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 September 30, 2005
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: 000-50592
K-FED BANCORP
(Exact name of registrant as specified in its charter)
FEDERAL 20-0411486
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1359 N. GRAND AVENUE COVINA, CA 91724
(Address of principal executive office) (Zip Code)
(800)524-2274
(Registrant's telephone number, including area code)
Indicate by check 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 shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
Indicate by check whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act). Yes 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 - 14,403,330 shares outstanding as of
November 7, 2005.
FORM 10-Q
K-FED BANCORP
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1: Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
as of September 30, 2005 and June 30, 2005 1
Consolidated Statements of Income and
Comprehensive Income for the Three Months
Ended September 30, 2005 and 2004 2
Consolidated Statement of Stockholders' Equity
And Other Comprehensive Income for the Three
Months Ended September 30, 2005 3
Consolidated Statements of Cash Flows for the
Three Months Ended September 30, 2005
and 2004 4
Notes to Consolidated Financial
Statements 5
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Item 3: Quantitative and Qualitative Disclosures
About Market Risk 16
Item 4: Controls and Procedures 18
Part II. Other Information
Item 1: Legal Proceedings 18
Item 2: Unregistered Sales of Equity Securities
and Use of Proceeds 18
Item 3: Defaults upon Senior Securities 18
Item 4: Submission of Matters to a Vote of
Security Holders 18
Item 5: Other Information 18
Item 6: Exhibits 19
SIGNATURES 20
K-FED BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
- ------------------------------------------------------------------------------------------------------------------
(UNAUDITED) (AUDITED)
SEPTEMBER 30 JUNE 30
2005 2005
---------------- ----------------
ASSETS
Cash and due from banks $ 8,577 $ 6,990
Federal funds sold 33,760 10,325
---------------- ----------------
Total cash and cash equivalents 42,337 17,315
Interest bearing deposits in other financial
institutions 9,010 9,010
Securities available-for-sale 18,136 18,848
Securities held-to-maturity, fair value of $28,001 and
$30,688 at September 30, 2005 and June 30, 2005,
respectively 28,288 30,834
Federal Home Loan Bank stock, at cost 4,068 4,027
Loans receivable 579,203 539,025
Deferred net loan origination fees (45) (32)
Net premium on purchased loans 1,049 982
Allowance for loan losses (2,521) (2,408)
---------------- ----------------
Loans receivable, net 577,686 537,567
Accrued interest receivable 2,668 2,310
Premises and equipment, net 1,442 1,491
Core deposit intangible 532 568
Goodwill 3,950 3,950
Bank-owned life insurance 10,196 10,089
Other assets 4,744 3,873
---------------- ----------------
Total assets 703,057 639,882
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest bearing $ 50,691 $ 43,744
Interest bearing 436,465 432,048
---------------- ----------------
Total deposits 487,156 475,792
Federal Home Loan Bank advances, short-term 10,000 11,000
Federal Home Loan Bank advances, long-term 109,835 59,777
Accrued expenses and other liabilities 4,639 2,553
---------------- ----------------
Total liabilities 611,630 549,122
Commitments and contingent liabilities
Stockholders' equity
Nonredeemable serial preferred stock, $.01 par value;
2,000,000 shares authorized; issued and outstanding - none - -
Common stock, $.01 par value; 18,000,000 authorized;
September 30, 2005 - 14,711,800 shares issued.
