Kearny Financial Corp. Reports Second Quarter 2018 Operating Results


FAIRFIELD, N.J., Jan. 30, 2018 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ:KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended December 31, 2017 of $1.3 million, or $0.02 per basic and diluted share.  The results represent a decrease in net income of $3.9 million compared to net income of $5.2 million, or $0.07 per basic and diluted share, for the quarter ended September 30, 2017.

As discussed in greater detail below, the decrease in net income primarily reflected the impact of federal income tax reform that was codified through the passage of the Tax Cuts and Jobs Act (the “Act”) on December 22, 2017.  The decrease in net income also reflected the recognition of certain merger-related expenses related to the Company’s proposed acquisition of Clifton Bancorp, Inc. (“CSBK”), the holding company for Clifton Savings Bank (“Clifton”).

The Act permanently reduced the Company’s federal income tax rate from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company.  While, collectively, the provisions of the Act are expected to benefit the Company’s future earnings, it resulted in a $3.5 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the three months ended December 31, 2017.  The $3.5 million charge to income tax expense resulted from a $4.9 million charge to reflect the reduced carrying value of the Company’s net deferred tax asset attributable to timing differences in the recognition of certain income and expense items for financial statement reporting purposes versus that recognized for income tax reporting purposes.  That charge was partially offset by a $1.4 million reduction in the net deferred income tax liability primarily attributable to the net unrealized gains and losses on the Company’s interest rate derivatives and available for sale securities portfolios.

The net charge of $3.5 million attributable to the changes in the carrying value of deferred income tax items was partially offset by a $769,000 reduction in current-year income tax expense attributable to the noted reduction in the Company’s income tax rate.  For the current “transition” year ending June 30, 2018, the Company’s statutory federal income tax rate has been reduced to 28%, reflecting effective statutory rates of 35% and 21% for the first and second halves of the year, respectively.  For the fiscal year ending June 30, 2019 and thereafter, the Company’s statutory federal income tax rate will be reduced to 21%.

As noted above, the decrease in net income between linked periods also reflects the Company’s recognition of $1.2 million of merger-related expenses related to its proposed acquisition of CSBK. The Company estimates that net income was adversely impacted by approximately $1.0 million for merger-related expenses recognized during the three months ended December 31, 2017 due to their limited income tax deductibility.  The proposed CSBK acquisition was announced on November 1, 2017, whereby the Company entered into a definitive agreement pursuant to which it will acquire CSBK in an all-stock transaction.  Under the terms of the agreement, each outstanding share of CSBK common stock will be exchanged for 1.191 shares of KRNY common stock.

Excluding the impacts on net income arising from federal income tax reform and merger-related expenses discussed above, the Company’s net income would have been $5.0 million or $0.06 per basic and diluted share for the three months ended December 31, 2017.

Overview

The Company continued to execute strategies during the second quarter of fiscal 2018 intended to grow and diversify its balance sheet while increasing its core earnings and prudently managing capital to promote long-term growth in shareholder value.  These strategies resulted in several incremental balance sheet growth and diversification achievements that are included among the following highlights for the quarter:

  • The Company’s aggregate loan portfolio, excluding loans held for sale and the allowance for loan losses, increased by $31.2 million to $3.29 billion, or 68.0% of total assets, at December 31, 2017 from $3.26 billion, or 67.8% of total assets, at September 30, 2017.  The growth in the loan portfolio largely reflected the Company’s continued strategic focus on growing and diversifying its commercial loan portfolio with the outstanding balance of construction loans increasing by $13.9 million to $22.2 million at December 31, 2017 while the outstanding balance of commercial business loans increased by $10.8 million to $92.4 million for that same period.
  • For those same comparative periods, the balance of commercial mortgage loans remained stable at $2.51 billion.  The overall stability in the balance of commercial mortgage loans reflected an accelerated pace of loan prepayments that offset the growth in loans arising from new loan origination volume.  The Company continues to execute strategies designed to increase the origination volume of commercial mortgage loans to compensate for the noted increase in prepayments.  Toward that end, the Company’s pipeline of commercial mortgage loans in the underwriting process increased during the quarter ended December 31, 2017.
  • The outstanding balance of residential mortgage loans held in the portfolio, including home equity loans and lines of credit, increased by $15.0 million to $655.3 million at December 31, 2017 from $640.3 million at September 30, 2017.  The increase largely reflected loan purchases of approximately $22.2 million during the three months ended December 31, 2017 that were intended to augment the growth in the loan portfolio and partially offset the effects of the increase in prepayments noted above.
  • Nonperforming loans decreased by $1.8 million to $16.3 million, or 0.50% of total loans, at December 31, 2017 from $18.1 million, or 0.56% of total loans, at September 30, 2017. 
  • The allowance for loan losses increased to $30.1 million at December 31, 2017 from $29.4 million at September 30, 2017, resulting in a “total loan coverage ratio”, representing the balance of the allowance for loan losses as a percentage of total loans, of 0.91% and 0.90%, respectively.
  • The “nonperforming loan coverage ratio”, representing the balance of the allowance for loan losses as a percentage of nonperforming loans, increased to 184.0% at December 31, 2017 from 162.6% at September 30, 2017.
  • The Company’s securities portfolio decreased by $10.4 million to $1.11 billion, or 22.9% of total assets, at December 31, 2017 from $1.12 billion, or 23.3% of total assets, at September 30, 2017.  The net decrease in the securities portfolio partly reflected normal principal repayments arising from amortization and maturities of securities. A portion of the security repayments were used to fund the growth in loans while the remainder was reinvested into uncapped, floating-rate securities, tax-advantaged municipal securities, mortgage-backed securities and subordinated debt issued by two community banks located in New Jersey and eastern Pennsylvania.  The decrease in the securities portfolio also reflected a $2.0 million decrease in the fair value of the available for sale securities portfolio during the period. 
  • The balance of cash and cash equivalents increased by $11.9 million to $50.7 million at December 31, 2017 from $38.8 million at September 30, 2017.  The increase largely reflected day-to-day operating fluctuations in the Company’s balance of cash and cash equivalents.  Notwithstanding the noted increase in the comparative period-end balances, the Company continues to limit the balance of cash and cash equivalents held to the minimum levels needed to meet its day-to-day funding obligations and overall liquidity risk management objectives.  Toward that end, the average balance of other interest-earning assets remained stable at $82.5 million for the quarter ended December 31, 2017 compared to $79.9 million for the quarter ended September 30, 2017.  Other interest-earning assets generally include the balance of interest-earning cash deposits held in other banks coupled with the balance of the Bank’s mandatory investment in the capital stock of the Federal Home Loan Bank of New York.
  • The Company’s total deposits increased by $80.5 million to $3.03 billion at December 31, 2017, from $2.95 billion at September 30, 2017.  The net growth in deposits included an $84.7 million increase in interest-bearing deposits that was partially offset by a $4.2 million decrease in non-interest-bearing deposits.  The growth in interest-bearing deposits largely reflected the continuing effects of product, pricing and marketing strategies enacted during fiscal 2017.  The decrease in non-interest-bearing deposits largely reflected day-to-day operating fluctuations in such balances.  Notwithstanding the noted decrease in the comparative period-end balances, the average balance of non-interest-bearing deposits increased by $2.4 million between comparative periods.
  • Total borrowings decreased by $9.7 million to $798.9 million at December 31, 2017, from $808.6 million at September 30, 2017.  The decrease in borrowings largely reflected a $9.7 million decrease in depositor sweep account balances representing normal day-to-day fluctuations in such balances.
  • The Company’s stockholders’ equity decreased by $25.0 million to $989.3 million at December 31, 2017 from $1.01 billion at September 30, 2017.  The decrease largely reflected the effects of the Company’s share repurchases and cash dividends paid to stockholders during the period.  The decrease in stockholders’ equity was partially offset by net income earned during the period coupled with a net increase in accumulated other comprehensive income reflecting an increase in the fair value of the Company’s derivatives portfolio, which was partially offset by a decrease in the fair value of the Company’s available for sale securities portfolio.
  • At December 31, 2017, the Company’s total consolidated equity to assets ratio was 20.42% while the Bank’s total consolidated equity to assets ratio was 17.68%. The Company’s and Bank’s capital ratios at December 31, 2017 were well in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines. 

