SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
---------
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--------- EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2004
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OR
---------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--------- EXCHANGE ACT OF 1934
For the transition period from to
--------- --------
Commission File Number 000-51093
---------
KEARNY FINANCIAL CORP.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
UNITED STATES 22-3803741
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
120 Passaic Ave., Fairfield, New Jersey 07004-3510
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code 973-244-4500
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No X
--- ---
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: February 18, 2005.
$0.10 par value common stock - 10,000 shares outstanding
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
INDEX
Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Statements of Financial Condition
at December 31, 2004 and June 30, 2004 (Unaudited) 1
Consolidated Statements of Income for the Three Months and
Six Months Ended December 31, 2004 and 2003 (Unaudited) 2-3
Consolidated Statements of Comprehensive Income for the Three
Months and Six Months Ended December 31, 2004 and 2003 (Unaudited) 4
Consolidated Statements of Cash Flows for the Six Months
Ended December 31, 2004 and 2003 (Unaudited) 5-6
Notes to Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-17
Item 3: Quantitative and Qualitative Disclosure About Market Risk 18-19
Item 4: Controls and Procedures 20
PART II - OTHER INFORMATION 21
SIGNATURES 22
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
(In Thousands, Except Share and Per Share Data, Unaudited)
December 31, June 30,
2004 2004
----------- -----------
Assets
------
Cash and amounts due from depository institutions $ 17,343 $ 21,008
Interest-bearing deposits in other banks 21,568 18,480
----------- -----------
Cash and cash equivalents 38,911 39,488
Securities available for sale; amortized cost of $25,156 and $25,109 43,295 41,564
Investment securities held to maturity; estimated fair value of
$440,449 and $428,775 440,693 435,870
Loans receivable, including net deferred loan costs of $829 and $758 514,620 510,938
Less: Allowance for loan losses (5,256) (5,144)
----------- -----------
Net loans receivable 509,364 505,794
----------- -----------
Mortgage-backed securities; estimated fair value of $714,293 and
$772,710 705,967 771,353
Premises and equipment 33,207 26,649
Federal Home Loan Bank of New York stock ("FHLB") 11,392 11,392
Interest receivable 9,720 9,861
Goodwill 82,263 82,263
Other assets 13,364 12,284
----------- -----------
Total assets $ 1,888,176 $ 1,936,518
=========== ===========
Liabilities and stockholders' equity
------------------------------------
Liabilities
-----------
Deposits:
Non-interest bearing $ 54,119 $ 55,377
Interest bearing 1,438,537 1,482,133
----------- -----------
Total deposits 1,492,656 1,537,510
Advances from FHLB 81,964 94,234
Advance payments by borrowers for taxes 4,026 4,224
Other liabilities 7,294 7,045
----------- -----------
Total liabilities 1,585,940 1,643,013
----------- -----------
Stockholders' equity
--------------------
Preferred stock $0.10 par value, 25,000,000 shares authorized; none
issued and outstanding - -
Common stock $0.10 par value, 75,000,000 shares authorized;
10,000 and 10,000 issued and outstanding, respectively 1 1
Paid in capital 499 499
Retained earnings - substantially restricted 289,947 282,959
Accumulated other comprehensive income 11,789 10,046
----------- -----------
Total stockholders' equity 302,236 293,505
----------- -----------
Total liabilities and stockholders' equity $ 1,888,176 $ 1,936,518
=========== ===========
See notes to consolidated financial statements.
-1-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In Thousands, Except Share and Per Share Data, Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- -------------------
2004 2003 2004 2003
-------- -------- -------- --------
Interest income:
Loans $ 7,321 $ 7,231 $ 14,453 $ 14,890
Mortgage-backed securities 8,298 8,458 16,947 16,434
Investment and available for sale
securities 4,083 3,624 8,094 6,852
Other interest earning assets 130 351 245 1,144
-------- -------- -------- --------
Total interest income 19,832 19,664 39,739 39,320
-------- -------- -------- --------
Interest expense:
Deposits 6,186 7,150 12,298 15,242
Borrowings 988 1,048 1,979 2,114
-------- -------- -------- --------
Total interest expense 7,174 8,198 14,277 17,356
-------- -------- -------- --------
Net interest income 12,658 11,466 25,462 21,964
Provision for loan losses (34) - 117 -
-------- -------- -------- --------
Net interest income after provision
for loan losses 12,692 11,466 25,345 21,964
-------- -------- -------- --------
Non-interest income:
Fees and service charges 171 158 348 356
Miscellaneous 239 197 556 437
-------- -------- -------- --------
Total non-interest income 410 355 904 793
-------- -------- -------- --------
Non-interest expenses:
Salaries and employee benefits 5,342 3,995 9,994 8,189
Net occupancy expense of
premises 723 625 1,370 1,202
Equipment 944 927 1,818 1,691
Advertising 295 102 576 364
Federal insurance premium 139 145 279 299
Amortization of intangible assets 159 159 318 318
Directors' fees 230 213 447 411
Merger related expenses - - - 592
Miscellaneous 935 927 1,754 1,770
-------- -------- -------- --------
Total non-interest expenses 8,767 7,093 16,556 14,836
-------- -------- -------- --------
Income before income taxes 4,335 4,728 9,693 7,921
Income taxes 1,143 1,418 2,705 2,376
-------- -------- -------- --------
Net income $ 3,192 $ 3,310 $ 6,988 $ 5,545
======== ======== ======== ========
Net income per common share:
Basic $ 319.20 $ 331.00 $ 698.80 $ 554.50
Diluted 319.20 331.00 698.80 554.50
See notes to consolidated financial statements.
