KRNY QQ1 2025 Results: Kearny Financial Corp (KRNY) – Regional Banks Performance in Q1 2025 with Modest Profitability, Margin Pressures, and Liquidity Considerations
Executive Summary
Kearny Financial Corp (KRNY) reported Q1 2025 revenue of $37.07 million and net income of $6.09 million, translating to an EPS of $0.0976. On a year-over-year basis, revenue and gross profit declined about 14.1%, while operating income fell roughly 45.4% and net income rose 106.8% quarter-over-quarter, delivering a mixed profitability signal. The quarter’s earnings reflect a low-margin environment and a complex balance sheet structure highlighted by substantial investments and a tight liquidity position. Management commentary in typical quarterly cadence would be expected to emphasize deposit stability, balance sheet optimization, and capital allocation, though no transcript data is provided here to quote directly. The balance sheet shows total assets of $7.77 billion and stockholders’ equity of $751.5 million, with current liabilities of $5.74 billion yielding a current ratio of 0.22 and a cash ratio near 0.027, signaling meaningful liquidity risk if funding markets were stressed. KRNY’s solvency framework remains modest but adequate with total debt around $1.38 billion and a capital base that supports ongoing operations and dividend policy (dividend yield ~1.64%). The bank’s 1Q25 performance sits in a competitive regional context where ROE (~0.8%) lags peers, suggesting structural efficiency and margin challenges in the near term. Investors should focus on balance-sheet resilience, deposit trends, and any potential NIM expansion as rates evolve, alongside the company’s ability to optimize its securities portfolio and cost base.
Net Income: $6.092 million; YoY: -38.10%; QoQ: 106.76%
EPS: $0.0976; YoY: -39.00%; QoQ: 106.73%
Financial Highlights
- Revenue: $37.07 million; YoY change: -14.13%; QoQ change: -58.25%
- Gross Profit: $37.07 million; YoY: -14.13%; QoQ: -58.25%
- Operating Income: $7.178 million; YoY: -45.42%; QoQ: -9.21%
- Net Income: $6.092 million; YoY: -38.10%; QoQ: 106.76%
- EPS: $0.0976; YoY: -39.00%; QoQ: 106.73%
- EBITDA: $8.412 million; EBITDARatio: 0.2269
- Operating Margin: ~7.36% (7178000 / 37072000)
- Net Margin (based on stated net income and revenue): ~16.4% (6.092M / 37.072M)
- Balance Sheet (selected): Total assets $7.77B; Total liabilities $7.02B; Stockholders’ equity $0.752B; Cash $155.6M; Current assets $1.256B; Current liabilities $5.741B; Short-term debt $0.270B; Long-term debt $1.109B; Total debt $1.380B
- Liquidity: Current ratio 0.22; Quick ratio 0.22; Cash ratio 0.027
- Cash Flow: Operating cash flow $2.54M; Free cash flow $1.183M; Net cash from financing activities $75.45M; Net change in cash $91.71M; Investing activities net cash used $13.72M; Capital expenditures $-1.356M
- Valuation/Capital: Price-to-Book ~0.57; Dividend yield ~1.64%.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
37.07M
-14.13%
-58.25%
Gross Profit
37.07M
-14.13%
-58.25%
Operating Income
7.18M
-45.42%
-9.21%
Net Income
6.09M
-38.10%
106.76%
EPS
0.10
-39.00%
106.73%
Key Financial Ratios
currentRatio
0.22
grossProfitMargin
42.1%
operatingProfitMargin
8.17%
netProfitMargin
6.93%
returnOnAssets
0.08%
returnOnEquity
0.81%
debtEquityRatio
1.84
operatingCashFlowPerShare
$0.04
freeCashFlowPerShare
$0.02
dividendPayoutRatio
115.1%
priceToBookRatio
0.57
priceEarningsRatio
17.59
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript was not provided in the dataset; therefore, direct management quotes and theme-based quotes could not be extracted. If available in a future update, the highlights would typically cover strategy (deposit growth, balance sheet optimization, capital allocation), operations (risk management, expense discipline), and market conditions (rate trajectory, competitive landscape). In lieu of quotes, the analysis relies on the disclosed financials and industry context to infer potential management emphasis.
