SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 7, 2014
Stewardship Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
| New Jersey | 1-33377 | 22-3351447 |
| (State or Other Jurisdiction of | (Commission | (IRS Employer |
| Incorporation) | File Number) | Identification No.) |
| 630 Godwin Avenue, Midland Park, NJ | 07432 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (201) 444-7100
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On May 7, 2014, Stewardship Financial Corporation (the "Corporation") issued a press release, furnished as Exhibit 99.1 and incorporated in this Item 2.02 by reference, announcing the Corporation’s financial results for the quarter ended March 31, 2014.
The information contained in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished, and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18. Furthermore, the information contained in this Current Report on Form 8-K, including Exhibit 99.1, shall not be incorporated by reference into any registration statement filed by the Corporation under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. The furnishing of the information in this Report is not intended to, and does not, constitute a determination or admission by the Corporation that the information in this Report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Corporation.
Item 9.01. Financial Statements and Exhibits
| (d) | The following exhibit is furnished pursuant to Item 2.02 and shall not be deemed to be “filed”: |
| Exhibit No. | Description | ||
| Exhibit 99.1 | Press Release dated May 7, 2014 |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 8, 2014 | Stewardship Financial Corporation | |
| /s/ Claire M. Chadwick | ||
| Claire M. Chadwick | ||
| Executive Vice President and | ||
| Chief Financial Officer |
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EXHIBIT 99.1
| Contact: | Claire M. Chadwick | |
| EVP and Chief Financial Officer | ||
| 630 Godwin Avenue | ||
| Midland Park, NJ 07432 | ||
| 201- 444-7100 |
PRESS RELEASE
Stewardship Financial Corporation Announces
First Quarter of 2014 Earnings
Midland Park, NJ – May 7, 2014 – Stewardship Financial Corporation (NASDAQ:SSFN), parent of Atlantic Stewardship Bank, announced net income for the three months ended March 31, 2014 of $506,000 as compared to net income of $822,000 for the three months ended March 31, 2013. After dividends on preferred stock, the net income available to the common stockholders was $335,000, or $0.06 per common share, for the current 2014 period compared to $656,000, or $0.11 per common share, for the equivalent period of 2013. Items affecting comparisons between the periods are explained below.
Of significant importance for the quarter, the Corporation did not record a provision for loan losses for the three months ended March 31, 2014 in contrast to a provision for loan losses of $1.6 million for the three months ended March 31, 2013. Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer commented, “Based on our continued improvement in asset quality and the reserves established over the past few years, no increase in the allowance for loan losses was necessary at March 31, 2014.”
Continuing on the Corporation’s improvement in the level of problem assets, Van Ostenbridge stated, “We are seeing the results of our committed focus for the last several years on reducing our level of nonperforming loans.” Nonperforming loans decreased to $5.1 million, or 1.20% of total loans at March 31, 2014, representing an approximate 50% reduction when compared to $10.2 million, or 2.34%, at December 31, 2013 and over a 70% decline when compared to $17.5 million, or 3.97%, a year earlier.
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| Press Release - Midland Park NJ | |
| Stewardship Financial Corporation continued | May 7, 2014 |
Total nonperforming assets, which includes other real estate owned, represented just 1.02% of total assets at March 31, 2014, signifying meaningful progress when compared to 1.58% and 2.65% at December 31, 2013 and March 31, 2013, respectively.
The decrease in nonperforming assets is partially attributable to the sale of a small group of nonperforming loans that, at December 31, 2013, the Corporation had categorized as held for sale at the lower of cost or fair value of the underlying collateral, less cost to sell. After charge-offs previously recorded on these loans recognized against the allowance for loan losses, these loans had a carrying value of $2.8 million. The loans were sold during the three months ended March 31, 2014 and resulted in a net loss to the Corporation of $241,000, reflecting further declines in fair value.
