Stewardship Financial Corporation (NASDAQ:SSFN), parent company of
Atlantic Stewardship Bank, today announced results for the three
and nine months ended September 30, 2018. The Corporation
reported net income of $2.2 million, or $0.25 per share, and $6.3
million, or $0.72 per share, for the three and nine months ended
September 30, 2018, respectively, compared to $1.6 million, or
$0.19 per share, and $3.9 million, or $0.51 per share, for the
corresponding prior year periods.
Stewardship Financial Corporation’s President
and Chief Executive Officer Paul Van Ostenbridge, stated, “We are
pleased to report another profitable quarter for the
Corporation. Results reflected a continued positive trend in
the organic growth of both loans and deposits.”
Operating ResultsFor the three
and nine months ended September 30, 2018, the Corporation reported
net interest income of $7.2 million and $21.0 million,
respectively, demonstrating continued improvement over the $6.8
million and $19.5 million realized in the equivalent prior year
periods. Net interest income continues to benefit from a
steady growth in assets that is being primarily driven by loan
growth. Reflective of the current interest rate environment
for the last several quarters, net interest margin continues to be
relatively stable. "The Corporation has not participated in
some of the unsustainable local competitive pricing pressures,"
noted Van Ostenbridge.
For both the three and nine months ended
September 30, 2018, the Corporation recorded reversals of the
allowance for loan losses resulting in negative provisions for loan
losses of $490,000 and $1.6 million, respectively. This
compares to positive provisions for loan losses of $20,000 and
$580,000 for the three and nine months ended September 30, 2017,
respectively. Notwithstanding the growth in the loan
portfolio, the negative loan loss provisions reflect, in part, net
recoveries of previously charged off loan balances of $41,000 and
$747,000 for the three and nine months ended September 30, 2018,
respectively. In addition, the negative provisions for loan
losses reflect the continued improvement in the economic conditions
and overall real estate climate in the primary business markets in
which the Corporation operates. Van Ostenbridge commented,
"Our allowance for loan losses to gross loans of 1.08% at September
30, 2018 is in line with peers."
Noninterest income for the three and nine months
ended September 30, 2018 was $837,000 and $2.4 million,
respectively, compared to $845,000 and $2.5 million in the same
prior year periods. In connection with the establishment of a
Small Business Administration ("SBA") department in late 2017,
noninterest income for the three and nine months ended September
30, 2018 included $70,000 and $129,000, respectively, of gains from
the sale of the guaranteed portion of newly originated SBA
loans. Offsetting these gains, the three and nine months
ended September 30, 2018 reflected $34,000 and $137,000,
respectively, of negative mark to market adjustments of a CRA
investment which is classified as an equity security. Such
security has been owned for years for CRA purposes, but under
accounting rules enacted earlier in 2018, equity securities now
require a quarterly mark to market through the income
statement.
For the three and nine months ended September
30, 2018, noninterest expenses were $5.6 million and $16.5 million,
respectively, compared to $5.0 million and $15.2 million in the
comparable prior year periods. An increase in salaries and
employee benefits is partially attributable to the costs associated
with the establishment of the previously mentioned SBA Lending
Department - fully staffed with experienced employees.
Certain costs associated with the recent launch of a new and
improved website (ASBnow.bank) are also included in noninterest
expenses for the three and nine months ended September 30,
2018. Van Ostenbridge noted, "Additional expense is incurred
to support continued growth in the balance sheet, but management
remains committed to appropriately controlling our expenses.”
Results for the current year periods included
the impact of a reduction in the Federal corporate income tax rate
from 35% to 21% effective January 1, 2018 as a result of the
enactment of the Tax Cuts and Jobs Act (“Tax Act”). Partially
offsetting the lower Federal corporate income tax rate was the
enactment of legislation by the State of New Jersey in July of
2018, which increased the corporate income tax rate to 11.5% from
9% for taxable income of $1.0 million or more retroactively to
January 1, 2018. For the current three and nine month periods
the effective tax rate was 27.3% and 26.9%, respectively, compared
to an effective tax rate of 37.2% and 36.9% for the three and nine
months ended September 30, 2017, respectively.
