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Stewardship Financial Corporation Reports Third Quarter of 2017 Earnings

MIDLAND PARK, N.J., Nov. 07, 2017 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced improved results for the current year periods. Net income for the three and nine months ended September 30, 2017 was reported at $1.6 million and $3.9 million, respectively, compared to net income of $1.0 million and $3.4 million for the three and nine months ended September 30, 2016.

Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation commented, “Following a successful capital raise in April 2017 and the opening of a new location in Morristown, NJ in June 2017, the Corporation is focused on growing the bank and generating solid core earnings. Increased revenue will result from a growing loan portfolio and we intend to continue to work to maintain expense levels.”

Operating Results
For the three and nine months ended September 30, 2017, the Corporation reported net interest income of $6.8 million and $19.5 million, respectively. Current net interest income levels reflect improvement over the $5.5 million and $16.7 million reported in the comparable prior year periods, with the current year increases primarily driven by growth in the loan portfolio. Average loan balances increased $146.5 million and $130.7 million for the three and nine months ended September 30, 2017 over the comparable prior year periods. The net interest margins for the current three and nine month periods were 3.09% and 3.15%, respectively, compared to 3.07% and 3.18% for the three and nine months ended September 30, 2016. The margins are generally reflective of an environment with a flattened yield curve.

With year-over-year growth in the loan portfolio, provisions for loan losses of $20,000 and $580,000 were recorded for the three and nine months ended September 30, 2017, respectively, compared to negative provisions for loan losses of $250,000 and $1.1 million for the three and nine months ended September 30, 2016, respectively. As the Corporation continues to maintain stable credit quality, the allowance for loan losses to total gross loans was 1.24% at September 30, 2017 compared to 1.31% at December 31, 2016 and 1.48% a year earlier.

For the three and nine months ended September 30, 2017, noninterest income was $845,000 and $2.5 million, respectively, compared to $823,000 and $2.5 million in the equivalent prior year periods. For the three and nine months ended September 30, 2017, noninterest income included $68,000 and $123,000 of gains on sales of mortgage loans, respectively, compared to $33,000 and $70,000 for the comparable prior year periods. For the nine months ended September 30, 2017, noninterest income included $1,000 of gains on calls and sales of securities compared to $62,000 for the comparable prior year period.

Noninterest expenses for the three and nine months ended September 30, 2017 were $5.0 million and $15.2 million, respectively, compared to $5.0 million and $14.9 million in the comparable prior year periods. “In growing our loan portfolio, we are realizing efficiencies and remain committed to managing our expenses and infrastructure, as appropriate,” stated Van Ostenbridge.

Balance Sheet / Financial Condition
Total assets of $910.7 million at September 30, 2017 reflected a $152.8 million increase, or 20%, from a year earlier. The asset growth was driven by organic loan originations which resulted in a $139.8 million increase in the gross loan portfolio over the last twelve months.

Van Ostenbridge noted, “We have demonstrated our ability to fund the increase in loans with deposit growth coupled with, to a lesser extent, borrowings." At September 30, 2017, deposits totaled $741.0 million, reflecting net growth over the past year of $94.9 million. A mix of organic growth and the retention / expansion of existing relationships has resulted in solid increases in deposits. Other borrowings were $68.8 million at September 30, 2017 compared to $35.0 million at September 30, 2016. Approximately $20 million of the growth in other borrowings can be attributed to a leverage strategy undertaken in conjunction with the capital raise in April 2017.

All regulatory capital levels at September 30, 2017 remain above the levels considered to be "well capitalized" under the applicable regulations. Tier 1 leverage ratio was 8.88% and 7.65% at September 30, 2017 and December 31, 2016, respectively. Total risk based capital ratio was 14.62% at September 30, 2017 compared to 13.10% at December 31, 2016.

The Corporation recently announced the establishment of a Small Business Administration (SBA) Department - staffed with newly hired employees with significant experience in the SBA process. Van Ostenbridge explained, "We view the SBA product offerings as value-added lending solutions for small businesses that do not meet traditional lending requirements."

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.

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


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,
2017 2017 2017 2016 2016
Selected Financial Condition Data:
Cash and cash equivalents$17,213 $19,459 $12,793 $11,680 $21,025
Securities available for sale115,733 116,244 95,632 98,583 103,546
Securities held to maturity53,323 52,091 52,805 52,330 54,179
FHLB stock3,919 5,169 3,784 3,515 2,425
Loans held for sale688 446 188 773 300
Loans receivable:
Loans receivable, gross691,953 692,056 654,769 604,083 552,106
Allowance for loan losses(8,614) (8,550) (8,246) (7,905) (8,150)
Other, net(422) (344) (327) (226) (110)
Loans receivable, net682,917 683,162 646,196 595,952 543,846
Other real estate owned, net 401 401 834
Bank owned life insurance20,943 20,802 16,673 16,558 16,439
Other assets15,958 15,934 15,927 15,743 15,333
Total assets$910,694 $913,307 $844,399 $795,535 $757,927
Noninterest-bearing deposits$171,609 $177,678 $170,566 $169,306 $172,072
Interest-bearing deposits569,352 543,215 530,138 489,624 474,012
Total deposits740,961 720,893 700,704 658,930 646,084
Other borrowings68,760 93,760 65,200 59,200 35,000
Subordinated debentures and subordinated notes23,301 23,284 23,268 23,252 23,235
Other liabilities3,564 2,859 2,810 2,766 2,040
Total liabilities836,586 840,796 791,982 744,148 706,359
Shareholders' equity74,108 72,511 52,417 51,387 51,568
Total liabilities and shareholders' equity$910,694 $913,307 $844,399 $795,535 $757,927
Gross loans to deposits93.39% 96.00% 93.44% 91.68% 85.45%
Equity to assets8.14% 7.94% 6.21% 6.46% 6.80%
Book value per share$8.57 $8.39 $8.55 $8.39 $8.43
Asset Quality Data:
Nonaccrual loans$806 $826 $592 $606 $929
Loans past due 90 days or more and accruing 320
Total nonperforming loans806 1,146 592 606 929
Other real estate owned 401 401 834
Total nonperforming assets$806 $1,146 $993 $1,007 $1,763
Nonperforming loans to total loans0.12% 0.17% 0.09% 0.10% 0.17%
Nonperforming assets to total assets0.09% 0.13% 0.12% 0.13% 0.23%
Allowance for loan losses to total gross loans1.24% 1.24% 1.26% 1.31% 1.48%


