8-9-13 4:01 PM EDT | Email Article
http://at.marketwire.com/accesstracking/AccessTrackingLogServlet?PrId=1041598&ProfileId=051205&sourceType=1

MIDLAND PARK, NJ -- (Marketwired) -- 08/09/13 -- Stewardship Financial Corporation (NASDAQ: SSFN), parent of Atlantic Stewardship Bank, announced net income for the three months ended June 30, 2013 of $461,000 as contrasted to a net loss of $324,000 for the three months ended June 30, 2012. For the six months ended June 30, 2013, the Corporation reported net income of $1.3 million compared to net income of $452,000 for the corresponding six month period in 2012. After dividends on preferred stock, the net income available to the common shareholders was $990,000, or $0.17 per diluted common share, for the first six months of 2013 compared to $339,000, or $0.06 per diluted common share, for the comparable period of 2012.

The Corporation reported net interest income of $5.7 million and $11.5 million for the three and six months ended June 30, 2013, compared to $6.0 million and $12.0 million for the equivalent prior year periods. The net interest margin for the current three and six months ended June 30, 2013 of 3.55% and 3.66%, respectively, compared to 3.69% and 3.70% for the three and six months ended June 30, 2012, respectively. The compression in margins continues to be primarily attributable to reduced asset yields resulting from the prolonged, low interest rate environment.

For the three and six months ended June 30, 2013, the Corporation recorded provisions for loan losses of $850,000 and $2.5 million, respectively, compared to $2.9 million and $4.7 million for the three and six months ended June 30, 2012, respectively. Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer commented, "The 2013 provision for loan losses is partially reflective of the reduction in nonperforming loans. While the economic environment remains challenging for our borrowers, the Corporation has seen stabilization and declines in problem loans over the past twelve months."

Nonperforming loans decreased to $14.7 million, or 3.33% of total loans at June 30, 2013, compared to $18.2 million, or 4.14% at December 31, 2012. At June 30, 2013, nonperforming loans are approximately one-half of the $29.7 million, or 6.68%, reported a year earlier. The ratio of allowance for loan losses to nonperforming loans increased to 73.30% at June 30, 2013, providing additional allowance coverage as compared to 58.31% at December 31, 2012 and 40.13% at June 30, 2012.

With respect to the Corporation's level of non-performing loans, Van Ostenbridge stated, "We continue to be encouraged by our progress over the past year. As problem loans continue to migrate through the lengthy workout phase, often concluding with foreclosure, we believe additional declines in nonperforming loans would occur."

For the three and six months ended June 30, 2013, noninterest income was $1.0 million and $2.5 million, respectively, compared to $1.3 million and $2.9 million for the corresponding prior year periods. While the six month period for 2013 included $537,000 as a result of a death benefit insurance payment received, the 2012 periods include increased gains realized from the sale of securities and other real estate owned.

Total noninterest expenses were $5.1 million and $10.1 million for the three and six months ended June 30, 2013. For the three and six months ended June 30, 2012, noninterest expenses were $4.8 million and $9.7 million, respectively. The increase in noninterest expenses reflects higher salary and employee benefits expense, reflective of increasing regulatory compliance and the attendant staffing necessary to oversee all compliance-related issues. In addition, the increase in salary and employee benefits expense is the result of an increased focus on commercial lending opportunities as well as costs associated with an enhanced credit review function.

Total assets at June 30, 2013 were $688.8 million -- relatively comparable to assets of $688.4 million at December 31, 2012. Gross loans receivable increased $1.6 million from December 30, 2012, reflective of new loans recorded partially offset by payoffs and normal principal amortization.

Total deposits of $592.7 million at June 30, 2013 show $2.4 million of deposit growth when compared to deposits of $590.3 million at December 31, 2012. The composition of deposits continues to reflect a shift from interest-bearing to noninterest-bearing. From December 31, 2012 to June 30, 2013 the Corporation's noninterest-bearing deposit balances increased $21.1 million, or 24.5% of total deposits, up from 21.1% at December 31, 2012.

In concluding his remarks, Van Ostenbridge noted, "We are now seeing slow and steady progress in reducing our problem loans indicating that the resources we have devoted are providing the appropriate results. More improvement is needed and we are fully committed to this goal."

Stewardship Financial Corporation's subsidiary, 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 tithing 10% of its pre-tax profits to Christian and local charities.

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, which forward looking statements 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)

                                June 30,  March 31,  December 31,  June 30,
                                  2013       2013        2012        2012
                               ---------  ---------  -----------  ---------

Selected Financial Condition
 Data:
  Cash and cash equivalents    $  14,322  $  26,144  $    21,016  $  25,340
  Securities available for
   sale                          181,676    175,493      174,700    172,712
  Securities held to maturity     28,119     28,548       29,718     32,993
  FHLB Stock                       2,133      2,213        2,213      2,213
  Loans receivable:
    Loans receivable, gross      442,006    441,533      440,423    445,267
    Allowance for loan losses    (10,787)   (11,512)     (10,641)   (11,934)
    Other, net                       134         62           50         45
                               ---------  ---------  -----------  ---------
  Loans receivable, net          431,353    430,083      429,832    433,378

