CSBK Clifton Bancorp Inc. (MM)

Clifton Bancorp Inc. (Nasdaq:CSBK) (the “Company”), the holding company for Clifton Savings Bank (“CSBK”), today announced results for the second quarter ended September 30, 2017. Net income for the second quarter was $2.31 million ($0.11 per share, basic and diluted) as compared to net income of $1.24 million ($0.06 per share, basic and diluted) for the second quarter ended September 30, 2016. Net income for the six months ended September 30, 2017 was $3.71 million ($0.17 per share, basic and diluted) as compared to $2.26 million ($0.10 per share, basic and diluted) for the same period in 2016.

The Board of Directors also announced today a cash dividend of $0.06 per common share for the quarter ended September 30, 2017. The dividend will be paid on December 1, 2017 to stockholders of record on November 17, 2017.

Notable Items

• Net income increased by 85.7%, or $1.1 million, to $2.31 million for the quarter ended September 30, 2017 compared to $1.24 million for the quarter ended September 30, 2016;
• Net income for the quarter ended September 30, 2017 included gains on the sale of securities totaling $593,000 versus no gains for the 2016 quarter;
• Total assets increased 8.6%, or $122.7 million, from $1.43 billion at March 31, 2017 to $1.55 billion at September 30, 2017;
• Loans receivable, net grew 13.2%, or $132.6 million, from $1.01 billion at March 31, 2017 to $1.14 billion at September 30, 2017:
  • One-to-four family real estate loans increased 3.0%, or $21.0 million, from $702.4 million at March 31, 2017 to $723.4 million at September 30, 2017;
  • Multi-family and commercial real estate loans increased 38.2%, or $112.4 million, from $294.4 million at March 31, 2017 to $406.8 million at September 30, 2017;
• Loan mix between one-to-four family real estate loans, and multi-family and commercial real estate loans, to total loans shifted from 69.5% and 29.1%, respectively, at March 31, 2017, to 63.2% and 35.6%, respectively, at September 30, 2017;
• Deposits increased 8.3%, or $69.7 million, from $844.8 at March 31, 2017 to $914.6 at September 30, 2017 with savings and checking deposits to total deposits increasing from 33.9% at March 31, 2017 to 36.7% at September 30, 2017;
• Stockholders’ equity declined as a percentage of total assets from 23.1% at September 30, 2016, and 20.7% at March 31, 2017, to 18.4% at September 30, 2017; and
• The Company repurchased 299,100 shares at a weighted average price of $15.76 during the quarter ended September 30, 2017. Since the Company commenced its first post second-step conversion repurchase program on April 1, 2015, it has repurchased 5,960,753 shares at a weighted average price of $14.50 per share.

Paul M. Aguggia, Chairman and Chief Executive Officer, stated, “We are pleased with our second quarter results as we increased net income in the face of continuing margin pressure. The primary driver of our increased earnings continues to be our overall loan growth. We approach the second half of our fiscal year with continued confidence in our ability to generate relatively higher yielding assets. Lowering our cost of funds remains a priority, but is a significant challenge in our hyper competitive deposit-gathering environment. ”

Balance Sheet and Credit Quality Review

Total assets increased $122.7 million, or 8.6%, from $1.43 billion at March 31, 2017, to $1.55 billion at September 30, 2017. The increase in total assets was primarily due to an increase in loans.

Net loans increased $132.6 million, or 13.2%, from $1.01 billion at March 31, 2017, to $1.14 billion at September 30, 2017. One-to-four family real estate loans increased $21.0 million, or 3.0%, while multi-family and commercial real estate loans increased $112.4 million, or 38.2%, during the six months ended September 30, 2017. Securities, including both available for sale and held to maturity issues, decreased $15.7 million, or 5.0%, from $315.3 million at March 31, 2017, to $299.6 million at September 30, 2017, mainly due to sales, maturities and repayments. Securities held to maturity totaling $10.2 million were sold during the six-month period ended September 30, 2017, resulting in a gain of $593,000. One security totaling $3.7 million was sold during the six-month period ended September 30, 2016, resulting in a gain of $84,000. Cash and cash equivalents increased $1.4 million, or 9.5%, from $14.7 million at March 31, 2017, to $16.0 million at September 30, 2017, as a small portion of cash flows from deposits and borrowed funds were not yet redeployed into higher yielding assets.

