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Stewardship Financial Corporation Reports Earnings for Third Quarter of 2016

MIDLAND PARK, N.J., Nov. 09, 2016 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, reported net income available to common shareholders for the three and nine months ended September 30, 2016 of $1.0 million and $3.4 million, respectively, as compared to net income available to common shareholders of $886,000 and $2.7 million for the three and nine months ended September 30, 2015, respectively.

“Solid loan growth funded by a steady increase in deposits continues to contribute to our strong earnings,” stated Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer.

Balance Sheet / Financial Condition
Total assets reached $757.9 million as of September 30, 2016, reflecting a growing balance sheet when compared to assets of $717.9 million at December 31, 2015. New loan originations, partially offset by normal principal amortization and payoffs, resulted in net growth in the loan portfolio of $26.3 million. Van Ostenbridge commented, “We recognize the importance of constant and stable growth in our loan portfolio.”

The strong loan growth continues to be supported by appropriate deposit growth. Total deposits grew to $646.1 million at September 30, 2016, an increase of $41.3 million when compared to deposits of $604.8 million at December 31, 2015.

Regulatory capital levels, at September 30, 2016, continue to significantly exceed the requirements for a “well capitalized” institution with a tier 1 leverage ratio of 7.69% (4% requirement) and total risk based capital ratio of 13.98% (8% requirement).

Operating Results
The Corporation reported net interest income of $5.5 million and $16.7 million for the three and nine months ended September 30, 2016, respectively, compared to $5.4 million and $16.3 million for the comparable prior year periods. Overall, the net interest rate spread and net interest margin for the current year periods reflects an overall decline in loan interest rates – a result of the historically low market rates in the current environment. The net interest margin for the current three and nine month periods was 3.07% and 3.18%, respectively, compared to 3.21% and 3.34% for the three and nine months ended September 30, 2015. The current year net interest income and margin includes the impact of the $16.6 million of Subordinated Notes issued in August 2015 and the subsequent redemption of preferred stock. When compared to the prior year periods, the cost of the Subordinated Notes added a total of $188,000 and $781,000 of interest expense to the current three and nine month periods, respectively. However, such increases, on an after tax basis, are less than the dividends that would have accrued on the preferred stock. The rate on the preferred stock would have been 4.56% until March 1, 2016, when the dividend rate on the preferred stock would have increased and become fixed at 9%.

Noninterest income for the three and nine months ended September 30, 2016 was $823,000 and $2.5 million, respectively, compared to $838,000 and $2.6 million for the equivalent prior year periods. The $164,000 decrease for the nine months ended September 30, 2016 reflects the fact that noninterest income included only $62,000 of gains on calls and sales of securities compared to $152,000 in the comparable prior year period. In addition, the nine months ended September 30, 2016 included only $6,000 of gains on sales of other real estate owned compared to $53,000 of gains during the nine months ended September 30, 2015.

For the three and nine months ended September 30, 2016, noninterest expenses were $5.0 million and $14.9 million, respectively, compared to $5.1 million and $15.3 million in the comparable prior year periods. “We continue to grow the balance sheet without adding to overhead – reflective of our diligent expense control,” Van Ostenbridge noted.

Asset Quality
Both the current year and the prior year periods results were positively impacted by the Corporation recording negative provisions for loan losses, reflective of the ongoing analysis that demonstrates constant improvement of credit quality. Results for the three and nine months ended September 30, 2016 included negative provisions of $250,000 and $1.1 million, respectively, compared to negative provisions for loan losses of $400,000 and $1.1 million for the comparable prior year periods. Nonperforming loans continue to decline and were just $929,000, or 0.17% of total loans at September 30, 2016 compared to $1.9 million, or 0.36%, at December 31, 2015. Total nonperforming assets of $1.8 million, which includes other real estate owned, also showed continued improvement and represented just 0.23% of total assets at September 30, 2016 compared to 0.38% at December 31, 2015.

About Stewardship Financial Corporation
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 11 banking offices in Midland Park, Hawthorne, 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 $8.8 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, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Selected Financial Condition Data:
Cash and cash equivalents$21,025 $13,901 $13,319 $10,910 $16,025
Securities available for sale 103,546 98,533 97,637 93,354 86,994
Securities held to maturity 54,179 65,666 62,427 60,738 60,252
FHLB Stock 2,425 2,650 2,608 2,608 3,035
Loans held for sale 300 581 783 1,522 1,570
Loans receivable:
Loans receivable, gross 552,106 537,638 528,011 526,477 518,168
Allowance for loan losses (8,150) (8,388) (8,540) (8,823) (8,805)
Other, net (110) (25) (64) (98) (93)
Loans receivable, net 543,846 529,225 519,407 517,556 509,270
Other real estate owned, net 834 834 1,013 880 587
Bank owned life insurance 16,439 16,320 14,212 14,111 14,008
Other assets 15,333 14,877 15,251 16,209 15,908
Total assets$757,927 $742,587 $726,657 $717,888 $707,649
Noninterest-bearing deposits$172,072 $160,461 $154,201 $147,828 $151,078
Interest-bearing deposits 474,012 466,008 458,225 456,925 434,790
Total deposits 646,084 626,469 612,426 604,753 585,868
Other borrowings 35,000 40,000 40,000 40,000 49,500
Subordinated debentures and subordinated notes 23,235 23,219 23,203 23,186 23,176
Other liabilities 2,040 2,213 1,836 2,376 2,087
Total liabilities 706,359 691,901 677,465 670,315 660,631
Shareholders' equity 51,568 50,686 49,192 47,573 47,018
Total liabilities and shareholders' equity$757,927 $742,587 $726,657 $717,888 $707,649
Gross loans to deposits 85.45% 85.82% 86.22% 87.06% 88.44%
Equity to assets 6.80% 6.83% 6.77% 6.63% 6.64%
Book value per share$8.43 $8.29 $8.05 $7.82 $7.72
Asset Quality Data:
Nonaccrual loans$929 $949 $2,304 $1,882 $2,574
Loans past due 90 days or more and accruing - - - - -
Total nonperforming loans 929 949 2,304 1,882 2,574
Other real estate owned 834 834 1,013 880 587
Total nonperforming assets$1,763 $1,783 $3,317 $2,762 $3,161
Nonperforming loans to total loans 0.17% 0.18% 0.44% 0.36% 0.50%
Nonperforming assets to total assets 0.23% 0.24% 0.46% 0.38% 0.45%
Allowance for loan losses to total gross loans 1.48% 1.56% 1.62% 1.68% 1.70%


