Kearny Financial Corp. (Form: S-1, Received: 09/05/2014 16:30:42)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

As filed with the Securities and Exchange Commission on September 5, 2014

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Kearny Financial Corp. and

Kearny Federal Savings Bank Employees’

Savings & Profit Sharing Plan and Trust

(Exact Name of Registrant as Specified in Its Charter)

Maryland

6712

To be Applied For

(State or Other Jurisdiction of

Incorporation or Organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

120 Passaic Avenue

Fairfield, New Jersey 07004

(973) 244-4500

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Mr. Craig L. Montanaro

President and Chief Executive Officer

120 Passaic Avenue

Fairfield, New Jersey 07004

(973) 244-4500

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:


Lawrence M.F. Spaccasi, Esq. Marc P. Levy, Esq. Luse Gorman Pomerenk & Schick, P.C. 5335 Wisconsin Avenue, N.W., Suite 780 Washington, D.C., 20015 (202) 274-2000		Richard Fisch, Esq. James C. Stewart, Esq. Spidi & Fisch, P.C. 1227 25 ^th Street, N.W., Suite 200 West Washington, D.C., 20037 (202) 434-4660

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x

If this Form is filed to register additional shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

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. (Check one):

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per share	Proposed maximum aggregate offering price	Amount of registration fee
Common Stock, $0.01 par value per share	108,427,927 shares	$10.00	$1,084,279,270(1)	$139,656
Participation Interests	2,499,830 interests (2)			(2)

(1)	Estimated solely for the purpose of calculating the registration fee.

(2)	The securities of Kearny Financial Corp. to be purchased by the Kearny Federal Savings Bank Employees’ Savings & Profit Sharing Plan and Trust are included in the amount shown for the common stock. Accordingly, no separate fee is required for the participation interests.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Prospectus Supplement

Interests in

KEARNY FEDERAL SAVINGS BANK

EMPLOYEES’ SAVINGS & PROFIT SHARING PLAN AND TRUST

Offering of Participation Interests in up to 2,499,830 Shares of

KEARNY FINANCIAL CORP.

Common Stock

Kearny Financial Corp., a new Maryland corporation, is offering shares of common stock for sale at $10.00 per share in connection with the conversion of Kearny MHC from the mutual holding company to the stock holding company form of organization. The shares being offered represent the ownership interest in Kearny Financial Corp., the existing federal corporation, currently owned by Kearny MHC. In this prospectus supplement, we will refer to Kearny Financial Corp., the new Maryland corporation, as “ New Kearny ,” and we will refer to Kearny Financial Corp., the existing federal corporation, as “ Kearny-Federal .” Kearny-Federal’s common stock is currently traded on the Nasdaq Global Select Market under the trading symbol “ KRNY ,” and we expect the shares of New Kearny common stock will also trade on the Nasdaq Global Select Market under the symbol “ KRNY .”

In connection with the offering, Kearny Federal Savings Bank is allowing participants in the Kearny Federal Savings Bank Employees’ Savings & Profit Sharing Plan and Trust (the “ 401(k) Plan ”) to invest all or a portion of their accounts in New Kearny common stock (“ New Kearny Common Stock ”). Based upon the value of the 401(k) Plan assets at June 30, 2014, the trustee of the 401(k) Plan could purchase up to 2,499,830 shares of New Kearny Common Stock, at the purchase price of $10.00 per share. This prospectus supplement relates to the election of 401(k) Plan participants to direct the trustee of the 401(k) Plan to invest all or a portion of their 401(k) Plan account balances in New Kearny Common Stock at the time of the stock offering.

Before you consider investing, you should read the prospectus of New Kearny dated ________ __, 2014, which is provided with this prospectus supplement. It contains detailed information regarding the conversion and stock offering of New Kearny and the financial condition, results of operations and business of Kearny-Federal and Kearny Federal Savings Bank. This prospectus supplement provides information regarding the 401(k) Plan. You should read this prospectus supplement together with the prospectus and keep both for future reference.

For a discussion of risks that you should consider, see “Risk Factors” beginning on page 18 of the prospectus.

The interests in the 401(k) Plan and the offering of the shares of New Kearny Common Stock have not been approved or disapproved by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission or any other federal or state agency. Any representation to the contrary is a criminal offense.

The securities offered in this prospectus supplement are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

This prospectus supplement may be used only in connection with offers and sales by New Kearny, in the stock offering, of New Kearny Common Stock acquired by the 401(k) Plan. No one may use this prospectus supplement to reoffer or resell interests in shares of New Kearny Common Stock acquired through the 401(k) Plan.

You should rely only on the information contained in this prospectus supplement and the prospectus. New Kearny, Kearny Federal Savings Bank and the 401(k) Plan have not authorized anyone to provide you with information that is different.

This prospectus supplement does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the prospectus nor any sale of New Kearny Common Stock shall under any circumstances imply that there has been no change in the affairs of New Kearny, Kearny Federal Savings Bank, or the 401(k) Plan since the date of this prospectus supplement, or that the information contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus supplement.

The date of this prospectus supplement is _____________ __, 2014.

TABLE OF CONTENTS


THE OFFERING			S-1

Securities Offered			S-1
Election to Purchase Common Stock			S-2
Purchase Priorities			S-2
Purchase in the Offering and Oversubscriptions			S-4
Minimum and Maximum Investment			S-4
Value of 401(k) Plan Assets			S-5
How to Order Common Stock in the Offering			S-5
Order Deadline			S-6
Irrevocability of Transfer Direction			S-6
Future Direction to Purchase and Sell Common Stock			S-7
Voting Rights of Common Stock			S-7

DESCRIPTION OF THE 401(K) PLAN			S-8

Introduction			S-8
Eligibility and Participation			S-8
Contributions Under the 401(k) Plan			S-9
Limitations on Contributions			S-9
Benefits Under the 401(k) Plan			S-9
Withdrawals and Distributions from the 401(k) Plan			S-10
Investment of Contributions and Account Balances			S-10
Performance History and Description of Funds			S-11
Administration of the 401(k) Plan			S-15
Amendment and Termination			S-16
Merger, Consolidation or Transfer			S-16
Federal Income Tax Consequences			S-16
Notice of Your Rights Concerning Employer Securities.			S-17
Additional Employee Retirement Income Security Act (“ERISA”) Considerations			S-18
Securities and Exchange Commission Reporting and Short-Swing Profit Liability			S-19
Financial Information Regarding 401(k) Plan Assets			S-19

LEGAL OPINION			S-19

THE OFFERING

Securities Offered

New Kearny is offering participants in the 401(k) Plan the opportunity to purchase common stock of New Kearny. Based on the fair market value of the 401(k) Plan’s assets as of June 30, 2014, at the purchase price of $10.00 per share, the 401(k) Plan may acquire up to 2,499,830 shares of New Kearny Common Stock in the stock offering.

Only employees of Kearny Federal Savings Bank may become participants in the 401(k) Plan and only participants, including former employees of Kearny Federal Savings Bank with an account balance in the 401(k) Plan, may purchase participation interests in shares of New Kearny Common Stock. All references to the purchase of New Kearny Common Stock contained in this document refer to participation interests in New Kearny Common Stock. A participation interest represents indirect ownership of New Kearny Common Stock. The interest is indirect since the New Kearny Common Stock will be held in the 401(k) Plan.

Your investment in shares of New Kearny Common Stock in connection with the stock offering is subject to the purchase priorities listed below under “Purchase Priorities.”

Information with regard to the 401(k) Plan and your opportunity to invest in shares of New Kearny Common Stock is contained in this prospectus supplement and information with regard to the financial condition, results of operations and business of Kearny-Federal and Kearny Federal Savings Bank is contained in the accompanying prospectus. The address of the principal executive office of New Kearny and Kearny Federal Savings Bank is 120 Passaic Avenue, Fairfield, New Jersey 07004. Kearny Federal Savings Bank’s telephone number at this address is (973) 244-4500.

All questions about this prospectus supplement should be addressed to Kimberly T. Manfredo, Senior Vice President/Director of Human Resources at Kearny Federal Savings Bank; telephone number: (973) 244-4554; email: kmanfredo@kearnyfederalsavings.net .

Questions about the stock offering, the prospectus, or obtaining a stock order form to purchase stock in the offering outside the 401(k) Plan may be directed to the Stock Information Center at ( ) ___________. The Stock Information Center will be open beginning _________ __, 2014, between 10:00 a.m. and 4:00 p.m., Eastern Time, on Monday through Friday. The Stock Information Center will be closed on weekends and bank holidays.

Election to Purchase Common Stock

In connection with the stock offering, you may elect to transfer all or a part of your account balances in the 401(k) Plan (excluding any investment in the current Kearny Financial Corp. Stock Fund) to be used to purchase New Kearny Common Stock in the stock offering at $10.00 per share. The trustee of the 401(k) Plan will purchase New Kearny Common Stock at $10.00 per share, in accordance with your directions. However, such directions are subject to purchase priorities and purchase limitations, as described below. Following the stock offering, the shares of New Kearny Common Stock acquired by the trustee in the stock offering will held in an account in the 401(k) Plan titled the “Kearny Financial Corp. Stock Fund.”

Purchase Priorities

All 401(k) Plan participants are eligible to purchase New Kearny Common Stock in the offering. However, such directions are subject to the purchase priorities in the Plan of Conversion and Reorganization of Kearny MHC, which provides for a subscription offering, a community offering and a firm commitment underwritten offering. In the offering, purchase priorities, in descending order, are as follows and apply in case more shares of New Kearny Common Stock are ordered than are available for sale (an “oversubscription”):

Subscription Offering:

(1)

Depositors of Kearny Federal Savings Bank and Atlas Bank with aggregate account balances of at least $50 as of the close of business on July 31, 2013, get first priority.

(2)

Kearny Federal Savings Bank’s tax-qualified plans, including the employee stock ownership plan, get second priority.

(3)

Depositors of Kearny Federal Savings Bank with aggregate account balances of at least $50 as of the close of business on __________ __, 20__, get third priority.

(4)

Depositors of Kearny Federal Savings Bank at the close of business on _____________ __, 20__, and each borrower of Kearny Federal Savings Bank as of January 18, 1995 or Atlas Bank as of February 17, 2010, whose borrowing remained outstanding at the close of business on _________ __, _________ get fourth priority.

Community Offering, if held:

(5)

Shares of New Kearny Common Stock not purchased in the

S-2

subscription offering may be offered for sale to the general public in a “community offering,” with a preference given first to natural persons residing in the New Jersey counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union and the New York counties of Kings and Richmond, and then to Kearny-Federal’s public stockholders as of _____________ __, 2014.

Firm Commitment Underwritten Offering:

(6)

Shares of Common Stock not purchased in the subscription offering may be offered for sale in a firm commitment underwritten offering, subject to such terms, conditions and procedures as New Kearny may determine, in a manner that will achieve wide distribution of New Kearny Common Stock.

If you fall into subscription offering categories (1), (3) or (4), you have subscription rights to purchase New Kearny Common Stock in the subscription offering. If you are not eligible in the subscription offering, you may be eligible to purchase in the community offering, if shares remain available for sale in the community offering. You may use funds in the 401(k) Plan to pay for the shares of New Kearny Common Stock. You may also be able to purchase shares of New Kearny Common Stock in the subscription offering even though you are ineligible to purchase through subscription offering categories (1), (3) or (4) through subscription offering category (2), reserved for its tax-qualified employee plans. You may place an order for the purchase of shares of New Kearny Common Stock by using the enclosed Special Investment Election Form, to be completed and submitted in the manner described below under “How to Order Common Stock in the Stock Offering through the 401(k) Plan.” If your stock order cannot be filled through subscription offering category (2), your order will be treated as a community offering order. Subscription offering orders will have preference over community offering orders in the event of oversubscription.

The above-listed purchase priorities will also apply to any purchase of New Kearny Common Stock outside the 401(k) Plan. If you are eligible to purchase shares of New Kearny Common Stock in the subscription offering, as listed above, you will separately receive an offering materials package in the mail, including a stock order form. You may use the stock order form to subscribe for shares outside the 401(k) Plan. Please refer to the offering prospectus for information on how to make such purchases. If you wish to subscribe for shares of New Kearny outside the 401(k) Plan and you are not eligible to

S-3

participate in the subscription offering, you may request offering materials by calling our Stock Information Center, toll-free, at ________________. Your order would be placed in the community offering, if held. Orders received in the subscription offering take precedence over the community offering orders in the event the stock offering is oversubscribed.

Purchase in the Offering and Oversubscriptions

The trustee of the 401(k) Plan will purchase shares of New Kearny Common Stock in the stock offering in accordance with your directions set forth in the Special Investment Election Form. At the conclusion of the “401(k) Offering Period” (as defined below in the Section on “How to Order Common Stock in the Offering “), the amount that you designate to be used to purchase shares of New Kearny Common Stock will be sold from your existing investment funds held in the 401(k) Plan and the proceeds transferred to a separate account maintained by the 401(k) Plan (the “Kearny Financial Corp. Stock Fund”). The proceeds transferred to the Kearny Financial Corp. Stock Fund will be held separately from your other 401(k) Plan assets, pending the formal completion of the stock offering several weeks later. Prior to the completion of the stock offering, we will determine whether all or any portion of your order will be filled (if the offering is oversubscribed, you may not receive any, or all of, your order, depending on your purchase priority, as described above). The amount that can be used toward your order will be applied to the purchase of shares of New Kearny Common Stock.

In the event the offering is oversubscribed, i.e. , there are more orders for New Kearny Common Stock than shares available for sale in the stock offering, and the trustee is unable to use the full amount allocated by you to purchase New Kearny Common Stock in the offering, the amount that cannot be invested in New Kearny Common Stock and any interest earned on such amount will be transferred from the separate account maintained by the 401(k) Plan and reinvested in the existing investment funds of the 401(k) Plan, in accordance with your then-existing investment elections (in proportion to your investment direction for future contributions). The prospectus describes the allocation procedures in the event of an oversubscription.

If you choose not to direct the investment of your 401(k) Plan account balances towards the purchase of New Kearny Common Stock in the offering, your account balances will remain in the investment funds of the 401(k) Plan as previously directed by you.

Minimum and Maximum Investment

In connection with the stock offering, the 401(k) Plan will permit you to direct the trustee to transfer all or a part of your 401(k) Plan

S-4

account balance (excluding any investment in the current Kearny Financial Corp. Stock Fund) to be used to purchase New Kearny Common Stock in the offering, subject to the maximum purchase limits for investors set forth in the prospectus. The trustee of the 401(k) Plan will then subscribe for shares of the New Kearny Common Stock offered for sale in the offering, in accordance with each participant’s direction. The trustee will pay $10.00 per share, which will be the same price paid by all other persons who purchase shares in the subscription and community offerings. In order to purchase New Kearny Common Stock through the 401(k) Plan, the minimum investment is $250, which will purchase 25 shares. The prospectus describes further the maximum purchase limits for investors in the stock offering.

Value of 401(k) Plan Assets

As of June 30, 2014, the market value of the assets of the 401(k) Plan was approximately $24,998,301.

How to Order Common Stock in the Offering

Enclosed is a Special Investment Election Form on which you can elect to purchase New Kearny Common Stock in the offering. This is done by following the procedures described below. Please note the following stipulations concerning this election:

•

You can elect to transfer all or a percentage of your current 401(k) Plan account on your Special Investment Election Form to purchase New Kearny Common Stock ( excluding any investment in the current Kearny Financial Corp. Stock Fund ).

•

Your election is subject to a minimum purchase of 25 shares, which equals $250.

•

Your election, plus any order you placed outside the 401(k) Plan, are together subject to a maximum purchase of 150,000 shares, which equals $1,500,000. Please see the Prospectus of New Kearny for additional purchase limitations.

•

The election period for the 401(k) Plan purchases ends at 5:00 p.m., Eastern Time, on __________ __, 2014 (the “401(k) Plan Offering Period”).

•

After your election is accepted, funds will be transferred from each of your designated accounts and the transferred amount will remain in an interest-bearing account until the conversion closes. At that time, the shares of Common Stock purchased based on your election will be transferred to the Kearny Financial Corp. Stock Fund and any remaining funds

S-5

will be transferred out of the interest-bearing account for investment in other funds under the Plan, based on your election currently on file for future contributions. If you do not have an election on file for future contributions, any remaining funds will be transferred to the SSgA Short Term Investment Fund to be reinvested in your discretion.

•

The amount transferred to the interest-bearing account needs to be segregated and held until the conversion closes. Therefore, this money is not available for distributions, loans or withdrawals.

•

During the offering period, however, you will continue to have the ability to transfer amounts not invested in the Kearny Financial Corp. Stock Fund among all the other investment funds on a daily basis.

If you wish to use all or a portion of your account balance in the 401(k) Plan to purchase New Kearny Common Stock in the stock offering, you should indicate that decision on your Special Investment Election Form. If you do not wish to make an election, you should check the box at the bottom of the Special Investment Election Form. You may return the form in one of several ways: (1) by using the enclosed self-addressed envelope, (2) by faxing it to (973) 439-3943, (3) by delivering it in person, (4) by email at kmanfredo@kearnyfederalsavings.net , or (5) by interoffice mail to Kimberly T. Manfredo, Senior Vice President/Director of Human Resources at Kearny Federal Savings Bank, 120 Passaic Avenue, Fairfield, New Jersey 07004, to be received no later than 5:00 p.m., Eastern Time, on ____________ __, 2014.

Special Investment Election Form Delivery Deadline

If you wish to purchase shares of New Kearny Common Stock through the 401(k) Plan, you must return your Special Investment Election Form to Kimberly T. Manfredo, Senior Vice President/Director of Human Resources at Kearny Federal Savings Bank, 120 Passaic Avenue, Fairfield, New Jersey 07004 or by faxing it to (973) 439-3943, to be received no later than 5:00 p.m., Eastern Time, on _________ __, 2014. You may return your Special Investment Election Form by hand delivery, mail, using the self-addressed pre-paid envelope, email (sending it to Kimberly T. Manfredo, Senior Vice President/Director of Human Resources), or faxing it, so long as it is returned by the time specified .

Irrevocability of Transfer Direction

Once you make an election to purchase shares of New Kearny Common Stock in the stock offering through the 401(k) Plan, you may not change your election . Your election is irrevocable .

S-6

Future Direction to Purchase and
Sell Common Stock

You will be able to purchase or sell shares of New Kearny Common Stock through the 40(k) Plan after the stock offering. In accordance with the 401(k) Plan procedures, you may direct that your future contributions or all or a portion of your account balance in the 401(k) Plan (excluding any investment in the current Kearny Financial Corp. Stock Fund) be transferred to the Kearny Financial Corp. Stock Fund to be used to purchase shares of New Kearny Common Stock. After the stock offering, to the extent that shares are available, the trustee of the 401(k) Plan will acquire shares of New Kearny Common Stock at your election in open market transactions at the prevailing price, which may be less than or more than $10.00 per share. You may change your investment allocation on a daily basis.

Special restrictions may apply to purchasing shares of New Kearny Common Stock by the participants who are subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to the purchase and sale of securities by officers, directors and principal stockholders of New Kearny.

Please note that if you are an officer of Kearny Federal Savings Bank that is restricted by the regulations of the Board of Governors of the Federal Reserve System from selling shares of New Kearny Common Stock acquired in the stock offering for one year, the New Kearny Common Stock that you purchased in the stock offering will not be tradable until the one-year trading restriction has lapsed.

Voting Rights of Common Stock

Although not required by the 401(k) Plan, it is anticipated that you will be given an opportunity to direct the trustee as to how to vote any shares of New Kearny Common Stock that are credited to your account. If the trustee does not receive your voting instructions, the 401(k) Plan administrator will exercise these rights as it determines in its discretion and will direct the trustee accordingly. All voting instructions will be kept confidential.

S-7

DESCRIPTION OF THE 401(K) PLAN

Introduction

Kearny Federal Savings Bank (the “Bank”) originally adopted the 401(k) Plan effective as of November 1, 2004, and subsequently amended and restated the 401(k) Plan effective as of January 1, 2010. The 401(k) Plan is a tax-qualified plan established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “ Code ”).

The Bank intends that the 401(k) Plan, in form and operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. The Bank will adopt any amendments to the 401(k) Plan that may be necessary to ensure the continuing qualified status of the 401(k) Plan under the Code and applicable Treasury Regulations.

Employee Retirement Income Security Act ( “ ERISA ” ). The 401(k) Plan is an “individual account plan” other than a “money purchase pension plan” within the meaning of ERISA. As such, the 401(k) Plan is subject to all of the provisions of Title I (Protection of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except for the funding requirements contained in Part 3 of Title I of ERISA which by their terms do not apply to an individual account plan (other than a money purchase plan). The 401(k) Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained in Title IV of ERISA are not applicable to participants or beneficiaries under the 401(k) Plan.

Reference to Full Text of 401(k) Plan . The following portions of this prospectus supplement summarize certain provisions of the 401(k) Plan. They are not complete and are qualified in their entirety by the full text of the 401(k) Plan. Copies of the 401(k) Plan are available to all employees by filing a request with the 401(k) Plan administrator at Kearny Federal Savings Bank, 120 Passaic Avenue, Fairfield, New Jersey 07004. You are urged to read carefully the full text of the 401(k) Plan.

Eligibility and Participation

Employees who are at least age 21 and complete three months of service are eligible to participate in the 401(k) Plan on the first day of the month coinciding with or next following the date the employee satisfies the eligibility requirements.

As of June 30, 2014, there were approximately 412 employees and former employees eligible to participate in the 401(k) Plan and 332 employees were actually participating in the 401(k) by making deferrals. The 401(k) Plan Year is January 1 to December 31.

S-8

Contributions under the 401(k) Plan

Salary Deferrals . You are permitted to defer, on a pre-tax basis, up to 75% of your compensation, subject to certain restrictions imposed by the Code, and to have that amount contributed to the 401(k) Plan on your behalf. For purposes of the 401(k) Plan, “compensation” means your base salary plus overtime. In accordance with Internal Revenue Service (the “ IRS ”) limitations, the annual compensation of each participant taken into account under the 401(k) Plan, for 2014, is limited to $260,000 (and as may be increased annually by the IRS). You may change the contribution rate of your pre-tax deferrals one time per pay period.

Matching Employer Contributions . The Bank will make a matching employer contribution equal to 100% of a participant’s elective deferrals, up to 3% of a participant’s compensation. The Bank will not match employee catch-up contributions described below.

Limitations on Contributions

Limitations on Employee Salary Deferrals . For the 401(k) Plan Year beginning January 1, 2014, the amount of your before-tax contributions may not exceed $17,500 per calendar year. In addition, if you are at least 50 years old in 2014, you will be able to make a “catch-up” contribution of up to $5,500 in addition to the $17,500 limit. The “catch-up” contribution limit may be adjusted periodically by law, based on changes in the cost of living. Contributions in excess of these limits, as applicable to you, are known as excess deferrals. If you defer amounts in excess of these limitations, as applicable to you, your gross income for federal income tax purposes will include the excess in the year of the deferral. In addition, unless the excess deferral is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received by you in the tax year in which the contribution is made.

Contribution Limit . Generally, the law imposes a maximum limit on the amount of contributions you may receive under the 401(k) Plan. This limit applies to all contributions to the 401(k) Plan, including your salary deferrals and all other employer contributions made on your behalf during the year, excluding earnings and any transfers/rollovers. For the 401(k) Plan Year beginning January 1, 2014, this total cannot exceed the lesser of $52,000 or 100% of your annual compensation.

Benefits under the 401(k) Plan

Vesting . At all times, you have a fully vested, nonforfeitable interest in the salary deferrals you have made to the 401(k) Plan. In addition, all employer matching contributions, rollover contributions and actual earnings thereon are 100% vested at all times.

S-9

Withdrawals and Distributions from the 401(k) Plan

Applicable federal law requires the 401(k) Plan to impose substantial restrictions on the right of a 401(k) Plan participant to withdraw amounts held for his or her benefit under the 401(k) Plan prior to the participant’s termination of employment with the employer.

In-Service Withdrawals . In-service withdrawals are permitted with respect to employee pre-tax elective deferrals and the earnings thereon. In-service withdrawals of employee rollover contribution and earnings, and employer matching contributions and earnings are permitted only in the event of hardship or attainment of age 59 1/2.

Withdrawals upon Termination . You may request a distribution from your account following your termination of employment. Following your termination, you may elect to leave your account balance in the 401(k) Plan and defer commencement of receipt of your vested balance until no later than April 1 of the calendar year following the calendar year in which you attain age 70 ¹ ⁄ ₂ , except to the extent your vested account balance as of the date of termination is less than $500, in which case your interest in the 401(k) Plan will be cashed out. You may make withdrawals from your account at any time after terminating employment and may continue to change investment instructions with respect to your remaining account balance.

Disability . In the event you become disabled in accordance with the definition of disability under the 401(k) Plan, you will be entitled to the same withdrawal rights as if terminating employment.

Form of Distribution . Your benefits under the 401(k) Plan will be distributed to you or your beneficiary in one of the following forms: (i) a single lump-sum payment; or (ii) a lump sum and partial lump sum payments plus installment payments, or (iii) distributions in kind of employer stock. Normal retirement age is 65.

Pre-Retirement Death . In the event of your death, the value of your account will be payable to your beneficiary. Payment will be made in a lump sum, unless the payment would exceed $500 and you elected prior to death that the payment be made in annual installments over a period not to exceed 5 years (10 years if your spouse is your beneficiary). If such an election is not in effect at the time of death, your beneficiary may elect to receive the benefit in the form of a lump sum distribution, annual installments over a period not to exceed 5 years (10 years if your spouse is the beneficiary) or make withdrawals as often as once per year, except that any balance remaining must be withdrawn by the 5 ^th anniversary (10 ^th anniversary if your spouse is the beneficiary) of your death.

Loans . Loans will be permitted from your account under the 401(k) Plan.

Investment of Contributions and Account Balances

All amounts credited to your accounts under the 401(k) Plan are held in the 401(k) Plan trust (the “ Trust ”) which is administered by the trustee appointed by the Bank’s board of directors. Prior to the effective date of the offering, you were provided the opportunity to direct the investment of your account into one of the following investment options:

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SSgA Conservative Strategic Balanced Fund

SSgA Moderate Strategic Balanced Fund

SSgA Aggressive Strategic Balanced Fund

SSgA S&P 500 Index Fund

MetLife Stable Value Fund

SSgA S&P Mid Cap Index Fund

SSgA Russell Small Cap Index Fund

SSgA NASDAQ 100 Index Fund

SSgA International Index Fund

10.

SSgA REIT Index NL

11.

SSgA Short Term Investment Fund

12.

SSgA U.S. Long Treasury Index Fund

13.

SSgA Target Retirement Income Fund

14.

SSgA Target Retirement 2010 Fund

15.

SSgA Target Retirement 2015 Fund

16.

SSgA Target Retirement 2020 Fund

17.

SSgA Target Retirement 2025 Fund

18.

SSgA Target Retirement 2030 Fund

19.

SSgA Target Retirement 2035 Fund

20.

SSgA Target Retirement 2040 Fund

21.

SSgA Target Retirement 2045 Fund

22.

SSgA Target Retirement 2050 Fund

23.

SSgA Target Retirement 2055 Fund

24.

SSgA U.S. Bond Index Fund

25.

SSgA Russell Large Cap Growth Index Fund

26.

SSgA Russell Large Cap Value Index Fund

27.

Kearny Financial Corp. Stock Fund

Performance History and Description of Funds

The following provides performance data with respect to the investment options available under the 401(k) Plan:


Fund	Performance as of June 30, 2014
	Total Return 3-Month		Annualized Total Return 1-Year		Annualized Total Return 3-Year		Annualized Total Return 5-Year		Annualized Total Return 10-Year
SSgA Conservative Strategic Balanced Fund		2.49%		8.46%		5.70%		7.41%		5.38%
SSgA Moderate Strategic Balanced Fund		3.33%		14.57%		9.18%		11.46%		6.48%
SSgA Aggressive Strategic Balanced Fund		4.15%		20.90%		12.59%		15.42%		7.27%
SSgA S&P 500 Index Fund		5.09%		24.02%		16.02%		18.29%		7.26%
MetLife Stable Value Fund		0.44%		1.87%		2.42%		2.87%		3.80%
SSgA S&P Mid Cap Index Fund		4.18%		24.65%		14.70%		21.09%		9.98%
SSgA Russell Small Cap Index Fund		1.87%		23.05%		13.96%		19.66%		8.23%
SSgA NASDAQ 100 Index Fund		7.27%		33.51%		19.30%		21.83%		9.92%
SSgA International Index Fund		4.11%		23.26%		7.77%		11.43%		6.53%
SSgA REIT Index NL		7.02%		12.63%		10.73%		22.99%		8.58%
SSgA Short-Term Investment Fund		-0.06%		-0.24%		-0.19%		-0.15%		1.48%

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SSgA U.S. Long Treasury Index Fund	4.58%	5.71%	8.29%	6.85%	6.98%
SSgA Target Retirement Income Fund	2.85%	9.08%	5.94%	8.04%	4.78%	*
SSgA Target Retirement Fund 2010	3.02%	9.87%	7.31%	9.96%	5.19%	*
SSgA Target Retirement Fund 2015	3.69%	13.15%	9.43%	12.14%	5.84%	*
SSgA Target Retirement Fund 2020	3.90%	15.93%	10.76%	13.44%	6.62%	*
SSgA Target Retirement Fund 2025	4.02%	17.60%	11.43%	14.36%	6.42%	*
SSgA Target Retirement Fund 2030	4.15%	18.93%	11.84%	14.92%	6.81%	*
SSgA Target Retirement Fund 2035	4.28%	20.03%	11.76%	15.28%	6.26%	*
SSgA Target Retirement Fund 2040	4.39%	21.10%	11.88%	15.37%	7.02%	*
SSgA Target Retirement Fund 2045	4.42%	21.25%	11.93%	15.47%	6.58%	*
SSgA Target Retirement Fund 2050	4.42%	21.25%	11.93%	15.44%	4.86%	*
SSgA Target Retirement Fund 2055	4.42%	21.25%	11.94%	N/A	10.85%	*
U.S. Bond Index Fund	1.90%	3.80%	3.07%	4.30%	4.43%
SSgA Russell Large Cap Growth Index Fund	5.15%	26.90%	16.26%	19.23%	8.21%
SSgA Russell Large Cap Value Index Fund	5.10%	23.75%	16.87%	19.25%	8.08%
Kearny Financial Corp. Stock Fund	2.44%	44.33%	18.45%	5.76%	3.36%	*

*Since fund inception

The following is a description of each of the 401(k) Plan’s investment funds and other investments:

SSgA Conservative Strategic Balanced Fund. The fund seeks to approximate as closely as practicable, before expenses, the return of the Conservative Strategic Balanced Custom Index over the long term. The fund seeks to offer a broad diversification and a disciplined rebalancing process by investing approximately 20% of the fund’s assets in U.S. stocks, 5% in international stocks and 75% in U.S. bonds.

SSgA Moderate Strategic Balanced Fund. The fund seeks to approximate as closely as practicable, before expenses, the return of the Moderate Strategic Balanced Custom Index over the long term. The fund seeks to offer a broad diversification and a disciplined rebalancing process by investing approximately 45% of the fund’s assets in U.S. stocks, 10% in international stocks and 45% in U.S. bonds.

SSgA Aggressive Strategic Balanced Fund . The fund seeks to approximate as closely as practicable, before expenses, the return of the Aggressive Strategic Balanced Custom Index over the long term. The fund seeks to offer a broad diversification and a disciplined rebalancing process by investing approximately 70% of the fund’s assets in U.S. stocks, 15% in international stocks and 15% in U.S. bonds.

SSgA S&P 500 Index Fund . The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the S&P 500 over the long term.

MetLife Stable Value Fund . The fund’s objective is the safety and preservation of principal and accumulated interest for participant-initiated transactions. The interest credited to balances in the fund will reflect both current market conditions and performance of the underlying investments in the fund.

SSgA S&P MidCap Index Fund. The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the S&P MidCap 400 Index over the long term.

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SSgA Russell Small Cap Index Fund. The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Russell 2000 Index over the long term.

SSgA NASDAQ 100 Index Fund . The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Nasdaq-100 Index over the long term.

SSgA International Index Fund. The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the MSCI EAFE Index over the long term.

SSgA REIT Index NL . The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Dow Jones U.S. Select REIT Index over the long term.

SSgA Short Term Investment . The fund seeks to provide safety of principal, daily liquidity and a competitive yield over the long term. The fund is not a “money market fund” registered with the Securities and Exchange Commission, and is not subject to the various rules and limitations that apply to such funds. There can be no assurance that the fund will maintain a stable net asset value.

SSgA U.S. Long Treasury Index Fund . The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Barclays Capital U.S. Long Treasury Bond Index over the long term.

SSgA Target Retirement Income Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 26% U.S. equities, 4% international equities, 65% U.S. fixed income and 5% real estate.

SSgA Target Retirement 2010 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 31.875% U.S. equities, 6.25% international equities, 56.875% U.S. fixed income and 5% real estate.

SSgA Target Retirement 2015 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 41% U.S. equities, 11.25% international equities, 44.375% U.S. fixed income and 3.375% real estate.

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SSgA Target Retirement 2020 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 53% U.S. equities, 16.5% international equities, and 30.5% U.S. fixed income.

SSgA Target Retirement 2025 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 56.5% U.S. equities, 18.2% international equities, and 25.3% U.S. fixed income.

SSgA Target Retirement 2030 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 44.6% U.S. equities, 29.7% international equities, 22.2% U.S. fixed income, and 3.5% commodities.

SSgA Target Retirement 2035 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 63.2% U.S. equities, 23.3% international equities, and 13.5% U.S. fixed income.

SSgA Target Retirement 2040 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 65% U.S. equities, 25% international equities, and 10% U.S. fixed income.

SSgA Target Retirement 2045 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 65% U.S. equities, 25% international equities, and 10% U.S. fixed income.

SSgA Target Retirement 2050 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprise of 65% U.S. equities, 25% international equities, and 10% U.S. fixed income.

SSgA Target Retirement 2055 Fund . The fund seeks to provide a total investment return to approximate as closely as possible, before expenses, the performance of a custom index over the long term. The fund seeks to approximate its custom benchmark, which is broadly comprised of 65% U.S. equities, 25% international equities, and 10% U.S. fixed income.

SSgA U.S. Bond Index Fund . The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Barclays Capital U.S. Aggregate Bond Index over the long term.

SSgA Russell Large Cap Growth Index Fund . The fund seeks to offer broad, low cost exposure to the stock of large U.S. companies considered to have above average growth potential. The fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the Russell 1000 Growth Index over the long term.

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SSgA Russell Large Cap Value Index Fund . The fund seeks to offer broad, low cost exposure to large U.S. value stocks. The Fund seeks an investment return that approximates as closely as practicable, before expense, the performance of the Russell 1000 Value Index over the long term.

New Kearny Common Stock. In connection with the stock offering, you may, in the manner described earlier, direct the trustee to invest all or a portion of your 401(k) Plan account in New Kearny Common Stock (excluding any investment in the current Kearny Financial Corp. Stock Fund). The trustee will use all amounts elected by participants to acquire shares of New Kearny Common Stock in the conversion and common stock offering, subject to the purchase priorities described herein. After the offering, you may elect to invest all or a portion of your payroll deduction contributions or employer contributions in New Kearny Common Stock. You may also elect to invest in New Kearny Common Stock with all or a portion of your accounts currently invested in other funds under the 401(k) Plan. It is expected that all purchases will be made at prevailing market prices. Pending investment in New Kearny Common Stock, amounts allocated towards the purchase of shares in the offering will be held in a separate account maintained by the 401(k) Plan. In the event of an oversubscription, any earnings that result therefrom will be reinvested among the other funds of the 401(k) Plan in accordance with your then existing investment election. For a discussion of material risks of investing in New Kearny Common Stock, you should read the “Risk Factors” section of the accompanying prospectus and the section of the prospectus supplement called “Your Rights Concerning Employer Securities” (see below).

An investment in any of the investment options listed above is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. As with any investment option, there is always a risk that you may lose money on your investment in any of the investment options listed above.

Administration of the 401(k) Plan

The Trustee and Custodian . Effective September 1, 2014, the trustee of the Kearny Financial Corp. Stock Fund is Pentegra Trust Company and Reliance Trust Company serves as the trustee of all other 401(k) Plan assets and the custodian of all 401(k) Plan assets (collectively, the “ Trustee ”).

401(k) Plan Administrator . Pursuant to the terms of the 401(k) Plan, the 401(k) Plan is administered by the 401(k) Plan administrator, Kearny Federal Savings Bank. The address of the 401(k) Plan administrator is 120 Passaic Avenue, Fairfield, New Jersey 07004, telephone number (973) 244-4500. The 401(k) Plan administrator is responsible for the administration of the 401(k) Plan, interpretation of the provisions of the 401(k) Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining the 401(k) Plan, maintenance of 401(k) Plan records, books of account and all other data necessary for the proper administration of the 401(k) Plan, preparation and filing of all returns and reports relating to the 401(k) Plan which are required to be filed with the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries and others under Sections 104 and 105 of ERISA.

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Reports to 401(k) Plan Participants . The 401(k) Plan administrator will provide access to your statement at least quarterly showing the balance in your account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments to your account to reflect earnings or losses (if any).

Amendment and Termination

It is the intention of the Bank to continue the 401(k) Plan indefinitely. Nevertheless, the Bank may terminate the 401(k) Plan at any time. If the 401(k) Plan is terminated in whole or in part, then regardless of other provisions in the 401(k) Plan, you will have a fully vested interest in your accounts. The Bank reserves the right to make any amendment or amendments to the 401(k) Plan which do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants or their beneficiaries; provided, however, that the Bank may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with ERISA.

Merger, Consolidation or Transfer

In the event of the merger or consolidation of the 401(k) Plan with another plan, or the transfer of the trust assets to another plan, the 401(k) Plan requires that you would, if either the 401(k) Plan or the other plan terminates, receive a benefit immediately after the merger, consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before the merger, consolidation or transfer, if the 401(k) Plan had then terminated.

Federal Income Tax Consequences

The following is a brief summary of the material federal income tax aspects of the 401(k) Plan. You should not rely on this summary as a complete or definitive description of the material federal income tax consequences relating to the 401(k) Plan. Statutory provisions change, as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws. Please consult your tax advisor with respect to any distribution from the 401(k) Plan and transactions involving the 401(k) Plan.

As a “tax-qualified retirement plan,” the Code affords the 401(k) Plan special tax treatment, including:

(1)

the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the 401(k) Plan each year;

(2)

participants pay no current income tax on amounts contributed by the employer on their behalf; and

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(3)

earnings of the 401(k) Plan are tax-deferred, thereby permitting the tax-free accumulation of income and gains on investments.

The Bank will administer the 401(k) Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.

Lump-Sum Distribution . A distribution from the 401(k) Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution if it is made within one taxable year, on account of the participant’s death, disability or separation from service, or after the participant attains age 59 ¹ ⁄ ₂ , and consists of the balance credited to participants under the 401(k) Plan and all other profit sharing plans, if any, maintained by the Bank. The portion of any lump-sum distribution required to be included in your taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution, less the amount of after-tax contributions, if any, you have made to this 401(k) Plan and any other profit sharing plans maintained by the Bank, which is included in the distribution.

New Kearny Common Stock Included in Lump-Sum Distribution . If a lump-sum distribution includes New Kearny Common Stock, the distribution generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any net unrealized appreciation with respect to New Kearny Common Stock; that is, the excess of the value of New Kearny Common Stock at the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of New Kearny Common Stock, for purposes of computing gain or loss on its subsequent sale, equals the value of New Kearny Common Stock at the time of distribution, less the amount of net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of New Kearny Common Stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute long-term capital gain, regardless of the holding period of New Kearny Common Stock. Any gain on a subsequent sale or other taxable disposition of New Kearny Common Stock, in excess of the amount of net unrealized appreciation at the time of distribution, will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal Revenue Service.

Distributions: Rollovers and Direct Transfers to Another Qualified Plan or to an IRA . You may roll over virtually all distributions from the 401(k) Plan to another qualified plan or to an individual retirement account in accordance with the terms of the other plan or account.

Before Making a Decision to Invest, Please Review Your Rights Concerning Employer Securities and The Importance of Diversification

Federal law provides specific rights concerning investments in employer securities. Because you may in the future have investments in New Kearny Common Stock under the 401(k) Plan, you should take the time to read the following information carefully.

Your Rights Concerning Employer Securities . The 401(k) Plan allows you to elect to move any portion of your account that is invested in New Kearny Common Stock from that investment into other investment alternatives under the 401(k) Plan. You may contact the 401(k)

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Plan administrator shown above for specific information regarding this right, including how to make this election. In deciding whether to exercise this right, you will want to give careful consideration to the information below that describes the importance of diversification. All of the investment options under the 401(k) Plan are available to you if you decide to diversify out of your investment in New Kearny Common Stock.

The Importance of Diversifying Your Retirement Savings . To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.

In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the 401(k) Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the rights described here and how these rights affect the amount of money that you invest in employer common stock through the 401(k) Plan.

It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the 401(k) Plan to help ensure that your retirement savings will meet your retirement goals.

Additional ERISA Considerations

As noted above, the 401(k) Plan is subject to certain provisions of ERISA, including special provisions relating to control over the 401(k) Plan’s assets by participants and beneficiaries. The 401(k) Plan’s feature that allows you to direct the investment of your account balances is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over 401(k) Plan assets by a participant or beneficiary. The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment discretion. Second, no person who otherwise is a fiduciary, such as the Bank, the 401(k) Plan administrator, or the 401(k) Plan’s trustee is liable under the fiduciary responsibility provisions of ERISA for any loss which results from your exercise of control over the assets in your 401(k) Plan account.

Because you will be entitled to invest all or a portion of your account balance in the 401(k) Plan in New Kearny Common Stock, the regulations under Section 404(c) of the ERISA require that the 401(k) Plan establish procedures that ensure the confidentiality of your decision to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights with respect to New Kearny Common Stock be conducted in a way that ensures the confidentiality of your exercise of these rights.

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Securities and Exchange Commission Reporting and Short-Swing Profit Liability

Section 16 of the Exchange Act imposes reporting and liability requirements on officers, directors, and persons beneficially owning more than 10% of publicly traded companies, such as New Kearny. Section 16(a) of the Securities Exchange Act of 1934 requires the filing of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10% of the shares of New Kearny, a Form 3 reporting initial beneficial ownership must be filed with the Securities and Exchange Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported periodically, either on a Form 4 within two business days after the change occurs, or annually on a Form 5 within 45 days after the close of New Kearny’s fiscal year. Discretionary transactions in and beneficial ownership of New Kearny Common Stock by officers, directors and persons beneficially owning more than 10% of New Kearny Common Stock generally must be reported to the Securities and Exchange Commission by such individuals.

In addition to the reporting requirements described above, Section 16(b) of the Exchange Act provides for the recovery by New Kearny of profits realized by an officer, director or any person beneficially owning more than 10% of New Kearny Common Stock resulting from non-exempt purchases and sales of New Kearny Common Stock within any six-month period.

The Securities and Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.

Except for distributions of New Kearny Common Stock due to death, disability, retirement, termination of employment or under a qualified domestic relations order, persons affected by Section 16(b) are required to hold shares of New Kearny Common Stock distributed from the 401(k) Plan for six months following such distribution and are prohibited from directing additional purchases of New Kearny Common Stock for six months after receiving such a distribution.

Financial Information Regarding 401(k) Plan Assets

Financial information representing the net assets available for 401(k) Plan benefits and the change in net assets available for

401(k) Plan benefits at June 30, 2014, is available upon written request to the 401(k) Plan administrator at the address shown above.

LEGAL OPINION

The validity of the issuance of New Kearny Common Stock has been passed upon by Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., which firm is acting as special counsel to Kearny Federal Savings Bank in connection with New Kearny’s stock offering.

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SUBSCRIPTION AND COMMUNITY

OFFERING PROSPECTUS

KEARNY FINANCIAL CORP.

(Proposed Holding Company for Kearny Federal Savings Bank)

Up to 83,375,000 Shares of Common Stock

Kearny Financial Corp., a Maryland corporation, is offering up to 83,375,000 shares of common stock for sale at $10.00 per share on a best efforts basis in connection with the conversion of Kearny MHC from the mutual holding company to the stock holding company form of organization. The shares we are offering represent the ownership interest in Kearny Financial Corp., a federal corporation, currently owned by Kearny MHC. In this prospectus, we will refer to Kearny Financial Corp., the Maryland corporation, as “New Kearny,” and we will refer to Kearny Financial Corp., the federal corporation, as “Kearny-Federal.” Kearny-Federal’s common stock is currently traded on the Nasdaq Global Select Market under the trading symbol “KRNY,” and we expect the shares of New Kearny common stock will also trade on the Nasdaq Global Select Market under the symbol “KRNY.”

The shares of common stock are first being offered in a subscription offering to eligible depositors and certain borrowers, and tax-qualified employee benefit plans of Kearny Federal Savings Bank, as described in this prospectus. Eligible depositors and certain borrowers of Kearny Federal Savings Bank include certain former depositors and certain former borrowers of Atlas Bank, which was recently merged into Kearny Federal Savings Bank (hereinafter referred to as “Kearny Bank”). Shares not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given to residents of the communities served by Kearny Bank and existing stockholders of Kearny-Federal. Any shares of common stock not purchased in the subscription or community offerings may be offered to the public through a syndicate of broker-dealers, referred to in this prospectus as the syndicated offering, or, in a separate firm commitment underwritten public offering. The syndicated offering or the firm commitment underwritten offering may commence before the subscription and community offerings (including any extensions) have expired. The subscription, community, syndicated and firm commitment underwritten offerings are collectively referred to in this prospectus as the offering. We must sell a minimum of 61,625,000 shares in order to complete the offering and the conversion. In addition to the shares that we will sell in the offering, we intend to establish a charitable foundation in connection with the conversion and contribute to it 500,000 shares of our common stock and $5.0 million in cash such that the total contribution will equal $10.0 million.

The minimum order is 25 shares. The subscription offering is expected to expire at p.m., Eastern Time, on [expiration date]. We may extend this expiration date without notice to you until [extension date]. We expect that the community offering, if held, will terminate at the same time, although it may continue without notice to you until [extension date] or longer if the Federal Reserve Board approves a later date. Once submitted, orders are irrevocable unless the subscription offering and/or community offering are terminated or extended, with regulatory approval, beyond [extension date], or the number of shares of common stock to be sold is increased to more than 83,375,000 shares or decreased to less than 61,625,000 shares. If the offering is extended past [extension date], all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to such notice, we will promptly return your funds with interest at 0.15% per annum or cancel your deposit account withdrawal authorization. If the number of shares to be sold in the offering is increased to more than 83,375,000 shares or decreased to less than 61,625,000 shares, we will resolicit subscribers, and all funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest. Funds received in the subscription offering and/or community offering will be held in a segregated account at Kearny Bank and will earn interest at 0.15% per annum until completion or termination of the offering. No shares purchased in the subscription offering or community offering will be issued until the completion of any syndicated or firm commitment underwritten offering.

In addition to the shares we are selling in the offering, the shares of Kearny-Federal currently held by the public will be exchanged for shares of common stock of New Kearny based on an exchange ratio that will result in existing public stockholders of Kearny-Federal owning approximately the same percentage of New Kearny common stock as they owned of Kearny-Federal common stock immediately prior to the completion of the conversion. The number of shares we expect to issue in the exchange ranges from 18,147,815 shares to 24,552,927 shares.

Sandler O’Neill & Partners, L.P. will assist us in selling the shares on a best efforts basis in the subscription offering, and if held, the community offering, and will serve as sole book-running manager for any syndicated offering or firm commitment underwritten offering. Sandler O’Neill & Partners, L.P. is not required to purchase any shares of common stock that are sold in the subscription offering or, if held, the community offering.

OFFERING SUMMARY

Price: $10.00 per share


	Minimum		Midpoint		Maximum
Number of shares		61,625,000		72,500,000		83,375,000
Gross offering proceeds	$	616,250,000	$	725,000,000	$	833,750,000
Estimated offering expenses, excluding selling agent and underwriters’ commissions	$	2,730,000	$	2,730,000	$	2,730,000
Selling agent and underwriters’ commissions ⁽¹⁾	$	18,461,425	$	21,669,550	$	24,877,675
Estimated net proceeds	$	595,058,575	$	700,600,450	$	806,142,325
Estimated net proceeds per share	$	9.66	$	9.66	$	9.67

(1)

The amounts shown assume that 50% of the shares are sold in the subscription and community offerings with a fee of 1.0% on all shares, excluding insider purchases, shares purchased by our employee stock ownership plan and shares contributed to the charitable foundation, with the remaining 50% sold in a syndicated or firm commitment underwritten offering with a fee of 5.0%. See “Pro Forma Data” and “The Conversion and Offering—Plan of Distribution; Selling Agent and Underwriter Compensation” for information regarding compensation to be received by Sandler O’Neill & Partners, L.P. in the subscription and community offerings and the compensation to be received by Sandler O’Neill & Partners, L.P. and the other broker-dealers that may participate in the syndicated or firm commitment underwritten offering. If all shares of common stock were sold in the syndicated or firm commitment underwritten offering, the selling agent and broker-dealers’ commissions or underwriter discounts would be approximately $30.8 million, $36.3 million and $41.7 million at the minimum, midpoint and maximum levels of the offering, respectively.

This investment involves a degree of risk, including the possible loss of principal.

Please read “ Risk Factors ” beginning on page 18.

These securities are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Neither the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

Sandler O’Neill + Partners, L.P.

For assistance, please contact the Stock Information Center at [stock center phone #].

The date of this prospectus is [Prospectus Date].

[MAP TO BE INSERTED ON INSIDE FRONT COVER]

TABLE OF CONTENTS


	Page

SUMMARY		1
RISK FACTORS		18
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA		29
FORWARD-LOOKING STATEMENTS		31
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING		32
OUR DIVIDEND POLICY		34
MARKET FOR THE COMMON STOCK		34
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE		36
CAPITALIZATION		37
PRO FORMA DATA		39
BUSINESS OF NEW KEARNY AND KEARNY-FEDERAL		43
BUSINESS OF KEARNY BANK		43
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		93
SUPERVISION AND REGULATION		125
TAXATION		132
MANAGEMENT		133
COMPENSATION DISCUSSION AND ANALYSIS		138
COMPENSATION RISK ASSESSMENT		144
BENEFICIAL OWNERSHIP OF COMMON STOCK		158
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS		159
THE CONVERSION AND OFFERING		160
KEARNYBANK FOUNDATION		183
COMPARISON OF STOCKHOLDERS’ RIGHTS FOR EXISTING STOCKHOLDERS OF KEARNY-FEDERAL		186
RESTRICTIONS ON ACQUISITION OF NEW KEARNY		192
DESCRIPTION OF CAPITAL STOCK OF NEW KEARNY FOLLOWING THE CONVERSION		195
TRANSFER AGENT		196
EXPERTS		196
LEGAL MATTERS		197
CHANGE IN ACCOUNTANTS		197
WHERE YOU CAN FIND ADDITIONAL INFORMATION		197
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		199

SUMMARY

The following summary explains the significant aspects of the conversion, the offering and the exchange of existing shares of Kearny-Federal common stock for shares of New Kearny common stock. It may not contain all of the information that is important to you. Before making an investment decision, you should read this entire document carefully, including the consolidated financial statements and the notes thereto, and the section entitled “Risk Factors.”

Our Organizational Structure and the Proposed Conversion

Since 2005 we have operated as a public company in a two-tiered public mutual holding company structure. Kearny-Federal is our federally-chartered, publicly-traded stock holding company and the parent company of Kearny Federal Savings Bank, which we refer to as “Kearny Bank” in this prospectus. At June 30, 2014, Kearny-Federal had consolidated assets of $3.51 billion, deposits of $2.48 billion and stockholders’ equity of $494.7 million. Kearny-Federal’s parent company is Kearny MHC, a federally chartered mutual holding company. At June 30, 2014, Kearny-Federal had 67,267,865 shares of common stock outstanding, of which 51,960,337 shares, or 77.2%, were held by Kearny MHC, and the remaining 15,307,528 shares, or 22.8%, were owned by the public.

Pursuant to the terms of the plan of conversion and reorganization, we are now converting from the mutual holding company corporate structure to the stock holding company corporate structure. As part of the conversion, we intend to establish and fund a new charitable foundation, the KearnyBank Foundation (the “Foundation”), which will support qualified charities in the communities we serve. Upon completion of the conversion, Kearny MHC and Kearny-Federal will cease to exist, and New Kearny will become the successor corporation to Kearny-Federal. The shares of New Kearny being offered in this offering represent the 77.2% ownership interest in Kearny-Federal currently held by Kearny MHC. Public stockholders of Kearny-Federal will receive shares of common stock of New Kearny in exchange for their shares of Kearny-Federal at an exchange ratio intended to preserve the same aggregate ownership interest in New Kearny as they had in Kearny-Federal, as adjusted to reflect certain assets held by Kearny MHC. Kearny MHC’s shares of Kearny-Federal will be cancelled.

The following diagram shows our current organizational structure, reflecting ownership percentages as of June 30, 2014:

LOGO

After the conversion and offering are completed, we will be organized as a fully public holding company, as follows:

LOGO

Our Business

Kearny Bank was originally founded in 1884 as a New Jersey mutual building and loan association. It obtained federal insurance of accounts in 1939 and received a federal charter in 1941. Kearny Bank’s deposits are federally insured by the Deposit Insurance Fund as administered by the Federal Deposit Insurance Corporation (“FDIC”) and Kearny Bank is regulated by the Office of the Comptroller of the Currency (“OCC”), as successor to the Office of Thrift Supervision (“OTS”) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), and by the FDIC.

Kearny-Federal is a savings and loan holding company whose primary business is the ownership and operation of Kearny Bank. Kearny Bank is principally engaged in the business of attracting deposits from the general public in New Jersey and New York and using these deposits, together with other funds, to originate or purchase loans for our portfolio and to invest in securities. Our loan portfolio is primarily comprised of loans collateralized by residential and commercial real estate, augmented by secured and unsecured loans to businesses and consumers. We also maintain a portfolio of investment securities, primarily comprised of U.S. agency mortgage-backed securities, U.S. government and agency debentures, bank-qualified municipal obligations, corporate bonds, asset-backed securities and collateralized loan obligations. At June 30, 2014, net loans receivable comprised 49.3% of our total assets while investment securities, including mortgage-backed and non-mortgage-backed securities, comprised 38.7% of our total assets. During the latter half of fiscal 2013, we executed a series of balance sheet restructuring and wholesale growth transactions to enhance our earnings and reduce our exposure to long term interest rate risk, resulting in both growth and diversification within the securities portfolio. Notwithstanding the near term effects of these transactions on the composition and allocation of our earning assets, it remains the long term goal of our business plan to reallocate our balance sheet to reflect a greater percentage of interest-earning assets to loans while, in turn, reducing the relative size of the securities portfolio.

Since 1999, we have acquired five banking institutions including: 1 ^st Bergen Bancorp (March 31, 1999), Pulaski Bancorp, Inc. (October 18, 2002), West Essex Bancorp (July 1, 2003), Central Jersey Bancorp (November 30, 2010) and, most recently, Atlas Bank (June 30, 2014). Atlas Bank, a federal mutual savings bank, had total assets with a fair value of $120.9 million at June 30, 2014 and two branch offices in Brooklyn and Staten Island, New York as of that date.

New Kearny’s executive offices are located at 120 Passaic Avenue, Fairfield, New Jersey 07004, and its telephone number is (973) 244-4500. Our website address is www.kearnyfederalsavings.com. Information on this website is not and should not be considered a part of this prospectus.

Business Strategy

Our goal is to continue to evolve from a traditional thrift business model toward that of a full service, community bank profitably deploying capital and enhancing earnings through a variety of balance sheet growth and diversification strategies. The key strategic initiatives of our business plan are presented below accompanied by an overview of our activities and achievements in support of those initiatives:

•

Continue to Increase Commercial Mortgage Lending .

During fiscal 2014, we increased our overall commercial mortgage loan portfolio by $317.0 million to $983.8 million, or 56.4% of total loans from $666.8 million, or 49.0% of total loans at June 30, 2013. This increase reflected commercial mortgage loan originations and purchases totaling $334.4 million and $87.0 million, respectively. We plan to continue to increase our portfolio of commercial mortgage loans by expanding loan acquisition volume through all available channels, including retail and broker originations, as well as individual and pooled loan purchases and participations.

Additionally, we intend to continue to expand our commercial lending infrastructure and resources, which will be supported by new product and pricing strategies designed to increase origination volume in a very competitive marketplace.

•

Continue to Increase Commercial Business Lending .

We plan to continue to focus our efforts on expanding our commercial non-real estate secured and unsecured business lending activities through all available channels. Although our commercial business loan originations increased during fiscal 2014, we had a modest $3.4 million decrease in the aggregate outstanding balance of this loan segment as loan repayments outpaced new originations during the year. Despite this modest decline, we anticipate this loan segment to increase in the future. In addition, we will attempt to expand our relationships with these borrowers to include commercial deposits and other products, with the goal of increasing our non-interest income.

•

Modestly Increase Residential Mortgage Lending .

We plan to modestly increase our portfolio of one- to four-family first mortgages while stabilizing the balance of home equity loans and home equity lines of credit and maintaining our conservative underwriting standards. During the year ended June 30, 2014, we originated $78.2 million of one- to four-family first mortgage loans compared to $65.1 million during the year ended June 30, 2013. We anticipate that this segment of our loan portfolio will continue to decline as a percentage of total loans and earning assets.

The overall stability in the outstanding balance of the residential mortgage loan portfolio and, more significantly, its decline as a percentage of total loans continues to reflect our decreased strategic focus on residential mortgage lending, coupled with the slowed pace of refinancing and diminished level of demand for “new purchase” mortgage loans.

•

Continue to Diversify Investment Securities .

In order to enhance earnings and reduce our exposure to long term interest rate risk, beginning in fiscal 2013, we initiated a plan to diversify the composition and allocation of our investment

portfolio into new asset sectors, including asset-backed securities, corporate bonds, municipal obligations, collateralized loan obligations and commercial mortgage-backed securities (“MBS”) while reducing our concentration in traditional residential MBS. Several of the added sectors include floating rate securities that reduce the level of interest rate risk (“IRR”) embedded in our securities portfolio. During fiscal 2014, we continued to expand our investments into these sectors and expect to continue to do so in the future.

•

Maintain Strong Asset Quality .

We continue to emphasize and maintain strong asset quality. Nonperforming assets decreased by $6.1 million to $26.9 million, or 0.77% of total assets, at June 30, 2014 from $33.0 million, or 1.05% of total assets, at June 30, 2013. Through our conservative underwriting standards and our prompt attention to potential problem loans, we anticipate maintaining strong asset quality ratios as we continue to grow and diversify our loan portfolio.

•

Expand Funding Through Retail Deposits .

We intend to expand our funding through retail deposit growth within our existing branch network, with the greatest emphasis on growth in our non-maturity/non-interest bearing deposits.

Our total deposits increased by $109.4 million for the year ended June 30, 2014 including $86.1 million of deposits assumed in conjunction with our Atlas Bank acquisition. Non-interest-bearing deposits increased $33.1 million during fiscal 2014,while interest-bearing deposits increased $76.3 million. Within interest-bearing deposits, the balance of savings accounts and certificates of deposit increased by $51.9 million and $55.7 million, respectively. This growth was partially offset by a $31.3 million decline in the balance of interest-bearing checking accounts.

With the acquisition of Atlas Bank, we now have a total of 42 branches. We plan to selectively evaluate branch network expansion opportunities, with a particular focus on limited branch expansion in Brooklyn and Staten Island, New York, as an outgrowth of our acquisition of Atlas Bank. We will also continue to carefully seek and evaluate additional de novo branch opportunities to contiguously expand our existing New Jersey branch network with an emphasis on “fill ins” between our northern and central New Jersey locations.

Notwithstanding the opportunities presented by de novo branching, we expect to place greater strategic emphasis on leveraging the opportunities to increase market share and expand the depth and breadth of customer relationships within the existing branch system. We continue to develop and deploy strategies to promote the “relationship banking” business model throughout our branch network with an emphasis on expanding business customer relationships linked to business lending initiatives.

•

Mergers and Acquisitions .

As a complement to the “organic” growth strategies, we continue to actively seek out opportunities to deploy capital, diversify our balance sheet mix, enter new markets and enhance earnings through mergers and acquisitions with other financial institutions. We are an experienced acquiror, having acquired five banks in the last 15 years. As demonstrated through our acquisition of Atlas Bank during fiscal 2014, we expect to place the greatest emphasis on opportunities to expand within the existing markets we serve or to enter new markets that are generally contiguous to such markets.

we continue to evaluate potential acquisition opportunities, there are no current agreements or arrangements for any such acquisitions.

•

Information Technology .

In conjunction with our strategic efforts to improve operating efficiency and control operating expenses, while expanding and enhancing product and service offerings, we completed the conversion of our primary core processing and related customer-facing systems to Fiserv, Inc. platforms during fiscal 2014. Additional Fiserv, Inc. technologies are expected to be deployed during fiscal 2015. We anticipate that such measures will significantly reduce our recurring technology service provider expenses and enhance our commercial business lending platform.

We consider the noted enhancements to our information technology infrastructure to be the first of several strategies to be deployed to control growth in non-interest expenses and improve our operating efficiency. Upon completion of this initiative, we expect to perform further evaluation and analysis of other significant categories of non-interest expense with the goal optimizing the cost level, resource allocation and utilization of our growing infrastructure to support our strategic goals and objectives.

See “Business of Kearny Bank—Business Strategy” for a more complete discussion of our business strategy.

Reasons for the Conversion and Offering

Our primary reasons for converting to the fully public stock form of ownership and undertaking the stock offering are to:

•

Support continued growth. Kearny Bank has experienced consistent deposit and loan growth over the past five years as we have expanded our geographical footprint and increased our emphasis on growing our commercial loan and deposit relationships. At June 30, 2010, our total assets and total deposits were $2.34 billion and $1.62 billion, respectively, compared to our total assets and total deposits of $3.51 billion and $2.48 billion, respectively, at June 30, 2014. The conversion will enable us to support additional deposit and loan growth and assist us in managing our interest rate risk in a rising interest rate environment.

•

Eliminate the uncertainties associated with the mutual holding company structure under financial reform legislation . Under the Dodd-Frank Act, the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) became the federal regulator of all savings and loan holding companies and mutual holding companies. This has resulted in changes in regulations applicable to Kearny MHC and Kearny-Federal, particularly changes with respect to the waiver of dividends by Kearny MHC, which is a key component of our mutual holding company structure and impacts the value of Kearny-Federal’s common stock. The Federal Reserve Board currently requires “grandfathered” mutual holding companies, like Kearny MHC, to obtain member (depositors and certain borrowers) approval and comply with other procedural requirements prior to waiving dividends, which makes dividend waivers more difficult and costly to obtain. As a result, Kearny-Federal has suspended its dividend during the past few years. The conversion will eliminate our mutual holding company structure, and enable us to pay dividends to our stockholders without the limitations described above, subject to the customary legal, regulatory and financial considerations applicable to all financial institutions. See “Our Dividend Policy.”

•

markets through possible future equity and debt offerings, although we have no current plans, agreements or understandings regarding any additional securities offerings.

•

Facilitate future mergers and acquisitions . Although we do not currently have any understandings or agreements regarding any specific acquisition transaction, the fully public stock holding company structure will give us greater flexibility to use our common stock as merger consideration and to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial institutions as opportunities arise. The additional capital raised in the offering also will enable us to consider larger merger transactions. In addition, although we intend to remain an independent financial institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit the acquisition of New Kearny for three years following completion of the conversion. Certain provisions in New Kearny’s articles of incorporation and bylaws, such as a prohibition on any beneficial owner voting in excess of 10% of New Kearny’s common stock and supermajority voting requirements, will also make it more difficult for companies or persons to exercise control of New Kearny without the consent of our board of directors. See “Risk Factors—Various factors, including our articles of incorporation and bylaws, and Maryland and federal law, will make takeover attempts more difficult to achieve,” and “Restrictions on Acquisition of New Kearny.”

•

Improve the liquidity of our shares of common stock . The larger number of shares that will be outstanding after completion of the conversion and offering is expected to result in a more liquid and active market for our common stock. A more liquid and active market will make it easier for our stockholders to buy and sell our common stock and will give us greater flexibility in implementing capital management strategies.

Terms of the Offering

We are offering between 61,625,000 and 83,375,000 shares of common stock to eligible depositors and certain borrowers of Kearny Bank, and our tax-qualified employee benefit plans on a best efforts basis in a subscription offering. Eligible depositors and borrowers of Kearny Bank include certain former depositors and certain former borrowers of Atlas Bank, which was recently merged into Kearny Bank.

Any shares not purchased in the subscription offering may be offered in a community offering to the general public, with a preference given first to residents of the New Jersey Counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union, and the New York Counties of Kings and Richmond, and then to our existing public stockholders. If necessary, we may also offer shares to the general public in a syndicated or firm commitment underwritten offering. Unless the number of shares of common stock to be offered is increased to more than 83,375,000 shares or decreased to fewer than 61,625,000 shares, or the subscription offering and/or community offering are extended beyond [extension date], subscribers will not have the opportunity to change or cancel their stock orders once submitted. If the subscription offering and/or community offering are extended past [extension date], all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to this notice, your order will be cancelled and we will promptly return your funds with interest at 0.15% per annum or cancel your deposit account withdrawal authorization. If the number of shares to be sold is increased to more than 83,375,000 shares or decreased to less than 61,625,000 shares, all subscribers’ stock orders will be canceled, their withdrawal authorizations will be canceled and funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly with interest at 0.15% per annum. We will then resolicit subscribers, giving them an opportunity to place new orders for a period of time. No shares purchased in the subscription offering and community offering will be issued until the completion of any syndicated or firm commitment underwritten offering.

The purchase price of each share of common stock offered for sale in the offering is $10.00. All investors will pay the same purchase price per share, regardless of whether the shares are purchased in the subscription offering, the community offering or a syndicated or firm commitment underwritten offering. Investors will not be charged a commission to purchase shares of common stock in the offering. Sandler O’Neill & Partners, L.P., our

marketing agent in the subscription offering and the community offering, will use its best efforts to assist us in selling shares of our common stock in the subscription offering and, if held, the community offering, but is not obligated to purchase any shares of common stock in the subscription offering and/or community offering.

How We Determined the Offering Range, the Exchange Ratio and the $10.00 per share Stock Price

The amount of common stock we are offering for sale and the exchange ratio for the exchange of shares of New Kearny for shares of Kearny-Federal are based on an independent appraisal of the estimated market value of New Kearny, assuming the offering has been completed and a contribution is made to the Foundation as described in this prospectus. RP Financial, LC., our independent appraiser, has estimated that, as of August 8, 2014, this market value was $943.5 million. Based on federal regulations, this market value forms the midpoint of a valuation range with a minimum of $802.7 million and a maximum of $1.08 billion. Based on this valuation range, the 77.2% ownership interest of Kearny MHC in Kearny-Federal as of June 30, 2014 being sold in the offering and the $10.00 per share price, the number of shares of common stock being offered for sale by New Kearny ranges from 61,625,000 shares to 83,375,000 shares. The purchase price of $10.00 per share was determined by us, taking into account, among other factors, the market price of our common stock prior to adoption of the plan of conversion and reorganization, the requirement under federal regulations that the common stock be offered in a manner that will achieve the widest distribution of the common stock, and desired liquidity in the common stock after the offering. The exchange ratio ranges from 1.1855 shares at the minimum of the offering range to 1.6040 shares at the maximum of the offering range, and will preserve the existing percentage ownership of public stockholders of Kearny-Federal (excluding any new shares purchased by them in the stock offering, their receipt of cash in lieu of fractional shares and the effect of shares issued to the Foundation).

The appraisal is based in part on Kearny-Federal’s financial condition and results of operations, the pro forma effect of the additional capital raised by the sale of shares of common stock in the offering, and an analysis of a peer group of 11 publicly traded thrift holding companies that RP Financial, LC. considers comparable to Kearny-Federal. The appraisal peer group consists of the following companies, all of which are traded on the Nasdaq Stock Market, except for Provident Financial Services, Inc., which trades on the New York Stock Exchange.


Company Name	Ticker Symbol	Headquarters	Total Assets ⁽¹⁾
			(In millions)
Bank Mutual Corporation	BKMU	Brown Deer, WI	$	2,338
Capitol Federal Financial, Inc.	CFFN	Topeka, KS	$	9,031
Dime Community Bancshares, Inc.	DCOM	Brooklyn, NY	$	4,302
Northfield Bancorp, Inc.	NFBK	Woodbridge, NJ	$	2,690
Northwest Bancshares, Inc.	NWBI	Warren, PA	$	7,902
OceanFirst Financial Corp.	OCFC	Toms River, NJ	$	2,329
Oritani Financial Corp.	ORIT	Township of Washington, NJ	$	3,140
Provident Financial Services, Inc.	PFS	Jersey City, NJ	$	8,449
TrustCo Bank Corp NY	TRST	Glenville, NY	$	4,589
United Financial Bancorp, Inc.	UBNK	Glastonbury, CT	$	5,159
WSFS Financial Corporation	WSFS	Wilmington, DE	$	4,613

(1)	Asset size for all companies is as of June 30, 2014.

The following table presents a summary of selected pricing ratios for New Kearny (on a pro forma basis) and for the peer group companies based on earnings and other information as of and for the twelve months ended June 30, 2014, and stock prices as of August 8, 2014, as reflected in the appraisal report. Compared to the average pricing of the peer group, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 31.4% on a price-to-book value basis, a discount of 31.1% on a price-to-tangible book value basis, and a premium of 362.2% on a price-to-earnings basis.


	Price-to-earnings multiple ⁽¹⁾		Price-to-book value ratio			Price-to-tangible book value ratio
New Kearny (on a pro forma basis, assuming completion of the conversion)
Maximum		97.70x		87.64	%		96.15	%
Midpoint		86.52x		82.78	%		91.58	%
Minimum		74.94x		77.04	%		86.06	%

Valuation of peer group companies, all of which are fully converted (on an historical basis)
Averages		18.72x		120.63	%		132.96	%
Medians		15.87x		113.69	%		130.59	%

(1)	Price-to-earnings multiples calculated by RP Financial, LC. in the independent appraisal are based on an estimate of “core” or recurring earnings on a trailing twelve-month basis through June 30, 2014. These ratios are different than those presented in “Pro Forma Data.”

The independent appraisal does not indicate trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the conversion and offering the shares of our common stock will trade at or above the $10.00 per share purchase price. Furthermore, the pricing ratios presented in the appraisal were utilized by RP Financial, LC. to estimate our pro forma appraised value for regulatory purposes and not to compare the relative value of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular company may be affected by a number of factors such as financial performance, asset size and market location.

For a more complete discussion of the amount of common stock we are offering for sale and the independent appraisal, see “The Conversion and Offering—Stock Pricing and Number of Shares to be Issued.”

The Exchange of Existing Shares of Kearny-Federal Common Stock

If you are currently a stockholder of Kearny-Federal, at the completion of the conversion your shares will be exchanged for shares of common stock of New Kearny. The number of shares of common stock you will receive will be based on the exchange ratio, which will depend upon our final appraised value and the percentage of outstanding shares of Kearny-Federal common stock owned by public stockholders immediately prior to the completion of the conversion. The following table shows how the exchange ratio will adjust, based on the appraised value of New Kearny as of August 8, 2014, assuming new shares are issued to the Foundation and assuming public stockholders of Kearny-Federal own 22.8% of Kearny-Federal common stock immediately prior to the completion of the conversion. The table also shows the number of shares of New Kearny common stock a hypothetical owner of Kearny-Federal common stock would receive in exchange for 100 shares of Kearny-Federal common stock owned at the completion of the conversion, depending on the number of shares of common stock issued in the offering.


	Shares to be Sold in This Offering					Shares of New Kearny to be Issued for Shares of Kearny-Federal					Shares to be issued to the Foundation					Total Shares of Common Stock to be Issued in Exchange and Offering		Exchange Ratio		Equivalent Value of Shares Based Upon Offering Price ⁽²⁾		Equivalent Pro Forma Tangible Book Value Per Exchanged Share ⁽³⁾		Shares to be Received for 100 Existing Shares ⁽⁴⁾
	Amount		Percent			Amount		Percent ⁽¹⁾			Amount		Percent					Exchange Ratio		Equivalent Value of Shares Based Upon Offering Price ⁽²⁾				Shares to be Received for 100 Existing Shares ⁽⁴⁾

Minimum		61,625,000		76.77	%		18,147,815		22.61	%		500,000		0.62	%		80,272,815		1.1855	$	11.86	$	13.78		118

Midpoint		72,500,000		76.84	%		21,350,371		22.63	%		500,000		0.53	%		94,350,371		1.3948	$	13.95	$	15.23		139

Maximum		83,375,000		76.90	%		24,552,927		22.64	%		500,000		0.46	%		108,427,927		1.6040	$	16.04	$	16.68		160

(1)	Percent does not reflect shares of New Kearny common stock to be issued to the Foundation.

(2)	Represents the value of shares of New Kearny common stock to be received in the conversion by a holder of one share of Kearny-Federal, pursuant to the exchange ratio, based upon the $10.00 per share purchase price.

(3)	Represents the pro forma tangible book value per share at each level of the offering range multiplied by the respective exchange ratio.

(4)	Cash will be paid in lieu of fractional shares.

No fractional shares of New Kearny common stock will be issued to any public stockholder of Kearny-Federal. For each fractional share that otherwise would be issued, New Kearny will pay in cash an amount equal to the product obtained by multiplying the fractional share interest to which the holder otherwise would be entitled by the $10.00 per share offering price.

Outstanding options to purchase shares of Kearny-Federal common stock also will convert into and become options to purchase shares of New Kearny common stock based upon the exchange ratio. The aggregate exercise price, duration and vesting schedule of these options will not be affected by the conversion. At June 30, 2014, there were 3,035,122 outstanding options to purchase shares of Kearny-Federal common stock, 2,824,112 of which have vested. Such outstanding options will be converted into options to purchase 3,598,137 shares of common stock at the minimum of the offering range and 4,868,335 shares of common stock at the maximum of the offering range. Because federal regulations prohibit us from repurchasing our common stock during the first year following the conversion unless compelling business reasons exist for such repurchases, we may use authorized but unissued shares to fund option exercises that occur during the first year following the conversion. If all existing options were exercised and funded with authorized but unissued shares of common stock following the conversion, stockholders would experience ownership dilution of approximately 4.3% at the minimum of the offering range.

How We Intend to Use the Proceeds From the Offering

We intend to invest at least 50% of the net proceeds from the stock offering in Kearny Bank as well as loan funds to our employee stock ownership plan to fund its purchase of shares of common stock in the stock offering. The remainder of the net proceeds from the offering will be retained by New Kearny. Therefore, assuming we sell 72,500,000 shares of common stock in the stock offering, and we have net proceeds of $700.6 million, we intend to invest $350.3 million in Kearny Bank, loan $36.5 million to our employee stock ownership plan to fund its purchase of shares of common stock and retain the remaining $308.8 million of the net proceeds at New Kearny. We also intend to contribute 500,000 shares of common stock and make a $5.0 million cash contribution to the Foundation.

New Kearny may use the funds it retains for investment, to pay cash dividends, to repurchase shares of common stock, to acquire other financial institutions and for other general corporate purposes. Kearny Bank may use the proceeds it receives to expand its branch network, to support increased lending and other products and services or to acquire other financial institutions.

Please see the section of this prospectus entitled “How We Intend to Use the Proceeds from the Offering” for more information on the proposed use of the proceeds from the offering.

Persons Who May Order Shares of Common Stock in the Offering

We are offering the shares of common stock in a subscription offering in the following descending order of priority:

(i)

To depositors with accounts at Kearny Bank and Atlas Bank with aggregate balances of at least $50 at the close of business on July 31, 2013.

(ii)

To our tax-qualified employee benefit plans (including Kearny Bank’s employee stock ownership plan and Kearny Bank’s 401(k) plan), which may subscribe for up to 10% of the shares of common stock sold in the offering and issued to the Foundation. We expect our employee stock ownership plan to purchase 5% of the shares of common stock sold in the stock offering and issued to the Foundation.

(iii)

To depositors with accounts at Kearny Bank with aggregate balances of at least $50 at the close of business on [supplemental eligibility record date].

(iv)

To depositors of Kearny Bank at the close of business on [member record date] and each borrower of Kearny Bank as of January 18, 1995 or Atlas Bank as of February 17, 2010, whose borrowing remained outstanding at the close of business on [member record date].

Shares of common stock not purchased in the subscription offering may be offered for sale to the general public in a community offering, with a preference given first to natural persons (including trusts of natural persons) residing in the New Jersey Counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union, and the New York Counties of Kings and Richmond, and then to Kearny-Federal’s public stockholders as of [stockholder record date]. The community offering may be held concurrently with the subscription offering or commenced during or after the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering or the community offering through a syndicated or firm commitment underwritten offering. Sandler O’Neill & Partners, L.P. will act as sole book-running manager for the syndicated or firm commitment underwritten offering. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated or firm commitment underwritten offering. Any determination to accept or reject stock orders in the community offering or syndicated or firm commitment underwritten offering will be based on the facts and circumstances available to management at the time of the determination.

If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. A detailed description of the subscription offering, the community offering and the syndicated or firm commitment underwritten offering, as well as a discussion regarding allocation procedures, can be found in the section of this prospectus entitled “The Conversion and Offering.”

Limits on How Much Common Stock You May Purchase

The minimum number of shares of common stock that may be purchased is 25 shares.

Generally, no individual may purchase more than 150,000 shares ($1.5 million) of common stock. If any of the following persons purchase shares of common stock, their purchases, in all categories of the offering, when combined with your purchases, cannot exceed 300,000 shares ($3.0 million) of common stock:

•

your spouse or relatives of you or your spouse living in your house;

•

most companies, trusts or other entities in which you are a trustee, have a substantial beneficial interest or hold a senior position; or

•

other persons who may be your associates or persons acting in concert with you.

Unless we determine otherwise, persons having the same address and persons exercising subscription rights through qualifying deposit accounts registered to the same address will be subject to the overall purchase limitation of 300,000 shares ($3.0 million).

In addition to the above purchase limitations, there is an ownership limitation for current stockholders of Kearny-Federal other than our employee stock ownership plan. Shares of common stock that you purchase in the offering individually and together with persons described above, plus any shares you and they receive in exchange for existing shares of Kearny-Federal common stock, may not exceed 9.9% of the total shares of common stock to be issued and outstanding after the completion of the conversion. However, if, based on your current ownership level, you will own more than 9.9% of the total shares of common stock to be issued and outstanding after the completion of the conversion following the exchange of your shares of Kearny-Federal common stock, you will not need to divest any of your exchanged shares. You will be required to obtain the approval or non-objection of the Federal Reserve Board prior to acquiring more than 10% of New Kearny’s common stock.

Subject to applicable regulatory approval, we may increase or decrease the purchase and ownership limitations at any time. See the detailed description of the purchase limitations in “The Conversion and Offering—Additional Limitations on Common Stock Purchases.”

How You May Purchase Shares of Common Stock in the Subscription Offering and the Community Offering

In the subscription offering and community offering, you may pay for your shares only by:

•

personal check, bank check or money order made payable directly to Kearny Financial Corp.; or

•

authorizing us to withdraw available funds from your Kearny Bank deposit accounts.

Kearny Bank is not permitted to lend funds to anyone to purchase shares of common stock in the offering. Additionally, you may not use a Kearny Bank line of credit check or any type of third party check to pay for shares of common stock. Please do not submit cash. You may not designate withdrawal from Kearny Bank’s accounts with check-writing privileges; instead, please submit a check. You may not authorize direct withdrawal from a Kearny Bank retirement account. See “The Conversion and Offering—Procedure for Purchasing Shares in Subscription and Community Offerings—Using Individual Retirement Account Funds.”

You may subscribe for shares of common stock in the subscription offering, and if held, the community offering, by delivering a signed and completed original stock order form, together with full payment payable to Kearny Financial Corp. or authorization to withdraw funds from one or more of your Kearny Bank deposit accounts, provided that the stock order form is received before p.m., Eastern Time, on [expiration date], which is the end of the subscription offering period. We expect that the community offering, if held, will terminate at the same time, although it may continue without notice to you until [extension date] or longer if the Federal Reserve Board approves a later date. You may submit your stock order form and payment by mail using the stock order reply envelope provided or by overnight delivery to our Stock Information Center, which will be located at [stock center address]. You may also hand-deliver stock order forms to the Stock Information Center. Hand-delivered stock order forms will only be accepted at this location. We will not accept stock order forms at our banking offices. Please do not mail stock order forms to Kearny Bank’s offices.

Please see “The Conversion and Offering— Procedure for Purchasing Shares in Subscription and Community Offerings—Payment for Shares” for a complete description of how to purchase shares in the subscription and community offerings.

Using Individual Retirement Account Funds to Purchase Shares of Common Stock

You may be able to subscribe for shares of common stock using funds in your individual retirement account, or IRA. If you wish to use some or all of the funds in your Kearny Bank individual retirement account, the applicable funds must be transferred to a self-directed account maintained by an independent trustee, such as a brokerage firm, and the purchase must be made through that account. If you do not have such an account, you will need to establish one before placing your stock order. An annual administrative fee may be payable to the independent trustee. Because individual circumstances differ and the processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the [expiration date] offering deadline, for assistance with purchases using your individual retirement account or other retirement account you may have at Kearny Bank or elsewhere . Whether you may use such funds to purchase shares in the stock offering may depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.

See “The Conversion and Offering—Procedure for Purchasing Shares in Subscription and Community Offerings—Payment for Shares” and “—Using Individual Retirement Account Funds” for a complete description of how to use IRA funds to purchase shares in the stock offering.

Market for Common Stock

Existing publicly held shares of Kearny-Federal’s common stock are listed on the Nasdaq Global Select Market under the symbol “KRNY.” Upon completion of the conversion, the shares of common stock of New Kearny will replace the existing shares, and we expect the shares of New Kearny common stock will also trade on the Nasdaq Global Select Market under the symbol “KRNY.” In order to list our stock on the Nasdaq Global Select Market, we are required to have at least three broker-dealers who will make a market in our common stock. As of [stockholder record date], Kearny-Federal had approximately registered market makers in its common stock. Sandler O’Neill & Partners, L.P. has advised us that they intend to make a market in our common stock following the offering, but are under no obligation to do so.

Our Dividend Policy

After the completion of the conversion, we intend to pay cash dividends on a quarterly basis. Initially, we expect the quarterly dividends to be $0.02 per share, which equals $0.08 per share on an annualized basis and an annual yield of 0.8% based on a price of $10.00 per share.

The dividend rate and the initial and continued payment of dividends will depend on a number of factors, including our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations, and general economic conditions. We cannot assure you that any such dividends will not be reduced or eliminated in the future.

For information regarding our current and proposed dividend policy, see “Our Dividend Policy.”

Purchases by Officers and Directors

We expect our directors and executive officers, together with their associates, to subscribe for 254,500 shares of common stock in the offering. The purchase price paid by them will be the same $10.00 per share price paid by all other persons who purchase shares of common stock in the offering. Following the conversion, our directors and executive officers, together with their associates, are expected to beneficially own 4,670,844 shares of common stock, or 5.82% of our total outstanding shares of common stock at the minimum of the offering range, which includes shares they currently own that will be exchanged for shares of New Kearny.

See “Subscriptions by Directors and Executive Officers” for more information on the proposed purchases of shares of common stock by our directors and executive officers.

Deadline for Orders of Shares of Common Stock in the Subscription and Community Offerings

The deadline for purchasing shares of common stock in the subscription offering is p.m., Eastern Time, on [expiration date], unless we extend this deadline. We expect that the community offering, if held, will terminate at the same time, although it may continue without notice to you until [extension date] or longer if the Federal Reserve Board approves a later date. If you wish to purchase shares of common stock, a properly completed and signed original stock order form, together with full payment, must be received (not postmarked) by this time.

Although we will make reasonable attempts to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription rights will expire at p.m., Eastern Time, on [expiration date], whether or not we have been able to locate each person entitled to subscription rights.

See “The Conversion and Offering— Procedure for Purchasing Shares in Subscription and Community Offerings—Expiration Date” for a complete description of the deadline for purchasing shares in the stock offering.

You May Not Sell or Transfer Your Subscription Rights

Federal regulations prohibit you from transferring your subscription rights. If you order shares of common stock in the subscription offering, you will be required to certify that you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights or the shares that you are purchasing. We intend to take legal action, including reporting persons to federal agencies, against anyone who we believe has sold or transferred his or her subscription rights. We will not accept your order if we have reason to believe you have sold or transferred your subscription rights. On the order form, you cannot add the names of others for joint stock registration unless they are also named on the qualifying deposit account. Doing so may jeopardize your subscription rights. In addition, the stock order form requires that you list all deposit accounts, giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation if there is an oversubscription.

Book-Entry Delivery of Common Stock

All shares of common stock sold in the subscription offering, community offering and syndicated offering will be issued in book-entry form. Stock certificates will not be mailed. A statement reflecting ownership of shares of common stock issued in the subscription offering and community offering will be sent to purchasers by first-class mail as soon as practicable after the completion of the conversion and offering. We expect trading in the stock to begin on the day of completion of the conversion and offering or the next business day. The conversion and offering are expected to be completed as soon as practicable following satisfaction of the conditions described below in “—Conditions to Completion of the Conversion.” It is possible that until statements reflecting ownership of shares of common stock are available and delivered to purchasers, purchasers might not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading. Your ability to sell the shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

Our Contribution of Shares of Common Stock to the Foundation

To further our commitment to our local community, we intend to establish and fund a new charitable foundation as part of the conversion and stock offering. The new charitable foundation, the KearnyBank Foundation, will complement our existing charitable organization. The establishment and funding of the Foundation has been approved by the board of directors of Kearny MHC, and the Boards of Directors of Kearny-Federal, New Kearny and Kearny Bank. In addition, the establishment and funding of the Foundation is subject to the approval of the members of Kearny MHC and the stockholders of Kearny-Federal. Assuming we receive approvals from the members of Kearny MHC and the stockholders of Kearny-Federal and the Federal Reserve Board to establish and fund the Foundation, we intend to contribute to the Foundation 500,000 shares of our common stock and $5.0 million in cash such that the total contribution will equal $10.0 million. As a result of the contribution, we expect to record an after-tax expense of approximately $6.5 million during the quarter in which the stock offering is completed.

The Foundation will be dedicated exclusively to supporting charitable causes and community development activities in the communities in which we operate. The contribution of common stock and cash to the Foundation will:

•

dilute the ownership interests of purchasers of shares of our common stock in the stock offering;

•

dilute the voting interests of purchasers of shares of our common stock in the stock offering; and

•

result in an expense, and a reduction in our earnings during the quarter in which the contribution is made, relating to the contribution to the Foundation, offset in part by a corresponding tax benefit.

If members or stockholders do not approve the funding of the Foundation, we will proceed with the conversion and offering without the contribution to the Foundation and subscribers for common stock will not be resolicited (unless required by the Federal Reserve Board).

The amount of common stock that we would offer for sale would be greater if the offering were to be completed without the establishment and funding of the Foundation. For a further discussion of the financial impact of the Foundation, including its effect on those who purchase shares in the offering, see “Risk Factors—Risks Related to the Offering—The contribution to the Foundation will dilute your ownership interest and adversely affect net income in 2015,” “Risk Factors—Our contribution to the Foundation may not be tax deductible, which could reduce our profits” and “KearnyBank Foundation.”

Conditions to Completion of the Conversion

We cannot complete the conversion and offering unless:

•

the plan of conversion and reorganization is approved by at least a majority of votes eligible to be cast by members of Kearny MHC as of [member record date];

•

the plan of conversion and reorganization is approved by Kearny-Federal stockholders holding at least two-thirds of the outstanding shares of common stock of Kearny-Federal as of [stockholder record date], including shares held by Kearny MHC;

•

the plan of conversion and reorganization is approved by Kearny-Federal stockholders holding at least a majority of the outstanding shares of common stock of Kearny-Federal as of [stockholder record date], excluding shares held by Kearny MHC;

•

we sell at least the minimum number of shares of common stock offered in the offering; and

•

we receive the approval of the Federal Reserve Board to complete the conversion and offering.

Subject to member, stockholder and regulatory approvals, we intend to contribute shares of New Kearny stock and cash to the Foundation in connection with the conversion. However, member and stockholder approval of the contribution to the Foundation is not a condition to the completion of the conversion and offering.

Kearny MHC intends to vote its shares in favor of the plan of conversion and reorganization and in favor of the contribution to the Foundation. At [stockholder record date], Kearny MHC owned % of the outstanding shares of common stock of Kearny-Federal. Therefore, the condition requiring that the plan of conversion and reorganization be approved by Kearny-Federal stockholders holding at least two-thirds of the outstanding shares of common stock of Kearny-Federal, including shares held by Kearny MHC, would be satisfied. The directors and executive officers of Kearny-Federal and their affiliates owned shares of Kearny-Federal (excluding exercisable options), or % of the outstanding shares of common stock and % of the outstanding shares of common stock excluding shares held by Kearny MHC. They intend to vote those shares in favor of the plan of conversion and reorganization and in favor of the contribution to the Foundation.

Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares

If we do not receive orders for at least 61,625,000 shares of common stock, we may take several steps in order to sell the minimum number of shares of common stock in the offering range. Specifically, we may:

(i)

increase the purchase and ownership limitations; and/or

(ii)

seek regulatory approval to extend the offering beyond [extension date], so long as we resolicit subscriptions that we have previously received in the offering; and/or

(iii)

increase the shares purchased by the employee stock ownership plan.

If one or more purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be, and, in our sole discretion, some other large purchasers may be, given the opportunity to increase their subscriptions up to the then-applicable limit.

Possible Change in the Offering Range

RP Financial, LC. will update its appraisal before we complete the offering. If our pro forma market value, including the shares issued to the Foundation, at that time is either below $802.7 million or above $1.08 billion, then, after consulting with the Federal Reserve Board, we may:

•

terminate the stock offering and promptly return all funds (with interest paid on funds received in the subscription and community offerings);

•

set a new offering range; or

•

take such other actions as may be permitted by the Federal Reserve Board and the Securities and Exchange Commission.

If we set a new offering range, we will promptly return funds, with interest at 0.15% per annum for funds received for purchases in the subscription and community offerings, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. We will then resolicit subscribers, allowing them to place a new stock order for a period of time.

Possible Termination of the Offering

We may terminate the offering at any time prior to the special meeting of members of Kearny MHC that has been called to vote on the conversion, and at any time after member approval with the approval of the Federal Reserve Board. If we terminate the offering, we will promptly return your funds with interest at 0.15% per annum and we will cancel deposit account withdrawal authorizations.

Benefits to Management and Potential Dilution to Stockholders Resulting from the Conversion

We expect our employee stock ownership plan, which is a tax-qualified retirement plan for the benefit of all Kearny Bank employees, to purchase up to 5% of the shares of common stock we sell in the offering and issue to the Foundation. If market conditions warrant, or if we receive orders in the subscription offering for more shares of common stock than the maximum of the offering range, the employee stock ownership plan’s subscription order may not be filled and the employee stock ownership plan may, with prior Federal Reserve Board approval, purchase shares in the open market following completion of the conversion.

Federal regulations permit us to implement one or more new stock-based benefit plans no earlier than six months after completion of the conversion. Stockholder approval of these plans would be required. Our current intention is to implement one or more new stock-based benefit plans, but we have not determined whether we would adopt the plans within 12 months following the completion of the conversion or more than 12 months following the completion of the conversion. The stock-based benefit plans would reserve a number of shares equal to (i) up to 2.5% of the shares of common stock sold in the offering and issued to the Foundation (reduced by amounts purchased by our 401(k) plan using its purchase priority in the stock offering) for awards of restricted stock to key employees and directors, at no cost to the recipients, and (ii) up to 6% of the shares of common stock sold in the offering and issued to the Foundation for issuance pursuant to the exercise of stock options by key employees and directors. For a description of our current stock-based benefit plan, see “Compensation Discussion and Analysis—Equity Based Compensation.”

The following table summarizes the number of shares of common stock and the aggregate dollar value of grants that would be available under one or more stock-based benefit plans if such plans reserve a number of shares of common stock equal to 2.5% and 6% of the shares sold in the offering and issued to the Foundation for restricted stock awards and stock options, respectively. The table shows the dilution to stockholders if all such shares are issued from authorized but unissued shares, instead of shares purchased in the open market. A portion of the stock grants shown in the table below may be made to non-management employees. The table also sets forth the number of shares of common stock to be acquired by the employee stock ownership plan for allocation to all qualifying employees.


	Number of Shares to be Granted or Purchased							Dilution Resulting From Issuance of Shares for Stock-Based Benefit Plans			Value of Grants (In Thousands) ⁽¹⁾
	At Minimum of Offering Range		At Maximum of Offering Range		As a Percentage of Common Stock to be Sold in the Offering and Issued to the Foundation						Value of Grants (In Thousands) ⁽¹⁾
	At Minimum of Offering Range		At Maximum of Offering Range								At Minimum of Offering Range		At Maximum of Offering Range

Employee stock ownership plan		3,106,250		4,193,750		5.00	%		N/A	⁽²⁾	$	31,063	$	41,937
Restricted stock awards		1,553,125		2,096,875		2.50			1.90	%		15,531		20,969
Stock options		3,727,500		5,032,500		6.00			4.44	%		9,468		12,783

Total		8,386,875		11,323,125		13.50	%		6.17	%	$	56,062	$	75,689

(1)

The actual value of restricted stock awards will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value for stock awards is assumed to be the same as the offering price of $10.00 per share. The fair value of stock options has been estimated at $2.54 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; an expected option term of 10 years; a dividend yield of 0.8%; a risk-free rate of return of 2.53%; and expected volatility of 16.10%. The actual value of option grants will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used and the option pricing model ultimately adopted.

(2)	No dilution is reflected for the employee stock ownership plan because such shares are assumed to be purchased in the stock offering.

We may fund our stock-based benefit plans through open market purchases, as opposed to new issuances of stock; however, if any options previously granted under our existing 2005 Stock Compensation and Incentive Plan are exercised during the first year following completion of the offering, they will be funded with newly issued shares as federal regulations do not permit us to repurchase our shares during the first year following the completion of the offering except to fund the grants of restricted stock under our existing stock-based benefit plan or under extraordinary circumstances.

The following table presents information as of June 30, 2014 regarding our employee stock ownership plan, our 2005 Stock Compensation and Incentive Plan and our proposed stock-based benefit plan. The table below assumes that 108,427,927 shares are outstanding after the offering, which includes the sale of 83,375,000 shares in the offering at the maximum of the offering range and the issuance of new shares in exchange for shares of Kearny-Federal using an exchange ratio of 1.6040. It also assumes that the value of the stock is $10.00 per share.


Existing and New Stock Benefit Plans	Participants	Shares at Maximum of Offering Range			Estimated Value of Shares			Percentage of Shares Outstanding After the Conversion
		(Dollars in thousands)
Employee Stock Ownership Plan:	Officers and Employees
Shares purchased in 2005 offering ⁽¹⁾			2,800,103	⁽²⁾	$	28,001			2.58	%
Shares to be purchased in this offering			4,193,750			41,937			3.87

Total employee stock ownership plan shares			6,993,853		$	69,938			6.45	%


Restricted Stock Awards:	Directors, Officers and Employees
2005 Stock Compensation and Incentive Plan ⁽¹⁾			2,286,751	⁽³⁾	$	22,868	⁽⁴⁾		2.11	%
New shares of restricted stock			2,096,875			20,969			1.93

Total shares of restricted stock			4,383,626		$	43,837			4.04	%


Stock Options:	Directors, Officers and Employees

2005 Stock Compensation and Incentive Plan ⁽¹⁾			5,716,876	⁽⁵⁾	$	57,169	⁽⁶⁾		5.27	%
New stock options			5,032,500			12,783			4.64

Total stock options			10,749,376		$	69,952			9.91	%


Total of stock benefit plans			22,126,855		$	183,727			20.40	%

(1)	The number of shares indicated has been adjusted for the 1.6040 exchange ratio at the maximum of the offering range.

(2)	As of June 30, 2014, 2,042,078 of these shares, or 1,273,116 shares prior to adjustment for the exchange, have been allocated.

(3)	As of June 30, 2014, 2,256,340 of these shares, or 1,406,696 shares prior to adjustment for the exchange, have been awarded, and 2,115,990 of these shares have vested.

(4)	The value of restricted stock awards is determined based on their fair value as of the date grants are made. For purposes of this table, the fair value of awards under the new stock-based benefit plan is assumed to be the same as the offering price of $10.00 per share.

(5)	As of June 30, 2014, options to purchase 5,086,668 of these shares, or 3,171,240 shares prior to adjustment for the exchange, have been awarded, and options to purchase 4,748,225 of these shares, or 2,960,240 shares prior to adjustment for the exchange, have vested.

(6)

The weighted-average fair value of stock options to be granted has been estimated at $2.54 per option, using the Black-Scholes option pricing model with the following assumptions: exercise price, $10.00; trading price on date of grant, $10.00; dividend yield, 0.8%; expected term, 10 years; expected volatility, 16.10%; and risk-free rate of return, 2.53%. The actual value of option grants will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used and the option pricing model ultimately adopted.

Tax Consequences

Kearny MHC, Kearny-Federal, Kearny Bank and New Kearny have received an opinion of counsel, Luse Gorman Pomerenk & Schick, P.C., regarding the material federal income tax consequences of the conversion, and have received an opinion of BDO USA, LLP regarding the material New Jersey state tax consequences of the conversion. As a general matter, the conversion will not be a taxable transaction for purposes of federal or state income taxes to Kearny MHC, Kearny-Federal (except for cash paid for fractional shares), Kearny Bank, New Kearny, persons eligible to subscribe in the subscription offering, or existing stockholders of Kearny-Federal. Existing stockholders of Kearny-Federal who receive cash in lieu of fractional shares of New Kearny will recognize a gain or loss equal to the difference between the cash received and the tax basis of the fractional share.

How You Can Obtain Additional Information—Stock Information Center

Our banking personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, please call our Stock Information Center. The telephone number is [stock center phone #]. The Stock Information Center is open Monday through Friday between 10:00 a.m. and p.m., Eastern Time. The Stock Information Center will be closed on weekends and bank holidays.

RISK FACTORS

You should consider carefully the following risk factors in evaluating an investment in the shares of common stock.

Risks Related to Our Business

Changes in interest rates may adversely affect our profitability and financial condition.

We derive our income mainly from the difference or “spread” between the interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings and other interest-bearing liabilities. In general, the larger the spread, the more we earn. When market rates of interest change, the interest we receive on our assets and the interest we pay on our liabilities will fluctuate. This can cause decreases in our spread and can adversely affect our income.

From an interest rate risk perspective, we have generally been liability sensitive, which indicates that liabilities generally re-price faster than assets.

In response to negative economic developments, the Federal Reserve Board’s Open Market Committee steadily reduced its federal funds rate target from 5.25% in September 2007 to between 0.00% and 0.25% currently, which has had the effect of reducing our cost of funds. Given our historic liability sensitivity, the decline in our cost of funds initially outpaced the decline in yield on our earning assets thereby having a positive impact on our net interest rate spread and net interest margin during the years preceding fiscal 2012. However, from fiscal 2012 through fiscal 2014, the rate of reduction in our cost of interest-bearing liabilities slowed in relation to the continuing decline in the yield on our interest-earning assets. Consequently, our net interest rate spread decreased by two basis points to 2.32% for the year ended June 30, 2014 from 2.34% for the year ended June 30, 2013. Our net interest margin declined six basis points to 2.44% for the year ended June 30, 2014 from 2.50% for the year ended June 30, 2013. Our net interest spread declined 12 basis points during fiscal 2013 from 2.46% for the preceding fiscal year ended June 30, 2012. Our net interest margin declined an additional 15 basis points during fiscal 2013 from 2.65% for the preceding fiscal year ended June 30, 2012.

We continue to be at risk of additional reductions in our net interest rate spread and net interest margin resulting from further declines in our yield on interest-earning assets that may outpace any subsequent reductions in our cost of funds. In particular, our ability to further reduce the cost of our interest-bearing deposits is increasingly limited given that most deposit offering rates are already well below 1.00% at June 30, 2014. Moreover, our liability sensitivity may adversely affect net income in the future when market interest rates ultimately increase from historical lows and our cost of interest-bearing liabilities rises faster than our yield on interest-earning assets.

Interest rates also affect how much money we lend. For example, when interest rates rise, the cost of borrowing increases and loan originations tend to decrease. In addition, changes in interest rates can affect the average life of loans and securities. A reduction in interest rates generally results in increased prepayments of loans and mortgage-backed securities, as borrowers refinance their debt in order to reduce their borrowing cost. This causes reinvestment risk, because we generally are not able to reinvest prepayments at rates that are comparable to the rates we earned on the prepaid loans or securities.

Changes in market interest rates could also reduce the value of our interest-earning assets including, but not limited to, our securities portfolio. In particular, the unrealized gains and losses on securities available for sale are reported, net of tax, in accumulated other comprehensive income which is a component of stockholders’ equity. As such, declines in the fair value of such securities resulting from increases in market interest rates may adversely affect stockholders’ equity.

If our allowance for loan losses is not sufficient to cover actual loan losses, our earnings will decrease.

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the required amount of the allowance for loan losses, we evaluate certain loans individually and establish loan loss allowances for specifically identified impairments. For all non-impaired loans, including those not individually reviewed, we estimate losses and establish loan loss allowances based upon historical and environmental loss factors. If the assumptions used in our calculation methodology are incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in further additions to our allowance. While our allowance for loan losses was 0.71% of total loans at June 30, 2014, significant additions to our allowance could materially decrease our net income.

In addition, bank regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize further loan charge-offs. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory authorities might have a material adverse effect on our financial condition and results of operations.

A significant portion of our assets consists of investment securities, which generally have lower yields than loans, and we classify a significant portion of our investment securities as available for sale which creates potential volatility in our equity and may have an adverse impact on our net income.

As of June 30, 2014, our securities portfolio, which includes mortgage-backed securities and collateralized mortgage obligations, totaled $1.36 billion, or 38.7% of our total assets. Investment securities typically have lower yields than loans. For fiscal 2014, the weighted average yield of our investment securities portfolio was 2.08% as compared to 4.31% for our loan portfolio. Accordingly, our net interest margin is lower than it would have been if a higher proportion of our interest-earning assets had been invested in loans. Additionally, $845.1 million, or 62.3% of our investment securities, are classified as available for sale and reported at fair value with unrealized gains or losses excluded from earnings and reported in other comprehensive income which affects our reported equity. Accordingly, given the significant size of the investment securities portfolio classified as available for sale and due to possible mark-to-market adjustments of that portion of the portfolio resulting from market conditions, we may experience greater volatility in the value of reported equity. Moreover, given that we actively manage our investment securities portfolio classified as available for sale, we may sell securities which could result in a realized loss, thereby reducing our net income.

Our increased commercial lending exposes us to additional risk.

Our commercial loans increased to 60.3% of total loans at June 30, 2014 from 21.5% of total loans at June 30, 2010. Our commercial lending operations include commercial mortgages, multi-family loans and other non-residential mortgage loans. We intend to continue increasing our commercial lending as part of our planned transition from a traditional thrift to a full-service community bank. We have also increased our commercial lending staff and are seeking additional commercial lenders to help grow the commercial loan portfolio. Our increased commercial lending, however, exposes us to greater risks than one- to four-family residential lending. Unlike single-family, owner-occupied residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment and other income and are secured by real property whose value tends to be more easily ascertainable and realizable, the repayment of commercial loans typically is dependent on the successful operation and income stream of the borrower, which can be significantly affected by economic conditions, and are secured, if at all, by collateral that is more difficult to value or sell or by collateral which may depreciate in value. In addition, commercial loans generally carry larger balances to single borrowers or related groups of borrowers than one- to four-family mortgage loans, which increases the financial impact of a borrower’s default.

Our loan portfolio contains a significant portion of loans that are unseasoned. It is difficult to evaluate the future performance of unseasoned loans.

Our net loan portfolio has grown to $1.73 billion at June 30, 2014, from $1.00 billion at June 30, 2010. A portion of this increase is due to increases in commercial real estate and commercial business loans resulting from originations and from purchases of and participations in loans originated by other financial institutions. It is difficult to assess the future performance of these loans recently added to our portfolio because our relatively limited experience with such loans does not provide us with a significant payment history from which to evaluate future collectability. These loans may experience higher delinquency or charge-off levels than our historical loan portfolio experience, which could adversely affect our future performance.

Because we intend to continue to increase our commercial business loan originations, our credit risk will increase.

We intend to increase our originations of commercial business loans, including C&I and SBA loans, which generally have more risk than one- to four-family residential mortgage loans. Since repayment of commercial business loans may depend on the successful operation of the borrower’s business, repayment of such loans can be affected by adverse conditions in the real estate market or the local economy. Because we plan to continue to increase our originations of these loans, it may be necessary to increase the level of our allowance for loan losses because of the increased risk characteristics associated with these types of loans. Any such increase to our allowance for loan losses would adversely affect our earnings. Additionally, Kearny Bank historically has not had a significant portfolio of commercial business loans.

Kearny Bank’s reliance on brokered deposits could adversely affect its liquidity and operating results.

Among other sources of funds, we rely on brokered deposits to provide funds with which to make loans and provide for other liquidity needs. On June 30, 2014, brokered deposits totaled $232.0 million, or approximately 9.7% of total deposits. Kearny Bank’s primary source for brokered money market deposits is the Promontory Interfinancial Network’s (“Promontory”) Insured Network Deposits (“IND”), a brokered deposit network that is sourced by Promontory from large retail and institutional brokerage firms whose individual clients seek to have a portion of their investments held in interest-bearing accounts at FDIC-insured institutions. Our Promontory IND deposits totaled $213.5 million at June 30, 2014. These funds were augmented by a small portfolio of longer-term, brokered certificates of deposit acquired during fiscal 2014 which totaled approximately $18.5 million at June 30, 2014.

Generally brokered deposits may not be as stable as other types of deposits. In the future, those depositors may not replace their brokered deposits with us as they mature, or we may have to pay a higher rate of interest to keep those deposits or to replace them with other deposits or other sources of funds. Not being able to maintain or replace those deposits as they mature would adversely affect our liquidity. Paying higher deposit rates to maintain or replace brokered deposits would adversely affect our net interest margin and operating results.

We may be required to record additional impairment charges with respect to our investment securities portfolio.

We review our securities portfolio at the end of each quarter to determine whether the fair value is below the current carrying value. When the fair value of any of our investment securities has declined below its carrying value, we are required to assess whether the impairment is other than temporary. If we conclude that the impairment is other than temporary, we are required to write down the value of that security. The “credit-related” portion of the impairment is recognized through earnings whereas the “noncredit-related” portion is generally recognized through other comprehensive income in the circumstances where the future sale of the security is unlikely.

At June 30, 2014, we had investment securities with fair values of approximately $1.35 billion on which we had approximately $14.3 million in gross unrealized losses. All unrealized losses on investment securities at June 30, 2014 represented temporary impairments of value. However, if changes in the expected cash flows of these

securities and/or prolonged price declines result in our concluding in future periods that the impairment of these securities is other than temporary, we will be required to record an impairment charge against income equal to the credit-related impairment.

Our investments in corporate and municipal debt securities and collateralized loan obligations expose us to additional credit risks.

The composition and allocation of our investment portfolio has historically emphasized U.S. agency mortgage-backed securities and U.S. agency debentures. While such assets remain a significant component of our investment portfolio at June 30, 2014, recent enhancements to our investment policies, strategies and infrastructure have enabled us to diversify the composition and allocation of our securities portfolio. Such diversification has included investing in bank-qualified municipal obligations, bonds issued by financial institutions and collateralized loan obligations. Unlike U.S. agency securities, the municipal and corporate debt securities acquired are backed only by the credit of their issuers while investments in collateralized loan obligations generally rely on the structural characteristics of an individual tranche within a larger investment vehicle to protect the investor from credit losses arising from borrowers defaulting on the underlying securitized loans.

While we have invested primarily in investment grade securities, these securities are not backed by the federal government and expose us to a greater degree of credit risk than U.S. agency securities. Any decline in the credit quality of these securities exposes us to the risk that the market value of the securities could decrease which may require us to write down their value and could lead to a possible default in payment.

We hold certain intangible assets that could be classified as impaired in the future. If these assets are considered to be either partially or fully impaired in the future, our earnings would decrease.

At June 30, 2014, we had approximately $109.4 million in intangible assets on our balance sheet comprising $108.6 million of goodwill and $790,000 of core deposit intangibles. We are required to periodically test our goodwill and identifiable intangible assets for impairment. The impairment testing process considers a variety of factors, including the current market price of our common stock, the estimated net present value of our assets and liabilities, and information concerning the terminal valuation of similarly situated insured depository institutions. If an impairment determination is made in a future reporting period, our earnings and the book value of these intangible assets will be reduced by the amount of the impairment. If an impairment loss is recorded, it will have little or no impact on the tangible book value of our common stock or our regulatory capital levels, but recognition of such an impairment loss could significantly restrict Kearny Bank’s ability to make dividend payments to New Kearny and New Kearny’s ability to pay dividends to stockholders.

Recently enacted financial reform legislation could substantially increase our compliance burden and costs and necessitate changes in the conduct of our business.

On July 21, 2010, the Dodd-Frank Act was signed into law. The Dodd-Frank Act is having a broad impact on the financial services industry, including significant regulatory and compliance changes. Many of the requirements called for in the Dodd-Frank Act are being implemented over time. Given the uncertainty associated with the manner in which the provisions of the Dodd-Frank Act will be implemented by the various regulatory agencies and through regulations, the full extent of the impact such requirements will have on our operations is unclear and may not be known for many years. The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities, require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage requirements or otherwise adversely affect our business. In particular, the following provisions of the Dodd-Frank Act, among others, are impacting our operations and activities, both currently and prospectively:

•

elimination of the OTS as our primary federal regulator, which requires us to continue adapting to a new regulatory regime;

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weakening of federal preemption standards applicable to Kearny Bank, which exposes us to additional state regulation;

•

changes in methodologies for calculating deposit insurance premiums and increases in required deposit insurance fund reserve levels, which could increase our deposit insurance expense;

•

application of regulatory capital requirements to New Kearny; and

•

imposition of comprehensive, new consumer protection requirements, which could substantially increase our compliance burden and potentially expose us to new liabilities.

Further, we may be required to invest significant management attention and resources to evaluate and continue to make any changes necessary to comply with new statutory and regulatory requirements under the Dodd-Frank Act. Failure to comply with the new requirements may negatively impact our results of operations and financial condition. While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations would have on us, these changes could be materially adverse to our investors.

Strong competition within our market area may limit our growth and profitability.

Competition is intense within the banking and financial services industry in New Jersey and New York. In our market area, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking firms operating locally and elsewhere. Many of these competitors have substantially greater resources, higher lending limits and offer services that we do not or cannot provide. This competition makes it more difficult for us to originate new loans and retain and attract new deposits. Price competition for loans may result in originating fewer loans, or earning less on our loans and price competition for deposits may result in a reduction of our deposit base or paying more on our deposits.

Our business is geographically concentrated in New Jersey and New York and a downturn in economic conditions within the region could adversely affect our profitability.

A substantial majority of our loans are to individuals and businesses in New Jersey and New York. The decline in the economy of the region could continue to have an adverse impact on our earnings. We have a significant amount of real estate mortgages, such that continuing decreases in local real estate values may adversely affect the value of property used as collateral. Adverse changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which may adversely influence our profitability.

The short-term and long-term impact of the changing regulatory capital requirements and new capital rules is uncertain.

The federal banking agencies have recently adopted proposals that when effective will substantially amend the regulatory risk-based capital rules applicable to Kearny-Federal, New Kearny and Kearny Bank. The amendments implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The new rules will apply regulatory capital requirements to Kearny-Federal and New Kearny. The amended rules include new minimum risk-based capital and leverage ratios, which will become effective in January 2015 with certain requirements to be phased in beginning in 2016, and will refine the definition of what constitutes “capital” for purposes of calculating those ratios.

The new minimum capital level requirements applicable to Kearny Bank would include: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 4% for all institutions. The amended rules also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital ratios, and would result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement will be phased in beginning in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying

discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that could be utilized for such actions.

The Basel III changes and other regulatory capital requirements will result in generally higher regulatory capital standards. However, it is difficult at this time to predict the precise effect on us. The application of more stringent capital requirements to Kearny-Federal, New Kearny and Kearny Bank could, among other things, result in lower returns on invested capital, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets. Implementation of changes to asset risk weightings for risk based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy and could further limit our ability to make distributions, including paying out dividends or buying back shares.

A natural disaster could harm our business.

Natural disasters can disrupt our operations, result in damage to our properties, reduce or destroy the value of the collateral for our loans and negatively affect the local economies in which we operate, which could have a material adverse effect on our results of operations and financial condition. The occurrence of a natural disaster could result in one or more of the following: (i) an increase in loan delinquencies; (ii) an increase in problem assets and foreclosures; (iii) a decrease in the demand for our products and services; or (iv) a decrease in the value of the collateral for loans, especially real estate, in turn reducing customers’ borrowing power, the value of assets associated with problem loans and collateral coverage.

Acts of terrorism and other external events could impact our ability to conduct business.

Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems and the metropolitan New York area and northern New Jersey remain central targets for potential acts of terrorism. Such events could cause significant damage, impact the stability of our facilities and result in additional expenses, impair the ability of our borrowers to repay their loans, reduce the value of collateral securing repayment of our loans, and result in the loss of revenue. While we have established and regularly test disaster recovery procedures, the occurrence of any such event could have a material adverse effect on our business, operations and financial condition.

Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks.

We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions. Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or persons outside Kearny-Federal, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of the internal control system and compliance requirements, and business continuation and disaster recovery. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits. This risk of loss also includes the potential legal actions that could arise as a result of an operational deficiency or as a result of noncompliance with applicable regulatory standards, adverse business decisions or their implementation, and customer attrition due to potential negative publicity. In the event of a breakdown in the internal control system, improper operation of systems or improper employee actions, we could suffer financial loss, face regulatory action, and suffer damage to our reputation.

Our risk management framework may not be effective in mitigating risk and reducing the potential for significant losses.

Our risk management framework is designed to minimize risk and loss to us. We seek to identify, measure, monitor, report and control our exposure to risk, including strategic, market, liquidity, compliance and operational

risks. While we use a broad and diversified set of risk monitoring and mitigation techniques, these techniques are inherently limited because they cannot anticipate the existence or future development of currently unanticipated or unknown risks. Recent economic conditions and heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have increased our level of risk. Accordingly, we could suffer losses as a result of our failure to properly anticipate and manage these risks.

We could be adversely affected by failure in our internal controls.

A failure in our internal controls could have a significant negative impact not only on our earnings, but also on the perception that customers, regulators and investors may have of us. We continue to devote a significant amount of effort, time and resources to continually strengthening our controls and ensuring compliance with complex accounting standards and banking regulations.

Risks associated with system failures, interruptions, or breaches of security could negatively affect our earnings.

Information technology systems are critical to our business. We use various technology systems to manage our customer relationships, general ledger, securities investments, deposits, and loans. We have established policies and procedures to prevent or limit the effect of system failures, interruptions, and security breaches, but such events may still occur or may not be adequately addressed if they do occur. In addition, any compromise of our systems could deter customers from using our products and services. Although we rely on security systems to provide security and authentication necessary to effect the secure transmission of data, these precautions may not protect our systems from security breaches.

In addition, we outsource a majority of our data processing to certain third-party providers. If these third-party providers encounter difficulties, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected. Threats to information security also exist in the processing of customer information through various other vendors and their personnel.

The occurrence of any system failures, interruption, or breach of security could damage our reputation and result in a loss of customers and business thereby subjecting us to additional regulatory scrutiny, or could expose us to litigation and possible financial liability. Any of these events could have a material adverse effect on our financial condition and results of operations.

Acquisitions may disrupt our business and dilute stockholder value.

We regularly evaluate merger and acquisition opportunities with other financial institutions and financial services companies. As a result, negotiations may take place and future mergers or acquisitions involving cash, debt, or equity securities may occur at any time. We would seek acquisition partners that offer us either significant market presence or the potential to expand our market footprint and improve profitability through economies of scale or expanded services.

Future acquisitions of other banks, businesses, or branches may have an adverse effect on our financial results and may involve various other risks commonly associated with acquisitions, including, among other things:

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difficulty in estimating the value of the target company;

•

payment of a premium over book and market values that may dilute our tangible book value and earnings per share in the short and long term;

•

potential exposure to unknown or contingent liabilities of the target company;

•

exposure to potential asset quality problems of the target company;

•

potential volatility in reported income associated with goodwill impairment losses;

•

difficulty and expense of integrating the operations and personnel of the target company;

•

inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits;

•

potential disruption to our business;

•

potential diversion of our management’s time and attention;

•

possible loss of key employees and customers of the target company; and

•

potential changes in banking or tax laws or regulations that may affect the target company.

Our inability to achieve profitability on new branches may negatively affect our earnings.

We have expanded our presence throughout our market area and we intend to pursue further expansion through de novo branching or the purchase of branches from other financial institutions. The profitability of our expansion strategy will depend on whether the income that we generate from the new branches will offset the increased expenses resulting from operating these branches. We expect that it may take a period of time before these branches can become profitable, especially in areas in which we do not have an established presence. During this period, the expense of operating these branches may negatively affect our net income.

Risks Related to the Offering

The future price of the shares of common stock may be less than the $10.00 purchase price per share in the offering.

If you purchase shares of common stock in the offering, you may not be able to sell them later at or above the $10.00 purchase price in the offering. In many cases, shares of common stock issued by newly converted savings institutions or mutual holding companies have traded below the initial offering price. The aggregate purchase price of the shares of common stock sold in the offering will be based on an independent appraisal. The independent appraisal is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common stock. The independent appraisal is based on certain estimates, assumptions and projections, all of which are subject to change from time to time. After the shares begin trading, the trading price of our common stock will be determined by the marketplace, and may be influenced by many factors, including prevailing interest rates, the overall performance of the economy, investor perceptions of New Kearny and the outlook for the financial services industry in general. Price fluctuations in our common stock may be unrelated to our operating performance.

Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance.

We intend to invest between $297.5 million and $403.1 million of the net proceeds of the offering in Kearny Bank. We may use the remaining net proceeds to invest in short-term investments, repurchase shares of common stock, pay dividends or for other general corporate purposes. We also expect to use a portion of the net proceeds we retain to fund a loan to our employee stock ownership plan to purchase shares of common stock in the offering. Kearny Bank may use the net proceeds it receives to fund new loans, expand its retail banking franchise by establishing or acquiring new branches or by acquiring other financial institutions or other financial services companies, or for other general corporate purposes. However, with the exception of the loan to the employee stock ownership plan, we have not allocated specific amounts of the net proceeds for any of these purposes, and we will have significant flexibility in determining the amount of the net proceeds we apply to different uses and when we apply or reinvest such proceeds. Also, certain of these uses, such as opening new branches or acquiring other

financial institutions, may require the approval of the OCC, the FDIC or the Federal Reserve Board. We have not established a timetable for reinvesting the net proceeds, and we cannot predict how long we will require to reinvest the net proceeds. Our failure to utilize these funds effectively would reduce our profitability and may adversely affect the value of our common stock.

Our return on equity will be low following the stock offering. This could negatively affect the trading price of our shares of common stock.

Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of financial institutions. Our return on equity will be low until we are able to leverage the additional capital we receive from the stock offering. Our return on equity will be negatively affected by added expenses associated with our employee stock ownership plan and the stock-based benefit plan(s) we intend to adopt. Until we can increase our net interest income and non-interest income and leverage the capital raised in the stock offering, we expect our return on equity to be low, which may reduce the market price of our shares of common stock.

The contribution to the Foundation will dilute your ownership interest and adversely affect net income in 2015.

We intend to establish and fund the Foundation in connection with the conversion and offering. We intend to contribute to the Foundation 500,000 shares of our common stock and $5.0 million in cash such that the total contribution will equal $10.0 million. The contribution will have an adverse effect on our net income for the quarter and year in which we make the contribution to the Foundation. The after-tax expense of the contribution will reduce net income in fiscal 2015 by approximately $6.5 million. We had net income of $10.2 million for the year ended June 30, 2014. In addition, persons purchasing shares in the stock offering will have their ownership and voting interests in New Kearny diluted by up to 0.6% at the minimum of the valuation range due to contribution of shares of common stock to the Foundation.

Our contribution to the Foundation may not be tax deductible, which could reduce our profits.

We may not have sufficient profits to be able to fully use the tax deduction from our contribution to the Foundation. Pursuant to the Internal Revenue Code, an entity is permitted to deduct up to 10% of its taxable income (income before federal income taxes and charitable contributions) in any one year for charitable contributions. Any contribution in excess of the 10% limit may be deducted for federal income tax purposes over each of the five years following the year in which the charitable contribution is made. Accordingly, a charitable contribution could, if necessary, be deducted over a six-year period. Based on $14.4 million of normalized taxable income before income tax expense in the year ended June 30, 2014, and assuming that our taxable income before income tax expense remained at that level in future years following our conversion and stock offering, we estimate that we would be able to deduct for federal income tax purposes $8.6 million of the contribution to the Foundation over six years. This would result in after-tax expense of $6.4 million, and not $5.9 million based on full deductibility of the $10.0 million contribution.

Our stock-based benefit plans will increase our expenses and reduce our income.

We intend to adopt one or more new stock-based benefit plans after the conversion, subject to stockholder approval, which will increase our annual compensation and benefit expenses related to the stock options and stock awards granted to participants under the stock-based benefit plan(s). The actual amount of these new stock-related compensation and benefit expenses will depend on the number of options and stock awards actually granted, the fair market value of our stock or options on the date of grant, the vesting period, and other factors which we cannot predict at this time. In the event we adopt a plan within 12 months following the conversion, the total shares of common stock reserved for issuance pursuant to awards of restricted stock and grants of options under our proposed stock-based benefit plans would be limited to 4% and 10%, respectively, of the total shares of our common stock sold in the stock offering and issued to the Foundation. If we award restricted shares of common stock or grant options in excess of these amounts under stock-based benefit plans adopted more than 12 months after the

completion of the conversion, our costs would increase further. We intend to adopt a stock-based benefit plan that would reserve for the exercise of stock options and the grant of stock awards a number of shares equal to 6% and 2.5%, respectively, of the shares sold in the stock offering and issued to the Foundation.

In addition, we will recognize expense for our employee stock ownership plan when shares are committed to be released to participants’ accounts, and we will recognize expense for restricted stock awards and stock options over the vesting period of awards made to recipients. The expense in the first year following the offering for shares purchased in the offering has been estimated to be approximately $8.8 million ($6.4 million after tax) at the maximum of the offering range assuming the employee stock ownership plan purchases 5% of the shares of common stock sold in the offering and issued to the Foundation as set forth in the pro forma financial information under “Pro Forma Data,” assuming the $10.00 per share purchase price as fair market value. Actual expenses, however, may be higher or lower, depending on the price of our common stock. For further discussion of our proposed stock-based plans, see “Management—Benefits to be Considered Following Completion of the Conversion.”

The implementation of stock-based benefit plans may dilute your ownership interest. Historically, stockholders have approved these stock-based benefit plans.

We intend to adopt one or more new stock-based benefit plans following the stock offering. These plans may be funded either through open market purchases or from the issuance of authorized but unissued shares of common stock. Our ability to repurchase shares of common stock to fund these plans will be subject to many factors, including applicable regulatory restrictions on stock repurchases, the availability of stock in the market, the trading price of the stock, our capital levels, alternative uses for our capital and our financial performance. While our intention is to fund the new stock-based benefit plan through open market purchases, stockholders would experience a 6.2% dilution in ownership interest at the maximum of the offering range in the event newly issued shares of our common stock are used to fund stock options and shares of restricted common stock in amounts equal to 6% and 2.5%, respectively, of the shares sold in the offering and issued to the Foundation. If adopted within 12 months following the completion of the conversion, the number of shares reserved for the exercise of stock options or available for stock awards under the stock-based benefit plan is expected to be limited to 10% and 4%, respectively, of the shares sold in the stock offering and issued to the Foundation. In the event we adopt a plan more than 12 months following the conversion, the plan would not be subject to these limitations and stockholders could experience greater dilution.

Although the implementation of the stock-based benefit plan will be subject to stockholder approval, historically, the overwhelming majority of stock-based benefit plans adopted by savings institutions and their holding companies following mutual-to-stock conversions have been approved by stockholders.

Various factors, including our articles of incorporation and bylaws, and Maryland and federal law, will make takeover attempts more difficult to achieve.

Our board of directors has no current intention to sell control of New Kearny. Our articles of incorporation and bylaws include certain provisions which will make it more difficult for companies or persons to acquire control of New Kearny without the consent of our board of directors, such as (i) a prohibition on any beneficial owner voting in excess of 10% of New Kearny’s common stock, (ii) supermajority voting requirements to remove directors for cause and amend certain provisions of the articles of incorporation and bylaws and (iii) provisions requiring advance notice of stockholder proposals and director nominations. For further information, see “Restrictions on Acquisition of New Kearny.”

Additionally, provisions of Maryland law, such as a five-year prohibition on business combinations with interested stockholders, and federal regulations, such as a three-year prohibition on acquiring more than 10% of the voting stock of New Kearny, as well as shares of restricted stock and stock options that we have granted or may grant to employees and directors and stock ownership by our management and directors, and various other factors will also make it more difficult for companies or persons to acquire control of New Kearny without the consent of our board of directors. You may want a takeover attempt to succeed because, for example, a potential acquiror

could offer a premium over the then prevailing price of our common stock. For additional information, see “Restrictions on Acquisition of New Kearny,” and “Management—Benefits to be Considered Following Completion of the Conversion.”

You may not revoke your decision to purchase New Kearny common stock in the subscription or community offerings after you send us your order.

Funds submitted or automatic withdrawals authorized in connection with a purchase of shares of common stock in the subscription and community offerings will be held by us until the completion or termination of the conversion and offering, including any extension of the expiration date and consummation of a syndicated or firm commitment underwritten offering. Because completion of the conversion and offering will be subject to regulatory approvals and an update of the independent appraisal prepared by RP Financial, LC., among other factors, there may be one or more delays in the completion of the conversion and offering. Orders submitted in the subscription and community offerings are irrevocable, and purchasers will have no access to their funds unless the offering is terminated, or extended beyond [extension date], or the number of shares to be sold in the offering is increased to more than 83,375,000 shares or decreased to fewer than 61,625,000 shares.

The distribution of subscription rights could have adverse income tax consequences.

If the subscription rights granted to certain current or former depositors or certain borrowers of Kearny Bank are deemed to have an ascertainable value, receipt of such rights may be taxable in an amount equal to such value. Whether subscription rights are considered to have ascertainable value is an inherently factual determination. We have received an opinion of counsel, Luse Gorman Pomerenk & Schick, P.C., that it is more likely than not that such rights have no value; however, such opinion is not binding on the Internal Revenue Service.

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables set forth selected consolidated historical financial and other data of Kearny-Federal and its subsidiaries for the periods and at the dates indicated. The following is only a summary and you should read it in conjunction with the business and financial information regarding Kearny-Federal contained elsewhere in this prospectus, including the audited consolidated financial statements. The information at June 30, 2014 and 2013, and for the years ended June 30, 2014, 2013 and 2012 is derived in part from the audited consolidated financial statements that appear elsewhere in this prospectus. The information at June 30, 2012, 2011 and 2010 and for the years ended June 30, 2011 and 2010 is derived in part from audited consolidated financial statements that do not appear in this prospectus.


	At June 30,
	2014		2013		2012		2011		2010
	(In Thousands)
Balance Sheet Data:
Assets	$	3,510,009	$	3,145,360	$	2,937,006	$	2,904,136	$	2,339,813
Net loans receivable		1,729,084		1,349,975		1,274,119		1,256,584		1,005,152
Mortgage-backed securities available for sale		437,223		780,652		1,230,104		1,060,247		703,455
Mortgage-backed securities held to maturity		295,658		101,114		1,090		1,345		1,700
Debt securities available for sale		407,898		300,122		12,602		44,673		29,497
Debt securities held to maturity		216,414		210,015		34,662		106,467		255,000
Cash and cash equivalents		135,034		127,034		155,584		222,580		181,422
Goodwill		108,591		108,591		108,591		108,591		82,263
Deposits		2,479,941		2,370,508		2,171,797		2,149,353		1,623,562
Borrowings		512,257		287,695		249,777		247,642		210,000
Total stockholders’ equity		494,676		467,707		491,617		487,874		485,926


	For the Years Ended June 30,
	2014			2013			2012			2011			2010
	(In Thousands, Except Percentage and Per Share Amounts)
Summary of Operations:
Interest income	$	95,819		$	88,258		$	98,549		$	100,376		$	93,108
Interest expense		21,998			22,001			28,369			32,216			36,321

Net interest income		73,821			66,257			70,180			68,160			56,787
Provision for loan losses		3,381			4,464			5,750			4,628			2,616

Net interest income after provision for loan losses		70,440			61,793			64,430			63,532			54,171
Non-interest income, excluding asset gains, losses and write downs		6,967			6,179			4,767			3,640			2,413
Non-interest income (loss) from asset gains, losses and write downs		1,156			10,209			(2,622	)		1,207			291
Debt extinguishment expenses		—			8,688			—			—			—
Other non-interest expenses		64,158			60,737			58,721			56,242			45,100

Income before income taxes		14,405			8,756			7,854			12,137			11,775
Provisions for income taxes		4,217			2,250			2,776			4,286			4,963

Net income	$	10,188		$	6,506		$	5,078		$	7,851		$	6,812


Share and Per Share Data:
Net income per share:
Basic	$	0.16		$	0.10		$	0.08		$	0.12		$	0.10
Diluted		0.16			0.10			0.08			0.12			0.10
Weighted average number of common shares outstanding:
Basic		65,796			66,152			66,495			67,118			67,920
Diluted		65,836			66,152			66,495			67,118			67,920
Cash dividends per share ⁽¹⁾	$	—		$	—		$	0.15		$	0.20		$	0.20
Dividend payout ratio ⁽²⁾		—	%		—	%		54.60	%		41.00	%		53.70	%

(1)	Excludes dividends waived by Kearny MHC.

(2)	Represents cash dividends paid divided by net income.


	At or For the Years Ended June 30,
	2014			2013			2012			2011			2010

Performance Ratios:
Return on average assets (net income divided by average total assets)		0.31	%		0.22	%		0.17	%		0.29	%		0.31	%
Return on average equity (net income divided by average equity)		2.17			1.33			1.04			1.63			1.42
Net interest rate spread		2.32			2.34			2.46			2.56			2.45
Net interest margin		2.44			2.50			2.65			2.80			2.83
Average interest-earning assets to average interest-bearing liabilities		116.81			118.83			117.90			117.38			120.88
Efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income)		78.30			84.00			81.19			77.04			75.81
Non-interest expense to average assets		1.96			2.38			2.02			2.10			2.04
Asset Quality Ratios:
Non-performing loans to total loans		1.45			2.27			2.61			2.76			2.13
Non-performing assets to total assets		0.77			1.05			1.27			1.46			0.93
Net charge-offs to average loans outstanding		0.12			0.28			0.59			0.12			0.05
Allowance for loan losses to total loans		0.71			0.80			0.79			0.93			0.84
Allowance for loan losses to non-performing loans		48.96			35.24			30.20			33.65			39.70
Capital Ratios:
Average equity to average assets		14.29			16.70			16.75			17.94			21.66
Equity to assets at period end		14.09			14.87			16.74			16.80			20.77
Tangible equity to tangible assets at year end ⁽¹⁾		11.32			11.93			12.87			13.11			17.36

(1)	Tangible equity equals total stockholders’ equity reduced by goodwill, core deposit intangible assets, disallowed servicing assets and accumulated other comprehensive (loss) income.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

•

statements of our goals, intentions and expectations;

•

statements regarding our business plans, prospects, growth and operating strategies;

•

statements regarding the quality of our loan and investment portfolios; and

•

estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

•

general economic conditions, either nationally or in our market areas, that are worse than expected;

•

changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses;

•

our ability to access cost-effective funding;

•

fluctuations in real estate values and both residential and commercial real estate market conditions;

•

demand for loans and deposits in our market area;

•

our ability to implement and changes in our business strategies;

•

competition among depository and other financial institutions;

•

inflation and changes in the interest rate environment that reduce our margins and yields, or reduce the fair value of financial instruments or reduce the origination levels in our lending business, or increase the level of defaults, losses and prepayments on loans we have made and make whether held in portfolio or sold in the secondary markets;

•

adverse changes in the securities markets;

•

changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

•

our ability to manage market risk, credit risk and operational risk in the current economic conditions;

•

our ability to enter new markets successfully and capitalize on growth opportunities;

•

our ability to successfully integrate any assets, liabilities, customers, systems and management personnel we have acquired or may acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto;

•

changes in consumer spending, borrowing and savings habits;

•

changes in accounting policies and practices, as may be adopted by bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;

•

our ability to retain key employees;

•

technological changes;

•

significant increases in our loan losses; and

•

changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. Please see “Risk Factors” beginning on page 18.

HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

Although we cannot determine what the actual net proceeds from the sale of the shares of common stock in the offering will be until the offering is completed, we anticipate that the net proceeds will be between $595.1 million and $806.1 million.

We intend to distribute the net proceeds as follows:


	Based Upon the Sale at $10.00 per share of
	61,625,000 Shares					72,500,000 Shares					83,375,000 Shares
	Amount		Percent of Net Proceeds			Amount		Percent of Net Proceeds			Amount		Percent of Net Proceeds
	(Dollars in thousands)

Offering proceeds	$	616,250				$	725,000				$	833,750
Less offering expenses		21,191					24,400					27,608

Net offering proceeds	$	595,059		100.0	%	$	700,600		100.0	%	$	806,142		100.0	%


Distribution of net proceeds:
Contribution to Kearny Bank	$	297,529		50.0	%	$	350,300		50.0	%	$	403,071		50.0	%
Cash contribution to the Foundation		5,000		0.8			5,000		0.7		$	5,000		0.6
To fund loan to employee stock ownership plan		31,063		5.2			36,500		5.2		$	41,937		5.2

Retained by New Kearny ⁽¹⁾	$	261,467		44.0	%	$	308,800		44.1	%	$	356,134		44.2	%

(1)

In the event the stock-based benefit plan providing for stock awards and stock options is approved by stockholders, and assuming shares are purchased for the stock awards at $10.00 per share, an additional $15.5 million, $18.3 million and $21.0 million, respectively, of net proceeds will be used by New Kearny. In this case, the net proceeds retained by New Kearny would be $246.0 million, $290.5 million and $335.1 million, respectively, at the minimum, midpoint and maximum of the offering range.

Payments for shares of common stock made through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will result in a reduction of Kearny Bank’s deposits. The net proceeds may vary because total expenses relating to the offering may be more or less than our estimates. For example, our expenses would increase if fewer shares were sold in the subscription and community offerings and more in the syndicated or firm commitment underwritten offering than we have assumed.

New Kearny may use the proceeds it retains from the offering:

•

to invest in securities;

•

to pay cash dividends to stockholders;

•

to repurchase shares of our common stock;

•

to finance the acquisition of financial institutions, although we do not currently have any agreements or understandings regarding any specific acquisition transaction; and

•

for other general corporate purposes.

See “Our Dividend Policy” for a discussion of our expected dividend policy following the completion of the conversion. Under current federal regulations, we may not repurchase shares of our common stock during the first year following the completion of the conversion, except when extraordinary circumstances exist and with prior regulatory approval, or except to fund restricted stock plans (which would require notification to the Federal Reserve Board) or tax qualified employee stock benefit plans.

Kearny Bank may use the net proceeds it receives from the offering:

•

to invest in securities;

•

to fund new loans;

•

to enhance existing products and services and to support the development of new products and services;

•

to expand its retail banking franchise by establishing or acquiring new branches or by acquiring other financial institutions or other financial services companies as opportunities arise, although we do not currently have any understandings or agreements to acquire a financial institution or other entity; and

•

for other general corporate purposes.

Initially, a substantial portion of the net proceeds will be invested in short-term investments, investment-grade debt obligations and mortgage-backed securities. We have not determined specific amounts of the net proceeds that would be used for the purposes described above. The use of the proceeds outlined above may change based on many factors, including, but not limited to, changes in interest rates, equity markets, laws and regulations affecting the financial services industry, the attractiveness of potential acquisitions to expand our operations, and overall market conditions. The use of the proceeds may also change depending on our ability to receive regulatory approval to establish new branches or acquire other financial institutions.

We expect our return on equity to be low until we are able to reinvest effectively the additional capital raised in the offering. Until we can increase our net interest income and non-interest income, we expect our return on equity to be below the industry average, which may negatively affect the value of our common stock. See “Risk

Factors—Risks Related to the Offering—Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance.”

OUR DIVIDEND POLICY

New Kearny will not be permitted to pay dividends on its common stock if its stockholders’ equity would be reduced below the amount of the liquidation account established by New Kearny in connection with the conversion. The source of dividends will depend on the net proceeds retained by New Kearny and earnings thereon, and dividends from Kearny Bank. In addition, New Kearny will be subject to state law limitations and federal bank regulatory policy on the payment of dividends. Maryland law generally limits dividends if the corporation would not be able to pay its debts in the usual course of business after giving effect to the dividend or if the corporation’s total assets would be less than the corporation’s total liabilities plus the amount needed to satisfy the preferential rights upon dissolution of stockholders whose preferential rights on dissolution are superior to those receiving the distribution.

After the completion of the conversion, Kearny Bank will not be permitted to pay dividends on its capital stock to New Kearny, its sole stockholder, if Kearny Bank’s stockholder’s equity would be reduced below the amount of the liquidation account established in connection with the conversion. In addition, Kearny Bank will not be permitted to make a capital distribution if, after making such distribution, it would be undercapitalized. Kearny Bank must file an application with the OCC for approval of a capital distribution if the total capital distributions for the applicable calendar year exceed the sum of Kearny Bank’s net income for that year to date plus its retained net income for the preceding two years or Kearny Bank would not be at least adequately capitalized following the distribution. A savings institution that is a subsidiary of a savings and loan holding company, such as Kearny Bank, must file notice with the Federal Reserve Board and an application or a notice with the OCC at least thirty days before making a capital distribution, such as paying a dividend to New Kearny.

Any payment of dividends by Kearny Bank to New Kearny that would be deemed to be drawn from Kearny Bank’s bad debt reserves established prior to calendar 1988, if any, would require a payment of taxes at the then-current tax rate by Kearny Bank on the amount of earnings deemed to be removed from the reserves for such distribution. Kearny Bank does not intend to make any distribution that would create such a federal tax liability. See “The Conversion and Offering—Liquidation Rights.” For further information concerning additional federal law and regulations regarding the ability of Kearny Bank to make capital distributions, including the payment of dividends to New Kearny, see “Taxation—Federal Taxation” and “Supervision and Regulation—Regulation of Kearny Bank—Dividend and Other Capital Distribution Limitations.”

We will file a consolidated federal tax return with Kearny Bank. Accordingly, it is anticipated that any cash distributions made by us to our stockholders would be treated as cash dividends and not as a non-taxable return of capital for federal tax purposes. Additionally, pursuant to Federal Reserve Board regulations, during the three-year period following the conversion, we will not make any capital distribution to stockholders that would be treated by recipients as a tax-free return of capital for federal income tax purposes.

MARKET FOR THE COMMON STOCK

Kearny-Federal’s common stock is currently listed on the Nasdaq Global Select Market under the symbol “KRNY.” Upon completion of the conversion, we expect the shares of common stock of New Kearny will replace

the existing shares of Kearny-Federal and trade on the Nasdaq Global Select Market under the symbol “KRNY.” In order to list our stock on the Nasdaq Global Select Market, we are required to have at least three broker-dealers who will make a market in our common stock. As of [stockholder record date], Kearny-Federal had approximately registered market makers in its common stock. Sandler O’Neill & Partners, L.P. has advised us that they intend to make a market in our common stock following the offering, but are under no obligation to do so.

The following table sets forth the high and low trading prices for shares of Kearny-Federal common stock for the periods indicated, as obtained from the Nasdaq Stock Market. We discontinued paying cash dividends on our common stock beginning in the fourth quarter of 2012 pursuant to new regulatory requirements associated with the waiver of dividends by Kearny MHC. As of the close of business on [stockholder record date], there were shares of common stock outstanding, including publicly held shares (shares held by stockholders other than Kearny MHC), and approximately stockholders of record.


	High		Low

Fiscal Year 2015
Quarter ended December 31, 2014 (through , 2014)	$		$
Quarter ended September 30, 2014	$		$

Fiscal Year 2014
Quarter ended June 30, 2014	$	15.55	$	12.97
Quarter ended March 31, 2014	$	15.49	$	10.91
Quarter ended December 31, 2013	$	11.99	$	10.10
Quarter ended September 30, 2013	$	11.05	$	9.19

Fiscal Year 2013
Quarter ended June 30, 2013	$	10.56	$	9.50
Quarter ended March 31, 2013	$	10.67	$	9.63
Quarter ended December 31, 2012	$	9.92	$	8.66
Quarter ended September 30, 2012	$	9.99	$	9.40

On September 3, 2014, the business day immediately preceding the public announcement of the conversion, and on , 2014, the closing prices of Kearny-Federal common stock as reported on the Nasdaq Global Select Market were $15.60 per share and $ per share, respectively. On the effective date of the conversion, all publicly held shares of Kearny-Federal common stock, including shares of common stock held by our officers and directors, will be converted automatically into and become the right to receive a number of shares of New Kearny common stock determined pursuant to the exchange ratio. See “The Conversion and Offering—Share Exchange Ratio for Current Stockholders.” Options to purchase shares of Kearny-Federal common stock will be converted into options to purchase a number of shares of New Kearny common stock determined pursuant to the exchange ratio, for the same aggregate exercise price. See “Beneficial Ownership of Common Stock.”

HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

At June 30, 2014, Kearny Bank exceeded all of the applicable regulatory capital requirements and was considered “well capitalized.” The table below sets forth the historical equity capital and regulatory capital of Kearny Bank at June 30, 2014, and the pro forma equity capital and regulatory capital of Kearny Bank, after giving effect to the sale of shares of common stock at $10.00 per share. The table assumes the receipt by Kearny Bank of 50% of the net offering proceeds. See “How We Intend to Use the Proceeds from the Offering.”


	Kearny Bank Historical at June 30, 2014					Pro Forma at June 30, 2014, Based Upon the Sale in the Offering of ⁽¹⁾⁽²⁾
	Kearny Bank Historical at June 30, 2014					61,625,000 Shares						72,500,000 Shares						83,375,000 Shares
	Amount		Percent of Assets ⁽³⁾			Amount			Percent of Assets ⁽³⁾			Amount			Percent of Assets ⁽³⁾			Amount			Percent of Assets ⁽³⁾
						(Dollars in thousands)

Equity	$	472,110		13.51	%	$	723,045			19.07	%	$	767,660			19.97	%	$	812,274			20.84	%

Tier 1 leverage capital	$	363,956		10.75	%	$	614,891			16.70	%	$	659,506			17.65	%	$	704,120			18.59	%
Leverage requirement		169,275		5.00			184,152			5.00			186,790			5.00			189,429			5.00

Excess	$	194,681		5.75	%	$	430,739			11.70	%	$	472,716			12.65	%	$	514,691			13.59	%


Tier 1 risk-based capital ⁽⁴⁾	$	363,956		19.78	%	$	614,891			32.36	%	$	659,506			34.52	%	$	704,120			36.65	%
Risk-based requirement		110,424		6.00			113,994			6.00			114,628			6.00			115,261			6.00

Excess	$	253,532		13.78	%	$	500,897			26.36	%	$	544,878			28.52	%	$	588,859			30.65	%


Total risk-based capital ⁽⁴⁾	$	376,343		20.45	%	$	627,278			33.02	%	$	671,893			35.17	%	$	716,507			37.30	%
Risk-based requirement		184,040		10.00			189,990			10.00			191,046			10.00			192,101			10.00

Excess	$	192,303		10.45	%	$	437,288			23.02	%	$	480,847			25.17	%	$	524,406			27.30	%


Reconciliation of capital infused into Kearny Bank:
Net proceeds						$	297,529					$	350,300					$	403,071
Less: Common stock acquired by employee stock ownership plan							(31,063	)					(36,500	)					(41,937	)
Less: Common stock acquired by stock-based benefit plan							(15,531	)					(18,250	)					(20,969	)

Pro forma increase						$	250,935					$	295,550					$	340,165

(1)

Effective January 1, 2015, the Prompt Corrective Action Well Capitalized Thresholds will be 5%, 8% and 10% for the tier 1 leverage capital requirement, tier 1 risk-based capital requirement and total risk-based capital requirement, respectively. Additionally, effective January 1, 2015, a new capital standard, common equity tier 1 capital ratio, will be implemented with a 6.5% well capitalized threshold. At June 30, 2014, our common equity tier 1 capital ratio was 10.75%, and assuming the completion of the conversion and offering, as of June 30, 2014, our common equity tier 1 capital ratio would be 16.90%, 17.92% and 18.90% at the minimum, the midpoint and the maximum, respectively. At June 30, 2014, assuming the completion of the conversion and offering, Kearny Bank would be classified as “well capitalized” under each of the Prompt Corrective Action requirements described in this footnote.

(2)

Pro forma capital levels assume that the employee stock ownership plan purchases 5.0% of the shares of common stock sold in the stock offering and issued to the Foundation with funds New Kearny lends to such plan. Pro forma generally accepted accounting principles (“GAAP”) capital and regulatory capital have been reduced by the amount required to fund this plan. See “Management” for a discussion of the employee stock ownership plan.

(3)	Equity and Tier 1 leverage capital levels are shown as a percentage of total average assets. Risk-based capital levels are shown as a percentage of risk-weighted assets.

(4)	Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.

CAPITALIZATION

The following table presents the historical consolidated capitalization of Kearny-Federal at June 30, 2014 and the pro forma consolidated capitalization of New Kearny after giving effect to the conversion and offering based upon the assumptions set forth in the “Pro Forma Data” section.


	Kearny-Federal			Pro Forma at June 30, 2014 Based Upon the Sale in the Offering at $10.00 per share of
	Historical at June 30, 2014			61,625,000 Shares			72,500,000 Shares			83,375,000 Shares
	(Dollars in thousands)

Deposits ⁽¹⁾	$	2,479,941		$	2,479,941		$	2,479,941		$	2,479,941
Borrowed funds		512,257			512,257			512,257			512,257

Total deposits and borrowed funds	$	2,992,198		$	2,992,198		$	2,992,198		$	2,992,198


Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 shares authorized (post-conversion) ⁽²⁾	$	—		$	—		$	—		$	—
Common stock, $0.01 par value, 800,000,000 shares authorized (post-conversion); shares to be issued as reflected ^{(2) (3)}		7,378			803			944			1,084
Additional paid-in capital ⁽²⁾		231,870			763,736			869,136			974,539
MHC capital contribution		—			278			278			278
Retained earnings ⁽⁴⁾		336,355			336,355			336,355			336,355
Less:
Accumulated other comprehensive loss		(2,280	)		(2,280	)		(2,280	)		(2,280	)
Treasury stock		(74,768	)		—			—			—
After-tax expense of contribution to the Foundation ⁽⁵⁾		—			(6,500	)		(6,500	)		(6,500	)
Common stock held by employee stock ownership plan ⁽⁶⁾		(3,879	)		(34,942	)		(40,379	)		(45,816	)
Common stock to be acquired by stock-based benefit plan ⁽⁷⁾		—			(15,531	)		(18,250	)		(20,969	)

Total stockholders’ equity	$	494,676		$	1,041,919		$	1,139,304		$	1,236,690


Pro Forma Shares Outstanding
Shares offered for sale		—			61,625,000			72,500,000			83,375,000
Exchange shares issued		—			18,147,815			21,350,371			24,552,927
Shares issued to the Foundation		—			500,000			500,000			500,000

Total shares outstanding		67,267,865			80,272,815			94,350,371			108,427,927


Total stockholders’ equity as a percentage of total assets ⁽¹⁾		14.09	%		25.68	%		27.42	%		29.08	%

(1)	Does not reflect withdrawals from deposit accounts for the purchase of shares of common stock in the conversion and offering. These withdrawals would reduce pro forma deposits and assets by the amount of the withdrawals.

(2)

Kearny-Federal currently has 25,000,000 authorized shares of preferred stock and 75,000,000 authorized shares of common stock, par value $0.10 per share. On a pro forma basis, common stock and additional paid-in capital have been revised to reflect the par value and number of shares of New Kearny common stock to be outstanding.

(3)

No effect has been given to the issuance of additional shares of New Kearny common stock pursuant to the exercise of options under one or more stock-based benefit plans. If the plans are implemented within the first year after the closing of the offering, an amount of 6%, subject to a limit up to 10%, of the shares of New Kearny common stock sold in the offering will be reserved for issuance upon the exercise of options under the plans. No effect has been given to the exercise of options currently outstanding. See “Management.”

(4)	The retained earnings of Kearny Bank will be substantially restricted after the conversion. See “The Conversion and Offering—Liquidation Rights” and “Supervision and Regulation—Regulation of Kearny Bank—Dividend and Other Capital Distribution Limitations.”

(footnotes continue on following page)

(continued from previous page)

(5)

Represents the expense of the contribution to the Foundation based on a 35.0% tax rate. The realization of the deferred tax benefit is limited annually to a maximum deduction for our charitable contribution equal to 10% of our annual taxable income, subject to our ability to carry forward for Federal or state purposes any unused portion of the deduction for the five years following the year in which the contribution is made.

(6)

Assumes that 5% of the shares sold in the offering will be acquired by the employee stock ownership plan financed by a loan from New Kearny. The loan will be repaid principally from Kearny Bank’s contributions to the employee stock ownership plan. Since New Kearny will finance the employee stock ownership plan debt, this debt will be eliminated through consolidation and no liability will be reflected on New Kearny’s consolidated financial statements. Accordingly, the amount of shares of common stock acquired by the employee stock ownership plan is shown in this table as a reduction of total stockholders’ equity.

(7)

Assumes a number of shares of common stock equal to 2.5% of the shares of common stock to be sold in the offering and issued to the Foundation will be purchased for grant by one or more stock-based benefit plans. The funds to be used by the plan to purchase the shares will be provided by New Kearny. The dollar amount of common stock to be purchased is based on the $10.00 per share subscription price in the offering and represents unearned compensation. This amount does not reflect possible increases or decreases in the value of common stock relative to the subscription price in the offering. New Kearny will accrue compensation expense to reflect the vesting of shares pursuant to the plan and will credit capital in an amount equal to the charge to operations. Implementation of the plan will require stockholder approval.

PRO FORMA DATA

The following tables summarize historical data of Kearny-Federal and pro forma data of New Kearny at and for year ended June 30, 2014. This information is based on assumptions set forth below and in the tables, and should not be used as a basis for projections of market value of the shares of common stock following the conversion and offering.

The net proceeds in the tables are based upon the following assumptions:

•

50% of all shares of common stock will be sold in the subscription and community offerings and 50% will be sold in the syndicated or firm commitment underwritten offering;

•

our executive officers and directors, and their associates, will purchase 254,500 shares of common stock;

•

our employee stock ownership plan will purchase 5% of the shares of common stock sold in the offering and issued to the Foundation with a loan from New Kearny. The loan will be repaid in substantially equal payments of principal and interest (at the prime rate of interest, calculated as of the date of the origination of the loan, and adjusting annually) over a period of 20 years. Interest income that we earn on the loan will offset the interest paid by Kearny Bank;

•

we will pay Sandler O’Neill & Partners, L.P. a fee equal to 1% of the aggregate amount of common stock sold in the subscription and community offerings;

•

we will pay Sandler O’Neill & Partners, L.P. and any other broker-dealers participating in the syndicated or firm commitment underwritten offering an aggregate fee, or underwriting discount, as applicable, of 5% of the aggregate dollar amount of the common stock sold in the syndicated or firm commitment underwritten offering;

•

no fee will be paid with respect to shares of common stock purchased by our qualified and non-qualified employee stock benefit plans, or stock purchased by our officers, directors and employees, and their immediate families, and no fee will be paid with respect to exchange shares or shares contributed to the Foundation; and

•

total expenses of the offering, other than the fees and commissions to be paid to Sandler O’Neill & Partners, L.P. and other broker-dealers, will be $2.7 million.

We calculated pro forma consolidated net income for the year ended June 30, 2014 as if the estimated net proceeds we received had been invested at the beginning of the period at an assumed interest rate of 1.62% (1.05% on an after-tax basis), respectively. These figures represent the yield on the five-year U.S. Treasury Note as of June 30, 2014, which, in light of current market interest rates, we consider to more accurately reflect the pro forma reinvestment rate than the arithmetic average of the weighted average yield earned on our interest earning assets and the weighted average rate paid on our deposits, which is the reinvestment rate generally required by federal regulations.

We further believe that the reinvestment rate is factually supportable because:

•

the yield on the U.S Treasury Note can be determined and/or estimated from third-party sources; and

•

we believe that U.S. Treasury securities are not subject to credit losses due to a U.S. Government guarantee of payment of principal and interest.

We calculated historical and pro forma per share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders’ equity by the indicated number of shares of common stock. We adjusted these figures to give effect to the shares of common stock purchased by the employee stock ownership plan. We computed per share amounts for each period as if the shares of common stock were outstanding at the beginning of each period, but we did not adjust per share historical or pro forma stockholders’ equity to reflect the earnings on the estimated net proceeds.

The pro forma tables give effect to the implementation of one or more stock-based benefit plans. Subject to the receipt of stockholder approval, we have assumed that the stock-based benefit plans will acquire for restricted stock awards a number of shares of common stock equal to 2.5% of the shares of common stock sold in the stock offering and issued to the Foundation at the same price for which they were sold in the stock offering. We assume that awards of common stock granted under the plans vest over a five-year period.

We have also assumed that options will be granted under the stock-based benefit plans to acquire shares of common stock equal to 6% of the shares of common stock sold in the stock offering and issued to the Foundation. In preparing the tables below, we assumed that stockholder approval was obtained, that the exercise price of the stock options and the market price of the stock at the date of grant were $10.00 per share and that the stock options had a term of ten years and vested over five years. We applied the Black-Scholes option pricing model to estimate a grant-date fair value of $2.54 for each option. In addition to the terms of the options described above, the Black-Scholes option pricing model assumed an estimated volatility rate of 16.10% for the shares of common stock, a dividend yield of 0.8%, an expected option term of 10 years and a risk-free rate of return of 2.53%.

We may grant options and award shares of common stock under one or more stock-based benefit plans in excess of 10% and 4%, respectively, of the shares of common stock sold in the stock offering and issued to the Foundation and that vest sooner than over a five-year period if the stock-based benefit plans are adopted more than one year following the stock offering. We intend to adopt a stock-based benefit plan that would reserve for the exercise of stock options and the grant of stock awards a number of shares equal to 6% and 2.5%, respectively, of the shares sold in the stock offering and issued to the Foundation.

As discussed under “How We Intend to Use the Proceeds from the Offering,” we intend to contribute 50% of the net proceeds from the stock offering to Kearny Bank, and we will retain the remainder of the net proceeds from the stock offering. We will use a portion of the proceeds we retain for the purpose of making a loan to the employee stock ownership plan and retain the rest of the proceeds for future use.

The pro forma table does not give effect to:

•

withdrawals from deposit accounts to purchase shares of common stock in the stock offering;

•

our results of operations after the stock offering; or

•

changes in the market price of the shares of common stock after the stock offering.

The following pro forma information may not be representative of the financial effects of the offering at the dates on which the offering actually occurs, and should not be taken as indicative of future results of operations. Pro forma consolidated stockholders’ equity represents the difference between the stated amounts of our assets and liabilities. The pro forma stockholders’ equity is not intended to represent the fair market value of the shares of common stock and may be different than the amounts that would be available for distribution to stockholders if we liquidated. Moreover, pro forma stockholders’ equity per share does not give effect to the liquidation accounts to be established in the conversion or, in the unlikely event of a liquidation of Kearny Bank, to the tax effect of the recapture of the bad debt reserve. See “The Conversion and Offering—Liquidation Rights.”


	At or for the Year Ended June 30, 2014 Based upon the Sale at $10.00 per share of
	61,625,000 Shares			72,500,000 Shares			83,375,000 Shares
	(Dollars in thousands, except per share amounts)

Gross proceeds of offering	$	616,250		$	725,000		$	833,750
Market value of shares issued to the Foundation		5,000			5,000			5,000
Market value of shares issued in the exchange		181,478			213,504			245,529

Pro forma market capitalization	$	802,728		$	943,504		$	1,084,279


Gross proceeds of offering	$	616,250		$	725,000		$	833,750
Expenses		(21,191	)		(24,400	)		(27,608	)

Estimated net proceeds		595,059			700,600			806,142
Common stock purchased by employee stock ownership plan		(31,063	)		(36,500	)		(41,937	)
Cash contributed to the Foundation		(5,000	)		(5,000	)		(5,000	)
Common stock purchased by stock-based benefit plan		(15,531	)		(18,250	)		(20,969	)

Estimated net proceeds, as adjusted	$	543,465		$	640,850		$	738,236


For the Year Ended June 30, 2014
Consolidated net earnings:
Historical	$	10,188		$	10,188		$	10,188
Income on adjusted net proceeds		5,723			6,748			7,774
Income on mutual holding company asset contribution		3			3			3
Employee stock ownership plan ⁽¹⁾		(1,010	)		(1,186	)		(1,363	)
Stock awards ⁽²⁾		(2,019	)		(2,373	)		(2,726	)
Stock options ⁽³⁾		(1,728	)		(2,030	)		(2,333	)

Pro forma net income ^{(4) (5)}	$	11,158		$	11,350		$	11,543


Earnings per share ⁽⁴⁾ :
Historical	$	0.13		$	0.11		$	0.10
Income on adjusted net proceeds		0.07			0.07			0.07
Income on mutual holding company asset contribution		—			—			—
Employee stock ownership plan ⁽¹⁾		(0.01	)		(0.01	)		(0.01	)
Stock awards ⁽²⁾		(0.03	)		(0.03	)		(0.03	)
Stock options ⁽³⁾		(0.02	)		(0.02	)		(0.02	)

Pro forma earnings per share ^{(4) (5)}	$	0.14		$	0.12		$	0.11


Offering price to pro forma net earnings per share		71.43	x		83.33	x		90.91	x

Number of shares used in earnings per share calculations		77,321,878			90,882,871			104,443,864


At June 30, 2014
Stockholders’ equity:
Historical	$	494,676		$	494,676		$	494,676
Estimated net proceeds		595,059			700,600			806,142
Equity increase from the mutual holding company		278			278			278
Stock contribution to the Foundation		5,000			5,000			5,000
Tax benefit of contribution of the Foundation		3,500			3,500			3,500
Common stock acquired by employee stock ownership plan ⁽¹⁾		(31,063	)		(36,500	)		(41,937	)
Common stock acquired by stock-based benefit plan ⁽²⁾		(15,531	)		(18,250	)		(20,969	)
Contribution to the Foundation		(10,000	)		(10,000	)		(10,000	)

Pro forma stockholders’ equity	$	1,041,919		$	1,139,304		$	1,236,690

Intangible assets	$	(109,381	)	$	(109,381	)	$	(109,381	)

Pro forma tangible stockholders’ equity ⁽⁶⁾	$	932,538		$	1,029,923		$	1,127,309


Stockholders’ equity per share ⁽⁷⁾ :
Historical	$	6.17		$	5.25		$	4.57
Estimated net proceeds		7.41			7.43			7.43
Equity increase from the mutual holding company		—			—			—
Stock contribution to the Foundation		0.06			0.05			0.05
Tax benefit of contribution of the Foundation		0.04			0.04			0.03
Common stock acquired by employee stock ownership plan ⁽¹⁾		(0.39	)		(0.39	)		(0.39	)
Common stock acquired by stock-based benefit plan ⁽²⁾		(0.19	)		(0.19	)		(0.19	)
Contribution to the Foundation		(0.12	)		(0.11	)		(0.09	)

Pro forma stockholders’ equity per share ^{(6) (7)}	$	12.98		$	12.08		$	11.41

Intangible assets	$	(1.36	)	$	(1.16	)	$	(1.01	)

Pro forma tangible stockholders’ equity per share ^{(6) (7)}	$	11.62		$	10.92		$	10.40


	At or for the Year Ended June 30, 2014 Based upon the Sale at $10.00 per share of
	61,625,000 Shares			72,500,000 Shares			83,375,000 Shares
	(Dollars in thousands, except per share amounts)
Offering price as percentage of pro forma stockholders’ equity per share		77.04	%		82.78	%		87.64	%
Offering price as percentage of pro forma tangible stockholders’ equity per share		86.06	%		91.58	%		96.15	%
Number of shares outstanding for pro forma book value per share calculations		80,272,815			94,350,371			108,427,927

(1)

Assumes that 5% of the shares of common stock sold in the offering and issued to the Foundation will be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire these shares are assumed to have been borrowed by the employee stock ownership plan from New Kearny, and the outstanding loan with respect to existing shares of Kearny-Federal held by the employee stock ownership plan will be refinanced and consolidated with the new loan from New Kearny. Kearny Bank intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the required principal and interest payments on the debt. Kearny Bank’s total annual payments on the employee stock ownership plan debt are based upon twenty equal annual installments of principal and interest. Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 718-40 requires that an employer record compensation expense in an amount equal to the fair value of the shares committed to be released to employees. The pro forma adjustments assume that the employee stock ownership plan shares are allocated in equal annual installments based on the number of loan repayment installments assumed to be paid by Kearny Bank, the fair value of the common stock remains equal to the subscription price and the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 35.0%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders’ equity. No reinvestment is assumed on proceeds contributed to fund the employee stock ownership plan. The pro forma net income further assumes that 155,313, 182,500 and 209,688 shares were committed to be released during the year at the minimum, midpoint and maximum of the offering range, respectively, and in accordance with ASC 718-40, only the employee stock ownership plan shares committed to be released during the period were considered outstanding for purposes of net income per share calculations.

(2)

Assumes that one or more stock-based benefit plans purchase an aggregate number of shares of common stock equal to 2.5% of the shares to be sold in the offering and issued to the Foundation. Stockholder approval of the plans and purchases by the plans may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from New Kearny or through open market purchases. Shares in the stock-based benefit plan are assumed to vest over a period of five years. The funds to be used to purchase the shares will be provided by New Kearny. The table assumes that (i) the stock-based benefit plan acquires the shares through open market purchases at $10.00 per share, (ii) 20% of the amount contributed to the plan is amortized as an expense during the year ended June 30, 2014, and (iii) the plan expense reflects an effective combined federal and state tax rate of 35.0%. Assuming stockholder approval of the stock-based benefit plans and that shares of common stock (equal to 2.5% of the shares sold in the offering and issued to the Foundation) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 1.9%.

(3)

Assumes that options are granted under one or more stock-based benefit plans to acquire an aggregate number of shares of common stock equal to 6% of the shares to be sold in the offering and issued to the Foundation. Stockholder approval of the plans may not occur earlier than six months after the completion of the conversion. In calculating the pro forma effect of the stock-based benefit plans, it is assumed that the exercise price of the stock options and the trading price of the common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes option pricing model was $2.54 for each option, the aggregate grant-date fair value of the stock options was amortized to expense on a straight-line basis over a five-year vesting period of the options, and that 25% of the amortization expense (or the assumed portion relating to options granted to directors) resulted in a tax benefit using an assumed tax rate of 35.0%. The actual expense will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation assumptions used and the option pricing model ultimately adopted. Under the above assumptions, the adoption of the stock-based benefit plans will result in no additional shares under the treasury stock method for purposes of calculating earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a portion of the shares used to satisfy the exercise of options comes from authorized but unissued shares, our net income per share and stockholders’ equity per share would decrease. The issuance of authorized but unissued shares of common stock pursuant to the exercise of options under such plan would dilute stockholders’ ownership and voting interests by approximately 4.4%.

(4)

Per share figures include publicly held shares of Kearny-Federal common stock that will be exchanged for shares of New Kearny common stock in the conversion. See “The Conversion and Offering—Share Exchange Ratio for Current Stockholders.” Net income per share computations are determined by taking the number of shares assumed to be sold in the offering and issued to the Foundation and the number of new shares assumed to be issued in exchange for publicly held shares and, in accordance with ASC 718-40, subtracting the employee stock ownership plan shares which have not been committed for release during the year. See note 1. The number of shares of common stock actually sold and issued to the Foundation and the corresponding number of exchange shares may be more or less than the assumed amounts.

(5)	Pro forma net income does not give effect to the nonrecurring expense that would be expected to be recognized in the year ended June 30, 2014 as a result of the contribution of cash and shares of common stock to the Foundation.

(6)	The retained earnings of Kearny Bank will be substantially restricted after the conversion. See “Our Dividend Policy,” “The Conversion and Offering—Liquidation Rights” and “Supervision and Regulation.”

(7)

Per share figures include publicly held shares of Kearny-Federal common stock that will be exchanged for shares of New Kearny common stock in the conversion. Stockholders’ equity per share calculations are based upon the sum of (i) the number of shares assumed to be sold in the offering and (ii) shares to be issued to the Foundation; and (iii) the number of shares to be issued in exchange for publicly held shares at the minimum, midpoint and maximum of the offering range, respectively. The exchange shares reflect an exchange ratio of 1.1855, 1.3948 and 1.6040 at the minimum, midpoint and maximum of the offering range, respectively. The number of shares actually sold, issued to the Foundation and the corresponding number of exchange shares may be more or less than the assumed amounts.

BUSINESS OF NEW KEARNY AND KEARNY-FEDERAL

New Kearny

New Kearny is a Maryland corporation that was organized in August 2014. Upon completion of the conversion, New Kearny will become the holding company of Kearny Bank and will succeed to all of the business and operations of Kearny-Federal and each of Kearny-Federal and Kearny MHC will cease to exist.

Initially following the completion of the conversion, New Kearny will have a total of approximately $ billion in assets comprised of the net proceeds it retains from the offering, part of which will be used to make a loan to the Kearny Bank Employee Stock Ownership Plan; the equity investment in Kearny Bank; cash, securities and the ESOP loan currently held by Kearny-Federal; and cash currently held by Kearny MHC. New Kearny will have no significant liabilities. New Kearny intends to use the support staff and offices of Kearny Bank and will pay Kearny Bank for these services. If New Kearny expands or changes its business in the future, it may hire its own employees.

New Kearny intends to invest the net proceeds of the offering as discussed under “How We Intend to Use the Proceeds From the Offering.” In the future, we may pursue other business activities, including mergers and acquisitions, investment alternatives and diversification of operations. There are, however, no current understandings or agreements for these activities.

Kearny-Federal

Kearny-Federal is a federally-chartered corporation that owns all of the outstanding shares of common stock of Kearny Bank. At June 30, 2014, Kearny-Federal had consolidated assets of $3.51 billion, deposits of $2.48 billion and stockholders’ equity of $494.7 million.

Kearny Bank became the wholly-owned subsidiary of Kearny-Federal in 2001. Kearny Bank reorganized into the two-tier public mutual holding company structure in 2005 and Kearny-Federal concurrently sold 21,821,250 shares of its common stock to the public, representing 30% of its then-outstanding shares, at $10.00 per share. An additional 50,916,250 shares, or 70% of its then-outstanding shares, were issued to Kearny MHC.

Kearny-Federal’s executive offices are located at 120 Passaic Avenue, Fairfield, New Jersey 07004 and the telephone number is (973) 244-4500. Its website address is www.kearnyfederalsavings.com . Information on this website is not and should not be considered a part of this prospectus.

BUSINESS OF KEARNY BANK

Kearny Bank is a community bank originally founded in 1884 as a New Jersey mutual building and loan association. It obtained federal insurance of accounts in 1939 and received a federal charter in 1941.

Kearny Bank operates from its administrative headquarters in Fairfield, New Jersey and 42 branch offices. Our principal lending activity is originating one- to four-family and commercial residential real estate loans for retention in our portfolio. At June 30, 2014, such loans comprised 33.3% and 56.4%, respectively, of our loan portfolio. We also offer, to a lesser extent, commercial business loans, home equity loans and lines of credit, construction loans, and consumer loans. We fund our loan production primarily with retail deposits and Federal Home Loan Bank advances. Our deposits consist principally of certificates of deposit and interest-bearing demand deposits, which accounted for 41.8% and 28.2% of total deposits at June 30, 2014, respectively. Our investment securities portfolio is comprised principally of mortgage-backed securities, corporate bonds, U.S. Agency obligations and collateralized loan obligations.

Kearny Bank is subject to comprehensive regulation and examination by the OCC and the FDIC.

Kearny Bank’s executive offices are located at 120 Passaic Avenue, Fairfield, New Jersey 07004, and its telephone number is (973) 244-4500. Its website address is www.kearnyfederalsavings.com . Information on this website is not and should not be considered to be a part of this prospectus.

Business Strategy

Our goal is to continue to evolve from a traditional thrift business model toward that of a full service, community bank, profitably deploying capital and enhancing earnings through a variety of balance sheet growth and diversification strategies. The key strategic initiatives of our business plan are presented below accompanied by an overview of our activities and achievements in support of those initiatives:

•

Continue to Increase Commercial Mortgage Lending : Increase the outstanding balances of multi-family and nonresidential mortgage loans through all available channels, including retail/broker originations as well as individual and pooled loan purchases and participations.

During fiscal 2014, we increased our commercial mortgage loan portfolio by $317.0 million to $983.8 million, or 56.4% of total loans from $666.8 million, or 49.0% of total loans at June 30, 2013. This increase reflected commercial mortgage loan originations and purchases totaling $334.4 million and $87.0 million, respectively. We plan to continue to increase our portfolio of commercial mortgage loans by expanding loan acquisition volume through all available channels, including retail and broker originations, as well as individual and pooled loan purchases and participations.

•

Continue to Increase Commercial Business Lending : Increase the outstanding balances of non-real estate secured and unsecured business loans through all available channels and expand those business relationships.

During the quarter ended March 31, 2014, we hired an experienced senior business lending officer to oversee our C&I lending function and expect to augment our existing resources with additional lenders and administrative resources during fiscal 2015. We expect to hire a senior Small Business Administration (“SBA”) lending officer dedicated to that function during fiscal 2015 as well as the needed administrative resources to support an anticipated increase in SBA lending volume during that time.

Through these strategies, we anticipate an increase in the level of non-interest income through greater gains on sale of SBA loan originations and other business loan-related fee income. Moreover, the expanded business lending strategies are expected to be undertaken within a larger set of strategic initiatives designed to promote other business banking services intended to increase commercial deposit balances and services.

•

Modestly Increase Residential Mortgage Lending : Modestly increase the outstanding balance of our one- to four-family first mortgage portfolio while stabilizing the balance of

home equity loans and home equity lines of credit. Allow segment to continue to decline as a percentage of total loans and earning assets.

•

Continue to Diversify Investment Securities : Continue to diversify composition and allocation of investment portfolio into new asset sectors to enhance earnings and reduce exposure to long term interest rate risk. Reduce concentration in agency one- to four-family residential pass-through mortgage-backed securities.

In order to enhance earnings and reduce our exposure to long term interest rate risk in fiscal 2013, we initiated a plan to diversify the composition and allocation of our investment portfolio into new asset sectors, including asset-backed securities, corporate bonds, municipal obligations, collateralized loan obligations and commercial mortgage-backed securities (“MBS”) while reducing our concentration in traditional residential MBS. Several of the added sectors include floating rate securities that reduce the level of interest rate risk (“IRR”) embedded in our securities portfolio. During fiscal 2014, we continued to expand our investments into these sectors and expect to continue to do so in the future.

•

Maintain Strong Asset Quality : Maintain high asset quality and continue to reduce the current level of nonperforming assets.

•

Expand Funding Through Retail Deposits : Expand our funding through retail deposit growth within existing branch network with greatest emphasis on growth in non-maturity/non-interest bearing deposits.

Our total deposits increased by $109.4 million for the year ended June 30, 2014 including $86.1 million of deposits assumed in conjunction with our Atlas Bank acquisition. Non-interest-bearing deposits increased $33.1 million during fiscal 2014 while interest-bearing deposits increased $76.3 million. Within interest-bearing deposits, the balance of savings accounts and certificates of deposit increased by $51.9 million and $55.7 million, respectively. This growth was partially offset by a $31.3 million decline in the balance of interest-bearing checking accounts.

•

Mergers and Acquisitions : Actively seeking out franchise expansion opportunities such as the acquisition of other financial institutions or branches.

In addition to searching for acquisitions of financial institutions or their branches, we are currently exploring opportunities for acquisitions or strategic partnerships to broaden our product and service offerings to include insurance agency and/or insurance related brokerage services. While we continue to evaluate potential acquisition opportunities, there are no current agreements or arrangements for any such acquisitions.

•

Information Technology : Procure and implement various information technologies designed to support our strategic initiatives while improving operating efficiency and reducing cost.

We consider the noted enhancements to our information technology infrastructure to be the first of several strategies to be deployed to control growth in non-interest expenses and improve our overall operating efficiency. Upon completion of this initiative, we expect to perform further evaluation and analysis of other significant categories of non-interest expense with the goal of optimizing the cost level, resource allocation and utilization of our growing infrastructure to support our strategic goals and objectives.

Acquisition Activity. Since 1999, we have acquired five banking institutions including: 1 ^st Bergen Bancorp (March 31, 1999), Pulaski Bancorp, Inc. (October 18, 2002), West Essex Bancorp (July 1, 2003), Central Jersey Bancorp (November 30, 2010) and, most recently, Atlas Bank (June 30, 2014). Atlas Bank, a federal mutual savings bank, had total assets with a fair value of $120.9 million at June 30, 2014 and two branch offices in Brooklyn and Staten Island, New York as of that date. As of June 30, 2014, Atlas Bank operated its main retail banking office in Brooklyn and a retail branch in Staten Island, New York, and had assets with a fair value of $120.9 million and deposit balances with fair values totaling $86.1 million. Atlas Bank had no public stockholders, and therefore no merger consideration was paid to third parties. We issued 1,044,087 shares of Kearny-Federal common stock to Kearny MHC as consideration for the transaction. As the merger was completed on June 30, 2014, the transaction is reflected in the consolidated statements of conditions and consolidated statements of operations at and for the relevant period presented in this prospectus. The Atlas Bank merger is reflected in the Pro Forma Data beginning on page 39. See “Pro Forma Data.”

