CSBK Clifton Bancorp Inc. (MM)

Clifton Bancorp Inc. (Nasdaq: CSBK), the holding company for Clifton Savings Bank (the “Bank”), today announced results for the quarter and year ended March 31, 2015. Net income for the fourth quarter was $3.51 million ($0.13 per diluted share) as compared to net income of $1.56 million ($0.06 per diluted share) for the quarter ended March 31, 2014. Net income for the year ended March 31, 2015 was $8.55 million ($0.33 per diluted share) as compared to $6.47 million ($0.25 per diluted share) for the same period in 2014.

Notable Items

• Quarterly income of $3.51 million, up significantly versus previous quarters, included non-recurring items;
• Net loans increased 1.9% and 9.7% during the three months and year ended March 31, 2015, respectively; and
• Multi-family and commercial real estate loans increased $27.5 million, or 58.9%, from March 31, 2014

Paul M. Aguggia, Chairman, President, and Chief Executive Officer, stated, “This year our team concentrated on expanding our real estate lending activities while concurrently executing on our strategy to enhance customer relationships and reduce interest expense. We also invested in upgrading our infrastructure and augmenting personnel to deliver enhanced products and services. Our announcement of our proposed new Hoboken office illustrates our desire to bring our community-focused banking model to key locations. Combined, these initiatives helped us turn in a solid financial performance this past year and position us nicely for our 2016 fiscal year and beyond.”

The Board of Directors is also pleased to announce a regular cash dividend of $.06 per share, as well as an additional, special dividend of $.06 per share. The combined $0.12 dividend per share will be paid on June 12, 2015 to stockholders of record on May 29, 2015.

Commenting on the combined dividend, Mr. Aguggia stated: “In light of our strong capital position the Board decided to pay out to shareholders a significant portion of the additional earnings recognized this quarter from non-recurring items.”

Balance Sheet and Credit Quality Review

Total assets decreased $79.1 million, or 6.3%, to $1.19 billion at March 31, 2015, from $1.27 billion at March 31, 2014. The decrease in total assets was primarily due to paying down borrowings and continuing to manage the cost of funds by allowing controlled, higher priced deposit runoff. In addition, stock subscription deposits in connection with the Bank’s second-step conversion totaling $154.3 million were reflected in total assets at March 31, 2014. The conversion was completed on April 1, 2014.

Net loans increased $56.6 million, or 9.7%, to $641.1 million at March 31, 2015 from $584.5 million at March 31, 2014. One- to four-family real estate loans increased $30.6 million, or 5.8%, while multi-family and commercial real estate loans increased $27.5 million, or 58.9%, during fiscal 2015. Securities, including both available for sale and held to maturity issues, decreased $3.4 million, or 0.8%, to $418.9 million at March 31, 2015 from $422.3 million at March 31, 2014. Cash and cash equivalents decreased $143.3 million, or 74.4%, to $49.3 million at March 31, 2015 from $192.6 million at March 31, 2014 as stock subscription deposits held at March 31, 2014 were redeployed into higher-yielding assets or used to repay borrowings during fiscal 2015 following the completion of the second-step conversion.

Deposits decreased $64.4 million, or 8.4%, to $699.5 million at March 31, 2015 from $763.9 million at March 31, 2014, mainly due to the previously noted downsizing of higher priced 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 $35.0 million, or 24.6%, to $107.5 million at March 31, 2015 from $142.5 million at March 31, 2014, as two borrowings were repaid in accordance with their original terms during fiscal 2015. Total stockholders’ equity increased $173.9 million, or 89.6%, to $368.0 million at March 31, 2015 from $194.1 million at March 31, 2014. The increase resulted primarily from net proceeds from the second-step conversion of $163.2 million, net income of $8.55 million, and exercises of stock options and related tax benefits of $7.95 million, partially offset by cash dividends paid of $7.63 million.