Deposits increased $69.7 million, or 8.3%, from $844.8 million at March 31, 2017, to $914.6 million at September 30, 2017. CSBK launched a high-yielding checking account in May 2017 that was responsible for a significant percentage of the period’s deposit growth. Borrowed funds increased $64.9 million, or 23.5%, from $275.8 million at March 31, 2017, to $340.7 million at September 30, 2017. The Company’s outstanding borrowings at September 30, 2017 had a weighted average rate of 1.81% 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 $10.7 million, or 3.6%, from $296.6 million at March 31, 2017, to $285.9 million at September 30, 2017 primarily as a result of $8.7 million in repurchases of common stock, and the payment of $7.9 million in cash dividends, including the $0.25 special dividend paid in July totaling $5.3 million, partially offset by net income of $3.7 million.

Nonaccrual loans increased $656,000, or 17.8%, to $4.3 million at September 30, 2017 as compared to $3.7 million at March 31, 2017. Included in nonaccrual loans at September 30, 2017 were seven loans totaling $1.2 million 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 was 0.41% at both September 30, 2017 and March 31, 2017. The allowance for loan losses to nonperforming loans increased to 154.12% at September 30, 2017 from 146.11% at March 31, 2017, as nonperforming one-to-four family loans increased slightly and provisions were added (mainly due to significant increases in loans outstanding).

Income Statement Review

Net interest income increased by $1.1 million, or 16.0%, to $8.2 million for the three months ended September 30, 2017, as compared to $7.1 million for the three months ended September 30, 2016. Net interest income increased despite a decrease of 7 basis points in net interest margin and a decrease of $9.6 million in average net interest-earning assets. The increase was primarily due to other categories of interest-earning assets being redeployed into CSBK’s highest yielding asset category (multi-family and commercial loans).

Net interest income increased by $2.1 million, or 14.9%, to $16.1 million for the six months ended September 30, 2017, as compared to $14.0 million for the six months ended September 30, 2016. Net interest income increased despite a decrease of 8 basis points in net interest margin and a decrease of $9.2 million in average net interest-earning assets. Net interest income increased for the reason noted above.

The provision for loan losses increased $105,000, or 20.8%, to $610,000 for the three months ended September 30, 2017, as compared to $505,000 for the three months ended September 30, 2016, and increased $169,000, or 16.4%, to $1.20 million for the six months ended September 30, 2017, as compared to $1.03 million for the six months ended September 30, 2016. The increases in the provisions for both periods were due in large part to the significant growth in the balance of outstanding loans, mainly commercial and multi-family real estate loans, which based on their risk profile require more reserves than residential loans.

Non-interest income for the three months ended September 30, 2017 increased $610,000, or 121.8%, to $1.11 million, as compared to $501,000 for the three months ended September 30, 2016, as the 2017 period included a $593,000 gain on the sale of securities and a $75,000 gain on the sale of real estate owned, compared to no gains noted in the 2016 period.

Non-interest income for the six months ended September 30, 2017 increased $530,000, or 51.6%, to $1.6 million, as compared to $1.0 million for the six months ended September 30, 2016, mostly due to the gains noted above in the 2017 period. The 2016 period included an $84,000 gain on the sale of securities.

