FAIRFIELD, N.J., July 30, 2019 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended June 30, 2019 of $8.8 million, or $0.10 per basic and diluted share, as compared to net income of $11.4 million, or $0.13 per basic and diluted share, for the quarter ended March 31, 2019.  For the fiscal year ended June 30, 2019, the Company reported net income of $42.1 million, or $0.46 per basic and diluted share.  The results represent an increase of $22.5 million compared to net income of $19.6 million, or $0.24 per basic and diluted share, for the fiscal year ended June 30, 2018.

Net income for the quarter and year ended June 30, 2019 was impacted by $1.7 million of non-recurring expenses which were recognized in conjunction with the Company’s previously announced consolidation of seven retail branches located in northern and central New Jersey.  The Company anticipates that additional non-recurring charges of approximately $950,000 will be recognized in conjunction with the noted branch consolidations during the quarter ending September 30, 2019.  Adjusting for the impact of such charges, net of tax benefit, the Company’s net income would have been $10.0 million or $0.11 per basic and diluted share for the quarter ended June 30, 2019 and $43.4 million or $0.47 per basic and diluted share for the fiscal year ended June 30, 2019.

Craig L. Montanaro, President and Chief Executive Officer, commented, “Looking back on fiscal 2019 we are very pleased with the progress that we have made which included vastly improved earnings performance compared to prior years, a seamless integration of the Clifton Bancorp, Inc. (“CSBK”) acquisition and the return of over $175 million in capital to shareholders via dividends and share repurchases.  Looking forward to fiscal 2020, our focus remains on the continued execution of our long-term strategic plan which emphasizes the growth of our core deposit franchise, the evolution of our digital banking platform and the deployment of our capital in a prudent and profitable manner.  In support of these goals, we will be enhancing our digital delivery channels with online deposit account opening capabilities during the first quarter of fiscal 2020 with additional best-of-breed digital products and services to follow throughout the remainder of the year.”

Balance Sheet Highlights

• Loans receivable increased by $19.1 million to $4.68 billion, or 70.5% of total assets, at June 30, 2019 from $4.66 billion, or 70.0% of total assets, at March 31, 2019.  For the year ended June 30, 2019, the Company’s aggregate loan portfolio increased by $177.6 million, or 3.9%, from $4.50 billion, or 68.4% of total assets, at June 30, 2018.
  
  
• Deposits increased by $10.0 million to $4.15 billion at June 30, 2019 from $4.14 billion at March 31, 2019.  For the year ended June 30, 2019, total deposits increased by $74.0 million from $4.07 billion at June 30, 2018.  The net increase in deposits for the quarter ended June 30, 2019 was attributable to an increase of $38.7 million in retail deposits that was partially offset by a decline of $28.6 million in wholesale deposits. For the year ended June 30, 2019 the net increase in deposits was attributable to an increase of $171.5 million in retail deposits that was partially offset by $97.5 million decrease in wholesale deposits.  The net growth and reallocation of the Company’s deposits for both the quarter and year ended June 30, 2019 reflected its continuing effort to relocate its funding mix in favor of retail deposits.
  
  
• Investment securities decreased by $28.2 million to $1.29 billion, or 19.5% of total assets, at June 30, 2019 from $1.32 billion at March 31, 2019.  For the year ended June 30, 2019, the securities portfolio decreased by $23.9 million, or 1.8%, from $1.31 billion, or 20.0% of total assets, at June 30, 2018.
  
  
• Borrowings decreased by $4.2 million to $1.32 billion at June 30, 2019, from $1.33 billion at March 31, 2019.  For the year ended June 30, 2019, total borrowings increased by $123.3 million from $1.20 billion at June 30, 2018.  The net increase in borrowings for the quarter ended June 30, 2019 reflected an increase of $30.0 million in overnight borrowings partially offset by a $28.2 million decrease in depositor sweep account balances coupled with the repayment of a $6.5 million Federal Home Loan Bank (“FHLB”) advance that matured during the period.  The increase in borrowings for the year ended June 30, 2019 partly reflected new FHLB advances totaling $227.0 million coupled with the increase of $30.0 million in overnight borrowings, noted above.  These increases were partially offset by a $19.7 million decrease in depositor sweep account balances coupled with the repayment of $116.0 million in FHLB advances that matured during the period. 

Earnings Highlights

Net Interest Income, Spread and Margin

• Net interest income decreased by $1.5 million to $37.1 million for the quarter ended June 30, 2019, from $38.6 million for the quarter ended March 31, 2019.  The decrease in net interest income was the result of a $1.3 million increase in interest expense coupled with a $200,000 decrease in interest income between comparative periods.  For the year ended June 30, 2019, net interest income increased by $34.0 million to $155.3 million from $121.3 million for the year ended June 30, 2018.  The increase in net interest income between comparative periods largely reflected the impact of the Company’s acquisition of CSBK during the fourth quarter of the prior fiscal year ended June 30, 2018.
  
  
• The Company’s net interest rate spread decreased ten basis points to 2.18% for the quarter ended June 30, 2019 from 2.28% for the quarter ended March 31, 2019.  The decrease in spread primarily reflected an eleven basis point increase in the average cost of interest-bearing liabilities to 1.74% for the quarter ended June 30, 2019 from 1.63% for the quarter ended March 31, 2019 while the average yield on interest-earning assets increased by one basis point to 3.92% from 3.91% for those same comparative periods.  For the year ended June 30, 2019, the net interest rate spread increased by six basis points to 2.31% from 2.25% for the year ended June 30, 2018.
  
  
• The factors that contributed to the quarterly change in interest rate spread also contributed to an eight basis point decrease in the Company’s net interest margin to 2.45% for the quarter ended June 30, 2019 from 2.53% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the net interest margin increased by six basis points to 2.56% from 2.50% for the year ended June 30, 2018.

Non-Interest Income

• Fees and service charges decreased by $334,000, or 20.0%, to $1.3 million for the quarter ended June 30, 2019 compared to $1.7 million for the quarter ended March 31, 2019.  This decrease largely reflected a decline in pre-payment fee income on commercial real estate loans related to an elevated level of pre-payment activity during the earlier comparative period.  For the years ended June 30, 2019 and June 30, 2018 fees and service charges remained stable at $5.4 million. 
  
  
• Aggregate loan sale gains increased by $45,000, or 29.8%, to $196,000 for the quarter ended June 30, 2019 as compared to $151,000 for the quarter ended March 31, 2019.  Such gains totaled $580,000 and $1.0 million for the years ended June 30, 2019 and June 30, 2018 respectively.   Variances in loan sale gains largely reflected fluctuations in the volume of loans sold.

Non-Interest Expense

• Non-interest expense increased by $2.0 million to $28.7 million for the quarter ended June 30, 2019 compared to $26.8 million for the quarter ended March 31, 2019.  The increase was largely attributable to $1.7 million of non-recurring branch consolidation expenses, recognized during the quarter ended June 30, 2019, as discussed earlier.  Other, less noteworthy, increases in salaries and employee benefits and marketing expense were partially offset by a decrease in net occupancy expense of premises.  For the year ended June 30, 2019, non-interest expense increased by $11.3 million to $109.2 million from $97.9 for the year ended June 30, 2018.  In addition to reflecting the impact of the $1.7 million of non-recurring branch consolidation expenses noted above, the increase in non-interest expense between comparative periods reflected the larger effects of Company’s acquisition of CSBK in April 2018 whose impact on the Company’s ongoing operating expenses was fully reflected throughout the fiscal year ended June 30, 2019.  These noted increases in non-interest expense were partially offset by the $6.7 million of non-recurring merger-related expenses attributable to the CSBK acquisition that were recorded during the year ended June 30, 2018 for which no comparable expenses were recorded during the year ending June 30, 2019.
  
