Form 8-K STEWARDSHIP FINANCIAL For: Jul 30

SECURITIES 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) July 30, 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 July 30, 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 quarter ended June 30, 2015.

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 July 30, 2015

 

 

 

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:  July 31, 2015			Stewardship Financial Corporation
			/s/ Claire M. Chadwick
			Claire M. Chadwick
			Executive Vice President and
			Chief Financial Officer

EXHIBIT 99.1

 

 

 

 

 

PRESS RELEASE

 

Stewardship Financial Corporation Announces

Earnings for Second Quarter of 2015

 

Midland Park, NJ – July 30, 2015 – Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, announced net income for the three and six months ended June 30, 2015 of $1.2 million and $2.1 million, respectively, as compared to net income of $726,000 and $1.2 million for the three and six months ended June 30, 2014, respectively. After dividends on preferred stock, net income available to common shareholders was $1.8 million, or $0.30 per common share, for the first six months of 2015 compared to $890,000, or $0.15 per common share, for the comparable period of 2014.

 

Commenting on the quarter and year-to-date numbers, Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer stated, “Our results continue to demonstrate our ability to generate improving earnings. The strong loan growth we have seen for the last few quarters continues – with growth in the loan portfolio of $29.8 million for the first six months of 2015, or 12.5% on an annualized basis. In addition, results benefited from continued improvement in asset quality.”

 

Operating Results

The Corporation reported net interest income of $5.5 million and $10.9 million for the three and six months ended June 30, 2015, compared to $5.4 million and $10.7 million for the equivalent prior year periods.

 

Press Release - Midland Park NJ
Stewardship Financial Corporation continued	July 30, 2015

 

 

Contributing to the improving results was the growth in average interest earning assets partially offset by reduced margins. The net interest margin was 3.40% for both the three and six months ended June 30, 2014 compared to 3.51% and 3.45% for the three and six months ended June 30, 2014, respectively. “Financial institutions, including the Corporation, continue to operate in this prolonged low interest rate environment where margins are generally expected to remain flat or show slight declines,” said Van Ostenbridge.

 

Noninterest income was reported at $882,000 and $1.8 million for the three and six months ended June 30, 2015, respectively, compared to $807,000 and $1.2 million for the equivalent prior year periods. The current year periods reflect increases in fees and service charges of $53,000 and $111,000 when compared to 2014. In addition, gains on sales of mortgage loans increased over the prior year three and six month periods as the Corporation has returned to selling the majority of residential loan production. Another positive factor was noninterest income for the six months ended June 30 2015 included gains of $152,000 from the sale of available for sale securities and $53,000 from the sale of other real estate owned. The prior year period included a loss of $241,000 from the sale of nonperforming loans.

 

For both 2015 and 2014, total noninterest expenses of amounted to $5.1 million and $10.2 million for the three and six month periods, respectively. The Corporation remains committed to controlling expenses even as growth in the balance sheet is achieved.

 

Asset Quality

For the three and six months ended June 30, 2015, results were positively impacted by the Corporation recording negative provisions for loan losses of $600,000 and $700,000, respectively. There were no provisions for loan losses recorded in either the three or six months ended June 30, 2014. During 2015,

 

 

Press Release - Midland Park NJ
Stewardship Financial Corporation continued	July 30, 2015

 

 

the Corporation recorded $299,000 and $397,000 for the three and six month periods, respectively, of net recoveries of previously charged off loan balances. Furthermore, nonperforming loans continue to decline and were $2.5 million, or 0.50% of total loans at June 30, 2015 compared to $3.6 million, or 0.76%, at December 31, 2014 and $4.9 million, or 1.13%, a year earlier. Total nonperforming assets of $2.8 million, which includes other real estate owned, also showed continued improvement and represented just 0.39% of total assets at June 30, 2015 compared to 0.71% and 0.91% at December 31, 2014 and June 30, 2014, respectively.

 

Balance Sheet / Financial Condition

As of June 30, 2015, total assets reached $701.2 million, reflecting a slightly larger balance sheet when compared to assets of $693.6 million at December 31, 2014. A $29.8 million increase in gross loans for the first half of 2015 resulted from new loan originations, partially offset by normal principal amortization. As previously reported, early in 2015, the Corporation identified and sold approximately $27.8 million of available for sale securities with higher price volatility thus providing a portion of the funding for the loan growth while still continuing to manage overall asset growth.

