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ý
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
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o
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TRANSITION
REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Stewardship
Financial Corporation
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(Exact
name of registrant as specified in its charter)
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New
Jersey
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22-3351447
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(State
or other jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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630
Godwin Avenue, Midland Park, NJ
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07432
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(Address
of principal executive offices)
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(Zip
Code)
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(201) 444-7100
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(Registrant’s
telephone number, including area code)
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(Former
name, former address and former fiscal year, if changed since last
report)
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o (Do
not check if a smaller reporting company)
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Smaller
reporting company ý
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PAGE
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NUMBER
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1
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2
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3 -
4
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5
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6 -
12
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13
- 20
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21
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21
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22
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22
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23
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24
-27
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Stewardship
Financial Corporation and Subsidiary
|
||||||||
Consolidated
Statements of Financial Condition
|
||||||||
(Unaudited)
|
||||||||
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Assets
|
||||||||
Cash
and due from banks
|
$ | 13,365,000 | $ | 11,789,000 | ||||
Other
interest-earning assets
|
124,000 | 143,000 | ||||||
Cash
and cash equivalents
|
13,489,000 | 11,932,000 | ||||||
Securities
available for sale
|
96,547,000 | 76,957,000 | ||||||
Securities
held to maturity; estimated fair value of $35,029,000 (2008)
and
|
||||||||
$41,508,000 (2007)
|
35,646,000 | 41,189,000 | ||||||
FHLB-NY
stock, at cost
|
2,856,000 | 1,983,000 | ||||||
Loans,
net of allowance for loan losses of $5,930,000 (2008) and $4,457,000
(2007)
|
436,963,000 | 415,690,000 | ||||||
Mortgage
loans held for sale
|
895,000 | 1,284,000 | ||||||
Premises
and equipment, net
|
7,520,000 | 7,950,000 | ||||||
Accrued
interest receivable
|
3,241,000 | 3,112,000 | ||||||
Intangible
assets
|
46,000 | 70,000 | ||||||
Bank
owned life insurance
|
8,517,000 | 8,273,000 | ||||||
Other
assets
|
4,417,000 | 3,465,000 | ||||||
Total
assets
|
$ | 610,137,000 | $ | 571,905,000 | ||||
Liabilities
and stockholders' equity
|
||||||||
Liabilities
|
||||||||
Deposits:
|
||||||||
Noninterest-bearing
|
$ | 96,804,000 | $ | 101,993,000 | ||||
Interest-bearing
|
395,306,000 | 370,306,000 | ||||||
Total
deposits
|
492,110,000 | 472,299,000 | ||||||
Other
borrowings
|
46,575,000 | 28,645,000 | ||||||
Subordinated
debentures
|
7,217,000 | 7,217,000 | ||||||
Securities
sold under agreements to repurchase
|
16,297,000 | 17,283,000 | ||||||
Accrued
interest payable
|
1,465,000 | 2,080,000 | ||||||
Accrued
expenses and other liabilities
|
4,714,000 | 3,291,000 | ||||||
Total
liabilities
|
568,378,000 | 530,815,000 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Stockholders'
equity
|
||||||||
Common
stock, no par value; 10,000,000 shares authorized;
|
||||||||
5,585,659
and 5,306,828 shares issued: 5,575,268 and 5,306,828
shares
|
||||||||
outstanding
at September 30, 2008 and December 31, 2007, respectively
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38,285,000 | 34,871,000 | ||||||
Treasury
stock, 10,391 shares outstanding at September 30, 2008
|
(138,000 | ) | - | |||||
Retained
earnings
|
4,248,000 | 5,943,000 | ||||||
Accumulated
other comprehensive income (loss)
|
(636,000 | ) | 276,000 | |||||
Total
stockholders' equity
|
41,759,000 | 41,090,000 | ||||||
Total
liabilities and stockholders' equity
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$ | 610,137,000 | $ | 571,905,000 | ||||
See
notes to unaudited consolidated financial statements.
