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8-K - FORM 8K - STEWARDSHIP FINANCIAL CORPform8k-113043_ssfn.htm


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 Reports
Earnings for the Year Ended December 31, 2010

Midland Park, NJ – February 14, 2011 – Stewardship Financial Corporation (NASDAQ:SSFN), parent of Atlantic Stewardship Bank, reported net income for the year ended December 31, 2010 of $1.2 million, or $0.12 per diluted common share, compared to net income of $3.6 million, or $0.54 per diluted common share, for the year ended December 31, 2009.  For the three months ended December 31, 2010 net income was $1.1 million, or $0.16 per diluted common share, compared to net income of $774,000, or $0.11 per diluted common share, for the same prior year period.  After dividends on preferred stock, the net income to the common shareholders was $683,000 for 2010 compared to net income of $3.1 million for 2009.  The earnings in the current year periods reflect stable net interest income, improved noninterest income and controlled noninterest expense but a higher provision for loan losses.
Although the level of nonperforming loans posed a considerable challenge with a substantial impact on the Corporation’s results for 2010, “some improvement was seen in the past quarter, with a 7.6% decline in nonperforming loans,” reported Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer.  Nonperforming loans were $22.6 million at December 31, 2010, a decline of $1.9 million from $24.5 million at

 
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Press Release - Midland Park NJ
 
Stewardship Financial Corporation continued
     February 14, 2011
   


September 30, 2010.  Nonperforming loans represented 5.01% of total loans at year end, an improvement from 5.43% just three months earlier and 5.88% at June 30, 2010.  Van Ostenbridge continued, “Our efforts have resulted in a positive trending in nonperforming loans.”
For the three months ended December 31, 2010 the Corporation recorded a $1.8 million provision for loan losses, or $9.6 million on a year to date basis.  Total allowance for loan losses at December 31, 2010 represented 1.88% of total loans compared to a ratio of 1.50% a year earlier.  In addition, at December 31, 2010 the ratio of allowance for loans losses to nonperforming loans of 37.52% reflected consistent allowance coverage when compared to a level of 38.09% as of September 30, 2010 and an improvement from the level of 30.20% at December 31, 2009.
The Corporation reported net interest income for the year ended December 31, 2010 of $24.2 million, representing an increase of 3.7% over the comparable prior year amount.  As a result of the effects of nonperforming loans and a decline in investment portfolio yields, the total asset yield declined.  Nevertheless, both net interest income and the net interest margin remained strong during 2010 as the Corporation was able to mitigate the lower asset yields by management and reduction in liability costs through proactive deposit pricing.  The reported net interest spread and margin for the year ended December 31, 2010 of 3.57% and 3.89%, respectively, were relatively comparable to the net interest spread and margin of 3.45% and 3.89%, respectively, for the prior year.
Noninterest income for the fourth quarter of 2010 includes a $279,000 gain realized on sale of available for sale securities conducted to reduce certain extension risk in the portfolio.  In addition, noninterest income included an increase in gains from the sale of mortgage loans.

 
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Press Release - Midland Park NJ
 
Stewardship Financial Corporation continued
     February 14, 2011



The Corporation experienced an increase in mortgage loan refinance activity due to the Corporation’s promotion of a ‘no cost closing’ program and the lower rate environment in the latter half of 2010.  This activity allowed the Corporation to sell a larger volume of mortgages into the secondary market.
Despite increased costs associated with reducing the level of our problem assets, including legal fees, the Corporation’s commitment to controlling noninterest expense continues.  Expenses incurred for the year ended December 31, 2010 were slightly below the 2009 level.
Total assets of $688.1 million at December 31, 2010 showed a modest 3.7% growth rate when compared to $663.8 million of assets at December 31, 2009.  Our commitment to our market remains unchanged, but we remain aware of the challenges that exist, as our customers continue to be cautious in their borrowing needs.
Deposit growth for 2010 was strong, with deposits increasing $45.7 million and totaling $575.6 million at December 31, 2010.  The increase in deposits enabled the Corporation to reduce other borrowings by $18.6 million since December 31, 2009.
Capital levels, as well, remained strong, with a tier 1 leverage ratio of 8.58% and total risk based capital ratio of 13.45%, far exceeding the regulatory requirements for a “well capitalized” institution.
Van Ostenbridge summarized, “During 2010, we showed a reduction in our level of nonperforming loans while maintaining strong regulatory capital levels.  We acknowledge that our results continue to be influenced by the loan loss provision, but we remain committed to addressing the workout of problematic loans in 2011.”
Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 13

 
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Press Release - Midland Park NJ
 
Stewardship Financial Corporation continued
     February 14, 2011


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 tithing 10% of its pre-tax profits to Christian and local charities.  The Bank is currently celebrating its twenty–fifth year of operation.  To date, the Bank’s total tithe donations exceed $7.3 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,
 
