SOURCE: Stewardship Financial Corporation

Stewardship Financial Corporation

February 24, 2016 16:15 ET

Stewardship Financial Corporation Announces Earnings for Fourth Quarter and Year Ended December 31, 2015

MIDLAND PARK, NJ--(Marketwired - February 24, 2016) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, today announced results for the fourth quarter and full year ended December 31, 2015. For the three months ended December 31, 2015, the Corporation reported net income available to common shareholders of $1.1 million, or $0.17 per diluted common share, compared to $1.1 million, or $0.19 per diluted common share, for the three months ended December 31, 2014. Net income available to common shareholders for the year ended December 31, 2015 of $3.7 million, or $0.62 per diluted common share, represented a significant increase over the $2.4 million, or $0.40 per diluted common share, earned for the year ended December 31, 2014.

Discussing the results, Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, commented, "Earnings reflect the impact of our loan growth and focus on noninterest income, while maintaining expense control. For 2015, we achieved 10.3% of growth in our loan portfolio and a 6.6% increase in fees and service charges while keeping expenses relatively flat."

Balance Sheet / Financial Condition

Total assets of $717.9 million at December 31, 2015 reflected an increase when compared to $693.6 million of assets at December 31, 2014. Since December 31, 2014, a $49.2 million increase in gross loans receivable was the result of new loan originations net of normal principal amortization and payoffs. In terms of total assets, the loan growth was partially offset by the previously reported sale of approximately $27.8 million of available for sale securities with higher price volatility. These sales provided a portion of the funding needed for the loan growth as well as a purposeful shift into higher yielding assets.

Deposit balances totaled $604.8 million at December 31, 2015 compared to $556.5 million a year earlier reflecting $48.3 million, or 8.7%, of growth. Van Ostenbridge noted, "This increase in deposits was important in our ability to cost effectively fund the growth we experienced in our loan portfolio." In addition, as a result of an increase in deposits, other borrowings decreased $26.7 million to $40.0 million at December 31, 2015.

The increase in subordinated debentures and subordinated notes reflects the previously announced completion of a $16.6 million issuance of fixed rate subordinated notes on August 28, 2015. The subordinated notes have a maturity date of August 28, 2025 and bear interest at the rate of 6.75% per annum. Using the net proceeds of the subordinated note issuance, on September 1, 2015, the Corporation repurchased the $15.0 million of preferred stock, thus ending the Corporation's participation in the U.S. Department of the Treasury's Small Business Lending Fund program ("SBLF").

While tier 1 capital was impacted by the replacement of preferred stock with subordinated debt, which is considered tier 2 capital, regulatory capital levels continued to exceed the capital requirements for a "well capitalized" institution. At December 31, 2015, the Corporation reported a tier 1 leverage ratio of 7.67% (4% requirement) and total risk based capital ratio of 14.34% (8% requirement).

Operating Results

Net interest income of $5.4 million and $21.8 million was reported for the three months and year ended December 31, 2015, respectively, compared to $5.8 million and $21.7 million for the same periods in 2014. The net interest margin for the current three months and year ended December 31, 2015 was 3.18% and 3.30%, respectively, compared to 3.57% and 3.46% for the three months and year ended December 31, 2014, respectively. The reduction in net interest rate margin partially reflects the impact of the $16.6 million of subordinated notes previously discussed. While the cost of the subordinated notes adds to interest expense, on an after tax basis, such increase is approximately offset by the dividends that would have accrued at a rate of 4.56% on the preferred stock resulting in an overall neutral effect on net income available to common shareholders. Furthermore, beginning on March 1, 2016, and for all dividend periods thereafter, the dividend rate on the preferred stock would have been increased and fixed at 9%, making the issuance of the subordinated notes a positive impact to net income available to common shareholders in the future.

For the three months ended December 31, 2015, the Corporation reported noninterest income of $855,000 compared to $990,000 for the equivalent prior year period. Noninterest income for the year ended December 31, 2015 was $3.5 million compared to $3.0 million for 2014. On a year-over-year basis, fees and service charges reflect an increase of $132,000. In addition, the current year gains on sales of mortgage loans of $141,000 represented a nearly 50% increase over 2014. Finally, the year ended December 31, 2014 included a loss of $241,000 from the sale of nonperforming loans.

Noninterest expenses for the three months and year ended December 31, 2015 totaled $4.9 million and $20.2 million, relatively consistent with the $5.0 million and $20.2 million incurred for the comparable prior year periods.