  
• The Company’s non-interest expense ratio totaled 1.73% for the quarter ended June 30, 2019 compared to 1.60% for the prior quarter ended March 31, 2019.  For the year ended June 30, 2019, the Company’s non-interest expense ratio totaled 1.64% compared to 1.86% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s non-interest expense ratios would have been 1.63% for the quarter ended June 30, 2019.  Similarly, adjusting for the both impact of the branch consolidation expenses and merger-related expenses noted earlier, the Company’s non-interest expense ratios would have been 1.61% and 1.73% for the years ended June 30, 2019 and June 30, 2018, respectively.
  
  
• The Company’s efficiency ratio was 70.9% for the quarter ended June 30, 2019 compared to 63.3% for the prior quarter ended March 31, 2019.  For the year ended June 30, 2019, the Company’s efficiency ratio totaled 64.7% compared to 72.7% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s efficiency ratio would have been 66.6% for the quarter ended June 30, 2019.  Similarly, adjusting for both the impact of the branch consolidation expenses and merger-related expenses noted earlier, the Company’s efficiency ratios would have been 63.7% and 67.7% for the years ended June 30, 2019 and June 30, 2018, respectively.

Income Taxes

• Income tax expense totaled $2.3 million for the quarter ended June 30, 2019 compared to $4.3 million for the quarter ended March 31, 2019 resulting in effective tax rates of 20.8% and 27.4%, respectively.  The decrease in income tax expense, and corresponding effective tax rate, for the current period largely reflected a lower level of pre-tax net income as compared to the prior period coupled with adjustments to deferred income taxes arising from updates to state income tax apportionment levels.  For the year ended June 30, 2019, income tax expense was $13.9 million compared to $14.4 million for the year ended June 30, 2018 resulting in effective tax rates of 24.8% and 42.4%, respectively.  The effective tax rate for the year ended June 30, 2018 reflected the impact of federal income tax reform and certain non-deductible merger-related expenses whose effects collectively increased the effective tax rate during the prior comparative period.  The effective tax rate for the year ended June 30, 2019 reflects the Company’s current statutory federal income tax rate of 21%.

Performance Ratios

• The Company’s return on average assets for the quarter ended June 30, 2019 decreased to 0.53% from 0.68% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the return on average assets increased to 0.63% from 0.37% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average assets would have been 0.60% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses, merger-related expenses and tax reform noted earlier, the Company’s return on average assets would have been 0.65% and 0.52% for the years ended June 30, 2019 and June 30, 2018.
  
  
• The Company’s return on average equity decreased to 3.08% for the quarter ended June 30, 2019 from 3.89% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the return on average equity increased to 3.52% from 1.81% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average equity would have been 3.50% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses, merger-related expenses and tax reform noted earlier, the Company’s return on average equity would have been and 3.62% and 2.53% for the years ended June 30, 2019 and June 30, 2018.
  
  
• The Company’s return on average tangible equity decreased to 3.80% for the quarter ended June 30, 2019 from 4.78% for the quarter ended March 31, 2019.  For the year ended June 30, 2019, the return on average tangible equity increased to 4.30% from 2.08% for the prior year ended June 30, 2018.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average tangible equity would have been 4.32% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses, merger-related expenses and tax reform noted earlier, the Company’s return on average tangible equity would have been 4.42% and 2.91% for the years ended June 30, 2019 and June 30, 2018.

Asset Quality Highlights

• Asset quality remained strong throughout the quarter ended June 30, 2019.  The outstanding balance of nonperforming loans totaled $20.3 million, or 0.43% of total loans, at June 30, 2019 as compared to $21.3 million, or 0.46% of total loans, at March 31, 2019.  For the year ended June 30, 2019, nonperforming loans increased by $3.4 million from $16.9 million, or 0.37% of total loans, at June 30, 2018. 
  
  
• The allowance for loan losses increased to $33.3 million at June 30, 2019 from $33.1 million at March 31, 2019, 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.  For the year ended June 30, 2019, the allowance for loan losses increased by $2.4 million from $30.9 million, or 0.68% of total loans, at June 30, 2018.
  
  
• The Company recognized net charge offs totaling approximately $495,000 for the quarter ended June 30, 2019, reflecting an annualized net charge off rate of 0.04% on the average balance of total loans for the period. By comparison, the Company’s net charge offs totaled approximately $242,000 for the quarter ended March 31, 2019, reflecting an annualized net charge off rate of 0.02%.  For the year ended June 30, 2019, the Company recognized net charge offs totaling $1.1 million reflecting an annualized charge off rate of 0.02% on the average balance of total loans for fiscal 2019.  By comparison, the Company’s net charge offs totaled approximately $1.1 million for the year ended June 30, 2018 reflecting an annualized charge off rate of 0.03% on the average balance of total loans for fiscal 2018. 
  
  
• The Company recorded a loan loss provision of $664,000 for the quarter ended June 30, 2019 compared to a loan loss provision reversal of $179,000 for the quarter ended March 31, 2019.  The increase in provision for loan losses was largely attributable to a net increase during the quarter ended June 30, 2019 in the balance of the performing portion of the loan portfolio that was collectively evaluated for impairment compared to a decline in such balances during the prior quarter ending March 31, 2019 while also reflecting an increase in net charge-offs between the comparative periods.  For the year ended June 30, 2019, the provision for loan losses increased by $850,000 to $3.6 million from $2.7 million for the year ended June 30, 2018.  The increase in the provision partly reflected the effects of greater growth during the year ended June 30, 2019 in the balance of the performing portion of the loan portfolio that was collectively evaluated for impairment compared to that of the prior year ended June 30, 2018.  Additionally, the increase reflected the effects of updates to environmental loss factors that increased the applicable portion of the allowance and the associated provision expense between comparative periods.

Capital Highlights

• The Company maintained its regular quarterly cash dividend paid to stockholders of $0.06 per share for both quarters ended June 30, 2019, and March 31, 2019.  For the year ended June 30, 2019, total cash dividends paid to stockholders, including both regular and special dividends, increased by $0.12 to $0.37 per share compared to $0.25 per share for the year ended June 30, 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 as of that date.  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 June 30, 2019, the Company repurchased 2,393,626 shares of its common stock at a total cost of $32.2 million and an average cost of $13.46 per share. 
  
  
• The Company’s and Bank’s regulatory capital ratios at June 30, 2019 were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines. 

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.

Linked-Quarter Comparative Financial Analysis
Summary Balance Sheet	At									Variance
(Dollars and Shares in Thousands,	June 30,			March 31,			Variance			or Change
Except Per Share Data, Unaudited)	2019			2019			or Change			Pct.
Assets
Cash and cash equivalents	$	38,935		$	54,160		$	(15,225	)		-28.1	%
Securities available for sale		714,263			726,920			(12,657	)		-1.7	%
Securities held to maturity		576,652			592,199			(15,547	)		-2.6	%
Loans held-for-sale		12,267			997			11,270			1130.4	%
Loans receivable, including yield adjustments		4,678,928			4,659,804			19,124			0.4	%
Less allowance for loan losses		(33,274	)		(33,105	)		(169	)		0.5	%
Net loans receivable		4,645,654			4,626,699			18,955			0.4	%
Premises and equipment		56,854			58,274			(1,420	)		-2.4	%
Federal Home Loan Bank stock		64,190			64,288			(98	)		-0.2	%
Accrued interest receivable		19,360			20,326			(966	)		-4.8	%
Goodwill		210,895			210,895			-			0.0	%
Core deposit intangible		5,160			5,470			(310	)		-5.7	%
Bank owned life insurance		256,155			254,569			1,586			0.6	%
Deferred income taxes, net		25,367			24,182			1,185			4.9	%
Other real estate owned		-			209			(209	)		-100.0	%
Other assets		9,077			19,563			(10,486	)		-53.6	%
Total assets	$	6,634,829		$	6,658,751		$	(23,922	)		-0.4	%
Liabilities
Deposits	$	4,147,610		$	4,137,573		$	10,037			0.2	%
Borrowings		1,321,982			1,326,216			(4,234	)		-0.3	%
Advance payments by borrowers for taxes		16,887			17,208			(321	)		-1.9	%
Other liabilities		21,191			19,643			1,548			7.9	%
Total liabilities		5,507,670			5,500,640			7,030			0.1	%
Stockholders' Equity
Common stock		891			915			(24	)		-2.6	%
Paid-in capital		787,394			817,675			(30,281	)		-3.7	%
Retained earnings		366,679			363,072			3,607			1.0	%
Unearned ESOP shares		(30,644	)		(31,130	)		486			-1.6	%
Accumulated other comprehensive income, net		2,839			7,579			(4,740	)		-62.5	%
Total stockholders' equity		1,127,159			1,158,111			(30,952	)		-2.7	%
Total liabilities and stockholders' equity	$	6,634,829		$	6,658,751		$	(23,922	)		-0.4	%
Consolidated capital ratios
Equity to assets		16.99	%		17.39	%		-0.40	%
Tangible equity to tangible assets		14.19	%		14.62	%		-0.43	%
Share data
Outstanding shares		89,126			91,495			(2,369	)		-2.6	%
Equity per share	$	12.65		$	12.66		$	(0.01	)		-0.1	%
Tangible equity per share (1)	$	10.22		$	10.29		$	(0.07	)		-0.7	%

