UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
x
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) of
THE
SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended:
September 30,
2008
OR
o
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:
000-50592
K-FED
BANCORP
(Exact
name of registrant as specified in its charter)
|
Federal
|
|
20-0411486
|
|
(State
or other jurisdiction of incorporation)
|
|
(I.R.S.
Employer Identification No.)
|
|
|
|
|
|
1359 N. Grand Avenue, Covina,
CA
|
|
91724
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
(800)
524-2274
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Sections 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
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange act. (Check one):
Large
accelerated filer
o
Accelerated
filer
o
Non-accelerated filer
o
Smaller Reporting Company
x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
o
No
x
APPLICABLE
ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of
the issuer’s classes of common stock, as of the latest practicable
date:
Common
Stock, $.01 par value – 13,414,813 shares outstanding as of November 3,
2008.
Form
10-Q
K-FED
BANCORP
Table
of Contents
|
|
|
Page
|
|
Part
I.
|
Financial Information
|
|
|
|
|
|
|
Item
1:
|
|
|
|
|
|
1
|
|
|
|
2
|
|
|
|
3
|
|
|
|
4
|
|
|
|
5
|
|
|
|
|
|
Item
2:
|
|
7
|
|
|
|
|
|
Item
3:
|
|
15
|
|
|
|
|
|
Item
4:
|
|
16
|
|
|
|
|
|
Part
II.
|
Other Information
|
|
|
|
|
|
|
Item
1:
|
|
18
|
|
Item
1A:
|
|
18
|
|
Item
2:
|
|
18
|
|
Item
3:
|
|
18
|
|
Item
4:
|
|
18
|
|
Item
5:
|
|
18
|
|
Item
6:
|
|
18
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
Part
I — FINANCIAL INFORMATION
Item
1. Financial Statements
K-FED
BANCORP AND SUBSIDIARY
Consolidated
Statements of Financial Condition
(Unaudited)
(Dollars
in thousands, except share data)
|
|
|
September
30
2008
|
|
June
30
2008
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$
|
8,486
|
|
$
|
11,655
|
|
|
Federal
funds sold
|
|
|
44,110
|
|
|
32,660
|
|
|
Total
cash and cash equivalents
|
|
|
52,596
|
|
|
44,315
|
|
|
Interest
earning deposits in other financial institutions
|
|
|
7,325
|
|
|
6,925
|
|
|
Securities
available-for-sale
|
|
|
7,776
|
|
|
8,539
|
|
|
Securities
held-to-maturity, fair value of $7,124 and
$7,308 at
September 30, 2008 and June 30, 2008, respectively
|
|
|
7,303
|
|
|
7,504
|
|
|
Federal
Home Loan Bank stock, at cost
|
|
|
12,732
|
|
|
12,540
|
|
|
Loans
receivable
|
|
|
742,660
|
|
|
745,435
|
|
|
Deferred
net loan origination costs
|
|
|
103
|
|
|
33
|
|
|
Net
discount on purchased loans
|
|
|
(70
|
)
|
|
(48
|
)
|
|
Allowance
for loan losses
|
|
|
(3,277
|
)
|
|
(3,229
|
)
|
|
Loans
receivable, net
|
|
|
739,416
|
|
|
742,191
|
|
|
Accrued
interest receivable
|
|
|
3,343
|
|
|
3,278
|
|
|
Premises
and equipment, net
|
|
|
2,859
|
|
|
3,059
|
|
|
Core
deposit intangible
|
|
|
203
|
|
|
226
|
|
|
Goodwill
|
|
|
3,950
|
|
|
3,950
|
|
|
Bank-owned
life insurance
|
|
|
11,527
|
|
|
11,408
|
|
|
Other
real estate owned
|
|
|
1,079
|
|
|
1,045
|
|
|
Other
assets
|
|
|
4,019
|
|
|
4,036
|
|
|
Total
assets
|
|
$
|
854,128
|
|
$
|
849,016
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
Noninterest
bearing
|
|
$
|
48,011
|
|
$
|
43,267
|
|
|
Interest
bearing
|
|
|
461,163
|
|
|
451,791
|
|
|
Total
deposits
|
|
|
509,174
|
|
|
495,058
|
|
|
Federal
Home Loan Bank advances, short-term
|
|
|
78,000
|
|
|
28,000
|
|
|
Federal
Home Loan Bank advances, long-term
|
|
|
147,015
|
|
|
207,019
|
|
|
State
of California time deposit
|
|
|
25,000
|
|
|
25,000
|
|
|
Accrued
expenses and other liabilities
|
|
|
3,855
|
|
|
3,211
|
|
|
Total
liabilities
|
|
|
763,044
|
|
|
758,288
|
|
|
Commitments
and contingent liabilities
|
|
|
—
|
|
|
—
|
|
|
Stockholders’
equity
|
|
|
|
|
|
|
|
|
Nonredeemable
serial preferred stock, $.01 par value;
2,000,000
shares authorized; issued and outstanding — none
|
|
|
—
|
|
|
—
|
|
|
Common
stock, $0.01 par value; 18,000,000 authorized;
September
30, 2008 — 14,713,440 shares issued and outstanding.
June
30, 2008 — 14,713,440 shares issued and outstanding.
|
|
|
147
|
|
|
147
|
|
|
Additional
paid-in capital
|
|
|
58,625
|
|
|
58,448
|
|
|
Retained
earnings
|
|
|
51,971
|
|
|
51,035
|
|
|
Accumulated
other comprehensive income, net of tax
|
|
|
23
|
|
|
20
|
|
|
Unearned
employee stock ownership plan shares
|
|
|
(2,502
|
)
|
|
(2,616
|
)
|
|
Treasury
stock, at cost (September 30, 2008 — 1,298,627 shares;
June
30, 2008 — 1,243,134 shares)
|
|
|
(17,180
|
)
|
|
(16,306
|
)
|
|
Total
stockholders’ equity
|
|
|
91,084
|
|
|
90,728
|
|
|
Total
liabilities and stockholders’ equity
|
|
$
|
854,128
|
|
$
|
849,016
|
|
|
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
K-FED BANCORP AND
SUBSIDIARY
Consolidated
Statements of Income and Comprehensive Income
(Unaudited)
(Dollars
in thousands, except per share data)
|
|
|
Three
Months Ended
September
30
|
|
|
|
|
2008
|
|
2007
|
|
|
Interest
Income
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$
|
10,900
|
|
$
|
10,273
|
|
|
Interest
on securities, taxable
|
|
|
174
|
|
|
373
|
|
|
Federal
Home Loan Bank dividends
|
|
|
192
|
|
|
119
|
|
|
Other
interest
|
|
|
239
|
|
|
222
|
|
|
Total
interest income
|
|
|
11,505
|
|
|
10,987
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
Interest
on deposits
|
|
|
3,509
|
|
|
4,133
|
|
|
Interest
on borrowed funds
|
|
|
2,721
|
|
|
2,327
|
|
|
Total
interest expense
|
|
|
6,230
|
|
|
6,460
|
|
|
Net
interest income
|
|
|
5,275
|
|
|
4,527
|
|
|
Provision
for loan losses
|
|
|
363
|
|
|
168
|
|
|
Net
interest income after provision
for
loan losses
|
|
|
4,912
|
|
|
4,359
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
Service
charges and fees
|
|
|
622
|
|
|
586
|
|
|
ATM
fees and charges
|
|
|
453
|
|
|
366
|
|
|
Referral
commissions
|
|
|
76
|
|
|
63
|
|
|
Loss
on equity investment
|
|
|
(66
|
)
|
|
(105
|
)
|
|
Bank-owned
life insurance
|
|
|
119
|
|
|
114
|
|
|
Other
noninterest income
|
|
|
6
|
|
|
17
|
|
|
Total
noninterest income
|
|
|
1,210
|
|
|
1,041
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
Salaries
and benefits
|
|
|
1,990
|
|
|
2,007
|
|
|
Occupancy
and equipment
|
|
|
596
|
|
|
562
|
|
|
ATM
expense
|
|
|
365
|
|
|
317
|
|
|
Advertising
and promotional
|
|
|
102
|
|
|
48
|
|
|
Professional
services
|
|
|
222
|
|
|
246
|
