CSBK Clifton Bancorp Inc. (MM)

Clifton Bancorp Inc. (Nasdaq:CSBK) (the “Company”), the holding company for Clifton Savings Bank, today announced results for the third quarter ended December 31, 2016. Net income for the third quarter was $1.22 million ($0.06 per share, basic and diluted) as compared to net income of $1.33 million ($0.05 per share, basic and diluted) for the third quarter ended December 31, 2015. Net income for the nine months ended December 31, 2016 was $3.48 million ($0.16 per share, basic and diluted) as compared to $4.52 million ($0.18 per share, basic and diluted) for the same period in 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 December 31, 2016. The dividend will be paid on March 3, 2017 to stockholders of record on February 17, 2017.

Notable Items

• Total assets increased 9.4%, or $118.1 million, from $1.25 billion at March 31, 2016 to $1.37 billion at December 31, 2016;
• Net loans increased 20.1%, or $156.7 million, from $780.2 million at March 31, 2016 to $936.9 million at December 31, 2016;
• Multi-family and commercial real estate loans increased 83.4%, or $128.1 million, from $153.6 million at March 31, 2016 to $281.7 million at December 31, 2016;
• Loan mix between one-to-four family real estate loans and multi-family/commercial real estate loans to total loans shifted from 79.0% and 19.7%, respectively, at March 31, 2016 to 68.6% and 30.0%, respectively, at December 31, 2016;
• Nonperforming loans to total gross loans decreased to 0.37% at December 31, 2016 from 0.63% at December 31, 2015;
• Deposits increased 15.6%, or $108.7 million, from $694.7 million at March 31, 2016 to $803.4 million at December 31, 2016.

Paul M. Aguggia, Chairman, President, and Chief Executive Officer, stated, “Our efforts to increase awareness of the CSBK brand among commercial/ multi-family real estate borrowers have successfully resulted in another quarter of substantive commercial loan growth. Positive momentum continues in our residential loan business and with CSBK’s deposit generation activities as well. We look forward to continuing to drive organic growth through calendar year 2017.”

Balance Sheet and Credit Quality Review

Total assets increased $118.1 million, or 9.4%, to $1.37 billion at December 31, 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 $156.7 million, or 20.1%, to $936.9 million at December 31, 2016 from $780.2 million at March 31, 2016. One-to-four family real estate loans increased $26.9 million, or 4.4%, while multi-family and commercial real estate loans increased $128.1 million, or 83.4%, during the nine months ended December 31, 2016. Securities, including both available for sale and held to maturity issues, decreased $38.3 million, or 10.7%, to $319.2 million at December 31, 2016 from $357.5 million at March 31, 2016, mainly because of calls, maturities and repayments. One security totaling $3.7 million was sold during the nine-month period ended December 31, 2016, resulting in a gain of $84,000. Cash and cash equivalents decreased $8.8 million, or 28.3%, to $22.3 million at December 31, 2016 from $31.1 million at March 31, 2016.

Deposits increased $108.7 million, or 15.6%, to $803.4 million at December 31, 2016 from $694.7 million at March 31, 2016. Borrowed funds increased $21.0 million, or 9.1%, to $252.5 million at December 31, 2016 from $231.5 million at March 31, 2016. The Company’s outstanding borrowings as of December 31, 2016 had a weighted average rate of 1.69% and a weighted average term of 19 months. All outstanding borrowings are with the Federal Home Loan Bank of New York.

Total stockholders’ equity decreased $12.2 million, or 3.9%, to $303.1 million at December 31, 2016 from $315.3 million at March 31, 2016, primarily as a result of $13.9 million in repurchases of common stock, and the payment of $4.0 million in cash dividends, partially offset by net income of $3.5 million.

Nonaccrual loans decreased $217,000, or 5.9%, to $3.4 million at December 31, 2016 from $3.7 million at March 31, 2016. Included in nonaccrual loans at December 31, 2016 were four loans totaling $564,000 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 0.37% at December 31, 2016 from 0.47% at March 31, 2016. The allowance for loan losses to nonperforming loans increased to 162.02% at December 31, 2016 from 119.19% at March 31, 2016, as nonperforming loans decreased, while the allowance balance increased mainly because of provisions associated with significant increases in loans.

