CSBK Clifton Bancorp Inc. (MM)

Clifton Bancorp Inc. (Nasdaq:CSBK) (the “Company”), the holding company for Clifton Savings Bank, today announced results for the quarter ended June 30, 2016. Net income for the first quarter was $1.02 million ($0.04 per share, basic and diluted) as compared to net income of $1.66 million ($0.07 per share, basic and diluted) for the first quarter ended June 30, 2015.

The Board of Directors also announced today that the Company will pay a cash dividend of $0.06 per common share for the quarter ended June 30, 2016. The dividend will be paid on August 26, 2016 to stockholders of record on August 12, 2016.

Notable Items

• Total assets increased 2.6%, or $32.7 million, from March 31, 2016 to $1.29 billion;
• Net loans increased 6.0%, or $46.4 million, from March 31, 2016 to $826.6 million;
• Multi-family and commercial real estate loans increased 32.0%, or $49.1 million, from March 31, 2016 to $202.7 million;
• Loan mix between one-to-four family real estate loans and multi-family/commercial real estate loans to total loans shifted to 74.2% and 24.5% at June 30, 2016 from 79.0% and 19.7% at March 31, 2016;
• Nonperforming loans to total gross loans decreased to 0.38% at June 30, 2016 from 0.81% at June 30, 2015;
• Deposits increased 3.6%, or $24.9 million, from March 31, 2016 to $719.6 million;
• 404,500 shares of common stock were repurchased during the three months ended June 30, 2016 at a weighted average price of $14.90 per share.

Paul M. Aguggia, Chairman, President, and Chief Executive Officer, stated, “Our hard work at building teams, platforms and products has taken hold. We are seeing encouraging growth in transactional accounts as a result of winning new customers and business relationships. Our commercial lending team is closing attractive deals at a healthy clip, further diversifying our loan portfolio. As we have said repeatedly, core deposit gathering and commercial loan growth represent key strategic priorities for the Company. We will continue to execute our business strategy by enhancing our delivery channels and maintaining our culture of compliance. We have more to do, there is no question. But we are off to a solid start in our new fiscal year.”

Balance Sheet and Credit Quality Review

Total assets increased $32.7 million, or 2.6%, to $1.29 billion at June 30, 2016, from $1.25 billion at March 31, 2016. The increase in total assets was primarily due to an increase in loans.

Net loans increased $46.4 million, or 6.0%, to $826.6 million at June 30, 2016 from $780.2 million at March 31, 2016. One-to-four family real estate loans decreased $3.2 million, or 0.5%, while multi-family and commercial real estate loans increased $49.1 million, or 32.0%, during the quarter ended June 30, 2016. The increase included a $10.0 million participation in multi-family real estate purchased with an in-market financial institution. Securities, including both available for sale and held to maturity issues, decreased $18.8 million, or 5.3%, to $338.6 million at June 30, 2016 from $357.5 million at March 31, 2016, mainly as a result of calls, maturities and repayments. One security totaling $3.7 million was sold during the quarter ended June 30, 2016, resulting in a gain of $84,000. Cash and cash equivalents decreased $929,000, or 3.0%, to $30.1 million at June 30, 2016 from $31.1 million at March 31, 2016.

Deposits increased $24.9 million, or 3.6%, to $719.6 million at June 30, 2016 from $694.7 million at March 31, 2016. Borrowed funds increased $12.5 million, or 5.4%, to $244.0 million at June 30, 2016 from $231.5 million at March 31, 2016. The Company’s outstanding borrowings as of June 30, 2016 have a weighted average rate of 1.53% and a weighted average term of 16 months. All outstanding borrowings are with the Federal Home Loan Bank of New York.

Total stockholders’ equity decreased $5.8 million, or 1.8%, to $309.5 million at June 30, 2016 from $315.3 million at March 31, 2016, primarily as a result of $6.0 million in repurchases of common stock, and the payment of $1.4 million in cash dividends, partially offset by net income of $1.0 million.

Nonaccrual loans decreased $544,000, or 14.9%, to $3.1 million at June 30, 2016 from $3.7 million at March 31, 2016. Included in nonaccrual loans at June 30, 2016 were five loans totaling $569,000 that were current or less than 90 days delinquent, but which were previously 90 days or more delinquent and on nonaccrual status pending a sustained period of repayment performance (generally six months). The percentage of nonperforming loans to total gross loans decreased to 0.38% at June 30, 2016 from 0.47% at March 31, 2016. The allowance for loan losses to nonperforming loans increased to 153.34% at June 30, 2016 from 119.19% at March 31, 2016, as nonperforming loans decreased, while the allowance balance increased mainly as a result of provision associated with a significant increase in loans.

