 30,
	2017			2017
Assets
Cash and cash equivalents	$	50,685		$	38,823		$	11,862			30.6
Securities available for sale		637,671			636,600			1,071			0.2
Securities held to maturity		471,452			482,926			(11,474	)		(2.4	)
Loans held-for-sale		3,490			3,808			(318	)		(8.4	)
Loans receivable, including yield adjustments		3,291,516			3,260,328			31,188			1.0
Less allowance for loan losses		(30,066	)		(29,445	)		(621	)		2.1
Net loans receivable		3,261,450			3,230,883			30,567			0.9
Premises and equipment		41,829			40,132			1,697			4.2
Federal Home Loan Bank stock		39,113			39,115			(2	)		(0.0	)
Accrued interest receivable		13,524			13,268			256			1.9
Goodwill		108,591			108,591			-			-
Bank owned life insurance		183,754			182,489			1,265			0.7
Deferred income taxes, net		6,941			13,230			(6,289	)		(47.5	)
Other assets		25,347			18,285			7,062			38.6
Total assets	$	4,843,847		$	4,808,150		$	35,697			0.7
Liabilities
Deposits	$	3,033,766		$	2,953,268		$	80,498			2.7
Borrowings		798,864			808,554			(9,690	)		(1.2	)
Advance payments by borrowers for taxes		8,511			9,787			(1,276	)		(13.0	)
Other liabilities		13,433			22,308			(8,875	)		(39.8	)
Total liabilities		3,854,574			3,793,917			60,657			1.6
Stockholders' Equity
Common stock		795			815			(20	)		(2.5	)
Paid-in capital		662,093			690,204			(28,111	)		(4.1	)
Retained earnings		353,536			354,123			(587	)		(0.2	)
Unearned ESOP shares		(33,563	)		(34,049	)		486			(1.4	)
Accumulated other comprehensive income, net		6,412			3,140			3,272			104.2
Total stockholders' equity		989,273			1,014,233			(24,960	)		(2.5	)
Total liabilities and stockholders' equity	$	4,843,847		$	4,808,150		$	35,697			0.7
Consolidated capital ratios
Equity to assets		20.42	%		21.09	%		-0.67	%
Tangible equity to tangible assets		18.59	%		19.27	%		-0.68	%
Share data
Outstanding shares		79,527			81,548			(2,021	)		(2.5	)
Equity per share	$	12.44		$	12.44		$	-			-
Tangible equity per share (1)	$	11.07		$	11.10		$	(0.03	)		(0.3	)
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.
Summary Income Statement (Dollars and Shares in Thousands, Except Per Share Data, Unaudited)	For the three months ended						Variance or Change			Variance or Change Pct.
	December 31,			September 30,
	2017			2017
Interest income
Loans	$	30,610		$	30,473		$	137			0.4
Mortgage-backed securities		2,848			2,896			(48	)		(1.7	)
Debt securities:
Taxable		3,229			2,960			269			9.1
Tax-exempt		641			621			20			3.2
Other interest-earning assets		704			642			62			9.7
Total Interest Income		38,032			37,592			440			1.2
Interest expense
Deposits		6,649			6,219			430			6.9
Borrowings		4,548			4,563			(15	)		(0.3	)
Total interest expense		11,197			10,782			415			3.8
Net interest income		26,835			26,810			25			0.1
Provision for loan losses		936			630			306			48.6
Net interest income after provision for loan losses		25,899			26,180			(281	)		(1.1	)
Non-interest income
Fees and service charges		1,409			1,261			148			11.7
Gain on sale of loans		200			331			(131	)		(39.6	)
Gain (loss) on sale of real estate owned		23			(109	)		132			(121.1	)
Income from bank owned life insurance		1,264			1,267			(3	)		(0.2	)
Electronic banking fees and charges		302			278			24			8.6
Miscellaneous		65			66			(1	)		(1.5	)
Total non-interest income		3,263			3,094			169			5.5
Non-interest expense
Salaries and employee benefits		12,926			12,867			59			0.5
Net occupancy expense of premises		2,122			1,981			141			7.1
Equipment and systems		2,193			2,190			3			0.1
Advertising and marketing		748			710			38			5.4
Federal deposit insurance premium		343			360			(17	)		(4.7	)
Directors' compensation		688			689			(1	)		(0.1	)
Merger-related expenses		1,193			-			1,193			-
Miscellaneous		2,551			2,489			62			2.5
Total non-interest expense		22,764			21,286			1,478			6.9
Income before income taxes		6,398			7,988			(1,590	)		(19.9	)
Income taxes		5,129			2,756			2,373			86.1
Net income	$	1,269		$	5,232		$	(3,963	)		(75.7	)
Net income per common share (EPS)
Basic	$	0.02		$	0.07		$	(0.05	)
Diluted	$	0.02		$	0.07		$	(0.05	)
Dividends declared (1)
Cash dividends declared per common share	$	0.03		$	0.15		$	(0.12	)
Cash dividends declared	$	1,856		$	12,148		$	(10,292	)
Dividend payout ratio		146.3	%		232.2	%		-85.93	%
Weighted average number of  common  shares outstanding
Basic		77,174			79,649			(2,475	)
Diluted		77,239			79,708			(2,469	)
(1) Dividends declared during the quarter ended September 30, 2017 include a $0.12 special dividend representing a supplemental   distribution of net income to stockholders from the prior fiscal year ended June 30, 2017.
