UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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 December 31, 2012

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 No. 0-50358

CLIFTON SAVINGS BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter)

United States	34-1983738
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
1433 Van Houten Avenue, Clifton, New Jersey	07015
(Address of Principal Executive Offices)	(Zip Code)

(973) 473-2200

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large Accelerated Filer	¨	Accelerated Filer	x
Non-Accelerated Filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

The number of shares outstanding of each of the issuer’s classes of common stock, as of February 1, 2013: 26,152,365 shares outstanding.

CLIFTON SAVINGS BANCORP, INC.

AND SUBSIDIARIES

INDEX

		Page Number
PART I—FINANCIAL INFORMATION
Item 1:	Financial Statements
	Consolidated Statements of Financial Condition (Unaudited) at December 31, 2012 and March 31, 2012	1
	Consolidated Statements of Income (Unaudited) For the Three And Nine Months Ended December 31, 2012 and 2011	2
	Consolidated Statements of Comprehensive Income (Unaudited) For the Three And Nine Months Ended December 31, 2012 and 2011	3
	Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended December 31, 2012 and 2011	4 – 5
	Notes to Consolidated Financial Statements	6 – 26
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27 – 38
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	39 – 40
Item 4:	Controls and Procedures	41
PART II—OTHER INFORMATION
Item 1:	Legal Proceedings	42
Item 1A:	Risk Factors	42
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	42 – 43
Item 3:	Defaults Upon Senior Securities	43
Item 4:	Mine Safety Disclosures	43
Item 5:	Other Information	43
Item 6:	Exhibits	44
SIGNATURES		45

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands, Except Share and Per Share Data, Unaudited)

	December 31, 2012			March 31, 2012
ASSETS
Cash and due from banks	$	28,019		$	11,534
Interest-bearing deposits in other banks		12,757			28,723
Cash and Cash Equivalents		40,776			40,257
Securities available for sale, at fair value:		16,858			70,195
Securities held to maturity, at cost (fair value of $478,772 at December 31, 2012 and $521,449 at March 31, 2012):		458,228			504,014
Loans receivable		451,071			438,923
Allowance for loan losses		(2,480	)		(2,090	)
Net Loans		448,591			436,833
Bank owned life insurance		35,240			27,577
Premises and equipment		7,990			8,075
Federal Home Loan Bank of New York stock		3,996			5,127
Interest receivable		3,143			3,927
Real estate owned		215			139
Other assets		5,172			5,296
Total Assets	$	1,020,209		$	1,101,440
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits:
Non-interest bearing	$	12,120		$	7,997
Interest bearing		758,985			818,278
Total Deposits		771,105			826,275
Advances from Federal Home Loan Bank of New York		54,694			78,679
Advance payments by borrowers for taxes and insurance		4,908			5,139
Other liabilities and accrued expenses		3,984			4,886
Total Liabilities		834,691			914,979
Commitments and Contingencies		—			—
Stockholders’ Equity
Preferred stock ($.01 par value), 1,000,000 shares authorized; shares issued or outstanding—none		—			—
Common stock ($.01 par value), 75,000,000 shares authorized; 30,530,470 shares issued, 26,137,415 shares outstanding at December 31, 2012; 26,138,138 shares outstanding at March 31, 2012		305			305
Paid-in capital		136,096			135,965
Deferred compensation obligation under Rabbi Trust		286			273
Retained earnings		100,764			101,835
Treasury stock, at cost; 4,393,055 shares at December 31, 2012; 4,392,332 shares at March 31, 2012		(47,370	)		(47,363	)
Common stock acquired by Employee Stock Ownership Plan (“ESOP”)		(4,396	)		(4,946	)
Accumulated other comprehensive income		80			619
Stock held by Rabbi Trust		(247	)		(227	)
Total Stockholders’ Equity		185,518			186,461
Total Liabilities and Stockholders’ Equity	$	1,020,209		$	1,101,440

See notes to consolidated financial statements.

- 1 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Share and Per Share Data, Unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2012			2011			2012			2011
Interest Income:
Loans	$	4,837		$	5,176		$	14,715		$	15,785
Mortgage-backed securities		3,111			3,514			9,773			10,685
Debt securities		599			1,409			2,464			4,483
Other interest-earning assets		53			62			178			205
Total Interest Income		8,600			10,161			27,130			31,158
Interest Expense:
Deposits		2,264			3,139			7,434			9,698
Advances		536			879			1,866			2,687
Total Interest Expense		2,800			4,018			9,300			12,385
Net Interest Income		5,800			6,143			17,830			18,773
Provision for Loan Losses		450			76			742			136
Net Interest Income after Provision for Loan Losses		5,350			6,067			17,088			18,637
Non-Interest Income:
Fees and service charges		50			52			162			159
Bank owned life insurance		229			220			662			650
Gain on sale of securities		—			—			647			—
Loss on disposal of premises and equipment		(3	)		—			(3	)		(9	)
Loss on extinguishment of debt		—			—			(527	)		—
Loss on write-down of land held for sale		—			(109	)		(99	)		(109	)
Other		2			—			3			2
Total Non-Interest Income		278			163			845			693
Non-Interest Expenses:
Salaries and employee benefits		1,672			1,620			5,384			5,169
Occupancy expense of premises		379			310			1,098			1,019
Equipment		320			261			880			796
Directors’ compensation		285			176			656			544
Advertising		58			45			171			184
Legal		42			51			133			518
Federal deposit insurance premium		121			138			379			402
Other		549			441			1,528			1,520
Total Non-Interest Expenses		3,426			3,042			10,229			10,152
Income before Income Taxes		2,202			3,188			7,704			9,178
Income Taxes		688			1,106			2,622			3,236
Net Income	$	1,514		$	2,082		$	5,082		$	5,942
Net Income per Common Share:
Basic	$	0.06		$	0.08		$	0.20		$	0.23
Diluted	$	0.06		$	0.08		$	0.20		$	0.23
Dividends per common share	$	0.12		$	0.06		$	0.24		$	0.18
Weighted Average Number of Common Shares and Common Stock Equivalents Outstanding:
Basic		25,690,312			25,616,651			25,672,039			25,598,095
Diluted		25,801,481			25,624,801			25,714,808			25,618,849

See notes to consolidated financial statements.

- 2 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands, Unaudited)

	Three Months						Nine Months
	Ended December 31,						Ended December 31,
	2012			2011			2012			2011
Net income	$	1,514		$	2,082		$	5,082		$	5,942
Other comprehensive income (loss):
Gross unrealized holding (loss) gain on securities available for sale, net of income taxes (benefit) of ($75) and ($83), ($129) and $127, respectively		(110	)		(120	)		(186	)		144
Reclassification adjustment for gross realized holding (gain) on securities available for sale, net of income tax of $-0- and $-0-, and $264 and $-0-, respectively		—			—			(383	)		—
Benefit plans, net of income taxes of $7 and $1, $20 and $7, respectively		12			8			30			18
Total other comprehensive (loss) income		(98	)		(112	)		(539	)		162
Total comprehensive income	$	1,416		$	1,970		$	4,543		$	6,104

See notes to consolidated financial statements.

- 3 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands, Unaudited)

	Nine Months Ended December 31,
	2012			2011
Cash flows from operating activities:
Net income	$	5,082		$	5,942
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		465			418
Net (accretion) of deferred fees and costs, premiums and discounts		(51	)		(194	)
Amortization component of net periodic pension cost		50			25
Provision for loan losses		742			136
Realized gain on sale of securities available for sale		(647	)		—
Loss on disposal of premises and equipment		3			9
Loss on extinguishment of debt		527			—
Loss on write-down of land held for sale		99			109
Loss on write-down of real estate owned		46			—
Decrease in interest receivable		784			519
Deferred income tax (benefit)		250			(80	)
Decrease in other assets		147			815
(Decrease) in accrued interest payable		(76	)		(7	)
(Decrease) in other liabilities		(826	)		(811	)
(Increase) in cash surrender value of bank owned life insurance		(662	)		(650	)
ESOP shares committed to be released		569			565
Loss on sale of real estate owned		1			1
Restricted stock expense		46			47
Stock option expense		59			99
Increase in deferred compensation obligation under Rabbi Trust		14			16
Net cash provided by operating activities		6,622			6,959
Cash flows from investing activities:
Proceeds from calls, maturities and repayments of:
Securities available for sale		59,197			25,179
Securities held to maturity		200,657			160,525
Proceeds from sale of securities available for sale		8,827			—
Redemptions of Federal Home Loan Bank of New York stock		1,806			320
Purchases of:
Securities available for sale		(15,000	)		(70,004	)
Securities held to maturity		(154,884	)		(144,397	)
Loans receivable		(34,009	)		(17,873	)
Bank owned life insurance		(7,000	)		—
Premises and equipment		(383	)		(332	)
Federal Home Loan Bank of New York stock		(675	)		—
Net decrease in loans receivable		21,356			20,361
Proceeds from sale of real estate owned		92			135
Net cash provided by (used in) investing activities		79,984			(26,086	)

See notes to consolidated financial statements.

- 4 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT’D)

(In Thousands, Unaudited)

	Nine Months Ended December 31,
	2012			2011
Cash flows from financing activities:
Net (decrease) in deposits	$	(55,170	)	$	(4,570	)
Payments on advances from Federal Home Loan Bank of New York		(24,512	)		(5,276	)
Net decrease in payments by borrowers for taxes and insurance		(231	)		(138	)
Dividends paid		(6,153	)		(1,579	)
Purchase of treasury stock		(27	)		(11	)
Income tax benefit from stock based compensation		6			7
Net cash (used in) financing activities		(86,087	)		(11,567	)
Net increase (decrease) in cash and cash equivalents		519			(30,694	)
Cash and cash equivalents—beginning		40,257			58,069
Cash and cash equivalents—ending	$	40,776		$	27,375
Supplemental information:
Cash paid during the period for:
Interest on deposits and borrowings	$	9,376		$	12,392
Income taxes paid	$	3,876		$	4,466
Non cash activities:
Transfer from loans receivable to real estate owned	$	215		$	177

See notes to consolidated financial statements.