|
Stewardship
Financial Corporation and Subsidiary
|
|||||||||||
Consolidated
Statements of Income
|
|||||||||||
(Unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Interest
income:
|
||||||||||||||||
Loans
|
$ | 7,217,000 | $ | 7,004,000 | $ | 21,478,000 | $ | 20,289,000 | ||||||||
Securities
held to maturity
|
||||||||||||||||
Taxable
|
170,000 | 227,000 | 560,000 | 691,000 | ||||||||||||
Non-taxable
|
210,000 | 195,000 | 627,000 | 551,000 | ||||||||||||
Securities
available for sale
|
||||||||||||||||
Taxable
|
1,194,000 | 1,031,000 | 3,301,000 | 2,868,000 | ||||||||||||
Non-taxable
|
53,000 | 20,000 | 121,000 | 50,000 | ||||||||||||
FHLB
dividends
|
46,000 | 29,000 | 128,000 | 87,000 | ||||||||||||
Other
interest-earning assets
|
20,000 | 20,000 | 62,000 | 39,000 | ||||||||||||
Total
interest income
|
8,910,000 | 8,526,000 | 26,277,000 | 24,575,000 | ||||||||||||
Interest
expense:
|
||||||||||||||||
Deposits
|
2,533,000 | 3,189,000 | 8,055,000 | 8,810,000 | ||||||||||||
Borrowed
money
|
567,000 | 425,000 | 1,694,000 | 1,378,000 | ||||||||||||
Total
interest expense
|
3,100,000 | 3,614,000 | 9,749,000 | 10,188,000 | ||||||||||||
Net
interest income before provision for loan losses
|
5,810,000 | 4,912,000 | 16,528,000 | 14,387,000 | ||||||||||||
Provision
for loan losses
|
1,175,000 | 90,000 | 1,535,000 | 280,000 | ||||||||||||
Net
interest income after provision for loan losses
|
4,635,000 | 4,822,000 | 14,993,000 | 14,107,000 | ||||||||||||
Noninterest
income:
|
||||||||||||||||
Fees
and service charges
|
370,000 | 375,000 | 1,067,000 | 1,160,000 | ||||||||||||
Bank
owned life insurance
|
85,000 | 80,000 | 244,000 | 240,000 | ||||||||||||
Gain
on sales of mortgage loans
|
47,000 | 73,000 | 156,000 | 259,000 | ||||||||||||
Gain
on calls of securities
|
4,000 | - | 61,000 | - | ||||||||||||
Merchant
processing
|
340,000 | 353,000 | 1,070,000 | 1,070,000 | ||||||||||||
Life
insurance proceeds
|
- | - | - | 459,000 | ||||||||||||
Miscellaneous
|
48,000 | 34,000 | 289,000 | 229,000 | ||||||||||||
Total
noninterest income
|
894,000 | 915,000 | 2,887,000 | 3,417,000 | ||||||||||||
Noninterest
expenses:
|
||||||||||||||||
Salaries
and employee benefits
|
1,968,000 | 1,781,000 | 6,078,000 | 5,425,000 | ||||||||||||
Occupancy,
net
|
477,000 | 406,000 | 1,354,000 | 1,122,000 | ||||||||||||
Equipment
|
276,000 | 239,000 | 842,000 | 696,000 | ||||||||||||
Data
processing
|
300,000 | 240,000 | 897,000 | 869,000 | ||||||||||||
Advertising
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106,000 | 111,000 | 342,000 | 311,000 | ||||||||||||
FDIC
insurance premium
|
77,000 | 24,000 | 223,000 | 50,000 | ||||||||||||
Amortization
of intangible assets
|
8,000 | 8,000 | 24,000 | 24,000 | ||||||||||||
Charitable
contributions
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126,000 | 178,000 | 474,000 | 546,000 | ||||||||||||
Stationery
and supplies
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87,000 | 63,000 | 316,000 | 256,000 | ||||||||||||
Merchant
processing
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299,000 | 315,000 | 944,000 | 965,000 | ||||||||||||
Bank-card
related services
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84,000 | 71,000 | 238,000 | 240,000 | ||||||||||||
Miscellaneous
|
554,000 | 437,000 | 1,671,000 | 1,546,000 | ||||||||||||
Total
noninterest expenses
|
4,362,000 | 3,873,000 | 13,403,000 | 12,050,000 | ||||||||||||
Income
before income tax expense
|
1,167,000 | 1,864,000 | 4,477,000 | 5,474,000 | ||||||||||||
Income
tax expense
|
329,000 | 635,000 | 1,399,000 | 1,705,000 | ||||||||||||
Net
income
|
838,000 | 1,229,000 | 3,078,000 | 3,769,000 | ||||||||||||
Basic
earnings per share
|
$ | 0.15 | $ | 0.22 | $ | 0.55 | $ | 0.68 | ||||||||
Diluted
earnings per share
|
$ | 0.15 | $ | 0.22 | $ | 0.55 | $ | 0.68 | ||||||||
Weighted
average number of common shares outstanding
|
5,573,982 | 5,569,912 | 5,576,987 | 5,553,499 | ||||||||||||
Weighted
average number of diluted common
|
||||||||||||||||
shares
outstanding
|
5,583,909 | 5,587,857 | 5,589,608 | 5,583,632 |
Share
data has been restated to reflect a 5% stock dividend declared on
September 18, 2007 and paid November 15, 2007, and a 5% stock
dividend declared on September 16, 2008 and payable November 17,
2008.
|
|||||||||||
See
notes to unaudited consolidated financial statements.