|
|
Postage
|
|
|
67
|
|
|
69
|
|
|
Telephone
|
|
|
121
|
|
|
126
|
|
|
Other
operating expense
|
|
|
472
|
|
|
478
|
|
|
Total
noninterest expense
|
|
|
3,935
|
|
|
3,853
|
|
|
Income
before income tax expense
|
|
|
2,187
|
|
|
1,547
|
|
|
Income
tax expense
|
|
|
778
|
|
|
554
|
|
|
Net
income
|
|
$
|
1,409
|
|
$
|
993
|
|
|
Comprehensive
Income
|
|
$
|
1,412
|
|
$
|
1,076
|
|
|
Earnings
per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.10
|
|
$
|
0.07
|
|
|
Diluted
|
|
$
|
0.10
|
|
$
|
0.07
|
|
|
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
|
K-FED
BANCORP AND SUBSIDIARY
Consolidated Statements of Stockholders’
Equity
And
Other Comprehensive Income
(Unaudited)
(Dollars
in thousands, except share and per share data)
|
|
|
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
Treasury
Stock
|
|
|
|
|
|
|
Comprehensive
Income
|
|
Shares
|
|
Amount
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss,
net
|
|
Unearned
ESOP
Shares
|
|
Shares
|
|
Amount
|
|
Total
|
|
|
Balance
June 30, 2008
|
|
|
|
|
14,713,440
|
|
$
|
147
|
|
$
|
58,448
|
|
$
|
51,035
|
|
$
|
20
|
|
$
|
(2,616
|
)
|
(1,243,134
|
)
|
$
|
(16,306
|
)
|
$
|
90,728
|
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income for the three months ended September 30, 2008
|
|
$
|
1,409
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,409
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
1,409
|
|
|
Other
comprehensive income – unrealized gain on securities, net of
tax
|
|
|
3
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
—
|
|
|
—
|
|
|
3
|
|
|
Total
comprehensive income
|
|
$
|
1,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
paid ($0.10 per share)
*
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(473
|
)
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(473
|
)
|
|
Purchase
of treasury stock
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(55,493
|
)
|
|
(874
|
)
|
|
(874
|
)
|
|
Stock
options earned
|
|
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
79
|
|
|
Allocation
of stock awards
|
|
|
|
|
—
|
|
|
—
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
101
|
|
|
Allocation
of ESOP common stock
|
|
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
114
|
|
—
|
|
|
—
|
|
|
111
|
|
|
Balance
September 30, 2008
|
|
|
|
|
14,713,440
|
|
$
|
147
|
|
$
|
58,625
|
|
$
|
51,971
|
|
$
|
23
|
|
$
|
(2,502
|
)
|
(1,298,627
|
)
|
$
|
(17,180
|
)
|
$
|
91,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
K-Fed Mutual Holding Company waived its receipt of dividends on the
8,861,750 shares it owns.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
K-FED
BANCORP AND SUBSIDIARY
Consolidated Statements of Cash
Flows
(Unaudited)
|
|
|
Three
Months Ended
September
30
|
|
|
|
|
2008
|
|
2007
|
|
|
Operating
Activities
|
|
|
|
|
|
|
Net
income
|
|
$
|
1,409
|
|
$
|
993
|
|
|
Adjustments
to reconcile net income to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Amortization
of net premiums on securities
|
|
|
4
|
|
|
6
|
|
|
Amortization
of net premiums on loan purchases
|
|
|
22
|
|
|
55
|
|
|
Amortization
of net loan origination fees
|
|
|
(55
|
)
|
|
—
|
|
|
Provision
for loan losses
|
|
|
363
|
|
|
168
|
|
|
Federal
Home Loan Bank stock dividend
|
|
|
(192
|
)
|
|
(119
|
)
|
|
Depreciation
and amortization
|
|
|
213
|
|
|
205
|
|
|
Amortization
of core deposit intangible
|
|
|
23
|
|
|
28
|
|
|
Loss
on equity investment
|
|
|
66
|
|
|
105
|
|
|
Increase
in cash surrender value of bank-owned life insurance
|
|
|
(119
|
)
|
|
(114
|
)
|
|
Accretion
of net premiums on purchased certificates of deposits
|
|
|
(37
|
)
|
|
(37
|
)
|
|
Amortization
of debt exchange costs
|
|
|
(4
|
)
|
|
6
|
|
|
Allocation
of ESOP common stock
|
|
|
111
|
|
|
158
|
|
|
Allocation
of stock awards
|
|
|
101
|
|
|
98
|
|
|
Stock
options earned
|
|
|
79
|
|
|
79
|
|
|
Net
increase in accrued interest receivable
|
|
|
(65
|
)
|
|
(90
|
)
|
|
Net
decrease (increase) in other assets
|
|
|
991
|
|
|
(130
|
)
|
|
Net
increase in accrued expenses and other liabilities
|
|
|
644
|
|
|
653
|
|
|
Net
cash provided by operating activities
|
|
|
3,554
|
|
|
2,064
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Proceeds
from maturities and principal repayments of available-for-sale
securities
|
|
|
766
|
|
|
413
|
|
|
Proceeds
from maturities and principal repayments of held-to-maturity
securities
|
|
|
201
|
|
|
826
|
|
|
Increase
in interest earning deposits at other institutions
|
|
|
(400
|
)
|
|
—
|
|
|
Decrease
(increase) in loans
|
|
|
1,366
|
|
|
(8,770
|
)
|
|
Purchases
of FHLB stock
|
|
|
—
|
|
|
(148
|
)
|
|
Purchases
of premises and equipment
|
|
|
(12
|
)
|
|
(91
|
)
|
|
Net
cash provided by (used in) investing activities
|
|
|
1,921
|
|
|
(7,770
|
)
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Proceeds
from FHLB advances
|
|
|
—
|
|
|
18,501
|
|
|
Repayment
of FHLB advances
|
|
|
(10,000
|
)
|
|
(28,501
|
)
|
|
Dividends
paid on common stock
|
|
|
(473
|
)
|
|
(471
|
)
|
|
Purchases
of treasury stock
|
|
|
(874
|
)
|
|
—
|
|
|
Net
increase in deposits
|
|
|
14,153
|
|
|
14,592
|
|
|
Exercise
of stock options
|
|
|
—
|
|
|
4,121
|
|
|
Net
cash provided by financing activities
|
|
|
2,806
|
|
|
4,121
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
8,281
|
|
|
(1,585
|
)
|
|
Beginning
cash and cash equivalents
|
|
|
44,315
|
|
|
26,732
|
|
|
Ending
cash and cash equivalents
|
|
$
|
52,596
|
|
$
|
25,147
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these unaudited consolidated
financial statements
|
K-FED
BANCORP AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
Note
1 –
Nature of Business
and Significant Accounting Policies
Nature of
Business
: K-Fed Bancorp (or the “Company”) is a majority-owned
subsidiary of K-Fed Mutual Holding Company (or the “Parent”). The Company and
its Parent are holding companies that are federally chartered. The Company’s
sole subsidiary, Kaiser Federal Bank (or the “Bank”), is a federally chartered
savings association, which provides retail and commercial banking services to
individuals and business customers from its nine branch locations throughout
California. While the Bank originates all types of retail and commercial real
estate loans, the majority of its residential real estate loans have been
purchased from other financial institutions.