Non-interest expenses for the three months ended September 30, 2017 increased $79,000, or 1.5%, to $5.4 million, as compared to $5.3 million for the three months ended September 30, 2016. The increase consisted primarily of increases in advertising and marketing expenses of $68,000, or 68.7%, and occupancy expenses of $59,000, or 13.6%, partially offset by a decrease in federal deposit insurance premium of $44,000, or 29.0%. The increase in advertising and marketing expenses was related to the costs to promote CSBK’s recently opened Hoboken and Montclair banking centers, as well as the new checking account product referenced above. The increase in occupancy expenses was mainly related to operational costs of the Montclair banking center. The decrease in federal deposit insurance premium in the 2017 period was due to the revision of the FDIC assessment system, which began on July 1, 2016, and is only partially reflected in the 2016 period expense. 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 six months ended September 30, 2017 increased $212,000, or 2.0%, to $11.0 million, as compared to $10.8 million for the six months ended September 30, 2016. The increase consisted primarily of increases in advertising and marketing expenses of $149,000, or 59.1%, and occupancy expenses of $102,000, or 12.0%, partially offset by a decrease in federal deposit insurance premium of $87,000, or 30.0%. The increases relate to the same items noted above.

Income taxes for the three months ended September 30, 2017 increased $496,000, or 96.7%, to $1.0 million, as compared to $513,000 for the three ended September 30, 2016, and increased $781,000, or 81.3%, to $1.74 million for the six months ended September 30, 2017, as compared to $961,000 for the six months ended September 30, 2016. The increases resulted from higher pre-tax income, coupled with a slight increase in the effective income tax rate. The overall effective income tax rates were 30.4% and 32.0%, respectively for the 2017 periods compared with 29.3% and 29.9%, respectively for the 2016 periods.

About Clifton Bancorp Inc.

Clifton Bancorp Inc. is the holding company for CSBK (Clifton Savings Bank), a federally chartered savings bank headquartered in Clifton, New Jersey. CSBK is a metropolitan, community-focused bank serving residents and 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, 2017. 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 September 30, At March 31,   2017     2017 (In thousands) Financial Condition Data: Total assets $ 1,554,521 $ 1,431,803 Loans receivable, net 1,140,419 1,007,844 Cash and cash equivalents 16,044 14,653 Securities 299,640 315,348 Deposits 914,573 844,825 FHLB advances 340,700 275,800 Total stockholders' equity 285,943 296,619                   Selected Consolidated Operating Data     Three Months Ended Six Months Ended September 30, September 30,   2017   2016   2017   2016 (In thousands, except per share data) Operating Data: Interest income $ 12,229 $ 9,916 $ 23,715 $ 19,507 Interest expense   4,026   2,847   7,623   5,496 Net interest income 8,203 7,069 16,092 14,011 Provision for loan losses   610   505   1,200   1,031 Net interest income after provision for loan losses 7,593 6,564 14,892 12,980 Non-interest income 1,111 501 1,558 1,028 Non-interest expenses   5,390   5,311   11,002   10,790 Income before income taxes 3,314 1,754 5,448 3,218 Income taxes   1,009   513   1,742   961 Net income $ 2,305 $ 1,241 $ 3,706 $ 2,257 Basic earnings per share $ 0.11 $ 0.06 $ 0.17 $ 0.10 Diluted earnings per share $ 0.11 $ 0.06 $ 0.17 $ 0.10   Average shares outstanding - basic 21,274 22,216 21,322 22,495 Average shares outstanding - diluted 21,411 22,276 21,474 22,555          

Average Balance Table

Three Months Ended September 30, 2017       2016     Interest           Interest     Average and Yield/ Average and Yield/