|
Stewardship
Financial Corporation and Subsidiary
|
||||||||
Consolidated
Statements of Cash Flows
|
||||||||
(Unaudited)
|
||||||||
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 3,078,000 | $ | 3,769,000 | ||||
Adjustments
to reconcile net income to
|
||||||||
net
cash provided by operating activities:
|
||||||||
Depreciation
and amortization of premises and equipment
|
696,000 | 569,000 | ||||||
Amortization
of premiums and accretion of discounts, net
|
89,000 | 102,000 | ||||||
Accretion
of deferred loan fees
|
(216,000 | ) | (71,000 | ) | ||||
Provision
for loan losses
|
1,535,000 | 280,000 | ||||||
Valuation
reserve on other real estate
|
- | 32,000 | ||||||
Originations
of mortgage loans held for sale
|
(15,869,000 | ) | (24,308,000 | ) | ||||
Proceeds
from sale of mortgage loans
|
16,414,000 | 25,335,000 | ||||||
Gain
on sale of loans
|
(156,000 | ) | (259,000 | ) | ||||
Gain
on calls of securities
|
(61,000 | ) | - | |||||
Loss
on sale of equipment
|
12,000 | - | ||||||
Deferred
income tax benefit
|
(639,000 | ) | (32,000 | ) | ||||
Amortization
of intangible assets
|
24,000 | 24,000 | ||||||
Nonqualified
stock option expense
|
36,000 | 38,000 | ||||||
Increase
in bank owned life insurance
|
(244,000 | ) | (240,000 | ) | ||||
Gain
from bank owned life insurance proceeds
|
- | (459,000 | ) | |||||
Increase
in accrued interest receivable
|
(129,000 | ) | (281,000 | ) | ||||
Decrease
in other assets
|
259,000 | 120,000 | ||||||
(Decrease)
increase in accrued interest payable
|
(615,000 | ) | 207,000 | |||||
Decrease
in other liabilities
|
(465,000 | ) | (37,000 | ) | ||||
Net
cash provided by operating activities
|
3,749,000 | 4,789,000 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchase
of securities available for sale
|
(41,754,000 | ) | (15,628,000 | ) | ||||
Proceeds
from maturities and principal repayments on securities available for
sale
|
5,973,000 | 8,815,000 | ||||||
Proceeds
from calls on securities available for sale
|
16,197,000 | 300,000 | ||||||
Purchase
of securities held to maturity
|
(1,798,000 | ) | (7,450,000 | ) | ||||
Proceeds
from maturities and principal repayments on securities held to
maturity
|
3,191,000 | 6,471,000 | ||||||
Proceeds
from calls on securities held to maturity
|
4,520,000 | 152,000 | ||||||
(Purchase)
redemption of FHLB-NY stock
|
(873,000 | ) | 294,000 | |||||
Net
increase in loans
|
(22,592,000 | ) | (26,171,000 | ) | ||||
Additional
investment in other real estate owned
|
- | (324,000 | ) | |||||
Proceeds
from life insurance payout
|
- | 1,030,000 | ||||||
Additions
to premises and equipment
|
(282,000 | ) | (1,138,000 | ) | ||||
Sale
of equipment
|
4,000 | - | ||||||
Net
cash used in investing activities
|
(37,414,000 | ) | (33,649,000 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Net
(decrease) increase in noninterest-bearing deposits
|
(5,189,000 | ) | 4,292,000 | |||||
Net
increase in interest-bearing deposits
|
25,000,000 | 20,056,000 | ||||||
Net
(decrease) increase in securities sold under agreements to
repurchase
|
(986,000 | ) | 7,781,000 | |||||
Proceeds
from term borrowings
|
65,000,000 | - | ||||||
Net
decrease in short term borrowings
|
(10,800,000 | ) | (6,400,000 | ) | ||||
Payments
on long term borrowings
|
(36,270,000 | ) | (1,230,000 | ) | ||||
Cash
dividends paid on common stock
|
(1,460,000 | ) | (1,358,000 | ) | ||||
Payment
of discount on dividend reinvestment plan
|
(34,000 | ) | (33,000 | ) | ||||
Purchase
of treasury stock
|
(131,000 | ) | - | |||||
Options
exercised
|
49,000 | 59,000 | ||||||
Tax
benefit of stock options
|
2,000 | 2,000 | ||||||
Issuance
of common stock
|
41,000 | 42,000 | ||||||
Net
cash provided by financing activities
|
35,222,000 | 23,211,000 | ||||||
Net
increase (decrease) in cash and cash equivalents
|
1,557,000 | (5,649,000 | ) | |||||
Cash
and cash equivalents - beginning
|
11,932,000 | 15,697,000 | ||||||
Cash
and cash equivalents - ending
|
$ | 13,489,000 | $ | 10,048,000 |
Stewardship
Financial Corporation and Subsidiary
|
|||||||
Consolidated
Statements of Cash Flows (continued)
|
|||||||
(Unaudited)
|
|||||||
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Supplemental
disclosures of cash flow information:
|
||||||||
Cash
paid during the period for interest
|
$ | 10,364,000 | $ | 9,980,000 | ||||
Cash
paid during the period for income taxes
|
$ | 1,814,000 | $ | 1,699,000 | ||||
Noncash
investing activities - security purchases due brokers
|
$ | 1,890,000 | $ | - | ||||
-
transfer of loan to ORE
|
$ | - | $ | 61,000 | ||||
See
notes to unaudited consolidated financial statements.
