EX-99.1 2 krny-ex991_6.htm EX-99.1 krny-ex991_6.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

October 30, 2019

 

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

 

KEARNY FINANCIAL CORP.

REPORTS FIRST QUARTER 2020 OPERATING RESULTS

 

Fairfield, New Jersey, October 30, 2019 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended September 30, 2019 of $11.4 million, or $0.13 per basic and diluted share.  The results represent an increase of $2.6 million compared to net income of $8.8 million, or $0.10 per basic and diluted share, for the quarter ended June 30, 2019.

 

Net income for the quarter ended September 30, 2019 was impacted by a non-recurring increase of $567,000 in non-interest expense and a non-recurring decrease of $106,000 in non-interest income which were recognized in conjunction with the Company’s previously announced branch consolidations.  Adjusting for the impact of such charges, net of tax benefit, the Company’s adjusted net income for the quarter ended September 30, 2019 would have been $11.8 million or $0.14 per basic and diluted share.  This compares to adjusted net income of $10.0 million or $0.11 per basic and diluted share for the quarter ended June 30, 2019.

 

Craig L. Montanaro, President and Chief Executive Officer, commented, “I am pleased to report that fiscal 2020 is off to a strong start.  We have made meaningful progress towards our goal of realigning our funding base, with a focus on growth in lower-cost core deposit relationships.  To that end, we grew core deposits by $111.4 million during the first quarter while facilitating the outflow of $75.3 million in wholesale funding.  This success coincided with our previously announced branch consolidations which were executed with a negligible loss in deposit balances.  On the technology front, we continued the ongoing evolution of our digital delivery channels with the deployment of online account opening and the launch of our new website, which was redesigned from the ground up with a mobile-first mindset.”

Balance Sheet Highlights

 

•

Deposits increased by $49.6 million to $4.20 billion at September 30, 2019 from $4.15 billion at June 30, 2019.  This net increase in deposits was attributable to an increase of $125.0 million in retail deposits that was partially offset by a decrease of $75.3 million in wholesale deposits.  The net growth and reallocation of the Company’s deposits for the quarter ended September 30, 2019 reflected its continuing effort to realign its funding mix in favor of core deposits.

 

•

Loans receivable decreased by $74.2 million to $4.60 billion, or 69.3% of total assets, at September 30, 2019 from $4.68 billion, or 70.5% of total assets, at June 30, 2019.  The decrease in loans receivable was attributable to loan prepayments outpacing origination volume.

 

•

Borrowings decreased by $40.9 million to $1.28 billion, or 19.3% of total assets, at September 30, 2019, from $1.32 billion, or 19.9% of total assets at June 30, 2019.  As noted above, the decrease in borrowings for the quarter ended September 30, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits.

 

•

Investment securities decreased by $21.3 million to $1.27 billion, or 19.1% of total assets, at September 30, 2019 from $1.29 billion, or 19.5% of total assets, at June 30, 2019.  In conjunction with the adoption of ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," the Company reclassified $537.7 million of investment securities from held-to-maturity to available-for-sale.

1

 

Earnings Highlights

Net Interest Income, Spread and Margin

 

•

Net interest income decreased by $459,000 to $36.7 million for the quarter ended September 30, 2019, from $37.1 million for the quarter ended June 30, 2019.  The decrease in net interest income was the result of an increase of $910,000 in interest expense partially offset by an increase of $451,000 in interest income.

 

•

Net interest spread decreased three basis points to 2.15% for the quarter ended September 30, 2019 from 2.18% for the quarter ended June 30, 2019.  The decrease in spread primarily reflected a six basis point increase in the cost of interest-bearing liabilities partially offset by a three basis point increase in the yield on interest-earning assets.

 

•

The factors that contributed to the quarterly change in net interest spread also contributed to a three basis point decrease in net interest margin to 2.42% for the quarter ended September 30, 2019 from 2.45% for the quarter ended June 30, 2019.

Non-Interest Income

 

•

Fees and service charges increased by $128,000, or 9.6%, to $1.5 million for the quarter ended September 30, 2019 compared to $1.3 million for the quarter ended June 30, 2019.

 

•

Aggregate loan sale gains attained record levels for the quarter ended September 30, 2019 increasing by $409,000, or 208.7%, to $605,000 from $196,000 for the quarter ended June 30, 2019.  The increase in loan sale gains largely reflected an increase in the volume of residential mortgage loans sold.

 

•

Miscellaneous non-interest income decreased by $123,000, to $5,000 for the quarter ended September 30, 2019 from $128,000 for the quarter ended June 30, 2019.  This decrease was attributable to a non-recurring loss on asset disposals associated with the branch consolidations noted above.

Non-Interest Expense

 

•

Non-interest expense decreased by $2.5 million to $26.2 million for the quarter ended September 30, 2019 compared to $28.7 million for the quarter ended June 30, 2019.  The decrease was largely attributable to a decrease of $1.2 million in non-recurring branch consolidation expenses to $567,000 for the quarter ended September 30, 2019 from $1.7 million for the quarter ended June 30, 2019.  Also contributing to the net decrease were decreases of $438,000 in FDIC insurance expense and $413,000 in advertising and marketing expense, partially offset by increases in net occupancy expense of premises and equipment and systems expense.  

For the quarter ended September 30, 2019 the Company recorded no expense associated with FDIC insurance premiums as a result of the FDIC’s Deposit Insurance Fund Reserve Ratio having reached a pre-established threshold defined by federal regulation.  Upon reaching this threshold qualifying banks with total consolidated assets of less than $10 billion were awarded assessment credits to be utilized towards their FDIC insurance premiums.

 

•

The Company’s non-interest expense ratio totaled 1.58% for the quarter ended September 30, 2019 compared to 1.73% for the prior quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s non-interest expense ratios would have been 1.55% for the quarter ended September 30, 2019.

 

•

The Company’s efficiency ratio was 64.6% for the quarter ended September 30, 2019 compared to 70.9% for the prior quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s efficiency ratio would have been 63.2% for the quarter ended September 30, 2019.

Income Taxes

 

•

Income tax expense totaled $3.8 million for the quarter ended September 30, 2019 compared to $2.3 million for the quarter ended June 30, 2019 resulting in effective tax rates of 25.1% and 20.8%, respectively.  The increase in income tax expense, and corresponding effective tax rate, largely reflected a higher level of pre-tax net income as compared to the prior period coupled with non-recurring adjustments during the prior period arising from updates to state income tax apportionment levels.

2

 

Performance Ratios

 

•

Return on average assets for the quarter ended September 30, 2019 increased to 0.68% from 0.53% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average assets would have been 0.71% for the quarter ended September 30, 2019.