Upon completion of the transaction, Atlas Bank merged with and into Kearny Bank, and Atlas Bank’s existing branch offices began operating under the name “Atlas Bank, a division of Kearny Federal Savings Bank,” for at least a year following the merger.

Market Area. Our primary market area consists of the New Jersey counties in which we currently operate branches, including Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union Counties. Our market area was expanded to include Kings and Richmond Counties in New York, resulting from our acquisition of Atlas Bank on June 30, 2014. Our lending is concentrated in these markets and our predominant sources of deposits are the communities in which our offices are located as well as the neighboring communities.

Our primary market area is largely urban and suburban with a broad economic base as is typical within the New York metropolitan area. Service jobs represent the largest employment sector followed by wholesale/retail trade. Our business of attracting deposits and making loans is generally conducted within our primary market area. A downturn in the local economy could reduce the amount of funds available for deposit and the ability of borrowers to repay their loans which would adversely affect our profitability.

According to SNL Financial, the population in our primary market area has increased from 2010 to 2014, with weighted population growth rates of 2.06% and 3.29% for the nine New Jersey counties and the two New York counties that we operate in, respectively. The weighted average median household income for 2014 for the nine New Jersey counties that we operate in was $72,840, while the weighted average median income for 2014 for the two New York counties that we operate in was $49,792. By contrast, the national level of median household income for 2014 was $51,579. By 2019, the projected increases in median household income are expected to be 4.12% for the nine New Jersey counties that we operate in and 6.36% for the two New York counties that we operate in. By 2019, the projected national level of increase in median household income is expected to be 4.58%.

Competition. We operate in a market area with a high concentration of banking and financial institutions and we face substantial competition in attracting deposits and in originating loans. A number of our competitors are significantly larger institutions with greater financial and managerial resources and lending limits. Our ability to compete successfully is a significant factor affecting our growth potential and profitability.

Our competition for deposits and loans historically has come from other insured financial institutions such as local and regional commercial banks, savings institutions and credit unions located in our primary market area. We also compete with mortgage banking and finance companies for real estate loans and with commercial banks and savings institutions for consumer loans. We also face competition for attracting funds from providers of alternative investment products such as equity and fixed income investments such as corporate, agency and government securities as well as the mutual funds that invest in these instruments.

There are large retail banking competitors operating throughout our primary market area, including Bank of America, Citibank, JP Morgan Chase Bank, PNC Bank, TD Bank, and Wells Fargo Bank and we also face strong competition from other community-based financial institutions.

Restructuring and Wholesale Growth Transactions. The following discussion presents an overview of certain balance sheet restructuring and wholesale growth transactions we executed during the fiscal year ended June 30, 2013 and will generally serve as a point of reference for subsequent discussions included in this prospectus.

We completed a series of balance sheet restructuring and wholesale growth transactions during fiscal 2013 that were intended to improve our financial position and operating results. Through the restructuring transactions we reduced our concentration in agency mortgage-backed securities (“MBS”) in favor of other investment sectors within the portfolio. As a result, we reduced our exposure to residential mortgage prepayment and extension risk while enhancing the overall yield of the investment portfolio and providing some additional protection to earnings against potential movements in market interest rates. The gains recognized through the sale of MBS enabled us to fully offset the costs of prepaying a portion of our high-rate Federal Home Loan Bank (“FHLB”) advances during the year. We also modified the terms of our remaining high-rate FHLB advances to a lower interest rate while extending the duration of that modified funding to better protect against potential increases in interest rates in the future.

The key features and characteristics of the restructuring transactions executed during the latter half of fiscal 2013 were as follows:

•

we sold available for sale agency MBS totaling approximately $330.0 million with a weighted average book yield of 1.78% resulting in a one-time gain on sale totaling approximately $9.1 million;

•

a portion of the proceeds from the noted MBS sales were used to prepay $60.0 million of fixed-rate FHLB advances at a weighted average rate of 3.99% resulting in a one-time expense of $8.7 million largely attributable to the prepayment penalties paid to the FHLB to extinguish the debt;

•

we reinvested the remaining proceeds from the noted MBS sales into a diversified mix of high-quality securities with an aggregate tax-effective yield modestly exceeding that of the MBS sold. Such securities primarily included:

•

fixed-rate, bank-qualified municipal obligations;

•

floating-rate corporate bonds issued by financial companies;

•

floating-rate, asset-backed securities comprising education loans with 97% U.S. government guarantees;

•

fixed-rate agency commercial MBS secured by multi-family mortgage loans; and

•

fixed-rate agency collateralized mortgage obligations (“CMO”); and

•

we modified the terms of our remaining $145.0 million of “putable” FHLB advances with a weighted average cost of 3.68% and weighted average remaining maturity of approximately 4.5 years. Such advances were subject to the FHLB’s quarterly “put” option enabling it to demand repayment in full in the event of an increase in interest rates. The terms of the modified advances extended their “non-putable” period to five years with a final stated maturity of ten years while reducing their average interest rate by 0.64% to 3.04% at no immediate cost to us.

We augmented the restructuring transaction noted above by also executing a limited wholesale growth strategy during the latter half of fiscal 2013. The strategy enhanced our net interest income and operating results without significantly impacting the sensitivity of our Economic Value of Equity (“EVE”) to movements in interest rates—a key measure of long-term exposure to interest rate risk.

In conjunction with the wholesale growth strategy, we drew an additional $300.0 million of wholesale funding that was utilized to purchase a diverse set of high-quality investment securities of an equivalent amount. The key features and characteristics of the wholesale growth transactions were as follows:

•

wholesale funding sources utilized in the strategy included 90-day FHLB borrowings and money-market deposits indexed to one-month LIBOR acquired through Promontory Interfinancial Network’s (“Promontory”) Insured Network Deposits (“IND”) program.

•

we utilized interest rate derivatives in the form of “plain vanilla” swaps and caps with aggregate notional amounts totaling $300.0 million to serve as cash flow hedges to manage the interest rate risk exposure of the floating rate funding sources noted above.

The investment securities acquired with this funding primarily included:

•

floating-rate corporate bonds issued by financial companies;

•

floating-rate, asset-backed securities comprising education loans with 97% U.S. government guarantees;

•

floating rate collateralized loan obligations (“CLO”)

•

fixed-rate agency residential and commercial MBS; and

•

fixed-rate agency collateralized mortgage obligations (“CMO”).

Lending Activities

General. In conjunction with our strategic efforts to evolve from a traditional thrift to a full-service community bank, our lending strategies have placed increasing emphasis on the origination of commercial loans while diminishing the emphasis on one- to four-family mortgage lending. The year-to-year trends in the composition and allocation of our loan portfolio, as reported in the table below, highlight those changes in business strategy. In particular, the outstanding balance of our commercial mortgages, including loans secured by multi-family, mixed-use and nonresidential properties, have significantly increased from both a dollar amount and percentage of portfolio basis over the past several years. Conversely, absent the effect of acquisitions, the outstanding balance of residential mortgage loans has declined during recent years, reflecting loan repayments that have outpaced originations.

Our commercial loan offerings also include secured business loans, most of which are secured by real estate, and unsecured business loans. Commercial loan offerings include programs offered through the SBA in which Kearny Bank participates as a Preferred Lender. Our consumer loan offerings primarily include home equity loans and home equity lines of credit as well as account loans, overdraft lines of credit, vehicle loans and personal loans. We also offer construction loans to builders/developers as well as individual homeowners. Substantially all of our borrowers are residents of our primary market area and would be expected to be similarly affected by economic and other conditions in that area. We have purchased out-of-state one- to four-family first mortgage loans to supplement our in-house originations. Please see “Lending Activities—Loan Originations, Purchases, Sales, Solicitation and Processing.”

Loan Portfolio Composition. The following table sets forth the composition of our loan portfolio in dollar amounts and as a percentage of the total portfolio at the dates indicated.


	At June 30,
	2014					2013					2012					2011					2010
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount			Percent
	(Dollars in Thousands)
Real estate mortgage:
One- to four-family	$	580,612		33.31	%	$	500,647		36.77	%	$	562,846		43.77	%	$	610,901		48.12	%	$	663,850			65.52	%
Commercial		983,755		56.44			666,828		48.97			484,934		37.71			383,690		30.23			203,013			20.04
Commercial business		67,261		3.86			70,688		5.19			88,414		6.88			105,001		8.28			14,352			1.42
Consumer:
Home equity loans		75,611		4.34			80,813		5.93			95,832		7.45			111,478		8.78			101,659			10.03
Home equity lines of credit		24,010		1.38			26,613		1.95			29,530		2.30			32,925		2.59			11,320			1.12
Passbook or certificate		3,965		0.23			3,887		0.29			3,638		0.28			2,753		0.22			2,703			0.27
Other		373		0.02			391		0.03			404		0.03			1,026		0.08			1,545			0.15
Construction		7,281		0.42			11,851		0.87			20,292		1.58			21,598		1.70			14,707			1.45

Total loans		1,742,868		100.00	%		1,361,718		100.00	%		1,285,890		100.00	%		1,269,372		100.00	%		1,013,149			100.00	%

Less:
Allowance for loan losses		12,387					10,896					10,117					11,767					8,561
Unamortized yield adjustments including net premiums on purchased loans and net deferred loans costs and fees		1,397					847					1,654					1,021					(564	)

		13,784					11,743					11,771					12,788					7,997


Total loans, net	$	1,729,084				$	1,349,975				$	1,274,119				$	1,256,584				$	1,005,152

Loan Maturity Schedule. The following table sets forth the maturities of our loan portfolio at June 30, 2014. Demand loans, loans having no stated maturity and overdrafts are shown as due in one year or less. Loans are stated in the following table at contractual maturity and actual maturities could differ due to prepayments.


	Real estate mortgage: One- to four- family		Real estate mortgage: Commercial		Commercial business		Home equity loans		Home equity lines of credit		Passbook or certificate		Other		Construction		Total
	(In Thousands)
Amounts Due:
Within 1 Year	$	116	$	27,314	$	26,935	$	328	$	307	$	2,172	$	180	$	6,784	$	64,136


After 1 year:
1 to 3 years		2,313		25,689		7,746		2,234		605		196		16		497		39,296
3 to 5 years		13,384		52,189		7,304		6,119		2,856		163		1		—		82,016
5 to 10 years		57,485		365,274		12,644		20,538		5,113		—		—		—		461,054
10 to 15 years		197,164		403,326		7,514		27,450		11,603		—		—		—		647,057
Over 15 years		310,150		109,963		5,118		18,942		3,526		1,434		176		—		449,309


Total due after one year		580,496		956,441		40,326		75,283		23,703		1,793		193		497		1,678,732


Total amount due	$	580,612	$	983,755	$	67,261	$	75,611	$	24,010	$	3,965	$	373	$	7,281	$	1,742,868

The following table shows the dollar amount of loans as of June 30, 2014 due after June 30, 2015 according to rate type and loan category.


	Fixed Rates		Floating or Adjustable Rates		Total
	(In Thousands)
Real estate mortgage:
One- to four-family	$	551,259	$	29,237	$	580,496
Commercial		415,177		541,264		956,441
Commercial business		20,027		20,299		40,326
Consumer:
Home equity loans		75,283		—		75,283
Home equity lines of credit		1,560		22,143		23,703
Passbook or certificate		1,432		361		1,793
Other		128		65		193
Construction		497		—		497


Total	$	1,065,363	$	613,369	$	1,678,732

One- to Four-Family Mortgage Loans. Our lending activities include the origination of one- to four-family first mortgage loans, of which approximately $548.3 million or 94.5% are secured by properties located within New Jersey and New York as of June 30, 2014 with the remaining $32.2 million or 5.5% secured by properties in other states. Our largest outstanding balance at that date was $1.8 million, which was secured by residential property located in Little Silver, New Jersey and was performing in accordance with its terms.

During the year ended June 30, 2014, Kearny Bank originated $78.2 million of one- to four-family first mortgage loans compared to $65.1 million in the year ended June 30, 2013. To supplement loan originations, we also purchased one- to four-family first mortgages totaling $22.4 million during the year ended June 30, 2014, compared to $16.3 million during the year ended June 30, 2013. In addition to the loans originated and purchased, we also acquired one- to four-family mortgage loans with fair values totaling $72.8 million through our acquisition of Atlas Bank on June 30, 2014. The loans acquired from Atlas Bank included a small portfolio of Non-Income Verification (“NIV”) loans that were granted prior to 2011. Atlas Bank’ NIV loan program did not require the borrower to provide full financial documentation upon application. As such, Atlas Bank relied solely on the loan-to-value ratio of the property and the borrower’s credit when approving an application under this program. The NIV program was terminated by Atlas Bank in 2011. The NIV loans acquired from Atlas Bank on June 30, 2014 had outstanding balances of approximately $17.4 million. All of the NIV loans acquired from Atlas Bank on that date were current and performing as agreed with the exception of one loan with an outstanding balance of $262,000, for which principal and interest are current but certain real estate taxes are delinquent.

In total, origination, purchase and acquisition volume of one- to four-family mortgage loans outpaced loan repayments and sales during fiscal 2014 resulting in a net increase in the outstanding balance of this segment of the loan portfolio.

We will originate a one- to four-family mortgage loan on an owner-occupied property with a principal amount of up to 95% of the lesser of the appraised value or the purchase price of the property, with private mortgage insurance required if the loan-to-value ratio exceeds 80%. At June 30, 2014, one- to four-family owner-occupied properties comprised 99% of our total one- to four-family loan portfolio. Our loan-to-value limit on a non-owner-occupied property is 75%. Loans in excess of $1.0 million are handled on a case-by-case basis and are subject to lower loan-to-value limits, generally no more than 50%.

Our fixed-rate and adjustable-rate residential mortgage loans on owner-occupied properties have terms of ten to 30 years. Residential mortgage loans on non-owner-occupied properties have terms of up to 15 years for fixed-rate loans and terms of up to 20 years for adjustable-rate loans.

Our adjustable-rate loan products provide for an interest rate that is tied to the one-year Constant Maturity U.S. Treasury index and have terms of up to 30 years with initial fixed-rate periods of one, three, five, seven, or ten years according to the terms of the loan and annual rate adjustment thereafter. We also offer an adjustable-rate loan with a term of up to 30 years with a rate that adjusts every five years to the five-year Constant Maturity U.S. Treasury index. There is a 200 basis point limit on the rate adjustment in any adjustment period and the rate adjustment limit over the life of the loan is 600 basis points.

The Dodd-Frank Act prohibits lenders from making residential mortgages unless the lender makes a reasonable and good faith determination that the borrower has a reasonable ability to repay the mortgage loan according to its terms. A borrower may recover statutory damages equal to all finance charges and fees paid within three years of a violation of the ability-to-repay rule and may raise a violation as a defense to foreclosure at any time. As authorized by the Dodd-Frank Act, the Consumer Financial Protection Bureau (“CFPB”) has adopted regulations defining “qualified mortgages” that would be presumed to comply with the Dodd-Frank Act’s ability-to-repay rules. Under the CFPB regulations, qualified mortgages must satisfy the following criteria: (i) no negative amortization, interest-only payments, balloon payments or a term greater than 30 years; (ii) no points or fees in excess of 3% of the loan amount for loans over $100,000; (iii) borrower’s income and assets are verified and documented; and (iv) the borrower’s debt-to-income ratio generally may not exceed 43%. Qualified mortgages are conclusively presumed to comply with the ability-to-repay rule unless the mortgage is a “higher cost” mortgage, in which case the presumption is rebuttable. Kearny Bank will not grant a non-qualified mortgage loan unless such loan falls under the “temporary qualified mortgage” guidance and there were additional factors to support the exception (which may include a review of the borrower’s creditworthiness and whether a deposit relationship exists).

We offer a first-time homebuyer program for persons who have not previously owned real estate and are purchasing a one- to four-family property in our primary lending area for use as a primary residence. This program is also available outside these areas, but only to persons who are existing deposit or loan customers of Kearny Bank and/or members of their immediate families. The financial incentives offered under this program are a one-eighth of one percentage point rate reduction on all first mortgage loan types and the refund of the application fee at closing.

The fixed-rate residential mortgage loans that we originate generally meet the secondary mortgage market standards of the Federal Home Loan Mortgage Corporation (“Freddie Mac”). However, as our business plan continues to call for increasing total loans on both a dollar and percentage of assets basis, we generally do not sell such loans in the secondary market and do not currently expect to do so in any large capacity in the near future.

Substantially all of our residential mortgages include “due on sale” clauses, which give us the right to declare a loan immediately payable if the borrower sells or otherwise transfers an interest in the property to a third party. Property appraisals on real estate securing our one- to four-family first mortgage loans are made by state certified or licensed independent appraisers approved by Kearny Bank’s Board of Directors. Appraisals are performed in accordance with applicable regulations and policies. We require title insurance policies on all first mortgage real estate loans originated. Homeowners, liability and fire insurance and, if applicable, flood insurance, are also required.

Multi-Family and Nonresidential Real Estate Mortgage Loans . We also originate commercial mortgage loans on multi-family and nonresidential properties, including loans on apartment buildings, retail/service properties and land as well as other income-producing properties, such as mixed-use properties combining residential and commercial space. Our growing strategic emphasis in commercial lending resulted in the origination of approximately $334.4 million of multi-family and commercial real estate mortgages during the year ended June 30, 2014, compared to $271.1 million during the year ended June 30, 2013. Our largest outstanding commercial mortgage loan balance at June 30, 2014 was $19.9 million, which is secured by a multi-family apartment building and performing in accordance with its terms.

Our commercial mortgage acquisition strategies also included purchases of loan participations totaling $87.0 million and $1.5 million during the years ended June 30, 2014 and 2013, respectively. Additionally, we acquired commercial mortgage loans with fair values totaling $5.7 million through our acquisition of Atlas Bank on June 30, 2014.

In total, commercial mortgage loan acquisition volume significantly outpaced loan repayments during fiscal 2014 resulting in the reported net increase in the outstanding balance of this segment of the loan portfolio. Our business plan continues to call for maintaining our strategic emphasis on the origination of commercial mortgages and increasing this segment of the portfolio on both a dollar and percentage of assets basis.

We generally require no less than a 25% down payment or equity position for mortgage loans on multi-family and nonresidential properties. For such loans, we generally require personal guarantees. Currently, these loans are made with a maturity of up to 25 years. We also offer a five-year balloon loan with a twenty-five year amortization schedule. Our commercial mortgage loans are generally secured by properties located in New Jersey and New York.

Commercial mortgage loans are generally considered to entail a greater level of risk than that which arises from one- to four-family, owner-occupied real estate lending. The repayment of these loans typically is dependent on a successful operation and income stream of the borrower and the real estate securing the loan as collateral. These risks can be significantly affected by economic conditions. In addition, commercial mortgage loans generally carry larger balances to single borrowers or related groups of borrowers than one- to four-family mortgage loans. Consequently, such loans typically require substantially greater evaluation and oversight efforts compared to residential real estate lending.

Commercial Business Loans. We also originate commercial term loans and lines of credit to a variety of professionals, sole proprietorships and small businesses in our market area including loans originated through the SBA in which Kearny Bank participates as a Preferred Lender. Kearny Bank originated approximately $24.1 million of commercial business loans during the year ended June 30, 2014 compared to $21.5 million during the year ended June 30, 2013. Our largest outstanding commercial business loan balance at June 30, 2014 was $6.7 million, which was secured by a hotel. This loan was performing in accordance with its original terms at June 30, 2014.

Our commercial business loan acquisition strategies were expanded during fiscal 2014 resulting in the purchase of C&I loan participations totaling $4.9 million during the year ended June 30, 2014. No such participations were purchased during fiscal 2013. The outstanding balance of our C&I loan participations at June 30, 2014 totaled $4.9 million comprising four loans acquired through Kearny Bank’s membership in BancAlliance, a cooperative network of lending institutions that serves as a conduit for institutional investors to participate in large commercial credits. The BancAlliance network is supported and managed on a day-to-day basis by Alliance Partners and its wholly-owned subsidiary AP Commercial LLC which acts as investment advisor and asset manager for loans acquired through the BancAlliance network while retaining a portion of such loans as an investor.

In total, commercial business loan repayments and sales outpaced loan acquisition volume during fiscal 2014 resulting in the modest decline in the outstanding balance reported for this segment of the loan portfolio. As a complement to our commercial mortgage strategies, our business plan calls for expanding our strategic emphasis on the acquisition of commercial business loans through both retail origination channels as well as purchases and participations acquired though wholesale sources with the goal of increasing this portfolio on both a dollar and percentage of assets basis.

Our commercial business loan activity during fiscal 2014 included the sale of $737,000 of SBA loan participations which resulted in the recognition of related sale gains totaling approximately $80,000 for the year ended June 30, 2014. By comparison, we sold $4.8 million of SBA loan participations during fiscal 2013 which resulted in the recognition of related sale gains totaling approximately $557,000. Notwithstanding the recent decline in SBA loan origination and sale activity, our business plan calls for an increase in SBA lending activity from the levels reported during fiscal 2014. Toward that end, we are currently evaluating our SBA lending function and expect to restructure that function in the coming year with a commitment and expectation for an increase in SBA loan origination and sale activity during fiscal 2015.

Approximately $57.8 million or 85.9% of our commercial business loans are “non-SBA” loans. Of these loans, approximately $54.3 million or 93.9% represent secured loans that are primarily collateralized by real estate or, to a lesser extent, other forms of collateral. The remaining $3.5 million or 6.1% represent unsecured loans to our business customers. We generally require personal guarantees on all “non-SBA” commercial business loans. Marketable securities may also be accepted as collateral on lines of credit, but with a loan to value limit of 50%. The loan to value limit on secured commercial lines of credit and term loans is otherwise generally limited to 70%. We also make unsecured commercial loans in the form of overdraft checking authorization up to $25,000 and unsecured lines of credit up to $25,000. Our “non-SBA” commercial term loans generally have terms of up to 20 years and are mostly fixed-rate loans. Our commercial lines of credit have terms of up to two years and are generally adjustable-rate loans. We also offer a one-year, interest-only commercial line of credit with a balloon payment.

The remaining $9.5 million or 14.1% of commercial business loans represent the retained portion of SBA loan originations. Such loans are generally secured by various forms of collateral, including real estate, business equipment and other forms of collateral. Kearny Bank generally sells the guaranteed portion of eligible SBA loans originated, which ranges from 50% to 90% of the loan’s outstanding balance while retaining the nonguaranteed portion of such loans in portfolio. Kearny Bank also retains both the guaranteed and non-guaranteed portion of those SBA originations that are generally ineligible for sale in the secondary market. At June 30, 2014, approximately $2.2 million of the retained portion of Kearny Bank’s SBA loans is guaranteed by the Small Business Administration.

Unlike single-family, owner-occupied residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment and other income and which are secured by real property whose value tends to be more easily ascertainable, commercial business loans, including those originated under SBA programs, are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may be substantially dependent on the success of the business itself and the general economic environment. Commercial business loans, therefore, generally have greater credit risk than residential mortgage loans. In addition, commercial business loans may carry larger balances to single borrowers or related groups of borrowers than one- to four-family first mortgage loans. As such, commercial business lending requires substantially greater evaluation and oversight efforts compared to residential or commercial real estate lending.

Home Equity Loans and Lines of Credit. Our home equity loans are fixed-rate loans for terms of generally up to 20 years. We also offer fixed-rate and adjustable-rate home equity lines of credit with terms of up to 20 years. Kearny Bank originated $29.0 million of home equity loans and home equity lines of credit compared to $26.1 million in the year ended June 30, 2013. However, repayments of home equity loans and lines of credit outpaced loan acquisition volume during fiscal 2014 resulting in the reported net decline in the outstanding balance of this segment of the loan portfolio. Our largest outstanding home equity loan and line of credit balance at June 30, 2014 was $470,000, which was secured by a single family residence located in Ocean, New Jersey and performing in accordance with its terms.

Collateral value is determined through a property value analysis report provided by a state certified or licensed independent appraiser. In some cases, we determine collateral value by a full appraisal performed by a state certified or licensed independent appraiser. Home equity loans and lines of credit do not require title insurance but do require homeowner, liability and fire insurance and, if applicable, flood insurance.

Home equity loans and fixed-rate home equity lines of credit are generally originated in our market area and are generally made in amounts of up to 80% of value on term loans and of up to 75% of value on home equity adjustable-rate lines of credit. We originate home equity loans secured by either a first lien or a second lien on the property.

Account Loans and Other Consumer Loans. In addition to home equity loans and lines of credit, our consumer loan portfolio primarily includes loans secured by savings accounts and certificates of deposit on deposit with Kearny Bank and overdraft lines of credit as well as vehicle loans and personal loans. We will generally lend up to 90% of the account balance on a loan secured by a savings account or certificate of deposit. At June 30, 2014,

passbook or certificate loans totaled $4.0 million and other consumer loans totaled $373,000. Our largest outstanding passbook or certificate loan balance was $225,000, which was secured by a certificate of deposit and performing in accordance with its terms. At June 30, 2014, our largest other consumer loan balance at that date was $40,000, which was unsecured and performing in accordance with its terms.

Consumer loans entail greater risks than residential mortgage loans, particularly consumer loans that are unsecured. Consumer loan repayment is dependent on the borrower’s continuing financial stability and is more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. The application of various federal laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on consumer loans in the event of a default.

Our underwriting standards for consumer loans include a determination of the applicant’s credit history and an assessment of the applicant’s ability to meet existing obligations and payments on the proposed loan. The stability of the applicant’s monthly income may be determined by verification of gross monthly income from primary employment and any additional verifiable secondary income.

Construction Lending. Our construction lending includes loans to individuals for construction of one- to four-family residences or for major renovations or improvements to an existing dwelling. Our construction lending also includes loans to builders and developers for multi-unit buildings or multi-house projects. At June 30, 2014, construction loans totaled $7.3 million. Our largest construction loan balance at that date was $1.3 million, which was secured by a residential property and performing in accordance with its terms.

During the year ended June 30, 2014, construction loan disbursements were $3.8 million compared to $3.0 million during the year ended June 30, 2013. However, the repayment of construction loans more than offset these disbursements during fiscal 2014 resulting in the reported net decline in the outstanding balance of this segment of the loan portfolio.

Construction borrowers must hold title to the land free and clear of any liens. Financing for construction loans is limited to 80% of the anticipated appraised value of the completed property. Disbursements are made in accordance with inspection reports by our approved appraisal firms. Terms of financing are generally limited to one year with an interest rate tied to the prime rate published in the Wall Street Journal and may include a premium of one or more points. In some cases, we convert a construction loan to a permanent mortgage loan upon completion of construction.

We have no formal limits as to the number of projects a builder has under construction or development and make a case-by-case determination on loans to builders and developers who have multiple projects under development. The Board of Directors reviews Kearny Bank’s business relationship with a builder or developer prior to accepting a loan application for processing. We generally do not make construction loans to builders on a speculative basis. There must be a contract for sale in place. Financing is provided for up to two houses at a time in a multi-house project, requiring a contract on one of the two houses before financing for the next house may be obtained.

Construction lending is generally considered to involve a higher degree of credit risk than mortgage lending. If the initial estimate of construction cost proves to be inaccurate, we may be compelled to advance additional funds to complete the construction with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If we are forced to foreclose on a project prior to completion, there is no assurance that we will be able to recover the entire unpaid portion of the loan. In addition, we may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminate period.

Loans to One Borrower. Federal law generally limits the amount that a savings institution may lend to one borrower to the greater of $500,000 or 15% of the institution’s unimpaired capital and surplus. Accordingly, as of June 30, 2014, our loans-to-one-borrower limit was approximately $54.5 million.

At June 30, 2014, our largest single borrower had an aggregate outstanding loan balance of approximately $25.4 million comprising eight commercial mortgage loans. Our second largest single borrower had an aggregate

outstanding loan balance of approximately $24.7 million comprising three commercial mortgage loans. Our third largest borrower had an aggregate outstanding loan balance of approximately $24.5 million comprising four commercial mortgage loans and two commercial business lines of credit with an additional $6.0 million available to the borrower through the unused portions of those lines of credit. At June 30, 2014, all of these lending relationships were current and performing in accordance with the terms of their loan agreements. By comparison, at June 30, 2013, loans outstanding to Kearny Bank’s three largest borrowers totaled approximately $20.1 million, $18.2 million and $12.6 million, respectively.

Loan Originations, Purchases, Sales, Solicitation and Processing. The following table shows total loans originated, purchased, acquired and repaid during the periods indicated.


	For the Years Ended June 30,
	2014			2013			2012
	(In Thousands)
Loans originated and purchased:
Loan originations:
Real estate mortgage:
One- to four-family	$	78,249		$	65,051		$	66,456
Commercial		334,369			271,109			95,534
Commercial business		24,062			21,546			17,968
Construction		3,802			2,953			12,004
Consumer:
Home equity loans and lines of credit		29,021			26,070			35,741
Passbook or certificate		1,330			1,492			2,740
Other		937			446			504

Total loan originations		471,770			388,667			230,947

Loan purchases:
Real estate mortgage:
One- to four-family		22,429			16,288			22,185
Multi-family and commercial		87,000			1,485			57,829
Commercial business		4,914			—			—

Total loans purchased		114,343			17,773			80,014

Loans acquired from Atlas ⁽¹⁾		78,725			2			—

Loans sold:
One- to four-family		(5,275	)		—			—
Commercial SBA participations		(737	)		(4,775	)		(6,462	)

Total loans sold		(6,012	)		(4,775	)		(6,462	)

Loan principal repayments		(281,711	)		(322,187	)		(280,578	)

Increase (decrease) due to other items		1,994			(3,622	)		(6,386	)


Net increase in loan portfolio	$	379,109		$	75,856		$	17,535

(1)	For information on loans acquired in the Atlas Bank acquisition, see Note 2 to the audited consolidated financial statements.

Our customary sources of loan applications include loans originated by our commercial and residential loan officers, repeat customers, referrals from realtors and other professionals and “walk-in” customers. These sources are supported in varying degrees by our newspaper and electronic advertising and marketing strategies.

During prior years, we had purchased loans under the terms of loan purchase and servicing agreements with three large nationwide lenders, in order to supplement our residential mortgage loan production pipeline. The original agreements called for the purchase of loan pools that contained mortgages on residential properties in our lending area. Subsequently, we expanded our loan purchase and servicing agreements with the same nationwide lenders to include mortgage loans secured by residential real estate located outside of New Jersey. We have procedures in place for purchasing these mortgages such that the underwriting guidelines are consistent with those used in our in-house loan origination process. The evaluation and approval process ensures that the purchased loans generally conform to our normal underwriting guidelines. Our due diligence process includes full credit reviews and

an examination of the title policy and associated legal instruments. We recalculate debt service and loan-to-value ratios for accuracy and review appraisals for reasonableness. All loan packages presented to Kearny Bank must meet our underwriting requirements as outlined in the purchase and servicing agreements and are subject to the same review process outlined above. Furthermore, there are stricter underwriting guidelines in place for out-of-state mortgages, including higher minimum credit scores. We did not purchase residential mortgage loans under the noted purchase and servicing agreements during the year ended June 30, 2014 but may do so in the future.

Once we purchase the loans, we continually monitor the seller’s performance by thoroughly reviewing portfolio balancing reports, remittance reports, delinquency reports and other data supplied to us on a monthly basis. We also review the seller’s financial statements and documentation as to their compliance with the servicing standards established by the Mortgage Bankers Association of America.

As of June 30, 2014, our portfolio of “out-of-state” residential mortgages includes loans located in 14 states outside of New Jersey and New York that total approximately $32.2 million or 5.5% of one- to four-family mortgage loans. The states with the three largest concentrations of such loans at June 30, 2014 were Massachusetts, Pennsylvania and Georgia, with outstanding principal balances totaling $10.7 million, $7.1 million and $2.9 million, respectively. The aggregate outstanding balances of loans in each of the remaining 11 states comprise approximately 35.5% of the total balance of out-of-state residential mortgage loans with aggregate balances by state ranging from $298,000 to $2.0 million.

We also enter into purchase agreements with a limited number of mortgage originators to supplement our loan production pipeline. These agreements call for the purchase, on a flow basis, of one- to four-family first mortgage loans with servicing released to Kearny Bank. During the year ended June 30, 2014, we purchased fixed-rate and adjustable-rate loans with principal balances totaling $22.4 million from these sellers.

In addition to purchasing one- to four-family loans, we have also purchased participations in commercial mortgage loans originated by other banks and non-bank originators. Our commercial loan acquisitions included the purchase of participations totaling $87.0 million during the year ended June 30, 2014. As of that date, the number and aggregate outstanding balance of commercial loan participations totaled 35 and $131.8 million, respectively, representing loans on a variety of multi-family and commercial real estate properties.

The participations noted above exclude those acquired through the Thrift Institutions Community Investment Corporation of New Jersey (“TICIC”), a subsidiary of the New Jersey Bankers Association that is no longer actively originating loans. At June 30, 2014, our remaining TICIC participations included a total of 18 loans with an aggregate balance of $3.1 million representing loans on multi-family and commercial real estate properties.

Loan Approval Procedures and Authority. Senior management recommends and the Board of Directors approves our lending policies and loan approval limits. Kearny Bank’s Loan Committee consists of the Chief Lending Officer, Chief Credit Officer, Divisional President and Special Assets Manager. The Committee may approve loans up to $5.0 million. Our Chief Lending Officer may approve loans up to $750,000. Loan department personnel of Kearny Bank serving in the following positions may approve loans as follows: commercial/mortgage loan managers, mortgage loans up to $500,000; mortgage loan underwriters, mortgage loans up to $250,000; consumer loan managers, consumer loans up to $250,000; and consumer loan underwriters, consumer loans up to $150,000. In addition to these principal amount limits, there are established limits for different levels of approval authority as to minimum credit scores and maximum loan to value ratios and debt to income ratios or debt service coverage. Our Chief Executive Officer and Chief Operating Officer have authorization to countersign loans for amounts that exceed $750,000 up to a limit of $1.0 million. Our Chief Lending Officer must approve loans between $750,000 and $1.0 million along with one of these designated officers. Non-conforming mortgage loans and loans over $1.0 million up to $2.0 million require the approval of the Loan Committee. Commercial loans in excess of $5.0 million require approval by the Board of Directors while such approval is also required for residential mortgage loans in excess of $2.0 million and commercial business loans in excess of $500,000.

Asset Quality

Collection Procedures on Delinquent Loans. We regularly monitor the payment status of all loans within our portfolio and promptly initiate collection efforts on past due loans in accordance with applicable policies and

procedures. Delinquent borrowers are notified by both mail and telephone when a loan is 30 days past due. If the delinquency continues, subsequent efforts are made to contact the delinquent borrower and additional collection notices and letters are sent. All reasonable attempts are made to collect from borrowers prior to referral to an attorney for collection. However, when a loan is 90 days delinquent, it is our general practice to refer it to an attorney for repossession, foreclosure or other form of collection action, as appropriate. In certain instances, we may modify the loan or grant a limited moratorium on loan payments to enable the borrower to reorganize his or her financial affairs and we attempt to work with the borrower to establish a repayment schedule to cure the delinquency.

As to mortgage loans, if a foreclosure action is taken and the loan is not reinstated, paid in full or refinanced, the property is sold at judicial sale at which we may be the buyer if there are no adequate offers to satisfy the debt. Any property acquired as the result of foreclosure or by deed in lieu of foreclosure is classified as real estate owned until it is sold or otherwise disposed of. When real estate owned is acquired, it is recorded at its fair market value less estimated selling costs. The initial write-down of the property, if necessary, is charged to the allowance for loan losses. Adjustments to the carrying value of the properties that result from subsequent declines in value are charged to operations in the period in which the declines are identified.

Past Due Loans. A loan’s “past due” status is generally determined based upon its “P&I delinquency” status in conjunction with its “past maturity” status, where applicable. A loan’s “P&I delinquency” status is based upon the number of calendar days between the date of the earliest P&I payment due and the “as of” measurement date. A loan’s “past maturity” status, where applicable, is based upon the number of calendar days between a loan’s contractual maturity date and the “as of” measurement date. Based upon the larger of these criteria, loans are categorized into the following “past due” tiers for financial statement reporting and disclosure purposes: Current (including 1-29 days past due), 30-59 days, 60-89 days and 90 or more days.

Nonaccrual Loans. Loans are generally placed on nonaccrual status when contractual payments become 90 days or more past due, and are otherwise placed on nonaccrual when we do not expect to receive all P&I payments owed substantially in accordance with the terms of the loan agreement. Loans that become 90 days past maturity, but remain non-delinquent with regard to ongoing P&I payments, may remain on accrual status if: (1) we expect to receive all P&I payments owed substantially in accordance with the terms of the loan agreement, past maturity status notwithstanding, and (2) the borrower is working actively and cooperatively with us to remedy the past maturity status through an expected refinance, payoff or modification of the loan agreement that is not expected to result in a troubled debt restructuring (“TDR”) classification. All TDRs are placed on nonaccrual status for a period of no less than six months after restructuring, irrespective of past due status. The sum of nonaccrual loans plus accruing loans that are 90 days or more past due are generally defined as “nonperforming loans.”

Payments received in cash on nonaccrual loans, including both the principal and interest portions of those payments, are generally applied to reduce the carrying value of the loan for financial statement purposes. When a loan is returned to accrual status, any accumulated interest payments previously applied to the carrying value of the loan during its nonaccrual period are recognized as interest income as an adjustment to the loan’s yield over its remaining term.

Loans that are not considered to be TDRs are generally returned to accrual status when payments due are brought current and we expect to receive all remaining P&I payments owed substantially in accordance with the terms of the loan agreement. Non-TDR loans may also be returned to accrual status when a loan’s payment status falls below 90 days past due and we: (1) expect receipt of the remaining past due amounts within a reasonable timeframe, and (2) expect to receive all remaining P&I payments owed substantially in accordance with the terms of the loan agreement.

Nonperforming Assets. The following table provides information regarding Kearny Bank’s nonperforming assets which are comprised of nonaccrual loans, accruing loans 90 days or more past due and real estate owned.


	At June 30,
	2014			2013			2012			2011			2010
	(Dollars in Thousands)

Loans accounted for on a nonaccrual basis:
Real estate mortgage:
One- to four-family ⁽¹⁾	$	9,944		$	11,675		$	14,917		$	4,056		$	1,867
Commercial		6,935			10,163			11,008			7,429			4,358
Commercial business		4,919			4,836			3,941			4,866			2,298
Consumer:
Home equity loans		949			703			984			204			250
Home equity lines of credit		981			626			193			93			—
Other		2			28			6			22			1
Construction		1,448			2,886			1,758			1,654			468

Total ⁽²⁾		25,178			30,917			32,807			18,324			9,242

Accruing loans which are contractually past due 90 days or more:
Real estate mortgage:
One- to four-family		—			—			—			14,923			12,321
Multi-family and commercial		—			—			398			—			—
Commercial business		—			—			293			1,718			—
Consumer:
Home equity loans and lines of credit		—			—			—			—			—
Passbook or certificate		—			—			—			—			—
Other		125			—			—			—			—
Construction		—			—			—			—			—

Total		125			—			691			16,641			12,321


Total nonperforming loans	$	25,303		$	30,917		$	33,498		$	34,965		$	21,563

Real estate owned	$	1,624		$	2,061		$	3,811		$	7,497		$	146

Total nonperforming assets	$	26,927		$	32,978		$	37,309		$	42,462		$	21,709

Total nonperforming loans to total loans		1.45	%		2.27	%		2.61	%		2.76	%		2.13	%

Total nonperforming loans to total assets		0.72	%		0.98	%		1.14	%		1.20	%		0.92	%

Total nonperforming assets to total assets		0.77	%		1.05	%		1.27	%		1.46	%		0.93	%

(1)	At June 30, 2014, included $8.4 million of nonperforming one- to four-family mortgage loans acquired from Countrywide.

(2)	TDRs on accrual status not included above totaled $3.3 million, $4.1 million, $2.6 million, $821,000 and $945,000 at June 30, 2014, 2013, 2012, 2011 and 2010, respectively.

Total nonperforming assets decreased by $6.1 million to $26.9 million at June 30, 2014 from $33.0 million at June 30, 2013. The decrease comprised a net decline in nonperforming loans of $5.6 million plus a net decrease in real estate owned of $437,000. For those same comparative periods, the number of nonperforming loans increased to 133 loans from 127 loans while the number of real estate owned properties decreased to seven from eight.

At June 30, 2014, nonperforming loans comprised $25.2 million of “nonaccrual” loans and $125,000 of loans being reported as “accruing loans over 90 days past due.” By comparison, at June 30, 2013, nonperforming loan comprised $30.9 million of “nonaccrual” loans with no loans being reported as “accruing loans over 90 days past due.”

A significant portion of the non-performing loans reported as “accruing loans over 90 days past due” prior to fiscal 2012 were originally acquired from Countrywide Home Loans, Inc. (“Countrywide”) and continue to be serviced by their acquirer, Bank of America (“BOA”) through a subsidiary, BAC Home Loans Servicing. In accordance with our agreement, BOA advances scheduled principal and interest payments to Kearny Bank when

such payments are not made by the borrower. Prior to fiscal 2012, the timely receipt of principal and interest from the servicer resulted in such loans retaining their accrual status. However, the delinquency status reported for these nonperforming loans reflected the borrower’s actual delinquency irrespective of Kearny Bank’s receipt of advances. In recognition that advances would ultimately be recouped by BOA from Kearny Bank in the event the borrower did not reinstate the loan, we included our obligation to refund such advances to the servicer, where applicable, in our impairment analyses of such loans.

Notwithstanding this prior practice, Kearny Bank reclassified the applicable nonperforming BOA loans from “accruing loans over 90 days past due” to “nonaccrual” during fiscal 2012. Since that time, interest payments received on the applicable BOA loans have been applied to reduce the carrying value of the loan for financial statement purposes rather than being recognized as interest income.

Nonperforming one- to four-family mortgage loans at June 30, 2014 include 48 nonaccrual loans totaling $9.9 million whose net outstanding balances range from $10,000 to $490,000, with an average balance of approximately $207,000 as of that date. The loans are in various stages of collection, workout or foreclosure. Of these loans, 44 are secured by New Jersey properties while an additional four loans acquired from Atlas Bank are secured by properties located in Staten Island, New York. We have identified approximately $528,000 of specific impairment relating to six of the nonperforming loans for which valuation allowances are maintained in the allowance for loan losses at June 30, 2014.

The number and balance of nonperforming one- to four-family mortgage loans at June 30, 2014 includes 36 loans totaling $8.4 million that were originally acquired from Countrywide with such loans comprising 33.2% of total nonperforming loans as of June 30, 2014. As of that same date, Kearny Bank owned a total of 77 residential mortgage loans with an aggregate outstanding balance of $33.3 million that were originally acquired from Countrywide. Of these loans, an additional two accruing loans totaling $866,000 are 30-89 days past due and are in various stages of collection.

Nonperforming commercial real estate loans, including multi-family and nonresidential mortgage loans, include 19 nonaccrual loans totaling $6.9 million. At June 30, 2014, the outstanding balances of these loans range from $27,000 to $1.5 million with an average balance of approximately $365,000 as of that date. The loans are in various stages of collection, workout or foreclosure and are secured by New Jersey properties. We have identified approximately $569,000 of specific impairment relating to six of these nonperforming loans for which valuation allowances are maintained in the allowance for loan losses at June 30, 2014.

Nonperforming commercial business loans at June 30, 2014 include 37 nonaccrual loans totaling $4.9 million. At June 30, 2014, the outstanding balances of these loans range from $6,000 to $820,000 with an average balance of approximately $133,000 as of that date. The loans are in various stages of collection, workout or foreclosure and are primarily secured by New Jersey and New York properties and, to a lesser extent, other forms of collateral. We have identified approximately $444,000 of specific impairment relating to 12 of these nonperforming loans for which valuation allowances are maintained in the allowance for loan losses at June 30, 2014.

Home equity loans and home equity lines of credit that are reported as nonperforming at June 30, 2014 include 22 nonaccrual loans totaling $1.9 million. At June 30, 2014, the outstanding balances of these loans range from $8,000 to $459,000 with an average balance of approximately $88,000 as of that date. The loans are in various stages of collection, workout or foreclosure and are primarily secured by New Jersey properties. We have identified approximately $132,000 of specific impairment relating to three of these nonperforming loans for which valuation allowances are maintained in the allowance for loan losses at June 30, 2014.

Other consumer loans that are reported as nonperforming include two unsecured nonaccrual loans totaling $2,000 and one accruing loan over 90 days past due totaling $125,000 that is fully secured by cash on deposit at Kearny Bank.

Nonperforming construction loans include four nonaccrual loans totaling $1.4 million. At June 30, 2014, the outstanding balances of these loans ranged from $355,000 to $596,000 with an average balance of approximately $362,000 as of that date. The loans are in various stages of collection, workout or foreclosure and are secured by

New Jersey properties in varying stages of development. We have identified no specific impairment relating to these nonperforming loans at June 30, 2014.

During the years ended June 30, 2014, 2013 and 2012, gross interest income of $1.8 million, $2.1 million and $1.7 million, respectively, would have been recognized on loans accounted for on a nonaccrual basis if those loans had been current. Interest income recognized on such loans of $52,000, $46,000 and $134,000 was included in income for the years ended June 30, 2014, 2013 and 2012, respectively.

At June 30, 2014, 2013, and 2012, Kearny Bank had loans with aggregate outstanding balances totaling $6.4 million, $9.4 million, and $6.7 million, respectively, reported as troubled debt restructurings.

During the year ended June 30, 2014, gross interest income of $321,000 would have been recognized on loans reported as troubled debt restructurings under their original terms prior to restructuring. Actual interest income of $259,000 was recognized on such loans for the year ended June 30, 2014 reflecting the interest received under the revised terms of those restructured loans.

During the year ended June 30, 2013, gross interest income of $303,000 would have been recognized on loans reported as troubled debt restructurings under their original terms prior to restructuring. Actual interest income of $250,000 was recognized on such loans for the year ended June 30, 2013 reflecting the interest received under the revised terms of those restructured loans.

Loan Review System. We maintain a loan review system consisting of several related functions including, but not limited to, classification of assets, calculation of the allowance for loan losses, independent credit file review as well as internal audit and lending compliance reviews. We utilize both internal and external resources, where appropriate, to perform the various loan review functions. For example, we have engaged the services of a third party firm specializing in loan review and analysis to perform several loan review functions. The firm reviews the loan portfolio in accordance with the scope and frequency determined by senior management and the Asset Quality Committee of the Board of Directors. The third party loan review firm assists senior management and the Board of Directors in identifying potential credit weaknesses; in appropriately grading or adversely classifying loans; in identifying relevant trends that affect the collectability of the portfolio and identifying segments of the portfolio that are potential problem areas; in verifying the appropriateness of the allowance for loan losses; in evaluating the activities of lending personnel including compliance with lending policies and the quality of their loan approval, monitoring and risk assessment; and by providing an objective assessment of the overall quality of the loan portfolio. Currently, independent loan reviews are being conducted quarterly and include non-performing loans as well as samples of performing loans of varying types within our portfolio.

Our loan review system also includes the internal audit and compliance functions, which operate in accordance with a scope determined by the Audit and Compliance Committee of the Board of Directors. Internal audit resources assess the adequacy of, and adherence to, internal credit policies and loan administration procedures. Similarly, our compliance resources monitor adherence to relevant lending-related and consumer protection-related laws and regulations. The loan review system is structured in such a way that the internal audit function maintains the ability to independently audit other risk monitoring functions without impairing its independence with respect to these other functions.

As noted, the loan review system also comprises our policies and procedures relating to the regulatory classification of assets and the allowance for loan loss functions each of which are described in greater detail below.

Classification of Assets. In compliance with the regulatory guidelines, our loan review system includes an evaluation process through which certain loans exhibiting adverse credit quality characteristics are classified “Special Mention”, “Substandard”, “Doubtful” or “Loss”.

An asset is classified as “Substandard” if it is inadequately protected by the paying capacity and net worth of the obligor or the collateral pledged, if any. Substandard assets include those characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Assets classified as “Doubtful” have all of the weaknesses inherent in those classified as “Substandard”, with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis

of currently existing facts, conditions and values. Assets, or portions thereof, classified as “Loss” are considered uncollectible or of so little value that their continuance as assets is not warranted.

Management evaluates loans classified as substandard or doubtful for impairment in accordance with applicable accounting requirements. As discussed in greater detail below, a valuation allowance is established through the provision for loan losses for any impairment identified through such evaluations. To the extent that impairment identified on a loan is classified as “Loss”, that portion of the loan is charged off against the allowance for loan losses.

Prior to fiscal 2012, our impaired loans with impairment were characterized by “split classifications” (e.g. Substandard/Loss) with all loan impairment being ascribed a “Loss” classification by default and charge-offs being recorded against the allowance for loan loss at the time such losses were realized. For loans primarily secured by real estate, which have historically comprised a large majority of our loan portfolio, the recognition of impairments as “charge offs” typically coincided with the foreclosure of the property securing the impaired loan at which time the property was brought into real estate owned at its fair value, less estimated selling costs, and any portion of the loan’s carrying value in excess of that amount was charged off against the allowance for loan losses (“ALLL”).

During fiscal 2012, we modified our loan classification and charge off practices to more closely align them to those of other institutions regulated by the OCC. The OCC succeeded the OTS as Kearny Bank’s primary regulator effective July 21, 2011. As a result of those changes, the classification of loan impairment as “Loss” is now based upon a confirmed expectation for loss, rather than simply equating impairment with a “Loss” classification by default. For loans primarily secured by real estate, the expectation for loss is generally confirmed when: (a) impairment is identified on a loan individually evaluated in the manner described below, and (b) the loan is presumed to be collateral-dependent such that the source of loan repayment is expected to arise solely from sale of the collateral securing the applicable loan. Impairment identified on non-collateral-dependent loans may or may not be eligible for a “Loss” classification depending upon the other salient facts and circumstances that affect the manner and likelihood of loan repayment. As a further result of these changes, loan impairment that is classified as “Loss” is now charged off against the ALLL concurrent with that classification rather than deferring the charge off of confirmed expected losses until they are realized as had been Kearny Bank’s practice prior to fiscal 2012.

The timeframe between when we first identify loan impairment and when such impairment may ultimately be charged off varies by loan type. For example, unsecured consumer and commercial loans are generally classified as “Loss” at 120 days past due, resulting in their outstanding balances being charged off at that time. For our secured loans, the condition of collateral dependency, as noted above, generally serves as the basis upon which a “Loss” classification is ascribed to a loan’s impairment thereby confirming an expected loss and triggering charge off of that impairment.

While the facts and circumstances that effect the manner and likelihood of repayment vary from loan to loan, we generally consider the referral of a loan to foreclosure, coupled with the absence of other viable sources of loan repayment, to be demonstrable evidence of collateral dependency. Depending upon the nature of the collections process applicable to a particular loan, an early determination of collateral dependency could result in a nearly concurrent charge off of a newly identified impairment. By contrast, a presumption of collateral dependency may only be determined after the completion of lengthy loan collection and/or workout efforts, including bankruptcy proceedings, which may extend several months or more after a loan’s impairment is first identified.

The adoption of this change to our charge off practices during fiscal 2012 resulted in the charge off of approximately $4.2 million of confirmed expected losses during that year for which valuation allowances had been previously established for identified impairments. Thereafter, the recognition of charge offs based upon confirmed expected losses rather than realized losses has generally accelerated the timing of their recognition compared to prior years.

In a limited number of cases, the entire net carrying value of a loan may be determined to be impaired based upon a collateral-dependent impairment analysis. However, the borrower’s adherence to contractual repayment terms precludes the recognition of a “Loss” classification and charge off. In these limited cases, a valuation allowance equal to 100% of the impaired loan’s carrying value may be maintained against the net carrying value of the asset.

Assets which do not currently expose us to a sufficient degree of risk to warrant an adverse classification but have some credit deficiencies or other potential weaknesses are designated as “Special Mention” by management. Adversely classified assets, together with those rated as “Special Mention”, are generally referred to as “Classified Assets”. Non-classified assets are internally rated within one of four “Pass” categories or as “Watch” with the latter denoting a potential deficiency or concern that warrants increased oversight or tracking by management until remediated.

Management performs a classification of assets review, including the regulatory classification of assets, generally on a monthly basis. The results of the classification of assets review are validated by our third party loan review firm during their quarterly independent review. In the event of a difference in rating or classification between those assigned by the internal and external resources, we will generally utilize the more critical or conservative rating or classification. Final loan ratings and regulatory classifications are presented monthly to the Board of Directors and are reviewed by regulators during the examination process.

The following table discloses our designation of certain loans as special mention or adversely classified during each of the five years presented.


	At June 30,
	2014		2013		2012		2011		2010
	(In Thousands)

Special Mention	$	12,258	$	14,050	$	20,297	$	11,141	$	10,353
Substandard		41,564		43,371		48,131		39,093		18,697
Doubtful		290		391		892		614		—
Loss ⁽¹⁾		—		—		—		—		—

Total	$	54,112	$	57,812	$	69,320	$	50,848	$	29,050

(1)	Net of specific valuation allowances where applicable

At June 30, 2014, 48 loans were classified as Special Mention and 180 loans were classified as Substandard. As of that same date, four loans were classified as Doubtful. As noted above, all loans, or portions thereof, classified as Loss during fiscal 2014 were charged off against the allowance for loan losses.

Allowance for Loan Losses. Our allowance for loan loss calculation methodology utilizes a “two-tier” loss measurement process that is generally performed monthly. Based upon the results of the classification of assets and credit file review processes described earlier, we first identify the loans that must be reviewed individually for impairment. Factors considered in identifying individual loans to be reviewed include, but may not be limited to, loan type, classification status, contractual payment status, performance/accrual status and impaired status.

Prior to fiscal 2011, the loans we considered to be eligible for individual impairment review were generally limited to our larger and/or more complex loans including our commercial mortgage loans, comprising multi-family and nonresidential real estate loans, as well as our construction loans and commercial business loans. During fiscal 2011, we expanded the scope of loans that we consider eligible for individual impairment review to also include one- to four-family mortgage loans, home equity loans and home equity lines of credit with such loans being reviewed individually for impairment, where applicable, since that time.

A reviewed loan is deemed to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Once a loan is determined to be impaired, management performs an analysis to determine the amount of impairment associated with that loan.

In measuring the impairment associated with collateral-dependent loans, the fair value of the collateral securing the loan is generally used as a measurement proxy for that of the impaired loan itself as a practical expedient. In the case of real estate collateral, such values are generally determined based upon a discounted market value obtained through an automated valuation module or prepared by a qualified, independent real estate appraiser.

The value of non-real estate collateral is similarly determined based upon the independent assessment of fair market value by a qualified resource.

We generally obtain independent appraisals on properties securing mortgage loans when such loans are initially placed on nonperforming or impaired status with such values updated approximately every six to twelve months thereafter throughout the collections, bankruptcy and/or foreclosure processes. Appraised values are typically updated at the point of foreclosure, where applicable, and approximately every six to twelve months thereafter while the repossessed property is held as real estate owned.

As supported by accounting and regulatory guidance, we reduce the fair value of the collateral by estimated selling costs, such as real estate brokerage commissions, to measure impairment when such costs are expected to reduce the cash flows available to repay the loan.

We establish valuation allowances in the fiscal period during which the loan impairments are identified. The results of management’s individual loan impairment evaluations are validated by our third party loan review firm during their quarterly independent review. Such valuation allowances are adjusted in subsequent fiscal periods, where appropriate, to reflect any changes in carrying value or fair value identified during subsequent impairment evaluations which are generally updated monthly by management.

The second tier of the loss measurement process involves estimating the probable and estimable losses on loans not otherwise reviewed individually for impairment as well as those individually reviewed loans that are determined to be non-impaired. Such loans include groups of smaller-balance homogeneous loans that may generally be excluded from individual impairment analysis, and therefore collectively evaluated for impairment, as well as the non-impaired loans within categories that are otherwise eligible for individual impairment review.

Valuation allowances established through the second tier of the loss measurement process utilize historical and environmental loss factors to collectively estimate the level of probable losses within defined segments of our loan portfolio. These segments aggregate homogeneous subsets of loans with similar risk characteristics based upon loan type. For allowance for loan loss calculation and reporting purposes, we currently stratify our loan portfolio into seven primary segments: residential mortgage loans, commercial mortgage loans, construction loans, commercial business loans, home equity loans, home equity lines of credit and other consumer loans.

The risks presented by residential mortgage loans are primarily related to adverse changes in the borrower’s financial condition that threaten repayment of the loan in accordance with its contractual terms. Such risk to repayment can arise from job loss, divorce, illness and the personal bankruptcy of the borrower. For collateral dependent residential mortgage loans, additional risk of loss is presented by potential declines in the fair value of the collateral securing the loan.

Home equity loans and home equity lines of credit generally share the same risks as those applicable to residential mortgage loans. However, to the extent that such loans represent junior liens, they are comparatively more susceptible to such risks given their subordinate position behind senior liens.

In addition to sharing similar risks as those presented by residential mortgage loans, risks relating to commercial mortgage loans also arise from comparatively larger loan balances to single borrowers or groups of related borrowers. Moreover, the repayment of such loans is typically dependent on the successful operation of an underlying real estate project and may be further threatened by adverse changes to demand and supply of commercial real estate as well as changes generally impacting overall business or economic conditions.

The risks presented by construction loans are generally considered to be greater than those attributable to residential and commercial mortgage loans. Risks from construction lending arise, in part, from the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost, including interest, of the project. The nature of these loans is such that they are comparatively more difficult to evaluate and monitor than permanent mortgage loans.

Commercial business loans are also considered to present a comparatively greater risk of loss due to the concentration of principal in a limited number of loans and/or borrowers and the effects of general economic conditions on the business. Commercial business loans may be secured by varying forms of collateral including, but not limited to, business equipment, receivables, inventory and other business assets which may not provide an adequate source of repayment of the outstanding loan balance in the event of borrower default. Moreover, the repayment of commercial business loans is primarily dependent on the successful operation of the underlying business which may be threatened by adverse changes to the demand for the business’ products and/or services as well as the overall efficiency and effectiveness of the business’ operations and infrastructure.

Finally, our unsecured consumer loans generally have shorter terms and higher interest rates than other forms of lending but generally involve more credit risk due to the lack of collateral to secure the loan in the event of borrower default. Consumer loan repayment is dependent on the borrower’s continuing financial stability, and therefore is more likely to be adversely affected by job loss, divorce, illness and personal bankruptcy. By contrast, our consumer loans also include account loans that are fully secured by the borrower’s deposit accounts and generally present nominal risk to Kearny Bank.

Each primary segment is further stratified to distinguish between loans originated and purchased through third parties from loans acquired through business combinations. Commercial business loans include secured and unsecured loans as well as loans originated through SBA programs. Additional criteria may be used to further group loans with common risk characteristics. For example, such criteria may distinguish between loans secured by different collateral types or separately identify loans supported by government guarantees such as those issued by the SBA.

In regard to historical loss factors, our allowance for loan loss calculation calls for an analysis of historical charge-offs and recoveries for each of the defined segments within the loan portfolio. We currently utilize a two-year moving average of annual net charge-off rates (charge-offs net of recoveries) by loan segment, where available, to calculate our actual, historical loss experience. The outstanding principal balance of the non-impaired portion of each loan segment is multiplied by the applicable historical loss factor to estimate the level of probable losses based upon our historical loss experience.

As noted, the second tier of our allowance for loan loss calculation also utilizes environmental loss factors to estimate the probable losses within the loan portfolio. Environmental loss factors are based upon specific qualitative criteria representing key sources of risk within the loan portfolio. Such risk criteria have traditionally considered the level of and trends in nonperforming loans; the effects of changes in credit policy; the experience, ability and depth of the lending function’s management and staff; national and local economic trends and conditions; credit risk concentrations and changes in local and regional real estate values. During fiscal 2014, the environmental factors we utilized in our allowance for loan loss calculation were expanded to include changes in the nature, volume and terms of loans, changes in the quality of loan review systems and resources and the effects of regulatory, legal and other external factors.

For each category of the loan portfolio, a level of risk, developed from a number of internal and external resources, is assigned to each of the qualitative criteria utilizing a scale ranging from zero (negligible risk) to 15 (high risk) , with higher values potentially ascribed to exceptional levels of risk that exceed the standard range, as appropriate. The sum of the risk values, expressed as a whole number, is multiplied by 0.01% to arrive at an overall environmental loss factor, expressed in basis points, for each loan category.

Prior to fiscal 2012, the aggregate outstanding principal balance of the non-impaired loans within each loan category was simply multiplied by the applicable environmental loss factor, as described above, to estimate the level of probable losses based upon the qualitative risk criteria. To more closely align our ALLL calculation methodology to that of other institutions regulated by the OCC, we modified our ALLL calculation methodology during fiscal 2012 to explicitly incorporate our existing credit-rating classification system into the calculation of environmental loss factors by loan type.

To do so, we implemented the use of risk-rating classification “weights” into our calculation of environmental loss factors during 2012. Our existing risk-rating classification system ascribes a numerical rating of “1” through “9” to each loan within the portfolio. The ratings “5” through “9” represent the numerical equivalents

of the traditional loan classifications “Watch”, “Special Mention”, “Substandard”, “Doubtful” and “Loss”, respectively, while lower ratings, “1” through “4”, represent risk-ratings within the least risky “Pass” category. The environmental loss factor applicable to each non-impaired loan within a category, as described above, is “weighted” by a multiplier based upon the loan’s risk-rating classification. Within any single loan category, a “higher” environmental loss factor is now ascribed to those loans with comparatively higher risk-rating classifications resulting in a proportionately greater ALLL requirement attributable to such loans compared to the comparatively lower risk-rated loans within that category.

In evaluating the impact of the level and trends in nonperforming loans on environmental loss factors, we first broadly consider the occurrence and overall magnitude of prior losses recognized on such loans over an extended period of time. For this purpose, losses are considered to include both charge offs as well as loan impairments for which valuation allowances have been recognized through provisions to the allowance for loan losses, but have not yet been charged off. To the extent that prior losses have generally been recognized on nonperforming loans within a category, a basis is established to recognize existing losses on loans collectively evaluated for impairment based upon the current levels of nonperforming loans within that category. Conversely, the absence of material prior losses attributable to delinquent or nonperforming loans within a category may significantly diminish, or even preclude, the consideration of the level of nonperforming loans in the calculation of the environmental loss factors attributable to that category of loans.

Once the basis for considering the level of nonperforming loans on environmental loss factors is established, we then consider the current dollar amount of nonperforming loans by loan type in relation to the total outstanding balance of loans within the category. A greater portion of nonperforming loans within a category in relation to the total suggests a comparatively greater level of risk and expected loss within that loan category and vice-versa.

In addition to considering the current level of nonperforming loans in relation to the total outstanding balance for each category, we also consider the degree to which those levels have changed from period to period. A significant and sustained increase in nonperforming loans over a 12-24 month period suggests a growing level of expected loss within that loan category and vice-versa.

As noted above, we consider these factors in a qualitative, rather than quantitative fashion when ascribing the risk value, as described above, to the level and trends of nonperforming loans that is applicable to a particular loan category. As with all environmental loss factors, the risk value assigned ultimately reflects our best judgment as to the level of expected losses on loans collectively evaluated for impairment.

The sum of the probable and estimable loan losses calculated through the first and second tiers of the loss measurement processes as described above, represents the total targeted balance for our allowance for loan losses at the end of a fiscal period. As noted earlier, we established all additional valuation allowances in the fiscal period during which additional individually identified loan impairments and additional estimated losses on loans collectively evaluated for impairment are identified. We adjust our balance of valuation allowances through the provision for loan losses as required to ensure that the balance of the allowance for loan losses reflects all probable and estimable loans losses at the close of the fiscal period. Notwithstanding calculation methodology and the noted distinction between valuation allowances established on loans collectively versus individually evaluated for impairment, our entire allowance for loan losses is available to cover all charge-offs that arise from the loan portfolio.

Although we believe that our allowance for loans losses is established in accordance with management’s best estimate, actual losses are dependent upon future events and, as such, further additions to the level of loan loss allowances may be necessary.

The following table sets forth information with respect to activity in the allowance for loan losses for the periods indicated.


	For the Years Ended June 30,
	2014			2013			2012			2011			2010
	(Dollars in Thousands)

Allowance balance (at beginning of period)	$	10,896		$	10,117		$	11,767		$	8,561		$	6,434

Provision for loan losses		3,381			4,464			5,750			4,628			2,616

Charge-offs:
One- to four-family mortgage		1,202			2,272			6,398			931			202
Home equity loan		47			221			135			7			16
Commercial mortgage		44			1,042			483			—			322
Commercial business		1,170			182			349			5			—
Construction		—			9			106			492			—
Other		30			2			9			7			1

Total charge-offs		2,493			3,728			7,480			1,442			541

Recoveries:
One- to four-family mortgage		67			15			6			6			10
Home equity loan		2			10			2			—			—
Commercial mortgage		525			—			37			2			42
Commercial business		9			18			—			11			—
Construction		—			—			33			—			—
Other		—			—			2			1			—

Total recoveries		603			43			80			20			52

Net (charge-offs) recoveries		(1,890	)		(3,685	)		(7,400	)		(1,422	)		(489	)

Allowance balance (at end of period)	$	12,387		$	10,896		$	10,117		$	11,767		$	8,561

Total loans outstanding	$	1,742,868		$	1,361,718		$	1,285,890		$	1,269,372		$	1,013,149

Average loans outstanding	$	1,548,746		$	1,309,085		$	1,250,307		$	1,172,576		$	1,030,287

Allowance for loan losses as a percent of total loans outstanding		0.71	%		0.80	%		0.79	%		0.93	%		0.84	%

Net loan charge-offs as a percent of average loans outstanding		0.12	%		0.28	%		0.59	%		0.12	%		0.05	%

Allowance for loan losses to non-performing loans		48.96	%		35.24	%		30.20	%		33.65	%		39.70	%

Allocation of Allowance for Loan Losses. The following table sets forth the allocation of the total allowance for loan losses by loan category and segment and the percent of loans in each category’s segment to total net loans receivable at the dates indicated. The portion of the loan loss allowance allocated to each loan segment does not represent the total available for future losses which may occur within a particular loan segment since the total loan loss allowance is a valuation reserve applicable to the entire loan portfolio.


	At June 30,
	2014					2013					2012					2011					2010
	Amount		Percent of Loans to Total Loans			Amount		Percent of Loans to Total Loans			Amount		Percent of Loans to Total Loans			Amount		Percent of Loans to Total Loans			Amount		Percent of Loans to Total Loans
	(Dollars in Thousands)
At end of period allocated to:
Real estate mortgage:
One- to four-family	$	2,729		33.31	%	$	3,660		36.77	%	$	4,572		43.77	%	$	6,644		48.13	%	$	4,302		65.52	%
Commercial		7,737		56.44			5,359		48.97			3,443		37.71			3,336		30.23			3,315		20.04
Commercial business		1,284		3.86			1,218		5.19			1,310		6.88			880		8.27			108		1.42
Consumer:
Home equity loans		460		4.34			490		5.93			447		7.45			322		8.78			313		10.03
Home equity lines of credit		88		1.38			76		1.95			54		2.30			49		2.59			34		1.12
Other		22		0.25			12		0.32			14		0.31			14		0.30			13		0.42
Construction		67		0.42			81		0.87			277		1.58			289		1.70			245		1.45

		12,387					10,896					10,117					11,534					8,330
Unallocated		—					—					—					233					231


Total	$	12,387		100.00	%	$	10,896		100.00	%	$	10,117		100.00	%	$	11,767		100.00	%	$	8,561		100.00	%

The following table sets forth the allocation of the allowance for loan losses by loan category and segment within each valuation allowance category at the dates indicated. The valuation allowance categories presented reflect the allowance for loan loss calculation methodology in effect at the time.


	At June 30,
	2014		2013		2012		2011		2010
	(Dollars in Thousands)
Valuation allowance for loans individually evaluated for impairment:
Real estate mortgage:
One- to four-family	$	528	$	697	$	1,240	$	4,061	$	2,433
Commercial		569		514		667		1,503		1,771
Commercial business		444		757		776		692		5
Consumer:
Home equity loans		132		110		127		—		—
Home equity lines of credit		—		—		—		—		—
Other		—		—		—		—		—
Construction		—		—		—		105		106

Total valuation allowance		1,673		2,078		2,810		6,361		4,315


Valuation allowance for loans collectively evaluated for impairment:
Historical loss factors		2,058		2,439		2,288		738		199

Environmental loss factors:
Real estate mortgage:
One- to four-family		1,175		1,278		1,502		2,160		1,784
Multi-family and commercial		6,717		4,292		2,776		1,658		1,443
Commercial business		374		407		316		186		103
Consumer:
Home equity loans		229		239		258		312		305
Home equity lines of credit		88		76		54		49		34
Other		8		6		8		8		8
Construction		65		81		105		62		139

Total environmental loss factors		8,656		6,379		5,019		4,435		3,816


Total (Factors based)		10,714		8,818		7,307		5,173		4,015


Unallocated general valuation allowance		—		—		—		233		231


Total allowance for loan losses	$	12,387	$	10,896	$	10,117	$	11,767	$	8,561

During the year ended June 30, 2014, the balance of the allowance for loan losses increased by approximately $1.5 million to $12.4 million or 0.71% of total loans at June 30, 2014 from $10.9 million or 0.80% of total loans at June 30, 2013. The increase resulted from provisions of $3.4 million during the year ended June 30, 2014 that were partially offset by charge-offs, net of recoveries, totaling $1.9 million.

With regard to loans individually evaluated for impairment, the balance of our allowance for loan losses attributable to such loans decreased by $405,000 to $1.7 million at June 30, 2014 from $2.1 million at June 30, 2013. The balance at June 30, 2014 reflected the allowance for impairment identified on $4.6 million of impaired loans while an additional $32.6 million of impaired loans had no allowance for impairment as of that date. By comparison, the balance of the allowance at June 30, 2013 reflected the impairment identified on $4.7 million of impaired loans while an additional $34.9 million of impaired loans had no impairment as of that date. The outstanding balances of impaired loans reflect the cumulative effects of various adjustments including, but not limited to, purchase accounting valuations and prior charge-offs, where applicable, which are considered in the evaluation of impairment.

With regard to loans evaluated collectively for impairment, the balance of our allowance for loan losses attributable to such loans increased by $1.9 million to $10.7 million at June 30, 2014 from $8.8 million at June 30, 2013. The increase in valuation was partly attributable to a $383.5 million increase in the aggregate outstanding balance of loans collectively evaluated for impairment to $1.71 billion at June 30, 2014 from $1.32 billion at June 30, 2013 as well as the ongoing reallocation of loans within the portfolio in favor of commercial loans against which we generally assign comparatively higher historical and environmental loss factors in our ALLL calculation. The increase in the allowance also reflected changes to certain environmental loss factors that were partially offset by decreases in historical loss factors.

Specifically, our loan portfolio experienced a net annualized average charge-off rate of 12 basis points during the year ended June 30, 2014 representing a decrease of 16 basis points from the 28 basis points of charge-offs reported for fiscal 2013. The historical loss factors used in our allowance for loan loss calculation methodology were updated to reflect the effect of these charge offs on the average annualized historical charge off rates by loan segment over the two year look-back period used by that methodology. The effect of the decline in the aggregate charge-off rate during the current year more than offset the effect of the concurrent increase in the overall balance of the unimpaired portion of the loan portfolio noted above. Together, these factors resulted in a net decrease of $381,000 in the applicable portion of the allowance to $2.1 million as of June 30, 2014 compared to $2.4 million at June 30, 2013.

As noted earlier, the loans acquired from Atlas Bank on June 30, 2014 were recorded at their fair value on the date of acquisition. Such valuations reflected any estimated impairment for potential credit losses at that time. Consequently, the historical loss factors applied to such loans were initially set to zero at June 30, 2014. The level of historical loss factors attributable to all acquired loans, including those acquired from Atlas Bank, will be updated periodically to reflect any “post-acquisition” charge off activity in accordance with our allowance for loan loss calculation methodology.

Changes to environmental loss factors during the year ended June 30, 2014 generally reflected changes to estimated impairment attributable to three primary factors. First, we updated the loss factors applicable to loans originally acquired through our acquisition of Central Jersey Bank during fiscal 2011. All such loans were initially recorded at fair value at acquisition reflecting any impairment identified on such loans at that time. In general, the aggregate level of realized losses on the acquired impaired loans has not exceeded the level of impairment originally ascribed to the loans at the time of acquisition. However, during fiscal 2014 we have identified and recognized additional “post-acquisition” impairment and charge-offs attributable to acquired loans that were performing at the time of acquisition. We consider such losses in developing the environmental loss factors used to calculate the required allowance applicable to the non-impaired portion of our acquired loan portfolio. As such, during the year ended June 30, 2014, we modified the following environmental loss factors applicable to loans acquired during fiscal 2011:

•

National and local economic trends and conditions: Increased the loss factors within the following loan segments to reflect the continued weakness in national and local economic conditions and the increase in related impairment that continues to be recognized over time since the loan segments were originally acquired at fair value:

•

All acquired loan segments: Increased (+3 bp) from “6” to “9”

•

Changes in the value of underlying collateral: Increased the loss factors within the following loan segments to reflect the continued weakness in applicable real estate values coupled with the adverse effects of Hurricane Sandy on collateral values and the increase in related impairment that continues to be recognized over time since the loan segments were originally acquired at fair value:

•

All acquired loan segments: Increased (+3 bp) from “6” to “9”

•

Level of and trends in nonperforming loans: Increased the loss factors within the following loan segments to reflect increases in the level of nonperforming loans and realized losses and the increase in related impairment that continues to be recognized over time since the loan segments were originally acquired at fair value.

•

Acquired SBA loan segments: Increased (+3 bp) from “12” to “15”

Given their original acquisition at fair value and limited portfolio seasoning through June 30, 2014, the environmental loss factors established for loans acquired through business combinations generally reflect a comparatively lower level of risk than those applicable to the remaining portfolio. As noted earlier, the loans acquired from Atlas Bank on June 30, 2014 were recorded at their fair value on the date of acquisition. Such valuations reflected any estimated impairment for potential credit losses at that time. Consequently, the environmental loss factors applied to such loans were initially set to zero at June 30, 2014. The level of environmental loss factors attributable to all acquired loans, including those acquired from Atlas Bank, will continue to be monitored and adjusted to reflect our best judgment as to the level of incurred “post- acquisition” impairment.

The second set of environmental loss factor changes during fiscal 2014 were primarily attributable to the significant growth in commercial mortgage loans reported during the year that necessitated changes to the applicable environmental loss factors including, but not limited to, the utilization of a new loss factor added during fiscal 2014:

•

National and local economic trends and conditions: Reallocated a portion of the risk factor value attributable to accelerated growth in commercial mortgage loan segments to a new loss factor added to our framework of environmental loss factors during fiscal 2014 (see below).

•

Multi-family mortgage loans: Reallocated (-6 bp) from “15” to “9”

•

Nonresidential mortgage loans: Reallocated (-3 bp) from “15” to “12”

•

Concentration of credit: Reallocated a portion of the risk factor value attributable to accelerated growth in commercial mortgage loan segments to a new loss factor added to our framework of environmental loss factors during fiscal 2014 (see below).

•

Multi-family mortgage loans: Reallocated (-3 bp) from “12” to “9”

•

Nonresidential mortgage loans: Reallocated (-3 bp) from “12” to “9”

•

Changes in the nature, volume and terms of loans: Added new environmental loss factor during fiscal 2014 with factor values initially reallocated from existing risk factors (see above). Additional increases were also made to the risk factor values to reflect further accelerated growth in commercial mortgage loan segments.

•

Multi-family mortgage loans: Reallocated (+9 bp) from “0” to “9”

•

Nonresidential mortgage loans: Reallocated (+6 bp) from “0” to “6”

•

Multi-family mortgage loans: Increased (+6 bp) from “9” to “15”

•

Nonresidential mortgage loans: Increased (+3 bp) from “6” to “9”

The third set of environmental loss factor changes during fiscal 2014 generally reflected the modest improvement in national and local economic conditions as well as improvements in certain real estate collateral values and the resulting impact on the estimated impairment within the applicable “non-acquired” segments our loan portfolio:

•

National and local economic trends and conditions: Decreased the loss factors within the following loan segments to reflect modest improvement in certain economic indicators. The improvement in such indicators generally suggests growing stability and/or improvement in national and location economic conditions that—while remaining weak—have recovered from their worst levels brought about by the global financial crisis of 2007-2008.

•

Residential mortgage loans: Decreased (-3 bp) from “9” to “6”

•

Home equity loans & lines of credit: Decreased (-3 bp) from “9” to “6”

•

Construction loans: Decreased (-3 bp) from “15” to “12”

•

Multi-family mortgage loans: Decreased (-3 bp) from “9” to “6”

•

Nonresidential mortgage loans: Decreased (-3 bp) from “12” to “9”

•

Commercial business loans: Decreased (-3 bp) from “15” to “12”

•

Changes in collateral values: Decreased the loss factor within the following loan segment to reflect the improvement in real estate collateral values securing loans within the applicable segment.

•

Multi-family mortgage loans: Decreased (-3 bp) from “15” to “12”

In conjunction with the net changes to the outstanding balance of the applicable loans, the increase in the environmental loss factors during the year ended June 30, 2014 resulted in a net increase of $2.3 million in the applicable valuation allowances to $8.7 million at June 30, 2014 from $6.4 million at June 30, 2013.

The tables on the following pages present the historical and environmental loss factors, reported as a percentage of outstanding loan principal, that were the basis for computing the portion of the allowance for loan losses attributable to loans collectively evaluated for impairment at June 30, 2014, and June 30, 2013. Given their acquisition at fair value on June 30, 2014, loans acquired in conjunction with the Atlas Bank acquisition on June 30, 2014 were excluded from the ALLL calculation as of that date. Therefore, the historical and environmental loss factors applicable to the categories of loans denoted as “acquired in merger” below were applicable at June 30, 2014 to loans previously acquired in conjunction with our acquisition of Central Jersey during fiscal 2011.

Allowance for Loan Losses

Allocation of Loss Factors on Loans Collectively Evaluated for Impairment

at June 30, 2014


Loan Category	Historical Loss Factors			Environmental Loss Factors ⁽²⁾			Total

Residential mortgage loans
Originated		0.03	%		0.27	%		0.30	%
Purchased		2.56			0.75			3.31
Acquired in merger		3.25			0.30			3.55

Home equity loans
Originated		0.11			0.33			0.44
Acquired in merger		0.36			0.30			0.66

Home equity lines of credit
Originated		0.00			0.33			0.33
Acquired in merger		0.00			0.30			0.30

Construction loans
One- to four-family
Originated		0.09			0.69			0.78
Acquired in merger		0.00			0.30			0.30
Multi-family
Originated		0.00			0.69			0.69
Acquired in merger		0.00			0.30			0.30
Nonresidential
Originated		0.00			0.69			0.69
Acquired in merger		0.00			0.30			0.30

Commercial mortgage loans
Multi-family
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.30			0.30
Nonresidential
Originated		0.10			0.72			0.82
Acquired in merger		0.00			0.30			0.30

Commercial business loans
Secured (One- to four-family)
Originated		0.00			0.69			0.69
Acquired in merger		0.00			0.30			0.30
Secured (Other)
Originated		0.50			0.69			1.19
Purchased		1.19			0.36			1.55
Acquired in merger		0.06			0.30			0.36
Unsecured
Originated		0.00			0.54			0.54
Acquired in merger		0.00			0.21			0.21

Allowance for Loan Losses

Allocation of Loss Factors on Loans Collectively Evaluated for Impairment

at June 30, 2014 (continued)


Loan Category	Historical Loss Factors			Environmental Loss Factors ⁽²⁾			Total
SBA 7A
Originated		0.00	%		0.69	%		0.69	%
Acquired in merger		18.91			0.33			19.24
SBA Express
Originated		0.00			0.69			0.69
Acquired in merger		0.00			0.33			0.33
SBA Line of Credit
Originated		0.00			0.69			0.69
Acquired in merger		0.53			0.33			0.86

Other consumer loans ⁽¹⁾		—			—			—

(1)	We generally maintain an environmental loss factor of 0.21% on other consumer loans while historical loss factors range from 0.00% to 12.34% based on loan type. Resulting balances in the allowance for loan losses are immaterial and therefore excluded from the presentation.

(2)

“Base” environmental factors reported excluding the effect of “weights” attributable to internal credit-rating classification as follows: “Pass-1”: 70%, “Pass-2”: 80%, “Pass-3”: 90%, “Pass-4”: 100%, “Watch”: 200%, “Special Mention”: 400%, “Substandard”: 600%, “Doubtful”: 800%. (e.g. Environmental loss factor applicable to originated residential mortgage loan rated as “Substandard”: 0.27% X 600% = 1.62%).

Allowance for Loan Losses

Allocation of Loss Factors on Loans Collectively Evaluated for Impairment

at June 30, 2013


Loan Category	Historical Loss Factors			Environmental Loss Factors ⁽²⁾			Total

Residential mortgage loans
Originated		0.09	%		0.30	%		0.39	%
Purchased		2.78			0.75			3.53
Acquired in merger		1.62			0.24			1.86

Home equity loans
Originated		0.15			0.36			0.51
Acquired in merger		0.30			0.24			0.54

Home equity lines of credit
Originated		0.00			0.36			0.36
Acquired in merger		0.00			0.24			0.24

Construction loans
One- to four-family
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24
Multi-family
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24
Nonresidential
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24

Commercial mortgage loans
Multi-family
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24
Nonresidential
Originated		0.13			0.72			0.85
Acquired in merger		0.11			0.24			0.35

Commercial business loans
Secured (One- to four-family)
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24
Secured (Other)
Originated		0.08			0.72			0.80
Acquired in merger		0.07			0.24			0.31
Unsecured
Originated		0.00			0.57			0.57
Acquired in merger		0.00			0.18			0.18

Allowance for Loan Losses

Allocation of Loss Factors on Loans Collectively Evaluated for Impairment

at June 30, 2013 (continued)


Loan Category	Historical Loss Factors			Environmental Loss Factors ⁽²⁾			Total
SBA 7A
Originated		0.00	%		0.72	%		0.72	%
Acquired in merger		1.58			0.24			1.82
SBA Express
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24
SBA Line of Credit
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24
SBA Other
Originated		0.00			0.72			0.72
Acquired in merger		0.00			0.24			0.24

Other consumer loans ⁽¹⁾		—			—			—

(1)	We generally maintain an environmental loss factor of 0.27% on other consumer loans while historical loss factors range from 0.00% to 100.00% based on loan type. Resulting balances in the allowance for loan losses are immaterial and therefore excluded from the presentation.

(2)

An overview of the balances and activity within the allowance for loan loss during prior fiscal years reflects the lagging detrimental effects on economic and market conditions that resulted from the 2008-2009 financial crisis which have continued to adversely impact credit quality within our loan portfolio since that time.

During the fiscal year ended June 30, 2013, the balance of the allowance for loan losses increased by approximately $779,000 to $10.9 million at June 30, 2013 from $10.1 million at June 30, 2012. The increase resulted from additional provisions of $4.5 million that were partially offset by net charge offs of $3.7 million during fiscal 2013. Valuation allowances attributable to impairment identified on individually evaluated loans decreased by $732,000 to $2.1 million at June 30, 2013 from $2.8 million at June 30, 2012. For those same comparative periods, valuation allowances on loans evaluated collectively for impairment increased by approximately $1.5 million to $8.8 million from $7.3 million reflecting the overall growth in the balance of non-impaired loans in the portfolio in conjunction with changes to the historical and environmental loss factors used in the allowance for loan loss calculation during the year.

During the fiscal year ended June 30, 2012, the balance of the allowance for loan losses decreased by approximately $1.7 million to $10.1 million at June 30, 2012 from $11.8 million at June 30, 2011. The decrease resulted from net charge-offs totaling $7.4 million that were partially offset by additional provisions of $5.8 million. As noted earlier, the net charge-offs reported during fiscal 2012 reflected changes to our loan classification and charge off practices that resulted in the accelerated charge off of approximately $4.2 million of confirmed expected losses for which valuation allowances had been previously established for identified impairments. Due partly to this change, valuation allowances attributable to impairment identified on individually evaluated loans decreased by $3.6 million to $2.8 million at June 30, 2012 from $6.4 million at June 30, 2011. For those same comparative periods, valuation allowances on loans evaluated collectively for impairment increased by approximately $2.1 million to $7.3 million from $5.2 million reflecting the overall growth in the balance of non-impaired loans in the portfolio in conjunction with changes to the historical and environmental loss factors used in the allowance for loan loss calculation during the year. As noted earlier, changes to environmental loss factors during fiscal 2012 included those arising from incorporating our credit-rating classification system into the calculation of environmental loss factors by loan type. Finally, the balance of the unallocated allowance was reduced to zero at June 30, 2012 from our prior balance of $233,000 at June 30, 2011.

The calculation of probable losses within a loan portfolio and the resulting allowance for loan losses is subject to estimates and assumptions that are susceptible to significant revisions as more information becomes available and as events or conditions effecting individual borrowers and the marketplace as a whole change over

time. Future additions to the allowance for loan losses will likely be necessary if economic and market conditions do not improve in the future from those currently prevalent in the marketplace. In addition, the federal banking regulators, as an integral part of their examination process, periodically review our loan and foreclosed real estate portfolios and the related allowance for loan losses and valuation allowance for foreclosed real estate. The regulators may require the allowance for loan losses to be increased based on their review of information available at the time of the examination, which may negatively affect our earnings.

Securities Portfolio

Our deposits and borrowings have traditionally exceeded our outstanding balance of loans receivable. We have generally invested excess funds into investment securities with a historical emphasis on U.S. agency mortgage-backed securities and U.S. agency debentures. Such assets are a significant component of our investment portfolio at June 30, 2014 and are expected to remain so in the future. However, recent enhancements to our investment policies, strategies and infrastructure have enabled us to diversify the composition and allocation of our securities portfolio as described below.

At June 30, 2014, our securities portfolio totaled $1.36 billion and comprised 38.7% of our total assets. By comparison, at June 30, 2013, our securities portfolio totaled $1.39 billion and comprised 44.3% of our total assets.

The year-over-year net decrease in the securities portfolio totaled approximately $34.7 million which largely reflected security repayments and sales that were partially offset by security purchases during the year as well as the addition of securities with fair values totaling $26.9 million acquired in conjunction with the acquisition of Atlas Bank on June 30, 2014. The securities acquired from Atlas Bank included mortgage-backed securities, including pass-through securities and collateralized mortgage obligations, with fair values totaling $23.9 million as well as one corporate bond with a fair value of $3.0 million at June 30, 2014. All securities acquired from Atlas Bank were determined to be high-quality, investment grade securities with no “other-than-temporary” impairment.

The net decrease in the portfolio was partially offset by an increase in the fair value of the available for sale securities portfolio to an unrealized gain of $1.1 million at June 30, 2014 from an unrealized loss of $7.4 million at June 30, 2013.

The decrease in the dollar amount of the securities portfolio and its decline as a percentage of total assets from June 30, 2013 to June 30, 2014 reflects the stated goals and objectives of our business plan which continues to call for shifting the mix of our earning assets toward greater balances of loans and lesser balances of investment securities.

Our investment policy, which is approved by the Board of Directors, is designed to foster earnings and manage cash flows within prudent interest rate risk and credit risk guidelines. Generally, our investment policy is to invest funds in various categories of securities and maturities based upon our liquidity needs, asset/liability management policies, investment quality, and marketability and performance objectives. Our Chief Executive Officer, Chief Operating Officer, Chief Risk/Investment Officer and Chief Financial Officer are the executive management members of our Capital Markets Committee (“CMC”) that are generally designated by the Board of Directors as the officers primarily responsible for securities portfolio management and all transactions require the approval of at least two of these designated officers. The Board of Directors is responsible for the oversight of the securities portfolio and the CMC’s activities relating thereto.

Federally-chartered savings banks have the authority to invest in various types of liquid assets. The investments authorized for purchase under the investment policy approved by our Board of Directors include U.S. government and agency mortgage-backed securities (including U.S. agency commercial MBS), U.S. government and government agency debentures, municipal obligations (consisting of bank-qualified municipal bond obligations of state and local governments), corporate bonds, asset-backed securities and collateralized loan obligations. We also hold small balances of single-issuer trust preferred securities and non-agency mortgage-backed securities that were acquired through bank acquisitions, but generally do not purchase such securities for the portfolio. On a short-term basis, our investment policy authorizes investment in securities purchased under agreements to resell, federal funds, certificates of deposits of insured banks and savings institutions and Federal Home Loan Bank term deposits.

The carrying value of our mortgage-backed securities totaled $732.9 million at June 30, 2014 and comprised 54.0% of total investments and 20.9% of total assets as of that date. Mortgage-backed securities generally include mortgage pass-through securities and collateralized mortgage obligations which are typically issued with stated principal amounts and backed by pools of mortgage loans. Mortgage originators use intermediaries (generally government agencies and government-sponsored enterprises, but also a variety of non-agency corporate issuers) to pool and package mortgage loans into mortgage-backed securities. The cash flow and re-pricing characteristics of a mortgage pass-through security generally approximate those of the underlying mortgages. By comparison, the cash flow and re-pricing characteristics of collateralized mortgage obligations are determined by those assigned to an individual security, or “tranche”, within the terms of a larger investment vehicle which allocates cash flows to its component tranches based upon a predetermined structure as payments are received from the underlying mortgagors.

We generally invest in mortgage-backed securities issued by U.S. government agencies or government-sponsored entities, such as the Government National Mortgage Association (“Ginnie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”). Mortgage-backed securities issued or sponsored by U.S. government agencies and government-sponsored entities are guaranteed as to the payment of principal and interest to investors. Mortgage-backed securities generally yield less than the mortgage loans underlying such securities because of the costs of servicing and of their payment guarantees or credit enhancements which minimize the level of credit risk to the security holder.

In addition to our investments in agency mortgage-backed securities, we formerly had an investment in the AMF Ultra Short Mortgage Fund (“AMF Fund”), a mutual fund acquired during 2002 as the result of a merger, which invested primarily in agency and non-agency mortgage-backed securities of short duration. The housing and credit crises negatively impacted the market value of certain securities in the fund’s portfolio resulting in a continuing decline in the net asset value of this fund. Due to a continuing decline in the net asset value of the AMF Fund, we elected to withdraw our investment in the fund by invoking a redemption-in-kind option during fiscal 2009 in lieu of cash. The shares redeemed for cash and the shares redeemed for the underlying securities were initially written down to fair value as of the trade date. However, additional losses in the form of other-than-temporary impairments (“OTTI”) were recognized through earnings during fiscal 2009 and 2010 due to further declines in the value of the applicable non-agency securities.

During the year ended June 30, 2014, non-agency CMOs totaling $34,000 fell below our investment grade threshold triggering their sale resulting in sale losses totaling $6,000. Similar sales were executed during fiscal 2013 and fiscal 2012 for CMOs totaling $24,000 and $38,000, respectively, resulting in losses on sale of $6,000 and $6,000, respectively.

We acquired one additional non-agency CMO with a fair value of $210,000 in conjunction with the acquisition of Atlas Bank on June 30, 2014. The acquisition increased the aggregate number and carrying value of our non-agency CMOs to five and $264,000, respectively. Of these securities, three non-agency CMOs with carrying values of $31,200 were impaired at June 30, 2014, but maintained their credit-ratings at levels supporting our investment grade assessment with such ratings equaling “A” by Standard & Poor’s Financial Services (“S&P”) and/or “Baa2” by Moody’s Investor Service (“Moody’s”), where rated by those agencies.

The carrying value of our U.S. agency debt securities totaled $148.6 million at June 30, 2014 and comprised 10.9% of total investments and 4.2% of total assets as of that date. Such securities included $144.3 million of fixed-rate U.S. agency debentures as well as $4.2 million of securitized pools of loans issued and fully guaranteed by the SBA.

The carrying value of our securities representing obligations of state and political subdivisions totaled $98.8 million at June 30, 2014 and comprised 7.3% of total investments and 2.8% of total assets as of that date. Such securities include approximately $95.7 million of highly-rated, fixed-rate bank-qualified securities representing general obligations of municipalities located within the U.S. or the obligations of their related entities such as boards of education or school districts. The portfolio also includes a nominal balance of non-rated municipal obligations totaling approximately $3.1 million comprising seven short-term, bond anticipation notes (“BANs”) issued by a total of four New Jersey municipalities with whom we also maintain or seek to maintain deposit relationships. At June 30, 2014, the fair value of each of our BANs equaled or exceeded their respective carrying values resulting in no

reported impairment on those securities as of that date. Each of our impaired municipal obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling or exceeding “A” or higher by S&P and/or “A1” or higher by Moody’s, where rated by those agencies. In the absence of such ratings, we rely upon our own internal analysis of the issuer’s financial condition to validate its investment grade assessment.

The carrying value of our asset-backed securities totaled $87.3 million at June 30, 2014 and comprised 6.4% of total investments and 2.5% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities representing securitized federal education loans with 97% U.S. government guarantees. The securities represent tranches of a larger investment vehicle designed to reallocate credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying loans. Our securities represent the highest credit-quality tranches within the overall structures with each being rated “AA+” by S&P at June 30, 2014.

The outstanding balance of our collateralized loan obligations totaled $119.6 million at June 30, 2014 and comprised 8.8% of total investments and 3.4% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities comprised of securitized commercial loans to large, U.S. corporations. Our securities represent tranches of a larger investment vehicle designed to reallocate cash flows and credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying loans. At June 30, 2014, each of our collateralized loan obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling or exceeding “AA” or higher by S&P and/or “Aa2” or higher by Moody’s, where rated by those agencies.

The carrying value of our corporate bonds totaled $162.2 million at June 30, 2014 and comprised 12.0% of total investments and 4.6% of total assets as of that date. This category of securities is comprised entirely of floating-rate corporate debt obligations of large financial institutions. At June 30, 2014, each of our corporate bonds were consistently rated by Moody’s and S&P well above the thresholds that generally support our investment grade assessment with such ratings equaling or exceeding “A-” or higher by S&P and/or “Baa1” or higher by Moody’s, where rated by those agencies.

The carrying value of our trust preferred securities totaled $7.8 million at June 30, 2014 and comprised less than 1.0% of total investments and total assets as of that date. The category comprises a total of five “single-issuer” (i.e. non-pooled) trust preferred securities that were originally issued by four separate financial institutions. As a result of bank mergers involving the issuers of these securities, our five trust preferred securities currently represent the de-facto obligations of three separate financial institutions. At June 30, 2014, two of the securities at an amortized cost of $3.0 million were consistently rated by Moody’s and S&P above the thresholds that generally support our investment grade assessment, with such ratings equaling “BBB” by S&P and “Baa2” by Moody’s. The securities were originally issued through Chase Capital II and currently represent de-facto obligations of JP Morgan Chase & Co. We also owned two trust preferred securities at an amortized cost of $4.9 million whose external credit ratings by both S&P and Moody’s fell below the thresholds that we normally associate with investment grade securities, with such ratings equaling “BB+” by S&P and “Ba1” by Moody’s. The securities were originally issued through BankBoston Capital Trust IV and MBNA Capital B and currently represent de-facto obligations of Bank of America Corporation. We hold one non-rated trust preferred security with a par value of $1.0 million representing a de-facto obligation of Mercantil Commercebank Florida Bancorp, Inc.

Current accounting standards require that securities be categorized as “held to maturity”, “trading securities” or “available for sale”, based on management’s intent as to the ultimate disposition of each security. These standards allow debt securities to be classified as “held to maturity” and reported in financial statements at amortized cost only if the reporting entity has the positive intent and ability to hold these securities to maturity. Securities that might be sold in response to changes in market interest rates, changes in the security’s prepayment risk, increases in loan demand, or other similar factors cannot be classified as “held to maturity”.

We do not currently use or maintain a trading account. Securities not classified as “held to maturity” are classified as “available for sale”. These securities are reported at fair value and unrealized gains and losses on the securities are excluded from earnings and reported, net of deferred taxes, as adjustments to accumulated other comprehensive income, a separate component of equity. As of June 30, 2014, our held to maturity securities portfolio had a carrying value of $512.1 million or 37.7 % of our total securities with the remaining $845.1 million or 62.3% of securities classified as available for sale.

Other than mortgage-backed or debt securities issued or guaranteed by the U.S. government or its agencies, we did not hold securities of any one issuer having an aggregate book value in excess of 10% of our equity at June 30, 2014. All of our securities carry market risk insofar as increases in market rates of interest may cause a decrease in their market value. We have determined that none of our securities with unrealized losses at June 30, 2014 are other than temporarily impaired as of that date.

Purchases of securities are made based on certain considerations, which include the interest rate, tax considerations, volatility, yield, settlement date and maturity of the security, our liquidity position and anticipated cash needs and sources. The effect that the proposed security would have on our credit and interest rate risk and risk-based capital is also considered. We do not purchase securities that are determined to be below investment grade.

During the years ended June 30, 2014, 2013 and 2012, proceeds from sales of securities available for sale totaled $170.9 million, $442.8 million and $51.3 million, which resulted in gross gains of $3.6 million, $10.6 million and $53,000 and gross losses of $2.1 million, $135,000, and $0, respectively. Proceeds from sale of securities held to maturity during the years ended June 30, 2014, 2013 and 2012 totaled $28,000, $18,000 and $32,000, with gross losses of $6,000, $6,000 and $6,000, respectively.

The following table sets forth the carrying value of our securities portfolio at the dates indicated. Mortgage-backed securities include mortgage pass-through securities and collateralized mortgage obligations.


	At June 30,
	2014		2013		2012		2011		2010
	(In Thousands)
Debt Securities Available for Sale :
U.S. agency obligations	$	4,205	$	5,015	$	5,889	$	6,591	$	3,942
Obligations of states and political subdivisions		26,773		25,307		—		30,635		18,955
Asset-backed securities		87,316		24,798		—		—		—
Collateralized loan obligations		119,572		78,486		—		—		—
Corporate bonds		162,234		159,192		—		—		—
Trust preferred securities		7,798		7,324		6,713		7,447		6,600

Total debt securities available for sale		407,898		300,122		12,602		44,673		29,497


Debt Securities Held to Maturity :
U.S. agency obligations		144,349		144,747		32,426		103,458		255,000
Obligations of states and political subdivisions		72,065		65,268		2,236		3,009		—

Total debt securities held to maturity		216,414		210,015		34,662		106,467		255,000


Mortgage-Backed Securities Available for Sale :
Government National Mortgage Association		3,276		6,333		11,690		13,581		15,628
Federal Home Loan Mortgage Corporation		231,910		299,833		460.509		390,448		273,704
Federal National Mortgage Association		201,827		474,486		757,905		656,218		414,123
Non-agency		210		—		—		—		—

Total mortgage-backed securities available for sale		437,223		780,652		1,230,104		1,060,247		703,455


Mortgage-Backed Securities Held to Maturity :
Government National Mortgage Association		9		—		—		—		—
Federal Home Loan Mortgage Corporation		303		120		158		212		267
Federal National Mortgage Association		295,292		100,889		786		930		1,123
Non-agency		54		105		146		203		310

Total mortgage-backed securities held to maturity		295,658		101,114		1,090		1,345		1,700


Total	$	1,357,193	$	1,391,903	$	1,278,458	$	1,212,732	$	989,652

The following table sets forth certain information regarding the carrying values, weighted average yields and maturities of our securities portfolio at June 30, 2014. This table shows contractual maturities and does not reflect re-pricing or the effect of prepayments. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. At June 30, 2014, securities with a carrying value of $152.6 million are callable within one year.


	At June 30, 2014
	One Year or Less					More Than One to Five Years					More Than Five to Ten Years					More Than Ten Years					Total Securities
	Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Carrying Value		Weighted Average Yield			Market Value
	(Dollars in Thousands)

U.S. agency obligations	$	1,022		2.53	%	$	143,357		0.90	%	$	826		0.62	%	$	3,349		2.41	%	$	148,554		0.94	%	$	147,152
Obligations of states and political subdivisions		4,787		1.14	%		2,752		1.22	%		45,381		1.71	%		45,918		2.30	%		98,838		1.94	%		97,298
Asset-backed securities		—		—	%		—		—	%		—		—	%		87,316		1.08	%		87,316		1.08	%		87,316
Collateralized loan obligations		—		—	%		—		—	%		19,973		1.57	%		99,599		1.97	%		119,572		1.90	%		119,572
Corporate bonds		—		—	%		20,190		1.09	%		142,044		1.21	%		—		—	%		162,234		1.19	%		162,234
Trust preferred securities		—		—	%		—		—	%		—		—	%		7,798		2.02	%		7,798		2.02	%		7,798
Mortgage-backed securities:
Residential pass-through:
Government National Mortgage Association		—		—	%		61		8.65	%		2,472		7.27	%		752		7.84	%		3,285		7.42	%		3,285
Federal Home Loan Mortgage Corporation		—		—	%		7,608		4.61	%		39,871		3.00	%		151,694		2.35	%		199,173		2.57	%		199,177
Federal National Mortgage Association		—		—	%		10,547		4.33	%		66,499		2.49	%		189,017		3.13	%		266,063		3.02	%		266,120
Commercial pass-through:
Federal National Mortgage Association		—		—			—		—			180,752		2.56	%		—		—			180,752		2.56	%		178,783
Collateralized mortgage obligations:
Federal Home Loan Mortgage Corporation		—		—	%		—		—	%		—		—	%		33,040		2.02	%		33,040		2.02	%		33,042
Federal National Mortgage Association		—		—	%		—		—	%		—		—	%		50,304		1.84	%		50,304		1.84	%		50,334
Non-agency		—		—	%		—		—	%		—		—	%		264		3.74	%		264		3.74	%		263


Total	$	5,809		1.38	%	$	184,515		1.28	%	$	497,818		2.10	%	$	669,051		2.29	%	$	1,357,193		2.08	%	$	1,352,374

Sources of Funds

General. Retail deposits are our primary source of funds for lending and other investment purposes. In addition, we derive funds from loan and mortgage-backed securities principal repayments and proceeds from the maturities and calls of non-mortgage-backed securities. Loan and securities payments are a relatively stable source of funds, while deposit inflows are significantly influenced by general interest rates and money market conditions. Wholesale funding sources including, but not limited to, borrowings from the FHLB of New York, wholesale deposits and other short term-borrowings are also used to supplement the funding for loans and investments.

Deposits. Our current deposit products include interest-bearing and non-interest-bearing checking accounts, money market deposit accounts, savings accounts and certificates of deposit accounts ranging in terms from 30 days to five years. Certificates of deposit with terms ranging from one year to five years are available for individual retirement account plans. Deposit account terms, such as interest rate earned, applicability of certain fees and service charges and funds accessibility, will vary based upon several factors including, but not limited to, minimum balance, term to maturity, and transaction frequency and form requirements.

Deposits are obtained primarily from within New Jersey and New York through Kearny Bank’s network of retail branches. Traditional methods of advertising are used to attract new customers and deposits, including radio, print media, outdoor advertising, direct mail and inserts included with customer statements. Premiums or incentives for opening accounts are sometimes offered. One of our key retail products in recent years has been “Star Banking”, which bundles a number of banking services and products together for those customers with a checking account with direct deposit and combined deposits of $20,000 or more, including Internet banking, bill pay, telephone banking, reduced rates on home equity loans and a 15 basis point premium on certificates of deposit with a term of at least one year, excluding special promotions. We also offer “High Yield Checking” which is primarily designed to attract core deposits in the form of customers’ primary checking accounts through interest rate and fee reimbursement incentives to qualifying customers. The comparatively higher interest expense associated with the “High Yield Checking” product in relation to our other checking products is partially offset by the transaction fee income associated with the account.

We may also offer a 15 basis point premium on certificate of deposit accounts with a term of at least one year, excluding special promotions, to certificate of deposit accountholders that have $500,000 or more on deposit with Kearny Bank. Though certificates of deposit with non-standard maturities are popular in our market, we generally promote certificates of deposit with traditional maturities, including three and six months and one, two, three, four and five years. During the term of our non-standard 17-month and 29-month certificates of deposit, we offer customers a “one-time option” to “step up” the rate paid from the original rate set on the certificate to the current rate being offered by Kearny Bank for certificates of that particular maturity.

The determination of interest rates on retail deposits is based upon a number of factors, including: (1) our need for funds based on loan demand, current maturities of deposits and other cash flow needs; (2) a current survey of a selected group of competitors’ rates for similar products; (3) our current cost of funds, yield on assets and asset/liability position; and (4) the alternate cost of funds on a wholesale basis, in particular the cost of borrowing from the FHLB. Interest rates are reviewed by senior management on a weekly basis.

We also utilize “non-retail” deposits as an alternative source of wholesale funding to traditional borrowings such as FHLB advances. Such funds are generally used to manage our exposure to interest rate risk and liquidity risk in conjunction with our overall asset/liability management process. At June 30, 2014, the balance of our interest-bearing checking accounts includes a total of $213.5 million of brokered money market deposits acquired through Promontory’s IND program. The terms of the program generally establish a reciprocal commitment for Promontory to deliver and Kearny Bank to accept such deposits for a period of no less than five years during which time total aggregate balances shall be maintained within a range of $200.0 million to $230.0 million. Such deposits are generally sourced by Promontory from large retail and institutional brokerage firms whose individual clients seek to have a portion of their investments held in interest-bearing accounts at FDIC-insured institutions.

We also acquired a small portfolio of longer-term, brokered certificates of deposit during fiscal 2014 whose balances and weighted average remaining term to maturity totaled approximately $18.5 million and 7.0 years,

respectively, at June 30, 2014. In combination with Promontory IND money market deposits noted above, Kearny Bank’s brokered deposits totaled $232.0 million, or 9.7% of deposits, at June 30, 2014.

During fiscal 2014, we began to utilize the QwickRate deposit listing service through which we have attracted “non-brokered” wholesale time deposits targeting institutional investors with a three-to-five year investment horizon. The balance of time deposits we acquired through the QwickRate listing during fiscal 2014 totaled $54.2 million at June 30, 2014 with such funds having a weighted average remaining term to maturity of 3.9 years. We generally prohibit the withdrawal of our listing service deposits prior to maturity.

Additional sources of non-retail deposits including, but not limited to, deposits acquired through listing services and other sources of brokered deposits, may be utilized in the future as additional, alternative sources of wholesale funding.

A large percentage of our deposits are in certificates of deposit, which represented 41.8% and 41.4% of total deposits at June 30, 2014 and June 30, 2013, respectively. Our liquidity could be reduced if a significant amount of certificates of deposit maturing within a short period were not renewed. At June 30, 2014 and June 30, 2013, certificates of deposit maturing within one year were $581.5 million and $646.6 million, respectively. Historically, a significant portion of the certificates of deposit remain with us after they mature and we believe that this will continue.

At June 30, 2014, $476.6 million or 46.0% of our certificates of deposit were certificates of $100,000 or more compared to $389.1 million or 39.6% at June 30, 2013. The general level of market interest rates and money market conditions significantly influence deposit inflows and outflows. The effects of these factors are particularly pronounced on deposit accounts with larger balances. In particular, certificates of deposit with balances of $100,000 or greater are traditionally viewed as being a more volatile source of funding than comparatively lower balance certificates of deposit or non-maturity transaction accounts. In order to retain certificates of deposit with balances of $100,000 or more, we may have to pay a premium rate, resulting in an increase in our cost of funds. In a rising rate environment, we may be unwilling or unable to pay a competitive rate. To the extent that such deposits do not remain with us, they may need to be replaced with borrowings, which could increase our cost of funds and negatively impact our interest rate spread and our financial condition.

The balance of deposits reported at June 30, 2014 included deposit balances with fair values totaling $86.1 million assumed in conjunction with the acquisition of Atlas Bank on June 30, 2014. Deposit balances assumed from Atlas Bank included non-interest-bearing and interest-bearing accounts totaling $14.6 million and $71.5 million respectively with the latter comprising interest-bearing checking accounts, savings accounts and certificates of deposit totaling $2.8 million, $31.4 million and $37.3 million, respectively. Kearny Bank also recognized a core deposit intangible of $398,000 in conjunction with the acquisition of Atlas Bank’s non-maturity deposits.

The balance of certificates of deposit assumed by Kearny Bank in conjunction with the acquisition of Atlas Bank included $6.4 million of predominantly short-term time deposits acquired by Atlas Bank through the QwickRate deposit listing service. In combination with the balance of longer-term time deposits we acquired through our relationship with QwickRate, the aggregate balance of “non-brokered” listing service deposits totaled $60.6 million, or 2.4% of deposits, at June 30, 2014.

The following table sets forth the distribution of average deposits for the periods indicated and the weighted average nominal interest rates for each period on each category of deposits presented.


	For the Years Ended June 30,
	2014								2013								2012
	Average Balance		Percent of Total Deposits			Weighted Average Nominal Rate			Average Balance		Percent of Total Deposits			Weighted Average Nominal Rate			Average Balance		Percent of Total Deposits			Weighted Average Nominal Rate
	(Dollars in Thousands)

Non-interest-bearing demand	$	196,490		8.30	%		0.00	%	$	172,954		8.04	%		0.00	%	$	145,458		6.78	%		0.00	%
Interest-bearing demand		722,999		30.53			0.52			494,625		23.00			0.37			454,166		21.19			0.59
Savings and club		473,917		20.01			0.16			445,470		20.72			0.20			414,560		19.34			0.33
Certificates of deposit		974,426		41.16			1.03			1,037,150		48.24			1.16			1,128,802		52.69			1.44


Total deposits	$	2,367,832		100.00	%		0.61	%	$	2,150,199		100.00	%		0.69	%	$	2,142,986		100.00	%		0.95	%

The following table sets forth certificates of deposit classified by interest rate as of the dates indicated.


	At June 30,
	2014		2013		2012
	(In Thousands)
Interest Rate
0.00-0.99%	$	618,650	$	544,763	$	516,645
1.00-1.99%		299,387		313,361		389,408
2.00-2.99%		100,596		119,309		165,132
3.00-3.99%		18,582		4,028		12,409
4.00-4.99%		3		3		16,091
5.00-5.99%		—		—		5,242


Total	$	1,037,218	$	981,464	$	1,104,927

The following table shows the amount of certificates of deposit of $100,000 or more by time remaining until maturity as of the date indicated.


	At June 30, 2014
	(In Thousands)
Maturity Period
Within three months	$	89,734
Three through six months		57,948
Six through twelve months		77,313
Over twelve months		251,637


Total	$	476,632

The following table sets forth the amount and maturities of certificates of deposit at June 30, 2014.


	Amount Due
	Within One Year		Over One Year to Two Years		Over Two Years to Three Years		Over Three Years to Four Years		Over Four Years to Five Years		Over Five Years		Total
	(In Thousands)
0.00-0.99%	$	480,131	$	120,354	$	17,439	$	564	$	162	$	—	$	618,650
1.00-1.99%		70,319		19,924		54,537		88,146		66,461		—		299,387
2.00-2.99%		29,875		36,220		18,102		2,211		14,188		—		100,596
3.00-3.99%		1,215		10,903		—		—		—		6,464		18,582
4.00-4.99%		3		—		—		—		—		—		3


Total	$	581,543	$	187,401	$	90,078	$	90,921	$	80,811	$	6,464	$	1,037,218

Borrowings . The sources of wholesale funding we utilize include borrowings in the form of advances from the FHLB of New York as well as other forms of borrowings. We generally use wholesale funding to manage our exposure to interest rate risk and liquidity risk in conjunction with our overall asset/liability management process. Toward that end, FHLB advances are primarily utilized to extend the duration of funding to partially offset the interest rate risk presented by our investment in longer-term fixed-rate loans and mortgage-backed securities. Extending the duration of funding may be achieved by simply utilizing fixed-rate borrowings with longer terms to maturity. Alternately, we may utilize derivatives such as interest rate swaps and caps in conjunction with either short-term fixed-rate or floating-rate borrowings to effectively extend the duration of those funding sources.

Advances from the FHLB are typically secured by our FHLB capital stock and certain investment securities as well as residential and multi-family mortgage loans that we choose to utilize as collateral for such borrowings. Additional information regarding our FHLB advances is included under Note 14 to the audited consolidated financial statements.

Short-term FHLB advances generally have original maturities of less than one year and include overnight borrowings which Kearny Bank typically utilizes to address short term funding needs as they arise. At June 30, 2014, we had a total of $320.0 million of short-term FHLB advances at a weighted average interest rate of 0.38%. Such advances included $300.0 million of 90-day FHLB term advances that are generally forecasted to be periodically redrawn at maturity for the same 90 day term as the original advance. Based on this presumption, we utilized interest rate swaps to effectively extend the duration of each of these advances at the time they were drawn to effectively fix their cost for a period of five years. Short-term advances at June 30, 2014 also included $17.0 million of overnight borrowings from the FHLB drawn for daily liquidity management purposes.

Also included in short-term FHLB advances at June 30, 2014 was a fixed-rate advance with a fair value of $3.0 million assumed in conjunction with our acquisition of Atlas Bank on June 30, 2014. The advance had a coupon of 0.35% and matured in July 2014.

Long-term advances generally include term advances with original maturities of greater than one year. At June 30, 2014, our outstanding balance of long-term FHLB advances totaled $161.5 million. Such advances included $145.0 million of advances at a weighted average interest rate of 3.04% as well as a $765,000 amortizing advance at a rate of 4.94%.

Also included in long-term FHLB advances at June 30, 2014 were four FHLB advances with fair values totaling $15.7 million assumed in conjunction with our acquisition of Atlas Bank on June 30, 2014. Such advances had a weighted average coupon of 1.11% and a weighted average remaining term of 2.6 years.

Our FHLB advances mature as follows:


Maturing in Years Ending June 30,	(In Thousands)
2015	$	320,000
2016		7,500
2017		3,000
2018		5,225
2021		765
2023		145,000

		481,490
Fair value adjustments		29

Total	$	481,519

Based upon the market value of investment securities and mortgage loans that are posted as collateral for FHLB advances at June 30, 2014, we are eligible to borrow up to an additional $327.2 million of advances from the FHLB as of that date. We are further authorized to post additional collateral in the form of other unencumbered investments securities and eligible mortgage loans that may expand our borrowing capacity with the FHLB up to 30% of our total assets. Additional borrowing capacity up to 50% of our total assets may be authorized with the approval of the FHLB’s Board of Directors or Executive Committee.

The balance of borrowings at June 30, 2014 also included overnight borrowings in the form of depositor sweep accounts totaling $30.7 million. Depositor sweep accounts are short-term borrowings representing funds that are withdrawn from a customer’s non-interest bearing deposit account and invested in an uninsured overnight investment account that is collateralized by specified investment securities owned by Kearny Bank.

Interest Rate Derivatives and Hedging

We utilize derivative instruments in the form of interest rate swaps and caps to hedge our exposure to interest rate risk in conjunction with our overall asset/liability management process. In accordance with accounting requirements, we formally designate all of our hedging relationships as either fair value hedges, intended to offset the changes in the value of certain financial instruments due to movements in interest rates, or cash flow hedges, intended to offset changes in the cash flows of certain financial instruments due to movement in interest rates, and documents the strategy for undertaking the hedge transactions and its method of assessing ongoing effectiveness.

At June 30, 2014, our derivative instruments are comprised entirely of interest rate swaps and caps with total notional amounts of $425.0 million and $75.0 million, respectively with Wells Fargo Bank, N.A. serving as the counterparty to each of the transactions. These instruments are intended to manage the interest rate exposure relating to certain wholesale funding positions drawn at June 30, 2014.

Additional information regarding our use of interest rate derivatives and our hedging activities is presented in Note 1 and Note 15 to the audited consolidated financial statements.

Subsidiary Activity

At June 30, 2014, Kearny Federal Savings Bank was the only wholly-owned operating subsidiary of Kearny Financial Corp. As of that date, Kearny Federal Savings Bank, had two wholly owned subsidiaries: KFS Financial Services, Inc. and CJB Investment Corp. KFS Financial Services, Inc. was incorporated as a New Jersey corporation in 1994 under the name of South Bergen Financial Services, Inc., was acquired in Kearny Bank’s merger with South Bergen Savings Bank in 1999 and was renamed KFS Financial Services, Inc. in 2000. It is a service corporation subsidiary originally organized for selling insurance products to Kearny Bank customers and the general public through a third party networking arrangement.

During the year ended June 30, 2014, KFS Insurance Services, Inc. was created as a wholly owned subsidiary of KFS Financial Services, Inc. for the primary purpose of acquiring insurance agencies. Both KFS Financial Services Inc. and KFS Insurance Services, Inc. were considered inactive during the year ended June 30, 2014.

CJB Investment Corp. was acquired by Kearny Bank through our acquisition of Central Jersey Bancorp in November 2010. CJB Investment Corp was organized under New Jersey law as a New Jersey Investment Company and remained active through the three-year period ended June 30, 2014.

In addition to the subsidiaries noted above, Kearny Bank dissolved its wholly owned subsidiary KFS Investment Corp. during fiscal 2014 which had remained inactive during the two years ended June 30, 2012 and 2013 and through the date of its dissolution during the year ended June 30, 2014.

Personnel

As of June 30, 2014, we had 410 full-time employees and 64 part-time employees equating to a total of 442 full time equivalent (“FTE”) employees. The number of employees at June 30, 2014 includes 19 full-time employees employed by Atlas Bank as of that date. By comparison, at June 30, 2013, we had 398 full-time employees and 55 part-time employees equating to a total of 426 FTEs. Our employees are not represented by a collective bargaining unit and we consider our working relationship with our employees to be good.

Properties

We conduct business from our administrative headquarters at 120 Passaic Avenue in Fairfield, New Jersey and 42 branch offices located in Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union Counties, New Jersey and Kings and Richmond Counties, New York. Eighteen of our offices are leased with remaining terms between one and fifteen years. At June 30, 2014, our net investment in property and equipment totaled $40.1 million. The following table sets forth certain information relating to our properties as of June 30, 2014. The net book values reported include our investment in land, building and/or leasehold improvements by property location.


Office Location	Year Opened	Net Book Value as of June 30, 2014 (In Thousands)		Square Footage		Owned/ Leased

Executive Office:
120 Passaic Avenue Fairfield, New Jersey	2004	$	10,203		53,000	Owned

Main Office:
614 Kearny Avenue Kearny, New Jersey	1928		887		6,764	Owned

Branches:
425 Route 9 & Ocean Gate Drive Bayville, New Jersey	1973		110		3,500	Leased

417 Bloomfield Avenue Caldwell, New Jersey	1968		267		4,400	Owned

20 Willow Street East Rutherford, New Jersey	1969		34		3,100	Owned

534 Harrison Avenue Harrison, New Jersey	1995		611		3,000	Owned

1353 Ringwood Avenue Haskell, New Jersey	1996		—		2,500	Leased

718B Buckingham Drive Lakewood, New Jersey	2008		7		2,800	Leased

630 North Main Street Lanoka Harbor, New Jersey	2005		1,911		3,200	Owned

307 Stuyvesant Avenue Lyndhurst, New Jersey	1970		114		3,300	Owned

270 Ryders Lane Milltown, New Jersey	1989		6		3,600	Leased

339 Main Road Montville, New Jersey	1996		2		1,850	Leased

119 Paris Avenue Northvale, New Jersey	1965		283		1,750	Owned

80 Ridge Road North Arlington, New Jersey	1952		97		3,500	Owned

510 State Highway 34 Old Bridge Township, New Jersey	2002		842		2,400	Owned

207 Old Tappan Road Old Tappan, New Jersey	1973		496		2,200	Owned

267 Changebridge Road Pine Brook, New Jersey	1974		198		3,600	Owned


Office Location	Year Opened	Net Book Value as of June 30, 2014 (In Thousands)		Square Footage		Owned/ Leased

917 Route 23 South Pompton Plains, New Jersey	2009		1,225		2,400	Leased

653 Westwood Avenue River Vale, New Jersey	1965		645		1,600	Owned

252 Park Avenue Rutherford, New Jersey	1974		1,456		1,984	Owned

520 Main Street Spotswood, New Jersey	1979		210		2,400	Owned

130 Mountain Avenue Springfield, New Jersey	1991		1,063		6,500	Owned

827 Fischer Boulevard Toms River, New Jersey	1996		559		3,500	Owned

2100 Hooper Avenue Toms River, New Jersey	2008		43		2,000	Leased

487 Pleasant Valley Way West Orange, New Jersey	1971		125		3,000	Owned

216 Main Street West Orange, New Jersey	1975		229		2,400	Owned

250 Valley Boulevard Wood-Ridge, New Jersey	1957		1,432		9,500	Owned

661 Wyckoff Avenue Wyckoff, New Jersey	2002		2,245		6,300	Owned

Central Jersey Division Branch Offices:

Administrative Offices & Branch
1903 Highway 35 Oakhurst, New Jersey	2008		407		15,200	Leased

301 Main Street Allenhurst, New Jersey	2011		432		3,600	Leased

611 Main Street Belmar, New Jersey	2002		19		3,200	Leased

501 Main Street Bradley Beach, New Jersey	2001		733		3,100	Owned

700 Branch Avenue Little Silver, New Jersey	2001		—		2,500	Leased

444 Ocean Boulevard North Long Branch, New Jersey	2004		—		1,500	Leased

627 Second Avenue Long Branch, New Jersey	1998		606		3,200	Owned

155 Main Street Manasquan, New Jersey	1998		—		3,000	Leased

300 West Sylvania Avenue Neptune City, New Jersey	2000		210		3,000	Leased

61 Main Street Ocean Grove, New Jersey	2002		2		2,800	Leased


Office Location	Year Opened	Net Book Value as of June 30, 2014 (In Thousands)		Square Footage		Owned/ Leased
2201 Bridge Avenue Point Pleasant, New Jersey	2001		24		3,500	Leased

700 Allaire Road Spring Lake Heights, New Jersey	1999		—		2,500	Leased

2200 Highway 35 Wall Township, New Jersey	1997		941		5,000	Owned

Atlas Bank Division Branch Offices:
689 Fifth Avenue Brooklyn, New York	1923		811		4,900	Owned

339 Sand Lane Staten Island, New York	2009		121		1,985	Leased

Legal Proceedings

We are, from time to time, party to routine litigation, which arises in the normal course of business, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. At June 30, 2014, there were no lawsuits pending or known to be contemplated against us that would be expected to have a material effect on operations or income.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. You should read the information in this section in conjunction with the business and financial information regarding Kearny-Federal and the financial statements provided in this prospectus.

Overview

Financial Condition . Total assets increased $364.6 million to $3.51 billion at June 30, 2014 from $3.15 billion at June 30, 2013. The increase was funded largely through growth in deposits and borrowings. The net growth in deposits was reflected in both non-interest bearing and interest-bearing deposits with the growth in the latter comprised of increases in savings accounts and certificates of deposit that were partially offset by a decline in interest-bearing checking. The growth in liabilities funded a net increase in earning assets reflecting growth in loans, non-mortgage-backed securities and other interest-earning assets that were partially offset by a decline in the balances of mortgage-backed securities.

We executed a series of balance sheet restructuring and wholesale growth transactions during the latter half of fiscal 2013 that resulted in both growth and diversification within the securities portfolio. Notwithstanding the near term effect of these transactions on the composition and allocation of our earning assets during fiscal 2013, it remains the long-term goal of our business plan to reallocate our balance sheet to reflect a greater percentage of earning assets in the loan portfolio while, in turn, reducing the relative size of the securities portfolio.

During fiscal 2014, loans receivable increased by $380.6 million to $1.74 billion, or 53.7% of earning assets, at June 30, 2014 from $1.36 billion or 47.1% of earning assets at June 30, 2013. For those same comparative periods, total securities decreased by $43.2 million to $1.36 billion, or 41.8% of earnings assets, at June 30, 2014 from $1.40 billion, or 48.4% of earning assets, at June 30, 2013.

Our business plan continues to call for increased origination of commercial loans with an emphasis on commercial mortgages, including multi-family and nonresidential mortgage loans, as well as secured and unsecured commercial business loans. During fiscal 2014, commercial loans grew by $313.5 million, or 42.5%, to $1.05 billion, or 60.3% of total loans, from $737.5 million, or 54.2% of total loans, at June 30, 2013. For those same comparative periods, one- to four-family mortgage loans, including first mortgages and home equity loans and lines of credit, increased by $72.2 million to $680.2 million, or 39.0% of total loans, from $608.1 million, or 44.7% of total loans.

The reported growth in loans for fiscal 2014 included loans with fair values totaling $78.7 million acquired in conjunction with the acquisition of Atlas Bank on June 30, 2014. The loans acquired from Atlas Bank primarily included one- to four-family and commercial mortgage loans totaling $72.8 million and $5.7 million, respectively, plus aggregate net deferred loan origination costs totaling $194,000 as of that date. Included in the loans acquired from Atlas Bank were four impaired residential mortgage loans whose aggregate carrying values at the time of acquisition totaled $742,000. We recognized no expectation for future credit losses in the valuation of the four impaired loans acquired from Atlas Bank.

We continued to diversify the composition and allocation of our securities portfolio during fiscal 2014. Non-mortgage-backed securities, including U.S. agency debentures, corporate bonds, single-issuer trust preferred securities, collateralized loan obligations, municipal obligations, and asset-backed securities increased to $624.3 million, or 46.0% of securities, at June 30, 2014 from $510.1 million, or 36.7% of securities, at June 30, 2013. For those same comparative periods, the balance of mortgage-backed securities, comprised primarily of U.S. government and agency pass-through securities and collateralized mortgage obligations, decreased by $148.9 million to $732.9 million, or 54.0% of securities, from $881.8 million, or 63.3% of securities.

The changes in the securities portfolio for fiscal 2014 included the addition of securities with fair values totaling $26.9 million acquired in conjunction with the acquisition of Atlas Bank on June 30, 2014. The securities acquired from Atlas Bank included mortgage-backed securities, including pass-through securities and collateralized

mortgage obligations, with fair values totaling $23.9 million as well as one corporate bond with a fair value of $3.0 million at June 30, 2014. All securities acquired from Atlas Bank were determined to be high-quality, investment grade securities with no “other-than-temporary” impairment.

For the year ended June 30, 2014, our total deposits increased by $109.4 million to $2.48 billion from $2.37 billion at June 30, 2013. As noted above, the growth in deposits was partly reflected in the growth of non-interest-bearing deposits which increased by $33.1 million during fiscal 2014. The remaining deposit growth was reflected in interest-bearing deposits which increased by $76.3 million to $2.26 billion at June 30, 2014. For the year ended June 30, 2014, within interest-bearing deposits, the balance of savings accounts and certificates of deposit increased by $51.9 million and $55.8 million, respectively. This growth was partially offset by a $31.3 million decline in the balance of interest-bearing checking accounts.

The balance of borrowings increased by $224.6 million to $512.3 million at June 30, 2014 from $287.7 million at June 30, 2013. The increase in borrowings largely reflected utilization of additional FHLB term advances to fund a portion of the loan growth reported during fiscal 2014. Interest rate derivatives were used to effectively extend duration of these borrowings for interest rate risk management purposes. The increase also reflected borrowings with fair values totaling $18.7 million assumed in conjunction with the Atlas Bank acquisition as well as a $12.0 million increase in overnight borrowings drawn for short-term liquidity management purposes.

Stockholders’ equity increased by $27.0 million to $494.7 million at June 30, 2014 from $467.7 million at June 30, 2013. The increase in stockholders’ equity was partly attributable to our issuance of common stock valued at $15.5 million as consideration paid to Kearny MHC for the acquisition of Atlas Bank, net income of $10.2 million for the fiscal year ended June 30, 2014, a reduction of unearned ESOP shares relating to the offsets of benefit plan expenses during the year and a net decrease in the unrealized loss of our available for sale securities portfolios. These were partially offset by an increase in treasury stock resulting from our share repurchase activity that was partially offset by the issuance of shares for the exercise of stock options during fiscal 2014.

Results of Operations. Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets and the interest we pay on our interest-bearing liabilities. It is a function of the average balances of loans and investments versus deposits and borrowed funds outstanding in any one period and the yields earned on those loans and investments and the cost of those deposits and borrowed funds. Our results of operations are also affected by our provision for loan losses, non-interest income and non-interest expense.

Net income for the fiscal year ended June 30, 2014 was $10.2 million or $0.16 per diluted share; an increase of $3.7 million from $6.5 million or $0.10 per diluted share for the fiscal year ended June 30, 2013. The increase in net income reflected an increase in net interest income and declines in non-interest expense and the provision for loan losses that were partially offset by a decline in non-interest income. These factors contributed to an overall increase in pre-tax net income and the provision for income taxes.

Our net interest income increased $7.5 million to $73.8 million for the year ended June 30, 2014 from $66.3 million for the year ended June 30, 2013. The increase in net interest income reflected a $7.5 million increase in interest income to $95.8 million from $88.3 million. The increase in interest income primarily reflected an increase in the average balance of interest-earning assets that was partially offset by a decline in their average yield. For the year ended June 30, 2014, the average balance of interest-earning assets increased by $376.3 million to $3.03 billion compared to $2.65 billion for the year ended June 30, 2013. For those same comparative periods, the average yield on interest-earning assets decreased by 16 basis points to 3.17% from 3.33%.

Interest expense remained generally stable at $22.0 million for the year ended June 30, 2014 and 2013. The nominal decrease in interest expense between the two periods reflected an increase in the average balance of

interest-bearing liabilities that was substantially offset by a decline in their average cost. For the year ended June 30, 2014 the average balance of interest-bearing liabilities increased by $360.8 million to $2.59 billion compared to $2.23 billion for the year ended June 30, 2013. For those same comparative periods, the average cost of interest-bearing liabilities decreased 14 basis points to 0.85% from 0.99%.

In total, the net interest rate spread decreased two basis points to 2.32% for fiscal 2014 from 2.34% for fiscal 2013 while the net interest margin decreased six basis points to 2.44% from 2.50% for those same comparative periods.

The provision for loan losses decreased $1.1 million to $3.4 million for fiscal 2014 from $4.5 million for fiscal 2013. The net decrease in the provision reflected the effects of recognizing comparatively lower provisions on loans evaluated individually for impairment. These decreases were partially offset by increases in provisions attributable to loans evaluated collectively for impairment due primarily to the overall growth within the non-impaired portion of the portfolio coupled with changes to certain environmental loss factors that were partially offset by decreases in historical loss factors.

Non-interest income decreased by $8.3 million to $8.1 million for fiscal 2014 from $16.4 million for fiscal 2013. The decrease in non-interest income primarily reflected a decline in gains on securities sold arising primarily from the comparatively higher levels recorded during fiscal 2013 in conjunction with the balance sheet restructuring transactions discussed earlier. The decrease also reflected a decline in the gain on sale of loans attributable to a decrease in SBA loan origination and sale volume during fiscal 2014. The decrease in non-interest income was partially offset by an increase in income attributable to our investment in bank-owned life insurance that was augmented by a decline on losses relating to write downs and sales of real estate owned. Other variances in non-interest income included decreases in loan-related and deposit-related fees and charges that were partially offset by an increase in other miscellaneous income primarily reflecting a gain on bargain purchase recorded in conjunction with the Atlas Bank acquisition.

Non-interest expense decreased by $5.2 million to $64.2 million for the year ended June 30, 2014 from $69.4 million for the year ended June 30, 2013. The decrease in non-interest expense primarily reflected the absence of any debt extinguishment expenses recognized during fiscal 2013 in conjunction with the balance sheet restructuring transactions discussed earlier for which no such expenses were recorded during fiscal 2014. This decrease in expense was partially offset by the recognition of non-recurring expenses included in equipment and systems expense, and to a lesser extent other categories of non-interest expense associated with the conversion of the primary core processing systems to Fiserv, Inc. during fiscal 2014. We also recognized non-recurring merger-related expenses during fiscal 2014 in conjunction with the acquisition of Atlas Bank. Less noteworthy operating increases in other categories of non-interest expense were reported in salaries and employee benefits, premises occupancy, advertising and marketing, deposit insurance expense and other miscellaneous expense.

The combined effects of these factors resulted in higher pre-tax net income and the provision for income taxes during fiscal 2014 compared with fiscal 2013. The increase in our effective income tax rate largely reflected the comparatively smaller portion of net income arising from tax favored sources, such as income from municipal obligations and bank-owned life insurance, during fiscal 2014 compared to fiscal 2013.

Recent Acquisition Activity. We completed the acquisition of Atlas Bank, a federal mutual savings bank headquartered in Brooklyn, New York, on June 30, 2014. As of June 30, 2014, Atlas Bank operated from its main retail banking office in Brooklyn and a branch in Staten Island, New York, and had assets with a fair value of $120.9 million and liabilities with fair values totaling $105.2 million. Atlas Bank had no stockholders, and therefore no merger consideration was paid to third parties. We issued 1,044,087 shares of Kearny-Federal common stock to Kearny MHC as consideration for the transaction. As the merger was completed on June 30, 2014, the transaction is reflected in the consolidated balance sheets and consolidated statements of operations at and for the relevant periods presented in this prospectus. The Atlas Bank merger is reflected in the “Pro Forma Data” section of this prospectus.

Critical Accounting Policies

Our accounting policies are integral to understanding the results reported. We describe them in detail in Note 1 to our audited consolidated financial statements. In preparing the audited consolidated financial statements,

management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses, the evaluation of securities impairment and the impairment testing of goodwill.

Allowance for Loan Losses. The allowance for loan losses is a valuation account that reflects our estimation of the losses in our loan portfolio to the extent they are both probable and reasonable to estimate. The balance of the allowance is generally maintained through provisions for loan losses that are charged to income in the period that estimated losses on loans are identified by our loan review system. We charge losses on loans against the allowance as such losses are actually incurred. Recoveries on loans previously charged-off are added back to the allowance.

As described in greater detail in the notes to audited consolidated financial statements, our allowance for loan loss calculation methodology utilizes a “two-tier” loss measurement process that is performed quarterly. Through the first tier of the process, we identify the loans that must be reviewed individually for impairment. Such loans generally include our larger and/or more complex loans including commercial mortgage loans, as well as our one- to four-family mortgage loans, home equity loans and home equity lines of credit. A reviewed loan is deemed to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Once a loan is determined to be impaired, management measures the amount of the estimated impairment associated with that loan which is generally defined as the amount by which the carrying value of a loan exceeds its fair value. We establish valuation allowances for loan impairments in the fiscal period during which they are identified. Impairments on individually evaluated loans generally are charged off against the applicable valuation allowance when they are determined to be confirmed, expected losses.

The second tier of the loss measurement process involves estimating the probable and estimable losses on loans not otherwise individually reviewed for impairment. Such loans generally comprise large groups of smaller-balance homogeneous loans as well as the remaining non-impaired loans of those types noted above that are otherwise eligible for individual impairment evaluation.

Valuation allowances established through the second tier of the loss measurement process utilize historical and environmental loss factors to collectively estimate the level of probable losses within defined segments of our loan portfolio. To calculate the historical loss factors, our allowance for loan loss methodology generally utilizes a 24-month moving average of annual net charge-off rates (charge-offs net of recoveries) by loan segment, where available, to calculate the actual, historical loss experience. The outstanding principal balance of each loan segment is multiplied by the applicable historical loss factor to estimate the level of probable losses based upon our historical loss experience.

Environmental loss factors are based upon specific qualitative criteria representing key sources of risk within the loan portfolio. Such risk criteria includes the level of and trends in nonperforming loans; the effects of changes in credit policy; the experience, ability and depth of the lending function’s management and staff; national and local economic trends and conditions; credit risk concentrations; changes in local and regional real estate values; changes in the nature, volume and terms of loans; changes in the quality of loan review systems and resources and the effects of regulatory, legal and other external factors. The outstanding principal balance of each loan segment is multiplied by the applicable environmental loss factor to estimate the level of probable losses based upon the qualitative risk criteria.

The sum of the probable and estimable loan losses calculated in accordance with loss measurement processes, as described above, represents the total targeted balance for our allowance for loan losses at the end of a fiscal period. A more detailed discussion of our allowance for loan loss calculation methodology is presented in Note 1 to our audited consolidated financial statements.

Impairment Testing of Goodwill. We record goodwill, representing the excess of amounts paid over the fair value of net assets of the institutions acquired in purchase transactions, at its fair value at the date of acquisition. Goodwill is tested and deemed impaired when the carrying value of goodwill exceeds its implied fair value. Goodwill was most recently tested as of June 30, 2014, at which time no impairment was indicated. As of that date, we reported goodwill of $108.6 million. The value of the goodwill can change in the future. We expect the value of the goodwill to decrease if there is a significant decrease in the franchise value of Kearny Bank. If an impairment is determined in the future, we will reflect the loss as an expense in the period in which the impairment is determined, leading to a reduction of our net income for that period by the amount of the impairment.

Other-than-Temporary Impairment (“OTTI”) of Securities. If the fair value of a security is less than its amortized cost, the security is deemed to be impaired. Management evaluates all securities with unrealized losses quarterly to determine if such impairments are “temporary” or “other-than-temporary” in accordance with applicable accounting guidance.

We account for temporary impairments based upon the classification of the related security as either available for sale, held to maturity or a trading. Temporary impairments on “available for sale” securities are recognized, on a tax-effected basis, through accumulated other comprehensive income with offsetting entries adjusting the carrying value of the security and the balance of deferred taxes. Conversely, we do not adjust the carrying value of “held to maturity” securities for temporary impairments, although information concerning the amount and duration of impairments on held to maturity securities is generally disclosed in periodic financial statements. The carrying value of securities held in a trading portfolio is adjusted to their fair value through earnings on a daily basis. However, we maintained no securities in trading portfolios at or during the periods presented in these financial statements.

We account for OTTI based upon several considerations. First, OTTI on securities that we have decided to sell as of the close of a fiscal period, or will, more likely than not, be required to sell prior to the full recovery of their fair value to a level equal to or exceeding their amortized cost, are recognized in earnings. If neither of these conditions regarding the likelihood of the security’s sale is applicable, then the OTTI is bifurcated into credit-related and noncredit-related components. A credit-related impairment generally represents the amount by which the present value of the cash flows that are expected to be collected on an other-than-temporarily impaired security fall below its amortized cost. The noncredit-related component represents the remaining portion of the impairment not otherwise designated as credit-related. We recognize credit-related, OTTI in earnings. However, noncredit-related, other-than-temporary impairments on debt securities are recognized in accumulated other comprehensive income.

Comparison of Financial Condition at June 30, 2014 and June 30, 2013

General. Total assets increased by $364.6 million to $3.51 billion at June 30, 2014 from $3.15 billion at June 30, 2013. The increase in total assets was primarily attributable to increases in the balances of loans, debt securities, FHLB stock and cash and cash equivalents that were partially offset by a decline in the balance of mortgage-backed securities. The net increase in total assets was complemented by increases in the balances of deposits, borrowings and stockholders’ equity.

Cash and Cash Equivalents. Cash and cash equivalents, which consist primarily of interest-earning and non-interest-earning deposits in other banks, increased by $8.0 million to $135.0 million at June 30, 2014 from $127.0 million at June 30, 2013. The increase in the balance largely reflected the addition of $9.1 million in cash and cash equivalents acquired in conjunction with the acquisition of Atlas Bank on June 30, 2014 with the remaining variance attributable to normal operating fluctuations in such balances.

Notwithstanding day-to-day fluctuations in cash and cash equivalents, we generally sought to maintain lower levels of cash and cash equivalents during the fiscal year ended June 30, 2014 to reduce the opportunity cost of excess liquidity. Management continues to monitor the level of short-term, liquid assets in relation to the expected need for such liquidity to fund our strategic initiatives – particularly those relating to the expansion of our commercial lending functions. We may alter our liquidity reinvestment strategies based upon the timing and relative success of those initiatives.

Debt Securities Available for Sale. Debt securities classified as available for sale increased by $107.8 million to $407.9 million at June 30, 2014 from $300.1 million at June 30, 2013. The net increase primarily reflected security purchases totaling $158.9 million during the year ended June 30, 2014 that were partially offset by security sales totaling $55.4 million during the same period. The security sales primarily reflected our decision to reduce our investment in certain collateralized loan obligations that may become ineligible investments under the terms of the “Volcker Rule” whose provisions were enacted by regulatory agencies during the quarter ended December 31, 2013 in conjunction with the ongoing adoption and implementation of the Dodd-Frank Act. Security purchases for the year partly reflected the reinvestment of these security sale proceeds into other eligible securities within the portfolio as well as the reinvestment of mortgage-backed security sale proceeds into shorter-duration investments within this segment of the portfolio.

In addition to the securities purchased, we also acquired a corporate debt security available for sale with a fair value of $3.0 million in conjunction with the Atlas Bank acquisition on June 30, 2014.

The net change in debt securities available for sale also reflected a decrease in the net unrealized loss within the portfolio coupled with repayments of principal attributable to amortization during the year ended June 30, 2014. The net unrealized loss for the portfolio decreased by $1.9 million to $3.3 million at June 30, 2014 from $5.2 million at June 30, 2013. The decrease in the net unrealized loss was primarily attributable to changes in the fair value of the various sectors within the portfolio arising primarily from movements in market interest rates.

At June 30, 2014, the available for sale debt securities portfolio included U.S. agency debentures, single-issuer trust preferred securities, corporate bonds, asset-backed securities, collateralized loan obligations and municipal obligations. Based on its evaluation, management has concluded that no other-than-temporary impairment is present within this segment of the investment portfolio as of that date.

Additional information regarding debt securities available for sale at June 30, 2014 is presented in the “Business of Kearny Bank” section of this prospectus as well as in Note 5 and Note 7 to the audited consolidated financial statements.

Debt Securities Held to Maturity. Debt securities classified as held to maturity increased by $6.4 million to $216.4 million at June 30, 2014 from $210.0 million at June 30, 2013. The net increase primarily reflected purchases of municipal obligations totaling $9.1 million during the year ended June 30, 2014 that were partially offset by repayments, calls and maturities of such securities during that same period.

At June 30, 2014, the held to maturity debt securities portfolio included U.S. agency debentures and municipal obligations, a small portion of which represent non-rated, short term, bond anticipation notes (“BANs”) issued by New Jersey municipalities with whom Kearny Bank maintains or seeks to maintain deposit relationships. Based on its evaluation, management has concluded that no other-than-temporary impairment is present within this segment of the investment portfolio as of that date.

Additional information regarding debt securities held to maturity at June 30, 2014 is presented in the “Business of Kearny Bank” section of this prospectus as well as in Note 6 and Note 7 to the audited consolidated financial statements.

Loans Receivable. Loans receivable, net of unamortized premiums, deferred costs and the allowance for loan losses, increased by $379.1 million to $1.73 billion at June 30, 2014 from $1.35 billion at June 30, 2013. The increase in net loans receivable was primarily attributable to new loan origination, purchase and acquisition volume outpacing loan repayments during the year ended June 30, 2014.

Residential mortgage loans, including home equity loans and lines of credit, increased by $72.2 million to $680.2 million at June 30, 2014 from $608.1 million at June 30, 2013. The components of the net increase included an increase in the balance of one- to four-family first mortgage loans of $80.0 million to $580.6 million at June 30, 2014 from $500.6 million at June 30, 2013. Partially offsetting this increase was a net reduction in the balance of home equity loans of $5.2 million to $75.6 million at June 30, 2014 from $80.8 million for those same comparative periods. Additionally, the balance of home equity lines of credit decreased by $2.6 million to $24.0 million at June 30, 2014 from $26.6 million at June 30, 2013.

Residential mortgage loan activity for the year ended June 30, 2014 continued to reflect our decreased strategic focus on residential mortgage lending coupled with the combined effects of an increase in mortgage rates from their historical lows that has slowed the pace of refinancing and the diminished level of demand for “new purchase” mortgages reflecting continued weakness in the economy. Moreover, as a portfolio lender cognizant of potential exposure to interest rate risk, we have generally refrained from lowering our long-term, fixed-rate residential mortgage rates to the levels available in the marketplace. Consequently, a portion of our residential mortgage borrowers may continue to seek long-term, fixed-rate refinancing opportunities from other market resources further limiting growth within this segment of the loan portfolio.

In total, residential mortgage loan origination and purchase volume for the year ended June 30, 2014 was $78.2 million and $22.4 million, respectively, while aggregate originations of home equity loans and home equity lines of credit totaled $29.0 million for that same period. In addition to the loans originated and purchased, we also acquired residential mortgage loans with fair values totaling $72.8 million in conjunction with the Atlas Bank acquisition on June 30, 2014.

Commercial loans, in aggregate, increased by $313.5 million to $1.05 billion at June 30, 2014 from $737.5 million at June 30, 2013. The components of the aggregate increase included an increase in commercial mortgage loans totaling $316.9 million that was partially offset by a decline in commercial business loans of $3.4 million. The ending balances of commercial mortgage loans and commercial business loans at June 30, 2014 were $983.8 million and $67.3 million, respectively. Commercial loan origination volume for the year ended June 30, 2014 totaled $358.4 million comprising $334.3 million and $24.1 million of commercial mortgage and commercial business loan originations, respectively. Commercial loan originations were augmented with the purchase of participations in commercial mortgage loans and commercial business loans totaling $87.0 million and $4.9 million, respectively, during the year ended June 30, 2014. In addition to the loans originated and purchased, we also acquired commercial mortgage loans with fair values totaling $5.7 million in conjunction with the Atlas Bank acquisition on June 30, 2014.

The outstanding balance of construction loans, net of loans-in-process, decreased by $4.6 million to $7.3 million at June 30, 2014 from $11.9 million at June 30, 2013. Construction loan disbursements for the year ended June 30, 2014 totaled $3.8 million.

Other loans, primarily comprising account loans, deposit account overdraft lines of credit and other consumer loans, increased $60,000 to $4.3 million at June 30, 2014. Other loan originations for the year ended June 30, 2014 totaled approximately $2.3 million.

Additional information regarding loans receivable at June 30, 2014 is presented in the “Business of Kearny Bank” section of this prospectus as well as in Note 8 to the audited consolidated financial statements.

Nonperforming Loans. At June 30, 2014, nonperforming loans decreased by $5.6 million to $25.3 million or 1.45% of total loans from $30.9 million or 2.27% of total loans as of June 30, 2013. The balance of nonperforming loans at June 30, 2014 included $25.2 million and $125,000 of “nonaccrual” loans and loans reported as “over 90 days past due and accruing”, respectively. By comparison, the balance of nonperforming loans at June 30, 2013 was comprised entirely of “nonaccrual” loans.

The composition of nonperforming loans at June 30, 2014 continued to include a disproportionate balance of residential mortgage loans originally acquired from Countrywide Home Loans, Inc. (“Countrywide”) which continue to be serviced by their acquirer, Bank of America through its subsidiary, BAC Home Loans Servicing, LP (“BOA”). In total, nonperforming Countrywide loans totaled $8.4 million, or 33.2% of total nonperforming loans, at June 30, 2014. As of that same date, we owned a total of 77 residential mortgage loans with an aggregate outstanding balance of $33.3 million that were originally acquired from Countrywide. Of these loans, an additional two loans totaling $866,000 are 30-89 days past due and are in various stages of collection.

Additional information about our nonperforming loans at June 30, 2014 is presented in the “Business of Kearny Bank” section as well as in Note 9 to the audited consolidated financial statements.

Allowance for Loan Losses. During the year ended June 30, 2014, the balance of the allowance for loan losses increased by approximately $1.5 million to $12.4 million or 0.71% of total loans at June 30, 2014 from $10.9 million or 0.80% of total loans at June 30, 2013. The increase resulted from provisions of $3.4 million during the year ended June 30, 2014 that were partially offset by charge-offs, net of recoveries, totaling approximately $1.9 million.

Additional information about the allowance for loan losses at June 30, 2014 is presented in the “Business of Kearny Bank” section of this prospectus as well as in Note 1 and Note 9 to the audited consolidated financial statements.

Mortgage-backed Securities Available for Sale. Mortgage-backed securities available for sale decreased by $343.4 million to $437.2 million at June 30, 2014 from $780.7 million at June 30, 2013. The net decrease partly reflected sales of securities totaling $114.0 million during the year ended June 30, 2014 partially offset by purchases totaling $50.2 million during the same period. A portion of the proceeds from mortgage-backed security sales were used to fund loan growth during the period. The remainder was used to fund purchases of short-duration debt securities, as noted above, as well as fixed-rate, agency securities including 30-year pass-through securities that were acquired based upon their Community Reinvestment Act eligibility.

The net decrease in mortgage-backed securities available for sale also reflected cash repayment of principal, net of discount accretion and premium amortization as well as the transfer of securities with fair values of $191.9 million from the available-for-sale portfolio to the held-to-maturity portfolio during the year ended June 30, 2014. The transferred securities were limited to those that we fully intend to hold until maturity including our agency mortgage-backed securities qualifying for Community Reinvestment Act eligibility and those comprising securitized commercial real estate project loans. The net decrease in the portfolio was partially offset by an increase in the fair value of the applicable securities resulting in an unrealized gain in the portfolio at June 30, 2014 from an unrealized loss at June 30, 2013.

In addition to the securities purchased, we also acquired mortgage-backed securities available for sale with a fair value of $23.9 million in conjunction with the Atlas Bank acquisition on June 30, 2014.

At June 30, 2014, the available for sale mortgage-backed securities portfolio primarily included agency pass-through securities and agency collateralized mortgage obligations. As of that date, the portfolio included one non-agency mortgage-backed security acquired from Atlas Bank with a fair value of $210,000. Based on its evaluation, management has concluded that no other-than-temporary impairment is present within this segment of the investment portfolio as of that date.

Additional information regarding mortgage-backed securities available for sale at June 30, 2014 is presented in the “Business of Kearny Bank” section of this prospectus as well as in Note 5 and Note 7 to the audited consolidated financial statements.

Mortgage-backed Securities Held to Maturity. Mortgage-backed securities held to maturity increased by $194.6 million to $295.7 million at June 30, 2014 from $101.1 million at June 30, 2013. The increase in the portfolio was primarily attributable to the transfer of securities with fair values of $191.9 million from the available-for-sale portfolio to the held-to-maturity portfolio during the year ended June 30, 2014. The increase in the portfolio also reflected purchases of securities totaling $5.1 million. Partially offsetting these increases was cash repayment of principal, net of discount accretion and premium amortization, coupled with the sale of one non-agency collateralized mortgage obligation whose credit quality had deteriorated below investment grade making it eligible for sale from the held to maturity portfolio.

At June 30, 2014, the held to maturity mortgage-backed securities portfolio primarily included agency pass-through securities and agency collateralized mortgage obligations. As of that date, we also held a nominal balance of non-agency mortgage-backed securities whose aggregate carrying values and market values totaled $54,000 and $53,000, respectively. Based on its evaluation, management has concluded that no other-than-temporary impairment is present within this segment of the investment portfolio as of that date.

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Additional information regarding mortgage-backed securities held to maturity at June 30, 2014 is presented in the “Business of Kearny Bank” section of this prospectus as well as in Note 6 and Note 7 to the audited consolidated financial statements.

Other Assets. The aggregate balance of other assets, including premises and equipment, FHLB stock, accrued interest receivable, goodwill, bank owned life insurance, deferred income taxes and other miscellaneous assets, increased by $12.3 million to $288.7 million at June 30, 2014 from $276.4 million at June 30, 2013. The increase in other assets largely reflected a $10.3 million increase in the investment in FHLB stock that primarily reflected the increase in our mandatory investment attributable to the corresponding increase in the balance of borrowings with the FHLB. The change in other assets also reflected a $2.7 million increase in the cash surrender value of our bank owned life insurance during fiscal 2014.

In addition to the increases noted above, the balance of other assets also reflected the addition of premises and equipment, FHLB stock and other miscellaneous assets totaling $2.2 million, $1.0 million and $3.0 million, respectively, acquired in conjunction with the acquisition of Atlas Bank on June 30, 2014.

The balance of real estate owned (“REO”), included in other assets, decreased by $437,000 to $1.6 million at June 30, 2014 from $2.1 million at June 30, 2013 representing the net carrying values of seven and eight properties held at the close of each period, respectively.

The remaining increases and decreases in other assets generally comprised normal growth or operating fluctuations in their respective balances.

Deposits. The balance of total deposits increased by $109.4 million to $2.48 billion at June 30, 2014 from $2.37 billion at June 30, 2013. The net increase in deposit balances reflected a $76.3 million increase in interest-bearing deposits as well as an increase of $33.1 million in non-interest-bearing checking accounts. The net increase in interest-bearing deposit accounts comprised a $51.9 million increase in savings and club accounts coupled with a $55.8 million increase in certificates of deposit. These increases were partially offset by a $31.3 million decline in interest-bearing checking accounts.

A portion of the net growth in deposits reflected balances with fair values totaling $86.1 million assumed in conjunction with the acquisition of Atlas Bank on June 30, 2014. Deposit balances assumed from Atlas Bank included non-interest-bearing and interest-bearing accounts totaling $14.6 million and $71.5 million, respectively, with the latter comprising interest-bearing checking accounts, savings accounts and certificates of deposit totaling $2.8 million, $31.4 million and $37.3 million, respectively. In addition to the deposits assumed from Atlas Bank, the change in deposit balances from year to year reflected changes in the balances of retail deposits as well as “non-retail” deposits acquired through various wholesale channels. The decline in the balance of interest-bearing checking accounts included a $16.1 million decrease in the balance of brokered money market deposits acquired through Promontory’s IND program to $213.5 million at June 30, 2014 from $229.6 million at June 30, 2013. The terms of the program generally establish a reciprocal commitment for Promontory to deliver and us to accept such deposits for a period of no less than five years during which time total aggregate balances shall be maintained within a range of $200.0 million to $230.0 million. Such deposits are generally sourced by Promontory from large retail and institutional brokerage firms whose individual clients seek to have a portion of their investments held in interest-bearing accounts at FDIC-insured institutions. The remaining decline in interest-bearing checking accounts reflected the combined effects of retail deposit outflows and disintermediation into other interest-bearing deposit accounts.

The certificates of deposit assumed in conjunction with the acquisition of Atlas Bank included $6.4 million of predominantly short-term time deposits originally acquired by Atlas Bank through the QwickRate deposit listing service. Separate from the acquisition of Atlas Bank, Kearny Bank also began to utilize the QwickRate deposit listing service during fiscal 2014 to attract “non-brokered” wholesale time deposits targeting institutional investors with a three-to-five year investment horizon. The balance of the time deposits acquired by Kearny Bank during fiscal 2014 through the QwickRate listing service totaled $54.2 million at June 30, 2014 with such funds having a weighted average remaining term to maturity of 3.9 years. In combination with the balance of deposits assumed in conjunction with the Atlas Bank acquisition, the aggregate balance of “non-brokered” listing service deposits totaled $60.6 million or 2.4% of deposits at June 30, 2014.

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Kearny Bank also acquired a small portfolio of longer-term, brokered certificates of deposit during fiscal 2014 whose balances totaled approximately $18.5 million at June 30, 2014. In combination with Promontory IND money market deposits noted above, Kearny Bank’s brokered deposits totaled $232.0 million or 9.7% of deposits at June 30, 2014.

The growth in certificates of deposit acquired through wholesale sources and those assumed from Atlas Bank were partially offset by a net decline in other retail time deposit balances that largely reflected our efforts to manage our cost of deposits which allowed for some controlled outflow of shorter-term time deposits during the year. However, we did maintain our attractive offering rates on certain longer-term time deposits during fiscal 2014 which continued to attract retail funding within the four-to-five year maturity tranches and supported our larger goal of extending the duration of time deposits for interest rate risk management purposes.

Finally, the increase in savings and club accounts largely reflected growth in retail core deposits coupled with the effects of the deposits assumed from Atlas Bank. A portion of this growth represented disintermediation from other interest-bearing deposit accounts during fiscal 2014.

Borrowings. The balance of borrowings increased by $224.6 million to $512.3 million at June 30, 2014 from $287.7 million at June 30, 2013. The reported increase primarily reflected an additional $200.0 million of FHLB advances drawn primarily to fund a portion of our loan growth during the year. For interest rate risk management purposes, we have utilized interest rate derivatives to effectively swap the rolling 90-day maturity/repricing characteristics of the new borrowings into a fixed rate for five years. The increase also reflected borrowings with fair values totaling $18.7 million assumed in conjunction with the Atlas Bank acquisition on June 30, 2014 as well as a $12.0 million increase in overnight borrowings to an outstanding balance of $17.0 million at June 30, 2014 which were drawn for short-term liquidity management purposes.

The change in borrowing balances also reflected a $6.1 million decline in the balance of customer sweep accounts to $30.7 million at June 30, 2014, from $36.8 million at June 30, 2013. Sweep accounts are short-term borrowings representing funds that are withdrawn from a customer’s non-interest-bearing deposit account and invested in an uninsured overnight investment account that is collateralized by specified investment securities we own.

Other Liabilities. The balance of other liabilities, including advance payments by borrowers for taxes and other miscellaneous liabilities, increased by $3.6 million to $23.1 million at June 30, 2014 from $19.5 million at June 30, 2013. The increase in other liabilities reflected normal operating fluctuations in such balances coupled with the assumption of other liabilities totaling $421,000 in conjunction with the Atlas Bank acquisition on June 30, 2014.

Stockholders’ Equity. Stockholders’ equity increased by $27.0 million to $494.7 million at June 30, 2014 from $467.7 million at June 30, 2013. The increase in stockholders’ equity was partly attributable to our issuance of 1,044,087 shares of our common stock valued at $15.5 million as consideration paid to Kearny MHC for the acquisition of Atlas Bank. The increase also reflected net income of $10.2 million for the fiscal year ended June 30, 2014 coupled with a reduction of unearned ESOP shares relating to the offsets of benefit plan expenses during the year. The increase in stockholders’ equity also reflected a net decrease in the unrealized loss on our available for sale securities portfolios whose changes in fair value are reflected in accumulated other comprehensive income on an after tax basis.

The increase in stockholders’ equity was partially offset by a net increase of $2.8 million in treasury stock which partly reflected our repurchase of 394,580 shares of our common stock during the period at an average price of $10.48 per share. The increase in treasury stock due to share repurchases was partially offset by the issuance of 117,618 shares at an average cost of $11.48 per share resulting from the exercise of employee stock options during the year.

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Comparison of Operating Results for the Years Ended June 30, 2014 and June 30, 2013

General . Net income for the year ended June 30, 2014 was $10.2 million or $0.16 per diluted share; an increase of $3.7 million compared to $6.5 million or $0.10 per diluted share for the year ended June 30, 2013. The increase in net income between comparative periods reflected an increase in net interest income and decreases in non-interest expense and provision for loan losses that were partially offset by a decline in non-interest income. These factors contributed to an overall increase in pre-tax net income and the provision for income taxes.

Net Interest Income . Net interest income for the year ended June 30, 2014 was $73.8 million; an increase of $7.5 million from $66.3 million for the year ended June 30, 2013. The increase in net interest income between the comparative periods resulted primarily from an increase in interest income that was augmented by a nominal decline in interest expense. The increase in interest income was primarily attributable to an increase in the average balance of interest-earning assets that was partially offset by a decline in their average yield. The nominal decline in interest expense resulted from the largely offsetting effects of an increase in the average balance of interest-bearing liabilities and concurrent decline in their average cost. Declines in average yields and costs between comparative periods continued to reflect the effects of low interest rates that were prevalent in the marketplace throughout most of fiscal 2014.

As a result of these factors, our net interest rate spread decreased two basis points to 2.32% for the year ended June 30, 2014 from 2.34% for the year ended June 30, 2013. The decrease in the net interest rate spread reflected a 16 basis point decline in the yield on earning assets to 3.17% from 3.33% that was partially offset by a decrease in the average cost of interest-bearing liabilities of 14 basis points to 0.85% from 0.99% for the same comparative periods. A discussion of the factors contributing to the overall change in yield on earning assets and average cost of interest-bearing liabilities is presented in the separate discussion and analysis of interest income and interest expense below.

The factors resulting in the decrease in net interest income and net interest rate spread also adversely affected our net interest margin. However, additional factors further impacted net interest margin including, but not limited to, the use of interest-earning assets to fund additions to treasury stock during fiscal 2014. In total, we reported a six basis point decline in net interest margin to 2.44% for the year ended June 30, 2014 from 2.50% for the year ended June 30, 2013.

Interest Income . Total interest income increased $7.5 million to $95.8 million for the year ended June 30, 2014 from $88.3 million for the year ended June 30, 2013. The increase in interest income reflected an increase in the average balance of interest-earning assets that was partially offset by a decline in their average yield. The average balance of interest-earning assets increased by $376.3 million to $3.03 billion for the year ended June 30, 2014 from $2.65 billion for the year ended June 30, 2013. For those same comparative periods, the average yield on interest-earning assets declined 16 basis points to 3.17% from 3.33%.

Interest income from loans increased $5.3 million to $66.8 million for the year ended June 30, 2014 from $61.5 million for the year ended June 30, 2013. The increase in interest income on loans was attributable to a net increase in the average balance of loans that was partially offset by decline in their average yield.

The average balance of loans increased by $239.7 million to $1.55 billion for the year ended June 30, 2014 from $1.31 billion for the year ended June 30, 2013. The reported increase in the average balance of loans primarily reflected an aggregate increase of $277.4 million in the average balance of commercial loans to $921.0 million for the year ended June 30, 2014 from $643.6 million for the year ended June 30, 2013. Our commercial loans generally comprise commercial mortgage loans, including multi-family and nonresidential mortgage loans, as well as secured and unsecured commercial business loans.

The increase in the average balance of commercial loans was partially offset by decreases in the average balances of residential mortgage loans and construction loans. The average balance of residential mortgage loans decreased by $31.0 million to $615.2 million for the year ended June 30, 2014 from $646.2 million for the year ended June 30, 2013. Our residential mortgages generally comprise one- to four-family first mortgage loans, home equity loans and home equity lines of credit. For those same comparative periods, the average balance of construction loans decreased by $6.5 million to $9.5 million from $16.0 million.

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The change in the average balance of loans also reflected an $89,000 increase in the average balance of consumer loans to $4.5 million for the year ended June 30, 2014 from $4.4 million for the year ended June 30, 2013.

The effect on interest income attributable to the net increase in the average balance of loans was partially offset by the noted decrease in their average yield. The average yield on loans decreased by 39 basis points to 4.31% for the year ended June 30, 2014 from 4.70% for the year ended June 30, 2013. The reduction in the overall yield on our loan portfolio partly reflects the effect of lower market interest rates which provides “rate reduction” refinancing incentive to existing borrowers while also contributing to the downward re-pricing of adjustable rate loans. Additionally, the average yield on newly originated loans that have provided the incremental growth in the portfolio during fiscal 2014 reflects the historically low interest rates prevalent in the marketplace which further reduces the overall yield of the loan portfolio.

Interest income from mortgage-backed securities decreased by $2.9 million to $20.8 million for the year ended June 30, 2014 from $23.7 million for the year ended June 30, 2013. The decrease in interest income reflected a decrease in the average balance of mortgage-backed securities that was partially offset by an increase in their average yield.

The average balance of mortgage-backed securities decreased by $217.2 million to $803.2 million for the year ended June 30, 2014 from $1.02 billion for the year ended June 30, 2013. The decrease in the average balance of mortgage-backed securities largely reflects principal repayments and security sales that outpaced the level of security purchases between comparative periods.

For those same comparative periods, the average yield on mortgage-backed securities increased by 27 basis points to 2.59% from 2.32%. The increase in the overall yield of the mortgage-backed securities portfolio partly reflected the comparatively higher yields of securities purchased during the year reflecting a modest increase in market interest rates between comparative periods. However, the increase in yield also reflected a decrease in purchased premium amortization during fiscal 2014 resulting from a decline in loan prepayments attributable to the noted increase in market rates and the resulting decline in “rate reduction” refinancing incentive to mortgagors.

Interest income from debt securities increased by $4.9 million to $7.2 million for the year ended June 30, 2014 from $2.3 million for the year ended June 30, 2013. The increase in interest income reflected an increase in the average balance of debt securities augmented by an increase in their average yield. The average balance of debt securities increased $359.7 million to $541.4 million for the year ended June 30, 2014 from $181.7 million for the year ended June 30, 2013. For those same comparative periods, the average yield of debt securities increased seven basis points to 1.33% from 1.26%.

The increase in the average balance of debt securities was partly attributable to a $286.0 million increase in the average balance of taxable securities to $446.6 million for the year ended June 30, 2014 from $160.6 million for the year ended June 30, 2013. For those same comparative periods, the average balance of tax-exempt securities increased by $73.7 million to $94.7 million from $21.1 million.

The increase in the average yield on debt securities reflected a three basis point increase in the yield on taxable securities to 1.20% during the year ended June 30, 2014 from 1.17% during the year ended June 30, 2013. For those same comparative periods, the yield on tax-exempt securities decreased one basis point to 1.94% from 1.95%.

Interest income from other interest-earning assets increased by $243,000 to $1.0 million for the year ended June 30, 2014 from $775,000 for the year ended June 30, 2013 reflecting an increase in the average yield that was partially offset by a decline in the average balance. The average yield of other interest-earning assets increased by 21 basis points to 0.76% for the year ended June 30, 2014 from 0.55% for the year ended June 30, 2013. For those same comparative periods, the average balance of other interest-earning assets decreased by $5.8 million to $133.9 million from $139.7 million.

The changes in the average balance and average yield on other interest-earning assets between comparative periods partly reflects the reinvestment of a portion of our excess liquidity that had been maintained during the

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earlier comparative period into FHLB stock, included in other interest-earning assets, as well as other investments included in our securities portfolios. Such reinvestment reduced the average balance of interest-earning cash which generally represents the lowest yielding asset within this category of interest-earning assets.

Interest Expense . Total interest expense remained stable at approximately $22.0 million for the years ended June 30, 2014 and June 30, 2013 reflecting a $3,000 decrease between comparative periods. As noted earlier, the nominal decline in interest expense resulted from the largely offsetting effects of an increase in the average balance of interest-bearing liabilities and concurrent decline in their average cost. The average balance of interest-bearing liabilities increased by $360.8 million to $2.59 billion for the year ended June 30, 2014 from $2.23 billion for the year ended June 30, 2013. For those same comparative periods, the average cost of interest-bearing liabilities declined 14 basis points to 0.85% from to 0.99%.

Interest expense attributed to deposits decreased by $173,000 to $14.5 million for the year ended June 30, 2014 from $14.7 million for the year ended June 30, 2013. The decrease in interest expense was attributable to a decline in the average cost of interest-bearing deposits that was partially offset by an increase in their average balance.

The cost of interest-bearing deposits declined by seven basis points to 0.67% for the year ended June 30, 2014 from 0.74% for the year ended June 30, 2013. The net decrease in the average cost was reflected in the declines in the average cost of savings and club accounts and certificates of deposit that were partially offset by an increase in the average cost of interest-bearing checking accounts. For the comparative periods noted, the average cost of savings and club accounts decreased four basis points to 0.16% from 0.20% and the average cost of certificates of deposit declined 13 basis points to 1.03% from 1.16% while the average cost of interest-bearing checking accounts increased by 15 basis points to 0.52% from 0.37%.

The decreases in the average cost of savings and club accounts and certificates of deposit largely reflected the effects of low market interest rates on deposit pricing throughout fiscal 2014 which also affected the pricing applicable to retail interest-bearing checking accounts. However, these effects were more than offset by the comparatively higher average cost of brokered money market deposits reported in interest-bearing checking throughout fiscal 2014.

The average balance of interest-bearing deposits increased by $194.1 million to $2.17 billion for the year ended June 30, 2014 from $1.98 billion for the year ended June 30, 2013. The net increase in the average balance was reflected in an increase in the average balances of interest-bearing checking accounts and savings and club accounts that were partially offset by a decrease in the average balance of certificates of deposit. For the comparative periods noted, the average balance of interest bearing checking accounts increased by $228.4 million to $723.0 million from $494.6 million and the average balance of savings and club accounts increased $28.4 million to $473.9 million from $445.5 million while the average balance of certificates of deposit decreased by $62.7 million to $974.4 million from $1.04 billion.

Interest expense attributed to borrowings increased by $170,000 to $7.5 million for the year ended June 30, 2014 from $7.3 million for the year ended June 30, 2013. The increase in interest expense on borrowings primarily reflected an increase in their average balance that was partially offset by a decrease in their average cost. The average balance of borrowings increased by $166.7 million to $420.3 million for the year ended June 30, 2014 from $253.6 million for the year ended June 30, 2013. For those same comparative periods, the average cost of borrowings declined 110 basis points to 1.77% from 2.87%.

The increase in the average balance of borrowings largely reflected a $169.5 million increase in the average balance of FHLB advances which increased to $387.6 million for the year ended June 30, 2014 from $218.1 million for the year ended June 30, 2013. For those same comparative periods, the average cost of FHLB advances decreased 137 basis points to 1.88% from 3.25%. The noted increase in the average balance of FHLB advances was partially offset by a $2.8 million decrease in the average balance of other borrowings, comprised primarily of depositor sweep accounts, to $32.7 million from $35.5 million. The average cost of sweep accounts declined four basis points to 0.50% from 0.54% for those same comparative periods.

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Provision for Loan Losses . The provision for loan losses decreased $1.1 million to $3.4 million for the year ended June 30, 2014 from $4.5 million for the year ended June 30, 2013. The net decrease in the provision partly reflected the effects of recognizing comparatively lower provisions on loans evaluated individually for impairment. These decreases were partially offset by increases in provisions attributable to loans evaluated collectively for impairment using historical and environmental loss factors. Such increases largely reflected the comparatively greater growth within the non-impaired portion of the portfolio during fiscal 2014 as well as the effects of updates to historical and environmental loss factors in accordance with our allowance for loan loss calculation methodology.

Additional information regarding the allowance for loan losses and the associated provisions recognized during the year ended June 30, 2014 is presented in the “Business of Kearny Bank” section of this prospectus as well as in Note 1 and Note 9 to the audited consolidated financial statements.

Non-Interest Income . Non-interest income, excluding gains and losses on the sale of securities and REO, increased by $311,000 to $7.0 million for the year ended June 30, 2014 from $6.7 million for the year ended June 30, 2013. The increase in non-interest income, excluding securities and REO gains and losses, was partly attributable to a $769,000 increase in income from bank owned life insurance resulting primarily from an increase in our average balance between periods. The increase in non-interest income also reflected a $93,000 increase in miscellaneous income that reflected a $226,000 bargain purchase gain recorded in conjunction with the Atlas Bank acquisition. This gain was partially offset by the absence of a $100,000 gain reported during the earlier comparative period related to the sale of a parcel of vacant land adjacent to one of our branches as well as other less noteworthy variances in miscellaneous income.

These noted increases in non-interest income were partially offset by a $477,000 decline in loan sale gains to $80,000 for the year ended June 30, 2014 from $557,000 for the year ended June 30, 2013 attributable to a decline the volume of SBA loan originations and sales during fiscal 2014. We continue to evaluate strategies to increase the origination and sales volume of SBA loans and expect such volumes to increase during fiscal 2015.

Less noteworthy variances in non-interest income included net a decrease in loan-related fees and charges that primarily reflected a decline in loan prepayment charges as well as a decline in deposit-related fees and charges that primarily reflected our temporary waiver of certain fees and charges to support our customer service objectives during the core processing system conversion completed during fiscal 2014.

For the year ended June 30, 2014, net REO sale and write down losses totaled $441,000 compared to $775,000 for the year ended June 30, 2013 with losses during both comparative periods being primarily attributed to reducing the carrying value of various REO properties to reflect reductions in expected sales prices below the fair values at which the properties were previously being carried. Where applicable, such losses were partially offset by REO sale gains.

Finally, non-interest income during the year ended June 30, 2014 reflected net gains on the sale of securities totaling $1.5 million attributable to the sale of $55.4 million of debt securities and $114.0 million of mortgage-backed securities during the period.

By comparison, we reported $10.4 million of security sale gains reported during the year ended June 30, 2013 attributable to the sale of mortgage-backed securities totaling approximately $432.4 million during the prior year. The securities sold during fiscal 2013 included $330.0 million of agency mortgage-backed securities sold in conjunction with the restructuring transaction noted earlier through which we recognized $9.1 million in gains on sale. Those sale gains were augmented by an additional $1.3 million of sale gains resulting from the sale of an additional $102.3 million of agency mortgage-backed securities during the year that were separate from the restructuring transaction.

The sale gains during the current year were partially offset by losses totaling $6,000 arising from the sale of $34,000 of non-agency collateralized mortgage obligations that had fallen below our investment grade thresholds. We also recognized $6,000 in losses during the prior fiscal year ended June 30, 2013 that resulted from a sale of $24,000 of non-agency collateralized mortgage obligations on that same basis.

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Non-Interest Expenses . Non-interest expense, excluding debt extinguishment and merger-related expenses, increased $3.1 million to $63.8 million for the year ended June 30, 2014 from $60.7 million for the year ended June 30, 2013. The net increase in non-interest expense primarily reflected increases in salary and employee benefit expense, premises occupancy expense, equipment and systems expense, advertising and marketing expense, federal deposit insurance expense and miscellaneous expense. Less noteworthy variances in other categories of non-interest expense reflected normal operating fluctuations within those categories.

Salaries and employee benefits increased by $368,000 to $35.8 million from $35.4 million reflecting increases in expenses resulting, in part, from increases in wage and salary expense and benefits expense attributable to the combined effects of our strategic efforts to expand our commercial lending origination and support staff as well as a temporary increase in employee overtime expense arising from the conversion of our primary core processing systems during the year. The variance also reflected an increase in ESOP expense attributable to the increase in our share value during the year coupled with an increase in stock benefit plan expenses attributable to stock options and shares of restricted stock granted to employees during the fourth quarter of fiscal 2014. These increases in salaries and employee benefits were partially offset by a decrease in the expense arising from changes to actuarial assumptions relating to Kearny Bank’s multi-employer defined benefit pension plan for employees that reduced the required contributions and associated expense to be recognized during fiscal 2014.

