STEWARDSHIP FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - STEWARDSHIP FINANCIAL CORP	a8-kearningsreleasessfn051.htm



For Immediate Release		Contact:
		Claire M. Chadwick
		Executive Vice President and
		Chief Financial Officer
		630 Godwin Avenue
		Midland Park, NJ 07432
		P: 201.444.7100

PRESS RELEASE

Stewardship Financial Corporation Announces

Earnings For The First Quarter of 2018

Midland Park, NJ - May 10, 2018 - Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced net income for the three months ended March 31, 2018 of $1.8 million, or $0.21 per share, compared to $991,000, or $0.16 per share for the three months ended March 31, 2017.

“We continue to strive to build on our past success and remain committed to creating stronger momentum as the year progresses,” stated Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer.

Operating Results

Net interest income and net interest margin were $6.8 million and 3.15% for the first quarter of 2018 compared to $6.2 million and 3.23% for the comparable period a year earlier. "Notwithstanding a tighter margin, our reported net interest income reflected the benefit from the increase in assets on a year-over-year basis," noted Van Ostenbridge.

Press Release - Midland Park NJ

Stewardship Financial Corporation continued May 10, 2017

Results for the three months ended March 31, 2018 benefited from the Corporation recording a negative provision for loan losses of $335,000 as compared to the positive $300,000 provision for loan losses for the three months ended March 31, 2017. The March 2018 reversal of a portion of the allowance for loan losses is reflective of continued improvement in both the Corporation's loss experience and overall economic conditions, including the real estate climate in the Corporation's primary business markets.

The Corporation reported noninterest income of $725,000 for the three months ended March 31, 2018 compared to $799,000 for the comparable prior year three-month period. The three months ended March 31, 2018 included a negative $74,000 mark to market adjustment of a CRA investment which is classified as an equity security. Such security has been owned for years for CRA purposes, but under newly enacted accounting rules, equity securities now require a quarterly mark to market through the income statement. When comparing the current year period to the prior year period, an increase in income from the purchase of additional bank-owned life insurance in the second quarter of 2017 was generally offset by a decline in fees and service charges.

Total noninterest expenses were $5.4 million for the three months ended March 31, 2018 compared to the $5.1 million incurred in the prior year period. “The Corporation continues to appropriately control expenses as the balance sheet grows,” stated Van Ostenbridge. The largest increase in expense was seen in salaries and employee benefits, which increased $265,000 in the current quarter when compared to the three months ended March 31, 2017. In addition to normal salary increases, the increase includes the costs associated with the establishment of a Small Business Administration (SBA) Lending Department - fully staffed with experienced employees. Costs associated with a harsh winter in 2018 are reflected as an increase in occupancy expenses.

Press Release - Midland Park NJ

Stewardship Financial Corporation continued May 10, 2017

The first quarter of 2018 results included the impact of a reduction in the Federal corporate income tax rate from 35% to 21% as a result of the enactment of the Tax Cuts and Jobs Act (“Tax Act”) in December 2017. For the current year period the effective tax rate was 26.4% compared to an effective tax rate of 36.7% for the three months ended March 31, 2017.

Balance Sheet / Financial Condition

Total assets at March 31, 2018 were $922.4 million compared to $928.8 million of assets at December 31, 2017. Growth in the loan portfolio from new originations was offset by several large loan payoffs during the current quarter. According to Van Ostenbridge, “Certain of the payoffs during the quarter represented lower yielding loans and now provides an opportunity to redeploy the assets into higher yielding loans.”

Total deposits were $772.2 million at March 31, 2018, reflecting net growth of $8.1 million since December 31, 2017. The Corporation continues to experience growth in both noninterest-bearing and interest-bearing deposits.

At March 31, 2018, the Corporation’s Tier 1 leverage ratio and total risk based capital ratio were 9.04% and 14.40%, respectively. These ratios are both significantly above the respective 4.0% and 8% minimum levels required and result in categorizing the Corporation as a “well capitalized” institution under regulatory guidelines.

About Stewardship Financial Corporation

Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne, Montville, Morristown, North Haledon, Pequannock, Ridgewood, Waldwick,

Press Release - Midland Park NJ

Stewardship Financial Corporation continued May 10, 2017

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 $10.1 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.



Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)

	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017

Selected Financial Condition Data:
Cash and cash equivalents	$	22,178		$	21,270		$	17,213		$	19,459		$	12,793
Securities available for sale	106,467			109,259			111,973			112,511			91,926
Securities held to maturity	51,894			52,442			53,323			52,091			52,805
Other equity investments	3,706			3,756			3,760			3,733			3,706
FHLB stock	3,039			3,715			3,919			5,169			3,784
Loans held for sale	—			370			688			446			188
Loans receivable:
Loans receivable, gross	708,169			711,720			691,953			692,056			654,769
Allowance for loan losses	(8,445		)	(8,762		)	(8,614		)	(8,550		)	(8,246		)
Other, net	(448		)	(397		)	(422		)	(344		)	(327		)
Loans receivable, net	699,276			702,561			682,917			683,162			646,196
Other real estate owned, net	—			—			—			—			401
Bank owned life insurance	21,222			21,084			20,943			20,802			16,673
Other assets	14,659			14,309			15,958			15,934			15,927
Total assets	$	922,441		$	928,766		$	910,694		$	913,307		$	844,399


Noninterest-bearing deposits	$	178,572		$	172,861		$	171,609		$	177,678		$	170,566
Interest-bearing deposits	593,644			591,238			569,352			543,215			530,138
Total deposits	772,216			764,099			740,961			720,893			700,704
Other borrowings	48,760			63,760			68,760			93,760			65,200
Subordinated debentures and
subordinated notes	23,333			23,317			23,301			23,284			23,268
Other liabilities	3,760			3,925			3,564			2,859			2,810
Total liabilities	848,069			855,101			836,586			840,796			791,982
Shareholders' equity	74,372			73,665			74,108			72,511			52,417
Total liabilities and shareholders' equity	$	922,441		$	928,766		$	910,694		$	913,307		$	844,399

