EPS of $-1.45 decreased by 863.2% from previous year
Gross margin of 100.0%
Net income of -90.08M
"N/A" - N/A
Kearny Financial Corp (KRNY) QQ4 2024 Earnings Analysis — Revenue Rise with Net Loss Driven by Investment Impairments and Non-Operating Charges
Executive Summary
Kearny Financial Corp (KRNY) reported Q4 2024 revenue of $88.796 million, up about 102.5% year over year, signaling a meaningful top-line rebound versus the prior year. However, the quarter delivered a net loss of $90.08 million, driven almost entirely by a large negative totalOtherIncomeExpensesNet of $90.996 million and elevated interest-related costs, which more than offset the $7.906 million of operating income (margin ~8.9% of revenue). The combination yielded an overall negative net income despite a solid operating performance, underscoring a material non-operating headwind masking underlying core profitability.
On the balance sheet, KRNY shows a liquidity-rich but leverage-leaning profile. Cash and cash equivalents plus short-term investments stood at approximately $1.137 billion at quarter-end, with total assets near $7.70 billion and total liabilities of about $6.95 billion. Equity totaled ~$0.754 billion, producing a tangible discount to book value (price-to-book ~0.50). The company maintains a modest operating cash flow (CFO) of roughly $7.26 million and free cash flow of about $6.23 million in the period, but financing activities were markedly negative (~$70.27 million), reflecting strategic capital management or balance-sheet actions during the quarter.
The earnings profile remains constrained by profitability headwinds rather than business model decay. Operating income contributed a positive result, while the bottom line was dragged down by sizable non-operating charges and a large impairment/reflection of investment-related items. The stock trades at a meaningful discount to book value, implying potential value if KRNY can stabilize earnings, shrink the non-operating drag, and sustain a healthier net interest and fee-based income mix going forward. Absent explicit management guidance in the data, investors should tether expectations to ongoing investment portfolio performance, credit quality in KRNY’s regional footprint, deposit mobilization, and efficiency improvements.
- Revenue: $88.796m in Q4 2024; YoY change +102.5%; QoQ change +2.9%
- Gross Profit: $88.796m (gross margin effectively 100% in reported terms)
- Operating Income: $7.906m; Operating Margin: 8.90%
- Net Income: -$90.079m; Net Margin: -1.01%
- Earnings Per Share (EPS): -$1.45; Weighted Avg Shares: 62.254m; Diluted EPS: -$1.45
- Key profitability deltas: TotalOtherIncomeExpensesNet = -$90.996m; Interest Expense = $49.714m; Tax expense = -$0.917m (tax benefit)
- Balance Sheet: Total Assets = $7.70b; Total Liabilities = $6.946b; Total Equity = $0.754b; Debt Ratio = 0.224; Debt/Equity = 2.29
- Liquidity: Cash & Short-Term Investments = $1.137b; Current Ratio = 0.0158; Quick Ratio = 0.995; Cash Ratio = 0.0108
- Cash Flow: CFO = $7.258m; Free Cash Flow = $6.231m; Net Change in Cash = -$7.163m; Cash at End = $63.864m
- Market Valuation (per KRNY data): Price-to-Book ~0.50; Dividend Yield ~1.83%
- Four-Quarter Trend (YoY QoQ context via quarterly data): Revenue YoY up ~102.5%, Net Income YoY materially negative; Operating Income healthier but offset by non-operating items.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
88.80M
102.52%
2.91%
Gross Profit
88.80M
102.52%
2.91%
Operating Income
7.91M
-48.63%
-20.24%
Net Income
-90.08M
-849.85%
-1 317.78%
EPS
-1.45
-863.16%
-1 308.33%
Key Financial Ratios
currentRatio
0.02
grossProfitMargin
100%
operatingProfitMargin
8.9%
netProfitMargin
-101.4%
returnOnAssets
-1.17%
returnOnEquity
-12%
debtEquityRatio
2.29
operatingCashFlowPerShare
$0.15
freeCashFlowPerShare
$0.13
dividendPayoutRatio
-7.61%
priceToBookRatio
0.5
priceEarningsRatio
-1.04
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript content was not provided in the input. As a result, no management quotes or direct call themes were captured. The analysis below integrates the reported financials and ratios with general market context and typical management focus areas for regional banks.