- 5 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Clifton Savings Bancorp, Inc. (the “Company”), the Company’s wholly-owned subsidiary, Clifton Savings Bank (the “Bank”) and the Bank’s wholly-owned subsidiary, Botany Inc. (“Botany”). The Company’s business consists principally of investing in securities and the operations of the Bank. Botany’s business consists solely of holding investment and mortgage-backed securities, and Botany is treated under New Jersey tax law as a New Jersey investment company. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements were prepared in accordance with the instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, or cash flows in conformity with accounting principles generally accepted in the United States of America. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements have been included. The results of operations for the nine month period ended December 31, 2012 are not necessarily indicative of the results which may be expected for the entire fiscal year or any other period. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“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 revenues and expenses during the reported periods. Actual results could differ from those estimates. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended March 31, 2012, which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on June 8, 2012.

The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of December 31, 2012, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

2. EARNINGS PER SHARE (EPS)

Basic EPS is based on the weighted average number of common shares actually outstanding, and is adjusted for employee stock ownership plan shares not yet committed to be released and deferred compensation obligations required to be settled in shares of Company stock. Unvested restricted stock awards, which contain rights to non-forfeitable dividends, are considered participating securities and the two-class method of computing basic and diluted EPS is applied. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities exercisable (such as stock options) or which could be converted into common stock, if dilutive, using the treasury stock method. The calculation of diluted EPS for the three and nine months ended December 31, 2012 includes incremental shares related to outstanding options of 111,169 and 42,769, respectively. During the three and nine months ended December 31, 2012, no options were antidilutive. The calculation of diluted EPS for the three and nine months ended December 31, 2011 includes incremental shares related to outstanding options of 8,150 and 20,754, respectively. During the three and nine months ended December 31, 2011, the average number of options which were antidilutive totaled 1,344,815 and -0-, respectively.

- 6 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. DIVIDEND WAIVER

During the three and nine months ended December 31, 2011, Clifton MHC (“MHC”), the federally chartered mutual holding company of the Company, waived its right, upon non-objection from the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), to receive cash dividends of approximately $1.0 million and $3.0 million, respectively.

As a result of restrictions implemented by the Federal Reserve Board, the MHC was unable to waive its receipt of dividends declared by the Company for the three and nine months ended December 31, 2012. Accordingly, the MHC received dividends from the Company totaling $2.0 million and $4.0 million during the three and nine months ended December 31, 2012, respectively. As a result of such regulatory considerations, the Company’s Board of Directors will be reviewing the Company’s dividend policy on a quarterly basis and can make no assurances that it will continue to declare regular quarterly cash dividends or that its dividend policy will not change in the future.

4. STOCK REPURCHASE PLANS

On November 29, 2012, the Company’s Board of Directors authorized the Company’s tenth repurchase plan for up to 280,000 shares of the Company’s outstanding common stock, representing approximately 3% of the outstanding shares owned by entities other than the MHC on that date. During the nine months ended December 31, 2012, 1,400 shares were repurchased under these plans at a total cost of approximately $15,000, or $10.53 per share. There were no stock repurchases under these plans made during the nine months ended December 31, 2011 as all authorized repurchase plans as of that date were complete.

Additionally, during the nine months ended December 31, 2012 and 2011, 1,202 and 1,061 shares, respectively, were repurchased at an aggregate cost of approximately $12,000, or $10.07 per share, and $11,000, or $10.67 per share, respectively, representing the withholding of shares subject to restricted stock awards under the Clifton Savings Bancorp, Inc. 2005 Equity Incentive Plan for payment of taxes due upon the vesting of restricted stock awards.

All repurchased shares are held as treasury stock for general corporate use.

5. RETIREMENT PLAN-COMPONENTS OF NET PERIODIC PENSION COST

Periodic pension expense for the director’s retirement plan and former President’s post-retirement health care plan were as follows:

	Three Months Ended December 31,					Nine Months Ended December 31,
	2012		2011			2012		2011
	(In Thousands)
Service cost	$	16	$	10		$	46	$	30
Interest cost		32		38			104		114
Amortization of past service cost		10		10			30		30
Amortization of unrecognized net loss (gain)		8		(1	)		20		(5	)
Settlement charge		117		—			117		—
Net periodic benefit cost	$	183	$	57		$	317	$	169

- 7 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair value of securities available-for-sale and held-to-maturity for the dates indicated are as follows:

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:
Government-sponsored enterprises	$	5,000	$	10	$	—	$	5,010
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		5,597		457		—		6,054
Federal National Mortgage Association		5,435		359		—		5,794
		11,032		816		—		11,848
Total available for sale securities	$	16,032	$	826	$	—	$	16,858

	March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Available for sale:
Debt securities:
Government-sponsored enterprises	$	44,994	$	77	$	—	$	45,071
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		7,118		601		—		7,719
Federal National Mortgage Association		16,295		1,110		—		17,405
		23,413		1,711		—		25,124
Total available for sale securities	$	68,407	$	1,788	$	—	$	70,195

- 8 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. SECURITIES (CONT’D)

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Held to maturity:
Debt securities:
Government-sponsored enterprises	$	69,998	$	697	$	5	$	70,690
Municipal bonds		2,002		—		2		2,000
Corporate bonds		49,902		2,053		1		51,954
		121,902		2,750		8		124,644
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		107,426		6,766		3		114,189
Federal National Mortgage Association		199,074		8,916		95		207,895
Governmental National Mortgage Association		29,826		2,218		—		32,044
		336,326		17,900		98		354,128
Total held to maturity securities	$	458,228	$	20,650	$	106	$	478,772

	March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In Thousands)
Held to maturity:
Debt securities:
Government-sponsored enterprises	$	117,929	$	559	$	69	$	118,419
Corporate bonds		49,855		568		561		49,862
		167,784		1,127		630		168,281
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		139,231		6,823		452		145,602
Federal National Mortgage Association		157,844		7,940		203		165,581
Governmental National Mortgage Association		39,155		2,830		—		41,985
		336,230		17,593		655		353,168
Total held to maturity securities	$	504,014	$	18,720	$	1,285	$	521,449

- 9 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. SECURITIES (CONT’D)

Contractual maturity data for securities is as follows:

	December 31, 2012
	Amortized		Fair
	Cost		Value
	(In Thousands)
Available for sale:
Debt securities:
Due after one but within five years	$	5,000	$	5,010
Mortgage-backed securities:
Due after five through ten years		2,921		3,146
Due after ten years		8,111		8,702
		11,032		11,848
Total available for sale securities	$	16,032	$	16,858
Held to maturity:
Debt securities:
Due less than one year	$	7,002	$	7,024
Due after one through five years		94,897		96,365
Due after five through ten years		20,003		21,255
		121,902		124,644
Mortgage-backed securities:
Due less than one year		3		3
Due after one through five years		308		325
Due after five through ten years		63,248		64,372
Due after ten years		272,767		289,428
		336,326		354,128
Total held to maturity securities	$	458,228	$	478,772

The amortized cost and carrying values shown above are by contractual final maturity. Actual maturities will differ from contractual final maturities due to scheduled monthly payments related to mortgage-backed securities and due to the borrowers having the right to prepay obligations with or without prepayment penalties.

- 10 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. SECURITIES (CONT’D)

The age of gross unrealized losses and the fair value of related securities at December 31 and March 31, 2012 were as follows:

	Less Than 12 Months				12 Months or More				Total
December 31, 2012:	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Held to maturity:
Debt securities:
Government-sponsored enterprises	$	19,995	$	5	$	—	$	—	$	19,995	$	5
Corporate bonds		—		—		4,999		1		4,999		1
Municipal bonds		2,000		2		—		—		2,000		2
		21,995		7		4,999		1		26,994		8
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		390		2		30		1		420		3
Federal National Mortgage Association		8,951		91		188		4		9,139		95
		9,341		93		218		5		9,559		98
Total held to maturity securities	$	31,336	$	100	$	5,217	$	6	$	36,553	$	106

	Less Than 12 Months				12 Months or More				Total
March 31, 2012:	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(In Thousands)
Held to maturity:
Debt securities:
Government-sponsored enterprises	$	34,912	$	69	$	—	$	—	$	34,912	$	69
Corporate bonds		29,404		561		—		—		29,404		561
		64,316		630		—		—		64,316		630
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		22,258		450		277		2		22,535		452
Federal National Mortgage Association		18,101		198		244		5		18,345		203
		40,359		648		521		7		40,880		655
Total held to maturity securities	$	104,675	$	1,278	$	521	$	7	$	105,196	$	1,285

Management does not believe that any of the unrealized losses at December 31, 2012 (four bonds of Government-sponsored enterprises, one municipal bond, and one corporate bond included in debt securities, and six FNMA and three FHLMC mortgage-backed securities) represent an other-than-temporary impairment as they are primarily related to market interest rates and not related to the underlying credit quality of the issuers of the securities. Additionally, the Company and subsidiaries have the ability, and management has the intent, to hold such securities for the time necessary to recover amortized cost and does not have the intent to sell the securities, and it is more likely than not that it will not have to sell the securities before recovery of their amortized cost.

- 11 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. SECURITIES (CONT’D)

The proceeds from sales of mortgage-backed securities available for sale totaled $8.8 million during the nine months ended December 31, 2012, and the gross realized gains on the sales totaled approximately $647,000. There were no sales of securities held to maturity during the nine months ended December 31, 2012. There were no sales of securities available for sale and held to maturity during the nine months ended December 31, 2011.

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

The following is a summary of loans by segment and the classes within those segments:

	December 31,			March 31,
	2012			2012
	(In Thousands)
Real estate:
One- to four-family	$	410,402		$	398,174
Multi-family		15,110			14,084
Commercial		13,847			14,844
Construction		1,981			1,380
		441,340			428,482
Consumer:
Second mortgage		6,509			7,892
Passbook or certificate		844			797
Equity lines of credit		2,131			2,097
Other loans		55			555
		9,539			11,341
Total Loans		450,879			439,823
Less:
Loans in process		(356	)		(744	)
Net purchase premiums, discounts, and deferred loan costs		548			(156	)
		192			(900	)
	$	451,071		$	438,923

The allowance for loan losses consists of general and unallocated components. For loans that are classified as impaired, a valuation allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component of the allowance covers pools of loans by loan class not considered impaired, as well as smaller balance homogeneous loans, such as one- to four-family real estate, construction real estate, second mortgage loans, home equity lines of credit and passbook loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors to reflect current conditions. The historical loss factor is adjusted by qualitative risk factors which include:

- 12 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

1. Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.

2. National, regional, and local economic and business conditions, including the value of underlying collateral for collateral dependent loans.

