Stewardship Financial (SSFN) 8-K Stewardship Financial Corporation Reports

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

Stewardship Financial Corporation Reports

Third Quarter of 2017 Earnings

Midland Park, NJ - November 7, 2017- Stewardship Financial Corporation (NASDAQ:SSFN), parent company of Atlantic Stewardship Bank, announced improved results for the current year periods. Net income for the three and nine months ended September 30, 2017 was reported at $1.6 million and $3.9 million, respectively, compared to net income of $1.0 million and $3.4 million for the three and nine months ended September 30, 2016.

Paul Van Ostenbridge, President and Chief Executive Officer of Stewardship Financial Corporation commented, “Following a successful capital raise in April 2017 and the opening of a new location in Morristown, NJ in June 2017, the Corporation is focused on growing the bank and generating solid core earnings. Increased revenue will result from a growing loan portfolio and we intend to continue to work to maintain expense levels.”

Operating Results

For the three and nine months ended September 30, 2017, the Corporation reported net interest income of $6.8 million and $19.5 million, respectively. Current net interest income levels reflect improvement over the

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Stewardship Financial Corporation continued November 7, 2017

$5.5 million and $16.7 million reported in the comparable prior year periods, with the current year increases primarily driven by growth in the loan portfolio. Average loan balances increased $146.5 million and $130.7 million for the three and nine months ended September 30, 2017 over the comparable prior year periods. The net interest margins for the current three and nine month periods were 3.09% and 3.15%, respectively, compared to 3.07% and 3.18% for the three and nine months ended September 30, 2016. The margins are generally reflective of an environment with a flattened yield curve.

With year-over-year growth in the loan portfolio, provisions for loan losses of $20,000 and $580,000 were recorded for the three and nine months ended September 30, 2017, respectively, compared to negative provisions for loan losses of $250,000 and $1.1 million for the three and nine months ended September 30, 2016, respectively. As the Corporation continues to maintain stable credit quality, the allowance for loan losses to total gross loans was 1.24% at September 30, 2017 compared to 1.31% at December 31, 2016 and 1.48% a year earlier.

For the three and nine months ended September 30, 2017, noninterest income was $845,000 and $2.5 million, respectively, compared to $823,000 and $2.5 million in the equivalent prior year periods. For the three and nine months ended September 30, 2017, noninterest income included $68,000 and $123,000 of gains on sales of mortgage loans, respectively, compared to $33,000 and $70,000 for the comparable prior year periods. For the nine months ended September 30, 2017, noninterest income included $1,000 of gains on calls and sales of securities compared to $62,000 for the comparable prior year period.

Noninterest expenses for the three and nine months ended September 30, 2017 were $5.0 million and $15.2 million, respectively, compared to $5.0 million and $14.9 million in the comparable prior year periods.“In

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Stewardship Financial Corporation continued November 7, 2017

growing our loan portfolio, we are realizing efficiencies and remain committed to managing our expenses and infrastructure, as appropriate,” stated Van Ostenbridge.

Balance Sheet / Financial Condition

Total assets of $910.7 million at September 30, 2017 reflected a $152.8 million increase, or 20%, from a year earlier. The asset growth was driven by organic loan originations which resulted in a $139.8 million increase in the gross loan portfolio over the last twelve months.

Van Ostenbridge noted, “We have demonstrated our ability to fund the increase in loans with deposit growth coupled with, to a lesser extent, borrowings." At September 30, 2017, deposits totaled $741.0 million, reflecting net growth over the past year of $94.9 million. A mix of organic growth and the retention / expansion of existing relationships has resulted in solid increases in deposits. Other borrowings were $68.8 million at September 30, 2017 compared to $35.0 million at September 30, 2016. Approximately $20 million of the growth in other borrowings can be attributed to a leverage strategy undertaken in conjunction with the capital raise in April 2017.

All regulatory capital levels at September 30, 2017 remain above the levels considered to be "well capitalized" under the applicable regulations. Tier 1 leverage ratio was 8.88% and 7.65% at September 30, 2017 and December 31, 2016, respectively. Total risk based capital ratio was 14.62% at September 30, 2017 compared to 13.10% at December 31, 2016.

The Corporation recently announced the establishment of a Small Business Administration (SBA) Department - staffed with newly hired employees with significant experience in the SBA process. Van

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Ostenbridge explained, "We view the SBA product offerings as value-added lending solutions for small businesses that do not meet traditional lending requirements."

