Stewardship Financial Corporation Reports Results for the Second Quarter of 2019

7/30/2019, 10:05 PM (Source: GlobeNewswire)

MIDLAND PARK, N.J., July 30, 2019 (GLOBE NEWSWIRE) -- Stewardship Financial Corporation (Nasdaq:SSFN), parent company of Atlantic Stewardship Bank, today reported results for the second quarter.  For the three and six months ended June 30, 2019 net income was $1.5 million, or $0.17 per share, and $3.1 million, or $0.36 per share, respectively.  Net income for the equivalent prior year periods was $2.3 million, or $0.27 per share, and $4.1 million, or $0.47 per share, respectively.  Results for the prior year three and six month periods benefited from the Corporation recording negative provisions for loan losses of $780,000 and $1.1 million, respectively, as compared to the positive $330,000 and $395,000 provisions for loan losses reflected in the current three and six month periods, respectively.  In addition, the current year periods were adversely impacted by merger-related expenses of $291,000 associated with the previously reported contemplated merger with Columbia Financial, Inc.

Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation, commented, “We are pleased with the Corporation's year-to-date performance.  Since the beginning of the year, we have demonstrated steady organic loan growth supported by a stable net interest margin."

Van Ostenbridge continued, "We are very optimistic about our contemplated merger with Columbia Financial.  The required regulatory approval process is underway and we continue to plan for our special meeting of shareholders seeking shareholder approval for the merger.  A fourth quarter close is still expected.  We believe the combined organization will create an institution that can serve the changing needs of customers and result in the development of strong loan and deposit portfolios."

Operating Results
The Corporation reported net interest income of $7.2 million for the three months ended June 30, 2019 compared to $7.0 million earned in the equivalent prior year period.  For the six months ended June 30, 2019, net interest income was $14.1 million, which also represented an improvement over the $13.8 million earned in the comparable prior year period.  The increases for both the three and six month periods were primarily a result of higher interest income on loans, due to both growth in average balances and greater loan yields, partially offset by increased interest expense.  The average rate earned on interest-earning assets has shown modest increases over the last five quarters due, in part, to loans repricing at higher rates.  An increase in the cost of interest-bearing liabilities, however, is the result of higher rates and the highly competitive environment for deposits.  Net interest margin of 3.13% for the three months ended June 30, 2019 reflected general stability over the last several quarters with a reported net interest margin of 3.12% and 3.11% for the prior two quarters, respectively.  Van Ostenbridge commented, "While the market for loans and deposits continues to be very competitive, which tends to drive yields on loans down and rates on deposits up, we were able to manage the continuing pressure on our net interest margin."

As previously mentioned, for the three and six months ended June 30, 2019, the Corporation recorded $330,000 and $395,000 in provisions for loan losses, compared to negative provisions for loan losses of $780,000 and $1.1 million for the three and six months ended June 30, 2018.  While the primary business markets in which the Corporation operates show ongoing improvement in the economic conditions and overall real estate climate, the loan loss provisions for the current periods principally reflect the growth in the loan portfolio.

For the three and six months ended June 30, 2019, noninterest income was $935,000 and $1.8 million, respectively, compared to $859,000 and $1.6 million in the equivalent prior year periods.  In addition to growth in fees and service charges, gains on sales of loans contributed to solid increases in non-interest income.  The three months ended June 30, 2019 included $23,000 of gains from the sales of mortgage loans and $71,000 of gains from the sale of the guaranteed portion of newly originated Small Business Administration ("SBA") loans.  On a year-to-date basis, for the six months ended June 30, 2019, mortgage loan sale gains were $48,000 and SBA loan sale gains were $112,000.  For both the three and six month periods, these reported gains were in excess of the equivalent prior year gains.  Noninterest income for the current three and six months also included mark-to-market gains on a CRA investment, which is classified as an equity security, of $24,000 and $46,000, respectively, compared to $29,000 and $103,000 of losses for the three and six months ended June 30, 2018, respectively.

