SOURCE: Stewardship Financial Corporation

Stewardship Financial Corporation

February 25, 2015 16:01 ET

Stewardship Financial Corporation Announces Earnings for Fourth Quarter and Year Ended December 31, 2014

MIDLAND PARK, NJ--(Marketwired - February 25, 2015) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, today announced results for the fourth quarter and full year ended December 31, 2014. For the three months ended December 31, 2014, the Corporation reported net income available to common shareholders of $1.1 million, or $0.19 per diluted common share, compared to $495,000, or $0.08 per diluted common share, for the three months ended December 31, 2013. Net income available to common shareholders for the year ended December 31, 2014 of $2.4 million, or $0.40 per diluted common share, represented an increase of more than 30% over the $1.8 million, or $0.31 per diluted common share, earned for the year ended December 31, 2013.

Reflecting on the results, Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, commented, "After the significant progress made over the last few years in improving asset quality and asset quality metrics, we are pleased to redirect our focus on loan growth. Throughout 2014, our loan portfolio increased $43.3 million, representing a 10% rate of growth. And, we are very pleased to report the continuing improvement in the Corporation's earnings."

Operating Results
Net interest income of $5.8 million for the three months ended December 31, 2014 was up slightly from the same three month period in 2013. For the full year, net interest income was $21.7 million compared to $22.8 million for year ended December 31, 2013. The Corporation reported a net interest margin of 3.57% for the three months, showing some expansion when compared to 3.49% for the three months ended December 31, 2013. For the year ended December 31, 2014 net interest margin was 3.46% compared to 3.54% for the year ended December 31, 2013. While the Corporation has endeavored to manage liability costs, the decline in net interest margin is reflective of the lower yields on assets due to a prolonged period of low interest rates.

The components of noninterest income had a significant impact on the comparison of current year results with the prior year periods. For the three months ended December 31, 2014, the Corporation reported noninterest income of $990,000 compared to $525,000 for the equivalent prior year period. The increase was the result of increased fees and service charges in the current year as compared to a loss of $372,000 from the sale of nonperforming loans reported for the three months ended December 31, 2013. Noninterest income for the years ended December 31, 2014 and 2013 was $3.0 million and $4.0 million, respectively. The prior year period for 2013 included noninterest income of $537,000 as a result of a death benefit insurance payment received. In addition, gains on sales of mortgage loans for the year ended December 31, 2014 reflected the reduced volume of loans originated for sale resulting from a decline in refinance activity. Finally, the year ended December 31, 2014 included a loss of $241,000 from the sale of nonperforming loans compared to the previously discussed prior year loss on sale of $372,000 during 2013.

Noninterest expenses for the three months and year ended December 31, 2014 were $5.0 million and $20.2 million as compared to $4.9 million and $19.8 million in the comparable prior year periods. The Corporation continues to balance the need to control expenses with a focus on quality loan growth and an awareness of the customers' desire for convenient banking -- all being addressed while still continuing to be compliant with regulations and remaining up-to-date on all levels of security.

Asset Quality
For the three months ended December 31, 2014 the Corporation recorded a negative provision for loan losses of $300,000, bringing the full year provision for loan losses to a negative $50,000. For the prior year, a provision for loan losses of $425,000 and $3.8 million for the three months and year ended December 31, 2013, respectively, was recorded. Nonperforming loans, in total, were $3.6 million, or 0.76% of total loans at December 31, 2014, down significantly when compared to $10.2 million, or 2.34%, at December 31, 2013. Total nonperforming assets, which includes other real estate owned, were just 0.71% of total assets at December 31, 2014 compared to 1.58% at December 31, 2013. The allowance for loan losses represented 2.01% of total gross loans compared to 2.28% at December 31, 2013. The recording of a negative provision 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.

Balance Sheet / Financial Condition
Total assets of $693.6 million at December 31, 2014 reflected an increase when compared to $673.5 million of assets at December 31, 2013. Since December 31, 2013, the $43.3 million increase in gross loans receivable was the result of new loan originations, partially offset by loan workouts as well as payoffs and normal principal amortization. In order to manage the growth in assets while still assisting in the funding of the loan growth, the Corporation identified and sold approximately $10.2 million of available for sale securities with high price volatility.

Deposit balances totaled $556.5 million at December 31, 2014 compared to $577.6 million a year earlier. Noninterest-bearing deposits of $136.7 million represented 24.6% of deposits at December 31, 2014 compared to $133.6 million, or 23.1%, at December 31, 2013.

Other borrowings increased to $66.7 million at December 31, 2014 from $25.0 million at December 31, 2013. The increase in other borrowings was partially the result of the replacement of the maturity of $7.0 million of securities sold under agreements to repurchase. In general, other borrowings enable the Corporation to deal with temporary deposit outflows and can assist in managing against rising interest rates through the extension of liabilities.