-2-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Cont'd)
------------------------------------------
(In Thousands, Except Share and Per Share Data, Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
--------------- ---------------
2004 2003 2004 2003
------ ------ ------ ------
Weighted average number of
Common shares outstanding:
Basic 10,000 10,000 10,000 10,000
Diluted 10,000 10,000 10,000 10,000
See notes to consolidated financial statements.
-3-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(In Thousands, Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------ ------------------
2004 2003 2004 2003
------- ------- ------- -------
Net income $ 3,192 $ 3,310 $ 6,988 $ 5,545
------- ------- ------- -------
Other comprehensive income,
net of income taxes:
Gross unrealized holdings gain
(loss) on securities available
for sale 1,911 1,993 2,681 1,490
Deferred income tax benefit
(expense) (669) (697) (938) (521)
------- ------- ------- -------
Other comprehensive income 1,242 1,296 1,743 969
------- ------- ------- -------
Comprehensive income $ 4,434 $ 4,606 $ 8,731 $ 6,514
======= ======= ======= =======
See notes to consolidated financial statements.
-4-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In Thousands, Unaudited)
Six Months Ended
December 31,
----------------------
2004 2003
--------- ---------
Cash flows from operating activities:
Net income $ 6,988 $ 5,545
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of premises and equipment 639 699
Net amortization of premiums, discounts and loan fees and costs 570 1,358
Deferred income taxes (1,532) (921)
Amortization of intangible assets 318 318
Provision for loan losses 117 -
Realized gain on sale of securities available for sale (71) -
Decrease (increase) in interest receivable 141 (647)
Decrease (increase) in other assets (1,399) (1,194)
Increase (decrease) in interest payable (25) (277)
Increase (decrease) in other liabilities 854 (985)
--------- ---------
Net cash provided by operating activities 6,600 3,896
--------- ---------
Cash flows from investing activities:
Purchases of securities available for sale (91) (74)
Proceeds from sale of securities available for sale 1,115 -
Purchases of investment securities held to maturity (22,161) (137,323)
Proceeds from calls and maturities of investment securities held to
maturity 14,791 53,015
Proceeds from repayments of investment securities held to maturity 2,545 2,152
Purchase of loans - (14,262)
Net (increase) decrease in loans receivable (3,761) 16,530
Purchases of mortgage-backed securities held to maturity (27,171) (253,022)
Principal repayments on mortgage-backed securities held to maturity 92,060 219,840
Additions to premises and equipment (7,197) (2,736)
Redemption (purchase) of FHLB Stock - 2,987
--------- ---------
Net cash provided by (used in) investing activities 50,130 (112,893)
--------- ---------
Cash flows from financing activities:
Net (decrease) increase in deposits (44,840) (49,143)
Repayment of FHLB advances (269) (1,254)
Net change in short-term borrowings from FHLB (12,000) -
Increase (decrease) in advance payments by borrowers for taxes (198) (235)
--------- ---------
Net cash (used in) provided by financing activities (57,307) (50,632)
--------- ---------
Net (decrease) increase in cash and cash equivalents (577) (159,629)
Cash and cash equivalents - beginning 39,488 325,657
--------- ---------
Cash and cash equivalents - ending $ 38,911 $ 166,028
========= =========
See notes to consolidated financial statements.
-5-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd)
----------------------------------------------
(In Thousands, Unaudited)
Six Months Ended
December 31,
-------------------
2004 2003
-------- --------
Supplemental disclosures of cash flows information:
Cash paid during the year for:
Income taxes, net of refunds $ 1,462 $ 2,945
======== ========
Interest $ 14,302 $ 17,633
======== ========
Supplemental disclosure of non-cash transactions:
Purchase of minority shares of West Essex $ - $ 17,336
======== ========
Goodwill - West Essex acquisition $ - $ 50,517
======== ========
Deposit for acquisition of West Essex Bancorp, Inc. $ - $(67,853)
======== ========
See notes to consolidated financial statements.
-6-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. PRINCIPLES OF CONSOLIDATION
-------------------------------
The consolidated financial statements include the accounts of Kearny Financial
Corp. (the "Company"), its wholly owned subsidiary, Kearny Federal Savings Bank
(the "Bank"), and the Bank's wholly owned subsidiaries, KFS Financial Services,
Inc., West Essex Insurance Agency and Kearny Federal Investment Corp. The
Company conducts its business principally through the Bank. We have eliminated
all significant intercompany accounts and transactions during consolidation.
2. BASIS OF PRESENTATION
-------------------------
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and Regulation S-X and do not include
information or footnotes necessary for a complete presentation of financial
condition, results of operations and cash flows in conformity with generally
accepted accounting principles. However, in the opinion of management, all
adjustments (consisting of normal adjustments) necessary for a fair presentation
of the consolidated financial statements have been included. The results of
operations for the three and six month periods ended December 31, 2004, are not
necessarily indicative of the results which may be expected for the entire
fiscal year.
3. NET INCOME PER COMMON SHARE
-------------------------------
Basic net income per common share is based on the weighted average number of
common shares actually outstanding. Diluted net income per share is calculated
by adjusting the weighted average number of shares of common stock outstanding
to include the effect of contracts or securities exercisable or which could be
converted into common stock, if dilutive, using the treasury stock method.
-7-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Forward-Looking Statement
This Form 10-Q may include certain forward-looking statements based on current
management expectations. The actual results of Kearny Financial Corp. (the
"Company") could differ materially from those management expectations. Factors
that could cause future results to vary from current management expectations
include, but are not limited to, general economic conditions, legislative and
regulatory changes, monetary and fiscal policies of the federal government,
changes in tax policies, rates and regulations of federal, state and local tax
authorities, changes in interest rates, deposit flows, the cost of funds, demand
for loan products, demand for financial services, competition, changes in the
quality or composition of loan and investment portfolios of Kearny Federal
Savings Bank, the Company's wholly-owned subsidiary, (the "Bank"), changes in
accounting principles, policies or guidelines, and other economic, competitive,
governmental and technological factors affecting the Company's operations,
markets, products, services and prices. Further description of the risks and
uncertainties to the business are included in the Company's other filings with
the Securities and Exchange Commission.
