Clifton Savings Bancorp, Inc. Announces 4th Quarter and Year End Results

Business Wire, May 1, 2006

CLIFTON, N.J. -- Clifton Savings Bancorp, Inc. (NASDAQ: CSBK) (the "Company"), the holding company of Clifton Savings Bank, S.L.A. (the "Bank"), today announced the results of its operations for the three months and year ended March 31, 2006. Net income was $882,000 for the three months ended March 31, 2006, a decrease of $646,000, or 42.3%, as compared to $1.53 million for the three months ended March 31, 2005. Net income was $3.67 million for the year ended March 31, 2006, a decrease of $1.61 million, or 30.5%, as compared to $5.28 million for the year ended March 31, 2005. Net income decreased primarily due to the effects of the increasing short-term interest rate environment on the Company's net interest margin and spread and the expense associated with the granting of stock awards in December 2005, of which 20% were immediately vested. Both basic and diluted earnings per common share were $0.03 for the three months ended March 31, 2006, as compared to $0.05 for the three months ended March 31, 2005. Both basic and diluted earnings per common share were $0.13 and $0.18 for the years ended March 31, 2006 and 2005, respectively. Dividends declared per common share were $0.05 for both the three months ended March 31, 2006 and 2005. The quarterly dividend of $0.05 to be payable on May 25, 2006 is the ninth consecutive cash dividend paid by the Company since becoming a stock organization in March 2004. Dividends declared per common share were $0.20 for the year ended March 31, 2006, as compared to $0.14 for the year ended March 31, 2005, an increase of $0.06, or 42.9%.

Net interest income decreased $761,000, or 14.9%, for the three months ended March 31, 2006, to $4.34 million as compared to $5.10 million for three months ended March 31, 2005, reflecting a 38 basis point decrease in the net interest margin coupled with a decrease of $2.1 million in average net interest-earning assets. Average interest-earning assets increased $2.5 million, or 0.3%, which consisted of increases of $59.1 million in loans, $10.1 million in investment securities and $758,000 in other interest-earning assets, partially offset by a decrease of $67.5 million in mortgage-backed securities. Loans and securities increased primarily due to the redeployment of repayments of mortgage-backed securities and cash and cash equivalents into higher yielding assets. Average interest-bearing liabilities increased $4.6 million, or 0.7%, which consisted of an increase of $19.2 million in interest-bearing deposits partially offset by a decrease of $14.6 million in borrowings. Net interest margin decreased to 2.13% for the quarter ended March 31, 2006, from 2.51% for the quarter ended March 31, 2005. The net interest rate spread decreased 54 basis points to 1.45%, as the 20 basis point increase to 4.44% in the average yield earned on interest-earning assets was not sufficient to offset the 74 basis point increase to 2.99% in the average rate paid on interest-bearing liabilities. These increases in yields and costs reflect an increase in the short term interest rate environment experienced during the quarter ended March 31, 2006.

Net interest income decreased $1.2 million, or 6.3%, to $17.8 million for the year ended March 31, 2006, as compared to $19.0 million for year ended March 31, 2005, reflecting an increase of $4.6 million in average net interest-earning assets partially offset by a 32 basis point decrease in the net interest margin. Average interest-earning assets increased $56.8 million, or 7.4%, which consisted of increases of $79.4 million in loans and $31.8 million in investment securities, partially offset by a decreases of $29.7 million in mortgage-backed securities and $24.7 million in other interest-earning assets. Loans and securities increased primarily due to the redeployment of repayments of mortgage-backed securities and cash and cash equivalents into higher yielding assets. Average interest-bearing liabilities increased $52.2 million, or 9.0%, which consisted of increases of $26.3 million in interest-bearing deposits and $25.9 million in borrowed funds. Net interest margin decreased to 2.16% for the year ended March 31, 2006, from 2.48% for the year ended March 31, 2005. The net interest rate spread decreased 44 basis points to 1.52%, as the 20 basis point increase to 4.29% in average yield earned on interest-earning assets was not sufficient to offset the 64 basis point increase to 2.77% in the average rate paid on interest-bearing liabilities. These increases in yields and costs reflect an increase in the short term interest rate environment experienced during the year ended March 31, 2006.

The provision for loan losses of recorded during the year ended March 31, 2006 decreased $100,000 or 38.5% to $160,000 from $260,000 for the year ended March 31, 2005. Provisions of $0 and $25,000 were recorded during the three months ended March 31, 2006 and 2005, respectively. The larger provisions in the prior periods were the result of larger increases in the loan portfolio during the prior periods. The gross loan portfolio increased $50.8 million, or 14.3%, from $354.6 million at March 31, 2005 to $405.4 million at March 31, 2006. The previous year's increase in the gross loan portfolio was $104.0 million, or 41.5%. The majority of the increase in 2006 was in one-to-four-family residential real estate loans, which increased $43.5 million, or 13.0%, for the year. Non-performing loans increased from $1,000 at March 31, 2005 (consisting of one one- to four-family residential real estate loan) to $10,000 at March 31, 2006 (consisting of two one- to four-family residential real estate loans). The percentage of non-performing loans to total loans has been consistently low, remaining under 0.01% to total gross loans at both period ends. The allowance for loan losses stood at $1.26 million at March 31, 2006, or 0.31% of gross loans, as compared to $1.10 million at March 31, 2005, or 0.31% of gross loans, reflecting the consistent risk profile of our loan portfolio.