Stewardship Financial Corporation Reports Results for the Third Quarter of 2012

Marketwired

MIDLAND PARK, NJ--(Marketwire - Nov 9, 2012) - Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, reported net income for the three and nine months ended September 30, 2012 of $328,000 and $780,000, respectively, compared to $578,000 and $1,646,000 for the corresponding three and nine month periods in 2011. After dividends on preferred stock and accretion, net income available to common shareholders for the current nine month period was $555,000, or $0.09 per diluted common share, compared to $1.1 million, or $0.19 per diluted common share, for the nine months ended September 30, 2011.

For the three and nine months ended September 30, 2012, the Corporation recorded provision for loan losses of $2.0 million and $6.7 million, respectively. These amounts compare to $2.3 million and $5.9 million for the same periods in 2011. "While the provision remains elevated," Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer noted, "nonperforming loans are beginning to show a decline." At September 30, 2012, nonperforming loans totaled $25.0 million, or 4.10% of total assets, representing a $4.7 million decline from $29.7 million, or 4.53% of total assets, at June 30, 2012. This decrease reflects payments and payoffs received as well as the transfer of certain loans to Other Real Estate Owned. "Other Real Estate Owned reflected an increase of $994,000 from June, however, we continue to have success in disposing of the properties quickly and the majority of properties currently held are under contract for sale," Van Ostenbridge commented.

The Corporation constantly monitors the loan portfolio and intends to continue to provide for loan loss reserves as appropriate based on ongoing reviews of the loan portfolio and general market conditions. As a measurement of the current allowance coverage, the total allowance for loan losses was 2.88% of total loans compared to a ratio of 2.54% at December 31, 2011. Likewise, at September 30, 2012 the allowance for loan losses represented 50.32% of nonperforming loans compared to 41.84% at December 31, 2011.

The Corporation reported net interest income of $5.9 million and $17.9 million for the three and nine months ended September 30, 2012, compared to $6.3 million and $18.5 million for the equivalent prior year periods. The net interest margin for the current three and nine months ended September 30, 2012 of 3.62% and 3.67%, respectively, compared to 3.87% and 3.86% for the three and nine months ended September 30, 2011, respectively. Asset yields continue to be impacted by the prolonged, low interest rate environment and the impact of nonaccruals. As such, the Corporation strives to offset some of the declines in yields on assets by managing funding costs. In addition to reducing rates offered on deposit products, during the current quarter the Corporation prepaid $7.0 million of a higher costing $14.0 million wholesale repurchase agreement.

For the three and nine months ended September 30, 2012, noninterest income was $1.7 million and $4.2 million, respectively, compared to $1.4 million and $3.4 million for the corresponding prior year periods. The 2012 periods include increased gains realized from the sale of securities. The gain for the three months ended September 30, 2012 reflects a transaction executed to lower the Company's risk exposure to rising interest rates and deleverage the balance sheet through the partial prepayment of a higher costing wholesale repurchase agreement. A resulting gain was partially offset by a prepayment premium.

Noninterest expenses for the three and nine months ended September 30, 2012 were $5.2 million and $14.4 million, respectively, as compared to $4.6 million and $13.8 million for the prior year three and nine month periods. Included in noninterest expenses in the current year periods is a $691,000 prepayment premium incurred with the repayment of the above noted wholesale repurchase agreement.

At September 30, 2012 total assets were $683.8 million, or a decrease of $25.0 million when compared to assets of $708.8 million at December 31, 2011. In addition to the above noted deleveraging of the balance sheet, since December 31, 2011, gross loans receivable have decreased $18.4 million, reflecting a reduced demand for loans and our ongoing attention on quality credit underwriting.

Deposits were $583.4 million at September 30, 2012, compared to deposits of $593.6 million at December 31, 2011. Average core deposit balances continue to see growth. Noninterest-bearing deposits now total $125.1 million, or 21.4% of total deposits at September 30, 2012, up from $115.8 million, or 19.5% at December 31, 2011.

In conclusion, Van Ostenbridge stated, "We are encouraged by the improvement in asset quality. We, however, acknowledge that there is still more to accomplish. We recognize that the legal process can be long, difficult and expensive but we remain firmly committed to addressing further reductions in our level of nonperforming assets."