 

•

Return on average equity increased to 4.08% for the quarter ended September 30, 2019 from 3.08% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average equity would have been 4.25% for the quarter ended September 30, 2019.

 

•

Return on average tangible equity increased to 5.06% for the quarter ended September 30, 2019 from 3.80% for the quarter ended June 30, 2019.  Adjusting for the impact of the branch consolidation expenses noted earlier, the Company’s return on average tangible equity would have been 5.28% for the quarter ended September 30, 2019.

Asset Quality Highlights

 

•

Asset quality remained strong throughout the quarter ended September 30, 2019.  The outstanding balance of non-performing loans totaled $21.8 million, or 0.47% of total loans, at September 30, 2019 as compared to $20.3 million, or 0.43% of total loans, at June 30, 2019.

 

•

The allowance for loan losses (“ALLL”) decreased to $32.4 million at September 30, 2019 from $33.3 million at June 30, 2019, resulting in an ALLL to total loans ratio of 0.70% for both comparative periods. The balance of the allowance for loan losses 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.

 

•

Net charge offs totaled $60,000 for the quarter ended September 30, 2019, reflecting an annualized net charge off rate of 0.01% on the average balance of total loans for the period.  By comparison, net charge offs totaled $495,000 for the quarter ended June 30, 2019, reflecting an annualized net charge off rate of 0.04%.

 

•

The Company recorded a loan loss provision reversal of $782,000 for the quarter ended September 30, 2019 compared to a loan loss provision of $664,000 for the quarter ended June 30, 2019.  The decrease in provision for loan losses was largely attributable to a net decrease during the quarter ended September 30, 2019 in the balance of the loan portfolio that was collectively evaluated for impairment compared to an increase in such balances during the prior quarter ending June 30, 2019, while also reflecting a decrease in net charge-offs between the comparative periods.

Capital Highlights

 

•

During the quarter ended September 30, 2019, the Company repurchased 2,326,051 shares of its common stock at a total cost of $30.6 million and an average cost of $13.15 per share.  Through September 30, 2019, the Company repurchased a total of 5,407,794 shares, or 58.7% of the shares authorized for repurchase under the current repurchase program, at a total cost of $71.9 million and at an average cost of $13.30 per share.

 

•

The Company maintained its regular quarterly cash dividend of $0.06 per share during the quarter ended September 30, 2019.  The Company continually evaluates its dividend policies in relation to its overall capital management and shareholder value objectives.

 

•

Book value per share increased by $0.15 to $12.80 at September 30, 2019, from $12.65 at June 30, 2019.  Tangible book value per share increased by $0.09 to $10.31 at September 30, 2019, from $10.22 at June 30, 2019.

 

•

The Company’s and Bank’s regulatory capital ratios at September 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.

3

 

Linked-Quarter Comparative Financial Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Balance Sheet

At

 

 

 

 

Variance

 

(Dollars and Shares in Thousands,

September 30,

 

June 30,

 

Variance

 

or Change

 

Except Per Share Data, Unaudited)

2019

 

2019

 

or Change

 

Pct.

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

129,305

 

$

38,935

 

$

90,370

 

 

232.1

%

Securities available for sale

 

1,231,691

 

 

714,263

 

 

517,428

 

 

72.4

%

Securities held to maturity

 

37,888

 

 

576,652

 

 

(538,764

)

 

-93.4

%

Loans held-for-sale

 

10,495

 

 

12,267

 

 

(1,772

)

 

-14.4

%

Loans receivable, including yield adjustments

 

4,604,738

 

 

4,678,928

 

 

(74,190

)

 

-1.6

%

Less allowance for loan losses

 

(32,432

)

 

(33,274

)

 

842

 

 

-2.5

%

Net loans receivable

 

4,572,306

 

 

4,645,654

 

 

(73,348

)

 

-1.6

%

Premises and equipment

 

56,599

 

 

56,854

 

 

(255

)

 

-0.4

%

Federal Home Loan Bank stock

 

63,739

 

 

64,190

 

 

(451

)

 

-0.7

%

Accrued interest receivable

 

19,393

 

 

19,360

 

 

33

 

 

0.2

%

Goodwill

 

210,895

 

 

210,895

 

 

-

 

 

0.0

%

Core deposit intangible

 

4,852

 

 

5,160

 

 

(308

)

 

-6.0

%

Bank owned life insurance

 

257,735

 

 

256,155

 

 

1,580

 

 

0.6

%

Deferred income taxes, net

 

21,742

 

 

25,367

 

 

(3,625

)

 

-14.3

%

Other real estate owned

 

-

 

 

-

 

 

-

 

 

0.0

%

Other assets

 

24,366

 

 

9,077

 

 

15,289

 

 

168.4

%

Total assets

$

6,641,006

 

$

6,634,829

 

$

6,177

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

4,197,250

 

$

4,147,610

 

$

49,640

 

 

1.2

%

Borrowings

 

1,281,118

 

 

1,321,982

 

 

(40,864

)

 

-3.1

%

Advance payments by borrowers for taxes

 

16,102

 

 

16,887

 

 

(785

)

 

-4.6

%

Other liabilities

 

35,747

 

 

21,191

 

 

14,556

 

 

68.7

%

Total liabilities

 

5,530,217

 

 

5,507,670

 

 

22,547

 

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

868

 

 

891

 

 

(23

)

 

-2.6

%

Paid-in capital

 

758,385

 

 

787,394

 

 

(29,009

)

 

-3.7

%

Retained earnings

 

373,004

 

 

366,679

 

 

6,325

 

 

1.7

%

Unearned ESOP shares

 

(30,158

)

 

(30,644

)

 

486

 

 

-1.6

%

Accumulated other comprehensive income, net

 

8,690

 

 

2,839

 

 

5,851

 

 

206.1

%

Total stockholders' equity

 

1,110,789

 

 

1,127,159

 

 

(16,370

)

 

-1.5

%

Total liabilities and stockholders' equity

$

6,641,006

 

$

6,634,829

 

$

6,177

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated capital ratios

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets

 

16.73

%

 

16.99

%

 

-0.26

%

 

 

 

Tangible equity to tangible assets

 

13.93

%

 

14.19

%

 

-0.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares

 

86,786

 

 

89,126

 

 

(2,340

)

 

-2.6

%

Book value per share

$

12.80

 

$

12.65

 

$

0.15

 

 

1.2

%

Tangible book value per share (1)

$

10.31

 

$

10.22

 

$

0.09

 

 

0.9

%

 

(1)

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

 

4

 

Summary Income Statement

For the three months ended

 

 

 

 

Variance

 

(Dollars and Shares in Thousands,

September 30,

 

June 30,

 

Variance

 

or Change

 

Except Per Share Data, Unaudited)

2019

 

2019

 

or Change

 

Pct.