As highlighted below, the noted balance sheet growth, reinvestment and reallocation achievements helped to offset the adverse effects of an increase in market interest rates and a flattening yield curve on the Company’s net interest margin:

  • The Company’s net interest income was $26.8 million for the quarters ended December 31, 2017 and September 30, 2017, reflecting an increase of $25,000 between comparative periods. 
  • The Company’s net interest margin increased by one basis point to 2.41% for the quarter ended December 31, 2017 from 2.40% for the quarter ended September 30, 2017 while the net interest rate spread also increased by one basis point to 2.14% from 2.13% for those same comparative periods, respectively.

The level of the Company’s charge offs and provision for loan losses continued to reflect strong asset quality metrics:

  • The Company recognized net charge offs totaling approximately $315,000, reflecting an annualized charge off rate of 0.04% on the average balance of total loans for the quarter ended December 31, 2017. By comparison, the Company’s net charge offs totaled approximately $471,000 for the quarter ended September 30, 2017, reflecting a net charge off rate of 0.06%.
  • The Company’s provision for loan losses increased by $306,000 to $936,000 for the quarter ended December 31, 2017 compared to $630,000 for the quarter ended September 30, 2017.  The increase in the provision was partly attributable to the comparatively greater level of growth during the quarter ended December 31, 2017 in the performing portion of the loan portfolio that is collectively evaluated for impairment using historical and environmental loss factors.  Such growth was concentrated in specific segments of the loan portfolio whose estimated credit losses for ALLL calculation purposes are based on comparatively higher loss factors compared to other segments in the portfolio.  The effects of the greater level of growth in the portfolio was partially offset by the decrease in net charge offs between the two comparative periods, as discussed above.  The increase in the provision also reflected updates to historical and environmental loss factors during the period.

The strategies executed by the Company during the quarter ended December 31, 2017 continued to strengthen and diversify its sources of non-interest income, as highlighted below:

  • Gains on sale of residential mortgage loans totaled $200,000 for the quarter ended December 31, 2017 compared to $213,000 for the quarter ended September 30, 2017.  The modest decrease in sale gains reflected a decrease in the volume of loans originated and sold that was partially offset by an increase in the average net gain recognized per loan sold between comparative periods.  There were no SBA loans originated and sold during the three months ended December 31, 2017.

In addition to the items noted above, fees and service charges increased by $148,000 to $1.4 million for the quarter ended December 31, 2017 from $1.3 million for the quarter ended September 30, 2017.  The increase was largely attributable to an increase in commercial mortgage loan prepayment charges recognized between comparative periods.

The Company continues to evaluate and implement tactics and strategies designed to improve operating practices, policies and procedures while making more efficient and effective use of its supporting infrastructure, including human resources, facilities and information technology systems. 

  • The Company’s ratio of non-interest expense to average assets totaled 1.89% for the quarter ended December 31, 2017 compared to 1.77% for the prior quarter ended September 30, 2017.  For those same comparative periods, the Company’s operating efficiency ratio increased to 75.6% from 71.2%, respectively.  As noted earlier, the increases in these ratios reflect the recognition of $1.2 million in non-recurring merger-related expenses during the three months ended December 31, 2017 for which no such expenses were recognized during the earlier comparative quarter.  Excluding the impact of merger-related expenses, the Company’s non-interest expense to average assets and efficiency ratios would have been 1.79% and 71.7%, respectively, for the three months ended December 31, 2017.

Collectively, the factors noted above contributed to the decrease in net income for the quarter ended December 31, 2017 compared to the prior quarter ended September 30, 2017.  The decrease in net income had an unfavorable impact on the Company’s earnings-based performance ratios as highlighted below:

  • The Company’s return on average assets for the quarter ended December 31, 2017 totaled 0.11% compared to 0.43% for the prior quarter ended September 30, 2017.  Excluding the impacts on net income arising from federal income tax reform and merger-related expenses discussed above, the Company’s return on average assets would have been 0.42% for the three months ended December 31, 2017.
  • The Company’s return on average equity for the quarter ended December 31, 2017 totaled 0.51% compared to 2.00% for the prior quarter ended September 30, 2017.  Excluding the impacts on net income arising from federal income tax reform and merger-related expenses discussed above, the Company’s return on average equity would have been 2.00% for the three months ended December 31, 2017.

