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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 0-21855
STEWARDSHIP FINANCIAL CORPORATION
(Name of small business issuer as specified in its charter)
New Jersey 22-3351447
(State of other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
630 Godwin Avenue, Midland Park, NJ 07432
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (201) 444-7100
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act:
Common Stock, no par value
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(Title of class)
Check whether the issuer: (1) has filed reports required to be filed by Section
13 or 15(d) of the Securities and Exchange Act of 1934, as amended, during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes (X) No ( )
Check whether disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of issuer's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
(X )
For the fiscal year ended December 31, 2002, the issuer had total revenues of
$20,029,000.
The aggregate market value of the voting stock held by non-affiliates of the
issuer, as of March 6, 2003 was $28,248,069.
The number of shares outstanding of the issuer's Common Stock, no par value, as
of March 6, 2003 was 1,983,236.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 2002 are incorporated by reference into Part II.
Portions of the Registrant's Proxy Statement for the 2003 Annual Meeting of
Shareholders are incorporated by reference into Part III.
Transitional Small Business Disclosure Format (check one):
Yes | | No |X|
Part I
Item 1 - Description of Business
General
Stewardship Financial Corporation (the "Corporation" or "Registrant") is a
one-bank holding company incorporated under the laws of the State of New Jersey
in January, 1995 to serve as a holding company for Atlantic Stewardship Bank
(the "Bank"). The Corporation was organized at the direction of the Board of
Directors of the Bank for the purpose of acquiring all of the capital stock of
the Bank (the "Acquisition"). Pursuant to the New Jersey Banking Act of 1948, as
amended (the "New Jersey Banking Act"), and pursuant to approval of the
shareholders of the Bank, the Corporation acquired the Bank and became its
holding company on November 22, 1996. As part of the Acquisition, shareholders
of the Bank received one share of common stock, no par value ("Common Stock") of
the Corporation for each outstanding share of the common stock of the Bank. The
only significant activity of the Corporation is ownership and supervision of the
Bank. The Corporation's main office is located at 630 Godwin Avenue, Midland
Park, Bergen County, New Jersey 07432.
The Bank is a commercial bank formed under the laws of the State of New
Jersey on April 26, 1984. The Bank operates from its main office at 630 Godwin
Avenue, Midland Park, New Jersey, leased space at 666 Godwin Avenue, Midland
Park, New Jersey, and its seven branches located at 386 Lafayette Avenue,
Hawthorne, New Jersey, 190 Franklin Avenue, Ridgewood, New Jersey, 30 Franklin
Turnpike, Waldwick, New Jersey, 87 Berdan Avenue, Wayne, New Jersey, 311 Valley
Road, Wayne, New Jersey, 249 Newark Pompton Turnpike, Pequannock, New Jersey and
1111 Goffle Road, Hawthorne, New Jersey. The Bank operates ATM machines at all
of its branches except its Lafayette Avenue, Hawthorne branch and operates an
offsite branch in the Christian Health Care Center, Wyckoff, New Jersey. The
Bank offers online banking and bill paying services through its website and
provides a MasterMoney Debit Card to both consumers and businesses.
The Corporation is subject to the supervision and regulation of the Board
of Governors of the Federal Reserve System (the "FRB"). The Bank's deposits are
insured by the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance
Corporation ("FDIC") up to applicable limits. The operations of the Corporation
and the Bank are subject to the supervision and regulation of the FRB, FDIC and
the New Jersey Department of Banking and Insurance (the "Department"). The
principal executive offices of the Corporation are located at 630 Godwin Avenue,
Midland Park, New Jersey 07432, and the telephone number is (201) 444-7100.
Business of the Corporation
The Corporation's primary business is the ownership and supervision of the
Bank. The Corporation, through the Bank, conducts a traditional commercial
banking business, and offers services including personal and business checking
accounts and time deposits, money market accounts and regular savings accounts.