Balance Sheet / Financial
ConditionAt September 30, 2018, total assets of $948.1
million reflected a $19.3 million increase from assets of
$928.8 million at December 31, 2017. The growth in assets was
primarily driven by organic loan originations which contributed to
an $18.5 million increase in net loans. During the
first nine months of 2018, the loan portfolio reflected unusually
high prepayment activity.
At September 30, 2018, total deposits were
$786.6 million, showing net growth of $22.5 million since December
31, 2017. The Corporation reported net growth of $17.4
million in noninterest-bearing accounts and $5.0 million in
interest-bearing accounts.
The Corporation's regulatory capital levels all
remain above the levels considered to be "well capitalized" under
the applicable regulations. The Tier 1 leverage ratio was
9.21% at September 30, 2018 compared to 8.88% at December 31,
2017. The total risk based capital ratio at September 30,
2018 and December 31, 2017 were 14.34% and 14.29%,
respectively.
About Stewardship Financial
CorporationStewardship 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 $10.1 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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
2018 |
|
2018 |
|
2018 |
|
2017 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Financial Condition Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
10,839 |
|
|
$ |
13,529 |
|
|
$ |
22,178 |
|
|
$ |
21,270 |
|
|
$ |
17,213 |
|
Securities available for sale |
109,764 |
|
|
112,594 |
|
|
106,467 |
|
|
109,259 |
|
|
111,973 |
|
Securities held to maturity |
62,227 |
|
|
58,471 |
|
|
51,894 |
|
|
52,442 |
|
|
53,323 |
|
Other equity investments |
3,661 |
|
|
3,694 |
|
|
3,706 |
|
|
3,756 |
|
|
3,760 |
|
FHLB stock |
3,552 |
|
|
3,087 |
|
|
3,039 |
|
|
3,715 |
|
|
3,919 |
|
Loans held for sale |
— |
|
|
607 |
|
|
— |
|
|
370 |
|
|
688 |
|
Loans receivable: |
|
|
|
|
|
|
|
|
|
Loans receivable, gross |
729,475 |
|
|
722,148 |
|
|
708,169 |
|
|
711,720 |
|
|
691,953 |
|
Allowance for loan losses |
(7,904 |
) |
|
(8,353 |
) |
|
(8,445 |
) |
|
(8,762 |
) |
|
(8,614 |
) |
Other, net |
(483 |
) |
|
(484 |
) |
|
(448 |
) |
|
(397 |
) |
|
(422 |
) |
Loans receivable, net |
721,088 |
|
|
713,311 |
|
|
699,276 |
|
|
702,561 |
|
|
682,917 |
|
Bank owned life insurance |
21,498 |
|
|
21,360 |
|
|
21,222 |
|
|
21,084 |
|
|
20,943 |
|
Other assets |
15,484 |
|
|
15,034 |
|
|
14,659 |
|
|
14,309 |
|
|
15,958 |
|
Total assets |
$ |
948,113 |
|
|
$ |
941,687 |
|
|
$ |
922,441 |
|
|
$ |
928,766 |
|
|
$ |
910,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
$ |
190,303 |
|
|
$ |
188,343 |
|
|
$ |
178,572 |
|
|
$ |
172,861 |
|
|
$ |
171,609 |
|
Interest-bearing deposits |
596,263 |
|
|
603,718 |
|
|
593,644 |
|
|
591,238 |
|
|
569,352 |
|
Total deposits |
786,566 |
|
|
792,061 |
|
|
772,216 |
|
|
764,099 |
|
|
740,961 |
|
Other borrowings |
56,800 |
|
|
46,700 |
|
