SOURCE: Stewardship Financial Corporation

Stewardship Financial Corporation

August 04, 2016 16:05 ET

Stewardship Financial Corporation Announces Second Quarter of 2016 Earnings

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