CSBK Clifton Bancorp Inc. (MM)

Clifton Bancorp Inc. (NasdaqGS: CSBK), the holding company for Clifton Savings Bank, today announced results for the quarter ended June 30, 2014. Net income for the first quarter was $1.62 million ($0.06 per diluted share). This compares to net income of $1.75 million ($0.07 per diluted share) for the quarter ended June 30, 2013 and net income of $1.56 million ($0.06 per diluted share) for the quarter ended March 31, 2014.

First Quarter Highlights

• Completed the conversion to a fully public company on April 1, 2014;
• Capital strong at 28.9% of total assets at June 30, 2014;
• Combined cash dividend of $0.12 per common share for the quarters ended December 31, 2013 and March 31, 2014 declared and paid;
• Loan growth solid at 4.5% quarter over quarter.

Paul M. Aguggia, the Company’s Chairman, Chief Executive Officer and President, stated, “In our first fiscal quarter since the completion of our conversion to a fully-public company, we have taken several steps to set the stage for future growth. We have instituted several marketing and customer outreach efforts to grow our franchise organically and we are in the process of a core processor change that will bolster our product and service offerings. These initiatives require material investment, but we expect meaningful returns. Our largest expenditures will relate to the system conversion and could reach or exceed $600,000 over the next two quarters. We also continue to emphasize commercial and residential lending as key drivers of revenue, and we are pleased with our solid 4.5% quarter over quarter loan growth. All of our plans are being pursued with keen focus on maintaining pristine asset quality, expense discipline, and building stockholder value.”

Review of Balance Sheet and Credit Quality

The Company’s total assets decreased $34.3 million, or 2.7%, to $1.23 billion at June 30, 2014, from $1.27 billion at March 31, 2014. The decrease in total assets was primarily due to the Company’s decision to use excess liquidity to pay down a borrowing during the quarter ended June 30, 2014, as well as manage deposits by allowing certain promotional rates to expire. In addition, the stock subscription deposits received in connection with the Company’s second-step conversion were reflected in the Company’s total assets at March 31, 2014. Net loans increased $26.4 million, or 4.5%, to $611.0 million at June 30, 2014 from $584.5 million at March 31, 2014 mainly due to origination volume and purchases of one- to four-family loans being higher than repayment levels. One- to four-family loans increased 2.6% from last quarter. The increase in net loans for the period also includes an increase in multi-family and commercial real estate loans of $13.1 million, or 28.1%, quarter over quarter. Securities, including both available for sale and held to maturity issues, increased $48.3 million, or 11.4%, to $470.6 million at June 30, 2014 from $422.3 million at March 31, 2014, primarily as a result of deployment of cash received in the second step conversion. Cash and cash equivalents decreased $107.6 million, or 55.8%, to $85.0 million at June 30, 2014 from $192.6 million at March 31, 2014, because of the inclusion of stock subscription deposits of $154.3 million at March 31, 2014. After the completion of the second-step conversion, a large portion of cash and cash equivalents were redeployed into higher- yielding assets.

Deposits decreased $27.3 million, or 3.6%, to $736.6 million at June 30, 2014 from $763.9 million at March 31, 2014, mainly due to the withdrawal of monies previously received from a promotional rate passbook account. In addition, $5.9 million in deposits outstanding on March 31, 2014 were used to purchase stock in the subscription offering. Borrowed funds decreased $15.0 million, or 10.5%, to $127.5 million at June 30, 2014 from $142.5 million at March 31, 2014, as one borrowing was repaid in accordance with its original terms during the period. The average rate of outstanding borrowings as of June 30, 2014 was 1.83%. All outstanding borrowings are with the Federal Home Loan Bank of New York.

Total stockholders’ equity increased $162.4 million, or 83.6%, to $356.5 million at June 30, 2014 from $194.1 million at March 31, 2014. The increase resulted primarily from net proceeds from the second-step conversion of $163.3 million, and net income of $1.6 million, partially offset by cash dividends paid of $3.0 million.

