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Clifton Savings Bancorp Inc. Reports Operating Results (10-Q)

February 05, 2009 | About:
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Clifton Savings Bancorp Inc. (CSBK) filed Quarterly Report for the period ended 2008-12-31.

Clifton Savings Bancorp Inc. is the holding company for Clifton Savings Bank S.L.A. The Bank provides community banking services through its ten offices in northeastern New Jersey. Clifton Savings Bancorp Inc. has a market cap of $277.22 million; its shares were traded at around $11.38 with a P/E ratio of 80.5 and P/S ratio of 6.98. The dividend yield of Clifton Savings Bancorp Inc. stocks is 1.93%.

Highlight of Business Operations:

Interest income on loans increased by $590,000, or 10.4% to $6.24 million during

the three months ended December 31, 2008, when compared with $5.65 million for

the same 2007 period. The increase during the 2008 period resulted from an

increase in the average yield earned on the loan portfolio of 8 basis points to

5.34% from 5.26%, coupled with an increase in the average balance of $38.3

million, or 8.9% when compared to the same period in 2007. The increase in yield

was a result of new loan originations which have yields significantly higher

than the overall average yield on the portfolio. Interest on mortgage-backed

securities increased $2.1 million, or 95.5% to $4.3 million during the three

months ended December 31, 2008, when compared with $2.2 million for the same

2007 period. The increase during the 2008 period resulted from an increase of 34

basis points in the average yield earned on mortgage-backed securities to 5.29%

from 4.95%, coupled with an increase of $148.3 million, or 84.0% in the average

balance of mortgage-backed securities outstanding. The increase in yield was due

to new purchases of securities at yields significantly higher than the overall

portfolio yield. Interest earned on investment securities decreased by $772,000,

or 50.4% to $758,000 during the three months ended December 31, 2008, when

compared to $1.53 million during the same 2007 period, due to a decrease in the

average balance by $66.2 million, or 60.0%, partially offset by an increase in

the average yield of 5 basis points to 4.76% from 4.71%. Investment securities

decreased primarily due to the redeployment of maturities and calls of

investment securities into higher yielding loans and mortgage-backed securities.

Interest earned on other interest-earning assets decreased by $190,000, or 68.6%

to $87,000 during the three months ended December 31, 2008, when compared to

$277,000 during the same 2007 period primarily due to a decrease of 326 basis

points in average yield to 1.64% from 4.90%, coupled with a decrease of $1.4

million, or 6.2%, in the average balance of other interest-earning assets.



Interest expense on deposits decreased $520,000, or 9.3% to $5.06 million during

the three months ended December 31, 2008, when compared to $5.58 million during

the same 2007 period. Such decrease was primarily attributable to a decrease of

55 basis points in the average cost of interest-bearing deposits to 3.43% from

3.98%, partially offset by an increase of $30.3 million, or 5.5% in the average

balance of interest-bearing deposits. The decrease in the average cost of

deposits reflected lower market interest rates. Interest expense on borrowed

money increased approximately $854,000, or 143.5% to $1.45 million during the

three months ended December 31, 2008 when compared with $595,000 during the same

2007 period. Such increase was primarily attributable to an increase of $92.3

million, or 158.9% in the average



During both the three months ended December 31, 2008 and 2007, there were no

provisions for loan losses recorded. The allowance for loan losses is based on

management's evaluation of the risk inherent in the Bank's loan portfolio and

gives due consideration to the changes in general market conditions and in the

nature and volume of the Bank's loan activity. The Bank intends to continue to

evaluate the need for a provision for loan losses based on its periodic review

of the loan portfolio and general market conditions. At December 31, 2008 and

March 31, 2008, the Bank's non-performing loans, all of which were delinquent

ninety days or more, totaled $444,000 and $265,000 respectively, at 0.10% and

0.06%, respectively, to total gross loans, and 0.05% and 0.03%, respectively, to

total assets at the end of each period. During the three months ended December

31, 2008 and 2007, the Bank did not charge off any loans. The allowance for loan

losses amounted to $1.56 million, representing 0.33% of total gross loans at

December 31, 2008, and $1.44 million, representing 0.34% of total gross loans at

March 31, 2008.



