Stewardship Financial Corporation Announces Second Quarter of 2014 Earnings

Stewardship Financial Corporation Announces Second Quarter of 2014 Earnings 
MIDLAND PARK, NJ -- (Marketwired) -- 08/05/14 --   Stewardship
Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship
Bank, announced net income for the three months ended June 30, 2014
of $726,000 as compared to net income of $461,000 for the three
months ended June 30, 2013. For the six months ended June 30, 2014,
the Corporation reported net income of $1.2 million compared to net
income of $1.3 million for the corresponding six month period in
2013. After dividends on preferred stock, the net income available to
the common shareholders was $890,000, or $0.15 per diluted common
share, for the first six months of 2014 compared to $990,000, or
$0.17 per diluted common share, for the comparable period of 2013. 
For the first six months of 2014, the Corporation did not record a
provision for loan losses compared to a provision of $850,000 and
$2.5 million for the three and six months ended June 30, 2013,
respectively. Paul Van Ostenbridge, Stewardship Financial
Corporation's President and Chief Executive Officer stated, "As with
the prior quarter, no provision for loan losses was necessary for the
six months ended June 30, 2014." 
Van Ostenbridge continued noting, "Following our significant
improvement in asset quality, the Corporation is demonstrating the
ability to sustain our progress." Nonperforming loans totaled $4.9
million, or 1.13% of total loans at June 30, 2014, down slightly from
the $5.1 million three months earlier, but a significant improvement
when compared to $10.2 million, or 2.34%, at December 31, 2013 and
$14.7 million, or 3.33%, a year earlier. Total nonperforming assets,
which includes other real estate owned, represented 0.91% of total
assets at June 30, 2014 compared to 1.58% and 2.29% at December 31,
2013 and June 30, 2013, respectively. 
Components of noninterest income also had a substantial impact on the
comparison of current year results with the prior year periods. For
the three and six months ended June 30, 2014, the Corporation
reported noninterest income of $807,000 and $1.2 million,
respectively, compared to $1.0 million and $2.5 million for the
corresponding prior year periods. The current six month period
includes a loss of $241,000 from the sale of nonperforming loans.
Reduced gains on sales of mortgage loans for both the three and six
months ended June 30, 2014 are reflective of the impact of rising
mortgage rates and corresponding reduction in refinance activity.
Further affecting comparisons, the six month period for 2013 included
$537,000 as a result of a death benefit insurance payment received. 
Net interest income was $5.4 million and $10.7 million for the three
and six months ended June 30, 2014, compared to $5.7 million and
$11.5 million for the equivalent prior year periods. "The Corporation
will continue to manage all expenses, however, the low interest rate
environment in which all banks have been operating continues to
negatively impact asset yields," said Van Ostenbridge. 
Total noninterest expenses were $5.1 million and $10.2 million for
the three and six months ended June 30, 2014, consistent with the
$5.1 million and $10.1 million incurred for the three and six months
ended June 30, 2013, respectively. 
Total assets at June 30, 2014 were $671.5 million -- relatively
comparable to assets of $673.5 million at December 31, 2013.
Likewise, the gross loans receivable balance was not significantly
different from December 31, 2013, and was the result of new loan
originations being offset by payoffs and normal principal
amortization. Securities, in the aggregate, decreased by $4.3 million
primarily due to normal pay downs and maturities during the six
months ended June 30, 2014. During the current quarter, the
Corporation reclassified $24.0 million of securities available for
sale to securities held to maturity as the Corporation has the intent
and ability to hold these securities until maturity.  
Total deposits of $566.4 million at June 30, 2014 reflect a $11.2
million decline when compared to deposits of $577.6 million at
December 31, 2013. The composition of deposits continues to show a
shift from interest-bearing to noninterest-bearing. From December 31,
2013 to June 30, 2014 the Corporation's noninterest-bearing deposit
balances increased $10.1 million and comprised 25.4% of total
deposits, up from 23.1% at December 31, 2013. 
Capital levels remain strong with a tier 1 leverage ratio of 9.35%
and total risk based capital ratio of 14.90%. Van Ostenbridge
commented, "We continue to significantly exceed the regulatory
capital requirements for a 'well capitalized' institution of 4% and
8%, respectively." 
In concluding his remarks, Van Ostenbridge noted, "With the
improvement in our asset quality coupled with the moderate, albeit
slow, improvement in the economy, our attentions are focused on
appropriately underwriting and originating loans and funding such
with deposits." 
Stewardship Financial Corporation's subsidiary, Atlantic Stewardship
Bank, has 12 banking offices in Midland Park, Hawthorne (2),
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 $8.1 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)                                 
                                                                            
                            June 30,    March 31,  December 31,   June 30,  
                              2014        2014         2013         2013    
                           ----------  ----------  ------------  ---------- 
                                                                            
Selected Financial                                                          
 Condition Data:                                                            
  Cash and cash                                                             
   equivalents             $   14,630  $   27,176  $     17,405  $   14,322 
  Securities available for                                              
    
   sale                       144,459     171,692       168,411     181,676 
  Securities held to                                                        
   maturity                    54,225      24,685        25,964      28,119 
  FHLB Stock                    2,429       2,133         2,133       2,133 
  Loans receivable:                                                         
    Loans receivable,                                                       
     gross                    433,198     423,471       434,009     442,006 
    Allowance for loan                                                      
     losses                    (9,825)     (9,792)       (9,915)    (10,787)
    Other, net                     40         105           168         134 
                           ----------  ----------  ------------  ---------- 
  Loans receivable, net       423,413     413,784       424,262     431,353 
                                                                            