|
Stewardship
Financial Corporation and Subsidiary
|
||||||||||||||||||||||||||||
Consolidated
Statement of Changes in Stockholders'
Equity
|
||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||
For
the Period Ended September 30, 2008
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Comprehensive
|
||||||||||||||||||||||||||||
Common
Stock
|
Treasury
Stock
|
Retained
|
Gain
(Loss),
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Earnings
|
Net
|
Total
|
||||||||||||||||||||||
Balance
-- December 31, 2007
|
5,306,828 | $ | 34,871,000 | - | $ | - | $ | 5,943,000 | $ | 276,000 | $ | 41,090,000 | ||||||||||||||||
Dividends
Paid
|
- | - | - | - | (1,460,000 | ) | - | (1,460,000 | ) | |||||||||||||||||||
5%
stock dividend (declared on September 16, 2008
|
||||||||||||||||||||||||||||
and
payable November 17, 2008)
|
265,984 | 3,319,000 | (495 | ) | (6,000 | ) | (3,313,000 | ) | - | - | ||||||||||||||||||
Payment
of discount on dividend
|
||||||||||||||||||||||||||||
reinvestment
plan
|
- | (34,000 | ) | - | - | - | - | (34,000 | ) | |||||||||||||||||||
Common
stock issued under stock plans
|
1,667 | 21,000 | 1,603 | 20,000 | - | - | 41,000 | |||||||||||||||||||||
Stock
option compensation expense
|
- | 36,000 | - | - | - | - | 36,000 | |||||||||||||||||||||
Stock
options exercised
|
11,180 | 70,000 | (1,499 | ) | (21,000 | ) | - | - | 49,000 | |||||||||||||||||||
Tax
benefit on stock options exercised
|
- | 2,000 | - | - | - | - | 2,000 | |||||||||||||||||||||
Repurchase
common stock
|
- | - | (10,000 | ) | (131,000 | ) | - | - | (131,000 | ) | ||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | 3,078,000 | - | 3,078,000 | |||||||||||||||||||||
Unrealized
holding losses on securities
|
||||||||||||||||||||||||||||
available
for sale arising during the
|
||||||||||||||||||||||||||||
period
(net tax benefit of $597,000)
|
- | - | - | - | - | (949,000 | ) | (949,000 | ) | |||||||||||||||||||
Reclassification
adjustment for gains in
|
||||||||||||||||||||||||||||
net
income (net of taxes of $24,000)
|
- | - | - | - | - | 37,000 | 37,000 | |||||||||||||||||||||
Total
comprehensive income, net of tax
|
2,166,000 | |||||||||||||||||||||||||||
Balance
-- September 30, 2008
|
5,585,659 | $ | 38,285,000 | (10,391 | ) | $ | (138,000 | ) | $ | 4,248,000 | $ | (636,000 | ) | $ | 41,759,000 | |||||||||||||
For
the Period Ended September 30, 2007
|
||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||
Other
|
||||||||||||||||||||||||||||
Comprehensive
|
||||||||||||||||||||||||||||
Common
Stock
|
Treasury
Stock
|
Retained
|
Loss,
|
|||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Earnings
|
Net
|
Total
|
||||||||||||||||||||||
Balance
-- December 31, 2006
|
5,017,919 | $ | 31,148,000 | - | $ | - | $ | 6,750,000 | $ | (592,000 | ) | $ | 37,306,000 | |||||||||||||||
Dividends
Paid
|
- | - | - | - | (1,358,000 | ) | - | (1,358,000 | ) | |||||||||||||||||||
5%
stock dividend (declared on September 18, 2008
|
||||||||||||||||||||||||||||
and
payable November 15, 2007)
|
253,054 | 3,631,000 | (392 | ) | (5,000 | ) | (3,626,000 | ) | - | - | ||||||||||||||||||
Payment
of discount on dividend
|
||||||||||||||||||||||||||||
reinvestment
plan
|
- | (33,000 | ) | - | - | - | - | (33,000 | ) | |||||||||||||||||||
Common
stock issued under stock plans
|
1,810 | 22,000 | 1,462 | 20,000 | - | - | 42,000 | |||||||||||||||||||||
Stock
option compensation expense
|
- | 38,000 | - | - | - | - | 38,000 | |||||||||||||||||||||
Stock
options exercised
|
41,359 | 186,000 | (9,302 | ) | (127,000 | ) | - | - | 59,000 | |||||||||||||||||||
Tax
benefit on stock options exercised
|
- | 2,000 | - | - | - | - | 2,000 | |||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net
income
|
- | - | - | - | 3,769,000 | - | 3,769,000 | |||||||||||||||||||||
Unrealized
holding gains on securities
|
||||||||||||||||||||||||||||
available
for sale arising during the
|
||||||||||||||||||||||||||||
period
(net tax benefit of $249,000)
|
- | - | - | - | - | 255,000 | 255,000 | |||||||||||||||||||||
Total
comprehensive income, net of tax
|
4,024,000 | |||||||||||||||||||||||||||
Balance
-- September 30, 2007
|
5,314,142 | $ | 34,994,000 | (8,232 | ) | $ | (112,000 | ) | $ | 5,535,000 | $ | (337,000 | ) | $ | 40,080,000 | |||||||||||||
See
notes to unaudited consolidated financial statements.