Non-accrual loans increased $339,000, or 6.6%, to $5.5 million at June 30, 2014 from $5.1 million at March 31, 2014. Included in non-accrual loans at June 30, 2014 were thirteen loans totaling $3.0 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 until there is a sustained period of repayment performance (generally six months). The percentage of non-performing loans to total loans increased to 0.89% at June 30, 2014, from 0.88% at March 31, 2014. The percentage of allowance for loan losses to nonperforming loans decreased to 57.12% at June 30, 2014 from 59.84% at March 31, 2014.

During the three months ended June 30, 2014, net charge-offs totaled $84,000 as compared to $92,000 during the three months ended March 31, 2014, and $40,000 during the three months ended June 30, 2013. For the three months ended June 30, 2014, there were charge-offs on two one- to four-family residential real estate loans. The charge-off for the three months ended March 31, 2014 related to one one- to four-family residential real estate loan, net of a partial recovery from a private mortgage insurance claim on a loan that was charged-off in late 2012. For the 2013 period, the charge-off related to a one- to four-family residential real estate loan, net of a partial recovery from a private mortgage insurance claim on the same loan noted above.

Income Statement Review

Net interest income increased $728,000, or 12.8%, for the three months ended June 30, 2014, to $6.40 million, as compared to $5.67 million for three months ended June 30, 2013, reflecting an increase of $91.1 million in average net interest-earning assets partially offset by a decrease of 3 basis points in net interest margin. Average interest-earning assets increased $138.0 million, or 14.4%, during the three months ended June 30, 2014, as compared to the three months ended June 30, 2013, which consisted of increases of $124.9 million in loans, $15.5 million in investment securities, and $30.5 million in other interest-earning assets, partially offset by a decrease of $32.9 million in mortgage-backed securities. The average balance of loans increased as the Bank continues to emphasize the growth of its loan portfolio (through loan originations, as supplemented by purchased loans) while repayment levels declined as fewer borrowers sought to refinance. Investment securities increased with the deployment of second step conversion proceeds into higher-yielding agency and municipal securities. Other interest-earning assets increased as some funds received from the subscription offering 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 increased $47.0 million, or 5.7%, during the three months ended June 30, 2014, primarily as a result of an increase of $78.8 million in borrowings, mostly originated in late 2013, which were used primarily to fund loan growth, partially offset by a decrease of $31.8 million in deposits.

The provision for loan losses decreased $42,000, or 23.3%, to $138,000 for the three months ended June 30, 2014 as compared to $180,000 for the three months ended June 30, 2013. The decrease in the provision for loan losses for the three months ended June 30, 2014 was mainly the result of more favorable trends in qualitative factors for delinquencies included in the periodic review of the general valuation allowance. During the three months ended June 30, 2014 and 2013, there also were normal recurring adjustments made to the historical loss and other qualitative factor components of the Bank’s general valuation allowance.

Non-interest income decreased $535,000, or 60.6%, to $348,000 for the three months ended June 30, 2014, as compared to $883,000 for the three months ended June 30, 2013. The decrease was mainly due to a $566,000 gain on sale of securities being included in the 2013 period.

Non-interest expenses increased $464,000, or 12.6%, to $4.14 million for the three months ended June 30, 2014, as compared to $3.67 million for the three months ended June 30, 2013. The increase was primarily the result of increases of $376,000, or 18.4%, in salaries and employee benefits, and $71,000, or 15.8%, in other miscellaneous expenses. The increase in salaries and employee benefits in the 2014 period was mainly due to an increase in costs associated with the transition and expansion of our management team, primarily our new Chief Executive Officer hired in January 2014, and a new Executive Vice President hired in April 2014, along with normal annual salary and benefit expense increases, including a $157,000 increase in employee stock ownership plan expense. Miscellaneous expenses include typical annual increases in operational expenses, as well as expenses associated with new investments in the Bank’s core business.

About Clifton Bancorp Inc.

Clifton Bancorp Inc. is the holding company of Clifton Savings Bank, a federally chartered savings bank headquartered in Clifton, New Jersey, which currently operates a total of 12 full-service banking offices in northeast New Jersey.

Forward-Looking Statements

Clifton Bancorp makes forward-looking statements in this news release. These forward-looking statements may include: statements of goals, intentions, earnings expectations, and other expectations; estimates of risks and of future costs and benefits; assessments of probable loan and lease losses; assessments of market risk; and statements of the ability to achieve financial and other goals.

