Kearny Financial Corp. - FORM 8-K - EX-99.2

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8-K - FORM 8-K - Kearny Financial Corp.	d14435d8k.htm
EX-99.1 - EX-99.1 - Kearny Financial Corp.	d14435dex991.htm

Annual Meeting of Shareholders

Nasdaq: KRNY

October 2015

Exhibit 99.2

This presentation may include certain “forward-looking statements,” which are made in good faith by Kearny Financial Corp.

(the “Company”) pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements involve risks and uncertainties, such as statements of the Company’s plans, objectives,

expectations, estimates and intentions that are subject to change based on various important factors (some of which are

beyond the Company’s control). In addition to the factors described under Item 1A. Risk Factors in the Company’s Annual

Report on Form 10-K, the following factors, among others, could cause the Company’s financial performance to differ

materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements:

•

the strength of the United States economy in general and the strength of the local economy in which the Company

conducts operations,

•

the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the

Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations,

•

the impact of changes in financial services laws and regulations (including laws concerning taxation, banking,

securities and insurance),

•

changes in accounting policies and practices, as may be adopted by regulatory agencies, the Financial Accounting

Standards Board (“FASB”) or the Public Company Accounting Oversight Board,

•

technological changes.

•

competition among financial services providers and,

•

the success of the Company at managing the risks involved in the foregoing and managing its business.

The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake 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.

Forward Looking Statements

Overview of Kearny Financial Corp

(1)

As of October 15, 2015

(2)

As of June 30, 2015

Source: SNL Financial, Company Filings

(dollars in millions)

as of June 30, 2015

Total Assets

$4,237.2

Total Deposits

$2,465.7

Total Loans

$2,102.9

Corporate Headquarters

Fairfield, NJ

Branches

Market Capitalization¹

$1,112.0

•

Founded in 1884

•

Largest New Jersey based deposit franchise

–

42 branch locations in 11 counties throughout Northern

and Central New Jersey and Southern New York

–

Top 15 deposit market share in the counties of Bergen,

Hudson, Ocean, and Monmouth, New Jersey²

•

Active acquirer

–

Completed 5 bank acquisitions since 1999 including

most recently Brooklyn, NY based Atlas Bank in June,

2014

Kearny Bank Mission Statement

Kearny Bank is dedicated to providing professional service and

sound financial advice to our client and shareholder base. This is

successfully accomplished through deep-rooted guiding principles of

strong values consisting of ethics and integrity, and by giving back to

the communities we serve. Through our financial expertise, strong

leadership, and loyal relationships, we help our clients achieve their

financial goals both for today and for tomorrow.

Brand Logo Flag

The New Kearny Logo

People

Our significant stakeholders, including employees, current and future

customers, stockholders, and the communities we serve.

Relationships

Delivery of superior service, a keen understanding of clients’ needs, and

a welcoming environment has resulted in high levels of customer

satisfaction, loyalty, and strong long-lasting relationships.

Performance

A strong resolve to remain true to sound, conservative practices, and

superior customer service which has led to steady progress and growth

throughout the years

Kearny Value Creation Post-Conversion

•

Optimization of asset mix

–

Continue to increase commercial real estate lending

–

Continue to increase commercial business lending

–

Reinvest cashflows

from the investment portfolio into loans while still maintaining a

diverse composition and allocation to reduce exposure to long term interest rate risk

•

Shift funding mix to focus more on core deposits: non-interest bearing and non-

maturity deposits

•

Implementing several strategies over the near term with the goal of controlling

non-interest expense and improving operating efficiency

•

Significant opportunities to grow in market

•

Conservative lending policies and strong credit quality

•

Established and experienced acquirer and integrator

Attractive Market Demographics

Note Deposit numbers and growth estimates as od June 30, 2015

Defined as the New York-Northern New Jersey-Long Island MSA

Source: SNL Financial

•

Attractive markets

•

Part of the largest

MSA¹ in the U.S

•

Opportunities still exist

for organic growth in

existing branch footprint

•

Weighted average

median household

income in Kearny

franchise counties was

$74,231 vs. $55,551

median household

income nationwide

–

Household income

poised to grow

$1,014

$1,268

$1,284

$1,361

$1,741

$2,103

$500

$1,000

$1,500

$2,000

$2,500

2010FY

2011FY

2012FY

2013FY

2014FY

2015FY

Total Loans

Loan Portfolio Growth

Kearny Financial

Corp. Historical Loan Growth (dollars in millions)

