Good morning, and welcome to the annual meeting of stockholders of Kearny Financial Corp. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Craig Montanaro, Director, President, and Chief Executive Officer of Kearny Financial Corp. Mr. Montanaro, the floor is yours.
Thank you, Ryan. The annual meeting will please come to order. Welcome to the annual meeting of stockholders of Kearny Financial Corp. My name is Craig Montanaro, President and CEO of Kearny Financial Corp and Kearny Bank. I will act as Chairperson of today's meeting. On behalf of the Directors and officers of the company, I would like to welcome you and express my appreciation to you for participating in this virtual meeting today. I'd like to recognize Chairman John J. Mazur Jr. and the Board of Directors who join me today. I'd also like to acknowledge our executive team who is also in attendance. I would also like to acknowledge Gail Corrigan, our Corporate Secretary, who will act as the Secretary of the annual meeting. Others present today include Amilja Regan from Computershare, Marc Levy Esquire from Luse Gorman, and Andrey Dragun from Crowe LLP.
In order to conduct an orderly meeting, please follow the rules of conduct, a copy of which is available on this portal. During the meeting, you may submit written questions by clicking the Q & A icon in the upper right portion of the meeting center screen. We will also address all questions that relate to the business matters conducted at this meeting immediately following our presentation of the proposals. The Board of Directors has previously appointed Amilja Regan from Computershare to act as Inspector of Elections at this meeting and any adjournments. The Inspector has taken an oath to fairly and impartially perform her duties. The oath of the Inspector will be attached to the minutes of the meeting.
The records of the company show that there were 64,929,382 shares of common stock outstanding on the record date of August 21st, 2026, and entitled to vote at this annual meeting. We have previously received an affidavit from the Secretary that a notice of internet availability of proxy materials stating the place, day, and hour of the annual meeting and the purpose for which it has been called was mailed on or before September 9, 2026, to each stockholder of record and on the close of business on August 21st, 2026. A copy of the affidavit will be attached to the minutes of this meeting. The company has delivered to the Inspector a list of stockholders, and all proxies- of shares of common stock outstanding and entitled to vote at the meeting are present in person or by proxy.
The inspector is making an exact count and will submit a formal report on the number of shares presented and represented during the course of the meeting. Based on a preliminary count, a quorum is declared present and subject to the confirmation of that fact by the inspector's report. The business to be acted upon at the annual meeting, as stated in the proxy statement notice of annual meeting, is to consider and act upon three proposals outlined in the proxy statement. Since no stockholder proposals were properly filed with the company secretary in advance of the meeting as provided in the bylaws, the businesses of the meeting is limited to the foregoing three matters in accordance with the bylaws. At the conclusion of discussion of the three items, we will take a vote on all items. I will then make a presentation of the operations of the company.
We will consider the proposals and the orders presented in the notice of annual meeting. The first item of business is to vote upon the election of Theodore J. Aanensen, Curtland E. Fields, Joseph P. Mazza, and Charles J. Pivirotto as directors of the company, each for a three-year term. The second item of business to be voted upon is the proposal to ratify the appointment of Crowe LLP as the independent registered public accounting firm for the company for the fiscal year ending June 30th, 2027. The final proposal to be considered is a non-binding advisory vote to approve compensation paid to the executive officers as described in the proxy statement. Information about executive compensation is contained in the proxy statement. Since there are no questions, this concludes the discussion on all business matters.
Any stockholders that wish to vote or recast their vote at this time may do so by clicking on the link provided online. If you have already voted, there's no need for you to recast your vote. Online voting is now closed. While the ballot is being finalized, I will provide an update on company matters. The presentation we are about to make contains both forward-looking statements about the company as well as non-GAAP financial measures. We refer you to the information regarding forward-looking statements and non-GAAP financial measures on page eight of our presentation, which is posted on our website. Okay. The first slide is Kearny at a glance. You can see these are our footings as of 6/30/2026. We are a top 10 New Jersey financial institution by both in assets and deposits. Roughly $7.7 billion and 40 branches across 12 counties.