Income Statement Review

Net interest income increased by $365,000, or 5.6%, to $6.94 million for the three months ended June 30, 2016 as compared to $6.58 million for the three months ended June 30, 2015. Net interest income increased despite a decrease of 6 basis points in net interest margin and a decrease of $46.6 million in average net interest-earning assets.

The provision for loan losses increased $453,000, or 620.6%, to $526,000 for the three months ended June 30, 2016, as compared to $73,000 for the three months ended June 30, 2015. The increase in the provision for the quarter ended June 30, 2016 was mainly the result of the significant increase in the balance of outstanding loans, partially offset by more favorable trends in qualitative factors related to delinquencies considered in the periodic review of the general valuation allowance.

Non-interest expenses for the three months ended June 30, 2016 increased $964,000, or 21.4%, to $5.48 million, as compared to $4.52 million for the three months ended June 30, 2015. The increase consisted primarily of increases in salaries and employee benefits of $708,000, or 26.2%, directors’ compensation of $43,000, or 20.4%, advertising and marketing of $96,000, or 168.4%, and other expense of $144,000, or 35.0%, partially offset by a decrease in professional services of $85,000, or 33.5%. The increases in salaries and employee benefits includes the addition of a chief operating officer and business development, compliance, lending and Hoboken Banking Center personnel, as well as typical annual increases in compensation and benefits expenses, employee stock ownership plan expense due to an increase in the price of the Company’s common stock, and the expense related to the granting of equity awards under the Company’s 2015 Equity Incentive Plan. The increase in directors’ compensation was due to the expense related to the granting of equity awards under the Company’s 2015 Equity Incentive Plan, and a settlement charge related to the directors’ retirement plan. The increase in advertising and marketing expenses was mainly related to the Hoboken Banking Center opening, while the increase in other expenses includes foreclosure and real estate owned related expenses. Professional services decreased due to a decrease in legal fees.

About Clifton Bancorp Inc.

Clifton Bancorp Inc. is the holding company of Clifton Savings Bank (CSBK), a federally chartered savings bank headquartered in Clifton, New Jersey. CSBK is a metropolitan, community-focused bank serving residents and small businesses in its market area through 12 full-service banking centers. For additional investor relations information, including subscribing to email alerts, visit cliftonbancorp.com.

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 8, 2016. 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, 2016 2016 (In thousands) Financial Condition Data: Total assets $ 1,285,825 $ 1,253,127 Loans receivable, net 826,629 780,229 Cash and cash equivalents 30,140 31,069 Securities 338,624 357,462 Deposits 719,592 694,662 FHLB advances 244,000 231,500 Total stockholders' equity 309,487 315,277     Selected Consolidated Operating Data Three Months Ended June 30, 2016 2015 (In thousands, except share and per share data) Operating Data: Interest income $ 9,591 $ 8,712 Interest expense   2,649   2,135 Net interest income 6,942 6,577 Provision for loan losses   526   73 Net interest income after provision for loan losses 6,416 6,504 Non-interest income 527 514 Non-interest expenses   5,479   4,515 Income before income taxes 1,464 2,503 Income taxes   448   845 Net income $ 1,016 $ 1,658 Basic and diluted earnings per share $ 0.04 $ 0.07   Average shares outstanding - basic 22,775 25,367 Average shares outstanding - diluted 22,834 25,440   Average Balance Table                                 Three Months Ended June 30, 2016     2015 Interest Interest Average and Yield/ Average and Yield/ Balance Dividends Cost Balance Dividends Cost Assets: (Dollars in thousands) Interest-earning assets: Loans receivable $800,628 $7,218 3.61% $646,459 $5,984 3.70% Mortgage-backed securities 273,455 1,843 2.70% 279,074 1,942 2.78% Investment securities 72,466 408 2.25% 128,390 709 2.21% Other interest-earning assets 31,010 122 1.57% 34,236 77 0.90% Total interest-earning assets 1,177,559 9,591 3.26% 1,088,159 8,712 3.20%   Non-interest-earning assets 86,754 81,378 Total assets $1,264,313 $1,169,537   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $53,322 14 0.11% $54,037 15 0.11% Savings and Club accounts 163,708 127 0.31% 141,798 58 0.16% Certificates of deposit 473,847 1,620 1.37% 482,464 1,500 1.24% Total interest-bearing deposits 690,877 1,761 1.02% 678,299 1,573 0.93% FHLB Advances 230,875 888 1.54% 107,500 562 2.09% Total interest-bearing liabilities 921,752 2,649 1.15% 785,799 2,135 1.09%   Non-interest-bearing liabilities: Non-interest-bearing deposits 18,834 13,556 Other non-interest-bearing liabilities 10,500 11,699 Total non-interest-bearing liabilities 29,334 25,255   Total liabilities 951,086 811,054 Stockholders' equity 313,227 358,483 Total liabilities and stockholders' equity $1,264,313 $1,169,537   Net interest income $6,942 $6,577 Interest rate spread 2.11% 2.11% Net interest margin 2.36% 2.42% Average interest-earning assets to average interest-bearing liabilities 1.28 x 1.38 x             Asset Quality Data Three Three Three Months Months Months Ended Ended Ended June 30, March 31, June 30,   2016     2016     2015   (Dollars in thousands) Allowance for loan losses: Allowance at beginning of period $ 4,360 $ 3,750 $ 3,475 Provision for loan losses 526 703 73   Charge-offs (112 ) (93 ) (26 ) Recoveries   1     -     3   Net charge-offs (111 ) (93 ) (23 )       Allowance at end of period $ 4,775   $ 4,360   $ 3,525     Allowance for loan losses to total gross loans 0.58 % 0.56 % 0.54 % Allowance for loan losses to nonperforming loans 153.34 % 119.19 % 66.01 %     At June 30, At March 31, At June 30,   2016     2016     2015   (Dollars in thousands) Nonperforming Assets: Nonaccrual loans: One- to four-family real estate $ 2,929 $ 3,412 $ 4,258 Multi-family real estate - - 574 Commercial real estate 185 186 436 Consumer real estate   -     60     72   Total nonaccrual loans 3,114 3,658 5,340 Real estate owned   367     58     -   Total nonperforming assets $ 3,481   $ 3,716   $ 5,340     Total nonperforming loans to total gross loans 0.38 % 0.47 % 0.81 % Total nonperforming assets to total assets 0.27 % 0.30 % 0.46 %           Selected Consolidated Financial Ratios     Three Months Ended June 30,

