Kearny Financial Corp. (KRNY) said Friday that its board of directors has determined not to pay its next scheduled quarterly dividend in July because of the onerous requirements imposed by the Federal Reserve Board on dividend waivers by the company's mutual holding company parent, Kearny MHC.
Craig Montanaro, President and Chief Executive Officer, said, "The new Federal Reserve regulations would require annual member approval of dividends, a procedure which we estimate would cost us 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. 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."
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