—
—
Forward Guidance
KRNY did not publish formal forward guidance in the provided data set. Based on the quarter and macro context, the near-term outlook hinges on: 1) Net interest income (NII) trajectory as interest rates stabilize or rise, given KRNY’s sizable securities portfolio and tailwinds from asset re-pricing; 2) Deposit trends and funding costs in a competitive regional market; 3) Balance-sheet optimization, including the sizable long-term investments and the ability to monetize or rotate securities to improve liquidity and earnings stability; 4) Credit quality in CRE/multifamily exposures under evolving regulatory expectations. Our qualitative assessment suggests a cautious path to stabilizing ROE and expanding NII, contingent on a more favorable rate environment and continued cost discipline. Key factors investors should monitor: NIM trajectory, deposit mix and cost of funds, loan growth quality, reserve adequacy, liquidity coverage ratio (LCR), and capital deployment to support sustainable earnings.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
KRNY Focus
1.00%
8.17%
0.81%
17.59%
NFBK
50.90%
17.10%
1.11%
14.15%
HFWA
70.80%
19.90%
1.58%
14.87%
HTBK
70.50%
25.60%
1.67%
12.59%
NBHC
62.90%
20.70%
1.82%
15.03%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, KRNY presents a Neutral to Cautiously Optimistic investment case on valuation grounds (P/B around 0.57) and a modest dividend yield, but the risk profile is dominated by liquidity constraints and relatively low ROE. 12–18 month catalysts would include stabilization or expansion of net interest income with favorable rate movements, improved deposit growth and efficiency gains, and proactive balance-sheet optimization of the securities portfolio. Investors should monitor NIM trends, deposit funding costs, asset quality signals in CRE/multifamily, liquidity coverage, and capital deployment. Given the current liquidity metrics and earnings structure, a selective exposure approach is prudent, favoring banks with stronger liquidity, higher ROE, and clearer paths to earnings acceleration.
Key Investment Factors
Growth Potential
Moderate growth potential from core NJ/NY regional markets, with possible upside from CRE/multifamily lending and selective loan growth tied to demand in northern and central New Jersey and parts of New York City.
Profitability Risk
Liquidity stress risk given a current ratio of 0.22; earnings volatility from high interest expense implications; credit risk in CRE/multifamily portfolios; dependence on securities portfolio performance amid rate shifts; regulatory and macroeconomic uncertainty in regional banking.
Financial Position
Solid capitalization (stockholders’ equity ~$751.5M) with significant investment securities (long-term investments ~$5.88B) supporting liquidity and yield; valuation implied by P/B ~0.57 suggests a potential undervaluation relative to book.
SWOT Analysis
Strengths
Stable earnings in a challenging rate environment (net income $6.09M in Q1 2025 on $37.07M revenue) and a solid capital base (Total stockholders’ equity ~$751.5M).
Large investment securities portfolio and long-dated investments provide earning potential and liquidity options in a volatile rate backdrop.
Dividend yield (~1.64%) offers income for investors seeking current yield in a low-rate regime.
Weaknesses
Liquidity sufficiency concerns with a current ratio of 0.22 and a cash ratio near 0.027, signaling vulnerability in stressed funding scenarios.
Low ROE (~0.8%) relative to regional peers, indicating lower profitability efficiency and potential capital allocation headwinds.
Possible data inconsistencies between income components (e.g., interest expense vs. pre-tax income) that complicate earnings quality assessment.
Opportunities
Potential NII improvement if rates rise and deposit costs stabilize, aided by asset re-pricing and portfolio optimization.
Opportunity to optimize cost structure and balance-sheet composition to strengthen liquidity and ROE.
Regional footprint in New Jersey and New York markets could support CRE/multifamily lending demand and fee-based growth.
Threats
Heightened interest-rate volatility and margin pressure in regional banks.
Credit risk from CRE/multifamily exposures in a competitive, rate-sensitive market.
Deposits competition and potential outflows, which could pressure liquidity and funding costs.
Regulatory changes and macroeconomic headwinds impacting loan demand and fee income.