KRNY

Kearny is a $7.74B-asset federally chartered savings institution (June fiscal year), and the headline pipeline metrics here are misleading for a bank: the 'revenue' line ($2.58M) is fee income, so the 235x P/S and 1,010% net margin are artifacts of running a spread lender through a generic revenue lens — ignore them. The real story is in the balance sheet and the spread business. FY2025 net income of $26.1M is a +130% 'recovery,' but only because FY2024 was a -$86.7M loss (a goodwill-driven wipeout — the 10-K details the annual goodwill impairment test on its single reporting unit). Stepping back, earnings have deteriorated for years: $63.2M (FY21) → $67.5M (FY22) → $40.8M (FY23) → -$86.7M (FY24) → $26.1M (FY25). A $26.1M profit on $746M of equity is a 3.5% ROE — well below any reasonable cost of capital, meaning the franchise is currently earning less than it costs to fund itself.

The income statement is squeezed from both sides by rates. Management flags that 75.5% of the loan book is fixed-rate and the yield curve is flat-to-inverted, so assets reprice slowly while deposit/borrowing costs stay elevated — directly compressing net interest margin. On top of that, $1.01B (89.4%) of the securities book is available-for-sale marked to fair value, injecting AOCI volatility straight into reported equity (which slipped -1.0% YoY despite retaining earnings). Credit looks contained for now — ACL is $46.2M, just 0.79% of loans, and the 9%-unemployment stress only lifts it to 1.13% — so this is a margin/returns problem, not yet a credit problem.