Kearny Financial Corp. Reports Fourth Quarter 2009 Operating Results

FAIRFIELD, NJ, Jul 30 (MARKET WIRE) --
Kearny Financial Corp. (NASDAQ: KRNY) (the "Company"), the holding
company of Kearny Federal Savings Bank (the "Bank"), today reported net
income for the quarter ended June 30, 2009 of $1.1 million, or $0.02 per
diluted share. The results represent a decrease of $191,000 compared to
net income of $1.3 million, or $0.02 per diluted share, for the quarter
ended March 31, 2009 and an increase of $288,000 compared to net income
of $825,000, or $0.01 per diluted share, for the quarter ended June 30,
2008. The Company attributes the decrease in net income between linked
quarters primarily to an increase in non-interest expense and decrease in
net interest income, partially offset by an increase in non-interest
income (excluding loss on securities) and decreases in the provision for
loan losses, loss on securities and income taxes. The increase in net
income year-over-year resulted primarily from an increase in net interest
income and decreases in loss on securities and income taxes, partially
offset by an increase in non-interest expense and decrease in
non-interest income (excluding loss on securities). The primary
contributing factor to the increase in non-interest expense between
comparative quarters was an increase in federal deposit insurance premium
expense.

Net income for the fiscal year ended June 30, 2009 was $6.4 million, or
$0.09 per diluted share, an increase of $487,000 compared to $5.9 million,
or $0.09 per diluted share, for the fiscal year ended June 30, 2008. The
increase in net income year-over-year resulted primarily from an increase
in net interest income, partially offset by increases in the provision for
loan losses, loss on securities, non-interest expense and income taxes as
well as a decrease in non-interest income (excluding loss on securities).
The primary contributing factor to the increase in non-interest expense
year-over-year was also an increase in federal deposit insurance premium
expense.

Kearny Federal Savings Bank operates from its administrative headquarters
in Fairfield, New Jersey, and 26 retail branch offices located in Bergen,
Hudson, Passaic, Morris, Middlesex, Essex, Union and Ocean Counties, New
Jersey. At June 30, 2009, Kearny Financial Corp. had total assets, loans,
deposits and stockholders' equity of $2.13 billion, $1.04 billion, $1.42
billion and $476.9 million, respectively.

The following is an overview of the Company's financial results for the
quarter ended June 30, 2009:

Net Interest Income

Net interest income during the quarter ended June 30, 2009 was $13.3
million, a decrease of $156,000 compared to net interest income of $13.5
million during the quarter ended March 31, 2009 and an increase of $1.1
million compared to net interest income of $12.2 million during the
quarter ended June 30, 2008. The Company's net interest margin during the
quarter ended June 30, 2009 was 2.76%, compared to 2.83% during the
quarter ended March 31, 2009 and 2.54% during the quarter ended June 30,
2008. The decrease in net interest income between linked quarters
resulted from a decrease in interest income partially offset by a
decrease in interest expense while the increase in net interest income
year-over-year resulted from a decrease in interest expense partially
offset by a decrease in interest income. Continuing a trend which began
during the quarter ended March 31, 2009, the Company's yield on earning
assets declined faster than the cost of funds due primarily to an
increase in cash and cash equivalents, combined with the precipitous
decline in market interest rates as well as a decrease in average loans
receivable between linked quarters. Interest income decreased $665,000 to
$23.6 million during the quarter ended June 30, 2009 compared to $24.2
million during the quarter ended March 31, 2009 and decreased $1.2
million compared to $24.8 million during the quarter ended June 30, 2008.
Interest expense decreased $509,000 to $10.3 million during the quarter
ended June 30, 2009 compared to $10.8 million during the quarter ended
March 31, 2009 and decreased $2.3 million compared to $12.6 million
during the quarter ended June 30, 2008.

