Summary

This summary highlights material information from this document and may not contain all the information that is important to you. To understand the conversion and offering fully, you should read this entire document carefully.

Our Company

New Clifton. The shares being offered will be issued by new Clifton, a Maryland corporation. Upon completion of the conversion, new Clifton will become the successor corporation to old Clifton and the parent holding company for Clifton Savings Bank. New Clifton will be a savings and loan holding company subject to regulation and examination by the Board of Governors of the Federal Reserve System, which we refer to herein as the Federal Reserve Board.

Old Clifton. Old Clifton is a federally chartered corporation that owns all of the common stock of Clifton Savings Bank. The common stock of old Clifton trades on the Nasdaq Global Select Market under the symbol “CSBK.” At September 30, 2013, old Clifton had consolidated total assets of $1.1 billion, gross loans of $555.7 million, total deposits of $791.4 million and total stockholders’ equity of $188.5 million. As of the date of this prospectus, old Clifton had 26,249,640 shares of common stock outstanding. After completion of the conversion, old Clifton will cease to exist.

Clifton MHC. Clifton MHC is the federally chartered mutual holding company of old Clifton. Clifton MHC’s sole business activity is the ownership of 16,791,758 shares of common stock of old Clifton, representing 64.0% of the common stock outstanding as of the date of this prospectus. After completion of the conversion, Clifton MHC will cease to exist.

Clifton Savings Bank. Clifton Savings Bank is a federally chartered savings bank headquartered in Clifton, New Jersey. Clifton Savings Bank has provided community banking services to customers since 1928. We currently operate twelve full-service locations in Bergen and Passaic Counties in New Jersey. At September 30, 2013, Clifton Savings Bank exceeded all regulatory capital requirements and was not a participant in any of the U.S. Treasury’s capital raising programs for financial institutions. Clifton Savings Bank has one wholly-owned subsidiary, Botany Inc., which is an investment company incorporated under New Jersey law. Botany Inc. primarily holds investments and mortgage-backed securities in an effort to minimize Clifton Savings Bank’s New Jersey state tax liability. Clifton Savings Bank is regulated by the Office of the Comptroller of the Currency.

Our principal executive offices are located at 1433 Van Houten Avenue, Clifton, New Jersey 07013 and our telephone number is (973) 473-2200. Our web site address is www.cliftonsavings.com . Information on our website should not be considered a part of this prospectus.

Our Business Strategy

We are a retail-oriented financial institution dedicated to serving the needs of customers in our market area. We deliver personalized service and respond with flexibility to customer needs. We believe our community orientation is attractive to our customers and distinguishes us from many large banks and other financial institutions that operate in our market area. We intend to maintain this focus as we grow.

Our principal objective is to build long-term value for our stockholders by operating a profitable community-oriented financial institution. We seek to accomplish this objective by focusing on strategies designed to enhance and expand our franchise and diversify our product offerings to increase profitability, while maintaining strong asset quality. We plan to manage actively our strong capital position consistent with applicable regulations and our overall business strategy. The following are key elements of our business strategy:

Continuing to emphasize residential portfolio lending . Our primary lending focus historically has been the origination of one- to four-family mortgage loans. At September 30, 2013, 90.2% of our total loan portfolio consisted of one- to four-family mortgage loans. We believe there are opportunities to increase our residential mortgage lending in our market area, and beginning in 2013 we made efforts to take advantage of these opportunities by hiring additional lending staff and increasing our origination channels. From March 31, 2013 to September 30, 2013, our one- to four-

 

family real estate loan portfolio has increased $82.0 million, or 19.6%. We utilize conservative underwriting strategies for all of our lending products. We originate loans solely for our own portfolio, rather than for sale, and we currently service all of the loans we originate. To further supplement our loan originations, we also have increased our purchased loans, which we underwrite using the same conservative underwriting procedures we use when originating loans. We also service most of our purchased loans. Purchased loans have increased from $1.8 million in fiscal 2011 to $47.3 million in fiscal 2013 and $49.6 million in the six months ended September 30, 2013.

Increasing our multi-family and commercial real estate lending. In late 2012, we established a commercial loan department to expand our multi-family and commercial real estate lending activities and diversify our loan portfolio beyond residential mortgage loans. Since March 31, 2013, our multi-family and commercial real estate loan portfolio has increased $13.4 million, or 46.7%, and at September 30, 2013 was 7.6% of our total loan portfolio. We believe the expansion of our multi-family and commercial real estate lending will help diversify our balance sheet, improve our interest rate risk exposure and increase our presence in our market area. After the offering, we intend to continue these efforts and plan to hire additional commercial lending personnel and add appropriate infrastructure in order to implement our strategy. Further, with the additional capital raised in the offering, we expect to continue to pursue larger lending relationships.

Continuing conservative underwriting practices in order to maintain a high quality loan portfolio. We believe that strong asset quality is a key to long-term financial success. We have sought to maintain a high level of asset quality and mitigate credit risk by using conservative underwriting standards and by diligent monitoring and collection efforts. At September 30, 2013, nonperforming loans were 0.9% of the total loan portfolio and 0.4% of total assets. Although we intend to increase our multi-family and commercial real estate lending, we will do so consistent with our loan underwriting and credit administration standards.

Stockholder-focused management of capital coupled with opportunistic acquisitions. We believe that maintaining a strong capital base is critical to support our long-range business plan; however, we recognize that we will have a historically high level of capital following completion of the offering. Consequently, we intend to manage our capital position, using appropriate capital management tools, to return excess capital to our stockholders, consistent with applicable regulations and policies. We have repurchased a total of $52.9 million of our common stock since 2005, however, our repurchase levels have slowed significantly since we initially determined to conduct a second-step conversion offering in fiscal 2011. We expect to continue stock repurchases after completion of the conversion subject to market conditions and regulatory restrictions. Under current federal regulations, subject to limited exceptions, we may not repurchase shares of our common stock during the first year following the completion of the conversion. See “ Use of Proceeds .” In addition, following the completion of the conversion, we intend to continue the payment of regular quarterly dividends. Initially, we expect the quarterly dividends to be $0.05 per share, which equals $0.20 per share on an annualized basis and an annual yield of 2.0% based on a price of $10.00 per share. See “ Our Dividend Policy .”