The increase in premises occupancy expense was largely attributable to an increase in facility repairs and maintenance costs arising from seasonal fluctuations in such expenses including, most notably, a significant increase in snow removal expenses across our retail branch and administrative headquarters locations during the winter months of fiscal 2014. The increase in occupancy expense also reflected a less noteworthy increase in rent expense relating to our leased facilities. These increases were partially offset by a decrease in property tax expense largely reflecting the recovery of funds during the current year resulting from our tax appeal efforts to reduce our property tax obligations on certain branch facilities.

The increase in equipment and systems expense was largely attributable to the recognition of certain non-recurring expenses supporting our conversion to Fiserv, Inc. systems during fiscal 2014.

We expect to implement several additional technology-based systems available through our master service agreement with Fiserv, Inc. over the next several quarters. For example, we intend to enhance and expand our service offerings to include Fiserv, Inc.’s mobile banking, person-to-person payments and online account opening systems. We also intend to implement additional “back-office” systems supporting loan underwriting, credit risk analysis and loan administration as well as financial systems supporting corporate budgeting, forecasting and profitability analysis.

We expect to recognize a reduced level of non-recurring technology-related expenditures relating to the implementation of these additional technologies over the next several quarters. Upon completing all applicable system conversions and integrations with Fiserv, Inc., we anticipate that our recurring technology service provider expenses will be reduced compared to “pre-conversion” levels. Such anticipated cost savings are based upon the current composition and transactional characteristics of our customer account base and may vary over time based upon changes to those factors.

In further support of the conversion of our core processing systems during the period, we recognized additional customer communication and disclosure expenses during fiscal 2014 which contributed to the increase in advertising and marketing during the year.

The reported increase in deposit insurance expense reflects an increase in Kearny Bank’s FDIC insurance premiums arising primarily from the growth in Kearny Bank’s total assets which, when offset by tangible capital, generally establishes the calculation basis of those premiums.

The reported increase in miscellaneous expense also reflected a variety of other non-recurring expenses generally supporting our core processing conversion during fiscal 2014. Such expenses included, but were not limited to, consulting and training expenses, travel and lodging charges as well as stationary, printing and debit card production costs that were directly attributable to the Fiserv, Inc. conversion.

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In general, we estimate that non-interest expense for the year ended June 30, 2014 included non-recurring expenses of approximately $1.9 million relating to our core processing conversion that was completed during the year. Such expenses include approximately $1.6 million in equipment and systems expense, $175,000 in salaries and employee benefits expense and $165,000 in miscellaneous expense while additional conversion-related expenses were also recognized in advertising and marketing expenses, as noted above.

In addition to the non-recurring expenses associated with the Fiserv, Inc. conversion, we recognized an additional $391,000 of non-recurring, merger-related expenses during the year ended June 30, 2014 attributable to our acquisition of Atlas Bank. Additional information regarding our acquisition of Atlas Bank is present in Note 2 to the audited consolidated financial statements.

Non-interest expense during the prior year ended June 30, 2013 included debt extinguishment expenses totaling $8.7 million for which no such expenses were recognized during fiscal 2014. The debt extinguishment expense recognized during the earlier comparative period was fully attributable to the balance sheet restructuring and wholesale growth transactions executed during the prior year.

Provision for Income Taxes . The provision for income taxes increased $2.0 million to $4.2 million for the year ended June 30, 2014 from $2.3 million for the year ended June 30, 2013. The variance in income tax expense between comparative periods partly reflected the underlying differences in the level of the taxable portion of pre-tax income between comparative periods. However, income tax expense for the earlier comparative period also reflected Kearny Bank’s recognition of an income tax benefit arising from the recognition of capital gains resulting from the balance sheet restructuring and wholesale growth transactions executed during that period. Such gains enabled us to recognize the income tax benefits attributable to capital losses incurred during prior years for which no deferred benefit had been previously recognized.

Our effective tax rate during the year ended June 30, 2014 was 29.3% which, in relation to statutory income tax rates, reflected the effects of tax-favored income sources included in pre-tax income. By comparison, our effective tax rate for the year ended June 30, 2013 was 25.7% which reflected those same tax-favored income sources coupled with the tax benefit recognized from prior capital losses noted above.

Comparison of Operating Results for the Years Ended June 30, 2013 and June 30, 2012

General. Net income for the year ended June 30, 2013 was $6.5 million or $0.10 per diluted share; an increase of $1.4 million compared to $5.1 million or $0.08 per diluted share for the year ended June 30, 2012. The increase in net income between comparative periods reflected an increase in non-interest income and a decline in the provision for loan losses that was partially offset by a decrease in net interest income and an increase in non-interest expense. The increase in net income also reflected a decline in the provision for income taxes.

Net Interest Income. Net interest income for the year ended June 30, 2013 was $66.3 million; a decrease of $3.9 million from $70.2 million for the year ended June 30, 2012. The decrease in net interest income between the comparative periods resulted from a decrease in interest income that outpaced a concurrent decline in interest expense. The decrease in interest income was primarily attributable to a decrease in the average yield on interest-earning assets while the decrease in interest expense reflected declines in both the average cost and average balance of interest-bearing liabilities. Declines in average yields and costs between comparative periods continued to reflect the effects of historically low interest rates that were prevalent in the marketplace throughout most of fiscal 2013.

As a result of these factors, our net interest rate spread decreased 12 basis points to 2.34% for the year ended June 30, 2013 from 2.46% for the year ended June 30, 2012. The decrease in the net interest rate spread reflected a 39 basis point decline in the yield on interest-earning assets to 3.33% from 3.72% that was partially offset by a decrease in the average cost of interest-bearing liabilities of 27 basis points to 0.99% from 1.26% for the same comparative periods. A discussion of the factors contributing to the overall change in yield on earning assets and average cost of interest-bearing liabilities is presented in the separate discussion and analysis of interest income and interest expense below.

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limited to, the use of interest-earning assets to fund additions to treasury stock during fiscal 2013. In total, we reported a 15 basis point decline in net interest margin to 2.50% for the year ended June 30, 2013 from 2.65% for the year ended June 30, 2012.

Interest Income. Total interest income decreased $10.3 million to $88.3 million for the year ended June 30, 2013 from $98.5 million for the year ended June 30, 2012. As noted above, the decrease in interest income primarily reflected a decline in the average yield on interest-earning assets while their average balance for the year remained stable. The average yield on interest-earning assets declined 39 basis points to 3.33% for the year ended June 30, 2013 from 3.72% for the year ended June 30, 2012. For those same comparative periods, the average balance of interest-earning assets remained stable at $2.65 billion.

Interest income from loans decreased $2.5 million to $61.5 million for the year ended June 30, 2013 from $64.0 million for the year ended June 30, 2012. The decrease in interest income on loans was attributable to a decrease in the average yield that was partially offset by an increase in the average balance.

The average yield on loans decreased by 42 basis points to 4.70% for the year ended June 30, 2013 from 5.12% for the year ended June 30, 2012. The reduction in the overall yield on our loan portfolio partly reflects the effect of lower market interest rates which provided “rate reduction” refinancing incentive to existing borrowers while also contributing to the downward re-pricing of adjustable rate loans. Additionally, the average yield on newly originated loans that have provided the incremental growth in the portfolio between periods reflects the historically low interest rates prevalent in the marketplace which further reduces the overall yield of the loan portfolio.

The effect on interest income attributable to the decline in the average yield on loans was partially offset by the noted increase in their average balance. The average balance of loans increased by $58.8 million to $1.31 billion for the year ended June 30, 2013 from $1.25 billion for the year ended June 30, 2012. The reported increase in the average balance of loans reflected an aggregate increase of $135.8 million in the average balance of commercial loans to $643.6 million for the year ended June 30, 2013 from $507.8 million for the year ended June 30, 2012.

The increase in the average balance of commercial loans was partially offset by a decline in the average balance of residential mortgage loans which decreased by $72.5 million to $646.2 million for the year ended June 30, 2013 from $718.7 million for the year ended June 30, 2012.

In general, because our commercial loans comprise comparatively higher yielding multi-family mortgages, nonresidential mortgage loans and business loans, the continued reallocation within the loan portfolio from residential mortgages into commercial loans partially offset the adverse impact of lower market interest rates on the overall yield of the loan portfolio between the comparative periods.

The net increase in the average balance of loans also reflected a $4.9 million decline in the average balance of construction loans whose aggregate average balances decreased to $16.0 million for the year ended June 30, 2013 from $20.9 million for the year ended June 30, 2012. For those same comparative periods, the average balance of consumer loans increased by $360,000 to $4.4 million from $4.1 million.

Interest income from mortgage-backed securities decreased by $8.7 million to $23.7 million for the year ended June 30, 2013 from $32.4 million for the year ended June 30, 2012. The decrease in interest income reflected a decrease in the average yield of mortgage-backed securities coupled with a decline in their average balance between comparative periods. The average yield on mortgage-backed securities declined 43 basis points to 2.32% for the year ended June 30, 2013 from 2.75% for the year ended June 30, 2012. For those same comparative periods, the average balance of these securities decreased $160.8 million to $1.02 billion from $1.18 billion.

The reduction in the overall yield of the mortgage-backed securities portfolio was attributable to many of the same factors affecting the yield on our loan portfolio. That is, lower market interest rates continued to provide a “rate reduction” refinancing incentive to mortgagors resulting in the payoff of comparatively higher rate mortgage loans underlying our mortgage-backed securities which have been replaced by lower yielding securities. The decline in yield also reflects an increase in purchased premium amortization during the current year primarily arising from a comparatively higher level of loan prepayments.

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The decrease in the average balance of mortgage-backed securities largely reflects principal repayments and security sales that have outpaced the level of security purchases. Such sales include those affected in conjunction with the balance sheet restructuring transactions noted earlier.

Interest income from debt securities increased by $906,000 to $2.3 million for the year ended June 30, 2013 from $1.4 million for the year ended June 30, 2012. The increase in interest income reflected an increase in the average balance of debt securities that was partially offset by a decline in the average yield. The average balance of debt securities increased $106.9 million to $181.7 million for the year ended June 30, 2013 from $74.8 million for the year ended June 30, 2012. For those same comparative periods, the average yield of debt securities decreased 60 basis points to 1.26% from 1.86%.

The decrease in the average yield on debt securities reflected a 78 basis point decline in the yield on taxable securities to 1.17% during the year ended June 30, 2013 from 1.95% for the year ended June 30, 2012. For those same comparative periods, the yield on tax-exempt securities increased 96 basis points to 1.95% from 0.99%. The increase in the average balance of debt securities was partly attributable to a $92.8 million increase in the average balance of taxable securities to $160.6 million for the year ended June 30, 2013 from $67.7 million for the year ended June 30, 2012. For those same comparative periods, the average balance of tax-exempt securities increased by $14.0 million to $21.1 million from $7.0 million.

Interest income from other interest-earning assets increased by $10,000 to $775,000 for the year ended June 30, 2013 from $765,000 for the year ended June 30, 2012 reflecting an increase in the average yield that was partially offset by a decline in the average balance. The average yield of other interest-earning assets increased by two basis points to 0.55% for the year ended June 30, 2013 from 0.53% for the year ended June 30, 2012. For those same comparative periods, the average balance of other interest-earning assets decreased by $4.8 million to $139.7 million from $144.5 million.

The changes in the average balance and average yield on other interest-earning assets between comparative periods largely reflects the reinvestment of a portion of our excess liquidity that had been maintained during the earlier comparative period into the investment securities portfolio. Such reinvestment reduced the average balance of interest-earning cash which generally represents the lowest yielding asset within this category of interest-earning assets.

Interest Expense. Total interest expense decreased by $6.4 million to $22.0 million for the year ended June 30, 2013 from $28.4 million for the year ended June 30, 2012. As noted earlier, the decrease in interest expense reflected a decrease in the average cost of interest-bearing liabilities which declined 27 basis points to 0.99% for the year ended June 30, 2013 from 1.26% for the year ended June 30, 2012. The decrease in the average cost was coupled with a $17.5 million decline in the average balance of interest-bearing liabilities to $2.23 billion from $2.25 billion for the same comparative periods.

Interest expense attributed to deposits decreased $5.6 million to $14.7 million for the year ended June 30, 2013 from $20.3 million for the year ended June 30, 2012. The decrease in interest expense was attributable to a decline in the average cost of deposits coupled with a decline in their average balance.

The cost of interest-bearing deposits declined by 27 basis points to 0.74% for the year ended June 30, 2013 from 1.01% for the year ended June 30, 2012. The reported decrease in the average cost was reflected across all categories of interest-bearing deposits and was primarily attributable to the overall declines in market interest rates. For those comparative periods, the average cost of interest-bearing checking accounts decreased by 22 basis points to 0.37% from 0.59% and the average cost of savings and club accounts decreased 13 basis points to 0.20% from 0.33% while the average cost of certificates of deposit declined 28 basis points to 1.16% from 1.44%.

The decrease in the average cost was coupled with a $20.3 million decline in the average balance of interest-bearing deposits to $1.98 billion for the year ended June 30, 2013 from $2.00 billion for the year ended June 30, 2012. The reported decrease in the average balance was primarily attributable to a $91.7 million decline in the average balance of certificates of deposit to $1.04 billion for the year ended June 30, 2013 from $1.13 billion for the year ended June 30, 2012. The decline in the average balance of certificates of deposit was partially offset by

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increases in the average balances of interest-bearing checking and savings accounts. For the same comparative periods, the average balance of interest-bearing checking accounts increased $40.5 million to $494.6 million from $454.2 million while the average balance of savings and club accounts increased $30.9 million to $445.5 million from $414.6 million.

Interest expense attributed to borrowings decreased by $807,000 to $7.3 million for the year ended June 30, 2013 from $8.1 million for the year ended June 30, 2012. The decrease in interest expense on borrowings primarily reflected a decrease in their average cost that was partially offset by an increase in their average balance. The average cost of borrowings declined 36 basis points to 2.87% for the year ended June 30, 2013 from 3.23% for the year ended June 30, 2012. For those same comparative periods, the average balance of borrowings increased $2.7 million to $253.6 million from $250.9 million.

The increase in the average balance of borrowings partly reflected a $1.3 million increase in the average balance of FHLB advances which increased to $218.1 million for the year ended June 30, 2013 from $216.8 million for the year ended June 30, 2012. For those same comparative periods, the average cost of FHLB advances decreased 38 basis points to 3.25% from 3.63%. The noted increase in the average balance of FHLB advances was augmented by a $1.4 million increase in the average balance of other borrowings, comprised primarily of depositor sweep accounts, to $35.5 million from $34.1 million whose average cost declined 12 basis points to 0.54% from 0.66% for those same comparative periods.

Provision for Loan Losses. The provision for loan losses totaled $4,464,000 for the year ended June 30, 2013 compared to a provision of $5,750,000 for the year ended June 30, 2012. The provisions for both periods partly reflected impairment losses identified on specific impaired loans while also reflecting the impact of changes in the balance of the non-impaired portion of the loan portfolio which is evaluated collectively for impairment using historical and environmental loss factors. Such factors were updated during each period in accordance with our allowance for loan loss calculation methodology.

Non-Interest Income. Non-interest income, excluding gains and losses on the sale of securities and REO, increased by $1.3 million to $6.7 million for the year ended June 30, 2013 from $5.4 million for the year ended June 30, 2012. The increase in non-interest income, excluding securities and REO gains and losses, was primarily attributable to a $1.2 million increase in income from bank owned life insurance resulting from a comparative increase in our average balance between periods. Less noteworthy variances in non-interest income included an increase in loan prepayment penalties included in fees and service charges as well as an increase in electronic banking fees and charges arising from an increase in ATM and debit card usage by customers. Partially offsetting these increases in non-interest income was a $104,000 decline in loan sale gains to $557,000 for the year ended June 30, 2013 from $661,000 for the year ended June 30, 2012 reflecting a decline the volume of SBA loan originations and sales during fiscal 2013.

Miscellaneous income for the year ended June 30, 2013 also included a $100,000 gain on the sale of a parcel of vacant land adjacent to one of our branches. The parcel had originally been acquired for branch expansion purposes, but was ultimately sold after we were unable to procure the required approvals for the expansion. Offsetting this increase in miscellaneous income was the absence in the current year of a $245,000 payment received by Kearny Bank during the prior fiscal year from a tenant in return for the discharge of their future obligations under the terms of a commercial lease agreement where Kearny Bank served as lessor.

For the year ended June 30, 2013, net REO sale losses totaled $775,000 compared to $3.3 million for the year ended June 30, 2012 with losses during both comparative periods being primarily attributed to reducing the carrying value of various REO properties to reflect reductions in expected sales prices below the fair values at which the properties were previously being carried. Where applicable, such losses were partially offset by REO sale gains.

As noted earlier, at June 30, 2013, we held a total of eight REO properties with an aggregate carrying value of $2.1 million. Two REO properties with aggregate carrying values totaling $581,000 were under contract for sale at June 30, 2013 with such values reflecting the net sale proceeds that we expected to receive based upon the terms of those contracts.

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Finally, non-interest income during the year ended June 30, 2013 reflected net gains on sales of securities totaling $10.4 million attributable to the sale of mortgage-backed securities totaling approximately $432.4 million during the period. The securities sold during the current period included $330.0 million of agency mortgage backed securities sold during the quarter ended March 31, 2013 in conjunction with the restructuring transaction noted earlier through which we recognized $9.1 million in gains on sale. Those sale gains were augmented by an additional $1.3 million of sale gains resulting from the sale of an additional $102.3 million of agency mortgage-backed securities during the year that were separate from the restructuring transaction.

The sale gains during the current year were partially offset by losses totaling $6,000 arising from the sale of $24,000 of non-agency collateralized mortgage obligations that had fallen below our investment grade thresholds. We recognized $6,000 in losses during the earlier comparative period ended June 30, 2012 that resulted from a sale of $38,000 of non-agency collateralized mortgage obligations on that same basis.

Non-Interest Expenses. Non-interest expense, excluding debt extinguishment expense, increased $2.0 million to $60.7 million for the year ended June 30, 2013 from $58.7 million for the year ended June 30, 2012. The net increase in non-interest expense primarily reflected increases in salary and employee benefit expense, premises occupancy expense, equipment and systems expense and federal deposit insurance expense that were partially offset by decreases in advertising and miscellaneous expense. Less noteworthy increases and decreases in other categories of non-interest expense reflected normal operating fluctuations within those categories.

Salaries and employee benefits increased by $1.7 million to $35.4 million from $33.7 million reflecting increases in expenses resulting, in part, from annual wage and salary increases as well as our strategic efforts to expand our commercial lending origination and support staff. The increase also reflected increases in health care benefit costs that went into effect during fiscal 2013.

The noted increase in premises occupancy expense largely reflected non-recurring facility-related repairs and maintenance expenses, a portion of which were necessitated by damage caused by Hurricane Sandy at a limited number of our branches located in or near certain New Jersey shore communities. In general, the facility-related damages caused by the hurricane were cosmetic in nature as evidenced by all 41 of our then-operating branches re-opening within two weeks of the hurricane. The increase in occupancy expenses also reflected a higher level of seasonal facility maintenance costs during fiscal 2013, including those relating to snow removal, arising from the extraordinarily mild winter that was experienced during fiscal 2012.

The reported increase in equipment and systems expense reflects, in part, temporary redundancy of data communication service provider charges associated with the ongoing upgrades to our wide area network infrastructure. The increase also reflects an increase in overall information technology repairs and maintenance costs between periods that includes a comparative increase in software maintenance expenses. Finally, equipment and systems expense during the earlier comparative period also reflected one-time adjustments reducing certain estimated expenses relating to the conversion and integration of systems and data acquired from Central Jersey Bancorp, Inc. (“Central Jersey”) for which no such adjustments were recorded during the current period.

The reported increase in federal deposit insurance expense largely reflects changes in Kearny Bank’s assessment rates charged by the FDIC as well as modest fluctuations in the assessment base used in the calculation of Kearny Bank’s deposit insurance premiums.

The increases in non-interest expenses noted above were partially offset by a decline in advertising and marketing expense that largely reflected a reduction in print advertising expenses that was partially offset by an increase in outdoor and electronic advertising expenses. The reduction in advertising and marketing expenses was augmented by a net decline in miscellaneous expense reflecting reductions across several categories including, but not limited to, legal expense, printing and office supplies as well as a variety of other less noteworthy general and administrative expense categories.

Provision for Income Taxes. The provision for income taxes decreased $526,000 to $2.3 million for the year ended June 30, 2013 from $2.8 million for the year ended June 30, 2012. The variance in income taxes between comparative years was partly attributable to the underlying differences in the taxable portion of pre-tax income between comparative periods. However, the variance also reflected Kearny Bank’s recognition of income

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tax benefits during the current period arising from the recognition of capital gains resulting from the restructuring transaction and sale of land noted earlier. Such gains enabled us to recognize the income tax benefits attributable to capital losses incurred during prior years for which no deferred benefit had been previously recognized.

Our effective tax rate during the year ended June 30, 2013 was 25.7% which, in relation to statutory income tax rates, reflected the combined effects of recurring tax-favored income sources included in pre-tax income as well as the tax benefit recognized from prior capital losses noted above. By comparison, our effective tax rate for the year ended June 30, 2012 was 35.3%.

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Average Balance Sheet. The following table sets forth certain information relating to Kearny-Federal at and for the periods indicated. We derived the average yields and costs by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented with daily balances used to derive average balances. No tax equivalent adjustments have been made to yield or costs.


						For the Years Ended June 30,
	At June 30, 2014					2014							2013							2012
	Actual Balance		Weighted Average Interest Rate			Average Balance		Interest		Average Yield/ Cost			Average Balance		Interest		Average Yield/ Cost			Average Balance		Interest		Average Yield/ Cost
						(Dollars in Thousands)
Interest-earning assets:
Loans receivable ⁽¹⁾	$	1,741,471		4.27	%	$	1,548,746	$	66,794		4.31	%	$	1,309,085	$	61,500		4.70	%	$	1,250,307	$	63,960		5.12	%
Mortgage-backed securities ⁽²⁾		728,460		2.66			803,211		20,827		2.59			1,020,425		23,688		2.32			1,181,237		32,435		2.75
Debt securities ⁽²⁾ :
Tax-exempt		99,602		1.94			94,737		1,839		1.94			21,083		411		1.95			7,045		70		0.99
Taxable		528,040		1.28			446,644		5,341		1.20			160,594		1,884		1.17			67,748		1,319		1.95
Other interest-earning assets ⁽³⁾		146,621		0.74			133,856		1,018		0.76			139,698		775		0.55			144,527		765		0.53

Total interest-earning assets		3,244,194		3.19			3,027,194		95,819		3.17			2,650,885		88,258		3.33			2,650,864		98,549		3.72
Non-interest-earning assets		265,815					252,005							271,342							257,407

Total assets	$	3,510,009				$	3,279,199						$	2,922,227						$	2,908,271

Interest-bearing liabilities:
Interest-bearing demand		700,248		0.24			722,999		3,790		0.52			494,625		1,847		0.37			454,166		2,690		0.59
Savings and club		518,421		0.16			473,917		739		0.16			445,470		878		0.20			414,560		1,376		0.33
Certificates of deposit		1,037,218		1.09			974,426		10,009		1.03			1,037,150		11,986		1.16			1,128,802		16,206		1.44

Total interest-bearing deposits		2,255,887		0.61			2,171,342		14,538		0.67			1,977,245		14,711		0.74			1,997,528		20,272		1.01

Borrowings		512,257		1.17			420,282		7,460		1.77			253,626		7,290		2.87			250,859		8,097		3.23

Total interest-bearing liabilities		2,768,144		0.72			2,591,624		21,998		0.85			2,230,871		22,001		0.99			2,248,387		28,369		1.26
Non-interest-bearing liabilities ⁽⁴⁾		247,189					219,082							203,255							172,638

Total liabilities		3,015,333					2,810,706							2,434,126							2,421,025
Stockholders’ equity		494,676					468,493							488,101							487,246

Total liabilities and stockholders’ equity	$	3,510,009				$	3,279,199						$	2,922,227						$	2,908,271

Net interest income								$	73,821						$	66,257						$	70,180

Interest rate spread ⁽⁵⁾				2.47	%						2.32	%						2.34	%						2.46	%

Net interest margin ⁽⁶⁾											2.44	%						2.50	%						2.65	%

Ratio of interest-earning assets to interest-bearing liabilities		1.17x					1.17x							1.18x							1.18x

(1)	Non-accruing loans have been included in loans receivable and the effect of such inclusion was not material. Allowance for loan losses has been included in non-interest-earning assets.

(2)	Mark to market valuation allowances have been excluded in the balances of interest-earning assets.

(3)	Includes interest-bearing deposits at other banks and Federal Home Loan Bank of New York capital stock.

(4)	Includes actual balance of non-interest-bearing deposits of $224,054,000 at June 30, 2014 and average balances of non-interest-bearing deposits of $196,490,000, $172,954,000, and $145,458,000 for the years ended June 30, 2014, 2013 and 2012, respectively.

(5)	Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.

(6)	Net interest margin represents net interest income as a percentage of average interest-earning assets.

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Rate/Volume Analysis . The following table reflects the sensitivity of Kearny-Federal’s interest income and interest expense to changes in volume and in prevailing interest rates during the periods indicated. Each category reflects the: (1) changes in volume (changes in volume multiplied by old rate); (2) changes in rate (changes in rate multiplied by old volume); and (3) net change. The net change attributable to the combined impact of volume and rate has been allocated proportionally to the absolute dollar amounts of change in each.


	Years Ended June 30, 2014 vs. 2013									Years Ended June 30, 2013 vs. 2012
	Increase (Decrease) Due to									Increase (Decrease) Due to
	Volume			Rate			Net			Volume			Rate			Net
	(In Thousands)
Interest and dividend income:
Net loans receivable	$	10,669		$	(5,375	)	$	5,294		$	2,930		$	(5,390	)	$	(2,460	)
Mortgage-backed securities		(5,412	)		2,551			(2,861	)		(4,071	)		(4,676	)		(8,747	)
Debt securities:
Tax-exempt		1,430			(2	)		1,428			229			112			341
Taxable		3,408			49			3,457			1,255			(690	)		565
Other interest-earning assets		(34	)		277			243			(22	)		32			10

Total interest-earning assets	$	10,061		$	(2,500	)	$	7,561		$	321		$	(10,612	)	$	(10,291	)


Interest expense:
Interest-bearing demand	$	1,035		$	908		$	1,943		$	223		$	(1,066	)	$	(843	)
Savings and club		53			(192	)		(139	)		92			(590	)		(498	)
Certificates of deposit		(693	)		(1,284	)		(1,977	)		(1,243	)		(2,977	)		(4,220	)
Borrowings		3,632			(3,462	)		170			90			(897	)		(807	)

Total interest-bearing liabilities	$	4,027		$	(4,030	)	$	(3	)	$	(838	)	$	(5,530	)	$	(6,368	)


Change in net interest income	$	6,034		$	1,530		$	7,564		$	1,159		$	(5,082	)	$	(3,923	)

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Liquidity and Commitments

Our liquidity, represented by cash and cash equivalents, is a product of our operating, investing and financing activities. Our primary sources of funds are deposits, amortization, prepayments and maturities of mortgage-backed securities and outstanding loans, maturities and calls of securities and funds provided from operations. In addition, we invest excess funds in short-term interest-earning assets, such as overnight deposits, which provide liquidity to meet lending requirements. While scheduled payments from the amortization of loans and mortgage-backed securities and maturing securities and short-term investments are relatively predictable sources of funds, general interest rates, economic conditions and competition greatly influence deposit flows and prepayments on loans and mortgage-backed securities.

Kearny Bank is required to have enough investments that qualify as liquid assets in order to maintain sufficient liquidity to ensure a safe operation. Liquidity may increase or decrease depending upon the availability of funds and comparative yields on investments in relation to the return on loans. We attempt to maintain adequate but not excessive liquidity and liquidity management is both a daily and long-term function of business management.

Cash and cash equivalents, consisting primarily of deposits in other banks, increased by $8.0 million to $135.0 million at June 30, 2014 from $127.0 million at June 30, 2013. The balances reported at June 30, 2014 included interest-earning and non-interest-earning accounts in other banks totaling $120.6 million and $4.1 million, respectively, primarily representing deposit relationships with two money center banks as well as accounts with the FHLB of New York and Federal Reserve Bank of New York. The largest money center account relationship totaled approximately $3.6 million at June 30, 2014 with the next largest money center banking relationship totaling approximately $283,000 as of that same date. Management routinely transfers funds between depository institutions to maximize the return on the funds.

Management reviews cash flow projections regularly and updates them monthly in order to maintain liquid assets at levels believed to meet the requirements of normal operations, including loan commitments and potential deposit outflows from maturing certificates of deposit and savings withdrawals. At June 30, 2014, Kearny Bank had commitments to originate and purchase loans totaling $29.2 million compared to $60.6 million at June 30, 2013. As of those same comparative dates, construction loans in process and unused lines of credit were $6.4 million and $59.8 million, respectively, compared to $11.1 million and $69.4 million, respectively. Kearny Bank had $581.5 million of certificates of deposit maturing in one year at June 30, 2014 compared to $646.6 million at June 30, 2013.

Deposits increased $109.4 million to $2.48 billion at June 30, 2014 from $2.37 billion at June 30, 2013. Between those comparative periods, non-interest-bearing demand deposits increased $33.1 million to $224.1 million, interest-bearing demand deposits decreased $31.3 million to $700.2 million, savings and club deposits increased $51.9 million to $518.4 million while certificates of deposit increased $55.8 million to $1.04 billion. The decrease in interest-bearing checking accounts partly reflects fluctuations in the balances of “non-retail” funding sources in the form of brokered money market deposits utilized in conjunction with our wholesale growth transactions discussed earlier coupled with some degree of disintermediation of retail deposits into other interest-bearing accounts.

Borrowings from the FHLB of New York and other sources are generally available to supplement Kearny Bank’s liquidity position and to the extent that maturing deposits do not remain with us, management may replace the funds with such borrowings. Kearny Bank has the capacity to borrow additional funds from the FHLB by taking additional long-term or short-term advances including overnight borrowings. As of June 30, 2014, Kearny Bank’s borrowing potential was $327.2 million without pledging additional collateral.

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The following table discloses our contractual obligations and commitments as of June 30, 2014.


	Total		Less Than One Year		One Year to Three Years		Over Three Years to Five Years		Over Five Years
	(In Thousands)

Operating lease obligations	$	10,038	$	1,761	$	3,084	$	1,932	$	3,261
Certificates of deposit		1,037,218		581,543		277,479		171,732		6,464
Federal Home Loan Bank advances		481,490		320,000		10,500		5,225		145,765


Total	$	1,528,746	$	903,304	$	291,063	$	178,889	$	155,490


	Total Committed		Less Than One Year		One Year to Three Years		Over Three Years to Five Years		Over Five Years
	(In Thousands)

Undisbursed funds from approved lines of credit ⁽¹⁾	$	59,835	$	17,237	$	6,029	$	4,784	$	31,785
Construction loans in process ⁽¹⁾		6,385		6,385		—		—		—
Other commitments to extend credit ⁽¹⁾		29,176		29,176		—		—		—


Total	$	95,396	$	52,798	$	6,029	$	4,784	$	31,785

(1)	Represents amounts committed to customers.

Off-Balance Sheet Arrangements

We are a party to financial instruments with off-balance-sheet risk in the normal course of our business of investing in loans and securities as well as in the normal course of maintaining and improving Kearny Bank’s facilities. These financial instruments include significant purchase commitments, such as commitments related to capital expenditure plans and commitments to purchase securities or mortgage-backed securities and commitments to extend credit to meet the financing needs of our customers. At June 30, 2014, we had no significant off-balance sheet commitments to purchase securities or for capital expenditures.

In addition to the commitments noted above, Kearny Bank is party to standby letters of credit totaling approximately $519,000 at June 30, 2014 through which we guarantee certain specific business obligations of our commercial customers.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance-sheet instruments. At June 30, 2014, outstanding loan commitments totaled $94.5 million compared to $141.1 million at June 30, 2013. Since some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. For additional information regarding our outstanding lending commitments at June 30, 2014, see Note 19 to the audited consolidated financial statements.

Capital

Consistent with our goals to operate as a sound and profitable financial organization, Kearny Bank actively seeks to maintain our well capitalized status in accordance with regulatory standards. As of June 30, 2014, Kearny Bank exceeded all capital requirements of the federal banking regulators. Kearny Bank’s regulatory capital ratios at June 30, 2014 were as follows: Tier 1 leverage ratio 10.75%; Tier I risk-based capital 19.78%; and total risk-based

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capital 20.45%. The regulatory capital requirements to be considered well capitalized are 5.0%, 6.0% and 10.0%, respectively. For additional information regarding regulatory capital at June 30, 2014, see Note 17 to the audited consolidated financial statements. Kearny Bank will be considered to be well capitalized under the new capital requirements effective January 1, 2015.

Impact of Inflation

The financial statements included in this document have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation.

Our primary assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on our performance than the effects of general levels of inflation. Interest rates, however, do not necessarily move in the same direction or with the same magnitude as the price of goods and services, since such prices are affected by inflation. In a period of rapidly rising interest rates, the liquidity and maturities of our assets and liabilities are critical to the maintenance of acceptable performance levels.

The principal effect of inflation on earnings, as distinct from levels of interest rates, is in the area of non-interest expense. Expense items such as employee compensation, employee benefits and occupancy and equipment costs may be subject to increases as a result of inflation. An additional effect of inflation is the possible increase in the dollar value of the collateral securing loans that we have made. We are unable to determine the extent, if any, to which properties securing our loans have appreciated in dollar value due to inflation.

Recent Accounting Pronouncements

For a discussion of the expected impact of recently issued accounting pronouncements that have yet to be adopted by us, please refer to Note 3 to the audited consolidated financial statements.

Management of Interest Rate Risk and Market Risk

Qualitative Analysis. The majority of our assets and liabilities are sensitive to changes in interest rates. Consequently, interest rate risk is a significant form of business risk that we must manage. Interest rate risk is generally defined in regulatory nomenclature as the risk to our earnings or capital arising from the movement of interest rates. It arises from several risk factors including: the differences between the timing of rate changes and the timing of cash flows (re-pricing risk); the changing rate relationships among different yield curves that affect bank activities (basis risk); the changing rate relationships across the spectrum of maturities (yield curve risk); and the interest-rate-related options embedded in bank products (option risk).

Regarding the risk to our earnings, movements in interest rates significantly influence the amount of net interest income we recognized. Net interest income is the difference between:

•

the interest income recorded on our earning assets, such as loans, securities and other interest-earning assets; and

•

the interest expense recorded on our costing liabilities, such as interest-bearing deposits and borrowings.

Net interest income is, by far, our largest revenue source to which we add our non-interest income and from which we deduct our provision for loan losses, non-interest expense and income taxes to calculate net income. Movements in market interest rates, and the effect of such movements on the risk factors noted above, significantly influence the “spread” between the interest we earned on our loans, securities and other interest-earning assets and the interest paid on our deposits and borrowings. Movements in interest rates that increase, or “widen”, that net

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interest spread enhance our net income. Conversely, movements in interest rates that reduce, or “tighten”, that net interest spread adversely impact our net income.

For any given movement in interest rates, the resulting degree of movement in an institution’s yield on interest-earning assets compared with that of its cost of interest-bearing liabilities determines if an institution is deemed “asset sensitive” or “liability sensitive”. An asset sensitive institution is one whose yield on interest-earning assets reacts more quickly to movements in interest rates than its cost of interest-bearing liabilities. In general, the earnings of asset sensitive institutions are enhanced by upward movements in interest rates through which the yield on its interest-earning assets increases faster than its cost of interest-bearing liabilities resulting in a widening of its net interest spread. Conversely, the earnings of asset sensitive institutions are adversely impacted by downward movements in interest rates through which the yield on its interest-earning assets decreases faster than its cost of interest-bearing liabilities resulting in a tightening of its net interest spread.

In contrast, a liability sensitive institution is one whose cost of interest-bearing liabilities reacts more quickly to movements in interest rates than its yield on interest-earning assets. In general, the earnings of liability sensitive institutions are enhanced by downward movements in interest rates through which the cost of interest-bearing liabilities decreases faster than its yield on its interest-earning assets resulting in a widening of its net interest spread. Conversely, the earnings of liability sensitive institutions are adversely impacted by upward movements in interest rates through which the cost of interest-bearing liabilities increases faster than its yield on its interest-earning assets resulting in a tightening of its net interest spread.

The degree of an institution’s asset or liability sensitivity is traditionally represented by its “gap position”. In general, gap is a measurement that describes the net mismatch between the balance of an institution’s interest-earning assets that are maturing and/or re-pricing over a selected period of time compared to that of its interest-costing liabilities. Positive gaps represent the greater dollar amount of interest-earning assets maturing or re-pricing over the selected period of time than interest-costing liabilities. Conversely, negative gaps represent the greater dollar amount of interest-costing liabilities maturing or re-pricing over the selected period of time than interest-earning assets. The degree to which an institution is asset or liability sensitive is reported as a negative or positive percentage of assets, respectively. The industry commonly focuses on cumulative one-year and three-year gap percentages as fundamental indicators of interest rate risk sensitivity.

Based upon the findings of our internal interest rate risk analysis, we are considered to be liability sensitive. Liability sensitivity characterizes the balance sheets of many thrift institutions and is generally attributable to the comparatively shorter contractual maturity and/or re-pricing characteristics of the institution’s deposits and borrowings versus those of its loans and investment securities.

With respect to the maturity and re-pricing of our interest-bearing liabilities, at June 30, 2014, $581.5 million or 56.1% of our certificates of deposit mature within one year with an additional $187.4 million or 18.1% maturing after one year but within two years. The remaining $268.3 million, or 25.9% of certificates, at June 30, 2014 have remaining terms to maturity exceeding two years. Based on current market interest rates, the majority of these certificates are projected to re-price to a level at or below their current rates to the extent they remain with us at maturity and are renewed at the same original term to maturity.

Excluding fair value adjustments, the balance of FHLB advances totaled $481.5 million at June 30, 2014 and comprises both short-term and long-term advances with fixed rates of interest. Short-term FHLB advances generally have original maturities of less than one year and include overnight borrowings which Kearny Bank typically utilizes to address short term funding needs as they arise. At June 30, 2014, Kearny Bank had a total of $320.0 million of short-term FHLB advances, including $300.0 million of 90-day FHLB term advances that are generally forecasted to be periodically redrawn at maturity for the same 90 day term as the original advance. Based on this presumption, Kearny Bank has utilized interest rate swaps to effectively extend the duration of each of these advances at the time they were drawn to effectively fix their cost for period of five years.

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Short-term advances also included one fixed-rate FHLB advance with a fair value of $3.0 million assumed in conjunction with Kearny Bank’s acquisition of Atlas Bank on June 30, 2014 as well as $17.0 million of overnight borrowings from the FHLB drawn for daily liquidity management purposes.

Long-term advances generally include term advances with original maturities of greater than one year. At June 30, 2014, our outstanding balance of long-term FHLB advances totaled $161.5 million. Such advances included $145.0 million of advances as well as a $764,000 amortizing advance. Long-term advances also included four FHLB advances with fair values totaling $15.7 million assumed in conjunction with Kearny Bank’s acquisition of Atlas Bank on June 30, 2014.

With respect to the maturity and re-pricing of our interest-earning assets, at June 30, 2014, $64.1 million, or 3.7% of our total loans will reach their contractual maturity dates within one year with the remaining $1.68 billion, or 96.3% of total loans having remaining terms to contractual maturity in excess of one year. Of loans maturing after one year, $1.07 billion had fixed rates of interest while the remaining $613.4 million had adjustable rates of interest with such loans representing 63.5% and 36.5% of total loans, respectively.

At June 30, 2014, $5.8 million or 0.4% of our securities will reach their contractual maturity dates within one year with the remaining $1.35 billion, or 99.6% of total securities, having remaining terms to contractual maturity in excess of one year. Of the latter category, $969.4 million comprising 71.5% of our total securities had fixed rates of interest while the remaining $380.9 million comprising 28.1% of our total securities had adjustable or floating rates of interest.

At June 30, 2014, mortgage-related assets, including mortgage loans and mortgage-backed securities, total $2.4 billion and comprise 73.4% of total earning assets. In addition to remaining term to maturity and interest rate type as discussed above, other factors contribute significantly to the level of interest rate risk associated with mortgage-related assets. In particular, the scheduled amortization of principal and the borrower’s option to prepay any or all of a mortgage loan’s principal balance, where applicable, have a significant effect on the average lives of such assets and, therefore, the interest rate risk associated with them. In general, the prepayment rate on lower yielding assets tends to slow as interest rates rise due to the reduced financial incentive for borrowers to refinance their loans. By contrast, the prepayment rate of higher yielding assets tends to accelerate as interest rates decline due to the increased financial incentive for borrowers to prepay or refinance their loans to comparatively lower interest rates. These characteristics tend to diminish the benefits of falling interest rates to liability sensitive institutions while exacerbating the adverse impact of rising interest rates.

We generally retained our liability sensitivity throughout fiscal 2014 while the degree of that sensitivity, as measured internally by the institution’s one-year and three-year gap percentages, increased during the period. Specifically, our cumulative one-year gap percentage changed to (12.08)% from (1.87)% at June 30, 2013 while our cumulative three-year gap percentage changed from (14.20)% to 0.11% over those same comparative periods.

The change in our one-year and three-year gaps between comparative periods reflects, in part, modeling assumption changes regarding our brokered money market deposits. This change resulted in a reallocation of brokered money market balances into the one-month re-pricing bucket for gap analysis reporting purposes for periods beginning in fiscal 2014. By contrast, at June 30, 2013, core deposit decay assumptions had been utilized to allocate such balances across the various re-pricing intervals across the maturity gap horizon. This change increased the balance of liabilities re-pricing within the cumulative one and three year periods thereby widening the negative gap reported for those periods.

Other factors contributing to the widening of the negative gaps for the cumulative one and three year intervals include a reduced balance of loan-related cash flows re-pricing within those periods due to slowing of mortgage loan prepayment assumptions coupled with the additional utilization of short-term FHLB advances which increased the balance of interest-bearing liabilities re-pricing within those periods. Our one-year and three-year gap measures do not currently reflect the effect of our interest rate derivatives and the effective extension of liability duration arising from their use as cash flow hedges.

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As a liability-sensitive institution, our net interest spread is generally expected to benefit from overall reductions in market interest rates. Conversely, our net interest spread is generally expected to be adversely impacted by overall increases in market interest rates. However, the general effects of movements in market interest rates can be diminished or exacerbated by “nonparallel” movements in interest rates across a yield curve. Nonparallel movements in interest rates generally occur when shorter term and longer term interest rates move disproportionately in a directionally consistent manner. For example, shorter term interest rates may decrease faster than longer term interest rates which would generally result in a “steeper” yield curve. Alternately, nonparallel movements in interest rates may also occur when shorter term and longer term interest rates move in a directionally inconsistent manner. For example, shorter term interest rates may rise while longer term interest rates remain steady or decline which would generally result in a “flatter” yield curve.

At its extreme, a yield curve may become “inverted” for a period of time during which shorter term interest rates exceed longer term interest rates. While inverted yield curves do occasionally occur, they are generally considered a “temporary” phenomenon portending a change in economic conditions that will restore the yield curve to its normal, positively sloped shape.

In general, the interest rates paid on our deposits tend to be determined based upon the level of shorter term interest rates. By contrast, the interest rates earned on our loans and investment securities generally tend to be based upon the level of longer term interest rates to the extent such assets are fixed rate in nature. As such, the overall “spread” between shorter term and longer interest rates when earning assets and costing liabilities re-price greatly influences our overall net interest spread over time. In general, a wider spread between shorter term and longer term interest rates, implying a “steeper” yield curve, is beneficial to our net interest spread. By contrast, a narrower spread between shorter term and longer term interest rates, implying a “flatter” yield curve, or a negative spread between those measures, implying an inverted yield curve, adversely impacts our net interest spread.

We continue to execute various strategies to mitigate the risk to our net interest rate spread and margin arising from adverse changes in interest rates and the shape of the yield curve. Such strategies include deploying excess liquidity in higher yielding interest-earning assets, such as commercial loans and investment securities, while continuing to lower our cost of interest-bearing liabilities by reducing deposit offering rates. More recently, we have extended the duration of our wholesale funding sources through cost effective use of interest rate derivatives that effectively converted short-term wholesale funding sources into longer-term, fixed-rate funding sources. Through various deposit pricing strategies, we have allowed for some controlled outflow of shorter term certificates while attracting term deposits with longer maturities through both our retail and “non-retail” deposit listing service channels.

Notwithstanding these efforts, the risk of further net interest rate spread and margin compression is significant as the yield on our interest-earning assets continues to reflect the impact of the greater declines in longer term market interest rates in recent years compared to the lesser concurrent reductions in shorter term market interest rates that affect our cost of interest-bearing liabilities. In particular, our ability to further reduce the cost of our interest-bearing deposits is increasingly limited since most deposit offering rates already well below 1.00% at June 30, 2014. Moreover, our liability sensitivity may adversely affect net income in the future when market interest rates ultimately increase from their historical lows and our cost of interest-bearing liabilities may rise faster than our yield on interest-earning assets.

Given the inherent liability sensitivity of our balance sheet, our business plan also calls for greater expansion into C&I lending. Toward that end, we are continuing to expand our retail lending resources with an experienced team of business lenders focused on the origination of floating-rate and shorter-term fixed-rate loans and the corresponding core deposit account balances typically associated with such relationships. As a complement to this retail business lending strategy, we have implemented strategies through which floating-rate and other shorter-term fixed-rate C&I loans are acquired through wholesale resources.

We maintain an Asset/Liability Management (“ALM”) Program to address all matters relating to the management of interest rate risk and liquidity risk. The program is overseen by the Board of Directors through our Interest Rate Risk Management Committee comprising five members of the Board with our Chief Operating Officer,

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Chief Financial Officer and Chief Risk/Investment Officer participating as management’s liaison to the committee. The committee meets quarterly to address management of our assets and liabilities, including review of our liquidity and interest rate risk profiles, loan and deposit pricing and production volumes, investment and wholesale funding strategies, 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 ALM policies and strategies, as it considers necessary and appropriate.

The Board of Directors has assigned the responsibility for the operational aspects of the ALM program to our Asset/Liability Management Committee (“ALCO”). The ALCO is a management committee comprising the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Lending Officer, Branch Administrator, Chief Risk/Investment Officer, Treasurer and Controller. Additional members of our management team may be asked to participate on the ALCO, as appropriate.

Responsibilities conveyed to the ALCO by the Board of Directors include:

•

developing ALM-related policies and associated operating procedures and controls that will identify and measure the risks associated with ALM while establishing the limits and thresholds relating thereto;

•

developing ALM-related operating strategies and tactics designed to manage the relevant risks within the applicable policy thresholds and limits while supporting the achievement of the goals and objectives of our strategic business plan;

•

developing, implementing and maintaining a management- and Board-level ALM monitoring and reporting system;

•

ensuring that the ALCO and the Board of Directors are kept abreast of current technologies, procedures and industry best practices that may be utilized to carry out their ALM-related duties and responsibilities;

•

ensuring the periodic independent validation of Kearny Bank’s ALM risk management policies and operating practices and controls; and

•

conducting periodic ALCO committee meetings to review all matters relating to ALM strategies and risk management activities.

Quantitative Analysis. The quantitative analysis regularly conducted by management measures interest rate risk from both a capital and earnings perspective. With regard to capital, our internal interest rate risk analysis calculates the sensitivity of our economic value of equity (“EVE”) ratio to movements in interest rates. EVE represents the present value of the expected cash flows from our assets less the present value of the expected cash flows arising from our liabilities adjusted for the value of off-balance sheet contracts. The EVE ratio represents the dollar amount of our EVE divided by the present value of our total assets for a given interest rate scenario. In essence, EVE attempts to quantify our economic value using a discounted cash flow methodology while the EVE ratio reflects that value as a form of capital ratio. The degree to which the EVE ratio changes for any hypothetical interest rate scenario from its “base case” measurement is a reflection of an institution’s sensitivity to interest rate risk.

Our EVE ratio is first calculated in a “base case” scenario that assumes no change in interest rates as of the measurement date. The model then measures the change in the EVE ratio throughout a series of interest rate scenarios representing immediate and permanent, parallel shifts in the yield curve up and down 100, 200 and 300 basis points with additional scenarios modeled where appropriate. The model requires that interest rates remain positive for all points along the yield curve for each rate scenario which may preclude the modeling of certain “down rate” scenarios during periods of lower market interest rates. Our interest rate risk management policy establishes acceptable floors for the EVE ratio and caps for the maximum change in the EVE ratio throughout the scenarios modeled.

As illustrated in the tables below, our EVE would be negatively impacted by an increase in interest rates. This result is expected given our liability sensitivity noted earlier. Specifically, based upon the comparatively shorter maturity and/or re-pricing characteristics of our interest-bearing liabilities compared with that of our interest-

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earning assets, an upward movement in interest rates would have a disproportionately adverse impact on the present value of our assets compared to the beneficial impact arising from the reduced present value of our liabilities. Hence, our EVE and EVE ratio decline in the increasing interest rate scenarios. Historically low interest rates at June 30, 2014 and June 30, 2013 precluded the modeling of certain scenarios as parallel downward shifts in the yield curve of 100 basis points or more would result in negative interest rates for many points along that curve.

The following tables present the results of our internal EVE analysis as of June 30, 2014 and June 30, 2013, respectively.


	At June 30, 2014
	Net Portfolio Value					Net Portfolio Value as % of Present Value of Assets
Changes in Rates ⁽¹⁾	$ Amount		$ Change			% Change			Net Portfolio Value Ratio			Basis Point Change
	(In Thousands)
+300 bps		221,884		(196,106	)		(47	)%		7.20	%		(509) bps
+200 bps		297,815		(120,175	)		(29	)%		9.34	%		(295) bps
+100 bps		365,983		(52,007	)		(12	)%		11.11	%		(118) bps
0 bps		417,990		—			—			12.29	%		—


	At June 30, 2013
	Net Portfolio Value					Net Portfolio Value as % of Present Value of Assets
Changes in Rates ⁽¹⁾	$ Amount		$ Change			% Change			Net Portfolio Value Ratio			Basis Point Change
	(In Thousands)
+300 bps		225,946		(192,783	)		(46	)%		8.13	%		(550) bps
+200 bps		309,100		(109,629	)		(26	)%		10.71	%		(292) bps
+100 bps		378,311		(40,418	)		(10	)%		12.67	%		(96) bps
0 bps		418,729		—			—			13.63	%		—

(1)	The (100) bps, (200) bps and (300) bps scenarios are not shown due to the low prevailing interest rate environment.

The dollar amount of EVE throughout the scenarios modeled remained generally stable between comparative periods. As such, the declines in the EVE ratio largely reflect the overall growth in interest-earning assets and interest-bearing liabilities during the period. Notwithstanding the noted changes in EVE and the EVE ratios, the sensitivity of those measures to movements in interest rates between comparative periods remained fairly stable as reflected by consistent percentage changes in EVE across the various interest rate scenarios modeled.

There are numerous internal and external factors that may contribute to changes in an institution’s EVE sensitivity. Internally, changes in the composition and allocation of an institution’s balance sheet and the interest rate risk characteristics of its components can significantly alter the exposure to interest rate risk as quantified by the changes in the EVE sensitivity measures. However, changes to certain external factors, most notably changes in the level of market interest rates and overall shape of the yield curve, can significantly alter the projected cash flows of the institution’s interest-earning assets and interest-costing liabilities and the associated present values thereof. Changes in internal and external factors from period to period can complement one another’s effects to reduce overall sensitivity, partly or wholly offset one another’s effects, or exacerbate one another’s adverse effects and thereby increase the institution’s exposure to interest rate risk as quantified by EVE sensitivity measures.

Our internal interest rate risk analysis also includes an “earnings-based” component which, compared to EVE-based analysis, generally focuses on shorter-term exposure to interest rate risk. A quantitative, earnings-based approach to measuring interest rate risk is strongly encouraged by bank regulators as a complement to the “EVE-based” methodology. However, there are no commonly accepted “industry best practices” that specify the manner in which “earnings-based” interest rate risk analysis should be performed with regard to certain key modeling variables. Such variables include, but are not limited to, those relating to rate scenarios (e.g., immediate and permanent rate “shocks” versus gradual rate change “ramps”, “parallel” versus “nonparallel” yield curve changes), measurement periods (e.g., one year versus two year, cumulative versus noncumulative), measurement criteria (e.g., net interest income versus net income) and balance sheet composition and allocation (“static” balance sheet,

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reflecting reinvestment of cash flows into like instruments, versus “dynamic” balance sheet, reflecting internal budget and planning assumptions).

We are aware that the absence of a commonly shared, industry-standard set of analysis criteria and assumptions on which to base an “earnings-based” analysis could result in inconsistent or misinterpreted disclosure concerning an institution’s level of interest rate risk. Consequently, we limit the presentation of our earnings-based interest rate risk analysis to the scenarios presented in the table below. Consistent with the EVE analysis above, such scenarios utilize immediate and permanent rate “shocks” that result in parallel shifts in the yield curve. For each scenario, projected net interest income is measured over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into the same instruments. Product pricing and earning asset prepayment speeds are appropriately adjusted for each rate scenario.

As illustrated in the tables below, our net interest income would be negatively impacted by a parallel upward shift in the yield curve. Like the EVE results presented earlier, this result is expected given our liability sensitivity noted earlier. The tables below reflect a noteworthy decrease in the sensitivity of net interest income to movements in interest rates between the comparative periods as analyzed from this earnings-based perspective. Such decreases largely reflect the aggregate effects of the various balance sheet management strategies we are currently undertaking to reduce our exposure to interest rate risk.


At June 30, 2014
Rate Change Type	Yield Curve Shift	Balance Sheet Composition & Allocation	Change in Rates		Measurement Period	Net Interest Income		Change in Net Interest Income			Change in Net Interest Income
						(In Thousands)
Base case (No change)	—	Static		0 bps	One Year	$	77,238	$	—			—	%
Immediate and permanent	Parallel	Static		100 bps	One Year		76,140		(1,098	)		(1.42	)
Immediate and permanent	Parallel	Static		200 bps	One Year		75,506		(1,732	)		(2.24	)
Immediate and permanent	Parallel	Static		300 bps	One Year		74,726		(2,512	)		(3.25	)


At June 30, 2013
Rate Change Type	Yield Curve Shift	Balance Sheet Composition & Allocation	Change in Rates		Measurement Period	Net Interest Income		Change in Net Interest Income			Change in Net Interest Income
						(In Thousands)
Base case (No change)	—	Static		0 bps	One Year	$	72,762	$	—			—	%
Immediate and permanent	Parallel	Static		100 bps	One Year		70,604		(2,158	)		(2.97	)
Immediate and permanent	Parallel	Static		200 bps	One Year		68,736		(4,026	)		(5.53	)
Immediate and permanent	Parallel	Static		300 bps	One Year		66,337		(6,425	)		(8.83	)

Notwithstanding the rate change scenarios presented in the EVE and earnings-based analyses above, future interest rates and their effect on net portfolio value or net interest income are not predictable. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, prepayments and deposit run-offs and should not be relied upon as indicative of actual results. Certain shortcomings are inherent in this type of computation. Although certain assets and liabilities may have similar maturity or periods of re-pricing, they may react at different times and in different degrees to changes in market interest rates. The interest rate on certain types of assets and liabilities, such as demand deposits and savings accounts, may fluctuate in advance of changes in market interest rates, while rates on other types of assets and liabilities may lag behind changes in market interest rates. Certain assets, such as adjustable-rate mortgages, generally have features which restrict changes in interest rates on a short-term basis and over the life of the asset. In the event of a change in interest rates, prepayments and early withdrawal levels could deviate significantly from

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those assumed in making calculations set forth above. Additionally, an increased credit risk may result as the ability of many borrowers to service their debt may decrease in the event of an interest rate increase.

SUPERVISION AND REGULATION

General

Kearny Bank and Kearny-Federal operate and New Kearny will operate in a highly regulated industry. This regulation establishes a comprehensive framework of activities in which a savings and loan holding company and federal savings bank may engage and is intended primarily for the protection of the deposit insurance fund and depositors. Set forth below is a brief description of certain laws that relate to the regulation of Kearny Bank and New Kearny. The description does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations.

Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution and its holding company, the classification of assets by the institution and the adequacy of an institution’s allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation, including changes in the regulations governing savings and loan holding companies, could have a material adverse impact on New Kearny, Kearny Bank and their operations. The adoption of regulations or the enactment of laws that restrict the operations of Kearny Bank and/or New Kearny or impose burdensome requirements upon one or both of them could reduce their profitability and could impair the value of Kearny Bank’s franchise, resulting in negative effects on the trading price of our common stock.

Regulation of Kearny Bank

General. As a federally-chartered savings bank with deposits insured by the FDIC, Kearny Bank is subject to extensive regulation by federal banking regulators. This regulatory structure gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies regarding the classification of assets and the level of the allowance for loan losses. The activities of federal savings banks are subject to extensive regulation including restrictions or requirements with respect to loans to one borrower, the percentage of non-mortgage loans or investments to total assets, capital distributions, permissible investments and lending activities, liquidity, transactions with affiliates and community reinvestment. Federal savings banks are also subject to reserve requirements imposed by the Federal Reserve Board. Both state and federal law regulate a federal savings bank’s relationship with its depositors and borrowers, especially in such matters as the ownership of savings accounts and the form and content of Kearny Bank’s mortgage documents.

As a result of the Dodd-Frank Act, the OCC assumed principal regulatory responsibility for federal savings banks from the OTS effective July 21, 2011. Under the Dodd-Frank Act, all existing OTS guidance, orders, interpretations, procedures and other advisory in effect prior to that date remained in effect and enforceable against the OCC until modified, terminated, set aside or superseded by the OCC in accordance with applicable law. The OCC has adopted most of the substantive OTS regulations on an interim final basis.

Kearny Bank must file reports with the OCC concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions such as mergers with or acquisitions of other financial institutions. The OCC regularly examines Kearny Bank and prepares reports to Kearny Bank’s Board of Directors on deficiencies, if any, found in its operations. The OCC has substantial discretion to take enforcement action with respect to an institution that fails to comply with applicable regulatory requirements or engages in violations of law or unsafe and unsound practices. Such actions can include, among others, the issuance of a cease and desist order, assessment of civil money penalties, removal of officers and directors and the appointment of a receiver or conservator. In addition, the FDIC has the authority to recommend to the Comptroller of the Currency to take enforcement action with respect to a particular federally-chartered savings bank and, if the Comptroller does not take action, the FDIC has authority to take such action under certain circumstances.

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Federal Deposit Insurance. Kearny Bank’s deposits are insured to applicable limits by the FDIC. Under the Dodd-Frank Act, the maximum deposit insurance amount has been permanently increased from $100,000 to $250,000.

The FDIC has adopted a risk-based premium system that provides for quarterly assessments. Assessments are based on an insured institution’s classification among four risk categories determined from their examination ratings and capital and other financial ratios. The institution is assigned to a category and the category determines its assessment rate, subject to certain specified risk adjustments. Insured institutions deemed to pose less risk to the deposit insurance fund pay lower assessments, while greater risk institutions pay higher assessments.

In February 2011, the FDIC published a final rule under the Dodd-Frank Act to reform the deposit insurance assessment system. Under the rule, assessments are based on an institution’s average consolidated total assets minus average tangible equity instead of deposits, which was the FDIC’s prior practice. The rule revised the assessment rate schedule to establish assessments ranging from 2.5 to 45 basis points, based on an institution’s risk classification and possible risk adjustments.

In addition to the FDIC assessments, the Financing Corporation (“FICO”) is authorized to impose and collect, with the approval of the FDIC, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended June 30, 2014, the annualized FICO assessment was equal to 0.62 of a basis point of total assets less tangible capital.

The Dodd-Frank Act increased the minimum target Deposit Insurance Fund ratio from 1.15% of estimated insured deposits to 1.35% of estimated insured deposits. The FDIC must seek to achieve the 1.35% ratio by June 30, 2020. It is intended that insured institutions with assets of $10 billion or more will fund the increase. The Dodd-Frank Act eliminated the 1.5% maximum fund ratio, instead leaving the maximum ratio to the discretion of the FDIC. The FDIC has exercised that discretion by establishing a long-term goal of a fund ratio of 2.0%.

The FDIC has authority to increase insurance assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of Kearny Bank. Management cannot predict what assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not currently know of any practice, condition or violation that may lead to termination of our deposit insurance.

Regulatory Capital Requirements. Under the OCC’s regulations, federal savings banks such as Kearny Bank are required to comply with minimum leverage capital requirements. For an institution not anticipating or experiencing significant growth and deemed by the OCC to be, in general, a strong banking organization rated composite 1 under Uniform Financial Institutions Ranking System, the minimum capital leverage requirement is a ratio of Tier 1 capital to total assets of 3.0%. For all other institutions, the minimum leverage capital ratio is 4.0%. Tier 1 capital is the sum of common stockholder’s equity, noncumulative perpetual preferred stock (including any related surplus) and minority investments in certain subsidiaries, less intangible assets (except for certain servicing rights and credit card relationships) and certain other specified items.

OCC regulations also require federal savings institutions to maintain certain ratios of regulatory capital to regulatory risk-weighted assets, or “risk-based capital ratios.” Risk-based capital ratios are determined by allocating assets and specified off-balance sheet items to risk-weighted categories ranging from 0.0% to 200.0%. Institutions must maintain a minimum ratio of total capital to risk-weighted assets of at least 8.0%, of which at least one-half must be Tier 1 capital. Total capital consists of Tier 1 capital plus Tier 2 or supplementary capital items, which include allowances for loan losses in an amount of up to 1.25% of risk-weighted assets, cumulative preferred stock, subordinated debentures and certain other capital instruments, and a portion of the net unrealized gain on equity securities. The includable amount of Tier 2 capital cannot exceed the amount of the institution’s Tier 1 capital.

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Federal savings institutions must also meet a “tangible capital” standard of 1.5% of total adjusted assets. Tangible capital is generally defined as Tier 1 capital less intangible assets except for certain mortgage servicing rights.

In July 2013, the OCC and the other federal bank regulatory agencies issued a final rule to revise the risk-based and leverage capital requirements and the method for calculating risk-weighted assets, to make them consistent with the agreements that were reached by the international Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The final rule applies to all depository institutions, top-tier bank holding companies with total consolidated assets of $500 million or more and top-tier savings and loan holding companies (“banking organizations”). Among other things, the rule establishes a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), sets the minimum leverage ratio for all institutions at a uniform 4% of total assets, increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt out is exercised. The final rule limits a banking organization’s dividends, stock repurchases and other capital distributions, and certain discretionary bonus payments to executive officers, if the bank organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above regulatory minimum risk-based requirements. The final rule becomes effective for us on January 1, 2015. The capital conservation buffer requirement will be phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement will be effective.

In assessing an institution’s capital adequacy, the OCC considers not only these numeric factors but also qualitative risk factors and has authority to establish higher capital requirements for individual institutions as deemed necessary.

Prompt Corrective Regulatory Action. Federal law requires that federal bank regulatory authorities take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For these purposes, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.

The OCC has adopted regulations to implement the prompt corrective action legislation. An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 5.0% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 4.0% or greater, and generally a leverage ratio of 4.0% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 4.0%, or generally a leverage ratio of less than 4.0%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 3.0%, or a leverage ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.

“Undercapitalized” banks must adhere to growth, capital distribution (including dividend) and other limitations and are required to submit a capital restoration plan. A bank’s compliance with such a plan must be guaranteed by any company that controls the undercapitalized institution in an amount equal to the lesser of 5% of the institution’s total assets when deemed undercapitalized or the amount necessary to achieve the status of adequately capitalized. If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional measures, including, but not limited to, a required sale of sufficient voting stock to become adequately capitalized, a requirement to reduce total assets, cessation of taking deposits from correspondent banks, the dismissal of directors or officers and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company. “Critically undercapitalized” institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator

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within 270 days after it obtains such status. These actions are in addition to other discretionary supervisory or enforcement actions that the OCC may take.

The recently adopted final rule that will increase regulatory capital requirements will adjust the prompt corrective action categories accordingly.

Dividend and Other Capital Distribution Limitations. Federal regulations impose various restrictions or requirements on the ability of savings institutions to make capital distributions, including cash dividends. A savings institution that is a subsidiary of a savings and loan holding company, such as Kearny Bank, must file notice with the Federal Reserve Board and an application or a notice with the OCC at least thirty days before making a capital distribution, such as paying a dividend to New Kearny. A savings institution must file an application with the OCC for prior approval of a capital distribution if: (i) it is not eligible for expedited treatment under the applications processing rules; (ii) the total amount of all capital distributions, including the proposed capital distribution, for the applicable calendar year would exceed an amount equal to the savings institution’s net income for that year to date plus the institution’s retained net income for the preceding two years; (iii) it would not adequately be capitalized after the capital distribution; or (iv) the distribution would violate an agreement with the OCC or applicable regulations. The Federal Reserve Board may disapprove a notice and the OCC may disapprove a notice or deny an application for a capital distribution if: (i) the savings institution would be undercapitalized following the capital distribution; (ii) the proposed capital distribution raises safety and soundness concerns; or (iii) the capital distribution would violate a prohibition contained in any statute, regulation, enforcement action or agreement or condition imposed in connection with an application.

Qualified Thrift Lender Test. Federal savings institutions must meet a qualified thrift lender test or they become subject to the business activity restrictions and branching rules applicable to national banks. In addition, the Dodd-Frank Act made failure to satisfy the qualified thrift lender test potentially subject to enforcement action as a violation of law. To meet the qualified thrift lender requirement, a savings institution must either (i) be deemed a “domestic building and loan association” under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) by maintaining at least 60% of its total assets in specified types of assets, including cash, certain government securities, loans secured by and other assets related to residential real property, educational loans and investments in premises of the institution or (ii) satisfy the statutory qualified thrift lender test set forth in the Home Owners’ Loan Act by maintaining at least 65% of its portfolio assets in qualified thrift investments (defined to generally include residential mortgages and related equity investments, certain mortgage-related securities, small business loans, student loans and credit card loans). For purposes of the statutory qualified thrift lender test, portfolio assets are defined as total assets minus goodwill and other intangible assets, the value of property used by the institution in conducting its business and specified liquid assets up to 20% of total assets. A savings institution must maintain its status as a qualified thrift lender in at least nine out of every twelve months.

A savings institution that fails the qualified thrift lender test and does not convert to a bank charter will generally be prohibited from: (1) engaging in any new activity not permissible for a national bank; (2) paying dividends not permissible under national bank regulations; and (3) establishing any new branch office in a location not permissible for a national bank in the institution’s home state. Its holding company would become regulated as a bank holding company rather than a savings and loan holding company. In addition, if the institution does not requalify under the qualified thrift lender test within three years after failing the test, the institution would be prohibited from making any investment or engaging in any activity not permissible for a national bank.

Transactions with Related Parties. Transactions between a savings institution (and, generally, its subsidiaries) and its related parties or affiliates are limited by Sections 23A and 23B of the Federal Reserve Act. An affiliate of an institution is any company or entity that controls, is controlled by or is under common control with the institution. In a holding company context, the parent holding company and any companies which are controlled by such parent holding company are affiliates of the institution. Generally, Section 23A of the Federal Reserve Act limits the extent to which the institution or its subsidiaries may engage in “covered transactions” with any one affiliate to 10% of such institution’s capital stock and surplus and contain an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such institution’s capital stock and surplus. The term “covered transaction” includes an extension of credit, purchase of assets, issuance of a guarantee or letter of credit and similar

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transactions. In addition, loans or other extensions of credit by the institution to the affiliate are required to be collateralized in accordance with specified requirements. The law also requires that affiliate transactions be on terms and conditions that are substantially the same, or at least as favorable to the institution, as those provided to non-affiliates.

Kearny Bank’s authority to extend credit to its directors, executive officers and 10% stockholders, as well as to entities controlled by such persons, is currently governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board. Among other things and subject to certain exceptions, these provisions generally require that extensions of credit to insiders:

•

be made on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those prevailing for comparable transactions with unaffiliated persons and that do not involve more than the normal risk of repayment or present other unfavorable features; and

•

not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of Kearny Bank’s capital.

In addition, extensions of credit in excess of certain limits must be approved by Kearny Bank’s board of directors. Extensions of credit to executive officers are subject to additional limits based on the type of extension involved.

Community Reinvestment Act. Under the CRA, every insured depository institution, including Kearny Bank, has a continuing and affirmative obligation consistent with its safe and sound operation to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community. The CRA requires the OCC to assess the depository institution’s record of meeting the credit needs of its community and to consider such record in its evaluation of certain applications by such institution, such as a merger or the establishment of a branch office by Kearny Bank. The OCC may use an unsatisfactory CRA examination rating as the basis for the denial of an application. Kearny Bank received a “satisfactory” CRA rating in its most recent CRA examination.

Federal Home Loan Bank System. Kearny Bank is a member of the FHLB of New York, which is one of twelve regional Federal Home Loan Banks. Each FHLB serves as a reserve or central bank for its members within its assigned region. It is funded primarily from funds deposited by financial institutions and proceeds derived from the sale of consolidated obligations of the FHLB System. It makes loans to members pursuant to policies and procedures established by the board of directors of the FHLB.

As a member, Kearny Bank is required to purchase and maintain stock in the FHLB of New York in specified amounts. The FHLB imposes various limitations on advances such as limiting the amount of certain types of real estate related collateral and limiting total advances to a member.

The FHLB of New York may pay periodic dividends to members. These dividends are affected by factors such as the FHLB’s operating results and statutory responsibilities that may be imposed such as providing certain funding for affordable housing and interest subsidies on advances targeted for low- and moderate-income housing projects. The payment of such dividends or any particular amount cannot be assumed.

Other Laws and Regulations

Interest and other charges collected or contracted for by Kearny Bank are subject to state usury laws and federal laws concerning interest rates. Kearny Bank’s operations are also subject to federal laws (and their implementing regulations) applicable to credit transactions, such as the:

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•

Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

•

Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services;

•

Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

•

Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

•

Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;

•

Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and

•

Truth in Savings Act, prescribing disclosure and advertising requirements with respect to deposit accounts.

The operations of Kearny Bank also are subject to the:

•

Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

•

Electronic Funds Transfer Act and Regulation E promulgated thereunder, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;

•

Check Clearing for the 21 ^st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check;

•

USA PATRIOT Act, which requires institutions operating to, among other things, establish broadened anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and

•

Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.

Regulation of New Kearny

General. New Kearny will be a savings and loan holding company within the meaning of Section 10 of the Home Owners’ Loan Act. As a result of the Dodd-Frank Act, it will be required to file reports with, and will be

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subject to regulation and examination by, the Federal Reserve Board, as successor to the OTS. New Kearny must also obtain regulatory approval from the Federal Reserve Board before engaging in certain transactions, such as mergers with or acquisitions of other financial institutions. In addition, the Federal Reserve Board has enforcement authority over New Kearny and any non-savings institution subsidiaries. This permits the Federal Reserve Board to restrict or prohibit activities that are determined to pose a serious risk to Kearny Bank. This regulation is intended primarily for the protection of the depositors and not for the benefit of stockholders of New Kearny.

The Federal Reserve Board has indicated that, to the greatest extent possible taking into account any unique characteristics of savings and loan holding companies and the requirements of the Home Owners’ Loan Act, it intends to apply to savings and loan holding companies its supervisory approach to the supervision of bank holding companies. The stated objective of the Federal Reserve Board is to ensure the savings and loan holding company and its non-depository subsidiaries are effectively supervised, can serve as a source of strength for, and do not threaten the safety and soundness of, the subsidiary depository institutions. The Federal Reserve Board has generally adopted the substantive provisions of OTS regulations governing savings and loan holding companies on an interim final basis with certain modifications as discussed below.

Activities Restrictions. As a savings and loan holding company, New Kearny will be subject to statutory and regulatory restrictions on its business activities. The non-banking activities of New Kearny and its non-savings institution subsidiaries will be restricted to certain activities specified by the Federal Reserve Board regulation, which include performing services and holding properties used by a savings institution subsidiary, activities authorized for savings and loan holding companies as of March 5, 1987 and non-banking activities permissible for bank holding companies pursuant to Bank Holding Company Act of 1956 or authorized for financial holding companies pursuant to the Gramm-Leach-Bliley Act. Before engaging in any non-banking activity or acquiring a company engaged in any such activities, New Kearny must file with the Federal Reserve Board either a prior notice or (in the case of non-banking activities permissible for bank holding companies) an application regarding its planned activity or acquisition. Under the Dodd-Frank Act, a savings and loan holding company may only engage in activities authorized for financial holding companies if they meet all of the criteria to qualify as a financial holding company. Accordingly, the Federal Reserve Board will require savings and loan holding companies to elect to be treated as financial holding companies in order to engage in financial holding company activities. In order to make such an election, the savings and loan holding company and its depository institution subsidiaries must be well capitalized and well managed.

Mergers and Acquisitions. New Kearny must obtain approval from the Federal Reserve Board before acquiring, directly or indirectly, more than 5% of the voting stock of another savings institution or savings and loan holding company or acquiring such an institution or holding company by merger, consolidation, or purchase of its assets. Federal law also prohibits a savings and loan holding company from acquiring more than 5% of a company engaged in activities other than those authorized for savings and loan holding companies by federal law or acquiring or retaining control of a depository institution that is not insured by the FDIC. In evaluating an application for New Kearny to acquire control of a savings institution, the Federal Reserve Board would consider factors such as the financial and managerial resources and future prospects of New Kearny and the target institution, the effect of the acquisition on the risk to the insurance funds, the convenience and the needs of the community and competitive factors.

Consolidated Capital Requirements. Savings and loan holding companies have historically not been subjected to consolidated regulatory capital requirements. The Dodd-Frank Act, however, required the Federal Reserve Board to promulgate consolidated capital requirements for bank and savings and loan holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to their subsidiary depository institutions. Instruments such as cumulative preferred stock and trust-preferred securities, which are currently includable as Tier 1 capital, by bank holding companies within certain limits will no longer be includable as Tier 1 capital, subject to certain grandfathering. The previously discussed final rule regarding regulatory capital requirements implements the Dodd-Frank Act’s directives as to holding company capital requirements. Consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions will apply to savings and loan holding companies as of January 1, 2015. As is the case with institutions themselves, the capital conservation buffer will be phased in between 2016 and 2019.

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Source of Strength Doctrine. The Dodd-Frank Act also extended the “source of strength” doctrine, which has long applied to bank holding companies, to savings and loan holding companies as well. The Federal Reserve Board has promulgated regulations implementing the “source of strength” policy, which requires holding companies to act as a source of strength to their subsidiary depository institutions by providing capital, liquidity and other support in times of financial distress. Further, the Federal Reserve Board has issued a policy statement regarding the payment of dividends by bank holding companies that it has also applied to savings and loan holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall financial condition. Regulatory guidance provides for consultation with a holding company’s Federal Reserve Board as to capital distributions in certain circumstances such as where our net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or our overall rate of earnings retention is inconsistent with our capital needs and overall financial condition. The ability of a holding company to pay dividends may be restricted if a subsidiary depository institution becomes undercapitalized. In addition, a subsidiary savings institution of a savings and loan holding company must file prior notice with the Federal Reserve Board, and receive its nonobjection, as well as filing an application or notice with the OCC, and receiving OCC approval or nonobjection, before paying dividends to the parent savings and loan holding company. Federal Reserve Board guidance also provides for regulatory review of certain stock redemption and repurchase proposals by holding companies. These regulatory policies could affect the ability of New Kearny to pay dividends, engage in stock redemptions or repurchases or otherwise engage in capital distributions.

Acquisition of Control. Under the federal Change in Bank Control Act, a notice must be submitted to the Federal Reserve Board if any person (including a company), or group acting in concert, seeks to acquire “control” of a savings and loan holding company. An acquisition of “control” can occur upon the acquisition of 10% or more of the voting stock of a savings and loan holding company or as otherwise defined by the Federal Reserve Board. Under the Change in Bank Control Act, the Federal Reserve Board has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the anti-trust effects of the acquisition. Any company that so acquires control is then subject to regulation as a savings and loan holding company.

TAXATION

Federal Taxation

General . Kearny MHC, Kearny-Federal and Kearny Bank are, and New Kearny will be, subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize certain pertinent federal income tax matters and is not a comprehensive description of the tax rules applicable to Kearny-Federal, New Kearny or Kearny Bank.

All tax years prior to 2011 for Kearny-Federal and 2010 for Atlas Bank are closed to federal tax examination.

Method of Accounting . For federal income tax purposes, Kearny-Federal currently reports its income and expenses on the accrual method of accounting and uses a tax year ending June 30 for filing its federal and state income tax returns.

Bad Debt Reserves . Prior to 1996, Kearny Bank was permitted to establish a reserve for bad debts and to make annual additions to the reserve. These additions could, within specified formula limits, be deducted in arriving at our taxable income. As a result of tax law changes in 1996, Kearny Bank was required to use the specific charge-off method in computing its bad debt deduction beginning with its 1996 federal tax return. Savings institutions were required to recapture any excess reserves over those established as of December 31, 1987 (base year reserve). At June 30, 2014, Kearny Bank had no reserves subject to recapture in excess of its base year reserves.

Kearny-Federal is required to use the specific charge-off method to account for tax bad debt deductions.

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Taxable Distributions and Recapture . Prior to 1996, bad debt reserves created prior to 1988 were subject to recapture into taxable income if Kearny Bank failed to meet certain thrift asset and definitional tests or made certain distributions. Tax law changes in 1996 eliminated thrift-related recapture rules. However, under current law, pre-1988 tax bad debt reserves remain subject to recapture if Kearny Bank makes certain non-dividend distributions, repurchases any of its common stock, pays dividends in excess of earnings and profits, or fails to qualify as a “bank” for tax purposes. At June 30, 2014, our total federal pre-base year bad debt reserve was approximately $30.5 million.

Alternative Minimum Tax . The Internal Revenue Code imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences, less any available exemption. The alternative minimum tax is imposed to the extent it exceeds the regular income tax. Net operating losses can offset no more than 90% of alternative taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years.

Net Operating Loss Carryovers. A financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years. A 2009 federal tax law change allows for a one-time carry back of either 2008 or 2009 taxable losses for up to five years. At June 30, 2014, Kearny-Federal had net operating losses of $2.6 million.

Corporate Dividends-Received Deduction . Kearny-Federal may exclude from its federal taxable income 100% of dividends received from Kearny Bank as a wholly-owned subsidiary by filing consolidated tax returns. The corporate dividends-received deduction is 80% when the corporation receiving the dividend owns at least 20% of the stock of the distributing corporation. The dividends-received deduction is 70% when the corporation receiving the dividend owns less than 20% of the distributing corporation.

State Taxation

Kearny MHC and Kearny-Federal are subject to the New Jersey corporate franchise (income) tax. Kearny-Federal and its subsidiaries file separate New Jersey corporate business tax returns on an unconsolidated basis. Generally, the income of savings institutions in New Jersey, which is calculated based on federal taxable income, subject to certain adjustments, is subject to New Jersey tax. Kearny-Federal and its subsidiaries are not currently under audit with respect to their New Jersey income tax returns nor have they been audited within the past five years. Kearny-Federal is required to file a New Jersey income tax return and is generally subject to a state income tax at a 9% rate.

New Jersey tax law does not and has not allowed for a taxpayer to file a tax return on a combined or consolidated basis with another member of the affiliated group where there is common ownership. However, under recent tax legislation, if the taxpayer cannot demonstrate by clear and convincing evidence that the tax filing discloses the true earnings of the taxpayer on its business carried on in the State of New Jersey, the New Jersey Director of the Division of Taxation may, at the director’s discretion, require the taxpayer to file a consolidated return for the entire operations of the affiliated group or controlled group, including its own operations and income.

As a Maryland business corporation, New Kearny is required to file an annual report with and pay annual franchise taxes to the State of Maryland.

MANAGEMENT

Shared Management Structure

The directors of New Kearny are the same persons who are the directors of Kearny Bank. In addition, each executive officer of New Kearny is also an executive officer of Kearny Bank. We expect that New Kearny and Kearny Bank will continue to have common executive officers until there is a business reason to establish separate management structures.

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Directors

New Kearny has nine directors. Directors serve three-year staggered terms so that approximately one-third of the directors are elected at each annual meeting. The mailing address for each person listed below is 120 Passaic Avenue, Fairfield, New Jersey 07004. Each of the persons listed as a director of Kearny-Federal is also a director of Kearny MHC and Kearny Bank.

The following table sets forth for each director of Kearny-Federal: name, position with the Company, age, year of first election or appointment, and expiration of current term if a director.


Name and Positions with Company	Age as of June 30, 2014	Year First Elected or Appointed ⁽¹⁾	Current Term to Expire

Theodore J. Aanensen Director	69	1986	2014
John N. Hopkins Director	67	2002	2015
John J. Mazur, Jr. Chairman of the Board, Director	60	1996	2016
Joseph P. Mazza Director	70	1993	2014
Matthew T. McClane Director	77	1994	2016
John F. McGovern Director	53	1999	2016
Craig L. Montanaro President and Chief Executive Officer, Director	48	2010	2015
Leopold W. Montanaro Director	74	2003	2015
John F. Regan Director	69	1999	2014

Executive Officers

The following table sets forth information regarding our executive officers who are not members of the board of directors of Kearny-Federal. Age information is as of June 30, 2014. The executive officers of New Kearny and Kearny Bank are elected annually. Each of our executive officers has held their positions listed below for at least the past five years, other than Mr. Vuong, who joined Kearny Bank in 2011 and Mr. Heyer, who joined in 2010.


Name and Positions with Company	Age as of June 30, 2014	Year First Elected or Appointed ⁽¹⁾
William C. Ledgerwood Sr. Executive Vice President, Chief Operating Officer	61	2002
Eric B. Heyer Executive Vice President, Chief Financial Officer	52	2010
Sharon Jones Executive Vice President, Corporate Secretary	60	2002
Patrick M. Joyce Executive Vice President, Chief Lending Officer	49	2002
Erika K. Parisi Executive Vice President, Branch Administrator	49	2002
Khanh B. Vuong Executive Vice President, Chief Risk Officer and Chief Investment Officer	52	2013

(1)

Refers to the year the individual first became a director or executive officer of either Kearny-Federal or Kearny Bank. All current directors, except John N. Hopkins, Leopold W. Montanaro and Craig L. Montanaro who joined the Board in 2002, 2003 and 2010, respectively, became directors of Kearny-Federal on its incorporation in 2001.

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Business Background of Our Executive Officers Who Are Not Directors

The business experience for the past five years of each of our executive officers who are not directors is set forth below. Unless otherwise indicated, the executive officer has held his or her position for the past five years.

William C. Ledgerwood was appointed Senior Executive Vice President and Chief Operating Officer in April 2014 and previously served as Executive Vice President and Chief Operating Officer since April 2011. He became Senior Vice President and Chief Financial Officer of Kearny Bank and Kearny-Federal in December 2006, and served as Senior Vice President, Treasurer and Chief Accounting Officer of Kearny Bank and Kearny-Federal from 2002 through 2006. He has been employed by Kearny Bank since 1998 and he is a graduate of Bucknell University and the National School of Banking at Fairfield University.

Eric B. Heyer was appointed Executive Vice President and Chief Financial Officer effective April 2014 and previously served as Senior Vice President and Chief Financial Officer since April 2011. He became First Vice President and Chief Accounting Officer of Kearny-Federal in October 2009 and of Kearny Bank in July 2009. Mr. Heyer had previously served as Senior Vice President, Treasurer and Chief Financial Officer of American Bancorp of New Jersey, Inc. from 1997 until its acquisition by Investors Bancorp, Inc. in May 2009.

Sharon Jones is the Executive Vice President and Corporate Secretary of Kearny MHC, Kearny-Federal and Kearny Bank. Appointed to the office of Corporate Secretary in 1994, she became a Vice President in 1997, a Senior Vice President in 2002 and an Executive Vice President in April 2014. Beginning her career at Kearny Bank in 1972 as a loan originator, she served as Assistant Vice President of Lending from 1982 to 1994 and also served as Director of Human Resources from 1994 to 2004.

Patrick M. Joyce was appointed Executive Vice President and Chief Lending Officer of Kearny Bank in April 2014, previously serving as Senior Vice President and Chief Lending Officer of Kearny Bank since 2002 and as Vice President of loan originations from 1999 to 2002. He was formerly employed by South Bergen Savings Bank as an Assistant Corporate Secretary and as a loan originator. He joined South Bergen Savings Bank in 1985. He joined Kearny Bank when South Bergen Savings Bank was acquired by Kearny Bank in 1999.

Erika K. Parisi was appointed Executive Vice President and Branch Administrator of Kearny Bank in April 2014, previously serving as Senior Vice President and Branch Administrator of Kearny Bank since 2002 and as Vice President and Branch Administrator from 1999 to 2002. She was formerly employed by South Bergen Savings Bank as Vice President and Branch Administrator and joined Kearny Bank when South Bergen Savings Bank was acquired by Kearny Bank in 1999. She joined South Bergen Savings Bank in 1991.

Khanh B. Vuong was appointed Executive Vice President, Chief Risk Officer and Chief Investment Officer in April 2014, previously serving as Senior Vice President, Chief Risk Officer and Chief Investment Officer since February 2013. Mr. Vuong, with over 25 years’ experience in diverse areas of banking, joined Kearny Bank in February 2011 in the capacity of Vice President of Enterprise Risk Management. He was promoted to the position of First Vice President and Chief Risk Officer in July 2012, then Senior Vice President, Chief Risk Officer and Chief Investment Officer in February 2013. Prior to his employment with Kearny Bank, he served as a Vice President at A.M. Best Company from April 2004 until November 2010 managing the Bank Rating Group. He is a 1983 graduate of New York University/College of Business Administration earning a B.S. in Marketing and Management and in 1985, he earned his M.B.A. in Finance from the Stern School of Business at New York University.

Business Experience and Qualifications of Directors

The Board believes that the many years of service that our directors have had with Kearny-Federal and Kearny Bank or with other financial institutions is one of the directors’ most important qualifications for service on the Board. This service has given them extensive knowledge of the business of Kearny Bank and Kearny-Federal.

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Furthermore, their service on Board committees, especially in areas of audit, compliance and compensation is critical to their ability to oversee the management of Kearny Bank by our executive officers. Service on the Board by the Chief Executive Officer (the “CEO”) is critical to aiding the outside directors to understand the crucial and complicated issues that are common in Kearny Bank’s business. Each outside director brings special skills, experience and expertise to the Board as a result of their other business activities and associations.

Theodore J. Aanensen is an owner and President of Aanensen’s, a luxury home remodeling and custom cabinetry company established in Kearny, New Jersey in 1951. A graduate of Upsala College in 1966, he has been President of Aanensen’s since 1982. He served as Chairman of the Board of Kearny Bank from January 2000 through January 2004 and as Chairman of the Board of Kearny-Federal and Kearny MHC from March 2001 through January 2004. He currently serves on the Board of Directors of Kearny Bank, Kearny MHC and Kearny-Federal. With over 45 years of business experience, Mr. Aanensen has strong leadership, sales and customer assessment skills. Mr. Aanensen has developed a broad understanding of Kearny Bank’s industry based on his service on the Board of Directors since 1986, strengthening the Board’s collective knowledge of our business and the policies and practices of the Board as its governing body.

John N. Hopkins retired March 2011 as Chief Executive Officer of Kearny MHC, Kearny-Federal and Kearny Bank after serving in those positions since March 2010. Prior to March 2010, he served as President and Chief Executive Officer of Kearny MHC, Kearny-Federal and Kearny Bank, positions he had held since 2002. He had served Kearny Bank as Executive Vice President from 1994 to 2002 and as Chief Financial Officer from 1994 to 1999. His career at Kearny Bank began in 1975. Mr. Hopkins was elected to serve as a Director in 2002 and currently serves on the Boards of Directors of Kearny Bank, Kearny-Federal and Kearny MHC. He is a graduate of Fairleigh Dickinson University. Active in professional and charitable organizations, he served on several committees of the New Jersey Bankers Association, the Board of Directors of TICIC, Inc., a consortium that provides long-term financing for affordable and senior housing in New Jersey, Chairman of the Board of Trustees of Clara Maass Medical Center and Director Emeritus of the Rutherford Senior Citizens Center (55 Kip Center). His many years of service in the operations of Kearny Bank and his past duties as Chief Executive Officer of Kearny-Federal and Kearny Bank bring a special knowledge of the financial, economic and regulatory challenges we face which makes him well suited to counseling the Board on these matters.

Joseph P. Mazza has been the sole owner of a dental practice in Rutherford, New Jersey since 1971. A graduate of Seton Hall University and the University of Pennsylvania, he currently serves on the Board of Directors of Kearny Bank, Kearny MHC and Kearny-Federal. He also serves on the Board of Directors of the Rutherford Senior Citizens Center (55 Kip Center). Dr. Mazza has been active in both professional and charitable organizations and has over 40 years of business experience. He served in the U.S. Army from 1969 to 1971, both in the U.S. and in Vietnam, and then continued to serve in the U.S. Army Reserves as a Lieutenant Colonel through 1993. Dr. Mazza brings to the Board strong leadership and business management skills along with valuable experience relating to governance and ethical issues.

John J. Mazur, Jr. is the sole owner and President/Chief Executive Officer of Elegant Desserts, a wholesale bakery located in Lyndhurst, New Jersey, that sells gourmet cakes locally and nationally. A 1976 graduate of Villanova University, he opened this business in 1994. From 1976 to 2003, he was also a partner and general manager of Mazur’s Bakery, in Lyndhurst, New Jersey, a family owned business that operated from 1936 until 2003 when it was sold. He became Chairman of the Board of Directors of Kearny MHC, Kearny-Federal and Kearny Bank in January 2004. Mr. Mazur is a resident of New Jersey and serves on the Board of the Meadowlands Chamber of Commerce as well as serving as Chairman of the Council of Regents for Felician College. Mr. Mazur brings strong marketing and sales skills to the Board as well as a wide range of experience in business management and employee relations.

Matthew T. McClane retired in 2002 as President and Chief Executive Officer of Kearny Bank after serving in that position since 1994 and as President and Chief Executive Officer of Kearny MHC and Kearny-Federal after serving in those positions since 2001. After graduating from St. Peter’s College and serving in the U.S. Army Reserves, he began his career with Kearny Bank in December of 1967. His many years of service included a wide range of responsibility for operations and human resources at Kearny Bank, which together with his past duties as Chief Executive Officer of Kearny-Federal and Kearny Bank bring a special insight and knowledge of personnel

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challenges along with financial, economic and regulatory challenges we face. This acute insight and knowledge makes him well suited to educating the Board on these matters. He currently serves on the Board of Directors of Kearny Bank, Kearny MHC and Kearny-Federal and remains active in the community as a member, past President and current Secretary of the Optimist Club of Kearny, New Jersey.

John F. McGovern has worked as a self-employed Certified Public Accountant (CPA) and Certified Financial Planner (CFP) since 1984 and holds the designation of Personal Financial Specialist (PFS) from the American Institute of Certified Public Accountants. Since 2001, he has been a federally registered investment advisor. Mr. McGovern is also the owner of McGovern Monuments, Inc. a monument sales and lettering company located in North Arlington, New Jersey that has been family owned and operated since 1924. He currently serves on the Board of Directors of Kearny Bank, Kearny MHC and Kearny-Federal. Mr. McGovern, as a CPA/PFS and CFP, has strong risk assessment, financial reporting and internal control expertise as well as extensive knowledge of accounting and regulatory issues. He has been designated as an audit committee financial expert under the Securities and Exchange Commission’s rules and regulations. Through his considerable experience as a CPA/PFS and CFP, Mr. McGovern provides an essential understanding of public accounting and financial matters to the Board. As a resident of New Jersey, he is involved in local and community organizations including the American Institute of Certified Public Accountants and the New Jersey Society of Certified Public Accountants.

Craig L. Montanaro was appointed President and Chief Executive Officer of Kearny-Federal and Kearny Bank in April 2011. Prior to that time, he had served as President and Chief Operating Officer since April 2010. He previously performed the duties of Senior Vice President and Director of Strategic Planning for Kearny Bank and Kearny-Federal from 2005 to March 2010 and from 2003 to 2004 served as Vice President and Regional Branch Administrator. He is a 1988 graduate of Syracuse University earning a Bachelor’s Degree in finance and marketing and in 2000 received his MBA from Fairfield University. He also received a Graduate Degree in banking from the National School of Banking at Fairfield University. Mr. Montanaro, formerly employed by West Essex Bank as Senior Vice President and Chief Operating Officer, joined Kearny Bank when that bank was acquired by Kearny Bank in 2003. West Essex Bank had employed him beginning in 1988. In addition to solid management and administrative skills, his knowledge and understanding of the financial, economic, social and regulatory environments make him a valuable asset to Kearny-Federal, Kearny Bank and to the Board of Directors. Craig L. Montanaro is the son of Director Leopold W. Montanaro.

Leopold W. Montanaro is retired and was the Chairman, President and Chief Executive Officer of West Essex Bancorp, Inc. and West Essex Bank, located in Caldwell, New Jersey, until that bank was acquired by Kearny-Federal on July 1, 2003. He was employed by West Essex Bank beginning in 1972. He serves as a director of Kearny Bank, Kearny-Federal and Kearny MHC. His past service as President of a financial institution, director on the board of the Federal Home Loan Bank of New York, Chairman of the Board of Directors of the New Jersey Thrift and Bankers Association and his participation in our local community for 45 years brings special knowledge of the financial, economic and regulatory challenges we face as well as knowledge of the local economy and business opportunities for Kearny Bank. He is the father of Craig L. Montanaro, President and Chief Executive Officer of Kearny Bank and Kearny-Federal.

John F. Regan now retired, was the majority shareholder and President of two automobile sales and service companies, DeMassi Pontiac, Buick and GMC, located in Riverdale, New Jersey and Regan Pontiac, Buick and GMC, located in Long Island City, New York since 1995. Both companies closed in March 2009, and in July 2009, both companies filed for bankruptcy. He currently serves on the Board of Directors of Kearny Bank, Kearny MHC and Kearny-Federal. Mr. Regan is a resident of New Jersey and his involvement in our local community brings knowledge of the local economy and business opportunities for Kearny Bank. Mr. Regan, while operating his automobile business, developed solid leadership and business management skills as well as a depth of knowledge in the areas of operational efficiency and effectiveness which are a valuable asset to the Board.

Board Independence

The board of directors determines the independence of each director in accordance with Nasdaq Stock Market rules, which include all elements of independence as set forth in the listing requirements for Nasdaq

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securities. The board of directors has determined that Messrs. Aanensen, Mazza, Regan, Mazur, McClane and McGovern are “independent” directors within the meaning of such standards. In evaluating the independence of our independent directors, we found no transactions between us and our independent directors that are not required to be reported in this prospectus and that had an impact on our determination as to the independence of our directors.

Codes of Ethics

Kearny-Federal has adopted a Code of Ethics that reflects current circumstances and Securities and Exchange Commission and Nasdaq definitions for such codes. The code of business conduct and ethics covers Kearny-Federal, Kearny Bank and other subsidiaries. Among other things, the code of business conduct and ethics includes provisions regarding honest and ethical conduct, conflicts of interest, full and fair disclosure, compliance with law, and reporting of and sanctions for violations. The code applies to all directors, officers and employees of Kearny-Federal and subsidiaries. We have posted a copy of the Code of Ethics on our corporate website, at www.kearnyfederalsavings.com, on the “Investor Relations” tab under the link “Governance Documents.” As further matters are documented, or if those documents (including the Code of Ethics) are changed, waivers from the code of business conduct and ethics are granted, or new procedures are adopted, those new documents, changes and/or waivers will be posted on the corporate website at that address.

Transactions With Certain Related Persons

Since the beginning of the last fiscal year, no directors, officers or their immediate family members have had a direct or indirect material interest in any transactions in which we or any subsidiary were a participant involving an amount in excess of $120,000 (other than loans from Kearny Bank).

Kearny Bank makes loans to its officers, directors and employees in the ordinary course of business. Kearny Bank has adopted written policies governing these loans. In accordance with federal regulations, all such loans or extensions of credit were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to Kearny Bank and did not involve more than the normal risk of collectability or present other unfavorable features. All such loans are approved in advance by the Board of Directors with any interested director abstaining. Loans to insiders are monitored on a monthly basis to ensure continued compliance with Kearny Bank’s lending policies.

COMPENSATION DISCUSSION AND ANALYSIS

Stockholder Advisory Votes on Executive Compensation.

At the 2011 Annual Meeting of Stockholders, the stockholders approved the advisory vote on our executive compensation policies and practices as disclosed in the Compensation Discussion and Analysis (“CD&A”) and the proxy statement by more than 98% of the shares voting on the matter. In addition, the stockholders approved an advisory vote recommending that such advisory vote be taken every three years by more than 91% of the shares voting on the matter. The next advisory vote on executive compensation is scheduled to be taken at the annual meeting of Kearny-Federal stockholders in 2014.

General Policy

The objective of our executive compensation program is to offer competitive short-term and long-term compensation opportunities that will attract, motivate and retain qualified and talented executives who will help facilitate improved financial performance and earnings growth with a focus on enhancing long-term value for our stockholders. Our executive compensation program is intended to align the interests of our executive officers with stockholders by rewarding performance measured against the approved annual corporate budget, and by rewarding strong executive leadership and superior individual performance. Compensation levels for executives are established after considering factors that include, but are not limited to, our financial performance and competitive labor market conditions. Furthermore, qualitative factors such as overall job performance, individual leadership, teamwork, and community involvement are considered in compensation deliberations.

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Components of Compensation

In establishing and evaluating executive compensation, the Compensation Committee concentrates on several fundamental pay components: base salary, bonus compensation, retirement income opportunity and long-term performance-based incentives through equity based compensation.

Base Salary : Salary levels for senior executives and other officers are reviewed by the Compensation Committee on an annual basis. Salary levels reflect an individual’s job responsibilities, career experience and job performance and the Compensation Committee’s analysis of competitive marketplace conditions for similar positions.

Bonus Compensation : We seek to reward the achievement of our and Kearny Bank’s business objectives by providing bonus compensation to those individuals who play an instrumental role in defining and then achieving or exceeding specific previously determined organizational business objectives. Although the Compensation Committee’s decisions are discretionary, the general factors that are used to determine bonuses are: (1) the actual company performance achieved as detailed in the annual operating budget; (2) an individual’s contribution to our and Kearny Bank’s achievement of its goals as detailed in its business plan and the annual operating budget since the executive’s last evaluation; and (3) the individual’s demonstrated capacity to adapt to changing business needs. No specific weightings of these factors were used to calculate bonuses. The Compensation Committee reviews the corporate performance following the end of the planning year as measured against the corporate budget approved by the Board for such year. The aggregate bonus pool accrued during the 2014 fiscal year was equal to 5.50% of total employee base compensation. While the Compensation Committee considers actual corporate performance compared against its corporate budget, aggregate bonus compensation and individual bonus awards are not directly tied to that measure.

Retirement Income Opportunity : Another component of both our and Kearny Bank’s executive compensation strategy is retirement income opportunity. Presently, retirement income opportunity involves Kearny Bank’s defined benefit pension plan and the Benefits Equalization Plan related to the defined benefit plan (each of which have been frozen as of July 1, 2007 so that future service or salary changes will not increase retirement benefits). Kearny Bank also maintains a 401(k) Plan and an Employee Stock Ownership Plan (“ESOP”) and related ESOP Benefits Equalization Plan. The retirement income programs provide a significant inducement for long-term retention of high-performing executives.

Equity Based Compensation : Our stockholders approved our Stock Compensation and Incentive Plan in 2005. Through this plan, senior executives and other officers may be awarded stock options and restricted stock awards that will offer them the possibility of future compensation opportunity depending on the executive’s continued employment with us and Kearny Bank and the long-term price appreciation of our common stock. During the fiscal years ended June 30, 2014, 2013 and 2012, no equity awards were made to any of our named executive officers, except for a stock option and restricted stock award made to Mr. Vuong on April 1, 2014. The Compensation Committee may grant equity-based compensation from time to time and it considers making awards in conjunction with the value of the other components of compensation in order to evaluate the overall value of each compensation component to senior executive and other officers. Although the stock options previously awarded to the executive officers do not currently represent a significant component of the overall compensation program, at the time of grant it was anticipated that such options would provide a meaningful compensation opportunity in the longer term in conjunction with long-term increases in stockholder value as measured by anticipated future appreciation in the market value of our stock. Such equity awards were granted in an effort to provide the senior executives and other officers with long-term performance and retention incentives consistent with our objective of enhancing long-term value for our stockholders.

In connection with the conversion, all outstanding stock options and restricted stock awards granted under the Stock Compensation and Incentive Plan will be exchanged for new stock options and shares of New Kearny common stock, as applicable, pursuant to the exchange ratio related to the conversion. All such awards will continue to be subject to the applicable terms of the award agreement.

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Other Important Components of the Compensation Program : In addition to these components of the compensation program, we also maintain employment agreements, including change in control severance protection for the executive officers named in the Summary Compensation Table, insurance programs and other benefit programs, and perquisites and other personal benefits, all consistent with industry practices in our market areas. All of these components of the compensation program are intended to maintain a competitive compensation program necessary to reward our executive officers for achieving our corporate goals and objectives and to provide the necessary job security and protections so that they may focus on achieving improved financial performance for us and our stockholders and to permit us to recruit new professional staff from time to time as necessary.

Senior Management Incentive Compensation Plan — Short Term Incentives

The primary objective of our Senior Management Incentive Compensation Plan (the “Incentive Compensation Plan”) is to motivate and reward senior management for achieving specific New Kearny goals that support our profitability, growth and prudent management of risk.

Eligibility is limited to executives and certain senior vice president positions that have a significant impact on the success of New Kearny. Participants include the officer tier levels of Senior Vice President, Executive Vice President, Senior Executive Vice President and President and Chief Executive Officer. Participants will be nominated by the President and Chief Executive Officer and approved by the Compensation Committee.

The performance goals are defined each year and approved by the Compensation Committee. At the beginning of each fiscal year, the President and Chief Executive Officer proposes performance goals to the Compensation Committee. The Compensation Committee discusses the proposed New Kearny goals with the Chief Executive Officer and incorporates appropriate modifications before adoption by the Compensation Committee.

Actual payouts are expected to vary each year based on a combination of New Kearny and individual performance. Funding for the Incentive Compensation Plan can range from 0% to 50% of a participant’s base salary depending on New Kearny performance and strategic achievements. For the fiscal year ending June 30, 2015, target annual incentive opportunities for different performance goals are 25% of base salary, and payments to the named executive officers will not exceed 50% of base salary depending on the performance of New Kearny.

After the end of the performance year, the President and Chief Executive Officer will provide the Compensation Committee with a summary of each officer’s performance and incentive recommendations based on their individual performance results relative to specific goals set at the start of the year. The Compensation Committee will conduct a similar review of the President and Chief Executive Officer, which includes input concerning the President and Chief Executive Officer’s performance from the Board of Directors, assessing individual goals, and overall contributions for the year. The Compensation Committee determines the President and Chief Executive Officer’s award and approves the officer awards. The Compensation Committee retains the discretion to modify incentive payouts based on significant individual or New Kearny performance shortfalls and/or regulatory and safety and soundness considerations. The Compensation Committee also has the discretion to make the award, or a portion of the award, payable in the form of equity, if desired, to facilitate officers’ ownership guidelines.

In order to ensure incentives are funded based on profits, New Kearny must achieve at least a threshold level of net income for any performance factor to pay above target levels. Threshold net income is defined as 75% of Kearny Bank’s budget for the Incentive Compensation Plan year. If Kearny Bank does not achieve the threshold net income level, incentive payout awards for any one-performance factor will be capped at target level. If performance falls below 50% for any individual performance factor, no incentive compensation will be paid out on that performance measure. Additionally, an overall floor has been instituted in which no payout will result if net income falls below 50% of target. The Incentive Compensation Plan may be adjusted for extraordinary items at the discretion of the Compensation Committee with Board approval.

The size of the incentive pool funding is determined based on New Kearny performance relative to the following performance targets: Net Income, Return on Average Assets, Earnings Per Share, Loan Growth, Core

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Deposit Growth, and certain other risk management factors such as Asset Quality or Interest Rate Risk. Each goal has a defined range of acceptable performance (underperformance, target and outperformance). If target is achieved, 100% of the pool is credited for that metric. If the minimum threshold is achieved, 50% of the pool is credited for that metric and outperformance is credited at 200%, with payment to a named executive officer capped at 50% of base salary.

The Compensation Committee weights each named executive officer’s annual performance targets under the Incentive Compensation Plan differently based on both corporate financial targets and individual goals. As an example, certain named executive officers may have higher weights assigned to corporate financial targets and lower weights assigned to their individual goals based on the nature of their job and the associated responsibilities.

The objective is to ensure our Incentive Compensation Plan is funded appropriately based on profits and strategic results.

In the event New Kearny or Kearny Bank is required to restate its financial statements, the effect of which negatively impacts reported financial results, participants will be required to forfeit any incentive award earned or distributed during the period for which the restatement is required in excess of what they would have otherwise received based on restated results. The Compensation Committee has discretion in determining the application of clawbacks and the amounts to be reclaimed.

The Incentive Compensation Plan was implemented effective July 1, 2014, and accordingly no awards were made under the Incentive Compensation Plan for the fiscal year ended June 30, 2014.

Administration of Compensation Program

The Compensation Committee of Kearny-Federal is responsible for the administration of the compensation program for the Chief Executive Officer and the other executive officers. The Compensation Committee meets periodically throughout the fiscal year, to determine annual salary adjustments, cash bonus and any equity awards for senior executive and other officers. Kearny Federal does not have a formal policy addressing each specific type of compensation. The Compensation Committee considers a variety of factors as it evaluates compensation for each officer, including:

•

overall Kearny-Federal financial performance as compared to budget and prior year’s performance;

•

bank regulatory compliance and examination results;

•

bank performance metrics compared to other financial services companies in our market area, including return on assets, return on equity, level of non-performing loans and efficiency ratio;

•

the individual achievements of each officer in their respective areas of responsibility; and

•

the market competitiveness of Kearny Federal’s compensation and benefits programs applicable to its executive management.

The Compensation Committee does not assign a specific weight to any given factor, and no factor has more specific weight than another factor considered. Annual salary increases are generally made in amounts deemed necessary to maintain the competitiveness of the salary structure. Absent a material increase in duties performed by an executive or a significant change in the economic or competitive environment, salaries are not increased materially from year to year.

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Mr. Montanaro, serving as the Chief Executive Officer, met with the Compensation Committee to discuss the performance evaluations of each of the executive officers, excluding him, and presented his recommendations. Mr. Montanaro is not present for any discussion involving his personal compensation.

The Compensation Committee awards specific bonus amounts for each executive officer after reviewing Kearny-Federal’s most recently completed fiscal year results and individual performance. Beginning on July 1, 2014, and for the fiscal year ending June 30, 2015, the Compensation Committee will approve bonuses under the terms of the Incentive Compensation Plan as described above. Kearny-Federal has never been required to materially adjust or restate its reported earnings. If Kearny-Federal is required to restate its financial statements, the effect of which negatively impacts reported financial results, participants in the Incentive Compensation Plan will be required to forfeit incentive awards earned or distributed during the period for which the restatement is required in excess of what they would have otherwise received based on restated results. Under the Dodd-Frank Act, a policy of recoupment of incentive compensation will be required for institutions above $1 billion in asset size. Kearny-Federal will be implementing such a recoupment policy in the future to comply with such requirements following issuance of final regulations by our Federal banking regulators.

The Board of Directors believes that equity-based compensation is important in aligning the interests of management with those of stockholders and has established the ESOP and Kearny-Federal’s 2005 Stock Compensation and Incentive Plan to help facilitate this objective. Although each of the executive officers has a substantial personal investment in our common stock, the Board of Directors does not have any formal equity ownership requirements or guidelines for our executive officers or directors.

Committee Review of Executive Compensation

In making its recommendations regarding executive compensation at calendar year-end 2013, the Compensation Committee considered various factors, including the financial condition and performance of Kearny-Federal compared to Kearny-Federal’s operating budget, the current economic conditions and interest rate environment, and the executive officer’s efforts to generate revenues and implement cost reduction strategies. The Compensation Committee also considers the individual performance of the executive officers, attainment of strategic business initiatives and regulatory compliance. The Compensation Committee has considered the potential risks to which the incentive compensation programs may expose Kearny-Federal, and the established policies, controls and procedures of Kearny-Federal and Kearny Bank that exist to protect against such risks to Kearny-Federal (See “—Compensation Risk Assessment”).

The Compensation Committee utilizes publicly available information to gather information related to compensation practices for executive officers of financial services companies in order to determine market competitive levels of compensation as well as reviewing internal pay levels within the executive group. The Compensation Committee’s review of such information includes an analysis of the compensation practices for executive officers of financial services companies with assets of between $1.0 billion and $5.0 billion located in New Jersey and in the adjacent states of New York and Pennsylvania within approximately 100 miles of Fairfield, New Jersey. In November 2013, these companies consisted of BCB Bancorp, Inc., Beneficial Mutual Bancorp, Inc., Bryn Mawr Bank Corporation, Cape Bancorp, Inc., Center Bancorp, Inc., Clifton Savings Bancorp, Inc., Customers Bancorp, Inc., Dime Community Bancshares, Inc., ESSA Bancorp, Inc., First of Long Island Corporation, Flushing Financial Corporation, Fox Chase Bancorp, Inc., Hudson Valley Holding Corp., Intervest Bancshares Corporation, Lakeland Bancorp. Inc., Northfield Bancorp, Inc., Ocean Shore Holding Co., OceanFirst Financial Corp., Oritani Financial Corp, Peapack-Gladstone Financial Corporation, Suffolk Bancorp, Sun Bancorp, Inc. and Univest Corporation of Pennsylvania.

In November 2013, the Compensation Committee reviewed the total salary plus cash bonus payments received by the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Lending Officer and the Chief Risk Officer for the companies in this comparative group as reported in the summary compensation table of such companies as set forth in the most recent annual meeting proxy statements as filed with the Securities and Exchange Commission. The Compensation Committee reviewed the reported compensation for the comparable group’s 25th percentile, median and 75th percentile with respect to total salary and total salary plus

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cash bonus paid by this group of companies for each executive position reviewed. The Compensation Committee reviewed such data prior to making its salary and cash bonus decisions in late 2013 with respect to the executive officers included in the Summary Compensation Table. Kearny-Federal does not engage in any specific benchmarking of total compensation or specific elements of compensation to a predetermined peer group of companies when determining compensation levels for its executive officers. The comparison companies and the elements of compensation that are compared are reviewed annually and may change from year-to-year. The Compensation Committee makes decisions regarding each individual executive’s target total compensation opportunity with consideration of the goal of motivating and retaining an experienced and effective management team.

In June 2014, the Compensation Committee reviewed updated total salary and total salary plus cash bonus compensation received by the Chief Executive Officers, the Chief Operating Officers, the Chief Financial Officers and the Chief Lending Officers for the companies in this comparative group as reported in the summary compensation table of such companies. The Compensation Committee reviewed updated compensation information with respect to the comparable group’s 25th percentile, median and 75th percentile with respect to total salary and total salary plus cash bonus paid by this group of companies for each executive position reviewed. The Compensation Committee determined that the compensation decisions made in December 2013 were consistent with the updated market data available.

The Compensation Committee has access to the public disclosures of comparable companies and available trade compensation surveys through Kearny-Federal’s internal resources and its business advisors. However, the Compensation Committee formulates its own compensation decisions based upon its review and analysis of such data, rather than relying on the analysis and recommendations of third-party consultants. The Compensation Committee utilized the services made available through ADP and IBM (formerly Kenexa) to assist the Compensation Committee in the review of certain matters, including developing compensation benchmarks for job positions organization-wide and developing incentive compensation programs for all executive and other positions throughout the organization.

The Compensation Committee is responsible for conducting periodic reviews of the executive compensation of senior executives, including the President and Chief Executive Officer. The Compensation Committee determines salary levels for senior executives and other officers and amounts of cash bonuses to be distributed to those individuals, if and as appropriate. Awards to senior management and key employees under Kearny-Federal’s 2005 Stock Compensation and Incentive Plan are determined by the Compensation Committee.

The Compensation Committee met during November and December 2013 and reviewed the compensation of the senior officers, Kearny-Federal’s operating performance, the competitive market competition data and determined to increase the base salaries of the named executive officers, other than the President and Chief Executive Officer and Senior Executive Vice President and Chief Operating Officer, by 5% effective as of January 1, 2014. The Compensation Committee also approved a bonus payment equal to 3% of base salary to each of the named executive officers. Such cash bonuses awarded in December 2013 related to performance for the fiscal year ended June 30, 2013.

Compensation of the Chief Executive Officer

In assessing appropriate types and amounts of compensation for the CEO, the Board evaluates both corporate and individual performance. Individual factors include the CEO’s initiation and implementation of successful business strategies; maintenance of an effective management team and management succession planning; and various personal qualities, including leadership, commitment, and professional and community standing.

In November 2013 the Compensation Committee reviewed Kearny-Federal’s fiscal year 2013 operating results, as well as the job performance of President and CEO, Craig Montanaro. The Compensation Committee believes that Mr. Montanaro has made significant contributions to our ongoing success, including his vision and leadership efforts in terms of the transformation process that is still occurring at Kearny-Federal and Kearny Bank, including the significant increase in commercial loan growth that has occurred, improvements in Kearny Bank’s deposit products mix profitability, as well as asset quality improvements. The Compensation Committee also

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considered his leadership in efforts to control organizational cost while increasing revenues and profitability. The Compensation Committee also considered his efforts with Kearny-Federal and Kearny Bank in establishing good working relationships with the organizations’ new banking regulators (the Federal Reserve Board and the OCC), and the significant regulatory compliance changes that Kearny-Federal and Kearny Bank have had to comply with over the last two years. Additionally, the Compensation Committee considered the median and 75th percentile base salary and total cash compensation paid to the CEO of the comparative peer group companies. Mr. Montanaro did not receive a base salary increase for 2014. The Compensation Committee did approve a bonus award of $13,500 (representing 3% of base salary) for the fiscal year 2013 performance .

Tax Deductibility of Executive Compensation

Under Section 162(m) of the Internal Revenue Code, companies are subject to limits on the deductibility of executive compensation. Deductible compensation is limited to $1 million per year for the Chief Executive Officer and the three most highly paid executive officers listed in the summary compensation table other than the Chief Financial Officer. Compensation that is “performance-based” under the Internal Revenue Code’s definition is exempt from this limit. Stock option grants by Kearny-Federal are intended to qualify as performance-based compensation.

The Compensation Committee does not have a formal policy with respect to the payment of compensation in excess of the deduction limit. The Compensation Committee’s practice is to structure compensation programs offered to the executive officers with a view to providing incentives necessary to attract, retain and reward our executive officers. In most instances, such compensation is anticipated to satisfy the requirements for tax-deductibility. The Compensation Committee may determine to authorize payments, all or part of which would be nondeductible for federal tax purposes. It is anticipated that all compensation earned for the fiscal year ended June 30, 2014 will be a deductible expense for tax purposes in accordance with Section 162(m) of the Internal Revenue Code.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis that is required by the rules established by the Securities and Exchange Commission. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Prospectus.

Compensation Committee: Theodore J. Aanensen (Chair), John J. Mazur, Jr., Joseph P. Mazza and Matthew T. McClane

Compensation Committee Interlocks and Insider Participation

The Compensation Committee consists of Directors Aanensen, Mazur, Mazza and McClane. Members of the Compensation Committee are non-employee directors of Kearny-Federal and Kearny Bank. No member of the Compensation Committee or any other director is, or was during fiscal year 2014, an executive officer of another company whose board of directors has a comparable committee on which one of Kearny-Federal’s executive officers serves. None of the executive officers of Kearny-Federal is, or was during fiscal year 2014, a member of the board of directors or a comparable compensation committee of a company of which any of the directors of Kearny-Federal is an executive officer.

COMPENSATION RISK ASSESSMENT

During the 2014 fiscal year, senior management has conducted an updated Compensation Risk Assessment which was presented to and reviewed by the Compensation Committee. This Compensation Risk Assessment concluded Kearny-Federal’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on Kearny-Federal.

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Summary Compensation Table. The following table sets forth for the fiscal years ended June 30, 2014, 2013 and 2012 certain information as to the total compensation paid to our President and Chief Executive Officer, Executive Vice President and Chief Financial Officer and our three other most highly compensated executive officers. Each executive is referred to as a named executive officer.


Name and Principal Position	Year		Salary($)		Bonus($)		Stock Awards ⁽¹⁾ ($)		Option Awards ⁽¹⁾ ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ⁽²⁾ ($)		All Other Compensation ⁽³⁾ ($)		Total($)

Craig L. Montanaro		2014		450,000		13,500		—		—		10,000		76,284		549,784
President and		2013		375,000		15,000		—		—		—		41,637		431,637
Chief Executive Officer		2012		300,000		15,000		—		—		31,000		50,294		396,294

William C. Ledgerwood		2014		300,600		9,018		—		—		36,000		55,773		401,391
Sr. Executive Vice		2013		285,600		13,530		—		—		—		44,236		343,366
President and Chief Operating Officer		2012		270,600		13,530		—		—		87,000		47,229		418,359

Patrick M. Joyce		2014		275,348		8,059		—		—		26,000		39,625		349,032
Executive Vice President		2013		263,466		12,915		—		—		—		31,301		307,682
and Chief Lending Officer		2012		258,300		12,915		—		—		74,000		35,366		380,581

Eric B. Heyer		2014		245,180		7,176		—		—		—		35,285		287,641
Executive Vice President		2013		234,600		11,500		—		—		—		24,721		270,821
and Chief Financial Officer		2012		230,000		11,340		—		—		—		27,850		269,190

Khanh B. Vuong		2014		230,881		25,000		110,925		129,000		—		32,935		528,741
Executive Vice President		2013		208,904		25,000		—		—		—		13,609		247,513
Chief Risk Officer,		2012		177,624		25,000		—		—		—		1,872		204,496
and Chief Investment Officer

(1)

These amounts represent the aggregate grant date fair value for outstanding restricted stock awards and stock option awards granted during the year indicated, computed in accordance with FASB ASC Topic 718. The assumptions used to determine the value of restricted stock awards and stock option awards described in Note 16 to the audited consolidated financial statements. For stock option awards, amounts reported are grant date fair values computed based upon the Black-Scholes options valuation model, which estimated the present dollar value of Kearny-Federal’s common stock options at the time of the grant. The actual value, if any, that may be realized will depend on the excess of the stock price over the exercise price on the date the options is exercised. Therefore, there is no assurance that the value realized by a named executive officer will be at or near the value shown above. For restricted stock awards, the amount shown reflects the aggregate grant date fair value of restricted stock awards granted to a named executive officer on April 1, 2014 with a grant date market value of $14.79 per share. Since all grants vest (are earned) at a rate of 20% per year beginning in 2015, the named executive officer will not recognize any income from the awards during 2014.

(2)

Includes for each individual the increase (if any) for the fiscal year in the present value of the individual’s accrued benefit (whether or not vested) under each tax-qualified and non-qualified actuarial or defined benefit plan calculated by comparing the present value of each individual’s accrued benefit under each such plan in accordance with FASB ASC Topic 715 as of the plan’s measurement date in such fiscal year to the present value of the individual’s accrued benefit as of the plan’s measurement date in the prior fiscal year.

(3)	For fiscal year 2014, all other compensation included the following:


Name	401(k) Plan Employer Contribution($)		Bank Owned Life Insurance (Taxable)($)		Allocation of Shares Under the *ESOP($)**		Long-Term Care Insurance Premium($)		Accrued Dividends on Unvested Stock Awards($)		Auto($)		Country Club Dues($)
Craig L. Montanaro		—		727		54,967		3,212		—		6,714		10,664
William C. Ledgerwood		6,937		1,394		35,692		4,750		—		7,000		—
Patrick M. Joyce		5,211		521		31,201		2,692		—		—		—
Eric B. Heyer		7,079		629		27,577		—		—		—		—
Khanh B. Vuong		6,926		484		25,525		—		—		—		—

*	For Messrs. Montanaro, Ledgerwood and Joyce includes regular ESOP allocations of $29,400, $29,401 and $29,401, respectively, and compensation under the related ESOP Benefits Equalization Plan of $25,567, $6,291 and $1,800, respectively.

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Grants of Plan-Based Awards . The following table provides information regarding options and restricted stock awards granted to the named executive officers during the fiscal year ended June 30, 2014.


Name	Grant Date	All Other Stock Awards: Number of Shares of Stock (#)			All Other Option Awards: Number of Securities Underlying Options (#)			Exercise Price of Option Awards		Grant Date Fair Value of Stock and Option Awards
Craig L. Montanaro	—		—			—			—		—
William C. Ledgerwood	—		—			—			—		—
Patrick M. Joyce	—		—			—			—		—
Eric B. Heyer	—		—			—			—		—
Khanh B. Vuong	April 1, 2014		7,500	⁽¹⁾		30,000	⁽¹⁾	$	14.79	$	239,925	⁽²⁾

(1)	Restricted stock awards and stock options vest at a rate of 20% per year, commencing on April 1, 2015.

(2)	Amounts reflect the full grant date fair value of the awards calculated in accordance with FASB ASC Topic 718.

Outstanding Equity Awards at Fiscal Year End. The following table provides information regarding options and restricted stock awards held by the named executive officers as of June 30, 2014.


	Option Awards								Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable		Number of Securities Underlying Unexercised Options Unexercisable ⁽¹⁾		Option Exercise Price($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested ⁽¹⁾		Market Value of Shares or Units of Stock That Have Not Vested ⁽²⁾ ($)
Craig L. Montanaro		140,000		—		12.71		12/5/2015		—		—
William C. Ledgerwood		140,000		—		12.71		12/5/2015		—		—
Patrick M. Joyce		140,000		—		12.71		12/5/2015		—		—
Eric B. Heyer		18,000		12,000		10.16		4/1/2021		6,000		90,840
Khanh B. Vuong		—		30,000		14.79		4/1/2024		10,500		158,970

(1)

On April 1, 2011, restricted stock awards and stock options were granted to Mr. Heyer, and restricted stock awards were granted to Mr. Vuong, and the awards vest at the rate of 20% per year, beginning on the one-year anniversary of the date of the grant. On April 1, 2014, Mr. Vuong received a grant of stock options, and an additional 7,500 shares of restricted stock awards and both awards vest at the rate of 20% per year beginning on the one-year anniversary of the date of the award.

(2)	Based upon the closing market price of the stock as of June 30, 2014 of $15.14 per share as reported on the Nasdaq Global Select Market.

Option Exercises and Stock Vested. The following table sets forth information regarding the vesting of restricted stock awards to the named executive officers during the fiscal year ended June 30, 2014.


	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ⁽¹⁾ ($)
Craig L. Montanaro		—		—		—		—
William C. Ledgerwood		—		—		—		—
Patrick M. Joyce		—		—		—		—
Eric B. Heyer		—		—		3,000		44,370
Khanh B. Vuong		—		—		1,500		22,185

(1)	Based upon the fair market value of the stock on the date of vesting, April 1, 2014 of $14.79 per share as reported on the Nasdaq Global Select Market.

Pension Benefits. Kearny Bank is a participating employer in a multiple-employer pension plan sponsored by the Pentegra Defined Benefit Plan for Financial Institutions (the “Pension Plan”). Participants become fully vested in the Pension Plan upon the earlier of completion of five years’ service or attainment of the normal retirement age of 65. The Pension Plan is intended to comply with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Pension Plan provides for monthly payments to each participating employee at normal retirement age. A participant who is vested in the Pension Plan may take an early retirement and elect to

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receive a reduced monthly benefit beginning as early as age 45. The Pension Plan also provides for payments in the event of disability or death. The annual benefit amount upon retirement at age 65 equals 2% of the participant’s highest five-year average salary times years of service. Benefits are payable in the form of a monthly retirement benefit and a death benefit or an alternative form that is actuarially equivalent. Effective July 1, 2007, Kearny Bank “froze” all future enrollments and benefit accruals under its non-contributory defined benefit pension plan and related benefits equalization plan.

The following table provides information with respect to each defined benefit pension plan in which the named executive officers may receive payments or other benefits at, following, or in connection with retirement.


Name	Plan Name	Number of Years Credited Service		Present Value of Accumulated Benefit ⁽¹⁾ ($)		Payments During Last Fiscal Year($)
Craig L. Montanaro	Pension		4		81,000		—
William C. Ledgerwood	Pension		9		394,000		—
Patrick M. Joyce	Pension		8		202,000		—
Eric B. Heyer ⁽²⁾	Pension		—		—		—
Khanh B. Vuong ⁽²⁾	Pension		—		—		—

(1)	Assumes retirement at normal retirement age as defined in the Pension Plan. Present value is calculated using assumptions set forth in Note 16 to the audited consolidated financial statements.

(2)	Messrs. Heyer and Vuong do not participate in the Pension Plan or Benefits Equalization Plan.

ESOP. Kearny Bank maintains an ESOP a tax-qualified defined contribution retirement plan, for all employees who have satisfied the ESOP’s eligibility requirements. Employees of Kearny Bank who have been credited with at least 1,000 hours of service during a 12-month period are eligible to participate in the ESOP. The ESOP borrowed funds from Kearny-Federal pursuant to a loan agreement and used those funds to purchase 1,745,700 shares of common stock for the ESOP in connection with Kearny-Federal’s minority stock offering in 2005. The purchased shares serve as collateral for the loan. The loan is being repaid principally through annual contributions to the ESOP by Kearny Bank over the 12-year loan term. The loan is currently scheduled to be paid off on March 31, 2017. Shares purchased by the ESOP are held in a suspense account for allocation among the participants’ accounts as the loan is repaid on a pro-rata basis.

Contributions to the ESOP and shares released from the suspense account in an amount proportional to the repayment of the ESOP loan will be allocated to each eligible participant’s plan account, based on the ratio of each participant’s compensation to the total compensation of all eligible participants. Vested benefits will be payable generally upon the participants’ termination of employment, and will be paid in the form of common stock. Pursuant to FASB ASC Topic 718-40, we are required to record a compensation expense each year in an amount equal to the fair market value of the shares released from the suspense account.

In connection with the conversion, the ESOP is expected to purchase 5% of the shares of New Kearny common stock sold in the stock offering and issued to the Foundation. We anticipate that the ESOP will fund its stock purchase with a loan from New Kearny equal to the aggregate purchase price of the common stock. This loan will be repaid principally through Kearny Bank’s contribution to the ESOP and dividends payable on the common stock held by the ESOP over the anticipated 20-year term of the loan. The interest rate for the ESOP loan is expected to be an adjustable-rate equal to the prime rate, as published in The Wall Street Journal , on the closing date of the offering. Thereafter, the interest rate will adjust annually. It is expected that the original ESOP loan from Kearny-Federal to the ESOP in connection with the minority stock offering will be refinanced and rolled into the loan to be received by the ESOP from New Kearny in connection with the conversion.

The trustee will hold the shares purchased by the ESOP in an unallocated suspense account, and shares will be released to the participants’ accounts as the loan is repaid, on a pro-rata basis. The trustee will allocate the shares released among the participants’ accounts on the basis of each participant’s proportional share of eligible plan compensation relative to all participants’ proportional share of eligible plan compensation. Following the

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consummation of the conversion, all shares of Kearny-Federal common stock currently held by the ESOP will automatically be converted to shares of New Kearny common stock pursuant to the exchange ratio.

401(k) Plan . Kearny Bank maintains a 401(k) Plan, a tax-qualified defined contribution retirement plan, for all employees who have satisfied the 401(k) Plan’s eligibility requirements. All eligible employees can begin participation in the 401(k) Plan on the first day of the month coinciding with or following the date on which the employee attains age 21 and has completed three months of service. A participant may contribute up to 75% of his or her compensation to the 401(k) Plan on a pre-tax basis, subject to the limitations imposed by the Internal Revenue Code. For 2014, the salary deferral contribution limit is $17,500, provided, however, that a participant over age 50 may contribute an additional $5,500 to the 401(k) Plan. In addition to salary deferral contributions, the 401(k) Plan provides that Kearny Bank will make an employer matching contribution equal to 100% of the participant’s salary deferral contribution, provided that such amount does not exceed 3% of the participant’s compensation earned during the plan year. A participant is always 100% vested in his or her salary deferral contributions and employer matching contributions. Each participant has an individual account under the 401(k) Plan and may direct the investment of his or her account among a variety of investment options or vehicles available. In connection with the conversion, each participant will be eligible to purchase New Kearny common stock through the 401(k) Plan.

Nonqualified Deferred Compensation. Kearny Bank has implemented for its senior officers a Benefits Equalization Plan related to the ESOP, and Messrs. Montanaro, Ledgerwood and Joyce are currently the only participants. This plan constitutes a defined contribution plan providing for deferral of compensation on a non-tax-qualified basis. The purpose of this plan is to provide a benefit to senior officers of Kearny Bank whose benefits under the ESOP are limited by Sections 401(a)(17) and 415 of the Internal Revenue Code. For example, this plan provides participants with a benefit for any compensation that they may earn in excess of $260,000 (as indexed) comparable to the benefits earned by all participants under the ESOP for compensation earned below that level. Kearny Bank may utilize a grantor trust in connection with this plan in order to set aside funds that ultimately may be used to pay benefits under the plan. The assets of the grantor trust will remain subject to the claims of Kearny Bank’s general creditors in the event of insolvency, until paid to a participant following termination of employment according to the terms of the plan. Benefits under the plan will be paid in a lump sum in the form of shares of common stock to the extent permissible under applicable regulations, or in the alternative, benefits will be paid in cash based upon the value of such shares at the time that such benefit payments are made. The actual value of benefits under this plan and the annual financial reporting expense associated with this plan are calculated annually based upon a variety of factors, including the actual value of benefits for participants determined under the ESOP each year, the applicable limitations under the Internal Revenue Code that are subject to adjustment annually and the compensation of each participant at such time. Generally, benefits under the plan are taxable to each participant at the time of receipt of such payment, and Kearny Bank will recognize a tax-deductible compensation expense at such time.

The following table sets forth information with respect to named executive officers with accumulated benefits under the Benefits Equalization Plan related to the ESOP:


Name	Executive Contributions In Last Fiscal Year($)		Registrant Contributions in Last Fiscal Year($) ⁽¹⁾		Aggregate Gain/Loss in Last Fiscal Year($)		Aggregate Withdrawals/ Distributions($)		Aggregate Balance at Last Fiscal Year End($) ⁽²⁾
Craig L. Montanaro		—		21,020		4,547		—		34,126
William C. Ledgerwood		—		4,627		1,644		—		9,675
Patrick M. Joyce		—		1,119		681		—		3,248

(1)	Contributions included in the “Registrant Contributions in Last Fiscal Year” column are included as compensation for the individual in the Summary Compensation Table.

(2)	Amounts included in the “Aggregate Balance at Last Fiscal Year End” have been reported as compensation for the individuals for years in which their summary compensation has been reported.

Current Employment Agreements. Kearny-Federal and Kearny Bank have entered into employment agreements with Craig L. Montanaro, pursuant to which his minimum base salary is currently $450,000. The salary

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payable under Mr. Montanaro’s agreement with Kearny-Federal, however, is reduced dollar-for-dollar for any salary payments made by Kearny Bank. Mr. Montanaro’s employment agreements have a term of three years, and may be extended on or before each anniversary of the effective date upon determination of the Board of Directors that his performance has met the requirements and standards of the Board. As of June 30, 2014, the term of Mr. Montanaro’s employment has been extended to June 30, 2017. Pursuant to the terms of Mr. Montanaro’s employment agreement with Kearny Bank, he is generally entitled to participate in all discretionary bonuses, pension and other retirement benefit plans, welfare benefit plans and other equity, incentive and benefit plans and perquisites applicable to senior management of Kearny Bank. Upon his termination of employment at any time on or after attainment of age 62 and until he becomes eligible for Medicare coverage, Mr. Montanaro is eligible to receive reimbursement for participation in medical coverage comparable to coverage under Kearny Bank’s plan.

If Kearny Bank terminates Mr. Montanaro without “cause” as defined in the agreement, he will be entitled to (i) a continuation of his salary from the date of termination through the remaining term of the agreement, and (ii) during the same period, the cost of obtaining health, life, disability and other benefits at levels substantially equal to those provided on the date of termination of employment. If Mr. Montanaro’s employment is terminated involuntarily without cause during the term of the agreement following a “change in control” of Kearny-Federal or Kearny Bank, as defined in the agreement, or without cause within 24 months following a change in control, he will be paid an amount equal to 2.999 times his five-year average annual taxable cash compensation in a lump sum. Mr. Montanaro will also be entitled to the foregoing change in control severance payment and benefits if he voluntarily terminates his employment within 120 days following certain events within 24 months following a change in control of Kearny-Federal or Kearny Bank. All amounts payable as severance in respect of a change in control will be reduced to the extent necessary such that neither the payments under the employment agreement, nor any other payments, constitute “excess parachute payments” under Section 280G of the Internal Revenue Code. If a change in control payment had been made under Mr. Montanaro’s agreement as of June 30, 2014, the payment would have equaled approximately $1,188,325.

Kearny Bank also entered into amended and restated employment agreements with Senior Executive Vice President and Chief Operating Officer William C. Ledgerwood providing for a current minimum base salary of $300,600, Executive Vice President and Chief Lending Officer Patrick M. Joyce providing for a current minimum base salary of $275,348 and Executive Vice President and Chief Financial Officer Eric B. Heyer providing for a current minimum base salary of $245,180. These agreements each have a term of two years, and each provides for extension of the term on or before each anniversary of the effective date upon determination of the Board of Directors of Kearny Bank that the officer’s performance has met its requirements and standards. Pursuant to the terms of the employment agreements, each officer is generally entitled to participate in all discretionary bonuses, pension and other retirement benefit plans, welfare benefit plans and other equity, incentive and benefit plans and perquisites applicable to senior management of Kearny Bank. Upon termination of employment at any time on or after attainment of age 62, each of the officers and his or her dependent family is also permitted to continue to participate, at Kearny Bank’s expense, in the group medical plan sponsored by Kearny Bank until such time that the officer and his or her spouse become eligible for Medicare coverage. If terminated without cause, each of these officers will be entitled to (i) a continuation of his or her salary through the remaining term of the agreement, and (ii) during the same period, the cost of obtaining health, life, disability and other benefits at levels substantially equal to those provided on the date of termination of employment. As of June 30, 2014, the remaining term of the agreements for each of the other officers was approximately two years, so a continuation of salary through the end of the term would equal $601,200 for Mr. Ledgerwood, $550,696 for Mr. Joyce and $490,360 for Mr. Heyer if the officer were terminated without cause as of that date. The value of the continuation of health, life disability and other benefits through the end of the term for each officer would equal approximately $71,263 based on Kearny Bank’s current cost of providing those benefits.

If terminated involuntarily without cause during the term of the agreement following a “change in control” of Kearny-Federal or Kearny Bank, as defined in the agreement, or without cause within 24 months following a change in control, each of these officers will be paid an amount equal to 2.0 times his most recent total annual compensation paid to the officer or accrued by Kearny Bank (including amounts attributable to salary, bonus, deferred compensation and retirement plans) with respect to the officer for the most recently completed calendar year ending on or prior to such date of termination of employment of such officer. The sum shall be paid in one (1)

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lump sum not later than the date of such termination of service. Each of the officers will also be entitled to the foregoing change in control severance payment and benefits upon a voluntary termination of employment within 120 days following certain events within 24 months following a change in control of Kearny-Federal or Kearny Bank. All amounts payable to any of the officers as severance in respect of a change in control will be reduced to the extent necessary such that neither the payments under the employment agreement, nor any other payments, constitute “excess parachute payments” under Section 280G of the Internal Revenue Code. If change in control payments had been made under these agreements as of June 30, 2014, Mr. Ledgerwood would have received a payment of approximately $776,494, Mr. Joyce would have received a payment of approximately $678,206 and Mr. Heyer would have received a payment of approximately $562,064.

Anticipated Future Employment Agreements. In connection with the conversion, Kearny Bank intends to enter into new employment agreements with Messrs. Montanaro, Ledgerwood, Joyce, Heyer and Vuong, which will be effective on the date of the conversion. The employment agreements to be entered into with Messrs. Montanaro, Ledgerwood, Joyce and Heyer will replace the current employment agreements described above. New Kearny will also enter into the agreements with Messrs. Ledgewood, Joyce, Heyer and Vuong solely as a guarantor. Mr. Vuong is not currently covered by an employment agreement. In addition, New Kearny intends to enter into a new employment agreement with Mr. Montanaro, which will be substantially identical to the agreement Kearny Bank enters into with Mr. Montanaro, except the compensation payable under Mr. Montanaro’s agreement with New Kearny will be reduced dollar-for-dollar for any compensation paid by Kearny Bank. Messrs. Montanaro and Ledgerwood’s new agreements will have a three-year term, and the other new agreements will have a two-year term, each commencing on the first anniversary of the agreements (which is defined as July 1 of each calendar year) and renewing on each subsequent anniversary thereafter for an additional year so that the remaining term will be three years for Messrs. Montanaro and Ledgerwood’s agreements and two years for the other agreements, provided that the disinterested members of the board of directors of Kearny Bank conduct a performance evaluation of the executive and affirmatively approve the extension.

The proposed employment agreements will provide for a minimum annual base salary rate of $450,000, $300,600, $275,348, $245,180 and $236,512 for Messrs. Montanaro, Ledgerwood, Joyce, Heyer and Vuong, respectively. In addition to base salary, each executive will be generally entitled to participate in all discretionary bonuses, pension and other retirement benefit plans, welfare benefit plans and other equity, incentive and benefit plans and perquisites applicable to senior management of Kearny Bank. Upon the termination of an executive’s employment at any time on or after attainment of age 62 and until the executive becomes eligible for Medicare coverage, the executive will be eligible to receive reimbursement for participation in medical coverage comparable to coverage under Kearny Bank’s plan.

In the event of the executive’s involuntary termination of employment for reasons other than cause, disability or death, the executive will be entitled to a severance payment equal to the executive’s base salary for the remaining term of the agreement, payable in a lump sum within ten days of the executive’s termination of employment, and the executive will be entitled to continued medical and dental coverage for the remaining term of the agreement. If severance payments had been made under these agreements as of June 30, 2014 for these types of terminations, Messrs. Montanaro, Ledgerwood, Joyce, Heyer and Vuong, respectively, would have received approximately $1,350,000, $901,800, $550,696, $490,360 and $473,024, respectively.

In the event the executive voluntarily resigns during the term of the employment agreement for “good reason” (as defined in the agreement), the executive will be entitled to a severance payment equal to the executive’s annual base salary, payable in a lump sum within ten days of the executive’s termination of employment. If severance payments had been made under these agreements as of June 30, 2014 for “good reason,” Messrs. Montanaro, Ledgerwood, Joyce, Heyer and Vuong, respectively, would have received approximately $450,000, $300,600, $275,348, $245,180 and $236,512, respectively.

In the event of a change in control of New Kearny or Kearny Bank followed within 24 months by the executive’s involuntary termination of employment for any reason other than cause or the executive’s termination for good reason, then in lieu of the severance benefits described immediately above, Messrs. Ledgerwood, Joyce, Heyer and Vuong will be entitled to a severance benefit equal to two times (three times for Mr. Ledgerwood) the

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executive’s total compensation earned during the most recently completed calendar year ending on or prior to the date of the executive’s termination of employment and Mr. Montanaro will be entitled to a severance benefit equal to 2.999 times his five-year average annual taxable cash compensation, payable in a lump sum within ten days of the executive’s date of termination of employment and the executives will be entitled to continued participation in non-taxable medical and dental coverage for the remaining term of the agreement. Messrs. Ledgerwood, Joyce, Heyer and Vuong’s agreements (and not Mr. Montanaro’s agreements) will provide that change in control severance payments will be reduced, to the extent necessary, to avoid a penalty tax under Section 280G of the Internal Revenue Code. If change in control severance payments had been made under these agreements as of June 30, 2014, Messrs. Montanaro, Ledgerwood, Joyce, Heyer and Vuong, respectively, would have received approximately $1,188,325, $1,164,741, $678,206, $562,064 and $551,550, respectively.

For purposes of the employment agreements, “good reason” will be defined as: (i) a material reduction in the executive’s base salary or benefits (other than a reduction that is part of a good faith, overall reduction applicable to all employees); (ii) a material reduction in the executive’s authority, duties or responsibilities; or (iii) a material breach of the employment agreement by Kearny Bank.

Upon any termination of employment (except following a change in control), Messrs. Montanaro, Ledgerwood, Joyce, Heyer and Vuong will each be required to adhere to non-competition and non-solicitation covenants for six months.

Kearny Bank also anticipates entering into new employment agreements with certain other individuals, which will contain similar terms to the agreements for Messrs. Joyce, Heyer and Vuong and change in control agreements with certain non-executive level officers, which will provide, in the event of a change in control of New Kearny or Kearny Bank followed within 24 months by the individual’s involuntary termination of employment for any reason other than cause or the executive’s termination for good reason, a severance payment equal to the individual’s annual base salary and bonus, payable in a lump sum within ten days of the individual’s termination of employment.

Executive Life Insurance Agreements. Kearny Bank is party to Executive Life Insurance Agreements with each of the named executive officers pursuant to which Kearny Bank has purchased life insurance policies on the named executive officers. Under the agreements, the beneficiaries of the named executive officers are entitled to a death benefit paid by the insurer from the policy proceeds equal to two times the named executive officer’s highest annual base salary in effect during the three calendar years prior to death if the named executive officer dies while employed by Kearny Bank or in effect during the three calendar years prior to retirement if the named executive officer is retired at the time of death and meets certain age and service requirements. The maximum death benefit, however, may not exceed $1.5 million. In the event of a change in control of Kearny Bank prior to the named executive officer’s death or retirement, the death benefit shall remain in effect regardless of whether the age and service requirements have been met.

Potential Payments Upon Resignation, Retirement or Termination. The table below reflects the amount of compensation payable to each of the named executive officers in accordance with each individual’s employment agreement and other benefit plans and agreements as discussed in the preceding sections in the event of termination of such executive’s employment. The amounts shown assume that such termination was effective as of June 30, 2014, and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The amounts shown relating to unvested stock options and stock awards are based on the fair market value of Kearny-Federal common stock on June 30, 2014 of $15.14. The actual amounts to be paid out can only be determined at the time of such executive’s termination of employment.

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Name and Plan	Voluntary Resignation($)		Early Retirement (at age 62)($)		Normal Retirement (at age 65)($)		Termination w/o Cause No Change in Control($)		Termination w/o Cause With Change in Control($)		Death($)		Disability($)

*Craig L. Montanaro*
Salary		—		—		—		1,350,000		1,188,325		37,500		1,035,000
Incentive/Bonus		—		—		—		13,500		—		—		13,500
Life Insurance		—		—		—		—		—		950,000		—

Total Cash Payments		—		—		—		1,363,500		1,188,325		987,500		1,048,500

Benefits
Medical/Vision		—		88,989		—		88,989		—		—		88,989
Dental		—		—		—		4,717		—		—		4,717
Life Insurance		—		468		156		468		—		—		468
LTD/LTC		—		—		—		11,886		—		—		11,886
Accident		—		—		—		792		—		—		792
ESOP BEP Benefits		25,567		25,567		25,567		25,567		25,567		25,567		25,567

Total Benefits		25,567		115,024		25,723		132,419		25,567		25,567		132,419

Total Cash & Benefits		25,567		115,024		25,723		1,495,919		1,213,892		1,013,067		1,180,919
Value Unvested Options Acceleration		—		—		—		—		—		—		—
Value Unvested Stock Awards Acceleration		—		—		—		—		—		—		—

Total		25,567		115,024		25,723		1,495,919		1,213,892		1,013,067		1,180,919


*William C. Ledgerwood*
Salary		—		—		—		601,200		776,494		25,050		495,990
Incentive/Bonus		—		—		—		9,018		—		—		9,018
Life Insurance		—		—		—		—		—		651,200		—

Total Cash Payments		—		—		—		610,218		776,494		676,250		505,008

Benefits
Medical/Vision		—		61,287		—		40,859		—		—		40,859
Dental		—		—		—		3,144		—		—		3,144
Life Insurance		—		468		156		312		—		—		312
LTD/LTC		—		—		—		11,000		—		—		11,000
Accident		—		—		—		528		—		—		528
ESOP BEP Benefits		6,291		6,291		6,291		6,291		6,291		6,291		6,291

Total Benefits		6,291		68,046		6,447		62,134		6,291		6,291		62,134

Total Cash & Benefits		6,291		68,046		6,447		672,352		782,785		682,541		567,142
Value Unvested Options Acceleration		—		—		—		—		—		—		—
Value Unvested Stock Awards Acceleration		—		—		—		—		—		—		—

Total		6,291		68,046		6,447		672,352		782,785		682,541		567,142

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Potential Payments Upon Resignation, Retirement or Termination (continued)


Name and Plan	Voluntary Resignation($)		Early Retirement (at age 62)($)		Normal Retirement (at age 65)($)		Termination w/o Cause No Change in Control($)		Termination w/o Cause With Change in Control($)		Death($)		Disability($)

*Patrick M. Joyce*
Salary		—		—		—		550,696		678,206		22,945		454,324
Incentive/Bonus		—		—		—		8,059		—		—		8,059
Life Insurance		—		—		—		—		—		587,264		—

Total Cash Payments		—		—		—		558,755		678,206		610,209		462,383

Benefits
Medical/Vision		—		88,989		—		59,326		—		—		59,326
Dental		—		—		—		3,144		—		—		3,144
Life Insurance		—		468		156		312		—		—		312
LTD/LTC		—		—		—		6,793		—		—		6,793
Accident		—		—		—		528		—		—		528
ESOP BEP Benefits		1,800		1,800		1,800		1,800		1,800		1,800		1,800

Total Benefits		1,800		91,257		1,956		71,903		1,800		612,009		71,903

Total Cash & Benefits		1,800		91,257		1,956		630,658		680,006		612,009		534,286
Value Unvested Options Acceleration		—		—		—		—		—		—		—
Value Unvested Stock Awards Acceleration		—		—		—		—		—		—		—

Total		1,800		91,257		1,956		630,658		680,006		612,009		534,286


*Eric B. Heyer*
Salary		—		—		—		490,360		562,064		20,431		414,414
Incentive/Bonus		—		—		—		7,176		—		—		7,176
Life Insurance		—		—		—		—		—		528,400		—

Total Cash Payments		—		—		—		497,536		562,064		548,831		421,590

Benefits
Medical/Vision		—		88,989		—		59,326		—		—		59,326
Dental		—		—		—		3,144		—		—		3,144
Life Insurance		—		468		156		312		—		—		312
LTD/LTC		—		—		—		1,255		—		—		1,255
Accident		—		—		—		528		—		—		528
ESOP BEP Benefits		—		—		—		—		—		—		—

Total Benefits		—		89,457		156		64,565		—		—		64,565

Total Cash & Benefits		—		89,457		156		562,101		562,064		548,831		486,155
Value Unvested Options Acceleration		—		—		—		—		59,760		59,760		59,760
Value Unvested Stock Awards Acceleration		—		—		—		—		90,840		90,840		90,840


Total		—		89,457		156		562,101		712,664		699,431		636,755

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Potential Payments Upon Resignation, Retirement or Termination (continued)


Name and Plan	Voluntary Resignation($)		Early Retirement (at age 62)($)		Normal Retirement (at age 65)($)		Termination w/o Cause No Change in Control($)		Termination w/o Cause With Change in Control($)		Death($)		Disability($)

*Khanh B. Vuong*
Salary		—		—		—		—		—		—		—
Incentive/Bonus		—		—		—		—		—		—		—
Life Insurance		—		—		—		—		—		500,500		—

Total Cash Payments		—		—		—		—		—		500,500		—

Benefits
Medical/Vision		—		—		—		—		—		—		—
Dental		—		—		—		—		—		—		—
Life Insurance		—		—		—		—		—		—		—
LTD/LTC		—		—		—		—		—		—		—
Accident		—		—		—		—		—		—		—
ESOP BEP Benefits		—		—		—		—		—		—		—

Total Benefits		—		—		—		—		—		—		—

Total Cash & Benefits		—		—		—		—		—		500,500		—
Value Unvested Options Acceleration		—		—		—		—		10,500		10,500		10,500
Value Unvested Stock Awards Acceleration		—		—		—		—		158,970		158,970		158,970


Total		—		—		—		—		169,470		669,970		169,470

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Director Compensation

Set forth below is a table providing information concerning the compensation of the non-employee directors of Kearny-Federal for the fiscal year ended June 30, 2014. Mr. Montanaro, our President and Chief Executive Officer, does not receive separate compensation for his service as a director, and information with respect to the compensation paid to Mr. Montanaro is included above in the Summary Compensation Table.


Name	Fees Earned or Paid in Cash($)		Change in Pension Value ⁽¹⁾ ($)		All Other Compensation ⁽²⁾ ($)		Total ⁽³⁾ ($)

John J. Mazur, Jr.		103,480		103,000		27,030		233,510
Matthew T. McClane		90,300		33,000		27,243		150,543
John F. McGovern		94,950		63,000		25,900		183,850
Theodore J. Aanensen		92,500		50,000		20,219		162,719
Joseph P. Mazza		95,400		49,000		20,678		165,078
John F. Regan		93,650		40,000		11,533		145,183
Leopold W. Montanaro		89,150		27,000		17,297		133,447
John N. Hopkins		90,400		33,000		25,777		149,177

(1)	For more information concerning the Directors Consultation and Retirement Plan, please see Note 16 to the audited consolidated financial statements.

(2)	For fiscal year 2014, all other compensation included the following:


Name	Health Care and Dental Premiums($)		Long Term Care Premiums($)		Bank Owned Life *Insurance($)**		Total All Other Compensation($)

John J. Mazur, Jr.		21,554		4,343		1,133		27,030
Matthew T. McClane		10,520		5,225		11,498		27,243
John F. McGovern		25,256		—		644		25,900
Theodore J. Aanensen		10,520		6,922		2,77		20,219
Joseph P. Mazza		10,520		7,102		3,056		20,678
John F. Regan		5,190		3,566		2,777		11,533
Leopold W. Montanaro		10,520		5,225		1,552		17,297
John N. Hopkins		10,520		6,220		9,037		25,777

*	For each director, other than Mr. Hopkins and Mr. Montanaro, Kearny-Federal maintains life insurance arrangements providing for a death benefit of $500,000. Life insurance arrangements provide for a death benefit of $1,950,000 for Mr. Hopkins and $292,312 for Mr. Montanaro.

(3)	As of June 30, 2014, each non-employee director, other than Mr. Hopkins, held options to acquire 133,655 shares of common stock. As of June 30, 2014, Mr. Hopkins held options to acquire 600,000 shares of common stock.

Board Fees. Directors are paid a fee of $1,250 per Kearny Bank Board meeting attended, $600 per Kearny-Federal meeting attended and $600 per Kearny MHC meeting attended. The Chairman receives a higher fee of $1,500, $720 and $720, for Kearny Bank, Kearny-Federal and Kearny MHC meetings, respectively. Directors receive a fee for participation in special meetings of the Board of Directors. Participation in a special meeting by means of a conference telephone or similar communications device through which all persons participating can hear each other at the same time constitutes presence in person for all purposes. Attendance in person is required in order to be paid for regularly scheduled board meetings.

Members of the Kearny Bank Executive Committee do not receive a fee for committee meetings. Each member of the Kearny Bank Board of Directors is also a member of the Executive Committee. Members of the Audit & Compliance Committee and the Chairman of this committee are paid $250 and $350, respectively, for each meeting attended. Members of the Compensation Committee and the Chairman of this committee are paid $250 and $300, respectively, for each meeting attended.

Directors also receive an annual retainer as follows: Directors are paid $46,400 for service on the Kearny Bank’s board, $9,000 for service on Kearny-Federal’s board and $9,000 for service on Kearny MHC’s board. The

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Chairman receives an annual retainer of $49,280, $9,000, and $9,000 for service on Kearny Bank, Kearny-Federal and Kearny MHC boards, respectively. Directors who also serve as employees do not receive compensation as directors. Directors also receive coverage under Kearny-Federal’s health, dental and long-term care insurance plans.

Director Life Insurance Agreements . Kearny Bank is party to Director Life Insurance Agreements with each director pursuant to which Kearny Bank has purchased life insurance policies on the directors. The directors become entitled to death benefits under the agreements if they (i) die while serving as a member of the board, or (ii) retire from board service on or after attaining age 70, or (iii) retire from board service on or after attaining age 60 and at a time when the director’s years of service with Kearny Bank and the director’s age equals at least 75. Under the agreements, the director’s beneficiaries are entitled to a death benefit equal to $500,000 (and a death benefit of $1,950,000 for John N. Hopkins and $292,312 for Leopold W. Montanaro), which will be paid by the life insurance company. In the event of a change in control of Kearny Bank prior to the named director’s death or retirement, the death benefit shall remain in effect regardless of whether the age and service requirements have been met.

Directors Consultation and Retirement Plan. Kearny-Federal maintains a Directors Consultation and Retirement Plan (the “DCRP”). The DCRP provides retirement benefits to the directors of Kearny-Federal, Kearny MHC and Kearny Bank based upon the number of years of service as a director. To be eligible to receive benefits under the DCRP, a director generally must have completed at least five years of service and must not retire from the board prior to reaching 60 years of age. If a director agrees to become a consulting director upon retirement, he will receive a monthly payment equal to 2.5% of the total retainer plus fees paid for attendance at regular and special meetings and meetings of the Executive Committee paid to him by Kearny-Federal, Kearny MHC and Kearny Bank during the 12-month period prior to the date of retirement multiplied by the number of years of service as a director, not to exceed 80% of board compensation. Benefits under the DCRP begin upon a director’s retirement and are paid for life; provided, however, that in the event of a director’s death prior to the receipt of 120 monthly payments, payments shall continue to the director’s surviving spouse or estate until 120 payments have been made. In the event there is a change in control (as defined in the DCRP), all directors will be presumed to be eligible to receive benefits under the DCRP and each director will receive a lump sum payment equal to the present value of future benefits payable. Benefits under the DCRP are unvested and forfeitable until retirement at or after age 60 with at least five years of service, termination of service following a change in control, or disability following at least five years of service or death.

In connection with the conversion, the DCRP will be amended to provide that no new individuals will become participants in the DCRP after the conversion.

Benefits to be Considered Following Completion of the Conversion

Following the stock offering, we intend to adopt a new stock-based benefit plan that will provide for grants of stock options and restricted common stock awards. If adopted within 12 months following the completion of the conversion, the number of shares reserved for the exercise of stock options or available for stock awards under the stock-based benefit plan is expected to be limited to 10% and 4%, respectively, of the shares sold in the stock offering and issued to the Foundation. We intend to adopt a stock-based benefit plan that would reserve for the exercise of stock options and the grant of stock awards a number of shares equal to 6% and 2.5%, respectively, of the shares sold in the stock offering and issued to the Foundation.

The new stock-based benefit plan will not be established sooner than six months after the stock offering and if adopted within one year after the stock offering would require the approval of a majority of the votes eligible to be cast by stockholders. If the new stock-based benefit plan is established more than one year after the stock offering, it would require the approval of our stockholders by a majority of votes cast. The following additional restrictions would apply to our stock-based benefit plan only if the plan is adopted within one year after the stock offering:

•

non-employee directors in the aggregate may not receive more than 30% of the options and restricted stock awards authorized under the plan;

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•

any one non-employee director may not receive more than 5% of the options and restricted stock awards authorized under the plan;

•

any officer or employee may not receive more than 25% of the options and restricted stock awards authorized under the plan;

•

any tax-qualified employee stock benefit plans and restricted stock plan, in the aggregate, may not acquire more than 10% of the shares sold in the offering, unless Kearny Bank has tangible capital of 10% or more, in which case tax-qualified employee stock benefit plans and restricted stock plans may acquire up to 12% of the shares sold in the offering;

•

the options and restricted stock awards may not vest more rapidly than 20% per year, beginning on the first anniversary of stockholder approval of the plan;

•

accelerated vesting is not permitted except for death, disability or upon a change in control of Kearny Bank or New Kearny; and

•

our executive officers or directors must exercise or forfeit their options in the event that Kearny Bank becomes critically undercapitalized, is subject to enforcement action or receives a capital directive.

We have not determined whether we will present the stock-based benefit plan for stockholder approval prior to or more than 12 months after the completion of the conversion. In the event an applicable regulatory authority changes their regulations or policies regarding stock-based benefit plans, including any regulations or policies restricting the size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.

We may obtain the shares needed for our stock-based benefit plans by issuing additional shares of common stock from authorized but unissued shares or through stock repurchases.

The actual value of the shares awarded under the stock-based benefit plan will be based in part on the price of New Kearny’s common stock at the time the shares are awarded. The new stock-based benefit plan is subject to stockholder approval, and cannot be implemented until at least six months after the offering. The following table presents the total value of all shares of restricted stock that would be available for issuance under the new stock-based benefit plan, assuming the shares are awarded when the market price of our common stock ranges from $8.00 per share to $14.00 per share.


Share Price		1,553,130 Shares Awarded at Minimum of Offering Range		1,825,000 Shares Awarded at Midpoint of Offering Range		2,096,870 Shares Awarded at Maximum of Offering Range

$	8.00	$	12,425,040	$	14,600,000	$	16,774,960
	10.00		15,531,300		18,250,000		20,968,700
	12.00		18,637,560		21,900,000		25,162,440
	14.00		21,743,820		25,550,000		29,356,180

The grant-date fair value of the options granted under the new stock-based benefit plan will be based in part on the price of shares of common stock of New Kearny at the time the options are granted. The value also will depend on the various assumptions utilized in the option pricing model ultimately adopted. The following table presents the total estimated value of the options to be available for grant under the stock-based benefit plan, assuming the market price and exercise price for the stock options are equal and the range of market prices for the shares is $8.00 per share to $14.00 per share. The Black-Scholes option pricing model provides an estimate only of the fair value of the options, and the actual value of the options may differ significantly from the value set forth in this table.

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Exercise Price		Grant-Date Fair Value Per Option		3,727,500 Options at Minimum of Offering Range		4,380,000 Options at Midpoint of Offering Range		5,032,500 Options at Maximum of Offering Range

$	8.00	$	2.03	$	7,566,825	$	8,891,400	$	10,215,975
	10.00		2.54		9,467,850		11,125,200		12,782,550
	12.00		3.05		11,368,875		13,359,000		15,349,125
	14.00		3.56		13,269,900		15,592,800		17,915,700

The tables presented above are provided for informational purposes only. There can be no assurance that our stock price will not trade below $10.00 per share. Before you make an investment decision, we urge you to read this prospectus carefully, including, but not limited to, the section entitled “Risk Factors” beginning on page 18.

BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table provides the beneficial ownership of shares of common stock of Kearny-Federal held by our directors and executive officers, individually and as a group, and all individuals known to management to own more than 5% of our common stock as of [stockholder record date].


Name of Beneficial Owner	Shares Beneficially Owned			Stock Options Exercisable Within 60 Days		Total Shares Beneficially Owned (1)		Percent of All Common Stock Outstanding

Directors:
Theodore J. Aanensen		75,499			133,655		209,154			*
John N. Hopkins		307,422			600,000		907,422		1.34
John J. Mazur, Jr.		99,516			133,655		233,171			*
Joseph P. Mazza		108,961			133,655		242,616			*
Matthew T. McClane		65,463			133,655		199,118			*
John F. McGovern		120,656			133,655		254,311			*
Craig L. Montanaro		131,272			140,000		271,272			*
Leopold W. Montanaro		129,461			133,655		263,116			*
John F. Regan		85,868			133,655		219,523			*
Executive Officers :
Eric B. Heyer		20,601	(2)		18,000		38,601			*
Sharon Jones		85,615			140,000		225,615			*
Patrick M. Joyce		39,700			140,000		179,700			*
William C. Ledgerwood		103,218			140,000		243,218			*
Erika K. Parisi		104,725			133,655		238,380			*
Khanh B. Vuong		2,418			—		2,418			*

All directors and executive officers as a group (15 persons)		1,480,395			2,247,240		3,727,635		5.54	%

Kearny MHC 120 Passaic Avenue Fairfield, New Jersey 07004		51,960,337							77.20	%

*	Less than 1%.

(1)	Beneficial ownership includes shares of common stock held directly as well as shares held by spouses or minor children in trust. and shares, underlying options which are exercisable within 60 days.

(2)	Includes 15,303 shares pledged as collateral for a secured borrowing facility.

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SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

The table below sets forth, for each of New Kearny’s directors and executive officers, and for all of these individuals as a group, the following information:

•

the number of exchange shares to be held upon completion of the conversion, based upon their beneficial ownership of Kearny-Federal common stock as of [stockholder record date];

•

the proposed purchases of subscription shares, assuming sufficient shares of common stock are available to satisfy their subscriptions; and

•

the total shares of common stock to be held upon completion of the conversion.

In each case, it is assumed that subscription shares are sold at the minimum of the offering range. See “The Conversion and Offering—Additional Limitations on Common Stock Purchases.” Federal regulations prohibit our directors and officers from selling the shares they purchase in the offering for one year after the date of purchase. Subscriptions by management through our 401(k) plan are included in the proposed purchases set forth below and will be counted as part of the maximum number of shares such individuals may subscribe for in the stock offering and as part of the maximum number of shares directors and officers may purchase in the stock offering.


			Proposed Purchases of Stock in the Offering ⁽¹⁾				Total Common Stock to be Held at Minimum of Offering Range ⁽³⁾
Name of Beneficial Owner	Number of Exchange Shares to Be Held ⁽²⁾		Number of Shares		Amount		Number of Shares		Percentage of Shares Outstanding
Theodore J. Aanensen		247,952		22,000	$	220,000		269,952			*
John N. Hopkins		1,075,748		50,000		500,000		1,125,748		1.40
John J. Mazur, Jr.		276,424		15,000		150,000		291,424			*
Joseph P. Mazza		287,621		25,000		250,000		312,621			*
Matthew T. McClane		236,054		15,000		150,000		251,054			*
John F. McGovern		300,968		25,000		250,000		325,968			*
Craig L. Montanaro		321,592		20,000		200,000		341,592			*
Leopold W. Montanaro		311,924		20,000		200,000		331,924			*
John F. Regan		258,001		10,000		100,000		268,001			*
Eric B. Heyer		45,761		10,000		100,000		55,761			*
Sharon Jones		267,466		10,000		100,000		277,466			*
Patrick M. Joyce		213,034		7,500		75,000		220,534			*
William C. Ledgerwood		288,334		10,000		100,000		298,334			*
Erika K. Parisi		282,599		10,000		100,000		292,599			*
Khanh B. Vuong		2,866		5,000		50,000		7,866			*

Total for Directors and Executive Officers		4,416,344		254,500	$	2,545,000		4,670,844		5.82	%

*	Less than 1%.

(1)	Includes proposed subscriptions, if any, by associates.

(2)	Based on information presented in “Beneficial Ownership of Common Stock,” and assuming an exchange ratio of 1.1855 at the minimum of the offering range.

(3)	At the maximum of the offering range, directors and executive officers would own 6,229,892 shares, or 5.75% of our outstanding shares of common stock.

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THE CONVERSION AND OFFERING

The boards of directors of Kearny MHC and Kearny-Federal have approved the plan of conversion and reorganization. The plan of conversion and reorganization must also be approved by the members of Kearny MHC (depositors and certain borrowers of Kearny Bank) and the stockholders of Kearny-Federal. A special meeting of members and a special meeting of stockholders have been called for this purpose. The Federal Reserve Board has conditionally approved the application that includes the plan of conversion and reorganization; however, such approval does not constitute a recommendation or endorsement of the plan of conversion and reorganization by the Federal Reserve Board.

General

The boards of directors of Kearny MHC and Kearny-Federal adopted the plan of conversion and reorganization on September 4, 2014. Pursuant to the plan of conversion and reorganization, our organization will convert from the mutual holding company form of organization to the fully stock form. Kearny MHC, the mutual holding company parent of Kearny-Federal, will be merged into Kearny-Federal, and Kearny MHC will no longer exist. Kearny-Federal, which owns 100% of Kearny Bank, will be merged into a new Maryland corporation named Kearny Financial Corp. As part of the conversion, the 77.2% ownership interest of Kearny MHC in Kearny-Federal will be offered for sale in the stock offering. In connection with the conversion and offering, we also intend to establish and fund a new charitable foundation, the KearnyBank Foundation. When the conversion is completed, all of the outstanding common stock of Kearny Bank will be owned by New Kearny, and all of the outstanding common stock of New Kearny will be owned by public stockholders (including the Foundation). Kearny MHC and Kearny-Federal will cease to exist. A diagram of our corporate structure before and after the conversion is set forth in the “Summary” section of this prospectus.

Under the plan of conversion and reorganization, at the completion of the conversion and offering, each share of Kearny-Federal common stock owned by persons other than Kearny MHC will be converted automatically into the right to receive new shares of New Kearny common stock determined pursuant to an exchange ratio. The exchange ratio will ensure that immediately after the exchange of existing shares of Kearny-Federal for new shares of New Kearny, the public stockholders will own the same aggregate percentage of shares of common stock of New Kearny that they owned in Kearny-Federal immediately prior to the conversion, excluding any shares they purchased in the offering, their receipt of cash paid in lieu of fractional shares and the effect of the shares contributed to the Foundation, adjusted to reflect certain assets held by Kearny MHC.

New Kearny intends to retain between $261.5 million and $356.1 million of the net proceeds of the offering and to invest between $297.5 million and $403.1 million of the net proceeds in Kearny Bank. The conversion will be consummated only upon the issuance of at least the minimum number of shares of our common stock offered (not including shares that we will contribute to the Foundation) pursuant to the plan of conversion and reorganization.

The plan of conversion and reorganization provides that we will offer shares of common stock for sale in the subscription offering to eligible account holders, our tax-qualified employee benefit plans, including our employee stock ownership plan and 401(k) plans, supplemental eligible account holders and other members. In addition, we may offer unsubscribed common stock for sale in a community offering to members of the general public, with a preference given in the following order:

•

natural persons (including trusts of natural persons) residing in the New Jersey Counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union, and the New York Counties of Kings and Richmond); and

•

Kearny-Federal’s public stockholders as of [stockholder record date].

We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the community offering. The community offering may begin at the same time as the subscription

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offering (or during or after the subscription offering) and must be completed within 45 days after the completion of the subscription offering unless otherwise extended by the Federal Reserve Board. See “—Community Offering.”

We also may offer for sale shares of common stock not purchased in the subscription offering or community offering, if held, through a syndicated or firm commitment underwritten offering in which Sandler O’Neill & Partners, L.P. will be sole book-running manager. See “—Syndicated or Firm Commitment Underwritten Offering” herein.

We determined the number of shares of common stock to be offered in the offering based upon an independent valuation appraisal of the estimated pro forma market value of New Kearny. All shares of common stock to be sold in the offering will be sold at $10.00 per share. Investors will not be charged a commission to purchase shares of common stock. The independent valuation will be updated and the final number of the shares of common stock to be issued in the offering will be determined at the completion of the offering. See “—Stock Pricing and Number of Shares to be Issued” for more information as to the determination of the estimated pro forma market value of the common stock.

The following is a brief summary of the conversion and is qualified in its entirety by reference to the provisions of the plan of conversion and reorganization. A copy of the plan of conversion and reorganization is available for inspection at each branch office of Kearny Bank. The plan of conversion and reorganization is also filed as an exhibit to Kearny MHC’s application to convert from mutual to stock form of which this prospectus is a part, copies of which may be obtained from the Federal Reserve Board. The plan of conversion and reorganization is also filed as an exhibit to the registration statement we have filed with the Securities and Exchange Commission, of which this prospectus is a part. Copies of the registration statement may be obtained from the Securities and Exchange Commission or online at the Securities and Exchange Commission’s website, www.sec.gov . See “Where You Can Find Additional Information.”

Reasons for the Conversion

Our primary reasons for converting to the fully public stock form of ownership and undertaking the stock offering are to:

•

Eliminate the uncertainties associated with the mutual holding company structure under financial reform legislation . Under the Dodd-Frank Act, the Federal Reserve Board became the federal regulator of all savings and loan holding companies and mutual holding companies. This has resulted in changes in regulations applicable to Kearny MHC and Kearny-Federal, particularly changes with respect to the waiver of dividends by Kearny MHC, which is a key component of our mutual holding company structure and impacts the value of Kearny-Federal’s common stock. The Federal Reserve Board currently requires “grandfathered” mutual holding companies, like Kearny MHC, to obtain member (depositors and certain borrowers) approval and comply with other procedural requirements prior to waiving dividends, which makes dividend waivers more difficult and costly to obtain. As a result, Kearny-Federal has suspended its dividend during the past few years. The conversion will eliminate our mutual holding company structure, and enable us to pay dividends to our stockholders without the limitations described above, subject to the customary legal, regulatory and financial considerations applicable to all financial institutions. See “Our Dividend Policy.”

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•

Transition us to a more familiar and flexible organizational structure . The stock holding company structure is a more familiar form of organization, which we believe will make our common stock more appealing to investors, and will give us greater flexibility to access the capital markets through possible future equity and debt offerings, although we have no current plans, agreements or understandings regarding any additional securities offerings.

•

Approvals Required

The affirmative vote of a majority of the total votes eligible to be cast by the members of Kearny MHC is required to approve the plan of conversion and reorganization. By their approval of the plan of conversion and reorganization, the members of Kearny MHC will also be approving the merger of Kearny MHC into Kearny-Federal. The affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock of Kearny-Federal and the affirmative vote of the holders of a majority of the outstanding shares of common stock of Kearny-Federal held by the public stockholders of Kearny-Federal (stockholders other than Kearny MHC) also are required to approve the plan of conversion and reorganization. The plan of conversion and reorganization also must be approved by the Federal Reserve Board, which has [approved] the application that includes the plan of conversion and reorganization.

The affirmative vote of a majority of the total number of votes entitled to be cast at the special meeting by Kearny-Federal stockholders and the affirmative vote of a majority of the total number of votes entitled to be cast at the special meeting by Kearny-Federal stockholders other than Kearny MHC is required to approve the contribution to the Foundation. The affirmative vote of a majority of the total votes eligible to be cast by the members of Kearny MHC is also required to approve the contribution to the Foundation. However, the completion of the conversion and offering is not dependent upon the approval of the contribution to the Foundation.

Share Exchange Ratio for Current Stockholders

Federal regulations provide that in a conversion of a mutual holding company to stock form, the public stockholders will be entitled to exchange their shares for common stock of the new holding company, provided that the mutual holding company demonstrates to the satisfaction of the Federal Reserve Board that the basis for the exchange is fair and reasonable. At the completion of the conversion, each publicly held share of Kearny-Federal common stock will be converted automatically into the right to receive a number of shares of New Kearny common

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stock. The number of shares of common stock will be determined pursuant to the exchange ratio, which ensures that the public stockholders will own the same percentage of common stock in New Kearny after the conversion as they held in Kearny-Federal immediately prior to the conversion, exclusive of their purchase of additional shares of common stock in the offering, their receipt of cash in lieu of fractional exchange shares and the effect of the shares contributed to the Foundation, adjusted for certain assets held by Kearny MHC. The exchange ratio will not depend on the market value of Kearny-Federal common stock. The exchange ratio will be based on the percentage of Kearny-Federal common stock held by the public, the independent valuation of New Kearny prepared by RP Financial, LC., and the number of shares of common stock issued in the offering. The exchange ratio is expected to range from approximately 1.1855 shares for each publicly held share of Kearny-Federal at the minimum of the offering range to 1.6040 shares for each publicly held share of Kearny-Federal at the maximum of the offering range.

The following table shows how the exchange ratio will adjust, based on the appraised value of New Kearny as of August 8, 2014, assuming public stockholders of Kearny-Federal own 22.8% of Kearny-Federal common stock immediately prior to the completion of the conversion. The table also shows how many shares of New Kearny a hypothetical owner of Kearny-Federal common stock would receive in the exchange for 100 shares of common stock owned at the completion of the conversion, depending on the number of shares issued in the offering.


	Shares to be Sold in This Offering					Shares of New Kearny to be Issued for Shares of Kearny-Federal					Shares to be issued to the Foundation					Total Shares of Common Stock to be Issued in Exchange and Offering		Exchange Ratio		Equivalent Value of Shares Based Upon Offering Price ⁽²⁾		Equivalent Pro Forma Tangible Book Value Per Exchanged Share ⁽³⁾		Shares to be Received for 100 Existing Shares ⁽⁴⁾
	Amount		Percent			Amount		Percent ⁽¹⁾			Amount		Percent					Exchange Ratio		Equivalent Value of Shares Based Upon Offering Price ⁽²⁾				Shares to be Received for 100 Existing Shares ⁽⁴⁾

Minimum		61,625,000		76.77	%		18,147,815		22.61	%		500,000		0.62	%		80,272,815		1.1855	$	11.86	$	13.78		118

Midpoint		72,500,000		76.84	%		21,350,371		22.63	%		500,000		0.53	%		94,350,371		1.3948	$	13.95	$	15.23		139

Maximum		83,375,000		76.90	%		24,552,927		22.64	%		500,000		0.46	%		108,427,927		1.6040	$	16.04	$	16.68		160

(1)	Percent does not reflect shares of New Kearny common stock to be issued to the Foundation.

(2)	Represents the value of shares of New Kearny common stock to be received in the conversion by a holder of one share of Kearny-Federal, pursuant to the exchange ratio, based upon the $10.00 per share offering price.

(3)	Represents the pro forma tangible book value per share at each level of the offering range multiplied by the respective exchange ratio.

(4)	Cash will be paid in lieu of fractional shares.

Options to purchase shares of Kearny-Federal common stock that are outstanding immediately prior to the completion of the conversion will be converted into options to purchase shares of New Kearny common stock, with the number of shares subject to the option and the exercise price per share to be adjusted based upon the exchange ratio. The aggregate exercise price, term and vesting period of the options will remain unchanged.

Effects of Conversion on Depositors, Borrowers and Members

Continuity . The conversion will not affect the normal business of Kearny Bank of accepting deposits and making loans. Kearny Bank will continue to be a federally-chartered savings bank and will continue to be regulated by the OCC and the FDIC. After the conversion, Kearny Bank will continue to offer existing services to depositors, borrowers and other customers. The directors serving Kearny-Federal at the time of the conversion will be the directors of New Kearny after the conversion.