N/A
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Forward Guidance
Management guidance for KRNY’s QQ4 2024 period is not disclosed in the provided data. Given the profile, key factors that would shape the next steps include: (1) stabilization or improvement in the non-operating income/expense line (the -$90.996m impact in Q4) and the drivers of investment impairment or mark-to-market movements; (2) net interest income trajectory and cost of funds as deposit dynamics evolve; (3) credit quality and loan growth in KRNY’s northern and central New Jersey footprint; (4) efficiency gains and expense control to lift operating leverage; (5) capital management and potential regulatory considerations with elevated leverage metrics. Investors should monitor quarterly trends in non-interest income, investment portfolio performance, and reserve adequacy, alongside any management commentary on strategy shifts (e.g., portfolio optimization, fee-based income initiatives, or balance-sheet optimization). A baseline scenario would assume continued pressure from non-operating charges abating modestly and a return to positive net income if core profitability remains resilient, while a bear case would assume persistent non-operating headwinds and margin compression.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
KRNY Focus
1.00%
8.90%
-12.00%
-1.04%
NFBK
93.80%
19.40%
1.18%
16.33%
HFWA
1.00%
11.30%
0.73%
29.94%
HTBK
0.00%
0.03%
1.98%
11.37%
NBHC
1.00%
28.20%
2.73%
10.67%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
KRNY presents a high-uncertainty, high-reward setup. The QQ4 2024 results show top-line strength in revenue growth but a pronounced net loss driven largely by non-operating charges tied to the investment portfolio, rather than a collapse in core banking operations. The core operating margin (~8.9%) suggests that, absent non-operating headwinds, KRNY could generate positive operating earnings if the investment headwinds abate. The stock trades at a meaningful discount to book value (P/B ~0.50), offering a potential catalyst if the company can normalize profitability, manage impairment risk, and sustain deposits while controlling expenses. Key near-term catalysts include stabilization of the investment portfolio, improvement in non-interest income, and potential efficiency gains.
However, the current risk profile is considerable. Negative net income and ROE indicate earnings quality concerns, and the balance sheet shows leverage-driven risk with a debt/equity ratio above 2x. The liquidity position is solid in absolute terms, but the low short-term current ratio is a function of balance-sheet structure rather than cash scarcity. In a scenario where investment losses stabilize and core NII and fee-based income hold up, KRNY could re-rate higher toward book value and above. In a more pessimistic scenario, persistent non-operating losses or weaker deposit growth could constrain profitability and capital returns. Investors should weigh KRNY as a selective bet within the regional banking space, favoring those with clearer earnings visibility and better capital adequacy metrics.
Key Investment Factors
Growth Potential
The stock trades at ~0.50x P/B, indicating material upside if KRNY stabilizes core earnings and improves profitability. Growth potential hinges on portfolio optimization to reduce impairment risk, modest loan growth in KRNY’s core markets, and expansion of fee-based revenue streams to diversify beyond interest income.
Profitability Risk
Key risks include ongoing volatility in the investment portfolio (driving large non-operating charges), sustained negative net income and ROE, leverage-heavy balance sheet with debt-to-equity >2x, deposits sensitivity in a regional market, and regulatory/compliance costs in a tight regional banking environment.
Financial Position
Liquidity remains robust with ~$1.14b in liquid assets (cash and short-term investments) against ~$6.95b in current liabilities, but current ratio is unusually low due to balance-sheet composition. A substantial long-term investment portfolio (~$5.83b) supports liquidity but introduces market risk. Equity is modest (~$0.754b) with a negative net income impact, resulting in a negative ROE (-12%). The market values KRNY at a discount to book (P/B ~0.50), implying potential equity upside if fundamentals normalize.
SWOT Analysis
Strengths
Strong liquidity buffer via cash and short-term investments (~$1.14b) and sizable investment portfolio to support operations.
Positive operating income in Q4 2024 ( ~$7.9m ) indicating underlying operating efficiency despite net loss.
Discount to book value (P/B ~0.50) may provide a catalyst if profitability stabilizes.
Weaknesses
Significant net loss driven by non-operating items (TotalOtherIncomeExpensesNet ~-$90.996m) masking core earnings.
Negative ROE (-12.0%) and negative net income undermine earnings quality.
Unusually low current ratio (0.0158) despite high liquidity due to balance-sheet structure; reliance on debt financing (Debt/Equity ~2.29).
Concentrated regional exposure to Northern/Central New Jersey and New York markets; sensitivity to local economic cycles and real estate concentration.
Opportunities
Portfolio optimization and risk management to reduce impairment exposure.
Growth via fee-based income and cost-control measures to lift operating leverage.
Valuation upside potential given ~50% discount to book value and modest dividend yield; potential multiple expansion if profitability improves.
Threats
Market-driven impairment risk in investment portfolio and potential interest-rate volatility affecting NII.
Credit quality and loan demand in regional banks; deposit competition and pricing pressure.
Regulatory and macroeconomic headwinds in the Northeast U.S. banking market.