The Company continued to execute key capital management strategies during the second quarter of fiscal 2018 to further support shareholder value:

  • The Company maintained its regular quarterly cash dividend payable to stockholders of $0.03 per share declared and paid during the quarter ended December 31, 2017.
  • In May 2017, the Company announced its second share repurchase program through which it authorized the repurchase of 8,559,084 shares, or 10%, of the Company’s outstanding shares.  During the quarter ended December 31, 2017, the Company repurchased a total of 1,943,840 of its shares at an average cost of $14.83 per share.  Through December 31, 2017, the Company has repurchased a total of 5,986,840 shares, or 69.9% of the number of shares authorized under the current program, at a total cost of $87.0 million and at an average cost of $14.54 per share.

The exhibits that follow this narrative begin with the presentation of the Linked-Quarter Comparative Financial Analysis that supports the discussion above by presenting the Company’s financial condition and operating results for the quarter ended December 31, 2017 compared to those for the prior quarter ended September 30, 2017.  This analysis is followed by a tabular Five-Quarter Financial Trend Analysis that presents similar financial information, together with other financial highlights and performance metrics, over a consecutive five quarter look-back period that is intended to reflect the Company’s financial performance and strategic achievements over this extended period of time.

Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by Kearny Financial Corp. with the Securities and Exchange Commission from time to time.  The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

For further information contact:
Craig L. Montanaro, President and Chief Executive Officer, or
Eric B. Heyer, Executive Vice President and Chief Financial Officer
Kearny Financial Corp.
(973) 244-4500

Linked-Quarter Comparative Financial Analysis  
       
Summary Balance Sheet
(Dollars and Shares in Thousands,
Except Per Share Data, Unaudited)
AtVariance
or Change
Variance
or Change
Pct.
  
December 31,September 30,  
 2017  2017   
Assets      
Cash and cash equivalents$  50,685 $  38,823 $  11,862    30.6   
Securities available for sale   637,671    636,600    1,071    0.2   
Securities held to maturity   471,452    482,926    (11,474)   (2.4)  
Loans held-for-sale   3,490    3,808    (318)   (8.4)  
Loans receivable, including yield adjustments   3,291,516    3,260,328    31,188    1.0   
Less allowance for loan losses   (30,066)   (29,445)   (621)   2.1   
Net loans receivable   3,261,450    3,230,883    30,567    0.9   
Premises and equipment   41,829    40,132    1,697    4.2   
Federal Home Loan Bank stock   39,113    39,115    (2)   (0.0)  
Accrued interest receivable   13,524    13,268    256    1.9   
Goodwill   108,591    108,591    -    -    
Bank owned life insurance   183,754    182,489    1,265    0.7   
Deferred income taxes, net   6,941    13,230    (6,289)   (47.5)  
Other assets   25,347    18,285    7,062    38.6   
Total assets $  4,843,847 $  4,808,150 $  35,697    0.7   
       
Liabilities      
Deposits$  3,033,766 $  2,953,268 $  80,498    2.7   
Borrowings   798,864    808,554    (9,690)   (1.2)  
Advance payments by borrowers for taxes   8,511    9,787    (1,276)   (13.0)  
Other liabilities   13,433    22,308    (8,875)   (39.8)  
Total liabilities   3,854,574    3,793,917    60,657    1.6   
       
Stockholders' Equity      
Common stock   795    815    (20)   (2.5)  
Paid-in capital   662,093    690,204    (28,111)   (4.1)  
Retained earnings   353,536    354,123    (587)   (0.2)  
Unearned ESOP shares   (33,563)   (34,049)   486    (1.4)  
Accumulated other comprehensive income, net   6,412    3,140    3,272    104.2   
Total stockholders' equity   989,273    1,014,233    (24,960)   (2.5)  
Total liabilities and stockholders' equity$  4,843,847 $  4,808,150 $  35,697    0.7   
       
Consolidated capital ratios      
Equity to assets 20.42% 21.09% -0.67%   
Tangible equity to tangible assets 18.59% 19.27% -0.68%   
       
Share data      
Outstanding shares   79,527    81,548    (2,021)   (2.5)  
Equity per share$  12.44 $  12.44 $  -     -    
Tangible equity per share (1)$  11.07 $  11.10 $  (0.03)   (0.3)  
               
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.  
   
   
Summary Income Statement
(Dollars and Shares in Thousands,
Except Per Share Data, Unaudited)
For the three months endedVariance
or Change
Variance
or Change
Pct.
  
December 31,September 30,  
 2017  2017   
Interest income      
Loans$  30,610 $  30,473 $  137    0.4   
Mortgage-backed securities   2,848    2,896    (48)   (1.7)  
Debt securities:      
Taxable   3,229    2,960    269    9.1   
Tax-exempt   641    621    20    3.2   
Other interest-earning assets   704    642    62    9.7   
Total Interest Income   38,032    37,592    440    1.2   
       
Interest expense      
Deposits   6,649    6,219    430    6.9   
Borrowings   4,548    4,563    (15)   (0.3)  
Total interest expense   11,197    10,782    415    3.8   
Net interest income   26,835    26,810    25    0.1   
Provision for loan losses   936    630    306    48.6   
Net interest income after provision for loan losses   25,899    26,180    (281)   (1.1)  
       
Non-interest income      
Fees and service charges   1,409    1,261    148    11.7   
Gain on sale of loans   200    331    (131)   (39.6)  
Gain (loss) on sale of real estate owned    23    (109)   132    (121.1)  
Income from bank owned life insurance   1,264    1,267    (3)   (0.2)  
Electronic banking fees and charges   302    278    24    8.6   
Miscellaneous   65    66    (1)   (1.5)  
Total non-interest income   3,263    3,094    169    5.5   
       
Non-interest expense      
Salaries and employee benefits   12,926    12,867    59    0.5   
Net occupancy expense of premises   2,122    1,981    141    7.1   
Equipment and systems   2,193    2,190    3    0.1   
Advertising and marketing   748    710    38    5.4   
Federal deposit insurance premium   343    360    (17)   (4.7)  
Directors' compensation   688    689    (1)   (0.1)  
Merger-related expenses   1,193    -    1,193    -    
Miscellaneous   2,551    2,489    62    2.5   
Total non-interest expense   22,764    21,286    1,478    6.9   
Income before income taxes   6,398    7,988    (1,590)   (19.9)  
Income taxes   5,129    2,756    2,373    86.1   
Net income$  1,269 $  5,232 $  (3,963)   (75.7)  
       
Net income per common share (EPS)      
Basic$  0.02 $  0.07 $  (0.05)   
Diluted$  0.02 $  0.07 $  (0.05)   
       
Dividends declared (1)      
Cash dividends declared per common share$  0.03 $  0.15 $  (0.12)   
Cash dividends declared$  1,856 $  12,148 $  (10,292)   
Dividend payout ratio 146.3% 232.2% -85.93%   
       
Weighted average number of  common
 shares outstanding
      
Basic   77,174    79,649    (2,475)   
Diluted   77,239    79,708    (2,469)   
                 
  (1) Dividends declared during the quarter ended September 30, 2017 include a $0.12 special dividend representing a supplemental
  distribution of net income to stockholders from the prior fiscal year ended June 30, 2017.
 
