SOURCE: Stewardship Financial Corporation

August 09, 2013 16:01 ET

Stewardship Financial Corporation Announces Earnings for Second Quarter of 2013

MIDLAND PARK, NJ--(Marketwired - Aug 9, 2013) -  Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, announced net income for the three months ended June 30, 2013 of $461,000 as contrasted to a net loss of $324,000 for the three months ended June 30, 2012. For the six months ended June 30, 2013, the Corporation reported net income of $1.3 million compared to net income of $452,000 for the corresponding six month period in 2012. After dividends on preferred stock, the net income available to the common shareholders was $990,000, or $0.17 per diluted common share, for the first six months of 2013 compared to $339,000, or $0.06 per diluted common share, for the comparable period of 2012.

The Corporation reported net interest income of $5.7 million and $11.5 million for the three and six months ended June 30, 2013, compared to $6.0 million and $12.0 million for the equivalent prior year periods. The net interest margin for the current three and six months ended June 30, 2013 of 3.55% and 3.66%, respectively, compared to 3.69% and 3.70% for the three and six months ended June 30, 2012, respectively. The compression in margins continues to be primarily attributable to reduced asset yields resulting from the prolonged, low interest rate environment.

For the three and six months ended June 30, 2013, the Corporation recorded provisions for loan losses of $850,000 and $2.5 million, respectively, compared to $2.9 million and $4.7 million for the three and six months ended June 30, 2012, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer commented, "The 2013 provision for loan losses is partially reflective of the reduction in nonperforming loans. While the economic environment remains challenging for our borrowers, the Corporation has seen stabilization and declines in problem loans over the past twelve months."

Nonperforming loans decreased to $14.7 million, or 3.33% of total loans at June 30, 2013, compared to $18.2 million, or 4.14% at December 31, 2012. At June 30, 2013, nonperforming loans are approximately one-half of the $29.7 million, or 6.68%, reported a year earlier. The ratio of allowance for loan losses to nonperforming loans increased to 73.30% at June 30, 2013, providing additional allowance coverage as compared to 58.31% at December 31, 2012 and 40.13% at June 30, 2012.

With respect to the Corporation's level of non-performing loans, Van Ostenbridge stated, "We continue to be encouraged by our progress over the past year. As problem loans continue to migrate through the lengthy workout phase, often concluding with foreclosure, we believe additional declines in nonperforming loans would occur."

For the three and six months ended June 30, 2013, noninterest income was $1.0 million and $2.5 million, respectively, compared to $1.3 million and $2.9 million for the corresponding prior year periods. While the six month period for 2013 included $537,000 as a result of a death benefit insurance payment received, the 2012 periods include increased gains realized from the sale of securities and other real estate owned.

Total noninterest expenses were $5.1 million and $10.1 million for the three and six months ended June 30, 2013. For the three and six months ended June 30, 2012, noninterest expenses were $4.8 million and $9.7 million, respectively. The increase in noninterest expenses reflects higher salary and employee benefits expense, reflective of increasing regulatory compliance and the attendant staffing necessary to oversee all compliance-related issues. In addition, the increase in salary and employee benefits expense is the result of an increased focus on commercial lending opportunities as well as costs associated with an enhanced credit review function.

Total assets at June 30, 2013 were $688.8 million -- relatively comparable to assets of $688.4 million at December 31, 2012. Gross loans receivable increased $1.6 million from December 30, 2012, reflective of new loans recorded partially offset by payoffs and normal principal amortization.

Total deposits of $592.7 million at June 30, 2013 show $2.4 million of deposit growth when compared to deposits of $590.3 million at December 31, 2012. The composition of deposits continues to reflect a shift from interest-bearing to noninterest-bearing. From December 31, 2012 to June 30, 2013 the Corporation's noninterest-bearing deposit balances increased $21.1 million, or 24.5% of total deposits, up from 21.1% at December 31, 2012.

In concluding his remarks, Van Ostenbridge noted, "We are now seeing slow and steady progress in reducing our problem loans indicating that the resources we have devoted are providing the appropriate results. More improvement is needed and we are fully committed to this goal."

Stewardship Financial Corporation's subsidiary, 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. 

