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

Effective Date 3/31/2012

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• FORM 10-Q 3-31-12 KEARNY FINANCIAL CORP • EXHIBIT 11 - STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE • EXHIBIT 31 - CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT OF 2002 • EXHIBIT 32 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES-OXLEY ACT OF 2002 • EXHIBIT 101.INS - XBRL INSTANCE DOCUMENT • EXHIBIT 101.SCH - XBRL SCHEMA DOCUMENT • EXHIBIT 101.CAL - XBRL CALCULATION LINKBASE DOCUMENT • EXHIBIT 101.LAB - XBRL LABELS LINKBASE DOCUMENT • EXHIBIT 101.PRE - XBRL PRESENTATION LINKBASE DOCUMENT • EXHIBIT 101.DEF - XBRL DEFINITION LINKBASE DOCUMENT

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended

March 31, 2012

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from

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)		-			-		(67	)		-			1,092			-			-		1,025

Dividends contributed for payment of
ESOP loan		-			-		118			-			-			-			-		118

Stock option expense		-			-		31			-			-			-			-		31

Treasury stock purchases		(879	)		-		-			-			-			(8,130	)		-		(8,130	)

Restricted stock plan shares earned
(12 shares)		-			-		126			-			-			-			-		126


Cash dividends declared ($0.15/ public share)		-			-		-			(2,321	)		-			-			-		(2,321	)

Cash dividend to Kearny MHC		-			-		-			(450	)		-			-			-		(450	)

Balance - March 31, 2012		66,972		$	7,274	$	215,466		$	318,463		$	(7,152	)	$	(67,330	)	$	19,476	$	486,197

See notes to consolidated financial statements.

- 5 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

	Nine Months Ended
	March 31,
	2012			2011

Cash Flows from Operating Activities:
Net income	$	3,880		$	4,018
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of premises and equipment		1,993			1,577
Net amortization of premiums, discounts and loan fees and costs		6,447			2,606
Deferred income taxes		511			80
Amortization of intangible assets		118			-
Amortization of benefit plans’ unrecognized net loss		30			51
Provision for loan losses		3,645			3,518
Loss on write-down and sales of real estate owned		3,271			13
Realized gain on sale of loans		(526	)		(47	)
Proceeds from sale of loans		5,872			1,967
Realized loss on sale of mortgage-backed securities held to maturity		5			28
Realized gain on disposition of premises and equipment		(1	)		-
Increase in cash surrender value of bank owned life insurance		(560	)		(528	)
ESOP, stock option plan and restricted stock plan expenses		1,182			2,889
Decrease in interest receivable		966			695
Decrease in other assets		718			68
Decrease in interest payable		(32	)		(200	)
Decrease in other liabilities		(446	)		(240	)

Net Cash Provided by Operating Activities		27,073			16,495

Cash Flows from Investing Activities:
Proceeds from calls and maturities of securities available for sale		30,598			25,610
Proceeds from repayments of securities available for sale		650			921
Purchase of securities held to maturity		(1,775	)		(68,733	)
Proceeds from calls and maturities of securities held to maturity		72,760			197,170
Proceeds from repayments of securities held to maturity		717			480
Purchase of loans		(54,460	)		(1,437	)
Net decrease in loans receivable		49,454			69,384
Proceeds from sale of real estate owned		224			531
Purchases of mortgage-backed securities available for sale		(455,370	)		(379,306	)
Principal repayments on mortgage-backed securities available for sale		225,944			164,688
Principal repayments on mortgage-backed securities held to maturity		159			259
Proceeds from sale of mortgage-backed securities held to maturity		27			34
Purchase of FHLB stock		(1,800	)		(2,250	)
Redemption of FHLB stock		1,802			2,701
Cash paid in merger, net of cash acquired		-			(24,529	)
Proceeds from cash settlement of premises and equipment		3			-
Proceeds from insurance claim on REO		-			82
Additions to premises and equipment		(1,495	)		(936	)

Net Cash Used in Investing Activities	$	(132,562	)	$	(15,331	)

- 6 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Thousands, Unaudited)

	Nine Months Ended
	March 31,
	2012			2011

Cash Flows from Financing Activities:
Net increase in deposits	$	5,525		$	41,143
Repayment of long-term FHLB advances		(59	)		(10,026	)
Increase in other short-term borrowings		177			775
Decrease in advance payments by borrowers for taxes		(233	)		(221	)
Dividends paid to stockholders of Kearny Financial Corp.		(2,357	)		(2,425	)
Purchase of common stock of Kearny Financial Corp. for treasury		(8,130	)		(3,316	)
Dividends contributed for payment of ESOP loan		118			104
Tax effect from stock based compensation		-			(364	)

Net Cash (Used in) Provided by Financing Activities		(4,959	)		25,670

Net (Decrease) Increase in Cash and Cash Equivalents		(110,448	)		26,834

Cash and Cash Equivalents – Beginning		222,580			181,422

Cash and Cash Equivalents – Ending	$	112,132		$	208,256

Supplemental Disclosures of Cash Flows Information:
Cash paid during the year for:
Income taxes, net of refunds	$	1,836		$	3,603

Interest	$	21,788		$	24,697

Non-cash investing and financing activities:
Acquisition of real estate owned in settlement of loans	$	1,157		$	871

Fair value of assets acquired, net of cash and cash equivalents acquired	$	-		$	559,113

Fair value of liabilities assumed	$	-		$	534,584

See notes to consolidated financial statements.