  
                 
Average Balance Sheet Data
(Dollars in Thousands, Unaudited)
For the three months endedVariance
or Change
Variance
or Change
Pct.
  
December 31,September 30,  
 2017  2017   
Assets      
Interest-earning assets:      
Loans receivable, including loans held for sale$  3,255,862 $  3,257,465 $  (1,603)   (0.0)  
Mortgage-backed securities   501,081    511,931    (10,850)   (2.1)  
Debt securities:      -    
Tax-exempt   126,214    122,685    3,529    2.9   
Taxable   495,316    489,252    6,064    1.2   
Total debt securities   621,530    611,937    9,593    1.6   
Other interest-earning assets   82,539    79,920    2,619    3.3   
Total interest-earning assets   4,461,012    4,461,253    (241)   (0.0)  
Non-interest-earning assets   364,015    361,259    2,756    0.8   
Total assets $  4,825,027 $  4,822,512 $  2,515    0.1   
       
Liabilities and Stockholders' Equity      
Interest-bearing liabilities:      
Deposits:      
Interest-bearing demand$  854,400 $  858,291 $  (3,891)   (0.5)  
Savings and club   518,542    522,715    (4,173)   (0.8)  
Certificates of deposit   1,337,560    1,285,882    51,678    4.0   
Total interest-bearing deposits   2,710,502    2,666,888    43,614    1.6   
Borrowings:      
Federal Home Loan Bank Advances   777,460    778,104    (644)   (0.1)  
Other borrowings   30,606    32,041    (1,435)   (4.5)  
Total borrowings   808,066    810,145    (2,079)   (0.3)  
Total interest-bearing liabilities   3,518,568    3,477,033    41,535    1.2   
Non-interest-bearing liabilities:      
Non-interest-bearing deposits   277,236    274,858    2,378    0.9   
Other non-interest-bearing liabilities   24,396    29,754    (5,358)   (18.0)  
Total non-interest-bearing liabilities   301,632    304,612    (2,980)   (1.0)  
Total liabilities   3,820,200    3,781,645    38,555    1.0   
Stockholders' equity   1,004,827    1,040,867    (36,040)   (3.5)  
Total liabilities and stockholders' equity$  4,825,027 $  4,822,512 $  2,515    0.1   
       
Average interest-earning assets to average interest-bearing liabilities 126.78% 128.31% -1.53% -1.2   
               
               
Performance Ratio HighlightsFor the three months endedVariance
or Change
   
December 31,September 30,  
 2017  2017   
Average yield on interest-earning assets:      
Loans receivable, including loans held for sale 3.76% 3.74% 0.02%   
Mortgage-backed securities 2.27% 2.26% 0.01%   
Debt securities:      
Tax-exempt (1) 2.03% 2.03% 0.00%   
Taxable 2.61% 2.42% 0.19%   
Total debt securities 2.49% 2.34% 0.15%   
Other interest-earning assets 3.42% 3.21% 0.21%   
Total interest-earning assets 3.41% 3.37% 0.04%   
       
Average cost of interest-bearing liabilities:      
Deposits:      
Interest-bearing demand 0.80% 0.76% 0.04%   
Savings and club 0.12% 0.12% 0.00%   
Certificates of deposit 1.43% 1.38% 0.05%   
Total interest-bearing deposits 0.98% 0.93% 0.05%   
Borrowings:      
Federal Home Loan Bank Advances 2.33% 2.33% 0.00%   
Other borrowings 0.27% 0.27% 0.00%   
Total borrowings 2.25% 2.25% 0.00%   
Total interest-bearing liabilities 1.27% 1.24% 0.03%   
       
Interest rate spread (2) 2.14% 2.13% 0.01%   
Net interest margin (3) 2.41% 2.40% 0.01%   
       
Non-interest income to average assets (annualized) 0.27% 0.26% 0.01%   
Non-interest expense to average assets (annualized) 1.89% 1.77% 0.12%   
       
Efficiency ratio (4) 75.63% 71.18% 4.45%   
       
Return on average assets (annualized) 0.11% 0.43% -0.32%   
Return on average equity (annualized) 0.51% 2.01% -1.50%   
             
(1) The yield on tax-exempt securities has not been adjusted to reflect their tax-effective yield.   
(2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities. 
(3) Net interest income divided by average interest-earning assets.     
(4) Non-interest expense divided by the sum of net interest income and non-interest income.   
    
    
Five-Quarter Financial Trend Analysis 
       
Summary Balance Sheet
(Dollars and Shares in Thousands,
Except Per Share Data, Unaudited)
At 
December 31,September 30,June 30,March 31,December 31, 
 2017  2017  2017  2017  2016  
Assets      
Cash and cash equivalents$  50,685 $  38,823 $  78,237 $  170,591 $  37,032  
Securities available for sale   637,671    636,600    613,760    614,948    671,281  
Securities held to maturity   471,452    482,926    493,321    501,987    517,819  
Loans held-for-sale   3,490    3,808    4,692    744    6,686  
Loans receivable, including yield adjustments   3,291,516    3,260,328    3,245,261    3,122,628    2,973,931  
Less allowance for loan losses   (30,066)   (29,445)   (29,286)   (27,614)   (26,060) 
Net loans receivable   3,261,450    3,230,883    3,215,975    3,095,014    2,947,871  
Premises and equipment   41,829    40,132    39,585    38,904    38,341  
Federal Home Loan Bank stock   39,113    39,115    39,958    39,474    34,525  
Accrued interest receivable   13,524    13,268    12,493    12,320    11,809  
Goodwill   108,591    108,591    108,591    108,591    108,591  
Bank owned life insurance   183,754    182,489    181,223    179,935    178,656  
Deferred income taxes, net   6,941    13,230    15,454    14,318    16,098  
Other assets   25,347    18,285    14,838    19,416    16,599  
Total assets $  4,843,847 $  4,808,150 $  4,818,127 $  4,796,242 $  4,585,308  
       
