CLIFTON BANCORP INC. AND SUBSIDIARIES
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Clifton Bancorp Inc. (the “Company”), the Company’s wholly-owned subsidiary, Clifton Savings Bank (the “Bank”), and the Bank’s wholly-owned subsidiary, Botany Inc. (“Botany”). The Company’s principal business is the ownership and operation of the Bank. Botany’s business consists solely of holding investment and mortgage-backed securities, and Botany is treated under New Jersey tax law as a New Jersey Investment Company. All significant intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements were prepared in accordance with the instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, or cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements have been included. The results of operations for the three month period ended June 30, 2017 are not necessarily indicative of the results which may be expected for the entire fiscal year or any other period. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended March 31, 2017, which are included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on June 8, 2017.
The Company has evaluated events and transactions occurring subsequent to the statement of financial condition date of June 30, 2017 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.
2. EARNINGS PER SHARE (EPS)
Basic EPS is based on the weighted average number of common shares actually outstanding and is adjusted for employee stock ownership plan shares not yet committed to be released and deferred compensation obligations required to be settled in shares of Company stock. Unvested restricted stock awards, which contain rights to non-forfeitable dividends, are considered participating securities and the two-class method of computing basic and diluted EPS is applied. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as outstanding stock options, were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Diluted EPS is calculated by adjusting the weighted average number of shares of common stock outstanding to include the effect of contracts or securities exercisable (such as stock options) or which could be converted into common stock, if dilutive, using the treasury stock method. The calculation of diluted EPS for the three months ended June 30, 2017 and 2016 includes incremental shares related to outstanding stock options of 155,753 and 59,768, respectively. Shares issued or retired during any period are weighted for the portion of the period they were outstanding. During the three months ended June 30, 2017 and 2016, the average number of options which were antidilutive were 0 and 1,060,953, respectively.
3. STOCK REPURCHASE AND STOCK BASED COMPENSATION
On March 11, 2015, the Company announced that the Board of Directors authorized a stock repurchase plan, which became effective on April 2, 2015, to acquire up to 2,731,000 shares, or 10%, of the Company’s outstanding common stock. On October 28, 2015, the Company announced that the Board of Directors authorized an extension of the stock repurchase plan to acquire an additional 2,569,000 shares, or 10%, of the Company’s outstanding common stock. On September 8, 2016, the Company announced that the Board of Directors again authorized an extension of the stock repurchase plan to acquire an additional 1,155,000 shares, or 5%, of the Company’s outstanding common stock.
During the three months ended June 30, 2017 and 2016, approximately 246,400 and 404,500 shares were repurchased, respectively, under the repurchase plan at aggregate costs of approximately $4.0 million, or $16.18 per share, and $6.0 million, or $14.90 per share, respectively.
- 8 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. STOCK REPURCHASE AND STOCK BASED COMPENSATION (CONT’D)
At the Company’s annual meeting of stockholders held on August 6, 2015, stockholders of the Company approved the Clifton Bancorp Inc. 2015 Equity Incentive Plan (“the 2015 Equity Incentive Plan”). Under the 2015 Equity Incentive Plan, the Company may grant options to purchase up to 1,705,944 of Company common stock and may grant up to 682,377 shares of common stock as restricted stock awards. At June 30, 2017, there were 716,964 shares and 220,466 shares, respectively, remaining for future option grants and restricted stock awards under the 2015 Equity Incentive Plan.
On April 6, 2016, 8,000 shares of restricted stock were awarded, with a grant date fair value of $14.89 per share. To fund the grant of restricted common stock, the Company issued 8,000 shares from authorized shares. All shares of restricted stock granted on this date vested on April 6, 2017.
On August 31, 2016, effective on September 12, 2016, 9,000 shares of restricted stock were awarded, with a grant date fair value of $15.16 per share. To fund the grant of restricted common stock, the Company issued 9,000 shares from authorized shares. All shares of restricted stock granted on this date vest in equal installments over a three-year period beginning one year from the date of grant.
Management recognizes expense for the fair value of these awards on a straight line basis over the requisite service period. During the three months ended June 30, 2017 and 2016, $315,000 and $317,000, respectively, in expense was recognized in regard to these restricted stock awards. The Company recognized approximately $129,000 and $130,000 of income tax benefits resulting from this expense for three months ended June 30, 2017 and 2016, respectively. The expected future compensation expense relating to the 359,427 non-vested restricted shares outstanding at June 30, 2017 is $3.9 million over a weighted average period of 3.2 years.
The following is summary of the status of the Company’s non-vested restricted shares:
|
|
Restricted
Shares
|
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Non-vested at March 31, 2016
|
|
|
506,362
|
|
|
$
|
13.84
|
|
Granted
|
|
|
17,000
|
|
|
|
15.03
|
|
Vested
|
|
|
(95,886
|
)
|
|
|
13.84
|
|
Forfeited
|
|
|
(60,049
|
)
|
|
|
13.84
|
|
Non-vested at March 31, 2017
|
|
|
367,427
|
|
|
|
13.89
|
|
Vested
|
|
|
(8,000
|
)
|
|
|
14.89
|
|
Non-vested at June 30, 2017
|
|
|
359,427
|
|
|
|
13.87
|
|
On April 6, 2016, stock options to purchase 10,000 shares of Company common stock were awarded, with a grant date fair value of $1.79 per share and an expiration date of April 6, 2026. All of these stock options vested on April 6, 2017. The stock options were granted at an exercise price of $14.89 equal to the value of the Company’s common stock on the grant date based on quoted market prices. The fair value of the stock options was estimated utilizing the Black-Scholes option pricing model using the following assumptions: an expected life of 5.5 years, risk-free rate of return of 1.28%, volatility of 14.92% and a dividend yield of 1.61%.
On September 12, 2016, stock options to purchase 10,000 shares of Company common stock were awarded, with a grant date fair value of $1.92 per share and an expiration date of September 12, 2026. All of these stock options granted vest one year from the date of grant. The stock options were granted at an exercise price of $15.16 equal to the value of the Company’s common stock on the grant date based on quoted market prices. The value of the stock options was estimated utilizing the Black-Scholes option pricing model using the following assumptions: an expected life of 5.5 years, risk-free rate of return of 1.28%, volatility of 15.63% and a dividend yield of 1.58%.
For all grants noted above, the expected option lives were estimated as the mid-point between the respective vesting periods and ten year life of the options. The risk-free rate of return was based on the rates on the grant dates of a U.S. Treasury Note with a term equal to the expected option life. Expected volatility was based on the historical stock price activity of the Company over the year prior to
- 9 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. STOCK REP
URCHASE AND STOCK BASED COMPENSATION (CONT’D)
the grant date. The dividend rate was based on the cash dividends paid by the Company on its common stock over the year prior to the grant date.