The
Company’s business activities generally are limited to passive investment
activities and oversight of our investment in the Bank. Unless the context
otherwise requires, all references to the Company include the Bank and the
Company on a consolidated basis.
Basis of
Presentation:
The financial statements of K-Fed Bancorp have
been prepared in conformity with accounting principles generally accepted in the
United States (“GAAP”) for interim financial information and predominant
practices followed by the financial services industry, and are unaudited. In the
opinion of the Company’s management, all adjustments consisting of normal
recurring accruals necessary for (i) a fair presentation of the financial
condition and results of operations for the interim periods included herein and
(ii) to make such statements not misleading have been made.
The
results of operations for the three months ended September 30, 2008 are not
necessarily indicative of the results of operations that may be expected for any
other interim period or for the fiscal year ending June 30, 2009. Certain
information and note disclosures normally included in the Company’s annual
financial statements have been condensed or omitted. Therefore, these
consolidated financial statements and notes thereto should be read in
conjunction with the consolidated financial statements and notes included in the
2008 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Principles of
Consolidation:
The consolidated financial statements presented
in this quarterly report include the accounts of K-Fed Bancorp and its
wholly-owned subsidiary, Kaiser Federal Bank. All material intercompany balances
and transactions have been eliminated in consolidation. K-Fed Mutual Holding
Company is owned by the depositors of the bank. These financial statements do
not include the transactions and balances of K-Fed Mutual Holding
Company.
Use of
Estimates:
The preparation of consolidated financial
statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of income and expenses during the
reporting period. Changes in these estimates and assumptions are considered
reasonably possible and may have a material impact on the consolidated financial
statements and thus actual results could differ from the amounts reported and
disclosed herein. Material estimates that are particularly susceptible to
significant change in the near term relate to the determination of the allowance
for loan losses, the valuation of financial instruments, and mortgage-loan
prepayment assumptions used to determine the effective interest amortization of
loan purchase premiums and discounts.
Newly
Issued Accounting Standards:
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 141R,
Business Combinations
. SFAS
141R replaces the current standard on business combinations and will
significantly change the accounting for and reporting of business combinations
in consolidated financial statements. This statement requires an entity to
measure the business acquired at fair value and to recognize goodwill
attributable to any noncontrolling interests (previously referred to as minority
interests) rather than just the portion attributable to the
acquirer. The statement will also result in fewer exceptions to the
principle of measuring assets acquired and liabilities assumed in a business
combination at fair value. In addition, the statement will result in
payments to third parties for consulting, legal, and similar services associated
with an acquisition to be recognized as expenses when incurred rather than
capitalized as part of the business combination. SFAS 141R is
effective for fiscal years beginning on or after December 15, 2008. The adoption
of the is statement is not expected to bave a material effect on the financial
statements of the Company.
Adoption
of New Accounting Standards:
In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value
and expands disclosures about fair value measurements. This Statement
establishes a fair value hierarchy about the assumptions used to measure fair
value and clarifies assumptions about risk and the effect of a restriction on
the sale or use of an asset. The standard is effective for fiscal years
beginning after November 15, 2007. In February 2008, the FASB issued Staff
Position (FSP) 157-2, Effective Date of FASB Statement No. 157. This FSP delays
the effective date of FAS 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value on a
recurring basis (at least annually) to fiscal years beginning after November 15,
2008, and interim periods within those fiscal years. The impact of adoption was
not material. See Note 3, “Fair Value” for disclosures related to the
adoption of SFAS 157.
In
February 2007, the FASB issued Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. The standard provides companies with
an option to report selected financial assets and liabilities at fair value and
establishes presentation and disclosure requirements designed to facilitate
comparisons between companies that choose different measurement attributes for
similar types of assets and liabilities. The Company did not elect the fair
value option for any financial assets or financial liabilities as of July 1,
2008, the effective date of the standard.
Note
2 –
Earnings Per
Share
Basic
earnings per common share is net income divided by the weighted average number
of common shares outstanding during the period. ESOP shares are considered
outstanding for this calculation unless unearned. Diluted earnings per common
share includes the dilutive effect of additional potential common shares
issuable under stock options and stock awards.
|
|
|
|
|
|
|
Three
months ended
September
30,
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
2007
|
|
|
|
|
(Dollars
in thousands)
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,409
|
|
|
|
$
|
993
|
|
|
Weighted
average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
13,499,626
|
|
|
|
|
13,558,404
|
|
|
Basic
earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.10
|
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share assuming dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income available to common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,409
|
|
|
|
$
|
993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
13,499,626
|
|
|
|
|
13,558,404
|
|
|
Dilutive
effect of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Dilutive
effect of stock awards
|
|
|
|
|
|
|
|
|
|
|
|
|
6,838
|
|
|
|
|
—
|
|
|
Average
common shares and dilutive potential common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
13,506,464
|
|
|
|
|
13,558,404
|
|
|
Diluted
earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.10
|
|
|
|
$
|
0.07
|
|
For the
three ended September 30, 2008 and 2007, outstanding stock options to purchase
322,400 and 348,400,shares, respectively, were anti-dilutive and not
considered in computing diluted earnings per common share.
Note 3 –
Fair
Value
Statement
157 establishes a fair value hierarchy which requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. The standard describes three levels of inputs that may be
used to measure fair value:
Level 1
: Quoted prices
(unadjusted) or identical assets or liabilities in active markets that the
entity has the ability to access as of the measurement date.
Level 2
: Significant other
observable inputs other than Level 1 prices such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market
data.
Level 3
: Significant
unobservable inputs that reflect a reporting entity’s own assumptions about the
assumptions that market participants would use in pricing an asset or
liability.
The fair
values of securities available for sale are determined by obtaining quoted
prices on nationally recognized securities exchanges (Level 1inputs) or matrix
pricing, which is a mathematical technique widely used to in the industry to
value debt securities without relying exclusively on quoted prices for the
specific securities but rather by relying on the securities’ relationship to
other benchmark quoted securities (Level 2 inputs).
Assets
and liabilities measured at fair value on a recurring basis are summarized
below:
|
|
|
|
Fair
Value Measurements at September 30, 2008 Using
|
|
|
|
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
|
Significant
Other Observable Inputs (Level 2)
|
|
Significant
Unobservable Inputs
(Level
3)
|
|
Assets
at September 30, 2008:
|
|
|
|
|
|
|
|
|
Available
for sale securities
|
$7,776
|
|
—
|
|
$ 7,776
|
|
—
|
|
|
The
following assets and liabilities were measured at fair value on a non-recurring
basis:
|
|
|
|
Fair
Value Measurements at September 30, 2008 Using
|
|
|
|
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
|
Significant
Other Observable Inputs (Level 2)
|
|
Significant
Unobservable Inputs
(Level
3)
|
|
Assets
at September 30, 2008:
|
|
|
|
|
|
|
|
|
Impaired
loans
|
$4,865
|
|
—
|
|
—
|
|
$ 4,865
|
Impaired
loans, which are measured for impairment using the fair value of the collateral
for collateral dependent loans, had a carrying amount of $5,603,000 as compared
to $3,842,000 at June 30, 2008.
