Attached files
| file | filename |
|---|---|
| EX-23 - EXHIBIT 23 - STEWARDSHIP FINANCIAL CORP | ssfn20171231_10kex23.htm |
| EX-32.1 - EXHIBIT 32.1 - STEWARDSHIP FINANCIAL CORP | ssfn20171231_10kex32-1.htm |
| EX-31.2 - EXHIBIT 31.2 - STEWARDSHIP FINANCIAL CORP | ssfn20171231_10kex31-2.htm |
| EX-31.1 - EXHIBIT 31.1 - STEWARDSHIP FINANCIAL CORP | ssfn20171231_10kex31-1.htm |
| EX-21 - EXHIBIT 21 - STEWARDSHIP FINANCIAL CORP | ssfn20171231_10kex21.htm |
| EX-10.12 - EXHIBIT 10.12 - STEWARDSHIP FINANCIAL CORP | ssfn20171231_10kex10-12.htm |
| 10-K - 10-K - STEWARDSHIP FINANCIAL CORP | ssfn_20171231x10k.htm |
2017 ANNUAL REPORT
Faithful to our
customers, community
and shareholders
“ We make a living
by what we get,
but we make a life
by what we give.”
– Winston Churchill
MESSAGE TO SHAREHOLDERS
The financial industry as a whole was impacted by the enactment of the Tax
Cuts and Jobs Act (“Tax Act”) in the fourth quarter of 2017. On December
22, 2017, the Tax Act was passed, which reduced the 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 one-time
noncash additional income tax expense of $1.4 million for the year ended
December 31, 2017. We anticipate the recent enactment may have positive
long-term effects on future earnings to offset the Corporation’s short-term
adjustment.
In reflecting on the Corporation’s 2017 highlights and accomplishments,
such as $133.2 million of growth in assets, increasing net interest income
by 17%, completing a successful capital raise in April, and maintaining
expenses, even with the growth in the balance sheet – we remain committed
to building on our successes while prudently growing the loan portfolio to
further improve our strong core earnings.
For eight consecutive quarters we have received a
5-Star rating for financial strength by BauerFinancial
Inc., the nation’s premier bank rating firm, which has
been analyzing and reporting on the nation’s banks
since 1983. “By earning Bauer’s highest 5-Star rating,
Atlantic Stewardship Bank proves to its customers and the community that
it is committed to their needs and to financial discipline,” notes Karen L.
Dorway, president of BauerFinancial. “As times change, so do customers’
needs. Community banks like Atlantic Stewardship Bank excel at finding
ways to meet these ever-changing needs while maintaining financial discipline
and prudent underwriting.”
OUR MISSION
At our subsidiary Atlantic Stewardship Bank, we have been
preserving a steady growth paradigm in a changing business
environment, all while adding value to our company with
our customer-centric approach. As a unique full-service
commercial bank, we offer customized financial solutions
to meet the needs of our customers, and we continue to be
the only U.S. bank that tithes. Since 1985, we have been
nurturing relationships, providing tailored solutions and
giving back to the communities we serve as a sign of faith to
our customers, Associates, community and shareholders.
FINANCIAL RESULTS
We respectfully report the following financial results as we sustain progression and responsible
corporate growth. Solid earnings continue to reflect the
impact of our loan growth funded by a balanced increase
in deposits. The earnings resulted in net income available
to common shareholders for the year ended December 31,
2017, of $3.9 million, or $0.50 per diluted common share,
compared to $4.7 million, or $0.78 per diluted common
share, earned for the year ended December 31, 2016.
For 2017, net interest income was $26.4 million compared
to $22.6 million for the prior year. The net interest
margin for 2017 was 3.13% compared to 3.18% for
2016. In general, the net interest margin is reflective of the
historically low market rates in the current environment.
As noted previously, the Corporation recorded a provision
for loan losses of $655,000 for 2017, and a negative
provision for loan losses of $1.4 million for 2016. As the
Corporation continues to experience 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.
Total assets reached $928.8 million at December 31,
2017—reflecting an increase of $133.2 million, or
16.7%, compared to $795.5 million of assets at the end
of 2016. The asset growth was the direct result of new
loan originations. We are encouraged by the momentum
resulting from robust loan production in 2017, but remain
vigilant to ensure that loans meet our prudent underwriting
standards.
Deposit balances totaled $764.1 million at December 31,
2017, compared to $658.9 million a year earlier, reflecting
$105.2 million, or 16.0%, of growth. In addition, in
order to fund loan growth and manage interest rate risk,
other borrowings increased $4.6 million to $63.8 million
at December 31, 2017. The combination of the increase
in deposits as well as the appropriate use of low-cost
borrowings is important to our ability to cost-effectively
fund the growth we experienced in our loan portfolio.
