Stewardship Financial Corporation Announces Earnings for Fourth Quarter and Year Ended December 31, 2015
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E-mailMIDLAND PARK, NJ -- (Marketwired) -- 02/24/16 -- Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, today announced results for the fourth quarter and full year ended December 31, 2015. For the three months ended December 31, 2015, the Corporation reported net income available to common shareholders of $1.1 million, or $0.17 per diluted common share, compared to $1.1 million, or $0.19 per diluted common share, for the three months ended December 31, 2014. Net income available to common shareholders for the year ended December 31, 2015 of $3.7 million, or $0.62 per diluted common share, represented a significant increase over the $2.4 million, or $0.40 per diluted common share, earned for the year ended December 31, 2014.
Discussing the results, Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, commented, "Earnings reflect the impact of our loan growth and focus on noninterest income, while maintaining expense control. For 2015, we achieved 10.3% of growth in our loan portfolio and a 6.6% increase in fees and service charges while keeping expenses relatively flat."
Balance Sheet / Financial Condition
Total assets of $717.9 million at December 31, 2015 reflected an increase when compared to $693.6 million of assets at December 31, 2014. Since December 31, 2014, a $49.2 million increase in gross loans receivable was the result of new loan originations net of normal principal amortization and payoffs. In terms of total assets, the loan growth was partially offset by the previously reported sale of approximately $27.8 million of available for sale securities with higher price volatility. These sales provided a portion of the funding needed for the loan growth as well as a purposeful shift into higher yielding assets.
Deposit balances totaled $604.8 million at December 31, 2015 compared to $556.5 million a year earlier reflecting $48.3 million, or 8.7%, of growth. Van Ostenbridge noted, "This increase in deposits was important in our ability to cost effectively fund the growth we experienced in our loan portfolio." In addition, as a result of an increase in deposits, other borrowings decreased $26.7 million to $40.0 million at December 31, 2015.
The increase in subordinated debentures and subordinated notes reflects the previously announced completion of a $16.6 million issuance of fixed rate subordinated notes on August 28, 2015. The subordinated notes have a maturity date of August 28, 2025 and bear interest at the rate of 6.75% per annum. Using the net proceeds of the subordinated note issuance, on September 1, 2015, the Corporation repurchased the $15.0 million of preferred stock, thus ending the Corporation's participation in the U.S. Department of the Treasury's Small Business Lending Fund program ("SBLF").
While tier 1 capital was impacted by the replacement of preferred stock with subordinated debt, which is considered tier 2 capital, regulatory capital levels continued to exceed the capital requirements for a "well capitalized" institution. At December 31, 2015, the Corporation reported a tier 1 leverage ratio of 7.67% (4% requirement) and total risk based capital ratio of 14.34% (8% requirement).
Operating Results
Net interest income of $5.4 million and $21.8 million was reported for the three months and year ended December 31, 2015, respectively, compared to $5.8 million and $21.7 million for the same periods in 2014. The net interest margin for the current three months and year ended December 31, 2015 was 3.18% and 3.30%, respectively, compared to 3.57% and 3.46% for the three months and year ended December 31, 2014, respectively. The reduction in net interest rate margin partially reflects the impact of the $16.6 million of subordinated notes previously discussed. While the cost of the subordinated notes adds to interest expense, on an after tax basis, such increase is approximately offset by the dividends that would have accrued at a rate of 4.56% on the preferred stock resulting in an overall neutral effect on net income available to common shareholders. Furthermore, beginning on March 1, 2016, and for all dividend periods thereafter, the dividend rate on the preferred stock would have been increased and fixed at 9%, making the issuance of the subordinated notes a positive impact to net income available to common shareholders in the future.
For the three months ended December 31, 2015, the Corporation reported noninterest income of $855,000 compared to $990,000 for the equivalent prior year period. Noninterest income for the year ended December 31, 2015 was $3.5 million compared to $3.0 million for 2014. On a year-over-year basis, fees and service charges reflect an increase of $132,000. In addition, the current year gains on sales of mortgage loans of $141,000 represented a nearly 50% increase over 2014. Finally, the year ended December 31, 2014 included a loss of $241,000 from the sale of nonperforming loans.
Noninterest expenses for the three months and year ended December 31, 2015 totaled $4.9 million and $20.2 million, relatively consistent with the $5.0 million and $20.2 million incurred for the comparable prior year periods.
Asset Quality
"We believe the stabilization of our nonperforming assets has been clearly demonstrated," stated Van Ostenbridge. For the three months and year ended December 31, 2015, results continue to be positively impacted by the Corporation recording negative provisions for loan losses of $275,000 and $1.4 million, respectively. For the prior year, the Corporation recorded negative provisions of $300,000 and $50,000 for the three months and year ended December 31, 2014. The allowance for loan losses represented 1.68% of total gross loans compared to 2.01% at December 31, 2014. The recording of negative provisions 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. Nonperforming loans were $1.9 million, or 0.36% of total loans at December 31, 2015 compared to $3.6 million, or 0.76%, at December 31, 2014. Total nonperforming assets of $2.8 million, which includes other real estate owned, represented 0.38% of total assets at December 31, 2015 compared to 0.71% at December 31, 2014.