Average Balance Sheet Data (Dollars in Thousands, Unaudited)	For the three months ended						Variance or Change			Variance or Change Pct.
	December 31,			September 30,
	2017			2017
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	3,255,862		$	3,257,465		$	(1,603	)		(0.0	)
Mortgage-backed securities		501,081			511,931			(10,850	)		(2.1	)
Debt securities:											-
Tax-exempt		126,214			122,685			3,529			2.9
Taxable		495,316			489,252			6,064			1.2
Total debt securities		621,530			611,937			9,593			1.6
Other interest-earning assets		82,539			79,920			2,619			3.3
Total interest-earning assets		4,461,012			4,461,253			(241	)		(0.0	)
Non-interest-earning assets		364,015			361,259			2,756			0.8
Total assets	$	4,825,027		$	4,822,512		$	2,515			0.1
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	854,400		$	858,291		$	(3,891	)		(0.5	)
Savings and club		518,542			522,715			(4,173	)		(0.8	)
Certificates of deposit		1,337,560			1,285,882			51,678			4.0
Total interest-bearing deposits		2,710,502			2,666,888			43,614			1.6
Borrowings:
Federal Home Loan Bank Advances		777,460			778,104			(644	)		(0.1	)
Other borrowings		30,606			32,041			(1,435	)		(4.5	)
Total borrowings		808,066			810,145			(2,079	)		(0.3	)
Total interest-bearing liabilities		3,518,568			3,477,033			41,535			1.2
Non-interest-bearing liabilities:
Non-interest-bearing deposits		277,236			274,858			2,378			0.9
Other non-interest-bearing liabilities		24,396			29,754			(5,358	)		(18.0	)
Total non-interest-bearing liabilities		301,632			304,612			(2,980	)		(1.0	)
Total liabilities		3,820,200			3,781,645			38,555			1.0
Stockholders' equity		1,004,827			1,040,867			(36,040	)		(3.5	)
Total liabilities and stockholders' equity	$	4,825,027		$	4,822,512		$	2,515			0.1
Average interest-earning assets to average interest-bearing liabilities		126.78	%		128.31	%		-1.53	%		-1.2
Performance Ratio Highlights	For the three months ended						Variance or Change
	December 31,			September 30,
	2017			2017
Average yield on interest-earning assets:
Loans receivable, including loans held for sale		3.76	%		3.74	%		0.02	%
Mortgage-backed securities		2.27	%		2.26	%		0.01	%
Debt securities:
Tax-exempt (1)		2.03	%		2.03	%		0.00	%
Taxable		2.61	%		2.42	%		0.19	%
Total debt securities		2.49	%		2.34	%		0.15	%
Other interest-earning assets		3.42	%		3.21	%		0.21	%
Total interest-earning assets		3.41	%		3.37	%		0.04	%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		0.80	%		0.76	%		0.04	%
Savings and club		0.12	%		0.12	%		0.00	%
Certificates of deposit		1.43	%		1.38	%		0.05	%
Total interest-bearing deposits		0.98	%		0.93	%		0.05	%
Borrowings:
Federal Home Loan Bank Advances		2.33	%		2.33	%		0.00	%
Other borrowings		0.27	%		0.27	%		0.00	%
Total borrowings		2.25	%		2.25	%		0.00	%
Total interest-bearing liabilities		1.27	%		1.24	%		0.03	%
Interest rate spread (2)		2.14	%		2.13	%		0.01	%
Net interest margin (3)		2.41	%		2.40	%		0.01	%
Non-interest income to average assets (annualized)		0.27	%		0.26	%		0.01	%
Non-interest expense to average assets (annualized)		1.89	%		1.77	%		0.12	%
Efficiency ratio (4)		75.63	%		71.18	%		4.45	%
Return on average assets (annualized)		0.11	%		0.43	%		-0.32	%
Return on average equity (annualized)		0.51	%		2.01	%		-1.50	%
(1) The yield on tax-exempt 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.