Additionally, the Corporation announced the successful
completion of an underwritten public offering of 2,509,090
shares of the Corporation’s common stock, for net
proceeds of $18.9 million. The Corporation is using the
net proceeds of this offering to support organic growth and
other general corporate purposes.
Regulatory capital levels at December 31, 2017, continue
to remain strong, with a Tier 1 leverage ratio of 8.88%
and total risk-based capital ratio of 14.29%, far exceeding
the regulatory requirements of 4% and 8%, respectively,
to be considered a “well capitalized” institution. While we
continue to be conservative regarding managing risks, we
are advanced in adapting to the necessities of our customer
base and their reliance on emerging technology.
BUSINESS SOLUTIONS HIGHLIGHTS
We continue to create more options to complement our
full line of commercial lending services including the
introduction of our new Small Business Administration
(SBA) Program, which is a value-added lending solution
for small businesses that do not meet traditional lending
requirements. We hired a new team of highly skilled
professionals to run our SBA Department, including
Rahbar Ameri, Senior Vice President/SBA Director, who
is responsible for managing the entire SBA process,
from establishing products and policies to cultivating,
underwriting and closing loans for business customers.
The benefit of our SBA Program is the ability to assist
customers with various scenarios, for example, new
entrepreneurs, veterans or third-generation business
owners, with affordable lending opportunities. We
recognize that customers want a bank that provides a
variety of customized solutions and understand that one
size does not fit all.
At ASB, our team of Associates are constantly listening
and committed to delivering on every promise. We evolved
our Cash Management Program and improved our line
of products and services, including but not limited to
Remote Deposit Capture, Merchant Services, Business
Checking and Loans, and Business Online and Mobile
Banking, to meet our customers’ unique business banking
requests. Customers know that they can rely on us to
always be personally faithful to their needs, while offering
personalized solutions with a hands-on delivery.
L to R: Diane Kerner, Administration
Officer; Rahbar Ameri, Senior Vice
President/SBA Director; Paul Van
Ostenbridge, President and CEO of
Atlantic Stewardship Bank; James H.
Shields, Senior Vice President/Chief
Credit Officer; William S. Clement,
Executive Vice President/Chief
Lending Officer; Sarah N. Ferrington,
Vice President/Marketing Manager
EXPANSION AND TECHNOLOGY
On June 24, 2017, we held a grand-opening celebration for our new Morristown
Branch, located at 43 South Park Place on the Green. We are excited to be a
part of the Morristown community and to have opened a new physical location,
which will join Montville and Pequannock as our third Morris County branch
and 12th branch location serving Bergen, Morris and Passaic counties, along
with the surrounding markets.
Our Morristown Branch will continue to meet the needs of our customers
and offer additional conveniences such as advanced technology with a new
Interactive Teller Machine (ITM), which combines ATM functions with access to
a live teller, as well as lending solutions tailored to meet customers’ requests with
a commercial lender on-site and localized decision-making.
Moreover, our Morristown Branch is the first to offer a cash recycle machine,
which is a technologically advanced machine that handles simple but important
tasks such as accepting and dispensing cash in an efficient manner. The cash
recycler, which is located in a customer transaction center, removes the manual
process of tellers counting cash coming in or going out and allows the tellers
to focus on the customer in a more personal manner. Customers are looking to
conduct their banking transactions in a fast and effortless fashion and the cash
recycler is the latest automation that simplifies financial operations. Our goal
is to provide the ultimate customer experience by meeting and exceeding our
customers’ expectations.
We are thrilled with the new branch design that we
created and launched beginning with our Morristown
Branch, and it is now being re-created in our Midland
Park Branch, with the anticipation of rolling it out
to all our branches in due time. The branch layout
and transformation as well as investment in new
technologies will take servicing our customers to a
whole new level and is another example of how we are
faithful to our customers’ needs.
“Your insights into the
changing industry were ‘right
on.’ Connecting the banking of
yesterday with banking today
resonated with the students.
The culture that you have
developed is so important.
It sets the tone for everyone.
Your discussion on asking your
customers for their input and
adjusting and personalizing
your service to them was a
message that caught their
attention and demonstrated
how successful companies
succeed.”