Organic growth has been, and will continue to be, our primary focus. However, following the offering we intend to review acquisition opportunities that we believe will enhance our franchise, further our business strategy and yield long-term financial benefits for our stockholders. The conversion into a stock holding company structure will better position us to participate in consolidation activity by providing a more flexible corporate structure and additional capital resources. Currently, we do not have any plans or arrangements to acquire any financial institutions.

Enhancing core earnings by increasing lower cost transaction and savings accounts and continuing our emphasis on operational efficiencies . Checking, savings and money market accounts are a lower cost source of funds than time deposits, and we have made a concerted effort to increase lower-cost transaction and savings deposit accounts and reduce our dependence on traditionally higher cost certificates of deposit. Our ratio of certificates of deposit to total deposits has decreased from 78.1% at March 31, 2011 to 70.4% at September 30, 2013. We intend to market our core transaction accounts and savings accounts, emphasizing additional product offerings and our high quality service. We also recognize that controlling operating expenses is essential to our long-term profitability. While we anticipate that our efficiency ratio may be negatively impacted in future periods as a result of our expansion of our lending efforts, and technology enhancements, we intend to continue to focus on operational efficiencies. Our annualized efficiency ratio for the six months ended September 30, 2013 was 57.6%.

 

Leveraging our competitive strengths to attract and retain customers. We believe that our competitive strengths are personalized, superior customer service, extensive knowledge of our markets and borrowers, and highly visible community activities. We believe that we can leverage these strengths to attract and retain customers. We also believe that there is an increasing population of potential customers dislocated as a result of large bank consolidations in our market area who seek the personalized service of a community bank. We plan to update existing technologies and implement new technologies to enhance the customer experience and ultimately increase the efficiency of our operations.

Description of the Conversion

In 2004, we reorganized Clifton Savings Bank into the partially public mutual holding company structure. As a part of that reorganization, we formed old Clifton as the mid-tier stock holding company for Clifton Savings Bank and sold a minority interest in old Clifton common stock to our depositors and borrowers and our employee stock ownership plan in a subscription offering. The majority of old Clifton’s shares were issued to Clifton MHC, a mutual holding company we organized in connection with the reorganization. As a mutual holding company, Clifton MHC does not have any shareholders, does not hold any significant assets other than the common stock of old Clifton, and does not engage in any significant business activity. Our current ownership structure is as follows:

 

The “second-step” conversion process that we are now undertaking involves a series of transactions by which we will convert our organization from the partially public mutual holding company form to the fully public stock holding company structure. In the stock holding company structure, all of Clifton Savings Bank’s common stock will be owned by new Clifton, and all of new Clifton’s common stock will be owned by the public. We are conducting the conversion and offering under the terms of our amended and restated plan of conversion and reorganization (which is referred to as the “plan of conversion”). Upon completion of the conversion and offering, old Clifton and Clifton MHC will cease to exist.

After the conversion and offering, our ownership structure will be as follows:

 

As part of the conversion, we are offering for sale common stock representing the ownership interest of old Clifton that is currently held by Clifton MHC. At the conclusion of the conversion and offering, existing public shareholders of old Clifton will receive shares of common stock in new Clifton in exchange for their existing shares of common stock of old Clifton, based upon an exchange ratio of 0.9097 to 1.2307 at the minimum and maximum of the

 

offering range, respectively. The actual exchange ratio will be determined at the conclusion of the conversion and the offering based on the total number of shares sold in the offering, and is intended to result in new Clifton’s existing public shareholders owning 35.4% of new Clifton common stock, which is based on the 36.0% ownership interest that existing public shareholders currently own of old Clifton common stock adjusted to reflect the assets of Clifton MHC, without giving effect to cash paid in lieu of issuing fractional shares or shares that existing shareholders may purchase in the offering.

If the conversion and offering is canceled, orders for common stock already submitted will be canceled, subscribers’ funds will be promptly returned with interest calculated at Clifton Savings Bank’s passbook savings rate and all deposit account withdrawal authorizations will be canceled.

The normal business operations of Clifton Savings Bank will continue without interruption during the conversion and offering, and the same officers and directors who serve Clifton Savings Bank at the completion of the conversion and offering will serve new Clifton and Clifton Savings Bank in the fully converted stock form.

Reasons for the Conversion and Offering

Our primary reasons for the conversion and offering are the following:

 

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Eliminate the uncertainties associated with the mutual holding company structure under financial reform legislation. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or “Dodd-Frank Act,” the Federal Reserve Board became the federal regulator of all savings and loan holding companies and mutual holding companies, which has resulted in changes in regulations applicable to Clifton MHC and old Clifton. Among other things, these changes have adversely affected our ability to pay cash dividends to our stockholders, including the ability of Clifton MHC to waive any dividends declared by old Clifton. The conversion will eliminate our mutual holding company structure and will enable us to pay dividends to our stockholders, subject to the customary legal, regulatory and financial considerations applicable to all financial institutions. See “ Our Dividend Policy .” It also will eliminate the risk that the Federal Reserve Board will amend existing regulations applicable to the conversion process in a manner disadvantageous to our public stockholders or depositors.

