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CST: 08/12/2019 15:08:13   

Stewardship Financial Corporation Announces Earnings for the First Quarter of 2019

221 Days ago

MIDLAND PARK, N.J., April 30, 2019 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced net income for the three months ended March 31, 2019 of  $1.6 million, or $0.19 per share.  For the comparable three months ended March 31, 2018, net income was $1.8 million, or $0.21 per share.  As discussed below, results for the prior year period benefited from the Corporation recording a negative provision for loan losses of $335,000 as compared to the positive $65,000 provision for loan losses reflected in the current three month period.

Commenting on the recent quarterly financial results, Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation, stated, “We are pleased with the start of 2019.  The balance sheet growth experienced in the first quarter, led by loan originations offset by a reduction in the securities portfolio, moved us even closer to being a $1 billion institution.  Likewise, earnings demonstrated a continued strength in core profitability.   With the current flattening yield curve environment, we acknowledge that this is a challenging interest rate environment. Nevertheless, net interest margin remained relatively stable in the most recent quarter."

Operating Results
Net interest income of $7.0 million was reported for the three months ended March 31, 2019.  This represented an improvement over the $6.8 million realized in the comparable prior year period.  The increase was primarily a result of increased interest income on loans due to both higher average balances and loan yields, partially offset by increased interest expense.  When comparing to the most recent previous quarter, net interest margin of 3.12% for the three months ended March 31, 2019 reflected a 1 basis point increase over the 3.11% level for the December 2018 quarter.  The average rate earned on interest-earning assets increased 10 basis points, reflecting an improvement over the 5 basis point increase in the fourth quarter of 2018.  Due to higher rates and a highly competitive deposit environment, the cost of interest-bearing liabilities increased 11 basis points in the first quarter, versus a 13 basis point increase in the preceding quarter.  Van Ostenbridge noted that, "With its significant impact on our profitability, we remained focused on protecting the margin."

As noted previously, for the three months ended March 31, 2019, the Corporation recorded a $65,000 provision for loan losses, compared to a negative provision for loan losses of $335,000 for the three months ended March 31, 2018.  The current period loan loss provision principally reflects the growth in the loan portfolio.  The need for additional loan loss reserves due to such growth was partially offset by the impact from the ongoing improvement in the economic conditions and overall real estate climate in the primary business markets in which the Corporation operates.  In addition, net recoveries of previously charged off loan balances of $27,000 were recognized for the three months ended March 31, 2019.

For the three months ended March 31, 2019, noninterest income was $906,000 compared to $725,000 in the equivalent prior year period.  In connection with the establishment of a Small Business Administration ("SBA") department in late 2017, noninterest income for the three months ended March 31, 2019 included $41,000 of gains from the sale of the guaranteed portion of newly originated SBA loans.  The three months ended March 31, 2019 also included a $22,000 mark-to-market gain on a CRA investment which is classified as an equity security.  This compares to a $74,000 loss in the prior year period.

Noninterest expenses were $5.6 million for the three months ended March 31, 2019 compared to $5.4 million in the same prior year period.  Our commitment to managing our expense structure remains.  Furthermore, when measuring against the most recent previous quarter, our noninterest expenses are in line with the 2018 fourth quarter expenses, despite the seasonally higher first quarter payroll tax expenses.

Balance Sheet / Financial Condition
At March 31, 2019, total assets of $961.1 million reflected a $5.5 million increase from assets of $955.6 million at December 31, 2018.  The $13.4 million increase in the gross loan portfolio reflected a 7.3% annualized growth rate.  In addition, the adoption of new accounting rules resulted in the establishment of a $3.1 million Right of Use Asset for all leases.  Offsetting these asset increases, cash flows from the securities portfolio were used to help fund asset growth, resulting in a $7.0 million decrease in the securities portfolio.

At March 31, 2019, total deposits were $783.6 million, showing minimal growth since December 31, 2018.  Van Ostenbridge reported, "On April 1, 2018, the Bank introduced a new line of relationship-focused deposit accounts and we are optimistic that these new Club accounts will assist and improving our deposit gathering efforts."

