EX-99.1 9 ex99-1.htm EX-99.1

Exhibit 99.1

 

  For Immediate Release
     
  Contact: Claire M. Chadwick
    SVP and Chief Financial Officer
    630 Godwin Avenue
    Midland Park, NJ 07432
    201- 444-7100

 

 

PRESS RELEASE

 

Stewardship Financial Corporation Announces

Earnings for the Year Ended December 31, 2012

 

Midland Park, NJ – March 27, 2013 – Stewardship Financial Corporation (NASDAQ:SSFN), parent of Atlantic Stewardship Bank, announced net income for the year ended December 31, 2012 of $520,000 compared to $684,000 for the year ended December 31, 2011. For the three months ended December 31, 2012, the Corporation reported a net loss of $260,000 compared to a net loss of $962,000 for the corresponding three month period in 2011. The 2012 fourth quarter results were negatively impacted by a larger loan loss provision. After dividends on preferred stock and accretion, net income available to common shareholders for the year ended December 31, 2012 was $168,000, or $0.03 per diluted common share, compared to $126,000, or $0.02 per diluted common share, for the prior year. For the three months ended December 31, 2012, after dividends on preferred stock and accretion, the Corporation reported a net loss available to common shareholders of $387,000, or a loss of $0.07 per diluted common share, compared to a net loss of $1,000,000, or a loss of $0.17 per diluted common share, for the three months ended December 31, 2011.

For the three months ended December 31, 2012 the Corporation recorded a $3.3 million provision for loan losses, or $10.0 million on a year to date basis. The prior year provision for loan losses was $4.9 million and $10.8 million for the three months and year ended December

 
 

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31, 2011, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer commented, “While our provision remained elevated during 2012, we did achieve a decline in nonperforming assets.”

At December 31, 2012, nonperforming assets totaled $19.3 million, or 2.80% of total assets, representing a $13.7 million decline from $33.0 million, or 4.66% of total assets, at December 31, 2011. Over the last several years, the Bank has been challenged by, among other things, a very slow and difficult foreclosure process in the State of New Jersey. The decrease in nonperforming assets reflects payments and payoffs received as well as a recent increase in foreclosures and the transfer of these loans to Other Real Estate Owned (OREO). Van Ostenbridge noted, “We continue to have success in disposing of the OREO properties quickly and only a few properties were held at year end with the majority of these properties under contract for sale.”

The Corporation continuously monitors and evaluates the loan portfolio and individual loan problems and, based on the ongoing reviews and general market conditions, establishes an appropriate level of loan loss reserves. As a measurement of improvement in allowance coverage, at December 31, 2012 the ratio of allowance for loans losses to nonperforming loans was 58.31%, representing an increase compared to an allowance coverage level of 41.84% as of December 31, 2011.

The Corporation reported net interest income of $5.7 million and $23.5 million for the three months and year ended December 31, 2012, respectively, compared to $6.2 million and $24.6 million for the equivalent prior year periods. The net interest margin for the current three months and year ended December 31, 2012 of 3.57% and 3.66%, respectively, compared to 3.75% and 3.83% for the three months and year ended December 31, 2011, respectively.

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Asset yields continue to be impacted by the prolonged, low interest rate environment as well as the impact of nonaccrual loans. The Corporation continues to attempt to offset a portion of the decline in yields on assets through the managing of funding costs. For example, in addition to reducing rates offered on deposit products, during the current year the Corporation prepaid $7.0 million of a higher costing $14.0 million wholesale repurchase agreement.

For the year ended December 31, 2012 noninterest income of $6.4 million represents an increase of $1.2 million compared to $5.2 million for the prior year. Noninterest income for the current year included $2.3 million from gains on calls and sales of securities compared to $1.2 million in 2011. Gains on sales of mortgage loans totaled $887,000 for 2012, a decrease from $1.2 million for the year ended December 31, 2011, reflective of retaining a higher amount of mortgage loans for portfolio. Gains on sales of other real estate owned of $429,000 for 2012 represent a net amount resulting from increased OREO activity over the $10,000 realized in 2011.

Noninterest expenses for the year ended December 31, 2012 increased over the 2011 level. The current year includes higher salary and employee benefits expense, partially reflective of an increased focus on commercial lending opportunities as well as costs associated with an enhanced credit review function. In addition, the increase in salary and employee benefits expenses is the result of increasing regulatory compliance and the attendant staffing necessary to oversee all compliance-related issues. Also included in other expense for the current year period is $691,000 related to a prepayment premium resulting from the repayment of $7 million of a wholesale repurchase agreement.

Total assets of $688.4 million at December 31, 2012 showed a decline when compared to $708.8 million of assets at December 31, 2011. As well as the above noted deleveraging of the balance sheet, since December 31, 2011, gross loans receivable have decreased $16.0

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million, reflecting modest demand for loans and our ongoing attention to quality credit underwriting. The Corporation, nevertheless, continues to actively lend and pursue opportunities to increase lending to those in the communities we serve.

Deposit balances were relatively unchanged at $590.3 million at December 31, 2012 compared to $593.6 million a year earlier. Core deposit balances (checking, money market and savings accounts) now comprise 73.5% of total deposits at December 31, 2012 compared to 71.2% just a year earlier. In addition, noninterest-bearing deposits continued to grow reaching $124.3 million, or 21.1% of deposits, at December 31, 2012 compared to $115.8 million, or 19.5%, at December 31, 2011.

The Corporation has been able to manage through the past few difficult years due, in part, to solid capital levels. Tier 1 leverage ratio of 9.09% and total risk based capital ratio of 14.89%, showed improvement from the prior year end and far exceed the regulatory requirements of 4% and 8%, respectively, for a “well capitalized” institution.

