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Clifton Bancorp Inc. Announces Financial Results for the Second Quarter Ended September 30, 2017; Declares Cash Dividend

CLIFTON, N.J.--(BUSINESS WIRE)-- 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

Source: Clifton Bancorp Inc.