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, 2004
                                         ---------------------------------------

                                       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        No  X
                                                      ---       ---

         Indicate by check mark whether the registrant is an  accelerated  filer
(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 18, 2005.

            $0.10 par value common stock - 10,000 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, 2004 and June 30, 2004 (Unaudited)                            1

               Consolidated Statements of Income for the Three Months and
               Six Months Ended December 31, 2004 and 2003 (Unaudited)                      2-3

               Consolidated Statements of Comprehensive Income for the Three
               Months and Six Months Ended December 31, 2004 and 2003 (Unaudited)            4

               Consolidated Statements of Cash Flows for the Six Months
               Ended December 31, 2004 and 2003 (Unaudited)                                 5-6

               Notes to Consolidated Financial Statements                                    7

      Item 2:  Management's Discussion and Analysis of
               Financial Condition and Results of Operations                                8-17

      Item 3:  Quantitative and Qualitative Disclosure About Market Risk                   18-19

      Item 4:  Controls and Procedures                                                       20


PART II - OTHER INFORMATION                                                                  21


SIGNATURES                                                                                   22
</TABLE>
<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 ----------------------------------------------
           (In Thousands, Except Share and Per Share Data, Unaudited)
<TABLE>
<CAPTION>
                                                                       December 31,     June 30,
                                                                           2004           2004
                                                                       -----------    -----------
<S>                                                                  <C>            <C>
Assets
------
Cash and amounts due from depository institutions                      $    17,343    $    21,008
Interest-bearing deposits in other banks                                    21,568         18,480
                                                                       -----------    -----------

        Cash and cash equivalents                                           38,911         39,488

Securities available for sale; amortized cost of $25,156 and $25,109        43,295         41,564
Investment securities held to maturity; estimated fair value of
  $440,449 and $428,775                                                    440,693        435,870
Loans receivable, including net deferred loan costs of $829 and $758       514,620        510,938
  Less: Allowance for loan losses                                           (5,256)        (5,144)
                                                                       -----------    -----------
  Net loans receivable                                                     509,364        505,794
                                                                       -----------    -----------
Mortgage-backed securities; estimated fair value of $714,293 and
  $772,710                                                                 705,967        771,353
Premises and equipment                                                      33,207         26,649
Federal Home Loan Bank of New York stock ("FHLB")                           11,392         11,392
Interest receivable                                                          9,720          9,861
Goodwill                                                                    82,263         82,263
Other assets                                                                13,364         12,284
                                                                       -----------    -----------

        Total assets                                                   $ 1,888,176    $ 1,936,518
                                                                       ===========    ===========

Liabilities and stockholders' equity
------------------------------------

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

Deposits:
  Non-interest bearing                                                 $    54,119    $    55,377
  Interest bearing                                                       1,438,537      1,482,133
                                                                       -----------    -----------

        Total deposits                                                   1,492,656      1,537,510

Advances from FHLB                                                          81,964         94,234
Advance payments by borrowers for taxes                                      4,026          4,224
Other liabilities                                                            7,294          7,045
                                                                       -----------    -----------

        Total liabilities                                                1,585,940      1,643,013
                                                                       -----------    -----------
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;
  10,000 and 10,000 issued and outstanding, respectively                         1              1
Paid in capital                                                                499            499
Retained earnings - substantially restricted                               289,947        282,959
Accumulated other comprehensive income                                      11,789         10,046
                                                                       -----------    -----------

        Total stockholders' equity                                         302,236        293,505
                                                                       -----------    -----------

        Total liabilities and stockholders' equity                     $ 1,888,176    $ 1,936,518
                                                                       ===========    ===========
</TABLE>

See notes to consolidated financial statements.

                                       -1-


<PAGE>

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

<TABLE>
<CAPTION>
                                         Three Months Ended      Six Months Ended
                                            December 31,           December 31,
                                        --------------------   -------------------
                                          2004        2003       2004       2003
                                        --------    --------   --------   --------
<S>                                   <C>         <C>        <C>        <C>
Interest income:
    Loans                               $  7,321    $  7,231   $ 14,453   $ 14,890
    Mortgage-backed securities             8,298       8,458     16,947     16,434
    Investment and available for sale
      securities                           4,083       3,624      8,094      6,852
    Other interest earning assets            130         351        245      1,144
                                        --------    --------   --------   --------

        Total interest income             19,832      19,664     39,739     39,320
                                        --------    --------   --------   --------
Interest expense:
    Deposits                               6,186       7,150     12,298     15,242
    Borrowings                               988       1,048      1,979      2,114
                                        --------    --------   --------   --------

        Total interest expense             7,174       8,198     14,277     17,356
                                        --------    --------   --------   --------

Net interest income                       12,658      11,466     25,462     21,964

Provision for loan losses                    (34)          -        117          -
                                        --------    --------   --------   --------

Net interest income after provision
  for loan losses                         12,692      11,466     25,345     21,964
                                        --------    --------   --------   --------
Non-interest income:
    Fees and service charges                 171         158        348        356
    Miscellaneous                            239         197        556        437
                                        --------    --------   --------   --------

        Total non-interest income            410         355        904        793
                                        --------    --------   --------   --------

Non-interest expenses:
    Salaries and employee benefits         5,342       3,995      9,994      8,189
    Net occupancy expense of
      premises                               723         625      1,370      1,202
    Equipment                                944         927      1,818      1,691
    Advertising                              295         102        576        364
    Federal insurance premium                139         145        279        299
    Amortization of intangible assets        159         159        318        318
    Directors' fees                          230         213        447        411
    Merger related expenses                    -           -          -        592
    Miscellaneous                            935         927      1,754      1,770
                                        --------    --------   --------   --------

        Total non-interest expenses        8,767       7,093     16,556     14,836
                                        --------    --------   --------   --------

Income before income taxes                 4,335       4,728      9,693      7,921
Income taxes                               1,143       1,418      2,705      2,376
                                        --------    --------   --------   --------

Net income                              $  3,192    $  3,310   $  6,988   $  5,545
                                        ========    ========   ========   ========

Net income per common share:
    Basic                               $ 319.20    $ 331.00   $ 698.80   $ 554.50
    Diluted                               319.20      331.00     698.80     554.50
</TABLE>

See notes to consolidated financial statements.