Five-Quarter Financial Trend Analysis
Summary Balance Sheet (Dollars and Shares in Thousands, Except Per Share Data, Unaudited)	At
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Assets
Cash and cash equivalents	$	50,685		$	38,823		$	78,237		$	170,591		$	37,032
Securities available for sale		637,671			636,600			613,760			614,948			671,281
Securities held to maturity		471,452			482,926			493,321			501,987			517,819
Loans held-for-sale		3,490			3,808			4,692			744			6,686
Loans receivable, including yield adjustments		3,291,516			3,260,328			3,245,261			3,122,628			2,973,931
Less allowance for loan losses		(30,066	)		(29,445	)		(29,286	)		(27,614	)		(26,060	)
Net loans receivable		3,261,450			3,230,883			3,215,975			3,095,014			2,947,871
Premises and equipment		41,829			40,132			39,585			38,904			38,341
Federal Home Loan Bank stock		39,113			39,115			39,958			39,474			34,525
Accrued interest receivable		13,524			13,268			12,493			12,320			11,809
Goodwill		108,591			108,591			108,591			108,591			108,591
Bank owned life insurance		183,754			182,489			181,223			179,935			178,656
Deferred income taxes, net		6,941			13,230			15,454			14,318			16,098
Other assets		25,347			18,285			14,838			19,416			16,599
Total assets	$	4,843,847		$	4,808,150		$	4,818,127		$	4,796,242		$	4,585,308
Liabilities
Deposits	$	3,033,766		$	2,953,268		$	2,930,127		$	2,853,263		$	2,746,017
Borrowings		798,864			808,554			806,228			825,260			701,849
Advance payments by borrowers for taxes		8,511			9,787			8,711			8,059			7,618
Other liabilities		13,433			22,308			15,880			15,650			15,172
Total liabilities		3,854,574			3,793,917			3,760,946			3,702,232			3,470,656
Stockholders' Equity
Common stock		795			815			844			873			892
Paid-in capital		662,093			690,204			728,790			768,373			795,773
Retained earnings		353,536			354,123			361,039			359,083			357,540
Unearned ESOP shares		(33,563	)		(34,049	)		(34,536	)		(35,022	)		(35,508	)
Accumulated other comprehensive income (loss), net		6,412			3,140			1,044			703			(4,045	)
Total stockholders' equity		989,273			1,014,233			1,057,181			1,094,010			1,114,652
Total liabilities and stockholders' equity	$	4,843,847		$	4,808,150		$	4,818,127		$	4,796,242		$	4,585,308
Consolidated capital ratios
Equity to assets		20.42	%		21.09	%		21.94	%		22.81	%		24.31	%
Tangible equity to tangible assets		18.59	%		19.27	%		20.14	%		21.02	%		22.47	%
Share data
Outstanding shares		79,527			81,548			84,351			87,256			89,176
Equity per share	$	12.44		$	12.44		$	12.53		$	12.54		$	12.50
Tangible equity per share (1)	$	11.07		$	11.10		$	11.24		$	11.29		$	11.28
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.
