Executive Summary

Q2 FY2025 diluted EPS was $0.10 and basic EPS $0.11 on net income of $6.6M, up 7.8% sequentially; net interest margin increased 2 bps to 1.82% while efficiency ratio improved to 78.86% .
Deposits rose 3.7% QoQ to $5.67B, enabling a 14.9% reduction in borrowings and lowering the loan-to-deposit ratio to 101.4% from 105.1%—a key balance sheet de-risking catalyst .
Asset quality was stable-to-better: non-performing assets declined to 0.49% of assets; ACL/loans was 0.77%, and annualized net charge-offs were 0.04% (up vs Q1’s 0.01%) .
The Board declared a $0.11 quarterly dividend payable Feb 26, 2025; management highlighted tailwinds from deposit momentum and reinvestment of low-coupon cashflows supporting future earnings .
Street consensus from S&P Global was unavailable today due to access limits; estimate comparison is not possible at this time (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

Deposits +3.7% QoQ (+$200.5M) driven by demand and savings, reducing borrowings by $220.9M; cost of funds down 9 bps QoQ, supporting NIM expansion .
Management tone confident on earnings tailwinds: “continuation of positive deposit trends coupled with the reinvestment of low-coupon cash flows… should serve as earnings tailwinds in the coming quarters” .
Asset quality improved: NPAs fell to $37.7M (0.49% of assets) from $39.9M (0.51%); ACL robust at $44.5M (0.77% of loans) .

What Went Wrong

Loan yields and taxable securities yields declined sequentially (loans -7 bps, taxable AFS -9 bps), partially offsetting deposit cost improvements; brokered CDs carried higher costs and balances QoQ .
Net charge-offs rose to $573K annually (0.04%), up vs Q1’s $124K (0.01%)—still modest, but a sequential increase to monitor .
Efficiency ratio remains elevated (78.86%), and NIM (1.82%) remains compressed vs pre-2023 levels, reflecting continued liability sensitivity and low asset yields .

Financial Results

Metric	Q4 FY2024 (Jun 30, 2024)	Q1 FY2025 (Sep 30, 2024)	Q2 FY2025 (Dec 31, 2024)
Diluted EPS ($)	($1.45)	$0.10	$0.10
Basic EPS ($)	($1.45)	$0.10	$0.11
Net Interest Income ($USD Millions)	$33.276	$32.446	$32.612
Non-Interest Income ($USD Millions)	$5.806	$4.626	$4.873
Total Revenue (Non-GAAP, $USD Millions)	$39.474	$37.072	$37.485
Net Interest Margin %	1.84%	1.80%	1.82%
Efficiency Ratio %	323.81%	80.35%	78.86%
ROA (annualized, %)	-4.68%	0.32%	0.34%
ROE (annualized, %)	-47.97%	3.25%	3.51%

Balance Sheet and Funding KPIs

KPI	Q4 FY2024	Q1 FY2025	Q2 FY2025
Total Deposits ($USD Millions)	$5,158	$5,471	$5,671
Total Borrowings ($USD Millions)	$1,710	$1,480	$1,259
Loan-to-Deposit Ratio (%)	110.4%	105.1%	101.4%
CET1 Ratio (%)	14.79%	—	14.59%
TBV / Share ($)	$9.90	$9.85	$9.75
Uninsured Deposits (Adjusted, $USD Millions)	$764	$773	$798

Asset Quality

Metric	Q4 FY2024	Q1 FY2025	Q2 FY2025
Non-Performing Loans / Total Loans (%)	0.70%	0.69%	0.65%
Non-Performing Assets / Total Assets (%)	0.52%	0.51%	0.49%
Net Charge-offs ($USD Thousands)	$3,518	$124	$573
ACL / Total Loans (%)	0.78%	0.78%	0.77%

Loan Portfolio Composition ($USD Thousands)

Category	Q4 FY2024	Q1 FY2025	Q2 FY2025
Multi-family Mortgage	$2,645,851	$2,646,187	$2,722,623
Nonresidential Mortgage	$948,075	$950,771	$950,194
Construction	$209,237	$227,327	$176,704
1–4 Family Residential	$1,756,051	$1,768,230	$1,765,160

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per Share ($)	Q3 FY2025 payable Feb 26, 2025	$0.11	$0.11	Maintained
Net Interest Margin (directional)	Near-term	Prior commentary: “inflection in near-term”	“Earnings tailwinds” from deposit trends and reinvestment; sequential growth in NIM during Q2	Raised qualitatively (no formal numeric guidance)
Funding/Deposits (directional)	Near-term	Brokered CDs favored over FHLB in Q1	Deposit growth momentum across types; L/D ratio improving	Improving mix

Note: No formal quantitative guidance ranges provided; management offered directional commentary on NIM and earnings tailwinds .