____________________ 
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

Summary Income Statement	For the three months ended									Variance
(Dollars and Shares in Thousands,	June 30,			March 31,			Variance			or Change
Except Per Share Data, Unaudited)	2019			2019			or Change			Pct.
Interest income
Loans	$	47,818		$	48,116		$	(298	)		-0.6	%
Taxable investment securities		9,772			9,511			261			2.7	%
Tax-exempt investment securities		700			710			(10	)		-1.4	%
Other interest-earning assets		1,158			1,320			(162	)		-12.3	%
Total Interest Income		59,448			59,657			(209	)		-0.4	%
Interest expense
Deposits		15,131			14,114			1,017			7.2	%
Borrowings		7,171			6,905			266			3.9	%
Total interest expense		22,302			21,019			1,283			6.1	%
Net interest income		37,146			38,638			(1,492	)		-3.9	%
Provision for loan losses (provision reversal)		664			(179	)		843			470.9	%
Net interest income after provision  (provision reversal) for loan losses		36,482			38,817			(2,335	)		-6.0	%
Non-interest income
Fees and service charges		1,340			1,674			(334	)		-20.0	%
Loss on sale and call of securities		(141	)		(182	)		41			22.5	%
Gain on sale of loans		196			151			45			29.8	%
Gain (loss) on sale and write down of other real estate owned		9			(6	)		15			250.0	%
Income from bank owned life insurance		1,586			1,560			26			1.7	%
Electronic banking fees and charges		270			253			17			6.7	%
Miscellaneous		128			226			(98	)		-43.4	%
Total non-interest income		3,388			3,676			(288	)		-7.8	%
Non-interest expense
Salaries and employee benefits		16,338			15,350			988			6.4	%
Net occupancy expense of premises		2,744			2,979			(235	)		-7.9	%
Equipment and systems		2,917			3,053			(136	)		-4.5	%
Advertising and marketing		948			739			209			28.3	%
Federal deposit insurance premium		438			455			(17	)		-3.7	%
Directors' compensation		770			770			-			0.0	%
Miscellaneous		4,590			3,425			1,165			34.0	%
Total non-interest expense		28,745			26,771			1,974			7.4	%
Income before income taxes		11,125			15,722			(4,597	)		-29.2	%
Income taxes		2,314			4,305			(1,991	)		-46.2	%
Net income	$	8,811		$	11,417		$	(2,606	)		-22.8	%
Net income per common share (EPS)
Basic	$	0.10		$	0.13		$	(0.03	)
Diluted	$	0.10		$	0.13		$	(0.03	)
Dividends declared
Cash dividends declared per common share	$	0.06		$	0.06		$	-
Cash dividends declared	$	5,204		$	5,338		$	(134	)
Dividend payout ratio		59.1	%		46.8	%		12.3	%
Weighted average number of  common  shares outstanding
Basic		87,090			89,488			(2,398	)
Diluted		87,132			89,532			(2,400	)

	For the three months ended									Variance
Average Balance Sheet Data	June 30,			March 31,			Variance			or Change
(Dollars in Thousands, Unaudited)	2019			2019			or Change			Pct.
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	4,648,362		$	4,709,052		$	(60,690	)		-1.3	%
Taxable investment securities		1,184,401			1,161,492			22,909			2.0	%
Tax-exempt investment securities		132,110			134,309			(2,199	)		-1.6	%
Other interest-earning assets		98,374			107,554			(9,180	)		-8.5	%
Total interest-earning assets		6,063,247			6,112,407			(49,160	)		-0.8	%
Non-interest-earning assets		572,218			574,921			(2,703	)		-0.5	%
Total assets	$	6,635,465		$	6,687,328		$	(51,863	)		-0.8	%
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	815,624		$	790,567		$	25,057			3.2	%
Savings and club		780,558			773,308			7,250			0.9	%
Certificates of deposit		2,229,723			2,288,836			(59,113	)		-2.6	%
Total interest-bearing deposits		3,825,905			3,852,711			(26,806	)		-0.7	%
Borrowings:
Federal Home Loan Bank advances		1,284,427			1,292,168			(7,741	)		-0.6	%
Other borrowings		29,439			26,037			3,402			13.1	%
Total borrowings		1,313,866			1,318,205			(4,339	)		-0.3	%
Total interest-bearing liabilities		5,139,771			5,170,916			(31,145	)		-0.6	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		311,648			307,645			4,003			1.3	%
Other non-interest-bearing liabilities		39,294			35,930			3,364			9.4	%
Total non-interest-bearing liabilities		350,942			343,575			7,367			2.1	%
Total liabilities		5,490,713			5,514,491			(23,778	)		-0.4	%
Stockholders' equity		1,144,752			1,172,837			(28,085	)		-2.4	%
Total liabilities and stockholders' equity	$	6,635,465		$	6,687,328		$	(51,863	)		-0.8	%
Average interest-earning assets to average  interest-bearing liabilities		117.97	%		118.21	%		-0.24	%		-0.2	%

	For the three months ended
	June 30,			March 31,			Variance
Performance Ratio Highlights	2019			2019			or Change
Average yield on interest-earning assets:
Loans receivable, including loans held for sale		4.11	%		4.09	%		0.02	%
Taxable investment securities		3.30	%		3.28	%		0.02	%
Tax-exempt investment securities (1)		2.12	%		2.12	%		0.00	%
Other interest-earning assets		4.71	%		4.91	%		-0.20	%
Total interest-earning assets		3.92	%		3.91	%		0.01	%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		1.19	%		1.06	%		0.13	%
Savings and club		0.68	%		0.60	%		0.08	%
Certificates of deposit		2.04	%		1.90	%		0.14	%
Total interest-bearing deposits		1.58	%		1.47	%		0.11	%
Borrowings:
Federal Home Loan Bank advances		2.21	%		2.13	%		0.08	%
Other borrowings		0.99	%		0.35	%		0.64	%
Total borrowings		2.18	%		2.10	%		0.08	%
Total interest-bearing liabilities		1.74	%		1.63	%		0.11	%
Interest rate spread (2)		2.18	%		2.28	%		-0.10	%
Net interest margin (3)		2.45	%		2.53	%		-0.08	%
Non-interest income to average assets  (annualized)		0.20	%		0.22	%		-0.02	%
Non-interest expense to average assets  (annualized)		1.73	%		1.60	%		0.13	%
Efficiency ratio (4)		70.91	%		63.27	%		7.64	%
Return on average assets (annualized)		0.53	%		0.68	%		-0.15	%
Return on average equity (annualized)		3.08	%		3.89	%		-0.81	%
Return on average tangible equity (annualized) (5)		3.80	%		4.78	%		-0.98	%