3. Nature and volume of the portfolio and terms of loans.

4. Experience, ability, and depth of lending management and staff.

5. The quality of the Bank’s loan review system.

6. Volume and severity of past due, classified and nonaccrual loans.

7. Existence and effect of any concentrations of credit and changes in the level of such concentrations.

8. Effect of external factors, such as competition and legal and regulatory requirements.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

The evaluation of the adequacy of the allowance is based on an analysis which categorizes the entire loan portfolio by certain risk characteristics. The loan portfolio segments are further disaggregated into the following loan classes, where the risk level for each type is analyzed when determining the allowance for loan losses.

Real Estate:

1. One-to Four-Family Loans—consists of loans secured by first liens on either owner occupied or investment properties. These loans can be affected by economic conditions and the value of the underlying properties. The risk is considered relatively low as the Bank has always had conservative underwriting standards and does not have sub-prime loans in its loan portfolio.

2. Multi-Family Loans—consists of loans secured by multi-family real estate which generally involve a greater degree of risk than one- to four-family residential mortgage loans. These loans can be affected by economic conditions and the value of the underlying properties. The Bank has always had conservative underwriting standards. These loans are affected by economic conditions.

3. Commercial Loans—consists of loans secured by commercial real estate which generally involve a greater degree of risk than one- to four-family residential mortgage loans. These loans can be affected by economic conditions and the value of the underlying properties. The Bank has always had conservative underwriting standards. These loans are affected by economic conditions to a greater degree than one-to four-family and multi-family loans.

4. Construction Loans—consists primarily of the financing of construction of one- to four family properties or construction/permanent loans for the construction of one-to four-family homes to be occupied by the borrower. Construction loans generally are considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate due to uncertainty of construction costs. Independent inspections are performed prior to disbursement of loan proceeds as construction progresses to mitigate these risks. These loans are also affected by economic conditions.

- 13 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

Consumer:

1. Second Mortgage and Equity Lines of Credit—consists of one-to four-family loans secured by first, second or third liens (when the Bank has the two other lien positions) or, in one instance, a commercial property. These loans are affected by the borrower’s continuing financial stability, and therefore are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. The credit risk is considered slightly higher than one-to four-family first lien loans as these loans are also dependent on the value of underlying properties, but have the added risk of a subordinate collateral position.

2. Passbook or Certificate and Other Loans—consists of loans secured by passbook accounts and certificates of deposits and unsecured loans. The passbook or certificate loans have low credit risk as they are fully secured by their collateral. Unsecured loans, included in other loans, are primarily between the Company and the MHC, so they also are considered a low credit risk.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans are rated pass-watch if the Bank is waiting for documents required for a complete file or if the loan is to be monitored due to previous delinquent status. Loans not classified are rated pass.

In addition, the Office of the Comptroller of the Currency (the “OCC”) as an integral part of its examination process, periodically reviews our loan portfolio and the related allowance for loan losses. The OCC may require the allowance for loan losses to be increased based on its review of information available at the time of the examination.

The change in the allowance for loan losses for the three and nine months ended December 31, 2012 and 2011 is as follows:

												Second			Passbook or
	One-to-Four											Mortgage and			Certificate
	Family			Multi-Family			Commercial			Real Estate		Equity Lines			and Other
	Real Estate			Real Estate			Real Estate			Construction		of Credit			Loans		Unallocated			Total
	(In Thousands)
At September 30, 2012:
Total allowance for loan losses	$	1,898		$	203		$	106		$	9	$	39		$	1	$	44		$	2,300
Charge-offs		(320	)		—			—			—		—			—		—			(320	)
Recoveries		50			—			—			—		—			—		—			50
Provision charged to operations		490			(4	)		(3	)		2		(2	)		—		(33	)		450
At December 31, 2012:
Total allowance for loan losses	$	2,118		$	199		$	103		$	11	$	37		$	1	$	11		$	2,480

- 14 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

											Second			Passbook or
	One-to-Four										Mortgage and			Certificate
	Family			Multi-Family		Commercial			Construction		Equity Lines			and Other
	Real Estate			Real Estate		Real Estate			Real Estate		of Credit			Loans		Unallocated			Total
	(In Thousands)
At March 31, 2012:
Total allowance for loan losses	$	1,733		$	193	$	105		$	4	$	42		$	1	$	12		$	2,090
Charge-offs		(402	)		—		—			—		—			—		—			(402	)
Recoveries		50			—		—			—		—			—		—			50
Provision charged to operations		737			6		(2	)		7		(5	)		—		(1	)		742
At December 31, 2012:
Total allowance for loan losses	$	2,118		$	199	$	103		$	11	$	37		$	1	$	11		$	2,480

											Second		Passbook or
	One-to-Four										Mortgage and		Certificate
	Family			Multi-Family		Commercial			Real Estate		Equity Lines		and Other
	Real Estate			Real Estate		Real Estate			Construction		of Credit		Loans			Unallocated			Total
	(In Thousands)
At September 30, 2011:
Total allowance for loan losses	$	1,670		$	118	$	84		$	6	$	48	$	2		$	12		$	1,940
Charge-offs		—			—		(6	)		—		—		—			—			(6	)
Recoveries		—			—		—			—		—		—			—			—
Provision charged to operations		(4	)		74		8			—		1		(1	)		(2	)		76
At December 31, 2011:
Total allowance for loan losses	$	1,666		$	192	$	86		$	6	$	49	$	1		$	10		$	2,010

- 15 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

	One-to-Four Family Real Estate		Multi-Family Real Estate		Commercial Real Estate			Construction Real Estate			Second Mortgage and Equity Lines of Credit		Passbook or Certificate and Other Loans			Unallocated			Total
	(In Thousands)
At March 31, 2011:
Total allowance for loan losses	$	1,601	$	103	$	93		$	11		$	46	$	3		$	23		$	1,880
Charge-offs		—		—		(6	)		—			—		—			—			(6	)
Recoveries		—		—		—			—			—		—			—			—
Provision charged to operations		65		89		(1	)		(5	)		3		(2	)		(13	)		136
At December 31, 2011:
Total allowance for loan losses	$	1,666	$	192	$	86		$	6		$	49	$	1		$	10		$	2,010

The following table presents the allocation of the allowance for loan losses by loan class at December 31 and March 31, 2012.

December 31, 2012	One-to-Four Family Real Estate		Multi-Family Real Estate		Commercial Real Estate		Construction Real Estate		Second Mortgage and Equity Lines of Credit		Passbook or Certificate and Other Loans		Unallocated		Total
	(In Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		2,118		199		103		11		37		1		11		2,480
Total	$	2,118	$	199	$	103	$	11	$	37	$	1	$	11	$	2,480
Loans:
Individually evaluated for impairment	$	529	$	—	$	252	$	—	$	—	$	—	$	—	$	781
Collectively evaluated for impairment		409,873		15,110		13,595		1,981		8,640		899		—		450,098
Total	$	410,402	$	15,110	$	13,847	$	1,981	$	8,640	$	899	$	—	$	450,879

- 16 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

March 31, 2012	One-to-Four Family Real Estate		Multi-Family Real Estate		Commercial Real Estate		Real Estate Construction		Second Mortgage and Equity Lines of Credit		Passbook or Certificate and Other Loans		Unallocated		Total
	(In Thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		1,733		193		105		4		42		1		12		2,090
Total	$	1,733	$	193	$	105	$	4	$	42	$	1	$	12	$	2,090
Loans:
Individually evaluated for impairment	$	909	$	—	$	256	$	—	$	—	$	—	$	—	$	1,165
Collectively evaluated for impairment		397,265		14,084		14,588		1,380		9,989		1,352		—		438,658
Total	$	398,174	$	14,084	$	14,844	$	1,380	$	9,989	$	1,352	$	—	$	439,823

The aggregate amount of classified loan balances are as follows at December 31 and March 31, 2012:

December 31, 2012	One-to-four Family Real Estate		Multi-family Real Estate		Commercial Real Estate		Construction Real Estate		Second Mortgage and Equity Lines of Credit		Passbook or certificate and Other Loans		Total Loans
	(In Thousands)
Pass	$	395,219	$	15,110	$	12,699	$	1,207	$	8,436	$	899	$	433,570
Pass-watch		8,825		—		655		774		36		—		10,290
Special mention		1,477		—		241		—		10		—		1,728
Substandard		4,881		—		252		—		158		—		5,291
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—
Total loans	$	410,402	$	15,110	$	13,847	$	1,981	$	8,640	$	899	$	450,879

March 31, 2012	One-to-four Family Real Estate		Multi-family Real Estate		Commercial Real Estate		Construction Real Estate		Second Mortgage and Equity Lines of Credit		Passbook or certificate and Other Loans		Total Loans
	(In Thousands)
Pass	$	386,604	$	13,516	$	12,083	$	1,380	$	9,823	$	1,352	$	424,758
Pass-watch		5,605		568		2,505		—		—		—		8,678
Special mention		2,294		—		—		—		64		—		2,358
Substandard		3,671		—		256		—		102		—		4,029
Doubtful		—		—		—		—		—		—		—
Loss		—		—		—		—		—		—		—
Total loans	$	398,174	$	14,084	$	14,844	$	1,380	$	9,989	$	1,352	$	439,823

- 17 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

The following table provides information with respect to our nonaccrual loans at December 31 and March 31, 2012. Loans are generally placed on nonaccrual status when they become more than 90 days delinquent, or when the collection of principal and/or interest becomes doubtful. As of December 31 and March 31, 2012, nonaccrual loans differed from the amount of total loans past due greater than 90 days due to some previously delinquent loans that are currently not more than 90 days delinquent which are maintained on nonaccrual status for a minimum of six months until the borrower has demonstrated the ability to satisfy the loan terms. A loan is returned to accrual status when there is sustained period of repayment performance (generally nine months) by the borrower in accordance with the contractual terms of the loan, or in some circumstances, when the factors indicating doubtful collectability no longer exist and the Bank expects repayment of the remaining contractual amounts due.

	December 31,		March 31,
	2012		2012
	(In Thousands)
Nonaccrual loans:
Real estate loans:
One-to four-family	$	4,814	$	3,671
Commercial		252		—
Consumer and other loans:
Second mortgage		158		102
Total nonaccrual loans	$	5,224	$	3,773

The following table provides information about delinquencies in our loan portfolio at December 31 and March 31, 2012.