June 30, 2005 - 14,711,800 shares issued. 147 147
Additional paid-in capital 57,664 57,541
Retained earnings 43,443 42,689
Accumulated other comprehensive loss, net of tax (224) (168)
Unearned employee stock ownership plan shares (3,867) (3,981)
Unearned employee stock awards (1,900) (2,015)
Treasury stock, at cost (September 30, 2005 - 308,470 shares;
June 30, 2005 - 278,470 shares) (3,836) (3,453)
---------------- ----------------
Total stockholders' equity 91,427 90,760
---------------- ----------------
Total liabilities and stockholders' equity $ 703,057 $ 639,882
================ ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
1
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
---------------------------------------
2005 2004
------------------ ------------------
INTEREST INCOME
Interest and fees on loans $ 7,029 $ 6,225
Interest on securities, taxable 427 520
Federal Home Loan Bank dividends 41 36
Other interest 189 42
------------------ ------------------
Total interest income 7,686 6,823
------------------ ------------------
INTEREST EXPENSE
Interest on deposits 2,645 1,926
Interest on Federal Home Loan Bank advances 671 513
------------------ ------------------
Total interest expense 3,316 2,439
------------------ ------------------
NET INTEREST INCOME 4,370 4,384
Provision for loan losses 165 120
------------------ ------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 4,205 4,264
------------------ ------------------
NONINTEREST INCOME
Service charges and fees 473 464
ATM fees and charges 375 322
Referral commissions 54 55
Loss on equity investment (270) (83)
Bank-owned life insurance 107 -
Other noninterest income 6 12
------------------ ------------------
Total noninterest income 745 770
------------------ ------------------
NONINTEREST EXPENSE
Salaries and benefits 1,782 1,571
Occupancy and equipment 392 316
ATM expense 298 257
Advertising and promotional 103 108
Professional services 228 260
Postage 65 61
Telephone 86 74
Other operating expense 353 279
------------------ ------------------
Total noninterest expense 3,307 2,926
------------------ ------------------
INCOME BEFORE INCOME TAX EXPENSE 1,643 2,108
Income tax expense 589 803
------------------ ------------------
NET INCOME $ 1,054 $ 1,305
================== ==================
COMPREHENSIVE INCOME $ 998 $ 1,427
================== ==================
EARNINGS PER COMMON SHARE:
Basic and diluted $ 0.08 $ 0.09
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
2
K-FED BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND OTHER COMPREHENSIVE INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
-----------------------
ACCUMULATED
ADDITIONAL OTHER UNEARNED
COMPREHENSIVE PAID-IN RETAINED COMPREHENSIVE ESOP
INCOME SHARES AMOUNT CAPITAL EARNINGS LOSS, NET SHARES
---------------------------------------------------------------------------------------------
Balance, June 30, 2005 14,711,800 $ 147 $ 57,541 $ 42,689 $ (168) $ (3,981)
COMPREHENSIVE INCOME
Net income for the three
months ended September 30,
2005 $ 1,054 - - - 1,054 - -
Other comprehensive income -
unrealized loss on
securities, net of tax (56) - - - - (56) -
-------------
TOTAL COMPREHENSIVE INCOME $ 998
=============
Dividends paid ($0.06 per - - - (300) - -
Share) *
Purchase of treasury stock - - - - - -
Allocation of ESOP common
Stock - - 31 - - 114
Allocation of stock awards - - - - - -
Allocation of stock options - - 92 - - -
---------------------------------------------------------------------------------------------
Balance, September 30, 2005 14,711,800 $ 147 $ 57,664 $ 43,443 $ (224) $ (3,867)
=============================================================================================
(continued)
TREASURY STOCK
UNEARNED ----------------------
STOCK
AWARDS SHARES AMOUNT TOTAL
-------------------------------------------------
Balance, June 30, 2005 $ (2,015) (278,470) $ (3,453) $ 90,760
COMPREHENSIVE INCOME
Net income for the three
months ended September 30,
2005 - - - 1,054
Other comprehensive income -
unrealized loss on
securities, net of tax - - - (56)
TOTAL COMPREHENSIVE INCOME
Dividends paid ($0.06 per - - - (300)
Share) *
Purchase of treasury stock - (30,000) (383) (383)
Allocation of ESOP common
Stock - - - 145
Allocation of stock awards 115 - - 115
Allocation of stock options - - - 92
-------------------------------------------------
Balance, September 30, 2005 $ (1,900) (308,470) $ (3,836) $ 91,427
=================================================
- ------------------------------
* 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 FINANCIAL STATEMENTS
3
K-FED BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
DOLLARS IN THOUSANDS
- ----------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30
----------------------------------------
2005 2004
------------------ ------------------
OPERATING ACTIVITIES
Net income $ 1,054 $ 1,305
Adjustments to reconcile net income to cash provided
by operating activities:
Amortization of net premiums on securities 36 40
Amortization of net premiums on loan purchases 219 427
Accretion of net loan origination fees (36) (10)
Provision for loan losses 165 120
Federal Home Loan Bank stock dividend (41) (36)
Depreciation and amortization 110 93
Amortization of core deposit intangible 36 -
Loss on equity investment 270 83
Increase in cash surrender value of bank-owned life insurance (107) -
Accretion of net premiums on purchased (17) -
certificates of deposits
Amortization of debt exchange costs 58 26
Allocation of ESOP common stock 145 152
Allocation of stock awards 115 -
Allocation of stock options 92 -
Net change in accrued interest receivable (358) (218)
Net change in other assets (653) (312)