Balance

Dividends

Cost

Balance

Dividends

Cost

Assets: (Dollars in thousands) Interest-earning assets: Loans receivable $ 1,107,262 $ 10,112 3.65 % $ 855,838 $ 7,748 3.62 % Mortgage-backed securities 248,079 1,579 2.55 % 267,646 1,734 2.59 % Investment securities 55,914 270 1.93 % 59,099 283 1.92 % Other interest-earning assets   39,524   268 2.71 %   28,402   151 2.13 % Total interest-earning assets 1,450,779   12,229 3.37 % 1,210,985   9,916 3.27 %   Non-interest-earning assets   85,339   85,425 Total assets $ 1,536,118 $ 1,296,410   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $ 97,727 160 0.65 % $ 53,270 14 0.11 % Savings and Club accounts 205,035 234 0.46 % 183,426 178 0.39 % Certificates of deposit   571,976   2,101 1.47 %   492,921   1,731 1.40 % Total interest-bearing deposits 874,738 2,495 1.14 % 729,617 1,923 1.05 % FHLB Advances   330,475   1,531 1.85 %   226,250   924 1.63 % Total interest-bearing liabilities 1,205,213   4,026 1.34 % 955,867   2,847 1.19 %   Non-interest-bearing liabilities: Non-interest-bearing deposits 27,950 23,512 Other non-interest-bearing liabilities   15,469   11,652 Total non-interest-bearing liabilities   43,419   35,164   Total liabilities 1,248,632 991,031 Stockholders' equity   287,486   305,379 Total liabilities and stockholders' equity $ 1,536,118 $ 1,296,410   Net interest income $ 8,203 $ 7,069 Interest rate spread 2.03 % 2.08 % Net interest margin 2.26 % 2.33 % Average interest-earning assets to average interest-bearing liabilities 1.20 x 1.27 x           Six Months Ended September 30, 2017       2016     Interest         Interest     Average and Yield/ Average and Yield/ Balance Dividends Cost Balance Dividends Cost Assets: (Dollars in thousands) Interest-earning assets: Loans receivable $ 1,072,038 $ 19,501 3.64 % $ 828,462 $ 14,966 3.61 % Mortgage-backed securities 250,519 3,196 2.55 % 270,566 3,577 2.64 % Investment securities 56,351 541 1.92 % 65,440 691 2.11 % Other interest-earning assets   36,795   477 2.59 %   29,388   273 1.86 % Total interest-earning assets 1,415,703   23,715 3.35 % 1,193,856   19,507 3.27 %   Non-interest-earning assets   86,113   85,722 Total assets $ 1,501,816 $ 1,279,578   Liabilities and stockholders' equity: Interest-bearing liabilities: Demand accounts $ 80,421 208 0.52 % $ 53,390 29 0.11 % Savings and Club accounts 206,504 467 0.45 % 173,567 304 0.35 % Certificates of deposit   567,035   4,118 1.45 %   484,690   3,351 1.38 % Total interest-bearing deposits 853,960 4,793 1.12 % 711,647 3,684 1.04 % FHLB Advances   315,057   2,830 1.80 %   226,357   1,812 1.60 % Total interest-bearing liabilities 1,169,017   7,623 1.30 % 938,004   5,496 1.17 %   Non-interest-bearing liabilities: Non-interest-bearing deposits 28,072 21,463 Other non-interest-bearing liabilities   14,254   10,834 Total non-interest-bearing liabilities   42,326   32,297   Total liabilities 1,211,343 970,301 Stockholders' equity   290,473   309,277 Total liabilities and stockholders' equity $ 1,501,816 $ 1,279,578   Net interest income $ 16,092 $ 14,011 Interest rate spread 2.05 % 2.10 % Net interest margin 2.27 % 2.35 % Average interest-earning assets to average interest-bearing liabilities 1.21 x 1.27 x               Asset Quality Data     Six Six Months Year Months Ended Ended Ended September 30, March 31, September 30,   2017     2017     2016   (Dollars in thousands) Allowance for loan losses: Allowance at beginning of period $ 6,100 $ 4,360 $ 4,360 Provision for loan losses 1,200 1,985 1,031   Charge-offs (1 ) (247 ) (193 ) Recoveries   11     2     2   Net recoveries (charge-offs) 10 (245 ) (191 )       Allowance at end of period $ 7,310   $ 6,100   $ 5,200     Allowance for loan losses to total gross loans 0.64 % 0.60 % 0.59 % Allowance for loan losses to nonperforming loans 154.12 % 146.11 % 185.52 %     At September 30, At March 31, At September 30,   2017     2017     2016   (Dollars in thousands) Nonperforming Assets: Nonaccrual loans: One- to four-family real estate $ 4,164 $ 3,508 $ 2,619 Commercial real estate   184     184     184   Total nonaccrual loans 4,348 3,692 2,803 Accruing loans past due 90 days or more   395     483     -   4,743 4,175 2,803 Real estate owned   167     698     943   Total nonperforming assets $ 4,910   $ 4,873   $ 3,746     Total nonperforming loans to total gross loans 0.41 % 0.41 % 0.32 % Total nonperforming assets to total assets 0.32 % 0.34 % 0.29 %                   Selected Consolidated Financial Ratios     Three Months Ended Six Months Ended September 30, September 30,

