SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q
(Mark One)

---------
   X         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---------    EXCHANGE ACT OF 1934


    For the quarterly period ended                  December 31, 2007
                                         ---------------------------------------

                                       OR

---------
             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---------    EXCHANGE ACT OF 1934


   For the transition period from                        to
                                       ----------------     --------------------


                        Commission File Number 000-51093
                                               ---------


                             KEARNY FINANCIAL CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              UNITED STATES                                22-3803741
------------------------------------------------ -------------------------------
     (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                 Identification Number)

    120 Passaic Ave., Fairfield, New Jersey                07004-3510
------------------------------------------------ -------------------------------
   (Address of principal executive offices)                (Zip Code)

Registrant's telephone number,
including area code                                     973-244-4500
                                                 -------------------------------


      Indicate by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

      Indicate  by check mark  whether  the  registrant  is a large  accelerated
filer,  an accelerated  filer,  or a  non-accelerated  filer.  See definition of
"accelerated  filer" and "large accelerated filer" in Rule 12b-2 of the Exchange
Act (Check one):
Large accelerated filer    Accelerated filer X             Non-accelerated filer

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act). Yes       No  X

      The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: February 1, 2008.

          $0.10 par value common stock - 70,722,937 shares outstanding

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES

                                      INDEX


<TABLE>
<CAPTION>
                                                                                           Page
                                                                                          Number
                                                                                          ------
<S>                                                                                        <C>
PART I - FINANCIAL INFORMATION

      Item 1:  Financial Statements

               Consolidated Statements of Financial Condition
               at December 31, 2007 and June 30, 2007 (Unaudited)                                 1

               Consolidated Statements of Income for the Three Months and Six Months
               Ended December 31, 2007 and 2006 (Unaudited)                                     2-3

               Consolidated Statements of Changes in Stockholders' Equity for the Six
               Months Ended December 31, 2007 and 2006 (Unaudited)                              4-5

               Consolidated Statements of Cash Flows for the Six
               Months Ended December 31, 2007 and 2006 (Unaudited)                              6-7

               Notes to Consolidated Financial Statements                                      8-12

      Item 2:  Management's Discussion and Analysis of
               Financial Condition and Results of Operations                                  13-27

      Item 3:  Quantitative and Qualitative Disclosure About Market Risk                      28-29

      Item 4:  Controls and Procedures                                                           30


PART II - OTHER INFORMATION                                                                   31-32


SIGNATURES                                                                                       34

</TABLE>

<PAGE>

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


<TABLE>
<CAPTION>
                                                                                December 31,    June 30,
                                                                                   2007           2007
                                                                               -----------    -----------
<S>                                                                          <C>            <C>
Assets
------

Cash and amounts due from depository institutions                              $    20,976    $    18,999
Interest-bearing deposits in other banks                                           153,435        144,342
                                                                               -----------    -----------

        Cash and Cash Equivalents                                                  174,411        163,341

Securities available for sale (amortized cost $45,594 and $90,580)                  44,236         88,869
Loans receivable, including net deferred loan costs of $1,061 and $1,511           967,590        866,542
  Less allowance for loan losses                                                    (6,143)        (6,049)
                                                                               -----------    -----------

  Net Loans Receivable                                                             961,447        860,493

Mortgage-backed securities available for sale (amortized cost $684,311
  and $655,123)                                                                    687,858        643,779
Premises and equipment                                                              34,671         35,369
Federal Home Loan Bank of New York ("FHLB") stock                                   13,148          4,162
Interest receivable                                                                  8,439          8,028
Goodwill                                                                            82,263         82,263
Bank owned life insurance                                                           15,430         15,154
Other assets                                                                         8,983         15,795
                                                                               -----------    -----------

        Total Assets                                                           $ 2,030,886    $ 1,917,253
                                                                               ===========    ===========

Liabilities and Stockholders' Equity
------------------------------------

Liabilities
-----------

Deposits:
  Non-interest bearing                                                         $    53,452    $    56,339
  Interest-bearing                                                               1,261,937      1,355,374
                                                                               -----------    -----------

        Total Deposits                                                           1,315,389      1,411,713

Advances from FHLB                                                                 228,165         28,488
Advance payments by borrowers for taxes                                              5,147          5,460
Other liabilities                                                                    8,663          9,000
                                                                               -----------    -----------

        Total Liabilities                                                        1,557,364      1,454,661
                                                                               -----------    -----------

Stockholders' Equity
--------------------

Preferred stock $0.10 par value, 25,000,000 shares authorized; none
  issued and outstanding                                                                 -              -
Common stock $0.10 par value, 75,000,000 shares authorized; 72,737,500
  shares issued; 70,906,537 and 71,143,337 shares outstanding, respectively          7,274          7,274
Paid-in capital                                                                    200,677        197,976
Retained earnings                                                                  305,517        304,970
Unearned Employee Stock Ownership Plan shares; 1,333,521 shares
  and 1,406,258 shares, respectively                                               (13,335)       (14,063)
Treasury stock, at cost; 1,830,963 shares and 1,594,163 shares, respectively       (27,274)       (24,361)
Accumulated other comprehensive income (loss)                                          663         (9,204)
                                                                               -----------    -----------

        Total Stockholders' Equity                                                 473,522        462,592
                                                                               -----------    -----------

        Total Liabilities and Stockholders' Equity                             $ 2,030,886    $ 1,917,253
                                                                               ===========    ===========
</TABLE>

See notes to consolidated financial statements.

                                       1

<PAGE>

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

<TABLE>
<CAPTION>
                                         Three Months Ended     Six Months Ended
                                            December 31,          December 31,
                                        --------------------   -------------------
                                          2007        2006       2007       2006
                                        --------    --------   --------   --------
<S>                                    <C>         <C>        <C>        <C>
Interest Income:
    Loans                               $ 13,937    $ 11,075   $ 27,108   $ 21,386
    Mortgage-backed securities             8,583       8,077     16,786     16,098
    Securities:
      Taxable                                335         390        687        790
      Tax-exempt                             204       1,376        753      3,261
    Other interest-earning assets          1,552       3,169      2,690      5,836
                                        --------    --------   --------   --------

        Total Interest Income             24,611      24,087     48,024     47,371
                                        --------    --------   --------   --------
Interest Expense:
    Deposits                              10,974      12,096     22,224     22,841
    Borrowings                             1,974         807      2,765      1,658
                                        --------    --------   --------   --------

        Total Interest Expense            12,948      12,903     24,989     24,499
                                        --------    --------   --------   --------

Net Interest Income                       11,663      11,184     23,035     22,872

Provision for Loan Losses                      -         119         94        277
                                        --------    --------   --------   --------

Net Interest Income after Provision
  for Loan Losses                         11,663      11,065     22,941     22,595
                                        --------    --------   --------   --------
Non-Interest Income:
    Fees and service charges                 327         276        662        504
    Gain (loss) on sale of securities
      available for sale                      (2)        152          5        152
    Miscellaneous                            344         344        714        684
                                        --------    --------   --------   --------

        Total Non-Interest Income            669         772      1,381      1,340
                                        --------    --------   --------   --------
Non-interest expenses:
    Salaries and employee benefits         6,002       6,746     12,325     13,553

    Net occupancy expense of
      Premises                               902         841      1,792      1,699
    Equipment                              1,087       1,100      2,123      2,176
    Advertising                              155         409        406        802
    Federal insurance premium                140         142        281        284
    Amortization of intangible assets         60         159        219        318
    Directors' compensation                  550         561      1,110      1,218
    Miscellaneous                          1,203       1,243      2,204      2,247
                                        --------    --------   --------   --------

        Total Non-Interest Expenses       10,099      11,201     20,460     22,297
                                        --------    --------   --------   --------

Income before Income Taxes                 2,233         636      3,862      1,638
Income Taxes                                 857          89      1,456        165
                                        --------    --------   --------   --------

Net Income                              $  1,376    $    547   $  2,406   $  1,473

                                        ========    ========   ========   ========
</TABLE>

                                       2

<PAGE>

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

                                 Three Months Ended     Six Months Ended
                                   December 31,           December 31,
                                -------------------   -------------------
                                  2007       2006       2007       2006
                                --------   --------   --------   --------
Net Income per Common
  Share (EPS):
    Basic                       $   0.02   $   0.01   $   0.03   $   0.02
    Diluted                         0.02       0.01       0.03       0.02

Weighted Average Number of
  Common Shares Outstanding:
    Basic                         68,808     69,258     68,763     69,505
    Diluted                       68,957     69,753     68,946     69,901

Dividends Declared Per Common
   Share                        $   0.05   $   0.05   $   0.10   $   0.10

See notes to consolidated financial statements.

                                       3

<PAGE>
       KEARNY FINANCIAL CORP. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         Six Months Ended December 31, 2006
    (In Thousands, Except Per Share Data, Unaudited)
<TABLE>
<CAPTION>
                                                                                                            Accumulated
                                                 Common Stock                            Unearned              Other
                                               ----------------    Paid-In   Retained      ESOP   Treasury  Comprehensive
                                               Shares    Amount    Capital   Earnings     Shares    Stock     (Loss)          Total
                                               ------    ------   --------   --------   --------  --------   --------      --------
<S>                                          <C>       <C>      <C>        <C>        <C>       <C>        <C>           <C>
Balance - June 30, 2006                        72,737    $7,274   $192,534   $306,728   $(15,517) $      -   $(15,885)     $475,134
Comprehensive income:
  Net income                                        -         -          -      1,473          -         -          -         1,473
  Realized gain on securities available
    for sale, net of income tax of $53              -         -          -          -          -         -        (99)          (99)
  Unrealized gain on securities available
    for sale, net of deferred income tax
    of $5,676                                       -         -          -          -          -         -     10,542        10,542
                                                                                                                           --------

   Total Comprehensive income                                                                                                11,916
                                                                                                                           --------

ESOP shares committed to be released
  (72 shares)                                       -         -        391          -        727         -          -         1,118
Stock option expense                                -         -        996          -          -         -          -           996
Treasury stock purchases                       (1,091)        -          -          -          -   (17,398)         -       (17,398)
Treasury stock reissued                             3         -         (8)         -          -        40          -            32
Restricted stock plan shares
  purchased (54 shares)                             -         -       (789)         -          -         -          -          (789)
Restricted stock plan shares earned
  (134 shares)                                      -         -      1,652          -          -         -          -         1,652
Tax effect from stock based
  compensation                                      -         -        434          -          -         -          -           434
Cash dividends declared ($0.10/share)               -         -          -     (1,814)         -         -          -        (1,814)
                                               ------    ------   --------   --------   --------  --------   --------      --------
Balance - December 31, 2006                    71,649    $7,274   $195,210   $306,387   $(14,790) $(17,358)  $ (5,442)     $471,281
                                               ======    ======   ========   ========   ========  ========   ========      ========
</TABLE>

See notes to consolidated financial statements.

                                       4
<PAGE>

                                KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                  Six Months Ended December 31, 2007
                            (In Thousands, Except Per Share Data, Unaudited)

<TABLE>
<CAPTION>
                                                                                                            Accumulated
                                                 Common Stock                            Unearned              Other
                                               ----------------    Paid-In   Retained      ESOP   Treasury  Comprehensive
                                               Shares    Amount    Capital   Earnings     Shares    Stock     (Loss)          Total
                                               ------    ------   --------   --------   --------  --------   --------      --------
<S>                                          <C>       <C>      <C>        <C>        <C>       <C>        <C>           <C>
Balance - June 30, 2007                        71,143     7,274   $197,976   $304,970   $(14,063) $(24,361)   $(9,204)     $462,592
Comprehensive income:
  Net income                                        -         -          -      2,406          -         -         -          2,406
  Realized gain on securities available
    for sale, net of income tax of $3               -         -          -          -          -         -         (2)           (2)
  Unrealized gain on securities available
    for sale, net of deferred income tax
    of $5,814                                       -         -          -          -          -         -      9,435         9,435
  Benefit plans, net of deferred income
    tax of $289                                     -         -          -          -          -         -        434           434
                                                                                                                           --------

   Total Comprehensive income                                                                                                12,273
                                                                                                                           --------

ESOP shares committed to be released
  (72 shares)                                       -         -        200          -        728         -          -           928
Dividends contributed for payment of
    ESOP loan                                       -         -         24          -          -         -          -            24
Stock option expense                                -         -        954          -          -         -          -           954
Treasury stock purchases                         (241)        -          -          -          -    (2,989)         -        (2,989)
Treasury stock reissued                             5         -        (13)         -          -        76          -            63
Restricted stock plan shares earned
  (126 shares)                                      -         -      1,542          -          -         -          -         1,542
Tax effect from stock based
  compensation                                      -         -         (6)         -          -         -          -            (6)
Cash dividends declared ($0.10/share)               -         -          -     (1,859)         -         -          -        (1,859)
                                               ------     ------  --------   --------   --------  --------    -------      --------
Balance - December 31, 2007                    70,907     $7,274  $200,677   $305,517   $(13,335) $(27,274)   $   663      $473,522
                                               ======     ======  ========   ========   ========  ========    =======      ========
</TABLE>

See notes to consolidated financial statements.

