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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________________________ TO _____________
Commission File Number: 0-50358
CLIFTON SAVINGS BANCORP, INC.
(Exact name of registrant as specified in its charter)
UNITED STATES 34-1983738
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1433 VAN HOUTEN AVENUE, CLIFTON, NEW JERSEY 07015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 473-2200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class)
Indicated by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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Indicated by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act).
Yes No X
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The aggregate market value of the voting and non-voting common equity
held by non-affiliates as of March 4, 2004, which was the date the registrant's
stock commenced trading, was $164,513,237 based upon the closing price of $12.25
as quoted on the Nasdaq National Market.
The number of shares outstanding of the registrant's common stock as of
June 1, 2004 was 30,530,470. Of such shares outstanding, 16,791,758 shares were
held by Clifton MHC.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE 2004 ANNUAL REPORT TO STOCKHOLDERS AND OF THE PROXY STATEMENT
FOR THE 2004 ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE IN
PARTS II AND III, RESPECTIVELY, OF THIS FORM 10-K.
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INDEX
Part I
Page
Item 1. Business...........................................................................................1
Item 2. Properties........................................................................................17
Item 3. Legal Proceedings.................................................................................17
Item 4. Submission of Matters to a Vote of Securities Holders.............................................18
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.............................18
Item 6. Selected Financial Data...........................................................................18
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation..............18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk........................................19
Item 8. Financial Statements and Supplementary Data.......................................................19
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure .............19
Item 9A. Controls and Procedures...........................................................................19
Part III
Item 10. Directors and Executive Officers of the Registrant................................................19
Item 11. Executive Compensation............................................................................19
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.............................................................................19
Item 13. Certain Relationships and Related Transactions....................................................20
Part IV
Item 14. Principal Accountant Fees and Services............................................................20
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K..................................20
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THIS REPORT CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE FEDERAL SECURITIES LAWS. THESE STATEMENTS ARE NOT HISTORICAL
FACTS, RATHER STATEMENTS BASED ON CLIFTON SAVINGS BANCORP, INC.'S CURRENT
EXPECTATIONS REGARDING ITS BUSINESS STRATEGIES, INTENDED RESULTS AND FUTURE
PERFORMANCE. FORWARD-LOOKING STATEMENTS ARE PRECEDED BY TERMS SUCH AS "EXPECTS,"
"BELIEVES," "ANTICIPATES," "INTENDS" AND SIMILAR EXPRESSIONS.
MANAGEMENT'S ABILITY TO PREDICT RESULTS OR THE EFFECT OF FUTURE
PLANS OR STRATEGIES IS INHERENTLY UNCERTAIN. FACTORS WHICH COULD AFFECT ACTUAL
RESULTS INCLUDE INTEREST RATE TRENDS, THE GENERAL ECONOMIC CLIMATE IN THE MARKET
AREA IN WHICH CLIFTON SAVINGS BANCORP OPERATES, AS WELL AS NATIONWIDE, CLIFTON
SAVINGS BANCORP'S ABILITY TO CONTROL COSTS AND EXPENSES, COMPETITIVE PRODUCTS
AND PRICING, LOAN DELINQUENCY RATES AND CHANGES IN FEDERAL AND STATE LEGISLATION
AND REGULATION. THESE FACTORS SHOULD BE CONSIDERED IN EVALUATING THE
FORWARD-LOOKING STATEMENTS AND UNDUE RELIANCE SHOULD NOT BE PLACED ON SUCH
STATEMENTS. CLIFTON SAVINGS BANCORP ASSUMES NO OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENTS.
PART I
ITEM 1. BUSINESS
GENERAL
Clifton Savings Bancorp, Inc. was organized as a federal corporation
at the direction of Clifton Savings Bank, S.L.A. in connection with the mutual
holding company reorganization of Clifton Savings. The reorganization was
completed on March 3, 2004. In the reorganization, Clifton Savings Bancorp sold
45% of its outstanding shares of common stock (13,738,712 shares) to the public
and issued 55% of its outstanding shares of common stock (16,791,758 shares) to
Clifton MHC, the mutual holding company parent of Clifton Savings. So long as
Clifton MHC exists, it will own at least a majority of Clifton Savings Bancorp's
common stock. Clifton Savings Bancorp's business activity is the ownership of
the outstanding capital stock of Clifton Savings and management of the
investment of offering proceeds retained from the reorganization. Clifton
Savings Bancorp neither owns nor leases any property but instead uses the
premises, equipment and other property of Clifton Savings with the payment of
appropriate rental fees, as required by applicable law and regulations. In the
future, Clifton Savings Bancorp may acquire or organize other operating
subsidiaries; however, there are no current plans, arrangements, agreements or
understandings, written or oral, to do so. Clifton Savings Bancorp has no
significant assets, other than all of the outstanding shares of Clifton Savings,
and no significant liabilities. Accordingly, the information set forth in this
report, including the consolidated financial statements and related financial
data, relates primarily to Clifton Savings.
Clifton Savings is a New Jersey state chartered savings and loan
association, and has served its customers in New Jersey since 1928. We operate
as a community-oriented financial institution offering traditional financial
services to consumers and businesses in our market area. We attract deposits
from the general public and use those funds to originate one- to four-family,
multi-family and commercial real estate, and consumer loans, which we hold for
investment.
AVAILABLE INFORMATION
Clifton Savings Bancorp's annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and any amendments to such reports
filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended, are made available free of charge on our website,
www.cliftonsavings.com, as soon as reasonably practicable after such reports are
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electronically filed with, or furnished to, the Securities and Exchange
Commission.
MARKET AREA
We are headquartered in Clifton, New Jersey, which is located in
northeast New Jersey and situated approximately 20 miles west of New York City.
In addition to our main office located in Passaic County, we operate nine branch
offices in Bergen and Passaic Counties, which, along with Essex County, we
consider our
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primary market area. The economy in our market area is primarily oriented to the
service, manufacturing, medical and retail industries. The area is also home to
commuters working in the greater New York City metropolitan area.
COMPETITION
We face significant competition for the attraction of deposits and
origination of loans. Our most direct competition for deposits has historically
come from the several financial institutions operating in our market area and,
to a lesser extent, from other financial service companies, such as brokerage
firms, credit unions and insurance companies. We also face competition for
investors' funds from money market funds and other corporate and government
securities. At June 30, 2003, which is the most recent date for which data is
available from the Federal Deposit Insurance Corporation, we held approximately
1.33% of the deposits in Bergen and Passaic Counties, which is the 19th market
share out of 50 financial institutions with offices in these counties. In
addition, banks owned by FleetBoston Financial Corporation, Wachovia
Corporation, J.P. Morgan Chase & Co. and Washington Mutual, Inc., all of which
are large regional bank holding companies, also operate in our market area.
These institutions are significantly larger than us and, therefore, have
significantly greater resources.
Our competition for loans comes primarily from financial institutions
in our market area, and to a lesser extent from other financial service
providers, such as mortgage companies and mortgage brokers. Competition for
loans also comes from the increasing number of non-depository financial service
companies entering the mortgage market, such as insurance companies, securities
companies and specialty finance companies.
We expect competition to increase in the future as a result of
legislative, regulatory and technological changes and the continuing trend of
consolidation in the financial services industry. Technological advances, for
example, have lowered barriers to entry, allowed banks to expand their
geographic reach by providing services over the Internet and made it possible
for non-depository institutions to offer products and services that
traditionally have been provided by banks. Changes in federal law permit
affiliation among banks, securities firms and insurance companies, which
promotes a competitive environment in the financial services industry.
Competition for deposits and the origination of loans could limit our growth in
the future.
LENDING ACTIVITIES
GENERAL. Our loan portfolio consists primarily of one- to four-family
mortgage loans. To a much lesser extent, our loan portfolio includes
multi-family and commercial real estate loans, construction and consumer loans.
Clifton Savings historically and currently only originates loans for investment
purposes. At March 31, 2004, Clifton Savings had no loans that were held for
sale.
ONE- TO FOUR-FAMILY RESIDENTIAL LOANS. Our primary lending activity is
the origination of mortgage loans to enable borrowers to purchase or refinance
existing homes or to construct new residential dwellings. We offer fixed-rate
and adjustable-rate mortgage loans with terms up to 30 years. Borrower demand
for adjustable-rate loans versus fixed-rate loans is a function of the level of
interest rates, the expectations of changes in the level of interest rates, the
difference between the interest rates and loan fees offered for fixed-rate
mortgage loans and the initial period interest rates and loan fees for
adjustable-rate loans. The relative amount of fixed-rate mortgage loans and
adjustable-rate mortgage loans that can be originated at any time is largely
determined by the demand for each in a competitive environment and the effect
each has on our interest rate risk. The loan fees charged, interest rates and
other provisions of mortgage loans are determined by us on the basis of our own
pricing criteria and competitive market conditions.
