SOURCE: Stewardship Financial Corporation

February 08, 2010 16:01 ET

Stewardship Financial Corporation Reports Earnings for the Year Ended December 31, 2009

MIDLAND PARK, NJ--(Marketwire - February 8, 2010) - Stewardship Financial Corporation (NASDAQ: SSFN), the holding company for Atlantic Stewardship Bank, reported net income for the year ended December 31, 2009 of $3.6 million, or $0.54 per diluted common share, compared to net income of $3.5 million, or $0.60 per diluted common share, for the year ended December 31, 2008. For the three months ended December 31, 2009 net income was $774,000, or $0.11 per diluted common share, compared to net income of $423,000, or $0.07 per diluted common share, for the same prior year period. All per share calculations have been adjusted for 5% stock dividends paid in November 2009 and 2008.

"We are pleased to report that Stewardship Financial Corporation had another profitable year despite facing economic and unprecedented challenges in 2009," said Paul Van Ostenbridge, President and Chief Executive Officer. Positives for 2009 included effective cost control efforts, a relatively stable net interest margin, strong levels of noninterest income, robust core deposit growth and a solid investment portfolio. The effects of increases in net interest income and noninterest income, including gains from the sale of mortgages, were largely offset by increased costs associated with Federal Deposit Insurance Corporation (FDIC) deposit insurance premiums.

The Corporation reported net interest income for the year ended December 31, 2009 of $23.3 million, representing an increase of 4.7% over the comparable prior year amount. Net interest income and margin remained strong during 2009 as a result of proactively managing funding costs in an effort to mitigate the lower asset yields attributable to historically low market rates. The reported net interest spread and margin for the year ended December 31, 2009 of 3.45% and 3.89%, respectively, were comparable to the net interest spread and margin of 3.43% and 4.00%, respectively, for the prior year.

For both the years ended December 31, 2009 and 2008 the Corporation recorded a provision for loan losses amounting to $3.6 million. While the provision for loan losses in 2008 was a direct result of problems related to a few commercial credit facilities, the current year provision for loan losses is reflective of current economic conditions that have contributed to an increase in loan delinquencies and the softness in the real estate market. At December 31, 2009, the total allowance for loan losses amounted to $6.9 million, or 1.50% of total loans, as compared to $5.2 million, or 1.18% of total loans, at December 31, 2008.

Van Ostenbridge commented, "Asset quality issues, caused by the economic downturn which began in 2008, were a major area of concern for all of 2009." Non-performing loans amounted to 4.98% of total loans at December 31, 2009 compared to 1.46% at December 31, 2008. Van Ostenbridge went on to state, "To address credit issues and help maintain profitability going forward, management has been diligent in efforts to identify and resolve nonperforming loans."

At the end of 2008, the Corporation sold its merchant servicing portfolio and, as a result, a decline in both noninterest income and noninterest expense is reflected for the year ended December 31, 2009.

As a result of increased attention to controlling operating costs, noninterest expense declined in 2009 when compared to 2008. However, offsetting decreases in certain expense line items was a significant increase in FDIC insurance premiums for all insured financial institutions. In addition to an industry-wide increase in regular assessment rates, FDIC insurance premiums include a $300,000 special FDIC assessment imposed during 2009.

At December 31, 2009 total assets were $663.8 million, compared to $611.8 million at December 31, 2008. The securities available for sale and held to maturity portfolios together increased $31.9 million, primarily reflecting the leverage strategy undertaken to invest the $10 million in funds raised through the issuance of preferred stock under the Capital Purchase Program (the "CPP"). Despite a difficult economic environment, gross loans receivable grew $20.8 million, or 4.7%, to $460.5 million at December 31, 2009. Included in assets at December 31, 2009 was approximately $3.2 million for the FDIC mandated prepayment of insurance premiums representing estimated FDIC assessments through December 31, 2012, which will be reduced over the next three years as actual FDIC assessments are incurred.