Effect on Deposit Accounts . Pursuant to the plan of conversion and reorganization, each depositor of Kearny Bank at the time of the conversion will automatically continue as a depositor after the conversion, and the deposit balance, interest rate and other terms of such deposit accounts will not change as a result of the conversion. Each such account will be insured by the FDIC to the same extent as before the conversion. Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.

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Effect on Loans . No loan outstanding from Kearny Bank will be affected by the conversion, and the amount, interest rate, maturity and security for each loan will remain as it was contractually fixed prior to the conversion.

Effect on Voting Rights of Members . At present, all depositors and certain borrowers of Kearny Bank are members of, and have voting rights in, Kearny MHC as to all matters requiring membership action. Upon completion of the conversion, depositors and certain borrowers will cease to be members of Kearny MHC and will no longer have voting rights. Upon completion of the conversion, all voting rights in Kearny Bank will be vested in New Kearny as the sole stockholder of Kearny Bank. The stockholders of New Kearny will possess exclusive voting rights with respect to New Kearny common stock.

Tax Effects . We have received an opinion of counsel with regard to the federal income tax consequences of the conversion and an opinion of a tax advisor with regard to the state income tax consequences of the conversion to the effect that the conversion will not be a taxable transaction for federal or state income tax purposes to Kearny MHC, Kearny-Federal, the public stockholders of Kearny-Federal (except for cash paid for fractional shares), members of Kearny MHC, eligible account holders, supplemental eligible account holders, or Kearny Bank. See “—Material Income Tax Consequences.”

Effect on Liquidation Rights . Each depositor in Kearny Bank has both a deposit account in Kearny Bank and a pro rata ownership interest in the net worth of Kearny MHC based upon the deposit balance in his or her account. This ownership interest is tied to the depositor’s account and has no tangible market value separate from the deposit account. This ownership interest may only be realized in the event of a complete liquidation of Kearny MHC and Kearny Bank; however, there has never been a liquidation of a solvent mutual holding company. Any depositor who opens a deposit account obtains a pro rata ownership interest in Kearny MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or all of the balance in the deposit account but nothing for his or her ownership interest in the net worth of Kearny MHC, which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a stock subsidiary of a mutual holding company normally have no way of realizing the value of their ownership interest, which would be realizable only in the unlikely event that Kearny MHC and Kearny Bank are liquidated. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of Kearny MHC after other claims, including claims of depositors to the amounts of their deposits, are paid.

Under the plan of conversion, Eligible Account Holders and Supplemental Eligible Account Holders will receive an interest in liquidation accounts maintained by New Kearny and Kearny Bank in an aggregate amount equal to (i) Kearny MHC’s ownership interest in Kearny-Federal’s total stockholders’ equity as of the date of the latest statement of financial condition used in this prospectus plus (ii) the value of the net assets of Kearny MHC as of the date of the latest statement of financial condition of Kearny MHC prior to the consummation of the conversion (excluding its ownership of Kearny-Federal). New Kearny and Kearny Bank will hold the liquidation accounts for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain deposits in Kearny Bank after the conversion. The liquidation accounts would be distributed to Eligible Account Holders and Supplemental Eligible Account Holders who maintain their deposit accounts in Kearny Bank only in the event of a liquidation of (a) New Kearny and Kearny Bank or (b) Kearny Bank. The liquidation account in Kearny Bank would be used only in the event that New Kearny does not have sufficient assets to fund its obligations under its liquidation account. The total obligation of New Kearny and Kearny Bank under their respective liquidation accounts will never exceed the dollar amount of New Kearny’s liquidation account as adjusted from time to time pursuant to the plan of conversion and federal regulations. See “—Liquidation Rights.”

Stock Pricing and Number of Shares to be Issued

The plan of conversion and reorganization and federal regulations require that the aggregate purchase price of the common stock sold in the offering must be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. We have retained RP Financial, LC. to prepare an independent

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valuation appraisal. For its services in preparing the initial valuation, RP Financial, LC. will receive a fee of $200,000, as well as payment for reimbursable expenses and an additional $20,000 for each subsequent updated appraisal report. We have agreed to indemnify RP Financial, LC. and its employees and affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as independent appraiser, except where such liability results from RP Financial, LC.’s bad faith or negligence.

The independent valuation was prepared by RP Financial, LC. in reliance upon the information contained in this prospectus, including the audited consolidated financial statements of Kearny-Federal. RP Financial, LC. also considered the following factors, among others:

•

the present results and financial condition of Kearny-Federal and the projected results and financial condition of New Kearny;

•

the economic and demographic conditions in Kearny-Federal’s existing market area;

•

certain historical, financial and other information relating to Kearny-Federal;

•

a comparative evaluation of the operating and financial characteristics of Kearny-Federal with those of other publicly traded savings institutions;

•

the effect of the conversion and offering on New Kearny’s stockholders’ equity and earnings potential;

•

the proposed dividend policy of New Kearny;

•

the trading market for securities of comparable institutions and general conditions in the market for such securities; and

•

the issuance of shares and contribution of cash to the Foundation.

The independent valuation appraisal considered the pro forma effect of the offering. Consistent with federal appraisal guidelines, the appraisal applied three primary methodologies: (i) the pro forma price-to-book value approach applied to both reported book value and tangible book value; (ii) the pro forma price-to-earnings approach applied to reported and core earnings; and (iii) the pro forma price-to-assets approach. The market value ratios applied in the three methodologies were based on the current market valuations of the peer group companies. RP Financial, LC. placed the greatest emphasis on the price-to-earnings and price-to-book approaches in estimating pro forma market value. RP Financial, LC. did not consider a pro forma price-to-assets approach to be meaningful in preparing the appraisal, as this approach is more meaningful when a company has low equity or earnings. The price-to-assets approach is less meaningful for a company like us, as we have equity in excess of regulatory capital requirements and positive reported and core earnings.

In applying each of the valuation methods, RP Financial, LC. considered adjustments to the pro forma market value based on a comparison of New Kearny with the peer group. RP Financial, LC. made upward adjustments for financial condition and asset growth, and a downward adjustment to earnings. No adjustments were made for market area, dividend policy, liquidity of the stock, stock market conditions, management or the effect of government regulations and regulatory reform. The upward adjustments considered, among other things, New Kearny’s stronger pro forma capital position and more favorable credit quality measures compared to the peer group. The downward adjustment considered, among other things, New Kearny’s lower return on average assets and average equity and lower net interest margin compared to the peer group. The valuation adjustment for stock market conditions took into consideration the prevailing stock market environment for the common stock of thrifts and their holding companies of recently completed thrift conversion transactions.

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Included in RP Financial, LC.’s independent valuation were certain assumptions as to the pro forma earnings of New Kearny after the conversion that were utilized in determining the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return of 1.05% for the twelve months ended June 30, 2014 on the net offering proceeds and purchases in the open market of 2.5% of the common stock issued in the offering by the restricted stock portion of the stock-based benefit plans at the $10.00 per share purchase price. See “Pro Forma Data” for additional information concerning these assumptions. The use of different assumptions may yield different results.

The independent valuation states that as of August 8, 2014, the estimated pro forma market value of New Kearny was $943.5 million. Based on federal regulations, this market value forms the midpoint of a range with a minimum of $802.7 million and a maximum of $1.08 billion. The aggregate offering price of the shares will be equal to the valuation range multiplied by the percentage of Kearny-Federal common stock owned by Kearny MHC. The number of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation range, the percentage of Kearny-Federal common stock owned by Kearny MHC and the $10.00 price per share, the minimum of the offering range is 61,625,000 shares, the midpoint of the offering range is 72,500,000 shares and the maximum of the offering range is 83,375,000 shares.

The board of directors of New Kearny reviewed the independent valuation and, in particular, considered the following:

•

Kearny-Federal’s financial condition and results of operations;

•

a comparison of financial performance ratios of Kearny-Federal to those of other financial institutions of similar size;

•

market conditions generally and in particular for financial institutions; and

•

the historical trading price of the publicly held shares of Kearny-Federal common stock.

All of these factors are set forth in the independent valuation. The board of directors also reviewed the methodology and the assumptions used by RP Financial, LC. in preparing the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with the approval of the Federal Reserve Board, if required, as a result of subsequent developments in the financial condition of Kearny-Federal or Kearny Bank or market conditions generally. In the event the independent valuation is updated to amend the pro forma market value of New Kearny to less than $802.7 million or more than $1.08 billion, the appraisal will be filed with the Securities and Exchange Commission by a post-effective amendment to New Kearny’s registration statement.

The following table presents a summary of selected pricing ratios for New Kearny (on a pro forma basis) and the peer group companies based on earnings and other information as of and for the twelve months ended June 30, 2014, and stock price information for the peer group companies as of August 8, 2014, as reflected in the appraisal report. Compared to the average pricing of the peer group, our pro forma pricing ratios at the midpoint of the offering range indicated a discount of 31.4% on a price-to-book value basis, a discount of 31.1% on a price-to-tangible book value basis and a premium of 362.2% on a price-to-earnings basis. Our board of directors, in reviewing and approving the appraisal, considered the range of price-to-earnings multiples and the range of price-to-book value and price-to-tangible book value ratios at the different amounts of shares to be sold in the offering. The appraisal did not consider one valuation approach to be more important than the other. The estimated appraised value and the resulting premium/discount took into consideration the potential financial effect of the conversion and offering as well as the trading price of Kearny-Federal’s common stock. The closing price of the common stock was $15.37 per share on August 8, 2014, the effective date of the appraisal, and $ per share on , 2014, the last trading day immediately preceding the announcement of the conversion.

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	Price-to-earnings multiple (1)		Price-to-book value ratio			Price-to-tangible book value ratio
New Kearny (on a pro forma basis, assuming completion of the conversion)
Maximum		97.70x		87.64	%		96.15	%
Midpoint		86.52x		82.78	%		91.58	%
Minimum		74.94x		77.04	%		86.06	%

Valuation of peer group companies, all of which are fully converted (on an historical basis)
Averages		18.72x		120.63	%		132.96	%
Medians		15.87x		113.69	%		130.59	%

(1)	Price-to-earnings multiples calculated by RP Financial, LC. in the independent appraisal are based on an estimate of “core,” or recurring, earnings on a trailing twelve-month basis through June 30, 2014. These ratios are different than those presented in “Pro Forma Data.”

The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing our shares of common stock. RP Financial, LC. did not independently verify our consolidated financial statements and other information that we provided to them, nor did RP Financial, LC. independently value our assets or liabilities. The independent valuation considers Kearny Bank as a going concern and should not be considered as an indication of the liquidation value of Kearny Bank. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the offering will thereafter be able to sell their shares at prices at or above the $10.00 price per share.

We will not decrease the minimum of the valuation range and the minimum of the offering range or increase the maximum of the valuation range and the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed.

If the update to the independent valuation at the conclusion of the offering results in an increase in the maximum of the valuation range to more than $1.08 billion and a corresponding increase in the offering range to more than 83,375,000 shares, or a decrease in the minimum of the valuation range to less than $802.7 million and a corresponding decrease in the offering range to fewer than 61,625,000 shares, in each case not including shares that will be contributed to the Foundation, then we will promptly return with interest at 0.15% per annum all funds previously delivered to us to purchase shares of common stock in the subscription and community offerings and cancel deposit account withdrawal authorizations and, after consulting with the Federal Reserve Board, we may terminate the plan of conversion and reorganization. Alternatively, we may establish a new offering range, extend the offering period and commence a resolicitation of purchasers or take other actions as permitted by the Federal Reserve Board in order to complete the offering. In the event that we extend the offering and conduct a resolicitation due to a change in the independent valuation, we will notify subscribers of the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. Any single offering extension will not exceed 90 days; aggregate extensions may not conclude beyond , 2016, which is two years after the special meeting of members to vote on the conversion.

An increase in the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and New Kearny’s pro forma earnings and stockholders’ equity on a per share basis while increasing stockholders’ equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership interest and New Kearny’s pro forma earnings and stockholders’ equity on a per share basis, while decreasing stockholders’ equity on an aggregate basis.

Copies of the independent valuation appraisal report of RP Financial, LC. and the detailed memorandum setting forth the method and assumptions used in the appraisal report are filed as exhibits to the documents specified under “Where You Can Find Additional Information.”

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Subscription Offering and Subscription Rights

In accordance with the plan of conversion and reorganization, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and on the purchase and ownership limitations set forth in the plan of conversion and reorganization and as described below under “—Additional Limitations on Common Stock Purchases.”

Priority 1: Eligible Account Holders . Each depositor of Kearny Bank and former depositors of Atlas Bank with aggregate deposit account balances of $50.00 or more (a “Qualifying Deposit”) at the close of business on July 31, 2013 (an “Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase up to $1.5 million (150,000 shares) of our common stock, subject to the overall purchase limitations. See “—Additional Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, any remaining shares will be allocated to each Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of our shares of common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she has an ownership interest on July 31, 2013. In the event of an oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed. In the event of an oversubscription, the subscription rights of Eligible Account Holders who are also directors or executive officers of Kearny-Federal or who are associates of such persons will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to their increased deposits in the 12 months preceding July 31, 2013.

Priority 2: Tax-Qualified Plans . Our tax-qualified employee plans, including our employee stock ownership plan and 401(k) plan, will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the offering and issued to the Foundation, although our employee stock ownership plan intends to purchase 5% of the shares of common stock sold in the offering and issued to the Foundation. If market conditions warrant or if we receive orders in the subscription offering for more shares of common stock than the maximum of the offering range, in the judgment of its trustees, the employee stock ownership plan may instead elect to purchase shares in the open market following the completion of the conversion, subject to the approval of the Federal Reserve Board. The amount of the subscription requests by the 401(k) plan will be determined by its participants, who will have the right to invest all or a portion of their 401(k) plan accounts in our common stock, subject to the maximum purchase limitations. However, to comply with the limitations applicable to our tax-qualified employee plans, our 401(k) plan may purchase no more than 5% of the shares of common stock sold in the offering.

Priority 3: Supplemental Eligible Account Holders . To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders and our tax-qualified employee stock benefit plans, each depositor of Kearny Bank with a Qualifying Deposit at the close of business on [supplemental eligibility record date] who is not an Eligible Account Holder (“Supplemental Eligible Account Holder”) will receive, without payment therefor, nontransferable subscription rights to purchase up to $1.5 million (150,000 shares) of common stock, subject to the overall purchase limitations. See “—Additional Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, any remaining shares will be allocated to each Supplemental Eligible Account

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Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of common stock, each Supplemental Eligible Account Holder must list on the stock order form all deposit accounts in which he or she has an ownership interest at [supplemental eligibility record date]. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

Priority 4: Other Members . To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders, our tax-qualified employee stock benefit plans, and Supplemental Eligible Account Holders, each depositor of Kearny Bank as of the close of business on [member record date] and each borrower of Kearny Bank as of January 18, 1995 or Atlas Bank as of February 17, 2010, whose borrowing remained outstanding as of the close of business on [member record date] and who is not an Eligible Account Holder or Supplemental Eligible Account Holder (“Other Members”) will receive, without payment therefor, nontransferable subscription rights to purchase up to $1.5 million (150,000 shares) of common stock, subject to the overall purchase limitations. See “—Additional Limitations on Common Stock Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will be allocated so as to permit each Other Member to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares of common stock or the number of shares for which he or she subscribed. Thereafter, any remaining shares will be allocated in the proportion that the amount of the subscription of each Other Member bears to the total amount of the subscriptions of all Other Members whose subscriptions remain unsatisfied.

To ensure proper allocation of common stock, each Other Member must list on the stock order form all deposit accounts in which he or she had an ownership interest at [member record date]. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

Expiration Date . The subscription offering will expire at p.m., Eastern Time, on [expiration date], unless extended by us for up to 45 days or such additional periods with the approval of the Federal Reserve Board, if necessary. Subscription rights will expire whether or not each eligible depositor can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights which have not been exercised prior to the expiration date will become void.

We will not execute orders until at least the minimum number of shares of common stock have been sold in the offering. If at least 61,625,000 shares have not been sold in the offering by [extension date] and the Federal Reserve Board has not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly, with interest at 0.15% per annum for funds received in the subscription and community offerings, and all deposit account withdrawal authorizations will be canceled. If an extension beyond [extension date] is granted by the Federal Reserve Board, we will resolicit purchasers in the offering as described under “—Procedure for Purchasing Shares in Subscription and Community Offerings—Expiration Date.”

Community Offering

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of Eligible Account Holders, our tax-qualified employee stock benefit plans, Supplemental Eligible Account Holders and Other Members, we may offer shares pursuant to the plan of conversion and reorganization to members of the general public in a community offering. If held, shares will be offered in the community offering with the following preferences:

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•

Kearny-Federal’s public stockholders as of [stockholder record date]; and

•

other members of the general public.

Subscribers in any community offering may purchase up to $1.5 million (150,000 shares) of common stock, subject to the overall purchase limitations. See “—Additional Limitations on Common Stock Purchases.” The opportunity to purchase shares of common stock in the community offering category is subject to our right, in our sole discretion, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable following the expiration date of the offering.

If we do not have sufficient shares of common stock available to fill the orders of natural persons (including trusts of natural persons) residing in the New Jersey Counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union, and the New York Counties of Kings and Richmond, we will allocate the available shares among those persons in a manner that permits each of them, to the extent possible, to purchase the lesser of 100 shares or the number of shares subscribed for by such person. Thereafter, unallocated shares will be allocated among natural persons residing in those counties whose orders remain unsatisfied on an equal number of shares basis per order. If an oversubscription occurs due to the orders of public stockholders of Kearny-Federal or members of the general public, the allocation procedures described above will apply to the stock orders of such persons. In connection with the allocation process, orders received for shares of common stock in the community offering will first be filled up to a maximum of 2% of the shares sold in the offering, and thereafter any remaining shares will be allocated on an equal number of shares basis per order until all shares have been allocated.

The term “residing” or “resident” as used in this prospectus means any person who occupies a dwelling within the New Jersey Counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union, and the New York Counties of Kings and Richmond, has a present intent to remain within this community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the community, together with an indication that this presence within the community is something other than merely transitory in nature. We may utilize deposit or loan records or other evidence provided to us to decide whether a person is a resident. In all cases, however, the determination shall be in our sole discretion.

Expiration Date. The community offering may begin concurrently, during or after the subscription offering, and we expect that the community offering, if held, will terminate at the same time as the subscription offering, although it may continue without notice to you until [extension date] or longer if the Federal Reserve Board approves a later date. The community offering, if held, must terminate no more than 45 days following the subscription offering, unless extended. New Kearny may decide to extend the community offering for any reason and is not required to give purchasers notice of any such extension unless such period extends beyond [extension date], in which event we will resolicit purchasers.

Syndicated or Firm Commitment Underwritten Offering

If feasible, our board of directors may decide to offer for sale shares of common stock not subscribed for or purchased in the subscription and community offerings in a syndicated or firm commitment underwritten offering, subject to such terms, conditions and procedures as we may determine, in a manner that will achieve a wide distribution of our shares of common stock.

If a syndicated or firm commitment underwritten offering is held, Sandler O’Neill & Partners, L.P. will serve as sole book-running manager. In the event that shares of common stock are sold in a syndicated or firm commitment underwritten offering, we will pay fees or have an underwriting discount, as applicable, of 5.0% of the aggregate amount of common stock sold in the syndicated or firm commitment underwritten offering to Sandler O’Neill & Partners, L.P. and any other broker-dealers included in the syndicated or firm commitment underwritten

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offering. The shares of common stock will be sold at the same price per share ($10.00 per share) that the shares are sold in the subscription offering and the community offering.

In the event of a syndicated offering, it is currently expected that investors would follow the same general procedures applicable to purchasing shares in the subscription and community offerings (the use of order forms and the submission of funds directly to New Kearny for the payment of the purchase price of the shares ordered) except that payment must be in immediately available funds (bank checks, money orders, deposit account withdrawals from accounts at Kearny Bank or wire transfers). See “—Procedure for Purchasing Shares in Subscription and Community Offerings.”

In the event of a firm commitment underwritten offering, the proposed underwriting agreement will not be entered into with Sandler O’Neill & Partners, L.P. and New Kearny, Kearny Bank, Kearny-Federal and Kearny MHC until immediately prior to the completion of the firm commitment underwritten offering. At that time, Sandler O’Neill & Partners, L.P. and any other broker-dealers included in the firm commitment underwritten offering will represent that they have received sufficient indications of interest to complete the offering. Pursuant to the terms of the underwriting agreement, and subject to certain customary provisions and conditions to closing, upon execution of the underwriting agreement, Sandler O’Neill & Partners, L.P. and any other underwriters will be obligated to purchase all the shares subject to the firm commitment underwritten offering.

If for any reason we cannot effect a syndicated or firm commitment underwritten offering of shares of common stock not purchased in the subscription and community offerings, or in the event that there are an insignificant number of shares remaining unsold after such offerings, we will try to make other arrangements for the sale of unsubscribed shares. The Federal Reserve Board and the Financial Industry Regulatory Authority must approve any such arrangements.

Additional Limitations on Common Stock Purchases

The plan of conversion and reorganization includes the following additional limitations on the number of shares of common stock that may be purchased in the offering:

(i)

no person may purchase fewer than 25 shares of common stock;

(ii)

tax qualified employee benefit plans, including our employee stock ownership plan and 401(k) plan, may purchase in the aggregate up to 10% of the shares of common stock issued in the offering and issued to the Foundation;

(iii)

except for the employee stock ownership plan and 401(k) plan, as described above, no person or entity, together with associates or persons acting in concert with such person or entity, may purchase more than $3.0 million (300,000 shares) of common stock in all categories of the offering combined;

(iv)

current stockholders of Kearny-Federal are subject to an ownership limitation. As previously described, current stockholders of Kearny-Federal will receive shares of New Kearny common stock in exchange for their existing shares of Kearny-Federal common stock. The number of shares of common stock that a stockholder may purchase in the offering, together with associates or persons acting in concert with such stockholder, when combined with the shares that the stockholder and his or her associates will receive in exchange for existing Kearny-Federal common stock, may not exceed 9.9% of the shares of common stock of New Kearny to be issued and outstanding at the completion of the conversion; and

(v)

the maximum number of shares of common stock that may be purchased in all categories of the offering by executive officers and directors of Kearny Bank and their associates, in the aggregate, when combined with shares of common stock issued in exchange for existing shares, may not exceed 25% of the total shares issued in the conversion.

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Depending upon market or financial conditions, our board of directors, with the approval of the Federal Reserve Board and without further approval of members of Kearny MHC, may decrease or increase the purchase limitations. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount will be given the opportunity to increase their orders up to the then applicable limit. The effect of this type of resolicitation will be an increase in the number of shares of common stock owned by persons who choose to increase their orders. In the event that the maximum purchase limitation is increased to 5% of the shares sold in the offering, such limitation may be further increased to 9.99%, provided that orders for shares of common stock exceeding 5% of the shares sold in the offering shall not exceed in the aggregate 10% of the total shares sold in the offering.

The term “associate” of a person means:

(i)

any corporation or organization, other than Kearny MHC, Kearny-Federal, Kearny Bank or a majority-owned subsidiary of Kearny MHC, Kearny-Federal or Kearny Bank, of which the person is a senior officer, partner or 10% beneficial stockholder;

(ii)

any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity; provided, however, it does not include any employee stock benefit plan in which the person has a substantial beneficial interest or serves as trustee or in a similar fiduciary capacity; and

(iii)

any blood or marriage relative of the person, who either has the same home as the person or who is a director or officer of Kearny MHC, Kearny-Federal, Kearny Bank or New Kearny.

The term “acting in concert” means:

(i)

knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or

(ii)

a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

A person or company that acts in concert with another person or company (“other party”) will also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any tax-qualified employee stock benefit plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for determining whether common stock held by the trustee and common stock held by the employee stock benefit plan will be aggregated.

We have the sole discretion to determine whether prospective purchasers are “associates” or “acting in concert.” Persons having the same address, and persons exercising subscription rights through qualifying deposits registered at the same address will be deemed to be acting in concert unless we determine otherwise.

Our directors are not treated as associates of each other solely because of their membership on the board of directors. Common stock purchased in the offering will be freely transferable except for shares purchased by directors and certain officers of New Kearny or Kearny Bank and except as described below. Any purchases made by any associate of New Kearny or Kearny Bank for the explicit purpose of meeting the minimum number of shares of common stock required to be sold in order to complete the offering shall be made for investment purposes only and not with a view toward redistribution. In addition, under Financial Industry Regulatory Authority guidelines, members of the Financial Industry Regulatory Authority and their associates are subject to certain restrictions on transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of these securities. For a further discussion of limitations on purchases of our shares of common stock at the time of conversion and thereafter, see “—Certain Restrictions on Purchase or Transfer of Our Shares after Conversion” and “Restrictions on Acquisition of New Kearny.”

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Plan of Distribution; Selling Agent and Underwriter Compensation

Subscription and Community Offerings. To assist in the marketing of our shares of common stock in the subscription and/or community offerings, we have retained Sandler O’Neill & Partners, L.P., which is a broker-dealer registered with the Financial Industry Regulatory Authority. Sandler O’Neill & Partners, L.P. will assist us on a best efforts basis in the subscription and community offerings by:

(i)

consulting as to the financial and marketing implications of the plan of conversion and reorganization;

(ii)

reviewing with our board of directors the financial effect of the offering on us, based on the independent appraiser’s appraisal of the shares of common stock;

(iii)

reviewing all offering documents, including this prospectus and any prospectus related to a syndicated or firm commitment underwritten offering, stock order forms and related offering materials;

(iv)

assisting in the design and implementation of a marketing strategy for the offering;

(v)

assisting management in scheduling and preparing for meetings with potential investors and other broker-dealers in connection with the offering; and

(vi)

providing such other general advice and assistance as may be reasonably necessary to promote the successful completion of the offerings.

For these services, Sandler O’Neill & Partners, L.P. will receive a fee of 1.0% of the aggregate dollar amount of all shares of common stock sold in the subscription and community offerings. No fee will be payable to Sandler O’Neill & Partners, L.P. with respect to shares purchased by officers, directors, employees or their immediate families, shares purchased by our tax-qualified and non-qualified employee benefit plans, and shares contributed to the Foundation, and no sales fee will be payable with respect to the exchange shares.

Syndicated or Firm Commitment Underwritten Offering. In the event that shares of common stock are sold in a syndicated or firm commitment underwritten offering, we will pay fees or have an underwriting discount, as applicable, of 5.0% of the aggregate dollar amount of common stock sold in the syndicated or firm commitment underwritten offering to Sandler O’Neill & Partners, L.P. and any other broker-dealers included in the syndicated or firm commitment underwritten offering.

Expenses. Sandler O’Neill & Partners, L.P. also will be reimbursed for reasonable legal fees and expenses in an amount not to exceed $250,000. If the plan of conversion is terminated or if Sandler O’Neill & Partners, L.P. engagement is terminated in accordance with the provisions of the agency agreement, Sandler O’Neill & Partners, L.P. will only receive reimbursement of its reasonable legal fees and expenses, and will return any amounts paid or advanced by us in excess of these amounts. We have separately agreed to pay Sandler O’Neill & Partners, L.P. up to $90,000 in fees and expenses for records management, as described below.

Sandler O’Neill & Partners, L.P. has not prepared any report or opinion constituting a recommendation or advice to us or to persons who subscribe for common stock, nor have they prepared an opinion as to the fairness to us of the purchase price or the terms of the common stock to be sold in the conversion and offering. Sandler O’Neill & Partners, L.P. does not express any opinion as to the prices at which common stock to be issued may trade.

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Records Management

We have also engaged Sandler O’Neill & Partners, L.P. as records management agent in connection with the conversion and the subscription and community offerings. In its role as records management agent, Sandler O’Neill & Partners, L.P., will assist us in the offering in the:

•

consolidation of deposit accounts and vote calculations;

•

design and preparation of proxy and stock order forms;

•

organization and supervision of the Stock Information Center;

•

proxy solicitation and other services for our special meeting of members; and

•

preparation and processing of other documents related to the stock offering.

Sandler O’Neill & Partners, L.P. will receive fees of up to $60,000 and reimbursement for expenses of up to $30,000 for these services. Of the fees for records management, $30,000 has been paid as of the date of this prospectus.

Indemnity

We will indemnify Sandler O’Neill & Partners, L.P. against liabilities and expenses, including legal fees, incurred in connection with certain claims or litigation arising out of or based upon untrue statements or omissions contained in the offering materials for the common stock, including liabilities under the Securities Act of 1933, as amended.

Solicitation of Offers by Officers and Directors

Some of our directors and executive officers may participate in the solicitation of offers to purchase common stock in the subscription and community offerings. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other regular employees of Kearny Bank may assist in the offering, but only in ministerial capacities, and may provide clerical work in effecting a sales transaction. No offers or sales may be made by tellers or at the teller counters. Investment-related questions of prospective purchasers will be directed to executive officers or registered representatives of Sandler O’Neill & Partners, L.P. Our other employees have been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the Securities Exchange Act of 1934, as amended, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors and employees to participate in the sale of common stock. None of our officers, directors or employees will be compensated in connection with their participation in the offering.

Lock-up Agreements

We, and each of our directors and executive officers have agreed, subject to certain exceptions, that during the period beginning on the date of this prospectus and ending 90 days after the closing of the offering, without the prior written consent of Sandler O’Neill & Partners, L.P., directly or indirectly, we will not (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any shares of Kearny-Federal or New Kearny stock or any securities convertible into or exchangeable or exercisable for Kearny-Federal or New Kearny stock, whether owned on the date of this prospectus or acquired after the date of this prospectus or with respect to which we or any of our directors or executive officers has or after the date of this prospectus acquires the power of disposition, or file any registration statement under the Securities Act of 1933, as amended, with respect to any of the foregoing, or (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of Kearny-Federal or New Kearny stock, whether any

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such swap or transaction is to be settled by delivery of stock or other securities, in cash or otherwise. In the event that either (1) during the period that begins on the date that is 15 calendar days plus three business days before the last day of the restricted period and ends on the last day of the restricted period, we issue an earnings release or material news or a material event relating to us occurs, or (2) prior to the expiration of the restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the restricted period, the restrictions set forth above will continue to apply until the expiration of the date that is 15 calendar days plus three business days after the date on which the earnings release is issued or the material news or event related to us occurs.

Procedure for Purchasing Shares in Subscription and Community Offerings

Expiration Date . The subscription offering will expire at p.m., Eastern Time, on [expiration date]. We expect that the community offering, if held, will terminate at the same time, although it may continue without notice to you until [extension date] or longer if the Federal Reserve Board approves a later date. We may extend the subscription offering, and if held, the community offering for up to 45 days, with the approval of the Federal Reserve Board, if required. This extension may be approved by us, in our sole discretion, without notice to purchasers in the offering. Any extension of the subscription and/or community offering beyond [extension date] would require the Federal Reserve Board’s approval. If the offering is so extended, all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds with interest at 0.15% per annum or cancel your deposit account withdrawal authorization. If the offering range is decreased below the minimum of the offering range or is increased above the maximum of the offering range, all subscribers’ stock orders will be cancelled, their deposit account withdrawal authorizations will be cancelled, and funds submitted to us will be returned promptly, with interest at 0.15% per annum for funds received in the subscription and community offerings. We will then resolicit the subscribers, giving them an opportunity to place a new stock order for a period of time.

We reserve the right in our sole discretion to terminate the offering at any time and for any reason, in which case we will cancel any deposit account withdrawal authorizations and promptly return all funds submitted, with interest at 0.15% per annum from the date of receipt as described above.

Use of Order Forms in the Subscription and Community Offerings . In order to purchase shares of common stock in the subscription and community offerings, you must properly complete an original stock order form and remit full payment. We are not required to accept orders submitted on photocopied or facsimiled order forms. All order forms must be received (not postmarked) prior to p.m., Eastern Time, on [expiration date]. We are not required to accept order forms that are not received by that time, are not signed or are otherwise executed defectively or are received without full payment or without appropriate deposit account withdrawal instructions. We are not required to notify subscribers of incomplete or improperly executed order forms, and we have the right to waive or permit the correction of incomplete or improperly executed order forms. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective subscriber of any such defects. You may submit your order form and payment by mail using the stock order return envelope provided, or by overnight delivery to our Stock Information Center, which will be located at [stock center address]. You may also hand-deliver stock order forms to the Stock Information Center. Hand-delivered stock order forms will only be accepted at this location. We will not accept stock order forms at our banking offices. Please do not mail stock order forms to Kearny Bank’s offices.

Once tendered, an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject orders received in the community offering, in whole or in part, at the time of receipt or at any time prior to completion of the offering. If you are ordering shares in the subscription offering, you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any person for the sale or transfer of the shares. We have the right to reject any order submitted in the offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of conversion and reorganization. Our interpretation of the terms and conditions of the plan of conversion and reorganization and of the acceptability of the order forms will be final.

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By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account and is not federally insured or otherwise guaranteed by Kearny Bank or the federal government, and that you received a copy of this prospectus. However, signing the order form will not result in you waiving your rights under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.

Payment for Shares . Payment for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for shares in the subscription and/or community offerings may be made by:

•

personal check, bank check or money order, made payable to Kearny Financial Corp.; or

•

authorization of withdrawal of available funds from your Kearny Bank deposit accounts.

Appropriate means for designating withdrawals from deposit accounts at Kearny Bank are provided on the order form. The funds designated must be available in the account(s) at the time the order form is received. A hold will be placed on these funds, making them unavailable to the depositor. Funds authorized for withdrawal will continue to earn interest within the account at the contractual rate until the offering is completed, at which time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to certificate accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be canceled at the time of withdrawal without penalty and the remaining balance will earn interest at the current passbook rate subsequent to the withdrawal. In the case of payments made by personal check, these funds must be available in the account(s). Checks and money orders received in the subscription and community offerings will be immediately cashed and placed in a segregated account at Kearny Bank and will earn interest at 0.15% per annum from the date payment is processed until the offering is completed or terminated.

You may not remit cash, Kearny Bank line of credit checks or any type of third-party checks (including those payable to you and endorsed over to New Kearny). You may not designate on your stock order form direct withdrawal from a Kearny Bank retirement account. See “—Using Individual Retirement Account Funds to Purchase Shares of Common Stock.” Additionally, you may not designate a direct withdrawal from Kearny Bank accounts with check-writing privileges. Please provide a check instead. If you request that we directly withdraw the funds, we reserve the right to interpret that as your authorization to treat those funds as if we had received a check for the designated amount, and we will immediately withdraw the amount from your checking account. If permitted by the Federal Reserve Board, in the event we resolicit large purchasers, as described above in “—Additional Limitations on Common Stock Purchases,” such purchasers who wish to increase their purchases will not be able to use personal checks to pay for the additional shares, but instead must pay for the additional shares using immediately available funds.

Once we receive your executed stock order form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by [extension date]. If the subscription and community offerings are extended past [extension date], all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds with interest at 0.15% per annum or cancel your deposit account withdrawal authorization. We may resolicit purchasers for a specified period of time.

Regulations prohibit Kearny Bank from lending funds or extending credit to any persons to purchase shares of common stock in the offering.

We shall have the right, in our sole discretion, to permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to thereafter pay for the shares of common stock for which they subscribe in the community offering at any time prior to 48 hours before the completion of the conversion. This payment may be made by wire transfer.

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If our employee stock ownership plan purchases shares in the offering, it will not be required to pay for such shares until completion of the offering, provided that there is a loan commitment from an unrelated financial institution or New Kearny to lend to the employee stock ownership plan the necessary amount to fund the purchase. In addition, if our 401(k) plan purchases shares in the offering, it will not be required to pay for such shares until completion of the offering.

Using Individual Retirement Account Funds. If you are interested in using funds in your individual retirement account or other retirement account to purchase shares of common stock, you must do so through a self-directed retirement account. By regulation, Kearny Bank’s retirement accounts are not self-directed, so they cannot be invested in our shares of common stock. Therefore, if you wish to use funds that are currently in a Kearny Bank retirement account, you may not designate on the order form that you wish funds to be withdrawn from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will instead have to be transferred to an independent trustee or custodian, such as a brokerage firm, offering self-directed retirement accounts. The purchase must be made through that account. If you do not have such an account, you will need to establish one before placing a stock order. An annual administrative fee may be payable to the independent trustee or custodian. There will be no early withdrawal or Internal Revenue Service interest penalties for these transfers. Individuals interested in using funds in an individual retirement account or any other retirement account, whether held at Kearny Bank or elsewhere, to purchase shares of common stock should contact our Stock Information Center for guidance as soon as possible, preferably at least two weeks prior to the [expiration date] offering deadline. Processing such transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be able to use such funds.

Delivery of Shares of Common Stock Purchased in the Subscription Offering and/or Community Offering and/or Syndicated Offering . All shares of New Kearny common stock sold in the subscription offering and/or community offering and/or syndicated offering will be issued in book-entry form and held electronically on the books of our transfer agent. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock issued in the subscription offering, community offering and syndicated offering will be mailed by our transfer agent to the persons entitled thereto at the registration address noted by them on their stock order form as soon as practicable following consummation of the conversion. We expect trading in the stock to begin on the day of completion of the conversion and stock offering or the next business day. Until a statement reflecting ownership of shares of common stock is available and delivered to purchasers, purchasers might not be able to sell the shares of common stock that they ordered, even though the shares of common stock will have begun trading. Your ability to sell the shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

Other Restrictions . Notwithstanding any other provision of the plan of conversion and reorganization, no person is entitled to purchase any shares of common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state “blue sky” regulations, or would violate regulations or policies of the Financial Industry Regulatory Authority, particularly those regarding free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase and we may refuse to honor any purchase order if an opinion is not timely furnished. In addition, we are not required to offer shares of common stock to any person who resides in a foreign country, or in a State of the United States with respect to which any of the following apply:

(i)

a small number of persons otherwise eligible to subscribe for shares under the plan of conversion and reorganization reside in such state;

(ii)

the issuance of subscription rights or the offer or sale of shares of common stock to such persons would require us, under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify our securities for sale in such state; or

(iii)

such registration or qualification would be impracticable for reasons of cost or otherwise.

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Restrictions on Transfer of Subscription Rights and Shares

Regulations of the Federal Reserve Board prohibit any person with subscription rights, including the Eligible Account Holders, Supplemental Eligible Account Holders and Other Members, from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of conversion and reorganization or the shares of common stock to be issued upon their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. When registering your stock purchase on the order form, you cannot add the name(s) of others for joint stock registration unless they are also named on the qualifying deposit account. Doing so may jeopardize your subscription rights. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise prior to completion of the offering.

We will pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.

Stock Information Center

Our banking office personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the conversion or offering, please call our Stock Information Center. The phone number is [stock center phone #]. The Stock Information Center is open Monday through Friday between 10:00 a.m. and p.m., Eastern Time. The Stock Information Center will be closed on weekends and bank holidays.

Liquidation Rights

Liquidation prior to the conversion. In the unlikely event that Kearny MHC is liquidated prior to the conversion, all claims of creditors of Kearny MHC would be paid first. Thereafter, if there were any assets of Kearny MHC remaining, these assets would first be distributed to certain depositors of Kearny Bank under such depositors’ liquidation rights. The amount received by such depositors would be equal to their pro rata interest in the remaining value of Kearny MHC after claims of creditors, based on the relative size of their deposit accounts.

Liquidation following the conversion. The plan of conversion and reorganization provides for the establishment, upon the completion of the conversion, of a liquidation account by New Kearny for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders in an amount equal to (i) Kearny MHC’s ownership interest in Kearny-Federal’s total stockholders’ equity as of the date of the latest statement of financial condition used in this prospectus plus (ii) the value of the net assets of Kearny MHC as of the date of the latest statement of financial condition of Kearny MHC prior to the consummation of the conversion (excluding its ownership of Kearny-Federal). The plan of conversion also provides for the establishment of a parallel liquidation account in Kearny Bank to support the New Kearny liquidation account in the event New Kearny does not have sufficient assets to fund its obligations under the New Kearny liquidation account.

In the unlikely event that Kearny Bank were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first. However, except with respect to the liquidation account to be established in Kearny-Federal, a depositor’s claim would be solely for the principal amount of his or her deposit accounts plus accrued interest. Depositors generally would not have an interest in the value of the assets of Kearny Bank or New Kearny above that amount.

The liquidation account established by New Kearny is designed to provide qualifying depositors a liquidation interest (exchanged for the liquidation interests such persons had in Kearny MHC) after the conversion in the event of a complete liquidation of New Kearny and Kearny Bank or a liquidation solely of Kearny Bank. Specifically, in the unlikely event that either (i) Kearny Bank or (ii) New Kearny and Kearny Bank were to liquidate

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after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by a distribution to depositors as of July 31, 2013 and [supplemental eligibility record date] of their interests in the liquidation account maintained by New Kearny. Also, in a complete liquidation of both entities, or of Kearny Bank only, when New Kearny has insufficient assets (other than the stock of Kearny Bank) to fund the liquidation account distribution due to Eligible Account Holders and Supplemental Eligible Account Holders and Kearny Bank has positive net worth, Kearny Bank shall immediately make a distribution to fund New Kearny’s remaining obligations under the liquidation account. In no event will any Eligible Account Holder or Supplemental Eligible Account Holder be entitled to a distribution that exceeds such holder’s interest in the liquidation account maintained by New Kearny as adjusted from time to time pursuant to the plan of conversion and federal regulations. If New Kearny is completely liquidated or sold apart from a sale or liquidation of Kearny Bank, then the New Kearny liquidation account will cease to exist and Eligible Account Holders and Supplemental Eligible Account Holders will receive an equivalent interest in the Kearny Bank liquidation account, subject to the same rights and terms as the New Kearny liquidation account.

Pursuant to the plan of conversion and reorganization, after two years from the date of conversion and upon the written request of the Board of Governors of the Federal Reserve System, New Kearny will transfer the liquidation account and the depositors’ interests in such account to Kearny Bank and the liquidation account shall thereupon be subsumed into the liquidation account of Kearny Bank.

Under the rules and regulations of the Federal Reserve Board, a post-conversion merger, consolidation, or similar combination or transaction with another depository institution or depository institution holding company in which New Kearny or Kearny Bank is not the surviving institution, would not be considered a liquidation. In such a transaction, the liquidation account would be assumed by the surviving institution or company.

Each Eligible Account Holder and Supplemental Eligible Account Holder would have an initial pro-rata interest in the liquidation account for each deposit account, including savings accounts, transaction accounts such as negotiable order of withdrawal accounts, money market deposit accounts, and certificates of deposit, with a balance of $50.00 or more held in Kearny Bank on July 31, 2013 or [supplemental eligibility record date] equal to the proportion that the balance of each Eligible Account Holder’s and Supplemental Eligible Account Holder’s deposit account on July 31, 2013 and [supplemental eligibility record date], respectively, bears to the balance of all deposit accounts of Eligible Account Holders and Supplemental Eligible Account Holders in Kearny Bank on such date.

If, however, on any June 30 annual closing date commencing after the effective date of the conversion, the amount in any such deposit account is less than the amount in the deposit account on July 31, 2013 or [supplemental eligibility record date], or any other annual closing date, then the interest in the liquidation account relating to such deposit account would be reduced from time to time by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account. Payment pursuant to liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders would be separate and apart from the payment of any insured deposit accounts to such depositor. Any assets remaining after the above liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be available for distribution to stockholders.

Material Income Tax Consequences

Completion of the conversion is subject to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state income tax consequences of conversion to Kearny MHC, Kearny-Federal, Kearny Bank, Eligible Account Holders, Supplemental Eligible Account Holders and Other Members of Kearny MHC. Unlike private letter rulings, opinions of counsel or tax advisors are not binding on the Internal Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. In the event of such disagreement, there can be no assurance that New Kearny or Kearny Bank would prevail in a judicial proceeding.

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Kearny MHC, Kearny-Federal, Kearny Bank and New Kearny have received an opinion of counsel, Luse Gorman Pomerenk & Schick, P.C., regarding all of the material federal income tax consequences of the conversion, which includes the following:

The merger of Kearny MHC with and into Kearny-Federal will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code.

The constructive exchange of Eligible Account Holders’ and Supplemental Eligible Account Holders’ liquidation interests in Kearny MHC for liquidation interests in Kearny-Federal will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

None of Kearny MHC, Kearny-Federal, Eligible Account Holders nor Supplemental Eligible Account Holders, will recognize any gain or loss on the transfer of the assets of Kearny MHC to Kearny-Federal in constructive exchange for liquidation interests in Kearny-Federal.

The basis of the assets of Kearny MHC and the holding period of such assets to be received by Kearny-Federal will be the same as the basis and holding period of such assets in Kearny MHC immediately before the exchange.

The merger of Kearny-Federal with and into New Kearny will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code and, therefore, will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code. Neither Kearny-Federal nor New Kearny will recognize gain or loss as a result of such merger.

The basis of the assets of Kearny-Federal and the holding period of such assets to be received by New Kearny will be the same as the basis and holding period of such assets in Kearny-Federal immediately before the exchange.

Current stockholders of Kearny-Federal will not recognize any gain or loss upon their exchange of Kearny-Federal common stock for New Kearny common stock.

Eligible Account Holders and Supplemental Eligible Account Holders will not recognize any gain or loss upon the constructive exchange of their liquidation interests in Kearny-Federal for interests in the liquidation account in New Kearny.

The exchange by the Eligible Account Holders and Supplemental Eligible Account Holders of the liquidation interests that they constructively received in Kearny-Federal for interests in the liquidation account established in New Kearny will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations.

10.

Each stockholder’s aggregate basis in shares of New Kearny common stock (including fractional share interests) received in the exchange will be the same as the aggregate basis of Kearny-Federal common stock surrendered in the exchange.

11.

Each stockholder’s holding period in his or her New Kearny common stock received in the exchange will include the period during which the Kearny-Federal common stock surrendered was held, provided that the Kearny-Federal common stock surrendered is a capital asset in the hands of the stockholder on the date of the exchange.

12.

Cash received by any current stockholder of Kearny-Federal in lieu of a fractional share interest in shares of New Kearny common stock will be treated as having been received as a distribution in

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full payment in exchange for a fractional share interest of New Kearny common stock, which such stockholder would otherwise be entitled to receive. Accordingly, a stockholder will recognize gain or loss equal to the difference between the cash received and the basis of the fractional share. If the common stock is held by the stockholder as a capital asset, the gain or loss will be capital gain or loss.

13.

It is more likely than not that the fair market value of the nontransferable subscription rights to purchase New Kearny common stock is zero. Accordingly, no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders or Other Members upon distribution to them of nontransferable subscription rights to purchase shares of New Kearny common stock. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights.

14.

It is more likely than not that the fair market value of the benefit provided by the liquidation account of Kearny Bank supporting the payment of the New Kearny liquidation account in the event New Kearny lacks sufficient net assets is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon the constructive distribution to them of such rights in the Kearny Bank liquidation account as of the effective date of the merger of Kearny-Federal with and into New Kearny.

15.

It is more likely than not that the basis of the shares of New Kearny common stock purchased in the offering by the exercise of nontransferable subscription rights will be the purchase price. The holding period of the New Kearny common stock purchased pursuant to the exercise of nontransferable subscription rights will commence on the date the right to acquire such stock was exercised.

16.

No gain or loss will be recognized by New Kearny on the receipt of money in exchange for New Kearny common stock sold in the offering.

We believe that the tax opinions summarized above address all material federal income tax consequences that are generally applicable to Kearny MHC, Kearny-Federal, Kearny Bank, New Kearny and persons receiving subscription rights and stockholders of Kearny-Federal. With respect to items 13 and 15 above, Luse Gorman Pomerenk & Schick, P.C. noted that the subscription rights will be granted at no cost to the recipients, are legally non-transferable and of short duration, and will provide the recipient with the right only to purchase shares of common stock at the same price to be paid by members of the general public in any community offering. The firm further noted that RP Financial, LC. has issued a letter that the subscription rights have no ascertainable fair market value. The firm also noted that the Internal Revenue Service has not in the past concluded that subscription rights have value. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes that it is more likely than not that the nontransferable subscription rights to purchase shares of common stock have no value. However, the issue of whether or not the nontransferable subscription rights have value is based on all the facts and circumstances. If the subscription rights granted to Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are deemed to have an ascertainable value, receipt of these rights could result in taxable gain to those Eligible Account Holders, Supplemental Eligible Account Holders and Other Members who exercise the subscription rights in an amount equal to the ascertainable value, and we could recognize gain on a distribution. Eligible Account Holders, Supplemental Eligible Account Holders and Other Members are encouraged to consult with their own tax advisors as to the tax consequences in the event that subscription rights are deemed to have an ascertainable value.

The opinion as to item 14 above is based on the position that: (i) no holder of an interest in a liquidation account has ever received any payment attributable to a liquidation account; (ii) the interests in the liquidation accounts are not transferable; (iii) the amounts due under the liquidation account with respect to each Eligible Account Holder and Supplemental Eligible Account Holder will be reduced as their deposits in Kearny Bank are reduced; and (iv) the

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Kearny Bank liquidation account payment obligation arises only if New Kearny lacks sufficient assets to fund the liquidation account.

In addition, we have received a letter from RP Financial, LC. stating its belief that the benefit provided by the Kearny Bank liquidation account supporting the payment of the liquidation account in the event New Kearny lacks sufficient net assets does not have any economic value at the time of the conversion. Based on the foregoing, Luse Gorman Pomerenk & Schick, P.C. believes it is more likely than not that such rights in the Kearny Bank liquidation account have no value. If such rights are subsequently found to have an economic value, income may be recognized by each Eligible Account Holder or Supplemental Eligible Account Holder in the amount of such fair market value as of the date of the conversion.

The opinion of Luse Gorman Pomerenk & Schick, P.C., unlike a letter ruling issued by the Internal Revenue Service, is not binding on the Internal Revenue Service and the conclusions expressed therein may be challenged at a future date. The Internal Revenue Service has issued favorable rulings for transactions substantially similar to the proposed reorganization and stock offering, but any such ruling may not be cited as precedent by any taxpayer other than the taxpayer to whom the ruling is addressed. We do not plan to apply for a letter ruling concerning the transactions described herein.

We have also received an opinion from BDO USA, LLP that the New Jersey state income tax consequences are consistent with the federal income tax consequences.

The federal and state tax opinions have been filed with the Securities and Exchange Commission as exhibits to New Kearny’s registration statement.

Certain Restrictions on Purchase or Transfer of Our Shares after Conversion

All shares of common stock purchased in the offering by a director or certain officers of Kearny Bank generally may not be sold for a period of one year following the closing of the conversion, except in the event of the death of the director or executive officer. Each book-entry for restricted shares will note a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within this time period of any certificate or record ownership of the shares other than as provided above is a violation of the restriction. Any shares of common stock issued at a later date as a stock dividend, stock split, or otherwise, with respect to the restricted stock will be similarly restricted. The directors and executive officers of New Kearny also will be restricted by the insider trading rules under the Securities Exchange Act of 1934, as amended.

Purchases of shares of our common stock by any of our directors, certain officers and their associates, during the three-year period following the closing of the conversion may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the prior written approval of the Federal Reserve Board. This restriction does not apply, however, to negotiated transactions involving more than 1% of our outstanding common stock or to purchases of our common stock by our stock option plan or any of our tax-qualified employee stock benefit plans or non-tax-qualified employee stock benefit plans, including any restricted stock plans.

Federal regulations prohibit New Kearny from repurchasing its shares of common stock during the first year following conversion unless compelling business reasons exist for such repurchases, or to fund restricted stock plans that have been ratified by stockholders (with Federal Reserve Board approval) or tax-qualified employee stock benefit plans. In addition, the repurchase of shares of common stock is subject to Federal Reserve Board policy related to repurchases of shares by financial institution holding companies.

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KEARNYBANK FOUNDATION

General

In furtherance of our commitment to our local community and communities we may serve in the future, the plan of conversion and reorganization provides that we will establish a new charitable foundation, KearnyBank Foundation, as a non-stock, nonprofit Delaware corporation, in connection with the offering. We intend to contribute cash and shares of common stock to the Foundation, as further described below.

By further enhancing our visibility and reputation in our local community, we believe that the contribution to the Foundation will enhance the long-term value of our community banking franchise. The stock offering presents us with a unique opportunity to provide a substantial and continuing benefit to our communities through the Foundation.

Purpose of the Foundation

We intend to contribute to the Foundation 500,000 shares of common stock and $5.0 million in cash, for a total contribution of $10.0 million. The purpose of the Foundation is to provide financial support to charitable organizations in the communities in which we operate and to enable our communities to share in our long-term growth. The Foundation is dedicated completely to community activities and the promotion of charitable causes. The Foundation will also support our on-going obligations to the community under the CRA. Kearny Bank received a satisfactory rating in its most recent CRA examination by the FDIC.

Funding the Foundation with shares of our common stock is also intended to allow our communities to share in our potential growth and success after the stock offering is completed because the Foundation will benefit directly from any increases in the value of our common stock. In addition, the Foundation will maintain close ties with Kearny Bank, thereby forming a partnership within the communities in which Kearny Bank operates.

Structure of the Foundation

The Foundation will be incorporated under Delaware law as a non-stock, nonprofit corporation. The certificate of incorporation of the Foundation will provide that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code. The Foundation’s certificate of incorporation will also provide that no part of the net earnings of the Foundation will inure to the benefit of, or be distributable to, its members, directors or officers or to private individuals.

The board of directors of the Foundation will be responsible for establishing the Foundation’s grant and donation policies, consistent with the purposes for which it was established. As directors of a nonprofit corporation, directors of the Foundation will at all times be bound by their fiduciary duty to advance the foundation’s charitable goals, to protect its assets and to act in a manner consistent with the charitable purposes for which the Foundation was established. The directors of the Foundation will also be responsible for directing the activities of the Foundation, including the management and voting of the shares of our common stock held by the Foundation. However, as required by Federal Reserve Board’s regulations, all shares of our common stock held by the Foundation will be voted in the same ratio as all other shares of our common stock on all proposals considered by our stockholders.

The Foundation’s initial place of business will be located at our administrative offices. The board of directors of the Foundation will appoint such officers and employees as may be necessary to manage its operations. To the extent applicable, we will comply with the affiliates restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve Board’s regulations governing transactions between Kearny Bank and the Foundation.

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The Foundation will receive working capital from the cash and stock contribution and:

(i)

any dividends that may be paid on our shares of common stock in the future;

(ii)

within the limits of applicable federal and state laws, loans collateralized by the shares of common stock; or

(iii)

the proceeds of the sale of any of the shares of common stock in the open market from time to time.

As a private foundation under Section 501(c)(3) of the Internal Revenue Code, the Foundation is required to distribute annually in grants or donations a minimum of 5% of the average fair market value of its net investment assets.

Tax Considerations

New Kearny, Kearny-Federal, Kearny MHC and Kearny Bank are authorized by law to make charitable contributions. We believe that the stock offering presents a unique opportunity to establish and fund a charitable foundation given the substantial amount of additional capital being raised. In making such a determination, we considered the dilutive impact to our stockholders of the contribution of shares of common stock to the Foundation. See “Capitalization” and “Historical and Pro Forma Regulatory Capital Compliance.”

We believe that our contribution of cash and shares of our common stock to the Foundation should not constitute an act of self-dealing and that we should be entitled to a federal tax deduction in the amount of the fair market value of the cash and stock at the time of the contribution. We are permitted to deduct for charitable purposes only an amount equal to 10% of our annual pre-tax income in any one year. We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to the Foundation. We estimate that all of the contribution should be deductible for federal tax purposes over a four-year period, except the contribution is expected to be deducted over five years at the minimum level of the offering range. Even if the contribution is deductible, we may not have sufficient earnings to be able to use the deduction in full. Any decision to make additional contributions to the Foundation in the future would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders and depositors, and the financial condition and operations of the foundation.

As a private foundation, earnings and gains, if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income, such as interest, dividends and capital gains, is generally taxed at a rate of 2%, although we may qualify for the lower 1% special rate. The Foundation is required to file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. The Foundation is required to make its annual return available for public inspection. The annual return for a private foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the recipient, any relationship between a grant recipient and the foundation’s managers and a concise statement of the purpose of each grant.

Regulatory Requirements Imposed on the Foundation

Federal Reserve Board regulations required that the directors who serve on the Foundation’s board could not participate in our board’s discussions concerning contributions to the Foundation, and could not vote on the matter.

Federal Reserve Board regulations provide that the Federal Reserve Board will generally not object if a well-capitalized savings bank contributes to a charitable foundation an aggregate amount of 8% or less of the shares or proceeds issued in a stock offering. Kearny Bank qualifies as a well-capitalized savings bank for purposes of this limitation, and the contribution to the Foundation will not exceed this limitation.

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Federal Reserve Board regulations impose the following requirements on the Foundation:

•

the Foundation’s primary purpose must be to serve and make grants in our local community;

•

the Federal Reserve Board may examine the Foundation at the foundation’s expense;

•

the Foundation must comply with all supervisory directives imposed by the Federal Reserve Board;

•

the Foundation must provide annually to the Federal Reserve Board a copy of the annual report that the Foundation submits to the Internal Revenue Service;

•

the Foundation must operate according to written policies adopted by its board of directors, including a conflict of interest policy;

•

the Foundation may not engage in self-dealing and must comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code; and

•

the Foundation must vote its shares of our common stock in the same ratio as all of the other shares voted on each proposal considered by our stockholders.

Within six months of completing the stock offering, the Foundation intends to submit to the Federal Reserve Board a three-year operating plan, conflict of interest policy, gift instrument, certificate of incorporation and bylaws.

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COMPARISON OF STOCKHOLDERS’ RIGHTS FOR EXISTING STOCKHOLDERS OF KEARNY-FEDERAL

General. As a result of the conversion, existing stockholders of Kearny-Federal will become stockholders of New Kearny. There are differences in the rights of stockholders of Kearny-Federal and stockholders of New Kearny caused by differences between federal and Maryland law and regulations and differences in Kearny-Federal’s federal stock charter and bylaws and New Kearny’s Maryland articles of incorporation and bylaws.

This discussion is not intended to be a complete statement of the differences affecting the rights of stockholders, but rather summarizes the material differences and similarities affecting the rights of stockholders. See “Where You Can Find Additional Information” for procedures for obtaining a copy of New Kearny’s articles of incorporation and bylaws.

Authorized Capital Stock. The authorized capital stock of Kearny-Federal consists of 75,000,000 shares of common stock, $0.10 par value per share, and 25,000,000 shares of preferred stock, having $0.10 par value per share.

The authorized capital stock of New Kearny consists of 800,000,000 shares of common stock, $0.01 par value per share, and 100,000,000 shares of preferred stock, par value $0.01 per share.

Under the Maryland General Corporation Law and New Kearny’s articles of incorporation, the board of directors may increase or decrease the number of authorized shares without stockholder approval. Stockholder approval is required to increase or decrease the number of authorized shares of Kearny-Federal.

Kearny-Federal’s charter and New Kearny’s articles of incorporation both authorize the board of directors to establish one or more series of preferred stock and, for any series of preferred stock, to determine the terms and rights of the series, including voting rights, dividend rights, conversion and redemption rates and liquidation preferences. As a result of the ability to fix voting rights for a series of preferred stock, our board of directors has the power, to the extent consistent with its fiduciary duty, to issue a series of preferred stock to persons friendly to management in order to attempt to block a hostile tender offer, merger or other transaction by which a third party seeks control. We currently have no plans for the issuance of additional shares for such purposes.

Issuance of Capital Stock. Pursuant to applicable laws and regulations, Kearny MHC is required to own not less than a majority of the outstanding shares of Kearny-Federal common stock. Kearny MHC will no longer exist following completion of the conversion.

New Kearny’s articles of incorporation do not contain restrictions on the issuance of shares of capital stock to directors, officers or controlling persons, whereas Kearny-Federal’s stock charter restricts such issuances to general public offerings, or to directors for qualifying shares, unless the share issuance or the plan under which they would generally be issued has been approved by stockholders. However, stock-based compensation plans, such as stock option plans and restricted stock plans as well as issuers in excess of 20% of outstanding shares, would have to be submitted for approval by New Kearny stockholders due to requirements of the Nasdaq Stock Market and in order to qualify stock options for favorable federal income tax treatment.

Voting Rights. Neither Kearny-Federal’s stock charter or bylaws nor New Kearny’s articles of incorporation or bylaws provide for cumulative voting for the election of directors. For additional information regarding voting rights, see “—Limitations on Voting Rights of Greater-than-10% Stockholders” below.

Payment of Dividends. Kearny-Federal’s ability to pay dividends depends, in part, upon Kearny Bank’s ability to pay dividends to Kearny-Federal, which is restricted by federal regulations and by federal income tax considerations related to federally-chartered savings banks.

The same restrictions will apply to Kearny Bank’s payment of dividends to New Kearny. In addition, Maryland law generally prohibits New Kearny from paying dividends if, after giving effect to the dividend, New

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Kearny would not be able to pay its indebtedness as it becomes due in the normal course of business or its total assets would be less than the sum of its total liabilities plus the amount that would be owed upon dissolution to stockholders whose preferential rights upon dissolution are superior to those receiving the dividend, and to an amount that would not make it insolvent.

Board of Directors . Kearny-Federal’s bylaws and New Kearny’s articles of incorporation require the board of directors to be divided into three classes and that the members of each class shall be elected for a term of three years and until their successors are elected and qualified, with one class being elected annually.

Under Kearny-Federal’s bylaws, any vacancies on the board of directors may be filled by the affirmative vote of a majority of the remaining directors although less than a quorum of the board of directors. Persons elected by the board of directors of Kearny-Federal to fill vacancies may only serve until the next election of directors by stockholders. Under New Kearny’s bylaws, any vacancy occurring on the board of directors, including any vacancy created by reason of an increase in the number of directors, may be filled only by the affirmative vote of two-thirds of the remaining directors, and any director so chosen shall hold office for the remainder of the term to which the director has been elected and until his or her successor is elected and qualified.

Limitations on Liability. The charter and bylaws of Kearny-Federal do not limit the personal liability of directors or officers.

New Kearny’s articles of incorporation provide that directors and officers will not be personally liable for monetary damages to New Kearny or its stockholders for certain actions as directors or officers, except for (i) the receipt of an improper personal benefit, (ii) actions or omissions that are determined to have involved active and deliberate dishonesty that was material to a cause of action, or (iii) to the extent otherwise provided by Maryland law. These provisions might, in certain instances, discourage or deter stockholders or management from bringing a lawsuit against directors or officers for a breach of their duties even though such an action, if successful, might benefit New Kearny.

Indemnification of Directors, Officers, Employees and Agents. As generally allowed under current Federal Reserve Board regulations, Kearny-Federal will indemnify its directors, officers and employees for any judgment and any reasonable costs incurred in connection with any litigation involving such person’s activities as a director, officer or employee if such person obtains a final judgment on the merits in his or her favor. In addition, indemnification is permitted in the case of a settlement, a final judgment against such person, or final judgment other than on the merits, if a majority of disinterested directors determines that such person was acting in good faith within the scope of his or her employment as he or she could reasonably have perceived it under the circumstances and for a purpose he or she could reasonably have believed under the circumstances was in the best interests of Kearny-Federal or its stockholders. Kearny-Federal also is permitted to pay ongoing expenses incurred by a director, officer or employee if a majority of disinterested directors concludes that such person may ultimately be entitled to indemnification. Before making any indemnification payment, Kearny-Federal is required to notify the Federal Reserve Board of its intention, and such payment cannot be made if the Federal Reserve Board objects to such payment.

The articles of incorporation of New Kearny provide that it shall indemnify (i) its current and former directors and officers to the fullest extent required or permitted by Maryland law, including the advancement of expenses, and (ii) other employees or agents to such extent as shall be authorized by the board of directors and Maryland law, all subject to any applicable federal law. Maryland law allows New Kearny to indemnify any person for expenses, liabilities, settlements, judgments and fines in suits in which such person has been made a party by reason of the fact that he or she is or was a director, officer or employee of New Kearny. No such indemnification may be given if the acts or omissions of the person are adjudged to be in bad faith and material to the matter giving rise to the proceeding, if such person is liable to the corporation for an unlawful distribution, or if such person personally received a benefit to which he or she was not entitled. The right to indemnification includes the right to be paid the expenses incurred in advance of final disposition of a proceeding.

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Special Meetings of Stockholders. Kearny-Federal’s bylaws provide that special meetings of stockholders may be called by the chairman, the president, a majority of the members of the board of directors or the holders of not less than 10% of the outstanding capital stock entitled to vote at the meeting. New Kearny’s bylaws provide that special meetings of stockholders may be called by the president, chairperson of the board of directors, by a majority vote of the total number of directors that New Kearny would have, if there were no vacancies on the board of directors, or upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting.

Stockholder Nominations and Proposals. Kearny-Federal’s bylaws provide that stockholders may submit nominations for election of directors at an annual meeting of stockholders and may propose any new business to be taken up at such a meeting by filing the proposal in writing with Kearny-Federal at least five days before the date of any such meeting.

New Kearny’s bylaws provide that any stockholder desiring to make a nomination for the election of directors or a proposal for new business at a meeting of stockholders must submit written notice to New Kearny not less than 110 days nor more than 120 days prior to the anniversary of the prior year’s annual meeting of stockholders; provided, however, that if the date of the annual meeting is advanced more than 30 days prior to the anniversary of the preceding year’s annual meeting, a stockholder’s written notice shall be timely only if delivered or mailed to and received by the Secretary of New Kearny at the principal executive office of the corporation no earlier than the day on which public disclosure of the date of such annual meeting is first made and no later than the tenth day following the day on which public disclosure of the date of such annual meeting is first made.

Management believes that it is in the best interest of New Kearny and its stockholders to provide sufficient time to enable management to disclose to stockholders information about a dissident slate of nominations for directors. This advance notice requirement may also give management time to solicit its own proxies in an attempt to defeat any dissident slate of nominations, should management determine that doing so is in the best interests of stockholders generally. Similarly, adequate advance notice of stockholder proposals will give management time to study such proposals and to determine whether to recommend to the stockholders that such proposals be adopted. In certain instances, such provisions could make it more difficult to oppose management’s nominees or proposals, even if stockholders believe such nominees or proposals are in their best interests.

Stockholder Action Without a Meeting. Kearny-Federal’s bylaws provide that any action to be taken at any annual meeting or special meeting of shareholders may be taken without a meeting if all shareholders entitled to vote on the matter consent to the action in writing.

New Kearny’s bylaws do not provide for action to be taken by stockholders without a meeting. However, under Maryland law, action may be taken by stockholders without a meeting if all stockholders entitled to vote on the action consent to taking such action without a meeting.

Stockholder’s Right to Examine Books and Records. Kearny-Federal’s bylaws provide that it may either make available for inspection, at least 20 days prior to a stockholders meeting, a list of the stockholders of record entitled to vote at such meeting, or the Board of Directors may elect to follow the procedures described in 12 C.F.R. 239.26(d) of the Federal Reserve Board’s regulations regarding the right to examine books and records. The federal regulation noted above provides that stockholders may inspect and copy specified books and records after proper written notice for a proper purpose. Maryland law provides that a stockholder may inspect a company’s bylaws, stockholder minutes, annual statement of affairs and any voting trust agreements. However, only a stockholder or group of stockholders who together, for at least six months, hold at least 5% of the outstanding stock of any class, have the right to inspect a company’s stock ledger, list of stockholders and books of accounts.

Limitations on Voting Rights of Greater-than-10% Stockholders. New Kearny’s articles of incorporation provide that no beneficial owner, directly or indirectly, of more than 10% of the outstanding shares of common stock will be permitted to vote any shares in excess of such 10% limit. Kearny-Federal’s charter does not contain voting limits based on stock ownership.

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In addition, federal regulations provide that for a period of three years following the date of the completion of the offering, no person, acting singly or together with associates in a group of persons acting in concert, may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of a class of New Kearny’s equity securities without the prior written approval of the Federal Reserve Board. Where any person acquires beneficial ownership of more than 10% of a class of New Kearny’s equity securities without the prior written approval of the Federal Reserve Board, the securities beneficially owned by such person in excess of 10% may not be voted by any person or counted as voting shares in connection with any matter submitted to the stockholders for a vote, and will not be counted as outstanding for purposes of determining the affirmative vote necessary to approve any matter submitted to the stockholders for a vote.

Business Combinations with Interested Stockholders. Under Maryland law, “business combinations” between New Kearny and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially owns 10% or more of the voting power of New Kearny’s voting stock after the date on which New Kearny had 100 or more beneficial owners of its stock; or (ii) an affiliate or associate of New Kearny at any time after the date on which New Kearny had 100 or more beneficial owners of its stock who, within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of New Kearny. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between New Kearny and an interested stockholder generally must be recommended by the board of directors of New Kearny and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of New Kearny, and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of New Kearny other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not apply if New Kearny’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

Current federal regulations do not provide a vote standard for business combinations involving federal mid-tier stock holding companies.

Mergers, Consolidations and Sales of Assets . Under New Kearny’s articles of incorporation, a merger or consolidation of New Kearny requires approval of a majority of all votes entitled to be cast by stockholders. However, no approval by stockholders is required for a merger if:

•

the plan of merger does not make an amendment to the articles of incorporation that would be required to be approved by the stockholders;

•

each stockholder of the surviving corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations, and rights, immediately after; and

•

the number of shares of any class or series of stock outstanding immediately after the effective time of the merger will not increase by more than 20% the total number of voting shares outstanding immediately before the merger.

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In addition, under certain circumstances the approval of the stockholders shall not be required to authorize a merger with or into a 90% owned subsidiary of New Kearny.

Under Maryland law, a sale of all or substantially all of New Kearny’s assets other than in the ordinary course of business, or a voluntary dissolution of New Kearny, requires the approval of its board of directors and the affirmative vote of a majority of the votes of stockholders entitled to be cast on the matter.

Current federal regulations do not provide a vote standard for mergers, consolidations or sales of assets by federal mid-tier stock holding companies.

Evaluation of Offers. The articles of incorporation of New Kearny provide that its board of directors, when evaluating a transaction that would or may involve a change in control of New Kearny (whether by purchases of its securities, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of New Kearny and its stockholders and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited to:

•

the economic effect, both immediate and long-term, upon New Kearny’s stockholders, including stockholders, if any, who do not participate in the transaction;

•

the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, New Kearny and its subsidiaries and on the communities in which New Kearny and its subsidiaries operate or are located;

•

whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of New Kearny;

•

whether a more favorable price could be obtained for New Kearny’s stock or other securities in the future;

•

the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of New Kearny and its subsidiaries;

•

the future value of the stock or any other securities of New Kearny or the other entity to be involved in the proposed transaction;

•

any antitrust or other legal and regulatory issues that are raised by the proposal;

•

the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and

•

the ability of New Kearny to fulfill its objectives as a financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations.

If the board of directors determines that any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.

Kearny-Federal’s charter and bylaws do not contain a similar provision.

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Dissenters’ Rights of Appraisal . Under Maryland law, stockholders of New Kearny will not have dissenters’ appraisal rights in connection with a plan of merger or consolidation to which New Kearny is a party as long as the common stock of New Kearny trades on a national securities exchange.

Current federal regulations do not provide for dissenters’ appraisal rights in business combinations involving federal mid-tier stock holding companies.

Amendment of Governing Instruments . No amendment of Kearny-Federal’s stock charter may be made unless it is first proposed by the board of directors then approved or preapproved by the Federal Reserve Board, and thereafter approved by the holders of a majority of the total votes eligible to be cast at a legal meeting. Amendments to Kearny-Federal’s bylaws require either preliminary approval by or post-adoption notice to the Federal Reserve Board as well as approval of the amendment by a majority vote of the authorized board of directors, or by a majority of the votes cast by the stockholders of Kearny-Federal at any legal meeting.

New Kearny’s articles of incorporation may be amended, upon the submission of an amendment by the board of directors to a vote of the stockholders, by the affirmative vote of at least two-thirds of the outstanding shares of common stock, or by the affirmative vote of a majority of the outstanding shares of common stock if at least two-thirds of the members of the whole board of directors approves such amendment; provided, however, that approval by at least 80% of the outstanding voting stock is generally required to amend the following provisions:

the limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares of common stock;

ii.

the division of the board of directors into three staggered classes;

iii.

the ability of the board of directors to fill vacancies on the board;

iv.

the requirement that directors may only be removed for cause and by the affirmative vote of at least a majority of the votes eligible to be cast by stockholders;

the ability of the board of directors to amend and repeal the bylaws;

vi.

the ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire New Kearny;

vii.

the authority of the board of directors to provide for the issuance of preferred stock;

viii.

the validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the total number of outstanding shares of common stock;

ix.

the number of stockholders constituting a quorum or required for stockholder consent;

the indemnification of current and former directors and officers, as well as employees and other agents, by New Kearny;

xi.

the limitation of liability of officers and directors to New Kearny for money damages;

xii.

the inability of stockholders to cumulate their votes in the election of directors;

xiii.

the requirement that the forum for certain actions or disputes will be a state or federal court located within the State of Maryland;

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xiv.

the advance notice requirements for stockholder proposals and nominations; and

xv.

the provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend the provisions of the articles of incorporation provided in (i) through (xiii) of this list.

The articles of incorporation also provide that the bylaws may be amended by the affirmative vote of a majority of our directors or by the stockholders by the affirmative vote of at least 80% of the total votes eligible to be voted at a duly constituted meeting of stockholders. Any amendment of this super-majority requirement for amendment of the bylaws would also require the approval of 80% of the outstanding voting stock.

RESTRICTIONS ON ACQUISITION OF NEW KEARNY

Although the board of directors of New Kearny is not aware of any effort that might be made to obtain control of New Kearny after the conversion, the board of directors believes that it is appropriate to include certain provisions as part of New Kearny’s articles of incorporation to protect the interests of New Kearny and its stockholders from takeovers which the board of directors might conclude are not in the best interests of Kearny Bank, New Kearny or New Kearny’s stockholders.

The following discussion is a general summary of the material provisions of Maryland law, New Kearny’s articles of incorporation and bylaws, Kearny Bank’s charter and certain other regulatory provisions that may be deemed to have an “anti-takeover” effect. The following description is necessarily general and is not intended to be a complete description of the document or regulatory provision in question. New Kearny’s articles of incorporation and bylaws are included as part of Kearny MHC’s application for conversion filed with the Federal Reserve Board and New Kearny’s registration statement filed with the Securities and Exchange Commission. See “Where You Can Find Additional Information.”

Maryland Law and Articles of Incorporation and Bylaws of New Kearny

Maryland law, as well as New Kearny’s articles of incorporation and bylaws, contain a number of provisions relating to corporate governance and rights of stockholders that may discourage future takeover attempts. As a result, stockholders who might desire to participate in such transactions may not have an opportunity to do so. In addition, these provisions will also render the removal of the board of directors or management of New Kearny more difficult.

Directors . The board of directors will be divided into three classes. The members of each class will be elected for a term of three years and only one class of directors will be elected annually. Thus, it would take at least two annual elections to replace a majority of the board of directors. The bylaws establish qualifications for board members, including restrictions on affiliations with competitors of Kearny Bank and restrictions based upon prior legal or regulatory violations. Further, the bylaws impose notice and information requirements in connection with the nomination by stockholders of candidates for election to the board of directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders. Such notice and information requirements are applicable to all stockholder business proposals and nominations, and are in addition to any requirements under the federal securities laws.

Restrictions on Call of Special Meetings . The articles of incorporation and bylaws provide that special meetings of stockholders can be called by the president, by a majority of the whole board of directors or upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting.

Prohibition of Cumulative Voting . The articles of incorporation prohibit cumulative voting for the election of directors.

Limitation of Voting Rights . The articles of incorporation provide that in no event will any person who beneficially owns more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit. This provision has been included in the articles

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of incorporation in reliance on Section 2-507(a) of the Maryland General Corporation Law, which entitles stockholders to one vote for each share of stock unless the articles of incorporation provide for a greater or lesser number of votes per share or limit or deny voting rights.

Restrictions on Removing Directors from Office . The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative vote of the holders of 80% of the voting power of all of our then-outstanding common stock entitled to vote (after giving effect to the limitation on voting rights discussed above in “—Limitation of Voting Rights.”).

Authorized but Unissued Shares . After the conversion, New Kearny will have authorized but unissued shares of common and preferred stock. See “Description of Capital Stock of New Kearny Following the Conversion.” The articles of incorporation authorize 100,000,000 shares of serial preferred stock. New Kearny is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board of directors is authorized to fix the designations, and relative preferences, limitations, voting rights, if any, including without limitation, offering rights of such shares (which could be multiple or as a separate class). In the event of a proposed merger, tender offer or other attempt to gain control of New Kearny that the board of directors does not approve, it may be possible for the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred stock therefore may be to deter a future attempt to gain control of New Kearny. The board of directors has no present plan or understanding to issue any preferred stock.

Amendments to Articles of Incorporation and Bylaws. Amendments to the articles of incorporation must be approved by the board of directors and by the affirmative vote of at least two-thirds of the outstanding shares of common stock, or by the affirmative vote of a majority of the outstanding shares of common stock if at least two-thirds of the members of the whole board of directors approves such amendment; provided, however, that approval by at least 80% of the outstanding voting stock is generally required to amend certain provisions. A list of these provisions is provided under “Comparison of Stockholders’ Rights For Existing Stockholders of Kearny-Federal—Amendment of Governing Instruments” above.

The articles of incorporation also provide that the bylaws may be amended by the affirmative vote of a majority of New Kearny’s directors or by the stockholders by the affirmative vote of at least 80% of the total votes eligible to be cast at a duly constituted meeting of stockholders. Any amendment of this super-majority requirement for amendment of the bylaws would also require the approval of 80% of the total votes eligible to be cast.

The provisions requiring the affirmative vote of 80% of the total eligible votes eligible to be cast for certain stockholder actions have been included in the articles of incorporation of New Kearny in reliance on Section 2-104(b)(4) of the Maryland General Corporation Law. Section 2-104(b)(4) permits the articles of incorporation to require a greater proportion of votes than the proportion that would otherwise be required for stockholder action under the Maryland General Corporation Law.

Business Combinations with Interested Stockholders . Maryland law restricts mergers, consolidations, sales of assets and other business combinations between New Kearny and an “interested stockholder”. See “Comparison of Stockholder Rights for Existing Stockholders of Kearny Financial Corp.—Mergers, Consolidations and Sales of Assets” above.

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Purpose and Anti-Takeover Effects of New Kearny’s Articles of Incorporation and Bylaws . Our board of directors believes that the provisions described above are prudent and will reduce our vulnerability to takeover attempts and certain other transactions that have not been negotiated with and approved by our board of directors. These provisions also will assist us in the orderly deployment of the offering proceeds into productive assets during the initial period after the conversion. We believe these provisions are in the best interests of New Kearny and its stockholders. Our board of directors believes that it will be in the best position to determine the true value of New Kearny and to negotiate more effectively for what may be in the best interests of all our stockholders. Accordingly, our board of directors believes that it is in the best interests of New Kearny and all of our stockholders to encourage potential acquirers to negotiate directly with the board of directors and that these provisions will encourage such negotiations and discourage hostile takeover attempts. It is also the view of our board of directors that these provisions should not discourage persons from proposing a merger or other transaction at a price reflective of the true value of New Kearny and that is in the best interests of all our stockholders.

Takeover attempts that have not been negotiated with and approved by our board of directors present the risk of a takeover on terms that may be less favorable than might otherwise be available. A transaction that is negotiated and approved by our board of directors, on the other hand, can be carefully planned and undertaken at an opportune time in order to obtain maximum value for our stockholders, with due consideration given to matters such as the management and business of the acquiring corporation.

Although a tender offer or other takeover attempt may be made at a price substantially above the current market price, such offers are sometimes made for less than all of the outstanding shares of a target company. As a result, stockholders may be presented with the alternative of partially liquidating their investment at a time that may be disadvantageous, or retaining their investment in an enterprise that is under different management and whose objectives may not be similar to those of the remaining stockholders.

Despite our belief as to the benefits to stockholders of these provisions of New Kearny’s articles of incorporation and bylaws, these provisions also may have the effect of discouraging a future takeover attempt that would not be approved by our board of directors, but pursuant to which stockholders may receive a substantial premium for their shares over then current market prices. As a result, stockholders who might desire to participate in such a transaction may not have any opportunity to do so. Such provisions will also make it more difficult to remove our board of directors and management. Our board of directors, however, has concluded that the potential benefits outweigh the possible disadvantages.

Charter of Kearny Bank

Kearny Bank’s charter will be amended to provide that for a period of five years from the closing of the conversion and offering, no person other than New Kearny may offer directly or indirectly to acquire the beneficial ownership of more than 10% of any class of equity security of Kearny Bank. This provision will not apply to any tax-qualified employee benefit plan of Kearny Bank or New Kearny or to an underwriter or member of an underwriting or selling group involving the public sale or resale of securities of New Kearny or any of its subsidiaries, so long as after the sale or resale, no underwriter or member of the selling group is a beneficial owner, directly or indirectly, of more than 10% of any class of equity securities of Kearny Bank. In addition, during this five-year period, all shares owned over the 10% limit may not be voted on any matter submitted to stockholders for a vote.

Conversion Regulations

Federal Reserve Board regulations prohibit any person from making an offer, announcing an intent to make an offer or participating in any other arrangement to purchase stock or acquire stock or subscription rights in a converting institution or its holding company from another person prior to completion of its conversion. Further, without the prior written approval of the Federal Reserve Board, no person may make an offer or announcement of an offer to purchase shares or actually acquire shares of a converted institution or its holding company for a period of three years from the date of the completion of the conversion if, upon the completion of such offer, announcement or acquisition, the person would become the beneficial owner of more than 10% of the outstanding stock of the

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institution or its holding company. The Federal Reserve Board has defined “person” to include any individual, group acting in concert, corporation, partnership, association, joint stock company, trust, unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities of an insured institution. However, offers made exclusively to a bank or its holding company, or to an underwriter or member of a selling group acting on the converting institution’s or its holding company’s behalf for resale to the general public, are excepted. The regulation also provides civil penalties for willful violation or assistance in any such violation of the regulation by any person connected with the management of the converting institution or its holding company or who controls more than 10% of the outstanding shares or voting rights of a converted institution or its holding company.

Change in Control Regulations

Under the Change in Bank Control Act, no person may acquire control of an insured savings association or its parent holding company unless the Federal Reserve Board has been given 60 days’ prior written notice and has not issued a notice disapproving the proposed acquisition. The Federal Reserve Board takes into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition. In addition, federal regulations provide that no company may acquire control of a savings association without the prior approval of the Federal Reserve Board. Any company that acquires such control becomes a “savings and loan holding company” subject to registration, examination and regulation by the Federal Reserve Board.

Control, as defined under federal law, means ownership, control of or holding irrevocable proxies representing more than 25% of any class of voting stock, control in any manner of the election of a majority of our directors, or a determination by the Federal Reserve Board that the acquiror has the power to direct, or directly or indirectly to exercise a controlling influence over, the management or policies of the institution. Acquisition of more than 10% of any class of a savings and loan holding company’s voting stock constitutes a rebuttable determination of control under the regulations under certain circumstances including where, as will be the case with New Kearny, the issuer has registered securities under Section 12 of the Securities Exchange Act of 1934. Federal Reserve Board regulations provide that parties seeking to rebut control will be provided an opportunity to do so in writing.

DESCRIPTION OF CAPITAL STOCK OF NEW KEARNY FOLLOWING THE CONVERSION

General

New Kearny is authorized to issue 800,000,000 shares of common stock, par value of $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share. New Kearny currently expects to issue in the offering and exchange up to 108,427,927 shares of common stock. New Kearny will not issue shares of preferred stock in the conversion. Each share of common stock will have the same relative rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription price for the common stock, or the issuance of shares to be contributed to the Foundation, in each case in accordance with the plan of conversion and reorganization, all of the shares of common stock will be duly authorized, fully paid and nonassessable.

The shares of common stock will represent nonwithdrawable capital, will not be an account of an insurable type, and will not be insured by the FDIC or any other government agency.

Common Stock

Dividends . New Kearny may pay dividends to an amount equal to the excess of our capital surplus over payments that would be owed upon dissolution to stockholders whose preferential rights upon dissolution are superior to those receiving the dividend, and to an amount that would not make us insolvent, as and when declared by our board of directors. The payment of dividends by New Kearny is also subject to limitations that are imposed by law and applicable regulation, including restrictions on payments of dividends that would reduce New Kearny’s assets below the then-adjusted balance of its liquidation account. The holders of common stock of New Kearny will

195

be entitled to receive and share equally in dividends as may be declared by our board of directors out of funds legally available therefor. If New Kearny issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with respect to dividends.

Voting Rights . Upon completion of the conversion, the holders of common stock of New Kearny will have exclusive voting rights in New Kearny. They will elect New Kearny’s board of directors and act on other matters as are required to be presented to them under Maryland law or as are otherwise presented to them by the board of directors. Generally, each holder of common stock will be entitled to one vote per share and will not have any right to cumulate votes in the election of directors. Any person who beneficially owns more than 10% of the then-outstanding shares of New Kearny’s common stock, however, will not be entitled or permitted to vote any shares of common stock held in excess of the 10% limit. If New Kearny issues shares of preferred stock, holders of the preferred stock may also possess voting rights. Certain matters require the approval of 80% of our outstanding common stock.

As a federally-chartered stock savings bank, corporate powers and control of Kearny Bank are vested in its board of directors, who elect the officers of Kearny Bank and who fill any vacancies on the board of directors. Voting rights of Kearny Bank are vested exclusively in the owners of the shares of capital stock of Kearny Bank, which will be New Kearny, and voted at the direction of New Kearny’s board of directors. Consequently, the holders of the common stock of New Kearny will not have direct control of Kearny Bank.

Liquidation . In the event of any liquidation, dissolution or winding up of Kearny Bank, New Kearny, as the holder of 100% of Kearny Bank’s capital stock, would be entitled to receive all assets of Kearny Bank available for distribution, after payment or provision for payment of all debts and liabilities of Kearny Bank, including all deposit accounts and accrued interest thereon, and after distribution of the balance in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. In the event of liquidation, dissolution or winding up of New Kearny, the holders of its common stock would be entitled to receive, after payment or provision for payment of all its debts and liabilities (including payments with respect to its liquidation account), all of the assets of New Kearny available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of liquidation or dissolution.

Preemptive Rights . Holders of the common stock of New Kearny will not be entitled to preemptive rights with respect to any shares that may be issued. The common stock is not subject to redemption.

Preferred Stock

None of the shares of New Kearny’s authorized preferred stock will be issued as part of the offering or the conversion. Preferred stock may be issued with preferences and designations as our board of directors may from time to time determine. Our board of directors may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control.

TRANSFER AGENT

The transfer agent and registrar for New Kearny’s common stock is Computershare Trust Company, N.A., Canton, Massachusetts.

EXPERTS

The audited consolidated financial statements of Kearny-Federal and subsidiaries as of June 30, 2014 and 2013, and for the years ended June 30, 2014 and 2013, and management’s assessment of the effectiveness of internal control over financial reporting as of June 30, 2014, have been included herein and in the registration statement in reliance upon the reports of BDO USA, LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

196

The audited consolidated financial statements of Kearny-Federal and subsidiaries for the year ended June 30, 2012, have been included herein and in the registration statement in reliance upon the reports of ParenteBeard LLC, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm or expert, in accounting and auditing.

RP Financial, LC. has consented to the publication herein of the summary of its report setting forth its opinion as to the estimated pro forma market value of the shares of common stock upon completion of the conversion and offering and its letters with respect to subscription rights and the liquidation accounts.

LEGAL MATTERS

Luse Gorman Pomerenk & Schick, P.C., Washington, D.C., counsel to New Kearny, Kearny MHC, Kearny-Federal and Kearny Bank, has issued to New Kearny its opinion regarding the legality of the common stock and the federal income tax consequences of the conversion. BDO USA, LLP has provided an opinion to us regarding the New Jersey income tax consequences of the conversion. Certain legal matters will be passed upon for Sandler O’Neill & Partners, L.P. and, in the event of a syndicated or firm commitment underwritten offering, for the other co-managers, by Spidi & Fisch, PC, Washington, D.C.

CHANGE IN ACCOUNTANTS

On July 3, 2013, Kearny-Federal dismissed ParenteBeard LLC, which had previously served as our independent accountant. The decision to dismiss ParenteBeard LLC was approved by the Audit Committee of the Board of Directors.

The audit report of ParenteBeard LLC on the consolidated statements of financial condition, income, comprehensive income, changes in stockholders’ equity, and cash flows of Kearny-Federal for the year ended June 30, 2012 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal year ended June 30, 2012 and through the subsequent interim period preceding the date of ParenteBeard LLC’s dismissal, there were: (1) no disagreements between us and ParenteBeard LLC on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of ParenteBeard LLC would have caused them to make reference thereto in their report on Kearny-Federal’s financial statements for such year, and (2) no reportable events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

On July 3, 2013, the Audit Committee of the Board of Directors engaged BDO USA, LLP as Kearny-Federal’s independent registered public accounting firm. During the fiscal years ended June 30, 2012 and 2011 and the subsequent interim period preceding the engagement of BDO USA, LLP, Kearny-Federal did not consult with BDO USA, LLP regarding (1) the application of accounting principles to a specified transaction, either completed or proposed; (2) the type of audit opinion that might be rendered on Kearny-Federal’s financial statements, and BDO USA, LLP did not provide any written report or oral advice that BDO USA, LLP concluded was an important factor considered by Kearny-Federal in reaching a decision as to any such accounting, auditing or financial report issues; or (3) any matter that was either the subject of a disagreement with ParenteBeard LLC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure or the subject of a reportable event.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

New Kearny has filed with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the shares of common stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does not contain all the information set forth in the registration statement. Such information, including the appraisal report which is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission telephone number is 1-800-SEC-0330. In addition, the Securities and Exchange Commission

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maintains a web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission, including New Kearny. The statements contained in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and should be read in conjunction with, such contract or document.

Kearny MHC has filed with the Board of Governors of the Federal Reserve System an Application on Form AC with respect to the conversion, and New Kearny has filed with the Board of Governors of the Federal Reserve System an Application H-(e)1 with respect to its acquisition of Kearny Bank. This prospectus omits certain information contained in those applications. To obtain a copy of the applications filed with the Board of Governors of the Federal Reserve System, you may contact , of the Federal Reserve Bank of Philadelphia, at ( ) - . The Plan of Conversion and Reorganization is available, upon request, at each of Kearny Bank’s offices.

In connection with the offering, New Kearny will register its common stock under Section 12(b) of the Securities Exchange Act of 1934, as amended and, upon such registration, New Kearny and the holders of its common stock will become subject to the proxy solicitation rules, reporting requirements and restrictions on common stock purchases and sales by directors, officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities Exchange Act of 1934, as amended. Under the plan of conversion and reorganization, New Kearny has undertaken that it will not terminate such registration for a period of at least three years following the offering.

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I ndex to Consolidated Financial Statements of

Kearny Financial Corp. and Subsidiaries


Management Report on Internal Control Over Financial Reporting			F-1

Reports of Independent Registered Public Accounting Firms			F-2

Consolidated Statements of Financial Condition as of June 30, 2014 and 2013			F-5

Consolidated Statements of Income For the Years Ended June 30, 2014, 2013 and 2012			F-6

Consolidated Statements of Comprehensive (Loss) Income For the Years Ended June 30, 2014, 2013 and 2012			F-7

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2014, 2013 and 2012			F-8

Consolidated Statements of Cash Flows for the Years Ended June 30, 2014, 2013 and 2012			F-11

Notes to Consolidated Financial Statements			F-14

199

LOGO

September 5, 2014

Management Report on Internal Control over Financial Reporting

The management of Kearny Financial Corp. and Subsidiaries (collectively the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system is a process designed to provide reasonable assurance to the management and board of directors regarding the preparation and fair presentation of published consolidated financial statements.

The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our consolidated financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to consolidated financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

General guidance from the SEC staff provides that if a registrant consummates a material purchase business combination during its fiscal year and it is not possible to conduct an assessment of the acquired business’s internal control over financial reporting in the period between the consummation date and the date of management’s assessment, management may exclude the acquired business from management’s report on internal control over financial reporting. As previously described in this annual report, the Company completed an acquisition of Atlas Bank on June 30, 2014, with Atlas Bank merging with and into the Company. In accordance with the SEC staff guidance, our management excluded Atlas Bank from management’s report on internal control over financial reporting as of June 30, 2014. The fair value of net assets acquired through the merger at June 30, 2014 was $15.7 million constituting 0.4% of the Company’s total assets as of that date.

The Company’s management assessed the effectiveness of internal control over financial reporting as of June 30, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (1992). Based on its assessment, management believes that, as of June 30, 2014, the Company’s internal control over financial reporting is effective based on those criteria.

The Company’s independent registered public accounting firm that audited the consolidated financial statements has issued an audit report on the effective operation of the Company’s internal control over financial reporting as of June 30, 2014, a copy of which is included in this annual report.


/s/ Craig L. Montanaro				/s/ Eric B. Heyer
Craig L. Montanaro				Eric B. Heyer
President and Chief Executive Officer				Executive Vice President and Chief Financial Officer

F-1


		Tel: +212 885-8000		100 Park Avenue
		Fax: +212 697-1299		New York, NY 10017
		www.bdo.com

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Kearny Financial Corp.

Fairfield, New Jersey

We have audited Kearny Financial Corp. and Subsidiaries’ (collectively the “Company”) internal control over financial reporting as of June 30, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Kearny Financial Corp.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control Over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Atlas Bank, which was acquired on June 30, 2014, and which is included in the consolidated balance sheets of the Company as of June 30, 2014, and the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year then ended. Atlas Bank constituted 3.4% and 3.2% of total assets and net assets, respectively, as of June 30, 2014, and had no impact on revenues and net income for the year then ended. Management did not access the effectiveness of internal control over financial reporting of Atlas Bank because of the timing of the acquisition which was completed on June 30, 2014. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Atlas Bank.

In our opinion, Kearny Financial Corp. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of June 30, 2014, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial condition of Kearny Financial Corp. and Subsidiaries as of June 30, 2014 and 2013, and the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended and our report dated September 5, 2014 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

New York, New York

September 5, 2014

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

BDO is the brand name for the BDO network and for each of the BDO Member Firms.

F-2


		Tel: +212 885-8000		100 Park Avenue
		Fax: +212 697-1299		New York, NY 10017
		www.bdo.com

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Kearny Financial Corp.

Fairfield, New Jersey

We have audited the accompanying consolidated statements of financial condition of Kearny Financial Corp. and Subsidiaries (collectively the “Company”) as of June 30, 2014 and 2013 and the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kearny Financial Corp. and Subsidiaries at June 30, 2014 and 2013, and the results of their operations and their cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Kearny Financial Corp.’s internal control over financial reporting as of June 30, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated September 5, 2014, expressed an unqualified opinion thereon.

/s/ BDO USA, LLP

New York, New York

September 5, 2014

BDO is the brand name for the BDO network and for each of the BDO Member Firms.

F-3

LOGO

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Kearny Financial Corp.

We have audited the accompanying consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows of Kearny Financial Corp. and Subsidiaries (collectively the “Company”) for the year ended June 30, 2012. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Kearny Financial Corp. and Subsidiaries for the year ended June 30, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ ParenteBeard LLC

Pittsburgh, Pennsylvania

September 13, 2012

except for the first paragraph of Note 3,

as to which the date is September 13, 2013

F-4

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Financial Condition


	June 30,
	2014			2013
	(In Thousands, Except Share and Per Share Data)

Assets
Cash and amounts due from depository institutions	$	14,403		$	13,102
Interest-bearing deposits in other banks		120,631			113,932


Cash and cash equivalents		135,034			127,034

Debt securities available for sale (amortized cost; 2014 $411,228; 2013 $305,283)		407,898			300,122
Debt securities held to maturity (fair value; 2014 $213,472; 2013 $202,328)		216,414			210,015


Loans receivable, including net yield adjustments 2014 $(1,397); 2013 $(847)		1,741,471			1,360,871
Less allowance for loan losses		(12,387	)		(10,896	)


Net loans receivable		1,729,084			1,349,975

Mortgage-backed securities available for sale (amortized cost; 2014 $432,802; 2013 $782,866)		437,223			780,652
Mortgage-backed securities held to maturity (fair value; 2014 $293,781; 2013 $96,447)		295,658			101,114
Premises and equipment		40,105			36,994
Federal Home Loan Bank of New York stock		25,990			15,666
Interest receivable		9,013			8,028
Goodwill		108,591			108,591
Bank owned life insurance		88,820			86,084
Deferred income tax assets, net		10,314			9,782
Other assets		5,865			11,303


Total Assets	$	3,510,009		$	3,145,360


Liabilities and Stockholders’ Equity

Liabilities

Deposits:
Non-interest bearing	$	224,054		$	190,964
Interest-bearing		2,255,887			2,179,544


Total deposits		2,479,941			2,370,508

Borrowings		512,257			287,695
Advance payments by borrowers for taxes		9,001			7,840
Other liabilities		14,134			11,610


Total Liabilities		3,015,333			2,677,653


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; 2014 73,781,587 shares issued, 2013 72,737,500 shares issued; 2014 67,267,865 outstanding; 2013 66,500,740 outstanding		7,378			7,274
Paid-in capital		231,870			215,722
Retained earnings		336,355			326,167
Unearned Employee Stock Ownership Plan shares; 2014 387,924; 2013 533,400 shares		(3,879	)		(5,334	)
Treasury stock, at cost; 2014 6,513,722; 2013 6,236,760 shares		(74,768	)		(71,983	)
Accumulated other comprehensive loss		(2,280	)		(4,139	)


Total Stockholders’ Equity		494,676			467,707


Total Liabilities and Stockholders’ Equity	$	3,510,009		$	3,145,360

See notes to consolidated financial statements.

F-5

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Income


	Years Ended June 30,
	2014			2013			2012
	(In Thousands, Except Per Share Data)
Interest Income
Loans	$	66,794		$	61,500		$	63,960
Mortgage-backed securities		20,827			23,688			32,435
Securities:
Taxable		5,341			1,884			1,319
Tax-exempt		1,839			411			70
Other interest-earning assets		1,018			775			765

Total Interest Income		95,819			88,258			98,549

Interest Expense
Deposits		14,538			14,711			20,272
Borrowings		7,460			7,290			8,097

Total Interest Expense		21,998			22,001			28,369


Net Interest Income		73,821			66,257			70,180

Provision for Loan Losses		3,381			4,464			5,750


Net Interest Income after Provision for Loan Losses		70,440			61,793			64,430


Non-Interest Income
Fees and service charges		2,452			2,541			2,435
Gain on sale of securities		1,517			10,427			47
Gain on sale of loans		80			557			661
Loss on sale and write down of real estate owned		(441	)		(775	)		(3,330	)
Income from bank owned life insurance		2,735			1,966			748
Electronic banking fees and charges		1,160			1,145			957
Miscellaneous		620			527			627

Total Non-Interest Income		8,123			16,388			2,145


Non-Interest Expenses
Salaries and employee benefits		35,774			35,406			33,688
Net occupancy expense of premises		7,031			6,625			6,528
Equipment and systems		8,982			7,596			7,190
Advertising and marketing		1,262			1,002			1,100
Federal deposit insurance premium		2,288			2,166			2,082
Directors’ compensation		690			698			678
Merger-related expenses		391			—			—
Debt extinguishment expenses		—			8,688			—
Miscellaneous		7,740			7,244			7,455

Total Non-Interest Expenses		64,158			69,425			58,721


Income before Income Taxes		14,405			8,756			7,854

Income Taxes		4,217			2,250			2,776


Net Income	$	10,188		$	6,506		$	5,078


Net Income per Common Share (EPS)
Basic	$	0.16		$	0.10		$	0.08


Diluted	$	0.16		$	0.10		$	0.08


Weighted Average Number of Common Shares Outstanding
Basic		65,796			66,152			66,495


Diluted		65,836			66,152			66,495

See notes to consolidated financial statements.

F-6

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Net Income	$	10,188		$	6,506		$	5,078


Other Comprehensive Income (Loss):

Realized gain on securities available for sale, net of income tax expense of: 2014 $(622); 2013 $(4,277); 2012 $(22)		(901	)		(6,156	)		(31	)

Unrealized gain (loss) on securities available for sale arising during the period, net of deferred income tax expense (benefit) of: 2014 $3,235; 2013 $(13,886); 2012 $5,401		6,754			(22,776	)		8,004

Net loss on securities transferred from available for sale to held to maturity, net of deferred income tax benefit of: 2014 $(404); 2013 $ -; 2012 $ -		(586	)		—			—

Fair value adjustments on derivatives, net of deferred income tax (benefit) expense of: 2014 $(2,699); 2013 $1,269; 2012 $ -		(3,909	)		1,838			—

Benefit plan adjustments, net of deferred income tax expense (benefit) of: 2014 346; 2013 $(443); 2012 $132		501			(641	)		191


Total Other Comprehensive Income (Loss)		1,859			(27,735	)		8,164


Total Comprehensive Income (Loss)	$	12,047		$	(21,229	)	$	13,242

See notes to consolidated financial statements.

F-7

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Years Ended June 30, 2014, 2013 and 2012


	Common Stock											Unearned						Accumulated Other
	Shares					Paid-in			Retained			ESOP			Treasury			Comprehensive
	Outstanding			Amount		Capital			Earnings			Shares			Stock			Income		Total
	(In Thousands)

Balance – June 30, 2011		67,851		$	7,274	$	215,258		$	317,354		$	(8,244	)	$	(59,200	)	$	15,432	$	487,874

Net income		—			—		—			5,078			—			—			—		5,078
Other comprehensive income, net of income tax		—			—		—			—			—			—			8,164		8,164
ESOP shares committed to be released (145 shares)		—			—		(88	)		—			1,455			—			—		1,367
Dividends contributed for payment of ESOP loan		—			—		160			—			—			—			—		160

Stock option expense		—			—		41			—			—			—			—		41

Treasury stock purchases		(915	)		—		—			—			—			(8,464	)		—		(8,464	)

Restricted stock plan shares earned (16 shares)		—			—		168			—			—			—			—		168

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

Cash dividends paid to Kearny MHC		—			—		—			(450	)		—			—			—		(450	)


Balance – June 30, 2012		66,936		$	7,274	$	215,539		$	319,661		$	(6,789	)	$	(67,664	)	$	23,596	$	491,617

See notes to consolidated financial statements.

F-8

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Years Ended June 30, 2014, 2013 and 2012


	Common Stock										Unearned						Accumulated Other
	Shares					Paid-in			Retained		ESOP			Treasury			Comprehensive
	Outstanding			Amount		Capital			Earnings		Shares			Stock			Income (Loss)			Total
	(In Thousands)

Balance – June 30, 2012		66,936		$	7,274	$	215,539		$	319,661	$	(6,789	)	$	(67,664	)	$	23,596		$	491,617

Net income		—			—		—			6,506		—			—			—			6,506
Other comprehensive loss, net of income tax		—			—		—			—		—			—			(27,735	)		(27,735	)
ESOP shares committed to be released (145 shares)		—			—		(24	)		—		1,455			—			—			1,431
Dividends contributed for payment of ESOP loan		—			—		(2	)		—		—			—			—			(2	)

Stock option expense		—			—		41			—		—			—			—			41

Treasury stock purchases		(435	)		—		—			—		—			(4,319	)		—			(4,319	)

Restricted stock plan shares earned (16 shares)		—			—		168			—		—			—			—			168


Balance – June 30, 2013		66,501		$	7,274	$	215,722		$	326,167	$	(5,334	)	$	(71,983	)	$	(4,139	)	$	467,707

See notes to consolidated financial statements.

F-9

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

Years Ended June 30, 2014, 2013 and 2012


	Common Stock									Unearned						Accumulated Other
	Shares					Paid-in		Retained		ESOP			Treasury			Comprehensive
	Outstanding			Amount		Capital		Earnings		Shares			Stock			Loss			Total
	(In Thousands)

Balance – June 30, 2013		66,501		$	7,274	$	215,722	$	326,167	$	(5,334	)	$	(71,983	)	$	(4,139	)	$	467,707

Net income		—			—		—		10,188		—			—			—			10,188
Other comprehensive income, net of income tax		—			—		—		—		—			—			1,859			1,859
ESOP shares committed to be released (145 shares)		—			—		287		—		1,455			—			—			1,742

Stock option expense		—			—		81		—		—			—			—			81

Treasury stock purchases		(395	)		—		—		—		—			(4,135	)		—			(4,135	)

Treasury stock reissued for stock option exercises		118			—		145		—		—			1,350			—			1,495

Restricted stock plan shares earned (19 shares)		—			—		239		—		—			—			—			239

Issuance of stock to MHC for acquisition		1,044			104		15,396		—		—			—			—			15,500


Balance – June 30, 2014		67,268		$	7,378	$	231,870	$	336,355	$	(3,879	)	$	(74,768	)	$	(2,280	)	$	494,676

See notes to consolidated financial statements.

F-10

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Cash Flows


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Cash Flows from Operating Activities
Net income	$	10,188		$	6,506		$	5,078
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		2,645			2,610			2,665
Net amortization of premiums, discounts and loan fees and costs		2,667			9,163			8,881
Deferred income taxes		83			278			96
Realized gain on bargain purchase		(226	)		—			—
Amortization of intangible assets		122			138			155
Amortization of benefit plans’ unrecognized net loss		43			100			40
Provision for loan losses		3,381			4,464			5,750
Realized loss (gain) on sale of debt securities available for sale		1,294			—			(53	)
Realized gain on sale of mortgage-backed securities available for sale		(2,817	)		(10,433	)		—
Realized loss on sale of mortgage-backed securities held to maturity		6			6			6
Realized loss on debt extinguishment		—			8,688			—
Realized gain on sale of loans		(80	)		(557	)		(661	)
Proceeds from sale of loans		6,092			5,332			7,123
Realized (gain) loss on disposition of premises and equipment		—			(105	)		8
Increase in cash surrender value of bank owned life insurance		(2,735	)		(1,966	)		(748	)
ESOP, stock option plan and restricted stock plan expenses		2,062			1,640			1,576
Loss on sale and write down of real estate owned		441			775			3,330
(Increase) decrease in interest receivable		(611	)		367			1,345
Decrease in other assets		367			2,882			2,655
Increase (decrease) in interest payable		71			(41	)		(46	)
Increase in other liabilities		3,014			76			157


Net Cash Provided by Operating Activities	$	26,007		$	29,923		$	37,357

See notes to consolidated financial statements.

F-11

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Cash Flows


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Cash Flows from Investing Activities
Purchases of debt securities available for sale	$	(158,909	)	$	(291,418	)	$	—
Proceeds from sales of debt securities available for sale		54,075			—			—
Proceeds from calls and maturities of debt securities available for sale		—			—			30,598
Proceeds from repayments of debt securities available for sale		737			732			838
Purchases of debt securities held to maturity		(9,056	)		(208,610	)		(2,236	)
Proceeds from calls and maturities of debt securities held to maturity		2,077			32,236			73,019
Proceeds from repayments of debt securities held to maturity		404			984			966
Purchases of loans		(114,343	)		(17,773	)		(80,014	)
Net (increase) decrease in loans receivable		(196,468	)		(69,663	)		48,566
Proceeds from sale of real estate owned		1,484			3,847			2,142
Purchases of mortgage-backed securities available for sale		(50,155	)		(373,003	)		(523,211	)
Principal repayments on mortgage-backed securities available for sale		114,107			335,914			305,665
Proceeds from sale of mortgage-backed securities available for sale		116,838			442,806			51,306
Purchases of mortgage-backed securities held to maturity		(5,094	)		(100,357	)		—
Principal repayments on mortgage-backed securities held to maturity		2,299			312			228
Proceeds from sale of mortgage-backed securities held to maturity		28			18			32
Purchase of cash flow hedges		—			(2,538	)		—
Additions to premises and equipment		(3,560	)		(1,042	)		(1,797	)
Proceeds from cash settlement on premises and equipment		—			220			3
Purchase of bank owned life insurance		—			(35,503	)		(23,397	)
Purchases of FHLB stock		(28,170	)		(18,675	)		(5,760	)
Redemptions of FHLB stock		18,883			17,151			5,178
Cash acquired in merger		9,133			—			—


Net Cash Used in Investing Activities		(245,690	)		(284,362	)		(117,874	)


Cash Flows from Financing Activities
Net increase in deposits		23,326			198,899			22,978
Repayment of term FHLB advances		(800,088	)		(218,774	)		(80	)
Proceeds from term FHLB advances		1,000,000			145,000			—
Net change in overnight borrowings		12,000			105,000			—
(Decrease) increase in sweep accounts		(6,026	)		(1,781	)		2,364
Increase in advance payments by borrowers for taxes		1,111			1,866			180
Dividends paid to stockholders of Kearny Financial Corp.		—			—			(3,617	)
Purchase of common stock of Kearny Financial Corp. for treasury		(4,135	)		(4,319	)		(8,464	)
Dividends contributed for payment of ESOP loan		—			(2	)		160
Treasury stock reissued		1,495			—			—


Net Cash Provided by Financing Activities		227,683			225,889			13,521


Net Increase (Decrease) in Cash and Cash Equivalents		8,000			(28,550	)		(66,996	)

Cash and Cash Equivalents - Beginning		127,034			155,584			222,580


Cash and Cash Equivalents - Ending	$	135,034		$	127,034		$	155,584

See notes to consolidated financial statements.

F-12

Kearny Financial Corp. and Subsidiaries

Consolidated Statements of Cash Flows


	Years Ended June 30,
	2014		2013		2012
	(In Thousands)

Supplemental Disclosures of Cash Flows Information
Cash paid during the year for:
Income taxes, net of refunds	$	3,503	$	1,687	$	1,836


Interest	$	21,919	$	22,042	$	28,415


Non-cash investing activities:
Real estate owned acquired in settlement of loans	$	1,489	$	2,873	$	1,786

Fair value of assets acquired, net of cash and cash equivalents acquired	$	111,806	$	—	$	—


Fair value of liabilities assumed	$	105,213	$	—	$	—


Transfer of securities available for sale to securities held to maturity	$	191,890	$	—	$	—

Non-cash financing activities:
Issuance of common stock to mutual holding company	$	15,500	$	—	$	—

See notes to consolidated financial statements.

F-13

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies

Basis of Consolidated Financial Statement Presentation

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 Investment Corp., CJB Investment Corp. and KFS Financial Services, Inc. and its wholly-owned subsidiary, KFS Insurance Services, Inc. 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 (“GAAP”), including the elimination of all significant inter-company accounts and transactions during consolidation.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of financial condition and revenues and expenses for the periods then ended. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, the evaluation of goodwill for impairment, identification of other-than-temporary impairment of securities and the determination of the amount of deferred tax assets which are more likely than not to be realized. The allowance for loan losses represents management’s best estimate of losses known and inherent in the loan portfolio that are both probable and reasonable to estimate, impairment testing of goodwill and evaluation for other-than-temporary impairment of securities are done in accordance with GAAP; and deferred tax assets are properly recognized. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions in the market area. Moreover, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the recognition of additions to the allowance based on their judgments about information available to them at the time of their examination. Additionally, subsequent evaluations of the Company’s goodwill that originated from the application of purchase accounting associated with the Company’s prior acquisition of four community banks could identify impairments to the intangible asset that would result in future charges to earnings. Finally, the determination of the amount of deferred tax assets more likely than not to be realized is dependent on projections of future earnings, which are subject to frequent change.

Business of the Company and Subsidiaries

The Company’s primary business is the ownership and operation of the Bank. The Bank is principally engaged in the business of attracting deposits from the general public at its 42 locations in New Jersey and New York and using these deposits, together with other funds, to originate or purchase loans for its portfolio and invest in securities. Loans originated or purchased by the Bank generally include loans collateralized by residential and commercial real estate augmented by secured and unsecured loans to businesses and consumers. The investment securities purchased by the Bank generally include U.S. agency mortgage-backed securities, U.S. government and agency debentures, bank-qualified municipal obligations, corporate bonds, asset-backed securities and collateralized loan obligations. The Bank maintains a small balance of single issuer trust preferred securities and non-agency mortgage-backed securities which were acquired through the Company’s purchase of other institutions and does not actively purchase such securities.

F-14

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

At June 30, 2014, the Bank had two wholly owned subsidiaries: KFS Financial Services, Inc., and CJB Investment Corp. KFS Financial Services, Inc., incorporated as a New Jersey corporation in 1994 under the name of South Bergen Financial Services, Inc., was acquired in Kearny’s merger with South Bergen Savings Bank in 1999 and was renamed KFS Financial Services, Inc. in 2000. It is a service corporation subsidiary originally organized for selling insurance products to Bank customers and the general public through a third party networking arrangement.

During the year ended June 30, 2014, KFS Insurance Services, Inc. was created as a wholly owned subsidiary of KFS Financial Services, Inc. for the primary purpose of acquiring insurance agencies. Both KFS Financial Services Inc. and KFS Insurance Services Inc. were considered inactive during the year ended June 30, 2014.

CJB Investment Corp. was acquired by the Bank through the Company’s acquisition of Central Jersey Bancorp in November 2010. CJB Investment Corp was organized under New Jersey law as a New Jersey Investment Company and remained active through the three-year period ended June 30, 2014.

In addition to the subsidiaries noted above, the Bank dissolved its wholly owned subsidiary KFS Investment Corp. during fiscal 2014 which had remained inactive during the two years ended June 30, 2012 and 2013 and through the date of its dissolution during the year ended June 30, 2014.

Cash and Cash Equivalents

Cash and cash equivalents include cash and amounts due from depository institutions and interest-bearing deposits in other banks, all with original maturities of three months or less.

Securities

In accordance with applicable accounting standards, the Company classifies its investment securities into one of three portfolios: held to maturity, available for sale or trading. Investments in debt securities that we have the positive intent and ability to hold to maturity are classified as held to maturity securities and reported at amortized cost. Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized holding gains and losses included in earnings. Debt and equity securities not classified as trading securities or as held to maturity securities are classified as available for sale securities and reported at fair value, with unrealized holding gains or losses, net of deferred income taxes, reported in the accumulated other comprehensive income (“OCI”) component of stockholders’ equity.

If the fair value of a security is less than its amortized cost, the security is deemed to be impaired. Management evaluates all securities with unrealized losses quarterly to determine if such impairments are “temporary” or “other-than-temporary”.

The Company accounts for temporary impairments based upon their classification as either available for sale, held to maturity or managed within a trading portfolio. Temporary impairments on “available for sale” securities are recognized, on a tax-effected basis, through OCI with offsetting entries adjusting the carrying value of the security and the balance of deferred taxes. Conversely, the Company does not adjust the carrying value of “held to maturity” securities for temporary impairments, although information concerning the amount and duration of impairments on held to maturity securities is disclosed in periodic financial statements. The carrying value of securities held in a trading portfolio is adjusted to their fair value through earnings on a daily basis. However, the Company did not maintain any securities in trading portfolios at or during the periods presented in these financial statements.

F-15

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

The Company accounts for other-than-temporary impairments based upon several considerations. First, other-than-temporary impairments on securities that the Company has decided to sell as of the close of a fiscal period, or will, more likely than not, be required to sell prior to the full recovery of their fair value to a level equal to or exceeding their amortized cost, are recognized in earnings. If neither of these conditions regarding the likelihood of the securities’ sale are applicable, then, for debt securities, the other-than-temporary impairment is bifurcated into credit-related and noncredit-related components. A credit-related impairment generally represents the amount by which the present value of the cash flows that are expected to be collected on a debt security fall below its amortized cost. The noncredit-related component represents the remaining portion of the impairment not otherwise designated as credit-related. The Company recognizes credit-related, other-than-temporary impairments in earnings. However, noncredit-related, other-than-temporary impairments on debt securities are recognized in OCI.

Premiums and discounts on all securities are generally amortized/accreted to maturity by use of the level-yield method considering the impact of principal amortization and prepayments on mortgage-backed securities. Premiums on callable securities are generally amortized to the call date whereas discounts on such securities are accreted to the maturity date. Gain or loss on sales of securities is based on the specific identification method.

Concentration of Risk

Financial instruments which potentially subject the Company and its subsidiaries to concentrations of credit risk consist of cash and cash equivalents, mortgage-backed and non-mortgage-backed securities and loans receivable. Cash and cash equivalents include deposits placed in other financial institutions. At June 30, 2014, the Company had cash and cash equivalents of $135.0 million comprising funds on deposit at other institutions totaling $124.7 million and other cash-related items, consisting primarily of vault cash, totaling $10.3 million. Cash and equivalents on deposit at other institutions at June 30, 2014 was comprised of $64.6 million held by the Federal Home Loan Bank of New York (“FHLB”), $47.5 million held by the Federal Reserve Bank of New York (“FRB”) and a total of $3.9 million held at two U.S. domestic money center banks representing funds on deposit totaling $3.6 million and $283,000, respectively, at June 30, 2014. Such balances also included a total of $8.7 million of cash held at or invested through Atlantic Community Bankers Bank (“ACBB”) including cash on deposit of $230,000 and federal funds sold of $8.5 million.

Securities include concentrations of investments backed by U.S. government agencies and U.S. government sponsored enterprises (“GSEs”), including the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the Government National Mortgage Association (“Ginnie Mae”) and the Small Business Administration (“SBA”). Additional concentration risk exists in the Company’s municipal and corporate obligations, asset-backed securities and collateralized loan obligations. Lesser concentration risk exists in the Company’s non-agency mortgage-backed securities and single issuer trust preferred securities due to comparatively lower total balances of such securities held by the Company and the variety of issuers represented.

The Company’s lending activity is primarily concentrated in loans collateralized by real estate in the states of New Jersey and New York. As a result, credit risk is broadly dependent on the real estate market and general economic conditions in these states. Additionally, the Company’s lending policies limit the amount of credit extended to any single borrower and their related interests thereby limiting the concentration of credit risk to any single borrower.

F-16

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

Loans Receivable

Loans receivable, net are stated at unpaid principal balances, net of deferred loan origination fees and costs, purchased discounts and premiums and the allowance for loan losses. Certain direct loan origination costs net of loan origination fees, are deferred and amortized, using the level-yield method, as an adjustment of yield over the contractual lives of the related loans. Unearned premiums and discounts are amortized or accreted by use of the level-yield method over the contractual lives of the related loans.

Past Due Loans

A loan’s “past due” status is generally determined based upon its “P&I delinquency” status in conjunction with its “past maturity” status, where applicable. A loan’s “P&I delinquency” status is based upon the number of calendar days between the date of the earliest P&I payment due and the “as of” measurement date. A loan’s “past maturity” status, where applicable, is based upon the number of calendar days between a loan’s contractual maturity date and the “as of” measurement date. Based upon the larger of these criteria, loans are categorized into the following “past due” tiers for financial statement reporting and disclosure purposes: Current (including 1-29 days past due), 30-59 days, 60-89 days and 90 or more days.

Nonaccrual Loans

Loans are generally placed on nonaccrual status when contractual payments become 90 days or more past due, and are otherwise placed on nonaccrual when the Company does not expect to receive all P&I payments owed substantially in accordance with the terms of the loan agreement. Loans that become 90 days past maturity, but remain non-delinquent with regard to ongoing P&I payments, may remain on accrual status if: (1) the Company expects to receive all P&I payments owed substantially in accordance with the terms of the loan agreement, past maturity status notwithstanding, and (2) the borrower is working actively and cooperatively with the Company to remedy the past maturity status through an expected refinance, payoff or modification of the loan agreement that is not expected to result in a troubled debt restructuring (“TDR”) classification. All TDRs are placed on nonaccrual status for a period of no less than six months after restructuring, irrespective of past due status. The sum of nonaccrual loans plus accruing loans that are 90 days or more past due are generally defined collectively as “nonperforming loans”.

Loans that are not considered to be TDRs are generally returned to accrual status when payments due are brought current and the Company expects to receive all remaining P&I payments owed substantially in accordance with the terms of the loan agreement. Non-TDR loans may also be returned to accrual status when a loan’s payment status falls below 90 days past due and the Company: (1) expects receipt of the remaining past due amounts within a reasonable timeframe, and (2) expects to receive all remaining P&I payments owed substantially in accordance with the terms of the loan agreement.

F-17

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

Acquired Loans

Loans that we acquire through acquisitions are recorded at fair value with no carryover of the related allowance for credit losses. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest.

The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable yield and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the nonaccretable yield. The nonaccretable yield represents estimated future credit losses expected to be incurred over the life of the loan. Subsequent decreases to the expected cash flows require us to evaluate the need for an allowance for credit losses. Subsequent improvements in expected cash flows result in the reversal of a corresponding amount of the nonaccretable yield which we then reclassify as accretable yield that is recognized into interest income over the remaining life of the loan using the interest method. Our evaluation of the amount of future cash flows that we expect to collect is performed in a similar manner as that used to determine our allowance for credit losses. Charge-offs of the principal amount on acquired loans would be first applied to the nonaccretable yield portion of the fair value adjustment.

Acquired loans that met the criteria for nonaccrual of interest prior to the acquisition may be considered performing upon acquisition, regardless of whether the customer is contractually delinquent, if we can reasonably estimate the timing and amount of the expected cash flows on such loans and if we expect to fully collect the new carrying value of the loans. As such, we may no longer consider the loan to be nonaccrual or nonperforming and may accrue interest on these loans, including the impact of any accretable yield.

Classification of Assets

In compliance with the regulatory guidelines, the Company’s loan review system includes an evaluation process through which certain loans exhibiting adverse credit quality characteristics are classified “Special Mention”, “Substandard”, “Doubtful” or “Loss”.

F-18

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

To the extent that impairment identified on a loan is classified as “Loss”, that portion of the loan is charged off against the allowance for loan losses. The classification of loan impairment as “Loss” is based upon a confirmed expectation for loss. For loans primarily secured by real estate, the expectation for loss is generally confirmed when: (a) impairment is identified on a loan individually evaluated in the manner described below, and (b) the loan is presumed to be collateral-dependent such that the source of loan repayment is expected to arise solely from sale of the collateral securing the applicable loan. Impairment identified on non-collateral-dependent loans may or may not be eligible for a “Loss” classification depending upon the other salient facts and circumstances that effect the manner and likelihood of loan repayment. However, loan impairment that is classified as “Loss” is charged off against the allowance for loan losses concurrent with that classification.

The timeframe between when loan impairment is first identified by the Company and when such impairment may ultimately be charged off varies by loan type. For example, unsecured consumer and commercial loans are generally classified as “Loss” at 120 days past due, resulting in their outstanding balances being charged off at that time. For the Company’s secured loans, the condition of collateral dependency generally serves as the basis upon which a “Loss” classification is ascribed to a loan’s impairment thereby confirming an expected loss and triggering charge off of that impairment. While the facts and circumstances that effect the manner and likelihood of repayment vary from loan to loan, the Company generally considers the referral of a loan to foreclosure, coupled with the absence of other viable sources of loan repayment, to be demonstrable evidence of collateral dependency. Depending upon the nature of the collections process applicable to a particular loan, an early determination of collateral dependency could result in a nearly concurrent charge off of a newly identified impairment. By contrast, a presumption of collateral dependency may only be determined after the completion of lengthy loan collection and/or workout efforts, including bankruptcy proceedings, which may extend several months or more after a loan’s impairment is first identified.

Assets which do not currently expose the Company to a sufficient degree of risk to warrant an adverse classification but have some credit deficiencies or other potential weaknesses are designated as “Special Mention” by management. Adversely classified assets, together with those rated as “Special Mention”, are generally referred to as “Classified Assets”. Non-classified assets are internally rated within one of four “Pass” categories or as “Watch” with the latter denoting a potential deficiency or concern that warrants increased oversight or tracking by management until remediated.

Management performs a classification of assets review, including the regulatory classification of assets, generally on a monthly basis. The results of the classification of assets review are validated by the Company’s third party loan review firm during their quarterly independent review. In the event of a difference in rating or classification between those assigned by the internal and external resources, the Company will generally utilize the more critical or conservative rating or classification. Final loan ratings and regulatory classifications are presented monthly to the Board of Directors and are reviewed by regulators during the examination process.

F-19

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

Allowance for Loan Losses

The allowance for loan losses is a valuation account that reflects the Company’s estimation of the losses in its loan portfolio to the extent they are both probable and reasonable to estimate. The balance of the allowance is generally maintained through provisions for loan losses that are charged to income in the period that estimated losses on loans are identified by the Company’s loan review system. The Company charges confirmed losses on loans against the allowance as such losses are identified. Recoveries on loans previously charged-off are added back to the allowance.

The Company’s allowance for loan loss calculation methodology utilizes a “two-tier” loss measurement process that is generally performed monthly. Based upon the results of the classification of assets and credit file review processes described earlier, the Company first identifies the loans that must be reviewed individually for impairment. Factors considered in identifying individual loans to be reviewed include, but may not be limited to, loan type, classification status, contractual payment status, performance/accrual status and impaired status.

The loans considered by the Company to be eligible for individual impairment review include its commercial mortgage loans, comprising multi-family and nonresidential real estate loans, construction loans, commercial business loans as well as its one-to-four family mortgage loans, home equity loans and home equity lines of credit.

The Company generally obtains independent appraisals on properties securing mortgage loans when such loans are initially placed on nonperforming or impaired status with such values updated approximately every six to twelve months thereafter throughout the collections, bankruptcy and/or foreclosure processes. Appraised values are typically updated at the point of foreclosure, where applicable, and approximately every six to twelve months thereafter while the repossessed property is held as real estate owned.

As supported by accounting and regulatory guidance, the Company reduces the fair value of the collateral by estimated selling costs, such as real estate brokerage commissions, to measure impairment when such costs are expected to reduce the cash flows available to repay the loan.

The Company establishes valuation allowances in the fiscal period during which the loan impairments are identified. The results of management’s individual loan impairment evaluations are validated by the Company’s third party loan review firm during their quarterly independent review. Such valuation allowances are adjusted in subsequent fiscal periods, where appropriate, to reflect any changes in carrying value or fair value identified during subsequent impairment evaluations which are generally updated monthly by management.

F-20

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

The second tier of the loss measurement process involves estimating the probable and estimable losses which addresses loans not otherwise reviewed individually for impairment as well as those individually reviewed loans that are determined to be non-impaired. Such loans include groups of smaller-balance homogeneous loans that may generally be excluded from individual impairment analysis, and therefore collectively evaluated for impairment, as well as the non-impaired loans within categories that are otherwise eligible for individual impairment review.

Valuation allowances established through the second tier of the loss measurement process utilize historical and environmental loss factors to collectively estimate the level of probable losses within defined segments of the Company’s loan portfolio. These segments aggregate homogeneous subsets of loans with similar risk characteristics based upon loan type. For allowance for loan loss calculation and reporting purposes, the Company currently stratifies its loan portfolio into seven primary segments: residential mortgage loans, commercial mortgage loans, construction loans, commercial business loans, home equity loans, home equity lines of credit and other consumer loans.

In addition to sharing similar risks as those presented by residential mortgage loans, risks relating to commercial mortgage also arise from comparatively larger loan balances to single borrowers or groups of related borrowers. Moreover, the repayment of such loans is typically dependent on the successful operation of an underlying real estate project and may be further threatened by adverse changes to demand and supply of commercial real estate as well as changes generally impacting overall business or economic conditions.

F-21

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

In regard to historical loss factors, the Company’s allowance for loan loss calculation calls for an analysis of historical charge-offs and recoveries for each of the defined segments within the loan portfolio. The Company utilizes a two-year moving average of annual net charge-off rates (charge-offs net of recoveries) by loan segment, where available, to calculate its actual, historical loss experience. The outstanding principal balance of the non-impaired portion of each loan segment is multiplied by the applicable historical loss factor to estimate the level of probable losses based upon the Company’s historical loss experience.

As noted, the second tier of the Company’s allowance for loan loss calculation also utilizes environmental loss factors to estimate the probable losses within the loan portfolio. Environmental loss factors are based upon specific qualitative criteria representing key sources of risk within the loan portfolio. Such risk criteria includes the level of and trends in nonperforming loans; the effects of changes in credit policy; the experience, ability and depth of the lending function’s management and staff; national and local economic trends and conditions; credit risk concentrations and changes in local and regional real estate values. During fiscal 2014, the environmental factors utilized by the Company in its allowance for loan loss calculation were expanded to include changes in the nature, volume and terms of loans, changes in the quality of loan review systems and resources and the effects of regulatory, legal and other external factors.

For each category of the loan portfolio, a level of risk, developed from a number of internal and external resources, is assigned to each of the qualitative criteria utilizing a scale ranging from zero (negligible risk) to 15 (high risk), with higher values potentially ascribed to exceptional levels of risk that exceed the standard range, as appropriate. The sum of the risk values, expressed as a whole number, is multiplied by .01% to arrive at an overall environmental loss factor, expressed in basis points, for each loan category.

F-22

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

The Company incorporates its credit-rating classification system into the calculation of environmental loss factors by loan type by including risk-rating classification “weights” in its calculation of those factors. The Company’s risk-rating classification system ascribes a numerical rating of “1” through “9” to each loan within the portfolio. The ratings “5” through “9” represent the numerical equivalents of the traditional loan classifications “Watch”, “Special Mention”, “Substandard”, “Doubtful” and “Loss”, respectively, while lower ratings, “1” through “4”, represent risk-ratings within the least risky “Pass” category. The environmental loss factor applicable to each non-impaired loan within a category, as described above, is “weighted” by a multiplier based upon the loan’s risk-rating classification. Within any single loan category, a “higher” environmental loss factor is ascribed to those loans with comparatively higher risk-rating classifications resulting in a proportionately greater ALLL requirement attributable to such loans compared to the comparatively lower risk-rated loans within that category.

In evaluating the impact of the level and trends in nonperforming loans on environmental loss factors, the Company first broadly considers the occurrence and overall magnitude of prior losses recognized on such loans over an extended period of time. For this purpose, losses are considered to include both charge offs as well as loan impairments for which valuation allowances have been recognized through provisions to the allowance for loan losses, but have not yet been charged off. To the extent that prior losses have generally been recognized on nonperforming loans within a category, a basis is established to recognize existing losses on loans collectively evaluated for impairment based upon the current levels of nonperforming loans within that category. Conversely, the absence of material prior losses attributable to delinquent or nonperforming loans within a category may significantly diminish, or even preclude, the consideration of the level of nonperforming loans in the calculation of the environmental loss factors attributable to that category of loans.

Once the basis for considering the level of nonperforming loans on environmental loss factors is established, the Company then considers the current dollar amount of nonperforming loans by loan type in relation to the total outstanding balance of loans within the category. A greater portion of nonperforming loans within a category in relation to the total suggests a comparatively greater level of risk and expected loss within that loan category and vice-versa.

In addition to considering the current level of nonperforming loans in relation to the total outstanding balance for each category, the Company also considers the degree to which those levels have changed from period to period. A significant and sustained increase in nonperforming loans over a 12-24 month period suggests a growing level of expected loss within that loan category and vice-versa.

As noted above, the Company considers these factors in a qualitative, rather than quantitative fashion when ascribing the risk value, as described above, to the level and trends of nonperforming loans that is applicable to a particular loan category. As with all environmental loss factors, the risk value assigned ultimately reflects the Company’s best judgment as to the level of expected losses on loans collectively evaluated for impairment.

F-23

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

The sum of the probable and estimable loan losses calculated through the first and second tiers of the loss measurement processes as described above, represents the total targeted balance for the Company’s allowance for loan losses at the end of a fiscal period. As noted earlier, the Company establishes all additional valuation allowances in the fiscal period during which additional individually identified loan impairments and additional estimated losses on loans collectively evaluated for impairment are identified. The Company adjusts its balance of valuation allowances through the provision for loan losses as required to ensure that the balance of the allowance for loan losses reflects all probable and estimable loans losses at the close of the fiscal period. Notwithstanding calculation methodology and the noted distinction between valuation allowances established on loans collectively versus individually evaluated for impairment, the Company’s entire allowance for loan losses is available to cover all charge-offs that arise from the loan portfolio.

Although the Company’s allowance for loans losses is established in accordance with management’s best estimate, actual losses are dependent upon future events and, as such, further additions to the level of loan loss allowances may be necessary.

Troubled Debt Restructurings

A modification to the terms of a loan is generally considered a TDR if the Company grants a concession to the borrower, that it would not otherwise consider for economic or legal reasons, related to the debtor’s financial difficulties. In granting the concession, the Company’s general objective is to make the best of a difficult situation by obtaining more cash or other value from the borrower or otherwise increase the probability of repayment.

A TDR may include, but is not necessarily limited to, the modification of loan terms such as a temporary or permanent reduction of the loan’s stated interest rate, extension of the maturity date and/or reduction or deferral of amounts owed under the terms of the loan agreement. In measuring the impairment associated with restructured loans that qualify as TDRs, the Company compares the cash flows under the loan’s existing terms with those that are expected to be received in accordance with its modified terms. The difference between the comparative cash flows is discounted at the loan’s effective interest rate prior to modification to measure the associated impairment. The impairment is charged off directly against the allowance for loan loss at the time of restructuring resulting in a reduction in carrying value of the modified loan that is accreted into interest income as a yield adjustment over the remaining term of the modified cash flows.

All restructured loans that qualify as TDRs are placed on nonaccrual status for a period of no less than six months after restructuring, irrespective of the borrower’s adherence to a TDR’s modified repayment terms during which time TDRs continue to be adversely classified and reported as impaired. TDRs may be returned to accrual status if (1) the borrower has paid timely P&I payments in accordance with the terms of the restructured loan agreement for no less than six consecutive months after restructuring, and (2) the Company expects to receive all P&I payments owed substantially in accordance with the terms of the restructured loan agreement at which time the loan may also be returned to a non-adverse classification while retaining its impaired status.

F-24

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

Premises and Equipment

Land is carried at cost. Buildings and improvements, furnishings and equipment and leasehold improvements are carried at cost, less accumulated depreciation and amortization computed on the straight-line method over the following estimated useful lives:


		Years

Building and improvements		10 - 50
Furnishings and equipment		3 - 20
Leasehold improvements		Shorter of useful lives or lease term

Construction in progress primarily represents facilities under construction for future use in our business and includes all costs to acquire land and construct buildings, as well as capitalized interest during the construction period. Interest is capitalized at the Company’s average cost of interest-bearing liabilities.

Significant renewals and betterments are charged to the premises and equipment account. Maintenance and repairs are charged to operations in the year incurred. Rental income is netted against occupancy costs in the consolidated statements of income.

Federal Home Loan Bank Stock

Federal law requires a member institution of the FHLB system to hold restricted stock of its district FHLB according to a predetermined formula. The restricted stock is carried at cost, less any applicable impairment.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets principally represent the excess cost over the fair value of the net assets of the institutions acquired in purchase transactions. Goodwill is evaluated annually by reporting unit and an impairment loss recorded if indicated. The impairment test is performed in two phases. The first step of the goodwill impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, an additional impairment evaluation must be performed. That additional evaluation compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. An impairment loss is recorded to the extent that the carrying amount of goodwill exceeds its implied fair value. No impairment charges were required to be recorded in the years ended June 30, 2014, 2013 or 2012. If an impairment loss is determined to exist in the future, such loss will be reflected as an expense in the consolidated statements of income in the period in which the impairment loss is determined. The balance of other intangible assets at June 30, 2014 totaled $790,000 representing the remaining unamortized balance of the core deposit intangibles ascribed to the value of deposits acquired by the Bank through the acquisition of Central Jersey Bancorp in November 2010 and Atlas Bank in June 2014.

Bank Owned Life Insurance

Bank owned life insurance is accounted for using the cash surrender value method and is recorded at its net realizable value. The change in the net asset value is recorded as a component of non-interest income. A deferred liability has been recorded for the estimated cost of postretirement life insurance benefits accruing to applicable employees and directors covered by an endorsement split-dollar life insurance arrangement. The Company recorded additional (gain) expense of approximately $(9,000), $14,000 and $25,000 for the years ended June 30, 2014, 2013 and 2012, respectively, attributable to this deferred liability.

F-25

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets.

Income Taxes

The Company and its subsidiaries file consolidated federal income tax returns. Federal income taxes are allocated to each entity based on their respective contributions to the taxable income of the consolidated income tax returns. Separate state income tax returns are filed for the Company and each of its subsidiaries on an unconsolidated basis.

Federal and state income taxes have been provided on the basis of the Company’s income or loss as reported in accordance with GAAP. The amounts reflected on the Company’s state and federal income tax returns differ from these provisions due principally to temporary differences in the reporting of certain items for financial statement reporting and income tax reporting purposes. The tax effect of these temporary differences is accounted for as deferred taxes applicable to future periods. Deferred income tax expense or benefit is determined by recognizing deferred tax assets and liabilities for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. The realization of deferred tax assets is assessed and a valuation allowance provided for the full amount which is not more likely than not to be realized.

The Company identified no significant income tax uncertainties through the evaluation of its income tax positions as of June 30, 2014 and June 30, 2013. Therefore, the Company has no unrecognized income tax benefits as of those dates. Our policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the consolidated statements of income. The Company recognized no interest and penalties during the years ended June 30, 2014, 2013 and 2012. The tax years subject to examination by the taxing authorities are the years ended June 30, 2013, 2012 and 2011.

Other Comprehensive Income

The Company records unrealized gains and losses, net of deferred income taxes, on available for sale mortgage-backed and non-mortgage-backed securities in accumulated other comprehensive income. Unrealized losses on available for sale securities recorded through OCI are generally considered “temporary” security impairments. Realized gains and losses, if any, are reclassified to non-interest income upon sale of the related securities.

The Company also records changes in the fair value of interest rate derivatives used in its cash flow hedging activities, net of deferred income tax, in accumulated other comprehensive income.

F-26

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

OCI also includes benefit plan amounts recognized in accordance with applicable accounting standards. This adjustment to OCI reflects, net of deferred income tax, transition obligations, prior service costs and unrealized net losses that had not been recognized in the consolidated financial statements prior to the implementation of those standards.

Derivatives and Hedging

The Company utilizes derivative instruments in the form of interest rate swaps and caps to hedge its exposure to interest rate risk in conjunction with its overall asset/liability management process. In accordance with accounting requirements, the Company formally designates all of its hedging relationships as either fair value hedges, intended to offset the changes in the value of certain financial instruments due to movements in interest rates, or cash flow hedges, intended to offset changes in the cash flows of certain financial instruments due to movement in interest rates, and documents the strategy for undertaking the hedge transactions and its method of assessing ongoing effectiveness. The Company does not use derivative instruments for speculative purposes.

All derivatives are recognized as either assets or liabilities in the Consolidated Financial Statements at their fair values. For a derivative designated as a cash flow hedge, the ineffective portion of changes in fair value (i.e. gain or loss) is reported in current period earnings. The effective portion of the change in fair value is initially recorded as a component of other comprehensive income (loss) and subsequently reclassified into earnings when the hedged transaction effects earnings. For a derivative designated as a fair value hedge, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings.

Derivative instruments qualify for hedge accounting treatment only if they are designated as such on the date on which the derivative contracted is entered and are expected to be, and are, effective in substantially reducing interest rate risk arising from the assets and liabilities identified as exposing the Company to risk. Those derivative financial instruments that do not meet the hedging criteria discussed below would be classified as undesignated derivatives and would be recorded at fair value with changes in fair value recorded in income.

Derivative hedge contracts must meet specific effectiveness tests (i.e., over time the change in their fair values due to the designated hedge risk must be within 80 to 125 percent of the opposite change in the fair values of the hedged assets or liabilities). Changes in fair value of the derivative financial instruments must be effective at offsetting changes in the fair value of the hedged items due to the designated hedge risk during the term of the hedge.

The Company formally assesses, both at the hedges’ inception, and on an on-going basis, whether derivatives used in hedging transactions have been highly effective in offsetting changes in cash flows of hedged items and whether those derivatives are expected to remain highly effective in subsequent periods. The Company discontinues hedge accounting when (a) it determines that a derivative is no longer effective in offsetting changes in cash flows of a hedged item; (b) the derivative expires or is sold, terminated or exercised; (c) probability exists that the forecasted transaction will no longer occur; or (d) management determines that designating the derivative as a hedging instrument is no longer appropriate. In all cases in which hedge accounting is discontinued and a derivative remains outstanding, the Company will carry the derivative at fair value in the Consolidated Financial Statements, recognizing changes in fair value in current period income in the consolidated statement of income.

F-27

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

In accordance with the applicable accounting guidance, the Company takes into account the impact of collateral and master netting agreements that allow it to settle all derivative contracts held with a single counterparty on a net basis, and to offset the net derivative position with the related collateral when recognizing derivative assets and liabilities. As a result, the Company’s Statements of Financial Condition could reflect derivative contracts with negative fair values included in derivative assets, and contracts with positive fair values included in derivative liabilities.

The Company’s interest rate derivatives are comprised entirely of interest rate swaps and caps hedging floating-rate and forecasted issuances of fixed-rate liabilities and accounted for as cash flow hedges. The carrying value of interest rate derivatives is included in the balance of other assets or other liabilities and comprises the remaining unamortized cost of interest rate caps and the cumulative changes in the fair value of interest rate derivatives. Such changes in fair value are offset against accumulated other comprehensive income, net of deferred income tax.

In general, the cash flows received and/or exchanged with counterparties for those derivatives qualifying as interest rate hedges, and the amortization of the original cost of qualifying caps, are generally classified in the financial statements in the same category as the cash flows of the items being hedged.

Interest differentials paid or received under the swap and cap agreements are reflected as adjustments to interest expense. The notional amounts of the interest rate swaps are not exchanged and do not represent exposure to credit loss. In the event of default by a counter party, the risk in these transactions is the cost of replacing the agreements at current market rates.

Net Income per Common Share (“EPS”)

Basic EPS is based on the weighted average number of common shares actually outstanding adjusted for the Employee Stock Ownership Plan (“the 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.

Stock Compensation Plans

Upon approval of the Kearny Financial Corp. 2005 Stock Compensation and Incentive Plan on October 24, 2005, the Company adopted applicable accounting standards requiring the expensing of the fair value of all options granted over their vesting periods and the fair value of all share-based compensation granted over the requisite service periods.

Advertising and Marketing Expenses

The Company expenses advertising and marketing costs as incurred.

F-28

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1 – Summary of Significant Accounting Policies (continued)

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to the consolidated statement of condition date of June 30, 2014, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued and resulted in the identification and disclosure of the subsequent event discussed below.

On September 4, 2014, the Boards of Directors of Kearny MHC (the majority stockholder of the Company), the Company and the Bank adopted a Plan of Conversion and Reorganization (the “Plan”). Pursuant to the Plan, Kearny MHC will convert from the mutual holding company form of organization to the fully public form. Kearny MHC will be merged into the Company, and Kearny MHC will no longer exist. The Company will then merge into a new Maryland corporation also named Kearny Financial Corp.

As part of the conversion, Kearny MHC’s ownership interest of the Company will be offered for sale in a public offering. The existing publicly held shares of the Company, which represent the remaining ownership interest in the Company, will be exchanged for new shares of common stock of the new Maryland corporation. The exchange ratio will ensure that immediately after the conversion and public offering, the public shareholders of the Company will own the same aggregate percentage of common stock of the new Maryland corporation that they owned immediately prior to the completion of the conversion and public offering (excluding shares purchased in the stock offering and cash received in lieu of fractional shares).

When the conversion and public offering are completed, all of the capital stock of the Company will be owned by the new Maryland corporation. The Plan provides for the establishment, upon the completion of the conversion, of special “liquidation accounts” for the benefit of certain depositors of the Company in an amount equal to the greater of Kearny MHC’s ownership interest in the retained earnings of the Company as of the date of the latest balance sheet contained in the prospectus plus the value of the net assets of Kearny MHC as of the date of the latest statement of financial condition of Kearny MHC prior to the consummation of the conversion (excluding its ownership of the Company).

Following the completion of the conversion, under the rules of the FRB, the Bank will not be permitted to pay dividends on its capital stock to the Company, its sole shareholder, if the Company’s shareholder’s equity would be reduced below the amount of the liquidation accounts. The liquidation accounts will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation accounts. Direct costs of the conversion and public offering will be deferred and reduce the proceeds from the shares sold in the public offering. No costs have been incurred as of June 30, 2014 related to the conversion.

Merger-related Expenses

Merger-related expenses are recorded in the consolidated statements of income and include $391,000 of direct costs relating to the Bank’s acquisition of Atlas Bank on June 30, 2014. Acquisition-related transaction and restructuring costs incurred by the Company are charged to expense as incurred.

F-29

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2 – Acquisition of Atlas Bank

On June 30, 2014, the Company completed its acquisition of Atlas Bank (“Atlas”), a federally chartered mutual savings bank headquartered in Brooklyn, New York. The transaction qualified as a tax-free reorganization for federal income tax purposes. Based upon an independent appraised valuation of Atlas, the Company issued 1,044,087 shares of its common stock with an aggregate value of $15.5 million to Kearny MHC as consideration for the acquisition of Atlas.

The Company accounted for the transaction using applicable accounting guidance regarding business combinations resulting in the recognition of pre-tax merger-related expenses totaling $391,000 during the year ended June 30, 2014. 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:
Shares of capital stock issued to mutual holding company	$	15,500

Total consideration paid	$	15,500


Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value:
Cash and cash equivalents	$	9,133
Debt securities		2,998
Net loans receivable		78,725
Mortgage-backed securities		23,896
Premises and equipment		2,196
Federal Home Loan Bank stock		1,037
Interest receivable		374
Deferred income tax assets, net		511
Core deposit intangible		398
Other assets		1,671

Fair value of assets acquired		120,939


Deposits		86,099
Federal Home Loan Bank advances		18,693
Other liabilities		421

Fair value of liabilities assumed		105,213


Total identifiable net assets		15,726
Gain on bargain purchase		(226	)

Total	$	15,500

F-30

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2 – Acquisition of Atlas Bank (continued)

The fair value amounts included in the table above, including those relating to income taxes, are preliminary estimates and are subject to adjustment but are not expected to be materially different than those shown.

The Company estimated the fair value of non-impaired loans acquired from Atlas by utilizing a methodology wherein loans with comparable characteristics were aggregated by type of collateral, remaining maturity, and repricing terms. Cash flows for each pool were projected using an estimate of future credit losses and rate of prepayments. Projected monthly cash flows were then discounted to present value using a risk-adjusted market rate for similar loans. The portion of the fair valuation attributable to expected future credit losses on non-impaired loans totaled approximately $1.2 million or 1.50% of their outstanding balances.

Included in the loans acquired from Atlas were four impaired residential mortgage loans whose aggregate carrying values at the time of acquisition totaled $742,000. To estimate the fair value of these impaired loans, the Company analyzed the value of the underlying collateral of the loans, assuming the fair values of the loans are derived from the eventual sale of the collateral. The value of the collateral was generally based on recently completed appraisals. The Company discounted these values using market derived rates of return, with consideration given to the period of time and cost associated with the foreclosure and disposition of the collateral. Based on this analysis, the Company recognized no expectation for future credit losses in its valuation of the four impaired loans acquired from Atlas.

At June 30, 2014, the remaining outstanding principal balance and carrying amount of the loans acquired from Atlas totaled approximately $79,088,000 and $78,725,000, respectively.

The fair values of investment securities, including mortgage-backed and non-mortgage-backed securities, were primarily determined by obtaining matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

The fair value of savings and transaction deposit accounts acquired from Atlas was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. The fair valuation of these deposits included a core deposit analysis which considered several factors in estimating the value of the intangible associated with such accounts. Such factors included an assumption for an initial run off rate of five percent coupled with an annual attrition rate thereafter based upon the weighted average age of the products by deposit category. Other factors considered included assumptions for the ongoing non-interest income and non-interest expenses relating to the applicable accounts which were based upon historical information. Based upon these factors, the Company projected cash flows which were present valued using applicable market interest rates for discounting. These cash flows were then compared to those applicable to alternative funding sources assumed to be brokered certificates of deposit. Based upon this analysis, a core deposit intangible totaling approximately $398,000 or 0.82% of applicable core deposit balances at acquisition was ascribed to the value of non-maturity deposits.

Certificates of deposit accounts were valued utilizing a discounted cash flow analysis based upon the underlying accounts’ contractual maturities and interest rates. The present value of the projected cash flows was then determined using discount rates based upon certificate of deposit interest rates available in the marketplace for accounts with similar terms.

F-31

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2 – Acquisition of Atlas Bank (continued)

The acquired borrowings were valued utilizing a discounted cash flow analysis based upon the underlying contractual maturities, interest rates and, where applicable, repricing and amortization terms applicable to each borrowing. The present value of the projected cash flow for each borrowing was then determined using discount rates based upon interest rates available in the marketplace for borrowings with similar terms.

Direct costs related to the merger were expensed as incurred. During the year ended June 30, 2014, the Company incurred $391,000 in merger-related expenses attributable to the acquisition of Atlas. Such costs included legal expenses of $198,000, investment banking fees totaling $175,000 and other professional service fees totaling $18,000.

The following table presents unaudited pro forma information as if the acquisition of Atlas had occurred on July 1, 2012. This pro forma information does not adjust for the effects of purchase accounting or the recognition of merger-related expenses due to their immateriality. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company merged with Atlas at the beginning of fiscal 2013. In particular, expected cost savings and acquisition integration costs are not fully reflected in the unaudited pro forma amounts.


	Pro Forma Year Ended
	June 30, 2014		June 30, 2013
	(In Thousands, Except Per Share Data)		(In Thousands, Except Per Share Data)
Net interest income	$	77,077	$	68,867
Non-interest income		8,255		16,340
Non-interest expense		68,508		73,361
Net income		9,535		5,567
Net income per common shares (EPS)
Basic and diluted		0.14		0.08

Note 3 – Recent Accounting Pronouncements

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 three 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. ASU 2011-05 was effective for the Company as of June 30, 2013. The impact of adoption of ASU 2011-05 as of June 30, 2013 and all prior periods presented was a separate, but consecutive, statements of income and other comprehensive income.

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-10, Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. The ASU allows the Fed Funds Effective Swap Rate to be used as a U.S. benchmark interest rate for hedge accounting purposes. In the past, only rates on U.S. Treasury obligations and LIBOR were permitted. The ASU was issued as a result of changes in the marketplace that have occurred since the issuance of Statement 133, and more particularly, as a result of the 2008 financial crisis. ASU 2013-10 is applicable to all entities that elect to apply hedge accounting of the benchmark interest rate under Topic 815, Derivatives and Hedging. The ASU was effective July 17, 2013, but only for qualifying new or redesignated hedging relationships entered into on or after that date. In other words, retrospective adoption is not available because it would be inconsistent with the requirement to prepare appropriate documentation at the inception of a hedge. The new pronouncement did not have an impact on the Company’s consolidated financial statements.

In January 2014, the FASB issued ASU 2014-04, Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40) Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The purpose of the ASU is to reduce diversity by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. This ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.

F-32

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 4 – Stock Offering and Stock Repurchase Plans

On June 7, 2004, the Board of Directors of the Company and the Bank adopted a plan of stock issuance pursuant to which the Company subsequently sold common stock representing a minority ownership of the estimated pro forma market value of the Company to eligible depositors of the Bank. Kearny MHC (the “MHC”) retained 70% of the outstanding common stock, or 50,916,250 shares. The MHC is a federally-chartered mutual holding company organized on March 30, 2001, and was previously subject to regulation by the Office of Thrift Supervision. Concurrent with the elimination of the Office of Thrift Supervision on July 21, 2011, the Federal Reserve Board became the primary regulator of the MHC. So long as the MHC is in existence, it will continue to own at least a majority of the outstanding common stock of the Company.

On March 23, 2012, the Company announced that the Board of Directors authorized a 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. Through June 30, 2013, the Company had repurchased a total of 471,100 shares in accordance with this repurchase plan at a total cost of approximately $4,654,000 and at an average cost per share of $9.88. During the fiscal year ended June 30, 2014, the Company completed the repurchases under this plan by repurchasing an additional 331,680 shares at a total cost of $3,434,000 and at an average cost per share of $10.35. In total, 802,780 shares were repurchased under this plan at a total cost of $8,088,000 and at an average cost of $10.07 per share.

On December 2, 2013, the Company announced that the Board of Directors authorized a stock repurchase plan to acquire up to 762,640 shares, or 5% of the Company’s outstanding stock held by persons other than Kearny MHC. Through June 30, 2014, the Company has repurchased a total of 62,900 shares in accordance with this repurchase plan at a total cost of approximately $700,000 and at an average cost per share of $11.13.

During the year ended June 30, 2012, Kearny MHC waived its right, upon non-objection from the Office of Thrift Supervision, to receive cash dividends of $7,187,000 declared by the Company during the year. The MHC elected to receive $450,000 of such dividends during the year ended June 30, 2012. The Company did not pay cash dividends during fiscal 2014 or 2013.

F-33

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 5 – Securities Available for Sale

Amortized cost, gross unrealized gains and losses and fair value of debt securities and mortgage-backed securities at June 30, 2014 and 2013 and stratification by contractual maturity of debt securities at June 30, 2014 are presented below:

June 30, 2014

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Carrying
Value

(In Thousands)

Securities available for sale:

Debt securities:

U.S. agency securities

4,159

4,205

Obligations of state and political subdivisions

27,537

773

26,773

Asset-backed securities

87,480

663

827

87,316

Collateralized loan obligations

120,089

—

517

119,572

Corporate bonds

163,076

617

1,459

162,234

Trust preferred securities

8,887

1,121

7,798

Total debt securities

411,228

1,369

4,699

407,898

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

33,505

—

485

33,020

Federal National Mortgage Association

51,277

1,249

50,040

Non-agency securities

210

—

210

Total collateralized mortgage obligations

84,992

1,734

83,270

Mortgage pass-through securities:

Residential pass-through securities:

Government National Mortgage Association

3,055

221

—

3,276

Federal Home Loan Mortgage Corporation

196,882

3,937

1,929

198,890

Federal National Mortgage Association

147,873

4,750

836

151,787

Total residential pass-through securities

347,810

8,908

2,765

353,953

Total mortgage-backed securities

432,802

8,920

4,499

437,223

Total securities available for sale

844,030

10,289

9,198

845,121

F-34

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 5 – Securities Available for Sale (continued)


	June 30, 2014
	Amortized Cost		Fair Value
	(In Thousands)
Debt securities available for sale:
Due in one year or less	$	—	$	—
Due after one year through five years		20,059		20,221
Due after five years through ten years		172,269		171,118
Due after ten years		218,900		216,559


	$	411,228	$	407,898


	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Carrying Value
	(In Thousands)

Securities available for sale:

Debt securities:

U.S. agency securities	$	4,955	$	60	$	—	$	5,015
Obligations of state and political subdivisions		27,560		—		2,253		25,307
Asset-backed securities		25,417		1		620		24,798
Collateralized loan obligations		78,366		190		70		78,486
Corporate bonds		160,107		34		949		159,192
Trust preferred securities		8,878		—		1,554		7,324


Total debt securities		305,283		285		5,446		300,122


Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation		9,825		—		470		9,355
Federal National Mortgage Association		56,158		24		3,055		53,127


Total collateralized mortgage obligations		65,983		24		3,525		62,482


Mortgage pass-through securities:

Residential pass-through securities:
Government National Mortgage Association		5,889		444		—		6,333
Federal Home Loan Mortgage Corporation		290,133		4,827		4,600		290,360
Federal National Mortgage Association		326,356		9,050		3,945		331,461


Total residential pass-through securities		622,378		14,321		8,545		628,154


Commercial pass-through securities:
Federal Home Loan Mortgage Corporation		116		2		—		118
Federal National Mortgage Association		94,389		3		4,494		89,898


Total commercial pass-through securities		94,505		5		4,494		90,016


Total mortgage-backed securities		782,866		14,350		16,564		780,652


Total securities available for sale	$	1,088,149	$	14,635	$	22,010	$	1,080,774

F-35

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 5 – Securities Available for Sale (continued)

During the years ended June 30, 2014, 2013 and 2012, proceeds from sales of securities available for sale totaled $170.9 million, $442.8 million and $51.3 million and resulted in gross gains of $3.6 million, $10.6 million and $53,000 and gross losses of $2.1 million, $135,000 and $-0-, respectively.

At June 30, 2014 and 2013, securities available for sale with carrying value of approximately $76.1 million and $99.4 million, respectively, were utilized as collateral for borrowings through the FHLB of New York. As of those same dates, securities available for sale with total carrying values of approximately $1.8 million and $4.4 million, respectively, were pledged to secure public funds on deposit.

At June 30, 2014, the Company’s available for sale mortgage-backed securities were secured by residential mortgage loans with original contractual maturities of ten to thirty years. At June 30, 2013, such securities had similar contractual maturities but were secured by both residential and commercial mortgage loans. The effective lives of mortgage-backed securities are generally shorter than their contractual maturities due to principal amortization and prepayment of the mortgage loans comprised within those securities. Investors in mortgage pass-through securities generally share in the receipt of principal repayments on a pro-rata basis as paid by the borrowers. By comparison, collateralized mortgage obligations generally represent individual tranches within a larger investment vehicle that is designed to distribute cash flows received on securitized mortgage loans to investors in a manner determined by the overall terms and structure of the investment vehicle and those applying to the individual tranches within that structure.

F-36

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 6 – Securities Held to Maturity

June 30, 2014

Carrying
Value

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

(In Thousands)

Securities held to maturity:

Debt securities:

U.S. agency securities

144,349

1,408

142,947

Obligations of state and political subdivisions

72,065

1,555

70,525

Total debt securities

216,414

2,963

213,472

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

—

Federal National Mortgage Association

264

—

294

Non-agency securities

—

Total collateralized mortgage obligations

338

369

Mortgage pass-through securities:

Residential pass-through securities:

Government National Mortgage Association

—

Federal Home Loan Mortgage Corporation

283

—

287

Federal National Mortgage Association

114,276

140

114,333

Total residential pass-through securities

114,568

144

114,629

Commercial pass-through securities:

Federal National Mortgage Association

180,752

2,042

178,783

Total commercial pass-through securities

180,752

2,042

178,783

Total mortgage-backed securities

295,658

249

2,126

293,781

Total securities held to maturity

512,072

270

5,089

507,253

F-37

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 6 – Securities Held to Maturity (continued)


	June 30, 2014
	Amortized Cost		Fair Value
	(In Thousands)
Debt securities held to maturity:
Due in one year or less	$	5,809	$	5,825
Due after one year through five years		146,079		144,664
Due after five years through ten years		37,107		36,442
Due after ten years		27,419		26,541


	$	216,414	$	213,472

June 30, 2013

Carrying
Value

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

(In Thousands)

Securities held to maturity:

Debt securities:

U.S. agency securities

144,747

3,622

141,139

Obligations of state and political subdivisions

65,268

4,083

61,189

Total debt securities

210,015

7,705

202,328

Mortgage-backed securities:

Collateralized mortgage obligations:

Federal Home Loan Mortgage Corporation

—

Federal National Mortgage Association

350

—

382

Non-agency securities

105

106

Total collateralized mortgage obligations

477

513

Mortgage pass-through securities:

Residential pass-through securities:

Federal Home Loan Mortgage Corporation

—

102

Federal National Mortgage Association

231

—

240

Total residential pass-through securities

329

—

342

Commercial pass-through securities:

Federal National Mortgage Association

100,308

—

4,716

95,592

Total commercial pass-through securities

100,308

—

4,716

95,592

Total mortgage-backed securities

101,114

4,718

96,447

Total securities held to maturity

311,129

12,423

298,775

F-38

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 6 – Securities Held to Maturity (continued)

During the years ended June 30, 2014, 2013 and 2012, proceeds from sales of securities held to maturity totaled $28,000, $18,000 and $32,000, respectively, resulting in gross losses of $6,000, $6,000 and $6,000, respectively. The proceeds and losses for each year were fully attributable to the sale of the Company’s non-investment grade, non-agency collateralized mortgage obligations. These securities were originally acquired as investment grade securities upon the in-kind redemption of the Bank’s interest in the AMF Fund during the first quarter of fiscal 2009. The ratings of these securities subsequently declined below investment grade with most ultimately being identified as other-than-temporarily impaired resulting in their eligibility for sale from the held-to-maturity portfolio.

At June 30, 2014 and 2013, securities held to maturity with carrying value of approximately $128.1 million and $123.3 million were utilized as collateral for borrowings from the FHLB of New York. As of those same dates, securities held to maturity with total carrying values of approximately $4.5 million and $-0- million, respectively, were pledged to secure public funds on deposit.

At June 30, 2014 and 2013, the Company’s held to maturity mortgage-backed securities were secured by both residential and commercial mortgage loans with original contractual maturities of ten to thirty years. The effective lives of mortgage-backed securities are generally shorter than their contractual maturities due to principal amortization and prepayment of the mortgage loans comprised within those securities. Investors in mortgage pass-through securities generally share in the receipt of principal repayments on a pro-rata basis as paid by the borrowers. By comparison, collateralized mortgage obligations generally represent individual tranches within a larger investment vehicle that is designed to distribute cash flows received on securitized mortgage loans to investors in a manner determined by the overall terms and structure of the investment vehicle and those applying to the individual tranches within that structure.

F-39

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities

The following two tables summarize the fair values and gross unrealized losses within the available for sale and held to maturity portfolios. The gross unrealized losses, presented by security type, represent temporary impairments of value within each portfolio as of the dates presented. Temporary impairments within the available for sale portfolio have been recognized through other comprehensive income as reductions in stockholders’ equity on a tax-effected basis.

The tables are followed by a discussion that summarizes the Company’s rationale for recognizing certain impairments as “temporary” versus those identified as “other-than-temporary”. Such rationale is presented by investment type and generally applies consistently to both the “available for sale” and “held to maturity” portfolios, except where specifically noted.


	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)

Securities available for sale:
June 30, 2014:
U.S. agency securities	$	826	$	1	$	84	$	1	$	910	$	2
Obligations of state and political subdivisions		946		3		23,140		770		24,086		773
Asset-backed securities		28,404		630		25,169		197		53,573		827
Collateralized loan obligations		84,705		270		24,829		247		109,534		517
Corporate bonds		19,790		210		53,811		1,249		73,601		1,459
Trust preferred securities		—		—		6,766		1,121		6,766		1,121
Collateralized mortgage obligations		21,806		219		50,028		1,515		71,834		1,734
Residential pass-through securities		—		—		123,666		2,765		123,666		2,765


Total	$	156,477	$	1,333	$	307,493	$	7,865	$	463,970	$	9,198


June 30, 2013:
Obligations of state and political subdivisions	$	25,307	$	2,253	$	—	$	—	$	25,307	$	2,253
Asset-backed securities		19,675		620		—		—		19,675		620
Collateralized loan obligations		27,930		70		—		—		27,930		70
Corporate bonds		149,190		949		—		—		149,190		949
Trust preferred securities		—		—		6,324		1,554		6,324		1,554
Collateralized mortgage obligations		60,740		3,525		—		—		60,740		3,525
Residential pass-through securities		244,429		8,545		—		—		244,429		8,545
Commercial pass-through securities		89,695		4,494		—		—		89,695		4,494


Total	$	616,966	$	20,456	$	6,324	$	1,554	$	623,290	$	22,010

F-40

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

The number of available for sale securities with unrealized losses at June 30, 2014 totaled 111 and included four U.S. agency securities, 63 municipal obligations, five asset-backed securities, 16 collateralized loan obligations, six corporate obligations, four trust preferred securities, six collateralized mortgage obligations and seven residential pass-through securities. The number of available for sale securities with unrealized losses at June 30, 2013 totaled 153 and included 70 municipal obligations, two asset-backed securities, five collateralized loan obligations, 13 corporate obligations, four trust preferred securities, four collateralized mortgage obligations and 55 mortgage-backed securities comprising 38 residential pass-through securities and 17 commercial pass-through securities.


	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
Securities held to maturity:
June 30, 2014:
U.S. agency securities	$	—	$	—	$	141,919	$	1,408	$	141,919	$	1,408
Obligations of state and political subdivisions		5,808		36		57,056		1,519		62,864		1,555
Collateralized mortgage obligations		30		1		—		—		30		1
Residential pass-through securities		59,993		83		—		—		59,993		83
Commercial pass-through securities		56,234		230		96,937		1,812		153,171		2,042


Total	$	122,065	$	350	$	295,912	$	4,739	$	417,977	$	5,089


June 30, 2013:
U.S. agency securities	$	139,699	$	3,622	$	—	$	—	$	139,699	$	3,622
Obligations of state and political subdivisions		59,109		4,083		—		—		59,109		4,083
Collateralized mortgage obligations		4		1		44		1		48		2
Commercial pass-through securities		90,935		4,716		—		—		90,935		4,716


Total	$	289,747	$	12,422	$	44	$	1	$	289,791	$	12,423

The number of held to maturity securities with unrealized losses at June 30, 2014 totaled 198 and included seven U.S. agency securities, 137 municipal obligations and 54 mortgage-backed securities comprising three collateralized mortgage obligations, 26 residential pass-through securities and 25 commercial pass-through securities. The number of held to maturity securities with unrealized losses at June 30, 2013 totaled 162 and included seven U.S. agency securities, 132 municipal obligations and 23 mortgage-backed securities comprising four collateralized mortgage obligations and 19 commercial pass-through securities.

F-41

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

In general, if the fair value of a debt security is less than its amortized cost basis at the time of evaluation, the security is “impaired” and the impairment is to be evaluated to determine if it is other than temporary. The Company evaluates the impaired securities in its portfolio for possible other than temporary impairment (OTTI) on at least a quarterly basis. The following represents the circumstances under which an impaired security is determined to be other than temporarily impaired:

•

When the Company intends to sell the impaired debt security;

•

When the Company more likely than not will be required to sell the impaired debt security before recovery of its amortized cost (for example, whether liquidity requirements or contractual or regulatory obligations indicate that the security will be required to be sold before a forecasted recovery occurs); or

•

When an impaired debt security does not meet either of the two conditions above, but the Company does not expect to recover the entire amortized cost of the security. According to applicable accounting guidance for debt securities, this is generally when the present value of cash flows expected to be collected is less than the amortized cost of the security.

In the first two circumstances noted above, the amount of OTTI recognized in earnings is the entire difference between the security’s amortized cost basis and its fair value at the balance sheet date. In the third circumstance, however, the OTTI is to be separated into the amount representing the credit loss from the amount related to all other factors. The credit loss component is to be recognized in earnings while the non-credit loss component is to be recognized in other comprehensive income. In these cases, OTTI is generally predicated on an adverse change in cash flows (e.g. principal and/or interest payment deferrals or losses) versus those expected at the time of purchase. The absence of an adverse change in expected cash flows generally indicates that a security’s impairment is related to other “non-credit loss” factors and is thereby generally not recognized as OTTI.

The Company considers a variety of factors when determining whether a credit loss exists for an impaired security including, but not limited to:

•

The length of time and the extent (a percentage) to which the fair value has been less than the amortized cost basis;

•

Adverse conditions specifically related to the security, an industry, or a geographic area (e.g. changes in the financial condition of the issuer of the security, or in the case of an asset backed debt security, in the financial condition of the underlying loan obligors, including changes in technology or the discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security or changes in the quality of the credit enhancement);

•

The historical and implied volatility of the fair value of the security;

•

The payment structure of the debt security;

•

Actual or expected failure of the issuer of the security to make scheduled interest or principal payments;

•

Changes to the rating of the security by external rating agencies; and

•

Recoveries or additional declines in fair value subsequent to the balance sheet date.

F-42

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

At June 30, 2014 and June 30, 2013, the Company held no securities on which credit-related OTTI had been recognized in earnings. The following discussion summarizes the Company’s rationale for recognizing the impairments reported in the tables above as “temporary” versus “other-than-temporary”. Such rationale is presented by investment type and generally applies consistently to both the available for sale and held to maturity portfolios, except where specifically noted.

Mortgage-backed Securities.

The carrying value of the Company’s mortgage-backed securities totaled $732.9 million at June 30, 2014 and comprised 54.0% of total investments and 20.9% of total assets as of that date. This category of securities primarily includes mortgage pass-through securities and collateralized mortgage obligations issued by U.S. government agencies and/or government-sponsored entities (“GSEs”) such as Ginnie Mae, Fannie Mae and Freddie Mac who guarantee the contractual cash flows associated with those securities. Those guarantees were strengthened during the 2008-2009 financial crisis at which time Fannie Mae and Freddie Mac were placed into receivership by the federal government. Through those actions, the U.S. government effectively reinforced the guarantees of their agencies thereby strengthening the creditworthiness of the mortgage-backed securities issued by those agencies.

With credit risk being reduced to negligible levels due primarily to the U.S. government’s support of most of these agencies, the unrealized losses on the Company’s investment in U.S. agency mortgage-backed securities are due largely to the combined effects of several market-related factors including, most notably, changes in market interest rates. In general, the fair value of certain debt securities, including the Company’s mortgage-backed securities, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are generally characterized by fixed interest rates or adjustable rates that lag the movement in market interest rates, decline and vice-versa.

Additionally, movements in market interest rates significantly impact the average lives of mortgage-backed securities by influencing the rate of principal prepayment attributable to refinancing activity. Changes in the expected average lives of such securities significantly impact their fair values due to the extension or contraction of the cash flows that an investor expects to receive over the life of the security. Generally, lower market interest rates prompt greater refinancing activity thereby shortening the average lives of mortgage-backed securities and vice-versa. The historically low mortgage rates prevalent in the marketplace during recent years created significant refinancing incentive for qualified borrowers.

Prepayment rates are also influenced by fluctuating real estate values and the overall availability of credit in the marketplace which significantly impacts the ability of borrowers to qualify for refinancing. The residential real estate marketplace in recent years has been characterized by diminished property values and reduced availability of credit due to tightening underwriting standards. As a consequence, the ability of certain borrowers to qualify for the refinancing of existing loans has been reduced while residential real estate purchase activity has been stifled. These factors have partially offset the effects of historically low interest rates on mortgage-backed security prepayment rates.

The market price of mortgage-backed securities, being the key measure of the fair value to an investor in such securities, is also influenced by the overall supply and demand for such securities in the marketplace. Absent other factors, an increase in the demand for, or a decrease in the supply of a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of a security decreases its price.

F-43

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

In sum, the factors influencing the fair value of the Company’s U.S. agency mortgage-backed securities, as described above, generally result from movements in market interest rates and changing real estate and financial market conditions which affect the supply and demand for such securities. Such market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company has the stated ability and intent to “hold to maturity” those securities so designated at June 30, 2014 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Moreover, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its U.S. agency and GSE mortgage-backed securities with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

In addition to those mortgage-backed securities issued by U.S. agencies and GSEs, the Company held a nominal balance of non-agency mortgage-backed securities at June 30, 2014. Unlike agency and GSE mortgage-backed securities, non-agency collateralized mortgage obligations are not explicitly guaranteed by a U.S. government sponsored entity. Rather, such securities generally utilize the structure of the larger investment vehicle to reallocate credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying mortgage loans. The creditworthiness of certain tranches may also be further enhanced by additional credit insurance protection embedded within the terms of the total investment vehicle.

The fair values of the non-agency mortgage-backed securities are subject to many of the factors applicable to the agency securities that may result in “temporary” impairments in value. However, due to the lack of agency guaranty, the Company also monitors the general level of credit risk for each of its non-agency mortgage-backed securities based upon a variety of factors including, but not limited to, the ratings assigned to its specific tranches by one or more credit rating agencies, where available. As noted above, the level of such ratings and changes thereto, is one of several factors considered by the Company in identifying those securities that may be other-than-temporarily impaired.

The applicable securities generally maintained their credit-ratings at levels supporting the investment grade assessment by the Company. The Company has the stated ability and intent to “hold to maturity” those securities at June 30, 2014 and has further concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its non-agency mortgage-backed securities with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

U.S. Agency Debt Securities.

The carrying value of the Company’s U.S. agency debt securities totaled $148.6 million at June 30, 2014 and comprised 10.9% of total investments and 4.2% of total assets as of that date. Such securities included $144.3 million of fixed-rate U.S. agency debentures and $4.2 million of securities representing securitized pools of loans issued and fully guaranteed by the Small Business Administration (“SBA”), a U.S. government agency.

F-44

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

With credit risk being reduced to negligible levels due to the issuer’s guarantee, the unrealized losses on the Company’s investment in U.S. agency debentures are due largely to the combined effects of several market-related factors including, most notably, changes in market interest rates. In general, the fair value of certain debt securities, including the Company’s U.S. agency debentures, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are generally characterized by fixed interest rates, decline and vice-versa.

The market price of U.S. agency debentures is also influenced by the overall supply and demand for such securities in the marketplace. Absent other factors, an increase in the demand for, or a decrease in the supply of a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s U.S. agency debentures, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company has the stated ability and intent to “hold to maturity” those securities so designated at June 30, 2014 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its balance of U.S. agency securities with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

Obligations of State and Political Subdivisions.

The carrying value of the Company’s securities representing obligations of state and political subdivisions totaled $98.8 million at June 30, 2014 and comprised 7.3% of total investments and 2.8% of total assets as of that date. Such securities include approximately $95.7 million of fixed-rate, bank-qualified securities representing general obligations of municipalities located within the U.S. or the obligations of their related entities such as boards of education or school districts. The portfolio also includes $3.1 million of non-rated bond anticipation notes (“BANs”) comprising seven short-term obligations issued by a total of four New Jersey municipalities with whom the Company maintains or seeks to maintain deposit relationships. At June 30, 2014, the fair value of each of the Company’s BANs equaled or exceeded their respective carrying values resulting in no reported impairment on those securities as of that date.

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where available, in its evaluation of the impairment attributable to each of its municipal obligations. The Company uses such ratings, in conjunction with the other criteria noted earlier, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

Unrealized losses associated with municipal obligations whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s periodic internal investment grade assessment of the security.

F-45

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

At June 30, 2014, each of the Company’s impaired municipal obligations were consistently rated by Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Financial Services (“S&P”) well above the thresholds that generally support the Company’s investment grade assessment with such ratings equaling “A” or higher by S&P and/or “A1” or higher by Moody’s, where rated by those agencies. In the absence of such ratings, the Company relies upon its own internal analysis of the issuer’s financial condition to validate its investment grade assessment.

Given the absence of any expectation for an adverse change in cash flows signifying a credit loss, the unrealized losses on the Company’s investment in municipal obligations are due largely to the combined effects of several market-related factors including, most notably, changes in market interest rates. In general, the fair value of certain debt securities, including the Company’s municipal obligations, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities, which are generally characterized by fixed interest rates, decline and vice-versa.