Comparison of Financial Condition at December 31, 2004 and June 30, 2004
Our total assets decreased by $48.3 million, or 2.6%, to $1.89 billion at
December 31, 2004 from $1.94 billion at June 30, 2004, primarily due to a $44.8
million net outflow of deposits and a $12.2 million decrease in Federal Home
Loan Bank advances. Mortgage-backed securities held to maturity decreased $65.4
million, partially offset by growth of $3.6 million in loans receivable, net and
$4.8 million in investment securities held to maturity.
Mortgage-backed securities decreased by $65.4 million, or 8.5%, to $706.0
million at December 31, 2004, from $771.4 million at June 30, 2004. The decrease
resulted from monthly principal repayments. We used this cash flow to fund the
aforementioned deposit outflow, reduce Federal Home Loan Bank advances, fund
loans receivable and purchase investment securities held to maturity.
Loans receivable, net of deferred fees and the allowance for loan losses,
increased $3.6 million, or 0.7%, to $509.4 million at December 31, 2004, from
$505.8 million at June 30, 2004. The increase came primarily in one-to-four
family mortgage loans, partially offset by decreases in commercial business
loans and construction loans.
Investment securities held to maturity increased $4.8 million, or 1.1%, to
$440.7 million at December 31, 2004, from $435.9 million at June 30, 2004. The
increase came exclusively in the tax-exempt category as we purchased municipal
securities during the six-month period.
Deposits, which decreased $44.8 million, or 2.9%, to $1.49 billion at December
31, 2004, from $1.54 billion at June 30, 2004 were the most significant cause of
the decrease in total liabilities. The primary factor for this decrease was the
runoff of certificates of deposit due to lower interest rates paid, as well as a
movement by customers to alternative investment opportunities in the
marketplace.
Federal Home Loan Bank advances decreased $12.2 million, or 13.0%, to $82.0
million at December 31, 2004, from $94.2 million at June 30, 2004 primarily
resulting from maturing advances that were not renewed.
Stockholders' equity increased $8.7 million, or 3.0%, to $302.2 million at
December 31, 2004, from $293.5 million at June 30, 2004. The increase primarily
reflects net income of $7.0 million for the six months ended December 31, 2004,
along with an increase in accumulated other comprehensive income of $1.7 million
resulting from an increase in the unrealized gain on available for sale
securities.
-8-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003
General. Net income for the three months ended December 31, 2004 was $3.2
million, a decrease of $118,000, or 3.6%, from $3.3 million for the three months
ended December 31, 2003. The decrease in net income resulted primarily from an
increase in salaries and employee benefits partially offset by an increase in
net interest income.
Net Interest Income. Net interest income increased by $1.2 million, or 10.4%, to
$12.7 million for the three months ended December 31, 2004 from $11.5 million
for the three months ended December 31, 2003. The net interest rate spread
increased to 2.66% for the three months ended December 31, 2004 from 2.35% for
the three months ended December 31, 2003. The net interest margin increased 32
basis points to 2.89% for the three months ended December 31, 2004 compared with
2.57% for the three months ended December 31, 2003.
The net interest rate spread primarily improved due to an 18 basis point
decrease in the cost of average interest-bearing liabilities to 1.87% for the
three months ending December 31, 2004, from 2.05% for the three months ending
December 31, 2003. The net interest rate spread also improved due to a 13 basis
point increase in the yield on average interest-earning assets to 4.53% for the
three months ending December 31, 2004, from 4.40% for the three months ending
December 31, 2003.
The increase in the net interest margin is largely reflective of the increase in
the ratio of average interest-earning assets to average interest-bearing
liabilities to 114.4% for the three months ended December 31, 2004, from 111.9%
for the three months ended December 31, 2003.
Interest Income. Total interest income increased $168,000, or 0.9%, to $19.8
million for the three months ended December 31, 2004, from $19.7 million for the
three months ended December 31, 2003. Average interest-earning assets decreased
$36.2 million, or 2.0%, to $1.75 billion for the three months ended December 31,
2004, from $1.79 billion for the three months ended December 31, 2003. However,
the aforementioned 13 basis points increase in yield offset the decline in
average interest-earning assets, leading to the increase in interest income. We
attribute the increase in interest income primarily to the reinvestment of cash
and cash equivalents in higher yielding loans receivable and investment
securities held to maturity.
Interest income on loans receivable increased $90,000, or 1.2%, to $7.3 million
for the three months ended December 31, 2004, from $7.2 million for the three
months ended December 31, 2003. The average balance of loans receivable
increased $19.4 million, or 3.9%, to $512.0 million for the three months ended
December 31, 2004, from $492.6 million for the three months ended December 31,
2003. However, a decrease in the average yield on loans receivable to 5.72% for
the three months ended December 31, 2004, from 5.87% for the three months ended
December 31, 2003, offset the increase in the average balance of loans
outstanding. A continuing marketing effort contributed to the increase in
average loans receivable. The lower yield reflects generally lower interest
rates on originations and downward rate adjustments on adjustable rate and
floating rate loans.
Interest income on investment securities increased $459,000, or 12.7%, to $4.1
million for the three months ended December 31, 2004 from $3.6 million for the
three months ended December 31, 2003. The increase resulted from an increase of
$73.4 million, or 17.7%, in the average balance of investment securities to
$488.2 million for the three months ended December 31, 2004 from $414.8 million
for the three months ended December 31, 2003. However, a decrease in the average
yield on investment securities to 3.35% for the three months ended December 31,
2004, from 3.49% for the three months ended December 31, 2003, partially offset
the increase in the average balance of investment securities.