  Loans held for sale             259         186         2,800       2,054 
  Other assets                 32,107      32,947        32,533      29,175 
                           ----------  ----------  ------------  ---------- 
  Total assets             $  671,522  $  672,603  $    673,508  $  688,832 
                           ==========  ==========  ============  ========== 
                                                                            
                                                                            
  Noninterest-bearing                                                       
   deposits                $  143,711  $  137,687  $    133,565  $  145,388 
  Interest-bearing                                                          
   deposits                   422,669     437,729       444,026     447,311 
                           ----------  ----------  ------------  ---------- 
  Total deposits              566,380     575,416       577,591     592,699 
  Other borrowings             31,000      25,000        25,000      25,000 
  Securities sold under                                                     
   agreements to                                                            
   repurchase                   7,601       7,601         7,300       7,344 
  Subordinated debentures       7,217       7,217         7,217       7,217 
  Other liabilities             2,329       2,209         2,621       2,280 
                           ----------  ----------  ------------  ---------- 
  Total liabilities           614,527     617,443       619,729     634,540 
  Shareholders' equity         56,995      55,160        53,779      54,292 
                           ----------  ----------  ------------  ---------- 
  Total liabilities and                                                     
   shareholders' equity    $  671,522  $  672,603  $    673,508  $  688,832 
                           ==========  ==========  ============  ========== 
                                                                            
  Equity to assets               8.49%       8.20%         7.98%       7.88%
                                                                            
Asset Quality Data:                                                         
  Nonaccrual loans         $    4,875  $    5,073  $     10,219  $   14,716 
  Loans past due 90 days                                                    
   or more and accruing             -           -             -           - 
                           ----------  ----------  ------------  ---------- 
  Total nonperforming                                                       
   loans                        4,875       5,073        10,219      14,716 
  Other real estate owned       1,225       1,789           451       1,072 
                           ----------  ----------  ------------  ---------- 
  Total nonperforming                                                       
   assets                  $    6,100  $    6,862  $     10,670  $   15,788 
                           ==========  ==========  ============  ========== 
                                                                            
                                                                            
  Nonperforming loans to                                                    
   total loans                   1.13%       1.20%         2.34%       3.33%
  Nonperforming assets to                                                   
   total assets                  0.91%       1.02%         1.58%       2.29%
  Allowance for loan                                                        
   losses to nonperforming                                                  
   loans                       201.54%     193.02%        97.03%      73.30%
  Allowance for loan                                                        
   losses to total gross                                                    
   loans                         2.27%       2.31%         2.28%       2.44%
                                                                            
                                                                            
                                                                            
                     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,        
                             ----------------------  ---------------------- 
                                2014        2013        2014        2013    
                             ----------  ----------  ----------  ---------- 
Selected Operating Data:                                                    
  Interest income            $    6,186  $    6,636  $   12,331  $   13,506 
  Interest expense                  810         958       1,649       1,962 
                             ----------  ----------  ----------  ---------- 
    Net interest and                                                        
     dividend income              5,376       5,678      10,682      11,544 
  Provision for loan losses           -         850           -       2,450 
                             ----------  ----------  ----------  ---------- 
  Net interest and dividend                                                 
   income after provision                                                   
   for loan losses                5,376       4,828      10,682       9,094 
  Noninterest income:                                                       
    Fees and service charges        504         492         925         948 
    Bank owned life                                                         
     insurance                      106          77         202         153 
    Gain on calls and sales                                                 
     of securities        
            -           -           -           2 
    Gain on sales of                                                        
     mortgage loans                   2         298          14         460 
    Loss on sales of loans            -           -        (241)          - 
    Gain on sales of other                                                  
     real estate owned               54           -          54         126 
    Gain on life insurance                                                  
     proceeds                         -           -           -         537 
    Other                           141         128         252         243 
                             ----------  ----------  ----------  ---------- 
    Total noninterest income        807         995       1,206       2,469 
  Noninterest expenses:                                                     
    Salaries and employee                                                   
     benefits                     2,557       2,711       5,235       5,407 
    Occupancy, net                  520         503       1,075       1,020 
    Equipment                       175         199         363         383 
    Data processing                 435         332         822         660 
    FDIC insurance premium          133         276         344         426 
    Other                         1,286       1,110       2,361       2,167 
                             ----------  ----------  ----------  ---------- 
    Total noninterest                                                       
     expenses                     5,106       5,131      10,200      10,063 
                             ----------  ----------  ----------  ---------- 
Income before income tax                                                    
 expense                          1,077         692       1,688       1,500 
Income tax expense                  351         231         456         217 
                             ----------  ----------  ----------  ---------- 
Net income                          726         461       1,232       1,283 
Dividends on preferred stock        171         127         342         293 
                             ----------  ----------  ----------  ---------- 
Net income available to                                                     
 common stockholders         $      555  $      334  $      890  $      990 
                             ==========  ==========  ==========  ========== 
                                                                            
Weighted avg. no. of diluted                                                
 common shares                5,999,897   5,934,549   5,978,511   5,932,774 
Diluted earnings per common                                                 
 share                       $     0.09  $     0.06  $     0.15  $     0.17 
                                                                            
Return on average common                                                    
 equity                            5.41%       3.21%       4.43%       4.79%
                                                                            
Return on average assets           0.44%       0.27%       0.37%       0.38%
                                                                            
Yield on average interest-                                                  
 earning assets                    4.03%       4.14%       3.98%       4.26%
Cost of average interest-                                                   
 bearing liabilities               0.70%       0.78%       0.70%       0.80%
                             ----------  ----------  ----------  ---------- 
Net interest rate spread           3.33%       3.36%       3.28%       3.46%
                             ==========  ==========  ==========  ========== 
                                                                            
Net interest margin                3.51%       3.55%       3.45%       3.66%

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