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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 First Quarter 2020 Operating Results

October 30, 2019 GMT

FAIRFIELD, N.J., Oct. 30, 2019 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended 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.

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.

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.

Linked-Quarter Comparative Financial Analysis ----------------------------------------------------------------------------------------------- Summary Balance Sheet At Varianc e ------------------------- - (Dollars and Shares in Thousands, September June 30, Variance or 30, 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.

Summary Income Statement For the three Variance months ended ------------------- - (Dollars and Shares in Thousands, September June 30, Variance or 30, Change Except Per Share Data, Unaudited) 2019 2019 or Pct. Change ------------------------------------------------------ -------- - -------- - -------- - ------- - 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) 37,469 36,482 987 2.7 % provision for loan losses - ------ - - ------ - - ------ - ------ - 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 )

For the three months Varianc ended e ------------------------- - Average Balance Sheet Data September June 30, Variance or 30, 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 117.65 % 117.97 % -0.32 % -0.3 % interest-bearing liabilities

For the three months ended --------------- - Septemb June Varianc er 30, 30, e 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 0.24 % 0.20 % 0.03 % (annualized) Non-interest expense to average assets 1.58 % 1.73 % -0.15 % (annualized) 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.

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 4,604,738 4,678,928 4,659,804 4,753,392 4,660,507 adjustments 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, 8,690 2,839 7,579 8,802 18,818 net - --------- - - --------- - - --------- - - --------- - - --------- - Total stockholders’ equity 1,110,789 1,127,159 1,158,111 1,183,261 1,236,081 - --------- - - --------- - - --------- - - --------- - - --------- - Total liabilities and stockholders’ $ 6,641,006 $ 6,634,829 $ 6,658,751 $ 6,702,440 $ 6,656,211 equity - --------- - - --------- - - --------- - - --------- - - --------- - 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.

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 - --------- - - --------- - --------- - --------- - --------- -

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 1,230,963 1,258,869 1,249,215 1,302,583 1,315,279 loans - --------- - - --------- - - --------- - - --------- - - --------- - 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 4,604,738 4,678,928 4,659,804 4,753,392 4,660,507 adjustments 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 26.5 % 26.6 % 26.5 % 27.1 % 27.8 % loans - --------- - - --------- - - --------- - - --------- - - --------- - 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 $ 15 $ 22 $ 23 $ 32 $ 19 due 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 %

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 $ 57,534 $ 66,110 $ 78,704 $ 108,067 $ 104,990 service) 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 27.4 % 29.5 % 29.6 % 30.5 % 30.5 % funding

Summary Income Statement For the three months ended ------------------------------------------------------ (Dollars and Shares in Thousands, September June 30, March December September 30, 31, 31, 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) 37,469 36,482 38,817 38,378 38,080 provision for loan losses - ------ - - ------ - - ------ - - ------ - - ------ - 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 - 9 (6 ) 36 (50 ) owned 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.

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 $ 4,656,192 $ 4,648,362 $ 4,709,052 $ 4,758,587 $ 4,562,375 for sale 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’ $ 6,644,169 $ 6,635,465 $ 6,687,328 $ 6,728,597 $ 6,587,721 equity - --------- - - --------- - - --------- - - --------- - - --------- - Average interest-earning assets to average 117.65 % 117.97 % 118.21 % 118.91 % 120.46 % interest-bearing liabilities

For the three months ended -------------------------------------------- SeptemberJune March December September 30, 30, 31, 31, 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 0.24 % 0.20 % 0.22 % 0.20 % 0.19 % (annualized) Non-interest expense to average assets 1.58 % 1.73 % 1.60 % 1.62 % 1.61 % (annualized) 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.

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 June 30, March December September 30, 31, 31, 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 $ 0.13 $ 0.10 $ 0.13 $ 0.12 $ 0.12 Diluted (GAAP) Add: Branch consolidation expenses - net of tax 0.01 0.01 - - - - ------ - - ------ - - ------ - - ------ - - ------ - Adjusted net income per common share Basic $ 0.14 $ 0.11 $ 0.13 $ 0.12 $ 0.12 and Diluted (non-GAAP) - ------ - - ------ - - ------ - - ------ - - ------ - 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 64.6 % 70.9 % 63.3 % 63.9 % 61.0 % + non-interest income) (GAAP) 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.

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 5.06 % 3.80 % 4.78 % 4.33 % 4.29 % (non-GAAP) - --------- - - --------- - - --------- - - --------- - - --------- - Calculation of Adjusted Return on Average Tangible Equity Adjusted net income annualized $ 47,380 $ 40,108 $ 45,668 $ 43,072 $ 44,584 (non-GAAP) - --------- - - --------- - - --------- - - --------- - - --------- - 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 5.28 % 4.32 % 4.78 % 4.33 % 4.29 % (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