(By Balaseshan) Kearny Financial Corp. (NASDAQ:KRNY), a holding company for Kearny Federal Savings Bank, said its board of directors has decided not to pay its next scheduled quarterly dividend in July 2012.
The board of directors has determined to suspend its next dividend because of the onerous requirements imposed by the Federal Reserve Board on dividend waivers by the company's mutual holding company parent, Kearny MHC.
The new Federal Reserve regulations would require annual member approval of dividends, a procedure which Kearny Financial estimates would cost it between $300,000 to $600,000 per year.
Without the dividend waiver, the company would be required to pay dividends to Kearny MHC at the same rate they are paid to public stockholders resulting in the payment of over $2.5 million to Kearny MHC each quarter.
In addition, Kearny MHC would incur significant tax liability on the receipt of this dividend income.
Chief Executive Craig Montanaro said the board of directors is hopeful that the industry's ongoing discussions with the Federal Reserve staff will result in less burdensome options but, in the meantime, has determined not to pay the July dividend. Future dividends will be evaluated on a quarterly basis.
Kearny Financial's primary business is the ownership and operation of Kearny Federal Savings Bank, a Federally-Chartered stock savings bank. The company operates from an administrative headquarters in Fairfield, New Jersey.
KRNY closed Friday's regular session up 0.11% at $9.49. The stock has been trading between $7.99 and $10.16 for the past 52 weeks.