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 Company’s loan or investment portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; the Company’s 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 its Annual Report on Form 10-K filed on June 6, 2014 in the Risk Factors section. 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.

          Selected Consolidated Financial Condition Data   At June 30, At March 31, 2014   2014 (In thousands) Financial Condition Data: Total assets $ 1,231,730 $ 1,265,990 Loans receivable, net 610,950 584,507 Cash and cash equivalents 85,042 192,581 Securities 470,605 422,295 Deposits 736,557 763,912 FHLB advances 127,500 142,500 Stock subscription deposits - 154,345 Total stockholders' equity 356,491 194,137     Selected Consolidated Operating Data Three Months Ended June 30, 2014 2013 (In thousands, except share and per share data) Operating Data: Interest income $ 8,712 $ 8,187 Interest expense 2,311 2,514 Net interest income 6,401 5,673 Provision for loan losses 138 180 Net interest income after provision for loan losses 6,263 5,493 Non-interest income 348 883 Non-interest expenses 4,137 3,673 Income before income taxes 2,474 2,703 Income taxes 852 955 Net income $ 1,622 $ 1,748 Basic and diluted earnings per share $ 0.06 $ 0.07   Average shares outstanding - basic 25,244 25,279 Average shares outstanding - diluted 25,413 25,509         Average Balance Table Three Months Ended June 30, 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 $597,112 $5,676 3.80% $472,175 $4,812 4.08% Mortgage-backed securities 306,831 2,365 3.08% 339,772 2,784 3.28% Investment securities 141,681 590 1.67% 126,176 550 1.74% Other interest-earning assets 50,128 81 0.65% 19,587 41 0.84% Total interest-earning assets 1,095,752 8,712 3.18% 957,710 8,187 3.42%   Non-interest-earning assets 149,253 72,586 Total assets $1,245,005 $1,030,296   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $56,799 18 0.13% $57,775 23 0.16% Savings and Club accounts 143,501 63 0.18% 138,715 91 0.26% Certificates of deposit 533,040 1,636 1.23% 568,612 1,928 1.36% Total interest-bearing deposits 733,340 1,717 0.94% 765,102 2,042 1.07% FHLB Advances 131,250 594 1.81% 52,500 472 3.60% Total interest-bearing liabilities 864,590 2,311 1.07% 817,602 2,514 1.23%   Non-interest-bearing liabilities: Non-interest-bearing deposits 12,452 13,445 Other non-interest-bearing liabilities 13,281 11,345 Total non-interest-bearing liabilities 25,733 24,790   Total liabilities 890,323 842,392 Stockholders' equity 354,682 187,904 Total liabilities and stockholders' equity $1,245,005 $1,030,296   Net interest income $6,401 $5,673 Interest rate spread 2.11% 2.19% Net interest margin 2.34% 2.37% Average interest-earning assets to average interest-bearing liabilities 1.27 x 1.17 x     Asset Quality Data Three Three Three Months Months Months Ended Ended Ended June 30, March 31, June 30, 2014 2014 2013 (Dollars in thousands) Allowance for loan losses: Allowance at beginning of period $ 3,071 $ 3,050 $ 2,500 Provision for loan losses 138 113 180   Charge-offs (84) (103) (45) Recoveries - 11 5 Net charge-offs (84) (92) (40)   Allowance at end of period $ 3,125 $ 3,071 $ 2,640   Allowance for loan losses to total gross loans 0.51% 0.52% 0.53% Allowance for loan losses to nonperforming loans 57.12% 59.84% 45.67%     At June 30, At March 31, At June 30, 2014 2014 2013 (Dollars in thousands) Nonperforming Assets: Nonaccrual loans: One- to four-family real estate $ 5,188 $ 4,848 $ 5,354 Commercial real estate 246 247 250 Consumer real estate 37 37 - Total nonaccrual loans 5,471 5,132 5,604 Real estate owned 124 - 204 Total nonperforming assets $ 5,595 $ 5,132 $ 5,808   Total nonperforming loans to total gross loans 0.89% 0.88% 1.17% Total nonperforming assets to total assets 0.45% 0.41% 0.57%     Selected Consolidated Financial Ratios Three Months Ended June 30, Selected Performance Ratios (1): 2014 2013 Return on average assets 0.52% 0.68% Return on average equity 1.83% 3.72% Interest rate spread 2.11% 2.19% Net interest margin 2.34% 2.37% Non-interest expenses to average assets 1.33% 1.43% Efficiency ratio (2) 61.30% 56.03% Average interest-earning assets to average interest-bearing liabilities 1.27x 1.17x Average equity to average assets 28.49% 18.24% Dividend payout ratio 186.56% 88.62%   Capital Ratios (3): Core (tier 1) capital 20.88% 16.18% Tier 1 risk-based capital 47.83% 38.62% Total risk-based capital 48.44% 39.23%     (1) Performance ratio are annualized.