•

Loan growth focus:

–

Expand upon expertise in commercial real estate, C&I, multifamily, and SBA lending;

–

Continue to hire additional commercial lenders and support personnel to increase market share;

–

Business development officers continue to work collaboratively with the retail branch network to further

develop/strengthen small business deposit, loan, and merchant business relationships

•

Strong performance in the NYC market with over $200 million in CRE originations during the 2015 fiscal year

Loan Portfolio Composition

•

As of June 30, 2015 KRNY had $2.1 billion

in net loans, comprising 49.3% of total

assets

•

Kearny’s yield on loans was 4.14% for the

2015 fiscal year

•

Kearny continues to make progress towards

its intended shift in loan mix

•

Maintaining strong underwriting quality of

new loans

MRQ

Loan Portfolio

20%

40%

60%

80%

100%

2013FQ4

2014FQ4

2015FQ4

1-4 Family

Multifamily

CRE

C&D

Consumer

Commercial

1-4 Family -

28.17%

Multifamily -

34.64%

CRE -

27.62%

C&D -

0.27%

Consumer -

4.56%

Commercial -

4.73%

Commercial Lending Success Continues

Asset Quality & Reserves

NPAs as defined by SNL to include nonaccrual loans and leases, renegotiated loans and leases, and real estate owned

Peer group defined in KRNY’s 2015 conversion offering prospectus and includes companies with the following tickers: BKMU, CFFN, DCOM, NFBK, NWBI, OCFC, ORIT, PFS, TRST, UBNK, and WSFS

Note: Peer comparison periods changed to conform to the same time periods as Kearny Financial Corp.’s fiscal periods (June 30 fiscal year-end)

Source: SNL Financial

NPAs / Assets¹

Loan Loss Reserves/ Gross Loans

0.92%

1.34%

1.18%

0.86%

0.64%

2.25%

1.98%

1.41%

1.18%

0.98%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

2011FY

2012FY

2013FY

2014FY

2015FY

KRNY

Peer Median²

0.93%

0.79%

0.80%

0.71%

0.74%

1.50%

1.38%

1.35%

1.24%

0.95%

0.0%

0.5%

1.0%

1.5%

2.0%

2011FY

2012FY

2013FY

2014FY

2015FY

KRNY

Peer Median²

•

Kearny has been successful in reducing its percent of nonperforming assets over the past

four calendar years

–

Reduced NPAs excluding restructured assets as a percent of total assets by about a third from 0.92%

at June 30, 2011 to 0.64% at June 30, 2015

–

Kearny has historically, and continues to outperform peers in key asset quality metrics

•

Kearny’s conservative underwriting standards and prompt attention to potential problem

loans supports consistently superior asset quality

–

This consistency allows Kearny to hold loan loss reserves at slightly lower levels than peers

Securities Portfolio

Source: SNL Financial, Company Filings

•

Kearny’s yield on securities was 2.08% for the 2015 fiscal year, the same as

during 2014

•

Kearny is working to reduce the portion of securities as a percent of total assets

and improve the general make-up of the portfolio

–

As of June 30, 2015, 34.4% of Kearny’s total assets were comprised of securities as