Deposits totaled $529.9 million at December 31, 2009. Deposits at December 31, 2008 of $506.5 million included $30.7 million of brokered CDs. After the payoff of these brokered CDs, growth in core customer deposits totaled $54.1 million, or over 11%. The early 2009 introduction of our new Power Rate checking product was a primary driving force in the growth in deposits. This new account pays a premium rate of interest and refunds ATM fees charged by other financial institutions. In return, the customer has simple monthly qualification factors such as enrolling in online banking with electronic statements and minimum levels of debit card usage.

Total stockholders' equity at December 31, 2009 of $53.5 million includes the increase from the $10 million received on January 30, 2009 under the CPP. Van Ostenbridge summarized, "While we remain guardedly optimistic about improvement in the economy and stabilization of real estate values, the Corporation's strong capital position provides us with the ability to withstand further challenges. In addition to our standard objectives of growing core deposits and lending those funds in our communities, and the resolution of credit issues, the Corporation has been investing in new products and services to meet the increasingly sophisticated needs of our commercial and retail customers."

Stewardship Financial Corporation's subsidiary, the Atlantic Stewardship Bank, has 13 banking offices in Midland Park, Hawthorne (2), Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (3), Westwood and Wyckoff, New Jersey. The bank is known for tithing 10% of its pre-tax profits to Christian and local charities. The Bank's Tithe amounts to $7.0 million in total donations since the program began.

We invite you to visit our website at www.asbnow.com for additional information.

The information disclosed in this document contains certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as "believe," "expect," "anticipate," "should," "plan," "estimate," and "potential." Examples of forward looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of the Corporation that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include: changes in general, economic and market conditions, legislative and regulatory conditions, or the development of an interest rate environment that adversely affects the Corporation's interest rate spread or other income anticipated from operations and investments.

                Selected Consolidated Financial Information
             (dollars in thousands, except per share amounts)
                                (unaudited)


                               December 31,   September 30,  December 31,
                                   2009           2009           2008
                               -------------  -------------  -------------
Selected Financial Condition
 Data:
  Cash and cash equivalents    $       8,871  $      13,646  $      12,814
  Securities available for sale      103,026         90,460         90,023
  Securities held to maturity         67,717         75,232         48,856
  FHLB Stock                           3,227          3,195          2,420
  Loans receivable:
    Loans receivable, gross          460,476        451,242        439,656
    Allowance for loan losses         (6,920)        (7,249)        (5,166)
    Other, net                          (437)          (441)          (387)
                               -------------  -------------  -------------
  Loans receivable, net              453,119        443,552        434,103

  Loans held for sale                    660          1,018            394
  Other assets                        27,224         22,518         23,206
                               -------------  -------------  -------------
  Total assets                 $     663,844  $     649,621  $     611,816
                               =============  =============  =============


  Total deposits               $     529,930  $     514,612  $     506,531
  Other borrowings                    54,600         53,900         36,900
  Subordinated debentures              7,217          7,217          7,217
  Securities sold under
   agreements to repurchase           15,396         16,019         15,160
  Other liabilities                    3,190          3,801          3,212
  Stockholders' equity                53,511         54,072         42,796
                               -------------  -------------  -------------
  Total liabilities and
   stockholders' equity        $     663,844  $     649,621  $     611,816
                               =============  =============  =============

  Book value per common share  $        7.50  $        7.60  $        7.31

  Equity to assets                      8.06%          8.32%          6.99%

Asset Quality Data:
  Nonaccrual loans             $      19,656  $      14,536  $       4,230
  Loans past due 90 days or more
   and accruing                          415            728            353
  Restructured loans                   2,846          2,417          1,855
                               -------------  -------------  -------------
  Total nonperforming loans    $      22,917  $      17,681  $       6,438
                               =============  =============  =============

  Non-performing loans to total
   loans                                4.98%          3.92%          1.46%
  Non-performing loans to total
   assets                               3.45%          2.72%          1.05%
  Allowance for loan losses to
   nonperforming loans                 30.20%         41.00%         80.24%
  Allowance for loan losses to
   total gross loans                    1.50%          1.61%          1.18%


All share data has been restated to include the effects of a 5% stock
dividend paid in November 2009.




