clifton8kreleasefeb4-15.htm

Clifton, New Jersey – February 4, 2015 -- Clifton Bancorp Inc. (NasdaqGS: CSBK), the holding company for Clifton Savings Bank (the “Bank”), today announced results for the third quarter ended December 31, 2014. Net income for the third quarter was $1.94 million ($0.08 per diluted share). This compares to net income of $1.76 million ($0.07 per diluted share) for the quarter ended December 31, 2013. Net income for the nine months ended December 31, 2014 was $5.04 million ($0.20 per diluted share) as compared to $4.91 million ($0.19 per diluted share) for the same period in 2013.

Paul M. Aguggia, Chairman, President, and Chief Executive Officer, stated, “We strategically invested time and resources in the third quarter implementing our core system, enabling us to compete more effectively by offering additional products and services. We are pleased to deliver increased earnings while we implement strategies to grow our banking business. We will continue to develop products, services and talent while leveraging our capital prudently and striving to maintain pristine asset quality and expense discipline.”

Total assets decreased $67.8 million, or 5.4%, to $1.20 billion at December 31, 2014, from $1.27 billion at March 31, 2014. The decrease in total assets was primarily due to paying down borrowings and managing the cost of funds by allowing controlled deposit runoff. In addition, the stock subscription deposits received in connection with the Bank’s second-step conversion are reflected in total assets at March 31, 2014. The conversion was completed on April 1, 2014.

Net loans increased $44.4 million, or 7.6%, to $628.9 million at December 31, 2014 from $584.5 million at March 31, 2014. One- to four-family real estate loans increased $23.6 million, or 4.5%, while multi-family and commercial real estate loans increased $22.0 million, or 47.0%, for the period. Securities, including both available for sale and held to maturity issues, increased $24.2 million, or 5.7%, to $446.5 million at December 31, 2014 from $422.3 million at March 31, 2014, primarily as a result of the deployment of second- step conversion cash proceeds. Cash and cash equivalents decreased $146.9 million, or 76.3%, to $45.7 million at December 31, 2014 from $192.6 million at March 31, 2014. Stock subscription deposits of $154.3 million are included at March 31, 2014. Cash and cash equivalents were redeployed into higher-yielding assets following the completion of the second-step conversion.

Deposits decreased $52.4 million, or 6.9%, to $711.5 million at December 31, 2014 from $763.9 million at March 31, 2014, mainly due to the downsizing of higher priced, rate-sensitive deposit accounts. In addition, $5.9 million in deposits outstanding on March 31, 2014 were used to purchase stock in the second-step conversion. Borrowed funds decreased $30.0 million, or 21.1%, to $112.5 million at December 31, 2014 from $142.5 million at March 31, 2014, as two borrowings were repaid in accordance with their original terms during the period. The average rate of outstanding borrowings as of December 31, 2014 is 2.01% and has an average term of 21 months. All outstanding borrowings are with the Federal Home Loan Bank of New York.

Non-accrual loans decreased $1.1 million, or 22.2%, to $4.0 million at December 31, 2014 from $5.1 million at March 31, 2014. Included in non-accrual loans at December 31, 2014 were twelve loans totaling $2.1 million that were current or less than 90 days delinquent, but which were previously 90 days or more delinquent and on a non-accrual status pending a sustained period of repayment performance (generally six months). The percentage of nonperforming loans to total gross loans decreased to 0.63% at December 31, 2014, from 0.88% at March 31, 2014. This percentage is the lowest since September 30, 2010. The percentage of allowance for loan losses to nonperforming loans increased to 84.5% at December 31, 2014 from 59.84% at March 31, 2014.

During the nine months ended December 31, 2014, net charge-offs totaled $313,000 as compared to $114,000 during the nine months ended December 31, 2013. For the nine months ended December 31, 2014, the charge-offs related to five one- to four-family residential real estate loans. For the 2013 period, the charge-offs related to two one- to four-family residential real estate loans and one multi-family loan restructuring, net of a partial recovery from a private mortgage insurance claim on a loan charged-off in a previous quarter.