—Bob Evans, Dean, School of
Business, Felician College
L to R: The official ribbon cutting:
Carolyn Lake, Director, Community Relations & Development of Interfaith Food
Pantry; Rosa Fornino, Vice President/Business Development Officer of Atlantic
Stewardship Bank; William Clement, Executive Vice President and Chief Lending
Officer of Atlantic Stewardship Bank; Rich Powers, Vice President/Business
Development Officer of Atlantic Stewardship Bank; Michael Hyatt, Assistant
Secretary/Branch Manager of Atlantic Stewardship Bank’s Morristown Branch;
Mayor Timothy P. Dougherty of Morristown; Mary Dougherty, Re/MAX Properties
Unlimited; Doug Olsen, Vice President/Regional Branch Manager of Atlantic
Stewardship Bank; Jeffrey Halverstadt, Vice President/Commercial Lending Officer
of Atlantic Stewardship Bank; Joseph Lobozzo, Sr., LDJ Builders, Inc.; and Paul Van
Ostenbridge, President and CEO of Atlantic Stewardship Bank
L to R: Bob Evans, Dean, School of Business, Felician College, along with three Felician
students and ASB President and CEO Paul Van Ostenbridge
COMMUNITY COMMITMENT
Stewardship is the centerpiece of our name and is the act of managing another’s
property or finances in a conservative and trustworthy manner. You will find
our commitment to stewardship in each relationship established at ASB, as every
account is important to us. The more we grow, the greater the opportunity to
provide assistance through our Tithing Program.
As part of ASB’s Tithing Program, where we tithe, or share, 10% of our taxable
income annually with nonprofit, educational, charitable and/or evangelical religious
organizations, we tithed $5,000 in 2017 to the Solid Foundation Skatepark in New Jersey.
The Solid Foundation is a brotherhood within skateboarding that strengthens and
propels young skaters into
leaders themselves with
faith as their driving force.
They used the $5,000
donation to purchase
computers to teach the
youth in the community
software programs and
creative web design,
and plan to expand the
educational lessons to
topics such as “how to
become an entrepreneur.”
We are privileged to be the only U.S. bank that
tithes a portion of our earnings with organizations
attending to the physical, emotional and spiritual
needs of others, locally and abroad, including inner-
city missions, educational programs for youth, caring
home environments for the elderly and spreading the
Gospel. We take this responsibility with the utmost
sincerity, and work diligently to provide a solid return
to customers while safeguarding their funds. As a result,
we have been able to give back over $9.3 million since
the bank’s inception.
L to R: Wayne Aoki, SFC Director, with Steven Wolfe, Co-Founder/Executive
Director at Solid Foundation Skatepark, Inc., and Roberto Celis, Director of Art &
Leadership at Solid Foundation Skatepark, Inc.
Our ASB Team attended and was honored to sponsor the
Eastern Christian 5K Run/Walk and Homecoming event
in October. Eastern Christian School caters to preschool
children as well as students through to grade 12, and is
committed to the vision of engaging the mind, nurturing
the spirit and transforming the world.
“Just catching up on my
reading and came across the
great article about the bank’s
charitable contributions and
Tithing Program. It was a
wonderful piece and really
speaks well for the bank.
Congratulations!”
—John E. Weeney, Jr., President
and CEO, New Jersey Bankers
Association
L to R: Carol Grebowiec; Michael Westra, SFC Director; Sharon Spoelstra;
and Ben Spoelstra, Vice President/Loan Workout Officer at Atlantic
Stewardship Bank
“For as the earth
brings forth its
bud, as the garden
causes the things
that are sown
in it to spring
forth, so the Lord
GOD will cause
righteousness and
praise to spring
forth before all the
nations.”
–Isaiah 61:11
CLOSING SENTIMENTS
Technology is changing consumer behaviors, and as the demands for it
increase and change, we are delivering as well as adding value with our service
experience. With us, you get more than the personalized service, advanced
technology and customized solutions that you’d expect—you get a truly caring
bank that’s committed to doing more,
where it matters most.
We are blessed to have the support of our
Board of Directors and appreciate their
commitment and strategic direction. This
year, we congratulate Robert J. Turner on
his retirement and welcome our newest
Director, Kim V. Vierheilig. We are grateful
to Mr. Turner for his service throughout
the years and we look forward to the
contributions Mrs. Vierheilig will bring to
our Corporation and Bank.
In closing, we remain faithful to our
customers, Associates, community and
shareholders, and thank everyone for their loyalty and trust in our Bank. With
this in mind, we thank our Lord for allowing the Corporation and Bank to
continue to thrive.
Richard W. Culp
Chairman of the Board of Directors
Paul Van Ostenbridge
President and Chief Executive Officer
L to R: Kim V. Vierheilig, Newest SFC Director;
and Bryan Pennington, AIA, Past President of
Architects League of Northern New Jersey
BOARD OF DIREC TORS
Stewardship Financial Corporation and
Atlantic Stewardship Bank
Richard W. Culp, Chairman
Educational Management
Consultant
Wayne Aoki
Retired
William C. Hanse, Esq.
