SOURCE: Stewardship Financial Corporation

August 05, 2014 16:01 ET

Stewardship Financial Corporation Announces Second Quarter of 2014 Earnings

MIDLAND PARK, NJ--(Marketwired - Aug 5, 2014) -   Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, announced net income for the three months ended June 30, 2014 of $726,000 as compared to net income of $461,000 for the three months ended June 30, 2013. For the six months ended June 30, 2014, the Corporation reported net income of $1.2 million compared to net income of $1.3 million for the corresponding six month period in 2013. After dividends on preferred stock, the net income available to the common shareholders was $890,000, or $0.15 per diluted common share, for the first six months of 2014 compared to $990,000, or $0.17 per diluted common share, for the comparable period of 2013.

For the first six months of 2014, the Corporation did not record a provision for loan losses compared to a provision of $850,000 and $2.5 million for the three and six months ended June 30, 2013, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer stated, "As with the prior quarter, no provision for loan losses was necessary for the six months ended June 30, 2014."

Van Ostenbridge continued noting, "Following our significant improvement in asset quality, the Corporation is demonstrating the ability to sustain our progress." Nonperforming loans totaled $4.9 million, or 1.13% of total loans at June 30, 2014, down slightly from the $5.1 million three months earlier, but a significant improvement when compared to $10.2 million, or 2.34%, at December 31, 2013 and $14.7 million, or 3.33%, a year earlier. Total nonperforming assets, which includes other real estate owned, represented 0.91% of total assets at June 30, 2014 compared to 1.58% and 2.29% at December 31, 2013 and June 30, 2013, respectively.

Components of noninterest income also had a substantial impact on the comparison of current year results with the prior year periods. For the three and six months ended June 30, 2014, the Corporation reported noninterest income of $807,000 and $1.2 million, respectively, compared to $1.0 million and $2.5 million for the corresponding prior year periods. The current six month period includes a loss of $241,000 from the sale of nonperforming loans. Reduced gains on sales of mortgage loans for both the three and six months ended June 30, 2014 are reflective of the impact of rising mortgage rates and corresponding reduction in refinance activity. Further affecting comparisons, the six month period for 2013 included $537,000 as a result of a death benefit insurance payment received.

Net interest income was $5.4 million and $10.7 million for the three and six months ended June 30, 2014, compared to $5.7 million and $11.5 million for the equivalent prior year periods. "The Corporation will continue to manage all expenses, however, the low interest rate environment in which all banks have been operating continues to negatively impact asset yields," said Van Ostenbridge.

Total noninterest expenses were $5.1 million and $10.2 million for the three and six months ended June 30, 2014, consistent with the $5.1 million and $10.1 million incurred for the three and six months ended June 30, 2013, respectively.

Total assets at June 30, 2014 were $671.5 million -- relatively comparable to assets of $673.5 million at December 31, 2013. Likewise, the gross loans receivable balance was not significantly different from December 31, 2013, and was the result of new loan originations being offset by payoffs and normal principal amortization. Securities, in the aggregate, decreased by $4.3 million primarily due to normal pay downs and maturities during the six months ended June 30, 2014. During the current quarter, the Corporation reclassified $24.0 million of securities available for sale to securities held to maturity as the Corporation has the intent and ability to hold these securities until maturity.

Total deposits of $566.4 million at June 30, 2014 reflect a $11.2 million decline when compared to deposits of $577.6 million at December 31, 2013. The composition of deposits continues to show a shift from interest-bearing to noninterest-bearing. From December 31, 2013 to June 30, 2014 the Corporation's noninterest-bearing deposit balances increased $10.1 million and comprised 25.4% of total deposits, up from 23.1% at December 31, 2013.

Capital levels remain strong with a tier 1 leverage ratio of 9.35% and total risk based capital ratio of 14.90%. Van Ostenbridge commented, "We continue to significantly exceed the regulatory capital requirements for a 'well capitalized' institution of 4% and 8%, respectively."

In concluding his remarks, Van Ostenbridge noted, "With the improvement in our asset quality coupled with the moderate, albeit slow, improvement in the economy, our attentions are focused on appropriately underwriting and originating loans and funding such with deposits."

