Stewardship Financial Corporation Announces Second Quarter of 2016 Earnings
/EINPresswire.com/ -- MIDLAND PARK, NJ--(Marketwired - August 04, 2016) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, announced net income available to common shareholders for the three and six months ended June 30, 2016 of $1.4 million and $2.4 million, respectively, as compared to net income available to common shareholders of $1.1 million and $1.8 million for the three and six months ended June 30, 2015, respectively.
Commenting on results, Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer stated, "Solid earnings continue to be the result of our efforts on originating quality loans and growing deposits appropriately."
Operating Results
The Corporation reported net interest income of $5.9 million and $11.1 million for the three and six months ended June 30, 2016, respectively, compared to $5.5 million and $10.9 million for the comparable prior year periods. The net interest margin for the current three and six month periods was 3.38% and 3.24%, respectively, compared to 3.40% for both the three and six months ended June 30, 2015. The current year net interest income and margin includes 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 a total of $296,000 and $593,000 of interest expense to the current three and six month periods, respectively, such increases, on an after tax basis, are less than the dividends that would have accrued on the preferred stock. The rate on the preferred stock would have been 4.56% until March 1, 2016, when the dividend rate on the preferred stock would have increased and become fixed at 9%. Offsetting the increase from the Subordinated Notes, for the three and six months ended June 30, 2016, net interest income included approximately $450,000 of nonrecurring interest recoveries and prepayment premiums on loans. Overall, the net interest rate spread and net interest margin for the current year periods reflects an overall decline in loan interest rates -- a result of the historically low market rates in the current environment.
For the three and six months ended June 30, 2016, noninterest income was $832,000 and $1.7 million, respectively, compared to $882,000 and $1.8 million for the equivalent prior year periods. The $149,000 decrease for the six months ended June 30, 2016, reflects the fact that noninterest income included only $56,000 of gains on calls and sales of securities compared to $152,000 in the comparable prior year period. In addition, the six months ended June 30, 2016 included only $6,000 of gains on sales of other real estate owned compared to $53,000 of gains during the six months ended June 30, 2015.
Noninterest expenses for the three and six months ended June 30, 2016 was $5.0 million and $9.9 million respectively, compared to $5.1 million and $10.2 million in the comparable prior year periods. "We continue to be diligent in our expense control and, after careful review of branch activity, effective July 9, 2016, our two Hawthorne branches have been consolidated," Van Ostenbridge stated.
Asset Quality
For the three and six months ended June 30, 2016, results were positively impacted by the Corporation recording negative provisions for loan losses of $450,000 and $800,000, respectively, compared to negative provisions for loan losses of $600,000 and $700,000 for the comparable prior year periods. For 2016, the negative provisions for the three and six month periods were partially driven by $298,000 and $365,000, respectively, of net recoveries of previously charged off loan balances. Furthermore, nonperforming loans continue to decline and were just $949,000, or 0.18% of total loans at June 30, 2016 compared to $1.9 million, or 0.36%, at December 31, 2015. Total nonperforming assets of $1.8 million, which includes other real estate owned, also showed continued improvement and represented just 0.24% of total assets at June 30, 2016 compared to 0.38% at December 31, 2015.
Balance Sheet / Financial Condition
As of June 30, 2016, total assets reached $742.6 million, reflecting a larger balance sheet when compared to assets of $717.9 million at December 31, 2015. New loan originations, partially offset by normal principal amortization and payoffs, resulted in net growth in the loan portfolio of $11.7 million. "Loan growth, based on prudent underwriting, continues to be our number one focus", stated Van Ostenbridge.
Funding of the loan growth has been supported by deposit growth. Total deposits grew to $626.5 million at June 30, 2016, an increase of $21.7 million when compared to deposits of $604.8 million at December 31, 2015.
Regulatory capital levels, at June 30, 2016, continue to significantly exceed the requirements for a "well capitalized" institution with a tier 1 leverage ratio of 7.78% (4% requirement) and total risk based capital ratio of 14.26% (8% requirement).