Net changes in accrued expenses and other 1,636 393
liabilities
------------------ ------------------
Net cash provided by operating 2,724 2,063
activities
------------------ ------------------
INVESTING ACTIVITIES
Proceeds from maturities of available-for-sale 603 487
securities
Proceeds from maturities of held-to-maturity 2,525 3,650
securities
Purchases of loans (66,897) (29,272)
Net change in loans, excluding loan purchases 26,430 29,677
Purchase of FHLB stock - (1,195)
Net cash received from branch acquisition - 56,491
Purchases of premises and equipment (61) (92)
------------------ ------------------
Net cash (used in) provided by investing (37,400) 59,746
activities
------------------ ------------------
FINANCING ACTIVITIES
Proceeds from FHLB advances 63,000 165,916
Repayment of FHLB advances (14,000) (185,916)
Dividends paid on common stock (300) -
Purchase of treasury stock (383) -
Debt exchange costs - (473)
Net change in deposits 11,381 (20,543)
------------------ ------------------
Net cash provided by (used in) financing 59,698 (41,016)
activities
------------------ ------------------
Net change in cash and cash equivalents 25,022 20,793
Cash and cash equivalents, at beginning of year 17,315 12,158
------------------ ------------------
Cash and cash equivalents, at end of period $ 42,337 $ 32,951
================== ==================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
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. 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 five 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 U.S. generally accepted accounting principals (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 a fair presentation of the financial condition and results of operations for
the interim periods included herein have been made.
The results of operations for the three month period ended September 30, 2005
are not necessarily indicative of the results of operations that may be expected
for any other interim period or for the year ending June 30, 2006. 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
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.
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.
5
NEW ACCOUNTING STANDARDS: In December 2004, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 123R (FAS-123R),
SHARE-BASED PAYMENT, which is a revision of Statement of Financial Accounting
Standards No. 123 (FAS-123), Accounting for Stock-Based Compensation.
FAS-123R eliminates accounting for share-based compensation transactions using
the intrinsic value method prescribed in Accounting Principles Board Opinion No.
25 (APB-25), ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and requires instead that
such transactions be accounted for using a fair-value-based method. FAS-123R is
effective as of the first interim or annual reporting period that begins after
June 15, 2005. The Company adopted FAS-123R effective July 1, 2005 applying the
modified prospective transition method. Under the modified prospective
transition method, the financial statements will not reflect restated amounts.
Existing options that will vest after June 30, 2005 will result in expense of
$370,000 for the years ending June 30, 2006, 2007, 2008, 2009, and $139,000 for
the year ending June 30, 2010. The effect of this pronouncement on future
operations will depend on the fair value of future options issued and
accordingly, cannot be determined at this time.
NOTE 2 - EMPLOYEE STOCK OWNERSHIP PLAN
In connection with the stock offering of the Company in 2004, the Bank
established an Employee Stock Ownership Plan ("ESOP") for the benefit of its
employees. The Company issued 454,940 shares of common stock to the ESOP in
exchange for a ten-year note in the amount of approximately $4.5 million. The
$4.5 million loan for the ESOP purchase was borrowed from the Company.
Shares issued to the ESOP are allocated to ESOP participants based on principal
and interest payments made by the ESOP on the loan from the Company. The loan is
secured by shares purchased with the loan proceeds and will be repaid by the
ESOP with funds from the Company's contributions to the ESOP and earnings on
ESOP assets. The $4.5 million loan for the ESOP purchase was borrowed from the
Company and requires quarterly payments to be made by the Bank of approximately
$139,000, which represents principal plus interest at 4.00%.
As shares are released from collateral, the Company will report compensation
expense equal to the current market price of the shares and the shares will
become outstanding for earnings-per-share (EPS) computations. Dividends on
allocated ESOP shares reduce retained earnings; dividends on unearned ESOP
shares reduce accrued interest.
NOTE 3 - EMPLOYEE STOCK COMPENSATION
STOCK OPTION PLAN ("SOP"). On November 16, 2004, the Company granted 275,600
incentive stock options to certain employees and 98,000 non-qualified stock
options to directors, for a total of 373,600 stock options granted. The fair
market value of the Company's common stock for purposes of determining the
exercise price of the option on the grant date was $14.50, based on the closing
price of the Company's stock as of the previous business day per the term of the
plan. The Company implemented the SOP to promote the long-term interests of the
Company and its shareholders by providing an incentive to those key employees
who contribute to the operational success of the Company. The maximum number of
options that may be issued under the SOP is 568,675. Options were granted at the
then fair market value and vest over five years. Options expire 10 years from
the date of grant and are subject to certain restrictions and limitations.