____________________
(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.

Year-to-Year Comparative Financial Analysis
Summary Balance Sheet	At									Variance
(Dollars in Thousands,	June 30,			June 30,			Variance			or Change
Except Per Share Data, Unaudited)	2019			2018			or Change			Pct.
Assets
Cash and cash equivalents	$	38,935		$	128,864		$	(89,929	)		-69.8	%
Securities available for sale		714,263			725,085			(10,822	)		-1.5	%
Securities held to maturity		576,652			589,730			(13,078	)		-2.2	%
Loans held-for-sale		12,267			863			11,404			1321.4	%
Loans receivable, including yield adjustments		4,678,928			4,501,348			177,580			3.9	%
Less allowance for loan losses		(33,274	)		(30,865	)		(2,409	)		7.8	%
Net loans receivable		4,645,654			4,470,483			175,171			3.9	%
Premises and equipment		56,854			56,240			614			1.1	%
Federal Home Loan Bank of New York stock		64,190			59,004			5,186			8.8	%
Accrued interest receivable		19,360			18,510			850			4.6	%
Goodwill		210,895			210,895			-			0.0	%
Core deposit intangible		5,160			6,295			(1,135	)		-18.0	%
Bank owned life insurance		256,155			249,816			6,339			2.5	%
Deferred income tax assets, net		25,367			23,754			1,613			6.8	%
Other real estate owned		-			725			(725	)		-100.0	%
Other assets		9,077			39,610			(30,533	)		-77.1	%
Total assets	$	6,634,829		$	6,579,874		$	54,955			0.8	%
Liabilities
Deposits	$	4,147,610		$	4,073,604		$	74,006			1.8	%
Borrowings		1,321,982			1,198,646			123,336			10.3	%
Advance payments by borrowers for taxes		16,887			18,088			(1,201	)		-6.6	%
Other liabilities		21,191			20,788			403			1.9	%
Total liabilities		5,507,670			5,311,126			196,544			3.7	%
Stockholders' Equity
Common stock	$	891			996			(105	)		-10.5	%
Paid-in capital		787,394			922,711			(135,317	)		-14.7	%
Retained earnings		366,679			359,096			7,583			2.1	%
Unearned ESOP shares		(30,644	)		(32,590	)		1,946			-6.0	%
Accumulated other comprehensive income, net		2,839			18,535			(15,696	)		-84.7	%
Total stockholders' equity		1,127,159			1,268,748			(141,589	)		-11.2	%
Total liabilities and stockholders' equity	$	6,634,829		$	6,579,874		$	54,955			0.8	%
Consolidated capital ratios
Equity to assets		16.99	%		19.28	%		-2.29	%
Tangible equity to tangible assets		14.19	%		16.53	%		-2.34	%
Share data
Outstanding shares (period end)		89,126			99,626			(10,500	)		-10.5	%
Equity per share	$	12.65		$	12.74		$	(0.09	)		-0.7	%
Tangible equity per share (1)	$	10.22		$	10.56		$	(0.34	)		-3.2	%

____________________
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

Summary Income Statement	For the year ended									Variance
(Dollars and Shares in Thousands,	June 30,			June 30,			Variance			or Change
Except Per Share Data, Unaudited)	2019			2018			or Change			Pct.
Interest income
Loans	$	192,386		$	138,426		$	53,960			39.0	%
Taxable investment securities		37,213			27,053			10,160			37.6	%
Tax-exempt investment securities		2,839			2,616			223			8.5	%
Other interest-earning assets		4,895			3,336			1,559			46.7	%
Total Interest Income		237,333			171,431			65,902			38.4	%
Interest expense
Deposits		52,511			29,649			22,862			77.1	%
Borrowings		29,509			20,489			9,020			44.0	%
Total interest expense		82,020			50,138			31,882			63.6	%
Net interest income		155,313			121,293			34,020			28.0	%
Provision for loan losses		3,556			2,706			850			31.4	%
Net interest income after provision for   loan losses		151,757			118,587			33,170			28.0	%
Non-interest income
Fees and service charges		5,445			5,412			33			0.6	%
(Loss) gain on sale and call of securities		(323	)		8			(331	)		-4137.5	%
Gain on sale of loans		580			1,004			(424	)		-42.2	%
Loss on sale of real estate owned		(11	)		(19	)		8			42.1	%
Income from bank owned life insurance		6,339			5,362			977			18.2	%
Electronic banking fees and charges		1,050			1,101			(51	)		-4.6	%
Miscellaneous		475			395			80			20.3	%
Total non-interest income		13,555			13,263			292			2.2	%
Non-interest expense
Salaries and employee benefits		63,029			53,736			9,293			17.3	%
Net occupancy expense of premises		11,220			9,178			2,042			22.2	%
Equipment and systems		12,273			9,482			2,791			29.4	%
Advertising and marketing		3,051			2,960			91			3.1	%
Federal deposit insurance premium		1,779			1,516			263			17.3	%
Directors' compensation		3,044			2,820			224			7.9	%
Merger-related expenses		-			6,743			(6,743	)		-100.0	%
Miscellaneous		14,847			11,415			3,432			30.1	%
Total non-interest expense		109,243			97,850			11,393			11.6	%
Income before income taxes		56,069			34,000			22,069			64.9	%
Income taxes		13,927			14,404			(477	)		-3.3	%
Net income	$	42,142		$	19,596		$	22,546			115.1	%
Net income per common share (EPS)
Basic	$	0.46		$	0.24		$	0.22
Diluted	$	0.46		$	0.24		$	0.22
Dividends declared
Cash dividends declared per common share	$	0.37		$	0.25		$	0.12
Cash dividends declared	$	34,028		$	20,158		$	13,870
Dividend payout ratio		80.7	%		102.9	%		-22.2	%
Weighted average number of  common  shares outstanding
Basic		91,054			82,587			8,467
Diluted		91,100			82,643			8,457

	For the year ended									Variance
Average Balance Sheet Data	June 30,			June 30,			Variance			or Change
(Dollars in Thousands, Unaudited)	2019			2018			or Change			Pct.
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	4,669,436		$	3,577,598		$	1,091,838			30.5	%
Taxable investment securities		1,171,335		$	1,048,163			123,172			11.8	%
Tax-exempt investment securities		134,489			127,779			6,710			5.3	%
Other interest-earning assets		101,595			93,209			8,386			9.0	%
Total interest-earning assets		6,076,855			4,846,749			1,230,106			25.4	%
Non-interest-earning assets		582,838			420,219			162,619			38.7	%
Total assets	$	6,659,693		$	5,266,968		$	1,392,725			26.4	%
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	796,815		$	896,695		$	(99,880	)		-11.1	%
Savings and club		761,203			569,777			191,426			33.6	%
Certificates of deposit		2,194,513			1,496,743			697,770			46.6	%
Total interest-bearing deposits		3,752,531			2,963,215			789,316			26.6	%
Borrowings:
Federal Home Loan Bank Advances		1,305,171			876,253			428,918			48.9	%
Other borrowings		54,152			34,274			19,878			58.0	%
Total borrowings		1,359,323			910,527			448,796			49.3	%
Total interest-bearing liabilities		5,111,854			3,873,742			1,238,112			32.0	%
Non-interest-bearing liabilities:
Non-interest-bearing deposits		312,169			281,262			30,907			11.0	%
Other non-interest-bearing liabilities		39,048			30,298			8,750			28.9	%
Total non-interest-bearing liabilities		351,217			311,560			39,657			12.7	%
Total liabilities		5,463,071			4,185,302			1,277,769			30.5	%
Stockholders' equity		1,196,622			1,081,666			114,956			10.6	%
Total liabilities and stockholders' equity	$	6,659,693		$	5,266,968		$	1,392,725			26.4	%
Average interest-earning assets to average  interest-bearing liabilities		118.88	%		125.12	%		-6.24	%		-5.0	%