Supplemental Balance Sheet Highlights (Dollars in Thousands, Unaudited)	At
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Cash and cash equivalents
Cash and due from depository institutions	$	17,899		$	17,972		$	18,889		$	17,429		$	17,541
Interest-bearing deposits in other banks		32,786			20,851			59,348			153,162			19,491
Total cash and cash equivalents	$	50,685		$	38,823		$	78,237		$	170,591		$	37,032
Securities available for sale
Debt securities:
U.S. agency securities	$	4,810		$	5,063		$	5,316		$	5,622		$	5,809
Municipal and state obligations		27,428			27,725			27,740			27,259			27,090
Asset-backed securities		169,484			163,615			162,429			150,805			121,445
Collateralized loan obligations		133,341			128,383			98,154			104,811			98,447
Corporate bonds		142,397			142,489			142,318			141,134			138,564
Trust preferred securities		8,494			8,544			8,540			8,248			8,101
Debt securities available for sale		485,954			475,819			444,497			437,879			399,456
Mortgage-backed securities:
Collateralized mortgage obligations		27,187			28,790			30,536			31,941			52,333
Residential pass-through securities		116,496			123,868			130,550			136,926			211,258
Commercial pass-through securities		8,034			8,123			8,177			8,202			8,234
Mortgage-backed securities		151,717			160,781			169,263			177,069			271,825
Total securities available for sale	$	637,671		$	636,600		$	613,760		$	614,948		$	671,281
Securities held to maturity
Debt securities:
U.S. agency securities	$	-		$	35,000		$	35,000		$	35,000		$	34,999
Municipal and state obligations		100,671			95,954			94,713			91,038			87,682
Subordinated debt		25,000			15,000			15,000			15,000			15,000
Debt securities held to maturity		125,671			145,954			144,713			141,038			137,681
Mortgage-backed securities:
Collateralized mortgage obligations		35,861			16,600			17,854			19,193			20,543
Residential pass-through securities		160,487			169,257			178,813			186,248			200,402
Commercial pass-through securities		149,433			151,115			151,941			155,508			159,193
Mortgage-backed securities		345,781			336,972			348,608			360,949			380,138
Total securities held to maturity	$	471,452		$	482,926		$	493,321		$	501,987		$	517,819
Total securities	$	1,109,123		$	1,119,526		$	1,107,081		$	1,116,935		$	1,189,100
Supplemental Balance Sheet Highlights (Dollars in Thousands, Unaudited)	At
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Loan portfolio composition:
Residential first mortgage loans	$	574,322		$	559,593		$	567,323		$	566,665		$	562,466
Home equity loans and lines of credit		80,961			80,746			82,822			82,412			83,305
Residential mortgage loans		655,283			640,339			650,145			649,077			645,771
Multifamily mortgage loans		1,438,386			1,427,840			1,412,575			1,371,339			1,295,207
Nonresidential and mixed use mortgage loans		1,069,254			1,085,983			1,085,064			995,782			932,616
Commercial mortgage loans		2,507,640			2,513,823			2,497,639			2,367,121			2,227,823
Commercial business loans		92,442			81,676			74,471			83,754			75,640
Construction loans		22,205			8,320			3,815			1,494			927
Account loans		2,996			2,800			2,863			2,860			2,980
Other consumer loans		8,951			10,988			13,520			15,313			17,501
Consumer loans		11,947			13,788			16,383			18,173			20,481
Total loans, excluding yield adjs		3,289,517			3,257,946			3,242,453			3,119,619			2,970,642
Unamortized yield adjustments		1,999			2,382			2,808			3,009			3,289
Loans receivable, including yield adjs		3,291,516			3,260,328			3,245,261			3,122,628			2,973,931
Less allowance for loan losses		(30,066	)		(29,445	)		(29,286	)		(27,614	)		(26,060	)
