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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