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Stewardship Financial Corporation Announces Earnings For The First Quarter of 2018

Company Release - 5/10/2018 4:05 PM ET

MIDLAND PARK, N.J., May 10, 2018 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced net income for the three months ended March 31, 2018 of $1.8 million, or $0.21 per share, compared to $991,000, or $0.16 per share for the three months ended March 31, 2017.

“We continue to strive to build on our past success and remain committed to creating stronger momentum as the year progresses,” stated Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer.

Operating Results
Net interest income and net interest margin were $6.8 million and 3.15% for the first quarter of 2018 compared to $6.2 million and 3.23% for the comparable period a year earlier.  "Notwithstanding a tighter margin, our reported net interest income reflected the benefit from the increase in assets on a year-over-year basis," noted Van Ostenbridge.

Results for the three months ended March 31, 2018 benefited from the Corporation recording a negative provision for loan losses of $335,000 as compared to the positive $300,000 provision for loan losses for the three months ended March 31, 2017.  The March 2018 reversal of a portion of the allowance for loan losses is reflective of continued improvement in both the Corporation's loss experience and overall economic conditions, including the real estate climate in the Corporation's primary business markets.

The Corporation reported noninterest income of $725,000 for the three months ended March 31, 2018 compared to $799,000 for the comparable prior year three-month period.  The three months ended March 31, 2018 included a negative $74,000 mark to market adjustment of a CRA investment which is classified as an equity security.  Such security has been owned for years for CRA purposes, but under newly enacted accounting rules, equity securities now require a quarterly mark to market through the income statement.  When comparing the current year period to the prior year period, an increase in income from the purchase of additional bank-owned life insurance in the second quarter of 2017 was generally offset by a decline in fees and service charges.

Total noninterest expenses were $5.4 million for the three months ended March 31, 2018 compared to the $5.1 million incurred in the prior year period.  “The Corporation continues to appropriately control expenses as the balance sheet grows,” stated Van Ostenbridge.  The largest increase in expense was seen in salaries and employee benefits, which increased $265,000 in the current quarter when compared to the three months ended March 31, 2017.  In addition to normal salary increases, the increase includes the costs associated with the establishment of a Small Business Administration (SBA) Lending Department - fully staffed with experienced employees.  Costs associated with a harsh winter in 2018 are reflected as an increase in occupancy expenses.

The first quarter of 2018 results included the impact of a reduction in the Federal corporate income tax rate from 35% to 21% as a result of the enactment of the Tax Cuts and Jobs Act (“Tax Act”) in December 2017.  For the current year period the effective tax rate was 26.4% compared to an effective tax rate of 36.7% for the three months ended March 31, 2017.

Balance Sheet / Financial Condition
Total assets at March 31, 2018 were $922.4 million compared to $928.8 million of assets at December 31, 2017.  Growth in the loan portfolio from new originations was offset by several large loan payoffs during the current quarter.  According to Van Ostenbridge, “Certain of the payoffs during the quarter represented lower yielding loans and now provides an opportunity to redeploy the assets into higher yielding loans.”

Total deposits were $772.2 million at March 31, 2018, reflecting net growth of $8.1 million since December 31, 2017.  The Corporation continues to experience growth in both noninterest-bearing and interest-bearing deposits.

At March 31, 2018, the Corporation’s Tier 1 leverage ratio and total risk based capital ratio were 9.04% and 14.40%, respectively.  These ratios are both significantly above the respective 4.0% and 8% minimum levels required and result in categorizing the Corporation as a “well capitalized” institution under regulatory guidelines.

About Stewardship Financial Corporation
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne, Montville, Morristown, 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 over $10.1 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)
          
 March 31,
2018
 December 31,
2017
 September 30, 
2017
 June 30, 
2017
 March 31, 
2017
Selected Financial Condition Data:         
Cash and cash equivalents$22,178  $21,270  $17,213  $19,459  $12,793 
Securities available for sale106,467  109,259  111,973  112,511  91,926 
Securities held to maturity51,894  52,442  53,323  52,091  52,805 
Other equity investments3,706  3,756  3,760  3,733  3,706 
FHLB stock3,039  3,715  3,919  5,169  3,784 
Loans held for sale  370  688  446  188 
Loans receivable:         
Loans receivable, gross708,169  711,720  691,953  692,056  654,769 
Allowance for loan losses(8,445) (8,762) (8,614) (8,550) (8,246)
Other, net(448) (397) (422) (344) (327)
Loans receivable, net699,276  702,561  682,917  683,162  646,196 
Other real estate owned, net        401 
Bank owned life insurance21,222  21,084  20,943  20,802  16,673 
Other assets14,659  14,309  15,958  15,934  15,927 
Total assets$922,441  $928,766  $910,694  $913,307  $844,399 
          
          
Noninterest-bearing deposits$178,572  $172,861  $171,609  $177,678  $170,566 
Interest-bearing deposits593,644  591,238  569,352  543,215  530,138 
Total deposits772,216  764,099  740,961  720,893  700,704 
Other borrowings48,760  63,760  68,760  93,760  65,200 
Subordinated debentures and         
subordinated notes23,333  23,317  23,301  23,284  23,268 
Other liabilities3,760  3,925  3,564  2,859  2,810 
Total liabilities848,069  855,101  836,586  840,796  791,982 
Shareholders' equity74,372  73,665  74,108  72,511  52,417 
Total liabilities and shareholders' equity$922,441  $928,766  $910,694  $913,307  $844,399 
          