                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                       December 31,
                                                                                   ----------------------
                                                                                     2007         2006
                                                                                   ---------    ---------
<S>                                                                              <C>          <C>
Cash Flows from Operating Activities:
    Net income                                                                     $   2,406    $   1,473
    Adjustments  to  reconcile  net  income to net cash  provided  by  operating
      activities:
        Depreciation and amortization of premises and equipment                          933          992
        Net amortization of premiums, discounts and loan fees and costs                  367          464
        Deferred income taxes                                                            747        2,377
        Amortization of intangible assets                                                220          318
        Amortization of benefit plans' unrecognized net loss, net of gain
          from curtailment and tax effects                                                57            -
        Provision for loan losses                                                         94          277
        Realized gains on sales of securities available for sale                          (5)        (152)
        Increase in cash surrender value of bank owned life insurance                   (276)        (261)
        ESOP, stock option plan and restricted stock plan expenses                     3,424        3,766
        Realized gain on disposition of premises and equipment                             -           (3)
        (Increase) decrease in interest receivable                                      (411)         823
        Increase in other assets                                                        (217)      (4,454)
        Increase (decrease) in interest payable                                          962          (21)
        Decrease in other liabilities                                                   (639)        (450)
                                                                                   ---------    ---------

            Net Cash Provided by Operating Activities                                  7,662        5,149
                                                                                   ---------    ---------
Cash Flows from Investing Activities:
    Purchases of securities available for sale                                          (206)        (189)
    Proceeds from sale of securities available for sale                               44,154      105,823
    Proceeds from calls and maturities of securities available for sale                  656        3,894
    Proceeds from repayments of securities available for sale                            387        1,246
    Purchase of loans                                                                (48,141)     (42,791)
    Net increase in loans receivable                                                 (53,000)     (47,662)
    Purchases of mortgage-backed securities available for sale                       (95,349)     (49,627)
    Principal repayments on mortgage-backed securities available for sale             65,887       69,488
    Additions to premises and equipment                                                 (235)        (998)
    Proceeds from cash settlement on premises and equipment                                -           21
    Purchase of FHLB stock                                                            (9,000)           -
    Redemption of FHLB stock                                                              14          238
                                                                                   ---------    ---------

            Net Cash (Used In) Provided by  Investing Activities                   $ (94,833)   $  39,443
                                                                                   ---------    ---------
</TABLE>

                                       6

<PAGE>

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

<TABLE>
<CAPTION>
                                                                          Six Months Ended
                                                                             December 31,
                                                                        ---------    ---------
                                                                           2007         2006
                                                                        ---------    ---------
<S>                                                                   <C>          <C>
Cash Flows from Financing Activities:
    Net (decrease) increase in deposits                                 $ (96,345)   $  36,322
    Repayment of long-term FHLB advances                                     (323)      (5,304)
    Long-term FHLB advances                                               200,000            -
    Decrease in advance payments by borrowers for taxes                      (313)        (394)
    Dividends paid to minority stockholders of Kearny Financial Corp.      (1,870)      (1,855)
    Purchase of common stock of Kearny Financial Corp. for treasury        (2,989)     (17,398)
    Treasury stock reissued                                                    63           32
    Purchase of common stock of Kearny Financial Corp. for restricted
     stock plan                                                                 -         (789)
    Dividends contributed for payment of ESOP loan                             24            -
    Tax (expense) benefit from stock based compensation                        (6)         434
                                                                        ---------    ---------

            Net Cash Provided by Financing Activities                   $  98,241    $  11,048
                                                                        ---------    ---------

            Net (Decrease) Increase in Cash and Cash Equivalents        $ (11,070)   $  55,640

Cash and Cash Equivalents - Beginning                                     163,341      230,279
                                                                        ---------    ---------

Cash and Cash Equivalents - Ending                                      $ 174,411    $ 285,919
                                                                        =========    =========

Supplemental Disclosures of Cash Flows Information:
    Cash paid during the year for:
        Income taxes, net of refunds                                    $     868    $   1,247
                                                                        =========    =========

        Interest                                                        $  24,027    $  24,520
                                                                        =========    =========

</TABLE>
See notes to consolidated financial statements.

                                       7

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


1.  PRINCIPLES OF CONSOLIDATION
-------------------------------

The consolidated  financial  statements include the accounts of Kearny Financial
Corp. (the  "Company"),  its wholly-owned  subsidiaries,  Kearny Federal Savings
Bank  (the  "Bank")  and  Kearny  Financial  Securities,  Inc.,  and the  Bank's
wholly-owned  subsidiaries,  KFS  Financial  Services,  Inc. and Kearny  Federal
Investment Corp. The Company conducts its business principally through the Bank.
Management  prepared the  consolidated  financial  statements in conformity with
accounting  principles  generally  accepted  in the  United  States of  America,
including  the  elimination  of  all  significant   inter-company  accounts  and
transactions during consolidation.

2.  BASIS OF PRESENTATION
-------------------------

The accompanying  unaudited  consolidated  financial statements were prepared in
accordance with instructions for Form 10-Q and Regulation S-X and do not include
information  or footnotes  necessary  for a complete  presentation  of financial
condition,  results of operations  and cash flows in conformity  with  generally
accepted accounting principles ("GAAP").  However, in the opinion of management,
all  adjustments  (consisting  of  normal  adjustments)  necessary  for  a  fair
presentation of the consolidated  financial  statements have been included.  The
results of operations for the three-month  and six-month  periods ended December
31, 2007, are not necessarily indicative of the results that may be expected for
the entire fiscal year or any other period.

The data in the consolidated statements of financial condition for June 30, 2007
was derived from the Company's annual report on Form 10-K. That data, along with
the interim financial  information  presented in the consolidated  statements of
financial  condition,  income,  changes in  stockholders'  equity and cash flows
should be read in conjunction with the 2007 consolidated  financial  statements,
including  the notes  thereto  included in the  Company's  annual report on Form
10-K.

3.  NET INCOME PER COMMON SHARE ("EPS")
--------------------------------------

Basic EPS is based on the  weighted  average  number of common  shares  actually
outstanding  adjusted for Employee Stock  Ownership Plan ("ESOP") shares not yet
committed to be released  and  unvested  restricted  stock  awards.  Diluted EPS
reflects  the  potential  dilution  that  could  occur  if  securities  or other
contracts to issue common stock,  such as unvested  restricted  stock awards and
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.

                                       8

<PAGE>

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

<TABLE>
<CAPTION>
                                          Three Months Ended                            Six Months Ended
                                           December 31, 2007                            December 31, 2007
                                 --------------------------------------     ------------------------------------------
                                   Income         Shares       Per            Income           Shares         Per
                                 (Numerator)  (Denominator)   Amount       (Numerator)      (Denominator)   Amount
                                 -----------  -------------   ------       -----------      -------------   ------
                                (In Thousands, Except Per Share Data)       (In Thousands, Except Per Share Data)
<S>                              <C>              <C>      <C>          <C>                      <C>      <C>
Net income                        $    1,376                             $        2,406
                                  ==========                             ==============
Basic earnings per share,
     income available to
     common stockholders          $    1,376       68,808   $     0.02   $        2,406           68,763   $     0.03
                                                            ==========                                     ==========
Effect of dilutive securities:
     Stock options                      -               4                        -                     9
     Restricted stock awards            -             145                        -                   174
                                  ----------       ------   ----------   --------------           ------   ----------

                                  $    1,376       68,957   $     0.02   $        2,406           68,946   $     0.03
                                  ==========       ======   ==========   ==============           ======   ==========
</TABLE>

<TABLE>
<CAPTION>
                                          Three Months Ended                            Six Months Ended
                                           December 31, 2006                            December 31, 2006
                                 --------------------------------------     ------------------------------------------
                                   Income         Shares       Per            Income           Shares         Per
                                 (Numerator)  (Denominator)   Amount       (Numerator)      (Denominator)   Amount
                                 -----------  -------------   ------       -----------      -------------   ------
                                (In Thousands, Except Per Share Data)       (In Thousands, Except Per Share Data)
<S>                              <C>              <C>      <C>          <C>                      <C>      <C>

Net income                        $       547                             $       1,473
                                  ==========                             ==============
Basic earnings per share,
     income available to
     common stockholders          $       547      69,258   $      0.01   $       1,473           69,505   $     0.02
                                                            ==========                                     ==========
Effect of dilutive securities:
     Stock options                      -             217                        -                   109
     Restricted stock awards            -             278                        -                   287
                                  ----------       ------   ----------   --------------           ------   ----------

                                  $       547      69,753   $      0.01   $       1,473           69,901   $     0.02
                                  ===========      ======   ===========   =============           ======   ==========
</TABLE>

4.  DIVIDEND WAIVER
-------------------

During the quarter and six months  ended  December  31,  2007,  Kearny MHC,  the
federally  chartered  mutual holding company of the Company waived its right, in
accordance  with the  non-objection  previously  granted by the Office of Thrift
Supervision,  to receive cash dividends of  approximately  $2.5 million and $5.1
million, respectively, declared on the shares of Company common stock it owns.

5.  STOCK REPURCHASES PLAN
--------------------------

On  January  18,  2007,  the  Company  announced  that the  Board  of  Directors
authorized  an  additional  stock  repurchase  plan to acquire  up to  1,036,634
shares,  or 5% of the  Company's  outstanding  stock held by persons  other than
Kearny MHC. Such  purchases will be made from time to time in the open market or
in privately negotiated stock purchases, based on stock availability,  price and
the Company's financial performance. During the quarter ended December 31, 2007,
the Company purchased 207,400 shares at a cost of $2.5 million, or approximately
$12.15 per share.  The total purchased under this plan through December 31, 2007
was  758,400  shares at a cost of $10.2  million,  or  approximately  $13.40 per
share.

                                       9

<PAGE>
xxxx
6. BENEFIT PLANS - COMPONENTS OF NET PERIODIC EXPENSE

The following  table sets forth the aggregate net periodic  benefit  expense for
the Bank's Benefit Equalization Plan, Postretirement Welfare Plan and Directors'
Consultation and Retirement Plan:

<TABLE>
<CAPTION>
                                                     Three Months                  Six Months
                                                   Ended December 31,           Ended December 31,
                                                  --------------------        ---------------------
                                                   2007          2006          2007           2006
                                                  ------        ------        ------         ------
                                                    (In Thousands)               (In Thousands)

<S>                                              <C>           <C>           <C>            <C>
Service cost                                      $  40         $  57         $  79          $ 114
Interest cost                                        81            85           163            170
Curtailment (Gain)                                    -             -           (35)             -
Amortization of unrecognized transition
   obligation                                        11            11            22             22
Amortization of unrecognized past service
   liability                                         18            14            35             28
Amortization of unrecognized net actuarial loss      36            46            73             92
                                                  -----         -----         -----          -----

Net periodic benefit expense                      $ 186         $ 213         $ 337          $ 426
                                                  =====         =====         =====          =====
</TABLE>

Effective July 1, 2007,  the Company  implemented a freeze on all future benefit
accruals  under the Bank's  non-contributory  defined  benefit  pension plan and
related benefit equalization plan. A curtailment gain of $682,000 related to the
reduction in the projected benefit obligation for the benefit  equalization plan
was applied  against  the  unrecognized  net  actuarial  loss.  In  addition,  a
curtailment  gain of $35,000 was  recorded as part of the net  periodic  benefit
expense due to the immediate  recognition of the unrecognized prior service cost
for the benefit equalization plan during the quarter ended September 30, 2007.

7.  NEW ACCOUNTING PRONOUNCEMENTS
---------------------------------

In September  2006, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 157,  "Fair Value
Measurements",  which defines fair value,  establishes a framework for measuring
fair value under GAAP, and expands  disclosures  about fair value  measurements.
SFAS No. 157 applies to other accounting  pronouncements  that require or permit
fair value measurements.  The new guidance is effective for financial statements
issued for fiscal years  beginning  after  November  15,  2007,  and for interim
periods  within those fiscal  years.  The Company is  currently  evaluating  the
potential  impact,  if any, of the adoption of SFAS No. 157 on its  consolidated
financial condition, results of operations and cash flows.