|
48,760 |
|
|
63,760 |
|
|
68,760 |
|
Subordinated debentures and subordinated
notes |
23,366 |
|
|
23,350 |
|
|
23,333 |
|
|
23,317 |
|
|
23,301 |
|
Other liabilities |
3,462 |
|
|
3,388 |
|
|
3,760 |
|
|
3,925 |
|
|
3,564 |
|
Total liabilities |
870,194 |
|
|
865,499 |
|
|
848,069 |
|
|
855,101 |
|
|
836,586 |
|
Shareholders' equity |
77,919 |
|
|
76,188 |
|
|
74,372 |
|
|
73,665 |
|
|
74,108 |
|
Total liabilities and shareholders'
equity |
$ |
948,113 |
|
|
$ |
941,687 |
|
|
$ |
922,441 |
|
|
$ |
928,766 |
|
|
$ |
910,694 |
|
|
|
|
|
|
|
|
|
|
|
Gross loans to deposits |
92.74 |
% |
|
91.17 |
% |
|
91.71 |
% |
|
93.14 |
% |
|
93.39 |
% |
|
|
|
|
|
|
|
|
|
|
Equity to assets |
8.22 |
% |
|
8.09 |
% |
|
8.06 |
% |
|
7.93 |
% |
|
8.14 |
% |
|
|
|
|
|
|
|
|
|
|
Shares outstanding |
8,678,454 |
|
|
8,676,843 |
|
|
8,674,890 |
|
|
8,652,804 |
|
|
8,645,316 |
|
Book value per share |
$ |
8.98 |
|
|
$ |
8.78 |
|
|
$ |
8.57 |
|
|
$ |
8.51 |
|
|
$ |
8.57 |
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Data: |
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
$ |
1,271 |
|
|
$ |
1,283 |
|
|
$ |
1,136 |
|
|
$ |
1,194 |
|
|
$ |
806 |
|
Loans past due 90 days or more and
accruing |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total nonperforming loans |
1,271 |
|
|
1,283 |
|
|
1,136 |
|
|
1,194 |
|
|
806 |
|
Other real estate owned |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Total nonperforming assets |
$ |
1,271 |
|
|
$ |
1,283 |
|
|
$ |
1,136 |
|
|
$ |
1,194 |
|
|
$ |
806 |
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans to total loans |
0.17 |
% |
|
0.18 |
% |
|
0.16 |
% |
|
0.17 |
% |
|
0.12 |
% |
Nonperforming assets to total assets |
0.13 |
% |
|
0.14 |
% |
|
0.12 |
% |
|
0.13 |
% |
|
0.09 |
% |
Allowance for loan losses to total gross
loans |
1.08 |
% |
|
1.16 |
% |
|
1.19 |
% |
|
1.23 |
% |
|
1.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Selected Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
9,215 |
|
|
$ |
8,400 |
|
|
$ |
26,622 |
|
|
$ |
23,767 |
|
Interest expense |
2,013 |
|
|
1,577 |
|
|
5,589 |
|
|
4,230 |
|
Net interest income |
7,202 |
|
|
6,823 |
|
|
21,033 |
|
|
19,537 |
|
Provision for loan losses |
(490 |
) |
|
20 |
|
|
(1,605 |
) |
|
580 |
|
Net interest income after provision for
loan losses |
7,692 |
|
|
6,803 |
|
|
22,638 |
|
|
18,957 |
|
Noninterest income: |
|
|
|
|
|
|
|
Fees and service charges |
542 |
|
|
524 |
|
|
1,600 |
|
|
1,578 |
|
Bank owned life insurance |
138 |
|
|
141 |
|
|
414 |
|
|
385 |
|
Gain on calls and sales of
securities |
— |
|
|
1 |
|
|
6 |
|
|
1 |
|
Gain on sales of mortgage loans |
12 |
|
|
68 |
|
|
43 |
|
|
123 |
|
Gain on sales of SBA loans |
70 |
|
|
— |
|
|
129 |
|
|
— |
|
Gain on sale of other real estate
owned |
— |
|
|
— |
|
|
— |
|
|
13 |
|
Miscellaneous |
75 |
|
|
111 |
|
|
229 |
|
|
357 |
|
Total noninterest income |
837 |
|
|
845 |
|
|
2,421 |
|
|
2,457 |
|
