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Stewardship Financial Corporation Announces Earnings for Second Quarter of 2013

Stewardship Financial Corporation Announces Earnings for Second Quarter of 2013 
MIDLAND PARK, NJ -- (Marketwired) -- 08/09/13 --  Stewardship
Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship
Bank, announced net income for the three months ended June 30, 2013
of $461,000 as contrasted to a net loss of $324,000 for the three
months ended June 30, 2012. For the six months ended June 30, 2013,
the Corporation reported net income of $1.3 million compared to net
income of $452,000 for the corresponding six month period in 2012.
After dividends on preferred stock, the net income available to the
common shareholders was $990,000, or $0.17 per diluted common share,
for the first six months of 2013 compared to $339,000, or $0.06 per
diluted common share, for the comparable period of 2012. 
The Corporation reported net interest income of $5.7 million and
$11.5 million for the three and six months ended June 30, 2013,
compared to $6.0 million and $12.0 million for the equivalent prior
year periods. The net interest margin for the current three and six
months ended June 30, 2013 of 3.55% and 3.66%, respectively, compared
to 3.69% and 3.70% for the three and six months ended June 30, 2012,
respectively. The compression in margins continues to be primarily
attributable to reduced asset yields resulting from the prolonged,
low interest rate environment. 
For the three and six months ended June 30, 2013, the Corporation
recorded provisions for loan losses of $850,000 and $2.5 million,
respectively, compared to $2.9 million and $4.7 million for the three
and six months ended June 30, 2012, respectively. Paul Van
Ostenbridge, Stewardship Financial Corporation's President and Chief
Executive Officer commented, "The 2013 provision for loan losses is
partially reflective of the reduction in nonperforming loans. While
the economic environment remains challenging for our borrowers, the
Corporation has seen stabilization and declines in problem loans over
the past twelve months." 
Nonperforming loans decreased to $14.7 million, or 3.33% of total
loans at June 30, 2013, compared to $18.2 million, or 4.14% at
December 31, 2012. At June 30, 2013, nonperforming loans are
approximately one-half of the $29.7 million, or 6.68%, reported a
year earlier. The ratio of
 allowance for loan losses to nonperforming
loans increased to 73.30% at June 30, 2013, providing additional
allowance coverage as compared to 58.31% at December 31, 2012 and
40.13% at June 30, 2012. 
With respect to the Corporation's level of non-performing loans, Van
Ostenbridge stated, "We continue to be encouraged by our progress
over the past year. As problem loans continue to migrate through the
lengthy workout phase, often concluding with foreclosure, we believe
additional declines in nonperforming loans would occur." 
For the three and six months ended June 30, 2013, noninterest income
was $1.0 million and $2.5 million, respectively, compared to $1.3
million and $2.9 million for the corresponding prior year periods.
While the six month period for 2013 included $537,000 as a result of
a death benefit insurance payment received, the 2012 periods include
increased gains realized from the sale of securities and other real
estate owned. 
Total noninterest expenses were $5.1 million and $10.1 million for
the three and six months ended June 30, 2013. For the three and six
months ended June 30, 2012, noninterest expenses were $4.8 million
and $9.7 million, respectively. The increase in noninterest expenses
reflects higher salary and employee benefits expense, reflective of
increasing regulatory compliance and the attendant staffing necessary
to oversee all compliance-related issues. In addition, the 
increase
in salary and employee benefits expense is the result of an increased
focus on commercial lending opportunities as well as costs associated
with an enhanced credit review function. 
Total assets at June 30, 2013 were $688.8 million -- relatively
comparable to assets of $688.4 million at December 31, 2012. Gross
loans receivable increased $1.6 million from December 30, 2012,
reflective of new loans recorded partially offset by payoffs and
normal principal amortization. 
Total deposits of $592.7 million at June 30, 2013 show $2.4 million
of deposit growth when compared to deposits of $590.3 million at
December 31, 2012. The composition of deposits continues to reflect a
shift from interest-bearing to noninterest-bearing. From December 31,
2012 to June 30, 2013 the Corporation's noninterest-bearing deposit
balances increased $21.1 million, or 24.5% of total deposits, up from
21.1% at December 31, 2012. 
In concluding his remarks, Van Ostenbridge noted, "We are now seeing
slow and steady progress in reducing our problem loans indicating
that the resources we have devoted are providing the appropriate
results. More improvement is needed and we are fully committed to
this goal." 
Stewardship Financial Corporation's subsidiary, 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.  
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, which forward looking statements 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, 
                                  2013       2013        2012        2012   
                               ---------  ---------  -----------  --------- 
                                                                            
Selected Financial Condition                                                
 Data:                                                                      
  Cash and cash equivalents    $  14,322  $  26,144  $    21,016  $  25,340 
  Securities available for                                                  
   sale                          181,676    175,493      174,700    172,712 
  Securities held to maturity     28,119     28,548       29,718     32,993 
  FHLB Stock                       2,133      2,213        2,213      2,213 
  Loans receivable:                                                         
    Loans receivable, gross      442,006    441,533      440,423    445,267 
    Allowance for loan losses    (10,787)   (11,512)     (10,641)   (11,934)
    Other, net                       134         62           50         45 
                               ---------  ---------  -----------  --------- 
  Loans receivable, net          431,353    430,083      429,832    433,378 
                                                                            
  Loans held for sale              2,054      2,101          784      3,334 
  Other assets                    29,175     29,344       30,125     30,158 
                               ---------  ---------  -----------  --------- 
  Total assets                 $ 688,832  $ 693,926  $   688,388  $ 700,128 
                               =========  =========  ===========  ========= 
                                                                            