Income Statement Review

Net interest income increased by $686,000, or 10.7%, to $7.1 million for the three months ended December 31, 2016 as compared to $6.4 million for the three months ended December 31, 2015. Net interest income increased despite a decrease of 11 basis points in net interest margin and a decrease of $35.2 million in average net interest-earning assets. The increase in interest-earning assets were in the Bank’s highest yielding asset category, and lower yielding assets also were redeployed into these higher yielding assets.

Net interest income increased by $1.6 million, or 8.1%, to $21.1 million for the nine months ended December 31, 2016 as compared to $19.6 million for the nine months ended December 31, 2015. Net interest income increased despite a decrease of 8 basis points in net interest margin and a decrease of $40.4 million in average net interest-earning assets. The increase in interest-earning assets were in the Bank’s highest yielding asset category, and lower yielding assets also were redeployed into these higher yielding assets.

The provision for loan losses increased $224,000, or 118.5%, to $413,000 for the three months ended December 31, 2016, as compared to $189,000 for the three months ended December 31, 2015, and increased $1.1 million, or 298.9%, to $1.44 million for the nine months ended December 31, 2016, as compared to $362,000 for the nine months ended December 31, 2015. The increases in the provisions for both periods were mainly the result of the significant increases in the balance of outstanding loans, partially offset by more favorable trends in qualitative factors related to delinquencies considered in the periodic reviews of the general valuation allowance.

Non-interest expenses for the three months ended December 31, 2016 increased $521,000, or 10.8%, to $5.35 million, as compared to $4.83 million for the three months ended December 31, 2015. The increase consisted primarily of increases in salaries and employee benefits of $392,000, or 13.5%, occupancy expense of $86,000, or 21.7%, equipment expense of $122,000, or 34.8%, and advertising and marketing expense of $91,000, or 70.0%, partially offset by decreases in directors compensation of $92,000, or 26.7%, and federal deposit insurance premiums of $71,000, or 55.9%. The increases in salaries and employee benefits result from the hiring of business development, compliance, lending, and Hoboken and Montclair Banking Center personnel. In addition, expenses rose due to typical annual increases in compensation and benefits expenses and employee stock ownership plan expense due to an increase in the price of the Company’s common stock. The increases in occupancy and equipment expense, as well as advertising and marketing expense, were mainly related to the costs of the Hoboken and Montclair Banking Centers, along with the costs associated with new products and services. The decrease in directors’ compensation was related to the retirement of a board member during the first fiscal quarter of 2016 and the shrinking of the board by one member. Federal deposit insurance premiums decreased because of the revision of the FDIC assessment system beginning July 1, 2016. Revisions for “small institutions” (under $10 billion in assets) resulted in, among other things, a change in the financial ratios method used to determine assessment rates.

Non-interest expenses for the nine months ended December 31, 2016 increased $2.2 million, or 15.9%, to $16.1 million, as compared to $13.9 million for the nine months ended December 31, 2015. The increases consisted primarily of increases in salaries and employee benefits of $1.75 million, or 21.1%, occupancy expense of $190,000, or 16.6%, equipment expense of $213,000, or 19.8%, and advertising and marketing expense of $178,000, or 60.3%. The increases in salaries and employee benefits include the items noted above, as well as the expense related to the granting of equity awards under the Company’s 2015 Equity Incentive Plan. All other category increases include the same items as noted above.

About Clifton Bancorp Inc.

Clifton Bancorp Inc. is the holding company for 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 13 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 December 31, At March 31, 2016   2016 (In thousands) Financial Condition Data: Total assets $ 1,371,265 $ 1,253,127 Loans receivable, net 936,894 780,229 Cash and cash equivalents 22,277 31,069 Securities 319,163 357,462 Deposits 803,364 694,662 FHLB advances 252,500 231,500 Total stockholders' equity 303,098 315,277               Selected Consolidated Operating Data Three Months Ended Nine Months Ended December 31, December 31, 2016   2015 2016   2015 (In thousands, except share and per share data)   Operating Data: Interest income $ 10,193 $ 8,736 $ 29,700 $ 26,187 Interest expense   3,071   2,300   8,567   6,634 Net interest income 7,122 6,436 21,133 19,553 Provision for loan losses   413   189   1,444   362 Net interest income after provision for loan losses 6,709 6,247 19,689 19,191 Non-interest income 460 460 1,488 1,426 Non-interest expenses   5,354   4,833   16,144   13,928 Income before income taxes 1,815 1,874 5,033 6,689 Income taxes   596   549  