The Corporation structures its specific services and charges in a manner
designed to attract the business of the small and medium sized business and
professional community as well as that of individuals residing, working and
shopping in its Bergen, Morris and Passaic County, New Jersey trade area. The
Corporation engages in a wide range of lending activities and offers commercial,
consumer, mortgage, home equity and personal loans. Stewardship Investment Corp.
is a wholly-owned non-bank subsidiary of the Bank, whose primary business is to
own and manage the Bank's investment portfolio.
In addition, in forming the Bank, the members of the Board of Directors
envisioned a community-based institution which would serve the local communities
surrounding its branches, while also providing a return to its shareholders.
This vision has been reflected in the Bank's tithing policy, under which the
Bank tithes 10% of its pre-tax profits to worthy Christian charities.
Service Area
The Corporation's service area primarily consists of the Bergen, Passaic
and Morris County, New Jersey market, although the Corporation makes loans
throughout New Jersey. The Corporation operates its main office in Midland Park,
New Jersey and seven existing branch offices in Hawthorne, Ridgewood, Waldwick,
Wayne and Pequannock, New Jersey.
Competition
The Corporation operates in a highly competitive environment competing for
deposits and loans with commercial banks, thrifts and other financial
institutions, many of which have greater financial resources than the
Corporation. Many large financial institutions in New York City and other parts
of New Jersey compete for the business of New Jersey residents located in the
Corporation's service area. Certain of these institutions have significantly
higher lending limits than the Corporation and provide services to their
customers that the Corporation does not offer.
Employees
At December 31, 2002, the Corporation employed 90 full-time employees and
13 part-time employees. None of these employees is covered by a collective
bargaining agreement and the Corporation believes that its employee relations
are good.
Supervision and Regulation
Bank holding companies and banks are extensively regulated under both
federal and state law. These laws and regulations are intended to protect
depositors, not stockholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the Corporation's business. Any change in the applicable law or
regulation may have a material effect on the business and prospects of the
Corporation and the Bank.
Regulation of the Corporation
BANK HOLDING COMPANY ACT. As a bank holding company registered under the
Bank Holding Company Act of 1956, as amended (the "BHCA"), the Corporation is
subject to the regulation and supervision of the FRB. The Corporation is
required to file with the FRB annual reports and other information that may be
required by the FRB.
The BHCA requires, among other things, the prior approval of the FRB in
any case where a bank holding company proposes to (i) acquire all or
substantially all of the assets of any other bank, (ii) acquire direct or
indirect ownership or control of more than 5% of the outstanding voting stock of
any bank (unless it owns a majority of such bank's voting shares), or (iii)
merge or consolidate with any other bank holding company. The FRB will not
approve any merger, acquisition or consolidation that would have a substantially
anti-competitive effect, unless the anti-competitive impact of the proposed
transaction is clearly outweighed by a greater public interest in meeting the
convenience and needs of the community to be served. The FRB also considers
capital adequacy and other financial and managerial resources and future
prospects of the companies and the banks concerned, together with the
convenience and needs of the community to be served.
Additionally, the BHCA prohibits a bank holding company, with certain
limited exceptions, from (i) acquiring or retaining direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any company which
is not a bank or bank holding company, or (ii) engaging directly or indirectly
in activities other than those of banking, managing or controlling banks, or
performing services for its subsidiaries; unless such non-banking business is
determined by the FRB to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In making such
determinations, the FRB is required to weigh the expected benefits to the
public, such as greater convenience, increased competition or gains in
efficiency, against the possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices.
There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory
policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default. Under a policy of the FRB with respect
to bank holding company operations, a bank holding company is required to commit
resources to support such institutions in circumstances where it might not do so
absent such policy. The FRB also has the authority under the BHCA to require a
bank holding company to terminate any activity or to relinquish control of a
non-bank subsidiary upon the FRB's determination that such activity or control
constitutes a serious risk to the financial soundness and stability of any bank
subsidiary of the bank holding company.
CAPITAL ADEQUACY GUIDELINES FOR BANK HOLDING COMPANIES. The FRB has
adopted risk-based capital guidelines for bank holding companies. The risk-based
capital guidelines are designed to make regulatory capital requirements more
sensitive to differences in risk profiles among banks and bank holding
companies, to account for off-balance sheet exposure, and to minimize
disincentives for holding liquid assets. Under these guidelines, assets and
off-balance sheet items are assigned to broad risk categories each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet items.
