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EX-32 - CERTIFICATION PURSUANT TO SECTION 906 - Kearny Financial Corp.ex32.htm
EX-11 - STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE - Kearny Financial Corp.ex11.htm
EX-31 - CERTIFICATION PURSUANT TO SECTION 302 - Kearny Financial Corp.ex31.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
December 31, 2010
     
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  [  ]    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: February 8, 2011.
     
$0.10 par value common stock  -  67,975,477 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, 2010 and June 30, 2010 (Unaudited)
 
1
     
 
Consolidated Statements of Operations for the Three and Six Months
   
 
Ended December 31, 2010 and December 31, 2009 (Unaudited)
 
2-3
     
 
Consolidated Statements of Changes in Stockholders’ Equity for the
   
 
Six Months Ended December 31, 2010 and December 31, 2009 (Unaudited)
 
4-6
     
 
Consolidated Statements of Cash Flows for the Six
   
 
Months Ended December 31, 2010 and December 31, 2009 (Unaudited)
 
7-8
     
 
Notes to Consolidated Financial Statements (Unaudited)
 
9-40
     
Item 2:   
Management’s Discussion and Analysis of
   
 
Financial Condition and Results of Operations
 
41-59
     
Item 3:   
Quantitative and Qualitative Disclosure About Market Risk
 
60-66
     
Item 4:   
Controls and Procedures
 
67
     
     
PART II - OTHER INFORMATION
 
68-69
     
     
SIGNATURES
 
70
     
 
 
 
 

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


   
December 31,
   
June 30,
 
   
2010
   
2010
 
Assets
           
             
Cash and amounts due from depository institutions
  $ 57,670     $ 3,286  
Interest-bearing deposits in other banks
    72,658       178,136  
                 
        Cash and Cash Equivalents
    130,328       181,422  
                 
Securities available for sale (amortized cost $127,157 and $30,960)
    125,569       29,497  
Securities held to maturity (estimated fair value $237,393 and $256,914)
    236,870       255,000  
Loans receivable, including unamortized yield adjustments of $(1,409) and $564
    1,319,354       1,013,713  
  Less allowance for loan losses
    (9,931 )     (8,561 )
                 
  Net Loans Receivable
    1,309,423       1,005,152  
                 
Mortgage-backed securities available for sale (amortized cost $845,741 and $673,414)
    862,769       703,455  
Mortgage-backed securities held to maturity (estimated fair value $1,580 and $1,754)
    1,533       1,700  
Premises and equipment
    39,630       34,989  
Federal Home Loan Bank of New York (“FHLB”) stock
    14,062       12,867  
Interest receivable
    10,425       8,338  
Goodwill
    108,543       82,263  
Bank owned life insurance
    24,099       19,833  
Deferred income tax assets, net
    5,598       -  
Other assets
    12,346       5,297  
 
               
        Total Assets
  $ 2,881,195     $ 2,339,813  
                 
Liabilities and Stockholders’ Equity
               
                 
Liabilities
               
                 
Deposits:
               
  Non-interest-bearing
  $ 96,626     $ 53,709  
  Interest-bearing
    2,034,745       1,569,853  
                 
        Total Deposits
    2,131,371       1,623,562  
                 
Borrowings
    255,202       210,000  
Advance payments by borrowers for taxes
    5,225       5,699  
Deferred income tax liabilities, net
    -       4,391  
Other liabilities
    12,577       10,235  
                 
        Total Liabilities
    2,404,375       1,853,887  
                 
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; 67,975,477 and 68,344,277 shares outstanding, respectively
    7,274       7,274  
Paid-in capital
    215,212       213,529  
Retained earnings
    312,442       312,844  
Unearned Employee Stock Ownership Plan shares; 897,090 shares
               
  and 969,828 shares, respectively
    (8,971 )     (9,698 )
Treasury stock, at cost; 4,762,023 shares and 4,393,223 shares, respectively
    (58,054 )     (54,738 )
Accumulated other comprehensive income
    8,917       16,715  
                 
        Total Stockholders’ Equity
    476,820       485,926  
                 
        Total Liabilities and Stockholders’ Equity
  $ 2,881,195     $ 2,339,813  
See notes to consolidated financial statements.
 