1,557

  2,166 Net income $ 1,219 $ 1,325 $ 3,476 $ 4,523 Basic earnings per share $ 0.06 $ 0.05 $ 0.16 $ 0.18 Diluted earnings per share $ 0.06 $ 0.05 $ 0.16 $ 0.18   Average shares outstanding - basic 22,020 24,475 22,337 24,771 Average shares outstanding - diluted 22,150 24,521 22,412 24,829               Average Balance Table Three Months Ended December 31, 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 $ 911,385 $ 8,082 3.55 % $ 690,633 $ 6,320 3.66 % Mortgage-backed securities 264,882 1,694 2.56 % 272,904 1,861 2.73 % Investment securities 53,522 259 1.94 % 90,323 481 2.13 % Other interest-earning assets   25,522   158 2.48 %   27,418   74 1.08 % Total interest-earning assets 1,255,311   10,193 3.25 % 1,081,278   8,736 3.23 % Non-interest-earning assets   87,134   76,825 Total assets $ 1,342,445 $ 1,158,103   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $ 53,830 14 0.10 % $ 54,474 15 0.11 % Savings and Club accounts 196,208 214 0.44 % 139,017 62 0.18 % Certificates of deposit   513,925   1,820 1.42 %   466,011   1,531 1.31 % Total interest-bearing deposits 763,963 2,048 1.07 % 659,502 1,608 0.98 % FHLB Advances   241,000   1,023 1.70 %   136,250   692 2.03 % Total interest-bearing liabilities 1,004,963   3,071 1.22 % 795,752   2,300 1.16 %   Non-interest-bearing liabilities: Non-interest-bearing deposits 23,720 14,683 Other non-interest-bearing liabilities   10,902   11,248 Total non-interest-bearing liabilities   34,622   25,931   Total liabilities 1,039,585 821,683 Stockholders' equity   302,860   336,420 Total liabilities and stockholders' equity $ 1,342,445 $ 1,158,103   Net interest income $ 7,122 $ 6,436 Interest rate spread 2.03 % 2.07 % Net interest margin 2.27 % 2.38 % Average interest-earning assets to average interest-bearing liabilities 1.25 x 1.36 x   Nine Months Ended December 31, 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 $ 856,318 $ 23,048 3.59 % $ 668,202 $ 18,394 3.67 % Mortgage-backed securities 268,886 5,271 2.61 % 275,500 5,702 2.76 % Investment securities 61,965 950 2.04 % 111,186 1,868 2.24 % Other interest-earning assets   28,008   431 2.05 %   29,109   223 1.02 % Total interest-earning assets 1,215,177   29,700 3.26 % 1,083,997   26,187 3.22 % Non-interest-earning assets   86,282   78,163 Total assets $ 1,301,459 $ 1,162,160   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $ 53,560 43 0.11 % $ 53,854 45 0.11 % Savings and Club accounts 181,114 518 0.38 % 140,951 178 0.17 % Certificates of deposit   494,157   5,171 1.40 %   473,823   4,545 1.28 % Total interest-bearing deposits 728,831 5,732 1.05 % 668,628 4,768 0.95 % FHLB Advances   232,400   2,835 1.63 %   121,000   1,866 2.06 % Total interest-bearing liabilities 961,231   8,567 1.19 % 789,628   6,634 1.12 %   Non-interest-bearing liabilities: Non-interest-bearing deposits 22,189 14,070 Other non-interest-bearing liabilities   10,691   11,648 Total non-interest-bearing liabilities   32,880   25,718   Total liabilities 994,111 815,346 Stockholders' equity   307,348   346,814 Total liabilities and stockholders' equity $ 1,301,459 $ 1,162,160   Net interest income $ 21,133 $ 19,553 Interest rate spread 2.07 % 2.10 % Net interest margin 2.32 % 2.40 % Average interest-earning assets to average interest-bearing liabilities 1.26 x 1.37 x             Asset Quality Data Nine Nine Months Year Months Ended Ended Ended December 31, March 31, December 31, 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 1,444 703 362   Charge-offs (231 ) (93 ) (90 ) Recoveries   2     -     3   Net charge-offs (229 ) (93 ) (87 )       Allowance at end of period $ 5,575   $ 4,360   $ 3,750     Allowance for loan losses to total gross loans 0.59 % 0.56 % 0.53 % Allowance for loan losses to nonperforming loans 162.02 % 119.19 % 85.48 %     At December 31,   At March 31, At December 31, 2016 2016 2015 (Dollars in thousands) Nonperforming Assets: Nonaccrual loans: One- to four-family real estate $ 3,257 $ 3,412 $ 3,572 Multi-family real estate - - 563 Commercial real estate 184 186 189 Consumer real estate   -     60     63   Total nonaccrual loans 3,441 3,658 4,387 Real estate owned   730     58     -   Total nonperforming assets $ 4,171   $ 3,716   $ 4,387     Total nonperforming loans to total gross loans 0.37 % 0.47 % 0.63 % Total nonperforming assets to total assets 0.30 % 0.30 % 0.38 %               Selected Consolidated Financial Ratios Three Months Ended Nine Months Ended December 31, December 31,