                                       -2-

<PAGE>

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

                           Three Months Ended  Six Months Ended
                               December 31,      December 31,
                             ---------------   ---------------
                              2004     2003     2004     2003
                             ------   ------   ------   ------

Weighted average number of
Common shares outstanding:
    Basic                    10,000   10,000   10,000   10,000
    Diluted                  10,000   10,000   10,000   10,000



See notes to consolidated financial statements.

                                       -3-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 -----------------------------------------------
                            (In Thousands, Unaudited)

                                       Three Months Ended     Six Months Ended
                                          December 31,           December 31,
                                       ------------------    ------------------
                                         2004       2003       2004       2003
                                       -------    -------    -------    -------

Net income                             $ 3,192    $ 3,310    $ 6,988    $ 5,545
                                       -------    -------    -------    -------

Other comprehensive income,
 net of income taxes:
    Gross unrealized holdings gain
      (loss) on securities available
      for sale                           1,911      1,993      2,681      1,490
    Deferred income tax benefit
      (expense)                           (669)      (697)      (938)      (521)
                                       -------    -------    -------    -------

Other comprehensive income               1,242      1,296      1,743        969
                                       -------    -------    -------    -------

Comprehensive income                   $ 4,434    $ 4,606    $ 8,731    $ 6,514
                                       =======    =======    =======    =======


See notes to consolidated financial statements.

                                       -4-

<PAGE>

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

<TABLE>
<CAPTION>
                                                                              Six Months Ended
                                                                                 December 31,
                                                                            ----------------------
                                                                               2004         2003
                                                                            ---------    ---------
<S>                                                                       <C>          <C>
Cash flows from operating activities:
    Net income                                                              $   6,988    $   5,545
    Adjustments to reconcile net income to net cash provided by operating
      activities:
        Depreciation and amortization of premises and equipment                   639          699
        Net amortization of premiums, discounts and loan fees and costs           570        1,358
        Deferred income taxes                                                  (1,532)        (921)
        Amortization of intangible assets                                         318          318
        Provision for loan losses                                                 117            -
        Realized gain on sale of securities available for sale                    (71)           -
        Decrease (increase) in interest receivable                                141         (647)
        Decrease (increase) in other assets                                    (1,399)      (1,194)
        Increase (decrease) in interest payable                                   (25)        (277)
        Increase (decrease) in other liabilities                                  854         (985)
                                                                            ---------    ---------

            Net cash provided by operating activities                           6,600        3,896
                                                                            ---------    ---------

Cash flows from investing activities:
    Purchases of securities available for sale                                    (91)         (74)
    Proceeds from sale of securities available for sale                         1,115            -
    Purchases of investment securities held to maturity                       (22,161)    (137,323)
    Proceeds from calls and maturities of investment securities held to
      maturity                                                                 14,791       53,015
    Proceeds from repayments of investment securities held to maturity          2,545        2,152
    Purchase of loans                                                               -      (14,262)
    Net (increase) decrease in loans receivable                                (3,761)      16,530
    Purchases of mortgage-backed securities held to maturity                  (27,171)    (253,022)
    Principal repayments on mortgage-backed securities held to maturity        92,060      219,840
    Additions to premises and equipment                                        (7,197)      (2,736)
    Redemption (purchase) of FHLB Stock                                             -        2,987
                                                                            ---------    ---------

            Net cash provided by (used in) investing activities                50,130     (112,893)
                                                                            ---------    ---------

Cash flows from financing activities:
    Net (decrease) increase in deposits                                       (44,840)     (49,143)
    Repayment of FHLB advances                                                   (269)      (1,254)
    Net change in short-term borrowings from FHLB                             (12,000)           -
    Increase (decrease) in advance payments by borrowers for taxes               (198)        (235)
                                                                            ---------    ---------

            Net cash (used in) provided by financing activities               (57,307)     (50,632)
                                                                            ---------    ---------

Net (decrease) increase in cash and cash equivalents                             (577)    (159,629)
Cash and cash equivalents - beginning                                          39,488      325,657
                                                                            ---------    ---------

Cash and cash equivalents - ending                                          $  38,911    $ 166,028
                                                                            =========    =========

</TABLE>

See notes to consolidated financial statements.

                                       -5-


<PAGE>

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


                                                            Six Months Ended
                                                              December 31,
                                                          -------------------
                                                             2004       2003
                                                          --------   --------
Supplemental  disclosures of cash flows  information:
    Cash paid during the year for:
        Income taxes, net of refunds                      $  1,462   $  2,945
                                                          ========   ========

        Interest                                          $ 14,302   $ 17,633
                                                          ========   ========
Supplemental disclosure of non-cash transactions:
    Purchase of minority shares of West Essex             $      -   $ 17,336
                                                          ========   ========
    Goodwill - West Essex acquisition                     $      -   $ 50,517
                                                          ========   ========
    Deposit for acquisition of West Essex Bancorp, Inc.   $      -   $(67,853)
                                                          ========   ========

See notes to consolidated financial statements.