	For the year ended
	June 30,			June 30,			Variance
Performance Ratio Highlights	2019			2018			or Change
Average yield on interest-earning assets:
Loans receivable, including loans held for sale		4.12	%		3.87	%		0.25	%
Taxable investment securities		3.18	%		2.58	%		0.60	%
Tax-exempt investment securities (1)		2.11	%		2.05	%		0.06	%
Other interest-earning assets		4.82	%		3.58	%		1.24	%
Total interest-earning assets		3.91	%		3.54	%		0.37	%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		1.02	%		0.82	%		0.20	%
Savings and club		0.55	%		0.17	%		0.38	%
Certificates of deposit		1.83	%		1.42	%		0.41	%
Total interest-bearing deposits		1.40	%		1.00	%		0.40	%
Borrowings:
Federal Home Loan Bank Advances		2.20	%		2.32	%		-0.12	%
Other borrowings		1.45	%		0.40	%		1.05	%
Total borrowings		2.17	%		2.25	%		-0.08	%
Total interest-bearing liabilities		1.60	%		1.29	%		0.31	%
Interest rate spread (2)		2.31	%		2.25	%		0.06	%
Net interest margin (3)		2.56	%		2.50	%		0.06	%
Non-interest income to average assets		0.20	%		0.25	%		-0.05	%
Non-interest expense to average assets		1.64	%		1.86	%		-0.22	%
Efficiency ratio (4)		64.69	%		72.72	%		-8.03	%
Return on average assets		0.63	%		0.37	%		0.26	%
Return on average equity		3.52	%		1.81	%		1.71	%
Return on average tangible equity (5)		4.30	%		2.08	%		2.22	%

____________________
(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.

Five-Quarter Financial Trend Analysis
Summary Balance Sheet	At
(Dollars and Shares in Thousands,	June 30,			March 31,			December 31,			September 30,			June 30,
Except Per Share Data, Unaudited)	2019			2019			2018			2018			2018
Assets
Cash and cash equivalents	$	38,935		$	54,160		$	51,483		$	44,486		$	128,864
Securities available for sale		714,263			726,920			666,602			706,240			725,085
Securities held to maturity		576,652			592,199			598,318			602,838			589,730
Loans held-for-sale		12,267			997			1,001			1,503			863
Loans receivable, including yield adjustments		4,678,928			4,659,804			4,753,392			4,660,507			4,501,348
Less allowance for loan losses		(33,274	)		(33,105	)		(33,526	)		(32,731	)		(30,865	)
Net loans receivable		4,645,654			4,626,699			4,719,866			4,627,776			4,470,483
Premises and equipment		56,854			58,274			58,414			57,635			56,240
Federal Home Loan Bank stock		64,190			64,288			64,514			66,428			59,004
Accrued interest receivable		19,360			20,326			19,435			19,455			18,510
Goodwill		210,895			210,895			210,895			210,895			210,895
Core deposit intangible		5,160			5,470			5,743			6,018			6,295
Bank owned life insurance		256,155			254,569			253,009			251,410			249,816
Deferred income taxes, net		25,367			24,182			24,692			22,136			23,754
Other real estate owned		-			209			508			674			725
Other assets		9,077			19,563			27,960			38,717			39,610
Total assets	$	6,634,829		$	6,658,751		$	6,702,440		$	6,656,211		$	6,579,874
Liabilities
Deposits		4,147,610		$	4,137,573		$	4,173,434		$	3,954,821		$	4,073,604
Borrowings		1,321,982			1,326,216			1,310,547			1,419,424			1,198,646
Advance payments by borrowers for taxes		16,887			17,208			17,201			10,687			18,088
Other liabilities		21,191			19,643			17,997			35,198			20,788
Total liabilities		5,507,670			5,500,640			5,519,179			5,420,130			5,311,126
Stockholders' Equity
Common stock		891			915			938			978			996
Paid-in capital		787,394			817,675			848,145			897,551			922,711
Retained earnings		366,679			363,072			356,993			350,838			359,096
Unearned ESOP shares		(30,644	)		(31,130	)		(31,617	)		(32,104	)		(32,590	)
Accumulated other comprehensive income, net		2,839			7,579			8,802			18,818			18,535
Total stockholders' equity		1,127,159			1,158,111			1,183,261			1,236,081			1,268,748
Total liabilities and stockholders' equity	$	6,634,829		$	6,658,751		$	6,702,440		$	6,656,211		$	6,579,874
Consolidated capital ratios
Equity to assets		16.99	%		17.39	%		17.65	%		18.57	%		19.28	%
Tangible equity to tangible assets		14.19	%		14.62	%		14.90	%		15.83	%		16.53	%
Share data
Outstanding shares		89,126			91,495			93,772			97,754			99,626
Equity per share	$	12.65		$	12.66		$	12.62		$	12.64		$	12.74
Tangible equity per share (1)	$	10.22		$	10.29		$	10.31		$	10.43		$	10.56

____________________
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

	At
Supplemental Balance Sheet Highlights	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in Thousands, Unaudited)	2019			2019			2018			2018			2018
Cash and cash equivalents
Cash and due from depository institutions	$	19,032		$	15,943		$	24,361		$	21,973		$	26,199
Interest-bearing deposits in other banks		19,903			38,217			27,122			22,513			102,665
Total cash and cash equivalents	$	38,935		$	54,160		$	51,483		$	44,486		$	128,864
Securities available for sale
Debt securities:
U.S. agency securities	$	3,678		$	3,737		$	3,942		$	4,070		$	4,411
Municipal and state obligations		26,951			26,731			26,205			25,907			26,088
Asset-backed securities		179,313			180,145			180,828			182,390			182,620
Collateralized loan obligations		208,611			207,906			184,439			215,569			226,066
Corporate bonds		122,024			121,597			144,692			147,811			147,594
Trust preferred securities		3,756			3,775			3,726			3,794			3,783
Debt securities		544,333			543,891			543,832			579,541			590,562
Mortgage-backed securities:
Collateralized mortgage obligations		21,390			21,660			23,019			23,097			24,292
Residential pass-through securities		44,303			70,513			91,918			95,795			102,359
Commercial pass-through securities		104,237			90,856			7,833			7,807			7,872
Mortgage-backed securities		169,930			183,029			122,770			126,699			134,523
Total securities available for sale	$	714,263		$	726,920		$	666,602		$	706,240		$	725,085
Securities held to maturity
Debt securities:
Municipal and state obligations	$	104,086		$	107,375		$	107,826		$	109,061		$	109,483
Subordinated debt		63,086			63,107			56,255			46,275			46,294
Debt securities		167,172			170,482			164,081			155,336			155,777
Mortgage-backed securities:
Collateralized mortgage obligations		46,381			49,368			51,540			54,130			56,886
Residential pass-through securities		166,283			174,338			182,335			190,812			200,622
Commercial pass-through securities		196,816			198,011			200,362			202,560			176,445
Mortgage-backed securities		409,480			421,717			434,237			447,502			433,953
Total securities held to maturity	$	576,652		$	592,199		$	598,318		$	602,838		$	589,730
Total securities	$	1,290,915		$	1,319,119		$	1,264,920		$	1,309,078		$	1,314,815