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

48,600

 

$

47,818

 

$

782

 

 

1.6

%

Taxable investment securities

 

9,328

 

 

9,772

 

 

(444

)

 

-4.5

%

Tax-exempt investment securities

 

693

 

 

700

 

 

(7

)

 

-1.0

%

Other interest-earning assets

 

1,278

 

 

1,158

 

 

120

 

 

10.4

%

Total Interest Income

 

59,899

 

 

59,448

 

 

451

 

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

16,055

 

 

15,131

 

 

924

 

 

6.1

%

Borrowings

 

7,157

 

 

7,171

 

 

(14

)

 

-0.2

%

Total interest expense

 

23,212

 

 

22,302

 

 

910

 

 

4.1

%

Net interest income

 

36,687

 

 

37,146

 

 

(459

)

 

-1.2

%

(Reversal of) provision for loan losses

 

(782

)

 

664

 

 

(1,446

)

 

217.8

%

Net interest income after (reversal of)

provision for loan losses

 

37,469

 

 

36,482

 

 

987

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

1,468

 

 

1,340

 

 

128

 

 

9.6

%

Loss on sale and call of securities

 

(14

)

 

(141

)

 

127

 

 

90.1

%

Gain on sale of loans

 

605

 

 

196

 

 

409

 

 

208.7

%

Gain on sale and write down of other real estate owned

 

-

 

 

9

 

 

(9

)

 

-100.0

%

Income from bank owned life insurance

 

1,580

 

 

1,586

 

 

(6

)

 

-0.4

%

Electronic banking fees and charges

 

318

 

 

270

 

 

48

 

 

17.8

%

Miscellaneous

 

5

 

 

128

 

 

(123

)

 

-96.1

%

Total non-interest income

 

3,962

 

 

3,388

 

 

574

 

 

16.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

15,777

 

 

16,338

 

 

(561

)

 

-3.4

%

Net occupancy expense of premises

 

2,969

 

 

2,744

 

 

225

 

 

8.2

%

Equipment and systems

 

3,089

 

 

2,917

 

 

172

 

 

5.9

%

Advertising and marketing

 

535

 

 

948

 

 

(413

)

 

-43.6

%

Federal deposit insurance premium

 

-

 

 

438

 

 

(438

)

 

-100.0

%

Directors' compensation

 

770

 

 

770

 

 

-

 

 

0.0

%

Miscellaneous

 

3,104

 

 

4,590

 

 

(1,486

)

 

-32.4

%

Total non-interest expense

 

26,244

 

 

28,745

 

 

(2,501

)

 

-8.7

%

Income before income taxes

 

15,187

 

 

11,125

 

 

4,062

 

 

36.5

%

Income taxes

 

3,817

 

 

2,314

 

 

1,503

 

 

65.0

%

Net income

$

11,370

 

$

8,811

 

$

2,559

 

 

29.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.13

 

$

0.10

 

$

0.03

 

 

 

 

Diluted

$

0.13

 

$

0.10

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.06

 

$

0.06

 

$

-

 

 

 

 

Cash dividends declared

$

5,045

 

$

5,204

 

$

(159

)

 

 

 

Dividend payout ratio

 

44.4

%

 

59.1

%

 

-14.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of  common

shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

84,756

 

 

87,090

 

 

(2,334

)

 

 

 

Diluted

 

84,793

 

 

87,132

 

 

(2,339

)

 

 

 

 

 

 

5

 

For the three months ended

 

 

 

 

Variance

 

Average Balance Sheet Data

September 30,

 

June 30,

 

Variance

 

or Change

 

(Dollars in Thousands, Unaudited)

2019

 

2019

 

or Change

 

Pct.

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

 

4,656,192

 

$

4,648,362

 

$

7,830

 

 

0.2

%

Taxable investment securities

 

1,147,698

 

 

1,184,401

 

 

(36,703

)

 

-3.1

%

Tax-exempt investment securities

 

129,339

 

 

132,110

 

 

(2,771

)

 

-2.1

%

Other interest-earning assets

 

125,114

 

 

98,374

 

 

26,740

 

 

27.2

%

Total interest-earning assets

 

6,058,343

 

 

6,063,247

 

 

(4,904

)

 

-0.1

%

Non-interest-earning assets

 

585,826

 

 

572,218

 

 

13,608

 

 

2.4

%

Total assets

$

6,644,169

 

$

6,635,465

 

$

8,704

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

$

883,843

 

$

815,624

 

$

68,219

 

 

8.4

%

Savings and club

 

799,181

 

 

780,558

 

 

18,623

 

 

2.4

%

Certificates of deposit

 

2,179,333

 

 

2,229,723

 

 

(50,390

)

 

-2.3

%

Total interest-bearing deposits

 

3,862,357

 

 

3,825,905

 

 

36,452

 

 

1.0

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,277,145

 

 

1,284,427

 

 

(7,282

)

 

-0.6

%

Other borrowings

 

10,012

 

 

29,439

 

 

(19,427

)

 

-66.0

%

Total borrowings

 

1,287,157

 

 

1,313,866

 

 

(26,709

)

 

-2.0

%

Total interest-bearing liabilities

 

5,149,514

 

 

5,139,771

 

 

9,743

 

 

0.2

%

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

320,641

 

 

311,648

 

 

8,993

 

 

2.9

%

Other non-interest-bearing liabilities

 

60,078

 

 

39,294

 

 

20,784

 

 

52.9

%

Total non-interest-bearing liabilities

 

380,719

 

 

350,942

 

 

29,777

 

 

8.5

%

Total liabilities

 

5,530,233

 

 

5,490,713

 

 

39,520

 

 

0.7

%

Stockholders' equity

 

1,113,936

 

 

1,144,752

 

 

(30,816

)

 

-2.7

%

Total liabilities and stockholders' equity

$

6,644,169

 

$

6,635,465

 

$

8,704

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to average

interest-bearing liabilities

 

117.65

%

 

117.97

%

 

-0.32

%

 

-0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

For the three months ended

 

 

 

 

 

September 30,

 

June 30,

 

Variance

 

Performance Ratio Highlights

2019

 

2019

 

or Change

 

Average yield on interest-earning assets:

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

 

4.18

%

 

4.11

%

 

0.07

%

Taxable investment securities

 

3.25

%

 

3.30

%

 

-0.05

%

Tax-exempt investment securities (1)

 

2.14

%

 

2.12

%

 

0.02

%

Other interest-earning assets

 

4.09

%

 

4.71

%

 

-0.62

%

Total interest-earning assets

 

3.95

%

 

3.92

%

 

0.03

%

 

 

 

 

 

 

 

 

 

 

Average cost of interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

1.30

%

 

1.19

%

 

0.11

%

Savings and club

 

0.77

%

 

0.68

%

 

