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PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Kearny Financial Corp. Reports Second Quarter 2020 Operating Results

January 30, 2020 GMT

FAIRFIELD, N.J., Jan. 30, 2020 (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 December 31, 2019 of $10.7 million, or $0.13 per basic and diluted share. The results represent a decrease of $718,000 compared to net income of $11.4 million, or $0.13 per basic and diluted share, for the quarter ended September 30, 2019.

The decrease in net income partially reflected the Company’s recognition of certain merger-related expenses totaling $219,000 related to its proposed acquisition of MSB Financial Corp. (NASDAQ: MSBF) (“MSBF”), the holding company for Millington Bank (“Millington”). The Company previously announced on December 18, 2019, that it had entered into a definitive agreement to acquire MSBF in a cash and stock transaction. Net income for the quarter ended December 31, 2019 was also impacted by a non-recurring increase of $153,000 in non-interest expense and a non-recurring decrease of $236,000 in non-interest income which were recognized in conjunction with the Company’s previously completed branch consolidations. Adjusting for the impact of such charges, net of tax benefit, the Company’s adjusted net income for the quarter ended December 31, 2019 was $11.1 million or $0.13 per basic and diluted share. This compares to adjusted net income of $11.8 million or $0.14 per basic and diluted share for the quarter ended September 30, 2019.

Craig L. Montanaro, President and Chief Executive Officer, commented, “I am very pleased to report another quarter of solid core earnings coupled with exceptionally strong core deposit growth. During the quarter, we grew core deposits by $147.3 million while facilitating the outflow of $120.5 million in wholesale funding. Our recently announced acquisition of MSB Financial Corp. will accelerate our funding realignment strategy as a majority of Millington’s deposits are comprised of core transaction accounts, while the Morris and Somerset county markets they serve offer tremendous opportunity for further growth in both deposits and loans. On the technology front, we continue to seek out, and partner with, best of breed technology providers as a means of strengthening our digital banking presence. Toward that end, we have committed to invest a total of $1.25 million in two separate FinTech firms whose product and service offerings will allow us to continue to provide our clients with the very best in digital banking solutions. As we move ahead our digital strategy focuses on the evaluation and implementation of technology solutions that leverage artificial intelligence, machine learning, robotic process automation and open API architecture.”

Balance Sheet Highlights

-- Deposits decreased by $8.4 million to $4.19 billion at December 31, 2019 from $4.20 billion at September 30, 2019. This net decrease in deposits was attributable to a decrease of $115.9 million in wholesale deposits that was largely offset by an increase of $107.5 million in retail deposits. The reallocation of deposits for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits. -- Loans receivable decreased by $112.0 million to $4.49 billion, or 68.0% of total assets, at December 31, 2019 from $4.60 billion, or 69.3% of total assets, at September 30, 2019. The decrease in loans receivable was attributable to an accelerated level of loan prepayment activity which outpaced loan origination volume. -- Borrowings decreased by $6.1 million to $1.28 billion, or 19.3% of total assets, at December 31, 2019. As noted above, the decrease in borrowings for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits. -- Investment securities increased by $168.7 million to $1.44 billion, or 21.8% of total assets, at December 31, 2019 from $1.27 billion, or 19.1% of total assets, at September 30, 2019.

Earnings Highlights

Net Interest Income, Spread and Margin

-- Net interest income decreased by $2.1 million to $34.6 million for the quarter ended December 31, 2019, from $36.7 million for the quarter ended September 30, 2019. The decrease in net interest income was the result of a decrease of $2.7 in interest income partially offset by a decrease of $637,000 in interest expense. -- Net interest spread decreased 11 basis points to 2.04% for the quarter ended December 31, 2019 from 2.15% for the quarter ended September 30, 2019. The decrease in spread primarily reflected a 16 basis point decrease in the yield on interest-earning assets that was partially offset by a five basis point decrease in the cost of interest-bearing liabilities. -- The factors that contributed to the quarterly change in net interest spread also contributed to a 13 basis point decrease in net interest margin to 2.29% for the quarter ended December 31, 2019 from 2.42% for the quarter ended September 30, 2019.

Non-Interest Income

-- Fees and service charges increased by $677,000 to $2.1 million for the quarter ended December 31, 2019 compared to $1.5 million for the quarter ended September 30, 2019. This increase was largely attributable to loan pre-payment penalty income associated with the accelerated loan pre-payment activity noted above.

-- Aggregate loan sale gains once again attained record levels increasing by $63,000 to $668,000 for the quarter ended December 31, 2019 from $605,000 for the quarter ended September 30, 2019. The increase in loan sale gains largely reflected an increase in the volume of residential mortgage loans sold during the period. -- Miscellaneous non-interest income decreased by $116,000, to a net loss of $111,000 for the quarter ended December 31, 2019 from $5,000 for the quarter ended September 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 increased by $183,000 to $26.4 million for the quarter ended December 31, 2019 compared to $26.2 million for the quarter ended September 30, 2019. The net increase was largely attributable to increases in advertising and marketing, net occupancy expense of premises, miscellaneous expense and non-recurring merger-related expenses. Partially offsetting these increases were decreases in salaries and employee benefits and equipment and systems expense. For the quarters ended December 31, 2019 and 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 are awarded assessment credits to be utilized towards their FDIC insurance premiums.

-- The Company’s non-interest expense ratio totaled 1.60% for the quarter ended December 31, 2019 compared to 1.58% for the prior quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s non-interest expense ratio would have been 1.57% for the quarter ended December 31, 2019. -- The Company’s efficiency ratio was 67.5% for the quarter ended December 31, 2019 compared to 64.6% for the prior quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s efficiency ratio would have been 66.1% for the quarter ended December 31, 2019.

Income Taxes

-- Income tax expense totaled $3.5 million for the quarter ended December 31, 2019 compared to $3.8 million for the quarter ended September 30, 2019 resulting in effective tax rates of 25.0% and 25.1%, respectively. The decrease in income tax expense largely reflected a lower level of pre-tax net income as compared to the prior period.

Performance Ratios

-- Return on average assets for the quarter ended December 31, 2019 decreased to 0.64% from 0.68% for the quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average assets would have been 0.67% for the quarter ended December 31, 2019. -- Return on average equity decreased to 3.86% for the quarter ended December 31, 2019 from 4.08% for the quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average equity would have been 4.02% for the quarter ended December 31, 2019. -- Return on average tangible equity decreased to 4.80% for the quarter ended December 31, 2019 from 5.06% for the quarter ended September 30, 2019. Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average tangible equity would have been 5.00% for the quarter ended December 31, 2019.