We offer fixed rate loans with terms of either 15, 20 or 30 years. Our
adjustable-rate mortgage loans are based on a 30 year amortization schedule and
interest rates and payments on our adjustable-rate mortgage loans adjust
annually after either a one, seven or 10 year initial fixed period. In addition,
we offer adjustable-rate mortgage loans that adjust every three years after a
three year initial fixed period. Interest rates and payments on our
adjustable-rate loans generally are adjusted to a rate typically equal to 2.75%
above either the one- or three-year constant maturity Treasury index. The
maximum amount by which the interest rate may be increased or decreased is
generally 2% per adjustment period and the lifetime interest rate cap is
generally 6% over the initial interest rate of the loan.
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While we anticipate that adjustable-rate loans will better offset the
adverse effects of an increase in interest rates as compared to fixed-rate
mortgages, the increased mortgage payments required of adjustable-rate loan
borrowers in a rising interest rate environment could cause an increase in
delinquencies and defaults. The marketability of the underlying property also
may be adversely affected in a high interest rate environment. In addition,
although adjustable-rate mortgage loans help make our asset base more responsive
to changes in interest rates, the extent of this interest sensitivity is limited
by the annual and lifetime interest rate adjustment limits.
While one- to four-family residential real estate loans are normally
originated with up to 30-year terms; such loans typically remain outstanding for
substantially shorter periods because borrowers often prepay their loans in full
upon sale of the property pledged as security or upon refinancing the original
loan. Therefore, average loan maturity is a function of, among other factors,
the level of purchase and sale activity in the real estate market, prevailing
interest rates and the interest rates payable on outstanding loans.
We generally do not make conventional loans with loan-to-value ratios
exceeding 95% and generally make loans with a loan-to-value ratio in excess of
80% only when secured by first liens on owner-occupied one- to four-family
residences. Loans with loan-to-value ratios in excess of 80% generally require
private mortgage insurance or additional collateral. We require all properties
securing mortgage loans to be appraised by a board-approved appraiser. We
require title insurance on all first mortgage loans. Borrowers must obtain
hazard or flood insurance (for loans on property located in a flood zone) prior
to closing the loan.
In an effort to provide financing for moderate income and first-time
buyers, we offer several special targeted lending programs (including a low- to
moderate-income program) and a first-time home buyers program. We offer
residential mortgage loans through these programs to qualified individuals and
originate the loans using modified underwriting guidelines. All of these loans
have private mortgage insurance on the portion of the principal amount that
exceeds 80% of the appraised value of the property.
MULTI-FAMILY AND COMMERCIAL REAL ESTATE LOANS. We offer adjustable-rate
mortgage loans secured by multi-family and commercial real estate. Our
multi-family and commercial real estate loans are generally secured by mixed-use
properties with residential units as well as retail space. We intend to continue
to grow this segment of our loan portfolio.
We originate five year adjustable-rate multi-family and commercial real
estate loans for terms up to 20 years. Interest rates and payments on our
adjustable-rate mortgage loans adjust every five years after a five year initial
fixed period. Interest rates and payment on our adjustable rate loans generally
are adjusted to a rate typically equal to 3.25% above the five-year constant
maturity treasury index. There are no adjustment period or lifetime interest
rate caps. Loan amounts generally do not exceed 75% of the appraised value.
Loans secured by multi-family and commercial real estate are generally
larger and involve a greater degree of risk than one- to four-family residential
mortgage loans. Of primary concern in multi-family and commercial real estate
lending is the borrower's creditworthiness and the feasibility and cash flow
potential of the project. Payments on loans secured by income properties are
often dependent on successful operation or management of the properties. As a
result, repayment of such loans may be subject to a greater extent than
residential real estate loans to adverse conditions in the real estate market or
the economy. In order to monitor cash flows on income properties, we require
borrowers and loan guarantors, if any, to provide annual financial statements
and rent rolls on multi-family and commercial real estate loans. We also perform
annual reviews and prepare write-ups on all loans where the loan is secured by
commercial or multi-family real estate.
At March 31, 2004, we had nine loans with principal balances in excess
of $500,000. These loans included one loan secured by a mixed-use building that
includes retail stores and two apartments totaling $627,000, or 6.6% of
multi-family and commercial real estate loans. In addition, we had one loan
secured by a multi-family property totaling $624,000, or 6.6% of multi-family
and commercial real estate loans. At March 31, 2004, all of these loans were
performing in accordance with their terms.
RESIDENTIAL CONSTRUCTION LOANS. To a much lesser extent, we originate
loans to finance the construction of residential dwellings. Construction loans
generally provide for interest-only payments at fixed-rates of interest and have
terms of six to 12 months. At the end of the construction period, the loan
generally converts
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into a permanent loan. Construction loans generally may be considered for
loan-to-value ratios of up to 70%. Loan proceeds are disbursed in increments as
construction progresses and as inspections warrant. We generally use independent
fee appraisers for construction disbursement purposes.
Construction financing is generally considered to involve a higher
degree of risk of loss than long-term financing on improved, occupied real
estate. Risk of loss on a construction loan is dependent largely upon the
accuracy of the initial estimate of the property's value at completion of
construction or development and the estimated cost (including interest) of
construction. During the construction phase, a number of factors could result in
delays and cost overruns. If the estimate of construction costs proves to be
inaccurate, we may be required to advance funds beyond the amount originally
committed to permit completion of the development. If the estimate of value
proves to be inaccurate, we may be confronted, at or prior to the maturity of
the loan, with a project having a value which is insufficient to assure full
repayment. As a result of the foregoing, construction lending often involves the
disbursement of substantial funds with repayment dependent, in part, on the
success of the ultimate project rather than the ability of the borrower or
guarantor to repay principal and interest. If we are forced to foreclose on a
project prior to or at completion due to a default, there can be no assurance
that we will be able to recover all of the unpaid balance of, and accrued
interest on, the loan as well as related foreclosure and holding costs.
CONSUMER LOANS. We offer a variety of consumer loans, including second
mortgage loans, loans secured by passbook or certificate accounts, and home
equity lines of credit.
The procedures for underwriting consumer loans include an assessment of
the applicant's payment history on other debts and ability to meet existing
obligations and payments on the proposed loans. Although the applicant's
creditworthiness is a primary consideration, the underwriting process also
includes a comparison of the value of the collateral, if any, to the proposed
loan amount.
Consumer loans may entail greater risk than do residential mortgage
loans, particularly in the case of consumer loans that are unsecured or secured
by assets that depreciate rapidly. In such cases, repossessed collateral for a
defaulted consumer loan may not provide an adequate source of repayment for the
outstanding loan and the remaining deficiency often does not warrant further
substantial collection efforts against the borrower. In addition, consumer loan
collections are dependent on the borrower's continuing financial stability, and
thus are more likely to be adversely affected by job loss, divorce, illness or
personal bankruptcy. Furthermore, the application of various federal and state
laws, including federal and state bankruptcy and insolvency laws, may limit the
amount which can be recovered on such loans.
LOAN ORIGINATIONS. Loan originations come from a number of sources. The
customary sources of loan originations include internet mortgage loan marketers,
local mortgage brokers, advertising, referrals from customers, and personal
contacts by our staff. We generally retain for our portfolio all of the loans
that we originate. We occasionally purchase participation interests in real
estate loans in our market area.
LOAN APPROVAL PROCEDURES AND AUTHORITY. Our policies and loan approval
limits are established and approved by the Board of Directors. All residential
mortgage loans not exceeding Fannie Mae and Freddie Mac conforming loan amounts
and all consumer loans require the approval of senior management and are
ratified by the Board of Directors. All other loans require the approval of our
Board of Directors. The Board of Directors meets weekly to review all mortgage
loans.
LOANS TO ONE BORROWER. The maximum amount that we may lend to one
borrower and the borrower's related entities is limited by regulation. At March
31, 2004 our regulatory limit on loans to one borrower was $19.9 million. At
that date, our largest lending relationship was $1.7 million and included seven
loans to one individual, all of which were performing according to the original
repayment terms at March 31, 2004.
LOAN COMMITMENTS. We issue commitments for fixed-rate and
adjustable-rate mortgage loans conditioned upon the occurrence of certain
events. Commitments to originate mortgage loans are legally binding agreements
to lend to our customers and generally expire in 90 days or less.
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DELINQUENCIES. When a borrower fails to make a required loan payment,
we take a number of steps to have the borrower cure the delinquency and restore
the loan to current status. We make initial contact with the borrower when the
loan becomes 30 days past due. If payment is not then received by the 45th day
of delinquency, additional letters and phone calls generally are made. When the
loan becomes 90 days past due, we send a letter notifying the borrower that we
will commence foreclosure proceedings if the loan is not brought current within
30 days. When the loan becomes 120 days past due, we will commence foreclosure
proceedings against any real property that secures the loan or attempt to
repossess any personal property that secures a consumer loan. If a foreclosure
action is instituted and the loan is not brought current, paid in full, or
refinanced before the foreclosure sale, the real property securing the loan
generally is sold at foreclosure. We may consider loan workout arrangements with
certain borrowers under certain circumstances.