Earnings Call Themes & Trends

Earnings call transcript for Q2 FY2025 was not available after comprehensive search; themes below reflect prepared remarks and investor materials from Q2, plus prior quarter releases.

Topic	Previous Mentions (Q4 FY2024 and Q1 FY2025)	Current Period (Q2 FY2025)	Trend
Net Interest Margin	Q4: NIM contracted 5 bps; near-term inflection anticipated . Q1: NIM contracted 4 bps, but ascended monthly; cost of funds benefit from Fed cut .	NIM +2 bps to 1.82%; monthly growth; deposit-driven cost of funds down 9 bps .	Improving
Deposits & Funding Mix	Q4: Deposits down; brokered CDs used to replace FHLB . Q1: Deposits +6.1%; shifted toward brokered CDs .	Deposits +3.7% QoQ; demand & savings strength; borrowings -14.9%; L/D ratio 101.4% .	Improving/liability-light
Asset Quality	Q4: Charge-off of $3.3M C&I relationship; NPAs up slightly vs Q3 . Q1: NPAs stable; net charge-offs 0.01% .	NPAs down to 0.49%; net charge-offs 0.04%; ACL/loans 0.77% .	Stable-to-better
CRE/Multifamily Exposure	Minimal NYC rent-regulated multifamily exposure; strong coverage .	NYC MF: 5.4% majority/fully rent-regulated; NPLs/total MF 0.93%; 2025 repricing ~$139.3M .	Monitored; risk contained
Liquidity & Uninsured Deposits	Q4: capacity $1.82B; brokered CDs used . Q1: Available capacity $2.06B (26.5% assets) .	Available liquidity $2.316B (30% assets); liquidity 2.9x adjusted uninsured deposits .	Strengthening
Macro/Rate	Q1: 50 bps Fed cut benefit to costs .	Management notes rate-cut expectations moderated; still sees deposit/reinvestment tailwinds .	Mixed, cautious optimism

Management Commentary

“As anticipated, this quarter reflected the early stages of growth in net interest income and expansion of net interest margin.” — Craig L. Montanaro, President & CEO .
“Positive deposit trends… coupled with the reinvestment of low-coupon cash flows… should serve as earnings tailwinds in the coming quarters.” — Montanaro .
“Deposit growth… allowed us to shrink… borrowings while reducing our cost of funds by nine basis points quarter-over-quarter.” — Montanaro .

Q&A Highlights

Q2 FY2025 earnings call transcript was not available; no Q&A analysis could be performed after checking SEC 8-K exhibits and company press releases across the period .
Any guidance clarifications will be incorporated once a transcript is accessible.

Estimates Context

S&P Global consensus estimates for Q2 FY2025 and Q1 FY2025 were unavailable due to daily request limits; therefore, we cannot quantify beats/misses vs Street at this time.
Implication: In the absence of estimates, investors should focus on the sequential NIM improvement, deposit growth, and reduced borrowings as likely drivers of estimate revisions when data is available .

Key Takeaways for Investors

Sequential improvement in core earnings drivers: NIM (+2 bps), efficiency ratio (-149 bps), and ROA/ROE up slightly—supported by lower funding costs and deposit growth .
Balance sheet de-risking underway: deposits +$200.5M QoQ; borrowings -$220.9M; loan-to-deposit ratio now ~101%—reducing wholesale reliance and interest expense .
Asset quality resilient: NPAs 0.49% of assets; ACL/loans 0.77% with low net charge-offs—providing a cushion as select CRE/C&I exposures normalize .
Multifamily and CRE exposures are diversified with conservative underwriting (LTVs ~61% MF; office LTV ~47.7%, DSCR 1.9x), and limited rent-regulated NYC concentration (5.4%) .
Dividend maintained at $0.11, signaling steady capital return amid improving operating trends and CET1 of 14.59% .
Near-term trading: Potential positive drift if deposit momentum and lower funding costs continue; watch brokered CD costs and asset yield pressure as pacing variables .
Medium-term thesis: Liability-sensitive balance sheet should benefit from deposit mix improvements and reinvestment; continued efficiency initiatives and stable credit underpin earnings normalization .

Kearny Financial Corp. (KRNY)·Q2 2025 Earnings Summary