   
2010
   
2010
   
2009
 
                   
Selected Financial Condition Data:
                 
     Cash and cash equivalents
  $ 19,983     $ 25,158     $ 8,871  
     Securities available for sale
    138,628       127,348       103,026  
     Securities held to maturity
    45,394       47,434       67,717  
     FHLB Stock
    2,497       2,497       3,227  
     Loans receivable:
                       
          Loans receivable, gross
    451,867       450,507       460,476  
          Allowance for loan losses
    (8,490 )     (9,327 )     (6,920 )
          Other, net
    (132 )     (290 )     (437 )
     Loans receivable, net
    443,245       440,890       453,119  
                         
     Loans held for sale
    9,818       9,326       660  
     Other assets
    28,553       27,409       27,224  
     Total assets
  $ 688,118     $ 680,062     $ 663,844  
                         
     Deposits:
                       
     Total deposits
  $ 575,603     $ 565,845     $ 529,930  
     Other borrowings
    36,000       36,000       54,600  
     Subordinated debentures
    7,217       7,217       7,217  
     Securities sold under agreements to repurchase
    14,642       15,241       15,396  
     Other liabilities
    2,524       2,910       3,190  
     Stockholders' equity
    52,132       52,849       53,511  
     Total liabilities and stockholders' equity
  $ 688,118     $ 680,062     $ 663,844  
                         
     Book value per common share
  $ 7.24     $ 7.37     $ 7.50  
                         
     Equity to assets
    7.58 %     7.77 %     8.06 %
                         
Asset Quality Data:
                       
     Nonaccrual loans
  $ 22,500     $ 24,334     $ 19,656  
     Loans past due 90 days or more and accruing
    -       10       415  
     Restructured loans
    130       140       2,846  
     Total nonperforming loans
    22,630       24,484       22,917  
     Other real estate owned
    615       356       -  
     Total nonperforming assets
  $ 23,245     $ 24,840     $ 22,917  
                         
                         
     Non-performing loans to total loans
    5.01 %     5.43 %     4.98 %
     Non-performing assets to total assets
    3.38 %     3.65 %     3.45 %
     Allowance for loan losses to nonperforming loans
    37.52 %     38.09 %     30.20 %
     Allowance for loan losses to total gross loans
    1.88 %     2.07 %     1.50 %


 
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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
                             
 
   
For the three months ended
   
For the year ended
 
   
December 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
 
Selected Operating Data:
                       
Interest income
  $ 8,193     $ 8,531     $ 32,984     $ 34,156  
Interest expense
    2,039       2,580       8,778       10,811  
Net interest income
    6,154       5,951       24,206       23,345  
Provision for loan losses
    1,820       1,200       9,575       3,575  
Net interest income after provision
                               
for loan losses
    4,334       4,751       14,631       19,770  
Noninterest income:
                               
Fees and service charges
    504       485       1,990       1,847  
Bank owned life insurance
    82       84       331       322  
Gain on sales of mortgage loans
    456       22       671       294  
Gain on calls and sales of securities
    279       3       1,081       258  
Merchant processing
    -       -       -       118  
Other
    49       62       314       294  
Total noninterest income
    1,370       656       4,387       3,133  
Noninterest expenses:
                               
Salaries and employee benefits
    2,180       2,000       8,331       8,264  
Occupancy, net
    483       460       1,954       1,858  
Equipment
    258       292       1,129       1,087  
Data processing
    336       336       1,322       1,218  
FDIC insurance premium
    264       238       976       1,124  
Charitable contributions
    60       208       360       619  
Merchant processing
    -       -       -       108  
Other
    1,166       818       3,878       3,512  
Total noninterest expenses
    4,747       4,352       17,950       17,790  
   Income before income taxes
    957       1,055       1,068       5,113  
   Income tax (benefit) expense
    (130 )     281       (165 )     1,479  
   Net income
    1,087       774       1,233       3,634  
   Dividends on preferred stock and accretion
    138       137       550       504  
   Net income available to common stockholders
  $ 949     $ 637     $ 683     $ 3,130  
                                 
   Weighted avg. no. of diluted common shares
    5,845,952       5,838,262       5,843,756       5,836,739  
   Diluted earnings per common share
  $ 0.16     $ 0.11     $ 0.12     $ 0.54  
                                 
   Return on average common equity
    7.07 %     4.64 %     1.27 %     5.92 %
                                 
   Return on average assets
    0.62 %     0.47 %     0.18 %     0.57 %
                                 
   Yield on average interest-earning assets
    5.13 %     5.52 %     5.27 %     5.65 %
   Cost of average interest-bearing liabilities
    1.52 %     2.06 %     1.70 %     2.20 %
   Net interest rate spread
    3.61 %     3.46 %     3.57 %     3.45 %
                                 
   Net interest margin
    3.87 %     3.88 %     3.89 %     3.89 %
 
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