The fair value of collateral is
calculated using a third party appraisal. The valuation allowance for
these loans was $738,000 at September 30, 2008 as compared to $334,000 at June
30, 2008. An additional provision for loan losses of $404,000 was
made during the quarter ended September 30, 2008 relating to impaired
loans.
(Level 3 inputs).
Real
estate owned of $1,079,000 was based on the fair value of the collateral (Level
3 inputs).
|
Item 2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Forward-Looking
Information
This Quarterly Report on Form 10-Q
contains certain forward-looking statements and information relating to the
Company and the Bank that are based on the beliefs of management as well as
assumptions made by and information currently available to management. In
addition, in portions of this document the words “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “should” and similar expressions or the negative
thereof, as they relate to the Company or the Bank or their management, are
intended to identify forward-looking statements. Such statements reflect the
current views of the Company and/or the Bank with respect to forward-looking
events and are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended. The
Company does not intend to update these forward-looking
statements.
Comparison
of Financial Condition at September 30, 2008 and June 30, 2008.
Assets:
Cash and cash
equivalents increased $8.3 million, or 18.7% to $52.6 million at September 30,
2008 from $44.3 million at June 30, 2008. The increase is related to federal
funds sold, which increased $11.5 million to $44.1 million at September 30, 2008
from $32.7 million at June 30, 2008, partially offset by a $3.2 million decrease
in cash and due from banks to $8.5 million at September 30, 2008 from $11.7
million at June 30, 2008. The increase in federal funds sold was primarily due
to an accumulation of cash in an anticipation repaying $18 million in FHLB
advances due in the subsequent quarter.
Our
investment portfolio decreased $964,000, or 6.0% to $15.1 million at September
30, 2008 from $16.0 million at June 30, 2008. The decrease was attributable to
maturities and normal repayments of principal on our mortgage-backed securities
and collateralized mortgage obligations.
Our gross
loan portfolio decreased by $2.8 million, or 0.4% to $742.7 million at September
30, 2008 from $745.4 million at June 30, 2008. The decrease was primarily due to
slowing loan demand resulting from the current weak market conditions. One-to
four-family real estate loans decreased $8.9 million, or 2.1% to $419.8 million
at September 30, 2008 from $428.7 million at June 30,
2008. Commercial real estate loans decreased $684,000, or 0.6% to
$115.1 million at September 30, 2008 from $115.8 million at June 30,
2008. Multi-family loans increased $12.1 million, or 9.2% to $144.4
million at September 30, 2008 from $132.3 million at June 30,
2008. Other loans which are comprised primarily of automobile loans
decreased $5.3 million, or 7.8% to $63.3 million at September 30, 2008 from
$68.6 million at June 30, 2008. Real estate loans comprised 91.5% of the total
loan portfolio at September 30, 2008, compared with 90.8% at June 30,
2008.
Deposits:
Total deposits
increased $14.1 million, or 2.9% to $509.2 million at September 30, 2008 from
$495.1 million at June 30, 2008. The increase was due to September 30, 2008
coinciding with a bi-weekly customer payroll deposit from Kaiser Permanente
combined with a current money market account promotion.
Borrowings:
Advances from the
Federal Home Loan Bank of San Francisco decreased $10.0 million, or 3.85% to
$225.0 million at September 30, 2008 from $235.0 million at June 30,
2008. The decline was the result of a scheduled advance repayment in
August 2008.
Stockholders’ Equity:
Stockholders’ equity increased $356,000 to $91.1 million at September 30, 2008
from $90.7 million at June 30, 2008 primarily as a result of $1.4 million in net
income earned for the three months ended September 30, 2008, an increase in the
unrealized gain on securities of $3,000 net of tax and the allocation of ESOP
shares, stock awards, and stock options earned totaling $291,000. This increase
was offset by cash payments of $874 for the purchase of treasury shares and
$473,000 in dividends paid to stockholders of record, excluding shares held by
K-Fed Mutual Holding Company, of $0.10 per share.
Average
Balances, Net Interest Income, Yields Earned and Rates Paid
|
|
|
For
the three months ended September 30,
|
|
|
|
|
|
2008
(4)
|
|
|
|
|
|
|
|
2007
(4)
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
Average
|
|
|
|
Yield/
|
|
|
|
Average
|
|
|
|
Yield/
|
|
|
|
|
Balance
|
|
Interest
|
|
Cost
|
|
|
|
Balance
|
|
Interest
|
|
Cost
|
|
|
|
|
(Dollars
in thousands)
|
|
INTEREST-EARNING
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
receivable
(1)
|
|
$
|
743,437
|
|
$
|
10,900
|
|
5.86
|
%
|
|
|
$
|
702,819
|
|
$
|
10,273
|
|
5.85
|
%
|
|
Securities
(2)
|
|
|
15,536
|
|
|
174
|
|
4.48
|
%
|
|
|
|
34,099
|
|
|
373
|
|
4.38
|
%
|
|
Federal
funds sold
|
|
|
39,876
|
|
|
200
|
|
2.01
|
%
|
|
|
|
11,826
|
|
|
148
|
|
5.01
|
%
|
|
Federal
Home Loan Bank stock
|
|
|
12,636
|
|
|
192
|
|
6.08
|
%
|
|
|
|
10,003
|
|
|
119
|
|
4.76
|
%
|
|
Interest-earning
deposits in other financial institutions
|
|
|
7,225
|
|
|
39
|
|
2.16
|
%
|
|
|
|
6,633
|
|
|
74
|
|
4.46
|
%
|
|
Total
interest-earning assets
|
|
|
818,710
|
|
|
11,505
|
|
5.62
|
%
|
|
|
|
765,380
|
|
|
10,987
|
|
5.74
|
%
|
|
Noninterest
earning assets
|
|
|
37,043
|
|
|
|
|
|
|
|
|
|
37,408
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
855,753
|
|
|
|
|
|
|
|
|
$
|
802,788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST-BEARING LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money
market
|
|
$
|
81,709
|
|
$
|
479
|
|
2.34
|
%
|
|
|
$
|
74,728
|
|
$
|
529
|
|
2.83
|
%
|
|
Savings
deposits
|
|
|
122,846
|
|
|
384
|
|
1.25
|
%
|
|
|
|
132,759
|
|
|
601
|
|
1.81
|
%
|
|
Certificates
of deposit
|
|
|
253,059
|
|
|
2,646
|
|
4.18
|
%
|
|
|
|
255,695
|
|
|
3,003
|
|
4.70
|
%
|
|
Borrowings
|
|
|
255,017
|
|
|
2,721
|
|
4.27
|
%
|
|
|
|
205,019
|
|
|
2,327
|
|
4.54
|
%
|
|
Total
interest-bearing liabilities
|
|
|
712,631
|
|
|
6,230
|
|
3.50
|
%
|
|
|
|
668,201
|
|
|
6,460
|
|
3.87
|
%
|
|
Noninterest
bearing liabilities
|
|
|
52,392
|
|
|
|
|
|
|
|
|
|
41,811
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
765,023
|
|
|
|
|
|
|
|
|
|
710,012
|
|
|
|
|
|
|
|
Equity
|
|
|
90,730
|
|
|
|
|
|
|
|
|
|
92,776
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
|
$
|
855,753
|
|
|
|
|
|
|
|
|
$
|
802,788
|
|
|
|
|
|
|
|
Net
interest/spread
|
|
|
|
|
$
|
5,275
|
|
2.12
|
%
|
|
|
|
|
|
$
|
4,527
|
|
1.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin
(3)
|
|
|
|
|
|
|
|
2.58
|
%
|
|
|
|
|
|
|
|
|
2.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of interest-earning assets to interest bearing liabilities
|
|
|
114.89
|
%
|
|
|
|
|
|
|
|
|
114.54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Calculated net of deferred fees and loss reserves.
|
|
(2)
Calculated based on amortized cost.
|
|
(3)
Net interest income divided by interest-earning assets.
|
|
(4)
Yields earned and rates paid have been annualized.
|
|
|
Comparison
of Results of Operations for the Three Months Ended September 30, 2008 and
September 30, 2007.