About Stewardship Financial Corporation

Stewardship Financial Corporation’s subsidiary, the Atlantic Stewardship Bank, is a full-service community bank serving both individuals and businesses. ASB is known for tithing, or sharing, 10% of its taxable income with nonprofit, educational, charitable and/or evangelical religious organizations. To date, ASB’s total tithing donations total over $ 9.3 million. ASB maintains 12 banking locations in NJ including; Hawthorne, Midland Park, Montville, Morristown, North Haledon, Pequannock, Ridgewood, Waldwick, Westwood, Wyckoff and two offices in Wayne. ASB invites you to visit their website at www.asbnow.com for additional information and to learn more.

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)
	September 30,			June 30,			March 31,			December 31,			September 30,
	2017			2017			2017			2016			2016
Selected Financial Condition Data:
Cash and cash equivalents	$	17,213		$	19,459		$	12,793		$	11,680		$	21,025
Securities available for sale	115,733			116,244			95,632			98,583			103,546
Securities held to maturity	53,323			52,091			52,805			52,330			54,179
FHLB stock	3,919			5,169			3,784			3,515			2,425
Loans held for sale	688			446			188			773			300
Loans receivable:
Loans receivable, gross	691,953			692,056			654,769			604,083			552,106
Allowance for loan losses	(8,614		)	(8,550		)	(8,246		)	(7,905		)	(8,150		)
Other, net	(422		)	(344		)	(327		)	(226		)	(110		)
Loans receivable, net	682,917			683,162			646,196			595,952			543,846
Other real estate owned, net	—			—			401			401			834
Bank owned life insurance	20,943			20,802			16,673			16,558			16,439
Other assets	15,958			15,934			15,927			15,743			15,333
Total assets	$	910,694		$	913,307		$	844,399		$	795,535		$	757,927
Noninterest-bearing deposits	$	171,609		$	177,678		$	170,566		$	169,306		$	172,072
Interest-bearing deposits	569,352			543,215			530,138			489,624			474,012
Total deposits	740,961			720,893			700,704			658,930			646,084
Other borrowings	68,760			93,760			65,200			59,200			35,000
Subordinated debentures and subordinated notes	23,301			23,284			23,268			23,252			23,235
Other liabilities	3,564			2,859			2,810			2,766			2,040
Total liabilities	836,586			840,796			791,982			744,148			706,359
Shareholders' equity	74,108			72,511			52,417			51,387			51,568
Total liabilities and shareholders' equity	$	910,694		$	913,307		$	844,399		$	795,535		$	757,927
Gross loans to deposits	93.39		%	96.00		%	93.44		%	91.68		%	85.45		%
Equity to assets	8.14		%	7.94		%	6.21		%	6.46		%	6.80		%
Book value per share	$	8.57		$	8.39		$	8.55		$	8.39		$	8.43
Asset Quality Data:
Nonaccrual loans	$	806		$	826		$	592		$	606		$	929
Loans past due 90 days or more and accruing	—			320			—			—			—
Total nonperforming loans	806			1,146			592			606			929
Other real estate owned	—			—			401			401			834
Total nonperforming assets	$	806		$	1,146		$	993		$	1,007		$	1,763
Nonperforming loans to total loans	0.12		%	0.17		%	0.09		%	0.10		%	0.17		%
Nonperforming assets to total assets	0.09		%	0.13		%	0.12		%	0.13		%	0.23		%
Allowance for loan losses to total gross loans	1.24		%	1.24		%	1.26		%	1.31		%	1.48		%