Interest income from loans decreased $442,000 to $14.8 million during the
quarter ended June 30, 2009 compared to $15.2 million during the quarter
ended March 31, 2009 and increased $676,000 compared to $14.1 million
during the quarter ended June 30, 2008. The decrease in interest income
between linked quarters resulted from decreases in both average loans
receivable and average yield. Year-over-year the increase in interest
income resulted from an increase in average loans receivable, partially
offset by a decrease in average yield. During the quarter ended June 30,
2009, average loans receivable were $1.05 billion with an average yield of
5.65%. By comparison, during the quarters ended March 31, 2009 and June
30, 2008, average loans receivable were $1.07 billion and $982.4 million,
respectively; with average yields of 5.68% and 5.74%, respectively. The
Bank experienced a reduction in average residential first mortgages, home
equity loans and home equity lines of credit, which decreased $36.6
million in aggregate to $817.5 million between the quarters ended March
31 and June 30, 2009. Management's decision to maintain a disciplined
pricing policy may have resulted in some residential borrowers
refinancing their loans with more aggressive lenders. By contrast,
average non-residential mortgages, multi-family mortgages and commercial
business loans increased $11.3 million in aggregate to $210.1 million
over the same period reflecting a better pricing environment for these
loans.

Interest income from mortgage-backed securities decreased $286,000 to $8.3
million during the quarter ended June 30, 2009 from $8.6 million during
the quarter ended March 31, 2009 and decreased $1.0 million compared to
$9.3 million during the quarter ended June 30, 2008. The decrease in
interest income between linked quarters resulted primarily from a
decrease in average yield. The decrease in interest income year-over-year
resulted from decreases in both average mortgage-backed securities and
average yield. During the quarter ended June 30, 2009, average
mortgage-backed securities were $684.2 million with an average yield of
4.86%. By comparison, during the quarters ended March 31, 2009 and June
30, 2008, average mortgage-backed securities were $685.3 million and
$746.8 million, respectively; with average yields of 5.02% and 4.99%,
respectively. Average yield has been decreasing due to the repayment of
higher coupon loans within the underlying mortgage portfolios as
refinancing activity accelerates.

Interest income from non-mortgage-backed securities and other
interest-earning assets, primarily cash and cash equivalents, increased
$63,000 to $480,000 during the quarter ended June 30, 2009 compared to
$417,000 during the quarter ended March 31, 2009 and decreased $878,000
from $1.4 million during the quarter ended June 30, 2008. The increase in
interest income between linked quarters was attributed to an increase in
the average balances in aggregate, partially offset by a decrease in
average yield. During the reporting period, deposit growth in conjunction
with shrinkage of the loan portfolio contributed to an increase in cash
and cash equivalents while the low interest rate environment continued to
suppress the average yield. Year-over-year, the decrease in interest
income resulted from a significant decrease in average yield due to the
525 basis point reduction in the federal funds rate since September 2007,
partially offset by an increase in the average balances in aggregate.
During the quarter ended June 30, 2009, average non-mortgage-backed
securities and other interest-earning assets totaled $202.4 million with
an average yield of 0.95%. By comparison, during the quarters ended March
31, 2009 and June 30, 2008, average non-mortgage-backed securities and
other interest-earning assets totaled $149.2 million and $191.8 million,
respectively, with average yields of 1.12% and 2.83%, respectively.

Interest expense attributed to deposits decreased $470,000 to $8.2 million
during the quarter ended June 30, 2009 from $8.7 million during the
quarter ended March 31, 2009 and decreased $2.2 million compared to $10.4
million during the quarter ended June 30, 2008. The decrease in interest
expense between linked quarters and year-over-year resulted from a
decrease in the average cost of interest-bearing deposits, partially
offset by an increase in average interest-bearing deposits. Management
continued to adhere to a disciplined deposit pricing policy during the
reporting period; nevertheless, the Bank experienced a significant
increase in deposit inflows between the linked quarters. During the
quarter ended June 30, 2009, average interest-bearing deposits were $1.36
billion with an average cost of 2.41%. By comparison, during the quarters
ended March 31, 2009 and June 30, 2008, average interest-bearing deposits
were $1.33 billion and $1.32 billion, respectively, with average costs of
2.60% and 3.16%, respectively. The decrease in the cost of deposits over
the comparative quarters was attributed primarily to decreases in the
average cost of certificates of deposit, which decreased to 3.11% during
the current quarter compared to 3.34% during the linked quarter and 4.18%
during the same quarter a year ago.