Asset Quality Highlights

-- Asset quality remained strong throughout the quarter ended December 31, 2019. The outstanding balance of non-performing loans totaled $22.0 million, or 0.49% of total loans, at December 31, 2019 as compared to $21.8 million, or 0.47% of total loans, at September 30, 2019. -- The allowance for loan losses (“ALLL”) decreased to $30.9 million at December 31, 2019 from $32.4 million at September 30, 2019, resulting in an ALLL to total loans ratio of 0.68% and 0.70%, respectively. 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 and thereafter.

-- Net charge offs totaled $30,000 for the quarter ended December 31, 2019, reflecting an annualized net charge off rate of 0.00% on the average balance of total loans for the period. By comparison, net charge offs totaled $60,000 for the quarter ended September 30, 2019, reflecting an annualized net charge off rate of 0.01%. -- The Company recorded a loan loss provision reversal of $1.5 million for the quarter ended December 31, 2019 compared to a loan loss provision reversal of $782,000 for the quarter ended September 30, 2019. The increase in provision reversal was largely attributable to a comparatively larger decrease in the balance of the loan portfolio that was collectively evaluated for impairment during the quarter ended December 31, 2019 compared to the quarter ended September 30, 2019.

Capital Highlights

-- During the quarter ended December 31, 2019, the Company repurchased 1,574,500 shares of its common stock at a total cost of $21.7 million and an average cost of $13.76 per share. Through December 31, 2019, the Company repurchased a total of 6,982,294 shares, or 75.7% of the shares authorized for repurchase under the current repurchase program, at a total cost of $93.6 million and at an average cost of $13.40 per share. -- The Company increased its regular quarterly cash dividend by $0.01 to $0.07 per share during the quarter ended December 31, 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 $0.05 to $12.85 at December 31, 2019, from $12.80 at September 30, 2019. Tangible book value per share increased by $0.01 to $10.32 at December 31, 2019, from $10.31 at September 30, 2019. -- The Company’s and Bank’s regulatory capital ratios at December 31, 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 Varianc e ------------------------- - (Dollars and Shares in Thousands, December September Variance or 31, 30, Change Except Per Share Data, Unaudited) 2019 2019 or Change Pct. --------------------------------------------- ----------- - ----------- - ---------- - ------ - Assets Cash and cash equivalents $ 41,796 $ 129,305 $ (87,509 ) -67.7 % Securities available for sale 1,402,206 1,231,691 170,515 13.8 % Securities held to maturity 36,073 37,888 (1,815 ) -4.8 % Loans held-for-sale 5,952 10,495 (4,543 ) -43.3 % Loans receivable, including yield adjustments 4,492,697 4,604,738 (112,041 ) -2.4 % Less allowance for loan losses (30,937 ) (32,432 ) 1,495 -4.6 % - --------- - - --------- - - -------- - ----- - Net loans receivable 4,461,760 4,572,306 (110,546 ) -2.4 % Premises and equipment 56,542 56,599 (57 ) -0.1 % Federal Home Loan Bank stock 62,838 63,739 (901 ) -1.4 % Accrued interest receivable 18,261 19,393 (1,132 ) -5.8 % Goodwill 210,895 210,895 - 0.0 % Core deposit intangible 4,545 4,852 (307 ) -6.3 % Bank owned life insurance 259,312 257,735 1,577 0.6 % Deferred income taxes, net 20,438 21,742 (1,304 ) -6.0 % Other real estate owned 178 - 178 0.0 % Other assets 29,605 24,366 5,239 21.5 % - --------- - - --------- - - -------- - ----- - Total assets $ 6,610,401 $ 6,641,006 $ (30,605 ) -0.5 % - --------- - - --------- - - -------- - ----- - Liabilities Deposits $ 4,188,822 $ 4,197,250 $ (8,428 ) -0.2 % Borrowings 1,275,049 1,281,118 (6,069 ) -0.5 % Advance payments by borrowers for taxes 16,585 16,102 483 3.0 % Other liabilities 35,375 35,747 (372 ) -1.0 % - --------- - - --------- - - -------- - ----- - Total liabilities 5,515,831 5,530,217 (14,386 ) -0.3 % Stockholders’ Equity Common stock 851 868 (17 ) -2.0 % Paid-in capital 737,539 758,385 (20,846 ) -2.7 % Retained earnings 377,896 373,004 4,892 1.3 % Unearned ESOP shares (29,671 ) (30,158 ) 487 -1.6 % Accumulated other comprehensive income, net 7,955 8,690 (735 ) -8.5 % - --------- - - --------- - - -------- - ----- - Total stockholders’ equity 1,094,570 1,110,789 (16,219 ) -1.5 % - --------- - - --------- - - -------- - ----- - Total liabilities and stockholders’ equity $ 6,610,401 $ 6,641,006 $ (30,605 ) -0.5 % - --------- - - --------- - - -------- - ----- - Consolidated capital ratios Equity to assets 16.56 % 16.73 % -0.17 % Tangible equity to tangible assets 13.75 % 13.93 % -0.18 % Share data Outstanding shares 85,150 86,786 (1,636 ) -1.9 % Book value per share $ 12.85 $ 12.80 $ 0.05 0.4 % Tangible book value per share(1) $ 10.32 $ 10.31 $ 0.01 0.1 %

(1) Tangible book value equals total stockholders’ equity reduced by goodwill and core deposit intangible assets.