The risk-based guidelines apply on a consolidated basis to bank holding
companies with consolidated assets of $150 million or more. The minimum ratio of
total capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) is 8%. At least 4% of the total
capital is required to be "Tier I" capital, consisting of common stockholders'
equity and certain preferred stock, less certain goodwill items and other
intangible assets. The remainder, "Tier II Capital," may consist of (a) the
allowance for loan losses of up to 1.25% of risk-weighted assets, (b) excess of
qualifying preferred stock, (c) hybrid capital instruments, (d) debt, (e)
mandatory convertible securities, and (f) qualifying subordinated debt. Total
capital is the sum of Tier I and Tier II capital less reciprocal holdings of
other banking organizations' capital instruments, investments in unconsolidated
subsidiaries and any other deductions as determined by the FRB (determined on a
case-by-case basis or as a matter of policy after formal rule-making).
Bank holding company assets are given risk-weights of 0%, 20%, 50%, and
100%. In addition, certain off-balance sheet items are given similar credit
conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets. Most loans are assigned to the 100% risk category, except
for performing first mortgage loans fully secured by residential property which
carry a 50% risk-weighting. Most investment securities (including, primarily,
general obligation claims of states or other political subdivisions of the
United States) are assigned to the 20% category, except for municipal or state
revenue bonds, which have a 50% risk-weight, and direct obligations of the U.S.
treasury or obligations backed by the full faith and credit of the U.S.
government, which have a 0% risk-weight. In converting off-balance sheet items,
direct credit substitutes including general guarantees and standby letters of
credit backing nonfinancial obligations, and undrawn commitments (including
commercial credit lines with an initial maturity or more than one year) have a
50% risk-weighting. Short term commercial letters of credit have a 20%
risk-weighting and certain short-term unconditionally cancelable commitments
have a 0% risk-weighting.
In addition to the risk-based capital guidelines, the FRB has adopted a
minimum Tier I capital (leverage) ratio, under which a bank holding company must
maintain a minimum level of Tier I capital to average total consolidated assets
of at least 3% in the case of a bank holding company that has the highest
regulatory examination rating and is not contemplating significant growth or
expansion. All other bank holding companies are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the stated minimum.
FINANCIAL SERVICES MODERNIZATION LEGISLATION. On November 12, 1999,
President Clinton signed into law the Gramm-Leach-Bliley Financial Services
Modernization Act of 1999 ("FSMA"). The passage of the FSMA removes the barriers
to affiliations among financial service companies by repealing restrictions
imposed under the Glass-Steagall Act of 1933 on banks affiliating with
securities firms and by creating a new financial holding company ("FHC") under
the BHCA. A company may form an FHC if all of its insured depository institution
subsidiaries are considered well-capitalized, well-managed, and hold a
satisfactory rating under the Community Reinvestment Act of 1977, as amended
("CRA"). An FHC can engage in a prescribed list of financial services, including
insurance and securities underwriting and agency activities, merchant banking,
insurance company portfolio investment activities and "complementary" financial
activities.
To insure consistency in the treatment of banks and other financial
institutions, FSMA reorganizes regulatory authority of federal agencies over
securities and investment activities.
In the area of insurance, FSMA designates the insurance products that
banks and subsidiaries may provide, prohibits national banks from underwriting
or selling title insurance if they did not actively conduct those activities
before FSMA and permits national banks to sell title insurance in states where
state banks are specifically authorized to do so. FSMA requires Federal banking
agencies to prescribe consumer protection regulations for insurance sales by
banks. FSMA preempts state laws that interfere with affiliations between banks
and insurance companies. It also initiates a process for creating a uniformity
in licensing of insurance agents on a national level.
FSMA also reinforces the barrier separating banking from general commerce
by preventing organizations from applying to the Office of Thrift Supervision to
form a unitary holding company after May 4, 1999. All existing unitaries can
continue to operate, regardless of current ownership but these unitaries can
only be sold to financial companies.