Net loans receivable	$	3,261,450		$	3,230,883		$	3,215,975		$	3,095,014		$	2,947,871
Loan portfolio allocation:
Residential first mortgage loans		17.5	%		17.2	%		17.5	%		18.2	%		18.9	%
Home equity loans and lines of credit		2.5	%		2.5	%		2.6	%		2.6	%		2.8	%
Residential mortgage loans		20.0	%		19.7	%		20.1	%		20.8	%		21.7	%
Multifamily mortgage loans		43.7	%		43.8	%		43.6	%		44.0	%		43.6	%
Nonresidential and mixed use mortgage loans		32.5	%		33.3	%		33.5	%		31.9	%		31.4	%
Commercial mortgage loans		76.2	%		77.2	%		77.0	%		75.9	%		75.0	%
Commercial business loans		2.8	%		2.5	%		2.3	%		2.7	%		2.5	%
Construction loans		0.7	%		0.3	%		0.1	%		0.0	%		0.0	%
Account loans		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%
Other consumer loans		0.2	%		0.3	%		0.4	%		0.5	%		0.6	%
Consumer loans		0.3	%		0.4	%		0.5	%		0.6	%		0.7	%
Total loans, excluding yield adjs		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Asset quality:
Nonperforming assets:
Accruing loans > 90 days past due	$	31		$	105		$	74		$	65		$	92
Nonaccrual loans		16,315			18,006			18,798			20,950			21,473
Total nonperforming loans		16,346			18,111			18,872			21,015			21,565
Other real estate owned		1,693			2,424			1,632			1,668			2,037
Total nonperforming assets	$	18,039		$	20,535		$	20,504		$	22,683		$	23,602
Nonperforming loans (% total loans)		0.50	%		0.56	%		0.58	%		0.67	%		0.72	%
Nonperforming assets (% total assets)		0.37	%		0.43	%		0.43	%		0.47	%		0.51	%
Allowance for loan losses (ALLL):
ALLL to total loans		0.91	%		0.90	%		0.90	%		0.88	%		0.88	%
ALLL to nonperforming loans		183.93	%		162.58	%		155.18	%		131.40	%		120.84	%
Net charge offs (recoveries)	$	315		$	471		$	(483	)	$	254		$	198
Average net charge off (recovery) rate (annualized)		0.04	%		0.06	%		-0.06	%		0.03	%		0.03	%
Supplemental Balance Sheet Highlights (Dollars in Thousands, Unaudited)	At
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Funding by type:
Deposits
Non-interest-bearing deposits	$	275,065		$	279,263		$	267,412		$	255,939		$	240,367
Interest-bearing demand		879,732			856,122			847,663			798,203			768,556
Savings and club		517,400			519,040			523,984			524,002			519,257
Certificates of deposit		1,361,569			1,298,843			1,291,068			1,275,119			1,217,837
Interest-bearing deposits		2,758,701			2,674,005			2,662,715			2,597,324			2,505,650
Total deposits		3,033,766			2,953,268			2,930,127			2,853,263			2,746,017
Borrowings:
Federal Home Loan Bank advances		775,649			775,673			775,696			775,719			665,742
Depositor sweep accounts		23,215			32,881			30,532			49,541			36,107
Total borrowings		798,864			808,554			806,228			825,260			701,849
Total funding	$	3,832,630		$	3,761,822		$	3,736,355		$	3,678,523		$	3,447,866
Loans as a % of deposits		107.6	%		109.5	%		109.9	%		108.5	%		107.6	%
Deposits as a % of total funding		79.2	%		78.5	%		78.4	%		77.6	%		79.6	%
Borrowings as a % of total funding		20.8	%		21.5	%		21.6	%		22.4	%		20.4	%
Funding by source:
Retail funding
Non-interest-bearing deposits	$	275,065		$	279,263		$	267,412		$	255,939		$	240,367
Interest-bearing demand		657,696			633,778			625,061			568,865			544,487
Savings and club		517,400			519,040			523,984			524,002			519,257
Certificates of deposit		1,210,616			1,175,407			1,168,010			1,152,025			1,113,073
Total retail deposits		2,660,777			2,607,488			2,584,467			2,500,831			2,417,184
Depositor sweep accounts		23,215			32,881			30,532			49,541			36,107
Total retail funding		2,683,992			2,640,369			2,614,999			2,550,372			2,453,291
Wholesale funding:
Interest-bearing demand	$	222,036		$	222,344		$	222,602		$	229,338		$	224,069
