Stewardship Financial Corporation Reports Earnings for the Third Quarter 2009
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MIDLAND PARK, NJ -- (MARKET WIRE) -- 11/03/09 -- Stewardship Financial Corporation (NASDAQ: SSFN), the holding company for Atlantic Stewardship Bank, reported net income for the three months ended September 30, 2009 of $893,000, or $0.13 per diluted common share, as compared to net income of $838,000, or $0.14 per diluted common share, for the three months ended September 30, 2008.
For the nine months ended September 30, 2009, Stewardship Financial Corporation reported net income of $2.9 million, or $0.43 per diluted common share, compared to net income of $3.1 million, or $0.52 per diluted common share for the corresponding nine month period in 2008. Per share calculations have been adjusted for a 5% stock dividend paid in November 2008 and a 5% stock dividend payable in November 2009.
In light of the difficulties faced by the banking industry, the operating results of the Corporation have been adversely affected by increases in the loan loss provision. For the nine months ended September 30, 2009, results were also impacted by the FDIC's industry-wide special assessment.
The Corporation reported net interest income for the three and nine months ended September 30, 2009 of $6.0 million and $17.4 million, respectively, representing increases of 2.9% and 5.2%, respectively, over the comparable prior year period amounts. The reported net interest spread and margin for the three months ended September 30, 2009 of 3.47% and 3.92%, respectively, compare to the net interest spread and margin of 3.53% and 4.04%, respectively, for the three months ended September 30, 2008. For the nine months ended September 30, 2009, net interest rate spread and margin were 3.44% and 3.89% compared to 3.40% and 3.98%, respectively, for the same 2008 period.
The provision for loan losses was $1.2 million and $2.4 million for the three and nine months ended September 30, 2009, respectively, compared to $1.2 million and $1.5 million, respectively, for the same prior year periods. The provision is reflective of the unsettled economic environment resulting in deterioration in certain borrowers' performance as well as declining real estate collateral values. Non-performing loans amounted to 3.92% of total assets at September 30, 2009 compared to 1.46% at December 31, 2008. At September 30, 2009, the total allowance for loan losses amounted to approximately $7.2 million, or an increase to 1.61% of total loans as compared to 1.18% at December 31, 2008.
"Asset quality continues to be a top priority for Stewardship Financial Corporation and we continue to evaluate our allowance for loan losses and increase our reserves as appropriate," stated Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer. "The current troubled economic climate impacts all banks and borrowers. Accordingly, we are closely monitoring and aggressively managing our entire loan portfolio." Van Ostenbridge continued saying, "As the increase in nonperforming assets indicates, real challenges remain. We continue to work closely with our borrowers, recognizing that each situation is different, requiring approaches appropriate for each borrower and each individual situation."
At the end of 2008, the Corporation sold its merchant servicing portfolio and, as a result, a decline in both the related noninterest income line and the related noninterest expense line is reflected for the three and nine months ended September 30, 2009.
As previously reported, FDIC insurance premiums increased due, in part, to the $300,000 special assessment imposed by the FDIC for the nine months ended September 30, 2009.
At September 30, 2009 assets totaled $649.6 million, reflecting growth of $37.8 million, or 6.2%, when compared to December 31, 2008. The securities available for sale and held to maturity portfolios together increased $26.8 million, primarily reflecting the investment and leveraging of the $10 million of preferred stock issued under the Capital Purchase Program. Gross loans receivable grew $11.6 million to $451.2 million at September 30, 2009 compared to $439.7 million at December 31, 2008. The increase reflects the Bank's origination levels after adjusting for the sale of approximately $5.9 million of participations in certain loans to other financial institutions.
Deposits totaled $514.6 million at September 30, 2009, compared to $506.5 million at December 31, 2008. After the payoff of the $30.7 million of brokered CDs that existed at December 31, 2008, growth in core customer deposits totaled $38.8 million. The mid-February introduction of our new Power Rate checking product was a primary driving force in the growth in deposits. This new account pays a premium rate of interest and refunds ATM fees charged by other financial institutions. In return, the customer has simple monthly qualification factors such as enrolling in online banking with electronic statements and minimum levels of debit card usage.
Total stockholders' equity at September 30, 2009 of $54.1 million includes the increase from the $10 million received on January 30, 2009 under the Capital Purchase Program (CPP). As a result of the increase in capital, the Corporation remains committed to the core banking activities of generating deposits and granting credit-worthy loans to consumers and businesses in our communities.
Stewardship Financial Corporation's subsidiary, the 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. The Bank's Tithe amounts to $6.3 million in total donations since the program began.
