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Stewardship Financial Corporation Reports Third Quarter of 2017 Earnings

Company Release - 11/7/2017 4:05 PM ET

MIDLAND PARK, N.J., Nov. 07, 2017 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced improved results for the current year periods.  Net income for the three and nine months ended September 30, 2017 was reported at $1.6 million and $3.9 million, respectively, compared to net income of $1.0 million and $3.4 million for the three and nine months ended September 30, 2016.

Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation commented, “Following a successful capital raise in April 2017 and the opening of a new location in Morristown, NJ in June 2017, the Corporation is focused on growing the bank and generating solid core earnings.  Increased revenue will result from a growing loan portfolio and we intend to continue to work to maintain expense levels.”

Operating Results
For the three and nine months ended September 30, 2017, the Corporation reported net interest income of $6.8 million and $19.5 million, respectively.  Current net interest income levels reflect improvement over the $5.5 million and $16.7 million reported in the comparable prior year periods, with the current year increases primarily driven by growth in the loan portfolio.  Average loan balances increased $146.5 million and $130.7 million for the three and nine months ended September 30, 2017 over the comparable prior year periods.  The net interest margins for the current three and nine month periods were 3.09% and 3.15%, respectively, compared to 3.07% and 3.18% for the three and nine months ended September 30, 2016.  The margins are generally reflective of an environment with a flattened yield curve.

With year-over-year growth in the loan portfolio, provisions for loan losses of $20,000 and $580,000 were recorded for the three and nine months ended September 30, 2017, respectively, compared to negative provisions for loan losses of $250,000 and $1.1 million for the three and nine months ended September 30, 2016, respectively.  As the Corporation continues to maintain stable credit quality, the allowance for loan losses to total gross loans was 1.24% at September 30, 2017 compared to 1.31% at December 31, 2016 and 1.48% a year earlier.

For the three and nine months ended September 30, 2017, noninterest income was $845,000 and $2.5 million, respectively, compared to $823,000 and $2.5 million in the equivalent prior year periods.  For the three and nine months ended September 30, 2017, noninterest income included $68,000 and $123,000 of gains on sales of mortgage loans, respectively, compared to $33,000 and $70,000 for the comparable prior year periods.  For the nine months ended September 30, 2017, noninterest income included $1,000 of gains on calls and sales of securities compared to $62,000 for the comparable prior year period.

Noninterest expenses for the three and nine months ended September 30, 2017 were $5.0 million and $15.2 million, respectively, compared to $5.0 million and $14.9 million in the comparable prior year periods.  “In growing our loan portfolio, we are realizing efficiencies and remain committed to managing our expenses and infrastructure, as appropriate,” stated Van Ostenbridge.

Balance Sheet / Financial Condition
Total assets of $910.7 million at September 30, 2017 reflected a $152.8 million increase, or 20%, from a year earlier.  The asset growth was driven by organic loan originations which resulted in a $139.8 million increase in the gross loan portfolio over the last twelve months.

Van Ostenbridge noted, “We have demonstrated our ability to fund the increase in loans with deposit growth coupled with, to a lesser extent, borrowings."  At September 30, 2017, deposits totaled $741.0 million, reflecting net growth over the past year of $94.9 million.  A mix of organic growth and the retention / expansion of existing relationships has resulted in solid increases in deposits.  Other borrowings were $68.8 million at September 30, 2017 compared to $35.0 million at September 30, 2016.  Approximately $20 million of the growth in other borrowings can be attributed to a leverage strategy undertaken in conjunction with the capital raise in April 2017.

All regulatory capital levels at September 30, 2017 remain above the levels considered to be "well capitalized" under the applicable regulations.  Tier 1 leverage ratio was 8.88% and 7.65% at September 30, 2017 and December 31, 2016, respectively.  Total risk based capital ratio was 14.62% at September 30, 2017 compared to 13.10% at December 31, 2016.

The Corporation recently announced the establishment of a Small Business Administration (SBA) Department - staffed with newly hired employees with significant experience in the SBA process.  Van Ostenbridge explained, "We view the SBA product offerings as value-added lending solutions for small businesses that do not meet traditional lending requirements."

