This week’s Stock of the Week is a solid company in an attractive market.
Kearny Financial Corporation (KRNY) is the holding company for Kearny Bank, a tightly focused bank in the attractive market area of northern New Jersey and southern New York. It has an admirably low efficiency ratio—a measure of how well it is run—of 61%, and recently announced its third stock buyback.
Kearny converted from a savings-and-loan and had an initial public offering in May 2015. Now that nearly four years have passed, it could become an acquisition target, since it is conservatively and well managed and has a 54-retail-branch footprint that could be a good fit for a larger bank looking to create or improve its presence in central and northern New Jersey and in Brooklyn and Staten Island, New York.
Kearny has a solid, mortgage-focused loan portfolio and does not make many higher-volatility construction loans. As a result, it has few nonperforming loans and charge-offs of only 0.02%. Revenue was $121 million in fiscal 2018 and likely will be $172 million this fiscal year and $175 million in fiscal 2020. The dividend of $0.24/share/yr. recently yielded 1.86% and appears secure.
Fiscal year: June. Earnings per share: 2020 est./$0.53…2019 est./$0.48…2018/$0.24.
George Young is co-portfolio manager of the $241 million Villere Balanced Fund (VILLX), New Orleans. Villere.com