SOURCE: Stewardship Financial Corporation

February 25, 2014 16:01 ET

Stewardship Financial Corporation Announces Year Ended December 31, 2013 Earnings

MIDLAND PARK, NJ--(Marketwired - Feb 25, 2014) -  Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported net income for the year ended December 31, 2013 of $2.5 million compared to $520,000 for the year ended December 31, 2012. For the three months ended December 31, 2013, the Corporation reported net income of $665,000 compared to a net loss of $260,000 for the corresponding three month period in 2012. After dividends on preferred stock and accretion, net income available to common shareholders for the year ended December 31, 2013 was $1.8 million, or $0.31 per diluted common share, compared to $168,000, or $0.03 per diluted common share, for the prior year. For the three months ended December 31, 2013, after dividends on preferred stock and accretion, the Corporation reported net income available to common shareholders of $495,000, or $0.08 per diluted common share, compared to a net loss of $387,000, or a loss of $0.07 per diluted common share, for the three months ended December 31, 2012.

Reflecting on the annual results, Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, commented, "We are very pleased to announce significantly stronger earnings linked with substantial improvement in asset quality."

Net interest income was $5.6 million and $22.8 million for the three months and year ended December 31, 2013, compared to $5.7 million and $23.5 million for the equivalent prior year periods. The net interest margin for the three months and year ended December 31, 2013 of 3.54% and 3.59%, respectively, compared to 3.57% and 3.66% for the three months and year ended December 31, 2012, respectively. "In this prolonged, low interest rate environment, compression in margins remains primarily attributable to reduced asset yields," Van Ostenbridge commented.

For the three months and year ended December 31, 2013 the Corporation recorded a $425,000 and $3.8 million provision for loan losses, respectively. For the prior year, a provision for loan losses of $3.3 million and $10.0 million for the three months and year ended December 31, 2012, respectively, was recorded. Van Ostenbridge stated, "The decline in our provision is reflective of an improvement in credit quality and a reduction in nonperforming assets."

At December 31, 2013, nonperforming assets totaled $10.7 million, or 1.58% of total assets, representing an $8.6 million decline from $19.3 million, or 2.80% of total assets, at December 31, 2012. Van Ostenbridge noted, "We have spent the last few years focused on addressing nonperforming loans and Other Real Estate Owned (OREO) acquired as a result of foreclosure and the 2013 year end balances reflect the results of such efforts." During the fourth quarter of 2013, the Corporation categorized a small group of nonperforming loans as available 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, the decrease in nonperforming assets is partially attributed to the sale of these loans which had a carrying value of $3.6 million. The loans were sold prior to December 31, 2013 and resulted in a net loss to the Corporation of $372,000, reflecting further declines in fair value.

The Corporation reported noninterest income of $525,000 and $4.0 million for the three months and year ended December 31, 2013, respectively, compared to $1.8 million and $6.4 million for the equivalent prior year periods. The current year periods include the previously mentioned loss of $372,000 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 full year period for 2013 included $537,000 as a result of a death benefit insurance payment received. The 2012 periods included significant gains realized from the sale of securities, primarily reflecting transactions executed to lower the Company's risk exposure to rising interest rates and deleverage the balance sheet through the partial prepayment of a higher costing wholesale repurchase agreement. The resulting prior year gain on sale of securities was partially offset by a prepayment premium on a wholesale repurchase agreement, which is included as a component of other noninterest expense for the year ended December 31, 2012.

Noninterest expenses for the three months and year ended December 31, 2013 were $4.9 million and $19.8 million as compared to $4.8 million and $19.7 million in the comparable prior year periods. While the Corporation remains dedicated to controlling expenses, higher salary and employee benefits expense is reflective of staffing necessary to address both increasing regulatory compliance as well the increase in staffing required to focus on commercial lending opportunities and an enhanced credit review function. As noted above, included in noninterest expenses in the year ended December 31, 2012 is a $691,000 prepayment premium incurred with the $7.0 million repayment of a wholesale repurchase agreement.

Total assets of $673.5 million at December 31, 2013 showed a slight decline when compared to $688.4 million of assets at December 31, 2012. Since December 31, 2012, gross loans receivable have decreased $6.4 million as a result of the new loan production being offset by loan workouts as well as payoffs and normal principal amortization. The decline includes the impact of the above discussed $3.6 million nonperforming loan sale. In addition, $2.8 million of other nonperforming loans, representing the lower of cost or estimated fair value of the underlying collateral less costs to sell, have been categorized as available for sale at December 31, 2013.

Deposit balances totaled $577.6 million at December 31, 2013 compared to $590.3 million a year earlier. Core deposit balances (checking, money market and savings accounts) continue to see growth and comprise 76.4% of total deposits at December 31, 2013. In addition, noninterest-bearing deposits continued to grow reaching $133.6 million, or 23.1% of deposits, at December 31, 2013 compared to $124.3 million, or 21.1%, at December 31, 2012.

The Corporation's capital levels remain strong. Tier 1 leverage ratio of 9.04% and total risk based capital ratio of 14.78%, remained relatively stable year over year and still far exceed the regulatory requirements of 4% and 8%, respectively, for a "well capitalized" institution.