Interest expense attributed to Federal Home Loan Bank ("FHLB") advances
was little changed at $2.1 million during the quarters ended June 30 and
March 31, 2009 and decreased $110,000 compared to $2.2 million during the
quarter ended June 30, 2008. During the quarter ended June 30, 2009,
average advances were $210.0 million with an average cost of 3.91%. By
comparison, during the quarters ended March 31, 2009 and June 30, 2008,
average advances were $214.6 million and $218.0 million, respectively,
with average costs of 3.90% and 3.97%.

Provision for Loan Losses

There was no provision for loan losses recorded during the quarter ended
June 30, 2009 compared to provisions of $208,000 and $-0- during the
linked and comparative quarters, respectively.

Non-interest Income

Non-interest income attributed to fees, service charges and miscellaneous
income increased $13,000 to $601,000 during the quarter ended June 30,
2009 from $588,000 during the quarter ended March 31, 2009 but decreased
$56,000 from $657,000 during the quarter ended June 30, 2008.
Year-over-year the decrease in non-interest income resulted primarily
from a $35,000 decrease in income from the Bank's official check clearing
agent. The clearing agent is no longer able to compensate its clients at
a meaningful level for use of the float on official checks due to
significant losses in its mortgage-backed securities portfolio.

The Company determined that during the quarter ended June 30, 2009 that it
would take a non-cash pre-tax charge to earnings of approximately $144,000
as a result of other-than-temporary impairment in the value of certain
private label collateralized mortgage obligations in the Bank's held to
maturity portfolio. These securities were acquired upon the in-kind
redemption of the Bank's interest in the AMF Ultra Short Mortgage Fund.
The after-tax cost is approximately $85,000. By comparison, there were
pre-tax other-than-temporary impairment charges recorded during the
quarters ended March 31, 2009 and June 30, 2008 of $570,000 and $659,000,
respectively.

Non-interest Expense

Non-interest expense increased $843,000 to $11.8 million during the
quarter ended June 30, 2009 from $11.0 million during the quarter ended
March 31, 2009 and increased $1.4 million compared to $10.4 million
during the quarter ended June 30, 2008. The increase in non-interest
expense between linked quarters was primarily the result of an increase
in federal deposit insurance premium expense as well as miscellaneous
expense, partially offset by a decrease in net occupancy expense of
premises.

Federal deposit insurance premium expense increased $976,000 to $1.3
million during the quarter ended June 30, 2009 from $361,000 during the
quarter ended March 31, 2009. The primary contributing factor to the
increase was the Federal Deposit Insurance Corporation ("the FDIC")
Special Assessment in the amount of $872,000. The special assessment was
based on the Bank's June 30, 2009 Total Assets minus Tier 1 Capital
multiplied by five basis points.

Miscellaneous expense increased $110,000 to $1.1 million between linked
quarters with no particular category significantly responsible for the
increase. Net occupancy expense of premises decreased $185,000 to $974,000
between linked quarters. The decrease resulted primarily from the cost of
snow removal during the quarter ended March 31, 2009.

Year-over-year the $1.4 million increase in non-interest expense was
primarily the result of a $1.3 million increase in federal deposit
insurance premium expense. In addition to the FDIC Special Assessment
recorded during the reporting period, the regular quarterly assessment
increased from $44,000 during the quarter ended June 30, 2008 to $465,000
during the quarter ended June 30, 2009.

Provision for Income Taxes

The provision for income taxes during the quarter ended June 30, 2009 was
$867,000 compared to $1.0 million during the quarter ended March 31, 2009
and $957,000 during the quarter ended June 30, 2008. The decrease in
income taxes between linked quarters was attributed primarily to a
decrease in pre-tax income. Year-over-year the decrease in income taxes
was due to a valuation allowance attributed to loss on securities
recorded during the quarter ended June 30, 2008. The Company's effective
tax rates during the quarters ended June 30 and March 31, 2009 and June
30, 2008 were 43.8%, 44.1% and 53.7%, respectively.

Cash and Cash Equivalents

Cash and cash equivalents, which consist primarily of interest-earning
deposits in other banks, increased $39.6 million to $211.5 million at June
30, 2009 from $171.9 million at March 31, 2009. Continuing a trend that
began in December 2008, cash and cash equivalents increased during the
quarter ended June 30, 2009 due to deposit inflows and depressed loan
demand. The Company's net interest margin continued to come under pressure
during the reporting period as interest-earning deposits produced an
average yield of 0.19% during the quarter ended June 30, 2009 compared to
0.29% during the quarter ended March 31, 2009.