Management recognizes expense for the fair value of these awards on a straight line basis over the requisite service period. During the three months ended June 30, 2017 and 2016, $83,000 and $76,000, respectively, in stock option expense, was recorded net of income tax benefits of $25,000 and $21,000 respectively. The expected future compensation expense relating to the 1,136,775 non-vested options outstanding at June 30, 2017 is $1.0 million over the weighted average period of 3.2 years.
A summary of stock option activity follows:
|
|
Number of
Stock Options
|
|
|
Range
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding at March 31, 2016
|
|
|
1,253,251
|
|
|
$9.03 - $13.84
|
|
$
|
13.26
|
|
|
8.78 Years
|
|
$
|
2,333,383
|
|
Granted
|
|
|
20,000
|
|
|
14.89 - 15.16
|
|
|
15.03
|
|
|
|
|
|
|
|
Exercised
|
|
|
(13,648
|
)
|
|
13.84
|
|
|
13.84
|
|
|
|
|
|
24,635
|
|
Forfeited
|
|
|
(122,828
|
)
|
|
13.84
|
|
|
13.84
|
|
|
|
|
|
|
|
Outstanding at March 31, 2017
|
|
|
1,136,775
|
|
|
9.03 - 15.16
|
|
|
13.22
|
|
|
7.73 Years
|
|
|
3,376,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2017
|
|
|
1,136,775
|
|
|
9.03 - 15.16
|
|
|
13.22
|
|
|
7.55 Years
|
|
|
3,763,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at June 30, 2017
|
|
|
355,895
|
|
|
9.03 - 14.89
|
|
|
11.83
|
|
|
6.00 Years
|
|
|
1,672,638
|
|
4. RETIREMENT PLAN-COMPONENTS OF NET PERIODIC PENSION COST
Periodic pension expense for the directors’ retirement plan and a former president’s post-retirement health care plan were as follows:
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(In Thousands)
|
|
Service cost
|
|
$
|
9
|
|
|
$
|
23
|
|
Interest cost
|
|
|
20
|
|
|
|
20
|
|
Amortization of unrecognized (gain)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Amortization of past service cost
|
|
|
—
|
|
|
|
3
|
|
Settlement charge
|
|
|
—
|
|
|
|
37
|
|
Net periodic benefit cost
|
|
$
|
28
|
|
|
$
|
82
|
|
- 10 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SECURITIES
The amortized cost, gross unrealized gains and losses and estimated fair value of securities available for sale and held to maturity for the dates indicated are as follows:
|
|
June 30, 2017
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
(In Thousands)
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association
|
|
$
|
4,232
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
4,191
|
|
Total available for sale securities
|
|
$
|
4,232
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
4,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
(In Thousands)
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association
|
|
$
|
4,472
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
4,435
|
|
Total available for sale securities
|
|
$
|
4,472
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
4,435
|
|
- 11 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SECURITIES (CONT’D)
|
|
June 30, 2017
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
(In Thousands)
|
|
Held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises
|
|
$
|
29,982
|
|
|
$
|
5
|
|
|
$
|
186
|
|
|
$
|
29,801
|
|
Corporate bonds
|
|
|
20,023
|
|
|
|
376
|
|
|
|
91
|
|
|
|
20,308
|
|
Municipal bonds
|
|
|
5,977
|
|
|
|
59
|
|
|
|
59
|
|
|
|
5,977
|
|
|
|
|
55,982
|
|
|
|
440
|
|
|
|
336
|
|
|
|
56,086
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Mortgage Corporation
|
|
|
51,624
|
|
|
|
633
|
|
|
|
545
|
|
|
|
51,712
|
|
Federal National Mortgage Association
|
|
|
176,677
|
|
|
|
2,224
|
|
|
|
873
|
|
|
|
178,028
|
|
Government National Mortgage Association
|
|
|
15,586
|
|
|
|
441
|
|
|
|
147
|
|
|
|
15,880
|
|
|
|
|
243,887
|
|
|
|
3,298
|
|
|
|
1,565
|
|
|
|
245,620
|
|
Total held to maturity securities
|
|
$
|
299,869
|
|
|
$
|
3,738
|
|
|
$
|
1,901
|
|
|
$
|
301,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
|
(In Thousands)
|
|
Held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises
|
|
$
|
29,973
|
|
|
$
|
20
|
|
|
$
|
211
|
|
|
$
|
29,782
|
|
Corporate bonds
|
|
|
20,025
|
|
|
|
327
|
|
|
|
110
|
|
|
|
20,242
|
|
Municipal bonds
|
|
|
8,839
|
|
|
|
24
|
|
|
|
94
|
|
|
|
8,769
|
|
|
|
|
58,837
|
|
|
|
371
|
|
|
|
415
|
|
|
|
58,793
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Mortgage Corporation
|
|
|
53,400
|
|
|
|
580
|
|
|
|
812
|
|
|
|
53,168
|
|
Federal National Mortgage Association
|
|
|
181,843
|
|
|
|
1,968
|
|
|
|
1,417
|
|
|
|
182,394
|
|
Government National Mortgage Association
|
|
|
16,833
|
|
|
|
488
|
|
|
|
167
|
|
|
|
17,154
|
|
|
|
|
252,076
|
|
|
|
3,036
|
|
|
|
2,396
|
|
|
|
252,716
|
|
Total held to maturity securities
|
|
$
|
310,913
|
|
|
$
|
3,407
|
|
|
$
|
2,811
|
|
|
$
|
311,509
|
|
- 12 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SECURITIES (CONT’D)
Contractual maturity data for securities are as follows:
|
|
June 30, 2017
|
|
|
|
Amortized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Value
|
|
|
|
(In Thousands)
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
Due after five through ten years
|
|
$
|
1,164
|
|
|
$
|
1,147
|
|
Due after ten years
|
|
|
3,068
|
|
|
|
3,044
|
|
Total available for sale securities
|
|
$
|
4,232
|
|
|
$
|
4,191
|
|
|
|
|
|
|
|
|
|
|
Held to maturity:
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
Due one year or less
|
|
$
|
15,121
|
|
|
$
|
15,120
|
|
Due after one through five years
|
|
|
32,756
|
|
|
|
32,956
|
|
Due after five through ten years
|
|
|
7,622
|
|
|
|
7,532
|
|
Due after ten years
|
|
|
483
|
|
|
|
478
|
|
|
|
|
55,982
|
|
|
|
56,086
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
Due after one through five years
|
|
|
14,394
|
|
|
|
14,307
|
|
Due after five through ten years
|
|
|
87,897
|
|
|
|
88,615
|
|
Due after ten years
|
|
|
141,596
|
|
|
|
142,698
|
|
|
|
|
243,887
|
|
|
|
245,620
|
|
Total held to maturity securities
|
|
$
|
299,869
|
|
|
$
|
301,706
|
|
The amortized cost and carrying values shown above are by contractual final maturity. Actual maturities will differ from contractual final maturities due to scheduled monthly payments related to mortgage-backed securities and due to the borrowers having the right to prepay obligations with or without prepayment penalties. The Company’s mortgage-backed securities are generally secured by residential mortgage loans with contractual maturities of 15 years or greater, and multi-family loans with contractual maturities of five to ten years. However, the effective lives of those securities are generally shorter than their contractual maturities due to principal amortization and prepayment of the loans within those securities. Investors in pass-through securities generally share in the receipt of principal repayments on a pro-rata basis as paid by the borrowers.
