Kearny Financial Corp.KRNY
Kearny Financial Corp. Fair Value Disclosure
Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
| Level 1: | Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. | ||||
| Level 2: | Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability or inputs that are derived principally from, or corroborated by, market data by correlation or other means. | ||||
| Level 3: | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. | ||||
Assets Measured on a Recurring Basis:
The following methods and significant assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis at June 30, 2025 and 2024:
Investment Securities Available for Sale
The Company’s available for sale investment securities are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the securities’ terms and conditions, among other things. From time to time, the Company validates prices supplied by the independent pricing service by comparison to prices obtained from third-party sources or derived using internal models.
Derivatives
The Company has contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate caps and swaps. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis and extensions of the Black-Scholes model. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.
Those assets measured at fair value on a recurring basis are summarized below:
| June 30, 2025 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Debt securities available for sale: | |||||||||||||||||||||||
| Asset-backed securities | $ | — | $ | 59,498 | $ | — | $ | 59,498 | |||||||||||||||
| Collateralized loan obligations | — | 323,245 | — | 323,245 | |||||||||||||||||||
| Corporate bonds | — | 140,117 | — | 140,117 | |||||||||||||||||||
| Total debt securities | — | 522,860 | — | 522,860 | |||||||||||||||||||
| Mortgage-backed securities available for sale: | |||||||||||||||||||||||
| Residential pass-through securities | — | 357,319 | — | 357,319 | |||||||||||||||||||
| Commercial pass-through securities | — | 132,790 | — | 132,790 | |||||||||||||||||||
| Total mortgage-backed securities | — | 490,109 | — | 490,109 | |||||||||||||||||||
| Total securities available for sale | $ | — | $ | 1,012,969 | $ | — | $ | 1,012,969 | |||||||||||||||
| $ | — | $ | 16,745 | $ | — | $ | 16,745 | ||||||||||||||||
| Total assets | $ | — | $ | 1,029,714 | $ | — | $ | 1,029,714 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| $ | — | $ | 5,149 | $ | — | $ | 5,149 | ||||||||||||||||
| Total liabilities | $ | — | $ | 5,149 | $ | — | $ | 5,149 | |||||||||||||||
| June 30, 2024 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Debt securities available for sale: | |||||||||||||||||||||||
| Asset-backed securities | $ | — | $ | 80,440 | $ | — | $ | 80,440 | |||||||||||||||
| Collateralized loan obligations | — | 389,543 | — | 389,543 | |||||||||||||||||||
| Corporate bonds | — | 131,797 | — | 131,797 | |||||||||||||||||||
| Total debt securities | — | 601,780 | — | 601,780 | |||||||||||||||||||
| Mortgage-backed securities available for sale: | |||||||||||||||||||||||
| Residential pass-through securities | — | 337,264 | — | 337,264 | |||||||||||||||||||
| Commercial pass-through securities | — | 133,789 | — | 133,789 | |||||||||||||||||||
| Total mortgage-backed securities | — | 471,053 | — | 471,053 | |||||||||||||||||||
| Total securities available for sale | $ | — | $ | 1,072,833 | $ | — | $ | 1,072,833 | |||||||||||||||
| $ | — | $ | 54,362 | $ | — | $ | 54,362 | ||||||||||||||||
| Total assets | $ | — | $ | 1,127,195 | $ | — | $ | 1,127,195 | |||||||||||||||
Assets Measured on a Non-Recurring Basis:
The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a non-recurring basis at June 30, 2025 and 2024:
Individually Analyzed Collateral Dependent Loans:
The fair value of collateral dependent loans that are individually analyzed is determined based upon the appraised fair value of the underlying collateral, less costs to sell. Such collateral primarily consists of real estate and, to a lesser extent, other business assets. Management may also adjust appraised values to reflect estimated changes in market values or apply other adjustments to appraised values resulting from its knowledge of the collateral. Internal valuations may be utilized to determine the fair value of other business assets. For non-collateral-dependent loans, management estimates fair value using discounted cash flows based on inputs that are largely unobservable and instead reflect management’s own estimates of the assumptions as a market participant would in pricing such loans. Individually analyzed collateral dependent loans are considered a Level 3 valuation by the Company.