Liabilities      
Deposits$  3,033,766 $  2,953,268 $  2,930,127 $  2,853,263 $  2,746,017  
Borrowings   798,864    808,554    806,228    825,260    701,849  
Advance payments by borrowers for taxes   8,511    9,787    8,711    8,059    7,618  
Other liabilities   13,433    22,308    15,880    15,650    15,172  
Total liabilities   3,854,574    3,793,917    3,760,946    3,702,232    3,470,656  
       
Stockholders' Equity      
Common stock   795    815    844    873    892  
Paid-in capital   662,093    690,204    728,790    768,373    795,773  
Retained earnings   353,536    354,123    361,039    359,083    357,540  
Unearned ESOP shares   (33,563)   (34,049)   (34,536)   (35,022)   (35,508) 
Accumulated other comprehensive income (loss), net   6,412    3,140    1,044    703    (4,045) 
Total stockholders' equity   989,273    1,014,233    1,057,181    1,094,010    1,114,652  
Total liabilities and stockholders' equity$  4,843,847 $  4,808,150 $  4,818,127 $  4,796,242 $  4,585,308  
       
Consolidated capital ratios      
Equity to assets 20.42% 21.09% 21.94% 22.81% 24.31% 
Tangible equity to tangible assets 18.59% 19.27% 20.14% 21.02% 22.47% 
       
Share data      
Outstanding shares    79,527    81,548    84,351    87,256    89,176  
Equity per share$  12.44 $  12.44 $  12.53 $  12.54 $  12.50  
Tangible equity per share (1)$  11.07 $  11.10 $  11.24 $  11.29 $  11.28  
               
(1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets.  
   
   
Supplemental Balance Sheet Highlights
(Dollars in Thousands, Unaudited)
At 
December 31,September 30,June 30,March 31,December 31, 
 2017  2017  2017  2017  2016  
Cash and cash equivalents      
Cash and due from depository institutions $  17,899 $  17,972 $  18,889 $  17,429 $  17,541  
Interest-bearing deposits in other banks   32,786    20,851    59,348    153,162    19,491  
Total cash and cash equivalents$  50,685 $  38,823 $  78,237 $  170,591 $  37,032  
       
Securities available for sale      
Debt securities:      
U.S. agency securities$  4,810 $  5,063 $  5,316 $  5,622 $  5,809  
Municipal and state obligations   27,428    27,725    27,740    27,259    27,090  
Asset-backed securities   169,484    163,615    162,429    150,805    121,445  
Collateralized loan obligations   133,341    128,383    98,154    104,811    98,447  
Corporate bonds   142,397    142,489    142,318    141,134    138,564  
Trust preferred securities   8,494    8,544    8,540    8,248    8,101  
Debt securities available for sale   485,954    475,819    444,497    437,879    399,456  
       
Mortgage-backed securities:      
Collateralized mortgage obligations   27,187    28,790    30,536    31,941    52,333  
Residential pass-through securities   116,496    123,868    130,550    136,926    211,258  
Commercial pass-through securities   8,034    8,123    8,177    8,202    8,234  
Mortgage-backed securities   151,717    160,781    169,263    177,069    271,825  
Total securities available for sale$  637,671 $  636,600 $  613,760 $  614,948 $  671,281  
       
Securities held to maturity      
Debt securities:      
U.S. agency securities$  -  $  35,000 $  35,000 $  35,000 $  34,999  
Municipal and state obligations   100,671    95,954    94,713    91,038    87,682  
Subordinated debt   25,000    15,000    15,000    15,000    15,000  
Debt securities held to maturity   125,671    145,954    144,713    141,038    137,681  
       
Mortgage-backed securities:      
Collateralized mortgage obligations   35,861    16,600    17,854    19,193    20,543  
Residential pass-through securities   160,487    169,257    178,813    186,248    200,402  
Commercial pass-through securities   149,433    151,115    151,941    155,508    159,193  
Mortgage-backed securities   345,781    336,972    348,608    360,949    380,138  
Total securities held to maturity$  471,452 $  482,926 $  493,321 $  501,987 $  517,819  
       
Total securities$  1,109,123 $  1,119,526 $  1,107,081 $  1,116,935 $  1,189,100  
                 
                 
Supplemental Balance Sheet Highlights
(Dollars in Thousands, Unaudited)
At 
December 31,September 30,June 30,March 31,December 31, 
  2017   2017   2017   2017   2016  
Loan portfolio composition:      
Residential first mortgage loans$  574,322 $  559,593 $  567,323 $  566,665 $  562,466  
Home equity loans and lines of credit   80,961    80,746    82,822    82,412    83,305  
Residential mortgage loans   655,283    640,339    650,145    649,077    645,771  
Multifamily mortgage loans   1,438,386    1,427,840    1,412,575    1,371,339    1,295,207  
Nonresidential and mixed use mortgage loans   1,069,254    1,085,983    1,085,064    995,782    932,616  
Commercial mortgage loans   2,507,640    2,513,823    2,497,639    2,367,121    2,227,823  
Commercial business loans   92,442    81,676    74,471    83,754    75,640  
Construction loans   22,205    8,320    3,815    1,494    927  
Account loans   2,996    2,800    2,863    2,860    2,980  
Other consumer loans   8,951    10,988    13,520    15,313    17,501  
Consumer loans   11,947    13,788    16,383    18,173    20,481  
Total loans, excluding yield adjs   3,289,517    3,257,946    3,242,453    3,119,619    2,970,642  
Unamortized yield adjustments   1,999    2,382    2,808    3,009    3,289  
Loans receivable, including yield adjs   3,291,516    3,260,328    3,245,261    3,122,628    2,973,931  
Less allowance for loan losses   (30,066)   (29,445)   (29,286)   (27,614)   (26,060) 
Net loans receivable$  3,261,450 $  3,230,883 $  3,215,975 $  3,095,014 $  2,947,871  
       
