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Stewardship Financial Corporation Announces Earnings For The Second Quarter of 2017

MIDLAND PARK, N.J. , Aug. 08, 2017 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced net income for the three and six months ended June 30, 2017 of $1.3 million and $2.3 million, respectively, compared to net income of $1.4 million and $2.4 million for the three and six months ended June 30, 2016. Current year periods were relatively comparable to the same prior year periods, however, the three and six month periods of 2017 reflected provision for loan losses of $260,000 and $560,000 as a result of robust loan growth, while the three and six months ended June 30, 2016 included recoveries of the allowance for loan losses of $450,000 and $800,000, respectively.

Earlier in the quarter, the Corporation announced the successful completion of an underwritten public offering of 2,509,090 shares of the Corporation’s common stock, which included 327,272 shares issued pursuant to the full exercise of the underwriter’s over-allotment option, at a price to the public of $8.25 per share, for aggregate gross proceeds of $20.7 million. The net proceeds to the Corporation, after deducting the underwriting discount and offering expenses, were $18.9 million. The Corporation expects to use the net proceeds of this offering to support organic growth and other general corporate purposes. In connection with the raise of capital, an approximate $20.0 million leverage transaction was completed.

Further, the Corporation celebrated the June 2017 opening of a new branch and loan production office in Morristown, New Jersey. Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer remarked that, “Our Morristown location, which expands our presence in Morris County, will continue to meet the needs of our customers. This new location offers additional conveniences such as advanced technology with a new Interactive Teller Machine, which combines ATM functions with access to a live teller, as well as lending solutions tailored to meet customers’ requests with a commercial lender on-site to provide localized decision-making.”

With respect to the activity during 2017, Van Ostenbridge noted, “In addition to a number of positive accomplishments, the Corporation continued to demonstrate the ability to generate solid core earnings. We were able to maintain expense levels and provide for loan loss reserves for our increasing loan portfolio while continuing to grow assets and increase revenue.”

Operating Results
The Corporation reported net interest income of $6.5 million and $12.7 million for the three and six months ended June 30, 2017, respectively, compared to $5.9 million and $11.1 million for the comparable prior year periods. Net interest income benefited from the recent growth in the average balance of the loan portfolio. The net interest margin for the current three and six month periods was 3.14% and 3.18%, respectively, compared to 3.38% and 3.24% for the three and six months ended June 30, 2016. The compression in margin in the 2017 periods when compared to prior periods is generally reflective of asset growth in an environment with a flattening of the yield curve and, to a lesser extent, the impact of the previously mentioned leverage strategy.

For the three and six months ended June 30, 2017, noninterest income was $813,000 and $1.6 million, respectively, compared to $832,000 and $1.7 million in the equivalent prior year periods. Excluding $32,000 and $56,000 of gains from securities transactions, noninterest income would have been $800,000 and $1.6 million for the three and six months ended June 30, 2016, which are comparable to the current year periods.

Noninterest expenses for the three and six months ended June 30, 2017 were $5.1 million and $10.2 million, respectively, compared to $5.0 million and $9.9 million in the comparable prior year periods. “Even with the substantial growth in assets, we have been able to effectively manage our infrastructure and expenses, resulting in an improvement in our efficiency,” stated Van Ostenbridge.

Balance Sheet / Financial Condition
Total assets at June 30, 2017 were $913.3 million, reflecting an increase of $117.8 million from the $795.5 million of assets at December 31, 2016. The strong organic loan origination levels accounted for $88.0 million of net growth in the gross loan portfolio during the six months ended June 30, 2017.

The continued funding of loan growth has been supported by deposits and, to a lesser extent, borrowings. Total deposits were $720.9 million at June 30, 2017, reflecting net growth of $62.0 million since December 31, 2016. Other borrowings increased to $93.8 million at June 30, 2017 compared to $59.2 million at December 31, 2016. Approximately $20 million of the growth in other borrowings can be attributed to the $20.0 million leverage strategy.