Compensation expense, net of related tax effects related to the SOP was $82,000
for the three months ended September 30, 2005. No options were outstanding
during the three months ended September 30, 2004.
At September 30, 2005, the Company had an aggregate of 195,075 options available
for future issuance under the SOP.
6
RECOGNITION AND RETENTION PLAN ("RRP"). The purpose of the RRP is to promote the
long-term interests of the Company and its shareholders by providing restricted
stock as a means for attracting and retaining directors and certain employees.
The Company granted restricted stock awards of 166,300 shares to its directors
and certain employees on November 16, 2004, of which 3,000 shares were forfeited
during the year ended June 30, 2005. The fair market price of the restricted
stock awards was at the $14.10 per share price on November 16, 2004 and totaled
$2.3 million. These restricted stock awards vest over a five year period, and
therefore, the unamortized cost of shares not yet earned (vested) is reported as
a reduction of shareholders' equity and will be amortized ratably over a five
year period as compensation expense. Compensation expense related to the RRP
awards was $115,000 for the three months ended September 30, 2005. No awards
were outstanding during the three months ended September 30, 2004. There were
163,300 restricted shares outstanding at quarter end. At September 30, 2005, the
Company had an aggregate of 64,170 restricted shares available for future
issuance under the RRP.
7
NOTE 4 - 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,
----------------------------------
2005 2004
-------------- ---------------
(Dollars in thousands)
Net income as reported $ 1,054 $ 1,305
Weighted average common shares outstanding 13,881,061 14,105,058
Basic earnings per share $ 0.08 $ 0.09
EARNINGS PER SHARE ASSUMING DILUTION
Net income available to common shareholders $ 1,054 $ 1,305
Weighted average common shares outstanding
Dilutive effect of stock options - -
Dilutive effect of stock awards - -
Average common shares and dilutive potential
common shares 13,881,061 14,105,058
Diluted earnings per share $ 0.08 $ 0.09
The effect of stock options and stock awards was not included in the calculation
of diluted earnings per share for the three months ended September 30, 2005
because to do so would have been anti-dilutive. Stock options and stock awards
were not in place during the three months ended September 30, 2004.
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.
8
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2005 AND JUNE 30, 2005.
GENERAL: Our total assets increased by $63.2 million, or 9.9%, to $703.1 million
at September 30, 2005 from $639.9 million at June 30, 2005. The increase
primarily reflects growth in our net loan portfolio of $40.1 million to $577.7
million from $537.6 million and an increase of $25.0 million in cash and cash
equivalents. To fund the increase in assets, deposits increased $11.4 million to
$487.2 million from $475.8 million and advances from the Federal Home Loan Bank
increased $49.0 million to $119.8 million from $70.8 million.
ASSETS: Cash and cash equivalents increased $25.0 million to $42.3 million at
September 30, 2005 from $17.3 million at June 30, 2005. The majority of the
increase is related to federal funds sold, which increased $23.5 million to
$33.8 million at September 30, 2005 from $10.3 million at June 30, 2005. The
increase will be utilized to assist in funding loan pool purchase commitments
scheduled for settlement in October 2005.
Our investment portfolio decreased $3.3 million, or 6.6%, to $46.4 million at
September 30, 2005 from $49.7 million at June 30, 2005. The decrease is
attributable to normal repayments of principal on our mortgage-backed securities
and collateralized mortgage obligations.
Our net loan portfolio increased $40.1 million, or 7.5%, to $577.7 million at
September 30, 2005 from $537.6 million at June 30, 2005. This increase was
primarily attributable to increases in one- to four-family and commercial real
estate loans. One- to four-family real estate loans increased $30.8 million, or
8.3% to $402.9 million at September 30, 2005 from $372.1 million at June 30,
2005 and commercial loans increased $8.5 million, or 26.2% to $40.9 million at
September 30, 2005 from $32.4 million at June 30, 2005. The overall loan mix
remained relatively constant, with real estate loans comprising 91.9% of the
total loan portfolio at September 30, 2005, compared with 91.3% at June 30,
2005.