To summarize, Van Ostenbridge stated, “The loan loss provisioning levels of recent years have been higher than we were previously accustomed to and have negatively impacted our performance. Nevertheless, we believe our level of reserves is appropriate and we are optimistic and encouraged by the recent improvement in our level of nonperforming assets. We understand that there is still more we need to accomplish and remain committed to further reductions in our level of problem assets. We firmly believe our level of loan loss reserves, coupled with strong liquidity and a sound capital base, enable us to continue to address workout strategies aimed at reducing the overall level of nonperforming assets.”

Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 13 banking offices in Midland Park, Hawthorne (2), Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (3), Westwood and Wyckoff, New Jersey. The bank is known for

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tithing 10% of its pre-tax profits to Christian and local charities. To date, the Bank’s tithe donations total $7.7 million.

We invite you to visit our website at www.asbnow.com 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.

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Stewardship Financial Corporation

Selected Consolidated Financial Information

(dollars in thousands, except per share amounts)

(unaudited)

 

   December 31,   September 30,   December 31, 
   2012   2012   2011 
             
Selected Financial Condition Data:               
     Cash and cash equivalents  $21,016   $17,387   $13,698 
     Securities available for sale   174,700    173,999    170,925 
     Securities held to maturity   29,718    31,890    38,354 
     FHLB Stock   2,213    2,213    2,478 
     Loans receivable:               
          Loans receivable, gross   440,423    437,999    456,413 
          Allowance for loan losses   (10,641)   (12,598)   (11,604)
          Other, net   50    93    (6)
     Loans receivable, net   429,832    425,494    444,803 
                
     Loans held for sale   784    938    4,711 
     Other assets   30,125    31,891    33,849 
     Total assets  $688,388   $683,812   $708,818 
                
                
     Noninterest-bearing deposits  $124,286   $125,060   $115,776 
     Interest-bearing deposits   465,968    458,366    477,776 
     Total deposits   590,254    583,426    593,552 
     Other borrowings   25,000    25,000    32,700 
     Securities sold under agreements to repurchase   7,343    7,342    14,342 
     Subordinated debentures   7,217    7,217    7,217 
     Other liabilities   2,228    2,953    3,215 
     Stockholders' equity   56,346    57,874    57,792 
     Total liabilities and stockholders' equity  $688,388   $683,812   $708,818 
                
     Book value per common share  $6.98   $7.25   $7.28 
                
     Equity to assets   8.19%   8.46%   8.15%
                
Asset Quality Data:               
     Nonaccrual loans  $18,011   $24,960   $27,736 
     Loans past due 90 days or more and accruing   237    75    — 
     Total nonperforming loans   18,248    25,035    27,736 
     Other real estate owned   1,058    2,985    5,288 
     Total nonperforming assets  $19,306   $28,020   $33,024 
                
                
     Nonperforming loans to total loans   4.14%   5.72%   6.08%
     Nonperforming assets to total assets   2.80%   4.10%   4.66%
     Allowance for loan losses to nonperforming loans   58.31%   50.32%   41.84%
     Allowance for loan losses to total gross loans   2.42%   2.88%   2.54%
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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, 
   2012   2011   2012   2011 
Selected Operating Data:                    
Interest income  $6,754   $7,748   $28,707   $31,574 
Interest expense   1,094    1,594    5,175    6,964 
Net interest and dividend income   5,660    6,154    23,532    24,610 
Provision for loan losses   3,330    4,925    9,995    10,845 
Net interest and dividend income                    
after provision for loan losses   2,330    1,229    13,537    13,765 
Noninterest income:                    
Fees and service charges   456    524    1,998    2,074 
Bank owned life insurance   81    81    325    325 
Gain on calls and sales of securities   1,004    686    2,340    1,161 
Gain on sales of mortgage loans   160    374    887    1,209 
Gain (loss) on sales of other real estate owned   (3)   —    429    10 
Other   79    118    410    391 
Total noninterest income   1,777    1,783    6,389    5,170 
Noninterest expenses:                    
Salaries and employee benefits   2,433    2,106    9,470    8,983 
Occupancy, net   515    487    1,967    2,023 
Equipment   240    239    971    970 
Data processing   317    341    1,291    1,351 
FDIC insurance premium   155    161    612    714 
Other   1,147    1,487    5,342    4,625 
Total noninterest expenses   4,807    4,821    19,653    18,666 
   Income (loss) before income tax expense (benefit)   (700)   (1,809)   273    269 
   Income tax expense (benefit)   (440)   (847)   (247)   (415)
   Net income (loss)   (260)   (962)   520    684 
   Dividends on preferred stock and accretion   127    38    352    558 
   Net income (loss) available to common stockholders  $(387)  $(1,000)  $168   $126 
                     
   Weighted avg. no. of diluted common shares   5,923,113    5,866,575    5,908,503    5,861,465 
   Diluted (loss) earnings per common share  $(0.07)  $(0.17)  $0.03   $0.02 
                     
   Return on average common equity   -3.56%   -8.82%   0.39%   0.29%
                     
   Return on average assets   -0.15%   -0.53%   0.07%   0.10%
                     
   Yield on average interest-earning assets   4.24%   4.70%   4.44%   4.89%
   Cost of average interest-bearing liabilities   0.86%   1.20%   1.00%   1.31%
   Net interest rate spread   3.38%   3.50%   3.44%   3.58%
                     
   Net interest margin   3.57%   3.75%   3.66%   3.83%

 

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