MIDLAND PARK, N.J., Feb. 22, 2018 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, reported results for fourth quarter and full year ended December 31, 2017. Net income for the three months and year ended December 31, 2017 was reported at $48,000 and $3.9 million, respectively. Both the three months and the year ended December 31, 2017 were impacted by a charge of $1.4 million as a result of the enactment of the Tax Cuts and Jobs Act (“Tax Act”) in December 2017. For the three months and year ended December 31, 2016 net income was $1.3 million and $4.7 million, respectively.
On December 22, 2017, the Tax Act was enacted which reduced the Federal statutory tax rate for corporations from 35% to 21% effective in 2018. While the Tax Act will lower the Corporation’s future tax rate, it also required the Corporation to revalue its net deferred tax assets to account for the future impact of the lower corporate tax rates. As a result, the Corporation recognized a charge of $1.4 million for the quarter and year ended December 31, 2017 related to the revaluation of the net deferred tax assets. Excluding the impact of the Tax Act, net income for the three months and year ended December 31, 2017 was $1.5 million and $5.4 million, respectively. (Please refer to the Non-GAAP Reconciliation table at the end of this document for details on the earnings impact of the Tax Act).
In reflecting on the Corporation's 2017 accomplishments, Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation, highlighted the following:
- $133.2 million of growth in assets;
- Asset growth was driven by 18% of loan growth;
- 16% of deposit growth provided the funding needs;
- Net interest income increased 17%;
- A successful capital raise was completed in April 2017;
- Our newest location opened in Morristown, NJ in June 2017;
- The formation of a Small Business Administration (SBA) Department occurred in the fall of 2017 - improving our ability to provide lending solutions for small businesses that do not meet traditional lending requirements;
- Expenses were maintained, even with the growth in the balance sheet.
"The Corporation remains committed to building on the successes of the year just ended, including prudently growing the loan portfolio to further improve our strong core earnings.”
Operating Results
Net interest income of $6.8 million and $26.4 million was reported for the three months and year ended December 31, 2017, respectively. Current net interest income levels reflect improvement over the $5.9 million and $22.6 million reported in the comparable prior year periods, with the current year increases primarily driven by growth in the loan portfolio. Average loan balances increased $133.4 million and $131.4 million for the three months and year ended December 31, 2017, respectively, over the comparable prior year periods. The net interest margins for the current three month period and the year were 3.09% and 3.13%, respectively, compared to 3.18% for both the three months and year ended December 31, 2016. The margins continue to reflect an environment with a flattened yield curve.
Due in a large part to growth in the loan portfolio, the Corporation recorded provisions for loan losses for the three months and year ended December 31, 2017 of $75,000 and $655,000, respectively. For the three months and year ended December 31, 2016 negative provisions for loan losses were $300,000 and $1.35 million, respectively. With relatively stable credit quality, the allowance for loan losses to total gross loans declined to 1.23% at December 31, 2017 compared to 1.31% at December 31, 2016.
For the three months and year ended December 31, 2017, noninterest income was $850,000 and $3.3 million, respectively, compared to $937,000 and $3.4 million in the equivalent prior year periods. For the three months and year ended December 31, 2017, noninterest income included $55,000 and $178,000 of gains on sales of mortgage loans, respectively, compared to $94,000 and $164,000 for the comparable prior year periods. For the year ended December 31, 2017, noninterest income included $1,000 of gains on calls and sales of securities compared to $63,000 for the comparable prior year period.
Noninterest expenses for the three months and year ended December 31, 2017 were $5.1 million and $20.3 million, respectively, compared to $5.0 million and $19.9 million in the comparable prior year periods. Van Ostenbridge stated, “We have been committed to managing our infrastructure and containing costs while growing the balance sheet and are encouraged by the efficiencies realized.”
Balance Sheet / Financial Condition
Total assets of $928.8 million at December 31, 2017 reflected a $133.2 million increase, or 17%, since December 31, 2016. The asset growth continues to be driven by organic loan originations which resulted in a $107.6 million year-over-year increase in the gross loan portfolio.