INVESTMENT ACTIVITIES
We have legal authority to invest in various types of liquid assets,
including U.S. Treasury obligations, securities of various federal agencies and
of state and municipal governments, deposits at the Federal Home Loan Bank of
New York and certificates of deposit of federally insured institutions. Within
certain regulatory limits, we also may invest a portion of our assets in
corporate securities. We also are required to maintain an investment in Federal
Home Loan Bank of New York stock.
At March 31, 2004, our investment portfolio consisted of Federal agency
debt securities with maturities of 15 years or less and mortgage-backed
securities issued by Fannie Mae, Freddie Mac and Ginnie Mae with stated final
maturities of 30 years or less. We purchase mortgage-backed securities in an
effort to increase yield, improve liquidity, provide call protection, and
enhance our qualified thrift lender ratio.
Our investment objectives are to provide and maintain liquidity, to
maintain a balance of high quality, diversified investments to minimize risk, to
provide collateral for pledging requirements, to establish an acceptable level
of interest rate risk, to provide an alternate source of low-risk investments
when demand for loans is weak, and to generate a favorable return. Clifton
Savings' Board of Directors has the overall responsibility for Clifton Savings'
investment portfolio, including approval of Clifton Savings' investment policy
and appointment of Clifton Savings' Investment Committee. The Investment
Committee is responsible for approval of investment strategies and monitoring of
the investment performance of Clifton Savings. Clifton Savings' President is the
designated investment officer and is responsible for the daily investment
activities and is authorized to make investment decisions consistent with
Clifton Savings' investment policy. The Investment Committee meets regularly
with the President in order to review and determine investment strategies and
transactions.
DEPOSIT ACTIVITIES AND OTHER SOURCES OF FUNDS
GENERAL. Deposits and loan repayments are the major sources of our
funds for lending and other investment purposes. Loan repayments are a
relatively stable source of funds, while deposit inflows and outflows and loan
prepayments are significantly influenced by general interest rates and money
market conditions.
DEPOSIT ACCOUNTS. Substantially all of our depositors are residents of
the State of New Jersey. Deposits are attracted from within our primary market
area through the offering of a broad selection of deposit instruments, including
NOW and Super NOW accounts, money market accounts, regular savings accounts,
club savings accounts and certificates of deposit. We do not utilize brokered
funds. Deposit account terms vary according to the minimum balance required, the
time periods the funds must remain on deposit and the interest rate, among other
factors. In determining the terms of our deposit accounts, we consider the rates
offered by our competition, profitability to us, matching deposit and loan
products and customer preferences and concerns. We generally review our deposit
mix and pricing weekly. In the past, our strategy had been to attract and retain
deposits by offering the highest rates in our market area. Our current strategy
is to offer competitive rates, but not be the market leader in every type and
maturity. We have also changed our advertising to emphasize transaction
accounts, with the goal of shifting our mix of deposits towards a smaller
percentage of higher cost time deposits.
BORROWINGS. Historically, we have not relied upon advances from the
Federal Home Loan Bank of New York to supplement our supply of lendable funds or
to meet deposit withdrawal requirements; however, as part of our leveraging
strategy, we may rely upon advances from the Federal Home Loan Bank in the
future.
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The Federal Home Loan Bank functions as a central reserve bank
providing credit for member financial institutions. As a member, we are required
to own capital stock in the Federal Home Loan Bank and are authorized to apply
for advances on the security of such stock and certain of our mortgage loans and
other assets (principally securities which are obligations of, or guaranteed by,
the United States), provided certain standards related to creditworthiness have
been met. Advances are made pursuant to several different programs. Each credit
program has its own interest rate and range of maturities. Depending on the
program, limitations on the amount of advances are based either on a fixed
percentage of an institution's net worth or on the Federal Home Loan Bank's
assessment of the institution's creditworthiness. Under its current credit
policies, the Federal Home Loan Bank generally limits advances to 25% of a
member's assets, and short-term borrowings of less than one year may not exceed
10% of the institution's assets. The Federal Home Loan Bank determines specific
lines of credit for each member institution. We have authority to borrow up to
20% of assets under a short-term line of credit.
SUBSIDIARY ACTIVITIES
Clifton Savings Bancorp's sole subsidiary is Clifton Savings. Clifton
Savings has no subsidiaries.
PERSONNEL
As of March 31, 2004, we had 76 full-time employees and 20 part-time
employees, none of whom is represented by a collective bargaining unit. We
believe our relationship with our employees is good.
REGULATION AND SUPERVISION
GENERAL
Clifton Savings is subject to extensive regulation, examination and
supervision by the New Jersey Commissioner of Banking and Insurance and the New
Jersey Department of Banking and Insurance, as its chartering agency, the Office
of Thrift Supervision, as its primary federal regulator, and the Federal Deposit
Insurance Corporation, as its deposits insurer. Clifton Savings is a member of
the Federal Home Loan Bank System and its deposit accounts are insured up to
applicable limits by the Savings Association Insurance Fund managed by the
Federal Deposit Insurance Corporation. Clifton Savings must file reports with
the New Jersey Department of Banking and Insurance, the Office of Thrift
Supervision and the Federal Deposit Insurance Corporation concerning its
activities and financial condition in addition to obtaining regulatory approvals
prior to entering into certain transactions such as mergers with, or
acquisitions of, other financial institutions. There are periodic examinations
by the New Jersey Department of Banking and Insurance, the Office of Thrift
Supervision and the Federal Deposit Insurance Corporation to evaluate Clifton
Savings' safety and soundness and compliance with various regulatory
requirements. This regulation and supervision establishes a comprehensive
framework of activities in which a savings association can engage and is
intended primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such policies, whether by the New Jersey Department of Banking and
Insurance, the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation or the New Jersey legislature or Congress, could have a material
adverse impact on Clifton Savings Bancorp and Clifton Savings and their
operations.
Clifton Savings Bancorp and Clifton MHC as savings and loan holding
companies, are also required to file certain reports with, are subject to
examination by, and otherwise comply with the rules and regulations of the New
Jersey Department of Banking and Insurance and the Office of Thrift Supervision.
Clifton Savings Bancorp is also be subject to the rules and regulations of the
Securities and Exchange Commission under the federal securities laws.
Certain of the regulatory requirements that are applicable to Clifton
Savings, Clifton Savings Bancorp and Clifton MHC are described below. This
description of statutory provisions and regulations is not intended to be a
complete explanation of such statutes and regulations and their effects on
Clifton Savings, Clifton Savings Bancorp and Clifton MHC and is qualified in its
entirety by reference to the actual statutes and regulations.
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REGULATION OF NEW JERSEY SAVINGS ASSOCIATIONS
GENERAL. New Jersey law and the New Jersey Department of Banking and
Insurance regulate, among other things, Clifton Savings' internal corporate
governance procedures as well as its deposits, lending and investment activities
and its ability to declare and pay dividends. The New Jersey Department of
Banking and Insurance must approve changes to a savings association's
certificate of incorporation, the establishment or relocation of branch offices,
mergers and the issuance of additional stock. As primary federal regulator, the
Office of Thrift Supervision also regulates some of these areas and must approve
certain corporate transactions such as mergers.
BUSINESS ACTIVITIES. The activities of New Jersey-chartered, Federal
Deposit Insurance Corporation insured savings associations are governed by the
New Jersey Savings and Loan Act (1963), as amended, the Home Owners' Loan Act,
as amended and, the Federal Deposit Insurance Act and the regulations issued by
the agencies to implement these statutes. These laws and regulations delineate
the nature and extent of the activities in which savings associations may
engage. In particular, under the New Jersey Savings and Loan Act, specific
lending activities of New Jersey savings associations may be limited to a
specified percentage of the association's assets or capital. Also, certain
activities or investments of a state savings association allowable under New
Jersey law may be constrained by federal law or regulation. New Jersey law
contains a "parity" provision which provides state savings associations with
authority that may be exercised by national banks, federally chartered savings
associations, out of state banks or savings banks and bank and financial holding
companies upon approval by the New Jersey Department of Banking and Insurance.
BRANCHING. New Jersey law provides that, upon satisfaction of certain
specified conditions, as determined by the New Jersey Department of Banking and
Insurance, savings associations located in a state which has reciprocal
legislation in effect on substantially the same terms and conditions as New
Jersey law may acquire, or be acquired by, New Jersey savings associations or
holding companies. Further, New Jersey's parity provision would permit
interstate de novo branching by savings associations to the same extent Office
of Thrift Supervision permits interstate branching for federal savings
associations. Office of Thrift Supervision regulations generally authorize
nationwide branching by federal savings association.
ACTIVITIES AND INVESTMENT. The Federal Deposit Insurance Act imposes
certain restrictions on the activities and investments of state savings
associations such as Clifton Savings. No state savings association may engage as
principal in any activity that is not permitted for federally chartered savings
associations unless the association is in compliance with federal regulatory
capital requirements and the Federal Deposit Insurance Corporation has
determined that the activity does not pose a significant risk to the deposit
insurance fund. A state savings association may engage in an activity that is
permissible for a federal savings association, but in a greater amount, only if
the institution is in capital compliance and the Federal Deposit Insurance
Corporation has not determined that engaging in that amount of activity poses a
risk to the affected deposit insurance fund. Also, a state savings association
may not acquire directly an equity investment of a type or in an amount that is
not permissible for federal associations. Generally, service corporations of
state savings associations may not engage in activities not permissible for
service corporations of federal savings associations unless the association is
in capital compliance and the Federal Deposit Insurance Corporation determines
that the activity poses no significant risk to the deposit insurance fund.