You can see our deposits, roughly $5.7 billion. Our loans, $5.9 billion. And our TBV is 10.07, and our capital is about $800 million with a market cap of $612 million. I'm going to talk a little bit today about executing our strategy that we focused on in 2026. It's a relatively new strategy, and the real goal here is to strengthen our franchise, expand our capabilities, and enhance our earnings power. If you look to the top couple of tiles there, you can see a couple of things we did this year. One was optimize our retail branch network. We consolidated three underperforming branches. One of the other things we did on the branch level was restructure the management of the branches and focus the branch teams more on relationship building and customer service.
We brought in a number of outside salespeople that are true business development people, and they spend 95% of their time bringing in business. The goal there was to realign expenses to support the growth in outside business development people. We also expanded. If you look to the right there that says expanded in the box. We added experienced deposit-focused bankers. These are verticals that we are working in. First one is corporate banking, second one is specialty deposits, and the third one is nonprofit, and finally, the fourth one is private education and verticals. The goal here is to broaden our relationship funding capabilities. If you look down and it says deployed, it says capacity through automation. This is something we have talked about. This is The Lab project that we have been working on. It really does a lot of things. Obviously, it uses automation and advanced analytics.
It deploys RPA both on the operation and lending side. The Lab group has really done this from a standpoint of looking at the entire institution and how we operate. The goal here really is to build a better scalable model and give us better analytics and also eliminate what I like to think is manual process. This has helped. It has enhanced our earnings power. You could see expanded margin. This year, we really focused on realigning and remixing both our deposits and our loans. We improved our funding reliance, and we reduced our borrowing amounts and grew net income 39% and net interest income 15%. We will dig a little deeper, and we will really talk about the funding franchise.
I think one of the things we are seeing in the environment is the banks are being valued more so by their deposit funding and core deposits more so than ever before. Analysts, investors really look at that. That is a function of both money market fund competition, brokerage, fintech, non-banks. We really set out to really grow these four verticals. The first one we mentioned in the previous slide was corporate banking. We are really focused on, with these bankers, trying to get our hands on the middle market commercial businesses, primary banking relationships, operating accounts, treasury management, and the full wallet share. Obviously, the deeper relationships, the better funding at a lower cost. On the specialty deposit side, that focus is really on 1031 exchange services, escrow, trust, and estate deposits. It is a real, especially the deposit clients, very one-on-one.
The government banking piece, we have had the government business for a while. It focuses on municipalities and public agencies, school districts, boards of education, operating and treasury relationships. Again, we have got a great relationship in the long-term public sector. We are well-known throughout the state, and we do very well in that vertical. The last one is the nonprofit and private education vertical. This is a newer one. It specializes in specialized expertise in the nonprofit world. It has a treasury management focus, and it is really a long-term relationship builder for our model. All of these create strategic value and improve our core funding and obviously, ultimately should help in growing a stronger franchise. Now we will take a look at earnings. We built some pretty good earnings this year, as you read. We ended the year up almost $10.3 million. Net income of about $36.3 million.
That's 39% growth in net income. A vast improvement over last year. That's really a function of improving our earning assets, reducing our wholesale funding, and really improving our pre-tax, pre-provision profitability. If we look at the top left chart, you can see that's our net interest margin. You can see it in the final quarter of fiscal 2025, roughly 2% margin. Then for the final quarter of this fiscal year that we're talking about, 226. So a basis point increase of 26%, which is substantial. You can see net interest income really supports that in the fourth quarter of 2025, roughly $35.8 million in net interest income, and it grows all the way to $40.3 million in the fourth quarter of 2026. So some vast improvements, 15% increase in net interest income growth.
If we look at some of the earning metrics, one of the things I like to look at because the analysts really look at this and the investors look at this, it's on the top line there you have with the gold diamonds and the gray bar. You can see our pre-tax, pre-provision EPS. That's become a very, very big hot topic. That along with, if you look at the blue chart, the blue columns there are pre-tax, pre-provision net revenue. Those two items become very focused because that's really the earnings power of the bank. You can see on the PTPP EPS, you can see we went from $0.16 to $0.20, substantial increase. Now in the blue lines, you could see $9.9 million to almost $12.5 million. So some significant growth there. That's really the earnings power of the bank really coming back.