- 13 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SECURITIES (CONT’D)
The age of gross unrealized losses and the fair value of related securities at June 30 and March 31, 2017 were as follows:
|
|
Less Than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Unrealized
|
|
June 30, 2017
|
|
Fair
Value
|
|
|
Losses
|
|
|
Fair
Value
|
|
|
Losses
|
|
|
Fair
Value
|
|
|
Losses
|
|
|
|
(In Thousands)
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association
|
|
$
|
4,191
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,191
|
|
|
$
|
41
|
|
Total available for sale securities
|
|
$
|
4,191
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,191
|
|
|
$
|
41
|
|
Held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises
|
|
$
|
19,811
|
|
|
$
|
186
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,811
|
|
|
$
|
186
|
|
Corporate bonds
|
|
|
9,930
|
|
|
|
91
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,930
|
|
|
|
91
|
|
Municipal bonds
|
|
|
2,628
|
|
|
|
59
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,628
|
|
|
|
59
|
|
|
|
|
32,369
|
|
|
|
336
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,369
|
|
|
|
336
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Mortgage Corporation
|
|
|
33,126
|
|
|
|
545
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,126
|
|
|
|
545
|
|
Federal National Mortgage Association
|
|
|
69,629
|
|
|
|
679
|
|
|
|
3,721
|
|
|
|
194
|
|
|
|
73,350
|
|
|
|
873
|
|
Government National Mortgage Association
|
|
|
6,591
|
|
|
|
105
|
|
|
|
859
|
|
|
|
42
|
|
|
|
7,450
|
|
|
|
147
|
|
|
|
|
109,346
|
|
|
|
1,329
|
|
|
|
4,580
|
|
|
|
236
|
|
|
|
113,926
|
|
|
|
1,565
|
|
Total held to maturity securities
|
|
$
|
141,715
|
|
|
$
|
1,665
|
|
|
$
|
4,580
|
|
|
$
|
236
|
|
|
$
|
146,295
|
|
|
$
|
1,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than 12 Months
|
|
|
12 Months or More
|
|
|
Total
|
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
|
Unrealized
|
|
March 31, 2017
|
|
Fair
Value
|
|
|
Losses
|
|
|
Fair
Value
|
|
|
Losses
|
|
|
Fair
Value
|
|
|
Losses
|
|
|
|
(In Thousands)
|
|
Available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association
|
|
$
|
4,435
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,435
|
|
|
$
|
37
|
|
Total available for sale securities
|
|
$
|
4,435
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,435
|
|
|
$
|
37
|
|
Held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government-sponsored enterprises
|
|
$
|
14,789
|
|
|
$
|
211
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,789
|
|
|
$
|
211
|
|
Corporate bonds
|
|
|
9,914
|
|
|
|
110
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,914
|
|
|
|
110
|
|
Municipal bonds
|
|
|
5,694
|
|
|
|
94
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,694
|
|
|
|
94
|
|
|
|
|
30,397
|
|
|
|
415
|
|
|
|
—
|
|
|
|
—
|
|
|
|
30,397
|
|
|
|
415
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal Home Loan Mortgage Corporation
|
|
|
34,007
|
|
|
|
812
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34,007
|
|
|
|
812
|
|
Federal National Mortgage Association
|
|
|
113,178
|
|
|
|
1,177
|
|
|
|
3,966
|
|
|
|
240
|
|
|
|
117,144
|
|
|
|
1,417
|
|
Government National Mortgage Association
|
|
|
7,119
|
|
|
|
117
|
|
|
|
1,024
|
|
|
|
50
|
|
|
|
8,143
|
|
|
|
167
|
|
|
|
|
154,304
|
|
|
|
2,106
|
|
|
|
4,990
|
|
|
|
290
|
|
|
|
159,294
|
|
|
|
2,396
|
|
Total held to maturity securities
|
|
$
|
184,701
|
|
|
$
|
2,521
|
|
|
$
|
4,990
|
|
|
$
|
290
|
|
|
$
|
189,691
|
|
|
$
|
2,811
|
|
Management does not believe that any of the unrealized losses at June 30, 2017 (four bonds of Government-sponsored enterprise, two corporate bonds, and seven municipal bonds included in debt securities, and twenty-nine FNMA mortgage-backed securities, eleven FHLMC mortgage-backed securities, and four GNMA mortgage-backed securities) represent an other-than-temporary impairment as they are primarily related to market interest rates and not related to the underlying credit quality of the issuers of the securities. Additionally, the Company and its subsidiaries have the ability, and management has the intent, to hold such securities for the time necessary to recover amortized cost and does not have the intent to sell the securities, and it is more likely than not that it will not have to sell the securities before recovery of their amortized cost.
- 14 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. SECURITIES (CONT’D)
During the three months ended June 30, 2017 and 2016, the proceeds from sales of securities available for sale totaled $0 and $3.7 million, respectively, resulting in gross realized gains of $0 and $84,000, respectively.
6. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES
The following is a summary of loans by segment and the classes within those segments:
|
|
June 30,
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2017
|
|
|
|
(In Thousands)
|
|
Real estate:
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
716,334
|
|
|
$
|
702,438
|
|
Multi-family
|
|
|
144,600
|
|
|
|
123,918
|
|
Commercial
|
|
|
202,293
|
|
|
|
170,464
|
|
|
|
|
1,063,227
|
|
|
|
996,820
|
|
Commercial and industrial
|
|
|
3,547
|
|
|
|
2,571
|
|
Consumer:
|
|
|
|
|
|
|
|
|
Second mortgage and equity lines of credit
|
|
|
10,368
|
|
|
|
10,297
|
|
Passbook or certificate and other loans
|
|
|
539
|
|
|
|
563
|
|
|
|
|
10,907
|
|
|
|
10,860
|
|
Total Loans
|
|
|
1,077,681
|
|
|
|
1,010,251
|
|
Net purchase premiums, discounts, and deferred loan costs
|
|
|
3,767
|
|
|
|
3,693
|
|
Total Loans, Net
|
|
$
|
1,081,448
|
|
|
$
|
1,013,944
|
|
The allowance for loan losses consists of general, specific and unallocated components. For loans that are classified as impaired, a valuation allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component of the allowance covers pools of loans by loan class not considered impaired, as well as smaller balance homogeneous loans, such as one- to four-family real estate, second mortgage loans and equity lines of credit and passbook or certificate and other loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors to reflect current conditions. The qualitative risk factors include:
1.
|
Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.
|
2.
|
National, regional, and local economic and business conditions, including the value of underlying collateral for collateral dependent loans.
|
3.
|
Nature and volume of the portfolio and terms of loans.
|
4.
|
Experience, ability, and depth of lending management and staff.
|
5.
|
The quality of the Bank’s loan review system.
|
6.
|
Volume and severity of past due, classified and nonaccrual loans.
|
7.
|
Existence and effect of any concentrations of credit and changes in the level of such concentrations.
|
8.
|
Effect of external factors, such as competition and legal and regulatory requirements.
|
- 15 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS RECEIVABLE AND
ALLOWANCE FOR LOAN LOSSES (CONT’D)
Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.
An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating losses in the portfolio.
The evaluation of the adequacy of the allowance is based on an analysis which categorizes the entire loan portfolio by certain risk characteristics. The loan portfolio segments are further disaggregated into the following loan classes, where the risk level for each type is analyzed when determining the allowance for loan losses.
Real Estate:
1. One- to Four-Family Loans - consists of loans secured by first liens on either owner occupied or investment properties. These loans can be affected by economic conditions and the value of the underlying properties. The risk is considered relatively low as the Bank has always had conservative underwriting standards and does not have sub-prime loans in its loan portfolio.
2. Multi-Family Loans - consists of loans secured by multi-family real estate which generally involve a greater degree of risk than one- to four-family residential mortgage loans. These loans can be affected by economic conditions and the value of the underlying properties.
3. Commercial Loans - consists of loans secured by commercial real estate which generally involve a greater degree of risk than one- to four-family residential mortgage loans. These loans can be affected by economic conditions and the value of the underlying properties. These loans are affected by economic conditions to a greater degree than one- to four-family and multi-family loans.
4. Construction Loans - consists primarily of the financing of construction of one- to four-family properties or construction/permanent loans for the construction of one- to four-family homes to be occupied by the borrower. Construction loans generally are considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate due to uncertainty of construction costs. Independent inspections are performed prior to disbursement of loan proceeds as construction progresses to mitigate these risks. These loans are also affected by economic conditions. There were no construction loans outstanding as of June 30 and March 31, 2017.
Commercial and Industrial:
Consists of commercial lines of credit and term loans which can be either secured or unsecured. Commercial and industrial loans are generally considered to involve a higher degree of risk of loss due to the concentration of principal in a limited number of loans and/or borrowers and the effects of general economic conditions on the business and/or the value of the underlying properties, if applicable. Commercial and industrial loans generally have shorter terms and higher interest rates than other forms of lending.
Consumer:
1. Second Mortgage and Equity Lines of Credit - consists of one- to four-family loans secured by first, second or third liens (when the Bank has the two other lien positions). These loans are affected by the borrower’s continuing financial stability, and therefore are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. The credit risk is considered slightly higher than one- to four-family first lien loans as these loans are also dependent on the value of underlying properties, but in many instances have the added risk of a subordinate collateral position.
2. Passbook or Certificate and Other Loans - consists of loans secured by passbook accounts and certificates of deposits and unsecured loans. The passbook or certificate loans have low credit risk as they are fully secured by their collateral. Unsecured loans included in other loans comprise two loans in a New Jersey loan fund, which also are considered a low credit risk.
- 16 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS RECEIVABLE AND ALLOW
ANCE FOR LOAN LOSSES (CONT’D)
The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated when credit deficiencies arise, such as delinquent loan payments. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss. Loans classified as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Non-classified assets are rated as a pass or pass-watch. Pass-watch loans require current oversight or tracking by management generally due to incomplete documentation or monitoring due to previous delinquent status.
Management performs a classification of assets review, including the regulatory classification of assets, generally on a monthly basis. The results of the classification of assets review are validated by the Company’s third party loan review firm during its semi-annual independent review. In the event of difference in rating or classification between those assigned by the internal and external resources, management and third parties confer to determine the appropriate rating or classification. Final loan ratings and regulatory classifications are presented quarterly to the Board of Directors and are reviewed by regulators during the examination process.
In addition, the Office of the Comptroller of the Currency (the “OCC”), as an integral part of its examination process, periodically reviews the Bank’s loan portfolio and the related allowance for loan losses. The OCC may require the allowance for loan losses to be increased based on its review of information available at the time of the examination.
- 17 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT
’D)
The change in the allowance for loan losses for the three months ended June 30, 2017 and 2016 is as follows:
At March 31, 2017:
|
|
One-to Four-
Family
Real Estate
|
|
|
Multi-Family
Real
Estate
|
|
|
Commercial
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Second
Mortgage
and
Equity Lines
of Credit
|
|
|
Passbook
or Certificate
and Other
Loans
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
(In Thousands)
|
|
Total allowance for
loan losses
|
|
$
|
3,107
|
|
|
$
|
1,225
|
|
|
$
|
1,686
|
|
|
$
|
28
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
6,100
|
|
Charge-offs
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
Recoveries
|
|
|
11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
Provision charged to
operations
|
|
|
55
|
|
|
|
205
|
|
|
|
315
|
|
|
|
11
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
|
590
|
|
At June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance for
loan losses
|
|
$
|
3,172
|
|
|
$
|
1,430
|
|
|
$
|
2,001
|
|
|
$
|
39
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
6,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2016:
|
|
One-to Four-
Family
Real Estate
|
|
|
Multi-Family
Real
Estate
|
|
|
Commercial
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Second
Mortgage
and
Equity Lines
of Credit
|
|
|
Passbook
or Certificate
and Other
Loans
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
(In Thousands)
|
|
Total allowance for
loan losses
|
|
$
|
2,922
|
|
|
$
|
505
|
|
|
$
|
865
|
|
|
$
|
2
|
|
|
$
|
44
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
4,360
|
|
Charge-offs
|
|
|
(112
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(112
|
)
|
Recoveries
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
Provision charged to
operations
|
|
|
91
|
|
|
|
269
|
|
|
|
171
|
|
|
|
9
|
|
|
|
(9
|
)
|
|
|
—
|
|
|
|
(5
|
)
|
|
|
526
|
|
At June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allowance for
loan losses
|
|
$
|
2,902
|
|
|
$
|
774
|
|
|
$
|
1,036
|
|
|
$
|
11
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
4,775
|
|
- 18 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)
The following table presents the allocation of the allowance for loan losses and related loans by loan class at June 30 and March 31, 2017.