LOANS-TO-ONE BORROWER. Under the Home Owners Loan Act and New Jersey
law, savings associations are subject to limits on loans-to-one borrower.
Generally, this limit is 15% of the association's unimpaired capital and
surplus, plus an additional 10% of unimpaired capital and surplus, if such loan
is secured by readily-marketable collateral, which is defined to include
financial instruments and bullion.
QTL TEST. The Home Owners Loan Act requires all savings associations to
meet a qualified thrift lender test. Under the test, a savings association is
required to maintain at least 65% of its "portfolio assets" (total assets less:
(i) specified liquid assets up to 20% of total assets; (ii) intangibles,
including goodwill; and (iii) the value of property used to conduct business) in
certain "qualified thrift investments" (primarily residential mortgages and
related investments, including mortgage-backed and related securities) in at
least 9 months out of each 12-month period. Recent legislation has expanded the
extent to which education loans, credit card loans and small business
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loans may be considered as "qualified thrift investments." A savings association
that fails the qualified thrift lender test must either convert to a commercial
bank charter or operate under certain restrictions. As of March 31, 2004,
Clifton Savings met the qualified thrift lender test.
LIMITATION ON CAPITAL DISTRIBUTIONS. Office of Thrift Supervision
regulations impose limitations upon all capital distributions by a savings
association, such as cash dividends, payments to repurchase or otherwise acquire
its shares, payments to shareholders of another institution in a cash-out merger
and other distributions charged against capital. Under the regulations,
application to and the prior approval of the Office of Thrift Supervision is
required prior to any capital distribution if the association does not meet the
criteria for "expedited treatment" of applications under Office of Thrift
Supervision regulations (I.E., generally, examination ratings in the two top
categories), the total capital distributions for the calendar year exceed net
income for that year plus the amount of retained net income for the preceding
two years, the institution would be undercapitalized following the distribution
or the distribution would otherwise be contrary to a statute, regulation or
agreement with the Office of Thrift Supervision. If an application is not
required, the institution must still provide prior notice to the Office of
Thrift Supervision of the capital distribution if it is a subsidiary of a
holding company. In the event Clifton Savings' capital fell below its regulatory
requirements or the Office of Thrift Supervision notified it that it was in need
of increased supervision, Clifton Savings' ability to make capital distributions
could be restricted. Following the reorganization, Clifton Savings may not make
a distribution that would constitute a return of capital during the three-year
term of the business plan submitted in connection with the reorganization.
Additionally, the Office of Thrift Supervision could prohibit a proposed capital
distribution by any savings association, which would otherwise be permitted by
the regulation, if the Office of Thrift Supervision determines that such
distribution would constitute an unsafe or unsound practice. No insured
depository institution may make a capital distribution if, after making the
distribution, the institution would be undercapitalized.
TRANSACTIONS WITH RELATED PARTIES. Clifton Savings' authority to engage
in transactions with related parties or "affiliates" (I.E., any company that
controls or is under common control with an institution, including Clifton
Savings Bancorp and any non-savings institution subsidiaries that Clifton
Savings Bancorp may establish) is limited by Sections 23A and 23B of the Federal
Reserve Act ("FRA"). Section 23A restricts the aggregate amount of covered
transactions with any individual affiliate to 10% of the capital and surplus of
the savings association and also limits the aggregate amount of transactions
with all affiliates to 20% of the savings association's capital and surplus.
Certain transactions with affiliates are required to be secured by collateral in
an amount and of a type described in Section 23A and the purchase of low quality
assets from affiliates is generally prohibited. Section 23B generally requires
that certain transactions with affiliates, including loans and asset purchases,
must be on terms and under circumstances, including credit standards, that are
substantially the same or at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. Also, savings associations are prohibited from lending to any
affiliate that is engaged in activities not permitted for bank holding companies
and no savings association may purchase the securities of an affiliate (other
than a subsidiary).
The Sarbanes-Oxley Act generally prohibits loans by a company to its
executive officers and directors. However, that act contains a specific
exception for loans by a depository institution, such as Clifton Savings, to its
executive officers and directors in compliance with federal banking laws. Under
such laws, Clifton Savings' authority to extend credit to executive officers,
directors and 10% shareholders ("insiders"), as well as entities such persons
control, is restricted. The law limits both the individual and aggregate amount
of loans that may make to insiders based, in part, on Clifton Savings capital
position and requires certain board approval procedures to be followed. Such
loans are required to be made in terms substantially the same as those offered
to unaffiliated individuals and not involve more than the normal risk of
repayment. There is an exception for loans made pursuant to a benefit or
compensation program that is widely available to all employees of the
institution and does not give preference to insiders over other employees.
STANDARDS FOR SAFETY AND SOUNDNESS. The Federal Deposit Insurance Act
requires each federal banking agency to prescribe for all insured depository
institutions standards relating to, among other things, internal controls,
information systems and audit systems, loan documentation, credit underwriting,
interest rate risk exposure, asset growth, and compensation, fees and benefits
and such other operational and managerial standards as the agency deems
appropriate. The federal banking agencies have adopted final regulations and
Interagency Guidelines Establishing Standards for Safety and Soundness to
implement these safety and soundness standards.
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The guidelines set forth the safety and soundness standards that the federal
banking agencies use to identify and address problems at insured depository
institutions before capital becomes impaired. If the appropriate federal banking
agency determines that an institution fails to meet any standard prescribed by
the guidelines, the agency will require the institution to submit to the agency
an acceptable plan to achieve compliance with the standard.
CAPITAL REQUIREMENTS. Office of Thrift Supervision and New Jersey
Department of Banking and Insurance capital regulations require savings
associations to meet three minimum capital standards: a 1.5% tangible capital to
total assets ratio, a 4% leverage ratio (3% for institutions receiving the
highest rating on the CAMELS examination rating system) which compares Tier 1
capital to total adjusted assets, and an 8% risk-based capital ratio. In
addition, the prompt corrective action standards discussed below also establish,
in effect, a minimum 2% tangible capital standard, a 4% leverage ratio (3% for
institutions receiving the highest rating on the CAMELS system) and, together
with the risk-based capital standard itself, a 4% Tier 1 risk-based capital
standard. The Office of Thrift Supervision regulations also require that, in
meeting the tangible, leverage and risk-based capital standards, institutions
must generally deduct investments in and loans to subsidiaries engaged in
activities as principal that are not permissible for a national bank.
The risk-based capital standard for savings associations requires the
maintenance of Tier 1 (core) and total capital (which is defined as core capital
and supplementary capital) to risk-weighted assets of at least 4% and 8%,
respectively. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, are multiplied by a risk-weight
factor of 0% to 100%, assigned by the Office of Thrift Supervision capital
regulation based on the risks believed inherent in the type of asset. A savings
institution also must maintain risk-based capital for recourse obligations,
direct credit substitutes and residual interests. The amount of risk-based
capital required for a residual interest generally depends on whether it has
been assigned a credit rating by a nationally recognized statistical rating
organization. Core (Tier 1) capital is defined as common stockholders' equity
(including retained earnings), certain noncumulative perpetual preferred stock
and related surplus, and minority interests in equity accounts of consolidated
subsidiaries less intangibles other than certain mortgage servicing rights and
credit card relationships. The components of supplementary capital currently
include cumulative preferred stock, long-term perpetual preferred stock,
mandatory convertible securities, subordinated debt and intermediate preferred
stock, the allowance for loan and lease losses limited to a maximum of 1.25% of
risk-weighted assets and up to 45% of unrealized gains on available-for-sale
equity securities with readily determinable fair market values. Overall, the
amount of supplementary capital included as part of total capital cannot exceed
100% of core capital.
The Office of Thrift Supervision and the New Jersey Department of
Banking and Insurance also have authority to establish individual minimum
capital requirements in appropriate cases upon a determination that an
association's capital level is or may become inadequate in light of the
particular circumstances.
At March 31, 2004, Clifton Savings met each of its capital
requirements.