Noninterest expenses: |
|
|
|
|
|
|
|
Salaries and employee benefits |
3,198 |
|
|
2,843 |
|
|
9,436 |
|
|
8,567 |
|
Occupancy, net |
426 |
|
|
414 |
|
|
1,271 |
|
|
1,216 |
|
Equipment |
186 |
|
|
173 |
|
|
555 |
|
|
497 |
|
Data processing |
489 |
|
|
444 |
|
|
1,451 |
|
|
1,369 |
|
Advertising |
192 |
|
|
182 |
|
|
556 |
|
|
529 |
|
FDIC insurance premium |
66 |
|
|
50 |
|
|
200 |
|
|
236 |
|
Charitable contributions |
180 |
|
|
130 |
|
|
555 |
|
|
375 |
|
Bank-card related services |
133 |
|
|
137 |
|
|
391 |
|
|
421 |
|
Other real estate owned, net |
— |
|
|
— |
|
|
— |
|
|
24 |
|
Miscellaneous |
684 |
|
|
663 |
|
|
2,071 |
|
|
1,999 |
|
Total noninterest expenses |
5,554 |
|
|
5,036 |
|
|
16,486 |
|
|
15,233 |
|
Income before income tax expense |
2,975 |
|
|
2,612 |
|
|
8,573 |
|
|
6,181 |
|
Income tax expense |
813 |
|
|
972 |
|
|
2,302 |
|
|
2,282 |
|
Net income |
$ |
2,162 |
|
|
$ |
1,640 |
|
|
$ |
6,271 |
|
|
$ |
3,899 |
|
|
|
|
|
|
|
|
|
Weighted avg. no. of diluted common shares |
8,677,445 |
|
|
8,643,737 |
|
|
8,670,662 |
|
|
7,656,942 |
|
Diluted earnings per common share |
$ |
0.25 |
|
|
$ |
0.19 |
|
|
$ |
0.72 |
|
|
$ |
0.51 |
|
|
|
|
|
|
|
|
|
Return on average common equity |
11.14 |
% |
|
8.83 |
% |
|
11.13 |
% |
|
8.02 |
% |
|
|
|
|
|
|
|
|
Return on average assets |
0.90 |
% |
|
0.71 |
% |
|
0.90 |
% |
|
0.60 |
% |
|
|
|
|
|
|
|
|
Yield on average interest-earning assets |
4.04 |
% |
|
3.80 |
% |
|
3.99 |
% |
|
3.83 |
% |
Cost of average interest-bearing liabilities |
1.18 |
% |
|
0.94 |
% |
|
1.12 |
% |
|
0.89 |
% |
Net interest rate spread |
2.86 |
% |
|
2.86 |
% |
|
2.87 |
% |
|
2.94 |
% |
|
|
|
|
|
|
|
|
Net interest margin |
3.16 |
% |
|
3.09 |
% |
|
3.15 |
% |
|
3.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Stewardship Financial
Corporation |
Selected Consolidated Financial
Information |
(dollars in thousands, except per
share amounts) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
2018 |
|
2018 |
|
2018 |
|
2017 |
|
2017 |
Selected Operating Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
9,215 |
|
|
$ |
8,868 |
|
|
$ |
8,539 |
|
|
$ |
8,463 |
|
|
$ |
8,400 |
|
Interest expense |
2,013 |
|
|
1,860 |
|
|
1,716 |
|
|
1,628 |
|
|
1,577 |
|
Net interest income |
7,202 |
|
|
7,008 |
|
|
6,823 |
|
|
6,835 |
|
|
6,823 |
|
Provision for loan losses |
(490 |
) |
|
(780 |
) |
|
(335 |
) |
|
75 |
|
|
20 |
|
Net interest and dividend incomeafter provision for
loan losses |
7,692 |
|
|
7,788 |
|
|
7,158 |
|
|
6,760 |
|
|
6,803 |
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
Fees and service charges |
542 |
|
|
551 |
|
|
507 |
|
|
533 |
|
|
524 |
|
Bank owned life insurance |
138 |
|
|
138 |
|
|
138 |
|
|
141 |
|
|
141 |
|
Gain on calls and sales of securities |
— |
|
|
— |
|
|
6 |
|
|
— |
|
|
1 |
|
Gain on sales of mortgage loans |
12 |
|
|
9 |
|
|
22 |
|
|
55 |
|
|
68 |
|
Gain on sales of SBA loans |
70 |
|
|
59 |
|
|
— |
|
|
— |
|
|