June 30, 2017
|
|
One-to Four-
Family
Real Estate
|
|
|
Multi-Family
Real
Estate
|
|
|
Commercial
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Second
Mortgage
and
Equity Lines
of Credit
|
|
|
Passbook
or Certificate
and Other
Loans
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
(In Thousands)
|
|
Allowance for loan
losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for
impairment
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively
evaluated for
impairment
|
|
|
3,172
|
|
|
|
1,430
|
|
|
|
2,001
|
|
|
|
39
|
|
|
|
36
|
|
|
|
—
|
|
|
|
22
|
|
|
|
6,700
|
|
Total
|
|
$
|
3,172
|
|
|
$
|
1,430
|
|
|
$
|
2,001
|
|
|
$
|
39
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
6,700
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually
evaluated for
impairment
|
|
$
|
1,414
|
|
|
$
|
190
|
|
|
$
|
184
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,799
|
|
Collectively
evaluated for
impairment
|
|
|
714,920
|
|
|
|
144,410
|
|
|
|
202,109
|
|
|
|
3,547
|
|
|
|
10,357
|
|
|
|
539
|
|
|
|
—
|
|
|
|
1,075,882
|
|
Total
|
|
$
|
716,334
|
|
|
$
|
144,600
|
|
|
$
|
202,293
|
|
|
$
|
3,547
|
|
|
$
|
10,368
|
|
|
$
|
539
|
|
|
$
|
—
|
|
|
$
|
1,077,681
|
|
March 31, 2017
|
|
One-to Four-
Family
Real Estate
|
|
|
Multi-Family
Real Estate
|
|
|
Commercial
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Second
Mortgage
and
Equity Lines
of Credit
|
|
|
Passbook
or Certificate
and Other
Loans
|
|
|
Unallocated
|
|
|
Total
|
|
|
|
(In Thousands)
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for
impairment
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Collectively evaluated for
impairment
|
|
|
3,107
|
|
|
|
1,225
|
|
|
|
1,686
|
|
|
|
28
|
|
|
|
34
|
|
|
|
—
|
|
|
|
20
|
|
|
|
6,100
|
|
Total
|
|
$
|
3,107
|
|
|
$
|
1,225
|
|
|
$
|
1,686
|
|
|
$
|
28
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
6,100
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for
impairment
|
|
$
|
1,665
|
|
|
$
|
191
|
|
|
$
|
184
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,052
|
|
Collectively evaluated for
impairment
|
|
|
700,773
|
|
|
|
123,727
|
|
|
|
170,280
|
|
|
|
2,571
|
|
|
|
10,285
|
|
|
|
563
|
|
|
|
—
|
|
|
|
1,008,199
|
|
Total
|
|
$
|
702,438
|
|
|
$
|
123,918
|
|
|
$
|
170,464
|
|
|
$
|
2,571
|
|
|
$
|
10,297
|
|
|
$
|
563
|
|
|
$
|
—
|
|
|
$
|
1,010,251
|
|
- 19 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)
The aggregate amount of classified loan balances are as follows at June 30 and March 31, 2017:
June 30, 2017
|
|
One-to Four
-Family
Real Estate
|
|
|
Multi-Family
Real Estate
|
|
|
Commercial
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Second
Mortgage and
Equity Lines
of Credit
|
|
|
Passbook or
Certificate
and Other
Loans
|
|
|
Total
Loans
|
|
|
|
(In Thousands)
|
|
Non-classified:
|
|
$
|
711,877
|
|
|
$
|
144,600
|
|
|
$
|
202,109
|
|
|
$
|
3,547
|
|
|
$
|
10,368
|
|
|
$
|
539
|
|
|
$
|
1,073,040
|
|
Classified:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special mention
|
|
|
329
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
329
|
|
Substandard
|
|
|
4,128
|
|
|
|
—
|
|
|
|
184
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,312
|
|
Doubtful
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total loans
|
|
$
|
716,334
|
|
|
$
|
144,600
|
|
|
$
|
202,293
|
|
|
$
|
3,547
|
|
|
$
|
10,368
|
|
|
$
|
539
|
|
|
$
|
1,077,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
One-to Four
-Family
Real Estate
|
|
|
Multi-Family
Real Estate
|
|
|
Commercial
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Second
Mortgage and
Equity Lines
of Credit
|
|
|
Passbook or
Certificate
and Other
Loans
|
|
|
Total
Loans
|
|
|
|
(In Thousands)
|
|
Non-classified:
|
|
$
|
697,958
|
|
|
$
|
123,918
|
|
|
$
|
170,280
|
|
|
$
|
2,571
|
|
|
$
|
10,297
|
|
|
$
|
563
|
|
|
$
|
1,005,587
|
|
Classified:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special mention
|
|
|
489
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
489
|
|
Substandard
|
|
|
3,991
|
|
|
|
—
|
|
|
|
184
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,175
|
|
Doubtful
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total loans
|
|
$
|
702,438
|
|
|
$
|
123,918
|
|
|
$
|
170,464
|
|
|
$
|
2,571
|
|
|
$
|
10,297
|
|
|
$
|
563
|
|
|
$
|
1,010,251
|
|
The following table provides information with respect to the Bank’s nonaccrual loans at June 30 and March 31, 2017. Loans are generally placed on nonaccrual status when they become more than 90 days delinquent, or when the collection of principal and, or interest become doubtful. Nonaccrual loans differ from the amount of total loans past due greater than 90 days due to some previously delinquent loans that are currently not more than 90 days delinquent which are maintained on nonaccrual status for a minimum of six months until the borrower has demonstrated the ability to satisfy the loan terms. A loan is returned to accrual status when there is sustained consecutive period of repayment performance (generally six consecutive months) by the borrower in accordance with the contractual terms of the loan, or in some circumstances, when the factors indicating doubtful collectability no longer exist and the Bank expects repayment of the remaining contractual amounts due.
|
|
June 30, 2017
|
|
|
March 31, 2017
|
|
|
|
(In Thousands)
|
|
Nonaccrual loans:
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
3,731
|
|
|
$
|
3,508
|
|
Commercial
|
|
|
184
|
|
|
|
184
|
|
Total nonaccrual loans
|
|
$
|
3,915
|
|
|
$
|
3,692
|
|
- 20 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6.
LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)
The following table provides information about delinquencies in the Bank’s loan portfolio at June 30 and March 31, 2017.
|
|
30-59
|
|
|
60-89
|
|
|
90 Days
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Days
|
|
|
Days
|
|
|
Or More
|
|
|
Total
|
|
|
|
|
|
|
Gross
|
|
June 30, 2017
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Current
|
|
|
Loans
|
|
|
|
(In Thousands)
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
1,548
|
|
|
$
|
710
|
|
|
$
|
3,122
|
|
|
$
|
5,380
|
|
|
$
|
710,954
|
|
|
$
|
716,334
|
|
Multi-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
144,600
|
|
|
|
144,600
|
|
Commercial
|
|
|
—
|
|
|
|
—
|
|
|
|
184
|
|
|
|
184
|
|
|
|
202,109
|
|
|
|
202,293
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,547
|
|
|
|
3,547
|
|
Consumer and other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second mortgage and equity lines of credit
|
|
|
—
|
|
|
|
21
|
|
|
|
—
|
|
|
|
21
|
|
|
|
10,347
|
|
|
|
10,368
|
|
Passbook or certificate and other loans
|
|
|
—
|
|
|
|
13
|
|
|
|
—
|
|
|
|
13
|
|
|
|
526
|
|
|
|
539
|
|
Total
|
|
$
|
1,548
|
|
|
$
|
744
|
|
|
$
|
3,306
|
|
|
$
|
5,598
|
|
|
$
|
1,072,083
|
|
|
$
|
1,077,681
|
|
|
|
30-59
|
|
|
60-89
|
|
|
90 Days
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Days
|
|
|
Days
|
|
|
Or More
|
|
|
Total
|
|
|
|
|
|
|
Gross
|
|
March 31, 2017
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Current
|
|
|
Loans
|
|
|
|
(In Thousands)
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family
|
|
$
|
1,594
|
|
|
$
|
665
|
|
|
$
|
2,879
|
|
|
$
|
5,138
|
|
|
$
|
697,300
|
|
|
$
|
702,438
|
|
Multi-family
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
123,918
|
|
|
|
123,918
|
|
Commercial
|
|
|
—
|
|
|
|
—
|
|
|
|
184
|
|
|
|
184
|
|
|
|
170,280
|
|
|
|
170,464
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,571
|
|
|
|
2,571
|
|
Consumer and other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second mortgage and equity lines of credit
|
|
|
9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
|
|
10,288
|
|
|
|
10,297
|
|
Passbook or certificate and other loans
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
561
|
|
|
|
563
|
|
Total
|
|
$
|
1,605
|
|
|
$
|
665
|
|
|
$
|
3,063
|
|
|
$
|
5,333
|
|
|
$
|
1,004,918
|
|
|
$
|
1,010,251
|
|
Loans with a carrying value of $397,000 and $483,000, respectively, were past due greater than 90 days and accruing as of June 30 and March 31, 2017.
We may obtain physical possession of real estate collateralizing a residential mortgage loan via foreclosure or an in-substance repossession. As of June 30, 2017, we hold two foreclosed residential real estate properties with a carrying value of $837,000 as a result of obtaining physical possession. In addition, as of June 30, 2017, we had six residential mortgage loans with a carrying value of $919,000 collateralized by residential real estate for which formal foreclosure proceedings were in process.
A loan is defined as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due under the contractual terms of the loan agreement. The Bank considers one- to four-family mortgage loans and consumer installment loans to be homogeneous and, therefore, does not generally evaluate them individually for impairment, unless they are considered troubled debt restructurings. All other loans are evaluated for impairment on an individual basis.
- 21 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)
Impaired loans, none of which had a related allowance at or for the three months ending June 30, 2017 and 2016, and at or for the year ended March 31, 2017, were as follows:
|
|
|
|
|
|
Unpaid
|
|
|
Average
|
|
|
Interest
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Recorded
|
|
|
Income
|
|
At or For The Three Months Ended June 30, 2017
|
|
Investment
|
|
|
Balance
|
|
|
Investment
|
|
|
Recognized
|
|
|
|
(In Thousands)
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
$
|
1,414
|
|
|
$
|
1,764
|
|
|
$
|
1,601
|
|
|
$
|
18
|
|
Multi-family
|
|
|
190
|
|
|
|
213
|
|
|
|
191
|
|
|
|
3
|
|
Commercial
|
|
|
184
|
|
|
|
184
|
|
|
|
184
|
|
|
|
—
|
|
Consumer and other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second mortgage
|
|
|
11
|
|
|
|
11
|
|
|
|
11
|
|
|
|
—
|
|
Total impaired loans
|
|
$
|
1,799
|
|
|
$
|
2,172
|
|
|
$
|
1,987
|
|
|
$
|
21
|
|
|
|
|
|
|
|
Unpaid
|
|
|
Average
|
|
|
Interest
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Recorded
|
|
|
Income
|
|
At or For The Three Months Ended June 30, 2016
|
|
Investment
|
|
|
Balance
|
|
|
Investment
|
|
|
Recognized
|
|
|
|
(In Thousands)
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
$
|
1,380
|
|
|
$
|
1,702
|
|
|
$
|
1,295
|
|
|
$
|
10
|
|
Multi-family
|
|
|
196
|
|
|
|
220
|
|
|
|
197
|
|
|
|
3
|
|
Commercial
|
|
|
185
|
|
|
|
185
|
|
|
|
185
|
|
|
|
2
|
|
Consumer and other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second mortgage
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
|
—
|
|
Total impaired loans
|
|
$
|
1,773
|
|
|
$
|
2,119
|
|
|
$
|
1,689
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unpaid
|
|
|
Average
|
|
|
Interest
|
|
|
|
Recorded
|
|
|
Principal
|
|
|
Recorded
|
|
|
Income
|
|
At or For The Year Ended March 31, 2017
|
|
Investment
|
|
|
Balance
|
|
|
Investment
|
|
|
Recognized
|
|
|
|
(In Thousands)
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to four-family
|
|
$
|
1,665
|
|
|
$
|
2,017
|
|
|
$
|
1,410
|
|
|
$
|
65
|
|
Multi-family
|
|
|
191
|
|
|
|
215
|
|
|
|
194
|
|
|
|
11
|
|
Commercial
|
|
|
184
|
|
|
|
184
|
|
|
|
184
|
|
|
|
3
|
|
Consumer and other loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second mortgage
|
|
|
12
|
|
|
|
12
|
|
|
|
12
|
|
|
|
1
|
|
Total impaired loans
|
|
$
|
2,052
|
|
|
$
|
2,428
|
|
|
$
|
1,800
|
|
|
$
|
80
|
|
The recorded investment in loans modified in a troubled debt restructuring totaled $1.5 million and $1.5 million respectively, at June 30 and March 31, 2017, of which $329,000 and $331,000, respectively, were over 90 days past due, $54,000 and $14,000, respectively, were 60-89 days past due, and $13,000 and $55,000, respectively, were 30-59 days past due. The remaining loans modified were current at the time of the restructuring and had complied with the terms of their restructure agreements at June 30 and March 31, 2017. Loans that were modified in a troubled debt restructuring represent concessions made to borrowers experiencing financial difficulties. The Bank works with these borrowers to modify existing loan terms usually by extending maturities or reducing interest rates. The Bank records an impairment loss, if any, based on the present value of expected future cash flows discounted at the original loan’s effective interest rate. Subsequently, these loans are individually evaluated for impairment.