Loans and Credit Quality

Loans receivable, net of deferred fees and costs and the allowance for
loan losses, decreased $11.2 million from $1.05 billion at March 31, 2009
to $1.04 billion at June 30, 2009. During the reporting period, management
adhered to a disciplined pricing policy and as a result the Bank did not
experience the same level of refinancing activity as some other lenders.
Lending activity did rebound during the current quarter as loan
originations and loan purchases totaled $37.9 million and $37.6 million,
respectively, compared to $26.2 million and $-0-, respectively, during the
quarter ended March 31, 2009. Residential first mortgages, home equity
loans and home equity lines of credit decreased $18.0 million in aggregate
between March 31 and June 30, 2009. Nonresidential mortgages, multi-family
mortgages and commercial business loans increased $7.9 million in
aggregate between March 31 and June 30, 2009 while all other loan
categories decreased $731,000 in aggregate over the same period.

Non-performing loans were $8.1 million or 0.78% of total loans at June 30,
2009. By comparison, non-performing loans were $7.5 million or 0.71% of
total loans at March 31, 2009 and $1.6 million or 0.15% of total loans at
June 30, 2008. With respect to loans past due 30 days or more, total
delinquencies increased $4.4 million to $16.2 million or 1.55% of total
loans at June 30, 2009 from $11.8 million or 1.12% of total loans at March
31, 2009. Charge-offs during the quarters ended June 30 and March 31, 2009
and June 30, 2008 were $1,000, $2,000 and $38,000, respectively, but as a
percentage of average loans, charge-offs were effectively zero percent
during all three quarters. There were no recoveries during any of the
comparative quarters. The allowance for loan losses as a percentage of
total loans outstanding was 0.62% at June 30, 2009, 0.61% at March 31,
2009 and 0.59% at June 30, 2008, reflecting an allowance of $6.4 million,
$6.4 million and $6.1 million, respectively, at the close of each quarter.

Securities and Mortgage-backed Securities

Mortgage-backed securities available for sale, all of which are government
agency pass-through certificates, decreased $12.6 million to $683.8
million at June 30, 2009 compared to $696.4 million at March 31, 2009. The
decrease resulted from principal repayments, maturities and a nominal
decrease in fair value, partially offset by purchases totaling $29.4
million. The net unrealized gain for this portfolio was $18.7 million as
of June 30, 2009. Management has concluded based on its evaluation of this
portfolio that no other-than-temporary impairment is present at June 30,
2009. Reinvestment of principal and interest payments in the portfolio was
limited to purchases of issues eligible to meet the Community Reinvestment
Act investment test during the reporting period.

Mortgage-backed securities held to maturity decreased $388,000 to $4.6
million at June 30, 2009 compared to $5.0 million at March 31, 2009 due
primarily to principal repayments and an additional non-cash pre-tax
charge to earnings of approximately $144,000 as a result of
other-than-temporary impairment in the value of certain private label
collateralized mortgage obligations in the portfolio. At June 30, 2009 an
analysis of the private label collateralized mortgage obligations
resulted in the conclusion that securities having an aggregate amortized
cost, adjusted for prior impairment charges, of $317,000 and fair value
of $173,000 were other-than-temporarily impaired. At June 30, 2009, the
Bank owned additional private label collateralized mortgage obligations
having an aggregate amortized cost of $2.6 million and fair value of $1.6
million which the analysis indicated were not other-than-temporarily
impaired.

Non-mortgage-backed securities, all of which are classified as available
for sale, increased $495,000 to $28.0 million at June 30, 2009 compared to
$27.5 million at March 31, 2009. The increase resulted primarily from an
increase in the fair value of the portfolio, partially offset by principal
repayments. The net unrealized loss for this portfolio was $3.6 million as
of June 30, 2009, an improvement from the $4.3 million unrealized loss at
March 31, 2009. Management has concluded based on its evaluation of this
portfolio that no other-than-temporary impairment is present at June 30,
2009.