Net interest income increased $652,000, or 10.7%, for the three months ended December 31, 2014, to $6.74 million, as compared to $6.09 million for three months ended December 31, 2013, reflecting an increase of $141.1 million in average net interest-earning assets coupled with an increase of 7 basis points in net interest margin. Average interest-earning assets increased $80.9 million, or 7.8%, during the three months ended December 31, 2014, as compared to the three months ended December 31, 2013, which consisted of increases of $55.4 million in loans, $10.4 million in investment securities, and $26.4 million in other interest-earning assets, partially offset by a decrease of $11.3 million in mortgage-backed securities. The average balance of loans increased as the Bank continues to emphasize the growth of its loan portfolio; repayment levels remained stable during the quarter. Investment securities increased with the deployment of cash and cash equivalents into higher-yielding agency securities. Other interest-earning assets increased as funds received from calls and principal repayments of investment and mortgage-backed securities were kept in cash and cash equivalents. Mortgage-backed securities decreased due to principal repayments of securities exceeding purchases as funds were redeployed into loans and other investment securities. Average interest-bearing liabilities decreased $60.2 million, or 6.8%, during the three months ended December 31, 2014, primarily as a result of decreases of $57.7 million in deposits and $2.5 million in borrowings.

Net interest income increased $2.17 million, or 12.3%, for the nine months ended December 31, 2014, to $19.73 million, as compared to $17.56 million for nine months ended December 31, 2013, reflecting an increase of $118.5 million in average net interest-earning assets coupled with an increase of 2 basis points in net interest margin. Average interest-earning assets increased $113.3 million, or 11.4%, during the nine months ended December 31, 2014, as compared to the nine months ended December 31, 2013, and consisted of increases of $90.8 million in loans, $12.9 million in investment securities, and $30.4 million in other interest-earning assets, partially offset by a decrease of $20.8 million in mortgage-backed securities. The average balance of loans increased while repayment levels remained stable. Investment securities increased with the deployment of second-step conversion proceeds into higher-yielding agency and municipal securities. Other interest-earning assets increased as funds received from calls and principal repayments of investment and mortgage-backed securities remained in cash and cash equivalents. Mortgage-backed securities decreased due to principal repayments of securities exceeding purchases as funds were redeployed into loans and other investment securities. Average interest-bearing liabilities decreased $5.3 million, or 0.6%, during the nine months ended December 31, 2014, primarily as a result of a decrease of $45.8 million in deposits, partially offset by an increase of $40.5 million in borrowings, mostly originated in late 2013, which were used primarily to fund loan growth.

The provision for loan losses increased $50,000, or 39.1%, to $178,000 for the three months ended December 31, 2014 as compared to $128,000 for the three months ended December 31, 2013, but decreased $47,000, or 7.1%, to $617,000 for the nine months ended December 31, 2014 as compared to $664,000 for the nine months ended December 31, 2013. The decrease in the provision for loan losses for the nine-month period ended December 31, 2014 was mainly the result of more overall favorable trends in qualitative factors related to delinquency and charge-off trends considered in the periodic review of the general valuation allowance, even though the actual provision for the 2014 three-month period was higher. During the periods ended December 31, 2014 and 2013, there also were typical recurring adjustments made to the historical loss and other qualitative factor components of the Bank’s general valuation allowance.

Non-interest income increased $86,000, or 27.7%, to $397,000 for the three months ended December 31, 2014, as compared to $311,000 for the three months ended December 31, 2013. The increase was mainly due to a $97,000 increase in income from bank owned life insurance. The Bank purchased additional insurance during the 2014 period. Non-interest income decreased $296,000, or 19.5%, to $1.22 million for the nine months ended December 31, 2014, as compared to $1.52 million for the nine months ended December 31, 2013. This decrease was mainly due to the inclusion of $464,000 of additional gains on sale of securities in the 2013 period, net of the increase of $174,000 in income from bank owned life insurance in the 2014 period.