- 22 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (CONT’D)
The following table presents troubled debt restructurings by class during the period indicated. There were no new troubled debt restructurings during the three months ended June 30, 2017.
|
|
|
|
Pre-restructuring
|
|
|
Post-restructuring
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Charge-off
|
|
|
|
Number of
|
|
Recorded
|
|
|
Recorded
|
|
|
Recorded
Upon
|
|
|
|
Loans
|
|
Investment
|
|
|
Investment
|
|
|
Restructuring
|
|
|
|
|
|
(Dollar In Thousands)
|
|
Three Months Ended June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One- to four-family real estate
|
|
2
|
|
$
|
468
|
|
|
$
|
411
|
|
|
$
|
—
|
|
There were no defaults that occurred within twelve months of restructuring during the three months ended June 30, 2017 and 2016.
7. FAIR VALUE
Accounting guidance on fair value measurement establishes a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy describes three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices, such as quoted for similar assets or liabilities; quoted prices in markets that are not active; or inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
In addition, the guidance requires the Company to disclose the fair value for certain assets and liabilities on both a recurring and non-recurring basis.
An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
- 23 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. FAIR VALUE (CONT’D)
For assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at June 30 and March 31, 2017 are as follows:
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
in Active
|
|
|
Other
|
|
|
Significant
|
|
|
|
Carrying
|
|
|
Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Value
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
(In Thousands)
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association
|
|
$
|
4,191
|
|
|
$
|
—
|
|
|
$
|
4,191
|
|
|
$
|
—
|
|
Total securities available for sale
|
|
$
|
4,191
|
|
|
$
|
—
|
|
|
$
|
4,191
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal National Mortgage Association
|
|
$
|
4,435
|
|
|
$
|
—
|
|
|
$
|
4,435
|
|
|
$
|
—
|
|
Total securities available for sale
|
|
$
|
4,435
|
|
|
$
|
—
|
|
|
$
|
4,435
|
|
|
$
|
—
|
|
There were no assets measured at fair value on a non-recurring basis at June 30, 2017. For assets measured at fair value on a non-recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2017 are as follow:
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
Carrying
|
|
|
Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Value
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
(In Thousands)
|
|
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans
|
|
$
|
193
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193
|
|
Real estate owned
|
|
|
28
|
|
|
|
—
|
|
|
|
—
|
|
|
|
28
|
|
There were no liabilities measured at fair value on a recurring or non-recurring basis at June 30 and March 31, 2017.
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized adjusted Level 3 inputs to determine fair value.
|
|
Fair Value
|
|
|
Valuation
|
|
Unobservable
|
|
Range (Weighted
|
|
|
Estimate
|
|
|
Techniques
|
|
Input
|
|
Average)
|
|
|
(Dollars in Thousand)
|
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Impaired Loans
|
|
$
|
193
|
|
|
Market valuation of underlying collateral (1)
|
|
Selling costs (2)
|
|
7% (7%)
|
Real estate owned
|
|
|
28
|
|
|
Market valuation of property (1)
|
|
Selling costs (2)
|
|
7% (7%)
|
(1)
|
Fair value is based on third party appraisals.
|
(2)
|
Includes estimated costs to sell.
|
The following information should not be interpreted as an estimate of the fair value of the Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of certain of the Company’s assets and liabilities at June 30 and March 31, 2017:
- 24 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. FAIR VALUE (CONT’D)
Cash and Cash Equivalents, Interest Receivable, and Interest Payable (Carried at Cost)
The carrying amounts reported in the consolidated statements of financial condition for cash and cash equivalents, interest receivable, and interest payable approximate their fair values.
Securities
The fair value of all securities, whether classified as available for sale (carried at fair value) or held to maturity (carried at cost), is determined by reference to quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Securities are measured on a recurring basis. The fair values of these securities are obtained from quotes received from an independent broker. The Company’s broker provides it with prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available. As the Company is responsible for the determination of fair value, it performs monthly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. The Company’s internal price verification procedures and review of fair value methodology documentation provided by third-party pricing services has not historically resulted in adjustment in the prices obtained from the pricing service.
Loans Receivable (Carried at Cost)
Fair value is estimated by discounting the future cash flows of such loans, using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.
Impaired Loans (Carried based on Collateral Fair Value or Discounted Cash Flows)
Impaired loans are those accounted for under ASC Topic 310 “Accounting by Creditors for Impairment of a Loan” in which the Company has measured impairment generally based on either the fair value of the loan’s collateral or discounted cash flows. These assets are included as Level 3 assets.
Federal Home Loan Bank of New York Stock (Carried at Cost)
Fair value approximates cost basis as these instruments are redeemable only with the issuing agency at face value.
Deposits (Carried at Cost)
The fair value of non-interest-bearing demand, interest-bearing demand, and Savings and Club accounts is the amount payable on demand at the reporting date. For fixed-maturity certificates of deposit, fair value is estimated by discounting future cash flows using the rates currently offered for deposits of similar remaining maturities.
Advances from Federal Home Loan Bank of New York (Carried at Cost)
The fair value is estimated by discounting future cash flows using rates currently offered for liabilities of similar remaining maturities, or when available, quoted market prices.
Commitments to Extend Credit
The fair value of commitments to extend credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.
As of June 30 and March 31, 2017, the fair value of the commitments to extend credit was not considered to be material.