Those assets measured at fair value on a non-recurring basis are summarized below:
| June 30, 2025 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Collateral dependent loans: | |||||||||||||||||||||||
| Multi-family mortgage | $ | — | $ | — | $ | 16,385 | $ | 16,385 | |||||||||||||||
| Nonresidential mortgage | — | — | 4,697 | 4,697 | |||||||||||||||||||
| Total | $ | — | $ | — | $ | 21,082 | $ | 21,082 | |||||||||||||||
| June 30, 2024 | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Collateral dependent loans: | |||||||||||||||||||||||
| Multi-family mortgage | $ | — | $ | — | $ | 1,896 | $ | 1,896 | |||||||||||||||
| Nonresidential mortgage | — | — | 5,014 | 5,014 | |||||||||||||||||||
| Total | $ | — | $ | — | $ | 6,910 | $ | 6,910 | |||||||||||||||
The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value:
| June 30, 2025 | |||||||||||||||||||||||||||||
| Fair Value | Valuation Techniques | Unobservable Input | Range | Weighted Average | |||||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||||||
| Collateral dependent loans: | |||||||||||||||||||||||||||||
| Multi-family mortgage | $ | 16,385 | Market valuation of underlying collateral | (1) | Adjustments to reflect current conditions/selling costs | (2) | 6.00% - 24.00% | 15.08 | % | ||||||||||||||||||||
| Nonresidential mortgage | 4,697 | Market valuation of underlying collateral | (1) | Adjustments to reflect current conditions/selling costs | (2) | 9.44% | 9.44 | % | |||||||||||||||||||||
| Total | $ | 21,082 | |||||||||||||||||||||||||||
| June 30, 2024 | |||||||||||||||||||||||||||||
| Fair Value | Valuation Techniques | Unobservable Input | Range | Weighted Average | |||||||||||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||||||||||||||
| Collateral dependent loans: | |||||||||||||||||||||||||||||
| Multi-family mortgage | 1,896 | Market valuation of underlying collateral | (1) | Adjustments to reflect current conditions/selling costs | (2) | 13.32% | 13.32 | % | |||||||||||||||||||||
| Nonresidential mortgage | 5,014 | Market valuation of underlying collateral | (1) | Adjustments to reflect current conditions/selling costs | (2) | 8.93% | 8.93 | % | |||||||||||||||||||||
| Total | $ | 6,910 | |||||||||||||||||||||||||||
________________________________________
(1) The fair value basis of collateral dependent loans is generally determined based on an independent appraisal of the fair value of a loan’s underlying collateral.
(2) The fair value basis of collateral dependent loans and other real estate owned is adjusted to reflect management estimates of selling costs including, but not limited to, real estate brokerage commissions and title transfer fees.
(3) The fair value basis of other real estate owned is generally determined based upon the lower of an independent appraisal of the property’s fair value or the applicable listing price or contracted sales price.
At June 30, 2025, collateral dependent loans valued using Level 3 inputs comprised loans with principal balance totaling $22.5 million and valuation allowance of $1.4 million reflecting an aggregate fair value of $21.1 million. By comparison, at June 30, 2024, collateral dependent loans valued using Level 3 inputs comprised loans with principal balance totaling $7.4 million and valuation allowances of $508,000 reflecting an aggregate fair value of $6.9 million.
Once a loan is foreclosed, the fair value of the other real estate owned continues to be evaluated based upon the fair value of the repossessed real estate originally securing the loan. At June 30, 2025 and June 30, 2024, the Company had no other real estate owned assets, respectively.
