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Section 1: 8-K (8-K)

Document


 
 
 
 
 
 
UNITED STATES 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 10, 2018
 
 
 
 
 
 
Stewardship Financial Corporation
(Exact Name of Registrant as Specified in Charter)
 
 
 
 
New Jersey
(State or other jurisdiction of
incorporation)
1-33377
(Commission File Number)
22-3351447
(I.R.S. Employer Identification No.)
 
 
 
630 Godwin Avenue
Midland Park, NJ
(Address of principal executive offices)
 
07432
(Zip Code)
 
 
 
Registrant’s telephone number, including area code: (201) 444-7100

Not Applicable
(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:
 
 
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 
 
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
 
 
Emerging growth company [ ]
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
 
 






Item 2.02. Results of Operations and Financial Condition
 
On May 10, 2018, 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, 2018.
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
 
The following exhibit is furnished pursuant to Item 2.02 and shall not be deemed to be "filed":
 
Exhibit No.  
 
Description
 
 
 
 
 
 
Press Release dated May 10, 2018





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.

 
STEWARDSHIP FINANCIAL CORPORATION
 
 
 
 
Date:  May 11, 2018
 
 
 
 
 
 
 
 
By:
 /s/ Claire M. Chadwick
 
 
Name:
Claire M. Chadwick
 
 
Title:
Executive Vice President and Chief Financial Officer
 
 
 
 
 
 





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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


393453870_sfc1a15.jpg

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.



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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.

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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,


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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.


4



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
%

5



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
%


6



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
%

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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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