About Stewardship Financial Corporation
Stewardship Financial Corporation's subsidiary, the Atlantic Stewardship Bank, has 11 banking offices in Midland Park, Hawthorne, 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 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 June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 ---------- ---------- ---------- ---------- ---------- Selected Financial Condition Data: Cash and cash equivalents $ 13,901 $ 13,319 $ 10,910 $ 16,025 $ 19,782 Securities available for sale 98,533 97,637 93,354 86,994 90,850 Securities held to maturity 65,666 62,427 60,738 60,252 58,363 FHLB Stock 2,650 2,608 2,608 3,035 2,833 Loans held for sale 581 783 1,522 1,570 1,416 Loans receivable: Loans receivable, gross 537,638 528,011 526,477 518,168 507,105 Allowance for loan losses (8,388) (8,540) (8,823) (8,805) (9,299) Other, net (25) (64) (98) (93) (132) ---------- ---------- ---------- ---------- ---------- Loans receivable, net 529,225 519,407 517,556 509,270 497,674 Other real estate owned, net 834 1,013 880 587 219 Bank owned life insurance 16,320 14,212 14,111 14,008 13,905 Other assets 14,877 15,251 16,209 15,908 16,149 ---------- ---------- ---------- ---------- ---------- Total assets $ 742,587 $ 726,657 $ 717,888 $ 707,649 $ 701,191 ========== ========== ========== ========== ========== Noninterest- bearing deposits $ 160,461 $ 154,201 $ 147,828 $ 151,078 $ 153,546 Interest-bearing deposits 466,008 458,225 456,925 434,790 432,453 ---------- ---------- ---------- ---------- ---------- Total deposits 626,469 612,426 604,753 585,868 585,999 Other borrowings 40,000 40,000 40,000 49,500 45,000 Subordinated debentures and subordinated notes 23,219 23,203 23,186 23,176 7,217 Other liabilities 2,213 1,836 2,376 2,087 2,123 ---------- ---------- ---------- ---------- ---------- Total liabilities 691,901 677,465 670,315 660,631 640,339 Shareholders' equity 50,686 49,192 47,573 47,018 60,852 ---------- ---------- ---------- ---------- ---------- Total liabilities and shareholders' equity $ 742,587 $ 726,657 $ 717,888 $ 707,649 $ 701,191 ========== ========== ========== ========== ========== Gross loans to deposits 85.82% 86.22% 87.06% 88.44% 86.54% Equity to assets 6.83% 6.77% 6.63% 6.64% 8.68% Book value per share $ 8.29 $ 8.05 $ 7.82 $ 7.72 $ 7.53 Asset Quality Data: Nonaccrual loans $ 949 $ 2,304 $ 1,882 $ 2,574 $ 2,539 Loans past due 90 days or more and accruing - - - - - ---------- ---------- ---------- ---------- ---------- Total nonperforming loans 949 2,304 1,882 2,574 2,539 Other real estate owned 834 1,013 880 587 219 ---------- ---------- ---------- ---------- ---------- Total nonperforming assets $ 1,783 $ 3,317 $ 2,762 $ 3,161 $ 2,758 ========== ========== ========== ========== ========== Nonperforming loans to total loans 0.18% 0.44% 0.36% 0.50% 0.50% Nonperforming assets to total assets 0.24% 0.46% 0.38% 0.45% 0.39% Allowance for loan losses to nonperforming loans 883.88% 370.66% 468.81% 342.07% 366.25% Allowance for loan losses to total gross loans 1.56% 1.62% 1.68% 1.70% 1.83%
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, ---------------------- ---------------------- 2016 2015 2016 2015 ---------- ---------- ---------- ---------- Selected Operating Data: Interest income $ 6,979 $ 6,360 $ 13,428 $ 12,554 Interest expense 1,124 842 2,297 1,635 ---------- ---------- ---------- ---------- Net interest and dividend income 5,855 5,518 11,131 10,919 Provision for loan losses (450) (600) (800) (700) ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 6,305 6,118 11,931 11,619 Noninterest income: Fees and service charges 530 557 1,059 1,036 Bank owned life insurance 107 101 208 197 Gain on calls and sales of securities 32 - 56 152 Gain on sales of mortgage loans 19 55 37 65 Gain on sales of other real estate owned 6 - 6 53 Other 138 169 285 297 ---------- ---------- ---------- ---------- Total noninterest income 832 882 1,651 1,800 Noninterest expenses: Salaries and employee benefits 2,742 2,688 5,457 5,396 Occupancy, net 404 423 802 