Summary Income Statement For the three Variance months ended ------------------- - (Dollars and Shares in Thousands, December September Variance or 31, 30, Change Except Per Share Data, Unaudited) 2019 2019 or Pct. Change ------------------------------------------------------ -------- - -------- - -------- - -------- - Interest income Loans $ 45,608 $ 48,600 $ (2,992 ) -6.2 % Taxable investment securities 9,698 9,328 370 4.0 % Tax-exempt investment securities 666 693 (27 ) -3.9 % Other interest-earning assets 1,210 1,278 (68 ) -5.3 % - ------ - - ------ - - ------ - ------- - Total Interest Income 57,182 59,899 (2,717 ) -4.5 % Interest expense Deposits 15,590 16,055 (465 ) -2.9 % Borrowings 6,985 7,157 (172 ) -2.4 % - ------ - - ------ - - ------ - ------- - Total interest expense 22,575 23,212 (637 ) -2.7 % - ------ - - ------ - - ------ - ------- - Net interest income 34,607 36,687 (2,080 ) -5.7 % Reversal of loan losses (1,465 ) (782 ) (683 ) 87.3 % - ------ - - ------ - - ------ - ------- - Net interest income after reversal of 36,072 37,469 (1,397 ) -3.7 % loan losses - ------ - - ------ - - ------ - ------- - Non-interest income Fees and service charges 2,145 1,468 677 46.1 % Gain (loss) on sale and call of securities 11 (14 ) 25 -178.6 % Gain on sale of loans 668 605 63 10.4 % Loss on sale and write down of other real estate owned (28 ) - (28 ) -100.0 % Income from bank owned life insurance 1,576 1,580 (4 ) -0.3 % Electronic banking fees and charges 293 318 (25 ) -7.9 % Miscellaneous (111 ) 5 (116 ) -2320.0 % - ------ - - ------ - - ------ - ------- - Total non-interest income 4,554 3,962 592 14.9 % Non-interest expense Salaries and employee benefits 15,174 15,777 (603 ) -3.8 % Net occupancy expense of premises 3,082 2,969 113 3.8 % Equipment and systems 3,046 3,089 (43 ) -1.4 % Advertising and marketing 890 535 355 66.4 % Directors’ compensation 769 770 (1 ) -0.1 % Merger-related expenses 219 - 219 0.0 % Miscellaneous 3,247 3,104 143 4.6 % - ------ - - ------ - - ------ - ------- - Total non-interest expense 26,427 26,244 183 0.7 % - ------ - - ------ - - ------ - ------- - Income before income taxes 14,199 15,187 (988 ) -6.5 % Income taxes 3,547 3,817 (270 ) -7.1 % - ------ - - ------ - - ------ - ------- - Net income $ 10,652 $ 11,370 $ (718 ) -6.3 % - ------ - - ------ - - ------ - ------- - Net income per common share (EPS) Basic $ 0.13 $ 0.13 $ - Diluted $ 0.13 $ 0.13 $ - Dividends declared Cash dividends declared per common share $ 0.07 $ 0.06 $ 0.01 Cash dividends declared $ 5,760 $ 5,045 $ 715 Dividend payout ratio 54.1 % 44.4 % 9.7 % Weighted average number of common shares outstanding Basic 82,831 84,756 (1,925 ) Diluted 82,876 84,793 (1,917 )

For the three months Varianc ended e ------------------------- - Average Balance Sheet Data December September Variance or 31, 30, Change (Dollars in Thousands, Unaudited) 2019 2019 or Change Pct. ----------------------------------------------- ----------- - ----------- - ---------- - ------ - Assets Interest-earning assets: Loans receivable, including loans held for sale 4,547,126 $ 4,656,192 $ (109,066 ) -2.3 % Taxable investment securities 1,244,475 1,147,698 96,777 8.4 % Tax-exempt investment securities 125,187 129,339 (4,152 ) -3.2 % Other interest-earning assets 117,811 125,114 (7,303 ) -5.8 % - --------- - - --------- - - -------- - ----- - Total interest-earning assets 6,034,599 6,058,343 (23,744 ) -0.4 % Non-interest-earning assets 590,746 585,826 4,920 0.8 % - --------- - - --------- - - -------- - ----- - Total assets $ 6,625,345 $ 6,644,169 $ (18,824 ) -0.3 % - --------- - - --------- - - -------- - ----- - Liabilities and Stockholders’ Equity Interest-bearing liabilities: Deposits: Interest-bearing demand $ 982,163 $ 883,843 $ 98,320 11.1 % Savings 813,626 799,181 14,445 1.8 % Certificates of deposit 2,063,066 2,179,333 (116,267 ) -5.3 % - --------- - - --------- - - -------- - ----- - Total interest-bearing deposits 3,858,855 3,862,357 (3,502 ) -0.1 % Borrowings: Federal Home Loan Bank advances 1,255,597 1,277,145 (21,548 ) -1.7 % Other borrowings 34,733 10,012 24,721 246.9 % - --------- - - --------- - - -------- - ----- - Total borrowings 1,290,330 1,287,157 3,173 0.2 % - --------- - - --------- - - -------- - ----- - Total interest-bearing liabilities 5,149,185 5,149,514 (329 ) 0.0 % Non-interest-bearing liabilities: Non-interest-bearing deposits 320,161 320,641 (480 ) -0.1 % Other non-interest-bearing liabilities 53,479 60,078 (6,599 ) -11.0 % - --------- - - --------- - - -------- - ----- - Total non-interest-bearing liabilities 373,640 380,719 (7,079 ) -1.9 % - --------- - - --------- - - -------- - ----- - Total liabilities 5,522,825 5,530,233 (7,408 ) -0.1 % Stockholders’ equity 1,102,520 1,113,936 (11,416 ) -1.0 % - --------- - - --------- - - -------- - ----- - Total liabilities and stockholders’ equity $ 6,625,345 $ 6,644,169 $ (18,824 ) -0.3 % - --------- - - --------- - - -------- - ----- - Average interest-earning assets to average 117.20 % 117.65 % -0.45 % -0.4 % interest-bearing liabilities

For the three months ended --------------- - Decembe Septemb Varianc r 31, er 30, e Performance Ratio Highlights 2019 2019 or Change -------------------------------------------------- ------ - ------ - ------ - Average yield on interest-earning assets: Loans receivable, including loans held for sale 4.01 % 4.18 % -0.17 % Taxable investment securities 3.12 % 3.25 % -0.13 % Tax-exempt investment securities (1) 2.13 % 2.14 % -0.01 % Other interest-earning assets 4.11 % 4.09 % 0.02 % ----- - ----- - ----- - Total interest-earning assets 3.79 % 3.95 % -0.16 % Average cost of interest-bearing liabilities: Deposits: Interest-bearing demand 1.29 % 1.30 % -0.01 % Savings 0.81 % 0.77 % 0.04 % Certificates of deposit 2.09 % 2.14 % -0.05 % ----- - ----- - ----- - Total interest-bearing deposits 1.62 % 1.66 % -0.04 % Borrowings: Federal Home Loan Bank advances 2.19 % 2.24 % -0.05 % Other borrowings 1.36 % 0.66 % 0.70 % ----- - ----- - ----- - Total borrowings 2.17 % 2.22 % -0.05 % ----- - ----- - ----- - Total interest-bearing liabilities 1.75 % 1.80 % -0.05 % Interest rate spread(2) 2.04 % 2.15 % -0.11 % Net interest margin(3) 2.29 % 2.42 % -0.13 % Non-interest income to average assets 0.27 % 0.24 % 0.03 % (annualized) Non-interest expense to average assets 1.60 % 1.58 % 0.02 % (annualized) Efficiency ratio(4) 67.48 % 64.56 % 2.92 % Return on average assets (annualized) 0.64 % 0.68 % -0.04 % Return on average equity (annualized) 3.86 % 4.08 % -0.22 % Return on average tangible equity (annualized) (5) 4.80 % 5.06 % -0.26 %

(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.

