Clifton Bancorp Inc. Announces Financial Results For The Second Quarter Ended September 30, 2016; Declares Cash Dividend

Clifton Bancorp Inc. (Nasdaq:CSBK) (the "Company"), the holding company for Clifton Savings Bank, today announced results for the second quarter ended September 30, 2016. Net income for the second quarter was $1.24 million ($0.06 per share, basic and diluted) as compared to net income of $1.54 million ($0.06 per share, basic and diluted) for the second quarter ended September 30, 2015. Net income for the six months ended September 30, 2016 was $2.26 million ($0.10 per share, basic and diluted) as compared to $3.20 million ($0.13 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 September 30, 2016. The dividend will be paid on December 2, 2016 to stockholders of record on November 18, 2016.

Notable Items
  • Total assets increased 4.7%, or $59.1 million, from $1.25 billion at March 31, 2016 to $1.31 billion at September 30, 2016;
  • Net loans increased 13.0%, or $101.4 million, from $780.2 million at March 31, 2016 to $881.6 million at September 30, 2016;
  • Multi-family and commercial real estate loans increased 61.3%, or $94.1 million, from $153.6 million at March 31, 2016 to $247.7 million at September 30, 2016;
  • Loan mix between one-to-four family real estate loans and multi-family/commercial real estate loans to total loans shifted to 70.6% and 28.0%, respectively, at September 30, 2016 from 79.0% and 19.7%, respectively, at March 31, 2016;
  • Nonperforming loans to total gross loans decreased to 0.32% at September 30, 2016 from 0.64% at September 30, 2015;
  • Deposits increased 11.2%, or $77.6 million, from $694.7 million at March 31, 2016 to $772.3 million at September 30, 2016;
  • 484,400 shares of common stock were repurchased during the three months ended September 30, 2016 at a weighted average price of $14.95 per share.

Paul M. Aguggia, Chairman, President, and Chief Executive Officer, stated, "As we pass our fiscal half-year mark, we are pleased that our strategy and execution have resulted in both deposit and loan growth. This has been accomplished, in large part, due to our strong capital position, our innovative approach to products, services and channels, and our focus on communicating the essence of what CSBK is all about: a community bank that has always put the needs of our customers first."

Balance Sheet and Credit Quality Review

Total assets increased $59.1 million, or 4.7%, to $1.31 billion at September 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 $101.4 million, or 13.0%, to $881.6 million at September 30, 2016 from $780.2 million at March 31, 2016. One-to-four family real estate loans increased $6.0 million, or 1.0%, while multi-family and commercial real estate loans increased $94.1 million, or 61.3%, during the six months ended September 30, 2016. Securities, including both available for sale and held to maturity issues, decreased $40.3 million, or 11.3%, to $317.1 million at September 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 six-month period ended September 30, 2016, resulting in a gain of $84,000. Cash and cash equivalents decreased $8.3 million, or 26.8%, to $22.8 million at September 30, 2016 from $31.1 million at March 31, 2016.

Deposits increased $77.6 million, or 11.2%, to $772.3 million at September 30, 2016 from $694.7 million at March 31, 2016. Borrowed funds decreased $7.0 million, or 3.0%, to $224.5 million at September 30, 2016 from $231.5 million at March 31, 2016. The Company's outstanding borrowings as of September 30, 2016 had a weighted average rate of 1.63% and a weighted average term of 18 months. All outstanding borrowings are with the Federal Home Loan Bank of New York.

Total stockholders' equity decreased $12.4 million, or 3.9%, to $302.9 million at September 30, 2016 from $315.3 million at March 31, 2016, primarily as a result of $13.3 million in repurchases of common stock, and the payment of $2.7 million in cash dividends, partially offset by net income of $2.3 million.

Nonaccrual loans decreased $855,000, or 23.4%, to $2.8 million at September 30, 2016 from $3.7 million at March 31, 2016. Included in nonaccrual loans at September 30, 2016 were four loans totaling $568,000 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 0.32% at September 30, 2016 from 0.47% at March 31, 2016. The allowance for loan losses to nonperforming loans increased to 185.52% at September 30, 2016 from 119.19% at March 31, 2016, as nonperforming loans decreased, while the allowance balance increased mainly as a result of provisions associated with significant increases in loans.