 

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Transition us to a more familiar and flexible organizational structure. The stock holding company structure is a more familiar form of organization, which we believe will make our common stock more appealing to investors. The stock holding company structure will also give us greater flexibility to access the capital markets through possible future equity and debt offerings, although we have no current plans or arrangements for any such offerings.

 

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Facilitate future mergers and acquisitions. Although we do not currently have any understandings or agreements regarding any specific acquisition transaction, the stock holding company structure will give us greater flexibility to structure, and make us a more attractive and competitive bidder for, mergers and acquisitions of other financial institutions as opportunities arise. The additional capital raised in the offering also will enable us to consider larger merger transactions. In addition, although we intend to remain an independent financial institution, the stock holding company structure may make us a more attractive acquisition candidate for other institutions. Applicable regulations prohibit the acquisition of new Clifton for three years following completion of the conversion.

 

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Improve the liquidity of our shares of common stock. The larger number of shares that will be outstanding after completion of the conversion and offering is expected to result in a more liquid and active market for new Clifton common stock. A more liquid and active market will make it easier for our stockholders to buy and sell our common stock and will give us greater flexibility in implementing capital management strategies.

Terms of the Offering

We are offering between 15,725,000 and 21,275,000 shares of common stock in a subscription offering to eligible depositors and certain borrowers of Clifton Savings Bank and to our tax-qualified employee benefit plans, including our employee stock ownership plan. To the extent shares remain available, we will offer shares in a community

 

offering to natural persons residing in Bergen, Passaic, Essex, Morris, Hudson and Union Counties in New Jersey, to our existing public shareholders and to the general public. If necessary, we will also offer shares to the general public in a syndicated offering or a firm commitment underwritten offering. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [DATE2] , 2014, or the number of shares of common stock to be sold is increased to more than 21,275,000 shares or decreased to less than 15,725,000 shares. If we extend the offering beyond [DATE2] , 2014, all subscribers will be notified and given the opportunity to confirm, change or cancel their orders. If no response is received, we will promptly return your funds with interest calculated at Clifton Savings Bank’s passbook savings rate or cancel your deposit account withdrawal authorization. If we intend to sell fewer than 15,725,000 shares or more than 21,275,000 shares, we will promptly return all funds and set a new offering range. We will then resolicit subscribers, giving them an opportunity to place new orders for a period of time. No shares purchased in the subscription offering and community offering will be issued until the completion of any syndicated offering or firm commitment underwritten offering.

The purchase price is $10.00 per share. All investors will pay the same purchase price per share, regardless of whether the shares are purchased in the subscription offering, the community offering or a syndicated offering or firm commitment underwritten offering. Sandler O’Neill & Partners, L.P., our marketing agent in the subscription and community offerings, will use its best efforts to assist us in selling shares of our common stock in the subscription and community offerings. Sandler O’Neill & Partners, L.P. is not obligated to purchase any shares of common stock in the subscription and community offerings.

How We Determined the Offering Range and Exchange Ratio

Federal regulations require that the aggregate purchase price of the securities sold in the offering be based upon our estimated pro forma market value after the conversion (i.e., taking into account the expected receipt of proceeds from the sale of securities in the offering) as determined by an independent appraisal. In accordance with the regulations of the Federal Reserve Board, a valuation range is established which ranges from 15% below to 15% above this pro forma market value. We have retained RP Financial, LC., which is experienced in the evaluation and appraisal of financial institutions, to prepare the appraisal. RP Financial has indicated that, as of November 15, 2013, the full market value of new Clifton’s common stock’s was $286.2 million, resulting in a valuation range of $243.3 million at the minimum to $329.1 million at the maximum. This results in an offering range of $157.3 million to $212.8 million, with a midpoint of $185.0 million. RP Financial, LC. will receive a fee of $100,000 for its appraisal report, plus $10,000 for any appraisal updates (of which there will be at least one) and reimbursement of out-of-pocket expenses.

In preparing its appraisal, RP Financial considered the information in this prospectus, including our financial statements. RP Financial also considered the following factors, among others:

 

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our historical and projected operating results and financial condition, including, but not limited to, net interest income, the amount and volatility of interest income and interest expense relative to changes in market conditions and interest rates, asset quality, levels of loan loss provisions, the amount and sources of non-interest income, and the amount of noninterest expense;

 

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the economic, demographic and competitive characteristics of our market area, including, but not limited to: employment by industry type, unemployment trends, size and growth of the population, trends in household and per capita income, and deposit market share;

 

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a comparative evaluation of our operating and financial statistics with those of other similarly-situated, publicly-traded savings associations and savings association holding companies, including a comparative analysis of balance sheet composition, income statement and balance sheet ratios, and credit and interest rate risk exposure;

 

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the effect of the capital raised in this offering on our net worth and earnings potential, including, but not limited to, the increase in consolidated equity resulting from the offering, the estimated increase in earnings resulting from the investment of the net proceeds of the offering, and the estimated impact on consolidated equity and earnings resulting from adoption of the proposed employee stock benefit plans; and

 

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the trading market for old Clifton common stock and securities of comparable institutions and general conditions in the market for such securities.

 

Four measures that some investors use to analyze whether a stock might be a good investment are the ratio of the offering price to the issuer’s “book value” and “tangible book value” and the ratio of the offering price to the issuer’s reported earnings and core earnings. RP Financial considered these ratios in preparing its appraisal, among other factors. Book value is the same as total equity and represents the difference between the issuer’s assets and liabilities. Tangible book value is equal to total equity minus intangible assets. Core earnings, for purposes of the appraisal, was defined as net earnings after taxes, excluding the after-tax portion of income from nonrecurring items. In applying each of the valuation methods, RP Financial considered adjustments to our pro forma market value based on a comparison of old Clifton with the peer group. RP Financial made slight upward adjustments for financial condition and asset growth and made slight downward adjustments for profitability, growth, viability of earnings, dividends, marketing of the issue and management. No adjustments were made for primary market area, liquidity of the shares and the effect of government regulations and regulatory reform.