Deposit balances totaled $764.1 million at December 31, 2017, reflecting $105.2 million of net growth when compared to $658.9 million a year earlier. A mix of organic growth and the retention / expansion of existing relationships has resulted in solid increases in deposits. Van Ostenbridge noted, “Essentially, we have demonstrated our ability to fund the increase in loans with deposit growth." Other borrowings were $63.8 million at December 31, 2017 compared to $59.2 million at December 31, 2016. Approximately $20 million of the growth in other borrowings can be attributed to a leverage strategy undertaken in conjunction with the capital raise in April 2017.
All regulatory capital levels at December 31, 2017 continue to reflect a strong capital position with ratios in excess of the levels to be considered "well capitalized" under the applicable regulations. The Tier 1 leverage ratio was 8.88% and 7.65% at December 31, 2017 and 2016, respectively. Total risk based capital ratio was 14.29% at December 31, 2017 compared to 13.10% at December 31, 2016.
About Stewardship Financial Corporation
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, is a full-service community bank serving both individuals and businesses. ASB is known for tithing, or sharing, 10% of its taxable income with nonprofit, educational, charitable and/or evangelical religious organizations. To date, ASB’s total tithing donations total over $ 9.3 million. ASB maintains 12 banking locations in NJ including; Hawthorne, Midland Park, Montville, Morristown, North Haledon, Pequannock, Ridgewood, Waldwick, Westwood, Wyckoff and two offices in Wayne. ASB invites you to visit their website at www.asbnow.com for additional information and to learn more.
Forward Looking Statements
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.
Explanation of Non-GAAP Financial Measures
Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release also contains certain supplemental non-GAAP information that the Corporation’s management uses in its analysis of the Corporation’s financial results. Specifically, the Corporation provides measures based on what it believes are its operating earnings on a consistent basis, and excludes material non-routine operating items which affect the GAAP reporting of results of operations. The Corporation’s management believes that providing this information to analysts and investors allows them to better understand and evaluate the Corporation’s core financial results for the periods in question. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. See accompanying non-GAAP tables.
| Stewardship Financial Corporation | |||||||||||||||||||
| Selected Consolidated Financial Information | |||||||||||||||||||
| (dollars in thousands, except per share amounts) | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | |||||||||||||||
| Selected Financial Condition Data: | |||||||||||||||||||
| Cash and cash equivalents | $ | 21,270 | $ | 17,213 | $ | 19,459 | $ | 12,793 | $ | 11,680 | |||||||||
| Securities available for sale | 113,015 | 115,733 | 116,244 | 95,632 | 98,583 | ||||||||||||||
| Securities held to maturity | 52,442 | 53,323 | 52,091 | 52,805 | 52,330 | ||||||||||||||
| FHLB stock | 3,715 | 3,919 | 5,169 | 3,784 | 3,515 | ||||||||||||||
| Loans held for sale | 370 | 688 | 446 | 188 | 773 | ||||||||||||||
| Loans receivable: | |||||||||||||||||||