|
2008
|
2007
|
|||||||||||||||
Weighted | Weighted | |||||||||||||||
Average
|
Average
|
|||||||||||||||
Exercise
|
Exercise
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Outstanding
at beginning of year
|
38,238 | $ | 7.20 | 83,153 | $ | 5.42 | ||||||||||
Exercised
|
(9,425 | ) | 4.57 | (43,283 | ) | 3.68 | ||||||||||
Forfeited
|
(1,531 | ) | 11.37 | (1,454 | ) | 9.92 | ||||||||||
Outstanding
at end of period
|
27,282 | $ | 7.88 | 38,416 | $ | 7.23 | ||||||||||
Options
exercisable
|
27,282 | 38,416 | ||||||||||||||
Weighted
average remaining
|
||||||||||||||||
contractual
life
|
2.28
years
|
2.78
years
|
||||||||||||||
Aggregate
intrinsic value
|
$ | 109,000 | $ | 199,000 | ||||||||||||
Intrinsic
value of options exercisable
|
$ | 109,000 | $ | 199,000 |
2008
|
2007
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Average
|
Average
|
|||||||||||||||
Exercise
|
Exercise
|
|||||||||||||||
Shares
|
Price
|
Shares
|
Price
|
|||||||||||||
Outstanding
at beginning of year
|
60,318 | $ | 11.76 | 63,791 | $ | 11.76 | ||||||||||
Exercised
|
(2,314 | ) | 12.24 | (2,315 | ) | 11.66 | ||||||||||
Outstanding
at end of period
|
58,004 | $ | 11.76 | 61,476 | $ | 11.76 | ||||||||||
Options
exercisable
|
24,432 | 14,889 | ||||||||||||||
Weighted
average remaining
|
||||||||||||||||
contractual
life
|
3.46
years
|
4.48
years
|
||||||||||||||
Aggregate
intrinsic value
|
$ | 7,000 | $ | 77,000 | ||||||||||||
Intrinsic
value of options exercisable
|
$ | - | $ | 14,000 |
September
30, 2008
|
||||||||||||
Gross
|
Gross
|
|||||||||||
Fair
|
Unrealized
|
Unrealized
|
||||||||||
Value
|
Holding
Gains
|
Holding
Losses
|
||||||||||
U.S.
government-sponsored agencies
|
$ | 51,691,000 | $ | 194,000 | $ | 811,000 | ||||||
Obligations
of state and political
|
||||||||||||
subdivisions
|
5,707,000 | 3,000 | 303,000 | |||||||||
Mortgage-backed
securities
|
36,357,000 | 155,000 | 249,000 | |||||||||
Other
securities
|
2,792,000 | 1,000 | 28,000 | |||||||||
$ | 96,547,000 | $ | 353,000 | $ | 1,391,000 |
December
31, 2007
|
||||||||||||
Gross
|
Gross
|
|||||||||||
Fair
|
Unrealized
|
Unrealized
|
||||||||||
Value
|
Holding
Gains
|
Holding
Losses
|
||||||||||
U.S.
government-sponsored agencies
|
$ | 35,693,000 | $ | 495,000 | $ | 4,000 | ||||||
Obligations
of state and political
|
||||||||||||
subdivisions
|
2,903,000 | 2,000 | 29,000 | |||||||||
Mortgage-backed
securities
|
37,131,000 | 205,000 | 205,000 | |||||||||
Other
securities
|
1,230,000 | - | 17,000 | |||||||||
$ | 76,957,000 | $ | 702,000 | $ | 255,000 |
September
30, 2008
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Unrecognized
|
Unrecognized
|
Fair
|
|||||||||||||
Value
|
Holding
Gains
|
Holding
Losses
|
Value
|
|||||||||||||
U.S.
Treasury securities
|
$ | 500,000 | $ | 2,000 | $ | - | $ | 502,000 | ||||||||
U.S.
government-sponsored agencies
|
6,790,000 | 31,000 | 37,000 | 6,784,000 | ||||||||||||
Obligations
of state and political
|
||||||||||||||||
subdivisions
|
23,450,000 | 39,000 | 675,000 | 22,814,000 | ||||||||||||
Mortgage-backed
securities
|
4,906,000 | 48,000 | 25,000 | 4,929,000 | ||||||||||||
$ | 35,646,000 | $ | 120,000 | $ | 737,000 | $ | 35,029,000 |
December
31, 2007
|
||||||||||||||||
Gross
|
Gross
|
|||||||||||||||
Carrying
|
Unrecognized
|
Unrecognized
|
Fair
|
|||||||||||||
Value
|
Holding
Gains
|
Holding
Losses
|
Value
|
|||||||||||||
U.S.
