SOURCE: Stewardship Financial Corporation

Stewardship Financial Corporation

May 10, 2016 16:05 ET

Stewardship Financial Corporation Announces Improved Earnings for First Quarter of 2016

MIDLAND PARK, NJ--(Marketwired - May 10, 2016) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, announced net income available to common shareholders for the three months ended March 31, 2016 of $991,000, or $0.16 per common share, as compared to $746,000, or $0.12 per common share, for the three months ended March 31, 2015.

"The Corporation continues to demonstrate an ability to produce steadily improving results," stated Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer.

Operating Results
Net interest income was $5.3 million for the first quarter of 2016 compared to $5.4 million for the comparable period a year earlier. The net interest margin for the three months ended March 31, 2016 was 3.11% compared to 3.41% for the three months ended March 31, 2015. The current year decline in net interest rate margin partially reflects the impact of the $16.6 million of Subordinated Notes issued in August 2015 and the subsequent redemption of preferred stock. While the cost of the Subordinated Notes added $296,000 of interest expense to the current year period, such increase, on an after tax basis, 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 become fixed at 9%, ultimately making the issuance of the subordinated notes a positive impact to future net income available to common shareholders.

The Corporation reported noninterest income of $819,000 for the three months ended March 31, 2016 compared to $918,000 for the equivalent prior year period. Excluding gains from securities transactions and gains from the sale of other real estate owned, noninterest income for the current year period of $795,000 represents an $82,000 improvement when measured against a comparable figure of $713,000 for the three months ended March 31, 2015. Approximately $50,000 of the increase is reflected in fees and service charges.

Total noninterest expenses were $4.9 million for the three months ended March 31, 2016 -- relatively comparable to the $5.0 million incurred in the prior year period.  "We are committed to controlling expenses as we grow our balance sheet," stated Van Ostenbridge.

Asset Quality
Results for the three months ended March 31, 2016 were positively impacted by the Corporation recording a negative provision for loan losses of $350,000 as compared to a negative provision for loan losses of $100,000 for the three months ended March 31, 2015. During the three months ended March 31, 2016, the Corporation recorded a $67,000 net recovery of previously charged off loan balances. In addition, both quantitative and qualitative factors evaluated in determining reserve levels continue to show improvement, thereby supporting a lower overall reserve level.

Balance Sheet / Financial Condition
Total assets at March 31, 2016 were $726.7 million, reflecting an increase from the $717.9 million of assets at December 31, 2015. While lower than recent quarters, the net impact of new loan originations, partially offset by normal principal amortization and payoffs, resulted in growth in the loan portfolio. To supplement the loan growth, funds were invested in securities, so as to contribute to the Corporation's overall yield on earning assets. According to Van Ostenbridge, "The Corporation intends to utilize cash flows from the securities portfolios to help fund future loan growth."

Total deposits were $612.4 million at March 31, 2016, reflecting net growth of $7.7 million since December 31, 2015. The Corporation continues to experience growth in both noninterest-bearing and interest-bearing deposits.

At March 31, 2016, the Corporation's Tier 1 and total risk based capital ratios were 10.28% and 14.45%, respectively. These ratios are both significantly above the respective 4.0% and 8% minimum levels required and result in categorizing the Corporation as a "well capitalized" institution under regulatory guidelines.

About Stewardship Financial Corporation
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 $8.8 million.

We invite you to visit our website at www.asbnow.com for additional information.

The information disclosed in this document contains cert ain "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,     September 30,     June 30,     March 31,  
    2016     2015     2015     2015     2015  
                               
Selected Financial Condition Data:                              
  Cash and cash equivalents   $ 13,319     $ 10,910     $ 16,025     $ 19,782     $ 21,035  
  Securities available for sale     97,637       93,354       86,994       90,850       94,553  
  Securities held to maturity     62,427       60,738       60,252       58,363       55,811  
  FHLB Stock     2,608       2,608       3,035       2,833       3,026  
  Loans held for sale     783       1,522       1,570       1,416       798  
  Loans receivable:                                        
    Loans receivable, gross     528,011       526,477       518,168       507,105       490,087  
    Allowance for loan losses     (8,540 )     (8,823 )     (8,805 )     (9,299 )     (9,600 )
    Other, net     (64 )     (98 )     (93 )     (132 )     (7 )
  Loans receivable, net     519,407       517,556       509,270       497,674       480,480  
  Other real estate owned, net     1,013       880       587       219       320  
  Bank owned life insurance     14,212       14,111       14,008       13,905       13,804  
  Other assets     15,251       16,209       15,908       16,149       15,990  
  Total assets   $ 726,657     $ 717,888     $ 707,649     $ 701,191     $ 685,817  
 
                                       
                                         
  Noninterest-bearing deposits   $ 154,201     $ 147,828     $ 151,078     $ 153,546     $ 141,406  
  Interest-bearing deposits     458,225       456,925       434,790       432,453       424,916  
  Total deposits     612,426       604,753       585,868       585,999       566,322  
  Other borrowings     40,000       40,000       49,500       45,000       50,000  
  Subordinated debentures and subordinated notes     23,203       23,186       23,176       7,217       7,217  
  Other liabilities     1,836       2,376       2,087       2,123       2,166  
  Total liabilities     677,465       670,315       660,631       640,339       625,705  
  Shareholders' equity     49,192       47,573       47,018       60,852       60,112  
  Total liabilities and shareholders' equity   $ 726,657     $ 717,888     $ 707,649     $ 701,191     $ 685,817  
                                         