The market price of municipal obligations is also influenced by the overall supply and demand for such securities in the marketplace. While these factors may generally reflect the level of available liquidity in the marketplace, demand for individual securities will specifically reflect investors’ assessment of an issuer’s creditworthiness and resulting expectations for timely and full repayment in accordance with the terms of the applicable security agreement. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s municipal obligations, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company has the stated ability and intent to “hold to maturity” those securities so designated at June 30, 2014 and does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of that date. In light of the factors noted, the Company does not consider its balance of obligations of state and political subdivisions with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

Asset-backed Securities.

The carrying value of the Company’s asset-backed securities totaled $87.3 million at June 30, 2014 and comprised 6.4% of total investments and 2.5% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities representing securitized federal education loans with 97% U.S. government guarantees. The securities represent tranches of a larger investment vehicle designed to reallocate credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying loans. The Company’s securities represent the highest credit-quality tranches within the overall structures with each being rated “AA+” by S&P at June 30, 2014.

F-46

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

With credit risk being reduced to nominal levels due to the guarantees and structural support noted above, the unrealized losses on the Company’s investment in asset-backed securities are due largely to the combined effects of several market-related factors, including changes in market interest rates and fluctuating demand for such securities in the marketplace. In general, the fair value of certain debt securities, including the Company’s asset-backed securities, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities decline and vice-versa. However, the floating-rate nature of the Company’s asset-backed securities greatly reduces their sensitivity to such changes in market rates.

More significantly, the market price of asset-backed securities is also influenced by the overall supply and demand for such securities in the marketplace. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s asset-backed securities, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of June 30, 2014. In light of the factors noted, the Company does not consider its balance of asset-backed securities with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

Collateralized Loan Obligations.

The outstanding balance of the Company’s collateralized loan obligations totaled $119.6 million at June 30, 2014 and comprised 8.8% of total investments and 3.4% of total assets as of that date. This category of securities is comprised entirely of structured, floating-rate securities comprised of securitized commercial loans to large U.S. corporations. The Company’s securities represent tranches of a larger investment vehicle designed to reallocate cash flows and credit risk among the individual tranches comprised within that vehicle. Through this process, investors in different tranches are subject to varying degrees of risk that the cash flows of their tranche will be adversely impacted by borrowers defaulting on the underlying loans.

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where available, in its evaluation of the impairment attributable to each of its collateralized loan obligations. The Company uses such ratings, in conjunction with the other criteria noted earlier, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

Unrealized losses associated with collateralized loan obligations whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s periodic internal investment grade assessment of the security.

F-47

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

At June 30, 2014, each of the Company’s impaired collateralized loan obligations were consistently rated by Moody’s and S&P well above the thresholds that generally support the Company’s investment grade assessment, with such ratings equaling “AA” or higher by S&P and “Aa2” or higher by Moody’s, where rated by those agencies.

Given the absence of any expectation for an adverse change in cash flows signifying a credit loss, the unrealized losses on the Company’s investment in collateralized loan obligations are due largely to the combined effects of several market-related factors, including changes in market interest rates and fluctuating demand for such securities in the marketplace. In general, the fair value of certain debt securities, including the Company’s collateralized loan obligations, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities decline and vice-versa. However, the floating-rate nature of the Company’s collateralized loan obligations greatly reduces their sensitivity to such changes in market rates.

More significantly, the market price of collateralized loan obligations is also influenced by the overall supply and demand for such securities in the marketplace. While these factors may generally reflect the level of available liquidity in the marketplace, demand for individual securities will specifically reflect the performance of the underlying collateral in conjunction with the resiliency of the security’s structural support as they affect investors’ expectations for timely and full repayment. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s collateralized loan obligations, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. The Company evaluated its entire portfolio of collateralized loan obligations during the first half of fiscal 2014 and sold those securities that it identified as potentially ineligible investments under the terms of the “Volcker Rule” and related regulations enacted by regulatory agencies during the latter half of fiscal 2014 in conjunction with the ongoing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Company concluded that the possibility of being required to sell its current collateralized loan obligations prior to their anticipated recovery is unlikely based upon their eligibility under the terms of the Volcker Rule in conjunction with the overall strength of the Company’s liquidity, asset quality and capital position as of June 30, 2014.

In light of the factors noted, the Company does not consider its balance of collateralized loan obligations with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

Corporate Bonds.

The carrying value of the Company’s corporate bonds totaled $162.2 million at June 30, 2014 and comprised 12.0% of total investments and 4.6% of total assets as of that date. This category of securities is comprised entirely of floating-rate corporate debt obligations of large financial institutions.

F-48

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where available, in its evaluation of the impairment attributable to each of its corporate bonds. The Company uses such ratings, in conjunction with the other criteria noted earlier, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

Unrealized losses associated with corporate bonds whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s periodic internal investment grade assessment of the security.

At June 30, 2014, each of the Company’s impaired corporate bonds were consistently rated by Moody’s and S&P above the thresholds that generally support the Company’s investment grade assessment with such ratings equaling “A-” or higher by S&P and/or “Baa1” or higher by Moody’s, where rated by those agencies.

Given the absence of any expectation for an adverse change in cash flows signifying a credit loss, the unrealized losses on the Company’s investment in corporate bonds are due largely to the combined effects of several market-related factors including changes in market interest rates and fluctuating demand for such securities in the marketplace. In general, the fair value of certain debt securities, including the Company’s corporate bonds, move inversely with changes in market interest rates. As market interest rates increase, the value of the securities decline and vice-versa. However, the floating-rate nature of the Company’s corporate bonds greatly reduces their sensitivity to such changes in market rates.

More significantly, the market price of corporate bonds is also influenced by the overall supply and demand for such securities in the marketplace. While these factors may generally reflect the level of available liquidity in the marketplace, demand for individual securities will specifically reflect investors’ assessment of an issuer’s creditworthiness and resulting expectations for timely and full repayment in accordance with the terms of the applicable security agreement. Absent other factors, an increase in the demand for, or a decrease in the supply of, a security increases its price. Conversely, a decrease in the demand for, or an increase in the supply of, a security decreases its price.

In sum, the factors influencing the fair value of the Company’s corporate bonds, as described above, generally result from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Those market conditions may fluctuate over time resulting in certain securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not necessarily reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value resulting directly from these changing market conditions are considered “noncredit-related” and “temporary” in nature.

Finally, the Company does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of June 30, 2014. In light of the factors noted, the Company does not consider its balance of corporate bonds with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

F-49

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

Trust Preferred Securities.

The carrying value of the Company’s trust preferred securities totaled $7.8 million at June 30, 2014 and comprised less than one percent of total investments and total assets as of that date. The category comprises a total of five “single-issuer” (i.e. non-pooled) trust preferred securities, four of which are impaired as of June 30, 2014, that were originally issued by four separate financial institutions. As a result of bank mergers involving the issuers of these securities, the Company’s five trust preferred securities currently represent the de-facto obligations of three separate financial institutions.

As noted earlier, the Company considers the ratings assigned by one or more credit rating agencies, where such ratings are available, in its evaluation of the impairment attributable to each of its trust preferred securities. The Company uses such ratings, in conjunction with other criteria, to identify those securities whose impairments are potentially “credit-related” versus “noncredit-related”.

Unrealized losses associated with trust preferred securities whose credit ratings exceed certain internally defined thresholds are considered to be indicative of “noncredit-related” impairment given the nominal level of credit losses that would be expected based upon such ratings. That conclusion is generally reinforced, as appropriate, by additional internal analysis supporting the Company’s internal investment grade assessment of the security.

At June 30, 2014, the Company owned two securities at an amortized cost of $3.0 million that were consistently rated by Moody’s and S&P above the thresholds that generally support the Company’s investment grade assessment. The securities were originally issued through Chase Capital II and currently represent de-facto obligations of JPMorgan Chase & Co.

The Company has attributed the unrealized losses on these securities to the combined effects of several market-related factors, including movements in market interest rates and general level of liquidity of such securities in the marketplace based on overall supply and demand.

With regard to interest rates, the Company’s impaired trust preferred securities are variable rate securities whose interest rates generally float with three-month LIBOR plus a margin. Based upon the historically low level of short-term market interest rates, the current yield on these securities is comparatively low. Consequently, the fair value of the securities, as determined based upon their market price, reflects the adverse effects of the historically low market interest rates at June 30, 2014.

More significantly, the market prices of the impaired trust preferred securities also currently reflect the effect of reduced demand for such securities in the current marketplace. Additionally, such prices reflect the effects of increased supply arising from financial institutions selling such investments.

In addition to the securities noted above, the Company owned two additional trust preferred securities at an amortized cost of $4.9 million whose external credit ratings by both S&P and Moody’s fell below the thresholds that the Company normally associates with investment grade securities. The securities were originally issued through BankBoston Capital Trust IV and MBNA Capital B and currently represent de-facto obligations of Bank of America Corporation.

F-50

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7 – Impairment of Securities (continued)

The Company’s evaluation of the unrealized loss associated with these securities considered a variety of factors to determine if any portion of the impairment was credit-related at June 30, 2014. Factors generally considered in such evaluations included the financial strength and viability of the issuer and its parent company, the security’s historical performance through prior business and economic cycles, rating consistency or variability among rating companies, the security’s current and anticipated status regarding payment default or deferral of contractual payments to investors and the impact of these factors on the present value of the security’s expected future cash flows in relation to its amortized cost basis.

In its evaluation, the Company noted the overall financial strength and continuing expected viability of the issuing entity’s parent, particularly given their systemically critical role in the marketplace. The Company noted the security’s absence of historical defaults or payment deferrals throughout prior business cycles including the recent fiscal crisis that triggered the current economic weaknesses prevalent in the marketplace. Given these factors, the Company had no basis upon which to estimate an adverse change in the expected cash flows over the securities’ remaining terms to maturity.

In sum, the factors influencing the fair value of the Company’s trust preferred securities and the resulting impairment attributable to each generally resulted from movements in market interest rates and changing market conditions which affect the supply and demand for such securities. Such market conditions may generally fluctuate over time resulting in the securities being impaired for periods in excess of 12 months. However, the longevity of such impairment is not reflective of an expectation for an adverse change in cash flows signifying a credit loss. Consequently, the impairments of value arising from these changing market conditions are both “noncredit-related” and “temporary” in nature.

Finally, the Company does not intend to sell the temporarily impaired available for sale securities prior to the recovery of their fair value to a level equal to or greater than the Company’s amortized cost. Furthermore, the Company has concluded that the possibility of being required to sell the securities prior to their anticipated recovery is unlikely based upon its strong liquidity, asset quality and capital position as of June 30, 2014. Moreover, as “single issuer” obligations, these securities fall outside the scope of the Volcker Rule discussed earlier that originally identified pooled trust preferred securities as potentially ineligible investments for banks. In light of the factors noted, the Company does not consider its investments in trust preferred securities with unrealized losses at June 30, 2014 to be “other-than-temporarily” impaired as of that date.

F-51

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 8 – Loans Receivable


	June 30,
	2014			2013
	(In Thousands)

Real estate mortgage:
One-to-four family residential	$	580,612		$	500,647
Commercial mortgage:
Multi-family		431,007			211,817
Nonresidential		552,748			455,011

		983,755			666,828


		1,564,367			1,167,475

Construction		7,281			11,851

Commercial business		67,261			70,688

Consumer:
Home equity loans		75,611			80,813
Home equity lines of credit		24,010			26,613
Passbook or certificate		3,965			3,887
Other		373			391

		103,959			111,704

Total Loans		1,742,868			1,361,718

Unamortized yield adjustments including net premiums on purchased loans and net deferred loan costs and fees		(1,397	)		(847	)

	$	1,741,471		$	1,360,871

The Bank has granted loans to officers and directors of the Company and its subsidiaries and to their associates. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than normal risk of collectability. As of June 30, 2014 and 2013 such loans totaled approximately $4.7 million and $3.7 million, respectively. During the year ended June 30, 2014, the Bank granted three new loans to related parties totaling $1.1 million.

Note 9 – Loan Quality and the Allowance for Loan Losses

The following tables present the balance of the allowance for loan losses at June 30, 2014, 2013 and 2012 based upon the calculation methodology described in Note 1. The tables identify the valuation allowances attributable to specifically identified impairments on individually evaluated loans, including those acquired with deteriorated credit quality, as well as valuation allowances for impairments on loans evaluated collectively. The tables include the underlying balance of loans receivable applicable to each category as of those dates as well as the activity in the allowance for loan losses for the years ended June 30, 2014, 2013 and 2012. Unless otherwise noted, the balance of loans reported in the tables below excludes yield adjustments and the allowance for loan loss.

F-52

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Allowance for Loan Losses and Loans Receivable

at June 30, 2014


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Balance of allowance for loan losses:

Originated and purchased loans
Loans individually evaluated for impairment	$	528	$	404	$	—	$	—	$	75	$	—	$	—	$	1,007
Loans collectively evaluated for impairment		2,172		6,760		29		352		272		35		21		9,641

Allowance for loan losses on originated and purchased loans		2,700		7,164		29		352		347		35		21		10,648


Loans acquired at fair value
Loans acquired with deteriorated credit quality		—		—		—		98		—		—		—		98
Other acquired loans individually evaluated for impairment		—		165		—		346		57		—		—		568
Loans collectively evaluated for impairment		29		408		38		488		56		53		1		1,073


Allowance for loan losses on loans acquired at fair value		29		573		38		932		113		53		1		1,739


Total allowance for loan losses	$	2,729	$	7,737	$	67	$	1,284	$	460	$	88	$	22	$	12,387

F-53

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Allowance for Loan Losses and Loans Receivable

at June 30, 2014 (continued)


	Residential Mortgage			Commercial Mortgage			Construction			Commercial Business			Home Equity Loans			Home Equity Lines of Credit		Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the year ended June 30, 2014:

At June 30, 2013:
Allocated	$	3,660		$	5,359		$	81		$	1,218		$	490		$	76	$	12		$	10,896
Unallocated		—			—			—			—			—			—		—			—

Total allowance for loan losses		3,660			5,359			81			1,218			490			76		12			10,896

Total charge offs		(1,202	)		(44	)		—			(1,170	)		(47	)		—		(30	)		(2,493	)

Total recoveries		67			525			—			9			2			—		—			603

Total allocated provisions		204			1,897			(14	)		1,227			15			12		40			3,381

Total unallocated provisions		—			—			—			—			—			—		—			—


At June 30, 2014:
Allocated		2,729			7,737			67			1,284			460			88		22			12,387
Unallocated		—			—			—			—			—			—		—			—

Total allowance for loan losses	$	2,729		$	7,737		$	67		$	1,284		$	460		$	88	$	22		$	12,387

F-54

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Allowance for Loan Losses and Loans Receivable

at June 30, 2014 (continued)


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Balance of loans receivable:

Originated and purchased loans
Loans individually evaluated for impairment	$	11,923	$	5,403	$	—	$	1,263	$	1,010	$	17	$	—	$	19,616
Loans collectively evaluated for impairment		494,522		873,340		3,619		31,326		66,163		10,529		4,248		1,483,747

Total originated and purchased loans		506,445		878,743		3,619		32,589		67,173		10,546		4,248		1,503,363


Loans acquired at fair value
Loans acquired with deteriorated credit quality		742		1,071		—		8,325		—		—		—		10,138
Other acquired loans individually evaluated for impairment		—		1,895		1,448		2,456		692		964		—		7,455
Loans collectively evaluated for impairment		73,425		102,046		2,214		23,891		7,746		12,500		90		221,912

Total loans acquired at fair value		74,167		105,012		3,662		34,672		8,438		13,464		90		239,505


Total loans	$	580,612	$	983,755	$	7,281	$	67,261	$	75,611	$	24,010	$	4,338		1,742,868

Unamortized yield adjustments																(1,397	)


Loans receivable															$	1,741,471

F-55

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Allowance for Loan Losses and Loans Receivable

at June 30, 2013


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Balance of allowance for loan losses:

Originated and purchased loans
Loans individually evaluated for impairment	$	697	$	430	$	—	$	—	$	110	$	—	$	—	$	1,237
Loans collectively evaluated for impairment		2,939		4,356		50		252		300		35		12		7,944

Allowance for loan losses on originated and purchased loans		3,636		4,786		50		252		410		35		12		9,181


Loans acquired at fair value
Loans acquired with deteriorated credit quality		—		—		—		17		—		—		—		17
Other acquired loans individually evaluated for impairment		—		84		—		740		—		—		—		824
Loans collectively evaluated for impairment		24		489		31		209		80		41		—		874


Allowance for loan losses on loans acquired at fair value		24		573		31		966		80		41		—		1,715


Total allowance for loan losses	$	3,660	$	5,359	$	81	$	1,218	$	490	$	76	$	12	$	10,896

F-56

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Allowance for Loan Losses and Loans Receivable

at June 30, 2013 (continued)


	Residential Mortgage			Commercial Mortgage			Construction			Commercial Business			Home Equity Loans			Home Equity Lines of Credit		Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the year ended June 30, 2013:

At June 30, 2012:
Allocated	$	4,572		$	3,443		$	277		$	1,310		$	447		$	54	$	14		$	10,117
Unallocated		—			—			—			—			—			—		—			—

Total allowance for loan losses		4,572			3,443			277			1,310			447			54		14			10,117

Total charge offs		(2,272	)		(1,042	)		(9	)		(182	)		(221	)		—		(2	)		(3,728	)

Total recoveries		15			—			—			18			10			—		—			43

Total allocated provisions		1,345			2,958			(187	)		72			254			22		—			4,464

Total unallocated provisions		—			—			—			—			—			—		—			—


At June 30, 2013:
Allocated		3,660			5,359			81			1,218			490			76		12			10,896
Unallocated		—			—			—			—			—			—		—			—

Total allowance for loan losses	$	3,660		$	5,359		$	81		$	1,218		$	490		$	76	$	12		$	10,896

F-57

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Allowance for Loan Losses and Loans Receivable

at June 30, 2013 (continued)


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Balance of loans receivable:

Originated and purchased loans
Loans individually evaluated for impairment	$	14,412	$	7,865	$	—	$	1,076	$	1,145	$	—	$	—	$	24,498
Loans collectively evaluated for impairment		484,575		540,491		5,717		25,975		65,581		10,461		4,145		1,136,945

Total originated and purchased loans		498,987		548,356		5,717		27,051		66,726		10,461		4,145		1,161,443


Loans acquired at fair value
Loans acquired with deteriorated credit quality		—		1,230		316		4,504		—		—		—		6,050
Other acquired loans individually evaluated for impairment		359		2,079		2,570		2,746		606		626		—		8,986
Loans collectively evaluated for impairment		1,301		115,163		3,248		36,387		13,481		15,526		133		185,239

Total loans acquired at fair value		1,660		118,472		6,134		43,637		14,087		16,152		133		200,275


Total loans	$	500,647	$	666,828	$	11,851	$	70,688	$	80,813	$	26,613	$	4,278		1,361,718

Unamortized yield adjustments																(847	)


Loans receivable															$	1,360,871

F-58

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Allowance for Loan Losses

at June 30, 2012


	Residential Mortgage			Commercial Mortgage			Construction			Commercial Business			Home Equity Loans			Home Equity Lines of Credit		Other Consumer			Total
	(In Thousands)
Changes in the allowance for loan losses for the year ended June 30, 2012:

At June 30, 2011:
Allocated	$	6,644		$	3,336		$	289		$	880		$	322		$	49	$	14		$	11,534
Unallocated		—			—			—			—			—			—		—			233

Total allowance for loan losses		6,644			3,336			289			880			322			49		14			11,767

Total charge offs		(6,398	)		(483	)		(106	)		(349	)		(135	)		—		(9	)		(7,480	)

Total recoveries		6			37			33			—			2			—		2			80

Total allocated provisions		4,320			553			61			779			258			5		7			5,983

Total unallocated provisions		—			—			—			—			—			—		—			(233	)


At June 30, 2012:
Allocated		4,572			3,443			277			1,310			447			54		14			10,117
Unallocated		—			—			—			—			—			—		—			—

Total allowance for loan losses	$	4,572		$	3,443		$	277		$	1,310		$	447		$	54	$	14		$	10,117

F-59

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

The following tables present key indicators of credit quality regarding the Company’s loan portfolio based upon loan classification and contractual payment status at June 30, 2014 and 2013.

Credit-Rating Classification of Loans Receivable

at June 30, 2014


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Originated and purchased loans
Non-classified	$	492,531	$	872,063	$	3,461	$	31,301	$	66,016	$	10,352	$	4,247	$	1,479,971

Classified:
Special mention		1,626		357		158		25		146		84		1		2,397
Substandard		12,288		6,039		—		1,263		1,011		110		—		20,711
Doubtful		—		284		—		—		—		—		—		284
Loss		—		—		—		—		—		—		—		—

Total classified loans		13,914		6,680		158		1,288		1,157		194		1		23,392

Total originated and purchased loans		506,445		878,743		3,619		32,589		67,173		10,546		4,248		1,503,363


Loans acquired at fair value
Non-classified		73,425		96,758		—		18,946		7,582		12,003		71		208,785

Classified:
Special mention		—		4,600		353		4,602		45		245		16		9,861
Substandard		742		3,654		3,309		11,118		811		1,216		3		20,853
Doubtful		—		—		—		6		—		—		—		6
Loss		—		—		—		—		—		—		—		—

Total classified loans		742		8,254		3,662		15,726		856		1,461		19		30,720

Total loans acquired at fair value		74,167		105,012		3,662		34,672		8,438		13,464		90		239,505


Total loans	$	580,612	$	983,755	$	7,281	$	67,261	$	75,611	$	24,010	$	4,338	$	1,742,868

F-60

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Credit-Rating Classification of Loans Receivable

at June 30, 2013


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Originated and purchased loans
Non-classified	$	482,462	$	538,544	$	5,717	$	25,630	$	65,353	$	10,339	$	4,118	$	1,132,163

Classified:
Special mention		1,843		983		—		50		228		28		—		3,132
Substandard		14,682		8,527		—		1,371		1,145		94		27		25,846
Doubtful		—		302		—		—		—		—		—		302
Loss		—		—		—		—		—		—		—		—

Total classified loans		16,525		9,812		—		1,421		1,373		122		27		29,280

Total originated and purchased loans		498,987		548,356		5,717		27,051		66,726		10,461		4,145		1,161,443


Loans acquired at fair value
Non-classified		1,301		109,559		820		31,062		13,419		15,450		132		171,743

Classified:
Special mention		—		4,548		1,300		4,932		62		76		—		10,918
Substandard		359		4,365		4,014		7,554		606		626		1		17,525
Doubtful		—		—		—		89		—		—		—		89
Loss		—		—		—		—		—		—		—		—

Total classified loans		359		8,913		5,314		12,575		668		702		1		28,532

Total loans acquired at fair value		1,660		118,472		6,134		43,637		14,087		16,152		133		200,275


Total loans	$	500,647	$	666,828	$	11,851	$	70,688	$	80,813	$	26,613	$	4,278	$	1,361,718

F-61

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Contractual Payment Status of Loans Receivable

at June 30, 2014


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Originated and purchased loans
Current	$	495,330	$	875,887	$	3,619	$	31,081	$	66,548	$	10,499	$	4,034	$	1,486,998

Past due:
30-59 days		1,385		—		—		245		183		—		60		1,873
60-89 days		1,163		—		—		—		3		30		28		1,224
90+ days		8,567		2,856		—		1,263		439		17		126		13,268

Total past due		11,115		2,856		—		1,508		625		47		214		16,365

Total originated and purchased loans		506,445		878,743		3,619		32,589		67,173		10,546		4,248		1,503,363


Loans acquired at fair value
Current		72,736		102,881		2,810		32,346		7,731		12,390		88		230,982

Past due:
30-59 days		689		561		—		—		152		—		—		1,402
60-89 days		—		427		—		—		95		110		1		633
90+ days		742		1,143		852		2,326		460		964		1		6,488

Total past due		1,431		2,131		852		2,326		707		1,074		2		8,523

Total loans acquired at fair value		74,167		105,012		3,662		34,672		8,438		13,464		90		239,505


Total loans	$	580,612	$	983,755	$	7,281	$	67,261	$	75,611	$	24,010	$	4,338	$	1,742,868

F-62

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Contractual Payment Status of Loans Receivable

at June 30, 2013


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Originated and purchased loans
Current	$	484,836	$	542,504	$	5,717	$	26,141	$	66,186	$	10,346	$	3,925	$	1,139,655

Past due:
30-59 days		2,297		836		—		—		21		115		166		3,435
60-89 days		1,515		—		—		—		186		—		27		1,728
90+ days		10,339		5,016		—		910		333		—		27		16,625

Total past due		14,151		5,852		—		910		540		115		220		21,788

Total originated and purchased loans		498,987		548,356		5,717		27,051		66,726		10,461		4,145		1,161,443


Loans acquired at fair value
Current		1,301		116,150		4,448		39,819		13,295		15,477		124		190,614

Past due:
30-59 days		—		258		—		45		433		—		8		744
60-89 days		—		186		—		284		62		49		—		581
90+ days		359		1,878		1,686		3,489		297		626		1		8,336

Total past due		359		2,322		1,686		3,818		792		675		9		9,661

Total loans acquired at fair value		1,660		118,472		6,134		43,637		14,087		16,152		133		200,275


Total loans	$	500,647	$	666,828	$	11,851	$	70,688	$	80,813	$	26,613	$	4,278	$	1,361,718

F-63

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

The following tables present information relating to the Company’s nonperforming and impaired loans at June 30, 2014 and 2013. Loans reported as “90+ days past due and accruing” in the table immediately below are also reported in the preceding contractual payment status table under the heading “90+ days past due”.

Performance Status of Loans Receivable

at June 30, 2014


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Originated and purchased loans
Performing	$	497,243	$	873,421	$	3,619	$	31,326	$	66,734	$	10,529	$	4,122	$	1,486,994

Nonperforming:
90+ days past due accruing		—		—		—		—		—		—		125		125
Nonaccrual		9,202		5,322		—		1,263		439		17		1		16,244

Total nonperforming		9,202		5,322		—		1,263		439		17		126		16,369

Total originated and purchased loans		506,445		878,743		3,619		32,589		67,173		10,546		4,248		1,503,363


Loans acquired at fair value
Performing		73,425		103,399		2,214		31,016		7,928		12,500		89		230,571

Nonperforming:
90+ days past due accruing		—		—		—		—		—		—		—		—
Nonaccrual		742		1,613		1,448		3,656		510		964		1		8,934

Total nonperforming		742		1,613		1,448		3,656		510		964		1		8,934

Total loans acquired at fair value		74,167		105,012		3,662		34,672		8,438		13,464		90		239,505


Total loans	$	580,612	$	983,755	$	7,281	$	67,261	$	75,611	$	24,010	$	4,338	$	1,742,868

F-64

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Performance Status of Loans Receivable

at June 30, 2013


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Originated and purchased loans
Performing	$	487,671	$	540,585	$	5,717	$	25,975	$	66,320	$	10,461	$	4,118	$	1,140,847

Nonperforming:
90+ days past due accruing		—		—		—		—		—		—		—		—
Nonaccrual		11,316		7,771		—		1,076		406		—		27		20,596

Total nonperforming		11,316		7,771		—		1,076		406		—		27		20,596

Total originated and purchased loans		498,987		548,356		5,717		27,051		66,726		10,461		4,145		1,161,443


Loans acquired at fair value
Performing		1,301		116,080		3,248		39,877		13,790		15,526		132		189,954

Nonperforming:
90+ days past due accruing		—		—		—		—		—		—		—		—
Nonaccrual		359		2,392		2,886		3,760		297		626		1		10,321

Total nonperforming		359		2,392		2,886		3,760		297		626		1		10,321

Total loans acquired at fair value		1,660		118,472		6,134		43,637		14,087		16,152		133		200,275


Total loans	$	500,647	$	666,828	$	11,851	$	70,688	$	80,813	$	26,613	$	4,278	$	1,361,718

F-65

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Impairment Status of Loans Receivable

at June 30, 2014


	Residential Mortgage			Commercial Mortgage			Construction		Commercial Business			Home Equity Loans			Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Carrying value of impaired loans:

Originated and purchased loans
Non-impaired loans	$	494,522		$	873,340		$	3,619	$	31,326		$	66,163		$	10,529	$	4,248	$	1,483,747

Impaired loans:
Impaired loans with no allowance for impairment		9,800			5,037			—		1,263			911			17		—		17,028
Impaired loans with allowance for impairment:
Unpaid principal balance		2,123			366			—		—			99			—		—		2,588

Allowance for impairment		(528	)		(404	)		—		—			(75	)		—		—		(1,007	)

Balance of impaired loans net of allowance for impairment		1,595			(38	)		—		—			24			—		—		1,581

Total impaired loans, excluding allowance		11,923			5,403			—		1,263			1,010			17		—		19,616

Total originated and purchased loans		506,445			878,743			3,619		32,589			67,173			10,546		4,248		1,503,363


Loans acquired at fair value
Non-impaired loans		73,425			102,046			2,214		23,891			7,746			12,500		90		221,912

Impaired loans:
Impaired loans with no allowance for impairment		742			1,690			1,448		10,141			617			964		—		15,602
Impaired loans with allowance for impairment:
Unpaid principal balance		—			1,276			—		640			75			—		—		1,991

Allowance for impairment		—			(165	)		—		(444	)		(57	)		—		—		(666	)

Balance of impaired loans net of allowance for impairment		—			1,111			—		196			18			—		—		1,325

Total impaired loans, excluding allowance		742			2,966			1,448		10,781			692			964		—		17,593

Total loans acquired at fair value		74,167			105,012			3,662		34,672			8,438			13,464		90		239,505


Total loans	$	580,612		$	983,755		$	7,281	$	67,261		$	75,611		$	24,010	$	4,338	$	1,742,868

F-66

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Impairment Status of Loans Receivable

at June 30, 2014 (continued)


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Unpaid principal balance of impaired loans:

Originated and purchased loans	$	17,655	$	5,919	$	—	$	1,407	$	1,027	$	17	$	—	$	26,025

Loans acquired at fair value		742		3,264		1,547		12,495		726		975		—		19,749


Total impaired loans	$	18,397	$	9,183	$	1,547	$	13,902	$	1,753	$	992	$	—	$	45,774


For the year ended June 30, 2014
Average balance of impaired loans	$	13,754	$	9,971	$	2,514	$	10,669	$	1,526	$	641	$	—	$	39,075
Interest earned on impaired loans	$	138	$	186	$	—	$	732	$	69	$	7	$	—	$	1,132

F-67

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Impairment Status of Loans Receivable

at June 30, 2013


	Residential Mortgage			Commercial Mortgage			Construction		Commercial Business			Home Equity Loans			Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Carrying value of impaired loans:

Originated and purchased loans
Non-impaired loans	$	484,575		$	540,491		$	5,717	$	25,975		$	65,581		$	10,461	$	4,145	$	1,136,945

Impaired loans:
Impaired loans with no allowance for impairment		11,758			7,470			—		1,076			1,026			—		—		21,330
Impaired loans with allowance for impairment:
Unpaid principal balance		2,654			395			—		—			119			—		—		3,168

Allowance for impairment		(697	)		(430	)		—		—			(110	)		—		—		(1,237	)

Balance of impaired loans net of allowance for impairment		1,957			(35	)		—		—			9			—		—		1,931

Total impaired loans, excluding allowance		14,412			7,865			—		1,076			1,145			—		—		24,498

Total originated and purchased loans		498,987			548,356			5,717		27,051			66,726			10,461		4,145		1,161,443


Loans acquired at fair value
Non-impaired loans		1,301			115,163			3,248		36,387			13,481			15,526		133		185,239

Impaired loans:
Impaired loans with no allowance for impairment		359			2,795			2,886		6,251			606			626		—		13,523
Impaired loans with allowance for impairment:
Unpaid principal balance		—			514			—		999			—			—		—		1,513

Allowance for impairment		—			(84	)		—		(757	)		—			—		—		(841	)

Balance of impaired loans net of allowance for impairment		—			430			—		242			—			—		—		672

Total impaired loans, excluding allowance		359			3,309			2,886		7,250			606			626		—		15,036

Total loans acquired at fair value		1,660			118,472			6,134		43,637			14,087			16,152		133		200,275


Total loans	$	500,647		$	666,828		$	11,851	$	70,688		$	80,813		$	26,613	$	4,278	$	1,361,718

F-68

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

Impairment Status of Loans Receivable

at June 30, 2013 (continued)


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
Unpaid principal balance of impaired loans:

Originated and purchased loans	$	20,682	$	8,956	$	—	$	1,120	$	1,169	$	—	$	—	$	31,927

Loans acquired at fair value		417		4,077		3,419		10,168		614		626		—		19,321


Total impaired loans	$	21,099	$	13,033	$	3,419	$	11,288	$	1,783	$	626	$	—	$	51,248


For the year ended June 30, 2013
Average balance of impaired loans	$	15,890	$	11,885	$	2,120	$	8,853	$	1,767	$	189	$	—	$	40,704
Interest earned on impaired loans	$	181	$	108	$	20	$	478	$	61	$	2	$	—	$	850

Impairment Status of Loans Receivable

at June 30, 2012


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(In Thousands)
For the year ended June 30, 2012
Average balance of impaired loans	$	17,633	$	11,228	$	1,944	$	10,358	$	1,322	$	161	$	—	$	42,646
Interest earned on impaired loans	$	484	$	58	$	52	$	283	$	20	$	—	$	—	$	897

F-69

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

The following tables present information regarding the restructuring of the Company’s troubled debts during the year ended June 30, 2013 and any defaults of TDRs during that year that were restructured within 12 months of the date of default. During the year ended June 30, 2014, the Company did not restructure any troubled debts and there were no defaults of TDRs that were restructured within 12 months of the date of default.

Troubled Debt Restructurings of Loans Receivable

at June 30, 2013


	Residential Mortgage		Commercial Mortgage		Construction		Commercial Business		Home Equity Loans		Home Equity Lines of Credit		Other Consumer		Total
	(Dollars in Thousands)
Troubled debt restructuring activity for the year ended June 30, 2013

Originated and purchased loans
Number of loans		5		1		—		—		2		—		—		8
Pre-modification outstanding recorded investment	$	967	$	265	$	—	$	—	$	176	$	—	$	—	$	1,408
Post-modification outstanding recorded investment		852		245		—		—		164		—		—		1,261
Charge offs against the allowance for loan loss for impairment recognized at modification		146		20		—		—		14		—		—		180

Loans acquired at fair value
Number of loans		—		—		—		—		—		—		—		—
Pre-modification outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Post-modification outstanding recorded investment		—		—		—		—		—		—		—		—
Charge offs against the allowance for loan loss for impairment recognized at modification		—		—		—		—		—		—		—		—

Troubled debt restructuring defaults

Originated and purchased loans
Number of loans		—		—		—		—		—		—		—		—
Outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Loans acquired at fair value
Number of loans		—		—		—		—		—		—		—		—
Outstanding recorded investment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

F-70

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9 – Loan Quality and the Allowance for Loan Losses (continued)

The manner in which the terms of a loan are modified through a troubled debt restructuring generally includes one or more of the following changes to the loan’s repayment terms:

•

Interest Rate Reduction : Temporary or permanent reduction of the interest rate charged against the outstanding balance of the loan.

•

Capitalization of Prior Past Dues : Capitalization of prior amounts due to the outstanding balance of the loan.

•

Extension of Maturity or Balloon Date : Extending the term of the loan past its original balloon or maturity date.

•

Deferral of Principal Payments: Temporary deferral of the principal portion of a loan payment.

•

Payment Recalculation and Re-amortization : Recalculation of the recurring payment obligation and resulting loan amortization/repayment schedule based on the loan’s modified terms.

At June 30, 2014, the remaining outstanding principal balance and carrying amount of acquired credit-impaired loans totaled approximately $11,778,000 and $ 10,138,000 respectively. By comparison, at June 30, 2013, the remaining outstanding principal balance and carrying amount of such loans totaled approximately $9,874,000 and $6,050,000, respectively.

The carrying amount of acquired credit-impaired loans for which interest is not being recognized due to the uncertainty of the cash flows relating to such loans totaled $2,374,000 and $1,952,000 at June 30, 2014 and June 30, 2013, respectively.

The balance of the allowance for loan losses at June 30, 2014 and June 30, 2013 included approximately $98,000 and $17,000 of valuation allowances, respectively, for a specifically identified impairment attributable to acquired credit-impaired loans. The valuation allowances were attributable to additional impairment recognized on the applicable loans subsequent to their acquisition, net of any charge offs recognized during that time.

The following table presents the changes in the accretable yield relating to the acquired credit-impaired loans for the years ended June 30, 2014 and 2013.


	Year Ended June 30, 2014 (In Thousands)			Year Ended June 30, 2013 (In Thousands)
Beginning balance	$	741		$	1,461
Accretion to interest income		(326	)		(567	)
Disposals		(38	)		(153	)
Reclassifications from nonaccretable difference		1,514			—

Ending balance	$	1,891		$	741

F-71

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10 – Premises and Equipment


	June 30,
	2014		2013
	(In Thousands)

Land	$	9,931	$	9,924
Buildings and improvements		35,080		32,920
Leasehold improvements		4,253		4,021
Furnishings and equipment		18,151		15,285
Construction in progress		1,959		1,530

		69,374		63,680

Less accumulated depreciation and amortization		29,269		26,686

	$	40,105	$	36,994

Land included properties held for future branch expansion totaling $2,419,000 at June 30, 2014 and 2013.

Note 11 – Interest Receivable


	June 30,
	2014		2013
	(In Thousands)

Loans	$	5,525	$	4,632
Mortgage-backed securities		1,796		2,326
Debt securities		1,692		1,070

	$	9,013	$	8,028

Note 12 – Goodwill and Other Intangible Assets


	Goodwill		Core Deposit Intangibles
	(In Thousands)

Balance at June 30, 2011		108,591		807
Amortization		—		(155	)


Balance at June 30, 2012		108,591		652
Amortization		—		(138	)


Balance at June 30, 2013		108,591		514
Acquisition of Atlas Bank		—		398
Amortization		—		(122	)


Balance at June 30, 2014	$	108,591	$	790

F-72

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 12 – Goodwill and Other Intangible Assets (continued)

Scheduled amortization of core deposit intangibles for each of the next five years and thereafter is as follows:


Years Ending June 30:	(In Thousands)
2015	$	194
2016		166
2017		139
2018		111
2019		84
Thereafter		96

Note 13 – Deposits


	June 30,
	2014					2013
	Amount		Weighted Average Interest Rate			Amount		Weighted Average Interest Rate
	(Dollars In Thousands)

Non-interest bearing demand	$	224,054		—	%	$	190,964		—	%
Interest-bearing demand ⁽¹⁾		700,248		0.24			731,521		0.29
Savings and club		518,421		0.16			466,559		0.16
Certificates of deposit ⁽²⁾		1,037,218		1.09			981,464		1.05


	$	2,479,941		0.56	%	$	2,370,508		0.55	%

⁽¹⁾	Interest-bearing demand deposits at June 30, 2014 and June 30, 2013 include $213.5 million and $229.6 million, respectively, of brokered deposits at a weighted average interest rate of 0.15% and 0.19%, excluding cost of interest rate derivatives used to hedge interest expense.

⁽²⁾	Certificates of deposit at June 30, 2014 include $18.5 million of brokered deposits at a weighted average interest rate of 3.49%. The Company held no brokered certificates of deposit at June 30, 2013.

Certificates of deposit with balances of $100,000 or more at June 30, 2014 and 2013, totaled approximately $476.6 million and $389.1 million, respectively. The Bank’s deposits are insurable to applicable limits by the Federal Deposit Insurance Corporation.

A summary of certificates of deposit by maturity follows:


	June 30,
	2014		2013
	(In Thousands)

One year or less	$	581,543	$	646,590
After one to two years		187,401		174,223
After two to three years		90,078		68,155
After three to four years		90,921		48,211
After four to five years		80,811		44,285
After five years		6,464		—


	$	1,037,218	$	981,464

F-73

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 13 – Deposits (continued)

Interest expense on deposits consists of the following:


	Years Ended June 30,
	2014		2013		2012
	(In Thousands)

Demand	$	3,790	$	1,847	$	2,690
Savings and club		739		878		1,376
Certificates of deposit		10,009		11,986		16,206

	$	14,538	$	14,711	$	20,272

Note 14 – Borrowings

Fixed-rate advances from FHLB of New York mature as follows:


	June 30,
	2014					2013
	Amount		Weighted Average Interest Rate			Amount		Weighted Average Interest Rate
	(Dollars in Thousands)

Maturing in years ending June 30:
2014	$	—		—	%	$	105,000		0.39	%
2015		320,000		0.38			—		—
2016		7,500		1.09			—		—
2017		3,000		1.05			—		—
2018		5,225		1.18			—		—
2021		765		4.94			854		4.94
2023		145,000		3.04			145,000		3.04

		481,490		1.21	%		250,854		1.94	%
Fair value adjustments		29					77

	$	481,519				$	250,931

At June 30, 2014, $320.0 million in advances are due within one year while the remaining $161.5 million in advances are due after one year of which $145.0 million are callable in April 2018.

At June 30, 2014, FHLB advances were collateralized by the FHLB capital stock owned by the Bank and mortgage loans and securities with carrying values totaling approximately $739.4 million and $204.2 million, respectively. At June 30, 2013, FHLB advances were collateralized by the FHLB capital stock owned by the Bank and mortgage loans and securities with carrying values totaling approximately $433.2 million and $222.7 million, respectively.

Borrowings at June 30, 2014 and 2013 also included overnight borrowings in the form of depositor sweep accounts totaling $30.7 million and $36.8 million, respectively. Depositor sweep accounts are short term borrowings representing funds that are withdrawn from a customer’s noninterest-bearing deposit account and invested in an uninsured overnight investment account that is collateralized by specified investment securities owned by the Bank.

F-74

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 15 – Derivative Instruments and Hedging Activities

At June 30, 2014 and 2013, the Company was subject to the terms of certain interest rate derivative agreements that were utilized by the Company to manage the interest rate exposure arising from specific wholesale funding positions. Such wholesale funding sources include floating-rate brokered money market deposits indexed to one-month LIBOR as well as a number of 90 day fixed-rate FHLB advances that are forecasted to be periodically redrawn at maturity for the same 90 day term as the original advance. The derivatives, comprising five interest rate swaps and two interest rate caps, were designated as cash flow hedges with changes in their fair value recorded as an adjustment through other comprehensive income on an after-tax basis. The Company had no interest rate derivatives as of or during the prior years ended June 30, 2012.

The effects of derivative instruments on the Consolidated Financial Statements for June 30, 2014 are as follows:

June 30, 2014

Notional/
Contract
Amount

Fair Value

Balance Sheet
Location

Expiration
Date

(Dollars in Thousands)

Derivatives designated as hedging instruments

Interest rate swaps:

Effective July 1, 2013

165,000

103

Other liabilities

July 1, 2018

Effective August 19, 2013

75,000

(1,109

)

Other liabilities

August 20, 2018

Effective October 9, 2013

50,000

(234

)

Other liabilities

October 9, 2018

Effective March 28, 2014

75,000

(1,203

)

Other liabilities

March 28, 2019

Effective June 5, 2015

60,000

(271

)

Other liabilities

June 5, 2020

Interest rate caps:

Effective June 5, 2013

40,000

913

Other liabilities

June 5, 2018

Effective July 1, 2013

35,000

826

Other liabilities

July 1, 2018

Total

500,000

(975

)

Year Ended June 30, 2014

Amount of
Gain (Loss)
Recognized in
OCI on
Derivatives, net
of tax (Effective
Portion)

Location of Gain
(Loss) Recognized
in Income on
Derivatives
(Ineffective
Portion)

Amount of
Gain (Loss)
Recognized in
Income on
Derivatives
(Ineffective
Portion)

(Dollars in Thousands)

Derivatives in cash flow hedges

Interest rate swaps:

Effective July 1, 2013

(896

)

Not Applicable

—

Effective August 19, 2013

(656

)

Not Applicable

—

Effective October 9, 2013

(138

)

Not Applicable

—

Effective March 28, 2014

(711

)

Not Applicable

—

Effective June 5, 2015

(883

)

Not Applicable

—

Interest rate caps:

Effective June 5, 2013

(333

)

Not Applicable

—

Effective July 1, 2013

(292

)

Not Applicable

—

Total

(3,909

)

—

F-75

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 15 – Derivative Instruments and Hedging Activities (continued)

The effects of derivative instruments on the Consolidated Financial Statements for June 30, 2013 are as follows:

June 30, 2013

Notional/
Contract
Amount

Fair Value

Balance Sheet
Location

Expiration
Date

(Dollars in Thousands)

Derivatives designated as hedging instruments

Interest rate swaps:

Effective July 1, 2013

165,000

1,617

Other assets

July 1, 2018

Effective June 5, 2015

60,000

1,220

Other assets

June 5, 2020

Interest rate caps:

Effective June 5, 2013

40,000

1,485

Other assets

June 5, 2018

Effective July 1, 2013

35,000

1,323

Other assets

July 1, 2018

Total

300,000

5,645


	June 30, 2013
	Amount of Gain (Loss) Recognized in OCI on Derivatives, net of tax (Effective Portion)		Location of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)		Amount of Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion)
	(Dollars in Thousands)
Derivatives in cash flow hedges

Interest rate swaps:
Effective July 1, 2013	$	957		Not Applicable	$	—
Effective June 5, 2015		722		Not Applicable		—

Interest rate caps:
Effective June 5, 2013		128		Not Applicable		—
Effective July 1, 2013		31		Not Applicable		—


Total	$	1,838			$	—

The Company has in place an enforceable master netting arrangement with every counterparty. All master netting arrangements include rights to offset associated with the Company’s recognized derivative assets, derivative liabilities, and cash collateral received and pledged.

At June 30, 2014, three of the Company’s derivatives were in an asset position totaling $1.8 million while the remaining four derivatives were in a liability position totaling $2.8 million. In total, the Company’s derivatives were in a net liability position of $975,000 at June 30, 2014 and included in other liabilities as of that date. As required under the enforceable master netting arrangement with its derivatives counterparty, the Company posted financial collateral in the amount of $1,090,000 at June 30, 2014 that was not included as an offsetting amount.

F-76

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 15 – Derivative Instruments and Hedging Activities (continued)

At June 30, 2013, all derivatives were in an asset position so that no offset was required. Both the gross amount of assets and net amount included in other assets was $5,645,000 at June 30, 2013. As required under the enforceable master netting arrangement, the Company’s derivatives counterparty posted financial collateral in the amount $5,500,000 at June 30, 2013 that was not included as an offsetting amount.

Note 16 – Benefit Plans

Employee Stock Ownership Plan

Effective upon completion of the Company’s initial public offering in February 2005, the Bank established an Employee Stock Ownership Plan (“ESOP”) for all eligible employees who complete a twelve-month period of employment with the Bank, have attained the age of 21 and complete at least 1,000 hours of service in a plan year. The ESOP used $17,457,000 in proceeds from a term loan obtained from the Company to purchase 1,745,700 shares of Company common stock. The remaining term loan principal is payable over 42 equal installments through March 31, 2017. The interest rate on the term loan is 5.50%. Each year, the Bank intends to make discretionary contributions to the ESOP, which will be equal to principal and interest payments required on the term loan. The Bank may substitute dividends paid, if any, on the Company common stock held by the ESOP for discretionary contributions.

Shares purchased with the loan proceeds provide collateral for the term loan and are held in a suspense account for future allocations among participants. Contributions to the ESOP and shares released from the suspense account are to be allocated among the participants on the basis of compensation, as described by the ESOP, in the year of allocation.

ESOP shares pledged as collateral were initially recorded as unearned ESOP shares in the consolidated statements of financial condition. Thereafter, on a monthly basis, 12,123 shares are committed to be released, compensation expense is recorded equal to the number of shares committed to be released times the monthly average market price of the shares, and the committed shares become outstanding for basic net income per common share computations. ESOP compensation expense was approximately $1,742,000, $1,431,000 and $1,367,000 for the years ended June 30, 2014, 2013 and 2012, respectively.

At June 30, 2014 and 2013, the ESOP shares were as follows:


	June 30,
	2014		2013

Allocated shares		1,113,602		989,049
Total shares distributed due to employee resignations/terminations		159,514		138,657
Shares committed to be released		84,660		84,594
Unearned shares		387,924		533,400


Total ESOP Shares		1,745,700		1,745,700


Fair value of unearned shares	$	5,873,169	$	5,595,366

F-77

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Employee Stock Ownership Plan Benefit Equalization Plan (“ESOP BEP”)

The Bank has a non-qualified plan to compensate its senior officers who participate in the Bank’s ESOP for certain benefits lost under such plan by reason of benefit limitations imposed by the Internal Revenue Code (“IRC”). The ESOP BEP expense was approximately $36,000, $6,000 and $-0- for the years ended June 30, 2014, 2013 and 2012, respectively. The liability totaled approximately $15,000 and $6,000 at June 30, 2014 and 2013, respectively.

Thrift Plan

The Bank sponsors the Employees’ Savings and Profit Sharing Plan and Trust (the “Plan”), pursuant to Section 401(k) of the Internal Revenue Code, for all eligible employees. Employees may elect to save up to 20% of their compensation. The Bank will contribute a matching contribution up to 3% of the employee annual compensation. The Plan expense amounted to approximately $543,000, $527,000 and $510,000 for the years ended June 30, 2014, 2013 and 2012, respectively.

Multi-Employer Retirement Plan

The Bank participates in the Pentegra Defined Benefit Plan for Financial Institutions (“The Pentegra DB Plan”), a tax-qualified defined-benefit pension plan. The Pentegra DB Plan’s Employer Identification Number is 13-5645888 and the Plan Number is 333. The Pentegra DB Plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the IRC. There are no collective bargaining agreements in place that require contributions to the Pentegra DB Plan.

The Pentegra DB Plan is a single plan under Internal Revenue Code Section 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra DB Plan contributions made by a participating employer may be used to provide benefits to participants of other participating employers.

The Pentegra DB Plan is non-contributory and covers all eligible employees. In April 2007, the Board of Directors of the Bank approved, effective July 1, 2007, “freezing” all future benefit accruals under the Bank’s defined benefit pension plan.

Funded status (market value of plan assets divided by funding target) of the Bank’s plan based on valuation reports as of July 1, 2013 and 2012 was 101.13% and 104.56%, respectively. Total contributions made to the Pentegra DB Plan, as reported on Form 5500, were $136.5 million and $196.5 million for the plan years ending June 30, 2013 and June 30, 2012, respectively. The Bank’s contributions to the Pentegra DB Plan were not more than 5% of the total contributions to the Pentegra DB Plan. During the years ended June 30, 2014, 2013 and 2012, the total expense recorded for the Pentegra DB Plan was approximately $303,000, $1,254,000 and $1,238,000, respectively.

F-78

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Atlas Bank Retirement Income Plan (“ABRIP”)

Through the merger with Atlas Bank, the Company acquired a non-contributory defined benefit pension plan covering all eligible employees of Atlas Bank. Effective January 31, 2013, the ABRIP was frozen by Atlas Bank. All benefits for eligible participants accrued in the ABRIP to the freeze date have been retained. The benefits are based on years of service and employee’s compensation. The ABRIP is funded in conformity with funding requirements of applicable government regulations.

The following table sets forth the ABRIP’s funded status at June 30, 2014:


	June 30,
	2014
	(In Thousands)
Reconciliation of funded status:
Projected benefit obligation	$	2,646
Fair value of assets		3,885


Funded status, included in other assets	$	1,239


Valuation assumptions:
Discount rate		4.50	%
Salary increase rate		N/A

There was no net periodic pension expense for the year ended June 30, 2014 as the acquisition of Atlas Bank occurred on June 30, 2014. The Bank does not expect to contribute to the ABRIP in the year ending June 30, 2015.

The assets of the ABRIP are invested in a Guaranteed Deposit Fund (“GDF”) with Prudential Financial, Inc. The GDF is a group annuity fund invested in public and private-issue debt securities through various sub-accounts. The underlying assets are valued based on quoted prices for similar assets with similar terms and other observable market data and have no redemption restrictions. The investments in the plan were monitored to ensure that they complied with the investment policies set forth by the Employee Benefits Committee of Atlas Bank. The plan’s assets were reviewed periodically by management, which included an analysis of the asset allocation and the performance of the GDF prepared by Prudential Financial, Inc.

The overall investment objective of the ABRIP is to ensure safety of principal and seek an attractive rate of return. The GDF utilizes a full spectrum of fixed income asset classes to provide the opportunity to maximize portfolio returns and diversification. Such asset classes are as follows:

•

Private Placement Bonds

•

Commercial Mortgage Loans

•

Public Corporate Bonds

•

Residential Mortgage Securities

•

Public Asset Backed Securities

•

Commercial Mortgage-backed Securities

•

Private Securitized Investments

F-79

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Atlas Bank Retirement Income Plan (“ABRIP”) (continued)

The long-term rate-of-return-on-assets assumption was set based on historical returns earned by equities and fixed-income securities, adjusted to reflect expectations of future returns as applied to the plan’s target allocation of asset classes. Equities and fixed-income securities were assumed to earn real rates of return in the ranges of 5-9% and 2-6%, respectively. The long-term inflation rate was estimated to be 3%. When these overall return expectations are applied to the plan’s allocation, the result is an expected rate of return of 7% to 11%.

The fair values of the ABRIP’s assets at June 30, 2014, by asset category (see Note 20 for the definitions of levels), are as follows:

Fair Value Measurements Using

Quoted Prices in
Active Markets
for Identical
Assets (Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs (Level 3)

Balance

(In Thousands)

At June 30, 2014:

Prudential Guaranteed Deposit Fund

—

3,885

—

3,885

Benefit Equalization Plan (“BEP”)

The Bank has an unfunded non-qualified plan to compensate senior officers of the Bank who participate in the Bank’s qualified defined benefit plan for certain benefits lost under such plans by reason of benefit limitations imposed by Sections 415 and 401 of the IRC. There were approximately $265,000, $221,000 and $257,000 in contributions made to and benefits paid under the BEP during each of the years ended June 30, 2014, 2013 and 2012, respectively.

The following tables set forth the BEP’s funded status and components of net periodic pension cost:


	June 30,
	2014			2013
	(Dollars in Thousands)
Change in benefit obligation:
Benefit obligation - beginning	$	3,430		$	2,859
Interest cost		154			143
Actuarial (gain) loss		(218	)		649
Benefit payments		(265	)		(221	)


Benefit obligation - ending	$	3,101		$	3,430


Change in plan assets:
Fair value of assets - beginning	$	—		$	—
Contributions		265			221
Benefit payments		(265	)		(221	)


Fair value of assets - ending	$	—		$	—

F-80

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Benefit Equalization Plan (“BEP”) (continued)


	June 30,
	2014			2013
	(Dollars in Thousands)
Reconciliation of funded status:
Accumulated benefit obligation	$	(3,101	)	$	(3,430	)


Projected benefit obligation	$	(3,101	)	$	(3,430	)
Fair value of assets		—			—


Accrued pension cost included in other liabilities	$	(3,101	)	$	(3,430	)


Valuation assumptions:
Discount rate		4.50	%		5.00	%
Salary increase rate		N/A			N/A


	Years Ended June 30,
	2014			2013			2012
	(Dollars in Thousands)
Net periodic pension expense:
Interest cost	$	154		$	143		$	162
Amortization of net actuarial loss		37			50			10


	$	191		$	193		$	172

Valuation assumptions:
Discount rate		5.00	%		4.25	%		5.75	%
Salary increase rate		N/A			N/A			N/A

It is estimated that contributions of approximately $225,000 will be made during the year ending June 30, 2015.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


Years Ending June 30:	(In Thousands)
2015		225
2016		227
2017		229
2018		230
2019		232
2020-2024		1,157

In April 2007, the Board of Directors of the Bank approved, effective July 1, 2007, “freezing” all future benefit accruals under the BEP related to the Bank’s defined benefit pension plan.

At June 30, 2014 and 2013, unrecognized net loss of $777,000 and $1,032,000, respectively, was included in accumulated other comprehensive income. For the fiscal year ending June 30, 2015, $47,000 of the unrecognized net loss is expected to be recognized as a component of net periodic pension cost.

F-81

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Postretirement Welfare Plan

The Bank has an unfunded postretirement group term life insurance plan covering all eligible employees. The benefits are based on age and years of service. During the years ended June 30, 2014, 2013 and 2012, contributions and benefits paid totaled $6,000, $5,000 and $5,000, respectively.

The following tables set forth the accrued accumulated postretirement benefit obligation and the net periodic postretirement benefit cost:


	June 30,
	2014			2013
	(Dollars in Thousands)

Change in benefit obligation:
Benefit obligation - beginning	$	1,043		$	655
Service cost		54			62
Interest cost		45			40
Actuarial (gain) loss		(144	)		291
Premiums/claims paid		(6	)		(5	)


Benefit obligation - ending	$	992		$	1,043


Change in plan assets:
Fair value of assets - beginning	$	—		$	—
Contributions		6			5
Premiums/claims paid		(6	)		(5	)


Fair value of assets - ending	$	—		$	—


Reconciliation of funded status:
Accumulated benefit obligation	$	(992	)	$	(1,043	)
Fair value of assets		—			—


Accrued postretirement benefit cost included in other liabilities	$	(992	)	$	(1,043	)


Valuation assumptions:
Discount rate		4.50	%		5.00	%
Salary increase rate		3.25	%		3.25	%

F-82

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Postretirement Welfare Plan (continued)


	Years Ended June 30,
	2014			2013			2012
	(Dollars in Thousands)

Net periodic postretirement benefit cost:
Service cost	$	54		$	62		$	23
Interest cost		45			40			34
Amortization of past service liability		—			—			3
Amortization of unrecognized loss (gain)		—			4			(12	)


	$	99		$	106		$	48


Valuation assumptions:
Discount rate		5.00	%		4.25	%		5.75	%
Salary increase rate		3.25	%		3.25	%		3.25	%

It is estimated that contributions of approximately $9,000 will be made during the year ending June 30, 2015.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


Years Ending June 30:	(In Thousands)
2015		9
2016		11
2017		12
2018		14
2019		16
2020-2024		106

At June 30, 2014 and 2013, unrecognized net gain (loss) of $18,000 and $(126,000), respectively, were included in accumulated other comprehensive income. For the fiscal year ending June 30, 2015, $-0- of unrecognized net gain is expected to be recognized as a component of net periodic postretirement benefit cost.

F-83

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Directors’ Consultation and Retirement Plan (“DCRP”)

The Bank has an unfunded retirement plan for non-employee directors. The benefits are payable based on term of service as a director. During each of the years ended June 30, 2014, 2013 and 2012, contributions and benefits paid totaled $60,000, $98,000 and $117,000, respectively.

The following table sets forth the DCRP’s funded status and components of net periodic cost:


	June 30,
	2014			2013
	(Dollars in Thousands)

Change in benefit obligation:
Projected benefit obligation - beginning	$	3,201		$	2,761
Service cost		147			168
Interest cost		136			125
Actuarial (gain) loss		(441	)		245
Benefit payments		(60	)		(98	)


Projected benefit obligation - ending	$	2,983		$	3,201


Change in plan assets:
Fair value of assets - beginning	$	—		$	—
Contributions		60			98
Benefit payments		(60	)		(98	)


Fair value of assets - ending	$	—		$	—


Reconciliation of funded status:
Accumulated benefit obligation	$	(2,524	)	$	(2,278	)


Projected benefit obligation	$	(2,983	)	$	(3,201	)
Fair value of assets		—			—


Accrued cost included in other liabilities	$	(2,983	)	$	(3,201	)


Valuation assumptions:
Discount rate		4.50	%		5.00	%
Fee increase rate		3.25	%		3.25	%

F-84

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Directors’ Consultation and Retirement Plan (“DCRP”) (continued)


	Years Ended June 30,
	2014			2013			2012
	(Dollars in Thousands)

Net periodic plan cost:
Service cost	$	147		$	168		$	131
Interest cost		136			125			146
Amortization of unrecognized gain		(39	)		—			(23	)
Amortization of past service liability		46			48			61


	$	290		$	341		$	315


Valuation assumptions:
Discount rate		5.00	%		4.25	%		5.75	%
Fee increase rate		3.25	%		3.25	%		3.25	%

It is estimated that contributions of approximately $80,000 will be made during the year ending June 30, 2015.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


Years Ending June 30:	(In Thousands)
2015		80
2016		101
2017		123
2018		146
2019		169
2020-2024		1,137

At June 30, 2014 and 2013, unrecognized net gain of $661,000 and $259,000, respectively, and unrecognized past service cost of $108,000 and $154,000, respectively, were included in accumulated other comprehensive income. For the fiscal year ending June 30, 2015, $18,000 of unrecognized gain and $46,000 of unrecognized past service cost are expected to be recognized as a component of net periodic plan cost.

F-85

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Stock Compensation Plans

The Company has two stock-related compensation plans: stock options and restricted stock awards. The plans authorized up to 3,564,137 shares as stock option grants and 1,425,655 shares as restricted stock awards. At June 30, 2014, there were 392,897 shares remaining available for future stock option grants and 18,959 shares remaining available for future restricted stock awards under the plans.

Stock option grants generally vest over a five-year service period and have a contractual maturity of ten years. The Company recognizes compensation expense for the fair values of these grants, which have graded vesting, on a straight-line basis over the requisite service period of the grants.

The Company granted 185,000 options during the year ended June 30, 2014. No options were granted during the years ended June 30, 2013 and 2012.

Management used the following assumptions to estimate the fair value of the options granted during the year ended June 30, 2014:


Weighted average risk-free interest rate	2.17	%
Expected dividend yield	2.00	%
Weighted average volatility factors of the expected market price of the Company’s stock	33.14	%
Weighted average expected life of the options	6.5 years

The weighted average fair value of stock options granted during the year ended June 30, 2014 was $4.30 per option.

Restricted stock awards generally vest in full after five years. The Company recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period of five years.

The Company awarded 54,500 shares of restricted stock during the year ended June 30, 2014. There were no restricted stock awards granted during the years ended June 30, 2013 and 2012.

During the years ended June 30, 2014, 2013 and 2012, the Company recorded $289,000, $209,000 and $209,000, respectively, of share-based compensation expense, comprised of stock option expense of $81,000, $41,000 and $41,000, respectively, and restricted stock expense of $208,000, $168,000 and $168,000, respectively.

During the years ended June 30, 2014, 2013 and 2012, the income tax benefit attributed to non-qualified stock options expense was approximately $1,000, $-0- and $-0-, respectively, and attributed to restricted stock expense was approximately $85,000, $68,000 and $68,000, respectively.

F-86

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16 – Benefit Plans (continued)

Stock Compensation Plans (continued)

The following is a summary of the Company’s stock option activity and related information for its option plans for the year ended June 30, 2014:


	Options			Weighted Average Exercise Price		Range of Prices	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	(In Thousands)							(In Thousands)

Outstanding at June 30, 2013		3,133		$	12.26	$10.16 - $12.71	2.5 years
Granted		185			14.79	14.79
Exercised		(118	)		12.71	12.71
Forfeited		(165	)		12.71	12.71

Outstanding at June 30, 2014		3,035		$	12.37	$10.16 - $14.79	2.0 years	$	9,034


Exercisable at June 30, 2014		2,824		$	12.24	$10.16 - $12.71	1.5 years	$	8,795

The Company generally utilizes treasury stock to issue shares upon the exercise of vested options. A total of 117,618 vested options with an aggregate intrinsic value of $256,000 were exercised during the fiscal year ended June 30, 2014 with all such shares being issued from treasury stock carrying an average cost of $11.48 per share. There were no vested options exercised during the years ended June 30, 2013 and 2012. As of June 30, 2014, the Company has 6,513,722 shares of treasury stock.

The cash proceeds from stock options exercises during the year ended June 30, 2014 totaled approximately $1.5 million. A portion of such exercises represented disqualifying dispositions of incentive stock options for which the Company recognized $98,000 in income tax benefit.

Expected future compensation expense relating to the 211,000 non-exercisable options outstanding as of June 30, 2014 is $829,000 over a weighted average period of 4.39 years.

The following is a summary of the status of the Company’s non-vested restricted share awards as of June 30, 2014 and changes during the year ended June 30, 2014:


	Restricted Shares			Weighted Average Grant Date Fair Value
	(In Thousands)

Non-vested at June 30, 2013		49		$	10.16
Awarded		54		$	14.79
Vested		(16	)	$	10.16

Non-vested at June 30, 2014		87		$	13.04

During the years ended June 30, 2014, 2013 and 2012, the total fair value of vested restricted shares were $244,000, $166,000 and $160,000, respectively. Expected future compensation expense relating to the 87,500 non-vested restricted shares at June 30, 2014 is $1,059,000 over a weighted average period of 3.62 years.

F-87

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17 – Stockholders’ Equity and Regulatory Capital

Federal banking regulators impose various restrictions or requirements on the ability of savings institutions to make capital distributions, including cash dividends. A savings institution that is a subsidiary of a savings and loan holding company, such as the Bank, must file an application or a notice with federal banking regulators at least thirty days before making a capital distribution. A savings institution must file an application for prior approval of a capital distribution if: (i) it is not eligible for expedited treatment under the applications processing rules of federal banking regulators; (ii) the total amount of all capital distributions, including the proposed capital distribution, for the applicable calendar year would exceed an amount equal to the savings institution’s net income for that year to date plus the institution’s retained net income for the preceding two years; (iii) it would not adequately be capitalized after the capital distribution; or (iv) the distribution would violate an agreement with federal banking regulators or applicable regulations.

During the fiscal years ended June 30, 2014 and 2012, applications for capital distributions from the Bank to the Company were approved by federal banking regulators in the amounts of $5,000,000 and $6,000,000, respectively, which were paid by the Bank to the Company in September 2013 and May 2013, respectively. No capital distributions from the Bank to the Company were initiated during the fiscal year ended June 30, 2013.

Federal banking regulators may disapprove a notice or deny an application for a capital distribution if: (i) the savings institution would be undercapitalized following the capital distribution; (ii) the proposed capital distribution raises safety and soundness concerns; or (iii) the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

The Bank is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to adjusted total assets (as defined). The following tables present information regarding the Bank’s regulatory capital levels at the dates presented.

F-88

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17 – Stockholders’ Equity and Regulatory Capital (continued)

Actual

For Capital Adequacy
Purposes

To be Well Capitalized
under Prompt
Corrective Action
Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollars in Thousands)

As of June 30, 2014:

Total capital (to risk-weighted assets)

376,343

20.45

$147,232

8.00

$184,040

10.00

Tier 1 capital (to risk-weighted assets)

363,956

19.78

73,616

4.00

110,424

6.00

Core (Tier 1) capital (to adjusted total assets)

363,956

10.75

135,420

4.00

169,275

5.00

Tangible capital (to adjusted total assets)

363,956

10.75

50,783

1.50

—

As of June 30, 2013:

Total capital (to risk-weighted assets)

353,386

21.77

$129,850

8.00

$162,313

10.00

Tier 1 capital (to risk-weighted assets)

342,490

21.10

64,925

4.00

97,388

6.00

Core (Tier 1) capital (to adjusted total assets)

342,490

11.32

121,054

4.00

151,317

5.00

Tangible capital (to adjusted total assets)

342,490

11.32

45,395

1.50

—

Based upon most recent notification from federal banking regulators dated November 12, 2013 the Bank was categorized as well capitalized as of September 30, 2013, under the regulatory framework for prompt corrective action. There are no conditions existing or events which have occurred since notification that management believes have changed the Bank’s category.

F-89

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 18 – Income Taxes

Retained earnings at June 30, 2014, includes approximately $30.5 million of bad debt allowance, pursuant to the IRC, for which income taxes have not been provided. If such amount is used for purposes other than to absorb bad debts, including distributions in liquidation, it will be subject to income tax at the then current rate.

The components of income taxes are as follows:


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Current income tax expense:
Federal income	$	3,196		$	1,629		$	2,210
State income		938			343			470

		4,134			1,972			2,680


Deferred income tax expense:
Federal		49			411			(24	)
State		122			102			120

		171			513			96


Valuation allowance		(88	)		(235	)		—

	$	4,217		$	2,250		$	2,776

The following table presents a reconciliation between the reported income taxes and the income taxes which would be computed by applying the normal federal income tax rate of 35% to income before income taxes for the years ended June 30, 2014, 2013 and 2012:


	Years Ended June 30,
	2014			2013			2012
	(Dollar in Thousands)

Federal income tax expense at statutory rate	$	5,042		$	3,065		$	2,749
(Reductions) increases in income taxes resulting from:
Tax exempt interest		(635	)		(142	)		(21	)
New Jersey state tax, net of federal income tax effect		632			284			389
Incentive stock options compensation expense		28			15			15
Income from BOLI		(959	)		(680	)		(250	)
Other items, net		197			(66	)		(106	)


		4,305			2,476			2,776


Valuation allowance		(88	)		(226	)		—


Total income tax expense	$	4,217		$	2,250		$	2,776


Effective income tax rate		29.27	%		25.70	%		35.35	%

The effective income tax rate represents total income tax expense divided by income before income taxes.

F-90

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 18 – Income Taxes (continued)

As a result of a redemption-in-kind transaction during the year ended June 30, 2009, the Company incurred a realized capital loss which was partially utilized as a capital loss carry back against capital gains in the three preceding years. As of June 30, 2010, the Company established a deferred tax asset for the remaining capital loss carry forward. Since it was not currently more likely than not that the deferred tax asset related to incurred capital losses would be realized, the Company established a valuation allowance thereon during the year ended June 30, 2010. The Company utilized a portion of the federal capital loss carryover with a capital gain for the year ended June 30, 2013 which decreased the related valuation allowance. As of June 30, 2014, the capital loss carryover had expired resulting in the write-off of the associated deferred tax asset against the remaining valuation allowance.

During the years ended June 30, 2014 and 2013, the Company maintained an additional valuation allowance against the deferred tax asset arising from the portion of the unrealized losses on securities available for sale that would represent capital losses if such losses were to be realized.

The tax effects of existing temporary differences that give rise to deferred income tax assets and liabilities are as follows:


	June 30,
	2014			2013
	(In Thousands)
Deferred income tax assets:
Purchase accounting	$	615		$	920
Accumulated other comprehensive income
Defined benefit plans		84			430
Unrealized loss on securities available for sale		—			2,928
Unrealized loss on securities available for sale transferred to held to maturity		404			—
Derivatives		1,430			—
Allowance for loan losses		5,060			4,451
Benefit plans		2,816			2,709
Compensation		239			—
Stock based compensation		3,255			3,320
Capital loss carryover		—			88
Uncollected interest		2,431			2,290
Depreciation		928			747
Other		809			705

		18,071			18,588
Valuation allowance		(134	)		(995	)

		17,937			17,593

Deferred income tax liabilities:
Deferred costs		815			617
Goodwill		6,198			5,716
Accumulated other comprehensive income
Unrealized gain on securities available for sale		458			—
Derivatives		—			1,269
Other		152			209

		7,623			7,811

Net deferred income tax asset	$	10,314		$	9,782

F-91

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 19 – Commitments

The Bank has non-cancelable operating leases for branch offices. The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of June 30, 2014:


Years Ending June 30:	(In Thousands)
2015	$	1,761
2016		1,629
2017		1,455
2018		1,126
2019		806
Thereafter		3,261


Total Minimum Payments Required	$	10,038

The following schedule shows the composition of total rental expense for all operating leases:


	June 30,
	2014		2013		2012
	(In Thousands)

Minimum rentals	$	1,716	$	1,629	$	1,520

The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The outstanding loan commitments are as follows:


	June 30,
	2014		2013
	(In Thousands)

Mortgage loans	$	27,452	$	58,448
Home equity loans		1,374		1,692
Business loans		350		500
Construction loans in process		6,385		11,100
Consumer home equity and overdraft lines of credit		35,765		37,972
Commercial lines of credit		24,070		31,434


	$	95,396	$	141,146

F-92

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 19 – Commitments (continued)

At June 30, 2014, the outstanding mortgage loan commitments included $20.0 million for fixed-rate loans with interest rates ranging from 3.00% to 6.00% and $935,000 for adjustable-rate loans with initial rates of 6.00%. The remaining $6.5 million of mortgage loan commitments represent the remaining balance of an outstanding blanket commitment with a third party loan originator to purchase newly originated residential mortgage loans whose rates may either be fixed or adjustable-rate. Home equity loan commitments include $1.4 million for fixed-rate loans with interest rates ranging from 3.125% to 6.00%. Business loan commitments total $350,000 representing funding commitments on floating rate loans with initial rates ranging from 3.75% to 5.50%. Undisbursed funds from home equity and business lines of credit are adjustable-rate loans with interest rates ranging from 1.25% below to 5.00% above the prime rate published in the Wall Street Journal. Lines of credit providing overdraft protection for checking accounts are adjustable-rate loans with interest rates ranging from 3.50% to 4.00% above prime.

At June 30, 2013, the outstanding mortgage loan commitments included $57.2 million for fixed-rate loans with interest rates ranging from 2.75% to 5.50% and $1.0 million for adjustable-rate loans with initial rates ranging from 4.25% to 6.0%. The remaining $185,000 of mortgage loan commitments represent the remaining balance of an outstanding blanket commitment with a third party loan originator to purchase newly originated residential mortgage loans whose rates may either be fixed or adjustable-rate. Home equity loan commitments include $1.7 million for fixed rate loans with interest rates ranging from 3.25% to 6.00%. Business loan commitments total $500,000 representing funding commitments on floating rate loans with initial rates ranging from 4.25% to 6.00%. Undisbursed funds from home equity and business lines of credit are adjustable-rate loans with interest rates ranging from 1.25% below to 3.00% above the prime rate published in the Wall Street Journal. Lines of credit providing overdraft protection for checking accounts are adjustable-rate loans with interest rates ranging from 3.5% to 5.00% above prime.

In addition to the commitments noted above, the Bank is party to standby letters of credit through which it guarantees certain specific business obligations of its commercial customers. The balance of standby letters of credit at June 30, 2014 and 2013 were approximately $519,000 and $1,791,000, respectively.

The Company and subsidiaries are also party to litigation which arises primarily in the ordinary course of business. In the opinion of management, the ultimate disposition of such litigation should not have a material adverse effect on the consolidated financial position of the Company.

F-93

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments

The guidance on fair value measurement establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy describes three levels of inputs that may be used to measure fair value:


Level 1:		Quoted prices in active markets for identical assets or liabilities.

Level 2:		Observable inputs other than Level 1 prices, such as quoted for similar assets or liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3:		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

In addition, the guidance requires the Company to disclose the fair value for assets and liabilities on both a recurring and non-recurring basis.

F-94

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)

Those assets and liabilities measured at fair value on a recurring basis are summarized below:

Fair Value Measurements Using

Quoted Prices in
Active Markets
for Identical
Assets (Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs (Level 3)

Balance

(In Thousands)

At June 30, 2014:

Debt securities available for sale:

U.S. agency securities

—

4,205

—

4,205

Obligations of state and political subdivisions

—

26,773

—

26,773

Asset-backed securities

—

87,316

—

87,316

Collateralized loan obligations

—

119,572

—

119,572

Corporate bonds

—

162,234

—

162,234

Trust preferred securities

—

7,798

—

7,798

Total debt securities

—

407,898

—

407,898

Mortgage-backed securities available for sale:

Collateralized mortgage obligations

—

83,270

—

83,270

Residential pass-through securities

—

353,953

—

353,953

Total mortgage-backed securities

—

437,223

—

437,223

Total securities available for sale

—

845,121

—

845,121

Derivative instruments:

Interest rate swaps

—

(2,714

)

—

(2,714

)

Interest rate caps

—

1,739

—

1,739

Total derivatives

—

(975

)

—

(975

)

F-95

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)


	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
	(In Thousands)
At June 30, 2013:

Debt securities available for sale:

U.S. agency securities	$	—	$	5,015	$	—	$	5,015
Obligations of state and political subdivisions		—		25,307		—		25,307
Asset-backed securities		—		24,798		—		24,798
Collateralized loan obligations		—		78,486		—		78,486
Corporate bonds		—		159,192		—		159,192
Trust preferred securities		—		6,324		1,000		7,324


Total debt securities		—		299,122		1,000		300,122


Mortgage-backed securities available for sale:

Collateralized mortgage obligations		—		62,482		—		62,482
Residential pass-through securities		—		628,154		—		628,154
Commercial pass-through securities		—		90,016		—		90,016

Total mortgage-backed securities		—		780,652		—		780,652

Total securities available for sale	$	—	$	1,079,774	$	1,000	$	1,080,774


Derivative instruments:

Interest rate swaps	$	—	$	2,837	$	—	$	2,837

Interest rate caps		—		2,808		—		2,808


Total derivatives	$	—	$	5,645	$	—	$	5,645

The fair values of securities available for sale (carried at fair value) or held to maturity (carried at amortized cost) are primarily determined by obtaining matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

F-96

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)

At June 30, 2014, the Company held a trust preferred security with a par value of $1.0 million, a de-facto obligation of Mercantil Commercebank Florida Bancorp, Inc. which is a part of a $40.0 million private placement with a coupon of 8.90% issued in 1998 and maturing in 2028. The security’s value at June 30, 2014 was determined using the matrix pricing (Level 2 inputs) noted above. However, the security’s fair value had previously been determined by using Level 3 inputs because management had been unable to obtain a market quote due to a lack of trading activity for this security. Consequently, the security’s fair value as reported at June 30, 2013 was based upon the present value of its expected future cash flows assuming the security continued to meet all its payment obligations and utilizing a discount rate based upon the security’s contractual interest rate.

The Company has contracted with a third party vendor to provide periodic valuations for its interest rate derivatives to determine the fair value of its interest rate caps and swaps. The vendor utilizes standard valuation methodologies applicable to interest rate derivatives such as discounted cash flow analysis and extensions of the Black-Scholes model. Such valuations are based upon readily observable market data and are therefore considered Level 2 valuations by the Company.

For the year ended June 30, 2014, there were no purchases, sales, issuances, or settlements of assets or liabilities whose fair values are determined based upon Level 3 inputs on a recurring basis. For that same period, there were no transfers of assets or liabilities within the fair valuation measurement hierarchy between Level 1 and Level 2 inputs.

F-97

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)

Those assets and liabilities measured at fair value on a non-recurring basis are summarized below:


	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance
	(In Thousands)
At June 30, 2014
Impaired loans	$	—	$	—	$	10,387	$	10,387

At June 30, 2013
Impaired loans	$	—	$	—	$	14,603	$	14,603
Real estate owned		—		—		229		229

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value:

Quantitative Information about Level 3 Fair Value Measurements

Fair
Value
Estimate

Valuation

Techniques

Unobservable
Input

Range

Weighted
Average

(In
Thousands)

At June 30, 2014

Impaired loans

10,387

Market valuation of underlying collateral ⁽¹⁾

Direct disposal
costs ⁽³⁾

6% - 10%

7.10

At June 30, 2013

Impaired loans

14,603

Market valuation of underlying collateral ⁽¹⁾

Direct disposal
costs ⁽³⁾

6% - 10%

7.21

Real estate owned

229

Market valuation property ⁽²⁾

Direct disposal
costs ⁽³⁾

6% - 10%

8.51

⁽¹⁾	The fair value basis of impaired loans is generally determined based on an independent appraisal of the market value of a loan’s underlying collateral.

⁽²⁾	The fair value basis of real estate owned is generally determined based upon the lower of an independent appraisal of the property’s market value or the applicable listing price or contracted sales price.

⁽³⁾

The fair value basis of impaired loans and real estate owned is adjusted to reflect management estimates of disposal costs including, but not necessarily limited to, real estate brokerage commissions and title transfer fees, with such cost estimates generally ranging from 6% to 10% of collateral or property market value.

An impaired loan is evaluated and valued at the time the loan is identified as impaired at the lower of cost or market value. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Market value is measured based on the value of the collateral securing the loan and is classified at a Level 3 in the fair value hierarchy. Once a loan is identified as individually impaired, management measures impairment in accordance with the FASB’s guidance on accounting by creditors for impairment of a loan with the fair value estimated using the market value of the collateral reduced by estimated disposal costs. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceeds the recorded investments in such loans. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly.

F-98

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)

At June 30, 2014, impaired loans valued using Level 3 inputs comprised loans with principal balances totaling $12.1 million and valuation allowances of $1.7 million reflecting fair values of $10.4 million. By comparison, at June 30, 2013, impaired loans valued using Level 3 inputs comprised loans with principal balances totaling $16.7 million and valuation allowances of $2.1 million reflecting fair values of $14.6 million.

Once a loan is foreclosed, the fair value of the real estate owned continues to be evaluated based upon the market value of the repossessed real estate originally securing the loan. At June 30, 2014, the Company held no real estate owned whose carrying value was written down utilizing Level 3 inputs during fiscal 2014. By comparison, at June 30, 2013, real estate owned whose carrying value was written down utilizing Level 3 inputs during the year ended June 30, 2013 comprised one property with a fair value totaling $229,000.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments at June 30, 2014 and June 30, 2013:

Cash and Cash Equivalents, Interest Receivable and Interest Payable. The carrying amounts for cash and cash equivalents, interest receivable and interest payable approximate fair value because they mature in three months or less.

Securities. See the discussion presented above concerning assets measured at fair value on a recurring basis.

Loans Receivable. Except for certain impaired loans as previously discussed, the fair value of loans receivable is estimated by discounting the future cash flows, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, of such loans.

FHLB of New York Stock. The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Deposits. The fair value of demand, savings and club accounts is equal to the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated using rates currently offered for deposits of similar remaining maturities. The fair value estimates do not include the benefit that results from the low-cost funding provided by deposit liabilities compared to the cost of borrowing funds in the market.

Advances from FHLB. Fair value is estimated using rates currently offered for advances of similar remaining maturities.

Interest Rate Derivatives. See the discussion presented above concerning assets measured at fair value on a recurring basis.

Commitments. The fair value of commitments to fund credit lines and originate or participate in loans is estimated using fees currently charged to enter into similar agreements taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest and the committed rates. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, is not considered material for disclosure. The contractual amounts of unfunded commitments are presented in Note 19.

F-99

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)

The carrying amounts and fair values of financial instruments are as follows:

Carrying Amount and Fair Value Measurements at
June 30, 2014

Carrying
Amount

Fair Value

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(In Thousands)

Financial assets:

Cash and cash equivalents

135,034

—

Debt securities available for sale

407,898

—

407,898

—

Debt securities held to maturity

216,414

213,472

—

213,472

—

Loans receivable

1,729,084

1,711,972

—

1,711,972

Mortgage-backed securities available for sale

437,223

—

437,223

—

Mortgage-backed securities held to maturity

295,658

293,781

—

293,781

—

FHLB stock

25,990

—

25,990

Interest receivable

9,013

—

Financial liabilities:

Deposits ^(A)

2,479,941

2,490,933

1,442,723

—

1,048,210

Borrowings

512,257

521,839

—

521,839

Interest payable on borrowings

1,001

—

Derivative instruments:

Interest rate swaps

(2,714

)

(2,714

)

—

(2,714

)

—

Interest rate caps

1,739

—

1,739

—

^(A)	Includes accrued interest payable on deposits of $69,000 at June 30, 2014.

F-100

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)


	Carrying Amount and Fair Value Measurements at June 30, 2013
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
					(In Thousands)
Financial assets:
Cash and cash equivalents	$	127,034	$	127,034	$	127,034	$	—	$	—
Debt securities available for sale		300,122		300,122		—		299,122		1,000
Debt securities held to maturity		210,015		202,328		—		202,328		—
Loans receivable		1,349,975		1,359,799		—		—		1,359,799
Mortgage-backed securities available for sale		780,652		780,652		—		780,652		—
Mortgage-backed securities held to maturity		101,114		96,447		—		96,447		—
FHLB stock		15,666		15,666		—		—		15,666
Interest receivable		8,028		8,028		8,028		—		—

Financial liabilities:
Deposits ^(A)		2,370,508		2,376,290		1,389,044		—		987,246
Borrowings		287,695		295,914		—		—		295,914
Interest payable on borrowings		938		938		938		—		—

Derivative instruments:
Interest rate swaps		2,837		2,837		—		2,837		—
Interest rate caps		2,808		2,808		—		2,808		—

^(A)	Includes accrued interest payable on deposits of $47,000 at June 30, 2013.

Limitations. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to value anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets and liabilities include premises and equipment, and advances from borrowers for taxes and insurance. In addition, the ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

F-101

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 20 – Fair Value of Financial Instruments (continued)

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies introduces a greater degree of subjectivity to these estimated fair values.

Note 21 – Comprehensive Income

The components of accumulated other comprehensive income (loss) included in stockholders’ equity are as follows:


	June 30,
	2014			2013
	(In Thousands)

Net unrealized loss on securities available for sale	$	1,091		$	(7,375	)
Tax effect		(592	)		2,021

Net of tax amount		499			(5,354	)


Net unrealized loss on securities available for sale transferred to held to maturity		(990	)		—
Tax effect		404			—

Net of tax amount		(586	)		—


Fair value adjustments on derivatives		(3,501	)		3,107
Tax effect		1,430			(1,269	)

Net of tax amount		(2,071	)		1,838


Benefit plan adjustments		(206	)		(1,053	)
Tax effect		84			430

Net of tax amount		(122	)		(623	)


Accumulated other comprehensive loss	$	(2,280	)	$	(4,139	)

F-102

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 21 – Comprehensive Income (continued)

Other comprehensive income (loss) and related tax effects are presented in the following table:


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Realized gain on sale of securities available for sale ⁽¹⁾	$	(1,523	)	$	(10,433	)	$	(53	)

Unrealized holding gain (loss) on securities available for sale arising during the period		9,989			(36,662	)		13,405

Unrealized holding loss on securities available for sale transferred to held to maturity		(1,009	)		—			—

Amortization of unrealized holding loss on securities available for sale transferred to held to maturity ⁽²⁾		19			—			—


Fair value adjustments on derivatives		(6,608	)		3,107			—


Benefit plans:
Amortization of:
Actuarial (gain) loss ⁽³⁾		(2	)		54			(25	)
Past service cost ⁽³⁾		46			48			64
New actuarial gain (loss)		803			(1,186	)		284

Net change in benefit plans accrued expense		847			(1,084	)		323


Other comprehensive income (loss) before taxes		1,715			(45,072	)		13,675

Tax effect		144			17,337			(5,511	)


Other comprehensive income (loss)	$	1,859		$	(27,735	)	$	8,164

(1)	Represents amount reclassified out of accumulated other comprehensive income and included in gain on sale of securities on the consolidated statements of income.

(2)	Represents amounts reclassified out of accumulated other comprehensive income and included in interest income on taxable securities.

(3)	Represents amounts reclassified out of accumulated other comprehensive income and included in the computation of net periodic pension expense. See Note 16 – Benefit Plans for additional information.

F-103

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 22 – Parent Only Financial Information

Kearny Financial Corp. operates its wholly owned subsidiary Kearny Federal Savings Bank and the Bank’s wholly-owned subsidiaries. The consolidated earnings of the subsidiaries are recognized by the Company using the equity method of accounting. Accordingly, the consolidated earnings of the subsidiaries are recorded as increases in the Company’s investment in the subsidiaries. The following are the condensed financial statements for Kearny Financial Corp. (Parent Company only) as June 30, 2014 and 2013, and for each of the years in the three-year period ended June 30, 2014.

CONDENSED STATEMENTS OF FINANCIAL CONDITION


	June 30,
	2014		2013
	(In Thousands)

Assets
Cash and amounts due from depository institutions	$	17,413	$	13,524
Loans receivable		5,065		6,726
Investment in subsidiaries		472,110		447,498
Other assets		154		62


	$	494,742	$	467,810


Liabilities and Stockholders’ Equity
Other liabilities	$	66	$	103
Stockholders’ equity		494,676		467,707


	$	494,742	$	467,810

F-104

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 22 – Parent Only Financial Information (continued)

CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Dividends from subsidiary	$	5,000		$	—		$	6,000
Interest income		341			450			566
Equity in undistributed earnings (loss) of subsidiaries		5,398			6,550			(864	)
Gain on sale of securities		—			38			—

		10,739			7,038			5,702


Directors’ compensation		123			117			124
Other expenses		539			436			526

		662			553			650


Income before Income Taxes		10,077			6,485			5,052

Income tax benefit		(111	)		(21	)		(26	)


Net income	$	10,188		$	6,506		$	5,078


Comprehensive income (loss)	$	12,047		$	(21,229	)	$	13,242

CONDENSED STATEMENTS OF CASH FLOWS


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Cash Flows from Operating Activities
Net income	$	10,188		$	6,506		$	5,078
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed (earnings) loss of subsidiaries		(5,398	)		(6,550	)		864
Amortization of premiums		—			8			14
Realized gain on sale of mortgage-backed securities available for sale		—			(38	)		—
Decrease in interest receivable		—			5			2
Payments received on intercompany liabilities		231			174			12,469
(Increase) decrease in other assets		(116	)		52			41
(Decrease) increase in other liabilities		(37	)		22			1

Net Cash Provided by Operating Activities	$	4,868		$	179		$	18,469

F-105

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 22 – Parent Only Financial Information (continued)

CONDENSED STATEMENTS OF CASH FLOWS


	Years Ended June 30,
	2014			2013			2012
	(In Thousands)

Cash Flows from Investing Activities
Repayment of loan to ESOP	$	1,661		$	1,573		$	1,489
Principal repayments on mortgage-backed securities available for sale		—			424			697
Proceeds from sale of mortgage-backed securities available for sale		—			667			—
Return of subsidiary investment		—			—			9

Net Cash Provided by Investing Activities		1,661			2,664			2,195


Cash Flows from Financing Activities
Dividends paid to minority stockholders of Kearny Financial Corp.		—			—			(3,617	)
Purchase of common stock of Kearny Financial Corp. for treasury		(4,135	)		(4,319	)		(8,464	)
Treasury stock reissued		1,495			—			—
Dividends contributed for payment of ESOP loan		—			(2	)		160
Dividends paid on vested ESOP distribution		—			—			(1	)

Net Cash Used in Financing Activities		(2,640	)		(4,321	)		(11,922	)


Net Increase (Decrease) in Cash and Cash Equivalents		3,889			(1,478	)		8,742

Cash and Cash Equivalents - Beginning		13,524			15,002			6,260

Cash and Cash Equivalents - Ending	$	17,413		$	13,524		$	15,002

F-106

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 23 – Net Income per Common Share (EPS)

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

Year Ended June 30, 2014

Income
(Numerator)

Shares
(Denominator)

Per Share
Amount

(In Thousands, Except Per Share Data)

Net income

10,188

Basic earnings per share, income available to common stockholders

10,188

65,796

0.16

Effect of dilutive securities:

Stock options

—

Diluted earnings per share

10,188

65,836

0.16


	Year Ended June 30, 2013
	Income (Numerator)		Shares (Denominator)		Per Share Amount
	(In Thousands, Except Per Share Data)

Net income	$	6,506

Basic earnings per share, income available to common stockholders	$	6,506		66,152	$	0.10

Effect of dilutive securities:
Stock options		—		—


Diluted earnings per share	$	6,506		66,152	$	0.10


	Year Ended June 30, 2012
	Income (Numerator)		Shares (Denominator)		Per Share Amount
	(In Thousands, Except Per Share Data)

Net income	$	5,078

Basic earnings per share, income available to common stockholders	$	5,078		66,495	$	0.08

Effect of dilutive securities:
Stock options		—		—


Diluted earnings per share	$	5,078		66,495	$	0.08

During the years ended June 30, 2014, 2013 and 2012, the average number of options which were anti-dilutive totaled approximately 1,910,000, 3,193,000 and 3,221,000, respectively.

F-107

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 24 – Quarterly Results of Operations (Unaudited)

The following is a condensed summary of quarterly results of operations for the years ended June 30, 2014 and 2013:

Year Ended June 30, 2014

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

(In Thousands, Except Per Share Data)

Interest income

23,300

23,933

23,956

24,630

Interest expense

5,104

5,458

5,475

5,961

Net Interest Income

18,196

18,475

18,481

18,669

Provision for loan losses

1,168

559

880

774

Net Interest Income after Provision for Loan Losses

17,028

17,916

17,601

17,895

Non-interest income

1,861

1,929

2,385

1,948

Non-interest expenses

15,282

15,557

17,515

15,804

Income before Income Taxes

3,607

4,288

2,471

4,039

Income taxes

1,021

1,301

685

1,210

Net Income

2,586

2,987

1,786

2,829

Net income per common share:

Basic

0.04

0.05

0.03

0.04

Diluted

0.04

0.05

0.03

0.04

Weighted Average Number of Common Shares Outstanding:

Basic

65,936

65,767

65,684

65,796

Diluted

65,936

65,767

65,782

66,228

Dividends declared per common share

0.00

F-108

Kearny Financial Corp. and Subsidiaries

Notes to Consolidated Financial Statements

Note 24 – Quarterly Results of Operations (Unaudited) (continued)


	Year Ended June 30, 2013
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In Thousands, Except Per Share Data)

Interest income	$	23,206	$	21,802	$	21,644	$	21,606
Interest expense		6,331		5,808		5,298		4,564


Net Interest Income		16,875		15,994		16,346		17,042

Provision for loan losses		339		1,393		1,407		1,325


Net Interest Income after Provision for Loan Losses		16,536		14,601		14,939		15,717

Non-interest income		1,200		2,285		11,070		1,833
Non-interest expenses		15,273		15,191		23,942		15,019


Income before Income Taxes		2,463		1,695		2,067		2,531

Income taxes		803		518		323		606


Net Income	$	1,660	$	1,177	$	1,744	$	1,925


Net income per common share:
Basic and diluted	$	0.03	$	0.02	$	0.03	$	0.03


Weighted Average Number of Common Shares Outstanding:
Basic and diluted		66,256		66,188		66,141		66,019


Dividends declared per common share	$	0.00	$	0.00	$	0.00	$	0.00

F-109

No person has been authorized to give any information or to make any representation other than as contained in this prospectus and, if given or made, such other information or representation must not be relied upon as having been authorized by Kearny Financial Corp. or Kearny Federal Savings Bank. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any jurisdiction in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of this prospectus nor any sale hereunder shall under any circumstances create any implication that there has been no change in the affairs of Kearny Financial Corp. or Kearny Federal Savings Bank since any of the dates as of which information is furnished herein or since the date hereof.

Up to 83,375,000 Shares

KEARNY FINANCIAL CORP.

(Proposed Holding Company for

Kearny Federal Savings Bank)

COMMON STOCK

par value $0.01 per share

PROSPECTUS

Sandler O’Neill + Partners, L.P.

[Prospectus Date]

These securities are not deposits or accounts and are not federally insured or guaranteed.

Until , 2014, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

[Existing Logo of Kearny Financial Corp.]

Dear Fellow Stockholder:

Kearny Financial Corp. is soliciting stockholder votes regarding the mutual-to-stock conversion of Kearny MHC. Pursuant to a Plan of Conversion and Reorganization, our organization will convert from a partially public company to a fully public company by selling a minimum of 61,625,000 shares of common stock of a newly formed company, also named Kearny Financial Corp. (“New Kearny”), which will become the holding company for Kearny Bank.

The Proxy Vote

We have received regulatory approval of the application that includes the Plan of Conversion and Reorganization. However, we must also receive the approval of our stockholders. Enclosed is a proxy statement/prospectus describing the proposals being presented at our special meeting of stockholders. Please promptly vote the enclosed proxy card. Our Board of Directors urges you to vote “FOR” the approval of the Plan of Conversion and Reorganization, “FOR” the establishment and funding of KearnyBank Foundation and “FOR” the other matters being presented at the special meeting.

The Exchange

At the conclusion of the conversion, your shares of Kearny Financial Corp. common stock will be exchanged for shares of New Kearny common stock. The number of new shares that you receive will be based on an exchange ratio that is described in the proxy statement/prospectus. Shortly after the completion of the conversion, our exchange agent will send a transmittal form to each stockholder of Kearny Financial Corp. who holds stock certificates. The transmittal form explains the procedure to follow to exchange your shares. Please do not deliver your certificate(s) before you receive the transmittal form. Shares of Kearny Financial Corp. that are held in street name (e.g., in a brokerage account) will be converted automatically at the conclusion of the conversion; no action or documentation is required of you.

The Stock Offering

We are offering the shares of common stock of New Kearny for sale at $10.00 per share. The shares are first being offered in a subscription offering to eligible depositors of Kearny Bank, which includes certain former depositors of Atlas Bank, our tax-qualified employee benefit plans, including our employee stock ownership and 401(k) plans, supplemental eligible account holders and other members. If all shares are not subscribed for in the subscription offering, shares would be available in a community offering to Kearny Financial Corp. public stockholders and others not eligible to place orders in the subscription offering. If you may be interested in purchasing shares of our common stock, contact our Stock Information Center at [stock center number] to receive a stock order form and prospectus. The stock offering period is expected to expire on [expiration date] .

If you have any questions, please refer to the Questions & Answers section herein.

We thank you for your support as a stockholder of Kearny Financial Corp.

Sincerely,

Craig L. Montanaro

President and Chief Executive Officer

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. None of the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System, or any state securities regulator has approved or disapproved of these securities or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

PROSPECTUS OF KEARNY FINANCIAL CORP., A MARYLAND CORPORATION

PROXY STATEMENT OF KEARNY FINANCIAL CORP., A FEDERAL CORPORATION

Kearny Bank, which we sometimes refer to in this document as “Kearny Bank,” is converting from the mutual holding company structure to a fully-public stock holding company structure. Currently, Kearny Bank is a wholly-owned subsidiary of Kearny Financial Corp., a federally chartered corporation, which we sometimes refer to in this document as “Kearny-Federal,” and Kearny MHC owns 77.2% of Kearny Financial Corp.’s common stock. The remaining 22.8% of Kearny Financial Corp.’s common stock is owned by public stockholders. As a result of the conversion, a newly formed Maryland corporation named Kearny Financial Corp. (“New Kearny”) will replace Kearny Financial Corp. as the holding company of Kearny Bank. Each share of Kearny Financial Corp. common stock owned by the public will be exchanged for between 1.1855 and 1.6040 shares of common stock of New Kearny, so that immediately after the conversion Kearny Financial Corp.’s existing public stockholders will own the same percentage of New Kearny common stock as they owned of Kearny Financial Corp.’s common stock immediately prior to the conversion, excluding any new shares purchased by them in the offering, the effect of shares issued to the KearnyBank Foundation (the “Charitable Foundation”), as further discussed below, their receipt of cash in lieu of fractional exchange shares and as adjusted to reflect assets held by Kearny MHC. The actual number of shares that you will receive will depend on the percentage of Kearny Financial Corp. common stock held by the public at the completion of the conversion, the final independent appraisal of New Kearny and the number of shares of New Kearny common stock sold in the offering described in the following paragraph. It will not depend on the market price of Kearny Financial Corp. common stock. See “Proposal 1 — Approval of the Plan of Conversion and Reorganization — Share Exchange Ratio” for a discussion of the exchange ratio. Based on the $ per share closing price of Kearny Financial Corp. common stock as of the last trading day prior to the date of this proxy statement/prospectus, unless at least shares of New Kearny common stock are sold in the offering (which is between the and the of the offering range), the initial value of the New Kearny common stock you receive in the share exchange would be less than the market value of the Kearny Financial Corp. common stock you currently own. See “Risk Factors — The market value of New Kearny common stock received in the share exchange may be less than the market value of Kearny Financial Corp. common stock exchanged.”

Concurrently with the exchange offer, we are offering for sale up to 83,375,000 shares of common stock of New Kearny, representing the ownership interest of Kearny MHC in Kearny Financial Corp. We are offering the shares of common stock to eligible depositors of Kearny Bank (which includes certain depositors of Atlas Bank), to Kearny Bank’s tax qualified benefit plans, supplemental eligible account holders and other members, and to the public, including Kearny Financial Corp. stockholders, at a price of $10.00 per share. The conversion of Kearny MHC and the offering and exchange of common stock by New Kearny is referred to herein as the “conversion and offering.” After the conversion and offering are completed, Kearny Bank will be a wholly-owned subsidiary of New Kearny, and 100% of the common stock of New Kearny will be owned by public stockholders. As a result of the conversion and offering, Kearny Financial Corp., the federal corporation, and Kearny MHC will cease to exist.

In connection with the conversion and offering, we also intend to contribute 500,000 shares of common stock and $5.0 million in cash, to the Charitable Foundation. The contribution of cash and shares of common stock will total $10.0 million. “See Proposal 2 — Establishment and Funding of the Charitable Foundation.”

Kearny Financial Corp.’s common stock is currently traded on the Nasdaq Global Select Market under the trading symbol “KRNY,” and we expect New Kearny’s shares of common stock will also trade on the Nasdaq Global Select Market under the symbol “KRNY.”

The conversion and offering cannot be completed unless the stockholders of Kearny Financial Corp. approve the Plan of Conversion and Reorganization of Kearny MHC, which may be referred to herein as the “plan of conversion.” Kearny Financial Corp. is holding a special meeting of stockholders at [meeting location], on [meeting date], at [meeting time], Eastern Time, to consider and vote upon the plan of conversion. We must obtain the affirmative vote of the holders of (i) two-thirds of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders, including shares held by Kearny MHC, and (ii) a majority of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders other than Kearny MHC. Kearny Financial Corp.’s board of directors unanimously recommends that stockholders vote “FOR” the plan of conversion.

The funding of the Charitable Foundation must also be approved by the stockholders of Kearny Financial Corp. at the special meeting of stockholders. We must obtain the affirmative vote of the holders of a majority of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders, and a majority of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders other than Kearny, MHC. However, the completion of the conversion and offering is not dependent upon the approval of the funding of the Charitable Foundation. Kearny Financial Corp.’s board of directors unanimously recommends that stockholders vote “FOR” the funding of the Charitable Foundation.

This document serves as the proxy statement for the special meeting of stockholders of Kearny Financial Corp. and the prospectus for the shares of New Kearny common stock to be issued in exchange for shares of Kearny Financial Corp. common stock. We urge you to read this entire document carefully. You can also obtain information about us from documents that we have filed with the Securities and Exchange Commission and the Board of Governors of the Federal Reserve System. This document does not serve as the prospectus relating to the offering by New Kearny of its shares of common stock in the offering, which is being made pursuant to a separate prospectus. Stockholders of Kearny Financial Corp. are not required to participate in the stock offering.

This proxy statement/prospectus contains information that you should consider in evaluating the plan of conversion. In particular, you should carefully read the section captioned “ Risk Factors ” beginning on page 11 for a discussion of certain risk factors relating to the conversion and offering.

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

None of the Securities and Exchange Commission, the Board of Governors of the Federal Reserve System or any state securities regulator has approved or disapproved of these securities or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

For answers to your questions, please read this proxy statement/prospectus including the Questions and Answers section, beginning on page 1. Questions about voting on the plan of conversion or the Charitable Foundation may be directed to [proxy solicitor], at [proxy solicitor number], Monday through Friday from a.m. to p.m., Eastern Time, and Saturdays from a.m. to p.m., Eastern Time.

The date of this proxy statement/prospectus is [document date], and it is first being mailed to stockholders of Kearny Financial Corp. on or about , 2014.

KEARNY FINANCIAL CORP.

120 Passaic Avenue

Fairfield, New Jersey 07004

(973) 244-4500

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

On [meeting date], Kearny Financial Corp. will hold a special meeting of stockholders at [meeting location]. The meeting will begin at [meeting time], Eastern Time. At the meeting, stockholders will consider and act on the following:

The approval of a plan of conversion and reorganization, whereby Kearny MHC and Kearny Financial Corp., a federal corporation, will convert and reorganize from the mutual holding company structure to the stock holding company structure, as more fully described in the attached proxy statement;

The approval of the establishment and funding of KearnyBank Foundation (the “Charitable Foundation”) with a contribution of 500,000 shares of common stock and $5.0 million in cash, for a total contribution of $10.0 million;

The approval of the adjournment of the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the plan of conversion and reorganization;

The following informational proposals:

Approval of a provision in New Kearny’s articles of incorporation requiring a super-majority vote of stockholders to approve certain amendments to New Kearny’s articles of incorporation;

Approval of a provision in New Kearny’s articles of incorporation requiring a super-majority vote of stockholders to approve stockholder-proposed amendments to New Kearny’s bylaws;

Approval of a provision in New Kearny’s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of New Kearny’s outstanding voting stock; and

Such other business that may properly come before the meeting.

NOTE: The board of directors is not aware of any other business to come before the meeting.

The provisions of New Kearny’s articles of incorporation that are summarized as informational proposals 4 through 6 were approved as part of the process in which our board of directors approved the plan of conversion and reorganization (referred to herein as the “plan of conversion”). These proposals are informational in nature only because the Board of Governors of the Federal Reserve System’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals.

The board of directors has fixed [record date], as the record date for the determination of stockholders entitled to notice of and to vote at the special meeting and at any adjournment or postponement thereof.

Upon written request addressed to the Corporate Secretary of Kearny Financial Corp. at the address given above, stockholders may obtain an additional copy of this proxy statement/prospectus and/or a copy of the plan of conversion. In order to assure timely receipt of the additional copy of the proxy statement/prospectus and/or the plan of conversion, the written request should be received by Kearny Financial Corp. by [request date].

Please complete and sign the enclosed proxy card, which is solicited by the board of directors, and mail it promptly in the enclosed envelope. The proxy will not be used if you attend the meeting and vote in person.

BY ORDER OF THE BOARD OF DIRECTORS

Sharon Jones

Corporate Secretary

Fairfield, New Jersey

[document date]

TABLE OF CONTENTS


QUESTIONS AND ANSWERS FOR STOCKHOLDERS OF KEARNY FINANCIAL CORP. REGARDING THE PLAN OF CONVERSION AND REORGANIZATION			1
SUMMARY			6
RISK FACTORS			11
INFORMATION ABOUT THE SPECIAL MEETING			12
PROPOSAL 1 — APPROVAL OF THE PLAN OF CONVERSION AND REORGANIZATION			15
PROPOSAL 2 — ESTABLISHMENT AND FUNDING OF THE CHARITABLE FOUNDATION			17
PROPOSAL 3 — ADJOURNMENT OF THE SPECIAL MEETING			20
PROPOSALS 4 THROUGH 6 — INFORMATIONAL PROPOSALS RELATED TO THE ARTICLES OF INCORPORATION OF NEW KEARNY.			21
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA			24
FORWARD-LOOKING STATEMENTS			24
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING			24
OUR DIVIDEND POLICY			24
MARKET FOR THE COMMON STOCK			24
HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE			24
CAPITALIZATION			24
PRO FORMA DATA			24
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			24
BUSINESS OF NEW KEARNY			24
BUSINESS OF KEARNY FINANCIAL CORP. AND KEARNY BANK			24
SUPERVISION AND REGULATION			24
TAXATION			24
MANAGEMENT			25
COMPENSATION DISCUSSION AND ANALYSIS			25
COMPENSATION RISK ASSESSMENT			25
BENEFICIAL OWNERSHIP OF COMMON STOCK			25
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS			25
THE CONVERSION AND OFFERING			25
KEARNYBANK FOUNDATION			25
COMPARISON OF STOCKHOLDERS’ RIGHTS FOR EXISTING STOCKHOLDERS OF KEARNY FINANCIAL CORP.			25
RESTRICTIONS ON ACQUISITION OF NEW KEARNY			25
DESCRIPTION OF CAPITAL STOCK OF NEW KEARNY FOLLOWING THE CONVERSION			25
TRANSFER AGENT			25
EXPERTS			25
LEGAL MATTERS			25
CHANGE IN ACCOUNTANTS			26
WHERE YOU CAN FIND ADDITIONAL INFORMATION			26
STOCKHOLDER PROPOSALS			26
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING			26
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING			27
OTHER MATTERS			27
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1

QUESTIONS AND ANSWERS

FOR STOCKHOLDERS OF KEARNY FINANCIAL CORP.

REGARDING THE PLAN OF CONVERSION AND REORGANIZATION

You should read this document for more information about the conversion. The plan of conversion described herein has been conditionally approved by Kearny Financial Corp.’s primary federal regulator, the Board of Governors of the Federal Reserve System. However, such conditional approval by the Board of Governors of the Federal Reserve System does not constitute a recommendation or endorsement of the plan of conversion.

Q.	WHAT ARE STOCKHOLDERS BEING ASKED TO APPROVE?

Kearny Financial Corp. stockholders as of [record date] are being asked to vote on the plan of conversion pursuant to which Kearny MHC will convert from the mutual to the stock form of organization. As part of the conversion, a newly formed Maryland corporation, New Kearny, is offering its common stock to eligible depositors of Kearny Bank, to Kearny Bank’s tax qualified benefit plans, to stockholders of Kearny Financial Corp. as of [record date] and to the public. The shares offered represent Kearny MHC’s current ownership interest in Kearny Financial Corp. Voting for approval of the plan of conversion will also include approval of the exchange ratio and the articles of incorporation of New Kearny (including the anti-takeover provisions and provisions limiting stockholder rights). Your vote is important. Without sufficient votes “FOR” its adoption, we cannot implement the plan of conversion and complete the stock offering. We also cannot establish and fund the Charitable Foundation.

Kearny Financial Corp. stockholders are also being asked to approve the establishment and funding of the Charitable Foundation with a contribution of 500,000 shares of common stock and $5.0 million in cash, for a total contribution of $10.0 million. Your vote is important .

In addition, Kearny Financial Corp. stockholders are being asked to approve the adjournment of the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the plan of conversion and/or the establishment and funding of the Charitable Foundation.

Stockholders also are asked to vote on the following informational proposals with respect to the articles of incorporation of New Kearny:

•

Approval of a provision requiring a super-majority vote to approve certain amendments to New Kearny’s articles of incorporation;

•

Approval of a provision requiring a super-majority vote of stockholders to approve stockholder-proposed amendments to New Kearny’s bylaws; and

•

Approval of a provision to limit the voting rights of shares beneficially owned in excess of 10% of New Kearny’s outstanding voting stock.

The provisions of New Kearny’s articles of incorporation that are included as informational proposals were approved as part of the process in which our board of directors approved the plan of conversion. These proposals are informational in nature only, because the Board of Governors of the Federal Reserve System’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of New Kearny’s articles of incorporation that are summarized above as informational proposals may have the effect of deterring, or rendering more difficult, attempts by third parties to obtain control of New Kearny if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

Your vote is important. Without sufficient votes “FOR” adoption of the plan of conversion, we cannot implement the plan of conversion and the related stock offering.

Q.	WHAT ARE THE REASONS FOR THE CONVERSION AND RELATED OFFERING?

A .	The primary reasons for the conversion and offering are to:

•

support growth;

•

eliminate some of the uncertainties associated with the mutual holding company structure under financial reform legislation;

•

transition us to a more familiar and flexible organizational structure;

•

facilitate future mergers and acquisitions; and

•

improve the liquidity of our shares of common stock.

As a fully converted stock holding company, we will have greater flexibility in structuring mergers and acquisitions, including the form of consideration that we can use to pay for an acquisition. Our current mutual holding company structure limits our ability to offer shares of our common stock as consideration in a merger or acquisition since Kearny MHC is required to own a majority of Kearny Financial Corp.’s outstanding shares of common stock. Potential sellers often want stock for at least part of the purchase price. Our new stock holding company structure will enable us to offer stock or cash consideration, or a combination of stock and cash, and therefore will enhance our ability to compete with other bidders when acquisition opportunities arise. We currently have no arrangements or understandings regarding any specific acquisition.

Q.	WHAT ARE THE REASONS FOR ESTABLISHING AND FUNDING THE CHARITABLE FOUNDATION?

A.	Kearny Bank has a long-standing commitment to charitable contributions within the communities in which we conduct our business. The contribution to the Charitable Foundation will enhance our ability to support community development and charitable causes.

Q.	HOW WILL THE ESTABLISHING AND FUNDING OF THE CHARITABLE FOUNDATION AFFECT THE NEW STOCK HOLDING COMPANY AND ITS STOCKHOLDERS?

A.	The issuance of shares to the Charitable Foundation will dilute the voting interests of stockholders and will result in an expense, and a related reduction in earnings, for the new holding company for the quarter in which the conversion is completed.

Q.	WHAT WILL STOCKHOLDERS RECEIVE FOR THEIR EXISTING KEARNY FINANCIAL CORP. SHARES?

As more fully described in “Proposal 1 — Approval of the Plan of Conversion and Reorganization — Share Exchange Ratio,” depending on the number of shares sold in the offering, each share of common stock that you own at the time of the completion of the conversion will be exchanged for between 1.1855 shares at the minimum and 1.6040 shares at the maximum of the offering range of New Kearny common stock (cash will be paid in lieu of any fractional shares). For example, if you own 100 shares of Kearny Financial Corp. common stock, and the exchange ratio is 1.6040 (at the maximum of the offering range), after the conversion you will receive 160 shares of New Kearny common stock and $4.00 in cash, the value of the fractional share based on the $10.00 per share purchase price of stock in the offering.

If you own shares of Kearny Financial Corp. common stock in a brokerage account in “street name,” your shares will be automatically exchanged within your account, and you do not need to take any action to exchange your shares of common stock or receive cash in lieu of fractional shares. If you own shares in the form of Kearny Financial Corp. stock certificates, after the completion of the conversion and stock offering, our exchange agent will mail to you a transmittal form with instructions to surrender your stock certificates. A statement reflecting your ownership of shares of common stock of New Kearny and a check representing cash in lieu of fractional shares will be mailed to you within five business days after the transfer agent receives a properly executed transmittal form and your existing Kearny Financial Corp. stock certificate(s). New Kearny will not issue stock certificates. You should not submit a stock certificate until you receive a transmittal form.

Q.	WHY WILL THE SHARES THAT I RECEIVE BE BASED ON A PRICE OF $10.00 per share RATHER THAN THE TRADING PRICE OF THE COMMON STOCK PRIOR TO COMPLETION OF THE CONVERSION?

The shares will be based on a price of $10.00 per share because that is the price at which New Kearny will sell shares in its stock offering. The amount of common stock New Kearny will issue at $10.00 per share in the offering and the exchange is based on an independent appraisal of the estimated market value of New Kearny, assuming the conversion and offering are completed. RP Financial, LC., an appraisal firm experienced in the appraisal of financial institutions, has estimated that, as of August 8, 2014, this market value was $943.5 million. Based on Board of Governors of the Federal Reserve System regulations, the market value forms the midpoint of a range with a minimum of $802.7 million and a maximum of $1.08 billion. Based on this valuation and the valuation range, the number of shares of common stock of New Kearny that existing public stockholders of Kearny Financial Corp. will receive in exchange for their shares of Kearny Financial Corp. common stock is expected to range from 61,625,000 to 83,375,000 with a midpoint of 72,500,000 (a value of approximately $802.7 million to $1.08 billion, with a midpoint of $943.5 million, at $10.00 per share). The number of shares received by the existing public stockholders of Kearny Financial Corp. is intended to maintain their existing ownership in our organization (excluding any new shares purchased by them in the offering, the effect of shares issued to the Charitable Foundation, their receipt of cash in lieu of fractional exchange shares and as adjusted to reflect assets held by Kearny MHC). The independent appraisal is based in part on Kearny Financial Corp.’s financial condition and results of operations, the pro forma impact of the additional capital raised by the sale of shares of common stock in the offering, and an analysis of a peer group of ten publicly traded savings bank and thrift holding companies that RP Financial, LC. considered comparable to Kearny Financial Corp.

Q.	DOES THE EXCHANGE RATIO DEPEND ON THE TRADING PRICE OF KEARNY FINANCIAL CORP. COMMON STOCK?

No, the exchange ratio will not be based on the market price of Kearny Financial Corp. common stock. Instead, the exchange ratio will be based on the appraised value of New Kearny. The purpose of the exchange ratio is to maintain the ownership percentage of existing public stockholders of Kearny Financial Corp. Therefore, changes in the price of Kearny Financial Corp. common stock between now and the completion of the conversion and offering will not affect the calculation of the exchange ratio.

Q.	SHOULD I SUBMIT MY STOCK CERTIFICATES NOW?

No. If you hold stock certificate(s), instructions for exchanging the certificates will be sent to you by our exchange agent after completion of the conversion. If your shares are held in “street name” ( e.g., in a brokerage account) rather than in certificate form, the share exchange will be reflected automatically in your account upon completion of the conversion.

Q.	HOW DO I VOTE?

A.	Mark your vote, sign each proxy card enclosed and return the card(s) to us, in the enclosed proxy reply envelope. For information on submitting your proxy, please refer to instructions on the enclosed proxy card. YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY.

Q.	IF MY SHARES ARE HELD IN STREET NAME, WILL MY BROKER, BANK OR OTHER NOMINEE AUTOMATICALLY VOTE ON THE PLAN ON MY BEHALF?

A.	No. Your broker, bank or other nominee will not be able to vote your shares without instructions from you. You should instruct your broker, bank or other nominee to vote your shares, using the directions that they provide to you.

Q.	WHY SHOULD I VOTE? WHAT HAPPENS IF I DON’T VOTE?

Your vote is very important. We believe the conversion and offering are in the best interests of our stockholders. Not voting all the proxy card(s) you receive will have the same effect as voting “against” the plan of conversion and “against” the establishment and funding of the Charitable Foundation. Without sufficient favorable votes “for” the plan of conversion, we cannot complete the conversion and offering. Without sufficient favorable votes “for” the establishment and funding of the Charitable Foundation, we cannot establish or fund the Charitable Foundation.

Q.	WHAT IF I DO NOT GIVE VOTING INSTRUCTIONS TO MY BROKER, BANK OR OTHER NOMINEE?

A.	Your vote is important. If you do not instruct your broker, bank or other nominee to vote your shares, the unvoted proxy will have the same effect as a vote “against” the plan of conversion and “against” the establishment and funding of the Charitable Foundation.

Q.	MAY I PLACE AN ORDER TO PURCHASE SHARES IN THE COMMUNITY OFFERING, IN ADDITION TO THE SHARES THAT I WILL RECEIVE IN THE EXCHANGE?

A.	Yes. If you would like to receive a prospectus and stock order form, you must call our Stock Information Center at [stock center number], Monday through Friday between a.m. and :00 p.m., Eastern Time. The Stock Information Center is closed weekends and bank holidays.

Eligible depositors of Kearny Bank have priority subscription rights allowing them to purchase common stock in a subscription offering. Shares not purchased in the subscription offering may be available for sale to the public in a community offering, as described herein. In the event orders for New Kearny common stock in a community offering exceed the number of shares available for sale, shares may be allocated (to the extent shares remain available) first to cover orders of natural persons residing in the New Jersey Counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union, and the New York Counties of Kings and Richmond; second to cover orders of Kearny Financial Corp. stockholders as of [record date]; and thereafter to cover orders of the general public.

Stockholders of Kearny Financial Corp. are subject to an ownership limitation. Shares of common stock purchased in the offering by a stockholder and his or her associates or individuals acting in concert with the stockholder, plus any shares a stockholder and these individuals receive in the exchange for existing shares of Kearny Financial Corp. common stock, may not exceed 9.9% of the total shares of common stock of New Kearny to be issued and outstanding after the completion of the conversion.

Please note that properly completed and signed stock order forms, with full payment, must be received (not postmarked) no later than :00 p.m., Eastern Time on [expiration date].

Q.	WILL THE CONVERSION HAVE ANY EFFECT ON DEPOSIT AND LOAN ACCOUNTS AT KEARNY BANK?

No. The account number, amount, interest rate and withdrawal rights of deposit accounts will remain unchanged. Deposits will continue to be federally insured by the Federal Deposit Insurance Corporation up to the legal limit. Loans and rights of borrowers will not be affected. Depositors will no longer have voting rights in Kearny MHC as to matters currently requiring such vote. Kearny MHC will cease to exist after the conversion and offering. Only stockholders of New Kearny will have voting rights after the conversion and offering.

Q.	WHAT IF THE PLAN OF CONVERSION AND REORGANIZATION IS APPROVED BUT THE ESTABLISHING AND FUNDING OF THE CHARITABLE FOUNDATION IS NOT APPROVED.

The Charitable Foundation will only be established and funded if both proposals are approved. If the establishing and funding of the Charitable Foundation is not approved, our board of directors will retain the ability to complete the conversion and stock offering without establishing and funding of the Charitable Foundation, or it may determine to terminate the conversion and stock offering.

OTHER QUESTIONS?

For answers to other questions, please read this proxy statement/prospectus. Questions about voting on the plan of conversion or the Charitable Foundation may be directed to [proxy solicitor], at [proxy solicitor number], Monday through Friday from a.m. to p.m., Eastern Time, and Saturdays from a.m. to p.m., Eastern Time. Questions about the stock offering may be directed to our Stock Information Center at [stock center number], Monday through Friday between a.m. and :00 p.m., Eastern Time. The Stock Information Center is closed weekends and bank holidays.

SUMMARY

This summary highlights material information from this proxy statement/prospectus and may not contain all the information that is important to you. To understand the conversion and other proposals fully, you should read this entire document carefully, including the sections entitled “Risk Factors,” “Proposal 1 — Approval of The Plan of Conversion and Reorganization,” “Proposal 2 — Establishment and Funding of the Charitable Foundation,” “Proposal 3 — Adjournment of the Special Meeting,” “Proposals 4 through 6 — Informational Proposals Related to the Articles of Incorporation of New Kearny” and the consolidated financial statements and the notes to the consolidated financial statements.

The Special Meeting

Date, Time and Place. Kearny Financial Corp. will hold its special meeting of stockholders at [meeting location], on [meeting date], at [meeting time], Eastern Time.

The Proposals. Stockholders will be voting on the following proposals at the special meeting:

The approval of a plan of conversion and reorganization whereby: (a) Kearny MHC and Kearny Financial Corp., a federal corporation, will convert and reorganize from the mutual holding company structure to the stock holding company structure; (b) Kearny Financial Corp., a Maryland corporation (“New Kearny”), will become the new stock holding company of Kearny Bank; (c) the outstanding shares of Kearny Financial Corp., other than those held by Kearny MHC, will be converted into shares of common stock of New Kearny; and (d) New Kearny will offer shares of its common stock for sale in a subscription offering, a community offering and, if necessary, a syndicated offering and/or firm commitment underwritten offering;

The approval of the establishment and funding of KearnyBank Foundation with a contribution of 500,000 shares of common stock and $5.0 million in cash, for a total contribution of $10.0 million;

The following informational proposals:

Approval of a provision in New Kearny’s articles of incorporation requiring a super-majority vote of stockholders to approve certain amendments to New Kearny’s articles of incorporation;

Approval of a provision in New Kearny’s articles of incorporation requiring a super-majority vote of stockholders to approve stockholder-proposed amendments to New Kearny’s bylaws;

Approval of a provision in New Kearny’s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of New Kearny’s outstanding voting stock; and

Such other business that may properly come before the meeting.

The provisions of New Kearny’s articles of incorporation that are summarized as informational proposals 4 through 6 were approved as part of the process in which our board of directors approved the plan of conversion. These proposals are informational in nature only, because the Board of Governors of the Federal Reserve System’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The

provisions of New Kearny’s articles of incorporation that are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of New Kearny, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

Vote Required for Approval of Proposals by the Stockholders of Kearny Financial Corp.

Proposal 1: Approval of the Plan of Conversion. We must obtain the affirmative vote of the holders of (i) two-thirds of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders, including shares held by Kearny MHC, and (ii) a majority of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders other than Kearny MHC.

Proposal 1 must also be approved by the members of Kearny MHC (depositors of Kearny Bank) at a special meeting of members called for that purpose. Members will receive separate informational materials from Kearny MHC regarding the conversion.

Proposal 2: Establishment and Funding of the Charitable Foundation. We must obtain the affirmative vote of the holders of a majority of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders, and the affirmative vote of the holders of a majority of the total number of votes entitled to be cast at the special meeting by Kearny Financial Corp. stockholders other than Kearny MHC. However, stockholder approval of the establishment and funding of the Charitable Foundation is not a condition to the completion of the conversion and offering.

Proposal 2 must also be approved by the depositors of Kearny Bank at a special meeting called for that purpose. Depositors will receive separate informational materials from Kearny MHC regarding the funding of the Charitable Foundation.

Proposal 3: Approval of the adjournment of the special meeting. We must obtain the affirmative vote of at least a majority of the votes cast by Kearny Financial Corp. stockholders at the special meeting to adjourn the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the proposal to approve the plan of conversion and/or the proposal to establish and fund the Charitable Foundation.

Informational Proposals 4 through 6. The provisions of New Kearny’s articles of incorporation that are summarized as informational proposals were approved as part of the process in which the board of directors of Kearny Financial Corp. approved the plan of conversion. These proposals are informational in nature only, because the Board of Governors of the Federal Reserve System’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals listed above, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of New Kearny’s articles of incorporation that are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of New Kearny, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

Other Matters. We must obtain the affirmative vote of the majority of the votes cast by holders of outstanding shares of common stock of Kearny Financial Corp. At this time, we know of no other matters that may be presented at the special meeting.

Revocability of Proxies

been voted at the special meeting, deliver a later-dated proxy or attend the special meeting and vote your shares in person. Attendance at the special meeting will not in itself constitute revocation of your proxy.

Vote by Kearny MHC

Management anticipates that Kearny MHC, our majority stockholder, will vote all of its shares of common stock in favor of all the matters set forth above. If Kearny MHC votes all of its shares in favor of each proposal, the approval of the adjournment of the special meeting, if necessary, would be assured, and the approval of the plan of conversion and reorganization and the approval of the establishment and funding of the Charitable Foundation by stockholders holding at least two-thirds of the outstanding shares of common stock of Kearny-Federal, including shares held by Kearny MHC, would also be assured.

As of [record date] the directors and executive officers of Kearny Financial Corp. beneficially owned shares, or approximately % of the outstanding shares of Kearny Financial Corp. common stock, and Kearny MHC owned 51,960,337 shares, or approximately 77.2% of the outstanding shares of Kearny Financial Corp. common stock.

Vote Recommendations

Your board of directors unanimously recommends that you vote “FOR” the plan of conversion, “FOR” the establishment and funding of the Charitable Foundation, “FOR” the adjournment of the special meeting, if necessary, and “FOR” the Informational Proposals 4 through 6.

Our Business

[same as prospectus]

Plan of Conversion and Reorganization

The Boards of Directors of Kearny Financial Corp., Kearny MHC, Kearny Bank and New Kearny have adopted a plan of conversion pursuant to which Kearny Bank will reorganize from a mutual holding company structure to a stock holding company structure. Public stockholders of Kearny Financial Corp. will receive shares in New Kearny in exchange for their shares of Kearny Financial Corp. common stock based on an exchange ratio. See “— The Exchange of Existing Shares of Kearny-Federal Common Stock.” This conversion to a stock holding company structure also includes the offering by New Kearny of shares of its common stock to eligible depositors of Kearny Bank, our tax-qualified employee benefit plans, including our employee stock ownership and 401(k) plans, supplemental eligible account holders and other members and to the public, including Kearny Financial Corp. stockholders, in a subscription offering and, if necessary, in a community offering and/or in a separate public offering through a syndicate of broker-dealers, referred to in this proxy statement/prospectus as the syndicated offering and/or the public in a firm commitment offering through a syndicate of broker dealers. Following the conversion and offering, Kearny MHC and Kearny Financial Corp. will no longer exist, and New Kearny will be the parent company of Kearny Bank.

The conversion and offering cannot be completed unless the stockholders of Kearny Financial Corp. approve the plan of conversion. Kearny Financial Corp.’s stockholders will vote on the plan of conversion at Kearny Financial Corp.’s special meeting. This document is the proxy statement used by Kearny Financial Corp.’s board of directors to solicit proxies for the special meeting. It is also the prospectus of New Kearny regarding the shares of New Kearny common stock to be issued to Kearny Financial Corp.’s stockholders in the share exchange. This document does not serve as the prospectus relating to the offering by New Kearny of its shares of common stock in the subscription offering and any community offering, syndicated community offering or firm commitment underwritten offering, which will be made pursuant to a separate prospectus.

In connection with the conversion and offering, Kearny MHC intends establish and fund the Charitable Foundation with a contribution of 500,000 shares of common stock and $5.0 million in cash, for a total contribution

of $10.0 million. The establishment and funding of the Charitable Foundation must be approved by the stockholders of Kearny Financial Corp. However, stockholder approval of the funding of Charitable Foundation is not a condition to the completion of the conversion and offering.

Our Organizational Structure

[same as prospectus]

Business Strategy

[same as prospectus]

Reasons for the Conversion

[same as prospectus]

See “Proposal 1 — Approval of the Plan of Conversion and Reorganization” for a more complete discussion of our reasons for conducting the conversion and offering.

Conditions to Completion of the Conversion

[same as prospectus]

The Exchange of Existing Shares of Kearny-Federal Common Stock

[same as prospectus]

How We Determined the Offering Range, the Exchange Ratio and the $10.00 per share Stock Price

[same as prospectus]

How We Intend to Use the Proceeds From the Offering

[same as prospectus]

Our Dividend Policy

[same as prospectus]

Purchases and Ownership by Officers and Directors

[same as prospectus]

Benefits to Management and Potential Dilution to Stockholders Resulting from the Conversion

[same as prospectus]

Market for Common Stock

[same as prospectus]

Tax Consequences

[same as prospectus]

Changes in Stockholders’ Rights for Existing Stockholders of Kearny Financial Corp.

As a result of the conversion, existing stockholders of Kearny Financial Corp. will become stockholders of New Kearny. Some rights of stockholders of New Kearny will be reduced compared to the rights stockholders currently have in Kearny Financial Corp. The reduction in stockholder rights results from differences between the federal and Maryland charters and bylaws, and from distinctions between federal and Maryland law. Many of the differences in stockholder rights under the articles of incorporation and bylaws of New Kearny are not mandated by Maryland law but have been chosen by management as being in the best interests of New Kearny and all of its stockholders. The differences in stockholder rights in the articles of incorporation and bylaws of New Kearny include the following: (i) greater lead time required for shareholders to submit proposals for certain provisions of new business or to nominate directors; (ii) approval by at least 80% of outstanding shares required to amend the bylaws and certain provisions of the articles of incorporation; and (iii) a limit on voting rights of shares beneficially owned in excess of 10% of New Kearny’s outstanding voting stock. See “Comparison of Stockholders’ Rights For Existing Stockholders of Kearny Financial Corp.” for a discussion of these differences.

Dissenters’ Rights

Stockholders of Kearny Financial Corp. do not have dissenters’ rights in connection with the conversion and offering.

Important Risks in Owning New Kearny’s Common Stock

Before you vote on the conversion, you should read the “Risk Factors” section beginning on page 11 of this proxy statement/prospectus.

RISK FACTORS

You should consider carefully the following risk factors when deciding how to vote on the conversion and before purchasing shares of New Kearny common stock.

Risks Related to Our Business

[same as prospectus]

Risks Related to the Offering and the Exchange

The market value of New Kearny common stock received in the share exchange may be less than the market value of Kearny-Federal common stock exchanged.

The number of shares of New Kearny common stock you receive will be based on an exchange ratio that will be determined as of the date of completion of the conversion and offering. The exchange ratio will be based on the percentage of Kearny Financial Corp. common stock held by the public prior to the completion of the conversion and offering, the final independent appraisal of New Kearny common stock prepared by RP Financial, LC. and the number of shares of common stock sold in the offering. The exchange ratio will ensure that existing public stockholders of Kearny Financial Corp. common stock will own the same percentage of New Kearny common stock after the conversion and offering as they owned of Kearny Financial Corp. common stock immediately prior to completion of the conversion and offering (excluding any new shares purchased by them in the offering and their receipt of cash in lieu of fractional exchange shares). The exchange ratio will not depend on the market price of Kearny Financial Corp. common stock.

The exchange ratio ranges from 1.1855 shares at the minimum and 1.6040 shares at the maximum of the offering range of New Kearny common stock per share of Kearny Financial Corp. common stock. Shares of New Kearny common stock issued in the share exchange will have an initial value of $10.00 per share. Depending on the exchange ratio and the market value of Kearny Financial Corp. common stock at the time of the exchange, the initial market value of the New Kearny common stock that you receive in the share exchange could be less than the market value of the Kearny Financial Corp. common stock that you currently own. Based on the most recent closing price of Kearny Financial Corp. common stock prior to the date of this proxy statement /prospectus, which was $ , unless at least shares of New Kearny common stock are sold in the offering (which is between the and the of the offering range), the initial value of the New Kearny common stock you receive in the share exchange would be less than the market value of the Kearny Financial Corp. common stock you currently own.

There may be a decrease in stockholders’ rights for existing stockholders of Kearny-Federal.

As a result of the conversion, existing stockholders of Kearny-Federal will become stockholders of New Kearny. In addition to the provisions discussed above that may discourage takeover attempts that may be favored by stockholders, some rights of stockholders of New Kearny will be reduced compared to the rights stockholders currently have in Kearny-Federal. The reduction in stockholder rights results from differences between the federal and Maryland chartering documents and bylaws, and from differences between federal and Maryland law. Many of the differences in stockholder rights under the articles of incorporation and bylaws of New Kearny are not mandated by Maryland law but have been chosen by management as being in the best interests of New Kearny and its stockholders. The articles of incorporation and bylaws of New Kearny include the following provisions: (i) greater lead time required for stockholders to submit proposals for new business or to nominate directors; and (ii) approval by at least 80% of the outstanding shares of capital stock entitled to vote generally is required to amend the bylaws and certain provisions of the articles of incorporation. See “Comparison of Stockholders’ Rights For Existing Stockholders of Kearny Financial Corp.” for a discussion of these differences.

[Remaining risks same as prospectus]

INFORMATION ABOUT THE SPECIAL MEETING

General

This proxy statement/prospectus is being furnished to you in connection with the solicitation by the board of directors of Kearny Financial Corp. of proxies to be voted at the special meeting of stockholders to be held at [meeting location], on [meeting date], at [meeting time], Eastern Time, and any adjournment or postponement thereof.

The purpose of the special meeting is to consider and vote upon the Plan of Conversion and Reorganization of Kearny MHC (referred to herein as the “plan of conversion”).

In addition, stockholders will vote on proposals to approve the establishment and funding of the Charitable Foundation with a contribution of 500,000 shares of common stock and $5.0 million in cash, for a total contribution of $10.0 million.

In addition, stockholders will vote on a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the proposals. Stockholders also will vote on informational proposals with respect to the articles of incorporation of New Kearny.

Voting in favor of or against the plan of conversion includes a vote for or against the conversion of Kearny MHC to a stock holding company as contemplated by the plan of conversion. Voting in favor of the plan of conversion will not obligate you to purchase any shares of common stock in the offering and will not affect the balance, interest rate or federal deposit insurance of any deposits at Kearny Bank.

Who Can Vote at the Meeting

You are entitled to vote your Kearny Financial Corp. common stock if our records show that you held your shares as of the close of business on [record date]. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name and these proxy materials are being forwarded to you by your broker or nominee. As the beneficial owner, you have the right to direct your broker or nominee how to vote.

As of the close of business on [record date], there were shares of Kearny Financial Corp. common stock outstanding. Each share of common stock has one vote.

Attending the Meeting

If you are a stockholder as of the close of business on [record date], you may attend the meeting. However, if you hold your shares in street name, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of Kearny Financial Corp. common stock held in street name in person at the meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

Quorum; Vote Required

The special meeting will be held only if there is a quorum. A quorum exists if a majority of the outstanding shares of common stock entitled to vote, represented in person or by proxy, is present at the meeting. If you return valid proxy instructions or attend the meeting in person, your shares will be counted for purposes of determining whether there is a quorum, even if you abstain from voting. Broker non-votes also will be counted for purposes of determining the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.

Proposal 1: Approval of the Plan of Conversion and Reorganization. We must obtain the affirmative vote of the holders of (i) two-thirds of the outstanding common stock of Kearny Financial Corp. entitled to be cast at the special meeting, including shares held by Kearny MHC, and (ii) a majority of the outstanding shares of common stock of Kearny Financial Corp. entitled to be cast at the special meeting, other than shares held by Kearny MHC.

Proposal 3: Approval of the adjournment of the special meeting. We must obtain the affirmative vote of at least a majority of the votes cast by Kearny Financial Corp. stockholders entitled to vote at the special meeting to adjourn the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the proposal to approve the plan of conversion.

Informational Proposals 4 through 6: Approval of certain provisions in New Kearny’s articles of incorporation. The provisions of New Kearny’s articles of incorporation that are summarized as informational proposals were approved as part of the process in which the board of directors of Kearny Financial Corp. approved the plan of conversion. These proposals are informational in nature only, because the Board of Governors of the Federal Reserve System’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. While we are asking you to vote with respect to each of the informational proposals, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of New Kearny’s articles of incorporation that are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of New Kearny, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

Shares Held by Kearny MHC and Our Officers and Directors

As of [record date], Kearny MHC beneficially owned 51,960,337 shares of Kearny Financial Corp. common stock. This equals approximately 77.2% of our outstanding shares. We expect that Kearny MHC will vote all of its shares in favor of Proposal 1 — Approval of the Plan of Conversion and Reorganization, Proposal 2 — Establishment and Contribution to the Charitable Foundation, Proposal 3 — Approval of the adjournment of the special meeting, and Informational Proposals 4 through 6.

As of [record date], our officers and directors beneficially owned shares of Kearny Financial Corp. common stock. This equals % of our outstanding shares and % of shares held by persons other than Kearny MHC.

Voting by Proxy

Our board of directors is sending you this proxy statement/prospectus to request that you allow your shares of Kearny Financial Corp. common stock to be represented at the special meeting by the persons named in the enclosed proxy card. All shares of Kearny Financial Corp. common stock represented at the meeting by properly executed and dated proxies will be voted according to the instructions indicated on the proxy card. If you sign, date and return a proxy card without giving voting instructions, your shares will be voted as recommended by our board of directors. Our board of directors recommends that you vote “FOR” approval of the plan of conversion, “FOR” the establishment and funding of the Charitable Foundation, “FOR” approval of the adjournment of the special meeting, if necessary, and “FOR” each of the Informational Proposals 4 through 6.

If any matters not described in this proxy statement/prospectus are properly presented at the special meeting, the board of directors will use their judgment to determine how to vote your shares. We do not know of any other matters to be presented at the special meeting.

If your Kearny Financial Corp. common stock is held in street name, you will receive instructions from your broker, bank or other nominee that you must follow to have your shares voted. Your broker, bank or other nominee may allow you to deliver your voting instructions via the telephone or the Internet. Please see the instruction form provided by your broker, bank or other nominee that accompanies this proxy statement/prospectus.

Revocability of Proxies

You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must advise the corporate secretary of Kearny Financial Corp. in writing before your common stock has been voted at the special meeting, deliver a later-dated proxy or attend the special meeting and vote your shares in person. Attendance at the special meeting will not in itself constitute revocation of your proxy.

Solicitation of Proxies

This proxy statement/prospectus and the accompanying proxy card are being furnished to you in connection with the solicitation of proxies for the special meeting by the board of directors. Kearny Financial Corp. will pay the costs of soliciting proxies from its stockholders. To the extent necessary to permit approval of the plan of conversion and the other proposals being considered, [proxy solicitor], our proxy solicitor, and directors, officers or employees of Kearny Financial Corp. and Kearny Bank may solicit proxies by mail, telephone and other forms of communication. We will reimburse such persons for their reasonable out-of-pocket expenses incurred in connection with such solicitation. For its services as information agent and stockholder proxy solicitor, we will pay [proxy solicitor] $ plus out-of-pocket expenses and charges for telephone calls made and received in connection with the solicitation.

We will also reimburse banks, brokers, nominees and other fiduciaries for the expenses they incur in forwarding the proxy materials to you.

Participants in the Employee Stock Ownership Plan

If you participate in Kearny Bank Employee Stock Ownership Plan, you will receive a voting instruction form that reflects all shares you may direct the trustees to vote on your behalf under the plan. Under the terms of the Employee Stock Ownership Plan, the Employee Stock Ownership Plan trustee votes all shares held by the Employee Stock Ownership Plan, but each Employee Stock Ownership Plan participant may direct the trustee how to vote the shares of common stock allocated to his or her account. The Employee Stock Ownership Plan trustee, subject to the exercise of its fiduciary duties, will vote all unallocated shares of Kearny Financial Corp. common stock held by the Employee Stock Ownership Plan and allocated shares for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions. The deadline for returning your voting instructions to the plan’s trustee is , 2014.

The board of directors recommends that you promptly sign and mark the enclosed proxy in favor of the above described proposals, including the adoption of the plan of conversion, and promptly return it in the enclosed envelope. Voting the proxy card will not prevent you from voting in person at the special meeting. For information on submitting your proxy, please refer to the instructions on the enclosed proxy card.

Your prompt vote is very important. Failure to vote will have the same effect as voting against the plan of conversion.

PROPOSAL 1 — APPROVAL OF THE PLAN OF CONVERSION AND REORGANIZATION

The boards of directors of Kearny Financial Corp. and Kearny MHC have approved the Plan of Conversion and Reorganization of Kearny MHC, referred to herein as the “plan of conversion.” The plan of conversion must also be approved by the members of Kearny MHC (depositors of Kearny Bank) and the stockholders of Kearny Financial Corp. A special meeting of members and a special meeting of stockholders have been called for this purpose. The Board of Governors of the Federal Reserve System has conditionally approved the plan of conversion; however, such conditional approval does not constitute a recommendation or endorsement of the plan of conversion by the Board of Governors of the Federal Reserve System.

General

Pursuant to the plan of conversion, our organization will convert from the mutual holding company form of organization to the fully stock form. Currently, Kearny Bank is a wholly-owned subsidiary of Kearny Financial Corp. and Kearny MHC owns approximately 77.2% of Kearny Financial Corp.’s common stock. The remaining 22.8% of Kearny Financial Corp.’s common stock is owned by public stockholders. As a result of the conversion, a newly formed company, New Kearny, will become the holding company of Kearny Bank. Each share of Kearny Financial Corp. common stock owned by the public will be exchanged for between 1.1855 shares at the minimum and 1.6040 shares at the maximum of the offering range of New Kearny common stock, so that Kearny Financial Corp.’s existing public stockholders will own the same percentage of New Kearny common stock as they owned of Kearny Financial Corp.’s common stock immediately prior to the conversion (excluding any new shares purchased by them in the offering, the effect of shares issued to the Charitable Foundation, their receipt of cash in lieu of fractional exchange shares and as adjusted to reflect assets held by Kearny MHC). The actual number of shares that you will receive will depend on the percentage of Kearny Financial Corp. common stock held by the public immediately prior to the completion of the conversion, the final independent appraisal of New Kearny and the number of shares of New Kearny common stock sold in the offering described in the following paragraph. It will not depend on the market price of Kearny Financial Corp. common stock.

Concurrently with the exchange offer, New Kearny is offering up to shares of common stock for sale, representing the 77.2% ownership interest of Kearny MHC in Kearny Financial Corp., to eligible depositors and to the public at a price of $10.00 per share. After the conversion and offering are completed, Kearny Bank will be a wholly-owned subsidiary of New Kearny, and 100% of the common stock of New Kearny will be owned by public stockholders. As a result of the conversion and offering, Kearny Financial Corp. and Kearny MHC will cease to exist.

We also intend to contribute 500,000 shares of common stock and $5.0 million in cash, for a total contribution of $10.0 million, pursuant to the plan of conversion.

New Kearny intends to contribute between $297.5 million and $403.1 million of the net proceeds to Kearny Bank and to retain between $261.5 million and $356.1 million of the net proceeds. The conversion will be consummated only upon the issuance of at least the minimum number of shares of our common stock offered pursuant to the plan of conversion.

The plan of conversion provides that we will offer shares of common stock in a “subscription offering” in the following descending order of priority:

(i)

To depositors with accounts at Kearny Bank with aggregate balances of at least $50 at the close of business on July 31, 2013.

(ii)

To our tax-qualified employee benefit plans (including Kearny Bank’s employee stock ownership plan and 401(k) plan), which will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the shares of common stock sold in the offering. We expect our employee stock ownership plan to purchase 5% of the shares of common stock sold in the stock offering, although we reserve the right to have the employee stock ownership plan purchase more than 5% of the shares sold in the offering to the extent necessary to complete the offering at the minimum of the offering range.

(iii)

To depositors with accounts at Kearny Bank with aggregate balances of at least $50 at the close of business on [supplemental date].

(iv)

To depositors of Kearny Bank at the close of business on [voting record date].

Shares of common stock not purchased in the subscription offering will be offered for sale to the general public in a community offering, with a preference given first to natural persons (including trusts of natural persons) residing in the New Jersey Counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union, and the New York Counties of Kings and Richmond. To the extent shares of common stock remain available, we will also offer the shares to Kearny-Federal’s public stockholders as of [record date]. The community offering is expected to begin concurrently with the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering or the community offering through a syndicated or firm commitment underwritten offering. Sandler O’Neill & Partners, L.P. will act as sole book-running manager for the syndicated or firm commitment underwritten offering. We have the right to accept or reject, in our sole discretion, orders received in the community offering or syndicated or firm commitment underwritten offering. Any determination to accept or reject stock orders in the community offering or syndicated or firm commitment underwritten offering will be based on the facts and circumstances available to management at the time of the determination.

We determined the number of shares of common stock to be offered in the offering based upon an independent valuation of the estimated pro forma market value of New Kearny. All shares of common stock to be sold in the offering will be sold at $10.00 per share. Kearny will not be charged a commission to purchase shares of common stock in the offering. The independent valuation will be updated and the final number of shares of common stock to be issued in the offering will be determined at the completion of the offering. See “— Stock Pricing and Number of Shares to be Issued” for more information as to the determination of the estimated pro forma market value of the common stock.

A copy of the plan of conversion is available for inspection at each branch office of Kearny Bank and at the Federal Reserve Bank of Philadelphia. The plan of conversion is also filed as an exhibit to Kearny MHC’s application to convert from mutual to stock form of which this proxy statement/prospectus is a part, copies of which may be obtained from the Board of Governors of the Federal Reserve System. The plan of conversion is also filed as an exhibit to the registration statement we have filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, copies of which may be obtained from the Securities and Exchange Commission or online at the Securities and Exchange Commission’s website. See “Where You Can Find Additional Information.”

The board of directors recommends that you vote “FOR” the Plan of Conversion and Reorganization of Kearny MHC.

[Remaining sections same as Prospectus under “The Conversion and Offering,” with the following to be added]

Exchange of Existing Stockholders’ Stock Certificates

The conversion of existing outstanding shares of Kearny-Federal common stock into the right to receive shares of New Kearny common stock will occur automatically at the completion of the conversion. As soon as practicable after the completion of the conversion, our exchange agent will send a transmittal form to each public stockholder of Kearny-Federal who holds physical stock certificates. The transmittal form will contain instructions on how to surrender certificates evidencing Kearny-Federal common stock in exchange for shares of New Kearny common stock in book entry form, to be held electronically on the books of our transfer agent. New Kearny will not issue stock certificates. We expect that a statement reflecting your ownership of shares of common stock of New Kearny common stock will be distributed within five business days after the exchange agent receives properly executed transmittal forms, Kearny-Federal stock certificates and other required documents. Shares held by public stockholders in street name (such as in a brokerage account) will be exchanged automatically upon the completion of the conversion; no transmittal forms will be mailed relating to these shares.

No fractional shares of New Kearny common stock will be issued to any public stockholder of Kearny-Federal when the conversion is completed. For each fractional share that would otherwise be issued to a stockholder who holds a stock certificate, we will pay by check an amount equal to the product obtained by multiplying the fractional share interest to which the holder would otherwise be entitled by the $8.00 offering purchase price per share. Payment for fractional shares will be made as soon as practicable after the receipt by the exchange agent of the transmittal forms and the surrendered Kearny-Federal stock certificates. If your shares of common stock are held in street name, you will automatically receive cash in lieu of fractional shares in your account.

You should not forward your stock certificates until you have received transmittal forms, which will include forwarding instructions. After the conversion, stockholders will not receive shares of New Kearny common stock and will not be paid dividends on the shares of New Kearny common stock until existing certificates representing shares of Kearny-Federal common stock are surrendered for exchange in compliance with the terms of the transmittal form. When stockholders surrender their certificates, any unpaid dividends will be paid without interest. For all other purposes, however, each certificate that represents shares of Kearny-Federal common stock outstanding at the effective date of the conversion will be considered to evidence ownership of shares of New Kearny common stock into which those shares have been converted by virtue of the conversion.

If a certificate for Kearny-Federal common stock has been lost, stolen or destroyed, our exchange agent will issue a new stock certificate upon receipt of appropriate evidence as to the loss, theft or destruction of the certificate, appropriate evidence as to the ownership of the certificate by the claimant, and appropriate and customary indemnification, which is normally effected by the purchase of a bond from a surety company at the stockholder’s expense.

All shares of New Kearny common stock that we issue in exchange for existing shares of Kearny-Federal common stock will be considered to have been issued in full satisfaction of all rights pertaining to such shares of common stock, subject, however, to our obligation to pay any dividends or make any other distributions with a record date prior to the effective date of the conversion that may have been declared by us on or prior to the effective date, and which remain unpaid at the effective date.

PROPOSAL 2 — ESTABLISHMENT AND FUNDING OF THE CHARITABLE FOUNDATION

General

In furtherance of our commitment to our local community, the plan of conversion and reorganization provides that we may establish and fund a charitable foundation, KearnyBank Foundation, in connection with the stock offering. We intend to contribute cash and shares of common stock to the charitable foundation, as further described below.

By further enhancing our visibility and reputation in our local community, we believe that the contribution to the Charitable Foundation will enhance the long-term value of our community banking franchise. The stock offering presents us with a unique opportunity to provide a substantial and continuing benefit to our communities through the Charitable Foundation.

Purpose of the Charitable Foundation

We intend to establish and contribute to the Charitable Foundation 500,000 shares of common stock and $5.0 million in cash, for a total contribution of $10.0 million. The purpose of the Charitable Foundation is to provide financial support to charitable organizations in the communities in which we operate and to enable our communities to share in our long-term growth. The Charitable Foundation will be dedicated completely to community activities and the promotion of charitable causes. The Charitable Foundation will also support our on-going obligations to the community under the Community Reinvestment Act. Kearny Bank received a satisfactory rating in its most recent Community Reinvestment Act examination by the FDIC.

Contributing additional shares of our common stock to the Charitable Foundation is also intended to allow our communities to share in our potential growth and success after the stock offering is completed because the Charitable Foundation will benefit directly from any increases in the value of our common stock. In addition, the Charitable Foundation will maintain close ties with Kearny Bank, thereby forming a partnership within the communities in which Kearny Bank operates.

Structure of the Charitable Foundation

The Charitable Foundation will be incorporated under Delaware law as a non-stock, nonprofit corporation. The certificate of incorporation of the Charitable Foundation will provide that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code. The Charitable Foundation’s certificate of incorporation will also provide that no part of the net earnings of the charitable foundation will inure to the benefit of, or be distributable to, its members, directors or officers or to private individuals.

The Charitable Foundation will be governed by a board of directors, consisting of . Federal Reserve Board regulations require that at least one person who serves on the foundation’s board of directors must not be one of our officers or directors and must have experience with local charitable organizations and grant making. While there are no plans to change the size of the board of directors during the year following the completion of the conversion, following the first anniversary of the conversion, the charitable foundation may alter the size and composition of its board of directors. For five years after the stock offering, one seat on the Charitable Foundation’s board of directors will be reserved for a person from our local community who has experience with local community charitable organizations and grant making and who is not one of our officers, directors or employees, and at least one seat on the charitable foundation’s board of directors will be reserved for one director from Kearny Bank’s board of directors or the board of directors of an acquirer or resulting institution in the event of a merger or acquisition of Kearny Bank. On an annual basis, directors of the Charitable Foundation will elect one third of the board to serve for three-year terms.

The board of directors of the Charitable Foundation will be responsible for establishing the foundation’s grant and donation policies, consistent with the purposes for which it was established. As directors of a nonprofit corporation, directors of the Charitable Foundation are at all times bound by their fiduciary duty to advance the foundation’s charitable goals, to protect its assets and to act in a manner consistent with the charitable purposes for which the foundation was established. The directors of the Charitable Foundation also are responsible for directing the activities of the foundation, including the management and voting of the shares of our common stock held by the foundation. However, as required by Federal Reserve Board’s regulations, all shares of our common stock held by the Charitable Foundation must be voted in the same ratio as all other shares of our common stock on all proposals considered by our stockholders.

The Charitable Foundation’s place of business is located at our administrative offices. The board of directors of the Charitable Foundation appoints such officers and employees as may be necessary to manage its operations. To the extent applicable, we comply with the affiliates restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and the Federal Reserve Board’s regulations governing transactions between Kearny Bank and the Charitable Foundation.

The Charitable Foundation will receive working capital from the cash and stock contribution and:

(1)

any dividends that may be paid on our shares of common stock in the future;

(2)

within the limits of applicable federal and state laws, loans collateralized by the shares of common stock; or

(3)

the proceeds of the sale of any of the shares of common stock in the open market from time to time.

As a private foundation under Section 501(c)(3) of the Internal Revenue Code, the Charitable Foundation is required to distribute annually in grants or donations a minimum of 5% of the average fair market value of its net investment assets.

Tax Considerations

Kearny Financial Corp., Kearny MHC and Kearny Bank are authorized by law to make charitable contributions. We believe that the stock offering presents a unique opportunity to fund a charitable foundation given the substantial amount of additional capital being raised. In making such a determination, we considered the dilutive impact to our stockholders of the contribution of shares of common stock to the Charitable Foundation. See “Capitalization” and “Historical and Pro Forma Regulatory Capital Compliance.”

We believe that our contribution of cash and shares of our common stock to the Charitable Foundation should not constitute an act of self-dealing and that we should be entitled to a federal and state tax deduction in the amount of the fair market value of the cash and stock at the time of the contribution. We are permitted to deduct for charitable purposes only an amount equal to 10% of our annual pre-tax income in any one year. We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to the Charitable Foundation. We estimate that all of the contribution should be deductible for federal tax purposes over a two-year period (i.e., the year in which the contribution is made and the succeeding year). Even if the contribution is deductible, we may not have sufficient earnings to be able to use the deduction in full. Any decision to make additional contributions to the Charitable Foundation in the future would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders and depositors, and the financial condition and operations of the foundation.

As a private foundation, earnings and gains, if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income, such as interest, dividends and capital gains, is generally taxed at a rate of 2%, although we expect to qualify for the lower 1% special rate. The Charitable Foundation is required to file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. The Charitable Foundation is required to make its annual return available for public inspection. The annual return for a private foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the recipient, any relationship between a grant recipient and the foundation’s managers and a concise statement of the purpose of each grant.

Regulatory Requirements Imposed on the Charitable Foundation

Federal Reserve Board regulations required that the directors who serve on the Charitable Foundation’s board could not participate in our board’s discussions concerning contributions to the Charitable Foundation, and could not vote on the matter.

Federal Reserve Board regulations impose the following requirements on the Charitable Foundation:

•

the Charitable Foundation’s primary purpose must be to serve and make grants in our local community;

•

the Federal Reserve Board may examine the Charitable Foundation at the foundation’s expense;

•

the Charitable Foundation must comply with all supervisory directives imposed by the Federal Reserve Board;

•

the Charitable Foundation must provide annually to the Federal Reserve Board a copy of the annual report that the Charitable Foundation submits to the Internal Revenue Service;

•

the Charitable Foundation must operate according to written policies adopted by its board of directors, including a conflict of interest policy;

•

the Charitable Foundation may not engage in self-dealing and must comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code;

•

the Charitable Foundation must vote its shares of our common stock in the same ratio as all of the other shares voted on each proposal considered by our stockholders; and

•

the Charitable Foundation may not engage in self dealing and must comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code.

Within six months of completing the stock offering, the Charitable Foundation intends to submit to the Federal Reserve Board a three-year operating plan.

The board of directors recommends that you vote “FOR” the funding of the Charitable Foundation.

PROPOSAL 3 — ADJOURNMENT OF THE SPECIAL MEETING

If there are not sufficient votes to constitute a quorum or to approve the plan of conversion and/or the establishment and funding of the Charitable Foundation at the time of the special meeting, the proposals may not be approved unless the special meeting is adjourned to a later date or dates in order to permit further solicitation of proxies. In order to allow proxies that have been received by Kearny Financial Corp. at the time of the special meeting to be voted for an adjournment, if necessary, Kearny Financial Corp. has submitted the question of adjournment to its stockholders as a separate matter for their consideration. The board of directors of Kearny Financial Corp. recommends that stockholders vote “FOR” the adjournment proposal. If it is necessary to adjourn the special meeting, no notice of the adjourned special meeting is required to be given to stockholders (unless the adjournment is for more than 30 days or if a new record date is fixed), other than an announcement at the special meeting of the hour, date and place to which the special meeting is adjourned.

The board of directors recommends that you vote “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the special meeting to approve the plan of conversion and/or the establishment and funding of the Charitable Foundation.

PROPOSALS 4 THROUGH 6 — INFORMATIONAL PROPOSALS RELATED TO THE

ARTICLES OF INCORPORATION OF NEW KEARNY.

By their approval of the plan of conversion as set forth in Proposal 1, the board of directors of Kearny Financial Corp. has approved each of the informational proposals numbered 4 through 6, all of which relate to provisions included in the articles of incorporation of New Kearny. Each of these informational proposals is discussed in more detail below.

As a result of the conversion, the public stockholders of Kearny Financial Corp., whose rights are presently governed by the charter and bylaws of Kearny Financial Corp., will become stockholders of New Kearny, whose rights will be governed by the articles of incorporation and bylaws of New Kearny. The following informational proposals address the material differences between the governing documents of the two companies. This discussion is qualified in its entirety by reference to the charter and bylaws of Kearny Financial Corp. and the articles of incorporation and bylaws of New Kearny. See “Where You Can Find Additional Information” for procedures for obtaining a copy of those documents.

The provisions of New Kearny’s articles of incorporation that are summarized as informational proposals 4 through 6 were approved as part of the process in which the board of directors of Kearny Financial Corp. approved the plan of conversion. These proposals are informational in nature only, because the Board of Governors of the Federal Reserve System’s regulations governing mutual-to-stock conversions do not provide for votes on matters other than the plan of conversion. Kearny Financial Corp.’s stockholders are not being asked to approve these informational proposals at the special meeting. While we are asking you to vote with respect to each of the informational proposals set forth below, the proposed provisions for which an informational vote is requested will become effective if stockholders approve the plan of conversion, regardless of whether stockholders vote to approve any or all of the informational proposals. The provisions of New Kearny’s articles of incorporation and bylaws that are summarized as informational proposals may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of New Kearny, if such attempts are not approved by the board of directors, or may make the removal of the board of directors or management, or the appointment of new directors, more difficult.

Informational Proposal 4. — Approval of a Provision in New Kearny’s Articles of Incorporation Requiring a Super-Majority Vote to Amend Certain Provisions of the Articles of Incorporation of New Kearny. No amendment of the charter of Kearny Financial Corp. may be made unless it is first proposed by the board of directors, then preliminarily approved by the Board of Governors of the Federal Reserve System, and thereafter approved by the holders of a majority of the total votes eligible to be cast at a legal meeting. The articles of incorporation of New Kearny generally may be amended by the holders of a majority of the shares entitled to vote; provided, however, that any amendment of Section C, D, E or F of Article Fifth (Preferred Stock, Restrictions on Voting Rights of the Corporation’s Equity Securities, Majority Vote and Quorum), Article 7 (Directors), Article 8 (Bylaws), Article 9 (Evaluation of Certain Offers), Article 10 (Indemnification, etc. of Directors and Officers), Article 11 (Limitation of Liability), Article 12 (Selection of Forum) and Article 13 (Amendment of the Articles of Incorporation) must be approved by the affirmative vote of the holders of at least 80% of the outstanding shares entitled to vote, except that the board of directors may amend the articles of incorporation without any action by the stockholders to increase or decrease the aggregate number of shares of capital stock.

These limitations on amendments to specified provisions of New Kearny’s articles of incorporation are intended to ensure that the referenced provisions are not limited or changed upon a simple majority vote. While this limits the ability of stockholders to amend those provisions, Kearny MHC, as a 77.2% stockholder, currently can effectively block any stockholder proposed change to the charter.

The requirement of a super-majority stockholder vote to amend specified provisions of New Kearny’s articles of incorporation could have the effect of discouraging a tender offer or other takeover attempt where the ability to make fundamental changes through amendments to the articles of incorporation is an important element of the takeover strategy of the potential acquiror. The board of directors believes that the provisions limiting certain amendments to the articles of incorporation will put the board of directors in a stronger position to negotiate with third parties with respect to transactions potentially affecting the corporate structure of New Kearny and the

fundamental rights of its stockholders, and to preserve the ability of all stockholders to have an effective voice in the outcome of such matters.

The board of directors recommends that you vote “FOR” the approval of a provision in New Kearny’s articles of incorporation requiring a super-majority vote to approve certain amendments to New Kearny’s articles of incorporation.

Informational Proposal 5. — Approval of a Provision in New Kearny’s Articles of Incorporation Requiring a Super-Majority Vote of Stockholders to Approve Stockholder Proposed Amendments to New Kearny’s Bylaws. An amendment to Kearny Financial Corp.’s bylaws proposed by stockholders must be approved by the holders of a majority of the total votes eligible to be cast at a legal meeting subject to applicable approval by the Board of Governors of the Federal Reserve System. The articles of incorporation of New Kearny provides that stockholders may only amend the bylaws if such proposal is approved by the affirmative vote of the holders of at least 80% of the outstanding shares entitled to vote.

The requirement of a super-majority stockholder vote to amend the bylaws of New Kearny is intended to ensure that the bylaws are not limited or changed upon a simple majority vote of stockholders. While this limits the ability of stockholders to amend the bylaws, Kearny MHC, as a 77.2% stockholder, currently can effectively block any stockholder proposed change to the bylaws. Also, the board of directors of both Kearny Financial Corp. and New Kearny may by a majority vote amend either company’s bylaws.

This provision in New Kearny’s articles of incorporation could have the effect of discouraging a tender offer or other takeover attempt where the ability to make fundamental changes through amendments to the bylaws is an important element of the takeover strategy of the potential acquiror. The board of directors believes that the provision limiting amendments to the bylaws will put the board of directors in a stronger position to negotiate with third parties with respect to transactions potentially affecting the corporate structure of New Kearny and the fundamental rights of its stockholders, and to preserve the ability of all stockholders to have an effective voice in the outcome of such matters.

The board of directors recommends that you vote “FOR” the approval of the provision in New Kearny’s articles of incorporation requiring a super-majority vote of stockholders to approve stockholder proposed amendments to New Kearny’s bylaws.

Informational Proposal 6. — Approval of a Provision in New Kearny’s Articles of Incorporation to Limit the Voting Rights of Shares Beneficially Owned in Excess of 10% of New Kearny’s Outstanding Voting Stock. The articles of incorporation of New Kearny provide that in no event shall any person, who directly or indirectly beneficially owns in excess of 10% of the then-outstanding shares of common stock as of the record date for the determination of shareholders entitled or permitted to vote on any matter, be entitled or permitted to vote in respect of the shares held in excess of the 10% limit. Beneficial ownership is determined pursuant to the federal securities laws and includes, but is not limited to, shares as to which any person and his or her affiliates (i) have the right to acquire pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options and (ii) have or share investment or voting power (but shall not be deemed the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of shareholders, and that are not otherwise beneficially, or deemed by New Kearny to be beneficially, owned by such person and his or her affiliates).

The foregoing restriction does not apply to any employee benefit plans of New Kearny or any subsidiary or a trustee of a plan.

The provision in New Kearny’s articles of incorporation limiting the voting rights of beneficial owners of more than 10% of New Kearny’s outstanding voting stock is intended to limit the ability of any person to acquire a significant number of shares of New Kearny common stock and thereby gain sufficient voting control so as to cause New Kearny to effect a transaction that may not be in the best interests of New Kearny and its stockholders generally. This provision will not prevent a stockholder from seeking to acquire a controlling interest in New

Kearny, but it will prevent a stockholder from voting more than 10% of the outstanding shares of common stock unless that stockholder has first persuaded the board of directors of the merits of the course of action proposed by the stockholder. The board of directors of New Kearny believes that fundamental transactions generally should be first considered and approved by the board of directors as it generally believes that it is in the best position to make an initial assessment of the merits of any such transactions and that its ability to make the initial assessment could be impeded if a single stockholder could acquire a sufficiently large voting interest so as to control a stockholder vote on any given proposal. This provision in New Kearny’s articles of incorporation makes an acquisition, merger or other similar corporate transaction less likely to occur, even if such transaction is supported by most stockholders, because it can prevent a holder of shares in excess of the 10% limit from voting the excess shares in favor of the transaction. Thus, it may be deemed to have an anti-takeover effect.

The board of directors recommends that you vote “FOR” the approval of a provision in New Kearny’s articles of incorporation to limit the voting rights of shares beneficially owned in excess of 10% of New Kearny’s outstanding voting stock.

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

[Same as prospectus]

FORWARD-LOOKING STATEMENTS

[Same as prospectus]

HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

[Same as prospectus]

OUR DIVIDEND POLICY

[Same as prospectus]

MARKET FOR THE COMMON STOCK

[Same as prospectus]

HISTORICAL AND PRO FORMA REGULATORY CAPITAL COMPLIANCE

[Same as prospectus]

CAPITALIZATION

[Same as prospectus]

PRO FORMA DATA

[Same as prospectus]

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

[Same as prospectus]

BUSINESS OF NEW KEARNY

[Same as prospectus]

BUSINESS OF KEARNY FINANCIAL CORP. AND KEARNY BANK

[Same as prospectus]

SUPERVISION AND REGULATION

[Same as prospectus]

TAXATION

[Same as prospectus]

MANAGEMENT

[Same as prospectus]

COMPENSATION DISCUSSION AND ANALYSIS

[Same as prospectus]

COMPENSATION RISK ASSESSMENT

[Same as prospectus]

BENEFICIAL OWNERSHIP OF COMMON STOCK

[Same as prospectus]

SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

[Same as prospectus]

THE CONVERSION AND OFFERING

[Same as prospectus]

KEARNYBANK FOUNDATION

[Same as prospectus]

COMPARISON OF STOCKHOLDERS’ RIGHTS FOR EXISTING

STOCKHOLDERS OF KEARNY FINANCIAL CORP.

[Same as prospectus]

RESTRICTIONS ON ACQUISITION OF NEW KEARNY

[Same as prospectus]

DESCRIPTION OF CAPITAL STOCK OF NEW KEARNY

FOLLOWING THE CONVERSION

[Same as prospectus]

TRANSFER AGENT

[Same as prospectus]

EXPERTS

[Same as prospectus]

LEGAL MATTERS

[Same as prospectus]

CHANGE IN ACCOUNTANTS

[Same as prospectus]

WHERE YOU CAN FIND ADDITIONAL INFORMATION

[Same as prospectus]

STOCKHOLDER PROPOSALS

In order to be eligible for inclusion in our proxy materials for our 2014 Annual Meeting of Stockholders, any stockholder proposal to take action at such meeting must be received at our executive office, 120 Passaic Avenue, Fairfield, New Jersey 07004, no later than . Any such proposals shall be subject to the requirements of the proxy rules adopted under the Exchange Act.

ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING

Provisions of Kearny-Federal’s Bylaws. Under Kearny-Federal’s Bylaws, a stockholder must follow certain procedures to nominate persons for election as directors or to introduce an item of business at a meeting of stockholders. These procedures provide, generally, that stockholders desiring to make nominations for directors, or to bring a proper subject of business before the meeting, must do so by a written notice timely received (generally not less than 30 days in advance of such meeting, subject to certain exceptions) by the Secretary of Kearny-Federal.

Provisions of New Kearny’s Bylaws. New Kearny’s Bylaws provide an advance notice procedure for certain business, or nominations to the Board of Directors, to be brought before an annual meeting of shareholders. In order for a shareholder to properly bring business before an annual meeting, or to propose a nominee to the board of directors, New Kearny’s Secretary must receive written notice not earlier than the 90th day nor later than the 80th day prior to date of the annual meeting; provided, however, that in the event that less than 90 days’ notice or prior public disclosure of the date of the annual meeting is provided to shareholders, then, to be timely, notice by the shareholder must be so received not later than the tenth day following the day on which public announcement of the date of such meeting is first made.

The notice with respect to shareholder proposals that are not nominations for director must set forth as to each matter such shareholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address of such shareholder as they appear on New Kearny’s books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of New Kearny which are owned beneficially or of record by such shareholder and such beneficial owner; (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business; and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

The notice with respect to director nominations must include (i) as to each individual whom the shareholder proposes to nominate for election as a director, (A) all information relating to such person that would indicate such person’s qualification under Article 2, Section 12 of New Kearny’s Bylaws, including an affidavit that such person would not be disqualified under the provisions of Article 2, Section 12 of the Bylaws and (B) all other information relating to such individual that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation; and (ii) as to the shareholder giving the notice, (A) the name and address of such shareholder as they appear on New Kearny’s books and of the beneficial owner, if any, on whose behalf the nomination is made; (B) the class or series and number of shares of capital stock of New Kearny which are owned beneficially or of record by such shareholder and such beneficial owner; (C) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or

persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder; (D) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (E) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934 or any successor rule or regulation. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected.

The 2014 annual meeting of stockholders is expected to be held , 2014. If the conversion is completed, advance written notice for certain business, or nominations to the Board of Directors, to be brought before the next annual meeting must be given to us no later than , 2014. If notice is received after , 2014, it will be considered untimely, and we will not be required to present the matter at the stockholders meeting. If the conversion is not completed, advance written notice for certain business, or nominations to the Board of Directors, to be brought before the next annual meeting must be given to us by , 2014. If notice is received after , 2014, it will be considered untimely, and we will not be required to present the matter at the stockholders meeting.

Nothing in this proxy statement/prospectus shall be deemed to require us to include in our proxy statement and proxy relating to an annual meeting any stockholder proposal that does not meet all of the requirements for inclusion established by the Securities and Exchange Commission in effect at the time such proposal is received.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING

The Notice of Special Meeting of Stockholders, Proxy Statement/Prospectus and Proxy Card are available at .

OTHER MATTERS

As of the date of this document, the board of directors is not aware of any business to come before the special meeting other than the matters described above in the proxy statement/prospectus. However, if any matters should properly come before the special meeting, it is intended that the holders of the proxies will act in accordance with their best judgment.

PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.

Other Expenses of Issuance and Distribution


		Amount
*	Registrant’s Legal Fees and Expenses	$	850,000
*	Registrant’s Accounting Fees and Expenses		207,000
*	Marketing Agent Fees (1)		24,567,675
*	Records Management Fees and Expenses		310,000
*	Appraisal Fees and Expenses		250,000
*	Printing, Postage, Mailing and EDGAR Fees		675,000
*	Filing Fees (Nasdaq, FINRA and SEC)		317,798
*	Transfer Agent Fees and Expenses		100,000
*	Business Plan Fees and Expenses		55,000
*	Proxy Solicitor Fees and Expenses		75,000
*	Other		200,202

*	Total	$	27,607,675

Estimated

(1)	Kearny Financial Corp. has retained Sandler O’Neill & Partners, L.P. to assist in the sale of common stock on a best efforts basis. Estimated at maximum of offering range, assuming 50% of the shares are sold in the subscription offering.

Item 14.

Indemnification of Directors and Officers

Articles 10 and 11 of the Articles of Incorporation of Kearny Financial Corp. (the “Corporation”) set forth circumstances under which directors, officers, employees and agents of the Corporation may be insured or indemnified against liability which they incur in their capacities as such:

ARTICLE 10. Indemnification, etc. of Directors and Officers.

A. Indemnification. The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

B. Procedure. If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has not received both (i) an undertaking as required by law to repay such advances in the event it shall ultimately be determined that the standard of conduct has not been met and (ii) a written affirmation by the indemnitee of his good faith belief that the standard of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors,

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independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

C. Non-Exclusivity. The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any agreement, any vote of stockholders or the Board of Directors, or otherwise.

D. Insurance. The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the MGCL.

E. Miscellaneous. The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

F. Limitations Imposed by Federal Law . Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation, Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.

Any repeal or modification of this Article 10 shall not in any way diminish any rights to indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder with respect to events occurring, or claims made, while this Article 10 is in force.

ARTICLE 11. Limitation of Liability. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to the extent that it is proved that the Person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.

Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.

Item 15.

Recent Sales of Unregistered Securities

Not Applicable.

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Item 16.

Exhibits and Financial Statement Schedules:

The exhibits and financial statement schedules filed as part of this registration statement are as follows:

(a)

List of Exhibits



1.1		Engagement Letters between Kearny MHC, Kearny Financial Corp., Kearny Federal Savings Bank and Sandler O’Neill & Partners, L.P.