0.09

%

Certificates of deposit

 

2.14

%

 

2.04

%

 

0.10

%

Total interest-bearing deposits

 

1.66

%

 

1.58

%

 

0.08

%

Borrowings:

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

2.24

%

 

2.21

%

 

0.03

%

Other borrowings

 

0.66

%

 

0.99

%

 

-0.33

%

Total borrowings

 

2.22

%

 

2.18

%

 

0.04

%

Total interest-bearing liabilities

 

1.80

%

 

1.74

%

 

0.06

%

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

2.15

%

 

2.18

%

 

-0.03

%

Net interest margin (3)

 

2.42

%

 

2.45

%

 

-0.03

%

 

 

 

 

 

 

 

 

 

 

Non-interest income to average assets

(annualized)

 

0.24

%

 

0.20

%

 

0.03

%

Non-interest expense to average assets

(annualized)

 

1.58

%

 

1.73

%

 

-0.15

%

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

64.56

%

 

70.91

%

 

-6.35

%

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

0.68

%

 

0.53

%

 

0.15

%

Return on average equity (annualized)

 

4.08

%

 

3.08

%

 

1.00

%

Return on average tangible equity (annualized) (5)

 

5.06

%

 

3.80

%

 

1.26

%

 

(1)

The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.

(2)

Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.

(3)

Net interest income divided by average interest-earning assets.

(4)

Non-interest expense divided by the sum of net interest income and non-interest income.

(5)

Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.

 

 

 

 

 

 

 

 

 

 

 

7

 

Five-Quarter Financial Trend Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Balance Sheet

At

 

(Dollars and Shares in Thousands,

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

Except Per Share Data, Unaudited)

2019

2019

 

2019

 

2018

2018

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

129,305

 

$

38,935

 

$

54,160

 

$

51,483

 

$

44,486

 

Securities available for sale

 

1,231,691

 

 

714,263

 

 

726,920

 

 

666,602

 

 

706,240

 

Securities held to maturity

 

37,888

 

 

576,652

 

 

592,199

 

 

598,318

 

 

602,838

 

Loans held-for-sale

 

10,495

 

 

12,267

 

 

997

 

 

1,001

 

 

1,503

 

Loans receivable, including yield adjustments

 

4,604,738

 

 

4,678,928

 

 

4,659,804

 

 

4,753,392

 

 

4,660,507

 

Less allowance for loan losses

 

(32,432

)

 

(33,274

)

 

(33,105

)

 

(33,526

)

 

(32,731

)

Net loans receivable

 

4,572,306

 

 

4,645,654

 

 

4,626,699

 

 

4,719,866

 

 

4,627,776

 

Premises and equipment

 

56,599

 

 

56,854

 

 

58,274

 

 

58,414

 

 

57,635

 

Federal Home Loan Bank stock

 

63,739

 

 

64,190

 

 

64,288

 

 

64,514

 

 

66,428

 

Accrued interest receivable

 

19,393

 

 

19,360

 

 

20,326

 

 

19,435

 

 

19,455

 

Goodwill

 

210,895

 

 

210,895

 

 

210,895

 

 

210,895

 

 

210,895

 

Core deposit intangible

 

4,852

 

 

5,160

 

 

5,470

 

 

5,743

 

 

6,018

 

Bank owned life insurance

 

257,735

 

 

256,155

 

 

254,569

 

 

253,009

 

 

251,410

 

Deferred income taxes, net

 

21,742

 

 

25,367

 

 

24,182

 

 

24,692

 

 

22,136

 

Other real estate owned

 

-

 

 

-

 

 

209

 

 

508

 

 

674

 

Other assets

 

24,366

 

 

9,077

 

 

19,563

 

 

27,960

 

 

38,717

 

Total assets

$

6,641,006

 

$

6,634,829

 

$

6,658,751

 

$

6,702,440

 

$

6,656,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

4,197,250

 

$

4,147,610

 

$

4,137,573

 

$

4,173,434

 

$

3,954,821

 

Borrowings

 

1,281,118

 

 

1,321,982

 

 

1,326,216

 

 

1,310,547

 

 

1,419,424

 

Advance payments by borrowers for taxes

 

16,102

 

 

16,887

 

 

17,208

 

 

17,201

 

 

10,687

 

Other liabilities

 

35,747

 

 

21,191

 

 

19,643

 

 

17,997

 

 

35,198

 

Total liabilities

 

5,530,217

 

 

5,507,670

 

 

5,500,640

 

 

5,519,179

 

 

5,420,130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

868

 

 

891

 

 

915

 

 

938

 

 

978

 

Paid-in capital

 

758,385

 

 

787,394

 

 

817,675

 

 

848,145

 

 

897,551

 

Retained earnings

 

373,004

 

 

366,679

 

 

363,072

 

 

356,993

 

 

350,838

 

Unearned ESOP shares

 

(30,158

)

 

(30,644

)

 

(31,130

)

 

(31,617

)

 

(32,104

)

Accumulated other comprehensive income, net

 

8,690

 

 

2,839

 

 

7,579

 

 

8,802

 

 

18,818

 

Total stockholders' equity

 

1,110,789

 

 

1,127,159

 

 

1,158,111

 

 

1,183,261

 

 

1,236,081

 

Total liabilities and stockholders' equity

$

6,641,006

 

$

6,634,829

 

$

6,658,751

 

$

6,702,440

 

$

6,656,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated capital ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets

 

16.73

%

 

16.99

%

 

17.39

%

 

17.65

%

 

18.57

%

Tangible equity to tangible assets

 

13.93

%

 

14.19

%

 

14.62

%

 

14.90

%

 

15.83

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares

 

86,786

 

 

89,126

 

 

91,495

 

 

93,772

 

 

97,754

 

Book value per share

$

12.80

 

$

12.65

 

$

12.66

 

$

12.62

 

$

12.64

 

Tangible book value per share (1)

$

10.31

 

$

10.22

 

$

10.29

 

$

10.31

 

$

10.43

 

 

(1)

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

 

8

 

At

 

Supplemental Balance Sheet Highlights

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

(Dollars in Thousands, Unaudited)

2019

2019

 

2019

 

2018

2018

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from depository institutions

$

16,106

 

$

19,032

 

$

15,943

 

$

24,361

 

$

21,973

 

Interest-bearing deposits in other banks

 

113,199

 

 

19,903

 

 

38,217

 

 

27,122

 

 

22,513

 

Total cash and cash equivalents

$

129,305

 

$

38,935

 

$

54,160

 

$

51,483

 

$

44,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. agency securities

$

694

 

$

3,678

 

$

3,737

 

$

3,942

 

$

4,070

 

Municipal and state obligations

 

91,050

 

 

26,951

 

 

26,731

 

 

26,205

 

 

25,907

 