Deposits

Deposits increased $16.6 million to $1.42 billion at June 30, 2009
compared to $1.40 billion at March 31, 2009. During the quarter ended
June 30, 2009, interest-bearing demand deposits increased $4.3 million to
$163.6 million, savings deposits increased $9.1 million to $301.6
million, certificates of deposit increased $1.7 million to $904.7 million
and non-interest-bearing demand deposits increased $1.5 million to $51.2
million. Management continued to maintain disciplined pricing during the
reporting period, which significantly slowed deposit inflows compared to
the prior quarter when deposits increased $53.2 million. Depositors have
been lengthening the maturities on their certificates of deposit,
particularly by transferring maturing accounts to 24-month and 36-month
certificates of deposit in order to improve the yield.

Federal Home Loan Bank Advances

FHLB advances were unchanged at $210.0 million between March 31 and June
30, 2009. As a result of the Bank's strong liquidity position, there were
no additional borrowings during the reporting period.

Stockholders' Equity and Capital Management

During the quarter ended June 30, 2009, stockholders' equity decreased
$1.1 million to $476.9 million from $478.0 million at March 31, 2009. The
decrease was primarily the result of a $3.2 million increase in treasury
stock due to the purchase of 288,700 shares of the Company's common stock
as well as an $855,000 cash dividend declared for payment to minority
shareholders. Partially offsetting these decreases was a $164,000 increase
in accumulated other comprehensive income due to the aggregate
mark-to-market adjustment to the available for sale securities portfolios
and benefit plan related adjustments to equity per SFAS No. 158 and net
income during the quarter of $1.1 million. Also contributing to the
partial offset of these decreases was $410,000 of Employee Stock Ownership
Plan shares earned, $771,000 of restricted stock plan shares earned and an
adjustment to equity of $477,000 for expensing stock options.

The Bank's ratio of tangible equity to tangible assets was 17.9% at June
30, 2009. The Bank's Total Capital and Tier 1 Capital to risk-weighted
assets were 38.9% and 38.4%, respectively, far in excess of the 10.0% and
6.0% levels, respectively, required by the Office of Thrift Supervision to
be classified "well-capitalized" under regulatory guidelines.

Statements contained in this news release that are not historical facts
are forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
are subject to risks and uncertainties which could cause actual results to
differ materially from those currently anticipated due to a number of
factors, which include, but are not limited to factors discussed in
documents filed by Kearny Financial Corp. with the Securities and Exchange
Commission from time to time. The Company does not undertake and
specifically disclaims any obligation to update any forward-looking
statement, whether written or oral, that may be made from time to time by
or on behalf of the Company.

KEARNY FINANCIAL CORP.
FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data, Unaudited)

At June 30, At March 31,
2009 2009
----------- -----------
Selected Balance Sheet Data:
Assets $ 2,125,482 $ 2,109,391
Cash and cash equivalents 211,525 171,869
Securities available for sale 28,027 27,532
Net loans receivable 1,039,413 1,050,573
Mortgage-backed securities available
for sale 683,785 696,432
Mortgage-backed securities held to
maturity 4,595 4,983
Goodwill 82,263 82,263
Deposits 1,421,201 1,404,585
Federal Home Loan Bank advances 210,000 210,000
Total stockholders' equity 476,881 477,960

For the Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Summary of Operations:
Interest income $ 23,583 $ 24,248 $ 24,789
Interest expense 10,263 10,772 12,596
----------- ----------- -----------
Net interest income 13,320 13,476 12,193
Provision for loan losses 0 208 0
----------- ----------- -----------
Net interest income after provision
for loan losses 13,320 13,268 12,193
Non-interest income, excluding loss
on securities 601 588 657
Loss on securities (144) (570) (659)
Non-interest expense 11,797 10,954 10,409
----------- ----------- -----------
Income before taxes 1,980 2,332 1,782
Provision for income taxes 867 1,028 957
----------- ----------- -----------
Net income $ 1,113 $ 1,304 $ 825
=========== =========== ===========

Per Share Data:
Net income per share - basic $ 0.02 $ 0.02 $ 0.01
Net income per share - diluted $ 0.02 $ 0.02 $ 0.01
Weighted average number of common
Shares outstanding - basic 67,809 67,984 68,548
Weighted average number of common
shares outstanding - diluted 67,915 68,007 68,634

Per Share Data:
Cash dividends per share (1) $ 0.05 $ 0.05 $ 0.05
Dividend payout ratio (2) 76.82% 66.72% 110.55%

(1) Represents dividends declared per common share.
(2) Represents dividends paid per minority share divided by net income.