	At
Supplemental Balance Sheet Highlights	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in Thousands, Unaudited)	2019			2019			2018			2018			2018
Loan portfolio composition:
Residential first mortgage loans	$	1,344,044		$	1,325,105		$	1,334,284		$	1,303,249		$	1,297,453
Home equity loans and lines of credit		96,165			97,788			96,001			93,473			90,761
Residential mortgage loans		1,440,209			1,422,893			1,430,285			1,396,722			1,388,214
Multifamily mortgage loans		1,946,391			1,956,571			1,974,409			1,898,831			1,758,584
Nonresidential and mixed use mortgage loans		1,258,869			1,249,215			1,302,583			1,315,279			1,302,961
Commercial mortgage loans		3,205,260			3,205,786			3,276,992			3,214,110			3,061,545
Commercial business loans		65,763			66,476			70,059			78,317			85,825
Construction loans		13,907			14,377			28,405			26,581			23,271
Account loans		3,732			3,360			3,310			3,133			3,283
Other consumer loans		2,082			2,624			3,524			4,427			5,777
Consumer loans		5,814			5,984			6,834			7,560			9,060
Total loans, excluding yield adjustments		4,730,953			4,715,516			4,812,575			4,723,290			4,567,915
Unamortized yield adjustments		(52,025	)		(55,712	)		(59,183	)		(62,783	)		(66,567	)
Loans receivable, including yield adjustments		4,678,928			4,659,804			4,753,392			4,660,507			4,501,348
Less allowance for loan losses		(33,274	)		(33,105	)		(33,526	)		(32,731	)		(30,865	)
Net loans receivable	$	4,645,654		$	4,626,699		$	4,719,866		$	4,627,776		$	4,470,483
Loan portfolio allocation:
Residential first mortgage loans		28.4	%		28.1	%		27.7	%		27.6	%		28.4	%
Home equity loans and lines of credit		2.0	%		2.1	%		2.0	%		2.0	%		2.0	%
Residential mortgage loans		30.4	%		30.2	%		29.7	%		29.6	%		30.4	%
Multifamily mortgage loans		41.2	%		41.5	%		41.0	%		40.2	%		38.5	%
Nonresidential and mixed use mortgage loans		26.6	%		26.5	%		27.1	%		27.8	%		28.5	%
Commercial mortgage loans		67.8	%		68.0	%		68.1	%		68.0	%		67.0	%
Commercial business loans		1.4	%		1.3	%		1.4	%		1.6	%		1.9	%
Construction loans		0.3	%		0.3	%		0.6	%		0.6	%		0.5	%
Account loans		0.1	%		0.1	%		0.1	%		0.1	%		0.1	%
Other consumer loans		0.0	%		0.1	%		0.1	%		0.1	%		0.1	%
Consumer loans		0.1	%		0.2	%		0.2	%		0.2	%		0.2	%
Total loans, excluding yield adjustments		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Asset quality:
Nonperforming assets:
Accruing loans - 90 days and over past due	$	22		$	23		$	32		$	19		$	60
Nonaccrual loans		20,248			21,297			20,743			20,473			16,799
Total nonperforming loans		20,270			21,320			20,775			20,492			16,859
Other real estate owned		-			209			508			674			725
Total nonperforming assets	$	20,270		$	21,529		$	21,283		$	21,166		$	17,584
Nonperforming loans (% total loans)		0.43	%		0.46	%		0.44	%		0.44	%		0.37	%
Nonperforming assets (% total assets)		0.31	%		0.32	%		0.32	%		0.32	%		0.27	%
Allowance for loan losses (ALLL):
ALLL to total loans		0.70	%		0.70	%		0.70	%		0.69	%		0.68	%
ALLL to nonperforming loans		164.15	%		155.28	%		161.38	%		159.73	%		183.08	%
Net charge offs	$	495		$	242		$	176		$	234		$	101
Average net charge off rate (annualized)		0.04	%		0.02	%		0.01	%		0.02	%		0.01	%

	At
Supplemental Balance Sheet Highlights	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in Thousands, Unaudited)	2019			2019			2018			2018			2018
Funding by type:
Deposits:
Non-interest-bearing deposits	$	309,063		$	303,713		$	305,392		$	308,631		$	311,938
Interest-bearing demand		843,432			800,023			807,389			786,069			1,000,989
Savings and club		790,658			777,678			760,499			743,289			744,039
Certificates of deposit		2,204,457			2,256,159			2,300,154			2,116,832			2,016,638
Interest-bearing deposits		3,838,547			3,833,860			3,868,042			3,646,190			3,761,666
Total deposits		4,147,610			4,137,573			4,173,434			3,954,821			4,073,604
Borrowings:
Federal Home Loan Bank advances		1,283,211			1,289,285			1,293,845			1,335,844			1,170,144
Overnight borrowings		30,000			-			-			60,000			-
Depositor sweep accounts		8,771			36,931			16,702			23,580			28,502
Total borrowings		1,321,982			1,326,216			1,310,547			1,419,424			1,198,646
Total funding	$	5,469,592		$	5,463,789		$	5,483,981		$	5,374,245		$	5,272,250
Loans as a % of deposits		112.3	%		111.8	%		113.1	%		117.1	%		109.8	%
Deposits as a % of total funding		75.8	%		75.7	%		76.1	%		73.6	%		77.3	%
Borrowings as a % of total funding		24.2	%		24.3	%		23.9	%		26.4	%		22.7	%
Funding by source:
Retail funding:
Non-interest-bearing deposits	$	309,063		$	303,713		$	305,392		$	308,631		$	311,938
Interest-bearing demand		843,432			800,023			807,389			786,069			790,164
Savings and club		790,658			777,678			760,499			743,289			744,039
Certificates of deposit		1,902,542			1,925,630			1,922,287			1,871,903			1,828,039
Total retail deposits		3,845,695			3,807,044			3,795,567			3,709,892			3,674,180
Depositor sweep accounts		8,771			36,931			16,702			23,580			28,502
Total retail funding		3,854,466			3,843,975			3,812,269			3,733,472			3,702,682
Wholesale funding:
Interest-bearing demand	$	-		$	-		$	-		$	-		$	210,825
Certificates of deposit (listing service)		66,110			78,704			108,067			104,990			104,256
Certificates of deposit (brokered)		235,805			251,825			269,800			139,939			84,343
Total wholesale deposits		301,915			330,529			377,867			244,929			399,424
FHLB advances		1,283,211			1,289,285			1,293,845			1,335,844			1,170,144
Overnight borrowings		30,000			-			-			60,000			-
Total wholesale funding		1,615,126			1,619,814			1,671,712			1,640,773			1,569,568
Total funding	$	5,469,592		$	5,463,789		$	5,483,981		$	5,374,245		$	5,272,250
Retail funding as a % of total funding		70.5	%		70.4	%		69.5	%		69.5	%		70.2	%
Wholesale funding as a % of total funding		29.5	%		29.6	%		30.5	%		30.5	%		29.8	%

