Stewardship Financial Corporation Reports Earnings for Third Quarter of 2015
/EINPresswire.com/ -- MIDLAND PARK, NJ--(Marketwired - November 05, 2015) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, reported net income for the three and nine months ended September 30, 2015, of $1.0 million and $3.1 million, respectively, compared to net income of $552,000 and $1.8 million for the equivalent three and nine month periods in 2014. After dividends on preferred stock, net income available to common shareholders for the current three month period was $886,000, or $0.15 per share, compared to $382,000, or $0.06 per share, for the three months ended September 30, 2014. For the first nine months of 2015, net income available to common shareholders was $2,683,000, or $0.44 per share, compared to $1,272,000, or $0.21 per share, during the same period in 2014.
"We are pleased to continue to report improving results. The stabilization of our asset quality and steady loan growth remain our focus and have contributed to our progress," said Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation,
Balance Sheet / Financial Condition
Total assets at September 30, 2015 were $707.6 million - an increase when compared to with total assets of $693.6 million at December 31, 2014. For the first nine months of 2015, a $40.8 million net increase in gross loans receivable was the result of new loan originations, partially offset by normal principal amortization and payoffs. On an annualized basis, such loan growth equates to 11.4%. Partially offsetting the loan growth was the previously reported sale of approximately $27.8 million of available for sale securities with higher price volatility. Such sales were conducted to provide a portion of the funding for the loan growth, reflecting an intentional shift to higher yielding assets.
Total deposits were $585.9 million at September 30, 2015, reflecting a $29.4 million increase when compared to deposits of $556.5 million at December 31, 2014. "The focus on loan growth naturally warrants a continued focus on deposit growth," noted Van Ostenbridge. As a result of an increase in deposits, other borrowings decreased $17.2 million to $49.5 million at September 30, 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, at September 30, 2015, continue to exceed the capital requirements for a "well capitalized" institution. The Corporation's tier 1 leverage ratio was 7.66% (4% requirement) and total risk based capital ratio was 14.48% (8% requirement).
Operating Results
For the three and nine months ended September 30, 2015, the Corporation reported net interest income of $5.4 million and $16.3 million, respectively, compared to $5.3 million and $16.0 million for the corresponding prior year periods. The net interest margin for the current three and nine months ended September 30, 2015 was 3.21% and 3.34%, respectively, compared to 3.36% and 3.42% for the three and nine months ended September 30, 2014, respectively. The recent decline 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.
Noninterest income for the three and nine months ended September 30, 2015 was $838,000 and $2.6 million, respectively, compared to $764,000 and $2.0 million for the same prior year periods. For the current year periods, fees and service charges reflect increases of $31,000 and $142,000 when compared to 2014. In addition, as a result of the Corporation returning to selling the majority of residential loan production, gains on sales of mortgage loans increased over the prior year three and nine month periods. For the nine months ended September 30 2015, noninterest income included gains of $152,000 from the sale of available for sale securities and $53,000 from the sale of other real estate owned. The prior year nine month period included a loss of $241,000 from the sale of nonperforming loans.
Noninterest expenses totaled $5.1 million and $15.3 million for the three and nine months ended September 30, 2015, relatively consistent with the $5.0 million and $15.2 million incurred for the three and nine months ended September 30, 2014, respectively.
Asset Quality
Van Ostenbridge stated, "The credit metrics of our assets have improved and stabilized." For the three and nine months ended September 30, 2015, results continue to be positively impacted by the Corporation recording negative provisions for loan losses of $400,000 and $1.1 million, respectively. For the prior year, the Corporation recorded a $250,000 provision for loan losses for both the three and nine months ended September 30, 2014. Nonperforming loans were $2.6 million, or 0.50% of total loans at September 30, 2015 compared to $3.6 million, or 0.76%, at December 31, 2014. Total nonperforming assets of $3.2 million, which includes other real estate owned, represented 0.45% of total assets at September 30, 2015 compared to 0.71% at December 31, 2014.
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 $8.2 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 March December September
30, June 30, 31, 31, 30,
2015 2015 2015 2014 2014
----------- ---------- ---------- ---------- ----------
Selected Financial
Condition Data:
Cash and cash
equivalents $ 16,025 $ 19,782 $ 21,035 $ 10,086 $ 10,850
Securities
available for
sale 86,994 90,850 94,553 124,918 138,255
Securities held to
maturity 60,252 58,363 55,811 55,097 54,234
FHLB Stock 3,035 2,833 3,026 3,777 2,882
Loans receivable:
Loans
receivable,
gross 518,168 507,105 490,087 477,320 443,006
Allowance for
loan losses (8,805) (9,299) (9,600) (9,602) (10,094)
Other, net (93) (132) (7) (19) (17)
----------- ---------- ---------- ---------- ----------
Loans receivable,
net 509,270 497,674 480,480 467,699 432,895
Loans held for
sale 1,570 1,416 798 - 364
Other assets 30,503 30,273 30,114 31,974 33,072
----------- ---------- ---------- ---------- ----------
Total assets $ 707,649 $701,191 $685,817 $693,551 $ 672,552
=========== ========== ========== ========== ==========
Noninterest-
bearing deposits $ 151,078 $153,546 $141,406 $136,721 $ 140,345
Interest-bearing
deposits 434,790 432,453 424,916 419,755 416,666
----------- ---------- ---------- ---------- ----------
Total deposits 585,868 585,999 566,322 556,476 557,011
Other borrowings 49,500 45,000 50,000 66,700 46,800
Securities sold
under agreements
to repurchase - - - - 100
Subordinated
debentures 23,176 7,217 7,217 7,217 7,217
Other liabilities 2,087 2,123 2,166 4,189 4,166
----------- ---------- ---------- ---------- ----------
Total liabilities 660,631 640,339 625,705 634,582 615,294
Shareholders'
equity 47,018 60,852 60,112 58,969 57,258
----------- ---------- ---------- ---------- ----------
Total liabilities
and shareholders'
equity $ 707,649 $701,191 $685,817 $693,551 $ 672,552
=========== ========== ========== ========== ==========
Gross loans to
deposits 88.44% 86.54% 86.54% 85.78% 79.53%
Equity to assets 6.64% 8.68% 8.77% 8.50% 8.51%
Asset Quality Data:
Nonaccrual loans $ 2,574 $ 2,539 $ 2,798 $ 3,628 $ 4,434
Loans past due 90
days or more and
accruing - - - - -
----------- ---------- ---------- ---------- ----------
Total
nonperforming
loans 2,574 2,539 2,798 3,628 4,434
Other real estate
owned 587 219 320 1,308 2,090
----------- ---------- ---------- ---------- ----------
Total
nonperforming
assets $ 3,161 $ 2,758 $ 3,118 $ 4,936 $ 6,524
=========== ========== ========== ========== ==========
Nonperforming
loans to total
loans 0.50% 0.50% 0.57% 0.76% 1.00%
Nonperforming
assets to total
assets 0.45% 0.39% 0.45% 0.71% 0.97%
Allowance for loan
losses to
nonperforming
loans 342.07% 366.25% 343.10% 264.66% 227.65%
Allowance for loan
losses to total
gross loans 1.70% 1.83% 1.96% 2.01% 2.28%
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
For the three months For the nine months
ended ended
September 30, September 30,
--------------------- ---------------------
2015 2014 2015 2014
---------- ---------- ---------- ----------
Selected Operating Data:
Interest income $ 6,412 $ 6,069 $ 18,966 $ 18,400
Interest expense 993 791 2,628 2,440
---------- ---------- ---------- ----------
Net interest and dividend
income 5,419 5,278 16,338 15,960
Provision for loan losses (400) 250 (1,100) 250
---------- ---------- ---------- ----------
Net interest and dividend
income
after provision for loan
losses 5,819 5,028 17,438 15,710
Noninterest income:
Fees and service charges 541 510 1,577 1,435
Bank owned life insurance 103 100 300 302
Gain on calls and sales of
securities - - 152 -
Gain on sales of mortgage
loans 52 32 117 46
Loss on sales of loans - - - (241)
Gain on sales of other real
estate owned - - 53 54
Other 142 122 439 374
---------- ---------- ---------- ----------
Total noninterest income 838 764 2,638 1,970
Noninterest expenses:
Salaries and employee benefits 2,785 2,624 8,181 7,859
Occupancy, net 427 439 1,317 1,514
Equipment 175 167 496 530
Data processing 468 433 1,380 1,255
FDIC insurance premium 87 133 317 477
Other 1,183 1,193 3,588 3,554
---------- ---------- ---------- ----------
Total noninterest expenses 5,125 4,989 15,279 15,189
---------- ---------- ---------- ----------
Income before income tax expense 1,532 803 4,797 2,491
Income tax expense 532 251 1,658 707
---------- ---------- ---------- ----------
Net income 1,000 552 3,139 1,784
Dividends on preferred stock 114 170 456 512
---------- ---------- ---------- ----------
Net income available to common
shareholders $ 886 $ 382 $ 2,683 $ 1,272
========== ========== ========== ==========
Weighted avg. no. of diluted 6,091,62 6,026,84 6,074,76 5,994,80
common shares 7 8 3 0
Diluted earnings per common
share $ 0.15 $ 0.06 $ 0.44 $ 0.21
Return on average common equity 7.58% 3.58% 7.88% 4.14%
Return on average assets 0.56% 0.33% 0.60% 0.36%
Yield on average interest-
earning assets 3.80% 3.85% 3.87% 3.94%
Cost of average interest-bearing
liabilities 0.79% 0.68% 0.72% 0.69%
---------- --------- ---------- ----------
Net interest rate spread 3.01% 3.17% 3.15% 3.25%
========== ========= ========== ==========
Net interest margin 3.21% 3.36% 3.34% 3.42%
Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
For the three months ended
-----------------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2015 2015 2015 2014 2014
----------- ----------- ----------- ----------- -----------
Selected
Operating Data:
Interest income $ 6,412 $ 6,360 $ 6,194 $ 6,534 $ 6,069
Interest
expense 993 842 793 767 791
----------- ----------- ----------- ----------- -----------
Net interest
and dividend
income 5,419 5,518 5,401 5,767 5,278
Provision for
loan losses (400) (600) (100) (300) 250
----------- ----------- ----------- ----------- -----------
Net interest
and dividend
income
after
provision for
loan losses 5,819 6,118 5,501 6,067 5,028
Noninterest
income:
Fees and
service
charges 541 557 479 568 510
Bank owned
life
insurance 103 101 96 103 100
Gain on calls
and sales of
securities - - 152 165 -
Gain on sales
of mortgage
loans 52 55 10 26 32
Loss on sales
of loans - - - - -
Gain on sales
of other real
estate owned - - 53 9 -
Other 142 169 128 119 122
----------- ----------- ----------- ----------- -----------
Total
noninterest
income 838 882 918 990 764
Noninterest
expenses:
Salaries and
employee
benefits 2,785 2,688 2,708 2,738 2,624
Occupancy, net 427 423 467 420 439
Equipment 175 165 156 157 167
Data
processing 468 459 453 447 433
FDIC insurance
premium 87 117 113 103 133
Other 1,183 1,253 1,152 1,179 1,193
----------- ----------- ----------- ----------- -----------
Total
noninterest
expenses 5,125 5,105 5,049 5,044 4,989
----------- ----------- ----------- ----------- -----------
Income before
income tax
expense 1,532 1,895 1,370 2,013 803
Income tax
expense 532 673 453 712 251
----------- ----------- ----------- ----------- -----------
Net income 1,000 1,222 917 1,301 552
Dividends on
preferred stock 114 171 171 171 170
----------- ----------- ----------- ----------- -----------
Net income
available to
common
shareholders $ 886 $ 1,051 $ 746 $ 1,130 $ 382
=========== =========== =========== =========== ===========
Weighted avg.
no. of diluted
common shares 6,091,627 6,086,474 6,045,683 6,030,561 6,026,848
Diluted earnings
per common
share $ 0.15 $ 0.17 $ 0.12 $ 0.19 $ 0.06
Return on
average common
equity 7.58% 9.25% 6.77% 10.41% 3.58%
Return on
average assets 0.56% 0.71% 0.54% 0.75% 0.33%
Yield on average
interest-
earning assets 3.80% 3.91% 3.90% 4.04% 3.85%
Cost of average
interest-
bearing
liabilities 0.79% 0.70% 0.67% 0.64% 0.68%
----------- ----------- ----------- ----------- -----------
Net interest
rate spread 3.01% 3.21% 3.23% 3.40% 3.17%
=========== =========== =========== =========== ===========
Net interest
margin 3.21% 3.40% 3.41% 3.57% 3.36%
Contact:
Claire M. Chadwick
EVP and Chief Financial Officer
630 Godwin Avenue
Midland Park, NJ 07432
P: (201) 444-7100
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