Stewardship Financial Corporation Reports Results for the Second Quarter of 2012

Marketwired

MIDLAND PARK, NJ--(Marketwire -08/14/12)- Stewardship Financial Corporation (SSFN), parent of Atlantic Stewardship Bank, reported results for the second quarter of 2012. Although the Corporation remains profitable on a year to date basis, the Corporation had a net loss for the three months ended June 30, 2012 of $324,000, or $0.06 per diluted common share, as compared to net income of $585,000, or $0.08 per diluted common share, for the three months ended June 30, 2011. For the six months ended June 30, 2012, the Corporation reported net income of $452,000 compared to net income of $1.1 million for the corresponding six month period in 2011. After dividends on preferred stock and accretion, net income available to common shareholders was $339,000 for the first six months of 2012, or $0.06 per diluted common share, compared to $792,000, or $0.14 per diluted common share, during the same period in 2011.

The Corporation recorded a $2.9 million provision for loan losses for the three months ended June 30, 2012 bringing the year to date provision for loan losses to $4.7 million. These amounts compare to provision for loan losses of $1.9 million and $3.6 million for the three and six month periods ended June 30, 2011, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer stated, "The current period loan loss provision is indicative of continuing economic conditions that have contributed to an increase in loan delinquencies and the softness in the real estate market. In addition, based on recent developments occurring in August, 2012 surrounding a single borrower, a $3.0 million loan was placed on nonaccrual retroactive to June 30, 2012. Management's evaluation of the collectability of this loan is based on the best information available at this time." The Corporation monitors its loan portfolio and intends to continue to provide for loan loss reserves based on its ongoing periodic review of the loan portfolio and general market conditions. As a measurement of the allowance coverage, the total allowance for loan losses was 2.68% of total loans compared to ratios of 2.54% at December 31, 2011 and 2.40% at June 30, 2011.

Nonperforming loans totaled $29.7 million at June 30, 2012, an increase from $27.7 million at December 31, 2011. As noted previously, included in nonperforming loans at June 30, 2012 is one loan for $3.0 million. Although the loan was not delinquent, the loan was placed on a nonaccrual status based on recent developments surrounding the borrower which may impact the borrower's repayment ability. The increase in nonaccruals due to this loan was partially offset by payments being received on other nonaccrual loans.

While nonperforming loans reflected an increase, positive results were seen in other real estate owned. The balance in other real estate owned at June 30, 2012 of $2.0 million reflects a substantial decrease from the $5.3 million held at December 31, 2011. "Although the legal process can be long and difficult, once a property is acquired through foreclosure or deed-in-lieu of foreclosure, the Corporation has been successful in quickly disposing of the properties," stated Van Ostenbridge.

For the three and six months ended June 30, 2012, the Corporation reported net interest income of $6.0 million and $12.0 million compared to $6.2 million and $12.2 million for the equivalent prior year periods. The net interest margin for the current three and six months ended June 30, 2012 of 3.69% and 3.70%, respectively, compared to 3.89% and 3.86% for the three and six months ended June 30, 2011, respectively.

For the six months ended June 30, 2012, the Corporation reported noninterest income of $2.5 million compared to $2.0 million for the equivalent prior year period. The 2012 period includes increased gains realized primarily from the sale of securities.

Noninterest expenses for the three and six months ended June 30, 2012 was $4.5 million and $9.2 million, respectively -- comparable to the prior year periods.

Total assets at June 30, 2012 were $700.1 million, a slight decrease from assets of $708.8 million at December 31, 2011. Additional liquidity was provided by an increase in cash and cash equivalents. Gross loans receivable decreased $11.1 million from December 31, 2011, reflecting the current reduced demand for loans and our continued emphasis on thorough credit underwriting.

In total, deposits of $593.5 million at June 30, 2012 were relatively unchanged from total deposits at December 31, 2011. However, the composition of deposits reflected a shift from interest-bearing to noninterest-bearing. From December 31, 2011 to June 30, 2012 the Corporation's noninterest-bearing deposit balances increased $8.2 million.

Van Ostenbridge concluded, "We continue to be challenged by a weak economy and problematic credit environment. The need for an elevated loan loss provision and its impact on our current earnings is disappointing. And, as always, our solid capital position provides us the ability to safely manage through this difficult time."