General.
Net income for the
three months ended September 30, 2008 was $1.4 million, an increase of $416,000,
or 41.9%, compared to net income of $993,000 for the three months ended
September 30, 2007. Earnings per basic and diluted common share were $0.10 for
the three months ended September 30, 2008 compared to $0.07 for the three months
ended September 30, 2007. The increase in net income was primarily the result of
increased net interest income resulting from a lower cost of funds.
Interest Income.
Interest
income increased by $518,000 or 4.7%, to $11.5 million for the three months
ended September 30, 2008 from $11.0 million for the three months ended September
30, 2007. The primary factor for the increase in interest income was an increase
in the average loans receivable balance of $40.6 million or 5.78%, from $702.8
million for the three months ended September 30, 2007 to $743.4 million for the
three months ended September 30, 2008.
Interest
income on securities decreased by $199,000 or 53.4%, to $174,000 for the three
months ended September 30, 2008 from $373,000 for the three months ended
September 30, 2007. The decrease was attributable to a $18.6 million decrease in
the average balance of investment securities from $34.1 million for the three
months ended September 30, 2007 to $15.5 million for the three months ended
September 30, 2008. The decrease was attributable to maturities and
normal repayments of principal on our mortgage-backed securities and
collateralized mortgage obligations.
Other
interest income increased by $17,000 or 7.7% to $239,000 for the three months
ended September 30, 2008 from $222,000 for the three months ended September 30,
2007. The primary factor for the increase in other interest income was an
increase in the average balance of federal funds sold of $28.1 million or
238.1%, from $11.8 million for the three months ended September 30, 2007 to
$39.9 million for the three months ended September 30, 2008. Other interest
income was also negatively impacted by a 299 basis point decrease in the average
yield earned on Federal funds sold from 5.01% for the three months ended
September 30, 2007 to 2.02% for the three months ended September 30,
2008. The decrease in the average yield on federal funds sold was
primarily attributable to declines in the federal funds rate during the
comparable periods as a result of actions taken by the Federal Reserve in
lowering the federal funds rate.
Interest Expense
. Interest
expense decreased $230,000 or 3.6% to $6.2 million for the three months ended
September 30, 2008 compared to $6.5 million for the three months ended September
30, 2007. The decrease was primarily attributable to a 37 basis point decrease
in the average cost of interest bearing liabilities from 3.87% for the three
months ended September 30, 2007 to 3.50% for the three months ended September
30, 2008. The decrease was partially offset by an increase in the average
balance of interest-bearing liabilities of $44.4 million or 6.65% to $712.6
million for the three months ended September 30, 2008 from $668.2 million for
the three months ended September 30, 2007.
Provision for Loan
Losses
.
We
maintain an allowance for loan losses to absorb probable incurred losses
inherent in the loan portfolio. The allowance is based on ongoing, quarterly
assessments of the probable losses inherent in the loan portfolio. Our
methodology for assessing the appropriateness of the allowance consists of
several key elements, which include loss ratio analysis by type of loan and
specific allowances for identified problem loans, including the results of
measuring impaired loans as provided in Statement of Financial Accounting
Standards (“SFAS”) No. 114, “Accounting by Creditors for Impairment of a Loan”
and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan – Income
Recognition and Disclosures.” These accounting standards prescribe
the measurement methods, income recognition and disclosures related to impaired
loans.
The loss
ratio analysis component of the allowance is calculated by applying loss factors
to outstanding loans based on the internal risk evaluation of the loans or pools
of loans. Changes in risk evaluations of both performing and nonperforming loans
affect the amount of the formula allowance. Loss factors are based both on our
historical loss experience as well as on significant factors that, in
management’s judgment, affect the collectability of the portfolio as of the
evaluation date.
The
appropriateness of the allowance is reviewed and established by management based
upon its evaluation of then-existing economic and business conditions affecting
our key lending areas and other conditions, such as credit quality trends
(including trends in nonperforming loans expected to result from existing
conditions), collateral values, loan volumes and concentrations, specific
industry conditions within portfolio segments and recent loss experience in
particular segments of the portfolio that existed as of the balance sheet date
and the impact that such conditions were believed to have had on the
collectability of the loan. Senior management reviews these conditions quarterly
in discussions with our senior credit officers. To the extent that any of these
conditions is evidenced by a specifically identifiable problem credit or
portfolio segment as of the evaluation date, management’s estimate of the effect
of such condition may be reflected as a specific allowance applicable to such
credit or portfolio segment. Where any of these conditions is not evidenced by a
specifically identifiable problem credit or portfolio segment as of the
evaluation date, management’s evaluation of the loss related to this condition
is reflected in the general allowance. The evaluation of the inherent loss with
respect to these conditions is subject to a higher degree of uncertainty because
they are not identified with specific problem credits or portfolio
segments.
Management
also evaluates the adequacy of the allowance for loan losses based on a review
of individual loans, historical loan loss experience, the value and adequacy of
collateral and economic conditions in our market area. This evaluation is
inherently subjective as it requires material estimates, including the amounts
and timing of future cash flows expected to be received on impaired loans that
may be susceptible to significant change. For all specifically reviewed loans
for which it is probable that we will be unable to collect all amounts due
according to the terms of the loan agreement, we determine impairment by
computing a fair value either based on discounted cash flows using the loan’s
initial interest rate or the fair value of the collateral if the loan is
collateral dependent. Large groups of smaller balance homogeneous loans that are
collectively evaluated for impairment and are excluded from specific impairment
evaluation, and their allowance for loan losses is calculated in accordance with
the allowance for loan losses policy described above.
Because
the allowance for loan losses is based on estimates of losses inherent in the
loan portfolio, actual losses can vary significantly from the estimated amounts.
Our methodology as described above permits adjustments to any loss factor used
in the computation of the formula allowance in the event that, in management’s
judgment, significant factors which affect the collectability of the portfolio
as of the evaluation date are not reflected in the loss factors. By assessing
the estimated losses inherent in the loan portfolio on a quarterly basis, we are
able to adjust specific and inherent loss estimates based upon any more recent
information that has become available. In addition, management’s determination
as to the amount of our allowance for loan losses is subject to review by the
Office of Thrift Supervision and the FDIC, which may require the establishment
of additional general or specific allowances based upon their judgment of the
information available to them at the time of their examination of Kaiser Federal
Bank.
Our
provision for loan losses was $363,000 for the three months ended September 30,
2008 compared to $168,000 for the three months ended September 30, 2007. The
allowance for loan losses as a percent of total loans was 0.44% at September 30,
2008 as compared to 0.41% at September 30, 2007. Net charge-offs totaled
$315,000 or 0.17% of average loans for the three months ended September 30, 2008
as compared to $31,000 or 0.02% of average loans for the three months ended
September30, 2007. The increase in provision for loan losses was primarily
attributable to an increase in real estate loan delinquencies as well as loan
volume increases in multi-family and commercial real estate lending. The
assumptions are based both on current industry and economic trends in addition
to our internal loan loss history. We used the same methodology and
generally similar assumptions in assessing the adequacy of the allowance for
consumer and real estate loans for both periods.
