Stewardship Financial Corporation Reports Earnings for Third Quarter of 2013

Stewardship Financial Corporation Reports Earnings for Third Quarter of 2013 
MIDLAND PARK, NJ -- (Marketwired) -- 11/08/13 --  Stewardship
Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship
Bank, reported net income for the three and nine months ended
September 30, 2013 of $522,000 and $1,805,000, respectively, compared
to $328,000 and $780,000 for the corresponding three and nine month
periods in 2012. After dividends on preferred stock and accretion,
net income available to common shareholders for the current three
month period was $352,000, or $0.06 per diluted common share,
compared to $216,000, or $0.04 per diluted common share, for the
three months ended September 30, 2012. For the first nine months of
2013, net income available to common shareholders was $1,342,000, or
$0.23 per diluted common share, compared to $555,000, or $0.09 per
diluted common share, during the same period in 2012. 
Stewardship Financial Corporation's President and Chief Executive
Officer Paul Van Ostenbridge commented, "We are pleased to report
solid earnings combined with improving and stabilizing asset
quality."  
Net interest income was $5.6 million and $17.1 million for the three
and nine months ended September 30, 2013, compared to $5.9 million
and $17.9 million for the equivalent prior year periods. In
addressing net interest income, Van Ostenbridge offered that "In this
prolonged, low interest rate environment, compression in margins
remains primarily attributable to reduced asset yields." The net
interest margin for the current three and nine months ended September
30, 2013 of 3.49% and 3.60%, respectively, compared to 3.62% and
3.67% for the three and nine months ended September 30, 2012,
respectively. 
For the three and nine months ended September 30, 2013 the
Corporation recorded a provision for loan losses of $900,000 and $3.4
million, respectively. Reflective of improvement in nonperforming
assets, the current year levels show significant declines from the
prior year loan loss provisions of $2.0 million and $6.7 million for
the three and nine months ended September 30 2012, respectively. 
Nonperforming assets at September 30, 2013 of $15.7 million, or 2.28%
of total assets, represented a $12.3 million decline from the $28.0
million, or 4.10% o
f total assets, at September 30, 2012. Commenting
on the Corporation's level of non-performing loans, Van Ostenbridge
stated, "Despite the lengthy workout and foreclosure process, we are
reassured by the decline in our level of nonperforming assets over
the past twelve months and are committed to continue our focus on
asset quality." 
The Corporation reported noninterest income of $971,000 and $3.4
million for the three and nine months ended September 30, 2013,
respectively, compared to $1.7 million and $4.6 million for the
equivalent prior year periods. While the nine month period for 2013
included $537,000 as a result of a death benefit insurance payment
received, the 2012 periods included greater gains realized from the
sale of securities. The gains for the three months ended September
30, 2012 reflected a transaction executed to lower the Company's risk
exposure to rising interest rates and deleverage the balance sheet
through the partial prepayment of a higher costing wholesale
repurchase agreement. The resulting prior year gain was partially
offset by a prepayment premium, which is included as a component of
other noninterest expense. 
Noninterest expenses for the three and nine months ended September
30, 2013 were $4.9 million and $14.9 million as compared to $5.2
million and $14.8 million in the comparable prior year periods.
Included in noninterest expenses in the prior year periods is a
$691,000 prepayment premium incurred with the repayment of the above
noted wholesale repurchase agreement. While the Corporation remains
dedicated to controlling expenses, an increase in noninterest
expenses, excluding the prior year one-time charge, is partially due
to higher salary and employee benefits expense. Such increase is
reflective of staffing necessary to address both increasing
regulatory compliance as well the increase in staffing required to
focus on commercial lending opportunities and an enhanced credit
review function. 
At September 30, 2013 total assets were $689.2 million, generally
unchanged from the $688.4 million of assets at December 31, 2012. The
loan portfolio balance remained relatively flat when compared to
December 31, 2012, as a result of the new loan production being
offset by loan workouts as well as payoffs and normal principal
amortization. 
Deposits were $577.2 million at September 30, 2013, compared to
deposits of $590.3 million at December 31, 2012. Average core deposit
balances continue to see growth. Noninterest-bearing deposits now
total $139.9 million, or 24.2% of total deposits at September 30,
2013, up from $124.3 million, or 21.1% at December 31, 2012. 
As a summary, Van Ostenbridge stated, "Based on the progress we have
seen over the past year, we have demonstrated our commitment to
improving asset quality and remain encouraged and confident in our
ability to continue to show progress in 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)                                 
                                                                            
                      September 30,   June 30,  December 31,  September 30, 
                           2013         2013        2012           2012     
                      -------------  ---------  ------------  ------------- 
                                                                            
Selected Financial                                                          
 Condition Data:                                                            
  Cash and cash                                                         
    
   equivalents        $      15,400  $  14,322  $     21,016  $      17,387 
  Securities                                                                
   available for sale       183,411    181,676       174,700        173,999 
  Securities held to                                                        
   maturity                  26,161     28,119        29,718         31,890 
  FHLB Stock                  2,813      2,133         2,213          2,213 
  Loans receivable:                                                         
    Loans receivable,                                                       
     gross                  439,339    442,006       440,423        437,999 
    Allowance for                                                           
     loan losses            (10,704)   (10,787)      (10,641)       (12,598)
    Other, net                  164        134            50             93 
                      -------------  ---------  ------------  ------------- 
  Loans receivable,                                                         
   net                      428,799    431,353       429,832        425,494 
                                                                            
  Loans held for sale           910      2,054           784            938 
  Other assets               31,734     29,175        30,125         31,891 
                      -------------  ---------  ------------  ------------- 
  Total assets        $     689,228  $ 688,832  $    688,388  $     683,812 
                      =============  =========  ============  ============= 
                                                                            
