SOURCE: Stewardship Financial Corporation

May 02, 2011 17:28 ET

Stewardship Financial Corporation Reports Earnings for the First Quarter of 2011

Midland Park, NJ--(Marketwire - May 2, 2011) - Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, announced today results for the first quarter ended March 31, 2011. Net income for the three months ended March 31, 2011 was $483,000, or $0.06 per diluted common share, as compared to net income of $871,000, or $0.13 per diluted common share, for the three months ended March 31, 2010. After dividends on preferred stock and accretion, the net income available to the common stockholders was $345,000 for 2011 compared to $734,000 for 2010.

"We are pleased to report the Corporation was profitable during the first quarter of 2011 despite the effect of the extended economic downturn," said Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer.

Net interest income was $5.9 million in the first quarter of 2011 compared to $6.2 million a year earlier. For the three months ended March 31, 2011, the net interest spread and margin was 3.59% and 3.84%, respectively, which represents a decline from the 3.74% and 4.08%, respectively, reported for the three months ended March 31, 2010. The current period yield on earning assets of 4.99%, compared to an earning asset yield of 5.58% for the three months ended March 31, 2010, reflects the effect of a prolonged low interest rate environment as well as the impact of nonaccrual loans. The cost of interest-bearing liabilities declined to 1.40% for the three months ended March 31, 2011 as compared to 1.84% reported for the same prior year period.

The Corporation recorded a $1.675 million provision for loan losses for the three months ended March 31, 2011 compared to a provision for loan losses of $1.550 million for the March 2010 period. The total allowance for loan losses increased to 2.15% of total loans from a comparable ratio of 1.88% at December 31, 2010 and 1.77% at March 31, 2010.

Commenting on the Corporation's loan loss provision, Van Ostenbridge stated, "Negative economic trends persist and while we are reporting a rise in level of nonperforming loans in the first quarter of 2011, we are aggressively addressing all the problem loans." Nonperforming loans increased to $24.1 million, or 5.25% of total loans at March 31, 2011, compared to $22.6 million, or 5.01% at December 31, 2010. Van Ostenbridge continued, "As our problem loan portfolio migrates through the workout process, we continue to implement loan workout strategies to improve asset quality and maximize loan repayments. While our total nonperforming assets remain at elevated levels, improvement in this area continues to be our top priority as we believe these efforts will be key drivers in improving Stewardship Financial Corporation's future profitability. We have engaged outside workout consultants in addition to bringing on new experienced associates to help us achieve this goal."

The Corporation reported noninterest income of $1.1 million for the three months ended March 31, 2011 compared to $1.0 million for the equivalent prior year period. Noninterest income for the current year period reflects $404,000 of gains on sales of mortgage loans compared to $55,000 of such gains for the three months ended March 31, 2010. While the Corporation did not have investment sales in the 2011 period, during the first quarter of 2010, the Corporation realized a $328,000 gain on sale of securities. In addition, 2011 noninterest income included increased fees and service charges when compared to the same period last year.

Noninterest expenses for the three months ended March 31, 2011 were $4.7 million as compared to $4.4 million in the comparable prior year period. The noninterest expenses include the costs, such as legal and other collection related expenses, incurred in connection with the managing of nonperforming assets.

Total assets at March 31, 2011 reached $700.9 million, representing a $12.8 million increase from assets of $688.1 million at December 31, 2010. Increases in cash and cash equivalents as well as securities reflect planned additional liquidity. Gross loans receivable increased $7.6 million from December 31, 2010, reflecting a positive trend of increasing loan demand.

Total deposits were $591.5 million at March 31, 2011, reflecting $15.9 million of continued strong deposit growth when compared to deposits of $575.6 million at December 31, 2010. The overall 2.8% growth in deposits during the first quarter of 2011 consisted of $2.1 million of interest-bearing and $13.8 million of non-interest-bearing accounts.

Capital levels continue to exceed the regulatory requirements for a "well capitalized" institution with a tier 1 leverage ratio of 8.65% and total risk based capital ratio of 13.47%.

Van Ostenbridge summarized, "We are devoting substantial attention to reducing our nonperforming loans, utilizing both internal and external resources to execute our workout strategies. Historically low interest rates and general economic conditions within our markets continue to pressure earnings. Nevertheless, we are operating from a position of strength with strong liquidity and a solid capital base. We continue to focus on new loan growth funded by our sound development of core deposits. This deposit driven growth will form the foundation of our future growth and profitability."