In December  2007,  the FASB issued  proposed FASB Staff  Position  (FSP) 157-b,
"Effective  Date of FASB  Statement  No.  157,"  that  would  permit a  one-year
deferral in applying the measurement provisions of SFAS No. 157 to non-financial
assets  and  non-financial  liabilities   (non-financial  items)  that  are  not
recognized or disclosed at fair value in an entity's  financial  statements on a
recurring basis (at least annually). Therefore, if the change in fair value of a
non-financial  item  is  not  required  to be  recognized  or  disclosed  in the
financial  statements on an annual basis or more frequently,  the effective date
of  application  of SFAS No. 157 to that item is  deferred  until  fiscal  years
beginning after November 15, 2008 and interim periods within those fiscal years.
This deferral does not apply, however, to an entity that applies SFAS No. 157 in
interim or annual financial  statements  before proposed FSP 157-b is finalized.
The  Company is  currently  evaluating  the  potential  impact,  if any,  of the
adoption  of FSP  157-b on its  consolidated  financial  condition,  results  of
operations and cash flows.

                                       10

<PAGE>

In September  2006, the FASB's  Emerging  Issues Task Force ("EITF") issued EITF
Issue No. 06-4, "Accounting for Deferred Compensation and Postretirement Benefit
Aspects of Endorsement Split Dollar Life Insurance  Arrangements" ("EITF 06-4").
EITF 06-4 requires the recognition of a liability related to the  postretirement
benefits covered by an endorsement split-dollar life insurance arrangement.  The
consensus  highlights  that the employer  (who is also the  policyholder)  has a
liability  for the benefit it is  providing  to its  employee.  As such,  if the
policyholder  has  agreed  to  maintain  the  insurance  policy in force for the
employee's benefit during his or her retirement,  then the liability  recognized
during the  employee's  active service period should be based on the future cost
of insurance to be incurred during the employee's retirement.  Alternatively, if
the policyholder  has agreed to provide the employee with a death benefit,  then
the liability for the future death benefit should be recognized by following the
guidance in SFAS No. 106 or Accounting Principals Board (APB) Opinion No. 12, as
appropriate.  For  transition,  an entity can choose to apply the guidance using
either of the following approaches: (a) a change in accounting principle through
retrospective application to all periods presented or (b) a change in accounting
principle  through a  cumulative-effect  adjustment  to the  balance in retained
earnings at the beginning of the year of adoption. The new guidance is effective
for fiscal  years  beginning  after  December  15,  2007,  with  early  adoption
permitted. The Company is currently evaluating the impact of adopting EITF Issue
No. 06-4 on its financial statements.

On September 29, 2006, the FASB issued SFAS No. 158, "Employers'  Accounting for
Defined Benefit Pension and Other  Postretirement  Plans", which amends SFAS No.
87 and SFAS No. 106 to require  recognition  of the over funded or under  funded
status of pension and other  postretirement  benefit plans on the balance sheet.
Under SFAS No. 158, gains and losses,  prior service costs and credits,  and any
remaining  transition  amounts  under SFAS No. 87 and SFAS No. 106 that have not
yet been  recognized  through net periodic  benefit cost will be  recognized  in
accumulated  other  comprehensive  income,  net of tax  effects,  until they are
amortized as a component of net periodic cost. The measurement  date -- the date
at which the benefit  obligation  and plan assets are measured -- is required to
be the company's  fiscal year end.  SFAS No. 158 is effective for  publicly-held
companies  for fiscal  years ending  after  December  15,  2006,  except for the
measurement date  provisions,  which are effective for fiscal years ending after
December 15, 2008. The  implementation  of this standard did not have and is not
expected  to have a  material  impact on the  Company's  consolidated  financial
position or results of operations.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial  Assets and Financial  Liabilities-Including  an Amendment of SFAS No.
115".  SFAS No.  159  permits  entities  to choose  to  measure  many  financial
instruments and certain other items at fair value.  Unrealized  gains and losses
on items for which the fair value option has been elected will be  recognized in
earnings at each  subsequent  reporting  date. SFAS No. 159 is effective for our
Company July 1, 2008.  The Company is evaluating the impact that the adoption of
SFAS No. 159 will have on its consolidated financial statements.

In March 2007, the FASB ratified EITF Issue No. 06-10 "Accounting for Collateral
Assignment Split-Dollar Life Insurance Agreements." EITF 06-10 provides guidance
for determining a liability for the postretirement benefit obligation as well as
recognition and measurement of the associated asset on the basis of the terms of
the collateral  assignment  agreement.  EITF 06-10 is effective for fiscal years
beginning after December 15, 2007. The Company is currently assessing the impact
of EITF 06-10 on its consolidated financial position and results of operations.

In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on Issue
No.  06-11,  "Accounting  for Income Tax Benefits of  Dividends  on  Share-Based
Payment  Awards"  ("EITF  06-11").  EITF  06-11  states  that an  entity  should
recognize a realized tax benefit  associated with dividends on non-vested equity
shares,  non-vested  equity share units and  outstanding  equity  share  options
charged to retained  earnings as an increase in additional paid in capital.  The
amount  recognized in additional  paid in

                                       11

<PAGE>

capital  should be  included  in the pool of excess tax  benefits  available  to
absorb  potential future tax  deficiencies on share-based  payment awards.  EITF
06-11  should be applied  prospectively  to income tax  benefits of dividends on
equity-classified  share-based  payment awards that are declared in fiscal years
beginning  after December 15, 2007. The Company expects that EITF 06-11 will not
have an impact on its consolidated financial statements.

FASB  statement  No. 141 (R) "Business  Combinations"  was issued in December of
2007.  This  Statement  establishes  principles  and  requirements  for  how the
acquirer of a business  recognizes and measures in its financial  statements the
identifiable assets acquired,  the liabilities  assumed, and any non-controlling
interest in the acquiree.  The Statement also provides  guidance for recognizing
and measuring the goodwill  acquired in the business  combination and determines
what  information  to disclose to enable users of the  financial  statements  to
evaluate  the nature and  financial  effects of the  business  combination.  The
guidance will become  effective as of the  beginning of a company's  fiscal year
beginning  after December 15, 2008. This new  pronouncement  may have a material
impact on the Company's financial statements in future periods.

Staff Accounting Bulletin ("SAB") No. 110 (SAB 110) amends and replaces Question
6 of Section  D.2 of Topic 14  "Share-Based  Payment,"  of the Staff  Accounting
Bulletin  series.  Question 6 of Section D.2 of Topic 14 expresses  the views of
the staff regarding the use of the "simplified" method in developing an estimate
of  expected  term of "plain  vanilla"  share  options  and allows  usage of the
"simplified"  method for share option grants prior to December 31, 2007. SAB 110
allows public companies which do not have historically  sufficient experience to
provide a  reasonable  estimate to continue use of the  "simplified"  method for
estimating  the  expected  term of "plain  vanilla"  share  option  grants after
December 31, 2007.  SAB 110 is effective  January 1, 2008.  The Company  expects
that SAB 110 will not have an impact on its consolidated financial statements.

                                       12

<PAGE>

                                     ITEM 2.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Forward-Looking Statements

This Form 10-Q may include certain  forward-looking  statements based on current
management  expectations.  The actual  results of Kearny  Financial  Corp.  (the
"Company") could differ materially from those management  expectations.  Factors
that could cause  future  results to vary from current  management  expectations
include,  but are not limited to, general economic  conditions,  legislative and
regulatory  changes,  monetary  and fiscal  policies of the federal  government,
changes in tax policies,  rates and regulations of federal,  state and local tax
authorities.  Additional  potential  factors  include changes in interest rates,
deposit flows,  cost of funds,  demand for loan  products,  demand for financial
services,  competition,  changes  in the  quality  or  composition  of loan  and
investment portfolios of Kearny Federal Savings Bank, the Company's wholly-owned
subsidiary,  (the "Bank"). Other factors that could cause future results to vary
from current management  expectations include changes in accounting  principles,
policies  or  guidelines,  and other  economic,  competitive,  governmental  and
technological  factors affecting the Company's  operations,  markets,  products,
services and prices.  Further  description of the risks and uncertainties to the
business are included in the  Company's  other filings with the  Securities  and
Exchange Commission.

Comparison of Financial Condition at December 31, 2007 and June 30, 2007

Total assets  increased $113.6 million or 5.9%, to $2.03 billion at December 31,
2007 from $1.92  billion at June 30, 2007.  The  increase  was due  primarily to
increases of $100.9 million, $44.1 million and $11.1 million,  respectively,  in
net  loans  receivable,  mortgage-backed  securities  and cash and  equivalents.
Partially  offsetting  these  increases  was a  decrease  of  $44.7  million  in
securities.

Cash and cash equivalents,  consisting primarily of interest-bearing deposits in
other banks  increased  $11.1 million or 6.8%, to $174.4 million at December 31,
2007 from $163.3 million at June 30, 2007. The Bank borrowed $200.0 million from
the Federal  Home Loan Bank  during the six months  ended  December  31, 2007 to
replenish liquidity depleted by loan originations and deposit outflows.

Between June 30, 2007 and December 31, 2007,  the securities  portfolio,  all of
which is classified as available for sale,  decreased $44.7 million or 50.3%, to
$44.2  million  from $88.9  million.  The decrease  resulted  from a decrease in
amortized  cost of  $45.0  million  due  primarily  to the  sale of  securities,
partially  offset by a $353,000  decrease in unrealized  losses.  During the six
months ended December 31, 2007,  management  sold  securities from the municipal
bond portfolio with an amortized cost of $44.1 million, which resulted in a gain
of $5,000. The decision to sell municipal bonds was prompted by the below market
yield on such  bonds as well as the  overall  decline in the  Company's  pre-tax
income,  which reduces the  advantage of holding  tax-exempt  instruments.  With
respect to the remaining  municipal bond portfolio,  management will continue to
assess its value given the improvement in pre-tax income and declining  interest
rates versus a preference for securities that provide a steady cash flow.

Loans  receivable,  net of deferred  fees and costs and the  allowance  for loan
losses,  increased  $100.9  million or 11.7%,  to $961.4 million at December 31,
2007,  compared to $860.5 million at June 30, 2007.  Consistent  with the Bank's
business plan, management continued to emphasize growth of the loan portfolio to
increase  interest  income during the six months ended December 31, 2007.  Total
loans  constituted  47.6% of assets at December 31,  2007,  compared to 45.1% at
June 30, 2007.

                                       13

<PAGE>

Between June 30, 2007 and December 31,  2007,  loan growth was  concentrated  in
one-to-four  family  residential first mortgage loans,  which increased by $66.9
million  to $626.2  million  at  December  31,  2007.  Nonresidential  mortgages
increased by $23.1 million to $164.6 million at December 31, 2007.  Multi-family
mortgages  increased by $2.7 million to $20.4 million at December 31, 2007. Home
equity loans  increased by $6.6 million to $120.2  million at December 31, 2007.
Commercial  loans increased by $1.8 million and totaled $6.0 million at December
31, 2007. There was a nominal  decrease in the disbursed  portion of home equity
lines of credit of $320,000 to $12.4  million and the unused  balance  decreased
$988,000 to $25.2 million at December 31, 2007.  Construction  loans outstanding
and gross  construction  loans  increased  $902,000  to $12.3  million  and $6.2
million to $22.7 million,  respectively, at December 31, 2007. To supplement the
Bank's  in-house loan  originations,  management  purchased  one-to-four  family
residential  mortgages  totaling  $48.1  million  during  the six  months  ended
December 31,  2007.  The Bank does not  originate or purchase any interest  only
mortgages, pay option adjustable rate mortgages or sub-prime mortgages.

Between  June 30, 2007 and December 31,  2007,  the  mortgage-backed  securities
portfolio,  all of which is classified as available for sale, increased by $44.1
million or 6.8%, to $687.9 million from $643.8  million.  The increase  resulted
from a $14.9  million  decrease in unrealized  losses due to declining  interest
rates and  purchases  totaling  $95.3  million,  partially  offset by  principal
repayments and maturities of $65.9 million. Management purchased mortgage-backed
securities  issued by Fannie Mae or Freddie  Mac  composed  of $55.2  million of
adjustable  rate  mortgages  and $15.3  million of 30 year fixed rate  Community
Reinvestment  Act eligible  issues needed to meet CRA  investment  requirements.
Management also implemented a nominal leverage strategy  utilizing a part of the
proceeds from Federal Home Loan Bank ("FHLB")  advances taken during the quarter
ended September 30, 2007 to fund the purchase of $24.8 million of 15 year and 20
year fixed rate mortgage-backed securities. Generally, cash flows from principal
and interest  payments  were  redeployed  to fund the  purchases  of  additional
securities.  Of particular  significance  management believes that the Bank does
not have sub-prime exposure in its mortgage-backed securities portfolio.

FHLB of New York stock  increased  $8.9 million or 211.9%,  to $13.1  million at
December 31,  2007,  compared to $4.2 million at June 30, 2007 due to a required
purchase of stock related to the $200.0 million  increase in advances from FHLB.
The FHLB  declared an 8.40%  annualized  cash  dividend  for the  quarter  ended
December 31, 2007,  which followed a cash dividend paid at an annualized rate of
8.05% for the quarter ended September 30, 2007.