In preparing its appraisal, RP Financial placed emphasis on the price-to-earnings and the price-to-book approaches, although it also considered the price-to-assets approach as required by applicable Federal Reserve Board regulations. The peer group consisted of ten publicly traded, fully converted, financial institution holding companies based in the eastern half of the United States, all selected based on asset size, capitalization, profitability and asset quality. The peer group included the following companies.

 

Company Name and Ticker Symbol		Exchange				Headquarters		Total Assets (1) (in millions)
Northfield Bancorp, Inc. (NFBK)			Nasdaq			Woodbridge, New Jersey		$	2,727
Bank Mutual Corp. (BKMU)			Nasdaq			Brown Deer, Wisconsin			2,333
First Connecticut Bancorp, Inc. (FBNK)			Nasdaq			Farmington, Connecticut			1,992
ESSA Bancorp, Inc. (ESSA)			Nasdaq			Stroudsburg, Pennsylvania			1,372
Westfield Financial, Inc. (WFD)			Nasdaq			Westfield, Massachusetts			1,271
Fox Chase Bancorp, Inc. (FXCB)			Nasdaq			Hatboro, Pennsylvania			1,107
Cape Bancorp, Inc. (CBNJ)			Nasdaq			Cape May Court House, New Jersey			1,051	(2)
Ocean Shore Holding Co. (OSHC)			Nasdaq			Ocean City, New Jersey			1,043
BSB Bancorp, Inc. (BLMT)			Nasdaq			Belmont, Massachusetts			1,023
TF Financial Corporation (THRD)			Nasdaq			Newtown, Pennsylvania			715	(2)

 

(1)	As of September 30, 2013, unless otherwise indicated.

(2)	As of June 30, 2013.

The following table presents a summary of selected pricing ratios for new Clifton based on financial data as of or for the twelve months ended September 30, 2013 and for the peer group companies as of and for the twelve months ended September 30, 2013 or the most recent date for which information is publicly available, and stock prices as of November 15, 2013, as reflected in the appraisal report.

 

		Price to Earnings Multiple				Price to Core Earnings Multiple				Price to Book Value Ratio				Price to Tangible Book Value Ratio
New Clifton (pro forma):
Minimum			42.07x				44.68x				73.15	%			73.15	%
Midpoint			50.17x				53.33x				80.13	%			80.13	%
Maximum			58.50x				62.24x				86.21	%			86.21	%
Peer group companies as of November 15, 2013:
Average			31.30x				31.68x				99.17	%			102.55	%
Median			25.89x				32.45x				100.73	%			101.94	%

Compared to the average pricing ratios of the peer group, at the midpoint of the offering range our common stock would be priced at a discount of 19.2% to the peer group on a price-to-book basis, a discount of 21.9% to the peer group on a price-to-tangible book basis, a premium of 60.3% on a price-to-earnings basis and a premium of 68.3% on a price-to-core earnings basis. This means that, at the midpoint of the offering range, a share of our common stock would be less expensive than the peer group on a book value and tangible book value basis and more expensive on a price-to-earnings and price-to-core earnings basis.

 

Our board of directors reviewed RP Financial’s appraisal report, including the methodology and the assumptions used by RP Financial, and determined that the valuation range was reasonable. Our board of directors has decided to offer the shares for a price of $10.00 per share. The purchase price of $10.00 per share was determined by us, taking into account, among other factors, the market price of our stock before adoption of the plan of conversion, the requirement under Federal Reserve Board regulations that the common stock be offered in a manner that will achieve the widest distribution of the stock, and the desired liquidity in the common stock after the offering. Our board of directors also established the formula for determining the exchange ratio. Based upon such formula and the offering range, the exchange ratio ranges from a minimum of 0.9097 to a maximum of 1.2307 shares of new Clifton common stock for each current share of old Clifton common stock, with a midpoint of 1.0702 shares. Based upon this exchange ratio, we expect to issue between 8,602,042 and 11,638,057 shares of new Clifton common stock to the holders of old Clifton common stock outstanding immediately before the completion of the conversion and offering.

Because of differences in important factors such as operating characteristics, location, financial performance, asset size, capital structure and business prospects between us and other fully converted institutions, you should not rely on these comparative valuation ratios as an indication as to whether or not our common stock is an appropriate investment for you. The appraisal is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing our common stock. You should not assume or expect that the appraisal described above means that our common stock will trade at or above the $10.00 purchase price after the offering.

Our board of directors makes no recommendation of any kind as to the advisability of purchasing shares of common stock in the offering.

The Exchange of Existing Shares of Old Clifton Common Stock

If you are a shareholder of old Clifton on the date we complete the conversion and offering, your existing shares will be canceled and exchanged for shares of new Clifton. The number of shares you will receive will be based on an exchange ratio determined as of the completion of the conversion and offering that is intended to result in old Clifton’s existing public shareholders owning approximately 35.4% of new Clifton’s common stock, which is the same percentage of old Clifton common stock currently owned by existing public shareholders as adjusted to reflect the assets of Clifton MHC. The following table shows how the exchange ratio will adjust, based on the number of shares sold in our offering. The table also shows how many shares a hypothetical owner of 100 shares of old Clifton common stock would receive in the exchange, based on the number of shares sold in the offering.

