XNAS:KRNY Kearny Financial Corp Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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f10q_033112-0128.htm
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
       March 31, 2012
 
     
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
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification Number)
     
120 Passaic Ave., Fairfield, New Jersey
 
07004-3510
(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  [X]  No [  ]
 
      Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  [X]  No [  ]
 
      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [  ]
Accelerated filer [X]
Non-accelerated filer [  ]
Smaller reporting company [  ]
 
      Indicate by check mark whether the registrant is a shell company (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:  May 7, 2012.
     
$0.10 par value common stock - 66,971,840 shares outstanding

 
 

 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

INDEX

   
Page
   
Number
PART I - FINANCIAL INFORMATION
   
     
  Item 1:
Financial Statements
   
     
 
Consolidated Statements of Financial Condition
   
 
at March 31, 2012 and June 30, 2011 (Unaudited)
 
1
     
 
Consolidated Statements of Income for the Three and Nine Months
   
 
Ended March 31, 2012 and March 31, 2011 (Unaudited)
 
2-3
     
 
Consolidated Statements of Changes in Stockholders’ Equity for the
   
 
Nine Months Ended March 31, 2012 and March 31, 2011
 
4-5
 
(Unaudited)
   
     
 
Consolidated Statements of Cash Flows for the Nine Months
 
6-7
 
Ended March 31, 2012 and March 31, 2011 (Unaudited)
   
     
 
Notes to Consolidated Financial Statements (Unaudited)
 
8-58
     
  Item 2:
Management’s Discussion and Analysis of
   
 
Financial Condition and Results of Operations
 
59-85
     
  Item 3:
Quantitative and Qualitative Disclosure About Market Risk
 
86-93
     
  Item 4:
Controls and Procedures
 
94
     
     
PART II - OTHER INFORMATION
 
95-97
     
     
SIGNATURES
 
98
     


 
 

 
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, Except Share and Per Share Data, Unaudited)
    
March 31,
   
June 30,
 
   
2012
   
2011
 
Assets
           
             
Cash and amounts due from depository institutions
  $ 40,139     $ 47,332  
Interest-bearing deposits in other banks
    71,993       175,248  
                 
        Cash and Cash Equivalents
    112,132       222,580  
                 
Securities available for sale (amortized cost $14,819 and $46,145)
    12,923       44,673  
Securities held to maturity (estimated fair value $34,999 and $107,052)
    34,725       106,467  
Loans receivable, including unamortized yield adjustments of $(1,433) and $(1,021)
    1,260,600       1,268,351  
  Less allowance for loan losses
    (9,100 )     (11,767 )
                 
  Net Loans Receivable
    1,251,500       1,256,584  
                 
Mortgage-backed securities available for sale (amortized cost $1,254,120 and $1,032,407)
     1,288,876        1,060,247  
Mortgage-backed securities held to maturity (estimated fair value $1,227 and $1,416)
    1,161       1,345  
Premises and equipment
    39,056       39,556  
Federal Home Loan Bank of New York (“FHLB”) stock
    13,558       13,560  
Interest receivable
    8,774       9,740  
Goodwill
    108,591       108,591  
Bank owned life insurance
    25,030       24,470  
Other assets
    13,746       16,323  
 
               
        Total Assets
  $ 2,910,072     $ 2,904,136  
                 
Liabilities and Stockholders’ Equity
               
                 
Liabilities
               
                 
Deposits:
               
  Non-interest-bearing
  $ 152,468     $ 143,087  
  Interest-bearing
    2,001,949       2,006,266  
                 
        Total Deposits
    2,154,417       2,149,353  
                 
Borrowings
    247,648       247,642  
Advance payments by borrowers for taxes
    5,561       5,794  
Deferred income tax liabilities, net
    4,940       1,669  
Other liabilities
    11,309       11,804  
                 
        Total Liabilities
    2,423,875       2,416,262  
                 
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; 72,737,500 shares
               
  issued; 66,971,840 and 67,851,077 shares outstanding, respectively
    7,274       7,274  
Paid-in capital
    215,466       215,258  
Retained earnings
    318,463       317,354  
Unearned Employee Stock Ownership Plan shares; 715,247 shares
               
  and 824,352 shares, respectively
    (7,152 )     (8,244 )
Treasury stock, at cost; 5,765,660 shares and 4,886,423 shares, respectively
    (67,330 )     (59,200 )
Accumulated other comprehensive income
    19,476       15,432  
                 
        Total Stockholders’ Equity
    486,197       487,874  
                 
        Total Liabilities and Stockholders’ Equity
  $ 2,910,072     $ 2,904,136  
See notes to consolidated financial statements.
 
- 1 -

 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data, Unaudited)

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Interest Income
                       
    Loans
  $ 15,809     $ 17,416     $ 48,493     $ 46,095  
    Mortgage-backed securities
    8,242       7,114       24,157       21,809  
    Securities:
                               
      Taxable
    270       1,230       1,096       4,017  
      Tax-exempt
    8       392       63       787  
    Other interest-earning assets
    205       275       582       695  
        Total Interest Income
    24,534       26,427       74,391       73,403  
                                 
Interest Expense
                               
    Deposits
    4,853       5,882       15,668       18,220  
    Borrowings
    2,011       2,056       6,088       6,277  
        Total Interest Expense
    6,864       7,938       21,756       24,497  
                                 