Non-interest expenses increased $462,000, or 12.8%, to $4.08 million for the three months ended December 31, 2014, as compared to $3.61 million for the three months ended December 31, 2013, and $1.83 million, or 16.8%, to $12.74 million for the nine months ended December 31, 2014 as compared to $10.91 million for the same 2013 period. The increases for the three- and nine-month periods were primarily the result of increases of $258,000, or 12.5%, and $1.02 million, or 16.6%, respectively, in salaries and employee benefits, $61,000, or 19.7%, and $207,000, or 22.5%, respectively, in equipment expense, $88,000, or 195.6%, and $74,000, or 37.8%, respectively, in advertising and marketing expenses, and $130,000, or 33.6%, and $410,000, or 31.6%, respectively, in other miscellaneous expenses. There was also a $141,000, or 21.7%, increase in directors compensation for the nine months ended December 31, 2014. The increases in salaries and employee benefits in the 2014 periods were mainly due to an increase in costs associated with the transition and expansion of our management team, along with annual salary and benefit expense increases, including an increase of $171,000 and $500,000, respectively, in employee stock ownership plan expenses for the three- and nine-month periods ended December 31, 2014. The increases in equipment expense for the three and nine-month periods ended December 31, 2014 were related to $97,000 and $263,000, respectively, in expenditures associated with the core processor change. Advertising and marketing expenses increased for the periods as management has intensified efforts to offer new products and expand the Bank’s current customer base. Miscellaneous expenses include typical annual increases in operational expenses, as well as expenses associated with consultants and new investments in the Bank’s core business and in expenses related to the core processor change during the nine-month period ended December 31, 2014. The increase in directors’ compensation for the nine-month period related to a charge recorded as a result of a one-time payment from the directors’ retirement plan.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Clifton Bancorp does not assume any duty and does not undertake to update its forward-looking statements. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those that Clifton Bancorp anticipated in its forward-looking statements and future results could differ materially from historical performance.

Clifton Bancorp’s forward-looking statements are subject to the following principal risks and uncertainties: general economic conditions and trends, either nationally or locally; conditions in the securities markets; changes in interest rates; changes in deposit flows, and in the demand for deposit, loan, and investment products and other financial services; changes in real estate values; changes in the quality or composition of the loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the ability to retain key members of management; changes in legislation, regulations, and policies; and a variety of other matters which, by their nature, are subject to significant uncertainties. Clifton Bancorp provides greater detail regarding some of these factors in the “Risk Factors” section of its Annual Report on Form 10-K, which was filed on June 6, 2014. Clifton Bancorp’s forward-looking statements may also be subject to other risks and uncertainties, including those that it may discuss elsewhere in this news release or in its filings with the SEC, accessible on the SEC’s website at www.sec.gov.

		At December 31, 2014		At March 31, 2014
		(In thousands)
Financial Condition Data:
Total assets	$	1,198,171	$	1,265,990
Loans receivable, net		628,872		584,507
Cash and cash equivalents		45,668		192,581
Securities		446,511		422,295
Deposits		711,486		763,912
FHLB advances		112,500		142,500
Stock subscription deposits		-		154,345
Total stockholders' equity		363,765		194,137

	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2014		2013		2014		2013
	(In thousands, except share and per share data)
Operating Data:
Interest income	$	8,993	$	8,583	$	26,604	$	25,080
Interest expense		2,249		2,491		6,877		7,519
Net interest income		6,744		6,092		19,727		17,561
Provision for loan losses		178		128		617		664
Net interest income after provision for
loan losses		6,566		5,964		19,110		16,897
Non-interest income		397		311		1,219		1,515
Non-interest expenses		4,075		3,613		12,744		10,910
Income before income taxes		2,888		2,662		7,585		7,502
Income taxes		948		907		2,544		2,594
Net income	$	1,940	$	1,755	$	5,041	$	4,908
Basic and diluted earnings per share	$	0.08	$	0.07	$	0.20	$	0.19

Average shares outstanding - basic		25,594		25,387		25,391		25,325
Average shares outstanding - diluted		25,728		25,643		25,565		25,570

	Three Months Ended December 31,
	2014							2013
				Interest							Interest
	Average			and		Yield/		Average			and		Yield/
	Balance			Dividends		Cost		Balance			Dividends		Cost
Assets:	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	624,831		$	5,919	3.79	%	$	569,387		$	5,471	3.84	%
Mortgage-backed securities		302,989			2,281	3.01	%		314,301			2,492	3.17	%
Investment securities		150,325			704	1.87	%		139,956			569	1.63	%
Other interest-earning assets		37,554			89	0.95	%		11,142			51	1.83	%
Total interest-earning assets		1,115,699			8,993	3.22	%		1,034,786			8,583	3.32	%