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 $8.6 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)
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
----------- ----------- ----------- ----------- -----------
Selected
Financial
Condition Data:
Cash and cash
equivalents $ 10,910 $ 16,025 $ 19,782 $ 21,035 $ 10,086
Securities
available for
sale 93,354 86,994 90,850 94,553 124,918
Securities held
to maturity 60,738 60,252 58,363 55,811 55,097
FHLB Stock 2,608 3,035 2,833 3,026 3,777
Loans
receivable:
Loans
receivable,
gross 526,477 518,168 507,105 490,087 477,320
Allowance for
loan losses (8,823) (8,805) (9,299) (9,600) (9,602)
Other, net (98) (93) (132) (7) (19)
----------- ----------- ----------- ----------- -----------
Loans
receivable, net 517,556 509,270 497,674 480,480 467,699
Loans held for
sale 1,522 1,570 1,416 798 -
Other assets 31,200 30,503 30,273 30,114 31,974
----------- ----------- ----------- ----------- -----------
Total assets $ 717,888 $ 707,649 $ 701,191 $ 685,817 $ 693,551
=========== =========== =========== =========== ===========
Noninterest-
bearing
deposits $ 147,828 $ 151,078 $ 153,546 $ 141,406 $ 136,721
Interest-bearing
deposits 456,925 434,790 432,453 424,916 419,755
----------- ----------- ----------- ----------- -----------
Total deposits 604,753 585,868 585,999 566,322 556,476
Other borrowings 40,000 49,500 45,000 50,000 66,700
Subordinated
debentures 23,186 23,176 7,217 7,217 7,217
Other
liabilities 2,376 2,087 2,123 2,166 4,189
----------- ----------- ----------- ----------- -----------
Total
liabilities 670,315 660,631 640,339 625,705 634,582
Shareholders'
equity 47,573 47,018 60,852 60,112 58,969
----------- ----------- ----------- ----------- -----------
Total
liabilities and
shareholders'
equity $ 717,888 $ 707,649 $ 701,191 $ 685,817 $ 693,551
=========== =========== =========== =========== ===========
Gross loans to
deposits 87.06% 88.44% 86.54% 86.54% 85.78%
Equity to assets 6.63% 6.64% 8.68% 8.77% 8.50%
Book value per
share $ 7.82 $ 7.72 $ 7.53 $ 7.42 $ 7.29
Asset Quality
Data:
Nonaccrual loans$ 1,882 $ 2,574 $ 2,539 $ 2,798 $ 3,628
Loans past due
90 days or more
and accruing - - - - -
----------- ----------- ----------- ----------- -----------
Total
nonperforming
loans 1,882 2,574 2,539 2,798 3,628
Other real
estate owned 880 587 219 320 1,308
----------- ----------- ----------- ----------- -----------
Total
nonperforming
assets $ 2,762 $ 3,161 $ 2,758 $ 3,118 $ 4,936
=========== =========== =========== =========== ===========
Nonperforming
loans to total
loans 0.36% 0.50% 0.50% 0.57% 0.76%
Nonperforming
assets to total
assets 0.38% 0.45% 0.39% 0.45% 0.71%
Allowance for
loan losses to
nonperforming
loans 468.81% 342.07% 366.25% 343.10% 264.66%
Allowance for
loan losses to
total gross
loans 1.68% 1.70% 1.83% 1.96% 2.01%
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,
------------------------- -------------------------
2015 2014 2015 2014
------------ ------------ ------------ ------------
Selected Operating Data:
Interest income $ 6,643 $ 6,534 $ 25,609 $ 24,934
Interest expense 1,198 767 3,826 3,207
------------ ------------ ------------ ------------
Net interest and
dividend income 5,445 5,767 21,783 21,727
Provision for loan
losses (275) (300) (1,375) (50)
------------ ------------ ------------ ------------
Net interest and
dividend income after
provision for loan
losses 5,720 6,067 23,158 21,777
Noninterest income:
Fees and service
charges 558 568 2,135 2,003
Bank owned life
insurance 103 103 403 405
Gain on calls and
sales of securities 17 165 169 165
Gain on sales of
mortgage loans 24 26 141 72
Loss on sales of
loans - - - (241)
Gain on sales of
other real estate
owned 30 9 83 63
Other 123 119 562 493
------------ ------------ ------------ ------------
Total noninterest
income 855 990 3,493 2,960
Noninterest expenses:
Salaries and employee
benefits 2,719 2,738 10,900 10,597
Occupancy, net 422 420 1,739 1,934
Equipment 159 157 655 687
Data processing 467 447 1,847 1,702
FDIC insurance
premium 106 103 423 580