Asset Quality

"We believe the stabilization of our nonperforming assets has been clearly demonstrated," stated Van Ostenbridge. For the three months and year ended December 31, 2015, results continue to be positively impacted by the Corporation recording negative provisions for loan losses of $275,000 and $1.4 million, respectively. For the prior year, the Corporation recorded negative provisions of $300,000 and $50,000 for the three months and year ended December 31, 2014. The allowance for loan losses represented 1.68% of total gross loans compared to 2.01% at December 31, 2014. The recording of negative provisions for loan losses and the decline in the allowance coverage ratio are directly attributable to improved credit quality metrics of the portfolio and the reduction in the estimated level of allowance for loan losses required. Nonperforming loans were $1.9 million, or 0.36% of total loans at December 31, 2015 compared to $3.6 million, or 0.76%, at December 31, 2014. Total nonperforming assets of $2.8 million, which includes other real estate owned, represented 0.38% of total assets at December 31, 2015 compared to 0.71% at December 31, 2014.

About Stewardship Financial Corporation

Stewardship Financial Corporation's subsidiary, Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne (2), Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (2), Westwood and Wyckoff, New Jersey. The Bank is known for tithing 10% of its pre-tax profits to Christian and local charities. To date, the Bank's tithe donations total $8.6 million.

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)  
                             
  December 31,     September 30,     June 30,     March 31,     December 31,  
  2015     2015     2015     2015     2014  
                                       
Selected Financial Condition Data:                                      
  Cash and cash equivalents $ 10,910     $ 16,025     $ 19,782     $ 21,035     $ 10,086  
  Securities available for sale   93,354       86,994       90,850       94,553       124,918  
  Securities held to maturity   60,738       60,252       58,363       55,811       55,097  
  FHLB Stock   2,608       3,035       2,833       3,026       3,777  
  Loans receivable:                                      
    Loans receivable, gross   526,477       518,168       507,105       490,087       477,320  
    Allowance for loan losses   (8,823 )     (8,805 )     (9,299 )     (9,600 )     (9,602 )
    Other, net   (98 )     (93 )     (132 )     (7 )     (19 )
  Loans receivable, net   517,556       509,270       497,674       480,480       467,699  
                                       
  Loans held for sale   1,522       1,570       1,416       798       -  
  Other assets   31,200       30,503       30,273       30,114       31,974  
  Total assets $ 717,888     $ 707,649     $ 701,191     $ 685,817     $ 693,551  
                                       
                                       
  Noninterest-bearing deposits $ 147,828     $ 151,078     $ 153,546     $ 141,406     $ 136,721  
  Interest-bearing deposits   456,925       434,790       432,453       424,916       419,755  
  Total deposits   604,753       585,868       585,999       566,322       556,476  
  Other borrowings   40,000       49,500       45,000       50,000       66,700  
  Subordinated debentures   23,186       23,176       7,217       7,217       7,217  
  Other liabilities   2,376       2,087       2,123       2,166       4,189  
  Total liabilities   670,315       660,631       640,339       625,705       634,582  
  Shareholders' equity   47,573       47,018       60,852       60,112       58,969  
  Total liabilities and shareholders' equity $ 717,888     $ 707,649     $ 701,191     $ 685,817     $ 693,551  
                                       
  Gross loans to deposits   87.06 %     88.44 %     86.54 %     86.54 %     85.78 %
                                       
  Equity to assets   6.63 %     6.64 %     8.68 %     8.77 %     8.50 %
                                       
  Book value per share $ 7.82     $ 7.72     $ 7.53     $ 7.42     $ 7.29  
                                       
Asset Quality Data:                                      
  Nonaccrual loans $ 1,882     $ 2,574     $ 2,539     $ 2,798     $ 3,628  
  Loans past due 90 days or more and accruing   -       -       -       -       -  
  Total nonperforming loans   1,882       2,574       2,539       2,798       3,628  
  Other real estate owned   880       587       219       320       1,308  
  Total nonperforming assets $ 2,762     $ 3,161     $ 2,758     $ 3,118     $ 4,936  
                                       
                                       
  Nonperforming loans to total loans   0.36 %     0.50 %     0.50 %     0.57 %     0.76 %
  Nonperforming assets to total assets   0.38 %     0.45 %     0.39 %     0.45 %     0.71 %
  Allowance for loan losses to nonperforming loans   468.81 %     342.07 %     366.25 %     343.10 %     264.66 %
  Allowance for loan losses to total gross loans   1.68 %     1.70 %     1.83 %     1.96 %     2.01 %
   