Five-Quarter Financial Trend Analysis ----------------------------------------------------------------------------------------------------------- - Summary Balance Sheet At ------------------------------------------------------------------- - (Dollars and Shares in Thousands, December September June 30, March 31, December 31, 30, 31, Except Per Share Data, Unaudited) 2019 2019 2019 2019 2018 --------------------------------------- ----------- - ----------- - ----------- - ----------- - ----------- - Assets Cash and cash equivalents $ 41,796 $ 129,305 $ 38,935 $ 54,160 $ 51,483 Securities available for sale 1,402,206 1,231,691 714,263 726,920 666,602 Securities held to maturity 36,073 37,888 576,652 592,199 598,318 Loans held-for-sale 5,952 10,495 12,267 997 1,001 Loans receivable, including yield 4,492,697 4,604,738 4,678,928 4,659,804 4,753,392 adjustments Less allowance for loan losses (30,937 ) (32,432 ) (33,274 ) (33,105 ) (33,526 ) - --------- - - --------- - - --------- - - --------- - - --------- - Net loans receivable 4,461,760 4,572,306 4,645,654 4,626,699 4,719,866 Premises and equipment 56,542 56,599 56,854 58,274 58,414 Federal Home Loan Bank stock 62,838 63,739 64,190 64,288 64,514 Accrued interest receivable 18,261 19,393 19,360 20,326 19,435 Goodwill 210,895 210,895 210,895 210,895 210,895 Core deposit intangible 4,545 4,852 5,160 5,470 5,743 Bank owned life insurance 259,312 257,735 256,155 254,569 253,009 Deferred income taxes, net 20,438 21,742 25,367 24,182 24,692 Other real estate owned 178 - - 209 508 Other assets 29,605 24,366 9,077 19,563 27,960 - --------- - - --------- - - --------- - - --------- - - --------- - Total assets $ 6,610,401 $ 6,641,006 $ 6,634,829 $ 6,658,751 $ 6,702,440 - --------- - - --------- - - --------- - - --------- - - --------- - Liabilities Deposits 4,188,822 $ 4,197,250 $ 4,147,610 $ 4,137,573 $ 4,173,434 Borrowings 1,275,049 1,281,118 1,321,982 1,326,216 1,310,547 Advance payments by borrowers for taxes 16,585 16,102 16,887 17,208 17,201 Other liabilities 35,375 35,747 21,191 19,643 17,997 - --------- - - --------- - - --------- - - --------- - - --------- - Total liabilities 5,515,831 5,530,217 5,507,670 5,500,640 5,519,179 Stockholders’ Equity Common stock 851 868 891 915 938 Paid-in capital 737,539 758,385 787,394 817,675 848,145 Retained earnings 377,896 373,004 366,679 363,072 356,993 Unearned ESOP shares (29,671 ) (30,158 ) (30,644 ) (31,130 ) (31,617 ) Accumulated other comprehensive income, 7,955 8,690 2,839 7,579 8,802 net - --------- - - --------- - - --------- - - --------- - - --------- - Total stockholders’ equity 1,094,570 1,110,789 1,127,159 1,158,111 1,183,261 - --------- - - --------- - - --------- - - --------- - - --------- - Total liabilities and stockholders’ $ 6,610,401 $ 6,641,006 $ 6,634,829 $ 6,658,751 $ 6,702,440 equity - --------- - - --------- - - --------- - - --------- - - --------- - Consolidated capital ratios Equity to assets 16.56 % 16.73 % 16.99 % 17.39 % 17.65 % Tangible equity to tangible assets 13.75 % 13.93 % 14.19 % 14.62 % 14.90 % Share data Outstanding shares 85,150 86,786 89,126 91,495 93,772 Book value per share $ 12.85 $ 12.80 $ 12.65 $ 12.66 $ 12.62 Tangible book value per share(1) $ 10.32 $ 10.31 $ 10.22 $ 10.29 $ 10.31

(1) Tangible book value equals total stockholders’ equity reduced by goodwill and core deposit intangible assets.

At --------------------------------------------------------------- Supplemental Balance Sheet Highlights December September June 30, March 31, December 31, 30, 31, (Dollars in Thousands, Unaudited) 2019 2019 2019 2019 2018 ----------------------------------------- ----------- ----------- ----------- ----------- ----------- Cash and cash equivalents Cash and due from depository institutions $ 17,843 $ 16,106 $ 19,032 $ 15,943 $ 24,361 Interest-bearing deposits in other banks 23,953 113,199 19,903 38,217 27,122 - --------- - --------- - --------- - --------- - --------- Total cash and cash equivalents $ 41,796 $ 129,305 $ 38,935 $ 54,160 $ 51,483 - --------- - --------- - --------- - --------- - --------- Securities available for sale Debt securities: U.S. agency securities $ 606 $ 694 $ 3,678 $ 3,737 $ 3,942 Municipal and state obligations 88,057 91,050 26,951 26,731 26,205 Asset-backed securities 177,676 181,068 179,313 180,145 180,828 Collateralized loan obligations 198,324 198,549 208,611 207,906 184,439 Corporate bonds 192,074 191,241 122,024 121,597 144,692 Trust preferred securities 3,795 3,775 3,756 3,775 3,726 - --------- - --------- - --------- - --------- - --------- Debt securities 660,532 666,377 544,333 543,891 543,832 Mortgage-backed securities: Collateralized mortgage obligations 57,839 63,594 21,390 21,660 23,019 Residential pass-through securities 360,900 202,858 44,303 70,513 91,918 Commercial pass-through securities 322,935 298,862 104,237 90,856 7,833 - --------- - --------- - --------- - --------- - --------- Mortgage-backed securities 741,674 565,314 169,930 183,029 122,770 - --------- - --------- - --------- - --------- - --------- Total securities available for sale $ 1,402,206 $ 1,231,691 $ 714,263 $ 726,920 $ 666,602 Securities held to maturity Debt securities: Municipal and state obligations $ 36,073 $ 37,888 $ 104,086 $ 107,375 $ 107,826 Corporate bonds - - 63,086 63,107 56,255 - --------- - --------- - --------- - --------- - --------- Debt securities 36,073 37,888 167,172 170,482 164,081 Mortgage-backed securities: Collateralized mortgage obligations - - 46,381 49,368 51,540 Residential pass-through securities - - 166,283 174,338 182,335 Commercial pass-through securities - - 196,816 198,011 200,362 - --------- - --------- - --------- - --------- - --------- Mortgage-backed securities - - 409,480 421,717 434,237 - --------- - --------- - --------- - --------- - --------- Total securities held to maturity $ 36,073 $ 37,888 $ 576,652 $ 592,199 $ 598,318 - --------- - --------- - --------- - --------- - --------- Total securities $ 1,438,279 $ 1,269,579 $ 1,290,915 $ 1,319,119 $ 1,264,920 - --------- - --------- - --------- - --------- - ---------

