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 ConditionTotal 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 ResultsThe 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 QualityBoth 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 CorporationStewardship 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. ChadwickEVP and Chief Financial Officer630 Godwin AvenueMidland Park, NJ 07432P: (201) 444-7100

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