compared to 42.2% of total assets at June 30, 2011

MRQ Securities

Portfolio

Yield on Securities

3.15%

2.69%

2.16%

2.08%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

2011FY

2012FY

2013FY

2014FY

2015FY

U.S. Agency Obligations -

10.50%

Municipal Bonds -

7.14%

CLO & ABS Securities -

15.11%

Corporate Bonds -

11.36%

TPS -

0.54%

Agency MBS -

55.33%

Non-Agency MBS -

0.01%

Deposit Composition

Note: Deposit percentages via Kearny Bank regulatory reports

•

Kearny Financial Corp. had $2.47 billion in

deposits as of June 30, 2015

–

The quarter ended June 30, 2015’s cost of

total deposits was 0.67% down from 1.06%

for the quarter ended June 30, 2011

•

Kearny continues to shift its deposit mix to

“stickier”, lower cost retail/non-maturity

deposits

•

This shift in cost of funding has helped

improve net income and profitability metrics

over the past 5 years

MRQ Deposit

Portfolio

Noninterest bearing

deposits -

8.86%

Interest bearing DDA -

29.38%

Savings and clubs -

21.13%

Certificates of deposit

40.63%

20%

40%

60%

80%

100%

2013FY

2014FY

2015FY

Noninterest bearing deposits

Interest bearing DDA

Savings and clubs

Certificates of deposit

Improving Performance Metrics

Profitability

Efficiency Ratio

Performance Metrics

•

Performance metrics are improving

•

Both efficiency ratio and ROAA have

improved over the past three years

$5,078

$6,506

$10,188

$5,629

0.18%

0.19%

0.32%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2012FY

2013FY

2014FY

2015FY

Net Income

Core ROAA

77.45%

83.02%

76.52%

75.83%

60.00%

65.00%

70.00%

75.00%

80.00%

85.00%

90.00%

2012FY

2013FY

2014FY

2015FH1

Efficiency Ratio

$70,180

$66,257

$73,821

$80,608

7.18%

9.23%

8.46%

7.92%

2.65%

2.50%

2.44%

2.34%

$60,000

$65,000

$70,000

$75,000

$80,000

$85,000

$90,000

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

2012FY

2013FY

2014FY

2015FH1

Net Interest Income

Noninterest Inc/ Operating Rev

Net Interest Margin

Maintenance of Strong Capital Ratios

Peer group defined in KRNY’s prospectus and includes companies with the following tickers: BKMU, CFFN, DCOM, NFBK, NWBI, OCFC, ORIT, PFS, TRST, UBNK, and WSFS

Pro forma risk-based and leverage ratios via offering prospectus. TCE/TA assumes midpoint offering with 68.5mm shares offered and $652mm in net proceeds post-foundation contribution

Note: Peer group defined in KRNY’s 2015 conversion offering prospectus and includes companies with the following tickers: BKMU, CFFN, DCOM, NFBK, NWBI, OCFC, ORIT, PFS, TRST, UBNK, and WSFS

Source: SNL Financial. Bank level financial numbers used where unavailable at the holding company

Tangible Common Equity to Tangible Assets

Tier 1 Leverage Ratio

Tier 1 Risk Based Capital Ratio

Risk-Based Capital Ratio

13.5%

11.8%

25.6%

10.0%

9.9%

10.5%

9.9%

9.2%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2011FY

2012FY

2013FY

2014FY

2015FY

KRNY

Peer Median¹

12.0%

12.1%

11.3%

10.8%

25.8%

9.4%

9.9%

10.4%

11.0%

10.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2011FY

2012FY

2013FY

2014FY

2015FY

KRNY

Peer Median¹

24.5%

24.6%

21.1%

19.8%

46.5%

16.0%

16.4%

16.5%

15.3%

14.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

2011FY

2012FY

2013FY

2014FY

2015FY

KRNY

Peer Median¹

25.3%

25.4%

21.8%

20.5%

47.2%

17.1%

17.9%

18.1%

16.8%

16.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

2011FY

2012FY

2013FY

2014FY

2015FY

KRNY

Peer Median¹

11.3%

M&A History and Strategy

Source: SNL Financial, Company Filings

Seller

Completed

Type

Assets

($000)

Branches

Bergen Bancorp

March 31, 1999

Thrift

300,755

Pulaski Bancorp, Inc. MHC

October 18, 2002

Thrift

237,596

West Essex Bancorp

July 1, 2003

Thrift

390,333

Central Jersey Bancorp

November 30, 2010

Bank

571,295

Atlas Bank

June 30, 2014

Thrift

110,480

•

Kearny is an experienced acquirer and integrator, having successfully completed 5 bank

acquisitions over the past 15 years

•

Kearny actively seeks out opportunities to deploy capital, including through mergers and

acquisitions with other financial institutions

–

The greatest emphasis of future expansion opportunities will be on expanding within existing markets

or areas contiguous to current markets

–

In addition to acquiring banks and their branches, the Company will also consider opportunities to

broaden the product and services offerings of the bank

–

Management is sensitive to key merger metrics such as TBV dilution and earn-back periods