- 7 -

KEARNY FINANCIAL CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Kearny Financial Corp. (the “Company”), its wholly-owned subsidiaries, Kearny Federal Savings Bank (the “Bank”) and Kearny Financial Securities, Inc., and the Bank’s wholly-owned subsidiaries, KFS Financial Services, Inc., KFS Investment Corp. and CJB Investment Corp. and its wholly owned subsidiary, Central Delaware Investment Corp. Kearny Financial Securities, Inc. and Central Delaware Investment Corp. were each dissolved during the quarter ended September 30, 2011. The Company conducts its business principally through the Bank. Management prepared the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, including the elimination of all significant inter-company 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, income, changes in stockholders’ equity and cash flows in conformity with generally accepted accounting principles (“GAAP”). However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements have been included. The results of operations for the three and nine month periods ended March 31, 2012, are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period.

The data in the consolidated statements of financial condition for June 30, 2011 was derived from the Company’s annual report on Form 10-K. That data, along with the interim financial information presented in the consolidated statements of financial condition, operations, changes in stockholders’ equity and cash flows should be read in conjunction with the 2011 consolidated financial statements, including the notes thereto included in the Company’s annual report on Form 10-K.

3. NET INCOME PER COMMON SHARE (“EPS”)

Basic EPS is based on the weighted average number of common shares actually outstanding including restricted stock awards (see following paragraph) adjusted for Employee Stock Ownership Plan (“ESOP”) shares not yet committed to be released. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Diluted EPS 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. Shares issued and reacquired during any period are weighted for the portion of the period they were outstanding.

The Financial Accounting Standards Board (“FASB”) has issued guidance on determining whether instruments granted in share-based payment transactions are participating securities. This guidance clarifies that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common shareholders. Awards of this nature are considered participating securities and the two-class method of computing basic and diluted earnings per share must be applied.

- 8 -

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:

	Three Months Ended							Nine Months Ended
	March 31, 2012							March 31, 2012
	Income			Shares		Per Share		Income		Shares		Per Share
	(Numerator)			(Denominator)		Amount		(Numerator)		(Denominator)		Amount
	(In Thousands, Except Per Share Data)							(In Thousands, Except Per Share Data)

Net income		$	1,392					$	3,880
Basic earnings per share,
income available to
common stockholders		$	1,392		66,243	$	0.02	$	3,880		66,571	$	0.06
Effect of dilutive securities:
Stock options			-		-				-		-

		$	1,392		66,243	$	0.02	$	3,880		66,571	$	0.06

	Three Months Ended							Nine Months Ended
	March 31, 2011							March 31, 2011
	Income			Shares		Per Share		Income		Shares		Per Share
	(Numerator)			(Denominator)		Amount		(Numerator)		(Denominator)		Amount
	(In Thousands, Except Per Share Data)							(In Thousands, Except Per Share Data)

Net income		$	2,688					$	4,018
Basic earnings per share,
income available to
common stockholders		$	2,688		67,054	$	0.04	$	4,018		67,105	$	0.06
Effect of dilutive securities:
Stock options			-		-				-		-

		$	2,688		67,054	$	0.04	$	4,018		67,105	$	0.06

During the three and nine months ended March 31, 2012, the average number of options which were considered anti-dilutive totaled approximately 3,233,000 and 3,233,000, respectively. During the three and nine months ended March 31, 2011, the average number of options which were considered anti-dilutive totaled approximately 3,168,000 and 3,191,000, respectively.

4. SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of March 31, 2012, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date this document was filed.

- 9 -

5. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2011, the FASB issued Accounting Standards Update 2011-03 which clarifies the accounting principles applied to repurchase agreements, as set forth by FASB ASC Topic 860, Transfers and Servicing. This ASU, entitled Reconsideration of Effective Control for Repurchase Agreements, amends one of three criteria used to determine whether or not a transfer of assets may be treated as a sale by the transferor. Under Topic 860, the transferor may not maintain effective control over the transferred assets in order to qualify as a sale. This ASU eliminates the criteria under which the transferor must retain collateral sufficient to repurchase or redeem the collateral on substantially agreed upon terms as a method of maintaining effective control. This ASU is effective for interim and annual reporting periods beginning on or after December 31, 2011, and requires prospective application to transactions or modifications of transactions which occur on or after the effective date. Early adoption is not permitted. The implementation of the new pronouncement did not have a material impact on the Company’s consolidated financial position or results of operations.