Income Statement Review

Net interest income increased by $529,000, or 8.1%, to $7.07 million for the three months ended September 30, 2016 as compared to $6.54 million for the three months ended September 30, 2015. Net interest income increased despite a decrease of 10 basis points in net interest margin and a decrease of $38.0 million in average net interest-earning assets.

Net interest income increased by $894,000, or 6.8%, to $14.01 million for the six months ended September 30, 2016 as compared to $13.12 million for the six months ended September 30, 2015. Net interest income increased despite a decrease of 7 basis points in net interest margin and a decrease of $42.7 million in average net interest-earning assets.

The provision for loan losses increased $405,000, or 405.0%, to $505,000 for the three months ended September 30, 2016, as compared to $100,000 for the three months ended September 30, 2015, and increased $858,000, or 496.0%, to $1.03 million for the six months ended September 30, 2016, as compared to $173,000 for the six months ended September 30, 2015. The increase in the provisions for both periods 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 September 30, 2016 increased $731,000, or 16.0%, to $5.31 million, as compared to $4.58 million for the three months ended September 30, 2015. The increase consisted primarily of increases in salaries and employee benefits of $653,000, or 24.0%, occupancy expense of $83,000, or 23.7%, and equipment expense of $68,000, or 18.4%, partially offset by a decrease in other expenses, mainly comprised of consulting and personnel search costs, of $89,000, or 19.8%. 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 increases in occupancy and equipment expenses were mainly related to the costs of the newly opened Hoboken Banking Center, along with the costs associated with new customer products and services.

Non-interest expenses for the six months ended September 30, 2016 increased $1.69 million, or 18.6%, to $10.79 million, as compared to $9.10 million for the six months ended September 30, 2015. The increase consisted primarily of increases in salaries and employee benefits of $1.36 million, or 25.1%, occupancy expense of $104,000, or 13.9%, equipment expense of $91,000, or 12.5%, and advertising and marketing expense of $87,000, or 52.7%, partially offset by a decrease in professional services of $95,000, or 20.3%. The increases in salaries and employee benefits include the same items noted above. The increases in occupancy, equipment, as well as advertising and marketing expenses, were mainly related to the costs of the newly opened Hoboken Banking Center, along with the costs associated with new customer products and services. 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 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 September 30, At March 31,
2016  

2016
(In thousands)
Financial Condition Data:
Total assets $ 1,312,190 $ 1,253,127
Loans receivable, net 881,593 780,229
Cash and cash equivalents 22,758 31,069
Securities 317,147 357,462
Deposits 772,306 694,662
FHLB advances 224,500 231,500
Total stockholders' equity 302,890 315,277
 
Selected Consolidated Operating Data            
Three Months Ended Six Months Ended
September 30, September 30,
2016   2015 2016   2015
(In thousands, except share and per share data)
 
Operating Data:
Interest income $ 9,916 $ 8,739 $ 19,507 $ 17,451
Interest expense   2,847   2,199   5,496   4,334
Net interest income 7,069 6,540 14,011 13,117
Provision for loan losses   505   100   1,031   173
Net interest income after provision for
loan losses 6,564 6,440 12,980 12,944
Non-interest income 501 452 1,028 966
Non-interest expenses   5,311   4,580   10,790   9,095
Income before income taxes 1,754 2,312 3,218 4,815
Income taxes   513   772   961   1,617
Net income $ 1,241 $ 1,540 $ 2,257 $ 3,198
Basic earnings per share $ 0.06 $ 0.06 $ 0.10 $ 0.13
Diluted earnings per share $ 0.06 $ 0.06 $ 0.10 $ 0.13
 
Average shares outstanding - basic 22,216 24,633 22,495 25,000
Average shares outstanding - diluted 22,276 24,687 22,555 25,064
 
