Kearny Financial Corp reported a mixed QQ2 2025 performance. Core banking operations generated solid operating earnings, with revenue of $81.485 million and operating income of $81.174 million, yielding an operating margin near 99.6%. However, a substantial non-operating item — total other income and expenses of -$73.357 million — materially reduced pretax income to $7.817 million and net income to $6.566 million, translating to diluted EPS of $0.10–$0.11. The result implies a robust underlying operating platform, but a heavy non-operating hit and a concentration of investments and leverage are shaping the reported profitability profile.
From a liquidity and capital perspective, KRNY exhibits limited near-term liquidity strength (current and quick ratios around 0.20) and a high reliance on long-term investments (total assets of $7.73B, with long-term investments of ~$5.88B). Total debt stands at ~$1.26B, with a debt-to-capitalization of ~62.8%, and free cash flow is negative for the quarter (FCF = -$3.75M). The combination of negative operating cash flow, elevated leverage, and a payout ratio above 100% signals near-term profitability and capital allocation headwinds, even as the shares trade at a discounted multiple to book value.
Compared with regional bank peers, KRNY’s valuation appears attractive on a price-to-book basis (P/B ~0.59) but shows relatively subdued profitability metrics (ROE ~0.88%) and weaker liquidity. The QQ2 2025 results underscore a bifurcated picture: a bank with a potentially compelling core business (high operating income) but with a large one-off or non-operating charge and structural balance-sheet risk that investors must monitor closely.