Noninterest Income.
Our
noninterest income increased $169,000, or 16.2% to $1.2 million for the three
months ended September 30, 2008 compared to $1.0 million for the three months
ended September 30, 2007. The increase was primarily the result of increased
customer fees and charges due to increased customer activity coupled with an
increase in ATM surcharge fees for non-customers.
Noninterest Expense.
Our
noninterest expense increased $82,000, or 2.1% to $3.9 million for the three
months ended September 30, 2008 from $3.8 million for the three months ended
September 30, 2007. The increase was primarily due to increases in general
operational costs to support continued growth of the Bank.
Income Tax Expense
. Income tax
expense increased $224,000, or 40.4% to $778,000 for the three months ended
September 30, 2008 compared to $554,000 for the three months ended September 30,
2007. This increase was primarily the result of higher pre-tax income of $2.2
million for the three months ended September 30, 2008 compared to $1.5 million
for the three months ended September 30, 2007. The effective tax rate was 35.6%
and 35.8% for the three months ended September 30, 2008 and 2007,
respectively.
Asset
Quality
The asset
quality of the Bank has remained strong and consistent over the past quarter.
This has been accomplished by the strict adherence to its long standing
disciplined credit culture that emphasizes the consistent application of
underwriting standards to all loans. In this regard, the Bank fully underwrites
all loans based on an applicant’s employment history, credit history and an
appraised value of the subject property. With respect to purchased loans, the
Bank underwrites each loan based upon our own underwriting standards prior to
making the purchase.
The
following underwriting guidelines have been used by the Bank as underwriting
tools to further limit the Bank’s potential loss exposure:
|
1.
|
All
variable rate loans are underwritten using the fully indexed
rate.
|
|
2.
|
All
interest-only loans are underwritten using the fully amortized
payment.
|
|
3.
|
We
only lend up to 80% of the lesser of the appraised value or purchase price
for one- to four-family residential
loans.
|
Additionally,
the Bank’s portfolio has remained strongly anchored in traditional mortgage
products. In this regard, we do not originate or purchase construction loans,
payment option-ARM loans, negatively amortizing loans or high LTV
loans.
Delinquent
Loans
.
The
following table sets forth certain information with respect to our loan
portfolio delinquencies at the dates indicated.
|
|
|
Loans
Delinquent :
|
|
|
|
|
|
|
|
|
60-89
Days
|
|
90
Days or More
|
|
Total
Delinquent Loans
|
|
|
|
|
Number
of Loans
|
|
Amount
|
|
Number
of Loans
|
|
Amount
|
|
Number
of Loans
|
|
Amount
|
|
|
|
|
(Dollars
in thousands)
|
|
|
At September 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
3
|
|
$
|
1,166
|
|
|
4
|
|
$
|
2,954
|
|
|
7
|
|
$
|
4,120
|
|
|
Commercial
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Multi-family
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
5
|
|
|
77
|
|
|
7
|
|
|
56
|
|
|
12
|
|
|
133
|
|
|
Home
equity
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
|
23
|
|
|
23
|
|
|
16
|
|
|
19
|
|
|
39
|
|
|
42
|
|
|
Total
loans
|
|
|
31
|
|
$
|
1,266
|
|
|
27
|
|
$
|
3,029
|
|
|
58
|
|
$
|
4,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
—
|
|
$
|
—
|
|
|
4
|
|
$
|
1,583
|
|
|
4
|
|
$
|
1,583
|
|
|
Commercial
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Multi-family
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
10
|
|
|
159
|
|
|
8
|
|
|
132
|
|
|
18
|
|
|
291
|
|
|
Home
equity
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
|
22
|
|
|
34
|
|
|
9
|
|
|
15
|
|
|
31
|
|
|
49
|
|
|
Total
loans
|
|
|
32
|
|
$
|
193
|
|
|
21
|
|
$
|
1,730
|
|
|
53
|
|
$
|
1,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
—
|
|
$
|
—
|
|
|
2
|
|
$
|
1,115
|
|
|
2
|
|
$
|
1,115
|
|
|
Commercial
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Multi-family
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
7
|
|
|
111
|
|
|
2
|
|
|
19
|
|
|
9
|
|
|
130
|
|
|
Home
equity
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
|
5
|
|
|
8
|
|
|
4
|
|
|
7
|
|
|
9
|
|
|
15
|
|
|
Total
loans
|
|
|
12
|
|
$
|
119
|
|
|
8
|
|
$
|
1,141
|
|
|
20
|
|
$
|
1,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N
on-Performing
Assets.
The following table sets forth the amounts and categories of
non-performing assets in our loan portfolio. Non-performing assets consist of
non-accrual loans and foreclosed assets. Loans to a customer whose financial
condition has deteriorated are considered for non-accrual status whether or not
the loan is 90 days and over past due. All loans past due 90 days and over are
classified as non-accrual. On non-accrual loans, interest income is not
recognized until actually collected. At the time the loan is placed on
non-accrual status, interest previously accrued but not collected is reversed
and charged against current income. Interest is not accrued on loans
greater than 90 days or more delinquent. At each date presented, we had no
troubled debt restructurings (loans for which a portion of interest or principal
has been forgiven and loans modified at interest rates less than current market
rates).
Foreclosed
assets consist of real estate and other assets which have been acquired through
foreclosure on loans. At the time of foreclosure, assets are recorded at the
lower of their estimated fair value less selling costs or the loan balance, with
any write-down charged against the allowance for loan losses.
|
|
|
At
September 30,
|
|
At
June 30,
|
|
At
June 30,
|
|
|
|
|
2008
|
|
2008
|
|
2007
|
|
|
|
|
|
(Dollars
in thousands)
|
|
|
Non-accrual loans:
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
$
|
2,954
|
|
$
|
1,583
|
|
$
|
1,115
|
|
|
Commercial
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Multi-family
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
56
|
|
|
132
|
|
|
19
|
|
|
Home
Equity
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
|
19
|
|
|
15
|
|
|
7
|
|
|
Total
|
|
|
3,029
|
|
|
1,730
|
|
|
1,141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate owned and Repossessed
assets:
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
One-
to four-family
|
|
|
1,079
|
|
|
1,045
|
|
|
238
|
|
|
Commercial
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Multi-family
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other loans:
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
97
|
|
|
161
|
|
|
74
|
|
|
Home
equity
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
|
1,176
|
|
|
1,206
|
|
|
312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
non-performing assets
|
|
$
|
4,205
|
|
$
|
2,936
|
|
$
|
1,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing
loans to total loans
(1)
|
|
|
0.41
|
%
|
|
0.23
|
%
|
|
0.16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing
assets to total assets
|
|
|
0.57
|
%
|
|
0.35
|
%
|
|
0.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Total loans are net of deferred fees and costs
|
|
|
Liquidity
and Commitments
Liquidity
may increase or decrease depending upon the availability of funds and
comparative yields on investments in relation to the return on loans.
Historically, we have maintained liquid assets at levels above the minimum
requirements imposed by Office of Thrift Supervision regulations and above
levels believed to be adequate to meet the requirements of normal operations,
including potential deposit outflows. Cash flow projections are regularly
reviewed and updated to assure that adequate liquidity is maintained. See
“Consolidated Statements of Cash Flows” contained in the unaudited Consolidated
Financial Statements included in this document.
