SOURCE: Stewardship Financial Corporation

August 14, 2012 16:01 ET

Stewardship Financial Corporation Reports Results for the Second Quarter of 2012

MIDLAND PARK, NJ--(Marketwire - Aug 14, 2012) -  Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported results for the second quarter of 2012. Although the Corporation remains profitable on a year to date basis, the Corporation had a net loss for the three months ended June 30, 2012 of $324,000, or $0.06 per diluted common share, as compared to net income of $585,000, or $0.08 per diluted common share, for the three months ended June 30, 2011. For the six months ended June 30, 2012, the Corporation reported net income of $452,000 compared to net income of $1.1 million for the corresponding six month period in 2011. After dividends on preferred stock and accretion, net income available to common shareholders was $339,000 for the first six months of 2012, or $0.06 per diluted common share, compared to $792,000, or $0.14 per diluted common share, during the same period in 2011.

The Corporation recorded a $2.9 million provision for loan losses for the three months ended June 30, 2012 bringing the year to date provision for loan losses to $4.7 million. These amounts compare to provision for loan losses of $1.9 million and $3.6 million for the three and six month periods ended June 30, 2011, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer stated, "The current period loan loss provision is indicative of continuing economic conditions that have contributed to an increase in loan delinquencies and the softness in the real estate market. In addition, based on recent developments occurring in August, 2012 surrounding a single borrower, a $3.0 million loan was placed on nonaccrual retroactive to June 30, 2012. Management's evaluation of the collectability of this loan is based on the best information available at this time." The Corporation monitors its loan portfolio and intends to continue to provide for loan loss reserves based on its ongoing periodic review of the loan portfolio and general market conditions. As a measurement of the allowance coverage, the total allowance for loan losses was 2.68% of total loans compared to ratios of 2.54% at December 31, 2011 and 2.40% at June 30, 2011.

Nonperforming loans totaled $29.7 million at June 30, 2012, an increase from $27.7 million at December 31, 2011. As noted previously, included in nonperforming loans at June 30, 2012 is one loan for $3.0 million. Although the loan was not delinquent, the loan was placed on a nonaccrual status based on recent developments surrounding the borrower which may impact the borrower's repayment ability. The increase in nonaccruals due to this loan was partially offset by payments being received on other nonaccrual loans.

While nonperforming loans reflected an increase, positive results were seen in other real estate owned. The balance in other real estate owned at June 30, 2012 of $2.0 million reflects a substantial decrease from the $5.3 million held at December 31, 2011. "Although the legal process can be long and difficult, once a property is acquired through foreclosure or deed-in-lieu of foreclosure, the Corporation has been successful in quickly disposing of the properties," stated Van Ostenbridge.

For the three and six months ended June 30, 2012, the Corporation reported net interest income of $6.0 million and $12.0 million compared to $6.2 million and $12.2 million for the equivalent prior year periods. The net interest margin for the current three and six months ended June 30, 2012 of 3.69% and 3.70%, respectively, compared to 3.89% and 3.86% for the three and six months ended June 30, 2011, respectively.

For the six months ended June 30, 2012, the Corporation reported noninterest income of $2.5 million compared to $2.0 million for the equivalent prior year period. The 2012 period includes increased gains realized primarily from the sale of securities.

Noninterest expenses for the three and six months ended June 30, 2012 was $4.5 million and $9.2 million, respectively -- comparable to the prior year periods.

Total assets at June 30, 2012 were $700.1 million, a slight decrease from assets of $708.8 million at December 31, 2011. Additional liquidity was provided by an increase in cash and cash equivalents. Gross loans receivable decreased $11.1 million from December 31, 2011, reflecting the current reduced demand for loans and our continued emphasis on thorough credit underwriting.

In total, deposits of $593.5 million at June 30, 2012 were relatively unchanged from total deposits at December 31, 2011. However, the composition of deposits reflected a shift from interest-bearing to noninterest-bearing. From December 31, 2011 to June 30, 2012 the Corporation's noninterest-bearing deposit balances increased $8.2 million.

Van Ostenbridge concluded, "We continue to be challenged by a weak economy and problematic credit environment. The need for an elevated loan loss provision and its impact on our current earnings is disappointing. And, as always, our solid capital position provides us the ability to safely manage through this difficult time."

