Stewardship Financial Corporation Announces Year Ended December 31, 2013 Earnings

Stewardship Financial Corporation Announces Year Ended December 31, 2013 
Earnings 
MIDLAND PARK, NJ -- (Marketwired) -- 02/25/14 --  Stewardship
Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship
Bank, reported net income for the year ended December 31, 2013 of
$2.5 million compared to $520,000 for the year ended December 31,
2012. For the three months ended December 31, 2013, the Corporation
reported net income of $665,000 compared to a net loss of $260,000
for the corresponding three month period in 2012. After dividends on
preferred stock and accretion, net income available to common
shareholders for the year ended December 31, 2013 was $1.8 million,
or $0.31 per diluted common share, compared to $168,000, or $0.03 per
diluted common share, for the prior year. For the three months ended
December 31, 2013, after dividends on preferred stock and accretion,
the Corporation reported net income available to common shareholders
of $495,000, or $0.08 per diluted common share, compared to a net
loss of $387,000, or a loss of $0.07 per diluted common share, for
the three months ended December 31, 2012. 
Reflecting on the annual results, Paul Van Ostenbridge, Stewardship
Financial Corporation's President and Chief Executive Officer,
commented, "We are very pleased to announce significantly stronger
earnings linked with substantial improvement in asset quality." 
Net interest income was $5.6 million and $22.8 million for the three
months and year ended December 31, 2013, compared to $5.7 million and
$23.5 million for the equivalent prior year periods. The net interest
margin for the three months and year ended December 31, 2013 of 3.54%
and 3.59%, respectively, compared to 3.57% and 3.66% for the three
months and year ended December 31, 2012, respectively. "In this
prolonged, low interest rate environment, compression in margins
remains primarily attributable to reduced asset yields," Van
Ostenbridge commented. 
For the three months and year ended December 31, 2013 the Corporation
recorded a $425,000 and $3.8 million provision for loan losses,
respectively. For the prior year, a provision for loan losses of $3.3
million and $10.0 million for the three months and year ended
December 31, 2012, respectively, was recorded. Van Ostenbridge
stated, "
The decline in our provision is reflective of an improvement
in credit quality and a reduction in nonperforming assets." 
At December 31, 2013, nonperforming assets totaled $10.7 million, or
1.58% of total assets, representing an $8.6 million decline from
$19.3 million, or 2.80% of total assets, at December 31, 2012. Van
Ostenbridge noted, "We have spent the last few years focused on
addressing nonperforming loans and Other Real Estate Owned (OREO)
acquired as a result of foreclosure and the 2013 year end balances
reflect the results of such efforts." During the fourth quarter of
2013, the Corporation categorized a small group of nonperforming
loans as available for sale at the lower of cost or fair value of the
underlying collateral, less cost to sell. After charge-offs
previously recorded on these loans recognized against the allowance
for loan losses, the decrease in nonperforming assets is partially
attributed to the sale of these loans which had a carrying value of
$3.6 million. The loans were sold prior to December 31, 2013 and
resulted in a net loss to the Corporation of $372,000, reflecting
further declines in fair value. 
The Corporation reported noninterest income of $525,000 and $4.0
million for the three months and year ended December 31, 2013,
respectively, compared to $1.8 million and $6.4 million for the
equivalent prior year periods. The current year periods include the
previously mentioned loss of $372,000 from the sale of nonperforming
loans as well as reduced gains on sales of mortgage loans reflective
of the impact of rising mortgage rates and corresponding reduction in
refinance activity. In addition, the full year period for 2013
included $537,000 as a result of a death benefit insurance payment
received. The 2012 periods included significant gains realized from
the sale of securities, primarily reflecting transactions 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 on sale of securities was partially offset by a prepayment
premium on a wholesale repurchase agreement, which is included as a
component of other noninterest expense for the year ended December
31, 2012. 
Noninterest expenses for the three months and year ended December 31,
2013 were $4.9 million and $19.8 million as compared to $4.8 million
and $19.7 million in the comparable prior year periods. While the
Corporation remains dedicated to controlling expenses, higher salary
and employee benefits expense 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. As noted above, included in
noninterest expenses in the year ended December 31, 2012 is a
$691,000 prepayment premium incurred with the $7.0 million repayment
of a wholesale repurchase agreement. 
Total assets of $673.5 million at December 31, 2013 showed a slight
decline when compared to $688.4 million of assets at December 31,
2012. Since December 31, 2012, gross loans receivable have decreased
$6.4 million as a result of the new loan production being offset by
loan workouts as well as payoffs and normal principal amortization.
The decline includes the impact of the above discussed $3.6 million
nonperforming loan sale. In addition, $2.8 million of other
nonperforming loans, representing the lower of cost or estimated fair
value of the underlying collateral less costs to sell, have been
categorized as available for sale at December 31, 2013. 
Deposit balances totaled $577.6 million at December 31, 2013 compared
to $590.3 million a year earlier. Core deposit balances (checking,
money market and savings accounts) continue to see growth and
comprise 76.4% of total deposits at December 31, 2013. In addition,
noninterest-bearing deposits continued to grow reaching $133.6
million, or 23.1% of deposits, at December 31, 2013 compared to
$124.3 million, or 21.1%, at December 31, 2012. 
The Corporation's capital levels remain strong. Tier 1 leverage ratio
of 9.04% and total risk based capital ratio of 14.78%, remained
relatively stable year over year and still far exceed the regulatory
requirements of 4% and 8%, respectively, for a "well capitalized"
institution. 
In summary, Van Ostenbridge stated, "Over the last few years the
Corporation has been committed to improving asset quality. The
significant progress seen in the past year represents the results of
our commitment. We are encouraged and confident that our current
level of loan loss reserves, coupled with strong liquidity and a
sound capital base, enable us to move forward." 
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. To date, the
Bank's tithe donations total $7.9 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)                                 
                                                                            