Deposits decreased $96.3 million or 6.8%, to $1.32 billion at December 31, 2007,
compared to $1.41 billion at June 30, 2007. During the six months,  certificates
of deposit, savings deposits and non-interest-bearing  demand accounts decreased
$76.3 million,  $17.1 million and $2.9 million,  respectively.  Interest-bearing
demand  deposits were  virtually  unchanged  during the period.  At December 31,
2007, deposits included certificates of deposit totaling $811.7 million, savings
deposits totaling $301.2 million,  non-interest-bearing demand accounts totaling
$53.5 million and  interest-bearing  demand  deposits  totaling  $149.0 million.
Deposits  decreased  $73.4 million during the quarter ended  September 30, 2007,
but as expected,  deposit  attrition  slowed to $22.9 million during the quarter
ended  December 31, 2007 due to the recent  reductions in the federal funds rate
by the Federal Reserve Board of Governors, amounting to a 100 basis point cut in
aggregate,  which  appear  to  be  gradually  lowering  interest  rates  in  the
marketplace.  Management believes the effect of additional interest rate cuts in
the  marketplace  and investor  concerns about the direction of the stock market
may reverse the outflow of deposits during the next quarter.

FHLB advances  increased $199.7 million or 700.7%, to $228.2 million at December
31, 2007, compared to $28.5 million at June 30, 2007. The increase in borrowings
resulted  primarily  from a need to  replenish  liquidity  utilized to fund loan
originations  and  deposit  outflows  and  make  cash  available  for  potential
implementation of growth and diversification  strategies related to execution of
the Company's business

                                       14

<PAGE>

plan. In the current interest rate environment  management  considers  long-term
advances to be a favorable  alternative to certificates  of deposit.  The $200.0
million in long-term  advances have a ten year term.  Partially  offsetting  the
increase was $323,000 in scheduled principal payments on amortizing advances.

During the six months ended December 31, 2007,  stockholders'  equity  increased
$10.9 million or 2.4%, to $473.5  million from $462.6  million at June 30, 2007.
The increase was primarily the result of a $9.9 million  increase in accumulated
other  comprehensive  income due to mark-to-market  adjustments to the available
for sale  securities  portfolio  and  benefit  plan  related  amortization  from
accumulated  other   comprehensive   income  pursuant  to  SFAS  No.  158.  Also
contributing to the increase was net income for the period of $2.4 million,  the
release of $928,000 of Employee Stock  Ownership Plan shares and $1.5 million of
restricted  stock plan shares and an addition to paid-in capital of $954,000 for
the expensing of stock  options.  Partially  offsetting  the increase was a $2.9
million  increase in treasury stock due to the purchase of 241,800 shares of the
Company's  common stock at a cost of $3.0  million,  partially  offset by shares
reissued for stock option exercises; and $1.9 million in cash dividends declared
for payment to minority shareholders. The Company's dividend was $0.10 per share
in aggregate for the two quarters.

Comparison of Operating Results for the Three Months Ended December 31, 2007 and
2006

General.  Net income for the quarter ended December 31, 2007 was $1.4 million or
$0.02 per diluted  share,  an increase of $829,000 or 151.6%,  from  $547,000 or
$0.01 per diluted share for the quarter ended December 31, 2006. The increase in
net income  year-over-year  resulted from an increase in net interest income and
decreases  in  the  provision  for  loan  losses  and in  non-interest  expense,
partially offset by a decrease in non-interest  income and an increase in income
taxes.

Net Interest Income. Net interest income for the quarter ended December 31, 2007
was $11.7  million,  an increase of $479,000 or 4.3%,  compared to $11.2 million
for the quarter ended December 31, 2006. The increase in net interest income was
due to an  increase  in  interest  income,  partially  offset by an  increase in
interest expense.

The  Company's  net  interest  rate spread was 1.80%  during the  quarter  ended
December 31, 2007 compared to 1.65% during the quarter ended  December 31, 2006.
Year-over-year,  the yield on average interest-earning assets increased 24 basis
points to 5.37% while the cost of average interest-bearing liabilities increased
nine   basis   points  to  3.57%.   The   increase   in  the  yield  on  average
interest-earning  assets was due to  increases  in the  yields on average  loans
receivable,  mortgage-backed  securities and securities,  partially  offset by a
decrease  in the yield on other  interest-earning  assets.  The cost of  average
interest-bearing liabilities increased due to an increase in the cost of average
interest-bearing  deposits partially offset by a decrease in the cost of average
borrowings.  The Bank continues to be liability  sensitive,  with  approximately
83.4% of its certificates of deposit re-pricing within twelve months. The recent
reductions  in the federal  funds rate should  result in an  improvement  in net
interest  income as the cost of  interest-bearing  deposits  begins to  decline.
However, with loan originations slowing, liquidity will probably remain high; as
a consequence the declining yield on cash equivalents, which may fall quickly as
interest rates fall, could mitigate the improvement in net interest income.

The Company's net interest margin  increased 16 basis points to 2.55% during the
quarter  ended  December 31, 2007,  compared with 2.39% during the quarter ended
December  31,  2006  resulting  from an increase  in net  interest  income and a
decrease in average  interest-earning  assets. Average  interest-earning  assets
during the quarter  ended  December 31, 2007 were $1.83 billion or $44.0 million
less than average  interest-earning  assets of $1.87 billion  during the quarter
ended December 31, 2006.  Average securities and other  interest-earning  assets
decreased,  partially  offset by an increase  in average  loans  receivable  and
mortgage-backed  securities,  which had a  favorable  affect  on yield.  Average
interest-bearing  liabilities

                                       15

<PAGE>

during the quarter  ended  December 31, 2007 were $1.45 billion or $31.0 million
less than  average  interest-bearing  liabilities  of $1.48  billion  during the
quarter ended December 31, 2006. Average  interest-bearing  deposits  decreased,
partially  offset by an  increase  in  average  borrowings.  The  effect  was an
increase in cost,  but less than what would have occurred had the borrowings not
replaced  certificates  of  deposits as a funding  source.  The ratio of average
interest-earning  assets to  average  interest-bearing  liabilities  was  126.3%
during the quarter  ended  December  31,  2007,  compared  to 126.6%  during the
quarter ended December 31, 2006.

Interest  Income.  Total interest  income  increased  $524,000 or 2.2%, to $24.6
million  during the quarter ended  December 31, 2007,  from $24.1 million during
the quarter ended  December 31, 2006. The increase in interest  income  resulted
from  increases in interest on loans and  mortgage-backed  securities  partially
offset by  decreases  in interest  from  securities  and other  interest-earning
assets.

Interest income from loans receivable  increased $2.8 million or 25.2%, to $13.9
million  during the quarter ended  December 31, 2007,  from $11.1 million during
the quarter ended  December 31, 2006 due primarily to growth in the portfolio as
well as an  improvement  in yield.  Average loans  receivable  increased  $182.0
million to $954.1  million  during the quarter  ended  December 31,  2007,  from
$772.1 million during the quarter ended December 31, 2006.  Consistent  with the
Bank's  business  plan,  management  continued to  emphasize  growth of the loan
portfolio to increase  interest  income.  Average loans  receivable  constituted
52.1% of average  interest-earning  assets during the quarter ended December 31,
2007, compared to 41.2% during the quarter ended December 31, 2006. The yield on
average loans receivable  increased ten basis points to 5.84% during the quarter
ended December 31, 2007, compared to 5.74% during the quarter ended December 31,
2006.  The  improvement in yield was aided by growth in the  potentially  higher
yielding  nonresidential and multi-family mortgage categories,  with the average
balance of the two types increasing $47.0 million or 34.5%, to $183.2 million in
aggregate,  year-over-year.  By comparison,  the average  balance of one-to-four
family   mortgages   increased  $121.9  million  or  24.6%,  to  $616.6  million
year-over-year.

Interest income from  mortgage-backed  securities increased $506,000 or 6.3%, to
$8.6  million  during the quarter  ended  December  31,  2007,  compared to $8.1
million during the quarter ended December 31, 2006 due to increases in yield and
average mortgage-backed securities. Average mortgage-backed securities increased
$14.5 million to $689.8 million during the quarter ended December 31, 2007, from
$675.3  million during the quarter ended December 31, 2006. The yield on average
mortgage-backed securities increased 20 basis points to 4.98% during the quarter
ended December 31, 2007,  from 4.78% during the quarter ended December 31, 2006.
To the  extent  that the Bank did not  need  the  funds  for loan  originations,
management  reinvested  cash flows from  principal  and interest  payments  into
additional mortgage-backed securities,  which contributed to the increase in the
average  balance  year-over-year.  During the quarter ended  September 30, 2007,
management  implemented  a nominal  leverage  strategy  utilizing  a part of the
proceeds  from  Federal  Home Loan Bank  advances to fund the  purchase of $24.8
million  of 15 year and 20 year  fixed rate  mortgage-backed  securities,  which
contributed to the increase in the average balance and yield.  Rate  adjustments
on  pass-through  certificates  containing  adjustable rate mortgages and higher
coupons on securities  recently  purchased compared to purchases in the year-ago
quarter also contributed to the increase in yield.

Interest  income from  securities  decreased $1.2 million or 69.5%,  to $539,000
during the quarter ended December 31, 2007, from $1.8 million during the quarter
ended December 31, 2006 due to a decrease in average securities partially offset
by an increase in yield.  Average  securities  decreased $126.8 million to $46.7
million during the quarter ended  December 31, 2007,  compared to $173.5 million
during the quarter ended December 31, 2006. The decrease in the average  balance
was due  primarily  to the sales of municipal  bonds,  totaling  $131.3  million
during the fiscal year ended June 30,  2007,  and $44.1  million  during the six
months ended December 31, 2007. Average tax-exempt  securities  decreased $124.3

                                       16

<PAGE>

million to $23.4 million while average taxable securities decreased $2.5 million
to $23.3 million, year-over-year.  The proceeds from the sales of the bonds were
utilized  primarily to fund loan originations and deposit  outflows.  As for the
remaining municipal bond portfolio, management will continue to assess its value
given the  improvement in pre-tax  income and declining  interest rates versus a
preference for securities  that provide a steady cash flow. The yield on average
securities  improved 54 basis points from 4.07% for the quarter  ended  December
31, 2006, to 4.61% for the quarter ended  December 31, 2007. The higher yield on
the securities  portfolio resulted primarily from the sale of the lower yielding
municipal bonds.

Interest  income from other  interest-earning  assets,  primarily  cash and cash
equivalents, decreased $1.6 million or 50.0%, to $1.6 million during the quarter
ended December 31, 2007, from $3.2 million during the quarter ended December 31,
2006.  The  decrease  was due to a decrease  in average  other  interest-bearing
assets as well as a decrease in yield.  There was a $113.8  million  decrease in
average other interest-earning assets to $140.5 million during the quarter ended
December 31, 2007,  from $254.3  million  during the quarter ended  December 31,
2006.  Average  cash and cash  equivalents  decreased,  partially  offset  by an
increase in average Federal Home Loan Bank ("FHLB")  capital stock. The cash and
cash  equivalents  were used  primarily  to fund loan  originations  and deposit
outflows.  FHLB capital stock  increased  due to the increase in FHLB  advances.
With a 100 basis point reduction in the federal funds rate between mid-September
and December 31, 2007, the yield on average interest-earning assets decreased 56
basis  points to 4.42%  during the quarter  ended  December  31, 2007 from 4.98%
during the same quarter a year ago.

Interest Expense.  Total interest expense  increased $45,000 or 0.3%,  virtually
unchanged  year-over-year at $12.9 million. The cost of average interest-bearing
liabilities  increased nine basis points to 3.57%,  partially  offset by a $31.8
million decrease in average interest-bearing liabilities to $1.45 billion during
the quarter ended  December 31, 2007  compared to $1.48 billion  during the year
earlier quarter.