-9-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003 (Cont'd)
The increased average balance reflects the redeployment of cash and cash
equivalents. The lower yield resulted from principal repayments on older higher
yielding securities while new purchases occurred in a lower interest rate
environment.
Interest income on mortgage-backed securities held to maturity decreased
$160,000, or 1.9%, to $8.3 million for the three months ended December 31, 2004
from $8.5 million for the three months ended December 31, 2003. There was a
$24.2 million, or 3.5%, increase in the average balance of mortgage-backed
securities held to maturity to $718.8 million for the three months ended
December 31, 2004 from $694.6 million for the three months ended December 31,
2003. The decrease in the average yield to 4.62% for the three months ended
December 31, 2004 from 4.87% for the three months ended December 31, 2003,
offset the increase in the average balance. The increase in the average balance
of mortgage-backed securities held to maturity resulted from the redeployment of
cash and cash equivalents. The decrease in yield resulted from principal
repayments received on older higher yielding securities while new purchases
occurred in a lower interest rate environment.
Interest income on other interest-earning assets decreased $221,000, or 63.0%,
to $130,000 for the three months ended December 31, 2004 from $351,000 for the
three months ended December 31, 2003. This was a result of a $115.0 million, or
100%, decrease in the average balance of securities purchased under agreements
to resell and a $38.1 million, or 54.4%, decrease in the average balance of
other interest-earning assets to $31.9 million for the three months ended
December 31, 2004 from $70.0 million for the three months ended December 31,
2003. There was an 87 basis point increase in the average yield on other
interest-earning assets to 1.63% for the three months ended December 31, 2004,
from 0.76% for the three months ended December 31, 2003. The substantial
decrease in the average balances was due to the use of assets in these
categories to invest in higher yielding securities. We attribute the improvement
in yield to the dividend paid on Federal Home Loan Bank stock relative to
short-term market interest rates.
Interest Expense. Total interest expense decreased $1.0 million, or 12.2%, to
$7.2 million for the three months ended December 31, 2004 from $8.2 million for
the three months ended December 31, 2003. The decrease resulted primarily from a
decrease in the average cost of interest-bearing liabilities to 1.87% for the
three months ended December 31, 2004 from 2.05% for the three months ended
December 31, 2003. The average balance of interest-bearing liabilities declined
to $1.53 billion for the three months ended December 31, 2004 as compared to
$1.60 billion for the three months ended December 31, 2003. Average cost
decreased due to lower market interest rates prevailing during the period.
Interest expense on deposits decreased $964,000, or 13.4%, to $6.2 million for
the three months ended December 31, 2004 from $7.2 million for the three months
ended December 31, 2003. Interest expense on deposits declined primarily due to
a decrease in the average cost of interest-bearing deposits to 1.71% for the
three months ended December 31, 2004 from 1.88% for the three months ended
December 31, 2003 and a decrease in deposits. The average balance of
interest-bearing deposits decreased $74.3 million, or 4.9%, to $1.45 billion for
the three months ended December 31, 2004 from $1.52 billion for the three months
ended December 31, 2003.
Interest expense on Federal Home Loan Bank advances decreased $60,000, or 5.7%,
to $988,000 for the three months ended December 31, 2004 from $1.0 million for
the three months ended December 31, 2003. The average balance increased $8.4
million, or 11.3%, to $83.0 million for the three months ended December 31, 2004
from $74.6 million for the three months ended December 31, 2003. However, a
decrease in the average cost to 4.76% for the three months ended December 31,
2004 from 5.62% for the
-10-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003 (Cont'd)
three months ended December 31, 2003 offset the increase in the average balance.
The increase in the average balance resulted from additional borrowings, but at
a lower cost due to their relatively short remaining term to maturity, in a
continuing low interest rate environment.
Provision for Loan Losses. There was a $34,000 reduction in the provision for
loan losses during the three months ended December 31, 2004. Total loans
increased to $513.8 million at December 31, 2004 from $510.2 million at June 30,
2004. Non-performing loans were $1.7 million, or 0.33%, of total loans at
December 31, 2004, as compared to $2.3 million, or 0.46%, of total loans at June
30, 2004. The allowance for loan losses as a percentage of gross loans
outstanding was 1.03% at December 31, 2004 and 1.01% at June 30, 2004,
reflecting balances of $5.3 million and $5.1 million, respectively.
Management assesses the allowance for loan losses monthly. Management uses
available information to recognize losses on loans, however, additional loan
loss provisions may be necessary in the future, based on changes in economic
conditions. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the allowance for loan losses and may
require us to recognize additional provisions based on their judgment of
information available to them at the time of their examination. We maintained
the allowance for loan losses as of December 31, 2004 at a level that
represented management's best estimate of losses in the loan portfolio to the
extent they were both probable and reasonably estimable.
Non-Interest Income. Non-interest income increased $55,000, or 15.5%, to
$410,000 for the three months ended December 31, 2004, compared to $355,000 for
the three months ended December 31, 2003. The increase was primarily the result
of increased fee income from our retail branch network.
Non-Interest Expense. Non-interest expense increased $1.7 million, or 23.9%, to
$8.8 million for the three months ended December 31, 2004, from $7.1 million for
the three months ended December 31, 2003. The increase consisted primarily of a
$1.3 million increase in salaries and employee benefits.
