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 sale113,015  115,733  116,244  95,632  98,583 
Securities held to maturity52,442  53,323  52,091  52,805  52,330 
FHLB stock3,715  3,919  5,169  3,784  3,515 
Loans held for sale370  688  446  188  773 
Loans receivable:         
Loans receivable, gross711,720  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, net702,561  682,917  683,162  646,196  595,952 
Other real estate owned, net      401  401 
Bank owned life insurance21,084  20,943  20,802  16,673  16,558 
Other assets14,309  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 deposits591,238  569,352  543,215  530,138  489,624 
Total deposits764,099  740,961  720,893  700,704  658,930 
Other borrowings63,760  68,760  93,760  65,200  59,200 
Subordinated debentures and         
subordinated notes23,317  23,301  23,284  23,268  23,252 
Other liabilities3,925  3,564  2,859  2,810  2,766 
Total liabilities855,101  836,586  840,796  791,982  744,148 
Shareholders' equity73,665  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 deposits93.14% 93.39% 96.00% 93.44% 91.68%
                    
Equity to assets7.93% 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 loans1,194  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 loans0.17% 0.12% 0.17% 0.09% 0.10%
Nonperforming assets to total assets0.13% 0.09% 0.13% 0.12% 0.13%
Allowance for loan losses to total gross                   
loans1.23% 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 expense1,628  1,103  5,858  4,513 
  Net interest income6,835  5,897  26,372  22,572 
 Provision for loan losses75  (300) 655  (1,350)
 Net interest income       
  after provision for loan losses6,760  6,197  25,717  23,922 
 Noninterest income:       
  Fees and service charges533  564  2,111  2,159 
  Bank owned life insurance141  119  526  447 
  Gain on calls and sales of securities  1  1  63 
  Gain on sales of mortgage loans55  94  178  164 
  Gain on sales of other real estate owned  30  13  36 
  Miscellaneous121  129  478  542 
  Total noninterest income850  937  3,307  3,411 
 Noninterest expenses:       
  Salaries and employee benefits2,888  2,735  11,455  10,980 
  Occupancy, net414  396  1,630  1,598 
  Equipment176  156  673  609 
  Data processing442  481  1,811  1,915 
  Advertising171  196  700  669 
  FDIC insurance premium86  21  322  317 
  Charitable contributions240  135  615  375 
  Bank-card related services130  148  551  579 
  Other real estate owned, net  14  24  143 
  Miscellaneous521  720  2,520  2,717 
  Total noninterest expenses5,068  5,002  20,301  19,902 
Income before income tax expense2,542  2,132  8,723  7,431 
Income tax expense2,494  784  4,776  2,695 
Net income$48  $1,348  $3,947  $4,736 
          
Weighted avg. no. of diluted common shares8,648,191  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 equity0.26% 10.40% 5.86% 9.43%
                  
Return on average assets0.02% 0.69% 0.45% 0.63%
                  
Yield on average interest-earning assets3.82% 3.77% 3.83% 3.81%
Cost of average interest-bearing liabilities0.97% 0.80% 0.91% 0.85%
Net interest rate spread2.85% 2.97% 2.92% 2.96%
                  
Net interest margin3.09% 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 Act1,420    1,420   
Adjusted net income$1,468  $1,348  $5,367  $4,736 
          
Weighted avg. no. of diluted common shares8,648,191  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 equity7.82% 10.40% 7.96% 9.43%
                  
Adjusted return on average assets0.63% 0.69% 0.61% 0.63%
          

 

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