At the Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Per Share Data:
Closing price as reported by NASDAQ $ 11.44 $ 10.48 $ 11.00
Book Value $ 6.89 $ 6.87 $ 6.69
Tangible Book Value $ 5.70 $ 5.69 $ 5.52

For the Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Performance Ratios:
Return on average assets 0.21% 0.25% 0.16%
Return on average equity 0.93% 1.10% 0.69%
Net interest rate spread (1) 2.27% 2.31% 1.89%
Net interest margin (2) 2.76% 2.83% 2.54%
Average interest-earning assets to
average interest-bearing liabilities 123.15% 123.12% 124.79%
Efficiency ratio 85.63% 81.18% 85.38%
Non-interest expense to average
assets 2.23% 2.10% 1.99%

(1) Interest income divided by average interest-earning assets less
interest expense divided by average interest-bearing liabilities.
(2) Net interest income divided by average interest-earning assets.

At or for the Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Asset Quality Ratios:(1)
Non-performing loans to total loans 0.78% 0.71% 0.15%
Non-performing assets to total assets 0.39% 0.36% 0.08%
Net charge-offs to average loans
outstanding 0.00% 0.00% 0.00%
Allowance for loan losses to total
loans 0.62% 0.61% 0.59%
Allowance for loan losses to
non-performing loans 79.09% 85.55% 388.05%

(1) Asset quality ratios are period end ratios unless otherwise noted.

At or for the Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Consolidated Capital Ratios:
Average equity to average assets 22.52% 22.65% 22.83%
Equity to assets at period end 22.44% 22.66% 22.63%
Tangible equity to tangible assets
at period end 19.03% 19.24% 19.51%

For the Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Average Balances:
Loans receivable $ 1,047,017 $ 1,072,911 $ 982,388
Mortgage-backed securities available
for sale 678,728 679,570 746,756
Mortgage-backed securities held to
maturity 5,465 5,690 0
Securities available for sale 31,826 31,945 41,006
Other interest-earning assets 170,592 117,279 150,751
----------- ----------- -----------
Total interest earning assets 1,933,628 1,907,395 1,920,901
Non-interest-earning assets 184,847 180,024 166,612
----------- ----------- -----------
Total assets $ 2,118,475 $ 2,087,419 $ 2,087,513
=========== =========== ===========

Interest-bearing deposits $ 1,360,118 $ 1,334,666 $ 1,321,253
Federal Home Loan Bank advances 210,000 214,556 218,000
----------- ----------- -----------
Total interest-bearing
liabilities 1,570,118 1,549,222 1,539,253
Non-interest-bearing liabilities 71,217 65,496 71,758
Stockholders' equity 477,140 472,701 476,502
----------- ----------- -----------
Total liabilities and
stockholders' equity $ 2,118,475 $ 2,087,419 $ 2,087,513
=========== =========== ===========

For the Three Months Ended
-------------------------------------
June 30, March 31, June 30,
2009 2009 2008
----------- ----------- -----------
Spread and Margin Analysis:
Yield on average:
Loans receivable 5.65% 5.68% 5.74%
Mortgage-backed securities
available for sale and held to
maturity 4.86% 5.02% 4.99%
Securities available for sale 2.84% 3.04% 3.71%
Other interest-earning assets 0.60% 0.59% 2.60%
Interest-earning assets 4.88% 5.09% 5.16%
Cost of average:
Interest-bearing deposits 2.41% 2.60% 3.16%
Federal Home Loan Bank advances 3.91% 3.90% 3.97%
Interest-bearing liabilities 2.61% 2.78% 3.27%
Net interest rate spread 2.27% 2.31% 1.89%
Net interest margin 2.76% 2.83% 2.54%
Average interest-earning assets to
average interest-bearing liabilities 123.15% 123.12% 124.79%

For the Twelve
Months Ended
------------------
June 30, June 30,
2009 2008
-------- --------
Summary of Operations:
Interest income $ 97,908 $ 97,367
Interest expense 44,200 50,528
-------- --------
Net interest income 53,708 46,839
Provision for loan losses 317 94
-------- --------
Net interest income after provision for loan losses 53,391 46,745
Non-interest income, excluding loss on securities 2,648 2,708
Loss on securities (1,129) (659)
Non-interest expense 43,922 40,939
-------- --------
Income before taxes 10,988 7,855
Provision for income taxes 4,597 1,951
-------- --------
Net income $ 6,391 $ 5,904
======== ========