Of Counsel
Hanse Anderson LLP
Margo Lane
Director of Marketing and Sales
Collagen Matrix, Inc.
John C. Scoccola
Senior Manager of Global Engineering
Verizon Enterprise Solutions
John L. Steen
President, Steen Sales, Inc.
Paul Van Ostenbridge
President and Chief Executive Officer
Stewardship Financial Corporation and
Atlantic Stewardship Bank
William J. Vander Eems
President, William Vander Eems, Inc.
Kim V. Vierheilig
Vice President, LAN Associates
Michael A. Westra
President and General Manager
Wayne Tile Company
Howard R. Yeaton, Vice Chairman
Managing Principal
Financial Consulting Strategies LLC
STEWARDSHIP FINANCIAL CORPORATION
CORPORATE ATTORNEYS
Stewardship Financial Corporation
McCarter & English, LLP
Attorneys at Law
100 Mulberry Street
4 Gateway Center
Newark, NJ 07102
973-622-4444
Atlantic Stewardship Bank
Hanse Anderson, LLP
2035 Hamburg Turnpike, Suite E
Wayne, NJ 07470-6245
973-831-8700
STOCK LISTING
Stewardship Financial Corporation
common stock is traded on the Nasdaq
Capital Market under the symbol SSFN.
Participation in our Dividend
Reinvestment Plan (DRP) is a convenient
and easy way to purchase shares of
SSFN at a discount to market and with
no commissions. To sign up for our DRP,
call the Investor Relations Department
of Computershare at 800-368-5948 or
visit www.computershare.com
STOCK REGISTRAR AND TRANSFER AGENT
To report a change of name or address,
or a lost stock certificate or dividend
check, contact:
Computershare Shareholder Services
P.O. Box 50500
Louisville, KY 40233-5000
800-368-5948
www.computershare.com/investor
Shareholder Relations
Stewardship Financial Corporation
Corporate Division
201-444-7100
www.ASBnow.com
BUSINESS DEVELOPMENT BOARDS
BERGEN
Richard Brady, Esq.
Chairman
Frank Baglieri, CPA
Steven Barlotta, CPA
Linda A. Brock
Christopher Byers, Esq.
William Cook
Douglas Cronk
Frederic Farcy
William Haggerty, CPA
Christopher Heck
Bartel Leegwater
Barbara Moran
Edward Nieuwenhuis, Jr., DPM
Celine November, Esq.
Katrin Ramsey
Kevin Sincavage
William Soodsma
Jeffrey R. Van Inwegen, M.D.
MORRIS
William A. Monaghan III, Esq.,
Chairman of Morris & Passaic Boards
Paul Casey
David Chang
Joseph Daughtry
David Kahl
Joseph Lobozzo, Sr.
Lydia Ramos
Mark P. Van Grouw, CPA
Abe Van Wingerden
Anita Van Wingerden
Kenneth Vander May
PASSAIC
William A. Monaghan III, Esq.,
Chairman of Morris & Passaic Boards
Patrick Anderson, CPA, Esq.
Heidi L. Borst
Samantha Braen-Magarro
Beatrice Davis
Robert Fylstra, CPA
Paul D. Heerema
Douglas Hoogerhyde, CPA
Donald G. Matthews, Esq.
Thomas Mizzone, Jr., CPA
Mary Postma
George Schaaf
Ralph Wiegers
SPECIAL APPRECIATION
Mr. Robert J. Turner announced his retirement from the Board of
Directors and as Secretary of the Corporation as of May 16, 2017.
Mr. Turner was a Director of the Corporation since 1997, and of our
wholly-owned subsidiary, Atlantic Stewardship Bank, since 1985. It is
with heartfelt appreciation that we express our gratitude to Mr. Turner
for his dedication, loyalty and valuable insight to the Corporation over
the years. Mr. Turner was the president of The Turner Group, an insurance brokerage
company, and brought years of experience in corporate management to the Board of
Directors. We value Mr. Turner’s 32 years of service and devotion to the Bank and look
forward to his continued support.
630 Godwin Avenue, Midland Park, NJ 07432
201-444-7100 | 877-844-BANK | www.ASBnow.com
BRANCH LOCATIONS
Headquarters – Midland Park
630 Godwin Avenue
Hawthorne
386 Lafayette Avenue
Montville
2 Changebridge Road
Morristown
43 S. Park Place
North Haledon
33 Sicomac Road
Pequannock
249 Newark-Pompton Turnpike
Ridgewood
190 Franklin Avenue
Waldwick
64 Franklin Turnpike
Wayne Hills
87 Berdan Avenue
Wayne Valley
311 Valley Road
Westwood
200 Kinderkamack Road
Wyckoff
378 Franklin Avenue