 

		Shares to be Sold in the Offering								Shares to be Exchanged for Existing Shares of Old Clifton								Total Shares of Common Stock to be Outstanding				Exchange Ratio				Equivalent Per Share Value (1)				Shares to be Received for 100 Existing Shares (2)
		Amount				Percent				Amount				Percent
Minimum			15,725,000				64.6	%			8,602,042				35.4	%			24,327,042				0.9097			$	9.10				90
Midpoint			18,500,000				64.6				10,120,050				35.4				28,620,050				1.0702				10.70				107
Maximum			21,275,000				64.6				11,638,057				35.4				32,913,057				1.2307				12.31				123

 

(1)	Represents the value of shares of new Clifton common stock received in the conversion by a holder of one share of old Clifton common stock at the exchange ratio, assuming a market price of $10.00 per share.

(2)

Cash will be paid instead of issuing any fractional shares. No fractional shares of new Clifton common stock will be issued in the conversion and offering. For each fractional share that would otherwise be issued, we will pay cash in an amount equal to the product obtained by multiplying the fractional share interest to which the holder would otherwise be entitled by the $10.00 per share offering price.

We also will convert options previously awarded under old Clifton’s 2005 Equity Incentive Plan into options to purchase new Clifton common stock. At September 30, 2013, there were outstanding options to purchase 1,376,823 shares of old Clifton common stock. The number of outstanding options and related per share exercise prices will be adjusted based on the exchange ratio. The aggregate exercise price, term and vesting period of the outstanding options will remain unchanged. If any options are exercised before we complete the offering, the number of shares of old Clifton common stock outstanding will increase and the exchange ratio would be adjusted.

 

How We Intend to Use the Proceeds of this Offering

The following table summarizes how we intend to use the proceeds of the offering, based on the sale of shares at the minimum and maximum of the offering range.

 

(In thousands)		15,725,000 Shares at $10.00 Per Share				21,275,000 Shares at $10.00 Per Share
Offering proceeds		$	157,250			$	212,750
Less: offering expenses			2,806				3,328
Net offering proceeds			154,444				209,422
Less:
Proceeds contributed to Clifton Savings Bank			77,222				104,711
Proceeds used for loan to employee stock ownership plan			9,435				12,765
Proceeds retained by new Clifton		$	67,787			$	91,946

Initially, we intend to invest the proceeds of the offering in short-term investments. In the future, new Clifton may use the funds it retains to invest in securities, pay cash dividends, repurchase shares of its common stock, subject to regulatory restrictions, or for general corporate purposes. Over time, Clifton Savings Bank intends to use the portion of the proceeds that it receives to fund new loans or purchase loans in our market area. The amount of time that it will take to deploy the proceeds of the offering into loans will depend primarily on the level of loan demand. We may also use the proceeds of the offering to diversify our business or acquire other companies as opportunities arise, although we have no specific plans to do so at this time.

Purchases by Directors and Executive Officers

We expect that our directors and executive officers, together with their associates, will subscribe for approximately 99,000 shares. Our directors and executive officers will pay the same $10.00 per share price as everyone else who purchases shares in the offering. Like all of our depositors, our directors and executive officers have subscription rights based on their deposits and, in the event of an oversubscription, their orders will be subject to the allocation provisions set forth in our plan of conversion. Purchases by our directors and executive officers will count towards the minimum number of shares we must sell to close the offering. Following the conversion and offering, and including shares received in exchange for shares of old Clifton, our directors and executive officers, together with their associates, are expected to own             shares of new Clifton common stock, which would equal     % of our outstanding shares if shares are sold at the midpoint of the offering range.

Benefits of the Conversion to Management

We intend to expand our employee stock ownership plan and adopt a new equity incentive plan.

Employee Stock Ownership Plan. Our employee stock ownership plan intends to purchase an amount of shares equal to 6.0% of the shares sold in the offering. The plan will use the proceeds from a 20-year loan from new Clifton to purchase these shares. We reserve the right to purchase shares of common stock in the open market following the offering to fund all or a portion of the employee stock ownership plan. As the loan is repaid and shares are released from collateral, the shares will be allocated to the accounts of employee participants. Allocations will be based on a participant’s individual compensation as a percentage of total plan compensation. Non-employee directors are not eligible to participate in the employee stock ownership plan. We will incur additional compensation expense as a result of this plan. See “Pro Forma Data” for an illustration of the effects of this plan.

New Equity Incentive Plan. We intend to implement a new equity incentive plan no earlier than six months after completion of the conversion and offering. We will submit this plan to our shareholders for their approval. If we implement the plan within one year after the conversion, we may grant stock options in an amount up to 10.0% of the number of shares sold in the offering and restricted stock awards in an amount equal to 4.0% of the shares sold in the offering. Stock options will be granted at an exercise price equal to 100% of the fair market value of our common stock

 

on the option grant date. Shares of restricted stock will be awarded at no cost to the recipient. We will incur additional compensation expense as a result of this plan. See “Pro Forma Data” for an illustration of the effects of this plan. The equity incentive plan may award a greater number of options and restricted stock awards if the plan is adopted after one year from the date of the completion of the conversion. We have not yet determined when we will present the plan for stockholder approval and we have not yet determined the number of shares that would be reserved for issuance under this plan. The new equity incentive plan will comply with all applicable Federal Reserve Board regulations. Our existing 2005 Equity Incentive Plan will continue as a plan of new Clifton.

Potential Dilution And Increased Compensation Costs Related To Equity Benefit Plans . The following table summarizes, at the maximum of the offering range, the total number and value of the shares of common stock that the employee stock ownership plan expects to acquire and the total value of all restricted stock awards and stock options that are expected to be available under the new equity incentive plan (assuming the equity incentive plan is implemented within one year following completion of the conversion). The equity incentive plan may award a greater number of options and restricted stock awards if the plan is adopted more than one year after completion of the conversion.