Treasury securities
|
$ | 501,000 | $ | 5,000 | $ | - | $ | 506,000 | ||||||||
U.S.
government-sponsored agencies
|
12,331,000 | 135,000 | 1,000 | 12,465,000 | ||||||||||||
Obligations
of state and political
|
||||||||||||||||
subdivisions
|
22,569,000 | 204,000 | 40,000 | 22,733,000 | ||||||||||||
Mortgage-backed
securities
|
5,788,000 | 48,000 | 32,000 | 5,804,000 | ||||||||||||
$ | 41,189,000 | $ | 392,000 | $ | 73,000 | $ | 41,508,000 |
September
30,
|
December
31,
|
||||||||
2008
|
2007
|
||||||||
Mortgage
|
|||||||||
Residential
|
$ | 40,624,000 | $ | 44,719,000 | |||||
Commercial
|
230,529,000 | 209,082,000 | |||||||
Commercial
|
96,647,000 | 89,845,000 | |||||||
Equity
|
20,972,000 | 19,723,000 | |||||||
Installment
|
53,996,000 | 56,796,000 | |||||||
Other
|
543,000 | 424,000 | |||||||
Total
loans
|
443,311,000 | 420,589,000 | |||||||
Less:
|
Deferred
loan fees
|
418,000 | 442,000 | ||||||
Allowance
for loan losses
|
5,930,000 | 4,457,000 | |||||||
6,348,000 | 4,899,000 | ||||||||
Loans,
net
|
$ | 436,963,000 | $ | 415,690,000 |
Nine
Months Ended September 30,
|
||||||||
2008
|
2007
|
|||||||
Balance,
beginning of period
|
$ | 4,457,000 | $ | 4,101,000 | ||||
Provision
charged to operations
|
1,535,000 | 280,000 | ||||||
Recoveries
of loans charged off
|
21,000 | 8,000 | ||||||
Loans
charged off
|
(83,000 | ) | (140,000 | ) | ||||
Balance,
end of period
|
$ | 5,930,000 | $ | 4,249,000 |
September
30,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
Impaired
loans
|
||||||||
With
related allowance for loan losses
|
$ | 3,468,000 | $ | 222,000 | ||||
Without
related allowance for loan losses
|
3,416,000 | 233,000 | ||||||
Total
impaired loans
|
$ | 6,884,000 | $ | 455,000 | ||||
Related
allowance for loan losses
|
$ | 1,262,000 | $ | 39,000 |
Fair
Value Measurements at September 30, 2008 Using
|
||||||||||||||||
September
30, 2008 |
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level
1)
|
Significant
Other
Observable
Inputs
(Level
2)
|
Significant
Unobservable
Inputs
(Level
3)
|
|||||||||||||
Assets:
|
||||||||||||||||
Available
for sale securities
|
$ | 96,547,000 | $ | - | $ | 96,547,000 | $ | - | ||||||||
Impaired
loans
|
$ | 6,884,000 | $ | - | $ | - | $ | 6,884,000 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
Net
income
|
$ | 838 | $ | 1,229 | $ | 3,078 | $ | 3,769 | ||||||||
Weighted
average shares
|
5,574 | 5,570 | 5,577 | 5,553 | ||||||||||||
Effect
of dilutive stock options
|
10 | 18 | 13 | 31 | ||||||||||||
Total
weighted average dilutive shares
|
5,584 | 5,588 | 5,590 | 5,584 | ||||||||||||
Basic
earnings per share
|
$ | 0.15 | $ | 0.22 | $ | 0.55 | $ | 0.68 | ||||||||
Diluted
earnings per share
|
$ | 0.15 | $ | 0.22 | $ | 0.55 | $ | 0.68 |
Analysis
of Net Interest Income (Unaudited)
|
||||||||||||||||||||||||
For
the Three Months Ended September 30,
|
||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Interest
|
Rates
|
Interest
|
Rates
|
|||||||||||||||||||||
Average
|
Income/
|
Earned/
|
Average
|
Income/
|
Earned/
|
|||||||||||||||||||
Balance
|
Expense
|
Paid
|
Balance
|
Expense
|
Paid
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning
assets:
|
||||||||||||||||||||||||
Loans
(1) (2)
|
$ | 447,028 | $ | 7,229 | 6.43 | % | $ | 388,936 | $ | 7,003 | 7.14 | % | ||||||||||||
Taxable
investment securities (1)
|
106,452 | 1,411 | 5.27 | 96,633 | 1,288 | 5.29 | ||||||||||||||||||
Tax-exempt
investment securities (1) (2)
|
28,737 | 383 | 5.33 | 24,085 | 313 | 5.20 | ||||||||||||||||||
Other
interest-earning assets
|
2,998 | 20 | 2.65 | 1,242 | 19 | 6.07 | ||||||||||||||||||
Total
interest-earning assets
|
585,215 | $ | 9,043 | 6.15 | 510,896 | $ | 8,623 | 6.70 | ||||||||||||||||
Non-interest-earning
assets:
|
||||||||||||||||||||||||
Allowance
for loan losses
|
(4,832 | ) | (4,217 | ) | ||||||||||||||||||||
Other
assets
|
34,959 | 33,564 | ||||||||||||||||||||||
Total
assets
|
$ | 615,342 | $ | 540,243 | ||||||||||||||||||||
Liabilities
and Stockholders' Equity
|
||||||||||||||||||||||||
Interest-bearing
liabilities:
|
||||||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 169,545 | $ | 636 | 1.49 | % | $ | 140,991 | $ | 973 | 2.74 | % | ||||||||||||
Savings
deposits
|
38,158 | 57 | 0.59 | 36,816 | 71 | 0.77 | ||||||||||||||||||
Time
deposits
|
187,083 | 1,841 | 3.91 | 186,397 | 2,144 | 4.56 | ||||||||||||||||||
Repurchase
agreements
|
16,241 | 135 | 3.31 | 11,855 | 127 | 4.25 | ||||||||||||||||||
FHLB
borrowing
|
52,590 | 314 | 2.38 | 16,802 | 176 | 4.16 | ||||||||||||||||||
Subordinated
