SOURCE: Stewardship Financial Corporation

November 03, 2009 16:05 ET

Stewardship Financial Corporation Reports Earnings for the Third Quarter 2009

MIDLAND PARK, NJ--(Marketwire - November 3, 2009) - Stewardship Financial Corporation (NASDAQ: SSFN), the holding company for Atlantic Stewardship Bank, reported net income for the three months ended September 30, 2009 of $893,000, or $0.13 per diluted common share, as compared to net income of $838,000, or $0.14 per diluted common share, for the three months ended September 30, 2008.

For the nine months ended September 30, 2009, Stewardship Financial Corporation reported net income of $2.9 million, or $0.43 per diluted common share, compared to net income of $3.1 million, or $0.52 per diluted common share for the corresponding nine month period in 2008. Per share calculations have been adjusted for a 5% stock dividend paid in November 2008 and a 5% stock dividend payable in November 2009.

In light of the difficulties faced by the banking industry, the operating results of the Corporation have been adversely affected by increases in the loan loss provision. For the nine months ended September 30, 2009, results were also impacted by the FDIC's industry-wide special assessment.

The Corporation reported net interest income for the three and nine months ended September 30, 2009 of $6.0 million and $17.4 million, respectively, representing increases of 2.9% and 5.2%, respectively, over the comparable prior year period amounts. The reported net interest spread and margin for the three months ended September 30, 2009 of 3.47% and 3.92%, respectively, compare to the net interest spread and margin of 3.53% and 4.04%, respectively, for the three months ended September 30, 2008. For the nine months ended September 30, 2009, net interest rate spread and margin were 3.44% and 3.89% compared to 3.40% and 3.98%, respectively, for the same 2008 period.

The provision for loan losses was $1.2 million and $2.4 million for the three and nine months ended September 30, 2009, respectively, compared to $1.2 million and $1.5 million, respectively, for the same prior year periods. The provision is reflective of the unsettled economic environment resulting in deterioration in certain borrowers' performance as well as declining real estate collateral values. Non-performing loans amounted to 3.92% of total assets at September 30, 2009 compared to 1.46% at December 31, 2008. At September 30, 2009, the total allowance for loan losses amounted to approximately $7.2 million, or an increase to 1.61% of total loans as compared to 1.18% at December 31, 2008.

"Asset quality continues to be a top priority for Stewardship Financial Corporation and we continue to evaluate our allowance for loan losses and increase our reserves as appropriate," stated Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer. "The current troubled economic climate impacts all banks and borrowers. Accordingly, we are closely monitoring and aggressively managing our entire loan portfolio." Van Ostenbridge continued saying, "As the increase in nonperforming assets indicates, real challenges remain. We continue to work closely with our borrowers, recognizing that each situation is different, requiring approaches appropriate for each borrower and each individual situation."

At the end of 2008, the Corporation sold its merchant servicing portfolio and, as a result, a decline in both the related noninterest income line and the related noninterest expense line is reflected for the three and nine months ended September 30, 2009.

As previously reported, FDIC insurance premiums increased due, in part, to the $300,000 special assessment imposed by the FDIC for the nine months ended September 30, 2009.

At September 30, 2009 assets totaled $649.6 million, reflecting growth of $37.8 million, or 6.2%, when compared to December 31, 2008. The securities available for sale and held to maturity portfolios together increased $26.8 million, primarily reflecting the investment and leveraging of the $10 million of preferred stock issued under the Capital Purchase Program. Gross loans receivable grew $11.6 million to $451.2 million at September 30, 2009 compared to $439.7 million at December 31, 2008. The increase reflects the Bank's origination levels after adjusting for the sale of approximately $5.9 million of participations in certain loans to other financial institutions.

Deposits totaled $514.6 million at September 30, 2009, compared to $506.5 million at December 31, 2008. After the payoff of the $30.7 million of brokered CDs that existed at December 31, 2008, growth in core customer deposits totaled $38.8 million. The mid-February 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 September 30, 2009 of $54.1 million includes the increase from the $10 million received on January 30, 2009 under the Capital Purchase Program (CPP). As a result of the increase in capital, the Corporation remains committed to the core banking activities of generating deposits and granting credit-worthy loans to consumers and businesses in our communities.

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 $6.3 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)

                       September 30,   June 30,  December 31, September 30,
                            2009         2009         2008         2008
                        -----------  -----------  -----------  -----------

Selected Financial
 Condition Data:
  Cash and cash
   equivalents          $    13,646  $    11,401  $    12,814  $    13,489
  Securities available
   for sale                  90,460       87,728       90,023       96,547
  Securities held to
   maturity                  75,232       74,756       48,856       35,646
  FHLB Stock                  3,195        2,538        2,420        2,856
  Loans receivable:
    Loans receivable,
     gross                  451,229      440,434      439,656      443,311
    Allowance for loan
     losses                  (7,249)      (6,342)      (5,166)      (5,930)
    Other, net                 (428)        (425)        (387)        (418)
                        -----------  -----------  -----------  -----------
  Loans receivable, net     443,552      433,667      434,103      436,963