PROMPT CORRECTIVE REGULATORY ACTION
Under the prompt corrective action statute, the Office of Thrift
Supervision is required to take certain supervisory actions against
undercapitalized savings associations, the severity of which depends upon the
institution's degree of capitalization. Generally, a savings association that
has total risk-based capital of 10% or more, has a Tier 1 risk-based capital
ratio of 6% or more, has a Tier 1 leverage capital ratio of 5% or more and is
not subject to any order or final capital directive to meet and maintain a
specific capital level for any capital measure is considered to be "well
capitalized." A savings institution that has a total risk-based capital ratio of
8% or more, a Tier 1 risk-based capital ratio of 4% or more and Tier 1 leverage
capital ratio of 4% or more (3% under certain circumstances) and does not meet
the definition of "well capitalized" is considered to be "adequately
capitalized." A savings institution that has a total risk-based capital of less
than 8.0% or a leverage ratio or a Tier 1 capital or risk-based assets ratio
that is less than 4.0% is considered to be undercapitalized. A savings
association that has a total risk-based capital less than 6.0%, a Tier 1
risk-based capital ratio of less than 3.0% or a leverage ratio that is less than
3.0% is considered to be "significantly undercapitalized" and a savings
association that has a tangible capital to assets ratio equal to or less than
2.0% is deemed to be "critically undercapitalized." Subject to a narrow
exception, the Office of Thrift Supervision is required to appoint a receiver or
conservator for an institution that is critically undercapitalized. The
regulation also provides that a capital restoration plan must be filed with the
Office of Thrift
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Supervision within 45 days of the date an association receives notice that it is
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." The Office of Thrift Supervision will not accept a capital
restoration plan unless it determines that the plan contains all of the required
elements, is based on realistic assumptions and is likely to succeed in
restoring the institution's capital, and would not appreciably increase the risk
to which the institution is exposed. Compliance with the plan must be guaranteed
by any parent holding company, which may include a financial commitment. This
guarantee may prevent the holding company from making any capital distributions
to shareholders, repurchasing any of its own stock, or incurring additional
debt. In addition, numerous mandatory supervisory actions may become immediately
applicable to the institution depending upon its category, including, but not
limited to, increased monitoring by regulators, restrictions on growth and
capital distributions and limitations on expansion. The Office of Thrift
Supervision could also take any one of a number of discretionary supervisory
actions, including the issuance of a capital directive and the replacement of
senior executive officers and directors.
INSURANCE OF DEPOSIT ACCOUNTS
Clifton Savings is a member of the Savings Association Insurance Fund.
The Federal Deposit Insurance Corporation maintains a risk-based assessment
system by which institutions are assigned to one of three categories based on
their capitalization and one of three subcategories based on examination ratings
and other supervisory information. An institution's assessment rate depends upon
the categories to which it is assigned. Assessment rates for Savings Association
Insurance Fund member institutions are determined semi-annually by the Federal
Deposit Insurance Corporation and currently range from zero basis points for the
healthiest institutions to 27 basis points of assessable deposits for the
riskiest. The Federal Deposit Insurance Corporation has authority to increase
insurance assessments. A significant increase in Savings Association Insurance
Fund insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of Clifton Savings. Management cannot predict
what insurance assessment rates will be in the future.
In addition to the assessment for deposit insurance, institutions are
required to make payments on bonds issued in the late 1980s by the Financing
Corporation ("FICO") to recapitalize the predecessor to the Savings Association
Insurance Fund. During 2003, FICO payments for Savings Association Insurance
Fund members approximated 1.60 basis points of assessable deposits.
Insurance of deposits may be terminated by the Federal Deposit
Insurance Corporation upon a finding that the institution has engaged in unsafe
or unsound practices, is in an unsafe or unsound condition to continue
operations or has violated any applicable law, regulation, rule, order or
condition imposed by the Federal Deposit Insurance Corporation or the Office of
Thrift Supervision. The management of Clifton Savings does not know of any
practice, condition or violation that might lead to termination of deposit
insurance.
ENFORCEMENT. The New Jersey Department of Banking and Insurance has
extensive enforcement authority over New Jersey savings associations and, under
certain circumstances, affiliated parties, insiders, and agents. This
enforcement authority includes: cease and desist orders, receivership,
conservatorship, restraining orders, removal of officers and directors,
emergency closures, dissolution and liquidation. Fines for violations can range
from $100 to $5,000 per day.
The Office of Thrift Supervision has primary federal enforcement
responsibility over federally-insured savings associations and has the authority
to bring actions against all "institution-affiliated parties," including
stockholders, and any attorneys, appraisers and accountants who knowingly or
recklessly participate in wrongful action likely to have an adverse effect on a
savings association. Formal enforcement action may range from the issuance of a
capital directive or cease and desist order to removal of officers or directors,
receivership or conservatorship. Civil penalties cover a wide range of
violations and can amount to $25,000 per day, or $1 million per day in
especially egregious cases. The Federal Deposit Insurance Corporation has the
authority to recommend to the Office of Thrift Supervision that enforcement
action be taken with respect to a particular savings association. If action is
not taken by the Office of Thrift Supervision, the Federal Deposit Insurance
Corporation has authority to take such action under certain circumstances. The
Federal Deposit Insurance Corporation also has authority to terminate deposit
insurance. Federal and state law also establish criminal penalties for certain
violations.
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COMMUNITY REINVESTMENT ACT
Under the Community Reinvestment Act, as implemented by Office of
Thrift Supervision regulations, a savings association has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of its entire community, including low and moderate income
neighborhoods. The Community Reinvestment Act does not establish specific
lending requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the
Community Reinvestment Act. The Community Reinvestment Act requires the Office
of Thrift Supervision, in connection with its examination of a savings
association, to assess the institution's record of meeting the credit needs of
its community and to take such record into account in its evaluation of certain
applications by such institution. New Jersey law similarly requires the New
Jersey Department of Banking and Insurance consider an association's Community
Reinvestment Act rating in connection with evaluating applications.
Community Reinvestment Act requires public disclosure of an
institution's rating and requires the Office of Thrift Supervision to provide a
written evaluation of an association's Community Reinvestment Act performance
utilizing a four-tiered descriptive rating system. Clifton Savings' latest
Community Reinvestment Act rating, received from the Office of Thrift
Supervision in July 2003, was "Satisfactory."
FEDERAL HOME LOAN BANK SYSTEM
Clifton Savings is a member of the Federal Home Loan Bank System, which
consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank
provides a central credit facility primarily for member institutions. Clifton
Savings, as a member of the Federal Home Loan Bank, is required to acquire and
hold shares of capital stock in the Federal Home Loan Bank in an amount at least
equal to 1.0% of the aggregate principal amount of its unpaid residential
mortgage loans and similar obligations at the beginning of each year, or 1/20 of
its advances (borrowings) from the Federal Home Loan Bank, whichever is greater.
Clifton Savings was in compliance with this requirement at March 31, 2004.
The Federal Home Loan Banks are required to provide funds for the
resolution of insolvent thrifts and to contribute funds for affordable housing
programs. These requirements could reduce the amount of dividends that the
Federal Home Loan Banks pay to their members and could also result in the
Federal Home Loan Banks imposing a higher rate of interest on advances to their
members. If dividends were reduced, Clifton Savings' net interest income would
likely also be reduced. Further, there can be no assurance that the impact of
future legislation on the Federal Home Loan Banks will not also cause a decrease
in the value of the Federal Home Loan Bank stock held by Clifton Savings.
FEDERAL RESERVE SYSTEM
Federal Reserve Board regulations require savings associations to
maintain non-interest-earning reserves against their transaction accounts. The
Federal Reserve Board regulations generally require that reserves be maintained
against aggregate transaction accounts as follows: for accounts aggregating
$45.4 million or less (subject to adjustment by the Federal Reserve Board) the
reserve requirement is 3.0% and for amounts greater than $45.4 million, the
reserve requirement is 10% (subject to adjustment by the Federal Reserve Board
between 8% and 14%). The first $6.6 million of otherwise reservable balances
(subject to adjustment by the Federal Reserve Board) are exempted from the
reserve requirements. Clifton Savings is in compliance with the foregoing
requirements. Because required reserves must be maintained in the form of either
vault cash, a non-interest-bearing account at a Federal Reserve Bank or a
pass-through account as defined by the Federal Reserve Board, the effect of this
reserve requirement is to reduce Clifton Savings' interest-earning assets.
HOLDING COMPANY REGULATION
GENERAL. Clifton Savings Bancorp and Clifton MHC are savings and loan
holding companies within the meaning of federal law. As such, these companies
are registered with the Office of Thrift Supervision and are subject to Office
of Thrift Supervision regulations, examinations, supervision, reporting
requirements and corporate governance and activities. In addition, the Office of
Thrift Supervision has enforcement authority over Clifton
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Savings Bancorp and Clifton MHC and their non-savings institution subsidiaries.
Among other things, this authority permits the Office of Thrift Supervision to
restrict or prohibit activities that are determined to be a serious risk to the
subsidiary savings institution.
New Jersey law provides the New Jersey Department of Banking and
Insurance with authority to examine savings and loan holding companies that
control state associations and to secure certain reports from such companies.
RESTRICTIONS APPLICABLE TO MUTUAL HOLDING COMPANIES. Pursuant to
Section 10(o) of the Home Owners Loan Act and Office of Thrift Supervision
regulations, a mutual holding company, such as Clifton MHC, may generally engage
in the following activities: (1) investing in the stock of a bank; (2) acquiring
a mutual association through the merger of such association into a bank
subsidiary of such holding company or an interim bank subsidiary of such holding
company; (3) merging with or acquiring another holding company, one of whose
subsidiaries is a bank; and (4) any activity approved by the Federal Reserve
Board for a bank holding company or financial holding company or previously
approved by Office of Thrift Supervision for multiple savings and loan holding
companies. Recent legislation, which authorized mutual holding companies to
engage in activities permitted by financial holding companies, expanded the
authorized activities. Financial holding companies may engage in a broad array
of financial service activities including insurance and securities.