Interest expense from deposits  decreased $1.1 million or 9.1%, to $11.0 million
during the quarter  ended  December  31,  2007,  from $12.1  million  during the
quarter ended December 31, 2006. The decrease resulted primarily from a decrease
in average  interest-bearing  deposits,  partially  offset by an increase in the
cost of deposits. The cost of average interest-bearing  deposits increased eight
basis points to 3.48%  during the quarter  ended  December 31, 2007,  from 3.40%
during the quarter ended December 31, 2006.  Average  interest-bearing  deposits
decreased  $161.9 million to $1.26 billion during the quarter ended December 31,
2007,  from $1.42 billion  during the quarter ended  December 31, 2006.  Average
interest-bearing  demand  deposit  accounts  increased  $19.4  million to $149.3
million and their cost increased  eight basis points to 1.97%.  The increase was
due primarily to an increase in tiered money market deposit accounts,  a popular
core deposit product. Average savings accounts decreased $34.6 million to $302.2
million and their cost decreased one basis point to 1.11%.  Traditional  savings
accounts  continued  to suffer  attrition  as  depositors  transferred  funds to
alternative  investments,  including the Bank's own tiered money market  deposit
account.  Average  certificates  of deposit  decreased  $146.7 million to $809.5
million  while  their  cost  increased  23 basis  points to 4.64%.  Though  most
certificates  of  deposit  attracted  by  interest  rate  specials  were  either
withdrawn or re-priced  lower at maturity,  we retained a significant  number of
non-promotional  certificates of deposit,  which  re-priced  higher at maturity,
leading to an increase in the cost of deposits.  At December 31, 2006,  the Bank
had $23.4 million of  certificates  of deposit with interest  rates of less than
3.00%,  $301.7 million of certificates of deposit with interest rates of between
3.00 - 3.99%,  $259.9 million of  certificates of deposit with interest rates of
between 4.00 - 4.99% and $368.7 million of certificates of deposit with interest
rates of between 5.00 - 5.99%. By December 31, 2007, the stratification adjusted
to $16.3 million, $55.1 million, $732.5 million and $7.7 million,  respectively.
Given  the  Bank's   liability   sensitive   interest  rate  risk  profile  with
approximately  83.4% of  certificates  of deposit  maturing within one year, the
recent reductions in the federal funds rate,  amounting to a 100 basis point cut
in  aggregate,  should  contribute  to a  subsequent  decrease  in the  cost  of
deposits.

                                       17

<PAGE>

Interest  expense from Federal Home Loan Bank borrowings  increased $1.2 million
or 144.6%,  to $2.0 million  during the quarter  ended  December 31, 2007,  from
$807,000  during  the  quarter  ended  December  31,  2006.  Average  borrowings
increased $130.9 million to $189.1 million during the quarter ended December 31,
2007, from $58.2 million during the quarter ended December 31, 2006. The cost of
average borrowings  decreased 137 basis points to 4.18% during the quarter ended
December 31, 2007 from 5.55%  during the quarter  ended  December 31, 2006.  The
increase in borrowings  resulted  primarily  from a need to replenish  liquidity
utilized to fund loan  originations and deposit outflows and make cash available
for potential implementation of growth and diversification strategies related to
execution of the  Company's  business  plan.  The Bank borrowed  $100.0  million
during the quarter ended  September 30, 2007 and an  additional  $100.0  million
during the quarter ended  December 31, 2007 at a weighted  average cost of 3.99%
and 3.59%, respectively.  The advances were a cheaper funding source compared to
certificates of deposit.

Provision for Loan Losses. We charge provisions for loan losses to operations at
a level  required to reflect  credit losses in the loan  portfolio that are both
probable and reasonable to estimate.  Management,  in determining  the allowance
for loan losses, considers the losses inherent in the loan portfolio and changes
in the nature and volume of our loan activities, along with the general economic
and  real  estate  market  conditions.  We  utilize  a  two-tier  approach:  (1)
identification  of impaired loans and  establishment of specific loss allowances
on such loans;  and (2)  establishment  of general  valuation  allowances on the
remainder of our loan  portfolio as required by  generally  accepted  accounting
principles  and  regulatory   guidelines  outlined  in  the  Interagency  Policy
Statement  last  updated in December  2006.  We  establish a specific  loan loss
allowance for an impaired loan based on delinquency  status,  size of loan, type
of  collateral  and/or  appraisal of the  underlying  collateral  and  financial
condition of the borrower.  Management bases general loan loss allowances upon a
combination  of  factors  including,  but  not  limited  to,  actual  loan  loss
experience,  composition of the loan portfolio,  current economic conditions and
management's judgment

There was no provision  for loan losses  during the quarter  ended  December 31,
2007,  compared  to an $119,000  provision  recorded  during the  quarter  ended
December 31, 2006.  The decision not to record a provision  was based on slowing
growth in the loan portfolio as well as asset quality that continues to be good.
Non-performing  loans  were  $1.1  million  or 0.12%,  of total  loans of $966.5
million at December  31, 2007;  $1.5 million or 0.17%,  of total loans of $865.0
million at June 30, 2007 and $639,000 or 0.08%, of total loans of $798.1 million
at December 31, 2006. Of particular significance, the Bank does not originate or
purchase  interest  only  mortgages,  pay option  adjustable  rate  mortgages or
sub-prime  mortgages.  The ratio of net  charge-offs  to average  loans was zero
percent during each of the comparative periods.

The  allowance for loan losses as a percentage  of total loans  outstanding  was
0.64% at December  31,  2007,  0.70% at June 30, 2007 and 0.72% at December  31,
2006,  reflecting  allowance  balances of $6.1  million,  $6.0  million and $5.8
million,  respectively.  The  allowance  for  loan  losses  as a  percentage  of
non-performing  loans was 540.8% at December 31,  2007,  406.3% at June 30, 2007
and  900.6%  at  December  31,  2006.  There  were no  material  charge-offs  or
recoveries  recorded  against the  allowance  for loan losses during the quarter
ended  December  31,  2007  compared  to a recovery  of $27,000  during the year
earlier quarter.

Management  assesses the  allowance  for loan losses  monthly.  Management  uses
available  information to recognize  losses on loans,  however,  additional loan
loss  provisions  may be necessary  in the future,  based on changes in economic
conditions.  In  addition,  regulatory  agencies,  as an integral  part of their
examination  process,  periodically review the allowance for loan losses and may
require  us to  recognize

                                       18

<PAGE>

additional  provisions based on their judgment of information  available to them
at the time of their  examination.  The allowance for loan losses as of December
31, 2007 was maintained at a level that represented  management's  best estimate
of losses in the loan  portfolio  to the  extent  they  were both  probable  and
reasonably estimable.

Non-Interest Income.  Non-interest income attributed to fees and service charges
from the Bank's  retail  operations  and other  miscellaneous  income  increased
$51,000 or 8.2%, to $671,000 during the quarter ended December 31, 2007 compared
to $620,000 during the quarter ended December 31, 2006. Fees and service charges
increased $51,000 due primarily to the overdraft privilege program introduced in
May 2007. Miscellaneous income was unchanged year-over-year.

There was a loss on sale of  securities  available for sale of $2,000 during the
quarter ended December 31, 2007 compared to a gain of $152,000  recorded  during
the quarter ended December 31, 2006.

Non-Interest  Expense.  Non-interest  expense decreased $1.1 million or 9.8%, to
$10.1  million  during the quarter ended  December 31, 2007,  from $11.2 million
during the quarter ended December 31, 2006. The decrease in non-interest expense
resulted  primarily  from a  decrease  in  salaries  and  employee  benefits  of
$744,000.   Also  contributing   were  decreases  in  advertising   expense  and
amortization  of  intangible  assets of $254,000 and $99,000,  respectively  and
reductions  in equipment  expense,  directors'  compensation  and  miscellaneous
expense totaling $64,000 in aggregate.  Partially offsetting the decrease was an
increase in net occupancy expense of premises of $61,000.

Salaries  and employee  benefits  decreased  $744,000 or 11.0%,  to $6.0 million
during the quarter ended December 31, 2007,  compared to $6.7 million during the
quarter ended December 31, 2006. The component of salaries and benefits with the
most significant  reduction was pension plan expense,  which decreased $518,000.
Effective July 1, 2007,  the Company  implemented a freeze on all future benefit
accruals  under the Bank's  non-contributory  defined  benefit  pension plan and
related benefit equalization plan. The freeze provides additional flexibility in
controlling  the costs  associated  with the plans  while still  preserving  the
participants' earned and vested benefits.  Stock benefits plan expense decreased
$76,000 due to a forfeiture  of unvested  restricted  stock and  unvested  stock
options in the prior year.  Employee  Stock  Ownership  Plan  expense  decreased
$122,000 due to a decrease in the average  market price of the Company's  common
stock.  The  remaining  components  of  salaries  and  benefits  expense  in the
aggregate  were  virtually  unchanged;  with normal salary  increases  partially
offset by a decision by the President and CEO of the Company and the Bank,  John
N. Hopkins,  that he would  voluntarily forgo the cash bonus payment approved by
the Compensation  Committee in November 2007. Mr. Hopkins was motivated to do so
as part of the Company's  overall cost cutting  effort.  In December  2006,  Mr.
Hopkins  received a cash bonus payment of $90,000.  Normal salary increases were
also partially  offset by a reduction in staff,  due to routine  attrition and a
conscious decision not to replace those employees.

Net occupancy expense of premises  increased $61,000 or 7.3%, to $902,000 during
the quarter  ended  December  31, 2007 from  $841,000  during the quarter  ended
December 31, 2006 due to increases in rent expense, net, repairs and maintenance
expense,  property  taxes  expense and  utilities  expense  partially  offset by
decreases in other components of net occupancy expense of premises.

Advertising  expense decreased $254,000 or 62.1%, to $155,000 during the quarter
ended  December 31, 2007 from  $409,000  during the quarter  ended  December 31,
2006. The decrease in advertising  expense between the comparative  quarters was
due primarily to limiting  marketing to loan products,  though also at a reduced
rate given the slowing  demand for loans,  to the exclusion of deposit  products
during  the  current  quarter.  This trend  will  probably  change due to recent
reductions in the federal funds rate, which appear to be lowering interest rates
in the marketplace, thus making our interest rate offerings more competitive.

                                       19

<PAGE>

The $99,000 decrease in the amortization of intangible assets to $60,000 was due
to the completion of  amortization  of an intangible  asset acquired  during the
purchase  of West  Essex  Bank in  2003.  Miscellaneous  expense  was  virtually
unchanged at $1.2 million during the quarters ended December 31, 2007 and 2006.

Provision for Income Taxes. The provision for income taxes increased $768,000 to
$857,000  during the quarter ended  December 31, 2007,  from $89,000  during the
quarter  ended  December 31, 2006.  The  effective tax rate was 38.4% during the
quarter  ended  December  31, 2007,  compared to 14.0% during the quarter  ended
December  31,  2006.  The  effective  tax rate  increased  due to a reduction in
interest from  tax-exempt  instruments  as a percentage of pre-tax income as net
income increased. Tax-exempt interest was 9.1% of income before taxes during the
quarter  ended  December 31, 2007  compared to 216.4%  during the quarter  ended
December  31, 2006.  During the fiscal year ended June 30 2007,  the decision to
sell  municipal  bonds was  prompted by the below  market yield on such bonds as
well as the overall decline in the Company's  pre-tax income,  which reduces the
advantage  of holding  tax-exempt  instruments.  With  respect to the  remaining
municipal bond portfolio, management will continue to assess its value given the
improvement in pre-tax  income and declining  interest rates versus a preference
for securities that provide a steady cash flow.

Comparison of Operating  Results for the Six months Ended  December 31, 2007 and
2006

General.  Net income for the six months ended December 31, 2007 was $2.4 million
or $0.03 per diluted share, an increase of $933,000 or 63.3%,  from $1.5 million
or $0.02 per diluted  share for the six months  ended  December  31,  2006.  The
increase in net income  year-over-year  resulted from  increases in net interest
income and non-interest  income,  and decreases in the provision for loan losses
and non-interest expense, partially offset by an increase in income taxes.

Net Interest  Income.  Net interest income for the six months ended December 31,
2007 was $23.0  million,  an increase  of  $163,000  or 0.7%,  compared to $22.9
million for the six months ended December 31, 2006. The increase in net interest
income  was due to an  increase  in  interest  income,  partially  offset  by an
increase in interest expense.

The  Company's  net interest  rate spread  increased  five basis points to 1.79%
during the six months  ended  December 31, 2007 from 1.74% during the six months
ended December 31, 2006.  Year-over-year,  the yield on average interest-earning
assets   increased   28  basis  points  to  5.36%  while  the  cost  of  average
interest-bearing liabilities increased 23 basis points to 3.57%. The increase in
the yield on average  interest-earning assets was due to increases in the yields
on  average  loans  receivable,   mortgage-backed   securities  and  securities,
partially  offset by a decrease in the yield on other  interest-earning  assets.
The cost of average interest-bearing liabilities increased due to an increase in
the cost of average interest-bearing deposits, partially offset by a decrease in
the cost of average  borrowings.  The Bank's  cumulative  gap position or timing
mismatch of  potential  re-pricing  of assets and  liabilities  continues  to be
liability  sensitive.  At  December  31,  2006,  the Bank's  cumulative  gap was
approximately  -16%.  At  September  30,  2007,  the Bank's  cumulative  gap was
approximately  -15%.  Management does not believe that there has been a material
adverse  change in the  Bank's  cumulative  gap during  the three  months  ended
December 31, 2007.  Recent  reductions in the federal funds rate should bring an
improvement  in net  interest  income as the cost of  interest-bearing  deposits
begins to decline.  However,  slowing loan  originations may mean that liquidity
will remain high; as a  consequence  the  declining  yield on cash  equivalents,
which may fall quickly as interest rates fall, could mitigate the improvement in
net interest income.