                                                                            
  Noninterest-bearing deposits $ 145,388  $ 132,960  $   124,286  $ 124,017 
  Interest-bearing deposits      447,311    462,578      465,968    469,478 
                               ---------  ---------  -----------  --------- 
  Total deposits                 592,699    595,538      590,254    593,495 
  Other borrowings                25,000     25,000       25,000     25,000 
  Securities sold under                                                     
   agreements to repurchase        7,344      7,344        7,343     14,342 
  Subordinated debentures          7,217      7,217        7,217      7,217 
  Other liabilities                2,280      2,152        2,228      2,183 
  Shareholders' equity            54,292     56,675       56,346     57,891 
                               ---------  ---------  -----------  --------- 
  Total liabilities and                                                     
   shareholders' equity        $ 688,832  $ 693,926  $   688,388  $ 700,128 
                               =========  =========  ===========  ========= 
                                                                            
  Equity to assets                  7.88%      8.17%        8.19%      8.27%
                                                                            
Asset Quality Data:                                                         
  Nonaccrual loans             $  14,716  $  17,479  $    18,011  $  29,541 
  Loans past due 90 days or                                                 
   more and accruing                   -         50          237        200 
                               ---------  ---------  -----------  --------- 
  Total nonperforming loans       14,716     17,529       18,248     29,741 
  Other real estate owned         
 1,072        876        1,058      1,991 
                               ---------  ---------  -----------  --------- 
  Total nonperforming assets   $  15,788  $  18,405  $    19,306  $  31,732 
                               =========  =========  ===========  ========= 
                                                                            
                                                                            
  Nonperforming loans to total                                              
   loans                            3.33%      3.97%        4.14%      6.68%
  Nonperforming assets to                                                   
   total assets                     2.29%      2.65%        2.80%      4.53%
  Allowance for loan losses to                                              
   nonperforming loans             73.30%     65.67%       58.31%     40.13%
  Allowance for loan losses to                                              
   total gross loans                2.44%      2.61%        2.42%      2.68%
                                                                            
                                                                            

 
                                                                            
                     Stewardship Financial Corporation                      
                Selected Consolidated Financial Information                 
              (dollars in thousands, except per share amounts)              
                                (unaudited)                                 
                                                                            
                              For the three months     For the six months   
                                      ended                   ended         
                                    June 30,                June 30,        
                             ----------------------  ---------------------- 
                                2013        2012        2013        2012    
                             ----------  ----------  ----------  ---------- 
Selected Operating Data:                                                    
  Interest income            $    6,636  $    7,317  $   13,506  $   14,833 
  Interest expense                  958       1,357       1,962       2,822 
                             ----------  ----------  ----------  ---------- 
    Net interest and                                                        
     dividend income              5,678       5,960      11,544      12,011 
  Provision for loan losses         850       2,900       2,450       4,665 
                             ----------  ----------  ----------  ---------- 
  Net interest and dividend                                                 
   income after provision                                                   
   for loan losses                4,828       3,060       9,094       7,346 
  Noninterest income:                                                       
    Fees and service charges        492         531         948       1,046 
    Bank owned life                                                         
     insurance                       77          81         153         161 
    Gain on calls and sales                                                 
     of securities                    -          12           2         445 
    Gain on sales of                                                        
     mortgage loans                 298         154         460         565 
    Gain on sales of other                                                  
     real estate owned                -         370         126         469 
    Gain on life insurance                                                  
     proceeds                         -           -         537           - 
    Other                           128         133         243         244 
                             ----------  ----------  ----------  ---------- 
    Total noninterest income        995       1,281       2,469       2,930 
  Noninterest expenses:                                                     
    Salaries and employee                                                   
     benefits                     2,711       2,257       5,407       4,643 
    Occupancy, net                  503         471       1,020         958 
    Equipment                       199         243         383         491 
    Data processing                 332         316         660         650 
    FDIC insurance premium          276         155         426         303 
    Other                         1,110       1,382       2,167       2,632 
                             ----------  ----------  ----------  ---------- 
    Total noninterest                                                       
     expenses                     5,131       4,824      10,063       9,677 
                             ----------  ----------  ----------  ---------- 
Income (loss) before income                                                 
 tax expense (benefit)              692        (483)      1,500         599 
Income tax expense (benefit)        231        (159)        217         147 
                             ----------  ----------  ----------  ---------- 
Net income (loss)                   461        (324)      1,283         452 
Dividends on preferred stock        127          38         293         113 
                             ----------  ----------  ----------  ---------- 
Net income (loss) available                                                 
 to common shareholders      $      334  $     (362) $      990  $      339 
                             ==========  ==========  ==========  ========== 
                                                                            
Weighted avg. no. of diluted                                                
 common shares                5,934,549   5,902,167   5,932,774   5,897,266 
Diluted earnings (loss) per                                                 
 common share                $     0.06  $    (0.06) $     0.17  $     0.06 
                                                                            
Return on average common                                                    
 equity                            3.21%      -3.31%       4.79%       1.56%
                                                                            
Return on average assets           0.27%      -0.18%       0.38%       0.13%
                                                                            
Yield on average interest-                                                  
 earning assets                    4.14%       4.51%       4.26%       4.55%
Cost of average interest-                                                   
 bearing liabilities               0.78%       1.04%       0.80%       1.08%
                             ----------  ----------  ----------  ---------- 
Net interest rate spread           3.36%       3.47%       3.46%       3.47%
                             ==========  ==========  ==========  ========== 
                                                                            
Net interest margin                3.55%       3.69%       3.66%       3.70%

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