Loan portfolio allocation:      
Residential first mortgage loans 17.5% 17.2% 17.5% 18.2% 18.9% 
Home equity loans and lines of credit 2.5% 2.5% 2.6% 2.6% 2.8% 
Residential mortgage loans 20.0% 19.7% 20.1% 20.8% 21.7% 
Multifamily mortgage loans 43.7% 43.8% 43.6% 44.0% 43.6% 
Nonresidential and mixed use mortgage loans 32.5% 33.3% 33.5% 31.9% 31.4% 
Commercial mortgage loans 76.2% 77.2% 77.0% 75.9% 75.0% 
Commercial business loans 2.8% 2.5% 2.3% 2.7% 2.5% 
Construction loans 0.7% 0.3% 0.1% 0.0% 0.0% 
Account loans 0.1% 0.1% 0.1% 0.1% 0.1% 
Other consumer loans 0.2% 0.3% 0.4% 0.5% 0.6% 
Consumer loans 0.3% 0.4% 0.5% 0.6% 0.7% 
Total loans, excluding yield adjs 100.0% 100.0% 100.0% 100.0% 100.0% 
       
Asset quality:      
Nonperforming assets:      
Accruing loans > 90 days past due$  31 $  105 $  74 $  65 $  92  
Nonaccrual loans   16,315    18,006    18,798    20,950    21,473  
Total nonperforming loans   16,346    18,111    18,872    21,015    21,565  
Other real estate owned   1,693    2,424    1,632    1,668    2,037  
Total nonperforming assets$  18,039 $  20,535 $  20,504 $  22,683 $  23,602  
       
Nonperforming loans (% total loans) 0.50% 0.56% 0.58% 0.67% 0.72% 
Nonperforming assets (% total assets) 0.37% 0.43% 0.43% 0.47% 0.51% 
       
Allowance for loan losses (ALLL):      
ALLL to total loans 0.91% 0.90% 0.90% 0.88% 0.88% 
ALLL to nonperforming loans 183.93% 162.58% 155.18% 131.40% 120.84% 
Net charge offs (recoveries)$  315 $  471 $  (483)$  254 $  198  
Average net charge off (recovery) rate (annualized) 0.04% 0.06% -0.06% 0.03% 0.03% 
       
       
Supplemental Balance Sheet Highlights
(Dollars in Thousands, Unaudited)
At 
December 31,September 30,June 30,March 31,December 31, 
 2017  2017  2017  2017  2016  
Funding by type:      
Deposits      
Non-interest-bearing deposits$  275,065 $  279,263 $  267,412 $  255,939 $  240,367  
Interest-bearing demand   879,732    856,122    847,663    798,203    768,556  
Savings and club   517,400    519,040    523,984    524,002    519,257  
Certificates of deposit   1,361,569    1,298,843    1,291,068    1,275,119    1,217,837  
Interest-bearing deposits   2,758,701    2,674,005    2,662,715    2,597,324    2,505,650  
Total deposits   3,033,766    2,953,268    2,930,127    2,853,263    2,746,017  
       
Borrowings:      
Federal Home Loan Bank advances   775,649    775,673    775,696    775,719    665,742  
Depositor sweep accounts   23,215    32,881    30,532    49,541    36,107  
Total borrowings   798,864    808,554    806,228    825,260    701,849  
       
Total funding$  3,832,630 $  3,761,822 $  3,736,355 $  3,678,523 $  3,447,866  
       
Loans as a % of deposits 107.6% 109.5% 109.9% 108.5% 107.6% 
Deposits as a % of total funding 79.2% 78.5% 78.4% 77.6% 79.6% 
Borrowings as a % of total funding 20.8% 21.5% 21.6% 22.4% 20.4% 
       
Funding by source:      
Retail funding      
Non-interest-bearing deposits$  275,065 $  279,263 $  267,412 $  255,939 $  240,367  
Interest-bearing demand   657,696    633,778    625,061    568,865    544,487  
Savings and club   517,400    519,040    523,984    524,002    519,257  
Certificates of deposit   1,210,616    1,175,407    1,168,010    1,152,025    1,113,073  
Total retail deposits   2,660,777    2,607,488    2,584,467    2,500,831    2,417,184  
Depositor sweep accounts   23,215    32,881    30,532    49,541    36,107  
Total retail funding   2,683,992    2,640,369    2,614,999    2,550,372    2,453,291  
       
Wholesale funding:      
Interest-bearing demand$  222,036 $  222,344 $  222,602 $  229,338 $  224,069  
Certificates of deposit (listing service)   93,853    101,791    101,430    101,432    96,516  
Certificates of deposit (brokered)   57,100    21,645    21,628    21,662    8,248  
Total wholesale deposits   372,989    345,780    345,660    352,432    328,833  
FHLB Advances   775,649    775,673    775,696    775,719    665,742  
Total wholesale funding   1,148,638    1,121,453    1,121,356    1,128,151    994,575  
       
Total funding$  3,832,630 $  3,761,822 $  3,736,355 $  3,678,523 $  3,447,866  
       
Retail funding as a % of total funding 70.0% 70.2% 70.0% 69.3% 71.2% 
Wholesale funding as a % of total funding 30.0% 29.8% 30.0% 30.7% 28.8% 
                 
                 
Summary Income Statement
(Dollars and Shares in Thousands,
Except Per Share Data, Unaudited)
For the three months ended 
December 31,September 30,June 30,March 31,December 31, 
  2017   2017   2017   2017   2016  
Interest income      
Loans$  30,610 $  30,473 $  29,842 $  28,235 $  27,407  
Mortgage-backed securities   2,848    2,896    3,063    3,222    3,779  
Debt securities:      
Taxable   3,229    2,960    2,868    2,488    2,146  
Tax-exempt   641    621    605    582    562  
Other interest-earning assets   704    642    586    481    421  
Total interest income   38,032    37,592    36,964    35,008    34,315  
       
Interest expense      
Deposits   6,649    6,219    5,909    5,420    5,410  
Borrowings   4,548    4,563    4,325    3,381    3,289  
Total interest expense   11,197    10,782    10,234    8,801    8,699  
Net interest income   26,835    26,810    26,730    26,207    25,616  
Provision for loan losses   936    630    1,188    1,809    1,255  
Net interest income after provision for loan losses   25,899    26,180    25,542    24,398    24,361  
       