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)  
                   
    September 30,   June 30,   December 31,   September 30,  
    2012   2012   2011   2011  
                           
Selected Financial Condition Data:                          
  Cash and cash equivalents   $ 17,387   $ 25,340   $ 13,698   $ 23,736  
  Securities available for sale     173,999     172,712     170,925     163,092  
  Securities held to maturity     31,890     32,993     38,354     39,937  
  FHLB Stock     2,213     2,213     2,478     2,491  
  Loans receivable:                          
    Loans receivable, gross     437,999     445,267     456,413     460,518  
    Allowance for loan losses     (12,598 )   (11,934 )   (11,604 )   (12,389 )
    Other, net     93     45     (6 )   (74 )
  Loans receivable, net     425,494     433,378     444,803     448,055  
                             
  Loans held for sale     938     3,334     4,711     1,152  
  Other assets     31,891     30,158     33,849     27,781  
  Total assets   $ 683,812   $ 700,128   $ 708,818   $ 706,244  
                             
                             
  Noninterest-bearing deposits   $ 125,060   $ 124,017   $ 115,776   $ 118,117  
  Interest-bearing deposits     458,366     469,478     477,776     469,747  
  Total deposits     583,426     593,495     593,552     587,864  
  Other borrowings     25,000     25,000     32,700     33,000  
  Securities sold under agreements to repurchase     7,342     14,342     14,342     15,191  
  Subordinated debentures     7,217     7,217     7,217     7,217  
  Other liabilities     2,953     2,183     3,215     3,420  
  Stockholders' equity     57,874     57,891     57,792     59,552  
  Total liabilities and stockholders' equity   $ 683,812   $ 700,128   $ 708,818   $ 706,244  
                             
  Book value per common share   $ 7.25   $ 7.27   $ 7.28   $ 7.59  
                             
  Equity to assets     8.46 %   8.27 %   8.15 %   8.43 %
                           
Asset Quality Data:                          
  Nonaccrual loans   $ 24,960   $ 29,541   $ 27,736   $ 24,422  
  Loans past due 90 days or more and accruing     75     200     -     2,589  
  Total nonperforming loans     25,035     29,741     27,736     27,011  
  Other real estate owned     2,985     1,991     5,288     434  
  Total nonperforming assets   $ 28,020   $ 31,732   $ 33,024   $ 27,445  
                             
                             
  Nonperforming loans to total loans     5.72 %   6.68 %   6.08 %   5.87 %
  Nonperforming assets to total assets     4.10 %   4.53 %   4.66 %   3.89 %
  Allowance for loan losses to nonperforming loans     50.32 %   40.13 %   41.84 %   45.87 %
  Allowance for loan losses to total gross loans     2.88 %   2.68 %   2.54 %   2.69 %
   
   
Stewardship Financial Corporation  
Selected Consolidated Financial Information  
(dollars in thousands, except per share amounts)  
(unaudited)  
                         
    For the three months ended     For the nine months ended  
    September 30,     September 30,  
    2012     2011     2012     2011  
Selected Operating Data:                                
  Interest income   $ 7,120     $ 8,018     $ 21,953     $ 23,826  
  Interest expense     1,259       1,732       4,081       5,370  
    Net interest and dividend income     5,861       6,286       17,872       18,456  
  Provision for loan losses     2,000       2,330       6,665       5,920  
  Net interest and dividend income after provision for loan losses     3,861       3,956       11,207       12,536  
  Noninterest income:                                
    Fees and service charges     496       501       1,542       1,550  
    Bank owned life insurance     83       83       244       244  
    Gain on calls and sales of securities     891       454       1,336       475  
    Gain on sales of mortgage loans     162       245       727       835  
    Other     87       67       331       273  
    Total noninterest income     1,719       1,350       4,180       3,377  
  Noninterest expenses:                                
    Salaries and employee benefits     2,394       2,380       7,037       6,877  
    Occupancy, net     494       516       1,452       1,536  
    Equipment     240       235       731       731  
    Data processing     324       335       974       1,010  
    FDIC insurance premium     154       152       457       553  
    Other     1,600       997       3,763       3,128  
    Total noninterest expenses     5,206       4,615       14,414       13,835  
Income before income tax expense     374       691       973       2,078  
Income tax expense     46       113       193       432  
Net income     328       578       780       1,646  
Dividends on preferred stock and accretion     112       244       225       520  
Net income available to common stockholders   $ 216     $ 334     $ 555     $ 1,126  
                                 
Weighted avg. no. of diluted common shares     5,916,123       5,866,575       5,903,598       5,855,663  
Diluted earnings per common share   $ 0.04     $ 0.06     $ 0.09     $ 0.19  
                                 
Return on average common equity     1.97 %     2.35 %     1.70 %     2.78 %
                                 
Return on average assets     0.19 %     0.32 %     0.15 %     0.32 %
                                 
Yield on average interest-earning assets     4.37 %     4.91 %     4.49 %     4.96 %
Cost of average interest-bearing liabilities     0.97 %     1.30 %     1.04 %     1.35 %
Net interest rate spread     3.40 %     3.61 %     3.45 %     3.61 %
                                 
Net interest margin     3.62 %     3.87 %     3.67 %     3.86 %
Contact:

Claire M. Chadwick
SVP and Chief Financial Officer
630 Godwin Avenue
Midland Park, NJ 07432
201-444-7100
View Comments (0)