        Net Interest Income
    17,670       18,489       52,635       48,906  
                                 
Provision for Loan Losses
    1,257       1,391       3,645       3,518  
                                 
        Net Interest Income after Provision
                               
           for Loan Losses
    16,413       17,098       48,990       45,388  
                                 
Non-Interest Income
                               
    Fees and service charges
    594       613       1,859       1,382  
    Loss on sale of securities
    -       (28 )     (5 )     (28 )
    Gain on sale of loans
    217       35       526       47  
    Income from bank owned life
      insurance
     186        191        560        528  
    Electronic banking fees and charges
    224       208       695       489  
    Loss from REO operations
    (1,357 )     (5 )     (3,560 )     (55 )
    Miscellaneous
    339       43       416       99  
        Total Non-Interest Income
    203       1,057       491       2,462  
                                 
Non-Interest Expenses
                               
    Salaries and employee benefits
    8,538       8,082       25,082       22,432  
    Net occupancy expense of
                               
      premises
    1,685       1,836       4,866       4,037  
    Equipment and systems
    1,686       1,693       5,429       4,255  
    Advertising and marketing
    220       252       842       768  
    Federal deposit insurance
                               
      premium
    569       861       1,551       1,825  
    Directors’ compensation
    168       174       491       982  
    Merger-related expenses
    -       225       -       3,415  
    Miscellaneous
    1,716       1,346       5,225       3,801  
        Total Non-Interest Expenses
  $ 14,582     $ 14,469     $ 43,486     $ 41,515  

 
- 2 -

 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(In Thousands, Except Per Share Data, Unaudited)

   
Three Months Ended
   
Nine Months Ended
 
   
March 31,
   
March 31,
 
   
2012
   
2011
   
2012
   
2011
 
                         
      Income Before Income Taxes
  $ 2,034     $ 3,686     $ 5,995     $ 6,335  
                                 
Income Taxes
    642       998       2,115       2,317  
                                 
      Net Income
  $ 1,392     $ 2,688     $ 3,880     $ 4,018  
                                 
Net Income per Common
                               
  Share (EPS):
                               
    Basic and Diluted
  $ 0.02     $ 0.04     $ 0.06     $ 0.06  
                                 
Weighted Average Number of
                               
  Common Shares Outstanding:
                               
    Basic and Diluted
    66,243       67,054       66,571       67,105  
                                 
Dividends Declared Per Common
                               
   Share
  $ 0.05     $ 0.05     $ 0.15     $ 0.15  

See notes to consolidated financial statements.



 
- 3 -

 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine Months Ended March 31, 2011
(In Thousands, Except Per Share Data, Unaudited)


 
                                  Accumulated        
                           
Unearned
         
Other
       
   
Common Stock
   
Paid-In
   
Retained
   
ESOP
   
Treasury
   
Comprehensive
       
   
Shares
   
Amount
   
Capital
   
Earnings
   
Shares
   
Stock
   
Income
   
Total
 
                                                 
Balance - June 30, 2010
    68,344     $ 7,274     $ 213,529     $ 312,844     $ (9,698 )   $ (54,738 )   $ 16,715     $ 485,926  
                                                                 
Comprehensive loss:
                                                               
  Net income
    -       -       -       4,018       -       -       -       4,018  
                                                                 
  Unrealized loss on securities available
                                                               
    for sale, net of deferred income tax
                                                               
    benefit of $5,211
    -       -       -       -       -       -       (7,579 )     (7,579 )
                                                                 
  Benefit plans, net of deferred income
                                                               
    tax expense of $4
    -       -       -       -       -       -       5       5  
                                                                 
   Total comprehensive loss
                                                            (3,556 )
                                                                 
ESOP shares committed to be released
                                                               
  (108 shares)
    -       -       (108 )     -       1,091       -       -       983  
                                                                 
Dividends contributed for payment of
                                                               
    ESOP loan
    -       -       104       -       -       -       -       104  
                                                                 
Stock option expense
    -       -       708       -       -       -       -       708  
                                                                 
Treasury stock purchases
    (369 )     -       -       -       -       (3,316 )     -       (3,316 )
                                                                 
Restricted stock plan shares earned
                                                               
  (111 shares)
    -       -       1,198       -       -       -       -       1,198  
                                                                 
Tax effect from stock based
                                                               
  compensation
    -       -       (240 )     (124 )     -       -       -       (364 )
                                                                 
Cash dividends declared ($0.15/ public share)
    -       -       -       (2,416 )     -       -       -       (2,416 )
                                                                 
Balance - March 31, 2011
    67,975     $ 7,274     $ 215,191     $ 314,322     $ (8,607 )   $ (58,054 )   $ 9,141     $ 479,267  
                                                                 
 
See notes to consolidated financial statements.
 
 
- 4 -

 
 
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine Months Ended March 31, 2012
(In Thousands, Except Per Share Data, Unaudited)

                                       
Accumulated
       
                           
Unearned
         
Other
       
   
Common Stock
   
Paid-In
   
Retained
   
ESOP
   
Treasury
   
Comprehensive
       
   
Shares
   
Amount
   
Capital
   
Earnings
   
Shares
   
Stock
   
Income
   
Total
 
                                                 
Balance - June 30, 2011
    67,851     $ 7,274     $ 215,258     $ 317,354     $ (8,244 )   $ (59,200 )   $ 15,432     $ 487,874  
                                                                 
Comprehensive income:
                                                               
  Net income
    -       -       -       3,880       -       -       -       3,880  
                                                                 
  Unrealized gain on securities available
                                                               
    for sale, net of deferred income tax
                                                               
    expense of $2,631
    -       -       -       -       -       -       3,859       3,859  
                                                                 
  Benefit plans, net of deferred income
                                                               
    tax expense of $128
    -       -       -       -       -       -       185       185  
                                                                 
   Total Comprehensive income
                                                            7,924  
                                                                 
ESOP shares committed to be released
                                                               
  (108 shares)
    -

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