At ------------------------------------------------------------------- - Supplemental Balance Sheet Highlights December September June 30, March 31, December 31, 30, 31, (Dollars in Thousands, Unaudited) 2019 2019 2019 2019 2018 ---------------------------------------- ----------- - ----------- - ----------- - ----------- - ----------- - Loan portfolio composition: Residential first mortgage loans $ 1,331,301 $ 1,319,750 $ 1,344,044 $ 1,325,105 $ 1,334,284 Home equity loans and lines of credit 89,916 93,304 96,165 97,788 96,001 - --------- - - --------- - - --------- - - --------- - - --------- - Residential mortgage loans 1,421,217 1,413,054 1,440,209 1,422,893 1,430,285 Multifamily mortgage loans 1,856,591 1,922,968 1,946,391 1,956,571 1,974,409 Nonresidential and mixed use mortgage 1,172,213 1,230,963 1,258,869 1,249,215 1,302,583 loans - --------- - - --------- - - --------- - - --------- - - --------- - Commercial mortgage loans 3,028,804 3,153,931 3,205,260 3,205,786 3,276,992 Commercial business loans 67,887 66,889 65,763 66,476 70,059 Construction loans 16,221 14,637 13,907 14,377 28,405 Account loans 3,581 3,530 3,732 3,360 3,310 Other consumer loans 1,327 1,679 2,082 2,624 3,524 - --------- - - --------- - - --------- - - --------- - - --------- - Consumer loans 4,908 5,209 5,814 5,984 6,834 - --------- - - --------- - - --------- - - --------- - - --------- - Total loans, excluding yield adjustments 4,539,037 4,653,720 4,730,953 4,715,516 4,812,575 Unamortized yield adjustments (46,340 ) (48,982 ) (52,025 ) (55,712 ) (59,183 ) - --------- - - --------- - - --------- - - --------- - - --------- - Loans receivable, including yield 4,492,697 4,604,738 4,678,928 4,659,804 4,753,392 adjustments Less allowance for loan losses (30,937 ) (32,432 ) (33,274 ) (33,105 ) (33,526 ) - --------- - - --------- - - --------- - - --------- - - --------- - Net loans receivable $ 4,461,760 $ 4,572,306 $ 4,645,654 $ 4,626,699 $ 4,719,866 - --------- - - --------- - - --------- - - --------- - - --------- - Loan portfolio allocation: Residential first mortgage loans 29.3 % 28.4 % 28.4 % 28.1 % 27.7 % Home equity loans and lines of credit 2.0 % 2.0 % 2.0 % 2.1 % 2.0 % - --------- - - --------- - - --------- - - --------- - - --------- - Residential mortgage loans 31.3 % 30.4 % 30.4 % 30.2 % 29.7 % Multifamily mortgage loans 40.9 % 41.3 % 41.2 % 41.5 % 41.0 % Nonresidential and mixed use mortgage 25.8 % 26.5 % 26.6 % 26.5 % 27.1 % loans - --------- - - --------- - - --------- - - --------- - - --------- - Commercial mortgage loans 66.7 % 67.8 % 67.8 % 68.0 % 68.1 % Commercial business loans 1.5 % 1.4 % 1.4 % 1.3 % 1.4 % Construction loans 0.4 % 0.3 % 0.3 % 0.3 % 0.6 % Account loans 0.1 % 0.1 % 0.1 % 0.1 % 0.1 % Other consumer loans 0.0 % 0.0 % 0.0 % 0.1 % 0.1 % - --------- - - --------- - - --------- - - --------- - - --------- - Consumer loans 0.1 % 0.1 % 0.1 % 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 $ 19 $ 15 $ 22 $ 24 $ 32 due Nonaccrual loans 21,935 21,766 20,248 21,297 20,743 - --------- - - --------- - - --------- - - --------- - - --------- - Total nonperforming loans 21,954 21,781 20,270 21,321 20,775 Other real estate owned 178 - - 209 508 - --------- - - --------- - - --------- - - --------- - - --------- - Total nonperforming assets $ 22,132 $ 21,781 $ 20,270 $ 21,530 $ 21,283 - --------- - - --------- - - --------- - - --------- - - --------- - Nonperforming loans (% total loans) 0.49 % 0.47 % 0.43 % 0.46 % 0.44 % Nonperforming assets (% total assets) 0.33 % 0.33 % 0.31 % 0.32 % 0.32 % Allowance for loan losses (ALLL): ALLL to total loans 0.68 % 0.70 % 0.70 % 0.70 % 0.70 % ALLL to nonperforming loans 140.92 % 148.90 % 164.15 % 155.27 % 161.38 % Net charge offs $ 30 $ 60 $ 495 $ 242 $ 176 Average net charge off rate (annualized) 0.00 % 0.01 % 0.04 % 0.02 % 0.01 %