Non-interest income      
Fees and service charges   1,409    1,261    839    498    1,289  
(Loss) gain on sale and call of securities   -    -    -    (22)   21  
Gain on sale of loans   200    331    531    245    459  
Gain (loss) on sale of real estate owned    23    (109)   3    (106)   12  
Income from bank owned life insurance   1,264    1,267    1,288    1,279    1,321  
Electronic banking fees and charges   302    278    287    240    270  
Miscellaneous   65    66    72    119    74  
Total non-interest income   3,263    3,094    3,020    2,253    3,446  
       
Non-interest expense      
Salaries and employee benefits   12,926    12,867    12,887    12,430    11,592  
Net occupancy expense of premises   2,122    1,981    2,013    2,088    1,976  
Equipment and systems   2,193    2,190    2,204    2,068    2,030  
Advertising and marketing   748    710    937    753    387  
Federal deposit insurance premium   343    360    352    338    339  
Directors' compensation   688    689    689    689    379  
Merger-related expenses   1,193    -    -    -    -  
Miscellaneous   2,551    2,489    2,969    2,668    2,670  
Total non-interest expense   22,764    21,286    22,051    21,034    19,373  
Income before income taxes   6,398    7,988    6,511    5,617    8,434  
Income taxes   5,129    2,756    2,107    1,549    2,970  
Net income$  1,269 $  5,232 $  4,404 $  4,068 $  5,464  
       
Net income per common share (EPS)      
Basic$  0.02 $  0.07 $  0.05 $  0.05 $  0.06  
Diluted$  0.02 $  0.07 $  0.05 $  0.05 $  0.06  
       
Dividends declared (1)      
Cash dividends declared per common share$  0.03 $  0.15 $  0.03 $  0.03 $  0.02  
Cash dividends declared$  1,856 $  12,148 $  2,448 $  2,525 $  1,687  
Dividend payout ratio 146.3% 232.2% 55.6% 62.1% 30.9% 
       
Weighted average number of  common
 shares outstanding
      
Basic   77,174    79,649    82,372    84,542    85,174  
Diluted   77,239    79,708    82,429    84,624    85,258  
                 
  (1) Dividends declared during the quarter ended September 30, 2017 include a $0.12 special dividend representing a supplemental distribution of net income to stockholders from the prior fiscal year ended June 30, 2017. 
  
  
Average Balance Sheet Data
(Dollars in Thousands, Unaudited)
For the three months ended 
December 31,September 30,June 30,March 31,December 31, 
 2017  2017  2017  2017  2016  
Assets      
Interest-earning assets:      
Loans receivable, including loans held for sale$  3,255,862 $  3,257,465 $  3,200,968 $3,029,151 $  2,899,794  
Mortgage-backed securities   501,081    511,931    532,621    582,591    673,569  
Debt securities:      
Tax-exempt   126,214    122,685    119,957    116,479    112,221  
Taxable   495,316    489,252    476,499    441,124    419,966  
Total debt securities   621,530    611,937    596,456    557,603    532,187  
Other interest-earning assets   82,539    79,920    118,349    61,336    71,072  
Total interest-earning assets   4,461,012    4,461,253    4,448,394    4,230,681    4,176,622  
Non-interest-earning assets   364,015    361,259    358,791    352,419    351,458  
Total assets $  4,825,027 $  4,822,512 $  4,807,185 $  4,583,100 $  4,528,080  
       
Liabilities and Stockholders' Equity      
Interest-bearing liabilities:      
Deposits:      
Interest-bearing demand$  854,400 $  858,291 $  813,148 $  756,520 $  761,765  
Savings and club   518,542    522,715    523,798    520,572    518,225  
Certificates of deposit   1,337,560    1,285,882    1,289,504    1,242,757    1,224,592  
Total interest-bearing deposits   2,710,502    2,666,888    2,626,450    2,519,849    2,504,582  
Borrowings:      
Federal Home Loan Bank Advances   777,460    778,104    775,703    643,504    594,238  
Other borrowings   30,606    32,041    40,064    44,940    35,273  
Total borrowings   808,066    810,145    815,767    688,444    629,511  
Total interest-bearing liabilities   3,518,568    3,477,033    3,442,217    3,208,293    3,134,093  
Non-interest-bearing liabilities:      
Non-interest-bearing deposits   277,236    274,858    262,499    246,449    245,928  
Other non-interest-bearing liabilities   24,396    29,754    25,112    25,028    31,781  
Total non-interest-bearing liabilities   301,632    304,612    287,611    271,477    277,709  
Total liabilities   3,820,200    3,781,645    3,729,828    3,479,770    3,411,802  
Stockholders' equity   1,004,827    1,040,867    1,077,357    1,103,330    1,116,278  
Total liabilities and stockholders' equity$  4,825,027 $  4,822,512 $  4,807,185 $  4,583,100 $  4,528,080  
       
Average interest-earning assets to average interest-bearing liabilities 126.78% 128.31% 129.23% 131.87% 133.26% 
                 
                 
Performance Ratio HighlightsFor the three months ended 
December 31,September 30,June 30,March 31,December 31, 
  2017   2017   2017   2017   2016  
Average yield on interest-earning assets:      
Loans receivable, including loans held for sale 3.76% 3.74% 3.73% 3.73% 3.78% 
Mortgage-backed securities 2.27% 2.26% 2.30% 2.21% 2.24% 
Debt securities:      
Tax-exempt (1) 2.03% 2.03% 2.02% 2.00% 2.00% 
Taxable 2.61% 2.42% 2.41% 2.26% 2.04% 
Total debt securities 2.49% 2.34% 2.33% 2.20% 2.04% 
Other interest-earning assets 3.42% 3.21% 1.98% 3.13% 2.37% 
Total interest-earning assets 3.41% 3.37% 3.32% 3.31% 3.29% 
       
Average cost of interest-bearing liabilities:      
Deposits:      
Interest-bearing demand 0.80% 0.76% 0.71% 0.65% 0.62% 
Savings and club 0.12% 0.12% 0.12% 0.12% 0.12% 
Certificates of deposit 1.43% 1.38% 1.34% 1.30% 1.33% 
Total interest-bearing deposits 0.98% 0.93% 0.90% 0.86% 0.86% 
Borrowings:      
Federal Home Loan Bank Advances 2.33% 2.33% 2.21% 2.08% 2.20% 
Other borrowings 0.27% 0.27% 0.27% 0.35% 0.29% 
Total borrowings 2.25% 2.25% 2.12% 1.96% 2.09% 
Total interest-bearing liabilities 1.27% 1.24% 1.19% 1.10% 1.11% 
       