At March 31, 2019, the Corporation’s Tier 1 leverage ratio and total risk based capital ratio were 9.48% and 14.31%, respectively.  These ratios remain significantly above the respective 4.0% and 8.0% minimum levels required and result in categorizing the Corporation as a “well capitalized” institution under regulatory guidelines.

About Stewardship Financial Corporation
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne, Montville, Morristown, 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 over $11.2 million.  We invite you to visit our website at www.ASBnow.bank 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)
 
                   
  March 31,
2019
  December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
Selected Financial Condition Data:                  
Cash and cash equivalents $ 13,157     $ 16,823     $ 10,839     $ 13,529     $ 22,178  
Securities available for sale 102,519     108,811     109,764     112,594     106,467  
Securities held to maturity 61,586     62,308     62,227     58,471     51,894  
Other equity investments 1,670     1,648     3,661     3,694     3,706  
FHLB stock 3,922     3,965     3,552     3,087     3,039  
Loans held for sale             607      
Loans receivable:                  
Loans receivable, gross 747,180     733,787     729,475     722,148     708,169  
Allowance for loan losses (8,018 )   (7,926 )   (7,904 )   (8,353 )   (8,445 )
Other, net (459 )   (457 )   (483 )   (484 )   (448 )
Loans receivable, net 738,703     725,404     721,088     713,311     699,276  
Premises and equipment, net 7,262     7,007     6,920     6,952     6,998  
Right of use asset 2,718                  
Bank owned life insurance 21,771     21,636     21,498     21,360     21,222  
Other assets 7,822     8,028     8,564     8,082     7,661  
Total assets $ 961,130     $ 955,630     $ 948,113     $ 941,687     $ 922,441  
                   
                   
Noninterest-bearing deposits $ 176,356     $ 174,717     $ 190,303     $ 188,343     $ 178,572  
Interest-bearing deposits 607,260     607,374     596,263     603,718     593,644  
Total deposits 783,616     782,091     786,566     792,061     772,216  
Other borrowings 63,900     65,700     56,800     46,700     48,760  
Subordinated debentures and subordinated notes 23,398     23,382     23,366     23,350     23,333  
Lease liability 3,217                  
Other liabilities 4,708     4,307     3,462     3,388     3,760  
Total liabilities 878,839     875,480     870,194     865,499     848,069  
Shareholders' equity 82,291     80,150     77,919     76,188     74,372  
Total liabilities and shareholders' equity $ 961,130     $ 955,630     $ 948,113     $ 941,687     $ 922,441  
                   
Gross loans to deposits 95.35 %   93.82 %   92.74 %   91.17 %   91.71 %
                   
Equity to assets 8.56 %   8.39 %   8.22 %   8.09 %   8.06 %
                   
Shares outstanding 8,712,023     8,680,388     8,678,454     8,676,843     8,674,890  
Book value per share $ 9.45     $ 9.23     $ 8.98     $ 8.78     $ 8.57  
                   
Asset Quality Data:                  
Nonaccrual loans $ 1,776     $ 1,544     $ 1,271     $ 1,283     $ 1,136  
Loans past due 90 days or more and accruing                  
Total nonperforming loans 1,776     1,544     1,271     1,283     1,136  
Other real estate owned                  
Total nonperforming assets $ 1,776     $ 1,544     $ 1,271     $ 1,283     $ 1,136  
                   
Nonperforming loans to total loans 0.24 %   0.21 %   0.17 %   0.18 %   0.16 %
Nonperforming assets to total assets 0.18 %   0.16 %   0.13 %   0.14 %   0.12 %
Allowance for loan losses to total gross loans 1.07 %   1.08 %   1.08 %   1.16 %   1.19 %
                             
                             
                             


Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
 
       
  For the three months ended March 31,
  2019   2018
   
Selected Operating Data:  
Interest income $ 9,401     $ 8,539  
Interest expense 2,417     1,716  
Net interest income 6,984     6,823  
Provision for loan losses 65     (335 )
Net interest income after provision for loan losses 6,919     7,158  
Noninterest income:      
Fees and service charges 562     507  
Bank owned life insurance 135     138  
Gain on calls and sales of securities 2     6  
Gain on sales of mortgage loans 25     22  
Gain on sales of SBA loans 41      
Gain (loss) on equity investments

