Profile: Kearny Financial Corp (KRNY.O)
5 Feb 2016
Kearny Financial Corp., incorporated on September 2, 2014, is a holding company for Kearny Bank (the Bank). The Bank is a federally chartered stock savings bank. The Company is a unitary savings and loan holding company. The Company's primary business is the ownership and operation of the Bank. The Bank is principally engaged in the business of attracting deposits from the public in New Jersey and New York and using these deposits, together with other funds, to originate or purchase loans for its portfolio and invest in securities. As of June 30, 2015, it operates through around 42 branch offices. As of June 30, 2015, its primary market area consists of the counties in which it operates branches, including Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union counties in New Jersey, and Kings (Brooklyn) and Richmond (Staten Island) counties in New York.
The Company's loan portfolio primarily consists of loans collateralized by residential and commercial real estate augmented by secured and unsecured loans to businesses and consumers. The Company's consumer loan offerings primarily include home equity loans and home equity lines of credit, as well as account loans, overdraft lines of credit, vehicle loans and personal loans. The Company also offers construction loans to builders/developers, as well as individual homeowners. The Company's lending activities include the origination of one- to four-family first mortgage loans, of which approximately $565.2 million or 95.4% are secured by properties located within New Jersey and New York, as of June 30, 2015. As of June 30, 2015, the Bank originated $51.3 million of one- to four-family first mortgage loans. As of June 30, 2015, its one- to four-family mortgage loan portfolio consisted of loans secured by owner-occupied properties. The Company offers a first-time homebuyer program for persons who have not previously owned real estate and are purchasing a one- to four-family property in its primary lending area for use as a primary residence.
The Company originates commercial mortgage loans on multi-family and non-residential properties, including loans on apartment buildings, retail/service properties and land, as well as other income-producing properties, such as mixed-use properties combining residential and commercial space. As of June 30, 2015, the Company originated $290.9 million of multi-family and non-residential real estate mortgages. As of June 30, 2015, its commercial mortgage acquisition strategies also included purchases of whole loans and participations totaling $136.1 million. The Company also originates commercial term loans and lines of credit to a range of professionals, sole proprietorships and small businesses in its market area, including loans originated through the small business administration (SBA) in which Kearny Bank participates as a preferred lender. The Company offer fixed-rate and adjustable-rate home equity lines of credit with terms of up to 20 years. As of June 30, 2015, Kearny Bank originated $21.3 million of home equity loans and home equity lines of credit.
In addition to home equity loans and lines of credit, the Company's consumer loan portfolio primarily includes loans secured by savings accounts and certificates of deposit on deposit with Kearny Bank and overdraft lines of credit, as well as vehicle loans and personal loans. As of June 30, 2015, passbook or certificate loans totaled $4.0 million and other consumer loans totaled $292,000. The Company's construction lending includes loans to individuals for construction of one- to four-family residences, and for renovations or improvements to an existing dwelling. The Company's construction lending also includes loans to builders and developers for multi-unit buildings or multi-house projects. As of June 30, 2015, construction loans totaled $5.7 million. As of June 30, 2015, its loans-to-one-borrower limit was approximately $104.3 million.
The Company maintains a portfolio of investment securities, which primarily consists of the United States agency mortgage-backed securities, the United States government and agency debentures, bank-qualified municipal obligations, corporate bonds, asset-backed securities and collateralized loan obligations. The Bank maintains a small balance of single issuer trust preferred securities and non-agency mortgage-backed securities. As of June 30, 2015, the Company's securities portfolio totaled $1.43 billion and consisted 33.8% of its total assets. As of June 30, 2015, the carrying value of its mortgage-backed securities totaled $790.1 million and consisted 55.2% of total investments and 18.6% of total assets.
The Company invests in mortgage-backed securities issued by the United States government agencies or government-sponsored entities, such as the Government National Mortgage Association (Ginnie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae). As of June 30, 2015, the carrying value of its United States agency debt securities totaled $150.6 million and consisted 10.5% of total investments and 3.6% of total assets.
Sources of Funds
The Company's primary source of funds for lending and other investment purposes include retail deposits. In addition, the Company derives funds from loan and mortgage‑backed securities principal repayments and proceeds from the maturities and calls of non-mortgage-backed securities. The Company's deposit products include interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, savings accounts and certificates of deposit accounts ranging in terms from 30 days to five years. The deposits are obtained primarily from within New Jersey and New York through Kearny Bank's network of retail branches.
The Company utilizes non-retail deposits as an alternative source of wholesale funding to traditional borrowings, such as Federal Home Loan Bank (FHLB) advances. As of June 30, 2015, the Company's brokered deposits totaled $244.6 million, or 9.9% of deposits. As of June 30, 2015, $489.2 million or 48.8% of its certificates of deposit were certificates of $100,000. The sources of wholesale funding the Bank utilizes include borrowings in the form of advances from the FHLB of New York, as well as other forms of borrowings. As of June 30, 2015, its outstanding balance of long-term FHLB advances totaled $161.4 million at a weighted average interest rate of 2.86%.
The Company competes with Bank of America, Citibank, JP Morgan Chase Bank, PNC Bank, TD Bank and Wells Fargo Bank.
Kearny Financial Corp
120 Passaic Ave
FAIRFIELD NJ 07004-3523