| Loans receivable, gross | 711,720 | 691,953 | 692,056 | 654,769 | 604,083 | ||||||||||||||
| Allowance for loan losses | (8,762 | ) | (8,614 | ) | (8,550 | ) | (8,246 | ) | (7,905 | ) | |||||||||
| Other, net | (397 | ) | (422 | ) | (344 | ) | (327 | ) | (226 | ) | |||||||||
| Loans receivable, net | 702,561 | 682,917 | 683,162 | 646,196 | 595,952 | ||||||||||||||
| Other real estate owned, net | — | — | — | 401 | 401 | ||||||||||||||
| Bank owned life insurance | 21,084 | 20,943 | 20,802 | 16,673 | 16,558 | ||||||||||||||
| Other assets | 14,309 | 15,958 | 15,934 | 15,927 | 15,743 | ||||||||||||||
| Total assets | $ | 928,766 | $ | 910,694 | $ | 913,307 | $ | 844,399 | $ | 795,535 | |||||||||
| Noninterest-bearing deposits | $ | 172,861 | $ | 171,609 | $ | 177,678 | $ | 170,566 | $ | 169,306 | |||||||||
| Interest-bearing deposits | 591,238 | 569,352 | 543,215 | 530,138 | 489,624 | ||||||||||||||
| Total deposits | 764,099 | 740,961 | 720,893 | 700,704 | 658,930 | ||||||||||||||
| Other borrowings | 63,760 | 68,760 | 93,760 | 65,200 | 59,200 | ||||||||||||||
| Subordinated debentures and | |||||||||||||||||||
| subordinated notes | 23,317 | 23,301 | 23,284 | 23,268 | 23,252 | ||||||||||||||
| Other liabilities | 3,925 | 3,564 | 2,859 | 2,810 | 2,766 | ||||||||||||||
| Total liabilities | 855,101 | 836,586 | 840,796 | 791,982 | 744,148 | ||||||||||||||
| Shareholders' equity | 73,665 | 74,108 | 72,511 | 52,417 | 51,387 | ||||||||||||||
| Total liabilities and shareholders' equity | $ | 928,766 | $ | 910,694 | $ | 913,307 | $ | 844,399 | $ | 795,535 | |||||||||
| Gross loans to deposits | 93.14 | % | 93.39 | % | 96.00 | % | 93.44 | % | 91.68 | % | |||||||||
| Equity to assets | 7.93 | % | 8.14 | % | 7.94 | % | 6.21 | % | 6.46 | % | |||||||||
| Book value per share | $ | 8.51 | $ | 8.57 | $ | 8.39 | $ | 8.55 | $ | 8.39 | |||||||||
| Asset Quality Data: | |||||||||||||||||||
| Nonaccrual loans | $ | 1,194 | $ | 806 | $ | 826 | $ | 592 | $ | 606 | |||||||||
| Loans past due 90 days or more and | |||||||||||||||||||
| accruing | — | — | 320 | — | — | ||||||||||||||
| Total nonperforming loans | 1,194 | 806 | 1,146 | 592 | 606 | ||||||||||||||
| Other real estate owned | — | — | — | 401 | 401 | ||||||||||||||
| Total nonperforming assets | $ | 1,194 | $ | 806 | $ | 1,146 | $ | 993 | $ | 1,007 | |||||||||
| Nonperforming loans to total loans | 0.17 | % | 0.12 | % | 0.17 | % | 0.09 | % | 0.10 | % | |||||||||
| Nonperforming assets to total assets | 0.13 | % | 0.09 | % | 0.13 | % | 0.12 | % | 0.13 | % | |||||||||
| Allowance for loan losses to total gross | |||||||||||||||||||
| loans | 1.23 | % | 1.24 | % | 1.24 | % | 1.26 | % | 1.31 | % | |||||||||
| Stewardship Financial Corporation | |||||||||||||||||
| Selected Consolidated Financial Information | |||||||||||||||||
| (dollars in thousands, except per share amounts) | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| For the three months ended | For the year ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Selected Operating Data: | |||||||||||||||||
| Interest income | $ | 8,463 | $ | 7,000 | $ | 32,230 | $ | 27,085 | |||||||||
| Interest expense | 1,628 | 1,103 | 5,858 | 4,513 | |||||||||||||
| Net interest income | 6,835 | 5,897 | 26,372 | 22,572 | |||||||||||||
| Provision for loan losses | 75 | (300 | ) | 655 | (1,350 | ) | |||||||||||