The Home Owners Loan Act prohibits a savings and loan holding company,
including a federal mutual holding company, directly or indirectly, or through
one or more subsidiaries, from acquiring more than 5% of the voting stock of
another savings institution, or holding company thereof, without prior written
approval of the Office of Thrift Supervision. The Home Owners Loan Act also
prohibits a savings and loan holding company from acquiring more than 5% of a
company engaged in activities other than those authorized for savings and loan
holding companies by the Home Owners Loan Act; or acquiring or retaining control
of a depository institution that is not insured by the Federal Deposit Insurance
Corporation. In evaluating applications by holding companies to acquire savings
institutions, the Office of Thrift Supervision must consider the financial and
managerial resources and future prospects of the company and institution
involved, the effect of the acquisition on the risk to the insurance funds, the
convenience and needs of the community and competitive factors.
The Office of Thrift Supervision is prohibited from approving any
acquisition that would result in a multiple savings and loan holding company
controlling savings institutions in more than one state, except: (1) the
approval of interstate supervisory acquisitions by savings and loan holding
companies, and (2) the acquisition of a savings institution in another state if
the laws of the state of the target savings institution specifically permit such
acquisitions. The states vary in the extent to which they permit interstate
savings and loan holding company acquisitions.
If the savings institution subsidiary of a savings and loan holding
company fails to meet the qualified thrift lender test set forth in Section
10(m) of the Home Owners Loan Act and the regulations of the Office of Thrift
Supervision, the holding company must register with the Federal Reserve Board as
a bank holding company within one year of the savings institution's failure to
so qualify.
STOCK HOLDING COMPANY SUBSIDIARY REGULATION. The Office of Thrift
Supervision has adopted regulations governing the two-tier mutual holding
company form of organization and subsidiary stock holding companies that are
controlled by mutual holding companies. Under these rules, a stock holding
company subsidiary, such as Clifton Savings Bancorp, holds all the shares of the
mutual holding company's bank subsidiary and issues the majority of its own
shares to the mutual holding company parent. The stock holding company
subsidiary is permitted to engage in activities that are permitted for its
mutual holding company parent subject to the same restrictions and conditions.
ACQUISITION OF CONTROL. Under the federal Change in Bank Control Act, a
notice must be submitted to the Office of Thrift Supervision if any person
(including a company), or group acting in concert, seeks to acquire "control" of
a savings and loan holding company or savings association. An acquisition of
"control" can occur upon the acquisition of 10% or more of the voting stock of a
savings and loan holding company or Bank or as otherwise defined by the Office
of Thrift Supervision. Under the Change in Bank Control Act, the Office of
Thrift Supervision has 60 days from the filing of a complete notice to act,
taking into consideration certain factors,
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including the financial and managerial resources of the acquirer and the
anti-trust effects of the acquisition. Any company that so acquires control
would then be subject to regulation as a savings and loan holding company.
New Jersey law requires a similar filing with and prior approval by the
New Jersey Department of Banking and Insurance.
WAIVERS OF DIVIDENDS BY CLIFTON MHC. Office of Thrift Supervision
regulations require Clifton MHC to notify the Office of Thrift Supervision of
any proposed waiver of its receipt of dividends from Clifton Savings Bancorp.
The Office of Thrift Supervision reviews dividend waiver notices on a
case-by-case basis, and, in general, does not object to any such waiver if: (i)
the mutual holding company's board of directors determines that such waiver is
consistent with such directors' fiduciary duties to the mutual holding company's
members; (ii) for as long as the savings association subsidiary is controlled by
the mutual holding company, the dollar amount of dividends waived by the mutual
holding company is considered as a restriction on the retained earnings of the
savings association, which restriction, if material, is disclosed in the public
financial statements of the savings association as a note to the financial
statements; (iii) the amount of any dividend waived by the mutual holding
company is available for declaration as a dividend solely to the mutual holding
company, and, in accordance with SFAS 5, where the savings association
determines that the payment of such dividend to the mutual holding company is
probable, an appropriate dollar amount is recorded as a liability; and (iv) the
amount of any waived dividend is considered as having been paid by the savings
association in evaluating any proposed dividend under Office of Thrift
Supervision capital distribution regulations. We anticipate that Clifton MHC
will waive dividends paid by Clifton Savings Bancorp.
CONVERSION OF CLIFTON MHC TO STOCK FORM. Office of Thrift Supervision
regulations permit Clifton MHC to convert from the mutual form of organization
to the capital stock form of organization. There can be no assurance when, if
ever, a conversion transaction will occur, and the Board of Directors has no
current intention or plan to undertake a conversion transaction. In a conversion
transaction a new holding company would be formed as the successor to Clifton
Savings Bancorp, Clifton MHC's corporate existence would end, and certain
depositors of Clifton Savings would receive the right to subscribe for
additional shares of the new holding company. In a conversion transaction, each
share of common stock held by stockholders other than Clifton MHC would be
automatically converted into a number of shares of common stock of the new
holding company determined pursuant to an exchange ratio that ensures that
stockholders other than Clifton MHC own the same percentage of common stock in
the new holding company as they owned in Clifton Savings Bancorp immediately
prior to the conversion transaction. Under Office of Thrift Supervision
regulations, stockholders other than Clifton MHC would not be diluted because of
any dividends waived by Clifton MHC (and waived dividends would not be
considered in determining an appropriate exchange ratio), in the event Clifton
MHC converts to stock form. The total number of shares held by stockholders
other than Clifton MHC after a conversion transaction also would be increased by
any purchases by stockholders other than Clifton MHC in the stock offering
conducted as part of the conversion transaction.
FEDERAL SECURITIES LAWS
Clifton Savings Bancorp common stock is registered with the Securities
and Exchange Commission under the Securities Exchange Act of 1934. Clifton
Savings Bancorp is subject to the information, proxy solicitation, insider
trading restrictions and other requirements under the Securities Exchange Act of
1934.
SARBANES-OXLEY ACT OF 2002
On July 30, 2002, the President signed into law the Sarbanes-Oxley Act
of 2002, which implemented legislative reforms intended to address corporate and
accounting fraud. The Sarbanes-Oxley Act places certain restrictions on the
scope of services that may be provided by accounting firms to their public
company audit clients and any non-audit services being provided to a public
company audit client will require preapproval by the company's audit committee.
In addition, the Sarbanes-Oxley Act requires chief executive officers and chief
financial officers, or their equivalent, to certify to the accuracy of periodic
reports filed with the Securities and Exchange Commission, subject to civil and
criminal penalties if they knowingly or willingly violate this certification
requirement.
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Under the Sarbanes-Oxley Act, bonuses issued to top executives prior to
restatement of a company's financial statements are now subject to disgorgement
if such restatement was due to corporate misconduct. Executives are also
prohibited from insider trading during retirement plan "blackout" periods, and
loans to company executives (other than loans by financial institutions
permitted by federal rules and regulations) are restricted. The legislation
accelerates the time frame for disclosures by public companies and changes in
ownership in a company's securities by directors and executive officers.
The Sarbanes-Oxley Act also increases the oversight of, and codifies
certain requirements relating to audit committees of public companies and how
they interact with the company's "registered public accounting firm." Among
other requirements, companies must disclose whether at least one member of the
committee is a "financial expert" (as such term is defined by the Securities and
Exchange Commission) and if not, why not.
PRIVACY REQUIREMENTS OF THE GLBA
The Gramm-Leach-Bliley Act of 1999, provided for sweeping financial
modernization for commercial banks, savings banks, securities firms, insurance
companies, and other financial institutions operating in the United States.
Among other provisions, the Gramm-Leach-Bliley Act places limitations on the
sharing of consumer financial information with unaffiliated third parties.
Specifically, the Gramm-Leach-Bliley Act requires all financial institutions
offering financial products or services to retail customers to provide such
customers with the financial institution's privacy policy and provide such
customers the opportunity to "opt out" of the sharing of personal financial
information with unaffiliated third parties.
ANTI-MONEY LAUNDERING
On October 26, 2001, in response to the events of September 11, 2001,
the President of the United States signed into law the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (referred to as the "USA PATRIOT Act"). The USA PATRIOT
Act significantly expands the responsibilities of financial institutions,
including savings and loan associations, in preventing the use of the U.S.
financial system to fund terrorist activities. Title III of the USA PATRIOT Act
provides for a significant overhaul of the U.S. anti-money laundering regime.
Among other provisions, it requires financial institutions operating in the
United States to develop new anti-money laundering compliance programs, due
diligence policies and controls to ensure the detection and reporting of money
laundering. Such required compliance programs are intended to supplement
existing compliance requirements, also applicable to financial institutions,
under the Bank Secrecy Act and the Office of Foreign Assets Control Regulations.