At ------------------------------------------------------------------- - Supplemental Balance Sheet Highlights December September June 30, March 31, December 31, 30, 31, (Dollars in Thousands, Unaudited) 2019 2019 2019 2019 2018 -------------------------------------- ----------- - ----------- - ----------- - ----------- - ----------- - Funding by type: Deposits: Non-interest-bearing deposits $ 312,098 $ 322,846 $ 309,063 $ 303,713 $ 305,392 Interest-bearing demand 1,060,434 931,188 843,432 800,023 807,389 Savings 829,321 800,514 790,658 777,678 760,499 Certificates of deposit 1,986,969 2,142,702 2,204,457 2,256,159 2,300,154 - --------- - - --------- - - --------- - - --------- - - --------- - Interest-bearing deposits 3,876,724 3,874,404 3,838,547 3,833,860 3,868,042 - --------- - - --------- - - --------- - - --------- - - --------- - Total deposits 4,188,822 4,197,250 4,147,610 4,137,573 4,173,434 Borrowings: Federal Home Loan Bank advances 1,253,958 1,273,618 1,283,211 1,289,285 1,293,845 Overnight borrowings 15,000 - 30,000 - - Depositor sweep accounts 6,091 7,500 8,771 36,931 16,702 - --------- - - --------- - - --------- - - --------- - - --------- - Total borrowings 1,275,049 1,281,118 1,321,982 1,326,216 1,310,547 - --------- - - --------- - - --------- - - --------- - - --------- - Total funding $ 5,463,871 $ 5,478,368 $ 5,469,592 $ 5,463,789 $ 5,483,981 - --------- - - --------- - - --------- - - --------- - - --------- - Loans as a % of deposits 106.7 % 109.2 % 112.3 % 111.8 % 113.1 % Deposits as a % of total funding 76.7 % 76.6 % 75.8 % 75.7 % 76.1 % Borrowings as a % of total funding 23.3 % 23.4 % 24.2 % 24.3 % 23.9 % Funding by source: Retail funding: Non-interest-bearing deposits $ 312,098 $ 322,846 $ 309,063 $ 303,713 $ 305,392 Interest-bearing demand 1,060,434 931,188 843,432 800,023 807,389 Savings 829,321 800,514 790,658 777,678 760,499 Certificates of deposit 1,876,280 1,916,132 1,902,542 1,925,630 1,922,287 - --------- - - --------- - - --------- - - --------- - - --------- - Total retail deposits 4,078,133 3,970,680 3,845,695 3,807,044 3,795,567 Depositor sweep accounts 6,091 7,500 8,771 36,931 16,702 - --------- - - --------- - - --------- - - --------- - - --------- - Total retail funding 4,084,224 3,978,180 3,854,466 3,843,975 3,812,269 Wholesale funding: Certificates of deposit (listing $ 42,119 $ 57,534 $ 66,110 $ 78,704 $ 108,067 service) Certificates of deposit (brokered) 68,570 169,036 235,805 251,825 269,800 - --------- - - --------- - - --------- - - --------- - - --------- - Total wholesale deposits 110,689 226,570 301,915 330,529 377,867 FHLB advances 1,253,958 1,273,618 1,283,211 1,289,285 1,293,845 Overnight borrowings 15,000 - 30,000 - - - --------- - - --------- - - --------- - - --------- - - --------- - Total wholesale funding 1,379,647 1,500,188 1,615,126 1,619,814 1,671,712 - --------- - - --------- - - --------- - - --------- - - --------- - Total funding $ 5,463,871 $ 5,478,368 $ 5,469,592 $ 5,463,789 $ 5,483,981 - --------- - - --------- - - --------- - - --------- - - --------- - Retail funding as a % of total funding 74.7 % 72.6 % 70.5 % 70.4 % 69.5 % Wholesale funding as a % of total 25.3 % 27.4 % 29.5 % 29.6 % 30.5 % funding

Summary Income Statement For the three months ended ---------------------------------------------------- - (Dollars and Shares in Thousands, December September June 30, March December 31, 30, 31, 31, Except Per Share Data, Unaudited) 2019 2019 2019 2019 2018 ------------------------------------------------------- -------- - -------- - -------- - -------- - -------- - Interest income Loans $ 45,608 $ 48,600 $ 47,818 $ 48,116 $ 49,015 Taxable investment securities 9,698 9,328 9,772 9,511 9,051 Tax-exempt investment securities 666 693 700 710 713 Other interest-earning assets 1,210 1,278 1,158 1,320 1,243 - ------ - - ------ - - ------ - - ------ - - ------ - Total interest income 57,182 59,899 59,448 59,657 60,022 Interest expense Deposits 15,590 16,055 15,131 14,114 12,727 Borrowings 6,985 7,157 7,171 6,905 7,946 - ------ - - ------ - - ------ - - ------ - - ------ - Total interest expense 22,575 23,212 22,302 21,019 20,673 - ------ - - ------ - - ------ - - ------ - - ------ - Net interest income 34,607 36,687 37,146 38,638 39,349 (Reversal of) provision for loan losses (1,465 ) (782 ) 664 (179 ) 971 - ------ - - ------ - - ------ - - ------ - - ------ - Net interest income after (reversal of) 36,072 37,469 36,482 38,817 38,378 provision for loan losses - ------ - - ------ - - ------ - - ------ - - ------ - Non-interest income Fees and service charges 2,145 1,468 1,340 1,674 1,258 Gain (loss) on sale and call of securities 11 (14 ) (141 ) (182 ) - Gain on sale of loans 668 605 196 151 101 (Loss) gain on sale and write down of other real estate (28 ) - 9 (6 ) 36 owned Income from bank owned life insurance 1,576 1,580 1,586 1,560 1,599 Electronic banking fees and charges 293 318 270 253 277 Miscellaneous (111 ) 5 128 226 38 - ------ - - ------ - - ------ - - ------ - - ------ - Total non-interest income 4,554 3,962 3,388 3,676 3,309 Non-interest expense Salaries and employee benefits 15,174 15,777 16,338 15,350 15,699 Net occupancy expense of premises 3,082 2,969 2,744 2,979 2,761 Equipment and systems 3,046 3,089 2,917 3,053 3,377 Advertising and marketing 890 535 948 739 787 Federal deposit insurance premium - - 438 455 421 Directors’ compensation 769 770 770 770 746 Merger-related expenses 219 - - - - Miscellaneous 3,247 3,104 4,590 3,425 3,479 - ------ - - ------ - - ------ - - ------ - - ------ - Total non-interest expense 26,427 26,244 28,745 26,771 27,270 - ------ - - ------ - - ------ - - ------ - - ------ - Income before income taxes 14,199 15,187 11,125 15,722 14,417 Income taxes 3,547 3,817 2,314 4,305 3,649 - ------ - - ------ - - ------ - - ------ - - ------ - Net income $ 10,652 $ 11,370 $ 8,811 $ 11,417 $ 10,768 - ------ - - ------ - - ------ - - ------ - - ------ - Net income per common share (EPS) Basic $ 0.13 $ 0.13 $ 0.10 $ 0.13 $ 0.12 Diluted $ 0.13 $ 0.13 $ 0.10 $ 0.13 $ 0.12 Dividends declared(1) Cash dividends declared per common share $ 0.07 $ 0.06 $ 0.06 $ 0.06 $ 0.05 Cash dividends declared $ 5,760 $ 5,045 $ 5,204 $ 5,338 $ 4,082 Dividend payout ratio 54.1 % 44.4 % 59.1 % 46.8 % 37.9 % Weighted average number of common shares outstanding Basic 82,831 84,756 87,090 89,488 92,434 Diluted 82,876 84,793 87,132 89,532 92,480