When comparing the current year quarter results with the prior year quarter, components of noninterest income also had a substantial impact. The Corporation reported noninterest income of $399,000 for the three months ended March 31, 2014 compared to $1.5 million for the equivalent prior year period. The current year period includes the previously mentioned loss of $241,000 from the sale of nonperforming loans as well as reduced gains on sales of mortgage loans reflective of the impact of rising mortgage rates and corresponding reduction in refinance activity. In addition, the prior year period included $537,000 as a result of a death benefit insurance payment received.
Net interest income was $5.3 million in the first quarter of 2014 compared to $5.9 million a year earlier. “While the Corporation continues to monitor and manage all expenses, the low interest rate environment in which we have been operating has put pressure on asset yields,” said Van Ostenbridge.
Total noninterest expenses were $5.1 million for the three months ended March 31, 2014 – comparable to $4.9 million incurred in the prior year period.
Total assets at March 31, 2014 were $672.6 million, which were comparatively unchanged from assets of $673.5 million at December 31, 2013. Additional liquidity was provided by an increase in cash and cash equivalents. Gross loans receivable decreased $10.5 million from December 31, 2013, reflecting normal payoffs and principal amortization as well as the competitive environment for new loans due to lack
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| Press Release - Midland Park NJ | |
| Stewardship Financial Corporation continued | May 7, 2014 |
of demand. Van Ostenbridge noted, “Our lending efforts are dedicated to building and maintaining a pipeline of loan applications, with underwriting that adheres to our strict guidelines.”
Total deposits were $575.4 million at March 31, 2014, reflecting a relatively insignificant decline when compared to deposits of $577.6 million at December 31, 2013. At March 31, 2014 noninterest bearing deposits represented 23.9% of total deposits.
Capital levels continue to significantly exceed the regulatory requirements for a “well capitalized” institution with a tier 1 leverage ratio of 9.22% and a total risk-based capital ratio of 15.13% compared to the regulatory requirements of 4% and 8%, respectively.
Van Ostenbridge concluded, “While the last several years have seen substantial attention and resources devoted to addressing problem loans, the results of those labors are now clearly evident. With asset quality issues now considered to be at a manageable level, our efforts can now be fully directed on our core banking business.”
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne (2), Montville, 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 $8.1 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)
| March 31, | December 31, | March 31, | ||||||||||
| 2014 | 2013 | 2013 | ||||||||||
| Selected Financial Condition Data: | ||||||||||||
| Cash and cash equivalents | $ | 27,176 | $ | 17,405 | $ | 26,144 | ||||||
| Securities available for sale | 171,692 | 168,411 | 175,493 | |||||||||
| Securities held to maturity | 24,685 | 25,964 | 28,548 | |||||||||
| FHLB Stock | 2,133 | 2,133 | 2,213 | |||||||||
| Loans receivable: | ||||||||||||
| Loans receivable, gross | 423,471 | 434,009 | 441,533 | |||||||||
| Allowance for loan losses | (9,792 | ) | (9,915 | ) | (11,512 | ) | ||||||
| Other, net | 105 | 168 | 62 | |||||||||
| Loans receivable, net | 413,784 | 424,262 | 430,083 | |||||||||
| Loans held for sale | 186 | 2,800 | 2,101 | |||||||||
| Other assets | 32,947 | 32,533 | 29,344 | |||||||||