Stewardship Financial Corporation's subsidiary, the 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. The Bank is currently celebrating its twenty-fifth year of operation. To date, the Bank's total tithe donations exceed $7.3 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)

                                    March 31,   December 31,    March 31,
                                      2011          2010          2010
                                  ------------  ------------  ------------

Selected Financial Condition Data:
   Cash and cash equivalents      $     29,661  $     19,983  $     12,196
   Securities available for sale       148,178       138,628        93,926
   Securities held to maturity          42,460        45,394        70,758
   FHLB Stock                            2,361         2,497         2,390
   Loans receivable:
     Loans receivable, gross           459,508       451,867       461,877
     Allowance for loan losses          (9,874)       (8,490)       (8,174)
     Other, net                            (86)         (132)         (422)
                                  ------------  ------------  ------------
   Loans receivable, net               449,548       443,245       453,281

   Loans held for sale                     827         9,818         2,724
   Other assets                         27,900        28,553        26,951
                                  ------------  ------------  ------------
   Total assets                   $    700,935  $    688,118  $    662,226
                                  ============  ============  ============


   Total deposits                 $    591,509  $    575,603  $    542,930
   Other borrowings                     33,000        36,000        36,000
   Subordinated debentures               7,217         7,217         7,217
   Securities sold under
    agreements to repurchase            14,643        14,642        15,399
   Other liabilities                     2,340         2,524         6,677
   Stockholders' equity                 52,226        52,132        54,003
                                  ------------  ------------  ------------
   Total liabilities and
    stockholders' equity          $    700,935  $    688,118  $    662,226
                                  ============  ============  ============

   Book value per common share    $       7.25  $       7.24  $       7.57

   Equity to assets                       7.45%         7.58%         8.15%

Asset Quality Data:
   Nonaccrual loans               $     24,010  $     22,500  $     19,525
   Loans past due 90 days or
    more and accruing                        -             -             -
   Restructured loans                      120           130         2,775
                                  ------------  ------------  ------------
   Total nonperforming loans            24,130        22,630        22,300
   Other real estate owned                 313           615             -
                                  ------------  ------------  ------------
   Total nonperforming assets     $     24,443  $     23,245  $     22,300
                                  ============  ============  ============


   Non-performing loans to
    total loans                           5.25%         5.01%         4.83%
   Non-performing assets to
    total assets                          3.49%         3.38%         3.37%
   Allowance for loan losses to
    nonperforming loans                  40.92%        37.52%        36.65%
   Allowance for loan losses to
    total gross loans                     2.15%         1.88%         1.77%





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

                                                For the three months ended
                                                  March 31,     March 31,
                                                ------------  ------------
                                                    2011          2010
                                                ------------  ------------
Selected Operating Data:
   Interest income                              $      7,775  $      8,495
   Interest expense                                    1,826         2,316
                                                ------------  ------------
     Net interest and dividend income                  5,949         6,179
   Provision for loan losses                           1,675         1,550
                                                ------------  ------------
   Net interest and dividend income
    after provision for loan losses                    4,274         4,629
   Non-interest income:
     Fees and service charges                            511           469
     Bank owned life insurance                            80            86
     Gain on sales of mortgage loans                     404            55
     Gain on calls and sales of securities                 -           328
     Other                                                89            73
                                                ------------  ------------
     Total noninterest income                          1,084         1,011
   Non-interest expenses:
     Salaries and employee benefits                    2,236         2,126
     Occupancy, net                                      545           489
     Equipment                                           258           309
     Data processing                                     337           325
     FDIC insurance premium                              254           224
     Charitable contributions                            100           165
     Other                                               954           786
                                                ------------  ------------
     Total noninterest expenses                        4,684         4,424
                                                ------------  ------------
   Income before income taxes                            674         1,216
   Income tax expense                                    191           345
                                                ------------  ------------
   Net income                                            483           871
   Dividends on preferred stock and accretion            138           137
                                                ------------  ------------
   Net income available to common stockholders  $        345  $        734
                                                ============  ============

   Weighted avg. no. of diluted common shares      5,849,723     5,841,633
   Diluted earnings per common share            $       0.06  $       0.13

   Return on average common equity                      3.28%         6.68%

   Return on average assets                             0.29%         0.54%

   Yield on average interest-earning assets             4.99%         5.58%
   Cost of average interest-bearing liabilities         1.40%         1.84%
                                                ------------  ------------
   Net interest rate spread                             3.59%         3.74%
                                                ============  ============

   Net interest margin                                  3.84%         4.08%

Contact Information

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