Form 8-K STEWARDSHIP FINANCIAL For: Feb 25
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E-mailSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 25, 2015
Stewardship Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
| New Jersey | 1-33377 | 22-3351447 |
| (State or Other Jurisdiction of | (Commission | (IRS Employer |
| Incorporation) | File Number) | Identification No.) |
| 630 Godwin Avenue, Midland Park, NJ | 07432 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (201) 444-7100
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On February 25, 2015, Stewardship Financial Corporation (the "Corporation") issued a press release, furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference, announcing the Corporation’s financial results for the year ended December 31, 2014.
The information contained in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished, and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18. Furthermore, the information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be incorporated by reference into any registration statement filed by the Corporation under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in this Report is not intended to, and does not, constitute a determination or admission by the Corporation that the information in this Report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Corporation.
Item 9.01. Financial Statements and Exhibits
| (d) | The following exhibit is furnished pursuant to Item 2.02 and shall not be deemed to be “filed”: |
| Exhibit No. | Description | |
| Exhibit 99.1 | Press Release dated February 25, 2015 |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: February 26, 2015 | Stewardship Financial Corporation |
| /s/ Claire M. Chadwick | |
| Claire M. Chadwick | |
| Executive Vice President and | |
| Chief Financial Officer |
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EXHIBIT 99.1
| For Immediate Release | ||
| Contact: | Claire M. Chadwick | |
| EVP and Chief Financial Officer | ||
| 630 Godwin Avenue | ||
| Midland Park, NJ 07432 | ||
| 201-444-7100 | ||
PRESS RELEASE
Stewardship Financial Corporation Announces Earnings for
Fourth Quarter and Year Ended December 31, 2014
Midland Park, NJ – February 25, 2015 – Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, today announced results for the fourth quarter and full year ended December 31, 2014. For the three months ended December 31, 2014, the Corporation reported net income available to common shareholders of $1.1 million, or $0.19 per diluted common share, compared to $495,000, or $0.08 per diluted common share, for the three months ended December 31, 2013. Net income available to common shareholders for the year ended December 31, 2014 of $2.4 million, or $0.40 per diluted common share, represented an increase of more than 30% over the $1.8 million, or $0.31 per diluted common share, earned for the year ended December 31, 2013.
Reflecting on the results, Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer, commented, “After the significant progress made over the last few years in improving asset quality and asset quality metrics, we are pleased to redirect our focus on loan growth. Throughout 2014, our loan portfolio increased $43.3 million, representing a 10% rate of growth. And, we are very pleased to report the continuing improvement in the Corporation’s earnings.”
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| Press Release - Midland Park, NJ | |
| Stewardship Financial Corporation, continued | February 25, 2015 |
Operating Results
Net interest income of $5.8 million for the three months ended December 31, 2014 was up slightly from the same three month period in 2013. For the full year, net interest income was $21.7 million compared to $22.8 million for year ended December 31, 2013. The Corporation reported a net interest margin of 3.57% for the three months, showing some expansion when compared to 3.49% for the three months ended December 31, 2013. For the year ended December 31, 2014 net interest margin was 3.46% compared to 3.54% for the year ended December 31, 2013. While the Corporation has endeavored to manage liability costs, the decline in net interest margin is reflective of the lower yields on assets due to a prolonged period of low interest rates.
The components of noninterest income had a significant impact on the comparison of current year results with the prior year periods. For the three months ended December 31, 2014, the Corporation reported noninterest income of $990,000 compared to $525,000 for the equivalent prior year period. The increase was the result of increased fees and service charges in the current year as compared to a loss of $372,000 from the sale of nonperforming loans reported for the three months ended December 31, 2013. Noninterest income for the years ended December 31, 2014 and 2013 was $3.0 million and $4.0 million, respectively. The prior year period for 2013 included noninterest income of $537,000 as a result of a death benefit insurance payment received. In addition, gains on sales of mortgage loans for the year ended December 31, 2014 reflected the reduced volume of loans originated for sale resulting from a decline in refinance activity. Finally, the year ended December 31, 2014 included a loss of $241,000 from the sale of nonperforming loans compared to the previously discussed prior year loss on sale of $372,000 during 2013.
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| Press Release - Midland Park, NJ | |
| Stewardship Financial Corporation, continued | February 25, 2015 |
Noninterest expenses for the three months and year ended December 31, 2014 were $5.0 million and $20.2 million as compared to $4.9 million and $19.8 million in the comparable prior year periods. The Corporation continues to balance the need to control expenses with a focus on quality loan growth and an awareness of the customers’ desire for convenient banking – all being addressed while still continuing to be compliant with regulations and remaining up-to-date on all levels of security.