DEPOSITS: Total deposits increased $11.4 million, or 2.4%, to $487.2 million at
September 30, 2005 from $475.8 million at June 30, 2005. This increase is
primarily due to an increase in non-interest bearing demand accounts as a result
of month end payroll deposits in addition to increases in money market and
certificate of deposit accounts resulting from customers seeking higher yielding
returns.
BORROWINGS: Advances from the Federal Home Loan Bank of San Francisco increased
$49.0 million to $119.8 million at September 30, 2005 from $70.8 million at June
30, 2005. The increase is primarily attributable to our strategic efforts to
leverage our capital to fund lending activities in order to enhance our
interest-earning assets position.
EQUITY: Equity increased $667,000 to $91.4 million at September 30, 2005 from
$90.8 million at June 30, 2005 primarily as a result of $1.1 million in income
earned for the first fiscal quarter ended September 30, 2005 in addition to the
allocation of ESOP shares, stock awards, and stock options earned during the
quarter totaling $352,000. Income was offset by the repurchase of 30,000 of our
outstanding common shares at an average price of $12.77 for a total cost of
$383,000 and the payment of $300,000 in cash dividends to shareholders of
record, excluding shares held by K-Fed Mutual Holding Company, or $0.06 per
share for the three months ended September 30, 2005.
9
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
For the three months ended September 30,
------------------------------------------------------------------------------
2005 (4) 2004 (4)
-------------------------------------- --------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
-------------------------------------- --------------------------------------
INTEREST-EARNING ASSETS
Loans receivable(1)................. $ 549,637 $ 7,029 5.12% $ 501,994 $ 6,225 4.96%
Securities(2)....................... 48,087 427 3.55% 60,237 520 3.45%
Fed Funds .......................... 15,498 123 3.17% 9,969 25 1.00%
Federal Home Loan Bank stock ....... 4,047 41 4.08% 4,146 36 3.43%
Interest-bearing deposits in other
financial institutions........... 9,010 65 2.89% 2,970 16 2.15%
Other interest-earning assets....... 113 1 3.54% 239 1 1.44%
----------- ----------- ----------- ----------- ----------- -----------
Total interest-earning assets....... 626,392 7,686 4.91% 579,555 6,823 4.71%
Non-interest earning assets......... 30,241 14,530
----------- -----------
Total assets........................ $ 656,633 $ 594,085
=========== ===========
INTEREST-BEARING
LIABILITIES
Money market........................ $ 107,767 $ 455 1.69% $ 105,092 $ 302 1.15%
Savings deposits.................... 99,700 106 0.42% 95,546 102 0.43%
Certificates of deposit............. 226,279 2,084 3.68% 191,084 1,522 3.19%
FHLB advances....................... 82,558 671 3.25% 72,881 513 2.82%
----------- ----------- ----------- ----------- ----------- -----------
Total interest-bearing liabilities.. 516,304 3,316 2.57% 464,603 2,439 2.10%
----------- -----------
Non-interest-bearing liabilities.... 49,206 39,562
----------- -----------
Total liabilities................... 565,510 504,165
Equity.............................. 91,123 89,920
----------- -----------
Total liabilities and equity........ $ 656,633 $ 594,085
=========== ===========
Net interest/spread................. $ 4,370 2.34% $ 4,384 2.61%
=========== =========== =========== ===========
Margin(3)........................... 2.79% 3.03%
=========== ===========
Ratio of interest-earning assets to
interest-bearing liabilities..... 121.32% 124.74%
=========== ===========
(1) Calculated net of deferred fees and loss reserves and includes non-accrual loans
(2) Calculated based on amortized cost
(3) Net interest income divided by interest-earning assets
(4) Rates have been annualized
10
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2005 AND SEPTEMBER 30, 2004.
GENERAL. Net income for the three months ended September 30, 2005 was $1.1
million, a decrease of $251,000, or 19.2%, from the net income of $1.3 million
for the three months ended September 30, 2004. The decrease in net income was
primarily due to an increase in noninterest expense of $381,000 partially offset
by a decrease in income tax expense of $214,000. Earnings per basic and diluted
share were $0.08 for the three months ended September 30, 2005 compared to $0.09
for the three months ended September 30, 2004.