Non-accrual loans increased $516,000, or 10.1%, to $5.6 million at March 31, 2015 from $5.1 million at March 31, 2014. Included in non-accrual loans at March 31, 2015 were nine loans totaling $1.3 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 remained constant at 0.88% at both March 31, 2015 and 2014. The percentage of allowance for loan losses to nonperforming loans increased to 61.53% at March 31, 2015 from 59.84% at March 31, 2014.

During the year ended March 31, 2015, net charge-offs totaled $313,000 as compared to $206,000 during the year ended March 31, 2014. For the year ended March 31, 2015, the charge-offs related to five one- to four-family residential real estate loans. For fiscal 2014, the charge-offs related to three 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.

Income Statement Review

Net interest income increased $88,000, or 1.4%, to $6.40 million, for the three months ended March 31, 2015, as compared to $6.31 million for three months ended March 31, 2014, reflecting an increase of $152.9 million in average net interest-earning assets offset by a decrease of 12 basis points in net interest margin. Average interest-earning assets increased $67.8 million, or 6.5%, during the three months ended March 31, 2015, as compared to the three months ended March 31, 2014, which consisted of increases of $55.4 million in loans, $10.8 million in investment securities, and $24.4 million in other interest-earning assets, partially offset by a decrease of $22.8 million in mortgage-backed securities. The average balance of loans increased as the Bank continues to emphasize the growth of its loan portfolio, but repayment levels remained stable during the quarter. Investment securities increased with the deployment of some 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 the sales and principal repayments of securities exceeding purchases, and funds were redeployed into loans and other investment securities. Average interest-bearing liabilities decreased $85.1 million, or 9.6%, during the three months ended March 31, 2015, primarily as a result of decreases of $56.3 million in interest-bearing deposits and $28.8 million in borrowings.

Net interest income increased $2.25 million, or 9.4%, to $26.13 million for the year ended March 31, 2015, as compared to $23.88 million for year ended March 31, 2014, reflecting an increase of $127.0 million in average net interest-earning assets partially offset by a decrease of 1 basis point in net interest margin. Average interest-earning assets increased $102.0 million, or 10.1%, during the year ended March 31, 2015, as compared to the year ended March 31, 2014, and consisted of increases of $82.9 million in loans, $12.9 million in investment securities, and $28.6 million in other interest-earning assets, partially offset by a decrease of $22.4 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, sales and principal repayments of investment and mortgage-backed securities remained in cash and cash equivalents. Mortgage-backed securities decreased due to the sales and principal repayments of securities exceeding purchases, as funds were redeployed into loans and other investment securities. Average interest-bearing liabilities decreased $25.0 million, or 2.9%, during the year ended March 31, 2015, primarily as a result of a decrease of $48.1 million in interest-bearing deposits, partially offset by an increase of $23.1 million in borrowings, mostly originated in late 2013, which were used primarily to fund loan growth.

The provision for loan losses decreased $13,000, or 11.5%, and $60,000, or 7.7%, for the quarter and year ended March 31, 2015, respectively, as compared to the respective 2014 periods. The provision was $100,000 as compared to $113,000 for the three- month periods ended March 31, 2015 and 2014, respectively, and $717,000 and $777,000 for the years ended March 31, 2015 and 2014, respectively. The overall decreases in the provision for loan losses for the 2015 periods were mainly the result of overall favorable trends in qualitative factors related to delinquency and charge-offs considered in the periodic review of the general valuation allowance.

