Stewardship Financial Corporation Announces Second Quarter

MIDLAND PARK, NJ--(Marketwired - August 04, 2016) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, announced net income available to common shareholders for the three and six months ended June 30, 2016 of $1.4 million and $2.4 million, respectively, as compared to net income available to common shareholders of $1.1 million and $1.8 million for the three and six months ended June 30, 2015, respectively.

Commenting on results, Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer stated, "Solid earnings continue to be the result of our efforts on originating quality loans and growing deposits appropriately."

Operating Results

The Corporation reported net interest income of $5.9 million and $11.1 million for the three and six months ended June 30, 2016, respectively, compared to $5.5 million and $10.9 million for the comparable prior year periods. The net interest margin for the current three and six month periods was 3.38% and 3.24%, respectively, compared to 3.40% for both the three and six months ended June 30, 2015. The current year net interest income and margin includes 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 a total of $296,000 and $593,000 of interest expense to the current three and six month periods, respectively, such increases, on an after tax basis, are less than the dividends that would have accrued on the preferred stock. The rate on the preferred stock would have been 4.56% until March 1, 2016, when the dividend rate on the preferred stock would have increased and become fixed at 9%. Offsetting the increase from the Subordinated Notes, for the three and six months ended June 30, 2016, net interest income included approximately $450,000 of nonrecurring interest recoveries and prepayment premiums on loans. Overall, the net interest rate spread and net interest margin for the current year periods reflects an overall decline in loan interest rates -- a result of the historically low market rates in the current environment.

For the three and six months ended June 30, 2016, noninterest income was $832,000 and $1.7 million, respectively, compared to $882,000 and $1.8 million for the equivalent prior year periods. The $149,000 decrease for the six months ended June 30, 2016, reflects the fact that noninterest income included only $56,000 of gains on calls and sales of securities compared to $152,000 in the comparable prior year period. In addition, the six months ended June 30, 2016 included only $6,000 of gains on sales of other real estate owned compared to $53,000 of gains during the six months ended June 30, 2015.

Noninterest expenses for the three and six months ended June 30, 2016 was $5.0 million and $9.9 million respectively, compared to $5.1 million and $10.2 million in the comparable prior year periods. "We continue to be diligent in our expense control and, after careful review of branch activity, effective July 9, 2016, our two Hawthorne branches have been consolidated," Van Ostenbridge stated.

Asset Quality

For the three and six months ended June 30, 2016, results were positively impacted by the Corporation recording negative provisions for loan losses of $450,000 and $800,000, respectively, compared to negative provisions for loan losses of $600,000 and $700,000 for the comparable prior year periods. For 2016, the negative provisions for the three and six month periods were partially driven by $298,000 and $365,000, respectively, of net recoveries of previously charged off loan balances. Furthermore, nonperforming loans continue to decline and were just $949,000, or 0.18% of total loans at June 30, 2016 compared to $1.9 million, or 0.36%, at December 31, 2015. Total nonperforming assets of $1.8 million, which includes other real estate owned, also showed continued improvement and represented just 0.24% of total assets at June 30, 2016 compared to 0.38% at December 31, 2015.

Balance Sheet / Financial Condition

As of June 30, 2016, total assets reached $742.6 million, reflecting a larger balance sheet when compared to assets of $717.9 million at December 31, 2015. New loan originations, partially offset by normal principal amortization and payoffs, resulted in net growth in the loan portfolio of $11.7 million. "Loan growth, based on prudent underwriting, continues to be our number one focus", stated Van Ostenbridge.

Funding of the loan growth has been supported by deposit growth. Total deposits grew to $626.5 million at June 30, 2016, an increase of $21.7 million when compared to deposits of $604.8 million at December 31, 2015.

Regulatory capital levels, at June 30, 2016, continue to significantly exceed the requirements for a "well capitalized" institution with a tier 1 leverage ratio of 7.78% (4% requirement) and total risk based capital ratio of 14.26% (8% requirement).