2015 Strategic Review: A Stronger Kearny Post-Conversion

•

Robust capital to support continued growth

–

The second step offering allows Kearny to pursue organic and strategic growth

opportunities that will continue Kearny’s historically strong loan growth

•

Eliminated uncertainties associated with the mutual holding company structure

under financial reform legislation

•

Transitioned Kearny to a more familiar and flexible organizational structure

•

Facilitates future mergers and acquisitions

–

Allows for increased flexibility to use common stock while bidding for potential strategic

targets

–

Potential to make Kearny a more attractive participant in the mergers and acquisitions

market, particularly in New Jersey

•

A larger public float and more familiar structure create a more liquid and active

market for Kearny’s common stock

•

Traditional Relationship Banking Focus

–

Growth/ Diversification of loan mix: CRE/Multifamily/C&I/SBA/Residential/Consumer

–

Grow funding thru traditional deposit sources utilizing a technological focus: mobile banking/on-line

account opening /P2P/cash management/RDC

•

New Opportunities

–

Launch mortgage banking platform/fee income generation

–

Expand governmental banking group

•

Expand customer wallet share

–

Extraordinary service

–

Innovative products for Millennials, Boomers, & Gen Xers

–

Digital marketing

–

On-boarding

•

Utilize Traditional Capital Market Strategies

–

Dividends

–

Buybacks (after one year regulatory limit)

–

M&A

•

Control operating expenses/utilizing technology

•

Continued focus on the Kearny Bank brand

2016 Strategic Focus

Comparative Stock Price Performance

Peer group defined in KRNY’s 2015 conversion offering prospectus and includes companies with the following tickers: BKMU, CFFN, DCOM, NFBK, NWBI, OCFC, ORIT, PFS,

TRST, UBNK, and WSFS

Source: SNL Financial

Stock Price Performance since January 1, 2012

72.8%

30.8%

73.3%

(20%)

(10%)

10%

20%

30%

40%

50%

60%

70%

80%

90%

KRNY

KRNY Peers

NASDAQ Bank

Peer Group Valuation Comparison

Note: Market Metrics as of October 16, 2015

Note: Peer group defined in KRNY’s prospectus and includes companies with the following tickers: BKMU, CFFN, DCOM, NFBK, NWBI, OCFC, ORIT, PFS, TRST, UBNK, and WSFS

Source: SNL Financial

($ in thousands)

Total

Price/

Peer Company

Ticker

Headquarters

Assets

TBV

Capitol Federal Financial, Inc.

CFFN

Topeka, KS

$9,131

122%

Provident Financial Services, Inc.

PFS

Iselin, NJ

8,751

181%

Northwest Bancshares, Inc.

NWBI

Warren, PA

7,865

140%

United Financial Bancorp, Inc.

UBNK

Glastonbury, CT

5,681

136%

WSFS Financial Corporation

WSFS

Wilmington, DE

5,077

184%

TrustCo Bank Corp NY

TRST

Glenville, NY

4,741

142%

Dime Community Bancshares, Inc.

DCOM

Brooklyn, NY

4,645

148%

Oritani Financial Corp.

ORIT

Township of Washington, NJ

3,353

136%

Northfield Bancorp, Inc.

NFBK

Woodbridge, NJ

3,147

131%

OceanFirst Financial Corp.

OCFC

Toms River, NJ

2,395

138%

Bank Mutual Corporation²

BKMU

Milwaukee, WI

2,467

122%

Mean

5,205

144%

Median

4,741

138%

105%

122%

138%

131%

136%

148%

142%

184%

136%

140%

181%

122%

50%

70%

90%

110%

130%

150%

170%

190%

210%

KRNY¹

BKMU

OCFC

NFBK

ORIT

DCOM

TRST

WSFS

UBNK

NWBI

PFS

CFFN

Peer Median P/TBV: 138%

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