Dig a little deeper, we'll look at our shareholder returns for the end of fiscal year. Pretty amazing. Our total return for Kearny was up 55.8% versus the KRX TR Bank index, which was up 29%. It's a substantial increase. More to go, obviously. There's a lot of momentum, and that's really partially due to the financial performance that we had this year and the improvement in our margin and our net income. Obviously the dividend at a 4% handle is always positive for new investors and existing. Take a look at our credit discipline. You folks have probably seen this chart a couple of times. We had about four basis points of net charge-offs this year. You can see the blue line dotted is commercial banks other than the top 100 largest banks. You can see our line is the gold line.
We never really intersect, whether it's the global financial crisis, Hurricane Sandy, or COVID. We've really done well. We're very conservative in our underwriting. We really haven't changed that. We've been disciplined through all credit cycles and I guess we updated this. For the last 20 years, our cumulative charge-off has been $42.1 million, which is roughly $2 million a year, which is very nominal. Finally, we'll talk a little bit about technology. I'm a big technology person. I think our industry is heading in that direction. You hear about it all the time on the news, and it's really about harnessing technology to support building a scalable model. That really is going to give us the competitive edge over the non-banks, the Fintechs, and some of the larger banks. If we look at the first tile there, you can see The Lab efficiency. Again, we've talked about this before.
Robotics, process automation deployed in operations and lending, reduced manual effort and bottlenecks. The real goal here is to eliminate manual process. We have people that are making decisions, looking at things as opposed to manually doing process. It is much more efficient and it helps us get to that scalable model we are looking for. If you look right at the data analytics tile, you can see the data analytics that we have built will give us a better insight on our loan and deposit customers, their behavior, how they spend, how they pay, what they used to pay, balances, change in balances. This is great in terms of growing relationships, expanding relationships, and really reconnaissance about potentially losing customers. We can see balance changes and movement in their accounts. Intelligent tools. This is the next tile. Intelligent tools and insight. This is really an interesting area.
Basically applied intelligent tools in areas to improve service controls and productivity. Expand capabilities to support the better decisions and operational efficiency. It is really using AI to support our branches and our lending people. We have put a lot of information in there. They can query through our own policies and procedures as opposed to calling to the main office for information. It is really a very interesting thing. We are working on the lending side of it, but our branches already use the bot for policies and procedures. Finally, you cannot forget, it is probably one of the most important things in this environment. You have to have a good digital experience. We have been modernizing our account opening and lending experience, and this is something that is a daily, weekly, monthly, annually focus on really improving the digital experience.
You have to have both a good person-to-person experience as well as a digital experience, give people what they prefer. So it is very important. Finally, this kind of wraps everything up. It is a strategic outlook, converting investments into long-term value. I like to call this the value chain, and it really is about, as you can see here, stronger relationships, expanding specialized banking businesses, leading with treasury management, and expanding our relationships. The other piece to it is on the deposit and loan side. Growing relationships, funding, expanding commercial assets, continuing the balance sheet optimization, something that we are going to be doing this year as well. Focused on all the other areas, not just multifamily. Scale with technology. We talked about automation, making better decisions, giving people higher capacity to do better and more important work.
This should ultimately result in growing earnings and creating value for you folks on the line. That is really it on the strategic outlook. The next slide, and I am not going to go through, is the non-GAAP reconciliation you saw in some of the metrics. We had adjusted income, adjusted EPS. This kind of backs into those numbers. All right. I believe the Inspector of Elections has completed her count and will now report on the certificate and report of Inspector of Elections.
The report confirms that a quorum is and has been in attendance at the annual meeting for all purposes. The report also shows that each director received more than the plurality of the votes cast at the annual meeting. The proposal to ratify the appointment of Crowe LLP as the independent registered public accounting firm for the company for the year ending June 30th, 2027, received the affirmative vote of at least a majority of the shares cast at the annual meeting.
The advisory non-binding proposal to approve executive compensation as described in the proxy statement, received the affirmative vote of at least the majority of the shares cast at the annual meeting. Accordingly, each of the directors has been elected. The proposal to ratify the appointment of Crowe LLP has been approved and the company has received advisory approval of its executive compensation as described in the proxy statement.
The certificate and report of Inspector of Elections has been completed and approved and will be attached to the minutes of the annual meeting. Again, on behalf of the directors and officers of Kearny Financial, I would like to thank all of you for participating in today's meeting and for your interest you have shown in the affairs of the company. This meeting is adjourned.
This concludes the meeting. You may now disconnect.