                                  December 31,  September 30,  December 31, 
                                      2013           2013          2012     
                                  ------------  -------------  ------------ 
                                                                            
Selected Financial Condition                                                
 Data:                                                                      
  Cash and cash equivalents       $     17,405  $      15,400  $     21,016 
  Securities available for sale        168,411        183,411       174,700 
  Securities held to maturity           25,964         26,161        29,718 
  FHLB Stock                             2,133          2,813         2,213 
  Loans receivable:                                                         
    Loans receivable, gross            434,009        439,339       440,423 
    Allowance for loan losses           (9,915)       (10,704)      (10,641)
    Other, net                             168            164            50 
                                  ------------  -------------  ------------ 
  Loans receivable, net                424,262        428,799       429,832 
                                                                            
  Loans held for sale                    2,800            910           784 
  Other assets                          32,533         31,734        30,125 
                                  ------------  -------------  ------------ 
  Total assets                    $    673,508  $     689,228  $    688,388 
                                  ============  =============  ============ 
                                                                            
                                                                            
  Noninterest-bearing deposits    $    133,565  $     139,918  $    124,286 
  Interest-bearing deposits            444,026        437,238       465,968 
                                  ------------  -------------  ------------ 
  Total deposits                       577,591        577,156       590,254 
  Other borrowings                      25,000         40,100        25,000 
  Securities sold under                                                     
   agreements to repurchase              7,300          8,044         7,343 
  Subordinated debentures                7,217          7,217         7,217 
  Other liabilities                      2,621          2,433         2,228 
  Shareholders' equity                  53,779         54,278        56,346 
                                  ------------  -------------  ------------ 
  Total liabilities and                                                     
   shareholders' equity           $    673,508  $     689,228  $    688,388 
                                  ============  =============  ============ 
                                                                            
  Equity to assets                        7.98%          7.88%         8.19%
                                                                            
Asset Quality Data:                                                         
  Nonaccrual loans                $     10,219  $      15,269  $     18,011 
  Loans past due 90 days or more                                            
   and accruing                              -              -           237 
                                  ------------  -------------  ------------ 
  Total nonperforming loans             10,219         15,269        18,248 
  Other real estate owned                  451            470         1,058 
                                  ------------  -------------  ------------ 
  Total nonperforming assets      $     10,670  $      15,739  $     19,306 
                                  ============  =============  ============ 
                                                                            