890 Equipment 148 165 298 321 Data processing 477 459 949 912 FDIC insurance premium 90 117 196 230 Other 1,138 1,253 2,199 2,405 ---------- ---------- ---------- ---------- Total noninterest expenses 4,999 5,105 9,901 10,154 ---------- ---------- ---------- ---------- Income before income tax expense 2,138 1,895 3,681 3,265 Income tax expense 776 673 1,328 1,126 ---------- ---------- ---------- ---------- Net income 1,362 1,222 2,353 2,139 Dividends on preferred stock - 171 - 342 ---------- ---------- ---------- ---------- Net income available to common shareholders $ 1,362 $ 1,051 $ 2,353 $ 1,797 ========== ========== ========== ========== Weighted avg. no. of diluted common shares 6,111,729 6,086,474 6,102,040 6,066,191 Diluted earnings per common share $ 0.22 $ 0.17 $ 0.39 $ 0.30 Return on average common equity 11.05% 9.25% 9.64% 8.03% Return on average assets 0.74% 0.71% 0.65% 0.63% Yield on average interest- earning assets 4.02% 3.91% 3.91% 3.91% Cost of average interest- bearing liabilities 0.86% 0.70% 0.88% 0.68% ---------- ---------- ---------- ---------- Net interest rate spread 3.16% 3.21% 3.03% 3.23% ========== ========== ========== ========== Net interest margin 3.38% 3.40% 3.24% 3.40%
Stewardship Financial Corporation Selected Consolidated Financial Information (dollars in thousands, except per share amounts) (unaudited) For the three months ended ---------------------------------------------------------- December September June 30, March 31, 31, 30, June 30, 2016 2016 2015 2015 2015 ---------- ---------- ---------- ---------- ---------- Selected Operating Data: Interest income $ 6,979 $ 6,449 $ 6,643 $ 6,412 $ 6,360 Interest expense 1,124 1,173 1,198 993 842 ---------- ---------- ---------- ---------- ---------- Net interest and dividend income 5,855 5,276 5,445 5,419 5,518 Provision for loan losses (450) (350) (275) (400) (600) ---------- ---------- ---------- ---------- ---------- Net interest and dividend income after provision for loan losses 6,305 5,626 5,720 5,819 6,118 Noninterest income: Fees and service charges 530 529 558 541 557 Bank owned life insurance 107 101 103 103 101 Gain on calls and sales of securities 32 24 17 - - Gain on sales of mortgage loans 19 18 24 52 55 Gain on sales of other real estate owned 6 - 30 - - Other 138 147 123 142 169 ---------- ---------- ---------- ---------- ---------- Total noninterest income 832 819 855 838 882 Noninterest expenses: Salaries and employee benefits 2,742 2,715 2,719 2,785 2,688 Occupancy, net 404 398 422 427 423 Equipment 148 150 159 175 165 Data processing 477 472 467 468 459 FDIC insurance premium 90 106 106 87 117 Other 1,138 1,061 1,027 1,183 1,253 ---------- ---------- ---------- ---------- ---------- Total noninterest expenses 4,999 4,902 4,900 5,125 5,105 ---------- ---------- ---------- ---------- ---------- Income before income tax expense 2,138 1,543 1,675 1,532 1,895 Income tax expense 776 552 614 532 673 ---------- ---------- ---------- ---------- ---------- Net income 1,362 991 1,061 1,000 1,222 Dividends on preferred stock - - - 114 171 ---------- ---------- ---------- ---------- ---------- Net income available to common shareholders $ 1,362 $ 991 $ 1,061 $ 886 $ 1,051 ========== ========== ========== ========== ========== Weighted avg. no. of diluted common shares 6,111,729 6,092,351 6,086,249 6,091,627 6,086,474 Diluted earnings per common share $ 0.22 $ 0.16 $ 0.17 $ 0.15 $ 0.17 Return on average common equity 11.05% 8.21% 8.89% 7.58% 9.25% Return on average assets 0.74% 0.55% 0.58% 0.56% 0.71% Yield on average interest- earning assets 4.02% 3.79% 3.87% 3.80% 3.91% Cost of average interest- bearing liabilities 0.86% 0.90% 0.92% 0.79% 0.70% ---------- ---------- ---------- ---------- ---------- Net interest rate spread 3.16% 2.89% 2.95% 3.01% 3.21% ========== ========== ========== ========== ========== Net interest margin 3.38% 3.11% 3.18% 3.21% 3.40%
For Immediate Release Contact:
Claire M. Chadwick
EVP and Chief Financial Officer
630 Godwin Avenue
Midland Park, NJ 07432
P: (201) 444-7100