Summary Income Statement	For the three months ended
(Dollars and Shares in Thousands,	June 30,			March 31,			December 31,			September 30,			June 30,
Except Per Share Data, Unaudited)	2019			2019			2018			2018			2018
Interest income
Loans	$	47,818		$	48,116		$	49,015		$	47,437		$	46,615
Taxable investment securities		9,772			9,511			9,051			8,879			8,670
Tax-exempt investment securities		700			710			713			716			702
Other interest-earning assets		1,158			1,320			1,243			1,174			1,275
Total interest income		59,448			59,657			60,022			58,206			57,262
Interest expense
Deposits		15,131			14,114			12,727			10,539			9,755
Borrowings		7,171			6,905			7,946			7,487			6,916
Total interest expense		22,302			21,019			20,673			18,026			16,671
Net interest income		37,146			38,638			39,349			40,180			40,591
Provision for loan losses (provision reversal)		664			(179	)		971			2,100			717
Net interest income after provision  (provision reversal) for loan losses		36,482			38,817			38,378			38,080			39,874
Non-interest income
Fees and service charges		1,340			1,674			1,258			1,173			1,205
(Loss) gain on sale and call of securities		(141	)		(182	)		-			-			9
Gain on sale of loans		196			151			101			132			127
Gain (loss) on sale and write down of other real estate owned		9			(6	)		36			(50	)		60
Income from bank owned life insurance		1,586			1,560			1,599			1,594			1,604
Electronic banking fees and charges		270			253			277			250			278
Miscellaneous		128			226			38			83			75
Total non-interest income		3,388			3,676			3,309			3,182			3,358
Non-interest expense
Salaries and employee benefits		16,338			15,350			15,699			15,642			15,277
Net occupancy expense of premises		2,744			2,979			2,761			2,736			2,716
Equipment and systems		2,917			3,053			3,377			2,926			2,776
Advertising and marketing		948			739			787			577			757
Federal deposit insurance premium		438			455			421			465			463
Directors' compensation		770			770			746			758			754
Merger-related expenses		-			-			-			-			5,149
Miscellaneous		4,590			3,425			3,479			3,353			3,365
Total non-interest expense		28,745			26,771			27,270			26,457			31,257
Income before income taxes		11,125			15,722			14,417			14,805			11,975
Income taxes		2,314			4,305			3,649			3,659			4,257
Net income	$	8,811		$	11,417		$	10,768		$	11,146		$	7,718
Net income per common share (EPS)
Basic	$	0.10		$	0.13		$	0.12		$	0.12		$	0.08
Diluted	$	0.10		$	0.13		$	0.12		$	0.12		$	0.08
Dividends declared (1)
Cash dividends declared per common share	$	0.06		$	0.06		$	0.05		$	0.20		$	0.04
Cash dividends declared	$	5,204		$	5,338		$	4,082		$	19,404		$	3,892
Dividend payout ratio		59.1	%		46.8	%		37.9	%		174.1	%		50.4	%
Weighted average number of  common  shares outstanding
Basic		87,090			89,488			92,434			95,127			98,046
Diluted		87,132			89,532			92,480			95,181			98,100

____________________
(1) Dividends declared during the quarter ended September 30, 2018 include a $0.16 special dividend representing a supplemental distribution of net income to stockholders from the fiscal year ended June 30, 2018.

	For the three months ended
Average Balance Sheet Data	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in Thousands, Unaudited)	2019			2019			2018			2018			2018
Assets
Interest-earning assets:
Loans receivable, including loans held for sale	$	4,648,362		$	4,709,052		$	4,758,587		$	4,562,375		$	4,507,336
Taxable investment securities		1,184,401			1,161,492			1,158,720			1,180,655			1,192,066
Tax-exempt investment securities		132,110			134,309			135,453			136,056			134,683
Other interest-earning assets		98,374			107,554			87,916			112,629			142,591
Total interest-earning assets		6,063,247			6,112,407			6,140,676			5,991,715			5,976,676
Non-interest-earning assets		572,218			574,921			587,921			596,006			586,976
Total assets	$	6,635,465		$	6,687,328		$	6,728,597		$	6,587,721		$	6,563,652
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	815,624		$	790,567		$	792,989		$	788,148		$	1,004,445
Savings and club		780,558			773,308			743,676			747,743			724,430
Certificates of deposit		2,229,723			2,288,836			2,214,932			2,046,997			1,983,372
Total interest-bearing deposits		3,825,905			3,852,711			3,751,597			3,582,888			3,712,247
Borrowings:
Federal Home Loan Bank advances		1,284,427			1,292,168			1,293,470			1,350,113			1,179,147
Other borrowings		29,439			26,037			119,281			40,981			34,636
Total borrowings		1,313,866			1,318,205			1,412,751			1,391,094			1,213,783
Total interest-bearing liabilities		5,139,771			5,170,916			5,164,348			4,973,982			4,926,030
Non-interest-bearing liabilities:
Non-interest-bearing deposits		311,648			307,645			315,165			314,114			305,763
Other non-interest-bearing liabilities		39,294			35,930			37,374			43,533			39,340
Total non-interest-bearing liabilities		350,942			343,575			352,539			357,647			345,103
Total liabilities		5,490,713			5,514,491			5,516,887			5,331,629			5,271,133
Stockholders' equity		1,144,752			1,172,837			1,211,710			1,256,092			1,292,519
Total liabilities and stockholders' equity	$	6,635,465		$	6,687,328		$	6,728,597		$	6,587,721		$	6,563,652
Average interest-earning assets to average  interest-bearing liabilities		117.97	%		118.21	%		118.91	%		120.46	%		121.33	%

	For the three months ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Performance Ratio Highlights	2019			2019			2018			2018			2018
Average yield on interest-earning assets:
Loans receivable, including loans held for sale		4.11	%		4.09	%		4.12	%		4.16	%		4.14	%
Taxable investment securities		3.30	%		3.28	%		3.12	%		3.01	%		2.91	%
Tax-exempt investment securities (1)		2.12	%		2.12	%		2.11	%		2.10	%		2.09	%
Other interest-earning assets		4.71	%		4.91	%		5.66	%		4.17	%		3.58	%
Total interest-earning assets		3.92	%		3.91	%		3.91	%		3.89	%		3.83	%
Average cost of interest-bearing liabilities:
Deposits:
Interest-bearing demand		1.19	%		1.06	%		0.97	%		0.86	%		0.89	%
Savings and club		0.68	%		0.60	%		0.49	%		0.41	%		0.29	%
Certificates of deposit		2.04	%		1.90	%		1.79	%		1.58	%		1.41	%
Total interest-bearing deposits		1.58	%		1.47	%		1.36	%		1.18	%		1.05	%
Borrowings:
Federal Home Loan Bank advances		2.21	%		2.13	%		2.27	%		2.19	%		2.34	%
Other borrowings		0.99	%		0.35	%		1.99	%		0.94	%		0.34	%
Total borrowings		2.18	%		2.10	%		2.25	%		2.15	%		2.28	%
Total interest-bearing liabilities		1.74	%		1.63	%		1.60	%		1.45	%		1.35	%
Interest rate spread (2)		2.18	%		2.28	%		2.31	%		2.44	%		2.48	%
Net interest margin (3)		2.45	%		2.53	%		2.56	%		2.68	%		2.72	%
Non-interest income to average assets  (annualized)		0.20	%		0.22	%		0.20	%		0.19	%		0.20	%
Non-interest expense to average assets  (annualized)		1.73	%		1.60	%		1.62	%		1.61	%		1.90	%
Efficiency ratio (4)		70.91	%		63.27	%		63.93	%		61.01	%		71.12	%
Return on average assets (annualized)		0.53	%		0.68	%		0.64	%		0.68	%		0.47	%
Return on average equity (annualized)		3.08	%		3.89	%		3.55	%		3.55	%		2.39	%
Return on average tangible equity (annualized) (5)		3.80	%		4.78	%		4.33	%		4.29	%		2.90	%