                    Stewardship Financial Corporation
                Selected Consolidated Financial Information
             (dollars in thousands, except per share amounts)
                                (unaudited)


                    For the three months ended      For the year ended
                           December 31,                December 31,
                    --------------------------  --------------------------
                        2009          2008          2009          2008
                    ------------  ------------  ------------  ------------
Selected Operating
 Data:
  Interest income   $      8,531  $      8,797  $     34,156  $     35,074
  Interest expense         2,580         3,022        10,811        12,771
                    ------------  ------------  ------------  ------------
    Net interest
     and dividend
     income                5,951         5,775        23,345        22,303
  Provision for
   loan losses             1,200         2,050         3,575         3,585
                    ------------  ------------  ------------  ------------
  Net interest and
   dividend income
   after provision
   for loan
   losses                  4,751         3,725        19,770        18,718

  Noninterest
   income:
    Fees and service
     charges                 485           266         1,847         1,333
    Bank owned life
     insurance                84            82           322           326
    Gain on sales
     of mortgage
     loans                    22            37           294           193
    Gain on calls
     and sales of
     securities                3            42           258           103
    Merchant
     processing                -           347           118         1,417
    Gain on sale of
     merchant
     portfolio                 -           509             -           509
    Other                     62            47           294           336
                    ------------  ------------  ------------  ------------
    Total
     noninterest
     income                  656         1,330         3,133         4,217

  Noninterest
   expenses:
    Salaries and
     employee
     benefits              2,000         2,051         8,264         8,129
    Occupancy, net           460           448         1,858         1,802
    Equipment                292           285         1,087         1,127
    Data processing          336           312         1,218         1,209
    FDIC insurance
     premium                 238            94         1,124           317
    Charitable
     contributions           208           153           619           627
    Merchant
     processing                -           314           108         1,258
    Other                    818           926         3,512         3,517
                    ------------  ------------  ------------  ------------
    Total
     noninterest
     expenses              4,352         4,583        17,790        17,986
                    ------------  ------------  ------------  ------------
  Income before
   income tax expense      1,055           472         5,113         4,949
  Income tax expense         281            49         1,479         1,448
                    ------------  ------------  ------------  ------------
  Net income                 774           423         3,634         3,501
  Dividends on
   preferred stock
   and accretion             137             -           504             -
                    ------------  ------------  ------------  ------------
  Net income
   available to
   common
   stockholders     $        637  $        423  $      3,130  $      3,501
                    ============  ============  ============  ============

  Weighted avg. no.
   of diluted common
   shares              5,838,262     5,854,713     5,838,262     5,865,126
  Diluted earnings
   per common share $       0.11  $       0.07  $       0.54  $       0.60

  Return on average
   common equity            4.64%         3.99%         5.92%         8.34%

  Return on average
   assets                   0.47%         0.28%         0.57%         0.58%

  Yield on average
   interest-earning
   assets                   5.52%         6.06%         5.65%         6.23%
  Cost of average
   interest-bearing
   liabilities              2.06%         2.57%         2.20%         2.80%
                    ------------  ------------  ------------  ------------
  Net interest rate
   spread                   3.46%         3.49%         3.45%         3.43%
                    ============  ============  ============  ============

  Net interest margin       3.88%         3.99%         3.89%         4.00%


All share data has been restated to include the effects of a 5% stock
dividend paid in November 2009.

Contact Information

  • Contact:
    Claire M. Chadwick
    SVP and Chief Financial Officer
    630 Godwin Avenue
    Midland Park, NJ 07432
    201-444-7100