Selected Performance Ratios (1):

2016 2015 Return on average assets 0.32% 0.57% Return on average equity 1.30% 1.85% Interest rate spread 2.11% 2.11% Net interest margin 2.36% 2.42% Non-interest expenses to average assets 1.73% 1.54% Efficiency ratio (2) 73.36% 63.67% Average interest-earning assets to average interest-bearing liabilities 1.28x 1.38x Average equity to average assets 24.77% 30.65% Dividend payout ratio 134.15% 180.16% Net charge-offs to average outstanding loans during the period 0.06% 0.01%    

(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     June 30,     March 31,     December 31,     September 30,     June 30,   2016     2016     2015     2015     2015   (In thousands except shares and per share data)

Operating Data

Interest income $ 9,591 $ 9,158 $ 8,736 $ 8,739 $ 8,712 Interest expense   2,649     2,468     2,300     2,199     2,135   Net interest income 6,942 6,690 6,436 6,540 6,577 Provision for loan losses   526     703     189     100     73   Net interest income after provision for loan losses 6,416 5,987 6,247 6,440 6,504 Non-interest income 527 440 460 452 514 Non-interest expenses   5,479     5,173     4,833     4,580     4,515   Income before income taxes 1,464 1,254 1,874 2,312 2,503 Income taxes   448     376     549     772     845   Net income $ 1,016   $ 878   $ 1,325   $ 1,540   $ 1,658    

Share Data

Basic earnings per share $ 0.04 $ 0.04 $ 0.05 $ 0.06 $ 0.07 Diluted earnings per share $ 0.04 $ 0.04 $ 0.05 $ 0.06 $ 0.07 Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.12 Average shares outstanding - basic 22,775 23,434 24,475 24,633 25,367 Average shares outstanding - diluted 22,834 23,479 24,521 24,687 25,440 Shares outstanding at period end 23,576 24,000 25,394 25,745 25,960  

Financial Condition Data

Total assets $ 1,285,825 $ 1,253,127 $ 1,167,739 $ 1,153,895 $ 1,152,707 Loans receivable, net 826,629 780,229 700,283 677,286 654,802 Cash and cash equivalents 30,140 31,069 30,493 17,869 23,498 Securities 338,624 357,462 356,977 379,582 395,386 Deposits 719,592 694,662 674,002 678,624 685,248 FHLB advances 244,000 231,500 147,000 124,000 107,500 Total stockholders' equity 309,487 315,277 333,956 338,267 347,764  

Assets Quality:

Total nonperforming assets $ 3,481 $ 3,716 $ 4,387 $ 4,330 $ 5,340 Total nonperforming loans to total gross loans 0.38 % 0.47 % 0.63 % 0.64 % 0.81 % Total nonperforming assets to total assets 0.27 % 0.30 % 0.38 % 0.38 % 0.46 % Allowance for loan losses $ 4,775 $ 4,360 $ 3,750 $ 3,625 $ 3,525 Allowance for loan losses to total gross loans 0.58 % 0.56 % 0.53 % 0.53 % 0.54 % Allowance for loan losses to nonperforming loans 153.34 % 119.19 % 85.48 % 83.72 % 66.01 %

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