In addition to enabling banks and their holding companies to conduct a
wide range of financial activities, the FSMA also contained a number of privacy
requirements with which banks and other financial institutions must comply.
Under the FSMA, all financial institutions must adopt a privacy policy and make
its policy known to those who become new customers and provide annual disclosure
of its policy to all of its customers. The Bank had to provide initial privacy
notices to all existing customers by July 1, 2001. Prior to disclosing a
consumers' nonpublic personal information (not covered by an exception) with
nonaffiliated third parties, financial institutions must provide a reasonable
means and opportunity to opt out of having information shared. The exceptions
include disclosures of nonpublic personal information: (i) made in connection
with certain processing and servicing transactions; (ii) with the consent, or at
the direction, of a customer or consumer; (iii) to protect against potential
fraud or unauthorized transactions; (iv) to respond to judicial process; and (v)
to provide the information to an employee of the institution who happens also to
be an employee of a nonaffiliated third party.
The FSMA also requires the issuance of regulations establishing standards
governing the administrative, technical and physical safeguards of customer
information. By July 1, 2001, all financial institutions had to have an
information security program. Institutions are required to identify and assess
the risks that may threaten customer information, develop a written plan
containing policies and procedures to manage and control these risks, implement
and test the plan, and adjust the plan on a continuing basis to account for
changes in technology, sensitivity of customer information and internal or
external threats to information security.
Additional proposals to change the regulations and laws governing the
banking and financial services industry are frequently introduced in the state
legislatures, before various banking regulatory agencies, and in Congress. The
likelihood and timing of any such changes and the impact of such changes might
have on the Corporation cannot be determined at this time.
Regulation of the Bank
As a New Jersey-chartered commercial bank, the Bank is subject to the
regulation, supervision and control of the Department. As a FDIC-insured
institution, the Bank is subject to regulation, supervision and control by the
FDIC, an agency of the federal government. The regulations of the FDIC and the
Department impact virtually all activities of the Bank, including the minimum
level of capital the Bank must maintain, the ability of the Bank to pay
dividends, the ability of the Bank to expand through new branches or
acquisitions, and various other matters.
INSURANCE OF DEPOSITS. The Bank's deposits are insured up to a maximum of
$100,000 per depositor under the BIF. The FDIC has established a risk-based
assessment system for all insured depository institutions. Under this system,
the FDIC has established an insurance premium assessment system based upon: (i)
the probability that the insurance fund will incur a loss with respect to the
institution; (ii) the likely amount of the loss; and (iii) the revenue needs of
the insurance fund. In compliance with this mandate, the FDIC has developed a
matrix that sets the assessment premium for a particular institution in
accordance with its capital level and overall rating by the primary regulatory
agency. Under the matrix as currently in effect, the assessment rate ranges from
0 to 27 basis points of assessed deposits.
DIVIDEND RIGHTS. Under the New Jersey Banking Act, a Bank may declare and
pay dividends only if, after payment of the dividend, the capital stock of the
Bank will be unimpaired and either the Bank will have a surplus of not less than
50% of its capital stock or the payment of the dividend will not reduce the
Bank's surplus.
BIF PREMIUMS AND THE RECAPITALIZATION OF SAIF. The Bank is a member of the
BIF of the FDIC. The FDIC also maintains another insurance fund, the Savings
Association Insurance Fund ("SAIF"), which primarily covers savings and loan
association deposits but also covers deposits that are acquired by a BIF-insured
institution from a savings and loan association ("OAKAR"). On September 30,
1996, the Deposit Insurance Funds Act of 1996 (the "Deposit Act") became law.
