SOURCE: Stewardship Financial Corporation

May 03, 2010 16:01 ET

Stewardship Financial Corporation Reports Earnings for the First Quarter of 2010

MIDLAND PARK, NJ--(Marketwire - May 3, 2010) - Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, announced today its financial results for the first quarter ended March 31, 2010. Net income for the three months ended March 31, 2010 was $871,000, or $0.13 per diluted common share, as compared to net income of $1.2 million, or $0.19 per diluted common share, for the three months ended March 31, 2009. Results for the current year period include an increased provision for loan losses. All per share calculations have been adjusted for a 5% stock dividend paid in November 2009.

"While our earnings were again impacted by the provision for loan losses," said Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, "positives for the quarter included an increase in net interest income as well as an increase in fees and service charges, and effective management of noninterest expenses."

Net interest income grew $581,000, or 10.4%, in the first quarter of 2010 compared to last year. For the three months ended March, 31, 2010, the net interest spread and margin grew to 3.74% and 4.08%, respectively, from 3.42% and 3.87%, respectively, for the three months ended March 31, 2009. The current period yield on earning assets of 5.58%, compared to an earning asset yield of 5.81% for the three months ended March 31, 2009, reflects the effect of a prolonged low interest rate environment. More than offsetting the decline in the asset yield, the cost of interest-bearing liabilities declined to 1.84% for the three months ended March 31, 2010 as compared to 2.39% reported for the same prior year period, principally reflecting the repricing of deposits at lower rates, consistent with the lower interest rate environment.

The Corporation recorded a $1.55 million provision for loan losses for the three months ended March 31, 2010 compared to a provision for loan losses of $150,000 for the March 2009 period. The total allowance for loan losses increased to 1.77% of total loans from a comparable ratio of 1.50% at December 31, 2009 and 1.22% at March 31, 2009, reflecting the continuing uncertain economic environment.

Commenting on the Corporation's loan loss provision, Van Ostenbridge stated, "While the results of our reserve analysis process required us to increase the provision for loan losses, our team continues to work diligently to assertively address problem and potential problem loans. We are making progress in working through these problem assets and the current difficult economic cycle." Van Ostenbridge continued, "While additional problem loans emerged, we were encouraged by our ability during the current quarter to resolve several of the problem loans existing at December 31, 2009." Non-performing loans declined slightly to $22.3 million, or 4.83% of total loans at March 31, 2010, compared to $22.9 million, or 4.98% at December 31, 2009.

During the first quarter of 2010, the Corporation realized a $328,000 gain on sale of securities. The security sale addressed the anticipated impact of rising interest rates and provided the Corporation with additional liquidity. In addition, noninterest income included increased fees and service charges when compared to the same period last year. This increase is partially the result of higher debit card related income due to increased customer usage.

Effective expense management was demonstrated by only a slight increase in total noninterest expenses in comparison to the first quarter of 2009.

Total assets at March 31, 2010 were $662.2 million, relatively unchanged from assets of $663.8 million at December 31, 2009. A $9.1 million decrease in the securities available for sale is primarily attributable to the sale of securities as discussed previously. Loans receivable, gross increased $1.4 million from December 31, 2009, reflecting a sufficient level of demand offset by payoffs and normal principal amortization. The Corporation adheres to appropriate underwriting standards to ensure the origination of quality loans.

Total deposits were $542.9 million at March 31, 2010, representing solid growth of $13.0 million when compared to deposits of $529.9 million at December 31, 2009. The growth in deposits consisted of both interest-bearing and non-interest bearing accounts, demonstrating appropriate product offerings. As a result of the deposit growth, other borrowings were reduced $18.6 million since December 31, 2009.

Van Ostenbridge concluded, "During this challenging time for the banking industry, our philosophy has been, and continues to be, to manage the net interest margin without compromising asset quality or future earnings potential. For the near term, the size and extent of our loan loss provisioning will remain the most important single factor in our earnings. However, we believe that with stabilization in our credit quality and a rebound in overall economic activity, we are well positioned for future growth."

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 over $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.