                                                                            
  Nonperforming loans to total                                              
   loans                                  2.34%          3.48%         4.14%
  Nonperforming assets to total                                             
   assets                                 1.58%          2.28%         2.80%
  Allowance for loan losses to                                              
   nonperforming loans                   97.03%         70.10%        58.31%
  Allowance for loan losses to                                              
   total gross loans                      2.28%          2.44%         2.42%
                                                                            
                                                                            
                                                                            
                     Stewardship Financial Corporation                      
                Selected Consolidated Financial Information                 
              (dollars in thousands, except per share amounts)              
                                (unaudited)                                 
                                                                            
                              For the three months     For the year ended   
                               ended December 31,         December 31,      
                             ----------------------  ---------------------- 
                                2013        2012        2013        2012    
                             ----------  ----------  ----------  ---------- 
Selected Operating Data:                                                    
  Interest income            $    6,529  $    6,754  $   26,571  $   28,707 
  Interest expense                  911       1,094       3,813       5,175 
                             ----------  ----------  ----------  ---------- 
    Net interest and               
                                         
     dividend income              5,618       5,660      22,758      23,532 
  Provision for loan losses         425       3,330       3,775       9,995 
                             ----------  ----------  ----------  ---------- 
  Net interest and dividend                                                 
   income after provision                                                   
   for loan losses                5,193       2,330      18,983      13,537 
  Noninterest income:                                                       
    Fees and service charges        458         456       1,865       1,998 
    Bank owned life                                                         
     insurance                      100          81         351         325 
    Gain on calls and sales                                                 
     of securities                  151       1,004         153       2,340 
    Gain on sales of                                                        
     mortgage loans                  39         160         649         887 
    Loss on sales of loans         (372)          -        (372)          - 
    Gain on sales of other                                                  
     real estate owned               44          (3)        326         429 
    Gain on life insurance                                                  
     proceeds                         -           -         537           - 
    Other                           105          79         456         410 
                             ----------  ----------  ----------  ---------- 
    Total noninterest income        525       1,777       3,965       6,389 
  Noninterest expenses:                                                     
    Salaries and employee                                                   
     benefits                     2,524       2,433      10,501       9,470 
    Occupancy, net                  507         515       2,045       1,967 
    Equipment                       214         240         794         971 
    Data processing                 438         317       1,425       1,291 
    FDIC insurance premium          230         155         876         612 
    Other                           988       1,147       4,197       5,342 
                             ----------  ----------  ----------  ---------- 
    Total noninterest                                                       
     expenses                     4,901       4,807      19,838      19,653 
                             ----------  ----------  ----------  ---------- 
Income (loss) before income                                                 
 tax expense (benefit)              817        (700)      3,110         273 
Income tax expense (benefit)        152        (440)        640        (247)
                             ----------  ----------  ----------  ---------- 
Net income (loss)                   665        (260)      2,470         520 
Dividends on preferred stock                                                
 and accretion                      170         127         633         352 
                             ----------  ----------  ----------  ---------- 
Net income (loss) available                                                 
 to common stockholders      $      495  $     (387) $    1,837  $      168 
                             ==========  ==========  ==========  ========== 
                                                                            
Weighted avg. no. of diluted                                                
 common shares                5,942,585   5,923,113   5,937,058   5,908,503 
Diluted (loss) earnings per                                                 
 common share                $     0.08  $    (0.07) $     0.31  $     0.03 
                                                                            
Return on average common                                                    
 equity                            4.95%      -3.56%       4.54%       0.39%
                                                                            
Return on average assets           0.39%      -0.15%       0.36%       0.07%
                                                                            
Yield on average interest-                                                  
 earning assets                    4.10%       4.24%       4.17%       4.44%
Cost of average interest-                                                   
 bearing liabilities               0.74%       0.86%       0.78%       1.00%
                             ----------  ----------  ----------  ---------- 
Net interest rate spread           3.36%       3.38%       3.39%       3.44%
                             ==========  ==========  ==========  ========== 
                                                                            
Net interest margin                3.54%       3.57%       3.59%       3.66%

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