| Net interest income | |||||||||||||||||
| after provision for loan losses | 6,760 | 6,197 | 25,717 | 23,922 | |||||||||||||
| Noninterest income: | |||||||||||||||||
| Fees and service charges | 533 | 564 | 2,111 | 2,159 | |||||||||||||
| Bank owned life insurance | 141 | 119 | 526 | 447 | |||||||||||||
| Gain on calls and sales of securities | — | 1 | 1 | 63 | |||||||||||||
| Gain on sales of mortgage loans | 55 | 94 | 178 | 164 | |||||||||||||
| Gain on sales of other real estate owned | — | 30 | 13 | 36 | |||||||||||||
| Miscellaneous | 121 | 129 | 478 | 542 | |||||||||||||
| Total noninterest income | 850 | 937 | 3,307 | 3,411 | |||||||||||||
| Noninterest expenses: | |||||||||||||||||
| Salaries and employee benefits | 2,888 | 2,735 | 11,455 | 10,980 | |||||||||||||
| Occupancy, net | 414 | 396 | 1,630 | 1,598 | |||||||||||||
| Equipment | 176 | 156 | 673 | 609 | |||||||||||||
| Data processing | 442 | 481 | 1,811 | 1,915 | |||||||||||||
| Advertising | 171 | 196 | 700 | 669 | |||||||||||||
| FDIC insurance premium | 86 | 21 | 322 | 317 | |||||||||||||
| Charitable contributions | 240 | 135 | 615 | 375 | |||||||||||||
| Bank-card related services | 130 | 148 | 551 | 579 | |||||||||||||
| Other real estate owned, net | — | 14 | 24 | 143 | |||||||||||||
| Miscellaneous | 521 | 720 | 2,520 | 2,717 | |||||||||||||
| Total noninterest expenses | 5,068 | 5,002 | 20,301 | 19,902 | |||||||||||||
| Income before income tax expense | 2,542 | 2,132 | 8,723 | 7,431 | |||||||||||||
| Income tax expense | 2,494 | 784 | 4,776 | 2,695 | |||||||||||||
| Net income | $ | 48 | $ | 1,348 | $ | 3,947 | $ | 4,736 | |||||||||
| Weighted avg. no. of diluted common shares | 8,648,191 | 6,119,693 | 7,906,791 | 6,109,983 | |||||||||||||
| Diluted earnings per common share | $ | 0.01 | $ | 0.22 | $ | 0.50 | $ | 0.78 | |||||||||
| Return on average common equity | 0.26 | % | 10.40 | % | 5.86 | % | 9.43 | % | |||||||||
| Return on average assets | 0.02 | % | 0.69 | % | 0.45 | % | 0.63 | % | |||||||||
| Yield on average interest-earning assets | 3.82 | % | 3.77 | % | 3.83 | % | 3.81 | % | |||||||||
| Cost of average interest-bearing liabilities | 0.97 | % | 0.80 | % | 0.91 | % | 0.85 | % | |||||||||
| Net interest rate spread | 2.85 | % | 2.97 | % | 2.92 | % | 2.96 | % | |||||||||
| Net interest margin | 3.09 | % | 3.18 | % | 3.13 | % | 3.18 | % | |||||||||
| Stewardship Financial Corporation | ||||||||||||||||||||||
| Selected Consolidated Financial Information | ||||||||||||||||||||||
| (dollars in thousands, except per share amounts) | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||||
| 2017 | 2017 | 2017 | 2017 | 2016 | ||||||||||||||||||
| Selected Operating Data: | ||||||||||||||||||||||
| Interest income | $ | 8,463 | $ | 8,400 | $ | 7,943 | $ | 7,424 | $ | 7,000 | ||||||||||||
| Interest expense | 1,628 | 1,577 | 1,409 | 1,244 | 1,103 | |||||||||||||||||
| Net interest income | 6,835 | 6,823 | 6,534 | 6,180 | 5,897 | |||||||||||||||||
| Provision for loan losses | 75 | 20 | 260 | 300 | (300 | ) | ||||||||||||||||
| Net interest and dividend income | ||||||||||||||||||||||
| after provision for loan losses | 6,760 | 6,803 | 6,274 | 5,880 | 6,197 | |||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||
| Fees and service charges | 533 | 524 | 519 | 535 | 564 | |||||||||||||||||
| Bank owned life insurance | 141 | 141 | 129 | 115 | 119 | |||||||||||||||||