For the three months ended ------------------------------------------------------------------- - Average Balance Sheet Data December September June 30, March 31, December 31, 30, 31, (Dollars in Thousands, Unaudited) 2019 2019 2019 2019 2018 -------------------------------------- ----------- - ----------- - ----------- - ----------- - ----------- - Assets Interest-earning assets: Loans receivable, including loans held $ 4,547,126 $ 4,656,192 $ 4,648,362 $ 4,709,052 $ 4,758,587 for sale Taxable investment securities 1,244,475 1,147,698 1,184,401 1,161,492 1,158,720 Tax-exempt investment securities 125,187 129,339 132,110 134,309 135,453 Other interest-earning assets 117,811 125,114 98,374 107,554 87,916 - --------- - - --------- - - --------- - - --------- - - --------- - Total interest-earning assets 6,034,599 6,058,343 6,063,247 6,112,407 6,140,676 Non-interest-earning assets 590,746 585,826 572,218 574,921 587,921 - --------- - - --------- - - --------- - - --------- - - --------- - Total assets $ 6,625,345 $ 6,644,169 $ 6,635,465 $ 6,687,328 $ 6,728,597 - --------- - - --------- - - --------- - - --------- - - --------- - Liabilities and Stockholders’ Equity Interest-bearing liabilities: Deposits: Interest-bearing demand $ 982,163 $ 883,843 $ 815,624 $ 790,567 $ 792,989 Savings 813,626 799,181 780,558 773,308 743,676 Certificates of deposit 2,063,066 2,179,333 2,229,723 2,288,836 2,214,932 - --------- - - --------- - - --------- - - --------- - - --------- - Total interest-bearing deposits 3,858,855 3,862,357 3,825,905 3,852,711 3,751,597 Borrowings: Federal Home Loan Bank advances 1,255,597 1,277,145 1,284,427 1,292,168 1,293,470 Other borrowings 34,733 10,012 29,439 26,037 119,281 - --------- - - --------- - - --------- - - --------- - - --------- - Total borrowings 1,290,330 1,287,157 1,313,866 1,318,205 1,412,751 - --------- - - --------- - - --------- - - --------- - - --------- - Total interest-bearing liabilities 5,149,185 5,149,514 5,139,771 5,170,916 5,164,348 Non-interest-bearing liabilities: Non-interest-bearing deposits 320,161 320,641 311,648 307,645 315,165 Other non-interest-bearing liabilities 53,479 60,078 39,294 35,930 37,374 - --------- - - --------- - - --------- - - --------- - - --------- - Total non-interest-bearing liabilities 373,640 380,719 350,942 343,575 352,539 - --------- - - --------- - - --------- - - --------- - - --------- - Total liabilities 5,522,825 5,530,233 5,490,713 5,514,491 5,516,887 Stockholders’ equity 1,102,520 1,113,936 1,144,752 1,172,837 1,211,710 - --------- - - --------- - - --------- - - --------- - - --------- - Total liabilities and stockholders’ $ 6,625,345 $ 6,644,169 $ 6,635,465 $ 6,687,328 $ 6,728,597 equity - --------- - - --------- - - --------- - - --------- - - --------- - Average interest-earning assets to average 117.20 % 117.65 % 117.97 % 118.21 % 118.91 % interest-bearing liabilities

For the three months ended ------------------------------------------ - Decembe Septemb June March Decembe r 31, er 30, 30, 31, r 31, Performance Ratio Highlights 2019 2019 2019 2019 2018 -------------------------------------------------- ------ - ------ - ------ - ------ - ------ - Average yield on interest-earning assets: Loans receivable, including loans held for sale 4.01 % 4.18 % 4.11 % 4.09 % 4.12 % Taxable investment securities 3.12 % 3.25 % 3.30 % 3.28 % 3.12 % Tax-exempt investment securities (1) 2.13 % 2.14 % 2.12 % 2.12 % 2.11 % Other interest-earning assets 4.11 % 4.09 % 4.71 % 4.91 % 5.66 % ----- - ----- - ----- - ----- - ----- - Total interest-earning assets 3.79 % 3.95 % 3.92 % 3.91 % 3.91 % Average cost of interest-bearing liabilities: Deposits: Interest-bearing demand 1.29 % 1.30 % 1.19 % 1.06 % 0.97 % Savings 0.81 % 0.77 % 0.68 % 0.60 % 0.49 % Certificates of deposit 2.09 % 2.14 % 2.04 % 1.90 % 1.79 % ----- - ----- - ----- - ----- - ----- - Total interest-bearing deposits 1.62 % 1.66 % 1.58 % 1.47 % 1.36 % Borrowings: Federal Home Loan Bank advances 2.19 % 2.24 % 2.21 % 2.13 % 2.27 % Other borrowings 1.36 % 0.66 % 0.99 % 0.35 % 1.99 % ----- - ----- - ----- - ----- - ----- - Total borrowings 2.17 % 2.22 % 2.18 % 2.10 % 2.25 % ----- - ----- - ----- - ----- - ----- - Total interest-bearing liabilities 1.75 % 1.80 % 1.74 % 1.63 % 1.60 % Interest rate spread(2) 2.04 % 2.15 % 2.18 % 2.28 % 2.31 % Net interest margin(3) 2.29 % 2.42 % 2.45 % 2.53 % 2.56 % Non-interest income to average assets 0.27 % 0.24 % 0.20 % 0.22 % 0.20 % (annualized) Non-interest expense to average assets 1.60 % 1.58 % 1.73 % 1.60 % 1.62 % (annualized) Efficiency ratio(4) 67.48 % 64.56 % 70.91 % 63.27 % 63.93 % Return on average assets (annualized) 0.64 % 0.68 % 0.53 % 0.68 % 0.64 % Return on average equity (annualized) 3.86 % 4.08 % 3.08 % 3.89 % 3.55 % Return on average tangible equity (annualized) (5) 4.80 % 5.06 % 3.80 % 4.78 % 4.33 %