— |
|
Miscellaneous |
75 |
|
|
102 |
|
|
52 |
|
|
121 |
|
|
111 |
|
Total noninterest income |
837 |
|
|
859 |
|
|
725 |
|
|
850 |
|
|
845 |
|
Noninterest expenses: |
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
3,198 |
|
|
3,129 |
|
|
3,109 |
|
|
2,888 |
|
|
2,843 |
|
Occupancy, net |
426 |
|
|
403 |
|
|
442 |
|
|
414 |
|
|
414 |
|
Equipment |
186 |
|
|
188 |
|
|
181 |
|
|
176 |
|
|
173 |
|
Data processing |
489 |
|
|
478 |
|
|
484 |
|
|
442 |
|
|
444 |
|
Advertising |
192 |
|
|
207 |
|
|
157 |
|
|
171 |
|
|
182 |
|
FDIC insurance premium |
66 |
|
|
70 |
|
|
64 |
|
|
86 |
|
|
50 |
|
Charitable contributions |
180 |
|
|
195 |
|
|
180 |
|
|
240 |
|
|
130 |
|
Bank-card related services |
133 |
|
|
131 |
|
|
127 |
|
|
130 |
|
|
137 |
|
Miscellaneous |
684 |
|
|
703 |
|
|
684 |
|
|
521 |
|
|
663 |
|
Total noninterest expenses |
5,554 |
|
|
5,504 |
|
|
5,428 |
|
|
5,068 |
|
|
5,036 |
|
Income before income tax expense |
2,975 |
|
|
3,143 |
|
|
2,455 |
|
|
2,542 |
|
|
2,612 |
|
Income tax expense |
813 |
|
|
842 |
|
|
647 |
|
|
2,494 |
|
|
972 |
|
Net income |
$ |
2,162 |
|
|
$ |
2,301 |
|
|
$ |
1,808 |
|
|
$ |
48 |
|
|
$ |
1,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted avg. no. of diluted commonshares |
8,677,445 |
|
|
8,675,868 |
|
|
8,658,506 |
|
|
8,648,191 |
|
|
8,643,737 |
|
Diluted earnings per common share |
$ |
0.25 |
|
|
$ |
0.27 |
|
|
$ |
0.21 |
|
|
$ |
0.01 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
Return on average common equity |
11.14 |
% |
|
12.32 |
% |
|
9.92 |
% |
|
0.26 |
% |
|
8.83 |
% |
|
|
|
|
|
|
|
|
|
|
Return on average assets |
0.90 |
% |
|
0.99 |
% |
|
0.80 |
% |
|
0.02 |
% |
|
0.71 |
% |
|
|
|
|
|
|
|
|
|
|
Yield on average interest-earning assets |
4.04 |
% |
|
3.99 |
% |
|
3.94 |
% |
|
3.82 |
% |
|
3.80 |
% |
Cost of average interest-bearing liabilities |
1.18 |
% |
|
1.12 |
% |
|
1.04 |
% |
|
0.97 |
% |
|
0.94 |
% |
Net interest rate spread |
2.86 |
% |
|
2.87 |
% |
|
2.90 |
% |
|
2.85 |
% |
|
2.86 |
% |
|
|
|
|
|
|
|
|
|
|
Net interest margin |
3.16 |
% |
|
3.16 |
% |
|
3.15 |
% |
|
3.09 |
% |
|
3.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stewardship Financial
Corporation |
Non-GAAP Reconciliation |
(dollars in thousands, except per
share amounts) |
(unaudited) |
|
|
|
|
|
|
|
For the three |
|
|
months ended, |
|
|
December 31, |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
48 |
|
Impact of Tax Act |
|
1,420 |
|
Adjusted net income |
|
$ |
1,468 |
|
|
|
|
|
|
Weighted avg. no. of diluted common shares |
|
8,648,191 |
|
Adjusted diluted earnings per common share |
|
$ |
0.17 |
|
|
|
|
|
|
Adjusted return on average common equity |
|
7.82 |
% |
|
|
|
|
|
Adjusted return on average assets |
|
0.63 |
% |
|
|
|
|
|
Contact:Claire M. ChadwickExecutive Vice
President andChief Financial Officer630 Godwin AvenueMidland Park,
NJ 07432P: 201.444.7100
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