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

November 06, 2009 | About:
10qk

10qk

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Clifton Savings Bancorp Inc. (CSBK) filed Quarterly Report for the period ended 2009-09-30.

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 $231.9 million; its shares were traded at around $8.68 with a P/E ratio of 48.2 and P/S ratio of 5.2. The dividend yield of Clifton Savings Bancorp Inc. stocks is 2.2%.

Highlight of Business Operations:

Interest income on loans increased by $125,000, or 2.1% to $6.12 million during

the three months ended September 30, 2009, when compared with $5.99 million for

the same 2008 period. The increase during the 2009 period resulted from an

increase in the average loan balance of $23.6 million, or 5.2% when compared to

the same period in 2008, partially offset by a decrease in the yield earned on

the loan portfolio of 16 basis points to 5.12% from 5.28%. Interest income on

mortgage-backed securities increased $245,000, or 6.0% to $4.33 million during

the three months ended September 30, 2009, when compared with $4.08 million for

the same 2008 period. The increase during the 2009 period resulted from an

increase of $30.5 million, or 9.8% in the average balance of mortgage-backed

securities outstanding, partially offset by a decrease in the yield earned on

mortgage-backed securities outstanding, of 18 basis points to 5.04% from 5.22%.

Interest earned on investment securities decreased by $177,000, or 20.5% to

$686,000 during the three months ended September 30, 2009, when compared to

$863,000 during the same 2008 period, due to a decrease in the average yield of

187 basis points to 2.81% from 4.68%, partially offset by an increase of $23.9

million, or 32.4%, in the average balance when compared to the same period in

2008. Interest earned on other interest-earning assets decreased by $106,000, or

48.0% to $115,000 during the three months ended September 30, 2009, when

compared to $221,000 during the same 2008 period primarily due to a decrease of

101 basis points in yield to 2.02% from 3.03%, coupled with a decrease of $6.3

million, or 21.8%, in the average balance of other interest-earning assets.



Interest expense on deposits decreased $267,000, or 5.4% to $4.65 million during

the three months ended September 30, 2009, when compared to $4.91 million during

the same 2008 period. Such decrease was primarily attributable to a decrease of

70 basis points in the cost of interest-bearing deposits to 2.74% from 3.44%,

partially offset by an increase of $108.5 million, or 19.0% 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 decreased approximately $201,000, or 12.8% to $1.37 million during the

three months ended September 30, 2009 when compared with $1.57 million during

the same 2008 period. Such decrease was primarily attributable to a decrease of

$19.5 million, or 12.1% in the average balance of borrowings, coupled with a

decrease of 3 basis points in the cost of borrowings to 3.87% from 3.90%. The

decrease in the cost of borrowings was a result of both existing borrowings at a

higher rate being repaid in accordance with their original terms, and a new

borrowing originated at a market interest rate well below the average cost of

existing borrowings.



During the three months ended September 30, 2009 and 2008, the Bank recorded

$333,000 and $115,000, respectively, to the provision for loan losses. The

increased provision in the current period was the result of increases in

non-performing loans due to worsening economic conditions and to a lesser

extent, the increase in the loan portfolio. 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

September 30, 2009 and September 30, 2008, the Bank's non-performing loans, all

of which were delinquent ninety days or more, and all of which were in a

nonaccrual status, totaled $2.7 million and $533,000 respectively, representing

0.54% and 0.11%, respectively, of total gross loans, and 0.26% and 0.06%,

respectively, of total assets at the end of each period. At March 31, 2009,

nonaccrual loans totaled 870,000, or 0.19% and 0.09% of total gross loans and

total assets, respectively. During the three months ended September 30, 2009 and

2008, the Bank charged off $83,000 and $0, respectively. During the period ended

September 30, 2009, the $83,000 charge-off represented a partial loss from the

restructuring of one residential real estate loan. This was the first loan

charge-off recorded by the Bank in more than ten years. At September 30, 2009,

non-performing loans consisted of eleven loans secured by one- to four-family

residential real estate, two loans secured by commercial real estate, and one

loan secured by a multi-family dwelling, while at September 30, 2008,

non-performing loans consisted of nine one- to four-family residential real

estate loans. At March 31, 2009, non-performing loans consisted of seven one- to

four-family residential real estate loans. All non-performing loans included

above are located in the state of New Jersey. The allowance for loan losses

amounted to $2.1 million, representing 0.42% of total gross loans at September

30, 2009, and $1.7 million, representing 0.36% of total gross loans at March 31,

2009.



Interest income on loans increased by $607,000, or 5.2% to $12.22 million during

the six months ended September 30, 2009, when compared with $11.62 million for

the same 2008 period. The increase during the 2009 period resulted from an

increase in the average loan balance of $32.4 million, or 7.3% when compared to

the same period in 2008, partially offset by a decrease in the yield earned on

the loan portfolio of 11 basis points to 5.15% from 5.26%. Interest income on

mortgage-backed securities increased $635,000, or 8.3% to $8.33 million during

the six months ended September 30, 2009, when compared with $7.69 million for

the same 2008 period. The increase during the 2009 period resulted from an

increase of $31.2 million, or 10.6% in the average balance of mortgage-backed

securities outstanding, partially offset by a decrease of 10 basis points in the

average yield earned on mortgage-backed securities to 5.10% from 5.20%. Interest

earned on investment securities decreased by $704,000, or 33.6% to $1.39 million

during the six months ended September 30, 2009, when compared to $2.09 million

during the same 2008 period, due to a decrease of 181 basis points in average

yield to 2.99% from 4.80%, partially offset by an increase of $5.8 million, or

6.7%, in the average balance. Interest earned on other interest-earning assets

decreased by $299,000, or 56.8% to $227,000 during the six months ended

September 30, 2009, when compared to $526,000 during the same 2008 period

primarily due to a decrease of 91 basis points in average yield to 1.89% from

2.80%, coupled with a decrease of $13.5 million, or 36.1%, in the average

balance.



The Bank anticipates that it will have sufficient funds available to meet its

current commitments. At September 30, 2009, the Bank had outstanding commitments

to originate loans totaling approximately $9.8 million, which included $8.2

million for fixed-rate mortgage loans with interest rates ranging from 4.375% to

5.250%, $1.5 million for adjustable rate mortgage loans with initial rate

ranging from 4.875% to 6.500%, $76,000 for fixed-rate second mortgage loans with

interest rates ranging from 6.00% to 6.25%, and $30,000 for an adjustable rate

home equity line of credit with an initial interest rate of 4.50%.



At September 30, 2009, the Bank had outstanding commitments to purchase $1.4

million for adjustable rate mortgage loans with existing rates ranging from

4.875% to 5.125%. In addition, the Bank had outstanding commitments to purchase

a $500,000 participation in a $3.0 million construction loan, and a $500,000

participation in a $6.5 million construction loan, with adjustable interest

rates of 2.75% and 2.50%, respectively, over the one month London Interbank

Offering Rate with floors of 6.00% and 6.25%, respectively. Also, the Bank has a

commitment to purchase a $500,000 participation in a $1.7 million construction

loan with an adjustable interest rate at the Prime Rate with a floor of 5.25%.



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