Asset Quality
For the three months ended December 31, 2014 the Corporation recorded a negative provision for loan losses of $300,000, bringing the full year provision for loan losses to a negative $50,000. For the prior year, a provision for loan losses of $425,000 and $3.8 million for the three months and year ended December 31, 2013, respectively, was recorded. Nonperforming loans, in total, were $3.6 million, or 0.76% of total loans at December 31, 2014, down significantly when compared to $10.2 million, or 2.34%, at December 31, 2013. Total nonperforming assets, which includes other real estate owned, were just 0.71% of total assets at December 31, 2014 compared to 1.58% at December 31, 2013. The allowance for loan losses represented 2.01% of total gross loans compared to 2.28% at December 31, 2013. The recording of a negative provision for loan losses and the decline in the allowance coverage ratio are directly attributable to improved credit quality metrics of the portfolio and the reduction in the estimated level of allowance for loan losses required.
Balance Sheet / Financial Condition
Total assets of $693.6 million at December 31, 2014 reflected an increase when compared to $673.5 million of assets at December 31, 2013. Since December 31, 2013, the $43.3 million increase in gross loans receivable was the result of new loan originations, partially offset by loan workouts as well as payoffs and normal principal amortization. In order to manage the growth in assets while still
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| Press Release - Midland Park, NJ | |
| Stewardship Financial Corporation, continued | February 25, 2015 |
assisting in the funding of the loan growth, the Corporation identified and sold approximately $10.2 million of available for sale securities with high price volatility.
Deposit balances totaled $556.5 million at December 31, 2014 compared to $577.6 million a year earlier. Noninterest-bearing deposits of $136.7 million represented 24.6% of deposits at December 31, 2014 compared to $133.6 million, or 23.1%, at December 31, 2013.
Other borrowings increased to $66.7 million at December 31, 2014 from $25.0 million at December 31, 2013. The increase in other borrowings was partially the result of the replacement of the maturity of $7.0 million of securities sold under agreements to repurchase. In general, other borrowings enable the Corporation to deal with temporary deposit outflows and can assist in managing against rising interest rates through the extension of liabilities.
The Corporation’s capital levels continue to significantly exceed the regulatory capital requirements for a “well capitalized” institution with a Tier 1 leverage ratio of 9.04% and total risk based capital ratio of 14.78% compared to the regulatory requirements of 4% and 8%, respectively.
About Stewardship Financial Corporation
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.
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| Press Release - Midland Park, NJ | |
| Stewardship Financial Corporation, continued | February 25, 2015 |
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.
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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
| December 31, | September 30, | December 31, | ||||||||||
| 2014 | 2014 | 2013 | ||||||||||
| Selected Financial Condition Data: | ||||||||||||
| Cash and cash equivalents | $ | 10,086 | $ | 10,850 | $ | 17,405 | ||||||
| Securities available for sale | 124,918 | 138,255 | 168,411 | |||||||||
| Securities held to maturity | 55,097 | 54,234 | 25,964 | |||||||||
| FHLB Stock | 3,777 | 2,882 | 2,133 | |||||||||
| Loans receivable: | ||||||||||||
| Loans receivable, gross | 477,320 | 443,006 | 434,009 | |||||||||
| Allowance for loan losses | (9,602 | ) | (10,094 | ) | (9,915 | ) | ||||||
| Other, net | (19 | ) | (17 | ) | 168 | |||||||
| Loans receivable, net | 467,699 | 432,895 | 424,262 | |||||||||
| Loans held for sale | — | 364 | 2,800 | |||||||||
| Other assets | 31,974 | 33,072 | 32,533 | |||||||||
| Total assets | $ | 693,551 | $ | 672,552 | $ | 673,508 | ||||||
| Noninterest-bearing deposits | $ | 136,721 | $ | 140,345 | $ | 133,565 | ||||||
| Interest-bearing deposits | 419,755 | 416,666 | 444,026 | |||||||||