Other 1,027 1,179 4,615 4,733
------------ ------------ ------------ ------------
Total noninterest
expenses 4,900 5,044 20,179 20,233
------------ ------------ ------------ ------------
Income before income tax
expense 1,675 2,013 6,472 4,504
Income tax expense 614 712 2,272 1,419
------------ ------------ ------------ ------------
Net income 1,061 1,301 4,200 3,085
Dividends on preferred
stock - 171 456 683
------------ ------------ ------------ ------------
Net income available to
common shareholders $ 1,061 $ 1,130 $ 3,744 $ 2,402
============ ============ ============ ============
Weighted avg. no. of
diluted common shares 6,086,249 6,030,561 6,077,657 6,003,814
Diluted earnings per
common share $ 0.17 $ 0.19 $ 0.62 $ 0.40
Return on average common
equity 8.89% 10.41% 8.14% 5.77%
Return on average assets 0.58% 0.75% 0.60% 0.46%
Yield on average
interest-earning assets 3.87% 4.04% 3.87% 3.96%
Cost of average interest-
bearing liabilities 0.92% 0.64% 0.77% 0.68%
------------ ------------ ------------ ------------
Net interest rate spread 2.95% 3.40% 3.10% 3.28%
============ ============ ============ ============
Net interest margin 3.18% 3.57% 3.30% 3.46%
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
For the three months ended
-----------------------------------------------------------
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
----------- ----------- ----------- ----------- -----------
Selected
Operating Data:
Interest income $ 6,643 $ 6,412 $ 6,360 $ 6,194 $ 6,534
Interest
expense 1,198 993 842 793 767
----------- ----------- ----------- ----------- -----------
Net interest
and dividend
income 5,445 5,419 5,518 5,401 5,767
Provision for
loan losses (275) (400) (600) (100) (300)
----------- ----------- ----------- ----------- -----------
Net interest
and dividend
income after
provision for
loan losses 5,720 5,819 6,118 5,501 6,067
Noninterest
income:
Fees and
service
charges 558 541 557 479 568
Bank owned
life
insurance 103 103 101 96 103
Gain on calls
and sales of
securities 17 - - 152 165
Gain on sales
of mortgage
loans 24 52 55 10 26
Loss on sales
of loans - - - - -
Gain on sales
of other real
estate owned 30 - - 53 9
Other 123 142 169 128 119
----------- ----------- ----------- ----------- -----------
Total
noninterest
income 855 838 882 918 990
Noninterest
expenses:
Salaries and
employee
benefits 2,719 2,785 2,688 2,708 2,738
Occupancy, net 422 427 423 467 420
Equipment 159 175 165 156 157
Data
processing 467 468 459 453 447
FDIC insurance
premium 106 87 117 113 103
Other 1,027 1,183 1,253 1,152 1,179
----------- ----------- ----------- ----------- -----------
Total
noninterest
expenses 4,900 5,125 5,105 5,049 5,044
----------- ----------- ----------- ----------- -----------
Income before
income tax
expense 1,675 1,532 1,895 1,370 2,013
Income tax
expense 614 532 673 453 712
----------- ----------- ----------- ----------- -----------
Net income 1,061 1,000 1,222 917 1,301
Dividends on
preferred stock - 114 171 171 171
----------- ----------- ----------- ----------- -----------
Net income
available to
common
shareholders $ 1,061 $ 886 $ 1,051 $ 746 $ 1,130
=========== =========== =========== =========== ===========
Weighted avg.
no. of diluted
common shares 6,086,249 6,091,627 6,086,474 6,045,683 6,030,561
Diluted earnings
per common
share $ 0.17 $ 0.15 $ 0.17 $ 0.12 $ 0.19
Return on
average common
equity 8.89% 7.58% 9.25% 6.77% 10.41%
Return on
average assets 0.58% 0.56% 0.71% 0.54% 0.75%
Yield on average
interest-
earning assets 3.87% 3.80% 3.91% 3.90% 4.04%
Cost of average
interest-
bearing
liabilities 0.92% 0.79% 0.70% 0.67% 0.64%
----------- ----------- ----------- ----------- -----------
Net interest
rate spread 2.95% 3.01% 3.21% 3.23% 3.40%
=========== =========== =========== =========== ===========
Net interest
margin 3.18% 3.21% 3.40% 3.41% 3.57%
Contact:Claire M. Chadwick EVP and Chief Financial Officer630 Godwin AvenueMidland Park, NJ 07432P: (201) 444-7100
Source: Stewardship Financial Corporation
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