dog with laptop
Email page PDF view Print view Email Alert Social media sharing

Stewardship Financial Corporation Announces Earnings for the First Quarter of 2019

Company Release - 4/30/2019 4:05 PM ET

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 sale102,519  108,811  109,764  112,594  106,467 
Securities held to maturity61,586  62,308  62,227  58,471  51,894 
Other equity investments1,670  1,648  3,661  3,694  3,706 
FHLB stock3,922  3,965  3,552  3,087  3,039 
Loans held for sale      607   
Loans receivable:         
Loans receivable, gross747,180  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, net738,703  725,404  721,088  713,311  699,276 
Premises and equipment, net7,262  7,007  6,920  6,952  6,998 
Right of use asset2,718         
Bank owned life insurance21,771  21,636  21,498  21,360  21,222 
Other assets7,822  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 deposits607,260  607,374  596,263  603,718  593,644 
Total deposits783,616  782,091  786,566  792,061  772,216 
Other borrowings63,900  65,700  56,800  46,700  48,760 
Subordinated debentures and subordinated notes23,398  23,382  23,366  23,350  23,333 
Lease liability3,217         
Other liabilities4,708  4,307  3,462  3,388  3,760 
Total liabilities878,839  875,480  870,194  865,499  848,069 
Shareholders' equity82,291  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 deposits95.35% 93.82% 92.74% 91.17% 91.71%
          
Equity to assets8.56% 8.39% 8.22% 8.09% 8.06%
          
Shares outstanding8,712,023  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 loans1,776  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 loans0.24% 0.21% 0.17% 0.18% 0.16%
Nonperforming assets to total assets0.18% 0.16% 0.13% 0.14% 0.12%
Allowance for loan losses to total gross loans1.07% 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 expense2,417  1,716 
Net interest income6,984  6,823 
Provision for loan losses65  (335)
Net interest income after provision for loan losses6,919  7,158 
Noninterest income:   
Fees and service charges562  507 
Bank owned life insurance135  138 
Gain on calls and sales of securities2  6 
Gain on sales of mortgage loans25  22 
Gain on sales of SBA loans41   
Gain (loss) on equity investments

22  (74)
Miscellaneous119  126 
Total noninterest income906  725 
Noninterest expenses:   
Salaries and employee benefits3,137  3,109 
Occupancy, net449  442 
Equipment205  181 
Data processing503  484 
Advertising183  157 
FDIC insurance premium64  64 
Charitable contributions195  180 
Bank-card related services131  127 
Miscellaneous725  684 
Total noninterest expenses5,592  5,428 
Income before income tax expense2,233  2,455 
Income tax expense586  647 
Net income$1,647  $1,808 
    
Weighted avg. no. of diluted common shares8,687,969  8,658,506 
Diluted earnings per common share$0.19  $0.21 
    
Return on average common equity8.22% 9.92%
    
Return on average assets0.70% 0.80%
    
Yield on average interest-earning assets4.19% 3.94%
Cost of average interest-bearing liabilities1.42% 1.04%
Net interest rate spread2.77% 2.90%
    
Net interest margin3.12% 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 expense2,417  2,247  2,013  1,860  1,716 
Net interest income6,984  7,130  7,202  7,008  6,823 
Provision for loan losses65  (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 charges562  628  542  551  507 
Bank owned life insurance135  138  138  138  138 
Gain (loss) on calls and sales of securities2  (192)     6 
Gain on sales of mortgage loans25  27  12  9  22 
Gain on sales of SBA loans41  64  70  59   
Gain (loss) on equity investments22  217  (34) (29) (74)
Miscellaneous119  114  109  131  126 
Total noninterest income906  996  837  859  725 
Noninterest expenses:         
Salaries and employee benefits3,137  3,200  3,198  3,129  3,109 
Occupancy, net449  430  426  403  442 
Equipment205  191  186  188  181 
Data processing503  496  489  478  484 
Advertising183  159  192  207  157 
FDIC insurance premium64  77  66  70  64 
Charitable contributions195  355  180  195  180 
Bank-card related services131  142  133  131  127 
Miscellaneous725  609  684  703  684 
Total noninterest expenses5,592  5,659  5,554  5,504  5,428 
Income before income tax expense2,233  2,477  2,975  3,143  2,455 
Income tax expense586  718  813  842  647 
Net income$1,647  $1,759  $2,162  $2,301  $1,808 
          
          
Weighted avg. no. of diluted common shares8,687,969  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 equity8.22% 8.86% 11.14% 12.32% 9.92%
          
Return on average assets0.70% 0.73% 0.90% 0.99% 0.80%
          
Yield on average interest-earning assets4.19% 4.09% 4.04% 3.99% 3.94%
Cost of average interest-bearing  liabilities1.42% 1.31% 1.18% 1.12% 1.04%
Net interest rate spread2.77% 2.78% 2.86% 2.87% 2.90%
          
Net interest margin3.12% 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 

           

 

SFFN old logo.jpg

Source: Stewardship Financial Corp