                                       -6-



<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 subsidiary,  Kearny Federal Savings Bank
(the "Bank"), and the Bank's wholly owned subsidiaries,  KFS Financial Services,
Inc.,  West Essex  Insurance  Agency and Kearny  Federal  Investment  Corp.  The
Company conducts its business  principally  through the Bank. We have eliminated
all significant intercompany 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.  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 and six month periods ended December 31, 2004, are not
necessarily  indicative  of the  results  which may be  expected  for the entire
fiscal year.


3.  NET INCOME PER COMMON SHARE
-------------------------------

Basic net income per common  share is based on the  weighted  average  number of
common shares actually  outstanding.  Diluted net income per share 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.

                                       -7-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Forward-Looking Statement

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, changes in interest rates, deposit flows, the 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"),  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, 2004 and June 30, 2004

Our total  assets  decreased  by $48.3  million,  or 2.6%,  to $1.89  billion at
December 31, 2004 from $1.94 billion at June 30, 2004,  primarily due to a $44.8
million net outflow of deposits  and a $12.2  million  decrease in Federal  Home
Loan Bank advances.  Mortgage-backed securities held to maturity decreased $65.4
million, partially offset by growth of $3.6 million in loans receivable, net and
$4.8 million in investment securities held to maturity.

Mortgage-backed  securities  decreased  by $65.4  million,  or 8.5%,  to  $706.0
million at December 31, 2004, from $771.4 million at June 30, 2004. The decrease
resulted from monthly principal  repayments.  We used this cash flow to fund the
aforementioned  deposit  outflow,  reduce Federal Home Loan Bank advances,  fund
loans receivable and purchase investment securities held to maturity.

Loans  receivable,  net of  deferred  fees and the  allowance  for loan  losses,
increased $3.6 million,  or 0.7%, to $509.4  million at December 31, 2004,  from
$505.8  million at June 30, 2004.  The increase  came  primarily in  one-to-four
family  mortgage  loans,  partially  offset by decreases in commercial  business
loans and construction loans.

Investment  securities  held to maturity  increased  $4.8  million,  or 1.1%, to
$440.7  million at December 31, 2004,  from $435.9 million at June 30, 2004. The
increase came exclusively in the tax-exempt  category as we purchased  municipal
securities during the six-month period.

Deposits,  which decreased $44.8 million,  or 2.9%, to $1.49 billion at December
31, 2004, from $1.54 billion at June 30, 2004 were the most significant cause of
the decrease in total liabilities.  The primary factor for this decrease was the
runoff of certificates of deposit due to lower interest rates paid, as well as a
movement  by  customers  to   alternative   investment   opportunities   in  the
marketplace.

Federal Home Loan Bank advances  decreased  $12.2  million,  or 13.0%,  to $82.0
million at December  31,  2004,  from $94.2  million at June 30, 2004  primarily
resulting from maturing advances that were not renewed.

Stockholders'  equity  increased  $8.7 million,  or 3.0%,  to $302.2  million at
December 31, 2004, from $293.5 million at June 30, 2004. The increase  primarily
reflects net income of $7.0 million for the six months ended  December 31, 2004,
along with an increase in accumulated other comprehensive income of $1.7 million
resulting  from an  increase  in the  unrealized  gain  on  available  for  sale
securities.

                                       -8-


<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003

General.  Net income  for the three  months  ended  December  31,  2004 was $3.2
million, a decrease of $118,000, or 3.6%, from $3.3 million for the three months
ended December 31, 2003. The decrease in net income  resulted  primarily from an
increase in salaries and employee  benefits  partially  offset by an increase in
net interest income.

Net Interest Income. Net interest income increased by $1.2 million, or 10.4%, to
$12.7  million for the three months ended  December 31, 2004 from $11.5  million
for the three months  ended  December  31,  2003.  The net interest  rate spread
increased to 2.66% for the three  months ended  December 31, 2004 from 2.35% for
the three months ended December 31, 2003. The net interest  margin  increased 32
basis points to 2.89% for the three months ended December 31, 2004 compared with
2.57% for the three months ended December 31, 2003.

The net  interest  rate  spread  primarily  improved  due to an 18  basis  point
decrease in the cost of average  interest-bearing  liabilities  to 1.87% for the
three months  ending  December 31, 2004,  from 2.05% for the three months ending
December 31, 2003.  The net interest rate spread also improved due to a 13 basis
point increase in the yield on average  interest-earning assets to 4.53% for the
three months  ending  December 31, 2004,  from 4.40% for the three months ending
December 31, 2003.

The increase in the net interest margin is largely reflective of the increase in
the  ratio  of  average  interest-earning  assets  to  average  interest-bearing
liabilities to 114.4% for the three months ended December 31, 2004,  from 111.9%
for the three months ended December 31, 2003.

Interest  Income.  Total interest income increased  $168,000,  or 0.9%, to $19.8
million for the three months ended December 31, 2004, from $19.7 million for the
three months ended December 31, 2003. Average  interest-earning assets decreased
$36.2 million, or 2.0%, to $1.75 billion for the three months ended December 31,
2004, from $1.79 billion for the three months ended December 31, 2003.  However,
the  aforementioned  13 basis  points  increase  in yield  offset the decline in
average  interest-earning assets, leading to the increase in interest income. We
attribute the increase in interest income  primarily to the reinvestment of cash
and  cash  equivalents  in  higher  yielding  loans  receivable  and  investment
securities held to maturity.

Interest income on loans receivable  increased $90,000, or 1.2%, to $7.3 million
for the three  months ended  December 31, 2004,  from $7.2 million for the three
months  ended  December  31,  2003.  The  average  balance  of loans  receivable
increased  $19.4 million,  or 3.9%, to $512.0 million for the three months ended
December 31, 2004,  from $492.6  million for the three months ended December 31,
2003.  However, a decrease in the average yield on loans receivable to 5.72% for
the three months ended December 31, 2004,  from 5.87% for the three months ended
December  31,  2003,  offset  the  increase  in the  average  balance  of  loans
outstanding.  A  continuing  marketing  effort  contributed  to the  increase in
average loans  receivable.  The lower yield  reflects  generally  lower interest
rates on  originations  and downward rate  adjustments  on  adjustable  rate and
floating rate loans.