Salaries and employee benefits increased $1.3 million, or 33.7%, to $5.3 million
for the three months ended December 31, 2004, compared to $4.0 million for the
three months ended December 31, 2003. The increase was the result of normal
salary increases, increased benefit costs and hiring of additional staff. The
pension plan contribution expense for the three months ended December 31, 2004
was $957,000, as compared to $530,000 for the three months ended December 31,
2003. The increase is due to lower than expected investment returns on plan
assets and higher required contributions resulting from the incremental effect
of normal salary increases.
All other elements of non-interest expense totaled $3.4 million for the three
months ended December 31, 2004; an increase of $327,000, or 10.6%, from the $3.1
million total for the three months ended December 31, 2003. This increase
primarily reflects normal increases in the cost of office occupancy and
equipment, including operating expenses associated with our new 53,000 square
foot administrative building in Fairfield, New Jersey.
Provision for Income Taxes. The provision for income taxes decreased $275,000,
or 19.4%, to $1.1 million for the three months ended December 31, 2004 from $1.4
million for the three months ended December 31, 2003. The effective income tax
rates were 26.4% for the three months ended December 31, 2004 as compared to
30.0% for the three months ended December 31, 2003. We attribute the decrease in
income tax expense to a decrease in pre-tax income, which decreased $393,000, or
8.5%, to
-11-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003 (Cont'd)
$4.3 million for the three months ended December 31, 2004, from $4.7 million for
the three months ended December 31, 2003.
Comparison of Operating Results for the Six Months Ended December 31, 2004 and
2003
General. Net income for the six months ended December 31, 2004 was $7.0 million,
an increase of $1.5 million, or 27.3%, from $5.5 million for the six months
ended December 31, 2003. The increase in net income resulted primarily from an
increase in net interest income partially offset by an increase in salaries and
employee benefits.
Net Interest Income. Net interest income increased by $3.5 million, or 15.9%, to
$25.5 million for the six months ended December 31, 2004 from $22.0 million for
the six months ended December 31, 2003. The net interest rate spread increased
to 2.65% for the six months ended December 31, 2004 from 2.20% for the six
months ended December 31, 2003. The net interest margin increased 45 basis
points to 2.88% for the six months ended December 31, 2004 compared with 2.43%
for the six months ended December 31, 2003.
The net interest rate spread primarily improved due to a 30 basis point decrease
in the cost of average interest-bearing liabilities to 1.85% for the six months
ending December 31, 2004, from 2.15% for the six months ending December 31,
2003. The net interest rate spread also improved due to a 15 basis point
increase in the yield on average interest-earning assets to 4.50% for the six
months ending December 31, 2004, from 4.35% for the six months ending December
31, 2003.
The increase in the net interest margin is largely reflective of the increase in
the ratio of average interest-earning assets to average interest-bearing
liabilities to 114.3% for the six months ended December 31, 2004, from 111.9%
for the six months ended December 31, 2003.
Interest Income. Total interest income increased $419,000, or 1.0%, to $39.7
million for the six months ended December 31, 2004, from $39.3 million for the
six months ended December 31, 2003. Average interest-earning assets decreased
$40.3 million, or 2.2%, to $1.77 billion for the six months ended December 31,
2004, from $1.81 billion for the six months ended December 31, 2003. However,
the aforementioned 15 basis points increase in yield offset the decline in
average interest-earning assets, leading to the increase in interest income. We
attribute the increase in interest income primarily to the reinvestment of cash
and cash equivalents in higher yielding loans receivable, investment securities
held to maturity and mortgage-backed securities held to maturity.
Interest income on loans receivable decreased $437,000, or 2.7%, to $14.5
million for the six months ended December 31, 2004, from $14.9 million for the
six months ended December 31, 2003. The average balance of loans receivable
increased $15.4 million, or 3.1%, to $511.4 million for the six months ended
December 31, 2004, from $496.0 million for the six months ended December 31,
2003. However, a decrease in the average yield on loans receivable to 5.65% for
the six months ended December 31, 2004, from 6.00% for the six months ended
December 31, 2003, offset the increase in the average balance of loans
outstanding. A continuing marketing effort contributed to the increase in
average loans receivable. The lower yield reflects generally lower interest
rates on originations and downward rate adjustments on adjustable rate and
floating rate loans.
Interest income on investment securities increased $1.2 million, or 18.1%, to
$8.1 million for the six
-12-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Comparison of Operating Results for the Six Months Ended December 31, 2004 and
2003 (Cont'd)
months ended December 31, 2004 from $6.9 million for the six months ended
December 31, 2003. The increase resulted from an increase of $91.2 million, or
23.2%, in the average balance of investment securities to $485.1 million for the
six months ended December 31, 2004 from $393.9 million for the six months ended
December 31, 2003. However, a decrease in the average yield on investment
securities to 3.34% for the six months ended December 31, 2004, from 3.48% for
the six months ended December 31, 2003, partially offset the increase in the
average balance of investment securities. The increased average balance reflects
the redeployment of cash and cash equivalents. The lower yield resulted from
principal repayments on older higher yielding securities while new purchases
occurred in a lower interest rate environment.
Interest income on mortgage-backed securities held to maturity increased
$513,000, or 3.1%, to $16.9 million for the six months ended December 31, 2004
from $16.4 million for the six months ended December 31, 2003. This was a result
of a $58.4 million, or 8.6%, increase in the average balance of mortgage-backed
securities held to maturity to $736.8 million for the six months ended December
31, 2004 from $678.4 million for the six months ended December 31, 2003. The
increase in the average balance more than offset the decrease in the average
yield to 4.60% for the six months ended December 31, 2004 from 4.85% for the six
months ended December 31, 2003. The increase in the average balance of
mortgage-backed securities held to maturity resulted from the redeployment of
cash and cash equivalents. The decrease in yield resulted from principal
repayments received on older higher yielding securities while new purchases
occurred in a lower interest rate environment.
