Stewardship Financial Corporation Announces Improved Earnings for First Quarter of 2016
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E-mailMIDLAND PARK, NJ -- (Marketwired) -- 05/10/16 -- Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, announced net income available to common shareholders for the three months ended March 31, 2016 of $991,000, or $0.16 per common share, as compared to $746,000, or $0.12 per common share, for the three months ended March 31, 2015.
"The Corporation continues to demonstrate an ability to produce steadily improving results," stated Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer.
Operating Results
Net interest income was $5.3 million for the first quarter of 2016 compared to $5.4 million for the comparable period a year earlier. The net interest margin for the three months ended March 31, 2016 was 3.11% compared to 3.41% for the three months ended March 31, 2015. The current year decline in net interest rate margin partially reflects the impact of the $16.6 million of Subordinated Notes issued in August 2015 and the subsequent redemption of preferred stock. While the cost of the Subordinated Notes added $296,000 of interest expense to the current year period, such increase, on an after tax basis, 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 become fixed at 9%, ultimately making the issuance of the subordinated notes a positive impact to future net income available to common shareholders.
The Corporation reported noninterest income of $819,000 for the three months ended March 31, 2016 compared to $918,000 for the equivalent prior year period. Excluding gains from securities transactions and gains from the sale of other real estate owned, noninterest income for the current year period of $795,000 represents an $82,000 improvement when measured against a comparable figure of $713,000 for the three months ended March 31, 2015. Approximately $50,000 of the increase is reflected in fees and service charges.
Total noninterest expenses were $4.9 million for the three months ended March 31, 2016 -- relatively comparable to the $5.0 million incurred in the prior year period. "We are committed to controlling expenses as we grow our balance sheet," stated Van Ostenbridge.
Asset Quality
Results for the three months ended March 31, 2016 were positively impacted by the Corporation recording a negative provision for loan losses of $350,000 as compared to a negative provision for loan losses of $100,000 for the three months ended March 31, 2015. During the three months ended March 31, 2016, the Corporation recorded a $67,000 net recovery of previously charged off loan balances. In addition, both quantitative and qualitative factors evaluated in determining reserve levels continue to show improvement, thereby supporting a lower overall reserve level.
Balance Sheet / Financial Condition
Total assets at March 31, 2016 were $726.7 million, reflecting an increase from the $717.9 million of assets at December 31, 2015. While lower than recent quarters, the net impact of new loan originations, partially offset by normal principal amortization and payoffs, resulted in growth in the loan portfolio. To supplement the loan growth, funds were invested in securities, so as to contribute to the Corporation's overall yield on earning assets. According to Van Ostenbridge, "The Corporation intends to utilize cash flows from the securities portfolios to help fund future loan growth."
Total deposits were $612.4 million at March 31, 2016, reflecting net growth of $7.7 million since December 31, 2015. The Corporation continues to experience growth in both noninterest-bearing and interest-bearing deposits.
At March 31, 2016, the Corporation's Tier 1 and total risk based capital ratios were 10.28% and 14.45%, 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 (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 $8.8 million.
We invite you to visit our website at www.asbnow.com for additional information.
The information disclosed in this document contains cert ain "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
March 31, 31, 30, June 30, March 31,
2016 2015 2015 2015 2015
--------- --------- --------- --------- ---------
Selected Financial
Condition Data:
Cash and cash
equivalents $ 13,319 $ 10,910 $ 16,025 $ 19,782 $ 21,035
Securities
available for sale 97,637 93,354 86,994 90,850 94,553
Securities held to
maturity 62,427 60,738 60,252 58,363 55,811
FHLB Stock 2,608 2,608 3,035 2,833 3,026
Loans held for sale 783 1,522 1,570 1,416 798
Loans receivable:
Loans receivable,
gross 528,011 526,477 518,168 507,105 490,087
Allowance for
loan losses (8,540) (8,823) (8,805) (9,299) (9,600)
Other, net (64) (98) (93) (132) (7)
--------- --------- --------- --------- ---------
Loans receivable,
net 519,407 517,556 509,270 497,674 480,480
Other real estate
owned, net 1,013 880 587 219 320
Bank owned life
insurance 14,212 14,111 14,008 13,905 13,804
Other assets 15,251 16,209 15,908 16,149 15,990
--------- --------- --------- --------- ---------
Total assets $ 726,657 $ 717,888 $ 707,649 $ 701,191 $ 685,817
========= ========= ========= ========= =========
Noninterest-bearing
deposits $ 154,201 $ 147,828 $ 151,078 $ 153,546 $ 141,406
Interest-bearing
deposits 458,225 456,925 434,790 432,453 424,916
--------- --------- --------- --------- ---------
Total deposits 612,426 604,753 585,868 585,999 566,322
Other borrowings 40,000 40,000 49,500 45,000 50,000
Subordinated
debentures and
subordinated notes 23,203 23,186 23,176 7,217 7,217
Other liabilities 1,836 2,376 2,087 2,123 2,166
--------- --------- --------- --------- ---------
Total liabilities 677,465 670,315 660,631 640,339 625,705