Gross loans to deposits91.71% 93.14% 93.39% 96.00% 93.44%
          
Equity to assets8.06% 7.93% 8.14% 7.94% 6.21%
          
Book value per share$8.57  $8.51  $8.57  $8.39  $8.55 
          
Asset Quality Data:         
Nonaccrual loans$1,136  $1,194  $806  $826  $592 
Loans past due 90 days or more and         
accruing      320   
Total nonperforming loans1,136  1,194  806  1,146  592 
Other real estate owned        401 
Total nonperforming assets$1,136  $1,194  $806  $1,146  $993 
          
Nonperforming loans to total loans0.16% 0.17% 0.12% 0.17% 0.09%
Nonperforming assets to total assets0.12% 0.13% 0.09% 0.13% 0.12%
Allowance for loan losses to total gross         
loans1.19% 1.23% 1.24% 1.24% 1.26%


Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
    
 For the three months ended
 March 31,
 2018 2017
Selected Operating Data:       
Interest income$8,539  $7,424 
Interest expense1,716  1,244 
Net interest income6,823  6,180 
Provision for loan losses(335) 300 
Net interest income after provision for loan losses7,158  5,880 
Noninterest income:   
Fees and service charges507  535 
Bank owned life insurance138  115 
Gain on calls and sales of securities6   
Gain on sales of mortgage loans22  17 
Miscellaneous52  132 
Total noninterest income725  799 
Noninterest expenses:   
Salaries and employee benefits3,109  2,844 
Occupancy, net442  409 
Equipment181  162 
Data processing484  469 
Advertising157  136 
FDIC insurance premium64  77 
Charitable contributions180  125 
Bank-card related services127  142 
Other real estate owned, net  15 
Miscellaneous684  735 
Total noninterest expenses5,428  5,114 
Income before income tax expense2,455  1,565 
Income tax expense647  574 
Net income$1,808  $991 
    
Weighted avg. no. of diluted common shares8,658,506  6,124,926 
Diluted earnings per common share$0.21  $0.16 
    
Return on average common equity9.92% 7.71%
    
Return on average assets0.80% 0.49%
    
Yield on average interest-earning assets3.94% 3.88%
Cost of average interest-bearing liabilities1.04% 0.84%
Net interest rate spread2.90% 3.04%
    
Net interest margin3.15% 3.23%


Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
          
 For the three months ended
 March 31, December 31, September 30, June 30, March 31,
 2018 2017 2017 2017 2017
Selected Operating Data:         
Interest income$8,539  $8,463  $8,400  $7,943  $7,424 
Interest expense1,716  1,628  1,577  1,409  1,244 
Net interest income6,823  6,835  6,823  6,534  6,180 
Provision for loan losses(335) 75  20  260  300 
Net interest and dividend income                   
after provision for loan losses7,158  6,760  6,803  6,274  5,880 
Noninterest income:         
Fees and service charges507  533  524  519  535 
Bank owned life insurance138  141  141  129  115 
Gain on calls and sales of securities6    1     
Gain on sales of mortgage loans22  55  68  38  17 
Gain on sales of other real estate owned      13   
Miscellaneous52  121  111  114  132 
Total noninterest income725  850  845  813  799 
Noninterest expenses:         
Salaries and employee benefits3,109  2,888  2,843  2,880  2,844 
Occupancy, net442  414  414  393  409 
Equipment181  176  173  162  162 
Data processing484  442  444  456  469 
Advertising157  171  182  211  136 
FDIC insurance premium64  86  50  109  77 
Charitable contributions180  240  130  120  125 
Bank-card related services127  130  137  142  142 
Other real estate owned, net      9  15 
Miscellaneous684  521  663  601  735 
Total noninterest expenses5,428  5,068  5,036  5,083  5,114 
Income before income tax expense2,455  2,542  2,612  2,004  1,565 
Income tax expense647  2,494  972  736  574 
Net income$1,808  $48  $1,640  $1,268  $991 
          
                    
Weighted avg. no. of diluted common shares8,658,506   8,648,191   8,643,737   8,174,484   6,124,926  
                    
Diluted earnings per common share$0.21  $0.01  $0.19  $0.16  $0.16 
          
Return on average common equity9.92% 0.26% 8.83% 7.37% 7.71%
                    
Return on average assets0.8% 0.02% 0.71% 0.58% 0.49%
                    
Yield on average interest-earning assets3.94% 3.82% 3.8% 3.81% 3.88%
Cost of average interest-bearing  liabilities1.04% 0.97% 0.94% 0.9% 0.84%
Net interest rate spread2.9% 2.85% 2.86% 2.91% 3.04%
                    
Net interest margin3.15% 3.09% 3.09% 3.14% 3.23%


Stewardship Financial Corporation
Non-GAAP Reconciliation
(dollars in thousands, except per share amounts)
(unaudited)
     
    For the three
months ended,
  December 31,
 2017
   
Net income $48 
 Impact of Tax Act 1,420 
Adjusted net income $1,468 
     
Weighted avg. no. of diluted common shares 8,648,191 
Adjusted diluted earnings per common share $0.17 
     
Adjusted return on average common equity 7.82%
     
Adjusted return on average assets 0.63%
     

 

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

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Source: Stewardship Financial Corp

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