Executive Summary

EPS of $0.15 beat S&P Global consensus of $0.145 by ~$0.005, driven by 10 bps net interest margin expansion to 2.10% and higher net interest income; dividend maintained at $0.11 per share . EPS consensus from S&P Global data.*
Linked-quarter “total revenue” (Company’s non-GAAP: net interest income + non-interest income) rose to $0.0428B from $0.0408B, as fee income improved and a $0.749M non-recurring property sale gain partially offset branch consolidation charges .
Credit remained broadly stable, but non-performing assets increased to $64.6M (0.84% of assets) due to a single construction loan 90+ days past due; ACL declined modestly to $45.1M (0.78% of loans) with net charge-offs of $1.0M annualized at 0.07% .
Strategic execution continued: three branch consolidations and an announced automation/AI partnership with The Lab Consulting aimed at operating efficiency and scalable growth, positioning for anticipated Fed rate cuts tailwinds .

What Went Well and What Went Wrong

What Went Well

Net interest margin expanded 10 bps to 2.10% and net interest income increased 5.2% to $37.7M, lifting pre-tax, pre-provision EPS to $0.19 from $0.16 QoQ .
Fee momentum: fees and service charges rose 36.2% QoQ to $0.892M; non-interest income up 17.2% QoQ to $5.847M (ex the $0.749M one-time gain, +2.1%) .
Management tone constructive on profitability growth and balance sheet management: “Net interest margin expansion…solid credit quality and well-controlled expenses…positions us well for sustained performance” — Craig L. Montanaro, CEO .

What Went Wrong

Non-performing assets rose notably to $64.6M (0.84% of assets) from $45.6M (0.59%), driven by a single construction credit; net charge-offs increased to $1.0M annualized 0.07% .
Non-interest expense climbed 2.5% QoQ to $31.7M, reflecting salary/benefits and non-recurring branch consolidation and maintenance costs (e.g., $250k consolidation expense) .
Deposits declined $43.3M QoQ (-0.8%) and loans fell $45.5M (-0.8%), with ongoing pressure in multifamily offset by construction and C&I growth initiatives .

Financial Results

Metric	Q1 FY2025 (Sep 30, 2024)	Q4 FY2025 (Jun 30, 2025)	Q1 FY2026 (Sep 30, 2025)
Net Interest Income ($USD Billions)	$0.0324	$0.0358	$0.0377
Total Non-Interest Income ($USD Billions)	$0.0046	$0.0050	$0.0058
Total Revenue (Company non-GAAP) ($USD Billions)	$0.0371	$0.0408	$0.0428
Net Income ($USD Billions)	$0.0061	$0.0068	$0.0095
Diluted EPS ($USD)	$0.10	$0.11	$0.15
Net Interest Margin (%)	1.80%	2.00%	2.10%
Efficiency Ratio (%)	80.35%	75.66%	72.71%
ROAA (annualized, %)	0.32%	0.35%	0.50%
ROAE (annualized, %)	3.25%	3.64%	5.10%

Loan Portfolio ($USD Billions)	Mar 31, 2025	Jun 30, 2025	Sep 30, 2025
Multifamily Mortgage	$2.733	$2.710	$2.641
CRE (Nonresidential Mortgage)	$0.988	$0.987	$0.989
Construction	$0.175	$0.178	$0.190
Commercial & Industrial	$0.140	$0.139	$0.142
1–4 Family Residential	$1.761	$1.749	$1.749
Consumer (Home Equity + Other)	$0.053	$0.053	$0.057
Total Loans (ex yield adj.)	$5.850	$5.815	$5.768

Funding & Asset Quality	Q1 FY2025 (Sep 30, 2024)	Q4 FY2025 (Jun 30, 2025)	Q1 FY2026 (Sep 30, 2025)
Deposits ($USD Billions)	$5.471	$5.675	$5.632
Borrowings ($USD Billions)	$1.480	$1.256	$1.206
Loans/Deposits (%)	105.1%	101.7%	101.7%
Uninsured Deposits (reported) ($USD Billions)	$1.800	$1.989	$2.040
Uninsured Deposits (adjusted) ($USD Billions)	$0.773	$0.814	$0.804
NPA / Assets (%)	0.51%	0.59%	0.84%
NPL / Loans (%)	0.69%	0.78%	1.12%
ACL ($USD Millions)	$44.9	$46.2	$45.1
ACL / Loans (%)	0.78%	0.79%	0.78%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q1 FY2026	$0.11 (Q4 FY2025)	$0.11 (Q1 FY2026)	Maintained
Formal EPS/Revenue guidance	FY2026/Q2 FY2026	None disclosed	None disclosed	N/A
Branch footprint actions	Oct 2025	3 consolidations approved/scheduled	Consolidating 3 branches, streamlining to 40 locations	Maintained execution timeline