Shareholders'
equity 49,192 47,573 47,018 60,852 60,112
--------- --------- --------- --------- ---------
Total liabilities
and shareholders'
equity $ 726,657 $ 717,888 $ 707,649 $ 701,191 $ 685,817
========= ========= ========= ========= =========
Gross loans to
deposits 86.22% 87.06% 88.44% 86.54% 86.54%
Equity to assets 6.77% 6.63% 6.64% 8.68% 8.77%
Book value per
share $ 8.05 $ 7.82 $ 7.72 $ 7.53 $ 7.42
Asset Quality Data:
Nonaccrual loans $ 2,304 $ 1,882 $ 2,574 $ 2,539 $ 2,798
Loans past due 90
days or more and
accruing - - - - -
--------- --------- --------- --------- ---------
Total nonperforming
loans 2,304 1,882 2,574 2,539 2,798
Other real estate
owned 1,013 880 587 219 320
--------- --------- --------- --------- ---------
Total nonperforming
assets $ 3,317 $ 2,762 $ 3,161 $ 2,758 $ 3,118
========= ========= ========= ========= =========
Nonperforming loans
to total loans 0.44% 0.36% 0.50% 0.50% 0.57%
Nonperforming
assets to total
assets 0.46% 0.38% 0.45% 0.39% 0.45%
Allowance for loan
losses to
nonperforming
loans 370.66% 468.81% 342.07% 366.25% 343.10%
Allowance for loan
losses to total
gross loans 1.62% 1.68% 1.70% 1.83% 1.96%
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
For the three months ended
March 31,
----------------------------
2016 2015
------------- -------------
Selected Operating Data:
Interest income $ 6,449 $ 6,194
Interest expense 1,173 793
------------- -------------
Net interest and dividend income 5,276 5,401
Provision for loan losses (350) (100)
Net interest income after provision for loan
losses 5,626 5,501
Noninterest income:
Fees and service charges 529 479
Bank owned life insurance 101 96
Gain on calls and sales of securities 24 152
Gain on sales of mortgage loans 18 10
Gain on sales of other real estate owned - 53
Other 147 128
------------- -------------
Total noninterest income 819 918
Noninterest expenses:
Salaries and employee benefits 2,715 2,708
Occupancy, net 398 467
Equipment 150 156
Data processing 472 453
FDIC insurance premium 106 113
Other 1,061 1,152
------------- -------------
Total noninterest expenses 4,902 5,049
------------- -------------
Income before income tax expense 1,543 1,370
Income tax expense 552 453
------------- -------------
Net income 991 917
Dividends on preferred stock - 171
------------- -------------
Net income available to common shareholders $ 991 $ 746
============= =============
Weighted avg. no. of diluted common shares 6,092,351 6,045,683
Diluted earnings per common share $ 0.16 $ 0.12
Return on average common equity 8.21% 6.77%
Return on average assets 0.55% 0.54%
Yield on average interest-earning assets 3.79% 3.90%
Cost of average interest-bearing liabilities 0.90% 0.67%
------------- -------------
Net interest rate spread 2.89% 3.23%
============= =============
Net interest margin 3.11% 3.41%
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
For the three months ended
----------------------------------------------------------
December September
March 31, 31, 30, June 30, March 31,
2016 2015 2015 2015 2015
---------- ---------- ---------- ---------- ----------
Selected
Operating Data:
Interest
income $ 6,449 $ 6,643 $ 6,412 $ 6,360 $ 6,194
Interest
expense 1,173 1,198 993 842 793
---------- ---------- ---------- ---------- ----------
Net interest
and
dividend
income 5,276 5,445 5,419 5,518 5,401
Provision for
loan losses (350) (275) (400) (600) (100)
---------- ---------- ---------- ---------- ----------
Net interest
and dividend
income
after
provision
for loan
losses 5,626 5,720 5,819 6,118 5,501
Noninterest
income:
Fees and
service
charges 529 558 541 557 479
Bank owned
life
insurance 101 103 103 101 96
Gain on
calls and
sales of
securities 24 17 - - 152
Gain on
sales of
mortgage
loans 18 24 52 55 10
Gain on
sales of
other real
estate
owned - 30 - - 53
Other 147 123 142 169 128
---------- ---------- ---------- ---------- ----------
Total
noninterest
income 819 855 838 882 918
Noninterest
expenses:
Salaries and
employee
benefits 2,715 2,719 2,785 2,688 2,708
Occupancy,
net 398 422 427 423 467
Equipment 150 159 175 165 156
Data
processing 472 467 468 459 453
FDIC
insurance
premium 106 106 87 117 113
Other 1,061 1,027 1,183 1,253 1,152
---------- ---------- ---------- ---------- ----------
Total
noninterest
expenses 4,902 4,900 5,125 5,105 5,049
---------- ---------- ---------- ---------- ----------
Income before
income tax
expense 1,543 1,675 1,532 1,895 1,370
Income tax
expense 552 614 532 673 453
---------- ---------- ---------- ---------- ----------
Net income 991 1,061 1,000 1,222 917
Dividends on
preferred stock - - 114 171 171
---------- ---------- ---------- ---------- ----------
Net income
available to
common
shareholders $ 991 $ 1,061 $ 886 $ 1,051 $ 746
========== ========== ========== ========== ==========
Weighted avg.
no. of diluted
common shares 6,092,351 6,086,249 6,091,627 6,086,474 6,045,683
Diluted earnings
per common
share $ 0.16 $ 0.17 $ 0.15 $ 0.17 $ 0.12
Return on
average common
equity 8.21% 8.89% 7.58% 9.25% 6.77%
Return on
average assets 0.55% 0.58% 0.56% 0.71% 0.54%
Yield on average
interest-
earning assets 3.79% 3.87% 3.80% 3.91% 3.90%
Cost of average
interest-
bearing
liabilities 0.90% 0.92% 0.79% 0.70% 0.67%
---------- ---------- ---------- ---------- ----------
Net interest
rate spread 2.89% 2.95% 3.01% 3.21% 3.23%
========== ========== ========== ========== ==========
Net interest
margin 3.11% 3.18% 3.21% 3.40% 3.41%
Contact:
Claire M. Chadwick EVP and Chief Financial Officer 630 Godwin Avenue Midland Park, NJ 07432 P: (201) 444-7100
Source: Stewardship Financial Corporation
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