Selected Performance Ratios (1):

2016 2015 2016 2015 Return on average assets 0.36 % 0.46 % 0.36 % 0.52 % Return on average equity 1.61 % 1.58 % 1.51 % 1.74 % Interest rate spread 2.03 % 2.07 % 2.07 % 2.10 % Net interest margin 2.27 % 2.38 % 2.32 % 2.40 % Non-interest expenses to average assets 1.60 % 1.67 % 1.65 % 1.60 % Efficiency ratio (2) 70.61 % 70.08 % 71.37 % 66.39 % Average interest-earning assets to average interest-bearing liabilities 1.25x 1.36x 1.26x 1.37x Average equity to average assets 22.56 % 29.05 % 23.62 % 29.84 % Dividend payout ratio 107.88 % 110.57 % 115.33 % 130.78 % Net charge-offs to average ourtstanding loans during the periods 0.02 % 0.04 % 0.04 % 0.02 %      

(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 December 31, September 30, June 30, March 31, December 31,

2016

2016

2016

2016

2015

(In thousands except shares and per share data)

Operating Data

Interest income $ 10,193 $ 9,916 $ 9,591 $ 9,158 $ 8,736 Interest expense   3,071     2,847     2,649     2,468     2,300   Net interest income 7,122 7,069 6,942 6,690 6,436 Provision for loan losses   413     505     526     703     189   Net interest income after provision for loan losses 6,709 6,564 6,416 5,987 6,247 Non-interest income 460 501 527 440 460 Non-interest expenses   5,354     5,311     5,479     5,173     4,833   Income before income taxes 1,815 1,754 1,464 1,254 1,874 Income taxes   596     513     448     376     549   Net income $ 1,219   $ 1,241   $ 1,016   $ 878   $ 1,325    

Share Data

Basic earnings per share $ 0.06 $ 0.06 $ 0.04 $ 0.04 $ 0.05 Diluted earnings per share $ 0.06 $ 0.06 $ 0.04 $ 0.04 $ 0.05 Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.06 Average shares outstanding - basic 22,020 22,216 22,775 23,434 24,475 Average shares outstanding - diluted 22,150 22,276 22,834 23,479 24,521 Shares outstanding at period end 23,046 23,086 23,576 24,000 25,394  

Financial Condition Data

Total assets $ 1,371,265 $ 1,312,190 $ 1,285,825 $ 1,253,127 $ 1,167,739 Loans receivable, net 936,894 881,593 826,629 780,229 700,283 Cash and cash equivalents 22,277 22,758 30,140 31,069 30,493 Securities 319,163 317,147 338,624 357,462 356,977 Deposits 803,364 772,306 719,592 694,662 674,002 FHLB advances 252,500 224,500 244,000 231,500 147,000 Total stockholders' equity 303,098 302,890 309,487 315,277 333,956  

Assets Quality:

Total nonperforming assets $ 4,171 $ 3,746 $ 3,481 $ 3,716 $ 4,387 Total nonperforming loans to total gross loans 0.37 % 0.32 % 0.38 % 0.47 % 0.63 % Total nonperforming assets to total assets 0.30 % 0.29 % 0.27 % 0.30 % 0.38 % Allowance for loan losses $ 5,575 $ 5,200 $ 4,775 $ 4,360 $ 3,750 Allowance for loan losses to total gross loans 0.59 % 0.59 % 0.58 % 0.56 % 0.53 % Allowance for loan losses to nonperforming loans 162.02 % 185.52 % 153.34 % 119.19 % 85.48 %

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Clifton Bancorp Inc.Michael Lesler, (973) 473-2200