Regulatory capital levels at June 30, 2017 include the net proceeds of $18.9 million from the Corporation's public offering of common stock. The Corporation’s Tier 1 leverage ratio and total risk based capital ratio were 9.15% and 14.36%, respectively, compared to 7.65% and 13.10% at December 31, 2016, respectively.

About Stewardship Financial Corporation
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, is a full-service community bank serving both individuals and businesses. ASB is known for tithing, or sharing, 10% of its taxable income with nonprofit, educational, charitable and/or evangelical religious organizations. To date, ASB’s total tithing donations total over $ 9.3 million. ASB maintains 12 banking locations in NJ including; Hawthorne, Midland Park, Montville, Morristown, North Haledon, Pequannock, Ridgewood, Waldwick, Westwood, Wyckoff and two offices in Wayne. ASB invites you to visit their website at www.asbnow.com for additional information and to learn more.

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, September 30, June 30,
2017 2017 2016 2016 2016
Selected Financial Condition Data:
Cash and cash equivalents$19,459 $12,793 $11,680 $21,025 $13,901
Securities available for sale116,244 95,632 98,583 103,546 98,533
Securities held to maturity52,091 52,805 52,330 54,179 65,666
FHLB stock5,169 3,784 3,515 2,425 2,650
Loans held for sale446 188 773 300 581
Loans receivable:
Loans receivable, gross692,056 654,769 604,083 552,106 537,638
Allowance for loan losses(8,550) (8,246) (7,905) (8,150) (8,388)
Other, net(344) (327) (226) (110) (25)
Loans receivable, net683,162 646,196 595,952 543,846 529,225
Other real estate owned, net 401 401 834 834
Bank owned life insurance20,802 16,673 16,558 16,439 16,320
Other assets15,934 15,927 15,743 15,333 14,877
Total assets$913,307 $844,399 $795,535 $757,927 $742,587
Noninterest-bearing deposits$177,678 $170,566 $169,306 $172,072 $160,461
Interest-bearing deposits543,215 530,138 489,624 474,012 466,008
Total deposits720,893 700,704 658,930 646,084 626,469
Other borrowings93,760 65,200 59,200 35,000 40,000
Subordinated debentures and subordinated notes23,284 23,268 23,252 23,235 23,219
Other liabilities2,859 2,810 2,766 2,040 2,213
Total liabilities840,796 791,982 744,148 706,359 691,901
Shareholders' equity72,511 52,417 51,387 51,568 50,686
Total liabilities and shareholders' equity$913,307 $844,399 $795,535 $757,927 $742,587
Gross loans to deposits96.00% 93.44% 91.68% 85.45% 85.82%
Equity to assets7.94% 6.21% 6.46% 6.80% 6.83%
Book value per share$8.39 $8.55 $8.39 $8.43 $8.29
Asset Quality Data:
Nonaccrual loans$826 $592 $606 $929 $949
Loans past due 90 days or more and accruing320
Total nonperforming loans1,146 592 606 929 949
Other real estate owned 401 401 834 834
Total nonperforming assets$1,146 $993 $1,007 $1,763 $1,783
Nonperforming loans to total loans0.17% 0.09% 0.10% 0.17% 0.18%
Nonperforming assets to total assets0.13% 0.12% 0.13% 0.23% 0.24%
Allowance for loan losses to total gross loans1.24% 1.26% 1.31% 1.48% 1.56%