- 25 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. FAIR VALUE (CONT’D)
The carrying amounts and fair values of financial instruments are as follows:
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
Prices
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
|
Other
|
|
|
Significant
|
|
|
|
Carrying
|
|
|
Estimated
|
|
|
Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
June 30, 2017
|
|
Value
|
|
|
Fair Value
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
(In Thousands)
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
48,280
|
|
|
$
|
48,280
|
|
|
$
|
48,280
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Securities available for sale
|
|
|
4,191
|
|
|
|
4,191
|
|
|
|
—
|
|
|
|
4,191
|
|
|
|
—
|
|
Securities held to maturity
|
|
|
299,869
|
|
|
|
301,706
|
|
|
|
—
|
|
|
|
301,706
|
|
|
|
—
|
|
Net loans receivable
|
|
|
1,074,748
|
|
|
|
1,051,499
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,051,499
|
|
FHLB of New York stock
|
|
|
16,289
|
|
|
|
16,289
|
|
|
|
—
|
|
|
|
16,289
|
|
|
|
—
|
|
Interest receivable
|
|
|
3,498
|
|
|
|
3,498
|
|
|
|
—
|
|
|
|
3,498
|
|
|
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
892,414
|
|
|
|
893,305
|
|
|
|
—
|
|
|
|
893,305
|
|
|
|
—
|
|
FHLB advances
|
|
|
324,800
|
|
|
|
325,026
|
|
|
|
—
|
|
|
|
325,026
|
|
|
|
—
|
|
Interest payable
|
|
|
504
|
|
|
|
504
|
|
|
|
—
|
|
|
|
504
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
Prices
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
|
Other
|
|
|
Significant
|
|
|
|
Carrying
|
|
|
Estimated
|
|
|
Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
March 31, 2017
|
|
Value
|
|
|
Fair Value
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
(In Thousands)
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14,653
|
|
|
$
|
14,653
|
|
|
$
|
14,653
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Securities available for sale
|
|
|
4,435
|
|
|
|
4,435
|
|
|
|
—
|
|
|
|
4,435
|
|
|
|
—
|
|
Securities held to maturity
|
|
|
310,913
|
|
|
|
311,509
|
|
|
|
—
|
|
|
|
311,509
|
|
|
|
—
|
|
Net loans receivable
|
|
|
1,007,844
|
|
|
|
981,930
|
|
|
|
—
|
|
|
|
—
|
|
|
|
981,930
|
|
FHLB of New York stock
|
|
|
13,733
|
|
|
|
13,733
|
|
|
|
—
|
|
|
|
13,733
|
|
|
|
—
|
|
Interest receivable
|
|
|
3,249
|
|
|
|
3,249
|
|
|
|
—
|
|
|
|
3,249
|
|
|
|
—
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
844,825
|
|
|
|
845,820
|
|
|
|
—
|
|
|
|
845,820
|
|
|
|
—
|
|
FHLB advances
|
|
|
275,800
|
|
|
|
276,149
|
|
|
|
—
|
|
|
|
276,149
|
|
|
|
—
|
|
Interest payable
|
|
|
475
|
|
|
|
475
|
|
|
|
—
|
|
|
|
475
|
|
|
|
—
|
|
8. RECENT ACCOUNTING PRONOUNCEMENTS
On May 28, 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) issued their final standard on revenue from contracts with customers. The standard, issued as ASU 2014-09 by the FASB and as IFRS 152 by the IASB, and amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, ASU 2016-20 and ASU 2017-05, outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The goals of the revenue recognition project are to clarify and converge the revenue recognition principles under U.S. GAAP and IFRS and to develop guidance that would streamline and enhance revenue recognition requirements while also providing “a more robust framework for addressing revenue issues.” The boards believe that the standard will improve the consistency of requirements, comparability of revenue recognition practices, and usefulness of disclosures. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this standard effective April 1, 2018 is not expected to have a material impact on the Company’s consolidated financial statements, as management has not identified any material changes in the timing of revenue recognition.
- 26 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. RECENT ACCOUNTING PRONOUNCEMENTS (CONT’D)
On January 5, 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which is intended to improve the recognition and measurement of financial instruments. The ASU significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements associated with the fair value of financial instruments. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this standard, effective April 1, 2018, is not expected to have a material impact on the Company’s consolidated financial statements.
On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 includes a lessee accounting model that recognizes two types of leases - finance leases and operating leases. The standard requires that a lessee recognize on the balance sheet assets and liabilities for leases with lease terms of more than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on its classification as a finance or operating lease. New disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases are also required. These disclosures include qualitative and quantitative requirements, providing information about the amounts recorded in the financial statements. For a public entity, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management is in the process of reviewing its existing lease portfolios to evaluate the impact of the new accounting guidance on the financial statements, as well as the impact to regulatory capital and risk-weighted assets. The Company expects a gross-up of its consolidated statements of financial condition as a result of recognizing operating lease liabilities and right of use assets; the extent of such gross-up is under evaluation. The Company does not expect material changes to the recognition of operating lease expense in its consolidated statements of income. This standard, effective April 1, 2019, is not expected to have a material impact on its overall consolidated financial statements.
On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The ASU also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the ALLL. In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. For a public entity, the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The new guidance is effective on April 1, 2020, with early adoption permitted on January 1, 2019. The Company is in the process of identifying and evaluating the impact of this new accounting guidance, which at the date of adoption is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings.
On August 26, 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), a consensus of the FASB’s Emerging Issues Task Force. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance addresses eight classification issues related to the statement of cash flows, which include proceeds from settlement of bank-owned life insurance policies. For a public entity, ASU 2016-15 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. The adoption of this standard effective April 1, 2018 is not expected to have a material impact on the Company’s consolidated financial statements.
- 27 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. RECENT ACCOUNTING PRONOUNCEMENTS (CONT’D)
On March 10, 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU requires that an employer disaggregate the service cost component from the other components of net benefit cost. The service cost must be presented in the same line item(s) as other employee compensation costs. These costs are generally included within income from continuing operations, but in some cases may be eligible for capitalization. All other components of net benefit cost must be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization. The changes, which respond to input from financial statement users, are intended to classify costs according to their natures, and better align the effect of defined benefit plans on operating income with International Financial Reporting Standards. For a public entity, ASU 2017-07 is effective for annual and interim periods in fiscal years beginning after December 15, 2017. The adoption of this standard effective April 1, 2018 is not expected to have a material impact on the Company’s consolidated financial statements.
On March 30, 2017, the FASB issued ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. The ASU is intended to enhance “the accounting for the amortization of premiums for purchased callable debt securities.” Specifically, the ASU shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. The ASU’s amendments are effective for public business entities for interim and annual periods beginning after December 15, 2018. The adoption of this standard, effective April 1, 2019, is not expected to have a material impact on the Company’s consolidated financial statements.
- 28 -
CLIFTON BANCORP INC. AND SUBSIDIARIES
ITEM 2: