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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