Kearny Financial Reports Operating Results (10-Q)
Kearny Financial has a market cap of $688.31 million; its shares were traded at around $9.95 with a P/E ratio of 110.56 and P/S ratio of 6.85. The dividend yield of Kearny Financial stocks is 2.01%. Highlight of Business Operations: Securities Available for Sale. Non-mortgage-backed securities classified as available for sale increased by $1.6 million to $29.6 million at September 30, 2009 from $28.0 million at June 30, 2009. The increase in the portfolio was attributable to an increase in the fair value of the portfolio partially offset by principal repayments. At September 30, 2009, the available for sale non-mortgage-backed securities portfolio consisted of $4.4 million of SBA pass-through certificates, $19.1 million of municipal bonds and $6.1 million of single issuer trust preferred securities with amortized costs of $4.5 million, $18.2 million and $8.8 million, respectively. The net unrealized loss for this portfolio was reduced to $1.9 million at September 30, 2009 from $3.6 million as of June 30, 2009. Based on its evaluation,
Residential mortgage loans, in aggregate, increased by $1.8 million to $816.6 million at September 30, 2009 from $814.8 million at June 30, 2009. The components of the aggregate increase included growth in one-to-four family first mortgage loans of $4.3 million to $693.6 million at September 30, 2009 partially offset by decreases in home equity loans and home equity lines of credit of $2.0 million and $535,000, respectively, whose ending balances at September 30, 2009 were $111.4 million and $11.6 million, respectively. The nominal increase in the balance of residential mortgage loans reflects management’s continued adherence to its disciplined pricing policy coupled with the effects of diminished loan demand in the marketplace arising from challenging economic conditions and diminished real estate values which have adversely impacted residential real estate purchase and refinancing activity. In total, residential mortgage loan origination volume for the three months ended September 30, 2009 was $39.9 million reflecting originations of one-to-four family first mortgage loans of $28.3 million and aggregate originations of home equity loans and home equity lines of credit of $11.6 million.
Commercial loans, in aggregate, increased by $11.4 million to $223.6 million at September 30, 2009 from $212.2 million at June 30, 2009. The components of the aggregate increase included growth in nonresidential mortgage loans and business loans of $12.0 million and $403,000, respectively, whose ending balances at September 30, 2009 were $183.8 million and $15.2 million, respectively. Partially offsetting these increases was a decline in multi-family mortgage loans of $990,000 to $24.6 million at September 30, 2009. The net growth in commercial loans reflects the Company’s long-term expanded strategic emphasis in commercial lending coupled with a continuing favorable pricing environment for these loans. In total, commercial loan origination volume for the three months ended September 30, 2009 was $14.9 million reflecting originations of nonresidential and multi-family mortgage loans of $13.7 million and originations of business loans of $1.2 million.
Mortgage-backed Securities Held to Maturity. Mortgage-backed securities held to maturity decreased $510,000 to $3.8 million at September 30, 2009 from $4.3 million at June 30, 2009 due primarily to principal repayments and the recognition of an additional $295,000 of other-than-temporary impairment in the value of certain non-agency collateralized mortgage obligations in the portfolio. At September 30, 2009, an analysis of the non-agency collateralized mortgage obligations resulted in the conclusion that securities having an aggregate amortized cost, adjusted for prior impairment charges, of $754,000 were other-than-temporarily impaired by an additional $295,000. Of this impairment, $98,000 was determined to be credit-related, and therefore recognized through earnings, while $197,000 was determined to be noncredit-related and therefore recognized through other comprehensive income. At September 30, 2009, the Company’s non-agency collateralized mortgage obligations have a total book value, net of other-than-temporary impairment charges, of $2.1 million and fair value of $1.9 million with the difference attributed to temporary impairments of value. The remainder of the held to maturity mortgage-backed securities portfolio comprises government agency mortgage pass-through securities and collateralized mortgage obligations that were not other-than-temporarily impaired based upon management’s evaluation at September 30, 2009. (For additional information refer to Note 10 to consolidated financial statements.)
Stockholders’ Equity. During the quarter ended September 30, 2009, stockholders’ equity increased $5.3 million to $482.0 million from $476.7 million at June 30, 2009. The increase was primarily attributable to a $4.2 million increase in accumulated other comprehensive income due to the aggregate mark-to-market adjustment to the available for sale securities portfolios and benefit plan related adjustments to equity and net income during the quarter of $1.1 million. Also contributing to the increase was $402,000 of ESOP shares earned, $771,000 of restricted stock plan shares earned and an adjustment to equity of $476,000 for expensing stock options. Partially offsetting these increases to stockholders' equity was a $968,000 increase in treasury stock due to the purchase of 87,000 shares of the Company’s common stock as well as an $852,000 cash dividend declared for payment to minority shareholders.
The decrease in the average cost was partially offset by a $82.0 million increase in the average balance of interest-bearing deposits to $1.39 billion for the three months ended September 30, 2009 from $1.31 billion for the three months ended September 30, 2008. The reported increase in the average balance was reflected across all categories of interest-bearing deposits and reflected the Company’s strategic efforts to increase its deposit base coupled with consumer demand for the safety of FDIC insurance to protect their financial assets given the recent volatility in the financial markets for uninsured investment products. For the same comparative periods, the average balance of interest bearing checking accounts increased $16.6 million to $171.1 million from $154.5 million, the average balance of savings accounts increased $7.6 million to $304.2 million from $296.6 million and the average balance of certificates of deposit increased $57.8 million to $917.4 million from $859.6 million. As of September 30, 2009, approximately $730.4 million or 79.3% of certificates of deposit mature within one year. Given the Bank’s liability sensitive interest rate risk profile, further reductions in the Bank’s cost of funds are possible to the extent maturing certificates of deposit re-price lower.
Read the The complete ReportKRNY is in the portfolios of Third Avenue Management.