The Corporation's capital levels continue to significantly exceed the regulatory capital requirements for a "well capitalized" institution with a Tier 1 leverage ratio of 9.04% and total risk based capital ratio of 14.78% compared to the regulatory requirements of 4% and 8%, respectively.

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 $8.1 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,    December 31,  
    2014    2014    2013  
                 
Selected Financial Condition Data:                
 Cash and cash equivalents  $10,086   $10,850   $17,405  
 Securities available for sale   124,918    138,255    168,411  
 Securities held to maturity   55,097    54,234    25,964  
 FHLB Stock   3,777    2,882    2,133  
 Loans receivable:                
  Loans receivable, gross   477,320    443,006    434,009  
  Allowance for loan losses   (9,602 )  (10,094 )  (9,915 )
  Other, net   (19 )  (17 )  168  
 Loans receivable, net   467,699    432,895    424,262  
                  
 Loans held for sale   -    364    2,800  
 Other assets   31,974    33,072    32,533  
 Total assets  $693,551   $672,552   $673,508  
                 
                 
 Noninterest-bearing deposits  $136,721   $140,345   $133,565  
 Interest-bearing deposits   419,755    416,666    444,026  
 Total deposits   556,476    557,011    577,591  
 Other borrowings   66,700    46,800    25,000  
 Securities sold under agreements to repurchase   -    100    7,300  
 Subordinated debentures   7,217    7,217    7,217  
 Other liabilities   4,189    4,166    2,621  
 Total liabilities   634,582    615,294    619,729  
 Shareholders' equity   58,969    57,258    53,779  
 Total liabilities and shareholders' equity  $693,551   $672,552   $673,508  
                  
 Equity to assets   8.50 %  8.51 %  7.98 %
                 
Asset Quality Data:                
 Nonaccrual loans  $3,628   $4,434   $10,219  
 Loans past due 90 days or more and accruing   -    -    -  
 Total nonperforming loans   3,628    4,434    10,219  
 Other real estate owned   1,308    2,090    451  
 Total nonperforming assets  $4,936   $6,524   $10,670  
                  
                  
 Nonperforming loans to total loans   0.76 %  1.00 %  2.34 %
 Nonperforming assets to total assets   0.71 %  0.97 %  1.58 %
 Allowance for loan losses to nonperforming loans   264.66 %  227.65 %  97.03 %
 Allowance for loan losses to total gross loans   2.01 %  2.28 %  2.28 %
              
              
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,  
    2014    2013    2014    2013  
Selected Operating Data:                         
 Interest income  $ 6,534   $ 6,529   $ 24,934   $ 26,571  
 Interest expense    767     911     3,207     3,813  
  Net interest and dividend income    5,767     5,618     21,727     22,758  
                   
 Provision for loan losses    (300 )   425     (50 )   3,775  
 Net interest and dividend income                         
 after provision for loan losses    6,067     5,193     21,777     18,983  
 Noninterest income:                         
  Fees and service charges    568     458     2,003     1,865  
  Bank owned life insurance    103     100     405     351  
  Gain on calls and sales of securities    165     151     165     153  
  Gain on sales of mortgage loans    26     39     72     649  
  Loss on sales of loans    -     (372 )   (241 )   (372 )
  Gain on sales of other real estate owned    9     44     63     326  
  Gain on life insurance proceeds    -     -     -     537  
  Other    119     105     493     456  
  Total noninterest income    990     525     2,960     3,965  
 Noninterest expenses:                         
  Salaries and employee benefits    2,738     2,524     10,597     10,501  
  Occupancy, net    420     507     1,934     2,045  
  Equipment    157     214     687     794  
  Data processing    447     438     1,702     1,425  
  FDIC insurance premium    103     230     580     876  
  Other    1,179     988     4,733     4,197  
  Total noninterest expenses    5,044     4,901     20,233     19,838  
Income before income tax expense    2,013     817     4,504     3,110  
Income tax expense    712     152     1,419     640  
Net income    1,301     665     3,085     2,470  
Dividends on preferred stock    171     170     683     633  
Net income available to common shareholders  $ 1,130   $ 495   $ 2,402   $ 1,837  
                          
Weighted avg. no. of diluted common shares    6,030,561     5,942,585     6,003,814     5,937,058  
Diluted earnings per common share  $ 0.19   $ 0.08   $ 0.40   $ 0.31  
                          
Return on average common equity    10.41 %   4.95 %   5.77 %   4.54 %
                          
Return on average assets    0.75 %   0.39 %   0.46 %   0.36 %
                          
Yield on average interest-earning assets    4.04 %   4.05 %   3.96 %   4.12 %
Cost of average interest-bearing liabilities    0.64 %   0.74 %   0.68 %   0.78 %
Net interest rate spread    3.40 %   3.31 %   3.28 %   3.34 %
                          
Net interest margin    3.57 %   3.49 %   3.46 %   3.54 %

Contact Information

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