Non-interest income increased $2.74 million, from $352,000 for the three months ended March 31, 2014 to $3.09 million for the three months ended March 31, 2015, and increased $2.45 million, from $1.87 million for the year ended March 31, 2014 to $4.31 million for the year ended March 31, 2015. The increases for both periods were mainly attributable to increases in income from bank owned life insurance and gains on sales of securities. Income from bank owned life insurance increased $877,000 and $1.05 million, respectively, for the three- and twelve-month periods ended March 31, 2015, as the Bank purchased additional insurance during fiscal 2015 and recorded a death benefit in March 2015. Gains on sale of securities increased $1.90 million and $1.44 million to $1.90 million and $2.01 million, respectively, during the three- and twelve-month periods ended March 31, 2015, from $0 and $566,000, respectively, for the same 2014 periods. In the 2015 periods, the gain on the sale of securities resulted mostly from the sale of certain mortgage-backed securities which had a very small amount of principal remaining relative to the principal balance purchased.

Non-interest expenses increased $191,000, or 4.6%, to $4.36 million for the three months ended March 31, 2015, as compared to $4.17 million for the three months ended March 31, 2014, and increased $2.0 million, or 13.4%, to $17.1 million for the year ended March 31, 2015 as compared to $15.1 million for the year ended March 31, 2014. The increases were driven by increases in salaries and employee benefits, equipment expense and advertising and marketing expenses. The increases in salaries and employee benefits in both of the 2015 periods include increases of $184,000 and $683,000, respectively, in employee stock ownership plan expenses for the three- and twelve-month periods ended March 31, 2015. The increase in equipment expense (and certain miscellaneous expense) for the year ended March 31, 2015 was mainly related to expenditures associated with the Bank’s core processor change. Advertising and marketing expenses increased for both periods as management has intensified efforts to offer new products and expand the Bank’s current customer base.

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. Clifton Savings Bank is an organization with dedicated people serving communities, residents and businesses. Clifton Savings operates 12 full-service banking offices located in the diverse and vibrant Northeastern counties of 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 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.

Selected Consolidated Financial Condition Data     At March 31,   2015         2014 (In thousands) Financial Condition Data:       Total assets $ 1,186,924 $ 1,265,990 Loans receivable, net 641,084 584,507 Cash and cash equivalents 49,308 192,581 Securities 418,875 422,295 Deposits 699,476 763,912 FHLB advances 107,500 142,500 Stock subscription deposits - 154,345 Total stockholders' equity 368,001 194,137 Selected Consolidated Operating Data      

Three Months Ended

March 31,

        Year Ended March 31,   2015       2014   2015   2014 (In thousands, except share and per share data) Operating Data: Interest income $ 8,558 $ 8,657 $ 35,162 $ 33,737 Interest expense   2,157   2,343   9,034   9,862 Net interest income 6,401 6,314 26,128 23,875 Provision for loan losses   100   113   717   777 Net interest income after provision for loan losses 6,301 6,201 25,411 23,098 Non-interest income 3,094 352 4,313 1,867 Non-interest expenses   4,362   4,171   17,106   15,081 Income before income taxes 5,033 2,382 12,618 9,884 Income taxes   1,520   825   4,064   3,419 Net income $ 3,513 $ 1,557 $ 8,554 $ 6,465 Basic earnings per share $ 0.14 $ 0.06 $ 0.33 $ 0.25 Diluted earnings per share $ 0.13 $ 0.06 $ 0.33 $ 0.25   Average shares outstanding - basic 25,979 25,590 25,538 25,391 Average shares outstanding - diluted 26,073 25,817 25,698 25,633 Average Balance Table     Three Months Ended March 31, 2015       2014

AverageBalance

       

InterestandDividends

     

Yield/Cost

     

AverageBalance

       

InterestandDividends

     

Yield/Cost

Assets:

 

(Dollars in thousands)