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)
September 30, June 30, December 31, September 30,
2009 2009 2008 2008
----------- ----------- ----------- -----------
Selected Financial
Condition Data:
Cash and cash
equivalents $ 13,646 $ 11,401 $ 12,814 $ 13,489
Securities available
for sale 90,460 87,728 90,023 96,547
Securities held to
maturity 75,232 74,756 48,856 35,646
FHLB Stock 3,195 2,538 2,420 2,856
Loans receivable:
Loans receivable,
gross 451,229 440,434 439,656 443,311
Allowance for loan
losses (7,249) (6,342) (5,166) (5,930)
Other, net (428) (425) (387) (418)
----------- ----------- ----------- -----------
Loans receivable, net 443,552 433,667 434,103 436,963
Loans held for sale 1,018 6,379 394 895
Other assets 22,518 22,858 23,206 23,741
----------- ----------- ----------- -----------
Total assets $ 649,621 $ 639,327 $ 611,816 $ 610,137
=========== =========== =========== ===========
Total deposits $ 514,612 $ 518,500 $ 506,531 $ 492,110
Other borrowings 53,900 39,300 36,900 46,575
Subordinated
debentures 7,217 7,217 7,217 7,217
Securities sold under
agreements to
repurchase 16,019 15,163 15,160 16,297
Other liabilities 3,801 5,943 3,212 6,179
Stockholders' equity 54,072 53,204 42,796 41,759
----------- ----------- ----------- -----------
Total liabilities
and stockholders'
equity $ 649,621 $ 639,327 $ 611,816 $ 610,137
=========== =========== =========== ===========
Book value per common
share $ 7.60 $ 7.46 $ 7.31 $ 7.13
Equity to assets 8.32% 8.32% 6.99% 6.84%
Asset Quality Data:
Nonaccrual loans $ 14,536 $ 11,533 $ 4,230 $ 6,884
Loans past due 90 days
or more and accruing 728 - 353 268
Restructured loans 2,417 2,460 1,855 -
----------- ----------- ----------- -----------
Total nonperforming
loans $ 17,681 $ 13,993 $ 6,438 $ 7,152
=========== =========== =========== ===========
Non-performing loans
to total loans 3.92% 3.18% 1.46% 1.61%
Non-performing loans
to total assets 2.72% 2.19% 1.05% 1.17%
Allowance for loan
losses to
nonperforming loans 41.00% 45.32% 80.24% 82.91%
Allowance for loan
losses to total
gross loans 1.61% 1.44% 1.18% 1.34%
All share data has been restated to include the effects of a 5% stock
dividend paid in November 2008 and a stock dividend payable in November
2009.
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,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Selected Operating
Data:
Interest income $ 8,610 $ 8,910 $ 25,625 $ 26,277
Interest expense 2,634 3,100 8,231 9,749
----------- ----------- ----------- -----------
Net interest and
dividend income 5,976 5,810 17,394 16,528
Provision for loan
losses 1,200 1,175 2,375 1,535
----------- ----------- ----------- -----------
Net interest and
dividend income
after provision for
loan losses 4,776 4,635 15,019 14,993
Non-interest income:
Fees and service
charges 492 370 1,362 1,067
Bank owned life
insurance 79 85 238 244
Gain on sales of
mortgage loans 188 47 272 156
Gain on calls and
sales of
securities 2 4 255 61
Merchant processing - 340 118 1,070
Other 60 48 232 289
----------- ----------- ----------- -----------
Total non-interest
income 821 894 2,477 2,887
Non-interest expenses:
Salaries and
employee benefits 2,128 1,968 6,264 6,078
Occupancy, net 453 477 1,398 1,354
Equipment 277 276 795 842
Data processing 300 300 882 897
FDIC insurance
premium 197 77 886 223
Charitable
contributions 120 126 411 474
Merchant processing - 299 108 944
Other 871 839 2,694 2,591
----------- ----------- ----------- -----------
Total non-interest
expenses 4,346 4,362 13,438 13,403
----------- ----------- ----------- -----------
Income before income
tax expense 1,251 1,167 4,058 4,477
Income tax expense 358 329 1,198 1,399
----------- ----------- ----------- -----------
Net income 893 838 2,860 3,078
Dividends on preferred
stock and accretion 138 - 367 -
----------- ----------- ----------- -----------
Net income available
to common
stockholders $ 755 $ 838 $ 2,493 $ 3,078
=========== =========== =========== ===========
Weighted avg. no. of
diluted common shares 5,837,797 5,863,105 5,836,225 5,869,088
Diluted earnings per
common share $ 0.13 $ 0.14 $ 0.43 $ 0.52
Return on average
common equity 5.65% 7.92% 6.37% 9.82%
Return on average
assets 0.56% 0.54% 0.60% 0.69%
Yield on average
interest-earning
assets 5.61% 6.15% 5.69% 6.27%
Cost of average
interest-bearing
liabilities 2.14% 2.62% 2.25% 2.87%
----------- ----------- ----------- -----------
Net interest rate
spread 3.47% 3.53% 3.44% 3.40%
=========== =========== =========== ===========
Net interest margin 3.92% 4.04% 3.89% 3.98%
All share data has been restated to include the effects of a 5% stock
dividend paid in November 2008 and a stock dividend payable in November
2009.
Contact: Claire M. Chadwick SVP and Chief Financial Officer 630 Godwin Avenue Midland Park, NJ 07432 201- 444-7100
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