           
Average Balance Table
Three Months Ended September 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 $ 855,838 $ 7,748 3.62 % $ 666,434 $ 6,090 3.66 %
Mortgage-backed securities 267,646 1,734 2.59 % 273,417 1,899 2.78 %
Investment securities 59,099 283 1.92 % 116,350 678 2.33 %
Other interest-earning assets   28,402   151 2.13 %   21,280   72 1.35 %
Total interest-earning assets 1,210,985   9,916 3.27 % 1,077,481   8,739 3.24 %
 
Non-interest-earning assets   85,425   77,426
Total assets $ 1,296,410 $ 1,154,907
 
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Demand accounts $ 53,270 14 0.11 % $ 52,423 15 0.11 %
Savings and Club accounts 183,426 178 0.39 % 142,039 58 0.16 %
Certificates of deposit   492,921   1,731 1.40 %   473,311   1,514 1.28 %
Total interest-bearing deposits 729,617 1,923 1.05 % 667,773 1,587 0.95 %
FHLB Advances   226,250   924 1.63 %   116,625   612 2.10 %
Total interest-bearing liabilities 955,867   2,847 1.19 % 784,398   2,199 1.12 %
 
Non-interest-bearing liabilities:
Non-interest-bearing deposits 23,512 13,898
Other non-interest-bearing liabilities   11,652   12,971
Total non-interest-bearing liabilities   35,164   26,869
 
Total liabilities 991,031 811,267
Stockholders' equity   305,379   343,640
Total liabilities and stockholders' equity $ 1,296,410 $ 1,154,907
 
Net interest income $ 7,069 $ 6,540
Interest rate spread 2.08 % 2.12 %
Net interest margin 2.33 % 2.43 %
Average interest-earning assets
to average interest-bearing liabilities 1.27 x 1.37 x
 
Six Months Ended September 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 $ 828,462 $ 14,966 3.61 % $ 656,681 $ 12,074 3.68 %
Mortgage-backed securities 270,566 3,577 2.64 % 276,092 3,841 2.78 %
Investment securities 65,440 691 2.11 % 122,985 1,387 2.26 %
Other interest-earning assets   29,388   273 1.86 %   28,795   149 1.03 %
Total interest-earning assets 1,193,856   19,507 3.27 % 1,084,553   17,451 3.22 %
 
Non-interest-earning assets   85,722   78,857
Total assets $ 1,279,578 $ 1,163,410
 
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Demand accounts $ 53,390 29 0.11 % $ 53,107 30 0.11 %
Savings and Club accounts 173,567 304 0.35 % 141,918 116 0.16 %
Certificates of deposit   484,690   3,351 1.38 %   478,253   3,014 1.26 %
Total interest-bearing deposits 711,647 3,684 1.04 % 673,278 3,160 0.94 %
FHLB Advances   226,357   1,812 1.60 %   112,714   1,174 2.08 %
Total interest-bearing liabilities 938,004   5,496 1.17 % 785,992   4,334 1.10 %
 
Non-interest-bearing liabilities:
Non-interest-bearing deposits 21,463 13,701
Other non-interest-bearing liabilities   10,834   12,184
Total non-interest-bearing liabilities   32,297   25,885
 
Total liabilities 970,301 811,877
Stockholders' equity   309,277   351,533
Total liabilities and stockholders' equity $ 1,279,578 $ 1,163,410
 
Net interest income $ 14,011 $ 13,117
Interest rate spread 2.10 % 2.12 %
Net interest margin 2.35 % 2.42 %
Average interest-earning assets
to average interest-bearing liabilities 1.27 x 1.38 x
 
         
Asset Quality Data
Six Six
Months Year Months
Ended Ended Ended
September 30, March 31, September 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 1,031 703 173
 
Charge-offs (193 ) (93 ) (26 )
Recoveries   2     -     3  
Net charge-offs (191 ) (93 ) (23 )
     
Allowance at end of period $ 5,200   $ 4,360   $ 3,625  
 
Allowance for loan losses to total gross loans 0.59 % 0.56 % 0.53 %
Allowance for loan losses to nonperforming loans 185.52 % 119.19 % 83.72 %
 