 

Total deposits grew to $586.0 million at June 30, 2015, an increase of $29.5 million when compared to deposits of $556.5 million at December 31, 2014. Van Ostenbridge noted, “We are now focused on building on this growth in deposits to fund loan growth.”

 

In general, as a result of an increase in deposits, other borrowings decreased $21.7 million to $45.0 million at June 30, 2015. Other borrowings assist the Corporation in managing against rising interest rates through the extension of liabilities and enable us to handle temporary deposit outflows.

 

 

Press Release - Midland Park NJ
Stewardship Financial Corporation continued	July 30, 2015

 

 

At June 30, 2015, capital levels continue to significantly exceed the regulatory capital requirements for a “well capitalized” institution with a tier 1 leverage ratio of 9.90% (4% requirement) and total risk based capital ratio of 14.47% (8% requirement).

 

About Stewardship Financial Corporation

Stewardship Financial Corporation’s subsidiary, the 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 $8.2 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,				September 30,				June 30,
		2015				2015				2014				2014				2014
Selected Financial Condition Data:
Cash and cash equivalents		$	19,782			$	21,035			$	10,086			$	10,850			$	14,630
Securities available for sale			90,850				94,553				124,918				138,255				144,459
Securities held to maturity			58,363				55,811				55,097				54,234				54,225
FHLB Stock			2,833				3,026				3,777				2,882				2,429
Loans receivable:
Loans receivable, gross			507,105				490,087				477,320				443,006				433,198
Allowance for loan losses			(9,299	)			(9,600	)			(9,602	)			(10,094	)			(9,825	)
Other, net			(132	)			(7	)			(19	)			(17	)			40
Loans receivable, net			497,674				480,480				467,699				432,895				423,413
Loans held for sale			1,416				798				—				364				259
Other assets			30,273				30,114				31,974				33,072				32,107
Total assets		$	701,191			$	685,817			$	693,551			$	672,552			$	671,522
Noninterest-bearing deposits		$	153,546			$	141,406			$	136,721			$	140,345			$	143,711
Interest-bearing deposits			432,453				424,916				419,755				416,666				422,669
Total deposits			585,999				566,322				556,476				557,011				566,380
Other borrowings			45,000				50,000				66,700				46,800				31,000
Securities sold under agreements to repurchase			—				—				—				100				7,601
Subordinated debentures			7,217				7,217				7,217				7,217				7,217
Other liabilities			2,123				2,166				4,189				4,166				2,329
Total liabilities			640,339				625,705				634,582				615,294				614,527
Shareholders' equity			60,852				60,112				58,969				57,258				56,995
Total liabilities and shareholders' equity		$	701,191			$	685,817			$	693,551			$	672,552			$	671,522
Gross loans to deposits			86.54%				86.54%				85.78%				79.53%				76.49%
Equity to assets			8.68%				8.77%				8.50%				8.51%				8.49%
Asset Quality Data:
Nonaccrual loans		$	2,539			$	2,798			$	3,628			$	4,434			$	4,875
Loans past due 90 days or more and accruing			—				—				—				—				—
Total nonperforming loans			2,539				2,798				3,628				4,434				4,875
Other real estate owned			219				320				1,308				2,090				1,225
Total nonperforming assets		$	2,758			$	3,118			$	4,936			$	6,524			$	6,100
Nonperforming loans to total loans			0.50%				0.57%				0.76%				1.00%				1.13%
Nonperforming assets to total assets			0.39%				0.45%				0.71%				0.97%				0.91%
Allowance for loan losses to nonperforming loans			366.25%				343.10%				264.66%				227.65%				201.54%
Allowance for loan losses to total gross loans			1.83%				1.96%				2.01%				2.28%				2.27%

 

 

Stewardship Financial Corporation

Selected Consolidated Financial Information

(dollars in thousands, except per share amounts)

(unaudited)

 