Certificates of deposit (listing service)		93,853			101,791			101,430			101,432			96,516
Certificates of deposit (brokered)		57,100			21,645			21,628			21,662			8,248
Total wholesale deposits		372,989			345,780			345,660			352,432			328,833
FHLB Advances		775,649			775,673			775,696			775,719			665,742
Total wholesale funding		1,148,638			1,121,453			1,121,356			1,128,151			994,575
Total funding	$	3,832,630		$	3,761,822		$	3,736,355		$	3,678,523		$	3,447,866
Retail funding as a % of total funding		70.0	%		70.2	%		70.0	%		69.3	%		71.2	%
Wholesale funding as a % of total funding		30.0	%		29.8	%		30.0	%		30.7	%		28.8	%
Summary Income Statement (Dollars and Shares in Thousands, Except Per Share Data, Unaudited)	For the three months ended
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Interest income
Loans	$	30,610		$	30,473		$	29,842		$	28,235		$	27,407
Mortgage-backed securities		2,848			2,896			3,063			3,222			3,779
Debt securities:
Taxable		3,229			2,960			2,868			2,488			2,146
Tax-exempt		641			621			605			582			562
Other interest-earning assets		704			642			586			481			421
Total interest income		38,032			37,592			36,964			35,008			34,315
Interest expense
Deposits		6,649			6,219			5,909			5,420			5,410
Borrowings		4,548			4,563			4,325			3,381			3,289
Total interest expense		11,197			10,782			10,234			8,801			8,699
Net interest income		26,835			26,810			26,730			26,207			25,616
Provision for loan losses		936			630			1,188			1,809			1,255
Net interest income after provision for loan losses		25,899			26,180			25,542			24,398			24,361
Non-interest income
Fees and service charges		1,409			1,261			839			498			1,289
(Loss) gain on sale and call of securities		-			-			-			(22	)		21
Gain on sale of loans		200			331			531			245			459
Gain (loss) on sale of real estate owned		23			(109	)		3			(106	)		12
Income from bank owned life insurance		1,264			1,267			1,288			1,279			1,321
Electronic banking fees and charges		302			278			287			240			270
Miscellaneous		65			66			72			119			74
Total non-interest income		3,263			3,094			3,020			2,253			3,446
Non-interest expense
Salaries and employee benefits		12,926			12,867			12,887			12,430			11,592
Net occupancy expense of premises		2,122			1,981			2,013			2,088			1,976
Equipment and systems		2,193			2,190			2,204			2,068			2,030
Advertising and marketing		748			710			937			753			387
Federal deposit insurance premium		343			360			352			338			339
Directors' compensation		688			689			689			689			379
Merger-related expenses		1,193			-			-			-			-
Miscellaneous		2,551			2,489			2,969			2,668			2,670
Total non-interest expense		22,764			21,286			22,051			21,034			19,373
Income before income taxes		6,398			7,988			6,511			5,617			8,434
Income taxes		5,129			2,756			2,107			1,549			2,970
Net income	$	1,269		$	5,232		$	4,404		$	4,068		$	5,464
Net income per common share (EPS)
Basic	$	0.02		$	0.07		$	0.05		$	0.05		$	0.06
Diluted	$	0.02		$	0.07		$	0.05		$	0.05		$	0.06
Dividends declared (1)
Cash dividends declared per common share	$	0.03		$	0.15		$	0.03		$	0.03		$	0.02
Cash dividends declared	$	1,856		$	12,148		$	2,448		$	2,525		$	1,687
Dividend payout ratio		146.3	%		232.2	%		55.6	%		62.1	%		30.9	%
Weighted average number of  common  shares outstanding
Basic		77,174			79,649			82,372			84,542			85,174
Diluted		77,239			79,708			82,429			84,624			85,258
(1) Dividends declared during the quarter ended September 30, 2017 include a $0.12 special dividend representing a supplemental distribution of net income to stockholders from the prior fiscal year ended June 30, 2017.
