Kearny Financial (KRNY) of Fairfield, N.J., has decided to skip its next quarterly dividend payment despite a proposal from the Federal Reserve Board that would prohibit thrift holding companies from missing dividend payments.
Under its previous regulator, the Office of Thrift Supervision, Kearny Financial could apply for and obtain approval to waive its quarterly dividend payment to its majority shareholder, Kearny Mutual Holding Co., said Eric Heyer, chief financial officer at Kearny Financial.
The Fed, which became Kearny's regulator when the OTS was eliminated, has proposed disallowing such waivers, though it is awaiting public comment before issuing a final rule. Until then, the $2.9 billion-asset Kearny has opted not to pay its next dividend.
The new Fed rule requires annual member approval of dividends, which Kearny says would cost the thrift an additional $300,000 to $600,000 per year. Kearny Mutual Holding would also incur a "incur significant tax liability" when it received the dividend payment, Kearny said in a news release.
The quarterly dividend payment was scheduled to be paid in July and Kearny has not yet decided whether it will pay future quarterly dividends. "We're left in a little bit of limbo here," Heyer said.