| Total deposits | 556,476 | 557,011 | 577,591 | |||||||||
| Other borrowings | 66,700 | 46,800 | 25,000 | |||||||||
| Securities sold under agreements to repurchase | — | 100 | 7,300 | |||||||||
| Subordinated debentures | 7,217 | 7,217 | 7,217 | |||||||||
| Other liabilities | 4,189 | 4,166 | 2,621 | |||||||||
| Total liabilities | 634,582 | 615,294 | 619,729 | |||||||||
| Shareholders' equity | 58,969 | 57,258 | 53,779 | |||||||||
| Total liabilities and shareholders' equity | $ | 693,551 | $ | 672,552 | $ | 673,508 | ||||||
| Equity to assets | 8.50% | 8.51% | 7.98% | |||||||||
| Asset Quality Data: | ||||||||||||
| Nonaccrual loans | $ | 3,628 | $ | 4,434 | $ | 10,219 | ||||||
| Loans past due 90 days or more and accruing | — | — | — | |||||||||
| Total nonperforming loans | 3,628 | 4,434 | 10,219 | |||||||||
| Other real estate owned | 1,308 | 2,090 | 451 | |||||||||
| Total nonperforming assets | $ | 4,936 | $ | 6,524 | $ | 10,670 | ||||||
| Nonperforming loans to total loans | 0.76% | 1.00% | 2.34% | |||||||||
| Nonperforming assets to total assets | 0.71% | 0.97% | 1.58% | |||||||||
| Allowance for loan losses to nonperforming loans | 264.66% | 227.65% | 97.03% | |||||||||
| Allowance for loan losses to total gross loans | 2.01% | 2.28% | 2.28% | |||||||||
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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
| For the three months ended | For the year ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Selected Operating Data: | ||||||||||||||||
| Interest income | $ | 6,534 | $ | 6,529 | $ | 24,934 | $ | 26,571 | ||||||||
| Interest expense | 767 | 911 | 3,207 | 3,813 | ||||||||||||
| Net interest and dividend income | 5,767 | 5,618 | 21,727 | 22,758 | ||||||||||||
| Provision for loan losses | (300 | ) | 425 | (50 | ) | 3,775 | ||||||||||
| Net interest and dividend income | ||||||||||||||||
| after provision for loan losses | 6,067 | 5,193 | 21,777 | 18,983 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Fees and service charges | 568 | 458 | 2,003 | 1,865 | ||||||||||||
| Bank owned life insurance | 103 | 100 | 405 | 351 | ||||||||||||
| Gain on calls and sales of securities | 165 | 151 | 165 | 153 | ||||||||||||
| Gain on sales of mortgage loans | 26 | 39 | 72 | 649 | ||||||||||||
| Loss on sales of loans | — | (372 | ) | (241 | ) | (372 | ) | |||||||||
| Gain on sales of other real estate owned | 9 | 44 | 63 | 326 | ||||||||||||
| Gain on life insurance proceeds | — | — | — | 537 | ||||||||||||
| Other | 119 | 105 | 493 | 456 | ||||||||||||
| Total noninterest income | 990 | 525 | 2,960 | 3,965 | ||||||||||||
| Noninterest expenses: | ||||||||||||||||
| Salaries and employee benefits | 2,738 | 2,524 | 10,597 | 10,501 | ||||||||||||
| Occupancy, net | 420 | 507 | 1,934 | 2,045 | ||||||||||||
| Equipment | 157 | 214 | 687 | 794 | ||||||||||||
| Data processing | 447 | 438 | 1,702 | 1,425 | ||||||||||||
| FDIC insurance premium | 103 | 230 | 580 | 876 | ||||||||||||
| Other | 1,179 | 988 | 4,733 | 4,197 | ||||||||||||
| Total noninterest expenses | 5,044 | 4,901 | 20,233 | 19,838 | ||||||||||||
| Income before income tax expense | 2,013 | 817 | 4,504 | 3,110 | ||||||||||||
| Income tax expense | 712 | 152 | 1,419 | 640 | ||||||||||||
| Net income | 1,301 | 665 | 3,085 | 2,470 | ||||||||||||
| Dividends on preferred stock | 171 | 170 | 683 | 633 | ||||||||||||
| Net income available to common shareholders | $ | 1,130 | $ | 495 | $ | 2,402 | $ | 1,837 | ||||||||
| Weighted avg. no. of diluted common shares | 6,030,561 | 5,942,585 | 6,003,814 | 5,937,058 | ||||||||||||
| Diluted earnings per common share | $ | 0.19 | $ | 0.08 | $ | 0.40 | $ | 0.31 | ||||||||
| Return on average common equity | 10.41% | 4.95% | 5.77% | 4.54% | ||||||||||||
| Return on average assets | 0.75% | 0.39% | 0.46% | 0.36% | ||||||||||||
| Yield on average interest-earning assets | 4.04% | 4.05% | 3.96% | 4.12% | ||||||||||||
| Cost of average interest-bearing liabilities | 0.64% | 0.74% | 0.68% | 0.78% | ||||||||||||
| Net interest rate spread | 3.40% | 3.31% | 3.28% | 3.34% | ||||||||||||
| Net interest margin | 3.57% | 3.49% | 3.46% | 3.54% | ||||||||||||
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