                                                                            
  Noninterest-bearing                                                       
   deposits           $     139,918  $ 145,388  $    124,286  $     125,060 
  Interest-bearing                                                          
   deposits                 437,238    447,311       465,968        458,366 
                      -------------  ---------  ------------  ------------- 
  Total deposits            577,156    592,699       590,254        583,426 
  Other borrowings           40,100     25,000        25,000         25,000 
  Securities sold                                                           
   under agreements                                                         
   to repurchase              8,044      7,344         7,343          7,342 
  Subordinated                                                              
   debentures                 7,217      7,217         7,217          7,217 
  Other liabilities           2,433      2,280         2,228          2,953 
  Shareholders'                                                             
   equity                    54,278     54,292        56,346         57,874 
                      -------------  ---------  ------------  ------------- 
  Total liabilities                                                         
   and shareholders'                                                        
   equity             $     689,228  $ 688,832  $    688,388  $     683,812 
                      =============  =========  ============  ============= 
                                                                            
  Equity to assets             7.88%      7.88%         8.19%          8.46%
                                                                            
Asset Quality Data:                                                         
  Nonaccrual loans    $      15,269  $  14,716  $     18,011  $      24,960 
  Loans past due 90                                                         
   days or more and                                                         
   accruing                       -          -           237             75 
                      -------------  ---------  ------------  ------------- 
  Total nonperforming                                                       
   loans                     15,269     14,716        18,248         25,035 
  Other real estate                                                         
   owned                        470      1,072         1,058          2,985 
                      -------------  ---------  ------------  ------------- 
  Total nonperforming                                                       
   assets             $      15,739  $  15,788  $     19,306  $      28,020 
                      =============  =========  ============  ============= 
                                                                            
                                                                            
  Nonperforming loans                                                       
   to total loans              3.48%      3.33%         4.14%          5.72%
  Nonperforming                                                             
   assets to total                                                          
   assets                      2.28%      2.29%         2.80%          4.10%
  Allowance for loan                                                        
   losses to                                                                
   nonperforming                                                            
   loans                      70.10%     73.30%        58.31%         50.32%
  Allowance for loan                                                        
   losses to total                                                          
   gross loans                 2.44%      2.44%         2.42%          2.88%
                                                                            
                                                                            
                                                                            
                     Stewardship Financial Corporation                      
                Selected Consolidated Financial Information                 
              (dollars in thousands, except per share amounts)              
                                (unaudited)                                 
                                                                            
                              For the three months     For the nine months  
                                      ended                   ended         
                                  September 30,           September 30,     
                             ----------------------  ---------------------- 
                                2013        2012        2013        2012    
                             ----------  ----------  ----------  ---------- 
Selected Operating Data:                                                    
  Interest income            $    6,536  $    7,120  $   20,042  $   21,953 
  Interest expense                  940       1,259       2,902       4,081 
                             ----------  ----------  ----------  ---------- 
    Net interest and                                                        
     dividend income              5,596       5,861      17,140      17,872 
  Provision for loan losses         900       2,000       3,350       6,665 
                             ----------  ----------  ----------  ---------- 
  Net interest and dividen
d                                                 
   income after provision                                                   
   for loan losses                4,696       3,861      13,790      11,207 
  Noninterest income:                                                       
    Fees and service charges        459         496       1,407       1,542 
    Bank owned life                                                         
     insurance                       98          83         251         244 
    Gain on calls and sales                                                 
     of securities                    -         891           2       1,336 
    Gain on sales of                                                        
     mortgage loans                 150         162         610         727 
    Gain (loss) on sales of                                                 
     other real estate owned        156         (37)        282         432 
    Gain on life insurance                                                  
     proceeds                         -           -         537           - 
    Other                           108          87         351         331 
                             ----------  ----------  ----------  ---------- 
    Total noninterest income        971       1,682       3,440       4,612 
  Noninterest expenses:                                                     
    Salaries and employee                                                   
     benefits                     2,570       2,394       7,977       7,037 
    Occupancy, net                  518         494       1,538       1,452 
    Equipment                       197         240         580         731 
    Data processing                 327         324         987         974 
    FDIC insurance premium          220         154         646         457 
    Other                         1,042       1,563       3,209       4,195 
                             ----------  ----------  ----------  ---------- 
    Total noninterest                                                       
     expenses                     4,874       5,169      14,937      14,846 
                             ----------  ----------  ----------  ---------- 
Income before income tax                                                    
 expense                            793         374       2,293         973 
Income tax expense                  271          46         488         193 
                             ----------  ----------  ----------  ---------- 
Net income                          522         328       1,805         780 
Dividends on preferred stock        170         112         463         225 
                             ----------  ----------  ----------  ---------- 
Net income available to                                                     
 common shareholders         $      352  $      216  $    1,342  $      555 
                             ==========  ==========  ==========  ========== 
                                                                            
Weighted avg. no. of diluted                                                
 common shares                5,939,958   5,916,123   5,935,195   5,903,598 
Diluted earnings per common                                                 
 share                       $     0.06  $     0.04  $     0.23  $     0.09 
                                                                            
Return on average common                                                    
 equity                            3.59%       1.97%       4.40%       1.70%
                                                                            
Return on average assets           0.30%       0.19%       0.35%       0.15%
                                                                            
Yield on average interest-                                                  
 earning assets                    4.07%       4.37%       4.20%       4.49%
Cost of average interest-                                                   
 bearing liabilities               0.76%       0.97%       0.79%       1.04%
                             ----------  ----------  ----------  ---------- 
Net interest rate spread           3.31%       3.40%       3.41%       3.45%
                             ==========  ==========  ==========  ========== 
                                                                            
Net interest margin                3.49%       3.62%       3.60%       3.67%

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