  Gross loans to deposits     86.22%       87.06%       88.44%       86.54%       86.54%  
                                         
  Equity to assets     6.77%       6.63%       6.64%       8.68%       8.77%  
                                         
  Book value per share   $ 8.05     $ 7.82     $ 7.72     $ 7.53     $ 7.42  
                                         
Asset Quality Data:                                        
  Nonaccrual loans   $ 2,304     $ 1,882     $ 2,574     $ 2,539     $ 2,798  
  Loans past due 90 days or more and accruing     -       -       -       -       -  
  Total nonperforming loans     2,304       1,882       2,574       2,539       2,798  
  Other real estate owned     1,013       880       587       219       320  
  Total nonperforming assets   $ 3,317     $ 2,762     $ 3,161     $ 2,758     $ 3,118  
                                         
                                         
  Nonperforming loans to total loans     0.44%       0.36%       0.50%       0.50%       0.57%  
  Nonperforming assets to total assets     0.46%       0.38%       0.45%       0.39%       0.45%  
  Allowance for loan losses to nonperforming loans     370.66%       468.81%       342.07%       366.25%       343.10%  
  Allowance for loan losses to total gross loans     1.62%       1.68%       1.70%       1.83%       1.96%  
                                         
   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
           
  For the three months ended  
  March 31,  
  2016     2015  
Selected Operating Data:              
  Interest income $ 6,449     $ 6,194  
  Interest expense   1,173       793  
    Net interest and dividend income   5,276       5,401  
  Provision for loan losses   (350 )     (100 )
  Net interest income after provision for loan losses   5,626       5,501  
  Noninterest income:              
    Fees and service charges   529       479  
    Bank owned life insurance   101       96  
    Gain on calls and sales of securities   24       152  
    Gain on sales of mortgage loans   18       10  
    Gain on sales of other real estate owned   -       53  
    Other   147       128  
    Total noninterest income   819       918  
  Noninterest expenses:              
    Salaries and employee benefits   2,715       2,708  
    Occupancy, net   398       467  
    Equipment   150       156  
    Data processing   472       453  
    FDIC insurance premium   106       113  
    Other   1,061       1,152  
    Total noninterest expenses   4,902       5,049  
Income before income tax expense   1,543
      1,370  
Income tax expense   552
      453  
Net income   991       917  
Dividends on preferred stock   -       171  
Net income available to common shareholders $ 991
    $ 746  
               
Weighted avg. no. of diluted common shares   6,092,351       6,045,683  
Diluted earnings per common share $ 0.16
    $ 0.12  
               
Return on average common equity   8.21%
      6.77%  
               
Return on average assets   0.55%
      0.54%  
               
Yield on average interest-earning assets   3.79%
      3.90%  
Cost of average interest-bearing liabilities   0.90%
      0.67%  
Net interest rate spread   2.89%
      3.23%  
               
Net interest margin   3.11%
      3.41%  
   
   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
                               
    For the three months ended  
    March 31,     December 31,     September 30,     June 30,     March 31,  
    2016     2015     2015     2015     2015  
Selected Operating Data:                              
  Interest income   $ 6,449     $ 6,643     $ 6,412     $ 6,360     $ 6,194  
  Interest expense     1,173       1,198       993       842       793  
    Net interest and dividend income     5,276       5,445       5,419       5,518       5,401  
  Provision for loan losses     (350 )     (275 )     (400 )     (600 )     (100 )
  Net interest and dividend income                                        
    after provision for loan losses     5,626       5,720       5,819       6,118       5,501  
  Noninterest income:                                        
    Fees and service charges     529       558       541       557       479  
    Bank owned life insurance     101       103       103       101       96  
    Gain on calls and sales of securities     24       17       -       -       152  
    Gain on sales of mortgage loans     18       24       52       55       10  
    Gain on sales of other real estate owned     -       30       -       -       53  
    Other     147       123       142       169       128  
    Total noninterest income     819       855       838       882       918  
  Noninterest expenses:                                        
    Salaries and employee benefits     2,715       2,719       2,785       2,688       2,708  
    Occupancy, net     398       422       427       423       467  
    Equipment     150       159       175       165       156  
    Data processing     472       467       468       459       453  
    FDIC insurance premium     106       106       87       117       113  
    Other     1,061       1,027       1,183       1,253       1,152  
    Total noninterest expenses     4,902       4,900       5,125       5,105       5,049  
Income before income tax expense     1,543       1,675       1,532       1,895       1,370  
Income tax expense     552       614       532       673       453  
Net income     991       1,061       1,000       1,222       917  
Dividends on preferred stock     -       -       114       171       171  
Net income available to common shareholders   $ 991     $ 1,061     $ 886     $ 1,051     $ 746  
                                         
Weighted avg. no. of diluted common shares     6,092,351       6,086,249       6,091,627       6,086,474       6,045,683  
Diluted earnings per common share   $ 0.16     $ 0.17     $ 0.15     $ 0.17     $ 0.12  
                                         
Return on average common equity     8.21%       8.89%       7.58%       9.25%       6.77%  
                                         
Return on average assets     0.55%       0.58%       0.56%       0.71%       0.54%  
                                         
Yield on average interest-earning assets     3.79%       3.87%       3.80%       3.91%       3.90%  
Cost of average interest-bearing liabilities     0.90%       0.92%       0.79%       0.70%       0.67%  
Net interest rate spread     2.89%       2.95%       3.01%       3.21%       3.23%  
                                         
Net interest margin     3.11%       3.18%       3.21%       3.40%       3.41%  
                                         

Contact Information

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