INTEREST INCOME. Interest income increased by $863,000, or 12.6%, to $7.7
million for the three months ended September 30, 2005 from $6.8 million for the
three months ended September 30, 2004. The primary factor for the increase in
interest income was an increase in the average loans receivable balance of $47.6
million, or 9.5%, from $502.0 million for the three months ended September 30,
2004 to $549.6 million for the three months ended September 30, 2005. The
increase was primarily due to whole-loan purchases of One-to-Four family
residential real estate loans. Interest income was also positively impacted by a
16 basis point increase in the average yield on loans receivable, from 4.96% for
the three months ended September 30, 2004 to 5.12% for the three months ended
September 30, 2005.
Interest income on securities decreased by $93,000 or 17.9%, to $427,000 for the
three months ended September 30, 2005 from $520,000 for the three months ended
September 30, 2004. The decrease resulted from a $12.2 million, or 20.2%
decrease in the average balance of securities as a result of principal
repayments. The decrease was partially offset by a 10 basis point increase in
the average yield on the securities investment portfolio from 3.45% for the
three months ended September 30, 2004 to 3.55% for the three months ended
September 30, 2005.
INTEREST EXPENSE. Interest expense increased $877,000, or 36.0%, for the three
months ended September 30, 2005 to $3.3 million as compared to $2.4 million for
the three months ended September 30, 2004. The increase is primarily
attributable to an increase in average deposits, combined with higher interest
rates. The average interest rates on interest-bearing liabilities increased 47
basis points to 2.57% for the three months ended September 30, 2005 from 2.10%
for the three months ended September 30, 2004. Average interest-bearing
liabilities increased $51.7 million or 11.1% to $516.3 million at September 30,
2005 from $464.6 million at September 30, 2004.
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 collectibility of the portfolio as of
the evaluation date.
11
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
collectibility 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 Kaiser Federal Bank will be unable
to collect all amounts due according to the terms of the loan agreement, Kaiser
Federal Bank determines 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 homogenous 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 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 collectibility 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 increased $45,000 to $165,000 for the three months
ended September 30, 2005 compared to $120,000 for the three months ended
September 30, 2004. The allowance for loan losses as a percent of total loans
was 0.43% at September 30, 2005 as compared to 0.45% at June 30, 2005. The
increase in the provision is primarily attributable to the $52,000 in net
charge-offs incurred during the three months ended September 30, 2005. 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.
12
NONINTEREST INCOME. Our noninterest income decreased $25,000, or 3.2%, to
$745,000 for the three months ended September 30, 2005 from $770,000 for the
three months ended September 30, 2004. The decrease is primarily the result of a
$187,000 increase in the loss on an equity investment in a California Affordable
Housing Program tax credit fund, partially offset by an increase in the addition
of income due to our purchase of bank-owned life insurance in April 2005.
NONINTEREST EXPENSE. Our noninterest expense increased $381,000, or 13.0% for
the three months ended September 30, 2005 as compared to September 30, 2004. The
increase was primarily due to a $211,000 increase in salaries and benefits, a
$76,000 increase in occupancy and equipment expense and a $74,000 increase in
other operating expense.
Salaries and benefits represented 53.9% of total noninterest expense for the
three months ended September 30, 2005 compared to 53.7% for the three months
ended September 30, 2004. Total salaries and benefits increased $211,000, or
13.4%, to $1.8 million for the three months ended September 30, 2005 from $1.6
million for the three months ended September 30, 2004. The increase was
primarily due to $115,000 in stock award expense and $92,000 in stock option
expense related to the establishment of these plans in November 2004.
Occupancy and equipment expense increased $76,000 to $392,000 for the three
months ended September 30, 2005 from $316,000 for the three months ended
September 30, 2004. The increase was primarily due to increased costs associated
with the acquisition of the Panorama City branch from Pan American Bank in
September 2004.
Other operating expense increased $74,000 to $353,000 for the three months ended
September 30, 2005 from $279,000 for the three months ended September 30, 2004.
The increase was primarily as a result of increases in various miscellaneous
accounts related to the continued growth of the Bank.
INCOME TAX EXPENSE. Income tax expense for the three months ended September 30,
2005 was $589,000 compared to $803,000 for the three months ended September 30,
2004. This decrease is primarily the result of a decrease in pre-tax income of
$465,000. The effective tax rate was 35.9% and 38.1% for the three months ended
September 30, 2005 and 2004, respectively. The decrease in the effective tax
rate is due primarily to the income received from our bank-owned life insurance,
which is non-taxable.