Average Balance Sheet Data (Dollars in Thousands, Unaudited)	For the three months ended
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	3,255,862		$	3,257,465		$	3,200,968		$	3,029,151		$	2,899,794
Mortgage-backed securities		501,081			511,931			532,621			582,591			673,569
Debt securities:
Tax-exempt		126,214			122,685			119,957			116,479			112,221
Taxable		495,316			489,252			476,499			441,124			419,966
Total debt securities		621,530			611,937			596,456			557,603			532,187
Other interest-earning assets		82,539			79,920			118,349			61,336			71,072
Total interest-earning assets		4,461,012			4,461,253			4,448,394			4,230,681			4,176,622
Non-interest-earning assets		364,015			361,259			358,791			352,419			351,458
Total assets	$	4,825,027		$	4,822,512		$	4,807,185		$	4,583,100		$	4,528,080
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	854,400		$	858,291		$	813,148		$	756,520		$	761,765
Savings and club		518,542			522,715			523,798			520,572			518,225
Certificates of deposit		1,337,560			1,285,882			1,289,504			1,242,757			1,224,592
Total interest-bearing deposits		2,710,502			2,666,888			2,626,450			2,519,849			2,504,582
Borrowings:
Federal Home Loan Bank Advances		777,460			778,104			775,703			643,504			594,238
Other borrowings		30,606			32,041			40,064			44,940			35,273
Total borrowings		808,066			810,145			815,767			688,444			629,511
Total interest-bearing liabilities		3,518,568			3,477,033			3,442,217			3,208,293			3,134,093
Non-interest-bearing liabilities:
Non-interest-bearing deposits		277,236			274,858			262,499			246,449			245,928
Other non-interest-bearing liabilities		24,396			29,754			25,112			25,028			31,781
Total non-interest-bearing liabilities		301,632			304,612			287,611			271,477			277,709
Total liabilities		3,820,200			3,781,645			3,729,828			3,479,770			3,411,802
Stockholders' equity		1,004,827			1,040,867			1,077,357			1,103,330			1,116,278
Total liabilities and stockholders' equity	$	4,825,027		$	4,822,512		$	4,807,185		$	4,583,100		$	4,528,080
Average interest-earning assets to average interest-bearing liabilities		126.78	%		128.31	%		129.23	%		131.87	%		133.26	%
Performance Ratio Highlights	For the three months ended
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Average yield on interest-earning assets:
Loans receivable, including loans held for sale		3.76	%		3.74	%		3.73	%		3.73	%		3.78	%
Mortgage-backed securities		2.27	%		2.26	%		2.30	%		2.21	%		2.24	%
Debt securities:
Tax-exempt (1)		2.03	%		2.03	%		2.02	%		2.00	%		2.00	%
Taxable		2.61	%		2.42	%		2.41	%		2.26	%		2.04	%
Total debt securities		2.49	%		2.34	%		2.33	%		2.20	%		2.04	%
Other interest-earning assets		3.42	%		3.21	%		1.98	%		3.13	%		2.37	%
Total interest-earning assets		3.41	%		3.37	%		3.32	%		3.31	%		3.29	%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		0.80	%		0.76	%		0.71	%		0.65	%		0.62	%
Savings and club		0.12	%		0.12	%		0.12	%		0.12	%		0.12	%
Certificates of deposit		1.43	%		1.38	%		1.34	%		1.30	%		1.33	%
Total interest-bearing deposits		0.98	%		0.93	%		0.90	%		0.86	%		0.86	%
Borrowings:
Federal Home Loan Bank Advances		2.33	%		2.33	%		2.21	%		2.08	%		2.20	%
Other borrowings		0.27	%		0.27	%		0.27	%		0.35	%		0.29	%
Total borrowings		2.25	%		2.25	%		2.12	%		1.96	%		2.09	%
Total interest-bearing liabilities		1.27	%		1.24	%		1.19	%		1.10	%		1.11	%
Interest rate spread (2)		2.14	%		2.13	%		2.13	%		2.21	%		2.18	%
Net interest margin (3)		2.41	%		2.40	%		2.40	%		2.48	%		2.45	%
Non-interest income to average assets (annualized)		0.27	%		0.26	%		0.25	%		0.20	%		0.30	%
Non-interest expense to average assets (annualized)		1.89	%		1.77	%		1.83	%		1.84	%		1.71	%
Efficiency ratio (4)		75.63	%		71.18	%		74.12	%		73.91	%		66.66	%
Return on average assets (annualized)		0.11	%		0.43	%		0.37	%		0.36	%		0.48	%
Return on average equity (annualized)		0.51	%		2.01	%		1.64	%		1.47	%		1.96	%
(1) The yield on tax-exempt 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.
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included below. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.
