SOURCE: Stewardship Financial Corporation

May 07, 2014 16:01 ET

Stewardship Financial Corporation Announces First Quarter of 2014 Earnings

MIDLAND PARK, NJ--(Marketwired - May 7, 2014) -  Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, announced net income for the three months ended March 31, 2014 of $506,000 as compared to net income of $822,000 for the three months ended March 31, 2013. After dividends on preferred stock, the net income available to the common stockholders was $335,000, or $0.06 per common share, for the current 2014 period compared to $656,000, or $0.11 per common share, for the equivalent period of 2013. Items affecting comparisons between the periods are explained below.

Of significant importance for the quarter, the Corporation did not record a provision for loan losses for the three months ended March 31, 2014 in contrast to a provision for loan losses of $1.6 million for the three months ended March 31, 2013. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, commented, "Based on our continued improvement in asset quality and the reserves established over the past few years, no increase in the allowance for loan losses was necessary at March 31, 2014."

Continuing on the Corporation's improvement in the level of problem assets, Van Ostenbridge stated, "We are seeing the results of our committed focus for the last several years on reducing our level of nonperforming loans." Nonperforming loans decreased to $5.1 million, or 1.20% of total loans at March 31, 2014, representing an approximate 50% reduction when compared to $10.2 million, or 2.34%, at December 31, 2013 and over a 70% decline when compared to $17.5 million, or 3.97%, a year earlier. 

Total nonperforming assets, which includes other real estate owned, represented just 1.02% of total assets at March 31, 2014, signifying meaningful progress when compared to 1.58% and 2.65% at December 31, 2013 and March 31, 2013, respectively.

The decrease in nonperforming assets is partially attributable to the sale of a small group of nonperforming loans that, at December 31, 2013, the Corporation had categorized as held for sale at the lower of cost or fair value of the underlying collateral, less cost to sell. After charge-offs previously recorded on these loans recognized against the allowance for loan losses, these loans had a carrying value of $2.8 million. The loans were sold during the three months ended March 31, 2014 and resulted in a net loss to the Corporation of $241,000, reflecting further declines in fair value.

When comparing the current year quarter results with the prior year quarter, components of noninterest income also had a substantial impact. The Corporation reported noninterest income of $399,000 for the three months ended March 31, 2014 compared to $1.5 million for the equivalent prior year period. The current year period includes the previously mentioned loss of $241,000 from the sale of nonperforming loans as well as reduced gains on sales of mortgage loans reflective of the impact of rising mortgage rates and corresponding reduction in refinance activity. In addition, the prior year period included $537,000 as a result of a death benefit insurance payment received.

Net interest income was $5.3 million in the first quarter of 2014 compared to $5.9 million a year earlier. "While the Corporation continues to monitor and manage all expenses, the low interest rate environment in which we have been operating has put pressure on asset yields," said Van Ostenbridge.

Total noninterest expenses were $5.1 million for the three months ended March 31, 2014 -- comparable to $4.9 million incurred in the prior year period.

Total assets at March 31, 2014 were $672.6 million, which were comparatively unchanged from assets of $673.5 million at December 31, 2013. Additional liquidity was provided by an increase in cash and cash equivalents. Gross loans receivable decreased $10.5 million from December 31, 2013, reflecting normal payoffs and principal amortization as well as the competitive environment for new loans due to lack of demand. Van Ostenbridge noted, "Our lending efforts are dedicated to building and maintaining a pipeline of loan applications, with underwriting that adheres to our strict guidelines."

Total deposits were $575.4 million at March 31, 2014, reflecting a relatively insignificant decline when compared to deposits of $577.6 million at December 31, 2013. At March 31, 2014 noninterest bearing deposits represented 23.9% of total deposits.

Capital levels continue to significantly exceed the regulatory requirements for a "well capitalized" institution with a tier 1 leverage ratio of 9.22% and a total risk-based capital ratio of 15.13% compared to the regulatory requirements of 4% and 8%, respectively.

Van Ostenbridge concluded, "While the last several years have seen substantial attention and resources devoted to addressing problem loans, the results of those labors are now clearly evident. With asset quality issues now considered to be at a manageable level, our efforts can now be fully directed on our core banking business."