(2) Represents non-interest expense divided by the sum of net interest income and non-interest income including gains and losses on the sale of assets.

(3) Ratios are for Clifton Savings Bank and subsidiary only.     Quarterly Data Quarter Ended June 30, March 31, December 31, September 30, June 30, 2014 2014 2013 2013 2013 (In thousands except shares and per share data)

Operating Data

Interest income $ 8,712 $ 8,657 $ 8,583 $ 8,310 $ 8,187 Interest expense 2,311 2,343 2,491 2,514 2,514 Net interest income 6,401 6,314 6,092 5,796 5,673 Provision for loan losses 138 113 128 356 180 Net interest income after provision for loan losses 6,263 6,201 5,964 5,440 5,493 Non-interest income 348 352 311 321 883 Non-interest expenses 4,137 4,171 3,613 3,624 3,673 Income before income taxes 2,474 2,382 2,662 2,137 2,703 Income taxes 852 825 907 732 955 Net income $ 1,622 $ 1,557 $ 1,755 $ 1,405 $ 1,748  

Share Data

Basic earnings per share $ 0.06 $ 0.06 $ 0.07 $ 0.06 $ 0.07 Diluted earnings per share $ 0.06 $ 0.06 $ 0.07 $ 0.05 $ 0.07 Dividends per share $ 0.12 $ - $ 0.06 $ 0.06 $ 0.06 Average shares outstanding - basic 25,244 25,590 25,387 25,309 25,279 Average shares outstanding - diluted 25,413 25,817 25,643 25,555 25,509 Shares outstanding at period end 26,596 26,529 26,470 26,248 26,242  

Financial Condition Data

Total assets $ 1,231,730 $ 1,265,990 $ 1,099,073 $ 1,082,866 $ 1,042,941 Loans receivable, net 610,950 584,507 577,388 554,450 492,204 Cash and cash equivalents 85,042 192,581 11,901 14,812 46,152 Securities 470,605 422,295 450,203 456,023 449,813 Deposits 736,557 763,912 774,529 791,387 789,705 FHLB advances 127,500 142,500 122,500 92,500 52,500 Stock subscription deposits - 154,345 - - - Total stockholders' equity 356,491 194,137 191,460 188,521 188,322  

Asset Quality:

Total nonperforming assets $ 5,595 $ 5,132 $ 4,561 $ 5,149 $ 5,985 Total nonperforming loans to total gross loans 0.89% 0.88% 0.79% 0.85% 1.17% Total nonperforming assets to total assets 0.45% 0.41% 0.41% 0.48% 0.57% Allowance for loan losses $ 3,125 $ 3,071 $ 3,050 $ 2,950 $ 2,640 Allowance for loan losses to total gross loans 0.51% 0.52% 0.53% 0.53% 0.53% Allowance for loan losses to nonperforming loans 57.12% 59.84% 66.87% 62.18% 45.67% Net charge-offs to average outstanding loans during the period 0.01% 0.02% 0.00% 0.01% 0.01%  

As a result of the completion of the Plan of Conversion on April 1, 2014, share and per share data, as appropriate, was adjusted to reflect the 0.9791 exchange ratio for preceding periods.

 

Clifton Bancorp Inc.Bart D’Ambra, 973-473-2200