Interest income on other interest-earning assets decreased $899,000, or 78.6%,
to $245,000 for the six months ended December 31, 2004 from $1.1 million for the
six months ended December 31, 2003. This was a result of a $157.1 million, or
100%, decrease in the average balance of securities purchased under agreements
to resell and a $48.1 million, or 59.2%, decrease in the average balance of
other interest-earning assets to $33.2 million for the six months ended December
31, 2004 from $81.3 million for the six months ended December 31, 2003. There
was a 52 basis point increase in the average yield on other interest-earning
assets to 1.48% for the six months ended December 31, 2004, from 0.96% for the
six months ended December 31, 2003. The substantial decrease in the average
balances was due to the use of assets in these categories to invest in higher
yielding securities. We attribute the improvement in yield to the dividend paid
on Federal Home Loan Bank stock relative to short-term market interest rates.
Interest Expense. Total interest expense decreased $3.1 million, or 17.8%, to
$14.3 million for the six months ended December 31, 2004 from $17.4 million for
the six months ended December 31, 2003. The decrease resulted primarily from a
decrease in the average cost of interest-bearing liabilities to 1.85% for the
six months ended December 31, 2004 from 2.15% for the six months ended December
31, 2003. The average balance of interest-bearing liabilities declined to $1.55
billion for the six months ended December 31, 2004 as compared to $1.62 billion
for the six months ended December 31, 2003. Average cost decreased due to lower
market interest rates prevailing during the period.
Interest expense on deposits decreased $2.9 million, or 19.1%, to $12.3 million
for the six months ended December 31, 2004 from $15.2 million for the six months
ended December 31, 2003. Interest expense on deposits declined due to a decrease
in the average cost of interest-bearing deposits to 1.68% for the six months
ended December 31, 2004 from 1.98% for the six months ended December 31, 2003.
The average balance of interest-bearing deposits decreased $79.0 million, or
5.1%, to $1.46 billion for the six months ended December 31, 2004 from $1.54
billion for the six months ended December 31, 2003.
-13-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Comparison of Operating Results for the Six Months Ended December 31, 2004 and
2003 (Cont'd)
Interest expense on Federal Home Loan Bank advances decreased $135,000, or 6.4%,
to $2.0 million for the six months ended December 31, 2004 from $2.1 million for
the six months ended December 31, 2003. The average balance increased $9.4
million, or 12.5%, to $84.5 million for the six months ended December 31, 2004
from $75.1 million for the six months ended December 31, 2003. However, a
decrease in the average cost to 4.68% for the six months ended December 31, 2004
from 5.63% for the six months ended December 31, 2003 offset the increase in the
average balance. The increase in the average balance resulted from additional
borrowings, but at a lower cost due to their relatively short remaining term to
maturity, in a continuing low interest rate environment.
Provision for Loan Losses. There was an $117,000 provision for loan losses made
during the six months ended December 31, 2004. Total loans increased to $513.8
million at December 31, 2004 from $510.2 million at June 30, 2004.
Non-performing loans were $1.7 million, or 0.33%, of total loans at December 31,
2004, as compared to $2.3 million, or 0.46%, of total loans at June 30, 2004.
The allowance for loan losses as a percentage of gross loans outstanding was
1.03% at December 31, 2004 and 1.01% at June 30, 2004, reflecting balances of
$5.3 million and $5.1 million, respectively.
Management assesses the allowance for loan losses monthly. Management uses
available information to recognize losses on loans, however, additional loan
loss provisions may be necessary in the future based on changes in economic
conditions. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the allowance for loan losses and may
require us to recognize additional provisions based on their judgment of
information available to them at the time of their examination. We maintained
the allowance for loan losses as of December 31, 2004 at a level that
represented management's best estimate of losses in the loan portfolio to the
extent they were both probable and reasonably estimable.
Non-Interest Income. Non-interest income increased $111,000, or 14.0%, to
$904,000 for the six months ended December 31, 2004 compared to $793,000 for the
six months ended December 31, 2003. The increase was primarily the result of a
gain from the sale of a trust-preferred security and increased fee income from
our retail branch network during the six months ended December 31, 2004.
At December 31, 2004, we had a $3.9 million investment in bank owned life
insurance. The returns on the investment of the cash value of the policy
generate non-interest income. We acquired this investment in connection with our
acquisition of West Essex Bank in 2003; it covers the former president and chief
executive officer and former chief lending officer of West Essex Bank.
During the six months ending December 31, 2004, we recognized a $71,000 gain,
included in non-interest income, from the sale of a security in our available
for sale portfolio. There was no such gain recorded in the six months ending
December 31, 2003.
Non-Interest Expense. Excluding merger related expenses, non-interest expense
increased $2.3 million, or 16.2%, to $16.6 million for the six months ended
December 31, 2004, from $14.2 million for the six months ended December 31,
2003. The increase consisted primarily of a $1.8 million increase in salaries
and employee benefits.
The merger related expenses of $592,000 recorded during the six months ended
December 31, 2003, consisted primarily of fees due to attorneys and financial
advisors.
Salaries and employee benefits increased $1.8 million, or 22.0%, to $10.0
million for the six months
-14-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Comparison of Operating Results for the Six Months Ended December 31, 2004 and
2003 (Cont'd)
ended December 31, 2004, compared to $8.2 million for the six months ended
December 31, 2003. The increase was the result of normal salary increases,
increased benefit costs and hiring of additional staff, including four business
development officers. The pension plan contribution expense for the six months
ended December 31, 2004 was $1.6 million, as compared to $767,000 for the six
months ended December 31, 2003. The increase is due to lower than expected
investment returns on plan assets and higher required contributions resulting
from the incremental effect of normal salary increases.