 
At September 30,   At March 31, At September 30,
2016 2016 2015
(Dollars in thousands)
Nonperforming Assets:
Nonaccrual loans:
One- to four-family real estate $ 2,619 $ 3,412 $ 3,452
Multi-family real estate - - 568
Commercial real estate 184 186 192
Construction real estate - - 49
Consumer real estate   -     60     69  
Total nonaccrual loans 2,803 3,658 4,330
Real estate owned   943     58     -  
Total nonperforming assets $ 3,746   $ 3,716   $ 4,330  
 
Total nonperforming loans to total gross loans 0.32 % 0.47 % 0.64 %
Total nonperforming assets to total assets 0.29 % 0.30 % 0.38 %
 
           
Selected Consolidated Financial Ratios
Three Months Ended Six Months Ended
September 30, September 30,

Selected Performance Ratios (1):
2016 2015 2016 2015
Return on average assets 0.38% 0.53% 0.35% 0.55%
Return on average equity 1.63% 1.79% 1.46% 1.82%
Interest rate spread 2.08% 2.12% 2.10% 2.12%
Net interest margin 2.33% 2.43% 2.35% 2.42%
Non-interest expenses to average assets 1.64% 1.59% 1.69% 1.56%
Efficiency ratio (2) 70.16% 65.50% 71.75% 64.58%
Average interest-earning assets to average
interest-bearing liabilities 1.27x 1.37x 1.27x 1.38x
Average equity to average assets 23.56% 29.75% 24.17% 30.22%
Dividend payout ratio 107.28% 95.06% 119.36% 139.15%
Net charge-offs to average ourtstanding loans during the periods 0.04% 0.00% 0.05% 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
September 30, June 30, March 31, December 31, September 30,

2016

2016

2016

2015

2015
(In thousands except shares and per share data)

Operating Data
Interest income $ 9,916 $ 9,591 $ 9,158 $ 8,736 $ 8,739
Interest expense   2,847     2,649     2,468     2,300     2,199  
Net interest income 7,069 6,942 6,690 6,436 6,540
Provision for loan losses   505     526     703     189     100  
Net interest income after provision for
loan losses 6,564 6,416 5,987 6,247 6,440
Non-interest income 501 527 440 460 452
Non-interest expenses   5,311     5,479     5,173     4,833     4,580  
Income before income taxes 1,754 1,464 1,254 1,874 2,312
Income taxes   513     448     376     549     772  
Net income $ 1,241   $ 1,016   $ 878   $ 1,325   $ 1,540  
 

Share Data
Basic earnings per share $ 0.06 $ 0.04 $ 0.04 $ 0.05 $ 0.06
Diluted earnings per share $ 0.06 $ 0.04 $ 0.04 $ 0.05 $ 0.06
Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.06
Average shares outstanding - basic 22,216 22,775 23,434 24,475 24,633
Average shares outstanding - diluted 22,276 22,834 23,479 24,521 24,687
Shares outstanding at period end 23,086 23,576 24,000 25,394 25,745
 

Financial Condition Data
Total assets $ 1,312,190 $ 1,285,825 $ 1,253,127 $ 1,167,739 $ 1,153,895
Loans receivable, net 881,593 826,629 780,229 700,283 677,286
Cash and cash equivalents 22,758 30,140 31,069 30,493 17,869
Securities 317,147 338,624 357,462 356,977 379,582
Deposits 772,306 719,592 694,662 674,002 678,624
FHLB advances 224,500 244,000 231,500 147,000 124,000
Total stockholders' equity 302,890 309,487 315,277 333,956 338,267
 

Assets Quality:
Total nonperforming assets $ 3,746 $ 3,481 $ 3,716 $ 4,387 $ 4,330
Total nonperforming loans to total gross loans 0.32 % 0.38 % 0.47 % 0.63 % 0.64 %
Total nonperforming assets to total assets 0.29 % 0.27 % 0.30 % 0.38 % 0.38 %
Allowance for loan losses $ 5,200 $ 4,775 $ 4,360 $ 3,750 $ 3,625
Allowance for loan losses to total gross loans 0.59 % 0.58 % 0.56 % 0.53 % 0.53 %
Allowance for loan losses to nonperforming loans 185.52 % 153.34 % 119.19 % 85.48 % 83.72 %

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