 

		Number of Shares to be Granted or Purchased								Dilution Resulting from the Issuance of Shares for Stock Benefit Plans				Total Estimated Value At Maximum of Offering Range
(Dollars in thousands)		At Maximum of Offering Range				As a Percentage of Common Stock to be Issued in the Offering (3)
Employee stock ownership plan (1)			1,276,500				6.00	%			—	%		$	12,765
Restricted stock awards (1)			851,000				4.00				2.52				8,510
Stock options (2)			2,127,500				10.00				6.07				4,319
Total			4,255,000				20.00	%			8.59	%		$	25,594

 

(1)	Assumes the value of new Clifton common stock is $10.00 per share for determining the total estimated value.

(2)	Assumes the value of a stock option at the date of grant is $2.03. See “ Pro Forma Data .”

(3)	At the maximum of the offering range we will sell 21,275,000 shares.

We may fund our plans through open market purchases rather than new issuances of common stock; however, if any options previously granted under our 2005 Equity Incentive Plan are exercised during the first year following completion of the offering, they will be funded with newly-issued shares as Federal Reserve Board regulations do not permit us to repurchase our shares during the first year following the completion of this offering except to fund the grants of restricted stock under the stock-based incentive plan or, with prior regulatory approval, under extraordinary circumstances. The Federal Reserve Board has previously advised that the exercise of outstanding options and cancellation of treasury shares in the conversion will not constitute an extraordinary circumstance or a compelling business purpose for satisfying this test.

 

The following table presents information regarding our existing employee stock ownership plan, options and restricted stock previously awarded or available for future awards under our 2005 Equity Incentive Plan, additional shares purchased by our employee stock ownership plan, and our proposed new equity incentive plan. The table below assumes that 32,913,057 shares are outstanding after the offering, which includes the sale of 21,275,000 shares in the offering at the maximum of the offering range and the issuance of 11,638,057 shares in exchange for shares of old Clifton using an exchange ratio of 1.2307. It is also assumed that the value of the stock is $10.00 per share.

 

Existing and New Stock Benefit Plans		Eligible Participants		Number of Shares at Maximum of Offering Range				Estimated Value of Shares				Percentage of Shares Outstanding After the Conversion and Offering
				(Dollars in thousands)
Employee Stock Ownership Plan:		Employees
Shares purchased in 2004 offering (1)					1,352,659	(2)		$	13,527				4.11	%
Shares to be purchased in this offering					1,276,500				12,765				3.88
Total employee stock ownership plan					2,629,159			$	26,292				7.99	%
Restricted Stock Awards:		Directors and employees
2005 Equity Incentive Plan (1)					736,447	(3)		$	7,364	(4)			2.24	%
New shares of restricted stock					851,000				8,510	(4)			2.59
Total shares of restricted stock					1,587,447			$	15,874				4.82	%
Stock Options:		Directors and employees
2005 Equity Incentive Plan (1)					1,841,119	(5)		$	3,737	(6)			5.59	%
New stock options					2,127,500				4,319	(7)			6.46
Total stock options					3,968,619			$	8,056				12.06	%
Total stock benefit plans					8,185,224			$	50,222				24.87	%

 

(1)	Number of shares has been adjusted for the 1.2307 exchange ratio at the maximum of the offering range.

(2)	As of September 30, 2013, of these shares,              (            before adjustment) have been allocated to the accounts of participants.

(3)	As of September 30, 2013, of these shares,              (            before adjustment) have been awarded and              (            before adjustment) remain available for future awards.

(4)	The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value is assumed to be the same as the offering price of $10.00 per share.

(5)

As of September 30, 2013, of these shares, options for              shares (             shares before adjustment) have been awarded and options for              shares (             shares before adjustment) remain available for future grants. As of September 30, 2013,              options had been exercised.

(6)

The fair value of stock options granted and outstanding under the 2005 Equity Incentive Plan has been estimated using the Black-Scholes option pricing model. Before the adjustment for the exchange ratio, there were             outstanding options with a weighted average fair value of $        per option and             outstanding options with a weighted average fair value of $        per option. Using this value and adjusting for the exchange ratio at the maximum of the offering range, the fair value of stock options granted or available for grant under the 2005 Equity Incentive Plan has been estimated at $        per option.

(7)

For purposes of this table, the fair value of stock options to be granted under the new equity incentive plan has been estimated at $2.03 per option using the Black-Scholes option pricing model with the following assumptions: exercise price, $10.00; trading price on date of grant, $10.00; dividend yield, 2.00%; expected life, 6.5 years; expected volatility, 23.31%; and risk-free interest rate, 1.91%.

 

Persons Who Can Order Stock in the Subscription Offering

We are offering shares of new Clifton common stock in a subscription offering to the following persons in the following order of priority:

 

1.

Persons with $50 or more on deposit at Clifton Savings Bank as of the close of business on September 30, 2012.

 

2.

Our employee stock ownership plan.

 

3.

Persons with $50 or more on deposit at Clifton Savings Bank as of the close of business on December 31, 2013 who are not eligible in category 1 above.

 

4.

Clifton Savings Bank’s depositors as of the close of business on                      who are not in categories 1 or 3 above and borrowers as of March 3, 2004 whose loans continue to be outstanding at                     .

Shares of common stock not purchased in the subscription offering will be offered for sale to the general public in a community offering, with a preference given first to natural persons (including trusts of natural persons) residing in the New Jersey Counties of Bergen, Passaic, Essex, Morris, Hudson and Union. To the extent shares of common stock remain available, we will also offer the shares to old Clifton’s public stockholders as of                     . The community offering may begin concurrently with, or any time after, the subscription offering. We also may offer for sale shares of common stock not purchased in the subscription offering or the community offering through a syndicated offering, which would be an offering to the general public on a best efforts basis by a syndicate of selected broker-dealers. Instead of a syndicated offering, shares not purchased in the subscription offering or the community offering may be sold in a firm commitment underwritten offering. Sandler O’Neill & Partners, L.P. will act as sole book-running manager for any syndicated offering or firm commitment underwritten offering. We have the right to accept or reject, in our sole discretion, orders received in the community offering or in a syndicated offering. Any determination to accept or reject stock orders in the community offering or any syndicated offering will be based on the facts and circumstances available to management at the time of the determination.

