SOURCE: Stewardship Financial Corporation

November 08, 2013 16:01 ET

Stewardship Financial Corporation Reports Earnings for Third Quarter of 2013

MIDLAND PARK, NJ--(Marketwired - Nov 8, 2013) -  Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported net income for the three and nine months ended September 30, 2013 of $522,000 and $1,805,000, respectively, compared to $328,000 and $780,000 for the corresponding three and nine month periods in 2012. After dividends on preferred stock and accretion, net income available to common shareholders for the current three month period was $352,000, or $0.06 per diluted common share, compared to $216,000, or $0.04 per diluted common share, for the three months ended September 30, 2012. For the first nine months of 2013, net income available to common shareholders was $1,342,000, or $0.23 per diluted common share, compared to $555,000, or $0.09 per diluted common share, during the same period in 2012.

Stewardship Financial Corporation's President and Chief Executive Officer Paul Van Ostenbridge commented, "We are pleased to report solid earnings combined with improving and stabilizing asset quality."

Net interest income was $5.6 million and $17.1 million for the three and nine months ended September 30, 2013, compared to $5.9 million and $17.9 million for the equivalent prior year periods. In addressing net interest income, Van Ostenbridge offered that "In this prolonged, low interest rate environment, compression in margins remains primarily attributable to reduced asset yields." The net interest margin for the current three and nine months ended September 30, 2013 of 3.49% and 3.60%, respectively, compared to 3.62% and 3.67% for the three and nine months ended September 30, 2012, respectively.

For the three and nine months ended September 30, 2013 the Corporation recorded a provision for loan losses of $900,000 and $3.4 million, respectively. Reflective of improvement in nonperforming assets, the current year levels show significant declines from the prior year loan loss provisions of $2.0 million and $6.7 million for the three and nine months ended September 30 2012, respectively.

Nonperforming assets at September 30, 2013 of $15.7 million, or 2.28% of total assets, represented a $12.3 million decline from the $28.0 million, or 4.10% of total assets, at September 30, 2012. Commenting on the Corporation's level of non-performing loans, Van Ostenbridge stated, "Despite the lengthy workout and foreclosure process, we are reassured by the decline in our level of nonperforming assets over the past twelve months and are committed to continue our focus on asset quality."

The Corporation reported noninterest income of $971,000 and $3.4 million for the three and nine months ended September 30, 2013, respectively, compared to $1.7 million and $4.6 million for the equivalent prior year periods. While the nine month period for 2013 included $537,000 as a result of a death benefit insurance payment received, the 2012 periods included greater gains realized from the sale of securities. The gains for the three months ended September 30, 2012 reflected a transaction 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 was partially offset by a prepayment premium, which is included as a component of other noninterest expense.

Noninterest expenses for the three and nine months ended September 30, 2013 were $4.9 million and $14.9 million as compared to $5.2 million and $14.8 million in the comparable prior year periods. Included in noninterest expenses in the prior year periods is a $691,000 prepayment premium incurred with the repayment of the above noted wholesale repurchase agreement. While the Corporation remains dedicated to controlling expenses, an increase in noninterest expenses, excluding the prior year one-time charge, is partially due to higher salary and employee benefits expense. Such increase 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.

At September 30, 2013 total assets were $689.2 million, generally unchanged from the $688.4 million of assets at December 31, 2012. The loan portfolio balance remained relatively flat when compared to December 31, 2012, as a result of the new loan production being offset by loan workouts as well as payoffs and normal principal amortization.

Deposits were $577.2 million at September 30, 2013, compared to deposits of $590.3 million at December 31, 2012. Average core deposit balances continue to see growth. Noninterest-bearing deposits now total $139.9 million, or 24.2% of total deposits at September 30, 2013, up from $124.3 million, or 21.1% at December 31, 2012.

As a summary, Van Ostenbridge stated, "Based on the progress we have seen over the past year, we have demonstrated our commitment to improving asset quality and remain encouraged and confident in our ability to continue to show progress in this goal."

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.

