MIDLAND PARK, NJ--(Marketwire - Nov 14, 2011) - Stewardship Financial Corporation (
Stewardship Financial Corporation's President and Chief Executive Officer Paul Van Ostenbridge commented, "On a year to date basis, the improvement in results for the 2011 was attributable to improved net interest and dividend income, a decline in the provision for loan losses and an increase in noninterest income. The loan loss provision, nevertheless, remains elevated -- reflective of the Corporation's level of nonperforming loans."
For the three and nine months ended September 30, 2011 the Corporation recorded a provision for loan losses of $2.3 million and $5.9 million, respectively. The prior year provision for loan losses was $1.5 million and $7.8 million for the three and nine months ended September 30 2010, respectively. The measurements of allowance coverage showed improvement as the total allowance for loan losses increased to 2.69% of total loans from a comparable ratio of 2.40% at June 30, 2011 and 1.88% at December 31, 2010. Furthermore, the ratio of allowance for loans losses to nonperforming loans grew to 45.87% at September 30, 2011, as compared to 37.73% at December 31, 2010.
Nonperforming loans totaled $27.0 million or 5.87% of total loans, at September 30, 2011 compared to $26.2 million, or 5.59% of total loans, at June 30, 2011 and $22.5 million, or 4.98% at December 31, 2010. At September 30, 2011 nonperforming loans included two loans totaling $2.6 million that are reflected as past due 90 days or more and accruing for which the Corporation received full payoffs subsequent to quarter end, including all accrued interest and principal outstanding.
Van Ostenbridge stated, "While the Corporation maintains strong underwriting practices, the economy continues to put an exceptional strain on our customers and the prolonged foreclosure environment presents challenges for the Bank. Nevertheless, the Corporation continues to devote the necessary resources to managing problem assets. We continue to aggressively pursue various workout strategies with the aim of maximizing loan repayments and improving asset quality. We believe our level of reserves for probable loan losses will assist us in aggressively addressing problem loans. In addition, we remain diligent in identifying any loans where there are concerns about collateral and cash flow weaknesses as a result of the current economic conditions."
When compared to the prior year periods, net interest income for the three and nine months ended September 30, 2011 reflected increases of $336,000 and $404,000, respectively. For the three months ended September 30, 2011, the net interest spread and margin of 3.61% and 3.87%, respectively, showed improvement from 3.53% and 3.83%, respectively, for the three months ended September 30, 2010. The net interest spread and margin for the nine months ended September 30, 2011 were 3.61% and 3.86%, respectively, compared to a net interest spread and margin of 3.56% and 3.90%, respectively, for the nine months ended September 30, 2010.
While declines in yields earned on assets reflect the effect of a prolonged low interest rate environment as well as the impact of nonaccrual loans, the Corporation has been successful in managing net interest margin primarily through reduced funding costs. The decrease in funding costs reflects the ongoing reduction in interest rates paid on deposits as a result of the repricing of deposits in the present environment as well as the restructuring of $15 million of Federal Home Loan Bank of New York advances at a lower cost.
The Corporation reported noninterest income of $1.4 million and $3.4 million for the three and nine months ended September 30, 2011, respectively, compared to $759,000 and $3.0 million for the equivalent prior year periods. For the current three and nine month periods noninterest income reflects $245,000 and $835,000, respectively, of gains on sales of mortgage loans compared to $94,000 and $215,000 of such gains for the three and nine months ended September 30, 2010, respectively. As a result of the continued low interest rate environment, an increase in residential mortgage loan application volume has enabled the Corporation to realize increased gains from the sale of these loans. The current year periods also include gains on calls and sales of securities of $454,000 and $475,000 for the three and nine months ended September 30, 2011, respectively. The prior year nine month period included $802,000 of gains on calls and sales of securities.
Noninterest expenses for the three and nine months ended September 30, 2011 were $4.6 million and $13.8 million as compared to $4.6 million and $13.2 million in the comparable prior year periods. Noninterest expenses in the current year periods reflect higher costs associated with the management of nonperforming assets, including salary expense. In addition, due to increased current year profitability, the accruals for benefits such as the Corporation's profit sharing plan are higher in the current year periods when compared with the prior year periods. Partially offsetting these expense increases is a decline in the FDIC insurance premiums reflecting a recent change by the FDIC in the quarterly assessment base.
At September 30, 2011 total assets were $706.2 million, or an increase of $18.2 million compared to $688.1 million of assets at December 31, 2010. The Corporation continues to actively lend and, since year end, gross loans have increased a net $8.7 million.