All other elements of non-interest expense totaled $6.6 million for the six
months ended December 31, 2004; an increase of $507,000, or 8.4%, from the $6.1
million total for the six months ended December 31, 2003. This increase
primarily reflects normal increases in the cost of office occupancy and
equipment, including operating expenses associated with our new 53,000 square
foot administrative building in Fairfield, New Jersey.
Provision for Income Taxes. The provision for income taxes increased $329,000,
or 13.8%, to $2.7 million for the six months ended December 31, 2004 from $2.4
million for the six months ended December 31, 2003. The effective income tax
rates were 27.9% for the six months ended December 31, 2004 as compared to 30.0%
for the six months ended December 31, 2003. We attribute the increase in income
tax expense to an increase in pre-tax income, which increased $1.8 million, or
22.4%, to $9.7 million for the six months ended December 31, 2004, from $7.9
million for the six months ended December 31, 2003.
-15-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources
The Bank is required to have enough investments that qualify as liquid assets in
order to maintain sufficient liquidity to ensure a safe and sound operation.
Liquidity may increase or decrease depending upon the availability of funds and
comparative yields on investments in relation to the return on loans.
Historically, the Bank has maintained liquid assets above levels believed to be
adequate to meet the requirements of normal operations, including potential
deposit outflows. The Bank reviews cash flow projections regularly and updates
them to assure maintenance of adequate liquidity.
The Bank's liquidity, represented by cash and cash equivalents, is a product of
its operating, investing and financing activities.
The Bank's primary sources of funds are deposits, amortization, prepayments and
maturities of mortgage-backed securities and outstanding loans, maturities of
investment securities and other short-term investments and funds provided from
operations. While scheduled payments from the amortization of loans and
mortgage-backed securities and maturing investment securities and short-term
investments are relatively predictable sources of funds, deposit flows, loan and
mortgage-backed securities prepayments are greatly influenced by general
interest rates, economic conditions and competition. In addition, the Bank
invests excess funds in short-term interest-earning assets, which provide
liquidity to meet lending requirements. The Bank also generates cash through
borrowings.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as overnight deposits or U.S. agency securities. The Bank uses its sources
of funds primarily to meet ongoing commitments, to pay maturing certificates of
deposit and savings withdrawals, to fund loan commitments and to maintain its
portfolio of mortgage-backed securities and investment securities. If the Bank
requires funds beyond its ability to generate them internally, borrowing
agreements exist with the Federal Home Loan Bank of New York (the "FHLB") which
provides an additional source of funds. At December 31, 2004, advances from the
FHLB amounted to $82.0 million.
The Bank anticipates that it will have sufficient funds available to meet its
current loan commitments. At December 31, 2004, the Bank has outstanding
commitments to originate loans of $21.8 million. Certificates of deposit
scheduled to mature in one year or less at December 31, 2004, totaled $630.9
million. Management's policy is to maintain deposit rates at levels that are
competitive with other local financial institutions. Based on the competitive
rates and on historical experience, management believes that a significant
portion of maturing deposits will remain with the Bank.
Consistent with its goals to operate a sound and profitable financial
organization, the Bank actively seeks to maintain its status as a
well-capitalized institution in accordance with regulatory standards. As of
December 31, 2004, Kearny Federal Savings Bank exceeded all capital requirements
of the Office of Thrift Supervision (the "OTS").
-16-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources (Cont'd.)
The following table sets forth the Bank's capital position at December 31, 2004,
as compared to the minimum regulatory capital requirements:
December 31, 2004 (Unaudited)
-------------------------------------------------------------------------------
To Be Well
Capitalized Under
Minimum Capital Prompt Corrective
Actual Requirements Action Provisions
------------------------- ----------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------------ --------- ---------- ---------- --------- ----------
(In Thousands)
Total Capital
(to risk-weighted assets) 219,456 33.76% $ 52,010 8.00% $ 65,012 10.00%
Tier 1 Capital
(to risk-weighted assets) 206,301 31.73% - - 39,008 6.00%
Core (Tier 1) Capital
(to adjusted total assets) 206,301 11.55% 53,577 3.00% 89,295 5.00%
Tangible Capital
(to adjusted total assets) 206,301 11.55% 26,788 1.50% - -
-17-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
---------------------------------------------------------
Qualitative Analysis. The ability to maximize net interest income is largely
dependent upon the achievement of a positive interest rate spread that can be
sustained during fluctuations in prevailing interest rates. Interest rate
sensitivity is a measure of the difference between amounts of interest-earning
assets and interest-bearing liabilities, which either reprice or mature within a
given period. The difference, or the interest rate repricing "gap", provides an
indication of the extent to which an institution's interest rate spread will be
affected by changes in interest rates. A gap is considered positive when the
amount of interest-rate sensitive assets exceeds the amount of interest-rate
sensitive liabilities, and is considered negative when the amount of interest
rate sensitive liabilities exceeds the amount of interest-rate sensitive assets.
Generally, during a period of rising interest rates, a negative gap within
shorter maturities would adversely affect net interest income, while a positive
gap within shorter maturities would result in an increase in net interest
income. During a period of falling interest rates, a negative gap within shorter
maturities would result in an increase in net interest income while a positive
gap within shorter maturities would result in a decrease in net interest income.
Because the Bank's interest-bearing liabilities, which mature or reprice within
short periods exceed its interest-earning assets with similar characteristics,
material and prolonged increases in interest rates generally would adversely
affect net interest income, while material and prolonged decreases in interest
rates generally would have a positive effect on net interest income.