-1-
 
 
 

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

   
Three Months Ended
   
Six Months Ended
 
   
December 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Interest Income:
                       
    Loans
  $ 14,878     $ 14,739     $ 28,679     $ 29,618  
    Mortgage-backed securities
    7,297       8,089       14,695       15,918  
    Securities:
                               
      Taxable
    1,379       454       2,787       514  
      Tax-exempt
    238       158       395       316  
    Other interest-earning assets
    241       215       420       445  
                                 
        Total Interest Income
    24,033       23,655       46,976       46,811  
                                 
Interest Expense:
                               
    Deposits
    6,015       7,188       12,338       15,016  
    Borrowings
    2,146       2,075       4,221       4,150  
                                 
        Total Interest Expense
    8,161       9,263       16,559       19,166  
                                 
Net Interest Income
    15,872       14,392       30,417       27,645  
                                 
Provision for Loan Losses
    876       605       2,127       1,463  
                                 
Net Interest Income after Provision
                               
  for Loan Losses
    14,996       13,787       28,290       26,182  
                                 
Non-Interest Income:
                               
    Fees and service charges
    427       350       769       728  
    Other-than-temporary security
                               
      impairment:
                               
      Total
    -       (65 )     -       (360 )
      Less: Portion recognized in
                               
        other comprehensive income
    -       10       -       207  
      Portion recognized in earnings
    -       (55 )     -       (153 )
    Miscellaneous
    347       220       636       460  
                                 
        Total Non-Interest Income
    774       515       1,405       1,035  
                                 
Non-Interest Expenses:
                               
    Salaries and employee benefits
    7,397       6,662       14,350       13,344  
    Net occupancy expense of
                               
      premises
    1,152       988       2,201       2,005  
    Equipment and systems
    1,385       1,117       2,562       2,189  
    Advertising and marketing
    270       226       516       440  
    Federal deposit insurance
                               
      premium
    517       393       964       550  
    Directors’ compensation
    250       540       808       1,096  
    Merger-related expenses
    3,150       -       3,190       -  
    Miscellaneous
    1,281       1,245       2,455       2,564  
                                 
        Total Non-Interest Expenses
  $ 15,402     $ 11,171     $ 27,046     $ 22,188  

-2-
 
 
 

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

   
Three Months Ended
   
Six Months Ended
 
   
December 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Income Before Income Taxes
  $ 368     $ 3,131     $ 2,649     $ 5,029  
Income Taxes
    373       1,290       1,319       2,093  
                                 
Net Income (Loss)
  $ (5 )   $ 1,841     $ 1,330     $ 2,936  
                                 
Net Income (Loss) per Common
                               
  Share (EPS):
                               
    Basic
  $ 0.00     $ 0.03     $ 0.02     $ 0.04  
    Diluted
    0.00       0.03       0.02       0.04  
                                 
Weighted Average Number of
                               
  Common Shares Outstanding:
                               
    Basic
    67,042       68,015       67,130       68,045  
    Diluted
    67,042       68,015       67,130       68,045  
                                 
Dividends Declared Per Common
                               
   Share (Excluding dividends
   waived by Kearny MHC)
  $ 0.05     $ 0.05     $ 0.10     $ 0.10  

See notes to consolidated financial statements.                                                                                    -3-
 
 
 

 

 
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 
Six Months Ended December 31, 2009
 
(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, 2009
    69,242     $ 7,274     $ 208,577     $ 309,687     $ (11,153 )   $ (45,985 )   $ 8,320     $ 476,720  
                                                                 
Comprehensive income:
                                                               
  Net income
    -       -       -       2,936       -       -       -       2,936  
                                                                 
  Unrealized gain on securities
                                                               
    available for sale, net of                                                                
    deferred income tax
                                                               
    expense of $1,719
    -       -       -       -       -       -       2,489       2,489  
                                                                 
  Non-credit related other-than-
                                                               
    temporary impairment losses on
                                                               
    securities held to maturity, net of
                                                               
    deferred income tax benefit of $50
    -       -       -       -       -       -       (74 )     (74 )
                                                                 
  Benefit plans, net of deferred income
                                                               
    tax expense of $8
    -       -       -       -       -       -       11       11  
                                                                 
   Total Comprehensive income
                                                            5,362  
                                                                 
ESOP shares committed to be released
                                                               
  (72 shares)
    -       -       39       -       727       -       -       766  
                                                                 
Dividends contributed for payment of
                                                               
    ESOP loan
    -       -       50       -       -       -       -       50  
                                                                 
Stock option expense
    -       -       953       -       -       -       -       953  
                                                                 
Treasury stock purchases
    (264 )     -       -       -       -       (2,727 )     -       (2,727 )
                                                                 
Restricted stock plan shares earned
                                                               
  (126 shares)
    -       -       1,542       -       -       -       -       1,542  
 
See notes to consolidated financial statements.                                                                                    -4-
 
 

 
 
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)
 