debenture
|
7,217 | 117 | 6.45 | 7,217 | 122 | 6.71 | ||||||||||||||||||
Total
interest-bearing liabilities
|
470,834 | $ | 3,100 | 2.62 | 400,078 | $ | 3,613 | 3.58 | ||||||||||||||||
Non-interest-bearing
liabilities:
|
||||||||||||||||||||||||
Demand
deposits
|
98,358 | 96,431 | ||||||||||||||||||||||
Other
liabilities
|
4,147 | 4,444 | ||||||||||||||||||||||
Stockholders'
equity
|
42,003 | 39,290 | ||||||||||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 615,342 | $ | 540,243 | ||||||||||||||||||||
Net
interest income (taxable equivalent basis)
|
$ | 5,943 | $ | 5,010 | ||||||||||||||||||||
Tax
Equivalent adjustment
|
(133 | ) | (97 | ) | ||||||||||||||||||||
Net
interest income
|
$ | 5,810 | $ | 4,913 | ||||||||||||||||||||
Net
interest spread (taxable equivalent basis)
|
3.53 | % | 3.11 | % | ||||||||||||||||||||
Net
yield on interest-earning
|
||||||||||||||||||||||||
assets
(taxable equivalent basis) (3)
|
4.04 | % | 3.89 | % |
(1) For
purpose of these calculations, nonaccruing loans are included in the
average balance. Fees are included in loan
interest. Loans and
|
||||||||||
total
interest-earning assets are net of unearned income. Securities
are included at amortized cost.
|
||||||||||
(2) The
tax equivalent adjustments are based on a marginal tax rate of
34%.
|
||||||||||
(3) Net
interest income (taxable equivalent basis) divided by average
interest-earning assets.
|
Analysis
of Net Interest Income (Unaudited)
|
|||||||||||||||||||||||
For
the Nine Months Ended September 30,
|
|||||||||||||||||||||||
2008
|
2007
|
||||||||||||||||||||||
Average
|
Average
|
||||||||||||||||||||||
Interest
|
Rates
|
Interest
|
Rates
|
||||||||||||||||||||
Average
|
Income/
|
Earned/
|
Average
|
Income/
|
Earned/
|
||||||||||||||||||
Balance
|
Expense
|
Paid
|
Balance
|
Expense
|
Paid
|
||||||||||||||||||
(Dollars
in thousands)
|
|||||||||||||||||||||||
Assets
|
|||||||||||||||||||||||
Interest-earning
assets:
|
|||||||||||||||||||||||
Loans
(1) (2)
|
$ | 435,554 | $ | 21,513 | 6.60 | % | $ | 379,189 | $ | 20,289 | 7.15 | % | |||||||||||
Taxable
investment securities (1)
|
101,304 | 3,990 | 5.26 | 93,092 | 3,646 | 5.24 | |||||||||||||||||
Tax-exempt
investment securities (1) (2)
|
27,353 | 1,091 | 5.32 | 22,880 | 872 | 5.08 | |||||||||||||||||
Other
interest-earning assets
|
3,307 | 62 | 2.50 | 744 | 39 | 7.01 | |||||||||||||||||
Total
interest-earning assets
|
567,518 | $ | 26,656 | 6.27 | 495,905 | $ | 24,846 | 6.70 | |||||||||||||||
Non-interest-earning
assets:
|
|||||||||||||||||||||||
Allowance
for loan losses
|
(4,649 | ) | (4,147 | ) | |||||||||||||||||||
Other
assets
|
34,397 | 33,395 | |||||||||||||||||||||
Total
assets
|
$ | 597,266 | $ | 525,153 | |||||||||||||||||||
Liabilities
and Stockholders' Equity
|
|||||||||||||||||||||||
Interest-bearing
liabilities:
|
|||||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 163,435 | $ | 2,102 | 1.72 | % | $ | 127,765 | $ | 2,353 | 2.46 | % | |||||||||||
Savings
deposits
|
38,394 | 180 | 0.63 | 37,363 | 211 | 0.76 | |||||||||||||||||
Time
deposits
|
181,398 | 5,773 | 4.25 | 183,801 | 6,246 | 4.54 | |||||||||||||||||
Repurchase
agreements
|
16,391 | 414 | 3.37 | 10,534 | 351 | 4.45 | |||||||||||||||||
FHLB
borrowing
|
46,217 | 917 | 2.65 | 20,281 | 662 | 4.36 | |||||||||||||||||
Subordinated
debenture
|
7,217 | 363 | 6.72 | 7,217 | 365 | 6.76 | |||||||||||||||||
Total
interest-bearing liabilities
|
453,052 | $ | 9,749 | 2.87 | 386,961 | $ | 10,188 | 3.52 | |||||||||||||||
Non-interest-bearing
liabilities:
|
|||||||||||||||||||||||
Demand
deposits
|
97,704 | 95,602 | |||||||||||||||||||||
Other
liabilities
|
4,600 | 4,014 | |||||||||||||||||||||
Stockholders'
equity
|
41,910 | 38,576 | |||||||||||||||||||||
Total
liabilities and stockholders' equity
|
$ | 597,266 | $ | 525,153 | |||||||||||||||||||
Net
interest income (taxable equivalent basis)
|
$ | 16,907 | $ | 14,658 | |||||||||||||||||||
Tax
Equivalent adjustment
|
(379 | ) | (271 | ) | |||||||||||||||||||
Net
interest income
|
$ | 16,528 | $ | 14,387 | |||||||||||||||||||
Net
interest spread (taxable equivalent basis)
|
3.40 | % | 3.18 | % | |||||||||||||||||||
Net
yield on interest-earning
|
|||||||||||||||||||||||
assets
(taxable equivalent basis) (3)
|
3.98 | % | 3.95 | % |
(1) For
purpose of these calculations, nonaccruing loans are included in the
average balance. Fees are included in loan
interest. Loans and total interest-earning
|
|||||||||
assets
are net of unearned income. Securities are included at
amortized cost.