Reconciliation of GAAP to Non-GAAP (Dollars in Thousands, Except Per Share Data, Unaudited)	For the three months ended
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Adjusted Net Income
Net income (GAAP)	$	1,269		$	5,232		$	4,404		$	4,068		$	5,464
Effect to adjust for:
Merger-related expenses		1,193			-			-			-			-
Income tax benefit from merger-related expenses		(165	)		-			-			-			-
Income tax expense for write-down of net deferred tax asset		4,867			-			-			-			-
Income tax benefit for write-down of net deferred tax liability		(1,381	)		-			-			-			-
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)		(769	)		-			-			-			-
Adjusted net income  (non-GAAP)	$	5,014		$	5,232		$	4,404		$	4,068		$	5,464
Adjusted Net Income per Common Share (EPS)
Net income per common share  Basic (GAAP)	$	0.02		$	0.07		$	0.05		$	0.05		$	0.06
Effect to adjust for:
Merger-related expenses		0.02			-			-			-			-
Income tax benefit from merger-related expenses		(0.01	)		-			-			-			-
Income tax expense for write-down of net deferred tax asset		0.06			-			-			-			-
Income tax benefit for write-down of net deferred tax liability		(0.02	)		-			-			-			-
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)		(0.01	)		-			-			-			-
Adjusted net income per common share  Basic (non-GAAP)	$	0.06		$	0.07		$	0.05		$	0.05		$	0.06
Adjusted Net Income per Common Share (EPS)
Net income per common share  Diluted (GAAP)	$	0.02		$	0.07		$	0.05		$	0.05		$	0.06
Effect to adjust for:
Merger-related expenses		0.02			-			-			-			-
Income tax benefit from merger-related expenses		(0.01	)		-			-			-			-
Income tax expense for write-down of net deferred tax asset		0.06			-			-			-			-
Income tax benefit for write-down of net deferred tax liability		(0.02	)		-			-			-			-
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)		(0.01	)		-			-			-			-
Adjusted net income per common share  Diluted (non-GAAP)	$	0.06		$	0.07		$	0.05		$	0.05		$	0.06
Reconciliation of GAAP to Non-GAAP (Unaudited)	For the three months ended
	December 31,			September 30,			June 30,			March 31,			December 31,
		2017			2017			2017			2017			2016
Adjusted Non-Interest Expense Ratio
Non-interest expense to average assets (GAAP)		1.89	%		1.77	%		1.83	%		1.84	%		1.71	%
Effect to adjust for:
Merger-related expenses		-0.10	%		0.00	%		0.00	%		0.00	%		0.00	%
Adjusted non-interest expense ratio (non-GAAP)		1.79	%		1.77	%		1.83	%		1.84	%		1.71	%
Adjusted Efficiency Ratio
Non-interest expense / (Net interest income + non-interest income) (GAAP)		75.6	%		71.2	%		74.1	%		73.9	%		66.7	%
Effect to adjust for:
Merger-related expenses		-3.9	%		0.0	%		0.0	%		0.0	%		0.0	%
Adjusted efficiency ratio (non-GAAP)		71.7	%		71.2	%		74.1	%		73.9	%		66.7	%
Adjusted Return on Average Assets
Return on average assets (GAAP)		0.11	%		0.43	%		0.37	%		0.36	%		0.48	%
Effect to adjust for:
Merger-related expenses		0.09	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax benefit from merger-related expenses		-0.01	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax expense for write-down of net deferred tax asset		0.40	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax benefit for write-down of net deferred tax liability		-0.11	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)		-0.06	%		0.00	%		0.00	%		0.00	%		0.00	%
Adjusted return on average assets (non-GAAP)		0.42	%		0.43	%		0.37	%		0.36	%		0.48	%
Adjusted Return on Average Equity
Return on average equity (GAAP)		0.51	%		2.01	%		1.64	%		1.47	%		1.96	%
Effect to adjust for:
Merger-related expenses		0.48	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax benefit from merger-related expenses		-0.07	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax expense for write-down of net deferred tax asset		1.94	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax benefit for write-down of net deferred tax liability		-0.55	%		0.00	%		0.00	%		0.00	%		0.00	%
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)		-0.31	%		0.00	%		0.00	%		0.00	%		0.00	%
Adjusted return on average equity (non-GAAP)		2.00	%		2.01	%		1.64	%		1.47	%		1.96	%

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