If we receive subscriptions for more shares than are to be sold in this offering, we may be unable to fill or may only partially fill your order. Shares will be allocated in order of the priorities described above under a formula outlined in the plan of conversion. See “ The Conversion and Offering—Subscription Offering and Subscription Rights ” for a description of the allocation procedure.

Subscription Rights are Not Transferable

You are not allowed to transfer your subscription rights and we will act to ensure that you do not do so. You will be required to certify that you are purchasing shares solely for your own account and that you have no agreement or understanding with another person to sell or transfer subscription rights or the shares that you purchase. We will not accept any stock orders that we believe involve the transfer of subscription rights. Eligible depositors and borrowers who enter into agreements to allow ineligible investors to participate in the subscription offering may be violating federal and state law and may be subject to civil enforcement actions or criminal prosecution.

Purchase Limitations

Pursuant to our plan of conversion, our board of directors has established limitations on the purchase of common stock in the offering. These limitations include the following:

 

•

The minimum purchase is 25 shares.

 

•

No individual (or individuals exercising subscription rights through a single qualifying deposit account held jointly) may purchase more than 100,000 shares of common stock in all categories of the stock offering combined.

 

•

No individual together with any associates and no group of persons acting in concert may purchase more than 200,000 shares of common stock in all the categories of the stock offering combined. For purposes of applying this limitation, your associates include:

 

•

Any person who is related by either blood or marriage to you and who lives in your home or who is a director or senior officer of Clifton MHC, old Clifton or Clifton Savings Bank;

 

•

Companies or other entities in which you are a senior officer or partner or have a 10% or greater beneficial ownership interest; and

 

•

Trusts or other estates in which you have a substantial beneficial interest or as to which you serve as a trustee or in another fiduciary capacity.

 

•

No individual together with any associates and no group of persons acting in concert may purchase shares of common stock so that, when combined with shares of new Clifton common stock received in exchange for shares of old Clifton common stock, such person or persons would hold more than 9.9% of the number of shares of new Clifton common stock outstanding upon completion of the conversion and offering. No person will be required to divest any shares of old Clifton common stock or be limited in the number of shares of new Clifton to be received in exchange for shares of old Clifton common stock as a result of this purchase limitation. However, you will be required to obtain the approval or non-objection of the Federal Reserve Board prior to acquiring 10% or more of new Clifton’s common stock.

We may increase or decrease the purchase limitations at any time subject to the Federal Reserve Board’s approval. If we increase the maximum purchase limitation to 5% of the shares of common stock sold in the offering, we may further increase the maximum purchase limitation to 9.99%, provided that orders for common stock exceeding 5% of the shares of common stock sold in the offering may not exceed in the aggregate 10% of the total shares of common stock sold in the offering. Our tax-qualified employee benefit plans, including our employee stock ownership plan, are authorized to purchase up to 10% of the shares sold in the offering, without regard to these purchase limitations.

Conditions to Completing the Conversion and Offering

We cannot complete the conversion and offering unless:

 

•

the plan of conversion is approved by at least a majority of the votes eligible to be cast by depositors and certain borrowers of Clifton Savings Bank;

 

•

the plan of conversion is approved by the holders of at least two-thirds of the outstanding shares of old Clifton, including the shares held by Clifton MHC;

 

•

the plan of conversion is approved by the holders of at least a majority of the outstanding shares of old Clifton, excluding the shares held by Clifton MHC;

 

•

we sell at least the minimum number of shares offered; and

 

•

we receive the final approval of the Federal Reserve Board to complete the conversion and offering.

Clifton MHC, which owns 64.0% of the outstanding shares of old Clifton, intends to vote its shares in favor of the plan of conversion. In addition, as of                     , 2014, directors and executive officers of old Clifton and their associates beneficially owned              shares of old Clifton, representing     % of the outstanding shares. They intend to vote those shares in favor of the plan of conversion.

Steps We May Take if We Do Not Receive Orders for the Minimum Number of Shares

We must sell a minimum of 15,725,000 shares to complete the conversion and offering. Purchases by our directors and executive officers and our employee stock ownership plan will count towards the minimum number of shares we must sell to complete the offering. If we do not receive orders for at least 15,725,000 shares of common stock in the subscription, community and/or syndicated offering or firm commitment underwritten offering, we may increase the purchase limitations and/or seek regulatory approval to extend the offering beyond [DATE2] , 2014 (provided that any such extension will require us to resolicit subscribers). Alternatively, we may terminate the offering, in which case we will promptly return your funds with interest calculated at Clifton Savings Bank’s passbook savings rate, which is currently     % per annum, and cancel all deposit account withdrawal authorizations.

 

How to Purchase Common Stock

In the subscription offering and the community offering, you may pay for your shares by:

 

1.

personal check, bank check or money order made payable directly to “Clifton Bancorp Inc.” (Clifton Savings Bank line of credit checks and third-party checks of any type will not be accepted); or

 

2.

authorizing us to withdraw money from the types of Clifton Savings Bank deposit accounts identified on the stock order form.

Clifton Savings Bank is not permitted to lend funds (including funds drawn on a Clifton Savings Bank line of credit) to anyone to purchase shares of common stock in the offering.

You may not designate on your stock order form a direct withdrawal from a retirement account at Clifton Savings Bank. Additionally, you may not designate on your stock order form a direct withdrawal from Clifton Savings Bank accounts with check-writing privileges. Instead, a check must be provided.