The Company's net interest margin  increased 12 basis points to 2.57% during the
six months ended  December 31, 2007,  compared  with 2.45% during the six months
ended December 31, 2006. Average

                                       20

<PAGE>

interest-earning assets during the six months ended December 31, 2007 were $1.79
billion or $72.0  million  less than  average  interest-earning  assets of $1.86
billion  during the six months ended December 31, 2006.  Average  securities and
other  interest-earning  assets  decreased,  partially  offset by an increase in
average loans receivable, which had a favorable impact on yield. The decrease in
average  interest-earning  assets  resulted in part from the use of cash to fund
deposit outflows and stock  repurchases.  Average  interest-bearing  liabilities
during the six  months  ended  December  31,  2007 were  $1.40  billion or $66.6
million less than average  interest-bearing  liabilities of $1.47 billion during
the six months  ended  December  31,  2006.  Average  interest-bearing  deposits
decreased, partially offset by an increase in average borrowings. In the current
interest rate environment  management  considers Federal Home Loan Bank advances
to be a favorable  alternative to  certificates  of deposit as a funding source.
The  ratio  of  average  interest-earning  assets  to  average  interest-bearing
liabilities  was 128.1% during the six months ended December 31, 2007,  compared
to 127.2% during the six months ended December 31, 2006.

Interest  Income.  Total interest  income  increased  $653,000 or 1.4%, to $48.0
million during the six months ended December 31, 2007, from $47.4 million during
the six months ended December 31, 2006. The increase in interest income resulted
from  increases in interest on loans and  mortgage-backed  securities  partially
offset by  decreases  in interest  from  securities  and other  interest-earning
assets.

Interest income from loans receivable  increased $5.7 million or 26.6%, to $27.1
million during the six months ended December 31, 2007, from $21.4 million during
the six months ended  December 31, 2006 due primarily to growth in the portfolio
as well as an improvement in yield.  Average loans  receivable  increased $180.7
million to $930.4 million  during the six months ended  December 31, 2007,  from
$749.7  million  during the six months ended  December 31, 2006. In keeping with
the Bank's business plan,  management  continued to emphasize growth of the loan
portfolio to increase interest income, year-over-year.  Average loans receivable
constituted 51.9% of average interest-earning assets during the six months ended
December  31, 2007,  compared to 40.2% during the six months ended  December 31,
2006. The yield on average loans  receivable  increased 12 basis points to 5.83%
during the six months ended December 31, 2007,  compared to 5.71% during the six
months  ended  December 31, 2006.  The  improvement  in yield was due in part to
growth in the  nonresidential  and multi-family  mortgage  categories,  with the
average  balance  increasing  in aggregate  $51.4 million to $177.3  million,  a
change of 40.8% year-over-year.  By comparison, the average balances outstanding
of one-to-four  family  mortgages  increased  $116.4 million or 24.0%, to $600.8
million year-over-year.

Interest income from  mortgage-backed  securities increased $688,000 or 4.3%, to
$16.8 million during the six months ended  December 31, 2007,  compared to $16.1
million  during the six months  ended  December  31,  2006 due  primarily  to an
increase in yield. Average  mortgage-backed  securities were virtually unchanged
at $679.8  million  during the six months ended  December  31, 2007  compared to
$679.5  million  during the six  months  ended  December  31,  2006.  Generally,
management  reinvested cash flows from principal and interest  payments into the
mortgage-backed  securities  portfolio to supplement  slowing loan originations.
The yield on average  mortgage-backed  securities  increased  20 basis points to
4.94% during the six months ended  December 31, 2007,  from 4.74% during the six
months ended December 31, 2006.  During the quarter  ending  September 30, 2007,
management  implemented  a nominal  leverage  strategy  utilizing  a part of the
proceeds  from  Federal  Home Loan Bank  advances to fund the  purchase of $24.8
million  of 15 year and 20 year  fixed rate  mortgage-backed  securities,  which
contributed  to  the  increase  in  yield.   Rate  adjustments  on  pass-through
certificates   containing  adjustable  rate  mortgages  and  higher  coupons  on
securities  purchased  during the six months ended December 31, 2007 compared to
purchases  during the six months ended December 31, 2006 also contributed to the
increase in yield.  However,  falling interest rates could negatively impact the
portfolio yield in the future due to the emphasis on purchasing  adjustable rate
product.  During the six months ending December 31, 2007, $55.2 million or 57.9%
of the mortgage-backed securities purchased were adjustable rate product.

                                       21

<PAGE>

Interest income from securities decreased $2.6 million or 63.4%, to $1.4 million
during the six months ended December 31, 2007,  from $4.1 million during the six
months ended December 31, 2006 due to a decrease in average securities partially
offset by an improvement in yield.  Average securities  decreased $134.7 million
to $65.4  million  during the six months ended  December  31, 2007,  compared to
$200.1  million  during the six months ended  December 31, 2006. The decrease in
the average balance was due primarily to the sales of municipal bonds,  totaling
$131.3  million  during the fiscal year ended June 30, 2007,  and $44.1  million
during the six months ended  December 31, 2007.  Average  tax-exempt  securities
decreased  $131.8  million to $41.9  million while  average  taxable  securities
decreased  $2.9  million  to $23.5  million,  year-over-year.  To the extent not
required to fund loan originations,  management reinvested the proceeds from the
sales into cash equivalents  pending  redeployment  into other  interest-earning
assets. The yield on average securities  improved 36 basis points from 4.05% for
the six months  ended  December  31,  2006,  to 4.41% for the six  months  ended
December  31,  2007.  The  higher  yield on the  securities  portfolio  resulted
primarily  from the sale of the lower yielding  municipal  bonds as well as rate
adjustments   on   pass-through    certificates    containing   Small   Business
Administration  adjustable  rate  loans  and  adjustable  rate  trust  preferred
securities.

Interest  income from other  interest-earning  assets  decreased $3.1 million or
53.4%,  to $2.7 million during the six months ended December 31, 2007, from $5.8
million during the six months ended December 31, 2006. The decrease was due to a
decrease  in average  other  interest-bearing  assets,  primarily  cash and cash
equivalents, as well as a decrease in yield. There was a $118.4 million decrease
in average other interest-earning assets to $116.3 million during the six months
ended  December  31,  2007,  from  $234.7  million  during the six months  ended
December  31,  2006.  For the most part,  management  utilized the cash and cash
equivalents to fund loan originations and deposit outflows. Partially offsetting
the  decrease  in cash and cash  equivalents,  average  Federal  Home  Loan Bank
("FHLB")  capital  stock  increased  $3.3  million  to $8.6  million  due to the
increase in FHLB advances. With a 100 basis point reduction in the federal funds
rate   between   mid-September   and  December   2007,   the  yield  on  average
interest-earning assets decreased 34 basis points to 4.63% during the six months
ended  December  31, 2007  compared to 4.97% during the same period in the prior
year.

Interest Expense.  Total interest expense  increased  $490,000 or 2.0%, to $25.0
million during the six months ended December 31, 2007, from $24.5 million during
the six months ended  December 31,  2006.  The cost of average  interest-bearing
liabilities  increased  23 basis  points to 3.57%,  partially  offset by a $66.6
million decrease in average interest-bearing liabilities to $1.40 billion during
the six months ended December 31, 2007 compared to $1.47 billion during the year
earlier six month period.

Interest  expense from  deposits  decreased  $617,000 or 2.7%,  to $22.2 million
during the six months ended December 31, 2007, from $22.8 million during the six
months ended December 31, 2006. The decrease resulted  primarily from a decrease
in average  interest-bearing  deposits,  partially  offset by an increase in the
cost of deposits.  The cost of average  interest-bearing  deposits  increased 25
basis points to 3.50% during the six months ended December 31, 2007,  from 3.25%
during the six months ended December 31, 2006. Average interest-bearing deposits
decreased  $135.0  million to $1.27 billion during the six months ended December
31, 2007,  from $1.41  billion  during the six months  ended  December 31, 2006.
Average  interest-bearing  demand deposit  accounts  increased  $21.7 million to
$149.2 million while their cost increased 24 basis points to 2.03% due to tiered
money market  deposit  accounts  introduced  to attract core  deposits.  Average
savings  accounts  decreased  $40.6  million to $308.3  million while their cost
decreased  three  basis  points  to 1.10%  as  depositors  transferred  funds to
alternative  investments,  including the Bank's own tiered money market  deposit
account.  Average  certificates  of deposit  decreased  $116.1 million to $813.4
million  while  their  cost  increased  43 basis  points  to  4.67%.  Management
discontinued  offering  interest rate specials on certificates of deposit during
the quarter ended December 31, 2006.  During the subsequent year,  including the
six months ended December 31, 2007 most  certificates  of deposits  attracted by
interest rate specials were either withdrawn or re-priced lower at maturity.  We

                                       22

<PAGE>

retained a significant  number of  certificates  of deposit,  which were not the
product of interest rate specials.  Those accounts  generally  re-priced  higher
when they renewed at maturity.  Given the Bank's  interest rate risk profile,  a
reduction in interest rates and  restoration of a more normal yield curve should
aid in improving our profitability.  With approximately 83.4% of certificates of
deposit  maturing  within one year,  the recent  reductions in the federal funds
rate,  amounting to a 100 basis point cut in aggregate,  should  contribute to a
subsequent decrease in the cost of deposits.

Interest  expense from Federal Home Loan Bank borrowings  increased $1.1 million
or 64.7%,  to $2.8 million during the six months ended  December 31, 2007,  from
$1.7 million during the six months ended December 31, 2006.  Average  borrowings
increased  $68.4 million to $128.0  million during the six months ended December
31, 2007,  from $59.6 million during the six months ended December 31, 2006. The
cost of average  borrowings  decreased  124 basis points to 4.32% during the six
months ended  December 31, 2007 from 5.56% during the six months ended  December
31, 2006. The increase in borrowings resulted primarily from a need to replenish
liquidity  utilized to fund loan originations and fund deposit outflows and make
cash  available  for  potential  implementation  of growth  and  diversification
strategies  related  to  execution  of the  Company's  business  plan.  The Bank
borrowed  $200.0  million  during the six months  ended  December  31, 2007 at a
weighted  average cost of 3.79% resulting in the decrease in the cost of average
borrowings. The advances were determined to be a cheaper funding source compared
to certificates of deposit.

Provision for Loan Losses. We charge provisions for loan losses to operations at
a level  required to reflect  credit losses in the loan  portfolio that are both
probable and reasonable to estimate.  Management,  in determining  the allowance
for loan losses, considers the losses inherent in the loan portfolio and changes
in the nature and volume of our loan activities, along with the general economic
and  real  estate  market  conditions.  We  utilize  a  two-tier  approach:  (1)
identification  of impaired loans and  establishment of specific loss allowances
on such loans;  and (2)  establishment  of general  valuation  allowances on the
remainder of our loan  portfolio as required by  generally  accepted  accounting
principles  and  regulatory   guidelines  outlined  in  the  Interagency  Policy
Statement  last  updated in December  2006.  We  establish a specific  loan loss
allowance for an impaired loan based on delinquency  status,  size of loan, type
of  collateral  and/or  appraisal of the  underlying  collateral  and  financial
condition of the borrower.  Management bases general loan loss allowances upon a
combination  of  factors  including,  but  not  limited  to,  actual  loan  loss
experience,  composition of the loan portfolio,  current economic conditions and
management's judgment

The  provision for loan losses  decreased  $183,000,  to $94,000  during the six
months ended December 31, 2007,  from a $277,000  provision  recorded during the
six  months  ended  December  31,  2006.   Management  attributes  the  decrease
principally  to slowing  growth in the loan  portfolio  and asset  quality  that
continues to be good.  Non-performing loans were $1.1 million or 0.12%, of total
loans of $966.5  million at December 31, 2007;  $1.5 million or 0.17%,  of total
loans of $865.0  million at June 30, 2007 and $639,000 or 0.08%,  of total loans
of $798.1  million at December 31, 2006.  Of particular  significance,  the Bank
does not originate or purchase  interest only mortgages,  pay option  adjustable
rate mortgages or sub-prime  mortgages.  The ratio of net charge-offs to average
loans was zero percent during each of the comparative periods.