1.2		Form of Agency Agreement between Kearny MHC, Kearny Financial Corp., a Federal corporation, Kearny Federal Savings Bank and Kearny Financial Corp., a Maryland corporation, and Sandler O’Neill & Partners, L.P. *

2		Plan of Conversion and Reorganization

3.1		Articles of Incorporation of Kearny Financial Corp.

3.2		Bylaws of Kearny Financial Corp.

4		Form of Common Stock Certificate of Kearny Financial Corp.

5		Opinion of Luse Gorman Pomerenk & Schick, P.C. regarding legality of securities being registered

8.1		Form of Federal Tax Opinion of Luse Gorman Pomerenk & Schick, P.C.

8.2		Form of State Tax Opinion of BDO USA, LLP

10.1		Employment Agreement between Kearny Federal Savings Bank and William C. Ledgerwood(2)

10.2		Employment Agreement between Kearny Federal Savings Bank and Erika K. Parisi(2)

10.3		Employment Agreement between Kearny Federal Savings Bank and Patrick M. Joyce(2)

10.4		Employment Agreement between Kearny Federal Savings Bank and Craig Montanaro(3)

10.5		Employment Agreement between Kearny Financial Corp. and Craig Montanaro

10.6		Form of Proposed Employment Agreement between Kearny Federal Savings Bank and Craig Montanaro*

10.7		Form of Proposed Employment Agreement between Kearny Financial Corp. and Craig Montanaro*

10.8		Form of Proposed Employment Agreement between Kearny Federal Savings Bank and Named Executive Officers*

10.9		Form of Proposed Change in Control Agreement between Kearny Federal Savings Bank and Certain Officers*

10.10		Directors Consultation and Retirement Plan(1)

10.11		Form of Proposed Employment Agreement between Kearny Federal Savings Bank and William C. Ledgerwood*

10.12		Form of Proposed Amended and Restated Directors Consultation and Retirement Plan

10.13		Benefit Equalization Plan for Pension Plan(1)

10.14		Form of Proposed Amended and Restated Benefit Equalization Plan for Pension Plan

10.15		Benefit Equalization Plan for Employee Stock Ownership Plan(1)

10.16		Form of Proposed Amended and Restated Benefit Equalization Plan for the Employee Stock Ownership Plan

10.17		Kearny Financial Corp. 2005 Stock Compensation and Incentive Plan (4)

10.18		Form of Proposed Amendment Number One to 2005 Stock Compensation and Incentive Plan

10.19		Kearny Federal Savings Bank Director Life Insurance Agreement(5)

10.20		Form of Proposed Amendment to Kearny Federal Savings Bank Director Life Insurance Agreement

10.21		Kearny Federal Savings Bank Executive Life Insurance Agreement(5)

10.22		Form of Proposed Amendment to Kearny Federal Savings Bank Executive Life Insurance Agreement

10.23		Employment Agreement between Kearny Federal Savings Bank and Eric B. Heyer(6)

10.24		Form of Proposed Officer Change in Control Severance Pay Plan

10.25		Kearny Federal Savings Bank Senior Management Incentive Compensation Plan(7)

16		Letter re Change in Certifying Accountant

21		Subsidiaries of Registrant

23.1		Consent of Luse Gorman Pomerenk & Schick, P.C. (contained in Opinions included as Exhibits 5 and 8.1)

23.2		Consent of RP Financial, LC.

23.3		Consent of BDO USA, LLP

23.4		Consent of ParenteBeard, LLC

24		Power of Attorney (set forth on signature page)

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99.1		Appraisal Agreement between Kearny Financial Corp. and RP Financial, LC

99.2		Letter of RP Financial, LC. with respect to Subscription Rights

99.3		Appraisal Report of RP Financial, LC.**

99.4		Marketing Materials*

99.5		Stock Order and Certification Form*

99.6		Letter of RP Financial, LC. with respect to Liquidation Account

99.7		Form of Kearny Financial Corp. Stockholder Proxy Card*

101		Interactive Data Files‡

‡	Attached as Exhibits 101 to this Prospectus are documents formatted in XBRL (Extensible Business Reporting Language.

(1)	Incorporated by reference to the exhibits to Kearny Financial Corp.’s Registration Statement on Form S-1 (File No. 333-118815).

(2)	Incorporated by reference to the identically numbered exhibit to Kearny Financial Corp.’s Annual Report on Form 10-K for the year ended June 30, 2008 (File No. 000-51093)

(3)	Incorporated by reference to the exhibit to Kearny Financial Corp.’s Annual Report on Form 10-K for the year ended June 30, 2012 (File No. 000-51093)

(4)	Incorporated by reference to Exhibit 4.1 to Kearny Financial Corp.’s Registration Statement on Form S-8 (File No. 333-130204)

(5)	Incorporated by reference to the exhibits to Kearny Financial Corp.’s Current Report on Form 8-K filed on August 18, 2005. (File No. 000-51093).

(6)	Incorporated by reference to the exhibit to Kearny Financial Corp.’s Current Report on Form 8-K filed on June 30, 2011. (File No. 000-51093).

(7)	Incorporated by reference to the exhibit to Kearny Financial Corp.’s Current Report on Form 8-K filed on September 2, 2014 (File No. 000-51093).

*	To be filed supplementally or by amendment.

**	Supporting financial schedules filed in paper format only pursuant to Rule 202 of Regulation S-T. Available for inspection during business hours at the principal offices of the SEC in Washington, D.C.

(b)

Financial Statement Schedules

No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.

Item 17.

Undertakings

The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

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(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(5) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(6) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(7) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(8) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the

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registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Fairfield, State of New Jersey on September 5, 2014.


KEARNY FINANCIAL CORP.

By:		/s/ Craig L. Montanaro
		Craig L. Montanaro
		President and Chief Executive Officer
		(Duly Authorized Representative)

POWER OF ATTORNEY

We, the undersigned directors and officers of Kearny Financial Corp. (the “Company”) hereby severally constitute and appoint Craig L. Montanaro as our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said Craig L. Montanaro may deem necessary or advisable to enable the Company to comply with the Securities Act of 1933, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form S-1 relating to the offering of the Company’s common stock, including specifically, but not limited to, power and authority to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said Craig L. Montanaro shall do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signatures	Title	Date

/s/ Craig L. Montanaro Craig L. Montanaro	President and Chief Executive Officer (Principal Executive Officer)	September 5, 2014

/s/ Eric B. Heyer Eric B. Heyer	Executive Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)	September 5, 2014

/s/ Theodore J. Aanensen Theodore J. Aanensen	Director	September 5, 2014

/s/ John N. Hopkins John N. Hopkins	Director	September 5, 2014

/s/ John J. Mazur, Jr. John J. Mazur, Jr.	Director	September 5, 2014

/s/ Joseph P. Mazza Joseph P. Mazza	Director	September 5, 2014

/s/ Matthew T. McClane Matthew T. McClane	Director	September 5, 2014

/s/ John F. McGovern John F. McGovern	Director	September 5, 2014

/s/ Leopold W. Montanaro Leopold W. Montanaro	Director	September 5, 2014

/s/ John F. Regan John F. Regan	Director	September 5, 2014

Exhibit 1.1

[Sandler O’Neill & Partners, L.P. Letterhead]

August 27, 2014

Kearny, MHC

Kearny Financial Corp.

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, NJ 07004


Attention:		Mr. Craig L. Montanaro
		President and Chief Executive Officer

Gentlemen:

We understand that the Boards of Directors of Kearny, MHC (“MHC”) and its subsidiaries, Kearny Financial Corp. (“Kearny Financial”) and Kearny Federal Savings Bank (the “Bank”), are considering the adoption of a Plan of Conversion and Reorganization (the “Plan”) pursuant to which the Company will be converted from mutual holding company to stock holding company form, and all of the shares of Kearny Financial currently outstanding (other than shares held by the MHC) will be exchanged for shares of common stock of a successor stock holding company to be formed in connection with the reorganization (the “Holding Company”). Concurrently with the reorganization, the Holding Company also intends to offer and sell certain shares of common stock (the “Shares”) in a public offering. The MHC, Kearny Financial, the Holding Company and the Bank are sometimes collectively referred to herein as the “Company” and their respective Boards of Directors are collectively referred to herein as the “Board.”

Under the terms of the Plan and applicable regulations, the Shares will be offered first to eligible depositors and certain borrower members of the Bank and the Company’s tax-qualified employee stock benefit plans in a subscription offering and, concurrently and subject to the prior rights of eligible depositors and certain borrower members, to certain persons in a community offering, with a preference given in the community offering to residents of the Bank’s community and then to Kearny Financial’s existing stockholders (the subscription offering and the community offering being collectively referred to herein as the “Subscription Offering”). Shares not subscribed for in the Subscription Offering may be offered to the general public through a syndicate of broker-dealers (“Syndicated Offering”) and/or in a firm commitment

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

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public offering (the “Firm Commitment Offering” and together with the Subscription Offering and Syndicated Offering, the “Offering”). Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”) is pleased to assist the Company with the Offering and this letter is to confirm the terms and conditions of our engagement.

Services

Sandler O’Neill will work with the Company and its management, counsel, accountants and other advisors in preparing for and completing the Offering and anticipate that our services will include the following:

Consulting as to the financial and marketing implications of the Plan;

Reviewing with the Board the financial impact of the Offering on the Company, based upon the independent appraiser’s appraisal of the common stock of the Holding Company;

Reviewing all offering documents, including the Prospectus, stock order forms and related offering materials (it being understood that preparation and filing of such documents will be the responsibility of the Company and its counsel);

Assisting in the design and implementation of a marketing strategy for the Offering;

Assisting management in scheduling and preparing for meetings with potential investors and/or other broker-dealers in connection with the Offering, including assistance in preparing presentation materials for such meetings; and

Providing such other general advice and assistance as may be reasonably necessary to promote the successful completion of the Offering.

Sandler O’Neill will act as exclusive marketing agent for the Company in the Subscription Offering and will serve as sole book-running manager of the Syndicated Offering and/or Firm Commitment Offering. The Company has advised Sandler O’Neill that it expects to invite certain other broker-dealers to serve as co-managers of any Firm Commitment Offering (collectively, the “Co-managers”). It is understood that neither Sandler O’Neill nor any Co-manager shall be obligated to take or purchase any Shares in the Offering other than as may be expressly agreed to by such firms and the Company in an underwriting agreement for a Firm Commitment Offering.

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

Page 3

Fees

If the Offering is consummated, the Company agrees to pay Sandler O’Neill for its marketing agent services a fee of one percent (1.00%) of the aggregate Actual Purchase Price of all Shares sold in the Subscription Offering, excluding Shares purchased by or on behalf of (i) any employee benefit plan or trust of the Company established for the benefit of its directors, officers and employees, (ii) any director, officer or employee of the Company or members of their immediate families (whether directly or through a personal trust), as to which no fee shall be payable, and (iii) shares issued to the foundation established in connection with the Plan and the Offering.

With respect to any Shares sold in the Syndicated Offering and/or Firm Commitment Offering, the Company agrees to pay to Sandler O’Neill and any Co-managers an aggregate fee of 5.0% of the aggregate Actual Purchase Price of all Shares sold in the Syndicated Offering and/or Firm Commitment Offering, of which not less than 65% shall be paid to Sandler O’Neill with the remainder to be paid to the Co-managers in such proportion as the Company may determine.

For purposes of this letter, the term “Actual Purchase Price” shall mean the price at which the shares of the Company’s common stock are sold in the Offering. It is understood and agreed that no fee shall be paid with respect to any shares issued to minority stockholders in exchange for their current shares as a result of the reorganization. All fees payable hereunder shall be payable in immediately available funds by wire transfer at the time of the closing of the Offering.

Expenses

In addition to any fees that may be payable hereunder and the expenses to be borne by the Company pursuant to the following paragraph, the Company agrees to reimburse Sandler O’Neill, upon request made from time to time, for its reasonable legal fees and expenses incurred in connection with the Offering, regardless of whether the Offering is consummated, up to a maximum aggregate amount of $250,000; provided, however , that such expenses shall be documented to the reasonable satisfaction of the Company. Sandler O’Neill and any Co-managers shall bear all of their other out-of-pocket expenses incurred in connection with the Offering. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this letter.

As is customary, the Company will bear all other expenses incurred in connection with the Offering, including, without limitation, (a) the cost of obtaining all securities and bank

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

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regulatory approvals, including any required FINRA filing fees; (b) the cost of printing and distributing the offering materials; (c) the costs of blue sky qualification (including fees and expenses of blue sky counsel) of the Shares in the various states; (d) listing fees; and (e) all fees and disbursements of the Company’s counsel, accountants and other advisors. In the event Sandler O’Neill incurs any such fees and expenses on behalf of the Company, the Company will reimburse Sandler O’Neill for such fees and expenses whether or not the Offering is consummated.

Due Diligence Review

Sandler O’Neill’s obligation to perform the services contemplated by this letter shall be subject to the satisfactory completion of such investigation and inquiries relating to the Company and its directors, officers, agents and employees as Sandler O’Neill and its counsel in their sole discretion may deem appropriate under the circumstances. In this regard, the Company agrees that, at its expense, it will make available to Sandler O’Neill all information reasonably requested, and will allow Sandler O’Neill the opportunity to discuss with the Company’s management the financial condition, business and operations of the Company, and will afford a similar opportunity to any Co-manager. The Company acknowledges that Sandler O’Neill and any Co-manager will rely upon the accuracy and completeness of all information received from the Company and its directors, officers, employees, agents, independent accountants and counsel.

Blue Sky Matters

Sandler O’Neill and the Company agree that the Company’s counsel shall serve as counsel with respect to blue sky matters in connection with the Offering. The Company shall cause such counsel to prepare a Blue Sky Memorandum related to the Subscription Offering and the Firm Commitment Offering, including Sandler O’Neill’s and, as applicable, any Co-managers’ participation therein, and shall furnish Sandler O’Neill a copy thereof addressed to Sandler O’Neill and, as applicable, the Co-managers, or upon which such counsel shall state Sandler O’Neill and, as applicable, the Co-managers, may rely.

Confidentiality

Except as contemplated in connection with the performance of its services under this agreement, as authorized by the Company or as required by law, regulation or legal process, Sandler O’Neill agrees that it will treat as confidential all material, non-public information relating to the Company obtained in connection with its engagement hereunder (the “Confidential Information”); provided, however , that Sandler O’Neill may disclose such Confidential Information to its agents, consultants and advisors who are assisting or advising

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

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Sandler O’Neill in performing its services hereunder and to any other Co-manager, provided they have agreed to be bound by the terms and conditions of this paragraph. As used in this paragraph, the term “Confidential Information” shall not include information which (a) is or becomes generally available to the public other than as a result of a disclosure by Sandler O’Neill, (b) was available to Sandler O’Neill on a non-confidential basis prior to its disclosure to Sandler O’Neill by the Company, or (c) becomes available to Sandler O’Neill on a non-confidential basis from a person other than the Company who is not otherwise known to Sandler O’Neill, upon due inquiry, to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation.

Indemnification

The Company agrees to indemnify and hold Sandler O’Neill, its affiliates and their respective partners, directors, officers, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 (each such firm and person being an “Indemnified Party”) harmless from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise, related to or arising out of the Offering or the engagement of Sandler O’Neill pursuant to, or the performance by Sandler O’Neill of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including reasonable legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party; provided, however, that the Company shall only be obligated to pay for one separate counsel (in addition to any required local counsel) in any one action or proceeding or group of related actions or proceedings for all Indemnified Parties collectively, and provided further that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense (a) arises out of or is based upon any untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make not misleading any statements contained in any final prospectus, or any amendment or supplement thereto, made in reliance on and in conformity with written information furnished to the Company by Sandler O’Neill expressly for use therein, or (b) is primarily attributable to the gross negligence, willful misconduct or bad faith of Sandler O’Neill. Notwithstanding the above, Sandler O’Neill and the Company hereby agree that in no event will any payments be made by the Company pursuant to this section that are prohibited by Section 18(k) of the Federal Deposit Insurance Act and its implementing regulations at 12 CFR Part 359. If the foregoing indemnification is unavailable for any reason other than for the reasons stated in subparagraph (a) or (b) above, the Company agrees to contribute to such losses, claims, damages, liabilities and expenses in the proportion that its financial interest in the

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

Page 6

Offering bears to that of Sandler O’Neill. The provisions of any agency agreement or underwriting agreement entered into in connection with the Syndicated Offering and/or Firm Commitment Offering shall also extend to any Co-manager.

The Company agrees to notify Sandler O’Neill promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this agreement.

Miscellaneous

Sandler O’Neill and the Company agree that (a) except as set forth in clause (b) below, the foregoing represents the general intention of the Company and Sandler O’Neill with respect to the services to be provided by Sandler O’Neill in connection with the Offering, which will serve as a basis for Sandler O’Neill commencing activities, and (b) the only legal and binding obligations of the Company and Sandler O’Neill with respect to the Offering shall be (i) the obligations set forth under the captions “Expenses,” “Confidentiality” and “Indemnification,” and (ii) as set forth in a duly negotiated and executed definitive Agency Agreement to be entered into prior to the commencement of the Subscription Offering, and a duly negotiated and executed Underwriting Agreement to be entered into prior to the commencement of the Firm Commitment Offering. Such Agency Agreement and Underwriting Agreement shall be in form and content satisfactory to Sandler O’Neill and the Company and their respective counsel and shall contain standard indemnification and contribution provisions consistent herewith.

Sandler O’Neill’s execution of such Agency Agreement and Underwriting Agreement shall also be subject to (i) Sandler O’Neill’s satisfaction with its investigation of the Company’s business, financial condition and results of operations, (ii) preparation of offering materials that are satisfactory to Sandler O’Neill, (iii) compliance with all relevant legal and regulatory requirements to the reasonable satisfaction of Sandler O’Neill, (iv) agreement that the price established by the independent appraiser is reasonable, and (v) market conditions at the time of the proposed offering.

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof.

[ Signature page follows ]

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

Page 7

Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Sandler O’Neill the duplicate copy of this letter enclosed herewith.


Very truly yours,

SANDLER O’NEILL & PARTNERS, L.P.
By:	Sandler O’Neill & Partners Corp.,
	the sole general partner

	By:	/s/ Catherine A. Lawton
		Catherine A. Lawton
		An officer of the Corporation


Accepted and agreed to as of
the date first written above:

KEARNY, MHC
KEARNY FINANCIAL CORP.
KEARNY FEDERAL SAVINGS BANK

By:		/s/ Craig L. Montanaro
		Craig L. Montanaro
		President and Chief Executive Officer

[Sandler O’Neill & Partners, L.P. Letterhead]

August 27, 2014

Kearny, MHC

Kearny Financial Corp.

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, NJ 07004


Attention:		Mr. Craig L. Montanaro
		President and Chief Executive Officer

Dear Mr. Montanaro:

Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”) is pleased to act as records management agent (“Records Agent”) for Kearny, MHC (the “MHC”), Kearny Financial Corp. (together with any successor stock holding company, the “Holding Company”) and Kearny Federal Savings Bank (the “Bank”) in connection with the offer and sale of certain shares of the common stock of the Holding Company to the Bank’s eligible account holders in a Subscription Offering, to members of the Bank’s community in a Community Offering, and shares not subscribed for in the Subscription Offering and Community Offering, to the public through a syndicate of broker-dealers in a Syndicated Offering and/or firm commitment underwritten public offering (collectively, the “Offering”) pursuant to the terms of a Plan of Conversion and Reorganization to be adopted by the Boards of Directors of the MHC, the Holding Company and the Bank (the “Plan”). The MHC, the Holding Company and the Bank are sometimes collectively referred to herein as the “Company.” This letter is to confirm the terms and conditions of our engagement.

SERVICES AND FEES

In our role as Records Agent, we anticipate that our services will include the services outlined below, each as may be necessary and as the Company may reasonably request:

Consolidation of Deposit Accounts and Vote Calculation

II.

Design and Preparation of Proxy Forms for Depositor Vote and Stock Order Forms for the Subscription and Community Offering

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

Page 2

III.

Organization and Supervision of Conversion Center

IV.

Coordinate Proxy Solicitation/Special Meeting of Depositors

Subscription Services

Each of these services is further described in Appendix A to this agreement.

FEES AND EXPENSES

For its services hereunder, the Company agrees to pay Sandler O’Neill a fee of $60,000. This fee is based upon the requirements of current regulations and the Plan as currently contemplated. Any unusual or additional items or duplication of service required as a result of a material change in the regulations or the Plan as currently contemplated or a material delay or other similar events may result in extra charges that will be covered in a separate agreement if and when they occur. All fees under this agreement shall be payable in cash, as follows: (a) $30,000 payable upon execution of this agreement, which shall be non-refundable; and (b) the balance upon the completion of the Offering.

In addition to any fees that may be payable to Sandler O’Neill hereunder, the Company agrees to reimburse Sandler O’Neill, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Offering is consummated, including, without limitation, travel, lodging, meals, telephone, postage, community meeting expenses and other similar expenses, up to a maximum of $30,000. It is understood that all expenses associated with the establishment and operation of the Conversion Center (e.g., postage, telephones, supplies, temporary employees, etc.) will be borne by the Company. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this agreement.

RELIANCE ON INFORMATION PROVIDED

The Company will furnish Sandler O’Neill with such information as Sandler O’Neill reasonably believes appropriate to its assignment (all such information so furnished being the “Records”). The Company recognizes and confirms that Sandler O’Neill (a) will use and rely primarily on the Records without having independently verified the same, and (b) does not assume responsibility for the accuracy or completeness of the Records.

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

Page 3

LIMITATIONS

Sandler O’Neill, as Records Agent hereunder, (a) shall have no duties or obligations other than those specifically set forth herein; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any order form or any stock certificates or the shares represented thereby, and will not be required to and will make no representations as to the validity, value or genuineness of the offer; (c) shall not be liable to any person, firm or corporation including the Company by reason of any error of judgment or for any act done by it in good faith, or for any mistake of law or fact in connection with this agreement and the performance hereof unless caused by or arising out of its own willful misconduct, bad faith or gross negligence; (d) will not be obliged to take any legal action hereunder which might in its judgment involve any expense or liability, unless it shall have been furnished with reasonable indemnity satisfactory to it; and (e) may rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telex, telegram, or other document or security delivered to it and in good faith believed by it to be genuine and to have been signed by the proper party or parties.

INDEMNIFICATION

The Company agrees to indemnify and hold Sandler O’Neill and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons (Sandler O’Neill and each such person being an “Indemnified Party”) harmless from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise, related to or arising out of the engagement of Sandler O’Neill pursuant to, and the performance by Sandler O’Neill of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred, including expenses incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party. The Company will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from Sandler O’Neill’s willful misconduct, bad faith or gross negligence. Notwithstanding the above, Sandler O’Neill and the Company hereby agree that in no event will payments be made by the Company pursuant to this section that are prohibited by Section 18(k) of the Federal Deposit Insurance Act and its implementing regulations at 12 CFR Part 359.

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

Page 4

MISCELLANEOUS

The following addresses shall be sufficient for written notices to each other:


If to you:		Kearny Financial Corp.
		120 Passaic Avenue
		Fairfield, NJ 07004
		Attention: Mr. Craig L. Montanaro

If to us:		Sandler O’Neill & Partners, L.P.
		1251 Avenue of the Americas, 6 ^th Floor
		New York, New York 10020
		Attention: General Counsel

The Agreement and the appendix hereto constitute the entire Agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof.

Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Sandler O’Neill the duplicate copy of this letter enclosed herewith.


Very truly yours,

SANDLER O’NEILL & PARTNERS, L.P.
By:		Sandler O’Neill & Partners Corp.,
		the sole general partner

By:		/s/ Catherine A. Lawton
		Catherine A. Lawton
		An Officer of the Corporation

Accepted and agreed to as of

the date first above written:

KEARNY, MHC

KEARNY FINANCIAL CORP.

KEARNY FEDERAL SAVINGS BANK

Kearny, MHC

Kearny Financial, Inc.

Kearny Federal Savings Bank

August 27, 2014

Page 5


By:		/s/ Craig L. Montanaro
		Craig L. Montanaro
		President and Chief Executive Officer

APPENDIX A

OUTLINE OF RECORDS MANAGEMENT AGENT SERVICES

I.	Consolidation of Deposit Accounts/Vote Calculation

Consolidate files in accordance with regulatory guidelines and create central file.

Our EDP format will be provided to your IT representatives.

Vote calculation.

II.	Design and Preparation of Proxy Forms for Member Vote and Stock Order Forms for the Subscription, Community Offering, Syndicated Offering and/or Firm Commitment Underwritten Public Offering

Assist in designing proxy cards and stock order forms for voting and ordering stock.

Prepare deposit account holder data for proxy cards and stock order forms (stockholder data to be supplied by Company’s transfer agent).

III.	Organization and Supervision of Conversion Center

Advising on the physical organization of the Conversion Center, including materials requirements.

Assist in the training of all Bank personnel and temporary employees who will be staffing the Conversion Center.

Establish reporting procedures.

On-site supervision of the Conversion Center during the offering period.

IV.	Coordinate Proxy Solicitation/Special Meeting of Members

Support proxy solicitor/tabulator.

Act as or support inspector of election, it being understood that Sandler O’Neill will not act as inspector of election in the case of a contested election.

If required, delete voting record date accounts closed prior to special meeting.

V.	Subscription Services

Produce list of depositors by state (Blue Sky report).

Production of subscription rights and research books.

Stock order form processing.

Acknowledgment letter to confirm receipt of stock order.

Daily reports and analysis.

Proration calculation and share allocation in the event of an oversubscription.

Produce charter shareholder list.

Interface with Transfer Agent for Stock Certificate issuance.

Refund and interest calculations.

10.

Confirmation letter to confirm purchase of stock.

11.

Notification of full/partial rejection of orders.

12.

Production of 1099/Debit tape.

A - 1

Exhibit 2

PLAN OF CONVERSION AND REORGANIZATION

KEARNY MHC

TABLE OF CONTENTS


1.	Introduction	1
2.	Definitions	2
3.	Procedures for conversion	8
4.	Holding company applications and approvals	11
5.	Sale of subscription shares	11
6.	Purchase price and number of subscription shares	12
7.	Retention of conversion proceeds by the holding company	13
8.	Subscription rights of eligible account holders (first priority)	13
9.	Subscription rights of employee plans (second priority)	14
10.	Subscription rights of supplemental eligible account holders (third priority)	14
11.	Subscription rights of other members (fourth priority)	15
12.	Community offering	15
13.	Syndicated community offering and/or firm commitment underwritten offering	16
14.	Limitations on purchases	17
15.	Payment for subscription shares	18
16.	Manner of exercising subscription rights through order forms	19
17.	Undelivered, defective or late order form; insufficient payment	20
18.	Residents of foreign countries and certain states	21
19.	Establishment of liquidation accounts	21
20.	Voting rights of stockholders	24
21.	Restrictions on resale or subsequent disposition	24
22.	Requirements for stock purchases by directors and officers following the conversion	25
23.	Transfer of deposit accounts	25
24.	Registration and marketing	25
25.	Tax rulings or opinions	26
26.	Stock benefit plans and employment agreements	26
27.	Restrictions on acquisition of bank and holding company	27
28.	Payment of dividends and repurchase of stock	28
29.	Articles of incorporation and bylaws	28
30.	Consummation of conversion and effective date	28
31.	Expenses of conversion	29
32.	Amendment or termination of plan	29
33.	Conditions to conversion	29
34.	Interpretation	30


Exhibit A		Form of Agreement of Merger between Kearny MHC and Kearny Financial Corp.

Exhibit B		Form of Agreement of Merger between Kearny Financial Corp., a federal corporation, and Kearny Financial Corp., a Maryland corporation

PLAN OF CONVERSION AND REORGANIZATION OF

KEARNY MHC

INTRODUCTION

This Plan of Conversion and Reorganization (the “Plan”) provides for the conversion of Kearny MHC, a federal mutual holding company (the “Mutual Holding Company”), from the mutual to the capital stock form of organization. The Mutual Holding Company currently owns a majority of the common stock of Kearny Financial Corp., a federal stock corporation (the “Mid-Tier Holding Company”), which owns 100% of the common stock of Kearny Federal Savings Bank (the “Bank”), a federally-chartered stock savings bank. A new stock holding company (the “Holding Company”) will be established as part of the Conversion, will succeed to all the rights and obligations of the Mutual Holding Company and the Mid-Tier Holding Company, and will issue Holding Company Common Stock in the Conversion. The purpose of the Conversion is to convert the Mutual Holding Company to the capital stock form of organization which will provide the Bank and the Holding Company with additional capital to grow and to respond to changing regulatory and market conditions. The Conversion will also provide the Bank and the Holding Company greater flexibility to effect corporate transactions, including mergers, acquisitions and branch expansions. The Holding Company Common Stock will be offered for sale in the Offering upon the terms and conditions set forth herein. The subscription rights granted to Participants in the Subscription Offering are set forth in Sections 8 through 11 hereof. All sales of Holding Company Common Stock in the Community Offering, in the Syndicated Community Offering or in the Firm Commitment Underwritten Offering, or in any other manner permitted by the Bank Regulators, will be at the sole discretion of the Board of Directors of the Bank and the Holding Company. As part of the Conversion, each Minority Stockholder will receive Holding Company Common Stock in exchange for Minority Shares. The Conversion will have no impact on depositors, borrowers or other customers of the Bank. After the Conversion, the Bank’s insured deposits will continue to be insured by the FDIC to the extent provided by applicable law.

In furtherance of the Bank’s commitment to its community, this Plan contemplates that a contribution of Holding Company Common Stock and/or cash, subject to regulatory limitations, will be made to the Foundation. The funding of the Foundation is intended to enhance the Bank’s existing community reinvestment activities in a manner that will allow the Bank’s local communities to share in the growth and profitability of the Holding Company and the Bank over the long term.

This Plan has been adopted by the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Bank. This Plan also must be approved by at least (i) a majority of the total votes eligible to be cast by Voting Members at the Special Meeting of Members, (ii) two-thirds of the total votes eligible to be cast by Stockholders at the Meeting of Stockholders, and (iii) a majority of the total votes eligible to be cast by Minority Stockholders at the Meeting of Stockholders. Approval of this Plan by the Voting Members shall constitute approval of each of the transactions necessary to implement this Plan, including the MHC Merger and the Mid-Tier Merger, by Voting Members in their capacity as members of the Mutual Holding Company. The Federal Reserve must approve this Plan before it is presented to Voting Members and Stockholders of the Mid-Tier Holding Company for their approval.

For purposes of this Plan, each holder of a deposit account in Atlas Bank (which merged into Kearny Bank on June 30, 2014) shall have the same rights and privileges as a depositor under this Plan as if the deposit account had been established at the Bank on the date established at Atlas Bank. For purposes of this Plan, each “member,” as defined in the Federal Mutual Association Charter of Atlas Bank, shall have the same rights and privileges as a Member, Other Member and Voting Member under this Plan as if the membership had been established at the Bank on the date established at Atlas Bank.

DEFINITIONS

For the purposes of this Plan, the following terms have the following meanings:

Account Holder – Any Person holding a Deposit Account in the Bank.

Acting in Concert – The term Acting in Concert means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement; or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A person or company which acts in concert with another person or company (“other party”) shall also be deemed to be acting in concert with any person or company who is also acting in concert with that other party, except that any Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated.

Affiliate – Any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another Person.

Appraised Value Range – The range of the estimated consolidated pro forma market value of the Holding Company, which shall also be equal to the estimated pro forma market value of the total number of shares of Conversion Stock to be issued in the Conversion, as determined by the Independent Appraiser prior to the Subscription Offering and as it may be amended from time to time thereafter. The maximum and minimum of the Appraised Value Range may vary as much as 15% above and 15% below, respectively, the midpoint of the Appraised Value Range.

Articles of Combination – The Articles of Combination filed with the Federal Reserve and any similar documents filed with the Bank Regulators in connection with the consummation of any merger relating to the Conversion.

Articles of Merger – The Articles of Merger filed with the Secretary of State of the State of Maryland and any similar documents in connection with the consummation of any merger relating to the Conversion.

Associate – The term Associate when used to indicate a relationship with any Person, means (i) any corporation or organization (other than the Mutual Holding

Company, the Mid-Tier Holding Company, the Bank or a majority-owned subsidiary of the Mutual Holding Company, the Mid-Tier Holding Company or the Bank) if the person is a senior officer or partner or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization, (ii) any trust or other estate, if the person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate except that for the purposes of this Plan relating to subscriptions in the Offering and the sale of Subscription Shares following the Conversion, a person who has a substantial beneficial interest in any Non-Tax-Qualified Employee Stock Benefit Plan or any Tax-Qualified Employee Stock Benefit Plan, or who is a trustee or fiduciary of such plan, is not an Associate of such plan, and except that, for purposes of aggregating total shares that may be held by Officers and Directors the term “Associate” does not include any Tax-Qualified Employee Stock Benefit Plan, and (iii) any person who is related by blood or marriage to such person and (A) who lives in the same home as such person or (B) who is a Director or Officer of the Mutual Holding Company, the Mid-Tier Holding Company, the Bank or the Holding Company, or any of their parents or subsidiaries.

Bank – Kearny Federal Savings Bank, Fairfield, New Jersey.

Bank Liquidation Account – The account established by the Bank representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders in connection with the Conversion.

Bank Regulators – The Federal Reserve and other bank regulatory agencies, if any, responsible for reviewing and approving the Conversion, including the ownership of the Bank by the Holding Company and the mergers required to effect the Conversion.

Code – The Internal Revenue Code of 1986, as amended.

Community – The New Jersey counties of Bergen, Essex, Hudson, Middlesex, Monmouth, Morris, Ocean, Passaic and Union and the New York counties of Kings and Richmond.

Community Offering – The offering of Subscription Shares not subscribed for in the Subscription Offering for sale to certain members of the general public directly by the Holding Company. The Community Offering may occur concurrently with the Subscription Offering, any Syndicated Community Offering or both, or upon conclusion of the Subscription Offering.

Control – (including the terms “controlling,” “controlled by,” and “under common control with”) means the direct or indirect power to direct or exercise a controlling influence over the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise as described in 12 C.F.R. Part 238.

Conversion – The conversion and reorganization of the Mutual Holding Company to stock form pursuant to this Plan, and all steps incident or necessary thereto, including the Offering and the Exchange Offering.

Conversion Stock – The Subscription Shares, the Exchange Shares and the Foundation Shares.

Deposit Account – Any withdrawable account, including, without limitation, savings, time, demand, NOW accounts, money market, certificate and passbook accounts.

Director – A member of the Board of Directors of the Bank, the Mid-Tier Holding Company, the Holding Company or the Mutual Holding Company, as appropriate in the context.

Eligible Account Holder – Any Person holding a Qualifying Deposit on the Eligibility Record Date for purposes of determining subscription rights and establishing subaccount balances in the Liquidation Account.

Eligibility Record Date – The date for determining Eligible Account Holders of the Bank, which is July 31, 2013.

Employees – All Persons who are employed by the Bank, the Mid-Tier Holding Company, the Holding Company or the Mutual Holding Company.

Employee Plans – Any one or more Tax-Qualified Employee Stock Benefit Plans of the Bank, its subsidiaries or the Holding Company, including any ESOP and 401(k) Plan.

ESOP – The Bank’s Employee Stock Ownership Plan and related trust.

Exchange Offering – The offering of Holding Company Common Stock to Minority Stockholders in exchange for Minority Shares.

Exchange Ratio – The rate at which shares of Holding Company Common Stock are exchanged for Minority Shares upon consummation of the Conversion. The Exchange Ratio (which shall be rounded to four decimal places) shall be determined such that as of the closing of the Conversion the rate will result in the Minority Stockholders owning in the aggregate the same percentage of the outstanding shares of Holding Company Common Stock immediately upon completion of the Conversion as the percentage of Mid-Tier Holding Company common stock owned by them in the aggregate immediately prior to the consummation of the Conversion before giving effect to (a) cash in lieu of any fractional shares and (b) any Subscription Shares purchased by Minority Stockholders in the Offering; provided that, the exchange ratio will be adjusted to reflect assets held by the Mutual Holding Company (other than shares of stock of Mid-Tier Holding Company).

Exchange Shares – The shares of Holding Company Common Stock issued to Minority Stockholders in the Exchange Offering.

FDIC – The Federal Deposit Insurance Corporation.

Federal Reserve – The Board of Governors of the Federal Reserve System.

Firm Commitment Underwritten Offering – The offering, at the sole discretion of the Holding Company, of Subscription Shares not subscribed for in the Subscription Offering and any Community Offering or Syndicated Community Offering, to members of the general public through one or more underwriters. A Firm Commitment Underwritten Offering may occur

following the Subscription Offering and any Community Offering or Syndicated Community Offering.

Foundation – KearnyBank Foundation, a new charitable foundation intended to qualify as an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended that will receive Holding Company Common Stock and/or cash in connection with the Offering.

Foundation Shares – Shares of Holding Company Common Stock issued to the Foundation in connection with the Conversion.

Holding Company – The Maryland corporation formed for the purpose of acquiring all of the shares of capital stock of the Bank in connection with the Conversion. Shares of Holding Company Common Stock will be issued in the Conversion to Participants, Minority Stockholders and others in the Conversion.

Holding Company Common Stock – The common stock, par value $0.01 per share, of the Holding Company.

Independent Appraiser – The appraiser retained by the Mutual Holding Company, Mid-Tier Holding Company and the Bank to prepare an appraisal of the pro forma market value of the Holding Company.

Liquidation Account – The account established by the Holding Company representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders in connection with the Conversion in exchange for their interests in the Mutual Holding Company immediately prior to the Conversion.

Majority Ownership Interest – A fraction, the numerator of which is equal to the number of shares of Mid–Tier Holding Company common stock owned by the Mutual Holding Company immediately prior to the completion of the Conversion, and the denominator of which is equal to the total number of shares of Mid–Tier Holding Company common stock issued and outstanding immediately prior to the completion of the Conversion.

Meeting of Stockholders – The special or annual meeting of stockholders of the Mid-Tier Holding Company and any adjournments thereof held to consider and vote upon this Plan.

Member – Any Person who qualifies as a member of the Mutual Holding Company pursuant to its charter.

MHC Merger – The merger of the Mutual Holding Company with and into the Mid-Tier Holding Company, with the Mid-Tier Holding Company as the surviving entity, which merger shall occur immediately prior to completion of the Conversion, as set forth in this Plan.

Mid-Tier Holding Company – Kearny Financial Corp., the federal corporation that owns 100% of the Bank’s common stock and any successor thereto.

Mid-Tier Merger – The merger of the Mid-Tier Holding Company with the Holding Company, with the Holding Company as the resulting entity, which merger shall occur immediately following the MHC Merger and prior to the completion of the Conversion, as set forth in this Plan.

Minority Shares – Any outstanding common stock of the Mid-Tier Holding Company, or shares of common stock of the Mid-Tier Holding Company issuable upon the exercise of options or grant of stock awards, owned by persons other than the Mutual Holding Company.

Minority Stockholder – Any owner of Minority Shares.

Mutual Holding Company – Kearny MHC, the mutual holding company of the Mid-Tier Holding Company.

Offering – The offering and issuance, pursuant to this Plan, of Holding Company Common Stock in a Subscription Offering, Community Offering and/or Syndicated Community Offering or Firm Commitment Underwritten Offering, as the case may be. The term “Offering” does not include Holding Company Common Stock issued in the Exchange Offering.

Offering Range – The range of the number of shares of Holding Company Common Stock offered for sale in the Offering multiplied by the Subscription Price. The Offering Range shall be equal to the Appraised Value Range multiplied by the Majority Ownership Interest (as adjusted to reflect assets held by Mutual Holding Company other than shares of stock of the Mid-Tier Holding Company). The maximum and minimum of the Offering Range may vary as much as 15% above and 15% below, respectively, the midpoint of the Offering Range.

Officer – The term Officer means the president, any vice-president (but not an assistant vice-president, second vice-president, or other vice president having authority similar to an assistant or second vice-president), the secretary, the treasurer, the comptroller, and any other person performing similar functions with respect to any organization whether incorporated or unincorporated. The term Officer also includes the chairman of the Board of Directors if the chairman is authorized by the charter or bylaws of the organization to participate in its operating management or if the chairman in fact participates in such management.

Order Form – Any form (together with any cover letter and acknowledgments) sent to any Participant or Person containing among other things a description of the alternatives available to such Person under this Plan and by which any such Person may make elections regarding subscriptions for Subscription Shares.

Other Member – Any Person holding a Deposit Account with a positive balance on the Voting Record Date who is not an Eligible Account Holder or Supplemental Eligible Account Holder, and any borrower who qualifies as a Voting Member.

Participant – Any Eligible Account Holder, Employee Plan, Supplemental Eligible Account Holder or Other Member.

Person – An individual, a corporation, a partnership, an association, a joint-stock company, a limited liability company, a trust, an unincorporated organization, or a government or political subdivision of a government.

Plan – This Plan of Conversion and Reorganization of the Mutual Holding Company as it exists on the date hereof and as it may hereafter be amended in accordance with its terms.

Prospectus – The one or more documents used in offering the Conversion Stock.

Qualifying Deposit – The aggregate balance of all Deposit Accounts in the Bank of (i) an Eligible Account Holder at the close of business on the Eligibility Record Date, provided such aggregate balance is not less than $50, or (ii) a Supplemental Eligible Account Holder at the close of business on the Supplemental Eligibility Record Date, provided such aggregate balance is not less than $50. The term “Qualifying Deposit” shall also include the aggregate balance of all Deposit Accounts of not less than $50 held by Persons at the close of business on the Eligibility Record Date at Atlas Bank which was merged with and into the Bank on June 30, 2014, subject to any applicable rules of the Bank Regulators.

Resident – Any Person who occupies a dwelling within the Community, has a present intent to remain within the Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the Community together with an indication that such presence within the Community is something other than merely transitory in nature. To the extent the Person is a corporation or other business entity, to be a Resident the principal place of business or headquarters of the corporation or business entity must be in the Community. To the extent a Person is a personal benefit plan, the circumstances of the beneficiary shall apply with respect to this definition. In the case of all other benefit plans, circumstances of the trustee shall be examined for purposes of this definition. The Mutual Holding Company and the Bank may utilize deposit or loan records or such other evidence provided to it to make a determination as to whether a Person is a resident. In all cases, however, such a determination shall be in the sole discretion of the Mutual Holding Company and the Bank. A Person must be a “Resident” for purposes of determining whether such person “resides” in the Community as such term is used in this Plan.

SEC – The United States Securities and Exchange Commission.

Special Meeting of Members – The special or annual meeting of Voting Members and any adjournments thereof held to consider and vote upon this Plan.

Stockholder – Any owner of outstanding common stock of the Mid-Tier Holding Company, including the Mutual Holding Company.

Subscription Offering – The offering of Subscription Shares to Participants.

Subscription Price – The price per Subscription Share to be paid by Participants and others in the Offering. The Subscription Price will be $10.00 unless otherwise determined by the Board of Directors of the Holding Company and fixed prior to the commencement of the Subscription Offering.

Subscription Shares – Shares of Holding Company Common Stock offered for sale in the Offering. Subscription Shares do not include Exchange Shares.

Supplemental Eligible Account Holder – Any Person, other than Directors and Officers of the Mutual Holding Company, the Bank and the Mid-Tier Holding Company (unless the Federal Reserve grants a waiver permitting a Director or Officer to be included) and their Associates, holding a Qualifying Deposit on the Supplemental Eligibility Record Date, who is not an Eligible Account Holder.

Supplemental Eligibility Record Date – The date for determining Supplemental Eligible Account Holders, which shall be the last day of the calendar quarter preceding Federal Reserve approval of the application for conversion. The Supplemental Eligibility Record Date will only occur if the Federal Reserve has not approved the Conversion within 15 months after the Eligibility Record Date.

Syndicated Community Offering – The offering, at the sole discretion of the Holding Company, of Subscription Shares not subscribed for in the Subscription Offering and the Community Offering, to members of the general public through a syndicate of broker-dealers. The Syndicated Community Offering may occur concurrently with the Subscription Offering and any Community Offering.

Tax-Qualified Employee Stock Benefit Plan – Any defined benefit plan or defined contribution plan, such as an employee stock ownership plan, stock bonus plan, profit-sharing plan or other plan, which, with its related trust, meets the requirements to be “qualified” under Section 401 of the Code. A “Non-Tax-Qualified Employee Stock Benefit Plan” is any defined benefit plan or defined contribution plan which is not so qualified.

Voting Member – Any Person who at the close of business on the Voting Record Date is entitled to vote as a member of the Mutual Holding Company.

Voting Record Date – The date fixed by the Directors for determining eligibility to vote at the Special Meeting of Members and/or the Meeting of Stockholders.

PROCEDURES FOR CONVERSION

A. After approval of the Plan by the Boards of Directors of the Bank, the Mid-Tier Holding Company and the Mutual Holding Company, the Plan together with all other requisite material shall be submitted to the Bank Regulators for approval. Notice of the adoption of the Plan by the Boards of Directors of the Bank, the Mutual Holding Company and the Mid-Tier Holding Company will be published in a newspaper having general circulation in each community in which an office of the Bank is located, and copies of the Plan will be made available at each office of the Bank for inspection by depositors. The Mutual Holding Company will publish a notice of the filing with the Bank Regulators of an application to convert in accordance with the provisions of the Plan as well as notices required in connection with any holding company, merger or other applications required to complete the Conversion.

B. Promptly following approval by the Bank Regulators, this Plan will be submitted to a vote of the Voting Members at the Special Meeting of Members and of the Stockholders at

the Meeting of Stockholders. The Mutual Holding Company will mail to all Voting Members, at their last known address appearing on the records of the Bank as of the Voting Record Date, a proxy statement in either long or summary form describing this Plan, which will be submitted to a vote of Voting Members at the Special Meeting of Members. The Mid-Tier Holding Company will mail to all Minority Stockholders a proxy statement describing this Plan, which will be submitted to a vote of Stockholders at the Meeting of Stockholders. The Holding Company also will mail to all Participants a Prospectus and Order Form for the purchase of Subscription Shares. In addition, all Participants will receive, or will be given the opportunity to request by either telephone or by letter addressed to the Bank’s Secretary, a copy of this Plan as well as the articles of incorporation or bylaws of the Holding Company. This Plan must be approved by at least (i) a majority of the total votes eligible to be cast by Voting Members at the Special Meeting of Members, (ii) two-thirds of the total votes eligible to be cast by Stockholders at the Meeting of Stockholders, and (iii) a majority of the total votes eligible to be cast by Minority Stockholders at the Meeting of Stockholders. Upon such approval of this Plan, the Mutual Holding Company, the Mid-Tier Holding Company, the Holding Company and the Bank will take all other necessary steps pursuant to applicable laws and regulations to consummate the Conversion. The Conversion must be completed within 24 months of the approval of this Plan by Voting Members, unless a longer time period is permitted by governing laws and regulations.

C. The period for the Subscription Offering will be not less than 20 days nor more than 45 days from the date Participants are first mailed a Prospectus and Order Form, unless extended. Any shares of Holding Company Common Stock for which subscriptions have not been received in the Subscription Offering may be issued in a Community Offering, and/or a Syndicated Community Offering or a Firm Commitment Underwritten Offering, or in any other manner permitted by the Bank Regulators. All sales of shares of Holding Company Common Stock must be completed within 45 days after the last day of the Subscription Offering, unless the offering period is extended by the Mutual Holding Company and the Holding Company with the approval of the Bank Regulators.

D. The Conversion will be effected as follows, or in any other manner that is consistent with the purposes of this Plan and applicable laws and regulations. The choice of which method to use to effect the Conversion will be made by the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Bank immediately prior to the closing of the Conversion. Each of the steps set forth below shall be deemed to occur in such order as is necessary to consummate the Conversion pursuant to this Plan, the intent of the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Bank, and applicable federal and state regulations and policy. Approval of this Plan by Voting Members and Stockholders of the Mid-Tier Holding Company also shall constitute approval of each of the transactions necessary to implement this Plan.

(1)

The Holding Company will be organized as a first-tier stock subsidiary of the Mid-Tier Holding Company.

(2)

The Mutual Holding Company will merge with the Mid-Tier Holding Company with the Mid-Tier Holding Company as the surviving entity pursuant to the Agreement of Merger attached hereto as Exhibit A, whereby the shares of Mid-Tier Holding Company common stock held by the Mutual Holding Company will

be canceled and Members will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their ownership interests in the Mutual Holding Company.

(3)

Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Holding Company with the Holding Company as the surviving entity pursuant to the Agreement of Merger attached hereto as Exhibit B, whereby the Bank will become the wholly-owned subsidiary of the Holding Company. As part of the Mid-Tier Merger, the liquidation interests in the Mid-Tier Holding Company constructively received by Members as part of the MHC Merger will automatically, without further action on the part of the holders thereof, be exchanged for interests in the Liquidation Account, and each of the Minority Shares shall automatically, without further action on the part of the holders thereof, be converted into and become the right to receive Holding Company Common Stock based upon the Exchange Ratio.

(4)

Immediately after the Mid-Tier Merger, the Holding Company will offer for sale the Holding Company Common Stock in the Offering.

(5)

The Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in constructive exchange for additional shares of common stock of the Bank and in exchange for the Bank Liquidation Account.

E. As part of the Conversion, each of the Minority Shares outstanding immediately prior to consummation of the Conversion shall automatically, without further action on the part of the holders thereof, be converted into and become the right to receive Holding Company Common Stock based upon the Exchange Ratio. The basis for exchange of Minority Shares for Holding Company Common Stock shall be fair and reasonable. Options to purchase shares of Mid-Tier Holding Company common stock which are outstanding immediately prior to the consummation of the Conversion shall be converted into options to purchase shares of Holding Company Common Stock, with the number of shares subject to the option and the exercise price per share to be adjusted based upon the Exchange Ratio so that the aggregate exercise price remains unchanged, and with the duration of the option remaining unchanged.

F. The Holding Company shall register the Conversion Stock with the SEC and any appropriate state securities authorities. In addition, the Mid-Tier Holding Company shall prepare preliminary proxy materials as well as other applications and information for review by the SEC in connection with the solicitation of Stockholder approval of this Plan.

G. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the Mutual Holding Company shall be automatically transferred to and vested in the Holding Company by virtue of the Conversion without any deed or other document of transfer. The Holding Company, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests

and powers were held or enjoyed by the Mid-Tier Holding Company and the Mutual Holding Company. The Holding Company shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the Mutual Holding Company immediately prior to the Conversion, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the Mutual Holding Company, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company and the Mutual Holding Company.

H. The home office and branch offices of the Bank shall be unaffected by the Conversion. The executive offices of the Holding Company shall be located at the current offices of the Mutual Holding Company and Mid-Tier Holding Company.

HOLDING COMPANY APPLICATIONS AND APPROVALS

The Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company, the Holding Company and the Bank will take all necessary steps to convert the Mutual Holding Company to stock form, form the Holding Company and complete the Offering. The Mutual Holding Company, Mid-Tier Holding Company, Bank and Holding Company shall make timely applications to the Bank Regulators and filings with the SEC for any requisite regulatory approvals to complete the Conversion.

SALE OF SUBSCRIPTION SHARES

The Subscription Shares will be offered simultaneously in the Subscription Offering to the Participants in the respective priorities set forth in this Plan. The Subscription Offering may begin as early as the mailing of the proxy statement for the Special Meeting of Members. The Holding Company Common Stock will not be insured by the FDIC. The Bank will not extend credit to any Person to purchase shares of Holding Company Common Stock.

Any shares of Holding Company Common Stock for which subscriptions have not been received in the Subscription Offering may be issued in the Community Offering, subject to the terms and conditions of this Plan. The Community Offering, if any, will involve an offering of unsubscribed shares directly to the general public with a first preference given to those natural persons and trusts of natural persons residing in the Community and the next preference given to Minority Stockholders as of the Voting Record Date. The Community Offering may begin at any time during or after the Subscription Offering. The offer and sale of Holding Company Common Stock prior to the Special Meeting of Members, however, is subject to the approval of this Plan by the Voting Members and the Stockholders of the Mid-Tier Holding Company, including Minority Stockholders.

If feasible, any shares of Holding Company Common Stock remaining unsold after the Subscription Offering and any Community Offering may be offered for sale in a Syndicated Community Offering or a Firm Commitment Underwritten Offering, or in any manner approved by the Bank Regulators that will achieve a widespread distribution of the Holding Company Common Stock. The issuance of Holding Company Common Stock in the Subscription Offering and any Community Offering will be consummated simultaneously on the date the sale of

Holding Company Common Stock is consummated in any Syndicated Community Offering or Firm Commitment Underwritten Offering, and only if the required minimum number of shares of Holding Company Common Stock has been issued.

PURCHASE PRICE AND NUMBER OF SUBSCRIPTION SHARES

The total number of shares of Conversion Stock to be offered in the Conversion will be determined jointly by the Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company and the Holding Company immediately prior to the commencement of the Subscription Offering, and will be based on the Appraised Value Range and the Subscription Price. The Offering Range will be equal to the Appraised Value Range multiplied by the Majority Ownership Interest, as adjusted to reflect certain assets held by Mutual Holding Company. The estimated pro forma consolidated market value of the Holding Company will be subject to adjustment within the Appraised Value Range if necessitated by market or financial conditions, with the receipt of any required approvals of the Bank Regulators, and the maximum of the Appraised Value Range may be increased by up to 15% subsequent to the commencement of the Subscription Offering to reflect changes in market and financial conditions or demand for the shares. The number of shares of Conversion Stock issued in the Conversion will be equal to the estimated pro forma consolidated market value of the Holding Company, as may be amended, divided by the Subscription Price, and the number of Subscription Shares issued in the Offering will be equal to the product of (i) the estimated pro forma consolidated market value of the Holding Company, as may be amended, divided by the Subscription Price, and (ii) the Majority Ownership Interest, as adjusted to reflect certain assets held by Mutual Holding Company.

In the event that the Subscription Price multiplied by the number of shares of Conversion Stock to be issued in the Conversion is below the minimum of the Appraised Value Range, or materially above the maximum of the Appraised Value Range, a resolicitation of purchasers may be required, provided that up to a 15% increase above the maximum of the Appraised Value Range will not be deemed material so as to require a resolicitation. Any such resolicitation shall be effected in such manner and within such time as the Mutual Holding Company, Mid-Tier Holding Company, the Holding Company and the Bank shall establish, if all required regulatory approvals are obtained.

Notwithstanding the foregoing, shares of Conversion Stock will not be issued unless, prior to the consummation of the Conversion, the Independent Appraiser confirms to the Bank, the Mutual Holding Company, the Holding Company, and the Bank Regulators, that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the number of shares of Conversion Stock issued in the Conversion multiplied by the Subscription Price is incompatible with its estimate of the aggregate consolidated pro forma market value of the Holding Company. If such confirmation is not received, the Holding Company may cancel the Offering and the Exchange Offering, extend the Offering and establish a new Subscription Price and/or Appraised Value Range, hold a new Offering and Exchange Offering after canceling the Offering and the Exchange Offering, or take such other action as the Bank Regulators may permit.

The Holding Company Common Stock to be issued in the Conversion shall be fully paid and nonassessable.

RETENTION OF CONVERSION PROCEEDS BY THE HOLDING COMPANY

The Holding Company may retain up to 50% of the net proceeds of the Offering. The Holding Company believes that the Offering proceeds will provide economic strength to the Holding Company and the Bank for the future in a highly competitive and regulated financial services environment, and would support the growth in the operations of the Holding Company and the Bank through increased lending, acquisitions of financial service organizations, continued diversification into other related businesses and other business and investment purposes, including the possible payment of dividends and possible future repurchases of the Holding Company Common Stock as permitted by applicable federal and state regulations and policy.

SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY)

A. Each Eligible Account Holder shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of $1,500,000 of Holding Company Common Stock, 0.10% of the total number of shares of Holding Company Common Stock issued in the Offering, or fifteen times the product (rounded down to the next whole number) obtained by multiplying the number of Subscription Shares offered in the Offering by a fraction of which the numerator is the amount of the Eligible Account Holder’s Qualifying Deposit and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders, in each case on the Eligibility Record Date, subject to the purchase limitations specified in Section 14.

B. In the event that Eligible Account Holders exercise subscription rights for a number of Subscription Shares in excess of the total number of such shares eligible for subscription, the Subscription Shares shall be allocated among the subscribing Eligible Account Holders so as to permit each subscribing Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation of Subscription Shares equal to the lesser of 100 shares or the number of shares for which such Eligible Account Holder has subscribed. Any remaining shares will be allocated among the subscribing Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the amount of the Qualifying Deposit of each Eligible Account Holder whose subscription remains unsatisfied bears to the total amount of the Qualifying Deposits of all Eligible Account Holders whose subscriptions remain unsatisfied. If the amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Eligible Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated.

C. Subscription rights as Eligible Account Holders received by Directors and Officers and their Associates that are based on deposits made by such persons during the 12

months preceding the Eligibility Record Date shall be subordinated to the subscription rights of all other Eligible Account Holders, except as permitted by the Bank Regulators.

SUBSCRIPTION RIGHTS OF EMPLOYEE PLANS (SECOND PRIORITY)

The Employee Plans shall have subscription rights to purchase in the aggregate up to 10% of the Subscription Shares issued in the Offering and contributed to the Foundation, including any Subscription Shares to be issued as a result of an increase in the maximum of the Offering Range after commencement of the Subscription Offering and prior to completion of the Conversion. Consistent with applicable laws and regulations and practices and policies, the Employee Plans may use funds contributed by the Holding Company or the Bank and/or borrowed from an independent financial institution to exercise such subscription rights, and the Holding Company and the Bank may make scheduled discretionary contributions thereto, provided that such contributions do not cause the Holding Company or the Bank to fail to meet any applicable regulatory capital requirements. The Employee Plans shall not be deemed to be Associates or Affiliates of or Persons Acting in Concert with any Director or Officer of the Holding Company or the Bank. Alternatively, if permitted by the Bank Regulators, the Employee Plans may purchase all or a portion of such shares in the open market after the completion of the Conversion.

10.

SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY)

A. Each Supplemental Eligible Account Holder shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of $1,500,000 of Holding Company Common Stock, 0.10% of the total number of shares of Holding Company Common Stock issued in the Offering, or fifteen times the product (rounded down to the next whole number) obtained by multiplying the number of Subscription Shares offered in the Offering by a fraction of which the numerator is the amount of the Supplemental Eligible Account Holder’s Qualifying Deposit and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in each case on the Supplemental Eligibility Record Date, subject to the availability of sufficient shares after filling in full all subscription orders of Eligible Account Holders and Employee Plans and subject to the purchase limitations specified in Section 14.

B. In the event that Supplemental Eligible Account Holders exercise subscription rights for a number of Subscription Shares in excess of the total number of such shares eligible for subscription, the Subscription Shares shall be allocated among the subscribing Supplemental Eligible Account Holders so as to permit each subscribing Supplemental Eligible Account Holder, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation of Subscription Shares equal to the lesser of 100 shares or the number of shares for which such Supplemental Eligible Account Holder has subscribed. Any remaining shares will be allocated among the subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the amount of the Qualifying Deposit of such Supplemental Eligible Account Holder whose

subscription remains unsatisfied bears to the total amount of the Qualifying Deposits of all Supplemental Eligible Account Holders whose subscriptions remain unsatisfied. If the amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated (one or more times as necessary) among those Supplemental Eligible Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated.

11.

SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY)

A. Each Other Member shall have nontransferable subscription rights to subscribe for in the Subscription Offering up to the greater of $ 1,500,000 of Holding Company Common Stock or 0.10% of the total number of shares of Holding Company Common Stock issued in the Offering, subject to the availability of sufficient shares after filling in full all subscription orders of Eligible Account Holders, Employee Plans and Supplemental Eligible Account Holders and subject to the purchase limitations specified in Section 14.

B. In the event that such Other Members subscribe for a number of Subscription Shares which, when added to the Subscription Shares subscribed for by the Eligible Account Holders, Employee Plans and Supplemental Eligible Account Holders, is in excess of the total number of Subscription Shares to be issued, the available shares will be allocated among Other Members so as to permit each such subscribing Other Member, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation of Subscription Shares equal to the lesser of 100 shares or the number of shares for which each such Other Member has subscribed. Any remaining shares will be allocated among the subscribing Other Members whose subscriptions remain unsatisfied in the proportion that the amount of the subscription of each such Other Member bears to the total amount of the subscriptions of all Other Members whose subscriptions remain unsatisfied.

12.

COMMUNITY OFFERING

If subscriptions are not received for all Subscription Shares offered for sale in the Subscription Offering, shares for which subscriptions have not been received may be offered for sale in the Community Offering through a direct community marketing program which may use a broker, dealer, consultant or investment banking firm experienced and expert in the sale of savings institutions securities. Such entities may be compensated on a fixed fee basis or on a commission basis, or a combination thereof. In the event orders for Holding Company Common Stock in the Community Offering exceed the number of shares available for sale, shares may be allocated (to the extent shares remain available) first to cover orders of natural persons (including trusts of natural persons) residing in the Community, next to cover orders of Minority Stockholders as of the Voting Record Date, and thereafter to cover orders of other members of the general public. In the event orders for Holding Company Common Stock exceed the number of shares available for sale in a category pursuant to the purchase priorities described in the preceding sentence, shares will be allocated within the category so that each member of that category will receive the lesser of 100 shares or the amount ordered and thereafter remaining shares will be allocated on an equal number of shares basis per order. In connection with the allocation, orders received for Holding Company Common Stock in the Community Offering will first be filled up to a maximum of two percent (2%) of the shares sold in the Offering, and

thereafter any remaining shares will be allocated on an equal number of shares basis per order. The Mutual Holding Company and the Holding Company shall use their best efforts consistent with this Plan to distribute Holding Company Common Stock sold in the Community Offering in such a manner as to promote the widest distribution practicable of such stock. The Holding Company reserves the right to reject any or all orders, in whole or in part, that are received in the Community Offering. Any Person may purchase up to $1,500,000 of Holding Company Common Stock in the Community Offering, subject to the purchase limitations specified in Section 14.

13.

SYNDICATED COMMUNITY OFFERING OR FIRM COMMITMENT UNDERWRITTEN OFFERING

If feasible, the Board of Directors may determine to offer Subscription Shares not sold in the Subscription Offering or the Community Offering, if any, for sale in a Syndicated Community Offering, subject to such terms, conditions and procedures as may be determined by the Mutual Holding Company and the Holding Company, in a manner that will achieve the widest distribution of Holding Company Common Stock, subject to the right of the Holding Company to accept or reject in whole or in part any orders in the Syndicated Community Offering. In the Syndicated Community Offering, any Person may purchase up to $1,500,000 of Holding Company Common Stock, subject to the purchase limitations specified in Section 14. In addition, unless otherwise approved by the Federal Reserve, orders received for Holding Company Common Stock in the Syndicated Community Offering will first be filled up to a maximum of two percent (2%) of the shares sold in the Offering, and thereafter any remaining shares will be allocated on an equal number of shares basis per order. Provided that the Subscription Offering has begun, the Holding Company may begin the Syndicated Community Offering at any time. The Holding Company reserves the right to reject any or all orders, in whole or in part, that are received in the Syndicated Community Offering.

Alternatively, if feasible, the Board of Directors may determine to offer Subscription Shares not sold in the Subscription Offering or any Community Offering for sale in a Firm Commitment Underwritten Offering subject to such terms, conditions and procedures as may be determined by the Mutual Holding Company and the Holding Company, subject to the right of the Holding Company to accept or reject in whole or in part any orders in the Firm Commitment Underwritten Offering. Provided the Subscription Offering has begun, the Holding Company may begin the Firm Commitment Underwritten Offering at any time.

If for any reason a Syndicated Community Offering or Firm Commitment Underwritten Offering of shares of Holding Company Common Stock not sold in the Subscription Offering or any Community Offering cannot be effected, or in the event that any insignificant residue of shares of Holding Company Common Stock is not sold in the Subscription Offering, Community Offering, or any Syndicated Community Offering or Firm Commitment Underwritten Offering, the Holding Company will use its best efforts to make other arrangements for the disposition of unsubscribed shares aggregating at least the minimum of the Offering Range. Such other purchase arrangements will be subject to receipt of any required approval of the Bank Regulators.

14.

LIMITATIONS ON PURCHASES

The following limitations shall apply to all purchases and issuances of shares of Conversion Stock:

A. The maximum purchase of Holding Company Common Stock in the Subscription Offering by a Person or group of Persons through a single deposit account is $1,500,000 (150,000 shares). The maximum number of shares of Holding Company Common Stock that may be subscribed for or purchased in all categories in the Offering by any Person or Participant, together with any Associate or group of Persons Acting in Concert, shall not exceed $3,000,000 (300,000 shares) of Holding Company Common Stock, except that the Employee Plans may subscribe for up to 10% of the Holding Company Common Stock issued in the Offering and contributed to the Foundation (including shares issued in the event of an increase in the maximum of the Offering Range of 15%).

B. The maximum number of shares of Holding Company Common Stock that may be issued to or purchased in all categories of the Offering by Officers and Directors and their Associates in the aggregate shall not exceed 25% of the shares of Conversion Stock and contributed to the Foundation.

C. The maximum number of shares of Holding Company Common Stock that may be subscribed for or purchased in all categories of the Offering by any Person or Participant together with purchases by any Associate or group of Persons Acting in Concert, combined with Exchange Shares received by any such Person or Participant together with any Associate or group of Persons Acting in Concert, shall not exceed 9.9% of the shares of Conversion Stock, except that this ownership limitation shall not apply to the Employee Plans.

D. A minimum of 25 shares of Holding Company Common Stock must be purchased by each Person or Participant purchasing shares in the Offering to the extent those shares are available; provided, however , that in the event the minimum number of shares of Holding Company Common Stock purchased times the Subscription Price exceeds $500, then such minimum purchase requirement shall be reduced to such number of shares which when multiplied by the price per share shall not exceed $500, as determined by the Board.

E. If the number of shares of Holding Company Common Stock otherwise allocable pursuant to Sections 8 through 13, inclusive, to any Person or that Person’s Associates would be in excess of the maximum number of shares permitted as set forth above, the number of shares of Holding Company Common Stock allocated to each such person shall be reduced to the lowest limitation applicable to that Person, and then the number of shares allocated to each group consisting of a Person and that Person’s Associates shall be reduced so that the aggregate allocation to that Person and his or her Associates complies with the above limits.

Depending upon market or financial conditions, the Boards of Directors of the Holding Company and the Mutual Holding Company, with the receipt of any required approvals of the Bank Regulators and without further approval of Voting Members, may decrease or increase the purchase limitations in this Plan, provided that the maximum purchase limitations may not be increased to a percentage in excess of 5% of the shares issued in the Offering except as provided

below. If the Mutual Holding Company and the Holding Company increase the maximum purchase limitations, the Mutual Holding Company and the Holding Company are only required to resolicit Participants who subscribed for the maximum purchase amount in the Subscription Offering and may, in the sole discretion of the Mutual Holding Company and the Holding Company, resolicit certain other large purchasers. In the event of such a resolicitation, the Mutual Holding Company and the Holding Company shall have the right, in their sole discretion, to require such persons to supply immediately available funds for the purchase of additional shares of Holding Company Common Stock. Such persons will be prohibited from paying with a personal check, but the Mutual Holding Company and the Holding Company may allow payment by wire transfer. In the event that the maximum purchase limitation is increased to 5% of the shares issued in the Offering, such limitation may be further increased to 9.99%, provided that orders for Holding Company Common Stock exceeding 5% of the shares of Holding Company Common Stock issued in the Offering shall not exceed in the aggregate 10% of the total shares of Holding Company Common Stock issued in the Offering. Requests to purchase additional shares of the Holding Company Common Stock in the event that the purchase limitation is so increased will be determined by the Board of Directors of the Holding Company in its sole discretion.

In the event of an increase in the total number of shares offered in the Offering due to an increase in the maximum of the Offering Range of up to 15% (the “Adjusted Maximum”), the additional shares may be used to fill the Employee Plans orders before all other orders and then will be allocated in accordance with the priorities set forth in this Plan.

For purposes of this Section 14, (i) Directors, Officers and Employees of the Bank, the Mid-Tier Holding Company, the Mutual Holding Company and the Holding Company or any of their subsidiaries shall not be deemed to be Associates or a group affiliated with each other or otherwise Acting in Concert solely as a result of their capacities as such, (ii) shares purchased by Tax-Qualified Employee Stock Benefit Plans shall not be attributable to the individual trustees or beneficiaries of any such plan for purposes of determining compliance with the limitations set forth in paragraphs A. and B. of this Section 14, and (iii) shares purchased by a Tax-Qualified Employee Stock Benefit Plan pursuant to instructions of an individual in an account in such plan in which the individual has the right to direct the investment, including any plan of the Bank qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended, shall be aggregated and included in that individual’s purchases and not attributed to the Tax-Qualified Employee Stock Benefit Plan.

Each Person purchasing Holding Company Common Stock in the Offering shall be deemed to confirm that such purchase does not conflict with the above purchase limitations contained in this Plan.

15.

PAYMENT FOR SUBSCRIPTION SHARES

All payments for Holding Company Common Stock subscribed for in the Subscription Offering and Community Offering must be delivered in full to the Bank or Holding Company, together with a properly completed and executed Order Form, on or prior to the expiration date of the Offering; provided, however , that if the Employee Plans subscribe for shares in the Subscription Offering, such plans will not be required to pay for the shares at the time they

subscribe but rather may pay for such shares of Holding Company Common Stock subscribed for by such plans at the Subscription Price upon consummation of the Conversion. Subscription funds will be held in a segregated account at the Bank.

Except as set forth in Section 14.E., above, payment for Holding Company Common Stock subscribed for shall be made by personal check, money order or bank draft. Alternatively, subscribers in the Subscription and Community Offerings may pay for the shares for which they have subscribed by authorizing the Bank on the Order Form to make a withdrawal from the designated types of Deposit Accounts at the Bank in an amount equal to the aggregate Subscription Price of such shares. Such authorized withdrawal shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the remaining balance does not meet the applicable minimum balance requirement, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will remain in the subscriber’s Deposit Account but may not be used by the subscriber during the Offering. Thereafter, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Subscription Price per share. Interest will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Interest on funds received by check, draft or money order will be paid by the Bank at not less than the passbook rate. Such interest will be paid from the date payment is processed by the Bank until consummation or termination of the Offering. If for any reason the Offering is not consummated, all payments made by subscribers in the Subscription and Community Offerings will be refunded to them, with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling the authorization for withdrawal. The Bank is prohibited by regulation from knowingly making any loans or granting any lines of credit for the purchase of stock in the Offering, and therefore, will not do so.

16.

MANNER OF EXERCISING SUBSCRIPTION RIGHTS THROUGH ORDER FORMS

As soon as practicable after the registration statement prepared by the Holding Company has been declared effective by the SEC and the stock offering materials have been approved by the Bank Regulators, Order Forms will be distributed to the Eligible Account Holders, Employee Plans, Supplemental Eligible Account Holders and Other Members at their last known addresses appearing on the records of the Bank for the purpose of subscribing for shares of Holding Company Common Stock in the Subscription Offering and will be made available for use by those Persons to whom a Prospectus is delivered. Each Order Form will be preceded or accompanied by a Prospectus describing the Mutual Holding Company, the Mid-Tier Holding Company, the Holding Company, the Bank, the Holding Company Common Stock and the Offering. Each Order Form will contain, among other things, the following:

A. A specified date by which all Order Forms must be received by the Mutual Holding Company or the Holding Company, or its agent, which date shall be not less than 20 days, nor more than 45 days, following the date on which the Order Forms are first mailed to Participants by the Mutual Holding Company or the Holding Company, and which date will constitute the termination of the Subscription Offering unless extended;

B. The Subscription Price per share for shares of Holding Company Common Stock to be sold in the Offering;

C. A description of the minimum and maximum number of Subscription Shares which may be subscribed for pursuant to the exercise of subscription rights or otherwise purchased in the Subscription and Community Offering;

D. Instructions as to how the recipient of the Order Form is to indicate thereon the number of Subscription Shares for which such Person elects to subscribe and the available alternative methods of payment therefor;

E. An acknowledgment that the recipient of the Order Form has received a final copy of the Prospectus prior to execution of the Order Form;

F. A statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering to the Mutual Holding Company or the Holding Company or their agent within the subscription period such properly completed and executed Order Form, together with payment in the full amount of the aggregate purchase price as specified in the Order Form for the shares of Holding Company Common Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the Order Form that the Bank withdraw said amount from the subscriber’s Deposit Account(s) at the Bank); and

G. A statement to the effect that the executed Order Form, once received by the Mutual Holding Company or the Holding Company, may not be modified or amended by the subscriber without the consent of the Holding Company.

Notwithstanding the above, the Mutual Holding Company and the Holding Company reserve the right in their sole discretion to accept or reject orders received on photocopied or facsimiled order forms.

17.

UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT

In the event Order Forms (a) are not delivered or are not timely delivered by the United States Postal Service, (b) are not received back by the Mutual Holding Company or Holding Company or are received by the Mutual Holding Company or Holding Company or their agent after the expiration date specified thereon, (c) are defectively filled out or executed, (d) are not accompanied by the full required payment for the shares of Holding Company Common Stock subscribed for (including cases in which deposit accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are not mailed pursuant to a “no mail” order placed in effect by the account holder, the subscription rights of the Participant to whom such rights have been granted will lapse as though such Participant failed to return the completed Order Form within the time period specified thereon; provided, however , that the Holding Company may, but will not be required to, waive any immaterial irregularity on any Order Form or require the submission of corrected Order Forms or the remittance of full payment for subscribed shares by such date as the Holding Company may specify. The

interpretation by the Holding Company of terms and conditions of this Plan and of the Order Forms will be final, subject to the authority of the Bank Regulators.

18.

RESIDENTS OF FOREIGN COUNTRIES AND CERTAIN STATES

The Holding Company will make reasonable efforts to comply with the securities laws of all states in the United States in which Persons entitled to subscribe for shares of Holding Company Common Stock pursuant to this Plan reside. However, no such Person will be issued subscription rights or be permitted to purchase shares of Holding Company Common Stock in the Subscription Offering if such Person resides in a foreign country; or in a state of the United States with respect to which any of the following apply: (a) a small number of Persons otherwise eligible to subscribe for shares under this Plan reside in such state; (b) the issuance of subscription rights or the offer or sale of shares of Holding Company Common Stock to such Persons would require the Holding Company under the securities laws of such state, to register as a broker, dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; or (c) such registration or qualification would be impracticable for reasons of cost or otherwise.

19.

ESTABLISHMENT OF LIQUIDATION ACCOUNTS

A Liquidation Account shall be established by the Holding Company at the time of the Conversion in an amount equal to the product of (i) the Majority Ownership Interest and (ii) the Mid-Tier Holding Company’s total stockholders’ equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the Conversion, plus the value of the net assets of the Mutual Holding Company as reflected in the latest statement of financial condition of the Mutual Holding Company prior to the effective date of the Conversion (excluding its ownership of Mid-Tier Holding Company common stock). Following the Conversion, the Liquidation Account will be maintained for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their Deposit Accounts at the Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to his Deposit Account, hold a related inchoate interest in a portion of the Liquidation Account balance in relation to his Deposit Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date, respectively, or to such balance as it may be subsequently reduced, as hereinafter provided. The Holding Company also shall cause the Bank to establish and maintain the Bank Liquidation Account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their Deposit Accounts at the Bank.

In the unlikely event of a complete liquidation of (i) the Bank or (ii) the Bank and the Holding Company (and only in such event) following all liquidation payments to creditors (including those to Account Holders to the extent of their Deposit Accounts), each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the then adjusted subaccount balance for such Account Holder’s Deposit Account, before any liquidation distribution may be made to any holders of the Holding Company’s capital stock. A merger, consolidation or similar combination with another depository institution or holding company thereof, in which the Holding Company and/or the Bank is not the surviving entity, shall not be

deemed to be a complete liquidation for this purpose. In such transactions, the Liquidation Account shall be assumed by the surviving holding company or institution.

In the unlikely event of a complete liquidation of either (i) the Bank or (ii) the Bank and the Holding Company (and only in such event) following all liquidation payments to creditors of the Bank (including those to Account Holders to the extent of their Deposit Accounts), at a time when the Bank has a positive net worth and the Holding Company does not have sufficient assets (other than the stock of the Bank) at the time of liquidation to fund its obligations under the Liquidation Account, the Bank, with respect to the Bank Liquidation Account shall immediately pay directly to each Eligible Account Holder and Supplemental Eligible Account Holder an amount necessary to fund the Holding Company’s remaining obligations under the Liquidation Account before any liquidating distribution may be made to any holders of the Bank’s capital stock and without making such amount subject to the Holding Company’s creditors. Each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a distribution from the Liquidation Account with respect to the Holding Company, in the amount of the then adjusted subaccount balance for his Deposit Account then held, before any distribution may be made to any holders of the Holding Company’s capital stock.

In the event of a complete liquidation of the Holding Company where the Bank is not also completely liquidating, or in the event of a sale or other disposition of the Holding Company apart from the Bank, each Eligible Account Holder and Supplemental Eligible Account Holder shall be treated as surrendering such Person’s rights to the Liquidation Account and receiving from the Holding Company an equivalent interest in the Bank Liquidation Account. Each such holder’s interest in the Bank Liquidation Account shall be subject to the same rights and terms as if the Bank Liquidation Account were the Liquidation Account (except that the Holding Company shall cease to exist).

The initial subaccount balance for a Deposit Account held by an Eligible Account Holder and Supplemental Eligible Account Holder shall be determined by multiplying the opening balance in the Liquidation Account by a fraction, the numerator of which is the amount of the Qualifying Deposits of such Account Holder and the denominator of which is the total amount of all Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders. For Deposit Accounts in existence at both the Eligibility Record Date and the Supplemental Eligibility Record Date, separate initial subaccount balances shall be determined on the basis of the Qualifying Deposits in such Deposit Account on each such record date. Such initial subaccount balance shall not be increased, but shall be subject to downward adjustment as described below.

If, at the close of business on any annual closing date, commencing on or after the effective date of the Conversion, the deposit balance in the Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder is less than the lesser of (i) the balance in the Deposit Account at the close of business on any other annual closing date subsequent to the Eligibility Record Date or Supplemental Eligibility Record Date, or (ii) the amount of the Qualifying Deposit in such Deposit Account as of the Eligibility Record Date or Supplemental Eligibility Record Date, the subaccount balance for such Deposit Account shall be adjusted by reducing such subaccount balance in an amount proportionate to the reduction in such deposit balance. In the event of such downward adjustment, the subaccount balance shall

not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Deposit Account. If any such Deposit Account is closed, the related subaccount shall be reduced to zero.

The creation and maintenance of the Liquidation Account and the Bank Liquidation Account shall not operate to restrict the use or application of any capital of the Holding Company or the Bank, except that neither the Holding Company nor the Bank shall declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its equity to be reduced below: (i) the amount required for the Liquidation Account or the Bank Liquidation Account, as applicable; or (ii) the regulatory capital requirements of the Holding Company (to the extent applicable) or the Bank. Neither the Holding Company nor the Bank shall be required to set aside funds in connection with its obligations hereunder relating to the Liquidation Account and the Bank Liquidation Account, respectively. Eligible Account Holders and Supplemental Eligible Account Holders do not retain any voting rights in either the Holding Company or the Bank based on their liquidation subaccounts.

The amount of the Bank Liquidation Account shall equal at all times the amount of the Liquidation Account, and the Bank Liquidation Account shall be reduced by the same amount and upon the same terms as any reduction in the Liquidation Account. In no event will any Eligible Account Holder or Supplemental Eligible Account Holder be entitled to a distribution that exceeds such holder’s subaccount balance in the Liquidation Account.

For the three-year period following the completion of the Conversion, the Holding Company will not without prior Federal Reserve approval (i) sell or liquidate the Holding Company, or (ii) cause the Bank to be sold or liquidated. Upon the written request of the Federal Reserve the Holding Company shall, or upon the prior written approval of the Federal Reserve the Holding Company may, at any time after two years from the completion of the Conversion, transfer the Liquidation Account to the Bank, at which time the Liquidation Account shall be assumed by the Bank and the interests of Eligible Account Holders and Supplemental Eligible Account Holders will be solely and exclusively established in the Bank Liquidation Account. In the event such transfer occurs, the Holding Company shall be deemed to have transferred the Liquidation Account to the Bank and such Liquidation Account shall be subsumed into the Bank Liquidation Account and shall not be subject in any manner or amount to the claims of the Holding Company’s creditors. Approval of this Plan by the Members shall constitute approval of the transactions described herein.

20.

CONTRIBUTION TO THE FOUNDATION

As part of the Conversion, the Holding Company, Bank and the Mutual Holding Company intend to donate shares of Holding Company Common Stock and cash to the Foundation, in such amounts, subject to regulatory limits, as shall be approved by the Board of Directors. This contribution to the Foundation is intended to enhance the Bank’s existing community reinvestment activities, and to share with the communities in which the Bank conducts its business a part of the Bank’s financial success as a community minded, financial services institution. The contribution of Holding Company Common Stock to the Foundation accomplishes this goal as it enables the community to share in the growth and profitability of the Holding Company and the Bank over the long term.

The Foundation is dedicated to the promotion of charitable purposes including community development, grants or donations to support housing assistance, not-for-profit community groups and other types of organizations or civic-minded projects. The Foundation will annually distribute total grants to assist charitable organizations or to fund projects within its local community of not less than 5% of the average fair market value of Foundation assets each year, less certain expenses. In order to serve the purposes for which it was formed and maintain its Section 501(c)(3) qualification, the Foundation may sell, on an annual basis, a limited portion of the Foundation Shares.

For a period of five years following the Conversion, except for temporary periods resulting from death, resignation, removal or disqualification, (i) at least one director of the Foundation will be an independent director who is unaffiliated with the Holding Company and the Bank who is from the Bank’s local community and who has experience with local community charitable organizations and grant making, and (ii) at least one director shall be a person who is also a member of the Board of Directors of the Bank. The board of directors of the Foundation will be responsible for establishing the policies of the Foundation with respect to grants or donations, consistent with the stated purposes of the Foundation.

The contribution to the Foundation as part of the Conversion must be approved by a majority of the total number of votes eligible to be cast by Voting Members and by the Minority Stockholders.

21.

VOTING RIGHTS OF STOCKHOLDERS

Following consummation of the Conversion, the holders of the voting capital stock of the Holding Company shall have the exclusive voting rights with respect to the Holding Company.

22.

RESTRICTIONS ON RESALE OR SUBSEQUENT DISPOSITION

A. All Subscription Shares purchased by Directors or Officers of the Mutual Holding Company, the Mid-Tier Holding Company, the Holding Company or the Bank in the Offering shall be subject to the restriction that, except as provided in this Section or as may be approved by the Bank Regulators, no interest in such shares may be sold or otherwise disposed of for value for a period of one year following the date of purchase in the Offering.

B. The restriction on disposition of Subscription Shares set forth above in this Section shall not apply to the following:

Any exchange of such shares in connection with a merger or acquisition involving the Bank or the Holding Company, as the case may be, which has been approved by the appropriate state and federal regulatory agencies; and

Any disposition of such shares following the death of the person to whom such shares were initially sold under the terms of this Plan.

C. With respect to all Subscription Shares subject to restrictions on resale or subsequent disposition, each of the following provisions shall apply:

Each certificate representing shares restricted by this section shall bear a legend giving notice of the restriction;

Instructions shall be issued to the stock transfer agent for the Holding Company not to recognize or effect any transfer of any certificate or record of ownership of any such shares in violation of the restriction on transfer; and

Any shares of capital stock of the Holding Company issued with respect to a stock dividend, stock split, or otherwise with respect to ownership of outstanding Subscription Shares subject to the restriction on transfer hereunder shall be subject to the same restriction as is applicable to such Subscription Shares.

23.

REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION

For a period of three years following the Conversion, no Officer, Director or their Associates shall purchase, without the prior written approval of the Bank Regulators, any outstanding shares of Holding Company Common Stock except from a broker-dealer registered with the SEC. This provision shall not apply to negotiated transactions involving more than 1% of the outstanding shares of Holding Company Common Stock, the exercise of any options pursuant to a stock option plan or purchases of Holding Company Common Stock made by or held by any Tax-Qualified Employee Stock Benefit Plan or Non-Tax-Qualified Employee Stock Benefit Plan of the Bank or the Holding Company (including the Employee Plans) which may be attributable to any Officer or Director. As used herein, the term “negotiated transaction” means a transaction in which the securities are offered and the terms and arrangements relating to any sale are arrived at through direct communications between the seller or any person acting on its behalf and the purchaser or his investment representative. The term “investment representative” shall mean a professional investment advisor acting as agent for the purchaser and independent of the seller and not acting on behalf of the seller in connection with the transaction.

24.

TRANSFER OF DEPOSIT ACCOUNTS

Each person holding a Deposit Account at the Bank at the time of Conversion shall retain an identical Deposit Account at the Bank following Conversion in the same amount and subject to the same terms and conditions (except as to voting and liquidation rights) applicable to such Deposit Account in the Bank immediately prior to completion of the Conversion.

25.

REGISTRATION AND MARKETING

Within the time period required by applicable laws and regulations, the Holding Company will register the securities issued in connection with the Conversion pursuant to the Securities Exchange Act of 1934 and will not deregister such securities for a period of at least three years thereafter, except that the requirement to maintain the registration of such securities for three years may be fulfilled by any successor to the Holding Company. In addition, the Holding Company will use its best efforts to encourage and assist a market-maker to establish

and maintain a market for the Conversion Stock and to list those securities on a national or regional securities exchange.

26.

TAX RULINGS OR OPINIONS

Consummation of the Conversion is expressly conditioned upon prior receipt by the Mutual Holding Company, the Mid-Tier Holding Company, the Holding Company and the Bank of either a ruling, an opinion of counsel or a letter of advice from their tax advisor regarding the federal and state income tax consequences of the Conversion to the Mutual Holding Company, the Mid-Tier Holding Company, the Holding Company, the Bank and the Account Holders and Voting Members receiving subscription rights in the Conversion.

27.

STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS

A. The Holding Company and the Bank are authorized to adopt Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion, including without limitation, an ESOP. Existing as well as any newly created Tax-Qualified Employee Stock Benefit Plans may purchase shares of Holding Company Common Stock in the Offering, to the extent permitted by the terms of such benefit plans and this Plan.

B. As a result of the Conversion, the Holding Company shall be deemed to have ratified and approved all employee stock benefit plans maintained by the Bank and the Mid-Tier Holding Company and shall have agreed to issue (and reserve for issuance) Holding Company Common Stock in lieu of common stock of the Mid-Tier Holding Company pursuant to the terms of such benefit plans. Upon consummation of the Conversion, the Mid-Tier Holding Company common stock held by such benefit plans shall be converted into Holding Company Common Stock based upon the Exchange Ratio. Also upon consummation of the Conversion, (i) all rights to purchase, sell or receive Mid-Tier Holding Company common stock and all rights to elect to make payment in Mid-Tier Holding Company common stock under any agreement between the Bank or the Mid-Tier Holding Company and any Director, Officer or Employee thereof or under any plan or program of the Bank or the Mid-Tier Holding Company, shall automatically, by operation of law, be converted into and shall become an identical right to purchase, sell or receive Holding Company Common Stock and an identical right to make payment in Holding Company Common Stock under any such agreement between the Bank or the Mid-Tier Holding Company and any Director, Officer or Employee thereof or under such plan or program of the Bank, and (ii) rights outstanding under all stock option plans shall be assumed by the Holding Company and thereafter shall be rights only for shares of Holding Company Common Stock, with each such right being for a number of shares of Holding Company Common Stock based upon the Exchange Ratio and the number of shares of Mid-Tier Holding Company common stock that were available thereunder immediately prior to consummation of the Conversion, with the price adjusted to reflect the Exchange Ratio but with no change in any other term or condition of such right.

C. The Holding Company and the Bank are authorized to adopt stock option plans, restricted stock award plans and other Non-Tax-Qualified Employee Stock Benefit Plans, provided that such plans conform to any applicable regulations. The Holding Company and the Bank intend to implement a stock option plan and a restricted stock award plan no earlier than

six months after completion of the Conversion. Stockholder approval of these plans will be required. If adopted within 12 months following the completion of the Conversion, the stock option plan will reserve a number of shares equal to up to 10% of the shares sold in the Offering and the stock award plan will reserve a number of shares equal to up to 4% of the shares sold in the Offering for awards to employees and directors at no cost to the recipients (unless the Bank’s tangible capital is less than 10% upon completion of the Offering in which case the stock award plan will reserve a number of shares equal to up to 3% of the shares sold in the Offering), subject to adjustment, if any, as may be required by Federal Reserve regulations or policy in effect to reflect stock options or restricted stock granted by the Mid-Tier Holding Company prior to the completion of the Conversion. (Non-Tax-Qualified Employee Stock Benefit Plans implemented more than one year following the completion of the Conversion are not subject to the restrictions set forth in the preceding sentence.) Shares for such plans may be issued from authorized but unissued shares, treasury shares or repurchased shares.

D. The Holding Company and the Bank are authorized to enter into employment agreements and/or change in control agreements with their executive officers.

28.

RESTRICTIONS ON ACQUISITION OF BANK AND HOLDING COMPANY


A.	(1)	The charter of the Bank may contain a provision stipulating that no person, except the Holding Company, for a period of five years following the closing date of the Conversion, may directly or indirectly acquire or offer to acquire the beneficial ownership of more than 10% of any class of equity security of the Bank, without the prior written approval of the Federal Reserve. In addition, such charter may also provide that for a period of five years following the closing date of the Conversion, shares beneficially owned in violation of the above-described charter provision shall not be entitled to vote and shall not be voted by any person or counted as voting stock in connection with any matter submitted to stockholders for a vote. In addition, special meetings of the stockholders relating to changes in control or amendment of the charter may only be called by the Board of Directors, and shareholders shall not be permitted to cumulate their votes for the election of Directors.

	(2)	For a period of three years from the date of consummation of the Conversion, no person, other than the Holding Company, shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of equity security of the Bank without the prior written consent of the Federal Reserve. Nothing in this Plan shall prohibit the Holding Company from taking actions permitted under 12 C.F.R. 239.63(f).

B. The Articles of Incorporation of the Holding Company may contain a provision stipulating that in no event shall any record owner of any outstanding shares of Holding Company Common Stock who beneficially owns in excess of 10% of such outstanding shares be entitled or permitted to any vote with respect to any shares held in excess of 10%. In addition,

the Articles of Incorporation and Bylaws of the Holding Company may contain provisions which provide for, or prohibit, as the case may be, staggered terms of the directors, noncumulative voting for directors, limitations on the calling of special meetings, a fair price provision for certain business combinations and certain notice requirements.

C. For the purposes of this section:

(1)

The term “person” includes an individual, a firm, a corporation or other entity;

(2)

The term “offer” includes every offer to buy or acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security for value;

(3)

The term “acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise; and

(4)

The term “security” includes non-transferable subscription rights issued pursuant to a plan of conversion as well as a “security” as defined in 15 U.S.C. § 77b(a)(1).

29.

PAYMENT OF DIVIDENDS AND REPURCHASE OF STOCK

A. The Holding Company shall comply with applicable regulations in the repurchase of any shares of its capital stock following consummation of the Conversion. The Holding Company shall not declare or pay a cash dividend on, or repurchase any of, its capital stock, if such dividend or repurchase would reduce its capital below the amount then required for the Liquidation Account.

B. The Bank shall not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its regulatory capital to be reduced below its applicable regulatory capital requirements.

30.

ARTICLES OF INCORPORATION AND BYLAWS

By voting to approve this Plan, Voting Members will be voting to adopt the Articles of Incorporation and Bylaws for the Holding Company.

31.

CONSUMMATION OF CONVERSION AND EFFECTIVE DATE

The Effective Date of the Conversion shall be the date upon which the Articles of Combination shall be filed with the Federal Reserve and the Articles of Merger shall be filed with the Secretary of State of the State of Maryland. The Articles of Combination and the Articles of Merger shall be filed after all requisite regulatory, member and stockholder approvals have been obtained, all applicable waiting periods have expired, and sufficient subscriptions and orders for Subscription Shares have been received. The closing of the sale of all shares of Holding Company Common Stock sold in the Offering and the Exchange Offering shall occur simultaneously on the effective date of the closing.

32.

EXPENSES OF CONVERSION

The Mutual Holding Company, the Mid-Tier Holding Company, the Bank and the Holding Company may retain and pay for the services of legal, financial and other advisors to assist in connection with any or all aspects of the Conversion, including the Offering, and the contribution to the Foundation, and such parties shall use their best efforts to assure that such expenses shall be reasonable.

33.

AMENDMENT OR TERMINATION OF PLAN

If deemed necessary or desirable, this Plan may be substantively amended as a result of comments from the Bank Regulators or otherwise at any time prior to the meetings of Voting Members and Mid-Tier Holding Company stockholders to vote on this Plan by the Board of Directors of the Mutual Holding Company, and at any time thereafter by the Board of Directors of the Mutual Holding Company with the concurrence of the Bank Regulators. Any amendment to this Plan made after approval by Voting Members and Mid-Tier Holding Company stockholders with the approval of the Bank Regulators shall not necessitate further approval by Voting Members unless otherwise required by the Bank Regulators. The Board of Directors of the Mutual Holding Company may terminate this Plan at any time prior to the Special Meeting of Members and the Meeting of Stockholders to vote on this Plan, and at any time thereafter with the concurrence of the Bank Regulators.

By adoption of this Plan, Voting Members of the Mutual Holding Company authorize the Board of Directors of the Mutual Holding Company to amend or terminate this Plan under the circumstances set forth in this Section.

34.

CONDITIONS TO CONVERSION

Consummation of the Conversion pursuant to this Plan is expressly conditioned upon the following:

A. Prior receipt by the Mutual Holding Company, the Mid-Tier Holding Company, the Holding Company and the Bank of rulings of the United States Internal Revenue Service and the state taxing authorities, or opinions of counsel or tax advisers as described in Section 26 hereof;

B. The issuance of the Subscription Shares offered in the Conversion;

C. The issuance of Exchange Shares; and

D. The completion of the Conversion within the time period specified in Section 3 of this Plan.

35.

INTERPRETATION

All interpretations of this Plan and application of its provisions to particular circumstances by a majority of the Board of Directors of the Mutual Holding Company shall be final, subject to the authority of the Bank Regulators.

Dated: September 4, 2014

EXHIBIT A

FORM OF AGREEMENT OF MERGER BETWEEN

KEARNY MHC AND

KEARNY FINANCIAL CORP.

AGREEMENT OF MERGER BETWEEN

KEARNY MHC AND

KEARNY FINANCIAL CORP.

THIS AGREEMENT OF MERGER (the “MHC Merger Agreement”) dated as of , is made by and between Kearny MHC, a federal mutual holding company (the “Mutual Holding Company”) and Kearny Financial Corp., a federal corporation (the “Mid-Tier Holding Company”). Capitalized terms have the respective meanings given them in the Plan of Conversion and Reorganization (the “Plan”) of the Mutual Holding Company, unless otherwise defined herein.

R E C I T A L S:

1. The Mutual Holding Company is a federal mutual holding company that owns % of the common stock of the Mid-Tier Holding Company.

2. The Mid-Tier Holding Company is a federal corporation that owns 100% of the common stock of the Bank.

3. At least two-thirds of the members of the boards of directors of the Mutual Holding Company and the Mid-Tier Holding Company have approved this MHC Merger Agreement whereby the Mutual Holding Company shall merge with the Mid-Tier Holding Company with the Mid-Tier Holding Company as the surviving or resulting corporation (the “MHC Merger”), and have authorized the execution and delivery thereof.

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the parties hereto have agreed as follows:

1. Merger . At and on the Effective Date of the MHC Merger, the Mutual Holding Company will merge with the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (“Resulting Corporation”) whereby the shares of Mid-Tier Holding Company common stock held by the Mutual Holding Company will be canceled and members of the Mutual Holding Company will constructively receive liquidation interests in Mid-Tier Holding Company in exchange for their ownership interests in the Mutual Holding Company.

2. Effective Date . The MHC Merger shall not be effective until and unless the Plan is approved by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) after approval of this MHC Merger Agreement by at least (i) two-thirds of the votes eligible to be cast by the Stockholders of the Mid-Tier Holding Company, (ii) a majority of the votes eligible to be cast by Minority Stockholders, and (iii) a majority of the votes eligible to be cast by Voting Members, and the Articles of Combination shall have been filed with the Federal Reserve with respect to the MHC Merger. Approval of the Plan by the Voting Members shall constitute approval of the MHC Merger Agreement by the Voting Members. Approval of the Plan by Minority Stockholders of the Mid-Tier Holding Company, including the Minority Stockholders, shall constitute approval of the MHC Merger Agreement by such stockholders.

3. Name . The name of the Resulting Corporation shall be Kearny Financial Corp.

4. Offices . The main office of the Resulting Corporation shall be 120 Passaic Avenue, Fairfield, New Jersey 07004.

5. Directors and Officers . The directors and officers of the Mid-Tier Holding Company immediately prior to the Effective Date shall be the directors and officers of the Resulting Corporation after the Effective Date.

6. Rights and Duties of the Resulting Corporation . At the Effective Date, the Mutual Holding Company shall be merged with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the Resulting Corporation. The business of the Resulting Corporation shall be that of a federally chartered corporation as provided in its Charter. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the Mutual Holding Company shall be transferred automatically to and vested in the Resulting Corporation by virtue of the MHC Merger without any deed or other document of transfer. The Resulting Corporation, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by the Mid-Tier Holding Company and the Mutual Holding Company. The Resulting Corporation shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the Mutual Holding Company immediately prior to the MHC Merger, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the Mutual Holding Company, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company or the Mutual Holding Company. The stockholders of the Mid-Tier Holding Company shall possess all voting rights with respect to the shares of stock of the Resulting Corporation. All rights of creditors and other obligees and all liens on property of the Mid-Tier Holding Company and the Mutual Holding Company shall be preserved and shall not be released or impaired.

7. Rights of Stockholders . At the Effective Date, the shares of Mid-Tier Holding Company common stock held by the Mutual Holding Company will be canceled and members of the Mutual Holding Company will constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their ownership interests in the Mutual Holding Company. Minority Stockholders’ rights will remain unchanged.

8. Other Terms . All terms used in this MHC Merger Agreement shall, unless defined herein, have the meanings set forth in the Plan. The Plan is incorporated herein by this reference and made a part hereof to the extent necessary or appropriate to effect and consummate the terms of this MHC Merger Agreement and the Conversion.

A-2

IN WITNESS WHEREOF , the Mutual Holding Company and the Mid-Tier Holding Company have caused this MHC Merger Agreement to be executed as of the date first above written.


	Kearny MHC
	(a federal mutual holding company)

ATTEST:

	By:
Sharon Jones		Craig L. Montanaro
Corporate Secretary		President and Chief Executive Officer


	Kearny Financial Corp.
	(a federal corporation)

ATTEST:

	By:
Sharon Jones		Craig L. Montanaro
Corporate Secretary		President and Chief Executive Officer

A-3

EXHIBIT B

FORM OF AGREEMENT OF MERGER BETWEEN

KEARNY FINANCIAL CORP.,

A FEDERAL CORPORATION AND

KEARNY FINANCIAL CORP.,

A MARYLAND CORPORATION

AGREEMENT OF MERGER BETWEEN

KEARNY FINANCIAL CORP.,

A FEDERAL CORPORATION AND

KEARNY FINANCIAL CORP.,

A MARYLAND CORPORATION

THIS AGREEMENT OF MERGER (the “Mid-Tier Merger Agreement”), dated as of , is made by and between Kearny Financial Corp., a federal corporation (the “Mid-Tier Holding Company”) and Kearny Financial Corp., a Maryland corporation (the “Holding Company”). Capitalized terms have the respective meanings given them in the Plan of Conversion and Reorganization of Kearny MHC (the “Plan”) unless otherwise defined herein.

R E C I T A L S:

1. The Mid-Tier Holding Company is a federal corporation that owns 100% of the common stock of the Bank.

2. The Holding Company has been organized to succeed to the operations of the Mid-Tier Holding Company.

3. At least two-thirds of the members of the boards of directors of the Mid-Tier Holding Company and the Holding Company have approved this Mid-Tier Merger Agreement whereby the Mid-Tier Holding Company will be merged with the Holding Company with the Holding Company as the resulting corporation (the “Mid-Tier Merger”), and authorized the execution and delivery thereof.

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, the parties hereto have agreed as follows:

1. Merger . At and on the Effective Date of the Mid-Tier Merger, the Mid-Tier Holding Company will merge with the Holding Company with the Holding Company as the resulting corporation (the “Resulting Corporation”), whereby the Bank will become the wholly-owned subsidiary of the Holding Company. As part of the Mid-Tier Merger, the members of Kearny MHC who constructively received liquidation interests in Mid-Tier Holding Company will exchange the liquidation interests in the Mid-Tier Holding Company that they constructively received in the MHC Merger for an interest in the Liquidation Account and the stockholders of the Mid-Tier Holding Company (Minority Stockholders immediately prior to the Conversion) will exchange their shares of Mid-Tier Holding Company Common Stock for Holding Company Common Stock in the Exchange Offering pursuant to the Exchange Ratio.

2. Effective Date . The Mid-Tier Merger shall not be effective until and unless the Plan is approved by the Board of Governors of the Federal Reserve System (the “Federal Reserve”) after approval by at least (i) two-thirds of the votes eligible to be case by Stockholders of the Mid-Tier Holding Company, (ii) a majority of the votes eligible to be cast by Minority Stockholders, and (iii) a majority of the votes eligible to be cast by Voting Members, and the Articles of Combination shall have been filed with the Federal Reserve and Articles of Merger have been filed with the Secretary of State of the State of Maryland with respect to the Mid-Tier

Merger. Approval of the Plan by the Voting Members shall constitute approval of the Mid-Tier Merger Agreement by the Voting Members in their capacity as members of Kearny MHC. Approval of the Plan by the stockholders of the Mid-Tier Holding Company, including the Minority Stockholders, shall constitute approval of the Mid-Tier Merger Agreement by such stockholders.

3. Name . The name of the Resulting Corporation shall be Kearny Financial Corp.

4. Offices . The main office of the Resulting Corporation shall be 120 Passaic Avenue, Fairfield, New Jersey 07004.

6. Rights and Duties of the Resulting Corporation . At the Effective Date, the Mid-Tier Holding Company shall merge with the Holding Company, with the Holding Company as the Resulting Corporation. The business of the Resulting Corporation shall be that of a Maryland corporation as provided in its Articles of Incorporation. All assets, rights, interests, privileges, powers, franchises and property (real, personal and mixed) of the Mid-Tier Holding Company and the Holding Company shall be transferred automatically to and vested in the Resulting Corporation by virtue of the Mid-Tier Merger without any deed or other document of transfer. The Resulting Corporation, without any order or action on the part of any court or otherwise and without any documents of assumption or assignment, shall hold and enjoy all of the properties, franchises and interests, including appointments, powers, designations, nominations and all other rights and interests as the agent or other fiduciary in the same manner and to the same extent as such rights, franchises, and interests and powers were held or enjoyed by the Mid-Tier Holding Company and the Holding Company. The Resulting Corporation shall be responsible for all of the liabilities, restrictions and duties of every kind and description of the Mid-Tier Holding Company and the Holding Company immediately prior to the Mid-Tier Merger, including liabilities for all debts, obligations and contracts of the Mid-Tier Holding Company and the Holding Company, matured or unmatured, whether accrued, absolute, contingent or otherwise and whether or not reflected or reserved against on balance sheets, books of accounts or records of the Mid-Tier Holding Company or the Holding Company. The stockholders of the Holding Company shall possess all voting rights with respect to the shares of stock of the Resulting Corporation. All rights of creditors and other obligees and all liens on property of the Mid-Tier Holding Company and the Holding Company shall be preserved and shall not be released or impaired.

7. Rights of Stockholders . At the Effective Date, the members of Kearny MHC immediately prior to the Conversion will exchange the liquidation rights in the Mid-Tier Holding Company that they constructively received in the MHC Merger for interests in the Liquidation Account, and the stockholders of Mid-Tier Holding Company (Minority Stockholders immediately prior to the Conversion) will exchange their shares of Mid-Tier Holding Company Common Stock for Holding Company Common Stock in the Exchange Offering pursuant to the Exchange Ratio.

B-2

8. Other Terms . All terms used in this Mid-Tier Merger Agreement shall, unless defined herein, have the meanings set forth in the Plan. The Plan is incorporated herein by this reference and made a part hereof to the extent necessary or appropriate to effect and consummate the terms of this Mid-Tier Merger Agreement and the Conversion.

B-3

IN WITNESS WHEREOF , the Mid-Tier Holding Company and the Holding Company have caused this Mid-Tier Merger Agreement to be executed as of the date first above written.


	Kearny Financial Corp.

ATTEST:

	By:
Sharon Jones		Craig L. Montanaro
Corporate Secretary		President and Chief Executive Officer


	Kearny Financial Corp.
	(a Maryland corporation)

ATTEST:

	By:
Sharon Jones		Craig L. Montanaro
Corporate Secretary		President and Chief Executive Officer

B-4

Exhibit 3.1

ARTICLES OF INCORPORATION

KEARNY FINANCIAL CORP.

The undersigned, Lawrence M.F. Spaccasi, whose address is 5335 Wisconsin Avenue, N.W., Suite 780, Washington, DC 20015, being at least eighteen years of age, acting as incorporator, does hereby form a corporation under the general laws of the State of Maryland, having the following Articles of Incorporation (the “Articles”):

ARTICLE 1. Name. The name of the corporation is Kearny Financial Corp. (herein the “Corporation”).

ARTICLE 2. Principal Office. The address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202.

ARTICLE 3. Purpose. The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

ARTICLE 4. Resident Agent. The name and address of the registered agent of the Corporation in the State of Maryland is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.

ARTICLE 5. Capital Stock

A. Authorized Stock. The total number of shares of capital stock of all classes that the Corporation has authority to issue is Nine Hundred Million (900,000,000) shares, consisting of:

1. One Hundred Million (100,000,000) shares of preferred stock, par value one cent ($0.01) per share (the “Preferred Stock”); and

2. Eight Hundred Million (800,000,000) shares of common stock, par value one cent ($0.01) per share (the “Common Stock”).

The aggregate par value of all the authorized shares of capital stock is Nine Million dollars ($9,000,000). Except to the extent required by governing law, rule or regulation, the shares of capital stock may be issued from time to time by the Board of Directors without further approval of the stockholders of the Corporation. The Corporation shall have the authority to purchase its capital stock out of funds lawfully available therefor, which funds shall include, without limitation, the Corporation’s unreserved and unrestricted capital surplus. The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. For the purposes of these Articles, the term “Whole Board” shall mean the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors at the time any such resolution is presented to the Board of Directors for adoption.

B. Common Stock. Except as provided under the terms of any series of Preferred Stock and as limited by Section D of this Article 5, the exclusive voting power shall be vested in the Common Stock. Except as otherwise provided in these Articles, each holder of the Common Stock shall be entitled to one vote for each share of Common Stock standing in the holder’s name on the books of the Corporation. Subject to any rights and preferences of any series of Preferred Stock, holders of Common Stock shall be entitled to such dividends as may be declared by the Board of Directors out of funds lawfully available therefor. Upon the liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of the Common Stock shall be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them, respectively, after: (i) payment or provision for payment of the Corporation’s debts and liabilities; (ii) distributions or provision for distributions in settlement of the Liquidation Account established by the Corporation as described in Section G of this Article 5; and (iii) distributions or provisions for distributions to holders of any class or series of stock having a preference over the Common Stock in the liquidation, dissolution or winding up of the Corporation.

C. Preferred Stock. The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares of Preferred Stock in series, to establish from time to time the number of shares to be included in each such series, and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the shares of each such series. The number of authorized shares of the Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required by law or pursuant to the terms of such Preferred Stock. The power of the stockholders to increase or decrease the authorized shares of the Preferred Stock shall not limit any of the powers of the Board of Directors provided under these Articles.

D. Restrictions on Voting Rights of the Corporation’s Equity Securities.

1. Notwithstanding any other provision of these Articles, in no event shall the record owner (or if more than one record owner, all such record owners taken as a group) of any outstanding Common Stock that is beneficially owned, directly or indirectly, by a Person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns in excess of 10% of the then-outstanding shares of Common Stock (the “Limit”), be entitled, or permitted to any vote in respect of the shares held in excess of the Limit. The number of votes that may be cast by any particular record owner by virtue of the provisions hereof in respect of Common Stock beneficially owned by such Person owning shares in excess of the Limit (a “Holder in Excess”) shall be a number equal to the total number of votes that a single record owner of all Common Stock owned by such Holder in Excess would be entitled to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the number of shares of such class or series that are both (i) beneficially owned by such Holder

in Excess and (ii) owned of record by such particular record owner and the denominator of which is the total number of shares of Common Stock beneficially owned by such Holder in Excess. The provisions of this Section D of this Article 5 shall not be applicable if, before the Holder in Excess acquired beneficial ownership of such shares in excess of the Limit, such acquisition was approved by a majority of the “Unaffiliated Directors.” For this purpose, the term “Unaffiliated Director” means any member of the Board of Directors who is unaffiliated with the Holder in Excess and was a member of the Board of Directors prior to the time that the Holder in Excess became such, and any director who is thereafter chosen to fill any vacancy on the Board of Directors and who is elected and who, in either event, is unaffiliated with the Holder in Excess and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of the Unaffiliated Directors then serving on the Board of Directors.

2. The following definitions shall apply to this Section D of this Article 5.

(a)

An “affiliate” of a specified Person shall mean a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.

(b)

“Beneficial ownership” shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on December 31, 2013; provided, however, that a Person shall, in any event, also be deemed the “beneficial owner” of any Common Stock:

(1)

that such Person or any of its affiliates beneficially owns, directly or indirectly; or

(2)

that such Person or any of its affiliates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of an agreement, contract, or other arrangement with the Corporation to effect any transaction of the type described in clause (i) or (ii) of the first sentence of Article 9 hereof) or upon the exercise of conversion rights, exchange rights, warrants, or options or otherwise, or (ii) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such Person nor any such affiliate is otherwise deemed the beneficial owner); or

(3)

that are beneficially owned, directly or indirectly, by any other Person with which such first mentioned Person or any of its affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that (i) no director or officer of the Corporation (or any affiliate of any such director or officer) shall, solely by reason of any or all of such directors or officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any Common Stock beneficially owned by any other such director or officer (or any affiliate thereof), and (ii) neither any employee stock ownership or similar plan of the Corporation or any subsidiary of the Corporation nor any trustee with respect thereto (or any affiliate of such trustee) shall, solely by reason of such capacity of such trustee, be deemed, for any purposes hereof, to beneficially own any Common Stock held under any such plan. For purposes of computing the percentage of beneficial ownership of Common Stock of a Person, the outstanding Common Stock shall include shares deemed owned by such Person through application of this subsection but shall not include any other shares of Common Stock that may be issuable by the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the outstanding Common Stock shall include only Common Stock then outstanding and shall not include any Common Stock that may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise.

(c)

A “Person” shall mean any individual, firm, corporation, or other entity.

(d)

The Board of Directors shall have the power to construe and apply the provisions of this Section D and to make all determinations necessary or desirable to implement such provisions including, but not limited to, matters with respect to (i) the number of shares of Common Stock beneficially owned by any Person, (ii) whether a Person is an affiliate of another, (iii) whether a Person has an agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership, (iv) the application of any other definition or operative provision of this Section D to the given facts, or (v) any other matter relating to the applicability or effect of this Section D.

3. The Board of Directors shall have the right to demand that any Person reasonably believed by the Board of Directors to be a Holder in Excess (or holder of record of Common Stock beneficially owned by any Holder in Excess) supply the Corporation with complete information as to (i) the record owner(s) of all shares beneficially owned by such Holder in Excess, and (ii) any other factual matter relating to the applicability or effect of this section as may reasonably be requested of such Holder in Excess. The Board of Directors shall further

have the right to receive from any Holder in Excess reimbursement for all expenses incurred by the Board in connection with its investigation of any matters relating to the applicability or effect of this section on such Holder in Excess, to the extent such investigation is deemed appropriate by the Board of Directors as a result of the Holder in Excess refusing to supply the Corporation with the information described in the previous sentence.

4. Any constructions, applications, or determinations made by the Board of Directors pursuant to this Section D in good faith and on the basis of such information and assistance as was then reasonably available for such purpose, shall be conclusive and binding upon the Corporation and its stockholders.

5. In the event any provision (or portion thereof) of this Section D shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section D shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section D remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including Holders in Excess, notwithstanding any such finding.

E. Majority Vote For Certain Actions. With respect those actions as to which any provision of the MGCL requires stockholder authorization by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, any such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in these Articles.

F. Quorum . Except as otherwise provided by law or expressly provided in these Articles, the presence, in person or by proxy, of the holders of record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to the provisions of Article 5, Section D) entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote shall constitute a quorum at all meetings of the stockholders, and every reference in these Articles to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.

G. Liquidation Account. Under regulations of the Board of Governors of the Federal Reserve System, the Corporation must establish and maintain a liquidation account (the “Liquidation Account”) for the benefit of certain Eligible Account Holders and Supplemental Eligible Account Holders as defined in the Plan of Conversion and Reorganization of Kearny MHC, as may be amended from time to time (the “Plan of Conversion”). In the event of a complete liquidation involving (i) the Corporation or (ii) Kearny Federal Savings Bank, a federally-chartered savings bank that will be a wholly-owned subsidiary of the Corporation, the Corporation must comply with the regulations of the Board of Governors of the Federal Reserve System and the provisions of the Plan of Conversion with respect to the amount and priorities of

each Eligible Account Holder’s and Supplemental Eligible Account Holder’s interests in the Liquidation Account. The interest of an Eligible Account Holder or Supplemental Eligible Account Holder in the Liquidation Account does not entitle such account holders to voting rights.

ARTICLE 6. Preemptive Rights and Appraisal Rights.

A. Preemptive Rights. Except for preemptive rights approved by the Board of Directors pursuant to a resolution approved by a majority of the directors then in office, no holder of the capital stock of the Corporation or series of stock or of options, warrants or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued capital stock of any class or series, or any unissued bonds, certificates of indebtedness, debentures or other securities convertible into or exchangeable for capital stock of any class or series or carrying any right to purchase stock of any class or series.

B. Appraisal Rights. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, pursuant to a resolution approved by a majority of the directors then in office, shall determine that such rights apply with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.

ARTICLE 7. Directors. The following provisions are made a part of these Articles for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:

A. Management of the Corporation. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or as reserved to the stockholders by law or by these Articles or the Bylaws of the Corporation; provided, however, that any limitations on the Board of Director’s management or direction of the affairs of the Corporation shall reserve the directors’ full power to discharge their fiduciary duties.

B. Number, Class and Terms of Directors; No Cumulative Voting. The number of directors constituting the Board of Directors of the Corporation shall initially be nine (9), which number may be increased or decreased in the manner provided in the Bylaws of the Corporation; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, with the term of office of the first class (“Class I”) to expire at the conclusion of the first annual meeting of stockholders, the term of office of the second class (“Class II”) to expire at the conclusion of the annual meeting of stockholders one year thereafter and the term of office of the third class (“Class III”) to expire at the conclusion of the annual meeting of stockholders two

years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her term expires and until his or her successor shall have been duly elected and qualified.

The names of the individuals who will serve as directors of the Corporation until their successors are elected and qualify are as follows:


Class I Directors:		Term to Expire in
Craig L. Montanaro		2015
Leopold W. Montanaro		2015
John N. Hopkins		2015

Class II Directors :		Term to Expire in
John J. Mazur, Jr.		2016
Matthew T. McClane		2016
John F. McGovern		2016

Class III Directors :		Term to Expire in
Theodore J. Aanensen		2017
Joseph P. Mazza		2017
John F. Regan		2017

Stockholders shall not be permitted to cumulate their votes in the election of directors. A plurality of all the votes cast at a meeting at which a quorum is present is sufficient to elect a director.

C. Vacancies. Any vacancies in the Board of Directors may be filled in the manner provided in the Bylaws of the Corporation.

D. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of 80% of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof) voting together as a single class.

E. Stockholder Proposals and Nominations of Directors. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the

manner provided in the Bylaws of the Corporation. Stockholder proposals to be presented in connection with a special meeting of stockholders shall be presented by the Corporation only to the extent required by Section 2-502 of the MGCL and the Bylaws of the Corporation.

ARTICLE 8. Bylaws. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. In addition to any vote of the holders of any class or series of stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof), voting together as a single class, shall be required for the adoption, amendment or repeal of any provisions of the Bylaws of the Corporation by the stockholders.

ARTICLE 9. Evaluation of Certain Offers. The Board of Directors, when evaluating (i) any offer of another Person (as defined below) to (A) make a tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another corporation or entity, or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or (ii) any other actual or proposed transaction that would or may involve a change in control of the Corporation (whether by purchases of shares of stock or any other securities of the Corporation in the open market or otherwise, tender offer, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation to the Corporation’s stockholders, give due consideration to all relevant factors, including, but not limited to: (A) the economic effect, both immediate and long-term, upon the Corporation’s stockholders, including stockholders, if any, who do not participate in the transaction; (B) the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located; (C) whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of the Corporation; (D) whether a more favorable price could be obtained for the Corporation’s stock or other securities in the future; (E) the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of the Corporation and its subsidiaries; (F) the future value of the stock or any other securities of the Corporation or the other entity to be involved in the proposed transaction; (G) any antitrust or other legal and regulatory issues that are raised by the proposal; (H) the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and (I) the ability of the Corporation to fulfill its objectives as a financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable statutes and regulations. If the Board of Directors

determines that any proposed transaction of the type described in clause (i) or (ii) of the immediately preceding sentence should be rejected, it may take any lawful action to defeat such transaction, including, but not limited to, any or all of the following: advising stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints with governmental and regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock or other securities or granting options or rights with respect thereto; and obtaining a more favorable offer from another individual or entity. This Article 9 sets forth certain factors that may be considered by the Board of Directors, but does not create any implication concerning the factors that must be considered, or any other factors that may or may not be considered, by the Board of Directors regarding any proposed transaction of the type described in clause (i) or (ii) of the first sentence of this Article 9.

For purposes of this Article 9, a “Person” shall include an individual, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group or entity formed for the purpose of acquiring, holding or disposing of securities.

ARTICLE 10. Indemnification, etc. of Directors and Officers.

entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise shall be on the Corporation.

ARTICLE 11. Limitation of Liability. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to

the extent that it is proved that the Person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the Person is entered in a proceeding based on a finding in the proceeding that the Person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.

ARTICLE 12. Selection of Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the MGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Maryland, in all cases subject to the court’s having personal jurisdiction over the indispensible parties named as defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article 12.

ARTICLE 13. Amendment of the Articles of Incorporation. The Corporation reserves the right to amend or repeal any provision contained in these Articles in the manner prescribed by the MGCL, including any amendment altering the terms or contract rights, as expressly set forth in these Articles, of any of the Corporation’s outstanding stock by classification, reclassification or otherwise, and no stockholder approval shall be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights conferred upon stockholders are granted subject to this reservation.

The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

No proposed amendment or repeal of any provision of these Articles shall be submitted to a stockholder vote unless the Board of Directors shall have (1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration at either an annual or special meeting of the stockholders pursuant to a resolution approved by the Board of Directors. Any proposed amendment or repeal of any provision of these Articles may be abandoned by the Board of Directors at any time before its effective time upon the adoption of a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number).

The amendment or repeal of any provision of these Articles shall be approved by at least two-thirds of all votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles), except that the proposed amendment or repeal of any provision of these Articles need only be approved by the vote of a majority of all the votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles) if the amendment or repeal of such provision is approved by the Board of Directors pursuant to a resolution approved by at least two-thirds of the Whole Board (rounded up to the nearest whole number).

Notwithstanding any other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by these Articles, the affirmative vote of the holders of at least 80% of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5), voting together as a single class, shall be required to amend or repeal this Article 13, Section C, D, E or F of Article 5, Article 7 (other than the removal of the list of the original directors), Article 8, Article 9, Article 10, Article 11 or Article 12.

ARTICLE 14. Name and Address of Incorporator. The name and mailing address of the sole incorporator are as follows:

Lawrence M.F. Spaccasi

5335 Wisconsin Ave., N.W., Suite 780

Washington, D.C. 20015

[Remainder of Page Intentionally Left Blank]

I, THE UNDERSIGNED, being the incorporator, for the purpose of forming a corporation under the laws of the State of Maryland, do make, file and record these Articles of Incorporation, do certify that the facts herein stated are true, and, accordingly, have hereto set my hand this 2nd day of September, 2014.

/s/ Lawrence M.F. Spaccasi

Lawrence M.F. Spaccasi, Incorporator

Exhibit 3.2

KEARNY FINANCIAL CORP.

BYLAWS

ARTICLE I

STOCKHOLDERS

Section 1.

Annual Meeting.

Kearny Financial Corp. (the “Corporation”) shall hold an annual meeting of its stockholders to elect directors and to transact any other business within its powers, at such place, on such date and at such time as the Board of Directors shall fix. Failure to hold an annual meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate act.

Section 2.

Special Meetings.

Special meetings of stockholders of the Corporation may be called by the President, the Chairperson of the Board, or by the Board of Directors pursuant to a resolution adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board of Directors (hereinafter the “Whole Board”). Special meetings of the stockholders shall be called by the Secretary at the request of stockholders only on the written request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to be acted upon at the meeting, and shall be delivered at the principal office of the Corporation addressed to the President or the Secretary. The Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing a notice of the meeting and, upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the meeting. The Board of Directors shall have the sole power to fix (i) the record date for determining stockholders entitled to request a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special meeting and (ii) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders and proxy holders may be considered present in person and may vote at the special meeting.

Section 3.

Notice of Meetings; Adjournment or Postponement.

Not less than 10 nor more than 90 days before each stockholders’ meeting, the Secretary shall give notice of the meeting in writing or by electronic transmission to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice of the meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting or notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally delivered to the stockholder, left at the stockholder’s residence or usual place of business, mailed to the stockholder at his or her address as it appears on the records of the Corporation, or transmitted to the stockholder by an electronic transmission to any address or number of the

stockholder at which the stockholder receives electronic transmissions. If the Corporation has received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who is entitled to notice waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission which is filed with the records of the stockholders’ meetings, or if such person is present at the meeting in person or by proxy.

A meeting of stockholders convened on the date for which it was called may be adjourned from time to time without further notice to a date not more than 120 days after the original record date. A meeting may be adjourned by a resolution adopted by a majority of the Whole Board or by the vote of a majority of the stockholders present at the meeting, whether or not a quorum is present at such meeting. At any adjourned meeting, any business may be transacted that might have been transacted at the original meeting.

A meeting of stockholders may be postponed to a date not more than 120 days after the original record date. A meeting may be postponed by a resolution adopted by a majority of the Whole Board. Notice of the date, time and place to which the meeting is postponed shall be given not less than ten days prior to such date and otherwise in the manner set forth in this Section 3. At any postponed meeting, any business may be transacted that might have been transacted at the meeting as originally scheduled.

If a meeting shall be adjourned or postponed to a date not more than 120 days after the original record date, a new record date need not be established, and the original record date may be used for the purpose of determining which stockholders are entitled to notice of, and to vote at, the adjourned or postponed meeting. Any writing authorizing another person to act as proxy at a meeting of stockholders shall remain valid for use at any adjournment or postponement of such meeting unless such proxy is revoked or a later dated proxy is provided by such stockholder.

As used in these Bylaws, the term “electronic transmission” shall have the meaning given to such term by Section 1-101 of the Maryland General Corporation Law (the “MGCL”) or any successor provision.

Section 4.

Quorum.

Unless the Articles of the Corporation provide otherwise, where a separate vote by a class or classes is required, a majority of the shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter.

If a quorum shall fail to attend any meeting, the chairperson of the meeting or the holders of a majority of the shares of stock who are present at the meeting, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date or time.

Section 5.

Organization and Conduct of Business.

The Chairperson of the Board of Directors of the Corporation, or in his or her absence, the Vice Chairperson of the Board, or in his or her absence, the Chief Executive Officer, or in his or her absence, such other person as may be designated by a majority of the Whole Board, shall call to order any meeting of the stockholders and act as chairperson of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairperson of the meeting appoints. The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her to be in order.

Section 6.

Advance Notice Provisions for Business to be Transacted at Annual Meetings and Elections of Directors.

(a) At any annual meeting of the stockholders, unless otherwise required by law, only such business shall be conducted as shall have been brought before the meeting: (i) as specified in the Corporation’s notice of the meeting; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting, and (2) complies with the notice procedures set forth in this Section 6(a). For business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of the immediately preceding sentence, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such business must otherwise be a proper matter for action by stockholders.

To be timely, a stockholder’s notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation not less than 110 days nor more than 120 days prior to the anniversary of the prior year’s annual meeting of stockholders; provided , however, that if the date of the annual meeting is advanced more than 30 days prior to the anniversary of the preceding year’s annual meeting, a stockholder’s written notice shall be timely only if delivered or mailed to and received by the Secretary of the Corporation at the principal executive office of the Corporation no earlier than the day on which public disclosure of the date of such annual meeting is first made and no later than the tenth day following the day on which public disclosure of the date of such annual meeting is first made.

The advance notice periods provided in this paragraph, once established by the initial notice or public disclosure of a date for the annual meeting of stockholders, shall remain in effect regardless of whether a subsequent notice or public disclosure shall provide that the meeting shall have been adjourned or that the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure. With respect to the first annual meeting of stockholders of the Corporation following the Corporation becoming the sole stockholder of Kearny Federal Savings Bank, notice by the stockholder shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the 120th day prior to the date of the annual meeting and (ii) the 10th day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice hereunder.

A stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (ii) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and any such beneficial owner; (iv) a description of all arrangements or understandings between such stockholder or beneficial owner and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this Section 6(a). The chairperson of the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6(a) and, if he or she should so determine, he or she shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted.

At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation’s notice of the meeting.

(b) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at which directors are to be elected only: (i) by or at the direction of the Board of Directors or; (ii) by any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(b) and on the record date for the determination of stockholders entitled to vote at such meeting, and (2) complies with the notice procedures set forth in this Section 6(b). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the Corporation.

shall have been adjourned or that the date of the meeting shall have been postponed or otherwise changed from the date provided in the initial notice or public disclosure. With respect to the first annual meeting of stockholders of the Corporation following the Corporation becoming the sole stockholder of Kearny Federal Savings Bank, notice by the stockholder shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the 120th day prior to the date of the annual meeting and (ii) the 10th day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting of stockholders shall commence a new period for the giving of notice hereunder.

A stockholder’s notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) all information relating to such person that would indicate such person’s qualification to serve on the Board of Directors of the Corporation; (ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of these Bylaws; (iii) such information relating to such person that is required to be disclosed in connection with solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor rule or regulation; and (iv) a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice: (i) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section 6(b). The chairperson of the meeting shall, if the facts so warrant, determine that a nomination was not made in accordance with such provisions and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.

(c) For purposes of subsections (a) and (b) of this Section 6, the term “public disclosure” shall mean disclosure (i) in a press release issued by a nationally recognized news service, (ii) in a document publicly filed or furnished by the Corporation with the U.S. Securities and Exchange Commission or (iii) on a website maintained by the Corporation. The timely notice requirements provided in subsections (a) and (b) of this Section 6 shall apply to all stockholder nominations for election as a director and all stockholder proposals for business to be conducted at an annual meeting regardless of whether such proposal is submitted for inclusion in the Corporation’s proxy materials pursuant to Rule 14a-8 of Regulation 14A under the Exchange Act.

Section 7.

Proxies and Voting.

Unless the Articles of the Corporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding share of stock, regardless of class, is entitled to one vote on each matter submitted to a vote at a meeting of stockholders; however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors, directors shall be determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Articles of the Corporation, all other matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.

A stockholder may vote the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person to act as proxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the writing or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature. A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization for the person to act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic or telephonic means. Unless a proxy provides otherwise, it is not valid more than 11 months after its date. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.

Section 8.

Conduct of Voting

The Board of Directors shall, in advance of any meeting of stockholders, appoint one or more persons as inspectors of election, to act at the meeting or any adjournment thereof and make a written report thereof, in accordance with applicable law. If one or more inspectors are not so elected, the chairperson of the meeting shall make such appointment at the meeting of stockholders. At all meetings of stockholders, the proxies and ballots shall be received, and all questions relating to the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided or determined by the inspector of election. All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy or the chairperson of the meeting, a written vote shall be taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. No candidate for election as a director at a meeting shall serve as an inspector at such meeting.

Section 9.

Control Share Acquisition Act.

Notwithstanding any other provision of the Articles of the Corporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This Section 9 may be repealed by a majority of the Whole Board, in whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section 3-701(d) of the MGCL, or any successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share Acquisition (as defined in Section 3-701(d) of the MGCL, or any successor provision).

ARTICLE II

BOARD OF DIRECTORS

Section 1.

General Powers, Number and Term of Office.

The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation shall, by virtue of the Corporation’s election made hereby to be governed by Section 3-804(b) of the MGCL, be fixed from time to time exclusively by vote of the Board of Directors; provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter in force. The Board of Directors shall annually elect a Chairperson of the Board from among its members and shall designate the Chairperson of the Board or his or her designee to preside at its meetings. The Board of Directors may also annually elect a Vice Chairperson. In the absence of the Chairperson of the Board, the Vice Chairperson of the Board shall preside at the meetings of the Board of Directors, and in his or her absence such other person as may be designated by a majority of the Whole Board shall preside at the meetings of the Board of Directors.

The directors, other than those who may be elected by the holders of any series of preferred stock, shall be divided into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the first annual meeting of stockholders, the term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to expire at the annual meeting of stockholders two years thereafter, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the first annual meeting, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determine, with each director to hold office until his or her successor shall have been duly elected and qualified.

Section 2.

Vacancies and Newly Created Directorships.

By virtue of the Corporation’s election made hereby to be subject to Section 3-804(c) of the MGCL, any vacancies in the Board of Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by the

affirmative vote of two-thirds of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3.

Regular Meetings.

Regular meetings of the Board of Directors shall be held at such place or places or by means of remote communication, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 4.

Special Meetings.

Special meetings of the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number), the Chairperson of the Board, the Vice Chairperson of the Board or by the President, and shall be held at such place or by means of remote communication, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director who has not waived notice by mailing and post-marking written notice not less than five days before the meeting, or by facsimile or other electronic transmission of the same not less than 24 hours before the meeting. Any director may waive notice of any special meeting, either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission that is filed with the records of the meeting. Attendance of a director at a special meeting shall constitute a waiver of notice of such meeting, except where the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted nor the purpose of any special meeting of the Board of Directors need be specified in the notice of such meeting. Any special meeting of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.

Section 5.

Quorum.

At any meeting of the Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

Section 6.

Participation in Meetings By Conference Telephone.

Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Such participation shall constitute presence in person at such meeting.

Section 7.

Conduct of Business.

At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws or the Corporation’s Articles or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and filed in paper or electronic form with the minutes of proceedings of the Board of Directors.

Section 8.

Powers.

All powers of the Corporation may be exercised by or under the authority of the Board of Directors except as provided by the Corporation’s Articles. Consistent with the foregoing, the Board of Directors shall have, among other powers, the unqualified power:

(i)

To declare dividends from time to time in accordance with law;

(ii)

To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;

(iii)

To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;

(iv)

To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;

(v)

To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;

(vi)

To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;

(vii)

To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and

(viii)

To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation’s business and affairs.

Section 9.

Compensation of Directors.

Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.

Section 10.

Resignation.

Any director may resign at any time by giving written notice of such resignation to the President or the Secretary at the principal office of the Corporation. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.

Section 11.

Presumption of Assent.

A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to such action unless such director announces his or her dissent at the meeting and (a) such director’s dissent is entered in the minutes of the meeting, (b) such director files his or her written dissent to such action with the secretary of the meeting before the adjournment thereof, or (c) such director forwards his or her written dissent within 24 hours after the meeting is adjourned, by certified mail, return receipt requested, bearing a postmark from the United States Postal Service, to the secretary of the meeting or the Secretary of the Corporation. Such right to dissent shall not apply to a director who voted in favor of such action or failed to make his or her dissent known at the meeting.

Section 12.

Director Qualifications

(a) No person shall be eligible for election or appointment to the Board of Directors: (i) if a financial or securities regulatory agency has issued a cease and desist, consent or other formal order, other than a civil money penalty, against such person, which order is subject to public disclosure by such agency; (ii) if such person has been convicted of a crime involving dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; (iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation in such a crime; or (iv) if such person did not, at the time of his or her first election or appointment to the Board of Directors of the Corporation or Kearny Federal Savings Bank, maintain his or her principal residence (as determined by reference to such person’s most recent tax returns, copies of which shall be provided to the Corporation for the sole purpose of determining compliance with this clause (iv)) within a county in which the Corporation or any subsidiary thereof maintains an office, or in any county contiguous to a county in which the Corporation or any subsidiary thereof maintains an office for a period of at least one year prior to the date of his or her purported nomination, election or appointment to the Board of Directors. No person may serve on the Board of Directors if such person: (i) is at the same time, a director, officer, employee or 10% or more stockholder of a bank, savings institution, credit union, mortgage banking company, consumer loan company or similar organization, other than a subsidiary of the Corporation, that engages in business activities or solicits customers, whether through a physical presence or electronically, in the same market area as the Corporation or any of its subsidiaries; (ii) does not agree in writing to comply with all of the Corporation’s policies applicable to directors including but not limited to its confidentiality policy, and confirm in writing his or her qualifications hereunder; (iii) is a party to any agreement or arrangement with a party other than the Corporation or a subsidiary that (x) provides him with material benefits which are tied to or contingent on the Corporation entering into a merger, sale of control or similar transaction in which it is not the surviving institution, (y) materially limits his or her voting discretion as a member of the Board of

Directors of the Corporation, or (z) materially impairs his or her ability to discharge his or her fiduciary duties with respect to the fundamental strategic direction of the Corporation; or (iv) is the nominee or representative, as those terms are defined in the regulations of the Board of Governors of the Federal Reserve System, 12 C.F.R §212.2(n), of a company or other entity of which any of the directors, partners, trustees or 10% stockholders would not be eligible for election or appointment to the Board of Directors under this Section 12(a).

(b) No person shall be elected to serve as a director after reaching the age of seventy-five years unless the board determines, by a vote of at least two-thirds of its disinterested members, that such director possesses skills and experience that (1) materially benefit the Board of Directors in the exercise of its powers and duties, (2) are not possessed to any comparable degree by any other member of the Board of Directors, and (3) are not reasonably replaceable. Except as otherwise provided by the Executive Committee of the Board of Directors, the term of office of any director that is an employee of the Corporation or any subsidiary of the Corporation shall expire on the date on which his or her employment with the Corporation or such subsidiary of the Corporation terminates for any reason other than retirement.

The Board of Directors shall have the power to construe and apply the provisions of this Section 12 and to make all determinations necessary or desirable to implement such provisions.

Section 13.

Attendance at Board Meetings.

The Board of Directors shall have the right to remove any director from the board upon a director’s unexcused absence from (i) three consecutive regularly scheduled meetings of the Board of Directors, or (ii) five regularly scheduled meetings of the Board of Directors in any fiscal year of the Corporation.

ARTICLE III

COMMITTEES

Section 1.

Committees of the Board of Directors.

(a) General Provisions. The Board of Directors may appoint from among its members an Executive Committee, an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and such other committees as the Board of Directors deems necessary or desirable. The Board of Directors may delegate to any committee so appointed any of the powers and authorities of the Board of Directors to the fullest extent permitted by the MGCL and any other applicable law.

(b) Composition. Each committee shall be composed of one or more directors or any other number of members specified in these Bylaws or required by applicable regulations or stock exchange rules. The Chairperson of the Board may recommend committees, committee memberships, and committee chairs to the Board of Directors. The Board of Directors shall have the power at any time to appoint the chairperson and the members of any committee, change the membership of any committee, to fill all vacancies on committees, to designate alternate members to replace or act in the place of any absent or disqualified member of a committee, or to dissolve any committee. A member of a committee may resign from that committee at any time by giving written notice of such resignation to the Chairperson of the Board. Unless otherwise specified therein, such resignation from the committee shall take effect upon receipt thereof.

(c) Issuance of Stock . If the Board of Directors has given general authorization for the issuance of stock providing for or establishing a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including all terms and conditions required or permitted to be established or authorized by the Board of Directors. Any committee so designated may exercise the power and authority of the Board of Directors if the resolution that designated the committee or a supplemental resolution of the Board of Directors shall so provide.

Section 2.

Conduct of Business.

Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if a unanimous consent which sets forth the action is given in writing or by electronic transmission by each member of the committee and filed in paper or electronic form with the minutes of the proceedings of such committee. The members of any committee may conduct any meeting thereof by conference telephone or other communications equipment in accordance with the provisions of Section 6 of Article II.

ARTICLE IV

OFFICERS

Section 1.

Generally.

(a) The Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairperson of the Board, Chief Executive Officer, President, one or more Vice Presidents, a Secretary and a Chief Financial Officer/Treasurer and from time to time may choose such other officers as it may deem proper. Any number of offices may be held by the same person, except that no person may concurrently serve as both President and Vice President of the Corporation.

(b) The term of office of all officers shall be until the next annual election of officers and until their respective successors are chosen, but any officer may be removed from office at any time by the affirmative vote of a majority of the Whole Board.

(c) All officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.

Section 2.

Chairperson of the Board of Directors.

The Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation that are authorized.

Section 3.

Vice Chairperson of the Board of Directors.

If appointed, the Vice Chairperson of the Board of Directors of the Corporation shall perform all duties and have all powers which are commonly incident to the office of Chairperson of the Board, with such duties to be performed and powers to be held in the absence of the Chairperson of the Board, or which are delegated to him or her by the Board of Directors.

Section 4.

Chief Executive Officer.

The Chief Executive Officer, subject to the control of the Board of Directors, shall serve in general executive capacity and have general power over the management and oversight of the administration and operation of the Corporation’s business and general supervisory power and authority over its policies and affairs. The Chief Executive Officer shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect.

Section 5.

President.

The President shall perform the duties of the Chief Executive Officer in the Chief Executive Officer’s absence or during his or her disability to act. In addition, the President shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the President from time to time by the Board of Directors or the Chief Executive Officer.

Section 6.

Vice President.

The Vice President or Vice Presidents (including Executive Vice Presidents or other levels of Vice President designated by the Board of Directors), if any, shall perform the duties of the Chief Executive Officer in the absence of both the Chief Executive Officer and the President, or during their disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident to their respective office and/or such other duties and powers as may be properly assigned to the Vice Presidents from time to time by the Board of Directors or the Chief Executive Officer.

Section 7.

Secretary.

The Secretary or an Assistant Secretary shall issue notices of meetings, shall keep the minutes of meetings, shall have charge of the seal and the corporate books, shall perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties and powers as are properly assigned thereto by the Board of Directors or the Chief Executive Officer.

Section 8.

Chief Financial Officer/Treasurer.

The Chief Financial Officer/Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities of any division of the Corporation that has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books of account. The funds of the Corporation shall be deposited in the name of the Corporation by the Chief Financial Officer/Treasurer with such banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Chief Financial Officer/Treasurer shall sign or countersign such instruments as require his or her signature, shall perform all such duties and have all such powers as are usually incident to such office and/or such other duties and powers as are properly assigned to him or her by the Board of Directors or the Chief Executive Officer, and may be required to give bond for the faithful performance of his or her duties in such sum and with such surety as may be required by the Board of Directors.

Section 9.

Other Officers.

The Board of Directors may designate and fill such other offices in its discretion and the persons holding such other offices shall have such powers and shall perform such duties as the Board of Directors or Chief Executive Officer may from time to time assign.

Section 10.

Action with Respect to Securities of Other Corporations

Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the President, a Vice President, or a proxy appointed by either of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.

ARTICLE V

STOCK

Section 1.

Certificates of Stock.

The Board of Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the Corporation. For certificated stock, each stockholder is entitled to certificates which represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder or other person to whom it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares of each series of preferred stock which the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to set the relative rights and preferences of subsequent series of preferred stock or (b) a statement which provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such request may be made to the Secretary or to the Corporation’s transfer agent. Upon the

issuance of uncertificated shares of capital stock, the Corporation shall send the stockholder a written statement of the same information required above with respect to stock certificates. Each stock certificate shall be in such form, not inconsistent with law or with the Corporation’s Articles, as shall be approved by the Board of Directors or any officer or officers designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairperson of the Board, the President, or a Vice-President, and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A certificate may not be issued until the stock represented by it is fully paid.

Section 2.

Transfers of Stock.

Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor.

Section 3.

Record Dates or Closing of Transfer Books.

The Board of Directors may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated period for the purpose of making any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at a meeting, receive a dividend, or be allotted other rights. The record date may not be prior to the close of business on the day the record date is fixed nor, subject to Section 3 of Article I of these Bylaws, more than 90 days before the date on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than 20 days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least ten days before the date of the meeting. Any shares of the Corporation’s own stock acquired by the Corporation between the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total number of outstanding shares entitled to be voted at the meeting.

Section 4.

Lost, Stolen or Destroyed Certificates.

The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate in place of one which is alleged to have been lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation or to the transfer agent designated to transfer shares of the stock of the Corporation. In their discretion, the Board of Directors or such officer or officers may require the owner of the certificate to give a bond, with sufficient surety, to indemnify the Corporation against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors or such officer or officers may refuse to issue such new certificate without the order of a court having jurisdiction over the matter.

Section 5.

Stock Ledger.

The Corporation shall maintain a stock ledger which contains the name and address of each stockholder and the number of shares of stock of each class which the stockholder holds. The stock ledger may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock or, if none, at the principal executive office of the Corporation.

Section 6.

Regulations.

The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.

ARTICLE VI

MISCELLANEOUS

Section 1.

Facsimile Signatures.

In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 2.

Corporate Seal.

The Board of Directors may provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. If the Corporation is required to place its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place the word “(seal)” adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.

Section 3.

Books and Records.

The Corporation shall keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.

Section 4.

Reliance upon Books, Reports and Records.

Each director, each member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall, in the performance of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such

information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member, officer or agent reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 5.

Fiscal Year.

The fiscal year of the Corporation shall commence on the first day of July and end on the last day of June in each year.

Section 6.

Time Periods.

In applying any provision of these Bylaws that requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded and the day of the event shall be included.

Section 7.

Checks, Drafts, Etc.

All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall be signed by any officer, employee or agent of the Corporation that is authorized by the Board of Directors.

Section 8.

Mail.

Any notice or other document that is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.

Section 9.

Contracts and Agreements.

To the extent permitted by applicable law, and except as otherwise prescribed by the Articles or these Bylaws, the Board of Directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law to be executed, acknowledged, or verified by more than one officer.

ARTICLE VII

AMENDMENTS

These Bylaws may be adopted, amended or repealed as provided in the Articles of the Corporation.

Exhibit 4

INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND


No.	KEARNY FINANCIAL CORP.	Shares

		CUSIP:

FULLY PAID AND NON-ASSESSABLE

PAR VALUE $0.01 PER SHARE

THE SHARES REPRESENTED BY THIS

CERTIFICATE ARE SUBJECT TO

RESTRICTIONS, SEE REVERSE SIDE


THIS CERTIFIES that		is the owner of

SHARES OF COMMON STOCK

Kearny Financial Corp.

a Maryland corporation

The shares evidenced by this certificate are transferable only on the books of Kearny Financial Corp. by the holder hereof, in person or by attorney, upon surrender of this certificate properly endorsed. THE CAPITAL STOCK EVIDENCED HEREBY IS NOT AN ACCOUNT OF AN INSURABLE TYPE AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER FEDERAL OR STATE GOVERNMENTAL AGENCY.

IN WITNESS WHEREOF, Kearny Financial Corp. has caused this certificate to be executed by the facsimile signatures of its duly authorized officers and has caused a facsimile of its seal to be hereunto affixed.


By:		[SEAL]	By:
	SHARON JONES			CRAIG L. MONTANARO
	CORPORATE SECRETARY			PRESIDENT AND CHIEF EXECUTIVE OFFICER

The Board of Directors of Kearny Financial Corp. (the “Company”) is authorized by resolution or resolutions, from time to time adopted, to provide for the issuance of more than one class of stock, including preferred stock in series, and to fix and state the voting powers, designations, preferences, limitations and restrictions thereof. The Company will furnish to any stockholder upon request and without charge a full description of each class of stock and any series thereof.

The shares evidenced by this certificate are subject to a limitation contained in the Articles of Incorporation to the effect that in no event shall any record owner of any outstanding common stock which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of the outstanding shares of common stock (the “Limit”) be entitled or permitted to any vote in respect of shares held in excess of the Limit.

The shares represented by this certificate may not be cumulatively voted on any matter. The Articles of Incorporation requires that, with limited exceptions, no amendment, addition, alteration, change or repeal of the Articles of Incorporation shall be made, unless such is first approved by the Board of Directors of the Company and approved by the stockholders by a majority of the total shares entitled to vote, or in certain circumstances approved by the affirmative vote of up to 80% of the shares entitled to vote.

The following abbreviations when used in the inscription on the face of this certificate shall be construed as though they were written out in full according to applicable laws or regulations.

TEN COM

as tenants in common

UNIF GIFT MIN ACT -

Custodian

(Cust)

(Minor)

TEN ENT

as tenants by the entireties

Under Uniform Gifts to Minors Act

JT TEN

as joint tenants with right of survivorship and not as tenants in common

(State)

Additional abbreviations may also be used though not in the above list

For value received, hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER

(please print or typewrite name and address including postal zip code of assignee)


		Shares of

the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of the within named corporation with full power of substitution in the premises.


Dated,

NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.

Exhibit 5

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

ATTORNEYS AT LAW

5335 Wisconsin Avenue, NW, Suite 780

Washington, D.C. 20015

Telephone (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

WRITER’S DIRECT DIAL NUMBER

(202) 274-2000

September 5, 2014

The Board of Directors

Kearny Financial Corp.

120 Passaic Avenue

Fairfield, New Jersey 07004

Re:

Kearny Financial Corp.

Common Stock, Par Value $0.01 Per Share

Ladies and Gentlemen:

You have requested the opinion of this firm as to certain matters in connection with the offer and sale of the shares of common stock, par value $0.01 per share (“Common Stock”) of Kearny Financial Corp. (the “Company”). We have reviewed the Company’s Articles of Incorporation, Registration Statement on Form S-1 (the “Form S-1”), as well as applicable statutes and regulations governing the Company and the offer and sale of the Common Stock. The opinion expressed below is limited to matters governed by Maryland and Federal law.

We are of the opinion that upon the declaration of effectiveness of the Form S-1, the Common Stock, when sold, will be legally issued, fully paid and non-assessable.

We hereby consent to our firm being referenced under the caption “Legal Matters” and to the filing of this opinion as an exhibit to the Form S-1.

Very truly yours,

/ S / L USE G ORMAN P OMERENK & S CHICK

A P ROFESSIONAL C ORPORATION


		[FORM OF FEDERAL TAX OPINION]				EXHIBIT 8.1

LUSE GORMAN POMERENK & SCHICK

A PROFESSIONAL CORPORATION

Attorneys at Law

5335 WISCONSIN AVENUE, N.W., SUITE 780

Washington, D.C. 20015

TELEPHONE (202) 274-2000

Facsimile (202) 362-2902

www.luselaw.com

____________ __, ____

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, New Jersey 07004

Gentlemen:

You have requested this firm’s opinion regarding the material federal income tax consequences that will result from the conversion of Kearny MHC, a federal mutual holding company (the “ Mutual Holding Company ”) from the mutual holding company to the stock holding company form of organization (the “ Conversion ”), pursuant to the Plan of Conversion and Reorganization of Kearny MHC, dated _________ __, 2014 (the “ Plan ”) and the integrated transactions described below. Capitalized terms used but not defined herein shall have the same meaning as set forth in the Plan.

In rendering our opinion, we have made such investigations as we have deemed relevant or necessary for the purpose of this opinion. In our examination, we have assumed the authenticity of original documents, the accuracy of copies and the genuineness of signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined and we have relied upon the accuracy of the factual matters set forth in the Plan and the Registration Statement filed by Kearny Financial Corp., a Maryland stock corporation (the “ Holding Company ”) with the Securities and Exchange Commission (“ SEC ”) under the Securities Act of 1933, as amended, and the Application for Conversion filed by the Mutual Holding Company with the Board of Governors of the Federal Reserve System (the “ Federal Reserve ”). In addition, we are relying on a letter from RP Financial, LC. to you, dated __________ __, 2014, stating its belief as to certain valuation matters described below. Furthermore, we assume that each of the parties to the Conversion will comply with all reporting obligations with respect to the Conversion required under the Internal Revenue Code of 1986, as amended (the “ Code ”), and the regulations thereunder (the “ Treasury Regulations ”).

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 2

Our opinion is based upon the existing provisions of the Code, and the Treasury Regulations, and upon current Internal Revenue Service (“ IRS ”) published rulings and existing court decisions, any of which could be changed at any time. Any such changes may be retroactive and could significantly modify the statements and opinions expressed herein. Similarly, any change in the facts and assumptions stated below, upon which this opinion is based, could modify the conclusions herein. This opinion is as of the date hereof, and we disclaim any obligation to advise you of any change in any matter considered herein after the date hereof.

We opine only as to the matters we expressly set forth herein, and no opinion should be inferred as to any other matters or as to the tax treatment of the transactions that we do not specifically address. We express no opinion as to other federal laws and regulations, or as to laws and regulations of other jurisdictions, or as to factual or legal matters other than as set forth herein.

For purposes of this opinion, we are relying on the representations as to factual matters provided to us by the Mutual Holding Company, Kearny Federal Savings Bank, Mid-Tier Holding Company (as defined below) and the Holding Company, as set forth in the certificates for each of those aforementioned entities and signed by authorized officers of each of the aforementioned entities, incorporated herein by reference.

Description of Proposed Transactions

Based upon our review of the documents described above, and in reliance upon such documents, we understand that the relevant facts are as follows. Kearny Federal Savings Bank (the “ Bank ”) is a federally chartered stock savings bank headquartered in Fairfield, New Jersey. The Bank was founded in 1884 as a New Jersey mutual building and loan association. It obtained federal insurance of accounts in 1939 and received a federal charter in 1941, and reorganized into the Mutual Holding Company structure in 2005. The Bank is currently a wholly owned subsidiary of Kearny Financial Corp. a federal corporation (the “ Mid-Tier Holding Company ”), which is a subsidiary of the Mutual Holding Company. The Mutual Holding Company is a mutual holding company with no stockholders. The depositors of the Bank are considered to be the “owners” of the Mutual Holding Company and are entitled upon the complete liquidation of the Mutual Holding Company to any liquidation proceeds after the payment of creditors.

The Boards of Directors of the Mutual Holding Company, the Mid-Tier Holding Company, and the Bank adopted the Plan providing for the Conversion of the Mutual Holding Company from a federal mutual holding company to the capital stock form of organization. As part of the Conversion, the Holding Company will succeed to all the rights and obligations of the Mutual

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 3

Holding Company and the Mid-Tier Holding Company, and will offer for sale shares of its common stock (the “ Holding Company Common Stock ”) to depositors, tax-qualified employee plans established by the Bank or the Holding Company, and members of the general public, according to the subscription priorities set forth in the Plan.

Pursuant to the Plan, the Conversion will be effected as follows and in such order as is necessary to consummate the Conversion:

(1)

The Mid-Tier Holding Company will organize the Holding Company as a Maryland-chartered first-tier stock holding company subsidiary.

(2)

The Mutual Holding Company will merge with and into the Mid-Tier Holding Company with the Mid-Tier Holding Company as the resulting entity (the “ MHC Merger ”) whereby the shares of Mid-Tier Holding Company held by the Mutual Holding Company will be cancelled and the depositors of the Bank who hold liquidation interests in the Mutual Holding Company will constructively receive liquidation interests in Mid-Tier Holding Company in exchange for their liquidation interests in the Mutual Holding Company.

(3)

Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with the Holding Company (the “ Mid-Tier Merger ”), with the Holding Company as the resulting entity. As part of the Mid-Tier Merger, the liquidation interests in Mid-Tier Holding Company constructively received by the persons who held liquidation interests in the Mutual Holding Company will automatically, without further action on the part of the holders thereof, be exchanged for an interest in the Holding Company Liquidation Account and the Minority Shares will automatically, without further action on the part of the holders thereof, be converted into and become the right to receive Holding Company Common Stock based on the Exchange Ratio.

(4)

Immediately after the Mid-Tier Merger, the Holding Company will offer for sale shares of Holding Company Common Stock in the Offering.

(5)

Following the Conversion, a Holding Company Liquidation Account will be maintained by the Holding Company for the benefit of Eligible Account Holders who continue to maintain

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 4

their deposit accounts with the Bank. Pursuant to the Plan, the Holding Company Liquidation Account will be equal to the Mutual Holding Company’s total equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the Offering. In turn, the Holding Company will hold the Bank Liquidation Account. The terms of the Holding Company Liquidation Account and Bank Liquidation Account, which supports the payment of the Holding Company Liquidation Account in the event the Holding Company lacks sufficient net assets, are described in the Plan.

As part of the Conversion, all of the then-outstanding shares of Mid-Tier Holding Company common stock owned by the Minority Stockholders will be converted into and become shares of Holding Company Common Stock pursuant to the Exchange Ratio in a manner that ensures that after the Conversion, Minority Stockholders will own in the aggregate the same percentage of Holding Company Common Stock as they held in Mid-Tier Holding Company common stock immediately prior to the Conversion, exclusive of Minority Stockholders’ purchases of additional shares of Holding Company Common Stock in the Offering and receipt of cash in lieu of fractional shares.

As a result of the Conversion and Offering, the Holding Company will be a publicly held corporation, will have registered the Holding Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended, and will become subject to the rules and regulations thereunder and file periodic reports and proxy statements with the SEC. The Bank will become a wholly-owned subsidiary of the Holding Company and will continue to carry on its business and activities as conducted immediately prior to the Conversion.

The stockholders of the Holding Company will be the former Minority Stockholders of the Mid-Tier Holding Company immediately prior to the Conversion, plus those persons who purchase shares of Holding Company Common Stock in the Offering. Nontransferable rights to subscribe for the Holding Company Common Stock have been granted, in order of priority, to Eligible Account Holders, tax-qualified employee plans established by the Bank or the Holding Company, and employees, officers, directors, trustees or corporators of the Mid-Tier Holding Company or the Bank who are not eligible in the preceding categories, according to the subscription priorities set forth in the Plan. Any shares not subscribed for in the Subscription Offering may be offered for sale to certain members of the public directly by the Holding Company through a Community Offering and/or a Syndicated Community Offering. Subscription rights are nontransferable.

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 5

Opinions

Based on the foregoing description of the Conversion, including the MHC Merger, and the Mid-Tier Merger, and subject to the qualifications and limitations set forth in this letter, we are of the opinion that:

1. The MHC Merger will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code. (Section 368(a)(l)(A) of the Code.)

2. The constructive exchange of the Eligible Account Holders liquidation interests in the Mutual Holding Company for liquidation interests in the Mid-Tier Holding Company in the MHC Merger will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax Regulations. ( cf. Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54.)

3. No gain or loss will be recognized by the Mutual Holding Company on the transfer of its assets to the Mid-Tier Holding Company and the Mid-Tier Holding Company’s assumption of its liabilities, if any, in constructive exchange for liquidation interests in the Mid-Tier Holding Company or on the constructive distribution of such liquidation interests to members of the Mutual Holding Company. (Section 361(a), 361(c) and 357(a) of the Code.)

4. No gain or loss will be recognized by the Mid-Tier Holding Company upon the receipt of the assets of the Mutual Holding Company in the MHC Merger in exchange for the constructive transfer of liquidation interests in the Mid-Tier Holding Company to the members of the Mutual Holding Company. (Section 1032(a) of the Code.)

5. Persons who have liquidation interests in the Mutual Holding Company will recognize no gain or loss upon the constructive receipt of liquidation interests in the Mid-Tier Holding Company in exchange for their liquidation interests in the Mutual Holding Company. (Section 354(a) of the Code.)

6. The basis of the assets of Mutual Holding Company (other than stock in the Mid-Tier Holding Company) to be received by the Mid-Tier Holding Company will be the same as the basis of such assets in the Mutual Holding Company immediately prior to the transfer. (Section 362(b) of the Code.)

7. The holding period of the assets of the Mutual Holding Company transferred to the Mid-Tier Holding Company will include the holding period of those assets of the Mutual Holding Company. (Section 1223(2) of the Code.)

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 6

8. The Mid-Tier Merger will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Code and therefore will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. (Section 368(a)(1)(F) of the Code.)

9. The Mid-Tier Holding Company will not recognize any gain or loss on the transfer of its assets to the Holding Company and the Holding Company’s assumption of its liabilities in exchange for shares of Holding Company Common Stock or the distribution of such stock to Minority Stockholders and constructive distribution of interests in the Liquidation Account to the Eligible Account Holders and Supplemental Eligible Account Holders. (Sections 361(a), 361(c) and 357(a) of the Code.)

10. No gain or loss will be recognized by the Holding Company upon the receipt of the assets of Mid-Tier Holding Company in the Mid-Tier Merger. (Section 1032(a) of the Code.)

11. The basis of the assets of the Mid-Tier Holding Company to be received by the Holding Company will be the same as the basis of such assets in the Mid-Tier Holding Company immediately prior to the transfer. (Section 362(b) of the Code.)

12. The holding period of the assets of the Mid-Tier Holding Company to be received by the Holding Company will include the holding period of those assets in the Mid-Tier Holding Company immediately prior to the transfer. (Section 1223(2) of the Code.)

13. Mid-Tier Holding Company shareholders will not recognize any gain or loss upon their exchange of Mid-Tier Holding Company common stock for Holding Company Common Stock (Section 354 of the Code.)

14. Eligible Account Holders will not recognize any gain or loss upon their constructive exchange of their liquidation interests in Mid-Tier Holding Company for the Holding Company Liquidation Accounts in the Holding Company. (Section 354 of the Code.)

15. The constructive exchange of the Eligible Account Holders’ liquidation interests in the Mid-Tier Holding Company for interests in a Holding Company Liquidation Account established in the Holding Company will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Income Tax Regulations ( cf. Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54).

16. The payment of cash to the Minority Stockholders in lieu of fractional shares of Holding Company Common Stock will be treated as though the fractional shares were distributed as part of the Mid-Tier Merger and then redeemed by Holding Company. The cash

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 7

payments will be treated as distributions in full payment for the fractional shares deemed redeemed under Section 302(a) of the Code, with the result that such shareholders will have short-term or long-term capital gain or loss to the extent that the cash they receive differs from the basis allocable to such fractional shares. (Rev. Rul. 66-365, 1966-2 C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574.)

17. It is more likely than not that the fair market value of the nontransferable subscription rights to purchase Holding Company Common Stock is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders, employees, officers, directors, trustees and corporators in the Subscription Offering upon distribution to them of nontransferable subscription rights to purchase shares of Holding Company Common Stock. (Section 356(a) of the Code.) Eligible Account Holders and other purchasers in the Subscription Offering will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights. (Rev. Rul. 56-572, 1956-2 C.B. 182.)

18. It is more likely than not that the fair market value of the benefit provided by the Bank Liquidation Account supporting the payment of the Holding Company Liquidation Account in the event the Holding Company lacks sufficient net assets is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders upon the constructive distribution to them of such rights in the Bank Liquidation Account as of the effective date of the Mid-Tier Merger. (Section 356(a) of the Code.)

19. Each shareholder’s aggregate basis in his or her Holding Company Common Stock (including fractional shares) received in the exchange will be the same as the aggregate basis of the Mid-Tier Holding Company common stock surrendered in exchange therefore. (Section 358(a) of the Code.)

20. It is more likely than not that the basis of the Holding Company Common Stock purchased in the Offering by the exercise of the nontransferable subscription rights will be the purchase price thereof. (Section 1012 of the Code.)

21. Each shareholder’s holding period in his or her Holding Company Common Stock received in the exchange will include the period during which the Mid-Tier Holding Company common stock surrendered was held, provided that the common stock surrendered is a capital asset in the hands of the shareholder on the date of the exchange. (Section 1223(1) of the Code.)

22. The holding period of the Holding Company Common Stock purchased pursuant to the exercise of subscriptions rights shall commence on the date on which the right to acquire such stock was exercised. (Section 1223(5) of the Code.)

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 8

23. No gain or loss will be recognized by Holding Company on the receipt of money in exchange for Holding Company Common Stock sold in the Offering. (Section 1032 of the Code.)

Our opinions under paragraphs 17, 19 and 20 are based on the position that the subscription rights to purchase shares of Holding Company Common Stock received by Eligible Account Holders, employees, officers, directors, trustees and corporators in the Subscription Offering have a fair market value of zero. We understand that the subscription rights will be granted at no cost to the recipients, will be legally nontransferable and of short duration, and will provide the recipient with the right only to purchase shares of Holding Company Common Stock at the same price to be paid by members of the general public in any Community Offering. We also note that the IRS has not in the past concluded that subscription rights have value. In addition, we are relying on a letter from RP Financial, LC. to you stating its belief that subscription rights do not have any economic value at the time of distribution or at the time the rights are exercised in the Subscription Offering. Based on the foregoing, we believe it is more likely than not that the nontransferable subscription rights to purchase Holding Company Common Stock have no value.

If the subscription rights are subsequently found to have an economic value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised) and the Holding Company and/or the Bank may be taxable on the distribution of the subscription rights.

Our opinion under paragraph 18 above is based on the position that the benefit provided by the Bank Liquidation Account supporting the payment of the Holding Company Liquidation Account in the event the Holding Company lacks sufficient net assets has a fair market value of zero. We understand that: (i) there is no history of any holder of a liquidation account receiving any payment attributable to a liquidation account; (ii) the interests in the Holding Company Liquidation Account and Bank Liquidation Account are not transferable; (iii) the amounts due under the Holding Company Liquidation Account with respect to each Eligible Account Holder are reduced as their deposits in the Bank are reduced as described in the Plan; and (iv) the Bank Liquidation Account payment obligation arises only if the Holding Company lacks sufficient net assets to fund the Holding Company Liquidation Account. We also note that the U.S. Supreme Court in Paulsen v. Commissioner, 469 U.S. 131 (1985) stated the following:

The right to participate in the net proceeds of a solvent liquidation is also not a significant part of the value of the shares. Referring to the possibility of a solvent liquidation of a mutual savings association, this Court observed: “It stretches the imagination very far to attribute any real value to such a remote contingency, and when coupled with the fact that it represents nothing which the depositor can readily transfer, any theoretical value reduces almost to the vanishing point.” Society for the Savings v. Bowers, 349 U.S. 143, 150 (1955).

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal stock corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

Page 9

In addition, we are relying on a letter from RP Financial, LC. to you dated _____________ __, 2014, stating its belief that the benefit provided by the Bank Liquidation Account supporting the payment of the Holding Company Liquidation Account in the event the Holding Company lacks sufficient net assets does not have any economic value at the time of the Conversion. Based on the foregoing, we believe it is more likely than not that such rights in the Bank Liquidation Account have no value.

If such rights in the Bank Liquidation Account are subsequently found to have an economic value, income may be recognized by each Eligible Account Holder in the amount of the fair market value of their interest in the Bank Liquidation Account as of the effective date of the Conversion.

CONSENT

We hereby consent to the filing of the opinion as an exhibit to the Mutual Holding Company’s Application for Conversion filed with the Federal Reserve and to the Holding Company’s Registration Statement on Form S-1 as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Application for Conversion and Form S-1 under the captions “The Conversion; Plan of Distribution-Material Income Tax Consequences” and “Legal Matters.”

Very truly yours,

Luse Gorman Pomerenk & Schick P.C.

Exhibit 8.2

Tel: 215-636-5500

Fax: 215-636-5501

www.bdo.com

1700 Market Street, 29th Floor

Philadelphia, PA 19103-3962

Boards of Directors

Kearny MHC

Kearny Financial Corp., a federal corporation

Kearny Financial Corp., a Maryland corporation

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, New Jersey 07004

Dear Board Members:

You have requested our opinion relating to certain New Jersey and Maryland tax consequences of the transactions that will occur pursuant to the Plan of Conversion and Reorganization, dated [ MONTH ] [ DAY ], [ YEAR ] (the “Plan”), between and among Kearny MHC, (“Mutual Holding Company”), Kearny Financial Corp, a federal corporation (“Mid-Tier Holding Company”), Kearny Financial Corp., a Maryland stock corporation (“Holding Company”) and Kearny Federal Savings Bank (“Bank”), pursuant to which Mutual Holding Company will convert from a mutual holding company to the stock holding form of organization (the “Conversion”). Capitalized terms used and not defined herein shall have the meanings set forth in the Plan.

Luse, Gorman, Pomerenk and Schick, Professional Corporation, special tax counsel to Mutual Holding Company, Mid-Tier Holding Company, Holding Company and Bank, will have issued an opinion as to certain federal income tax issues relating to the Plan (the “Federal Income Tax Opinion”), which we have read. The conclusions set forth herein rely upon the proposed transactions, facts, assumptions, representations and conclusions as set forth in the Federal Income Tax Opinion.

BDO is the brand name for the BDO network and for each of the BDO Member Firms.


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FACTS

We incorporate by reference the facts set out in the Federal Income Tax Opinion and summarize those facts as follows:

Bank is a federally-chartered savings bank headquartered in Fairfield, New Jersey.

Bank reorganized into its present mutual holding company structure in 2005.

Bank is currently a wholly-owned subsidiary of Mid-Tier Holding Company, which is a subsidiary of Mutual Holding Company.

Mutual Holding Company is a mutual holding company with no stockholders.

Bank’s depositors (the “Depositors”), who are entitled to the liquidation proceeds after payment of the creditors upon complete liquidation of Mutual Holding Company, are considered to be the owners of Mutual Holding Company.

As part of the Conversion, Holding Company will: (a) succeed to all of the rights and obligations of Mutual Holding Company and Mid-Tier Holding Company; and (b) offer for sale (the “Offering”) its shares of common stock (the “Holding Company Common Stock”) to the Depositors, tax-qualified employee plans established by Bank or Holding Company and members of the general public according to the subscription priorities set forth in the Plan.

The Board of Directors of Mutual Holding Company, Mid-Tier Holding Company, Holding Company and Bank have (or will have) adopted the Plan.

Further, while not in the Federal Income Tax Opinion, it is understood that:

No deeds will be presented for recording in connection with the Conversion and Offering;


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The equalized value of real property transferred as a result of the Conversion and Offering is less than 20% of the value of the assets exchanged; and

Neither Mutual Holding Company nor Mid-Tier Holding Company owns any tangible personal property.

Neither Mutual Holding Company nor Mid-Tier Holding Company owns any real property.

Holding Company will at no time have offices, payroll or receipts in Maryland nor will it carry on any business in the state.

CONVERSION AND OFFERING

The Plan contemplates that each of the integrated transactions described below will be undertaken in connection with the Conversion and Offering:

Mid-Tier Holding Company will organize Holding Company as a Maryland chartered first-tier stock holding company subsidiary.

Mutual Holding Company will merge with and into Mid-Tier Holding Company with Mid-Tier Holding Company as the surviving entity (the “MHC Merger”), whereby, the shares of Mid-Tier Holding Company held by Mutual Holding Company will be cancelled and the Depositors will constructively receive liquidation interests in Mid-Tier Holding Company in exchange for their liquidation interests in Mutual Holding Company.

Immediately after the MHC Merger, Mid-Tier Holding Company will merge with and into Holding Company (the “Mid-Tier Merger”) with Holding Company as the surviving entity.

As part of the Mid-Tier Merger, the liquidation interests in Mid-Tier Holding Company constructively received by the Depositors automatically, without further action, will be exchanged for an interest in the Holding Company Liquidation Account (see description below) and the Minority Shares will automatically, without further action, be converted into and become the right to receive Holding Company Common Stock based on the Exchange Ratio.


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Immediately after the Mid-Tier Merger, Holding Company will proceed with the Offering.

Holding Company will contribute at least 50 percent of the net proceeds derived from the Offering to Bank in constructive exchange for additional shares of common stock of Bank and in exchange for the Bank Liquidation Account.

Following the Conversion, Holding Company will maintain the Holding Company Liquidation Account for the benefit of Eligible Account Holders who continue to maintain their deposit accounts with Bank (the “Account Holders”). Pursuant to the Plan, the Holding Company Liquidation Account will be equal to Mutual Holding Company’s total equity as reflected in the latest statement of financial condition contained in the final Prospectus used in the Offering. In turn, Holding Company will hold the Bank Liquidation Account. The terms of the Holding Company Liquidation Account and the Bank Liquidation Account, which supports the payment of the Holding Company Liquidation Account in the event Holding Company lacks sufficient net assets, are described in the Plan.

As part of the Conversion, all of the then outstanding shares of Mid-Tier Holding Company common stock owned by the Minority Stockholders will be converted into and become shares of Holding Company Common Stock pursuant to the Exchange Ratio in a manner that ensures that after the Conversion, Minority Stockholders will own in the aggregate the same percentage of Holding Company Common Stock as they held in Mid-Tier Holding Company common stock immediately prior to the Conversion, exclusive of Minority Stockholders’ purchases of additional shares of the Holding Company Common Stock in the Offering and receipt of cash in lieu of fractional shares.

As a result of the Conversion and Offering, Holding Company will be a publicly held corporation, will have registered the Holding Company Common Stock under Section 12(b) of the Securities Exchange Act of 1934, as amended, and will become subject to the rules and regulations thereunder and file periodic reports and proxy statements with the SEC. Bank will become a wholly-owned subsidiary of Holding Company and will continue to carry on its business and activities as conducted immediately prior to the Conversion. No person or group of persons acting in concert will acquire more than 50% of the outstanding shares of Holding Company in the Offering.


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The stockholders of Holding Company will be the former Minority Stockholders of Mid-Tier Holding Company immediately prior to the Conversion, plus those persons who purchase shares of the Holding Company Common Stock in the Offering. Nontransferable rights to subscribe for the Holding Company Common Stock have been granted, in order of priority, to the Account Holders, tax-qualified employee plans established by Bank or Holding Company, and employees, officers, directors, trustees or incorporators of Mid-Tier Holding Company or Bank who are not eligible in the preceding categories, according to the subscription priorities set forth in the Plan. Any shares not subscribed for in the Subscription Offering may be offered for sale to certain members of the public directly by Holding Company through a Community Offering and/or a Syndicated Community Offering. Subscription rights are nontransferable.

LAW AND ANALYSIS

The Federal Income Tax Opinion concludes that none of the transactions contemplated in the Conversion and Offering will result in the recognition of taxable income, gain or loss to Mutual Holding Company, Mid-Tier Holding Company, Holding Company, Bank, the Depositors, the Account Holders or other persons participating in the Conversion and Offering for federal income tax purposes.

New Jersey imposes a 9% Corporation Business Tax (“CBT”) on the entire net income of a corporation including that of Mutual Holding Company, Mid-Tier Holding Company, Holding Company and Bank. (N.J.R.S. §§ 54:10A-2 and 54:10A-34). A taxpayer’s entire net income for CBT purposes is initially equal to its federal taxable income before net operating losses and special deductions. (N.J.R.S. § 54:10A-4(k)). New Jersey requires that specified adjustments be made to federal taxable income to determine entire net income, however, none are pertinent here. (N.J.R.S. § 54:10A-4(k)). Accordingly, none of the corporations participating in the Conversion and Offering will recognize CBT taxable income or loss related to the Conversion and Offering if they do not recognize taxable income or loss for federal income tax purposes.


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New Jersey imposes a gross income tax (“GIT”) on the New Jersey gross income of residents and non-residents. (N.J.R.S. § 54A:2-1). The GIT is imposed upon New Jersey gross income, consisting of specific categories of income including a category for “net gains or income from disposition of property.” (N.J.R.S. § 54A:5-1). In determining gain or loss on disposition of property for GIT purposes, the basis of property is the same as that used for federal income tax purposes. (N.J.R.S. § 54A:5-1.c). However, gains or income from transactions that are subject to non-recognition for federal income tax purposes are likewise not recognized for GIT. (N.J.R.S. § 54A:5-1.c). Accordingly, to the extent that no gain or loss is recognized for federal income tax purposes by any of the persons participating in the Conversion and Offering, no gain or loss will be recognized by these persons for GIT purposes.

Neither the CBT nor the GIT provides for a lower rate of tax on capital gains. Accordingly, the holding period of an asset is not relevant for purposes of those taxes.

New Jersey imposes sales/use tax upon a “retail sale of tangible personal property or a specialized digital product” unless it is specifically exempted. (N.J.R.S. § 54:32B-3). Because neither Mutual Holding Company nor Mid-Tier Holding Company owns any tangible personal property, none of the transactions comprising the Conversion and Offering will attract New Jersey sales/use tax.

New Jersey imposes fees in connection with the conveyance of real property, which are together referred to herein as the “realty transfer tax.” (N.J.R.S. § 46:15-7). The realty transfer tax is imposed upon the recording of deeds evidencing transfer of title to real property and is calculated based on the amount of consideration recited in the deed. (N.J.R.S. § 46:15-7). An additional 1% fee is imposed upon the grantee of a deed for the transfer of real property for more than $1 million that is classified as Class 4A “commercial property” for assessment purposes. (N.J.R.S. § 46:15-7.2). Because no deeds are to be presented for recording in connection with the Conversion and Offering, neither the Conversion nor Offering will attract New Jersey realty transfer tax.

New Jersey imposes a 1% tax on the consideration paid upon the sale or transfer of a controlling interest in an entity that possesses, directly or indirectly, a controlling interest in classified real property where the equalized assessed value of the classified real property is greater than


			Page				7

$1,000,000. (N.J.R.S. § 54:15C-1.a(1)). The tax applies when a single purchaser acquires, or a group of purchasers acting in concert acquire, a controlling interest in an entity. (N.J.R.S. § 54:15C-1.a.(2)). “Controlling interest” for these purposes means, in the case of a corporation, more than fifty per cent of the total combined voting power of all classes of stock of that corporation. (N.J.R.S. § 54:15C-1.g). However, where the sale or transfer is incidental to a corporate merger or acquisition, the tax does not apply provided the equalized assessed value of the real property transferred is less than 20% of the total value of all the assets exchanged in the merger or acquisition. (N.J.R.S. § 54:15C-1.c(5)). A similar provision applies in respect of the additional 1% fee referred to above. (N.J.R.S. § 46:15-7.2(b)(2)). Because the equalized assessed value of the real property transferred as a result of the Conversion and Offering is less than 20% of the total value of all the assets exchanged, neither the Conversion nor the Offering will attract New Jersey controlling interest tax.

The computation of the Maryland taxable income of a corporation is initially equal to federal taxable income. (Md. Code, Tax-General § 10-304(1)). Maryland also requires certain adjustments be made to federal taxable income to determine a corporation’s taxable income; however, none here are pertinent. (Md. Code, Tax-General §§ 10-305 through 10-310). Accordingly, Holding Company will not recognize Maryland taxable income or loss related to the Conversion and Offering if it does not recognize taxable income or loss for federal income tax purposes.

OPINION

Based upon our review of the documents mentioned herein, additional representations and information provided and the facts, assumptions and conclusions of the Federal Income Tax Opinion, it is our opinion that:

Mutual Holding Company, Mid-Tier Holding Company and Holding Company will not recognize gain or loss for CBT purposes as a result of the Conversion and Offering. (N.J.R.S. § 54:10A-4(k)).

