Stewardship Financial (SSFN) 8-K Earnings For The First Quarter of 2017

For Immediate Release	Contact:
	Claire M. Chadwick
	EVP 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 2017

Midland Park, NJ - May 10, 2017- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced net income for the three months ended March 31, 2017 of $991,000, or $0.16 per common share. While the current year period net results were comparable to the three months ended March 31, 2016, the first quarter of 2017 reflected a provision for loan losses of $300,000 as a result of substantial loan growth compared to a recovery of $350,000 of the allowance for loan losses for the three months ended March 31, 2016.

“The current period results demonstrate the Corporation’s ability to report core earnings achieved through growing our loan portfolio, even with a related need to provide for a loan loss reserve,” stated Paul Van Ostenbridge, Stewardship Financial Corporation’s President and Chief Executive Officer.

Operating Results

Net interest income and net interest margin was $6.2 million and 3.23% for the first quarter of 2017 compared to $5.3 million and 3.11% for the comparable period a year earlier. Net interest income benefited from the recent loan growth. The three months ended March 31, 2017 included approximately $105,000 of prepayment premiums on loan payoffs compared to $27,000 for the same prior year period.

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Press Release - Midland Park NJ

Stewardship Financial Corporation continued May 10, 2017

The Corporation reported noninterest income of $799,000 for the three months ended March 31, 2017 compared to $819,000 for the equivalent prior year period. Excluding $24,000 of nonrecurring gains from securities transactions, noninterest income would have been $795,000 for the three months ended March 31, 2016, relatively comparable to the current year period.

Total noninterest expenses were $5.1 million for the three months ended March 31, 2017 compared to the $4.9 million incurred in the prior year period.“We remain committed to controlling expenses as we grow our balance sheet,” stated Van Ostenbridge.

Asset Quality

Results for the three months ended March 31, 2017 were affected by the Corporation recording a provision for loan losses of $300,000 as compared to the positive impact of a $350,000 negative provision for loan losses for the three months ended March 31, 2016. With the significant improvement in credit quality the recording of a provision for loan losses is directly linked to the robust growth in the loan portfolio.

Balance Sheet / Financial Condition

Total assets at March 31, 2017 were $844.4 million, reflecting an increase from the $795.5 million of assets at December 31, 2016. The growth in the balance sheet was the result of strong origination levels. New loan originations, partially offset by normal principal amortization and payoffs, resulted in net growth in the loan portfolio of $50.7 million. According to Van Ostenbridge, “The new loans originated represent a record level for the Corporation.”

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Press Release - Midland Park NJ

Stewardship Financial Corporation continued May 10, 2017

Total deposits were $700.7 million at March 31, 2017, reflecting net growth of $41.8 million since December 31, 2016. The Corporation continues to experience growth in both noninterest-bearing and interest-bearing deposits.

At March 31, 2017, the Corporation’s Tier 1 leverage ratio and total risk based capital ratio were 7.38% and 12.38%, 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.

The Corporation previously announced on April 17, 2017 the closing of its underwritten public offering of 2,509,090 shares of the Corporation’s common stock, which included 327,272 shares issued pursuant to the full exercise of the underwriter’s over-allotment option, at a price to the public of $8.25 per share, for aggregate gross proceeds of approximately $20.7 million. The net proceeds to the Corporation, after deducting the underwriting discount and estimated offering expenses, were approximately $18.8 million. The Corporation expects to use the net proceeds of this offering to support organic growth and other general corporate purposes.

About Stewardship Financial Corporation

Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, has 11 banking offices in Midland Park, Hawthorne, Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (2), Westwood and Wyckoff, New Jersey. Additionally, the Bank is scheduled to open its 12th branch location in Morristown, New Jersey in late spring. 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 $9.3 million.

We invite you to visit our website at www.asbnow.com for additional information.

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Press Release - Midland Park NJ

Stewardship Financial Corporation continued May 10, 2017

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)
	March 31,			December 31,			September 30,			June 30,			March 31,
	2017			2016			2016			2016			2016
Selected Financial Condition Data:
Cash and cash equivalents	$	12,793		$	11,680		$	21,025		$	13,901		$	13,319
Securities available for sale	95,632			98,583			103,546			98,533			97,637
Securities held to maturity	52,805			52,330			54,179			65,666			62,427
FHLB Stock	3,784			3,515			2,425			2,650			2,608
Loans held for sale	188			773			300			581			783
Loans receivable:
Loans receivable, gross	654,769			604,083			552,106			537,638			528,011
Allowance for loan losses	(8,246		)	(7,905		)	(8,150		)	(8,388		)	(8,540		)
Other, net	(327		)	(226		)	(110		)	(25		)	(64		)
Loans receivable, net	646,196			595,952			543,846			529,225			519,407
Other real estate owned, net	401			401			834			834			1,013
Bank owned life insurance	16,673			16,558			16,439			16,320			14,212
Other assets	15,927			15,743			15,333			14,877			15,251
Total assets	$	844,399		$	795,535		$	757,927		$	742,587		$	726,657
Noninterest-bearing deposits	$	170,566		$	169,306		$	172,072		$	160,461		$	154,201
Interest-bearing deposits	530,138			489,624			474,012			466,008			458,225
Total deposits	700,704			658,930			646,084			626,469			612,426
Other borrowings	65,200			59,200			35,000			40,000			40,000
Subordinated debentures and subordinated notes	23,268			23,252			23,235			23,219			23,203
Other liabilities	2,810			2,766			2,040			2,213			1,836
Total liabilities	791,982			744,148			706,359			691,901			677,465
Shareholders' equity	52,417			51,387			51,568			50,686			49,192
Total liabilities and shareholders' equity	$	844,399		$	795,535		$	757,927		$	742,587		$	726,657
Gross loans to deposits	93.44		%	91.68		%	85.45		%	85.82		%	86.22		%
Equity to assets	6.21		%	6.46		%	6.80		%	6.83		%	6.77		%
Book value per share	$	8.55		$	8.39		$	8.43		$	8.29		$	8.05
Asset Quality Data:
Nonaccrual loans	$	592		$	606		$	929		$	949		$	2,304
Loans past due 90 days or more and accruing	—			—			—			—			—
Total nonperforming loans	592			606			929			949			2,304
Other real estate owned	401			401			834			834			1,013
Total nonperforming assets	$	993		$	1,007		$	1,763		$	1,783		$	3,317
Nonperforming loans to total loans	0.09		%	0.10		%	0.17		%	0.18		%	0.44		%
Nonperforming assets to total assets	0.12		%	0.13		%	0.23		%	0.24		%	0.46		%
Allowance for loan losses to total gross loans	1.26		%	1.31		%	1.48		%	1.56		%	1.62		%