December 31, 2012	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Gross Loans
	(In Thousands)
Real estate loans:
One-to four-family	$	1,794	$	476	$	3,986	$	6,256	$	404,146	$	410,402
Multi-family		—		—		—		—		15,110		15,110
Commercial		252		—		—		252		13,595		13,847
Construction		—		—		—		—		1,981		1,981
Consumer and other loans:
Second mortgage and equity lines of credit		69		—		46		115		8,525		8,640
Passbook or certificate and other loans		—		—		—		—		899		899
Total	$	2,115	$	476	$	4,032	$	6,623	$	444,256	$	450,879

- 18 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

March 31, 2012	30-59 Days Past Due		60-89 Days Past Due		>90 Days Past Due		Total Past Due		Current		Total Gross Loans
	(In Thousands)
Real estate loans:
One-to four-family	$	3,982	$	191	$	3,124	$	7,297	$	390,877	$	398,174
Multi-family		—		—		—		—		14,084		14,084
Commercial		—		—		—		—		14,844		14,844
Construction		—		—		—		—		1,380		1,380
Consumer and other loans:
Second mortgage and equity lines of credit		102		—		52		154		9,835		9,989
Passbook or certificate and other loans		6		—		—		6		1,346		1,352
Total	$	4,090	$	191	$	3,176	$	7,457	$	432,366	$	439,823

There were no loans that are past due greater than ninety days that were accruing as of December 31 and March 31, 2012.

A loan is defined as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due under the contractual terms of the loan agreement. The Company considers one- to four-family mortgage loans and consumer installment loans to be homogeneous and, therefore, does not separately evaluate them for impairment, unless they are considered troubled debt restructurings. All other loans are evaluated for impairment on an individual basis.

Impaired loans, none of which had a related allowance at or during the periods ending December 31, 2012 and 2011, and March 31, 2012, were as follows:

At or For The Three Months Ended December 31, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
With no related allowance recorded:
Real estate loans:
One-to four-family	$	529	$	720	$	—	$	529	$	—
Commercial		252		252		—		254		5
Total impaired loans	$	781	$	972	$	—	$	783	$	5

- 19 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

At or For The Three Months Ended December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
With no related allowance recorded:
Real estate loans:
One-to four-family	$	1,097	$	1,279	$	—	$	1,069	$	11
Commercial		257		257		—		301		24
Total impaired loans	$	1,354	$	1,536	$	—	$	1,370	$	35

At or For The Nine Months Ended December 31, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
With no related allowance recorded:
Real estate loans:
One-to four-family	$	529	$	720	$	—	$	612	$	11
Commercial		252		252		—		254		10
Total impaired loans	$	781	$	972	$	—	$	866	$	21

At or For The Nine Months Ended December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
With no related allowance recorded:
Real estate loans:
One-to four-family	$	1,097	$	1,279	$	—	$	1,160	$	40
Commercial		257		257		—		351		24
Total impaired loans	$	1,354	$	1,536	$	—	$	1,511	$	64

- 20 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)

At March 31, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In Thousands)
With no related allowance recorded:
Real estate loans:
One-to four-family	$	909	$	1,119	$	—
Commercial		256		256		—
Total impaired loans	$	1,165	$	1,375	$	—

The recorded investment in loans modified in a troubled debt restructuring totaled $529,000 and $909,000, respectively, at December 31 and March 31, 2012, of which $-0- and $34,000, respectively, were 30-59 days past due, $9,000 and $-0- , respectively, were 60-89 days past due, and $489,000 and $218,000, respectively, were 90 days or more past due. The remaining loans modified were current at the time of the restructuring and have complied with the terms of their restructure agreements at December 31 and March 31, 2012. Loans that were modified in a troubled debt restructuring represent concessions made to borrowers experiencing financial difficulties. The Company works with these borrowers to modify existing loan terms usually by extending maturities or reducing interest rates. The Company records an impairment loss, if any, based on the present value of expected future cash flows discounted at the original loan’s effective interest rate. Subsequently, these loans are individually evaluated for impairment. There were no new troubled debt restructurings or defaults on troubled debt restructurings that occurred within twelve months of restructurings during the three and nine months ended December 31, 2012.

8. FAIR VALUE

The guidance on fair value measurement establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted for similar assets or liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

In addition, the guidance requires the Company to disclose the fair value for certain assets and liabilities on both a recurring and non-recurring basis.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

- 21 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. FAIR VALUE (CONT’D)

For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31 and March 31, 2012 are as follows:

			(Level 1)		(Level 2)
			Quoted Prices		Significant		(Level 3)
			in Active		Other		Significant
	Carrying		Markets for		Observable		Unobservable
Description	Value		Identical Assets		Inputs		Inputs
	(In Thousands)
December 31, 2012:
Securities available for sale:
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	$	6,054	$	—	$	6,054	$	—
Federal National Mortgage Association		5,794		—		5,794		—
Debt securities:
Government-sponsored enterprises		5,010		—		5,010		—
Total securities available for sale	$	16,858	$	—	$	16,858	$	—
March 31, 2012:
Securities available for sale:
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation	$	7,719	$	—	$	7,719	$	—
Federal National Mortgage Association		17,405		—		17,405		—
Debt securities:
Government-sponsored enterprises		45,071		—		45,071		—
Total securities available for sale	$	70,195	$	—	$	70,195	$	—

There were no liabilities measured at fair value on a recurring or non-recurring basis at December 31 or March 31, 2012. For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2012 are as follows:

			(Level 1)		(Level 2)
			Quoted Prices		Significant		(Level 3)
			in Active		Other		Significant
	Carrying		Markets for		Observable		Unobservable
Description	Value		Identical Assets		Inputs		Inputs
	(In Thousands)
March 31, 2012
Real estate owned	$	139	$	—	$	—	$	139
Impaired loans		313		—		—		313

There were no assets measured at fair value on a non-recurring basis at December 31, 2012.

- 22 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. FAIR VALUE (CONT’D)

The following information should not be interpreted as an estimate of the fair value of the Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.

The following methods and assumptions were used to estimate the fair values of certain of the Company’s assets and liabilities at December 31 and March 31, 2012.

Cash and Cash Equivalents, Interest Receivable and Interest Payable (Carried at Cost)

The carrying amounts reported in the consolidated statements of financial condition for cash and cash equivalents, interest receivable and interest payable approximate their fair values.

Securities

The fair value of all securities, whether classified as available for sale (carried at fair value) or held to maturity (carried at cost), is determined by reference to quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Securities are measured on a recurring basis. The fair values of these securities are obtained from quotes received from an independent broker. The Company’s broker provides it with prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available. As the Company is responsible for the determination of fair value, it performs monthly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in adjustment in the prices obtained from the pricing service.

Loans Receivable (Carried at Cost)

Fair value is estimated by discounting the future cash flows, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, of such loans.

Impaired Loans (Carried based on Discounted Cash Flows)

Impaired loans are those accounted for under ASC Topic 310 “Accounting by Creditors for Impairment of a Loan” in which the Company has measured impairment generally based on either the fair value of the loan’s collateral or discounted cash flows. These assets are included as Level 3 fair values since they are based on either unobservable inputs that are significant to the discounted cash flow measurement or the fair value of the loan’s collateral.

Real Estate Owned

Real estate owned, acquired through foreclosure or deed-in-lieu of foreclosure, is carried at the lower of cost or fair value less estimated selling costs. Fair value is estimated through current appraisals by a licensed appraiser and, as such, foreclosed real estate properties are classified as Level 3.

Federal Home Loan Bank of New York Stock (Carried at Cost)

Fair value approximates cost basis as these instruments are redeemable only with the issuing agency at face value.

Deposits (Carried at Cost)

The fair value of non-interest-bearing demand, Crystal Checking, NOW, Super NOW, Money Market and Savings and Club accounts is the amount payable on demand at the reporting date. For fixed-maturity certificates of deposit, fair value is estimated by discounting future cash flows using the rates currently offered for deposits of similar remaining maturities.

- 23 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. FAIR VALUE (CONT’D)

Advances from Federal Home Loan Bank of New York (Carried at Cost)

The fair value is estimated by discounting future cash flows using rates currently offered for liabilities of similar remaining maturities, or when available, quoted market prices.

Commitments to Extend Credit

The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.

As of December 31 and March 31, 2012, the fair value of the commitments to extend credit were not considered to be material.

The carrying amounts and fair values of financial instruments are as follows:

December 31, 2012	Carrying Value		Estimated Fair Value		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	40,776	$	40,776	$	40,776	$	—	$	—
Securities available for sale		16,858		16,858		—		16,858		—
Securities held to maturity		458,228		478,772		—		478,772		—
Net loans receivable		448,591		478,275		—		—		478,275
Federal Home Loan Bank of New York stock		3,996		3,996		3,996		—		—
Interest receivable		3,143		3,143		3,143		—		—
Financial liabilities:
Deposits		771,105		778,036		194,939		583,097		—
FHLB advances		54,694		62,373		—		62,373		—
Interest payable		214		214		214		—		—

- 24 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. FAIR VALUE (CONT’D)

					(Level 1)		(Level 2)
					Quoted Prices		Significant		(Level 3)
					in Active		Other		Significant
	Carrying		Estimated		Markets for		Observable		Unobservable
March 31, 2012	Value		Fair Value		Identical Assets		Inputs		Inputs
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	40,257	$	40,257	$	40,257	$	—	$	—
Securities available for sale		70,195		70,195		—		70,195		—
Securities held to maturity		504,014		521,449		—		521,449		—
Net loans receivable		436,833		462,509		—		—		462,509
Federal Home Loan Bank of New York stock		5,127		5,127		5,127		—		—
Interest receivable		3,927		3,927		3,927		—		—
Financial liabilities:
Deposits		826,275		835,021		188,281		646,740		—
FHLB advances		78,679		88,318		—		88,318		—
Interest payable		290		290		290		—		—

9. RECENT ACCOUNTING PRONOUNCEMENTS

In December 2011, the FASB issued ASU 2011-12 “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” which defers indefinitely the requirement for companies to present reclassification adjustments out of accumulated other comprehensive income (“OCI”) by component in both the statement where net income is presented and the statement where OCI is presented. The issue is still being further deliberated by the FASB. While the FASB is redeliberating, companies will continue to have the option of (1) presenting reclassifications adjustments out of accumulated OCI on the face of the statement where OCI is presented or (2) disclosing reclassification adjustments in the footnotes to the financial statements. The Company does not expect that the guidance effective in future periods will have a material impact on its consolidated financial statements.