   
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,  
  2015     2014     2015     2014  
Selected Operating Data:                              
  Interest income $ 6,643     $ 6,534     $ 25,609     $ 24,934  
  Interest expense   1,198       767       3,826       3,207  
    Net interest and dividend income   5,445       5,767       21,783       21,727  
  Provision for loan losses   (275 )     (300 )     (1,375 )     (50 )
  Net interest and dividend income after provision for loan losses   5,720       6,067       23,158       21,777  
  Noninterest income:                              
    Fees and service charges   558       568       2,135       2,003  
    Bank owned life insurance   103       103       403       405  
    Gain on calls and sales of securities   17       165       169       165  
    Gain on sales of mortgage loans   24       26       141       72  
    Loss on sales of loans   -       -       -       (241 )
    Gain on sales of other real estate owned   30       9       83       63  
    Other   123       119       562       493  
    Total noninterest income   855       990       3,493       2,960  
  Noninterest expenses:                              
    Salaries and employee benefits   2,719       2,738       10,900       10,597  
    Occupancy, net   422       420       1,739       1,934  
    Equipment   159       157       655       687  
    Data processing   467       447       1,847       1,702  
    FDIC insurance premium   106       103       423       580  
    Other   1,027       1,179       4,615       4,733  
    Total noninterest expenses   4,900       5,044       20,179       20,233  
Income before income tax expense   1,675       2,013       6,472       4,504  
Income tax expense   614       712       2,272       1,419  
Net income   1,061       1,301       4,200       3,085  
Dividends on preferred stock   -       171       456       683  
Net income available to common shareholders $ 1,061     $ 1,130     $ 3,744     $ 2,402  
   
Weighted avg. no. of diluted common shares   6,086,249       6,030,561       6,077,657       6,003,814  
Diluted earnings per common share $ 0.17     $ 0.19     $ 0.62     $ 0.40  
   
Return on average common equity   8.89 %     10.41 %     8.14 %     5.77 %
   
Return on average assets   0.58 %     0.75 %     0.60 %     0.46 %
   
Yield on average interest-earning assets   3.87 %     4.04 %     3.87 %     3.96 %
Cost of average interest-bearing liabilities   0.92 %     0.64 %     0.77 %     0.68 %
Net interest rate spread   2.95 %     3.40 %     3.10 %     3.28 %
   
Net interest margin   3.18 %     3.57 %     3.30 %     3.46 %
   
   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
                               
    For the three months ended  
    December 31,     September 30,     June 30,     March 31,     December 31,  
    2015     2015     2015     2015     2014  
Selected Operating Data:                                        
  Interest income   $ 6,643     $ 6,412     $ 6,360     $ 6,194     $ 6,534  
  Interest expense     1,198       993       842       793       767  
    Net interest and dividend income     5,445       5,419       5,518       5,401       5,767  
  Provision for loan losses     (275 )     (400 )     (600 )     (100 )     (300 )
  Net interest and dividend income after provision for loan losses     5,720       5,819       6,118       5,501       6,067  
  Noninterest income:                                        
    Fees and service charges     558       541       557       479       568  
    Bank owned life insurance     103       103       101       96       103  
    Gain on calls and sales of securities     17       -       -       152       165  
    Gain on sales of mortgage loans     24       52       55       10       26  
    Loss on sales of loans     -       -       -       -       -  
    Gain on sales of other real estate owned     30       -       -       53       9  
    Other     123       142       169       128       119  
    Total noninterest income     855       838       882       918       990  
  Noninterest expenses:                                        
    Salaries and employee benefits     2,719       2,785       2,688       2,708       2,738  
    Occupancy, net     422       427       423       467       420  
    Equipment     159       175       165       156       157  
    Data processing     467       468       459       453       447  
    FDIC insurance premium     106       87       117       113       103  
    Other     1,027       1,183       1,253       1,152       1,179  
    Total noninterest expenses     4,900       5,125       5,105       5,049       5,044  
Income before income tax expense     1,675       1,532       1,895       1,370       2,013  
Income tax expense     614       532       673       453       712  
Net income     1,061       1,000       1,222       917       1,301  
Dividends on preferred stock     -       114       171       171       171  
Net income available to common shareholders   $ 1,061     $ 886     $ 1,051     $ 746     $ 1,130  
                                         
Weighted avg. no. of diluted common shares     6,086,249       6,091,627       6,086,474       6,045,683       6,030,561  
Diluted earnings per common share   $ 0.17     $ 0.15     $ 0.17     $ 0.12     $ 0.19  
                                         
Return on average common equity     8.89 %     7.58 %     9.25 %     6.77 %     10.41 %
                                         
Return on average assets     0.58 %     0.56 %     0.71 %     0.54 %     0.75 %
                                         
Yield on average interest-earning assets     3.87 %     3.80 %     3.91 %     3.90 %     4.04 %
Cost of average interest-bearing liabilities     0.92 %     0.79 %     0.70 %     0.67 %     0.64 %
Net interest rate spread     2.95 %     3.01 %     3.21 %     3.23 %     3.40 %
                                         
Net interest margin     3.18 %     3.21 %     3.40 %     3.41 %     3.57 %
                                         

Contact Information

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