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 tithe donations total $7.7 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)  
                         
    June 30,     March 31,     December 31,     June 30,  
    2012     2012     2011     2011  
                                 
Selected Financial Condition Data:                                
  Cash and cash equivalents   $ 25,340     $ 24,181     $ 13,698     $ 25,866  
  Securities available for sale     172,712       175,102       170,925       145,891  
  Securities held to maturity     32,993       36,353       38,354       41,426  
  FHLB Stock     2,213       2,266       2,478       2,491  
  Loans receivable:                                
    Loans receivable, gross     445,267       453,671       456,413       468,668  
    Allowance for loan losses     (11,934 )     (13,097 )     (11,604 )     (11,230 )
    Other, net     45       62       (6 )     (109 )
  Loans receivable, net     433,378       440,636       444,803       457,329  
                                 
  Loans held for sale     3,334       1,395       4,711       -  
  Other assets     30,158       32,112       33,849       27,386  
  Total assets   $ 700,128     $ 712,045     $ 708,818     $ 700,389  
                                 
                                 
  Noninterest-bearing deposits   $ 124,017     $ 118,597     $ 115,776     $ 114,518  
  Interest-bearing deposits     469,478       483,486       477,776       473,900  
  Total deposits     593,495       602,083       593,552       588,418  
  Other borrowings     25,000       28,000       32,700       33,000  
  Securities sold under agreements to repurchase     14,342       14,342       14,342       15,791  
  Subordinated debentures     7,217       7,217       7,217       7,217  
  Other liabilities     2,183       2,348       3,215       2,316  
  Stockholders' equity     57,891       58,055       57,792       53,647  
  Total liabilities and stockholders' equity   $ 700,128     $ 712,045     $ 708,818     $ 700,389  
                                 
  Book value per common share   $ 7.27     $ 7.31     $ 7.28     $ 7.49  
                                 
  Equity to assets     8.27 %     8.15 %     8.15 %     7.66 %
                                 
Asset Quality Data:                                
  Nonaccrual loans   $ 29,541     $ 26,823     $ 27,736     $ 23,834  
  Loans past due 90 days or more and accruing     200       -       -       2,342  
  Total nonperforming loans     29,741       26,823       27,736       26,176  
  Other real estate owned     1,991       3,840       5,288       275  
  Total nonperforming assets   $ 31,732     $ 30,663     $ 33,024     $ 26,451  
                                 
                                 
  Nonperforming loans to total loans     6.68 %     5.91 %     6.08 %     5.59 %
  Nonperforming assets to total assets     4.53 %     4.31 %     4.66 %     3.78 %
  Allowance for loan losses to nonperforming loans     40.13 %     48.83 %     41.84 %     42.90 %
  Allowance for loan losses to total gross loans     2.68 %     2.89 %     2.54 %     2.40 %
                                   
   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
   
    For the three months ended     For the six months ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Selected Operating Data:                                
  Interest income   $ 7,317     $ 8,033     $ 14,833     $ 15,808  
  Interest expense     1,357       1,812       2,822       3,638  
    Net interest and dividend income     5,960       6,221       12,011       12,170  
  Provision for loan losses     2,900       1,915       4,665       3,590  
  Net interest and dividend income after provision for loan losses     3,060      
4,306
     
7,346
     
8,580
 
  Noninterest income:                                
    Fees and service charges     531       538       1,046       1,049  
    Bank owned life insurance     81       81       161       161  
    Gain on calls and sales of securities     12       21       445       21  
    Gain on sales of mortgage loans     154       186       565       590  
    Other     133       117       244       206  
    Total noninterest income     911       943       2,461       2,027  
  Noninterest expenses:                                
    Salaries and employee benefits     2,257       2,261       4,643       4,497  
    Occupancy, net     471       475       958       1,020  
    Equipment     243       238       491       496  
    Data processing     316       338       650       675  
    FDIC insurance premium     155       147       303       401  
    Charitable contributions     25       75       175       175  
    Other     987       1,002       1,988       1,956  
    Total noninterest expenses     4,454       4,536       9,208       9,220  
(Loss) income before income tax (benefit) expense     (483 )     713       599       1,387  
Income tax (benefit) expense     (159 )     128       147       319  
Net (loss) income     (324 )     585       452       1,068  
Dividends on preferred stock and accretion     38       138       113       276  
Net (loss) income available to common stockholders   $ (362 )   $ 447     $ 339     $ 792  
                                 
Weighted avg. no. of diluted common shares     5,902,167       5,850,506       5,897,266       5,850,116  
Diluted (loss) earnings per common share   $ (0.06 )   $ 0.08     $ 0.06     $ 0.14  
                                 
Return on average common equity     -3.31 %     4.11 %     1.56 %     3.70 %
                                 
Return on average assets     -0.18 %     0.34 %     0.13 %     0.31 %
                                 
Yield on average interest-earning assets     4.51 %     4.99 %     4.55 %     4.99 %
Cost of average interest-bearing liabilities     1.04 %     1.37 %     1.08 %     1.38 %
Net interest rate spread     3.47 %     3.62 %     3.47 %     3.61 %
                                 
Net interest margin     3.69 %     3.89 %     3.70 %     3.86 %
                                 

Contact Information

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