OTHER REGULATIONS
Interest and other charges collected or contracted for by Clifton
Savings are subject to state usury laws and federal laws concerning interest
rates. Clifton Savings' loan operations are also subject to federal laws
applicable to credit transactions, such as the:
o Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers;
o Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution is
fulfilling its obligation to help meet the housing needs of the
community it serves;
o Equal Credit Opportunity Act, prohibiting discrimination on
the basis of race, creed or other prohibited factors in extending
credit;
o Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
o Fair Debt Collection Act, governing the manner in which consumer
debts may be collected by collection agencies; and
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o Rules and regulations of the various federal agencies charged
with the responsibility of implementing such federal laws.
The deposit operations of Clifton Savings also are subject to the:
o Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative subpoenas
of financial records; and
o Electronic Funds Transfer Act and Regulation E promulgated
thereunder, which governs automatic deposits to and withdrawals
from deposit accounts and customers' rights and liabilities
arising from the use of automated teller machines and other
electronic banking services.
FEDERAL AND STATE TAXATION
FEDERAL INCOME TAXATION
GENERAL. We report our income on a fiscal year basis using the accrual
method of accounting. The federal income tax laws apply to us in the same manner
as to other corporations with some exceptions, including particularly our
reserve for bad debts discussed below. The following discussion of tax matters
is intended only as a summary and does not purport to be a comprehensive
description of the tax rules applicable to us. Our federal income tax returns
have been either audited or closed under the statute of limitations through tax
year 1995. For its 2004 year, Clifton Savings' maximum federal income tax rate
is 34%.
BAD DEBT RESERVES. For fiscal years beginning before June 30, 1996,
thrift institutions that qualified under certain definitional tests and other
conditions of the Internal Revenue Code were permitted to use certain favorable
provisions to calculate their deductions from taxable income for annual
additions to their bad debt reserve. A reserve could be established for bad
debts on qualifying real property loans, generally secured by interests in real
property improved or to be improved, under the percentage of taxable income
method or the experience method. The reserve for nonqualifying loans was
computed using the experience method. Federal legislation enacted in 1996
repealed the reserve method of accounting for bad debts and the percentage of
taxable income method for tax years beginning after 1995 and require savings
institutions to recapture or take into income certain portions of their
accumulated bad debt reserves. Approximately $6.4 million of our accumulated bad
debt reserves would not be recaptured into taxable income unless Clifton Savings
makes a "non-dividend distribution" to Clifton Savings as described below.
DISTRIBUTIONS. If Clifton Savings makes "non-dividend distributions" to
Clifton Savings Bancorp, the distributions will be considered to have been made
from Clifton Savings' unrecaptured tax bad debt reserves, including the balance
of its reserves as of December 31, 1987, to the extent of the "non-dividend
distributions," and then from Clifton Savings' supplemental reserve for losses
on loans, to the extent of those reserves, and an amount based on the amount
distributed, but not more than the amount of those reserves, will be included in
Clifton Savings' taxable income. Non-dividend distributions include
distributions in excess of Clifton Savings' current and accumulated earnings and
profits, as calculated for federal income tax purposes, distributions in
redemption of stock, and distributions in partial or complete liquidation.
Dividends paid out of Clifton Savings' current or accumulated earnings and
profits will not be so included in Clifton Savings' taxable income.
The amount of additional taxable income triggered by a non-dividend is
an amount that, when reduced by the tax attributable to the income, is equal to
the amount of the distribution. Therefore, if Clifton Savings makes a
non-dividend distribution to Clifton Savings Bancorp, approximately one and
one-half times the amount of the distribution not in excess of the amount of the
reserves would be includable in income for federal income tax purposes, assuming
a 34% federal corporate income tax rate. Clifton Savings does not intend to pay
dividends that would result in a recapture of any portion of its bad debt
reserves.
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STATE TAXATION
NEW JERSEY TAXATION. Clifton Savings, Clifton Savings Bancorp and
Clifton MHC are subject to New Jersey's Corporation Business Tax at the rate of
9% on their taxable income, before net operating loss deductions and special
deductions for federal income tax purposes. For this purpose, "taxable income"
generally means federal taxable income subject to certain adjustments (including
addition of interest income on state and municipal obligations).
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Clifton Savings Bancorp, Clifton MHC and Clifton
Savings are elected annually by the Board of Directors and serve at the Board's
discretion. The executive officers of Clifton Savings Bancorp, Clifton MHC and
Clifton Savings are:
NAME POSITION
- ------------ --------------
John A. Celentano, Jr.................. Chairman of the Board and Chief Executive Officer
of Clifton Savings Bancorp and Clifton MHC and
Chairman of the Board of Clifton Savings
Walter Celuch.......................... President and Corporate Secretary of Clifton
Savings Bancorp and Clifton MHC and President,
Chief Executive Officer and Secretary of Clifton
Savings
Bart D'Ambra........................... Executive Vice President and Chief Operating
Officer of Clifton Savings
Stephen A. Hoogerhyde.................. Executive Vice President and Chief Lending Officer
of Clifton Savings
Christine R. Piano, C.P.A.............. Chief Financial Officer and Treasurer of Clifton
Savings Bancorp and Clifton MHC and Executive Vice
President and Chief Financial Officer of Clifton
Savings
Below is information regarding the executive officers of Clifton
Savings Bancorp and Clifton Savings who are not also directors. Unless otherwise
stated, each executive officer has held his or her current position for at least
the last five years. Ages presented are as of March 31, 2004.
WALTER CELUCH has been President and Corporate Secretary of Clifton
Savings Bancorp and Clifton MHC since 2004 and has been President and Chief
Executive Officer of Clifton Savings since January 1999. From October 1987 until
December 1998, Mr. Celuch served as the Senior Vice President and Chief
Financial Officer of Clifton Savings. Mr. Celuch has served with Clifton Savings
for over 15 years. Age 56.
BART D'AMBRA has been Executive Vice President and Chief Operating
Officer of Clifton Savings since March 2003. Mr. D'Ambra served as Senior Vice
President from April 2002 until March 2003. Prior to April 2002, Mr. D'Ambra
served Clifton Savings as a Vice President. Mr. D'Ambra has served with Clifton
Savings for over 10 years. Age 55.
STEPHEN A. HOOGERHYDE has been Executive Vice President and Chief
Lending Officer of Clifton Savings since March 2003 and April 2002,
respectively. Mr. Hoogerhyde served as Senior Vice President from April 2002
until March 2003. Prior to April 2002, Mr. Hoogerhyde served Clifton Savings as
Vice President and Mortgage Officer. Mr. Hoogerhyde has served with Clifton
Savings for over 17 years. Age 49.
CHRISTINE R. PIANO, a certified public accountant, has been Chief
Financial Officer and Treasurer of Clifton Savings Bancorp and Clifton MHC since
2004 and has been Executive Vice President and Chief Financial Officer of
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Clifton Savings since April 2003 and March 1999, respectively. Ms. Piano served
as Vice President from March 2000 to April 2003 and as Assistant Vice President
from March 1999 to March 2000. Prior to 1999, Ms. Piano was a Manager at Radics
& Co., LLC, an accounting and auditing firm. Age 40.
ITEM 2. PROPERTIES
We conduct our business through our main office and branch offices. The
following table sets forth certain information relating to these facilities as
of March 31, 2004.
NET BOOK VALUE
YEAR AS OF SQUARE OWNED/
LOCATION OPENED MARCH 31, 2004 FOOTAGE LEASED
- ------------ ----------- --------------------- ----------- -------------
(DOLLARS IN THOUSANDS)
MAIN OFFICE:
1433 Van Houten Avenue 1981 $2,612 10,460 Owned
BRANCHES:
CLIFTON:
1055 Clifton Avenue 1956 854 2,484 Owned
1 Village Square West 1928 216 1,550 Owned
319 Lakeview Avenue 1970 57 3,311 Owned
646 Van Houten Avenue 1968 143 1,081 Owned
387 Valley Road 1971 1 995 Leased(1)
GARFIELD:
247 Palisade Avenue(2) 2004 1,352 3,130 Owned
369 Lanza Avenue 1977 1,103 2,174 Owned
WALLINGTON:
163 Maple Avenue(3) 2003 465 680 Owned
WAYNE:
1158 Hamburg Turnpike 2003 218 1,617 Leased(4)
- -------------------------
(1) The current lease expires in 2006 with an option for an additional 5 years.
(2) This branch replaced a previously leased facility which was opened in 1975.
(3) This is a temporary facility. The permanent facility at 55 Union Boulevard
was opened on May 13, 2004.
(4) The current lease expires in 2008 with an option for an additional 5 years.
ITEM 3. LEGAL PROCEEDINGS
On January 14, 2003, Lawrence B. Seidman, a depositor at Clifton
Savings, filed an action in the Chancery Division of the Superior Court of New
Jersey, Passaic County, to temporarily enjoin, among other things, Clifton
Savings from implementing its proposed "Plan of Reorganization and Stock
Issuance" pending a further hearing. That request was denied in its entirety. On
January 26, 2004, all defendants removed the state court lawsuit to federal
court whereupon Mr. Seidman sought additional restraints which would have the
effect of delaying the Special Meeting of members to vote on the proposed "Plan
of Reorganization and Stock Issuance."
