Kearny Financial Boosts Loans to $5.81B, Fortifies Capital

TL;DR

**Kearny Financial is a solid regional bank, growing loans and deposits while maintaining robust capital, making it a stable bet in a volatile market.**

AI Summary

Kearny Financial Corp. reported a robust financial position for the fiscal year ended June 30, 2025, with total loans increasing to $5.81 billion from $5.75 billion in 2024, reflecting a 1.0% growth. The company's strategic shift towards a full-service community bank model is evident in its diversified loan portfolio, with multi-family mortgage loans constituting the largest segment at $2.71 billion (46.6% of total loans) and nonresidential mortgage loans at $986.6 million (17.0%). Core non-maturity deposit accounts reached $3.70 billion, representing 65.2% of total deposits, underscoring a strong focus on relationship banking. Kearny Financial maintained strong capital levels, with Common Equity Tier 1 Capital ratios of 14.49% for the Company and 13.61% for Kearny Bank, significantly above regulatory minimums. Liquid assets included $167.3 million in cash and equivalents and $1.01 billion in available-for-sale investment securities, complemented by substantial borrowing capacity of $845.0 million from other financial institutions, $695.0 million from the FHLB, and $1.19 billion from the FRB. The allowance for credit losses increased to $46.19 million from $44.94 million in 2024, indicating prudent risk management. The company continues to invest in technology, enhancing its digital banking and online account opening platforms to drive efficiency and expand market reach.

Why It Matters

Kearny Financial's strategic evolution from a traditional thrift to a full-service community bank, marked by a growing commercial loan portfolio and strong core deposit base, signals resilience in a competitive banking landscape. For investors, the sustained high capital and liquidity levels, with a Common Equity Tier 1 Capital ratio of 14.49%, provide a strong buffer against economic uncertainties and potential interest rate fluctuations. Employees benefit from the company's investment in technology and expansion of business banking efforts, which can lead to new opportunities and skill development. Customers gain from enhanced digital services and tailored lending solutions, particularly in the commercial sector, fostering stronger relationships. In a market dominated by larger institutions, Kearny's focused approach on relationship banking and diversified offerings allows it to carve out a significant niche, particularly in New Jersey and New York.

Risk Assessment

Risk Level: medium — Kearny Financial faces medium risk due to its concentration in real estate loans, with multi-family and nonresidential mortgages comprising 63.6% of its total loan portfolio at June 30, 2025. While the average LTVs are conservative (62% for multi-family, 52% for nonresidential), a significant downturn in the New Jersey and New York real estate markets could impact asset quality. Additionally, the highly competitive market with larger institutions possessing greater financial and technological resources poses a continuous challenge to growth and profitability.

Analyst Insight

Investors should consider Kearny Financial's strong capital position and diversified loan growth as indicators of stability. Monitor real estate market conditions in New Jersey and New York closely, as a significant portion of their loan portfolio is concentrated there. The company's commitment to technology and core deposit growth suggests a proactive strategy to mitigate competitive pressures and enhance long-term value.

Key Numbers

• $5.81B — Total Loans (Increased from $5.75 billion in 2024, reflecting 1.0% growth.)
• $2.71B — Multi-family mortgage loans (Represents 46.6% of the total loan portfolio at June 30, 2025.)
• $986.6M — Nonresidential mortgage loans (Represents 17.0% of the total loan portfolio at June 30, 2025.)
• $3.70B — Core non-maturity deposit accounts (Represents 65.2% of total deposits at June 30, 2025, indicating strong relationship banking.)
• 14.49% — Company Common Equity Tier 1 Capital ratio (Well above regulatory minimums at June 30, 2025.)
• 13.61% — Bank Common Equity Tier 1 Capital ratio (Well above regulatory minimums at June 30, 2025.)
• $167.3M — Short-term cash and equivalents (Part of liquid assets at June 30, 2025.)
• $1.01B — Investment securities available for sale (Part of liquid assets at June 30, 2025, readily available for sale or pledge.)
• $46.19M — Allowance for credit losses (Increased from $44.94 million in 2024, reflecting prudent risk management.)
• 43 — Branch offices (Number of branch offices operated by Kearny Bank as of June 30, 2025.)

Key Players & Entities

• Kearny Financial Corp. (company) — holding company for Kearny Bank
• Kearny Bank (company) — nonmember New Jersey-chartered savings bank
• Federal Reserve Board (regulator) — regulates the holding company and provides borrowing capacity
• Federal Deposit Insurance Corporation (regulator) — insures deposits and primarily regulates Kearny Bank
• New Jersey Department of Banking and Insurance (regulator) — primarily regulates Kearny Bank
• NASDAQ Stock Market LLC (regulator) — exchange where KRNY common stock is registered
• Fairfield, New Jersey (location) — administrative headquarters of Kearny Financial Corp.
• Maryland (location) — state of incorporation for Kearny Financial Corp.
• June 30, 2025 (date) — fiscal year end for the 10-K filing
• December 31, 2024 (date) — last business day of the most recently completed second fiscal quarter

FAQ

Risk Factors

• Interest Rate Sensitivity [high — financial]: The Company's profitability is sensitive to changes in interest rates. A significant portion of its assets are interest-earning, and a substantial portion of its liabilities are interest-bearing. Fluctuations in interest rates can impact net interest income and the fair value of its investment securities.
• Credit Risk and Loan Portfolio Quality [high — financial]: The Company's primary credit risk stems from its loan portfolio. While the allowance for credit losses increased to $46.19 million, adverse economic conditions or specific borrower defaults could lead to higher-than-expected loan losses, impacting financial performance.
• Economic Downturns [high — market]: Downturns in the national or local economy could negatively affect the Company's business, including increasing loan delinquencies and defaults, reducing demand for loan products, and decreasing the value of collateral securing loans.
• Cybersecurity and Data Breaches [medium — operational]: The Company relies on technology to conduct its business. A failure to protect customer data and sensitive information from cyberattacks or data breaches could result in significant financial losses, reputational damage, and regulatory penalties.
• Regulatory Compliance [medium — regulatory]: As a financial institution, the Company is subject to extensive federal and state regulation. Changes in regulations, or failure to comply with existing regulations, could result in fines, sanctions, or other adverse actions.
• Competition [medium — market]: The banking industry is highly competitive. The Company faces competition from traditional banks, credit unions, and non-bank financial institutions, which could impact its ability to attract and retain customers and grow its loan and deposit portfolios.

Industry Context

Kearny Financial Corp. operates in the highly competitive community banking sector. The industry is characterized by a trend towards consolidation and an increasing focus on digital transformation to enhance customer experience and operational efficiency. Banks are navigating a complex interest rate environment and evolving regulatory landscape, with a continued emphasis on relationship banking and diversified loan portfolios.

Regulatory Implications

As a financial institution, Kearny Financial is subject to stringent regulatory oversight from federal and state agencies. Maintaining strong capital ratios, such as the reported Common Equity Tier 1 ratios well above minimums, is crucial for compliance and operational stability. Evolving regulations around cybersecurity and data privacy also present ongoing compliance challenges.

What Investors Should Do

1. Monitor loan growth and diversification trends.
2. Assess the impact of interest rate changes on net interest margin.
3. Evaluate the effectiveness of technology investments.
4. Review the adequacy of the allowance for credit losses.

Glossary

Common Equity Tier 1 Capital

A measure of a bank's core capital, representing the highest quality and most loss-absorbent capital. (Indicates the bank's strong capital position, with ratios of 14.49% for the Company and 13.61% for Kearny Bank, significantly exceeding regulatory requirements.)

Non-maturity deposit accounts

Deposit accounts, such as checking and savings accounts, that do not have a fixed maturity date. (Represents a stable and low-cost funding source for the bank, with $3.70 billion comprising 65.2% of total deposits, highlighting a focus on relationship banking.)

Allowance for credit losses

An estimate of the amount of loan losses that the bank expects to incur over the life of its loans. (The increase to $46.19 million reflects prudent risk management and an anticipation of potential credit issues within the loan portfolio.)

Available-for-sale investment securities

Securities that are not classified as held-to-maturity or trading securities, which can be sold before maturity. (These $1.01 billion in securities provide liquidity and can be sold or pledged to meet funding needs.)

Year-Over-Year Comparison

While specific year-over-year comparisons for revenue and net income are not detailed in the provided summary, total loans saw a modest 1.0% growth to $5.81 billion. The allowance for credit losses increased to $46.19 million from $44.94 million, indicating a more conservative stance on potential credit risks. The company continues to emphasize its strong capital position and relationship banking model, with core non-maturity deposits forming a significant portion of its funding base.