10. WITHDRAWAL OF APPLICATION OF PLAN OF CONVERSION AND REORGANIZATION

On November 8, 2010, the Company, the Bank and the MHC adopted a Plan of Conversion and Reorganization (the “Plan of Conversion”) pursuant to which the Bank planned to reorganize from the two-tier mutual holding company structure to the stock holding company structure. Pursuant to the Plan of Conversion: (1) the MHC would have merged with and into the Company, with the Company being the surviving entity (the “MHC Merger”); (2) the Company would have merged with and into a newly formed corporation named Clifton Savings Bancorp, Inc. (the “Holding Company”); (3) the shares of common stock of the Company held by persons other than the MHC (whose shares would have been canceled) would have been converted into shares of common stock of the Holding Company pursuant to an exchange ratio designed to preserve the percentage ownership interests of such persons; and (4) the Holding Company would have offered and sold shares of its common stock to certain depositors and borrowers of the Bank and others in the manner and subject to the priorities set forth in the Plan of Conversion.

The transactions contemplated by the Plan of Conversion were subject to approval by the shareholders of the Company, the members of the MHC and the Company’s primary federal regulator.

- 25 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. WITHDRAWAL OF APPLICATION OF PLAN OF CONVERSION AND REORGANIZATION(CONT’D)

On February 7, 2011, the Company announced the postponement of the conversion and offering following the issuance of a “Needs to Improve” rating to the Bank by the Office of Thrift Supervision (the “OTS”), the Bank’s former primary federal regulator, as a result of its most recent Community Reinvestment Act (“CRA”) examination. On June 22, 2011, the Company announced that it had withdrawn its application for conversion that had been pending before the OTS. As a result of the postponement and withdrawal of the application for conversion, the Company expensed approximately $939,000 in conversion and offering costs, which represents all of the costs associated with the conversion and offering. For the three and nine months ended December 31, 2011, $-0- and $527,000 in conversion costs were expensed by the Company, which, for the nine months, consisted of legal expense of $302,000, and other non-interest expenses of $225,000. The Bank has focused on improving its record of lending to lower income individuals in the communities served by the Bank. The Company remains committed to the completion of its conversion offering, but does not plan to proceed with its offering until the Bank is able to obtain a rating of “satisfactory” or better on its CRA performance.

- 26 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

ITEM 2:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Form 10-Q may include, and from time to time the Company may disclose, certain forward-looking statements based on current management expectations. The Company’s actual results could differ materially from those management expectations. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of loan and investment portfolios, changes in accounting principles, policies or guidelines, and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and prices. (See Part II—“Item 1A: Risk Factors.”) Additional factors are discussed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2012 under Part I—“Item 1A. Risk Factors”. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made and the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date of the forward-looking statements or to reflect the occurrence of unanticipated events. Accordingly, past results and trends should not be used by investors to anticipate future results or trends.

Overview of Financial Condition and Results of Operations

The Company’s results of operations depend primarily on its net interest income, which is a direct result of the interest rate environment. Net interest income is the difference between the interest income earned on interest-earning assets and the interest paid on interest-bearing liabilities. It is a function of the average balances of loans and securities versus deposits and borrowed funds outstanding in any one period and the yields earned on those loans and securities and the cost of those deposits and borrowed funds.

Interest-earning assets consist primarily of investment and mortgage-backed securities and loans which comprised 46.6% and 44.0%, respectively, of total assets at December 31, 2012, as compared to 52.1% and 39.7%, respectively, of total assets at March 31, 2012. Cash and cash equivalents increased to 4.0% of total assets at December 31, 2012, as compared to 3.7% at March 31, 2012. The Company’s mortgage-backed securities portfolio consists solely of U.S. government-sponsored or guaranteed enterprises and the investment portfolio consists of approximately 59% U.S. government-sponsored or guaranteed enterprises and 29% corporate bonds.

Interest-bearing liabilities consist of deposits and borrowings from the Federal Home Loan Bank of New York (the “FHLB”). Deposits decreased $55.2 million, or 6.7%, between March 31, 2012 and December 31, 2012, and borrowed funds decreased by $24.0 million, or 30.5%, during this period. The decrease in deposits was due to the Bank’s continued strategy of pricing deposits to allow for controlled outflow of non-core deposits to maintain the net interest margin and spread in this current economic environment. The balance in borrowed funds was $54.7 million at December 31, 2012 as compared to $78.7 million at March 31, 2012. During the nine months ended December 31, 2012, $16.2 million of long-term borrowings were paid off in advance of their maturity and $7.8 million were repaid in accordance with their original terms.

Net interest income decreased $343,000, or 5.6%, during the three months ended December 31, 2012, when compared with the same 2011 period. This decrease in net interest income was due to a $1.6 million decrease in total interest income partially offset by a decrease in total interest expense of $1.2 million. Average interest-earning assets decreased $101.3 million, or 9.5%, during the three months ended December 31, 2012, while average interest-bearing liabilities decreased $97.2 million, or 10.6%, when compared with the same 2011 period. The $4.1 million decrease in average

- 27 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview of Financial Condition and Results of Operations (Cont’d)

net interest-earning assets was mainly attributable to a decrease of $124.0 million in investment securities and $9.4 million in other interest- earning assets, partially offset by increases of $13.0 million in loans, $19.1 million in mortgage-backed securities, and decreases in interest earning deposits of $61.1 million and borrowings of $36.1 million. The net interest rate spread increased 14 basis points during the three months ended December 31, 2012, to 2.21% from 2.07% during the three months ended December 31, 2011. This was due to a decrease of 39 basis points in the cost of interest-bearing liabilities which was partially offset by a decrease of 25 basis points in the return on interest-earning assets. Results of operations also depend, to a lesser extent, on non-interest income generated, any provision for loan losses recorded, and non-interest expenses incurred. During the three months ended December 31, 2012, non-interest income increased $115,000, or 70.6%, as compared to the comparable period in 2011 as the result of a decrease in loss on the write-down of land held for sale of $109,000 to zero during the three months ended December 31, 2012. Provision for loan losses increased $374,000, or 492.1%, for the three months ended December 31, 2012, and non-interest expenses increased $384,000, or 12.6%, between periods.

Changes in Financial Condition

The Company’s assets at December 31, 2012 totaled $1.02 billion, which represents a decrease of $81.2 million or 7.4% as compared with $1.10 billion at March 31, 2012.

Cash and cash equivalents increased $519,000, or 1.3% to $40.8 million at December 31, 2012 as compared to $40.3 million at March 31, 2012.

Securities available for sale at December 31, 2012 decreased $53.3 million, or 76.0% to $16.9 million from $70.2 million at March 31, 2012. The decrease during the nine months ended December 31, 2012 resulted primarily from maturities, calls, and repayments, totaling $59.2 million, proceeds from sales totaling $8.8 million and a decrease of $962,000 in the unrealized gain on the portfolio, partially offset by purchases of $15.0 million in securities.

Securities held to maturity at December 31, 2012 decreased $45.8 million, or 9.1% to $458.2 million from $504.0 million at March 31, 2012. The decrease during the nine months ended December 31, 2012 resulted primarily from maturities, calls and repayments totaling $200.7 million, partially offset by purchases of securities totaling $154.9 million.

Net loans at December 31, 2012 increased $11.8 million, or 2.7% to $448.6 million when compared with $436.8 million at March 31, 2012. The increase during the nine months ended December 31, 2012 resulted primarily from origination volume and purchases of loans exceeding repayment levels. The Bank continues to supplement its internal origination volume with purchases of loans from various sources. The largest increase in the loan portfolio was in one- to four-family real estate loans, which increased $12.2 million, or 3.1%.

Total liabilities decreased $80.3 million, or 8.8% to $834.7 million at December 31, 2012 from $915.0 million at March 31, 2012. Deposits at December 31, 2012 decreased $55.2 million, or 6.7% to $771.1 million when compared with $826.3 million at March 31, 2012, as the Bank continued its strategy of pricing deposits to allow for controlled outflow of non-core deposits to maintain the net interest margin and spread in this current economic environment. Borrowed funds decreased $24.0 million, or 30.5% to $54.7 million at December 31, 2012, as compared with $78.7 million at March 31, 2012. During the nine months ended December 31, 2012, $16.2 million of long-term borrowings were paid off in advance of their maturity and $7.8 million were repaid in accordance with their original terms. At December 31, 2012, the remaining borrowings of $54.7 million had a weighted average interest rate of 3.82%.

- 28 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Changes in Financial Condition (Cont’d)

Stockholders’ equity totaled $185.5 million and $186.5 million at December 31, 2012 and March 31, 2012, respectively. The decrease of $943,000, or 0.5%, for the nine months ended December 31, 2012, resulted primarily from net income of $5.1 million, employee stock ownership shares committed to be released of $569,000, $105,000 for stock options and restricted stock awards earned under the Company’s 2005 Equity Incentive Plan and related tax benefits, a net decrease in unrealized gains on the available for sale securities portfolio, net of income taxes, of $569,000 and cash dividends declared of $6.2 million.

Comparison of Operating Results for the Three Months Ended December 31, 2012 and 2011

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, as well as the total dollar amounts of interest income and dividends from average interest-earning assets and interest expense on average interest-bearing liabilities and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. For purposes of this table, average balances have been calculated using the average of month-end balances, and nonaccrual loans are included in average balances; however, accrued interest income has been excluded from these loans. Loan fees (costs) are included in interest income on loans and are insignificant. Yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax equivalent basis are insignificant.

- 29 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Three Months Ended December 31, 2012 and 2011 (Cont’d.)