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,
2017 2016 2017 2016
Selected Operating Data:
Interest income$8,400 $6,657 $23,767 $20,085
Interest expense1,577 1,113 4,230 3,410
Net interest income6,823 5,544 19,537 16,675
Provision for loan losses20 (250) 580 (1,050)
Net interest income
after provision for loan losses6,803 5,794 18,957 17,725
Noninterest income:
Fees and service charges524 536 1,578 1,595
Bank owned life insurance141 120 385 328
Gain on calls and sales of securities1 6 1 62
Gain on sales of mortgage loans68 33 123 70
Gain on sales of other real estate owned 13 6
Miscellaneous111 128 357 413
Total noninterest income845 823 2,457 2,474
Noninterest expenses:
Salaries and employee benefits2,843 2,788 8,567 8,245
Occupancy, net414 400 1,216 1,202
Equipment173 155 497 453
Data processing444 485 1,369 1,434
Advertising182 165 529 473
FDIC insurance premium50 100 236 296
Charitable contributions130 80 375 240
Bank-card related services137 150 421 431
Other real estate owned, net 27 24 129
Miscellaneous663 649 1,999 1,997
Total noninterest expenses5,036 4,999 15,233 14,900
Income before income tax expense2,612 1,618 6,181 5,299
Income tax expense972 583 2,282 1,911
Net income$1,640 $1,035 $3,899 $3,388
Weighted avg. no. of diluted common shares8,643,737 6,115,987 7,656,942 6,106,723
Diluted earnings per common share$0.19 $0.17 $0.51 $0.55
Return on average common equity8.83% 8.06% 8.02% 9.09%
Return on average assets0.71% 0.54% 0.60% 0.61%
Yield on average interest-earning assets3.80% 3.68% 3.83% 3.83%
Cost of average interest-bearing liabilities0.94% 0.83% 0.89% 0.86%
Net interest rate spread2.86% 2.85% 2.94% 2.97%
Net interest margin3.09% 3.07% 3.15% 3.18%


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,
2017 2017 2017 2016 2016
Selected Operating Data:
Interest income $8,400 $7,943 $7,424 $7,000 $6,657
Interest expense 1,577 1,409 1,244 1,103 1,113
Net interest income 6,823 6,534 6,180 5,897 5,544
Provision for loan losses 20 260 300 (300) (250)
Net interest and dividend income
after provision for loan losses 6,803 6,274 5,880 6,197 5,794
Noninterest income:
Fees and service charges 524 519 535 564 536
Bank owned life insurance 141 129 115 119 120
Gain on calls and sales of securities 1 1 6
Gain on sales of mortgage loans 68 38 17 94 33
Gain on sales of other real estate owned 13 30
Miscellaneous 111 114 132 129 128
Total noninterest income 845 813 799 937 823
Noninterest expenses:
Salaries and employee benefits 2,843 2,880 2,844 2,735 2,788
Occupancy, net 414 393 409 396 400
Equipment 173 162 162 156 155
Data processing 444 456 469 481 485
Advertising 182 211 136 196 165
FDIC insurance premium 50 109 77 21 100
Charitable contributions 130 120 125 135 80
Bank-card related services 137 142 142 148 150
Other real estate owned, net 9 15 14 27
Miscellaneous 663 601 735 720 649
Total noninterest expenses 5,036 5,083 5,114 5,002 4,999
Income before income tax expense 2,612 2,004 1,565 2,132 1,618
Income tax expense 972 736 574 784 583
Net income $1,640 $1,268 $991 $1,348 $1,035
Weighted avg. no. of diluted common shares 8,643,737 8,174,484 6,124,926 6,119,693 6,115,987
Diluted earnings per common share $0.19 $0.16 $0.16 $0.22 $0.17
Return on average common equity 8.83% 7.37% 7.71% 10.40% 8.06%
Return on average assets 0.71% 0.58% 0.49% 0.69% 0.54%
Yield on average interest-earning assets 3.80% 3.81% 3.88% 3.77% 3.68%
Cost of average interest-bearing liabilities 0.94% 0.90% 0.84% 0.80% 0.83%
Net interest rate spread 2.86% 2.91% 3.04% 2.97% 2.85%
Net interest margin 3.09% 3.14% 3.23% 3.18% 3.07%


Source:Stewardship Financial Corp