The Bank's Board of Directors established an Interest Rate Risk Management
Committee comprised of members of the board and management. The committee meets
quarterly to address management of our assets and liabilities, including review
of our short term liquidity position; loan and deposit pricing and production
volumes and alternative funding sources; current investments; average lives,
durations and repricing frequencies of loans and securities; and a variety of
other asset and liability management topics. The results of the committee's
quarterly review are reported to the full board, which adjusts our interest rate
risk policy and strategies, as it considers necessary and appropriate.
Quantitative Analysis. Management using the OTS model, which estimates the
change in the Bank's net portfolio value ("NPV") over a range of interest rate
scenarios, monitors the Bank's interest rate sensitivity. NPV is the present
value of expected cash flows from assets, liabilities, and off-balance sheet
contracts. The NPV ratio, under any interest rate scenario, is defined as the
NPV in that scenario divided by the market value of assets in the same scenario.
The OTS produces its analysis based upon data submitted on the Bank's quarterly
Thrift Financial Reports. The following table sets forth the Bank's NPV as of
September 30, 2004, the most recent date for which the Bank has received the
Bank's NPV as calculated by the OTS. Management does not believe that there has
been a material adverse change in the Bank's interest rate risk during the three
months ended December 31, 2004.
At September 30, 2004
----------------------------------------------------------------------------
Net Portfolio Value
Net Portfolio Value as % of Present Value of Assets
----------------------- ----------------------------------------------------
Net Portfolio Basis Point
Changes in Rates $ Amount $ Change % Change Value Ratio Change
----------------------- --------- ----------- -------------- -------------- --------------
(In Thousands)
+300 bp 166,167 -136,551 -45% 9.46% -635 bp
+200 bp 212,904 -89,814 -30% 11.76% -405 bp
+100 bp 258,914 -43,804 -14% 13.89% -191 bp
0 bp 302,718 - - 15.81% -
-100 bp 330,752 +28,034 +9% 16.95% +114 bp
-18-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
---------------------------------------------------------
Certain shortcomings are inherent in the methodology used in the above interest
rate risk measurements. Modeling changes in NPV require the making of certain
assumptions, which may or may not reflect the manner in which actual yields and
costs respond to changes in market interest rates. In this regard, the NPV model
presented assumes that the composition of the Bank's interest sensitive assets
and liabilities existing at the beginning of a period remains constant over the
period being measured and also assumes that a particular change in interest
rates is reflected uniformly across the yield curve regardless of the duration
to maturity or repricing of specific assets and liabilities. Accordingly,
although the NPV measurements and net interest income models provide an
indication of the Bank's interest rate risk exposure at a particular point in
time, such measurements are not intended to and do not provide a precise
forecast of the effect of changes in market interest rates on the Bank's net
interest income and will differ from actual results.
-19-
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONTROLS AND PROCEDURES
-----------------------
As of the end of the period covered by this report, based on an evaluation of
the Company's disclosure controls and procedures (as defined in Rule 13a-15(e)
under the Securities and Exchange Act of 1934), each of the Chief Executive
Officer and the Chief Financial Officer of the Company has concluded that the
Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in its Exchange Act reports
is recorded, processed, summarized and reported within the applicable time
periods specified by the SEC's rules and forms.
During the quarter under report, there was no change in the Company's internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Securities and Exchange Act of 1934) that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
-20-
KEARNY FINANCIAL CORP.
PART II
ITEM 1. Legal Proceedings
-----------------
At December 31, 2004, neither the Company nor the Bank were
involved in any pending legal proceedings other than routine
legal proceedings occurring in the ordinary course of
business, which involve amounts in the aggregate believed by
management to be immaterial to the financial condition of
the Company and the Bank.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
-----------------------------------------------------------
Not applicable.
ITEM 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
ITEM 5. Other Information
-----------------
None.
ITEM 6. Exhibits
--------
The following Exhibits are filed as part of this report:
3.1 Charter of Kearny Financial Corp. (1)
3.2 By-laws of Kearny Financial Corp. (1)
4.0 Specimen Common Stock Certificate of Kearny Financial Corp. (1)
10.1 Employment Agreement between Kearny Federal Savings Bank and John N. Hopkins (1)
10.2 Employment Agreement between Kearny Federal Savings Bank and Allan Beardslee (1)
10.3 Employment Agreement between Kearny Federal Savings Bank and Albert E. Gossweiler (1)
10.4 Employment Agreement between Kearny Federal Savings Bank and Sharon Jones (1)
10.5 Employment Agreement between Kearny Federal Savings Bank and William C. Ledgerwood (1)
10.6 Employment Agreement between Kearny Federal Savings Bank and Erika Sacher (1)
10.7 Employment Agreement between Kearny Federal Savings Bank and Patrick M. Joyce (1)
10.8 Directors Consultation and Retirement Plan (1)
10.9 Benefit Equalization Plan (1)
10.10 Benefit Equalization Plan for Employee Stock Ownership Plan (1)
11.0 Statements re: computation of per share earnings (Filed herewith).
31.0 Rule 13a-14(a)/15d-14(a) Certifications (Filed herewith).
32.0 Section 1350 Certifications (Filed herewith).
---------------------------------------------------
(1) Incorporated by reference to the
identically numbered exhibit to the
Registrant's Registration Statement on
Form S-1 (File No. 333-118815).
-21-
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it behalf by the
undersigned thereunto duly authorized.
KEARNY FINANCIAL CORP.
Date: February 18, 2005 By: /s/John N. Hopkins
--------------------- -------------------------------------------
John N. Hopkins
President and Chief Executive Officer
(Duly authorized officer and principal
executive officer)
Date: February 18, 2005 By: /s/Albert E. Gossweiler
--------------------- -------------------------------------------
Albert E. Gossweiler
Senior Vice President and Chief Financial
Officer
(Principal financial officer)
-22-