About Stewardship Financial Corporation
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, is a full-service community bank serving both individuals and businesses. ASB is known for tithing, or sharing, 10% of its taxable income with nonprofit, educational, charitable and/or evangelical religious organizations.  To date, ASB’s total tithing donations total over $9.3 million.  ASB maintains 12 banking locations in NJ including; Hawthorne, Midland Park, Montville, Morristown, North Haledon, Pequannock, Ridgewood, Waldwick, Westwood, Wyckoff and two offices in Wayne.  ASB invites you to visit their website at www.asbnow.com for additional information and to learn more.

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.

Contact:
Claire M. Chadwick
Executive Vice President and
Chief Financial Officer
630 Godwin Avenue
Midland Park, NJ 07432
P: 201.444.7100 


 
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
          
 September 30, June 30, March 31, December 31, September 30,
 2017 2017 2017 2016 2016
          
Selected Financial Condition Data:         
Cash and cash equivalents$17,213  $19,459  $12,793  $11,680  $21,025 
Securities available for sale115,733  116,244  95,632  98,583  103,546 
Securities held to maturity53,323  52,091  52,805  52,330  54,179 
FHLB stock3,919  5,169  3,784  3,515  2,425 
Loans held for sale688  446  188  773  300 
Loans receivable:         
Loans receivable, gross691,953  692,056  654,769  604,083  552,106 
Allowance for loan losses(8,614) (8,550) (8,246) (7,905) (8,150)
Other, net(422) (344) (327) (226) (110)
Loans receivable, net682,917  683,162  646,196  595,952  543,846 
Other real estate owned, net    401  401  834 
Bank owned life insurance20,943  20,802  16,673  16,558  16,439 
Other assets15,958  15,934  15,927  15,743  15,333 
Total assets$910,694  $913,307  $844,399  $795,535  $757,927 
          
          
Noninterest-bearing deposits$171,609  $177,678  $170,566  $169,306  $172,072 
Interest-bearing deposits569,352  543,215  530,138  489,624  474,012 
Total deposits740,961  720,893  700,704  658,930  646,084 
Other borrowings68,760  93,760  65,200  59,200  35,000 
Subordinated debentures and subordinated notes23,301  23,284  23,268  23,252  23,235 
Other liabilities3,564  2,859  2,810  2,766  2,040 
Total liabilities836,586  840,796  791,982  744,148  706,359 
Shareholders' equity74,108  72,511  52,417  51,387  51,568 
Total liabilities and shareholders' equity$910,694  $913,307  $844,399  $795,535  $757,927 
          
Gross loans to deposits93.39% 96.00% 93.44% 91.68% 85.45%
          
Equity to assets8.14% 7.94% 6.21% 6.46% 6.80%
          
Book value per share$8.57  $8.39  $8.55  $8.39  $8.43 
          
Asset Quality Data:         
Nonaccrual loans$806  $826  $592  $606  $929 
Loans past due 90 days or more and accruing  320       
Total nonperforming loans806  1,146  592  606  929 
Other real estate owned    401  401  834 
Total nonperforming assets$806  $1,146  $993  $1,007  $1,763 
          
Nonperforming loans to total loans0.12% 0.17% 0.09% 0.10% 0.17%
Nonperforming assets to total assets0.09% 0.13% 0.12% 0.13% 0.23%
Allowance for loan losses to total gross loans1.24% 1.24% 1.26% 1.31% 1.48%
               