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value KRNY The NASDAQ Stock Market
• $3.70 b — e non-maturity deposit accounts totaled $3.70 billion, representing 65.2% of total depo
• $167.3 million — ne 30, 2025, our liquid assets included $167.3 million of short-term cash and equivalents supp
• $1.01 billion — rm cash and equivalents supplemented by $1.01 billion of investment securities classified as
• $845.0 million — ity to borrow additional funds totaling $845.0 million via unsecured overnight borrowings from
• $695.0 million — s from other financial institutions and $695.0 million and $1.19 billion from the Federal Home
• $1.19 billion — ial institutions and $695.0 million and $1.19 billion from the Federal Home Loan Bank of New
• $2.71 b — 25, multi-family mortgage loans totaled $2.71 billion, or 46.6% of our loan portfolio,
• $986.6 m — e nonresidential mortgage loans totaled $986.6 million, or 17.0% of our loan portfolio.
• $138.8 m — l and industrial business loans totaled $138.8 million, or 2.4% of our loan portfolio. W
• $177.7 m — ne 30, 2025, construction loans totaled $177.7 million, or 3.1% of our loan portfolio. O
• $1.75 b — mily residential mortgage loans totaled $1.75 billion, or 30.1% of our loan portfolio.
• $1.63 b — f our loan portfolio. At June 30, 2025, $1.63 billion, or 93.3%, of our one- to four-fa
• $118.5 m — Jersey and New York with the remaining $118.5 million, or 6.7%, secured by properties i
• $806,000 — strategy resulted in the recognition of $806,000 in gains associated with the sale of $1

Filing Documents

• krny-20250630.htm (10-K) — 4722KB
• krny-20250630ex21.htm (EX-21.1) — 24KB
• krny-20250630ex231.htm (EX-23.1) — 4KB
• krny-20250630ex311.htm (EX-31.1) — 10KB
• krny-20250630ex312.htm (EX-31.2) — 10KB
• krny-20250630ex321.htm (EX-32.1) — 5KB
• krny-20250630ex322.htm (EX-32.2) — 5KB
• krny-20250630_g1.jpg (GRAPHIC) — 117KB
• krny-20250630_g2.jpg (GRAPHIC) — 62KB
• 0001617242-25-000056.txt ( ) — 24097KB
• krny-20250630.xsd (EX-101.SCH) — 83KB
• krny-20250630_cal.xml (EX-101.CAL) — 185KB
• krny-20250630_def.xml (EX-101.DEF) — 609KB
• krny-20250630_lab.xml (EX-101.LAB) — 1252KB
• krny-20250630_pre.xml (EX-101.PRE) — 1032KB
• krny-20250630_htm.xml (XML) — 5567KB

Business

Business 2 Item 1A.

Risk Factors

Risk Factors 28 Item 1B. Unresolved Staff Comments 35

Cybersecurity

Item 1C. Cybersecurity 36 Item 2.

Properties

Properties 37 Item 3.

Legal Proceedings

Legal Proceedings 37 Item 4. Mine Safety Disclosures 37 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. [Reserved] 39 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 40 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 51 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 53 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 53 Item 9A.

Controls and Procedures

Controls and Procedures 53 Item 9B. Other Information 54 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 54 PART III Item 10. Directors, Executive Officers and Corporate Governance 55 Item 11.

Executive Compensation

Executive Compensation 55 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 55 Item 13. Certain Relationships and Related Transactions, and Director Independence 56 Item 14. Principal Accounting Fees and Services 56 PART IV Item 15. Exhibits, Financial Statement Schedules 57 Item 16. Form 10-K Summary 59

SIGNATURES

SIGNATURES i Table of Contents PART I

Forward-Looking Statements

Forward-Looking Statements This Annual Report on Form 10-K contains forward-looking statements, which can be identified by the use of words such as "estimate," "project," "believe," "intend," "anticipate," "plan," "seek," "expect" and words of similar meaning. These forward-looking statements include, but are not limited to: estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of the Annual Report on Form 10-K. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: general economic conditions, either nationally or in our market areas, that are worse than expected; the imposition of tariffs or other domestic or international governmental policies and retaliatory responses; changes in the amount and trend of loan delinquencies and write-offs and changes in estimates and the methodologies for calculating the allowance for credit losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement changes in our business strategies; competition among deposi

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