22     (74 )
Miscellaneous 119     126  
Total noninterest income 906     725  
Noninterest expenses:      
Salaries and employee benefits 3,137     3,109  
Occupancy, net 449     442  
Equipment 205     181  
Data processing 503     484  
Advertising 183     157  
FDIC insurance premium 64     64  
Charitable contributions 195     180  
Bank-card related services 131     127  
Miscellaneous 725     684  
Total noninterest expenses 5,592     5,428  
Income before income tax expense 2,233     2,455  
Income tax expense 586     647  
Net income $ 1,647     $ 1,808  
       
Weighted avg. no. of diluted common shares 8,687,969     8,658,506  
Diluted earnings per common share $ 0.19     $ 0.21  
       
Return on average common equity 8.22 %   9.92 %
       
Return on average assets 0.70 %   0.80 %
       
Yield on average interest-earning assets 4.19 %   3.94 %
Cost of average interest-bearing liabilities 1.42 %   1.04 %
Net interest rate spread 2.77 %   2.90 %
       
Net interest margin 3.12 %   3.15 %
           
           
           


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


  For the three months ended
  March 31,
2019
  December 31,
2018
  September 30,
2018
  June 30,
2018
  March 31,
2018
Selected Operating Data:                                      
Interest income $ 9,401     $ 9,377     $ 9,215     $ 8,868     $ 8,539  
Interest expense 2,417     2,247     2,013     1,860     1,716  
Net interest income 6,984     7,130     7,202     7,008     6,823  
Provision for loan losses 65     (10 )   (490 )   (780 )   (335 )
Net interest and dividend income
after provision for loan losses
6,919     7,140     7,692     7,788     7,158  
Noninterest income:                  
Fees and service charges 562     628     542     551     507  
Bank owned life insurance 135     138     138     138     138  
Gain (loss) on calls and sales of securities 2     (192 )           6  
Gain on sales of mortgage loans 25     27     12     9     22  
Gain on sales of SBA loans 41     64     70     59      
Gain (loss) on equity investments 22     217     (34 )   (29 )   (74 )
Miscellaneous 119     114     109     131     126  
Total noninterest income 906     996     837     859     725  
Noninterest expenses:                  
Salaries and employee benefits 3,137     3,200     3,198     3,129     3,109  
Occupancy, net 449     430     426     403     442  
Equipment 205     191     186     188     181  
Data processing 503     496     489     478     484  
Advertising 183     159     192     207     157  
FDIC insurance premium 64     77     66     70     64  
Charitable contributions 195     355     180     195     180  
Bank-card related services 131     142     133     131     127  
Miscellaneous 725     609     684     703     684  
Total noninterest expenses 5,592     5,659     5,554     5,504     5,428  
Income before income tax expense 2,233     2,477     2,975     3,143     2,455  
Income tax expense 586     718     813     842     647  
Net income $ 1,647     $ 1,759     $ 2,162     $ 2,301     $ 1,808  
                   
                   
Weighted avg. no. of diluted common shares 8,687,969     8,679,304     8,677,445     8,675,868     8,658,506  
Diluted earnings per common share $ 0.19     $ 0.20     $ 0.25     $ 0.27     $ 0.21  
                   
Return on average common equity 8.22 %   8.86 %   11.14 %   12.32 %   9.92 %
                   
Return on average assets 0.70 %   0.73 %   0.90 %   0.99 %   0.80 %
                   
Yield on average interest-earning assets 4.19 %   4.09 %   4.04 %   3.99 %   3.94 %
Cost of average interest-bearing  liabilities 1.42 %   1.31 %   1.18 %   1.12 %   1.04 %
Net interest rate spread 2.77 %   2.78 %   2.86 %   2.87 %   2.90 %
                   
Net interest margin 3.12 %   3.11 %   3.16 %   3.16 %   3.15 %
                             
                             

 

Contact:  
Claire M. Chadwick  
Executive Vice President and  
Chief Financial Officer  
630 Godwin Avenue  
Midland Park, NJ 07432  
P: 201.444.7100  

           

 

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