|
|||||||||
(2) The
tax equivalent adjustments are based on a marginal tax rate of
34%.
|
|||||||||
(3) Net
interest income (taxable equivalent basis) divided by average
interest-earning assets.
|
September
30,
|
June
30,
|
March
31,
|
December
31,
|
|||||||||||||
2008
|
2008
|
2008
|
2007
|
|||||||||||||
(Dollars
in Thousands)
|
||||||||||||||||
Nonaccrual
loans: (1)
|
$ | 6,884 | $ | 451 | $ | 360 | $ | 455 | ||||||||
Loans
past due 90 days or more: (2)
|
268 | 840 | 703 | 26 | ||||||||||||
Total
nonperforming loans
|
$ | 7,152 | $ | 1,291 | $ | 1,063 | $ | 481 | ||||||||
Other
real estate owned
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Total
nonperforming loans
|
$ | 7,152 | $ | 1,291 | $ | 1,063 | $ | 481 | ||||||||
Allowance
for loan losses
|
$ | 5,930 | $ | 4,768 | $ | 4,571 | $ | 4,457 | ||||||||
Nonaccrual
loans to total loans
|
1.55 | % | 0.10 | % | 0.08 | % | 0.11 | % | ||||||||
Nonperforming
loans to total loans
|
1.61 | % | 0.29 | % | 0.25 | % | 0.11 | % | ||||||||
Nonperforming
loans to total assets
|
1.17 | % | 0.21 | % | 0.18 | % | 0.08 | % | ||||||||
Nonperforming
assets to total assets
|
1.17 | % | 0.21 | % | 0.18 | % | 0.08 | % | ||||||||
Allowance
for loan losses to total loans
|
1.34 | % | 1.09 | % | 1.07 | % | 1.06 | % | ||||||||
Allowance
for loan losses to
|
||||||||||||||||
nonperforming
loans
|
82.91 | % | 369.30 | % | 430.13 | % | 926.61 | % |
Required
|
Actual
|
Excess
|
|
Leverage
Ratio
|
4.00%
|
8.02%
|
4.02%
|
Risk-based
Capital
|
|||
Tier
1
|
4.00%
|
10.47%
|
6.47%
|
Total
|
8.00%
|
11.72%
|
3.72%
|
|
(a)
|
Evaluation
of internal controls and procedures
|
|
(b)
|
Management’s
Report on Internal Control over Financial
Reporting
|
|
(c)
|
Changes
in internal controls.
|
Item
4.
|
Submission of Matters
to a Vote of Security Holders
|
|
None.
|
||
Item
6.
|
Exhibits
|
|
(a)
|
Exhibits
|
|
See
Exhibit Index following this
report.
|
Stewardship
Financial Corporation
|
||||
Date:
|
November 13, 2008
|
By:
|
/s/ Paul Van Ostenbridge
|
|
Paul
Van Ostenbridge
|
||||
President
and Chief Executive Officer
|
||||
(Principal
Executive Officer)
|
||||
Date:
|
November 13, 2008
|
By:
|
/s/ Claire M. Chadwick
|
|
Claire
M. Chadwick
|
||||
Senior
Vice President and Chief Financial Officer
|
||||
(Principal
Financial and Accounting Officer)
|
||||
EXHIBIT
NUMBER
|
DESCRIPTION
|
|
Certification
of Paul Van Ostenbridge required by Rule 13a-14(a) or Rule
15d-14(a)
|
||
Certification
of Claire M. Chadwick required by Rule 13a-14(a) or Rule
15d-14(a)
|
||
Certification
of Paul Van Ostenbridge and Claire M. Chadwick required by Rule 13a-14(b)
or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. Section 1350
|