Interest income on loans increased by $1.3 million, or 7.8% to $17.9 million

during the nine months ended December 31, 2008, when compared with $16.6 million

for the same 2007 period. The increase during the 2008 period resulted from an

increase in the average yield earned on the loan portfolio of 7 basis points to

5.29% from 5.22%, coupled with an increase in the average balance of $25.8

million, or 6.1% when compared to the same period in 2007. Interest on

mortgage-backed securities increased $6.3 million, or 110.5% to $12.0 million

during the nine months ended December 31, 2008, when compared with $5.7 million

for the same 2007 period. The increase during the 2008 period resulted from an

increase of 50 basis points in the average yield earned on mortgage-backed

securities to 5.23% from 4.73%, coupled with an increase of $144.5 million, or

89.9% in the average balance of mortgage-backed securities outstanding. The

average yields on loans and securities increased as a result of yields on new

loan originations and securities purchased being significantly higher than the

overall existing portfolio yields. Interest earned on investment securities

decreased by $2.1 million, or 42.0% to $2.9 million during the nine months ended

December 31, 2008, when compared to $5.0 million during the same 2007 period,

due to a decrease in the average balance by $64.0 million, or 44.4%, partially

offset by an 11 basis point increase in average yield to 4.75% from 4.64%.

Investment securities decreased primarily due to the redeployment of maturities

and calls of investment securities into higher yielding loans and

mortgage-backed securities. Interest earned on other interest-earning assets

decreased by $521,000, or 45.9% to $613,000 during the nine months ended

December 31, 2008, when compared to $1.13 million during the same 2007 period

primarily due to a decrease of 277 basis points in average yield to 2.52% from

5.29%, partially offset by an increase of $3.8 million, or 13.4%, in the average

balance.



Interest expense on deposits decreased $1.5 million, or 9.0% to $15.1 million

during the nine months ended December 31, 2008, when compared to $16.6 million

during the same 2007 period. Such decrease was primarily attributable to a

decrease of 45 basis points in the average cost of interest-bearing deposits to

3.48% from 3.93%, partially offset by an increase of $16.9 million, or 3.0% in

the average balance of interest-bearing deposits. Interest expense on borrowed

money increased approximately $3.1 million, or 221.4% to $4.5 million during the

nine months ended December 31, 2008 when compared with $1.4 million during the

same 2007 period. Such increase was primarily attributable to an increase of

$102.0 million, or 209.2% in the average balance of borrowings, coupled with an

increase of 7 basis points in the average cost of borrowings to 3.93% from

3.86%.



During the nine months ended December 31, 2008 and 2007, the Bank recorded

$115,000 and $90,000, respectively, as a provision for loan losses. The

allowance for loan losses is based on management's evaluation of the risk

inherent in the Bank's loan portfolio and gives due consideration to the changes

in general market conditions and in the nature and volume of the Bank's loan

activity. The Bank intends to continue to evaluate the need for a provision for

loan losses based on its periodic review of the loan portfolio and general

market conditions. The larger provision in the 2008 period was a result of both

increases in non-performing loans and the loan portfolio balance. The gross loan

portfolio increased $45.3 million, or 10.7% from March 31, 2008 to December 31,

2008, and only $8.3 million, or 2.0% from March 31, 2007 to December 31, 2007.

At December 31, 2008 and March 31, 2008, the Bank's non-performing loans, all of

which were delinquent ninety days or more, totaled $444,000 and $265,000

respectively, at 0.10% and 0.06%, respectively, to total gross loans, and 0.05%

and 0.03%, respectively, to total assets at the end of each period. During the

nine months ended December 31, 2008 and 2007, the Bank did not charge off any

loans. The allowance for loan losses amounted to $1.56 million, representing

0.33% of total gross loans at December 31, 2008, and $1.44 million representing

0.34% of total gross loans at March 31, 2008.



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