Noninterest expenses were $5.8 million and $11.4 million for the three and six months ended June 30, 2019, respectively, compared to $5.5 million and $10.9 million in the same prior year periods.  Included in the current year periods was $291,000 of merger-related expenses incurred to date.

Balance Sheet / Financial Condition
Total assets at June 30, 2019 of $964.3 million reflected an $8.7 million increase from assets of $955.6 million at December 31, 2018.  During the first six months of 2019, the gross loan portfolio increased $23.2 million, reflecting a healthy 6.3% annualized growth rate.  Asset growth since the prior year end included the establishment of a Right of Use Asset for all leases, as required due to the adoption of new accounting rules.  At June 30, 2019, the Right of Use Asset was $2.9 million.  Offsetting these asset increases, cash flows from the securities portfolio were used to help fund asset growth, resulting in a $12.7 million decrease in the securities portfolio since the end of last year.

At June 30, 2019, total deposits were $781.9 million, very comparable to the $782.1 million at December 31, 2018.  Van Ostenbridge commented, "While we were faced with a significant amount of maturities of interest-bearing deposits during the second quarter, we were able to retain a majority of these deposits.  The runoff of a portion of these maturities was offset by an increase in noninterest-bearing deposits, which is reflective of our focus on building lasting customer relationships and low cost, core deposits."  During the first six months of 2019, non-interest bearing demand deposits grew $8.3 million, equating to an annualized growth rate of over 9%.

At June 30, 2019, the Corporation’s regulatory capital ratios reflected a well-capitalized institution.  The Tier 1 leverage ratio and total risk based capital ratio were 9.52% and 14.18%, respectively, compared to the respective minimum required levels of 4.0% and 8.0%.

About Stewardship Financial Corporation
Stewardship Financial Corporation is a one-bank holding company, incorporated under the laws of the State of New Jersey in January of 1995, which serves as a holding company for Atlantic Stewardship Bank.  Stewardship’s primary business is the ownership and supervision of Atlantic Stewardship Bank. Stewardship, through Atlantic Stewardship Bank conducts commercial banking business and offers services including personal and business checking accounts, time deposits, money market accounts and regular savings accounts. Stewardship manages its business through its main office located at 630 Godwin Avenue, Midland Park, New Jersey, and through its twelve branch 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 for additional information.

Forward-Looking Statements
Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of the Corporation’s management and are subject to significant risks and uncertainties.

Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. The following factors, among others, could cause actual results to differ materially from the anticipated results expressed in the forward-looking statements: (i) governmental approvals of the merger may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger or otherwise; (ii) the shareholders of Stewardship may fail to approve the merger; (iii) the interest rate environment may further compress margins and adversely affect new interest income; (iv) the risks associated with continued diversification of assets and adverse changes to credit quality; and (v) changes in legislation, regulations and policies. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Stewardship’s reports (such as the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission (the “SEC”) and available at the SEC’s Internet website ( All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to Stewardship or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. Except as required by law, Stewardship does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.

Additional Information about the Proposed Merger and Where to Find It
In connection with the proposed merger, Stewardship has filed a proxy statement with the SEC. Shareholders of Stewardship are urged to read the proxy statement and other relevant documents and any amendments or supplements to those documents, because they will contain important information which should be considered before making any decision regarding the proposed merger. A free copy of the proxy statement, as well as other filings containing information about Columbia or Stewardship, as and when they become available, may be obtained at the SEC’s Internet site ( Copies of the proxy statement may also be obtained, free of charge, from Stewardship’s website ( under the “Investor Relations” tab, or by contacting Stewardship’s investor relations department at Stewardship Financial Corporation, 630 Godwin Avenue, Midland Park, NJ 07432, Attention: Investor Relations, Telephone 201.444.7100.