		For the three months ended								For the six months ended
		June 30,								June 30,
		2015				2014				2015				2014
Selected Operating Data:
Interest income		$	6,360			$	6,186			$	12,554			$	12,331
Interest expense			842				810				1,635				1,649
Net interest and dividend income			5,518				5,376				10,919				10,682
Provision for loan losses			(600	)			—				(700	)			—
Net interest and dividend income
after provision for loan losses			6,118				5,376				11,619				10,682
Noninterest income:
Fees and service charges			557				504				1,036				925
Bank owned life insurance			101				106				197				202
Gain on calls and sales of securities			—				—				152				—
Gain on sales of mortgage loans			55				2				65				14
Loss on sales of loans			—				—				—				(241	)
Gain on sales of other real estate owned			—				54				53				54
Other			169				141				297				252
Total noninterest income			882				807				1,800				1,206
Noninterest expenses:
Salaries and employee benefits			2,688				2,557				5,396				5,235
Occupancy, net			423				520				890				1,075
Equipment			165				175				321				363
Data processing			459				435				912				822
FDIC insurance premium			117				133				230				344
Other			1,253				1,286				2,405				2,361
Total noninterest expenses			5,105				5,106				10,154				10,200
Income before income tax expense			1,895				1,077				3,265				1,688
Income tax expense			673				351				1,126				456
Net income			1,222				726				2,139				1,232
Dividends on preferred stock			171				171				342				342
Net income available to common shareholders		$	1,051			$	555			$	1,797			$	890
Weighted avg. no. of diluted common shares			6,086,474				5,999,897				6,066,191				5,978,511
Diluted earnings per common share		$	0.17			$	0.09			$	0.30			$	0.15
Return on average common equity			9.25%				5.41%				8.03%				4.43%
Return on average assets			0.71%				0.44%				0.63%				0.37%
Yield on average interest-earning assets			3.91%				4.03%				3.91%				3.98%
Cost of average interest-bearing liabilities			0.70%				0.70%				0.68%				0.70%
Net interest rate spread			3.21%				3.33%				3.23%				3.28%
Net interest margin			3.40%				3.51%				3.40%				3.45%

 

Stewardship Financial Corporation

Selected Consolidated Financial Information

(dollars in thousands, except per share amounts)

(unaudited)

 

		For the three months ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2015				2015				2014				2014				2014
Selected Operating Data:
Interest income		$	6,360			$	6,194			$	6,534			$	6,069			$	6,186
Interest expense			842				793				767				791				810
Net interest and dividend income			5,518				5,401				5,767				5,278				5,376
Provision for loan losses			(600	)			(100	)			(300	)			250				—
Net interest and dividend income
after provision for loan losses			6,118				5,501				6,067				5,028				5,376
Noninterest income:
Fees and service charges			557				479				568				510				504
Bank owned life insurance			101				96				103				100				106
Gain on calls and sales of securities			—				152				165				—				—
Gain on sales of mortgage loans			55				10				26				32				2
Loss on sales of loans			—				—				—				—				—
Gain on sales of other real estate owned			—				53				9				—				54
Other			169				128				119				122				141
Total noninterest income			882				918				990				764				807
Noninterest expenses:
Salaries and employee benefits			2,688				2,708				2,738				2,624				2,557
Occupancy, net			423				467				420				439				520
Equipment			165				156				157				167				175
Data processing			459				453				447				433				435
FDIC insurance premium			117				113				103				133				133
Other			1,253				1,152				1,179				1,193				1,286
Total noninterest expenses			5,105				5,049				5,044				4,989				5,106
Income before income tax expense			1,895				1,370				2,013				803				1,077
Income tax expense			673				453				712				251				351
Net income			1,222				917				1,301				552				726
Dividends on preferred stock			171				171				171				170				171
Net income available to common shareholders		$	1,051			$	746			$	1,130			$	382			$	555
Weighted avg. no. of diluted common shares			6,086,474				6,045,683				6,030,561				6,026,848				5,999,897
Diluted earnings per common share		$	0.17			$	0.12			$	0.19			$	0.06			$	0.09
Return on average common equity			9.25%				6.77%				10.41%				3.58%				5.41%
Return on average assets			0.71%				0.54%				0.75%				0.33%				0.44%
Yield on average interest-earning assets			3.91%				3.90%				4.04%				3.85%				4.03%
Cost of average interest-bearing liabilities			0.70%				0.67%				0.64%				0.68%				0.70%
Net interest rate spread			3.21%				3.23%				3.40%				3.17%				3.33%
Net interest margin			3.40%				3.41%				3.57%				3.36%				3.51%

 

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