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


                                 March 31,    December 31,     March 31,
                                   2010           2009           2009
                               -------------  -------------  -------------

Selected Financial Condition
 Data:
    Cash and cash equivalents  $      12,196  $       8,871  $      11,820
    Securities available for
     sale                             93,926        103,026        106,577
    Securities held to
     maturity                         70,758         67,717         70,842
    FHLB Stock                         2,390          3,227          3,032
    Loans receivable:
          Loans receivable,
           gross                     461,877        460,476        437,196
          Allowance for loan
           losses                     (8,174)        (6,920)        (5,324)
          Other, net                    (422)          (437)          (405)
                               -------------  -------------  -------------
    Loans receivable, net            453,281        453,119        431,467

    Loans held for sale                2,724            660          1,968
    Other assets                      26,951         27,224         23,310
                               -------------  -------------  -------------
    Total assets               $     662,226  $     663,844  $     649,016
                               =============  =============  =============

    Total deposits             $     542,930  $     529,930  $     515,470
    Other borrowings                  36,000         54,600         50,500
    Subordinated debentures            7,217          7,217          7,217
    Securities sold under
     agreements to repurchase         15,399         15,396         15,162
    Other liabilities                  6,677          3,190          7,087
    Stockholders' equity              54,003         53,511         53,580
                               -------------  -------------  -------------
    Total liabilities and
     stockholders' equity      $     662,226  $     663,844  $     649,016
                               =============  =============  =============

    Book value per common
     share                     $        7.57  $        7.50  $        7.53

    Equity to assets                    8.15%          8.06%          8.26%

Asset Quality Data:
    Nonaccrual loans           $      19,525  $      19,656  $       6,592
    Loans past due 90 days or
     more and accruing                     -            415            414
    Restructured loans                 2,775          2,846          2,375
                               -------------  -------------  -------------
    Total nonperforming loans  $      22,300  $      22,917  $       9,381
                               =============  =============  =============

    Non-performing loans to
     total loans                        4.83%          4.98%          2.15%
    Non-performing loans to
     total assets                       3.37%          3.45%          1.45%
    Allowance for loan losses
     to nonperforming loans            36.65%         30.20%         56.75%
    Allowance for loan losses
     to total gross loans               1.77%          1.50%          1.22%


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
                                                      March 31,
                                            ------------------------------
                                                 2010            2009
                                            --------------  --------------
Selected Operating Data:
  Interest income                           $        8,495  $        8,473
  Interest expense                                   2,316           2,875
                                            --------------  --------------
    Net interest and dividend income                 6,179           5,598
  Provision for loan losses                          1,550             150
                                            --------------  --------------
  Net interest and dividend income
   after provision for loan losses                   4,629           5,448
  Non-interest income:
    Fees and service charges                           469             396
    Bank owned life insurance                           86              83
    Gain on sales of mortgage loans                     55              11
    Gain on calls and sales of securities              328              39
    Merchant processing                                  -             118
    Other                                               73              60
                                            --------------  --------------
    Total noninterest income                         1,011             707
  Non-interest expenses:
    Salaries and employee benefits                   2,126           2,059
    Occupancy, net                                     489             472
    Equipment                                          309             265
    Data processing                                    325             305
    FDIC insurance premium                             224             170
    Charitable contributions                           165             171
    Merchant processing                                  -             108
    Other                                              786             858
                                            --------------  --------------
    Total noninterest expenses                       4,424           4,408
                                            --------------  --------------
  Income before income taxes                         1,216           1,747
  Income tax expense                                   345             560
                                            --------------  --------------
  Net income                                           871           1,187
  Dividends on preferred stock                         137              84
                                            --------------  --------------
  Net income available to common
   stockholders                             $          734  $        1,103
                                            ==============  ==============

  Weighted avg. no. of diluted common
   shares                                        5,841,633       5,834,953
  Diluted earnings per common share         $         0.13  $         0.19

  Return on average common equity                     5.48%           9.04%

  Return on average assets                            0.54%           0.76%

  Yield on average interest-earning assets            5.58%           5.81%
  Cost of average interest-bearing
   liabilities                                        1.84%           2.39%
                                            --------------  --------------
  Net interest rate spread                            3.74%           3.42%
                                            ==============  ==============

  Net interest margin                                 4.08%           3.87%


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