Selected Performance Ratios (1):

2017   2016   2017   2016   Return on average assets 0.60 % 0.38 % 0.49 % 0.35 % Return on average equity 3.21 % 1.63 % 2.55 % 1.46 % Interest rate spread 2.03 % 2.08 % 2.05 % 2.10 % Net interest margin 2.26 % 2.33 % 2.27 % 2.35 % Non-interest expenses to average assets 1.40 % 1.64 % 1.47 % 1.69 % Efficiency ratio (2) 57.87 % 70.16 % 62.33 % 71.75 % Average interest-earning assets to average interest-bearing liabilities 1.20x 1.27x 1.21x 1.27x Average equity to average assets 18.72 % 23.56 % 19.34 % 24.17 % Dividend payout ratio 55.40 % 107.28 % 212.55 % 119.36 % Net charge-offs to average outstanding loans during the periods 0.00 % 0.04 % 0.00 % 0.05 %  

(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     September 30,     June 30,     March 31,     December 31,     September 30,   2017     2017     2017     2016     2016   (In thousands except per share data)

Operating Data

Interest income $ 12,229 $ 11,486 $ 10,774 $ 10,193 $ 9,916 Interest expense   4,026     3,597     3,246     3,071     2,847   Net interest income 8,203 7,889 7,528 7,122 7,069 Provision for loan losses   610     590     541     413     505   Net interest income after provision for loan losses 7,593 7,299 6,987 6,709 6,564 Non-interest income 1,111 447 426 460 501 Non-interest expenses   5,390     5,612     5,558     5,354     5,311   Income before income taxes 3,314 2,134 1,855 1,815 1,754 Income taxes   1,009     733     609     596     513   Net income $ 2,305   $ 1,401   $ 1,246   $ 1,219   $ 1,241    

Share Data

Basic earnings per share $ 0.11 $ 0.07 $ 0.06 $ 0.06 $ 0.06 Diluted earnings per share $ 0.11 $ 0.07 $ 0.06 $ 0.06 $ 0.06 Dividends per share $ 0.06 $ 0.31 $ 0.06 $ 0.06 $ 0.06 Average shares outstanding - basic 21,274 21,369 21,887 22,020 22,216 Average shares outstanding - diluted 21,411 21,525 22,025 22,150 22,276 Shares outstanding at period end 22,065 22,299 22,549 23,046 23,086  

Financial Condition Data

Total assets $ 1,554,521 $ 1,525,028 $ 1,431,803 $ 1,371,265 $ 1,312,190 Loans receivable, net 1,140,419 1,074,748 1,007,844 936,894 881,593 Cash and cash equivalents 16,044 48,280 14,653 22,277 22,758 Securities 299,640 304,060 315,348 319,163 317,147 Deposits 914,573 892,414 844,825 803,364 772,306 FHLB advances 340,700 324,800 275,800 252,500 224,500 Total stockholders' equity 285,943 288,152 296,619 303,098 302,890  

Assets Quality:

Total nonperforming assets $ 4,910 $ 5,149 $ 4,873 $ 4,171 $ 3,746 Total nonperforming loans to total gross loans 0.41 % 0.40 % 0.41 % 0.37 % 0.32 % Total nonperforming assets to total assets 0.32 % 0.34 % 0.34 % 0.30 % 0.29 % Allowance for loan losses $ 7,310 $ 6,700 $ 6,100 $ 5,575 $ 5,200 Allowance for loan losses to total gross loans 0.64 % 0.62 % 0.60 % 0.59 % 0.59 % Allowance for loan losses to nonperforming loans 154.12 % 155.38 % 146.11 % 162.02 % 185.52 %  

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