Interest income on investment  securities increased $459,000,  or 12.7%, to $4.1
million for the three months  ended  December 31, 2004 from $3.6 million for the
three months ended December 31, 2003. The increase  resulted from an increase of
$73.4  million,  or 17.7%,  in the average  balance of investment  securities to
$488.2  million for the three months ended December 31, 2004 from $414.8 million
for the three months ended December 31, 2003. However, a decrease in the average
yield on investment  securities to 3.35% for the three months ended December 31,
2004, from 3.49% for the three months ended December 31, 2003,  partially offset
the increase in the average balance of investment securities.

                                       -9-


<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003 (Cont'd)

The  increased  average  balance  reflects  the  redeployment  of cash  and cash
equivalents.  The lower yield resulted from principal repayments on older higher
yielding  securities  while new  purchases  occurred  in a lower  interest  rate
environment.

Interest  income  on  mortgage-backed  securities  held  to  maturity  decreased
$160,000,  or 1.9%, to $8.3 million for the three months ended December 31, 2004
from $8.5  million for the three months  ended  December  31, 2003.  There was a
$24.2  million,  or 3.5%,  increase  in the average  balance of  mortgage-backed
securities  held to  maturity  to  $718.8  million  for the three  months  ended
December 31, 2004 from $694.6  million for the three  months ended  December 31,
2003.  The  decrease in the average  yield to 4.62% for the three  months  ended
December  31, 2004 from 4.87% for the three  months  ended  December  31,  2003,
offset the increase in the average balance.  The increase in the average balance
of mortgage-backed securities held to maturity resulted from the redeployment of
cash  and cash  equivalents.  The  decrease  in yield  resulted  from  principal
repayments  received on older higher  yielding  securities  while new  purchases
occurred in a lower interest rate environment.

Interest income on other  interest-earning  assets decreased $221,000, or 63.0%,
to $130,000 for the three months ended  December 31, 2004 from  $351,000 for the
three months ended December 31, 2003. This was a result of a $115.0 million,  or
100%,  decrease in the average balance of securities  purchased under agreements
to resell and a $38.1  million,  or 54.4%,  decrease in the  average  balance of
other  interest-earning  assets  to $31.9  million  for the three  months  ended
December 31, 2004 from $70.0  million for the three  months  ended  December 31,
2003.  There  was an 87  basis  point  increase  in the  average  yield on other
interest-earning  assets to 1.63% for the three months ended  December 31, 2004,
from  0.76% for the three  months  ended  December  31,  2003.  The  substantial
decrease  in the  average  balances  was  due to the  use  of  assets  in  these
categories to invest in higher yielding securities. We attribute the improvement
in yield to the  dividend  paid on  Federal  Home Loan Bank  stock  relative  to
short-term market interest rates.

Interest Expense.  Total interest expense  decreased $1.0 million,  or 12.2%, to
$7.2 million for the three months ended  December 31, 2004 from $8.2 million for
the three months ended December 31, 2003. The decrease resulted primarily from a
decrease in the average cost of  interest-bearing  liabilities  to 1.87% for the
three  months  ended  December  31, 2004 from 2.05% for the three  months  ended
December 31, 2003. The average balance of interest-bearing  liabilities declined
to $1.53  billion for the three  months  ended  December 31, 2004 as compared to
$1.60  billion for the three  months  ended  December  31,  2003.  Average  cost
decreased due to lower market interest rates prevailing during the period.

Interest expense on deposits decreased  $964,000,  or 13.4%, to $6.2 million for
the three months ended  December 31, 2004 from $7.2 million for the three months
ended December 31, 2003.  Interest expense on deposits declined primarily due to
a decrease in the  average  cost of  interest-bearing  deposits to 1.71% for the
three  months  ended  December  31, 2004 from 1.88% for the three  months  ended
December  31,  2003  and  a  decrease  in  deposits.   The  average  balance  of
interest-bearing deposits decreased $74.3 million, or 4.9%, to $1.45 billion for
the three months ended December 31, 2004 from $1.52 billion for the three months
ended December 31, 2003.

Interest expense on Federal Home Loan Bank advances decreased $60,000,  or 5.7%,
to $988,000 for the three  months ended  December 31, 2004 from $1.0 million for
the three months ended  December 31, 2003.  The average  balance  increased $8.4
million, or 11.3%, to $83.0 million for the three months ended December 31, 2004
from $74.6  million for the three months ended  December  31, 2003.  However,  a
decrease in the average cost to 4.76% for the three  months  ended  December 31,
2004 from 5.62% for the

                                      -10-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003 (Cont'd)

three months ended December 31, 2003 offset the increase in the average balance.
The increase in the average balance resulted from additional borrowings,  but at
a lower cost due to their  relatively  short  remaining  term to maturity,  in a
continuing low interest rate environment.

Provision  for Loan Losses.  There was a $34,000  reduction in the provision for
loan  losses  during the three  months  ended  December  31,  2004.  Total loans
increased to $513.8 million at December 31, 2004 from $510.2 million at June 30,
2004.  Non-performing  loans  were $1.7  million,  or 0.33%,  of total  loans at
December 31, 2004, as compared to $2.3 million, or 0.46%, of total loans at June
30,  2004.  The  allowance  for loan  losses  as a  percentage  of  gross  loans
outstanding  was  1.03%  at  December  31,  2004 and  1.01%  at June  30,  2004,
reflecting balances of $5.3 million and $5.1 million, respectively.

