SOURCE: Stewardship Financial Corporation

Stewardship Financial Corporation

November 06, 2014 16:01 ET

Stewardship Financial Corporation Reports Earnings for Third Quarter of 2014

MIDLAND PARK, NJ--(Marketwired - November 06, 2014) - Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported net income for the three and nine months ended September 30, 2014 of $552,000 and $1,784,000, respectively, compared to net income of $522,000 and $1,805,000 for the equivalent three and nine month periods in 2013. After dividends on preferred stock, net income available to common shareholders for the current three month period was $382,000, or $0.06 per diluted common share, compared to $352,000, or $0.06 per diluted common share, for the three months ended September 30, 2013. For the first nine months of 2014, net income available to common shareholders was $1,272,000, or $0.21 per diluted common share, compared to $1,342,000, or $0.23 per diluted common share, during the same period in 2013.

The Corporation reported net interest income of $5.3 million and $16.0 million for the three and nine months ended September 30, 2014, respectively, compared to $5.6 million and $17.1 million for the corresponding prior year periods.

For both the three and nine months ended September 30, 2014, the Corporation recorded a $250,000 provision for loan losses. For the prior year three and nine month periods ended, the provision for loan losses totaled $900,000 and $3.4 million, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer stated, "Although no provision for loan losses was required for the first half of 2014 due to improved credit metrics of our portfolio, with growth in the loan portfolio, a current quarter provision for loan losses was appropriate."

The components of noninterest income had a significant impact on the comparison of current year results with the prior year periods. Noninterest income for the three and nine months ended September 30, 2014 was $764,000 and $2.0 million, respectively, compared to $1.0 million and $3.4 million for the same prior year periods. Reduced gains on sales of mortgage loans for both the three and nine months ended September 30, 2014 are reflective of the impact from a reduction in refinance activity. The current nine month period includes a loss of $241,000 from the sale of nonperforming loans. Further affecting comparisons, the nine month period for 2013 included noninterest income of $537,000 as a result of a death benefit insurance payment received.

Noninterest expenses totaled $5.0 million and $15.2 million for the three and nine months ended September 30, 2014, relatively consistent with the $4.9 million and $14.9 million incurred for the three and nine months ended September 30, 2013, respectively.

In total, assets at September 30, 2014 were $672.5 million -- reasonably consistent with total assets of $673.5 million at December 31, 2013. A $9.0 million net increase in gross loans receivable (after normal principal amortization and payoffs) was offset by an $8.4 million decrease in cash and securities. Van Ostenbridge noted, "Our loan growth was funded from cash and securities, reflecting an intentional shift in our assets to higher yielding loans." 

Nonperforming loans, in total, were $4.4 million, or 1.00% of total loans at September 30, 2014, down slightly from $4.9 million at June 30, 2014 and down significantly when compared to $10.2 million, or 2.34%, at December 31, 2013 and $15.3 million, or 3.48%, a year earlier. Total nonperforming assets, which includes other real estate owned, were just 0.97% of total assets at September 30, 2014 compared to 1.58% and 2.28% at December 31, 2013 and September 30, 2013, respectively.

Total deposits were $557.0 million at September 30, 2014, reflecting a $20.6 million decline when compared to deposits of $577.6 million at December 31, 2013. As with the shift in the asset base, the composition of deposits continues to show a shift from interest-bearing to noninterest-bearing deposits. During the first nine months of 2014 the Corporation's noninterest-bearing deposit balances increased $6.8 million and comprised 25.2% of total deposits, up from 23.1% at December 31, 2013.

Other borrowings increased to $46.8 million at September 30, 2014 from $25.0 million at December 31, 2014. The increase in other borrowings is partially the result of the replacement of the maturity of $7.0 million of securities sold under agreements to repurchase. In general, other borrowings enable the Corporation to deal with temporary deposit outflows and can assist in managing against rising interest rates through the extension of liabilities.

Capital levels continue to significantly exceed the regulatory capital requirements for a "well capitalized" institution with a tier 1 leverage ratio of 9.37% (4% requirement) and total risk based capital ratio of 14.69% (8% requirement).

Stewardship stockholders of record as of November 3, 2014 will be paid a cash dividend of $0.02 per share on November 17, 2014. Commenting on the increase in the dividend Van Ostenbridge thanked shareholders, "for their patience while we navigated through a very difficult time for the banking industry." 

Van Ostenbridge concluded, "In order to achieve improved loan growth and increasing revenues, our current focus remains on originating loans with funding of such coming from reductions in cash and securities."