Interest rate spread (2) 2.14% 2.13% 2.13% 2.21% 2.18% 
Net interest margin (3) 2.41% 2.40% 2.40% 2.48% 2.45% 
       
Non-interest income to average assets (annualized) 0.27% 0.26% 0.25% 0.20% 0.30% 
Non-interest expense to average assets (annualized) 1.89% 1.77% 1.83% 1.84% 1.71% 
       
Efficiency ratio (4) 75.63% 71.18% 74.12% 73.91% 66.66% 
       
Return on average assets (annualized) 0.11% 0.43% 0.37% 0.36% 0.48% 
Return on average equity (annualized) 0.51% 2.01% 1.64% 1.47% 1.96% 
             
(1) The yield on tax-exempt securities has not been adjusted to reflect their tax-effective yield.   
(2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities. 
(3) Net interest income divided by average interest-earning assets.    
(4) Non-interest expense divided by the sum of net interest income and non-interest income.   
    
    
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included below. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. 
  
       
Reconciliation of GAAP to Non-GAAP
(Dollars in Thousands,
Except Per Share Data, Unaudited)
For the three months ended 
December 31,September 30,June 30,March 31,December 31, 
 2017  2017  2017  2017  2016  
Adjusted Net Income      
Net income (GAAP)$  1,269 $  5,232 $  4,404 $  4,068 $  5,464  
Effect to adjust for:      
Merger-related expenses   1,193    -    -    -    -  
Income tax benefit from merger-related expenses   (165)   -    -    -    -  
Income tax expense for write-down of net deferred tax asset    4,867    -    -    -    -  
Income tax benefit for write-down of net deferred tax liability    (1,381)   -    -    -    -  
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)   (769)   -    -    -    -  
Adjusted net income
 (non-GAAP)
$  5,014 $  5,232 $  4,404 $  4,068 $  5,464  
       
Adjusted Net Income per Common Share (EPS)      
Net income per common share
 Basic (GAAP)
$  0.02 $  0.07 $  0.05 $  0.05 $  0.06  
Effect to adjust for:      
Merger-related expenses   0.02    -     -     -     -   
Income tax benefit from merger-related expenses   (0.01)   -     -     -     -   
Income tax expense for write-down of net deferred tax asset    0.06    -     -     -     -   
Income tax benefit for write-down of net deferred tax liability    (0.02)   -     -     -     -   
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)   (0.01)   -     -     -     -   
Adjusted net income per common share
 Basic (non-GAAP)
$  0.06 $  0.07 $  0.05 $  0.05 $  0.06  
       
Adjusted Net Income per Common Share (EPS)      
Net income per common share
 Diluted (GAAP)
$  0.02 $  0.07 $  0.05 $  0.05 $  0.06  
Effect to adjust for:      
Merger-related expenses   0.02    -     -     -     -   
Income tax benefit from merger-related expenses   (0.01)   -     -     -     -   
Income tax expense for write-down of net deferred tax asset    0.06    -     -     -     -   
Income tax benefit for write-down of net deferred tax liability    (0.02)   -     -     -     -   
Income tax benefit for reduction in current year income tax rate (from 35% to 28%)   (0.01)   -     -     -     -   
Adjusted net income per common share
 Diluted (non-GAAP)
$  0.06 $  0.07 $  0.05 $  0.05 $  0.06  
       
       
Reconciliation of GAAP to Non-GAAP
(Unaudited)
For the three months ended 
December 31,September 30,June 30,March 31,December 31, 
 2017  2017  2017  2017  2016  
Adjusted Non-Interest Expense Ratio      
Non-interest expense to average assets (GAAP) 1.89% 1.77% 1.83% 1.84% 1.71% 
Effect to adjust for:      
Merger-related expenses -0.10% 0.00% 0.00% 0.00% 0.00% 
Adjusted non-interest expense ratio (non-GAAP) 1.79% 1.77% 1.83% 1.84% 1.71% 
       
Adjusted Efficiency Ratio      
Non-interest expense / (Net interest income + non-interest income) (GAAP) 75.6% 71.2% 74.1% 73.9% 66.7% 
Effect to adjust for:      
Merger-related expenses -3.9% 0.0% 0.0% 0.0% 0.0% 
Adjusted efficiency ratio (non-GAAP) 71.7% 71.2% 74.1% 73.9% 66.7% 
       
Adjusted Return on Average Assets      
Return on average assets (GAAP) 0.11% 0.43% 0.37% 0.36% 0.48% 
Effect to adjust for:      
Merger-related expenses 0.09% 0.00% 0.00% 0.00% 0.00% 
Income tax benefit from merger-related expenses -0.01% 0.00% 0.00% 0.00% 0.00% 
Income tax expense for write-down of net deferred tax asset  0.40% 0.00% 0.00% 0.00% 0.00% 
Income tax benefit for write-down of net deferred tax liability  -0.11% 0.00% 0.00% 0.00% 0.00% 
Income tax benefit for reduction in current year income tax rate (from 35% to 28%) -0.06% 0.00% 0.00% 0.00% 0.00% 
Adjusted return on average assets (non-GAAP) 0.42% 0.43% 0.37% 0.36% 0.48% 
       
       
Adjusted Return on Average Equity      
Return on average equity (GAAP) 0.51% 2.01% 1.64% 1.47% 1.96% 
Effect to adjust for:      
Merger-related expenses 0.48% 0.00% 0.00% 0.00% 0.00% 
Income tax benefit from merger-related expenses -0.07% 0.00% 0.00% 0.00% 0.00% 
Income tax expense for write-down of net deferred tax asset  1.94% 0.00% 0.00% 0.00% 0.00% 
Income tax benefit for write-down of net deferred tax liability  -0.55% 0.00% 0.00% 0.00% 0.00% 
Income tax benefit for reduction in current year income tax rate (from 35% to 28%) -0.31% 0.00% 0.00% 0.00% 0.00% 
Adjusted return on average equity (non-GAAP) 2.00% 2.01% 1.64% 1.47% 1.96%