Non-interest-earning assets		85,720							61,952
Total assets	$	1,201,419						$	1,096,738

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Demand accounts	$	55,006			18	0.13	%	$	57,625			19	0.13	%
Savings and Club accounts		138,601			59	0.17	%		160,750			135	0.34	%
Certificates of deposit		514,687			1,594	1.24	%		547,575			1,755	1.28	%
Total interest-bearing deposits		708,294			1,671	0.94	%		765,950			1,909	1.00	%
FHLB Advances		112,500			578	2.06	%		115,000			582	2.02	%
Total interest-bearing liabilities		820,794			2,249	1.10	%		880,950			2,491	1.13	%

Non-interest-bearing liabilities:
Non-interest-bearing deposits		10,662							16,527
Other non-interest-bearing liabilities		9,744							9,904
Total non-interest-bearing liabilities		20,406							26,431

Total liabilities		841,200							907,381
Stockholders' equity		360,219							189,357
Total liabilities and stockholders' equity	$	1,201,419						$	1,096,738

Net interest income				$	6,744						$	6,092
Interest rate spread						2.12	%						2.19	%
Net interest margin						2.42	%						2.35	%
Average interest-earning assets
to average interest-bearing liabilities		1.36	x						1.17	x

	Nine Months Ended December 31,
	2014							2013
				Interest							Interest
	Average			and		Yield/		Average			and		Yield/
	Balance			Dividends		Cost		Balance			Dividends		Cost
Assets:	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	611,422		$	17,394	3.79	%	$	520,633		$	15,433	3.95	%
Mortgage-backed securities		304,587			6,985	3.06	%		325,402			7,822	3.20	%
Investment securities		147,308			1,960	1.77	%		134,441			1,692	1.68	%
Other interest-earning assets		46,572			265	0.76	%		16,159			133	1.10	%
Total interest-earning assets		1,109,889			26,604	3.20	%		996,635			25,080	3.36	%

Non-interest-earning assets		115,236							68,720
Total assets	$	1,225,125						$	1,065,355

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Demand accounts	$	55,862			55	0.13	%	$	57,798			61	0.14	%
Savings and Club accounts		140,499			183	0.17	%		151,375			339	0.30	%
Certificates of deposit		525,402			4,875	1.24	%		558,358			5,551	1.33	%
Total interest-bearing deposits		721,763			5,113	0.94	%		767,531			5,951	1.03	%
FHLB Advances		123,000			1,764	1.91	%		82,500			1,568	2.53	%
Total interest-bearing liabilities		844,763			6,877	1.09	%		850,031			7,519	1.18	%

Non-interest-bearing liabilities:
Non-interest-bearing deposits		11,458							15,094
Other non-interest-bearing liabilities		11,527							11,812
Total non-interest-bearing liabilities		22,985							26,906

Total liabilities		867,748							876,937
Stockholders' equity		357,377							188,418
Total liabilities and stockholders' equity	$	1,225,125						$	1,065,355

Net interest income				$	19,727						$	17,561
Interest rate spread						2.11	%						2.18	%
Net interest margin						2.37	%						2.35	%
Average interest-earning assets
to average interest-bearing liabilities		1.31	x						1.17	x

	Nine
	Months			Year
	Ended			Ended
	December 31,			March 31,
	2014			2014
	(Dollars in thousands)
Allowance for loan losses:
Allowance at beginning of period	$	3,071		$	2,500
Provision for loan losses		617			777

Charge-offs		(313	)		(222	)
Recoveries		-			16
Net charge-offs		(313	)		(206	)

Allowance at end of period	$	3,375		$	3,071

Allowance for loan losses to total gross loans		0.54	%		0.52	%
Allowance for loan losses to nonperforming loans		84.50	%		59.84	%