	Three Months Ended December 31,
	2012								2011
				Interest								Interest
	Average			and		Yield/			Average			and		Yield/
	Balance			Dividends		Cost			Balance			Dividends		Cost
	(Dollars in thousands)
Assets:
Interest-earning assets:
Loans receivable	$	452,837		$	4,837		4.27	%	$	439,929		$	5,176		4.71	%
Mortgage-backed securities		357,714			3,111		3.48	%		338,670			3,514		4.15	%
Investment securities		128,906			599		1.86	%		252,910			1,409		2.23	%
Other interest-earning assets		22,956			53		0.92	%		32,370			62		0.77	%
Total interest-earning assets		962,413			8,600		3.57	%		1,063,879			10,161		3.82	%
Noninterest-earning assets		66,589								65,454
Total assets	$	1,029,002							$	1,129,333
Liabilities and stockholders’ equity:
Interest-bearing liabilities:
Demand accounts		57,942			24		0.17	%		54,784			48		0.35	%
Savings and Club accounts		123,326			76		0.25	%		120,982			133		0.44	%
Certificates of deposit		584,471			2,164		1.48	%		651,025			2,958		1.82	%
Total interest-bearing deposits		765,739			2,264		1.18	%		826,791			3,139		1.52	%
FHLB advances		54,983			536		3.90	%		91,087			879		3.86	%
Total interest-bearing liabilities		820,722			2,800		1.36	%		917,878			4,018		1.75	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		11,120								7,747
Other noninterest-bearing liabilities		10,534								19,354
Total noninterest-bearing liabilities		21,654								27,101
Total liabilities		842,376								944,979
Stockholders’ equity		186,626								184,354
Total liabilities and stockholders’ equity	$	1,029,002							$	1,129,333
Net interest income				$	5,800							$	6,143
Interest rate spread							2.21	%							2.07	%
Net interest margin							2.41	%							2.31	%
Average interest-earning assets to average interest-bearing liabilities		1.17	x							1.16	x

Net income decreased $568,000, or 27.3% to $1.51 million for the three months ended December 31, 2012 compared with $2.08 million for the same 2011 period. The decrease in net income during the 2012 period resulted primarily from a decrease of $343,000, or 5.6%, in net interest income, an increase of $374,000, or 492.1%, in the provision for loan losses, and an increase of $384,000, or 12.6%, in noninterest expenses, partially offset by a decrease of $109,000 in loss on the write-down of land held for sale included in noninterest income in 2011 and a decrease of $418,000, or 37.8%, in income taxes.

- 30 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Three Months Ended December 31, 2012 and 2011 (Cont’d.)

Interest income on loans decreased by $339,000, or 6.6%, to $4.84 million during the three months ended December 31, 2012, when compared with $5.18 million for the same 2011 period. The decrease during the 2012 period mainly resulted from a decrease in the yield earned on the loan portfolio of 44 basis points, to 4.27% from 4.71%, partially offset by an increase of $12.9 million, or 2.9%, in the average balance when compared to the same period in 2011. Interest income on mortgage-backed securities decreased $403,000, or 11.5%, to $3.11 million during the three months ended December 31, 2012, when compared with $3.51 million for the same 2011 period. The decrease during the 2012 period resulted from a decrease of 67 basis points in the yield earned on mortgage-backed securities to 3.48% from 4.15%, partially offset by an increase of $19.0 million, or 5.6%, in the average balance of mortgage-backed securities outstanding due to purchases exceeding repayments during the period. Interest earned on investment securities decreased by $810,000, or 57.5% to $599,000 during the three months ended December 31, 2012, when compared to $1.41 million during the same 2011 period, due to a decrease in the average balance of $124.0 million, or 49.0%, coupled with a 37 basis point decrease in yield to 1.86% from 2.23%. The balance of investment securities decreased as many securities were called during the period. Interest earned on other interest-earning assets decreased by $9,000, or 14.5% to $53,000 during the three months ended December 31, 2012, when compared to $62,000 during the same 2011 period primarily due to a decrease of $9.4 million, or 29.1% in average balance, partially offset by 15 basis points increase in the yield to 0.92% from 0.77%. Other interest-earning assets decreased due to the funds being redeployed into higher yielding assets. The decrease in the yields on most interest-earning assets was the result of overall lower market interest rates.

Interest expense on deposits decreased $875,000, or 27.9% to $2.26 million during the three months ended December 31, 2012, when compared to $3.14 million during the same 2011 period. The decrease was primarily attributable to a decrease of 34 basis points in the cost of interest-bearing deposits to 1.18% from 1.52%, coupled with a decrease of $61.1 million, or 7.4% in the average balance of interest-bearing deposits. The decrease in the average cost of deposits reflected lower market interest rates. The decrease in the balance was the result of the Bank’s continued strategy of pricing deposits to allow for controlled outflow of non-core deposits to maintain the net interest margin and spread in this current economic environment. Interest expense on borrowed money decreased approximately $343,000, or 39.0%, to $536,000 during the three months ended December 31, 2012 when compared with $879,000 during the same 2011 period. Such decrease was primarily attributable to a decrease of $36.1 million, or 39.6%, in the average balance of borrowings, partially offset by as increase of 4 basis points in the cost of borrowings to 3.90% from 3.86%. The $97.2 million decrease in average interest-bearing liabilities was due to a decrease of $61.1 million in interest-bearing deposits coupled with a decrease of $36.1 million in borrowings. Net interest income decreased $343,000, or 5.6%, during the three months ended December 31, 2012, to $5.80 million when compared to $6.14 million for the same 2011 period. The net interest rate spread increased 14 basis points due to a 39 basis point decrease in the cost of interest-bearing liabilities partially offset by a decrease of 25 basis points in the yield earned on interest-earning assets.

- 31 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Three Months Ended December 31, 2012 and 2011 (Cont’d.)

The provision for loan losses increased $374,000, or 492.1%, to $450,000 for the three months ended December 31, 2012 as compared to $76,000 for the same period in 2011. The allowance for loan losses is based on management’s qualitative analysis which includes an evaluation of economic and other factors to determine the adequacy of the allowance for loan loss balance. The Bank intends to continue to evaluate the need for a provision for loan losses based on its periodic review of the loan portfolio and general market conditions. At December 31, 2012 and 2011, the Bank’s non-accrual loans totaled $5.2 million and $3.2 million, respectively, representing 1.16% and 0.72%, respectively, of total gross loans, and 0.53% and 0.30%, respectively, of total assets. At March 31, 2012, nonaccrual loans totaled $3.8 million, or 0.86% and 0.34% of total gross loans and total assets, respectively. During the three months ended December 31, 2012, the Bank recorded $270,000 in net charge-offs on two one-to four-family loans. During the three months ended December 31, 2011 there was a $6,000 charge-off which represented a loss from the write-down to fair value of one commercial real estate loan which was repossessed in December 2011. At December 31, 2012, non-accrual loans consisted of twenty-six loans secured by one- to four-family residential real estate, one loan secured by commercial real estate, four second mortgage loans secured by one- to four-family residential real estate, and one second mortgage loan secured by commercial real estate, while at December 31, 2011, non-accrual loans consisted of twenty-one loans secured by one- to four-family residential real estate loans, and one loan secured by commercial real estate, one of which is a second mortgage. Included in these non-accrual loans at December 31, 2012 are ten loans totaling $1.2 million that are current or less than ninety days delinquent. At December 31, 2011, one loan less than ninety days delinquent was included in non-accrual loans. In December 2011, the Bank amended its non-accrual policy to expand the classification of non-accrual loans to include loans that were previously ninety days or more delinquent until there is a sustained period of repayment performance (generally nine months) by the borrower in accordance with the contractual terms of the loan. All non-accrual loans included above are secured by properties located in the state of New Jersey. Impaired loans totaled $781,000, $1.2 million and $1.4 million at December 31, 2012, March 31, 2012 and December 31, 2011, respectively. The allowance for loan losses amounted to $2.48 million, $2.09 million, and $2.01 million, respectively, at December 31, 2012, March 31, 2012, and December 31, 2011, representing 0.55%, 0.48%, and 0.45% of total gross loans at December 31, 2012, March 31, 2012 and December 31, 2011, respectively.

Non-interest income increased $115,000, or 70.6%, to $278,000 for the three months ended December 31, 2012 compared to $163,000 for the three months ended December 31, 2011. The increase was primarily the result of a $109,000 loss on the write-down of land held for sale in the prior period.

Non-interest expense increased $384,000, or 12.6%, to $3.43 million for the three months ended December 31, 2012 as compared to $3.04 million for the three months ended December 31, 2011. The increase was primarily the result of increases of $69,000, or 22.3%, in occupancy expense of premises, $59,000, or 22.6%, in equipment expense, $109,000, or 61.9%, in directors’ compensation, and $108,000, or 24.5%, in other expenses. Occupancy expense of premises and equipment expense increased due to normal annual increases as well as the additional expenses associated with the Bank’s loan department being moved to a new leased location in September 2012. Directors’ compensation increased as a $117,000 expense was recorded in October 2012 in connection with a death benefit payout from the directors’ retirement plan as a result of the death of one of the directors of the Company. Other expenses increased mostly due to an increase in stationary and printing costs related to the relocation of the loan department, along with costs associated with the hiring of a commercial loan officer, increased costs related to a new internal audit firm hired in the current year and increased real estate owned operating expenses.

Income taxes totaled $688,000 and $1.1 million during the three months ended December 31, 2012 and 2011, respectively. The decrease of $418,000, or 37.8% during the 2012 period resulted from a decrease in pre-tax income. The overall effective income tax rate was 31.2% in the 2012 period compared with 34.7% for the 2011 period.

- 32 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Nine months Ended December 31, 2012 and 2011

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, as well as the total dollar amounts of interest income and dividends from average interest-earning assets and interest expense on average interest-bearing liabilities and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. For purposes of this table, average balances have been calculated using the average of month-end balances, and nonaccrual loans are included in average balances; however, accrued interest income has been excluded from these loans. Loan fees (costs) are included in interest income on loans and are insignificant. Yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax equivalent basis are insignificant.

- 33 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Nine Months Ended December 31, 2012 and 2011 (Cont’d.)