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, which forward looking statements 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,  
    2013     2013     2012     2012  
                         
Selected Financial Condition Data:                                
  Cash and cash equivalents   $ 15,400     $ 14,322     $ 21,016     $ 17,387  
  Securities available for sale     183,411       181,676       174,700       173,999  
  Securities held to maturity     26,161       28,119       29,718       31,890  
  FHLB Stock     2,813       2,133       2,213       2,213  
  Loans receivable:                                
    Loans receivable, gross     439,339       442,006       440,423       437,999  
    Allowance for loan losses     (10,704 )     (10,787 )     (10,641 )     (12,598 )
    Other, net     164       134       50       93  
  Loans receivable, net     428,799       431,353       429,832       425,494  
                                   
  Loans held for sale     910       2,054       784       938  
  Other assets     31,734       29,175       30,125       31,891  
  Total assets   $ 689,228     $ 688,832     $ 688,388     $ 683,812  
                                   
                                   
  Noninterest-bearing deposits   $ 139,918     $ 145,388     $ 124,286     $ 125,060  
  Interest-bearing deposits     437,238       447,311       465,968       458,366  
  Total deposits     577,156       592,699       590,254       583,426  
  Other borrowings     40,100       25,000       25,000       25,000  
  Securities sold under agreements to repurchase     8,044       7,344       7,343       7,342  
  Subordinated debentures     7,217       7,217       7,217       7,217  
  Other liabilities     2,433       2,280       2,228       2,953  
  Shareholders' equity     54,278       54,292       56,346       57,874  
  Total liabilities and shareholders' equity   $ 689,228     $ 688,832     $ 688,388     $ 683,812  
                                   
  Equity to assets     7.88 %     7.88 %     8.19 %     8.46 %
                                 
Asset Quality Data:                                
  Nonaccrual loans   $ 15,269     $ 14,716     $ 18,011     $ 24,960  
  Loans past due 90 days or more and accruing     -       -       237       75  
  Total nonperforming loans     15,269       14,716       18,248       25,035  
  Other real estate owned     470       1,072       1,058       2,985  
  Total nonperforming assets   $ 15,739     $ 15,788     $ 19,306     $ 28,020  
                                   
                                   
  Nonperforming loans to total loans     3.48 %     3.33 %     4.14 %     5.72 %
  Nonperforming assets to total assets     2.28 %     2.29 %     2.80 %     4.10 %
  Allowance for loan losses to nonperforming loans     70.10 %     73.30 %     58.31 %     50.32 %
  Allowance for loan losses to total gross loans     2.44 %     2.44 %     2.42 %     2.88 %
                                   
                                   
                                   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
                         
    For the three months ended     For the nine months ended  
    September 30,     September 30,  
    2013     2012     2013     2012  
Selected Operating Data:                                
  Interest income   $ 6,536     $ 7,120     $ 20,042     $ 21,953  
  Interest expense     940       1,259       2,902       4,081  
    Net interest and dividend income     5,596       5,861       17,140       17,872  
  Provision for loan losses     900       2,000       3,350       6,665  
  Net interest and dividend income after provision for loan losses     4,696       3,861       13,790       11,207  
  Noninterest income:                                
    Fees and service charges     459       496       1,407       1,542  
    Bank owned life insurance     98       83       251       244  
    Gain on calls and sales of securities     -       891       2       1,336  
    Gain on sales of mortgage loans     150       162       610       727  
    Gain (loss) on sales of other real estate owned     156       (37 )     282       432  
    Gain on life insurance proceeds     -       -       537       -  
    Other     108       87       351       331  
    Total noninterest income     971       1,682       3,440       4,612  
  Noninterest expenses:                                
    Salaries and employee benefits     2,570       2,394       7,977       7,037  
    Occupancy, net     518       494       1,538       1,452  
    Equipment     197       240       580       731  
    Data processing     327       324       987       974  
    FDIC insurance premium     220       154       646       457  
    Other     1,042       1,563       3,209       4,195  
    Total noninterest expenses     4,874       5,169       14,937       14,846  
Income before income tax expense     793       374       2,293       973  
Income tax expense     271       46       488       193  
Net income     522       328       1,805       780  
Dividends on preferred stock     170       112       463       225  
Net income available to common shareholders   $ 352     $ 216     $ 1,342     $ 555  
                                 
Weighted avg. no. of diluted common shares     5,939,958       5,916,123       5,935,195       5,903,598  
Diluted earnings per common share   $ 0.06     $ 0.04     $ 0.23     $ 0.09  
                                 
Return on average common equity     3.59 %     1.97 %     4.40 %     1.70 %
                                 
Return on average assets     0.30 %     0.19 %     0.35 %     0.15 %
                                 
Yield on average interest-earning assets     4.07 %     4.37 %     4.20 %     4.49 %
Cost of average interest-bearing liabilities     0.76 %     0.97 %     0.79 %     1.04 %
Net interest rate spread     3.31 %     3.40 %     3.41 %     3.45 %
                                 
Net interest margin     3.49 %     3.62 %     3.60 %     3.67 %

Contact Information

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