Persons that have liquidation interests in Mutual Holding Company will not recognize gain or loss for CBT or GIT purposes upon the constructive receipt of liquidation interests in Mid-Tier Holding Company in exchange for their liquidation interests in Mutual Holding Company. (N.J.R.S. §§ 54:10A-4(k) and 54A:5-1.c).


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Mid-Tier Holding Company Shareholders will not recognize gain or loss for CBT or GIT purposes upon their exchange of Mid-Tier Holding Company common stock for Holding Company common stock. (N.J.R.S. §§ 54:10A-4(k) and 54A:5-1.c).

Account Holders will not recognize gain or loss for CBT or GIT purposes upon their constructive exchange of their liquidation rights in Mid-Tier Holding Company for Holding Company Liquidation Accounts. (N.J.R.S. §§ 54:10A-4(k) and 54A:5-1.c).

It is more likely than not that Account Holders, employees, officers, directors, trustees and incorporators will not recognize gain or loss for CBT or GIT purposes in the Subscription Offering upon distribution to them of nontransferable subscription rights to purchase shares of Holding Company Common Stock. (N.J.R.S. §§ 54:10A-4(k) and 54A:5-1.c). Further, it is more likely than not that Account Holders and other purchasers will not recognize taxable income for CBT or GIT purposes as a result of exercising nontransferable subscription rights. (N.J.R.S. §§ 54:10A-4(k) and 54A:5-1.c).

It is more likely than not that Account Holders will not recognize gain or loss for CBT or GIT purposes upon the constructive distribution to them of rights in the Bank Liquidation Account as of the effective date of the Mid-Tier Merger. (N.J.R.S. §§ 54:10A-4(k) and 54A:5-1.c).

The Conversion and Offering will not attract any New Jersey sales/use tax liability. (N.J.R.S. § 54:32B-3).

The Conversion and Offering will not attract any New Jersey realty transfer tax or controlling interest tax. (N.J.R.S. §§ 46:15-7, 46:15-7.2(b)(2) and 54:15C-1.c(5)).

Holding Company will not recognize gain or loss for Maryland corporate income tax purposes as a result of the Conversion and Offering. (Md. Code, Tax-General §§ 10-304(1) and 10-305 through 10-310).


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Since this opinion letter is provided in advance of the closing of the Conversion and Offering, we have assumed that the transactions will be consummated as described herein. Any differences could cause us to modify the opinion expressed herein.

In providing our opinion, we have considered the provisions of New Jersey and Maryland tax law, regulations, rulings and judicial precedent as well as the Code, Treasury regulations, federal judicial precedent and Internal Revenue Service rulings, to date. A change in the authorities upon which our opinion is based could affect our conclusions. Moreover, there can be no assurances that our opinion, if challenged, will be accepted by New Jersey or Maryland. We have assumed the authenticity of the original documents, the accuracy of copies and the genuineness of signatures. We have further assumed the absence of adverse facts not apparent from the face of the instruments and documents we examined.

In issuing our opinions, we have assumed that the transactions comprising the Conversion and Offering have been duly and validly authorized and that the various representations and warranties provided by management are accurate, complete, true and correct. Accordingly, we express no opinion concerning the effect, if any, of variations from the foregoing. We specifically express no opinion concerning tax matters relating to the Conversion and Offering under the federal income tax laws.

We have not been asked to, and we do not, render any opinion with respect to any matters other than those expressly set forth above. This opinion is rendered for your use only, and may not be delivered to or relied upon by any other person or entity without our express written consent.


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We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and the Application for Conversion and Offering.

Very truly yours,

[ DAY ] August 2014

Philadelphia, Pennsylvania

Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS AGREEMENT, is entered into the 30th day of June, 2012, (“Effective Date”) by and between Kearny Financial Corp., Kearny, New Jersey (the “Company”) and Craig L. Montanaro (the “Executive”).

WITNESSETH

WHEREAS, the Executive has heretofore been employed by the Company as the President and Chief Executive Officer and is experienced in all phases of the business of the Company; and

WHEREAS, the Company desires to be ensured of the Executive’s continued active participation in the business of the Company; and

WHEREAS, as an inducement to the Executive to remain in the employ of the Company and in consideration of the Executive’s agreeing to remain in the employ of the Company, the parties desire to specify the continuing employment relationship between the Company and the Executive;

NOW THEREFORE, in consideration of the covenants and the mutual agreements herein contained, the parties hereby agree as follows:

1. Employment . The Company hereby employs the Executive in the capacity of President and Chief Executive Officer. The Executive hereby accepts said employment and agrees to render such administrative and management services to the Company and to its subsidiaries, including Kearny Federal Savings Bank (“Bank”), as are currently rendered and as are customarily performed by persons situated in a similar executive capacity. The Executive shall promote the business of the Company and its subsidiaries. The Executive’s other duties shall be such as the Board of Directors for the Company (the “Board of Directors” or “Board”) may from time to time reasonably direct, including normal duties as an officer of the Company. The Executive’s employment shall be for no definite period of time, and the Executive or the Company may terminate such employment relationship at any time for any reason or no reason. The employment at-will relationship remains in full force and effect regardless of any statements to the contrary made by company personnel or set forth in any documents other than those explicitly made to the contrary and signed by an authorized representative of the Board.

2. Term of Agreement . The term of this Agreement shall be for the period commencing on the Effective Date and ending thirty-six (36) months thereafter (“Term”). Additionally, on, or before, each annual anniversary date from the Effective Date, the Term of this Agreement shall be extended for up to an additional period beyond the then effective expiration date upon a determination and resolution of the Board of Directors that the performance of the Executive has met the requirements and standards of the Board, and that the Term of such Agreement shall be extended. If a determination is made by the Board to not renew such Term at the time of such renewal interval, the Board shall furnish the Executive of written notice of such determination not to renew the Term and the reason for such action or failure to take such action by the Board within 10 calendar days of such Board action. References herein to the Term of this Agreement shall refer both to the initial term and successive terms.

3. Compensation, Benefits and Expenses .

(a) Base Salary . The Company shall compensate and pay the Executive during the Term of this Agreement a minimum base salary at the rate of $300,0000 per annum; provided that such amount shall be reduced to the extent that the Executive is paid a base salary by the Bank (“Base Salary”), payable in cash not less frequently than monthly; provided, that the rate of such salary shall be reviewed by the Board of Directors not less often than annually, and the Executive shall be entitled to receive increases at such percentages or in such amounts as determined by the Board of Directors. The Base Salary may not be decreased without the Executive’s express written consent. Such Base Salary payable shall be reduced dollar for dollar for any such salary payments made by the Bank to the Executive for each applicable pay period.

(b) Discretionary Bonus . The Executive shall be entitled to participate in an equitable manner with all other senior management employees of the Company in discretionary bonuses that may be authorized and declared by the Board of Directors to its senior management executives from time to time. No other compensation provided for in this Agreement shall be deemed a substitute for the Executive’s right to participate in such discretionary bonuses when and as declared by the Board.

(c) Participation in Benefit and Retirement Plans . The Executive shall be entitled to participate in and receive the benefits of any plan of the Company which may be or may become applicable to senior management relating to pension or other retirement benefit plans, profit-sharing, stock options or incentive plans, or other plans, benefits and privileges given to employees and executives of the Company, to the extent commensurate with his then duties and responsibilities, as fixed by the Board of Directors of the Company.

(d) Participation in Medical Plans and Insurance Policies . The Executive shall be entitled to participate in and receive the benefits of any plan or policy of the Company which may be or may become applicable to senior management relating to life insurance, short and long term disability, medical, dental, eye-care, prescription drugs or medical reimbursement plans. Additionally, Executive’s dependent family shall be eligible to participate in medical and dental insurance plans sponsored by the Company or the Bank with the cost of such premiums paid by the Company.

(e) Vacations and Sick Leave . The Executive shall be entitled to paid annual vacation leave in accordance with the policies as established from time to time by the Board of Directors, which shall in no event be less than five weeks per annum. The Executive shall also be entitled to an annual sick leave benefit as established by the Board for senior management employees of the Company. The Executive shall not be entitled to receive any additional compensation from the Company for failure to take a vacation or sick leave, nor shall he be able to accumulate unused vacation or sick leave from one year to the next; provided, however, such Executive may carry forward from year to year a maximum of ten days of unused vacation leave.

(f) Expenses . The Company shall reimburse the Executive or otherwise provide for or pay for all reasonable expenses incurred by the Executive in furtherance of, or in connection with the business of the Company, including, but not by way of limitation, automobile and traveling expenses, and all reasonable entertainment expenses, subject to such reasonable documentation and other limitations as may be established by the Board of Directors of the Company. If such expenses are paid in the first instance by the Executive, the Company shall reimburse the Executive therefor.

(g) Changes in Benefits . The Company shall not make any changes in such plans, benefits or privileges previously described in Section 3(c), (d) and (e) which would adversely affect the Executive’s rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executive officers of the Company and does not result in a proportionately greater adverse change in the rights of, or benefits to, the Executive as compared with any other executive officer of the Company. Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 3(a) hereof.

(h) Post-Retirement Medical Coverage . Upon the termination of employment with the Company at any time on or after attainment of age 62, the Executive shall be eligible to receive reimbursement for the costs of maintaining participation in the group medical insurance plan sponsored by the Company or the Bank from time to time for the benefit of the Executive and Executive’s dependent family to the extent that such participant is permissible under the Company’s or the Bank’s plan without the Company or the Bank incurring penalties or taxes associated with such coverage, or in the alternative, the Executive will receive reimbursement for participation in other comparable coverage, until such time that the Executive and Executive’s spouse shall be eligible for coverage under the Federal Medicare System, or any successor program. The provisions of this Section shall survive the termination of this Agreement.

(i) Deferral of Non-Deductible Compensation . In the event that the Executive’s aggregate compensation (including compensatory benefits which are deemed remuneration for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)) from the Company and other consolidated filers with the Company for any calendar year exceeds the greater of (i) $1,000,000, or (ii) the maximum amount of compensation deductible by the Company combined with any other consolidated filers in any calendar year under Section 162(m) of the Code (the “maximum allowable amount”), then any such amount in excess of the maximum allowable amount shall be mandatorily deferred with interest thereon at the then “prime rate” plus 300 basis points per annum, compounded annually, to a calendar year such that the amount to be paid to the Executive in such calendar year, including deferred amounts and interest thereon, does not exceed the maximum allowable amount. Subject to the foregoing, deferred amounts, including interest thereon, shall be payable at the earliest time permissible. All unpaid deferred amounts shall be paid to the Executive not later than his date of termination of employment, unless his date of termination is on a December 31st, in which case, the unpaid deferred amounts shall be paid to the Executive on the first business day of the next succeeding calendar year. The provisions of this Section shall survive any termination of the Executive’s employment and any termination of this Agreement.

4. Loyalty.

(a) The Executive shall devote his full time and attention to the performance of his employment under this Agreement. During the term of the Executive’s employment under this Agreement, the Executive shall not engage in any business or activity contrary to the business affairs or interests of the Company.

(b) Nothing contained in this Section 4 shall be deemed to prevent or limit the right of Executive to invest in the capital stock or other securities of any business dissimilar from that of the Company, or solely as a passive or minority investor in any business.

5. Standards . During the term of this Agreement, the Executive shall perform his duties in accordance with such reasonable standards expected of executives with comparable positions in comparable organizations and as may be established from time to time by the Board of Directors.

6. Termination and Termination Pay . The Executive’s employment under this Agreement shall be terminated upon any of the following occurrences:

(a) The death of the Executive during the term of this Agreement, in which event the Executive’s estate shall be entitled to receive the compensation due the Executive through the last day of the calendar month in which Executive’s death shall have occurred.

(b) The Company’s Board of Directors may terminate the Executive’s employment at any time, but any termination by the Company’s Board of Directors other than termination for Cause shall not prejudice the Executive’s right to compensation or benefits under the Agreement. The Executive shall have no right to receive compensation or other benefits for any period after termination for Cause. Termination for “Cause” shall include termination because of the Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Agreement. The Company’s Board of Directors may within its sole discretion, acting in good faith, terminate the Executive for Cause and shall notify such Executive accordingly; provided that any such determination shall not be effective unless it is adopted by an affirmative vote of not less than a majority of the members of the full Board of Directors at a meeting of the Board called and held for such purpose (after reasonable written notice has been delivered to the Executive of such meeting, the purpose of such meeting and the preliminary basis for such Cause termination and an opportunity for such Executive, together with personal counsel, to be heard before the Board on the matter prior to such vote by the Board).

(c) Except as provided pursuant to Section 9 hereof, in the event Executive’s employment under this Agreement is terminated by the Company without Cause, the Company shall be obligated to continue to pay the Executive the salary provided pursuant to Section 3(a) herein, up

to the date of termination of the remaining Term of this Agreement and the cost of Executive obtaining all health, life, disability, and other benefits which the Executive would be eligible to participate in through such date based upon the benefit levels substantially equal to those being provided Executive at the date of termination of employment. The provisions of this Section 6(c) shall survive the expiration of this Agreement.

(d) The voluntary termination by the Executive during the term of this Agreement with the delivery of no less than 60 days written notice to the Board of Directors, other than pursuant to Section 9(b), in which case the Executive shall be entitled to receive only the compensation, vested rights, and all employee benefits up to the date of such termination.

7. Regulatory Exclusions.

(a) If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(3) and (g)(1)), the Company’s obligations under the Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company may in its discretion (i) pay the Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

(b) If the Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s affairs by an order issued under Sections 8(e)(4) or 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Company under this Agreement shall terminate as of the effective date of the order, but the vested rights of the contracting parties shall not be affected.

(c) If the Company is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

(d) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Company: (i) by the Comptroller of the Currency (“Comptroller”), or his or her designee, at the time that the Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement to provide assistance to or on behalf of the Company under the authority contained in Section 13(c) of the FDIA; or (ii) by the Comptroller, or his or her designee, at the time that the Comptroller, or his or her designee approves a supervisory merger to resolve problems related to operation of the Company or when the Company is determined by the Comptroller to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.

(e) Notwithstanding anything herein to the contrary, any payments made to the Executive pursuant to the Agreement, or otherwise, shall be subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments promulgated thereunder.

8. Disability . If the Executive shall become disabled or incapacitated to the extent that he is unable to perform his duties hereunder, by reason of medically determinable physical or mental impairment, as determined by a doctor engaged by the Board of Directors, Executive shall nevertheless continue to receive the compensation and benefits provided under the terms of this Agreement as follows: 100% of such compensation and benefits for a period of 12 months, but not exceeding the remaining term of the Agreement, and 65% thereafter for the remainder of the term of the Agreement. Such benefits noted herein shall be reduced by any benefits otherwise provided to the Executive during such period under the provisions of disability insurance coverage in effect for Company employees. Thereafter, Executive shall be eligible to receive benefits provided by the Company under the provisions of disability insurance coverage in effect for Company employees. Upon returning to active full-time employment, the Executive’s full compensation as set forth in this Agreement shall be reinstated as of the date of commencement of such activities. In the event that the Executive returns to active employment on other than a full-time basis, then his compensation (as set forth in Section 3(a) of this Agreement) shall be reduced in proportion to the time spent in said employment, or as shall otherwise be agreed to by the parties.

9. Change in Control Severance Protection .

(a) Notwithstanding any provision herein to the contrary, in the event of the involuntary termination of Executive’s employment during the term of this Agreement following any Change in Control of the Company or Bank, or within 24 months thereafter of such Change in Control, absent Cause, Executive shall be paid an amount equal to the product of 2.999 times the Executive’s “base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”) and regulations promulgated thereunder. Said sum shall be paid in one (1) lump sum not later than the date of such termination of service, and such payments shall be in lieu of any other future payments that the Executive would be otherwise entitled to receive under Section 6 of this Agreement; provided, that such payments shall be reduced to the extent that similar payments are made by the Bank. Additionally, except as otherwise provided at Section 3(d) herein, the Executive and his or her dependents shall remain eligible to participate in the medical and dental insurance programs offered by the Bank to its employees for a period of not less than 18 months following the date of such termination of employment; provided that the Employee shall pay to the Bank not less than monthly the corresponding COBRA continuation premiums in effect at such time for Company or Bank employees generally during such period of insurance continuation. Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to the Executive by the Bank or the Company shall be deemed an “excess parachute payment” in accordance with Section 280G of the Code and be subject to the excise tax provided at Section 4999(a) of the Code. The term “Change in Control” shall refer to: (i) the sale of all, or substantially all, of the assets of the Bank or the Company; (ii) the merger or recapitalization of the Bank or the Company whereby the Bank or the Company is not the surviving entity; (iii) a change in control of the Bank or the Company, as otherwise defined or determined by the Office of the Comptroller of the Currency (“OCC”) or regulations promulgated by it; or (iv) the acquisition, directly or indirectly, of the beneficial ownership (within the meaning of that term as it is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five percent (25%) or more of the outstanding voting securities of the Bank or the Company by any person, trust, entity or group. The term “person” means an individual other than the Executive, or a corporation,

partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any other form of entity not specifically listed herein. The reorganization of the Bank from its mutual holding company form to a parent holding company form whereby such parent company shall own 100% of the stock of the Bank and public stockholders shall own 100% of the parent company common stock shall not be deemed a Change in Control. The provisions of this Section 9(a) shall survive the expiration of this Agreement occurring after a Change in Control.

(b) Notwithstanding any other provision of this Agreement to the contrary, Executive may voluntarily terminate his employment under this Agreement within 24 months following a Change in Control of the Company or Bank for Good Reason (as defined thereafter) and Executive shall thereupon be entitled to receive the payment and benefits described in Section 9(a) of this Agreement. The Executive must provide written notice to the Company of the existence of the event or condition constituting such Good Reason within ninety (90) days of the initial occurrence of the event or the condition alleged to constitute “Good Reason.” Upon delivery of such notice by the Executive, the Company shall have a period of thirty (30) days thereafter during which it or they may remedy in good faith the condition constituting such Good Reason, and the Executive’s employment shall continue in effect during such time so long as the Company makes diligent efforts during such time to cure such Good Reason. In the event that the Company shall remedy in good faith the event or condition constituting Good Reason, then such notice of termination shall be null and void, and the Company shall not be required to pay the amount due to the Executive under this Section 9(b). The Company’s remedy of any Good Reason event or condition with or without notice from the Executive shall not relieve the Company from any obligations to the Executive under this Agreement or otherwise and shall not affect the Executive’s rights upon the reoccurrence of the same, or the occurrence of any other, Good Reason event or condition. The provisions of this Section 9(b) shall survive the expiration of this Agreement occurring after a Change in Control.

“Good Reason” shall exist if, without Executive’s express written consent, the Company materially breaches any of their respective obligations under this Agreement. Without limitation, such a material breach shall be deemed to occur upon the occurrence any of the following:

(1) a material diminution in the Executive’s base compensation;

(2) a material diminution in the Executive’s authority, duties, or responsibilities;

(3) a material diminution in the budget over which the Executive retains authority;

(4) a material change in the geographic location of the Executive’s office location;

(5) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report, including a requirement that the Executive is required to report to a corporate officer or employee instead of reporting directly to the board of directors of the Company, if such Executive previously reported directly to the Board of Directors; or

(6) any other action or inaction that constitutes a material breach by the Company of this Agreement.

10. Withholding . All payments required to be made by the Company hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation.

11. Successors and Assigns .

(a) This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company.

(b) Since the Company is contracting for the unique and personal skills of the Executive, the Executive shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Company.

12. Amendment; Waiver . No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed by the Executive and such officer or officers as may be specifically designated by the Board of Directors of the Company to sign on its behalf. No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

13. Governing Law . The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the State of New Jersey.

14. Nature of Obligations . Nothing contained herein shall create or require the Company to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a right to receive benefits from the Company hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company.

15. Headings . The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

16. Severability . The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.

17. Arbitration . Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled exclusively by arbitration in accordance with the rules then in effect of the district office of the American Arbitration Association (“AAA”) nearest to the home office of the Company, and judgment upon the award rendered may be entered in any court having jurisdiction thereof, except to the extent that the parties may otherwise reach a mutual settlement of such issue. The provisions of this Section 17 shall survive the expiration of this Agreement.

18. Confidential Information . The Executive acknowledges that during his or her employment he or she will learn and have access to confidential information regarding the Company and the Bank and its customers and businesses (“Confidential Information”). The Executive agrees and covenants not to disclose or use for his or her own benefit, or the benefit of any other person or entity, any such Confidential Information, unless or until the Company or the Bank consents to such disclosure or use, or such information becomes common knowledge in the industry or is otherwise legally in the public domain. The Executive shall not knowingly disclose or reveal to any unauthorized person any Confidential Information relating to the Company, the Bank, or any subsidiaries or affiliates, or to any of the businesses operated by them, and the Executive confirms that such information constitutes the exclusive property of the Company and the Bank. The Executive shall not otherwise knowingly act or conduct himself (a) to the material detriment of the Company or the Bank, or its subsidiaries, or affiliates, or (b) in a manner which is inimical or contrary to the interests of the Company or the Bank. Executive acknowledges and agrees that the existence of this Agreement and its terms and conditions constitutes Confidential Information of the Company, and the Executive agrees not to disclose the Agreement or its contents without the prior written consent of the Company; provided, however, the Executive may disclose this Agreement to his personal attorney and personal tax advisor without prior consent from the Company. Notwithstanding the foregoing, the Company reserves the right in its sole discretion to make disclosure of this Agreement as it deems necessary or appropriate in compliance with its regulatory reporting requirements. Notwithstanding anything herein to the contrary, failure by the Executive to comply with the provisions of this Section may result in the immediate termination of the Agreement within the sole discretion of the Company, disciplinary action against the Executive taken by the Company, including but not limited to the termination of employment of the Executive for breach of the Agreement and the provisions of this Section, and other remedies that may be available in law or in equity. The provisions of this Section shall survive the expiration of this Agreement.

19. Indemnification; Insurance

(a) Indemnification . The Company agrees to indemnify the Executive and his heirs, executors, and administrators to the fullest extent permitted under applicable law and regulations, including, without limitation 12 U.S.C. Section 1828(k), against any and all expenses and liabilities reasonably incurred by the Executive in connection with or arising out of any action, suit or proceeding in which the Executive may be involved by reason of his having been a director or officer of the Company or any of its subsidiaries, whether or not the Executive is a director or officer of the Company at the time of incurring any such expenses or liabilities. Such expenses and liabilities shall include, but shall not be limited to, judgments, court costs and attorney’s fees and the cost of reasonable settlements. The Executive shall be entitled to indemnification in respect of a settlement only if the Board of Directors of the Company has approved such settlement. Notwithstanding anything herein to the contrary, (i) indemnification for expenses shall not extend to matters for which the Executive’s employment or service has been terminated, and (ii) the obligations of this Section 19 shall survive the termination of this Agreement. Nothing contained herein shall be deemed to provide indemnification prohibited by applicable law or regulation.

(b) Insurance . During the Term of the Agreement, the Company shall provide the Executive (and his heirs, executors, and administrators) with coverage under a directors’ and officers’ liability policy at the Company’s expense, at least equivalent to such coverage otherwise provided to the other directors and senior officers of the Company.

(c) Compliance with Regulatory Limitations. Notwithstanding anything herein to the contrary, the provisions of this Section 19 shall be subject to the limitations and restrictions provided at 12 CFR 545.121 as it may be amended from time to time.

20. Entire Agreement . This Agreement together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement between the parties hereto. This Agreement shall supersede any prior employment agreements and/or change in control severance agreements between the Executive and the Company.

21. Effect of Code Section 409A .

(a) This Agreement shall be amended to the extent necessary to comply with Section 409A of the Code and regulations promulgated thereunder. Prior to such amendment, and notwithstanding anything contained herein to the contrary, this Agreement shall be construed in a manner consistent with Section 409A of the Code and the parties shall take such actions as are required to comply in good faith with the provisions of Section 409A of the Code such that payments shall not be made to the Executive at such time if such payments shall subject the Executive to the penalty tax under Code Section 409A, but rather such payments shall be made by the Company to the Executive at the earliest time permissible thereafter without the Executive having liability for such penalty tax under Section Code 409A.

(b) Notwithstanding anything in this Agreement to the contrary, if the Company in good faith determines, as of the effective date of Executive’s Termination of Employment that the Executive is a “specified employee” within the meaning of Section 409A of the Code and if the payment under Sections 6(c) or 9 does not qualify as a short-term deferral under Code Section 409A and Treas. Reg. §1.409A-1(b)(4) (or any similar or successor provisions), and that an amount (or any portion of an amount) payable to Executive hereunder, is required to be suspended or delayed for six months in order to satisfy the requirements of Section 409A of the Code, then the Company will so advise Executive, and any such payment (or the minimum amount thereof) shall be suspended and accrued for six months (“Six-Month Delay”), whereupon such amount or portion thereof shall be paid to Executive in a lump sum on the first day of the seventh month following the effective date of Executive’s Termination of Employment. The limitations of this Six-Month Delay shall only be effective if the stock of the Company or a parent corporation is publicly traded as set forth at Section 409A(a)(2)(B)(i) of the Code.

“Specified Employee” means, for an applicable twelve (12) month period beginning on April 1, a key employee (as described in Code Section 416(i), determined without regard to paragraph (5) thereof) during the calendar year ending on the December 31 immediately preceding such April 1.

“Termination of Employment” shall have the same meaning as “separation from service”, as that phrase is defined in Section 409A of the Code (taking into account all rules and presumptions provided for in the Section 409A regulations). Whether a “Termination of Employment” takes place

is determined based on whether the facts and circumstances indicate that the Company and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an Executive or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an Executive or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Company if the Executive has been providing services to the Company less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Executive continues to be treated as an Executive for other purposes (such as continuation of salary and participation in employee benefit programs), whether similarly situated service providers have been treated consistently, and whether the Executive is permitted, and realistically available, to perform services for other service recipients in the same line of business. The Executive is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the Executive during the immediately preceding 36-month period. The Executive will be presumed not to have separated from service where the level of bona fide services performed continues at a level that is a 50 percent or more of the average level of service performed by the Executive during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide services performed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that the Company and the Executive reasonably anticipated that as of a certain date the level of bona fide services would be reduced permanently to a level less than or equal to 20 percent of the average level of bona fide services provided during the immediately preceding 36-month period or full period of services provided to the Company if the Executive has been providing services to the Company for a period of less than 36 months (or that the level of bona fide services would not be so reduced).

For periods during which the Executive is on a paid bona fide leave of absence and has not otherwise terminated employment, the Executive is treated as providing bona fide services at a level equal to the level of services that the Executive would have been required to perform to receive the compensation paid with respect to such leave of absence. Periods during which the Executive is on an unpaid bona fide leave of absence and has not otherwise terminated employment are disregarded for purposes of determining the applicable 36-month (or shorter) period). Bona fide leave of absence means that there is a reasonable expectation that the Executive will return to perform services for the Company.

(i) To the maximum extent permitted under Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(iii) (or any similar or successor provisions), the Company will pay the Executive an amount equal to the lesser of two times (1) the maximum amount that may be taken into account under a qualified plan pursuant to Code Section 401(a)(17) for the year in which the Executive’s Termination of Employment occurs, and (2) the sum of the Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the taxable year of the Executive preceding the taxable year of the Executive in which his Termination of Employment occurs (adjusted for any increase during that year that was expected to continue indefinitely if the

Executive had not had a Termination of Employment); provided that amounts paid under this Section 21(c) must be paid no later than the last day of the second taxable year of the Executive following the taxable year of the Executive in which occurs the Termination of Employment and such amounts paid will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Company under Sections 6(c) or 9; and

(ii) To the maximum extent permitted under Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(v)(D) (or any similar or successor provisions), within ten (10) days of the Termination of Employment, the Company will pay the Executive an amount equal to the applicable dollar amount under Code Section 402(g)(1)(B) for the year of the Executive’s Termination of Employment; provided that the amount paid under this Section 21(c) will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Company under Sections 6(c) or 9.

(d) To the extent that any reimbursements or in-kind payments are subject to Code Section 409A, then such expenses (other than medical expenses) must be incurred before the last day of the second taxable year following the taxable year in which the termination occurred, provided that any reimbursement for such expenses be paid before the Executive’s third taxable year following the taxable year in which the termination occurred. For medical expenses, to the extent the Agreement entitles the Executive to reimbursement by the Company of payments of medical expenses incurred and paid by the Executive but not reimbursed by a person other than the Company and allowable as a deduction under Code Section 213 (disregarding the requirement of Code Section 213(a) that the deduction is available only to the extent that such expenses exceed 7.5 percent of adjusted gross income), then the reimbursement applies during the period of time during which the Executive would be entitled (or would, but for the Agreement, be entitled) to continuation coverage under a group health plan of the Company under Code Section 4980B (COBRA) if the Executive elected such coverage and paid the applicable premiums.

22. Non-Competition; Non-Solicitation

(a) Following termination of employment with the Company, the Executive will not, without the express written consent of the Company, directly or indirectly communicate or divulge to, or use for his own benefit or for the benefit of any other person, firm, association, or corporation, any of the trade secrets, proprietary data or other confidential information communicated to or otherwise learned or acquired by the Executive from the Company, the Bank, or any subsidiary of such entities, except that Executive may disclose such matters to the extent that disclosure is required by a court or other governmental agency of competent jurisdiction.

(b) During the six(6) month period following any termination of employment with the Company,

(i) Executive hereby agrees that he will not contact (with a view toward selling any product or service competitive with any product or service sold or proposed to be sold by the Company, the Bank, or any subsidiary of such entities) any person, firm, association or corporation (A) to which the Company, the Bank, or any subsidiary of such entities sold any product or service

within thirty-six months of the Executive’s termination of employment, (B) which Executive solicited, contacted or otherwise dealt with on behalf of the Company, the Bank, or any subsidiary of such entities within one year of the Executive’s termination of employment, or (C) which Executive was otherwise aware was a client of the Company, the Bank, or any subsidiary of such entities at the time of termination of employment. Executive will not directly or indirectly make any such contact, either for his own benefit or for the benefit of any other person, firm, association, or corporation.

(ii) Executive hereby agrees that he shall not engage in providing professional services or enter into employment as an employee, director, consultant, representative, or similar relationship to any financial services enterprise (including but not limited to a savings and loan association, bank, credit union, or insurance company) engaged in the business of offering retail customer and commercial deposit and/or loan products whereby the Executive will have a work location in the State of New Jersey within 15 miles of any office of the Company, the Bank, or any subsidiary of such entities existing as of the date of such termination of employment; provided, however, the Executive may request a waiver from the Company and the Bank with respect to the limitations of this Section 22 on a case by case basis at any time, and the Company and the Bank hereby agree that such written approval of such request shall not be unreasonably withheld. Notwithstanding the foregoing, the Company and the Bank reserve the right to elect not to approve such request for waiver of the limitations herein within its sole discretion if the proposed employing entity is an FDIC insured depository institution.

(iii) Executive hereby agrees that he shall not, on his own behalf or on behalf of others, employ, solicit, or induce, or attempt to employ, solicit or induce, any employee of the Company, the Bank, or any subsidiary of such entities, for employment with any enterprise, nor will the Executive directly or indirectly, on his behalf or for others, seek to influence any employee of the Company, the Bank, or any subsidiary of such entities to leave the employ of the Company, the Bank, or any subsidiary of such entities.

(iv) Executive will not make any public statements regarding the Company, the Bank, or any subsidiary of such entities without the prior consent of the Company or the Bank, and the Executive shall not make any statements that disparage the Company, the Bank, or any subsidiary of such entities or the business practices of the Company, the Bank, or any subsidiary of such entities, except to the extent required by law or by a court or other governmental agency of competent jurisdiction. The Company and the Bank shall not knowingly or intentionally make any statements that disparage the Executive.

(v) The parties acknowledges and agrees that irreparable injury will result to each in the event of a breach of any of the provisions of Sections 22(a) and 22(b) (the “Designated Provisions”) and that the parties will have no adequate remedy at law with respect thereto. Accordingly, in the event of a material breach of any Designated Provision, and in addition to any other legal or equitable remedy the parties may have, the parties shall each be entitled to the entry of a preliminary and a permanent injunction (including, without limitation, specific performance by a court of competent jurisdiction located in Essex County, New Jersey, or elsewhere), to restrain the violation or breach thereof by the other parties, and the parties shall each submit to the jurisdiction of such court in any such action.

(c) Upon the termination of employment of the Executive as an officer and employee of the Company for any reason, the Executive hereby agrees and acknowledges that this Agreement shall constitute such individual’s letter of resignation as a member of the Board of Directors of the Company, the Bank, and all related entities of the Company and the Bank, effective as of the date of such termination of employment.

(d) The provisions of Sections 22(a), (b) and (c) shall survive the expiration of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first hereinabove written.


		Kearny Financial Corp.

By:		/s/ John Mazur
		John Mazur
		Chairman of the Board

ATTEST:

/s/ Sharon Jones

Sharon Jones, Secretary


WITNESS:

/s/ Kimberly T. Manfredo				/s/ Craig L. Montanaro
Kimberly T. Manfredo,				Craig L. Montanaro, Executive
1 ^st VP/Director of HR

Exhibit 10.12

KEARNY FINANCIAL CORP.

DIRECTORS CONSULTATION AND RETIREMENT PLAN

AS AMENDED AND RESTATED

WHEREAS, Kearny Financial Corp. (“Company”) has previously implemented the Kearny Financial Corp. Directors Consultation and Retirement Plan (“Plan”), and

WHEREAS, the Company wishes to make certain revisions to the Plan with respect to on-going administration of the Plan.

NOW THEREFORE, BE IT RESOLVED that the Plan shall be revised, amended and restated, with such amendments set forth herein effective as of [date] , as follows:

ARTICLE I

DEFINITIONS

The following words and phrases as used herein shall, for the purpose of this Plan and any subsequent amendment thereof, have the following meanings unless a different meaning is plainly required by the content:

“ Bank ” means Kearny Federal Savings Bank, Kearny, New Jersey, and any successor to Kearny Federal Savings Bank.

“ Board of Directors ” means the Board of Directors of the Company or the Board of Directors of the Bank, as constituted from time to time and successors thereto, as the context requires.

“ Change in Control ” means the occurrence of any of the following events:

(i)

Merger : The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(ii)

Acquisition of Significant Share Ownership : There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(iii)

Change in Board Composition : During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board of directors (or first nominated by the board of directors for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the board of directors as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or

(iv)

Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.

“ Code ” means the Internal Revenue Code of 1986, as amended, and regulations (“Treasury Regulations”) and guidance promulgated thereunder.

“ Committee ” means the committee provided for in Section 8.11 of the Plan and as of the Effective Date of the Plan, as amended and restated, means the Compensation Committee of the Board of Directors of the Company.

“ Company ” means Kearny Financial Corp., and any successor to Kearny Financial Corp., or any future parent corporation of the Bank.

“ Director ” means a member of the Board of Directors of the Company or Board of Directors of the Bank.

“ Disability ” means the Participant is determined to be totally disabled by the Social Security Administration in a manner consistent with Section 409A of the Code.

“ Effective Date ” means May 1, 1995, with respect to the initial effective date of the Plan and [date] , with respect to the effective date of this amendment and restatement of the Plan.

“ Participant ” means a Director serving on the Board of Directors of the Company or the Board of Directors of the Bank on or after the Effective Date. A Director’s participation shall continue as long as he or she fulfills all requirements for participation subject to the right of termination, amendment and modification of the Plan as set forth in Section 8.4 of the Plan. Notwithstanding the foregoing, an individual who first becomes a Director on or after the Effective Date of the Plan, as amended and restated, shall not be eligible to participate in the Plan. All Directors of the Company and the Bank at the Effective Date of the amendment and restatement of the Plan shall continue as Participants in the Plan.

“ Plan ” means this Kearny Financial Corp. Directors Consultation and Retirement Plan, as amended from time to time.

“ Retirement Benefit Amount ” means the amount determined in accordance with Section 2.5(c) of the Plan.

“ Retirement Date ” means the date of termination of service as a Director following the Participant’s completion of not less than five (5) Years of Service and attainment of not less than age sixty (60) while serving as a Director. A Director may attain the Retirement Date for service completed at one corporate entity and not yet meet the requirements for the Retirement Date for another corporate entity.

“ Termination of Service ” means that the Participant ceases service with the Company or the Bank for any reason whatsoever other than by reason of a leave of absence that is approved by the Company or the Bank. Termination of Service shall have the same meaning as “separation from service,” as that phrase is defined in Section 409A of the Code. Whether a “separation from service” has occurred is determined based on whether the facts and circumstances indicate that the Company and/or the Bank and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to less than 50% of the average level of bona fide services performed over the immediately preceding 36 months (or such lesser period of time in which the Participant performed services for the Company or the Bank). The determination of whether the Participant has had a “separation from service” (including while the Participant is on a leave of absence) shall be made by applying the presumptions set forth in the Treasury Regulations under Section 409A of the Code.

“ Year of Service ” means all years of service as a member of the Board of Directors of the Company and the Board of Directors of the Bank and all predecessor entities; provided, however, service with “predecessor entities” refers only to predecessors of the Bank prior to the Effective Date. A Year of Service shall consist of twelve consecutive months of service. In calculating the Retirement Benefit Amount, Years of Service may differ based upon actual service as a member of the Board of Directors of the Company and as a member of the Board of Directors of the Bank.

ARTICLE II

BENEFITS

2.1 Retirement . Upon a Participant’s Termination from Service with the Company or the Bank, as applicable, a Participant will become eligible to receive benefits under the Plan if he has

attained either or both his Retirement Date with the Company and his Retirement Date with the Bank, provided the Participant enters into an agreement to be a consulting director of the Company (in a form similar to that contained in Schedule A to this Plan). For the avoidance of doubt, a Participant may attain his Retirement with the Company without attaining his Retirement Date with the Bank and vice versa depending on the number of Years of Service the Participant has earned with both the Bank and the Company. If a Participant has attained his Retirement Date with either or both the Company and the Bank, upon the Participant’s Termination from Service, the Company will pay the Participant a monthly benefit determined in accordance with Section 2.5 of the Plan. The Company will commence payments of the monthly benefit to the Participant on the first business day of the first calendar month following the Participant’s Termination from Service and will continue to make the monthly benefit payments to the Participant on the first business day of each succeeding calendar month for the life of the Participant. Except as provided for in Sections 2.2 and 2.3 of the Plan, the Company shall have no financial obligation to a Participant who experiences a Termination from Service without attaining his Retirement Date with either the Company or the Bank.

2.2 Change in Control . If a Participant has experienced a Termination from Service prior to the date of a Change in Control and is either receiving a monthly benefit or is eligible to receive a monthly benefit because he had attained his Retirement Date with either or both the Company or the Bank, but which has not yet commenced, the Company will pay the remaining lifetime benefits due to the Participant (based on the Participant’s life expectancy) in a single lump sum payment within five (5) business days of the date of the Change in Control. If a Participant has died prior a Change in Control and his beneficiary or estate is receiving monthly benefit payments, the Company will pay the remaining payments due to the Participant’s beneficiary or estate (as determined in accordance with Section 2.3 of the Plan) in a single lump sum payment within five (5) business days of the date of the Change in Control. If a Participant has not experienced a Termination from Service prior to a Change in Control, the Company will pay the lifetime benefits that would otherwise be due to the Participant had he experienced a Termination from Service as of the date of the Change in Control (whether or not he actually experiences a Termination from Service as of the date of the Change on Control) in a single lump sum payment within five (5) business days of the date of the Change in Control. If a Participant would not otherwise have attained his Retirement Date with the Company or the Bank as of the date of the Change in Control (because of his age and/or Years of Service with the Company or the Bank), the Participant will, for purposes of this Section 2.2, be deemed to have satisfied the minimum age and service requirements necessary to have attained his Retirement Date with both the Company and the Bank as of the date of the Change in Control for purposes of determining his benefits under Section 2.1 of the Plan and then the lump sum equivalent under this Section 2.2. For purposes of this Section 2.2, any lump sum payment will be calculated using as the discount rate the interest rate for 5-year treasury obligations, as reported in the Wall Street Journal , and as in effect as of the date of the Change in Control.

2.3 Death of a Participant . If Participant has experienced a Termination from Service and has received 120 monthly benefit payments from the Company, no further benefit payments will be due to his beneficiary or estate following his death. If a Participant has experienced a Termination from

Service and is receiving monthly benefit payments from the Company but has not received at least 120 monthly benefit payments as of the date of his death, the Company will continue to make the monthly benefit payments (at the same time and same amount as would have been made to the Participant) to the Participant’s beneficiary or estate (if there is no beneficiary) until the total aggregate number of benefit payments made to the Participant and the Participant’s beneficiary or estate equals 120. If a Participant dies prior to experiencing a Termination from Service, the Company will pay the Participant’s beneficiary or estate (if there is no beneficiary) the monthly benefit determined in accordance with Section 2.1 of the Plan, provided, however, that if the Participant would not have attained his Retirement Date with both or either the Company and the Bank as of the date of his death, he shall be deemed to have served as a member of the Board(s) of Director on which he was serving at the time of his death until his Retirement Date. Unless a lump sum payment of the benefits is elected by the Participant on the form set forth in Schedule B to the Plan, the benefit payments will be made monthly to the Participant’s beneficiary or estate (if there is no beneficiary) for a period of 120 months. For purposes of this Section 2.3, any lump sum payment will be calculated using as the discount rate the interest rate for 5-year treasury obligations, as reported in the Wall Street Journal , as in effect as of the date of the Participant’s death.

2.4 Disability of a Participant . Upon a Participant’s Disability, as applicable, a Participant will become eligible to receive benefits under the Plan if he has attained either or both his Retirement Date with the Company and his Retirement Date with the Bank, as of the date of his Disability (determined, however, without regard to any minimum age requirement). For the avoidance of doubt, a Participant may attain his Retirement Date with the Company without attaining his Retirement Date with the Bank and vice versa depending on the number of Years of Service the Participant has earned with both the Bank and the Company. If a Participant has experienced a Disability and has attained his Retirement Date (determined without regard to the Participant’s age) with either or both the Company and the Bank, the Company will pay the Participant a monthly benefit determined in accordance with Section 2.5 of the Plan. The Company will commence payments of the monthly benefit to the Participant on the first business day of the first calendar month following the Participant’s Disability and will continue to make the monthly benefit payments to the Participant on the first business day of each succeeding calendar month for the life of the Participant.

2.5 Determination of Benefit Payments .

(a) A Director’s monthly benefit shall equal the product of (i) one-twelfth (1/12) of the Retirement Benefit Amount specified in Section 2.5(c) and (ii) the Percentage of the Retirement Benefit Amount specified in Section 2.5(b). A Director’s monthly benefit shall be calculated separately with respect to his service with the Company and his service with the Bank.

(b) A Participant’s Percentage of the Retirement Benefit Amount equals 2.5% times the number of Years of Service the Participant has earned serving as a member of the Board of Directors of the Company and/or the Bank, as applicable, provided the Participant’s percentage calculated under this provision shall not exceed 80%. Except as provided for under Section 2.2 of the Plan, a Participant who has not earned at least five (5) Years of Service with either or both the Company or the Bank shall have a percentage equal to 0% with respect to his Retirement Benefit Amount from the Company and/or the Bank.

(c) A Participant’s Retirement Benefit Amount with respect to the Company equals the total highest retainer, regular and special meeting fees, as well as fees for Executive Committee meetings of the Company, paid to a Director by the Company during any twelve (12) consecutive month period during the 24 month period prior to his Termination of Service, death or Disability or Change in Control, as applicable. A Participant’s Retirement Benefit Amount with respect to the Bank equals the total highest retainer, regular and special meeting fees, as well as fees for Executive Committee meetings of the Bank, paid to a Director by the Bank during any twelve (12) consecutive month period during the 24 month period prior to his Termination of Service, death or Disability or Change in Control, as applicable. For purposes of calculating a Participant’s Retirement Benefit Amount with respect to either the Company or the Bank, any compensation paid to the Director under any stock-based plan or bonus arrangement (including the Bank’s Strategic Business Planning Incentive Compensation Program) shall be excluded in the determination of the retainers and fees paid to the Director.

ARTICLE III

INSURANCE

3.1 Ownership of Insurance . The Company or the Bank, in their sole discretion, may purchase one or more life insurance policies on the lives of Participants in order to provide funds to pay part or all of the benefits accrued under this Plan. All rights and incidents of ownership in any life insurance policy that the Company or the Bank may purchase insuring the life of the Participant (including any right to proceeds payable thereunder) shall belong exclusively to such entity or its designated trust, and neither the Participant, nor any beneficiary or any other person claiming under or through him or her shall have any rights, title or interest in or to any insurance policy. The Participant shall not have any power to transfer, assign, hypothecate or otherwise encumber in advance any of the benefits payable thereunder, nor shall any benefits be subject to seizure for the benefit of any debts or judgments, or be transferable by operation of law in the event of bankruptcy, insolvency or otherwise. Any life insurance policy purchased pursuant hereto and any proceeds payable thereunder shall remain subject to the claims of the corporate general creditors.

3.2 Physical Examination . As a condition of becoming or remaining covered under this Plan, each Participant, as may be requested by the Company from time to time shall take a physical examination by a physician approved by an insurance carrier. The cost of the examination shall not be borne by the Participant. The report of the examination shall be transmitted directly from the physician to the insurance carrier designated by the Company to establish certain costs associated with obtaining insurance coverage as may be deemed necessary under this Plan. Examinations shall remain confidential among the Participant, the physician and the insurance carrier and shall not be made available to the Company in any form or manner.

3.3 Death of Participant . On death of the Participant, the proceeds derived from an insurance policy(ies), if any, shall be paid to the sponsoring entity or its designated trust.

ARTICLE IV

TRUST

4.1 Trust . Except as may be specifically provided in this Plan, nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company or the Bank and the Participant or any other person. Any funds which may be invested under the provisions of this Plan shall continue for all purposes to be a part of the general funds of the Company. No person other than the Company shall by virtue of the provisions of this Plan have any interest in such funds. The Company shall not be under any obligation to use such funds solely to provide benefits hereunder, and no representations have been made to a Participant that such funds can or will be used only to provide benefits hereunder. To the extent that any person acquires a right to receive payments from the Company under the Plan, such rights shall be no greater than the right of any unsecured general creditor of the Company.

In order to facilitate the accumulation of funds necessary to meet the costs of the Company under this Plan (including the provision of funds necessary to pay premiums with respect to any life insurance policies purchase pursuant to Article III of the Plan and to pay benefits to the extent that the cash value and/or proceeds of any such policies are not adequate to make payments to a Participant or his or her beneficiary as and when the same are due under the Plan), the Company may enter into a trust agreement. The Company, in its discretion, may elect to place any life insurance policies purchased pursuant to Article III of the Plan into the trust. In addition, such sums shall be placed in the trust as may from time to time be approved by the Board of Directors of the Company, in its sole discretion. To the extent the assets of the trust and/or the proceeds of any life insurance policy purchased pursuant to Article III of the Plan are not sufficient to pay benefits accrued under this Plan, such payments shall be made from the general assets of the Company.

ARTICLE V

VESTING

5.1 Vesting . All benefits under this Plan are deemed non-vested and forfeitable prior to a Participant’s Retirement Date. Notwithstanding the foregoing, all benefits payable hereunder shall be deemed 100% non-forfeitable by the Participant upon the attainment of his Retirement Date with the Company or the Bank, upon a Change in Control, upon a Participant’s Disability following not less than five Years of Service, or upon the death of the Participant. No benefits shall be deemed payable hereunder for any time period prior to the time that such benefits shall be deemed 100% non-forfeitable.

ARTICLE VI

TERMINATION OF SERVICE

6.1 Termination . All rights of the Participant hereunder shall terminate immediately upon the Participant ceasing to be in the active service of the Company or the Bank prior to the time that benefits payable under the Plan shall be deemed to be 100% non-forfeitable. A leave of absence approved by the Board of Directors shall not constitute a cessation of service within the meaning of this Section 6.1, within the sole discretion of the Board of Directors of the Company.

ARTICLE VII

FORFEITURE OR SUSPENSION OF BENEFITS

7.1 Forfeiture or Suspension of Benefits . Notwithstanding any other provision of this Plan to the contrary, benefits shall be forfeited or suspended during any period of paid service with the Company or the Bank following the commencement of benefit payments, within the sole discretion of the Committee and in a manner consistent with Section 409A of the Code.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Other Benefits . Nothing in this Plan shall diminish or impair the Participant’s eligibility, participation or benefit entitlement under any other benefit, insurance or compensation plan or agreement of the Company or the Bank now or hereinafter in effect. Upon retirement as a Director, Participants shall no longer be eligible for reimbursement from the Bank for the costs associated with enrollment in the Bank’s medical insurance plans or reimbursement for the costs associated with attendance at industry conferences.

8.2 No Effect on Employment or Service . This Plan shall not be deemed to give any Participant or other person in the employ or service of the Company or the Bank any right to be retained in the employment or service of the Company or the Bank, or to interfere with the right of the Company or the Bank to terminate any Participant or other person at any time and to treat him or her without regard to the effect which such treatment might have upon him or her as a Participant in this Plan.

8.3 Legally Binding . The rights, privileges, benefits and obligations under this Plan are intended to be legal obligations of the Company and binding upon the Company, its successors and assigns.

8.4 Termination, Amendment and Modification . The Company, by action of the Board of Directors, reserves the exclusive right to amend, modify, or terminate this Plan. Any such termination, modification or amendment shall not terminate or diminish any rights or benefits accrued by any Participant prior the termination, modification or amendment. The Company shall give thirty (30) days’ notice in writing to any Participant prior to the effective date of any amendment, modification or termination of this Plan. Notwithstanding the foregoing, in no event shall such benefits payable under the Plan be reduced below those provided for in Section 2.5 of the Plan. Except as provided below, in no event may the Company terminate, modify or amend the Plan following a Change in Control or the execution of any legal document to effect a transaction that would be considered a Change in Control. Subject to the requirements of Section 409A of the Code, in the event of complete termination of the Plan, the Plan shall cease to operate and the Company shall pay out to the Participant his or her benefit as if the Participant had a Termination from Service as of the effective date of the complete termination. Such complete termination of the Plan shall occur only under the following circumstances and conditions:

(a) The Company may terminate the Plan within 12 months of a corporate dissolution taxed under Code Section 331, or with approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under the Plan are included in the Participant’s gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

(b) The Company may terminate the Plan by irrevocable action of the Board of Directors taken within the 30 days preceding a Change in Control (but not following a Change in Control), provided that the Plan shall only be treated as terminated if all substantially similar arrangements sponsored by the Company are terminated so that the Participant and all participants under substantially similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within 12 months of the date of the termination of the arrangements.

(c) The Company may terminate the Plan provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Company, (ii) all arrangements sponsored by the Company that would be aggregated with this Plan under Treasury Regulations Section 1.409A-1(c) if the Participant covered by this Plan was also covered by any of those other arrangements are also terminated; (iii) no payments other than payments that would be payable under the terms of the arrangement if the termination had not occurred are made within 12 months of the termination of the arrangement; (iv) all payments are made within 24 months of the termination of the arrangements; and (v) the Company does not adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c) if the Participant participated in both arrangements, at any time within 3 years following the date of termination of the arrangement.

8.5 Arbitration . Any controversy or claim arising out of or relating to any contract or the breach thereof shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, with such arbitration hearing to be held at the offices of the American Arbitration Association (“AAA”) nearest to the home office of the Company, unless otherwise mutually agreed to by the Participant and the Company, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

8.6 Limitation . No rights of any Participant are assignable by any Participant, in whole or in part, either by voluntary or involuntary act or by operation of law. Rights of Participants hereunder are not subject to anticipation, alienation, sale, transfer, assignment, pledge, hypothecation, encumbrance or garnishment by creditors of the Participant. Such rights are not subject to the debts, contracts, liabilities, engagements, or torts of any Participant. No Participant shall have any right under this Plan or any trust referred to in Article IV of the Plan or against any assets held or acquired pursuant thereto other than the rights of a general, unsecured creditor of the Company pursuant to the unsecured promise of the Company to pay the benefits accrued hereunder in accordance with the terms of this Plan. The Company has no obligation under this Plan to fund or otherwise secure its obligations to render payments hereunder to Participants. No Participant shall have any voice in the use, disposition, or investment of any asset acquired or set aside by the Company to provide benefits under this Plan.

8.7 ERISA and IRC Disclaimer . It is intended that the Plan be neither an “employee welfare benefit plan” nor an “employee pension benefit plan” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Further, it is intended that the Plan will not cause the interest of a Participant under the Plan to be includible in the gross income of such Participant prior to the actual receipt of a payment under the Plan for purposes of the Code. No representation is made to any Participant to the effect that any insurance policies purchased by the Company or the Bank or assets of any trust established pursuant to this Plan will be used solely to provide benefits under this Plan or in any way shall constitute security for the payment of such benefits. Benefits payable under this Plan are not in any way limited to or governed by the proceeds of any such insurance policies or the assets of any such trust. No Participant in the Plan has any preferred claim against the proceeds of any such insurance policies or the assets of any such trust.

8.8 Conduct of Participants . Notwithstanding anything contained herein to the contrary, no payment of any then unpaid benefits shall be made and all rights under the Plan of a Participant, or any other person, to receive unpaid benefit shall be forfeited if the Participant engages in any activity or conduct which in the opinion the Board(s) of Directors of the Company or the Bank is inimical to the best interests of the Company or the Bank.

8.9 Incompetency . If the Company shall find that any person to whom any payment is payable under the Plan is deemed unable to care for his or her personal affairs because of illness or accident, any payment due (unless a prior claim related to that payment shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, a child, a parent, or a brother or sister, or to any person deemed by the Company to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Board of Directors may determine in its sole discretion. Any such payments shall constitute a complete discharge of the liabilities of the Company under the Plan.

8.10 Construction . The Company shall have full power and authority to interpret, construe and administer this Plan and the Company’s interpretations and construction thereof, and actions thereunder, shall be binding and conclusive on all persons for all purposes. Directors of the Company and the Bank shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his own willful, gross misconduct or lack of good faith.

8.11 Plan Administration . The Board of Directors of the Company shall administer the Plan; provided, however, that the Board of Directors may appoint an administrative committee (“Committee”) to provide administrative services or perform duties required by this Plan. The Committee shall have only the authority granted to it by the Board of Directors. All prior obligations of the Bank under the Kearny Federal Savings Bank Directors Consultation and Retirement Plan shall be assumed by the Company as of the original Effective Date of the Plan; provided, however, the Bank shall reimburse the Company for all such obligations assumed. Further, the Bank shall reimburse the Company for all obligations under the Plan attributable to compensation paid by the Bank to each Plan Participant.

8.12 Governing Law . This Plan shall be construed in accordance with and governed by the laws of the State of New Jersey, except to the extent that Federal law shall be deemed to apply. No payments of benefits shall be made hereunder if the Board of Directors of the Company, or counsel retained thereby, determines that such payments would be in violation of applicable regulations, or likely result in imposition of regulatory action, by the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation or other appropriate banking regulatory agencies.

8.13 Successors and Assigns . The Plan shall be binding upon any successor or successors of the Company, and unless clearly inapplicable, reference herein to the Company shall be deemed to include any successor or successors of the Company.

8.14 Sole Agreement . The Plan expresses, embodies, and supersedes all previous agreements, understandings, and commitments, whether written or oral, between the Company and any Participants with respect to the subject matter hereof.

IN WITNESS WHEREOF, the Company has caused the Plan, as amended and restated, to be executed by its duly authorized officers.


		Kearny Financial Corp.

	By:
Date		CRAIG L. MONTANARO

	Title:	President/CEO


Date	Witness:	SHARON JONES

		SVP/Corporate Secretary

Exhibit 10.14

KEARNY FEDERAL SAVINGS BANK

AMENDED AND RESTATED

BENEFIT EQUALIZATION PLAN FOR PENSION PLAN

INTRODUCTION

WHEREAS , Kearny Federal Savings Bank has previously adopted the Kearny Federal Savings Bank Benefit Equalization Plan for Pension Plan, effective July 1, 1995 and amended and restated as of January 1, 2009 (the “Prior Plan”); and

WHEREAS , in connection with the conversion (the “Conversion”) of Kearny MHC (the “MHC”) from the mutual holding company to the stock holding company form of organization and the related public stock offering of Kearny Financial Corp., a Maryland stock corporation (the “Company”), the Bank desires to amend and restate the Prior Plan in order to remove any reference to the MHC structure and to make certain other changes; and

WHEREAS , the Prior Plan was “frozen” to new participants and benefit accruals effective July 1, 2007; and

WHEREAS , the Prior Plan may be amended in accordance with Article 7 of the Prior Plan and this amended and restated Kearny Federal Savings Bank Benefits Equalization Plan for Pension Plan (the “Plan”) shall take effect, and supersede and replace the Prior Plan, as of the date of the Conversion.

NOW, THEREFORE , the Plan shall be implemented on the date of the Conversion.

PURPOSE

The adoption of this Plan has been authorized by the Board of Directors of the Kearny Federal Savings Bank (the “Bank”) solely for the purpose of providing benefits to certain employees of the Bank which would have been payable under the Regulations governing the Comprehensive Retirement Program of the Financial Institutions Retirement Fund, as they may be from time to time amended and as adopted by the Bank, but for the limitations placed on benefits for such employees by Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto (“IRC”).

This plan is intended to constitute a nonqualified unfunded deferred compensation plan for a select group of management or highly compensated employees. All benefits payable under this Plan shall be paid solely out of the general assets of the Bank. No benefits under this Plan shall be payable by the Financial Institutions Retirement Fund or from its assets.

Article 1. Definitions

When used in the Plan, the following terms shall have the following meanings:

1.01 “Actuary” means the independent consulting actuary retained by the Bank to assist the Committee in its administration of the Plan.

1.02 “Bank” means Kearny Federal Savings Bank and each subsidiary or affiliated company thereof which participates in the Plan.

1.03 “Beneficiary” means the beneficiary or beneficiaries designated in accordance with Article 5 of the Plan to receive the benefit, if any, payable upon the death of a member of the Plan.

1.04 “Board of Directors” means the Board of Directors of the Bank.

1.05 “Committee” means the Administrative Committee appointed by the Board of Directors to administer the Plan.

1.06 “Effective Date.” Notwithstanding anything to the contrary contained herein, this Plan shall be subject to the consummation of the Conversion, and shall become effective as of the Effective Date as defined in the Plan of Conversion and Reorganization of Kearny MHC (which for purposes of this Plan shall be referred to as the “Plan of Conversion”). In the event the Plan of Conversion is terminated for any reason, the Plan shall be automatically terminated and become null and void. The Prior Plan shall remain in full force and effect until the Effective Date. Thereafter, on the Effective Date, the Prior Plan shall be terminated without any further action.

1.07 “Fund” means the Financial Institutions Retirement Fund, a qualified and tax-exempt pension plan and trust under Sections 401(a) and 501(a) of the IRC.

1.08 “IRC” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

1.09 “Member” means any person included in the membership of the Plan as provided in Article 2.

1.10 “Plan” means the Kearny Federal Savings Bank Amended and Restated Benefit Equalization Plan for Pension Plan, effective as of the Effective Date of the Conversion.

1.11 “Prior Plan” means the Kearny Federal Savings Bank Benefits Equalization Plan for Pension Plan initially effective date of July 1, 1995 and amended and restated as of January 1, 2009.

1.12 “Regulations” means the Regulations governing the Comprehensive Retirement Program of the Fund as from time to time amended, and as adopted by the Bank.

1.13 “Senior Officer” means an employee of the Employer who has the title of President, Executive Vice President, Vice President, or Corporate Secretary.

Article 2. Membership

2.01 Every Senior Officer of the Employer who is a member of the Fund on the effective date shall become a member of the Plan on the effective date. Every other employee of the Employer shall become a member of the Plan on the first day of the calendar month coincident with or next following the date he is a Senior Officer of the Employer and a member of the Fund.

2.02 If, on the date that payment of a member’s benefit from the Fund commences, the member is not entitled under Section 3.01 below to receive a benefit under the Plan, his membership in the Plan shall terminate on such date.

2.03 A benefit shall be payable under the Plan to or on account of a member only upon the member’s death or Termination of Employment with the Bank.

Article 3. Amount and Payment of Benefits

Notwithstanding any provision in this Plan to the contrary, effective July 1, 2007, there shall be no new participants or additional benefit accruals.

3.01 The amount, if any, of the annual benefit payable to or on account of a member pursuant to the Plan shall equal the excess of (i) over (ii), as determined by the Committee, where:

(i) is the annual benefit (as calculated by the Fund on the basis of the Regular Form of benefits distribution, as detailed at Section 3.02, herein) that would otherwise be payable to or on account of the member by the Fund under the Regulations if the provisions of the Regulations were administered without regard to the limitations imposed by Sections 401(a)(17) and 415 of the IRC; and

(ii) is the annual benefit (as calculated by the Fund on the basis of the Regular Form of benefits distribution, as detailed at Section 3.02, herein) that is payable to or on account of the member by the Fund under the Regulations after giving effect to any reduction of such benefit required by the limitations imposed by Sections 401(a)(17) and 415 of the IRC.

For purposes of this Section 3.01, “annual benefit” includes any “Active Service Death Benefit,” “Disability Benefit,” “Retirement Adjustment Payment,” “Annual Increment,” and “Single Purchase Fixed Percentage Adjustment” which the Bank elected to provide its employees under the Regulations.

3.02 The annual benefit, if any, payable to or on account of a member under Section 3.01 above, shall be converted by the Actuary and shall be payable to or on account of the member in the “Regular Form” of payment, utilizing for that purpose the same actuarial factors and assumptions then used by the Fund to determine actuarial equivalence under the Regulations. For purposes of the Plan the “Regular Form” of payment means an annual benefit payable for the member’s lifetime and the death benefit described in Section 3.03 below.

3.03 Notwithstanding the foregoing, pursuant to Section 1.409A-2(b)(2)(ii) of the treasury Regulations, the member may elect to make a change in the form of a payment from that of the “Regular Form” before any annuity payment has been made under the Plan, from one type of life annuity to another type of life annuity with the same scheduled date for the first annuity payment, and such change will not be considered a change in the time and form of a payment, provided that the annuities are actuarially equivalent applying reasonable actuarial methods and assumptions.

3.04 Upon the death of a member who had commenced the payment of his benefit in the “Regular Form”, a death benefit shall be paid to the member’s beneficiary in a lump sum equal to the excess, if any, of (i) over (ii), where:

(i) is an amount equal to 12 times the annual benefit, if any, payable under Section 3.02 above; and

(ii) is the sum of the benefit payments, if any, which the member had received under the Plan.

Such benefit shall be payable to the Beneficiary within 60 days of the death of the member.

3.05 If a member to whom an annual benefit is payable under the Plan dies before commencement of the payment of his benefit, the death benefit payable under Section 3.02 and 3.04 shall be payable to the member’s beneficiary as if the payment of the member’s benefit had commenced on the first day of the month in which his death occurred. Such benefit shall be payable to the Beneficiary within 60 days of the death of the member.

3.06 If a member is restored to employment with the Bank after payment of his benefit under the Plan has commenced, all payments under the Plan shall thereupon be discontinued. Upon the member’s subsequent retirement or termination of employment with the Bank, his benefit under the Plan shall be recomputed in accordance with Sections 3.01 and 3.02, but shall be reduced by the equivalent value of the amount of any benefit paid by the Plan in respect of his previous retirement or termination of employment, and such reduced benefit shall be paid to such member in accordance with the provisions of the Plan. For purposes of this Section 3.06, the equivalent value of the benefit paid in respect of a member’s previous retirement or termination of employment shall be determined by the Actuary utilizing for that purpose the same actuarial factors and assumptions then used by the Fund to determine actuarial equivalence under the Regulations.

Article 4. Source and Method of Payments

4.01 All payments of benefits under the Plan shall be paid from, and shall only be a general claim upon, the general assets of the Bank, notwithstanding that the Bank, in its discretion, may establish a bookkeeping reserve or a grantor trust (as such term is used in Section

671 through 677 of the IRC) to reflect or to aid it in meeting its obligations under the Plan with respect to any member or prospective member or beneficiary. No benefit whatever provided by the Plan shall be payable from the assets of the Fund. No member shall have any right, title or interest whatever in or to any investments which the Bank may make or any specific assets which the Bank may reserve to aid it in meeting its obligations under the Plan.

4.02 All annual benefits under the Plan shall be paid in monthly installments commencing on the first day of the month next following the member’s Termination of Employment, except that no benefit shall be paid prior to the date benefits under the Plan can be definitely determined by the Committee.

Article 5. Designation of Beneficiaries

5.01 Each member of the Plan may file with the Committee a written designation of one or more persons as the beneficiary who shall be entitled to receive the amount, if any, payable under the Plan upon his death. A member may, from time to time, revoke or change his beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the member’s death, and in no event shall it be effective as of a date prior to such receipt.

5.02 If no such beneficiary designation is in effect at the time of a member’s death, or if no designated beneficiary survives the member, or if, in the opinion of the Committee, such designation conflicts with applicable law, the member’s estate shall be deemed to have been designated his beneficiary an shall be paid the amount, if any, payable under the Plan upon the member’s death. If the Committee is in doubt as to the right of any person to receive such amount, the Committee may retain such amount, without liability for any interest thereon, until the rights thereto are determined, or the Committee may pay such amount into any court of appropriate jurisdiction and such payment shall be a complete discharge of the liability of the Plan and the Bank therefore.

Article 6. Administration of the Plan

6.01 The Board of Directors has delegated to the Administrative Committee, subject to those powers which the Board has reserved as described in Article 7 below, general authority over and responsibility for the administration and interpretation of the Plan. The Committee shall have full power and authority to interpret and construe the Plan, to make all determinations considered necessary or advisable for the administration of the Plan and any trust referred to in Article 4 above, and the calculation of the amount of benefits payable thereunder, and to review claims for benefits under the Plan. The Committee’s interpretations and constructions of the Plan and its decisions or actions thereunder shall be binding and conclusive on all persons for all purposes.

6.02 If the Committee deems it advisable, it shall arrange for the engagement of the Actuary, and legal counsel and certified public accountants (who may be counsel or accountants

for the Bank), and other consultants, and make use of agents and clerical or other personnel, for purposes of the Plan. The Committee may rely upon the written opinions of such Actuary, counsel, accountants and consultants, and upon any information supplied by the Fund for purposes of Section 3.01 of the Plan, and delegate to any agent or to any subcommittee or Committee member its authority to perform any act hereunder, including without limitations those matters involving the exercise of discretion; provided, however, that such delegation shall be subject to revocation at any time at the discretion of the Committee. The Committee shall report to the Board of Directors, or to a committee designated by the Board, at such intervals as shall be specified by the Board or such designated committee, with regard to the matters for which it is responsible under the Plan.

6.03 The Committee shall consist of at least three individuals, each of whom shall be appointed by, shall remain in office at the will of, and may be removed, with or without cause, by the Board of Directors. Any Committee member may resign at any time. No Committee member shall be entitled to act on or decide any matters relating solely to such member or any of his rights or benefits under the Plan. The Committee member shall not receive any special compensation for serving in such capacity but shall be reimbursed for any reasonable expenses incurred in connection therewith. No bond or other security need be required of the Committee or any member thereof in any jurisdiction.

6.04 The Committee shall elect or designate its own Chairman, establish its own procedures and the time and place for its meetings and provide for the keeping of minutes of all meetings. Any action of the Committee may be taken upon the affirmative vote of a majority of the members at a meeting, or at the direction of its Chairman, without a meeting by mail or telephone, provided that all of the Committee members are informed in writing of the vote.

6.05 All claims for benefits under the Plan shall be submitted in writing to the Chairman of the Committee. Written notice of the decision on each such claim shall be furnished with reasonable promptness to the member or his beneficiary (the “claimant”). The claimant may request a review by the Committee of any decision denying the claim in whole or in part. Such request shall be made in writing and filed with the Committee within 30 days of such denial. A request for review shall contain all additional information which the claimant wishes the Committee to consider. The Committee may hold any hearing or conduct any independent investigation which it deems desirable to render its decision and the decision on review shall be made as soon as feasible after the Committee’s receipt of the request for review. Written purposes under the Plan, such decisions on claims (where no review is requested) and decisions on review (where review is requested) shall be final, binding and conclusive on all interested persons as to all matters relating to the Plan.

6.06 All expenses incurred by the Committee in its administration of the Plan shall be paid by the Bank.

Article 7. Amendment and Termination

The Board of Directors may amend, suspend or terminate, in whole or in part, the Plan without the consent of the Committee, any member, beneficiary or other person, except that no

amendment, suspension or termination shall retroactively impair or otherwise adversely affect the rights of any member, beneficiary or other person to benefits under the Plan which have accrued prior to the date of such action, as determined by the Committee in its sole discretion. The Committee may adopt any amendment or take any other action which may be necessary or appropriate to facilitate the administration, management and interpretation of the Plan or to conform the Plan thereto, provided any such amendment or action does not have a material effect on the then currently estimated cost to the Bank of maintaining the Plan.

Upon a termination of the Plan, the member may receive a lump sum payment immediately paid to the member (without regard to any actual Termination of Employment) or designated Beneficiary, provided, however, any such distributions to be made in accordance with this Article 7 shall comply with the requirements and limitation under IRC Section 409A, including that such lump-sum distribution shall only be made: (1) within thirty (30) days before, or twelve (12) months after a Change in Control as defined below, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all of the Bank’s arrangements which are substantially similar to the Plan are terminated so the member and all participants under similar arrangements shall receive all amounts of deferred compensation under such terminated agreements within twelve (12) months of the termination of the arrangements; (2) Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Plan are included in the member’s gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or (3) Upon the Bank’s termination of this and all other non-account balance plans (as referenced in IRC Section 409A or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new non-account balance plans for a minimum of three (3) years following the date of such termination.

For purposes of this Plan, the term “Change in Control” shall mean the occurrence of any of the following events:

(i) Merger : The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(ii) Acquisition of Significant Share Ownership : There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(iii) Change in Board Composition : During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or

(iv) Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.

Notwithstanding the foregoing, the Conversion shall not be considered a “Change in Control” for purposes of this Agreement.

Article 8. General Provisions

8.01 The Plan shall be binding upon and inure to the benefit of the Bank and its successors and assigns and the members, and the successors, assigns, designees, and estates of the members. The Plan shall also be binding upon and inure to the benefit of any successor organization succeeding to substantially all of the assets and business of the Bank, but nothing in the Plan shall preclude the Bank from merging or consolidating into or with, or transferring all or substantially all of its assets to, another organization which assumes the Plan and all obligations of the Bank hereunder. The Bank agrees that it will make appropriate provision for the preservation of members’ rights under the Plan in any agreement or plan which it may enter into to effect any merger, consolidation, reorganization or transfer of assets. Upon such a merger, consolidation, reorganization, or transfer of assets and assumption of Plan obligations of the Bank, the term “Bank” shall refer to such other organization and the Plan shall continue in full force and effect.

8.02 Neither the Plan nor any action taken thereunder shall be construed as giving to a member the right to be retained in the employ of the Bank or as affecting the right of the Bank to dismiss any member from its employ.

8.03 The Bank shall withhold or cause to be withheld from all benefits payable under the Plan all federal, state, local or other taxes required by applicable law to be withheld with respect to such payments.

8.04 No right or interest of a member under the Plan may be assigned, sold, encumbered, transferred or otherwise disposed of and any attempted disposition of such right or interest shall be null and void.

8.05 If the Committee shall find that any person to whom any amount is or was payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has

died, then any payment, or any part thereof, due to such person or his estate (unless a prior claim therefor has been made by a duly appointed legal representative), may, if the Committee is inclined, be paid to such person’s spouse, child or other relative, an institution maintaining or having custody of such person, or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be in complete discharge of the liability of the Plan and the Bank therefor.

8.06 To the extent that any person acquires a right to receive payments from the Bank under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Bank.

8.07 All elections, designations, requests, notices, instructions, and other communications from a member, beneficiary or other person to the Committee required or permitted under the Plan shall be in such form as is prescribed from time to time by the Committee and shall be mailed by first-class mail or delivered to such location as shall be specified by the Committee and shall be deemed to have been given and delivered only upon actual receipt thereof at such location.

8.08 The benefits payable under the Plan shall be in addition to all other benefits provided for employees of the Bank and shall not be deemed salary or other compensation by the Bank for the purpose of computing benefits to which he may be entitled under any other plan or arrangement of the Bank.

8.09 No Committee member shall be personally liable by reason of any instrument executed by him or on his behalf, or action taken by him, in his capacity as a Committee member nor for any mistake of judgment made in good faith. The Bank shall indemnify and hold harmless the Fund and each Committee member and each employee, officer or director of the Bank or the Fund, to whom any duty, power, function or action in respect of the Plan may be delegated or assigned, or from whom any information is requested for Plan purposes, against any cost or expense (including fees of legal counsel) and liability (including any sum paid in settlement of a claim or legal action with the approval of the Bank) arising out of anything done or omitted to be done in connection with the Plan, unless arising out of such person’s fraud or bad faith.

8.10 As used in the Plan, the masculine gender shall be deemed to refer to the feminine, and the singular person shall be deemed to refer to the plural, wherever appropriate.

8.11 The captions preceding the sections of the Plan have been inserted solely as a matter of convenience and shall not in any manner define or limit the scope or intent of any provisions of the Plan.

8.12 The Plan shall be construed according to the laws of the State of New Jersey in effect from time to time.

Article 9 Section 409A Compliance.

9.01 Notwithstanding anything herein to the contrary, the Committee shall make reasonable efforts to administer the Plan and make benefit payments hereunder in a manner that is not deemed to be contrary to the requirements set forth at IRC Section 409A and regulations and notices promulgated thereunder such that any payments made would result in the requirement for the recipient of such payments to pay additional interest and taxes to be imposed in accordance with IRC Section 409A(a)(1)(B); provided, however, neither the Bank, nor the Committee shall have any responsibility to a member or Beneficiary with respect to any tax liabilities that may be applicable to any payments made by the Plan.

9.02 If any provision of the Plan shall be determined to be inconsistent with the requirements of IRC Section 409A, then, the Plan shall be construed, to the maximum extent possible, to give effect to such provision in a manner consistent with IRC Section 409A, and if such construction is not possible, as if such provision had never been included.

9.03 Delay of Payment Commencement to Specified Employees. Notwithstanding any provision in the Plan to the contrary, if a member is a Specified Employee, such member’s benefit payments shall become first payable to him or her as of the first day of the seventh month next following his or her Termination of Employment, if and only if such payments, if made earlier, would result in the recipient of such payments to pay additional interest and taxes to be imposed in accordance with IRC Section 409A(a)(1)(B); provide that such payment delay shall not be required in the event of the death or Disability of a member. “Specified Employee” shall mean a key employee who, at any time during the plan year, is (i) an officer of the Bank having an annual compensation greater than $150,000 (as indexed), (ii) a 5-percent owner of Company, or (iii) a 1-percent owner of the Company having an annual compensation from the Bank greater than $150,000; provided, however, that this subparagraph shall only be effective if the stock of the Bank or the Company (or another parent corporation of the Bank or the Company) is publicly traded as set forth at Section 409A(a)(2)(B)(i).

9.04 Subsequent Changes to Time and Form of Payment. The Bank may permit a subsequent change to the time and form of benefit distributions. Any such change must be submitted in writing by the member to the Bank and shall be considered made only when it becomes irrevocable under the terms of the Plan. Any change will be considered irrevocable not later than thirty (30) days following acceptance of the change by the Committee, subject to the following rules:

(i) the subsequent deferral election may not take effect until at least twelve (12) months after the date on which the election is made;

(ii) the payment (except in the case of death, Disability, or unforeseeable emergency) upon which the subsequent deferral election is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have been paid; and

(iii) in the case of a payment made at a specified time, the election to make a change must be made not less than twelve (12) months before the date the payment is scheduled to be paid.

9.05 Termination of Employment” shall have the same meaning as “separation from service”, as that phrase is defined in IRC Section 409A (taking into account all rules and presumptions provided for in the Section 409A regulations). No separation from service is deemed to occur due to military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the member’s right to reemployment is provided by law or contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the member will return to perform services for the Bank. If the period of leave exceeds six months and the member does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the member to be unable to perform the duties of his position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period. Whether a “Termination of Employment” takes place is determined based on whether the facts and circumstances indicate that the Bank and member reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the member would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Bank if the member has been providing services to the Bank less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the member continues to be treated as an employee for other purposes (such as continuation of salary and participation in employee benefit programs), whether similarly situated service providers have been treated consistently, and whether the member is permitted, and realistically available, to perform services for other service recipients in the same line of business. The member is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the member during the immediately preceding 36-month period. The member will be presumed not to have separated from service where the level of bona fide services performed continues at a level that is a 50 percent or more of the average level of service performed by the member during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide services performed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that the Bank and the member reasonably anticipated that as of a certain date the level of bona fide services would be reduced permanently to a level less than or equal to 20 percent of the average level of bona fide services provided during the immediately preceding 36-month period or full period of services provided to the Bank if the member has been providing services to the Bank for a period of less than 36 months (or that the level of bona fide services would not be so reduced). For periods during which the member is on

a paid bona fide leave of absence and has not otherwise terminated employment, the member is treated as providing bona fide services at a level equal to the level of services that the member would have been required to perform to receive the compensation paid with respect to such leave of absence. Periods during which the member is on an unpaid bona fide leave of absence and has not otherwise terminated employment are disregarded for purposes of determining the applicable 36-month (or shorter) period).

9.06 De Minimus Lump Sum Payment. Notwithstanding the foregoing, the Bank may, in its sole discretion, commence pay-out of a member’s annual benefit at any time, provided that such pay-out amount shall be in an amount equal to not less than the lump sum value of such annual benefit balance determined on the date of such pay-out; provided that such pay-out (1) accompanies the termination of the member’s entire interest under the Plan and all similar arrangements that constitute a non-account balance plan under Regulations at Section 1.409A-1(c)(2) applicable to IRC Section 409A and (2) the payment is not greater than the applicable dollar amount under IRC Section 402(g)(1)(B).

9.07 Disability shall mean: the member: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors of the Bank.

This Benefit Equalization Plan has been duly adopted this ___ day of ___________, ______, to be effective as of the Effective Date of the Conversion.

Kearny Federal Savings Bank

Craig L. Montanaro, President and

Chief Executive Officer

Attest:

Sharon Jones

Corporate Secretary

Exhibit 10.16

KEARNY FEDERAL SAVINGS BANK

AMENDED AND RESTATED

BENEFITS EQUALIZATION PLAN RELATED TO THE

EMPLOYEE STOCK OWNERSHIP PLAN

WHEREAS , Kearny Federal Savings Bank has previously adopted the Kearny Federal Savings Bank Benefit Equalization Plan related to the Employee Stock Ownership Plan as amended and restated effective January 1, 2009 (the “Prior Plan”); and

WHEREAS , in connection with the conversion of Kearny MHC (the “MHC”) from the mutual holding company to the stock holding company form of organization (the “Conversion”), the Bank desires to amend and restate the Prior Plan in order to conform the definition of “change in control” to that of other benefits arrangements that are amended and restated or adopted in connection with the Conversion and to make certain other changes; and

WHEREAS , the Prior Plan may be amended in accordance with Section 8.01 of the Prior Plan and this Kearny Federal Savings Bank Amended and Restated Benefits Equalization Plan related to the Employee Stock Ownership Plan (the “Plan”) shall take effect, and supersede and replace the Prior Plan, as of the date of the Conversion.

NOW, THEREFORE , the Plan shall be implemented on the date of the Conversion.

Article I

Introduction

Section 1.01 Purpose, Design and Intent.

(a) The purpose of the Plan is to assist Kearny Federal Savings Bank (the “Bank”) and its affiliates in retaining the services of key employees, to induce such employees to use their best efforts to enhance the business of the Bank and its affiliates, and to provide certain supplemental retirement benefits to such employees.

(b) The Plan, in relevant part, is intended to constitute an unfunded “excess benefit plan” as defined in Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended. In this respect, the Plan is specifically designed to provide certain key employees with retirement benefits that would have been provided under various tax qualified retirement plans sponsored by the Bank but for the applicable limitations placed on benefits and contributions under such plans by various provisions of the Internal Revenue Code of 1986, as amended.

Article II

Definitions

Section 2.01 Definitions. In this Plan, whenever the context so indicates, the singular or the plural number and the masculine or feminine gender shall be deemed to include the other, the terms “he,” “his,” and “him,” shall refer to a Participant or a beneficiary of a Participant, as the case may be, and, except as otherwise provided, or unless the context otherwise requires, the capitalized terms shall have the following meanings:

“Affiliate” means any corporation, trade or business, which, at the time of reference, is together with the Bank, a member of a controlled group of corporations, a group of trades or businesses (whether or not incorporated) under common control, or an affiliated service group, as described in Sections 414(b), 414(c), and 414(m) of the Code, respectively, or any other organization treated as a single employer with the Bank under Section 414(o) of the Code.

“Applicable Limitations” means one or more of the following, as applicable:

(i) the maximum limitations on annual additions to a tax-qualified defined contribution plan under Section 415(c) of the Code; and

(ii) the maximum limitation on the annual amount of compensation that may, under Section 401(a)(17) of the Code, be taken into account in determining contributions to and benefits under tax-qualified plans.

“Bank” means Kearny Federal Savings Bank, and its successors.

“Board of Directors” means the Board of Directors of the Bank.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the person(s) designated by the Board of Directors, pursuant to Section 9.02 of the Plan, to administer the Plan.

“Common Stock” means the common stock of the Company.

“Company” means Kearny Financial Corp., a Maryland stock corporation, and any successors thereto.

“Disability” (total and permanent disability) means total and permanent disability within the meaning of the Social Security Act.

“Effective Date.” Notwithstanding anything to the contrary contained herein, this Plan shall be subject to the consummation of the Conversion, and shall become effective as of the Effective Date as defined the Plan of Conversion and Reorganization of Kearny MHC (which for purposes o this Plan shall be referred to as the “Plan of Conversion”). In the event the Plan of Conversion is terminated for any reason, the Plan shall be automatically terminated and become null and void. The Prior Plan shall remain in full force and effect until the Effective Date. Thereafter, on the Effective Date, the Prior Plan shall be terminated without any further action.

“Eligible Individual” means any Employee who participates in the ESOP, and whom the Board of Directors determines is one of a “select group of management or highly compensated employees,” as such phrase is used for purposes of Sections 101, 201, and 301 of ERISA.

“Employee” means any person employed by the Bank or an Affiliate.

“Employer” means the Bank or Affiliate thereof that employs the Employee.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ESOP” means the Kearny Federal Savings Bank Employee Stock Ownership Plan and Trust, as amended from time to time.

“ESOP Valuation Date” means any day as of which the income, assets and investment experience of the trust fund of the ESOP is determined and individuals’ accounts under the ESOP are adjusted accordingly.

“Participant” means an Eligible Employee who is entitled to benefits under the Plan.

“Plan” means the Kearny Federal Savings Bank Amended and Restated Benefits Equalization Plan related to the Employee Stock Ownership Plan, effective as of the Effective Date of the Conversion.

“ Prior Plan ” means the Kearny Federal Savings Bank Benefits Equalization Plan related to the Employee Stock Ownership Plan as amended and restated effective January 1, 2009.

“Supplemental ESOP Account” means an account established by an Employer, pursuant to Section 5.01 of the Plan, with respect to a Participant’s Supplemental ESOP Benefit.

“Supplemental ESOP Benefit” means the benefit credited to a Participant pursuant to Section 4.01 of the Plan.

Article III

Eligibility and Participation

Section 3.01 Eligibility and Participation.

(a) Each Eligible Employee may participate in the Plan. An Eligible Employee shall become a Participant in the Plan upon designation as such by the Board of Directors. An Eligible Employee whom the Board of Directors designates as a Participant in the Plan shall commence participation as of the date established by the Board of Directors. The Board of Directors shall establish an Eligible Employee’s date of participation at the same time it designates the Eligible Employee as a Participant in the Plan.

(b) The Board of Directors may, at any time, designate an Eligible Employee as a Participant for any or all supplemental benefits provided for under Article IV of the Plan.

Article IV

Benefits

Section 4.01 Supplemental ESOP Benefit.

As of each ESOP Valuation Date of the ESOP, the Employer shall credit the Participant’s Supplemental ESOP Account with a Supplemental ESOP Benefit equal to the excess of (I) over (II), where:

(a) (I) equals the increase in the amount of cash and stock that would have been allocated to the Participant’s Accounts for the respective ESOP Valuation Date in excess of the aggregate amount that would have been credited to such Participant’s Accounts as of the prior ESOP Valuation Date based upon the allocation of: 1) current plan year dividends on previously allocated stock, 2) dividends on unallocated stock, 3) other ESOP Trust earnings, 4) plan forfeitures, and 5) Employer contributions under the ESOP, determined as if the provisions of the ESOP were administered for the current ESOP Valuation Date and all prior ESOP Valuation Dates without regard to any of the Applicable Limitations; and

(b) (II) equals the amount of cash and stock actually allocated to the Participant’s Accounts under the provisions of the ESOP for that particular ESOP Valuation Date, after giving effect to any reduction of such allocation required by any of the Applicable Limitations.

Article V

Accounts

Section 5.01 Supplemental ESOP Benefit Account.

For each Participant who is credited with a benefit pursuant to Section 4.01 of the Plan, the Employer shall establish, as a memorandum account on its books, a Supplemental ESOP Account. Each year, the Committee shall credit to the Participant’s Supplemental ESOP Account the amount of benefits determined under Section 4.01 of the Plan for that year. The Committee shall credit the account with an amount equal to the appropriate number of shares of Common Stock or other medium of contribution that would have otherwise been made to the Participant’s accounts under the ESOP but for the limitations imposed by the Code. Shares of Common Stock shall be valued under this Plan in the same manner as under the ESOP. Cash contributions credited to a Participant’s Supplemental ESOP Account shall be credited annually with interest at a rate equal to the combined weighted return provided to the Participant’s non-stock accounts under the ESOP.

Article VI

Supplemental Benefit Payments

Section 6.01 Payment of Supplemental ESOP Benefit.

(a) Except in the case of a Participant’s death or Disability, a Participant’s Supplemental ESOP Benefit shall be paid to the Participant in the form of a lump-sum payment within 60 days after the date of Termination of Employment of the Participant in the form of shares of Common Stock of the Company; provided however, if this Plan is unable to make distributions in the form of Common Stock due to regulatory limitations, then distributions of such portion of the Supplemental ESOP Benefit shall be made in cash with such amounts to be valued based upon the fair market value of such Common Stock at the time of such distribution. Notwithstanding any provision in the Plan to the contrary, pursuant to Section 6.01(c), if a Participant is a Specified Employee, such Participant’s benefit payments shall become first payable to him or her as of the first day of the seventh month next following his or her Termination of Employment. Distributions upon the death or Disability of the Participant shall be made in the form of a lump-sum within 60 days of the date of death or Disability of the Participant.

(b) A Participant shall have a non-forfeitable right to the Supplemental ESOP Benefit credited to him under this Plan in the same non-forfeitable percentage as such Participant has non-forfeitable benefits allocated to him under the ESOP at the time such benefits under the ESOP become distributable.

(c) The Bank shall withhold such amounts of cash or stock as it deems necessary with respect to any distributions to be made by the Plan in order to satisfy its tax withholding obligations under applicable Federal, State or local law.

Section 6.02 Alternative Payment of Benefits.

Notwithstanding the other provisions of this Article VI, a Participant may, with prior written consent of the Committee and upon such terms and conditions as the Committee may impose, request that the Supplemental ESOP Benefit to which he is entitled be paid commencing at a different time, over a different period, in a different form, or to different persons, than the benefit to which he or his beneficiary may be entitled under the ESOP; provided, however, any such request for an alternative distribution time or period (except in the case of death or Disability) shall not be effective for one year from the date that such request is filed with the Committee and such election to defer the starting date of a previously elected deferral shall require that such additional deferral shall be for a period of not less than five years from the date that such payment would otherwise have been made.

Section 6.03 Section 409A Compliance.

(a) Notwithstanding anything herein to the contrary, the Committee shall make reasonable efforts to administer the Plan and make benefit payments hereunder in a manner that is not deemed to be contrary to the requirements set forth at Section 409A of the Code and regulations and notices promulgated thereunder such that any payments made would result in the requirement for the recipient of such payments to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(1)(B) of the Code; provided, however, neither the Bank, nor the Committee shall have any responsibility to a Participant or Beneficiary with respect to any tax liabilities that may be applicable to any payments made by the Plan.

(b) If any provision of the Plan shall be determined to be inconsistent with the requirements of Section 409A of the Code, then, the Plan shall be construed, to the maximum extent possible, to give effect to such provision in a manner consistent with Section 409A of the Code, and if such construction is not possible, as if such provision had never been included.

(c) Delay of Payment Commencement to Specified Employees. Notwithstanding any provision in the Plan to the contrary, if a Participant is a Specified Employee, such Participant’s benefit payments shall become first payable to him or her as of the first day of the seventh month next following his or her Termination of Employment, if and only if such payments, if made earlier, would result in the recipient of such payments to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(1)(B) of the Code; provide that such payment delay shall not be required in the event of the death or Disability of a Participant. “Specified Employee” shall mean a key employee who, at any time during the plan year, is (i) an officer of the Bank having an annual compensation greater than $150,000 (as indexed), (ii) a 5-percent owner of Company, or (iii) a 1-percent owner of the Company having an annual compensation from the Bank greater than $150,000; provided, however, that this subparagraph shall only be effective if the stock of the Bank or the Company (or another parent corporation of the Bank or the Company) is publicly traded as set forth at Section 409A(a)(2)(B)(i).

(d) Request to Delay Payment by Participant. Any request by a Participant to delay the commencement date of the Supplemental ESOP Benefit shall be detailed in writing and approved by the Committee not less than one year prior to the date that such request is filed with the Committee and such payment commencement date shall not be earlier than five years from the commencement date absent such subsequent written request.

(e) Termination of Employment” shall have the same meaning as “separation from service”, as that phrase is defined in Section 409A of the Code (taking into account all rules and presumptions provided for in the Section 409A regulations). No separation from service is deemed to occur due to military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Participant’s right to reemployment is provided by law or contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Bank. If the period of leave exceeds six months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period.

Whether a “Termination of Employment” takes place is determined based on whether the facts and circumstances indicate that the Bank and Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Bank if the Participant has been providing services to the Bank less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Participant continues to be treated as an employee for other purposes (such as continuation of salary and participation in employee benefit programs), whether similarly situated service providers have been treated consistently, and whether the Participant is permitted, and realistically available, to perform services for other service recipients in the same line of business. The Participant is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the Participant during the immediately preceding 36-month period. The Participant will be presumed not to have separated from service where the level of bona fide services performed continues at a level that is a 50 percent or more of the average level of service performed by the Participant during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide services performed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that the Bank and the Participant reasonably anticipated that as of a certain date the level of bona fide services would be reduced permanently to a level less than or equal to 20 percent of the average level of bona fide services provided during the immediately preceding 36-month period or full period of services provided to the Bank if the Participant has been providing services to the Bank for a period of less than 36 months (or that the level of bona fide services would not be so reduced).

For periods during which the Participant is on a paid bona fide leave of absence and has not otherwise terminated employment, the Participant is treated as providing bona fide services at a level equal to the level of services that the Participant would have been required to perform to receive the compensation paid with respect to such leave of absence. Periods during which the Participant is on an unpaid bona fide leave of absence and has not otherwise terminated employment are disregarded for purposes of determining the applicable 36-month (or shorter) period).

(f) De Minimus Lump Sum Payment. Notwithstanding the foregoing, the Bank may, in its sole discretion, commence pay-out of a Participant’s account balance at any time, provided that such pay-out amount shall be in an amount equal to not less than the lump sum value of such account balance determined on the date of such pay-out; provided that such pay-out (1) accompanies the termination of the Participant’s entire interest under the Plan and all similar arrangements that constitute an account balance plan under Regulations at Section 1.409A-1 ^© (2) applicable to Section 409A of the Code; and (2) the payment is not greater than the applicable dollar amount under Section 402(g)(1)(B) of the Code.

Article VII

Claims Procedures

Section 7.01 Claims Reviewer.

For purposes of handling claims with respect to this Plan, the “Claims Reviewer” shall be the Committee, unless the Committee designates another person or group of persons as Claims Reviewer.

Section 7.02 Claims Procedure.

(a) An initial claim for benefits under the Plan must be made by the Participant or his beneficiary or beneficiaries in accordance with the terms of this Section 7.02.

(b) Not later than ninety (90) days after receipt of such a claim, the Claims Reviewer will render a written decision on the claim to the claimant, unless special circumstances require the extension of such 90-day period. If such extension is necessary, the Claims Reviewer shall provide the Participant or the Participant’s beneficiary or beneficiaries with written notification of such extension before the expiration of the initial 90-day period. Such notice shall specify the reason or reasons for the extension and the date by which a final decision can be expected. In no event shall such extension exceed a period of ninety (90) days from the end of the initial 90-day period.

(c) In the event the Claims Reviewer denies the claim of a Participant or any beneficiary in whole or in part, the Claims Reviewer’s written notification shall specify, in a manner calculated to be understood by the claimant, the reason for the denial; a reference to the Plan or other document or form that is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim; an explanation as to why such information or material is necessary; and an explanation of the applicable claims procedure.

(d) Should the claim be denied in whole or in part and should the claimant be dissatisfied with the Claims Reviewer’s disposition of the claimant’s claim, the claimant may have a full and fair review of

the claim by the Committee upon written request submitted by the claimant or the claimant’s duly authorized representative and received by the Committee within sixty (60) days after the claimant receives written notification that the claimant’s claim has been denied. In connection with such review, the claimant or the claimant’s duly authorized representative shall be entitled to review pertinent documents and submit the claimant’s views as to the issues, in writing. The Committee shall act to deny or accept the claim within sixty (60) days after receipt of the claimant’s written request for review unless special circumstances require the extension of such 60-day period. If such extension is necessary, the Committee shall provide the claimant with written notification of such extension before the expiration of such initial 60-day period. In all events, the Committee shall act to deny or accept the claim within 120 days of the receipt of the claimant’s written request for review. The action of the Committee shall be in the form.

(e) In no event may a claimant commence legal action for benefits the claimant believes are due the claimant until the claimant has exhausted all of the remedies and procedures afforded the claimant by this Article VII.

Article VIII

Amendment and Termination

Section 8.01 Amendment of the Plan.

The Bank may from time to time and at any time amend the Plan; provided, however, that such amendment may not adversely affect the rights of any Participant or beneficiary with respect to any benefit under the Plan to which the Participant or beneficiary may have previously become entitled prior to the effective date of such amendment without the consent of the Participant or beneficiary. The Committee shall be authorized to make minor or administrative changes to the Plan, as well as amendments required by applicable federal or state law (or authorized or made desirable by such statutes); provided, however, that such amendments must subsequently be ratified by the Board of Directors.

Section 8.02 Termination of the Plan.

The Bank may at any time terminate the Plan; provided, however, that such termination may not adversely affect the rights of any Participant or beneficiary with respect to any benefit under the Plan to which the Participant or beneficiary may have previously become entitled to prior to the effective date of such termination without the consent of the Participant or beneficiary. Any amounts credited to the Supplemental ESOP Account of any Participant shall remain subject to the provisions of the Plan. Upon a termination of the Plan, the Participant may receive a lump sum payment immediately paid to the Participant (without regard to any actual Termination of Employment) or designated Beneficiary, provided, however, any such distributions to be made in accordance with this Section 8.4 shall comply with the requirements and limitation under Section 409A of the Code, including that such lump-sum distribution shall only be made: (1) within thirty (30) days before, or twelve (12) months after a Change in Control as defined below, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all of the Bank’s arrangements which are substantially similar to the Plan are terminated so the Participant and all participants under similar arrangements shall receive all amounts of deferred compensation under such terminated agreements within twelve (12) months of the termination of the arrangements; (2) Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the

Plan are included in the Participant’s gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or (3) Upon the Bank’s termination of this and all other account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new account balance plans for a minimum of three (3) years following the date of such termination.

For purposes of this Plan, the term “Change in Control” shall mean the occurrence of any of the following events:

(iv) Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.

Notwithstanding the foregoing, the Conversion shall not be considered a “Change in Control” for purposes of this Agreement.

Article IX

General Provisions

Section 9.01 Unfunded, Unsecured Promise to Make Payments in the Future.

The right of a Participant or any beneficiary to receive a distribution under this Plan shall be an unsecured claim against the general assets of the Bank or its Affiliates, and neither a Participant, nor his designated beneficiary or beneficiaries, shall have any rights in or against any amount credited to any account under this Plan or any other assets of the Bank or an Affiliate. The Plan at all times shall be considered entirely unfunded both for tax purposes and for purposes of Title I of ERISA. Any funds invested hereunder shall continue for all purposes to be part of the general assets of the Bank or an Affiliate and available to its general creditors in the event of bankruptcy or insolvency. Accounts under this Plan and any benefits which may be payable pursuant to this Plan are not subject in any manner to anticipation, sale, alienation, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of a Participant or a Participant’s beneficiary. The Plan constitutes a mere promise by the Bank or Affiliate to make benefit payments in the future. No interest or right to receive a benefit may be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such Participant or beneficiary, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

Section 9.02 Committee as Plan Administrator.

(a) The Plan shall be administered by the Committee designated by the Board of Directors of the Bank.

(b) The Committee shall have the authority, duty and power to interpret and construe the provisions of the Plan as it deems appropriate. The Committee shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. In addition, the Committee shall have the authority and power to delegate any of its administrative duties to employees of the Bank or an Affiliate, as they may deem appropriate. The Committee shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Bank with respect to the Plan. The interpretations, determinations, regulations and calculations of the Committee shall be final and binding on all persons and parties concerned.

Section 9.03 Expenses.

Expenses of administration of the Plan shall be paid by the Bank or an Affiliate.

Section 9.04 Statements.

The Committee shall furnish individual annual statements of accrued benefits to each Participant, or current beneficiary, in such form as determined by the Committee or as required by law.

Section 9.05 Rights of Participants and Beneficiaries.

(a) The sole rights of a Participant or beneficiary under this Plan shall be to have this Plan administered according to its provisions and to receive whatever benefits he or she may be entitled to hereunder.

(b) Nothing in the Plan shall be interpreted as a guaranty that any funds in any trust which may be established in connection with the Plan or assets of the Bank or an Affiliate will be sufficient to pay any benefit hereunder.

(c) The adoption and maintenance of this Plan shall not be construed as creating any contract of employment or service between the Bank or an Affiliate and any Participant or other individual. The Plan shall not affect the right of the Bank or an Affiliate to deal with any Participants in employment or service respects, including their hiring, discharge, compensation, and other conditions of employment or service.

Section 9.06 Incompetent Individuals.

The Committee may, from time to time, establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to a Participant or beneficiary in the event that such Participant or beneficiary is declared incompetent and a conservator or other person is appointed and legally charged with that Participant’s or beneficiary’s care. Except as otherwise provided for herein, when the Committee determines that such Participant or beneficiary is unable to manage his financial affairs, the Committee may pay such Participant’s or beneficiary’s benefits to such conservator, person legally charged with such Participant’s or beneficiary’s care, or institution then contributing toward or providing for the care and maintenance of such Participant or beneficiary. Any such payment shall constitute a complete discharge of any liability of the Bank or an Affiliate and the Plan for such Participant or beneficiary.

Section 9.07 Sale, Merger or Consolidation of the Bank.

The Plan may be continued after a sale of assets of the Bank, or a merger or consolidation of the Bank into or with another corporation or entity only if, and to the extent that, the transferee, purchaser or successor entity agrees to continue the Plan. Additionally, upon a merger, consolidation or other change in control of the Bank or its parent company any amounts credited to a Participant’s Supplemental ESOP Account shall be placed in a grantor trust to the extent not already in such a trust. In the event that the Plan is not continued by the transferee, purchaser or successor entity, then the Plan shall be terminated subject to the provisions of Section 8.02 of the Plan. Any legal fees incurred by a Participant in determining benefits to which such Participant is entitled under the Plan following a sale, merger, or consolidation of the Bank or an Affiliate of which the Participant is an Employee or, if applicable, a member of the Board of Directors, shall be paid by the resulting or succeeding entity.

Section 9.08 Location of Participants.

Each Participant shall keep the Bank informed of his current address and the current address of his designated beneficiary or beneficiaries. The Bank shall not be obligated to search for any person. If such person is not located within three (3) years after the date on which payment of the Participant’s benefits payable under this Plan may first be made, payment may be made as though the Participant or his beneficiary had died at the end of such three-year period.

Section 9.09 Liability of the Bank and its Affiliates.

Notwithstanding any provision herein to the contrary, neither the Bank nor any individual acting as an employee or agent of the Bank shall be liable to any Participant, former Participant, beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Bank or any such employee or agent of the Bank.

Section 9.10 Governing Law.

All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the United States and, to the extent not preempted by such laws, by the laws of the State of New Jersey.

Having been adopted by its Board of Directors, this Plan is executed by its duly authorized officer this __ day of ___________, ______, the Effective Date of the Conversion.

KEARNY FEDERAL SAVINGS BANK

By:

Attest: Sharon Jones, Corporate Secretary

Exhibit 10.18

KEARNY FINANCIAL CORP.

2005 STOCK COMPENSATION AND INCENTIVE PLAN

Amendment Number One

WHEREAS , Kearny Financial Corp. (the “ Company ”) maintains the Kearny Financial Corp. 2005 Stock Compensation and Incentive Plan (the “ Plan ”); and

WHEREAS , in connection with the conversion of Kearny MHC from the mutual holding company to the stock holding company form of organization (the “Conversion”), the Company wishes to amend the Plan in order to use a uniform definition of change in control in all benefit plans and arrangements sponsored by the Company and Kearny Federal Savings Bank; and

WHEREAS , pursuant to Section 9.6(d) of the Plan, the Company may amend the Plan from time to time.

NOW THEREFORE , the Plan is hereby amended as follows, effective as of the effective date of the Conversion:

The definition of “Change in Control” at Section 2 of the Plan is hereby amended to read as follows:

“Change in Control.” For purposes of this Plan, the term “Change in Control” shall mean the occurrence of any of the following events:

(i)

(ii)

(iii)

Change in Board Composition : During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or

(iv)

Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.

Notwithstanding the foregoing, the Conversion shall not be considered a “Change in Control” for purposes of this Plan.”

IN WITNESS WHEREOF , the Company has adopted this Amendment, on the date set forth below.

Exhibit 10.20

KEARNY FEDERAL SAVINGS BANK

DIRECTOR LIFE INSURANCE AGREEMENT

Amendment

WHEREAS , Kearny Federal Savings Bank (the “ Bank ”) has entered into a Director Life Insurance Agreement (“Agreement”) with [name] (the “Insured”); and

WHEREAS , the Bank wishes to amend the Agreement to conform the definition of “Change in Control” with that of other arrangements sponsored by the Bank and to eliminate references to the “Office of Thrift Supervision” in the Agreement; and

WHEREAS , pursuant to Section XIV of the Agreement, the Bank may amend the Agreement at any time prior to Change in Control and during the lifetime of the Insured.

NOW THEREFORE , the Agreement is amended by deleting Section VIII in its entirety and replacing it with the following new Article VIII:

“If a Change of Control shall occur prior to the Insured’s termination of service or Retirement, then the death benefit coverage set forth in Section VI shall remain in effect until the Insured’s death notwithstanding the conditions of age and/or years of service set forth at Section VI, unless this Agreement is otherwise terminated pursuant to its terms not less than one year prior to such date of a Change in Control. For the avoidance of doubt, this Agreement may not be amended or terminated after a Change in Control. Coverage under this Agreement for the Insured who terminates service with the Bank (for reasons other than death or prior to a Change in Control) prior to satisfaction of the Retirement requirements of Section VI (and prior to the occurrence of a Change of Control) will cease on his or her last day of service as a member of the Board of the Bank.

For purposes of the above, a “Change of Control” shall mean:

(i) Merger : Kearny Financial Corp. (the “Company”) or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or

(iv) Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.”

IN WITNESS WHEREOF, the Bank has adopted this Amendment, on and effective as of the date set forth below.

Exhibit 10.22

KEARNY FEDERAL SAVINGS BANK

EXECUTIVE LIFE INSURANCE AGREEMENT

Amendment

WHEREAS , Kearny Federal Savings Bank (the “ Bank ”) has entered into an Executive Life Insurance Agreement (“Agreement”) with [name] (the “Insured”); and

WHEREAS , pursuant to Section XIV of the Agreement, the Bank may amend the Agreement at any time prior to Change in Control and during the lifetime of the Insured.

NOW THEREFORE , the Agreement is amended by deleting Section VIII in its entirety and replacing it with the following new Article VIII:

For purposes of the above, a “Change of Control” shall mean:

(iv) Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.”

IN WITNESS WHEREOF, the Bank has adopted this Amendment, on and effective as of the date set forth below.

Exhibit 10.24

KEARNY FEDERAL SAVINGS BANK

OFFICER CHANGE IN CONTROL SEVERANCE PAY PLAN

A.	Purpose .

The primary purpose of the Kearny Federal Savings Bank Officer Change in Control Severance Pay Plan (the “Plan”) is to ensure the successful continuation of the business of Kearny Federal Savings Bank (the “Bank”) and the fair and equitable treatment of the Bank’s officers following a Change in Control (as defined below).

B.	Covered Employees .

Subject to paragraph C below, any active employee of the Bank who is classified as an “officer” with at least one year of service as of his or her termination date shall be eligible to receive a Change in Control Severance Benefit (as defined below) if, within the period beginning on the effective date of a Change in Control and ending on the first anniversary of such date, (i) the officer’s employment with the Bank is involuntarily terminated or (ii) the officer terminates employment with the Bank voluntarily after being offered continued employment in a position that is not a Comparable Position (as defined below). For purposes of this Plan, an “employee” shall include any individual receiving remuneration from the Bank as an employee, which remuneration is reported on Form W-2, Wage and Tax Statement. An “officer” shall mean an employee of the Bank who has been named an officer of the Bank with a title of not less than Assistant Vice President, Assistant Secretary, etc.

C.	Limitations on Eligibility for Change in Control Severance Benefits or Management Restructuring Benefits .

(1)

No officer shall be eligible for a Change in Control Severance Benefit if (a) his or her employment is terminated for “Cause,” (b) he or she is offered a Comparable Position and declines to accept such position, or (c) the officer is, at the time of termination of employment, a party to an individual employment agreement or change in control agreement with the Bank and/or Kearny Financial Corp. (the “Company”).

(2)

For purposes of this Plan, a termination of employment for “Cause” shall include termination because of the officer’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Plan.

(3)

For purposes of this Plan, a “Comparable Position” shall mean a position that would (a) provide the officer with base compensation and benefits that are comparable in the aggregate to those provided to the officer prior to the Change in Control; (b) provide the officer with an opportunity for variable bonus compensation that is comparable to the opportunity provided to the officer prior to

the Change in Control; (c) be in a location that would not require the officer to increase his or her daily one way commuting distance by more than twenty-five (25) miles as compared to the officer’s commuting distance immediately prior to the Change in Control; and (d) have job skill requirements and duties that are comparable to the requirements and duties of the position held by the officer prior to the Change in Control.

D.	Definitions of Change in Control .

For purposes of this Plan, a “Change in Control” means any of the following events:

(1)

Merger : The Company or the Bank merges into or consolidates with another entity, or merges another Bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;

(2)

Acquisition of Significant Share Ownership : A person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (2) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(3)

Change in Board Composition : During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (c), each director who is first elected by the board (or first nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

(4)

Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.

E.	Determination of the Change in Control Severance Benefit .

(1)

The Change in Control Severance Benefit payable to an eligible officer under this Plan shall be determined under the following schedule:

(a)

An eligible officer shall receive a Change in Control Severance Benefit equal to the product of (i) the officer’s years of credited service from his or her hire date (including partial years) through the termination date and (ii) an amount equal to one month of the officer’s Base Compensation (as

defined below). A “year of credited service” shall mean each twelve (12)-month period of service following an officer’s hire date determined without regard the number of hours worked during such period(s), provided, however, that upon the written resolution of the Compensation Committee (which may take into consideration recommendations by the Chief Executive Officer of the Company or the Bank), an eligible officer may be credited with additional years of credited service hereunder in order to increase the Severance Benefit payable to such person. The minimum payment to an eligible officer under this paragraph shall be an amount equal to six (6) months of Base Compensation and the maximum payment to an eligible officer shall be an amount equal to eighteen (18) months of Base Compensation.

(b)

The Change in Control Severance Benefit shall be paid in a lump sum not later than five (5) business days after the date of the officer’s termination of employment.

(2)

For purpose of determinations under this paragraph E, “Base Compensation” shall mean:

(a)

For salaried officers, the officer’s annual base salary at the rate in effect on his or her termination date or, if greater, the rate in effect on the date immediately preceding the Change in Control.

(b)

For officers whose compensation is determined in whole or in part on the basis of commission income, the officer’s base salary at termination (or, if greater, the officer’s base salary on the date immediately preceding the effective date of the Change in Control), if any, plus the commissions earned by the officer in the twelve (12) full calendar months preceding his or her termination date (or, if greater, the commissions earned in the twelve (12) full calendar months immediately preceding the effective date of the Change in Control).

(c)

For hourly officers, the officer’s total hourly wages for the twelve (12) full calendar months preceding his or her termination date or, if greater, the twelve (12) full calendar months preceding the effective date of the Change in Control.

(3)

Notwithstanding the foregoing, in the event the party that enters into the merger or change in control transaction with the Bank or the Company (the “Acquiror”) sponsors a severance pay plan, then the eligible officer will receive the greater of the benefit described above or the severance benefits of the Acquiror, whichever is greater.

F.	Withholding .

All payments will be subject to customary withholding for federal, state and local tax purposes.

G.	Parachute Payment .

Notwithstanding anything in this Plan to the contrary, if a Change in Control Severance Benefit to an officer who is a “Disqualified Individual” shall be in an amount which includes an “Excess Parachute Payment,” taking into account payments under this Plan and otherwise, the benefit payable under this Plan shall be reduced to the maximum amount which does not include an Excess Parachute Payment. The terms “Disqualified Individual” and “Excess Parachute Payment” shall have the same meanings as under Section 280G of the Internal Revenue Code of 1986, as amended, or any successor provision thereto.

H.	Administration .

The Plan is administered by the Board of Directors, which shall have the discretion to interpret the terms of the Plan and to make all determinations about eligibility and payment of benefits. All decisions of the Board of Directors, any action taken by the Board of Directors with respect to the Plan and within the powers granted to the Board of Directors under the Plan, and any interpretation by the Board of Directors of any term or condition of the Plan, are conclusive and binding on all persons, and will be given the maximum possible deference allowed by law. The Board of Directors may delegate and reallocate any authority and responsibility with respect to the Plan.

I.	Source of Payments .

Unless otherwise determined by the Board of Directors, all payments and benefits provided under this Agreement shall be paid solely by the Bank or its successors. Notwithstanding anything in this Agreement to the contrary, no provision of this Agreement shall be construed so as to result in the duplication of any payment or benefit.

J.	Inalienability .

In no event may any officer sell, transfer, anticipate, assign or otherwise dispose of any right or interest under the Plan. At no time will any such right or interest be subject to the claims of creditors, nor liable to attachment, execution or other legal process.

K.	Governing Law .

The provisions of the Plan will be construed, administered and enforced in accordance with the laws of the State of New Jersey, except to the extent that federal law applies.

L.	Severability .

If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

M.	No Employment Rights .

Neither the establishment nor the terms of this Plan shall be held or construed to confer upon any employee the right to a continuation of employment by the Bank, nor constitute a contract of employment, express or implied. The Bank reserves the right to dismiss or otherwise deal with any employee to the same extent and on the same basis as though this Plan had not been adopted. Nothing in this Plan is intended to alter the at-will status of the Bank’s employees, it being understood that, except to the extent otherwise expressly set forth to the contrary in an individual employment-related agreement, the employment of any employee may be terminated at any time by either the Bank or the employee with or without cause.

N.	Amendment and Termination .

The Plan may be terminated or amended in any respect by resolution adopted by a majority of the Board of Directors, unless a Change in Control has previously occurred. If a Change in Control occurs, the Plan no longer shall be subject to amendment, change, substitution, deletion, revocation or termination in any respect whatsoever. The form of any proper amendment or termination of the Plan shall be a written instrument signed by a duly authorized officer or officers of the Bank, certifying that the amendment or termination has been approved by the Board of Directors. A proper amendment of the Plan automatically shall effect a corresponding amendment to each Participant’s rights hereunder. A proper termination of the Plan automatically shall effect a termination of all employees’ rights and benefits hereunder. This Plan supersedes in its entirely the Kearny Federal Savings Bank Officer Change in Control Severance Pay Plan that was adopted effective as of January 1, 2009.

O.	Required Provisions .

(1)

In the event any of the provisions of this paragraph O are in conflict with the terms of this Plan, this paragraph O shall prevail.

(2)

Any payments made to employees pursuant to this Plan, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

(3)

Notwithstanding anything else in this Plan to the contrary, an employee’s employment shall not be deemed to have been terminated unless and until the employee has a Separation from Service within the meaning of Code Section 409A. For purposes of this Agreement, a “Separation from Service” shall have occurred if the Bank and the employee reasonably anticipate that either no further services will be performed by the employee after the date of termination (whether

as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

(4)

Notwithstanding the foregoing, if an employee is a “specified employee” (i.e., a “key employee” of a publicly traded company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this Plan is triggered due to the executive’s Separation from Service, then solely to the extent necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6) months following employee’s Separation from Service. Rather, any payment which would otherwise be paid to the employee during such period shall be accumulated and paid to the employee in a lump sum on the first day of the seventh month following such Separation from Service. All subsequent payments shall be paid in the manner specified in this Plan.

P.	Claims Procedures and Arbitration .

(1)

In the event that benefits under this Plan are not paid to the employee and such employee (or former employee) feels entitled to receive such benefits, then a written claim must be made to the Board of Directors within sixty (60) days from the date payments are refused. The Board of Directors shall review the written claim and, if the claim is denied, in whole or in part, they shall provide in writing, within thirty (30) days of receipt of such claim, their specific reasons for such denial, reference to the provisions of this Plan upon which the denial is based, and any additional material or information necessary to perfect the claim. Such writing by the Board of Directors shall further indicate the additional steps which must be undertaken by the employee or former employee if an additional review of the claim denial is desired.

(2)

If the employee or former employee desires a second review, he or she shall notify the Board of Directors in writing within thirty (30) days of the first claim denial. The employee or former employee may review this Plan or any documents relating thereto and submit any issues and comments, in writing, they may feel appropriate. In its sole discretion, the Board of Directors shall then review the second claim and provide a written decision within thirty (30) days of receipt of such claim. This decision shall state the specific reasons for the decision and shall include reference to specific provisions of this Plan upon which the decision is based.

(3)

If claimants continue to dispute the benefit denial based upon completed performance of this Plan or the meaning and effect of the terms and conditions thereof, it shall be settled by arbitration administered by the AAA under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

Q.	Successors .

The provisions of this Plan shall bind and inure to the benefit of the Bank and its successors and assigns. The term “successors” as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Bank, and successors of any such corporation or other business entity.

[signature page follows]

This plan has been approved and adopted by the Board of Directors of the Bank and is effective as of [date] .


KEARNY FEDERAL SAVINGS BANK

By:
		Its President and Chief Executive Officer

Exhibit 16

September 5, 2014

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Dear Sir or Madam:

We have read the change in independent registered public accounting firm disclosure pursuant to Item 304 of Regulation S-K, captioned “Change in Accountants” in the Registration Statement on Form S-1 of Kearny Financial Corp. dated on or about September 5, 2014, and agree with the statements concerning our Firm contained therein.

Very truly yours,

/s/ ParenteBeard LLC

Exhibit 21

Subsidiaries

Parent

Kearny Financial Corp.


Subsidiaries	State or Other Jurisdiction of Incorporation	Percentage Ownership

Kearny Federal Savings Bank	United States		100	%

Subsidiaries of Kearny Federal Savings Bank

CJB Investment Corp.	New Jersey		100	%

KFS Financial Services, Inc.	New Jersey		100	%

Subsidiaries of KFS Financial Services, Inc.

KFS Insurance Services, Inc.	New Jersey		100	%

Exhibit 23.2

LOGO

September 5, 2014

Boards of Directors

Kearny MHC

Kearny Financial Corp.

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, New Jersey 07004

Members of the Boards of Directors:

We hereby consent to the use of our firm’s name in the Application for Conversion, and any amendments thereto, to be filed with the Federal Reserve Board, and in the Registration Statement on Form S-1, and any amendments thereto, to be filed with the Securities and Exchange Commission. We also hereby consent to the inclusion of, summary of and references to our Valuation Appraisal Report and any Valuation Appraisal Report Updates and our statement concerning subscription rights in such filings including the prospectus of Kearny Financial Corp. We also consent to the reference to our firm under the heading “Experts” in the prospectus.

Sincerely,

RP ^® FINANCIAL, LC.

LOGO


Washington Headquarters
Three Ballston Plaza		Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600		Fax No.: (703) 528-1788
Arlington, VA 22201		Toll-Free No.: (866) 723-0594
www.rpfinancial.com		E-Mail: mail@rpfinancial.com

Exhibit 23.3

[BDO USA, LLP Letterhead]

Consent of Independent Registered Public Accounting Firm

Kearny Financial Corp.

Fairfield, New Jersey

We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our reports dated September 5, 2014, relating to the consolidated financial statements and the effectiveness of internal control over financial reporting of Kearny Financial Corp., which are contained in that Prospectus.

We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ BDO USA, LLP

New York, New York

September 5, 2014

Exhibit 23.4

Consent of Independent Registered Public Accounting Firm

Kearny Financial Corp.

Fairfield, New Jersey

We hereby consent to the use in the Prospectus constituting a part of this Registration Statement on Form S-1 of Kearny Financial Corp. of our report dated September 13, 2012 except for the first paragraph of Note 3, as to which the date is September 13, 2013, relating to the consolidated financial statements, which appears in that Prospectus.

We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ ParenteBeard LLC

Pittsburgh, Pennsylvania

September 5, 2014

Exhibit 99.1

LOGO

July 24, 2014

Mr. Craig L. Montanaro

President and Chief Executive Officer

Kearny Financial Corp. / Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, NJ 07004-3523

Dear Mr. Montanaro:

This letter sets forth the agreement between Kearny Federal Savings Bank, Fairfield, New Jersey (the “Bank”), the wholly-owned subsidiary of Kearny Financial Corp. (the “Company”), which in turn is the majority-owned subsidiary of Kearny MHC (the “MHC”), and RP ^® Financial, LC. (“RP Financial”), whereby RP Financial will provide the independent conversion appraisal services in conjunction with the second step conversion transaction by the MHC. The scope, timing and fee structure for these appraisal services are described below.

These appraisal services will be directed by the undersigned, with the assistance of a Director of RP Financial and appropriate research staff.

Description of Appraisal Services

In conjunction with these appraisal services, RP Financial will conduct a financial due diligence, including on-site interviews of senior management and reviews of historical and pro forma financial information and other documents and records, to gain insight into the operations, financial condition, profitability, market area, risks and various internal and external factors of the Company, all of which will be considered in estimating the pro forma market value of the Company in accordance with the applicable regulatory appraisal guidelines. RP Financial will prepare a detailed written valuation report of the Company that will be fully consistent with applicable regulatory appraisal guidelines and standard pro forma valuation practices. The appraisal report will include an analysis of the Company’s financial condition and operating results, as well as an assessment of the Company’s interest rate risk, credit risk and liquidity risk. The appraisal report will incorporate an evaluation of the Company’s business strategies, market area, prospects for the future and the intended use of proceeds. A peer group analysis relative to certain relatively comparable publicly-traded banking companies will be conducted for the purpose of determining appropriate valuation adjustments for the Company relative to the peer group’s pricing ratios.

We will review pertinent sections of the Company’s prospectus and conduct discussions with representatives of the Company to obtain necessary data and information for the appraisal report, including key deal elements such as dividend policy, use of proceeds, reinvestment rate, tax rate, offering expenses, and characteristics of stock plans and the structure of any contribution to a charitable foundation immediately following the offering.


Washington Headquarters
Three Ballston Plaza		Direct: (703) 647-6543
1100 North Glebe Road, Suite 600		Telephone: (703) 528-1700
Arlington, VA 22201		Fax No.: (703) 528-1788
E-Mail: rriggins@rpfinancial.com		Toll-Free No.: (866) 723-0594

Craig L. Montanaro

July 24, 2014

Page 2

The original appraisal report will establish a midpoint pro forma market value in accordance with the applicable regulatory requirements. The appraisal report may be periodically updated throughout the conversion process, and there will be at least one updated appraisal that would be prepared at the time of the closing of the stock offering to determine the number of shares to be issued in accordance with the conversion regulations. In the event of a syndicated community offering and/or a firm commitment underwritten offering, it will be necessary to file an update in conjunction with the close of the subscription offering and prior to the pricing phase in the syndicated community offering and/or a firm commitment underwritten offering.

RP Financial agrees to deliver the original appraisal report and subsequent updates, in writing, to the Company at the above address in conjunction with the filing of the regulatory conversion applications and amendments thereto. Subsequent updates will be filed promptly as certain events occur which would warrant the preparation and filing of such appraisal updates pursuant to regulatory guidelines. Further, RP Financial agrees to perform such other services as are necessary or required in connection with the regulatory review of the appraisal and respond to the regulatory comments, if any, regarding the valuation original appraisal and subsequent updates.

In the event of a syndicated community offering and/or a firm commitment underwritten offering phase, RP Financial will participate in the various all hands calls regarding the offering results, pricing discussions and timing.

RP Financial will formally present the appraisal report, including the appraisal methodology, peer group selection and assumptions, to the Board of Directors for review and consideration. If appropriate, RP Financial will present subsequent updates to the Board. It is understood that this appraisal may be presented either in person or telephonically.

Fee Structure and Payment Schedule

The Company agrees to pay RP Financial fees for preparation and delivery of the original appraisal report and subsequent appraisal updates as shown in the detail below, plus reimbursable expenses. Payment of these fees shall be made according to the following schedule:

•

$20,000 upon execution of this letter of agreement engaging RP Financial’s appraisal services;

•

$180,000 upon delivery of the completed original appraisal report; and

•

$20,000 upon delivery of each subsequent appraisal update report required in conjunction with the regulatory application and stock offering. Under the conversion regulations a closing appraisal update is required in conjunction with the completion of the offering. In addition, there may appraisal updates required prior to commencement of the offering if interim changes in market conditions or financial results dictate. Also, if there is a syndicated offering and/or a firm commitment underwritten offering phase, it will be necessary to prepare an update immediately upon completion of the subscription/ community offering and prior to the commencement of the syndicated and/or firm commitment underwriting phase of the offering.

Craig L. Montanaro

July 24, 2014

Page 3

The Company will reimburse RP Financial for reasonable out-of-pocket expenses incurred in preparation of the original appraisal and subsequent updates. Such out-of-pocket expenses will likely include travel, printing, communications, shipping, computer and data services, and will not exceed $10,000 in the aggregate, without the Company’s authorization to exceed this level.

In the event the Company shall, for any reason, discontinue the proposed transaction prior to delivery of the completed original appraisal report or subsequent updates and payment of the corresponding fees, the Company agrees to compensate RP Financial according to RP Financial’s standard billing rates for consulting services based on accumulated and verifiable time expenses, not to exceed the respective fee caps noted above, after applying full credit to the initial retainer fee towards such payment, together with reasonable out-of-pocket expenses, subject to the cap on such expenses as set forth above. RP Financial’s standard billing rates range from $75 per hour for research associates to $450 per hour for managing directors.

If during the course of the proposed transaction, unforeseen events occur so as to materially change the nature or the work content of the services described in this contract, the terms of said contract shall be subject to renegotiation by the Company and RP Financial. Such unforeseen events shall include, but not be limited to, material changes to the structure of the transaction such as inclusion of a simultaneous business combination transaction, material changes in the conversion regulations, appraisal guidelines or processing procedures as they relate to conversion appraisals, material changes in management or procedures, operating policies or philosophies, and excessive delays or suspension of processing of conversion applications by the regulators such that completion of the conversion transaction requires the preparation by RP Financial of a new appraisal.

Covenants, Representations and Warranties

The Company and RP Financial agree to the following:

1. The Company agrees to make available or to supply to RP Financial such information with respect to its business and financial condition as RP Financial may reasonably request in order to provide the aforesaid valuation. Such information heretofore or hereafter supplied or made available to RP Financial shall include: annual financial statements, periodic regulatory filings and material agreements, debt instruments, off balance sheet assets or liabilities, commitments and contingencies, unrealized gains or losses and corporate books and records. All information provided by the Company to RP Financial shall remain strictly confidential (unless such information is otherwise made available to the public), and if the conversion is not consummated or the services of RP Financial are terminated hereunder, RP Financial shall promptly return to the Company the original and any copies of such information.

2. The Company represents and warrants to RP Financial that any information provided to RP Financial does not and will not, to the best of the Company’s knowledge, at the times it is provided to RP Financial, contain any untrue statement of a material fact or in response to informational requests by RP Financial fail to state a material fact necessary to make the statements therein not false or misleading in light of the circumstances under which they were made.

Craig L. Montanaro

July 24, 2014

Page 4

3. (a) The Company agrees that it will indemnify and hold harmless RP Financial, any affiliates of RP Financial, the respective members, officers, agents and employees of RP Financial or their successors and assigns who act for or on behalf of RP Financial in connection with the services called for under this agreement (hereinafter referred to as “RP Financial”), from and against any and all losses, claims, damages and liabilities (including, but not limited to, reasonable attorneys’ fees, and all losses and expenses in connection with claims under the federal securities laws) attributable to (i) any untrue statement or alleged untrue statement of a material fact contained in the financial statements or other information furnished or otherwise provided by the Company to RP Financial, either orally or in writing; (ii) the omission or alleged omission of a material fact from the financial statements or other information furnished or otherwise made available by the Company to RP Financial; or (iii) any action or omission to act by the Company, or the Company’s respective officers, directors, employees or agents, which action or omission is undertaken in bad faith or is negligent. The Company will be under no obligation to indemnify RP Financial hereunder if a court determines that RP Financial was negligent or acted in bad faith with respect to any actions or omissions of RP Financial related to a matter for which indemnification is sought hereunder. Reasonable time devoted by RP Financial to situations for which RP Financial is deemed entitled to indemnification hereunder, shall be an indemnifiable cost payable by the Company at the normal hourly professional rate chargeable by such employee.

(b) RP Financial shall give written notice to the Company of such claim or facts within thirty days of the assertion of any claim or discovery of material facts upon which RP Financial intends to base a claim for indemnification hereunder, including the name of counsel that RP Financial intends to engage in connection with any indemnification related matter. In the event the Company elects, within seven days of the receipt of the original notice thereof, to contest such claim by written notice to RP Financial, the Company shall not be obligated to make payments under Section 3(c), but RP Financial will be entitled to be paid any amounts payable by the Company hereunder within five days after the final non-appealable determination of such contest either by written acknowledgement of the Company or a decision of a court of competent jurisdiction or alternative adjudication forum, unless it is determined in accordance with Section 3(c) hereof that RP Financial is not entitled to indemnity hereunder. If the Company does not so elect to contest a claim for indemnification by RP Financial hereunder, RP Financial shall (subject to the Company’s receipt of the written statement and undertaking under Section 3(c) hereof) be paid promptly and in any event within thirty days after receipt by the Company of detailed billing statements or invoices for which RP Financial is entitled to reimbursement under Section 3(c) hereof.

(c) Subject to the Company’s right to contest under Section 3(b) hereof, the Company shall pay for or reimburse the reasonable expenses, including reasonable attorneys’ fees, incurred by RP Financial in advance of the final disposition of any proceeding within thirty days of the receipt of such request if RP Financial furnishes the Company: (1) a written statement of RP Financial’s good faith belief that it is entitled to indemnification hereunder; (2) a written undertaking to repay the advance if it ultimately is determined in a final, non-appealable adjudication of such proceeding that RP Financial is not entitled to such indemnification; and (3) a detailed invoice of the expenses for which reimbursement is sought.

Craig L. Montanaro

July 24, 2014

Page 5

(d) In the event the Company does not pay any indemnified loss or make advance reimbursements of expenses in accordance with the terms of this agreement, RP Financial shall have all remedies available at law or in equity to enforce such obligation.

(e) Any indemnification payments to be made by the Company hereunder are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 USC 1828(k)) and the Regulations promulgated thereunder by the Federal Deposit Insurance Corporation (12 CFR Part 359).

This agreement constitutes the entire understanding of the Company and RP Financial concerning the subject matter addressed herein, and such contract shall be governed and construed in accordance with the State of New Jersey. This agreement may not be modified, supplemented or amended except by written agreement executed by both parties.

The Company and RP Financial are not affiliated, and neither the Company nor RP Financial has an economic interest in, or is held in common with, the other and has not derived a significant portion of its gross revenues, receipts or net income for any period from transactions with the other. RP Financial represents and warrants that it is not aware of any fact or circumstance that would cause it not to be “independent” within the meaning of the conversion regulations of the federal banking agencies or otherwise prohibit or restrict in anyway RP Financial from serving in the role of independent appraiser for the Company.

* * * * * * * * * * *

Please acknowledge your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter, together with the initial retainer fee of $20,000.

Sincerely,

Ronald S. Riggins

President and Managing Director


Agreed To and Accepted By:		/s/ Craig L. Montanaro
		President and Chief Executive Officer

For: Kearny Federal Savings Bank, subsidiary of Kearny Financial Corp., Fairfield, New Jersey

Date Executed: July 28, 2014

Exhibit 99.2

LOGO

September 5, 2014

Boards of Directors

Kearny MHC

Kearny Financial Corp.

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, New Jersey 07004

Re:	Plan of Conversion and Reorganization

Kearny MHC

Kearny Financial Corp.

Members of the Boards of Directors:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion and Reorganization (the “Plan”) adopted by the Boards of Directors of Kearny MHC (the “MHC”) and Kearny Financial Corp. Inc. (“Kearny-Federal”), a federal corporation. The Plan provides for the conversion of the MHC into the capital stock form of organization. Pursuant to the Plan, a new Maryland stock holding company named Kearny Financial Corp. (the “Company”) will be organized and will sell shares of common stock in a public offering. When the conversion is completed, all of the capital stock of Kearny Federal Savings Bank will be owned by the Company and all of the common stock of the Company will be owned by public stockholders.

We understand that in accordance with the Plan, subscription rights to purchase shares of common stock in the Company are to be issued to: (1) Eligible Account Holders; (2) Tax-Qualified Plans including Kearny Federal Savings Bank’s employee stock ownership plan (the “ESOP”); (3) Supplemental Eligible Account Holders; and (4) Other Members. Based solely upon our observation that the subscription rights will be available to such parties without cost, will be legally non-transferable and of short duration, and will afford such parties the right only to purchase shares of common stock at the same price as will be paid by members of the general public in the community and syndicated or firm commitment underwritten offerings but without undertaking any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue, we are of the belief that, as a factual matter:

(1)

the subscription rights will have no ascertainable market value; and,

(2)

the price at which the subscription rights are exercisable will not be more or less than the pro forma market value of the shares upon issuance.

Changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the Company’s value alone. Accordingly, no assurance can be given that persons who subscribe to shares of common stock in the subscription offering will thereafter be able to buy or sell such shares at the same price paid in the subscription offering.

Sincerely,

LOGO

RP Financial, LC.


Washington Headquarters
Three Ballston Plaza		Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600		Fax No.: (703) 528-1788
Arlington, VA 22201		Toll-Free No.: (866) 723-0594
www.rpfinancial.com		E-Mail: mail@rpfinancial.com

Exhibit 99.3

LOGO

PRO FORMA VALUATION REPORT
SECOND STEP CONVERSION
Kearny Financial Corp. ?Fairfield, New Jersey
PROPOSED HOLDING COMPANY FOR: Kearny Federal Savings Bank ? Fairfield, New Jersey
Dated as of August 8, 2014
RP RP Financial., LC. Advisory Planning Valuation
1100 North Glebe Road Suite 600
Arlington, Virginia 22201
703.528.1700
rpfinancial.com

LOGO

August 8, 2014

Boards of Directors

Kearny MHC

Kearny Financial Corp.

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, New Jersey 07004

Members of the Boards of Directors:

At your request, we have completed and hereby provide an independent appraisal (“Appraisal”) of the estimated pro forma market value of the common stock which is to be issued in connection with the mutual-to-stock conversion transaction described below.

This Appraisal is furnished pursuant to the requirements stipulated in the Code of Federal Regulations and has been prepared in accordance with the “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization” of the Office of Thrift Supervision (“OTS”) and accepted by the Federal Reserve Board (“FRB”) and the Office of the Comptroller of the Currency (“OCC”), and applicable regulatory interpretations thereof.

Description of Plan of Conversion and Reorganization

On September 4, 2014, the respective Boards of Directors of Kearny MHC (the “MHC”) and Kearny Financial Corp. (“KRNY”) adopted the plan of conversion and reorganization (the “Plan of Conversion”) whereby the MHC will convert to stock form. As a result of the conversion, KRNY, which currently owns all of the issued and outstanding common stock of Kearny Federal Saving Bank (the “Bank”), will be succeed by a new Maryland corporation with the name of Kearny Financial Corp. (“Kearny Financial” or the “Company”). Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will hereinafter also be referred to as Kearny Financial or the Company, unless otherwise identified as KRNY. As of June 30, 2014, the MHC had a majority ownership interest in, and its principal asset consisted of, approximately 77.24% of the common stock (the “MHC Shares”) of KRNY. The remaining 22.76% of KRNY’s common stock was owned by public stockholders.

It is our understanding that Kearny Financial will offer its stock, representing the majority ownership interest held by the MHC, in a subscription offering to Eligible Account Holders, Tax-Qualified Plans including the Bank’s employee savings and stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Members, as such terms are defined for purposes of applicable federal regulatory requirements governing mutual-to-stock conversions. To the extent that shares remain available for purchase after satisfaction of all subscriptions



Washington Headquarters
Three Ballston Plaza		Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600		Fax No.: (703) 528-1788
Arlington, VA 22201		Toll-Free No.: (866) 723-0594
www.rpfinancial.com		E-Mail: mail@rpfinancial.com

Boards of Directors

August 8, 2014

Page 2

received in the subscription offering, the shares may be offered for sale to the public at large in a community offering and a syndicated or firm commitment underwritten offering. Upon completing the mutual-to-stock conversion and stock offering (the “second-step conversion”), the Company will be 100% owned by public shareholders, the publicly-held shares of KRNY will be exchanged for shares in the Company at a ratio that retains their ownership interest at the time the conversion is completed and the MHC assets will be consolidated with the Company.

In connection with the second-step conversion, the Company will contribute $5 million of Kearny Financial common stock and $5 million of cash to the Kearny Federal Savings Foundation (the “Foundation”).

RP ^® Financial, LC.

RP ^® Financial, LC. (“RP Financial”) is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. We believe that, except for the fee we will receive for the Appraisal, we are independent of the Company, the Bank, the MHC and the other parties engaged by the Bank or the Company to assist in the stock conversion process.

Valuation Methodology

In preparing our Appraisal, we have reviewed the regulatory applications of the Company, the Bank and the MHC, including the prospectus as filed with the FRB and the Securities and Exchange Commission (“SEC”). We have conducted a financial analysis of the Company, the Bank and the MHC that has included a review of audited financial information for the fiscal years ended June 30, 2009 through June 30, 2014 and a review of various unaudited information and internal financial reports through June 30, 2014, and due diligence related discussions with the Company’s management; BDO USA, LLP., the Company’s independent auditor; Luse Gorman Pomerenk & Schick, P.C., the Company’s conversion counsel and Sandler O’Neill & Partners, L.P., the Company’s marketing advisor in connection with the stock offering. All assumptions and conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

We have investigated the competitive environment within which Kearny Financial operates and have assessed Kearny Financial’s relative strengths and weaknesses. We have kept abreast of the changing regulatory and legislative environment for financial institutions and analyzed the potential impact on Kearny Financial and the industry as a whole. We have analyzed the potential effects of the stock conversion on Kearny Financial’s operating characteristics and financial performance as they relate to the pro forma market value of Kearny Financial. We have analyzed the assets held by the MHC, which will be consolidated with Kearny Financial’s assets and equity pursuant to the completion of the second-step conversion. We have reviewed the economic and demographic characteristics of the Company’s primary

Boards of Directors

August 8, 2014

Page 3

market area. We have compared Kearny Financial’s financial performance and condition with selected publicly-traded thrifts in accordance with the Valuation Guidelines, as well as all publicly-traded thrifts and thrift holding companies. We have reviewed the current conditions in the securities markets in general and the market for thrift stocks in particular, including the market for existing thrift issues, initial public offerings by thrifts and thrift holding companies, and second-step conversion offerings. We have excluded from such analyses thrifts subject to announced or rumored acquisition, and/or institutions that exhibit other unusual characteristics.

The Appraisal is based on Kearny Financial’s representation that the information contained in the regulatory applications and additional information furnished to us by Kearny Financial and its independent auditor, legal counsel and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by Kearny Financial, or its independent auditor, legal counsel and other authorized agents nor did we independently value the assets or liabilities of Kearny Financial. The valuation considers Kearny Financial only as a going concern and should not be considered as an indication of Kearny Financial’s liquidation value.

Our appraised value is predicated on a continuation of the current operating environment for Kearny Financial and for all thrifts and their holding companies. Changes in the local, state and national economy, the legislative and regulatory environment for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the value of Kearny Financial’s stock alone. It is our understanding that there are no current plans for selling control of Kearny Financial following completion of the second-step conversion. To the extent that such factors can be foreseen, they have been factored into our analysis.

The estimated pro forma market value is defined as the price at which Kearny Financial’s common stock, immediately upon completion of the second-step stock offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

In preparing the pro forma pricing analysis we have taken into account the pro forma impact of the MHC’s net assets (i.e., unconsolidated equity) that will be consolidated with the Company and thus will slightly increase equity. After accounting for the impact of the MHC’s net assets, the public shareholders’ ownership interest was reduced by approximately 0.01%. Accordingly, for purposes of the Company’s pro forma valuation, the public shareholders’ pro forma ownership interest was reduced from 22.76% to 22.75% and the MHC’s ownership interest was increased from 77.24% to 77.25%.

Valuation Conclusion

It is our opinion that, as of August 8, 2014, the estimated aggregate pro forma valuation of the shares of the Company to be issued and outstanding at the end of the conversion offering – including (1) newly-issued shares representing the MHC’s current ownership interest in the Company; (2) exchange shares issued to existing public shareholders of KRNY; and (3) shares

Boards of Directors

August 8, 2014

Page 4

issued to the Foundation – was $943,503,710 at the midpoint, equal to 94,350,371 shares at $10.00 per share. The resulting range of value and pro forma shares, all based on $10.00 per share, are as follows: $802,728,150 or 80,272,815 shares at the minimum and $1,084,279,270 or 108,427,927 shares at the maximum.

Based on this valuation and taking into account the ownership interest represented by the shares owned by the MHC, the midpoint of the offering range is $725,000,000 equal to 72,500,000 shares at $10.00 per share. The resulting offering range and offering shares, all based on $10.00 per share, are as follows: $616,250,000 or 61,625,000 shares at the minimum and $833,750,000 or 83,375,000 shares at the maximum.

Establishment of the Exchange Ratio

The conversion regulations provide that in a conversion of a mutual holding company, the minority stockholders are entitled to exchange the public shares for newly issued shares in the fully converted company. The Boards of Directors of the MHC and KRNY have independently determined the exchange ratio, which has been designed to preserve the current aggregate percentage ownership in the Company (adjusted for the dilution resulting from the consolidation of the MHC’s unconsolidated equity into the Company). The exchange ratio to be received by the existing minority shareholders of the Company will be determined at the end of the offering, based on the total number of shares sold in the offering and the final appraisal. Based on the valuation conclusion herein, the resulting offering value and the $10.00 per share offering price, the indicated exchange ratio at the midpoint is 1.3948 shares of the Company’s stock for every one share held by public shareholders. Furthermore, based on the offering range of value, the indicated exchange ratio is 1.1855 at the minimum and 1.6040 at the maximum. RP Financial expresses no opinion on the proposed exchange of newly issued Company shares for the shares held by the public stockholders or on the proposed exchange ratio.

Limiting Factors and Considerations

The valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is determined in accordance with applicable regulatory guidelines and is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion offering, or prior to that time, will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The appraisal reflects only a valuation range as of this date for the pro forma market value of Kearny Financial immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the second-step conversion.

RP Financial’s valuation was based on the financial condition, operations and shares outstanding of Kearny Financial as of June 30, 2014, the date of the financial data included in the prospectus. The proposed exchange ratio to be received by the current public stockholders of KRNY and the exchange of the public shares for newly issued shares of Kearny Financial’s

Boards of Directors

August 8, 2014

Page 5

common stock as a full public company was determined independently by the Boards of Directors of the MHC and KRNY. RP Financial expresses no opinion on the proposed exchange ratio to public stockholders or the exchange of public shares for newly issued shares.

RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its client institutions.

This valuation will be updated as provided for in the conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of Kearny Financial, management policies, and current conditions in the equity markets for thrift shares, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the legislative and regulatory environment for financial institutions, the stock market and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update. The valuation will also be updated at the completion of Kearny Financial’s stock offering.

Respectfully submitted,

RP ^® FINANCIAL, LC.

Ronald S. Riggins

President and Managing Director

Gregory E. Dunn

Director


*RP ^® Financial, LC.*		*TABLE OF CONTENTS*
		i

TABLE OF CONTENTS

KEARNY FINANCIAL CORP.

KEARNY FEDERAL SAVINGS BANK

Fairfield, New Jersey


		PAGE
DESCRIPTION		NUMBER

CHAPTER ONE	OVERVIEW AND FINANCIAL ANALYSIS

Introduction		I.1
Plan of Conversion and Reorganization		I.2
Strategic Overview		I.3
Balance Sheet Trends		I.7
Income and Expense Trends		I.11
Interest Rate Risk Management		I.14
Lending Activities and Strategy		I.16
Asset Quality		I.20
Funding Composition and Strategy		I.21
Subsidiaries		I.22
Legal Proceedings		I.23

CHAPTER TWO	MARKET AREA ANALYSIS

Introduction		II.1
National Economic Factors		II.2
Market Area Demographics		II.6
Local Economy		II.10
Unemployment Trends		II.13
Real Estate Trends		II.14
Market Area Deposit Characteristics and Competition		II.15

CHAPTER THREE	PEER GROUP ANALYSIS

Peer Group Selection		III.1
Financial Condition		III.6
Income and Expense Components		III.8
Loan Composition		III.11
Interest Rate Risk		III.13
Credit Risk		III.15
Summary		III.15


*RP ^® Financial, LC.*		*TABLE OF CONTENTS*
		ii

TABLE OF CONTENTS

KEARNY FINANCIAL CORP.

KEARNY FEDERAL SAVINGS BANK

Fairfield, New Jersey

(continued)


DESCRIPTION		PAGE NUMBER

CHAPTER FOUR	VALUATION ANALYSIS

Introduction		IV.1
Appraisal Guidelines		IV.1
RP Financial Approach to the Valuation		IV.1
Valuation Analysis		IV.2
1. Financial Condition		IV.3
2. Profitability, Growth and Viability of Earnings		IV.4
3. Asset Growth		IV.6
4. Primary Market Area		IV.6
5. Dividends		IV.8
6. Liquidity of the Shares		IV.8
7. Marketing of the Issue		IV.9
A. The Public Market		IV.9
B. The New Issue Market		IV.13
C. The Acquisition Market		IV.14
D. Trading in Kearny Financial’s Stock		IV.17
8. Management		IV.17
9. Effect of Government Regulation and Regulatory Reform		IV.18
Summary of Adjustments		IV.18
Valuation Approaches		IV.18
1. Price-to-Earnings (“P/E”)		IV.20
2. Price-to-Book (“P/B”)		IV.21
3. Price-to-Assets (“P/A”)		IV.23
Comparison to Recent Offerings		IV.23
Valuation Conclusion		IV.24
Establishment of the Exchange Ratio		IV.25


*RP ^® Financial, LC.*		*LIST OF TABLES*
		*iii*

LIST OF TABLES

KEARNY FINANCIAL CORP.

KEARNY FEDERAL SAVINGS BANK

Fairfield, New Jersey


TABLE NUMBER	DESCRIPTION	PAGE

1.1	Historical Balance Sheet Data	I.8
1.2	Historical Income Statements	I.12

2.1	Summary Demographic Data	II.8
2.2	Largest Employers in New Jersey	II.11
2.3	Primary Market Area Employment Sectors	II.12
2.4	Unemployment Trends	II.13
2.5	Residential Real Estate Trends	II.14
2.6	Deposit Summary	II.16
2.7	Market Area Deposit Competitors	II.17

3.1	Peer Group of Publicly-Traded Thrifts	III.3
3.2	Balance Sheet Composition and Growth Rates	III.7
3.3	Income as a % of Average Assets and Yields, Costs, Spreads	III.9
3.4	Loan Portfolio Composition and Related Information	III.12
3.5	Interest Rate Risk Measures and Net Interest Income Volatility	III.14
3.6	Credit Risk Measures and Related Information	III.16

4.1	Market Area Unemployment Rates	IV.7
4.2	Pricing Characteristics and After-Market Trends	IV.15
4.3	Market Pricing Comparatives	IV.16
4.4	Public Market Pricing	IV.22


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.1*

I. OVERVIEW AND FINANCIAL ANALYSIS

Introduction

Kearny Federal Savings Bank (the “Bank”), founded in 1884, is a federally-chartered stock savings bank headquartered in Fairfield, New Jersey that serves northern and central New Jersey and Brooklyn and Staten Island, New York. The Bank’s headquarters office and all of its 42 branch offices are located within the New York metropolitan area with 40 full service banking offices in the New Jersey Counties of Bergen, Monmouth, Hudson, Ocean, Morris, Essex, Middlesex, Union, and Passaic and 2 full service banking offices in the New York counties of Kings and Richmond. Within the Bank’s branch network, 13 branches currently operate under “Central Jersey Bank, a division of Kearny Federal Savings Bank” and two branches operate under “Atlas Bank, a division of Kearny Federal Savings Bank.” The Bank is subject to regulation and oversight by the Office of the Comptroller of the Currency (the “OCC”). The Bank is a member of the Federal Home Loan Bank (“FHLB”) system, and its deposits are insured up to the regulatory limits by the Federal Deposit Insurance Corporation (the “FDIC”). Exhibit I-1 is a map of the Bank’s branch office locations.

Kearny Financial Corp. (“KRNY”) is the federally-chartered mid-tier holding company of the Bank and owns 100% of the outstanding common stock of the Bank. KRNY was organized on March 30, 2001 and has since been engaged primarily in the business of holding the common stock of the Bank. KRNY completed its initial public offering on February 23, 2005, pursuant to which it sold 21,821,250 shares or 30% of its outstanding common stock to the public and issued 50,916,250 shares or the remaining 70% of its common stock outstanding to Kearny MHC (the “MHC”), the federally-chartered mutual holding company parent of KRNY. Stock repurchase programs conducted by KRNY since the initial public offering have reduced the total number of shares outstanding, which has been partially offset by the 1,044,087 shares issued to the MHC by KRNY in connection with the recent merger with Atlas Bank, to total 67,267,865 of total shares outstanding as of June 30, 2014. The MHC and KRNY are subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board” or the “FRB”). At June 30, 2014, KRNY had total consolidated assets of $3.5 billion, deposits of $2.5 billion and equity of $494.7 million or 14.09% of total assets. Excluding goodwill and core deposit intangibles of $109.4 million, KRNY’s tangible equity


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.2*

equaled $385.3 million or 10.98% of total assets at June 30, 2014. KRNY’s audited financial statements for the most recent period are included by reference as Exhibit I-1.

Plan of Conversion and Reorganization

On September 4, 2014, the respective Boards of Directors of the MHC and KRNY adopted the plan of conversion and reorganization (the “Plan of Conversion”) whereby the MHC will convert to stock form. As a result of the conversion, KRNY, which currently owns all of the issued and outstanding common stock of the Bank, will be succeeded by a new Maryland corporation with the name of Kearny Financial Corp. (“Kearny Financial” or the “Company”). Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will hereinafter also be referred to as Kearny Financial or the Company, unless otherwise identified as KRNY. As of June 30, 2014, the MHC had a majority ownership interest in, and its principal asset consisted of, approximately 77.24% of the common stock (the “MHC Shares”) of KRNY. The remaining 22.76% of KRNY’s common stock was owned by public shareholders.

Pursuant to the Plan of Conversion, it is our understanding that Kearny Financial will offer its stock representing the majority ownership interest held by the MHC in a subscription offering to Eligible Account Holders, Tax-Qualified Plans including the Bank’s employee savings and stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Members, as such terms are defined for purposes of applicable federal regulatory requirements governing mutual-to-stock conversions. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to the general public in a community offering and a syndicated or firm commitment underwritten offering. Upon completing the mutual-to-stock conversion and stock offering (the “second-step conversion”), the Company will be 100% owned by public shareholders, the publicly-held shares of KRNY will be exchanged for shares in the Company at a ratio that retains their ownership interest at the time the conversion is completed and the MHC assets will be consolidated with the Company.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.3*

Strategic Overview

Kearny Financial maintains a local community banking emphasis, with a primary strategic objective of meeting the borrowing and savings needs of consumers and businesses throughout northern and central New Jersey and in Brooklyn and Staten Island, New York. Over the last several years, the Company has pursued a strategy of evolving the Company’s traditional thrift business model into that of a full service community bank through growing a diversified loan portfolio, increasing core deposits, building non-interest revenue sources and expansion and diversification of the bank franchise through acquisitions. Lending strategies have placed increased emphasis on the origination of higher yielding commercial loans, both mortgage and non-mortgage, while diminishing the emphasis on 1-4 family mortgage lending.

The composition and volume of loan originations and purchases during fiscal 2014 reflect current growth strategies, through which the Company has been building a commercial lending team to facilitate an increase in commercial loan production through originations, expanded relationships with loan participants and other external loan origination resources. Pursuant to targeting growth of commercial loans, the Company is also placing an emphasis on growing commercial deposit accounts through establishing full service banking relationships with its commercial borrowers.

Over the past five fiscal years, the Company has supplemented organic growth through the acquisition of two financial institutions:

•

On November 30, 2010, the Company completed the acquisition of Central Jersey Bancorp (“Central Jersey Bancorp”) and its wholly-owned subsidiary, Central Jersey Bank, NA, a $571.3 million commercial bank. Central Jersey Bank continues to operate as a division of the Bank through its 14 branch offices in Monmouth and Ocean Counties, New Jersey.

•

On June 30, 2014, the Company completed the acquisition of Atlas Bank, a federal mutual savings bank headquartered in Brooklyn, New York. In addition to its main office in Brooklyn, Atlas Bank maintains one branch in Staten Island, New York. As of June 30, 2014, Atlas Bank had assets with a fair value of $120.9 million and deposit balances with fair values totaling $86.1 million. For at least a year following the merger, Atlas Bank’s two branch offices will operate under the name “Atlas Bank, a division of Kearny Federal Savings Bank.”

In addition to current strategic growth initiatives, the Company has sought to strengthen its balance sheet and increase earnings through a series of balance sheet and wholesale growth transactions that were completed during fiscal 2013. The key features of the restructuring transactions included:


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.4*

•

The Company sold available for sale agency mortgage-backed securities (“MBS”) totaling approximately $330.0 million with a weighted average book yield of 1.78% resulting in a one-time gain on sale totaling approximately $9.1 million;

•

A portion of the proceeds from the noted MBS sales were used to prepay $60.0 million of fixed-rate FHLB advances at a weighted average rate of 3.99% resulting in a one-time expense of $8.7 million largely attributable to the prepayment penalties paid to the FHLB to extinguish the debt; and

•

The Company reinvested the remaining proceeds from the noted MBS sales into a diversified mix of high-quality securities with an aggregate tax-effective yield modestly exceeding that of the MBS sold. Such securities primarily included:

•

Fixed-rate, bank-qualified municipal obligations;

•

Floating-rate corporate bonds issued by financial companies;

•

Floating-rate, asset-backed securities comprising education loans with 97% U.S. government guarantees;

•

Fixed-rate agency commercial MBS secured by multi-family mortgage loans; and

•

Fixed-rate agency collateralized mortgage obligations (“CMOs”).

•

The Company modified the terms of its remaining $145.0 million of “putable” FHLB advances with a weighted average cost of 3.68% and weighted average remaining maturity of approximately 4.5 years. Such advances were subject to the FHLB’s quarterly “put” option enabling it to demand repayment in full in the event of an increase in interest rates. The terms of the modified advances extended their “non-putable” period to five years with a final stated maturity of ten years while reducing their average interest rate by 0.64% to 3.04% at no immediate cost to the Company.

In connection with the restructuring transactions, the Company also implemented a wholesale growth strategy during the second half 2013. Pursuant to the wholesale growth strategy the Company added $300 million of borrowings to fund purchases of $300 million of investment securities. The Company estimates the initial pre-tax net interest rate spread on the wholesale growth strategy, net of hedging costs, to be approximately 1.00%. The key features of the wholesale growth transactions included:

•

Wholesale funding sources utilized in the strategy included 90-day FHLB borrowings and money-market deposits indexed to one-month LIBOR acquired through Promontory Interfinancial Network’s (“Promontory”) Insured Network Deposits (“IND”) program.

•

The Company utilized interest rate derivatives in the form of “plain vanilla” swaps and caps with aggregate notional amounts totaling $300.0 million to serve as cash flow hedges to manage the interest rate risk exposure of the floating rate funding sources noted above.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.5*

•

The investment securities acquired with this funding primarily included:

•

Floating-rate corporate bonds issued by financial companies;

•

Floating-rate, asset-backed securities comprising education loans with 97% U.S. government guarantees;

•

Floating rate collateralized loan obligations (“CLOs”)

•

Fixed-rate agency residential and commercial MBS; and

•

Fixed-rate agency collateralized mortgage obligations (“CMOs”).

Historically, the Company’s lending and investment activities have facilitated maintenance of favorable credit quality measures. However, the Company’s lending markets were adversely impacted by the 2008 national recession and resulting fallout from the financial crisis that occurred with the implosion of the housing market, which led to some deterioration in the Company’s credit quality. Non-performing assets increased from $21.7 million or 0.93% of assets at fiscal yearend 2010 to a peak balance of $42.5 million or 1.46% of assets at fiscal yearend 2011. Since fiscal yearend 2011, the non-performing assets balance has trended lower and equaled $26.9 million or 0.77% of assets at June 30, 2014.

Investments serve as a supplement to the Company’s lending activities for purposes of facilitating management of interest rate risk and liquidity. Historically, the Company’s investment portfolio was highly concentrated in MBS, with the MBS portfolio primarily consisting of agency securities issued by government-sponsored enterprises (“GSEs”). To a lesser extent, the MBS portfolio includes securities issued by the Government National Mortgage Association (“GNMA”) and non-agency MBS. Pursuant to the 2013 balance sheet restructuring the Company reduced the concentration of MBS in the investment portfolio, although MBS continue to constitute the largest segment of the investment portfolio. Beyond MBS, Kearny Financial’s other investment holdings include investments in government agencies, municipal bonds, corporate bonds, asset-backed securities, collateralized loan obligations, and trust preferred securities. As of June 30, 2014, the investment securities portfolio totaled $1.357 billion or 38.67% of total assets, which represented a decline compared to historical levels as the Company’s strategic initiatives have been emphasizing loan growth so as to shift the mix of interest-earning assets towards a higher concentration of loans.

Deposits generated from consumers and businesses within the Company’s primary market area have consistently served as the primary funding source for the Company’s lending and investment activities. Transaction and savings account deposits comprise the largest portion of the Company’s deposit base, with the balance consisting of certificates of deposit (“CDs”). Kearny Financial utilizes borrowings as a supplemental funding source to facilitate


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.6*

management of funding costs and interest rate risk, with FHLB advances accounting for the major portion of the Company’s borrowings. Other wholesale funding utilized by the Company also includes overnight borrowings in the form of depositor sweep accounts and brokered CDs.

Kearny Financial’s earnings base is largely dependent upon net interest income and operating expense levels. The Company has been experiencing net interest margin compression in recent years, as the prolonged low interest rate environment has resulted in a narrowing of the Company’s interest rate spread. Overall, the high concentration of interest-earning assets maintained in lower yielding investments has provided for relatively low levels of net interest income as a percent of average assets. Operating expenses have also been maintained at relatively low levels as percent of average assets, as the relatively low concentration of loans that comprise interest-earning assets and limited diversification into areas that generate non-interest income revenues has supported containment of the Company’s operating expenses.

A key component of the Company’s business plan is to complete a second-step conversion. The second-step conversion will increase the capital level to improve the overall competitive position of the Company in the local market area, enhance profitability and reduce interest rate risk. Kearny Financial’s higher capital position resulting from the infusion of stock proceeds will serve to reduce interest rate risk, particularly through enhancing the Company’s interest-earning assets/interest-bearing liabilities (“IEA/IBL”) ratio. The additional funds realized from the stock offering will serve to raise the level of interest-earning assets funded with equity and, thereby, reduce the ratio of interest-earning assets funded with interest-bearing liabilities as the balance of interest-bearing liabilities will initially remain relatively unchanged following the conversion, which may facilitate a reduction in Kearny Financial’s funding costs. The additional equity will also provide a larger capital base for planned future growth.

Additionally, the Company’s strengthened capital position will support continued expansion of the bank franchise in desired growth markets. Notably, the Company intends to explore increasing its branch presence in the Brooklyn and/or Staten Island markets that were recently entered into with the acquisition of Atlas Bank. As a fully-converted institution, the Company’s strengthened capital position and greater capacity to offer stock as consideration will facilitate additional opportunities to grow through acquisitions of other financial institutions or providers of other financial services. At this time, the Company has no specific plans for further expansion through acquisition.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.7*

The projected use of stock proceeds is highlighted below.

•

The Company. The Company is expected to retain up to 50% of the net conversion proceeds. At present, Company funds, net of the loan to the ESOP, are expected to be invested initially into liquid funds held as a deposit at the Bank. Over time, Company funds are anticipated to be utilized for various corporate purposes, including payment of cash dividends, repurchases of common stock and possibly acquisitions.

•

The Bank. The balance of the net conversion proceeds will be infused into the Bank. Cash proceeds (i.e., net proceeds less deposits withdrawn to fund stock purchases) infused into the Bank are anticipated to become part of general operating funds, and are expected to initially be invested in short-term investments pending longer-term deployment that will emphasize funding loan growth.

Overall, it is the Company’s objective to pursue growth that will serve to increase returns, while, at the same time, growth will not be pursued that could potentially compromise the overall risk associated with Kearny Financial’s operations.

Balance Sheet Trends

Table 1.1 shows the Company’s historical balance sheet data for the past five fiscal years. Asset growth trends have consistently trended upward since fiscal year end 2010, with total assets increasing from $2.3 billion at June 30, 2010 to $3.5 billion at June 30, 2014. Asset growth was most significant during fiscal years 2011 and 2014, which reflects the acquisition of Central Jersey Bancorp during fiscal 2011 and the acquisition of Atlas Bank during fiscal 2014. Overall, the Company’s assets increased at a 10.67% annual rate from June 30, 2010 through June 30, 2014. A summary of Kearny Financial’s key operating ratios for the past five fiscal years is presented in Exhibit I-3.

Similar to asset growth trends, the Company’s net loans receivable balance has trended higher from fiscal yearend 2010 through fiscal yearend 2014. Overall, net loans receivable increased at an annual rate of 14.52% from June 30, 2010 through June 30, 2014, which also provided for an increase in the loans-to-assets ratio from 42.96% at June 30, 2010 to 49.26% at June 30, 2104. Net loans receivable at June 30, 2014 totaled $1.7 billion, versus $1.0 billion at June 30, 2010. Loan growth was most significant during fiscal 2014, which was largely realized through increased originations of commercial real estate loans and also includes approximately $78.7 million of loans acquired in conjunction with the acquisition of the Atlas Bank on June 30, 2014.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.8*

Table 1.1

Kearny Financial Corp.

Historical Balance Sheet Data


																										06/30/10- 06/30/14 Annual. Growth Rate

	At June 30,
	2010					2011					2012					2013					2014
	Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Amount		Pct(1)			Pct
	($000)		(%)			($000)		(%)			($000)		(%)			($000)		(%)			($000)		(%)			(%)
Total Amount of:
Assets	$	2,339,813		100.00	%	$	2,904,136		100.00	%	$	2,937,006		100.00	%	$	3,145,360		100.00	%	$	3,510,009		100.00	%		10.67	%
Cash and cash equivalents		181,422		7.75	%		220,580		7.60	%		155,584		5.30	%		127,034		4.04	%		135,034		3.85	%		-7.12	%
Loans receivable, net		1,005,152		42.96	%		1,256,584		43.27	%		1,274,119		43.38	%		1,349,975		42.92	%		1,729,084		49.26	%		14.52	%
Mortgage-backed securities (AFS)		703,455		30.06	%		1,060,247		36.51	%		1,230,104		41.88	%		780,652		24.82	%		437,223		12.46	%		-11.21	%
Investment securities (AFS)		29,497		1.26	%		44,673		1.54	%		12,602		0.43	%		300,122		9.54	%		407,898		11.62	%		92.84	%
Mortgage-backed securities (HTM)		1,700		0.07	%		1,345		0.05	%		1,090		0.04	%		101,114		3.21	%		295,658		8.42	%		263.15	%
Investment securities (HTM)		255,000		10.90	%		106,467		3.67	%		34,662		1.18	%		210,015		6.68	%		216,414		6.17	%		-4.02	%

Total Investments and MBS		989,652		42.30	%		1,212,732		41.76	%		1,278,458		43.53	%		1,391,903		44.25	%		1,357,193		38.67	%		8.22	%
FHLB stock		12,867		0.55	%		13,560		0.47	%		14,142		0.48	%		15,666		0.50	%		25,990		0.74	%		19.22	%
Bank-owned life insurance		19,833		0.85	%		24,470		0.84	%		48,615		1.66	%		86,084		2.74	%		88,820		2.53	%		45.47	%
Real estate owned		146		0.01	%		7,497		0.26	%		3,811		0.13	%		2,061		0.07	%		1,624		0.05	%		82.62	%
Goodwill/Other intangibles		82,263		3.52	%		109,398		3.77	%		109,243		3.72	%		109,105		3.47	%		109,381		3.12	%		7.38	%
Deposits	$	1,623,562		69.39	%	$	2,149,353		74.01	%	$	2,171,797		73.95	%	$	2,370,508		75.37	%	$	2,479,941		70.65	%		11.17	%
FHLB advances and other borrowings		210,000		8.98	%		247,642		8.53	%		249,777		8.50	%		287,695		9.15	%		512,257		14.59	%		24.97	%
Stockholders’ equity	$	485,926		20.77	%	$	487,874		16.80	%	$	491,617		16.74	%	$	467,707		14.87	%	$	494,676		14.09	%		0.45	%
Stockholders’ tangible equity		403,663		17.25	%		378,476		13.03	%		382,374		13.02	%		358,602		11.40	%		385,295		10.98	%		-1.16	%

Shares Outstanding/Ownership Percentages:
Public shares outstanding		17,428,027		25.50	%		16,934,827		24.96	%		16,019,790		23.93	%		15,584,490		23.44	%		15,307,528		22.76	%
MHC shares outstanding (2)		50,916,250		74.50	%		50,916,250		75.04	%		50,916,250		76.07	%		50,916,250		76.56	%		51,960,337		77.24	%

Total shares outstanding		68,344,277		100.00	%		67,851,077		100.00	%		66,936,040		100.00	%		66,500,740		100.00	%		67,267,865		100.00	%

Loans/Deposits				61.91	%				58.46	%				58.67	%				56.95	%				69.72	%
Number of offices		27					40					41					41					42

(1)	Ratios are as a percent of ending assets.

(2)	For June 30, 2014, reflects 1,044,087 shares issued to the MHC in connection with the merger with Atlas Bank.

Sources: Kearny Financial’s prospectus, audited and unaudited financial statements and RP Financial calculations.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.9*

From fiscal yearend 2010 through fiscal yearend 2014, the Company’s loan portfolio composition shifted towards higher concentrations of commercial real estate loans and commercial business loans and lower concentrations of 1-4 family loans, consumer loans and construction loans. Commercial real estate loans, including multi-family loans, currently constitute the largest concentration of the Company’s loan portfolio, with the portfolio increasing from $203.0 million or 20.04% of total loans at June 30, 2010 to $983.8 million or 56.44% of total loans at June 30, 2014. Comparatively, 1-4 family loans, which comprise the second largest concentration of the loan portfolio, declined from $663.9 million or 65.52% of total loans at June 30, 2010 to $580.6 million or 33.31% of total loans at June 30, 2014. Over the same time period, consumer loans decreased from $117.2 million or 11.57% of total loans to $104.0 million or 5.96% of total loans, commercial business loans increased from $14.4 million or 1.42% of total loans to $67.3 million or 3.86% of total loans and construction loans decreased from $14.7 million or 1.45 % of total loans to $7.3 million or 0.42% of total loans.

The intent of the Company’s investment policy is to provide adequate liquidity and to generate a favorable return within the context of supporting overall credit and interest rate risk objectives. Over the past five fiscal years, the Company’s investment securities portfolio ranged from a low $989.7 million or 42.30% of assets at June 30, 2010 to a high of $1.392 billion or 44.25% of assets at June 30, 2013. As of June 30, 2014, the Company held investment securities totaling $1.357 billion or 38.67% of assets, which consisted of $845.1 million of investment securities maintained as available-for-sale and $512.1 million of investment securities maintained as held-to-maturity. As of June 30, 2014, the available-for-sale investment securities portfolio consisted of MBS ($437.2 million), corporate bonds ($162.2 million), collateralized loan obligations ($119.6 million), asset-backed securities ($87.3 million), municipal bonds ($26.8 million), trust preferred securities ($7.8 million) and U.S. agency obligations ($4.2 million). As of June 30, 2014, the available-for-sale investment securities portfolio had a net unrealized gain of $1.1 million. As of June 30, 2014, the held-to-maturity investment securities portfolio consisted of MBS ($295.7 million), U.S. agency obligations ($144.3 million) and municipal bonds ($72.1 million). Exhibit I-4 provides historical detail of the Company’s investment portfolio. The Company also held $26.0 million of FHLB stock and cash and cash equivalents of $135.0 million at June 30, 2014, equal to 0.74% of assets and 3.85% of assets, respectively.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.10*

The Company also maintains an investment in BOLI policies, which cover the lives of certain directors and officers of the Company. The purpose of the investment is to provide funding for the benefit plans of the covered individuals. The life insurance policies earn tax-exempt income through cash value accumulation and death proceeds. As of June 30, 2014, the cash surrender value of the Company’s BOLI equaled $88.8 million or 2.53% of assets.

Over the past five fiscal years, Kearny Financial’s funding needs have been addressed through a combination of deposits, borrowings, and internal cash flows. From June 30, 2010 through June 30, 2014, the Company’s deposits increased at an 11.17% annual rate. Deposit growth paralleled trends in asset growth, consistently increasing over the last five fiscal years. Overall, deposits increased from $1.624 billion or 69.39% of assets at June 30, 2010 to $2.480 billion or 70.65% of assets at June 30, 2014. Transaction and savings account deposits constitute the largest concentration of the Company’s deposits, pursuant to which the concentration of core deposits comprising total deposits has increased in recent years due to growth of core deposits and a decrease in CDs.

Borrowings serve as an alternative funding source for the Company to address funding needs for growth and to support management of deposit costs and interest rate risk. From June 30, 2010 through June 30, 2014, borrowings increased at an annual rate of 24.97%. Most of the increase in borrowings occurred during fiscal 2014 in connection with the implementation of the Company’s wholesale growth strategy. Overall, borrowings increased from $210.0 million or 8.98% of assets at June 30, 2010 to $512.3 million or 14.59% of assets at June 30, 2014. FHLB advances constitute the primary source of borrowings utilized by the Company.

The Company’s equity increased at a 0.45% annual rate from June 30, 2010 through June 30, 2014, as retention of earnings was largely offset by stock repurchases and payment of cash dividends prior to fiscal 2013. Significantly stronger asset growth relative to equity growth provided for a decline in the Company’s equity-to-assets from 20.77% at June 30, 2010 to 14.09% at June 30, 2014. Similarly, the Company’s tangible equity-to-assets ratio declined from 17.25% at June 30, 2010 to 10.98% at June 30, 2014. Goodwill and other intangibles totaled $109.4 million or 3.12% of assets at June 30, 2014, consisting of $108.6 million of goodwill and $790,000 of core deposit intangibles. The Bank maintained capital surpluses relative to all of its regulatory capital requirements at June 30, 2014. The addition of stock proceeds will serve to strengthen the Company’s capital position, as well as support growth


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.11*

opportunities. At the same time, the significant increase in Kearny Financial’s pro forma capital position will initially depress its ROE.

Income and Expense Trends

Table 1.2 shows the Company’s historical income statements for the past five fiscal years. The Company’s reported earnings over this time period ranged from a low of $5.1 million or 0.17% of average assets in fiscal 2012 to a high of $10.2 million or 0.31% of average assets in fiscal 2014. Net interest income and operating expenses represent the primary components of the Company’s earnings. Non-interest operating income has been a stable yet modest source of earnings for the Company. Loan loss provisions have fluctuated over the past five fiscal years, but generally have not been a significant impact on earnings. Non-operating income and losses have generally had a limited impact on the Company’s earnings over the last five fiscal years.

From fiscal 2010 through fiscal 2014, the Company’s net interest income to average assets ratio ranged from a low of 2.24% during fiscal 2013 to a high of 2.58% during fiscal 2010. The downward trend in the Company’s net interest income ratio from fiscal 2010 through fiscal 2013 reflects interest rate spread compression that has resulted from a more significant decrease in the yield earned on interest-earnings assets relative to the cost of interest-bearing liabilities. As a result of the prolonged low interest rate environment, the decline in yield earned on less rate sensitive interest-earning assets has become more significant relative to the decline in rate paid on more rate sensitive liabilities, which had more significant downward repricing earlier in the prevailing interest rate environment. An increase in the concentration of interest-earning assets comprised of higher yielding loans relative to cash and investments helped to stabilize the Company’s interest rate spread during fiscal 2014. Overall, the Company’s interest rate spread increased from 2.45% during fiscal 2010 to 2.56% during fiscal 2011, which was followed by a downward trend to 2.32% during fiscal 2014. The Company’s net interest rate spreads and yields and costs for the past five fiscal years are set forth in Exhibit I-3 and Exhibit I-5.

Several factors may impact the Company’s future spreads and net interest income. First, the benefit of declining funding costs has been diminishing as the overall cost of funds equaled 0.85% for fiscal 2014, and the potential for further reductions in funding costs is viewed to be somewhat limited. At the same time, the increased emphasis on growing the loan portfolio


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.12*

Table 1.2

Kearny Financial Corp.

Historical Income Statements


	For the Year Ended June 30,
	2010						2011						2012						2013						2014
	Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)			Amount			Pct(1)
	($000)			(%)			($000)			(%)			($000)			(%)			($000)			(%)			($000)			(%)
Interest income	$	93,108			4.24	%	$	100,376			3.71	%	$	98,549			3.30	%	$	88,258			2.98	%	$	95,819			2.92	%
Interest expense		(36,321	)		-1.65	%		(32,216	)		-1.19	%		(28,369	)		-0.95	%		(22,001	)		-0.74	%		(21,998	)		-0.67	%

Net interest income	$	56,787			2.58	%	$	68,160			2.52	%	$	70,180			2.35	%	$	66,257			2.24	%	$	73,821			2.25	%
Provision for loan losses		(2,616	)		-0.12	%		(4,628	)		-0.17	%		(5,750	)		-0.19	%		(4,464	)		-0.15	%		(3,381	)		-0.10	%

Net interest income after provisions	$	54,171			2.47	%	$	63,532			2.35	%	$	64,430			2.16	%	$	61,793			2.09	%	$	70,440			2.15	%
Non-interest operating income	$	2,413			0.11	%	$	3,640			0.13	%	$	4,767			0.16	%	$	6,179			0.21	%	$	6,967			0.21	%
Gain(Loss) on sale of loans		0			0.00	%		539			0.02	%		661			0.02	%		557			0.02	%		80			0.00	%
Operating expense		(44,727	)		-2.04	%		(52,768	)		-1.95	%		(58,721	)		-1.97	%		(60,737	)		-2.05	%		(63,767	)		-1.94	%

Net operating income	$	11,857			0.54	%	$	14,943			0.55	%	$	11,137			0.37	%	$	7,792			0.26	%	$	13,641			0.42	%

Non-Operating Income/(Loss)
Gain(Loss) on sale of securities	$	509			0.02	%	$	749			0.03	%	$	47			0.00	%	$	10,427			0.35	%	$	1,517			0.05	%
OTTI charge on securities available for sale		(206	)		-0.01	%		0			0.00	%		0			0.00	%		0			0.00	%		0			0.00	%
Gain/(Loss) on sale of real estate owned		(12	)		0.00	%		(81	)		0.00	%		(3,330	)		-0.11	%		(775	)		-0.03	%		(441	)		-0.01	%
Merger-related expenses		(373	)		-0.02	%		(3,474	)		-0.13	%		0			0.00	%		0			0.00	%		(391	)		-0.01	%
Debt extinguishment expense		0			0.00	%		0			0.00	%		0			0.00	%		(8,688	)		-0.29	%		0			0.00	%

Net non-operating income(loss)	($	82	)		0.00	%	($	2,806	)		-0.10	%	($	3,283	)		-0.11	%	$	964			0.03	%	$	685			0.02	%
Net income before tax	$	11,775			0.54	%	$	12,137			0.45	%	$	7,854			0.26	%	$	8,756			0.30	%	$	14,405			0.44	%
Income tax provision		(4,963	)		-0.23	%		(4,286	)		-0.16	%		(2,776	)		-0.09	%		(2,250	)		-0.08	%		(4,217	)		-0.13	%

Net income (loss)	$	6,812			0.31	%	$	7,851			0.29	%	$	5,078			0.17	%	$	6,506			0.22	%	$	10,188			0.31	%

Adjusted Earnings
Net income	$	6,812			0.31	%	$	7,851			0.29	%	$	5,078			0.17	%	$	6,506			0.22	%	$	10,188			0.31	%
Add(Deduct): Non-operating income/expense		82			0.00	%		2,806			0.10	%		3,283			0.11	%		(964	)		-0.03	%		(685	)		-0.02	%
Tax effect (2)		(29	)		0.00	%		(982	)		-0.04	%		(1,149	)		-0.04	%		337			0.01	%		240			0.01	%

Adjusted earnings	$	6,865			0.31	%	$	9,675			0.36	%	$	7,212			0.24	%	$	5,879			0.20	%	$	9,743			0.30	%
Expense coverage ratio (3)		1.26x						1.29x						1.19x						1.09x						1.16x
Efficiency ratio (4)		75.84	%					73.58	%					78.49	%					83.67	%					78.86	%
Effective tax rate		42.15	%					35.31	%					35.35	%					25.70	%					29.27	%
Return on average equity		1.42	%					1.63	%					1.04	%					1.33	%					2.17	%

(1)	Ratios are as a percent of average assets.