In summary, Van Ostenbridge stated, "Over the last few years the Corporation has been committed to improving asset quality. The significant progress seen in the past year represents the results of our commitment. We are encouraged and confident that our current level of loan loss reserves, coupled with strong liquidity and a sound capital base, enable us to move forward."

Stewardship Financial Corporation's subsidiary, Atlantic Stewardship Bank, has 13 banking offices in Midland Park, Hawthorne (2), Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (3), 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 $7.9 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)  
                   
    December 31,     September 30,     December 31,  
    2013     2013     2012  
                         
Selected Financial Condition Data:                        
  Cash and cash equivalents   $ 17,405     $ 15,400     $ 21,016  
  Securities available for sale     168,411       183,411       174,700  
  Securities held to maturity     25,964       26,161       29,718  
  FHLB Stock     2,133       2,813       2,213  
  Loans receivable:                        
    Loans receivable, gross     434,009       439,339       440,423  
    Allowance for loan losses     (9,915 )     (10,704 )     (10,641 )
    Other, net     168       164       50  
  Loans receivable, net     424,262       428,799       429,832  
                           
  Loans held for sale     2,800       910       784  
  Other assets     32,533       31,734       30,125  
  Total assets   $ 673,508     $ 689,228     $ 688,388  
                           
                           
  Noninterest-bearing deposits   $ 133,565     $ 139,918     $ 124,286  
  Interest-bearing deposits     444,026       437,238       465,968  
  Total deposits     577,591       577,156       590,254  
  Other borrowings     25,000       40,100       25,000  
  Securities sold under agreements to repurchase     7,300       8,044       7,343  
  Subordinated debentures     7,217       7,217       7,217  
  Other liabilities     2,621       2,433       2,228  
  Shareholders' equity     53,779       54,278       56,346  
  Total liabilities and shareholders' equity   $ 673,508     $ 689,228     $ 688,388  
                           
  Equity to assets     7.98 %     7.88 %     8.19 %
                         
Asset Quality Data:                        
  Nonaccrual loans   $ 10,219     $ 15,269     $ 18,011  
  Loans past due 90 days or more and accruing     -       -       237  
  Total nonperforming loans     10,219       15,269       18,248  
  Other real estate owned     451       470       1,058  
  Total nonperforming assets   $ 10,670     $ 15,739     $ 19,306  
                           
                           
  Nonperforming loans to total loans     2.34 %     3.48 %     4.14 %
  Nonperforming assets to total assets     1.58 %     2.28 %     2.80 %
  Allowance for loan losses to nonperforming loans     97.03 %     70.10 %     58.31 %
  Allowance for loan losses to total gross loans     2.28 %     2.44 %     2.42 %
                         
                         
                         
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
                         
 
 
 
 
For the three months ended December 31,  
 
 
 
For the year ended December 31,  
 
    2013     2012     2013     2012  
Selected Operating Data:                                
  Interest income   $ 6,529     $ 6,754     $ 26,571     $ 28,707  
  Interest expense     911       1,094       3,813       5,175  
    Net interest and dividend income     5,618       5,660       22,758       23,532  
  Provision for loan losses     425       3,330       3,775       9,995  
  Net interest and dividend income after provision for loan losses     5,193       2,330       18,983       13,537  
  Noninterest income:                                
    Fees and service charges     458       456       1,865       1,998  
    Bank owned life insurance     100       81       351       325  
    Gain on calls and sales of securities     151       1,004       153       2,340  
    Gain on sales of mortgage loans     39       160       649       887  
    Loss on sales of loans     (372 )     -       (372 )     -  
    Gain on sales of other real estate owned     44       (3 )     326       429  
    Gain on life insurance proceeds     -       -       537       -  
    Other     105       79       456       410  
    Total noninterest income     525       1,777       3,965       6,389  
  Noninterest expenses:                                
    Salaries and employee benefits     2,524       2,433       10,501       9,470  
    Occupancy, net     507       515       2,045       1,967  
    Equipment     214       240       794       971  
    Data processing     438       317       1,425       1,291  
    FDIC insurance premium     230       155       876       612  
    Other     988       1,147       4,197       5,342  
    Total noninterest expenses     4,901       4,807       19,838       19,653  
Income (loss) before income tax expense (benefit)     817       (700 )     3,110       273  
Income tax expense (benefit)     152       (440 )     640       (247 )
Net income (loss)     665       (260 )     2,470       520  
Dividends on preferred stock and accretion     170       127       633       352  
Net income (loss) available to common stockholders   $ 495     $ (387 )   $ 1,837     $ 168  
                                 
Weighted avg. no. of diluted common shares     5,942,585       5,923,113       5,937,058       5,908,503  
Diluted (loss) earnings per common share   $ 0.08     $ (0.07 )   $ 0.31     $ 0.03  
                                 
Return on average common equity     4.95 %     -3.56 %     4.54 %     0.39 %
                                 
Return on average assets     0.39 %     -0.15 %     0.36 %     0.07 %
                                 
Yield on average interest-earning assets     4.10 %     4.24 %     4.17 %     4.44 %
Cost of average interest-bearing liabilities     0.74 %     0.86 %     0.78 %     1.00 %
Net interest rate spread     3.36 %     3.38 %     3.39 %     3.44 %
                                 
Net interest margin     3.54 %     3.57 %     3.59 %     3.66 %

Contact Information

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