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, which forward looking statements 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)  
                         
    June 30,     March 31,     December 31,    June 30,  
    2013     2013     2012     2012  
                                 
Selected Financial Condition Data:                                
  Cash and cash equivalents   $ 14,322     $ 26,144     $ 21,016     $ 25,340  
  Securities available for sale     181,676       175,493       174,700       172,712  
  Securities held to maturity     28,119       28,548       29,718       32,993  
  FHLB Stock     2,133       2,213       2,213       2,213  
  Loans receivable:                                
    Loans receivable, gross     442,006       441,533       440,423       445,267  
    Allowance for loan losses     (10,787 )     (11,512 )     (10,641 )     (11,934 )
    Other, net     134       62       50       45  
  Loans receivable, net     431,353       430,083       429,832       433,378  
                                   
  Loans held for sale     2,054       2,101       784       3,334  
  Other assets     29,175       29,344       30,125       30,158  
  Total assets   $ 688,832     $ 693,926     $ 688,388     $ 700,128  
                                   
                                   
  Noninterest-bearing deposits   $ 145,388     $ 132,960     $ 124,286     $ 124,017  
  Interest-bearing deposits     447,311       462,578       465,968       469,478  
  Total deposits     592,699       595,538       590,254       593,495  
  Other borrowings     25,000       25,000       25,000       25,000  
  Securities sold under agreements to repurchase     7,344       7,344       7,343       14,342  
  Subordinated debentures     7,217       7,217       7,217       7,217  
  Other liabilities     2,280       2,152       2,228       2,183  
  Shareholders' equity     54,292       56,675       56,346       57,891  
  Total liabilities and shareholders' equity   $ 688,832     $ 693,926     $ 688,388     $ 700,128  
                                   
  Equity to assets     7.88 %     8.17 %     8.19 %     8.27 %
                                 
Asset Quality Data:                                
  Nonaccrual loans   $ 14,716     $ 17,479     $ 18,011     $ 29,541  
  Loans past due 90 days or more and accruing     -       50       237       200  
  Total nonperforming loans     14,716       17,529       18,248       29,741  
  Other real estate owned     1,072       876       1,058       1,991  
  Total nonperforming assets   $ 15,788     $ 18,405     $ 19,306     $ 31,732  
                                   
                                   
  Nonperforming loans to total loans     3.33 %     3.97 %     4.14 %     6.68 %
  Nonperforming assets to total assets     2.29 %     2.65 %     2.80 %     4.53 %
  Allowance for loan losses to nonperforming loans     73.30 %     65.67 %     58.31 %     40.13 %
  Allowance for loan losses to total gross loans     2.44 %     2.61 %     2.42 %     2.68 %
                                   
                                   
   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
                         
    For the three months ended     For the six months ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
Selected Operating Data:                                
  Interest income   $ 6,636     $ 7,317     $ 13,506     $ 14,833  
  Interest expense     958       1,357       1,962       2,822  
    Net interest and dividend income     5,678       5,960       11,544       12,011  
  Provision for loan losses     850       2,900       2,450       4,665  
  Net interest and dividend income after provision for loan losses     4,828       3,060       9,094       7,346  
  Noninterest income:                                
    Fees and service charges     492       531       948       1,046  
    Bank owned life insurance     77       81       153       161  
    Gain on calls and sales of securities     -       12       2       445  
    Gain on sales of mortgage loans     298       154       460       565  
    Gain on sales of other real estate owned     -       370       126       469  
    Gain on life insurance proceeds     -       -       537       -  
    Other     128       133       243       244  
    Total noninterest income     995       1,281       2,469       2,930  
  Noninterest expenses:                                
    Salaries and employee benefits     2,711       2,257       5,407       4,643  
    Occupancy, net     503       471       1,020       958  
    Equipment     199       243       383       491  
    Data processing     332       316       660       650  
    FDIC insurance premium     276       155       426       303  
    Other     1,110       1,382       2,167       2,632  
    Total noninterest expenses     5,131       4,824       10,063       9,677  
Income (loss) before income tax expense (benefit)     692       (483 )     1,500       599  
Income tax expense (benefit)     231       (159 )     217       147  
Net income (loss)     461       (324 )     1,283       452  
Dividends on preferred stock     127       38       293       113  
Net income (loss) available to common shareholders   $ 334     $ (362 )   $ 990     $ 339  
                                 
Weighted avg. no. of diluted common shares     5,934,549       5,902,167       5,932,774       5,897,266  
Diluted earnings (loss) per common share   $ 0.06     $ (0.06 )   $ 0.17     $ 0.06  
                                 
Return on average common equity     3.21 %     -3.31 %     4.79 %     1.56 %
                                 
Return on average assets     0.27 %     -0.18 %     0.38 %     0.13 %
                                 
Yield on average interest-earning assets     4.14 %     4.51 %     4.26 %     4.55 %
Cost of average interest-bearing liabilities     0.78 %     1.04 %     0.80 %     1.08 %
Net interest rate spread     3.36 %     3.47 %     3.46 %     3.47 %
                                 
Net interest margin     3.55 %     3.69 %     3.66 %     3.70 %
                                 

Contact Information

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