  Loans held for sale         1,018        6,379          394          895
  Other assets               22,518       22,858       23,206       23,741
                        -----------  -----------  -----------  -----------
  Total assets          $   649,621  $   639,327  $   611,816  $   610,137
                        ===========  ===========  ===========  ===========


  Total deposits        $   514,612  $   518,500  $   506,531  $   492,110
  Other borrowings           53,900       39,300       36,900       46,575
  Subordinated
   debentures                 7,217        7,217        7,217        7,217
  Securities sold under
   agreements to
   repurchase                16,019       15,163       15,160       16,297
  Other liabilities           3,801        5,943        3,212        6,179
  Stockholders' equity       54,072       53,204       42,796       41,759
                        -----------  -----------  -----------  -----------
  Total liabilities
   and stockholders'
   equity               $   649,621  $   639,327  $   611,816  $   610,137
                        ===========  ===========  ===========  ===========

  Book value per common
   share                $      7.60  $      7.46  $      7.31  $      7.13

  Equity to assets             8.32%        8.32%        6.99%        6.84%

Asset Quality Data:
  Nonaccrual loans      $    14,536  $    11,533  $     4,230  $     6,884
  Loans past due 90 days
   or more and accruing         728            -          353          268
  Restructured loans          2,417        2,460        1,855            -
                        -----------  -----------  -----------  -----------
  Total nonperforming
   loans                $    17,681  $    13,993  $     6,438  $     7,152
                        ===========  ===========  ===========  ===========

  Non-performing loans
   to total loans              3.92%        3.18%        1.46%        1.61%
  Non-performing loans
   to total assets             2.72%        2.19%        1.05%        1.17%
  Allowance for loan
   losses to
   nonperforming loans        41.00%       45.32%       80.24%       82.91%
  Allowance for loan
   losses to total
   gross loans                 1.61%        1.44%        1.18%        1.34%

All share data has been restated to include the effects of a 5% stock
dividend paid in November 2008 and a stock dividend payable 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 nine months ended
                              September 30,             September 30,
                        ------------------------  ------------------------
                            2009         2008         2009         2008
                        -----------  -----------  -----------  -----------
Selected Operating
 Data:
  Interest income       $     8,610  $     8,910  $    25,625  $    26,277
  Interest expense            2,634        3,100        8,231        9,749
                        -----------  -----------  -----------  -----------
    Net interest and
     dividend income          5,976        5,810       17,394       16,528
  Provision for loan
   losses                     1,200        1,175        2,375        1,535
                        -----------  -----------  -----------  -----------
  Net interest and
   dividend income
   after provision for
   loan losses                4,776        4,635       15,019       14,993
  Non-interest income:
    Fees and service
     charges                    492          370        1,362        1,067
    Bank owned life
     insurance                   79           85          238          244
    Gain on sales of
     mortgage loans             188           47          272          156
    Gain on calls and
     sales of
     securities                   2            4          255           61
    Merchant processing           -          340          118        1,070
    Other                        60           48          232          289
                        -----------  -----------  -----------  -----------
    Total non-interest
     income                     821          894        2,477        2,887
  Non-interest expenses:
    Salaries and
     employee benefits        2,128        1,968        6,264        6,078
    Occupancy, net              453          477        1,398        1,354
    Equipment                   277          276          795          842
    Data processing             300          300          882          897
    FDIC insurance
     premium                    197           77          886          223
    Charitable
     contributions              120          126          411          474
    Merchant processing           -          299          108          944
    Other                       871          839        2,694        2,591
                        -----------  -----------  -----------  -----------
    Total non-interest
     expenses                 4,346        4,362       13,438       13,403
                        -----------  -----------  -----------  -----------
  Income before income
   tax expense                1,251        1,167        4,058        4,477
  Income tax expense            358          329        1,198        1,399
                        -----------  -----------  -----------  -----------
  Net income                    893          838        2,860        3,078
  Dividends on preferred
   stock and accretion          138            -          367            -
                        -----------  -----------  -----------  -----------
  Net income available
   to common
   stockholders         $       755  $       838  $     2,493  $     3,078
                        ===========  ===========  ===========  ===========

  Weighted avg. no. of
   diluted common shares  5,837,797    5,863,105    5,836,225    5,869,088
  Diluted earnings per
   common share         $      0.13  $      0.14  $      0.43  $      0.52

  Return on average
   common equity               5.65%        7.92%        6.37%        9.82%

  Return on average
   assets                      0.56%        0.54%        0.60%        0.69%

  Yield on average
   interest-earning
   assets                      5.61%        6.15%        5.69%        6.27%
  Cost of average
   interest-bearing
   liabilities                 2.14%        2.62%        2.25%        2.87%
                        -----------  -----------  -----------  -----------
  Net interest rate
   spread                      3.47%        3.53%        3.44%        3.40%
                        ===========  ===========  ===========  ===========

  Net interest margin          3.92%        4.04%        3.89%        3.98%

All share data has been restated to include the effects of a 5% stock
dividend paid in November 2008 and a stock dividend payable in November
2009.

Contact Information

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