The  allowance for loan losses as a percentage  of total loans  outstanding  was
0.64% at December  31,  2007,  0.70% at June 30, 2007 and 0.72% at December  31,
2006,  reflecting  allowance  balances of $6.1  million,  $6.0  million and $5.8
million,  respectively.  The  allowance  for  loan  losses  as a  percentage  of
non-performing  loans was 540.8% at December 31,  2007,  406.3% at June 30, 2007
and  900.6%  at  December  31,  2006.  There  were no  material  charge-offs  or
recoveries  recorded against the allowance for loan losses during the six months
ended  December  31,  2007  compared  to a recovery  of $27,000  during the year
earlier period.

                                       23

<PAGE>

Management  assesses the  allowance  for loan losses  monthly.  Management  uses
available  information to recognize  losses on loans,  however,  additional loan
loss  provisions  may be necessary  in the future,  based on changes in economic
conditions.  In  addition,  regulatory  agencies,  as an integral  part of their
examination  process,  periodically review the allowance for loan losses and may
require  us to  recognize  additional  provisions  based  on their  judgment  of
information  available to them at the time of their  examination.  The allowance
for  loan  losses  as of  December  31,  2007  was  maintained  at a level  that
represented  management's  best estimate of losses in the loan  portfolio to the
extent they were both probable and reasonably estimable.

Non-Interest Income.  Non-interest income attributed to fees and service charges
from the Bank's  retail  operations  and other  miscellaneous  income  increased
$188,000 or 15.8%, to $1.4 million during the six months ended December 31, 2007
compared to $1.2 million during the six months ended December 31, 2006. Fees and
service  charges  increased  $158,000 due primarily to the  overdraft  privilege
program  introduced  in  May  2007.   Miscellaneous   income  increased  $30,000
year-over-year.

Non-interest  income attributed to the gain on sale of securities  available for
sale was $5,000  during the six months  ended  December  31, 2007  compared to a
$152,000 gain recorded during the six months ended December 31, 2006.

Non-Interest  Expense.  Non-interest  expense decreased $1.8 million or 8.1%, to
$20.5 million during the six months ended December 31, 2007,  from $22.3 million
during the six months  ended  December 31,  2006.  The decrease in  non-interest
expense resulted  primarily from a decrease in salaries and employee benefits of
$1.2  million.   Also  contributing  were  decreases  in  advertising   expense,
amortization  of  intangible  assets and  directors'  compensation  of $396,000,
$99,000 and $108,000,  respectively,  and  reductions  in equipment  expense and
miscellaneous  expense totaling $96,000 in aggregate.  Partially  offsetting the
decrease was an increase in net occupancy expense of premises of $93,000.

Salaries and employee benefits  decreased $1.2 million or 8.9%, to $12.3 million
during the six months ended December 31, 2007,  compared to $13.5 million during
the six months ended  December 31, 2006.  The component of salaries and benefits
with the most  significant  reduction was pension plan expense,  which decreased
$887,000. Effective July 1, 2007, the Company implemented a freeze on all future
benefit accruals under the Bank's non-contributory  defined benefit pension plan
and  related  benefit   equalization   plan.  The  freeze  provides   additional
flexibility  in  controlling  the costs  associated  with the plans  while still
preserving the  participants'  earned and vested  benefits.  Stock benefits plan
expense decreased $151,000 due to a forfeiture of unvested  restricted stock and
unvested stock options in the prior year.  Employee Stock Ownership Plan expense
decreased  $189,000  due  to a  decrease  in the  average  market  price  of the
Company's  common  stock.  The  remaining  components  of salaries  and benefits
expense in the aggregate were virtually unchanged;  with normal salary increases
partially  offset by a decision by the  President and CEO of the Company and the
Bank, John N. Hopkins,  that he would  voluntarily  forgo the cash bonus payment
approved  by the  Compensation  Committee  in  November  2007.  Mr.  Hopkins was
motivated to do so as part of the  Company's  overall cost cutting  effort.  Mr.
Hopkins  previously  received a cash bonus payment of $90,000 in December  2006.
Also normal salary  increases were partially offset by a reduction in staff, due
to routine attrition and a conscious decision not to replace those employees.

Net  occupancy  expense of premises  increased  $93,000 or 5.5%, to $1.8 million
during the six months ended  December 31, 2007 from $1.7 million  during the six
months ended  December 31, 2006 due to increases in rent expense,  net,  repairs
and maintenance expense,  property taxes expense and utilities expense partially
offset by decreases in depreciation and other expenses.

                                       24

<PAGE>

Advertising  expense  decreased  $396,000 or 49.4%,  to $406,000  during the six
months  ended  December  31,  2007 from  $802,000  during the six  months  ended
December 31, 2006. During the current period,  management  generally devoted the
Bank's  advertising  to  loan  products  while  temporarily   discontinuing  the
marketing of deposit  products.  This trend will  probably  change due to recent
reductions in the federal funds rate, which appear to be lowering interest rates
in the marketplace, thus making our interest rate offerings more competitive.

The $99,000  decrease in the  amortization of intangible  assets to $219,000 was
due to the completion of amortization of an intangible asset acquired during the
purchase of West Essex Bank in 2003.

Directors'  compensation  decreased $108,000 or 8.9%, to $1.1 million during the
six months  ended  December 31,  2007,  compared to $1.2 million  during the six
months ended  December 31, 2006.  Fees  decreased  $16,000 to $330,000 and other
directors'  compensation decreased $92,000 to zero due primarily to freezing the
directors' incentive compensation plan.

Miscellaneous  expense was  virtually  unchanged at $2.2 million  during the six
months ended December 31, 2007 and 2006.

Provision  for Income  Taxes.  The  provision  for income taxes  increased  $1.3
million to $1.5  million  during the six months ended  December  31, 2007,  from
$165,000  during the six months ended  December 31, 2006. The effective tax rate
was 37.7% during the quarter ended  December 31, 2007,  compared to 10.1% during
the quarter ended  December 31, 2006.  The effective tax rate increased due to a
reduction in interest  from  tax-exempt  instruments  as a percentage of pre-tax
income as net income increased.  Tax-exempt  interest was 19.5% of income before
taxes during the six months ended  December 31, 2007  compared to 199.1%  during
the six months ended  December  31, 2006.  During the fiscal year ended June 30,
2007,  the  decision to sell  municipal  bonds was  prompted by the below market
yield on such  bonds as well as the  overall  decline in the  Company's  pre-tax
income,  which reduces the  advantage of holding  tax-exempt  instruments.  With
respect to the remaining  municipal bond portfolio,  management will continue to
assess its value given the improvement in pre-tax income and declining  interest
rates versus a preference for securities that provide a steady cash flow.

Liquidity and Capital Resources

Liquidity,  represented  by cash  and  cash  equivalents,  is a  product  of the
Company's  operating,   investing  and  financing  activities.   For  detail  on
operating, investing and financing activities see the Consolidated Statements of
Cash Flows for the six months ended  December 31, 2007.  The primary  sources of
funds are deposits, principal amortization, principal prepayments and maturities
of mortgage-backed securities and loans receivable; maturities of securities and
funds  provided  from  operations.  In  addition,  excess  funds are invested 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.

The 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.  The Bank attempts to
maintain adequate but not excessive liquidity,  and liquidity management is both
a daily and long-term function of business management.

                                       25

<PAGE>

During the  fiscal  year ended June 30,  2007 and  continuing  into the  current
fiscal  year,  to the  extent  that the Bank  did not  need the  funds  for loan
originations,  management  maintained  liquidity at an elevated  level while the
Treasury yield curve  remained  inverted or flat.  However,  the 100 basis point
decrease in the federal  funds rate prior to December  31, 2007  followed by the
125 basis point  decrease in January  2008  caused the  Treasury  yield curve to
revert to its more  traditional  shape.  As a  consequence,  despite  the Bank's
business  plan which calls for  increasing  the loan  portfolio and reducing its
reliance on securities and other  interest-earning  assets to generate  interest
income,  management  expects to redeploy excess  liquidity into  mortgage-backed
securities to supplement loan originations. Borrower demand has decreased due to
the slowing  economy and is expected to remain sluggish for at least the balance
of 2008.

The Bank reviews cash flow  projections  regularly  and updates them 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 December 31, 2007,
the  Bank had  outstanding  commitments  to  originate  loans of $14.6  million,
commitments  to fund the  purchase  of loans on a flow  basis of $25.4  million,
construction  loans in process of $10.4  million  and unused  lines of credit of
$28.1 million. At December 31, 2007, the Bank had $676.9 million of certificates
of deposit maturing within one year.

Deposits  decreased  $22.9 million to $1.32  billion at December 31, 2007,  from
$1.34  billion at  September  30,  2007.  During the  quarter,  certificates  of
deposit,    savings    deposits,    interest-bearing    demand    accounts   and
non-interest-bearing demand accounts decreased $14.0 million, $5.1 million, $2.3
million and $1.5 million,  respectively.  As expected,  deposit attrition slowed
during the quarter due to the recent reductions in the federal funds rate by the
Federal  Reserve  Board of  Governors,  amounting  to a 100  basis  point cut in
aggregate,  which  appear  to  be  gradually  lowering  interest  rates  in  the
marketplace.  Management believes the effect of additional interest rate cuts in
the  marketplace  and investor  concerns about the direction of the stock market
may reverse the outflow of deposits during the next quarter.

Borrowings from the Federal Home Loan Bank ("FHLB") of New York are available to
supplement  the  Bank's  liquidity  position  and to the  extent  that  maturing
deposits do not remain with us, we may  replace the funds with  borrowings.  The
Bank has the  capacity  to borrow  additional  funds  from the FHLB,  through an
overnight line of credit of $200.0 million or by taking additional short-term or
long-term advances. The Bank borrowed $100.0 million in ten-year advances during
the quarter ended September 30, 2007 with $50.0 million  callable after one year
and $50.0  million  callable  after two years.  The Bank  borrowed an additional
$100.0 in ten-year  advances  during the quarter  ended  December  31, 2007 with
$50.0 million  callable  after one year and $50.0  million after two years.  The
current cost of long-term advances,  relative to the cost of retail certificates
of deposit,  makes them an attractive funding source.  There was no need to make
use of overnight  borrowings  during the quarter ended December 31, 2007, due to
adequate liquidity.

Consistent  with  its  goals  to  operate  a  sound  and  profitable   financial
organization,   the  Bank   actively   seeks  to   maintain   its  status  as  a
well-capitalized  institution in accordance  with  regulatory  standards.  As of
December 31, 2007, Kearny Federal Savings Bank exceeded all capital requirements
of the Office of Thrift Supervision (the "OTS").

                                       26

<PAGE>

The following table sets forth the Bank's capital position at December 31, 2007,
as compared to the minimum regulatory capital requirements:


<TABLE>
<CAPTION>
                                                                December 31, 2007 (Unaudited)
                                        ------------------------------------------------------------------------------
                                                                                                     To Be Well
                                                                                                 Capitalized Under
                                                                        Minimum Capital          Prompt Corrective
                                                   Actual                 Requirements           Action Provisions
                                             ------------------         ------------------       -------------------
                                             Amount       Ratio         Amount       Ratio        Amount       Ratio
                                             ------       -----         ------       -----        ------       -----
                                                                    (Dollars in Thousands)
<S>                                       <C>           <C>       <C>               <C>      <C>              <C>
Total Capital
  (to risk-weighted assets)                 351,966       39.41%    $   71,450        8.00%    $  89,312        10.00%

Tier 1 Capital
  (to risk-weighted assets)                 345,823       38.72%         -            -        $  53,587         6.00%

Core (Tier 1) Capital
  (to adjusted total assets)                345,823       18.04%    $   76,661        4.00%    $  95,826         5.00%

Tangible Capital
  (to adjusted total assets)                345,823       18.04%    $   28,748        1.50%        -             -
</TABLE>


In August 2007,  the Bank  received  approval  from the OTS for a $19.0  million
capital  distribution to the Company.  However,  future  dividend  requests will
require  closer OTS scrutiny  due to the Bank's  compressed  earnings.  The cash
dividend was paid in November 2007.

                                       27

<PAGE>

                                     ITEM 3.
            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
            ---------------------------------------------------------


Qualitative  Analysis.  The ability to maximize net  interest  income is largely
dependent upon the  achievement of a positive  interest rate spread  sustainable
during fluctuations in prevailing interest rates. Interest rate sensitivity is a
measure  of the  difference  between  amounts  of  interest-earning  assets  and
interest-bearing  liabilities,  which either  re-price or mature  within a given
period.  The  difference,  or the interest rate  re-pricing  "gap",  provides an
indication of the extent changes in interest  rates may affect an  institution's
interest  rate spread.  A positive  gap exists when the amount of  interest-rate
sensitive assets exceeds the amount of interest-rate sensitive liabilities,  and
a negative  gap exists when the amount of interest  rate  sensitive  liabilities
exceeds the amount of interest-rate sensitive assets. Generally, during a period
of rising  interest  rates,  a negative  gap  within  shorter  maturities  would
adversely  affect  net  interest  income,  while a positive  gap within  shorter
maturities would result in an increase in net interest  income.  During a period
of falling interest rates, a negative gap within shorter maturities would result
in an  increase  in net  interest  income  while a positive  gap within  shorter
maturities would result in a decrease in net interest income.