____________________
(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.

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	For the three months ended
(Dollars in Thousands,	June 30,			March 31,			December 31,			September 30,			June 30,
Except Per Share Data, Unaudited)	2019			2019			2018			2018			2018
Adjusted Net Income
Net income (GAAP)	$	8,811		$	11,417		$	10,768		$	11,146		$	7,718
Add: Merger-related expenses - net of tax		-			-			-			-			3,698
Add: Branch consolidation expenses - net of tax		1,216			-			-			-			-
Adjusted net income (non-GAAP)	$	10,027		$	11,417		$	10,768		$	11,146		$	11,416
Adjusted Net Income per Common Share (EPS)
Net income per common share Basic and  Diluted (GAAP)	$	0.10		$	0.13		$	0.12		$	0.12		$	0.08
Add: Merger-related expenses - net of tax		-			-			-			-			0.04
Add: Branch consolidation expenses - net of tax		0.01			-			-			-			-
Adjusted net income per common share Basic  and Diluted (non-GAAP)	$	0.11		$	0.13		$	0.12		$	0.12		$	0.12
Adjusted Non-Interest Expense
Non-interest expense (GAAP)	$	28,745		$	26,771		$	27,270		$	26,457		$	31,257
Less: Merger-related expenses		-			-			-			-			(5,149	)
Less: Branch consolidation expenses (1)		(1,725	)		-			-			-			-
Adjusted non-interest expense (non-GAAP)	$	27,020		$	26,771		$	27,270		$	26,457		$	26,108
Adjusted Non-Interest Expense Ratio
Non-interest expense to average assets (GAAP)		1.73	%		1.60	%		1.62	%		1.61	%		1.90	%
Less: Merger-related expenses		0.00	%		0.00	%		0.00	%		0.00	%		-0.31	%
Less: Branch consolidation expenses		-0.10	%		0.00	%		0.00	%		0.00	%		0.00	%
Adjusted non-interest expense ratio (non-GAAP)		1.63	%		1.60	%		1.62	%		1.61	%		1.59	%
Adjusted Efficiency Ratio
Non-interest expense / (Net interest income  + non-interest income) (GAAP)		70.9	%		63.3	%		63.9	%		61.0	%		71.1	%
Less: Merger-related expenses		0.0	%		0.0	%		0.0	%		0.0	%		-11.7	%
Less: Branch consolidation expenses		-4.3	%		0.0	%		0.0	%		0.0	%		0.0	%
Adjusted efficiency ratio (non-GAAP)		66.6	%		63.3	%		63.9	%		61.0	%		59.4	%
Adjusted Return on Average Assets
Return on average assets (GAAP)		0.53	%		0.68	%		0.64	%		0.68	%		0.47	%
Add: Merger-related expenses - net of tax		0.00	%		0.00	%		0.00	%		0.00	%		0.22	%
Add: Branch consolidation expenses - net of tax		0.07	%		0.00	%		0.00	%		0.00	%		0.00	%
Adjusted return on average assets (non-GAAP)		0.60	%		0.68	%		0.64	%		0.68	%		0.69	%
Adjusted Return on Average Equity
Return on average equity (GAAP)		3.08	%		3.89	%		3.55	%		3.55	%		2.39	%
Add: Merger-related expenses - net of tax		0.00	%		0.00	%		0.00	%		0.00	%		1.14	%
Add: Branch consolidation expenses - net of tax		0.42	%		0.00	%		0.00	%		0.00	%		0.00	%
Adjusted return on average equity (non-GAAP)		3.50	%		3.89	%		3.55	%		3.55	%		3.53	%

____________________
(1) The amounts included in branch consolidation expenses were located on the income statement in salaries and employee benefits and miscellaneous expense totaling $654,000 and $1,071,000, respectively.  

	For the three months ended
Reconciliation of GAAP to Non-GAAP	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in Thousands, Unaudited)	2019			2019			2018			2018			2018
Calculation of Return on Average Tangible  Equity
Net income annualized (GAAP)	$	35,244		$	45,668		$	43,072		$	44,584		$	30,872
Total Average equity (GAAP)	$	1,144,752		$	1,172,837		$	1,211,710		$	1,256,092		$	1,292,519
Less: average goodwill		(210,895	)		(210,895	)		(210,895	)		(210,895	)		(221,024	)
Less: average other intangible assets		(5,313	)		(5,606	)		(5,915	)		(6,191	)		(6,404	)
Adjusted average tangible equity (non-GAAP)	$	928,544		$	956,336		$	994,900		$	1,039,006		$	1,065,091
Return on average tangible equity (non-GAAP)		3.80	%		4.78	%		4.33	%		4.29	%		2.90	%
Calculation of Adjusted Return on Average  Tangible Equity
Adjusted net income annualized (non-GAAP)	$	40,108		$	45,668		$	43,072		$	44,584		$	45,664
Total Average equity (GAAP)	$	1,144,752		$	1,172,837		$	1,211,710		$	1,256,092		$	1,292,519
Less: average goodwill		(210,895	)		(210,895	)		(210,895	)		(210,895	)		(221,024	)
Less: average other intangible assets		(5,313	)		(5,606	)		(5,915	)		(6,191	)		(6,404	)
Adjusted average tangible equity (non-GAAP)	$	928,544		$	956,336		$	994,900		$	1,039,006		$	1,065,091
Adjusted return on average tangible equity  (non-GAAP)		4.32	%		4.78	%		4.33	%		4.29	%		4.29	%

Reconciliation of GAAP to Non-GAAP	For the year ended
(Dollars in Thousands,	June 30,			June 30,
Except Per Share Data, Unaudited)	2019			2018
Adjusted Net Income
Net income (GAAP)	$	42,142		$	19,596
Add: Merger-related expenses - net of tax		-			5,105
Add: One-time impact of Tax Cuts and Jobs Act of 2017		-			2,717
Add: Branch consolidation expenses - net of tax		1,216			-
Adjusted net income (non-GAAP)	$	43,358		$	27,418
Adjusted Net Income per Common Share (EPS)
Net income per common share  Basic and Diluted (GAAP)	$	0.46		$	0.24
Add: Merger-related expenses - net of tax		-			0.06
Add: One-time impact of Tax Cuts and Jobs Act of 2017		-			0.03
Add: Branch consolidation expenses - net of tax		0.01			-
Adjusted net income per common share Basic  and Diluted (non-GAAP)	$	0.47		$	0.33
Adjusted Non-Interest Expense
Non-interest expense (GAAP)	$	109,243		$	97,850
Less: Merger-related expenses		-			(6,743	)
Less: Branch consolidation expenses		(1,725	)		-
Adjusted non-interest expense (non-GAAP)	$	107,518		$	91,107
Adjusted Non-Interest Expense Ratio
Non-interest expense to average assets (GAAP)		1.64	%		1.86	%
Less: Merger-related expenses		0.00	%		-0.13	%
Less: Branch consolidation expenses		-0.03	%		0.00	%
Adjusted non-interest expense ratio (non-GAAP)		1.61	%		1.73	%
Adjusted Efficiency Ratio
Non-interest expense / (Net interest income  + non-interest income) (GAAP)		64.69	%		72.72	%
Less: Merger-related expenses		0.00	%		-5.01	%
Less: Branch consolidation expenses		-1.02	%		0.00	%
Adjusted efficiency ratio (non-GAAP)		63.67	%		67.71	%
Adjusted Return on Average Assets
Return on average assets (GAAP)		0.63	%		0.37	%
Add: Merger-related expenses - net of tax		0.00	%		0.10	%
Add: One-time impact of Tax Cuts and Jobs Act of 2017		0.00	%		0.05	%
Add: Branch consolidation expenses - net of tax		0.02	%		0.00	%
Adjusted return on average assets (non-GAAP)		0.65	%		0.52	%
Adjusted Return on Average Equity
Return on average equity (GAAP)		3.52	%		1.81	%
Add: Merger-related expenses - net of tax		0.00	%		0.47	%
Add: One-time impact of Tax Cuts and Jobs Act of 2017		0.00	%		0.25	%
Add: Branch consolidation expenses - net of tax		0.10	%		0.00	%
Adjusted return on average equity (non-GAAP)		3.62	%		2.53	%

	For the year ended
Reconciliation of GAAP to Non-GAAP	June 30,			June 30,
(Dollars in Thousands, Unaudited)	2019			2018
Calculation of Return on Average Tangible Equity
Net income (GAAP)	$	42,142		$	19,596
Total Average equity (GAAP)	$	1,196,622		$	1,081,666
Less: average goodwill		(210,895	)		(136,622	)
Less: average other intangible assets		(5,758	)		(1,785	)
Adjusted average tangible equity (non-GAAP)	$	979,969		$	943,259
Return on average tangible equity (non-GAAP)		4.30	%		2.08	%
Calculation of Adjusted Return on Average Tangible Equity
Adjusted net income (non-GAAP)	$	43,358		$	27,418
Total Average equity (GAAP)	$	1,196,622		$	1,081,666
Less: average goodwill		(210,895	)		(136,622	)
Less: average other intangible assets		(5,758	)		(1,785	)
Adjusted average tangible equity (non-GAAP)	$	979,969		$	943,259
Adjusted return on average tangible equity (non-GAAP)		4.42	%		2.91	%

 

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