Earnings Call Themes & Trends

Note: A Q1 FY2026 earnings call transcript was not available in the document set; themes reflect management communications in the 8-K, press releases, and investor presentation.

Topic	Previous Mentions (Q3 FY2025 & Q4 FY2025)	Current Period (Q1 FY2026)	Trend
Net interest margin trajectory	NIM expanded 8 bps in Q3 to 1.90%; +10 bps in Q4 to 2.00%	NIM +10 bps to 2.10% with improved asset yields, lower borrowings	Improving
Deposit mix and funding costs	Reallocation to brokered CDs; deposit growth via branches/digital; deposit costs easing	Deposits -0.8% QoQ; interest-bearing demand & CDs down; total funding down	Mixed; cautious
Credit quality	NCOs minimal in Q4; NPA increased due to two MF relationships	NPA up due to single construction loan; ACL steady; NCOs 0.07%	Stable core; idiosyncratic uptick
Automation/AI initiatives	Not highlighted	Partnership with The Lab Consulting (RPA, AI-enabled processing)	New initiative; positive
Branch optimization	Regulatory approval to consolidate 3 branches	Executing consolidations to 40 locations by Oct 2025	Executing
Rate outlook/macro	Margin expansion tailwinds from repricing	Positioning for anticipated Fed funds rate reductions	Constructive

Management Commentary

“Net interest margin expansion of 10 basis points…led to a 36% quarter-over-quarter increase in earnings per share…expected tailwinds from anticipated reductions in the federal funds rate” — Craig L. Montanaro, CEO .
“Partnership with The Lab Consulting…to deploy advanced automation and analytics…enhance operational efficiency, elevate client service, and deliver shareholder value” .
Strategy: loan portfolio diversification with construction and C&I up 26.8% and 10.2% annualized respectively; consolidating three branches as part of real estate footprint optimization .

Q&A Highlights

The Q1 FY2026 earnings call transcript was not available in the filings/press releases catalog; no Q&A highlights could be verified from primary sources.

Estimates Context

Metric	Consensus (S&P Global)	Actual	Beat/Miss
EPS (Primary, $USD)	$0.145*	$0.15	Beat by ~$0.005*
Revenue ($USD Millions)	N/A*	$43.6 (Company-reported “total revenue” non-GAAP: $42.8; GAAP net interest + non-interest: $43.6)	N/A*

Values retrieved from S&P Global.*

Context:

Coverage is thin (EPS # of estimates = 2*), limiting statistical significance; revenue consensus unavailable, so revisions likely center on EPS and NIM trajectory.*

Key Takeaways for Investors

Earnings inflection continues: NIM at 2.10% and PPNR/share at $0.19 point to operating leverage; maintain focus on deposit costs and funding mix durability .
Credit watch item is idiosyncratic: NPA increase tied to a single construction loan with expected full repayment; core portfolio metrics/ACL remain steady .
Efficiency agenda is tangible: non-recurring expenses aside, automation/AI partnership and branch consolidations should support medium-term cost ratios and scalability .
Capital/liquidity strong: tangible equity/tangible assets at 8.47% and $2.54B secured borrowing capacity (~33% of assets) underpin resilience amid rate normalization .
Dividend sustained at $0.11; cash return consistent with improving profitability, supporting yield-oriented holders .
Near-term trading implication: modest EPS beat and margin expansion are positive; monitor credit headlines around the construction loan and deposit trends for sentiment sensitivity .
Medium-term thesis: asset repricing opportunity (particularly MF/CRE) and process automation offer margin/efficiency upside if funding costs continue to ease and credit normalization holds .

Kearny Financial Corp. (KRNY)·Q1 2026 Earnings Summary