Deposits were $587.9 million at September 30, 2011, compared to deposits of $575.6 million at December 31, 2010. Average core deposit balances continue to see growth. Noninterest-bearing deposits now total $118.1 million, or 20.1% of total deposits at September 30, 2011, up from $99.7 million, or 17.3% at December 31, 2010.
The Corporation's already strong capital position improved with the September 1, 2011 announcement of a $15 million investment through the purchase by the United States Department of the Treasury of the Corporation's preferred stock affected through the Small Business Lending Fund (the "SBLF"). As disclosed in a prior press release, the SBLF is a voluntary program designed to increase lending to small businesses by providing capital to qualified community banks at favorable rates. The Corporation used a portion of the SBLF proceeds to repurchase from the Treasury the full balance of $10 million of outstanding preferred shares issued under the Capital Purchase Program (the "CPP"). Repurchase of the outstanding warrant issued in connection with the CPP was completed on October 26, 2011.
"As noted throughout this year, the Corporation has remained profitable," Van Ostenbridge stated. "However, we recognize there is still more to accomplish. The troubled real estate market, the struggling economy and the complex regulatory environment remain challenges for the Corporation. However, we believe the Corporation is well positioned from a capital and liquidity standpoint to effectively manage during this demanding economic period. We remain committed to a focus on asset quality, disciplined in our loan and deposit pricing and determined to grow our income and manage of our expenses."
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. 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) | |||||||||||||
| September 30, | June 30, | December 31, | September 30, | ||||||||||
| 2011 | 2011 | 2010 | 2010 | ||||||||||
| Selected Financial Condition Data: | |||||||||||||
| Cash and cash equivalents | $ | 23,736 | $ | 25,866 | $ | 19,983 | $ | 25,158 | |||||
| Securities available for sale | 163,092 | 145,891 | 138,628 | 127,348 | |||||||||
| Securities held to maturity | 39,937 | 41,426 | 45,394 | 47,434 | |||||||||
| FHLB Stock | 2,491 | 2,491 | 2,497 | 2,497 | |||||||||
| Loans receivable: | |||||||||||||
| Loans receivable, gross | 460,518 | 468,668 | 451,866 | 450,507 | |||||||||
| Allowance for loan losses | (12,389 | ) | (11,230 | ) | (8,490 | ) | (9,327 | ) | |||||
| Other, net | (74 | ) | (109 | ) | (131 | ) | (290 | ) | |||||
| Loans receivable, net | 448,055 | 457,329 | 443,245 | 440,890 | |||||||||
| Loans held for sale | 1,152 | - | 9,818 | 9,326 | |||||||||
| Other assets | 27,781 | 27,386 | 28,553 | 27,409 | |||||||||
| Total assets | $ | 706,244 | $ | 700,389 | $ | 688,118 | $ | 680,062 | |||||
| Total deposits | $ | 587,864 | $ | 588,418 | $ | 575,603 | $ | 565,845 | |||||
| Other borrowings | 33,000 | 33,000 | 36,000 | 36,000 | |||||||||
| Subordinated debentures | 7,217 | 7,217 | 7,217 | 7,217 | |||||||||
| Securities sold under agreements to repurchase | 15,191 | 15,791 | 14,642 | 15,241 | |||||||||
| Other liabilities | 3,420 | 2,316 | 2,524 | 2,910 | |||||||||
| Stockholders' equity | 59,552 | 53,647 | 52,132 | 52,849 | |||||||||
| Total liabilities and stockholders' equity | $ | 706,244 | $ | 700,389 | $ | 688,118 | $ | 680,062 | |||||
| Book value per common share | $ | 7.65 | $ | 7.49 | $ | 7.24 | $ | 7.37 | |||||
| Equity to assets | 8.43 | % | 7.66 | % | 7.58 | % | 7.77 | % | |||||
| Asset Quality Data: | |||||||||||||
| Nonaccrual loans | $ | 24,422 | $ | 23,834 | $ | 22,500 | $ | 24,334 | |||||