(2)	Assumes a 35.0% effective tax rate.

(3)	Expense coverage ratio calculated as net interest income before provisions for loan losses divided by operating expenses.

(4)	Efficiency ratio calculated as operating expenses divided by the sum of net interest income before provisions for loan losses plus non-interest operating income.

Sources: Kearny Financial’s prospectus, audited and unaudited financial statements and RP Financial calculations.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.13*

and, in particular growth of commercial real estate and commercial business loans, will facilitate an increase in yield earned on interest-earning assets. Lastly, the completion of the second- step conversion will have a dual benefit of providing the Company with additional interest-free funds to reinvest, while over the longer term, the Company has indicated the intent to use the additional equity to support balance sheet growth, including expansion of interest-earning assets at a positive spread.

Non-interest operating income has been a fairly stable contributor to the Company’s earnings, averaging a modest 0.16% of average assets over the five year period covered in Table 1.2. For fiscal 2014, non-interest operating income amounted to $7.0 million or 0.21% of average assets. Fees and service charges, income from BOLI and electronic banking fees and charges constitute the major components of the Company’s non-interest operating revenues.

Operating expenses represent the other major component of the Company’s earnings, which have been maintained at approximately 2.00% of average assets over the past five fiscal years. For fiscal 2014, operating expenses were $63.8 million or 1.94% of average assets. The general upward trend in operating expenses since fiscal 2010 was due to such factors as normal cost increases, adding staff, equipment and systems in support of the Company’s growth strategies and the acquisitions of Central Jersey Bancorp and Atlas Bank that were completed in fiscal years 2011 and 2014, respectively. Notwithstanding the upward trend in the Company’s operating expenses, the Company has effectively maintained a low operating expense ratio throughout the period shown in Table 1.2. Notably, the Company maintains a high ratio of assets per employee, which is supported by the relatively low staffing requirements associated with the Company’s relatively high concentration of interest-earning assets maintained in investments, mortgage-based lending strategy that has emphasized growth of higher balance commercial real estate loans and limited diversification into other products and services that would provide additional sources of non-interest operating income. As of June 30, 2014, the Company’s ratio of assets per full time equivalent employee equaled $7.9 million, versus $5.7 million for all publicly-traded thrifts.

Overall, the general trends in the Company’s net interest margin and operating expense ratio since fiscal 2010 reflect a slight decline in core earnings, as indicated by the Company’s expense coverage ratio (net interest income divided by operating expenses). Kearny Financial’s expense coverage ratio equaled 1.26 times during fiscal 2010, versus a ratio of 1.16 times during fiscal 2014. Similarly, Kearny Financial’s efficiency ratio (operating expenses as a


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.14*

percent of the sum of net interest income and other operating income) of 75.84% during fiscal 2010 was slightly more favorable than its efficiency ratio of 78.86% during fiscal 2014.

Over the past five fiscal years, loan loss provisions established by the Company have ranged from a high of 0.19% of average assets during fiscal 2012 to a low of 0.10% of average assets during fiscal 2014. The downward trend in the amount of loan loss provisions established since fiscal 2012 has been supported by improving credit quality trends, including a decline in non-performing assets and lower net charge-offs, and an improving economy in the New York metropolitan area. As of June 30, 2014, the Company maintained valuation allowances of $12.4 million, equal to 0.71% of total loans outstanding and 48.95% of non-performing loans. Exhibit I-6 sets forth the Company’s loan loss allowance activity during the past five fiscal years.

Non-operating income and expenses haves typically been somewhat of a limited factor in the Company’s earnings over the past five fiscal years, consisting of gains on sale of investment securities, an OTTI charge on available for sale securities, losses on the sale of REO, merger-related expenses and a one-time debt extinguishment expense. Net non-operating income and losses over the past five fiscal years ranged from a net non-operating loss of $3.3 million or 0.11% of average assets during fiscal 2012 to net non-operating income of $964,000 or 0.03% of average assets during fiscal 2013. For fiscal 2014, the Company’s net non-operating income equaled $685,000 or 0.02% of average assets and consisted of $1.5 million of gains on the sale of available for sale securities, a $441,000 loss on the sale of REO, and $391,000 of merger-related expenses. Overall, the various items that comprise the Company’s non-operating income/expense are not viewed to be part of the Company’s core or recurring earnings base.

The Company’s effective tax rate ranged from a low of 25.70% during fiscal 2013 to a high of 42.15% during fiscal 2010. For fiscal 2014, the Company’s effective tax rate was 29.27%. As set forth in the prospectus, the Company’s marginal effective tax rate is 35.0%.

Interest Rate Risk Management

The Company’s balance sheet is liability-sensitive in the short-term (less than one year) and, thus, the net interest margin will typically be adversely affected during periods of rising and higher interest rates. Comparatively, the Company’s net interest margin generally benefits from a declining and low interest rate environment. However, as interest rates have remained at relatively low levels for an extended period of time, the Company’s has experienced interest rate


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.15*

spread compression as the average yield earned on interest-earning assets has been declining more significantly relative to the average rate paid on interest-bearing liabilities.

The Company’s model simulation analysis measures interest rate risk from a capital perspective and an earnings perspective. With regard to capital, the Company’s internal interest rate risk analysis calculates the sensitivity of the Company’s Economic Value of Equity (“EVE”) ratio to movements in interest rates. EVE represents the present value of the expected cash flows from existing assets less the present value of expected cash flows arising from existing liabilities adjusted for the value of off-balance sheet contracts. The EVE ratio represents the dollar amount of the Bank’s EVE divided by the present value of its total assets for a given interest rate scenario. With regard to earnings, the Company’s internal interest rate risk analysis generally focuses on shorter-term exposure to interest rate risk and for each scenario, projected net interest income (“NII”) is measured over a one year period utilizing a static balance sheet assumption through which incoming and outgoing asset and liability cash flows are reinvested into the same instruments. As of June 30, 2014, an analysis of the Company’s EVE indicated that a 2.0% instantaneous and permanent increase in interest rates that result in parallel shifts in the yield curve would result in a 29% decrease in EVE. Comparatively, at June 30, 2014, a 2.0% instantaneous and permanent increase in interest rates that result in parallel shifts in the yield curve would result in a 2.24% reduction in net interest income over a one year period (see Exhibit I-7).

In addition to the balance sheet restructuring and wholesale growth strategy implemented during the second half of calendar 2013, the Company continues to implement a number of strategies to manage interest rate risk, particularly with respect to seeking to mitigate the risk to its net interest rate spread and net interest margin arising from adverse changes in interest rates and the shape of the yield curve. Such strategies include deploying excess liquidity into higher yielding interest-earning assets, such as commercial loans and investment securities, and emphasizing growth of commercial business loans which consists primarily of adjustable rate loans or shorter term fixed rate loans. As of June 30, 2014, of the Company’s total loans due after June 30, 2015, adjustable rate loans comprised 36.5% of those loans (see Exhibit I-8).

On the liability side of the balance sheet, management of interest rate risk has been pursued through reducing deposit offering rates, extending the duration of wholesale funding sources through cost effective use of interest rate derivatives that effectively convert short-term


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.16*

wholesale funding sources into longer-term, fixed-rate funding sources, utilizing FHLB advances with initial terms out to ten years and emphasizing growth of lower costing and less interest rate sensitive transaction and savings account deposits. Transaction and savings account deposits comprised 58.2% of the Company’s deposits at June 30, 2014. Additionally, through various deposit pricing strategies, the Company has allowed for some controlled outflow of shorter term certificates and some growth of longer term CDs.

The infusion of stock proceeds will serve to further limit the Company’s interest rate risk exposure, as most of the net proceeds will be redeployed into interest-earning assets and the increase in the Company’s capital position will lessen the proportion of interest rate sensitive liabilities funding assets.

Lending Activities and Strategy

Kearny Financial’s lending activities have provided for a loan portfolio composition that is concentrated in commercial real estate loans, followed by 1-4 family residential loans, consumer loans, commercial business loans and construction loans. Going forward, the Company’s lending strategy will continue to emphasize commercial real estate lending and lending diversification will emphasize growth of commercial business loans. Exhibit I-9 provides historical detail of Kearny Financial’s loan portfolio composition over the past five fiscal years and Exhibit I-10 provides the contractual maturity of the Company’s loan portfolio by loan type as of June 30, 2014.

Commercial Real Estate and Multi-Family Loans

Commercial real estate and multifamily loans consist largely of loans originated by the Company, which are generally collateralized by properties in the Company’s regional lending area. On a more limited basis, the Company supplements originations of commercial real estate loans with purchased loan participations from local banks. Loan participations are subject to the same underwriting criteria and loan approvals as applied to loans originated by the Company. Kearny Financial generally originates commercial real estate loans up to a loan-to-value (“LTV”) ratio of 75.0% and generally requires a minimum debt-coverage ratio of 1.25 times. Commercial real estate loans are originated with amortization terms of up to 25 years. The Company also offers a five year balloon loan with a 25 year amortization schedule. Properties securing the commercial real estate loan portfolio include apartment buildings, retail/service properties, land and mixed-use properties. As of June 30, 2014, the Company’s


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.17*

outstanding balance of commercial real estate loans totaled $983.8 million equal to 56.44% of total loans outstanding.

1-4 Family Residential Loans

Kearny Financial offers both fixed rate and adjustable rate 1-4 family permanent mortgage loans with terms of up to 30 years, which are substantially secured by properties located in New Jersey and New York. From time to time, the Company will supplement originations with purchases of 1-4 family loans. Loan originations and loan purchases are generally underwritten to secondary market guidelines, so as to provide the Company with the flexibility to sell the loans into the secondary market for purposes of managing interest rate risk. However, the Company’s current philosophy is to retain 1-4 family loan originations and purchases for its own portfolio. ARM loans offered by the Company have initial repricing terms of one, three, five, seven or ten years and then adjust annually for the balance of the loan term. ARM loans are indexed to the one year Constant Maturity U.S. Treasury index. As of June 30, 2014, the Company’s outstanding balance of 1-4 family residential loans totaled $580.6 million or 33.31% of total loans outstanding.

Consumer Loans

The consumer loan portfolio consists primarily of home equity loans and lines of credit, with the balance of the portfolio consisting largely of loans secured by savings account deposits or CDs. Home equity loans are originated as fixed rate loans with terms of up to 20 years and home equity lines of credit are originated as fixed or adjustable rate loans with terms of up to 20 years. Home equity loans and fixed rate home equity lines of credit are generally originated within the Company’s market area and are generally made in amounts of up to an 80% LTV ratio on term loans and of up to a 75% LTV ratio on home equity adjustable rate lines of credit, inclusive of other liens on the property As of June 30, 2014, the Company’s outstanding balance of home equity loans and lines of credit totaled $99.6 million or 5.72% of total loans outstanding and 95.83% of total consumer loans outstanding. As of June 30, 2014, other consumer loans consisted of $4.0 million of loans secured by savings account deposits or CDs and $373,000 of other miscellaneous consumer loans.

Commercial Business Loans

The commercial business loan portfolio is generated through extending loans to businesses operating in the regional market area. Expansion of commercial business lending


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.18*

activities is a desired area of loan growth for the Company, pursuant to which the Company is seeking to become a full service community bank to its commercial loan customers through offering a full range of commercial loan products that can be packaged with lower cost commercial deposit products. Commercial business loans offered by the Company consist of term loans and lines of credit to a variety of professionals, sole proprietorships and small businesses, including loans originated through the SBA in which the Bank participates as a Preferred Lender. The LTV limit on secured commercial lines of credit and term loans is generally limited to 70%. The Company also originates unsecured commercial loans in the form of overdraft checking authorization up to $25,000 and unsecured lines of credit up to $25,000. The Company’s non-SBA commercial term loans generally have terms of up to 20 years and are mostly fixed-rate loans. Commercial lines of credit have terms of up to two years and are generally adjustable rate loans. The Company also offers a one year, interest-only commercial line of credit with a balloon payment.

The Company’s generation of commercial business loans was expanded during fiscal 2014 to include purchases of commercial business loan participations totaling $4.9 million. The $4.9 million of commercial business loan participations maintained at June 30, 2014 were comprised of four loans acquired through the Company’s membership in BancAlliance, a cooperative network of lending institutions that serves as a conduit for institutional investors to participate in large commercial credits.

As of June 30, 2014, Kearny Financial’s outstanding balance of commercial business loans equaled $67.3 million or 3.86% of total loans outstanding. Non-SBA loans comprised $57.8 million or 85.9% of the commercial business loan portfolio at June 30, 2014, of which approximately 94% were secured loans primarily collateralized by real estate or, to a lesser extent, other forms of collateral. The remaining $9.5 million or 14.1% of commercial business loans represent the retained portion of SBA loan originations that are generally secured by various forms of collateral, including real estate and business equipment. The Company generally sells the guaranteed portion of eligible SBA loans originated, which ranges from 50% to 90% of the loan’s outstanding balance, while retaining the nonguaranteed portion of such loans in portfolio.

Construction Loans

Construction loans consist of loans to individuals for construction of 1-4 family residences or for major renovations or improvements to an existing dwelling, as well as loans to


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.19*

builders and developers for multi-unit buildings or multi-house projects. All of the Company’s construction lending activities are conducted in the state of New Jersey. Construction loans are originated up to a LTV ratio of 80% of the anticipated appraised value of the completed property. Terms for construction loans are generally limited to one year with an interest rate tied to the prime rate as published in The Wall Street Journal. In some cases, the Company converts a construction loan to a permanent mortgage loan upon completion of construction. The Company generally does not make construction loans to builders on a speculative basis. Financing is provided for up to two houses at a time on a multi-house project, requiring a contract on one of the two houses before financing for the next house may be obtained. As of June 30, 2014, Kearny Financial’s outstanding balance of construction loans equaled $7.3 million or 0.42% of total loans outstanding.

Loan Originations, Purchases, and Sales

Exhibit I-11 provides a summary of the Company’s lending activities for the fiscal years ended 2012 through 2014. Annual loan originations trended higher during the three year period, ranging from a low $230.9 million during fiscal 2012 to a high of $471.8 million during fiscal 2014. Multi-family and commercial real estate loans were the largest source of originations during the three year period, with such originations increasing from $95.5 million during fiscal 2012 to $334.4 million during fiscal 2014.

From time to time, the Company has supplemented loan originations with purchases of loans. Loan purchases were most significant during fiscal 2014 when the Company purchased loans totaling $114.3 million, consisting of $87.0 million of commercial real estate loan participations, $22.4 million of 1-4 family loans and $4.9 million of commercial business loan participations. As of June 30, 2014, the Company’s commercial real estate loan portfolio included 35 commercial real estate loan participations with a total balance of $131.8 million. Purchases of 1-4 family loans by the Company include loans located outside of the states of New Jersey and New York, which totaled $32.2 million at June 30, 2014. As of June 30, 2014, the largest concentrations of out of state purchased 1-4 family loans were in the states of Massachusetts ($10.7 million), Pennsylvania ($7.1 million) and Georgia ($2.9 million). The company also acquired loans with a fair value of $78.7 million of loans in connection with the acquisition of Atlas Bank completed on June 30, 2014.


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		*I.20*

In terms of loans sold, the Company generally sells the guaranteed portion of eligible SBA loans originated while retaining the nonguaranteed portion of such loans in portfolio. Over the past three fiscal years, SBA loan sales ranged from $6.5 million during fiscal 2012 to $737,000 during fiscal 2014. Other loans sold by the Company during the past three fiscal were limited to the sale of $5.3 million of 1-4 family loans during fiscal 2014. In each of the past three fiscal years, the Company has realized a net increase in loans as loan originations and purchases more than offset loan principal repayments and loan sales.

Asset Quality

The Company’s historical balance sheet concentration maintained in investment securities and the correspondingly relatively low concentration of assets maintained in loans have generally supported the maintenance of relatively favorable credit quality measures. With the onset of the national recession and bursting of the house bubble in 2008, the Company experienced elevated levels of problems assets. Over the past five fiscal years, Kearny Financial’s balance of non-performing assets ranged from a low of $21.7 million or 0.93% of assets at fiscal yearend 2010 to a high of $42.5 million or 1.46% of assets at fiscal yearend 2011. Since peaking at fiscal yearend 2011, the balance of non-performing assets had trended lower during past three fiscal years. The Company held $26.9 million of non-performing assets at June 30, 2014, equal to 0.77% of assets. As shown in Exhibit I-12, non-performing assets at June 30, 2014 consisted of $25.2 million of non-accruing loans, $125,000 of accruing loans 90 days or more past due and $1.6 million of real estate owned. Non-accruing 1-4 family loans and non-accruing commercial real estate loans comprised the largest concentrations of the non-performing loan balance, accounting for $9.9 million and $6.9 million of the non-performing loan balance, respectively, at June 30, 2014. Comparatively, as of June 30, 2011, the balances of non-performing 1-4 loans and non-performing commercial real estate loans were $19.0 million and $7.4 million, respectively.

To track the Company’s asset quality and the adequacy of valuation allowances, the Company has established detailed asset classification policies and procedures which are consistent with regulatory guidelines. Classified assets are reviewed monthly by senior management and the Board. In addition, the results of the classification of assets review are validated by the Company’s third party loan review firm during their quarterly, independent review. Pursuant to these procedures, when needed, the Company establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As of


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.21*

June 30, 2014, the Company maintained loan loss allowances of $12.4 million, equal to 0.71% of total loans outstanding and 48.95% of non-performing loans.

Funding Composition and Strategy

Deposits have consistently served as the Company’s primary funding source and at June 30, 2014, deposits accounted for 82.88% of the Company’s combined balance of deposits and borrowings. Exhibit I-13 sets forth the Company’s deposit composition for the past three fiscal years. Transaction and savings account deposits constituted 58.84%% of average total deposits during fiscal 2014, as compared to 47.31% of average total deposits during fiscal 2012. The increase in the concentration of core deposits comprising total deposits since fiscal 2012 was realized through growth of core deposits and a decline in CDs. Most of the growth of core deposits has consisted of interest-bearing demand deposits, which was driven by brokered money market deposits acquired through Promontory’s IND program. At June 30, 2014, the balance of interest-bearing demand deposits included $213.5 million of brokered money market deposits acquired through Promontory’s IND program. The terms of the program generally establish a reciprocal commitment for Promontory to deliver and the Bank to accept such deposits for a period of no less than five years during which time total aggregate balances shall be maintained within a range of $200.0 million to $230.0 million.

The balance of the Company’s deposits consists of CDs, which equaled 41.16% of average total deposits during fiscal 2014 compared to 52.69% of average total deposits during fiscal 2012. Kearny Financial’s current CD composition reflects a higher concentration of short-term CDs (maturities of one year or less). As of June 30, 2014, 56.07% of total CDs were scheduled to mature in one year or less. Exhibit I-14 sets forth the maturity schedule of the Company’s CDs as of June 30, 2014. As of June 30, 2014, jumbo CDs (CD accounts with balances of $100,000 or more) amounted to $476.6 million or 45.95% of total CDs. During fiscal 2014, the Company began to utilize the QwickRate deposit listing service through which it has attracted non-brokered wholesale CDs targeting institutional investors with a three-to-five year investment horizon. At June 30, 2014, the balance of the Company’s listing service time deposits totaled $54.2 million and had a weighted average remaining term to maturity of 3.9 years. Additionally, the balance of CDs assumed in conjunction with the acquisition of Atlas Bank included $6.4 million of predominantly short-term CDs acquired by Atlas Bank through the QwickRate deposit listing service. In addition to the $213.5 million of money market brokered deposits, the Company held $18.5 million of longer-term brokered CDs at June 30, 2014.


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.22*

Borrowings serve as an alternative funding source for the Company to facilitate management of funding costs and exposure to interest rate risk and liquidity risk. Borrowings utilized by the Company have predominantly consisted of advances from the FHLB of New York. As of June 30, 2014, the Company maintained $481.5 million of FHLB advances. The majority of FHLB advances held by the Company at June 30, 2014 had short-term maturities of less than one year. At June 30, 2014, the Company had a total of $320.0 million of short-term FHLB advances at a weighted average interest rate of 0.38%. Such advances included $300.0 million of 90-day FHLB term advances that are generally forecasted to be periodically redrawn at maturity for the same 90 day term as the original advance. Based on this presumption, the Company has utilized interest rate swaps to effectively extend the duration of each of these advances at the time they were drawn to effectively fix their cost for period of five years. At June 30, 2014, the Company had also drawn $12.0 million of overnight borrowings from the FHLB for daily liquidity management purposes. The Company’s long-term FHLB advances totaled $161.5 million at June 30, 2014, including $145.0 million of advances maturing in fiscal 2023 with a weighted average interest rate of 3.04%

In addition, the Company assumed one short-term, fixed rate FHLB advance of $3.0 million and four long-term FHLB advances totaling $15.7 million in conjunction with its acquisition of Atlas Bank on June 30, 2014. The short-term advance had a coupon of 0.35% and matured in July 2014, while the long-term advances had a weighted average coupon of 1.11% and a weighted average remaining term of 2.6 years as of June 30, 2014.

Other borrowing held by the Company at June 30, 2014 consisted of $30.7 million of overnight borrowings in the form of depository sweep accounts. These accounts are short-term borrowings representing funds that are withdrawn from a customer’s non-interest bearing deposit account and invested in an uninsured overnight investment account that is collateralized by specified investment securities owned by the Company.

Subsidiaries

The Bank is the single wholly-owned operating subsidiary of Kearny Financial, while the Bank has two wholly-owned subsidiaries: KFS Financial Services, Inc. and CJB Investment Corp.

KFS Financial Services, Inc. was incorporated as a New Jersey corporation in 1994 under the name of South Bergen Financial Services, Inc., and was acquired in the Bank’s


*RP ^® Financial, LC.*		*OVERVIEW AND FINANCIAL ANALYSIS*
		*I.23*

merger with South Bergen Savings Bank in 1999 and was renamed KFS Financial Services, Inc. in 2000. It is a service corporation subsidiary that was originally organized for selling insurance products, including annuities, to Bank customers and the general public through a third party networking arrangement. During fiscal 2014, KFS Insurance Services, Inc. was created as a wholly-owned subsidiary of KFS Financial Services, Inc. for the primary purpose of acquiring insurance agencies. Both KFS Financial Services, Inc. and KFS Insurance Services, Inc. were considered inactive during the year ended June 30, 2014.

CJB Investment Corp. was acquired by the Bank through the Company’s acquisition of Central Jersey Bancorp in November 2010. CJB Investment Corp. was organized under New Jersey law as a New Jersey Investment Company and remained active through fiscal yearend 2014.

Legal Proceedings

The Company is involved in routine legal proceedings in the ordinary course of business from time to time. At June 30, 2014, the Company was not party to any pending legal proceedings that the Company’s management believed would have a material adverse effect on the Company’s financial condition, results of operations or cash flows.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.1*

II. MARKET AREA

Introduction

Kearny Financial serves northern and central New Jersey and Brooklyn and Staten Island, New York through the administrative headquarters office in Fairfield, New Jersey and 42 full service branch offices. The Company’s administrative office and all of its branches are located within the New York metropolitan statistical area (“MSA”) and covers an eleven-county market area including the New Jersey counties of Bergen (9 branches), Monmouth (12 branches), Hudson (2 branches), Ocean (6 branches), Morris (3 branches), Essex (3 branches), Middlesex (3 branches), Union (1 branch), and Passaic (1 branch) and the New York counties of Kings (1 branch) and Richmond (1 branch). Within the Company’s branch office network, 13 branches operate under “Central Jersey Bank, a division of Kearny Federal Savings Bank” and two branches operate under “Atlas Bank, a division of Kearny Federal Savings Bank.” The Company completed the acquisition of Atlas Bank on June 30, 2014, which expanded its branch network into the state of New York. A map showing the Company’s office coverage is set forth below and details regarding the Company’s office facilities are set forth in Exhibit II-1.

LOGO


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.2*

The New York MSA is the nation’s largest metropolitan area in terms of total population, with an estimated 2014 population of 20.0 million and the eleven counties served by the Company’s branches had a total 2014 population of approximately 8.5 million. Finance, international trade, media, real estate, manufacturing, tourism, biotechnology, and education are the leading industries in the area. Other industries include entertainment and news media. The New York MSA had an estimated gross product of over $1.33 trillion in 2012, making it the largest regional economy in the United States. New York City’s economy is the hub of the New York MSA economy. Focused in Manhattan, New York City is the financial capital of the world and is home to the New York Stock Exchange (“NYSE”), the world’s largest stock exchange by market capitalization of its listed companies. The New York area is also distinctive for its high concentrations of advanced service sector firms in fields such as law, accountancy, banking and management consultancy.

The primary market areas served by the Company are the urban/suburban markets in northern and central New Jersey and the urban markets of Staten Island and Brooklyn in New York. With operations in densely populated markets, the Company’s competitive environment includes a significant number of commercial banks, thrifts and other financial services companies, some of which have a regional or national presence. The regional economy is highly diversified and tends to parallel trends in the broader national economy. As counties in the New York MSA, the regional market area includes a large commuter population.

Future growth opportunities for Kearny Financial depend on the future growth and stability of the local and regional economy, demographic growth trends, and the nature and intensity of the competitive environment. These factors have been briefly examined to help determine the growth potential that exists for the Company, the relative economic health of the Company’s market area and the resultant impact on value.

National Economic Factors

The future success of the Company’s operations is partially dependent upon various national and local economic trends. In assessing national economic trends over the past few quarters, the pace of manufacturing activity slowed considerably in January 2014 with the PMI reading declining 5.2 points to 51.3. Comparatively, January service sector activity expanded at a slight faster pace, with a PMI reading of 56.7 compared to 55.7 in December. January was the second straight month of weak job growth, with a tepid gain of 113,000 jobs. The January unemployment rate dipped to 6.6% in January. Existing home sales in January declined to the


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.3*

lowest level since July 2012, while new home sales were up solidly in January. January 2014 home prices were up 0.9% from December and up 12.0% from a year ago January. Manufacturing activity accelerated in February, with the PMI registering 53.2. Comparatively, February service sector activity expanded at a slower pace in February, decreasing to a reading of 51.6. Job growth picked-up in February, as the U.S. economy added 175,000 jobs. However, as more people entered the labor force, the February unemployment rate ticked up to 6.7%. Despite poor weather conditions in many areas of the U.S., retail sales rose slightly in February. Sales of existing and new homes were both lower in February compared to January, which was in part attributable to rising mortgage rates and higher home prices. Home prices were up 12.2% in February compared to a year ago. Manufacturing activity expanded for the tenth consecutive month in March, with the March PMI of 53.7 reflecting a slight increase compared to February. Similarly, service sector activity expanded at a slightly faster rate in March compared to February. Job growth was up slightly in March, with a total of 192,000 jobs added during the month. However, the March unemployment rate remained at 6.7%. A healthy increase in March retail sales offered evidence of an improving economy. Sales of existing homes were down slightly in March compared to February, while new single-family home sales were down 14.5% from February to March. However, March pending home sales were up 3.4% in March compared to February, marking the first gain in nine months. First quarter GDP growth fell short of expectations, as the U.S. economy increased at a modest 0.1% annual rate during the quarter (subsequently revised to contracting at a 2.9% annual rate).

Manufacturing and non-manufacturing activity both accelerated in April 2014, providing more evidence that the economy was regaining momentum. The April jobs report showed a healthy pick-up in hiring with 288,000 jobs added and the April unemployment rate declined to 6.3%, but most of the decline was due to fewer job seekers as more people elected to drop out of the labor force. In early-May 2014 testimony before Congress, Federal Reserve Chairwoman Janet Yellen stated that the economy was on track for solid growth in the current quarter; although, a slowdown in housing that became evident in late-2013 showed few signs of reviving. Existing home sales rose for the first time 2014 during April increasing 1.3% from March, but did not match the 6.4% increase in new home sales for April. April home prices rose 2.1% from March and were up 10.5% from a year ago. Manufacturing and service sector activity expanded at slightly higher rates in May compared to April. The U.S. economy added 217,000 jobs in May and the May unemployment rate remained at 6.3%. May existing home sales rose 4.9% compared to April, while new home sales jumped 18.6% from April to May. The pace of


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.4*

manufacturing and service activity eased slightly in June compared to May. June employment data showed payrolls increased by 288,000 and the June unemployment rate dropped to 6.1%. June retail sales showed an increase of 0.2% from May, which was the smallest increase since January 2014. Existing home sales were up 2.6% in June compared to May, while sales of new single-family homes declined 8.1% in June from May. Second quarter GDP increased at a 4.0% annual rate.

The employment report for July 2014 showed job growth slowing more than expected, as 209,000 jobs were added in July and the unemployment rate for July edged up to 6.2%. Both manufacturing and non-manufacturing activity expanded at slightly higher rates in July compared to June’s readings.

In terms of interest rates trends over the past few quarters, long-term, interest rates eased lower at the start of 2014, with the 10-year Treasury yield dipping below 3.0%. The weaker-than-expected jobs report for December furthered the downward trend in long-term Treasury yields heading into mid-January. The downward trend in long-term Treasury yields continued through the balance of January, as investors sought the safe haven of Treasury bonds amid turmoil in emerging markets and soft jobs data. The Federal Reserve concluded its late-January meeting by voting to scale back its bond buying program by another $10 billion. Lackluster economic data provided for a stable interest rate environment through most of February, which was followed by a slight decline in long-term Treasury yields in late-February as investors responded to a decline in February consumer confidence and a downward revision to fourth quarter GDP. Stronger-than-expected job growth reflected in the February employment report and an increase in February manufacturing activity translated into Treasury yields edging higher during first half of March. A lower reading for March consumer confidence provided for a slight dip in the 10-year Treasury yield in mid-March, which was followed by an up-tick in the 10-year Treasury yield at the conclusion of the Federal Reserve’s March meeting and announcement that the Federal Reserve decided to trim its bond buying program by another $10 billion to $55 billion in monthly bond purchases. Long-term Treasury yields stabilized in the closing weeks of the first quarter.

Treasury yields edged higher in early-April 2014, as employment data for March showed job growth accelerating, and then declined slightly going into mid-April. Interest rates stabilized through the balance of April, as inflation remained in check and economic data generally reflected a continuation of sluggish economic growth. The Federal Reserve trimmed its monthly


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		*II.5*

bond purchase program by another $10 billion to a total of $45 billion in monthly bond purchases at the end of April. The 10-year Treasury yield dropped to six month lows in early- and mid-May, as investors moved into safe haven investments amid geopolitical fears, uncertainty over global economic growth and data indicating that the U.S. economy was growing at a tepid pace. Interest rates stabilized heading into late-May and then dipped lower at the end of May, with the yield on the 10-year Treasury falling below 2.5% following a downward revision to first quarter GDP growth. Some favorable economic data pushed long-term Treasury yields slightly higher during the first half of June. The mid-June meeting of the Federal Reserve concluded with the Federal Reserve announcing that it would reduce monthly bond purchases by another $10 billion to $35 billion per month and that it did not anticipate raising short-term rates until 2015. Following the Federal Reserve meeting, interest rates stabilized for the balance of June.

Better-than-expected job growth reflected in the June employment report contributed to long-term Treasury yields increasing slightly at the start of the third quarter of 2014. Treasury yields eased lower in mid-July, as investors moved to safer assets on news that a jet was shot down over eastern Ukraine. The 10-year Treasury yield stabilized around 2.50% through the end of July. The policy statement from the Federal Reserve’s end of July meeting indicated that the Federal Reserve would remain patient about raising interest rates and monthly bond purchases by the Federal Reserve would be scaled back by another $10 billion to $25 billion per month. Weaker than expected job growth reflected in the July employment report and turmoil in the Mideast and Ukraine contributed to long-term Treasury yields edging lower in early-August. As of August 8, 2014, the bond equivalent yields for U.S. Treasury bonds with terms of one and ten years equaled 0.10% and 2.44%, respectively, versus comparable year ago yields of 0.12% and 2.58%. Exhibit II-2 provides historical interest rate trends.

Based on the consensus outlook of economists surveyed by The Wall Street Journal in July 2014, GDP growth was projected to come in at 1.6% in 2014 and increase to 2.9% in 2015. The unemployment rate was forecasted to equal 5.9% in December 2014 and decline to 5.7% in June 2015. An average of 212,000 jobs were projected to be added per month during 2014. On average, the economists did not expect the Federal Reserve to begin raising its target rate until mid-2015 at the earliest and the 10-year Treasury yield would increase to 3.07% at the end of 2014. The surveyed economists also forecasted home prices would rise 5.1% in 2014 and housing starts were forecasted to continue to trend slightly higher in 2014.


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		*II.6*

Market Area Demographics

Demographic and economic growth trends, measured by changes in population, number of households, age distribution and median household income, provide key insight into the health of the market area served by Kearny Financial (see Table 2.1). Table 2.1 presents information regarding the demographic and economic trends for the Company’s market area from 2010 to 2014 and projected data through 2019. Data for the nation, the New York MSA, and the states of New Jersey and New York are included for comparative purposes.

The primary market area counties maintain populations ranging from 471,000 in Richmond County (Staten Island) to 2.6 million in Kings County (Brooklyn). Overall, the primary market area counties are densely populated markets, ranking among the largest populations in New Jersey and New York. Kings County has the largest population in New York, while the Company’s market area counties in New Jersey make up nine of the top ten highest populated counties in the state encompassing approximately 61% of the entire population of New Jersey. While large in their population totals, most of the primary market area counties have experienced relatively slow demographic growth during the 2010 to 2014 period, a characteristic typical of mature densely populated urban markets located throughout the Northeast Corridor. Among the primary market area counties, population and household growth rates were the strongest in Hudson County, New Jersey and Kings County, New York, exceeding the comparable United States growth rates. Population and household growth rates for the remainder of the primary market area counties are projected to be below the comparable U.S. measures over the next five years, while more closely approximating the comparable state growth rates.

New Jersey and New York rank second and sixteenth in the United States in terms of median household income. New Jersey’s central location within the metropolitan areas of New York and Philadelphia has fostered some relatively affluent markets that are served by the Company’s branch network. Morris County has the highest household and per capital income measures of the primary market area counties, which can be attributable to its close proximity to New York City as the suburban area is home to a large commuter population with jobs in New York City and also has 33 Fortune 500 businesses headquartered within the county that are concentrated in the finance, insurance, real estate, pharmaceuticals, health services, and research and development, and technology industries. The lower income areas of New Jersey


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		*II.7*

include the urban cities across the Hudson River from New York City, which includes Passaic and Essex Counties.

The primary market area counties had 2014 median household incomes ranging from $44,890 in Kings County to $91,208 in Morris County, as compared to $51,579 for the U.S., $69,176 for New Jersey, $57,619 for New York, and $64,538 for the entire New York metro area.


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		*II.8*

Table 2.1

Kearny Financial Corp.

Summary Demographic Data


	Year						Growth Rate
	2010		2014		2019		2010-2014			2014-2019
							(%)			(%)
Population (000)
USA		308,746		317,199		328,309		0.7	%		0.7	%
New York-Newark-Jersey City, NY-NJ-PA		19,567		19,985		20,476		0.5	%		0.5	%
New Jersey		8,792		8,906		9,052		0.3	%		0.3	%
Bergen, NJ		905		928		953		0.6	%		0.5	%
Essex, NJ		784		789		797		0.2	%		0.2	%
Hudson, NJ		634		663		694		1.1	%		0.9	%
Middlesex, NJ		810		832		857		0.7	%		0.6	%
Monmouth, NJ		630		628		628		-0.1	%		0.0	%
Morris, NJ		492		501		512		0.4	%		0.4	%
Ocean, NJ		577		583		591		0.3	%		0.3	%
Passaic, NJ		501		503		507		0.1	%		0.2	%
Union, NJ		536		549		564		0.6	%		0.5	%
New York		19,378		19,675		20,051		0.4	%		0.4	%
Kings, NY		2,505		2,604		2,711		1.0	%		0.8	%
Richmond, NY		469		471		475		0.1	%		0.2	%

Households (000)
USA		116,716		120,163		124,623		0.7	%		0.7	%
New York-Newark-Jersey City, NY-NJ-PA		7,153		7,323		7,522		0.6	%		0.5	%
New Jersey		3,214		3,258		3,316		0.3	%		0.3	%
Bergen, NJ		336		343		352		0.6	%		0.5	%
Essex, NJ		284		287		291		0.3	%		0.3	%
Hudson, NJ		246		260		273		1.3	%		1.0	%
Middlesex, NJ		281		288		296		0.6	%		0.6	%
Monmouth, NJ		234		234		235		0.0	%		0.1	%
Morris, NJ		181		184		189		0.5	%		0.5	%
Ocean, NJ		221		222		224		0.1	%		0.2	%
Passaic, NJ		167		167		169		0.1	%		0.1	%
Union, NJ		188		192		196		0.5	%		0.5	%
New York		7,318		7,462		7,633		0.5	%		0.5	%
Kings, NY		917		959		1,004		1.1	%		0.9	%
Richmond, NY		166		167		168		0.2	%		0.2	%

Median Household Income ($)
USA		NA		51,579		53,943		NA			0.9	%
New York-Newark-Jersey City, NY-NJ-PA		NA		64,538		67,452		NA			0.9	%
New Jersey		NA		69,176		71,683		NA			0.7	%
Bergen, NJ		NA		79,746		82,495		NA			0.7	%
Essex, NJ		NA		52,919		54,781		NA			0.7	%
Hudson, NJ		NA		59,841		65,078		NA			1.7	%
Middlesex, NJ		NA		75,361		77,975		NA			0.7	%
Monmouth, NJ		NA		80,904		83,406		NA			0.6	%
Morris, NJ		NA		91,208		91,080		NA			0.0	%
Ocean, NJ		NA		57,972		59,459		NA			0.5	%
Passaic, NJ		NA		53,787		55,012		NA			0.5	%
Union, NJ		NA		68,442		71,584		NA			0.9	%
New York		NA		57,619		61,427		NA			1.3	%
Kings, NY		NA		44,890		47,918		NA			1.3	%
Richmond, NY		NA		70,814		74,155		NA			0.9	%


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.9*

Table 2.1

Kearny Financial Corp.

Summary Demographic Data


	Year						Growth Rate
	2010		2014		2019		2010-2014		2014-2019
							(%)		(%)
Per Capita Income ($)
USA		NA		27,721		29,220		NA		1.1	%
New York-Newark-Jersey City, NY-NJ-PA		NA		34,561		36,357		NA		1.0	%
New Jersey		NA		35,137		36,654		NA		0.8	%
Bergen, NJ		NA		41,284		42,620		NA		0.6	%
Essex, NJ		NA		31,412		32,562		NA		0.7	%
Hudson, NJ		NA		33,075		36,483		NA		2.0	%
Middlesex, NJ		NA		33,903		35,077		NA		0.7	%
Monmouth, NJ		NA		41,382		42,869		NA		0.7	%
Morris, NJ		NA		46,181		46,286		NA		0.0	%
Ocean, NJ		NA		28,873		29,625		NA		0.5	%
Passaic, NJ		NA		25,183		25,783		NA		0.5	%
Union, NJ		NA		33,782		35,536		NA		1.0	%
New York		NA		32,019		34,373		NA		1.4	%
Kings, NY		NA		24,402		26,584		NA		1.7	%
Richmond, NY		NA		32,080		33,964		NA		1.1	%


	Less Than 25,000		$25,000 to 50,000		$50,000 to 100,000		$100,000+
2014 HH Income Dist. (%)
USA		24.4		24.4		29.8		21.3
New York-Newark-Jersey City, NY-NJ-PA		21.6		19.2		27.7		31.5
New Jersey		18.1		19.3		29.4		33.2
Bergen, NJ		15.6		16.5		28.1		39.8
Essex, NJ		26.4		21.8		25.7		26.1
Hudson, NJ		22.9		20.5		28.8		27.8
Middlesex, NJ		14.8		17.8		31.3		36.0
Monmouth, NJ		15.2		16.9		27.5		40.5
Morris, NJ		11.1		14.0		29.8		45.1
Ocean, NJ		20.8		23.6		31.0		24.6
Passaic, NJ		24.6		23.0		27.4		25.0
Union, NJ		17.7		19.8		29.2		33.3
New York		23.7		21.2		28.6		26.5
Kings, NY		31.4		23.0		26.2		19.4
Richmond, NY		18.3		17.8		30.6		33.2

Source: SNL Financial, LC.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.10*

Income measures show Bergen, Middlesex, Monmouth, and Morris Counties of New Jersey and Richmond County of New York are relatively affluent markets, reporting higher median household incomes than the comparable national, state and metro area measures. Comparatively, median household income for Essex, Hudson, Ocean, Passaic, and Union Counties of New Jersey and Kings County of New York fell below the comparable state measures. However, with the exception of Kings County, all of the primary market area counties maintain median household incomes that exceed the median household income for the U.S. Projected income growth rates for the primary market area counties are generally fairly consistent with the projected income growth rates for New Jersey, New York and the U.S., with Hudson County and Kings County showing the highest projected income growth rates.

The relative affluence of the primary market area counties with the higher income measures is further evidenced by a comparison of household income distribution measures, as these counties maintain a lower percentage of households with incomes of less than $25,000 and a much higher percentage of households with incomes over $100,000 relative to the U.S. Comparatively, Kings County is the only primary market area county that maintains a higher percentage of households with incomes of less than $25,000 and lower percentage of households with incomes over $100,000 as compared to the nationwide aggregates.

Local Economy

The primary market area economy is relatively broad based and due to the overall geographic size covered by the Company’s branch network in the state of New Jersey is somewhat reflective of the New Jersey state economy. Table 2.2 below lists the largest employers in the state of New Jersey.

The Company’s market area contains a cross section of employment sectors, with a mix of services, wholesale/retail trade, construction, healthcare and finance related employment. Throughout northern New Jersey, the greatest employment gains over the past year have occurred in the trade, transportation, and utilities industries (retail trade accounted for 60% of the gain), while in central New Jersey the greatest employment gains were in the educational and health services. As shown in Table 2.2, the retail trade, education, and healthcare industries provide major sources of employment in the state. Healthcare is the only industry that has added jobs in the state of New Jersey every year since 1990, according to the New Jersey Department of Labor and Workforce Development. Moreover, the healthcare industry is projected to grow at an annual rate of 1.3% through 2020.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.11*

Table 2.2

Kearny Financial Corp.

Largest Employers in New Jersey


Company	Industry	Employees
Wakefern Foods	Food/Household		36,000
Rutgers, The State University of New Jersey	Education		28,700
Barnabas Health	Healthcare		18,000
WalMart	Consumer		17,900
Verizon Communications Inc.	Information Technology		15,800
UPS	Logistics		14,800
Johnson & Johnson	Life Sciences		13,500
United Airlines	Services		13,400
Caesars Entertainment	Hospitality		13,100
The Great Atlantic & Pacific Tea Co. Inc.	Food/Household		12,400
Bank of America Merrill Lynch	Financial		12,000
NJ Transit	Services		12,000
Meridian Health	Healthcare		11,000
Robert Wood Johnson Health Network	Healthcare		11,000
Home Depot	Consumer		10,800
Merck	Life Sciences		10,000
AT&T	Information Technology		9,900
Public Service Electric & Gas (PSEG)	Utility		9,800
TD Bank	Financial		9,500
Hackensack University Health Network	Healthcare		9,000
CVS Caremark	Healthcare		8,300
Macy’s	Consumer		8,100
FedEx	Logistics		8,000
Prudential Finance	Financial		8,000
Virtua	Healthcare		8,000

Source: Choose New Jersey.

Employment data presented in Table 2.3 below, indicates that consistent with the profile of the largest employers, services are the most prominent employment sectors for the state of New Jersey, the New York MSA, and the primary market area counties. The data also shows that employment in wholesale/retail trade constitutes the second largest sources of employment in the primary market area counties, followed by finance, insurance, and real estate, and construction jobs, consistent with the state of New Jersey and the New York MSA.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.12*

Table 2.3

Kearny Financial Corp.

Primary Market Area Employment Sectors

(Percent of Labor Force)


Employment Sector	*New Jersey*			New York MSA			North Jersey			Central Jersey			NY Mkt Area			Mkt Area Avg
	(% of Total Employment)
Services		*33.8*	%		*34.3*	%		34.0	%		32.2	%		34.0	%		*33.4*	%
Wholesale/Retail Trade		*26.3*	%		*28.1*	%		27.3	%		26.7	%		31.2	%		*28.4*	%
Finance/Insurance/Real Estate		*9.6*	%		*10.4*	%		9.8	%		9.6	%		9.4	%		*9.6*	%
Construction		*8.7*	%		*7.1*	%		7.6	%		9.8	%		8.0	%		*8.5*	%
Healthcare		*5.6*	%		*5.2*	%		5.3	%		6.2	%		5.8	%		*5.8*	%
Transportation/Utility		*3.7*	%		*3.4*	%		4.1	%		3.8	%		3.2	%		*3.7*	%
Manufacturing		*3.3*	%		*3.3*	%		3.7	%		3.0	%		2.4	%		*3.0*	%
Government		*3.2*	%		*2.0*	%		2.7	%		2.6	%		1.0	%		*2.1*	%
Agriculture		*2.2*	%		*1.5*	%		1.7	%		2.4	%		0.9	%		*1.7*	%
Information		*0.8*	%		*0.9*	%		0.8	%		0.7	%		0.9	%		*0.8*	%
Other		*2.9*	%		*3.7*	%		3.0	%		2.8	%		3.1	%		*3.0*	%

		*100.0*	%		*100.0*	%		100.0	%		100.0	%		100.0	%		*100.0*	%

Source: SNL Financial, LC.

New Jersey is a global hub for the life sciences sector due to its high concentration of pharmaceutical, biotechnology and medical device companies, world-class universities, talented workforce, top teaching hospitals and research institutions and assets for clinical trials. The vitality of the biopharmaceutical and life-sciences cluster in New Jersey is fundamental to the state’s economic health with its well-paying jobs, where employment totaled 116,548 in 2012 or 3.6% of the state’s private sector workforce. Nationally, the proportion was just 1.9%. Many of the businesses within leisure, hospitality and retail trade also directly and indirectly support the state’s tourism industry, as leisure, hospitality and retail trade employment totaled 785,434 in 2012 or 24.6% of all private sector workers in the state of New Jersey. Moreover, the state’s location facilitates employment in the transportation, logistics and distribution industry, with the sector employing 11.2% of the state’s private sector workers compared to 8.9% for the nation.

The close proximity to New York City, particularly Wall Street, has also made New Jersey a top choice for financial service companies to locate their headquarters, major operation centers and data facilities. Based in New York City, the NYSE and the NASDAQ, are the world’s two largest stock exchanges, respectively, when measured by average daily trading volume and overall market capitalization. Coupled with the presence of major banks,


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.13*

investment houses, private equity funds, etc., New York City is the world’s largest financial center. Moreover, financial services account for more than 35% of the City’s employment income. Financial services accounted for approximately $35 billion of New Jersey’s gross domestic product in 2012.

Unemployment Trends

Comparative unemployment rates for the primary market area counties, as well as for the U.S, New Jersey, New York, and New York MSA, are shown in Table 2.4. May 2014 unemployment rates for the primary market area counties ranged from a low of 5.1% for Morris County to a high of 8.3% for Kings County. Seven of the eleven counties in the primary market area reported May 2014 unemployment rates that were higher than the comparable state and national aggregates, while Bergen, Middlesex, Monmouth, and Morris Counties recorded more favorable unemployment rates, which were below the comparable state and national aggregates. All of the primary area counties, as well as the New York MSA, showed a decrease in unemployment for May 2014 compared to May 2013, which was consistent with the statewide and national trends.

Table 2.4

Kearny Financial Corp.

Unemployment Trends


Region	May 2013 Unemployment			May 2014 Unemployment
USA		7.6	%		6.3	%
New York-Newark-Jersey City, NY-NJ-PA		7.8	%		6.6	%
New Jersey		8.7	%		6.7	%
Bergen, NJ		7.5	%		5.7	%
Essex, NJ		10.1	%		7.8	%
Hudson, NJ		10.0	%		7.5	%
Middlesex, NJ		8.2	%		6.2	%
Monmouth, NJ		7.8	%		6.0	%
Morris, NJ		6.8	%		5.1	%
Ocean, NJ		8.8	%		6.7	%
Passaic, NJ		10.5	%		8.1	%
Union, NJ		8.9	%		6.9	%
New York		7.4	%		6.4	%
Kings, NY		8.9	%		8.3	%
Richmond, NY		7.2	%		7.0	%

Source: SNL Financial, LC.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.14*

Real Estate Trends

Home Sales

According to the New Jersey Association of Realtors (“NJAR”), home prices have been rising with the inventory of houses for sale becoming increasingly tight in the state of New Jersey. Sellers are seeing multiple offers in many cases, as buyers seek to complete purchases while mortgage interest rates are still near record lows. In New Jersey, existing home sales were up 25.8% for the third quarter of 2013, compared to the third quarter of 2012. Over the same time period, Northern and Central New Jersey experienced similar increases in existing home sales of 29.1% in Northern New Jersey and 23.8% in Central New Jersey. The statewide median sales price of existing single-family homes in the third quarter of 2013 was up 3.5% compared to the year ago quarter, with similar pricing trends experienced in the Northern and Central New Jersey markets.

Table 2.5

Kearny Financial Corp.

Residential Real Estate Trends


	Existing Single-Family Home Sales							Median Sales Price
Region	Sep-13		Sep-12		%			Sep-13		Sep-12		%
New Jersey		29,300		23,300		25.8	%	$	311,000	$	300,600		3.5	%
Northern NJ		14,200		11,000		29.1	%	$	385,800	$	371,100		4.0	%
Central NJ		7,800		6,300		23.8	%	$	315,400	$	307,200		2.7	%

Source: New Jersey Home Sales Report, New Jersey Association of Realtors.

Foreclosure Trends

According to RealtyTrac, a company specializing in real estate foreclosure data, a total of 26,467 New Jersey properties had foreclosure filings in the first half of 2014, a 54% increase from a year ago, representing the highest increase in the nation. New Jersey also had one of the highest increases in new foreclosure starts in the first half of 2014, increasing 70% from the year prior. Furthermore, New Jersey ranked fourth in the country with the highest foreclosure rate with one in every 134 homes, or 0.74 percent of all housing units, receiving a foreclosure filing in the first half of 2014.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.15*

Market Area Deposit Characteristics and Competition

The Company’s retail deposit base is closely tied to the markets in northern and central New Jersey and the Brooklyn and Staten Island markets areas of New York and, in particular, the markets that are nearby to the Company’s branch locations. Table 2.6 displays deposit market trends from June 30, 2009 through June 30, 2013 for the primary market counties. Additional data is also presented for the states of New Jersey and New York.

The data indicates that commercial banks gained deposit market share in nine out of the eleven primary market area counties during the four year period covered in Table 2.6. Similar to the states of New Jersey and New York, commercial banks maintained a larger market share of deposits than savings institutions in all of the Company’s primary market area counties. Over the four year period savings institution deposits increased at a faster pace than commercial bank deposit growth in Essex and Passaic Counties in New Jersey, while modestly growing or declining in the remaining nine counties of the Company’s primary market area.

Kearny Financial’s highest market share of deposits is in Monmouth County, where the Company maintains its largest branch presence (12 branches), and highest balance of deposits is in Bergen County, where the Company has its second largest branch presence (9 branches). The Company’s $464.5 million of deposits at the Monmouth County branches represented a 2.3% market share of bank and thrift deposits at June 30, 2013, while Bergen County accounted for $794.9 million of the Company’s deposits and a 1.9% market share of Bergen County bank and thrift deposits at June 30, 2013. Overall, the Company’s deposit market share ranges from a high of 2.3% in Monmouth County to a low of 0.1% in Richmond County.

As implied by the Company’s relatively low market shares of deposits, the Company faces significant competition. Among the Company’s competitors are much larger and more diversified institutions, which have greater resources than maintained by Kearny Financial. Kearny Financial’s institution competitors in the Company’s primary market area include other locally based thrifts and banks, as well as regional, super-regional and money center banks. Table 2.7 lists the Company’s largest competitors in the New York MSA currently served by its branches, based on deposit market share as noted parenthetically. The Company’s deposit market share and market rank have also been provided in Table 2.7.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.16*

Table 2.6

Kearny Financial Corp.

Deposit Summary


	As of June 30,
	2009							2013							Deposit
			Market			No. of				Market			No. of		Growth Rate
	Deposits		Share			Branches		Deposits		Share			Branches		2009-2013
	(Dollars in Thousands)														(%)
*New Jersey*	$	250,063,999		100.0	%		3,348	$	276,313,267		100.0	%		3,241		2.5	%
Commercial Banks		169,528,472		67.8	%		2,458		207,913,800		75.2	%		2,477		5.2	%
Savings Institutions		80,535,527		32.2	%		890		68,399,467		24.8	%		764		-4.0	%
Kearny Financial (1)		1,871,755		0.7	%		39		2,378,497		0.9	%		40		6.2	%

Bergen County	$	37,015,398		100.0	%		493	$	41,463,745		100.0	%		481		2.9	%
Commercial Banks		24,938,917		67.4	%		372		29,158,245		70.3	%		360		4.0	%
Savings Institutions		12,076,481		32.6	%		121		12,305,500		29.7	%		121		0.5	%
Kearny Financial		719,457		1.9	%		9		794,948		1.9	%		9		2.5	%

Monmouth County	$	16,963,350		100.0	%		278	$	20,078,514		100.0	%		281		4.3	%
Commercial Banks		10,483,827		61.8	%		202		14,738,954		73.4	%		218		8.9	%
Savings Institutions		6,479,523		38.2	%		76		5,339,560		26.6	%		63		-4.7	%
Kearny Financial (1)		427,781		2.5	%		12		464,476		2.3	%		12		2.1	%

Hudson County	$	22,013,068		100.0	%		192	$	28,602,497		100.0	%		173		6.8	%
Commercial Banks		18,004,484		81.8	%		133		25,238,491		88.2	%		130		8.8	%
Savings Institutions		4,008,584		18.2	%		59		3,364,006		11.8	%		43		-4.3	%
Kearny Financial		222,234		1.0	%		2		453,445		1.6	%		2		19.5	%

Ocean County	$	12,700,866		100.0	%		195	$	14,577,615		100.0	%		192		3.5	%
Commercial Banks		6,417,626		50.5	%		112		9,204,660		63.1	%		131		9.4	%
Savings Institutions		6,283,240		49.5	%		83		5,372,955		36.9	%		61		-3.8	%
Kearny Financial (1)		155,833		1.2	%		6		185,116		1.3	%		6		4.4	%

Morris County	$	15,708,136		100.0	%		240	$	22,597,204		100.0	%		233		9.5	%
Commercial Banks		11,148,256		71.0	%		187		17,952,952		79.4	%		192		12.7	%
Savings Institutions		4,559,880		29.0	%		53		4,644,252		20.6	%		41		0.5	%
Kearny Financial		82,005		0.5	%		2		110,084		0.5	%		2		7.6	%

Essex County	$	20,096,172		100.0	%		272	$	23,948,094		100.0	%		266		4.5	%
Commercial Banks		12,854,614		64.0	%		194		13,117,166		54.8	%		199		0.5	%
Savings Institutions		7,241,558		36.0	%		78		10,830,928		45.2	%		67		10.6	%
Kearny Financial		107,579		0.5	%		3		138,102		0.6	%		3		6.4	%

Middlesex County	$	21,068,228		100.0	%		279	$	25,260,950		100.0	%		282		4.6	%
Commercial Banks		15,869,461		75.3	%		194		20,611,782		81.6	%		212		6.8	%
Savings Institutions		5,198,767		24.7	%		85		4,649,168		18.4	%		70		-2.8	%
Kearny Financial		88,333		0.4	%		3		124,670		0.5	%		3		9.0	%

Union County	$	16,415,899		100.0	%		218	$	21,115,558		100.0	%		209		6.5	%
Commercial Banks		11,250,331		68.5	%		150		16,047,694		76.0	%		154		9.3	%
Savings Institutions		5,165,568		31.5	%		68		5,067,864		24.0	%		55		-0.5	%
Kearny Financial		45,742		0.3	%		1		48,422		0.2	%		1		1.4	%

Passaic County	$	9,866,022		100.0	%		158	$	11,007,777		100.0	%		150		2.8	%
Commercial Banks		7,658,607		77.6	%		134		8,399,458		76.3	%		122		2.3	%
Savings Institutions		2,207,415		22.4	%		24		2,608,319		23.7	%		28		4.3	%
Kearny Financial		22,791		0.2	%		1		59,234		0.5	%		2		27.0	%

*New York*	$	791,022,426		100.0	%		5,415	$	1,147,892,634		100.0	%		5,382		9.8	%
Commercial Banks		698,964,783		88.4	%		4,374		1,075,748,632		93.7	%		4,435		11.4	%
Savings Institutions		92,057,643		11.6	%		1,041		72,144,002		6.3	%		947		-5.9	%
Kearny Financial (2)		48,984		0.0	%		1		81,311		0.0	%		2		13.5	%

Kings County	$	33,785,314		100.0	%		344	$	40,791,617		100.0	%		363		4.8	%
Commercial Banks		25,467,956		75.4	%		251		34,484,119		84.5	%		280		7.9	%
Savings Institutions		8,317,358		24.6	%		93		6,307,498		15.5	%		83		-6.7	%
Kearny Financial (2)		48,984		0.1	%		1		65,935		0.2	%		1		7.7	%

Richmond County	$	9,398,355		100.0	%		105	$	10,266,172		100.0	%		111		2.2	%
Commercial Banks		4,179,372		44.5	%		47		7,045,808		68.6	%		66		13.9	%
Savings Institutions		5,218,983		55.5	%		58		3,220,364		31.4	%		45		-11.4	%
Kearny Financial (2)		0		0.0	%		0		15,376		0.1	%		1		NA

(1)	For June 30, 2009 (prior to the acquisition) includes Central Jersey Bank.

(2)	For June 30, 2009 and June 30, 2013, represents Atlas Bank’s deposits (prior to the recently completed acquisition).

Source: FDIC.


*RP ^® Financial, LC.*		*MARKET AREA*
		*II.17*

Table 2.7

Kearny Financial Corp.

Market Area Deposit Competitors


Location	Name	Market Share			Rank
New York MSA	JP Morgan Chase & Co.		35.97	%
	Bank of New York Mellon Corp.		8.85	%
	Bank of America Corp.		7.82	%
	Citigroup Inc.		6.43	%
	HSBC		5.15	%
	Capital One Financial Corp.		3.92	%
	Wells Fargo & Co.		3.77	%
	Toronto-Dominion Bank		3.76	%
	Hudson City Bancorp, Inc.		1.66	%
	New York Community Bancorp		1.61	%
	Kearny Financial Corp.		0.20	%		37 out of 206

Source: SNL Financial LC.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.1*

III. PEER GROUP ANALYSIS

This chapter presents an analysis of Kearny Financial’s operations versus a group of comparable savings institutions (the “Peer Group”) selected from the universe of all publicly-traded savings institutions in a manner consistent with the regulatory valuation guidelines. The basis of the pro forma market valuation of Kearny Financial is derived from the pricing ratios of the Peer Group institutions, incorporating valuation adjustments for key differences in relation to the Peer Group. Since no Peer Group can be exactly comparable to Kearny Financial, key areas examined for differences are: financial condition; profitability, growth and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and effect of government regulations and regulatory reform.

Peer Group Selection

The Peer Group selection process is governed by the general parameters set forth in the regulatory valuation guidelines. Accordingly, the Peer Group is comprised of only those publicly-traded savings institutions whose common stock is either listed on the NYSE or NASDAQ, since their stock trading activity is regularly reported and generally more frequent than non-publicly traded and closely-held institutions. Institutions that are not listed on the NYSE or NASDAQ are inappropriate, since the trading activity for thinly-traded or closely-held stocks are typically highly irregular in terms of frequency and price and thus may not be a reliable indicator of market value. We have also excluded from the Peer Group those companies under acquisition or subject to rumored acquisition, mutual holding companies and recent conversions, since their pricing ratios are subject to unusual distortion and/or have limited trading history. A recent listing of the universe of all publicly-traded savings institutions is included as Exhibit III-1.

Ideally, the Peer Group, which must have at least 10 members to comply with the regulatory valuation guidelines, should be comprised of locally- or regionally-based institutions with comparable resources, strategies and financial characteristics. There are approximately 116 publicly-traded institutions nationally and, thus, it is typically the case that the Peer Group will be comprised of institutions with relatively comparable characteristics. To the extent that differences exist between the converting institution and the Peer Group, valuation adjustments will be applied to account for the differences. Since Kearny Financial will be a full public


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.2*

company upon completion of the offering, we considered only full public companies to be viable candidates for inclusion in the Peer Group. From the universe of publicly-traded thrifts, we selected eleven institutions with characteristics similar to those of Kearny Financial. In the selection process, we applied three “screens” to the universe of all public companies that were eligible for consideration:

•

Screen #1 Mid-Atlantic institutions with assets between $2.0 billion and $10.0 billion, tangible equity-to-assets ratios of greater than 7.5%, positive core earnings and market capitalizations of at least $275 million. Eight companies met the criteria for Screen #1 and all eight were included in the Peer Group: Dime Community Bancshares of New York, Northfield Bancorp, Inc. of New Jersey, Northwest Bancshares, Inc. of Pennsylvania, OceanFirst Financial Corp. of New Jersey, Oritani Financial Corp. of New Jersey, Provident Financial Services, Inc. of New Jersey, TrustCo Bank Corp. of New York and WSFS Financial Corp. of Delaware. Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded Mid-Atlantic thrifts.

•

Screen #2 Northeast institutions with assets between $2.0 billion and $10.0 billion, tangible equity-to-assets ratios of greater than 7.5%, positive core earnings and market capitalizations of at least $275 million. Two companies met the criteria for Screen #2 and one was included in the Peer Group: United Financial Bancorp, Inc. of Connecticut. Meridian Bancorp of Massachusetts met the selection criteria, but was excluded from the Peer Group due to its recent conversion status (conversion completed July 2014). Exhibit III-3 provides financial and public market pricing characteristics of all publicly-traded Northeast thrifts.

•

Screen #3 Mid-West institutions with assets between $2.25 billion and $10.0 billion, tangible equity-to-assets ratios of greater than 7.5%, positive core earnings and market capitalizations of at least $275 million. Three companies company met the criteria for Screen #2 and two were included in the Peer Group: Bank Mutual Corporation of Wisconsin and Capitol Federal Financial, Inc. of Kansas. Flagstar Bancorp Inc. of Michigan met the selection criteria, but was excluded from the Peer Group due to its very high level of non-performing assets. As of June 30, 2014, Flagstar Bancorp’s held non-performing assets equal to 16.17% of assets. Exhibit III-4 provides financial and public market pricing characteristics of all publicly-traded Mid-West thrifts.

Table 3.1 shows the general characteristics of each of the eleven Peer Group companies and Exhibit III-5 provides summary demographic and deposit market share data for the primary market areas served by each of the Peer Group companies. While there are expectedly some differences between the Peer Group companies and Kearny Financial, we believe that the Peer Group companies, on average, provide a good basis for valuation subject to valuation adjustments. The following sections present a comparison of Kearny Financial’s financial condition, income and expense trends, loan composition, interest rate risk and credit risk versus the Peer Group as of the most recent publicly available date. Comparative data for


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.3*

Table 3.1

Peer Group of Publicly-Traded Thrifts

As of June 30, 2014

As of

August 8, 2014

Total

Fiscal

Conv.

Stock

Market

Ticker

Financial Institution

Exchange

City

State

Assets

Offices

Year End

Date

Price

Value

($Mil)

($)

($Mil)

BKMU

Bank Mutual Corporation

NASDAQ

Brown Deer

2,338

Dec

10/30/2003

6.11

284.48

CFFN

Capitol Federal Financial, Inc.

NASDAQ

Topeka

9,031

Sep

12/22/2010

11.97

1,700.18

DCOM

Dime Community Bancshares, Inc.

NASDAQ

Brooklyn

4,302

Dec

6/26/1996

15.03

553.98

NFBK

Northfield Bancorp, Inc.

NASDAQ

Woodbridge

2,690

Dec

1/25/2013

13.01

690.04

NWBI

Northwest Bancshares, Inc.

NASDAQ

Warren

7,902

167

Dec

12/18/2009

12.33

1,170.91

OCFC

OceanFirst Financial Corp.

NASDAQ

Toms River

2,329

Dec

7/3/1996

16.44

281.85

ORIT

Oritani Financial Corp.

NASDAQ

Township of Washington

3,140

Jun

6/24/2010

14.91

678.40

PFS

Provident Financial Services, Inc.

NYSE

Jersey City

8,449

Dec

1/16/2003

16.87

1,094.67

TRST

TrustCo Bank Corp NY

NASDAQ

Glenville

4,589

140

Dec

6.66

630.54

UBNK

United Financial Bancorp, Inc.

NASDAQ

Glastonbury

5,159

Dec

3/4/2011

12.76

673.98

WSFS

WSFS Financial Corporation

NASDAQ

Wilmington

4,613

Dec

11/26/1986

72.86

650.20

Source: SNL Financial, LC.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.4*

all publicly-traded thrifts, publicly-traded New Jersey thrifts and institutions comparable to Kearny Financial that have recently completed a second-step conversion offering have been included in the Chapter III tables as well.

In addition to the selection criteria used to identify the Peer Group companies, a summary description of the key comparable characteristics of each of the Peer Group companies relative to Kearny Financial’s characteristics is detailed below.

•

Bank Mutual Corporation of Wisconsin. Comparable due to completed second-step conversion in 2003, similar interest-bearing funding composition, similar impact of loan loss provisions on earnings, similar concentration of assets consisting of mortgage-backed securities, similar lending diversification emphasis on multi-family and commercial real estate loans and similar ratio of non-performing assets as a percent of assets.

•

Capitol Federal Financial, Inc. of Kansas. Comparable due to completed second-step conversion in 2010, similar size of branch network, relatively high equity-to-assets ratio, similar earnings contribution from sources of non-interest operating income and similar concentration of mortgage-backed securities as a percent of assets.

•

Dime Community Bancshares of New York. Comparable due to similar asset size, competes in a large metropolitan market area, similar earnings contribution from sources of non-interest operating income, similar lending diversification into commercial real estate loans as a percent of assets and similar ratio of non-performing assets as a percent of assets.

•

Northfield Bancorp, Inc. of New Jersey. Comparable due to completed second-step conversion in January 2013, competes in a large metropolitan market area, relatively high equity-to-assets ratio, similar impact of loan loss provisions on earnings, similar earnings contribution from sources of non-interest operating income, similar ratio of operating expenses as a percent of average assets and similar lending diversification into commercial real estate loans as a percent of assets.

•

Northwest Bancshares, Inc. of Pennsylvania. Comparable due to completed second-step conversion in December 2009, similar interest-bearing funding composition and similar lending diversification into commercial real estate loans as a percent of assets.

•

OceanFirst Financial Corp. of New Jersey. Comparable due to similar interest-bearing funding composition similar impact of loan loss provisions on earnings and similar lending diversification emphasis on commercial real estate loans as a percent of assets.

•

Oritani Financial Corp. of New Jersey. Comparable due to completed second-step conversion in June 2010, competes in a large metropolitan market area, similar asset size, relatively high equity-to-assets ratio, similar earnings contribution from sources of non-interest operating income and similar ratio of non-performing assets as a percent of assets.

•

Provident Financial Services of New Jersey. Comparable due to competes in a large metropolitan market area, similar interest-bearing funding composition, similar impact of loan loss provisions on earnings, similar ratio of operating expenses as a percent of assets, similar concentration of 1-4 family permanent mortgage loans as a percent assets and similar concentration of multi-family loans as a percent of assets.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.5*

•

TrustCo Bancorp of New York. Comparable due to similar impact of loan loss provisions on earnings and similar ratio of operating expenses as a percent of average assets.

•

United Financial Bancorp, Inc. of Connecticut. Comparable due to similar interest-bearing funding composition, similar impact of loan loss provisions on earnings, similar concentration of 1-4 family permanent mortgage loans as a percent of assets, similar lending diversification into commercial real estate loans as a percent of assets and similar ratio of non-performing assets as a percent of assets.

•

WSFS Financial Corp. of Delaware. Selected due to competes in a large metropolitan market area, similar size of branch network, similar interest-bearing funding composition and similar impact of loan loss provisions on earnings.

In aggregate, the Peer Group companies maintained a similar level of tangible equity as the industry average (12.23% of assets versus 12.80% for all public companies), generated higher earnings as a percent of average assets (0.89% core ROAA versus 0.57% for all public companies) and earned a higher ROE (7.32% core ROE versus 4.61% for all public companies). Overall, the Peer Group’s average P/TB ratio and average core P/E multiple were above the respective averages for all publicly-traded thrifts.


	All
	Publicly-Traded			Peer Group
Financial Characteristics (Averages)
Assets ($Mil)	$	2,893		$	4,958
Market capitalization ($Mil)	$	403		$	764
Tangible equity/assets (%)		12.80	%		12.23	%
Core return on average assets (%)		0.57			0.89
Core return on average equity (%)		4.61			7.32

Pricing Ratios (Averages) (1)
Core price/earnings (x)		17.65x			18.72x
Price/tangible book (%)		115.47	%		132.96	%
Price/assets (%)		13.13			15.63

(1)	Based on market prices as of August 8, 2014.

Ideally, the Peer Group companies would be comparable to Kearny Financial in terms of all of the selection criteria, but the universe of publicly-traded thrifts does not provide for an appropriate number of such companies. However, in general, the companies selected for the Peer Group were fairly comparable to Kearny Financial, as will be highlighted in the following comparative analysis. Comparative data for all publicly-traded thrifts, publicly-traded Pennsylvania thrifts and institutions comparable to Kearny Financial that have recently completed a second-step conversion offering have been included in the Chapter III tables as well.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.6*

Financial Condition

Table 3.2 shows comparative balance sheet measures for Kearny Financial and the Peer Group, reflecting the expected similarities and some differences given the selection procedures outlined above. The Company’s and the Peer Group’s ratios reflect balances as of June 30, 2014, unless indicated otherwise for the Peer Group companies. Kearny Financial’s equity-to-assets ratio of 14.09% slightly exceeded the Peer Group’s average net worth ratio of 13.35%. Accordingly, with the infusion of the net conversion proceeds, the Company’s pro forma equity-to-assets ratio will substantially exceed the Peer Group’s equity-to-assets ratio. Tangible equity-to-assets ratios for the Company and the Peer Group equaled 10.98% and 12.23%, respectively. The increase in Kearny Financial’s pro forma capital position will be favorable from a risk perspective and in terms of future earnings potential that could be realized through leverage and lower funding costs. At the same time, the Company’s higher pro forma capitalization will initially depress return on equity. Both Kearny Financial’s and the Peer Group’s capital ratios reflected capital surpluses with respect to the regulatory capital requirements.

The interest-earning asset compositions for the Company and the Peer Group were somewhat similar, with loans constituting the bulk of interest-earning assets for both Kearny Financial and the Peer Group. The Company’s loans-to-assets ratio of 49.26% was lower than the comparable Peer Group ratio of 70.77%. Comparatively, the Company’s cash and investments-to-assets ratio of 43.26% was above the comparable Peer Group ratio of 23.45%. Overall, Kearny Financial’s interest-earning assets amounted to 92.52% of assets, which was less than the comparable Peer Group ratio of 94.22%. The Peer Group’s non-interest earning assets included bank-owned life insurance (“BOLI”) equal to 1.95% of assets and goodwill/intangibles equal to 1.12% of assets, while the Company maintained BOLI equal to 2.53% of assets and goodwill/intangibles equal to 3.12% of assets.

Kearny Financial’s funding liabilities reflected a funding strategy that was somewhat similar to that of the Peer Group’s funding composition. The Company’s deposits equaled 70.65% of assets, which was slightly above the Peer Group’s ratio of 67.27%. Comparatively, the Company maintained a slightly lower level of borrowings than the Peer Group, as indicated by borrowings-to-assets ratios of 14.59% and 18.10% for Kearny Financial and the Peer Group, respectively. Total interest-bearing liabilities maintained by the Company and the Peer Group, as a percent of assets, equaled 85.24% and 85.37%, respectively.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.7*

Table 3.2

Balance Sheet Composition and Growth Rates

Comparable Institution Analysis

As of June 30, 2014


			Balance Sheet as a Percent of Assets																														Balance Sheet Annual Growth Rates																					Regulatory Capital
			Cash &			MBS &						Net						Borrowed			Sub.			Total			Goodwill			Tangible						MBS, Cash &									Borrows.			Total			Tangible			Tier 1			Tier 1			Risk- Based
			Equivalents			Invest			BOLI			Loans (1)			Deposits			Funds			Debt			Equity			& Intang			Equity			Assets			Investments			Loans			Deposits			&Subdebt			Equity			Equity			Leverage			Risk-Based			Capital
Kearny Financial Corp. of NJ
June 30, 2014				3.85	%		39.41	%		2.53	%		49.26	%		70.65	%		14.59	%		0.00	%		14.09	%		3.12	%		10.98	%		11.59	%		-1.07	%		28.08	%		4.62	%		78.06	%		5.77	%		7.44	%		10.75	%		19.78	%		20.45	%

All Public Companies
Averages				5.18	%		19.53	%		1.84	%		68.02	%		73.68	%		11.33	%		0.39	%		13.37	%		0.68	%		12.80	%		7.79	%		1.26	%		12.56	%		6.91	%		15.22	%		10.69	%		7.95	%		12.09	%		20.45	%		21.79	%
Medians				3.85	%		16.53	%		1.83	%		70.14	%		74.72	%		9.83	%		0.00	%		12.75	%		0.01	%		11.44	%		4.64	%		-3.07	%		9.26	%		2.28	%		3.65	%		2.69	%		2.06	%		11.22	%		17.45	%		19.01	%

State of NJ
Averages				2.66	%		26.88	%		2.58	%		66.19	%		70.18	%		13.95	%		0.20	%		15.13	%		0.34	%		14.35	%		6.36	%		3.80	%		11.89	%		2.54	%		21.44	%		26.41	%		15.08	%		12.46	%		20.89	%		21.96	%
Medians				1.65	%		24.00	%		2.45	%		69.65	%		71.94	%		13.18	%		0.00	%		13.08	%		0.00	%		11.07	%		2.47	%		1.41	%		9.14	%		-0.88	%		23.66	%		2.62	%		11.40	%		10.39	%		18.21	%		19.12	%

Comparable Recent Conversions(2)
EBSB	Meridian Bancorp, Inc.	MA		3.22	%		7.94	%		1.40	%		84.55	%		83.84	%		6.04	%		0.00	%		9.29	%		0.51	%		8.78	%		17.70	%		-18.67	%		25.93	%		20.54	%		0.40	%		6.52	%		6.93	%		8.24	%		9.05	%		10.23	%

Comparable Group
Averages				3.61	%		19.84	%		1.95	%		70.77	%		67.27	%		17.58	%		0.52	%		13.35	%		1.12	%		12.23	%		16.12	%		5.45	%		21.04	%		15.76	%		22.62	%		13.28	%		9.44	%		11.67	%		17.11	%		18.12	%
Medians				1.60	%		19.63	%		2.07	%		69.19	%		69.09	%		16.79	%		0.00	%		12.65	%		0.62	%		10.22	%		3.28	%		-8.82	%		9.26	%		1.74	%		16.05	%		4.36	%		4.42	%		10.85	%		16.29	%		17.55	%

Comparable Group
BKMU	Bank Mutual Corporation	WI		1.60	%		24.12	%		2.57	%		66.70	%		73.41	%		11.52	%		0.00	%		12.39	%		0.01	%		12.38	%		-0.80	%		-18.53	%		9.26	%		-4.54	%		29.80	%		4.36	%		4.42	%		11.22	%		16.88	%		18.13	%
CFFN	Capitol Federal Financial, Inc.	KS		0.98	%		28.87	%		0.67	%		67.90	%		51.54	%		30.88	%		0.00	%		16.60	%		0.00	%		16.60	%		-2.26	%		-17.12	%		5.86	%		0.57	%		-3.90	%		-7.73	%		-7.73	%		14.40	%		33.50	%		33.70	%
DCOM	Dime Community Bancshares, Inc.	NY		1.34	%		2.29	%		1.32	%		91.95	%		61.68	%		23.67	%		1.64	%		10.43	%		1.29	%		9.13	%		8.87	%		-8.82	%		10.28	%		1.74	%		34.73	%		9.69	%		11.22	%		9.20	%		12.23	%		12.85	%
NFBK	Northfield Bancorp, Inc.	NJ		1.33	%		32.97	%		4.72	%		57.54	%		55.06	%		19.86	%		0.00	%		24.12	%		0.62	%		23.50	%		-0.01	%		-22.17	%		18.46	%		-3.46	%		29.59	%		-9.83	%		-10.01	%		18.74	%		24.91	%		26.16	%
NWBI	Northwest Bancshares, Inc.	PA		4.88	%		14.37	%		1.80	%		73.58	%		73.07	%		11.00	%		1.30	%		13.57	%		2.27	%		11.30	%		-0.77	%		-14.41	%		3.48	%		-0.16	%		1.25	%		-4.94	%		-6.11	%		10.85	%		16.29	%		17.55	%
OCFC	OceanFirst Financial Corp.	NJ		1.88	%		22.80	%		2.37	%		70.12	%		73.22	%		15.77	%		1.18	%		9.27	%		0.00	%		9.27	%		1.02	%		-15.65	%		8.26	%		0.10	%		7.31	%		-0.20	%		-0.20	%		9.45	%		14.22	%		15.47	%
ORIT	Oritani Financial Corp.	NJ		0.60	%		14.83	%		2.17	%		79.74	%		50.35	%		30.81	%		0.00	%		16.76	%		0.00	%		16.76	%		10.89	%		16.76	%		10.02	%		11.36	%		16.05	%		1.46	%		1.46	%		14.34	%		16.63	%		17.79	%
PFS	Provident Financial Services, Inc.	NJ		1.57	%		19.91	%		2.07	%		69.19	%		69.09	%		16.79	%		0.00	%		13.27	%		4.80	%		8.47	%		16.16	%		9.70	%		18.55	%		11.22	%		46.40	%		13.66	%		13.28	%		9.38	%		10.78	%		11.85	%
TRST	TrustCo Bank Corp NY	NY		13.54	%		19.63	%		0.00	%		64.48	%		87.06	%		3.96	%		0.00	%		8.39	%		0.01	%		8.38	%		3.28	%		-5.82	%		9.00	%		2.63	%		2.94	%		10.44	%		10.46	%		8.21	%		16.57	%		17.83	%
UBNK	United Financial Bancorp, Inc.	CT		1.73	%		19.35	%		2.34	%		71.61	%		77.10	%		9.22	%		0.15	%		12.65	%		2.43	%		10.22	%		136.33	%		139.51	%		130.45	%		150.65	%		77.70	%		119.75	%		78.22	%		11.77	%		12.70	%		13.31	%
WSFS	WSFS Financial Corporation	DE		10.30	%		19.06	%		1.38	%		65.65	%		68.36	%		19.90	%		1.45	%		9.36	%		0.83	%		8.53	%		4.64	%		-3.47	%		7.82	%		3.24	%		6.95	%		9.37	%		8.80	%		10.82	%		13.53	%		14.68	%

(1)	Includes loans held for sale.

(2)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.

Source: SNL Financial, LC. and RP ^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.8*

A key measure of balance sheet strength for a thrift institution is its IEA/IBL ratio. Presently, the Company’s IEA/IBL ratio is slightly lower than the Peer Group’s ratio, based on IEA/IBL ratios of 108.54% and 110.37%, respectively. The additional capital realized from stock proceeds should serve to provide Kearny Financial with an IEA/IBL ratio that exceeds the Peer Group’s ratio, as the increase in capital provided by the infusion of stock proceeds will serve to lower the level of interest-bearing liabilities funding assets and will be primarily deployed into interest-earning assets.

The growth rate section of Table 3.2 shows annual growth rates for key balance sheet items. Kearny Financial’s and the Peer Group’s growth rates are based on annual growth for the twelve months ended June 30, 2014 or the most recent twelve month period available for the Peer Group companies. The Peer Group’s balance sheet growth rates were impacted by acquisition related growth involving the merger of United Financial Bancorp and Rockville Financial. Likewise, Kearny Financial’s growth rates reflect the impact of the Atlas Bank acquisition. Kearny Financial recorded an 11.59% increase in assets, versus asset growth of 16.12% recorded by the Peer Group. Asset growth for Kearny Financial was largely realized through a 28.08% increase in loans, which was in part funded by a 1.07% reduction in cash and investments. Asset growth for the Peer Group was primarily sustained by a 21.04% increase in loans and was supplemented with a 5.45% increase in cash and investments.

The Company’s asset growth was funded by a 4.62% increase in deposits and a 78.06% increase in borrowings. Comparatively, asset growth for the Peer Group was funded through deposit growth of 15.76% and a 22.62% increase in borrowings. The Company’s tangible capital increased by 7.44%, which was slightly below the Peer Group’s tangible growth rate of 9.44%. The Company’s post-conversion capital growth rate will initially be constrained by maintenance of a higher pro forma capital position. Additional stock repurchases and implementation of any dividend payments, pursuant to regulatory limitations and guidelines, could also slow the Company’s capital growth rate in the longer term following the stock offering.

Income and Expense Components

Table 3.3 displays statements of operations for the Company and the Peer Group. The Company’s and the Peer Group’s ratios are based on earnings for the twelve months ended June 30, 2014, unless otherwise indicated for the Peer Group companies. Kearny Financial


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.9*

Table 3.3

Income as Percent of Average Assets and Yields, Costs, Spreads

Comparable Institution Analysis

For the 12 Months Ended June 30, 2014


						Net Interest Income															Non-Interest Income									Non-Op. Items									Yields, Costs, and Spreads
															Loss			NII			Gain			Other			Total									Provision												MEMO:		MEMO:
			Net												Provis.			After			on Sale of			Non-Int			Non-Int			Net Gains/			Extrao.			for			Yield			Cost			Yld-Cost			Assets/		Effective
			Income			Income			Expense			NII			on IEA			Provis.			Loans			Income			Expense			Losses (1)			Items			Taxes			On IEA			Of IBL			Spread			FTE Emp.		Tax Rate
			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)					(%)
Kearny Financial Corp. of NJ
June 30, 2014				0.31	%		2.92	%		0.67	%		2.25	%		0.10	%		2.15	%		0.00	%		0.21	%		1.94	%		0.02	%		0.00	%		0.13	%		3.17	%		0.85	%		2.32	%	$	7,941		29.27	%

All Public Companies
Averages				0.56	%		3.64	%		0.65	%		3.00	%		0.12	%		2.87	%		0.26	%		0.57	%		2.99	%		-0.01	%		0.00	%		0.16	%		3.92	%		0.81	%		3.07	%	$	5,709		28.52	%
Medians				0.58	%		3.61	%		0.64	%		3.04	%		0.08	%		2.94	%		0.04	%		0.47	%		2.81	%		0.00	%		0.00	%		0.23	%		3.89	%		0.81	%		3.10	%	$	5,022		32.55	%

State of NJ
Averages				0.54	%		3.48	%		0.66	%		2.82	%		0.21	%		2.61	%		0.02	%		0.32	%		2.12	%		-0.01	%		0.00	%		0.29	%		3.78	%		0.81	%		3.05	%	$	7,981		34.45	%
Medians				0.59	%		3.44	%		0.67	%		2.88	%		0.09	%		2.72	%		0.00	%		0.23	%		2.08	%		0.00	%		0.00	%		0.35	%		3.76	%		0.78	%		3.09	%	$	6,451		34.35	%

Comparable Recent Conversions(2)
EBSB	Meridian Bancorp, Inc.	PA		0.62	%		3.81	%		0.81	%		3.00	%		0.26	%		2.74	%		0.02	%		0.37	%		2.58	%		0.39	%		0.00	%		0.32	%		4.08	%		1.00	%		3.08	%	$	6,386		34.34	%

Comparable Group
Averages				0.84	%		3.61	%		0.65	%		2.97	%		0.09	%		2.88	%		0.03	%		0.60	%		2.13	%		-0.08	%		0.00	%		0.44	%		3.88	%		0.84	%		3.04	%	$	8,165		37.06	%
Medians				0.82	%		3.46	%		0.50	%		3.08	%		0.07	%		2.95	%		0.01	%		0.53	%		2.04	%		0.00	%		0.00	%		0.43	%		3.81	%		0.67	%		3.19	%	$	6,579		34.40	%

Comparable Group
BKMU	Bank Mutual Corporation	WI		0.51	%		3.39	%		0.46	%		2.94	%		0.10	%		2.84	%		0.09	%		0.86	%		2.96	%		0.00	%		0.00	%		0.32	%		3.77	%		0.58	%		3.19	%	$	3,428		38.33	%
CFFN	Capitol Federal Financial, Inc.	KS		0.81	%		3.16	%		1.19	%		1.97	%		0.01	%		1.97	%		0.00	%		0.24	%		1.01	%		0.00	%		0.00	%		0.40	%		3.24	%		1.46	%		1.78	%	$	13,271		32.96	%
DCOM	Dime Community Bancshares, Inc.	NY		1.01	%		4.14	%		1.14	%		3.00	%		-0.02	%		3.02	%		0.00	%		0.19	%		1.51	%		0.02	%		0.00	%		0.70	%		4.35	%		1.36	%		2.99	%	$	11,291		41.02	%
NFBK	Northfield Bancorp, Inc.	NJ		0.77	%		3.37	%		0.57	%		2.80	%		0.06	%		2.75	%		0.00	%		0.34	%		1.86	%		0.00	%		0.00	%		0.45	%		3.64	%		0.92	%		2.72	%	$	8,807		36.92	%
NWBI	Northwest Bancshares, Inc.	PA		0.82	%		3.86	%		0.74	%		3.12	%		0.27	%		2.85	%		0.00	%		0.84	%		2.67	%		0.11	%		0.00	%		0.31	%		4.25	%		0.97	%		3.28	%	$	3,891		27.34	%
OCFC	OceanFirst Financial Corp.	NJ		0.73	%		3.48	%		0.33	%		3.15	%		0.07	%		3.07	%		0.04	%		0.73	%		2.52	%		-0.20	%		0.00	%		0.38	%		3.64	%		0.42	%		3.22	%	$	6,387		34.40	%
ORIT	Oritani Financial Corp.	NJ		1.40	%		4.38	%		1.06	%		3.32	%		0.02	%		3.29	%		0.00	%		0.18	%		1.35	%		0.00	%		0.00	%		0.73	%		4.62	%		1.33	%		3.29	%	$	15,268		34.35	%
PFS	Provident Financial Services, Inc.	NJ		0.89	%		3.46	%		0.50	%		2.96	%		0.07	%		2.89	%		0.01	%		0.53	%		2.04	%		-0.05	%		0.00	%		0.45	%		3.81	%		0.67	%		3.14	%	$	8,572		33.51	%
TRST	TrustCo Bank Corp NY	NY		0.97	%		3.41	%		0.33	%		3.08	%		0.13	%		2.95	%		0.01	%		0.60	%		1.82	%		0.04	%		0.00	%		0.59	%		3.48	%		0.40	%		3.08	%	$	6,453		37.98	%
UBNK	United Financial Bancorp, Inc.	CT		0.06	%		3.65	%		0.44	%		3.21	%		0.14	%		3.07	%		0.14	%		0.47	%		2.62	%		-0.88	%		0.00	%		0.12	%		3.95	%		0.66	%		3.29	%	$	6,579		65.42	%
WSFS	WSFS Financial Corporation	DE		1.25	%		3.42	%		0.34	%		3.08	%		0.13	%		2.95	%		0.09	%		1.59	%		3.03	%		0.09	%		0.00	%		0.43	%		3.97	%		0.46	%		3.51	%	$	5,873		25.46	%

(1)	Net gains/losses includes gain/loss on sale of securities and nonrecurring income and expense.

(2)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.10*

and the Peer Group reported net income to average assets ratios of 0.31% and 0.84%, respectively. Higher levels of net interest income and non-interest operating income accounted for the Peer Group’s higher return, which was slightly offset by the Company’s lower level of operating expenses.

The Peer Group’s higher net interest income ratio was primarily realized through maintenance of a higher interest income ratio, as interest expense ratios were similar for the Company and the Peer Group. The Peer Group’s higher interest income ratio was supported by maintaining a higher overall yield earned on interest-earning assets (3.88% versus 3.17% for the Company) and a higher concentration of assets maintained in interest-earning assets. The Company’s and the Peer Group’s similar interest expense ratios were indicative of their similar cost of funds (0.85% for the Company versus 0.84% for the Peer Group), as well as the Company’s and the Peer Group’s similar levels of interest-bearing liabilities as a percent of assets. Overall, Kearny Financial and the Peer Group reported net interest income to average assets ratios of 2.25% and 2.97%, respectively.

In another key area of core earnings strength, the Company maintained a lower level of operating expenses than the Peer Group. For the period covered in Table 3.3, the Company and the Peer Group reported operating expense to average assets ratios of 1.94% and 2.13%, respectively. The Company’s lower operating expense ratio was viewed to be in part attributable to an interest-earning asset composition that consisted of a higher concentration of cash and investments and a lower concentration of loans relative to the Peer Group’s interest-earning asset composition. Additionally, the Company’s less significant diversification into areas that generate sources of non-interest operating income would tend to support a lower level of operating expenses. At the same time, the Company’s lower operating expense ratio was achieved despite maintaining a comparatively higher number of employees maintained relative to its asset size. Assets per full time equivalent employee equaled $7.941 million for the Company, versus $8.165 million for the Peer Group.

When viewed together, net interest income and operating expenses provide considerable insight into a thrift’s earnings strength, since those sources of income and expenses are typically the most prominent components of earnings and are generally more predictable than losses and gains realized from the sale of assets or other non-recurring activities. In this regard, as measured by their expense coverage ratios (net interest income divided by operating expenses), the Company’s earnings were less favorable than the Peer


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.11*

Group’s. Expense coverage ratios for Kearny Financial and the Peer Group equaled 1.16x and 1.39x, respectively.

Sources of non-interest operating income provided a larger contribution to the Peer Group’s earnings, with such income amounting to 0.21% and 0.63% of Kearny Financial’s and the Peer Group’s average assets, respectively. Taking non-interest operating income into account in comparing the Company’s and the Peer Group’s earnings, Kearny Financial’s efficiency ratio (operating expenses as a percent of the sum of non-interest operating income and net interest income) of 78.86% was less favorable than the Peer Group’s efficiency ratio of 59.17%.

Loan loss provisions had a similar impact on the Company’s and the Peer Group’s earnings, with loan loss provisions established by the Company and the Peer Group equaling 0.10% and 0.09% of average assets, respectively.

Net non-operating gains amounted to 0.02% of average assets for the Company, while the Peer Group’s earnings reflected a net non-operating loss equal to 0.08% of average assets. Typically, gains and losses generated from the sale of assets and other non-operating activities are viewed as earnings with a relatively high degree of volatility, particularly to the extent that such gains and losses result from the sale of investments or other assets that are not considered to be part of an institution’s core operations. Extraordinary items were not a factor in either the Company’s or the Peer Group’s earnings.

Taxes had a larger impact on the Peer Group’s earnings, as the Company and the Peer Group posted effective tax rates of 29.27% and 37.06%, respectively. As indicated in the prospectus, the Company’s effective marginal tax rate is equal to 35.0%.

Loan Composition

Table 3.4 presents data related to the Company’s and the Peer Group’s loan portfolio compositions (including the investment in mortgage-backed securities). The Company’s loan portfolio composition reflected a lower concentration of 1-4 family permanent mortgage loans and mortgage-backed securities as compared to the Peer Group (37.42% of assets versus 39.66% for the Peer Group), as the Company’s higher concentration of mortgage-backed securities was more than offset by the Peer Group’s higher concentration of 1-4 family permanent mortgage loans. Loans serviced for others equaled 0.68% and 6.71% of the Company’s and the Peer Group’s assets, respectively, thereby indicating that loan servicing


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.12*

Table 3.4

Loan Portfolio Composition and Related Information

Comparable Institution Analysis

As of June 30, 2014


			Portfolio Composition as a Percent of Assets
						1-4			Constr.			Multi-						Commerc.						RWA/			Serviced		Servicing
			MBS			Family			& Land			Family			Comm RE			Business			Consumer			Assets			For Others		Assets
			(%)			(%)			(%)			(%)			(%)			(%)			(%)			(%)			($000)		($000)
Kearny Financial Corp. of NJ
June 30, 2014				20.88	%		16.54	%		0.21	%		12.28	%		15.74	%		1.92	%		2.96	%		52.68	%	$	23,767	$	284

All Public Companies
Averages				12.91	%		28.23	%		2.86	%		7.33	%		17.20	%		4.30	%		5.31	%		66.43	%	$	2,158,147	$	15,535
Medians				11.02	%		26.24	%		1.91	%		2.56	%		17.12	%		3.22	%		4.73	%		66.77	%	$	74,862	$	402

State of	NJ
Averages				14.19	%		28.21	%		2.14	%		9.84	%		20.11	%		2.60	%		3.71	%		65.51	%	$	125,038	$	612
Medians				12.58	%		27.66	%		2.21	%		2.59	%		17.61	%		2.54	%		3.75	%		70.85	%	$	865	$	2

Comparable Recent Conversions(1)
EBSB	Meridian Bancorp, Inc.	MA		0.50	%		16.93	%		7.78	%		10.74	%		38.49	%		9.21	%		2.30	%		89.82	%	$	163,385	$	716

Comparable Group
Averages				14.14	%		25.52	%		1.90	%		15.11	%		17.28	%		3.61	%		4.77	%		67.51	%	$	332,801	$	1,833
Medians				13.23	%		21.56	%		1.18	%		2.58	%		14.73	%		2.79	%		4.95	%		71.03	%	$	205,373	$	741
Comparable Group
BKMU	Bank Mutual Corporation	WI		23.54	%		25.07	%		5.99	%		12.24	%		10.66	%		8.48	%		4.95	%		65.92	%	$	1,112,812	$	8,213
CFFN	Capitol Federal Financial, Inc.	KS		21.08	%		65.28	%		0.60	%		0.11	%		0.52	%		0.00	%		1.48	%		42.93	%	$	205,373	$	741
DCOM	Dime Community Bancshares, Inc.	NY		0.67	%		1.46	%		0.00	%		73.52	%		17.12	%		0.00	%		0.31	%		72.95	%	$	5,996	$	415
NFBK	Northfield Bancorp, Inc.	NJ		30.67	%		5.66	%		0.57	%		32.96	%		14.49	%		1.45	%		1.53	%		72.59	%	$	0	$	0
NWBI	Northwest Bancshares, Inc.	PA		7.41	%		38.44	%		2.41	%		2.17	%		14.73	%		4.43	%		11.68	%		65.64	%	$	794,623	$	1,360
OCFC	OceanFirst Financial Corp.	NJ		14.13	%		37.77	%		3.14	%		0.94	%		20.73	%		2.79	%		5.50	%		65.91	%	$	786,094	$	3,772
ORIT	Oritani Financial Corp.	NJ		12.94	%		4.79	%		1.10	%		28.06	%		42.39	%		0.35	%		0.47	%		85.30	%	$	4,503	$	0
PFS	Provident Financial Services, Inc.	NJ		12.23	%		18.59	%		2.33	%		11.11	%		22.46	%		4.83	%		3.84	%		71.03	%	$	207,976	$	1,120
TRST	TrustCo Bank Corp NY	NY		13.23	%		52.12	%		1.12	%		0.63	%		2.23	%		0.66	%		8.72	%		48.66	%	$	0	$	0
UBNK	United Financial Bancorp, Inc.	CT		4.15	%		21.56	%		1.18	%		2.58	%		12.88	%		4.42	%		6.58	%		73.03	%	$	414,882	$	4,084
WSFS	WSFS Financial Corporation	DE		15.53	%		10.00	%		2.45	%		1.88	%		31.92	%		12.34	%		7.41	%		78.61	%	$	128,550	$	459

(1)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.


Source:		SNL Financial LC. and RP ^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.13*

income had a larger impact on the Peer Group’s earnings. Loan servicing intangibles constituted a relatively small balance sheet item for both the Company and the Peer Group.

Diversification into higher risk and higher yielding types of lending was more significant for the Peer Group. The Peer Group’s loan portfolio composition reflected slightly higher concentrations of commercial real estate loans (17.28% of assets versus 15.74% of assets for the Company), multi-family loans (15.11% of assets versus 12.28% of assets for the Company), construction/land loans (1.90% of assets versus 0.21% of assets for the Company), commercial business loans (3.61% of assets versus 1.92 of assets for the Company) and consumer loans (4.77% of assets versus 2.96% of assets for the Company). In total, construction/land, commercial real estate, multi-family, commercial business and consumer loans comprised 33.11% and 42.67% of the Company’s and the Peer Group’s assets, respectively. Overall, the Company’s asset composition provided for a lower risk weighted assets-to-assets ratio of 52.68% compared to 67.51% for the Peer Group.

Interest Rate Risk

Table 3.5 reflects various key ratios highlighting the relative interest rate risk exposure of the Company versus the Peer Group. In terms of balance sheet composition, Kearny Financial’s interest rate risk characteristics implied greater interest rate risk exposure relative to the comparable measures for the Peer Group. Most notably, the Company’s tangible equity-to-assets ratio and IEA/IBL ratio were slightly below the respective Peer Group ratios. Likewise, a greater degree of balance sheet interest rate risk exposure was implied by the Company’s higher ratio of non-interest earning assets as a percent of assets. On a pro forma basis, the infusion of stock proceeds should serve to strengthen the Company’s balance sheet interest rate risk characteristics, given the increases that will be realized in Company’s tangible equity-to-assets and IEA/IBL ratios.

To analyze interest rate risk associated with the net interest margin, we reviewed quarterly changes in net interest income as a percent of average assets for Kearny Financial and the Peer Group. In general, the comparative fluctuations in the Company’s and the Peer Group’s net interest income ratios implied that the interest rate risk associated with their respective net interest margins was fairly similar, based on the interest rate environment that prevailed during the period covered in Table 3.5. The stability of the Company’s net interest margin should be enhanced by the infusion of stock proceeds, as interest rate sensitive


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.14*

Table 3.5

Interest Rate Risk Measures and Net Interest Income Volatility

Comparable Institution Analysis

As of June 30, 2014


			Balance Sheet Measures
			Tangible						Non-Earn.			Quarterly Change in Net Interest Income
			Equity/			IEA/			Assets/
			Assets			IBL			Assets			6/30/2014		3/31/2014		12/31/2013		9/30/2013		6/30/2013		3/31/2013
			(%)			(%)			(%)			(change in net interest income is annualized in basis points)
Kearny Financial Corp. of NJ
June 30, 2014				11.0	%		108.5	%		7.5	%		-3		-4		-1		-4		7		6

All Public Companies				12.9	%		108.6	%		7.3	%		2		-2		5		1		-2		-7
State of	NJ			15.1	%		113.5	%		4.3	%		-5		-2		3		4		-2		-4

Comparable Recent Conversions(1)
EBSB	Meridian Bancorp, Inc.	MA		8.8	%		106.5	%		4.3	%		-3		-3		-7		4		-13		6

Comparable Group
Average				12.3	%		110.6	%		5.8	%		4		-3		-1		1		-1		-6
Median				10.5	%		108.7	%		5.2	%		2		-3		-1		2		0		-4

Comparable Group
BKMU	Bank Mutual Corporation	WI		12.4	%		108.8	%		7.6	%		3		1		7		14		2		11
CFFN	Capitol Federal Financial, Inc.	KS		16.6	%		118.6	%		2.3	%		2		9		2		0		0		-4
DCOM	Dime Community Bancshares, Inc.	NY		9.3	%		109.9	%		4.4	%		-8		-16		-10		-19		9		-23
NFBK	Northfield Bancorp, Inc.	NJ		23.6	%		122.6	%		8.2	%		-8		8		-13		15		6		-11
NWBI	Northwest Bancshares, Inc.	PA		11.6	%		108.7	%		7.2	%		8		-7		-1		-2		-6		-9
OCFC	OceanFirst Financial Corp.	NJ		9.3	%		105.1	%		5.2	%		-1		0		16		-1		5		-13
ORIT	Oritani Financial Corp.	NJ		16.8	%		117.3	%		4.8	%		-19		-12		-8		10		-22		12
PFS	Provident Financial Services, Inc.	NJ		8.9	%		105.6	%		9.3	%		-2		-2		-1		2		-3		0
TRST	TrustCo Bank Corp NY	NY		8.4	%		107.3	%		2.3	%		4		-3		3		4		-7		-3
UBNK	United Financial Bancorp, Inc.	CT		10.5	%		107.2	%		7.3	%		61		-9		-8		-14		2		-25
WSFS	WSFS Financial Corporation	DE		8.6	%		105.9	%		5.0	%		7		-7		8		9		0		3

(1)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.


Source:		SNL Financial LC. and RP ^® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.15*

liabilities will be funding a lower portion of Kearny Financial’s assets and the proceeds will be substantially deployed into interest-earning assets.

Credit Risk

Overall, based on a comparison of credit risk measures, the Company’s implied credit risk exposure was viewed to be fairly similar to the Peer Group’s credit risk exposure. As shown in Table 3.6, the Company’s ratios for non-performing/assets and non-performing loans/loans equaled 0.77% and 1.45%, respectively, versus comparable measures of 1.23% and 1.56% for the Peer Group. The Company’s and Peer Group’s loss reserves as a percent of non-performing loans equaled 48.95% and 85.11%, respectively. Loss reserves maintained as percent of loans receivable equaled 0.71% for the Company, versus 1.09% for the Peer Group. Net loan charge-offs were a similar factor for the Company and the Peer Group, as net loan charge-offs for the Company and the Peer Group equaled 0.11% of loans and 0.13% of loans, respectively.

Summary

Based on the above analysis, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of the Company. Such general characteristics as asset size, capital position, interest-earning asset composition, funding composition, core earnings measures, loan composition, credit quality and exposure to interest rate risk all tend to support the reasonability of the Peer Group from a financial standpoint. Those areas where differences exist will be addressed in the form of valuation adjustments to the extent necessary.


*RP ^® Financial, LC.*		*PEER GROUP ANALYSIS*
		*III.16*

Table 3.6

Credit Risk Measures and Related Information

Comparable Institution Analysis

As of June 30, 2014


						NPAs &												Rsrves/
			REO/			90+Del/			NPLs/			Rsrves/			Rsrves/			NPAs &			Net Loan		NLCs/
			Assets			Assets (1)			Loans (1)			Loans HFI			NPLs (1)			90+Del (1)			Chargeoffs (2)		Loans
			(%)			(%)			(%)			(%)			(%)			(%)			($000)		(%)
Kearny Financial Corp. of NJ
June 30, 2014				0.05	%		0.77	%		1.45	%		0.71	%		48.95	%		46.00	%	$	1,890		0.11	%

All Public Companies
Averages				0.36	%		2.28	%		2.68	%		1.29	%		81.20	%		66.11	%	$	4,014		0.26	%
Medians				0.19	%		1.75	%		2.00	%		1.20	%		64.13	%		50.70	%	$	650		0.13	%

State of	NJ
Averages				0.39	%		3.63	%		4.53	%		1.13	%		58.25	%		37.01	%	$	3,122		0.38	%
Medians				0.10	%		2.95	%		3.20	%		1.24	%		49.20	%		30.49	%	$	2,063		0.14	%

Comparable Recent Conversions(3)
EBSB	Meridian Bancorp, Inc.	PA		0.05	%		1.75	%		1.99	%		1.11	%		55.54	%		53.90	%	$	1,639		0.07	%

Comparable Group
Averages				0.12	%		1.23	%		1.56	%		1.09	%		85.11	%		70.46	%	$	4,685		0.13	%
Medians				0.10	%		1.09	%		1.49	%		1.24	%		73.86	%		63.57	%	$	1,966		0.13	%

Comparable Group
BKMU	Bank Mutual Corporation	WI		0.26	%		0.83	%		0.83	%		1.44	%		173.10	%		118.07	%	$	1,966		0.13	%
CFFN	Capitol Federal Financial, Inc.	KS		0.04	%		0.34	%		0.45	%		0.15	%		32.94	%		29.44	%	$	639		0.01	%
DCOM	Dime Community Bancshares, Inc.	NY		0.02	%		0.57	%		0.53	%		0.49	%		93.17	%		79.82	%	$	205		0.01	%
NFBK	Northfield Bancorp, Inc.	NJ		0.02	%		1.54	%		2.55	%		1.67	%		65.54	%		63.57	%	$	2,057		0.14	%
NWBI	Northwest Bancshares, Inc.	PA		0.19	%		1.92	%		2.32	%		1.21	%		52.30	%		47.07	%	$	22,874		0.40	%
OCFC	OceanFirst Financial Corp.	NJ		0.21	%		2.95	%		3.85	%		1.27	%		32.87	%		30.49	%	$	1,589		0.10	%
ORIT	Oritani Financial Corp.	NJ		0.12	%		0.69	%		0.71	%		1.24	%		174.72	%		143.90	%	$	680		0.03	%
PFS	Provident Financial Services, Inc.	NJ		0.08	%		1.51	%		2.05	%		1.08	%		52.81	%		49.92	%	$	8,030		0.15	%
TRST	TrustCo Bank Corp NY	NY		0.18	%		1.26	%		1.65	%		1.56	%		94.61	%		81.06	%	$	6,654		0.23	%
UBNK	United Financial Bancorp, Inc.	CT		0.06	%		0.84	%		0.78	%		0.58	%		73.86	%		49.42	%	$	784		0.04	%
WSFS	WSFS Financial Corporation	DE		0.10	%		1.09	%		1.49	%		1.35	%		90.27	%		82.28	%	$	6,055		0.21	%

(1)	Includes TDRs for the Company and the Peer Group.

(2)	Net loan chargeoffs are shown on a last twelve month basis.

(3)	Ratios are based on the date of the most recent financial statements disclosed in the offering prospectus.


Source:		SNL Financial, LC and RP ^® Financial, LC. calculations. The information provided in this table has been obrained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.1*

IV. VALUATION ANALYSIS

Introduction

This chapter presents the valuation analysis and methodology, prepared pursuant to the regulatory valuation guidelines, and valuation adjustments and assumptions used to determine the estimated pro forma market value of the common stock to be issued in conjunction with the Company’s conversion transaction.

Appraisal Guidelines

The regulatory written appraisal guidelines required by the FRB, the OCC, the FDIC and state banking agencies specify the market value methodology for estimating the pro forma market value of an institution pursuant to a mutual-to-stock conversion. Pursuant to this methodology: (1) a peer group of comparable publicly-traded institutions is selected; (2) a financial and operational comparison of the subject company to the peer group is conducted to discern key differences; and (3) a valuation analysis in which the pro forma market value of the subject company is determined based on the market pricing of the peer group as of the date of valuation, incorporating valuation adjustments for key differences. In addition, the pricing characteristics of recent conversions, both at conversion and in the aftermarket, must be considered.

RP Financial Approach to the Valuation

The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes “fundamental analysis” techniques. Additionally, the valuation incorporates a “technical analysis” of recently completed stock conversions, particularly second-step conversions, including closing pricing and aftermarket trading of such offerings. It should be noted that these valuation analyses cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a particular stock on a given day.

The pro forma market value determined herein is a preliminary value for the Company’s to-be-issued stock. Throughout the conversion process, RP Financial will: (1) review changes in Kearny Financial’s operations and financial condition; (2) monitor Kearny Financial’s


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.2*

operations and financial condition relative to the Peer Group to identify any fundamental changes; (3) monitor the external factors affecting value including, but not limited to, local and national economic conditions, interest rates, and the stock market environment, including the market for thrift stocks and Kearny Financial’s stock specifically; and (4) monitor pending conversion offerings, particularly second-step conversions (including those in the offering phase). If, during the conversion process, material changes occur, RP Financial will determine if updated valuation reports should be prepared to reflect such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering to determine if the prepared valuation analysis and resulting range of value continues to be appropriate.

The appraised value determined herein is based on the current market and operating environment for the Company and for all thrifts. Subsequent changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all thrift stocks, including Kearny Financial’s value, or Kearny Financial’s value alone. To the extent a change in factors impacting the Company’s value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into the analysis.

Valuation Analysis

A fundamental analysis discussing similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Company and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed on the specific strengths and weaknesses of the Company relative to the Peer Group in such key areas as financial condition, profitability, growth and viability of earnings, asset growth, primary market area, dividends, liquidity of the shares, marketing of the issue, management, and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, in particular new issues, to assess the impact on value of the Company coming to market at this time.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.3*

1. Financial Condition

The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as liquidity, capital, asset composition and quality, and funding sources in assessing investment attractiveness. The similarities and differences in the Company’s and the Peer Group’s financial strengths are noted as follows:

•

Overall A/L Composition . In comparison to the Peer Group, the Company’s interest-earning asset composition showed a higher concentration of cash and investments and a lower concentration of loans. Diversification into higher risk and higher yielding types of loans was more significant for the Peer Group and the Peer Group also maintained a higher concentration of 1-4 family loans. Overall, in comparison to the Peer Group, the Company’s interest-earning asset composition provided for a lower yield earned on interest-earning assets and a lower risk weighted assets-to-assets ratio. Kearny Financial’s funding composition reflected slightly higher and lower levels of deposits and borrowings, respectively, which translated into similar cost of funds for the Company and the Peer Group. Overall, as a percent of assets, the Company maintained a lower level of interest-earning assets and a similar level of interest-bearing liabilities compared to the Peer Group’s ratios, which resulted in a lower IEA/IBL ratio for the Company. After factoring in the impact of the net stock proceeds, the Company’s IEA/IBL ratio should exceed the Peer Group’s IEA/IBL ratio. On balance, RP Financial concluded that asset/liability composition was a neutral factor in our adjustment for financial condition.

•

Credit Quality. The Company’s ratios for non-performing assets as a percent of assets and non-performing loans as a percent of loans were slightly lower to the comparable ratios for the Peer Group. Loss reserves as a percent of non-performing loans and as a percent of loans were lower for the Company. Net loan charge-offs as a percent of loans were similar for the Company and the Peer Group. The Company’s risk weighted assets-to-assets ratio was lower than the Peer Group’s ratio, which was consistent with the Company’s lower concentration of assets maintained in loans. Overall, RP Financial concluded that credit quality was a slightly positive factor in our adjustment for financial condition.

•

Balance Sheet Liquidity . The Company operated with a higher level of cash and investment securities relative to the Peer Group (43.26% of assets versus 23.45% for the Peer Group). Following the infusion of stock proceeds, the Company’s cash and investments ratio is expected to increase as the proceeds retained at the holding company level will be initially deployed into cash and investments. The Company was viewed as having slightly greater future borrowing capacity relative to the Peer Group, based on the slightly lower level of borrowings currently funding the Company’s assets. Overall, RP Financial concluded that balance sheet liquidity was a slightly positive factor in our adjustment for financial condition.

•

Funding Liabilities . The Company’s interest-bearing funding composition reflected a slightly higher concentration of deposits and a slightly lower concentration of borrowings relative to the comparable Peer Group ratios, which translated into a similar cost of funds for the Company and the Peer Group. Total interest-bearing liabilities as a percent of assets were approximately the same for the Company and the Peer Group. Following the stock offering, the increase in the Company’s capital


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.4*

position will reduce the level of interest-bearing liabilities funding the Company’s assets. Overall, RP Financial concluded that funding liabilities were a neutral factor in our adjustment for financial condition.

•

Capital . The Company currently operates with a slightly lower tangible equity-to-assets ratio than the Peer Group. Following the stock offering, Kearny Financial’s pro forma tangible capital position will be well above the Peer Group’s tangible equity-to-assets ratio. The Company’s higher pro forma capital position implies greater leverage capacity, lower dependence on interest-bearing liabilities to fund assets and a greater capacity to absorb unanticipated losses. At the same time, the Company’s more significant capital surplus will make it difficult to achieve a competitive ROE. On balance, RP Financial concluded that capital strength was a slightly positive factor in our adjustment for financial condition.

On balance, Kearny Financial’s balance sheet strength was considered to be more favorable than the Peer Group’s balance sheet strength and, thus, a slight upward adjustment was applied for the Company’s financial condition.

2. Profitability, Growth and Viability of Earnings

Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution’s earnings stream and the prospects and ability to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The major factors considered in the valuation are described below.

•

Reported Earnings . The Company’s reported earnings were lower than the Peer Group’s on a ROAA basis (0.31% of average assets versus 0.84% for the Peer Group), as the Peer Group maintained earnings advantages with respect to net interest income and non-interest operating income, which were slightly offset by the Company’s lower level of operating expenses. Reinvestment of stock proceeds into interest-earning assets will serve to increase the Company’s earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by implementation of additional stock benefit plans in connection with the second-step offering. Overall, the Company’s pro forma reported earnings were considered to be less favorable than the Peer Group’s earnings and, thus, RP Financial concluded that this was a moderately negative factor in our adjustment for profitability, growth and viability of earnings.

•

Core Earnings . Net interest income, operating expenses, non-interest operating income and loan loss provisions were reviewed in assessing the relative strengths and weaknesses of the Company’s and the Peer Group’s core earnings. The Company operated with a lower net interest income ratio, a lower operating expense ratio and a lower level of non-interest operating income. The Company’s ratios for net interest income and operating expenses resulted in a lower expense coverage ratio in comparison to the Peer Group’s ratio (equal to 1.16x versus 1.39X for the Peer Group). Similarly, the Company’s efficiency ratio of 78.86% was less favorable than the Peer Group’s efficiency ratio of 59.17%. Loan loans provisions had a similar impact on the Company’s and the Peer Group’s earnings. Overall, these


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.5*

measures, as well as the expected earnings benefits the Company should realize from the redeployment of stock proceeds into interest-earning assets and leveraging of post-conversion capital, which will be somewhat negated by expenses associated with the stock benefit plans, indicate that the Company’s pro forma core earnings will remain less favorable than the Peer Group’s earnings on a ROAA basis. Therefore, RP Financial concluded that this was a moderately negative factor in our adjustment for profitability, growth and viability of earnings.

•

Interest Rate Risk . Quarterly changes in the Company’s and the Peer Group’s net interest income to average assets ratios indicated a similar degree of volatility was associated with their respective net interest margins. Measures of balance sheet interest rate risk, such as capital, IEA/IBL and non-interest earning asset ratios implied a greater degree of interest rate risk exposure was associated with the Company’s balance sheet. On a pro forma basis, the infusion of stock proceeds can be expected to provide the Company with equity-to-assets and IEA/ILB ratios that will likely exceed the Peer Group ratios, as well as enhance the stability of the Company’s net interest margin through the reinvestment of stock proceeds into interest-earning assets. On balance, RP Financial concluded that interest rate risk was a slightly positive factor in our adjustment for profitability, growth and viability of earnings.

•

Credit Risk . Loan loss provisions were a comparable factor in the Company’s and the Peer Group’s earnings (0.10% of average assets versus 0.09% of average assets for the Peer Group). In terms of future exposure to credit quality related losses, lending diversification into higher risk types of loans was more significant for the Peer Group. The Company’s credit quality measures generally implied a slightly lower degree of credit risk exposure relative to the comparable credit quality measures indicated for the Peer Group. Overall, RP Financial concluded that credit risk was a slightly positive factor in our adjustment for profitability, growth and viability of earnings.

•

Earnings Growth Potential . Several factors were considered in assessing earnings growth potential. First, the Company maintained a lower interest rate spread than the Peer Group, which would tend to continue to provide for a lower net interest income ratio for the Company going forward based on the current prevailing interest rate environment. Second, the infusion of stock proceeds will provide the Company with more significant growth potential through leverage than currently maintained by the Peer Group. Third, the Peer Group’s higher ratio of non-interest operating income and the Company’s lower operating expense ratio were viewed as respective advantages to sustain earnings growth during periods when net interest margins come under pressure as the result of adverse changes in interest rates. Overall, earnings growth potential was considered to be a slightly negative factor in our adjustment for profitability, growth and viability of earnings.

•

Return on Equity . Currently, the Company’s core ROE is lower than the Peer Group’s core ROE. As the result of the significant increase in capital that will be realized from the infusion of net stock proceeds into the Company’s equity, the Company’s pro forma return equity on a core earnings basis will remain lower than the Peer Group’s core ROE. Accordingly, this was a moderately negative factor in the adjustment for profitability, growth and viability of earnings.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.6*

On balance, Kearny Financial’s pro forma earnings strength was considered to be less favorable than the Peer Group’s and, thus, a moderate downward adjustment was applied for profitability, growth and viability of earnings.

3. Asset Growth

Comparative twelve-month asset growth rates for the Company and the Peer Group showed an 11.59% increase in the Company’s assets, versus a 16.12% increase in the Peer Group’s assets. Asset growth for the Company was mostly attributable to loan growth, which included loan growth realized from the acquisition of Atlas Bank. Similarly, asset growth for the Peer Group was supported by acquisition related growth by one of the Peer Group companies and consisted primarily of loan growth. Overall, the Company’s and the Peer Group’s asset growth trends would be viewed to be fairly similar in terms of supporting future earnings growth. On a pro forma basis, the Company’s tangible equity-to-assets ratio will exceed the Peer Group’s tangible equity-to-assets ratio, indicating greater leverage capacity for the Company. On balance, a slight upward adjustment was applied for asset growth.

4. Primary Market Area

The general condition of an institution’s market area has an impact on value, as future success is in part dependent upon opportunities for profitable activities in the local market served. Kearny Financial’s primary market area is the New York MSA, particularly the central and northern New Jersey markets. The Company’s market area is comprised of a mix of suburban and urban markets with varied demographic characteristics in terms of growth and affluence. Operating in a densely populated market area provides the Company with growth opportunities, but such growth must be achieved in a highly competitive market environment for providers of financial services. The May 2014 unemployment rate for the New York MSA was slightly above and slightly below the respective comparable unemployment rates for the U.S. and New Jersey.

On average, the Peer Group companies generally operate in markets with similar populations compared to the primary market area counties served by the Company’s branch network. Population growth rates for the primary market area counties served by the Peer Group companies were fairly consistent with the population growth rate for the New York MSA. The New York MSA has a higher per capita income compared to the Peer Group’s average and


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.7*

median per capita income measures, while per capita income measures for the Company’s primary market area counties were varied and included some counties with lower per capita income relative to the Peer Group’s average and median per capita income measures. The average deposit market share maintained by the Peer Group companies was well above the Company’s market share of deposits in Hudson County, while the Peer Group’s median deposit market shares was only slightly above the Company’s deposit market share in Hudson County. Overall, the degree of competition faced by the Peer Group companies was viewed to be less than faced by Kearny Financial, while the growth potential in the markets served by the Peer Group companies was for the most part viewed to be similar to the Company’s primary market area. Summary demographic and deposit market share data for the Company and the Peer Group companies is provided in Exhibit III-5. As shown in Table 4.1, May 2014 unemployment rates for the markets served by the Peer Group companies were, on average, slightly below the May 2014 unemployment rate for the New York MSA and somewhat below the May 2014 unemployment rate for Hudson County. On balance, we concluded that no adjustment was appropriate for the Company’s market area.

Table 4.1

Market Area Unemployment Rates

Kearny Financial and the Peer Group Companies (1)


	County	May 2014 Unemployment
Kearny Financial - NJ	Hudson		7.5	%
	New York MSA		6.6	%

Peer Group Average			6.3	%

Bank Mutual Corporation - WI	Milwaukee		7.0	%
Capitol Federal Financial - KS	Shawnee		4.9	%
Dime Community Bancshares - NY	Kings		8.3	%
Northfield Bancorp, Inc. - NJ	Middlesex		6.2	%
Northwest Bancshares - PA	Warren		4.9	%
OceanFirst Financial Corp. - NJ	Ocean		6.7	%
Oritani Financial Corp. - NJ	Bergen		5.7	%
Provident Financial Services - NJ	Hudson		7.5	%
TrustCo Bank Corp. - NY	Schenectady		5.4	%
United Financial Bancorp - CT	Hartford		7.2	%
WSFS Financial Corp. - DE	New Castle		5.9	%

(1)	Unemployment rates are not seasonally adjusted

Source: SNL Financial


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.8*

5. Dividends

The Company currently does not pay a dividend. Following the second-step offering, Kearny Financial has indicated its intention to pay a quarterly cash dividend of $0.02 per share for an annual cash dividend of $0.08 per share, which is equal to a 0.8% yield based on the $10.00 per share IPO price. However, future declarations of dividends by the Board of Directors will depend upon a number of factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions.

All eleven of the Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 0.66% to 4.69%. The average dividend yield on the stocks of the Peer Group institutions was 3.10% as of August 8, 2014. Comparatively, as of August 8, 2014, the average dividend yield on the stocks of all fully-converted publicly-traded thrifts equaled 1.89% The dividend paying thrifts generally maintain higher than average profitability ratios, facilitating their ability to pay cash dividends.

The Company’s indicated dividend policy provides for a lower yield compared to the Peer Group’s average dividend yield, while the Company’s implied payout ratio was below and above the Peer Group’s respective average and median payout ratios. At the same time, the Company’s tangible equity-assets ratio, which will be at levels exceeding the Peer Group’s ratio across the conversion offering range, will provide Kearny Financial the capacity to pay a dividend comparable to the Peer Group’s average dividend yield. On balance, we concluded that no adjustment was warranted for this factor.

6. Liquidity of the Shares

The Peer Group is by definition composed of companies that are traded in the public markets. Ten of the Peer Group companies trade on the NASDAQ Global Select Market and Provident Financial Services trades on the New York Stock Exchange. Typically, the number of shares outstanding and market capitalization provides an indication of how much liquidity there will be in a particular stock. The market capitalization of the Peer Group companies ranged from $282 million to $1.7 billion as of August 8, 2014, with average and median market values of $764 million and $674 million, respectively. The shares issued and outstanding of the Peer Group companies ranged from 8.9 million to 142.0 million, with average and median shares outstanding of 59.8 million and 52.8 million, respectively. The Company’s second-step stock


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.9*

offering is expected to provide for a pro forma market value and shares outstanding that will be in the upper end of the Peer Group’s ranges for market values and shares outstanding. Consistent with all but one of the Peer Group companies, the Company’s stock will also be quoted on the NASDAQ Global Select Market following the stock offering. Overall, we anticipate that the Company’s stock will have a comparable trading market as the Peer Group companies on average and, therefore, concluded no adjustment was necessary for this factor.

7. Marketing of the Issue

We believe that four separate markets exist for thrift stocks, including those coming to market such as Kearny Financial’s stock: (A) the after-market for public companies, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (B) the new issue market in which converting thrifts are evaluated on the basis of the same factors, but on a pro forma basis without the benefit of prior operations as a fully-converted company; (C) the acquisition market for thrift franchises based in New Jersey; and (D) the market for the public stock of Kearny Financial. All of these markets were considered in the valuation of the Company’s to-be-issued stock.

A. The Public Market

The value of publicly-traded thrift stocks is easily measurable, and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues and stock market conditions in general. Exhibit IV-2 displays historical stock market trends for various indices and includes historical stock price index values for thrifts and commercial banks. Exhibit IV-3 displays various stock price indices for thrifts.

In terms of assessing general stock market conditions, the performance of the overall stock market has generally shown an upward trend in recent quarters. Stocks retreated at the start of 2014, as profit taking and a disappointing employment report for December weighed on the broader stock market. Mixed fourth quarter earnings reports translated into an up and down stock market in mid-January. Concerns about weakening economies in emerging market countries precipitated a global stock market selloff heading into the second half of January, as the DJIA posted five consecutive losses. News that the Federal Reserve voted


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.10*

again to scale back its monthly bond buying program by another $10 billion, despite recent turmoil in emerging markets and soft jobs data, added to the selloff to close out January. A significant decline in January manufacturing activity drove stocks sharply lower at the start of February. Stocks rebounded heading into mid-February, as disappointing job growth reflected in the January employment report and congressional testimony by the new Federal Reserve Chairwoman eased investor concerns that the Federal Reserve would not continue on its current course of easy monetary policies. The release of minutes from the Federal Reserve’s previous meeting, which indicated that some Federal Reserve officials were considering raising interest rates sooner than expected, pressured stocks lower heading into the second half of February. Despite data showing a softening economy, stocks traded higher to close out February. Stocks declined sharply on the first day of trading in March as the Ukraine crisis sparked a global selloff, which was followed by a rebound in the stock market to close out the first week of March as the threat of the Ukraine crisis escalating diminished and the February employment report showed better-than-expected job growth. Data showing that China’s economy weakened sharply during the first two months of 2014 and rising tensions in Ukraine contributed to stocks trading lower into mid-March. The broader stock market traded unevenly in the second half of March, as investors reacted to mixed reports on the economy and comments from the Federal Reserve Chairwoman signaling that the Federal Reserve could begin raising interest rates earlier than expected. New assurances from the Federal Reserve Chairwoman on the Federal Reserve’s plan to keep rates low until the job market returned to normal health and remarks from China’s premier that the Chinese government was ready to take steps to support China’s economy helped to lift stocks at the close of March.

Stocks edged higher at the start of the second quarter of 2014, which was followed by a downturn as investors reacted to March employment data in which the unemployment rate was unchanged from February and job growth was slightly below expectations. Led by advances in technology shares, the broader stock market traded higher for the first time in four sessions at the start of the first quarter earnings season. Stocks retreated heading into mid-April, with once high-flying biotechnology and Internet companies leading the decline. A strong retail sales report for March helped stocks to rebound in mid-April, with technology stocks leading the market higher. Investor confidence was also bolstered by reassurances from the Federal Reserve Chairwoman on maintaining her stance for keeping interest rates low. A rebound in technology stocks and a series of deals in the healthcare sector helped to extend gains in the broader stock market heading into late-April. The DJIA closed at a


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.11*

record high at the end of April, as a number of positive first quarter earnings reports helped to offset investors’ worries about tensions in Ukraine and slowing growth in China. Stocks traded unevenly during the first three weeks of May, as investors reacted to mixed data on the economy and gravitated towards lower risk investments. The release of minutes from the Federal Reserve’s April policy meeting, which suggested that Federal Reserve officials were in no hurry to raise interest rates, and better-than-expected new home sales for April contributed to gains in the broader stock market heading into the last week of May. Stocks closed out May on an upswing, despite a downward revision to first quarter GDP growth to a negative annual growth rate of 1.0%. Favorable reports for May manufacturing and service activity, along with a May jobs report that generally met expectations, supported a continuation of a positive trend in the broader stock market during the first week of June. Instability in Iraq and a spike in oil prices weighed on stocks heading into mid-June. Stocks rebounded at the conclusion of the Federal Reserve’s policy meeting in mid-June, as the Federal Reserve indicated that it planned to maintain its current policy of keeping its target interest rate near zero and reduce its monthly purchases of long-term bonds from $45 billion to $35 billion. Optimism about the U.S. economy and the Federal Reserve’s commitment to keep interest rates low spurred the DJIA and the S&P 500 to record highs heading into late-June. Followings six consecutive sessions of closing higher, the broader stock market closed out the second quarter with mixed results.

Better-than-expected job growth reflected in June employment report contributed to stock market gains in early-July, with the DJIA moving to a first time close above 17000. The DJIA retreated back under 17000 following the record close, as caution prevailed ahead of the second quarter earnings season. Some better-than-expected earnings reports coming out of the banking and technology sectors helped to propel the DJIA to record highs in mid-July. Global tensions in Ukraine and the Middle East pressured stocks lower heading into late-July. Stocks tumbled lower at the end of July, as worries about the global economy, including Europe’s prolonged economic slump and Argentina defaulting on its debt, translated into a broad-based selloff. In the first full trading week of August, weaker–than-expected job growth reflected in the July employment report and ongoing geopolitical concerns pushed the DJIA to its lowest close since late-April which was followed by the DJIA rebounding on the last trading day of the week. On August 8, 2014, the DJIA closed at 16553.93, an increase of 7.3% from one year ago and a decrease of 0.1% year-to-date, and the NASDAQ closed at 4370.90, an increase of 19.4% from one year ago and an increase of 4.7% year-to-date. The Standard & Poor’s 500 Index closed at 1931.59 on August 8, 2014, an increase of 14.2% from one year ago


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.12*

and an increase of 4.5% year-to-date.

Thrift stocks slightly underperformed the broader stock market over the past few quarters. Shares of thrift issues traded down at the start of 2014, as the 10-year Treasury yield approached 3.0% in early-January. Thrift stocks were also hurt by the disappointing employment report for December and then traded in a narrow range in mid-January, as investors reacted to mixed fourth quarter earnings reports coming out the banking sector at the start of the fourth quarter earnings season. Financial shares participated in the selloff experienced in the broader stock market during the second half of January and the first trading day of February. Janet Yellen’s debut congressional testimony as Federal Reserve Chairwoman helped to spark a rally in thrift stocks heading into mid-February, as she indicated that there were no plans to change course from the Federal Reserve’s current monetary policies. Thrift issues generally followed trends in the broader stock market in late-February and at the start of March, rallying at the end of February and then selling off at the start of March. Lessening concerns about Ukraine, financial sector merger activity and rising home prices boosted thrift shares following the March 1 selloff. The mid-March global selloff sparked by news of a slowdown in China’s economy impacted thrift shares as well, which was followed by an upward movement in shares in connection some favorable economic data including a pick-up in industrial production. Mixed signals from the Federal Reserve regarding the end of its quantitative easing program and a decline in February pending home sales were factors that pressured thrift stocks lower in late-March. Thrift stocks traded up at the end of the first quarter, as comments by the Federal Reserve Chairwoman that the Federal Reserve would continue to support the economic recovery were well received in the broader stock market.

Consistent with the broader stock market, thrift stocks traded lower in early-April 2014 with the release of the March employment report. A disappointing first quarter earnings report posted by J.P. Morgan, along with a selloff in the broader stock market, pressured financial shares lower heading into mid-April. Led by Citigroup’s better-than-expected first quarter earnings report, financial shares participated in the broader stock market rally going in the second half of April. News that Bank of America would suspend its stock buyback program and a planned increase in its quarterly dividend pressured financial shares lower in late-April. Thrift shares traded in a narrow range during early-May and then bounced higher, as the Federal Reserve Chairwoman reiterated the Federal Reserve’s stance to keep short-term interest rates near zero for the foreseeable future. Fresh concerns over the pace of economic growth and weakness in the housing sector pulled financial shares lower in mid-May.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.13*

Indications that the Federal Reserve was planning to stay the course on keeping interest rates low and a favorable report on new home sales for April boosted thrift shares heading into the last week of May. After trading in a narrow range at the end of May, some favorable economic reports supported gains in thrift shares during the first week of June. Thrift shares showed little movement heading into mid-June and then bounced higher at the conclusion of the Federal Reserve’s mid-June policy meeting, in which the Federal Reserve lowered its forecast for economic growth this year and indicated that interest rates were not expected to rise until 2015. Consistent with the broader stock market, thrift stocks traded in a narrow range at the close of the second quarter.

The favorable employment report for June boosted thrift stocks, along with the broader stock market, at the start of the third quarter of 2014. Financial shares eased lower ahead of the second quarter earnings season. Mixed second earnings reports coming out of the banking sector provided for a narrow trading range for thrift shares through mid-July. Thrift stocks faltered along with stocks in general heading into the second half of July, as investors moved to safe haven investments on reports of a Malaysian airliner being shot down and Israel’s invasion of Gaza. Merger activity in the banking sector helped to lift thrift stocks heading into late-July. Thrift shares traded lower to close out July and at the start of August, as concerns that an improving U.S. economy could prompt the Federal Reserve to raise rates sooner than expected weighed on interest rate sensitive issues. In the first full week trading in August, thrift shares stabilized and then rebounded along with the broader stock market to close out the week. On August 8, 2014, the SNL Index for all publicly-traded thrifts closed at 703.2, an increase of 5.8% from one year ago and a decrease of 0.5% year-to-date.

B. The New Issue Market

In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Company’s pro forma market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues are based on reported financials. The distinction between pricing of


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.14*

converting and existing issues is perhaps no clearer than in the case of the price/book (“P/B”) ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrifts the P/B ratio may reflect a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.

As shown in Table 4.2, two standard conversions and two second-step conversions have been completed during the past three months. The second-step conversion offerings are considered to be more relevant for Kearny Financial’s pro forma pricing. Investors Bancorp’s second-step offering was closed slightly below the maximum of its offering range and Meridian Bancorp’s second-step offering closed slightly above the maximum of its offering range. The average closing pro forma price/tangible book ratio of the two recent second-step conversion offerings equaled 105.6%. On average, the two recent second-step conversion offerings had price appreciation of 5.3% after their first week of trading. As of August 8, 2014, the two recent second-step conversion offerings showed an average price increase of 5.1% from their respective IPO prices.

Shown in Table 4.3 are the current pricing ratios for the four fully-converted offerings completed during the past three months and trade on NASDAQ. The current average P/TB ratio of the NASDAQ traded, fully-converted recent conversions equaled 97.56%, based on closing stock prices as of August 8, 2014.

C. The Acquisition Market

Also considered in the valuation was the potential impact on Kearny Financial’s stock price of recently completed and pending acquisitions of thrift institutions operating in New Jersey. As shown in Exhibit IV-4, there were five acquisitions of thrifts headquartered in New Jersey completed from the beginning of 2010 through August 8, 2014 and there is currently one acquisition pending for a thrift based in New Jersey. The recent acquisition activity involving regional financial institutions may imply a certain degree of acquisition speculation for the Company’s stock. To the extent that acquisition speculation may impact the Company’s offering, we have largely taken this into account in selecting companies for the Peer Group which operate in markets that have experienced some degree of acquisition activity as well and, thus, are subject to the same type of acquisition speculation that may influence Kearny Financial’s stock. However, since converting thrifts are subject to a three-year regulatory


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.15*

Table 4.2

Pricing Characteristics and After-Market Trends

Conversions Completed in the Last Three Months


			Pre-Conversion Data																											Insider Purchases															Pro Forma Data																			Post-IPO Pricing Trends
Institutional Information			Financial Info.					Asset Quality						Offering Information											Contribution to Char. Found.					% Off Incl. Fdn. +Merger Shares															Pricing Ratios(2)(5)								Financial Charac.											Closing Price:
														Excluding Foundation													% of Public Off. Excl. Fdn.			Benefit Plans												Initial Div. Yield			P/TB			Core P/E		P/A			Core ROA			TE/A			Core ROE			IPO Price		First Trading Day		% Chge			After First Week(3)		% Chge			After First Month(4)		% Chge			Thru 8/8/14		% Chge
Institution	Conversion Date	Ticker	Assets		Equity/ Assets			NPAs/ Assets			Res. Cov.			Gross Proc.		% Offer			% of Mid.			Exp./ Proc.			Form		% of Public Off. Excl. Fdn.			ESOP			Recog. Plans			Stk Option			Mgmt.& Dirs.			Initial Div. Yield			P/TB			Core P/E		P/A			Core ROA			TE/A			Core ROE			IPO Price		First Trading Day		% Chge			After First Week(3)		% Chge			After First Month(4)		% Chge			Thru 8/8/14		% Chge
			($Mil)		(%)			(%)			(%)			($Mil.)		(%)			(%)			(%)					(%)			(%)			(%)			(%)			(%)(1)			(%)			(%)			(x)		(%)			(%)			(%)			(%)			($)		($)		(%)			($)		(%)			($)		(%)			($)		(%)
*Standard Conversions*
Blue Hills Bancorp, Inc. - MA*	7/22/14	BHBK- NASDAQ	$	1,500		10.30	%		0.28	%		268	%	$	277.7		100	%		132	%		1.4	%		C/S	$	57K/2.4	%		8.0	%		4.0	%		10.0	%		0.7	%		0.00	%		74.5	%		NM		16.3	%		0.0	%		22.1	%		-0.1	%	$	10.00	$	12.38		23.8	%	$	12.17		21.7	%	$	12.35		23.5	%	$	12.35		23.5	%
Sunshine Bancorp, Inc. - FL*	7/15/14	SBCP- NASDAQ	$	201		13.20	%		2.43	%		49	%	$	42.3		100	%		132	%		3.3	%		N.A		N.A.			8.0	%		4.0	%		10.0	%		4.5	%		0.00	%		67.8	%		NM		17.8	%		0.0	%		26.3	%		0.1	%	$	10.00	$	12.03		20.3	%	$	11.90		19.0	%	$	11.86		18.6	%	$	11.86		18.6	%

	Averages - Standard Conversions:		$	850		11.75	%		1.36	%		158	%	$	160.0		100	%		132	%		2.3	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		2.6	%		0.00	%		71.1	%		NM		17.1	%		0.0	%		24.2	%		0.0	%	$	10.00	$	12.21		22.1	%	$	12.04		20.4	%	$	12.11		21.1	%	$	12.11		21.1	%
	Medians - Standard Conversions:		$	850		11.75	%		1.36	%		158	%	$	160.0		100	%		132	%		2.3	%		N.A.		N.A.			8.0	%		4.0	%		10.0	%		2.6	%		0.00	%		71.1	%		NM		17.1	%		0.0	%		24.2	%		0.0	%	$	10.00	$	12.21		22.1	%	$	12.04		20.4	%	$	12.11		21.1	%	$	12.11		21.1	%

*Second Step Conversions*
Meridian Bancorp, Inc. - MA*	7/29/14	EBSB- NASDAQ	$	2,798		9.20	%		1.54	%		60	%	$	325.0		59	%		118	%		2.1	%		N.A		N.A.			5.0	%		4.0	%		10.0	%		0.6	%		0.00	%		102.7	%		48.5		17.7	%		0.4	%		17.3	%		2.1	%	$	10.00	$	10.60		6.0	%	$	10.65		6.5	%	$	10.63		6.3	%	$	10.63		6.3	%
Investors Bancorp, Inc. - NJ*	5/8/14	ISBC- NASDAQ	$	16,437		8.56	%		0.95	%		124	%	$	2,195.8		61	%		110	%		2.1	%		C/S	$	10M/0.5	%		3.0	%		4.0	%		10.0	%		0.1	%		0.78	%		108.4	%		31.0		19.4	%		0.6	%		18.0	%		3.4	%	$	10.00	$	10.42		4.2	%	$	10.40		4.0	%	$	10.92		9.2	%	$	10.38		3.8	%

	Averages - Second Step Conversions:		$	9,617		8.88	%		1.25	%		92	%	$	1,260.4		60	%		114	%		2.1	%		N.A.		N.A.			4.0	%		4.0	%		10.0	%		0.4	%		0.39	%		105.6	%		39.8x		18.6	%		0.5	%		17.7	%		2.7	%	$	10.00	$	10.51		5.1	%	$	10.53		5.3	%	$	10.78		7.8	%	$	10.51		5.1	%
	Medians - Second Step Conversions:		$	9,617		8.88	%		1.25	%		92	%	$	1,260.4		60	%		114	%		2.1	%		N.A.		N.A.			4.0	%		4.0	%		10.0	%		0.4	%		0.39	%		105.6	%		39.8x		18.6	%		0.5	%		17.7	%		2.7	%	$	10.00	$	10.51		5.1	%	$	10.53		5.3	%	$	10.78		7.8	%	$	10.51		5.1	%

	Averages - All Conversions:		$	5,234		10.32	%		1.30	%		125	%	$	710.2		80	%		123	%		2.2	%		N.A.		N.A.			6.0	%		4.0	%		10.0	%		1.5	%		0.20	%		88.3	%		39.8x		17.8	%		0.3	%		21.0	%		1.4	%	$	10.00	$	11.36		13.6	%	$	11.28		12.8	%	$	11.44		14.4	%	$	11.31		13.1	%
	Medians - All Conversions:		$	2,149		9.75	%		1.25	%		92	%	$	301.4		81	%		125	%		2.1	%		N.A.		N.A.			6.5	%		4.0	%		10.0	%		0.6	%		0.00	%		88.6	%		39.8x		17.8	%		0.2	%		20.1	%		1.1	%	$	10.00	$	11.32		13.2	%	$	11.28		12.8	%	$	11.39		13.9	%	$	11.25		12.5	%

Note:

* - Appraisal performed by RP Financial; BOLD = RP Fin. Did the business plan, “NT” - Not Traded; “NA” - Not Applicable, Not Available; C/S-Cash/Stock.

(1)	As a percent of MHC offering for MHC transactions.

(2)	Does not take into account the adoption of SOP 93-6.

(3)	Latest price if offering is less than one week old.

(4)	Latest price if offering is more than one week but less than one month old.

(5)	Mutual holding company pro forma data on full conversion basis.

(6)	Simultaneously completed acquisition of another financial institution.

(7)	Simultaneously converted to a commercial bank charter.

(8)	Former credit union.

August 8, 2014


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.16*

Table 4.3

Market Pricing Comparatives

Prices As of August 8, 2014


		Market				Per Share Data
		Capitalization				Core			Book															Dividends(4)								Financial Characteristics(6)
		Price/		Market		12 Month			Value/		Pricing Ratios(3)													Amount/					Payout			Total		Equity/			Tang Eq/			NPAs/			Reported						Core
Financial Institution		Share(1)		Value		EPS(2)			Share		P/E		P/B			P/A			P/TB			P/Core		Share		Yield			Ratio(5)			Assets		Assets			Assets			Assets			ROA			ROE			ROA			ROE
		($)		($Mil)		($)			($)		(x)		(%)			(%)			(%)			(x)		($)		(%)			(%)			($Mil)		(%)			(%)			(%)			(%)			(%)			(%)			(%)
All Non-MHC Public Companies		$	16.11	$	402.94	$	0.87		$	15.46		17.73x		107.44	%		13.13	%		115.47	%		17.65x	$	0.30		1.89	%		54.24	%	$	2,893		13.24	%		12.72	%		2.23	%		0.57	%		4.56	%		0.57	%		4.61	%
Converted Last 3 Months (no MHC)		$	11.31	$	1,175.52	$	0.14		$	12.13		32.98x		95.28	%		20.37	%		97.56	%		39.62x	$	0.04		0.39	%		7.27	%	$	5,631		21.74	%		21.37	%		1.28	%		0.32	%		2.49	%		0.27	%		2.27	%

Converted Last 3 Months (no MHC)
ISBC	Investors Bancorp Inc of NJ	$	10.38	$	3,718.84	$	0.36		$	9.82		30.53x		105.68	%		21.30	%		108.59	%		28.63x	$	0.16		1.54	%		29.07	%	$	17,457		20.16	%		19.72	%		0.85	%		0.69	%		6.69	%		0.73	%		7.02	%
SBCP	Sunshine Bancorp Inc of FL	$	11.86	$	50.19	$	0.01		$	14.76		NM		80.35	%		21.15	%		80.35	%		NM	$	0.00		0.00	%		0.00	%	$	237		26.32	%		26.32	%		2.43	%		0.02	%		0.08	%		0.02	%		0.08	%
BHBK	Blue Hills Bancorp Inc. of MA	$	12.35	$	351.57	($	0.01	)	$	13.94		NM		88.59	%		20.18	%		92.03	%		NM	$	0.00		0.00	%		0.00	%	$	1,742		22.79	%		22.12	%		0.28	%		0.03	%		0.15	%		-0.02	%		-0.10	%
EBSB	Meridian Bancorp, Inc. of MA	$	10.63	$	581.48	$	0.21		$	9.98		35.43x		106.51	%		18.84	%		109.25	%		50.62x	$	0.00		0.00	%		0.00	%	$	3,087		17.69	%		17.33	%		1.54	%		0.54	%		3.05	%		0.37	%		2.07	%

(1)	Average of High/Low or Bid/Ask price per share.

(2)	EPS (estimate core basis) is based on actual trailing 12 month data, adjusted to omit non-operating items on a tax-effected basis.

(3)	P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings.

(4)	Indicated 12 month dividend, based on last quarterly dividend declared.

(5)	Indicated 12 month dividend as a percent of trailing 12 month estimated core earnings.

(6)	ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common earnings and average common equity and total assets balances.

(7)	Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.

Source: SNL Financial, LC. and RP ^® Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.17*

moratorium from being acquired, acquisition speculation in Kearny Financial’s stock would tend to be less compared to the stocks of the Peer Group companies.

D. Trading in Kearny Financial’s Stock

Since Kearny Financial’s minority stock currently trades under the symbol “KRNY” on the NASDAQ, RP Financial also considered the recent trading activity in the valuation analysis. Kearny Financial had a total of 67,267,865 shares issued and outstanding at June 30, 2014, of which 15,307,528 shares were held by public shareholders and traded as public securities. As of August 8, 2014, the 52 week trading range of the Company’s stock was $9.19 to $15.55 per share and its closing price on August 8, 2014 was $15.37 per share. There are significant differences between the Company’s minority stock (currently being traded) and the conversion stock that will be issued by the Company. Such differences include different liquidity characteristics, a different return on equity for the conversion stock and the stock is currently traded based on speculation of a range of exchange ratios. Since the pro forma impact has not been publicly disseminated to date, it is appropriate to discount the current trading level. As the pro forma impact is made known publicly, the trading level will become more informative.

* * * * * * * * * * *

In determining our valuation adjustment for marketing of the issue, we considered trends in both the overall thrift market, the new issue market including the new issue market for second-step conversions, the acquisition market, and recent trading activity in the Company’s minority stock. Taking these factors and trends into account, RP Financial concluded that no adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.

8. Management

The Company’s management team appears to have experience and expertise in all of the key areas of the Company’s operations. Exhibit IV-5 provides summary resumes of the Company’s Board of Directors and senior management. The financial characteristics of the Company suggest that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the Company’s present organizational


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.18*

structure. The Company currently does not have any senior management positions that are vacant. Similarly, the returns, equity positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and management teams that have been effective in implementing competitive operating strategies. Therefore, on balance, we concluded no valuation adjustment relative to the Peer Group was appropriate for this factor.

9. Effect of Government Regulation and Regulatory Reform

As a fully-converted regulated institution, Kearny Financial will operate in substantially the same regulatory environment as the Peer Group members — all of whom are adequately capitalized institutions and are operating with no apparent restrictions. Exhibit IV-6 reflects the Bank’s pro forma regulatory capital ratios. On balance, no adjustment has been applied for the effect of government regulation and regulatory reform.

Summary of Adjustments

Overall, based on the factors discussed above, we concluded that the Company’s pro forma market value should reflect the following valuation adjustments relative to the Peer Group:


Key Valuation Parameters :		Valuation Adjustment
Financial Condition		Slight Upward
Profitability, Growth and Viability of Earnings		Moderate Downward
Asset Growth		Slight Upward
Primary Market Area		No Adjustment
Dividends		No Adjustment
Liquidity of the Shares		No Adjustment
Marketing of the Issue		No Adjustment
Management		No Adjustment
Effect of Govt. Regulations and Regulatory Reform		No Adjustment

Valuation Approaches

In applying the accepted valuation methodology promulgated by the FRB, i.e., the pro forma market value approach, we considered the three key pricing ratios in valuing the Company’s to-be-issued stock — price/earnings (“P/E”), price/book (“P/B”), and price/assets (“P/A”) approaches — all performed on a pro forma basis including the effects of the stock


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.19*

proceeds. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated the valuation parameters disclosed in the Company’s prospectus for reinvestment rate, effective tax rate, stock benefit plan assumptions and expenses, and cash and stock contribution to the Foundation (summarized in Exhibits IV-7 and IV-8). In our estimate of value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group and recent conversion offerings.

RP Financial’s valuation placed an emphasis on the following:

•

P/E Approach . The P/E approach is generally the best indicator of long-term value for a stock and we have given it significant weight among the valuation approaches. Given certain similarities between the Company’s and the Peer Group’s earnings composition and overall financial condition, the P/E approach was carefully considered in this valuation. At the same time, recognizing that (1) the earnings multiples will be evaluated on a pro forma basis for the Company; and (2) the Peer Group on average has had the opportunity to realize the benefit of reinvesting and leveraging their offering proceeds, we also gave weight to the other valuation approaches.

•

P/B Approach . P/B ratios have generally served as a useful benchmark in the valuation of thrift stocks, particularly in the context of an initial public offering, as the earnings approach involves assumptions regarding the use of proceeds. RP Financial considered the P/B approach to be a valuable indicator of pro forma value, taking into account the pricing ratios under the P/E and P/A approaches. We have also modified the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or “P/TB”), in that the investment community frequently makes this adjustment in its evaluation of this pricing approach.

•

P/A Approach . P/A ratios are generally a less reliable indicator of market value, as investors typically assign less weight to assets and attribute greater weight to book value and earnings. Furthermore, this approach as set forth in the regulatory valuation guidelines does not take into account the amount of stock purchases funded by deposit withdrawals, thus understating the pro forma P/A ratio. At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community’s willingness to pay market multiples for earnings or book value when ROE is expected to be low.

•

Trading of KRNY stock . Converting institutions generally do not have stock outstanding. Kearny Financial, however, has public shares outstanding due to the mutual holding company form of ownership and first-step minority stock offering. Since Kearny Financial is currently traded on the NASDAQ, it is an indicator of investor interest in the Company’s conversion stock and therefore received some weight in our valuation. Based on the August 8, 2014 closing stock price of $15.37 per share and the 67,267,865 shares of Kearny Financial stock outstanding, the Company’s implied market value of $1.034 billion was considered in the valuation process. However, since the conversion stock will have different characteristics than


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.20*

the minority shares, and since pro forma information has not been publicly disseminated to date, the current trading price of Kearny Financial’s stock was somewhat discounted herein but will become more important towards the closing of the offering.

The Company has adopted “Employers’ Accounting for Employee Stock Ownership Plans” (“ASC 718-40”), which causes earnings per share computations to be based on shares issued and outstanding excluding unreleased ESOP shares. For purposes of preparing the pro forma pricing analyses, we have reflected all shares issued in the offering, including all ESOP shares, to capture the full dilutive impact, particularly since the ESOP shares are economically dilutive, receive dividends and can be voted. However, we did consider the impact of ASC 718-40 in the valuation.

In preparing the pro forma pricing analysis we have taken into account the pro forma impact of the MHC’s net assets (i.e., unconsolidated equity) that will be consolidated with the Company and thus will slightly increase equity. At June 30, 2014, the MHC had net assets of $278,000, which has been added to the Company’s June 30, 2014 equity to reflect the consolidation of the MHC into the Company’s operations. Exhibit IV-9 shows that after accounting for the impact of the MHC’s net assets, the public shareholders’ ownership interest was reduced by approximately 0.01%. Accordingly, for purposes of the Company’s pro forma valuation, the public shareholders’ ownership interest was reduced from 22.76% to 22.75% and the MHC’s ownership interest was increased from 77.24% to 77.25%.

Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above and the dilutive impact of the stock contribution to the Foundation, RP Financial concluded that as of August 8, 2014, the aggregate pro forma market value of Kearny Financial’s conversion stock equaled $943,503,710 at the midpoint, equal to 94,350,371 shares at $10.00 per share. The $10.00 per share price was determined by the Kearny Financial Board. The midpoint and resulting valuation range is based on the sale of a 77.25% ownership interest to the public, which provides for a $725,000,000 public offering at the midpoint value.

1. Price-to-Earnings (“P/E”) . The application of the P/E valuation method requires calculating the Company’s pro forma market value by applying a valuation P/E multiple to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.21*

The Company’s reported earnings equaled $10.188 million for the twelve months ended June 30, 2014. In deriving Kearny Financial’s core earnings, the adjustments made to reported earnings were to eliminate gains on the sale of investment securities equal to $1.517 million, loss on sale of real estate owned equal to $441,000 and merger related expenses equal to $391,000. As shown below, assuming an effective marginal tax rate of 35.0% for the earnings adjustments, the Company’s core earnings were estimated to equal $9.743 million for the twelve months ended June 30, 2014.


	Amount
	($000)
Net income	$	10,188
Deduct: Net gain in sale of investment securities(1)		(986	)
Add back: Loss on sale of real estate owned(1)		287
Add back: Merger related expenses(1)		254

Core earnings estimate	$	9,743

(1)	Tax effected at 35.0%

Based on the Company’s reported and estimated core earnings, and incorporating the impact of the pro forma assumptions discussed previously, the Company’s pro forma reported and core P/E multiples at the $943.5 million midpoint value equaled 83.13x and 86.52x, respectively, indicating premiums of 349.11% and 362.18% relative to the Peer Group’s average reported and core earnings multiples of 18.51x and 18.72x, respectively (see Table 4.4). In comparison to the Peer Group’s median reported and core earnings multiples of 16.32x and 15.87x, respectively, the Company’s pro forma reported and core P/E multiples at the midpoint value indicated premiums of 409.38% and 445.18%, respectively. The Company’s pro forma P/E ratios based on reported earnings at the minimum and the maximum equaled 71.95x and 93.94x, respectively, and based on core earnings at the minimum and the maximum equaled 74.94x and 97.70x, respectively.

2. Price-to-Book (“P/B”) . The application of the P/B valuation method requires calculating the Company’s pro forma market value by applying a valuation P/B ratio, as derived from the Peer Group’s P/B ratio, to the Company’s pro forma book value. Based on the $943.5 million midpoint valuation, the Company’s pro forma P/B and P/TB ratios equaled 82.78% and 91.58%, respectively. In comparison to the average P/B and P/TB ratios for the Peer Group of


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.22*

Table 4.4

Public Market Pricing Versus Peer Group

Kearny Financial Corp. and the Comparables

As of August 8, 2014


			Market				Per Share Data
			Capitalization				Core			Book															Dividends(3)								Financial Characteristics(5)
			Price/		Market		12 Month			Value/		Pricing Ratios(2)													Amount/					Payout			Total		Equity/			Tang. Eq./			NPAs/			Reported						Core						Exchange		2nd Step
			Share		Value		EPS(1)			Share		P/E		P/B			P/A			P/TB			P/Core		Share		Yield			Ratio(4)			Assets		Assets			T. Assets			Assets			ROAA			ROAE			ROAA			ROAE			Ratio		Proceeds
			($)		($Mil)		($)			($)		(x)		(%)			(%)			(%)			(x)		($)		(%)			(%)			($Mil)		(%)			(%)			(%)			(%)			(%)			(%)			(%)			(X)		($Mil)
Kearny Financial Corp. of NJ
Maximum			$	10.00	$	1,084.28	$	0.10		$	11.41		93.94x		87.64	%		25.50	%		96.15	%		97.70x	$	0.08		0.80	%		78.16	%	$	4,252		29.08	%		27.21	%		0.63	%		0.27	%		0.93	%		0.26	%		0.90	%		1.6040x	$	833.75
Midpoint			$	10.00	$	943.50	$	0.12		$	12.08		83.13x		82.78	%		22.71	%		91.58	%		86.52x	$	0.08		0.80	%		69.22	%	$	4,155		27.42	%		25.46	%		0.65	%		0.27	%		1.00	%		0.26	%		0.96	%		1.3948x	$	725.00
Minimum			$	10.00	$	802.73	$	0.13		$	12.98		71.95x		77.04	%		19.79	%		86.06	%		74.94x	$	0.08		0.80	%		59.95	%	$	4,057		25.68	%		23.62	%		0.66	%		0.27	%		1.07	%		0.26	%		1.03	%		1.1855x	$	616.25

All Non-MHC Public Companies(6)
Averages			$	16.11	$	402.94	$	0.87		$	15.46		17.73x		107.44	%		13.13	%		115.47	%		17.65x	$	0.30		1.89	%		54.24	%	$	2,893		13.24	%		12.72	%		2.23	%		0.57	%		4.56	%		0.57	%		4.61	%
Median			$	13.46	$	110.74	$	0.63		$	14.40		17.07x		94.49	%		12.45	%		98.73	%		16.88x	$	0.24		1.75	%		41.40	%	$	899		12.54	%		11.44	%		1.72	%		0.58	%		4.49	%		0.63	%		4.44	%

All Non-MHC State of NJ(6)
Averages			$	13.49	$	784.50	$	0.51		$	13.44		20.83x		101.78	%		16.64	%		110.94	%		20.89x	$	0.33		2.31	%		58.02	%	$	4,218		16.35	%		15.50	%		1.74	%		0.65	%		4.55	%		0.66	%		4.50	%
Medians			$	13.01	$	331.03	$	0.46		$	12.59		16.78x		97.62	%		12.96	%		108.59	%		17.39x	$	0.24		2.15	%		50.35	%	$	2,329		13.27	%		11.07	%		1.48	%		0.69	%		5.57	%		0.75	%		5.50	%

State of NJ(6)
CBNJ	Cape Bancorp Inc.	NJ	$	10.16	$	118.08	$	0.54		$	12.09		17.52x		84.01	%		10.83	%		100.21	%		18.90x	$	0.24		2.36	%		41.38	%	$	1,092		12.89	%		11.03	%		1.48	%		0.60	%		4.60	%		0.56	%		4.23	%
CSBK	Clifton Bancorp Inc	NJ	$	12.43	$	331.03	$	0.24		$	13.40		NM		92.73	%		26.84	%		92.73	%		NM	$	0.24		1.93	%		99.47	%	$	1,232		28.94	%		28.94	%		0.50	%		0.55	%		2.74	%		0.55	%		2.74	%
COBK	Colonial Financial Services	(7) NJ	$	12.50	$	48.25	($	0.79	)	$	15.96		NM		78.30	%		8.67	%		78.30	%		NM	$	0.00		0.00	%		NM		$	557		11.07	%		11.07	%		5.19	%		-0.38	%		-3.63	%		-0.49	%		-4.68	%
ISBC	Investors Bancorp Inc	NJ	$	10.38	$	3,718.84	$	0.36		$	9.82		30.53x		105.68	%		21.30	%		108.59	%		28.63x	$	0.16		1.54	%		29.07	%	$	17,457		20.16	%		19.72	%		0.85	%		0.69	%		6.69	%		0.73	%		7.02	%
NFBK	Northfield Bancorp Inc.	NJ	$	13.01	$	690.04	$	0.39		$	12.23		34.24x		106.35	%		25.65	%		109.17	%		33.72x	$	0.28		2.15	%		65.79	%	$	2,690		24.12	%		23.65	%		1.51	%		0.77	%		2.92	%		0.78	%		2.96	%
OSHC	Ocean Shore Holding Co.	NJ	$	14.70	$	99.36		NA		$	16.01		16.33x		91.82	%		9.81	%		98.39	%		NM	$	0.24		1.63	%		26.67	%	$	1,013		10.68	%		10.22	%		0.97	%		0.57	%		5.57	%		NA			NA
OCFC	OceanFirst Financial Corp.	NJ	$	16.44	$	281.85	$	1.15		$	12.59		16.78x		130.59	%		12.10	%		130.59	%		14.26x	$	0.48		2.92	%		48.98	%	$	2,329		9.27	%		9.27	%		2.95	%		0.73	%		7.76	%		0.86	%		9.17	%
ORIT	Oritani Financial Corp.	NJ	$	14.91	$	678.40	$	0.94		$	11.57		15.86x		128.90	%		21.60	%		128.90	%		15.87x	$	0.70		4.69	%		101.06	%	$	3,140		16.76	%		16.76	%		0.69	%		1.40	%		7.80	%		1.40	%		7.79	%
PFS	Provident Financial Services	NJ	$	16.87	$	1,094.67	$	1.21		$	17.28		14.54x		97.62	%		12.96	%		151.55	%		13.95x	$	0.60		3.56	%		51.72	%	$	8,449		13.27	%		8.89	%		1.51	%		0.89	%		6.54	%		0.93	%		6.77	%

Comparable Group
Averages			$	18.09	$	764.47	$	1.20		$	14.42		18.51x		120.63	%		15.63	%		132.96	%		18.72x	$	0.43		3.10	%		100.43	%	$	4,958		13.35	%		12.35	%		1.20	%		0.84	%		6.90	%		0.89	%		7.32	%
Medians			$	13.01	$	673.98	$	0.65		$	12.17		16.32x		113.69	%		13.74	%		130.59	%		15.87x	$	0.48		3.13	%		56.82	%	$	4,589		12.65	%		10.48	%		1.09	%		0.82	%		6.54	%		0.86	%		6.77	%

Comparable Group
BKMU	Bank Mutual Corp.	WI	$	6.11	$	284.48	$	0.26		$	6.14		23.50x		99.54	%		12.19	%		99.60	%		23.26x	$	0.16		2.62	%		53.85	%	$	2,338		12.39	%		12.38	%		0.83	%		0.51	%		4.30	%		0.52	%		4.32	%
CFFN	Capitol Federal Financial Inc	KS	$	11.97	$	1,700.18	$	0.51		$	10.53		23.47x		113.69	%		18.87	%		113.69	%		23.47x	$	0.30		2.51	%		192.16	%	$	9,031		16.60	%		16.60	%		0.34	%		0.81	%		4.64	%		0.81	%		4.64	%
DCOM	Dime Community Bancshares Inc.	NY	$	15.03	$	553.98	$	1.15		$	12.17		12.96x		123.51	%		12.88	%		141.00	%		13.09x	$	0.56		3.73	%		48.28	%	$	4,302		10.43	%		9.25	%		0.51	%		1.01	%		9.56	%		1.00	%		9.47	%
NFBK	Northfield Bancorp Inc.	NJ	$	13.01	$	690.04	$	0.39		$	12.23		34.24x		106.35	%		25.65	%		109.17	%		33.72x	$	0.28		2.15	%		65.79	%	$	2,690		24.12	%		23.65	%		1.51	%		0.77	%		2.92	%		0.78	%		2.96	%
NWBI	Northwest Bancshares, Inc.	PA	$	12.33	$	1,170.91	$	0.65		$	11.30		17.37x		109.16	%		14.82	%		131.13	%		18.83x	$	0.52		4.22	%		228.17	%	$	7,902		13.57	%		11.56	%		1.92	%		0.82	%		5.82	%		0.76	%		5.36	%
OCFC	OceanFirst Financial Corp.	NJ	$	16.44	$	281.85	$	1.15		$	12.59		16.78x		130.59	%		12.10	%		130.59	%		14.26x	$	0.48		2.92	%		48.98	%	$	2,329		9.27	%		9.27	%		2.95	%		0.73	%		7.76	%		0.86	%		9.17	%
ORIT	Oritani Financial Corp.	NJ	$	14.91	$	678.40	$	0.94		$	11.57		15.86x		128.90	%		21.60	%		128.90	%		15.87x	$	0.70		4.69	%		101.06	%	$	3,140		16.76	%		16.76	%		0.69	%		1.40	%		7.80	%		1.40	%		7.79	%
PFS	Provident Financial Services	NJ	$	16.87	$	1,094.67	$	1.21		$	17.28		14.54x		97.62	%		12.96	%		151.55	%		13.95x	$	0.60		3.56	%		51.72	%	$	8,449		13.27	%		8.89	%		1.51	%		0.89	%		6.54	%		0.93	%		6.77	%
TRST	TrustCo Bank Corp NY	NY	$	6.66	$	630.54	$	0.45		$	4.07		14.42x		163.75	%		13.74	%		163.99	%		14.80x	$	0.26		3.94	%		56.82	%	$	4,589		8.39	%		8.38	%		1.26	%		0.97	%		12.01	%		0.94	%		11.70	%
UBNK	United Financial Bancorp	CT	$	12.76	$	673.98	$	0.57		$	12.36		NM		103.25	%		13.06	%		127.77	%		22.34x	$	0.40		3.13	%		250.00	%	$	5,159		12.65	%		10.48	%		0.62	%		0.06	%		0.49	%		0.64	%		4.95	%
WSFS	WSFS Financial Corp.	DE	$	72.86	$	650.20	$	5.89		$	48.40		11.92x		150.53	%		14.09	%		165.17	%		12.37x	$	0.48		0.66	%		7.86	%	$	4,613		9.36	%		8.60	%		1.09	%		1.25	%		14.05	%		1.20	%		13.41	%

(1)	Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%.

(2)	P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.

(3)	Indicated 12 month dividend, based on last quarterly dividend declared.

(4)	Indicated 12 month dividend as a percent of trailing 12 month earnings.

(5)	ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances.

(6)	Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.

(7)	Financial information is as of or for the twelve months ended March 31, 2014.

Source: SNL Financial, LC. and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.23*

120.63% and 132.96%, respectively, the Company’s ratios reflected discounts of 31.38% on a P/B basis and 31.12% on a P/TB basis. In comparison to the Peer Group’s median P/B and P/TB ratios of 113.69% and 130.59%, respectively, the Company’s pro forma P/B and P/TB ratios at the midpoint value reflected discounts of 27.19% and 29.87%, respectively. At the maximum of the range, the Company’s P/B and P/TB ratios equaled 87.64% and 96.15%, respectively. In comparison to the Peer Group’s average P/B and P/TB ratios, the Company’s P/B and P/TB ratios at the maximum of the range reflected discounts of 27.35% and 27.69%, respectively. In comparison to the Peer Group’s median P/B and P/TB ratios, the Company’s P/B and P/TB ratios at the maximum of the range reflected discounts of 22.91% and 26.37%, respectively. RP Financial considered the discounts under the P/B approach to be reasonable, given the nature of the calculation of the P/B ratio which tends to mathematically result in a ratio discounted to book value. The discounts reflected under the P/B approach were also supported by the significant premiums reflected in the Company’s P/E multiples.

3. Price-to-Assets (“P/A”) . The P/A valuation methodology determines market value by applying a valuation P/A ratio to the Company’s pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the $943.5 million midpoint of the valuation range, the Company’s value equaled 22.71% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 15.63%, which implies a premium of 45.30% has been applied to the Company’s pro forma P/A ratio. In comparison to the Peer Group’s median P/A ratio of 13.74%, the Company’s pro forma P/A ratio at the midpoint value reflects a premium of 65.28%.

Comparison to Recent Offerings

As indicated at the beginning of this chapter, RP Financial’s analysis of recent conversion offering pricing characteristics at closing and in the aftermarket has been limited to a “technical” analysis and, thus, the pricing characteristics of recent conversion offerings cannot be a primary determinate of value. Particular focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock proceeds (i.e., external funds vs. deposit withdrawals). As discussed previously, the two recently completed second-step offerings had an average forma price/tangible book ratio at closing of 105.60% (see Table 4.2). In comparison, the Company’s pro forma


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.24*

price/tangible book ratio at the midpoint value reflects an implied discount of 13.28%. The current average P/TB ratio of the two recent second-step conversions, based on closing stock prices as of August 8, 2014, equaled 108.92%. In comparison to the current P/TB ratio of the two recent second-step conversions, the Company’s P/TB ratio at the midpoint value reflects an implied discount of 15.92%. Among the two recent second-step conversion offerings, Meridian Bancorp’s second-step conversion offering was considered to be more comparable to the Company’s offering based on offering size and resulting pro forma market value. In comparison to Meridian Bancorp’s closing P/TB ratio of 102.70%, the Company’s pro forma price/tangible book ratio at the midpoint value reflects an implied discount of 10.83%. In comparison to Meridian Bancorp’s current P/TB ratio of 109.25%, the Company’s P/TB ratio at the midpoint value reflects an implied discount 16.17%. Comparative pre-conversion financial data for Meridian Bancorp has been included in the Chapter III tables and show that, in comparison to Kearny Financial, Meridian Bancorp maintained a lower tangible equity-to-assets ratio (8.78% versus 10.98% for Kearny Financial), a higher return on average assets (0.62% versus 0.31% for Kearny Financial) and a higher ratio of non-performing assets as a percent of assets (1.75% versus 0.77% for Kearny Financial).

Valuation Conclusion

Based on the foregoing, it is our opinion that, as of August 8, 2014, the estimated aggregate pro forma valuation of the shares of the Company to be issued and outstanding at the end of the conversion offering – including (1) newly-issued shares representing the MHC’s current ownership interest in the Company; (2) exchange shares issued to existing public shareholders of the Company; and (3) shares issued to the Foundation - was $943,503,710 at the midpoint, equal to 94,350,371 shares at a per share value of $10.00. The pro forma valuation calculations relative to the Peer Group are shown in Table 4.4 and are detailed in Exhibit IV-7 and Exhibit IV-8. The resulting range of value and pro forma shares, all based on $10.00 per share, are as follows:


*RP ^® Financial, LC.*		*VALUATION ANALYSIS*
		*IV.25*


	Total Shares			Offering Shares			Exchange Shares Issued to Public Shareholders			Foundation Shares			Exchange Ratio
Shares
Maximum		108,427,927			83,375,000			24,552,927			500,000			1.6040
Midpoint		94,350,371			72,500,000			21,350,371			500,000			1.3948
Minimum		80,272,815			61,625,000			18,147,815			500,000			1.1855

Distribution of Shares
Maximum		100.00	%		76.89	%		22.65	%		0.46	%
Midpoint		100.00	%		76.84	%		22.63	%		0.53	%
Minimum		100.00	%		76.77	%		22.61	%		0.62	%

Aggregate Market Value at $10 per share
Maximum	$	1,084,279,270		$	833,750,000		$	245,529,270		$	5,000,000
Midpoint	$	943,503,710		$	725,000,000		$	213,503,710		$	5,000,000
Minimum	$	802,728,150		$	616,250,000		$	181,478,150		$	5,000,000

Establishment of the Exchange Ratio

Conversion regulations provide that in a conversion of a mutual holding company, the minority shareholders are entitled to exchange the public shares for newly issued shares in the fully converted company. The Boards of Directors of the MHC and KRNY have independently determined the exchange ratio, which has been designed to preserve the current aggregate percentage ownership in the Company (adjusted for the dilution resulting from the consolidation of the MHC’s unconsolidated equity into the Company). The exchange ratio to be received by the existing minority shareholders of the Company will be determined at the end of the offering, based on the total number of shares sold in the second-step conversion offering and the final appraisal. Based on the valuation conclusion herein, the resulting offering value and the $10.00 per share offering price, the indicated exchange ratio at the midpoint is 1.3948 shares of the Company’s stock for every one public share held by public shareholders. Furthermore, based on the offering range of value, the indicated exchange ratio is 1.1855 at the minimum and 1.6040 at the maximum. RP Financial expresses no opinion on the proposed exchange of newly issued Company shares for the shares held by the public shareholders or on the proposed exchange ratio.

Exhibit 99.6

LOGO

September 5, 2014

Boards of Directors

Kearny MHC

Kearny Financial Corp.

Kearny Federal Savings Bank

120 Passaic Avenue

Fairfield, New Jersey 07004

Re:	Plan of Conversion and Reorganization

Kearny MHC

Kearny Financial Corp.

Members of the Boards of Directors:

All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion and Reorganization (the “Plan”) adopted by the Boards of Directors of Kearny MHC (the “MHC”) and Kearny Financial Corp. (the “Mid-Tier”). The Plan provides for the conversion of the MHC into the full stock form of organization. Pursuant to the Plan, the MHC will be merged into the Mid-Tier and the Mid-Tier will merge with Kearny Financial Corp., a newly-formed Maryland corporation (the “Company”) with the Company as the resulting entity, and the MHC will no longer exist. As part of the Plan, the Company will sell shares of common stock in an offering that will represent the ownership interest in the Mid-Tier now owned by the MHC.

We understand that in accordance with the Plan, depositors will receive rights in a liquidation account maintained by the Company representing the amount of (i) the MHC’s ownership interest in the Mid-Tier’s total stockholders’ equity as of the date of the latest statement of financial condition used in the prospectus plus (ii) the value of the net assets of the MHC as of the date of the latest statement of financial condition of the MHC prior to the consummation of the conversion (excluding its ownership of the Mid-Tier). The Company shall continue to hold the liquidation account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain deposits in Kearny Federal Savings Bank (the “Bank”). The liquidation accounts are designed to provide payments to depositors of their liquidation interests in the event of liquidation of the Bank (or the Company and the Bank).

In the unlikely event that either the Bank (or the Company and the Bank) were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution to depositors as of July 31, 2013 and depositors as of the last day of the calendar quarter immediately preceding the date on which the Federal Reserve Board (“FRB”) approves the MHC’s application for conversion, of the liquidation account maintained by the Company. Also, in a complete liquidation of both entities, or of the Bank, when the Company has insufficient assets (other than the stock of the Bank), to fund the liquidation account distribution due to Eligible Account Holders and Supplemental Eligible Account Holders and the Bank has positive net worth, the Bank shall immediately make a distribution to fund the Company’s remaining obligations under the liquidation account. The Plan further provides that if the Company is completely liquidated or sold apart from a sale or liquidation of the Bank, then the rights of Eligible Account Holders and Supplemental Eligible Account Holders in the liquidation account maintained by the Company shall be surrendered and treated as a liquidation account in the Bank, the bank liquidation account and depositors shall have an equivalent interest in such bank liquidation account, subject to the same rights and terms as the liquidation account.


Washington Headquarters
Three Ballston Plaza		Telephone: (703) 528-1700
1100 North Glebe Road, Suite 600		Fax No.: (703) 528-1788
Arlington, VA 22201		Toll-Free No.: (866) 723-0594
www.rpfinancial.com		E-Mail: mail@rpfinancial.com

RP ^® Financial, LC.

Boards of Directors

September 5, 2014

Page 2

Based upon our review of the Plan and our observations that the liquidation rights become payable only upon the unlikely event of the liquidation of the Bank (or the Company and the Bank), that liquidation rights in the Company automatically transfer to the Bank in the event the Company is completely liquidated or sold apart from a sale or liquidation of the Bank, and that after two years from the date of conversion and upon written request of the FRB, the Company will transfer the liquidation account and depositors’ interest in such account to the Bank and the liquidation account shall thereupon become the liquidation account of the Bank no longer subject to the Company’s creditors, we are of the belief that: the benefit provided by the Bank liquidation account supporting the payment of the liquidation account in the event the Company lacks sufficient net assets does not have any economic value at the time of the transactions contemplated in the first and second paragraphs above. We note that we have not undertaken any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue.

Sincerely,

LOGO

RP ^® Financial, LC.