Our
liquidity, represented by cash and cash equivalents and mortgage-backed and
related securities, is a product of operating, investing and financing
activities. Our primary sources of funds are deposits; amortization, prepayments
and maturities of outstanding loans and mortgage-backed and related securities,
and other short-term investments; and funds provided from operations. While
scheduled payments from the amortization of loans and mortgage-backed related
securities and maturing investment securities and short-term investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by general interest rates, economic conditions, and
competition. In addition, we invest excess funds in short-term interest-earning
assets, which provide liquidity to meet lending requirements. We also generate
cash through borrowings. We utilize Federal Home Loan Bank advances to leverage
our capital base and provide funds for our lending and investment activities and
enhance our interest rate risk management.
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. On a longer-term basis, we maintain a strategy of investing in various
lending products. We use our sources of funds primarily to meet ongoing
commitments, to pay maturing time deposits and savings withdrawals, to fund loan
commitments and to maintain our portfolio of mortgage-backed and related
securities. At September 30, 2008, the total approved loan commitments unfunded
amounted to $8.3 million, which includes the unfunded portion of loans of $5.5
million.
The Bank
pledged certain investment securities and mortgage loans to obtain $25.0 million
in deposits with the State of California through the state’s time deposit
program. Time deposits and advances from the Federal Home Loan Bank
of San Francisco scheduled to mature in one year or less at September 30, 2008,
totaled $93.0 million and $38.0 million, respectively. Based on historical
experience, management believes that a significant portion of maturing deposits
will remain with Kaiser Federal Bank. We anticipate that we will continue to
have sufficient funds, through deposits and borrowings, to meet our current
commitments.
At
September 30, 2008, we had available additional advances from the Federal Home
Loan Bank of San Francisco in the amount of $83.0 million. Kaiser
Federal Bank’s credit limit with the Federal Home Loan Bank is limited to 40% of
the Bank’s total assets.
Capital
The table
below sets forth Kaiser Federal Bank’s capital position relative to its Office
of Thrift Supervision capital requirements at September 30, 2008. The
definitions of the terms used in the table are those provided in the capital
regulations issued by the Office of Thrift Supervision.
|
|
|
Actual
|
|
Minimum
Capital Requirements
|
|
Minimum
required to be Well Capitalized Under Prompt Corrective Actions
Provisions
|
|
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
|
|
|
(Dollars
in thousands)
|
|
|
Total
risk-based capital (to risk-weighted assets)
|
|
$74,819
|
|
13.07
|
%
|
$45,783
|
|
8.00
|
%
|
$57,228
|
|
10.00
|
%
|
|
Tier
1 risk-based capital (to risk-weighted assets)
|
|
72,359
|
|
12.64
|
|
22,891
|
|
4.00
|
|
34,337
|
|
6.00
|
|
|
Tier
1 (core) capital (to adjusted tangible assets)
|
|
72,359
|
|
8.60
|
|
33,669
|
|
4.00
|
|
42,087
|
|
5.00
|
|
Consistent
with our goal to operate a sound and profitable financial organization, we
actively seek to maintain a “well capitalized” institution in accordance with
regulatory standards. At September 30, 2008, Kaiser Federal Bank was
a “well-capitalized” institution under regulatory standards.
Impact
of Inflation
The
consolidated financial statements presented herein have been prepared in
accordance with GAAP. These principles require the measurement of financial
position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation.
Our
primary assets and liabilities are monetary in nature. As a result, interest
rates have a more significant impact on our performance than the effects of
general levels of inflation. Interest rates, however, do not necessarily move in
the same direction or with the same magnitude as the price of goods and
services, since such prices are affected by inflation. In a period of rapidly
rising interest rates, the liquidity and maturity structure of our assets and
liabilities are critical to the maintenance of acceptable performance
levels.
The
principal effect of inflation, as distinct from levels of interest rates, on
earnings is in the area of noninterest expense. Such expense items as employee
compensation, employee benefits and occupancy and equipment costs may be subject
to increases as a result of inflation. An additional effect of inflation is the
possible increase in the dollar value of the collateral securing loans that we
have made. We are unable to determine the extent, if any, to which properties
securing our loans have appreciated in dollar value due to
inflation.
ITEM
3. Quantitative and Qualitative Disclosures About Market Risk
Our Risk When Interest Rates Change.
The rates of interest we earn on assets and pay on liabilities generally
are established contractually for a period of time. Market interest rates change
over time. Our loans generally have longer maturities than our deposits.
Accordingly, our results of operations, like those of other financial
institutions, are impacted by changes in interest rates and the interest rate
sensitivity of our assets and liabilities. The risk associated with changes in
interest rates and our ability to adapt to these changes is known as interest
rate risk and is our most significant market risk.
How We Measure Our Risk of Interest
Rate Changes.
As part of our attempt to manage our exposure to changes in
interest rates and comply with applicable regulations, we monitor our interest
rate risk. In monitoring interest rate risk we continually analyze and manage
assets and liabilities based on their payment streams and interest rates, the
timing of their maturities, and their sensitivity to actual or potential changes
in market interest rates.
In order
to minimize the potential for adverse effects of material and prolonged
increases in interest rates on our results of operations, we have adopted
investment/asset and liability management policies to better match the
maturities and repricing terms of our interest-earning assets and
interest-bearing liabilities. The board of directors sets and recommends the
asset and liability policies of Kaiser Federal Bank, which are implemented by
the asset/liability management committee.
The
purpose of the asset/liability management committee is to communicate,
coordinate and control asset/liability management consistent with our business
plan and board approved policies. The committee establishes and monitors the
volume and mix of assets and funding sources taking into account relative costs
and spreads, interest rate sensitivity and liquidity needs. The objectives are
to manage assets and funding sources to produce results that are consistent with
liquidity, capital adequacy, growth, risk and profitability goals.
The
asset/liability management committee generally meets on a weekly basis to
review, among other things, economic conditions and interest rate outlook,
current and projected liquidity needs and capital position, anticipated changes
in the volume and mix of assets and liabilities and interest rate risk exposure
limits versus current projections pursuant to net present value of portfolio
equity analysis and income simulations. The asset/liability management committee
regularly reviews interest rate risk by forecasting the impact of alternative
interest rate environments on net interest income and market value of portfolio
equity, which is defined as the net present value of an institution’s existing
assets, liabilities and off-balance sheet instruments, and evaluating such
impacts against the maximum potential changes in net interest income and market
value of portfolio equity that are authorized by the board of directors of
Kaiser Federal Bank. The asset/liability management committee recommends
appropriate strategy changes based on this review. The chairman or his designee
is responsible for reviewing and reporting on the effects of the policy
implementations and strategies to the board of directors at least
quarterly.
In order
to manage our assets and liabilities and achieve the desired liquidity, credit
quality, interest rate risk, profitability and capital targets, we have focused
our strategies on: (1) originating and purchasing adjustable rate loans; (2)
originating a reasonable volume of short- and intermediate-term consumer loans;
(3) managing our deposits to establish stable deposit relationships; and (4)
using Federal Home Loan Bank advances, and pricing on fixed-term non-core
deposits to align maturities and repricing terms.
At times,
depending on the level of general interest rates, the relationship between long-
and short-term interest rates, market conditions and competitive factors, the
asset/liability management committee may determine to increase our interest rate
risk position somewhat in order to maintain our net interest margin. In the
future, we intend to continue our existing strategy of originating and
purchasing relatively short-term and/or adjustable rate loans. The Bank does not
maintain any securities for trading purposes. The Bank does not currently engage
in trading activities or use instruments such as interest rate swaps, hedges, or
other similar derivatives to control interest rate risk.