The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of June 30, 2025 and 2024:
| June 30, 2025 | |||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 167,269 | $ | 167,269 | $ | 167,269 | $ | — | $ | — | |||||||||||||||||||
| Investment securities available for sale | 1,012,969 | 1,012,969 | — | 1,012,969 | — | ||||||||||||||||||||||||
| Investment securities held to maturity | 120,217 | 106,712 | — | 106,712 | — | ||||||||||||||||||||||||
| Loans held-for-sale | 5,931 | 6,069 | — | 6,069 | — | ||||||||||||||||||||||||
| Net loans receivable | 5,766,746 | 5,309,760 | — | — | 5,309,760 | ||||||||||||||||||||||||
| FHLB Stock | 64,261 | — | — | — | — | ||||||||||||||||||||||||
| Interest receivable | 28,098 | 28,098 | 40 | 6,930 | 21,128 | ||||||||||||||||||||||||
| Interest rate contracts | 16,745 | 16,745 | — | 16,745 | — | ||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Deposits other than certificates of deposits | $ | 3,698,643 | $ | 3,698,643 | $ | 3,698,643 | $ | — | $ | — | |||||||||||||||||||
| Certificates of deposits | 1,976,574 | 1,970,863 | — | — | 1,970,863 | ||||||||||||||||||||||||
| Borrowings | 1,256,491 | 1,257,269 | — | — | 1,257,269 | ||||||||||||||||||||||||
| Interest payable on deposits | 5,259 | 5,259 | 1,710 | — | 3,549 | ||||||||||||||||||||||||
| Interest payable on borrowings | 3,455 | 3,455 | — | — | 3,455 | ||||||||||||||||||||||||
| Interest rate contracts | 5,149 | 5,149 | — | 5,149 | — | ||||||||||||||||||||||||
| June 30, 2024 | |||||||||||||||||||||||||||||
| Carrying Amount | Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 63,864 | $ | 63,864 | $ | 63,864 | $ | — | $ | — | |||||||||||||||||||
| Investment securities available for sale | 1,072,833 | 1,072,833 | — | 1,072,833 | — | ||||||||||||||||||||||||
| Investment securities held to maturity | 135,742 | 119,278 | — | 119,278 | — | ||||||||||||||||||||||||
| Loans held-for-sale | 6,036 | 6,077 | — | 6,077 | — | ||||||||||||||||||||||||
| Net loans receivable | 5,687,848 | 5,114,459 | — | — | 5,114,459 | ||||||||||||||||||||||||
| FHLB Stock | 80,300 | — | — | — | — | ||||||||||||||||||||||||
| Interest receivable | 29,521 | 29,521 | 11 | 8,986 | 20,524 | ||||||||||||||||||||||||
| Interest rate contracts | 54,362 | 54,362 | — | 54,362 | — | ||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Deposits other than certificates of deposits | $ | 3,550,762 | $ | 3,550,762 | $ | 3,550,762 | $ | — | $ | — | |||||||||||||||||||
| Certificates of deposits | 1,607,361 | 1,597,939 | — | — | 1,597,939 | ||||||||||||||||||||||||
| Borrowings | 1,709,789 | 1,703,924 | — | — | 1,703,924 | ||||||||||||||||||||||||
| Interest payable on deposits | 5,662 | 5,662 | 3,397 | — | 2,265 | ||||||||||||||||||||||||
| Interest payable on borrowings | 7,784 | 7,784 | — | — | 7,784 | ||||||||||||||||||||||||
Commitments. The fair value of commitments to fund credit lines and originate or participate in loans held in portfolio or loans held for sale is estimated using fees currently charged to enter into similar agreements taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, including those relating to loans held for sale that are considered derivative instruments for financial statement reporting purposes, the fair value also considers the difference between current levels of interest and the committed rates. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, is not considered material for disclosure.
Limitations. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no fair value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment, and advances from borrowers for taxes and insurance. In addition, the ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.
Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 21, 2025 | Showing above |
| 2024 | Aug 23, 2024 | |
| 2023 | Aug 25, 2023 | |
| 2022 | Aug 26, 2022 | |
| 2021 | Aug 27, 2021 | |
| 2020 | Aug 28, 2020 | |
| 2019 | Aug 28, 2019 | |
| 2018 | Aug 28, 2018 | |
| 2017 | Aug 29, 2017 | |
| 2016 | Aug 29, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.