Gross loans to deposits	91.71		%	93.14		%	93.39		%	96.00		%	93.44		%

Equity to assets	8.06		%	7.93		%	8.14		%	7.94		%	6.21		%

Book value per share	$	8.57		$	8.51		$	8.57		$	8.39		$	8.55

Asset Quality Data:
Nonaccrual loans	$	1,136		$	1,194		$	806		$	826		$	592
Loans past due 90 days or more and
accruing	—			—			—			320			—
Total nonperforming loans	1,136			1,194			806			1,146			592
Other real estate owned	—			—			—			—			401
Total nonperforming assets	$	1,136		$	1,194		$	806		$	1,146		$	993

Nonperforming loans to total loans	0.16		%	0.17		%	0.12		%	0.17		%	0.09		%
Nonperforming assets to total assets	0.12		%	0.13		%	0.09		%	0.13		%	0.12		%
Allowance for loan losses to total gross
loans	1.19		%	1.23		%	1.24		%	1.24		%	1.26		%



Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)

	For the three months ended
	March 31,
	2018			2017
Selected Operating Data:
Interest income	$	8,539		$	7,424
Interest expense	1,716			1,244
Net interest income	6,823			6,180
Provision for loan losses	(335		)	300
Net interest income after provision for loan losses	7,158			5,880
Noninterest income:
Fees and service charges	507			535
Bank owned life insurance	138			115
Gain on calls and sales of securities	6			—
Gain on sales of mortgage loans	22			17
Miscellaneous	52			132
Total noninterest income	725			799
Noninterest expenses:
Salaries and employee benefits	3,109			2,844
Occupancy, net	442			409
Equipment	181			162
Data processing	484			469
Advertising	157			136
FDIC insurance premium	64			77
Charitable contributions	180			125
Bank-card related services	127			142
Other real estate owned, net	—			15
Miscellaneous	684			735
Total noninterest expenses	5,428			5,114
Income before income tax expense	2,455			1,565
Income tax expense	647			574
Net income	$	1,808		$	991

Weighted avg. no. of diluted common shares	8,658,506			6,124,926
Diluted earnings per common share	$	0.21		$	0.16

Return on average common equity	9.92		%	7.71		%

Return on average assets	0.80		%	0.49		%

Yield on average interest-earning assets	3.94		%	3.88		%
Cost of average interest-bearing liabilities	1.04		%	0.84		%
Net interest rate spread	2.90		%	3.04		%

Net interest margin	3.15		%	3.23		%



Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)

	For the three months ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2018			2017			2017			2017			2017
Selected Operating Data:
Interest income	$	8,539		$	8,463		$	8,400		$	7,943		$	7,424
Interest expense	1,716			1,628			1,577			1,409			1,244
Net interest income	6,823			6,835			6,823			6,534			6,180
Provision for loan losses	(335		)	75			20			260			300
Net interest and dividend income after provision for loan losses	7,158			6,760			6,803			6,274			5,880
Noninterest income:
Fees and service charges	507			533			524			519			535
Bank owned life insurance	138			141			141			129			115
Gain on calls and sales of securities	6			—			1			—			—
Gain on sales of mortgage loans	22			55			68			38			17
Gain on sales of other real estate owned	—			—			—			13			—
Miscellaneous	52			121			111			114			132
Total noninterest income	725			850			845			813			799
Noninterest expenses:
Salaries and employee benefits	3,109			2,888			2,843			2,880			2,844
Occupancy, net	442			414			414			393			409
Equipment	181			176			173			162			162
Data processing	484			442			444			456			469
Advertising	157			171			182			211			136
FDIC insurance premium	64			86			50			109			77
Charitable contributions	180			240			130			120			125
Bank-card related services	127			130			137			142			142
Other real estate owned, net	—			—			—			9			15
Miscellaneous	684			521			663			601			735
Total noninterest expenses	5,428			5,068			5,036			5,083			5,114
Income before income tax expense	2,455			2,542			2,612			2,004			1,565
Income tax expense	647			2,494			972			736			574
Net income	$	1,808		$	48		$	1,640		$	1,268		$	991


Weighted avg. no. of diluted common shares	8,658,506			8,648,191			8,643,737			8,174,484			6,124,926
Diluted earnings per common share	$	0.21		$	0.01		$	0.19		$	0.16		$	0.16

Return on average common equity	9.92		%	0.26		%	8.83		%	7.37		%	7.71		%

Return on average assets	0.80		%	0.02		%	0.71		%	0.58		%	0.49		%

Yield on average interest-earning assets	3.94		%	3.82		%	3.80		%	3.81		%	3.88		%
Cost of average interest-bearing liabilities	1.04		%	0.97		%	0.94		%	0.90		%	0.84		%
Net interest rate spread	2.90		%	2.85		%	2.86		%	2.91		%	3.04		%

Net interest margin	3.15		%	3.09		%	3.09		%	3.14		%	3.23		%



Stewardship Financial Corporation
Non-GAAP Reconciliation
(dollars in thousands, except per share amounts)
(unaudited)

		For the three months ended,
		December 31, 2017


Net income		$	48
	Impact of Tax Act	1,420
Adjusted net income		$	1,468

Weighted avg. no. of diluted common shares		8,648,191
Adjusted diluted earnings per common share		$	0.17

Adjusted return on average common equity		7.82		%

Adjusted return on average assets		0.63		%

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