On February 4, 2004, the Office of Thrift Supervision ("OTS") informed
Mr. Seidman that he was prohibited from soliciting proxies for the Special
Meeting without obtaining OTS approval and further stated that his failure to
comply with OTS regulations may result in a referral of the matter to its Office
of Enforcement. On February 13, 2004, the New Jersey Department of Banking and
Insurance also denied Mr. Seidman's request to solicit proxies for the Special
Meeting.
On February 18, 2004, at the scheduled hearing on Mr. Seidman's
application for temporary restraints and injunctive relief, the United States
District Court for the District of New Jersey accepted Mr. Seidman's voluntary
dismissal of his application for temporary restraints and preliminary injunctive
relief and all claims relating to the Special Meeting of members. The District
Court also dissolved all restraints against all parties concerning the
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election of directors at the 2004 Annual Meeting. The District Court remanded to
the Superior Court of New Jersey two state law claims.
On February 24, 2004, Mr. Seidman filed a notice of appeal in the
Superior Court of the State of New Jersey, Appellate Division, seeking review of
the determination made on February 13, 2004 by the Commissioner of Banking and
Insurance which denied Mr. Seidman the right to communicate with members of
Clifton Savings and the determination made on January 22, 2004 in the
Commissioner's intent to approve the application of Clifton Savings to convert.
Mr. Seidman noticed both the Office of the Attorney General, State of New Jersey
and Clifton Savings of this appeal. At this time, the appeal is being briefed
and a decision on the appeal is not expected for some time. Clifton Savings
remains confident that the Commissioner's determinations will be upheld by the
Appellate Division.
On February 25, 2004, Mr. Seidman filed yet another complaint in the
Chancery Division of the Superior Court of New Jersey, Passaic County, seeking:
(1) a ruling declaring that the Special Meeting for the conversion of Clifton
Savings must include an election of directors voted upon by members, (2) an
injunction restraining alleged corporate waste, and (3) counsel fees and costs
of suit.
On February 26, 2004, all defendants again removed the state court
action to federal court. Mr. Seidman has filed a motion to remand the action to
the state court. That motion is scheduled to be heard on May 24, 2004. Clifton
Savings remains confident that it will prevail on any and all claims brought by
Mr. Seidman in any venue.
Clifton Savings filed a claim under its Directors and Officers
liability coverage, which includes a $100,000 deductible, to recover certain
costs incurred in the defense against Mr. Seidman's claims. As of March 31,
2004, $380,000 of costs have been incurred, of which $240,000 have been expensed
and are included in the consolidated statements of income in legal fees and
$140,000 have been recorded as a receivable included in other assets in the
consolidated statements of financial condition. The actual amount which will be
recovered through the insurance claim is not yet determinable and will likely
differ from the aforementioned estimate.
Clifton Savings Bank remains confident that it will prevail on any and
all claims brought by and against Mr. Seidman.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information regarding the market for Clifton Savings Bancorp's
common equity and related stockholder matters is incorporated herein by
reference to Clifton Savings Bancorp's 2004 Annual Report to Stockholders at
"Investor and Corporate Information."
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by
reference to the Section captioned "Selected Consolidated Financial Information"
in the 2004 Annual Report to Stockholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The information regarding management's discussion and analysis of
financial condition and results of operation is incorporated herein by reference
to Clifton Savings Bancorp's 2004 Annual Report to Stockholders at "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is incorporated herein by
reference to the Section captioned "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the 2004 Annual Report to
Stockholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The information regarding financial statements is incorporated herein
by reference to Clifton Savings Bancorp's 2004 Annual Report to Stockholders in
the Consolidated Financial Statements and the Notes thereto.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The Company's management, including the Company's principal executive
officer and principal financial officer, have evaluated the effectiveness of the
Company's "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"). Based upon their evaluation, the principal executive
officer and principal financial officer concluded that, as of the end of the
period covered by this report, the Company's disclosure controls and procedures
were effective for the purpose of ensuring that the information required to be
disclosed in the reports that the Company files or submits under the Exchange
Act with the Securities and Exchange Commission (the "SEC") (1) is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and (2) is accumulated and communicated to the Company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to the directors and officers of Clifton
Savings Bancorp and information regarding compliance with Section 16(a) of the
Exchange Act is incorporated herein by reference to Clifton Savings Bancorp's
Proxy Statement for the 2004 Annual Meeting of Stockholders and to Part I, Item
1, "Description of Business -- Executive Officers of the Registrant."
Clifton Savings Bancorp has adopted a Code of Ethics and Business
Conduct. See the Exhibits to this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information regarding executive compensation is incorporated herein
by reference to Clifton Savings Bancorp's Proxy Statement for the 2004 Annual
Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
The information relating to security ownership of certain beneficial
owners and management and the equity compensation plan information is
incorporated herein by reference to Clifton Savings Bancorp's Proxy Statement
for the 2004 Annual Meeting of Stockholders.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information relating to certain relationships and related
transactions is incorporated herein by reference to Clifton Savings Bancorp's
Proxy Statement for the 2004 Annual Meeting of Stockholders.
PART IV
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND EXPENSES
The information relating to the principal accountant fees and expenses
is incorporated herein by reference to Clifton Savings Bancorp's Proxy Statement
for the 2004 Annual Meeting of Stockholders.
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) The following are filed as a part of this report
by means of incorporation to Clifton Savings
Bancorp's 2004 Annual Report to Stockholders:
o Report of Independent Auditors
o Consolidated Statements of Financial Condition
as of March 31, 2004
o Consolidated Statements of Income for the Years
Ended March 31, 2004, and 2003
o Consolidated Statements of Changes in
Shareholders' Equity for the Years Ended
March 31, 2004, and 2003
o Consolidated Statements of Cash Flows for the
Years Ended March 31, 2004, and 2003
o Notes to Consolidated Financial Statements
(2) All financial statement schedules are omitted because
they are not required or applicable, or the required
information is shown in the consolidated financial
statements or the notes thereto.
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(3) Exhibits
3.1 Charter of Clifton Savings Bancorp, Inc.
3.2 Bylaws of Clifton Savings Bancorp, Inc.
4.1 Specimen Stock Certificate of Clifton
Savings Bancorp, Inc.
10.1 Clifton Savings Bank, S.L.A. Employee Stock
Ownership Plan and Trust
10.2 ESOP Loan Commitment Letter and ESOP Loan
Documents
10.3 Employment Agreement between Clifton Savings
Bancorp, Inc. and John A. Celentano, Jr.
10.4 Employment Agreement between Clifton Savings
Bancorp, Inc. and Walter Celuch
10.5 Employment Agreement between Clifton Savings
Bank, S.L.A. and John A. Celentano, Jr.
10.6 Employment Agreement between Clifton Savings
Bank, S.L.A. and Walter Celuch
10.7 Change in Control Agreement between Clifton
Savings Bank, S.L.A. and Bart D'Ambra
10.8 Change in Control Agreement between Clifton
Savings Bank, S.L.A. and Stephen A.
Hoogerhyde
10.9 Change in Control Agreement between Clifton
Savings Bank, S.L.A. and Christine R. Piano
10.10 Clifton Savings Bank, S.L.A. Directors'
Retirement Plan
10.11 Clifton Savings Bank, S.L.A. 401(k) Savings
Plan(1)
10.12 Clifton Savings Bank, S.L.A. Supplemental
Executive Retirement Plan
13.0 Annual Report to Stockholders
14.1 Code of Ethics and Business Conduct
21.0 List of Subsidiaries
23.0 Consent of Radics & Co., LLC
31.1 Rule 13a-14(a)/15d-14(a) Certification of
Chief Executive Officer
31.2 Rule 13a-14(a)/15d-14(a) Certification of
Chief Financial Officer
32.0 Section 1350 Certification of Chief
Executive Officer and Chief Financial
Officer
------------------------------
(1) Incorporated by reference to the Registration
Statement on Form S-8 (No. 333-113302) filed on March
5, 2004.
(b) Reports on Form 8-K
None
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CLIFTON SAVINGS BANCORP, INC.
Date: June 24, 2004 By: /s/ John A. Celentano, Jr.
-------------------------------------
John A. Celentano, Jr.
Chairman of the Board and Chief
Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Name Title Date
---- ----- ----
/s/ John A. Celentano, Jr. Chairman of the Board and June 24, 2004
- ---------------------------- Chief Executive Officer
John A. Celentano, Jr. (principal executive officer)
/s/ Christine R. Piano Chief Financial Officer and June 24, 2004
- ---------------------------- Treasurer (principal financial
Christine R. Piano and accounting officer)
/s/ Frank J. Hahofer Director June 24, 2004
- ----------------------------
Frank J. Hahofer
/s/ Thomas A. Miller Director June 24, 2004
- ----------------------------
Thomas A. Miller
/s/ John H. Peto Director June 24, 2004
- ----------------------------
John H. Peto
Director June __, 2004
- ----------------------------
Raymond L. Sisco
/s/ Joseph C. Smith Director June 24, 2004
- ----------------------------
Joseph C. Smith
Director June __, 2004
- ----------------------------
John Stokes