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)  
                         
    June 30,     March 31,     December 31,     June 30,  
    2014     2014     2013     2013  
                                   
Selected Financial Condition Data:                                
  Cash and cash equivalents   $ 14,630     $ 27,176     $ 17,405     $ 14,322  
  Securities available for sale     144,459       171,692       168,411       181,676  
  Securities held to maturity     54,225       24,685       25,964       28,119  
  FHLB Stock     2,429       2,133       2,133       2,133  
  Loans receivable:                                
    Loans receivable, gross     433,198       423,471       434,009       442,006  
    Allowance for loan losses     (9,825 )     (9,792 )     (9,915 )     (10,787 )
    Other, net     40       105       168       134  
  Loans receivable, net     423,413       413,784       424,262       431,353  
                                   
  Loans held for sale     259       186       2,800       2,054  
  Other assets     32,107       32,947       32,533       29,175  
  Total assets   $ 671,522     $ 672,603     $ 673,508     $ 688,832  
                                   
                                   
  Noninterest-bearing deposits   $ 143,711     $ 137,687     $ 133,565     $ 145,388  
  Interest-bearing deposits     422,669       437,729       444,026       447,311  
  Total deposits     566,380       575,416       577,591       592,699  
  Other borrowings     31,000       25,000       25,000       25,000  
  Securities sold under agreements to repurchase     7,601       7,601       7,300       7,344  
  Subordinated debentures     7,217       7,217       7,217       7,217  
  Other liabilities     2,329       2,209       2,621       2,280  
  Total liabilities     614,527       617,443       619,729       634,540  
  Shareholders' equity     56,995       55,160       53,779       54,292  
  Total liabilities and shareholders' equity   $ 671,522     $ 672,603     $ 673,508     $ 688,832  
                                   
  Equity to assets     8.49 %     8.20 %     7.98 %     7.88 %
                                 
Asset Quality Data:                                
  Nonaccrual loans   $ 4,875     $ 5,073     $ 10,219     $ 14,716  
  Loans past due 90 days or more and accruing     -       -       -       -  
  Total nonperforming loans     4,875       5,073       10,219       14,716  
  Other real estate owned     1,225       1,789       451       1,072  
  Total nonperforming assets   $ 6,100     $ 6,862     $ 10,670     $ 15,788  
                                   
                                   
  Nonperforming loans to total loans     1.13 %     1.20 %     2.34 %     3.33 %
  Nonperforming assets to total assets     0.91 %     1.02 %     1.58 %     2.29 %
  Allowance for loan losses to nonperforming loans     201.54 %     193.02 %     97.03 %     73.30 %
  Allowance for loan losses to total gross loans     2.27 %     2.31 %     2.28 %     2.44 %
                                 
                                 
                                 
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,  
    2014     2013     2014     2013  
Selected Operating Data:                                
  Interest income   $ 6,186     $ 6,636     $ 12,331     $ 13,506  
  Interest expense     810       958       1,649       1,962  
    Net interest and dividend income     5,376       5,678       10,682       11,544  
  Provision for loan losses     -       850       -       2,450  
  Net interest and dividend income after provision for loan losses     5,376       4,828       10,682       9,094  
  Noninterest income:                                
    Fees and service charges     504       492       925       948  
    Bank owned life insurance     106       77       202       153  
    Gain on calls and sales of securities     -       -       -       2  
    Gain on sales of mortgage loans     2       298       14       460  
    Loss on sales of loans     -       -       (241 )     -  
    Gain on sales of other real estate owned     54       -       54       126  
    Gain on life insurance proceeds     -       -       -       537  
    Other     141       128       252       243  
    Total noninterest income     807       995       1,206       2,469  
  Noninterest expenses:                                
    Salaries and employee benefits     2,557       2,711       5,235       5,407  
    Occupancy, net     520       503       1,075       1,020  
    Equipment     175       199       363       383  
    Data processing     435       332       822       660  
    FDIC insurance premium     133       276       344       426  
    Other     1,286       1,110       2,361       2,167  
    Total noninterest expenses     5,106       5,131       10,200       10,063  
Income before income tax expense     1,077       692       1,688       1,500  
Income tax expense     351       231       456       217  
Net income     726       461       1,232       1,283  
Dividends on preferred stock     171       127       342       293  
Net income available to common stockholders   $ 555     $ 334     $ 890     $ 990  
                                 
Weighted avg. no. of diluted common shares     5,999,897       5,934,549       5,978,511       5,932,774  
Diluted earnings per common share   $ 0.09     $ 0.06     $ 0.15     $ 0.17  
                                 
Return on average common equity     5.41 %     3.21 %     4.43 %     4.79 %
                                 
Return on average assets     0.44 %     0.27 %     0.37 %     0.38 %
                                 
Yield on average interest-earning assets     4.03 %     4.14 %     3.98 %     4.26 %
Cost of average interest-bearing liabilities     0.70 %     0.78 %     0.70 %     0.80 %
Net interest rate spread     3.33 %     3.36 %     3.28 %     3.46 %
                                 
Net interest margin     3.51 %     3.55 %     3.45 %     3.66 %

Contact Information

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