Certain Information Regarding Participants
Stewardship and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies of Stewardship’s shareholders in connection with the proposed merger. You can find information about Stewardship’s executive officers and directors in the materials filed by Stewardship with the SEC. Additional information regarding the interests of Stewardship’s participants and other persons who may be deemed participants in the transaction and a description of their direct and indirect interests, by security holdings or otherwise, may be obtained by reading the proxy statements filed by Stewardship with the SEC on April 5, 2019 and other relevant documents regarding the proposed merger filed with the SEC. Free copies of these documents may be obtained as described in the preceding paragraph.

Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
 June 30,
 March 31,
 December 31,
 September 30,
 June 30,
Selected Financial Condition Data:         
Cash and cash equivalents$12,610  $13,157  $16,823  $10,839  $13,529 
Securities available for sale96,117  102,519  108,811  109,764  112,594 
Securities held to maturity62,264  61,586  62,308  62,227  58,471 
Other equity investments1,693  1,670  1,648  3,661  3,694 
FHLB stock4,091  3,922  3,965  3,552  3,087 
Loans held for sale469        607 
Loans receivable:         
Loans receivable, gross756,994  747,180  733,787  729,475  722,148 
Allowance for loan losses(8,404) (8,018) (7,926) (7,904) (8,353)
Other, net(535) (459) (457) (483) (484)
Loans receivable, net748,055  738,703  725,404  721,088  713,311 
Premises and equipment, net7,146  7,262  7,007  6,920  6,952 
Right of use asset2,917  3,092       
Bank owned life insurance21,908  21,771  21,636  21,498  21,360 
Other assets6,994  7,448  8,028  8,564  8,082 
Total assets$964,264  $961,130  $955,630  $948,113  $941,687 
Noninterest-bearing deposits$182,971  $176,356  $174,717  $190,303  $188,343 
Interest-bearing deposits598,974  607,260  607,374  596,263  603,718 
Total deposits781,945  783,616  782,091  786,566  792,061 
Other borrowings67,400  63,900  65,700  56,800  46,700 
Subordinated debentures and subordinated notes23,415  23,398  23,382  23,366  23,350 
Lease liability3,043  3,217       
Other liabilities4,371  4,708  4,307  3,462  3,388 
Total liabilities880,174  878,839  875,480  870,194  865,499 
Shareholders' equity84,090  82,291  80,150  77,919  76,188 
Total liabilities and shareholders' equity$964,264  $961,130  $955,630  $948,113  $941,687 
Gross loans to deposits96.81% 95.35% 93.82% 92.74% 91.17%
Equity to assets8.72% 8.56% 8.39% 8.22% 8.09%
Shares outstanding8,714,222  8,712,023  8,680,388  8,678,454  8,676,843 
Book value per share$9.65  $9.45  $9.23  $8.98  $8.78 
Asset Quality Data:         
Nonaccrual loans$1,906  $1,776  $1,544  $1,271  $1,283 
Loans past due 90 days or more and accruing         
Total nonperforming loans1,906  1,776  1,544  1,271  1,283 
Other real estate owned         
Total nonperforming assets$1,906  $1,776  $1,544  $1,271  $1,283 
Nonperforming loans to total loans0.25% 0.24% 0.21% 0.17% 0.18%
Nonperforming assets to total assets0.20% 0.18% 0.16% 0.13% 0.14%
Allowance for loan losses to total gross loans1.11% 1.07% 1.08% 1.08% 1.16%

Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
 For the three months ended
June 30,
 For the six months ended
June 30,
 2019 2018 2019 2018
Selected Operating Data:       
Interest income$9,772  $8,868  $19,173  $17,407 
Interest expense2,608  1,860  5,025  3,576 
Net interest income7,164  7,008  14,148  13,831 
Provision for loan losses330  (780) 395  (1,115)
Net interest income after provision for loan losses6,834  7,788  13,753  14,946 
Noninterest income:       
Fees and service charges572  551  1,134  1,058 
Bank owned life insurance138  138  273  276 
Gain on calls and sales of securities1    3  6 
Gain on sales of mortgage loans23  9  48  31 
Gain on sales of SBA loans71  59  112  59 
Gain (loss) on equity investments
24  (29) 46  (103)
Miscellaneous106  131  225  257 
Total noninterest income935  859  1,841  1,584 
Noninterest expenses:       
Salaries and employee benefits3,102  3,129  6,239  6,238 
Occupancy, net417  403  866  845 
Equipment234  188  439  369 
Data processing515  478  1,018  962 
Advertising194  207  377  364 
FDIC insurance premium65  70  129  134 
Charitable contributions175  195  370  375 
Bank-card related services138  131  269  258 
Merger related expenses291    291   
Miscellaneous655  703  1,380  1,387 
Total noninterest expenses5,786  5,504  11,378  10,932 
Income before income tax expense1,983  3,143  4,216  5,598 
Income tax expense530  842  1,116  1,489 
Net income$1,453  $2,301  $3,100  $4,109 
Weighted avg. no. of basic and diluted common shares8,713,110  8,675,868  8,700,609  8,667,235 
Basic and diluted earnings per common share$0.17  $0.27  $0.36  $0.47 
Return on average common equity7.01% 12.32% 7.61% 11.13%
Return on average assets0.61% 0.99% 0.65% 0.90%
Yield on average interest-earning assets4.27% 3.99% 4.23% 3.97%
Cost of average interest-bearing liabilities1.52% 1.12% 1.47% 1.08%
Net interest rate spread2.75% 2.87% 2.76% 2.89%
Net interest margin3.13% 3.16% 3.12% 3.15%

Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
 For the three months ended
 June 30,
 March 31,
 December 31,
 September 30,
 June 30,
Selected Operating Data:         
Interest income$9,772  $9,401  $9,377  $9,215  $8,868 
Interest expense2,608  2,417  2,247  2,013  1,860 
Net interest income7,164  6,984  7,130  7,202  7,008 
Provision for loan losses330  65  (10) (490) (780)
Net interest and dividend income after provision for loan losses6,834  6,919  7,140  7,692  7,788 
Noninterest income:         
Fees and service charges572  562  628  542  551 
Bank owned life insurance138  135  138  138  138 
Gain (loss) on calls and sales of securities1  2  (192)    
Gain on sales of mortgage loans23  25  27  12  9 
Gain on sales of SBA loans71  41  64  70  59 
Gain (loss) on equity investments24  22  217  (34) (29)
Miscellaneous106  119  114  109  131 
Total noninterest income935  906  996  837  859 
Noninterest expenses:         
Salaries and employee benefits3,102  3,137  3,200  3,198  3,129 
Occupancy, net417  449  430  426  403 
Equipment234  205  191  186  188 
Data processing515  503  496  489  478 
Advertising194  183  159  192  207 
FDIC insurance premium65  64  77  66  70 
Charitable contributions175  195  355  180  195 
Bank-card related services138  131  142  133  131 
Merger related expenses291         
Miscellaneous655  725  609  684  703 
Total noninterest expenses5,786  5,592  5,659  5,554  5,504 
Income before income tax expense1,983  2,233  2,477  2,975  3,143 
Income tax expense530  586  718  813  842 
Net income$1,453  $1,647  $1,759  $2,162  $2,301 
Weighted avg. no. of basic and diluted common shares8,713,110  8,687,969  8,679,304  8,677,445  8,675,868 
Basic and diluted earnings per common share$0.17  $0.19  $0.20  $0.25  $0.27 
Return on average common equity7.01% 8.22% 8.86% 11.14% 12.32%
Return on average assets0.61% 0.70% 0.73% 0.90% 0.99%
Yield on average interest-earning assets4.27% 4.19% 4.09% 4.04% 3.99%
Cost of average interest-bearing liabilities1.52% 1.42% 1.31% 1.18% 1.12%
Net interest rate spread2.75% 2.77% 2.78% 2.86% 2.87%
Net interest margin3.13% 3.12% 3.11% 3.16% 3.16%

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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