Asset-backed securities

 

181,068

 

 

179,313

 

 

180,145

 

 

180,828

 

 

182,390

 

Collateralized loan obligations

 

198,549

 

 

208,611

 

 

207,906

 

 

184,439

 

 

215,569

 

Corporate bonds

 

191,241

 

 

122,024

 

 

121,597

 

 

144,692

 

 

147,811

 

Trust preferred securities

 

3,775

 

 

3,756

 

 

3,775

 

 

3,726

 

 

3,794

 

Debt securities

 

666,377

 

 

544,333

 

 

543,891

 

 

543,832

 

 

579,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

63,594

 

 

21,390

 

 

21,660

 

 

23,019

 

 

23,097

 

Residential pass-through securities

 

202,858

 

 

44,303

 

 

70,513

 

 

91,918

 

 

95,795

 

Commercial pass-through securities

 

298,862

 

 

104,237

 

 

90,856

 

 

7,833

 

 

7,807

 

Mortgage-backed securities

 

565,314

 

 

169,930

 

 

183,029

 

 

122,770

 

 

126,699

 

Total securities available for sale

$

1,231,691

 

$

714,263

 

$

726,920

 

$

666,602

 

$

706,240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal and state obligations

$

37,888

 

$

104,086

 

$

107,375

 

$

107,826

 

$

109,061

 

Corporate bonds

 

-

 

 

63,086

 

 

63,107

 

 

56,255

 

 

46,275

 

Debt securities

 

37,888

 

 

167,172

 

 

170,482

 

 

164,081

 

 

155,336

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

-

 

 

46,381

 

 

49,368

 

 

51,540

 

 

54,130

 

Residential pass-through securities

 

-

 

 

166,283

 

 

174,338

 

 

182,335

 

 

190,812

 

Commercial pass-through securities

 

-

 

 

196,816

 

 

198,011

 

 

200,362

 

 

202,560

 

Mortgage-backed securities

 

-

 

 

409,480

 

 

421,717

 

 

434,237

 

 

447,502

 

Total securities held to maturity

$

37,888

 

$

576,652

 

$

592,199

 

$

598,318

 

$

602,838

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total securities

$

1,269,579

 

$

1,290,915

 

$

1,319,119

 

$

1,264,920

 

$

1,309,078

 

 

9

 

At

 

Supplemental Balance Sheet Highlights

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

(Dollars in Thousands, Unaudited)

2019

2019

 

2019

 

2018

2018

Loan portfolio composition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential first mortgage loans

$

1,319,750

 

$

1,344,044

 

$

1,325,105

 

$

1,334,284

 

$

1,303,249

 

Home equity loans and lines of credit

 

93,304

 

 

96,165

 

 

97,788

 

 

96,001

 

 

93,473

 

Residential mortgage loans

 

1,413,054

 

 

1,440,209

 

 

1,422,893

 

 

1,430,285

 

 

1,396,722

 

Multifamily mortgage loans

 

1,922,968

 

 

1,946,391

 

 

1,956,571

 

 

1,974,409

 

 

1,898,831

 

Nonresidential and mixed use mortgage loans

 

1,230,963

 

 

1,258,869

 

 

1,249,215

 

 

1,302,583

 

 

1,315,279

 

Commercial mortgage loans

 

3,153,931

 

 

3,205,260

 

 

3,205,786

 

 

3,276,992

 

 

3,214,110

 

Commercial business loans

 

66,889

 

 

65,763

 

 

66,476

 

 

70,059

 

 

78,317

 

Construction loans

 

14,637

 

 

13,907

 

 

14,377

 

 

28,405

 

 

26,581

 

Account loans

 

3,530

 

 

3,732

 

 

3,360

 

 

3,310

 

 

3,133

 

Other consumer loans

 

1,679

 

 

2,082

 

 

2,624

 

 

3,524

 

 

4,427

 

Consumer loans

 

5,209

 

 

5,814

 

 

5,984

 

 

6,834

 

 

7,560

 

Total loans, excluding yield adjustments

 

4,653,720

 

 

4,730,953

 

 

4,715,516

 

 

4,812,575

 

 

4,723,290

 

Unamortized yield adjustments

 

(48,982

)

 

(52,025

)

 

(55,712

)

 

(59,183

)

 

(62,783

)

Loans receivable, including yield adjustments

 

4,604,738

 

 

4,678,928

 

 

4,659,804

 

 

4,753,392

 

 

4,660,507

 

Less allowance for loan losses

 

(32,432

)

 

(33,274

)

 

(33,105

)

 

(33,526

)

 

(32,731

)

Net loans receivable

$

4,572,306

 

$

4,645,654

 

$

4,626,699

 

$

4,719,866

 

$

4,627,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan portfolio allocation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential first mortgage loans

 

28.4

%

 

28.4

%

 

28.1

%

 

27.7

%

 

27.6

%

Home equity loans and lines of credit

 

2.0

%

 

2.0

%

 

2.1

%

 

2.0

%

 

2.0

%

Residential mortgage loans

 

30.4

%

 

30.4

%

 

30.2

%

 

29.7

%

 

29.6

%

Multifamily mortgage loans

 

41.3

%

 

41.2

%

 

41.5

%

 

41.0

%

 

40.2

%

Nonresidential and mixed use mortgage loans

 

26.5

%

 

26.6

%

 

26.5

%

 

27.1

%

 

27.8

%

Commercial mortgage loans

 

67.8

%

 

67.8

%

 

68.0

%

 

68.1

%

 

68.0

%

Commercial business loans

 

1.4

%

 

1.4

%

 

1.3

%

 

1.4

%

 

1.6

%

Construction loans

 

0.3

%

 

0.3

%

 

0.3

%

 

0.6

%

 

0.6

%

Account loans

 

0.1

%

 

0.1

%

 

0.1

%

 

0.1

%

 

0.1

%

Other consumer loans

 

0.0

%

 

0.0

%

 

0.1

%

 

0.1

%

 

0.1

%

Consumer loans

 

0.1

%

 

0.1

%

 

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

$

15

 

$

22

 

$

23

 

$

32

 

$

19

 

Nonaccrual loans

 

21,766

 

 

20,248

 

 

21,297

 

 

20,743

 

 

20,473

 

Total nonperforming loans

 

21,781

 

 

20,270

 

 

21,320

 

 

20,775

 

 

20,492

 

Other real estate owned

 

-

 

 

-

 

 

209

 

 

508

 

 

674

 

Total nonperforming assets

$

21,781

 

$

20,270

 

$

21,529

 

$

21,283

 

$

21,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans (% total loans)

 

0.47

%

 

0.43

%

 

0.46

%

 

0.44

%

 

0.44

%

Nonperforming assets (% total assets)

 

0.33

%

 