| Loans past due 90 days or more and accruing | 2,589 | 2,342 | - | 10 | |||||||||
| Total nonperforming loans | 27,011 | 26,176 | 22,500 | 24,344 | |||||||||
| Other real estate owned | 434 | 275 | 615 | 356 | |||||||||
| Total nonperforming assets | $ | 27,445 | $ | 26,451 | $ | 23,115 | $ | 24,700 | |||||
| Non-performing loans to total loans | 5.87 | % | 5.59 | % | 4.98 | % | 5.40 | % | |||||
| Non-performing assets to total assets | 3.89 | % | 3.78 | % | 3.36 | % | 3.63 | % | |||||
| Allowance for loan losses to nonperforming loans | 45.87 | % | 42.90 | % | 37.73 | % | 38.31 | % | |||||
| Allowance for loan losses to total gross loans | 2.69 | % | 2.40 | % | 1.88 | % | 2.07 | % | |||||
| Stewardship Financial Corporation | ||||||||||||||
| Selected Consolidated Financial Information | ||||||||||||||
| (dollars in thousands, except per share amounts) | ||||||||||||||
| (unaudited) | ||||||||||||||
| |
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||
| Selected Operating Data: | ||||||||||||||
| Interest income | $ | 8,018 | $ | 8,095 | $ | 23,826 | $ | 24,791 | ||||||
| Interest expense | 1,732 | 2,145 | 5,370 | 6,739 | ||||||||||
| Net interest and dividend income | 6,286 | 5,950 | 18,456 | 18,052 | ||||||||||
| Provision for loan losses | 2,330 | 1,500 | 5,920 | 7,755 | ||||||||||
| Net interest and dividend income after provision for loan losses | 3,956 | 4,450 | 12,536 | 10,297 | ||||||||||
| Noninterest income: | ||||||||||||||
| Fees and service charges | 501 | 514 | 1,550 | 1,486 | ||||||||||
| Bank owned life insurance | 83 | 82 | 244 | 249 | ||||||||||
| Gain on sales of mortgage loans | 245 | 94 | 835 | 215 | ||||||||||
| Gain on calls and sales of securities | 454 | 0 | 475 | 802 | ||||||||||
| Other | 67 | 69 | 273 | 265 | ||||||||||
| Total noninterest income | 1,350 | 759 | 3,377 | 3,017 | ||||||||||
| Noninterest expenses: | ||||||||||||||
| Salaries and employee benefits | 2,380 | 2,077 | 6,877 | 6,151 | ||||||||||
| Occupancy, net | 516 | 501 | 1,536 | 1,471 | ||||||||||
| Equipment | 235 | 285 | 731 | 871 | ||||||||||
| Data processing | 335 | 334 | 1,010 | 986 | ||||||||||
| FDIC insurance premium | 152 | 251 | 553 | 712 | ||||||||||
| Charitable contributions | 140 | 150 | 315 | 300 | ||||||||||
| Other | 857 | 1,010 | 2,813 | 2,712 | ||||||||||
| Total noninterest expenses | 4,615 | 4,608 | 13,835 | 13,203 | ||||||||||
| Income before income tax expense (benefit) | 691 | 601 | 2,078 | 111 | ||||||||||
| Income tax expense (benefit) | 113 | 261 | 432 | (35 | ) | |||||||||
| Net income | 578 | 340 | 1,646 | 146 | ||||||||||
| Dividends on preferred stock and accretion | 244 | 137 | 520 | 412 | ||||||||||
| Net income (loss) available to common stockholders | $ | 334 | $ | 203 | $ | 1,126 | $ | (266 | ) | |||||
| Weighted avg. no. of diluted common shares | 5,866,575 | 5,842,366 | 5,855,663 | 5,842,565 | ||||||||||
| Diluted earnings (loss) per common share | $ | 0.06 | $ | 0.03 | $ | 0.19 | $ | (0.05 | ) | |||||
| Return on average common equity | 2.35 | % | 1.51 | % | 2.78 | % | -0.66 | % | ||||||
| Return on average assets | 0.32 | % | 0.20 | % | 0.32 | % | 0.03 | % | ||||||
| Yield on average interest-earning assets | 4.91 | % | 5.18 | % | 4.96 | % | 5.32 | % | ||||||
| Cost of average interest-bearing liabilities | 1.30 | % | 1.65 | % | 1.35 | % | 1.76 | % | ||||||
| Net interest rate spread | 3.61 | % | 3.53 | % | 3.61 | % | 3.56 | % | ||||||
| Net interest margin | 3.87 | % | 3.83 | % | 3.86 | % | 3.90 | % | ||||||
Contact Information:
Contact:
Claire M. Chadwick
SVP and Chief Financial Officer
630 Godwin Avenue
Midland Park, NJ 07432
201-444-7100