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
Selected Performance Ratios (1):	2014			2013			2014			2013
Return on average assets		0.65	%		0.64	%		0.55	%		0.61	%
Return on average equity		2.15	%		3.71	%		1.88	%		3.47	%
Interest rate spread		2.12	%		2.19	%		2.11	%		2.18	%
Net interest margin		2.42	%		2.35	%		2.37	%		2.35	%
Non-interest expenses to average assets		1.36	%		1.32	%		1.39	%		1.37	%
Efficiency ratio (2)		57.06	%		56.43	%		60.84	%		57.19	%
Average interest-earning assets to average
interest-bearing liabilities		1.36	x		1.17	x		1.31	x		1.17	x
Average equity to average assets		29.98	%		17.27	%		29.17	%		17.69	%
Dividend payout ratio		78.87	%		88.26	%		120.49	%		94.68	%
Net charge-offs to average outstanding loans during
the period		0.03	%		0.02	%		0.07	%		0.03	%

Capital Ratios (3):
Core (tier 1) capital		21.09	%		15.27	%		21.09	%		15.27	%
Tier 1 risk-based capital		46.72	%		15.15	%		46.72	%		35.15	%
Total risk-based capital		47.37	%		35.79	%		47.37	%		35.79	%

	Quarter Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2014			2014			2014			2014			2013
	(In thousands except shares and per share data)
Operating Data
Interest income	$	8,993		$	8,899		$	8,712		$	8,657		$	8,583
Interest expense		2,249			2,317			2,311			2,343			2,491
Net interest income		6,744			6,582			6,401			6,314			6,092
Provision for loan losses		178			301			138			113			128
Net interest income after provision for
loan losses		6,566			6,281			6,263			6,201			5,964
Non-interest income		397			474			348			352			311
Non-interest expenses		4,075			4,532			4,137			4,171			3,613
Income before income taxes		2,888			2,223			2,474			2,382			2,662
Income taxes		948			744			852			825			907
Net income	$	1,940		$	1,479		$	1,622		$	1,557		$	1,755

Share Data
Basic and diluted earnings per share	$	0.08		$	0.06		$	0.06		$	0.06		$	0.07
Dividends per share	$	0.06		$	0.06		$	0.12		$	-		$	0.06
Average shares outstanding - basic		25,594			25,333			25,244			25,590			25,387
Average shares outstanding - diluted		25,728			25,521			25,413			25,817			25,643
Shares outstanding at period end		27,145			26,676			26,596			26,529			26,470

Financial Condition Data
Total assets	$	1,198,171		$	1,211,527		$	1,231,730		$	1,265,990		$	1,099,073
Loans receivable, net		628,872			617,024			610,950			584,507			577,388
Cash and cash equivalents		45,668			74,979			85,042			192,581			11,901
Securities		446,511			454,595			470,605			422,295			450,203
Deposits		711,486			731,070			736,557			763,912			774,529
FHLB advances		112,500			112,500			127,500			142,500			122,500
Stock subscription deposits		-			-			-			154,345			-
Total stockholders' equity		363,765			357,693			356,491			194,137			191,460

Assets Quality:
Total nonperforming assets	$	3,994		$	4,509		$	5,595		$	5,132		$	4,561
Total nonperforming loans to total gross loans		0.63	%		0.73	%		0.89	%		0.88	%		0.79	%
Total nonperforming assets to total assets		0.33	%		0.37	%		0.45	%		0.41	%		0.41	%
Allowance for loan losses	$	3,375		$	3,250		$	3,125		$	3,071		$	3,050
Allowance for loan losses to total gross loans		0.54	%		0.53	%		0.51	%		0.52	%		0.53	%
Allowance for loan losses to nonperforming loans		84.50	%		72.08	%		57.12	%		59.84	%		66.87	%

	At December 31,			At March 31,
	2014			2014
	(Dollars in thousands)

Nonaccrual loans:
One- to four-family real estate	$	3,481		$	4,848
Commercial real estate		440			247
Consumer real estate		73			37
Total nonaccrual loans		3,994			5,132
Real estate owned		-			-
Total nonperforming assets	$	3,994		$	5,132

		0.63	%		0.88	%
		0.33	%		0.41	%