Interest-earning assets: Loans receivable $636,175 $5,756 3.62% $580,822 $5,591 3.85% Mortgage-backed securities 283,461 2,013 2.84% 306,279 2,421 3.16% Investment securities 143,308 697 1.95% 132,442 563 1.70% Other interest-earning assets 45,633 92 0.81% 21,235 82 1.54% Total interest-earning assets 1,108,577 8,558 3.09% 1,040,778 8,657 3.33%   Non-interest-earning assets 81,989 105,327 Total assets $1,190,566 $1,146,105   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $54,581 18 0.13% $57,913 19 0.13% Savings and Club accounts 138,978 53 0.15% 154,027 80 0.21% Certificates of deposit 500,158 1,523 1.22% 538,081         1,652 1.23% Total interest-bearing deposits 693,717 1,594 0.92% 750,021 1,751 0.93% FHLB Advances 108,750 563 2.07% 137,500         592 1.72% Total interest-bearing liabilities 802,467 2,157 1.08% 887,521 2,343 1.06%   Non-interest-bearing liabilities: Non-interest-bearing deposits 12,295 17,098 Other non-interest-bearing liabilities 9,983 48,827 Total non-interest-bearing liabilities 22,278 65,925   Total liabilities 824,745 953,446 Stockholders' equity 365,821 192,659 Total liabilities and stockholders' equity $1,190,566 $1,146,105   Net interest income $6,401 $6,314 Interest rate spread 2.01% 2.27% Net interest margin 2.31% 2.43% Average interest-earning assets to average interest-bearing liabilities 1.38 x 1.17 x   Year Ended March 31, 2015       2014 Interest Interest Average and Yield/ Average and Yield/ Balance Dividends Cost Balance Dividends Cost Assets: (Dollars in thousands) Interest-earning assets: Loans receivable $617,696 $23,150 3.75% $ 534,787 $21,023 3.93% Mortgage-backed securities 298,251 8,998 3.02% 320,684 10,243 3.19% Investment securities 146,327 2,657 1.82% 133,401 2,256 1.69% Other interest-earning assets 46,693 357 0.76% 18,098 215 1.19% Total interest-earning assets 1,108,967 35,162 3.17% 1,006,970 33,737 3.35%   Non-interest-earning assets 107,642 80,648 Total assets $1,216,609 $1,087,618   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $55,544 72 0.13% 57,785 80 0.14% Savings and Club accounts 140,118 236 0.17% 152,038 418 0.27% Certificates of deposit 519,183 6,399 1.23% 553,114         7,204 1.30% Total interest-bearing deposits 714,845 6,707 0.94% 762,937 7,702 1.01% FHLB Advances 119,423 2,327 1.95% 96,346         2,160 2.24% Total interest-bearing liabilities 834,268 9,034 1.08% 859,283 9,862 1.15%   Non-interest-bearing liabilities: Non-interest-bearing deposits 11,676 15,540 Other non-interest-bearing liabilities 11,182 23,306 Total non-interest-bearing liabilities 22,858 38,846   Total liabilities 857,126 898,129 Stockholders' equity 359,483 189,489 Total liabilities and stockholders' equity $1,216,609 $1,087,618   Net interest income $26,128 $23,875 Interest rate spread 2.09% 2.20% Net interest margin 2.36% 2.37% Average interest-earning assets to average interest-bearing liabilities 1.33

x

1.17

x

Asset Quality Data         Year Ended March 31,   2015           2014   (Dollars in thousands) Allowance for loan losses: Allowance at beginning of period $ 3,071 $ 2,500 Provision for loan losses 717 777   Charge-offs (313 ) (222 ) Recoveries   -     16   Net charge-offs (313 ) (206 )     Allowance at end of period $ 3,475   $ 3,071     Allowance for loan losses to total gross loans 0.54 % 0.52 % Allowance for loan losses to nonperforming loans 61.53 % 59.84 %     At March 31,   2015     2014   (Dollars in thousands) Nonperforming Assets: Nonaccrual loans: One- to four-family real estate $ 4,555 $ 4,848 Multi-family real estate 581 - Commercial real estate 439 247 Consumer real estate   73     37   Total nonaccrual loans 5,648 5,132 Real estate owned   -     -   Total nonperforming assets $ 5,648   $ 5,132     Total nonperforming loans to total gross loans 0.88 % 0.88 % Total nonperforming assets to total assets 0.48 % 0.41 % Selected Consolidated Financial Ratios         Three Months Ended     March 31, Year Ended March 31, Selected Performance Ratios (1): 2015     2014 2015     2014 Return on average assets 1.18% 0.54% 0.70% 0.59% Return on average equity 3.84% 3.23% 2.38% 3.41% Interest rate spread 2.01% 2.27% 2.09% 2.20% Net interest margin 2.31% 2.43% 2.36% 2.37% Non-interest expenses to average assets 1.47% 1.46% 1.41% 1.39% Efficiency ratio (2) 45.94% 62.57% 56.19% 58.59%