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.  We maintained
the  allowance  for  loan  losses  as of  December  31,  2004  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  increased  $55,000,  or  15.5%,  to
$410,000 for the three months ended December 31, 2004,  compared to $355,000 for
the three months ended  December 31, 2003. The increase was primarily the result
of increased fee income from our retail branch network.

Non-Interest Expense.  Non-interest expense increased $1.7 million, or 23.9%, to
$8.8 million for the three months ended December 31, 2004, from $7.1 million for
the three months ended December 31, 2003. The increase consisted  primarily of a
$1.3 million increase in salaries and employee benefits.

Salaries and employee benefits increased $1.3 million, or 33.7%, to $5.3 million
for the three months ended  December 31, 2004,  compared to $4.0 million for the
three  months ended  December  31,  2003.  The increase was the result of normal
salary  increases,  increased  benefit costs and hiring of additional staff. The
pension plan  contribution  expense for the three months ended December 31, 2004
was  $957,000,  as compared to $530,000 for the three months ended  December 31,
2003.  The  increase is due to lower than  expected  investment  returns on plan
assets and higher required  contributions  resulting from the incremental effect
of normal salary increases.

All other elements of  non-interest  expense  totaled $3.4 million for the three
months ended December 31, 2004; an increase of $327,000, or 10.6%, from the $3.1
million  total for the three months  ended  December  31,  2003.  This  increase
primarily  reflects  normal  increases  in the  cost  of  office  occupancy  and
equipment,  including  operating expenses  associated with our new 53,000 square
foot administrative building in Fairfield, New Jersey.

Provision for Income Taxes.  The provision for income taxes decreased  $275,000,
or 19.4%, to $1.1 million for the three months ended December 31, 2004 from $1.4
million for the three months ended December 31, 2003.  The effective  income tax
rates were 26.4% for the three  months  ended  December  31, 2004 as compared to
30.0% for the three months ended December 31, 2003. We attribute the decrease in
income tax expense to a decrease in pre-tax income, which decreased $393,000, or
8.5%, to

                                      -11-


<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Comparison of Operating Results for the Three Months Ended December 31, 2004 and
2003 (Cont'd)

$4.3 million for the three months ended December 31, 2004, from $4.7 million for
the three months ended December 31, 2003.

Comparison of Operating  Results for the Six Months Ended  December 31, 2004 and
2003

General. Net income for the six months ended December 31, 2004 was $7.0 million,
an  increase of $1.5  million,  or 27.3%,  from $5.5  million for the six months
ended December 31, 2003. The increase in net income  resulted  primarily from an
increase in net interest income  partially offset by an increase in salaries and
employee benefits.

Net Interest Income. Net interest income increased by $3.5 million, or 15.9%, to
$25.5 million for the six months ended  December 31, 2004 from $22.0 million for
the six months ended December 31, 2003.  The net interest rate spread  increased
to 2.65% for the six  months  ended  December  31,  2004 from  2.20% for the six
months  ended  December 31, 2003.  The net  interest  margin  increased 45 basis
points to 2.88% for the six months ended  December 31, 2004  compared with 2.43%
for the six months ended December 31, 2003.

The net interest rate spread primarily improved due to a 30 basis point decrease
in the cost of average interest-bearing  liabilities to 1.85% for the six months
ending  December 31,  2004,  from 2.15% for the six months  ending  December 31,
2003.  The net  interest  rate  spread  also  improved  due to a 15 basis  point
increase  in the yield on average  interest-earning  assets to 4.50% for the six
months ending  December 31, 2004,  from 4.35% for the six months ending December
31, 2003.

The increase in the net interest margin is largely reflective of the increase in
the  ratio  of  average  interest-earning  assets  to  average  interest-bearing
liabilities  to 114.3% for the six months ended  December 31, 2004,  from 111.9%
for the six months ended December 31, 2003.

Interest  Income.  Total interest income increased  $419,000,  or 1.0%, to $39.7
million for the six months ended  December 31, 2004,  from $39.3 million for the
six months ended December 31, 2003.  Average  interest-earning  assets decreased
$40.3  million,  or 2.2%, to $1.77 billion for the six months ended December 31,
2004,  from $1.81 billion for the six months ended  December 31, 2003.  However,
the  aforementioned  15 basis  points  increase  in yield  offset the decline in
average  interest-earning assets, leading to the increase in interest income. We
attribute the increase in interest income  primarily to the reinvestment of cash
and cash equivalents in higher yielding loans receivable,  investment securities
held to maturity and mortgage-backed securities held to maturity.

Interest  income  on loans  receivable  decreased  $437,000,  or 2.7%,  to $14.5
million for the six months ended  December 31, 2004,  from $14.9 million for the
six months  ended  December 31, 2003.  The average  balance of loans  receivable
increased  $15.4  million,  or 3.1%, to $511.4  million for the six months ended
December 31,  2004,  from $496.0  million for the six months ended  December 31,
2003.  However, a decrease in the average yield on loans receivable to 5.65% for
the six months  ended  December  31,  2004,  from 6.00% for the six months ended
December  31,  2003,  offset  the  increase  in the  average  balance  of  loans
outstanding.  A  continuing  marketing  effort  contributed  to the  increase in
average loans  receivable.  The lower yield  reflects  generally  lower interest
rates on  originations  and downward rate  adjustments  on  adjustable  rate and
floating rate loans.