The primary purpose of the Deposit Act was to recapitalize the SAIF by charging
all SAIF member institutions a one-time special assessment. The Deposit Act was
designed to lead to an equalization of the deposit insurance assessments between
BIF and SAIF insured institutions, and to separate out from insurance
assessments payments required for debt service and principal repayment on bonds
issued by the Federal Finance Corporation ("FICO") in the mid-1980s to fund a
portion of the thrift bailout. Under the Deposit Act, the FDIC charged
assessments for SAIF and BIF deposits in a 5 to 1 ratio to pay FICO bonds until
January 1, 2000, at which time the assessment became equal. During 2002 a FICO
rate of approximately 1.75 basis points was charged on BIF and SAIF deposits.
INTERSTATE BANKING. On September 29, 1994, the Riegle-Neal Interstate
Banking and Branching Efficiency Act (the "Interstate Act") was enacted. The
Interstate Act generally enhances the ability of bank holding companies to
conduct their banking business across state borders. The Interstate Act has two
main provisions. The first provision generally provides that commencing on
September 29, 1995, bank holding companies may acquire banks located in any
state regardless of the provisions of state law. These acquisitions are subject
to certain restrictions, including caps on the total percentage of deposits that
a bank holding company may control both nationally and in any single state. New
Jersey law currently allows interstate acquisitions by bank holding companies
whose home state has "reciprocal" legislation which would allow acquisitions by
New Jersey based holding companies. The second major provision of the Interstate
Act permitted, beginning on June 1, 1997, banks located in different states to
merge and continue to operate as a single institution in more than one state.
States could have, by legislation passed before June 1, 1997, opted out of the
interstate bank merger provisions of the Interstate Act. In addition, states
could have elected to opt in and allow interstate bank mergers prior to June 1,
1997. A final provision of the Interstate Act permits banks located in one state
to establish new branches in another state without obtaining a separate bank
charter in that state, but only if the state in which the branch is located has
adopted legislation specifically allowing interstate de novo branching. In
April, 1996, the New Jersey legislature passed legislation which would permit
interstate bank mergers prior to June 1, 1997, provided that the home state of
the institution acquiring the New Jersey institution permits interstate mergers
prior to June 1, 1997. In addition, the legislation permits an out-of-state
institution to acquire an existing branch of a New Jersey-based institution, and
thereby conduct a business in New Jersey. The legislation is likely to enhance
competition in the New Jersey marketplace as bank holding companies located
outside of New Jersey become increasingly able to acquire institutions located
within the State of New Jersey.
Item 2. Description of Property
The Corporation conducts its business through its main office located at
630 Godwin Avenue, Midland Park, New Jersey, a lending office located at 666
Godwin Avenue, Midland Park, New Jersey, and its six branch offices. The
following table sets forth certain information regarding the Corporation's
properties as of December 31, 2002.
Leased Date of Lease
Location or Owned Expiration
-------- -------- -------------
630 Godwin Avenue Owned ---
Midland Park, NJ
386 Lafayette Avenue Owned ---
Hawthorne, NJ
190 Franklin Avenue Leased 09/30/07
Ridgewood, NJ
30 Franklin Turnpike Leased 02/28/07
Waldwick, NJ
87 Berdan Avenue Leased 06/30/04
Wayne, NJ
311 Valley Road Leased 11/30/03
Wayne, NJ
249 Newark Pompton Turnpike Owned ---
Pequannock, NJ
1111 Goffle Road Leased 05/31/06
Hawthorne, NJ
666 Godwin Avenue Leased 10/31/03
Midland Park, NJ
306 Ramapo Valley Road Leased 11/30/13
Oakland, New Jersey
Item 3 - Legal Proceedings
The Corporation and the Bank are periodically parties to or otherwise
involved in legal proceedings arising in the normal course of business, such as
claims to enforce liens, claims involving the making and servicing of real
property loans, and other issues incident to the Bank's business. Management
does not believe that there is any pending or threatened proceeding against the
Corporation or the Bank which, if determined adversely, would have a material
effect on the business or financial position of the Corporation or the Bank.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted for a vote of the corporation's shareholders
during the fourth quarter of the fiscal year ended December 31, 2002 ("fiscal
2002").
Part II
Item 5 - Market for Common Equity and Related Stockholder Matters
Market Price
Commencing in November 1997, the Company's Common Stock began trading
on the Over-the-Counter Bulletin Board under the symbol "SSFN".