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 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
13
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, 2005, the total approved loan commitments
unfunded amounted to $59.1 million, which includes the unadvanced portion of
loans of $6.9 million and a $49.7 million commitment to purchase a pool of
fixed-rate whole residential real estate loans in October 2005.
Time deposits and advances from the Federal Home Loan Bank of San Francisco
scheduled to mature in one year or less at September 30, 2005, totaled $119.1
million and $10.0 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, 2005, we had available additional advances from the Federal
Home Loan Bank of San Francisco in the amount of $85.3 million. Of this amount,
we have committed to borrow $40.0 million in fixed-rate borrowings.
Subsequent to quarter end, we have committed to purchase an additional $24.9
million of fixed-rate real estate loans. Additionally, our credit limit with the
Federal Home Loan Bank of San Francisco was increased to 40 percent of the
Bank's total assets, up from our current limit of 30 percent. If this new limit
was effective at September 30, 2005, we would have had an additional $68.4
million available in advances.
14
CAPITAL
The table below sets forth Kaiser Federal Bank's capital position relative to
its Office of Thrift Supervision capital requirements at September 30, 2005. The
definitions of the terms used in the table are those provided in the capital
regulations issued by the Office of Thrift Supervision.
MINIMUM REQUIRED
TO BE WELL
CAPITALIZED
UNDER PROMPT
MINIMUM CAPITAL CORRECTIVE
ACTUAL REQUIREMENTS ACTION PROVISIONS
------------------------- ------------------------- -------------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------------------------- ------------------------- -------------------------
(Dollars in thousands)
Total capital (to risk-
weighted assets) $ 66,616 15.85% $ 33,622 8.00% $ 42,027 10.00%
Tier 1 capital (to risk-
weighted assets) 64,095 15.25 16,811 4.00 25,216 6.00
Tier 1 (core) capital (to
adjusted tangible 64,095 9.43 27,199 4.00 33,999 5.00
assets)
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.
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.
15
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.
16
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 September 30, 2005
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.
SEPTEMBER 30, 2005
-----------------------------------------------------------------------
CHANGE IN INTEREST NET PORTFOLIO VALUE (NPV) NPV AS % OF PV OF ASSETS
RATES IN BASIS ---------------------------------------- ----------------------------
POINTS ("BP") (RATE
SHOCK IN RATES) $ AMOUNT $ CHANGE % CHANGE NPV RATIO CHANGE(BP)
- ---------------------- ------------------------- ------------------------- --------------
(Dollars in thousands)
+300 bp $ 54,503 $ (26,899) (33)% 8.37 % (335) bp
+200 bp 64,336 (17,066) (21) 9.65 (207)
+100 bp 73,658 (7,744) (10) 10.81 (91)
0 bp 81,402 - - 11.72 -
-100 bp 82,727 1,325 2 11.76 4
-200 bp 77,266 (4,136) (5) 10.93 (79)
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.
17
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 Rules 13a-15(e) or 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 Rules 13a-15(f) or 15(d)-15(f) under the Act) that occurred during
the most recent fiscal quarter that have materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Issuer Purchases of Equity Securities
TOTAL NUMBER OF MAXIMUM NUMBER
SHARES PURCHASED OF SHARES THAT
TOTAL NUMBER AS PART OF MAY YET BE
OF SHARES AVERAGE PRICE PUBLICLY PURCHASED UNDER
PERIOD PURCHASED PER SHARE ANNOUNCED PLANS* THE PLAN
- --------------------- ------------ --------------- ------------------- -----------------
7/1/05 - 7/31/05 5,000 $ 12.52 5,000 225,129
8/1/05 - 8/31/05 10,000 13.06 10,000 215,129
9/1/05 - 9/30/05 15,000 12.65 15,000 200,129
---------------
* On April 27, 2005, the Company announced its intention to repurchase 5%
of its outstanding publicly held common stock, or 281,129 shares of stock.
Management believes that the repurchase of shares represents an attractive
investment opportunity which will benefit the Company and its stockholders.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
18
ITEM 6. EXHIBITS
31.1 Certification of Chief Executive Officer pursuant to Section 302
of the Sarbanes-Oxley Act
31.2 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
19
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 7, 2005 /s/ Kay M. Hoveland
---------------- ------------------------------------
Kay M. Hoveland
President and Chief Executive Officer
Date: November 7, 2005 /s/ Daniel A. Cano
---------------- ------------------------------------
Daniel A. Cano
Chief Financial Officer
20