Because the Bank's interest-bearing liabilities, which mature or re-price within
short periods exceed its interest-earning  assets with similar  characteristics,
material and prolonged  increases in interest rates  generally  would  adversely
affect net interest income,  while material and prolonged  decreases in interest
rates generally would have a positive effect on net interest income.

The Bank's  Board of  Directors  established  an Interest  Rate Risk  Management
Committee comprised of members of the board and management.  The committee meets
quarterly to address management of the Bank's assets and liabilities,  including
review of its short  term  liquidity  position;  loan and  deposit  pricing  and
production volumes and alternative funding sources; current investments; average
lives,  durations and  re-pricing  frequencies  of loans and  securities;  and a
variety of other asset and liability  management  topics.  The committee reports
the results of its quarterly  review to the full board,  which adjusts  interest
rate risk policy and strategies, as it considers necessary and appropriate.

Quantitative  Analysis.  Management  using the OTS model,  which  estimates  the
change in the Bank's net  portfolio  value (the  "NPV") over a range of interest
rate  scenarios,  monitors  the Bank's  interest  rate  sensitivity.  NPV is the
present value of expected cash flows from assets,  liabilities,  and off-balance
sheet contracts. OTS defines the NPV ratio, under any interest rate scenario, as
the NPV in that  scenario  divided  by the  market  value of  assets in the same
scenario.  The OTS produces its analysis based upon data submitted on the Bank's
quarterly Thrift Financial Reports.

                                       28

<PAGE>

The following table sets forth the Bank's NPV as of September 30, 2007, the most
recent date for which the Bank has received the Bank's NPV as  calculated by the
OTS.  Management does not believe that there has been a material  adverse change
in the Bank's  interest  rate risk during the three  months  ended  December 31,
2007.

<TABLE>
<CAPTION>
                                                              At September 30, 2007
                            ------------------------------------------------------------------------------------------
                                                                                  Net Portfolio Value
                                  Net Portfolio Value                       as % of Present Value of Assets
                            ---------------------------------     ----------------------------------------------------
                                                                                     Net Portfolio       Basis Point
 Changes in Rates (1)         $ Amount           $ Change           % Change          Value Ratio          Change
-----------------------     --------------     --------------     --------------     --------------     --------------
                                     (In Thousands)
<S>     <C>                   <C>                <C>                    <C>             <C>                <C>
       +300 bp                286,609           -112,625               -28%             16.25%            -479 bp
       +200 bp                326,411            -72,823               -18%             18.04%            -301 bp
       +100 bp                364,755            -34,479                -9%             19.66%            -138 bp
        +50 bp                382,893            -16,341                -4%             20.40%             -64 bp
          0 bp                399,234                  -                 -              21.04%               -
        -50 bp                413,156            +13,922                +3%             21.56%             +52 bp
       -100 bp                424,855            +25,621                +6%             21.99%             +94 bp
       -200 bp                440,094            +40,860               +10%             22.46%            +142 bp
</TABLE>

(1)  The -300 bp scenario is not shown due to the low  prevailing  interest rate
     environment.

This  analysis  also  indicated  that as of September  30, 2007 an immediate and
permanent  2.0%  increase in interest  rates would cause an  approximately  9.8%
decrease in our net interest income. Conversely, an immediate and permanent 2.0%
decrease in interest rates would cause an approximately 9.9% increase in our net
interest income.

Certain  shortcomings are inherent in the methodology used in the above interest
rate risk  measurements.  Modeling  changes in NPV require the making of certain
assumptions,  which may or may not reflect the manner in which actual yields and
costs respond to changes in market interest rates. In this regard, the NPV model
presented  assumes that the composition of the Bank's interest  sensitive assets
and liabilities  existing at the beginning of a period remains constant over the
measurement  period. The model also assumes that a particular change in interest
rates reflects  uniformly  across the yield curve  regardless of the duration to
maturity or re-pricing of specific assets and liabilities. Accordingly, although
the NPV measurements and net interest income models provide an indication of the
Bank's  interest  rate  risk  exposure  at a  particular  point  in  time,  such
measurements  are not  intended to and do not provide a precise  forecast of the
effect of changes in market interest rates on the Bank's net interest income and
will differ from actual results.

                                       29

<PAGE>

                                     ITEM 4.
                             CONTROLS AND PROCEDURES
                             -----------------------


Based on their  evaluation of the Company's  disclosure  controls and procedures
(as defined in Rules  13a-15(e)  under the Securities  Exchange Act of 1934 (the
"Exchange Act"),  the Company's  principal  executive  officer and the principal
financial  officer have  concluded  that as of the end of the period  covered by
this Quarterly  Report on Form 10-Q such disclosure  controls and procedures are
effective to ensure that information  required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded,  processed,
summarized  and reported  within the time periods  specified in  Securities  and
Exchange  Commission  rules and forms and is accumulated and communicated to the
Company's  management,  including the principal  executive officer and principal
financial officer,  as appropriate to allow timely decisions  regarding required
disclosures.

During the quarter under report,  there was no change in the Company's  internal
control  over  financial  reporting  (as  defined  in Rule  13a-15(f)  under the
Securities  and  Exchange  Act of 1934)  that  has  materially  affected,  or is
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.

                                       30

<PAGE>

                                     PART II


     ITEM 1.        Legal Proceedings
                    -----------------

                    At December 31, 2007,  neither the Company nor the Bank were
                    involved in any pending legal proceedings other than routine
                    legal  proceedings  occurring  in  the  ordinary  course  of
                    business, which involve amounts in the aggregate believed by
                    management to be  immaterial  to the financial  condition of
                    the Company and the Bank.

     ITEM 1A.       Risk Factors
                    ------------

                    Management  of the Company  does not believe  there has been
                    any  material  changes  with  regard  to  the  Risk  Factors
                    previously  disclosed  under Item 1A. of the Company's  Form
                    10-K for the year ended June 30, 2007, previously filed with
                    the Securities and Exchange Commission.

     ITEM 2.        Unregistered Sales of Equity Securities and Use of Proceeds
                    -----------------------------------------------------------

                      ISSUER PURCHASES OF EQUITY SECURITIES

                    The   following   table   reports   information    regarding
                    repurchases of the Company's common stock during the quarter
                    ended December 31, 2007.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                       Total Number of       Maximum
                                                            Shares          Number of
                                                         Purchased as       Shares that
                               Total                   Part of Publicly     May Yet Be
                             Number of       Average      Announced       Purchased Under
                              Shares        Price Paid     Plans or         the Plans or
                             Purchased      per Share      Program           Programs (1)
--------------------------------------------------------------------------------------------
<S>                          <C>             <C>           <C>                 <C>
 October 1-31, 2007                -              -              -             485,634
--------------------------------------------------------------------------------------------
 November 1-30, 2007          79,700         $11.96         79,700             405,934
--------------------------------------------------------------------------------------------
 December 1-31, 2007         127,700         $12.27        127,700             278,234
--------------------------------------------------------------------------------------------
 Total                       207,400         $12.15        207,400             278,234
--------------------------------------------------------------------------------------------
</TABLE>

(1)  On January 18, 2007, the Company  announced a five percent stock repurchase
     plan (approximately  1,036,634 shares).  Such purchases are to be made from
     time to time in the open market, based on stock availability, price and the
     Company's financial performance. This program has no expiration date.

     ITEM 3.        Defaults Upon Senior Securities
                    -------------------------------

                    Not applicable.

                                       31

<PAGE>

     ITEM 4.        Submission of Matters to a Vote of Security Holders
                    ---------------------------------------------------

                    The Annual Meeting of  Stockholders  (the  "Meeting") of the
                    Company was held on October 22, 2007. There were outstanding
                    and  entitled  to vote at the Meeting  71,113,937  shares of
                    Common Stock of the  Company,  including  50,916,250  shares
                    held by Kearny MHC, the mutual holding company parent of the
                    Company.  Kearny  MHC  voted  its  shares  in  favor  of all
                    proposals. There were present at the meeting or by proxy the
                    holders of  68,074,723  shares of Common Stock  representing
                    93.5% of the total eligible votes to be cast. Proposal 1 was
                    to elect three  directors of the Company.  Proposal 2 was to
                    ratify the  appointment of the  independent  auditor for the
                    fiscal year ending June 30,  2008.  The result of the voting
                    at the Meeting is as follows:

<TABLE>
<CAPTION>
                    Proposal 1:
                <S>                       <C>     <C>                   <C>           <C>
                    John J. Mazur, Jr.     FOR:      67,551,371           WITHHELD:      523,352
                    Matthew T. McClane     FOR:      67,553,574           WITHHELD:      521,149
                    John F. McGovern       FOR:      67,561,518           WITHHELD:      513,205
</TABLE>

<TABLE>
<CAPTION>

                    Proposal 2:
                    Ratification of the appointment of Beard Miller Company LLP as independent auditor.
<S>                                     <C>          <C>
                                           FOR:      67,790,951
                                           AGAINST:     221,294
                                           ABSTAIN:      62,478
</TABLE>

     ITEM 5.        Other Information
                    -----------------

                    None.

     ITEM 6.        Exhibits
                    --------

                    The following Exhibits are filed as part of this report:

<TABLE>
<CAPTION>
                <S>    <C>
                    3.1  Charter of Kearny Financial Corp. (1)
                    3.2  By-laws of Kearny Financial Corp. (1)
                    4.0  Specimen Common Stock Certificate of Kearny Financial Corp. (1)
                    10.1 Employment Agreement between Kearny Federal Savings Bank and John N. Hopkins (1)
                    10.2 Employment Agreement between Kearny Federal Savings Bank and Albert E. Gossweiler (1)
                    10.3 Employment Agreement between Kearny Federal Savings Bank and Sharon Jones (1)
                    10.4 Employment Agreement between Kearny Federal Savings Bank and William C. Ledgerwood (1)
                    10.5 Employment Agreement between Kearny Federal Savings Bank and Erika K. Parisi (1)
                    10.6 Employment Agreement between Kearny Federal Savings Bank and Patrick M. Joyce (1)
                    10.7 Employment Agreement between Kearny Federal Savings Bank and Craig L. Montanaro (2)
                    10.8 Directors Consultation and Retirement Plan (1)
                    10.9 Benefit Equalization Plan (1)
                    10.10 Benefit Equalization Plan for Employee Stock Ownership Plan (1)
</TABLE>

<TABLE>
<CAPTION>
                <S>    <C>
                    10.11 Stock Option Plan (3)
                    10.12 Restricted Stock Plan (3)
                    10.13 Kearny Federal Savings Bank Director Life Insurance Agreement (4)
                    10.14 Kearny Federal Savings Bank Executive Life Insurance Agreement (4)
                    10.15 Kearny Financial Corp. Directors Incentive Compensation Plan (5)
                    11.0 Statement regarding computation of earnings per share (Filed herewith).
                    31.0 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
                    32.0 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                ----------------------------------------------------------------------------------
</TABLE>
                    (1)  Incorporated by reference to the  identically  numbered
                         exhibit to the Registrant's  Registration  Statement on
                         Form S-1 (File No. 333-118815).
                    (2)  Incorporated   by  reference  to  the  exhibit  to  the
                         Registrant's Form 8-K filed on July 21, 2005. (File No.
                         000-51093).
                    (3)  Incorporated   by   reference   to   the   Registrant's
                         definitive  proxy  statement  filed  September 30, 2005
                         (File No. 000-51093).
                    (4)  Incorporated  by  reference  to  the  exhibits  to  the
                         Registrant's  Form 8-K filed on August 18, 2005.  (File
                         No. 000-51093).
                    (5)  Incorporated   by  reference  to  the  exhibit  to  the
                         Registrant's  Form 8-K filed on  December 9, 2005 (File
                         No. 000-51093).

                                       33

<PAGE>

                                   SIGNATURES
                                   ----------


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on it  behalf  by the
undersigned thereunto duly authorized.


                               KEARNY FINANCIAL CORP.

Date:      February 7, 2008    By: /s/ John N. Hopkins
           -----------------       ---------------------------------------------
                                   John N. Hopkins
                                   President and Chief Executive Officer
                                   (Duly  authorized  officer  and  principal
                                   executive officer)

Date:      February 7, 2008    By: /s/ William C. Ledgerwood
           -----------------       ---------------------------------------------
                                   William C. Ledgerwood
                                   Senior Vice President and
                                   Chief Financial Officer
                                   (Principal financial officer)


                                       34