The following table sets forth the quarterly high and low bid prices of
the Common Stock as reported on the Over-the-Counter Bulletin Board for the
quarterly periods presented. The prices below reflect inter-dealer prices,
without retail markup, markdown or commissions, and may not represent actual
transactions. The stock prices and cash dividends set forth below also reflect
adjustments related to 5% stock dividends paid in November, 2001 and November,
2002.
Bid
------------------------
Cash
High Low Dividend
------ ------ --------
Year Ended December 31, 2002
Fourth quarter $18.90 $17.67 $0.09
Third quarter 18.30 16.88 0.09
Second quarter 17.83 16.05 0.08
First quarter 18.33 15.47 0.08
Year Ended December 31, 2001
Fourth quarter $18.57 $15.71 $0.08
Third quarter 16.95 14.53 0.07
Second quarter 17.09 12.93 0.07
First quarter 15.59 13.41 0.07
Approximate Number of Holders of Common Stock
As of March 6 , 2003, there were approximately 801 holders of record of
the Corporation's Common Stock.
Dividends
The Corporation may pay dividends as declared from time to time by the
Corporation's Board of Directors out of funds legally available therefor,
subject to certain restrictions. Since dividends from the Bank will be the
Corporation's main source of income, any restriction on the Bank's ability to
pay dividends will act as a restriction on the Corporation's ability to pay
dividends. Under the Banking Act, no cash dividend may be paid by the Bank
unless, following the payment of such dividend, the capital stock of the Bank
will be unimpaired and the Bank will have a surplus of no less than 50% of its
capital stock or, if not, the payment of such dividend will not reduce the
surplus of the Bank. In addition, the Bank cannot pay dividends in such amounts
as would reduce its capital below the regulatory imposed minimums.
During fiscal 2002, the Corporation paid quarterly cash dividends totaling
$0.34 per share for an annual dividend payout ratio of 21.4%. During the fiscal
year ended December 31, 2001, the Corporation paid quarterly cash dividends
totaling $0.29 per share for an annual dividend payout ratio of 21.8%.
Item 6 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this item is incorporated by reference from
page A-2 of the Registrant's Annual Report to Shareholders under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Item 7 - Financial Statements
The information required by this item is incorporated by reference from
page A-18 of the Registrant's Annual Report to Shareholders under the caption
"Consolidated Statements of Financial Condition"
Item 8 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 9 - Directors and Executive Officers of the Corporation; Compliance
with Section 16(a) of the Exchange Act
Information concerning directors and executive officers of the Corporation
is incorporated herein by reference to the definitive Proxy Statement for the
Corporation's 2003 Annual Meeting of Shareholders (the "Proxy Statement"). It is
expected that the Proxy Statement will be filed with the Securities and Exchange
Commission no later than April 30, 2003.
Information concerning compliance with Section 16(a) of the Securities and
Exchange Act of 1934 is incorporated herein by reference to the Proxy Statement.
Item 10 - Executive Compensation
Information concerning executive compensation is incorporated herein by
reference to the Proxy Statement.
Item 11 - Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference to the Proxy Statement.
Item 12 - Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions is
incorporated herein by reference to the Proxy Statement.
Item 13 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description of Exhibits
------ -----------------------
3(i) Certificate of Incorporation of the Corporation (1)
3(ii) Bylaws of the Corporation (1)
10(i)* 1995 Incentive Stock Option Plan (1)
10(ii)* 1995 Stock Option Plan for Non-Employee Directors (1)
10(iii)* 1995 Employee Stock Purchase Plan (2)
10 (iv)* Stock Bonus Plan (2)
10 (v) Stewardship Financial Corporation Dividend Reinvestment Plan (3)
10 (vi)* Stewardship Financial Corporation Director Stock Plan (4)
10(vii)* Amended and Restated 1995 Stock Option Plan (5)
10(viii)* Amended and Restated Director Stock Plan (5)
10(ix) Dividend Reinvestment Plan (6)
10(x) 2001 Stock Option Plan for Non-Employee Directors (7)
13 Annual Report to Shareholders for the year ended December 31,
2002, pages A-1 through A-40
21 Subsidiaries of the Registrant (1)
23 Consent of KPMG LLP
99(i) Certification Pursuant to Section 906 of Sarbanes-Oxley Act of
2002
----------
(1) Incorporated by reference from Exhibits 5(B)(3)(i), 5(B)(3)(ii),
5(B)(3)(iii), 5(B)(10)(a), 5(B)(10)(b), 5(B)(21) from the Corporation's
Registration Statement on Form 8-B, Registration No. 0-21855, filed
December 10, 1996.