Average interest-earning assets to average

interest-bearing liabilities

1.38x 1.17x 1.33x 1.17x Average equity to average assets 30.73% 16.81% 29.55% 17.42% Dividend payout ratio 44.35% 0.00% 89.22% 71.88%

Net charge-offs to average outstanding loans during

the period

0.00% 0.06% 0.05% 0.04%   (1) Performance ratios 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.

  Quarterly Data     Quarter Ended    

March 31,

2015

   

December 31,

2014

 

September 30,

2014

 

June 30,

2014

   

March 31,

2014 (1)

            (In thousands except shares and per share data)

Operating Data

Interest income $ 8,558 $ 8,993 $ 8,899 $ 8,712 $ 8,657 Interest expense   2,157     2,249     2,317     2,311     2,343   Net interest income 6,401 6,744 6,582 6,401 6,314 Provision for loan losses   100     178     301     138     113   Net interest income after provision for loan losses 6,301 6,566 6,281 6,263 6,201 Non-interest income 3,094 397 474 348 352 Non-interest expenses   4,362     4,075     4,532     4,137     4,171   Income before income taxes 5,033 2,888 2,223 2,474 2,382 Income taxes   1,520     948     744     852     825   Net income $ 3,513   $ 1,940   $ 1,479   $ 1,622   $ 1,557    

Share Data

Basic earnings per share $ 0.14 $ 0.08 $ 0.06 $ 0.06 $ 0.06 Diluted earnings per share $ 0.13 $ 0.08 $ 0.06 $ 0.06 $ 0.06 Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.12 $ - Average shares outstanding - basic 25,979 25,594 25,333 25,244 25,590 Average shares outstanding - diluted 26,073 25,728 25,521 25,413 25,817 Shares outstanding at period end 27,326 27,145 26,676 26,596 26,529  

Financial Condition Data

Total assets $ 1,186,924 $ 1,198,171 $ 1,211,527 $ 1,231,730 $ 1,265,990 Loans receivable, net 641,084 628,872 617,024 610,950 584,507 Cash and cash equivalents 49,308 45,668 74,979 85,042 192,581 Securities 418,875 446,511 454,595 470,605 422,295 Deposits 699,476 711,486 731,070 736,557 763,912 FHLB advances 107,500 112,500 112,500 127,500 142,500 Stock subscription deposits - - - - 154,345 Total stockholders' equity 368,001 363,765 357,693 356,491 194,137  

Assets Quality:

Total nonperforming assets $ 5,648 $ 3,994 $ 4,509 $ 5,595 $ 5,132 Total nonperforming loans to total gross loans 0.88 % 0.63 % 0.73 % 0.89 % 0.88 % Total nonperforming assets to total assets 0.48 % 0.33 % 0.37 % 0.45 % 0.41 % Allowance for loan losses $ 3,475 $ 3,375 $ 3,250 $ 3,125 $ 3,071 Allowance for loan losses to total gross loans 0.54 % 0.54 % 0.53 % 0.51 % 0.52 % Allowance for loan losses to nonperforming loans 61.53 % 84.50 % 72.08 % 57.12 % 59.84 %

(1) As a result of the completion of the second-step conversion on April 1, 2014, share and per share data, as appropriate, was adjusted to reflect the 0.9791 exchange ratio for the period.

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