Interest income on investment  securities  increased $1.2 million,  or 18.1%, to
$8.1 million for the six

                                      -12-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Comparison of Operating  Results for the Six Months Ended  December 31, 2004 and
2003 (Cont'd)

months  ended  December  31,  2004 from $6.9  million  for the six months  ended
December 31, 2003. The increase  resulted from an increase of $91.2 million,  or
23.2%, in the average balance of investment securities to $485.1 million for the
six months ended  December 31, 2004 from $393.9 million for the six months ended
December  31,  2003.  However,  a decrease  in the average  yield on  investment
securities to 3.34% for the six months ended  December 31, 2004,  from 3.48% for
the six months ended  December 31,  2003,  partially  offset the increase in the
average balance of investment securities. The increased average balance reflects
the  redeployment  of cash and cash  equivalents.  The lower yield resulted from
principal  repayments on older higher  yielding  securities  while new purchases
occurred in a lower interest rate environment.

Interest  income  on  mortgage-backed  securities  held  to  maturity  increased
$513,000,  or 3.1%, to $16.9 million for the six months ended  December 31, 2004
from $16.4 million for the six months ended December 31, 2003. This was a result
of a $58.4 million,  or 8.6%, increase in the average balance of mortgage-backed
securities  held to maturity to $736.8 million for the six months ended December
31, 2004 from $678.4  million for the six months ended  December  31, 2003.  The
increase in the  average  balance  more than offset the  decrease in the average
yield to 4.60% for the six months ended December 31, 2004 from 4.85% for the six
months  ended  December  31,  2003.  The  increase  in the  average  balance  of
mortgage-backed  securities held to maturity  resulted from the  redeployment of
cash  and cash  equivalents.  The  decrease  in yield  resulted  from  principal
repayments  received on older higher  yielding  securities  while new  purchases
occurred in a lower interest rate environment.

Interest income on other  interest-earning  assets decreased $899,000, or 78.6%,
to $245,000 for the six months ended December 31, 2004 from $1.1 million for the
six months ended December 31, 2003.  This was a result of a $157.1  million,  or
100%,  decrease in the average balance of securities  purchased under agreements
to resell and a $48.1  million,  or 59.2%,  decrease in the  average  balance of
other interest-earning assets to $33.2 million for the six months ended December
31, 2004 from $81.3  million for the six months ended  December 31, 2003.  There
was a 52 basis point  increase in the  average  yield on other  interest-earning
assets to 1.48% for the six months ended  December 31, 2004,  from 0.96% for the
six months  ended  December 31, 2003.  The  substantial  decrease in the average
balances  was due to the use of assets in these  categories  to invest in higher
yielding securities.  We attribute the improvement in yield to the dividend paid
on Federal Home Loan Bank stock relative to short-term market interest rates.

Interest Expense.  Total interest expense  decreased $3.1 million,  or 17.8%, to
$14.3 million for the six months ended  December 31, 2004 from $17.4 million for
the six months ended December 31, 2003. The decrease  resulted  primarily from a
decrease in the average cost of  interest-bearing  liabilities  to 1.85% for the
six months ended  December 31, 2004 from 2.15% for the six months ended December
31, 2003. The average balance of interest-bearing  liabilities declined to $1.55
billion for the six months ended  December 31, 2004 as compared to $1.62 billion
for the six months ended December 31, 2003.  Average cost decreased due to lower
market interest rates prevailing during the period.

Interest expense on deposits decreased $2.9 million,  or 19.1%, to $12.3 million
for the six months ended December 31, 2004 from $15.2 million for the six months
ended December 31, 2003. Interest expense on deposits declined due to a decrease
in the  average  cost of  interest-bearing  deposits to 1.68% for the six months
ended  December 31, 2004 from 1.98% for the six months ended  December 31, 2003.
The average balance of  interest-bearing  deposits  decreased $79.0 million,  or
5.1%,  to $1.46  billion for the six months  ended  December 31, 2004 from $1.54
billion for the six months ended December 31, 2003.

                                      -13-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Comparison of Operating  Results for the Six Months Ended  December 31, 2004 and
2003 (Cont'd)

Interest expense on Federal Home Loan Bank advances decreased $135,000, or 6.4%,
to $2.0 million for the six months ended December 31, 2004 from $2.1 million for
the six months ended  December  31, 2003.  The average  balance  increased  $9.4
million,  or 12.5%,  to $84.5 million for the six months ended December 31, 2004
from $75.1  million for the six months  ended  December  31,  2003.  However,  a
decrease in the average cost to 4.68% for the six months ended December 31, 2004
from 5.63% for the six months ended December 31, 2003 offset the increase in the
average  balance.  The increase in the average balance  resulted from additional
borrowings,  but at a lower cost due to their relatively short remaining term to
maturity, in a continuing low interest rate environment.

Provision for Loan Losses.  There was an $117,000 provision for loan losses made
during the six months ended December 31, 2004.  Total loans  increased to $513.8
million  at  December   31,  2004  from  $510.2   million  at  June  30,   2004.
Non-performing loans were $1.7 million, or 0.33%, of total loans at December 31,
2004,  as compared to $2.3 million,  or 0.46%,  of total loans at June 30, 2004.
The  allowance for loan losses as a percentage  of gross loans  outstanding  was
1.03% at December  31, 2004 and 1.01% at June 30, 2004,  reflecting  balances of
$5.3 million and $5.1 million, respectively.

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.  We maintained
the  allowance  for  loan  losses  as of  December  31,  2004  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  increased  $111,000,  or 14.0%,  to
$904,000 for the six months ended December 31, 2004 compared to $793,000 for the
six months ended  December 31, 2003.  The increase was primarily the result of a
gain from the sale of a  trust-preferred  security and increased fee income from
our retail branch network during the six months ended December 31, 2004.

