Kearny Financial's Business Segments

Kearny Financial Corp. is a Maryland corporation that was incorporated on September 2, 2014. Kearny Financial is the holding company for Kearny Bank (the “Bank”), a federally-chartered stock savings bank.

On May 18, 2015, the Company completed its second-step conversion and stock offering through which it converted from the mutual holding company structure to a fully publicly held company. In conjunction with that transaction, the Company sold 71,750,000 shares of its common stock at $10.00 per share, resulting in gross proceeds of $717.5 million. The new shares issued included 3,612,500 shares sold to the Bank’s Employee Stock Ownership Plan (“ESOP”) with an aggregate value of $36.1 million based on the sales price of $10.00 per share. Concurrent with the closing of the transaction, the Company also issued an additional 500,000 shares of its common stock with an aggregate value of $5.0 million and contributed these shares with an additional $5.0 million in cash to the KearnyBank Foundation.

The Company recognized direct stock offering costs of $10.7 million in conjunction with the transaction which reduced the net proceeds credited to capital. After adjusting for transaction costs and the value of the shares issued to the Bank’s ESOP, the Company recognized a net increase in equity capital of $670.7 million, of which $353.4 million was contributed to the Bank by the Company as an additional investment in the Bank’s common equity. Approximately $34.5 million of new capital proceeds were funded through withdrawals of existing customer deposits previously held by the Bank.

Each outstanding share held by the public stockholders of Kearny Financial Corp., a federal corporation, immediately prior to the closing of the conversion and stock offering was converted into 1.3804 shares of the Company’s new common stock while the shares previously held by Kearny MHC, the former mutual holding company, were cancelled concurrent with the closing of the transaction.

Kearny Financial Corp, the holding company for Kearny Bank, offers a wide array of financial products and services that cater to the diverse needs of its customers, which include individual consumers, businesses, and commercial property owners. Below is a comprehensive description of the various segments, products, and services that Kearny Financial Corp provides:

1. Mortgage Lending

One-to-Four-Family Mortgage Loans:
Kearny Bank offers first-time homebuyer programs designed specifically for individuals who have not previously owned real estate. This uniquely tailored program allows them to purchase one- to four-family properties intended for use as their primary residences. Key features of this program include:
- Rate Reduction: A rate reduction of one-eighth of one percentage point on all first mortgage loan types.
- Fee Refund: Refund of the application fee at closing.
- Availability: While the primary lending area is prioritized, the program extends outside these regions for existing customers or their immediate family members.

The fixed-rate residential mortgage loans originated by Kearny Bank comply with the secondary mortgage market standards set by the Federal Home Loan Mortgage Corporation (Freddie Mac). However, the bank primarily retains these loans on its balance sheet rather than selling them in the secondary market, although it may reconsider this strategy to enhance balance sheet management and increase non-interest income.

Multi-Family and Nonresidential Real Estate Mortgage Loans:
Kearny Bank also specializes in originating commercial mortgage loans for multi-family and nonresidential properties. This segment includes:
- Types of Properties: Apartment buildings, retail/service properties, and mixed-use properties (residential and commercial).
- Loan Procedures: A minimum down payment of 25% is commonly required, and personal guarantees are typically expected. However, loans may be considered on a non-recourse basis under specific conditions, involving stronger loan asset profiles.

Commercial Business Loans:
Kearny Financial Corp provides various commercial lending solutions to professionals, sole proprietorships, and small businesses. Notable features of this segment include:
- Term Loans and Lines of Credit: These products are tailored for businesses seeking capital for operations and expansion.
- SBA Loans: Kearny Bank participates as a Preferred Lender in the Small Business Administration (SBA) loan program, facilitating access to government-backed loans for eligible small businesses.
- BancAlliance Participation: Kearny Bank has a strategic partnership within the BancAlliance network, allowing it to offer middle-market commercial credits. This cooperative lending arrangement enables the bank to share risks and benefits through a network of lending institutions.

Construction Lending:
Kearny Bank also provides construction loans for residential and commercial projects, with specific stipulations, including:
- Land Ownership: Borrowers must own the land outright, free of liens.
- Loan-to-Value Ratio: Financing is typically limited to 80% of the anticipated appraised value of the completed property.
- Disbursement Structure: Loan disbursements follow inspection reports conducted by approved appraisal firms.
- Loan Terms: Generally, construction loans span one year, with interest rates tied to the Wall Street Journals prime rate and may include additional points. Post-construction, these loans may be converted into permanent mortgage loans, facilitating long-term financing.

Additional Financial Services:
While the core offerings focus heavily on mortgage and commercial loans, Kearny Bank may also provide various deposit services, wealth management solutions, and personal banking products. These typically include:
- Savings and Checking Accounts: Standard and specialized accounts catering to individual and business needs.
- Investment Services: Options for customers looking to grow their assets or retirement plans.
- Insurance Products: Offerings to protect personal and business assets.

Conclusion
Kearny Financial Corp distinguishes itself through its diverse range of mortgage lending solutions, including innovative programs for first-time homebuyers and robust commercial lending opportunities. The institution emphasizes building strong relationships with its customers while adapting its offerings to meet changing market demands. This comprehensive suite of products and services aims to enhance the financial well-being of both individual and business clients, ensuring that Kearny Bank remains a vital part of the communities it serves.