In June 2011, the FASB issued Accounting Standards Update 2011-05 which amends FASB ASC Topic 220, Comprehensive Income, to facilitate the continued alignment of U.S. GAAP with International Accounting Standards. The ASU prohibits the presentation of the components of comprehensive income in the statement of stockholder’s equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate, but consecutive, statements of net income and other comprehensive income. Under previous GAAP, all 3 presentations were acceptable. Regardless of the presentation selected, the Reporting Entity is required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements. The provisions of this ASU are effective for fiscal years, and interim periods within those years, beginning after December 31, 2011 for public entities. As the two remaining options for presentation existed prior to the issuance of this ASU, early adoption is permitted. The Company is currently evaluating the potential impact the new pronouncement will have on its consolidated financial statements.

In September, 2011, the FASB issued Accounting Standards Update 2011-08, Testing Goodwill for Impairment. The purpose of this ASU is to simplify how entities test goodwill for impairment by adding a new first step to the preexisting goodwill impairment test under ASC Topic 350, Intangibles – Goodwill and Other. This amendment gives the entity the option to first assess a variety of qualitative factors such as economic conditions, cash flows, and competition to determine whether it was more likely than not that the fair value of goodwill has fallen below its carrying value. If the entity determines that it is not likely that the fair value has fallen below its carrying value, then the entity will not have to complete the original two-step test under Topic 350. The amendments in this ASU are effective for impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. The Company is currently evaluating the potential impact the new pronouncement will have on its consolidated financial statements.

In September, 2011, the FASB issued Accounting Standards Update 2011-09, Disclosures about an Employer’s Participation in a Multiemployer Plan. This update creates additional disclosures for employers participating in multiemployer pension plans to provide clarity with regard to the employer’s involvement in the plan, as well as the financial health of the plan itself. Participating employers will now be required to disclose plan names, contribution amounts, funded status, minimum contribution requirements, and other relevant plan information for all years presented on the statement of income. The ASU does not amend the accounting requirements for such contributions and liabilities, and as such will only impact the level of disclosure made with regard to the plan. For public companies, the amendments of this ASU are effective for annual periods for fiscal years ending after December 15, 2011. Early

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adoption by both public and nonpublic entities is permitted. The Company is currently evaluating the potential impact the new pronouncement will have on its consolidated financial statements.

In December, 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update 2011-05. In response to stakeholder concerns regarding the operational ramifications of the presentation of these reclassifications for current and previous years, the FASB has deferred the implementation date of this provision to allow time for further consideration. The requirement in ASU 2011-05, Presentation of Comprehensive Income, for the presentation of a combined statement of comprehensive income or separate, but consecutive, statements of net income and other comprehensive income is still effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 for public companies. The Company is currently evaluating the potential impact the new pronouncement will have on its consolidated financial statements.

6. STOCK REPURCHASE PLANS

On March 23, 2012, the Company announced the completion of its stock repurchase plan originally announced on August 17, 2011 through which it repurchased a total of 845,031 shares at a total cost of $7.8 million and at an average cost per share of $9.24. On that same day, the Company announced that the Board of Directors authorized a new stock repurchase plan to acquire up to 802,780 shares, or 5% of the Company’s outstanding stock held by persons other than Kearny MHC. All shares under this latest plan remain available for repurchase at March 31, 2012.

7. DIVIDEND WAIVER

During the nine months ended March 31, 2012, Kearny MHC, the federally chartered mutual holding company of the Company waived its right, in accordance with the non-objection previously granted by the Federal Reserve Bank (“FRB”), to receive cash dividends of approximately $7.2 million declared on the 50,916,250 shares of Company common stock it owns. The MHC elected to receive $450,000 of dividends during the quarter ended March 31, 2012.

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8. SECURITIES AVAILABLE FOR SALE

The amortized cost, gross unrealized gains and losses and estimated fair values of securities at March 31, 2012 and June 30, 2011 and stratification by contractual maturity of securities at March 31, 2012 are presented below:

	At March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
	(In Thousands)
Debt securities:
Trust preferred securities	$	8,869	$	-	$	1,959	$	6,910
U.S. agency securities		5,950		64		1		6,013

Total debt securities		14,819		64		1,960		12,923

Mortgage-backed securities:
Collateralized mortgage obligations:
Federal National Mortgage Association		2,724		26		-		2,750

Total collateralized mortgage
obligations		2,724		26		-		2,750

Mortgage pass-through securities:
Government National Mortgage Association		11,211		915		19		12,107
Federal Home Loan Mortgage Corporation		469,284		11,479		380		480,383
Federal National Mortgage Association		770,901		22,935		200		793,636

Total mortgage pass-through securities		1,251,396		35,329		599		1,286,126

Total mortgage-backed securities		1,254,120		35,355		599		1,288,876
Total securities available for sale	$	1,268,939	$	35,419	$	2,559	$	1,301,799

	At March 31, 2012
	Amortized Cost	Carrying Value
	(In Thousands)
Debt securities:
Due in one year or less