At  December  31,  2004,  we had a $3.9  million  investment  in bank owned life
insurance.  The  returns  on the  investment  of the cash  value  of the  policy
generate non-interest income. We acquired this investment in connection with our
acquisition of West Essex Bank in 2003; it covers the former president and chief
executive officer and former chief lending officer of West Essex Bank.

During the six months  ending  December 31, 2004,  we recognized a $71,000 gain,
included in  non-interest  income,  from the sale of a security in our available
for sale  portfolio.  There was no such gain  recorded in the six months  ending
December 31, 2003.

Non-Interest  Expense.  Excluding merger related expenses,  non-interest expense
increased  $2.3  million,  or 16.2%,  to $16.6  million for the six months ended
December 31,  2004,  from $14.2  million for the six months  ended  December 31,
2003. The increase  consisted  primarily of a $1.8 million  increase in salaries
and employee benefits.

The merger  related  expenses of $592,000  recorded  during the six months ended
December 31, 2003,  consisted  primarily of fees due to attorneys  and financial
advisors.

Salaries  and employee  benefits  increased  $1.8  million,  or 22.0%,  to $10.0
million  for the  six  months

                                      -14-

<PAGE>


                    KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 ---------------------------------------------


Comparison of Operating  Results for the Six Months Ended  December 31, 2004 and
2003 (Cont'd)

ended  December  31,  2004,  compared to $8.2  million for the six months  ended
December 31,  2003.  The  increase  was the result of normal  salary  increases,
increased benefit costs and hiring of additional staff,  including four business
development  officers.  The pension plan contribution expense for the six months
ended  December 31, 2004 was $1.6  million,  as compared to $767,000 for the six
months  ended  December 31,  2003.  The  increase is due to lower than  expected
investment  returns on plan assets and higher required  contributions  resulting
from the incremental effect of normal salary increases.

All other  elements of  non-interest  expense  totaled  $6.6 million for the six
months ended December 31, 2004; an increase of $507,000,  or 8.4%, from the $6.1
million  total  for the six  months  ended  December  31,  2003.  This  increase
primarily  reflects  normal  increases  in the  cost  of  office  occupancy  and
equipment,  including  operating expenses  associated with our new 53,000 square
foot administrative building in Fairfield, New Jersey.

Provision for Income Taxes.  The provision for income taxes increased  $329,000,
or 13.8%,  to $2.7 million for the six months ended  December 31, 2004 from $2.4
million for the six months ended  December 31, 2003.  The  effective  income tax
rates were 27.9% for the six months ended December 31, 2004 as compared to 30.0%
for the six months ended  December 31, 2003. We attribute the increase in income
tax expense to an increase in pre-tax income,  which increased $1.8 million,  or
22.4%,  to $9.7  million for the six months ended  December 31, 2004,  from $7.9
million for the six months ended December 31, 2003.

                                      -15-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Liquidity and Capital Resources

The Bank is required to have enough investments that qualify as liquid assets in
order to maintain  sufficient  liquidity  to ensure a safe and sound  operation.
Liquidity may increase or decrease  depending upon the availability of funds and
comparative   yields  on  investments  in  relation  to  the  return  on  loans.
Historically,  the Bank has maintained liquid assets above levels believed to be
adequate to meet the  requirements  of normal  operations,  including  potential
deposit outflows.  The Bank reviews cash flow projections  regularly and updates
them to assure maintenance of adequate liquidity.

The Bank's liquidity,  represented by cash and cash equivalents, is a product of
its operating, investing and financing activities.

The Bank's primary sources of funds are deposits, amortization,  prepayments and
maturities of mortgage-backed  securities and outstanding  loans,  maturities of
investment  securities and other short-term  investments and funds provided from
operations.  While  scheduled  payments  from  the  amortization  of  loans  and
mortgage-backed  securities  and maturing  investment  securities and short-term
investments are relatively predictable sources of funds, deposit flows, loan and
mortgage-backed   securities  prepayments  are  greatly  influenced  by  general
interest  rates,  economic  conditions and  competition.  In addition,  the Bank
invests  excess  funds in  short-term  interest-earning  assets,  which  provide
liquidity to meet lending  requirements.  The Bank also  generates  cash through
borrowings.

Liquidity  management  is  both a  daily  and  long-term  function  of  business
management.  Excess  liquidity is generally  invested in short-term  investments
such as overnight deposits or U.S. agency securities.  The Bank uses its sources
of funds primarily to meet ongoing commitments,  to pay maturing certificates of
deposit and savings  withdrawals,  to fund loan  commitments and to maintain its
portfolio of mortgage-backed  securities and investment securities.  If the Bank
requires  funds  beyond  its  ability to  generate  them  internally,  borrowing
agreements  exist with the Federal Home Loan Bank of New York (the "FHLB") which
provides an additional source of funds. At December 31, 2004,  advances from the
FHLB amounted to $82.0 million.

The Bank  anticipates  that it will have sufficient  funds available to meet its
current  loan  commitments.  At  December  31,  2004,  the Bank has  outstanding
commitments  to  originate  loans  of $21.8  million.  Certificates  of  deposit
scheduled  to mature in one year or less at December 31,  2004,  totaled  $630.9
million.  Management's  policy is to maintain  deposit  rates at levels that are
competitive  with other local financial  institutions.  Based on the competitive
rates and on  historical  experience,  management  believes  that a  significant
portion of maturing deposits will remain with the Bank.

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, 2004, Kearny Federal Savings Bank exceeded all capital requirements
of the Office of Thrift Supervision (the "OTS").

                                      -16-


<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------


Liquidity and Capital Resources (Cont'd.)