The
Office of Thrift Supervision provides Kaiser Federal Bank with the information
presented in the following table, which is based on information provided to the
Office of Thrift Supervision by Kaiser Federal Bank. It presents the change in
Kaiser Federal Bank’s net portfolio value at June 30, 2008 which is the latest
information available that would occur upon an immediate change in interest
rates based on Office of Thrift Supervision assumptions but without giving
effect to any steps that management might take to counteract that
change.
|
|
|
June
30, 2008
|
|
|
Change
in interest rates in basis points (“bp”)
(Rate
shock in rates)
|
|
|
|
|
|
|
|
|
|
Net
portfolio value (NPV)
|
|
|
|
NPV
as % of PV of assets
|
|
|
|
$
amount
|
|
|
|
$
change
|
|
|
|
%
change
|
|
|
|
NPV
ratio
|
|
|
|
Change(bp)
|
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+300
bp
|
|
$
|
53,007
|
|
|
|
$
|
(30,374
|
)
|
|
|
(36
|
)%
|
|
|
6.58
|
%
|
|
|
(315
|
)bp
|
|
+200
bp
|
|
|
63,782
|
|
|
|
|
(19,599
|
)
|
|
|
(24
|
)
|
|
|
7.75
|
|
|
|
(198
|
)
|
|
+100
bp
|
|
|
73,847
|
|
|
|
|
(9,534
|
)
|
|
|
(11
|
)
|
|
|
8.79
|
|
|
|
(94
|
)
|
|
0
bp
|
|
|
83,381
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9.73
|
|
|
|
—
|
|
|
-100
bp
|
|
|
88,126
|
|
|
|
|
4,745
|
|
|
|
6
|
|
|
|
10.14
|
|
|
|
41
|
|
The
Office of Thrift Supervision uses certain assumptions in assessing the interest
rate risk of savings associations. These assumptions relate to interest rates,
loan prepayment rates, deposit decay rates, and the market values of certain
assets under differing interest rate scenarios.
As with
any method of measuring interest rate risk, shortcomings are inherent in the
method of analysis presented in the foregoing tables. For example, although
assets and liabilities may have similar maturities or periods to repricing, they
may react in different degrees to changes in the market interest rates. Also,
the interest rates on certain types of assets and liabilities may fluctuate in
advance of changes in market interest rates, while interest rates on other types
may lag behind changes in market rates. Additionally, certain assets, such as
adjustable rate mortgage loans, have features, that restrict changes in interest
rates on a short-term basis and over the life of the asset. Further, if interest
rates change, expected rates of prepayments on loans and early withdrawals from
certificates of deposit could deviate significantly from those assumed in
calculating the table.
ITEM
4. Controls and Procedures
Our
management evaluated, with the participation of our Chief Executive Officer and
Chief Financial Officer, the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the “Act”)) as of the end of the period covered by this
report. The Company’s Chief Executive Officer and Chief Financial Officer
concluded that the Company’s disclosure controls and procedures as of the end of
the period covered by this report are effective in ensuring that the information
required to be disclosed by the Company in the reports it files or submits under
the Act is (i) accumulated and communicated to the Company’s management
(including the Chief Executive Officer and Chief Financial Officer) in a timely
manner, and (ii) recorded, processed, summarized, and reported within the time
periods specified in the SEC’s rules and forms.
There
have been no changes in our internal control over financial reporting (as
defined in Rule 13a-15(f) under the Act) that occurred during the quarter ended
September 30, 2008 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART
II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
There
have been no material changes to the risk factors that were previously disclosed
in the Company’s annual report on Form 10-K for the fiscal year ended June 30,
2008.
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
Issuer
Purchases of Equity Securities
|
Period
|
|
Total
Number of Shares Purchased
|
|
Weighted
Average Price Paid Per Share
|
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans
*
|
|
Maximum
Number of Shares That May Yet be Purchased Under the Plan
|
|
|
7/1/08
– 7/31/08
|
|
41,469
|
|
$
|
10.87
|
|
508,788
|
|
0
|
|
|
8/1/08
– 8/31/08
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
9/1/08
– 9/30/08
|
|
14,024
|
|
|
9.96
|
|
14,024
|
|
214,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
On
August 27, 2008, the Company announced its intention to repurchase an additional
5% of its outstanding publicly held common stock, or 228,354 shares of
stock.
Item 3. Defaults Upon Senior
Securities
None.
Item 4. Submission of Matters to a Vote of
Security Holders
None.
Item
5. Other Information
None.
Item 6. Exhibits
31.1 Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act
31.1 Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act
32.1 Certification
of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
32.2 Certification
of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
Act
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
K-Fed
Bancorp
Registrant
Date:
November 4,
2008
/s/ Kay M.
Hoveland
Kay M.
Hoveland
President, Chief
Executive Officer
/s/ Dustin
Luton
Dustin
Luton
Chief Financial
Officer
EXHIBIT
31.1
Certification
of the Chief Executive Officer
Pursuant
to Section 302 of the Sarbanes-Oxley Act
I, Kay M.
Hoveland, certify that:
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of K-Fed
Bancorp;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
|
(b)
|
Designed
such internal control over financial reporting, or cause such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
|
(d)
|
Disclosed
in this report any changes in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially effect, the registrant’s internal control over financial
reporting; and
|
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
November 4,
2008
/s/ Kay M.
Hoveland
Kay M. Hoveland
President and Chief Executive
Officer
EXHIBIT
31.2
Certification
of the Chief Financial Officer
Pursuant
to Section 302 of the Sarbanes-Oxley Act
I, Dustin
Luton, certify that:
|
1.
|
I
have reviewed this Quarterly Report on Form 10-Q of K-Fed
Bancorp;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
|
(b)
|
Designed
such internal control over financial reporting, or cause such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
|
(c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
|
(d)
|
Disclosed
in this report any changes in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially effect, the registrant’s internal control over financial
reporting; and
|
|
5.
|
The
registrant’s other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date:
November 4,
2008
/s/ Dustin
Luton
Dustin Luton
Chief Financial
Officer
EXHIBIT
32.1
Certification
of the Chief Executive Officer
Pursuant
to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In
connection with the Quarterly Report of K-Fed Bancorp (the “Company”) on Form
10-Q for the period ended September 30, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Kay M. Hoveland, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in
connection with this quarterly report on Form 10-Q that:
|
|
1.
|
The
Report fully complies with the requirements of sections 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended,
and
|
|
|
2.
|
The
information contained in the report fairly presents, in all material
respects, the company’s financial condition and results of
operations.
|
Date:
November 4,
2008
/s/ Kay M.
Hoveland
Kay M. Hoveland
Chief Executive Officer
EXHIBIT
32.2
Certification
of the Chief Financial Officer
Pursuant
to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In
connection with the Quarterly Report of K-Fed Bancorp (the “Company”) on Form
10-Q for the period ended September 30, 2008 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Dustin Luton, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in
connection with this quarterly report on Form 10-Q that:
|
|
1.
|
The
Report fully complies with the requirements of sections 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended,
and
|
|
|
2.
|
The
information contained in the report fairly presents, in all material
respects, the company’s financial condition and results of
operations.
|
Date:
November 4,
2008
/s/ Dustin
Luton
Dustin Luton
Chief Financial
Officer