(2) Incorporated by reference from Exhibits 4(c) and 4(d) from the
Corporation's Registration Statement on Form S-8, Registration No.
333-20793, filed January 31, 1997.
(3) Incorporated by reference from Exhibit 4(a) from the Corporation's
Registration Statement on Form S-3, Registration No. 333-20699, filed
January 30, 1997.
(4) Incorporated by reference from Exhibit 4(a) from the Corporation's
Registration Statement on Form S-8, Registration No. 333-31245, filed July
14, 1997.
(5) Incorporated by reference from Exhibits 10(vii) and 10(viii) from the
Corporation's Annual Report on Form 10-KSB, filed March 31, 1999.
(6) Incorporated by reference from Exhibit 4(a) from the Corporation's
Registration Statement on Form S-3, Registration No. 333-54738, filed
January 31, 2001.
(7) Incorporated by reference from Exhibit B from the Corporation's
Proxy Statement for the 2001 Annual Meeting of Shareholders, filed April
5, 2001.
(b) Reports on Form 8-K
None.
Item 14 - Controls and Procedures
(a) Evaluation of disclosure controls and procedures
Based on their evaluation as of a date within 90 days of the filing date
of this Annual Report on Form 10-KSB, the Corporation's principal executive
officer and principal financial officer have concluded that the Corporation's
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934 (the "Exchange Act")) are effective to
ensure that information required to be disclosed by the Corporation in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.
(b) Changes in internal controls
There were no significant changes in the Corporation's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
STEWARDSHIP FINANCIAL CORPORATION
By: /s/ Paul Van Ostenbridge
---------------------------------
Paul Van Ostenbridge
Chief Executive Officer
Dated: March 18, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Paul Van Ostenbridge President, Chief Executive Officer March 18, 2003
------------------------------------ and Director
Paul Van Ostenbridge
/s/ Julie E. Holland Vice President and Treasurer March 18, 2003
------------------------------------ (Principal Financial Officer)
Julie E. Holland
/s/ William Almroth Director March 18, 2003
------------------------
William Almroth
/s/ Harold Dyer Director March 18, 2003
------------------------------------
Harold Dyer
/s/ William Hanse Director March 18, 2003
------------------------------------
William Hanse
/s/ Margo Lane Director March 18, 2003
------------------------------------
Margo Lane
/s/ Arie Leegwater Chairman of the Board March 18, 2003
------------------------------------ and Director
Arie Leegwater
/s/ John L. Steen Vice Chairman of the March 18, 2003
------------------------------------ Board and Director
John L. Steen
/s/ Robert Turner Secretary and Director March 18, 2003
-------------------------------------
Robert Turner
/s/ William J. VanderEems Director March 18, 2003
------------------------------------
William J. VanderEems
/s/ Abe Van Wingerden Director March 18, 2003
---------------------------------------
Abe Van Wingerden
Certification of Annual Report
I, Paul Van Ostenbridge, certify that:
1. I have reviewed this annual report on Form 10-KSB of Stewardship Financial
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 21, 2003 /s/ Paul Van Ostenbridge
-------------------------------------
Paul Van Ostenbridge
President and Chief Executive Officer
Certification of Annual Report
I, Julie Holland, certify that:
1. I have reviewed this annual report on Form 10-KSB of Stewardship Financial
Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: March 21, 2003 /s/ Julie Holland
-------------------------------------
Julie Holland
Vice President and Treasurer