	Nine Months Ended December 31,
	2012							2011
	Average Balance		Interest and Dividends		Yield/ Cost			Average Balance		Interest and Dividends		Yield/ Cost
	(Dollars in thousands)
Assets:
Interest-earning assets:
Loans receivable	$	448,065	$	14,715		4.38	%	$	440,159	$	15,785		4.78	%
Mortgage-backed securities		357,284		9,773		3.65	%		333,814		10,685		4.27	%
Investment securities		158,077		2,464		2.08	%		253,137		4,483		2.36	%
Other interest-earning assets		32,737		178		0.72	%		30,914		205		0.88	%
Total interest-earning assets		996,163		27,130		3.63	%		1,058,024		31,158		3.93	%
Noninterest-earning assets		62,600							72,530
Total assets	$	1,058,763						$	1,130,554
Liabilities and stockholders’ equity:
Interest-bearing liabilities:
Demand accounts		57,433		89		0.21	%		55,105		152		0.37	%
Savings and Club accounts		123,411		261		0.28	%		120,774		406		0.45	%
Certificates of deposit		601,773		7,084		1.57	%		653,620		9,140		1.86	%
Total interest-bearing deposits		782,617		7,434		1.27	%		829,499		9,698		1.56	%
FHLB advances		63,866		1,866		3.90	%		92,877		2,687		3.86	%
Total interest-bearing liabilities		846,483		9,300		1.46	%		922,376		12,385		1.79	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		9,570							7,714
Other noninterest-bearing liabilities		16,015							17,982
Total noninterest-bearing liabilities		25,585							25,696
Total liabilities		872,068							948,072
Stockholders’ equity		186,695							182,482
Total liabilities and stockholders’ equity	$	1,058,763						$	1,130,554
Net interest income			$	17,830						$	18,773
Interest rate spread						2.17	%						2.14	%
Net interest margin						2.39	%						2.37	%
Average interest-earning assets to average interest-bearing liabilities		1.18x							1.15x

Net income decreased $860,000, or 14.5% to $5.08 million for the nine months ended December 31, 2012 compared with $5.94 million for the same 2011 period. The decrease in net income during the 2012 period resulted primarily from a decrease in net interest income of $943,000, or 5.0%, an increase in provision for loan losses of $606,000, or 445.6%, a $527,000 loss on extinguishment of debt, and an increase $77,000, or 0.8% in noninterest expenses, partially offset by a gain on sale of securities of $647,000, and a decrease of $614,000, or 19.0%, in income taxes.

- 34 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Nine Months Ended December 31, 2012 and 2011 (Cont’d.)

Interest income on loans decreased by $1.1 million, or 6.8%, to $14.7 million during the nine months ended December 31, 2012, when compared with $15.8 million for the same 2011 period. The decrease during the 2012 period mainly resulted from a decrease in the yield earned on the loan portfolio of 40 basis points, to 4.38% from 4.78%, partially offset by an increase of $7.9 million, or 1.8% in the average balance of loans when compared to the same period in 2011. Interest income on mortgage-backed securities decreased $912,000, or 8.5%, to $9.8 million during the nine months ended December 31, 2012, when compared with $10.7 million for the same 2011 period. The decrease during the 2012 period resulted from a decrease of 62 basis points in the yield earned on mortgage-backed securities to 3.65% from 4.27% partially offset by an increase of $23.5 million, or 7.0% in the average balance of mortgage-backed securities outstanding. Interest earned on investment securities decreased by $2.0 million, or 45.0%, to $2.5 million during the nine months ended December 31, 2012, when compared to $4.5 million during the same 2011 period, due to a decrease in the average balance of $95.1 million, or 37.6%, and a decrease of 28 basis points in yield to 2.08% from 2.36%. The balance of investment securities decreased as many securities were called and this accounted for the largest decrease in assets. Interest earned on other interest-earning assets decreased by $27,000, or 13.2% to $178,000 during the nine months ended December 31, 2012, when compared to $205,000 during the same 2011 period primarily due to a decrease of 16 basis points in yield to 0.72% from 0.88%, partially offset by an increase of $1.8 million, or 5.9%, in the average balance.

Interest expense on deposits decreased $2.3 million, or 23.4%, to $7.4 million during the nine months ended December 31, 2012, when compared to $9.7 million during the same 2011 period. Such decrease was primarily attributable to a decrease of 29 basis points in the cost of interest-bearing deposits to 1.27% from 1.56%, along with a decrease of $46.9 million, or 5.7%, in the average balance of interest-bearing deposits. The decrease in the average cost of deposits reflected lower market interest rates. The decrease in the balance was the result of the Bank’s continued strategy of pricing deposits to allow for controlled outflow of non-core deposits to maintain the net interest margin and spread in this current economic environment. Interest expense on borrowed money decreased approximately $821,000, or 30.6% to $1.87 million during the nine months ended December 31, 2012 when compared with $2.69 million during the same 2011 period. The decrease was primarily attributable to a decrease of $29.0 million, or 31.2%, in the average balance of borrowings, partially offset by an increase of 4 basis points in the cost of borrowings to 3.90% from 3.86%. Net interest income decreased $943,000, or 5.0% during the nine months ended December 31, 2012, to $17.83 million when compared to $18.77 million for the same 2011 period. The average balance of investment securities decreased as deposits, borrowings and total assets decreased. Other interest-earning assets increased as the balance of interest-earning deposits increased as some funds received from investment securities called during the quarter were not immediately redeployed into higher yielding assets. Loans increased as origination and purchase volume was slightly in excess of repayments. Mortgage-backed securities increased as purchases of these types of securities exceeded repayment levels. The $75.9 million decrease in average interest-bearing liabilities was primarily due to a decrease of $46.9 million in interest-bearing deposits and a decrease of $29.0 million in borrowings. The net interest rate spread increased 3 basis points due to a decrease of 30 basis points in the average yield earned on interest-earning assets offset by a 33 basis point decrease in the average cost of interest-bearing liabilities.

- 35 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Operating Results for the Nine Months Ended December 31, 2012 and 2011 (Cont’d.)

The provision for loan losses increased $606,000, or 445.6% to $742,000 during the nine months ended December 31, 2012 as compared to $136,000 recorded during the same period in 2011. During the nine months ended December 31, 2012 the Bank recorded net charge-offs of $352,000 on two one-to-four family loans. The allowance for loan losses is based on management’s evaluation of the risk inherent in the Bank’s loan portfolio and gives due consideration to the changes in general market conditions and in the nature and volume of the Bank’s loan activity. The Bank intends to continue to evaluate the need for a provision for loan losses based on its periodic review of the loan portfolio and general market conditions. See “Comparison of Operating Results for the Three Months Ended December 31, 2012 and 2011” for a discussion of non-performing and impaired loans as of December 31, 2012, March 31, 2011 and December 31, 2012.

Non-interest income increased $152,000, or 21.9%, during the nine months ended December 31, 2012, as compared to the comparable period in 2011 as the result of a $647,000 gain on sale of securities in 2012 partially offset by a $527,000 loss on extinguishment of debt. The loss of extinguishment of debt and gain on sale of securities resulted from a deleveraging strategy implemented in July 2012. Advances totaling $16.2 million which had a weighted average rate of 3.67% were extinguished. This was funded by the sale of $8.2 million of mortgage-backed securities and by cash. No such transactions occurred during the nine months ended December 31, 2011. During the nine months ended December 31, 2012 there also was a decrease of $10,000, or 9.2%, in loss on write-down of land held for sale compared to the 2011 period on the write- down of land held for sale on a property which was sold in July 2012.

Non-interest expense increased $77,000, or 0.8%, to $10.23 million for the nine months ended December 31, 2012 as compared to $10.15 million for the nine months ended December 31, 2011. The increase was primarily the result of increases of $215,000, or 4.2%, in salaries and employee benefits expense, $84,000, or 10.6%, in equipment expense, and $112,000, or 20.6%, in directors’ compensation, partially offset by a decrease of $385,000, or 74.3%, in legal fees. The increase in salaries and employee benefits was mainly due to an increase in costs associated with the hiring of an enterprise risk officer and a compliance officer in the 2012 period, along with normal annual salary increases. Equipment expense increased due to normal annual increases as well as the additional expenses associated with the Bank’s loan department being relocated to a new leased location in September 2012. Directors’ compensation increased as a $117,000 expense was recorded in October 2012 in connection with a death benefit payout from the directors retirement plan as a result of the death of one of the directors of the Company. The decrease in legal expenses was primarily due to the expensing of legal fees totaling $302,000 during the 2011 period as a result of the withdrawal of the Bank’s second-step conversion application and the postponement of the Company’s related stock offering which was announced in June 2011.

Income taxes totaled $2.62 million and $3.24 million during the nine months ended December 31, 2012 and 2011, respectively. The decrease of $614,000, or 19.0%, during the 2012 period resulted from lower pre-tax income. The overall effective income tax rate was 34.3% in the 2012 period compared with 35.3% for 2011.

Liquidity and Capital Resources

The Company maintains levels of liquid assets sufficient to ensure the Bank’s safe and sound operation. The Company adjusts its liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The Company also adjusts its liquidity level as appropriate to meet its asset/liability objectives. Liquid assets, which include cash and cash equivalents and securities available for sale, totaled $57.6 million, or 5.6% of total assets at December 31, 2012 as compared to $110.5 million, or 10.0% of total assets at March 31, 2012.

The Company’s liquidity, represented by cash and cash equivalents and securities available for sale, is a product of its operating, investing and financing activities.

- 36 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (Cont’d)

The Company is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, the Company on a stand-alone basis is responsible for paying any dividends declared to its shareholders. The Company also may repurchase shares of its common stock. The Company’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to the Company in any calendar year, without the receipt of prior approval from the OCC but with prior notice to the OCC, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. On a stand-alone basis, at December 31, 2012, the Company had liquid assets of $13.9 million.

Cash was generated by operating and investing activities during the nine months ended December 31, 2012. The primary sources of cash were net income and proceeds from principal repayments, maturities and calls of investment securities. Dividends declared and paid totaled $6.15 million during the nine months ended December 31, 2012.

The Company’s primary investing activities are the origination of loans and the purchases of securities. Net loans amounted to $448.6 million and $436.8 million at December 31, 2012 and March 31, 2012, respectively. Securities, including available for sale and held to maturity issues, totaled $475.1 million and $574.2 million at December 31, 2012 and March 31, 2012, respectively. In addition to funding new loan production through operating and investing activities, such activities were funded by principal repayments, maturities, and calls on existing loans and securities.

Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short to intermediate-term investments. If the Bank requires funds beyond its ability to generate them internally, the Bank can borrow overnight funds from the FHLB under an overnight advance program up to the Bank’s maximum borrowing capacity based on its ability to collateralize such borrowings. At December 31, 2012, advances from FHLB amounted to $54.7 million at a weighted average rate of 3.82%. Additionally, the Bank has the ability to borrow funds of up to an aggregate of $88.0 million at two financial institutions under established unsecured overnight lines of credit at a daily adjustable rate.

The Bank anticipates that it will have sufficient funds available to meet its current commitments. At December 31, 2012, the Bank had outstanding commitments to originate loans totaling approximately $6.2 million for fixed-rate one- to four-family mortgage loans with interest rates ranging from 2.75% to 4.25%.

At December 31, 2012 the Bank also had commitments outstanding to purchase $3.6 million in adjustable interest rate one- to four-family mortgage loans with initial interest rates ranging from 3.000% to 3.125%, and $3.4 million in fixed rate one- to four-family mortgage loans with interest rates ranging from 2.750% to 3.625%.