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. To date, the Bank's tithe donations total $7.7 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, June 30,
2012 2012 2011 2011
----------- ----------- ------------ -----------

Selected Financial
Condition Data:
Cash and cash
equivalents $ 25,340 $ 24,181 $ 13,698 $ 25,866
Securities available
for sale 172,712 175,102 170,925 145,891
Securities held to
maturity 32,993 36,353 38,354 41,426
FHLB Stock 2,213 2,266 2,478 2,491
Loans receivable:
Loans receivable,
gross 445,267 453,671 456,413 468,668
Allowance for loan
losses (11,934) (13,097) (11,604) (11,230)
Other, net 45 62 (6) (109)
----------- ----------- ------------ -----------
Loans receivable, net 433,378 440,636 444,803 457,329

Loans held for sale 3,334 1,395 4,711 -
Other assets 30,158 32,112 33,849 27,386
----------- ----------- ------------ -----------
Total assets $ 700,128 $ 712,045 $ 708,818 $ 700,389
=========== =========== ============ ===========


Noninterest-bearing
deposits $ 124,017 $ 118,597 $ 115,776 $ 114,518
Interest-bearing
deposits 469,478 483,486 477,776 473,900
----------- ----------- ------------ -----------
Total deposits 593,495 602,083 593,552 588,418
Other borrowings 25,000 28,000 32,700 33,000
Securities sold under
agreements to
repurchase 14,342 14,342 14,342 15,791
Subordinated
debentures 7,217 7,217 7,217 7,217
Other liabilities 2,183 2,348 3,215 2,316
Stockholders' equity 57,891 58,055 57,792 53,647
----------- ----------- ------------ -----------
Total liabilities and
stockholders' equity $ 700,128 $ 712,045 $ 708,818 $ 700,389
=========== =========== ============ ===========

Book value per common
share $ 7.27 $ 7.31 $ 7.28 $ 7.49

Equity to assets 8.27% 8.15% 8.15% 7.66%

Asset Quality Data:
Nonaccrual loans $ 29,541 $ 26,823 $ 27,736 $ 23,834
Loans past due 90
days or more and
accruing 200 - - 2,342
----------- ----------- ------------ -----------
Total nonperforming
loans 29,741 26,823 27,736 26,176
Other real estate
owned 1,991 3,840 5,288 275
----------- ----------- ------------ -----------
Total nonperforming
assets $ 31,732 $ 30,663 $ 33,024 $ 26,451
=========== =========== ============ ===========


Nonperforming loans
to total loans 6.68% 5.91% 6.08% 5.59%
Nonperforming assets
to total assets 4.53% 4.31% 4.66% 3.78%
Allowance for loan
losses to
nonperforming loans 40.13% 48.83% 41.84% 42.90%
Allowance for loan
losses to total
gross loans 2.68% 2.89% 2.54% 2.40%


Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)

For the three months For the six months
ended ended
June 30, June 30,
---------------------- ----------------------
2012 2011 2012 2011
---------- ---------- ---------- ----------
Selected Operating Data:
Interest income $ 7,317 $ 8,033 $ 14,833 $ 15,808
Interest expense 1,357 1,812 2,822 3,638
---------- ---------- ---------- ----------
Net interest and
dividend income 5,960 6,221 12,011 12,170
Provision for loan losses 2,900 1,915 4,665 3,590
---------- ---------- ---------- ----------
Net interest and dividend
income after provision
for loan losses 3,060 4,306 7,346 8,580
Noninterest income:
Fees and service charges 531 538 1,046 1,049
Bank owned life
insurance 81 81 161 161
Gain on calls and sales
of securities 12 21 445 21
Gain on sales of
mortgage loans 154 186 565 590
Other 133 117 244 206
---------- ---------- ---------- ----------
Total noninterest income 911 943 2,461 2,027
Noninterest expenses:
Salaries and employee
benefits 2,257 2,261 4,643 4,497
Occupancy, net 471 475 958 1,020
Equipment 243 238 491 496
Data processing 316 338 650 675
FDIC insurance premium 155 147 303 401
Charitable contributions 25 75 175 175
Other 987 1,002 1,988 1,956
---------- ---------- ---------- ----------
Total noninterest
expenses 4,454 4,536 9,208 9,220
---------- ---------- ---------- ----------
(Loss) income before income
tax (benefit) expense (483) 713 599 1,387
Income tax (benefit) expense (159) 128 147 319
---------- ---------- ---------- ----------
Net (loss) income (324) 585 452 1,068
Dividends on preferred stock
and accretion 38 138 113 276
---------- ---------- ---------- ----------
Net (loss) income available
to common stockholders $ (362) $ 447 $ 339 $ 792
========== ========== ========== ==========

Weighted avg. no. of diluted
common shares 5,902,167 5,850,506 5,897,266 5,850,116
Diluted (loss) earnings per
common share $ (0.06) $ 0.08 $ 0.06 $ 0.14

Return on average common
equity -3.31% 4.11% 1.56% 3.70%

Return on average assets -0.18% 0.34% 0.13% 0.31%

Yield on average interest-
earning assets 4.51% 4.99% 4.55% 4.99%
Cost of average interest-
bearing liabilities 1.04% 1.37% 1.08% 1.38%
---------- ---------- ---------- ----------
Net interest rate spread 3.47% 3.62% 3.47% 3.61%
========== ========== ========== ==========

Net interest margin 3.69% 3.89% 3.70% 3.86%

Contact:

Claire M. Chadwick
SVP and Chief Financial Officer
630 Godwin Avenue
Midland Park, NJ 07432
201-444-7100

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