Stewardship Financial Corporation's subsidiary, the 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)  
                   
    March 31,     December 31,     March 31,  
    2014     2013     2013  
                         
Selected Financial Condition Data:                        
  Cash and cash equivalents   $ 27,176     $ 17,405     $ 26,144  
  Securities available for sale     171,692       168,411       175,493  
  Securities held to maturity     24,685       25,964       28,548  
  FHLB Stock     2,133       2,133       2,213  
  Loans receivable:                        
    Loans receivable, gross     423,471       434,009       441,533  
    Allowance for loan losses     (9,792 )     (9,915 )     (11,512 )
    Other, net     105       168       62  
  Loans receivable, net     413,784       424,262       430,083  
                         
  Loans held for sale     186       2,800       2,101  
  Other assets     32,947       32,533       29,344  
  Total assets   $ 672,603     $ 673,508     $ 693,926  
                         
                         
  Noninterest-bearing deposits   $ 137,687     $ 133,565     $ 132,960  
  Interest-bearing deposits     437,729       444,026       462,578  
  Total deposits     575,416       577,591       595,538  
  Other borrowings     25,000       25,000       25,000  
  Securities sold under agreements to repurchase     7,601       7,300       7,344  
  Subordinated debentures     7,217       7,217       7,217  
  Other liabilities     2,209       2,621       2,152  
  Total liabilities     617,443       619,729       637,251  
  Shareholders' equity     55,160       53,779       56,675  
  Total liabilities and shareholders' equity   $ 672,603     $ 673,508     $ 693,926  
                         
  Equity to assets     8.20 %     7.98 %     8.17 %
                         
Asset Quality Data:                        
  Nonaccrual loans   $ 5,073     $ 10,219     $ 17,479  
  Loans past due 90 days or more and accruing     -       -       50  
  Total nonperforming loans     5,073       10,219       17,529  
  Other real estate owned     1,789       451       876  
  Total nonperforming assets   $ 6,862     $ 10,670     $ 18,405  
                         
                         
  Nonperforming loans to total loans     1.20 %     2.34 %     3.97 %
  Nonperforming assets to total assets     1.02 %     1.58 %     2.65 %
  Allowance for loan losses to nonperforming loans     193.02 %     97.03 %     65.67 %
  Allowance for loan losses to total gross loans     2.31 %     2.28 %     2.61 %
                         
                         
   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
             
    For the three months ended  
    March 31,  
    2014     2013  
Selected Operating Data:                
  Interest income   $ 6,145     $ 6,870  
  Interest expense     839       1,004  
    Net interest and dividend income     5,306       5,866  
  Provision for loan losses     -       1,600  
  Net interest and dividend income after provision for loan losses     5,306       4,266  
  Noninterest income:                
    Fees and service charges     421       456  
    Bank owned life insurance     96       76  
    Gain on calls and sales of securities     -       2  
    Gain on sales of mortgage loans     12       162  
    Loss on sales of loans     (241 )     -  
    Gain on sales of other real estate owned     -       126  
    Gain on life insurance proceeds     -       537  
    Other     111       115  
    Total noninterest income     399       1,474  
  Noninterest expenses:                
    Salaries and employee benefits     2,678       2,696  
    Occupancy, net     555       517  
    Equipment     188       184  
    Data processing     387       328  
    FDIC insurance premium     211       150  
    Other     1,075       1,057  
    Total noninterest expenses     5,094       4,932  
  Income before income tax expense (benefit)     611       808  
  Income tax expense (benefit)     105       (14 )
  Net income     506       822  
  Dividends on preferred stock and accretion     171       166  
  Net income available to common stockholders   $ 335     $ 656  
                 
  Weighted avg. no. of diluted common shares     5,956,887       5,930,981  
  Diluted earnings per common share   $ 0.06     $ 0.11  
                 
  Return on average common equity     3.41 %     6.39 %
                 
  Return on average assets     0.31 %     0.49 %
                 
  Yield on average interest-earning assets     3.97 %     4.34 %
  Cost of average interest-bearing liabilities     0.71 %     0.82 %
  Net interest rate spread     3.26 %     3.52 %
                 
  Net interest margin     3.44 %     3.72 %
                   
                   

Contact Information

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