At December 31, 2012, undisbursed funds from customer approved unused lines of credit under a homeowners’ equity lending program amounted to approximately $4.5 million. Unless they are specifically cancelled by notice from the Bank, these funds represent firm commitments available to the respective borrowers on demand. The Bank also had a commitment for $40,000 for an adjustable rate home equity line of credit with an initial rate of 3.25%.

Certificates of deposit due within one year at December 31, 2012, totaled $313.7 million, or 54.4% of our certificates of deposit. Management believes that, based upon its experience and the Bank’s deposit flow history, a significant portion of such deposits will remain with the Bank. FHLB advances due within one year at December 31, 2012 totaled $7.2 million.

Under applicable federal regulations, three separate measurements of capital adequacy (the “Capital Rule”) are required. The Capital Rule requires each savings institution to maintain tangible capital equal of at least 1.5% and core capital equal of at least 4.0% of its adjusted total assets. The Capital Rule further requires each savings institution to maintain total capital equal of at least 8.0% of its risk-weighted assets.

- 37 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (Cont’d)

The following table sets forth the Bank’s capital position at December 31 and March 31, 2012, as compared to the minimum regulatory capital requirements:

						Regulatory Capital Requirements
	Actual					Minimum Capital Adequacy					For Classification as Well-Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars In Thousands)
As of December 31, 2012:
Total risk-based capital (to risk-weighted assets)	$	167,126		40.49	%	$	33,019		8.00	%	$	41,274		10.00	%
Tier 1 capital (to risk-weighted assets)		164,646		39.89			16,509		4.00			24,764		6.00
Core (tier 1) capital (to adjusted total assets)		164,646		16.17			40,738		4.00			50,922		5.00
Tier 1 risk-based capital (to adjusted tangible assets)		164,646		16.17			15,277		1.50			—		—
As of March 31, 2012:
Total risk-based capital (to risk-weighted assets)	$	161,069		38.31	%	$	33,632		8.00	%	$	42,040		10.00	%
Tier 1 capital (to risk-weighted assets)		158,979		37.82			16,816		4.00			25,224		6.00
Core (tier 1) capital (to adjusted total assets)		158,979		14.58			43,620		4.00			54,526		5.00
Tier 1 risk-based capital (to adjusted tangible assets)		158,979		14.58			16,358		1.50			—		—

- 38 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

ITEM  3:

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Qualitative Analysis

The majority of Clifton Savings Bank’s assets and liabilities are monetary in nature. Consequently, one of our most significant forms of market risk is interest rate risk. The Bank’s assets consist primarily of mortgage loans, and investment and mortgage-backed securities which have longer maturities than the Bank’s liabilities, which consists primarily of deposits. As a result, a principal part of Clifton Savings Bank’s business strategy is to manage interest rate risk and reduce the exposure of net interest income to change in market interest rates. Accordingly, our Board of Directors, through their Enterprise Risk Management Committee, has established an Asset/Liability Management Committee which is responsible for evaluating the interest rate risk inherent in assets and liabilities, for determining the level of risk that is appropriate given Clifton Savings Bank’s business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the Board of Directors. Senior management monitors the level of interest rate risk on a regular basis and the Asset/Liability Management Committee, which consists of senior management and outside directors operate under a policy adopted by the Board of Directors, and meets as needed to review Clifton Savings Bank’s asset/liability policies and interest rate risk position.

Clifton Savings Bank retains an independent, nationally recognized consulting firm who specializes in asset and liability management to complete the quarterly interest rate risk reports. This firm uses a combination of analyses to monitor the Bank’s exposure to changes in interest rates. The economic value of equity analysis is a model that estimates the change in net portfolio value (“NPV”) over a range of instantaneously shocked interest rate scenarios. NPV is the discounted present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. In calculating changes in NPV, assumptions estimating loan prepayment rates, reinvestment rates and deposit decay rates that seem most likely based on historical experience during prior interest rate changes are used.

The net interest income analysis uses data derived from an asset and liability analysis and applies several additional elements, including actual interest rate indices and margins, contractual limitations and the U.S. Treasury yield curve as of the balance sheet date. In addition the model uses consistent parallel yield curve ramps (in both directions) to determine possible changes in net interest income if the theoretical yield curve ramps occurred gradually. Net interest income analysis also adjusts the asset and liability repricing analysis based on changes in prepayment rates resulting from the parallel yield curve shifts.

The asset and liability analysis determines the relative balance between the repricing of assets and liabilities over multiple periods of time (ranging from overnight to five years). This asset and liability analysis includes expected cash flows from loans and mortgage-backed securities, applying prepayment rates based on the differential between the current interest rate and the market interest rate for each loan and security type. This analysis identifies mismatches in the timing of asset and liability but does not necessarily provide an accurate indicator of interest rate risk because the assumptions used in the analysis may not reflect the actual response to market changes.

The table below sets forth the estimated changes in Clifton Savings Bank’s NPV and net interest income that would result from the designated changes in interest rates as of September 30, 2012, the most recent date the Bank’s interest rate risk was measured. Given the current economic environment, the Bank expects that these changes as of December 31, 2012 do not materially differ from the results presented. This data is for the Bank and its subsidiary only and does not included any assets of the Company. Such changes to interest rates are calculated as an immediate and permanent change for the purposes of computing NPV and a gradual change over a one year period for the purposes of computing net interest income. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results. We did not estimate changes in NPV or net interest income for an interest rate decrease of greater than 100 basis points or increase of greater than 200 basis points.

- 39 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative Analysis (Cont’d)

									Net Interest Income
	Net Portfolio Value (2)										Increase (Decrease) in Estimated Net Interest Income
			Estimated Increase (Decrease)						Estimated Net Interest Income (3)
Change in Interest  Rates                 Basis Point (bp) (1)	Estimated NPV
			Amount			Percent					Amount			Percent
	(Dollars in Thousands)
+200 bp	$	163,464	($	29,143	)		(15.13	)%	$	23,428	($	45	)		(0.19	)%
0		192,607		—			—			23,473		—			—
(100)		183,648		(8,959	)		(4.65	)		23,041		(432	)		(1.84	)

(1) Assumes an instantaneous and parallel shift in interest rates at all maturities.

(2) NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.

(3) Assumes a gradual change in interest rates over a one year period at all maturities.

The table set forth above indicates at September 30, 2012, in the event of a 200 basis point increase in interest rates, we would be expected to experience a 15.13% decrease in NPV and a $45,000 or 0.19%, decrease in net interest income. In the event of a 100 basis point decrease in interest rates, we would be expected to experience a 4.65% decrease in NPV and a $432,000, or 1.84%, decrease in net interest income. Please note that the NPV is a theoretical liquidation calculation which assumes the Bank is no longer a going concern and that the net interest income simulation is built upon a static (no growth or attrition) balance sheet. Accordingly, this data does not reflect any future actions management may take in response to changes in interest rates, such as changing the mix of assets and liabilities, which could change the results of the NPV and net interest income calculations.

Certain shortcomings are inherent in any methodology used in the above interest rate risk measurements. Modeling changes in NPV and net interest income require certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NPV and net interest income table presented above assumes the composition of Clifton Savings Bank’s interest-rate sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and, accordingly, the data do not reflect any actions we may take in response to changes in interest rates. The table also assumes a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or the repricing characteristics of specific assets and liabilities. Accordingly, although the NPV and net interest income table provide an indication of Clifton Savings Bank’s sensitivity to interest rate changes at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effects of changes in market interest rates on Clifton Savings Bank’s NPV and net interest income and will differ from actual results.

- 40 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

ITEM  4:

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the three months ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 41 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

PART II

ITEM 1. Legal Proceedings

Periodically, there have been various claims and lawsuits against the Company and Bank, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

ITEM 1A: Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under the section “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2012, as filed with the SEC on June 8, 2012, and our Quarterly Report on Form 10Q for the quarter ended September 30, 2012, as filed with SEC on November 8, 2012 which could materially affect our business, financial condition and/or operating results. As of December 31, 2012, the risk factors of the Company have not changed materially from those reported in the Form 10-K and 10Q, except as described above. The risks described in the Form 10-K and 10Q are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

(a) Unregistered Sale of Equity Securities. There were no sales of unregistered securities during the quarter ended December 31, 2012.

(b) Use of Proceeds. Not applicable.

(c) The following table sets forth information regarding the Company’s repurchases of its common stock during the quarter ended December 31, 2012.

- 42 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

PART II

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds (Cont’d)

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (1)
October 1—October 31, 2012		—	$	—		—		—
November 1—November 30, 2012		—		—		—		280,000
December 1—December 31, 2012		1,400		10.53		1,400		278,600
Total		1,400	$	10.53		1,400

(1) On November 29, 2012, the Company announced that the Board of Directors had approved its tenth stock repurchase program authorizing the Company to repurchase up to 280,000 shares of the Company’s common stock.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

- 43 -

CLIFTON SAVINGS BANCORP, INC. AND SUBSIDIARIES

PART II

ITEM 6. Exhibits

The following Exhibits are filed as part of this report.

3.1	Charter of Clifton Savings Bancorp, Inc. (1)
3.2	By-Laws of Clifton Savings Bancorp, Inc. (2)
4.1	Specimen Stock Certificate of Clifton Savings Bancorp, Inc. (1)
10.1	Employment Agreement between Clifton Savings Bancorp, Inc. and Christine R. Piano.*
10.2	Employment Agreement between Clifton Savings Bank and Bart D’Ambra.*
10.3	Employment Agreement between Clifton Savings Bank and Stephen A. Hoogerhyde.*
10.4	Employment Agreement between Clifton Savings Bank and Christine R. Piano.*
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.0	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.0**	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the unaudited Consolidated Financial Statements (detail tagged).

* Management contract or compensation plan arrangement.

** Furnished, not filed.

(1) Incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2004, filed with the Securities and Exchange Commission on June 29, 2004 (File No. 000-50358).

(2) Incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 26, 2007.

- 44 -

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.

	CLIFTON SAVINGS BANCORP, INC.
Date:    February 7, 2013	By:	/s/ John A. Celentano, Jr.
		John A. Celentano, Jr.
		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
Date:    February 7, 2013	By:	/s/ Christine R. Piano
		Christine R. Piano
		Chief Financial Officer and Treasurer (Principal Financial and Chief Accounting Officer)

- 45 -