| Total assets | $ | 672,603 | $ | 673,508 | $ | 693,926 | ||||||
| Noninterest-bearing deposits | $ | 137,687 | $ | 133,565 | $ | 132,960 | ||||||
| Interest-bearing deposits | 437,729 | 444,026 | 462,578 | |||||||||
| Total deposits | 575,416 | 577,591 | 595,538 | |||||||||
| Other borrowings | 25,000 | 25,000 | 25,000 | |||||||||
| Securities sold under agreements to repurchase | 7,601 | 7,300 | 7,344 | |||||||||
| Subordinated debentures | 7,217 | 7,217 | 7,217 | |||||||||
| Other liabilities | 2,209 | 2,621 | 2,152 | |||||||||
| Total liabilities | 617,443 | 619,729 | 637,251 | |||||||||
| Shareholders' equity | 55,160 | 53,779 | 56,675 | |||||||||
| Total liabilities and shareholders' equity | $ | 672,603 | $ | 673,508 | $ | 693,926 | ||||||
| Equity to assets | 8.20% | 7.98% | 8.17% | |||||||||
| Asset Quality Data: | ||||||||||||
| Nonaccrual loans | $ | 5,073 | $ | 10,219 | $ | 17,479 | ||||||
| Loans past due 90 days or more and accruing | — | — | 50 | |||||||||
| Total nonperforming loans | 5,073 | 10,219 | 17,529 | |||||||||
| Other real estate owned | 1,789 | 451 | 876 | |||||||||
| Total nonperforming assets | $ | 6,862 | $ | 10,670 | $ | 18,405 | ||||||
| Nonperforming loans to total loans | 1.20% | 2.34% | 3.97% | |||||||||
| Nonperforming assets to total assets | 1.02% | 1.58% | 2.65% | |||||||||
| Allowance for loan losses to nonperforming loans | 193.02% | 97.03% | 65.67% | |||||||||
| Allowance for loan losses to total gross loans | 2.31% | 2.28% | 2.61% | |||||||||
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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
| For the three months ended | ||||||||
| March 31, | ||||||||
| 2014 | 2013 | |||||||
| Selected Operating Data: | ||||||||
| Interest income | $ | 6,145 | $ | 6,870 | ||||
| Interest expense | 839 | 1,004 | ||||||
| Net interest and dividend income | 5,306 | 5,866 | ||||||
| Provision for loan losses | — | 1,600 | ||||||
| Net interest and dividend income | ||||||||
| after provision for loan losses | 5,306 | 4,266 | ||||||
| Noninterest income: | ||||||||
| Fees and service charges | 421 | 456 | ||||||
| Bank owned life insurance | 96 | 76 | ||||||
| Gain on calls and sales of securities | — | 2 | ||||||
| Gain on sales of mortgage loans | 12 | 162 | ||||||
| Loss on sales of loans | (241 | ) | — | |||||
| Gain on sales of other real estate owned | — | 126 | ||||||
| Gain on life insurance proceeds | — | 537 | ||||||
| Other | 111 | 115 | ||||||
| Total noninterest income | 399 | 1,474 | ||||||
| Noninterest expenses: | ||||||||
| Salaries and employee benefits | 2,678 | 2,696 | ||||||
| Occupancy, net | 555 | 517 | ||||||
| Equipment | 188 | 184 | ||||||
| Data processing | 387 | 328 | ||||||
| FDIC insurance premium | 211 | 150 | ||||||
| Other | 1,075 | 1,057 | ||||||
| Total noninterest expenses | 5,094 | 4,932 | ||||||
| Income before income tax expense (benefit) | 611 | 808 | ||||||
| Income tax expense (benefit) | 105 | (14 | ) | |||||
| Net income | 506 | 822 | ||||||
| Dividends on preferred stock and accretion | 171 | 166 | ||||||
| Net income available to common stockholders | $ | 335 | $ | 656 | ||||
| Weighted avg. no. of diluted common shares | 5,956,887 | 5,930,981 | ||||||
| Diluted earnings per common share | $ | 0.06 | $ | 0.11 | ||||
| Return on average common equity | 3.41% | 6.39% | ||||||
| Return on average assets | 0.31% | 0.49% | ||||||
| Yield on average interest-earning assets | 3.97% | 4.34% | ||||||
| Cost of average interest-bearing liabilities | 0.71% | 0.82% | ||||||
| Net interest rate spread | 3.26% | 3.52% | ||||||
| Net interest margin | 3.44% | 3.72% | ||||||
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