The following table sets forth the Bank's capital position at December 31, 2004,
as compared to the minimum regulatory capital requirements:

<TABLE>
<CAPTION>
                                                                December 31, 2004 (Unaudited)
                                        -------------------------------------------------------------------------------
                                                                                                      To Be Well
                                                                                                  Capitalized Under
                                                                        Minimum Capital           Prompt Corrective
                                                 Actual                   Requirements            Action Provisions
                                        -------------------------    -----------------------    -----------------------
                                          Amount         Ratio        Amount        Ratio        Amount        Ratio
                                        ------------    ---------    ----------   ----------    ---------    ----------
                                                                        (In Thousands)
<S>                                       <C>           <C>        <C>             <C>        <C>             <C>
Total Capital
  (to risk-weighted assets)                 219,456       33.76%      $ 52,010        8.00%     $ 65,012        10.00%

Tier 1 Capital
  (to risk-weighted assets)                 206,301       31.73%             -           -        39,008         6.00%

Core (Tier 1) Capital
  (to adjusted total assets)                206,301       11.55%        53,577        3.00%       89,295         5.00%

Tangible Capital
  (to adjusted total assets)                206,301       11.55%        26,788        1.50%        -             -

</TABLE>
                                      -17-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
            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 that can be
sustained  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 reprice or mature within a
given period. The difference,  or the interest rate repricing "gap", provides an
indication of the extent to which an institution's  interest rate spread will be
affected by changes in interest  rates.  A gap is  considered  positive when the
amount of  interest-rate  sensitive  assets exceeds the amount of  interest-rate
sensitive  liabilities,  and is considered  negative 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 reprice 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 our assets and liabilities,  including review
of our short term liquidity  position;  loan and deposit  pricing and production
volumes and alternative  funding sources;  current  investments;  average lives,
durations and repricing  frequencies of loans and  securities;  and a variety of
other asset and  liability  management  topics.  The results of the  committee's
quarterly review are reported to the full board, which adjusts our 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 ("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.  The NPV ratio,  under any interest rate scenario,  is defined 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.  The following table sets forth the Bank's NPV as of
September  30,  2004,  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, 2004.

<TABLE>
<CAPTION>
                                                              At September 30, 2004
                            ----------------------------------------------------------------------------
                                                                              Net Portfolio Value
                              Net Portfolio Value                       as % of Present Value of Assets
                          -----------------------   ----------------------------------------------------
                                                                       Net Portfolio       Basis Point
   Changes in Rates       $ Amount      $ Change      % Change          Value Ratio          Change
-----------------------   ---------   -----------   --------------     --------------     --------------
                                                   (In Thousands)
<S>  <C>               <C>           <C>               <C>              <C>               <C>
       +300 bp            166,167      -136,551          -45%              9.46%            -635 bp
       +200 bp            212,904       -89,814          -30%             11.76%            -405 bp
       +100 bp            258,914       -43,804          -14%             13.89%            -191 bp
          0 bp            302,718             -            -              15.81%               -
       -100 bp            330,752       +28,034           +9%             16.95%            +114 bp

</TABLE>

                                      -18-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
            ---------------------------------------------------------


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
period being  measured  and also  assumes  that a particular  change in interest
rates is reflected  uniformly  across the yield curve regardless of the duration
to  maturity  or  repricing  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.

                                      -19-

<PAGE>

                     KEARNY FINANCIAL CORP. AND SUBSIDIARIES
                             CONTROLS AND PROCEDURES
                             -----------------------


As of the end of the period  covered by this report,  based on an  evaluation of
the Company's  disclosure  controls and procedures (as defined in Rule 13a-15(e)
under the  Securities  and  Exchange Act of 1934),  each of the Chief  Executive
Officer and the Chief  Financial  Officer of the Company has concluded  that the
Company's  disclosure  controls  and  procedures  are  effective  to ensure that
information  required to be disclosed by the Company in its Exchange Act reports
is recorded,  processed,  summarized  and reported  within the  applicable  time
periods specified by the SEC's rules and forms.

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.

                                      -20-

<PAGE>

                             KEARNY FINANCIAL CORP.

                                     PART II


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

                    At December 31, 2004,  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 2.        Unregistered Sales of Equity Securities and Use of Proceeds
                    -----------------------------------------------------------

                    Not applicable.

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

                    Not applicable.

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

                    None.

     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 Allan Beardslee (1)
                             10.3     Employment Agreement between Kearny Federal Savings Bank and Albert E. Gossweiler (1)
                             10.4     Employment Agreement between Kearny Federal Savings Bank and Sharon Jones (1)
                             10.5     Employment Agreement between Kearny Federal Savings Bank and William C. Ledgerwood (1)
                             10.6     Employment Agreement between Kearny Federal Savings Bank and Erika Sacher (1)
                             10.7     Employment Agreement between Kearny Federal Savings Bank and Patrick M. Joyce (1)
                             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)
                             11.0     Statements re: computation of per share earnings (Filed herewith).
                             31.0     Rule 13a-14(a)/15d-14(a) Certifications (Filed herewith).
                             32.0     Section 1350 Certifications (Filed herewith).
</TABLE>

                             ---------------------------------------------------
                                 (1)  Incorporated    by    reference   to   the
                                      identically   numbered   exhibit   to  the
                                      Registrant's   Registration  Statement  on
                                      Form S-1 (File No. 333-118815).

                                      -21-

<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 18, 2005       By:   /s/John N. Hopkins
       ---------------------         -------------------------------------------
                                     John N. Hopkins
                                     President and Chief Executive Officer
                                     (Duly  authorized  officer  and  principal
                                     executive officer)

Date:  February 18, 2005       By:   /s/Albert E. Gossweiler
       ---------------------         -------------------------------------------
                                     Albert E. Gossweiler
                                     Senior Vice President and Chief  Financial
                                     Officer
                                     (Principal financial officer)

                                      -22-