0.31

%

 

0.32

%

 

0.32

%

 

0.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses (ALLL):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL to total loans

 

0.70

%

 

0.70

%

 

0.70

%

 

0.70

%

 

0.69

%

ALLL to nonperforming loans

 

148.90

%

 

164.15

%

 

155.28

%

 

161.38

%

 

159.73

%

Net charge offs

$

60

 

$

495

 

$

242

 

$

176

 

$

234

 

Average net charge off rate (annualized)

 

0.01

%

 

0.04

%

 

0.02

%

 

0.01

%

 

0.02

%

 

10

 

At

 

Supplemental Balance Sheet Highlights

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

(Dollars in Thousands, Unaudited)

2019

2019

 

2019

 

2018

2018

Funding by type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

$

322,846

 

$

309,063

 

$

303,713

 

$

305,392

 

$

308,631

 

Interest-bearing demand

 

931,188

 

 

843,432

 

 

800,023

 

 

807,389

 

 

786,069

 

Savings and club

 

800,514

 

 

790,658

 

 

777,678

 

 

760,499

 

 

743,289

 

Certificates of deposit

 

2,142,702

 

 

2,204,457

 

 

2,256,159

 

 

2,300,154

 

 

2,116,832

 

Interest-bearing deposits

 

3,874,404

 

 

3,838,547

 

 

3,833,860

 

 

3,868,042

 

 

3,646,190

 

Total deposits

 

4,197,250

 

 

4,147,610

 

 

4,137,573

 

 

4,173,434

 

 

3,954,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,273,618

 

 

1,283,211

 

 

1,289,285

 

 

1,293,845

 

 

1,335,844

 

Overnight borrowings

 

-

 

 

30,000

 

 

-

 

 

-

 

 

60,000

 

Depositor sweep accounts

 

7,500

 

 

8,771

 

 

36,931

 

 

16,702

 

 

23,580

 

Total borrowings

 

1,281,118

 

 

1,321,982

 

 

1,326,216

 

 

1,310,547

 

 

1,419,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total funding

$

5,478,368

 

$

5,469,592

 

$

5,463,789

 

$

5,483,981

 

$

5,374,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans as a % of deposits

 

109.2

%

 

112.3

%

 

111.8

%

 

113.1

%

 

117.1

%

Deposits as a % of total funding

 

76.6

%

 

75.8

%

 

75.7

%

 

76.1

%

 

73.6

%

Borrowings as a % of total funding

 

23.4

%

 

24.2

%

 

24.3

%

 

23.9

%

 

26.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funding by source:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail funding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

$

322,846

 

$

309,063

 

$

303,713

 

$

305,392

 

$

308,631

 

Interest-bearing demand

 

931,188

 

 

843,432

 

 

800,023

 

 

807,389

 

 

786,069

 

Savings and club

 

800,514

 

 

790,658

 

 

777,678

 

 

760,499

 

 

743,289

 

Certificates of deposit

 

1,916,132

 

 

1,902,542

 

 

1,925,630

 

 

1,922,287

 

 

1,871,903

 

Total retail deposits

 

3,970,680

 

 

3,845,695

 

 

3,807,044

 

 

3,795,567

 

 

3,709,892

 

Depositor sweep accounts

 

7,500

 

 

8,771

 

 

36,931

 

 

16,702

 

 

23,580

 

Total retail funding

 

3,978,180

 

 

3,854,466

 

 

3,843,975

 

 

3,812,269

 

 

3,733,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale funding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit (listing service)

$

57,534

 

$

66,110

 

$

78,704

 

$

108,067

 

$

104,990

 

Certificates of deposit (brokered)

 

169,036

 

 

235,805

 

 

251,825

 

 

269,800

 

 

139,939

 

Total wholesale deposits

 

226,570

 

 

301,915

 

 

330,529

 

 

377,867

 

 

244,929

 

FHLB advances

 

1,273,618

 

 

1,283,211

 

 

1,289,285

 

 

1,293,845

 

 

1,335,844

 

Overnight borrowings

 

-

 

 

30,000

 

 

-

 

 

-

 

 

60,000

 

Total wholesale funding

 

1,500,188

 

 

1,615,126

 

 

1,619,814

 

 

1,671,712

 

 

1,640,773

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total funding

$

5,478,368

 

$

5,469,592

 

$

5,463,789

 

$

5,483,981

 

$

5,374,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail funding as a % of total funding

 

72.6

%

 

70.5

%

 

70.4

%

 

69.5

%

 

69.5

%

Wholesale funding as a % of total funding

 

27.4

%

 

29.5

%

 

29.6

%

 

30.5

%

 

30.5

%

 

11

 

Summary Income Statement

For the three months ended

 

(Dollars and Shares in Thousands,

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

Except Per Share Data, Unaudited)

2019

2019

 

2019

 

2018

2018

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

48,600

 

$

47,818

 

$

48,116

 

$

49,015

 

$

47,437

 

Taxable investment securities

 

9,328

 

 

9,772

 

 

9,511

 

 

9,051

 

 

8,879

 

Tax-exempt investment securities

 

693

 

 

700

 

 

710

 

 

713

 

 

716

 

Other interest-earning assets

 

1,278

 

 

1,158

 

 

1,320

 

 

1,243

 

 

1,174

 

Total interest income

 

59,899

 

 

59,448

 

 

59,657

 

 

60,022

 

 

58,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

16,055

 

 

15,131

 

 

14,114

 

 

12,727

 

 

10,539

 

Borrowings

 

7,157

 

 

7,171

 

 

6,905

 

 

7,946

 

 

7,487

 

Total interest expense

 

23,212

 

 

22,302

 

 

21,019

 

 

20,673

 

 

18,026

 

Net interest income

 

36,687

 

 

37,146

 

 

38,638

 

 

39,349

 

 

40,180

 

(Reversal of) provision for loan losses

 

(782

)

 

664

 

 

(179

)

 

971

 

 

2,100

 

Net interest income after (reversal of)

provision for loan losses

 

37,469

 

 

36,482

 

 

38,817

 

 

38,378

 

 

38,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

1,468

 

 

1,340

 

 

1,674

 

 

1,258

 

 

1,173

 

Loss on sale and call of securities

 

(14

)

 

(141

)

 

(182

)

 

-

 

 

-

 

Gain on sale of loans

 

605

 

 

196

 

 

151

 

 

101

 

 

132

 

Gain (loss) on sale and write down of other real estate owned

 

-

 

 

9

 

 

(6

)

 

36

 

 

(50

)

Income from bank owned life insurance

 

1,580

 

 

1,586

 

 

1,560

 

 

1,599

 

 

1,594

 

Electronic banking fees and charges

 

318

 

 

270

 

 

253

 

 

277

 

 

250

 