Stewardship Financial Corporation's subsidiary, Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne (2), 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 $8.1 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,  
  2014    2014    2013    2013  
                    
Selected Financial Condition 
Data:
                      
 Cash and cash 
equivalents
$10,850    $14,630    $17,405    $15,400  
 Securities available
for sale
 138,255     144,459     168,411     183,411  
 Securities held
to maturity
 54,234     54,225     25,964     26,161  
 FHLB Stock  2,882     2,429     2,133     2,813  
 Loans receivable:                       
  Loans receivable,
gross
 443,006     433,198     434,009     439,339  
  Allowance for loan
losses
 (10,094 )   (9,825 )   (9,915 )   (10,704 )
  Other, net  (17 )   40     168     164  
 Loans receivable, net  432,895     423,413     424,262     428,799  
                        
 Loans held for sale  364     259     2,800     910  
 Other assets  33,072     32,107     32,533     31,734  
 Total assets $672,552    $671,522    $673,508    $689,228  
                        
                        
 Noninterest-bearing
deposits
$140,345    $143,711    $133,565    $139,918  
 Interest-bearing
deposits
 416,666     422,669     444,026     437,238  
 Total deposits  557,011     566,380     577,591     577,156  
 Other borrowings  46,800     31,000     25,000     40,100  
 Securities sold
under agreements
to repurchase
 100     7,601     7,300     8,044  
 Subordinated debentures  7,217     7,217     7,217     7,217  
 Other liabilities  4,166     2,329     2,621     2,433  
 Total liabilities  615,294     614,527     619,729     634,950  
 Shareholders' equity  57,258     56,995     53,779     54,278  
 Total liabilities
and shareholders'
equity
$672,552    $671,522    $673,508    $689,228  
                        
 Equity to assets  8.51%     8.49%     7.98%     7.88%  
                        
Asset Quality Data:                       
 Nonaccrual loans $4,434    $4,875    $10,219    $15,269  
 Loans past due
90 days or more
and accruing
 -     -     -     -  
 Total nonperforming
loans
 4,434     4,875     10,219     15,269  
 Other real estate
owned
 2,090     1,225     451     470  
 Total nonperforming
assets
$6,524    $6,100    $10,670    $15,739  
                        
                        
 Nonperforming
loans
to total loans
 1.00%     1.13%     2.34%     3.48%  
 Nonperforming
assets
to total assets
 0.97%     0.91%     1.58%     2.28%  
 Allowance
for loan losses 
to nonperforming loans
 227.65%     201.54%     97.03%     70.10%  
 Allowance
for loan losses 
to total gross loans
 2.28%     2.27%     2.28%     2.44%  
                
                
 
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
                            
      For the three months   For the nine months
      ended September 30,   ended September 30,
      2014   2013   2014    2013
Selected Operating
Data:
                      
  Interest income $ 6,069   $ 6,536   $ 18,400    $ 20,042
  Interest expense   791     940     2,440      2,902
    Net interest and dividend
income
  5,278     5,596     15,960      17,140
  Provision for loan losses   250     900     250      3,350
  Net interest and dividend income                       
  after provision for loan losses   5,028     4,696     15,710      13,790
  Noninterest income:                       
    Fees and service charges   510     459     1,435      1,407
    Bank owned life insurance   100     98     302      251
    Gain on calls
and sales of securities
  -     -     -      2
    Gain on sales
of mortgage loans
  32     150     46      610
    Loss on sales of loans   -     -     (241 )    -
    Gain on sales of other
real estate owned
  -     156     54      282
    Gain on
life insurance proceeds
  -     -     -      537
    Other   122     108     374      351
    Total noninterest income   764     971     1,970      3,440
  Noninterest expenses:                       
    Salaries and
employee benefits
  2,624     2,570     7,859      7,977
    Occupancy, net   439     518     1,514      1,538
    Equipment   167     197     530      580
    Data processing   433     327     1,255      987
    FDIC
insurance premium
  133     220     477      646
    Other   1,193     1,042     3,554      3,209
    Total noninterest
expenses
  4,989     4,874     15,189      14,937
Income before
income tax expense
  803     793     2,491      2,293
Income tax expense   251     271     707      488
Net income   552     522     1,784      1,805
Dividends
on preferred stock
  170     170     512      463
Net income
available to
common stockholders
$ 382   $ 352   $ 1,272    $ 1,342
                            
Weighted avg. no.
of diluted
common shares
  6,026,848     5,939,958     5,994,800      5,935,195
Diluted earnings
per common share
$ 0.06   $ 0.06   $ 0.21    $ 0.23
                            
Return on
average common equity
  3.58%     3.59%     4.14%      4.40%
                            
Return on
average assets
  0.33%     0.30%     0.36%      0.35%
                            
Yield on average
interest-earning assets
  3.85%     4.07%     3.94%      4.20%
Cost of average
interest-bearing liabilities
  0.68%     0.76%     0.69%      0.79%
Net interest rate
spread
  3.17%     3.31%     3.25%      3.41%
                            
Net interest margin   3.36%     3.49%     3.42%      3.60%

Contact Information

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