About Stewardship Financial Corporation

Stewardship Financial Corporation's subsidiary, the Atlantic Stewardship Bank, has 11 banking offices in Midland Park, Hawthorne, 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 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,			September 30,			June 30,
			2016			2016			2015			2015			2015

Selected Financial Condition Data:
	Cash and cash equivalents		$	13,901		$	13,319		$	10,910		$	16,025		$	19,782
	Securities available for sale			98,533			97,637			93,354			86,994			90,850
	Securities held to maturity			65,666			62,427			60,738			60,252			58,363
	FHLB Stock			2,650			2,608			2,608			3,035			2,833
	Loans held for sale			581			783			1,522			1,570			1,416
	Loans receivable:
		Loans receivable, gross		537,638			528,011			526,477			518,168			507,105
		Allowance for loan losses		(8,388	)		(8,540	)		(8,823	)		(8,805	)		(9,299	)
		Other, net		(25	)		(64	)		(98	)		(93	)		(132	)
	Loans receivable, net			529,225			519,407			517,556			509,270			497,674
	Other real estate owned, net			834			1,013			880			587			219
	Bank owned life insurance			16,320			14,212			14,111			14,008			13,905
	Other assets			14,877			15,251			16,209			15,908			16,149
	Total assets		$	742,587		$	726,657		$	717,888		$	707,649		$	701,191


Noninterest-bearing deposits			$	160,461		$	154,201		$	147,828		$	151,078		$	153,546
Interest-bearing deposits				466,008			458,225			456,925			434,790			432,453
Total deposits				626,469			612,426			604,753			585,868			585,999
Other borrowings				40,000			40,000			40,000			49,500			45,000
Subordinated debentures and subordinated notes				23,219			23,203			23,186			23,176			7,217
Other liabilities				2,213			1,836			2,376			2,087			2,123
Total liabilities				691,901			677,465			670,315			660,631			640,339
Shareholders' equity				50,686			49,192			47,573			47,018			60,852
Total liabilities and shareholders' equity			$	742,587		$	726,657		$	717,888		$	707,649		$	701,191

Gross loans to deposits				85.82	%		86.22	%		87.06	%		88.44	%		86.54	%

Equity to assets				6.83	%		6.77	%		6.63	%		6.64	%		8.68	%

Book value per share			$	8.29		$	8.05		$	7.82		$	7.72		$	7.53

Asset Quality Data:
	Nonaccrual loans		$	949		$	2,304		$	1,882		$	2,574		$	2,539
	Loans past due 90 days or more and accruing			-			-			-			-			-
	Total nonperforming loans			949			2,304			1,882			2,574			2,539
	Other real estate owned			834			1,013			880			587			219
	Total nonperforming assets		$	1,783		$	3,317		$	2,762		$	3,161		$	2,758


	Nonperforming loans to total loans			0.18	%		0.44	%		0.36	%		0.50	%		0.50	%
	Nonperforming assets to total assets			0.24	%		0.46	%		0.38	%		0.45	%		0.39	%
	Allowance for loan losses to nonperforming loans			883.88	%		370.66	%		468.81	%		342.07	%		366.25	%
	Allowance for loan losses to total gross loans			1.56	%		1.62	%		1.68	%		1.70	%		1.83	%

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,
			2016			2015			2016			2015
Selected Operating Data:
	Interest income		$	6,979		$	6,360		$	13,428		$	12,554
	Interest expense			1,124			842			2,297			1,635
		Net interest and dividend income		5,855			5,518			11,131			10,919
	Provision for loan losses			(450	)		(600	)		(800	)		(700	)
	Net interest income after provision for loan losses			6,305			6,118			11,931			11,619
	Noninterest income:
		Fees and service charges		530			557			1,059			1,036
		Bank owned life insurance		107			101			208			197
		Gain on calls and sales of securities		32			-			56			152
		Gain on sales of mortgage loans		19			55			37			65
		Gain on sales of other real estate owned		6			-			6			53
		Other		138			169			285			297
		Total noninterest income		832			882			1,651			1,800
	Noninterest expenses:
		Salaries and employee benefits		2,742			2,688			5,457			5,396
		Occupancy, net		404			423			802			890
		Equipment		148			165			298			321
		Data processing		477			459			949			912
		FDIC insurance premium		90			117			196			230
		Other		1,138			1,253			2,199			2,405
		Total noninterest expenses		4,999			5,105			9,901			10,154
Income before income tax expense				2,138			1,895			3,681			3,265
Income tax expense				776			673			1,328			1,126
Net income				1,362			1,222			2,353			2,139
Dividends on preferred stock				-			171			-			342
Net income available to common shareholders			$	1,362		$	1,051		$	2,353		$	1,797