Miscellaneous

 

5

 

 

128

 

 

226

 

 

38

 

 

83

 

Total non-interest income

 

3,962

 

 

3,388

 

 

3,676

 

 

3,309

 

 

3,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

15,777

 

 

16,338

 

 

15,350

 

 

15,699

 

 

15,642

 

Net occupancy expense of premises

 

2,969

 

 

2,744

 

 

2,979

 

 

2,761

 

 

2,736

 

Equipment and systems

 

3,089

 

 

2,917

 

 

3,053

 

 

3,377

 

 

2,926

 

Advertising and marketing

 

535

 

 

948

 

 

739

 

 

787

 

 

577

 

Federal deposit insurance premium

 

-

 

 

438

 

 

455

 

 

421

 

 

465

 

Directors' compensation

 

770

 

 

770

 

 

770

 

 

746

 

 

758

 

Miscellaneous

 

3,104

 

 

4,590

 

 

3,425

 

 

3,479

 

 

3,353

 

Total non-interest expense

 

26,244

 

 

28,745

 

 

26,771

 

 

27,270

 

 

26,457

 

Income before income taxes

 

15,187

 

 

11,125

 

 

15,722

 

 

14,417

 

 

14,805

 

Income taxes

 

3,817

 

 

2,314

 

 

4,305

 

 

3,649

 

 

3,659

 

Net income

$

11,370

 

$

8,811

 

$

11,417

 

$

10,768

 

$

11,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.13

 

$

0.10

 

$

0.13

 

$

0.12

 

$

0.12

 

Diluted

$

0.13

 

$

0.10

 

$

0.13

 

$

0.12

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.06

 

$

0.06

 

$

0.06

 

$

0.05

 

$

0.20

 

Cash dividends declared

$

5,045

 

$

5,204

 

$

5,338

 

$

4,082

 

$

19,404

 

Dividend payout ratio

 

44.4

%

 

59.1

%

 

46.8

%

 

37.9

%

 

174.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of  common

shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

84,756

 

 

87,090

 

 

89,488

 

 

92,434

 

 

95,127

 

Diluted

 

84,793

 

 

87,132

 

 

89,532

 

 

92,480

 

 

95,181

 

 

(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.

 

12

 

For the three months ended

 

Average Balance Sheet Data

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

(Dollars in Thousands, Unaudited)

2019

2019

 

2019

 

2018

2018

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

$

4,656,192

 

$

4,648,362

 

$

4,709,052

 

$

4,758,587

 

$

4,562,375

 

Taxable investment securities

 

1,147,698

 

 

1,184,401

 

 

1,161,492

 

 

1,158,720

 

 

1,180,655

 

Tax-exempt investment securities

 

129,339

 

 

132,110

 

 

134,309

 

 

135,453

 

 

136,056

 

Other interest-earning assets

 

125,114

 

 

98,374

 

 

107,554

 

 

87,916

 

 

112,629

 

Total interest-earning assets

 

6,058,343

 

 

6,063,247

 

 

6,112,407

 

 

6,140,676

 

 

5,991,715

 

Non-interest-earning assets

 

585,826

 

 

572,218

 

 

574,921

 

 

587,921

 

 

596,006

 

Total assets

$

6,644,169

 

$

6,635,465

 

$

6,687,328

 

$

6,728,597

 

$

6,587,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

$

883,843

 

$

815,624

 

$

790,567

 

$

792,989

 

$

788,148

 

Savings and club

 

799,181

 

 

780,558

 

 

773,308

 

 

743,676

 

 

747,743

 

Certificates of deposit

 

2,179,333

 

 

2,229,723

 

 

2,288,836

 

 

2,214,932

 

 

2,046,997

 

Total interest-bearing deposits

 

3,862,357

 

 

3,825,905

 

 

3,852,711

 

 

3,751,597

 

 

3,582,888

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,277,145

 

 

1,284,427

 

 

1,292,168

 

 

1,293,470

 

 

1,350,113

 

Other borrowings

 

10,012

 

 

29,439

 

 

26,037

 

 

119,281

 

 

40,981

 

Total borrowings

 

1,287,157

 

 

1,313,866

 

 

1,318,205

 

 

1,412,751

 

 

1,391,094

 

Total interest-bearing liabilities

 

5,149,514

 

 

5,139,771

 

 

5,170,916

 

 

5,164,348

 

 

4,973,982

 

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

320,641

 

 

311,648

 

 

307,645

 

 

315,165

 

 

314,114

 

Other non-interest-bearing liabilities

 

60,078

 

 

39,294

 

 

35,930

 

 

37,374

 

 

43,533

 

Total non-interest-bearing liabilities

 

380,719

 

 

350,942

 

 

343,575

 

 

352,539

 

 

357,647

 

Total liabilities

 

5,530,233

 

 

5,490,713

 

 

5,514,491

 

 

5,516,887

 

 

5,331,629

 

Stockholders' equity

 

1,113,936

 

 

1,144,752

 

 

1,172,837

 

 

1,211,710

 

 

1,256,092

 

Total liabilities and stockholders' equity

$

6,644,169

 

$

6,635,465

 

$

6,687,328

 

$

6,728,597

 

$

6,587,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to average

interest-bearing liabilities

 

117.65

%

 

117.97

%

 

118.21

%

 

118.91

%

 

120.46

%

 

13

 

For the three months ended

 

 

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

Performance Ratio Highlights

2019

2019

 

2019

 

2018

2018

Average yield on interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

 

4.18

%

 

4.11

%

 

4.09

%

 

4.12

%

 

4.16

%

Taxable investment securities

 

3.25

%

 

3.30

%

 

3.28

%

 

3.12

%

 

3.01

%

Tax-exempt investment securities (1)

 

2.14

%

 

2.12

%

 

2.12

%

 

2.11

%

 

2.10

%

Other interest-earning assets

 

4.09

%

 

4.71

%

 

4.91

%

 

5.66

%

 

4.17

%

Total interest-earning assets

 

3.95

%

 

3.92

%

 

3.91

%

 

3.91

%

 

3.89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average cost of interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

1.30

%

 

1.19

%

 

1.06

%

 

0.97

%

 

0.86

%

Savings and club

 

0.77

%

 

0.68

%

 

0.60

%

 

0.49

%

 

0.41

%

Certificates of deposit

 

2.14

%

 

2.04

%

 

1.90

%

 

1.79

%

 

1.58

%

Total interest-bearing deposits

 

1.66

%

 

1.58

%

 

1.47

%

 

1.36

%

 

1.18

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

2.24

%

 

2.21

%

 

2.13

%

 

2.27

%

 

2.19

%

Other borrowings

 

0.66

%

 

0.99

%

 

0.35

%

 

1.99

%

 