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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
			For the three months ended						For the nine months ended
			September 30,						September 30,
			2017			2016			2017			2016
Selected Operating Data:
	Interest income		$	8,400		$	6,657		$	23,767		$	20,085
	Interest expense		1,577			1,113			4,230			3,410
		Net interest income	6,823			5,544			19,537			16,675
	Provision for loan losses		20			(250		)	580			(1,050		)
	Net interest income
		after provision for loan losses	6,803			5,794			18,957			17,725
	Noninterest income:
		Fees and service charges	524			536			1,578			1,595
		Bank owned life insurance	141			120			385			328
		Gain on calls and sales of securities	1			6			1			62
		Gain on sales of mortgage loans	68			33			123			70
		Gain on sales of other real estate owned	—			—			13			6
		Miscellaneous	111			128			357			413
		Total noninterest income	845			823			2,457			2,474
	Noninterest expenses:
		Salaries and employee benefits	2,843			2,788			8,567			8,245
		Occupancy, net	414			400			1,216			1,202
		Equipment	173			155			497			453
		Data processing	444			485			1,369			1,434
		Advertising	182			165			529			473
		FDIC insurance premium	50			100			236			296
		Charitable contributions	130			80			375			240
		Bank-card related services	137			150			421			431
		Other real estate owned, net	—			27			24			129
		Miscellaneous	663			649			1,999			1,997
		Total noninterest expenses	5,036			4,999			15,233			14,900
Income before income tax expense			2,612			1,618			6,181			5,299
Income tax expense			972			583			2,282			1,911
Net income			$	1,640		$	1,035		$	3,899		$	3,388
Weighted avg. no. of diluted common shares			8,643,737			6,115,987			7,656,942			6,106,723
Diluted earnings per common share			$	0.19		$	0.17		$	0.51		$	0.55
Return on average common equity			8.83		%	8.06		%	8.02		%	9.09		%
Return on average assets			0.71		%	0.54		%	0.60		%	0.61		%
Yield on average interest-earning assets			3.80		%	3.68		%	3.83		%	3.83		%
Cost of average interest-bearing liabilities			0.94		%	0.83		%	0.89		%	0.86		%
Net interest rate spread			2.86		%	2.85		%	2.94		%	2.97		%
Net interest margin			3.09		%	3.07		%	3.15		%	3.18		%

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Stewardship Financial Corporation
Selected Consolidated Financial Information
(dollars in thousands, except per share amounts)
(unaudited)
			For the three months ended
			September 30,			June 30,			March 31,			December 31,			September 30,
			2017			2017			2017			2016			2016
Selected Operating Data:
	Interest income		$	8,400		$	7,943		$	7,424		$	7,000		$	6,657
	Interest expense		1,577			1,409			1,244			1,103			1,113
		Net interest income	6,823			6,534			6,180			5,897			5,544
	Provision for loan losses		20			260			300			(300		)	(250		)
	Net interest and dividend income
		after provision for loan losses	6,803			6,274			5,880			6,197			5,794
	Noninterest income:
		Fees and service charges	524			519			535			564			536
		Bank owned life insurance	141			129			115			119			120
		Gain on calls and sales of securities	1			—			—			1			6
		Gain on sales of mortgage loans	68			38			17			94			33
		Gain on sales of other real estate owned	—			13			—			30			—
		Miscellaneous	111			114			132			129			128
		Total noninterest income	845			813			799			937			823
	Noninterest expenses:
		Salaries and employee benefits	2,843			2,880			2,844			2,735			2,788
		Occupancy, net	414			393			409			396			400
		Equipment	173			162			162			156			155
		Data processing	444			456			469			481			485
		Advertising	182			211			136			196			165
		FDIC insurance premium	50			109			77			21			100
		Charitable contributions	130			120			125			135			80
		Bank-card related services	137			142			142			148			150
		Other real estate owned, net	—			9			15			14			27
		Miscellaneous	663			601			735			720			649
		Total noninterest expenses	5,036			5,083			5,114			5,002			4,999
Income before income tax expense			2,612			2,004			1,565			2,132			1,618
Income tax expense			972			736			574			784			583
Net income			$	1,640		$	1,268		$	991		$	1,348		$	1,035
Weighted avg. no. of diluted common shares			8,643,737			8,174,484			6,124,926			6,119,693			6,115,987
Diluted earnings per common share			$	0.19		$	0.16		$	0.16		$	0.22		$	0.17
Return on average common equity			8.83		%	7.37		%	7.71		%	10.40		%	8.06		%
Return on average assets			0.71		%	0.58		%	0.49		%	0.69		%	0.54		%
Yield on average interest-earning assets			3.80		%	3.81		%	3.88		%	3.77		%	3.68		%
Cost of average interest-bearing liabilities			0.94		%	0.90		%	0.84		%	0.80		%	0.83		%
Net interest rate spread			2.86		%	2.91		%	3.04		%	2.97		%	2.85		%
Net interest margin			3.09		%	3.14		%	3.23		%	3.18		%	3.07		%

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