Weighted avg. no. of diluted common shares				6,111,729			6,086,474			6,102,040			6,066,191
Diluted earnings per common share			$	0.22		$	0.17		$	0.39		$	0.30

Return on average common equity				11.05	%		9.25	%		9.64	%		8.03	%

Return on average assets				0.74	%		0.71	%		0.65	%		0.63	%

Yield on average interest-earning assets				4.02	%		3.91	%		3.91	%		3.91	%
Cost of average interest-bearing liabilities				0.86	%		0.70	%		0.88	%		0.68	%
Net interest rate spread				3.16	%		3.21	%		3.03	%		3.23	%

Net interest margin				3.38	%		3.40	%		3.24	%		3.40	%

Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)

			For the three months ended
			June 30,			March 31,			December 31,			September 30,			June 30,
			2016			2016			2015			2015			2015
Selected Operating Data:
	Interest income		$	6,979		$	6,449		$	6,643		$	6,412		$	6,360
	Interest expense			1,124			1,173			1,198			993			842
		Net interest and dividend income		5,855			5,276			5,445			5,419			5,518
	Provision for loan losses			(450	)		(350	)		(275	)		(400	)		(600	)
	Net interest and dividend income after provision for loan losses			6,305			5,626			5,720			5,819			6,118
	Noninterest income:
		Fees and service charges		530			529			558			541			557
		Bank owned life insurance		107			101			103			103			101
		Gain on calls and sales of securities		32			24			17			-			-
		Gain on sales of mortgage loans		19			18			24			52			55
		Gain on sales of other real estate owned		6			-			30			-			-
		Other		138			147			123			142			169
		Total noninterest income		832			819			855			838			882
	Noninterest expenses:
		Salaries and employee benefits		2,742			2,715			2,719			2,785			2,688
		Occupancy, net		404			398			422			427			423
		Equipment		148			150			159			175			165
		Data processing		477			472			467			468			459
		FDIC insurance premium		90			106			106			87			117
		Other		1,138			1,061			1,027			1,183			1,253
		Total noninterest expenses		4,999			4,902			4,900			5,125			5,105
Income before income tax expense				2,138			1,543			1,675			1,532			1,895
Income tax expense				776			552			614			532			673
Net income				1,362			991			1,061			1,000			1,222
Dividends on preferred stock				-			-			-			114			171
Net income available to common shareholders			$	1,362		$	991		$	1,061		$	886		$	1,051

Weighted avg. no. of diluted common shares				6,111,729			6,092,351			6,086,249			6,091,627			6,086,474
Diluted earnings per common share			$	0.22		$	0.16		$	0.17		$	0.15		$	0.17

Return on average common equity				11.05	%		8.21	%		8.89	%		7.58	%		9.25	%

Return on average assets				0.74	%		0.55	%		0.58	%		0.56	%		0.71	%

Yield on average interest-earning assets				4.02	%		3.79	%		3.87	%		3.80	%		3.91	%
Cost of average interest-bearing liabilities				0.86	%		0.90	%		0.92	%		0.79	%		0.70	%
Net interest rate spread				3.16	%		2.89	%		2.95	%		3.01	%		3.21	%

Net interest margin				3.38	%		3.11	%		3.18	%		3.21	%		3.40	%

Contact Information:

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

Stewardship Financial Corporation Announces Second Quarter of 2016 Earnings