 
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
        
 For the three months ended For the nine months ended
 September 30, September 30,
 2017 2016 2017 2016
Selected Operating Data:       
Interest income$8,400  $6,657  $23,767  $20,085 
Interest expense1,577  1,113  4,230  3,410 
Net interest income6,823  5,544  19,537  16,675 
Provision for loan losses20  (250) 580  (1,050)
Net interest income       
after provision for loan losses6,803  5,794  18,957  17,725 
Noninterest income:       
Fees and service charges524  536  1,578  1,595 
Bank owned life insurance141  120  385  328 
Gain on calls and sales of securities1  6  1  62 
Gain on sales of mortgage loans68  33  123  70 
Gain on sales of other real estate owned    13  6 
Miscellaneous111  128  357  413 
Total noninterest income845  823  2,457  2,474 
Noninterest expenses:       
Salaries and employee benefits2,843  2,788  8,567  8,245 
Occupancy, net414  400  1,216  1,202 
Equipment173  155  497  453 
Data processing444  485  1,369  1,434 
Advertising182  165  529  473 
FDIC insurance premium50  100  236  296 
Charitable contributions130  80  375  240 
Bank-card related services137  150  421  431 
Other real estate owned, net  27  24  129 
Miscellaneous663  649  1,999  1,997 
Total noninterest expenses5,036  4,999  15,233  14,900 
Income before income tax expense2,612  1,618  6,181  5,299 
Income tax expense972  583  2,282  1,911 
Net income$1,640  $1,035  $3,899  $3,388 
        
Weighted avg. no. of diluted common shares8,643,737  6,115,987  7,656,942  6,106,723 
Diluted earnings per common share$0.19  $0.17  $0.51  $0.55 
        
Return on average common equity8.83% 8.06% 8.02% 9.09%
        
Return on average assets0.71% 0.54% 0.60% 0.61%
        
Yield on average interest-earning assets3.80% 3.68% 3.83% 3.83%
Cost of average interest-bearing liabilities0.94% 0.83% 0.89% 0.86%
Net interest rate spread2.86% 2.85% 2.94% 2.97%
        
Net interest margin3.09% 3.07% 3.15% 3.18%
            


 
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
           
  For the three months ended
  September 30, June 30, March 31, December 31, September 30,
  2017 2017 2017 2016 2016
Selected Operating Data:          
Interest income $8,400  $7,943  $7,424  $7,000  $6,657 
Interest expense 1,577  1,409  1,244  1,103  1,113 
Net interest income 6,823  6,534  6,180  5,897  5,544 
Provision for loan losses 20  260  300  (300) (250)
Net interest and dividend income          
after provision for loan losses 6,803  6,274  5,880  6,197  5,794 
Noninterest income:          
Fees and service charges 524  519  535  564  536 
Bank owned life insurance 141  129  115  119  120 
Gain on calls and sales of securities 1      1  6 
Gain on sales of mortgage loans 68  38  17  94  33 
Gain on sales of other real estate owned   13    30   
Miscellaneous 111  114  132  129  128 
Total noninterest income 845  813  799  937  823 
Noninterest expenses:          
Salaries and employee benefits 2,843  2,880  2,844  2,735  2,788 
Occupancy, net 414  393  409  396  400 
Equipment 173  162  162  156  155 
Data processing 444  456  469  481  485 
Advertising 182  211  136  196  165 
FDIC insurance premium 50  109  77  21  100 
Charitable contributions 130  120  125  135  80 
Bank-card related services 137  142  142  148  150 
Other real estate owned, net   9  15  14  27 
Miscellaneous 663  601  735  720  649 
Total noninterest expenses 5,036  5,083  5,114  5,002  4,999 
Income before income tax expense 2,612  2,004  1,565  2,132  1,618 
Income tax expense 972  736  574  784  583 
Net income $1,640  $1,268  $991  $1,348  $1,035 
           
Weighted avg. no. of diluted common shares 8,643,737  8,174,484  6,124,926  6,119,693  6,115,987 
Diluted earnings per common share $0.19  $0.16  $0.16  $0.22  $0.17 
           
Return on average common equity 8.83% 7.37% 7.71% 10.40% 8.06%
           
Return on average assets 0.71% 0.58% 0.49% 0.69% 0.54%
           
Yield on average interest-earning assets 3.80% 3.81% 3.88% 3.77% 3.68%
Cost of average interest-bearing liabilities 0.94% 0.90% 0.84% 0.80% 0.83%
Net interest rate spread 2.86% 2.91% 3.04% 2.97% 2.85%
           
Net interest margin 3.09% 3.14% 3.23% 3.18% 3.07%
                


Source: Stewardship Financial Corp

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