  Loans held for sale              2,054      2,101          784      3,334
  Other assets                    29,175     29,344       30,125     30,158
                               ---------  ---------  -----------  ---------
  Total assets                 $ 688,832  $ 693,926  $   688,388  $ 700,128
                               =========  =========  ===========  =========


  Noninterest-bearing deposits $ 145,388  $ 132,960  $   124,286  $ 124,017
  Interest-bearing deposits      447,311    462,578      465,968    469,478
                               ---------  ---------  -----------  ---------
  Total deposits                 592,699    595,538      590,254    593,495
  Other borrowings                25,000     25,000       25,000     25,000
  Securities sold under
   agreements to repurchase        7,344      7,344        7,343     14,342
  Subordinated debentures          7,217      7,217        7,217      7,217
  Other liabilities                2,280      2,152        2,228      2,183
  Shareholders' equity            54,292     56,675       56,346     57,891
                               ---------  ---------  -----------  ---------
  Total liabilities and
   shareholders' equity        $ 688,832  $ 693,926  $   688,388  $ 700,128
                               =========  =========  ===========  =========

  Equity to assets                  7.88%      8.17%        8.19%      8.27%

Asset Quality Data:
  Nonaccrual loans             $  14,716  $  17,479  $    18,011  $  29,541
  Loans past due 90 days or
   more and accruing                   -         50          237        200
                               ---------  ---------  -----------  ---------
  Total nonperforming loans       14,716     17,529       18,248     29,741
  Other real estate owned          1,072        876        1,058      1,991
                               ---------  ---------  -----------  ---------
  Total nonperforming assets   $  15,788  $  18,405  $    19,306  $  31,732
                               =========  =========  ===========  =========


  Nonperforming loans to total
   loans                            3.33%      3.97%        4.14%      6.68%
  Nonperforming assets to
   total assets                     2.29%      2.65%        2.80%      4.53%
  Allowance for loan losses to
   nonperforming loans             73.30%     65.67%       58.31%     40.13%
  Allowance for loan losses to
   total gross loans                2.44%      2.61%        2.42%      2.68%



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

                              For the three months     For the six months
                                      ended                   ended
                                    June 30,                June 30,
                             ----------------------  ----------------------
                                2013        2012        2013        2012
                             ----------  ----------  ----------  ----------
Selected Operating Data:
  Interest income            $    6,636  $    7,317  $   13,506  $   14,833
  Interest expense                  958       1,357       1,962       2,822
                             ----------  ----------  ----------  ----------
    Net interest and
     dividend income              5,678       5,960      11,544      12,011
  Provision for loan losses         850       2,900       2,450       4,665
                             ----------  ----------  ----------  ----------
  Net interest and dividend
   income after provision
   for loan losses                4,828       3,060       9,094       7,346
  Noninterest income:
    Fees and service charges        492         531         948       1,046
    Bank owned life
     insurance                       77          81         153         161
    Gain on calls and sales
     of securities                    -          12           2         445
    Gain on sales of
     mortgage loans                 298         154         460         565
    Gain on sales of other
     real estate owned                -         370         126         469
    Gain on life insurance
     proceeds                         -           -         537           -
    Other                           128         133         243         244
                             ----------  ----------  ----------  ----------
    Total noninterest income        995       1,281       2,469       2,930
  Noninterest expenses:
    Salaries and employee
     benefits                     2,711       2,257       5,407       4,643
    Occupancy, net                  503         471       1,020         958
    Equipment                       199         243         383         491
    Data processing                 332         316         660         650
    FDIC insurance premium          276         155         426         303
    Other                         1,110       1,382       2,167       2,632
                             ----------  ----------  ----------  ----------
    Total noninterest
     expenses                     5,131       4,824      10,063       9,677
                             ----------  ----------  ----------  ----------
Income (loss) before income
 tax expense (benefit)              692        (483)      1,500         599
Income tax expense (benefit)        231        (159)        217         147
                             ----------  ----------  ----------  ----------
Net income (loss)                   461        (324)      1,283         452
Dividends on preferred stock        127          38         293         113
                             ----------  ----------  ----------  ----------
Net income (loss) available
 to common shareholders      $      334  $     (362) $      990  $      339
                             ==========  ==========  ==========  ==========

Weighted avg. no. of diluted
 common shares                5,934,549   5,902,167   5,932,774   5,897,266
Diluted earnings (loss) per
 common share                $     0.06  $    (0.06) $     0.17  $     0.06

Return on average common
 equity                            3.21%      -3.31%       4.79%       1.56%

Return on average assets           0.27%      -0.18%       0.38%       0.13%

Yield on average interest-
 earning assets                    4.14%       4.51%       4.26%       4.55%
Cost of average interest-
 bearing liabilities               0.78%       1.04%       0.80%       1.08%
                             ----------  ----------  ----------  ----------
Net interest rate spread           3.36%       3.47%       3.46%       3.47%
                             ==========  ==========  ==========  ==========

Net interest margin                3.55%       3.69%       3.66%       3.70%

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

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Morningstar - 2013/8/9 - Stewardship Financial Corporation Announces Earnings for Second Quarter of 2013
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