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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
			For the three months ended
			March 31,
			2017			2016
Selected Operating Data:
	Interest income		$	7,424		$	6,449
	Interest expense		1,244			1,173
		Net interest and dividend income	6,180			5,276
	Provision for loan losses		300			(350		)
	Net interest income
		after provision for loan losses	5,880			5,626
	Noninterest income:
		Fees and service charges	535			529
		Bank owned life insurance	115			101
		Gain on calls and sales of securities	—			24
		Gain on sales of mortgage loans	17			18
		Other	132			147
		Total noninterest income	799			819
	Noninterest expenses:
		Salaries and employee benefits	2,844			2,715
		Occupancy, net	409			398
		Equipment	162			150
		Data processing	469			472
		Advertising	136			151
		FDIC insurance premium	77			106
		Charitable contributions	125			70
		Bank-card related services	142			131
		Other real estate owned, net	15			74
		Miscellaneous	735			635
		Total noninterest expenses	5,114			4,902
Income before income tax expense			1,565			1,543
Income tax expense			574			552
Net income			$	991		$	991
Weighted avg. no. of diluted common shares			6,124,926			6,092,351
Diluted earnings per common share			$	0.16		$	0.16
Return on average common equity			7.71		%	8.21		%
Return on average assets			0.49		%	0.55		%
Yield on average interest-earning assets			3.88		%	3.79		%
Cost of average interest-bearing liabilities			0.84		%	0.90		%
Net interest rate spread			3.04		%	2.89		%
Net interest margin			3.23		%	3.11		%

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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,
			2017			2016			2016			2016			2016
Selected Operating Data:
	Interest income		$	7,424		$	7,000		$	6,657		$	6,979		$	6,449
	Interest expense		1,244			1,103			1,113			1,124			1,173
		Net interest and dividend income	6,180			5,897			5,544			5,855			5,276
	Provision for loan losses		300			(300		)	(250		)	(450		)	(350		)
	Net interest and dividend income
		after provision for loan losses	5,880			6,197			5,794			6,305			5,626
	Noninterest income:
		Fees and service charges	535			564			536			530			529
		Bank owned life insurance	115			119			120			107			101
		Gain on calls and sales of securities	—			1			6			32			24
		Gain on sales of mortgage loans	17			94			33			19			18
		Gain on sales of other real estate owned	—			30			—			6			—
		Other	132			129			128			138			147
		Total noninterest income	799			937			823			832			819
	Noninterest expenses:
		Salaries and employee benefits	2,844			2,735			2,788			2,742			2,715
		Occupancy, net	409			396			400			404			398
		Equipment	162			156			155			148			150
		Data processing	469			481			485			477			472
		Advertising	136			196			165			157			151
		FDIC insurance premium	77			21			100			90			106
		Charitable contributions	125			135			80			90			70
		Bank-card related services	142			148			150			150			131
		Other real estate owned, net	15			14			27			28			74
		Other	735			720			649			713			635
		Total noninterest expenses	5,114			5,002			4,999			4,999			4,902
Income before income tax expense			1,565			2,132			1,618			2,138			1,543
Income tax expense			574			784			583			776			552
Net income			$	991		$	1,348		$	1,035		$	1,362		$	991
Weighted avg. no. of diluted common shares			6,124,926			6,119,693			6,115,987			6,111,729			6,092,351
Diluted earnings per common share			$	0.16		$	0.22		$	0.17		$	0.22		$	0.16
Return on average common equity			7.71		%	10.40		%	8.06		%	11.05		%	8.21		%
Return on average assets			0.49		%	0.69		%	0.54		%	0.74		%	0.55		%
Yield on average interest-earning assets			3.88		%	3.77		%	3.68		%	4.02		%	3.79		%
Cost of average interest-bearing liabilities			0.84		%	0.80		%	0.83		%	0.86		%	0.90		%
Net interest rate spread			3.04		%	2.97		%	2.85		%	3.16		%	2.89		%
Net interest margin			3.23		%	3.18		%	3.07		%	3.38		%	3.11		%

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