| Gain on calls and sales of | ||||||||||||||||||||||
| securities | — | 1 | — | — | 1 | |||||||||||||||||
| Gain on sales of mortgage loans | 55 | 68 | 38 | 17 | 94 | |||||||||||||||||
| Gain on sales of other real estate | ||||||||||||||||||||||
| owned | — | — | 13 | — | 30 | |||||||||||||||||
| Miscellaneous | 121 | 111 | 114 | 132 | 129 | |||||||||||||||||
| Total noninterest income | 850 | 845 | 813 | 799 | 937 | |||||||||||||||||
| Noninterest expenses: | ||||||||||||||||||||||
| Salaries and employee benefits | 2,888 | 2,843 | 2,880 | 2,844 | 2,735 | |||||||||||||||||
| Occupancy, net | 414 | 414 | 393 | 409 | 396 | |||||||||||||||||
| Equipment | 176 | 173 | 162 | 162 | 156 | |||||||||||||||||
| Data processing | 442 | 444 | 456 | 469 | 481 | |||||||||||||||||
| Advertising | 171 | 182 | 211 | 136 | 196 | |||||||||||||||||
| FDIC insurance premium | 86 | 50 | 109 | 77 | 21 | |||||||||||||||||
| Charitable contributions | 240 | 130 | 120 | 125 | 135 | |||||||||||||||||
| Bank-card related services | 130 | 137 | 142 | 142 | 148 | |||||||||||||||||
| Other real estate owned, net | — | — | 9 | 15 | 14 | |||||||||||||||||
| Miscellaneous | 521 | 663 | 601 | 735 | 720 | |||||||||||||||||
| Total noninterest expenses | 5,068 | 5,036 | 5,083 | 5,114 | 5,002 | |||||||||||||||||
| Income before income tax expense | 2,542 | 2,612 | 2,004 | 1,565 | 2,132 | |||||||||||||||||
| Income tax expense | 2,494 | 972 | 736 | 574 | 784 | |||||||||||||||||
| Net income | $ | 48 | $ | 1,640 | $ | 1,268 | $ | 991 | $ | 1,348 | ||||||||||||
| Weighted avg. no. of diluted common | ||||||||||||||||||||||
| shares | 8,648,191 | 8,643,737 | 8,174,484 | 6,124,926 | 6,119,693 | |||||||||||||||||
| Diluted earnings per common share | $ | 0.01 | $ | 0.19 | $ | 0.16 | $ | 0.16 | $ | 0.22 | ||||||||||||
| Return on average common equity | 0.26 | % | 8.83 | % | 7.37 | % | 7.71 | % | 10.40 | % | ||||||||||||
| Return on average assets | 0.02 | % | 0.71 | % | 0.58 | % | 0.49 | % | 0.69 | % | ||||||||||||
| Yield on average interest-earning assets | 3.82 | % | 3.80 | % | 3.81 | % | 3.88 | % | 3.77 | % | ||||||||||||
| Cost of average interest-bearing | ||||||||||||||||||||||
| liabilities | 0.97 | % | 0.94 | % | 0.90 | % | 0.84 | % | 0.80 | % | ||||||||||||
| Net interest rate spread | 2.85 | % | 2.86 | % | 2.91 | % | 3.04 | % | 2.97 | % | ||||||||||||
| Net interest margin | 3.09 | % | 3.09 | % | 3.14 | % | 3.23 | % | 3.18 | % | ||||||||||||
| Stewardship Financial Corporation | |||||||||||||||||
| Non-GAAP Reconciliation | |||||||||||||||||
| (dollars in thousands, except per share amounts) | |||||||||||||||||
| (unaudited) | |||||||||||||||||
| For the three months ended | For the year ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Net income | $ | 48 | $ | 1,348 | $ | 3,947 | $ | 4,736 | |||||||||
| Impact of Tax Act | 1,420 | — | 1,420 | — | |||||||||||||
| Adjusted net income | $ | 1,468 | $ | 1,348 | $ | 5,367 | $ | 4,736 | |||||||||
| Weighted avg. no. of diluted common shares | 8,648,191 | 6,119,693 | 7,906,791 | 6,109,983 | |||||||||||||
| Adjusted diluted earnings per common share | $ | 0.17 | $ | 0.22 | $ | 0.68 | $ | 0.78 | |||||||||
| Adjusted return on average common equity | 7.82 | % | 10.40 | % | 7.96 | % | 9.43 | % | |||||||||
| Adjusted return on average assets | 0.63 | % | 0.69 | % | 0.61 | % | 0.63 | % | |||||||||