(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, December September June 30, March December 31, 30, 31, 31, Except Per Share Data, Unaudited) 2019 2019 2019 2019 2018 ----------------------------------------------- -------- - -------- - -------- - -------- - -------- - Adjusted Net Income Net income (GAAP) $ 10,652 $ 11,370 $ 8,811 $ 11,417 $ 10,768 Add: Merger-related expenses - net of tax 154 - - - - Add: Branch consolidation expenses - net of tax 274 475 1,216 - - - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted net income (non-GAAP) $ 11,080 $ 11,845 $ 10,027 $ 11,417 $ 10,768 - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted Net Income per Common Share (EPS) Net income per common share Basic and $ 0.13 $ 0.13 $ 0.10 $ 0.13 $ 0.12 Diluted (GAAP) Add: Merger-related expenses - net of tax - - - - - Add: Branch consolidation expenses - net of tax - 0.01 0.01 - - - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted net income per common share Basic $ 0.13 $ 0.14 $ 0.11 $ 0.13 $ 0.12 and Diluted (non-GAAP) - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted Non-Interest Expense Non-interest expense (GAAP) $ 26,427 $ 26,244 $ 28,745 $ 26,771 $ 27,270 Less: Merger-related expenses (219 ) - - - - Less: Branch consolidation expenses (153 ) (567 ) (1,725 ) - - - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted non-interest expense (non-GAAP) $ 26,055 $ 25,677 $ 27,020 $ 26,771 $ 27,270 - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted Non-Interest Income Non-interest income (GAAP) $ 4,554 $ 3,962 $ 3,388 $ 3,676 $ 3,309 Add: Branch consolidation expenses 236 106 - - - - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted non-interest income (non-GAAP) $ 4,790 $ 4,068 $ 3,388 $ 3,676 $ 3,309 - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted Non-Interest Expense Ratio Non-interest expense to average assets (GAAP) 1.60 % 1.58 % 1.73 % 1.60 % 1.62 % Less: Merger-related expenses -0.01 % 0.00 % 0.00 % 0.00 % 0.00 % Less: Branch consolidation expenses -0.01 % -0.03 % -0.10 % 0.00 % 0.00 % - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted non-interest expense ratio (non-GAAP) 1.57 % 1.55 % 1.63 % 1.60 % 1.62 % - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted Efficiency Ratio Non-interest expense / (Net interest income 67.5 % 64.6 % 70.9 % 63.3 % 63.9 % + non-interest income) (GAAP) - ------ - - ------ - - ------ - - ------ - - ------ - Calculation of Adjusted Efficiency Ratio (non-GAAP) Non-interest expense (GAAP) $ 26,427 $ 26,244 $ 28,745 $ 26,771 $ 27,270 Less: Merger-related expenses (219 ) - - - - Less: Branch consolidation expenses (153 ) (567 ) (1,725 ) - - - ------ - - ------ - - ------ - - ------ - - ------ - Non-interest expense (non-GAAP) $ 26,055 $ 25,677 $ 27,020 $ 26,771 $ 27,270 Net interest income (GAAP) 34,607 36,687 37,146 38,638 39,349 Total non-interest income (GAAP) 4,554 3,962 3,388 3,676 3,309 Add: Branch consolidation expenses 236 106 - - - - ------ - - ------ - - ------ - - ------ - - ------ - Total revenue (non-GAAP) $ 39,397 $ 40,755 $ 40,534 $ 42,314 $ 42,658 Adjusted efficiency ratio (non-GAAP) 66.1 % 63.0 % 66.6 % 63.3 % 63.9 % - ------ - - ------ - - ------ - - ------ - - ------ -

For the three months ended ------------------------------------------------------------------- - Reconciliation of GAAP to Non-GAAP December September June 30, March 31, December 31, 30, 31, (Dollars in Thousands, Unaudited) 2019 2019 2019 2019 2018 ---------------------------------------- ----------- - ----------- - ----------- - ----------- - ----------- - Adjusted Return on Average Assets Return on average assets (GAAP) 0.64 % 0.68 % 0.53 % 0.68 % 0.64 % Add: Merger-related expenses - net of 0.01 % 0.00 % 0.00 % 0.00 % 0.00 % tax Add: Branch consolidation expenses - net 0.02 % 0.03 % 0.07 % 0.00 % 0.00 % of tax - --------- - - --------- - - --------- - - --------- - - --------- - Adjusted return on average assets 0.67 % 0.71 % 0.60 % 0.68 % 0.64 % (non-GAAP) - --------- - - --------- - - --------- - - --------- - - --------- - Adjusted Return on Average Equity Return on average equity (GAAP) 3.86 % 4.08 % 3.08 % 3.89 % 3.55 % Add: Merger-related expenses - net of 0.06 % 0.00 % 0.00 % 0.00 % 0.00 % tax Add: Branch consolidation expenses - net 0.10 % 0.17 % 0.42 % 0.00 % 0.00 % of tax - --------- - - --------- - - --------- - - --------- - - --------- - Adjusted return on average equity 4.02 % 4.25 % 3.50 % 3.89 % 3.55 % (non-GAAP) - --------- - - --------- - - --------- - - --------- - - --------- - Calculation of Return on Average Tangible Equity Net income annualized (GAAP) $ 42,608 $ 45,480 $ 35,244 $ 45,668 $ 43,072 - --------- - - --------- - - --------- - - --------- - - --------- - Total Average equity (GAAP) $ 1,102,520 $ 1,113,936 $ 1,144,752 $ 1,172,837 $ 1,211,710 Less: average goodwill (210,895 ) (210,895 ) (210,895 ) (210,895 ) (210,895 ) Less: average other intangible assets (4,711 ) (5,006 ) (5,313 ) (5,606 ) (5,915 ) - --------- - - --------- - - --------- - - --------- - - --------- - Average tangible equity (non-GAAP) $ 886,914 $ 898,035 $ 928,544 $ 956,336 $ 994,900 - --------- - - --------- - - --------- - - --------- - - --------- - Return on average tangible equity 4.80 % 5.06 % 3.80 % 4.78 % 4.33 % (non-GAAP) - --------- - - --------- - - --------- - - --------- - - --------- - Calculation of Adjusted Return on Average Tangible Equity Adjusted net income annualized $ 44,320 $ 47,380 $ 40,108 $ 45,668 $ 43,072 (non-GAAP) - --------- - - --------- - - --------- - - --------- - - --------- - Total Average equity (GAAP) $ 1,102,520 $ 1,113,936 $ 1,144,752 $ 1,172,837 $ 1,211,710 Less: average goodwill (210,895 ) (210,895 ) (210,895 ) (210,895 ) (210,895 ) Less: average other intangible assets (4,711 ) (5,006 ) (5,313 ) (5,606 ) (5,915 ) - --------- - - --------- - - --------- - - --------- - - --------- - Average tangible equity (non-GAAP) $ 886,914 $ 898,035 $ 928,544 $ 956,336 $ 994,900 - --------- - - --------- - - --------- - - --------- - - --------- - Adjusted return on average tangible equity 5.00 % 5.28 % 4.32 % 4.78 % 4.33 % (non-GAAP) - --------- - - --------- - - --------- - - --------- - - --------- -

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