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,
2016 2015 2016 2015
Selected Operating Data:
Interest income $ 6,657 $ 6,412 $ 20,085 $ 18,966
Interest expense 1,113 993 3,410 2,628
Net interest and dividend income 5,544 5,419 16,675 16,338
Provision for loan losses (250) (400) (1,050) (1,100)
Net interest income
after provision for loan losses 5,794 5,819 17,725 17,438
Noninterest income:
Fees and service charges 536 541 1,595 1,577
Bank owned life insurance 120 103 328 300
Gain on calls and sales of securities 6 - 62 152
Gain on sales of mortgage loans 33 52 70 117
Gain on sales of other real estate owned - - 6 53
Other 128 142 413 439
Total noninterest income 823 838 2,474 2,638
Noninterest expenses:
Salaries and employee benefits 2,788 2,785 8,245 8,181
Occupancy, net 400 427 1,202 1,317
Equipment 155 175 453 496
Data processing 485 468 1,434 1,380
FDIC insurance premium 100 87 296 317
Other 1,071 1,183 3,270 3,588
Total noninterest expenses 4,999 5,125 14,900 15,279
Income before income tax expense 1,618 1,532 5,299 4,797
Income tax expense 583 532 1,911 1,658
Net income 1,035 1,000 3,388 3,139
Dividends on preferred stock - 114 - 456
Net income available to common shareholders $ 1,035 $ 886 $ 3,388 $ 2,683
Weighted avg. no. of diluted common shares 6,115,987 6,091,627 6,106,723 6,074,763
Diluted earnings per common share $ 0.17 $ 0.15 $ 0.55 $ 0.44
Return on average common equity 8.06% 7.58% 9.09% 7.88%
Return on average assets 0.54% 0.56% 0.61% 0.60%
Yield on average interest-earning assets 3.68% 3.80% 3.83% 3.87%
Cost of average interest-bearing liabilities 0.83% 0.79% 0.86% 0.72%
Net interest rate spread 2.85% 3.01% 2.97% 3.15%
Net interest margin 3.07% 3.21% 3.18% 3.34%


Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
For the three months ended
September 30, June 30, March 31, December 31, September 30,
2016 2016 2016 2015 2015
Selected Operating Data:
Interest income $ 6,657 $ 6,979 $ 6,449 $ 6,643 $ 6,412
Interest expense 1,113 1,124 1,173 1,198 993
Net interest and dividend income 5,544 5,855 5,276 5,445 5,419
Provision for loan losses (250) (450) (350) (275) (400)
Net interest and dividend income
after provision for loan losses 5,794 6,305 5,626 5,720 5,819
Noninterest income:
Fees and service charges 536 530 529 558 541
Bank owned life insurance 120 107 101 103 103
Gain on calls and sales of securities 6 32 24 17 -
Gain on sales of mortgage loans 33 19 18 24 52
Gain on sales of other real estate owned - 6 - 30 -
Other 128 138 147 123 142
Total noninterest income 823 832 819 855 838
Noninterest expenses:
Salaries and employee benefits 2,788 2,742 2,715 2,719 2,785
Occupancy, net 400 404 398 422 427
Equipment 155 148 150 159 175
Data processing 485 477 472 467 468
FDIC insurance premium 100 90 106 106 87
Other 1,071 1,138 1,061 1,027 1,183
Total noninterest expenses 4,999 4,999 4,902 4,900 5,125
Income before income tax expense 1,618 2,138 1,543 1,675 1,532
Income tax expense 583 776 552 614 532
Net income 1,035 1,362 991 1,061 1,000
Dividends on preferred stock - - - - 114
Net income available to common shareholders $ 1,035 $ 1,362 $ 991 $ 1,061 $ 886
Weighted avg. no. of diluted common shares 6,115,987 6,111,729 6,092,351 6,086,249 6,091,627
Diluted earnings per common share $ 0.17 $ 0.22 $ 0.16 $ 0.17 $ 0.15
Return on average common equity 8.06% 11.05% 8.21% 8.89% 7.58%
Return on average assets 0.54% 0.74% 0.55% 0.58% 0.56%
Yield on average interest-earning assets 3.68% 4.02% 3.79% 3.87% 3.80%
Cost of average interest-bearing liabilities 0.83% 0.86% 0.90% 0.92% 0.79%
Net interest rate spread 2.85% 3.16% 2.89% 2.95% 3.01%
Net interest margin 3.07% 3.38% 3.11% 3.18% 3.21%


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

Source:Stewardship Financial Corporation