0.94

%

Total borrowings

 

2.22

%

 

2.18

%

 

2.10

%

 

2.25

%

 

2.15

%

Total interest-bearing liabilities

 

1.80

%

 

1.74

%

 

1.63

%

 

1.60

%

 

1.45

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

2.15

%

 

2.18

%

 

2.28

%

 

2.31

%

 

2.44

%

Net interest margin (3)

 

2.42

%

 

2.45

%

 

2.53

%

 

2.56

%

 

2.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income to average assets

(annualized)

 

0.24

%

 

0.20

%

 

0.22

%

 

0.20

%

 

0.19

%

Non-interest expense to average assets

(annualized)

 

1.58

%

 

1.73

%

 

1.60

%

 

1.62

%

 

1.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

64.56

%

 

70.91

%

 

63.27

%

 

63.93

%

 

61.01

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

0.68

%

 

0.53

%

 

0.68

%

 

0.64

%

 

0.68

%

Return on average equity (annualized)

 

4.08

%

 

3.08

%

 

3.89

%

 

3.55

%

 

3.55

%

Return on average tangible equity (annualized) (5)

 

5.06

%

 

3.80

%

 

4.78

%

 

4.33

%

 

4.29

%

 

(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.

 

 

 

14

 

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,

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

Except Per Share Data, Unaudited)

2019

2019

 

2019

 

2018

2018

Adjusted Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

11,370

 

$

8,811

 

$

11,417

 

$

10,768

 

$

11,146

 

Add: Branch consolidation expenses - net of tax

 

475

 

 

1,216

 

 

-

 

 

-

 

 

-

 

Adjusted net income (non-GAAP)

$

11,845

 

$

10,027

 

$

11,417

 

$

10,768

 

$

11,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per Common Share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share Basic and

Diluted (GAAP)

$

0.13

 

$

0.10

 

$

0.13

 

$

0.12

 

$

0.12

 

Add: Branch consolidation expenses - net of tax

 

0.01

 

 

0.01

 

 

-

 

 

-

 

 

-

 

Adjusted net income per common share Basic

and Diluted (non-GAAP)

$

0.14

 

$

0.11

 

$

0.13

 

$

0.12

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Non-Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense (GAAP)

$

26,244

 

$

28,745

 

$

26,771

 

$

27,270

 

$

26,457

 

Less: Branch consolidation expenses (1) (2)

 

(567

)

 

(1,725

)

 

-

 

 

-

 

 

-

 

Adjusted non-interest expense (non-GAAP)

$

25,677

 

$

27,020

 

$

26,771

 

$

27,270

 

$

26,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Non-Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income (GAAP)

$

3,962

 

$

3,388

 

$

3,676

 

$

3,309

 

$

3,182

 

Less: Branch consolidation expenses (1)

 

106

 

 

-

 

 

-

 

 

-

 

 

-

 

Adjusted non-interest income (non-GAAP)

$

4,068

 

$

3,388

 

$

3,676

 

$

3,309

 

$

3,182

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Non-Interest Expense Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense to average assets (GAAP)

 

1.58

%

 

1.73

%

 

1.60

%

 

1.62

%

 

1.61

%

Less: Branch consolidation expenses

 

-0.03

%

 

-0.10

%

 

0.00

%

 

0.00

%

 

0.00

%

Adjusted non-interest expense ratio (non-GAAP)

 

1.55

%

 

1.63

%

 

1.60

%

 

1.62

%

 

1.61

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense / (Net interest income

+ non-interest income) (GAAP)

 

64.6

%

 

70.9

%

 

63.3

%

 

63.9

%

 

61.0

%

Less: Branch consolidation expenses

 

-1.4

%

 

-4.3

%

 

0.0

%

 

0.0

%

 

0.0

%

Adjusted efficiency ratio (non-GAAP)

 

63.2

%

 

66.6

%

 

63.3

%

 

63.9

%

 

61.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (GAAP)

 

0.68

%

 

0.53

%

 

0.68

%

 

0.64

%

 

0.68

%

Add: Branch consolidation expenses - net of tax

 

0.03

%

 

0.07

%

 

0.00

%

 

0.00

%

 

0.00

%

Adjusted return on average assets (non-GAAP)

 

0.71

%

 

0.60

%

 

0.68

%

 

0.64

%

 

0.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average equity (GAAP)

 

4.08

%

 

3.08

%

 

3.89

%

 

3.55

%

 

3.55

%

Add: Branch consolidation expenses - net of tax

 

0.17

%

 

0.42

%

 

0.00

%

 

0.00

%

 

0.00

%

Adjusted return on average equity (non-GAAP)

 

4.25

%

 

3.50

%

 

3.89

%

 

3.55

%

 

3.55

%

 

(1)

For the quarter ended September 30, 2019, the amounts included in branch consolidation expenses were located on the income statement in salaries and employee benefits, miscellaneous expense and miscellaneous non-interest income totaling $331,000, $236,000 and $106,000, respectively.

(2)

For the quarter ended June 30, 2019, 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.

 

15

 

For the three months ended

 

Reconciliation of GAAP to Non-GAAP

September 30,

June 30,

 

March 31,

 

December 31,

September 30,

(Dollars in Thousands, Unaudited)

2019

2019

 

2019

 

2018

2018

Calculation of Return on Average Tangible

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income annualized (GAAP)

$

45,480

 

$

35,244

 

$

45,668

 

$

43,072

 

$

44,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Average equity (GAAP)

$

1,113,936

 

$

1,144,752

 

$

1,172,837

 

$

1,211,710

 

$

1,256,092

 

Less: average goodwill

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

Less: average other intangible assets

 

(5,006

)

 

(5,313

)

 

(5,606

)

 

(5,915

)

 

(6,191

)

Average tangible equity (non-GAAP)

$

898,035

 

$

928,544

 

$

956,336

 

$

994,900

 

$

1,039,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible equity (non-GAAP)

 

5.06

%

 

3.80

%

 

4.78

%

 

4.33

%

 

4.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Return on Average

Tangible Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income annualized (non-GAAP)

$

47,380

 

$

40,108

 

$

45,668

 

$

43,072

 

$

44,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Average equity (GAAP)

$

1,113,936

 

$

1,144,752

 

$

1,172,837

 

$

1,211,710

 

$

1,256,092

 

Less: average goodwill

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

Less: average other intangible assets

 

(5,006

)

 

(5,313

)

 

(5,606

)

 

(5,915

)

 

(6,191

)

Average tangible equity (non-GAAP)

$

898,035

 

$

928,544

 

$

956,336

 

$

994,900

 

$

1,039,006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted return on average tangible equity

(non-GAAP)

 

5.28

%

 

4.32

%

 

4.78

%

 

4.33

%

 

4.29

%

 

 

 

 

16