Six Months Ended December 31, 2009
 
(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
 
                                                 
Tax effect from stock based
                                               
  compensation
    -       -       (186 )     -       -       -       -       (186 )
                                                                 
Cash dividends declared ($0.10/
  public share)
    -       -       -       (1,694 )     -       -       -       (1,694 )
                                                                 
Cash dividend to Kearny MHC
    -       -       -       (300 )     -       -       -       (300 )
                                                                 
                                                                 
Balance - December 31, 2009
    68,978     $ 7,274     $ 210,975     $ 310,629     $ (10,426 )   $ (48,712 )   $ 10,746     $ 480,486  
 
See notes to consolidated financial statements.                                                                                    -5-
 
 
 
 

 
 
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Continued)
 
Six Months Ended December 31, 2010
 
(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 income:
                                                               
  Net income
    -       -       -       1,330       -       -       -       1,330  
                                                                 
  Unrealized loss on securities available
                                                               
    for sale, net of deferred income tax
                                                               
    benefit of $5,342
    -       -       -       -       -       -       (7,793 )     (7,793 )
                                                                 
  Benefit plans, net of deferred income
                                                               
    tax benefit of $3
    -       -       -       -       -       -       (5 )     (5 )
                                                                 
   Total Comprehensive income
                                                            (6,468 )
                                                                 
ESOP shares committed to be released
                                                               
  (72 shares)
    -       -       (84 )     -       727       -       -       643  
                                                                 
Dividends contributed for payment of
                                                               
    ESOP loan
    -       -       64       -       -       -       -       64  
                                                                 
Stock option expense
    -       -       745       -       -       -       -       745  
                                                                 
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 ($0.10/
  public share)
    -       -       -       (1,608 )     -       -       -       (1,608 )
                                                                 
Balance - December 31, 2010
    67,975     $ 7,274     $ 215,212     $ 312,442     $ (8,971 )   $ (58,054 )   $ 8,917     $ 476,820  
 
See notes to consolidated financial statements.                                                                                    -6-
 
 

 
 
KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands, Unaudited)

   
Six Months Ended
 
   
December 31,
 
   
2010
   
2009
 
             
Cash Flows from Operating Activities:
           
    Net income
  $ 1,330     $ 2,936  
    Adjustments to reconcile net income to net cash provided by operating
               
      activities:
               
        Depreciation and amortization of premises and equipment
    944       872  
        Net amortization of premiums, discounts and loan fees and costs
    1,681       411  
        Deferred income taxes
    (756 )     545  
        Amortization of intangible assets
    -       14  
        Amortization of benefit plans’ unrecognized net loss
    34       72  
        Provision for loan losses
    2,127       1,463  
        Realized gain on sale of loans originated for sale
    (10 )     -  
        Proceeds from sales of loans originated for sale
    1,046       -  
        Loss on other-than-temporary impairment of securities
    -       153  
        Increase in cash surrender value of bank owned life insurance
    (337 )     (279 )
        ESOP, stock option plan and restricted stock plan expenses
    2,586       3,261  
        Loss on sale of real estate owned
    35       -  
       Increase in interest receivable
    -       (129 )
       Increase in other assets
    (1,242 )     (5,863 )
       (Decrease) increase in interest payable
    (36 )     27  
       Decrease in other liabilities
    (1,194 )     (1,959 )
                 
            Net Cash Provided by Operating Activities
    6,208       1,524  
                 
Cash Flows from Investing Activities:
               
    Proceeds from calls and maturities of securities held for sale
    405       40  
    Proceeds from repayments of securities available for sale
    585       365  
    Purchase of securities held to maturity
    (65,555 )     (65,000 )
    Proceeds from calls and maturities of securities held to maturity
    115,230       -  
    Proceeds from repayments of securities held to maturity
    148       -  
    Purchase of loans
    (1,437 )     (20,659 )
    Net decrease in loans receivable
    41,223       36,195  
    Proceeds from sale of real estate owned
    60       243  
    Purchases of mortgage-backed securities available for sale
    (245,211 )     (113,682 )
    Principal repayments on mortgage-backed securities available for sale
    105,597       81,768  
    Principal repayments on mortgage-backed securities held to maturity
    181       456  
    Purchase of Federal Home Loan Bank (“FHLB”) stock
    (2,250 )     -  
    Redemption of FHLB stock
    2,250       -  
    Cash paid in merger, net of cash acquired
    (24,529 )     -  
    Additions to premises and equipment
    (434 )     (1,001 )
                 
            Net Cash Used in Investing Activities
  $ (73,737 )   $ (81,275 )

-7-


 
 

 

KEARNY FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Thousands, Unaudited)