Personal checks will be immediately cashed, so the funds must be available within the account when your stock order form is received by us. Subscription funds submitted by check or money order will be held in a segregated account at Clifton Savings Bank until completion or termination of the offering. We will pay interest calculated at Clifton Savings Bank’s passbook savings rate from the date those funds are received until completion or termination of the offering. Withdrawals from certificate of deposit accounts to purchase common stock in the offering may be made without incurring an early withdrawal penalty. All funds authorized for withdrawal from deposit accounts with Clifton Savings Bank must be available within the deposit accounts at the time the stock order form is received. A hold will be placed on the amount of funds designated on your stock order form. Those funds will be unavailable to you during the offering; however, the funds will not be withdrawn from the accounts until the offering is completed and will continue to earn interest at the applicable contractual deposit account rate until the completion of the offering.

You may deliver your stock order form in one of three ways: by mail, using the stock order reply envelope provided, by overnight delivery to the address indicated on the stock order form, or by hand-delivery to the Stock Information Center, which is located at                     . Stock order forms will not be accepted at any Clifton Savings Bank offices. Once submitted, your order is irrevocable. We are not required to accept copies or facsimiles of order forms.

Using IRA Funds to Purchase Shares in the Offering

You may be able to subscribe for shares of common stock using funds in your individual retirement account(s), or IRA. If you wish to use some or all of the funds in your Clifton Savings Bank IRA or other retirement account, the applicable funds must first be transferred to a self-directed retirement account maintained by an unaffiliated institutional trustee or custodian, such as a brokerage firm. An annual fee may be payable to the new trustee. If you do not have such an account, you will need to establish one and transfer your funds before placing your stock order. Our Stock Information Center can give you guidance if you wish to place an order for stock using funds held in a retirement account at Clifton Savings Bank or elsewhere. Because processing retirement account transactions takes additional time, we recommend that you contact our Stock Information Center promptly, preferably at least two weeks before the [DATE1] , 2014 offering deadline. Whether you may use retirement funds for the purchase of shares in the offering will depend on timing constraints and, possibly, limitations imposed by the institution where the funds are held.

Deadline for Ordering Stock in the Subscription and Community Offerings

The subscription offering will end at     :    p.m., Eastern time, on [DATE1] , 2014. If you wish to purchase shares, a properly completed and signed original stock order form, together with full payment for the shares of common stock, must be received (not postmarked) no later than this time. The community offering, if held, may terminate at the same time, although it may continue until [DATE2] , 2014, or longer if the Federal Reserve Board approves a later date. No single extension may be for more than 90 days. We are not required to provide notice to you of an extension unless we extend the offering beyond [DATE2] , 2014, in which case all subscribers in the subscription and community offerings

 

will be notified and given the opportunity to confirm, change or cancel their orders. If no response is received, we will promptly return your funds with interest calculated at Clifton Savings Bank’s passbook savings rate or cancel your deposit account withdrawal authorization. If we intend to sell fewer than 15,725,000 shares or more than 21,275,000 shares, we will promptly return all funds and set a new offering range. All subscribers will be notified and given the opportunity to place a new order.

Market for New Clifton’s Common Stock

Old Clifton’s common stock currently trades on the Nasdaq Global Select Market under the symbol “CSBK,” and we expect the shares of new Clifton’s common stock will also trade on the Nasdaq Global Select Market under the symbol “CSBK.” After shares of the common stock begin trading, you may contact a stock broker to buy or sell shares. There can be no assurance that persons purchasing the common stock in the offering will be able to sell their shares at or above the $10.00 offering price, and brokerage firms typically charge commissions related to the purchase or sale of securities.

Our Dividend Policy

After the completion of the conversion, we intend to pay cash dividends on a quarterly basis. Initially, we expect the quarterly dividends to be $0.05 per share, which equals $0.20 per share on an annualized basis and an annual yield of 2.0% based on a price of $10.00 per share. The dividend rate and our ability to continue to pay dividends will depend on a number of factors, including our capital requirements, our financial condition and results of operations, tax considerations, statutory and regulatory limitations and general economic conditions. No assurance can be given that we will continue to pay dividends or that they will not be reduced or eliminated in the future.

Tax Consequences

As a general matter, the conversion will not be a taxable transaction for purposes of federal or state income taxes to us or persons who receive or exercise subscription rights. Existing shareholders of old Clifton who receive cash in lieu of fractional share interests in shares of new Clifton will recognize gain or loss equal to the difference between the cash received and the tax basis of the fractional share. Kilpatrick Townsend & Stockton LLP and BDO USA, LLP have issued us opinions to this effect. See “The Conversion and Offering—Material Income Tax Consequences.”

Book Entry Delivery

All shares of common stock sold will be issued in book entry form. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock issued in the subscription and community offerings or in any syndicated offering will be mailed by our transfer agent to the persons entitled thereto at the registration address noted by them on their stock order forms as soon as practicable following consummation of the conversion and offering. We expect trading in the stock to begin on the day of completion of the conversion and offering or the next business day. The conversion and offering are expected to be completed as soon as practicable following satisfaction of the conditions described above in “—Conditions to Completing the Conversion and Offering.” It is possible that until a statement reflecting ownership of shares of common stock is available and delivered to purchasers, purchasers might not be able to sell the shares of common stock that they purchased, even though the common stock will have begun trading. Your ability to sell your shares of common stock before receiving your statement will depend on arrangements you may make with a brokerage firm.

Stock Information Center

Our banking office personnel may not, by law, assist with investment-related questions about the offering. If you have any questions regarding the offering, please call our Stock Information Center. The telephone number is                     . The Stock Information Center is open Monday through Friday from     :     a.m. to     :     p.m., Eastern time. The Stock Information Center will be closed weekends and bank holidays.