Per Share Data:
Net income per share - basic $ 0.09 $ 0.09
Net income per share - diluted $ 0.09 $ 0.09
Weighted average number of common shares
outstanding - basic 68,111 68,675
Weighted average number of common shares
outstanding - diluted 68,223 68,789

Per Share Data:
Cash dividends per share (1) $ 0.20 $ 0.20
Dividend payout ratio (2) 54.91% 62.47%

(1) Represents dividends declared per common share.
(2) Represents dividends paid per minority share divided by net income.

For the Twelve
Months Ended
------------------------
June 30, June 30,
2009 2008
----------- -----------
Performance Ratios:
Return on average assets 0.31% 0.29%
Return on average equity 1.35% 1.26%
Net interest rate spread (1) 2.25% 1.81%
Net interest margin (2) 2.81% 2.54%
Average interest-earning assets to average
interest-bearing liabilities 124.16% 126.49%
Efficiency ratio 79.53% 83.74%
Non-interest expense to average assets 2.11% 2.04%

(1) Interest income divided by average interest-earning assets less
interest expense divided by average interest-bearing liabilities.
(2) Net interest income divided by average interest-earning assets.

At or for the Twelve
Months Ended
------------------------
June 30, June 30,
2009 2008
----------- -----------
Asset Quality Ratios:(1)
Non-performing loans to total loans 0.78% 0.15%
Non-performing assets to total assets 0.39% 0.08%
Net charge-offs to average loans outstanding 0.00% 0.00%
Allowance for loan losses to total loans 0.62% 0.59%
Allowance for loan losses to non-performing loans 78.04% 388.05%

(1) Asset quality ratios are period end ratios unless otherwise noted.

At or for the Twelve
Months Ended
------------------------
June 30, June 30,
2009 2008
----------- -----------
Consolidated Capital Ratios:
Average equity to average assets 22.73% 23.41%
Equity to assets at period end 22.44% 22.63%
Tangible equity to tangible assets at period end 19.03% 19.51%

For the Twelve
Months Ended
------------------------
June 30, June 30,
2009 2008
----------- -----------
Average Balances:
Loans receivable $ 1,064,019 $ 951,019
Mortgage-backed securities available for sale 692,331 699,942
Mortgage-backed securities held to maturity 4,341 0
Securities available for sale 33,904 53,391
Other interest-earning assets 115,806 141,792
----------- -----------
Total interest earning assets 1,910,401 1,846,144
Non-interest-earning assets 169,408 158,737
----------- -----------
Total assets $ 2,079,809 $ 2,004,881
=========== ===========

Interest-bearing deposits $ 1,323,623 $ 1,284,415
FHLB advances 215,077 175,081
----------- -----------
Total interest-bearing liabilities 1,538,700 1,459,496
Non-interest-bearing liabilities 68,441 75,976
Stockholders' equity 472,668 469,409
----------- -----------
Total liabilities and stockholders'
equity $ 2,079,809 $ 2,004,881
=========== ===========

For the Twelve
Months Ended
------------------------
June 30, June 30,
2009 2008
----------- -----------
Spread and Margin Analysis:
Yield on average:
Loans receivable 5.69% 5.80%
Mortgage-backed securities available for sale
and held to maturity 5.02% 4.97%
Securities available for sale 3.07% 4.23%
Other interest-earning assets 1.18% 3.68%
Interest-earning assets 5.12% 5.27%
Cost of average:
Interest-bearing deposits 2.70% 3.37%
FHLB advances 3.95% 4.12%
Interest-bearing liabilities 2.87% 3.46%
Net interest rate spread 2.25% 1.81%
Net interest margin 2.81% 2.54%
Average interest-earning assets to average
interest-bearing liabilities 124.16% 126.49%

For further information contact:
Craig Montanaro
Senior Vice President
Director of Strategic Planning
Kearny Financial Corp.
(973) 244-4510

Copyright 2009, Market Wire, All rights reserved.

-0-