   
Six Months Ended
 
   
December 31,
 
   
2010
   
2009
 
             
Cash Flows from Financing Activities:
           
    Net increase in deposits
  $ 31,157     $ 75,800  
    Repayment of long-term FHLB advances
    (6 )     -  
    Decrease in other short-term borrowings
    (9,009 )     -  
    Decrease in advance payments by borrowers for taxes
    (474 )     (484 )
    Dividends paid to stockholders of Kearny Financial Corp.
    (1,617 )     (1,707 )
    Purchase of common stock of Kearny Financial Corp. for treasury
    (3,316 )     (2,727 )
    Dividends contributed for payment of ESOP loan
    64       50  
    Tax effect from stock based compensation
    (364 )     (186 )
                 
            Net Cash Provided by Financing Activities
    16,435       70,746  
                 
            Net Decrease in Cash and Cash Equivalents
    (51,094 )     (9,005 )
                 
Cash and Cash Equivalents – Beginning
    181,422       211,525  
                 
Cash and Cash Equivalents – Ending
  $ 130,328     $ 202,520  
                 
Supplemental Disclosures of Cash Flows Information:
               
    Cash paid during the year for:
               
        Income taxes, net of refunds
  $ 3,603     $ 2,606  
                 
        Interest
  $ 16,595     $ 19,139  
                 
    Non-cash investing and financing activities:
               
        Acquisition of  real estate owned in settlement of loans
  $ 435     $ 543  
                 
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.
 
-8-
 
 

 
 
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.  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 six month period ended December 31, 2010, 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, 2010 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 2010 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.

-9-
 
 
 

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

 
Three Months Ended
   
Six Months Ended
 
 
December 31, 2010
   
December 31, 2010
 
 
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 (loss)
  $ (5 )               $ 1,330              
Basic earnings per share,
                                       
     income available to
                                       
     common stockholders
  $ (5 )     67,042     $ 0.00     $ 1,330       67,130     $ 0.02  
Effect of dilutive securities:
                                               
     Stock options
    -       -               -       -          
                                                 
    $ (5 )     67,042     $ 0.00     $ 1,330       67,130     $ 0.02  


 
Three Months Ended
   
Six Months Ended
 
 
December 31, 2009
   
December 31, 2009
 
 
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
  $ 1,841                 $ 2,936              
Basic earnings per share,
                                       
     income available to
                                       
     common stockholders
  $ 1,841       68,015     $ 0.03     $ 2,936       68,045     $ 0.04  
Effect of dilutive securities:
                                               
     Stock options
    -       -               -       -          
                                                 
    $ 1,841       68,015     $ 0.03     $ 2,936       68,045     $ 0.04  

4.  SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of December 31, 2010, for items that should potentially be recognized or disclosed in these financial statements.  The evaluation was conducted through the date this document was filed.

5. ACQUISITION OF CENTRAL JERSEY BANCORP

On November 30, 2010, the Company completed its acquisition of Central Jersey Bancorp (“Central Jersey”) and its wholly owned subsidiary, Central Jersey Bank, National Association (“Central Jersey Bank”).  The transaction qualified as a tax-free reorganization for federal income tax purposes. The final consideration paid in the transaction totaled $82.1 million which included $70.5 million paid to stockholders of Central Jersey at a price of $7.50 per outstanding share and $11.6 million paid to U.S. Department of Treasury (“U.S. Treasury”) for the redemption of the 11,300 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A and related warrant originally issued by Central Jersey to the U.S. Treasury under the TARP Capital Purchase Plan.
 
-10-
 
 
 
 

 
 
The Company accounted for the transaction using applicable accounting guidance regarding business combinations resulting in the recognition of pre-tax merger-related expenses totaling $3.2 million during the six months ended December 31, 2010.  Additionally, the Company recorded the assets acquired and liabilities assumed through the merger at fair value as summarized in the following table (in thousands).

      Consideration Paid:
     
      Cash for outstanding shares paid to Central Jersey shareholders
  $ 70,455  
      Cash paid to U.S. Department of Treasury for redemption of Central Jersey preferred
      shares and related warrant
     11,620  
      Total consideration paid
  $ 82,075  
         
      Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value
       
      Cash and cash equivalents
  $ 57,546       
      Investment securities
    128,948  
      Net loans receivable
    347,721  
      Mortgage-backed securities
    34,447  
      Premises and equipment
    5,151  
      Federal Home Loan Bank (“FHLB”) stock
    1,195  
      Interest receivable
    2,087  
      Bank owned life insurance
    3,929  
      Deferred income tax assets, net
    3,887  
      Other assets
    5,468  
      Fair value of assets acquired
    590,379