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,
2017 2016
2017
2016
Selected Operating Data:
Interest income$7,943 $6,979 $15,367 $13,428
Interest expense1,409 1,124 2,653 2,297
Net interest income6,534 5,855 12,714 11,131
Provision for loan losses260 (450) 560 (800)
Net interest income after provision for loan losses6,274 6,305 12,154 11,931
Noninterest income:
Fees and service charges519 530 1,054 1,059
Bank owned life insurance129 107 244 208
Gain on calls and sales of securities 32 56
Gain on sales of mortgage loans38 19 55 37
Gain on sales of other real estate owned13 6 13 6
Miscellaneous114 138 246 285
Total noninterest income813 832 1,612 1,651
Noninterest expenses:
Salaries and employee benefits2,880 2,742 5,724 5,457
Occupancy, net393 404 802 802
Equipment162 148 324 298
Data processing456 477 925 949
Advertising211 157 347 308
FDIC insurance premium109 90 186 196
Charitable contributions120 90 245 160
Bank-card related services142 150 284 281
Other real estate owned, net9 28 24 102
Miscellaneous601 713 1,336 1,348
Total noninterest expenses5,083 4,999 10,197 9,901
Income before income tax expense2,004 2,138 3,569 3,681
Income tax expense736 776 1,310 1,328
Net income$1,268 $1,362 $2,259 $2,353
Weighted avg. no. of diluted common shares8,174,484 6,111,729 7,155,367 6,102,040
Diluted earnings per common share$0.16 $0.22 $0.32 $0.39
Return on average common equity7.37% 11.05% 7.52% 9.64%
Return on average assets0.58% 0.74% 0.54% 0.65%
Yield on average interest-earning assets3.81% 4.02% 3.84% 3.91%
Cost of average interest-bearing liabilities0.90% 0.86% 0.87% 0.88%
Net interest rate spread2.91% 3.16% 2.97% 3.03%
Net interest margin3.14% 3.38% 3.18% 3.24%


Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,
2017
2017
2016
2016
2016
Selected Operating Data:
Interest income $7,943 $7,424 $7,000 $6,657 $6,979
Interest expense 1,409 1,244 1,103 1,113 1,124
Net interest income 6,534 6,180 5,897 5,544 5,855
Provision for loan losses 260 300 (300) (250) (450)
Net interest and dividend income
after provision for loan losses 6,274 5,880 6,197 5,794 6,305
Noninterest income:
Fees and service charges 519 535 564 536 530
Bank owned life insurance 129 115 119 120 107
Gain on calls and sales of securities 1 6 32
Gain on sales of mortgage loans 38 17 94 33 19
Gain on sales of other real estate owned 13 30 6
Miscellaneous 114 132 129 128 138
Total noninterest income 813 799 937 823 832
Noninterest expenses:
Salaries and employee benefits 2,880 2,844 2,735 2,788 2,742
Occupancy, net 393 409 396 400 404
Equipment 162 162 156 155 148
Data processing 456 469 481 485 477
Advertising 211 136 196 165 157
FDIC insurance premium 109 77 21 100 90
Charitable contributions 120 125 135 80 90
Bank-card related services 142 142 148 150 150
Other real estate owned, net 9 15 14 27 28
Miscellaneous 601 735 720 649 713
Total noninterest expenses 5,083 5,114 5,002 4,999 4,999
Income before income tax expense 2,004 1,565 2,132 1,618 2,138
Income tax expense 736 574 784 583 776
Net income $1,268 $991 $1,348 $1,035 $1,362
Weighted avg. no. of diluted common shares 8,174,484 6,124,926 6,119,693 6,115,987 6,111,729
Diluted earnings per common share $0.16 $0.16 $0.22 $0.17 $0.22
Return on average common equity 7.37% 7.71% 10.40% 8.06% 11.05%
Return on average assets 0.58% 0.49% 0.69% 0.54% 0.74%
Yield on average interest-earning assets 3.81% 3.88% 3.77% 3.68% 4.02%
Cost of average interest-bearing liabilities 0.90% 0.84% 0.80% 0.83% 0.86%
Net interest rate spread 2.91% 3.04% 2.97% 2.85% 3.16%
Net interest margin 3.14% 3.23% 3.18% 3.07% 3.38%

Contact: Claire M. Chadwick Executive Vice President and Chief Financial Officer 630 Godwin Avenue Midland Park, NJ 07432 P: 201.444.7100

Source:Stewardship Financial Corporation